Medical Billing Glossary: Terms with Examples

270/271 eligibility transaction

The HIPAA-standard eligibility and benefit inquiry and response. The 270 asks; the 271 responds. A response must still be read in the context of the service, date, payer product and applicable requirements.

Example: staff reviews the 271 response before escalating a coverage or authorization question.

276/277 claim-status transaction

The HIPAA-standard claim-status request and response. It reports status information; it does not replace work needed to answer a payer request, correct a rejection or appeal a denial.

Example: a 277 response routes an accepted claim to follow-up because more information is pending.

835 electronic remittance advice

The standard transaction that communicates claim and service-line adjudication and adjustment information. It supports posting and reconciliation; it is not the same as the bank deposit.

Related: ERA, CARC, RARC and EFT.

837 claim transaction

The standard electronic format for professional, institutional or dental claim information. A clearinghouse acceptance or acknowledgement does not mean the payer has completed adjudication.

Related: claim, clearinghouse and rejection.

ICD-10-CM

The diagnosis code set used to report conditions and reasons for services in covered transactions. CMS states that FY 2027 ICD-10-CM updates apply to encounters on and after October 1, 2026.

Control: verify the code set effective for the date of service.

NPI — National Provider Identifier

A standard identifier for covered health care providers in HIPAA administrative and financial transactions. An NPI identifies; it does not by itself prove licensure, credentialing, enrollment or network participation.

Source check: CMS posted an NPPES monthly deactivation update on October 12, 2026.

TIN — Taxpayer Identification Number

A tax identifier used in enrollment, contracting and payment workflows. It serves a different purpose from an NPI, and the correct combination depends on the billing entity and payer setup.

Adjudication

The payer's processing decision on a claim or service line under the applicable coverage, coding, contract and benefit rules. The result may include payment, patient responsibility, an adjustment, a denial or a request.

Adjustment

A change to the billed or allowed amount shown in the remittance. The group code, CARC, RARC, contract and payer instructions help explain why it occurred and what action, if any, is supported.

Appeal

A formal request to review a payer determination. Deadlines, levels, evidence and submission channels vary by payer, product, contract, jurisdiction and determination date.

CARC — Claim Adjustment Reason Code

A standard code that helps explain why a claim or service-line payment differs from the billed amount. Read it with the claim adjustment group code, any RARC and the payer's current instructions.

Charge

The amount recorded for a documented service before payer adjudication. A charge is not automatically the allowed amount, payment or patient responsibility.

Claim

A request for payment or encounter record containing the required patient, provider, payer and service information. It may be electronic or, when permitted, paper.

Claim acknowledgement

A response showing whether a file or claim passed a transmission or intake stage. Acceptance at one stage does not prove coverage, correct coding or payment.

Claim status

The current processing state reported by a payer or intermediary. A status should lead to an evidence-based next action and owner, not remain an unworked label.

Clean claim

A term often used for a claim that can be processed without requesting additional information or correcting a defect. The controlling definition and prompt-payment rules can vary, so verify the payer, contract and applicable law.

Clearinghouse

An intermediary that can validate, translate and route electronic transactions between a provider and payer. Its edits and acknowledgements are part of the evidence chain, not a payment guarantee.

COB — Coordination of Benefits

The process of determining the relative payment responsibilities when more than one health plan may cover a claim. COB is not the same as coinsurance.

Denial

A payer determination after adjudication that does not pay the claim or service as submitted. Review the remittance, policy, contract, documentation and appeal rights before choosing an action.

Eligibility

Information about whether coverage is active and what benefit details are returned for the inquiry. Eligibility does not guarantee that a particular service will be covered or paid.

Encounter

A recorded interaction or service event. An encounter may support a claim, but the billing record still needs the required documentation, identifiers, codes and payer routing.

Medical necessity

A coverage concept applied under the relevant benefit, policy and clinical context. Documentation and coding must support the reported service; the term should not be treated as a universal payer rule.

Prior authorization

A payer process that may require advance information or approval before a service. Authorization is not a guarantee of payment because eligibility, documentation, coding and other requirements still apply.

RARC — Remittance Advice Remark Code

A standard code that adds explanation to a remittance decision. Read it with the related CARC, group code and payer instructions rather than as a complete remedy by itself.

Rejection

A file or claim that fails a submission or intake edit before full adjudication. It usually needs correction and resubmission through the applicable channel; it is different from a denial.

Timely filing

The deadline for submitting a claim or related action. It is payer-, product-, contract-, jurisdiction- and action-specific; there is no single deadline for all claims.

Allowed amount

The maximum amount on which payment for a covered service is based under a plan or contract. It is not necessarily the provider's charge or the amount paid by the payer.

Balance

An amount remaining after recorded charges, payments, adjustments and transfers. Before routing a balance, reconcile it to the remittance, deposit and applicable responsibility.

Coinsurance

A form of cost sharing generally calculated as a share of the allowed amount after applicable plan rules. It differs from a fixed copayment and from the premium paid for coverage.

Copayment

A fixed cost-sharing amount a member may owe for a covered service under plan terms. Confirm the current benefit and how it applies to the service.

Deductible

The amount a member pays for covered services before the plan begins paying according to its terms, subject to the benefit design and exceptions.

EFT — Electronic Funds Transfer

The movement of payment funds to a bank account. Reconcile the EFT trace and deposit to the corresponding 835 remittance; receiving one does not prove the other posted correctly.

EOB — Explanation of Benefits

A plan's explanation to a member of how a claim was processed. An EOB is not the provider's bill and should be reconciled with the practice's remittance and account record.

ERA — Electronic Remittance Advice

The electronic explanation of claim adjudication and payment information, commonly delivered in the X12 835 format. Posting should preserve the source decision and adjustment details.

Guarantor

The person or entity recorded as financially responsible under the practice's account and policy. A guarantor is not automatically the patient, subscriber or payer.

HSA — Health Savings Account

A tax-advantaged account an eligible individual may use for qualified medical expenses. It is not a payer adjudication status or a substitute for verifying patient responsibility.

Patient responsibility

The portion assigned to the patient after applicable coverage, adjudication, payments and adjustments. Verify the remittance and practice policy before billing it.

Premium

The amount paid to maintain health coverage. It is different from deductible, copayment, coinsurance and a provider's billed charge.

Reimbursement or payment

Funds paid for a covered service under the applicable payer and contract rules. The term should not be used as a promised amount or outcome without claim-specific evidence.

Remittance

The explanation of how a payer processed claims and service lines. It must be matched to funds, posted adjustments and any supported next action.

A/R — Accounts receivable

Amounts recorded as owed to the practice at a reporting date. A/R is a process and financial balance, not a person or credential.

Related: aging, days in A/R, payer follow-up and patient responsibility.

BAA — Business Associate Agreement

A contract required in applicable HIPAA business-associate relationships that defines permitted uses and disclosures of protected health information and other required safeguards and duties.

Medical billing department

The team responsible for assigned billing workflows. The name alone does not define scope; document ownership for eligibility, charges, coding review, claims, denials, posting, A/R, statements and reporting.

PCP — Primary Care Provider

A clinician or practice serving a primary-care role under the relevant plan or care arrangement. PCP refers to a provider role, not an identifier like the NPI.

PHI — Protected Health Information

Individually identifiable health information protected under HIPAA when held or transmitted by a covered entity or business associate. Access and disclosure must follow the applicable rule, agreement and organizational policy.

Provider

A person or organization furnishing health care. In a claim, different provider roles may be reported, such as billing, rendering, referring or attending; use the role required by the transaction and payer.

Rendering provider

The individual provider who performed or rendered the reported service when that role applies. The rendering NPI is distinct from the billing entity's identifiers.