Revenue Cycle Management Glossary of Terms

Glossary

Term	Definition
Accountable Care Organization (ACO)	A healthcare model where a group of providers collaborates to manage and coordinate care for a specific patient population, aiming to improve quality and reduce costs.
Accounts Receivable (A/R)	The outstanding payments owed to a healthcare organization by patients or insurance companies for services rendered.
Adjudication	The process by which an insurance payer determines whether to accept, deny, or partially pay a claim.
Adjustment	The portion of a bill that a provider writes off, often due to a contract with a payer.
Advance Beneficiary Notice of Noncoverage (ABN)	A notice given to a Medicare beneficiary when a provider believes that a service may not be covered by Medicare.
Allowed Amount	The maximum amount an insurance company will pay for a covered healthcare service.
Appeal	A formal request to an insurance company to review a decision to deny a claim.
Applied to Deductible (ATD)	The amount of a patient’s bill that is applied to their annual deductible.
Assignment of Benefits (AOB)	An agreement that allows a healthcare provider to receive payment directly from an insurance company on the patient’s behalf.
Authorization	The process of obtaining approval from a health plan for a specific service or treatment before it is provided.
Bad Debt	An unpaid patient balance that is deemed uncollectible after all recovery attempts have been exhausted.
Balance Billing	The practice of billing a patient for the difference between the provider’s charge and the amount allowed by the insurance plan.
Bundled Payment	A single payment to a provider for all services related to a specific treatment or episode of care.
Capitation	A fixed payment model where a provider receives a set amount per patient over a defined period, regardless of the services rendered.
Case Mix Index (CMI)	A relative value assigned to a diagnosis-related group (DRG) of patients in a medical center. It reflects the diversity, clinical complexity, and resource needs of the patients a hospital treats.
Charge Capture	The process of documenting and recording all services, procedures, and supplies provided to a patient to ensure they are accurately reflected on the final bill.
Charge Description Master (CDM)	A comprehensive list maintained by a hospital of all billable items, including procedures, services, supplies, and medications, along with their associated charges.
Charity Care	Free or reduced-cost care provided to patients who are unable to pay for their medical services.
Claim	A request for payment that a healthcare provider submits to an insurance company for services rendered.
Claim Denial	The refusal of an insurance company to pay for a submitted claim.
Clean Claim	A claim that is submitted to a payer without any errors and can be processed without requiring additional information.
Clearinghouse	A company that acts as an intermediary, forwarding claim information from providers to payers.
Clinical Denial	A claim denial from a payer based on the judgment that the services provided were not medically necessary, were experimental, or were not delivered at the appropriate level of care.
Coding	The process of translating a patient’s diagnosis and procedures into universal alphanumeric codes for billing purposes.
Coinsurance	A percentage of the cost for a covered healthcare service that the patient is responsible for paying.
Collections	The process of pursuing payment for unpaid medical bills.
Contractual Allowance	The difference between a hospital’s full-billed charges and the amount contractually agreed upon with a payer. This amount is written off by the hospital.
Coordination of Benefits (COB)	The process of determining which insurance plan is primary and which is secondary when a patient is covered by more than one plan.
Copayment (Copay)	A fixed amount a patient pays for a covered healthcare service at the time of the visit.
Current Procedural Terminology (CPT) Codes	A set of medical codes used to report medical, surgical, and diagnostic procedures and services.
Date of Service (DOS)	The date on which healthcare services were provided to the patient.
Days in A/R	A measurement of the average number of days it takes for a provider to receive payment for services.
Deductible	The amount a patient must pay out-of-pocket for covered healthcare services before their insurance plan begins to pay.
Denial Management	The process of investigating, appealing, and resolving denied claims.
Denial Reason Code	A standardized code provided by an insurance company on a remittance advice that explains precisely why a claim or service line was denied.
Diagnosis-Related Group (DRG)	A system to classify hospital cases into one of approximately 500 groups, used by Medicare to determine how much to pay the hospital for each case.
Early Out	A program that focuses on collecting patient balances early in the revenue cycle, typically before they are sent to collections.
Electronic Health Record (EHR)	A digital version of a patient’s paper chart, providing real-time, patient-centered records.
Eligibility Verification	The process of confirming a patient’s insurance coverage and benefits before a service is provided.
Episode of Care	A series of healthcare services provided to a patient for a specific condition or illness.
Explanation of Benefits (EOB)	A statement from a health insurance company to a member listing services that were billed, how charges were processed, and the total amount of patient responsibility.
Fair Debt Collection Practices Act (FDCPA)	A federal law that limits the behavior and actions of third-party debt collectors when attempting to collect debts.
Fee Schedule	A complete listing of fees used by insurance carriers to pay doctors or other providers.
Financial Clearance	The pre-service process of ensuring that all financial aspects of a patient’s visit are addressed, including insurance verification, authorization, and estimating patient responsibility.
Financial Counseling	A service that helps patients understand their medical bills and the payment options available to them.
Financial Hardship Policy	An official hospital policy that outlines the criteria and process for patients to receive free or discounted care based on their inability to pay.
Gross Charges	The full, undiscounted price of services billed by a hospital before any contractual allowances, discounts, or write-offs are applied.
Guarantor	The person who is financially responsible for the patient’s bill.
Healthcare Common Procedure Coding System (HCPCS)	A set of healthcare procedure codes based on the American Medical Association’s Current Procedural Terminology (CPT).
Health Information Management (HIM)	The practice of acquiring, analyzing, and protecting digital and traditional medical information vital to providing quality patient care.
Health Insurance Portability and Accountability Act (HIPAA)	A federal law that provides data privacy and security provisions for safeguarding medical information.
Hospital-Acquired Condition (HAC)	A medical condition or complication that a patient develops during a hospital stay that was not present at the time of admission. Payers may reduce or deny payment for HACs.
In-Network	A provider who has a contract with a health insurance plan to provide services to its members at a discounted rate.
International Classification of Diseases (ICD) Codes	A global standard for reporting diseases and health conditions.
Interoperability	The ability of different health information technology systems and software applications (like EHRs and billing systems) to communicate, exchange, and interpret data seamlessly.
Itemized Bill	A detailed statement that lists every individual service, supply, and medication a patient received during their encounter, along with its specific charge.
Key Performance Indicator (KPI)	A measurable value that demonstrates how effectively a company is achieving key business objectives.
Managed Care	A type of health insurance that contracts with healthcare providers and medical facilities to provide care for members at a lower cost.
Medical Necessity	The determination that a healthcare service or supply is needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that it meets accepted standards of medicine.
Medicare Administrative Contractor (MAC)	A private healthcare insurer that has been awarded a geographic jurisdiction to process Medicare Part A and Part B medical claims for a fee.
Modifier	A two-digit code added to a CPT or HCPCS code to provide more specific information about the service performed, such as if it was performed on both sides of the body.
National Provider Identifier (NPI)	A unique 10-digit identification number issued to healthcare providers in the United States by the Centers for Medicare and Medicaid Services (CMS).
Net Revenue	The amount of money a hospital anticipates actually collecting for services rendered after subtracting contractual allowances, discounts, and bad debt.
Out-of-Network	A provider who does not have a contract with a health insurance plan.
Out-of-Pocket Maximum	The most a patient will have to pay for covered services in a plan year.
Patient Financial Responsibility	The portion of medical bills that a patient is required to pay.
Patient Portal	A secure online website that gives patients 24-hour access to personal health information, billing statements, and communication tools with their provider.
Payer	An organization, such as an insurance company, that pays for healthcare services.
Pay-for-Performance (P4P)	A value-based care model that offers financial incentives to providers for meeting or exceeding certain performance measures for quality, efficiency, and patient satisfaction.
Peer-to-Peer Review	A live conversation between a physician at the hospital and a physician at the insurance company to discuss the medical necessity of a denied service in an attempt to overturn the denial.
Point-of-Service (POS) Collection	The collection of a patient’s portion of their bill at the time services are rendered.
Pre-Authorization	A decision by a health insurer that a healthcare service, treatment plan, or prescription drug is medically necessary.
Pre-Registration	The process of gathering a patient’s demographic and insurance information before their scheduled appointment.
Price Transparency	The practice of providing patients with information about the cost of healthcare services before they are provided.
Prior Authorization	See Pre-Authorization.
Prompt Pay Discount	A small reduction in the patient’s balance that a hospital may offer as an incentive for paying the bill in full by a specified date.
Propensity to Pay	A score or model that predicts a patient’s likelihood of paying their medical bills.
Provider	A person or facility that provides healthcare services, such as a doctor or hospital.
Readmission Rate	A key quality metric that measures the percentage of patients who are readmitted to the hospital within a specific timeframe (usually 30 days) after being discharged.
Remittance Advice (RA)	A document sent by a payer to a provider that explains how a claim was processed and paid.
Revenue Code	A four-digit code used on hospital claim forms (UB-04) that identifies the department where services were rendered or the type of item a patient received.
Revenue Cycle Management (RCM)	The financial process, utilizing medical billing software, that healthcare facilities use to track patient care episodes from registration and appointment scheduling to the final payment of a balance.
Robotic Process Automation (RPA)	A technology that uses software “bots” to automate highly repetitive, rule-based tasks within the revenue cycle, such as checking claim status or verifying eligibility.
Scrubbing	The process of reviewing claims for errors before they are submitted to a payer.
Self-Pay	A patient who pays for healthcare services out-of-pocket, without insurance.
Skip Tracing	The process of locating a person whose contact information is no longer accurate, often used in debt collection.
Technical Denial	A claim denial for non-clinical reasons. Common causes include incorrect coding, missing information, failure to obtain prior authorization, or late filing.
Third-Party Liability (TPL)	The legal obligation of a third party, such as an insurance company, to pay for part or all of a person’s medical expenses.
Unbundling	The illegal practice of using multiple CPT codes for the individual parts of a procedure that could be represented by a single, comprehensive code, in order to increase reimbursement.
Underpayment	When a payer pays less than the contractually agreed-upon rate for a service.
Uncompensated Care	Healthcare services provided by hospitals that are not reimbursed, including both bad debt and charity care.
Upcoding	An illegal practice where a provider assigns an inaccurate billing code to a medical procedure or treatment to increase reimbursement.
Utilization Management (UM)	The evaluation of the medical necessity, appropriateness, and efficiency of the use of healthcare services, procedures, and facilities under the provisions of the applicable health benefits plan.
Value-Based Care	A healthcare delivery model where providers are paid based on patient health outcomes.
Write-Off	The act of canceling a debt from an account, also known as an adjustment.