Medical billing terms, explained in one or two sentences.

From AR days to the QPA: the vocabulary of the revenue cycle, written for practice owners and administrators.

Accounts receivable (AR): Money owed to the practice for services already provided, by payers and patients.
Aging buckets: AR grouped by how long claims have been unpaid: 0–30, 31–60, 61–90, 91–120 and 120+ days.
Allowed amount: The maximum a payer will pay for a service under the contract or fee schedule, before patient responsibility.
Appeal: A formal request asking a payer to reconsider a denied or underpaid claim, usually with supporting documentation.
AR days (days in AR): Average number of days it takes to collect payment; total AR divided by average daily charges.
Base units: The fixed value assigned to an anesthesia code, reflecting the complexity of the procedure.
Business Associate Agreement (BAA): A HIPAA-required contract that sets out how a vendor may use and must protect protected health information.
CARC: Claim Adjustment Reason Code: the standard code on a remittance explaining why a claim line was paid differently than billed (for example CO-45).
Charge capture: Recording every billable service performed so it reaches a claim.
Clean claim: A claim with no errors that a payer can process without returning it for more information.
Clean claim rate: The share of claims accepted on first submission without edits or rejections.
Clearinghouse: A company that checks claims for errors and transmits them between providers and payers.
CO-45: Adjustment code meaning the charge exceeds the fee schedule or contracted amount; the difference is a contractual write-off, unless the payment was below contract.
Conversion factor: The dollar amount multiplied by units (or RVUs) to calculate payment; anesthesia payment uses a per-unit conversion factor.
Coordination of benefits (COB): Rules for deciding which plan pays first when a patient has more than one insurance.
CPT: Current Procedural Terminology: the five-character codes used to report medical procedures and services, maintained by the AMA.
Denial: A payer's refusal to pay a claim or claim line, with a reason code.
Denial rate: The share of submitted claims denied by payers in a period.
E/M: Evaluation and management services: office visits, consultations and similar codes.
Eligibility verification: Confirming a patient's coverage and benefits before the service.
EOB: Explanation of benefits: the payer's statement to the patient describing how a claim was processed.
ERA: Electronic remittance advice (835): the electronic version of the payer's payment explanation to the provider.
Fee schedule: A list of the amounts a payer will pay for each code.
Global period: The days before and after a surgery during which related routine care is included in the surgical payment (0, 10 or 90 days).
Gross collection ratio (GCR): Payments divided by total charges; useful for trends but affected by how charges are set.
HCPCS Level II: Alphanumeric codes for supplies, drugs, DME and some services (for example J-codes and L-codes).
ICD-10-CM: The diagnosis coding system used in the US to describe why a service was performed.
Independent dispute resolution (IDR): The federal process under the No Surprises Act in which a certified entity picks one party's payment offer for a disputed out-of-network claim.
LCD: Local Coverage Determination: a Medicare contractor's rules on when a service is considered medically necessary.
Medical direction: An anesthesiologist directing CRNAs or residents in concurrent cases, reported with modifiers QK, QY and QX.
Medical necessity: The requirement that a service is reasonable and needed for the patient's diagnosis or treatment under payer policy.
Modifier: A two-character code added to a CPT/HCPCS code to show the service was altered (for example 25, 50, 59).
Modifier 25: Significant, separately identifiable E/M service on the same day as a minor procedure.
Modifier 50: Bilateral procedure performed on both sides in the same session.
Modifier 59: Distinct procedural service; CMS also offers the more specific XE, XP, XS and XU modifiers.
Multiple procedure payment reduction: Payment rule that reduces payment for the second and later procedures in the same session.
NCCI: National Correct Coding Initiative: CMS edits that define which codes can't be billed together without a modifier.
Net collection ratio (NCR): Payments divided by allowed amounts (charges minus contractual adjustments); shows how much collectible revenue was actually collected.
No Surprises Act (NSA): Federal law protecting patients from most surprise out-of-network bills and creating open negotiation and IDR for payment disputes.
Open negotiation: The 30-business-day period under the No Surprises Act in which provider and plan try to agree on payment before IDR.
Out-of-network (OON): A provider without a contract with the patient's health plan.
Payer: An insurance company, health plan or government program that pays claims.
Peer-to-peer review: A call between the treating physician and the payer's medical reviewer to discuss a denial or authorization.
Place of service (POS): A code on the claim showing where the service was performed, such as office (11) or ASC (24).
Prior authorization: Payer approval required before certain services are performed for them to be covered.
Qualifying payment amount (QPA): Under the No Surprises Act, generally the plan's median contracted rate for the service in the area, indexed for inflation.
RARC: Remittance Advice Remark Code: an additional code giving more detail on how a claim was adjudicated.
Reconsideration: A first-level request to the payer to review a claim decision, often before a formal appeal.
Revenue cycle management (RCM): The processes that turn patient services into collected revenue, from scheduling to final payment.
Scrubbing: Checking claims against coding rules and payer edits before submission to catch errors.
Time units: Anesthesia time converted to units, commonly 15 minutes per unit, added to base units.
Timely filing limit: The deadline for submitting a claim after the date of service, set by each payer (Medicare: 12 months).
Underpayment: A claim paid below the contracted rate, often hidden within an adjustment.
Write-off: An amount removed from AR as uncollectible or contractually not owed.

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