Glossary

Dermatology Billing Glossary

Every term a dermatology practice runs into on a remittance, in a payer policy or on an A/R report — defined once, in the context where it actually costs or earns money.

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Coding

Mohs micrographic surgery: A staged skin cancer excision in which the same physician acts as surgeon and pathologist, billed by stage and by additional tissue block.
Modifier 25: Appended to an E/M code to show a significant, separately identifiable evaluation and management service was performed on the same day as a procedure.
Modifier 59Distinct procedural service (and the X{EPSU} subsets): Signals that two procedures normally bundled together were genuinely distinct — different session, site or lesion.
Modifier 51: Indicates multiple procedures were performed in the same session, invoking multiple-procedure payment reduction.
Global period: The window after a procedure during which related follow-up care is included in the original payment and not separately billable.
E/M (evaluation and management): The office-visit code family, leveled since 2021 by medical decision-making or by total time on the date of the encounter.
CPT code: The five-digit procedure code set maintained by the AMA that describes what was performed.
ICD-10-CM: The diagnosis code set that establishes medical necessity for the procedure billed.
HCPCS Level II: Codes for supplies, drugs and services not described by CPT, including injectables used in dermatology.
Dermatopathology billing: Billing for the technical and professional components of skin specimen examination, often split between entities.

Claims & denials

NCCI edit (bundling): A CMS-published pair rule that prevents two codes from being paid together unless a modifier establishes they were distinct.
CARC / RARCClaim adjustment reason code / remittance advice remark code: The standardized codes on a remittance that state why a claim was reduced or denied.
Eligibility verification: Confirming active coverage, plan, deductible status and network participation before the date of service.
Coordination of benefitsCOB: The rules determining which payer is primary when a patient has more than one plan.
Timely filing limit: The deadline by which a claim must reach the payer, after which it is unpayable regardless of merit.
Appeal: A formal request that a payer reconsider a denial, supported by documentation and a specific argument.
Claim scrubbing: Automated pre-submission checking of claims against payer edits, code pairs and required fields.
Clearinghouse: The intermediary that validates, formats and routes electronic claims between practice and payers.
ERA (835)Electronic remittance advice: The electronic file describing how a payer adjudicated each claim line, used for automated posting.

Payer policy

Underpayment: A claim paid at less than the contracted allowable, without a denial to signal the shortfall.
Fee schedule: The list of amounts a payer will allow for each code, either published (Medicare) or contracted (commercial).
Prior authorization: Payer approval required before a service is performed, without which the claim is denied regardless of medical necessity.
Medical necessity: The payer's standard for whether a service was reasonable and necessary for the diagnosis documented.
LCD / NCDLocal and national coverage determination: The coverage rules that decide what Medicare pays for, nationally or within a MAC's jurisdiction.
MACMedicare Administrative Contractor: The private contractor that processes Medicare Part B claims for a defined geographic jurisdiction.
Medicare Advantage: Private plans that replace traditional Medicare and may add prior authorization and network rules Medicare does not impose.
CredentialingProvider enrollment: Enrolling a provider with each payer so their services are payable under the practice's contracts.
Payer contract negotiation: Renegotiating commercial rates and terms, usually anchored to a percentage of the Medicare fee schedule.
Buy and bill: The practice purchases a drug, administers it and bills the payer, carrying the inventory cost and reimbursement risk.

Revenue cycle metrics

Clean claim rateFirst-pass acceptance: The share of claims paid on first submission without rework.
Denial rate: The percentage of submitted claims denied, ideally segmented by cause, payer and provider.
Days in A/R: The average number of days revenue sits unpaid, calculated from outstanding receivables against average daily charges.
Aged A/R: Receivables grouped into buckets by age, typically 0-30, 31-60, 61-90, 91-120 and 120+ days.
Net collection rate: Payments collected as a share of what the practice was contractually entitled to collect, after contractual adjustments.
Per-visit yieldRevenue per encounter: Collected revenue divided by encounters, tracked by provider.
Charge capture: The process of ensuring every service performed becomes a billable charge.
Revenue leakage: Earned revenue that never reaches the bank because of coding, documentation, follow-up or contract failures.
EFTElectronic funds transfer: Direct deposit of payer payments, reconciled against the corresponding remittance file.
Patient responsibility: The deductible, coinsurance and copay portion the patient owes after the payer adjudicates.

Compliance

Good faith estimate: A written cost estimate required under the No Surprises Act for uninsured and self-pay patients.
Cosmetic vs medical: The determination of whether a dermatologic service is medically necessary and billable to insurance or elective and patient-paid.
ABNAdvance beneficiary notice of noncoverage: The Medicare form notifying a beneficiary that a service may not be covered, shifting financial responsibility to them.
Documentation audit: A review of a sample of charts against the codes billed, to confirm the record supports them.
Compliance program: The documented policies, training and monitoring a practice maintains to prevent and detect billing violations.
HIPAA: The federal framework governing the privacy and security of protected health information.
BAABusiness associate agreement: The contract required before a vendor may handle protected health information on a practice's behalf.
PHIProtected health information: Individually identifiable health information in any form, including everything on a claim.

Written for dermatology, not billing in general

Most billing glossaries define terms the same way for every specialty. That is not much help when the question is how a global period interacts with a Mohs stage, or why one MAC pays a destruction another denies.

Every entry here explains the term and then what it actually does inside a dermatology practice's revenue cycle.

How to use it

Reading a remittance: start with CARC/RARC, then bundling, global period and medical necessity.
Reviewing your own numbers: clean claim rate, denial rate, days in A/R, net collection rate and per-visit yield.
Onboarding a new biller or provider: the coding and compliance sections are a reasonable first week of reading.

Frequently asked questions

Which terms cause the most denials in dermatology?

Modifier 25, NCCI bundling edits, global period rules and medical necessity under the applicable LCD account for the large majority of preventable dermatology denials.

Is this glossary specific to Medicare?

No. Medicare terms are covered because Medicare policy anchors most commercial contracts, but commercial, Medicare Advantage and Medicaid managed-care concepts are included as well.