Glossary

52 plain-English definitions for the coding and billing terms used across this site.

8ABCDEFGHILMNPRSTUX

8

835
The ANSI X12 electronic transaction a payer sends back after processing a claim - lists what was paid, adjusted, and denied, using CARC and RARC codes. Also called an ERA.
See also: ERA, CARC, RARC
837
The ANSI X12 electronic claim transaction submitted to a payer. 837P is for professional (physician) claims, 837I is for institutional (facility) claims.
See also: EDI, CMS-1500, UB-04

A

Adjudication
The process a payer goes through to review a submitted claim and decide how much to pay, deny, or adjust.
Allowed Amount
The maximum amount a payer will pay for a service under a provider's contract, regardless of what was billed. The difference between the billed and allowed amount is typically written off.
Appeal
A formal request asking a payer to reconsider a denied or reduced claim, usually with supporting documentation.

B

Billable Code
A code specific enough to be submitted on a claim. In ICD-10-CM, a category-level code (like E11) usually isn't billable on its own - you need the full subcategory (like E11.9).

C

CARC
Claim Adjustment Reason Code. A financial code explaining why a payer adjusted, reduced, or denied part of a claim. Maintained by X12.
See also: RARC, Group Code
Clean Claim
A claim submitted with no errors or missing information, ready to be processed without needing follow-up from the provider.
Clearinghouse
A third party that sits between providers and payers, checking claims for errors and translating between different electronic formats before forwarding them.
CMS
Centers for Medicare & Medicaid Services. The federal agency that administers Medicare, Medicaid, and maintains several of the code sets on this site, including ICD-10-CM, HCPCS Level II, and place of service codes.
CMS-1500
The standard paper claim form for professional (physician) services. Its electronic equivalent is the 837P transaction.
Coinsurance
The percentage of the allowed amount a patient owes after their deductible has been met, e.g. 20% coinsurance on a $100 allowed service is $20.
Coordination of Benefits (COB)
The process of determining which payer is primary and which is secondary when a patient has more than one insurance plan.
Copayment
A fixed dollar amount a patient owes for a service, set by their plan, independent of the total charge.
Credentialing
The process of verifying a provider's qualifications, licenses, and history before a payer or facility allows them to bill or practice.

D

Deductible
The amount a patient must pay out of pocket before their insurance starts covering costs for the plan year.
Denial
A payer's refusal to pay for a submitted claim or service line, always accompanied by at least one CARC explaining why.
DRG
Diagnosis-Related Group. A classification system that groups inpatient hospital stays by diagnosis and procedures for a single, bundled payment rather than paying for each service separately.

E

EDI
Electronic Data Interchange. The standardized electronic transaction formats (837, 835, 270/271, etc.) that providers and payers use to exchange claims, eligibility, and payment data.
EOB
Explanation of Benefits. The patient-facing document (paper or electronic) summarizing how a claim was processed - what was billed, what the plan paid, and what the patient owes. The provider-facing equivalent is the 835/ERA.
ERA
Electronic Remittance Advice. Another name for the 835 transaction.
See also: 835

F

Facility Rate
The lower of the two Medicare Physician Fee Schedule payment rates, used when a service is performed somewhere the facility itself bills separately for overhead (a hospital, an ASC).
See also: Non-Facility Rate, Place of Service
Fee Schedule
A payer's published list of the maximum amount it will pay for each procedure code.
FHIR
Fast Healthcare Interoperability Resources. A modern, API-based data standard from HL7 for exchanging clinical and administrative healthcare data.

G

Group Code
The two-letter prefix paired with every CARC (CO, OA, PI, PR, or CR) that identifies who's financially responsible for the adjustment before you even look up the code itself.
See also: CARC

H

HCC
Hierarchical Condition Category. A risk-adjustment model that maps diagnosis codes to categories used to predict a patient's expected healthcare costs, mainly for Medicare Advantage payment.
HCPCS
Healthcare Common Procedure Coding System. HCPCS Level II covers supplies, equipment, and services not in CPT (e.g. ambulance transport, DME) and is maintained by CMS as public domain data.
HIPAA
Health Insurance Portability and Accountability Act. Federal law that, among other things, sets national standards for electronic healthcare transactions and protects patient health information.

I

ICD-10-CM
The diagnosis coding system used in the US, maintained by CDC/NCHS. Codes are built from a category, subcategory, and sometimes a 7th-character extension.

L

LCD
Local Coverage Determination. A regional Medicare contractor's policy on whether and under what conditions a service is covered - can vary by geographic area, unlike an NCD.

M

Modifier
A two-character code appended to a procedure code to indicate something changed about how it was performed - which side of the body, whether it was a distinct service, who assisted - without changing the base code.

N

NCD
National Coverage Determination. A nationwide Medicare policy on whether a service is covered, set at the federal level rather than by individual regional contractors.
Non-Facility Rate
The higher of the two Medicare Physician Fee Schedule payment rates, used when a provider's own practice absorbs the full cost of a service (typically an office visit).
See also: Facility Rate, Place of Service
NPI
National Provider Identifier. A unique 10-digit number assigned to every healthcare provider and organization in the US, used on virtually every claim.
NPPES
National Plan and Provider Enumeration System. The CMS system that assigns NPIs and maintains the public provider registry.
NUCC
National Uniform Claim Committee. Maintains the provider taxonomy code set and the CMS-1500 claim form.

P

Payer
The insurance company, government program, or other entity responsible for paying a claim.
PHI
Protected Health Information. Individually identifiable health information covered under HIPAA - this site never stores or transmits PHI; file parsing tools process everything client-side in the browser.
Place of Service
A two-digit code identifying where a service was performed (office, hospital, home, etc.), which determines whether the facility or non-facility payment rate applies.
Prior Authorization
Approval a payer requires before a service is performed, confirming in advance that it will be covered. Missing this is one of the most common reasons for a denial.
Provider Taxonomy Code
A code identifying a provider's specialty and classification, maintained by NUCC, used alongside the NPI to describe what kind of provider someone is.
Patient Responsibility (PR)
The CARC group code indicating an adjustment amount that legitimately shifts to the patient - deductible, coinsurance, or copay.
See also: CARC, Group Code

R

RARC
Remittance Advice Remark Code. A code that adds detail to a CARC, explaining specifically what an adjustment means. Never appears without an accompanying CARC.
See also: CARC
Revenue Code
A four-digit UB-04 code identifying a specific category of hospital charge (room and board, pharmacy, lab, etc.) on an institutional claim.
RVU
Relative Value Unit. A unit measuring the relative resources (physician work, practice expense, malpractice risk) a procedure requires, used by Medicare to calculate payment amounts.

S

Superbill
An itemized form used by a provider's office listing the diagnoses and procedures for a visit, used to generate the actual claim.

T

Taxonomy Code
See Provider Taxonomy Code.
See also: Provider Taxonomy Code
Timely Filing
The deadline, set by each payer, by which a claim must be submitted after the date of service or it will be denied regardless of validity.
Type of Bill (TOB)
A code on institutional claims that breaks down into facility type, bill classification, and claim frequency - identifying what kind of facility billed, what kind of stay it was, and whether this is an original, corrected, or void claim.

U

UB-04
The standard paper claim form for institutional (facility) services, maintained by the AHA/NUBC. Its electronic equivalent is the 837I transaction.
Unbundling
Billing separate codes for services that should be billed together under a single comprehensive code - generally not allowed and a common source of CARC 97 denials.

X

X12
The standards body that maintains the electronic transaction formats (837, 835, 270/271, etc.) used throughout US healthcare EDI, as well as the CARC and RARC code lists.