Common Billing Terminology
Advanced Beneficiary Notice (ABN)
An Advanced Beneficiary Notice is a form advising you that tests performed by your doctor may not be covered by Medicare. The purpose of the ABN is to let you know in advance that these services may not be covered and to advise you that you will be responsible for payment of these charges.
Assignment of Benefits
Assignment of Benefits means the physician agrees to accept payment from an insurance company first and then bill the patient for any after-insurance balances. In this arrangement, the patient has assigned rights for payment, via signature, to the physician for services rendered.
Billing Statement
A summary of current activity on an account.
Birthday Rule
The Birthday Rule is endorsed by the National Association of Insurance Commissioners (NAIC). The Birthday Rule states that the plan of the parent whose date of birth (month and day) falls earlier in the calendar year is the primary plan for dependent children. For example, if the father’s birth date is March 4 and the mother’s birth date is January 22, the mother’s plan would be primary. If both parents have the same birth date, the health plan in effect for the longer period of time will be primary.
Claim
The information billed to the insurance company for services provided.
Co-Insurance
Co-insurance is an arrangement by which the patient and the insurance company share in the payment of a service. Co-insurance takes effect after the approved deductible amount has been met.
For example, assigned Medicare benefits have a 20 percent co-insurance. This means that after the approved deductible amount has been met, Medicare pays 80 percent of the approved amount and the patient, or the patient’s supplemental insurance pays the remaining 20 percent. The deductible in most cases becomes the responsibility of the patient.
Coordination of Benefits
Coordination of Benefits is the determination of benefits payable under more than one group health insurance so the insured’s total benefits do not exceed 100 percent of the medical expenses.
Deductible
The portion of eligible (covered) expenses that you must pay each year before coverage begins.
Eligible Charges (Allowed Amount)
The maximum dollar amount allowed for covered services rendered by participating providers and facilities or by nonparticipating providers and facilities. Deductibles and coinsurance amounts are calculated from eligible charges. Participating providers and facilities accept this allowed amount as payment in full for covered services. Nonparticipating providers and facilities may not accept this amount as payment in full for covered services.
Evidence of Coverage (EOC)
A written guide from your health plan that explains what the plan does and does not cover and the rules you must follow for getting care.
Explanation of Benefits (EOB)
A statement provided to the insured by an insurance company explaining how the claim was processed.
Flexible Spending Account
A short-term savings account that lets you set aside pre-tax income and use it to pay for health care or child care during the year.
Guarantor
The person responsible for paying the bill.
Insurance Deductible
An insurance deductible is a minimum amount the patient must pay before the insurance company will pay anything toward charges. Usually the deductible needs to be met and paid by the patient each year.
Insurance Copay
An insurance copay is the amount of money or percent of charges for Basic or Supplemental Health Services that a member is required to pay, as set forth by their health plan. This is often associated with an office visit or emergency room visit. For example $5, $10 or $25.
Non-Participation
Non-participation means the physician does not participate in the patient’s health plan; therefore, the patient is billed directly for services and is responsible for payment in full.
Open Enrollment
The period each year during which you can join a plan or change plans if your employer offers more than one plan.
Out-of-Pocket Maximum
The total amount of eligible charges each year payable by insured directly to providers or facilities; 100 percent of eligible charges will be paid during the remainder of the year once the applicable out of pocket maximum is satisfied.
Payer
A third-party entity (commercial or government insurance carriers) that pays medical claims.
Physician Participation
Physician participation is a method by which a physician agrees to accept an insurance company’s payment level as payment in full. The bill is sent directly to the insurance company with payment made directly to the physician. This excludes amounts considered patient obligation under the patient’s coverage plan. For example, co-insurance, deductibles, and non-covered services would still have to be paid by the patient.
Pre-Approval
Permission from your medical group or health plan to get a service that requires a referral from your doctor. Also called authorization or prior-authorization.
Pre-existing condition
An illness or injury you have before you join a health plan.
Premium
What your health plan charges each month to maintain your health care coverage.
Primary Insurance
The insurance primarily responsible for the payment of the claim.
Prior Authorization/Precertification
A formal approval obtained from the insurance company prior to delivery of medical services.
Secondary Insurance
The insurance responsible for processing the claim after the primary insurance determination of benefits.
Subscriber
The person who holds and/or is responsible for the medical insurance policy.
Supplemental Insurance
An additional insurance policy that processes claims after Medicare reimbursement.
Yearly Deductible
The amount you must pay each year before your health plan starts to pay. Also called annual deductible.
Yearly Out-of-Pocket Maximum
The most you have to pay for most health care services in a year. In some cases, you may still have to pay copays for some services.