Insurance Terminology

  1. coinsurance: A method of cost-sharing in a health insurance policy that requires a group member to pay a stated percentage of all remaining eligible medical expenses after the deductible amount has been paid.
  2. copayment: A specified dollar amount that a member must pay out-of-pocket for a specified service at the time the service is rendered.
  3. annual maximum benefit amount: The maximum dollar amount set by an managed care organization that limits the total amount the plan must pay for all healthcare services provided to a subscriber in a year.
  4. claim: An itemized statement of healthcare services and their costs provided by a hospital, physician's office, or other provider facility. Claims are submitted to the insurer or managed care plan by either the plan member or the provider for payment of the costs incurred.
  5. claim form An application for payment of benefits under a health plan.
  6. claimant: The person or entity submitting a claim.
  7. deductible: A flat amount a group member must pay before the insurer will make any benefit payments.
  8. electronic medical record (EMR): 16 An automated, on-line medical record containing clinical and demographic information about a patient that is available to providers, ancillary service departments, pharmacies, and others involved in patient treatment or care.
  9. fee-for-service (FFS) payment system: A system in which the insurer will either reimburse the group member or pay the provider directly for each covered medical expense after the expense has been incurred.
  10. fee schedule: 18 The fee determined by an managed care organization to be acceptable for a procedure or service, which the contracted physician agrees to accept as payment in full. Also known as a fee allowance, fee maximum, or capped fee.
  11. formulary: 20 A listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given insured. There are usually cost benefits in using drugs on an insurer’s formulary. Non-formulary drugs are usually covered at a lesser rate and require a greater co-payment by the patient.
  12. fully funded plan: A health plan under which an insurer or managed care organization bears the financial responsibility of guaranteeing claim payments and paying for all incurred covered benefits and administration costs.
  13. generic substitution: 21 The dispensing of a drug that is the generic equivalent of a drug listed on a pharmacy benefit management plan's formulary. In most cases, generic substitution can be performed without physician approval.
  14. grievances: Formal complaints demanding formal resolution by a managed care plan.
  15. Health Insurance Portability and Accountability Act (HIPAA): A federal act that protects people who change jobs, are self-employed, or who have pre-existing medical conditions. HIPAA standardizes an approach to the continuation of healthcare benefits for individuals and members of small group health plans and establishes parity between the benefits extended to these individuals and those benefits offered to employees in large group plans. The act also contains provisions designed to ensure that prospective or current enrollees in a group health plan are not discriminated against based on health status and protects patient privacy.
  16. health maintenance organization (HMO): A healthcare system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee. Patients are usually limited to physicians contracted by the HMO and the primary care provider acts as the gate-keeper in referring patients to specialists.
  17. indemnity wraparound policy: An out-of-plan product that an HMO offers through an agreement with an insurance company.
  18. independent practice association (IPA): An organization comprised of individual physicians or physicians in small group practices that contracts with managed care organizations on behalf of its member physicians to provide healthcare services.
  19. individual stop-loss coverage: A type of stop-loss insurance that provides benefits for claims on an individual that exceed a stated amount in a given period. Also known as specific stop-loss coverage.
  20. lifetime maximum benefit amount: The maximum dollar amount set by an managed care organization that limits the total amount the plan must pay for all healthcare services provided to a subscriber in the sub-scriber's lifetime.
  21. managed care: The integration of both the financing and delivery of healthcare within a system that seeks to manage the accessibility, cost, and quality of that care.
  22. managed care organization (MCO): Any entity that utilizes certain concepts or techniques to manage the accessibility, cost, and quality of healthcare. Also known as a managed care plan.
  23. Medicare: A federal government hospital expense and medical expense insurance plan primarily for elderly and disabled persons. See also Medicare Part A, Medicare Part B, and Medicare Part C.
  24. Medicare Part A: The part of Medicare that provides basic hospital insurance coverage automatically for most eligible persons.
  25. Medicare Part B: A voluntary program that is part of Medicare and provides benefits to cover the costs of physicians' services.
  26. Medicare supplement: A private medical expense insurance plan that supplements Medicare coverage. Also known as a Medigap policy. This may or may not cover Medicare deductibles and may or may not cover all of the remaining costs after Medicare makes a payment. Consult your individual plan for details.
  27. Medigap policy: See Medicare supplement.
  28. member services: The department responsible for helping members with any problems, handling member grievances and complaints, tracking and reporting patterns of problems encountered, and enhancing the relationship between members of the plan and the plan itself. Member services are far more receptive to patient calls than calls from your provider.
  29. network or “in-network”: The group of physicians, hospitals, and other medical care providers that a specific managed care plan has contracted with to deliver medical services to its members. Often referred to as Preferred, as in “preferred providers” in PPO situations. Your insurer will usually cover a greater percentage of the costs when you see in-network or preferred providers. Out-of-network or non-preferred providers might be paid at a lesser amount, or not at all. See your individual plan for details.
  30. no balance billing provision: A provider contract clause which states that the provider agrees to accept the amount the plan pays for medical services as payment in full and not to bill plan members for additional amounts (except for co-payments, coinsurance, and deductibles).
  31. open access: A provision that specifies that plan members may self-refer to a specialist, either in-network or out-of-network, at full benefit or at a reduced benefit, without first obtaining a referral from a primary care provider.
  32. open formulary: 30 The provision that drugs on the preferred list and those not on the preferred list will both be covered by a pharmacy benefit management plan or managed care organization.
  33. out-of-pocket maximums: Dollar amounts set by insurers that limit the amount a member has to pay out of his or her own pocket for particular healthcare services during a particular time period.
  34. outpatient care: Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility.
  35. Patient Bill of Rights: Refers to the Consumer Bill of Rights and Responsibilities, a report prepared by the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry in an effort to ensure the security of patient information, promote healthcare quality, and improve the availability of healthcare treatment and services. The report lists a number "rights," subdivided into eight general areas, that all healthcare consumers should be guaranteed and describes responsibilities that consumers need to accept for the sake of their own health.
  36. point-of-service (POS) product: A healthcare option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan's network or seek medical care outside the network. Using an out-of-network provider usually means the insurer will pay a lesser percentage of the medical costs leaving a greater patient responsibility.
  37. preferred provider arrangement (PPA): As defined in state laws, a contract between a healthcare insurer and a healthcare provider or group of providers who agree to provide services to persons covered under the contract. Examples include preferred provider organizations (PPOs) and exclusive provider organizations (EPOs). Your insurer will usually cover a greater percentage of the cost when you see preferred providers. Out-of-network or non-preferred providers might be paid at a lesser amount, or not at all. It is important to see your individual plan for details.
  38. preferred provider organization (PPO): A healthcare benefit arrangement designed to supply services at a discounted cost by providing incentives for members to use designated healthcare providers (who contract with the PPO at a discount), but which also provides coverage for services rendered by healthcare providers who are not part of the PPO network.
  39. premium: A prepaid payment or series of payments made to a health plan by purchasers, and often plan members, for medical benefits.
  40. primary care provider (PCP): A physician or other medical professional who serves as a group member's first contact with a plan's healthcare system. Also known as a primary care physician, personal care physician, or personal care provider.
  41. prior authorization: 38 In the context of a pharmacy benefit management plan, a program that requires physicians to obtain certification of medical necessity prior to drug dispensing. This term also refers to obtaining certification of medical necessity before performing medical procedures, commonly required with radiological or laboratory testing. Many insurance policies ultimately hold the patient responsible for obtaining the prior authorization. This means that if a procedure is done without authorization and a retrospective authorization cannot be obtained, the patient will bear full financial responsibility for the procedure or test. It is always wise to make sure prior authorization has been obtained where needed.
  42. retrospective authorization: Authorization to deliver healthcare service that is granted after service has been rendered.
  43. self-funded plan: A health plan under which an employer or other group sponsor, rather than an MCO or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members. Also known as a self-insured plan.
  44. specialty services: Services that are provided by independent, specialty organizations rather than by the insurer providing the basic health plan.
  45. stop-loss insurance: A type of insurance coverage that enables provider organizations or self-funded groups to place a dollar limit on their liability for paying claims and requires the insurer issuing the insurance to reimburse the insured organization for claims paid in excess of a specified yearly maximum.
  46. therapeutic substitution: 43 The dispensing of a different chemical entity within the same drug class of a drug listed on a pharmacy benefit management plan's formulary. Therapeutic substitution always requires physician approval.
  47. usual, customary, and reasonable (UCR) fee: The amount commonly charged for a particular medical service by physicians within a particular geographic region. UCR fees are used by traditional health insurance companies as the basis for physician reimbursement.
  48. utilization management (UM): Managing the use of medical services to ensure that a patient receives necessary, appropriate, high-quality care in a cost-effective manner.
  49. utilization review (UR): The evaluation of the medical necessity, efficiency, and/or appropriateness of healthcare services and treatment plans.
  50. utilization review committee: Committee that reviews utilization issues brought to it by the medical director, often approving or reviewing policy regarding coverage, reviewing utilization patterns of providers, and approving or reviewing the sanctioning process against providers.

References:

  1. Guide to Accreditation (Washington, D.C.: American Association of Health Plans, June 1996), 83.
  2. Managed Care at a Glance: Common Terms (Boston, MA: Tufts Managed Institute, 1996), 6.
  3. The National Coalition on Healthcare, "Why the Quality of U.S. Health Care Must Be Improved," (October 1997)
  4. Peter R. Kongstvedt, Essentials of Managed Care, Second Edition (Gaithersburg, VA: Aspen Publishers, Inc., 1997), 74.
  5. Joan D. Biblo, Myra J. Christopher, Linda Johnson, and Robert Lyman Potter, Ethical Issues in Managed Care: Guidelines for Clinicians and Recommendations to Accrediting Organizations (Kansas City, MO: Midwest Bioethics Center, 1995), 3-4, 8, 11-12.
  6. Joan D. Biblo, Myra J. Christopher, Linda Johnson, and Robert Lyman Potter, Ethical Issues in Managed Care: Guidelines for Clinicians and Recommendations to Accrediting Organizations (Kansas City, MO: Midwest Bioethics Center, 1995), 3-4, 8, 11-12.
  7. Capitation: Questions and Answers, (Washington, D.C.: American Association of Health Plans, 1996.
  8. Kenneth Huggins and Robert D. Land, Operations of Life and Health Insurance Companies, 2nd ed. (Atlanta, GA: LOMA, 1992), 259-60.
  9. Kenneth Huggins and Robert D. Land, Operations of Life and Health Insurance Companies, 2nd ed. (Atlanta, GA: LOMA, 1992), 259-60.
  10. Drug Benefit Trends [1995, 7(2):6-10] 1997, SCP Communications, Inc.
  11. Peter R. Kongstvedt, Essentials of Managed Health Care, Second Edition (Gaithersburg, VA: Aspen Publishers, Inc., 1997), 75.
  12. Peter R. Kongstvedt, Essentials of Managed Health Care, Second Edition (Gaithersburg, VA: Aspen Publishers, Inc., 1996), 803.
  13. Jane Lightcap Brown, Insurance Administration (Atlanta, GA LOMA, 1997), 395.
  14. Drug Benefit Trends [1995, 7(2):6-10] 1997, SCP Communications, Inc.
  15. U.S. Congress, Office of Technological Assessment, "Bringing Health Care Online: The Role of Information Technologies," OTA-ITC-624 (Washington, D.C.: U.S. Government Printing Office, September 1995).
  16. Richard Rogenehaugh, The Managed Healthcare Dictionary (Gaithersburg, VA: Aspen Publishers, Inc., 1997), 73.
  17. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 73.
  18. Peter R. Kongstvedt, The Managed Care Handbook, 3rd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1996), 132.
  19. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 74.
  20. Drug Benefit Trends [1995, 7(2): 6-10 1997, SCP Communications, Inc.]
  21. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.]
  22. Institute of Medicine, 1990.
  23. Mail-order pharmacy programs open formulary
  24. Peter R. Kongstvedt, The Managed Care Handbook, 3rd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1996), 802.
  25. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 75.
  26. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 73.
  27. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 76.
  28. Blue Cross Blue Shield Association, Marketing and Selling the Product (Blue Cross and Blue Shield Association, 1993), 34-35.
  29. Joan D. Biblo, Myra J. Christopher, Linda Johnson, and Robert Lyman Potter, Ethical Issues in Managed Care: Guidelines for Clinicians and Recommendations to Accrediting Organizations (Kansas City, MO: Midwest Bioethics Center, 1995), 3-4, 8, 11-12.
  30. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.
  31. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 74.
  32. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.
  33. Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 75.
  34. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.
  35. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.
  36. Managed Care at a Glance: Common Terms (Boston, MA: Tufts Managed Institute, 1996), 5.
  37. 1997 Standards for Credentialing and Recredentialing (Washington, D.C.: National Committee for Quality Assurance, 1997), 70.
  38. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.
  39. Joan D. Biblo, Myra J. Christopher, Linda Johnson, and Robert Lyman Potter, Ethical Issues in Managed Care: Guidelines for Clinicians and Recommendations to Accrediting Organizations (Kansas City, MO: Midwest Bioethics Center, 1995), 3-4, 8, 11-12.
  40. Stephen Blakely, "An Update on Healthcare Pools," Nation's Business 85 (May 1997):51-2.
  41. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.
  42. Kenneth Huggins and Robert D. Land, Operations of Life and Health Insurance Companies, 2nd ed. (Atlanta, GA: LOMA, 1992), 259-60.
  43. Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.