Revenue Cycle Management Glossary
62+ essential RCM terms defined — from EDI transactions and coding standards to denial codes and the No Surprises Act.
AR
Aging AR
Accounts receivable categorized by age (0–30, 31–60, 61–90, 90+ days) to track outstanding claims and prioritize follow-up.
Related Use Case →Write-Off
An amount that is removed from accounts receivable, either as a contractual adjustment or as bad debt when the claim is deemed uncollectable.
Claims
276/277 Transaction
The EDI 276 transaction is a claim status inquiry. The 277 is the payer's response indicating whether a claim is paid, denied, pending, or rejected. Used for automated claim status checking.
Related Use Case →837 Transaction
The standard EDI transaction for submitting professional (837P), institutional (837I), or dental (837D) claims electronically to payers.
Adjunction
The payer's process of reviewing and adjudicating a claim, resulting in payment, denial, or partial payment.
Clean Claim
A claim that is accepted by the payer on first submission without requiring correction or additional information. Clean claim rate is a key RCM KPI.
Related Use Case →Clearinghouse
A third-party service that receives claims from providers, validates and formats them, and forwards to the appropriate payer.
Scrubbing
The process of validating claims against payer-specific rules before submission to catch errors and prevent denials.
Related Use Case →Timely Filing
The deadline set by each payer for submitting claims, typically 90–180 days from the date of service. Claims filed after the deadline are denied.
Related Use Case →Coding
Bundling
When a payer considers two or more services as included in one comprehensive service and will not pay for them separately. NCCI edits define bundling rules.
Related Use Case →Current Procedural Terminology (CPT)
A medical code set used to report medical procedures and services to payers. Maintained by the American Medical Association.
HCPCS (Healthcare Common Procedure Coding System)
A medical code set used for products, supplies, and services not included in CPT, including DME, drugs, and transportation.
ICD-10
The International Classification of Diseases, 10th Revision. A medical code set used to report diagnoses. ICD-10-CM is for clinical, ICD-10-PCS is for procedures.
Modifier
A two-character code added to a CPT or HCPCS code to provide additional information about the service, such as 25 (significant, separately identifiable E/M) or 59 (distinct procedural service).
NCCI (National Correct Coding Initiative)
CMS-developed coding edits that identify code combinations that should not be billed together (bundling) or have unit limits (MUEs).
Related Use Case →Undercoding
Billing a lower-level code than the service documented supports, resulting in lost revenue. Often caused by coder caution or incomplete documentation.
Related Use Case →Upcoding
Billing a higher-level code than the service documented supports, creating audit risk and potential fraud exposure.
Related Use Case →Compliance
ABN (Advance Beneficiary Notice)
A Medicare form that providers give to patients when a service is likely to be denied as not medically necessary. The ABN informs the patient of potential financial responsibility.
BAA (Business Associate Agreement)
A contract required under HIPAA between a covered entity and a business associate that handles PHI, specifying how PHI will be protected.
HIPAA
The Health Insurance Portability and Accountability Act, which establishes standards for protecting patient health information (PHI).
LCD (Local Coverage Determination)
A Medicare Administrative Contractor's policy on whether a service is reasonable and necessary in a specific jurisdiction.
NCD (National Coverage Determination)
A CMS national policy on whether a service is reasonable and necessary under Medicare. Applies nationwide.
Prudent Layperson Standard
A legal standard requiring payers to cover emergency services based on a prudent layperson's assessment of symptoms, not the final diagnosis.
Denials
Appeal
A formal request to a payer to reconsider a denied claim, accompanied by supporting documentation and clinical evidence.
Related Use Case →Denial
A payer's refusal to pay a claim, accompanied by a reason code explaining why the claim was denied.
Related Use Case →Medical Necessity
The determination that a service is reasonable and necessary for the diagnosis or treatment of a patient's condition. Payers require documentation of medical necessity.
Related Use Case →Rework
The process of correcting and resubmitting a denied or rejected claim. Each rework cycle adds 14–30 days to the revenue cycle.
Eligibility
270/271 Transaction
The EDI 270 transaction is an eligibility inquiry sent to a payer. The 271 is the payer's response containing coverage and benefits information. Together they enable real-time eligibility verification.
Related Use Case →Coinsurance
The percentage of covered charges that the patient pays after the deductible is met (e.g., 20% coinsurance means the patient pays 20% and the payer pays 80%).
Coordination of Benefits (COB)
The process of determining which insurance plan pays first when a patient has multiple coverage sources.
Co-pay
A fixed dollar amount that the patient pays for a covered service, typically at the time of service (e.g., $25 co-pay for an office visit).
Deductible
The amount a patient must pay out-of-pocket before insurance coverage begins paying for covered services.
Out-of-Network (OON)
A provider who does not have a contract with the patient's insurance plan. OON services typically result in higher patient costs or are subject to NSA protections.
KPIs
Cost to Collect
Total RCM operating costs as a percentage of total collections. A key efficiency KPI for revenue cycle operations.
Related Use Case →Days in AR
The average number of days it takes to collect payment on a claim. Calculated as Total AR / Average Daily Charges.
Related Use Case →Denial Overturn Rate
The percentage of appealed denials that are successfully overturned and paid. A measure of appeal effectiveness.
Related Use Case →Denial Rate
The percentage of submitted claims that are denied by payers. The inverse of first-pass yield.
Related Use Case →First-Pass Yield
The percentage of claims paid from first submission without resubmission. A key RCM KPI.
Gross Collection Rate
Total payments divided by total charges, without adjusting for contractual write-offs. Less meaningful than net collection rate.
Net Collection Rate
Payments divided by charges minus contractual adjustments. Measures how effectively a practice collects what it is owed after contracts are applied.
Related Use Case →NSA/IDR
Determination (IDR)
The binding decision made by a Certified IDR Entity selecting one party's final offer for payment under the No Surprises Act.
Federal IDR
The Independent Dispute Resolution process under the No Surprises Act for resolving payment disputes between out-of-network providers and payers.
Good Faith Estimate (GFE)
An estimate of expected charges that providers must furnish to uninsured or self-pay patients before scheduled services, required under the No Surprises Act.
No Surprises Act (NSA)
Federal legislation effective January 1, 2022, that protects patients from surprise medical bills from out-of-network providers in emergency and certain non-emergency settings.
Open Negotiation
The 30-business-day period under the NSA during which a provider and payer attempt to agree on a payment rate before initiating Federal IDR.
QPA (Qualifying Payment Amount)
The median in-network rate used as the baseline payment amount under the No Surprises Act. Calculated by the payer and used as the starting point in IDR.
Payments
835 ERA
Electronic Remittance Advice. The standard EDI transaction payers use to communicate payment and adjustment details for adjudicated claims. Used for automated payment posting.
Related Use Case →Capitation
A payment arrangement where a provider receives a fixed periodic payment per patient regardless of the services provided.
EOB (Explanation of Benefits)
A statement sent by the payer to the patient explaining how a claim was processed, including amounts paid, denied, and the patient's responsibility.
Fee Schedule
A list of charges or contracted rates for medical services. Payer fee schedules define the maximum amount the payer will pay for each service.
Related Use Case →Patient Responsibility
The portion of a medical bill that the patient is responsible for paying, including co-pays, deductibles, and coinsurance.
Payment Posting
The process of recording payer payments and adjustments in the practice management system. Also called cash application.
Related Use Case →Reassignment
A process where a provider authorizes payment to be made to another party, such as a billing company or group practice.
Remittance
See 835 ERA. The electronic or paper communication from a payer detailing how claims were adjudicated and paid.
Underpayment
A payment from a payer that is less than the contracted rate for the service. Underpayments represent revenue leakage if not identified and recovered.
Related Use Case →Prior Authorization
Authorization
Approval from a payer required before certain services are performed. Also called prior authorization, pre-authorization, or precertification.
Related Use Case →Precertification
See Prior Authorization. Approval from a payer required before certain services are performed.
Related Use Case →Prior Authorization (PA)
Approval from a payer required before certain services are performed. Also called pre-authorization or precertification.
Related Use Case →Revenue Cycle
Charge Capture
The process of recording billable services and procedures for claim submission. Errors in charge capture lead to lost revenue.
Revenue Cycle Management (RCM)
The financial process of managing patient encounters from scheduling through payment, including eligibility, coding, claims, denials, AR, and payment posting.
Technology
EDI (Electronic Data Interchange)
The standardized electronic exchange of healthcare transactions between providers and payers, including 270/271, 276/277, 837, and 835.
EHR (Electronic Health Record)
A digital version of a patient's chart, including clinical documentation, orders, results, and billing data.
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