Medical Billing Terminologies – Comprehensive Study Notes
CMS Forms and Claim Submission
Account Number/Encounter number — Number given by doctor or hospital for each patient visit to track i) medical condition, ii) treatment rendered, iii) cost of treatment for that date of service; Block # on CMS 1500.
Advance Beneficiary Notice (ABN) — A notice the hospital or doctor gives the patient before treatment indicating Medicare may not pay for some services; allows patient to decide whether to proceed and how to pay.
Authorization Number — System whereby a provider must obtain approval from health plan staff (e.g., Medical Director in UMR Utilization Management Review) before a member can receive certain services; determines coverage and medical necessity; also called Certification Number/ Pre-certification / Pre-admission approval; Block # on CMS 1500.
CMS 1500 — The form doctors use to submit a professional claim; 33 blocks; other names include Provider claim/Medical claim/Professional Component/Provider Bills/Medical bills/Professional claims.
UB-92 / UB-04 (CMS 1450) — Hospital claims form; used for institutional/hospital claims; Block numbering differs from CMS 1500 (e.g., block 81).
Clearinghouse — Entity that forwards claims to insurance payers electronically.
Clearinghouse relevance to front-end edits — Clean Claim is a claim that will pass all front-end edits.
COBRA Insurance — Coverage continuation after unemployment; typically more expensive; lasts up to months, potentially months under certain conditions.
Explanation of Benefits / ERA / EOB / RA — Notice from payer after processing; explains status, amounts billed, paid, and patient responsibility. Medicare EOB is called EOMB.
Rebill / Reprocess / Manual claims submission — Re-submit or reprocess denied/returned claims; manual submission is via mail.
ROI (Release of Information) — Signed consent allowing disclosure of medical information to involved billing entities; linked to SOF (Signature on File) in CMS 1500 Block # .
SOF (Signature on File) — Indicator that an authorization to release information is on file.
Retro Authorization — In emergencies or specific circumstances, providers may obtain authorization after service; retro-authorization; time periods vary by payer.
Retro Authorization: Only in emergencies or certain contained cases; retro authorization may be granted after the service if time window is met.
Secondary Insurance — The payer billed after primary has paid or denied.
Special note: Mother baby clause and other clauses appear in later sections; see sections below for more detail.
Insurance Roles and Eligibility
Beneficiary — Person covered by health insurance (enrollee/insured/subscriber/member).
Enrollee / Guarantor / Subscriber / Policy holder / Insured — The person who owns or pays for the policy.
Beneficiary Eligibility Verification (BEV) — A method for doctors/hospitals to verify patient coverage/benefits.
Birthday rule — Determines primary vs. secondary coverage for a child when parents are insured; primary is the parent whose birthday (month and day, not year) comes first.
Date of Service — The date(s) when the patient was treated.
Effective Date — The date coverage or benefits begin.
Insurance company — Also known as insurer or health plan.
Insured — Person covered by the policy.
Insured Group Name / Insured Group Number — Group-level identifier for the insurer’s policy; used to identify the group under which the patient is insured.
Primary Insurance Company — payer responsible for paying first.
Secondary Insurance — payer billed after primary; may cover remaining costs.
Healthcare Payer ID (Payer id) — 5-digit electronic addressing used to submit claims electronically; example path: https://access.emdeon.com/PayerLists/.
Patient demographics (PD) — Age, sex, address, etc., required for filing a claim.
Flexibility around BEV and enrollment status — BEV used to verify eligibility; enrollment status impacts processing and benefit applicability.
Pre-Existing Condition — Health condition present before policy start; some insurers may not pay for these conditions.
Pre-registration — Scheduling, collecting demographic/demo data, and insurance eligibility verification prior to visit.
Pre-certification / Pre-authorization — Prior approval required for certain services; see Authorization Number above.
Reprocess / Rebill (already described) — Methods to address denied claims.
Secondary Insurance (repeat) — See above; ensures coordination of benefits when multiple payers are involved.
Third Party Administrator (TPA) — Independent entity handling benefits/claims for a self-insured company.
Coding, Billing Codes, and Modifiers
CPT (Current Procedural Terminology) — Codes used to report services and procedures; Level I HCPCS codes.
CPT modifier — A two-character descriptor added to CPT codes to indicate a modification or special circumstance of a service.
HCPCS — Coding system used to report procedures, services, supplies, medications, and durable medical equipment.
HCPCS modifier — Two-character descriptor used with CPT Level I and Level II codes.
CDT (Current Dental Terminology) — Dental CPT codes.
ICD/Diagnosis Codes — Codes describing patient diagnoses; V Codes used for preventive medicine and non-disease purposes.
NDC (National Drug Code) — Identifies drug products; 3-segment code (Labeler/Product/Package size) with formats like 4-4-2, 5-3-2, or 5-4-1; listed in CMS Block # .
NCCI (National Correct Coding Initiatives) — CMS program preventing improper payment for paired procedures; includes Column One/Column Two edits and Mutually Exclusive Edits; site: cms.gov.
NPI (National Provider Identifier) — 10-digit identifier for providers/suppliers mandated by HIPAA.
UPIN — Unique Physician Identification Number; replaced by NPI ().
CDM (Charge Description Master) — Inbuilt software listing all billed amounts for procedure codes.
UCR (Usual and Customary Reasonable) — Payment scale for non-participating providers, based on usual fee, local customary fee, and reasonable fee.
CPT / HCPCS / ICD-V Codes notes: CPT is Level I; HCPCS includes Level II; V Codes pertain to preventive/other non-disease contexts.
Itemized statement / I-Bill — Detailed listing of all services posted to a patient account, including DOS, service description, service code, charges, estimated insurance amounts, totals.
Medical Record Number — Identifier for a patient’s chart.
Provider Identification Number (PIN) — Assigned by insurer to contracted providers; unique to each carrier.
Payment Models, Deductibles, and Costs to Patients
Capitation — Fixed payments paid to a provider periodically for each patient; provider paid whether or not patient is seen; common arrangement is Per Member Per Month (PMPM).
Global payment (Bundled Physician Rates) — Payment that bundles professional and technical components if billed by the same provider.
Global Days — Global period for post-operative care; usually up to a maximum of days for major surgery and days for minor surgery; follow-up within global period included in surgical reimbursement.
Deductible — Fixed amount per contractual period patient pays before insurance begins to pay; resets yearly.
Coinsurance — Percentage of allowable amount patient pays.
Co-pay — Small fixed upfront amount paid by patient for specific services per visit (often called FLAT RATE).
Out-of-Pocket Costs — Patient’s share of costs (co-pay, co-insurance, deductible).
Premium — Amount paid periodically to keep the plan active.
Lifetime Maximum — Maximum benefits an insurer will pay over a patient’s lifetime.
Stop-loss / Catastrophic Limit — Insurer fixes a cap to protect patient from catastrophic costs; patient stops paying after limit.
Balance Billing — Billing patient or secondary payer when balance remains after primary payment; occurs if secondary not involved or patient not enrolled in secondary.
Write-off — Amount waived by provider due to billing agreements or other considerations; provider bears loss.
Charity Care — Free medical care for patients who cannot afford to pay.
Exclusions — Conditions or circumstances not covered by the policy.
Covered Expenses — Services the insurer agrees to pay for.
Fee-for-Service vs Indemnity — Traditional payment method where a doctor bills; less common today as MCOs evolved.
Fee Schedule — List of allowed amounts insurer will pay for a service based on PX code.
Pre-Registration — See above; includes scheduling, demographic capture, eligibility verification.
Preventive Care — Tests or treatments to stay healthy or catch problems early.
Medigap / Supplemental — Plans that cover gaps in Original Medicare, sometimes not applicable with Part C.
Medi-gap / Medigap examples (e.g., AARP) — Private policies to fill gaps in Medicare.
Over-the-Counter (OTC) Drugs — Drugs that do not require a prescription.
Third Party Administrator (TPA) noted above under insurance roles.
Patient Access, Eligibility, and Enrollment Details
Beneficiary / Enrollee / Guarantor / Subscriber / Policy holder / Insured — See above for roles.
Demographics (Patient Demographics - PD) — Data used for claims; includes age, sex, address, etc.
Mother baby clause — Newborns are covered under the mother’s policy for days from birth date.
Medicare Advantage Plan (Part C) — Part C plans provide Medicare benefits through private plans; cannot enroll in Medigap if in Part C.
Medicare Summary Notice (MSN) — Notice from Medicare after claims processing detailing billed amounts, approved payments, patient responsibility, and any denials.
Medicare Automated Cross-over Claim — When claim information is automatically sent from Medicare to secondary payer (e.g., Medicaid).
Pre-Existing Condition waiting periods — See Waiting Period; typical durations months depending on policy.
MRI (Medical Recording Index) — Maintained for years to distinguish new vs established patients; after years a new account number is issued.
Observation — Service type used to determine inpatient vs outpatient status; typically charged by the hour.
Inpatient (IP) / Outpatient (OP) — IP: admitted to hospital for ≥ hours; OP: treated and discharged the same day or within a short stay.
Primary vs Secondary considerations in network arrangements — See Participating vs Non-Participating Providers.
Providers, Networks, and Access Arrangements
Provider — Any person or institution providing medical care.
Rendering provider / Specialist / Attending physician / Treating physician — Different designations for who delivers care.
Participating Provider (In-network) / Non-Participating Provider (Out-of-Network) — Contracted with insurer vs not contracted; affects payment rates.
Network of Providers / Group Name — A group of providers within a plan network.
IPA (Independent Practice Association) — Organization of physicians contracted with an HMO.
Privacy, Compliance, and Oversight
HIPAA (Privacy Rule) — Sets standards for disclosure of Protected Health Information (PHI).
RO I (Release of Information) and SOF (Signature on File) — Documentation that allows information release and evidence of authorization.
OIG (Office of Inspector General) — Government body establishing compliance guidelines to combat fraud and abuse; sets billing standards.
EOB/ERA/RA vs MSN/EOMB — See above for explanation of benefits notices.
Fraud / Abuse — Distinct concepts in billing: Fraud is intentional misrepresentation; Abuse is improper use of services; both invite penalties.
LCD / NCD (Local Coverage Determination / National Coverage Determination) — Local and national policies guiding coverage decisions; managed by CMS; addresses overutilization concerns.
Care Settings, Services, and Equipment
Ambulatory Surgery Center (ASC) — Outpatient surgery not requiring overnight stay; also called Day Surgery, Same Day Surgery, SDS.
Emergency Care — Care for medical emergencies; typically requires pre-certification not necessary; Emergency indicator on CMS form Block # C (Y) to prevent denial when ER flagged.
Home Health Care — Care at home, usually for disability or illness.
Hospice — Care for terminally ill patients with focus on comfort; may be in-home or inpatient.
Hospital — Center for care and surgery; can be inpatient or outpatient depending on stay duration.
Durable Medical Equipment (DME) — Reusable medical equipment prescribed by a clinician (e.g., wheelchair).
Accessibility, Transactions, and Miscellaneous Terms
Advance Beneficiary Notice (ABN) — See above under CMS forms.
Payer ID — Electronic mailing address for claims; 5-digit code; example URLs for payer lists provided in training materials.
PTAN (Provider Transaction Access Number) — Medicare-issued identifier for par providers; legacy ID; also called Medicare PIN.
Place of Service (POS) — Where service was performed (home, hospital, office, clinic).
Procedure Code (PX) — Short form is CPT; code describing services rendered.
Release of Information (ROI) — See above; signed release statement.
Refill of information: Reimbursement vs Denial — See Reprocess / Rebill; ROI; Retro Authorization.
NDC, NPI, UPIN — Clarifications of identifiers used in claims processing.
Medical necessity / Medically Necessary — Services required to treat a condition; not all services are covered if not medically necessary.
Charity Care / Exclusions / Medically necessary — Distinguish between covered vs non-covered services; some patients qualify for charity care.
W-9 Form — Tax form; verifies tax ID for contracting; required to avoid denial for W-9 related issues.
Backdating the Prior Authorization — If authorization was not used on the date of service but later accepted by insurer, it can be backdated to the service date with justification.
Observation vs Inpatient care and related billing windows — See Global Days for follow-up within the surgical window.
Mother baby clause — See above; newborn coverage rules.
Quick Reference: Key Block Numbers and Codes
CMS 1500 Block # — Signature on File for ROI.
CMS 1500 Block # — Assignment of Benefits (AOB) / signature on file required.
CMS 1500 Block # — Provider name; = Group; = NPI.
CMS 1500 Block # — Authorization Number / Pre-certification. Also where Prior Authorization details are captured.
CMS 1500 Block # C — Emergency indicator (Y) for ER services; otherwise ER services may be denied.
CMS 1500 Block # — Federal Tax ID Number.
CMS 1500 Block # — Account Number / Encounter Number.
CMS 1500 Block # — Final block area for claims submission metadata.
CLIA — Clinical Laboratory Improvement Amendments; “10 digits”; Block # on CMS 1500.
MRI — Medical Recording Index; 3-year rule; new vs established patient; new A/C number after 3 years.
Notes:
This set consolidates terms across the transcript pages 1–13, preserving definitions, examples, and form-specific references. The purpose is to provide a comprehensive, exam-ready study guide that mirrors the content and structure of the original material while highlighting block numbers, timeframes, and plan interactions essential for medical billing knowledge.