The hospital bill glossary: 14 terms every patient should know

Hospital bills speak a language most patients never learn. Here are the 14 terms you need to read your bill, compare hospitals, and call your insurer with the right vocabulary. Definitions are short by design — every term links to where it shows up on this site.

Code systems — what's billed

CPT

Current Procedural Terminology. A 5-digit code identifying a specific medical procedure, service, or test. Maintained and licensed by the American Medical Association. On ClearPrice Health, the procedure-page header shows the relevant CPT code as a single editorial citation; we do not enumerate codes anywhere on aggregate pages.

HCPCS

Healthcare Common Procedure Coding System. CMS-maintained set of codes that overlap with CPT but also cover non-physician services, durable medical equipment, and supplies. Used heavily by Medicare. HCPCS Level II codes are alphanumeric.

MS-DRG

Medicare Severity Diagnosis-Related Group. A 3-digit code grouping inpatient stays by clinical similarity for billing purposes. The hospital is paid one bundled amount per MS-DRG regardless of length of stay. Used for inpatient admissions; less relevant for outpatient procedures.

APC

Ambulatory Payment Classification. The outpatient counterpart to MS-DRG — bundles outpatient services into payment groups. CMS uses APCs for Medicare outpatient billing.

NDC

National Drug Code. An 11-digit identifier for a specific medication and dosage. Used for drugs administered during a hospital visit (chemotherapy, infusions, anesthetic agents).

Insurance terms — what you pay

EOB

Explanation of Benefits. A statement your insurer sends after a claim is processed. Shows the billed amount, the negotiated/allowed amount, what insurance paid, and what you owe. Not a bill — the actual bill comes from the hospital. Cross-check the EOB against the hospital's bill before paying.

Deductible

The amount you pay in full out-of-pocket each year before insurance starts paying. Resets on January 1 (or your plan's anniversary). Higher deductible = lower monthly premium but higher cost when care happens.

Coinsurance

The percentage of cost you pay after the deductible is met. Common values: 10%, 20%, 30%. If your coinsurance is 20% and the negotiated rate is $1,000, your share is $200; insurance pays $800.

Out-of-pocket maximum (OOP max)

An annual cap on what you pay. Once you've paid this much (in deductible + coinsurance + copays combined), insurance covers 100% of further covered care for the rest of the year.

What's on the bill

Facility fee

The hospital's charge for using its building, equipment, and staff. Distinct from the professional fee. Hospitals' MRFs publish facility-fee rates; professional fees are billed separately.

Professional fee

The provider's charge for their personal time and expertise (the radiologist reading your MRI, the anesthesiologist during surgery). Billed separately from the facility fee, often by a separate billing entity, and not always at the same hospital negotiated rate.

Ancillary services

Services billed alongside the primary procedure: anesthesia, pathology, lab tests, pharmacy. Each may have its own code and its own negotiated rate. The published procedure rate is rarely the whole bill.

Price types in the MRF

Gross charge

The hospital's list price — what they bill before any discount. Almost no one pays gross charges; insurers pay negotiated rates and cash payers usually get the discounted cash price.

Negotiated rate

The amount the hospital and a specific insurer have agreed the procedure costs. Published per-payer in the MRF. This is the upper bound on what your insurer will pay; your share depends on your deductible / coinsurance / OOP-max.

Discounted cash price

What the hospital charges someone paying cash without insurance. Often lower than the gross charge but not always lower than what insurance + your share would total. For routine, low-cost procedures with high-deductible plans, cash can be cheaper.

Chargemaster

The hospital's master list of every billable item and its gross charge. Internal — not the same as the MRF. Hospitals derive published gross charges from the chargemaster. Sometimes called the Charge Description Master (CDM).

Want to see these terms in action? Read How to estimate your hospital bill in Colorado for a worked example, or browse the methodology for how we compute the medians and bands shown on every procedure page.