Glossary of billing terms

To help you understand your bills and statements, Children’s Hospitals and Clinics of Minnesota has put together this short glossary.

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

Admission certification
Certification to ensure that criteria are met for admission. It is a more precise term than “admission review” or “concurrent review.”

Ambulatory Surgery Center (ASC) – Minnetonka
The ambulatory surgery center, also called same-day surgery center, performs surgeries of an uncomplicated nature. These surgeries were traditionally done in more expensive inpatient (hospital) settings, but 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 is related to the coordination of benefits and determination of the primary payer when a child is covered by both parents’ health insurance plans. The insurer of the parent whose birthday month falls first in the year is the primary payer. This applies to non-divorced parents.

In certain third-party payer plans, co-insurance is the percentage of the allowed amount 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. If payment is made to the beneficiary, the guarantor is responsible for the bill.

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-payment depends on the cost-sharing arrangements adopted by the health plan.

Coordination of Benefits (COB)
A case where a patient has more than one form of health insurance coverage or a request from the insurance company in order to validate additional coverage. A request may be sent to the policy holder, failure to respond to this type of request will result in the balance being owed by the guarantor.

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.

Explanation of Benefits (EOB)
A form from the insurance carrier that explains the benefits that were paid and/or charges that were rejected.

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

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

HCFA-1500 form
A professional health insurance claim form. It is most commonly used when billing includes physician charges, independent laboratory charges, independent ambulance charges, durable medical equipment, CRNA/AA charges and 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
Insurance billing during an admission.

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; 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. It 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 low income families and certain children with disabilities. 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, such as services or retail items that insurance will not pay for.

Non-covered days
Days of care not covered by the primary payer.

Hospital care or other provider services that are not in your insurance carrier’s network. Please check with your insurance carrier to understand which providers are eligible for insurance coverage.

The amount the patient/guarantor owes after insurance or for any non-covered services.

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)
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 that provides services and supplies to the beneficiaries. The provider may be a physician, chiropractor, physical therapist or other healthcare 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 who needs 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 (usually the patient or patient’s family member) or use patient/guarantor instead (and define guarantor) 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.

This is a form signed by the patient/guarantor accepting financial responsibility for the specified services not covered by insurance.


Dealing with billing and insurance issues can be stressful, confusing, and complex. At Children’s, we can help. We provide billing policies and translations into several languages.


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