Common Insurance Terms and Acronyms
One of the biggest hurdles to insurance billing is learning the lingo. It can feel like a different language! Not to mention the heavy use of acronyms for everything. Consider this your beginners dictionary for learning the language of insurance billing. We’ll start with interpreting the acronyms, and then we’ll move into definitions for each
What do the acronyms mean?
This list is not exhaustive, but it covers a lot of the most common acronyms in insurance billing. Here we have just listed the basics of what each acronym stands for, but we will dive deeper into the meaning of each in the next section, along with defining some common terms that are frequently used in the world of insurance.
AMA: American Medical Association
BCBS: Blue Cross Blue Shield
CAQH: Council for Affordable Quality Healthcare
CMS: Centers for Medicare & Medicaid Services
CMS-1500: Standard health insurance claim form
COB: Coordination of Benefits
CPT: Current Procedural Terminology
DOB: Date of Birth
EDI: Electronic Data Interchange
EHR: Electronic Health Record
EIN: Employer Identification Number
EOB: Explanation of Benefits
ERA: Electronic Remittance Advice
E&B: Eligibility & Benefits
HIPAA: Health Insurance Portability and Accountability Act
HMO: Health Maintenance Organization
INN: In Network
NPPES: National Plan & Provider Enumeration System
NPI: National Provider Identifier
NSA: No Surprises Act
NUCC: National Uniform Claim Committee
OON: Out of Network
OOP: Out of Pocket
PHI: Protected Health Information
PPO: Preferred Provider Organization
RCM: Revenue Cycle Management
SSN: Social Security Number
UHC: United Healthcare
Definitions
American Medical Association: An organization founded in 1847 with the mission “to promote the art and science of medicine and the betterment of public health.” The AMA developed the standardized system of CPT codes that are used in medical billing.
Blue Cross Blue Shield: An insurance company unique in that it is operated independently in each of the states that it operates in.
CAQH: A database for provider information. CAQH profiles are designed to provide standardization among providers, and to aid in the credentialing process. Your information on CAQH must be verified or updated quarterly. Simply review the demographic information that is on file and make sure that it is accurate, or make any necessary changes. CAQH is also another great resource for information on the insurance industry.
Centers for Medicare and Medicaid Services: Part of the Department of Health and Human Service, it is the government organization responsible for regulating Medicare and Medicaid health plans. Whether or not you are a Medicare or Medicaid provider, we strongly recommend checking in with cms.gov to stay informed about insurance legislation, processes and trends.
Clearinghouse: A third party entity that verifies all information submitted on a claim before it arrives at the insurance company. If any submitted information does not match what the insurance company has on file for you as a provider or your patient, the claim will be rejected and sent back to you for correction.
Contract: Upon completing credentialing, you should be sent a contract outlining the terms of your professional relationship with the insurance company, including responsibilities about timely filing of claim submission, reimbursement rates for services, and contract renewal advice. Keep this document handy and securely stored.
Contracted Rate: The rate that the insurance company agrees to pay healthcare providers for any service provided to a member of their plan. Check out our related blog post on Why You NEED to Know Your Contracted Rates.
Coordination of Benefits: A form that a patient submits to each insurance company if they have multiple insurance plans to designate which insurance is primary, and which insurance is secondary. For claim submission, it is important to follow the chain of submission as outlined in the patient’s coordination of benefits.
CMS-1500: A standard paper form established by the National Uniform Claim Committee to submit insurance claim information from a provider to an insurance company. The form is a specific shade of red. You can purchase claim forms from a variety of sources including office supply stores or direct from a government printing office.
CPT Code: A code used to designate a specific medical treatment or procedure for billing purposes. The American Medical Association developed, published, and updates CPT codes.
Credentialing: The process of applying to be an in network provider with an insurance company.
Date of Birth: Used on insurance claim forms to identify plan members, you should always keep your patient’s date of birth on file, as well as the date of birth of the insurance policy holder if your patient is covered under a parent, spouse, or other guardian’s plan.
Deductible: An amount designated by a patient’s insurance plan that a patient must pay for healthcare services before some benefits of their plan will apply. Copays do not typically apply toward a deductible.
Denial: A claim submitted to the insurance company is denied when the services rendered are not covered under the patient’s insurance plan. Claims can be wrongfully denied, in which case appeals can be submitted for further review. Check out our article Standard Denial Reasons and How to Solve Them if you are experiencing issues with claim denials.
Electronic Data Interchange: The electronic version of a CMS-1500 form. Electronic Data Interchange connection must be securely established between your EHR, a clearing house and the insurance company in order for claims to be submitted electronically. Electronic Data Interchange is HIPAA compliant.
Electronic Health Record: This term can refer to individual records of electronic health data, but more often refers to a software system that contains all of your patient data.
Electronic Remittance Advice: The electronic version of an explanation of benefits. ERA information is transmitted securely to your EHR system for posting against a claim. The ERA will include all of the information that is typically included in an explanation of benefits.
Eligibility & Benefits: Sometimes referred to as Verification of Benefits, the act of checking a patient’s insurance plan to see if and which medical services are covered under their insurance plan, and the patient payment responsibility for any given service. Can also be helpful in determining whether or not a patient has met a deductible or out of pocket maximum.
Employer Identification Number: A number assigned to business entities by the IRS, similar to a social security number for tax reporting. Your Employer Identification Number must be included on claims if you credentialed yourself or your business using your EIN.
Explanation of Benefits: Once a claim has been processed at an insurance company, an explanation of benefits will be returned to you and/or your patient outlining what the insurance company paid, or what a patient is responsible for paying. If a claim has been denied, further information will be included on the Explanation of Benefits.
Fee Schedule: A document, usually listed in a table, of CPT codes and their corresponding rate that an insurance company has agreed to pay a healthcare provider for services rendered. The fee schedule is proprietary information to the insurance company, and is not to be shared among providers. For further reading, check out our blog post What is a Fee Schedule?
Health Insurance Portability and Accountability Act: Legislation enacted in 1996 to protect patient health information. With the development of electronic data sharing, HIPAA was designed to make sure that patients could have peace of mind knowing that their data is secure. For therapists, there are many available HIPAA compliant technologies that you can use in your practice so that you do not have to think twice about being HIPAA compliant.
Health Maintenance Organization: A type of insurance plan which requires patients to first see their primary care provider before they visit any specialist, and patients must see an in-network provider to receive coverage.
In Network: A healthcare provider is considered In Network when they are credentialed with the insurance company in question. Typically, patients will seek a healthcare provider who is In Network with their insurance plan since the patient can take advantage of better benefits.
National Plan & Provider Enumeration System: NPPES assigns NPI numbers to providers upon registration. You must have an NPI number if you are submitting claims to insurance. This is another online database that has provider information on record. NPI information is stored here for each provider, and the information can be publicly accessed. Your information should also be reviewed regularly on the NPPES website to make sure that all information is accurate.
National Provider Identifier: Your NPI number is one of several important identifiers for you as a therapist. NPI numbers are assigned by NPPES. You can apply for either an individual NPI number, also referred to as a Type 1 NPI, or an NPI for an organization or group, also referred to as a Type 2 NPI number. You may also have both. It is important to know which NPI number was used when you credential with an insurance company so that claims can be submitted using the same NPI number to process properly.
No Surprises Act: Legislation that took effect in January of 2022, the No Surprises Act was established to prevent patients from receiving large “surprise” medical bills. Providers are required to provide a Good Faith Estimate to their patients before services are rendered.
National Uniform Claim Committee: Developed and regulates the CMS-1500 form for claim submissions.
Out of Network: A provider is considered Out of Network if they are not credentialed with the particular insurance company in question.
Out of Pocket: What a patient will pay for healthcare services themselves before their health insurance plan will fully cover medical expenses. An Out of Pocket Maximum is the maximum amount that a patient will pay in a given year, including their deductible and any copays or coinsurance amounts, before their insurance company will cover 100% of medical expenses.
Prior Authorization: Some services require authorization from an insurance company before the insurance company will provide coverage on those services for their patients. A request must be submitted to the insurance company including diagnosis and treatment plan.
Protected Health Information: Under the HIPAA Act, health records for patients are considered private information that must be transmitted securely to any healthcare organization with the patient’s consent. This includes demographic information, diagnosis and treatment plans for your patients.
Preferred Provider Organization: A type of insurance plan which allows a patient to see a specialist without referral, and allows coverage of services provided by out of network healthcare providers.
Rejection: A rejection of a claim occurs at the clearinghouse, before a claim arrives at the insurance company. A rejection is usually due to a demographic error, including things such as an incorrect NPI, Tax ID, address for the provider or the patient, or an incorrect date of birth. Rejections can be corrected and resubmitted. If you are having issues with rejections, check out our article My Claim Was Rejected. Now What?
Revenue Cycle Management: The term used to describe the stages of insurance claim submission, from the moment that a patient decides they would like to see you for services, to claim submission, follow up, collection and payment posting. Revenue Cycle Management is what Practice Solutions specializes in. Our team is specialized in handling the stages of Revenue Cycle Management so that healthcare providers can spend the most time with their patients.
Social Security Number: A number assigned to you by the IRS for tax reporting purposes. You may use your Social Security Number as a tax ID when you credential with an insurance company if you are credentialing as an individual rather than as a business.
Standard Rate/Cash Rate/Private Pay Rate: The rate that you establish for your services to clients who are paying privately and not using insurance. Standard rates are up to you to decide. Standard Rates are different from your contracted rates established by the insurance company. You can read more about the distinction in this article Standard Rates vs Contracted Rates.
United Healthcare: According to ValuePenguin, UnitedHealth Group controls the highest percentage of market share in the insurance industry. One of the key players in the world of insurance.
