Hospital and Insurance Billing
Terms and Definitions
Adjustment The portion of the patient’s bill that the hospital has written off according to the contract with a patient’s insurance company or as outlined in our Financial Assistance policies.
Advance Beneficiary Notice (ABN) A notice the hospital gives Medicare patients before services are rendered, stating that Medicare will not pay for some treatment or services. The notice is given so the patient may decide whether to have the treatment and how to pay for it.
Advance Directive (Healthcare) Written ahead of time, a health care advance directive is a written document that says how a patient wants medical decisions to be made if they lose the ability to make decisions. A health care advance directive may include a Living Will and a Durable Power of Attorney for health care.
Amount Due from Insurance The amount a patient’s insurance pays for treatment. This amount will not include any deductibles, coinsurance, co-payments, or charges for non-covered services.
Authorization Many health insurance companies require patients to obtain permission prior to receiving hospital treatment. This is called the approval, authorization, or certification process. It is important for a patient to be familiar with their insurance company’s authorizations requirements. Failure to follow the insurance company’s protocols may result in substantial penalties to the patient.
Charge The amount of money the hospital charges for a certain medical service or supply. This amount does not reflect any adjustment.
Charity Care Financial assistance the hospital offers to patients who meet qualifying income guidelines.
Co-insurance This amount is a portion of the total payment due to the hospital that is the patient’s/guarantor’s responsibility. This amount is determined by their policy and is usual based on a percentage (90%/10%, 80%/20%).
Contractual Adjustment A portion of a patient’s bill that the hospital must write off because of a billing agreement with the patient’s insurance company.
Co-payment A fixed amount a patient/guarantor is required to pay based on the type of medical services rendered. This amount is due from the patient at the time services are rendered. This information may be indicated on a patient’s insurance card. Examples of this are an Emergency Department co-payment and an inpatient co-payment.
Deductible The amount an insurance plan dictates a patient/guarantor must pay before the insurance company begins to pay claims. This information may be indicated on a patient’s insurance card.
Deposit The amount a self-pay patient must pay to the hospital for elective and scheduled procedures before services are rendered. This applies to patients’ without insurance coverage and to procedures not covered by a patient’s insurance. Generally, this amount is 50% of the estimated cost of the procedure.
Estimate An approximation of the cost of a procedure. This amount is based on the average cost of associated with the procedure. Each case is unique. Therefore, a patient’s final cost may be less or more than the original estimate.
Explanation of Benefits (EOB/EOMB) A patient will receive this notice from their insurance company after receiving treatment at the hospital. It tells the patient what was billed, the payment amount approved by the insurance, the amount paid, and the amount due from the patient.
Financial Responsibility This is the amount the patient/guarantor must pay.
Guarantor This is the person legal responsible for paying a hospital bill. Unless a minor is receiving services, this person is usually the patient.
HIPAA (Health Insurance Portability and Accountability Act) This federal act sets standards for protecting the privacy of patients’ health information.
Medicare Summary Notice (MSN) A Medicare patient will receive this notice from Medicare after receiving treatment at the hospital. It tells the patient what was billed to Medicare, Medicare's approved payment, the amount Medicare paid, and the amount due from the patient. It is also called an Explanation of Medicare Benefits (EOMB).
Non-Contracted Insurance If a patient’s insurance company is not contracted with Cottage Health System, the hospital will bill the insurance company as a courtesy to the patient. If payment in full is not received within 45 days from the date the hospital billed the insurance company, the hospital will bill the patient.
Out-of-Network Provider A doctor or other healthcare provider who is not part of an insurance plan's doctor or hospital network.
PIA (Personal Insurance Administrators) Insurance Claim Form This form must be completed each time a patient with PIA coverage is treated at the hospital. PIA provides students at Westmont and UCSB with coverage.
Primary Insurance Company The insurance company first responsible for paying a patient’s claim.
Release of Information Patient billing information can only be discussed with the patient, patient's guardian or guarantor (listed as responsible party), or spouse. A release of information form must be signed by the patient and grants the Billing Office the ability to discuss a patient's account with their designated representative.
Secondary Insurance Additional insurance coverage that may pay some charges not paid by a patient’s primary insurance company. Payment is made according to the terms of a patient’s policy and benefits and benefit coordination with a patient’s primary insurance.