Common Reimbursement Terminology

Ambulatory Payment Classification (APC)
The basic unit of payment in the Medicare Prospective Payment System for outpatient visits or procedures will be the APC. Under the APC system, outpatient services and procedures are classified for purchases of payment (similar to DRGs).

Ambulatory Surgical Center (ASC)
An organization which provides surgical services on an outpatient basis for patients who do not need to occupy an inpatient, acute care hospital bed.

Centers for Medicare and Medicaid Services
The U.S. Government agency with responsibility for the administration of the Medicare and Medicaid programs. Prior to June 14, 2001, known as the Health Care Financing Administration (HCFA)

In the context of reimbursement, coding is a nomenclature system used by insurers and providers to identify diagnoses and describe medical services and products. Codes also serve to track utilization and establish reimbursement rates for facility and professional services. Procedural and diagnosis coding is based on the information contained in the patient’s medical record and cannot be coded based on reimbursement levels.

Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA is a federal law that allows and requires past employees to be covered under company health insurance plans for a set premium. This program gives individuals the opportunity to remain insured when their current plan or position has been terminated.

Coordination of Benefits (COB)
A provision in an insurance plan wherein a person covered under more than one group plan, has benefits coordinated such that all payments are limited to 100% of the actual charge or allowance. Most plans also specify rules whereby one insurer is considered primary and the other is considered secondary.

Coverage refers to the terms and conditions under which a payer will or will not provide benefits for a specific treatment. Coverage policies are usually developed for new technologies or procedures. Frequently private payers rely on coverage policies developed by Medicare.

Current Procedural Technology (CPT)
The coding system for physicians' services developed by the American Medical Association (AMA) and the basis for the HCPCs coding system.

Diagnosis (Dx)
The provider's determination of a patient's condition, sign, or symptom, using the ICD-9-CM coding system. See International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) Coding.

Diagnosis Related Group (DRG)
A system of classifying medical cases for payment on the basis of diagnosis. Used under Medicare's prospective payment system (PPS) for inpatient hospital services.

Durable Medical Equipment (DME)
DME is any medical equipment that can usually withstand repeated use, is useable at home, and is not beneficial to a person without an illness or injury. Splinting, orthopedic bracing, and wheelchairs are good examples of DME.

Explanation of Benefits (EOB)
A form received from the insurer which explains benefits that were paid and/or charges that were rejected.

Fee-For-Service (FFS)
Refers to paying medical providers for individual services rendered. UCR, CPR and Fee Schedules are examples of fee for service systems.

Healthcare Common Procedure Coding System (HCPCS)
A three-level coding system, consisting of: CPT, National or Level 2, and Local or Level 3 codes. CPT and National Level 2 codes are recognized and used by the majority of health care insurers.

Health Care Financing Administration (HCFA)
The U.S. Government agency with responsibility for the administration of the Medicare and Medicaid programs. Effective June 14, 2001, HCFA's name was changed to the Centers for Medicare and Medicaid Services (CMS).

Health Maintenance Organization (HMO)
Prepaid health plans that provide a range of services in return for fixed monthly premiums or other payment methods. Virtually any organization can sponsor an HMO, including the government, medical schools, hospitals, employers, labor unions, and insurance companies.

Refers to the International Classification of Diseases, 9th Revision, Clinical Modification. A standardized system of describing diagnoses and procedures. The coding and terminology provide a uniform language that will accurately designate primary and secondary diagnosis and provide for reliable, consistent communication on claim forms.

Length of Stay (LOS)
This is the length or number of days that an individual stay in an inpatient setting.

Non-Participating Provider (Medicare)
A provider who does not sign a Medicare participating agreement, and therefore is not obligated to accept assignment on all claims.

Participating Provider (PAR)
A hospital, pharmacy, physician or ancillary services provider who has contracted with a health plan to provide medical services for a determined fee or payment.

Payment refers to the amount of reimbursement provided to the hospital and the physician for services related to the procedure.

Point of Service Plan (POS)
The newest type of managed care organization which differs from others in one critical aspect. Insured’s who decide to go outside the plan for health care services receive reduced benefits.

Preferred Provider Organization (PPO)
An arrangement whereby an insurer or managing entity contracts with a group of health care providers who furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.

Primary Care Provider (PCP)
A healthcare professional who acts as a member's personal healthcare manager. The PCP evaluates a patient's medical condition and either treats the condition or coordinates required healthcare services.

Prospective Payment System (PPS)
Under Medicare, payments to hospitals for inpatient services are prospectively determined amounts based on the DRG assigned at discharge.

Resource Based Relative Value Scale (RBRVS)
A government mandated relative value system implement January 1992 that is used for calculating national fee schedules for services provided to Medicare patients. Physicians are paid on relative value units (RVUs) for procedures and services. The three components of each established value are: work RVU, practice expense RVU, and malpractice expense RVU.

Third Party Administrator (TPA)
An organization that processes health care claims without bearing any insurance risk.

An updated version of UB-82, a uniform billing form required for submitting and processing claims for institutional providers. All services are billed in a standardized, consistent format on each invoice. It merges billing information with diagnostic codes, including almost all the elements from the uniform hospital discharge data set. The UB-92 is also referred to as the HCFA-1450 form.

Usual, Customary and Reasonable (UCR)
A method of determining benefits by comparing the provider's charges to those of his or her peers in the same community and specialty

U.S. Agency for Health Care Policy and Research

Ambulatory Payment Classification

Ambulatory Surgical Center

Centers for Medicare and Medicaid Services

Coordination of Benefits

Consolidated Omnibus Budget Reconciliation Act

Current Procedural Technology

Durable Medical Equipment

Date of Service

Diagnosis Related Group


Electronic Data Interchange

Explanation of Benefits

Employee Retirement Income Security Act

Fee-for-Service Program

Health Care Financing Administration

Healthcare Common Procedure Coding System

Health Maintenance Organization

International Classification of Diseases, 9th Revision, Clinical Modification

Investigational Device Exemption

Length of Sta

Medicare Fee Schedule

National Committee for Quality Assurance

Non-Participating Provider (Medicare)

National Provider Identifier

Outpatient Prospective Payment System

Participating Provider

Primary Care Provider

Physician Hospital Organization

Premarket Approval

Point of Service Program

Preferred Provider Organization

Prospective Payment System

Resource Based Relative Value Scale

Rural Health Clinics

Relative Value Unit

Third Party Administrator

Uniform Bill 1992

Usual, Customary and Reasonable

Unique Physician Identifying Number