Healthcare finance glossary.

A non-recourse receivables purchase is the outright sale of an unpaid invoice or insurance claim to a buyer who assumes the risk of non-payment, so the seller keeps the cash even if the claim is later denied.

A true sale is a transaction in which a seller transfers full legal ownership of an asset, such as an insurance claim, to a buyer, so the asset leaves the seller's books and the proceeds are not borrowed money.

Accounts receivable financing is a category of arrangements in which a business raises capital against its unpaid invoices or claims, either by borrowing with the receivables as collateral or by selling the receivables outright.

Medical factoring is an arrangement in which a healthcare provider sells its unpaid claims to a third party called a factor, which advances a portion of the value upfront and typically takes over collecting the claim from payers and patients.

Healthcare asset-based lending is a form of secured borrowing in which a provider takes a loan backed by its assets, commonly its accounts receivable, and the lender files a lien against that collateral until the loan is repaid.

A merchant cash advance is a financing product in which a provider receives a lump sum upfront in exchange for a fixed repayment amount, collected through automatic daily or weekly debits from the business's revenue or bank account.

Non-recourse is a financing or sale arrangement in which the buyer or lender has no right to reclaim money from the seller if the purchased asset is not paid, so the risk of non-payment transfers entirely to the buyer.

Recourse is a financing or sale arrangement in which the buyer or lender can reclaim money from the seller if a purchased claim is not paid, so the seller stays on the hook for non-payment even after receiving cash.

Denial management is the process a practice uses to track, appeal, and prevent insurance claim denials so that more submitted claims are ultimately paid.

Days in AR is the average number of days a healthcare practice waits to collect payment on its claims, calculated by dividing total accounts receivable by average daily charges.

Claim adjudication is the process a payer uses to review a submitted insurance claim and decide whether to pay it in full, pay it in part, or deny it.

Prior authorization is a payer requirement that a provider get approval before delivering a service, so the payer confirms it will cover that service for the patient.

PDGM, the Patient-Driven Groupings Model, is the Medicare payment system for home health that pays agencies based on 30-day periods of care and patient characteristics rather than the volume of therapy visits provided.

A 277CA is the electronic acknowledgment a payer or clearinghouse returns after a claim is submitted, confirming whether the claim was accepted for processing or rejected before adjudication.

An 837P claim is the X12 EDI transaction used to submit a professional healthcare claim electronically, carrying the same service-line, CPT, diagnosis, and provider data that the paper CMS-1500 form would otherwise hold.

An 835 remittance advice is the X12 EDI transaction a payer sends to report how it adjudicated one or more claims, detailing what was paid, what was adjusted, and why, line by line.

A 271 eligibility response is the X12 EDI transaction a payer returns to answer a 270 eligibility inquiry, confirming whether a patient is covered and reporting the specifics of their benefits.

A UCC-1 on purchased receivables is a public UCC financing statement a buyer files to give record notice that it owns specific claims it has purchased, covering only those receivables and not the practice's other business assets.

Expected net reimbursement (ENR) is the amount a claim is realistically expected to pay after a payer applies its contractual adjustments, which is almost always less than the provider's billed charge.

An advance rate is the percentage of a claim's expected value that a buyer pays the provider upfront at the time of purchase, with the rest released once the payer settles the claim.

A discount fee is the difference between what a buyer pays for a claim and what that claim ultimately collects, disclosed upfront as the buyer's compensation for purchasing the claim.