Medical Billing and Coding Terminology, Acronyms, and Abbreviations

Key Insights:

• Medical billers and coders encounter numerous terms when performing their job duties. Familiarizing yourself with basic billing and coding terminology can help you better understand the information you may come across in this job role.
• It’s also helpful to know what common healthcare acronyms and abbreviations mean, as you may see many of these in this line of work, as well.
• If learning medical billing and coding terminology feels overwhelming, you don’t have to feel alone. Ultimate Medical Academy (UMA) offers several student services designed to help guide and academically support learners enrolled in our degree program.

Hospitals and doctors’ offices use medical billing and coding to request payment for services. If you’ve looked into entering this field, you may have seen some terms that you’re unfamiliar with. What do they mean, and how do they relate to the job?

This list is a beginner’s guide to medical billing and coding terminology. The first section includes basic terms used in medical billing and/or medical coding roles. This is followed by abbreviations and acronyms you could also encounter. The two together can give you a good start on what you need to know as a medical biller and coder. ­

Basic Medical Billing and Coding Terms to Know

You can come across quite a few terms when performing medical billing and coding job duties. Here are several that you might see.

Accept assignment

This means that the healthcare provider accepts the amount paid by the insurance company as full payment for the claim.

Adjusted claim

If a claim is modified, potentially resulting in an overpayment or underpayment to a healthcare provider, this is referred to as an adjusted claim.

Allowed amount

This is the amount that insurance companies will pay or reimburse for a specific service or procedure. If the allowed amount is less than the total charge, the patient may be responsible for the balance.

Aging

This refers to an insurance claim or patient bill that passes the 30-day mark without being paid.

Ancillary services

These are services received by a patient while in the hospital, other than room and board. Examples include diagnostic and screening tests, prosthetics, and physical therapy.¹

Appeal

If a health insurance plan denies payment for a service, the patient has a right to object via an appeal. Each health insurance company has its own process for handling patient appeals.

Applied to deductible (ATD)

Some health insurance plans require that patients pay a certain amount of medical expenses before covering certain expenses. This is called a deductible. Payments made before insurance coverage begins are applied to the deductible.

Assignment of Benefits (AOB)

The Assignment of Benefits is a payment that healthcare providers receive directly from insurance companies. It means the insurance company has successfully processed the claim.

Authorization

Some insurance policies require patients to seek authorization before receiving certain health-related services. This ensures that the service is covered under their plan.

Beneficiary

A beneficiary is the person who receives the benefits from a healthcare insurance plan. Sometimes this is the holder of the plan, and other times it’s the holder’s spouse or children.

Capitation

Health insurance companies can enter into a capitation agreement with a healthcare provider, which is essentially a fixed payment amount for a patient over a specific period of time and covers agreed-upon services.

Carrier

This medical billing and coding term refers to a patient’s health insurance provider.

Clean claim

This means that a medical claim is filed error-free and on time, making it a term you want to see when working in a medical billing and coding role.

Clearinghouse

Healthcare providers use clearinghouses or electronic hubs to securely submit electronic claims to insurance companies, ensuring that patients’ private health information is protected.

Coding

In healthcare, coding refers to translating patient information (symptoms, diagnoses, and treatments) into universally recognized medical codes using standardized coding systems. These codes are used to file insurance claims and are the root of the medical billing process.

Co-insurance

Some insurance plans pay only a percentage of a particular procedure or service, and the patient must pay the rest. The amount owed by the patient is known as the co-insurance.

Collection ratio

A healthcare agency’s collection ratio is the amount of money it has received as reimbursement for products and/or services compared to how much is owed.

Contractual adjustment

Healthcare providers can enter into a contract with insurance companies, agreeing to write off or waive a portion of the money owed by a patient for a specific service. This is referred to as a contractual adjustment.

Coordination of benefits (COB)

If a patient has two health insurance plans, such as when covered by their employer and their spouse’s employer, a COB is used to determine which policy pays for what and in what amounts. When this occurs, one policy is considered primary and pays out first, while the other is secondary and pays last.

Co-pay

If a patient is responsible for a portion of the office visit, this is listed as a co-pay within the health insurance policy.

Credentialing

Healthcare providers must be credentialed before insurance carriers will reimburse them for services rendered to policyholders. This process involves confirming the provider’s education, training, licenses, and credentials.²

Credit balance

If a patient’s account is overpaid, it shows up as a credit balance.

Crossover claim

When a patient has both Medicare and a secondary insurance policy, the claim is paid by Medicare first and then submitted to the secondary insurance. This is known as a crossover claim.

Current Procedural Terminology (CPT) codes

This is a 5-digit coding system used to assign codes to procedures performed by a physician. These are sometimes referred to as service codes. There are three category codes used in the CPT coding system:³

1. Category I codes are used to describe medical procedures and services.
2. Category II codes are used to track performance data related to quality of care.
3. Category III codes are temporary codes used to collect data on new and emerging technologies and services.

Date of Service (DOS)

This is the date the healthcare service provider saw the patient.

Day sheet

The day sheet summarizes treatments provided, charges made, and payments received on a specific day.

Deductible

This is the amount a patient is required to pay before insurance will cover any portion of the expense.

Demographics

A patient’s demographics include their age, race, and gender, as well as their contact information. This information is required when filing an insurance claim and is important for accurate billing, effective provider-patient communications, and quality patient care.⁴

Downcoding

If an insurance company doesn’t receive adequate documentation to support a particular level of service, it may reduce that service to a lower level, thereby reducing provider reimbursement. This is known as downcoding.

Duplicate coverage inquiry (DCI)

If an insurance company wants to know if another insurance company is providing coverage for a patient, it may submit a duplicate coverage inquiry.

Durable medical equipment (DME)

This medical billing and coding term refers to equipment patients use when performing activities of daily living. Walkers, wheelchairs, hospital beds, and portable oxygen equipment all fall into this category of medical equipment.

Dx (diagnosis code)

Dx is short for diagnosis. This code is used when a medical professional identifies or determines a patient’s disease or illness.

E/M codes

Evaluation and Management (E/M) codes are CPT codes used to assess or manage a patient’s health and range from 99202 to 99499. These codes exclude diagnostic testing, radiology, surgery, and other specific therapies, according to the American Medical Association.⁵

Electronic claim

An electronic claim is a paperless claim that is sent digitally to the patient’s insurance company or another payer.

Electronic funds transfer

While some patients may pay their medical bills with cash or a check, others pay them electronically via bank transfer, credit card, or debit card — all of which are electronic funds transfers.

Electronic health record (EHR)

Electronic health records are patient health records that can be shared across multiple providers.

Electronic medical record (EMR)

Electronic medical records are digital versions of a patient’s chart within a single practice.

Electronic remittance advice (ERA)

This is a form sent from a health plan to the healthcare provider about a specific claim. It shares details about the contract agreement, benefit coverage, and patient copay and co-insurance information.

Enrollee

If the patient is covered by health insurance, they are listed on the policy as an enrollee.

Explanation of Benefits (EOB)

The EOB is a statement that a health insurance plan sends to the patient describing the claims received, the amount the plan will cover, and the patient’s anticipated portion of the bill.

Fee-for-service

In a fee-for-service health plan, the insurance company reimburses the provider for each individual service or procedure performed on patients.

Fee schedule

This is a list of pre-determined fee maximums that insurance companies will reimburse healthcare providers for specific services and procedures.

Financial responsibility

If a patient is responsible for a portion of their healthcare service expenses, these expenses are referred to as their financial responsibility.

Fiscal intermediary (FI)

Also known as a Medicare Administrative Contractor (MAC), a fiscal intermediary is a private healthcare insurer that helps process Medicare Part A and Part B claims, in addition to processing durable medical equipment claims for Medicare fee-for-service beneficiaries.⁶

Formulary

Insurance companies have lists of prescription drugs they are willing to cover. This list is called a formulary.

Fraud

Fraud refers to a deliberate misrepresentation of facts, often to achieve some type of gain. Two types of fraud in healthcare are:

1. If a healthcare provider intentionally submits a claim for a service or procedure that was not rendered
2. If a patient obtains services dishonestly

Group name and number

Some patients have health plans as part of a group, such as an employer-provided insurance policy or health insurance offered on behalf of a union. The group name and number are used to identify the appropriate group when filing a claim.

Guarantor

In certain instances, someone other than the patient may be responsible for health claim expenses not covered by insurance. This person is known as the guarantor.

Healthcare Common Procedure Coding System (HCPCS)

This is a standardized medical coding system used to submit healthcare claims. There are three levels of HCPCS codes:

1. HCPCS Level I codes include CPT codes and are used to submit claims for physician services.
2. HCPCS Level II codes are used for non-physician healthcare products and services.
3. HCPCS Level III codes are used by Medicare, Medicaid, and private insurers.

Healthcare provider

This is a frequently used term in the medical billing and coding industry. A provider is a facility, hospital, or office that offers healthcare services to patients. Your doctor is a provider, for instance, as is your local urgent care.

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act of 1996 is a federal law designed to protect a patient’s private health information. Under HIPAA, a person’s medical data cannot be released or disclosed without their consent.

Health Maintenance Organization (HMO)

An HMO is a network of healthcare providers who agree to accept pre-determined amounts for specific services. Patients who see a provider outside this network will often pay higher out-of-pocket costs, as covered expenses for out-of-network providers can be limited.⁷

Health Savings Account (HSA)

If a patient has a health savings account, it means they have deferred, tax-free money in an account that can be used to cover their medical expenses. Fidelity reports that, in 2026, HSA contribution maximums are $4,400 for an individual and $8,750 for a family.⁸

Hospice

The Hospice Foundation of America explains that hospice is “medical care for people who are expected to live six months or less.”⁹ The dying patient’s needs are addressed during hospice care, in addition to offering support to caregivers and family members even after their loved one’s death.

Indemnity

An indemnity is another name for a fee-for-service insurance policy.

In-network

If a provider is in-network, it means they’ve signed a contract with the insurance company and agree to accept a pre-determined amount for services rendered. A provider who is in-network is also commonly referred to as a participating provider.

Inpatient

Patients who are admitted to the hospital for longer than 24 hours fall under this designation.

Intensive care

Patients who are severely injured or ill may require advanced care. They can be admitted into a hospital’s intensive care unit, where they are provided with more extensive monitoring and medical attention.

International Classification of Diseases (ICD codes)

ICD is short for the International Statistical Classification of Diseases and Related Health Problems coding system. The latest version of ICD codes was released in 2022 and is referred to as ICD-11, which stands for the 11th revision of this classification. It contains roughly 17,000 unique codes and over 120,000 codable terms, in addition to being completely digital.¹⁰

Managed care plan

This type of insurance plan requires enrollees to use healthcare providers that contract with the insurance company when it is not a medical emergency and they are within the coverage area.

Maximum out-of-pocket

Some insurance policies have a maximum out-of-pocket amount, meaning that if the insured exceeds this amount, the insurance company will cover the remaining eligible medical expenses.

Medicaid

Medicaid is a joint federal and state government health insurance program for people with limited income and resources.

Medical billing specialist

A medical billing specialist submits, tracks, and follows up on insurance claims so the provider can be paid.

Medical coder

A medical coder translates patient health information, such as their diagnoses and treatments, into codes using universal medical coding systems. These codes are used when filing claims with health insurance companies.

Medical necessity

This medical billing and coding term refers to any service that is needed for treatment. It does not include services that are cosmetic or experimental.

Medical record number

Healthcare providers assign each patient a unique medical record number, similar to how each state assigns drivers a unique driver’s license number. This number identifies that patient within that facility’s medical records system.

Medical transcription

Some healthcare providers create an audio version of their patient notes and have them converted to writing. This is called medical transcription.

Medicare

Medicare is a government insurance program for people aged 65 and over, or younger people with certain disabilities or diseases such as permanent kidney failure or amyotrophic lateral sclerosis (ALS). Original Medicare includes Part A (hospital coverage) and Part B (outpatient medical expenses), and can purchase Part D (prescription drug coverage)) as a stand-alone plan or as part of a Medicare Advantage plan.¹¹

Medicare Beneficiary Identifier (MBI)

The Social Security Administration designates each Medicare enrollee with a number used to process claims, called a Medicare Beneficiary Identifier. It was previously known as a Medicare HIC Number.¹²

Modifier

CPT and HCPCS Level II codes can have modifiers to give more information about a service provided, but without changing the initial code’s meaning. For example, the AAPC reports that “59” is a common modifier used and indicates that a service was a “distinct procedural service.”¹³

Not Elsewhere Classifiable (NEC)

An NEC code, which stands for “not elsewhere classifiable,” is used when no specific code exists for a particular condition. In other words, the condition is known, but there is no code for it.

Not Otherwise Specified (NOS)

This code is used when there isn’t enough information to provide a more specific code at the time. This is different from an NEC (not elsewhere classifiable) code, which is used when a condition is known, yet has no corresponding code.

Out-of-network provider

If a provider does not have a contract with a specific insurance company, they are considered an out-of-network or non-participating provider.

Outpatient

The term outpatient refers to any service provided in which the patient was treated for 24 hours or less.

Participating

Participating is another word for in-network, meaning that a healthcare provider agrees to treat patients within a specific network.

Place of Service (POS)

Place of service (POS) codes are two digits that indicate where services were rendered. For example, the Centers for Medicare & Medicaid Services shares that a 01 code means that services were provided in a pharmacy, while a code of 14 signifies that services were provided in a group home.¹⁴

Preferred Provider Organization (PPO)

A PPO is like an HMO in that it encourages patients to choose in-network healthcare providers. However, it is unlike an HMO in that a referral is not required to see a specialist.

Protected Health Information (PHI)

Protected health information is patient information that is protected under the Health Insurance Portability and Accountability Act (HIPAA). This includes their name, contact information, lab results, discharge summaries, provider notes, insurance policy numbers, and information about their health conditions.¹⁵

Referral

A referral is when a primary care provider recommends that a patient see another provider with a more specialized skill set. If your doctor thinks you may have a chronic skin condition, for instance, they may give you a referral to a dermatologist.

Relative value units (RVUs)

This medical billing and coding term refers to a scale used to determine physician payments, and can be broken down into three types:¹⁶

• Work RVUs – the provider’s skills, physical and mental effort, and time required to perform the service
• Practice expense (PE) RVUs – the cost of labor, medical and office supplies and equipment, and building costs
• Malpractice RVUs – the cost of professional liability insurance

Scrubbing

Scrubbing is the process of checking claims for inaccuracies and errors before sending them for processing. Claims can be rejected for errors, which can delay reimbursement payments to providers, so scrubbing is an important step.

TRICARE

TRICARE (previously known as the Civilian Health and Medical Program of the Uniformed Services or CHAMPUS) refers to health insurance coverage provided to uniformed service members, retirees, and their family members.¹⁷

Unbundling

This is when multiple CPT codes are used for individual parts of a single procedure, even though there is a code available for that procedure in its entirety. Unbundling can occur due to a misunderstanding, or it may be a tactic providers use to increase payment, the latter of which can be classified as a fraudulent or abusive medical billing practice.¹⁸

Upcoding

If a healthcare provider uses a more severe diagnosis code for a patient in an attempt to get a higher amount of reimbursement, this is called upcoding. Like unbundling, upcoding is also a fraudulent billing practice.

Additional Healthcare Abbreviations and Acronyms

There are also a few additional abbreviations and acronyms that can be helpful to know should you decide to pursue training for a medical billing and coding career path. They include:

• AMA – American Medical Association
• BCBS – Blue Cross Blue Shield
• CMS – Centers for Medicare and Medicaid Services
• DOB – Date of birth
• GHP – Group health plan (i.e., insurance policies provided by employers)
• MAC – Medicare Administrative Contractor
• MSP – Medicare secondary payer
• N/C – Non-covered charge
• NPI – National provider identifier
• OIG – Office of Inspector General
• PCP – Primary care physician
• PEC – Pre-existing condition
• POS – Point-of-service plan
• SOF – Signature on file
• TAR – Treatment authorization request
• TIN – Tax identification number
• TOS – Type of service
• TPA – Third-party administrator
• UPIN – Unique physician identification number

This list of terms, acronyms, and abbreviations can help give you a foundation of knowledge in this field, even before you begin medical billing and coding career training. And if it feels like a lot to learn, we understand.

Ultimate Medical Academy’s Student Services team members are here to provide our learners with academic guidance and support, like they did for Javious B., who worked two full-time jobs and almost gave up, but didn’t.

Contact us to learn more about how we can help you pursue your career goals or to discuss your healthcare program options.

FAQs

• What is coding in medical terms? Medical coding refers to translating patient information into alphanumeric codes that healthcare providers use to bill insurance companies for services rendered.
• What does medical billing and coding look like? Check out our medical coding examples to get a better understanding of what it means to work in this type of healthcare role.
• What does c/o stand for in medical terms? This abbreviation is short for “complains of” or “complaint of” and is used to signify a patient’s reported symptoms.