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Key Health Insurance Terms and Definitions
Accreditation – The stamp of approval for a health plan or hospital that
meets predetermined standards. Two organizations that accredit managed care
plans are the National Committee for Quality Assurance (NCQA) and the Joint
Commission on Accreditation of Health Care Organizations (JCAHO). JCAHO also
accredits hospitals and clinics. While NCQA accredits HMO-based health plans,
the Utilization Review Accreditation Commission, or URAC, is the leading
organization that accredits PPO-based plans. (See Health Insurance Basics for
Micro-Businesses.)
Activities of Daily Living (ADL) – Your daily
habits such as bathing, dressing, and eating. ADLs are used as an assessment
tool to determine whether you can function at home after a hospitalization for a
serious injury or illness.
Acute Care – Treatment for an
immediate and severe illness, for the subsequent treatment of injuries related
to an accident or other trauma, or recovery from surgery. You receive acute care
for only a short time, usually in a hospital.
Ambulatory Care –
Health services provided to you outside of the hospital, also known as
“outpatient care.” Ambulatory care centers, hospital outpatient departments,
physicians' offices, and home health care services all fall under this heading,
provided that you don’t stay overnight while receiving treatment.
Ancillary Services – Supplemental services, including laboratory,
radiology, physical therapy, and inhalation therapy that are provided to you
along with medical or hospital care.
Appeal – When you ask your
health insurer to reconsider a decision, such as a claim or treatment denial.
(See Where to Go When You Need Help.)
Balance Billing – The
practice of billing you for the fee amount remaining after your health insurer’s
payment.
Behavioral Health – Includes mental health, psychiatric,
marriage and family counseling, addictions treatment, and substance abuse.
Services can be provided by a wide variety of providers, including social
workers, counselors, psychiatrist, psychologists, neurologists and family
practice physicians.
Benefit Limitations – Any provision which
restricts coverage, regardless of medical necessity. Limitations are often
expressed in terms of dollar amounts, length of stay, diagnosis, or treatment
descriptions. Make sure you receive and read the fine print in your Evidence of
Coverage or Summary Plan Description that comes with your policy.
Benefit Package – The services available to you through your
health plan. The package will detail costs, limitations on the amounts of
services, and annual or lifetime spending limits.
Birthday Rule –
A method of determining which parent’s medical coverage will be primary for
dependent children: the parent whose birthday falls earliest in the year will be
considered as having the primary plan.
Board Certified – A
physician who has passed a written and oral examination given by a medical
specialty board and who has been certified as a specialist in that area.
Board Eligible – A physician who has graduated from an approved
medical school and is eligible to take the specialty board examination. Some
HMOs accept board eligibility as equivalent to board certification.
Cafeteria Plan – An arrangement under which you may select your
own benefits. Sometimes you are offered varying benefit plans or add-ons
provided through the same insurer, other times this refers to plans offered by
different insurers.
Carrier – Any licensed organization, which
underwrites or administers your life, health, or other insurance programs.
Carve Out – A health care delivery and financing arrangement in
which certain services are administered and funded separately from the general
health care services. Common carve outs include such services as psychiatric,
rehabilitation, chemical dependency, and ambulatory services. HMOs and insurers
use this strategy when they don’t have in-house expertise related to the service
that they have "carved out."
Case Management – Method designed to
monitor and coordinate your treatment when you have a specific diagnosis, such
as diabetes or coronary artery disease, or if you require high-cost services.
Case management aims to ensure that you receive the appropriate level of
services delivered in the most cost-effective manner in order to achieve the
best outcome.
Case Manager – A nurse or social worker who works
with you, your doctor, and your insurer to coordinate health care services and
provide you with a plan of necessary and appropriate care.
Catastrophic Health Insurance – Health insurance that protects
you against the high cost of treating severe injuries or lengthy illnesses.
These policies usually cover some, if not all, of your medical expenses above an
amount that is the responsibility of another insurance policy up to a maximum
limit of liability.
Centers for Medicare and Medicaid Services (CMS)
– The Centers for Medicare & Medicaid Services (CMS) is a Federal agency
within the U.S. Department of Health and Human Services. CMS adminsters
Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP).
Certificate of Coverage (COC) – Outlines the terms of your
coverage and benefits.
Centers of Excellence – Hospitals that
specialize in treating particular illnesses or performing certain procedures,
such as cancer or organ transplants.
Charges – The published
prices of services supplied by a provider or facility. There is often a wide
disparity between the amount your doctor or hospital charges you and the amount
your insurer actually pays. This is because your insurance company has
negotiated a lower rate with the provider or facility which is often 40 percent
to 60 percent lower than the published rate. This is why you’re at such a huge
disadvantage if you’re trying to pay for health care out of your own pocket.
Chronic Care – Long term care of persistent diseases or
conditions such as asthma or low back pain. Chronic care promotes self-care to
improve your state of health and prevent further loss of function.
Claim – Your request (or your provider’s) submitted to your
insurer to pay for health care services.
Claims Review – The
process used by insurers to determine whether the services you’ve received are
covered under your policy.
Closed Access – A “gatekeeper” health
plan that requires you to seek treatment only from providers contracted with
that plan.
Closed Panel – Medical services delivered in an
HMO-owned health center or satellite clinic by physicians who belong to a
specially formed, but legally separate, medical group that only serves the
HMO.
Coding – A mechanism for consistently identifying and
defining health care services in order to ease billing procedures and prevent
fraud. The International Classification of Diseases (ICD) is the official system
of assigning codes to diagnoses and procedures associated with inpatient
hospital stays, while Current Procedural Terminology (CPT) codes identify
outpatient services.
Coinsurance – The amount shared by you and
your insurer for covered services after you have met your deductible. This is
expressed in a ratio, typically 80/20 (80 percent paid by your insurer and 20
percent paid by you.)
Comorbid Condition – A medical condition
that exists side-by-side with a principal diagnosis at the time of a hospital
admission that is expected to increase your length of stay by at least one
day.
Comprehensive Major Medical Insurance – A policy which
provides you with a high level of protection against routine and major medical
expenses. It is generally characterized by a low deductible, co-insurance, and a
plan fairly “rich” in benefits.
Concurrent Review – Review of a
procedure or hospital admission done by health care professional (usually a
nurse) other than the one providing your care. Concurrent review is conducted
during a hospital stay to determine the appropriateness of the confinement and
the medical necessity for a continued stay.
Confidentiality – The
protection of your personal information as required by state or federal law or
by policy of your health care provider.
Consolidated Omnibus Budget
Reconciliation Act (COBRA) – Federal law that continues your
employer-sponsored health care coverage for a certain amount of time after you
lose your job.
Conversion – In group health insurance, the
opportunity given to you and any of your covered dependents to change group
insurance to some form of individual insurance, without medical examination upon
the loss of your group insurance.
Coordination of Benefits (COB)
– A method used by insurers to avoid duplicate payments under more than one
insurance policy. A coordination of benefits clause in either policy prevents
double payment by making one insurer the primary payer, and assuring that not
more than 100 percent of the cost is covered.
Copay – Unlike
co-insurance, which is based on a percentage of the cost, a copay is a flat fee
paid for a specific service, such as $15 for an office visit. This cost-sharing
arrangement is typical of an HMO-based plan. (See Health Insurance Basics for
Micro-Businesses.)
Cosmetic Procedure – Treatment, such as a
facelift, which improve your appearance but is not medically
necessary.
Cost Sharing – When you must pay some of your health
care costs out of your own pocket in order to receive care. This includes
deductibles, coinsurance, and copayments, but not your
premium.
Covered Benefit – A medically necessary service that is
specifically provided for under the provisions of your health plan’s Evidence of
Coverage. A covered benefit must always be medically necessary, but not every
medically necessary service is a covered benefit. Always check the fine print in
your health insurance policy.
Credentialing – Process by which a
potential or existing provider must meet certain standards in order to begin or
continue participation in a health care plan or in a hospital medical staff
organization. Credentialing helps determine the quality of personnel by
providing standards for evaluating education, training, and competency.
Deductible – The amount you must pay before your health insurance
benefits kick in. You must meet your deductible each year.
Dependent
– Someone other than yourself who is covered under your health plan. This
may be a spouse, child, unmarried partner, or, in rare instances, a
parent.
Disallowance – When an insurer declines to pay for all or
part of your claim.
Discharge Planning – When after-care services
are determined for discharge from the hospital.
Durable Medical
Equipment (DME) – Medical equipment, such as a walker, that you own or rent
to assist in your home treatment or rehabilitation.
Electronic
Medical Record (EMR) – A computer-based record containing your personal
health care information. This technology, when fully developed, will meet
provider needs for real-time data access and evaluation in medical care.
Elimination Period – The waiting period in a health insurance
policy.
Emergency Medical Treatment and Labor Act (EMTALA) – This
legislation requires hospitals to provide you with emergency treatment,
regardless of your insurance status or ability to pay.
Employee
Assistance Program (EAP) – A service, plan or set of benefits that are
designed for personal or family problems, including mental health, substance
abuse, gambling addiction, marital problems, parenting problems, emotional
problems, or financial pressures. EAP began with a primary drug and alcohol
focus with an emphasis on rehabilitating valued employees rather than
terminating them for their substance abuse problems.
Employee
Retirement Income Security Act of 1974 (ERISA) – This legislation regulates
the majority of private pension and welfare group benefit plans in the U.S.
ERISA exempts most large self-funded plans from State regulation and, hence,
from any reform activities undertaken at the state level.
Evidence or
Explanation of Coverage (EOC) – The booklet provided to you by your insurer
which summarizes the benefits available to you under your
plan.
Evidence of Insurability – Proof of a person's physical
condition that affects acceptability for insurance or a health care contract.
Exclusions – Conditions or situations not covered under your
health plan. Some common exclusions include cosmetic surgery, dental expenses,
and infertility treatment.
Explanation of Benefits (EOB) – The
statement sent to you that explains the services provided, the amount you or
your insurer was billed, any payments that were made, and the amount you owe.
First Dollar Coverage – Insurance coverage with no “front-end”
deductible. Your coverage begins immediately for any covered benefit. It is
common for many plans to provide first dollar coverage for preventive care such
as annual physical exams and immunizations for children.
Flexible
Spending Account (FSA) – An IRS-sanctioned plan that allows you to use
pre-tax dollars set aside from your salary to pay for any unreimbursed health
care or dependent care services.
Formulary – List of prescription
drugs approved by a health plan. Formularies are either "closed," including only
certain drugs, or "open," including all drugs. Both types typically impose a
cost scale requiring you to pay more for brand name drugs, rather than generic.
Gatekeeper – Usually refers to your primary care physician (PCP)
who oversees and coordinates all aspects of your health care. In many managed
care plans, your PCP must preauthorize a visit to a specialist, unless there is
an emergency.
Guaranteed Issue – Requirement that health plans
offer coverage to all businesses during some period each year.
Grace
Period – Period past the due date of a premium during which your coverage
may not be cancelled.
Grievance Procedures – The process by which
you can air complaints and/or appeal a treatment denial.
Group
Insurance – A single contract issued by your employer, or other group
entity, that covers many individuals.
Health Employer Data and
Information Set (HEDIS) – A set of HMO performance measures that are
maintained by the National Committee for Quality Assurance. HEDIS data is
collected annually and provides an informational resource for consumers on
issues of health plan quality.
Health Insurance Portability and
Accountability Act of 1996 (HIPAA) – Primarily affecting the small group and
individual health insurance markets, this legislation was designed to allow the
portability of health insurance between jobs. In addition, it required the
creation of a federal law to protect personally identifiable health
information.
Hold Harmless Clause – A clause frequently found in
managed care contracts whereby the parties agree to indemnify each other for
malpractice or corporate malfeasance if either is found to be liable. It may
also refer to language that prohibits your doctor from billing you if your
managed care company goes bankrupt.
Hospice – Facility or program
providing care for the terminally ill.
Identification Card – A
card given to you and your dependents which identifies benefit eligibility.
Informed Consent – Refers to requirements that health care
providers and researchers explain the purposes, risks, benefits, confidentiality
protections, and other relevant aspects of medical care, a specific procedure,
or participation in medical research. Informed consent is also required for the
authorization of release or disclosure of individually identifiable health care
information under HIPAA.
Inpatient Care – Care given to a
registered bed patient in a hospital, nursing home, or other medical
institution.
Lifetime Limit – A cap on the benefits paid under a
policy. Many policies have a lifetime limit of $1 million, which means that the
insurer agrees to cover up to $1 million in covered services over the life of
the policy.
Mandated Benefits – Benefits that health plans are
required by law to provide.
Medical Information Bureau (MIB) – A
data pool service that stores information on the health histories of persons who
have applied for insurance in the past. Most Life and Health insurers subscribe
to this bureau to get more complete underwriting information on health insurance
applicants.
Medically Necessary – Services or supplies which are
necessary for the symptoms, diagnosis, or treatment of a medical condition. They
meet the standards of appropriate medical practice within the medical community
in your service area and are not primarily carried out for your convenience or
your doctor’s.
Mental Health Parity – Legislation designed to
make sure that insurers provide the same level of coverage for mental health
treatment as that offered for medical and surgical treatments.
National Practitioner Data Bank (NPBD) – The federal government
maintains this computerized data bank which contains information on physicians
against whom malpractice claims have been paid or disciplinary actions have been
taken. Many regulatory agencies require hospitals to use the NPDB prior to
credentialing physicians at their facilities.
Network – An
affiliation of providers through formal and informal contracts and agreements.
Open Access – Open access means that you can visit any
participating network provider without a referral.
Open Enrollment
Period – The period during which you may elect to enroll in, or transfer
between, available programs providing health care coverage, without evidence of
insurability or waiting periods. Under an open enrollment requirement, a plan
must accept all who apply during a specific period each year.
Out-of-Network Benefits – Under most HMO-based plans, you are not
reimbursed for any services provided by a hospital or doctor who does not
participate in the plan’s network. With PPO-based plans, there may be a
provision for reimbursement of "out-of-network" providers, but this usually
involves higher copays and/or lower reimbursements.
Out-of-Network
Provider – A health care provider with whom an insurer does not have a
contract. You must pay either part or all of the costs of care from an
out-of-network provider, depending on the provisions of your health plan.
Out-of-Pocket Expenses – Your portion of health care costs that
are not reimbursed by the insurer, including deductibles, co-payments, and
co-insurance.
Out-of-Pocket Limit – A cap placed on your
out-of-pocket costs, after which benefits increase to provide full coverage for
the rest of the year. It is a stated dollar amount set by your insurer, in
addition to regular premiums.
Outpatient Care – Care given to a
person who is not hospitalized. Many surgeries and treatments are now provided
on an outpatient basis and don’t require an overnight
stay.
Participating Physician – A physician in the insurer’s
service area who has entered into a contract.
Plan Document – The
document that contains all of the provisions, conditions, and terms of a
pension, health, or welfare plan. This document may be written in technical
terms and is different from a summary plan description (SPD) that, under ERISA,
must be written in language that can be understood the average plan participant.
(See ERISA above.)
Portability – A requirement that health plans
must guarantee you continuous coverage without waiting periods if you’re moving
between plans. Your old health plan must give you a certificate of prior
coverage that you pass along to your new plan to guarantee that the new plan
cannot exclude any of your pre-existing conditions. (See HIPAA
above.)
Pre-Certification (Pre-authorization) – Review of “need”
for care before admission. This review determines whether or not your insurer
will pay for the service.
Pre-existing Condition – A medical
condition that you developed prior to applying for, or receiving, a health
insurance policy that may trigger a limitation of your benefits. Some policies
can exclude coverage of such conditions, often indefinitely. New statutes in
1997 and 1998 altered the freedom other health plans have enjoyed in setting
pre-existing time limits. (See HIPAA above.)
Preventive Care –
Health care that emphasizes prevention, early detection, and early treatment,
thereby ultimately reducing health care costs. Health care that focuses on
keeping you well in addition to helping you when you are sick.
Primary Care – Basic or general health care given by general
practitioners, family practitioners, internists, obstetricians, and
pediatricians with referral to secondary care specialists, as necessary.
Protected Health Information – Under HIPAA, this refers to
individually identifiable health information transmitted or maintained in any
form. (See HIPAA above.)
Reasonable and Customary Charges – These
charges are those which are most often made by a provider for services rendered
in a particular geographic area.
Referral – Permission from your
doctor to consult with another physician or hospital.
Report Card
– An accounting of the quality of services, compared among providers over
time. You can use report cards to choose a health plan or doctor, or check up on
the overall program effectiveness of your current plan or provider.
Risk Pool – Legislatively created programs that group individuals
together who cannot secure coverage in the private sector.
Second
Surgical Opinion – A cost containment technique to help you and your insurer
determine whether a recommended procedure is necessary, or whether an
alternative method of treatment could accomplish the same result. Some health
policies require a second surgical opinion before specific procedures will be
covered.
Section 125 Plan – A plan which provides flexible
benefits. This plan qualifies under the IRS code which allows employee
contributions to meet with pre-tax dollars. (See Flexible Spending Accounts
above.)
Self-Funded Plan – Plan that is funded by the employer
rather than an insurer.
State Children's Health Insurance Program
(SCHIP) – Created in 1997 by the Balanced Budget Act, SCHIP gave each state
permission to offer health insurance for children, up to age 19, who are not
already insured. SCHIP is a state-administered program and each state sets its
own guidelines regarding eligibility and services.
Third Party
Administrator (TPA) - An independent organization that provides
administrative services including claims processing and underwriting for other
entities, such as insurance companies or employers.
Triage - The
act of categorizing patients according to the severity of their health. Triage,
most commonly used in emergency rooms, is designed to maximize the most
efficient use of medical resources and personnel.
Utilization Review
– A cost control mechanism by which the appropriateness, necessity, and
quality of health care is monitored by both insurers and
employers.
Waiting Periods – The length of time an individual must
wait to become eligible for benefits for a specific condition after overall
coverage has begun.
Wellness – In health care, wellness refers to
preventive medicine and the associated lifestyle that promotes general
well-being and reduces health care usage and costs.