Medical Billing and Coding Terminology: A Comprehensive List

Medical Billing & Coding
Medical RCM

Medical Billing and Coding Terminology: A Comprehensive List

Jul 24, 2023Read time: 8 minutes

Submitting claims to insurance companies is a crucial step in the medical revenue cycle. Clean claims facilitate faster reimbursements, while inaccurate claims can lead to costly delays and time-consuming denials.

The key to accurate claims submission is understanding the complex codes and acronyms associated with various healthcare procedures, diagnoses, and facilities. From “CPT” to “RA” to “UCR,” these terms form the foundation of effective communication between healthcare providers and payers.

In this article, we’ll define the key terms and acronyms you need to know to improve your claim accuracy, boost your reimbursement rates, and maintain your regulatory compliance. We’ll also outline some best practices for navigating terminology updates and staying compliant.

Understanding Medical Billing and Coding Terminology🔗

Medical billing and coding ensure that healthcare providers are promptly and adequately reimbursed for their services. Here’s a brief overview of both terms:

Medical billing is the process of submitting coded claims to payers, tracking their status, managing their payments, and following up on denied or delayed reimbursements.
Medical coding is the process of translating patient diagnoses, treatments, and procedures into standardized codes, such as CPT, ICD-10, and HCPCS. These codes are universally recognized by insurance companies, government programs, and healthcare organizations.

Medical coders often use abbreviations to streamline communication and enhance efficiency for everyone involved in the billing process. By using accurate terminology and standardized abbreviations, you can optimize your reimbursement rate and regulatory compliance.

Key Medical Billing and Coding Terms🔗

With the differences between medical billing and coding in mind, let’s explore some essential terminology and acronyms, starting with the terms that every biller and coder should understand:

Basic Terminology Every Biller and Coder Should Know🔗

CPT (Current Procedural Terminology) – A set of codes that physicians and healthcare providers use to describe medical, surgical, and diagnostic procedures when reporting their services to insurance companies for reimbursement
ICD (International Classification of Diseases) – A standardized system for coding diagnoses, symptoms, and conditions to facilitate accurate documentation and billing
HCPCS (Healthcare Common Procedure Coding System) – A set of codes used for products, services, and procedures that aren’t included in the CPT code set, such as durable medical equipment and ambulance services
Modifier – A two-digit code that is added to a CPT or HCPCS code to provide additional context about a procedure or service, such as a change in its location, extent, or complexity
E/M (Evaluation and Management) – Codes used to describe clinical encounters between healthcare providers and patients, including office visits, hospital visits, and consultations
Medical necessity – A requirement by insurance providers that a procedure or service must be deemed essential for a patient’s treatment or care to ensure its reimbursement eligibility

Premium – The monthly, quarterly, or annual payment that a policyholder makes to maintain their insurance coverage.
Deductible – The amount a patient must pay out of pocket for their healthcare services before their insurance company takes over.
Copay – A fixed amount that a patient must pay out-of-pocket for a covered healthcare service, typically collected during the visit.
Coinsurance – The percentage of a covered healthcare service that a patient is responsible for paying after meeting their deductible.
Allowed amount – The maximum amount an insurance company will pay for a covered healthcare service.
Out-of-pocket maximum – The maximum amount a patient will pay for covered services in a plan year—including deductibles, copays, and coinsurance—before their insurance plan begins covering 100% of their eligible expenses.

Claims Processing and Denials Terminology🔗

Claim submission – The process of sending medical claims to insurance companies for reimbursement.
Adjudication – The process an insurance company uses to determine if a claim is eligible for reimbursement.
Clean claim – A claim that is free from any errors or missing information, enabling it to be processed and reimbursed without delays
Rejection vs. denial – A rejection takes place when an insurance company refuses to process a claim due to missing information, formatting errors, or incorrect coding, while a denial happens when the claim is processed, but the insurance company determines it’s ineligible for payment due to coverage issues.
Appeal – The process of contesting a claim denial by submitting additional documents or providing clarification to the insurer.
Remittance advice (RA) – A document that insurance companies send out that explains how they processed a claim, along with their reasons for any payments, adjustments, or denials.

Compliance and Regulatory Terminology🔗

HIPAA (Health Insurance Portability and Accountability Act) – A United States law that outlines federal standards for protecting patients’ health information and ensuring their data privacy and security.
CMS (Centers for Medicare & Medicaid Services) – A U.S. federal agency that manages, regulates, and oversees the nation’s major healthcare programs, including Medicare and Medicaid.
NPI (National Provider Identifier) – A unique identifier assigned to healthcare providers to simplify administration.
Fraud vs. abuse – Fraud refers to the deliberate misrepresentation of information for financial gain, while abuse describes actions that deviate from accepted medical or business standards, potentially leading to unnecessary or excessive charges.
Auditing – The process of reviewing claims, coding practices, and billing procedures for regulatory compliance, errors, and potential signs of fraud or abuse.

Medical Billing Abbreviations List🔗

With these definitions in mind, let’s take a look at some of the most commonly used abbreviations in medical billing and coding.

Commonly Used Abbreviations in Medical Billing🔗

EOB (Explanation of Benefits) – An insurance provider’s statement outlining the costs they’ll cover, along with the patient's remaining financial responsibility.
POS (Place of Service) – The location where a patient receives healthcare services, such as a doctor’s office or hospital.
TOS (Type of Service) – A code that indicates the type of healthcare service a patient receives, such as surgery or lab work.
DOS (Date of Service) – The date that a patient received a particular healthcare service.

Abbreviations for Insurance and Payment Processing🔗

HMO (Health Maintenance Organization) – An insurance plan that requires patients to use a designated network of providers for covered services and typically requires referrals from primary care physicians for specialist visits.
PPO (Preferred Provider Organization) – An insurance plan that features a network of covered healthcare providers but also allows patients to receive some out-of-network care at a higher cost.
EFT (Electronic Funds Transfer) – A digital system that insurance companies use to transfer payments to healthcare providers directly, eliminating the need for paper checks.
UCR (Usual, Customary, and Reasonable) – A standard that’s used to determine how much an insurer will pay for a service based on the standard rates commonly charged in a specific geographic area.
AOB (Assignment of Benefits) – A legal agreement that allows a patient to authorize their insurance company to send payments directly to their healthcare provider.

Medical Coding Abbreviations🔗

CPT (Current Procedural Terminology) – The coding system used to describe medical, surgical, and diagnostic procedures.
ICD-10 (International Classification of Diseases, 10th Edition) – A coding system used to identify diseases, conditions, and other health-related issues for accurate documentation and billing.
HCPCS (Healthcare Common Procedure Coding System) – The coding system that’s used to describe medical services, procedures, and products that aren’t covered by the CPT code set.
RVU (Relative Value Unit) – A metric that assigns value to specific medical services or procedures, which healthcare facilities and payers use to determine reimbursement rates.

Claim Status and Denial Abbreviations🔗

COB (Coordination of Benefits) – A process that determines which insurance company is the primary payer when a patient has multiple insurance plans.
DEN (Denial) – A claim that’s rejected by an insurer due to insufficient coverage or incorrect coding.
PEND (Pending) – A claim that’s awaiting further review or information from the healthcare provider or insurance company.
RARC (Remittance Advice Remark Code) – Codes that provide additional information about a claim adjustment or denial.
CARC (Claim Adjustment Reason Code) – Codes that explain why an adjustment was made to a claim.

3 Best Practices for Understanding and Using Medical Billing Terminology🔗

Learning the complex terminology and abbreviations listed above is just the first step to mastering the medical billing and coding process. For optimal results, you should also follow these three best practices:

Stay up-to-date on industry updates – Medical codes are constantly evolving, so you should regularly review them with trusted sources. For example, you can check the American Medical Association (AMA) for CPT changes, the Centers for Disease Control and Prevention (CDC) for ICD-10 revisions, and Medicare and Medicaid for regulatory guidelines and policy updates.
Use technology to enhance accuracy – Modern billing software can automate your code selection and claims submission process, reducing the risk of human error. Meanwhile, AI-driven claim scrubbing tools can flag potential errors before you submit your claims.
Take advantage of helpful resources – If you’re unsure about a certain term, you can always visit the Centers for Medicare & Medicaid Services website to check the latest terminology and coding guidelines. Industry associations, such as AAPC and AHIMA, also provide training programs to help you deepen your expertise.

If you need additional support, you can partner with a medical billing expert, like Medusind. We offer comprehensive medical billing solutions to healthcare institutions of all sizes. Our experienced team can streamline your administrative burdens, managing everything from insurance eligibility to claims submission.

Contact Medusind today to learn how our medical billing solutions can improve your clean claims rate, cash flow, and bottom line!