Common Medical Billing Terms

Learning common medical billing terms can help your bottom line. The terms are organized according to their use, and reading them will help you understand how to navigate through the billing process.

Terms Related to Codes

CPT Current Procedural Terminology Codes

These codes identify all the medical procedures and services rendered.

ICD-10 Codes or International Classification of Disease Codes

ICD-10 codes show why billed procedures were performed. Using the ICD-10 and CPT codes tell the insurance company what medical services were performed, which allows the insurance company to identify the fees that they will pay.

Terms Related to Payment

Fee Schedule

This is a list of the maximum amount a health plan will pay for each service based on the CPT billing codes. Some plans refer to this as a fee allowance schedule or fee maximums.


The deductible is the finite amount that you must pay before your insurance starts paying for the medical service in any policy year.


A copay is the fixed fee that you must pay for the medical service. These payments are often applied to medical encounters, tests, emergency room visits, urgent care visits, and other services.


Coinsurance starts to kick in once you have paid your deductible. It is the percentage of the authorized amount you must pay for any service provided.

Explanation of Benefits or EOB

EOB’s are not bills sent by your providers. It is a statement your insurance company sends to explain what medical treatments or services were paid on your behalf. You will also find the cost of the services you must cover yourself.

Terms related to services

Ineligible Services

These are services not covered by your policy. The reason for the exclusion may either be your plan does not cover it, it is bundled with others, or the service is from an out-of-network provider.

Medical Necessity

Medical necessity denial happens when the insurance company does not agree with your provider’s decision to render services for your medical condition. Your provider must explain why the treatment was necessary to get paid.

Coordination of Benefits (COB)

Coordination of benefits is the process wherein insurance companies determine the order of responsibility when paying for medical claims. This happens when you have more than one insurance policy, and it will decide which of your policy is primary or secondary.

Billing Terms

Clean Claim
Claims sent to the insurance payer are free of errors and processed promptly. These types of claims help providers get their payment quickly. Many providers have specialized medical billing firms to handle their billing for clean claims.

Clearing House

This is a third-party organization that reviews, formats, and edits claims before sending them to the insurance payer. Their process is sometimes called scrubbing, and they provide practices with clean claims. 

In conclusion, learning common medical billing terms will help your bottom line as you understand the medical billing process better. Learning terms related to coding, payment, services, and billing can help you navigate the complexities of medical billing and get paid on time.