Medical Billing Terminology

Medical billing terminology is industry-specific vocabulary that allows for standardized communication among professionals in the healthcare industry. Medical billers and coders must be familiar with medical billing terminology so they can communicate accurately with physicians, insurance companies and others involved in the billing and reimbursement process. Knowing medical billing terminology can help medical billers in medical coding.

Medical coding is a preset classification system used to assign alphanumeric codes to patient services for use on medical insurance claims. The terms are sometimes complex and there are many acronyms used—not always easy for some people to learn or understand—which is a good reason to see what you’ll be dealing with prior to entering the field.

The following is just a small sample of common medical billing terminology demonstrates the wide range of topics covered by these unique expressions.

Medical Billing Terminology for
Medical Coding Languages

  • CPT (Current Procedural Terminology): a five-character coding language used for documenting patient services such as procedures, surgeries, laboratory, and radiology services
  • ICD-10 (International Classification of Diseases): the 10th revision of the coding language that uses seven-character codes to classify patient diagnoses and track public health statistics around the world
  • HCPCS Level II (Healthcare Common Procedure Coding System): the five character system of alphanumeric codes that describes medical supplies, nonphysician services and outpatient hospital care

Medical Billing Terminology for
Billing Software Programs

  • EHR (Electronic Health Records): software that allows users to standardize information needed for managing patients’ medical records so that it can be shared with other providers, including specialists and insurers
  • EMR (Electronic Medical Records): software used by physicians for patient diagnosis and treatment that resembles digital versions of paper patient charts
  • SaaS (Software as a Service): medical billing software that is licensed by subscription and accessed on a central host rather than an office computer

Medical Billing Terminology for
Insurance Plans

  • HMO (Health Maintenance Organization): a health plan in which primary physicians provide care to beneficiaries for a contracted, set monthly fee and determine the need for specialist services within the network, allowing for more control of costs
  • INN (in-network): a healthcare provider that has contracted with a patient’s insurance company or network to take a contracted rate as payment for services
  • OON (out-of-network): a healthcare provider that does not have a contract with a patient’s insurance company to provide services at a specified rate and may charge more than a fee the insurance company accepts
  • POS (Point of Service): a healthcare insurance plan in which HMO members are permitted to receive care at non-network providers by paying an additional fee
  • PPO (Preferred Provider Organization): a health management plan in which covered services are administered from a set list of “preferred” physicians and other healthcare providers within a specific network, while services from providers outside the network are charged at a higher rate
  • WC (Workers’ Compensation): insurance that employers are required to have to cover the costs incurred by employees who become injured or sick while performing their jobs

Medical Billing Terminology used in the
Medical Billing Process

  • Claim: a request for payment for medical services provided to a patient
  • EDI (Electronic Data Interchange): the network of electronic systems that allows providers to submit claims through a central clearinghouse, from which the claims are distributed to individual insurance carriers without the use of paper
  • EOB (Explanation of Benefits): a document issued by an insurance company to covered individuals that explains what services were covered or denied on their accounts, and the amount the insurance company paid to providers on their behalf
  • CMS-1450 form: the standard form used by all insurance carriers for institutional claims
  • CMS-1500 form: the standard claim form used by all insurance carriers for professional claims

Medical Billing Terminology for
Government-related Topics

  • CMS (Centers for Medicare & Medicaid Services): the division of the U.S. Department of Health and Human Services that manages Medicaid, Medicare and the Children’s Health Insurance Program (CHIP)
  • HIPAA (Health Insurance Portability and Accountability Act): a federal law that ensures patient privacy by detailing how medical providers and health plans can use individual health information
  • NPI (National Provider Identifier): a unique 10-digit number assigned to every U.S. healthcare provider by the CMS

Medical Billing Terminology for
Medical Conditions and Procedures

  • Acute: a condition that is severe and expected to last a short time
  • Ambulatory Care: all types of care that are administered without involving an overnight hospital stay
  • Catastrophic Illness: a severe illness likely to result in disability or long-term care and corresponding high medical costs
  • Chronic: a condition that is recurring or lasts for an extended period of time
  • Morbidity: the condition of being affected by a disease, often used when describing “morbidity rate”
  • Mortality: a measure of the number of deaths, often used when describing “mortality rate”
  • Observation: a type of billable medical care in which a provider allows time to determine if a patient requires inpatient care or can be released to heal at home


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