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What are the Key Medical Billing Terminologies that Everyone Must Know?

Medical billing is a tedious task, and only qualified people can do the job. Without the medical billing and coding, it is difficult to bill the patients for receiving the treatment. Well, as it’s one of the most complicated billing systems, it has separate medical billing vocabulary. There are a lot of terminologies that common people don’t know much about. If you want to learn more about the Medical billing terminologies, then you are in the right place. In this post, we are going to share the detailed information about the key medical billing terms that everyone must know. 

Key Medical Billing Terminologies 


Medical billing is a complicated task. Even the medical billers find it difficult to create a simplified bill. There are multiple terms, which the common people don’t know at all. We are listing some of the key medical billing and coding terms, which will help you to understand the bill from the hospitals. 

Allowed Amount / Approved Amount 

Allowed or Approved amount is the amount that is approved by the Insurance company. If the amount is lower than the total bill, then the remainder has to be borne by the patient himself. The insurance companies usually allow only a few percents of the total bill.


The appeal is the legal challenge to the decision made by the insurance provider. When the insurance company denies to pay for the bill or partly pays the same. The appeal status appears on the medical bill provided to the patient. 

ATD or Applied to Deductibles 

The Applied to Deductibles is the term used to indicate the amount that is deductible from the insurance plan. Also, it is the amount that any patient owes, that contributes towards the annual deductibles. 

AOB or Assignment of Benefits 

The AOB or Assignment of Benefits is the terms used to indicate the payment of the bill from the insurance company by settling the claim. Usually, this term is used when the payment is processed and sent to the hospital after filing and claims and completion of the processing. 


The beneficiary is the person receiving the benefits from the insurance claim. Usually, the patient is counted as the beneficiary, but in some cases, the hospital is considered as the beneficiary. 

Charity Care 

Charity care is a free service to patients. The patients who cannot afford certain medical procedures can apply for charity care. In this, the insurance company will pay for the additional costs even if the policy can’t cover the same. 

Clean Claim 

A clean claim is the perfect insurance claim, which contains no errors. The clean claims are pretty rare, and most of the time, they are processed within no time. 


As the name suggests, Co-Insurance stands for the division of the insurance percentage between the two parties. The second party can be another insurance company or the beneficiary himself. 


A deductible is nothing but the term used to explain the amount that the user has to pay for starting the insurance cover. It’s known as the down-payment or first-premium in other countries. 


Downcoding is the term used to identify the medical procedures that are not performed. The insurance company finds no evidence of the surgical procedures performed; then it will downcode. They will remove the code from the claim and process the insurance payment to the hospital. 

Managed Care Plan

The managed care plan is the insurance plan that covers the treatment from the authorized physicians and the hospitals. The specially authorized hospitals under the network are eligible to file the claims in this plan. 

Medical Necessity 

Medical necessity is the term used to tell the insurance companies that the minor procedures that are not part of the plan were performed. Most of the time, the insurance companies will pay for the medical necessities as they are essential for keeping the patient alive. 

Non-covered charge or N/C 

A non-covered charge is what the name suggests. It’s the charge that is not covered by the insurance companies. The charge has to be borne by the patient himself. The hospitals will recover this charge from your pockets. 

PEC or Pre-existing Conditions 

The insurance companies ask for the pre-existing conditions from the patients. If the patient has any of the PEC, then the companies exclude him/her from the insurance cover for the specific ailment. 


The preauthorization is the term used to indicate the authorization from the insurance company before performing certain medical procedures. The pre-authorization allows the hospitals to know if the insurance company will cover the procedure charges or not. 

Supplementary Insurance 

Supplementary insurance means the secondary insurance that is available along with the primary insurance. When the primary insurance covers only a few ailments, the supplementary insurance can cover the other ones. Sometimes, primary and supplementary insurances are redeemed in case of multiple ailments. 

UCR or Usual Customary and Reasonable 

UCR means Usual Customary and Reasonable. It is the amount that is covered by the insurance provider. When the UCR is exceeded, the patient is liable for the extra charges incurred. 

Final Words 

The medical billing is complicated, and we don’t know most of the charges for our bills. The medical terminology is essential to understand, as it helps to know how and why we are charged for receiving medical treatment. These are the common medical billing terminologies that you will spot on the hospital bill. Now you know the meaning of the same and can approach the medical insurance companies or the hospital for inappropriate billing or clearing some doubts. 

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