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Glossary of insurance terms

Glossary of insurance terms

Below is a complete list of some common insurance terms and definitions. 

A - D

Adjustments. Adjustments will occur after a finalized claim has been reprocessed or corrected. usually resulting in a clawback, insurance adjustments are when the payer changes anything from what they paid to the client responsibility.

Allowed Amount. This refers to the maximum amount a plan will pay for a covered healthcare service. If the deductible amount remaining is greater than the allowed amount the client will owe the allowed amount in full. If the client has a copay or coinsurance they will owe a dollar amount or percentage amount based on their level of coverage and the insurance will pay the remainder of the allowed amount. Sometimes referred to as eligible expense, payment allowance, or negotiated rate.
Example: A 60 minute sessions was billed at $185 to insurance. The client has a 40% coinsurance. The Allowed Amount is $130.00. The client would then owe 40% of the $130.00 Allowed Amount which equals $52. The insurance then pays what remains of the allowed amount which equals $78.

Availity, OfficeAlly, Change Healthcare. These are three major clearinghouses that our clearinghouse, Eligible, could work with when we are not able to establish a direct connection with the payer. These can be referred to as a trading partner or third-party clearinghouse.

Benefit Level Exceptions/Single case agreement. The provider is out-of-network, but for certain clients, the provider will receive in-network benefits because they have negotiated an agreement specifically for certain clients with the payer.

Billing NPI. The billing NPI goes in box 33a of the claim form. The billing NPI is used to let insurance companies know what entity is the one billing for the services rendered. The billing provider can be an individual (type 1) or an organization/group (type 2) NPI.

CAQH EnrollHub. A website where providers would enroll to receive their insurance payments by EFT. This depends on the payer and if they are using CAQH as their EDI (electronic data interchange).

Carve Out. A service that an insurance payer excludes from their coverage because another insurance payer is covering that service under the patient's plan.

Claim Reference ID. The unique reference number that our clearinghouse assigns to a claim to be able to identify it.

Clawbacks/take-backs. It is common for insurance payers to audit the claims that they've processed for errors. Sometimes they will find that they've paid too much or too little and will issue new EOBs/ERAs to correct their mistake. How payers process clawbacks/take-backs vary from payer to payer as some will send an invoice to refund the amount while others will withhold payment from future reimbursements until the balance has been recouped.

Clearinghouse. The middleman between SimplePractice and insurance payers. They review and correct claims before submitting them to payers for final processing.

Coordination of Benefits (COB). A survey sent out at the beginning of the plan year to the client to let the payer know whether they are going to be sharing the cost with a secondary insurance payer. There specific rules that dictate which plan can be primary and which can be secondary.

Courtesy Billing. This is when a clinician who is out of network submits claims to insurance so that the client is the one that gets reimbursed. In this scenario, the clinician is getting paid their full fee as Self-Pay from the client.

CMS 1500. This is the standard claim form that is used to file insurance claims. This is the only insurance form we support.

Coinsurance. It is the percentage that the payer will cover after the deductible has been satisfied. After a client has met their deductible, coinsurance kicks in. This means that now the plan will cover their services at a predetermined percentage based on their benefits. For example: 80% paid by insurance 20% paid by client. Provider will have to call plan to verify this coverage.

Contracted amount/Contractual agreement. When a provider becomes credentialed/paneled as an in-network provider, they agree and come into a contract with the payer detailing contracted amounts the payer will pay for the services they provide. The contracted amount and the client responsibility (copay, coinsurance, etc.) will add up to what is called the Allowed Amount. Any remainder is the Contractual Obligation, also known as the write-off.

Contractual Obligation. Also known as the write-off, when a provider is in-network and bound by a contract, the payer will not pay anymore than the allowed amount. Any amount left over is what is known as the contractual obligation which is written off as money the provider will not receive.

Copay. The initial payment a client owes the provider. This is basically a cover charge to get in to see the provider. The copay is a set price that covers what the provider charges just to get in the door. Not all plans have copays. If they do, they are generally listed on the client’s ID card.

Credentialing or Paneling process. This is the process a clinician goes through in order to become an in-network provider.

Deductible. The set amount that a client is responsible for before the plan will cover anything. There are some plans that have a deductible that must be met before you even get to pay a copay. Ex: a collective $1500 must be spent on services and then the spec copay will be $35.  The client will pay for all of their services out of pocket until they have reached this entire amount. Providers will usually have to call the plan to know what to charge a client if they don’t know their contracted rate. Clients usually have no idea what they owe. Insurance companies aren’t forthcoming with this info.

E - I

EDI. Abbreviation for Electronic Data Interchange. This refers to an electronic communication method that provides standards for exchanging data via any electronic means. Our clearinghouse communicates with payers via EDI. 

EFT. Electronic Fund Transfer: A direct deposit/wire transfer between two bank accounts. Also known as ACH. Most payers offer the option of signing up to receive payments via EFTs instead of paper checks but this process is usually between the provider and the payer and completed outside of SimplePractice.

EIN. Employee Identification Number: A federal tax ID number for non-person entities, e.g. for an LLC or a corporation.

Enrollment Process. This is the process through which you let insurance payers know that you will be filing claims and/or receiving ERAs (also known as EOBs or Payment Reports) via SimplePractice.

EOBs. Abbreviation for Explanation of Benefits. An EOB is a document you receive from insurance payers along with any check or payment to break down what sessions for which clients that payment is covering.

ERAs. Abbreviation for Electronic Remittance Advice. An ERA is the electronic version of an EOB, also known as remits.

HCFA Form. Abbreviation for Health Care Financing Administration, it’s another name used to describe a claim form.

ICN. When claims are entered into the Medicare system, they are issued a tracking number known as the internal control number (ICN). The ICN is a 13-digit number assigned to each claim received by Medicare.

Incident-to-Billing. This has to do with submitting claims when there is a supervisor/intern relationship for the rendering provider. Each state has different requirements for who's name and NPI goes in box 24j (the supervisor's or the intern's) so it is best to check local state's regulations prior to billing insurance.

Individual NPI. This is also known as a Type 1 NPI. It’s an NPI that is assigned to an individual clinician.

Insurance Payer (Payer). The entity in charge of processing claims and payments on behalf of insurance companies.

ISA. This is a number that uniquely identifies the interchange data to the sender. It is assigned by the sender and this 9 digit control number is used for claim tracking purposes.

J - P

Loops and Segments. These refer to the specific boxes on a CMS1500 claim form.

Medicare ID. Same as the PTAN -- the provider's ID number solely for Medicare enrollment.

Medicare Crossover. Depending on if the client has accurately set up their Coordination of Benefits, Medicare Crossover is when Medicare (the primary insurance) will automatically forward the primary claim after processing to the secondary insurance on the provider's behalf.

NPI. Abbreviation for National Provider Identifier. The NPI is a unique identification number for covered health care providers. NPIs are always 10 digits and they’re assigned by the Centers for Medicare and Medicaid Services (CMS).

Out-of-Pocket Max. This refers to the maximum amount of money that a client will have to pay out of their own pocket. Once they have accumulated this total amount in charges for services, everything in-network will be covered at 100%.
Example: A collective $1500 must be spent (deductible) and then office visits will be $35 until you have spent a total accumulation of $5000, then everything in-network will be free (only applies to in-network services) Provider will have to call payer to verify

Paneling or Credentialing process. This is the process a clinician goes through in order to become an in-network provider.

Payer. The insurance company that pays for the services on the claim.

Payer Control Number. The unique reference number that a payer assigns to a claim to be able to identify it.

Payer ID. Electronic address where a claim will be sent.

Payer Portal. The insurance company's website. An online portal where the provider can go to usually check the status of claims and review remittance advices.

Payment Reports. SimplePractice’s version of ERAs. When you receive a payment report, our system will read that payment report and will automatically create and assign payments to the sessions and clients the payment is meant to cover.

Provider. This definition depends on the context. If it’s used by saying in-network or out-of-network provider it refers to a therapist who is in or out of network. If it’s used as insurance provider it refers to an insurance company.

PTAN. PTAN stands fo Provider Transaction Access Number. It is the provider's ID number solely for Medicare enrollment.

R - Z

Rendering NPI. This is the NPI that goes in box 24J of the claim form. This is the NPI that lets insurance payers know who was the individual who provided/rendered the services in that claim form. The rendering provider is an individual so they need to use a Type 1 NPI.

Submitter. The clearinghouse.

Subscriber. The person responsible for paying the insurance premiums. The primary subscriber may be the client, or it may be the client's spouse or parent, whoever is the primary insured.

Superbills. “Statement for Insurance Reimbursement” This is a statement out of network clinicians give to their clients so that clients can request reimbursement from insurance themselves. The information in this statement is the same information that’s included in an insurance claim.

Taxonomy Code. A taxonomy code is a number that denotes an NPI’s specialty. A counselor has a different taxonomy code than a dietitian. This information is necessary for claims to be processed and it is populated in box 33b of our claim form.

Third Party Clearinghouse. Also known as a trading partner, a third party clearinghouse is another entity our clearinghouse works with to be able to establish a claim filing and/or ERA connection with a payer.

TIN. Tax Identification number: same as EIN.

Trading Partner ID or Submitter ID. This is the unique identifier that a payer gives each clearinghouse.

Write-off. This term refers to the discrepancy between a provider’s fee for services and the amount that an insurance company is willing to pay for those services that a patient is not responsible for. The write-off amount may be categorized as “not covered” amounts for billing purposes.

0 - 9

270. A request for an insurance coverage report.

276/277. Claim status request and response; The 276 and 277 transactions are used in tandem as the 276 transaction is used to inquire about the current status of a specified claim or claims while the 277 transaction is a response to that inquire (i.e. payment status tracking).

835. An electronic payment report enrollment.

837p. An electronic claim filing enrollment.

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