Medical Billing Glossary

The full list of every service, supply, and medication a hospital charges. These 'list prices' are often 3–10x higher than what anyone actually pays. Always demand a discount from chargemaster prices.

Current Procedural Terminology — the 5-digit standardized code for every medical procedure. CPT 99214 = a complex office visit; CPT 80053 = comprehensive metabolic panel. Check your bill for these codes.

International Classification of Diseases code — identifies the diagnosis or reason for the visit. Insurance uses this to decide coverage. A wrong ICD code can cause unnecessary denials.

Document from your insurer showing what was billed, what they paid, and what you owe. NOT a bill — you should wait for an actual bill from the provider before paying. The EOB is your audit trail.

When an out-of-network provider bills you for the difference between their charge and what your insurer paid. Largely banned for emergency care and in-network facility visits by the No Surprises Act (2022).

Billing fraud where a provider submits a code for a more expensive service than was actually performed. E.g., billing for a 60-minute complex visit when only 20 minutes occurred. Common and often hard to detect — request your chart notes.

Billing each component of a procedure separately to generate higher total charges, when guidelines require they be billed together. Also a form of overbilling — check for multiple CPT codes that should be bundled.

Critical distinction for Medicare patients. 'Observation status' means you're technically outpatient even if you sleep in the hospital — affecting what Part B vs. Part A covers and your SNF eligibility. Always ask: 'Am I admitted or under observation?'

A complete line-by-line breakdown of every charge, showing CPT codes, quantities, and individual prices. You are legally entitled to request one. Studies show 80% of itemized bills contain errors. Always request this before paying.

An additional fee charged when your doctor practices at a hospital-owned clinic or outpatient center. These fees can add $100–$500+ to an otherwise routine visit. Ask before scheduling if your doctor is 'hospital-based.'

The amount you pay out-of-pocket before insurance starts paying. E.g., $2,000 deductible means you pay the first $2,000 in covered services each year. Preventive care is typically free before the deductible.

A fixed dollar amount you pay for a covered service (e.g., $30 for a primary care visit). Copays usually don't count toward your deductible but do count toward your out-of-pocket maximum.

Your percentage share of costs after the deductible is met. E.g., 20% coinsurance on a $1,000 claim means you pay $200. This continues until you hit your out-of-pocket maximum.

The most you'll pay in a plan year for covered services. Once hit, insurance covers 100%. In 2024, the ACA cap is $9,450 individual / $18,900 family for marketplace plans. Does NOT include premiums.

The monthly amount you pay to maintain insurance coverage, regardless of whether you use it. Does NOT count toward your deductible or out-of-pocket maximum.

In-network providers have a contract with your insurer and accept negotiated rates. Out-of-network providers can charge whatever they want — you pay far more, and balance billing may apply (with some protections under the No Surprises Act).

Insurer approval required BEFORE certain procedures, medications, or treatments. Without it, your insurer can deny the claim entirely. Always confirm prior auth requirements in advance. Denials can be appealed.

Policy requiring you to try and 'fail' cheaper treatments before the insurer will approve the recommended one. Commonly used for specialty drugs and mental health. Often overridable with a strong prior auth letter.

Your insurer's approved list of covered medications, organized into tiers (Tier 1 = cheapest generic, Tier 5 = most expensive specialty). If your drug isn't on the formulary, it may not be covered at all — check before filling.

Federal law allowing you to continue employer-sponsored health coverage after losing your job — but you pay 100% of the premium plus a 2% admin fee. Expensive but allows continuity of care. Compare vs. ACA marketplace options.

A plan with a higher deductible ($1,600+ individual in 2024) in exchange for lower monthly premiums. The key benefit: you can open an HSA (Health Savings Account) and save money tax-free for medical expenses.

Pre-tax account to pay for eligible medical expenses through your employer. 2024 limit: $3,200. Use-it-or-lose-it rule — up to $640 may roll over. Funds available at start of plan year even before contributed.

Tax-advantaged account for HDHP holders only. Triple tax benefit: pre-tax contributions, tax-free growth, tax-free withdrawals for medical. 2024 limits: $4,150 individual / $8,300 family. Rolls over forever — never expires.

Private insurance sold alongside Original Medicare (Parts A & B) to cover gaps like copays, coinsurance, and deductibles. Premiums vary widely. Cannot be used with Medicare Advantage plans.

2010 law requiring marketplace plans to cover essential health benefits, prohibiting denial based on pre-existing conditions, and allowing children to stay on parents' plan to age 26. Establishes ACA subsidies based on income.

The amount the federal government pays for a procedure under the Medicare program. Considered a benchmark for fair pricing — most hospital charges are 3–10x the Medicare rate. Use it to evaluate if you're being overcharged.

An EOB from your insurer is NOT a bill. It tells you what was filed and what your estimated share is. Wait for an actual bill from the provider before paying — and compare it against your EOB for discrepancies.

Federal rule (2021) requiring all hospitals to publish a machine-readable file of their prices for every service, including negotiated rates with insurers. Many hospitals don't comply — you can report violations to CMS.

What a reasonable payer (like Medicare or a well-negotiated insurer) would pay for a service. Resources: Healthcare Bluebook, Fair Health Consumer, CMS hospital data. Use this as your target when negotiating.

The window of time a debt collector can sue you over medical debt, varying by state (typically 3–7 years). After this expires, the debt is 'time-barred.' Making a payment or acknowledging the debt in writing can restart the clock.

Emergency Medical Treatment and Labor Act — federal law requiring any hospital with an ER that accepts Medicare to screen and stabilize emergency patients regardless of their ability to pay, insurance status, or immigration status.

Federal law banning surprise medical bills from out-of-network emergency providers, out-of-network anesthesiologists/radiologists at in-network facilities, and air ambulances. Patients can only be charged in-network cost-sharing rates.

Every IRS 501(c)(3) nonprofit hospital must have a financial assistance policy (FAP) offering free or discounted care to patients who qualify. They cannot send bills to collections without first screening you for FAP eligibility.

The process of preparing you to leave the hospital safely. You have the right to a discharge plan, to know your expected discharge date, to appeal a premature discharge, and to have a family member or representative involved.