GLOSSARY OF HEALTH INSURANCE TERMS
Communicating with insurers can be challenging due to all of the jargon they use. To assist you, we’ve included definitions of commonly used health insurance terms and their definitions here. This is not intended to be a complete list of the terms you may encounter when dealing with your insurance company; however, we do hope that it is helpful.
Allowed Amount: Maximum amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference.
Appeal: A request for your health insurer or plan to review a decision or grievance again.
Benefit: The portion of the cost for a covered health care service (or supplies) that your health plan is responsible for paying.
Co-insurance: Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay co-insurance plus any deductibles you owe. For example, if the health insurance or plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20% would be $20.00. The health insurance or plan pays the rest of the allowed amount.
Covered Benefit: This term is used to refer to benefits that you are entitled to under your insurance plan. If your policy states that a service or treatment is a covered benefit, your insurer they will pay a percentage of its cost. If the service or treatment is not a covered benefit under your plan, your insurer will pay no portion of it. When discussing covered benefits, keep in mind that insurance policies vary greatly and each insurance company makes its own determination as to if and how they will cover procedures.
CPT (Current Procedural Terminology) Code: CPT codes are numbers that are assigned to every task associated with your care, including but not limited to medical, surgical and diagnostic services. This national medical coding system is used my all medical insurers to identify the services we provide to patients in our office, and determine the amount of reimbursement that is due under the terms of your insurance plan. CPT codes are developed, maintained and copyrighted by the American Medical Association. (Note: If you use Medicare, you’ll see CPT codes but they are used a bit differently. Medicare uses HCPCS codes (i.e., Healthcare Common Procedure Coding System).
Deductible: The amount you owe for health insurance services your health insurance plan or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health services subject to the deductible. The deductible may not apply to all services.
Dental Code: Dental codes refer to a nation-wide system of codes used by all dentists to identify charges or services provided to a patient, primarily for billing purposes. Dental codes consist of a “D” and are followed by 4 numbers. Some dental codes have zeros at the beginning (instead of a “D”), which is also acceptable.
DOS (Date of Service): “DOS” refers to the actual date the patient was seen in the provider’s office for treatment. DOS is important when speaking with insurance companies because your insurer will only have information on the dates that have been submitted by your doctor and received at their office. If your insurer doesn’t have the information, it is possible the claim form may be lost and/or needs to be resubmitted.
Durable Medical Equipment (DME): “DME” refers to equipment or supplies ordered by a health care provider for everyday or extended use. Coverage for DME may include: oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics, CPAP machines as well as the orthopedic stabilization and repositioning appliances, or splint,” that we provide to patients fit this criteria. [Note: Some insurers require preauthorization before any Durable Medical Equipment is issued to you; however, this is usually only required when the equipment costs more than $300.00. If you insurer requires preauthorization, we will supply the information that is required. This typically consists of a description of the device, what it is to be used for, the corresponding diagnosis codes plus any other relevant CPT codes.]
DX Code: “DX” is an abbreviation for “diagnosis,” hence a “DX Code” is a diagnosis code. This is the coding used by your doctor to identify your diagnosis for billing and insurance reimbursement purposes. In most cases, the DX Code is the same as the ICD-9 code (see below).
EOB (Explanation of Benefits): An “EOB” is the letter or statement from your insurer that documents any claims the insurer has received and processed. Sent to you and your health care provider, the EOB provides an itemized list of each charge and the portion of the charge that was paid. It also includes a reason for each payment. (Note: If you do not receive an EOB, it is likely your insurer never received your claim. If the DOS (i.e., date of service) is missing on your EOB, it is possible that your insurer is still processing your claims.
Excluded Services: Health care services that are not covered and, therefore, not paid for under the terms of your health insurance policy are referred to as “excluded services.” Policies vary greatly, so patients should familiarize themselves with the details of their specific plans.
Fee-for-Service: When working with a “fee-for-service” health care provider, the plan holder (i.e., the patient) pays the doctor’s office for a service or treatment and then submits a claim to their insurance company. The patient is then reimbursed by the insurance company for the service or treatment if it is covered under the patient’s health plan. As a “fee for service” practice, we will provide you with all of the completed forms and information you need to submit your claims to your insurer. We will also answer questions your insurer may have about the services and treatments we provide in our office.
Grievance: A complaint that you communicate to your health insurer or plan. (Note: There is usually no way to dispute non-payment for an excluded service, as that specific policy does not pay for those treatments and procedures.)
ICD-9 Code: “ICD” refers to “The International Classification of Diseases, Ninth Revision.” These are the nationally standardized costs used to classify and index all medical diagnoses that are used by all insurers and medical billing agencies.
In-Network Provider: Most physicians will contract with insurance companies to become in-network providers. Under this arrangement, the insurer will agree to pay the doctor a specific price for specific procedures. Because the insurance company and the doctor have entered into this contractual agreement, the insurer usually pays at a better rate when they are seen by in-network providers. If the doctor is not an in-network provider, the insurer may choose to pay a lower rate or not at all. The latter is referred to as a Non-Preferred provider – that is, a provider who does not have a contract with your health insurer or plan to provide services to you.
Letter of Medical Necessity: Written by your doctor’s office, a Letter of Medical Necessity is addressed to your insurer. It details your diagnosis and includes an explanation of the medically necessary reasons for the procedures that were performed – or are to be performed. You and/or your insurer can ask us to provide a Letter of Medical Necessity; however, we can only do this after we have seen you in our office.
Network: The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.
Out-of-Network Provider (also referred to as a “Non-Preferred Provider”): Some insurers require that patients be seen by doctors that have contracted with them for a specific rate. A doctor that is not in this contract is considered an out-of-network provider. If a patient sees an out-of-network provider, the insurer will not pay or reimburse at the best negotiated rate. Instead, they will usually pay at a lower rate. Sometimes they will not pay at will, which forces the patient to pay for the office visits in their entirety with no benefit of insurance reimbursement.
Preauthorization (also referred to as “Predetermination’): A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary; sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn’t a promise your health insurance or plan will cover the cost.
Primary Care Physician: A physician (M.D — Medical Doctor or DO – Doctor of Osteopathic Medicine) who directly provides or coordinates a range of health care services for a patient.
Primary Care Provider: A physician (M.D — Medical Doctor or DO – Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist or physician assistant, as allowed under state law, who provides, coordinates or helps a patient access a range of health care services.
UCR (Usual, Customary and Reasonable): The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount is sometimes used to determine the allowed amount.