The revenue cycle glossary.
Plain-English definitions of the medical billing and RCM terms every practice leader should know — from days in A/R to net collection rate.
Days in A/R
The average number of days it takes to collect payment after a service is performed. Calculated as total accounts receivable divided by average daily charges. Under 35 days is generally healthy; over 50 signals collection problems.
Accounts Receivable (A/R)
Money owed to a practice for services already delivered — by insurance payers, patients, or both. "Aging A/R" refers to receivables grouped by how long they have been outstanding (0–30, 31–60, 61–90, 90+ days).
Clean Claim Rate
The percentage of claims accepted and processed by payers on first submission, without rejection or manual correction. High performers run above 95%.
Denial Rate
The percentage of submitted claims payers refuse to pay as billed. Industry averages run 5–10%; every denied claim costs rework time and delays cash.
Clearinghouse
An intermediary that receives claims from a practice, checks them against payer formatting rules, and forwards them electronically. Rejections at this stage never reach the payer until corrected.
Rejection vs. Denial
A rejection happens before processing — the claim never enters the payer’s system (formatting, eligibility, data errors). A denial is a processed claim the payer refuses to pay. They require different workflows.
ERA / EOB
Electronic Remittance Advice (ERA) is the electronic version of the Explanation of Benefits (EOB) — the payer’s statement of what was paid, adjusted, or denied and why.
Payment Posting
Recording payer and patient payments against the correct claims and line items. Late or careless posting distorts A/R and hides underpayments.
Charge Entry
Translating clinical services into billable charges with correct codes, modifiers, and demographics. Errors here cascade into rejections and denials downstream.
Charge Lag
Days between the date of service and the date the charge is entered and billed. Every day of lag delays cash and increases timely-filing risk.
Timely Filing Limit
The payer-imposed deadline for submitting a claim (often 90–180 days from service). Claims filed late are denied outright and are usually unrecoverable.
Underpayment
A payment below the contracted allowable rate. Without systematic variance checking against contract terms, underpayments post silently and are never recovered.
Contractual Adjustment
The difference between the billed charge and the payer’s contracted allowable — written off as part of the payer agreement. Abnormally high adjustments can hide denials and underpayments.
Prior Authorization
Payer approval required before certain services are delivered. Missing or expired authorizations are among the most common — and most preventable — denial causes.
Credentialing
The process of enrolling providers with payers so services are reimbursable. Gaps in credentialing produce denials that no amount of billing effort can fix retroactively.
Revenue Cycle Management (RCM)
The full financial process of healthcare delivery — from scheduling and eligibility through charge capture, claims, payment, denial resolution, and patient balances.
First-Pass Resolution Rate
The share of claims paid without any rework. The single best summary measure of billing operation quality.
Net Collection Rate
Collections as a percentage of what payers and patients actually owed (after contractual adjustments). Below ~95% indicates revenue leakage.