What is the medical billing glossary?
The MedPrecision medical billing glossary is a citation-ready reference of 78 terms covering medical coding (CPT, ICD-10, HCPCS), payer types (Medicare, Medicaid, commercial), HIPAA and federal compliance, billing cycle steps, modifiers, CARC/RARC denial codes, and revenue cycle KPIs. Each definition is sourced to AMA, CMS, X12, and HHS publications.
- 78 terms across 10 categories
- Compliance: HIPAA, HITECH, AKS, Stark, FCA
- Coding: CPT, ICD-10-CM/PCS, HCPCS, NCCI, MUE
- Denial codes: CARC, RARC, CARC 97/50/197/27
- Modifiers: 25, 59, 24, TC, 26, KX, X-modifiers
- KPIs: Days in A/R, NCR, FPRR, denial rate
Medical Billing Glossary: A-Z
Definitions for 78 medical billing, coding, payer, compliance, and revenue cycle terms used in U.S. healthcare. Each entry traces to AMA CPT, CMS, X12, or HHS published sources.
Compliance
HIPAA, HITECH, federal fraud-and-abuse statutes
Anti-Kickback Statute
The Anti-Kickback Statute (42 USC 1320a-7b(b)) is a federal criminal law prohibiting the knowing and willful offer, payment, solicitation, or receipt of any remuneration to induce or reward referrals of items or services payable by a federal health care program.
Read definitionBusiness Associate Agreement (BAA)
A Business Associate Agreement is a HIPAA-required written contract under 45 CFR 164.504(e) between a covered entity and any vendor that creates, receives, maintains, or transmits PHI on its behalf, establishing the vendor's permitted uses, safeguards, and breach notification obligations.
Read definitionFalse Claims Act
The False Claims Act (31 USC 3729-3733) is a federal law imposing civil liability on a person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the U.S. government. The statute provides for a civil penalty per claim, adjusted annually for inflation, plus three times the government’s damages.
Read definitionHIPAA
HIPAA is the 1996 federal law that establishes national standards for protecting the privacy and security of individually identifiable health information held by covered entities and their business associates.
Read definitionHITECH Act
HITECH is the 2009 federal law that strengthened HIPAA by extending direct liability to business associates, increasing breach notification requirements, and creating tiered civil monetary penalties for HIPAA violations.
Read definitionMinimum Necessary Rule
The Minimum Necessary Rule, codified at 45 CFR 164.502(b) and 164.514(d), requires covered entities and business associates to limit uses, disclosures, and requests of PHI to the minimum necessary to accomplish the intended purpose.
Read definitionPHI (Protected Health Information)
PHI is any individually identifiable health information transmitted or maintained by a HIPAA covered entity or business associate, in any form or medium, that relates to a person's past, present, or future physical or mental health, treatment, or payment for care.
Read definitionStark Law
The Stark Law (42 USC 1395nn) is a federal civil statute that bars a physician from referring a patient for designated health services payable by Medicare to an entity with which the physician, or an immediate family member, has a financial relationship unless an exception is satisfied, and bars that entity from billing for services furnished on a prohibited referral.
Read definitionPayers
Medicare, Medicaid, commercial insurance, MACs and TPAs
CMS
CMS is the federal agency within the U.S. Department of Health and Human Services that administers Medicare, jointly administers Medicaid and CHIP with the states, and oversees the Health Insurance Marketplaces and HIPAA administrative simplification.
Read definitionCommercial Payer
A commercial payer is a private (non-government) insurance company offering health coverage to individuals or employer groups, typically as PPO, HMO, EPO, or POS products. A fully-insured product is regulated as insurance by the state; an employer-sponsored plan that ERISA covers is also subject to the federal claims-and-appeals rule, whether that plan is fully-insured or self-funded.
Read definitionMAC (Medicare Administrative Contractor)
A Medicare Administrative Contractor is a private organization that contracts with CMS to process Medicare Part A and Part B claims (or DME claims) within a defined geographic jurisdiction, applying CMS coverage rules and publishing local coverage determinations.
Read definitionMedicaid
Medicaid is a joint federal-state program established under Title XIX of the Social Security Act that provides health coverage to eligible low-income individuals, with each state administering its own program under federal minimum requirements.
Read definitionMedicaid Managed Care Organization (MCO)
A Medicaid Managed Care Organization is a private health plan that contracts with a state Medicaid agency to deliver Medicaid benefits to enrolled members under a capitated PMPM payment, accepting financial risk for member care.
Read definitionMedicare Advantage
Medicare Advantage (Part C) is coverage offered by private insurers under contract with CMS, through which a beneficiary receives their Medicare Part A and Part B benefits instead of through Original Medicare — most often as an HMO or PPO product with a provider network and prior-authorization requirements, paid for by a risk-adjusted capitation from CMS.
Read definitionMedicare Part A/B/C/D
Medicare is divided into four parts: Part A (hospital insurance) covers inpatient hospital, inpatient SNF, hospice and some home health services; Part B (medical insurance) covers physician services, outpatient care, durable medical equipment, lab and X-ray and many preventive services, and home health services as well; Part C (Medicare Advantage) is private plans that provide all Part A and Part B services; Part D covers outpatient prescription drugs.
Read definitionTPA (Third Party Administrator)
A Third Party Administrator is an organization that processes claims, eligibility, and customer service for self-funded employer health plans without bearing the underlying insurance risk, which is retained by the employer plan sponsor.
Read definitionCoding
CPT, ICD-10, HCPCS, NCCI, DRG, APC, RVU
APC (Ambulatory Payment Classification)
An APC is the hospital outpatient classification system used by CMS under the Outpatient Prospective Payment System (OPPS) to group similar outpatient services for prospective payment to hospitals.
Read definitionCMS-1500 form
The CMS-1500 is the paper claim form Medicare prescribes for non-institutional providers (physicians, NPPs, suppliers); its electronic equivalent is the 837P (Professional) HIPAA EDI transaction, and many other payers accept the same form and transaction on their own terms.
Read definitionCPT (Current Procedural Terminology)
CPT is the five-digit procedural code set developed and maintained by the American Medical Association that describes medical, surgical, and diagnostic services performed by physicians and qualified health professionals; it is HIPAA-named for use in claims.
Read definitionDRG (Diagnosis-Related Group)
A DRG is the inpatient hospital classification system that groups admissions with similar clinical characteristics and resource use into a single payment category; CMS uses MS-DRGs to pay hospitals under the IPPS for Medicare inpatient stays.
Read definitionHCPCS Level I/II
HCPCS is the two-tier code set used to identify medical services and items: Level I is identical to AMA CPT codes; Level II is alphanumeric codes maintained by CMS for products, supplies, and services not covered by CPT.
Read definitionICD-10-CM
ICD-10-CM is the U.S. clinical modification of the WHO's ICD-10 diagnosis code set, maintained by the CDC's National Center for Health Statistics, used to report diagnoses on all HIPAA-covered claims.
Read definitionICD-10-PCS
ICD-10-PCS is the U.S. inpatient hospital procedural code set maintained by CMS, with seven-character alphanumeric codes used exclusively to report procedures performed during inpatient hospital admissions for billing under MS-DRGs.
Read definitionLCD / NCD (Local & National Coverage Determinations)
An NCD is a nationwide CMS coverage policy specifying whether Medicare will cover a service; an LCD is a coverage policy issued by a Medicare Administrative Contractor (MAC) for its jurisdiction when no NCD applies, defining medical necessity criteria and covered diagnosis codes.
Read definitionMUE (Medically Unlikely Edits)
MUEs are CMS-published per-line, per-beneficiary, per-day unit limits for HCPCS/CPT codes that flag claim lines exceeding the maximum number of units typically performed for a given service.
Read definitionNCCI (National Correct Coding Initiative)
NCCI is a CMS-published set of edits that prevent improper payment when incorrect code combinations or unit counts are submitted. The program contains three edit types: Procedure-to-Procedure (PTP) edits, Medically Unlikely Edits (MUE) limiting units of service, and Add-on Code edits.
Read definitionRVU (Relative Value Unit)
An RVU is a unit of measure in the Medicare Resource-Based Relative Value Scale (RBRVS) representing the relative resources required to perform a CPT/HCPCS service, comprising work, practice expense, and malpractice components.
Read definitionUB-04 form
The UB-04 (also known as CMS-1450) is the standard paper claim form used by institutional providers (hospitals, SNFs, home health, hospice) to bill Medicare and other payers; its electronic equivalent is the 837I (Institutional) HIPAA EDI transaction.
Read definitionBilling Cycle
Charge entry, scrubbing, ERA posting, A/R
A/R (Accounts Receivable)
Accounts receivable in medical billing is the total dollar amount of outstanding charges that have been billed to insurance payers and patients but not yet paid; A/R is tracked, aged, and worked by buckets (0-30, 31-60, 61-90, 91-120, 120+ days).
Read definitionAdjudication
Adjudication is the payer-side process of reviewing and determining how a claim will be paid: applying eligibility, benefits, coverage rules, contracted rates, and edits to determine the allowed amount, paid amount, patient responsibility, and any denials or adjustments.
Read definitionCharge Entry
Charge entry is the revenue cycle step where rendered services are translated into billable charges in the practice management system, including CPT/HCPCS codes, ICD-10 diagnoses, modifiers, units, and place-of-service codes.
Read definitionClaim Scrubbing
Claim scrubbing is the automated pre-submission process that runs claims through a rule-set of payer-specific and standards-based edits (NCCI, MUE, HIPAA syntax, payer policies) to identify and correct errors before the claim leaves the practice.
Read definitionClean Claim
A clean claim is a properly completed claim that requires no additional information from the provider or a third party and no special handling, so the payer can accept it into adjudication without manual intervention. Clean means accepted for processing — not paid.
Read definitionEOB (Explanation of Benefits)
An Explanation of Benefits is a payer-issued document sent to the member (and sometimes the provider) after claim adjudication that itemizes the services billed, allowed amount, plan payment, deductible/coinsurance/copay applied, and patient responsibility.
Read definitionERA (Electronic Remittance Advice / 835)
The ERA (X12 835 transaction) is the HIPAA-standard electronic file payers send to providers detailing claim adjudication results — payments, adjustments, denials with CARC/RARC codes — typically paired with EFT funds transfer.
Read definitionPayment Posting
Payment posting is the revenue cycle step where insurance payments (from 835 ERA or paper EOBs) and patient payments are applied to specific claim lines and patient accounts in the practice management system, including contractual adjustments and denial transfers.
Read definitionRegulation
No Surprises Act, parity, transparency, info blocking
21st Century Cures Act
The 21st Century Cures Act is a 2016 federal law whose information blocking provisions, implemented at 45 CFR part 171, prohibit health care providers, health IT developers of certified health IT, and health information networks and exchanges from interfering with the access, exchange or use of electronic health information.
Read definitionEPSDT
EPSDT (Early and Periodic Screening, Diagnostic, and Treatment) is the comprehensive child health benefit under Title XIX of the Social Security Act that Medicaid programs must cover for enrollees under age 21, including all medically necessary services to correct or ameliorate a condition.
Read definitionInformation Blocking Rule
The Information Blocking Rule, codified at 45 CFR Part 171 under the 21st Century Cures Act, prohibits health care providers, health IT developers, and health information networks from engaging in practices likely to interfere with access, exchange, or use of electronic health information (EHI), subject to ten regulatory exceptions.
Read definitionMHPAEA
The Mental Health Parity and Addiction Equity Act of 2008 is a federal law that requires group health plans and health insurance issuers offering mental health and substance use disorder (MH/SUD) benefits to provide them no more restrictively than medical/surgical benefits.
Read definitionNo Surprises Act
The No Surprises Act is a federal law effective January 1, 2022 that prohibits balance billing for most out-of-network emergency services, certain non-emergency services at in-network facilities, and air ambulance services, with disputes resolved through an Independent Dispute Resolution (IDR) process.
Read definitionPrice Transparency Rule
Price transparency rules are two separate federal requirements: hospitals must publish standard charges, including payer-specific negotiated charges, under 45 CFR part 180, and health plans and issuers must publish in-network and out-of-network pricing files under the Transparency in Coverage rules at 45 CFR 147.210 to 147.212.
Read definitionTechnology
EHR, PM systems, clearinghouses, X12 EDI, FHIR
Clearinghouse
A clearinghouse is a HIPAA-defined entity that processes health information from one format into a standard electronic format and transmits 837 claims, 835 remittances, 270/271 eligibility, and 276/277 claim status transactions between providers and payers.
Read definitionEHR (Electronic Health Record)
An Electronic Health Record is a digital, longitudinal record of a patient's health information maintained by a healthcare organization, designed to be shared across providers and care settings, and to support clinical decisions, billing, and quality reporting.
Read definitionEMR vs EHR
In common industry usage, an EMR (Electronic Medical Record) is a digital version of a single practice's paper chart, designed for use within that practice, while an EHR (Electronic Health Record) is a broader, interoperable longitudinal record designed to be shared across organizations and care settings. The split describes how the words are used, not a line drawn by any federal rule.
Read definitionFHIR
FHIR (Fast Healthcare Interoperability Resources) is an HL7 standard for exchanging healthcare information using modern web technologies (RESTful APIs, JSON/XML, OAuth 2.0), used for clinical data exchange, patient access APIs, and increasingly for prior-authorization and quality reporting.
Read definitionPM (Practice Management) System
A Practice Management system is the software that handles the operational and financial workflow of a medical practice — scheduling, registration, eligibility, charge entry, claim submission, payment posting, A/R follow-up, and reporting — typically integrated with or embedded in an EHR.
Read definitionX12 (HIPAA EDI)
ASC X12 is the standards body whose X12N subcommittee develops the HIPAA-named electronic data interchange transactions for healthcare administrative data: 837 (claims), 835 (remittance), 270/271 (eligibility), 276/277 (claim status), 278 (prior auth), and 834 (enrollment).
Read definitionKPIs
Days in A/R, NCR, denial rate, FPRR, charge lag, cost-to-collect
Charge Lag
Charge lag is the median number of days between a service's date of service (DOS) and the date the charge is posted in the practice management system — a front-end revenue cycle speed measure, and only the first half of the interval between the visit and the claim reaching the payer.
Read definitionCost-to-Collect
Cost-to-Collect is the total cost of revenue cycle operations — labor, software, vendor fees, clearinghouse and payment processing — divided by total cash collected, expressed as a percentage. It measures what converting billed services into cash costs, and it is only meaningful when both sides of a comparison are drawn on the same cost boundary.
Read definitionDays in A/R
Days in A/R is total accounts receivable divided by average daily charges over a chosen period — this page uses a 90-day rolling window — and represents the average number of days it takes a practice to collect on a billed charge.
Read definitionDenial Rate
Denial Rate is the percentage of claims (or claim dollars) denied by payers on initial adjudication, calculated as Denied Claims ÷ Total Claims Adjudicated × 100, typically tracked monthly and segmented by payer and denial reason category. Claims rejected before adjudication sit in neither the numerator nor the denominator — a rejection is not a denial.
Read definitionFirst-Pass Resolution Rate
First-Pass Resolution Rate is the percentage of claims paid on first submission — no rejection, no denial, no corrected claim and no appeal — measured against every claim submitted in the period. Its complement is rejections plus denials, not denials alone.
Read definitionNet Collection Rate
Net Collection Rate is the percentage of allowed (contracted) revenue actually collected, calculated as Payments ÷ (Charges − Contractual Adjustments) over a rolling period; it measures how effectively a practice collects what it is contractually entitled to receive.
Read definitionModifiers
25, 59, 24, 51, 76, 78, 79, TC, 26, KX, X-modifiers
Modifier 24
Modifier 24 is appended to an E/M code to indicate an unrelated evaluation and management service provided by the same physician during the global postoperative period of a procedure.
Read definitionModifier 25
Modifier 25, defined by the AMA CPT, indicates a significant, separately identifiable evaluation and management (E/M) service performed by the same physician on the same day as another procedure or other service.
Read definitionModifier 26
Modifier 26 is appended to a diagnostic procedure code to indicate that only the professional component — the physician’s interpretation and written report — is being billed, while the technical work of performing the study is billed separately, under whichever payment system applies to the setting where it was performed.
Read definitionModifier 51
Modifier 51 is appended to the additional procedures when multiple procedures are performed at the same session by the same provider. Under Medicare’s multiple-surgery rules the procedures subject to the standard policy are ranked by fee schedule amount, with the highest paid in full and the second through fifth reduced.
Read definitionModifier 59
Modifier 59 is appended to a procedure code to indicate that a service was distinct or independent from other non-E/M services performed on the same day, used to bypass NCCI Procedure-to-Procedure (PTP) edits when documentation supports a separately identifiable service.
Read definitionModifier 76
Modifier 76 indicates that a procedure or service was repeated by the same physician or qualified health care professional subsequent to the original procedure or service on the same day.
Read definitionModifier 78
Modifier 78 is appended to a procedure code to indicate an unplanned return to the operating or procedure room by the same physician for a related procedure during the global postoperative period of the original surgery.
Read definitionModifier 79
Modifier 79 is appended to a procedure code to indicate an unrelated procedure or service by the same physician during the global postoperative period of an earlier procedure, separating the new procedure from the earlier surgery's global package.
Read definitionModifier KX
Modifier KX is a HCPCS Level II modifier appended to a claim line to attest that the documented medical-necessity requirements specified in the applicable Medicare LCD or NCD have been met, used for therapy services exceeding annual thresholds and for certain DME and laboratory services.
Read definitionModifier TC
Modifier TC is a HCPCS Level II modifier appended to a diagnostic procedure code to indicate that only the technical component — equipment, supplies, technologist time and overhead — is being billed under the physician fee schedule, not the professional interpretation. Hospital outpatient technical services are paid under OPPS instead, on an institutional claim.
Read definitionModifiers XE, XS, XP, XU
The X-modifiers (XE, XS, XP, XU) are HCPCS modifiers introduced by CMS in 2015 as more specific subsets of Modifier 59, identifying the specific reason a procedure is distinct from another service: separate Encounter, separate Structure, separate Practitioner, or Unusual non-overlapping service.
Read definitionDenial Codes
CARC, RARC, CARC 97/50/197/27
CARC
A Claim Adjustment Reason Code is a standardized code maintained by the X12 External Code List committee that explains why a claim line was adjusted (paid less than billed, denied, or transferred to patient responsibility) on a payer's 835 ERA.
Read definitionCARC 197
CARC 197 is the X12 claim adjustment reason code a payer returns when the plan’s own prior-approval step for a service was not completed before the claim was adjudicated; the remark codes alongside it usually indicate which approval the payer was looking for.
Read definitionCARC 236
CARC 236 indicates a denial because the procedure or procedure/modifier combination on the claim is not compatible with another procedure or procedure/modifier combination billed on the same day, per a National Correct Coding Initiative (NCCI) procedure-to-procedure (PTP) edit or Medically Unlikely Edit (MUE).
Read definitionCARC 27
CARC 27 indicates a denial because the patient's coverage with the payer had terminated before the date of service, meaning the patient was not insured by this payer on the day services were rendered.
Read definitionCARC 50
CARC 50 is the X12 claim adjustment reason code a payer returns when it has determined that a service does not meet its coverage criteria for medical necessity — a Medicare local or national coverage determination, or a commercial plan’s own medical policy.
Read definitionCARC 97
CARC 97 indicates the payer denied or reduced payment because the service is bundled with another service on the same claim under NCCI Procedure-to-Procedure edits — 'The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.'
Read definitionRARC
A Remittance Advice Remark Code is a code carried on the 835 ERA that either adds explanation to an adjustment already described by a CARC or conveys information about remittance processing. X12 publishes the list as external code list 411 and names CMS as its maintainer.
Read definitionRCM Specialty
Revenue cycle, credentialing, prior auth, eligibility
Eligibility Verification
Eligibility verification is the process of confirming a patient's insurance coverage is active for the date of service, determining the plan benefits (deductible, copay, coinsurance, covered services), and identifying any prior-auth or referral requirements before the encounter.
Read definitionFront-end vs Back-end RCM
Front-end RCM covers patient access before and during the encounter (scheduling, registration, eligibility, prior auth, financial counseling, point-of-service collections); the middle turns the encounter into a claim (documentation, charge capture, coding, scrubbing, submission); back-end RCM is everything the payer's response sets in motion (acceptance or rejection, adjudication tracking, payment posting, denial management, A/R follow-up, patient collections). The boundary between middle and back end is the moment the claim is transmitted.
Read definitionPrior Authorization
Prior authorization is the payer's process of pre-approving a planned service, procedure, medication, or admission before it is rendered, based on medical-necessity criteria; without an approved PA where required, claims typically deny under CARC 197.
Read definitionProvider Credentialing
Provider credentialing is the process by which a payer verifies a provider's qualifications, training, licensure, malpractice history, and other professional credentials before adding the provider to its network and authorizing reimbursement.
Read definitionProvider Enrollment
Provider enrollment is the process of formally setting up a provider in a payer's claims system as a participating provider, including establishing billing privileges, EFT/ERA setup, and the contractual effective date for in-network reimbursement.
Read definitionRCM (Revenue Cycle Management)
Revenue Cycle Management is the end-to-end financial process by which healthcare organizations identify, collect, and manage revenue from patient services — spanning patient access, eligibility, coding, charge capture, claim submission, payment posting, denial management, and patient collections.
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