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Basic Medical Terms Your Practice Staff Should Know


Last week, we talked about the difference and definitions of major insurance types in "Medical Insurance Primer for Practice Staff." A fellow blogger pointed out that many patients are also not aware of the differences between copay, co-insurance, and a deductible. Below are some additional terms for your staff to have that will easily explain these differences to your patients.

Allowed Amount: Amount of the billed charge the insurance company deems is payable by the plan.

Assignment of Benefits: The patient or guardian signs the Assignment of Benefits form so that the physician or medical provider will receive the insurance payment directly.

Authorization: Approval by the health plan if the physician wants to refer the patient to a specialist.

Bundling: Method by which the insurance company decides to combine payment for two or more medical services.

Capitation: Payment methodology in which the physician is paid a set dollar amount determined by a per member, per month calculation to deliver medical services to a specified group of people (like an IPA).

Carve-Out: Medical services that are separated from a contract and paid under a different arrangement.

Case Management: A method by which a health plan attempts to control costs by directing all of the procedures for the care of an individual through a nurse or other healthcare professional.

Claim: Request for payment by a medical provider for a given medical service or item.

Consolidated Omnibus Budget Reconciliation Act (COBRA): Continuation of medical benefits once a member has left their employer.

Co-Insurance: A percentage the patient is responsible for on a given insurance claim.

Contracted Provider (Participating): Provider that has an agreement with a health plan to accept their patients at a previously agreed upon rate for payment. They are deemed as "in-network."

Copayment / Copay: A fixed dollar amount an insured person must pay when medical service is received.

Deductible: Set dollar amount which must be satisfied within a specified timeframe before the health plan begins making payments on a claim.

Explanation of Benefits (EOB): Summary of the payment made by your health plan to the medical provider.

Fee-for-Service: Method of payment for medical services rendered.

Fee Schedule: List of CPT codes and dollar amounts an insurance company will pay.

HCFA 1500: Standard claim form used by health plans on which to consider payment to the medical provider.

ICD-9 / ICD-10: Standard format of identifying the illness, injury, or disease by using a three-digit to five-digit code.

Medical Necessity: Medical procedure or service must be performed only for the treatment of an accident, injury, or illness and is not considered experimental, investigational, or cosmetic.

Out-of-Pocket Expense: Amount the patient must pay (and not paid for by the insurance plan).

Pre-Existing: Medical condition diagnosed prior to the effective date of the health plan.

Usual & Customary: Reduction in the payment of benefits on a claim which is justified by the insurance company as “the going rate” to be paid in that geographical area.

These are the most common ones I receive questions about, can you think of any others that might be helpful?

Keeping this list in a convenient place for your staff is a great tool for them to utilize when communicating with your patients.

Find out more about P.J. Cloud-Moulds and our other Practice Notes bloggers.

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