Medical Billing Terms: A Plain-Language Glossary
Documents you will receive
Most confusion starts with the paperwork. Three documents get mixed up more than any others, and only one of them is a bill.
- Bill or statement: a request for payment from the provider, which may be a summary or itemized.
- Itemized bill: a line-by-line list of services, dates, quantities, codes and charges.
- EOB (Explanation of Benefits): a notice from your insurer showing how a claim was processed. It is not a bill.
- Medicare Summary Notice (MSN): the statement Medicare sends about claims it processed.
- Good faith estimate: an estimate of expected charges that uninsured and self-pay patients are entitled to before scheduled care.
- Validation notice: a written notice a debt collector must send about the debt it claims you owe.
- Denial notice: a message from your insurer saying a claim was not paid, usually with appeal instructions.
What you pay
These terms describe your share of the cost under a health plan. Exact amounts are set by your plan documents, so check yours.
- Premium: the regular amount you pay to keep coverage active, separate from any bill for care.
- Deductible: the amount you pay for covered care before your plan starts sharing costs.
- Copay: a fixed amount you pay for a particular service, such as an office visit.
- Coinsurance: your percentage share of a covered cost after the deductible is met.
- Out-of-pocket maximum: the most your plan says you will pay in a plan year for covered, in-network care.
- Patient responsibility: the amount your EOB says you owe after the plan's processing.
- Self-pay: paying for care without using insurance, either by choice or because you are uninsured.
Pricing and network terms
A single service can have several prices attached to it. Knowing which one a number refers to is half of reading a bill.
- Billed charge: the amount the provider lists for the service before any adjustment.
- Allowed amount: the maximum your plan will recognize for a covered service, which in-network providers agree to accept.
- Adjustment or write-off: the part of the billed charge removed under the provider's contract with your plan.
- In-network: providers that have a contract with your plan.
- Out-of-network: providers without a contract, who may bill differently.
- Balance billing: billing you for the difference between the provider's charge and what your plan allowed or paid.
- Chargemaster: a hospital's internal list of standard prices for its services.
Coding terms
Codes translate care into billing language. You do not need to memorize them, but you should know what the words mean when you see them on an itemized bill. CPT is a trademark of the American Medical Association.
- CPT codes: standardized codes describing medical services and procedures.
- ICD-10 codes: diagnosis codes describing the condition being treated.
- E/M (evaluation and management): codes for office, emergency and hospital visits, billed in levels.
- Modifier: an addition to a code that gives more detail, for example that a service was repeated.
- NCCI edits: CMS correct-coding edits that limit which code pairs can be billed together.
- Upcoding: billing a higher level of service than was provided.
- Unbundling: billing separately for services that should be billed together.
Billing errors and problems
These words describe the things that go wrong, and many of them have their own pages on this site.
- Duplicate charge: the same service billed more than once.
- Services not rendered: a charge for care or supplies you did not receive.
- Clerical error: a wrong date, quantity, patient name or account number.
- Facility fee: a charge for use of a hospital or outpatient facility, separate from the doctor's fee.
- Professional fee: the charge for the clinician's own services.
- Coordination of benefits: how plans decide which pays first when you have more than one.
- Prior authorization: approval from your plan before certain services, which can affect whether a claim is paid.
Insurance decisions and appeals
When an insurer says no, there is a process. The deadline for appealing is printed on your denial notice or EOB; many plans allow roughly six months, but check yours.
- Claim: a request for payment submitted to your insurer, usually by the provider.
- Denial: a decision that a claim, or part of it, will not be paid.
- Internal appeal: asking your plan to reconsider its decision.
- External review: an independent reviewer examines a denied claim after the internal appeal.
- ERISA: the federal law that governs claims procedures for many employer plans.
- Medical necessity: the standard a plan uses to decide whether a service is covered.
- Explanation of denial: the reason code or text on your EOB that tells you why a claim was not paid.
Laws, regulators and collections
A few legal and regulatory terms come up repeatedly when bills are disputed. They are summaries only, not legal advice.
- No Surprises Act: federal law limiting certain surprise out-of-network bills, though not for ground ambulances.
- FDCPA: the Fair Debt Collection Practices Act, which governs third-party debt collectors.
- HIPAA right of access: your right to request your records, generally with a response in 30 days.
- Hospital price transparency: rules requiring hospitals to publish standard charges.
- 501(r): the tax rule requiring nonprofit hospitals to have a financial assistance policy.
- Financial assistance or charity care: a hospital program that reduces or eliminates bills for eligible patients.
- State insurance department: the state regulator that takes complaints about insurers.
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Frequently asked questions
What is the difference between an EOB and a medical bill?
An EOB comes from your insurer and explains how a claim was processed. A bill comes from the provider and asks for payment. Compare the patient responsibility on your EOB with the balance on the bill before you pay.
What does allowed amount mean?
The allowed amount is the most your plan recognizes for a covered service. In-network providers agree to accept it, so the difference between their billed charge and the allowed amount is generally written off rather than billed to you.
Are CPT codes the same as diagnosis codes?
No. CPT codes describe the services performed, such as a visit or procedure. Diagnosis codes, such as ICD-10 codes, describe the condition being treated. Both appear in claims, and mismatches between them can lead to denials.
What is balance billing?
Balance billing is when a provider bills you for the difference between its charge and what your plan paid or allowed. Some balance billing is banned, for example in certain emergency situations under the No Surprises Act and for most Medicaid patients.
Where can I look up a term that is not on this list?
Check your plan's summary documents and the CMS and healthcare.gov websites, which publish plain-language definitions. You can also ask your insurer or the provider's billing office to explain any line on your bill in writing.
Sources and further reading
Related guides
Not legal or medical advice. Medical Bill Dispute Pro is a software tool that helps you prepare billing dispute letters. It is not a law firm, does not provide legal advice, and cannot guarantee any outcome. Laws and rules change and vary by plan and state; verify important details with the sources linked above, your insurer, or a qualified professional.