December 14, 2020 December 14, 2020/ Donna Lehmann
Are you buried under a pile of paperwork? Running into optometry medical and vision billing roadblocks? Need a refresher course in common medical billing and insurance terms?
We’ve got you covered with a glossary of insurance terminology and billing tips to help you improve collections, prevent rejected and denied claims, and focus on growing revenue for your eye care business.
Medical Billing Terms and Descriptions for Billers and Coders
Accounts Receivable (AR): The balance of money due to the provider for services delivered. If you’re filing claims regularly and posting the remits as they come in, then AR should be the actual value of outstanding claims that need your attention.
Related: How to Reduce the Accounts Receivable Cycle With Smarter Billing
Adjudication: The medical claim decision-making process once the claim reaches the insurance payer to determine if they will accept, deny, or reject the claim. The process includes the payer evaluating the medical claim, deciding if the claim is valid and compliant, how much the payer will reimburse the provider for the claim.
Advance Beneficiary Notice of Noncoverage (ABN): A consent document that informs the patient they may be financially liable for the costs should their insurance carrier deny the claim. The ABN must be completed and signed by the patient before you provide services or items that are not covered by insurance.
Related: Rules to Follow for Advance Beneficiary Notice of Noncoverage
Aging Bucket or AR Aging: Insurance claims that haven’t been paid or balances owed by patients that are overdue more than 30 days.
Related: 10 Optometry Medical Billing Tips to Improve Collections
Allowed Amount: The maximum dollar amount that an insurance company will allow a provider to collect for an eligible healthcare service. Depending on the patient’s particular coverage, this amount may be paid by the insurance, the patient, or split between them.
Applied to Deductible (ATD): The amount of charges the patient must pay before the insurance company will start paying. This is usually found on the patient insurance statement.
Assignment of Benefits (AOB): Insurance payments that are paid directly to the provider for services performed.
Authorization: A process when a patient requires permission (prior authorization) from the insurance payer before receiving certain treatments or services.
Authorization Number: A number that states the treatment or service has been approved by the patient’s insurance plan.
Bundling: Also known as code bundling, is when two or more healthcare services are listed under one billing code.
Claim Adjustment Reason Codes (CARCs): Reason codes explain why the payment was adjusted and describe why the claim or service line was paid differently than it was billed.
Related: Mastering Claim Denial Reason Codes Expedites Cash Flow
Clearinghouse: An intermediary or middleman (a sender and receiver) that regularly transmits secure, HIPAA-compliant electronic medical claims and financial information from eye care providers to single or multi payers in batch transactions. Payers include Medicare, Medicaid, Managed Care, private insurances, and other third-party payers.
Related: Clearinghouse vs. RCM: Here’s the Big Difference
Charge Entry: The process of entering accurate medical billing information and assigning diagnosis codes and procedure codes to file a medical claim.
Related: Why is Charge Entry Critical to Medical Billing?
Claim Adjustment Group Codes: These codes include two alpha characters that assign the responsibility of a claim adjustment that appears in the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA). These group codes include a numeric or alpha-numeric claim adjustment reason code that indicates why a claim or service line was paid (or not paid) differently than it was billed.
Claim Scrubbing: A process to make sure medical claims are clean and free from errors before submitting them.
CMS-1500 02/12 Form: A Centers for Medicare and Medicaid Services (CMS) medical claim form used to submit paper claims to Medicare and Medicaid. Its red ink distinguishes the form. Sometimes referred to as a HCFA form, Health Care Financing Administration (HCFA) being the former name for CMS.
Coordination of Benefits: When a patient is covered by more than one insurance plan—one is primary and the other is a secondary carrier.
Co-insurance: Amount (typically a percentage) a patient pays the healthcare provider once the patient’s insurance has paid its portion (based on their benefit contract). Oftentimes, the patient must have met their deductible before co-insurance kicks in.
Co-payment (Co-pay): A fixed fee that the patient pays the healthcare provider for the services or treatment received.
Credentialing: Sometimes called medical provider credentialing. This is the process of gathering and authenticating (verifying) a doctor’s credentials (professional background and educational history). Credentialing ensures that providers have the required licenses, certifications, and skills to care for patients. Insurance plan credentialing is often referred to as “getting on insurance panels.”
Related: Critical Steps for Efficient Provider Credentialing and Enrollment
Current Procedural Terminology (CPT®) Code: Codes published by the American Medical Association® that consist of various categories/types of five-digit codes and two-character modifiers to describe any changes to the procedure. Some codes may have a fifth alpha character, such as F, T or U. There are four types of CPT codes: Category I, Category II, Category II, and Proprietary Laboratory Analyses (PLA) codes.
Date of Service (DOS): The treatment date.
Diagnosis Code (ICD-10): The ICD-10-CM (International Classification of Diseases) diagnosis code is a medical code that describes the condition and diagnoses of patients, whereas the ICD-10-PCS code describes inpatient procedures. A diagnosis code tells the insurance payer why you performed the service.
Related: 2022 ICD-10-CM Codes Update Guide for Eye Care
Related: The 2021 ICD-10-CM Codes Update Guide for Eye Care
Denied Claim: A denied claim is a claim that has made it through the adjudication system—the insurance company or third-party payer received and processed the claim. However, even though a payer denies a claim, you can still appeal the claim as that doesn’t mean it’s not payable.
Related: Common Coding Denials You Need to Know for Faster Payments
Effective Date: The date when a benefit contract for insurance coverage begins.
EDI Enrollment: The process of enrolling with a clearinghouse and/or individual payers to submit electronic claims. You must enroll with your clearinghouse when you set up a billing system. Each clearinghouse has a unique submitter and receiver ID so you can submit and receive remits, which are linked to your Tax ID. Certain payers require enrollment paperwork before you can submit claims to them via the clearinghouse, including Medicare and Medicaid.
Electronic Data Interchange (EDI): A link between your billing system and the insurance company, and how billing transfers claim data to various insurance payers.
Electronic Funds Transfer (EFT): Similar to direct deposit where insurance claims payments are automatically sent to your bank account. More insurance payers require that providers receive EFT payments to remain compliant with provider network criteria.
Electronic Remittance Advice (ERA): An electronic data interchange (EDI) or electronic transaction that provides claim information. ERAs are often used to auto-post claim payment into the billing system.
Eligibility and Verification: Ensures the insurance data is correct and helps determine the amount a patient may owe (e.g., co-pays, co-insurance, and deductibles). Providing more accurate cost estimates to your patients can significantly boost patient satisfaction and save you from future claim denials.
Related: Reduce Denied Claims With Proactive Insurance Eligibility Verification
Evaluation and Management (E/M) Codes: A category of CPT® codes used for billing services provided by a doctor or other healthcare provider to describe patient visits in various categories. These medical codes apply to visits and services that involve “evaluating and managing” patient health for new and established patients. E/M coding consists of three components: history, medical decision making (MDM), and exam.
Beginning January 1, 2021, health care providers and medical billers must use the new E/M codes for 99202-99215 (99201 was deleted in 2021) and select the code based on the level of MDM or total time. For more information, review the American Medical Association® (AMA) CPT® E/M Code and Guideline Changes document and CPT® E/M Level of Decision-Making Table 2 to determine the appropriate office or other outpatient E/M service code.
Related: Managing 2021 Evaluation and Management Code Changes
Explanation of Benefits (EOB): An EOB is a statement the insurance company sends after processing a claim received from the provider. The EOB lists the total charges (amount billed), allowed amount, non-covered charges, the amount paid to the provider, and any co-pay, co-insurance, and deductibles the patient pays.
Fee Schedule: A fee schedule is included in the provider’s insurance company contract (except for Medicare and Medicaid) and states what the insurance company is willing to pay (allowed amount) for services the provider performs.
Global Period: A period triggered by a surgical procedure where certain follow-up procedures are included in the original surgery code. Depending on the surgical procedure, the global period may be 0 days, 10 days, or 90 days. During this period, certain modifiers may be used for procedures that would otherwise be considered part of the standard follow-up care when those procedures are performed for unrelated reasons.
Guarantor: The person responsible for paying the bill. Also known as the responsible party.
Healthcare Common Procedure Coding System (HCPCS) Codes: Standardized five-character, alpha-numeric code sets used for billing Medicare and Medicaid patients that correspond to services, procedures, and equipment not covered by CPT® codes. The Centers for Medicare and Medicaid Services (CMS) monitors HCPCS billing codes.
HIPAA: The Health Insurance Portability and Accountability Act (HIPAA) federal law has been around since 1996. HIPAA compliance focuses on three main tasks—confidentiality, integrity, and availability. HIPAA protects the privacy of individual identifiable protected health information (PHI), provides electronic and physical security of health and PHI, and simplifies billing and other electronic transactions.
ICD-10 Codes: International Classification of Diseases Tenth Revision. ICD-10-CM (clinical modification) is a medical code that describes the condition and diagnoses of patients, whereas the ICD-10-PCS (procedural classification system) code describes inpatient procedures. A diagnosis code tells the insurance payer why you performed the service.
Local Coverage Determination (LCD): Decisions made by a Medicare Administrative Contractor (MAC). Certain codes may be governed by an LCD. Reviewing LCDs regularly is an important part of ensuring your claims are complete and correct before submission to avoid payment delays.
Medicare Administrative Contractor (MAC): A private health care insurer who processes claims for Medicare beneficiaries.
Related: Medicare Billing Solutions for Cataract Post-Op Co-Management
Related: 5 Medicare Billing Dos and Don’ts to Guide Your Practice
Medicare Advantage Plans: Also known as Medicare Part C, these plans are an “all in one” alternative to traditional Medicare plans that are offered through private insurance companies.
Related: Meet Growing Demand With These Medicare Advantage Billing Tips
Medicare Beneficiary Identifier (MBI): The MBI is an 11-character alphanumeric number on the patient’s Medicare card that replaces the patient’s Social Security Number (SSN)-based Health Insurance Claim Number (HICN).
Medically Necessary: Medicare defines medically necessary as “health care services or supplies that are needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.”
Modifier: Modifiers are added to the Healthcare Common Procedure Coding System (HCPCS) or Current Procedural Terminology (CPT®) codes to provide additional information necessary for processing a claim, such as identifying why a doctor or other qualified healthcare professional provided a specific service and procedure.
Related: How (and How Not) to Use Common Modifiers
National Correct Coding Initiative (NCCI) Edits: NCCI edits prevent bundling/unbundling due to incorrectly using CPT® procedure codes and HCPCS billing codes, including combining inappropriate code combinations.
National Coverage Determination (NCD): A form of utilization management that determines if Medicare will pay for an item or service.
National Provider Identifier (NPI): A unique 10-digit identification number issued to healthcare providers and is required by HIPAA. This number is assigned through the National Plan and Provider Enumeration System (NPPES).
Place of Service (POS): A two digit code that describes the location where services were performed.
Pre-Certification Number: The insurance company will issue a pre-certification number that states the patient services and treatment have been approved; however, this does not guarantee payment.
Prior Authorization Number: An authorization number issued from the insurance payer for specific services. Always verify prior authorization and referral numbers are correct on the claim.
Related: Reduce Denied Claims With Proactive Insurance Eligibility Verification
Procedure Code: The American Medical Association® Current Procedural Terminology (CPT®) code describes a medical, surgical, or diagnostic procedure that a healthcare provider performs.
Provider Enrollment: The process of enrolling a provider with commercial or government health insurance plans to which the provider can be reimbursed for the services rendered to patients. For example, once you have successfully enrolled with the insurance plan, the provider is considered “in network.”
Related: Critical Steps for Efficient Provider Credentialing and Enrollment
Remittance Advice Remark Codes (RARCs): Remark Codes are used to provide an additional explanation for an adjustment already described by a Claim Adjustment Reason Code or to convey information about processing remittance.
Rejected Claim: A claim that has never been processed by a clearinghouse, insurance payer, or the Centers for Medicare & Medicaid Services (CMS). The claim is not considered “received” and the claim did not make it through the adjudication (decision making) process.
Revenue Cycle Management (RCM): A complete RCM is a financial process that manages provider credentialing and enrollment, eligibility and benefits verification, claims processing, payment posting, and revenue generation. RCM and optometric billing services work with your medical clearinghouse to streamline and simplify administrative and clinical functions so you can capture, manage, and collect patient service revenue.
Related: Clearinghouse vs. RCM: Here’s the Big Difference
Related: Calculating ROI for Outsourcing Optometric Medical Billing and RCM
Secondary Insurance: A patient’s supplemental insurance that pays some deductibles, co-pays, and co-insurances after the primary insurance has paid.
Superbill: An itemized document used by healthcare providers that outlines the services a patient received from the provider. The healthcare provider submits the Superbill via a paper or electronic claim to payers for reimbursement.
Tax Identification Number (TIN): Nine-digit Federal tax identification number issued by the Internal Revenue Service (IRS) and used by individuals and businesses for filing taxes. A TIN is also known as an Employer Identification Number (EIN) for your eye care practice.
Telehealth: Remote non-clinical services.
Telemedicine: Remote clinical services.
Related: Telehealth and Telemedicine Billing Guide for Eye Care Professionals During COVID-19
Term Date: The date the insurance contract expires or the date a subscriber or dependent’s insurance coverage ceases.
Third-Party Administrator (TPA): A company that processes insurance claims or manages other claims administrative services for healthcare providers.
Third-Party Payer: An entity, such as insurance companies, government agencies, health maintenance organizations (HMOs), and employers, that pay medical claims on behalf of the insured.
Type of Service (TOS): Describes the category of service performed.
Unbundling: When providers submit several CPT treatment codes when only one is necessary.
Usual, Customary and Reasonable (UCR) Charges: A base amount an insurance company will pay after filing a claim. UCR (varies by the geographic location and service) is also the allowed amount most providers can charge for certain medical services.
Write-Off or Adjustment Amount: An amount written off or adjusted from a charge. Typically, this is any amount over the insurance’s stated allowed amount, but may include additional adjustments such as penalties or Medicare sequestration. If you are in-network with an insurance company, you may not bill the patient for any write-off or adjustment amounts.
Experience the Positive ROI of Outsourcing Eye Care Billing
Fast Pay Health certified coders and billing consultants have extensive experience in optometry and ophthalmology coding and billing. Coders are well-versed in CPT® and ICD-10 coding, billing with code modifiers, electronic data interchange (EDI) processes, industry standards, and maintaining 100% HIPAA compliance.
Request a free practice analysis today and start reaping the benefits of fewer denied claims and faster payments.
CPT® copyright 2021 American Medical Association. All rights reserved.