The vocabulary, in plain English.
Insurance and billing depend on a small set of acronyms that everyone uses but nobody explains. Here they are, defined the way we'd want them defined for our own families.
EOB (Explanation of Benefits)
An EOB is the document your insurance plan sends after a claim is processed. It is not a bill. It lists what was billed, what the plan allowed, what the plan paid, and what's left for the patient — typically broken down by line item. Discrepancies between the EOB and the provider's bill are the most common source of recoverable errors.
CPT code
CPT (Current Procedural Terminology) is the AMA's standardized coding system for medical procedures and services. Every billable line item has a CPT code. Errors usually take three forms: upcoding (a higher-severity code than the documentation supports), unbundling (separating services that should be billed as a package), and modifier mistakes (adding a -25 or -59 that isn't justified).
ICD-10 code
ICD-10 codes describe the diagnosis (what's wrong with you), while CPT codes describe what was done about it. A bill needs both. If the diagnosis doesn't medically support the procedure billed, the claim is denied — and sometimes the claim is then re-billed with a different (often higher) CPT to make it stick. That re-billing is a frequent audit finding.
Allowed amount
Each insurance plan negotiates an allowed amount with each in-network provider for each CPT. That number is the cap — anything billed above it is the provider's problem (in-network) or potentially yours (out-of-network). Knowing the allowed amount is what makes most appeals possible.
Balance billing
If a provider bills $1,000 and the plan's allowed amount is $400, an in-network provider eats the $600. An out-of-network provider used to be free to bill the patient for the difference. The federal No Surprises Act (effective 2022) prohibits surprise balance billing in emergency, ancillary, and air-ambulance situations.
No Surprises Act
The No Surprises Act protects patients from balance billing in emergency situations, for ancillary services at in-network facilities (anesthesia, radiology, pathology), and for air ambulance transport. Patients are responsible only for in-network cost-sharing. It is one of the most frequently cited statutes in out-of-network bill disputes.
Upcoding
Upcoding usually shows up in ER and inpatient claims, where coders pick the level (1–5) based on chart notes. Audit comparison: read the actual chart, then ask whether the level claimed is supported by the documented severity, time, or complexity. When the answer is no, the bill is recoverable.
Unbundling
Many CPT codes are designed to include certain ancillary services. ECG interpretation, for example, is bundled into ER E/M codes when read by the same provider. Billing them separately violates CPT bundling rules and the difference is recoverable.
ERISA
The Employee Retirement Income Security Act sets the procedures plans must follow when they deny a claim. It guarantees the right to appeal, mandates a written explanation of denials, and requires external review for fully-funded plans. Self-funded plans (~60% of employer plans) are governed by ERISA federally rather than state insurance law.
HIPAA
HIPAA's Privacy and Security Rules govern who can access your medical records and how those records must be protected. Any vendor handling Protected Health Information signs a Business Associate Agreement (BAA) committing to the same standard.
Out-of-network
OON care typically costs more, with the patient responsible for a higher share. The provider isn't bound by the plan's allowed amount, which is what makes balance billing possible without statutory protection.
Modifier (CPT)
Modifiers like -25 (significant E/M on the same day) and -59 (distinct procedural service) change how a code is billed. They're frequently added to break bundling rules — a flagged modifier can shift a claim by hundreds or thousands of dollars per line.