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Glossary of Terms

Glossary of Common Billing and Insurance Terms

Account Number

This is a number assigned to identify each episode of care. This number is used to track services and payments.

Advance Beneficiary Notice (ABN)

This is a written notice given to you by a doctor, provider or supplier in advance of any service that Medicare may not consider covered. Also known as a waiver of liability, the ABN (the complete name is "Advance Beneficiary Notice") is a provided when providers offer a service or item they believe Medicare will not cover. ABNs only apply if you have Original Medicare, not if you are enrolled in a Medicare Advantage private health plan.

Allowed amount

Maximum amount on which payment is based for covered health care services. If your provider charges more than the allowed amount, you may have to pay the difference.


A request for your health insurer or plan to review a decision or a grievance.  This may be performed by our denial staff or yourself, depending on the type of denial.


Authorization is the approval of care, such as hospitalization or diagnostic tests, by a health plan. Your insurance or health plan may require pre-authorization before you're treated.


The amount owed to WakeMed indicated on the billing statement.


This is an amount billed for a service or supply at a WakeMed location.

CMS 1500 Form

The CMS 1500 form (Formerly HCFA 1500) is required by Medicare, Medicaid, and most private insurance companies and managed care plans for billing. It is the official standard form used by physicians and other providers when submitting bills and claims for reimbursement to Medicare, Medicaid, and private insurers.


Coinsurance is the amount a patient may be billed that is predetermined in their contract with their insurance carrier and the plan they selected.  This usually is an insurer's coverage to a certain percentage. If your insurance includes coinsurance, you'll be responsible for charges beyond those covered by your insurance.

Coordination of Benefits (COB)

Coordination of benefits is an agreement between your insurers to prevent double payment for your care when more than one plan provides coverage. The agreement determines which insurer has primary responsibility for payment and which has secondary responsibility.


Copayment is the portion of a claim or medical expense that you must pay out of pocket. Copayment usually is a fixed amount that is determined by your insurance plan.

Cost Share

The share of costs by your insurance that you pay out of pocket. Cost share generally includes deductibles, coinsurance, copayments or similar charges. It does not include premiums, balance billing amounts for non-network providers or the cost of noncovered services.

Covered Charges

Services that are typically covered under the terms of your contract with your insurance company. It is important to note that even though services may be covered charges, they are often subject to your deductible and coinsurance.

Current Procedural Terminology (CPT) codes

Medical professionals use this set of five-digit codes for billing and authorization of services.


A deductible is the portion of your health care expenses that you must pay before your insurance applies.  This amount is determined by your selected plan with your insurance carrier.

Denial or Denied

A service for which your health care plan has determined the provisions of your benefit plan do not have benefits available or there are certain limitations as to when the benefits are available. If your insurance denies due to benefits for a service, you are liable for the entire amount.

Diagnosis-Related Groups (DRGs or MS-DRGs)

A DRG (diagnosis-related group) is the system Medicare and some insurance companies use to classify and categorize charges for inpatient hospitalization. The DRG is based on a patient’s diagnoses and surgery when performed. Medicare and/or other payers use the assigned DRG to pay the hospital a set (fixed) amount – regardless of the actual charges for the patient’s hospital stay.

Explanation of benefits (EOB)

An explanation of benefits is a statement mailed to an insured person noting how a claim was paid or why it wasn't covered. Medicare recipients receive a Medicare Summary Notice (MSN).

Fee Schedule

A fee schedule is a list of the maximum fee that a health plan will pay for each service based on CPT billing codes.

International Classification of Disease (ICD) codes

ICD codes are an international disease classification system used in diagnosis and treatment.

Itemized Statement

An itemized list of services provided. The itemized statement of charges includes the CPT and diagnosis codes used when submitting a claim to an insurance plan. An itemized statement is not a bill.


Medicaid is a program financed jointly by the federal government and the states that provides health care coverage and nursing home care for low-income individuals. Benefits vary widely from state to state.


Medicare is a federal program insuring people age 65 and older and people who have disabilities of all ages. Medicare Part A covers hospitalization and is a compulsory benefit. Medicare Part B covers outpatient services and is a voluntary benefit.

Medicare Advantage Plan

Medicare Advantage Plans are offered by private companies that contract with Medicare to provide Medicare Part A and Part B benefits. Medicare Advantage Plans may be HMOs, PPOs or private fee-for-service plans. When a person is enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan. Services aren't paid for under the original Medicare.

Medicare Summary Notice

This is a statement Medicare provides to Medicare enrollees by explaining how it processed and paid a claim.

Noncovered Charges

This is specific to your insurance policy. Noncovered charges are services that are not a covered benefit under the provisions of your insurance plan. If your insurance does not cover a service, you are liable for the entire amount.

Noncovered Services

A service not covered under the limits of the patient's health insurance contract. These amounts are the patient's responsibility to pay. Patients should direct questions about coverage to their health plans.

Pre-admission, Pre-certification

Pre-admission or certification is also known as pre-admission review, pre-certification and pre-cert. Pre-admission certification is the practice of reviewing requests for hospital admission before you enter the hospital.

Primary Insurance Company

This is the insurance company with first responsibility for the payment of the claim.


A provider is any supplier of health care services, such as doctors, pharmacists, physical therapists and others.

Proof of Health Insurance

A valid insurance card including the address where claims are to be filed.

Secondary Insurance Company

This is the insurance company responsible for processing the claim after the primary insurance determines what it will pay.

Self-pay Patient

A patient who has no insurance or does not want the services rendered to be filed with his or her insurance company.


The UB04 form is required by Medicare, Medicaid and most private insurance companies and managed care plans for billing inpatient and outpatient hospital or facility charges. The official standard form used by physicians and other providers when submitting bills or claims for reimbursement to Medicare, Medicaid and private insurers. UB04 claim forms contains patient demographics, diagnostic codes, ICD/CPT/HCPCS codes, diagnosis codes and units.

Utilization Review

This is a process of tracking, reviewing and rendering opinions about care. The practices of pre-certification, recertification, retrospective review and concurrent review all describe utilization review methods.