DrChrono Blog

If you’ve clicked the link to read this blog post, you probably want some clarification on medical billing terms. You’re not alone. Unless you deal with medical billing on a daily basis or have some experience in medical billing, you probably haven’t had much exposure to these medical terms. Consequently, I’ve decided to break some of these commonly used terms down and create an easy guide below to help.

Most medical practices have two priorities:

1. Provide great care and help patients

2. Make $$

As a practice, while admitting the latter is just as necessary as the former may not be ideal, keeping costs low and making money is extremely crucial for a practice. Helping patients should always be the highest priority, but practices can’t help patients if they don’t have a steady cashflow and are worried about their resources. As a result, it’s very important for practices to optimize their medical billing. After all, a practice is still a business, and having a well-maintained medical billing system is paramount to the success of a medical practice.

**Medical Billing **is the process of submitting claims to insurance companies or patients for services rendered and making sure your practice is receiving correct amount of payment.

Medical Billing fits into the **Revenue Cycle Management **Process; the process includes keeping track of claims, making sure payments are collected, and addressing denied claims. Time management and efficiency play large elements in RCM– this involves claims, billings, and receivables from the time the patient leaves your office to when your practice receives payment and the outstanding balance for services equals $0. Every claim has its own life cycle and the practice can either handle their own billing or outsource it to a RCM service like drchrono RCM. If you’d like to learn more about RCM, please read the other article in this series RCM FAQs.

Now that you have a little more insight into what medical billing is and its role in revenue cycle management, here’s a list of commonly used terms:

RCM Vocabulary:

Adjustment: This refers to a binding agreement between a provider, patient, and insurance company wherein the provider agrees to charges that it will write off on behalf of the patient. Contractual adjustments may occur when there is a discrepancy between what a provider charges for healthcare services and what an insurance company has decided to pay for that service.

****Clean claim: This refers to a medical claim filed with a health insurance company that is free of errors and processed in a timely manner. Some providers may send claims to organizations that specialize in producing clean claims, like clearinghouses.

Clearinghouse: Clearinghouses are facilities that review and correct medical claims as necessary before sending them to insurance companies for final processing. This meticulous editing process for claims is known in the medical billing industry as “scrubbing.”

CMS 1500: The CMS 1500 is a paper medical claim form used for transmitting claims based on coverage by Medicare and Medicaid plans. Commercial insurance providers often require that providers use CMS 1500 forms to process their own paper claims.

Coding: Coding is the process of translating a physician’s documentation about a patient’s medical condition and health services rendered into medical codes that are then plugged into a claim for processing with an insurance company. Medical billing specialists must be familiar with many code sets in order to perform their job duties.

Co-insurance: The percentage of coverage that a patient or secondary insurance is responsible for paying after the primary  insurance company pays the portion agreed upon in a health plan. Co-insurance percentages vary depending on the health plan.

Co-pay: A patient’s co-pay is the patient’s liability to a provider for any treatment or services. Co-pays are separate from a deductible, and will vary depending on a person’s insurance plan.

Current procedural terminology (CPT) code: CPT codes represent treatments and procedures performed by a physician in a 5-digit format. CPT codes are entered together with ICD-9 codes that explain a patient’s diagnosis. Medical billing specialists will enter CPT codes into claims so insurance companies understand the nature of healthcare a patient received with a provider.

Date of service (DOS): The date when a provider performed healthcare services and procedures.

Day sheet: A document that summarizes the services, treatments, payments, and charges that for a given period of time.

Deductible: The amount a patient must pay before an insurance carrier starts their healthcare coverage. Deductibles range in price according to terms set in a person’s health plan.

******Explanation of benefits (EOB)**: A document attached to a processed medical claim wherein the insurance company explains the services they will cover for a patient’s healthcare treatments. EOBs may also explain what is wrong with a claim if it’s denied.

**Electronic remittance advice (ERA)**: The digital version of an EOB, which specifies the details of payments made on a claim either by an insurance company or required by the patient.

Fee schedule: A document that outlines the reimbursement associated for each medical service designated by a CPT code.

****ICD-10 codes: ICD-10 codes are an international set of codes that represent diagnoses of patients’ medical conditions as determined by physicians. Medical billing specialists may translate a physician’s diagnoses into ICD-10 codes and then input those codes into a claim for processing.

Medical coder: A medical coder is responsible for assigning various medical codes to services and healthcare plans described by a physician on a patient’s superbill.

Medical biller: A medical billing specialist is responsible for using information regarding services and treatments performed by a healthcare provider to ensure claims are billed in a timely manner, correct rejection and denials, and work aged claims for payment or adjustment.

Modifier: Modifiers are additions to CPT codes that explain alterations and modifications to an otherwise routine treatment, exam, or service.

****Patient responsibility: This refers to the amount a patient owes a provider after an insurance company pays for their portion of the medical expenses.

**Primary care physician (PCP)**: The physician who provides the basic healthcare services for a patient and recommends additional care for more serious treatments as necessary.

Subscriber: The subscriber is the individual covered under a group policy. For instance, an employee of a company with a group health policy would be one of many subscribers on that policy.

Superbill: A document used by healthcare staff and physicians to record information about a patient receiving care. The superbill can contain demographic information, insurance information, and especially any diagnoses or care plans written by the physician. The information from a superbill becomes a claim.

Untimely submission: Claims have a specific timeframe in which they can be sent off to an insurance company for processing. If a provider fails to file a claim with an insurance company in that timeframe, it is marked for untimely submission and will be denied by the company.

Utilization limit: The limit per year for coverage under certain available healthcare services for Medicare enrollees. Once a patient passes the utilization limit for a service, Medicare may no longer cover them.

I hope this quick vocab sheet gives you some more insight into medical billing and its verbiage. Medical billing can get complex and it pays to have someone more knowledgable and up-to-date. Let us help you; schedule a demo or contact us at sales@drchrono.com.

If you’re interested in learning more check out these pages:

• Medical billing
• Revenue cycle management

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  <em>Article by Samantha Lin, Digital Marketing Associate, <a href="https://www.drchrono.com/" target="_blank" rel="noopener noreferrer">drchrono</a></em><br /> Samantha produces content as part of the Marketing team at drchrono. She has strong interests in healthcare and education, particularly in providing women the necessary information to make educated decisions on their personal health. Samantha holds a B.S. in Managerial Economics from the University of California, Davis.
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