Medical billing glossary

Understanding your medical bill can be challenging due to the specialized terminology and complex cost structures involved. Key cost components on your bill may include the allowed amount (the maximum your insurer pays for a service), your coinsurance or copay responsibility, and any remaining balance if the insurer does not cover the full billed amount. To ensure transparency and avoid unexpected charges, always request an itemized estimate prior to your procedure and clarify which services are included in the quoted fee. Be proactive in communicating with your healthcare provider or billing department if any terms or amounts are unclear.

Common Cost Components Explained

• Allowed Amount: The maximum sum your insurer will pay for a specific service; you may owe the difference if your provider charges more.
• Coinsurance: The percentage you pay after your insurer covers its part (e.g., you pay 20% if the insurer covers 80%).
• Copayment (Copay): A set dollar amount for specific services, such as office visits or emergency care, as outlined in your insurance plan.
• Amounts Generally Billed (AGB): The average payment received for services, used to calculate patient financial responsibility, especially for those seeking financial assistance.
• Contracted Collection Agency: An external company hired to collect overdue payments on behalf of the healthcare provider.

Insurance & Payment Advice

• Always verify if your healthcare provider is in-network to minimize out-of-pocket expenses.
• Ask your provider or insurance company for an itemized estimate before receiving care.
• If you receive a bill that is unclear or seems higher than expected, request a detailed breakdown of charges.
• Explore financial assistance options if you are unable to pay the full amount.
• Understand your insurance plan’s coordination of benefits if you have multiple coverages, to ensure proper claim processing.

Frequently Asked Questions

• What is the allowed amount on my medical bill? The allowed amount is the maximum sum your insurer agrees to pay for a covered service. If your provider charges more than this, you may have to pay the difference.
• How is coinsurance different from a copayment? Coinsurance is a percentage of the cost you pay after insurance pays its share, while a copayment is a fixed dollar amount you pay for specific services.
• What does ‘Amounts Generally Billed (AGB)’ mean? AGB is the average amount paid by insurers for services, used to determine patient responsibility thresholds for financial assistance programs.
• Why was my bill sent to a contracted collection agency? If your account remains unpaid for an extended period, the provider may use an outside agency to collect the balance.
• Can I get a breakdown of the charges on my medical bill? Yes, you have the right to request an itemized bill detailing all services and charges.
• What should I do if I cannot afford my medical bill? Contact the billing department to discuss payment plans or financial assistance options that may be available.
• How does coordination of benefits work? If you have more than one insurance plan, coordination of benefits determines which plan pays first and how much the other plan will cover.
• Why is my out-of-pocket cost higher than expected? Your out-of-pocket cost may be higher if your provider is out-of-network, if you have not met your deductible, or if certain services are not covered by your plan.
• How often is the AGB recalculated? The Amounts Generally Billed (AGB) is typically recalculated annually based on past claims and payments.
• What should I do if I don’t understand a term on my bill? Refer to the medical billing glossary or contact your provider’s billing department for clarification.

Medical billing terms can be confusing. That’s why we’ve defined some of the most common terms you may see on your bill. Look below for simple, easy-to-understand definitions.

Glossary

Allowed Amount – The maximum amount an insurer will pay for a covered medical service or treatment. If there is a remainder still owed, you’ll need to pay the difference.

Amounts Generally Billed (AGB) – AGB refers to a method of reviewing past claim insurance payments and dividing by total billed claim amounts. The AGB number is used to calculate total financial responsibility thresholds for patients that are eligible for financial assistance. The AGB is recalculated every year.

Coinsurance – The percentage you pay after an insurance company pays its agreed-upon percentage; e.g., your plan may cover 80% and you would pay the remaining 20%.

Contracted Collection Agency – A contracted outside agency (vendor) providing debt collection services on behalf of Aurora.

Copayment or copay – A dollar amount specified by your insurance plan that you pay for a medical visit. You may have a co-pay for a doctor visit, or for specific services rendered at a hospital such as emergency services.

Coordination of Benefits – A method of determining which insurance is to be billed first when a patient is covered by more than one insurance. This helps ensure that members covered by more than one plan will receive the benefits they are entitled to while avoiding overpayment by either plan and keeping premiums at a minimum.

CPT Code – A CPT (Current Procedural Technology) code utilizes a standardized coding system to communicate to an insurance company which specific services were provided to a patient.

Deductible – The amount you need to pay before an insurance company begins to pay for services. This amount resets at the beginning of a new benefit period, usually yearly.

Denial – A denial occurs when an insurance company refuses to pay for health care services that were provided to you by a licensed health care professional or facility.

Diagnosis code – A system of classifying the medical condition of the patient at the time of the service, which is produced using the medical documentation recorded at the time of service. This is added to the claim to help the insurance company understand the reason for the specific treatment.

Due Upon Receipt – Indicates that you need to pay the bill as soon as possible after you receive your billing statement. The expectation is that you will pay the entire balance before the next statement is mailed, unless you choose to contact Aurora to explore other payment options.

Eligible patient(s) – Aurora patients that meet certain published eligibility requirements for financial assistance.

Emergency or urgent care services – Services that are provided in a hospital emergency department or in a hospital urgent care setting.

Experimental or not medically necessary – Experimental or investigational medical treatment or procedures are those not approved by the Food and Drug Administration (FDA) and not considered to be a standard of care.

Guarantor – The person or group that assumes responsibility of payment for a debt owed to Aurora.

HIPAA/Privacy – The Health Insurance Portability and Accountability Act (HIPAA) is a federal law designed to protect the patient’s private health information.

In-network – A group of health care providers contracted with an insurance company offering services to plan members for specific pre-negotiated rates.

Inpatient services – The services you received while you were admitted to the hospital.

Noncovered Services – Charges for services and supplies that are not covered under a health plan, such as acupuncture, weight loss surgery or marriage counseling.

OB Medical Screening – Labor and Delivery (L & D) areas have been designated by hospital bylaws to perform emergency medical screenings and act on behalf of the emergency department with regard to pregnant women because of their expertise in assessing maternal/fetal conditions. In this case, the services are rendered in the L & D area, but are billed as emergency services to comply with emergency treatment laws.

Observation services – Hospital outpatient services provided to help the doctor decide if a patient needs to be formally admitted to the hospital.

Observation status – Your admission status is determined by your physician when he or she writes the orders for admission. If you’re hospitalized, you’re assigned to either inpatient or observation status. Observation status occurs when you are not sick enough for inpatient admission, but are too sick to get care at your doctor’s office.

Other hospital outpatient services – Select, nonsurgical services provided on an outpatient basis.

Out-of-network – Health care providers outside of an established network.

Out-of-pocket – The cost you would need to pay depending upon your plan. Costs vary by plan and there’s usually a maximum out of pocket (MOOP) cost.

Outpatient surgery – Select surgical services and invasive diagnostic procedures provided on an outpatient basis.

Primary and secondary Insurance – When a patient is covered by more than one insurance plan, one insurer will become the primary carrier and all others will be considered secondary and tertiary carriers that will help cover remaining costs not covered by your primary insurer.

Professional services – The services most frequently performed at doctors’ offices.

Self pay balance – The portion of a patient’s bill that the guarantor is legally responsible for paying.

Subrogate – Subrogation occurs when an insurance company pays a claim, but reserves the right to pursue another party to recover payment. This generally occurs when medical services were provided as a result of an accidental injury.

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