The RCM glossary

This glossary defines common terms in revenue cycle management (RCM). The revenue cycle is how healthcare providers get paid for the care they deliver.

Each entry has a plain-English definition. Many entries also include a link to a related Stedi guide or docs page.

Worth bookmarking. We'll add terms as we publish new guides and as the industry changes. Check back for updates.

A · B · C · D · E · F · G · H · I · M · N · O · P · R · S · T · U · X

A

AAA error

An error that a payer returns when it rejects an eligibility check. The error typically tells you what went wrong.

For example, 72 (Invalid/Missing Subscriber/Insured ID) means the member ID doesn't match the payer's requirements.

These errors are called AAA errors because they appear in the AAA segment of the X12 271 eligibility response. See Eligibility troubleshooting.

Accepted claim

A claim that passed the payer's validation. This means the payer will adjudicate the claim.

In a claim acknowledgment, a claim status category code of A2 (Acknowledgment/Acceptance into adjudication system) or A5 (Acknowledgment/Split Claim) means the payer accepted the claim. See Interpret claim status.

ADA dental claim form

The standard paper form for dental claims. The American Dental Association (ADA) maintains it. The electronic version is an 837D dental claim. See Submit paper claims.

Adjudication

The process where a payer decides whether and how much to pay a provider for a claim. Most claims are adjudicated automatically, which is called auto-adjudication.

Adjustment

Also called: claim adjustment
Any difference between what the provider billed in a claim and what the payer paid for the claim.

The payer applies adjustments during adjudication. Adjustments are reported in Electronic Remittance Advice (ERAs). See Why ERA payments don't match claim charges.

Allowed amount

The maximum amount a payer will pay a healthcare provider for a service.

For commercial payers, the provider's contract with the payer sets the allowed amount. For government payers, like Medicare, the government sets allowed amounts and publishes them in fee schedules.

See Why ERA payments don't match claim charges.

Atypical provider

Also called: non-traditional provider
A provider that delivers health-related services but isn't eligible for an NPI. Examples include personal care, respite care, and adult foster care providers. See How to submit claims for atypical providers.

B

Billed amount

Also called: charged amount
The amount a provider charges for a service on a claim. Billed amounts usually aren't what the provider expects to be paid. The allowed amount typically drives actual payment. See Why ERA payments don't match claim charges.

C

Carveout

When the primary payer for a plan lets another entity handle certain benefits. For example, many Blue Cross Blue Shield (BCBS) plans carve out mental health benefits to Magellan, a mental health payer. See Carveout benefits.

CDT code

Also called: Current Dental Terminology code, Code on Dental Procedures and Nomenclature
A standardized set of procedure codes that describe dental services, such as a cleaning, filling, or braces. Providers use them in dental claims. The American Dental Association (ADA) maintains CDT codes.

Claim

A bill that a healthcare provider sends to a payer. It lists the services provided to a patient and requests payment based on the patient's plan benefits. Common claim types are professional, institutional, and dental claims. See Claims processing overview.

Claim acknowledgment

X12 transaction: 277CA Health Care Claim Acknowledgment
An X12 HIPAA transaction sent from a healthcare clearinghouse or payer back to the provider in response to a claim.

A claim acknowledgment tells you whether the claim will move forward in processing or not. Providers often get several claim acknowledgments for one claim submission. See Acknowledgments and ERAs overview.

Claim Adjustment Group Code

Also called: group code
A code that categorizes an adjustment in an Electronic Remittance Advice (ERA). Every adjustment in an ERA has a Claim Adjustment Group Code and a CARC.

The group code tells you who's financially responsible, such as the patient or the provider. The CARC tells you why. For example, group code PR (Patient Responsibility) means the patient owes the adjustment amount. See Claims code lists.

Claim Adjustment Reason Code (CARC)

A code that explains why a payer adjusted a claim or service line. Every adjustment in an Electronic Remittance Advice (ERA) has a Claim Adjustment Group Code and a CARC.

The group code tells you who's financially responsible, such as the patient or the provider. The CARC tells you why. For example, CARC 45 means the billed amount exceeds the allowed amount. See Claims code lists.

Claim attachment

X12 transaction: 275 Additional Information to Support a Health Care Claim or Encounter
Additional documents, such as X-rays, medical records, or treatment plans, that help justify or validate a claim.

Without required attachments, the payer may delay (pend) or deny the claim. Providers can send attachments to payers electronically using an X12 275 transaction. See Submit claim attachments.

Claim denial

A payer's decision to not pay a claim, or to pay only part of it, after it processes the claim. Denials happen during adjudication. They show up in the claim's Electronic Remittance Advice (ERA). See The difference between claim rejections and denials.

Claim edit

An automated rule that validates part of a claim. If a claim fails an edit, the submitter must fix the issue and resubmit the claim. See Claim edits and repairs.

Claim frequency code

A code that tells the payer whether a claim is an original claim, a replacement, or a void (canceled). See Resubmit or cancel claims.

Claim rejection

The result when a claim fails a claim edit or other check after submission. A claim can be rejected by the healthcare clearinghouse or the payer.

Rejections show up in claim acknowledgments. A rejection doesn't stop the clock on the timely filing limit. You still need to fix and resubmit the claim before the deadline. See Acknowledgments and ERAs overview.

Claim scrubbing

The process that checks a claim for errors before it reaches the payer, and fixes some of them. The goal is a clean claim. At Stedi, claim scrubbing happens through our claim edits and repairs.

Claim status category code

An X12 code that gives the broad state of a claim, such as accepted, rejected, pending, or finalized.

Every code starts with one or more letters, like the A (Acknowledgment) in A7 (Acknowledgment/Rejected for Invalid Information). The letters show the claim's highest-level state at a glance. See Interpret claim status.

Claim status check

X12 transactions: 276 Health Care Claim Status Request, 277 Health Care Claim Status Response
An X12 HIPAA transaction that returns the current status of one or more claims. It includes the claim status category code and claim status codes. See Check claim status.

Claim status code

A code in a claim acknowledgment or claim status response that gives details about a claim's status. It's more specific than the claim status category code. See Interpret claim status.

Clean claim

A claim that reaches the payer without errors. Clean claims can have a real impact on a provider's cash flow.

Stedi's claim edits and repairs catch errors, and fix some, before the claim reaches the payer. See What are claim edits and repairs?

Clearinghouse

Also called: healthcare clearinghouse
A company that helps healthcare providers exchange X12 HIPAA transactions, such as eligibility checks and claims, with payers. See What is a healthcare clearinghouse?

CMS-1500

Also called: HCFA form
The standard paper form for professional claims. The National Uniform Claim Committee (NUCC) maintains it. The electronic version is an 837P professional claim. See How to fill out Stedi's CMS-1500 form.

Co-insurance

Also called: coinsurance
The percentage of costs the patient pays for a service. For example, with 20% co-insurance, the patient pays 20% of the cost, and the payer covers the remaining 80%. See Patient responsibility.

Co-pay

Also called: copay, co-payment
A fixed dollar amount the patient pays for a service, often even if they haven't met the deductible. For example, a plan can have a $25 co-pay for each physician office visit. See Patient responsibility.

Companion guide

Also called: payer companion guide
A document that lists a payer's extra rules for X12 HIPAA transactions, such as eligibility checks and claims. Providers and vendors are expected to follow these rules and use them to interpret responses.

Contractual adjustment

Also called: contractual write-off
An adjustment that reduces the provider's billed amount to the payer's allowed amount. It's the most common type of adjustment.

In an Electronic Remittance Advice (ERA), it has a Claim Adjustment Group Code of CO (Contractual Obligations) and a CARC of 45. See Why ERA payments don't match claim charges.

Coordination of benefits (COB)

The process that decides the billing order when a patient's services are covered by more than one payer.

COB determines which payers are billed and in what order. It makes sure no payer pays more than their share. See Coordination of benefits (COB) checks.

Corrected claim

Also called: replacement claim
A resubmission that tells the payer which claim to change. You set the claim frequency code to 7 (Replacement of Prior Claim). See Resubmit or cancel claims.

Credentialing

How a payer checks that a healthcare provider is qualified to practice. To get credentialed with a payer, providers typically work with the payer directly or use a credentialing service. See Credentialing and enrollment.

Crossover claim

A claim that one payer adjudicates and then forwards to another payer. Crossover claims are common in coordination of benefits (COB) situations, like Medicare claims for patients with a Medigap plan.

An ERA claim status code of 19 (Processed as Primary, Forwarded to Additional Payer(s)), 20 (Processed as Secondary, Forwarded to Additional Payer(s)), or 21 (Processed as Tertiary, Forwarded to Additional Payer(s)) shows that the payer forwarded the claim. See Crossover claims.

Current Procedural Terminology (CPT) code

A standardized set of procedure codes that describe medical services, such as an office visit or surgery. Providers typically use them in professional claims.

The American Medical Association (AMA) maintains CPT codes. CPT codes make up Level I of HCPCS codes.

D

Date of service (DOS)

Also called: service date
The date (or date range) a provider delivered or expects to deliver care to a patient. Eligibility checks, claims, and claim status checks require a date of service.

Deductible

The amount a patient must pay out of pocket for a service before the payer starts to cover costs. For example, with a $1,000 annual deductible, the patient pays for the first $1,000. See Patient responsibility.

Dental claim

X12 transaction: 837D Health Care Claim: Dental
A claim for dental services, such as cleanings, fillings, braces, or oral surgery. The electronic version is an X12 HIPAA 837D transaction. The paper version is the ADA dental claim form. See Submit dental claims.

Dependent

A person covered under a policyholder's health plan, like a spouse or child. Some payers give dependents their own member ID. In that case, treat the dependent as the subscriber in eligibility checks. See Submit eligibility checks.

E

Electronic data interchange (EDI)

A structured way for businesses to send documents back and forth electronically, like purchase orders, invoices, or claims. X12 is one EDI standard.

U.S. healthcare uses a subset of it, called X12 HIPAA, for healthcare billing transactions, such as eligibility checks and claims.

Electronic funds transfer (EFT)

An electronic payment from a payer to a provider's bank. Most payers pay providers for claims through EFT.

EFTs typically travel over the Automated Clearing House (ACH) network, the same network used for direct deposit. Each EFT has a trace number that's typically included in the related Electronic Remittance Advice (ERA).

Electronic Remittance Advice (ERA)

X12 transaction: 835 Health Care Claim Payment/Advice
The payer's itemized breakdown of a payment and any related adjustments. It's the electronic version of an EOB or EOP.

An ERA can cover multiple claims. It shows what the payer paid the provider, what was adjusted, and why. See Acknowledgments and ERAs overview.

Eligibility check

X12 transactions: 270 Health Care Eligibility Benefit Inquiry, 271 Health Care Eligibility Benefit Response
An X12 HIPAA transaction that confirms that a patient has active insurance coverage and returns their plan benefits.

You send an eligibility request to the patient's payer. The payer responds with an eligibility response that includes benefit details, like co-pays, co-insurance, and deductibles. See Eligibility checks overview.

Encounter claim

Also called: encounter report
A claim that records care a provider delivered without requesting payment for it. Providers in capitated contracts, where the payer pays a fixed monthly amount per patient, submit encounter claims so the payer can track the care each patient got. See How claims and eligibility checks work for value-based care.

Explanation of Benefits (EOB)

A paper or PDF statement from a payer that explains how the payer processed a patient's claim. The payer sends the EOB to the patient. The provider version is an Explanation of Payment (EOP). Providers get the same information electronically in an Electronic Remittance Advice (ERA).

Explanation of Payment (EOP)

A paper or PDF statement from a payer that explains how the payer processed a provider's claims. The payer sends the EOP to the provider. The patient version is an Explanation of Benefits (EOB). Providers get the same information electronically in an Electronic Remittance Advice (ERA).

F

Fee schedule

A list of the prices a payer pays for each service. Fee schedules set the allowed amount for a service. For commercial payers, the fee schedule is part of the provider's contract with the payer. For government payers, like Medicare, the government sets the fee schedule. There's no negotiation. See Why ERA payments don't match claim charges.

Finalized claim

A claim the payer has finished adjudicating. The payer has paid, partly paid, or denied the claim. In a claim status response, finalized claims have a category code that starts with F, such as F1 (Finalized/Payment). See Interpret claim status.

G

Group number

The payer's code for the employer, union, or other party that purchased a healthcare plan. Employees on a group plan typically share the same group number, though there are exceptions. See Plan details.

H

Headless clearinghouse

A healthcare clearinghouse that makes virtually every feature available over an API. Developers can use the API to embed the features in their own products. AI agents can also use every feature. See What is a headless clearinghouse?

Health Insurance Portability and Accountability Act (HIPAA)

A U.S. federal law that, among other things, protects healthcare data. It requires certain electronic healthcare transactions, such as claims and eligibility checks, to use X12 HIPAA. See X12 HIPAA format.

Healthcare Common Procedure Coding System (HCPCS) code

A standardized set of procedure codes that describe services like medical equipment, ambulance rides, and certain drugs. Providers typically use them in professional claims.

Level I HCPCS codes are CPT codes. The Centers for Medicare & Medicaid Services (CMS) maintains Level II codes and updates them every quarter.

HIPAA Eligibility Transaction System (HETS)

The backend system used by the Centers for Medicare & Medicaid Services (CMS) for Medicare eligibility checks. HETS returns standard eligibility responses, the same as responses from commercial payers. You can connect to HETS through Stedi.

I

Implementation acknowledgment

X12 transaction: 999 Implementation Acknowledgment for Health Care Insurance
An X12 HIPAA transaction that confirms whether a submitted X12 file uses valid X12 syntax. A negative implementation acknowledgment means the receiver – Stedi or the payer – rejected at least one transaction due to a structural error, such as a malformed segment.

Institutional claim

X12 transaction: 837I Health Care Claim: Institutional
A claim for facility charges, like the room, equipment, nursing staff, and supplies used during a patient's care. The electronic version is an X12 HIPAA 837I transaction. The paper version is the UB-04. See Submit institutional claims.

Insurance discovery

Also called: coverage discovery
A check that searches for a patient's active coverage with only their demographic data, such as name, birthdate, ZIP code, and SSN, if available. See Insurance discovery overview.

M

Medicaid

A public health insurance program for people with low income. The federal government and the states fund it together. Medicaid programs are state-run, so rules and payer IDs vary by state. Many Medicaid patients get coverage through a managed care plan that contracts with the state. See How to verify coverage for Medicaid patients when it changes month to month.

Medicare

The U.S. federal health insurance program for people 65 and older and people with certain disabilities. Medicare has four parts. The government runs Part A (hospital benefits) and Part B (medical benefits), together called Original Medicare. Private payers run Part C, called Medicare Advantage, and Part D (prescription drugs). See How to find the right payer for Medicare claims.

Medicare Advantage

Also called: Medicare Part C
A health plan from a private payer that's approved by Medicare as an alternative to Original Medicare.

Medicare Beneficiary Identifier (MBI)

The Medicare equivalent of a member ID. It's a unique, randomly generated identifier for people enrolled in Medicare. See MBI lookup.

Medigap

Also called: Medicare Supplement Insurance
A private plan that helps cover costs that Medicare Part A and Part B don't. Medigap isn't part of Medicare. Medicare often forwards claims to the patient's Medigap plan automatically. This is called a crossover claim. See Secondary claims for Medigap.

Member ID

Also called: subscriber ID
A payer's identifier for a patient. Member IDs are typically on the patient's insurance card. Some dependents may use the member ID of the policyholder.

N

National Provider Identifier (NPI)

A unique 10-digit ID for healthcare providers. The Centers for Medicare & Medicaid Services (CMS) issues NPIs.

There are two types: Type 1 for individuals and Type 2 for organizations. Atypical providers deliver health-related services but aren't eligible for an NPI. See National Provider Identifier.

Network status

Also called: in-network, out-of-network
Whether a provider has a contract with the payer or health plan. If a provider doesn't have a contract with a payer or plan, the provider is considered out-of-network. If they do, the provider is considered in-network.

The provider's network status determines whether a claim is in-network or out-of-network. See Provider network status, authorizations, and referrals.

O

Original Medicare

Also called: Traditional Medicare
Medicare Part A and Part B. The Centers for Medicare & Medicaid Services (CMS), a U.S. federal agency, runs both. Patients have either Original Medicare or a Medicare Advantage plan, but not both. Patients with Original Medicare have a government-issued Medicare card. See How to find the right payer for Medicare claims.

Out-of-pocket maximum

Also called: OOP max, stop loss
The most a patient pays for covered services in a plan year. Once the patient reaches it, the plan pays 100% of the allowed amount for covered services. See Patient responsibility.

P

Patient control number (PCN)

Also called: patient account number
A tracking ID for a claim. You create it when you submit the claim. The payer sends it back in claim acknowledgments, Electronic Remittance Advice (ERAs), and claim status responses. See Resubmit or cancel claims.

Patient responsibility

What the patient has to pay. It includes co-pays, co-insurance, and deductibles. In an Electronic Remittance Advice (ERA), patient responsibility adjustments have a Claim Adjustment Group Code of PR (Patient Responsibility). See Patient responsibility.

Payer

A health insurer. Payers include insurance companies, like Aetna or Cigna, and government programs, like Medicare. Payers receive claims, decide what to pay, and send back money (or denials) to the provider. See A practical guide to revenue cycle automation.

Payer claim control number (PCCN)

Also called: ICN
The unique ID the payer assigns when a claim enters its adjudication system. A PCCN is different from the patient control number (PCN) in the original claim. To replace or void a claim, you reference its PCCN. See Resubmit or cancel claims.

Payer ID

An ID that tells a clearinghouse which payer should get a transaction. Payer IDs aren't standard. They can vary by clearinghouse, plan, and transaction type. Stedi's payer ID aliases let you use payer IDs from other clearinghouses with Stedi.

Pending claim

Also called: pended claim
A claim the payer is still working on. The payer hasn't paid or denied it yet. In a claim status response, pending claims have a category code that starts with P, such as P1 (Pending/In Process). No action is needed yet. See Interpret claim status.

Policyholder

Also called: subscriber
The primary person covered by a health plan. Other people on the plan, like a spouse or child, are dependents.

Dependents may or may not be issued their own member ID. It varies by payer and plan.

Predetermination

Also called: predetermination of benefits, pre-treatment estimate
A dental claim sent to a payer before care to estimate what the payer will cover. See What is predetermination of benefits for dental services?

Primary insurance

The health plan that pays first when a patient has more than one plan. In COB scenarios, you send the claim to the primary payer first, then the secondary, and so on. See Interpret COB response.

Prior authorization

X12 transaction: 278 Health Care Services Review
Approval a provider must get before the payer covers certain services. Without it, the payer may deny the claim. See Provider network status, authorizations, and referrals.

Procedure code

A code that describes a service a provider delivered. Most claims list a procedure code on each service line.

The set of procedure codes you use varies based on claim type:

Professional claims use CPT and HCPCS codes.
Dental claims use CDT codes.
Institutional claims use CPT and HCPCS codes for outpatient services and ICD-10-PCS codes for inpatient procedures. Revenue codes describe the facility charges on each service line.

See Differences between 837P professional, 837D dental, and 837I institutional claims.

Professional claim

X12 transaction: 837P Health Care Claim: Professional
A claim for services personally delivered by an individual provider, such as a physician, specialist, or therapist.

The electronic version is an X12 HIPAA 837P transaction. The paper version is the CMS-1500. See Submit professional claims.

Provider

Also called: healthcare provider
A person or organization that delivers healthcare. Examples include doctors, hospitals, dentists, and therapists.

A claim can include multiple provider types. For example, the billing provider receives payment from the payer. The rendering provider is the person who delivered care. See A practical guide to revenue cycle automation.

R

Remittance Advice Remark Code (RARC)

Also called: remark code
A code that gives more detail about an adjustment that a CARC already describes. For example, RARC MA15 means the payer split the claim.

RARCs appear in Electronic Remittance Advice (ERAs), next to CARCs. See Claims code lists.

Revenue code

A code that describes where and how a facility delivered care. For example, 0450 is Emergency Room. Institutional claims use revenue codes to describe facility charges. The National Uniform Billing Committee (NUBC) maintains them. See Differences between 837P professional, 837D dental, and 837I institutional claims.

Revenue cycle management (RCM)

Also called: revenue cycle
How providers manage the revenue cycle – everything a provider does to get paid for delivering care. RCM is typically a mix of software, services, and internal processes. See A practical guide to revenue cycle automation.

S

Service line

A row in a claim that describes one specific service, procedure, or supply, like an office visit or a dental filling. Each service line includes a procedure code or revenue code and a charge. The charges add up to the claim's billed amount. See How to fill out Stedi's CMS-1500 form.

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