Medical billing glossary

Understanding medical bills can be challenging due to the specialized terminology and varied cost components involved. Common billing terms—such as allowed amount, coinsurance, copayment, and contracted collection agency—help define how much you owe for a procedure and how your insurance shares the cost. The total fee you see on your bill typically includes the service charge, any applicable co-pays, and portions that insurance may not cover. To avoid unexpected expenses, always request an itemized estimate before your procedure, check with your insurer about coverage details, and clarify what costs are your responsibility.

Common Cost Components Explained

• Allowed Amount: The maximum your insurance will pay for a covered service. Anything above this may be your responsibility.
• Copayment: A fixed dollar amount you pay for specific services at the time of care.
• Coinsurance: The percentage of the bill you pay after insurance covers its share.
• Amounts Generally Billed (AGB): The average amount charged for services, used to calculate financial responsibility for eligible patients seeking financial assistance.
• Contracted Collection Agency: A third-party agency that may collect unpaid balances if bills are not settled in time.

Insurance & Payment Advice

• Verify your insurance plan’s coverage and ask about your share of costs (including copays and coinsurance) before receiving care.
• If you expect difficulty paying your bill, inquire about financial assistance or payment plans early on.
• Review any bills for accuracy and request an itemized statement to understand each charge.
• Know that some services may be billed separately (e.g., anesthesia, labs, radiology).

Frequently Asked Questions

• What is an “allowed amount” on my medical bill? The allowed amount is the highest sum your insurance company will pay for a particular medical service; if the provider charges more, you may owe the difference.
• What does coinsurance mean? Coinsurance is the percentage of costs you pay after your insurance has paid its portion; for example, if you have 80/20 coverage, you pay 20% of the allowed amount.
• How does a copayment differ from coinsurance? A copayment is a fixed dollar fee (e.g., $30 per visit), while coinsurance is a percentage of the total cost of a service.
• What happens if I can’t pay my bill? If you cannot pay your bill, contact the provider to discuss payment plans or financial assistance options before the account is sent to a collection agency.
• What is a contracted collection agency? This is a third-party firm that collects unpaid medical debts on behalf of the healthcare provider if you do not pay your bill within a certain period.
• What does “Amounts Generally Billed (AGB)” mean? AGB is the average amount charged for medical services, used to determine eligibility and thresholds for financial assistance programs.
• How can I reduce my out-of-pocket costs? Review your insurance benefits, ask about in-network providers, request an itemized bill, and see if you qualify for financial assistance or discounts.
• Can I request a detailed breakdown of charges? Yes, you have the right to ask your provider or hospital for an itemized bill explaining each charge and service rendered.
• What is “coordination of benefits”? This is a process insurers use to determine which plan pays first if you have coverage from more than one insurance policy.
• Will I receive separate bills from different providers? Yes, it is possible to get additional bills from specialists, labs, or anesthesiologists involved in your care, even if you went to one facility.

Medical billing terms can be confusing. That’s why we’ve defined some of the most common terms you may see on your bill. Look below for simple, easy-to-understand definitions.

Glossary

Allowed Amount – The maximum amount an insurer will pay for a covered medical service or treatment. If there is a remainder still owed, you’ll need to pay the difference.

Amounts Generally Billed (AGB) – AGB refers to a method of reviewing past claim insurance payments and dividing by total billed claim amounts. The AGB number is used to calculate total financial responsibility thresholds for patients that are eligible for financial assistance. The AGB is recalculated every year.

Coinsurance – The percentage you pay after an insurance company pays its agreed-upon percentage; e.g., your plan may cover 80% and you would pay the remaining 20%.

Contracted Collection Agency – A contracted outside agency (vendor) providing debt collection services on behalf of Aurora.

Copayment or copay – A dollar amount specified by your insurance plan that you pay for a medical visit. You may have a co-pay for a doctor visit, or for specific services rendered at a hospital such as emergency services.

Coordination of Benefits – A method of determining which insurance is to be billed first when a patient is covered by more than one insurance. This helps ensure that members covered by more than one plan will receive the benefits they are entitled to while avoiding overpayment by either plan and keeping premiums at a minimum.

CPT Code – A CPT (Current Procedural Technology) code utilizes a standardized coding system to communicate to an insurance company which specific services were provided to a patient.

Deductible – The amount you need to pay before an insurance company begins to pay for services. This amount resets at the beginning of a new benefit period, usually yearly.

Denial – A denial occurs when an insurance company refuses to pay for health care services that were provided to you by a licensed health care professional or facility.

Diagnosis code – A system of classifying the medical condition of the patient at the time of the service, which is produced using the medical documentation recorded at the time of service. This is added to the claim to help the insurance company understand the reason for the specific treatment.

Due Upon Receipt – Indicates that you need to pay the bill as soon as possible after you receive your billing statement. The expectation is that you will pay the entire balance before the next statement is mailed, unless you choose to contact Aurora to explore other payment options.

Eligible patient(s) – Aurora patients that meet certain published eligibility requirements for financial assistance.

Emergency or urgent care services – Services that are provided in a hospital emergency department or in a hospital urgent care setting.

Experimental or not medically necessary – Experimental or investigational medical treatment or procedures are those not approved by the Food and Drug Administration (FDA) and not considered to be a standard of care.

Guarantor – The person or group that assumes responsibility of payment for a debt owed to Aurora.

HIPAA/Privacy – The Health Insurance Portability and Accountability Act (HIPAA) is a federal law designed to protect the patient’s private health information.

In-network – A group of health care providers contracted with an insurance company offering services to plan members for specific pre-negotiated rates.

Inpatient services – The services you received while you were admitted to the hospital.

Noncovered Services – Charges for services and supplies that are not covered under a health plan, such as acupuncture, weight loss surgery or marriage counseling.

OB Medical Screening – Labor and Delivery (L & D) areas have been designated by hospital bylaws to perform emergency medical screenings and act on behalf of the emergency department with regard to pregnant women because of their expertise in assessing maternal/fetal conditions. In this case, the services are rendered in the L & D area, but are billed as emergency services to comply with emergency treatment laws.

Observation services – Hospital outpatient services provided to help the doctor decide if a patient needs to be formally admitted to the hospital.

Observation status – Your admission status is determined by your physician when he or she writes the orders for admission. If you’re hospitalized, you’re assigned to either inpatient or observation status. Observation status occurs when you are not sick enough for inpatient admission, but are too sick to get care at your doctor’s office.

Other hospital outpatient services – Select, nonsurgical services provided on an outpatient basis.

Out-of-network – Health care providers outside of an established network.

Out-of-pocket – The cost you would need to pay depending upon your plan. Costs vary by plan and there’s usually a maximum out of pocket (MOOP) cost.

Outpatient surgery – Select surgical services and invasive diagnostic procedures provided on an outpatient basis.

Primary and secondary Insurance – When a patient is covered by more than one insurance plan, one insurer will become the primary carrier and all others will be considered secondary and tertiary carriers that will help cover remaining costs not covered by your primary insurer.

Professional services – The services most frequently performed at doctors’ offices.

Self pay balance – The portion of a patient’s bill that the guarantor is legally responsible for paying.

Subrogate – Subrogation occurs when an insurance company pays a claim, but reserves the right to pursue another party to recover payment. This generally occurs when medical services were provided as a result of an accidental injury.

Billing FAQ: Get all of your billing and insurance questions answered in clear, simple language.

Send us a message. Send us your Aurora billing question via secure message, and we’ll respond within three business days.