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Billing Terms & Definitions


The portion of the patient’s bill that the hospital has written off per the contract with their insurance company or as outlined in our financial assistance policies.

Advance Beneficiary Notice (ABN)

A notice the hospital gives Medicare patients before services are rendered, stating that Medicare will not pay for some treatments or services. The notice is given to help patients decide whether to have the treatment and how to pay for it.

Advance Directive

A health care advance directive is a written statement describing a patient’s wishes about medical treatment if they lose the ability to make their own decisions. Advance directives may include a living will and a durable power of attorney for health care.

Amount Due from Insurance

The amount a patient’s insurance pays for treatment. This amount will not include any deductibles, coinsurance, co-payments or charges for non-covered services.


Many health insurance companies require patients to obtain permission before receiving hospital treatment. This is called the approval, authorization or certification process. Patients must be familiar with their insurance company’s authorizations requirements. Failure to follow the insurance company’s protocols may result in substantial costs.


The amount of money the hospital charges for a specific medical service or supply. This amount does not reflect any adjustments.

Charity Care

Financial assistance the hospital offers qualified patients.


This portion of the hospital payment is the patient’s/guarantor’s responsibility. This amount is determined by their insurance policy and is usually based on a percentage.

Contractual Adjustment

This is the portion of a patient’s bill that the hospital must write off because of a billing agreement with the patient’s insurance company.


The fixed amount a patient/guarantor must pay based on the types of medical services. This payment is due when services are rendered. Co-payment amounts may be spelled out on a patient’s insurance card.


The amount an insurance plan dictates a patient/guarantor must pay before the company pays claims. This information may be spelled out on a patient’s insurance card.


The amount a self-pay patient must pay the hospital for elective and scheduled procedures before services are rendered. This applies to patients without insurance coverage and procedures not covered by insurance. Generally, this amount is 50 percent of the procedure’s estimated cost.


An approximation of a procedure’s cost. This amount is based on the average cost associated with the procedure. Each case is unique; therefore, the final cost may be less or more than the original estimate.

Explanation of Benefits

A patient will receive this notice from their insurance company after hospitalization. It tells the patient what was billed, the payment amount approved by their insurance, the amount paid and the amount due from the patient.

Financial Responsibility

This is the amount the patient/guarantor must pay.


This is the person legally responsible for paying a hospital bill. Unless a minor is receiving services, this person is usually the patient.

Health Insurance Portability and Accountability Act (HIPAA)

This federal law sets standards for protecting patients’ health information.

Medicare Summary Notice

Medicare patients receive this notice following hospitalization. It tells patients what was billed, Medicare's approved payment, the amount Medicare paid and the amount due from the patient. It is also called an Explanation of Medicare Benefits.

Non-Contracted Insurance

If a patient’s insurance company is not contracted with Cottage Health, the hospital will bill the insurance company as a courtesy to the patient. If full payment is not received within 45 days, the hospital will bill the patient.

Out-of-Network Provider

A doctor, or other health care provider, who is not part of an insurance plan's network.

Personal Insurance Administrators (PIA) Insurance Claim Form

PIA covers students at Westmont and UCSB. This form must be completed each time a patient with PIA coverage is treated at the hospital.

Primary Insurance Company

The insurance company first responsible for paying a patient’s claim.

Release of Information

Patient billing information can only be discussed with the patient, patient's guardian or guarantor (listed as responsible party) or spouse. A release of information form must be signed by the patient and grants the billing office the ability to discuss the patient's account with their designated representative.

Secondary Insurance

Additional coverage that may pay charges not covered by primary insurance. Payment is made according to the terms of a patient’s policy and benefits and coordinated with the patient’s primary insurance.