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Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Accreditation

Accreditation programs give an official authorization or appeal to an organization against a set of industry-derived standards

Administrative Services Only (ASO)

A type of plan where the insurance company functions as a Third Party Administrator (TPA) and offers only administrative functions including paying claims and possibly supplying stop loss coverage.

Administrator

A type of firm appointed by a self-insured employer or/and IPA to administer its plan.

Advanced Directive

A signed document by the member stipulating how medical treatment should be provided if the member becomes unable to make critical decisions.  An advanced directive may include a durable power of attorney for health care: a “declaration” under the California Natural Death Act (sometimes referred as a “living will”): or any other recognized advanced directive.

Age/Sex Factor

A measurement used in underwriting that represents the age and sex risk for increased medical costs of one population relative to another.

Appeals

The process used by a member to request that the health plan re-considers a previous authorization or denial decision.

Brand Name Drug

A prescription drug that has been patented and is only available through one manufacturer.

 

Capitation

A method of payment in which a health plan, such as an HMO, or a specific health care provider received a prepaid amount for each person eligible to receive services ($ per member per month), regardless of the services used by any specific individual.

Carve-Out Benefit

Specific benefits that are administered separately from the rest of an organization’s basic health insurance package.  Carve-out benefits are frequently (but not always) managed by an intermediary other than the one that administers the firm’s basic insurance plan.  Examples of carve-out benefits include mental health services and substance abuse, dental, vision, eye care, and prescription drugs.

Case Management

A program that assists the member/patient in determining the most appropriate and cost effective treatment plan.  Case management is usually provided to patients who have prolonged expensive and chronic conditions.

Centers for Medicare and Medicaid Services (CMS)

CMS is the federal organization that administers Medicare and Medicaid.  CMS was formerly HCFA (changed on July 1, 2001)

Chemotherapy

Treatment of malignant disease by chemical or biological antinoeplastic agents.

Chiropractic Care

An alternative medicine therapy administered by a licensed Chiropractor.  The Chiropractor adjusts the spine and joints to treat pain and improve general health.

COBRA (see Consolidated Omnibus Budget Reconciliation Act)

Those sections of the Consolidated Omnibus Budget Reconciliation Act of 1985 that regulates the condition and manner in which an Employer must offer continuation of group health insurance to Covered Persons who’s coverage would otherwise terminate under the terms of the Policy.

Coinsurance

The portion of covered health care cost for which the covered person has a financial responsibility, usually according to a fixed percentage.  Often coinsurance applies after first meeting a deductible requirement.

Community Rating

A method determining a premium structure that is not influenced by the expected level of benefit utilization by specific groups, but by expected utilization by the population as a whole.

Concurrent Review

Initiated during the patient’s course of hospitalization, concurrent review evaluates the appropriateness of admission and continued hospital stay.  Concurrent review is an adjunct to precertification and is usually performed on the telephone in the same manner as precertification.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Federal legislation adopted in 1985 which applies to firms with more than 20 employees; provides that 1) employees are allowed to remain covered under their group medical plan for 18 months after leaving their jobs; Employees must pay their own premium but the rates will remain the same as the group; 2) a group medical plan cannot require Medicare to be the primary provider for participants over 70 years fo age and over; 3) Medicare was expanded to include state and government employees.

Coordination of Benefits (COB)

A provision in a contract that applies when a person is covered under more than one group medical program.  It requires that payment of benefits will be coordinated by all programs to eliminate overinsurance or duplication of benefits.

Copayment

A type of cost sharing whereby insured or covered persons pay a specified flat amount per unit of service or unit of time (e.g., $10 per visit, $25 per inpatient hospital stay), their insurer paying the rest of the cost.  The copayment is incurred at the time the service is used.  The amount paid does not vary with the cost of the service (unlike coinsurance, which is payment of some percentage of the cost).

Cost-Sharing

Provisions of health insurance policy which require the insured or otherwise covered individual to pay some portion of his medical expenses.  Cost-sharing mechanisms include deductibles, coinsurance, and copayments.

Custodial Care

The care provided primarily to assist a patient in meeting the activities of daily living such as: help in walking, getting in and out of bed, bathing, dressing, feeding and preparation of special diets, and supervision of medications which are ordinarily self-administer, but not continuing care requiring skilled nursing services.

Deductible

An amount the insured person must pay before payments for covered services begin.  For example, an insurance plan might require the insured to pay the first $250 of covered expenses during a calendar year before the insurance company will begin payment.

Dependent

A person who meets the Dependents eligibility requirements for coverage under the health plan policy.

Diagnostic Tests

Tests and procedures ordered by a physician to determine if the patient has a certain condition or disease based upon specific signs or symptoms demonstrated by the patient.  Such diagnostic tolls include radiology, ultrasound, nuclear medicine, laboratory, pathology services or tests.

Direct Contracting

An arrangement whereby employers, unions, and other “primary” payers bypass insurance companies and HMOs, and contract directly with the organized provider networks (e.g., a hospital system and/or a large physician group).

Discharge Planning

A process undertaken during an inpatient stay to identify the need and arrange for the provision of a patient’s health care requirements after discharge from the hospital.

Drug Formulary

A list of preferred pharmaceutical products that health plans, working with pharmacists and physicians, have developed to encourage greater efficiency in the dispensing of prescription drugs without sacrificing quality.

Durable Medical Equipment (DME)

Mechanical devices, equipment and supplies, which enable a person to maintain functional ability.

Employee Retirement Income Action Act

A federal law that applies to employee welfare plans( health, dental, 401K, etc) and preempts all state laws which regards to reporting and disclosure policies.  HMO’s are exempt from ERISA.

Exclusive Provider Organization (EPO)

A health plan in which patients must go to a participating provider or receive no benefit. This is a cross between an HMO and a PPO (See preferred provider organization). Like a PPO doctors typically are paid on a fee-for-service basis. However, patients have less freedom to go out of network than with a PPO.

Experience Rating

The process of determining the premium rate for group risk, wholly or partially on the basis of that group’s medical claims experience.

Exclusions

Specific conditions or circumstances that are not covered under the health plan benefit agreement. 

Experimental Procedures

Procedures that are mainly limited to laboratory research.

Expiration Date

The date indicated in the contract as the date coverage expires.

Explanation of Benefits (EOB)

A summary statement to the Provider or Member explaining services provided, amount billed and payments to the provider.

Fee-For-Service (FFS)

A method of payment in which each service provided to patients is associated with a corresponding fee to be paid to the provider.

Fee Schedule

A comprehensive listing of fees used by either a health care plan or the government to reimburse physicians and/or other providers on a fee-for-service basis.  A schedule of maximum fees that a medical provider can receive for a procedure covered by the medical insurance plan.

Gatekeeper

A health care professional who coordinates, manages, and authorizes all health care services provided to a covered beneficiary.  Gatekeepers are frequently used by managed care plans as a method for controlling costs through limiting unnecessary utilization of services.  Gatekeepers generally are a physician (e.g., internist, family/general practitioner, pediatrician, and in some cases, OB/GYN), but may also be a nurse, a social worker, or a physician’s assistant.

Generic Drug

A drug which is the pharmaceutical equivalent to one or more brand name drugs.  Such generic drugs have been approved by the Food and Drug Administration as meeting the same standards of safety, purity, strength and effectiveness as the brand drug.

Health Care Financing Administration (HCFA)

See Centers for Medicare and Medicaid Services (CMS)

Health Maintenance Organization (HMO)

Health care delivery system that typically uses contracted primary care physicians to coordinate all health care for enrolled members. HMOs require you to select a primary care physician (PCP). The PCP coordinates your care and refers you to specialists and hospitals. Covered services are usually paid in full after you pay any required copay. Usually there are no deductibles to be met, no claim forms to be completed by the enrollee, and a geographically-restricted service area..  HMOs may be organized differently as represented by the following four models:

HMO-Group

HMO that contracts with one independent group practice to provide health services.

HMO-IPA

HMO that contracts directly with physicians in an independent practice association (IPA), with one or more associations of physicians in independent practice, and/or with one or more multi-specialty group practices to provide health services.

HMO-Network

HMO that contracts with two or more independent group practices to provide health services.

HMO-Staff

HMO that delivers health services through a salaried physician group that is employed by the HMO unit.

Home Health Care

Health services rendered in the home to an individual who is confined to the home.  Such services are provided to aged, disabled, sick or convalescent individuals who do not need institutional care, but who do need nursing services or therapy, medical supplies and special outpatient services.

Home Infusion Therapy

The administration of intravenous drug therapy in the home.  Home infusion therapy includes the following services: solutions and pharmaceutical additives; pharmacy compounding and dispensing services; durable medical equipment; ancillary medical supplies; and nursing services.

Hospice

A facility or service that provides care for the terminally ill patient and who provides support to the family.  The care, primarily for pain control and symptom relief, can be provided in the home or in an inpatient setting.

Indemnity Insurance

Coverage in which the insured is reimbursed by the insurance carrier (company) for his/her medical expenses.  Typically, the choice of physician and hospital is completely up to the patient; there are deductibles, and there are limits to the dollar amount of coverage.  Such coverage is typically offered by insurance companies and Blue Cross/Blue Shield plans.

Inpatient

Service provided after the patient is admitted to the hospital.  Inpatient stays are those lasting 24 hours or more.

Integrated Delivery Network

A group of hospitals, physicians, and ancillary providers joined together to create a system which provides comprehensive health care services through a coordinated, client-centered continuum designed to improve the health of people in specified geographic markets within economic limits (e.g., capitation).

Managed Care

Any form of health plan that uses selective provider contracting to have patients seen by a network of contracted providers and that requires pre-authorization of certain services.

Medically Necessary

A service or treatment which is appropriate and consistent with diagnosis, and which, in accordance with accepted standards of practice in the medical community of the area in which the health services are rendered, could not be omitted without adversely affecting the member’s condition or the quality of medical care rendered.

Medicare

The name commonly used to describe Health Insurance Benefits for the Aged and Disabled provided under Public Law 89097 as amended to date or as later amended.  A federal administrated hospital insurance program and supplementary medical insurance for the aged (individuals over 65) and disabled created by the 1965 amendments of the Social Security Act.

Medicare Beneficiary

A person who has been designated by the Social Security Administration as entitled to receive Medicare benefits.

Medicare Supplement Policy

A participant in a health plan will pay a policyholder’s coinsurance, deductible and copayments and will provide additional health plan or non-Medicare coverage for services up to a predefined benefit limit.  In essence, the product pays for the portion of the cost of service not covered by Medicare.  Also called Medigap and Medicare wrap.

Member

A participant in a health plan (subscriber/enrollee or eligible dependent) who makes up the plan’s enrollment.  Also used to describe an individual specified within a subscriber contract who may or may not receive health care services according to the terms of the subscriber policy.

Network

A defined group of providers typically linked through contractual arrangements

Occupational Therapy

Treatment to restore a physically disabled person’s ability to perform activities such as walking, eating, drinking, dressing, toileting and bathing.

Out-of-Area Benefits

Those benefits that the plan supplies to its subscribers when they are outside the geographical limits of the HMO.  These benefits usually include emergency care benefits and stipulate that within-the-area services for emergency care will be provided until the subscriber can be returned to the plan for medical management of the cases.

Out-of-Pocket Payments

Those expenses borne directly by a patient without benefits of insurance, sometimes called direct costs.  These include patient payments under cost-sharing provisions.

Outpatient

A patient who is receiving care at a hospital, physician office or other health facility without being admitted to the facility for an overnight stay.  The term “ambulatory” is often used to describe outpatient care.

Participating Provider

A provider who has contracted with the health plan to provide medical services to covered persons.  The provider may be a hospital, pharmacy, other facility, or a physician who has contractually accepted the terms and conditions as set forth by the health plan.

Peer Review Organization

An entity established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) to review quality of care and appropriateness of admissions, readmissions, and discharges for Medicare and Medicaid (Medi-Cal).  These organizations are held responsible for maintaining and lowering admission rates and reducing lengths of stay while insuring against inadequate treatment.  Previously known as Professional Standards Review Organization.

Per Diem Rate

A rate set in advance to compensate the hospital or other inpatient facility for a day of care.

Per Member Per Month (PM/PM)

The unit of measure related to each affected member for each month the member was affected.  The calculation is # of units/member months (MM).

Point of Service Plan (POS)

This plan offers participants the option to choose the type of coverage they want before each medical service. It combines elements of an HMO (requiring a primary care doctor) and a PPO (the ability to receive services out-of-network and still have coverage at a reduced rate). If your PCP does not provide or coordinate your care, this choice pays lower benefits.

Precertification

Prior assessment by a payer or payer’s agent that proposed services, such as hospitalization, are appropriate for a particular patient.  Established clinical protocols assist the reviewer in determining whether an admission should be authorized, and for how long.

Pre-Existing Condition

A health condition or medical problem that was diagnosed or treated before in anew health plan or insurance policy.  Some pre-existing conditions may be excluded from coverage.

Preferred Provider Organization (PPO)

Provides a list of contracted 'preferred' providers from which to choose. You receive the highest monetary benefit when you limit your health care services to those providers on the list. If you go to a doctor or hospital that is not on the preferred provider list referred to as going 'out-of-network', then the plan covers a smaller percentage of your health care expenses or may cover none of your health care expenses based on the contract wording of the plan.

Premium

A prospectively determined rate that a subscriber pays for specific health services.  Generally, a comprehensive prepaid health plan will have premium rates for single subscribers and for those with dependents.

Preventive Care

Comprehensive care emphasizing priorities for prevention, early detection and early treatment of conditions, generally including routine physician examinations and immunizations.

Primary Care Physician (PCP)

The member physician responsible for coordinating and controlling the delivery of covered services to the member.  Primary care physicians include general and family practitioners, internal medicine and pediatricians.

Prior Authorization

The process of obtaining coverage approval for a service or medication.  Without such prior authorization, the service or medication is not covered.

Prosthetic Devices

A device which replaces all or portion of a part of the human body.  These devices are necessary a part of the body is permanently damaged, is absent or is malfunctioning.

Quality Assurance/Quality Management

A formal set of activities to review and affect the quality of services provided.  Quality assurance includes quality assessment and corrective actions to remedy any deficiencies identified in the quality of direct patient, administrative, and support services.

Radiation Therapy

Treatment of disease by x-ray, radium, cobalt or high energy particle sources.

Reasonable and Customary

A term used to refer to the commonly charged or prevailing fees for health services within a geographic area.  A fee is considered to be reasonable if it falls with the parameters of the average or commonly charged fee for the particular service within the specific area.

Referral Provider

A provider that renders a service to a patient who has been sent to him/her by a participating provider in the health plan.

Reinsurance

Insurance purchased by an HMO, insurance company, or self-funded employer from another insurance company to protect itself against all or part of the losses that may be incurred in the process of honoring the claims of its participating providers, policy holders, or employees and covered dependents.  Also called risk control insurance or stop-loss insurance.

Respiratory Therapy

Treatment of illness or disease that is accomplished by introducing dry and moist gases into the lungs.

Retrospective Review

A method of determining medical necessity and/or appropriate billing practice for services which have already been rendered.

Risk Pool

A defined account (e.g., defined by size, geographic location, claim dollars that exceed “x” level per individual, etc.) to which revenue and expenses are posted.  A risk pool attempts to define expected claim liability of a given defined account as well as required funding to support the claim liability.

Sanction

A reprimand, for any number of reasons, of a participating provider.

Second Opinion

The voluntary option or mandatory requirement to visit another physician or surgeon regarding diagnosis, course of treatment or having specific types of elective surgery preformed.

Self-Insure

The practice of an individual, group of individuals, employer, or organization assuming complete responsibility for losses which might be insured against, such as health care expenses.  In such cases, health care expenses would be financed out of current income, savings, or a fund developed for the purpose.

Service Area

The geographic area serviced by the health plan as approved by the state regulatory agencies and/or detailed in the certification of authority.

Skilled Nursing Facility (SNF)

A licensed institution (or a distinct part of a hospital) that is primarily engaged in providing continuous nursing care and related services for patients who require medical care, nursing care or rehabilitation services.

Stop-Loss Insurance

Insurance coverage taken out by a health plan or self-funded employer to provide protection from losses resulting from claims over a specific dollar amount per member per year (calendar year or illness to illness).

     Types of stop-loss insurance include:

  • Specific or individual reimbursement is given for claims on any covered individual, which exceed a predetermined deductible, such as $25,000 or $50,000.

  • Aggregate reimbursement is given for claims, which in total exceed a predetermined level, such as 125 percent of the amount expected in an average year.

Subscriber

The person responsible for payment of premiums or who’s employment is basis for eligibility for membership in a HMO or other plan.

Summary Plan Document (SPD)

A booklet that describes the benefits, rights and duties of the employee with regard to the health plan.

Underwriting

A review of prospective and renewing cases for appropriate pricing, risk assessment and administrative feasibility.  1) The bearing of the risk for something; 2) the analysis of a group that is done in order to determine rates, or if the group should be offered coverage at all.

Utilization Review

A formal review of patient utilization or of the appropriateness of health care services on a prospective, concurrent, or retrospective basis.

Workers Compensation

A State-governed system designed to address work-related injuring.  Under the system, employers assume the cost of medical treatment and wage losses arising from a worker’s job-related injury or disease, regardless of who is at fault.  In return, employees give up the right to sue employers, even if the injuries stem from employer negligence.

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