CPB Medical Billing key terms

A standardized code set maintained by the American Medical Association that describes medical, surgical, and diagnostic services. Payers use it to determine how a procedure is identified and reimbursed on a claim.

A two-level code system. Level I is CPT; Level II covers products, supplies, and services not in CPT, such as drugs, durable medical equipment, and ambulance services, using five-character alphanumeric codes.

The diagnostic and inpatient procedure code set used to report why a patient was seen. ICD-10-CM covers diagnoses in all settings; ICD-10-PCS covers inpatient hospital procedures only.

A category of CPT codes for patient encounters such as office visits, hospital visits, and consultations. Selection depends on medical decision making or time, depending on the code set and payer rules.

A two-character code appended to a CPT or HCPCS code to clarify a service, such as a distinct procedural service or a bilateral procedure. Modifiers affect how payers process and pay the claim.

A two-digit code on a claim identifying where a service was furnished, such as office, hospital outpatient, or skilled nursing facility. POS can change both coverage and payment amount.

A defined window of days around a surgical procedure during which related routine follow-up care is included in the procedure payment rather than billed separately. The length depends on the procedure category.

The payer practice of combining component services into a single payment rather than paying each separately. Claims editing systems deny or reduce codes considered integral to a larger procedure.

A CMS program of edits that identifies code pairs not appropriately billed together. Procedure-to-procedure edits and medically unlikely edits help prevent improper payments and support accurate coding.

The process of recording services, supplies, and encounters delivered to a patient so they can be converted into billable charges. Gaps or delays here directly reduce revenue and distort claim accuracy.

A form or electronic template clinicians use to document diagnoses and procedures performed during an encounter. It feeds coding and charge entry and should match the medical record exactly.

The ICD-10-CM code describing the condition chiefly responsible for the encounter after study. It must be supported by documentation and drives medical necessity determinations for the claim.

The determination that a service is reasonable and required for the diagnosis or treatment of a condition, based on accepted standards of care. Payers deny claims when documentation does not establish it.

A claim submitted with all required data elements correct and complete, with no defects that would prevent timely adjudication. Clean claim rates are a core measure of billing office performance.

An automated review of claims before submission that checks for missing fields, invalid code combinations, eligibility issues, and payer-specific rules. It reduces denials by catching errors early.

A payer statement explaining how a claim was processed, including allowed amounts, patient responsibility, and denial reasons. Remittance advice serves a similar purpose for electronic payments.

An electronic or paper payment notice from a payer detailing claims paid, adjusted, or denied, with reason codes. The 835 transaction is the standard electronic format used in HIPAA transactions.

The exchange of standardized healthcare transactions between providers and payers, such as claims (837) and remittance (835). HIPAA mandates specific X12 formats for these transactions.

An intermediary that receives claims from providers, validates and formats them, and forwards them to the correct payer. It also routes electronic remittances and reports back to the provider.

The maximum amount a payer will recognize for a covered service under its contract or fee schedule. Patient cost sharing and provider write-offs are calculated from this figure.

A published list of payment amounts a payer assigns to each code. Medicare, Medicaid, and commercial plans each maintain their own schedules, often tied to relative value units.

A payment methodology that assigns relative value units for physician work, practice expense, and malpractice cost to each CPT code, then applies a conversion factor and geographic adjustment.

Rules determining which of a patient's multiple insurance plans pays first. The primary plan pays before the secondary, and incorrect order of billing is a common source of denials.

Confirming with a payer before or at the time of service that a patient is enrolled, covered on the date of service, and has the benefits being billed. Failures here cause preventable denials.

A payer requirement that approval be obtained before certain services, drugs, or procedures are performed. Missing or expired authorization typically results in denial of the entire claim.

A notice given to a Medicare beneficiary before a service likely to be denied as not medically necessary, stating the patient may be financially liable. Proper notice supports billing the patient.

A payer's refusal to pay a claim or line item, communicated with reason codes such as missing information, no coverage, or lack of medical necessity. Denials must be worked within payer deadlines.

A standardized or payer-specific code on a remittance explaining why a claim was reduced or rejected. Correct interpretation determines whether to appeal, correct, or write off the balance.

A formal request that a payer reconsider a denied or underpaid claim, supported by documentation and citing policy or contract terms. Appeals follow defined levels and strict filing deadlines.

The first level of appeal in the Medicare claims process, reviewed by a Medicare Administrative Contractor. It must be filed within the stated deadline and include supporting documentation.

A private entity contracted by CMS to process Medicare Part A and B claims and handle related appeals in an assigned jurisdiction. Providers must bill the correct MAC for their region.

The maximum period after a date of service within which a claim or appeal must reach the payer. Deadlines vary by payer and contract, and missed deadlines generally forfeit payment.

A report grouping unpaid claims by how long they have been outstanding, such as 0-30 or 90-plus days. It is a primary indicator of collections performance and denial backlog.

Removing an uncollectible or contractually non-billable amount from patient or payer balances. Distinguishing contractual adjustments from bad debt is important for accurate reporting and compliance.

The difference between a provider's billed charge and the payer's allowed amount, which the provider may not bill to the patient under the network agreement. It is not bad debt.

Federal law that protects the privacy and security of protected health information and mandates standards for electronic healthcare transactions. Violations can bring civil and criminal penalties.

Individually identifiable health information held or transmitted by covered entities or their business associates. Its use and disclosure are restricted unless permitted by HIPAA or authorized by the patient.

The HIPAA principle that only the least amount of protected health information needed for a purpose should be used, disclosed, or requested. It does not apply to treatment disclosures.

A federal statute imposing liability on parties who knowingly submit false or fraudulent claims to government programs. Penalties include treble damages and per-claim fines, with whistleblower provisions.

A federal law prohibiting knowingly offering or receiving remuneration to induce referrals for items or services payable by federal healthcare programs. Violations are criminal and can also trigger civil liability.

A federal law that prohibits physicians from referring patients for certain designated health services to entities with which they or immediate family members have a financial relationship, unless an exception applies.

Billing a service at a higher level or with a more complex code than the documentation supports. It is a form of healthcare fraud and a frequent target of payer audits and government enforcement.

A payer or auditor examination of claims and medical records after services were billed to verify coding accuracy and medical necessity. Findings can lead to recoupment, penalties, or corrective action plans.

A claim sent to a patient's secondary insurer after the primary plan has processed and paid its share. It must include primary payment details so the secondary can coordinate benefits correctly.

A unique identifier for medications that is reported with drug-related HCPCS codes on claims. Payers use it to verify the product, dosage, and pricing of administered drugs.

The federal health insurance program for people aged 65 and older and certain younger individuals with disabilities or end-stage renal disease. Its billing rules strongly influence commercial payer policies.

The portion of a covered service the patient owes, such as deductibles, coinsurance, and copayments. It should be calculated from the allowed amount, not the billed charge.