Reference

The Business of Medicine Glossary

The terms medical school rarely explains — billing, insurance, contracts and practice ownership — in plain English.

These are the words that decide how medicine is paid for. The Dark Side of Medicine argues that every physician — and every patient — should understand them. Definitions are general and simplified; rules change, and nothing here is legal, financial or billing advice.

Ambulatory surgery center (ASC)

A licensed facility for procedures that don't need a hospital stay — patients go home the same day. Many are owned wholly or partly by physicians, and they are paid under their own Medicare payment system, usually at lower rates than hospital outpatient departments.

Capitation

A payment model in which a provider receives a fixed amount per patient per month to cover an agreed set of services, regardless of how much care each patient uses. It shifts financial risk from the insurer to the provider.

Chargemaster

A hospital's master list of prices for every service, drug and supply. Few patients or insurers pay these list prices, but they are the starting point for bills and negotiations — one reason itemized hospital bills can look so high.

Claims-made vs. occurrence malpractice insurance

An occurrence policy covers incidents that happen while the policy is active, whenever the claim is filed. A claims-made policy covers claims filed while it is active, so a doctor who changes jobs often needs "tail" coverage for claims that arrive later.

Concierge medicine

A practice model in which patients pay a membership or retainer fee for more access to their physician — longer visits, same-day appointments, direct contact. Some concierge practices also bill insurance for covered services; others don't.

CPT code

Current Procedural Terminology: the five-character codes, maintained by the American Medical Association, that describe what a clinician did — a visit, a test, a procedure. Most professional billing in the U.S. is built on them.

Credentialing

The process of verifying a clinician's training, licenses and history before a hospital grants privileges or an insurer adds them to its network. Many commercial insurers draw this information from a shared database called CAQH.

Defensive medicine

Ordering tests, consultations or procedures mainly to reduce the risk of being sued rather than because they are clearly needed. It is widely discussed as a contributor to healthcare costs.

Denial (claim denial)

An insurer's refusal to pay all or part of a claim — for missing information, coding errors, lack of prior authorization or medical-necessity disputes. Managing denials is a large part of a practice's revenue cycle.

DRG (diagnosis-related group)

The system Medicare and many insurers use to pay hospitals a set amount for an inpatient stay based on the patient's diagnosis, procedures and complications, rather than itemizing every service. Accurate documentation determines which DRG applies.

Employed vs. independent physician

An employed physician works for a hospital, health system or large group and is paid a salary, often with productivity bonuses. An independent physician owns or co-owns a practice and carries its business risk — and its rewards.

Facility fee

A charge billed by a hospital or hospital-owned clinic for use of its space, equipment and staff, separate from the physician's professional fee. The same visit can cost more in a hospital-owned setting because of it.

Fee schedule

A list of what a payer will pay for each service. Medicare publishes its Physician Fee Schedule every year; commercial insurers negotiate their own schedules with practices and hospitals.

ICD-10 code

International Classification of Diseases codes, used to record diagnoses. A claim pairs ICD-10 codes (why the patient was seen) with CPT or procedure codes (what was done).

In-network vs. out-of-network

An in-network provider has a contract with an insurer at agreed rates; an out-of-network provider doesn't. Patients usually pay more out of network, and federal rules now limit some surprise bills.

Locum tenens

Temporary physician work covering for another doctor or filling a staffing gap, usually arranged through an agency. Many physicians use it early in their careers or alongside other work.

Medicaid

A joint federal and state program that covers health care for people with low incomes. Each state runs its own program within federal rules, so eligibility and payment rates vary widely.

Medicare

The federal health insurance program for people 65 and older and some younger people with disabilities. Part A covers hospital care, Part B physician and outpatient care, and Part D prescription drugs.

Medicare Advantage

Private health plans approved by Medicare that provide Part A and B benefits (and often drug coverage) in place of traditional Medicare. They are paid by Medicare and often use networks and prior authorization.

Non-compete clause

A contract term limiting where and for how long a physician may practice after leaving an employer. Enforceability depends on state law, and it is one of the most important terms to understand before signing a first contract.

NPI (National Provider Identifier)

A unique 10-digit number every U.S. healthcare provider uses on claims. Individuals and organizations each have their own, and many online directories copy their details from the national NPI registry.

Office-based lab (OBL)

A procedure suite run inside a physician's practice — common in vascular and interventional care — where certain catheter-based procedures can be performed outside a hospital.

Prior authorization

An insurer's requirement to approve a test, procedure or drug before it is provided in order for it to be covered. It is a major administrative burden for practices and a frequent cause of delays.

Professional fee

The charge for a clinician's own work — the exam, the reading of a test, the procedure itself — billed separately from any facility fee.

Revenue cycle management

Everything between a patient's appointment and the practice being paid: registration, insurance checks, coding, claim submission, follow-up on denials and patient billing. Many practices outsource part of it.

RVU (relative value unit)

A measure Medicare uses to rank services by the work, practice expense and malpractice cost involved. Work RVUs (wRVUs) are also widely used to set employed physicians' productivity pay.

Sale-leaseback / owning your building

Arrangements in which a physician (often through a separate company) owns the property a practice uses and leases it back to the practice — the idea behind the book's "own your building" advice. Leases between related parties must be at fair market value and structured with legal and tax advice.

Stark Law and the Anti-Kickback Statute

Federal laws that restrict physician self-referrals and payments for referrals in Medicare and Medicaid. Any arrangement between physicians and facilities they refer to — leases, ownership, compensation — needs to be structured with healthcare counsel.

Telehealth

Care delivered remotely by video, phone or messaging. Its use and coverage expanded sharply during the COVID-19 pandemic, and payment rules continue to evolve.

Value-based care

Payment approaches that reward quality and outcomes rather than the number of services — for example, shared-savings programs and accountable care organizations (ACOs).

The book puts these terms in context, with the stories and numbers behind them.

Buy The Dark Side of Medicine

General information only — not legal, financial, tax or billing advice. Last reviewed October 2026.