Insurance billing glossary

Insurance billing comes with its own vocabulary. This glossary gives clear, short definitions of the terms you'll meet while setting up policies, submitting claims and posting payments in Pabau, for providers, front-desk teams and billing staff alike.

Insurance payer

The organization that processes and pays claims: a commercial insurer, a government program such as Medicare or Medicaid, or a third-party administrator. The payer receives your claim and decides reimbursement based on the member's benefits. In Pabau, each insurer you bill is linked to its payer in Setup → Claims → Claim.MD → Payers.

Insurance policy

The contract between a person and an insurer setting out the coverage terms, including deductibles, co-pays and which services are covered. In Pabau, a client's policy lives on the Insurance tab of their client card.

Deductible

The amount the insured person pays out of pocket each year before the insurance starts paying for covered services.

Copayment (co-pay)

A fixed fee the insured pays for a covered service, usually collected at the visit. You can record a policy's co-pay on the client's policy and collect it at checkout.

Coinsurance

The percentage of the cost the insured owes for covered services once their deductible has been met. For example, the plan pays 80% and the client pays 20%.

Policy holder

The person (or entity) who owns the policy and holds the contract with the insurer. The policy holder isn't always the person receiving care: a client can be covered under a partner's or parent's policy, which is why Pabau lets you set the policy holder to Someone else.

Insurance plan

A specific program offered by an insurer that defines networks, covered services, limits and cost-sharing. Plans act as templates for individual policies.

Insurance coverage

The services, treatments and procedures the insurer agrees to pay for under a plan. Coverage varies by service category; an eligibility and benefits report in Pabau shows it per service type.

Eligibility check

A real-time question to the payer: is this client's coverage active, and what does it pay for? Run one from a claim or the client's insurance case before the visit to avoid denials. See Request eligibility and benefits report.

Prior authorization

The payer's approval, given before treatment, for a set number of visits or a date range. In Pabau it is recorded on the client's insurance case and carried onto the claim in box 23.

Insurance claim

A provider's formal request to an insurer for payment for services rendered. US professional claims use the CMS-1500 format, which is what Pabau builds and submits for you.

NPI (National Provider Identifier)

The 10-digit number that identifies a US healthcare provider on claims. A practice has a group NPI for billing; each practitioner has their own for the services they render.

Rejection and denial

A rejection means the claim was turned back before the payer assessed it, usually because of missing or invalid data; you correct it and send it again. A denial means the payer assessed the claim and refused to pay; you correct and resubmit it, or appeal.

EOB (explanation of benefits)

The payer's statement of how a claim was processed: what was billed, allowed and paid, any adjustments, and the client's share. Payers that don't send ERAs post a paper EOB.

ERA (electronic remittance advice)

The electronic version of the EOB. ERAs arrive through Claim.MD, and you pull them in and post them from the Remittance tab on More → Claims.

Adjustment codes (CARC)

The codes on an EOB or ERA that explain why the payer paid less than you billed, such as CO-45 (charge exceeds the contracted fee) or PR-1 (deductible). The group (CO, PR, OA) says who is responsible for the difference.

Insurance payment

The amount the payer pays the provider after processing a claim. Electronic payments arrive with an ERA, which you post from the Remittance tab on More → Claims.

Secondary claim (coordination of benefits)

When a client has two policies, the primary payer is billed first and the secondary payer is then billed for what the primary didn't cover, with the primary's payment and adjustment codes attached. See Submitting secondary claims in Pabau.

Coverage type

The classification of benefits that defines which services are covered and how they're paid, including network rules, referrals, cost-sharing and prior-approval requirements.

Billing profile

The information that identifies your business as the billing entity on claims: billing provider name, NPI, tax ID and billing address. In Pabau it lives in Setup → Claims → Claim.MD → Billing profile and fills box 33 of the CMS-1500.

Clearinghouse

An intermediary that transmits electronic claims between providers and payers, checking and formatting them to each payer's requirements along the way. Pabau's clearinghouse partner for US claims is Claim.MD.

Credentialing

The insurer's process of verifying a provider's education, training, licenses and practice history, required before joining a payer's network.

In-network

Providers who have completed credentialing and contracted with a payer at negotiated rates. Clients generally pay less when they see in-network providers.

Out-of-network

Providers without a contract with a given payer. Clients usually pay more: higher coinsurance, separate deductibles, or no coverage at all. For out-of-network clients, Pabau can produce a superbill so they can claim reimbursement themselves.

Enrollment

Registering your practice with a payer so you can submit claims, receive ERAs and run eligibility checks electronically. Managed per payer from the Payers tab of your Claim.MD setup. This is different from a client enrolling in a health plan. See Electronic enrollments with insurance payers.

Superbill

A detailed receipt you give a client so they can seek reimbursement directly from their insurer. It includes your provider details, ICD-10 diagnosis codes, the services provided with CPT codes, and costs. Download one from any claim's Export menu.

What's Next?

Ready to put the vocabulary to work? Start with Getting started with insurance billing.

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