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Billing Terms Glossary

Payment and Reimbursement Terms: Definitions for Therapists and Psychiatrists

These payment and reimbursement terms are defined in plain English for therapists and psychiatrists. Payment and reimbursement terms describe how a payer pays a claim and how money is adjusted or taken back. These definitions cover remittances, EFT, overpayments, and write-offs.

In this section

35 terms defined
Written for psychotherapists and psychiatrists
Source organization linked on every entry

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Administrative Adjustment

General (all payers)

Also called: admin write-off; courtesy adjustment

Definition: A non-contractual adjustment made for administrative reasons, such as small balances or errors.
Why it matters: Requires policy and documentation to avoid waiving cost sharing improperly.
Illustrative example: A practice adjusts a $3 balance under a written policy.

Reference source HFMA

Categories Payment & ReimbursementAudits & Compliance

Allowed Amount

General (all payers)

Also called: allowable; maximum allowable; eligible amount

Definition: The maximum amount a payer will recognize for a covered service. For participating providers, the difference between the charge and the allowed amount is written off.
Why it matters: The core number behind payments, adjustments, and patient responsibility.
Illustrative example: Charge is $180; allowed amount is $130; the practice writes off $50.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementClaims Processing

Assignment of Benefits (AOB)

General (all payers)

Also called: AOB; assignment of insurance benefits; direct payment authorization

Definition: An assignment of benefits is a patient's signed authorization that lets the insurer pay the provider directly instead of paying the patient.
Why it matters: Without an assignment, a payer may send the payment to the patient. Get the signed form at intake and show it on the claim in Box 13. Medicare uses a different assignment concept, described under Assignment (Medicare).
Illustrative example: A patient signs the AOB at intake so the plan pays the practice directly.

Reference source NUCC, 1500 Claim Form Reference Instruction Manual, Version 13.0 (7/25)

Categories Payment & ReimbursementAudits & Compliance

Bad Debt

General (all payers)

Also called: uncollectible balance; bad debt write-off

Definition: Balances a practice determines are uncollectible after reasonable collection efforts.
Why it matters: Tracking it shows the cost of nonpayment and informs policy.
Illustrative example: A balance goes to collections after statements and calls.

Related terms Write-Off Collections Self-Pay

Reference source HFMA

Categories Payment & ReimbursementRevenue Cycle Metrics

Contractual Adjustment

General (all payers)

Also called: contractual write-off; CO adjustment

Definition: The portion of the billed charge a participating provider must write off because it exceeds the contracted allowed amount.
Why it matters: It is not collectible from the patient and must be posted correctly to keep A/R accurate.
Illustrative example: The ERA shows a $50 contractual adjustment with group code CO.

Reference source CMS (Centers for Medicare & Medicaid Services) · X12

Categories Payment & ReimbursementRevenue Cycle Metrics

Conversion Factor

General (all payers)

Also called: CF; Medicare conversion factor

Definition: The dollar amount that multiplies total RVUs to set the Medicare payment for a service.
Why it matters: Changes to it move Medicare payment for every service, and many contracts key off it.
Illustrative example: A rule finalizes a new conversion factor for the calendar year.

Time-sensitive: updated yearly; confirm the current value at cms.gov.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Physician Fee Schedule

Categories Payment & Reimbursement

Credit Balance

General (all payers)

Also called: provider credit balance; refund due to patient

Definition: A negative account balance created when payments exceed charges, which may be owed back to a patient or payer.
Why it matters: Credit balances can create unclaimed property and compliance issues if not resolved.
Illustrative example: A patient overpays and the practice refunds the excess.

Related terms Overpayment Patient Refund

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementPatient Financial Responsibility Terms

ECHO Health

General (all payers)

Also called: ECHO; Echo Health payments; ECHO payments

Definition: A health care payments company that delivers payments and remittances between payers and providers, including virtual card and EFT. Listed for reference; not an endorsement or partnership.
Why it matters: Payers using ECHO may pay by virtual card unless the provider enrolls in EFT.
Illustrative example: A provider enrolls in ECHO EFT to avoid card fees.

Reference source ECHO Health

Categories Payment & Reimbursement

EFT Enrollment

General (all payers)

Also called: EFT registration; ERA/EFT enrollment

Definition: The process of registering a provider's bank account and EDI details with a payer to receive electronic payments and remittances.
Why it matters: Missing enrollment means paper checks and manual posting.
Illustrative example: A practice enrolls in ERA and EFT with each payer.

Reference source X12

Categories Payment & ReimbursementEDI & Clearinghouse Terms

Electronic Funds Transfer (EFT)

General (all payers)

Also called: EFT; direct deposit; electronic payment

Definition: An electronic transfer of payment from a payer to a provider's bank account.
Why it matters: EFT enrollment is required by many payers and must match the ERA to reconcile.
Illustrative example: A payer sends an EFT that a biller matches to an ERA.

Reference source X12

Categories Payment & ReimbursementEDI & Clearinghouse Terms

Explanation of Benefits (EOB)

General (all payers)

Also called: EOB; explanation of benefits statement

Definition: A statement a payer sends the member, and sometimes the provider, that explains how a claim was processed and what the member owes.
Why it matters: Patients use it to check what they owe, and practices use it to reconcile balances.
Illustrative example: A patient brings an EOB showing $30 patient responsibility.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementPatient Financial Responsibility Terms

Explanation of Payment (EOP)

General (all payers)

Also called: EOP; provider remittance statement

Definition: A payer's provider-facing statement explaining how claims were paid, similar to a remittance advice in paper or portal form.
Why it matters: Some payers call the remittance an EOP.
Illustrative example: A practice downloads an EOP from the payer portal.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & Reimbursement

Facility Rate

General (all payers)

Also called: facility payment rate; facility setting

Definition: The Medicare payment level used when the service is delivered in a facility setting, typically lower than the non-facility rate.
Why it matters: Choosing the wrong POS can change payment.
Illustrative example: A service in a hospital setting is paid at the facility rate.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Physician Fee Schedule

Categories Payment & ReimbursementClaims Processing

InstaMed

General (all payers)

Also called: InstaMed payments

Definition: A health care payments company, part of J.P. Morgan, offering payer and provider payment delivery and patient payment tools. Listed for reference; not an endorsement or partnership.
Why it matters: Some payers and providers use it for payments and remittances.
Illustrative example: A payer delivers ERA and EFT through InstaMed.

Verify: confirm current ownership.

Reference source InstaMed

Categories Payment & Reimbursement

Medicaid Fee Schedule

Medicaid (state-specific)

Also called: state Medicaid fee schedule; Medicaid rates; Medicaid reimbursement rates

Definition: A Medicaid fee schedule is the list of rates a state Medicaid program or a Medicaid managed care plan pays for covered codes. States publish their own.
Why it matters: Medicaid rates can differ widely by state and plan. Check the state or plan schedule, not Medicare, before you predict payment.
Illustrative example: A practice checks the state's published fee schedule for a psychotherapy code before accepting Medicaid patients.

Time-sensitive: Rates change. Confirm the current schedule with the state.

Reference source Medicaid.gov · CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementMedicare & Medicaid Terms Medicaid

Non-Facility Rate

General (all payers)

Also called: non-facility payment rate; office setting rate

Definition: The Medicare payment level used when the service is delivered in a non-facility setting such as a practitioner's office.
Why it matters: Some payers apply it to telehealth under certain conditions.
Illustrative example: An office visit is paid at the non-facility rate.

Verify: telehealth rate treatment is payer-specific.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Physician Fee Schedule

Categories Payment & ReimbursementClaims Processing

Offset

General (all payers)

Also called: payment offset; claim offset

Definition: A payer's method of recovering an overpayment by subtracting it from a future payment.
Why it matters: Offsets appear on ERAs and confuse posting if not tracked.
Illustrative example: An ERA shows a negative line item for prior overpayment.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & Reimbursement

Optum Pay

General (all payers)

Also called: Optum payments

Definition: A payment and remittance service from Optum used by some payers to deliver provider payments. Listed for reference; not an endorsement or partnership.
Why it matters: Payment method rules and fees vary.
Illustrative example: A provider enrolls in Optum Pay to receive payments.

Verify: confirm current product and enrollment steps.

Reference source Optum Pay

Categories Payment & Reimbursement

Overpayment

General (all payers)

Also called: overpaid claim; refund due

Definition: A payment greater than the amount the provider was entitled to, which typically must be returned within timelines set by law or contract.
Why it matters: Keeping known overpayments can create compliance exposure, including under the False Claims Act for Medicare and Medicaid.
Illustrative example: A duplicate payment is identified and refunded.

Verify: confirm current federal overpayment rules with counsel or a compliance officer.

Reference source CMS (Centers for Medicare & Medicaid Services) · HHS Office of Inspector General (OIG)

Categories Payment & ReimbursementAudits & Compliance

Paper Check Payment

General (all payers)

Also called: check payment; mailed check

Definition: A payment issued as a paper check mailed to the provider's payment address.
Why it matters: Slower to post and easier to misplace or misapply.
Illustrative example: A payer mails a check with a paper remittance.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & Reimbursement

Payment Address

General (all payers)

Also called: remit-to address; pay-to address

Definition: The address where a payer sends checks and paper remittances for a provider.
Why it matters: An outdated address sends payment to the wrong place.
Illustrative example: A practice updates its pay-to address after a move.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementProvider Data Management Terms

Payment Platform

General (all payers)

Also called: payment portal; payment processing platform

Definition: Software that lets a practice or payer send, receive, and reconcile payments electronically.
Why it matters: Different platforms carry different fees and enrollment steps.
Illustrative example: A practice reconciles EFT deposits against ERAs.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementEHR & Healthcare Technology Terms

Payment Posting

General (all payers)

Also called: posting payments; cash posting

Definition: Recording payments, adjustments, and patient balances from ERAs and EOBs into the billing system.
Why it matters: Errors in posting distort A/R and hide underpayments.
Illustrative example: A poster applies payment, contractual adjustment, and patient responsibility from the ERA.

Reference source X12

Categories Payment & ReimbursementRevenue Cycle Metrics

PaySpan

General (all payers)

Also called: PaySpan Health

Definition: A vendor that offers electronic payment and remittance services between payers and providers. Listed for reference; not an endorsement or partnership.
Why it matters: Some payers use it for ERA and EFT delivery.
Illustrative example: A provider enrolls in PaySpan to receive payer payments.

Reference source PaySpan Health

Categories Payment & ReimbursementEDI & Clearinghouse Terms

Recoupment

General (all payers)

Also called: payer recoupment; clawback

Definition: A payer's recovery of money it says it overpaid, often by deducting it from future payments.
Why it matters: Recoupments shrink remittances and can be disputed.
Illustrative example: A payer recoups a prior payment through offsets against new claims.

Related terms Takeback Offset Overpayment Refund Request

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementDenials & Appeals

Refund Request

General (all payers)

Also called: overpayment refund request; payer refund letter

Definition: A payer's written demand for return of a payment it believes was in error.
Why it matters: Deadlines and dispute rights are short, so requests need a fast, documented response.
Illustrative example: A practice receives a refund letter with a 30-day response window.

Related terms Overpayment Recoupment Appeal

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & Reimbursement

Relative Value Unit (RVU)

General (all payers)

Also called: RVU; work RVU; wRVU

Definition: A measure of the resources a service requires. Under Medicare, RVUs for work, practice expense, and malpractice, combined with a conversion factor, set payment.
Why it matters: Practices also use RVUs to track productivity.
Illustrative example: A practice tracks work RVUs per clinician for productivity reports.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Physician Fee Schedule

Categories Payment & ReimbursementRevenue Cycle Metrics

Remittance Advice (ERA)

General (all payers)

Also called: remittance advice; ERA; electronic remittance advice; 835

Definition: An explanation of how a payer processed a claim, showing payments, adjustments, and denial reasons; the electronic version is the ERA (835).
Why it matters: Posting correctly from the ERA is the core of accurate accounts receivable.
Illustrative example: A biller posts payment and adjustments from the ERA.

Reference source X12

Categories Payment & ReimbursementEDI & Clearinghouse Terms

RVS Update Committee (RUC)

General (all payers)

Also called: RUC; AMA RUC; Relative Value Scale Update Committee

Definition: The RVS Update Committee, or RUC, is an AMA committee that makes recommendations to CMS about the relative values used in the Medicare physician fee schedule.
Why it matters: Its recommendations influence relative value units, which drive Medicare payment and many commercial fee schedules.
Illustrative example: A specialty society presents data to the RUC about the time and work of a code.

Verify: Confirm the committee's current role.

Reference source American Medical Association (AMA) · CMS (Centers for Medicare & Medicaid Services)

Categories Payment & Reimbursement

Takeback

General (all payers)

Also called: payer takeback; retro takeback; retroactive denial

Definition: A payer's reversal of a previously paid claim, often after a later review or eligibility finding, followed by recovery of the money.
Why it matters: Takebacks create surprise negative balances and may allow limited appeal windows.
Illustrative example: A payer retroactively denies a paid claim because coverage was terminated.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementDenials & Appeals

Underpayment

General (all payers)

Also called: underpaid claim; short pay

Definition: A payment less than the contracted or expected amount for a covered service.
Why it matters: Left unchecked, systematic underpayments become large lost revenue.
Illustrative example: A payer pays $105 on a $130 contracted rate.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementDenials & Appeals

Usual, Customary and Reasonable (UCR)

General (all payers)

Also called: UCR; usual and customary; U&C

Definition: A method some payers use to set the maximum allowable amount for out-of-network services, based on what providers in an area typically charge.
Why it matters: OON reimbursement is often calculated from UCR, not from the provider's billed charge.
Illustrative example: A plan pays 70% of its UCR amount, which is lower than the practice's billed fee.

Verify: how each payer defines UCR is payer-specific.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & ReimbursementContracting & Network Management

Virtual Credit Card (VCC)

General (all payers)

Also called: VCC; virtual card payment

Definition: A one-time credit card number a payer or vendor sends to pay a claim, often with processing fees to the provider.
Why it matters: Card fees reduce net payment, so practices often prefer EFT.
Illustrative example: A payer pays by virtual card; the practice pays a merchant fee to process it.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Payment & Reimbursement

Write-Off

General (all payers)

Also called: adjustment write-off; balance write-off

Definition: Removing a balance from accounts receivable, whether contractually required, administrative, or due to bad debt.
Why it matters: Improper write-offs can be a compliance concern, especially with patient balances on insured services.
Illustrative example: A practice writes off a contractual difference and separately writes off a small uncollectible balance per policy.

Reference source HFMA

Categories Payment & ReimbursementRevenue Cycle Metrics

Zelis

General (all payers)

Also called: Zelis payments; Zelis Healthcare

Definition: A health care payments and pricing company that offers payment delivery, repricing, and provider payment services. Listed for reference; not an endorsement or partnership.
Why it matters: Payments and remittances from some payers arrive through Zelis.
Illustrative example: A provider enrolls with Zelis to receive payer payments.

Reference source Zelis

Categories Payment & Reimbursement

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Payment and Reimbursement Terms: Definitions for Therapists and Psychiatrists

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