Medical Billing Glossary

The 20 most confusing medical billing terms, defined in plain English. Search insurers' documents no more — every term below is the one that actually shows up on your bill.

CPT code

A five-digit code that identifies a specific medical service or procedure, like an office visit or a lab test, on your bill and insurance claim. Providers use it so insurers know exactly what was done. For example, 99213 is a routine follow-up office visit.See our full guide to 99213 →

EOB (Explanation of Benefits)

A statement from your insurance company that shows how a claim was processed: what was billed, what your plan allows, what the plan paid, and your estimated share. An EOB is not a bill — you never pay money based on it alone.How to compare an EOB with your bill →

Deductible

The amount you pay in full out of pocket for covered care before your insurance starts paying its share. With a $1,500 deductible, the first $1,500 of covered care each year is yours. Deductibles reset every plan year.

Coinsurance

The percentage of the allowed amount you pay for care after you've met your deductible. With 20% coinsurance, you pay 20% and your plan pays the remaining 80% of each covered service.

Copay

A flat dollar amount you pay for a specific service, such as $30 per office visit or $15 per prescription. Copays are usually collected at the time of the visit and often apply even while you're still meeting your deductible.

Prior authorization

Your insurer's advance approval that a specific service, medication, or procedure is covered before you receive it. Care given without a required prior authorization can be denied, leaving you with the full charge — so always confirm it's in place for planned procedures.

Balance billing

When a provider bills you for the gap between what your insurer paid and what the provider charges. It's generally prohibited for in-network care and in several other situations under the No Surprises Act — but still legal for some out-of-network care, so it's worth checking before paying.When you can (and can't) be charged the difference →

Out-of-pocket maximum

The most you can pay for covered in-network care in a plan year, including deductibles, copays, and coinsurance. Once you hit it, your plan pays 100% of covered in-network costs for the rest of the year. Monthly premiums don't count toward it.

Coordination of benefits (COB)

The rules insurers use when you're covered by more than one health plan — for example, your own plan plus a spouse's plan. COB decides which plan pays first and how much the second plan covers, so claims aren't paid twice.

Claim denial

Your insurer's decision to refuse payment for a billed service. Denials happen for many reasons — missing prior authorization, coding errors, or out-of-network care — and many are worth appealing, since appeals often succeed. The denial letter must explain the reason and your appeal rights.

Allowed amount

The maximum your insurance plan will pay for a covered service, based on its negotiated rates with providers. Your bill's asking price is almost always higher; the difference is written off as an adjustment and is not your responsibility.

Adjustment (contractual discount)

The amount a provider writes off because it agreed to your insurer's negotiated rates. It appears on your bill as a discount between the total charge and the allowed amount — and you never owe it, no matter how large it looks.

In-network provider

A doctor, hospital, or lab that has a contract with your insurance plan at negotiated rates. In-network care costs you the least, and in-network providers generally cannot bill you beyond your plan's allowed amount.

Out-of-network provider

A provider without a contract with your insurance plan. Care from them usually costs you more, may not count toward your in-network deductible, and can expose you to balance billing for the unpaid balance.

Good faith estimate

A written estimate of the expected cost of scheduled care that uninsured (or self-pay) patients are legally entitled to request. If the final bill exceeds the estimate by $400 or more, you have the right to start a dispute process.

No Surprises Act

A federal law, effective 2022, that protects patients from most surprise out-of-network bills — especially for emergency care and certain providers at in-network facilities, like anesthesiologists and radiologists. Providers covered by the law must treat you as in-network.What the law protects you from →

Itemized bill

A bill that lists every charge separately, line by line, with codes and amounts — instead of a single lump sum. You're entitled to request one, and it's the first step in auditing a bill for errors.How to read a medical bill line by line →

ICD-10 code

A diagnosis code that explains why you received care — for example, a specific condition or symptom. It appears on claims alongside CPT codes, and mismatched diagnosis and procedure codes are a common cause of claim denials.

HCPCS code

A billing code used for services and supplies CPT codes don't cover, such as medical equipment, ambulance services, and some drugs. Like CPT codes, it tells your insurer exactly what you're being charged for.

Charity care (financial assistance)

Free or discounted care that hospitals — especially nonprofit ones — are required to offer patients who meet income criteria. Ask the provider's billing office about financial assistance policies; many also offer discounts and payment plans regardless of status.