A
Adjudication. The process a payer uses to review a claim against the member's benefits, the provider contract, and payment policies, then decide what to pay, adjust, or deny.
Allowed Amount. The maximum a health plan recognizes for a covered service, including both the plan's payment and the patient's cost share. For in-network care, it's set by the provider contract.
Ambulatory Payment Classification (APC). Medicare's grouping of hospital outpatient services with similar clinical and cost characteristics, used to set payment under the Outpatient Prospective Payment System (OPPS).
Appeal. A formal request asking a payer to reconsider a denial or payment decision, usually with supporting documentation and within a contractual or regulatory deadline.
Administrative Services Only (ASO). An arrangement where an employer funds its own health plan and pays an insurer or administrator to process claims and provide network access.
B
Balance Billing. Billing a patient for the difference between the provider's charge and the plan's allowed amount. It's prohibited for in-network care and, under the No Surprises Act, in most emergency and certain out-of-network situations.
Billed Charges. The provider's full, undiscounted price for a service, taken from its chargemaster. Contracts often pay a percentage of billed charges for certain services.
C
CARC and RARC. Claim Adjustment Reason Codes explain why a claim was paid differently than billed. Remittance Advice Remark Codes add detail. Together, they tell you where a denial came from and how to fix it.
Carve-Out. A service, such as high-cost drugs, implants, or transplant, that's paid separately from the contract's base payment method.
Chargemaster (CDM). The master list of every billable item and service a hospital or medical group offers, with its gross charge and billing codes.
Chargemaster Protection. A contract term limiting how much a provider's annual charge increases flow through to services paid as a percentage of charges. Often called a chargemaster cap.
Clean Claim. A claim with all required information and no defects, so a payer can process it without asking for more. State prompt pay laws and the contract define what counts.
Coordination of Benefits (COB). The rules that decide which plan pays first when a patient has more than one source of coverage.
Credentialing. Verifying a provider's licensure, training, and history before a payer allows them to participate in its network. Delays here mean unpaid claims.
D
Default Rate. The payment, often a percentage of billed charges, that applies to services without a specific price in the contract.
Delegated Credentialing. An agreement where a payer lets a qualified provider organization perform credentialing on its behalf, which can speed new providers into the network.
Denial. A payer's refusal to pay all or part of a claim. Many denials trace back to contract terms, not billing errors.
Diagnosis Related Group (MS-DRG). Medicare's system for classifying inpatient stays into groups that receive a fixed payment, adjusted for severity. Many commercial contracts use it as a payment base.
E
Explanation of Benefits (EOB). The statement a payer sends a member showing what was billed, what the plan paid, and what the member owes. It isn't a bill.
Expected Payment. What a provider should be paid under its contract, calculated in the billing system. Comparing it to actual payment is how you find underpayments.
F
Fee Schedule. A list of set payment amounts by procedure code, often built as a percentage of Medicare's rates.
I
Independent Dispute Resolution (IDR). The federal process under the No Surprises Act for resolving out-of-network payment disputes. A certified entity picks one of the two parties' final offers.
J
Joint Operating Committee (JOC). A regular meeting between a payer and provider to work through claims, denials, and operational issues before they become disputes.
L
Lesser-Of Provision. A contract term paying the lesser of the contracted rate or the provider's billed charges. It penalizes providers that keep charges low.
Letter of Agreement (LOA). A short-form agreement setting payment terms for a limited scope or period, often used as a bridge while a full contract is negotiated.
M
Medical Necessity. The standard that a service is reasonable and appropriate for the patient's condition under accepted clinical practice. Who decides, and by what criteria, should be defined in the contract.
Most Favored Nation (MFN). A clause requiring a provider to give a payer rates at least as good as it gives any other payer. Some states restrict it.
N
Network Adequacy. Regulatory standards for how many providers, of what types, and within what distance a health plan must have in its network.
No Surprises Act. The federal law, effective in 2022, that protects patients from surprise bills for emergency care and certain out-of-network care at in-network facilities.
O
Out-of-Network (OON). A provider without a contract with the patient's health plan, usually meaning higher patient costs and no negotiated rate.
Outlier Payment. An additional Medicare payment for unusually high-cost cases that exceed a fixed-loss threshold. Contracts based on Medicare may include or exclude it.
P
Payment Policy. A payer's rules on coding, bundling, and claim editing. Policy changes can lower payment without changing a single contracted rate.
Percent of Medicare. A rate expressed as a multiple of what traditional Medicare would pay for the same service, such as 150% of Medicare.
Prior Authorization. A payer's approval required before certain services are provided. Missing it is one of the most common causes of denials.
Prompt Pay Laws. State laws requiring payers to pay clean claims within set timeframes, with penalties or interest for late payment.
Q
Qualifying Payment Amount (QPA). Under the No Surprises Act, generally a payer's median contracted rate for the same service in the same area. It's used to set patient cost share and is a factor in IDR.
R
Recoupment. A payer recovering money it says it overpaid, often by offsetting future payments. Your contract should define notice and dispute rights first.
Reference-Based Pricing. Paying providers based on a benchmark, often a percentage of Medicare, rather than a negotiated contract rate.
Remittance Advice (835). The electronic payment explanation a payer sends a provider, detailing what was paid, adjusted, or denied on each claim.
S
Self-Funded Plan. A health plan where the employer pays claims directly and bears the risk. Most are governed by federal ERISA law rather than state insurance law.
Silent PPO. When a third party accesses a provider's discounted rates without a contract that authorizes it. Strong contracts prohibit rental of your rates.
Single Case Agreement (SCA). A one-time agreement setting payment for a specific patient's care with an out-of-network provider.
Stop-Loss. A contract term that changes how very high-cost cases are paid once charges pass a set threshold, often switching to a percentage of charges.
T
Termination Without Cause. A right for either party to end a contract with advance notice and no stated reason. The notice period is your real protection.
Third-Party Administrator (TPA). A company that processes claims and handles administration for self-funded health plans.
Timely Filing. The deadline for submitting a claim after the date of service. Miss it, and the claim is usually unpayable.
Transparency in Coverage (TiC). The federal rule requiring health plans to publish their negotiated rates in machine-readable files (MRFs). It's become a key source of market rate data.
U
Underpayment. A payment below what the contract requires. Finding it depends on accurate expected payment calculations.
Utilization Management (UM). The processes payers use to review whether care is necessary, appropriate, and delivered in the right setting, including prior authorization and concurrent review.
V
Value-Based Care. Payment arrangements that tie part of a provider's reimbursement to quality, outcomes, or cost performance rather than volume alone.
