Glossary of billing and insurance terms

Advance Beneficiary Notice (ABN)
This is a written notice given to you by a doctor, provider or supplier in advance of any service that Medicare may not consider covered. Also known as a waiver of liability, the ABN (the complete name is "Advance Beneficiary Notice") is a provided when providers offer a service or item they believe Medicare will not cover. ABNs only apply if you have Original Medicare, not if you are enrolled in a Medicare Advantage private health plan.
This refers to the predetermined allowable limits used by insurance carriers to limit the maximum amount they will pay for a service based on their contract with you. Please note that Mayo Clinic doesn't accept predetermined usual, customary and reasonable (UCR) health -insurance payment amounts for health plans with which Mayo Clinic doesn't participate. "Allowable" charges are sometimes known as reasonable and customary (R&C) charges.
Allowed amount
Maximum amount on which payment is based for covered health care services. This may be called "eligible expense," "payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference. See Balance billing.
Ambulatory care
Ambulatory care is care given in the doctor's office or surgical center without an overnight stay.
A request for your health insurer or plan to review a decision or a grievance.
Authorization is the approval of care, such as hospitalization, by an insurer or health plan. Your insurer or health plan may require pre-authorization before you're treated.
The amount owed to Mayo Clinic indicated on the billing statement.
Balance billing
Balance billing is the practice of a provider billing you for all charges not paid by your insurance plan, even if those charges are above the plan's usual, customary and reasonable (UCR) charges or are considered medically unnecessary. Managed care plans and service plans generally prohibit providers from balance billing except for allowed copayments, coinsurance and deductibles. Such prohibition against balance billing may even extend to the plan's failure to pay at all (for example, because of bankruptcy).
Billing account number
This is the account number of the billing addressee (guarantor) assigned to receive the bill. Refer to this number when contacting Mayo Clinic with questions.
Billing addressee (guarantor)
This is the person designated to receive the monthly billing statements. This person can coordinate the billing, payment and insurance coverage for the account.
Certification is the official authorization for use of services.
Claims review
Claims review is the review your insurer or health plan performs before paying your doctor or reimbursing you. This review allows the insurer to validate the medical appropriateness of the services given and review the charges related to your care.
Coinsurance is a provision that limits an insurer's coverage to a certain percentage, commonly 80 percent. This provision is common among indemnity insurance plans and preferred provider plans. If your insurance includes coinsurance, you'll be responsible for charges beyond those covered by your insurance.
Commercial health insurance
This is nongovernment insurance that pays all or some portion of medical bills. It may be purchased by individuals or by employers and is most often obtained as an employment benefit.
Coordination of benefits (COB)
Coordination of benefits is an agreement between your insurers to prevent double payment for your care when more than one plan provides coverage. The agreement determines which insurer has primary responsibility for payment and which has secondary responsibility.
Copayment is the portion of a claim or medical expense that you must pay out of pocket. Copayment usually is a fixed amount.
Cost share
The share of costs by your insurance that you pay out of pocket. Cost share generally includes deductibles, coinsurance, copayments or similar charges. It does not include premiums, balance billing amounts for non-network providers or the cost of noncovered services.
Covered charges
Services that are typically covered under the terms of your contract with your insurance company. It is important to note that even though services may be covered charges, they are often subject to your deductible and coinsurance.
Credit balance
This balance may appear under "Current Amount Due" on your statement with a minus sign after the amount (for example, $100-). Mayo Clinic may owe a refund to the patient or insurance plan, dependent upon review of the account.
Current Procedural Terminology (CPT) codes
Medical professionals use this set of five-digit codes for billing and authorization of services.
A deductible is the portion of your health care expenses that you must pay before your insurance applies.
Denial or denied
A service for which your health care plan has determined the provisions of your benefit plan do not have benefits available or there are certain limitations as to when the benefits are available. If your insurance denies benefits for a service, you are liable for the entire amount.
Diagnosis-related groups (DSGs)
DSGs are a system of classifying inpatient stays for payment. The Centers for Medicare & Medicaid Services uses DSGs to derive standard reimbursement rates for medical procedures and to pay hospitals for Medicare recipients. Some states use DSGs for all payers, and some private health plans use DSGs for contracting.
Date of service.
Elective services
Any service that is not emergency care. With few exceptions, cosmetic procedures are elective services and must be prepaid by the patient.
Explanation of benefits (EOB)
An explanation of benefits is a statement mailed to an insured person noting how a claim was paid or why it wasn't covered. Medicare recipients receive a Medicare Summary Notice (MSN).
Fee schedule
A fee schedule is a list of the maximum fee that a health plan will pay for each service based on CPT billing codes. Some plans refer to it as fee maximums or as a fee allowance schedule.
HCFA 1500 form
The HCFA 1500 form is required by Medicare and Medicaid, and used by some private insurance companies and managed care plans for billing. The official standard form used by physicians and other providers when submitting bills and claims for reimbursement to Medicare, Medicaid and private insurers HCFA 1500 contains patient demographics, diagnostic codes, CPT/HCPCS codes, diagnosis codes, and units.
Health maintenance organization (HMO)
An HMO can be defined in several ways: 1. An organization that provides health care to members in return for a preset amount of money. 2. A health plan that places at least some of the care providers at risk of medical expenses. 3. A health plan that uses primary care doctors to determine whether members receive care from specialists (although some HMOs don't).
A hospice is a facility or program that provides care for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional and spiritual needs of the patient. Hospice care is covered under Medicare Part A (hospital insurance).
In-network provider
A provider who has a contract with your health insurer or plan to provide services to you. Also known as a preferred provider.
International Classification of Disease (ICD) codes
ICD codes are an international disease classification system used in diagnosis and treatment.
Itemized statement
An itemized list of services provided. The itemized statement of charges includes the CPT and diagnosis codes used when submitting a claim to an insurance plan. An itemized statement is not a bill.
Managed health care
Managed health care refers to a system of health care delivery that tries to manage the costs and quality of health care and access to care. It often involves use of contracted provider networks, limitations on benefits for care given by noncontracted providers (unless authorized to do so) and use of care authorization systems. Managed care includes managed indemnity plans, preferred provider organizations, point-of-service plans, open-panel HMOs and closed-panel HMOs.
Mayo Clinic contracted services
These are patient services for which Mayo Clinic has a contract with a specific insurance company to accept a contractually set amount for these medical services.
Mayo Clinic number
This is your personal identification number at Mayo Clinic. It's unique, and it will be your Mayo Clinic number for life.
Medicaid is a program financed jointly by the federal government and the states that provides health care coverage and nursing home care for low-income individuals. Benefits vary widely from state to state.
Medicaid (Title XIX)
This is a joint federal and state program that helps with the medical costs for some people who have low incomes and limited resources. Each state has its own standards for qualification, benefits covered, program eligibility, rates of payment for providers and methods of administering the program.
Medicare is a federal program insuring people age 65 and older and people who have disabilities of all ages. Medicare Part A covers hospitalization and is a compulsory benefit. Medicare Part B covers outpatient services and is a voluntary benefit.
Medicare (Title XVIII)
This is a federal program for people age 65 and older, for people eligible for Social Security disability payments for two years or longer, and for certain workers and their dependents who need kidney transplantation or dialysis, regardless of financial status. It consists of two separate but coordinated programs: hospital insurance (Part A) and supplementary medical insurance (Part B), and also a separate drug coverage program administered by the private sector (Part D).
Medicare Advantage Plan
Medicare Advantage Plans are offered by private companies that contract with Medicare to provide Medicare Part A and Part B benefits. Medicare Advantage Plans may be HMOs, PPOs or private fee-for-service plans. When a person is enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan. Services aren't paid for under Original Medicare.
Medicare Advantage Plan (Medicare Part C)
Medicare Part C is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits.
Medicare assignment (vs. Medicare Non-Assignment)
Assignment means that your doctor, provider or supplier agrees to accept the Medicare-approved amount as full payment for covered services. Providers that do not accept assignment are called nonparticipating providers and have not signed an agreement form to accept assignment for all Medicare-covered services. Most doctors and providers accept assignment, but you should always check to make sure. Mayo Clinic's campuses in Arizona and Florida do not accept Medicare assignment. Mayo Clinic's Minnesota campus accepts Medicare assignment only for Minnesota residents. Mayo Clinic will submit a claim to Medicare charging up to 15 percent over the Medicare approved amount. If you have a Medicare supplement policy, it may or may not cover the 15 percent "Medicare excess" charge.
Medicare sequestration
Effective April 1, 2013, Medicare claims with dates of service or dates of discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. The claims payment adjustment shall be applied to all claims after determining coinsurance, any applicable deductible and any applicable Medicare secondary payment adjustments. Though beneficiary payments for deductible and coinsurance are not subject to the 2 percent payment reduction, Medicare's payment to beneficiaries for nonassigned claims is subject to the 2 percent reduction. Questions about reimbursement should be directed to your Medicare claims administration contractor.
Medicare Summary Notice
This is a statement Medicare provides to Medicare enrollees by explaining how it processed and paid a claim.
Medigap is private insurance that supplements Medicare reimbursement for medical services. Medicare often reimburses care at lower rates than those charged by doctors. Medigap is meant to cover the gap between Medicare reimbursement and provider charges so that the Medicare recipient doesn't have to pay the difference.
Monthly statement of account
This is your Mayo Clinic bill.
Noncovered charges
This is specific to your insurance policy. Noncovered charges are services that are not a covered benefit under the provisions of your insurance plan. If your insurance does not cover a service, you are liable for the entire amount.
Noncovered services
A service not covered under the limits of the patient's health insurance contract. These amounts are the patient's responsibility to pay. Patients should direct questions about coverage to their health plans.
A health care provider that chooses not to accept the Medicare-approved amount as payment in full.
Out of network
A provider who does not have a contract with your health insurer or plan to provide services to you. You'll pay more to see an out-of-network or nonpreferred provider. Check your policy to see if you can go to all providers who have contracted with your health insurance or plan, or if your health insurance or plan has a "tiered" network and you must pay extra to see some providers.
Per diem reimbursement
In per diem reimbursement, an institution such as a hospital receives a set rate per day rather than reimbursement for charges for each service provided. Per diem reimbursement can vary by service (for example, medical or surgical, obstetrics, mental health, and intensive care) or can be a set rate.
Point-of-service (POS) plan
A point-of-service plan is one in which members don't have to choose the coverage for services until they need them. Most often, the plan enrolls each member in both an HMO (or HMO-like) system and an indemnity plan. These plans provide different benefits depending on whether the member stays within the plan. Dual choice refers to an HMO-like plan with an indemnity plan, and triple choice refers to the addition of a PPO to the dual choice.
Pre-admission certification
Pre-admission certification is also known as pre-admission review, pre-certification and pre-cert. Pre-admission certification is the practice of reviewing requests for hospital admission before you actually enter the hospital.
Pre-care deposit
When applicable, a dollar amount predetermined by Mayo Clinic to be paid before your visit.
Pre-certification is also known as pre-admission certification, pre-admission review and pre-cert. It refers to the process of obtaining authorization from the health plan for routine hospital admissions (inpatient or outpatient). Failure to obtain pre-certification often results in reduced reimbursement or denial of claims.
Preferred provider organization (PPO)
Preferred provider organizations contract with independent providers for services. The doctors in a PPO are paid on a fee-for-service schedule that is discounted below standard fees. The panel of providers is limited, and the PPO usually reviews health care utilization. PPO members sometimes can use a doctor outside the PPO network, but usually must pay a bigger portion of the fee.
Primary care physician (PCP)
Sometimes referred to as a "gatekeeper," the primary care physician usually is the first doctor you see for an illness. Your doctor treats you directly, refers you to a specialist (secondary care) or admits you to a hospital. Your primary care physician may be a family doctor, internist, pediatrician or, occasionally, an obstetrician or gynecologist.
Primary insurance company
This is the insurance company with first responsibility for the payment of the claim.
Prior authorization or prior written approval
Approval from a health plan that may be required before you get a service or fill a prescription in order for the service or prescription to be covered by your plan.
A provider is any supplier of health care services, such as doctors, pharmacists, physical therapists and others.
Proof of health insurance
A valid insurance card including the address where claims are to be filed.
Reasonable and customary (R&C)
Reasonable and customary refers to the predetermined allowable limits used by insurers to limit the maximum amount they'll pay for a service based on their contract with you. Please note that Mayo Clinic doesn't accept predetermined health insurance payment amounts for health plans with which it doesn't participate. R&C may also be known as allowable or UCR.
A written order from your primary care doctor for you to see a specialist or get certain medical services. In many health maintenance organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don't get a referral approved by your insurance first, the plan may not pay for the services.
Areas in the lobbies of Mayo Clinic facilities where all patients report to be assigned a Mayo Clinic medical record and billing account number. Here they can also receive information about payment, billing and filing insurance. Registration also refers to the process of registering, which can be performed in person or online. All address, phone and insurance changes should be updated whenever changes to them occur.
Secondary insurance company
This is the insurance company responsible for processing the claim after the primary insurance determines what it will pay.
Self-insured plan
In self-insured (self-funded) plans, the employer (rather than an insurance company or managed care plan) assumes the risk of medical costs. Self-funded plans are exempt from state laws and regulations such as insurance premium taxes and mandatory benefits. Self-funded plans often contract with insurance companies or third-party administrators to administer the benefits.
Self-pay patient
A patient who has no insurance or does not want the services rendered to be filed with his or her insurance company. This patient must make a pre-care deposit.
Skilled nursing facility (SNF)
A skilled nursing facility generally is an institution for convalescence or a nursing home. Skilled nursing facilities provide a high level of specialized care for long-term or acute illness.
A record of account status (blue and white form) sent to patients monthly to advise them of the previous period's transactions and activity on the account.
Supplemental insurance
This is any private health insurance plan held by a Medicare or commercial beneficiary, including Medigap policies or post-retirement benefits. Supplemental insurance usually pays the deductible or copay and sometimes will pay the entire bill when primary insurance benefits have reached their limit.
Supplemental or secondary claim form
If you have supplemental or secondary insurance, Mayo Clinic will submit claims to those carriers on your behalf.
Third-party administrator (TPA)
Third-party administrators handle the administrative duties and sometimes utilization review for self-funded plans.
Tier network
With a tiered product, the member's benefit level of cost sharing is determined by the network of the independently contracted provider that renders the service. Keep in mind that an employer can customize the benefit levels for each tier. Here is an example of a basic benefit structure of a tiered product: Tier 1 is the highest benefit level and most cost-effective level for the member, as it is tied to a narrow network of designated providers. Tier 2 benefits offer members the option to select a provider from the broader network of contracted providers, but at a higher out-of-pocket expense. Tier 3 benefits, if offered, typically address the use of out-of-network providers as the highest cost option for covered services, which are subject to usual, customary and reasonable charges.
The UB92/UB04 form is required by Medicare and Medicaid and used by some private insurance companies and managed care plans for billing inpatient and outpatient hospital or facility charges. The official standard form used by physicians and other providers when submitting bills or claims for reimbursement to Medicare, Medicaid and private insurers. UB04 claim forms contains patient demographics, diagnostic codes, CPT/HCPCS codes, diagnosis codes and units.
Uninsured patient
This is a patient without public or private health insurance. Mayo Clinic requires uninsured patients to make a deposit before receiving care.
Usual, customary and reasonable (UCR) charge
Usual, customary and reasonable charges reflect the prevailing fees for service in an area. Many insurers and managed care plans reimburse providers based on UCR charges. This term may be synonymous with a fee allowance schedule.
Utilization limits
Medicare sets limits on how many times some services can be provided in a year. If services exceed this utilization limit, your claim could be denied. These limits are not disclosed to Mayo Clinic.
Utilization review
This is a process of tracking, reviewing and rendering opinions about care. The practices of pre-certification, recertification, retrospective review and concurrent review all describe utilization review methods.
Visit number
This is a number assigned to identify each episode of care. This number is used to track services and payments.
Workers' compensation coverage
This is insurance that employers are required to have to cover medical care of employees who get sick or are injured on the job.