In this blog, we share some everyday terminology to help you better understand the medical billing process. Medical billing is a complex field that requires knowledgeable professionals, such as our team of certified medical billers and coders at Comprehensive Healthcare Revenue Management (CHRM), to get the job done right. Whether you’re interested in a career in medical billing or would just like to learn more about the important role that medical billing plays in your healthcare practice, this glossary can help.

CHRM is your source for remote medical billing and medical coding services. We work with a variety of different healthcare facilities, including oncology clinics, physicians’ offices, hospitals, orthopedic surgeries, and free-standing emergency rooms (FSERs). We also offer consulting services, audits, A/R services, and more. Contact us today to sign up for a free audit.

Allowed Amount

The maximum an insurance company will pay to reimburse a healthcare service or procedure. The patient typically pays the remaining balance. This may also be called “eligible expense,” “payment allowance,” or “negotiated rate.”


A request for a health insurer to review a decision or grievance. Medical billing specialists deal with appeals after a claim has been denied or rejected.

Applied to Deductible (ATD)

The amount of money a patient owes to a provider that goes towards their yearly deductible.

Assignment of Benefits (AOB)

Insurance payments made directly to the healthcare provider for medical services. The assignment of benefits is paid after a claim has been successfully processed with an insurance company.

Clean Claim

A medical claim is error-free and processed in a timely manner. Outsourcing your medical billing can increase your clean claim rate by up to 99%.


The process of translating a physician’s documentation into medical codes that are then entered into a claim for processing with a health insurance company. At CHRM, we offer medical coding services in addition to medical billing.


A provision that limits an insurance company’s coverage to a certain percentage, commonly 80%. If a patient’s insurance plan includes coinsurance, they’ll be responsible for any charges beyond those covered by their insurer.

Coordination of Benefits (COB)

Coordination of benefits occurs when a patient is covered by more than one insurance plan. In this situation, one insurance company becomes the primary carrier and all others become secondary and tertiary carriers that may cover any leftover costs.


The portion of a claim or medical expense that must be paid for out-of-pocket. The “co-pay,” as it is often referred to, is usually a fixed amount.


The amount a patient must pay before their insurance will start their healthcare coverage. Deductibles range in price according to different healthcare plans.


A service or procedure which a patient’s insurer has determined does not fall under the benefits outlined in their insurance plan. In the case of a denial, the patient is liable for the total cost.

Explanation of Benefits (EOB)

A statement mailed to an insured patient noting how a claim was paid or why it wasn’t covered.

Fee Schedule

A document that outlines the maximum fee that insurers will pay for different services.


The party paying for an insurance plan who is not the patient, sometimes referred to as the “responsible party.” For example, parents are guarantors of their children’s health insurance.

Health Maintenance Organization (HMO)

A network of healthcare providers that offers coverage to patients for services exclusively within their network.

In-Network Provider

A healthcare provider who has a contract with a patient’s health insurance plan. Sometimes referred to as a “preferred provider” or “network provider.”

International Classification of Disease (ICD)

An international disease classification system used in diagnosis, treatment, and medical coding.

Managed Care Plan

A type of insurance plan where patients are only eligible to receive care with their insurer’s networks, such as an HMO.


A joint federal and state program that provides healthcare coverage to low-income families and individuals.


A federal program that insures people age 65 and older, as well as some younger people with disabilities, as determined by the Social Security Administration.

Non-Covered Charges (N/C)

Procedures and services not covered by a patient’s health insurance plan.

Not Elsewhere Classifiable (NEC)

Procedures and services that can’t be described within the available code set.


A health care provider that chooses not to accept Medicare payments as a sufficient amount for the services rendered.

Out-of-Network Provider

A provider who does not have a contract with a patient’s health insurer. Using an out-of-network provider typically costs patients more money to receive care than using an in-network provider would.

Patient Responsibility

The amount a patient owes a provider after their insurance company covers their portion of the expenses.

Point of Service (POS) Plan

A plan whereby patients with HMO membership can receive care at non-HMO providers in exchange for a referral and higher deductible.


The practice of reviewing requests for services with a patient’s health insurance company before the services are actually rendered, to ensure that the insurance company will cover their portion.

Pre-Existing Condition (PEC)

A medical condition that a patient had before receiving insurance from their health insurance company. Some health insurance companies will deny a person coverage due to a PEC.

Preferred Provider Organization (PPO)

A plan similar to an HMO, except that the insurance company, rather than the HMO itself, decides which providers are in-network.


The sum a patient pays to their insurance company on a regular basis to receive health insurance.

Primary Care Provider (PCP)

A patient’s PCP is usually the first doctor to see them for an illness or other health conditions. PCPs will often refer patients to a specialist (secondary care) or hospital. Common PCPs include family doctors, internists, pediatricians, and sometimes OB-GYNs.


A referral occurs when a provider recommends that a patient see another provider to receive specialized treatment.


A payment made by the patient for healthcare services at the time they receive it. Self-pay patients may not have insurance or may not want the services rendered to be filed with their insurance company.

Supplemental Insurance

A secondary policy or other insurance plan that covers a patient’s healthcare costs after receiving coverage from their primary insurance. Supplemental insurance typically covers a patient’s deductible or copay.


Formerly known as the Civilians Health and Medical Program of the Uniformed Services (CHAMPUS), Tricare is a federal health insurance plan for active and retired service members and their families.

Triple Option Plan (TOP)

Also referred to as the “cafeteria plan,” TOPs give enrolled individuals the options to choose between an HMO, PPO, or a POS.


A form used by providers for filing claims with insurance companies. One of the most common claim forms.

Usual Customary and Reasonable (UCR)

The amount of money stipulated in a contract that a health insurance company agrees to pay for a certain healthcare service or procedure.

Utilization Limits

Medicare’s limitations on how many times certain services can be provided in a year. If services exceed the utilization limit, they could be denied.

Utilization Review

The process of tracking, reviewing, and rendering opinions about care.

Outsource Your Medical Billing With CHRM!

In this glossary, we covered only some of the many terms associated with medical billing and insurance. As you can see, mastering medical billing requires knowledge of a wide range of terminology and practices. Prevent administrative burn-out in your healthcare facility by outsourcing your medical billing to CHRM today! With outsourced medical billing, you can stop overburdening your staff with difficult and time-consuming tasks and get back to focusing on what matters most — your patients. Contact us today to get started.