chapter 7 medical office concepts Detailed
Questions & Expert Answers
accepting assignment - Correct Answer The agreement by a healthcare provider who participates in an
insurance plan to accept the allowed charge as payment in full for services.
allowed charge - Correct Answer The maximum amount that an insurer will pay for a service or
procedure; also called "allowable," "maximum."
assignment of benefits - Correct Answer The permission given by a policyholder that allows a third-
party payer to pay benefits directly to the healthcare provider.
balance billing - Correct Answer Collecting payment from the insured patient of the difference between
a provider's usual fee and a payer's lower allowed charge.
birthday rule - Correct Answer A guideline for determining which of two parents with medical coverage
has the primary insurance for a child; states that the policy held by the insured with the earliest birthday
in the calendar year is the primary policy.
blue cross blue shield - Correct Answer One of the largest private-sector insurers in the United States;
offers both indemnity and managed care plans with many variations.
capitation - Correct Answer A form of payment made by the insurance company in advance of medical
services received; the prepayment by the insurance carrier of a fixed amount to a physician to cover ser
vices for a member of a particular plan.
carrier - Correct Answer An insurance company; also known as a third-party payer.
Centers for Medicare and Medicaid Services (CMS) - Correct Answer The federal agency responsible for
setting up the terms of Medicare and reviewing managed care plans that want to become Medicare-
covered providers; part of the Department of Health and Human Services, CMS was called the Health
Care Financing Administration (HCFA) before 2001.
, CHAMPVA - Correct Answer Acronym for the Civilian Health and Medical Program of the Veterans
Administration; the government health insurance program that covers the medical expenses of families
of veterans with total, permanent, service-connected disabilities; covers spouses and dependents of
veterans who die as a result of injuries sustained in the line of duty.
code linkage - Correct Answer The connection between the diagnostic and pro-cedural information,
examined by insurance carriers to evaluate the medical necessity of the reported charges.
coinsurance - Correct Answer The percentage of each claim that the insured person must pay; the
percentage to be paid by the carrier is usually stated first as in "a rate of 80-20."
coordination of benefits - Correct Answer The clause in insurance policies which states that the insured
who has two insurance policies may have only a maximum of 100 percent of the health costs.
copayment - Correct Answer The set charge, required by HMOs and some other insurers, to be paid by
patients every time they visit the physician's office.
cpt - Correct Answer The initials used for Current Procedural Terminology, a book published by the
American Medical Association and up-dated annually; contains the most commonly used system of
procedure codes.
customary fee - Correct Answer A physician's charge for a procedure or service determined by what
physicians with similar training and experi-ence in a certain geographic area typically charge.
deductible - Correct Answer A certain amount of medical expense the insured must incur before the
insurance carrier will begin paying benefits.
Defense Enrollment Eligibility Reporting System (DEERS) - Correct Answer The system used to list
individuals covered through TRICARE.
diagnosis related groups - Correct Answer A system used by Medicare to establish payment for hospital
stays; based on groupings of diagnostic codes that show the relative value of medical resources used
throughout the nation for patients with similar conditions.
Questions & Expert Answers
accepting assignment - Correct Answer The agreement by a healthcare provider who participates in an
insurance plan to accept the allowed charge as payment in full for services.
allowed charge - Correct Answer The maximum amount that an insurer will pay for a service or
procedure; also called "allowable," "maximum."
assignment of benefits - Correct Answer The permission given by a policyholder that allows a third-
party payer to pay benefits directly to the healthcare provider.
balance billing - Correct Answer Collecting payment from the insured patient of the difference between
a provider's usual fee and a payer's lower allowed charge.
birthday rule - Correct Answer A guideline for determining which of two parents with medical coverage
has the primary insurance for a child; states that the policy held by the insured with the earliest birthday
in the calendar year is the primary policy.
blue cross blue shield - Correct Answer One of the largest private-sector insurers in the United States;
offers both indemnity and managed care plans with many variations.
capitation - Correct Answer A form of payment made by the insurance company in advance of medical
services received; the prepayment by the insurance carrier of a fixed amount to a physician to cover ser
vices for a member of a particular plan.
carrier - Correct Answer An insurance company; also known as a third-party payer.
Centers for Medicare and Medicaid Services (CMS) - Correct Answer The federal agency responsible for
setting up the terms of Medicare and reviewing managed care plans that want to become Medicare-
covered providers; part of the Department of Health and Human Services, CMS was called the Health
Care Financing Administration (HCFA) before 2001.
, CHAMPVA - Correct Answer Acronym for the Civilian Health and Medical Program of the Veterans
Administration; the government health insurance program that covers the medical expenses of families
of veterans with total, permanent, service-connected disabilities; covers spouses and dependents of
veterans who die as a result of injuries sustained in the line of duty.
code linkage - Correct Answer The connection between the diagnostic and pro-cedural information,
examined by insurance carriers to evaluate the medical necessity of the reported charges.
coinsurance - Correct Answer The percentage of each claim that the insured person must pay; the
percentage to be paid by the carrier is usually stated first as in "a rate of 80-20."
coordination of benefits - Correct Answer The clause in insurance policies which states that the insured
who has two insurance policies may have only a maximum of 100 percent of the health costs.
copayment - Correct Answer The set charge, required by HMOs and some other insurers, to be paid by
patients every time they visit the physician's office.
cpt - Correct Answer The initials used for Current Procedural Terminology, a book published by the
American Medical Association and up-dated annually; contains the most commonly used system of
procedure codes.
customary fee - Correct Answer A physician's charge for a procedure or service determined by what
physicians with similar training and experi-ence in a certain geographic area typically charge.
deductible - Correct Answer A certain amount of medical expense the insured must incur before the
insurance carrier will begin paying benefits.
Defense Enrollment Eligibility Reporting System (DEERS) - Correct Answer The system used to list
individuals covered through TRICARE.
diagnosis related groups - Correct Answer A system used by Medicare to establish payment for hospital
stays; based on groupings of diagnostic codes that show the relative value of medical resources used
throughout the nation for patients with similar conditions.
