Billing & insurance, in plain English

The acronyms and jargon you'll see on bills, EOBs, and denial letters — defined the way I'd explain them to a family member.

Allowed amount

The maximum your insurer will pay a provider for a service. If the provider charged more and is in-network, they must write off the difference. If out-of-network, you may be balance billed for the rest.

Balance billing

When an out-of-network provider bills you for the difference between their charge and what insurance paid. Banned in many situations by the No Surprises Act.

Charity Care

Free or discounted care nonprofit hospitals must offer to patients under certain income limits. Required by IRS §501(r).

Claim

The bill your provider sends to your insurance for a service.

Coinsurance

Your percentage share of a covered service AFTER you've met your deductible (e.g., 20%).

Copay

A flat dollar amount you pay at the time of service (e.g., $25 for a primary care visit).

CPT code

A 5-digit code identifying the procedure or service performed. Found on itemized bills.

Deductible

What you pay out-of-pocket each year before insurance starts covering most services.

DRG

Diagnosis-Related Group — a bundled payment code hospitals use for inpatient stays.

EOB (Explanation of Benefits)

The statement from your insurer showing what was billed, what they paid, what was discounted, and what you owe. It is NOT a bill.

Formulary

The list of drugs your insurance plan covers, usually grouped into tiers.

HCPCS code

Codes for supplies, equipment, and services not in the CPT set (e.g., ambulance, wheelchairs).

In-network

A provider who has a contract with your insurance to accept negotiated rates.

Itemized bill

A line-by-line statement of every charge with its code. You have the right to request one.

MOOP / Out-of-pocket max

The most you'll pay in a plan year before insurance covers 100% of covered services.

Network adequacy

State and federal rules requiring insurers to have enough in-network providers near you.

No Surprises Act

Federal law (2022) that bans most surprise out-of-network bills for emergency care and ancillary services at in-network facilities.

Prior authorization

Approval from your insurer that a service is medically necessary BEFORE it happens. Often required for imaging, surgery, and certain drugs.

QMB

Qualified Medicare Beneficiary — a Medicare-Medicaid dual-eligible status that protects you from being billed for Medicare cost-sharing.

Remit / Remittance

The payment and explanation a provider receives from an insurer for a claim.

Revenue code

A 4-digit hospital code that groups a charge into a category (room, pharmacy, lab, etc.).

Surprise bill

An unexpected out-of-network bill — often from anesthesia, radiology, or ER providers at an in-network hospital.

UCR (Usual, Customary, Reasonable)

The 'fair' market rate some insurers use to calculate out-of-network reimbursement. Often disputed.