This article defines the basic billing vocabulary any private practice may need to know.
Aging: An overdue claim which is not the client’s responsibility.
Applied to Deductible (ATD): The amount of money your insured Client pays that goes towards paying their annual deductible. The amount of the deductible can vary depending on insurance plan and Provider.
Authorization: An insurance company may require those covered to get permission before receiving specific services. If a patient does not get authorization from their Insurance Provider before receiving the service, the insurance company reserves the right to deny coverage.
Beneficiary: The name for the person who receives the benefits of an insurance plan. He or she is not necessarily the person paying for the insurance plan.
Clearinghouse: A third-party company that acts as an intermediary between you (the Provider) and the insurance company. A clearinghouse checks your bills for errors, also known as claims scrubbing. They also verify that you have used the correct diagnosis and procedural codes.
CMS-1500 (HCFA forms): This is a standard paper claim form used to bill Medicare and Medicaid.
Coding: In insurance billing, coding refers to the process of translating the services rendered to a patient into a standard set of medical codes. These codes make it easy for insurance companies to process claims.
Contractual Obligation: The difference between your fee and what the insurance company will pay you for your services. It is not the amount your Client is responsible for paying.
Contracted Rate: Insurance payments paid directly to the Provider (that is you). This transaction happens after you have submitted a claim, and it has been successfully processed by the insurance company.
Coordination of Benefits (COB): For patients covered by more than one insurance plan, it is important to understand which insurance company to bill for which services.
Copay: This is the amount of money your Client pays you before receiving treatment or services. A copay is not included in the deductible and will vary depending on the Insurance Provider and plan.
Current Procedural Terminology (CPT): A standard set of codes maintained by the American Medical Association (AMA). It contains five-digit numerical representations for every type of service. Although there are almost 10,000 codes in circulation, you will likely use less than 100 codes on a consistent basis.
Deductible: Describes the amount your Client must pay on their own before their insurance plan kicks in.
Downcoding: Occurs if the insurance company suspects that you did not provide a service and decides to reduce the cost of the claim or get rid of it altogether.
Diagnostic and Statistical Manual of Mental Disorders (DSM 5): The DSM is a handbook that contains the standard language for healthcare professionals to use in order to describe and diagnose mental disorders. It works hand in hand with ICD-10. On KASA, we have also provided a valuable resource to help you convert DSM-IV and DSM 5 codes to ICD-10.
Electronic Data Interchange (EDI): The automated transfer of data between a care provider and a payer. This can provide quicker turnaround of information, reduce administrative expenses, and help to avoid claim processing delays.
Electronic Claim: A type of claim sent to an insurance company electronically via a billing software, like KASA.
Electronic Funds Transfer (EFT): The electronic message used by health plans to order a financial institution to electronically transfer funds to a Provider’s account to pay for health care services. An EFT can include information such as: amount being paid, name and identification of the payer and payee, bank accounts, routing numbers, and date of payment.
Electronic Remittance Advice (ERA): The explanation from a health plan to a Provider about a claim payment.
Enrollee: Refers to the person covered by an insurance plan.
Fee Schedule: Your list of fees for each service you provide.
Financial Responsibility: Outlined in the contract with the Client and their Provider, sets clear expectations on who is responsible for what before and after services are rendered.
Healthcare Common Procedure Coding System (HCPCS): HCPCS, pronounced Hick Picks, is divided into two different levels. Level I is identical to CPT codes. Level II is used to identify services and products that were not included in CPT. It is used primarily by Medicare and Medicaid but can also be used by other Insurance Providers.
International Classification of Diseases ICD-9 Codes: Now expired, these codes were the international standard used to identify a disease or diagnosis.
International Classification of Diseases ICD-10 Codes: Released in October 2015, ICD-10 codes are the current international standard for identifying a disease or diagnosis. This differs from a CPT code as CPT is a code that represents what service you provide. An ICD is a code that represents the diagnosis of a medical condition.
In-Network: Describes if you have contracted with an insurance company to provide services to their enrollees.
Maximum Out of Pocket: Describes the absolute max amount of money your Client will pay annually on their own.
Medicare: A government insurance program provided to seniors over the age of 65 and persons with disabilities.
Medicaid: A government insurance program (a joint venture between federal and state) that provides coverage to people with low or no income.
Not Otherwise Specified (NOS): You may come across a condition without a specified diagnosis. This comes in handy when using ICD-10.
National Provider Identifier Number (NPI): As a healthcare Provider, this is your unique 10-digit number.
Out of Network: Defined by individual insurance companies, this term refers to Providers who are not in a contract with the insurance company.
Pre-Certification: When your Client must check with their Insurance Provider first to certify that a specific treatment is covered by their plan.
Premium: The amount a person pays their insurance company to receive health coverage. It is usually paid on a monthly, quarterly, or annual basis.
Provider: This is you.
Remittance: The explanation of a payment for one or more claims sent by a payer to a Provider.
Scrubbing: The process done by your clearinghouse. Scrubbing checks your bills for errors before sending the payment through for processing.
Self-Pay: Describes Clients who pay for their own services, instead of through Insurance Providers. You may also see or use the term Private Pay.
Superbill: An itemized form that describes all pertinent information, including procedure codes (CPT) and diagnosis codes (ICD-10).
Upcoding: The illegal practice of using a higher ICD-10 code in order to get more from a Client or an insurance company.