A glossary of healthcare financial terms and their definitions.
An accountable care organization is a group of health care providers who take responsibility for the total cost and quality of care for their patients, and in exchange they can receive a portion of the savings they achieve.
The allowable amount is the maximum amount a plan will pay for a covered healthcare service.
Ambulatory payment classification (APC) is the United States government's method of paying for facility outpatient services for the Medicare program.
The anesthesia conversion factor is the dollar multiplier used to calculate the payment amount for anesthesia services by multiplying it by the total anesthesia units.
An assignment of benefits is an agreement that allows the insurance company to pay the healthcare provider directly for services rendered.
Attribution is the process of assigning beneficiaries or medical spending to a single entity, such as a Taxpayer Identification Number (TIN) or a medical condition, often based on the primary care services received or regression analysis.
An audit clause is a provision in a contract that grants one party the right to examine and verify the financial records and compliance of the other party to ensure adherence to the agreed terms.
Billed charges is the amount originally billed for medical services, also referred to as "Gross Charges," which is often discounted based on insurance contracts or self-payment arrangements.
A bundled payment is a single payment for the combined cost of eligible services and supplies provided during a defined episode of care.
Capitation is a fixed, pre-arranged monthly payment received by a physician, clinic, or hospital per patient enrolled in a health plan.
A carve-out is a health plan design in which a specific benefit, such as prescription drugs or mental health services, is managed separately from the main health insurance policy.
A charge status indicator is a mechanism used by organizations to quickly ascertain the financial and administrative condition of charges, enabling efficient management and resolution of billing issues.
A claim is a formal request made by a healthcare provider or an insured individual to an insurance company for payment of services rendered or medical expenses incurred.
A clean claim is a claim that complies with all standard coding guidelines, contains no missing information, and is free of any potential defect or impropriety.
A clinical validation denial is the rejection of a healthcare claim due to insufficient or inaccurate clinical documentation supporting the medical necessity of services provided.
A clinically integrated network is a specific organizing structure that providers join when they form an accountable care organization (ACO) and meets specific standards that allow the clinicians in the network to jointly negotiate with payers without violating anti-trust laws.
Coinsurance is the percentage of covered health costs you're responsible for paying after you've met your deductible.
A contract amendment is an alteration to an original agreement that modifies specific provisions while generally keeping the rest of the contract intact, creating a new version for all parties to follow.
A contract term is the specified length of time for which an agreement remains in effect, outlining the start and end dates of the contractual obligations.
A copayment is a fixed amount you pay for a covered healthcare service, often at the time of service, after you have met your deductible or as part of your plan's cost-sharing structure.
A CPT® code is a standardized code created by the American Medical Association (AMA) to report medical, surgical, and diagnostic services and procedures for reimbursement.
Credentialing is the process of verifying a healthcare provider's qualifications and documentation, which is necessary for insurance companies to authorize them as "in-network" providers and issue reimbursement for services rendered.
A denial is an insurance company's refusal to pay for services rendered, resulting in loss or delay of payment for the healthcare provider.
Dispute resolution is a process that addresses conflicts over contractual obligations, reimbursement, and service agreements between healthcare payors and providers.
A Diagnosis-Related Group (DRG) is a classification system used to categorize hospitalization costs, primarily to determine how much Medicare or other health insurance companies should pay for an inpatient hospital stay.
An in-network provider is a doctor, hospital, or facility that contracts with an insurance plan to offer care at lower, negotiated rates.
An indemnification clause is a provision in a contract where one party agrees to compensate the other for certain losses or liabilities, often related to the indemnifying party's acts, omissions, or breach of the agreement.
A modifier is a two-digit alphabetic, numeric, or combined code used to add information or change the description of a service to improve accuracy or specificity in medical coding.
A most favored nation clause in healthcare payer contracting is a contractual provision requiring a healthcare provider to offer a payer prices or terms at least as favorable as those offered to any other payer under similar circumstances.
A Multiple procedure payment reduction is a policy where reimbursement for additional surgical or diagnostic procedures performed on the same patient during the same session is reduced.
An open enrollment period is a window of time, typically once a year, when individuals can sign up for, adjust, or cancel their health insurance plan.
An out-of-network provider is one who has no contract with your health plan and can charge you full price for services.
A payer is an organization that sets service rates, collects payments, processes claims, and pays provider claims in the health care industry.
A per diem rate is a set daily charge for services provided by a healthcare facility, often used in patient billing regardless of the specific services rendered.
Prior authorization is a requirement by your health insurance or plan for certain services before you receive them, except in an emergency, to check if the plan covers the proposed care and if it is medically necessary, safe, and cost-effective.
A provider is a facility, supplier, physician, or other individual or organization that furnishes health care services.
A provider network is a list of doctors, other health care providers, and hospitals that a plan contracts with to provide medical care to its members.
Recoupment is when insurance payers adjust reimbursements to reclaim overpayments in future claims.
Reimbursement based on % of medicare is an approach where payment rates are determined by paying a percentage above or below Medicare's standardized fee schedule for a service.
An electronic remittance advice is an explanation from a health plan to a provider about a claim payment.
Risk adjustment is a process in the ACA-defined individual and small group markets that determines risk transfers among health insurance plans, charging lower risk plans to fund payments to higher risk plans.
A Relative Value Unit (RVU) is a measure of value used in the United States Medicare reimbursement formula for physician services.
Shared risk is a model where practices assume accountability for the probability of the assigned population using medical services, often participating in risk-sharing contracts or entities.
Shared savings is the payment an Accountable Care Organization (ACO) may be eligible to receive for achieving savings for the Medicare program while delivering high-quality care.
A stop-loss provision is a clause in health insurance policies that sets a ceiling, or out-of-pocket maximum, on the amount a policyholder pays for covered medical expenses, after which the insurer pays 100% of eligible costs.
A termination clause is a provision that allows parties to end a contract lawfully under agreed-upon conditions.
A timely filing limit is the time limit a member or provider has to file a claim for health services received or provided, which, if missed, can result in the claim being denied.
A total cost of care is generally used to refer to all direct and indirect costs associated with an episode of care for a period of health care coverage.
