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Billing Terms & Definitions

Adjustment

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.

Authorization

Many health insurance companies require patients to obtain permission before receiving hospital treatment. This is called the approval, authorization or certification process.

Beneficiary

The recipient of funds or other benefits.

Charges

Amount the hospital charges for a service, for a procedure or for supplies. Also referred to as “Gross Charges” or amount “billed.” Typically the charges are discounted or “adjusted” based upon the insurance contract agreement or a self-payment discount. See also “Adjustment,” “Contractual Adjustment,” “Charity Care,” and “Self-Pay Patient Payment Discount.”

Charity Care

Financial assistance the hospital offers qualified patients. Patients must apply in order to determine eligibility. Please follow this link to learn more about our financial assistance policy. For patients with a Federal Poverty Level (FPL) of 350% or below, financial assistance will be provided as a full write-off of any patient financial responsibility. Patients with a FPL from 351% - 445% will receive a discounted payment.

Co-insurance

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.

Co-payment

A flat dollar amount or percent of charges paid for each medical service used by an insured person. Insurance companies use co-payments to share health care costs to prevent over utilization.

Cost

Amount of expenditures hospital incurs to provide hospital services.

Deductible

The portion of any hospital bill that is not covered by the insurance company. It is normally quoted as a fixed amount per year and is a part of most healthcare policies. The deductible must be paid by the insured before the benefits of the policy can apply.

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.

Guarantor

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.

Insured

One who is covered by an insurance product.

Insurer


One that offers insurance and takes the risk of covering the costs of an eligible event.

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.

Patient Financial Responsibility

This is the amount the patient/guarantor must pay.

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.

Self-Pay Patient Payment Discount

A 30% discount off of gross charges for patients that have no insurance coverage. All self-pay patients are eligible for this discount regardless of financial need.