the most common healthcare terms defined


COPAY

A fixed amount you pay for a service. Usually they range from $5-$75 depending on the type of care. 


CO-INSURANCE

A percentage that you pay for services after you have met your deductible. 

Example: $750 service, with a $300 deductible and 20% coinsurance

  • Your deductible responsibility: $300

  • Your coinsurance responsibility: $90 ($750 - 300 = $450. $450 x 20% = $90)

  • Your total responsibility on this service: $390


CONTRACTED RATE

The amount of money the insurance company and provider have agreed to pay/be paid for the medical service.


CPT CODE

A five digit code that describes the service a doctor provides. Each CPT code is tied to a charge for that service, and is billed with ICD diagnosis codes. There are hundreds of CPT codes, we listed a few examples below:

  • 99203: New patient office visit

  • 99213: Established patient office visit

  • 76536: Ultrasound of the thyroid

  • 90736: Shingles vaccine

Think about the CPT as the “what” of the visit, and the ICD diagnosis code as the “why.”


DEDUCTIBLE

The amount you owe for a service before insurance begins to pay a portion.

Example: $750 service, with a $300 deductible and 20% coinsurance

  • Your deductible responsibility: $300

  • Your coinsurance responsibility: $90 ($750 - 300 = $450. $450 x 20% = $90)

  • Your total responsibility on this service: $390


Stands for Explanation of Benefits. This is a document your insurance company sends to you a few weeks after a service that outlines the charges from the provider, the allowed amount by insurance, and your responsibility.

EOB


HMO

Stands for Health Maintenance Organization. When you enroll in an HMO plan you designate one primary care physician (PCP) from your network that acts as a starting point for your care. To see a specialist, you first visit your PCP who will either treat you or write a referral to a specialist. HMO plans are often lower cost than PPO plans, but have more limited networks.


ICD DIAGNOSIS CODE

Billed in conjunction with CPT codes to describe the “why” of the service billed. If the ICD diagnosis code doesn’t align with the CPT code billed, the service may be denied.


Care that requires an overnight stay at a hospital. Inpatient care is usually reserved for complex procedures and involves monitoring by medical staff.

Examples:

  • Cesarian section

  • Total knee replacement

  • Many heart and back procedures

INPATIENT CARE


A state-administered government program that most commonly provides healthcare coverage for low income people. Eligibility and benefits vary on a state-by-state basis. Learn more.

MEDICAID


A nationally-administered government program that most commonly provides healthcare coverage for the elderly. Learn more.

MEDICARE


OUT-OF-POCKET MAXIMUM

The maximum amount you are responsible for paying each plan year.

This usually is met if you have several procedures in one year. Once the out of pocket maximum is met, the insurance company will pay for 100% of the cost of medically necessary services received from in-network providers. 


Healthcare services that do not require an overnight stay in a facility (i.e. hospital, etc.)

OUTPATIENT CARE


Stands for Preferred Provider Organization. PPO plans allow you to be more flexible when choosing your doctor, but often come at a higher price than the more restrictive HMO plan.

PPO


Prescriptions are categorized by your insurer into different tiers. Typically, the lower the tier, the less expensive the prescription. For example, Tier 1 typically includes generic prescriptions and are the cheapest.

To determine which tier your prescriptions are in, check your plan’s drug list by calling your insurer or logging into your account on your insurer’s website. Once you determined the tier, check your plan’s Summary of Benefits  page to understand your copay or coinsurance responsibility. BCBS of Michigan offers a detailed guide for their plans here - check it out as an example, but check your insurer’s website for details on your specific plan.

TIER 1, TIER 2, ETC. PRESCRIPTIONS