Glossary

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A

Accounts receivable (AR), Amounts owed to a practice for services delivered but not yet collected, from payers and patients. Adjudication, The payer’s process of evaluating a claim against eligibility, benefits, contract terms, coding rules, and medical policy to determine payment. AFR (Applicable Federal Rate), Interest rates published monthly by the IRS. Related-party loans below the AFR trigger imputed interest under IRC § 7872. See Intercompany loan note. AKS (Anti-Kickback Statute), 42 U.S.C. § 1320a-7b(b). Criminal, intent-based prohibition on remuneration to induce or reward referrals of federally reimbursable items or services. See Stark and anti-kickback. Allowed amount, What a payer’s contract says a service is worth. The real number; billed charges are not. ASC 810, The US GAAP consolidation standard, including the variable interest entity model under which PCs are typically consolidated into an MSO’s audited financials. See How investors read MSO-PC financials.

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B

BAA (Business Associate Agreement), HIPAA-required contract between a covered entity and a business associate. Required content at 45 C.F.R. § 164.504(e). Balance billing, Billing a patient the difference between the charge and the allowed amount. Prohibited for in-network care, and restricted out-of-network by the No Surprises Act. Billed charge, The chargemaster rate submitted on a claim. Largely fictional for contracted payers. Biller, The person who converts delivered care into collected money. See What billers actually do. BlueCard, The program letting a provider bill their local Blue plan for a member of an out-of-area Blue plan. Business associate, Under HIPAA, an entity that creates, receives, maintains, or transmits PHI on a covered entity’s behalf. The MSO is the PC’s business associate.

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C

CAQH ProView, A shared credentialing database most commercial payers pull from. Requires periodic re-attestation. CARC (Claim Adjustment Reason Code), X12-maintained code explaining why a claim or line was paid differently than billed. Always paired with a group code. See CARC codes. CDT, Dental procedure code set, licensed by the ADA. Chargeback, A forced reversal of a card payment initiated by the cardholder through their issuing bank. See Chargebacks. Clean claim, A claim accepted on first submission and adjudicated without denial. Clearinghouse, An intermediary that translates, validates, routes, and returns claims and remittances between providers and payers. See What is a clearinghouse?. CO (Contractual Obligation), Group code meaning the provider absorbs the amount. Cannot be billed to the patient. COB (Coordination of benefits), Determining which payer pays first when a patient has multiple coverages. Contractual adjustment, Billed charge minus allowed amount. A write-off, arriving as CO-45. Covered entity, Under HIPAA, a health plan, clearinghouse, or provider transmitting health information electronically for covered transactions. The PC is a covered entity. CPOM (Corporate Practice of Medicine), State-law doctrine prohibiting corporations owned or controlled by non-licensees from practicing medicine, employing physicians to practice, or controlling clinical judgment. See The CPOM doctrine. CPT, Procedure code set, licensed by the AMA. Credible allegation of fraud, An allegation from any source, verified by the State and bearing indicia of reliability, that triggers a mandatory Medicaid payment suspension under 42 C.F.R. § 455.23. Requires no finding about who actually submitted the claims. See Provider identity theft. Credentialing, Verification of a clinician’s qualifications and their linkage to a group’s payer contract. Distinct from contracting. Credit balance, Money on an account that the practice is not entitled to keep. A liability, not revenue.

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D

Days in AR, Total accounts receivable divided by average daily charges. De-identification, Removing identifiers under 45 C.F.R. § 164.514 by Safe Harbor or Expert Determination, after which data is no longer PHI and HIPAA does not apply. Harder than it looks for free-text clinical narrative. See LLMs, zero data retention, and HIPAA. Denial, A claim the payer adjudicated and refused to pay, in whole or part. Distinct from a rejection. See Claim denials. Designated health services (DHS), The service categories to which the Stark Law’s referral prohibition applies, including clinical lab, physical therapy, imaging, and DME. Dormancy period, The time unclaimed property must remain unclaimed before it must be reported to the state. DSO (Dental Service Organization), Dentistry’s term for an MSO.

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E

EDI (Electronic Data Interchange), Structured electronic exchange of business documents. In healthcare, the X12 standards mandated by HIPAA. EFT (Electronic Funds Transfer), Direct deposit of payer payments. The health care standard is ACH CCD+ with an addenda record carrying the TRN. EHR / PM, Electronic health record / practice management system. Where clinical and billing data lives. Eliminations, Removing intercompany transactions on consolidation so the same dollars aren’t counted twice. ERA (Electronic Remittance Advice), The 835 transaction. Enrolled separately from EFT. ERISA, 29 U.S.C. § 1001 et seq. Governs employer benefit plans and broadly preempts state insurance law as applied to self-funded plans. Escheatment, The process by which unclaimed property becomes the state’s. See Escheatment by state. Extrapolation, Applying an audit sample’s error rate across a larger universe of claims to calculate an overpayment demand.

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F

FCA (False Claims Act), 31 U.S.C. §§ 3729–3733. Prohibits knowingly submitting false claims to the government. Treble damages plus per-claim penalties; enforceable by private relators through qui tam. Fee-splitting, State-law prohibition on sharing professional fees with non-licensees. Distinct from CPOM. See Fee-splitting. FMV (Fair market value), What an unrelated party would pay for the same services. The anchor for management fee and compensation defensibility. Friendly PC, A professional entity owned by a licensed clinician aligned with and contractually connected to an MSO, with succession pre-arranged. Industry jargon, not a legal term. See The friendly PC. Fully-insured, A plan where the insurance company bears the risk. Contrast self-funded.

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G

Good faith estimate (GFE), Required estimate of expected charges for uninsured and self-pay patients under the No Surprises Act. Group code, CO, PR, OA, or PI. Determines who bears an adjustment. See Group codes. Group NPI, See Type 2 NPI.

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H

HCPCS Level II, CMS-maintained codes for supplies, drugs, and services not in CPT. HIPAA, Governs health information privacy and security and mandates standard electronic transactions.

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I

ICD-10-CM, Diagnosis code set. Incident-to, Medicare billing of services furnished by auxiliary personnel under a physician’s NPI, subject to specific supervision requirements. Not a workaround for uncredentialed clinicians. Intercompany, Transactions between the PC and the MSO. Must be characterized as a fee or a loan, and documented as such.

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L

LLM (Large Language Model), An AI model that processes and generates text. If PHI goes into a prompt, the provider is a business associate and a BAA is required. See LLMs, zero data retention, and HIPAA. LCD / NCD, Local and National Coverage Determinations. Define Medicare medical necessity, LCDs regionally by MAC. LEIE, The OIG List of Excluded Individuals/Entities. Screen monthly. Lockbox, A bank-operated mailing address where payer and patient checks are received and deposited.

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M

MAC (Medicare Administrative Contractor), Regional contractor processing Medicare Part A/B claims and issuing LCDs. Management fee, What the PC pays the MSO under the MSA. The MSO’s revenue, and the investable earnings stream. See Where the profit lives. MSA (Management Services Agreement), The contract between MSO and PC defining services, fee, and the clinical carve-out. See MSA clause anatomy. MSO (Management Services Organization), A company, ownable by anyone, providing non-clinical services to a professional entity.

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N

Net collection rate, Payments received divided by charges minus contractual adjustments. What you collected out of what you were entitled to collect. NCCI, CMS’s National Correct Coding Initiative edits, identifying code pairs that should not be reported together. No Surprises Act, Restricts balance billing in specified out-of-network situations and requires good faith estimates for self-pay patients. NPI (National Provider Identifier), 10-digit identifier. Type 1 for individuals, Type 2 for organizations. NPPES, The CMS system that issues and maintains NPIs.

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O

OA (Other Adjustment), Group code for adjustments that are neither contractual nor patient responsibility. Overpayment, Money received that you are not entitled to keep. For Medicare and Medicaid, subject to the 60-day report-and-return rule.

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P

PA (Professional Association), A professional entity form used in Texas, Florida, and some other states. Par / non-par, Participating / non-participating in a payer’s network. Payment suspension, A program’s withholding of all or part of a provider’s payments during a fraud investigation. Discretionary under Medicare (42 C.F.R. § 405.371), mandatory under Medicaid absent good cause (42 C.F.R. § 455.23). Payer, Any entity that pays healthcare claims. Not synonymous with insurance company. See Payers vs insurance companies. PC (Professional Corporation), A corporation whose ownership is restricted to licensees of a specified profession. PECOS, The Medicare provider enrollment system. PHI (Protected Health Information), Individually identifiable health information under HIPAA. 835s, 837s, and 271s are PHI. PI (Payer Initiated Reduction), Group code for a payer’s own reduction, not contractual. Often appealable. PLB (Provider Level Adjustment), 835 segment carrying adjustments outside the claim detail, takebacks, interest, withholds. Where reconciliation breaks if ignored. PLLC, Professional limited liability company. POS (Place of Service), Code identifying where a service was delivered. Affects payment. PR (Patient Responsibility), Group code meaning the patient owes it. Bill the patient. Prior authorization, A payer’s advance approval for a service. Missing it produces CARC 197. Professional entity, Umbrella term for PC, PLLC, and PA. Provider identity theft, Use of a clinician’s or entity’s NPI, license, and TIN to submit claims they never rendered, ordered, or authorized. The fraudster takes the money; the provider of record takes the overpayment demand. See Provider identity theft. PTAN, Provider Transaction Access Number. A MAC-assigned identifier distinct from the NPI.

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Q

Qui tam, The False Claims Act provision letting a private relator sue on the government’s behalf and share in the recovery. QoE (Quality of Earnings), A diligence review normalizing reported EBITDA.

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R

RARC (Remittance Advice Remark Code), Code qualifying a CARC with additional detail. See RARC codes. RBRVS, The resource-based relative value scale underlying the Medicare Physician Fee Schedule. RCM (Revenue Cycle Management), The end-to-end process of converting care into cash; also the category of vendors who do it for you. Recoupment, A payer recovering a prior payment, by demand or by offset. See Handle recoupments. Rejection, A claim refused before adjudication, signalled by a 999 or 277CA. No appeal rights. Distinct from a denial. Retro-effective date, A payer effective date backdated to the application or practice start date.

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S

Self-funded, A plan where the employer bears the claims risk and a carrier acts only as administrator. Governed by ERISA, with state insurance law largely preempted. Silent PPO, A discount taken by a payer with no direct contract with you, accessed through a rental network. Stark Law, 42 U.S.C. § 1395nn. Civil, strict-liability prohibition on physician referrals for designated health services to entities with which they have a financial relationship. Stock transfer restriction agreement, Pre-wires what happens to the PC’s equity on defined triggers. See Draft the stock transfer restriction. Subpart, An additional organizational NPI for a distinct component of one entity.

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T

Taxonomy code, 10-character code identifying provider type and specialty. Must match your enrollment. See Taxonomy codes. Timely filing, The deadline by which a claim must reach the payer. Missing it produces CARC 29. TPA (Third-Party Administrator), An entity administering claims for a self-funded plan without bearing risk. TRN, The 835 segment carrying the reassociation trace number, used to match a remittance to its deposit. Reconcile by TRN, not by amount. Type 1 NPI, An individual clinician’s NPI. Follows the person for life. Type 2 NPI, An organization’s NPI. Tied to the entity’s EIN.

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U

Unbundling, Billing separately for components that should be billed under a single comprehensive code. Underpayment, A claim paid for less than the contract requires. Does not announce itself. See Underpayments and contracts. Upcoding, Billing a higher-level code than the documented service supports.

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V

VCC (Virtual Credit Card), A single-use card number a payer sends instead of an EFT. Costs you 2–3%. VIE (Variable Interest Entity), An entity consolidated under ASC 810 based on power and economics rather than equity ownership. PCs are typically VIEs of their MSO.

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W

Write-off, Revenue recorded as uncollectible. Contractual write-offs (CO) are expected; denial and timely-filing write-offs are losses.

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X

X12, The standards body whose transaction formats HIPAA adopted for healthcare EDI. See X12 transaction sets.

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Z

Zero data retention (ZDR), A configuration in which an AI provider does not persist prompts and outputs after serving the request. A storage control, not HIPAA compliance and not a substitute for a BAA, and configured independently of BAA coverage, sometimes in opposite directions. See LLMs, zero data retention, and HIPAA.