Glossary

Accounts receivable (A/R) is the money owed to a provider for care already delivered but not yet collected — from payers and from patients.

Adjudication is the payer’s process of reviewing a submitted claim against the member’s plan and deciding what to pay — approving, adjusting, or denying it.

An Advance Beneficiary Notice of Noncoverage (ABN) is a standardized CMS notice a provider or supplier gives a Medicare fee-for-service beneficiary before furnishing an item or service that Medicare is expected to deny, so the beneficiary can decide whether to accept financial responsibility.

The allowed amount is the maximum a plan will recognize for a service — the number every other number on the remittance is derived from.

An appeal is a formal request asking a payer to reverse a denial, arguing with evidence that the original decision was wrong under the plan's own rules.

In Medicare, assignment is an agreement by which a provider or supplier accepts the Medicare-approved amount as full payment for a covered service, billing Medicare directly and limiting what the patient owes to applicable deductible and coinsurance.

An authorization number is the reference a payer issues when it approves a prior authorization — the identifier that ties the approval to the claim for the service it covers.

A behavioral health carve-out is an arrangement in which mental health and substance use treatment benefits are separated from a health plan's general medical benefits and managed by a specialized organization rather than the main medical plan.

Benefit verification establishes what a plan actually pays for a specific planned service — and what the patient will owe — where eligibility verification only confirms that coverage is active.

The provider or supplier identified as submitting the claim and requesting payment under the applicable billing arrangement.

CAQH runs the shared credentialing data source many commercial payers pull from — one profile a provider maintains, rather than one application per payer.

A CARC is the standardized code on a remittance that states why a payer adjusted a claim line — the payer's stated reason for paying less than billed.

Charge capture is the process of recording every billable service a provider delivered so it can be coded and billed — making sure the practice bills for all the care it gave.

CHIP (the Children's Health Insurance Program) is a jointly federal- and state-funded, state-administered public program that helps cover health care for eligible children, and sometimes pregnant women, in families earning too much for Medicaid but who lack affordable coverage.

A controlled group of claim transactions prepared and tracked together for release, transmission, response matching, and reconciliation.

The service-level portion of a claim carrying details such as date, procedure, modifiers, units, charge, diagnosis linkage, and rendering information.

A rejection is a claim returned before adjudication because it failed a format or data edit — it never entered the payer's system and cannot be appealed.

Scrubbing is the automated check a claim passes through before submission — catching the errors that would otherwise come back as a rejection or a denial.

A clean claim carries everything a payer needs to adjudicate it on first submission — no missing data, no manual intervention, no request for more information.

A clearinghouse is an intermediary that receives claims from providers, scrubs them against payer edits, and routes them electronically to the right payers — returning rejections and remittances.

The CMS-1500 is the standard paper claim form for professional services — the layout behind what most practices submit electronically as an 837P.

The Collaborative Care Model (CoCM) is a team-based, measurement-guided approach to treating behavioral health conditions inside a primary care or other medical practice, and Medicare recognizes it through a defined set of monthly care-management billing codes.

A contractual adjustment is the difference between a provider’s billed charge and the amount the payer’s contract allows — an agreed write-down, not a patient balance.

A control point is a defined place in a workflow where information, authorization, transfer, reconciliation, or completion is checked and evidenced.

COB is the set of rules deciding which plan pays first when a patient has more than one — and a frequent denial reason when the order is billed wrongly.

A corrected claim replaces a claim the payer already processed — it fixes an error rather than arguing the decision, and it must be marked as a replacement.

Cost sharing is the portion of a covered service a patient pays — deductible, copayment, and coinsurance — calculated from the plan's allowed amount, not the billed charge.

A CPT (Current Procedural Terminology) code reports the medical, surgical, or diagnostic service a provider performed — the “what was done” on a claim.

Credentialing is the process of verifying a provider’s qualifications so they can join a payer’s network or be granted privileges at a facility.

A decision right states which role has authority to make a defined operational, coding, compliance, financial, technical, or policy decision.

A denial is a claim a payer has processed and refused to pay, in whole or part, with the reason returned as standardized codes on the remittance.

A dual-eligible beneficiary is a person who qualifies for both Medicare and Medicaid at the same time, so both programs help cover their care.

The effective date is the day a provider's participation with a payer begins — and the day their claims start being payable. It is not the approval date.

EFT is the movement of the money itself. It arrives separately from the remittance that explains it, which is why the two have to be matched.

Eligibility verification is confirming, before or at the visit, that a patient’s insurance is active and covers the planned service — and what the patient will owe.

An EOB is the statement a health plan sends the patient explaining how a claim was processed — what was billed, allowed, and paid, and what the patient owes. It is not a bill.

EPSDT is Medicaid's federally required child health benefit that covers comprehensive preventive screening, diagnosis, and any medically necessary treatment for enrolled individuals under age 21.

An exception queue holds work that cannot continue through the normal path and gives each item a reason, owner, deadline, and next action.

Fee-for-service (FFS) is a payment method in which a health plan or program pays a provider a separate amount for each covered service delivered, based on the specific services billed rather than a fixed per-member payment.

A claim indicator communicating whether the transaction is an original, replacement, void, or another defined submission frequency under the applicable instructions.

ICD-10 is the diagnosis coding system used in the US to report a patient’s condition on a claim — the “why” that justifies a service.

A Local Coverage Determination (LCD) is a decision issued by a Medicare Administrative Contractor (MAC) about whether a particular item or service is considered reasonable and necessary, and therefore eligible for coverage, within that contractor's geographic jurisdiction.

A managed care organization (MCO) is a health plan that contracts with a state Medicaid agency to deliver covered benefits to enrolled members in exchange for a set per-member payment, becoming the payer that providers bill for those members' services.

Medical necessity is a payer's coverage standard — whether a service was appropriate for the patient's condition under the plan's published criteria.

A Medicare Administrative Contractor (MAC) is a private organization that CMS contracts with to process and pay Medicare fee-for-service claims within a defined geographic area.

The Medicare Beneficiary Identifier (MBI) is the unique, randomly generated 11-character alphanumeric code on a person's Medicare card that identifies them in Medicare claims and related transactions, replacing the older Social Security number-based identifier.

Medicare Secondary Payer (MSP) refers to the set of situations and rules under which another insurer or plan is required to pay a patient's medical claim before Medicare does, making Medicare the secondary rather than the primary payer.

Medication-assisted treatment (MAT) is the clinical use of FDA-approved medications, combined with counseling and behavioral therapies, to treat substance use disorders — most commonly opioid and alcohol use disorders.

Mental health parity is the principle — anchored in federal law — that health plans must treat coverage for mental health and substance use disorder care no more restrictively than they treat coverage for comparable medical and surgical care.

A modifier is a two-character suffix on a procedure code that changes what the code reports — without changing the code itself.

Network status is whether a provider participates in a patient's specific plan — in-network or out-of-network — which changes coverage, cost sharing, and balance-billing exposure.

The NPI is the standard 10-digit identifier for a healthcare provider — the number that says who rendered and who is billing for a service.

The design connecting roles, processes, decisions, systems, controls, information, governance, and measures to operational outcomes.

An overpayment is money received beyond what was owed. It is not the provider's money, and how it must be handled is set by rules rather than by choice.

A partial hospitalization program (PHP) is a structured, intensive form of outpatient behavioral health treatment in which a person attends several hours of care on most days of the week but returns home each night rather than staying overnight.

Patient responsibility is the share of the allowed amount the plan assigns to the patient — deductible, copay, or coinsurance. It is set by the plan, not the provider.

Contracting negotiates the terms and the rates. Credentialing verifies who you are. They are separate, and being good at one says nothing about the other.

"Payer of last resort" means Medicaid generally pays for a covered service only after all other available insurance and legally liable third parties have paid, making it the final source billed rather than the first.

Payment posting is recording what a payer decided against each claim — the payment, the adjustments, and the reasons. It is data entry that determines what happens next.

Reconciliation proves that what was posted matches what the bank received. It is the control that catches the payments posting never saw.

PECOS is Medicare's provider enrollment system — where a provider's Medicare enrollment record lives, is updated, and is revalidated.

A peer-to-peer review is a conversation between the ordering provider and a payer's physician reviewer to discuss the clinical basis for a service the payer has questioned or denied.

Precertification is a payer's advance review confirming that a planned service meets its coverage criteria before the service is provided — for most payers, another name for prior authorization.

A predetermination is a payer's advance, usually non-binding review of whether a service would be covered — an estimate of coverage rather than a required approval.

Primary source verification confirms a credential with the body that issued it — not with the provider, and not with their copy of it.

Prior authorization is a payer’s requirement that a provider obtain approval before delivering certain services — without it, the payer may not cover the care.

Privileging grants a credentialed provider permission to perform specific procedures at a specific facility. It is about scope, not about payment.

The role accountable for an end-to-end process, including its design, controls, performance, exceptions, and improvement.

Enrollment registers a provider with a payer so their claims route and pay. It follows credentialing, and it is the step that actually touches revenue.

A RARC is a standardized code that supplements a CARC on the remittance, adding the detail the adjustment reason alone does not carry.

The professional identified as referring the patient or directing a service when that role is applicable to the claim.

A remittance advice is the payer’s explanation to the provider of how a claim was paid or denied — what was allowed, paid, adjusted, and left to the patient. The electronic form is the ERA (X12 835).

The individual provider identified as performing or rendering the billed service when required on the claim.

Revalidation is re-proving an enrollment that already exists. Missing it can deactivate a provider who has changed nothing and done nothing wrong.

A secondary claim bills the next plan after the primary has paid — and it must carry what the primary did, or it cannot be adjudicated.

A measurable commitment for a defined service, population, clock, completion state, evidence, owner, and breach response.

Step therapy is a payer requirement that a patient try a preferred, usually lower-cost treatment first, and have it prove inadequate, before a more expensive alternative is covered.

The subscriber holds the insurance policy; a dependent is someone else covered under it. Billing the patient's information where the subscriber's belongs is a common, avoidable denial.

Timely filing is the deadline by which a payer must receive a claim. Miss it and the claim is denied on the date alone, whatever its merits.

The UB-04 is the standard claim form for institutional services — hospitals and facilities — and the counterpart to the professional CMS-1500.

An underpayment is a claim paid at less than the contract requires. Unlike a denial, it arrives as a payment — so nothing about it looks wrong.

A write-off removes a balance from accounts receivable. Whether it was a decision or a default is what separates a healthy one from a loss.

42 CFR Part 2 is a federal regulation that gives special confidentiality protection to the records of patients treated for substance use disorders by federally assisted treatment programs, generally requiring patient consent before those records are disclosed.

The 837 is the standard electronic transaction that carries a claim to a payer — the HIPAA-mandated format behind nearly every claim submitted today.