Core terminology
| Term | Beginner explanation |
|---|---|
| Claim | A request for payment submitted to a payer for healthcare services. |
| Charge | The amount assigned by the provider or organization to a healthcare service. |
| Allowed amount | The amount recognized by a payer according to coverage, policy or contract terms. |
| Copay | A fixed amount the patient may be responsible for under the benefit plan. |
| Deductible | An amount a patient may need to pay before certain plan benefits begin paying according to plan rules. |
| Coinsurance | A percentage of an allowed cost that may be assigned to the patient under the benefit plan. |
| Premium | The amount paid for insurance coverage. |
| EOB | Explanation of Benefits — a statement explaining how a claim was processed. |
| ERA | Electronic Remittance Advice — electronic claim-payment and adjustment information returned by a payer. |
| A/R | Accounts Receivable — outstanding amounts that have not yet been resolved. |
| Denial | A claim or service that the payer has processed but will not pay as submitted, requiring review of the reason and next action. |
| Rejection | A claim that fails an edit or transmission requirement before normal payer adjudication and generally must be corrected before it can be processed. |
| Prior authorization | A payer process that may require approval before certain services are provided. |
| Eligibility | Checking whether coverage is active and obtaining applicable benefit information. |
| NPI | National Provider Identifier — a standard identifier for covered healthcare providers in the United States. |
| ICD-10-CM | A diagnosis classification system used in the United States for reporting diseases, conditions and related health information. |
| CPT | A code set maintained by the American Medical Association and widely used to report medical procedures and professional services. |
| HCPCS Level II | A standardized coding system used for certain products, supplies and services not represented by CPT. |
| Clearinghouse | An organization or system that can receive, validate and transmit electronic healthcare transactions between providers and payers. |
| Clean claim | A claim containing the information needed to be processed without requiring correction or additional information. |
| Adjustment | A change to the billed balance based on payer processing, contract terms or another valid account action. |
| Patient responsibility | The portion of an allowed or billable balance assigned to the patient after applicable claim processing and benefit rules. |
| Timely filing | The payer deadline for submitting an initial claim or, depending on policy, certain subsequent claim actions. |
| Appeal | A formal request asking a payer to reconsider a claim decision. |
Rejection vs. denial
Beginners often use these words interchangeably. A rejection generally means the claim did not pass a required edit or transmission step and needs correction before normal adjudication. A denial generally follows payer processing and communicates that payment was not allowed as submitted. Actual payer workflows and terminology can vary, so staff should always review the payer response.
Quick knowledge check
What does A/R stand for?
Accounts Receivable.
Which document explains how a claim was processed: EOB or NPI?
EOB — Explanation of Benefits.
What is a clearinghouse used for?
It can receive, validate and transmit electronic healthcare transactions between providers and payers.
Does “patient responsibility” automatically mean every billed charge can be transferred to the patient?
No. Patient responsibility depends on claim processing, plan benefits, payer rules, contracts and applicable law.
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