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Advance Beneficiary Notice (ABN):

A notice that a healthcare professional should give a Medicare beneficiary when furnishing an item or service for which Medicare is expected to deny payment.

Ambulatory Surgery Center (ASC): 

A place other than a hospital where outpatient surgery is performed. Patients may stay for only a few hours or for one night.

Ambulatory Payment Classification (APC):

The Medicare payment system for hospital-based outpatient departments.


A request for payment for services, procedures, and products a patient has received. Claims are also called bills for all Part A and Part B services billed through Medicare contractors.

Centers for Medicare & Medicaid Services (CMS): 

The federal agency that runs the Medicare program and works with states to run the Medicaid program.


The percentage of the Medicare approved amount that a patient has to pay after the patient pays his/her annual Medicare deductible.


An entity that has an agreement with CMS or another funding agency to perform a project.

Contractor policy: 

Policy developed by CMS contractors and used to make coverage and coding determinations. It is developed when:

  • There is no national coverage policy for a service or all of the uses of a service;
  • There is a need to interpret the national coverage policy; or
  • Local coding rules are needed

Current Procedural Terminology (CPT®) code: 

A medical code set maintained and copyrighted by the American Medical Association (AMA), and adopted by the Secretary of Health and Human Services as the standard for reporting physician and other services on standard transactions. The standardized descriptions and five-character, alphanumeric codes are used to report healthcare services and procedures to payers for reimbursement.

Global period: 

A payment concept defined by Medicare as a surgical "package" that includes all intra-operative and follow-up services, as well as some preoperative services associated with the surgery for which the surgeon receives a single payment.

Healthcare Common Procedural Coding System (HCPCS): 

A medical code set that identifies healthcare procedures, equipment, and supplies for claim submission purposes. It has been selected for use in HIPAA transactions.


Home health agency


Hospital-based outpatient wound care department.

Hospital insurance (Part A): 

The Medicare program that covers specified inpatient hospital services, post-hospital skilled nursing care, home health services, and hospice care for aged and disabled individuals who meet the eligibility requirements.

Local Coverage Determination (LCD):

A decision by a Medicare contractor whether to cover a particular procedure, product, and/or service in their jurisdiction.


A joint federal and state program that helps with medical costs for people with low incomes. Medicaid programs vary from state to state, but most healthcare costs are covered if a patient qualifies for both Medicare and Medicaid.

Medically necessary: 

Procedures, products, and/or services that are proper and needed for the diagnosis or treatment of a medical condition; are provided for the diagnosis, direct care, and treatment of a medical condition; meet the standards of good medical practice in the local area; and are not mainly for the convenience of a patient or a provider.

Medical reimbursement: 

Reimbursement by commercial payers or Medicare contractors for procedures, products, and services performed by providers. Reimbursement is based on claims and documentation filed by providers using medical diagnosis, product codes, and procedure codes.


The federal health insurance program for people 65 years of age or older, people with disabilities, and people with end-stage renal disease.

Medicare Administrative Contractor (MAC): 

A private insurance company that has a contract with Medicare to pay both Part A and Part B bills.

Medicare benefits: 

Health insurance available under Medicare Part A and Part B through the traditional fee-for-service payment system.

Medicare contractor:

A Medicare Part A fiscal intermediary (institutional), a Medicare Part B carrier (professional), a Medicare Administrative Contractor, or a Medicare Durable Medical Equipment Medicare Administrative Contractor (DME MAC).

Medicare Part A (hospital insurance): 

Hospital insurance that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home healthcare.

Medicare Part B (medical insurance):

Medicare medical insurance that helps pay for physicians’ services, outpatient hospital care, durable medical equipment, and some medical services that are not covered by Part A.

Medicare Physician Fee Schedule (MPFS): 

The payment system for physicians under Medicare Part B.

Outpatient hospital: 

A portion of a hospital that provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization.

Outpatient Prospective Payment System (OPPS): 

The Medicare payment system for most hospital-based outpatient departments at hospitals or community mental health centers that are paid under Medicare Part B.


In healthcare, an entity that assumes the risk of paying for medical treatments. This can be an uninsured patient, a self-insured employer, a health plan, or an HMO.

Prospective payment system: 

A method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, ambulatory payment classification groups for hospital-based outpatient departments).


Any organization, institution, or individuals that provides healthcare services to Medicare beneficiaries.

Qualified healthcare professional (QHP):

An individuals who is qualified by education, training, licensure/regulation (when applicable), and facility privileging (when applicable) who performs a professional service within her/his scope of practice and independently reports that professional service.

Revenue code: 

Payment codes for services or items entered in section FL 42 of the UB-92 Claim Form found in Medicare and/or NUBC (National Uniform Billing Committee) manuals.

CPT® is a registered trademark of the American Medical Association