Glossary of Health Insurance Terms
Access: Right to enter or use health care
services.
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Acquisition Cost: The cost to an
insurer to acquire new business. It includes costs such as underwriting
the risk, issuing a new policy, paying commissions and overhead or office
expenses.
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Activities of Daily Living
(ADLs): Everyday activities which are used to measure an individual's
ability to function independently. ADLs define the disability in long term
care insurance. The loss of some number of ADLs is an insuring or
triggering event in all long term care policies. In California, Senate
Bill 1943 established seven standard activities of daily living (eating,
bathing, dressing, toileting, continence, transferring, ambulating) for
any LTC policy that purports to cover home care in it's provisions. A loss
of 2 to 7 of the ADLs will qualify an insured for benefits. There are LTC
programs in California that do not comply with S.B.1943 (California
Partnership and CALPERS). These programs have more stringent insuring
clauses. ADLs and the loss necessary to trigger benefits may vary from
state to state. Additionally, despite standardization, companies choose to
define the inability to perform an ADL differently. The NAIC is working to
set national standards for ADL definitions.
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Actual Charge: The amount a physician
or supplier actually bills for a particular medical services or supply.
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Actuary: A professional who mathematically
analyzes and determines the price of the risk associated with providing
insurance coverage. An actuary may also determine the anticipated cost of
providing future benefits. Factors considered in the study include the
projection of future claims experience, administrative expenses and
anticipated investment return.
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Acute Care: Care for illness or injury
that develops rapidly, has pronounced symptoms ad is finite in length.
Traditional medical insurance, Medicare and Medicare supplements are
designed to provide coverage for acute illness.
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Adjusted Average Per Capita Cost (AAPCC): Health Care
Financing Administration (HCFA) basis of payment to HMOs and CMPs.
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Adjusted Community Rate
(ACR): Uniform capitation rate that is charged to all enrollees in a
plan based on adjustments for risk factors such as age and sex.
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Administrative Services Only (ASO): A type of contract with
an insurance company or a third-party administrator that provides an
employer with administrative services. It does not provide coverage for
risk of insurance protection. The usual expenses covered include claims
processing, plan design advice and printing benefit booklets. These
contracts are usually entered into by large employers who can afford the
risk of providing insurance protection with their own money.
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Administrator: A person who is
designated to be responsible for the proper operation and administration
of a plan. When the plan sponsor does not designate a person for this
duty, the ERISA considers the pan sponsor to be the plan administrator.
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Adult Day Care: Social, recreational
and/or rehabilitative services provided for persons who benefit from
daytime supervision. An alternative between care in the home or in a
institution.
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Adverse Selection: A tendency
which occurs when a person makes a decision based on his/her diminished
health condition or frequency of needed treatment and is, therefore
considered a poorer claims risk than most others in the group.
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Aid to Families with Dependent Children (AFDC): Public
assistance program that provides payment to families with children 18
years of age and under who have an income below a defined poverty line.
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Agent: Licensed by the state, performs the
functions for sole proprietors and small businesses that Human Resource
Departments do for larger businesses, gathers census data, prepares
proposals, makes presentations to businesses, explains benefits to
employers, and employees, does field underwriting when required, delivers
policies and certificates, assists in handling claims, performs other
related tasks required by the employer or sole proprietor.
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Aggregate Amount (limit): Maximum
amount of total losses for which a plan sponsor (employer) is liable for
any one-plan year.
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Ageism: Prejudice against people because of
their age.
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Alternate Care Benefit:
Payment for a special arrangement of services specifically designed to
allow the person to reside in a setting other than a nursing facility
(i.e. services to provide assistance, capital improvements such as a ramp,
and/or durable medical support.
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Alternative Care Benefit:
payment for a special arrangement of services specifically designed to
allow the person to reside in a setting other than a nursing facility
(i.e. services to provide assistance, capital improvements such as a ramp,
and/or durable medical equipment.
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Alternate Care Facility: (1)
A hospice; or (2) a place that provides ongoing care to inpatients in one
location and which (a) provides 24-hour care and services sufficient to
support needs resulting from inability to perform activities of daily
living or cognitive impairment; (b) has a trained and ready-to-respond
employee to provide such care; (c) provides three meals a day and
accommodates special dietary needs; (d) is appropriately licensed or
accredited; (e) has formal arrangements for the services of a physician or
nurse to provide emergency medical care; and (f) has appropriate
procedures for handling administering drugs.
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Alzheimer's Disease: A form of
organic dementia resulting in premature mental deterioration, first
described in 1906 by German neurologist, Alois Alzheimer. In California,
as well as most of the rest of the United States, Alzheimer's Disease is
considered a cognitive impairment, thus triggering benefits under long
term care insurance policy.
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Ambulatory Care: Medical services
provided on an outpatient (non-hospitalized) basis. Services may include
diagnosis, treatment, surgery, and rehabilitation.
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Ancillary Services: Health care
services conducted by providers other than physicians and surgeons. These
will usually include such services as physical therapy and home health
care.
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Annual Benefit Cap: Maximum
amount paid for specific medical services or total medical services.
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Approved Amount: The amount Medicare
determines is reasonable for a service covered under Medicare Part B. It
may be less than the actual charge. For many services, including physician
services, the approved amount is taken from a fee schedule that assigns a
dollar value to all Medicare-covered services that are paid under that fee
schedule.
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Assessment: A determination of physical
and/or medical status by a health professional based on established
medical guidelines. The assessment is a central component in home care
coverage's and the payment of home care claims. Upon the triggering of
benefits, due either to the loss of some number or activities of daily
living or a cognitive impairment, an assessment is performed by a
multidisciplinary team. This "team" usually spearheaded by the insured's
physician, determines the level of functional incapacity and develops a
plan of care that will be followed in assisting the insured in the
performing the ADLs and IADLs (instrumental activities of daily living).
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Assignment: An arrangement whereby a
physician or medical supplier agrees to accept the amount approved by
Medicare as full payment for services and supplies under Part B. Medicare
usually pays 80% of the approved amount directly to the physician or
supplier after the beneficiary meets the annual Part B deductible of $100.
The beneficiary pays the other 20 percent.
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Assignment of Benefits: When
the insured authorizes the insurer or claims payer to pay benefits
directly to the medical care provider.
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Assisted Living: A non-medical
institution providing room, board, laundry, some form of personal care and
usually recreational and social services. Licensed by state departments of
social services, these facilities exist under several names including
domiciliary care facility,, sheltered house, board and care, community
based residential care facilities and alternate care facilities.
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ASO: A type of contract with an insurance
company or a third party administrator that provides an employer with
administrative service. It can include coverage for a certain amount of
claims risk. The usual administrative expenses include claims processing,
plan design advice and printing benefit booklets. Large employers who can
afford the risk of providing insurance protection with their own money
usually enter into these contracts.
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Attachment Point: For aggregate
stop-loss insurance, it is the point at which the stop-loss insurance
carriers begin to reimburse the employer based upon the cumulative total
of claims paid within a policy year.
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Authorizations: Consent or
endorsement by a primary care physician for patient referral to ancillary
services and specialists.
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Average Length of Stay: One
measure of use of health facilities, reported as an average number of
inpatient days spent in a hospital or other health care facility per
admission or discharge. It is calculated as follows: total number of days
in the facility for all admissions during a particular period divided by
the number of admissions during the same period. Average lengths of stay
vary and are measured by age, specific diagnosis, or sources of payment.
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Balance Billing: Specific deductible
is the point at which the stop-loss insurance carrier begins to reimburse
the employer based upon the individual's total of claims paid within a
policy year. Also, the practice of medical care providers (such as
doctors, hospital, or other medical practitioner) billing the insurer for
full costs, then billing the insured for the portion of the bill which was
not paid. Many Managed Care plans prohibit the use of balanced billing and
may use sanctions against providers who balance the bill.
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Benchmark: Point of comparison between
desired clinical outcome and actual practice.
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Beneficiary: The person entitled to
receive benefits under a plan, including the covered employee and his or
her dependents.
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Benefit: Amount an insurance company pays to
a claimant, assignee, or beneficiary when the insured suffers a loss
covered by the policy.
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Benefit Increase Options:
Also known as automatic benefit increase option, automatic increase
benefit, and cost of living adjustment benefit. These are optional
benefits that provide for annual increases in the benefit amount to offset
the effects of inflation. Benefit increase options are paid for at the
time of issue and either increases the daily policy benefits by a 5%
compounded or simple interest factor. A key element to remember is that
the increases begin at the second policy anniversary and continue for the
duration of the policy, except where the insurance carrier "caps" the
increase at some predetermined amount. These increase options are not to
be mistaken with future insurability options.
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Benefit Period: A benefit period is a
way of measuring a beneficiary's use of hospital and skilled nursing
facility services covered by Medicare. A benefit period begins the day the
beneficiary is hospitalized. It ends after the beneficiary has been out of
the hospital or other facility that primarily provides skilled nursing for
rehabilitation services (or, if in the latter type of facility, has not
received skilled care there) for 60 days in a row. If the beneficiary is
hospitalized after 60 days, a new benefit begins period begins, most
Medicare Part A benefits are renewed, and the beneficiary must pay a new
impatient hospital deductible. There is no limit to the number of benefit
periods a beneficiary can have.
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Cafeteria Plan: A plan which offers a
choice between two or more benefits, or a choice between cash and one or
more qualified benefits, and which complies with Section 125 of the
Internal Revenue Code. (Also known as flexible benefit plans or "flex"
plans).
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Capitation: Method of compensation, used
primarily by HMOs, to pay providers a fixed amount for each enrollee
regardless of the actual number or nature of services provided to each
person.
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Carve-Out: Term used to describe certain
services not included in capitated benefits that are paid for separately
on a predetermined fee-for-service basis.
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Case Management: Planned approach to
manage service or treatment to an individual with a serious medical
problem. Its dual goal is to contain costs and promote more effective
intervention to meet patient needs. Often referred to as large case
management.
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Centers of Excellence:
Providers who are selected to perform certain specialized procedures
because of their expertise and willingness to provide discounts.
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Chronic Care: Care for illness
continuing over a long period of time or recurring frequently. Chronic
conditions often begin inconspicuously and symptoms are less pronounced
than acute conditions. Long term care insurance is designed to assist
people who have a loss of capacity due to chronic illnesses.
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Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS): Federal program providing cost-sharing
health benefits for dependents and survivors of active duty personnel and
for retirees and their dependents and survivors.
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Claim: Demand to the insurer by an insured
person for the payment of benefits under a policy.
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Closed Panel: Managed care plan that
contracts with physicians on an exclusive basis that requires the insured
to use a list of certain providers. The primary provider is responsible
for all health care needs and refers to a specialty physician or
hospitalization only when medically needed.
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Coalitions: An association of health care
plan sponsors who pool their resources to negotiate with insurers or other
health care payers and providers.
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COBRA (Consolidated Omnibus Budget Reconciliation
Act of 1985): A federal law that requires most employers to allow
eligible employees and their beneficiaries to continue to self-pay for
their coverage after it normally terminates for up to 18, 24, 29 or 36
months.
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Cognitive Impairment:
Deterioration in intellectual capacity which (1) requires regular
supervision to protect patients and others; (2) must be determined by
clinical diagnosis or test; and (3) may be the result of Alzheimer's
disease, senile dementia, or other nervous or mental disorders of organic
origin.
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Co-insurance: An agreement between the
insured and the insurance company where payment is shared for all claims
by the policy. A typical arrangement is 80%/20% up to $5,000. The
insurance company pays 80% of the first $5,000 and the insured pays 20%.
Usually after 80% of $5,000, the insurance company then pays 100% of
covered expenses during the remainder of the calendar year up to any
limits of the policy. This is also referred to as co-payment.
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Commission: Part of an insurance premium,
which is paid by an insurance company to an agent or broker for procuring
and servicing the business for the insurance company/client. Depending
upon the size of the group being insured, these commissions average
between three and ten percent of the premium paid by the employer.
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Community-Rated: Method of
developing group-specific capitation rates by a health plan that generally
does not account for unique characteristics of the group. The rate is
based on the total experience of a given geographic area or "community."
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Community-Rating: A rating method
that determines a single average premium based on the characteristics and
claims experience of an entire membership such as an HMO or an insurance
pool. Age, lifestyle, industry, health factors and gender are not used to
determine rates (See Adverse Selection).
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Competitive Medical Plans
(CMPS): Health care organization that meets specific government
criteria for Medicare risks contracting but is not necessarily a HMO.
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Concurrent Review: Method of
utilization review that takes place on-site when a patient is confined to
a hospital.
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Congregate Housing: Apartment
houses or group accommodations that provide health care and other support
services to functionally impaired older persons who do not need routine
nursing care.
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Conversion Privilege: A
contractual right given to an insured person whose group coverage
terminates so that person is able to convert to an individual policy
without providing evidence of insurability.
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Coordination of Benefits
(COB): A contractual provision to prevent an insured from receiving
benefits under more than one health insurance plan so that the insured's
benefits from all sources do not exceed allowable medical expenses or
eliminate appropriate patient incentives to contain cost.
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Co-payment: A small charge paid at the
time a medical service is received. It does not accumulate towards a
plan's deductible or out-of-pocket maximum and is designed to discharge
utilization. (See Co-insurance)
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Cost Containment: Efforts or
activities designed to reduce or slow down the cost increases of medical
care services.
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Cost Sharing: The sharing of costs
between the payment of premium cost and medical expenses by the health
care plan and its insured through employee contributions, deductibles,
co-insurance and co-payments.
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Cost Shifting: The increased cost of
medical care to other patients that makes up for losses incurred in
providing care to patients who are under-insured or who have no coverage.
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Coverage: The different types of options
selected and the benefits paid under a plan or insurance contract.
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Covered Expense(s): An expense that
will be reimbursed according to the terms of the plan or insurance
contract. Credentialing Review and documentation of professional providers
including licensure, malpractice history, analysis of practice patterns,
and certification.
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Current Procedural Terminology (CPT): Set of five-digit
codes describing medical services that are used for billing by
professional providers.
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Custodial Care Facilities:
A licensed facility that provides personal assistance to persons who are
unable to care for themselves due to age, illness, physical or mental
infirmity, but who do not require daily nursing care.
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Customer: User of health care services,
such as patients getting care or providers getting support services from
laboratories; payer of service, such as individuals, employers, or the
government; or the general public.
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Deductible: The amount of covered
expenses that the insured must pay before a plan or insurance contract
starts to reimburse for eligible expenses.
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Defense Medicine: Extensive use of
laboratory testing, treatment, increased hospital admissions, and extended
hospital stays that are not medically necessary for the treatment of the
patient; the sole purpose of reducing the possibility of malpractice suits
by the patient or providing a good legal defense in the event of such
lawsuits.
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Dementia: The severe impairment of
cognitive functions (thinking, memory and personality). Of our elderly
population, 5 to 6 percent have dementia. Alzheimer's Disease causes
approximately one-half of these causes, vascular disorders (multiple
strokes) case one-fourth and the other dementia's are caused by
alcoholism, heart disease, infections, toxic reaction to medication and
other rarer conditions. While impairment from Alzheimer's Disease and
vascular disorders is permanent, dementia caused by other conditions can
usually be corrected.
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Diagnosis-Related Groups
(DRGs): System of determining specific reimbursement fees based on the
medical diagnosis of a patient.
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Discharge Planning: Assessment of
an inpatient's medical condition for the purpose of arranging for
appropriate continuing care upon leaving the facility. This planning
includes how long the patient will be in the hospital, the expected
outcome, and whether there are special needs or requirements on discharge.
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Divestment: In reference to eligibility
for Medicaid, the disposal of resources at less than fair market value in
order to qualify for benefits.
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Dual Choice: An arrangement where an
employer will offer an alternative in addition to its original health
plan.
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Durable Power of Attorney:
An individual's appointment of a representative to act on his or her
behalf via a legal document that remains in effect of incapacity of the
grantor.
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Eligible Expense(s): The portion of
the medical care provider's services that are covered for payment under
the terms of the health plan or insurance contract.
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Elimination Period: The number of
days in which you receive covered care or services before benefits are
payable.
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Employee Retirement Income Security Act of 1974 (ERISA): A federal law that originally set minimum standards
for funding, vesting and termination of employer-sponsored pension plans.
ERISA also contains provisions to protect the interests of participants
and beneficiaries in welfare plans. Welfare plans must be in written form,
describe the benefits and name the persons responsible for the operation
of the plan.
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Enrollee: health plan participant, member,
or eligible individual in a managed Care program.
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Evidence of Insurability: A
procedure used to review factors concerning a person's physical condition
and medical history. From this information, the plan or insurance company
evaluates whether the risk of the individual will be accepted and if they
will offer coverage.
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Exclusion: Specific conditions or services
that are not covered by the terms of the plan or insurance contract.
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Exclusive Provider Organization (EPO):
Arrangement consisting of a group of providers who have a contract with an
insurer, employer, third-party administrator, or other sponsoring group.
Criteria for provider participation may be the same as those in PPOs but
have more restrictive provider selection and credentialing process or
otherwise forfeit reimbursement altogether.
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Expected Claims: A dollar amount,
which represents the expected claims, which will be paid during any plan
or contract period.
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Experience: Refers to the history of
actual claims paid for the contract period (see Paid Claims) or can refer
to the history of claims incurred during a contract period.
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Experience-Rated: Determination of
premium or capitation rates for a group risk based wholly or partly on
that group's previous cost and utilization experience.
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Explanation of Benefits (EOB): A document sent
to an insured when the plan or insurance company handles a claim. The
document explains how reimbursement was made, or why the claim was not
paid, and if any additional information is needed. The appeals procedure
should be outlined to advise the insured of his/her rights if there is
dissatisfaction with the decision.
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Extended Benefits: Benefits which
continue, or become payable, after the termination of coverage from a plan
or insurance contract, for example a hospitalization which continues after
coverage would normally cease.
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Federally Qualified: Voluntary
federal certification for HMOs.
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Federally Qualified Health Center: Another way to limit your
health care costs is to go to a federally qualified health center (FQHC)
for the type of care generally provided in a doctor's office.
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Fee-for-Service Reimbursement: Payment for services based on
each visit or service rendered. Under this arrangement Plans or Insurers
have not established contracted or capitated rates of payments with
providers prior to the insured claim occurrence.
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Fee Schedule: Maximum dollar or unit
allowances for health services that apply under a specific contract.
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Fiduciary: Under ERISA, any person who
exercises discretionary authority or control over a plan or plan assets.
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Fixed Costs: Refers to those costs which
are payable monthly and which do not relate to actual claims paid or
incurred, for example, premium and administration costs.
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Flexible Spending Accounts: Special accounts typically
funded by an employee's salary reduction to help pay certain expenses not
covered by the employer's plan or insurance contract. The advantage of
these accounts is that after-tax dollars are converted to before-tax
dollars, thereby reducing the actual cost of expenses.
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Formulary: List of preferred
pharmaceutical products to be used by a managed care plan's network
physicians. Formularies are based on evaluations of the efficacy, safety,
and cost effectiveness.
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Fraud: Fraud in the health care system may
include areas such as offering free tests or services and billing the
insurer or plan, or for charging for services no rendered.
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Freestanding Plan: Unbundled or
separate health care benefits apart from the basic health care plan,
usually dental or vision care. Employees are allowed either to select the
separate benefit or decline it for other alternatives. This choice of
freestanding plans is often referred to as "cafeteria-type" benefits.
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Fully Insured Plan: The employer
pays the entire premium and, in return, transfers all of the risk and
responsibility for claims payments to the insurance company.
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Gatekeeper: (Primary Care Physician) A
health professional within a managed-care environment who determines the
patient's access to treatment. The primary care physician treats the
patient and determines necessity of access to further treatment and
specialists.
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Gatekeeper Question: A
qualifying question asked by an insurance company at the time of
application to help identify risk(s). Example: "Have you ever been treated
for a heart attack or heart condition?"
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Geriatrics: The study of physical and
mental changes in persons as they age - including the diagnostic,
treatment and prevention of disorders.
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Grace Period: Time period that follows
the premium due date when the coverage and policy remain in force.
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Global Fees: Negotiated fees that are
all-inclusive (one fee is paid for the entire range of services provided
for a specific episode or episode of care.)
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Group-Model HMO: HMO staffing that
occurs by contracting with multi-speiciality medical groups to care for
plan members. Physicians are not employees of the HMO but are considered
as a closed panel.
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Guaranteed Issue Underwriting: The applicant is guaranteed
coverage up to an agreed amount or level without evidence of insurability
(see Evidence of Insurability).
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Guaranteed Renewable: The
insured's right to continue an in-force policy by the timely payment of
premiums. The insurance company cannot change the coverage or refuse to
renew the coverage for other than non-payment of premiums (includes health
conditions and/or marital or employment status).
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Health Alliances: Health Alliances
or Health Insurance Purchasing Cooperatives (HIPCs) are groups or entities
whose primary purpose is to negotiate with health plans to provide
coverage at competitive prices to members of the alliance.
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Health Insurance Purchasing Cooperatives (HIPCS): See Health Alliances
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Health Care Financing Administration (HCFA):
Branch of the U.S Department of Health and Human Services charged with
oversight and financial management of government-related health care
programs such as Medicare and Medicaid.
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Health Care Prepayment Plan (HCPP): HCFA
program allowing managed care groups that organize, finance, and deliver
Medicare Part B services be reimbursed for such services on a reasonable
cost basis.
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Health Insurance Purchasing Cooperatives (HIPCS): See Health Alliances
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Health Maintenance Organization (HMO): An
organization that provides a wide range of comprehensive health care
services for a specified group of enrollees for a fixed, pre-paid premium.
There are several models of HMOs: Group Model, Individual Practice
Association (IPA), Staff Model and Network Model.
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Home and Community-Based Care Benefits: To be eligible for
Home and Community-Based Care Benefits, you must require covered services
while your policy is in force that are due to (1) medical necessity, or
(2) your inability to perform two or more activities of daily living, or
(3) cognitive impairment.
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Home Health Services:
Comprehensive medically necessary services provided by a recognized
provider to a patient in the home.
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Hospice: Care provided to terminally ill
patients and their families that emphasize emotional needs and coping with
pain and death.
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Hospital Bill Audit: Independent
examination of hospital bills by a third party to determine if services
and supplies charged to the patient were actually delivered, and if the
price charged was correct.
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Hospital Indemnity Insurance: Hospital indemnity coverage is
insurance that pays a fixed cash amount for each day you are hospitalized
up to a designated number of days. Some coverage may have added benefits
such as surgical benefits or skilled nursing home confinement benefits.
Some policies have a maximum number of days or a maximum payment amount.
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Inability to Perform Activities of Daily Living: Dependence
on someone else because of need, due to injury, sickness, or frailty of
age, for regular human assistance or supervision in performing normal
activities of daily living.
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Incontestability: Provision in a
policy which allows an insurance company to contest the validity of a
claim after the policy has been in force for a certain period, usually two
or three years.
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Incurred But Not Reported (IBNR): Claims which
have been incurred by the insured but have not been submitted to the plan
or insurance company for reimbursement (also known as lagged claims).
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Indemnity Insurance: Health care
insurance plan providing benefits in a predetermined amount for covered
services. Traditionally, the insurer pays on a fee-for-service basis with
no involvement in the actual delivery of health care services.
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Individual or Independent Practice Association (IPA): Association of individual physicians that provides
services on a negotiated per capita rate, flat retainer fee, or negotiated
fee-for-service basis. It is one model of HMO managed care. IPAs may also
serve non-HMO patients.
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Institutionalization: Admission
of an individual to an institution, such as a nursing home.
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Instrumental Activities of Daily Living (IADLs): The more complex tasks associated with independent
living. California State Bill 1943 stipulates that any long term care
insurance policy that purports to cover home care, must provide benefits
for the IADLs. The IADLs include lighthouse keeping, taking medications,
using the telephone, meal preparation, moving about outside, and shopping
for essentials. IADLs define the services covered by policies covering
home care.
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Insurability: The health status of an
insurance applicant, which makes him/her acceptable to an insurance
company, i.e. health, financial condition, occupation.
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Integrated Coverage:
Combinations of HMOs, indemnity plans, or PPO's into one health care plan.
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Intermediate Care: Care that may,
but does not necessarily need to be delivered by a skilled professional.
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Joint Commission on Accreditation of Healthcare Organizations
(JCAHO): Private voluntary accrediting organization
for all types of health care organizations. Its focus is the outcome,
process, and excellence in health care.
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Lagged Claims: The time between when
service is incurred and when it is submitted and processed for payment.
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Lapse: Termination of insurance coverage for
failure to pay premiums.
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Lifetime Aggregate or Maximum: The maximum benefit payment
provided under a plan or insurance contract.
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Long-term Care (LTC): Continuum of maintenance,
custodial, and health services to the chronically ill, disabled, or
mentally impaired over a lengthy period of time. Services may be provided
in long-term care or on an outpatient basis (subacute care, rehabilitation
facility, nursing home, mental hospital, outpatient, or at-home basis).
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Long-Term Care Facility: A
place which is (1) licensed by the state; (2) provides skilled,
intermediate, or custodial nursing care on an inpatient basis under the
supervision of a physician; (3) keeps a daily medical record of each
patient.
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Malpractice: Unprofessional,
incompetent, or inappropriate medical care.
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Malpractice Reform: Proposed
changes may include required arbitration and limits to the amount of
attorney's fees.
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Managed Care: Term used to describe the
coordination of financing and provision of health care to produce
high-quality health care for the lowest possible cost. A system that
imposes control on the utilization of medical services and on the
providers who renders the care. Managed care is provided through managed
indemnity plans; Preferred Provider Organizations (PPOs), Exclusive
Provider Organizations (EPOs), Health Maintenance Organizations (HMOs), or
any other cost management environment.
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Managed Competition: Proposed
system in which the government restricts the consumer to purchasing
insurance from government-approved carriers.
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Managed Indemnity: Use of
utilization controls in traditional fee-for-service health insurance plans
in order to reduce cost and inappropriate care.
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Mandate: A specific procedure or coverage
that a plan or insurance contract must offer dictated by state or federal
law.
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Mandated Benefits: Health care
coverage required by state and federal law to be included in health
insurance contracts.
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Medicaid: State programs with federal
matching funds for public health assistance to persons, regardless of age,
whose income and resources are insufficient to pay for health care.
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Medical Necessity: Term used by
insurers to describe medical treatment that is appropriate and in
accordance with generally accepted standards of medical practice.
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Medicare: Federally sponsored program under
the Social Security Act that provides hospital benefits, supplementary
medical care, and catastrophic coverage to persons 65 years of age and
older and to some younger persons who are covered under Social Security
benefits.
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Medicare-Approved Amount:
Medicare has a fee schedule that list the dollar amount that Medicare
considers to be the reasonable charge for the services provided by a
doctor that Medicare approves for a covered service provided by a doctor
is the lesser of the Medicare fee schedule amount for a particular service
or the amount charged by the doctor.
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Medicare Part A (Hospital
Insurance): Helps pay for medically necessary inpatient care in a
hospital, skilled nursing facility or psychiatric hospital, and for
hospice and home health care.
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Medicare Part B (Medical Insurance):
Helps pay for medically necessary physician services and many other
medical services and supplies not covered by Part A.
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Medicare-Qualified Providers: Providers who have been
approved by Medicare.
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Medicare Risk Plan: A type of
Medicare supplement coverage where the Medicare recipient "assigns"
his/her benefits to an HMO. The HMO contracts with the Federal Government
to provide medical services to the Medicare recipient at a discounted rate
to the government.
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Medicare Select: Federal programs
designed to introduce Medicare beneficiaries to managed care plans through
Preferred Provider Organization supplemental (MedSup) health insurance.
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Medigap-Medicare Supplement Insurance: Medigap insurance is
specifically designed to supplement Medicare's benefits and is regulated
by federal and state law. It must be clearly identified as Medicare
supplemental insurance and it must provide specific benefits that help
fill the gaps in your Medicare coverage. Other kinds of insurance may help
you with out-of- pocket health care costs but they do not qualify as
Medigap plans.
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Mental Health Services:
Behavioral health care services that may be provided on an inpatient,
outpatient, or partial hospitalization basis.
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Military Health Services System (MHSS): Federal
health benefits program for active duty military personnel, retirees,
their dependents, and survivors.
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Multiple Employer Trust (MET): A trust
established by a sponsor that allows small employers in the same or
related industries to provide medical insurance under a trust arrangement.
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Multiple Employer Welfare Arrangement (MEWA):
An employee welfare arrangement designed to provide benefits to employees
of two or more employers.
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Multiple Provider Arrangement: Managed care plan consisting
of group, staff, or IPA structures in combination.
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Multi-specialty Group Practice: Independent physicians'
group that is organized to contract with a managed care plan to provide
medical services to enrollees. The physicians are not employees of the
HMO, but are employed by the group practice.
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National Association of Health Underwriters (NAHU): A professional organization founded in 1929, of more
than 14,800 men and women in the health insurance industry representing
more than 119 million consumers. NAHU promotes excellence in the insurance
industry through legislative advocacy, education, participation and
quality leadership.
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National Association of Insurance Commissioners (NAIC): An organization that assists state insurance
departments and helps draft models laws.
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National Committee on Quality Assurance (NCQA):
Private, voluntary organization for accrediting managed care. It assesses
quality, credentialing utilization management, customer rights, preventive
health services, and medical records. Developed the Health Plan Employer
Data Set.
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Negotiated Fees: Managed care plans
and providers mutually agree on set fees for each service. This negotiated
rate is usually based on services defined by the Current Procedural
Terminology (CPT) codes, generally at a discount from what the provider
would usually charge. Providers cannot charge more than this fee.
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Network or Mixed-Model HMO: Provider arrangements that
contract with a number of Independent Practice Associations or group
practices to provide physician services to HMO enrollees in return for
higher patient volume. This model is a multiple provider arrangement that
can be either an open or closed panel.
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Network Providers: Limited
grouping or panels of providers in a managed care arrangement with several
delivery points. Enrollees may be required to use only network providers
or may have financing liability for using non-network providers for
medical services.
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Non-Forfeiture Benefits: A
guarantee for a refund of all of the premiums paid in one of two way; (1)
to a named beneficiary at the death of the insured, or, (2) as an
"extended term" type benefit for as long as all premiums accrued will last
with the balance (if any) left to a named beneficiary. See Return of
Premium
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Non-Network Providers:
Non-contracted or unapproved health providers who are outside a managed
care arrangement.
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Omnibus Budget Reconciliation Act (OBRA): Term
given by Congress to many of its annual tax and budget reconciliation
acts. Most of these tax and budget acts have language or provisions
related to health care and managed care, particularly in relation to
Medicare.
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Open-Ended HMO: Hybrid HMO product
that allows members to use physicians outside the plan in exchange for
additional financial liability in the form of a deductible, coinsurance,
or co-payment.
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Open Panel: A right included in an HMO
which allows the covered person to obtain non-emergency covered services
from a specialist without a referral from the primary care physician or
gatekeeper.
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Out-of-Network Care: Medical
services obtained by managed care plan members from unaffiliated or
non-contracted health care providers. In many plans, such care will not be
reimbursed unless previous authorization is obtained.
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Out-of-Pocket Expenses: Those
health care costs that must be borne by the insured.
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Out-of-Pocket Maximum: The
maximum amount that an insured is required to pay under a plan or
insurance contract.
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Outcome Measurement: A document
program that tracks a physician's treatment patterns for the purposes of
evaluating efficiency.
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Overutilization: Inappropriate or
excessive use of medical services that add to health care costs.
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Paid Claims: The total claims payment
made by the plan or insurance company. It does not include any employee
cost sharing or provider discounts.
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Partial Capitation Risk Contracts: State Medicaid contracts
with HMOs or similar managed care organizations that accept risk for a
defined set of services (for example, physician services and laboratory,
x-ray, or clinic services). Other services are reimbursed on a
fee-for-services basis.
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Participating Provider: A
provider who has agreed to contract with a managed care program to provide
eligible services to covered persons.
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Per Review: Traditional quality assurance
program to monitor standard processes of care or adverse outcomes of
provider practice by other professional peers. The goal of peer review is
to find and correct medical practices that do not conform to the standard
processes of care.
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Per Diem: Literally, per day. Term that is
applied to determining costs for one day of care. It is an average cost
and does not reflect true cost for each patient.
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Per Member Per Month (PMPM): Computational
designation for each enrollee in a managed care program.
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Personal Care Advocate: A
representative of the nursing facility resident who reviews care, address
concerns, and provides advocacy support for a patient and his or her
family.
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Physician-Hospital Organization (PHO): Group
practice arrangement that occurs when hospitals and physicians organize
for purposes of contracting with managed care organizations. These
relationships are formally organized, contractual, or corporate in
character and include physicians outside the boundaries of a hospital's
medical staff.
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Plan of Care: Also known as Home Care
Plan. It is the result of an assessment; a program for providing home care
services. In most policies, a physician and the multi-disciplinary team
will prepare such a program. It will be appropriate for the level of care
needed for the physician's diagnosis. All long term care policies
qualifying under California Senate Bill 1943 require plans of care.
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Play or Pay: A concept that would
require employers to provide health insurance to their employees and
dependents (play) or pay a tax or premium toward a publicly provided
system that covers people without private insurance (pay).
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Point of Service Plans (POS): Combination of HMO
and PPO features. They provide a comprehensive set of health benefits and
offer a full range of health services much the same as the HMO. However,
the member does not have to choose how to receive services until they need
them. The member can then opt to use the defined managed care program, or
can go out-of-plan for services but pay the difference for non-plan
benefits (e.g. 100 percent coverage for managed care Vs. 80 percent
coverage out-of-plan).
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Pool (ing): Used by insurance companies to
combine all premiums, claims and expenses in order to spread the risk of
insurance coverage. This process ensures that small employers will not be
singled out and unfairly assessed with a large rate increase due to
unanticipated medical catastrophic claims of insured employee(s).
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Portability: Provides access to
continuous health insurance coverage so the insured does not lose coverage
due to any change in health or personal status (such as employment,
marriage, or divorce).
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Practice Guidelines: Specific,
professionally agreed upon recommendation for medical practice used within
health care organizations to standardize the practice to achieve
consistent quality outcomes. Practice guidelines may be instituted when
triggered by specific clinical indicators.
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Pre-authorization: Previous
approval required for referral to a specialist or non-emergency health
care services.
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Pre-certification: Utilization
management program that requires the individual or provider to notify the
insurer before hospitalization or surgical procedure. Notification allows
the insurer to authorize payment and to recommend alternate courses of
action.
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Pre-existing Condition: A
condition or diagnosis which existed (or for which treatment was received)
before coverage began under a current plan or insurance contract, and for
which benefits are not available or are limited.
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Pre-existing Condition Clause: A clause in an insurance
contract or plan that specifies if benefits will or will not be paid for a
pre-existing condition. (Example: "the insured must be covered by the plan
for a certain period of time or have gone a certain amount of time without
any treatment.") Additionally, the clause may limit the benefit payable
for treatment of pre existing conditions until a certain time period of
coverage has elapsed, usually six months to a year.
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Preferred Provider Organization (PPO): Managed
care arrangement consisting of a group of hospitals, physicians, and other
providers who have contracts with an insurer, employer, third-party
administrator, or other sponsoring group to provide health care services
to covered persons in exchange for prompt payment and increased patient
volume.
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Premiums: Periodic payment to keep an
insurance policy in force.
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Premium Tax: A state tax on insurance
premiums.
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Prepaid Group Practice: A
type of HMO plan where participating providers render specific services to
the insured in exchange for an advance fixed patient.
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Prevailing Charges: Amounts
charged by health care providers that are consistent with charges from
similar providers for identical or similar services in a given locale.
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Preventive Medicine: Wellness
and health promotion services that are part of the basic benefits package
of a managed health care plan.
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Primary Care: Non-specialist, basic
routine medical care provided by family physician.
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Primary Care Case Management: Single provider is responsible
for coordinating, arranging, and monitoring all patient care, even for
those patients with no serious medical conditions.
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Primary Care Physician (PCP): Primary deliverers
and managers of health care, central to controlling costs and utilization.
The PCP provides basic care to the enrollee, initiates referrals to a
specialist, and provides follow-up care. Refers exclusively to other
contracted providers and admits patients only to contracted hospitals.
Usually defined as a physician practicing in such areas as internal
medicine, family practice, and pediatrics.
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Profiling: Systematic method of
collecting, collating, and analyzing patient data to develop
provider-specific information about medical practice.
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Prospective Review:
Data-gathering technique that uses projected figures or current data to
determine future costs or services.
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Protocol: Tool for enhancing quality in a
health care organization by developing customary methods for medical
interventions. Treatment protocols are developed for clinical areas of
medicine where diagnostic or therapeutic approaches are defined.
Technology assessment and quality studies are used to establish decision
protocols for particular diseases or treatments.
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Providers: Term used to describe medical
professionals and services organizations that provide health care
services.
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Qualified Provider: Health care
provider who has been contracted with or authorized to provide
reimbursable health care services from an insurer or payer.
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Quality Assurance: Set of
activities that measures the characteristics of health care services and
may include corrective measures.
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Readmission: Patient admission to a
hospital for the same or similar diagnosis as a previous, recent
admission. Often used as a measure of inappropriate discharge or treatment
from the first admission.
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Reasonable and Customary:
The maximum amount a plan or insurance contract will consider eligible for
reimbursement, based upon prevailing fees in a geographic area.
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Rebating: The practice (illegal in most
states) of giving an insurance applicant anything of value as an
inducement to purchase or renew an insurance policy.
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Referral: Primary care physician-directed
transfer of a patient to a specialty physician or specialty care.
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Referral Pool: Capitation set-aside
for referrals or inpatient medical services. If utilization targets are
met at the end of the year, primary care physicians may share what is left
in the pool.
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Rehabilitation: Process and goal of
restoring a disabled insured person to maximum physical, mental, and
vocational independence and productivity commensurate with their
limitations.
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Reinsurance: The transfer of part of the
insurance risk to another insurer or insurers--self-funded plans generally
buy specific and/or aggregate stop-loss coverage to cover losses in excess
of certain limits (also known as excess loss coverage). (See Attachment
Point)
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Reserves: A specific amount of money
pre-funded and set aside to assure adequate funds to cover future claims.
Both insurance companies and self-insured employers must "reserve" in
order to preserve cash flow and protect solvency.
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Resource-Based Relative Value Scale (RBRVS):
Developed by the Health Care Financing Administration (HCFA) of the
federal government to redistribute physician payments more adequately to
encourage the use of PCP services. The amount of resources devoted to
produce a health care service serve as the basis for the fee that is paid.
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Retention: The portion of the insurance
premium which is allocated for expenses, administration, commissions, risk
charges and profit.
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Retrospective Claim Review: Examination of claim data
after completion of medical services to assess appropriateness of care or
reimbursement for services.
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Rider (Exclusion): An amendment to insurance
contracts limiting, or excluding an existing coverage for certain
conditions. For example, a rider to a policy may exclude coverage for
treatment to an applicant's knee.
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Risk: Chance of incurring financial loss by an
insurer or provider.
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Risk Adjustment: Correction of
capitation or fee rates based upon factors that can cause an increase in
medical costs such as age or sex.
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Risk Contract: See Medicare Risk
Contact.
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Risk Sharing: Apportionment of chance
of incurring financial loss by insurers, managed care organization, and
health care providers.
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Second Surgical Opinions:
Utilization control to determine appropriateness of surgery by a second
provider source.
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Self-Insurers: Employers, businesses,
and other entities that chose to assume the responsibilities of an
insurance company to insure their beneficiaries.
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Self-Funding: An arrangement under
which all or some of the risk associated with providing coverage is not
covered by an insurance contract.
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Self-Referral: Choice by the insured
or patient of medical specialists or specialty services without need for
primary care physician or health plan controls.
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Service Area: A geographic area of
operation for a managed care entity.
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Set Aside: See Withdrawal Arrangements
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Seventy-five/twenty-five (75/25) Rule: HMOs participating in the
Medicaid program are required to limit Medicaid and Medicare recipients to
no more that 75 percent of enrollees and to draw at least 25 percent of
their enrollees from the private sector. This "75/25" is imposed to ensure
that care provided to Medicaid enrollees is comparable to that provided to
enrollees with private insurance.
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Skilled Nursing Facilities: Institution providing the degree
of medical care required from, or under the supervision of, a registered
nurse or a physician.
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Social Security Act: Law under
which the federal government operates the Old Age, Survivors, Disability,
and Health Insurance Program (OASDHI).
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Specialty Managed Care Arrangements: Those group practices
and organizations of providers who contract with managed care
organizations to provide non primary-care medical services.
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Specialty Physicians: Those
physicians practicing in areas other than internal medicine, family
practice, or pediatrics.
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Specified Disease Insurance: Specified disease insurance,
which is not available in some states, provides benefits for only a single
disease, such as cancer, or for a group of specified diseases. The value
of such coverage depends on the chance you will get the specific disease
or diseases covered. Benefits are usually limited to payment of a fixed
amount for each type of treatment.
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Specified Low-Income Medicare Beneficiary (SLMB): Persons entitled to Medicare Part A whose incomes are
slightly higher than the National Poverty Level. Your income cannot exceed
the National Poverty Level by more than 20 percent.
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Spend Down: See "Divestment"
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Staff Model HMO: HMO that owns the
clinical facilities used by patients enrolled in the HMO. The HMO directly
employs the physicians providing service and they provide service only to
patients enrolled in the HMO plan.
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Stakeholders: Those with a stake in the
cost and quality of health care services, including patients, employers,
providers, and government.
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Stop-Loss Insurance: Protection
purchased by self-insured and some managed care arrangements against the
risk of large losses or severe adverse claim experience.
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Subacute Care: Health care services
that are less intense than hospital care but more intense than skilled
nursing home services.
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Supplementary Coverage:
Insurance to help cover those parts of Medicare Part B that are
non-reimbursable.
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Third-Party Administrator (TPA): Method by which
an outside person or firm, not a party to a contract, provides specific
administrative duties (including premium accounting, claims review and
payment, arranges for utilization review and stop-loss coverage) for a
self- funded plan. Entity may also handle payment of claims.
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Tort Reform: The purpose of reform is to
eliminate unnecessary practices and testing which are performed
defensively by a physician with little or no value to the person seeking
treatment. It may also include reasonable limits placed on non-economic
damages paid to a patient or beneficiary.
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Total Disability: Generally, a
disability that prevents insureds from performing all occupational duties.
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Trend Factor: The percentage of
increase used by an insurance company or plan to reflect the projected
rise in health care costs. Calculation factors also include inflation,
utilization, technology and geographic area.
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Triggers: Data point or indicator that
suggests further study or review. Also refers to the assessments conducted
by a licensed health care practitioner to determine eligibility for
private long term care insurance benefits.
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Triple Option Plan: An employer
plan that usually offers an insured an opportunity to choose between an
indemnity HMO or PPO level of benefits at time of claim.
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Twenty-four (24-hour) Coverage:
Any combination of traditional health insurance and workers' compensation
insurance that attempts to dissolve the occupational and non-occupational
boundaries between the two coverages.
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Unbundled: Health services or benefits
that are a stand-alone or carved-out benefit under a separate contract or
bill.
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Unbundling: To increase the reimbursement
paid by a plan or insurance contract, each medical procedure is billed
under a separate code as a separate item, instead of part of one overall
procedure.
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Underwriters: Insurance professionals
who determine if and on what basis an insurer will accept an application
for insurance.
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Usual, Customary, and Reasonable (UCR) Fees:
Charges of health care providers that are consistent with charges from
similar providers for identical or similar services in a given locale.
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Utilization: Patterns of usage for
single medical service or type of service (hospital care, prescription
drugs, physician visits). Measurement of utilization of all medical
services in combination usually is done in terms of dollar expenditures.
Use is expressed in rates per unit of population at risk for a given
period, such as number of annual admissions to a hospital per 1,000
persons over age 65.
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Utilization Review (UR): Programs designed to
reduce unnecessary medical services, both inpatient and outpatient.
Utilization reviews may be prospective, retrospective, concurrent, or in
relation to discharge planning.
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Vendors: Term describing a person, persons,
groups, and organizations providing health care services for
reimbursement.
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Waiting Period: Date of hire and the
employees eligibility to qualify for a plan of insurance or if already
insured that time period before one is eligible for benefits (i.e.
elimination period).
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Waivers: Term usually associated with the
Medicare or Medicaid programs by which the government waives certain
regulations or rules for a managed care or insurance program to operate in
a certain geographic area. Can also relate to exclusions in life and
disability insurance (reference "Rider").
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Waiver of Premium: A provision in
a plan or insurance contract, which relieves the insured of paying
premiums while totally disabled or also when receiving care for nursing
home benefit and sometimes HHC.
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Withhold Arrangements: Portion
of a provider's salary, fees, or capitation that is held back until
performance in relation to quality and utilization are examined at the end
of each year. If performance was at least satisfactory, withholds are
released to the provider.
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Workers Compensation Insurance: Programs mandated by the
states, which requires employers to provide liability insurance coverage
and pay benefits to dependents of employees killed to compensate for work
related injuries or disabilities.
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Wrap-Around Coverage: Programs
of HMOs that, in some states, were prevented by state law from taking on
financial risk for out-of-plan care and joined with insurers to cover the
out-of-plan portion of care. Such programs led to the development of
point-of-service (POS) plans.
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