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Insurance and billing terminology can be
very confusing. To help eliminate some of
that confusion, we have compiled some
commonly used terms and their definitions.
Allowed charge (approved charge):
The amount Medicare or your insurance
company approves for payment to a physician
for a service rendered. Typically, Medicare
pays 80 percent of the approved charge and
the patient pays the remaining 20 percent.
Assignment of benefits:
A procedure whereby the subscriber
authorizes the carrier to make payment of
allowable benefits directly to the provider.
Assignment (Medicare):
The term used to refer to a physician's
decision to accept Medicare's allowed
charge.
Balance billing:
Billing the patient or beneficiary for any
fee in excess of the amount allowed by the
insurance carrier.
Benefits package or benefit schedule
summary:
Description of covered health care services
that your insurance plan will provide for
you and your family.
Co-insurance:
The portion of the balance of covered
medical expenses which a beneficiary must
pay after payment of the deductible. Under
Medicare Part B, the beneficiary pays
coinsurance of 20 percent of allowed
charges.
Co-payment:
A type of cost sharing where the insured
party is responsible for paying a fixed
dollar amount per service.
Coordination of benefits (COB):
A provision in an insurance plan that when a
patient is covered under more than one group
plan, benefits paid by all plans will be
limited to 100 percent of the actual charge.
Deductible:
A pre-determined amount which you must pay
toward the cost of medical treatment before
the benefits of the program go into effect.
Medicare Part B has an annual deductible of
$100.
EOB:
Explanation of benefits.
EOMB:
Explanation of Medicare benefits.
Fee-for-service:
Reimbursement based on the cost of services
provided.
Network:
Group of physicians who agree to provide
care to members and to abide by the rules of
the insurance plan. If you physician
contracts with your insurance company they
are considered "in network."
Non-participating physician:
A health care professional or facility that
does not have a written participating
agreement with an insurance plan. For
Medicare, if a physician does not sign a
Medicare participation agreement they are
not obligated to accept assignment on all
Medicare claims. Frequently defined as
NonPar.
Part A (Medicare):
The hospital insurance program which covers
the cost of hospital and related post
hospital services.
Part B (Medicare):
Covers the costs of the physician services,
outpatient laboratory and x-ray tests,
durable medical equipment, outpatient
hospital care, and certain other services.
Part B requires payment of a monthly
premium. Beneficiaries are responsible for a
deductible and coinsurance payment for most
covered services.
Participating provider:
A health care professional or facility that
has a written participation agreement with
an insurance plan. For Medicare, a physician
who signs a participation agreement agrees
to accept assignment of all Medicare claims
for a period of one year. Frequently
referred as Par.
Preferred provider organization (PPO):
A type of managed care plan where members
obtain services from a network of physicians
who have nonexclusive arrangements with the
managed care plan. Members also receive some
benefit coverage when they obtain services
from providers who are not in the plan’s
network.
Pre-certification:
The process of obtaining permission to
perform a service form the insurance carrier
before the service is performed.
Pre-existing condition exclusion:
A practice of some health insurers to deny
coverage to individuals for a certain
period, for example, six months, for health
conditions that already exist when coverage
is initiated.
Primary care physician (PCP):
A physician who devotes the majority of
his/her practice to family or general
medicine.
Release of information:
The patient's signature indicating
consent to the release of information
necessary for settlement of his/hers
insurance claim.
Referral:
Written approval by your PCP for you to see
a specialist.
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