Common Billing & Insurance Terms

Below are frequently used Insurance Terms that may help you understand your insurance benefits as well as your account.

Ancillary Services
Assignment of Benefits
Authorization
Bundling
Claim
Co-Insurance
Co-Payment
Code
Contracted Provider
Coordination of Benefits
Deductible
Exclusions
Explanation of Benefits (EOB)
Guarantor
Medical Necessity
Out of Pocket Expense
Participating Provider
Policyholder
PPO
Subscriber
Usual and Customary

Ancillary Services: The name given to professional services such as laboratory tests and radiology exams.
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Assignment of Benefits: The patient or guardian signs the Assignment of Benefits form so that the physician or medical provider will receive the insurance payment directly.
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Authorization: If a physician wants to perform a surgery, order a medical supply, or refer the patient to a specialist, an authorization and approval by some health plans is required. Sometimes referred to as a ퟙreferral authorization.ퟘ
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Bundling: A method by which the insurance company decides to combine payment for two or more medical services.
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Claim: A request for payment by a medical provider for a given medical service or item.
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Co-Insurance: A percentage the patient is responsible for on a given insurance claim.
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Co-Payment: A per occurrence payment.
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Code: The Medical IndustryíŸÙs standardized code that identifies the service or procedure performed or the reason it was performed. The two common coding systems are CPT codes (Procedure Codes) and ICD codes (diagnosis codes). These codes are required and are used to communicate to the insurance company what was done and why it was done.
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Contracted Provider: A medical provider that has a written agreement with a health plan to accept their patients at a previously agreed upon rate for payment.
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Coordination of Benefits: When you are covered under more than one insurance plan the two plans must ퟙcoordinateퟘ how much they will pay. Their contract states that the two payments together cannot be more than 100% of the bill.
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Deductible: A set dollar amount which must be satisfied within a specific time frame before the health plans begins making payments on claims.
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Exclusions: Those items or medical services that are not covered by the health plan.
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Explanation of Benefits (EOB): A summary of the payment made by your health plan to the medical provider.
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Guarantor: The person financially responsible for paying the bill. Not the insurance company but the person responsible for the patient who received treatment.
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Medical Necessity: A medical procedure or service must be performed only for the treatment of an accident, injury or illness and is must not be considered experimental, investigational or cosmetic. Medical Necessity guidelines are developed by insurance plans and along with physician specialty organization but they can vary by plan.
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Out of Pocket Expense: The amount the patient must pay themselves and is not paid for by the insurance plan.
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Participating Provider: A physician or other medical provider who has agreed to accept a set fee for services provided to members of a specific health plan. They are deemed to be ퟙin-networkퟘ.
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Policyholder: The name of the person who is the holder of the insurance contract, whether it is through their employer or purchased themselves as an individual plan. Also called the subscriber or guarantor.
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PPO: Preferred Provider Organization. A plan which contracts with medical providers for a discounted rate on medical services. A PPO allows a person to see any physician they would like, but there are better benefits if they visit a physician within their insurance (PPO) network. PPO plans pay their physicians on a fee-for-service basis, which means that the medical provider must submit a claim to the insurance company for payment each time a medical service is performed.
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Subscriber: The person who purchases the insurance or the person whose name the insurance is held in íŸÏ Also known as the policyholder.
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Usual and Customary: A reduction in the payment of benefits on a claim which is justified by the insurance company as ퟙthe going rateퟘ to be paid in that geographical area. This amount is often different for each insurance company.
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