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Medical Billing Terminology

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.


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.

Co-Insurance – 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.

Co-payment/Co-Pay – 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/Urgent Care Services – Services that are provided in a hospital emergency room 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.

Non-Covered 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 room 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 Insurances – 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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