Glossary of Terms
Commonly used terminology, phrases, and definitions related to revenue cycle management, medical credentialing, and payer contracting for healthcare providers.
A | B | C | D | E | F | G | H | I | L | M | N | O | P | Q | R | S | T | U | V | W
A
Accounts Receivable (AR) — The total amount of money owed to a medical practice for services rendered but not yet collected. AR is one of the most closely watched numbers in revenue cycle management because it represents earned revenue that hasn’t yet been converted to cash. High AR balances often signal problems with claim submission speed, denial rates, or follow-up workflows.
Accounts Receivable Aging — A report that breaks outstanding claims into time buckets based on how long they have been unpaid, typically organized as 0–30 days, 31–60 days, 61–90 days, and 90-plus days. The older the balance, the harder it is to collect. Reviewing the AR aging report monthly is a core practice in revenue cycle management.
Adjudication — The process by which a health insurance payer reviews a submitted claim, applies its coverage rules and fee schedule, and determines how much it will pay. Adjudication results in one of three outcomes: payment, denial, or a request for additional information.
Administrative Simplification — Provisions under HIPAA designed to standardize electronic healthcare transactions and reduce administrative burden for providers and payers. This includes standardized claim formats, code sets, and identifiers used in billing and credentialing.
Allowed Amount — The maximum dollar amount a payer will reimburse for a specific service under a provider’s contract. Also called the contracted rate or allowable. If a provider bills more than the allowed amount, the difference is written off as a contractual adjustment and cannot be billed to the patient.
Appeals Process — The formal process a provider uses to challenge a payer’s denial of a claim. Appeals can be submitted when a claim is denied for reasons such as medical necessity, incorrect coding, or missing documentation. A strong appeals process is essential to recovering revenue from preventable denials.
Assignment of Benefits — A patient’s authorization for their insurance company to pay their provider directly rather than reimbursing the patient first. Most practices require assignment of benefits as a standard part of the registration process.
Authorization (Prior Authorization) — Approval obtained from a payer before a service is rendered, confirming that the payer considers the service medically necessary and will cover it. Failure to obtain required prior authorization is one of the most common and costly reasons for claim denial.
B
Balance Billing — The practice of billing a patient for the difference between what a provider charges and what the payer has paid, beyond the patient’s copay, coinsurance, or deductible. Balance billing is generally prohibited for in-network providers under most payer contracts and is restricted by federal and state surprise billing laws.
Benchmark — A standard or reference point used to evaluate performance. In revenue cycle management, benchmarks are typically industry-wide averages or targets for metrics like days in AR, clean claim rate, and denial rate. Benchmarks vary by specialty and payer mix, so context matters when interpreting them.
Benefit Verification — The process of confirming a patient’s insurance coverage, eligibility, and plan-specific benefits before a service is rendered. Thorough benefit verification before each encounter is one of the most effective ways to reduce claim denials at the front end of the revenue cycle.
Bundling — A payer’s practice of combining multiple procedure codes into a single payment when those procedures are considered to be included in a more comprehensive service. Providers must be aware of which codes their payers bundle together to avoid submitting claims that will be partially denied.
C
CAQH ProView — A centralized database maintained by the Council for Affordable Quality Healthcare (CAQH) that allows providers to store and share their credentialing information with payers. Most commercial payers use CAQH ProView as part of their credentialing process, and keeping the profile current and attested regularly is essential for smooth provider enrollment.
Capitation — A payment model in which a provider receives a fixed per-member-per-month payment from a payer in exchange for providing all covered services to a defined patient population, regardless of the volume or type of services rendered. Capitation shifts financial risk from the payer to the provider.
Charge Entry — The process of recording the services rendered during a patient encounter into the billing system so that a claim can be generated and submitted. Charge entry accuracy directly affects coding accuracy, claim accuracy, and ultimately, reimbursement.
Claim — A formal request submitted by a provider to a payer requesting reimbursement for services rendered to a patient. Claims can be submitted electronically (CMS-1500 for professional claims, UB-04 for facility claims) or on paper, though electronic submission is now standard for most practices.
Claim Scrubbing — The automated review of a claim before submission to identify and correct errors that would cause a denial. Claim scrubbing software checks for things like missing required fields, code combinations that payers won’t pay together, and diagnosis codes that don’t support the services billed.
Clean Claim — A claim that is submitted correctly on the first attempt and is accepted for processing without any corrections or additional information required. Clean claim rate is one of the key indicators of billing process quality. Industry benchmark for clean claim rate is 95 percent or higher.
CMS (Centers for Medicare and Medicaid Services) — The federal agency within the U.S. Department of Health and Human Services responsible for administering Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the Health Insurance Marketplace. CMS sets the rules and payment rates that govern a significant portion of healthcare reimbursement in the United States.
CMS-1500 — The standard claim form used by physicians and other non-institutional providers to bill Medicare, Medicaid, and most commercial payers for professional services. Completing this form accurately is essential for clean claim submission.
Coding — The process of translating the clinical documentation of a patient encounter into standardized codes, including ICD-10-CM codes for diagnoses, CPT codes for procedures and services, and HCPCS codes for supplies, equipment, and certain services. Coding accuracy directly affects claim acceptance rates and reimbursement.
Contractual Adjustment — The difference between what a provider bills for a service and the payer’s contracted allowed amount. Contractual adjustments are written off and cannot be collected from the patient. They are not the same as bad debt or a write-off for a denial.
Conversion Factor — A dollar amount set annually by CMS that is multiplied by a service’s Relative Value Units (RVUs) to calculate the Medicare payment rate for that service. Changes to the conversion factor affect every physician service billed to Medicare.
Coordination of Benefits (COB) — The process of determining which payer is responsible for paying first when a patient has coverage under more than one insurance plan. The primary payer pays first, and the secondary payer may cover some or all of the remaining patient responsibility.
Copay — A fixed dollar amount that a patient pays at the time of service as their share of the cost for a covered service. Copays are defined by the patient’s insurance plan and are typically collected by the provider at check-in.
Coinsurance — The percentage of a covered service cost that a patient pays after meeting their deductible, with the payer covering the remaining percentage. For example, an 80/20 coinsurance split means the payer covers 80 percent and the patient owes 20 percent.
CPT Code (Current Procedural Terminology) — A standardized five-digit code maintained by the American Medical Association (AMA) that describes medical, surgical, and diagnostic services. CPT codes are the primary coding system used on professional claims and are updated annually.
Credentialing — The formal process of verifying a healthcare provider’s qualifications, training, licensure, work history, and professional standing before granting them the ability to see patients within a health system or insurance network. Credentialing is required both for hospital privileges and for payer enrollment.
Credentialing Cycle — The recurring process of re-verifying a provider’s credentials, typically every two to three years, as required by payers and accreditation bodies. Also called re-credentialing.
D
Days in AR (Days in Accounts Receivable) — A metric that measures the average number of days it takes a practice to collect payment after a claim is submitted. Calculated by dividing total outstanding AR by average daily charges. The industry benchmark for most specialties is under 35 days.
Deductible — The amount a patient must pay out of pocket for covered services before their insurance plan begins paying. High-deductible health plans have increased the portion of revenue practices must collect directly from patients.
Denial — A payer’s refusal to reimburse a submitted claim. Denials can be hard (meaning the claim is permanently rejected and cannot be resubmitted) or soft (meaning the denial can be corrected and resubmitted). The industry benchmark for denial rate is under 5 percent.
Denial Management — The process of identifying, analyzing, appealing, and resolving denied claims. Effective denial management includes both working individual denied claims and identifying root causes to prevent the same denials from recurring.
Diagnosis Code (ICD-10-CM) — A standardized code from the International Classification of Diseases, 10th Revision, Clinical Modification, that describes the patient’s diagnosis or reason for the encounter. Diagnosis codes must support the medical necessity of the services billed.
DME (Durable Medical Equipment) — Medical equipment prescribed for home use that is durable, serves a medical purpose, and can withstand repeated use. Examples include wheelchairs, walkers, CPAP machines, and hospital beds. DME billing has its own set of codes (HCPCS Level II) and documentation requirements.
Downcoding — The practice of assigning a lower-level procedure code than what is actually supported by the documentation and the service rendered. Downcoding results in lower reimbursement than the practice is entitled to receive and is a common and costly problem in small practices.
E
EDI (Electronic Data Interchange) — The electronic exchange of standardized healthcare data between providers and payers, including claim submission, eligibility verification, claim status inquiry, and remittance advice. EDI has largely replaced paper-based transactions in healthcare billing.
Eligibility Verification — Confirming that a patient’s insurance coverage is active and that the planned services are covered benefits under their plan before the encounter takes place. Eligibility errors are among the most common causes of claim denials and should be verified for every patient at every visit.
E/M Codes (Evaluation and Management) — A category of CPT codes used to report patient encounters with physicians and other qualified healthcare professionals, including office visits, hospital visits, and consultations. E/M codes are selected based on medical decision making (MDM) or total time and are among the most commonly billed and audited codes in outpatient medicine.
Enrollment (Payer Enrollment) — The process of applying to participate in a payer’s network as an in-network provider. Also called provider enrollment or payer credentialing. Enrollment is distinct from facility credentialing and typically involves submitting an application, a CAQH profile, and supporting documentation to each payer individually.
EOB (Explanation of Benefits) — A document sent by a payer to both the provider and the patient after a claim is processed, explaining what was billed, what the payer allowed, what adjustments were applied, and what the patient owes. The EOB is the primary tool for identifying underpayments and billing errors.
ERA (Electronic Remittance Advice) — The electronic version of an EOB, sent from the payer to the provider after claim adjudication. ERAs are used by billing software to automatically post payments to patient accounts, reducing manual data entry and improving payment accuracy.
F
Fee Schedule — A complete list of the maximum amounts a payer will reimburse for each covered service. Medicare publishes an annual fee schedule updated through the Physician Fee Schedule Final Rule. Commercial payers maintain their own fee schedules, which are negotiated through payer contracts.
First Pass Resolution Rate (FPRR) — The percentage of claims that are paid in full on the first submission without requiring any follow-up, resubmission, or appeal. FPRR is a direct measure of billing efficiency and process quality.
Formulary — A list of prescription drugs covered by an insurance plan. Providers prescribing medications that are not on a payer’s formulary may face prior authorization requirements or coverage denials that affect patient care and practice efficiency.
Fraud and Abuse — Fraud in healthcare billing refers to intentional misrepresentation to obtain payment, such as billing for services not rendered. Abuse refers to practices that are inconsistent with sound medical, business, or fiscal practices and result in unnecessary costs, even without fraudulent intent. Both are subject to significant federal penalties under the False Claims Act and other statutes.
G
Global Surgery Period — A defined time period following a surgical procedure during which all routine follow-up care is considered included in the surgical payment and cannot be billed separately. Global periods are designated as 0 days, 10 days, or 90 days depending on the procedure.
Group NPI — A National Provider Identifier assigned to a group practice or organization, as distinguished from an individual provider’s NPI. Claims can be submitted under either or both NPIs depending on the payer’s requirements and the billing arrangement.
H
HCPCS Codes (Healthcare Common Procedure Coding System) — A two-level coding system used to report medical services, procedures, and supplies for Medicare and Medicaid billing. Level I consists of CPT codes. Level II consists of alphanumeric codes for services not covered by CPT, including ambulance services, DME, and certain drugs.
HIPAA (Health Insurance Portability and Accountability Act) — Federal legislation that establishes national standards for the protection of patient health information, the electronic exchange of healthcare data, and patient rights. HIPAA compliance is a non-negotiable requirement for all healthcare providers and their business associates.
Hold Harmless Clause — A provision in a payer contract that protects patients from being billed for covered services if the payer fails to pay or pays less than expected. Hold harmless clauses vary by contract and state law, but most prohibit in-network providers from billing patients beyond their applicable cost-sharing amounts.
I
ICD-10-CM — The International Classification of Diseases, 10th Revision, Clinical Modification. The current standardized diagnosis coding system used in the United States for reporting conditions, injuries, and symptoms on medical claims. ICD-10-CM codes must be documented to the highest level of specificity to support medical necessity.
In-Network Provider — A healthcare provider who has a signed contract with a specific payer and has agreed to accept the payer’s negotiated rates as payment in full for covered services. In-network providers are listed in the payer’s provider directory and are accessible to members at lower cost-sharing rates.
Incident-To Billing — A billing arrangement that allows services provided by non-physician practitioners (NPPs) such as nurse practitioners or physician assistants to be billed under a supervising physician’s NPI, typically resulting in reimbursement at 100 percent of the Medicare physician fee schedule rather than the reduced NPP rate. Strict supervision and documentation requirements apply.
L
LCD (Local Coverage Determination) — A decision made by a Medicare Administrative Contractor (MAC) that defines the circumstances under which a specific service will be covered for Medicare patients in a particular geographic area. LCDs specify covered diagnoses, documentation requirements, and billing instructions for specific procedures.
Lien — A legal claim against a patient’s potential settlement proceeds in personal injury or workers’ compensation cases, allowing a healthcare provider to be paid from those proceeds for services rendered. Medical lien billing involves specific documentation and legal requirements.
M
MAC (Medicare Administrative Contractor) — A private company contracted by CMS to process and pay Medicare fee-for-service claims for a defined geographic jurisdiction. MACs also publish Local Coverage Determinations and respond to provider billing inquiries for Medicare.
Managed Care — A system of delivering and financing healthcare designed to control costs and coordinate care. Managed care organizations (MCOs) include HMOs, PPOs, and EPOs, and they typically require providers to participate in their networks and comply with utilization management requirements such as prior authorizations and referrals.
Medicaid — A joint federal and state insurance program that provides health coverage to eligible low-income individuals and families. Each state administers its own Medicaid program within federal guidelines, resulting in significant variation in billing rules, covered services, and reimbursement rates from state to state.
MDM (Medical Decision Making) — One of the two approved methods for selecting the level of an evaluation and management (E/M) service code. MDM is based on three elements: the number and complexity of problems addressed, the amount and type of data reviewed, and the level of risk involved in the management options selected.
Medicare — The federal health insurance program administered by CMS for people aged 65 and older, certain younger people with disabilities, and people with end-stage renal disease. Medicare is divided into four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage).
Medicare Advantage (Part C) — An alternative to traditional Medicare in which beneficiaries receive their Medicare benefits through a private insurance plan approved by CMS. Medicare Advantage plans often have their own networks, prior authorization requirements, and billing rules that differ from traditional Medicare.
MIPS (Merit-Based Incentive Payment System) — A quality payment program under Medicare that adjusts physician payments based on performance across four categories: quality, cost, improvement activities, and promoting interoperability. MIPS scores from a given performance year affect Medicare payments two years later.
Modifier — A two-digit code appended to a CPT code that provides additional information about a service without changing its definition. Modifiers indicate things like bilateral procedures, multiple procedures performed on the same day, or services provided by an assistant surgeon. Incorrect modifier use is a common cause of claim denials and audits.
N
NCD (National Coverage Determination) — A CMS policy that defines the circumstances under which Medicare will cover a specific service nationally, applicable to all MACs and Medicare beneficiaries. NCDs take precedence over LCDs when both exist for the same service.
Network Adequacy — A regulatory standard that requires payers to maintain a sufficient number of in-network providers to give members reasonable access to covered services. CMS sets specific network adequacy standards for Medicare Advantage plans, and state regulators set similar requirements for Medicaid and commercial plans. Practices can use network adequacy data to support panel exception requests when a payer’s panel is closed.
Net Collection Rate — The percentage of collectible revenue that a practice actually collects, after accounting for contractual adjustments. Calculated as payments divided by charges minus contractual adjustments. Industry benchmark is 95 to 98 percent. A net collection rate below 95 percent indicates revenue is being lost to write-offs, untimely filing, or uncollected patient balances.
NPI (National Provider Identifier) — A unique 10-digit identification number assigned to healthcare providers by CMS. Every provider and group practice must have an NPI, and it is required on all HIPAA-standard electronic transactions including claim submissions.
NPP (Non-Physician Practitioner) — A licensed healthcare professional who provides clinical services but is not a physician. NPPs include nurse practitioners (NPs), physician assistants (PAs), certified registered nurse anesthetists (CRNAs), and clinical social workers. NPP services may be billed independently or incident-to a supervising physician depending on the setting and payer.
O
Out-of-Network Provider — A provider who does not have a contract with a specific payer and has not agreed to the payer’s negotiated rates. Patients seen by out-of-network providers typically face higher cost-sharing, and providers may face restrictions on how much they can collect under federal and state surprise billing laws.
Out-of-Pocket Maximum — The most a patient is required to pay for covered services in a plan year, after which the payer covers 100 percent of covered costs. Understanding a patient’s out-of-pocket maximum is relevant for patient collections strategy.
Overpayment — Payment received from a payer that exceeds the correct contractual amount. Providers are legally required to identify and return overpayments within 60 days of identifying them under the Medicare 60-day rule. Failure to return overpayments can result in False Claims Act liability.
P
Panel — The network of credentialed and contracted providers a health plan uses to provide services to its members. When a provider is “on panel,” they are credentialed with and contracted by a payer to provide in-network services.
Panel Exception Request — A formal letter submitted to a payer requesting that an exception be made to a closed panel policy so that a specific provider can be credentialed and contracted with that payer. A strong panel exception request documents a specific network adequacy gap that the provider would fill.
Payer — Any entity that pays for healthcare services on behalf of patients. Payers include Medicare, Medicaid, commercial health insurance companies, self-insured employer plans, and managed care organizations.
Payer Contracting — The process of negotiating the terms and rates under which a provider will participate in a payer’s network. Payer contracts define reimbursement rates, billing rules, timely filing requirements, and other conditions of participation. Contract terms can significantly affect practice revenue and should be actively managed and renegotiated periodically.
Payer Mix — The breakdown of a practice’s revenue by payer type, expressed as a percentage. Knowing your payer mix is essential for financial planning, benchmarking, and payer contract strategy. A shift in payer mix toward higher-paying commercial plans can significantly improve revenue without changing patient volume.
PFS (Physician Fee Schedule) — The Medicare fee schedule that sets payment rates for physician services. CMS updates the Physician Fee Schedule annually through the PFS Final Rule, which is published each November and takes effect January 1.
Place of Service (POS) Code — A two-digit code on a claim that identifies the setting where a service was provided, such as an office, hospital outpatient department, or the patient’s home (for telehealth). POS codes affect payment rates and are a common source of billing errors, particularly for telehealth services.
Point of Service Collection — The practice of collecting copays, deductibles, and known patient balances at the time of the encounter rather than billing the patient after the fact. Point-of-service collection is the most effective strategy for improving patient AR because collection probability drops significantly once a patient leaves the office.
Primary Source Verification (PSV) — The process of verifying a provider’s credentials directly with the original issuing authority, such as a state medical board or medical school, rather than relying on copies provided by the provider. PSV is required by accreditation bodies including The Joint Commission, NCQA, and DNV.
Provider Enrollment — The administrative process of applying to participate as an in-network provider with a specific payer. Also called payer enrollment or payer credentialing. Provider enrollment is required separately for each payer and involves submitting a completed application, CAQH profile, and supporting documentation. Enrollment timelines typically range from 90 to 120 days.
Q
Quality Payment Program (QPP) — A CMS initiative that ties Medicare physician payments to quality and value rather than volume. The QPP includes two tracks: the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs).
R
RAC (Recovery Audit Contractor) — A private company contracted by CMS to identify and recover improper Medicare payments through post-payment audits. RAC audits focus on high-risk billing patterns including upcoded E/M claims, incorrect modifier usage, and telehealth billing errors.
Rate Negotiation — The process of negotiating higher reimbursement rates with payers, either during initial contract setup or at the time of contract renewal. Rate negotiations are most effective when a practice can demonstrate high patient volume, strong quality scores, and value to the payer’s network. Also called contract rate negotiation or fee schedule negotiation.
RBRVS (Resource-Based Relative Value Scale) — The system used by Medicare to determine payment rates for physician services. Under RBRVS, every service is assigned RVUs based on physician work, practice expense, and malpractice expense. Those RVUs are multiplied by a conversion factor to produce the payment amount.
Recredentialing — The process of renewing a provider’s credentials with a payer or health system on a periodic basis, typically every two to three years. Recredentialing requires updated documentation and verification of licenses, certifications, and professional standing.
Remittance Advice — Documentation sent by a payer to a provider explaining the payment for one or more claims. The remittance advice shows what was billed, what was allowed, what was adjusted, and what was paid. Electronic remittance advice (ERA) is used to automate payment posting in practice management systems.
Revenue Cycle Management (RCM) — The end-to-end process of managing a healthcare provider’s financial interactions with patients and payers, from the initial scheduling and eligibility verification through claim submission, payment posting, denial management, and final balance collection. Effective RCM is essential for financial stability in any medical practice.
RVU (Relative Value Unit) — A unit of measure used by Medicare and many commercial payers to assign relative value to physician services. RVUs are broken into three components: physician work (wRVU), practice expense (peRVU), and malpractice expense (mRVU). The total RVU for a service, multiplied by the conversion factor, produces the payment rate.
S
Split and Shared Visit — A patient encounter in which both a physician and a non-physician practitioner (NPP) provide a portion of the care on the same day in the same setting. The visit may be billed under the physician’s NPI if the physician performed the substantive portion of the service, defined by either MDM or time.
Superbill — A document used in medical practices to capture the services rendered during a patient encounter for billing purposes. A superbill typically includes the provider’s NPI, the patient’s information, diagnosis codes, and procedure codes. Also called an encounter form or charge ticket.
Surprise Billing — The practice of billing a patient at out-of-network rates for services they received without knowing the provider was out-of-network, often in emergency situations or at in-network facilities that used out-of-network staff. The No Surprises Act, effective in 2022, significantly limits surprise billing in most circumstances.
T
Timely Filing — The deadline by which a claim must be submitted to a payer after the date of service. Each payer sets its own timely filing limit, ranging from 90 days to 365 days or more. Claims submitted after the timely filing deadline will be denied and generally cannot be appealed. Missing timely filing deadlines is one of the most preventable sources of revenue loss.
Transparency in Coverage — A federal rule that requires most health insurers to publish detailed machine-readable files of their in-network negotiated rates and out-of-network allowed amounts. Providers can use this data to benchmark their own contracted rates against what payers are paying other providers in the market.
U
UB-04 — The standard claim form used by hospitals and other institutional providers to bill payers for facility-based services. Also called the CMS-1450 form.
Unbundling — The practice of billing separately for services that should be billed together as a single procedure code. Unbundling can result in higher reimbursement than is appropriate and is considered a compliance risk. Payers and auditors actively monitor for unbundling patterns.
Upcoding — The practice of assigning a higher-level procedure or diagnosis code than is supported by the documentation in order to receive a higher payment. Upcoding is considered fraud and can result in repayment demands, penalties, and exclusion from Medicare and Medicaid.
V
Value-Based Care — A healthcare delivery model in which providers are paid based on patient health outcomes and quality of care rather than the volume of services provided. Value-based arrangements include shared savings programs, bundled payments, and capitation models.
Value-Based Contract — A payer contract that ties a portion of reimbursement to quality metrics, cost targets, or patient outcomes rather than purely fee-for-service payment. Practices entering value-based contracts need robust data reporting capabilities and a clear strategy for meeting the contract’s performance benchmarks.
W
Write-Off — An amount that a practice removes from its accounts receivable because it is uncollectible or not allowable. Types of write-offs include contractual adjustments (required under payer contracts), bad debt write-offs (patient balances that cannot be collected), and small balance write-offs (amounts below a threshold not worth pursuing). Excessive write-offs beyond contractual adjustments are a sign of revenue leakage.
This glossary is provided by Medwave, a medical billing, credentialing, and payer contracting company serving healthcare practices across the United States. If you have a term you would like to see added, contact us directly. We update this resource regularly as industry terminology shifts and new regulations are introduced.