Insurance Glossary
Define the insurance and medical billing terms you'll encounter when navigating prior authorization and appeals.
Appeal Process
External Review
An independent review of a denied claim by a physician who was not involved in the original denial. Most states allow external review after an internal appeal is denied.
Internal Appeal
The first step of the formal appeals process. You submit additional medical evidence and a written explanation to your insurer to request reconsideration of a denial.
Peer-to-Peer Review
A conversation between your healthcare provider and a physician employed by the insurance company to discuss the medical necessity of your treatment. Can speed up appeals.
Billing
Bundled Payment
A single payment amount for an entire episode of care, procedure, or treatment. Unlike fee-for-service, bundled payments incentivize efficiency.
EOB
Explanation of Benefits. A document sent by your insurance company explaining what charges were covered, what you owe, and the reasoning behind coverage decisions.
Fee-for-Service
A payment model where healthcare providers are paid for each individual service or procedure provided. Opposite of bundled or capitated payment models.
Usual and Customary
The amount an insurance company considers "reasonable" for a particular procedure in a specific geographic area. Out-of-network providers often charge more than this amount.
Capitated Payment
A fixed monthly payment per patient for healthcare services, regardless of how much care is delivered. Used in some HMO and managed care plans.
Coding
CPT Code
Current Procedural Terminology. A five-digit code that describes a specific medical procedure or service. Used by insurers to determine coverage and billing.
HCPCS Code
Healthcare Common Procedure Coding System. Similar to CPT codes but used primarily for Medicare services, durable medical equipment, and supplies. Starts with a letter followed by four numbers.
ICD-10 Code
International Classification of Diseases, 10th Revision. A diagnostic code that describes the patient's medical condition or reason for the procedure. Often called a "diagnosis code."
Insurance Concept
Medical Necessity
A determination that a medical procedure or treatment is appropriate, reasonable, and necessary to diagnose, treat, or manage a patient's medical condition. Insurance companies use this standard to deny claims.
Insurance Network
In-Network
A healthcare provider who has a contract with your insurance company and agreed to accept the insurer's fee schedule. In-network care is typically covered at a higher percentage.
Out-of-Network
A healthcare provider who does not have a contract with your insurance company. You typically pay a higher percentage of costs when seeing out-of-network providers.
Insurance Outcome
Denial
An insurance company's decision to not cover a specific medical service or procedure. Common reasons include lack of medical necessity, missing prior authorization, or procedure being considered experimental.
Insurance Plan
Deductible
The amount you must pay out-of-pocket before your insurance company begins to cover your medical expenses. Different deductibles may apply for different service categories.
Insurance Process
Appeal
A formal request to reconsider a denied insurance claim. Appeals typically go through an internal review process first, then external review if denied again.
Claim
A request for payment submitted to your insurance company by your healthcare provider. Includes procedure codes, diagnosis codes, provider information, and charges.
Prior Authorization
A requirement that your healthcare provider gets approval from your insurance company before you receive a procedure or treatment. Also called prior approval or pre-authorization.
Insurance Requirement
Step Therapy
A coverage policy that requires patients to try less expensive treatments before insurance will cover more expensive options. Also called fail-first or step-down therapy.
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