EDI & Medical Billing Glossary

Electronic Remittance Advice (ERA). The standard electronic data interchange format used by healthcare payers to transmit payment details, claim adjudication results, and denial codes (CARC and RARC) to providers.

Health Care Claim Transaction. The electronic format used to submit healthcare billing claims. Divided into 837P (Professional/CMS-1500 for physicians), 837I (Institutional/UB-04 for hospitals), and 837D (Dental).

Eligibility & Benefit Inquiry (270) and Response (271). The paired ANSI X12 transactions used to verify a patient's insurance coverage, active policy status, co-pays, deductibles, and co-insurance in real time prior to service delivery.

Claim Status Request (276) and Response (277). The electronic transaction set allowing providers to query the processing status of a submitted claim without phone calls or manual payer portal navigation.

Health Care Services Review / Prior Authorization. The transaction format used to transmit authorization requests and receive determinations from payers for specialized medical procedures and medications.

Implementation Acknowledgment. The transaction returned by clearinghouses and payers confirming whether an electronic file conforms to ANSI X12 syntax standards or contains structural parsing rejections.

The automated and clinical process by which a healthcare payer reviews a submitted claim against policy benefits, medical necessity rules, and fee schedules to determine payment or denial.

The American National Standards Institute (ANSI) Accredited Standards Committee X12, which defines the uniform syntax and protocol for electronic healthcare transactions governed under HIPAA.

Unpaid patient and insurance claims categorized by the number of days outstanding since billing (0-30, 31-60, 61-90, 91-120, 120+ days). A vital indicator of revenue cycle speed and integrity.

Standardized national code set explaining why a claim or service line was paid differently from the billed charge or denied altogether. Found in the CAS segment of an 835 remittance.

A two-letter code prefix in the CAS segment assigning financial responsibility: CO (Contractual Obligation / write-off), PR (Patient Responsibility), OA (Other Adjustment), PI (Payer Initiated), or CR (Correction).

A medical claim submitted without missing, invalid, or contradictory data elements that can be processed and paid on first pass by the payer without manual intervention.

An intermediary organization that receives electronic claim files from providers, validates formatting against ANSI X12 rules, and translates/routes them securely to respective payers.

The process determining the order of payment responsibility (Primary vs. Secondary/Tertiary) when a patient is covered by more than one health insurance policy.

A 5-digit medical code set maintained by the American Medical Association (AMA) describing medical, surgical, diagnostic, and therapeutic procedures performed by healthcare providers.

A rejection occurs at the clearinghouse or front-end before claim adjudication due to formatting or demographic errors. A denial occurs after adjudication when the payer processes the claim and refuses payment.

The average number of days it takes for a practice to collect payment after a service is rendered. Calculated as: (Total Accounts Receivable / Average Daily Gross Revenue).

The annual out-of-pocket dollar amount an insured patient must pay for covered healthcare services before their health insurance begins contributing payment.

The digital version of an Explanation of Benefits sent via EDI 835 format. Contains line-item breakdowns of allowed amounts, patient cost-shares, adjustments, and reason codes.

A statement sent by a health plan to patients and providers detailing what medical treatments were billed, what was covered, the contractual discount, and what the patient owes.

The computer-to-computer exchange of structured business documents in a standardized electronic format between healthcare trading partners without human intervention.

The formal vetting and contracting process with commercial and government payers that allows a physician or clinic to bill and receive in-network reimbursement for services.

Identifies the general category of financial adjustment on a remittance. CO indicates provider contractual discount; PR indicates valid patient balance; OA indicates other payer adjustment.

A defined window of time (0, 10, or 90 days) during which all routine preoperative, intraoperative, and postoperative care associated with a surgical procedure is bundled into a single payment.

Healthcare Common Procedure Coding System Level II alphanumeric codes (e.g., A-codes, J-codes) used primarily for supplies, durable medical equipment (DME), injectable drugs, and non-physician services.

The Health Insurance Portability and Accountability Act of 1996, establishing national standards for electronic healthcare transactions, national identifiers, and data privacy/security.

International Classification of Diseases, 10th Revision, Clinical Modification. The diagnostic code set used in the U.S. to establish the medical necessity of billed healthcare services.

The Interchange Control Header (ISA) and Interchange Control Trailer (IEA) define the start and end of an electronic interchange envelope, identifying the sender, receiver, timestamp, and control number.

A two-character code appended to a CPT/HCPCS code (such as -25, -59, -X{EPSU}) providing additional clinical information about the service without altering the fundamental code definition.

Health care services or supplies needed to prevent, diagnose, or treat an illness, injury, or disease that meet accepted clinical standards of medical practice (often challenged under CARC 50).

A unique 10-digit identification number issued to healthcare providers in the United States by the Centers for Medicare & Medicaid Services (CMS). Divided into Type 1 (Individual) and Type 2 (Organizational).

Pre-service approval required by an insurance company before a patient receives certain specialized tests, treatments, surgical procedures, or prescriptions.

A routing code assigned by a clearinghouse to identify each healthcare insurance carrier when submitting 837 claims and retrieving 835 remittance files. Payer IDs are not standardized nationally — they vary in length and format, and the same payer often has a different ID on each clearinghouse, so always use the ID published in your own clearinghouse’s payer list.

Specific secondary explanatory codes (e.g. M123, N382, MA01) maintained by CMS providing essential context, missing data specifications, or appeal instructions alongside a CARC code.

The systematic coordination of clinical documentation, coding accuracy, patient access, and billing operations to prevent revenue leakage, claim denials, and compliance risks.

The contractual or statutory deadline (e.g., 90 days, 180 days, or 365 days from date of service) by which a provider must submit a clean claim or appeal to an insurance plan to receive reimbursement.