Medical Insurance Billing and Coding

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By Allen B. Ury

Like all career fields, Medical Insurance Billing and Coding uses language and terms all professionals need to understand. If you are thinking about medical billing and coding training, here's some basic terminology with which you need to be familiar:

Allowed Expenses - This is the most an insurance plan will pay for a particular service.

AOB - "Assignment of Benefits," the form that allows an insurer to pay benefits directly to the provider (doctor, hospital, etc.) instead of the patient.

Assignment & Authorization - The form the patient signs that allows the medical provider to directly bill an insurance company and receive payment.

Claim - Notice that a service has been performed along with a request for payment.

Coding - Using industry-recognized numbers/abbreviations to represent various diagnoses and treatments.

COB - "Coordination of Benefits," the provision used when a patient is covered by one or more health plans.

Co-Payment - A small amount of money patients are required to pay up-front when they visit a healthcare provider.

Coverage - Those treatments and services a particular plan does - and does not - cover.

DOS - "Date of Service."

Deductible - The amount a patient must first pay out-of-pocket before insurance coverage even begins. This is usually based on a calendar year.

DRGs - "Diagnosis-Related Groups," a way of matching illnesses with related treatments for billing purposes.

ERISA - "Employee Retirement Income Security Act" of 1974, which sets standards for group health plans.

EPO - "Exclusive Provider Organization," which is a group of healthcare providers (doctors/hospitals) who have contracted with an insurance carrier to deliver services at a set rate. Standards and credentials for an EPO member tend to be higher than those in a PPO (see below).

HIPPA - The "Health Insurance Portability and Privacy Act" is the federal law that allows people to take insurance with them after they leave a job and also establishes strict privacy standards for the handling of medical records.

HMO - "Health Maintenance Organization," a group that provides medical services to members at a fixed price.

ICD-9-CM - "International Classification of Disease - 9th Edition (Clinical Modification) - The list of illnesses and corresponding codes used to "code" medical records and insurance claim forms.

Network - A group of doctors, hospitals and other healthcare providers who have contracted with a particular insurance plan (HMO, PPO, etc.)

Out-of-Network Provider - Also known as a "Non-Participating Provider," this is a doctor or hospital not signed with a particular network.

Preauthorization - Permission from an insurance company to proceed with a specific procedure,

PEC - "Pre-Existing Condition," which is a condition or illness a person has before buying insurance, and is therefore usually not covered by the plan for a specified period of time.

PPO - "Preferred Provider Organization," a group of healthcare providers (doctors, hospitals, etc.) who have contracted with an insurance company to provide services at set, usually less-expensive rates.

PCP - "Primary Care Physician," the doctor - usually an internist or family practice doctor - who is the first person a patient goes to for an examination. If necessary, the PCP may then refer the patient to a specialist.

UCR - "Usual, Customary and Reasonable," a phrase used to describe service rates that are in line with those charged for similar services by other providers in the area.

These are just a few of the basic terms Medical Insurance Biller and Coders encounter daily. As in any industry, there are dozens if not hundreds of other terms, acronyms and slang used by those in the field, "lingo" one picks up through exposure and repetition over time.


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