Glossary of Billing Terms

Admission Diagnosis

The diagnosis code provided at the time of admission as stated by the physician.

Admission Certification

Certification by utilization review committee to ensure that criteria are met for admission. It is a more precise term than "admission review" or "concurrent review."

Ambulatory Surgery Center (ASC) – West

Ambulatory surgery center, also called same-day surgery center, performs surgery of an uncomplicated nature that had traditionally been done in the more expensive inpatient setting but that can be done with equal efficiency without hospital admission.

Assignment of Benefits

The insured's signature authorizing a third-party payment to be made to the provider directly for medical services. The assignment of benefits is normally obtained at the time of registration or admission. It is not essential that the assignment be obtained prior to treatment being rendered, but it is imperative that it be obtained prior to discharge.

Birthday Rule

The Birthday Rule related to the coordination of benefits and determination of the primary payer when a child is covered by both parents' health insurance plans. This applies to non-divorced parents. The insurer of the parent whose birthday month falls first in the year is the primary payer.


In certain third-party payer plans, the percentage of gross medical charges that the patient must pay after meeting any applicable deductible amount. In some instances, the co-payment is effective only for certain services or after full payment for certain services has ended. (see also Deductible)

Commercial Carrier

Commercial Carriers offer contracts to individuals and groups, mostly groups under which payments are made to the beneficiary (or to the providers if they have accepted assignments of benefits) according to an indemnity table or schedule of benefits for specified medical services.

Contractual Allowance

An allowance for the difference between charges and the amount of money actually paid by a third party. Contractual allowances include any agreements made regarding discounts for third-party payers.


A percentage or proportion of a bill that is paid directly by the patient. The type of co-payments depends on the cost-sharing arrangements adopted by the health plan.

Coordination of Benefits (COB)

In cases where a patient has more than one form of health insurance coverage, the policy decision indicating which health insurance plan should pay first on a claim.

Covered Charges

The charges that the insurance will consider payment on.

CPT Code

The code used to identify procedures performed; required by most insurance companies. CPT (Current Procedures Terminology) is developed and approved by the American Medical Association.


A fixed amount of money that an individual must pay before the insurance company will begin to reimburse for services.


Identification of a disease from which an individual patient suffers or condition for which a patient needs or receives medical care.

Electronic Claim

Filing claims electronically instead of manually, requires that claim data be entered into a computer system (either our own or that of a service bureau) and placing a telephone call to the insurance carrier's computer system using a modem. The claim data is submitted directly from our computer to theirs.

Explanation of Benefits (EOB)

A form from the insurance carrier which explains the benefits that were paid and/or charges that were rejected. If the insurance carrier paid, a check would be included with an EOB.

Federal Tax Number

The number assigned to the provider by the federal government for tax reporting purposes. Also know as the Tax Identification Number (TIN) or Employer Identification Number (EIN).

Financial Class

The classification assigned to a patient account by a health care provider, reflecting expected method of payment (e.g., self-pay, Blue Cross, Medicaid, Commercial insurance, etc)

HCFA-1500 Form

A multi-purpose health insurance claim form printed in red ink on optical character recognition paper. It is designed to be typed, computer printed or hand written. IT is most commonly used when billing a) physician charges, b) independent laboratory charges, c) government programs, d) independent ambulance charges, e) durable medical equipment, f) CRNA/AA charges, and g) independent dialysis charges.


The patient is not covered by the insurance, the insurance does not cover certain treatments, the patient's insurance has expired, and/or the hospital stay was not approved.

Insurance Group Number

The identification number, control number, or code assigned by the carrier or plan administrator to identify the group under which an individual is covered.

Interim Billing

Patient billing within an entire admission.


The Insured is the term used to designate the person who represented the family unit in relation to the insurance program. This may be the employee whose employment makes this coverage possible. This person may also be known as the enrollee, certificate holder, policyholder, or subscriber.

Medical Record

A patient's file containing sufficient information to clearly identify the patient, to justify the patient's diagnosis, and treatment and to accurately document the results. The record also serves as a basis for planning and the continuity of patient care, and provides a means of communication among physicians and any other professionals involved in the patient's care. The record also serves as a basis for review, study, evaluations on services, and protecting the legal interests of the patient, hospital, and responsible practitioner.


A health insurance program for the poor and medically indigent. States share in financing the program with the federal government and determine eligibility and benefits consistent with federal standards.

Non-Covered Charges

Charges the patient will be responsible for (i.e., a private room, personal items, phone, television).

Non-Covered Days

Days of care not covered by the primary payer.


Hospital care or other provider services that are rendered by non-participating providers, due to the purposeful selection of the enrollee or the occurrence of an illness or injury while on out-of-the area travel.


The patient agrees to assign the insurance payment over to the hospital, the payment could be a payment in full or a partial payment.


Third party that is to make payment on a bill (insurance company).

Per Diem

Payment to a provider (normally an acute care facility) at an established or negotiated rate per day rather than reimbursement of all hospital charges as billed.


The procedure of obtaining permission to perform a service from the insurance carrier before the service is performed.

Pre-Existing Condition

An illness or disability that existed as a diagnosed illness before the insurance policy went into effect. Depending on the policy, coverage for treatment of pre-existing conditions may be excluded or limited. Sometimes referred to as a "Pre-X."

Preferred Provider Organization (PPO)

Preferred provider organization, a managed care arrangement that offers enrollees a larger choice of primary care and specialty providers to choose from with fewer utilization restrictions than an HMO offers.

Primary Carrier

The insurance carrier which has first responsibility for payment under Coordination of Benefits.

Principle Diagnosis Code

The condition established after study to be chiefly responsible for causing the admission for a patient for care.


The provider is the person or entity in relation to the insurance program that provides services and supplies to the beneficiaries. The provider may be a physician, chiropractor, physical therapist, or other health care professional who treats the patient. In a medical office, when the nurse or in-house laboratory provides services under the physician's supervision, the physician is still considered the provider.

Provider Number

The unique identifying number assigned to the provider by the payer.


The request for additional care, usually of a specialty nature, by a primary care physician or by a specialist needing additional medical information on behalf of the patient.

Secondary Insurance

Whenever there is more than one insurance plan involved, the plan that is required to pay second and after the primary insurance has paid is called the secondary insurance.


The portion of a bill that is to be paid in part or in full by the responsible party from their own resources as it is not payable by a third party.

Third-Party Liability

Liability of an entity that pays the medical cost of a patient's hospital bill.

Treatment Authorization Code

A number that indicates that the treatment provided has been authorized by the payer.