Glossary for Patients

Medicaid is a state-funded program that provides health insurance for people who qualify. Unlike Medicare, Medicaid does not have age restrictions for members.

Medicare Advantage is a type of health insurance that combines Medicare benefits with private health insurance.

Medicare is a federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant). If you have questions about Medicare, please see Your Health Insurance Coverage.

Major medical insurance is a comprehensive health insurance policy. In the past, this term referred to the most comprehensive plans. The Affordable Care Act made it mandatory for all insurance companies to provide many of these comprehensive benefits to all customers.

Long-term care insurance pays for the medical services and care you need because of a chronic illness or disability.

Health insurance that is purchased individually, not through a group plan.

The charges for nursing services are added to the basic room and board charges.

This refers to the fees that you may have to pay if you use services in a hospital's outpatient department or clinic.

The person responsible for paying the bill is always the patient, unless the patient is an incapacitated adult or an unemancipated minor (under age 18), in which case, the guarantor is the parent or legal guardian.

An arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices.

A health savings account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan. The funds contributed to an account are not subject to federal income tax at the time of deposit.

A Health Maintenance Organization (HMO) is a type of health insurance coverage that offers subscribers access to a network of doctors, hospitals, and other providers.

RCM stands for revenue cycle management. RCM and optometric billing services work with your medical clearinghouse to streamline and simplify administrative and clinical functions so you can capture, manage, and collect patient service revenue.

A claim that has never been processed by a clearinghouse or insurance payer, or claims that have not been adjudicated by the Centers for Medicare & Medicaid Services (CMS). The claim is not considered “received” and did not make it through the adjudication (decision making) process.

For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $7,050 for an individual or $14,100 for a family.

Paying for services using cash and not going through insurance. Hospital and practice cash rates for the uninsured can be cheaper than paying high deductibles.

Coinsurance is the percentage of costs you pay after you've met your deductible.

A copay is a set rate you pay for prescriptions, doctor visits, and other types of care.

An out-of-pocket maximum is a cap, or limit, on the amount of money you have to pay for covered health care services in a plan year. If you meet that limit, your health plan will pay 100% of all covered health care costs for the rest of the plan year.

Your deductible is the amount you need to pay each year for covered services before your plan starts paying benefits.

Warrantied payments are agreements between payers and providers in which the provider accepts responsibility for providing or paying for additional services if certain complications arise from the procedure or treatment. For example, a surgical infection might warrant a hospital readmission without additional payment from the hospital. A warrantied payment does not guarantee that complications will not occur; it merely guarantees that if they do occur, there will be no additional charge for services needed to address those complications.

Value-based payments are a type of payment model in which the amount of payment for a service depends in some way on the quality or cost of the service that is delivered. There is no single standard as to how much the payment must vary, nor what type of value measure must be used, so some payment models have been described as “value-based” even though there is very little difference in the amount of payments based on differences in quality or cost.

This section details the portion of the bill that is your responsibility to pay. This amount might include your deductible, coinsurance, any amount over the maximum reimbursable charge, or products/services not covered by your plan.

The amount you save by using a provider that belongs to your insurer network. The insurer negotiates lower rates with its in-network providers to help save you money.

In order to receive money, a provider must do something to “trigger” the receipt of payment. In fee-for-service payment, the trigger is the delivery of a service—a provider delivers a service for which a patient or payer has previously agreed they will pay, and then bills (or invoices) the payer by submitting a claim. In a capitation payment model, the payment is not based on specific services (indeed, the capitation payment may be paid even if no services are delivered at all), so the trigger is something that associates a patient with the provider—typically a formal assignment of the patient to the provider or statistical rules attributing patients to providers. In condition-based payments, payment is triggered by both the presence of an illness or condition and an indication that providers will provide treatment for those conditions or illnesses.

TRICARE is a health insurance program for active-duty and retired U.S. service members.

The term "third-party payer" refers to an organization other than the patient (first party) or healthcare provider (second party) involved in paying healthcare claims.

A surprise bill is a bill from a provider who isn’t in the patient’s insurance network. This can happen when a patient goes to a hospital, but one or more of the physicians who provide services during the stay isn’t employed by the hospital and doesn’t have a contract with the patient's health insurance plan.

Subsidies are tax breaks that help to lower the monthly premium payment you make to your health insurance company. You could qualify if your household income is within 100-400% of the Federal Poverty Level. This is also known as "Premium Tax Credits".

Patients without insurance coverage will receive a 30% discount off of gross charges. This discount is available to all self-pay patients, regardless of financial need.

Secondary insurance is a plan that pays after your primary insurance when you have more than one policy.

A statement sent to the hospital, usually with payment, by an insurance company after medical services have been processed.

A redetermination is a review of a Medicare claim initially denied by the Centers for Medicare and Medicaid Services. If you request a redetermination through an appeal, a new contractor will review your case.

PACE is a health insurance program for seniors who need nursing home care but can still live in their own communities. Your care is coordinated by a team of nurses, social workers and other providers.

A payment method in which Medicare pays health care providers a predetermined amount for each service. The amount of the payment is determined by the classification system used for that service. (For example, diagnosis-related groups for inpatient hospital services.)

Private Fee-for-Service plans are a type of Medicare Advantage plan that pays your providers directly for each service you receive, but has different cost-sharing and reimbursement than Original Medicare.

Primary insurance pays first when you have more than one plan.

A premium is a fee you pay to your insurance company each month for the coverage on the health plan you have chosen.

A PPO is a health insurance plan that allows you to see any doctor or provider in its network without a referral from your primary care physician.

Patient demographics include identifying information such as name, date of birth and address, along with insurance information. Patient demographics streamline the medical billing process, improve healthcare quality, enhance communication and bolster cultural competency.

Participating providers will accept Medicare assignment as payment in full for covered services.

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A pre-admission deposit is money you pay for medical care before you receive the service, such as a deposit for surgery.

The maximum amount an individual will pay out of pocket for health care expenses.

An outlier payment is an additional payment made to a provider to cover all or part of the additional costs of services delivered to an outlier patient. For example, Medicare makes a lump-sum payment to hospitals based on the DRG to which a patient is assigned, but if the cost of treating a particular patient exceeds this amount, Medicare will make an additional outlier payment.

Under Medicare, a Non-Participating Physician is paid 95% of the Medicare approved amount for participating physicians. The Limiting Charge is 115% of that amount and the difference between Medicare’s payment to the physician and the Limiting Charge can be Balance Billed to the patient.

The person or persons responsible for paying the bill.

Group health plans, which are offered by employers, are insurance policies that cover most of your medical and dental expenses, as well as life insurance.

Health plans purchased before March 23, 2010 are grandfathered plans. Grandfathered plans may not include all of the rights and protections established by the Affordable Care Act.

Extra Savings is a discount applied to your out-of-pocket costs such as deductibles, copayments and coinsurance. If you're a low-income patient, you may be eligible for Extra Savings. Also known as a "Cost Sharing Reduction (CSR)".

a statement from your health insurance plan describing what costs it will cover for medical care or products you've received.

An expedited appeal is an appeal that you can submit when Medicare makes a decision related to your coverage (for example, the length of coverage for a hospital stay).

An excess charge is the difference between what your healthcare provider charges, and what Medicare approves.

The Affordable Care Act requires health insurance companies to cover ten benefits, including outpatient care, emergency services, hospitalization, maternity and newborn care, mental health treatment and prescription drugs.

The enrollment period is the time period in which you will be eligible to sign up for a new health insurance plan.

Your billing system connects with the insurance company and transfers claim data to various insurance payers.

Your effective date is the date on which your health plan coverage begins.

A facility-independent payment is one that pays the same amount for a particular service or procedure regardless of the type of facility where it is delivered. It may also require a different risk adjustment system than facility-specific payments in order to distinguish patient characteristics that may require use of a more expensive setting for care.

A dispensing fee is a payment to a pharmacy from a pharmaceutical insurance plan or other payer for each medication that the pharmacy dispenses to a patient insured by the plan or paid for by the payer. The payment is intended to cover the costs of the pharmacy’s operations other than the cost of acquiring the drug itself, but it's also intended to help offset some expenses faced by pharmacies and help them maintain their viability.

Denial of coverage is when Original Medicare, a Medicare Advantage Plan or a Medicare drug plan (Part D) refuses to pay for medical services.

Treatment date.

Billing date. It is not the same date as the date of service.

A cost sharing reduction is a discount applied to your out-of-pocket costs such as deductibles, copayments and coinsurance. To qualify, your income must be within 100-250% of the Federal Poverty Level.

A cost plan is a healthcare plan sponsored by a HMO, through which you can get your Medicare benefits. A cost plan is not a Medicare Advantage Plan; it allows you to spend your own money on care outside of the network.

Coordination of benefits is when two or more health plans share the cost of medical claims. Your primary insurance and secondary insurance must coordinate benefits in order to pay claims.

A condition-based payment is triggered by a patient’s health condition, rather than by a specific procedure or service delivered to address the condition. For example, a condition-based payment could be paid for pregnancy-related care, rather than paying for delivery; or it could be paid for management of heart failure and emphysema over time, rather than paying for specific treatments.

Reason codes explain why a payment was adjusted, and they can also describe why a claim or service line was paid differently than it was billed.

A claim is a request for payment made to your health insurance company. It's usually handled by your doctor or provider, though some plans will require you to file a claim if you visit an out-of-network doctor.

The Children's Health Insurance Program (CHIP) provides healthcare for low-income families with children. CHIP recipients usually earn too much to qualify for Medicaid but not enough to purchase private coverage.

ChampVA provides a health insurance plan for military members and their families. The organization shares the cost of medically necessary procedures and supplies with eligible beneficiaries. Members can visit most authorized providers.

The catastrophic limit is the highest amount of money you have to pay out-of-pocket during a given period of time for certain services. Once you reach this amount, you start paying a higher level of coverage.

Catastrophic coverage is designed to help you avoid having to pay very high out-of-pocket costs if you have an injury or illness.

A case rate is a payment for a single service provided to a patient over a specific period of time, such as an inpatient stay or surgery. There is no single way to define a "case" but it is generally used to describe services associated with a particular condition or procedure. For example, a hospital room fee and an entire surgical procedure are case rates.

Capitation is a payment model in which a healthcare provider is paid based on the number of individuals cared for, rather than on the number of services provided to those individuals. Population-based payment is an alternative term for capitation.

Buy-and-bill is a way of dealing with the problem of paying for drugs administered to patients in an outpatient setting. The provider buys the drug from a manufacturer or wholesaler using his own resources and then, after administering the drug to a patient, bills the payer for the drug. Most payers use ASP+x%: they pay providers an amount established in a fee schedule and not based on the actual cost to acquire the drug.

A bundled payment discount is the amount by which a bundled payment is lower than the estimated payments that would have been made under the existing payment system. For example, if a hospital and surgeon are being paid a bundled payment for surgical services delivered in their hospital, the amount of the discounted fee might be set at 5% below the sum of their Inpatient Prospective Payment System (IPPS) payments and Physician Fee Schedule (PFS) payments.

Bundled payments are payments that cover multiple healthcare services. They are most often used in situations where one provider bills for a service that has been provided by several different providers (e.g., a hospital and its physicians). Bundling is often thought of as a cost-saving measure, since it is supposed to reduce unnecessary services and encourage providers to use more efficient methods of providing care.

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A beneficiary is a person who enrolls in a health insurance plan and benefits from it.

An attachment point is a dollar amount established in a stop-loss policy purchased by a provider or health insurance plan from a reinsurer. When the total amount of costs or claims payments exceeds the attachment point, the reinsurer pays all or part of the amount of costs or claims above the attachment point.

If your doctor agrees to accept assignments, they do so by agreeing to receive the Medicare-approved amount as the full amount for any services provided. Your healthcare provider will submit the claim to Medicare, which usually means that your out-of-pocket costs are less than if you had received a fee-for-service arrangement.

The Medicare-approved amount is the amount that a health insurance plan sets as the fee for a particular service or item. Original Medicare calls this "assignment."

The amount your insurance company has determined you owe your provider.

The appeals process is a way for patients and their doctors to object to their health plan when they disagree with the health plan's decision to deny payment for care.

An advance coverage decision is a Private Fee-For-Service (PFFS) plan’s way of letting you know whether or not it will pay for a certain service.

Also known as a waiver of liability, this notice is required when health care providers and suppliers believe that Medicare will not cover the services or items they provide to a person without coverage.

The Annual Notice of Change (ANOC) is a letter you receive from your Medicare Advantage or Part D plan in late September. It summarizes changes in the plan’s cost and coverage that will take effect January 1 of the next year.

The allowed amount is the maximum amount your health insurance provider will pay for a covered service. If your healthcare provider charges more than the allowed amount, you may have to pay the difference.

The part of your bill that your provider has agreed to write off.

A payment model that rewards providers based on performance on one or more measures of quality or spending uses "achievement" to refer to how a provider's level of performance compares with a benchmark. In contrast, "improvement" is a measure of how the provider's own level of performance has changed over time. Many pay-for-performance systems are based on both achievement and improvement.

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In a traditional fee-for-service payment model, the accountable provider is the individual or provider organization that bills for payment for a particular service. In shared savings payment models, multi-provider bundled payment models and global payment models where a patient receives services from multiple providers, a method is generally needed for determining which provider (or providers) will be accountable. This can be done either by having one or more providers agree to accept accountability before the relevant services are to be delivered or by using an attribution methodology to determine which provider(s) will be accountable.

The Affordable Care Act (ACA) is a federal healthcare reform law that reduces the number of uninsured Americans by making coverage more affordable. The ACA also requires insurance companies to cover preventive care and other essential health benefits.