Glossary of Billing Terms
Definitions for common medical billing and health insurance terms
When you need or receive health care services, you may come across billing or health insurance terms that are unfamiliar. Below you’ll find definitions for many of these words and phrases in our medical billing glossary.
You can also count on Scripps to help you understand the billing and insurance process or read your medical bill. Find answers to frequently asked questions or talk to a billing expert by calling 877-727-4777.
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Like a discount, an adjustment is the part of your bill that is modified or reduced based on the contract between Scripps and your health insurance plan.
The allowed amount is the maximum charge for covered health care services, as determined by your health insurance company. This is also known as a negotiated rate. If your doctor or hospital charges more than the allowed amount, you may have to pay the difference.
Amount not covered
The amount not covered is the cost you must pay out-of-pocket. These may include co-pays, co-insurance, deductibles or charges for medical services that were not approved by your health plan or are not covered under your specific benefits package.
Applied to deductible
Applied to deductible refers to the amount you owe your doctor’s office or hospital that goes to paying your yearly deductible. Your deductible is determined by your health insurance plan.
Assignment of benefits
Assignment of benefits is the legal process that lets your health insurance company make reimbursements for your care directly to your doctor’s office or hospital.
Authorization is the approval by your health insurance company, medical group or hospital for you to receive certain medical services.
An authorization number is a number assigned by your health insurance company that confirms your request or referral for certain medical services has been approved.
In health care, a beneficiary is the person enrolled in a health insurance plan.
Your benefits are the specific medical services covered by your health insurance company.
A medical bill, also known as a billing statement, is a printed summary of the care you received and any amounts you may owe.
The birthday rule is a common practice that establishes which health insurance plan is considered “primary” and which is “secondary” when a child is covered by more than one health plan. In this case, birthday refers only to the month and day of the parents’ birthdays, not the years they were born.
If the child’s parents are married:
- The parent whose birthday occurs first in a calendar year is considered the primary insurance holder.
- The other parent’s benefits are considered secondary coverage.
- If the parents have the same birthday month and day, whichever parent has been covered the longest by their current insurance plan is considered the primary insurance holder.
If the child’s parents are separated or divorced, then coverage is usually applied in the following order:
- The primary insurance holder is the parent with legal custody of the child.
- Secondary coverage begins with the spouse of the parent who has legal custody of the child.
- Final coverage would occur under the parent who does not have legal custody of the child.
If the child’s parents share joint custody:
- The parent whose birthday occurs first in a calendar year is typically considered the primary insurance holder.
- The other parent’s benefits are considered secondary coverage.
California Children’s Services (CSS)
California Children’s Services (CSS) is a state program that provides medical services to children under 21 who have certain eligible conditions. Covered services include diagnostic and treatment services, medical case management, physical therapy and occupational therapy.
A claim is the bill your doctor’s office or hospital sends to your health insurance company, requesting payment for covered services.
Co-insurance is the percentage of costs for covered services you pay after your deductible. For example, if a hospital charges $1,000 for surgery, and your insurance plan covers 80%, your health insurance company would pay $800, and you would pay 20%, or $200, assuming you had already met your deductible for the year.
Co-payment (or co-pay) is a fixed amount your health insurance company requires you to pay for a covered service. For example, your co-pay might be $20 to see your primary care physician. You may have different co-pays amounts for primary care, specialist, urgent care or emergency room visits.
Coordination of benefits (COB)
A coordination of benefits (COB) policy determines which health insurance plan is considered primary and which provides secondary coverage when you’re covered by more than one plan.
Covered services are all the health care services your health insurance company agrees to pay for under your plan.
Date of service (DOS)
The date of service (DOS) is the date you received medical care.
An annual deductible is the amount you pay for medical expenses before your health insurance plan begins to pay benefits. For example, if your medical plan has a $500 annual deductible, you will pay all of your health care expenses up to $500 before your health insurance plan will begin to pay. Most deductibles start over at the beginning of each calendar year, but some start over based on your date of enrollment in the health plan.
Denial or denied
If your insurance company denies benefits for a service, you are responsible for paying all costs. Scripps can help you with appeals and denied claims.
Exclusive provider organization (EPO)
An EPO is a type of health plan that lets you choose providers from a local network of doctors and hospitals. There are two main types of EPOs, each offering different levels of flexibility:
- In the first type, you must select a primary care physician (PCP) or a medical group to oversee your care. Your chosen PCP or medical group helps you get authorization for specialty services, which are covered by your plan if you stay within network and only use preferred providers. If you choose to receive out-of-network care (non-emergency), you are responsible for paying all costs.
- In the second type, you can see whichever in-network providers you wish without having to get a referral, just like members of Preferred Provider Organization (PPO) health plans. However, in this type of EPO, the network of providers you may see is smaller than traditional PPO networks.
There is usually a lifetime policy maximum associated with EPO coverage.
Explanation of benefits (EOB)
An explanation of benefits (EOB) is a document from your health insurance company that lists the claims submitted for your medical care. It summarizes:
- The date you received care
- The services you received
- The amount billed to the insurance company by the doctor or hospital
- Whether your claim was approved or denied
- Whether any services were not covered
- How much your insurance company paid for the care you received
- How much, if anything, you must pay for the care you received
A guarantor is the person financially responsible for paying a patient’s bill, often a parent or legal guardian. A guarantor may be needed if the patient is:
- Age 18 or younger
- Over 18 and has decreased mental capacity
Health maintenance organization (HMO)
A health maintenance organization (HMO) is a health insurance plan that contracts with a group of physicians, other health care professionals and hospitals (known as a network) to care for its patients (known as members). Members usually must select a primary care physician (PCP) from the network, and call or see the PCP first for all medical care.
In-network providers are doctors or hospitals who are part of your health insurance company’s approved network. These providers have agreed to charge the allowed amount (or negotiated rate) for services.
Inpatient refers to care that requires admission to a hospital and stays at least one night.
In medical billing, the insured’s name is the name of the person enrolled in a health insurance plan. This is also called a beneficiary.
Medi-Cal is the name of the Medicaid program in California. Medi-Cal provides free or low-cost medical care to children and adults who meet certain criteria, including limited income.
Medi-Cal Managed Care
Medi-Cal Managed Care is a system under Medi-Cal that provides care for enrolled patients through managed care plans. Under Medi-Cal Managed Care, patients must select a primary care physician to oversee their care and coordinate referrals to specialists. Patients must also use doctors and hospitals that are part of their health plan’s network.
Medicare is a federal health insurance program for people who are 65 and older, disabled or on dialysis. It’s divided into two parts, each covering specific health care services:
- Medicare Part A covers inpatient hospital services, nursing home care, home health care and hospice care.
- Medicare Part B helps pay the cost of doctors’ services, outpatient procedures, medical equipment and supplies, and preventive care.
- Medicare Part C is the Medicare Advantage program available through private insurance companies, offering you the same or more benefits as Medicare Part A and Part B.
- Medicare Part D is optional coverage for prescription drugs, available as part of a Medicare Advantage plan or as a stand-alone option for people enrolled in Medicare Part A or Part B.
Learn more about Medicare and how to choose the right Medicare plan for you.
Medicare supplement (Medigap)
Also known as Medigap plans, supplemental Medicare insurance plans help “fill the gap” by partially or fully covering expenses not covered by original Medicare. You may purchase these plans from private insurance companies only if you’re enrolled in original Medicare. Learn more about Medicare Advantage or supplemental plans accepted at Scripps.
Noncovered services are medical expenses not covered by your insurance company. If you receive noncovered services, you are responsible for paying the costs.
Out-of-network providers are doctors or hospitals who are not part of (not contracted with) your health insurance company’s approved network. If you receive nonemergency care from a doctor or hospital that is not contracted with your health plan, you may be responsible for paying some or all of the costs.
An out-of-pocket cost is the amount you pay for medical care. Your insurance plan usually sets a max amount you could pay per year.
An out-of-pocket maximum is the highest dollar amount you could pay for medical care during a plan year. Once you reach your out-of-pocket maximum, your health insurance company starts paying for covered services.
Outpatient refers to medical care or treatment that does not require an overnight stay in the hospital. Sometimes called ambulatory care, outpatient care is usually provided in a medical office or outpatient surgery center.
Outpatient hospital departments
Outpatient hospital departments are areas of the hospital that provide outpatient medical care, including diagnosis and treatment. When you receive care in an outpatient hospital department, you can go home after your visit (you do not need to stay in the hospital overnight).
A payment arrangement gives you extra time to pay the total balance on your account. It involves scheduled payments that are automatically processed on a certain date every month, using your preferred payment method. Scripps can help you set up a payment plan or explore other types of financial assistance.
Point of service (POS)
Point of service (POS), also called a tiered plan, is a type of health insurance plan that combines certain features of HMO and PPO plans. It provides different tiers (levels) of coverage that are based on your use of in-network or out-of-network providers. Below are common tiers associated with POS plans.
- Tier 1 benefits (HMO coverage) — You must choose a primary care physician (PCP) to oversee your care and help you obtain authorization for specialty services. Your only out-of-pocket costs may be the co-pays required for certain visits.
- Tier 2 benefits (PPO coverage) — You may self-refer to any in-network provider without obtaining authorization from your PCP. But you may still need authorization from your insurance company. You’ll likely need to pay a deductible and a percentage of your medical costs.
- Tier 3 benefits (noncontracted coverage) — The payments from your insurance company will vary, based on the specific benefits offered by your plan. If your insurance company denies your claim for noncovered services, you may be responsible for a larger share — even up to 100% — of the charges. Typically, if you receive care without getting the necessary authorization from your insurance company, you’re responsible for 100% of the charges.
The policy number is the unique number assigned to you by your insurance company. It identifies you as the policyholder or enrolled member.
The pre-certification number is a number assigned by your insurance company to indicate a medical service has been approved. However, it does not guarantee payment for that service.
A pre-existing condition is a medical illness or injury that you’ve received treatment for in the past, before enrolling in your current health insurance plan. Pre-existing conditions are often chronic (long-term). Examples are diabetes, COPD and sleep apnea.
Preferred provider organization (PPO)
A preferred provider organization (PPO) is a type of health insurance plan that allows you to see in-network doctors without a referral from your primary care physician. If you see an out-of-network provider, your PPO may cover some costs, but you will pay more than if you saw an in-network doctor. You also may need authorization from your health plan for certain services, such as physical therapy or an MRI.
Primary care physician (PCP)
Your primary care physician (PCP) is the main doctor who oversees your medical care. They can specialize in internal medicine, family medicine, pediatrics or (in some cases) OB-GYN. Most HMO, EPO and POS insurance plans require you to choose a PCP. If you don’t choose a PCP, the health plan may assign one to you. Your PCP will provide or authorize all types of care you may need, including diagnostic tests, referrals to specialists or hospitalizations. Depending on the type of insurance plan you have, your visit to a specialist may not be covered if your PCP didn’t approve it ahead of time.
Primary insurance company
The primary insurance company is the company that pays your medical claims first, if you’re covered by more than one health insurance company.
Prior authorization is another term for advance approval. It means your primary care physician (PCP), medical group or health insurance plan must approve certain services or procedures ahead of time. Medical services that may require prior authorization include general surgeries and some in-office tests and procedures. Several factors determine whether medical services are approved or denied, including medical necessity and cost. If you cannot obtain prior authorization due to a medical emergency, the doctor or hospital caring for you must typically notify your health insurance company within 24 hours of your care or admission.
A provider refers to the doctor or hospital that cared for you.
The provider charge is the amount your doctor or hospital charged for the medical services they provided.
Provider-based billing is the “professional fee” (also known as a physician fee) that is sometimes listed on medical bills. Health care organizations that use provider-based billing systems charge fees for physician services separate from hospital or facility fees.
Reasonable and customary (R&C)
A reasonable and customary charge (or R&C charge) refers to fair or appropriate costs for medical services in a geographic area, as defined by your health insurance company. This is also known as “usual and customary.”
The responsible party, also known as the guarantor, is the person financially responsible for paying a medical bill.
A referral is another name for a doctor’s medical order. Under most managed care plans, such as HMO plans, you must have a doctor’s referral before you can see a specialist or have certain medical services.
If you’re covered by more than one health insurance company, your secondary insurance pays the remaining balance of your claim after the primary insurance company pays its portion.
Self-pay patients are people who pay the full costs of their medical care, because they don’t have health insurance or because they don’t want the services to be filed with their insurance.
Share of cost (SOC)
Share of cost (SOC) refers to the amount a Medi-Cal patient must pay toward their health expenses before Medi-Cal begins to pay. If you’re covered by Medi-Cal and your monthly income changes, your SOC may change as well.
A billing statement, also known as a medical bill, is a printed summary of the care you received and the amount you owe.
In health care, a subscriber is the person enrolled in a health insurance plan. More than one person may be covered by the subscriber’s insurance, such as children covered by a parent’s insurance.
Total charges are the total cost of medical services you received.
Usual, customary and reasonable (UCR)
A usual, customary and reasonable charge (or UCR charge) refers to fair or appropriate costs for medical services in a geographic area, as defined by your health insurance company. This is also known as “reasonable and customary” or “usual and customary.”
Workers’ compensation is a type of insurance that provides coverage to employees who experience job-related injuries or illnesses. Each state has its own laws and programs for workers’ compensation. The US also maintains a separate workers’ compensation plan for federal employees.