Hospital Pricing Glossary
Plain-language definitions of hospital billing, quality ratings, and healthcare pricing terms. 47 terms and counting.
Billing & Pricing
Balance BillingThe practice of a provider billing a patient for the difference between the provider's charge and what the insurer paid, now largely prohibited in emergency and many in-network-facility scenarios under the No Surprises Act.Case Mix Index (CMI)A measure of the average complexity and resource intensity of a hospital's Medicare patients, calculated as the average MS-DRG relative weight across discharges.Cash-Pay Rate (Discounted Cash Price)The price a hospital charges self-pay or uninsured patients who pay directly, often substantially lower than both the chargemaster and some commercial negotiated rates.Chargemaster (Charge Description Master)A hospital's master list of prices for every item and service, from a single aspirin to a heart transplant, typically containing tens of thousands of line items with prices that bear little relation to actual costs.CPT CodeThe Current Procedural Terminology code maintained by the American Medical Association, used to identify outpatient procedures, office visits, and services on claims.Diagnosis Related Group (DRG)A classification system that groups hospital inpatient stays into categories based on diagnosis, procedures, and patient complexity, used by Medicare to determine how much a hospital gets paid.Hospital Price TransparencyA federal rule (effective January 1, 2021) requiring all U.S. hospitals to publicly display their prices, including chargemaster rates, negotiated rates with each insurer, and cash-pay discounts.ICD-10 CodeThe International Classification of Diseases, 10th Revision, code used to identify patient diagnoses on hospital claims, replacing ICD-9 in the U.S. on October 1, 2015.Independent Dispute Resolution (IDR)The baseball-style arbitration process created by the No Surprises Act that resolves payment disputes between out-of-network providers and insurers without involving the patient.Inpatient Prospective Payment System (IPPS)Medicare's payment system for acute-care hospital inpatient stays, paying a fixed amount per MS-DRG rather than reimbursing each individual service.Machine-Readable File (MRF)The comprehensive hospital pricing file, required by the Hospital Price Transparency Rule, containing gross charges, cash prices, and payer-specific negotiated rates for every item and service.MS-DRG (Medicare Severity DRG)The severity-adjusted version of the DRG system used by Medicare since 2007, expanding groupings to capture complication and comorbidity burden and refine payment accuracy.Negotiated RateThe payer-specific price a hospital has agreed to accept from a particular insurance plan for a service, usually 30-60% below the chargemaster gross charge.Shoppable ServiceA common, non-urgent medical service that patients can plan and price-compare in advance, required by CMS to be listed with plain-language descriptions and prices on every hospital's website.Surprise Medical Bill (Balance Billing)An unexpected bill from an out-of-network provider for the difference between the provider's charge and the insurance payment, largely prohibited for most scenarios since the No Surprises Act took effect January 1, 2022.UB-04 Claim FormThe standardized hospital billing form (also called CMS-1450) used by hospitals and other institutional providers to bill Medicare, Medicaid, and commercial insurers for facility services.UpcodingThe practice of assigning a higher-severity MS-DRG, ICD-10 code, or CPT code than the patient's actual condition warrants, resulting in higher Medicare or insurer reimbursement.
Quality & Safety
CMS Star Rating (Hospital Overall Rating)A 1-to-5 star rating assigned by CMS to each hospital based on 46+ quality measures, covering mortality, safety, readmissions, patient experience, and timely care.HCAHPS SurveyThe standardized national patient satisfaction survey (Hospital Consumer Assessment of Healthcare Providers and Systems) administered to a random sample of discharged hospital patients, producing publicly reported patient experience scores.Hospital Readmission Penalty (HRRP)A Medicare payment penalty of up to 3% applied to hospitals with excess 30-day readmissions for six tracked conditions, administered through the Hospital Readmissions Reduction Program.Hospital-Acquired Condition (HAC) Reduction ProgramA CMS program that reduces Medicare payments by 1% for the quartile of hospitals with the highest rates of hospital-acquired conditions, including infections and preventable injuries.Leapfrog Hospital Safety GradeA letter grade (A-F) assigned twice yearly to U.S. hospitals by The Leapfrog Group, a nonprofit founded by large employers, based on 30+ patient safety measures.Mortality Rate (Hospital)The rate of patient deaths within 30 days of hospital admission for specific conditions, risk-adjusted to account for differences in patient severity.Readmission RateThe percentage of patients who return to the hospital within 30 days of discharge for the same or related condition, a key quality metric tracked by CMS.Value ScoreHospitalCostData's proprietary A-F grade combining price (40%), quality rating (40%), and patient outcomes (20%), measuring whether a hospital delivers good care at a fair price.
Insurance & Coverage
Deductible (Health Insurance)The amount a patient must pay for covered healthcare services before the insurance plan begins to pay, ranging from $0 for some plans to $7,000+ for high-deductible plans.MedicaidA joint federal-state health insurance program for low-income individuals, paying hospitals less than Medicare and covering over 80 million Americans as of 2025.MedicareFederal health insurance for Americans aged 65+ and certain younger people with disabilities, covering hospital stays (Part A), outpatient care (Part B), Medicare Advantage (Part C), and prescription drugs (Part D).Medicare Advantage (Part C)A private health insurance alternative to traditional Medicare that covers Parts A and B and usually Part D, enrolling over half of all Medicare beneficiaries as of 2024.Out-of-Pocket MaximumThe most a patient pays for in-network covered services in a plan year, after which the insurance plan pays 100% of covered services.
Hospital Types
340B HospitalA hospital that qualifies for the federal 340B Drug Pricing Program, purchasing outpatient drugs at prices approximately 25-50% below wholesale acquisition cost to support care for low-income and uninsured patients.Critical Access Hospital (CAH)A small, rural hospital (25 beds or fewer) designated by CMS to receive cost-based reimbursement at 101% of reasonable costs, ensuring rural communities maintain access to essential hospital services.For-Profit HospitalAn investor-owned hospital that operates to generate returns for shareholders, making up about 24% of U.S. community hospitals, paying taxes and distributing profits rather than reinvesting in community benefit.Inpatient Rehabilitation Facility (IRF)A hospital or hospital unit specializing in intensive rehabilitation for patients recovering from stroke, joint replacement, spinal cord injury, and other conditions, paid under its own prospective payment system.Long-Term Acute Care Hospital (LTACH)A specialized acute-care hospital treating medically complex patients requiring hospital-level care for more than 25 days on average, paid under its own prospective payment system separate from IPPS.Nonprofit HospitalA hospital organized as a 501(c)(3) tax-exempt entity, making up about 58% of U.S. community hospitals, that reinvests revenue into the community in exchange for federal, state, and local tax exemptions.Teaching HospitalA hospital affiliated with a medical school that trains resident physicians, typically larger, more complex, and higher-cost than community hospitals, but often offering more advanced care.
Regulation & Oversight
Centers for Medicare & Medicaid Services (CMS)The federal agency within the Department of Health and Human Services that administers Medicare, Medicaid, CHIP, and the ACA marketplace, setting hospital payment rates, quality standards, and the data that HospitalCostData uses.Certificate of Need (CON)A state regulation requiring hospitals to obtain government approval before building new facilities, adding beds, or purchasing major equipment, intended to prevent excess capacity and control costs.Disproportionate Share Hospital (DSH) PaymentsSupplemental Medicare and Medicaid payments to hospitals that serve a disproportionate number of low-income patients, totaling approximately $28 billion annually across both programs.EMTALA (Emergency Medical Treatment and Labor Act)A 1986 federal law requiring Medicare-participating hospitals with emergency departments to provide screening and stabilizing treatment to all patients regardless of ability to pay or insurance status.No Surprises Act (NSA)A federal law effective January 1, 2022 that prohibits surprise billing for most emergency services and out-of-network services provided at in-network facilities, and creates Good Faith Estimate and dispute resolution protections.Observation StatusA Medicare outpatient classification for short hospital stays where patients receive monitoring and treatment without being formally admitted as inpatients, billed under Medicare Part B rather than Part A.Two-Midnight RuleA Medicare policy effective October 1, 2013 that presumptively classifies hospital stays spanning two midnights as inpatient and stays less than two midnights as outpatient observation, with significant payment and patient cost-sharing consequences.
Patient Rights & Protections
Charity Care (Financial Assistance)Free or reduced-cost hospital care provided to patients who cannot afford to pay, required of all 501(c)(3) nonprofit hospitals under IRS Section 501(r) and frequently offered voluntarily by for-profit and government hospitals.Good Faith EstimateA written estimate of expected charges for scheduled healthcare services that uninsured or self-pay patients have the right to receive under the No Surprises Act, effective January 1, 2022.Medical DebtUnpaid healthcare bills, the leading cause of personal bankruptcy in the United States, affecting approximately 100 million Americans who carry some form of medical debt.