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Medical Billing and Coding Terminology

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When you pursue a medical billing and coding career, you can expect to come in contact with a wide variety of acronyms and terms that are commonly used in the healthcare industry.

Growing your medical billing and coding vocabulary is one way that you can demonstrate your knowledge and skills to future employers. To help you, we've created a medical billing and coding terminology glossary. This glossary contains the definition of key terms and acronyms and is a helpful reference tool whether you are pursuing your undergraduate medical billing and coding certificate or already working in the industry.

Commonly Used Medical Billing and Coding Acronyms

Accountable Care Organization (ACO)

An accountable care organization, commonly called an ACO within the medical billing and coding industry, is an organization that connects healthcare provider reimbursements to metrics of quality. The goal of an ACO is to reduce the overall cost of care per patient and to provide high-quality care to patients. These organizations are accountable to both the patient and any third parties, such as insurance providers, that pay for the treatment.

In the United States, ACOs are made up of healthcare professionals who coordinate to connect payments to the quality of care that Medicare beneficiaries receive. These groups tend to use alternative payment methods, such as capitation, which is when a group of patients pays a fixed amount of money per unit of time (typically hourly) spent seeing a medical professional.

American Medical Association (AMA)

The American Medical Association (AMA) is a lobbying group and professional association made up of Doctors of Medicine (MD), Doctors of Osteopathic Medicine (DO) and medical students. It is the largest association of physicians in the United States, and they aim to improve public health through science and education.

The AMA is of particular importance for medical billers and medical coders as they publish the official list of Physician Specialty Codes, which coders and billers use to identify and label treatments and physician specialties. They also publish the Current Procedural Terminology (CPT®) code set, which aids in the billing of outpatient and office procedures.

Center for Medicaid and Medicare Services (CMS)

The CMS is a United States Department of Health agency that serves as the administrative body in charge of federal healthcare programs. Notably, the CMS oversees state and federal insurance marketplaces, Medicaid, Medicare and the Children's Health Insurance Program.

Charge Description Master (CDM)

The charge description master, also referred to as the chargemaster or procedure code dictionary, is a database of all the billable items that can be added to a patient's account. This database lists the rate charged by a care provider for individual procedures and services and is used to generate the invoice that is sent to the patient or their insurer.

Coordination of Benefits (COB)

A coordination of benefits is when two separate insurers work in tandem to pay a claim for a single person. This is often done to avoid duplicate payments, establish primary and secondary plans, reduce the cost to the patient and reduce overall insurance premiums.

Current Procedural Terminology (CPT)

Current procedural terminology is a database of the vocabulary used to refer to the various procedures that physicians perform. This terminology is used by physicians for billing.

Diagnosis-Related Groups (DRG)

Diagnosis-related groups are groups that a patient is classified into based on the treatment procedures they received. The system was designed to contain costs within hospitals. Patients are assigned to their group based on variables such as procedures performed, the age and sex of the patient, primary diagnosis and discharge status.

Duplicate Coverage Inquiry (DCI)

A duplicate coverage inquiry is a method of inquiry used by an insurance company or group plan to determine the existing coverages of another insurance company or group plan. Companies tend to use DCIs when a patient has more than one type of coverage.

Durable Medical Equipment (DME)

Durable medical equipment is any equipment that a patient uses in the home to maintain or improve their quality of life. Common examples of DME include crutches, canes, wheelchairs and walkers. In some cases, these items may be covered by the patient's insurance.

Electronic Health Records (EHR)

Electronic health records are digital records of your medical visits, diagnoses and treatments. These records make it easier for providers to track data and improve the care they provide patients. EHRs also help to create a more efficient healthcare experience, as they can be created, updated and viewed by physicians, specialists and other authorized staff from various healthcare providers.

Electronic Remittance Advice (ERA)

An electronic remittance advice is a digital version of a medical insurance payment explanation. The document contains details about the insurance company/provider's claims payment. In the event that a claim is denied, the ERA will contain the reasons for the denial.

Explanation of Benefits (EOB)

An explanation of benefits is the document sent to a patient by the health insurance company after the patient receives treatment. The document contains a list of items covered by the insurance company during the diagnosis and treatment process.

Federally Qualified Health Center (FQHC)

A federally qualified health center is an organization that provides a wide range of medical care services for a community. Services can include dental care, primary care, mental health services and more. These entities receive grants from the federal government per Section 330 of the Public Health Service Act.

Health Insurance Portability and Accountability Act (HIPAA)

Health Maintenance Organization (HMO)

A health maintenance organization is a type of insurance group that provides services through a localized network of doctors and other care providers. Coverage from HMOs is usually limited to a specific set of care providers. Any services rendered by providers that are not in that network would not be covered by the insurance group.

Healthcare Common Procedure Coding System (HCPCS, aka "hickpicks")

International Classification of Diseases (ICD)

International Classification of Functioning, Disability and Health (ICF)

The International Classification of Functioning, Disability and Health is a book/online database maintained by the WHO that is used to classify health and disability at both the individual and wider-populous level. It is used as the international standard of health and disability measurement.

Primary Care Physician (PCP)

A primary care physician is the general physician who serves as the main point of reference for an individual’s medical care. Patients visit their PCP for general check-ups and most minor illnesses. When necessary, a primary care physician will determine whether or not their patient needs to see a specialist.

Revenue Value Units (RVU)

Revenue value units are a value measurement used in the Medicare reimbursement formula. Each service's payment formula contains three RVUs, one for practice expense, another for malpractice expense and one for physician work. This formula and the RVU's contained within are used to determine the appropriate payment from Medicare to the care provider.

Signature on File (SOF)

Signature on file is when a patient or next of kin signs a document that enables the care provider to make necessary treatment or diagnosis decisions without the need of prior consultation. A SOF document typically permits payments of any health insurance benefits to the supplier, physician or patient.

Skilled Nursing Facility (SNF)

Uniform Hospital Discharge Data Set (UHDDS)

The uniform hospital discharge data set is a set of data that is collected during inpatient hospital discharges. It contains standard demographic and identifying information about the patient and its primary goal is to ensure that uniform data is acquired for all discharges.

World Health Organization (WHO)

The World Health Organization is a sub-agency of the United Nations that is responsible for worldwide public health. They maintain multiple disease, disability and treatment classifications, including the International Statistical Classification of Diseases and Related Health Problems (ICD), that physicians all over the world use as a reference and guideline for different procedures. In addition to their status as a regulatory body, they are responsible for medical feats and advancements such as the eradication of smallpox.

Medical Billing and Coding Key Terms

Acute and Chronic Conditions

Acute conditions are severe physical or mental ailments that come on suddenly and intensely. A chronic condition is a recurring or ever-present ailment. In many cases, chronic conditions are the cause of acute conditions. An example of this would be asthma (a chronic condition) causing an asthma attack (an acute condition).

Allowances

Allowances, also known as healthcare benefit allowances, are funds provided to an employee by their employer to cover a specific expense. In the realm of healthcare, these are also known as health savings accounts (HSAs) and are untaxed.

Assignment of Benefits (AOB)

A contract signed by a policyholder that gives a third party the ability to file a claim or directly bill an insurer on behalf of the policyholder. This contract is often referred to as an AOB.

Category I, II and III Codes

Category codes are sets of codes that apply to medical procedures and treatment methods provided to a patient. Category I is the most common, and encompasses most procedures provided during inpatient service, outpatient service and within hospitals. Category II are supplemental codes used for performance tracking. Category III codes refer to experimental or emerging treatment options.

Claim Scrubbing

Claim scrubbing is the process of reviewing a claim for any errors before it is sent to the insurer. The intent of claim scrubbing is to avoid a rejected or denied clam.

Combination Codes

Combination codes are single codes that classify two diagnoses. They can also be used to classify diagnoses with complications and associated secondary processes.

Facilitated Enrollment

Facilitated enrollment is a government program designed to help individuals who may have difficulty enrolling in health insurance services. Qualified individuals are opted in automatically and have the option to choose between different Medicare options.

Group Number

A number associated with the employer who provides a health insurance plan. The group number indicates the benefits that a policyholder receives from a health insurance plan.

HIPAA 4010 and 5010

HIPAA 4010 refers to a set of standards and codes that was used to communicate information between healthcare providers and insurance companies. HIPAA 5010 is an updated set of codes that was used to increase efficiency between the communicating parties. HIPAA 5010 replaced HIPAA 4010 and was made mandatory in 2012.

In-Network

In-network refers to a healthcare provider with which a policyholder's insurance group has previously negotiated a discounted rate. In-network visits are often covered in part or in whole by the insurance company.

Medicare

A health insurance program that provides health insurance for American citizens aged 65 and older. It also provides health insurance for people with disabilities who are under the age of 65.

Out-of-Network

An out-of-network healthcare provider is a provider with whom a policyholder's insurance group does not have a contract. Out-of-network services are either not covered at all by the insurance group, or may be covered at a lower percentage than in-network services.

Preauthorization

A situation in which a health insurance provider must authorize a service to be performed. Typically, the patient/policyholder is required to provide evidence that the procedure is medically necessary.

Premium

The monthly amount paid to a health insurance company by a policyholder. Premiums may be paid in part or in whole by a policyholder's employer.

Remittance

An explanation of payments for claims sent to a paying party by a healthcare provider. They are typically delivered via an electronic remittance device.

Symptoms

Symptoms are the subjective effects of a disease or condition, such as pain or soreness, which are perceived by the patient. Unlike signs, symptoms may be less noticeable to an observer.

Tabular List

A list of ICD-10-CM codes that is split up into sections that correlate with a body system or specific condition. For instance, an alphabetical list would simply list known conditions in alphabetical order while a tabular list would group related conditions into a single section.

V Codes

A set of codes that provide supplementary information on factors that have affected patient condition and their need for certain services. They are designed to indicate circumstances where something other than a disease or injury is noted by healthcare providers as a factor that influenced the care they chose to provide.

Additional Diagnosis

An additional diagnosis is when a patient receives a diagnosis from a second care provider. These are often referred to as a secondary diagnosis. Patients may receive an additional diagnosis by request of the doctor who gave the primary diagnosis (for instance, a primary care physician may give a primary diagnosis but refer a patient to a specialist for a more thorough examination) or they may seek out their own if they disagree with the primary diagnosis.

Alphabetic Index

The alphabetic index is a full, alphabetized list of ICD-10-CM codes and terms. This index also provides a reference guide to the tabular list where the full code can be found in the event that the alphabetic index does not list the full code.

Beneficiary

An individual enrolled in a healthcare or insurance plan that receives benefits from the plan. These benefits typically come in the form of network-negotiated rates or paid insurance claims.

Claim Adjustment

A claim adjustment is the amount that a healthcare provider agrees to not charge a patient. This happens after a negotiation between the insurer and the claimant (typically the provider) reaches an agreement on billing.

Co-Insurance

Co-insurance is the process of splitting risk between two or more parties. The most common instance of co-insurance in the United States is the splitting of risk (payments) between a patient and their insurance company.

Deductible

Any amount of money required to be paid by a policyholder before the health insurance plan begins to cover costs.

Federally Qualified Health Center Look-Alike

Centers that are functionally identical to Federally Qualified Health Centers, but do not receive funding from the government's HRSA Health Center Program.

Health Insurance Exchange

Also known as health insurance marketplaces, a health insurance exchange is an organization that individuals can use to purchase health insurance plans. They are commonly associated with a state, and each state offers different insurance options.

ICD-9

The previous system used to assign codes to procedures, processes and diagnoses associated with patient treatment at hospitals. It contains a tabular list of disease code numbers, an alphabetical index and a classification system for most medical procedures.

Managed Care

A set of activities used to lower the cost of providing for-profit healthcare to patients. These activities and procedures also aim to improve the quality of care that a patient receives.

Medicaid

A federal health insurance program that provides U.S. citizens with health insurance provided they are below a certain income threshold. It offers some benefits that are not covered by Medicare, such as personal care services and long-term care facility expenses.

Patient Responsibility

Any portion of a medical bill for which the patient is responsible. For instance, if a patient receives a bill for $100 and their insurance covers 70% of the bill, the patient’s responsibility would be $30.

Precertification

Another term for preauthorization, which is when a health insurance provider must authorize a service to be performed.

Primary Diagnosis

A primary diagnosis is the condition responsible for the majority of the resources provided to a patient while receiving care.

Revenue Code

A four-digit number on a healthcare provider's bill to an insurance company that indicates the location of the patient when they received treatment or items that the patient may have received during treatment.

Subcategory

A category beneath a previously established larger category. For example, a subcategory of cancer would include cancers localized to specific areas such as lung cancer, brain cancer, bone cancer and more.

Untimely Submission

A medical claim that is submitted after the maximum time frame allowed by an insurance provider. Untimely submissions are denied by the insurer.

Volume I, II and III

The three medical device classifications established by the FDA, they are more commonly referred to as Class I, II and III. Class I devices are less regulated as they present minimal risk to the patient (e.g. an electric toothbrush). Class II devices are more closely regulated and include items like syringes. Class III devices are the most regulated and could present serious risk to an individual if used improperly. A defibrillator is an example of a Class III device.

Advanced Directive

An advanced directive is a legal document that provides instructions on how a patient would like medical decisions to be made for them in the event that they cannot make them themselves.

American National Standards Institute

A non-profit organization that establishes standards for goods, services, systems, processes and professionals in the United States. They aim to increase the competitiveness of U.S. businesses by establishing minimum levels of quality that each product must meet.

Claim Denial

A claim denial is when a health insurance company refuses to cover the services provided to an insured patient. Claim denials have been processed by the insurer and denied. This is not to be confused with a claim rejection, which is a claim that the insurer refuses to process because of one or more errors on the claim, and can be resubmitted once the errors are corrected.

Comorbidity

A comorbidity is a disease or malady that occurs alongside a primary condition. Comorbidities increase the likelihood of the primary condition becoming severe or resulting in death. For example, asthma can be a comorbidity with respiratory diseases such as COVID-19 or pneumonia.

Enrollee

Any individual enrolled in a health insurance plan. This term does not refer to beneficiaries, it only refers to the primary insured party.

Group Name

The name of the insurance group or plan that insures a policyholder.

Healthcare Provider

Any entity that provides healthcare to a patient. The term includes, but is not limited to, doctors, nurses, hospitals, pharmacies and clinics.

ICD-10

Published by WHO, ICD-10 is the current system used to assign codes to procedures, processes and diagnoses associated with patient treatment at hospitals. It contains a tabular list of more than 68,000 disease code numbers, an alphabetical index and a classification system for most medical procedures. It is used globally as a diagnostic tool.

Manifestation Codes

Manifestation codes are used to describe the manifestation i.e. symptoms and signs of illnesses) of a disease. They do not describe the disease itself and cannot be used as a diagnosis, though they are helpful tools when attempting to arrive at a diagnosis.

Modifier

A code that indicates a healthcare procedure was modified or changed for a specific circumstance. Modifiers do not affect the code of the procedure that was changed, and are primarily used to keep an accurate record of the care received by a patient.

Payment Reconciliation Reports

A report that is filed to confirm that patients and their insurers were charged an accurate amount by the healthcare provider. If an error is found during the reconciliation process a patient may receive a reimbursement for the erroneous charge.

Predetermination

A review process by an insurance company's medical staff to determine whether or not a service is correct based on the needs of the policyholder.

Primary Insurance

The health insurance group that provides the first payment on a claim for healthcare services. In most cases, this will be Medicare or the insurance provided by a patient's employer.

Signs

Objective evidence of a disease or condition, such as a fever or rash. Unlike symptoms, which may only be noticeable to the patient, signs can be observed and identified by others.

Supplemental Insurance

A health insurance plan purchased by a policyholder in addition to their primary insurance plan. It is typically used to cover services that are not covered by the policyholder's primary insurance.

Utilization Limit

A limit set by Medicare that dictates how many times a service can be provided within a time frame, typically one year. Claims for a service by a patient that has exceeded the utilization limit may be denied.

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