Resources

Health Insurance Terms

Benefit Advocates is pleased to present you with some of the industry’s most used terms to help you navigate and understand the language of healthcare. To use this tool, click on the letter of the alphabet to access glossary information.

A

Access – the patient’s ability to obtain medical care. The ease of access is determined by such components as the availability of medical services and their acceptability to the patient, the location of health care facilities, transportation, hours of operation and cost of care.

Accreditation – the process by which an organization recognizes a provider, a program of study or an institution as meeting 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. The Commission on Accreditation of Rehabilitation Facilities (CARF) accredits rehabilitation providers.

Accrual – the amount of money that is set aside to cover expenses. The accrual is the plan’s best estimate of what those expenses are, and (for medical expenses) is based on a combination of data from the authorization system, the claims system, lag studies, and the plan’s prior history.

Administrative Costs – costs related to utilization review, insurance marketing, medical underwriting, agents’ commissions, premium collection, claims processing, insurer profit, quality assurance programs, and risk management. Administrative costs also refer to certain allowable costs on hospital Centers for Medicare and Medicaid Services (CMS) cost reports, usually considered overhead.

Adjudication – the exercise of judicial power by hearing, trying and determining the claims of litigants before the court. Processing claims according to contract.

Accidental Death Benefit – a provision added to an insurance policy for payment of an additional benefit in case of death by accidental means. It is often referred to as double indemnity.

Administrator – (Employee Benefit Plans) Under ERISA, the person designated administrator by the instrument under which the plan operates. If the administrator is not designated, administrator means the plan sponsor. If the administrator is not designated and the plan sponsor cannot be identified, the administrator may be the party prescribed by regulation of the secretary of labor. The administrator’s responsibilities are as follows: 1. Act solely in the interest of plan participants and beneficiaries, and for the exclusive purpose of providing benefits and defraying reasonable administrative expenses. 2. Manage the plan’s assets to minimize the risk of large losses. 3. Act in accordance with the documents governing the plan.

Adult Day Care – provision during the day, on a regular basis, of a range of services that may include health, medical, psychological, social, nutritional and educational services that allow a disabled person to function in the home or at a center.

Allowable Charge – the maximum charge for which a third party will reimburse a provider for a given service. An allowable charge is not necessarily the same as either a reasonable, customary, maximum, actual, or prevailing charge.

Ambulatory Surgical Center – any public or private establishment with an organized medical staff of physicians; with permanent facilities that are equipped and operated for the purpose of performing surgical procedures; and which does not provide services for patients to stay overnight.

Americans with Disabilities Act – a law enacted in 1990 that prohibits discrimination against persons with disabilities in areas such as terms and conditions of employment. Requires employers to make reasonable accommodations to enable employees with disabilities to perform the essential parts of a job.

Anesthesiologist – a physician who specializes in providing anesthetics (local or general) to patients undergoing surgery or other procedures.

Assignment of Benefits – the payment of medical benefits directly to a provider of care rather than to a member. Generally requires either a contract between the health plan and the provider, or a written release from the subscriber to the provider allowing the provider to bill the health plan.

Assisted Living Facilities – shared and supervised housing for those who cannot function independently. Various types of homes serve those who need minimal support to those more severely impaired.

Attending Physician – the physician who is in charge of your care while your are hospitalized. Though medical students, residents and other doctors may treat you, the Attending Physician is your physician of record while you are hospitalized.

Automatic Enrollment – employers can enroll all eligible employees in a plan and begin participant deferrals without requiring the employees to submit a salary deferral request. Plan design specifies the percentage of earnings to be contributed and how these deferrals will be invested; participants can generally change the percentage and allocations if they stay in the plan. Employees who do not wish to participate in the plan must actively file a request to be excluded from the plan. Also known as negative enrollment.

B

Balance Billing – the practice of charging full fees in excess of covered amounts and then billing the patient for that portion of the bill that the payer does not cover.

Board Certified – a physician or other health professional who has passed an examination given by a medical specialty board and has been certified by that board as a specialist in that medical discipline.

Board Eligible – a physician who is eligible to take a specialty board examination as a result of completion of medical school and a relevant residency. Some HMOs and other health facilities accept board-eligible physicians.

Brand-Name Drug – a drug protected by a patent issued to the original innovator or marketer. The patent prohibits the manufacture of the drug by other companies as long as the patent remains in effect.

C

Calendar Year Deductible – a deductible that applies to any eligible medical expenses incurred by the insured during any one calendar year.

Capitation – a set amount of money received or paid out to a health provider. It is based on membership rather than on the medical services delivered and usually is expressed in units of per member per month.

Carryover Deductible – the deductible payable under continuation coverage includes the portion of the deductible satisfied before the qualifying event.

Carve-Out – a program separate from the primary group health plan designed to provide a specialized type of care, such as a mental health carve-out. Also, a method of integrating Medicare with an employer’s retiree health plan (making the employer plan excess or secondary) which tends to produce the lowest employer cost.

Case Management – a utilization management technique that focuses on coordinating a number of health care and disability services needed by clients. It includes a standardized, objective assessment of client needs and the development of an individualized service or care plan that is based on the needs assessment and is goal-oriented. Often used for patients with certain conditions who need extensive medical services; usually overseen by an individual or team of medical practitioners.

Cash Balance Plan – a defined benefit plan that simulates a defined contribution plan. Benefits are definitely determinable, but account balances are credited with a fixed rate of return and converted to a monthly pension benefit at retirement.

Catastrophic Coverage – health care for life-threatening conditions whose cost can drain an individual’s family income.

Certificate of Creditable Coverage – notes the amount of previous qualified health coverage; required by the Health Insurance Portability and Accountability Act (HIPAA) in certain circumstances.

Centers for Disease Control (CDC) – the federal agency that researches and investigates causes of diseases, provides educational and prevention programs, and issues definitions of diseases and the conditions that determine eligibility for state, federal and/or private benefit programs. CDC is part of the Public Health System, a division of the Department of Health and Human Services.

Centers for Medicare/Medicaid – the agency of the Department of Health and Human Services that administers Medicare, Medicaid and other federal programs established by the Social Security Act of 1935. Formerly the Health Care Financing Administration (HCFA).

Chiropractor – (doctor of chiropractic) a licensed health professional (not a physician) who has extensive training and treats diseases caused by malfunction of the nerve system using manipulation and other treatments most commonly of the spine and pelvis.

CNA – certified nursing assistant.

COBRA – Consolidated Omnibus Reconciliation Act. A portion of this Act requires employers to offer the opportunity for terminated employees to purchase continuation of health care coverage under the group’s medical plan.

Coinsurance – a provision in a member’s coverage that limits the amount of coverage by the plan to a certain percentage, commonly 80 percent. Any additional costs are paid out of pocket by the member.

Coordination of Benefits (COB) – a group health insurance policy provision designed to eliminate duplicate payments and provide the sequence in which coverage will apply (primary and secondary) when a person is insured under two contracts.

Copayment – that portion of a claim or medical expense that member must pay out of pocket. Usually a fixed amount, such as $10 in many HMOs.

Coronary Care Unit (CCU) – a unit of a hospital, usually part of ICU, especially designed and staffed to care for critically ill patients with heart attack or disease or following heart surgery.

Credentialing – refers to the obtaining and reviewing the documentation of professional providers by a health plan. The documentation includes education, licensure, certifications, insurance, evidence of malpractice insurance and malpractice history.

Custodial Care – general assistance in performing the activities of daily living, as well as board, room and other services, generally provided on a long-term basis and that does not include any skilled nursing components.

D

Deductible – that portion of a member’s health care expenses that must be paid out of pocket before any insurance coverage applies.

Dependent – a person entitled to receive health benefits from someone else’s plan.

Durable Power of Attorney – a legal document in which a person designates another person to act as their representative in financial transactions. It continues even if the person becomes incompetent.

E

Effective Date – the date on which a policy’s coverage of a risk goes into effect.

Eligible Dependent – a person entitled to receive health benefits from someone else’s plan, also called a dependent.

Elimination Period – most often used to designate the waiting period in a health insurance policy.

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. This is usually a service provided by an employer to the employees, designed to assist employees in getting help for these problems so that they may remain on the job.

Employee Retirement Income Security Act of 1974 (ERISA) – also called the Pension Reform Act, this act regulates the majority of private pension and welfare group benefit plans in the U.S. It sets forth requirements governing participation, crediting of service, vesting, communication and disclosure, funding, fiduciary conduct and other areas.

ENT (otolaryngologist) – a physician who specializes in diseases of the ear, nose and throat.

Experience – a term used to describe the relationship of premium to claims for a plan, coverage, or benefits for a stated time period. Usually expressed as a ratio or percent.

Explanation of Benefits (EOB) – a statement sent to covered individuals explaining services provided, amount to be billed, and payments made. A summary of benefits provided to subscribers by the carrier. Same as Evidence of Coverage.

Extended Care Facility (ECF) – a nursing, long-term, or convalescent home offering skilled nursing care and rehabilitation services on a 24-hour basis.

Extension of Benefits – an insurance policy provision that allows medical coverage to continue past termination of employments. See also COBRA.

F

Fail First Requirements (also called Step Therapy) – drug plans may require an enrollee to try one drug before the plan will pay for another drug. Step therapy aims to control costs by requiring that enrollees use more common drugs which are usually less expensive. The process of beginning drug therapy for a medical condition with the most cost-effective and safest drug therapy and progressing to costlier or riskier therapy is called Step therapy or Fail First Requirement. Progression to a new medication is based on the failure of the former medication to relieve or cure symptoms why it is called ”fail first.” Physicians and drug plans may disagree on the proper Step Therapy and patients are encouraged to become knowledgeable and decisive in agreeing to protocols. Also called ”step protocol.”

Family Practitioner – a physician, a generalist who cares for the whole family regardless of age.

Fee Disclosure – physicians and caregivers discussing their charges with patients before treatment.

Fee-For-Service (FFS) – traditional method of payment for health care services where specific payment is made for specific services rendered. Usually people speak of this in contrast to capitation, diagnostic-related group (DRG) or per diem discounted rates, none of which are similar to the traditional fee for service method of reimbursement. Under a fee-for-service payment system, expenditures increase if the fees themselves increase, if more units of service are provided, or if more expensive services are substituted for less expensive ones.

Fiduciary – indicates the relationship of trust and confidence where one person (the fiduciary) holds or controls property for the benefit of another person. For example, the relationship between a trustee and the beneficiaries of the trust.

First Dollar Coverage – insurance coverage with no front-end deductible where coverage begins with the first dollar of expense incurred by the insured for any covered benefit.

Flat Fee-Per-Case – a flat fee paid for a client’s treatment based on their diagnosis and/or presenting problem. For this fee, the provider covers all of the services the client requires for a specific period of time.

Flexible Benefit Plan – a program offered by some employers in which employees may choose among a number of health care benefit options.

Flexible Spending Account – a plan that gives employees the opportunity to set aside pre-tax funds for the reimbursement of eligible tax-favored welfare benefits under Section 125 of the IRS tax code. Two plans are available, health care and dependent day care. Also called Reimbursement Accounts.

Formulary (prescription drug) – a listing of prescription medications that will be covered by a plan or insurance contract that often fosters substitution of generic or therapeutic equivalents on a cost-effective basis. Organizations often develop a formulary under the leadership of a pharmacy and therapeutics committee. When used by hospitals or clinics, a formulary is intended as a recommendation usually and not considered a requirement.

G

Gastroenterologist – a physician who specializes in diseases of the stomach and intestines.

Gatekeeper – an informal though widely used term that refers to a primary care physician management model health plan. In this model, all care from providers, other than in true emergencies, must be authorized by the primary care physician before care is rendered. This is a predominant feature of most HMOs. The term can also refer to a utilization review, case management, local agency or managed care entity responsible for determining the services a patient can access and receive reimbursement for.

Generic Drug or Generic Equivalent – a drug which is exactly the same as a brand name drug and which may be manufactured and marketed after the brand name drug’s patent expires (approximately 9-10 years after the brand-name drug entered the market). Generic drugs cost significantly less than brand name drugs, and are identical in terms of efficacy, safety, side effect profile, and dosing. Important exceptions to this may include drugs such as immunosuppressants or drugs with a ”narrow therapeutic index” such as anti-arrhythmics. ”Narrow therapeutic index” refers to drugs that have a high rate of side effects at commonly administered dosages.

Grace Period – a period past the due date of a premium during which coverage may not be cancelled.

Grievance Procedures – the process by which an insured can air complaints and seek remedies.

Group Health Plan – a health plan that provides health coverage to employees, former employees, and their families, and is supported by an employer, employee organization or other organized group.

Guaranteed Eligibility – a defined period of time (3-6 months) that all patients enrolled in prepaid health programs are considered eligible for Medicaid, regardless of their actual eligibility for Medicaid. A State may apply to CMS for a waiver to incorporate this into their contracts.

Gynecologist – a physician who specializes in women’s health.

H

Health Maintenance Organization (HMO) – a prepaid medical group practice plan that provides a comprehensive predetermined medical care benefit package. HMOs emphasize preventive care, early diagnosis and outpatient treatment. The HMO can be sponsored by the government, medical schools, hospitals, employers, labor unions, consumer groups, insurance companies and hospital-medical plans. HMOs are both insurers and providers of health care.

HCFA (Health Care Financing Administration) – the federal agency that oversees all aspects of health financing for Medicare.

HEDIS (Health Plan Employer Data and Information Set) – a core of performance measures designed by participating managed health plans and employers to meet the employers’ need to understand the value of their health care benefits and to hold plans accountable for performance. HEDIS is offered under the sponsorship of the National Committee for Quality Assurance (NCQA).

Hematologist – a physician who specializes in blood disorders.

Health Insurance Portability and Accountability Act of 1996 (HIPAA) – a federal law that allows persons to qualify immediately for comparable health insurance coverage when they change their employment relationships. This legislation sets a precedent for Federal involvement in insurance regulation. It sets minimum standards for regulation of the small group insurance market and for a set group in the individual insurance market in the area of portability and availability of health insurance. As a result of this law, hospitals, doctors and insurance companies are now required to share patient medical records and personal information on a wider basis.

Hold Harmless Clause or Hold Harmless Provision – a contract clause which forbids providers from seeking compensation from patients if the health plan fails to compensate the providers because of insolvency or for any other reason.

Home Health Agency (HHA) – an organization providing skilled nursing and other therapeutic services in the patient’s home.

Home Health Care – a full range of medical and other health related services such as physical therapy, nursing, counseling, and social services that are delivered in the home of a patient, by a provider.

Home Health Services – items and services provided as needed in patients’ homes by a home health agency or by others under arrangement made by an HHA. Can range from skilled nursing care and physical therapy to personal care and help with household chores.

Homemaker Service – agency providing services of trained homemakers for persons needing assistance in the home during illness or in situations where the parent or guardian is absent from the home.

Hospice – health care facility or service providing medical care and support services such as counseling to terminally ill persons and their families.

Hospice Care – care that is a part of a hospice care program given to covered persons who are terminally ill.

Hospice Care Agency – an agency or organization that has hospice care available 24 hours each day. Certified by Medicare as a hospice care agency and if required is licensed as such by the jurisdiction in which it is located.

Hospital – any institution duly licensed, certified, and operated as a hospital. The term that does not include a convalescent facility, nursing home, or any institution or part thereof which is used principally as a convalescence facility, rest facility, nursing facility or facility for the aged.

I

Incurred Claims – all claims with dates of service within a specified period.

Indemnity – health insurance benefits provided in the form of cash payments rather than services. Insurance program in which covered person is reimbursed for covered expenses. An indemnity insurance contract usually defines the maximum amounts that will be paid for covered services.

Indemnity Plans – in these traditional fee-for-service group health insurance plans, the patient chooses any doctor or hospital he or she wants to use. The employer pays premiums to the health insurance company to cover the costs of providing benefits and administering claims. The employee may pay a portion of the monthly insurance premiums, an annual deductible and /or copayments per medical visit.

Individual Stop-Loss Coverage – a type of stop-loss insurance that provides benefits for claims on an individual that exceed a stated amount in a given period. Also known as specific stop-loss coverage.

Inpatient Care – health care given to a registered bed patient in a hospital, nursing home, skilled nursing, or other medical or post acute institution.

Internal Medicine – generally, that branch of medicine that is concerned with diseases that do not require surgery, specifically, the study and treatment of internal organs and body systems.

Intensive Care Unit (ICU) – a unit of a hospital especially designed and staffed to meet the specific needs of critically or seriously ill patients.

Internist – a physician who specializes in adult medicine (ages 18 and over).

J

JCAHO (Joint Commission for the Accreditation of Health Organizations) – a not-for-profit organization that performs accreditation reviews primarily on hospitals and other health care providers. Most managed care plans require any hospital under contract to be accredited by the JCAHO to receive payment although many small hospitals cannot afford the cost of accreditation.

M

Mail Order Drug Program – a method of dispensing medication directly to the patient through the mail by means of mail order drug distribution company. Offers greatly reduced costs for prescriptions, especially for long-term therapy.

Major Medical Expense Insurance – policies designed to help offset the heavy medical expenses resulting from catastrophic or prolonged illness or injury. They generally provide benefits payments for 75 to 80 percent of most types of medical expenses above a deductible paid by the insured.

Malpractice Insurance – insurance against the risk of suffering financial damage due to professional misconduct or lack of ordinary skill.

Managed Care – health care programs that impose some controls on the utilization of health care services and providers who offer such care, and/or the fees charged for such services. Managed care can by provided through HMOs, PPOs, and managed indemnity plans. The primary goal is to deliver cost-effective health care without sacrificing quality or access.

Managed Care Organization (MCO) – any entity that uses certain concepts or techniques to manage the accessibility, cost and quality of health care.

Managed Indemnity Plans – health insurance plans that are administered like traditional indemnity plans but which include managed care “overlays” such as precertification and other utilization review techniques.

Mandated Benefits – benefits that health plans are required by law to provide.

Medicaid (Title XIX) – a joint federal and state program that helps with medical costs for some people with low incomes and limited resources. Medicaid serves the poor, blind, aged, disabled or members of families with dependent children (AFDC). Each state has its own standards for qualification. A Federally aided, state-operated and administered program that provides medical benefits for certain indigent or low-income persons in need of health and medical care. The program, authorized by Title XIX of the Social Security Act, is basically for the poor. It does not cover all of the poor, however, but only persons who meet specified eligibility criteria.

Medical Review, Medical Review Criteria – screening of healthcare utilization and the criteria used for this screening. Medical reviews are usually conducted by insurance companies, third-party payers, review organizations and case managers.

Medical Student – a student enrolled in medical school (medical school is a four-year program) You may hear the term 2nd-year or 3rd-year medical student.

Medicare – administered by the Social Security Administration, Medicare is the U.S. federal government plan for paying certain hospital and medical expenses for those who qualify, primarily those over age 65. Part A, Hospital insurance, provided for inpatient hospital and posthospital care. Part B pays for medically necessary doctors’ services and outpatient services.

Medicare Advantage Plan – a plan offered by a private company that contracts with Medicare to provide an enrollee with all your Medicare Part A and Part B benefits. Medicare Advantage Plans are HMOs, PPOs, Private Fee-for-Service Plans, and Special Needs Plans. When an individual is enrolled in a Medicare Advantage Plan, Medicare services are covered through the plans, and are not paid for under Original Medicare.

Medicare Approved Amount – in the original Medicare Plan, this is the amount a doctor or supplier can be paid, including what Medicare pays and any deductible, coinsurance, or copayment that the citizen pays. Same as Medicare Approved Charge.

Medicare Contractor – a Medicare Part A Fiscal Intermediary (institutional), a Medicare Part B Carrier (professional), or a Medicare Durable Medical Equipment Regional Carrier (DMERC).

Medicare Coverage – made up of two parts: Hospital Insurance (Part A) and Medical Insurance (Part B). The term of coverage does not include Medicare Drug Plans (Part D).

Medicare Part A – the Medicare component that provides basic hospital insurance to cover the costs of inpatient hospital services, confinement in nursing facilities or other extended care facilities after hospitalization, home care services following hospitalization, and hospice care.

Medicare Part B – the Medicare component that provides benefits to cover the costs of physicians’ professional services, whether the services are provided in a hospital, a physician’s office, an extended-care facility, a nursing home, or an insured’s home.

Medicare Part D – A prescription drug benefit clause in the U.S. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that gives Medicare recipients three choices: stay in traditional Medicare without signing up for the prescription drug benefit, stay in traditional Medicare and enroll in an independently provided drug plan, or enroll in a comprehensive private health plan.

Medicare+Choice – The Medicare component that addresses how covered services are delivered to enrollees and increases the numbers and types of healthcare organizations allowed to participate in Medicare.

Medicare Supplement Policy – a voluntary, contributory private insurance plan available to Medicare eligibles to cover the costs of deductibles, coinsurance, physicians’ services and other medical and health services not covered by Medicare. Also, called Medigap policies.

Medigap – individual medical expense insurance policies sold by state-licensed private insurance companies. Private health insurance plans that supplement Medicare benefits by covering some costs not paid for by Medicare. Except in Massachusetts, Minnesota, and Wisconsin, there are 12 standardized plans labeled Plan A through Plan L. Medigap policies only work with the Original Medicare Plan.

Mental Health Parity and Mental Health Parity Act – mental health parity refers to providing the same insurance coverage for mental health treatment as that offered for medical and surgical treatments. The Mental Health Parity Act was passed in 1996 and established parity in lifetime benefit limits and annual limits. A law which prohibits group health plans from applying more restrictive annual and lifetime limits on coverage for mental illness than for physical illness.

Mental Health Provider – psychiatrist, social worker, hospital or other facility licensed to provide mental health services.

Miscellaneous Expenses – hospital charges, other than room and board, such as those for X-rays, drugs, laboratory fees, and other ancillary services.

Morbidity – the extent of illness, injury, or disability in a defined population. It is usually expressed in general or specific rates of incidence or prevalence.

N

National Committee on Quality Assurance (NCQA) – an independent, private sector group that reviews care quality and other procedures of managed care organizations to render an accreditation.

Neonatal Intensive Care Unit (NICU) – a unit of a hospital, especially designed and staffed to care for critically ill newborns.

Neonatologist – a physician who specializes in the treatment and diagnosis of newborns (up to 28 days of life).

Network – an affiliation of providers through formal and informal contracts and agreements. Networks may contract externally to obtain administrative and financial services. A list of physicians, hospitals and other providers who provide health care services to the beneficiaries of a specific managed care organization. See also IDS, PPO, PHO or Hospital Alliances.

Neurologist – a physician who specializes in diseases of the nervous system (e.g. multiple sclerosis, stroke).

Neurosurgeon – a physician who specializes in surgery of the nervous structures; brain and spinal cord.

Non-Formulary Drugs – drugs not on a plan-approved drug list.

Nonparticipating Physician (or Provider) – a provider, doctor or hospital that does not sign a contract to participate in a health plan, usually which requires reduced rates from the provider.

Non-Plan Provider – a health care provider without a contract with an insurer. Same as nonparticipating Provider.

Nosocomial Infections – infections that are acquired while a patient is in a hospital are referred to as nosocomial infections; a term derived from ‘nosos,’ the Greek word for ‘disease.’ Often nosocomial infections become apparent while the patient is still in the hospital but in some cases symptoms may not show up until after the affected patient is discharged. About one patient in 10 acquires an infection as a direct result of being hospitalized.

Nurse Practitioner (NP) – A registered nurse qualified and specially trained to provide primary care, including primary health care in homes and in ambulatory care facilities, long-term care facilities, and other health care institutions.

O

Obstetrician – a physician who specializes in delivering babies.

Occupational Therapist – a licensed allied health professional who specializes in creative activities that promote recovery and rehabilitation of patients.

Ombudsperson or Ombudsman – a person within a managed care organization or a person outside of the health care system (such as an appointee of the state) who is designated to receive and investigate complaints from beneficiaries about quality of care, inability to access care, discrimination, and other problems that beneficiaries may experience with their managed care organization.

Oncologist – a physician who specializes in treatment of tumors/cancer.

Open Access – a term describing a member’s ability to self-refer for specialty care. Open access arrangements allow a member to see a participating provider without a referral from another doctor. Describes health plan members’ abilities, rights or invitation to self-refer for specialty care.

Open Enrollment Period – the period when an employee may change health plans; usually occurs once per year.

Open Formulary – the provision that drugs on the preferred list and those not on the preferred list will both be covered by a Pharmacy Benefit Management plan. See entry for PBM.

Ophthalmologist – a physician who specializes in diseases of the eye.

Optician – an licensed health professional (not a physician) who makes glasses and contacts.

Optometrist – a licensed health professional (not a physician) who specializes in examinations of the eye and prescribes eyeglasses and contacts for correction.

Orthopedist (orthopedic surgeon) – a physician who specializes in injuries and diseases of the bones.

Osteopath (DO) – a specialty that emphasizes the theory that the body can make its own remedies given normal structural relationships, environmental conditions and nutrition, Osteopathic physicians are granted the Doctor of Osteopathy (DO) degree.

Out of Network Benefits – with most HMOs, a patient cannot have any services reimbursed if provided by a hospital or doctor who is not in the network. With PPOs and other managed care organizations, there may exist a provision for reimbursement of “out of network” providers. Usually this will involve higher copay or a lower reimbursement.

Out-of-Network Provider – a health care provider with whom a managed care organization does not have a contract to provide health care services. Because the beneficiary must pay either all of the costs of care from an out-of-network provider or their cost-sharing requirements are greatly increased, depending on the particular plan a beneficiary is in, out-of-network providers are generally not financially accessible to Medicaid beneficiaries.

Out of Pocket Costs – dollar amounts set by MCOs that limit the amount a member has to pay out of his or her own pocket for particular healthcare services during a particular time period. Costs borne by the member that are not covered by health care plan.

Outpatient Care – care given a person who is not bedridden. Also called ambulatory care. Many surgeries and treatments are now provided on an outpatient basis, while previously they had been considered reason for inpatient hospitalization. Some say this is the fastest growing segment of healthcare.

Outpatient Hospital Care – medical or surgical care furnished by a hospital to a patient if that patient has not been admitted as an inpatient but is registered on hospital records as an outpatient. If a doctor orders that a patient be placed under observation, it may be considered outpatient care, even if the patient stays under observation overnight.

Outpatient Surgical Facility – a freestanding center within a hospital that is approved and licensed by the state to perform outpatient diagnostic services or surgical treatment of an illness or injury.

P

Participating Provider – simply refers to a provider under a contract with a health plan. A physician or hospital that has agreed to provide services for a set payment provided by a payer, or who agrees to other arrangements, or who agrees to provide services to a set of covered lives or defined patients.

Patient Liability – the dollar amount that an insured is legally obligated to pay for services rendered by a provider. These may include copayments, deductibles and payments for uncovered services.

Payer (usually Third-Party Payer) – the public or private organization that is responsible for payment for health care expenses. Payers may be insurance companies or self-insured employers.

Pediatrician – a physician who specializes in children’s health (up to age 18).

PCP (Primary Care Physician) – the physician who often acts as the primary gatekeeper in health plans. Often the PCP must approval referrals to specialists. Particularly in HMOs and some PPOs, all members must choose or are assigned a PCP.

Peer Review – the mechanism used by the medical staff to evaluate the quality of total health care provided by the managed care organization. The evaluation covers how well all health personnel perform services and how appropriate the services are to meet the patients’ needs. Evaluation of health care services by medical personnel with similar training.

Penalty (on Medicare Premium) – an amount added to a senior citizen’s monthly premium for Medicare Part B, or for a Medicare Prescription Drug Plan, if they do not join the Medicare Plan(s) when first able to. The senior citizen pays this higher amount as long as they have Medicare. There are some exceptions.

Pharmacy Benefit Management (PBM) Plan – a type of managed care specialty service organization that seeks to contain the costs of prescription drugs or pharmaceuticals while promoting more efficient and safer drug use. Also known as a prescription benefit management plan.

Physician’s Assistant (PA) – a licensed allied health professional who works under the supervision of a doctor and is trained to perform certain medial procedures previously reserved for physicians.

Physical Therapist – a licensed allied health professional who treats diseases or injuries by physical means; exercise, manipulation, electricity, heat, cold and water.

Plastic Surgeon – a physician who specializes in the repair, restoration or improvement of lost, injured or defective body parts.

Podiatrist (doctor of podiatry) – a licensed health professional (not a physician) who specializes in treatment of the feet.

Portability – requirement that health plans guarantee continuous coverage without waiting periods for persons moving between plans. The ability for an individual to transfer from one health insurer to another health insurer with regard to pre-existing conditions or other risk factors. This is a new protection for beneficiaries involving the issuance of a certificate of coverage from previous health plan to be given to new health plan. Under this requirement, a beneficiary who changes jobs is guaranteed coverage with the new plan, without a waiting period or having to meet additional deductible requirements.

POS (Point-of-service) Plan – a health plan that allows members to choose to receive services from a participating or nonparticipating network provider, usually with a financial disincentive for going outside the network. Generally the level of coverage is reduced for services associated with the use of nonparticipating providers.

Pre-admission Review, Pre-Admission Certification, Pre-Certification, or Pre-Authorization – review of “need” for inpatient care or other care before admission. This refers to a decision made by the payer, MCO or insurance company before admission. The payer determines whether or not the payer will pay for the service. Most managed care plans require pre-certification. This is a method of controlling and monitoring utilization by evaluating the need for service prior to the service being rendered. Failure to obtain pre-certification often results in a financial penalty or denial of payment for the admission or procedure.

Pre-existing Condition – a physical and/or mental condition of an insured person that existed prior to the issuance of his or her policy. Some plans may cover these conditions after a waiting period of six months to a year.

Preferred Provider Organization (PPO) – some combination of hospitals and physicians agreeing to offer particular services to a group of people, perhaps under contract with a private insurer. A health care delivery system that contracts with providers of medical care to provide services at discounted fees to members. Members may seek care form nonparticipating providers but generally are financially penalized for doing so by the loss of the discount and subjection to copayments and deductibles.

Premium – amount paid to a carrier for providing coverage under a contract. A periodic payment by the insured to the health insurance company or prescription benefit manager in exchange for insurance coverage. Varies depending on health plan or drug formulary.

Prescription Drug Plan (PDP) – these plans became more commonplace with the implementation of Medicare Part D in 2006. Everyone with Medicare, regardless of income, health status, or prescription drugs used, can get some sort of prescription drug coverage. These standalone plans add prescription drug coverage to the original Medicare Plan and to some Medicare Cost Plans and Medicare Private Fee-for-Service Plans.

Preventive Care – comprehensive care emphasizing priorities for prevention, early detection and early treatment of conditions, generally including routine physical examinations, immunizations and well-person care.

Prior Approval – a formal process for obtaining approval from a health insurer before a specific treatment, procedure, service or supply has been provided. Completing this process ensures that the patient receives full benefits for the specified services.

Primary Care – basic or general health care usually rendered by general practitioners, family practitioners, internists, obstetricians and pediatricians — who are often referred to as primary care practitioners or PCPs — as opposed to specialist care.

Primary Coverage – a plan that pays its expenses without consideration of other plans, under coordination of benefits rules.

Primary Care Physician (PCP) – a physician, usually a pediatrician, family practitioner or internist who oversees the total care of patients, referring the patient to other professionals as appropriate.

Proctologist – a physician who specializes in disease of the anus, rectum and sigmoid colon.

Protected Health Information – under HIPAA, this refers to individually identifiable health information transmitted or maintained in any form.

Psychiatrist – a physician who specializes mental, emotional and behavioral disorders.

Psychologist (doctor of psychology) – a health professional (not a physician) who specializes in the mental or behavioral characteristics of an individual or group. Provides psychological testing for diagnosis of mental and behavioral disorders. Psychologists are granted a Doctor of Psychology degree.

Q

Qualified Beneficiary – generally, qualified beneficiaries include covered employees or enrollees, their spouses and their dependent children who are covered under a group health plan. In certain cases, retired employees, their spouses and dependent children may be qualified beneficiaries.

R

Reasonable and Customary (R&C) charge – the prevailing charge made by physicians of similar expertise for a similar procedure in a particular geographic area. Also called Usual, Customary and Reasonable Fees.

Referral – the process of sending a patient from one practitioner to another for health care services. Health plans may require that designated primary care providers authorize a referral for coverage of specialty services.

Rehabilitation – Rehabilitative services are normally ordered by a doctor to help a patient recover from an illness or injury. These services are given by nurses and physical, occupational and speech therapists.

Renal (kidney) Dialysis Center – a facility that furnishes the full spectrum of diagnostic, therapeutic and rehabilitative services (except transplantation) required for the care of dialysis patients.

Resident Physician – a physician who has graduated from medical school and is currently in specialty training (interns are now called first-year residents).

Rheumatologist – a physician who specializes in the treatment of rheumatic diseases; inflammation of joints and muscles (e.g. rheumatoid arthritis).

RN – registered nurse, a nurse with two to four years of training.

S

Self-Funding or Self-Funded Plan – An employer or organization assumes complete responsibility for health care losses of its covered employees. This usually includes setting up a fund against which claim payments are drawn and claims processing is often handled through an administrative services contract with an independent organization. In this case, the employer does not pay premiums to an insurance carrier, but, rather pays administrative costs to the insurance company or health plan, and, in essence, treats them as a third-party administrator (TPA) only.

Self-Insured Plan – a health, dental or vision plan in which the risk for cost is assumed by the company rather than an insurance company or managed care plan. In a sense, the employer is acting as an insurance company by paying claims with the money ordinarily earmarked for premiums.

Self-Referral – the process whereby a patient seeks care directly from a specialist without seeking authorization from the primary care physician.

Service Area – the area where a health plan accepts members. For plans that require enrollees to use certain doctors and hospitals, it is also the area where services are provided.

Skilled Care – a type of health care given when a patient needs skilled nursing or rehabilitation staff to manage, observe, and evaluate care. Generally refers to a level of care that is lower, or less intense, than inpatient hospital care.

Skilled Nursing Care – a level of care that includes services that can only be performed safely and correctly by a licensed nurse (either a registered nurse or a licensed practical nurse).

Skilled Nursing Facility (SNF) – a care setting for patients who no longer require hospital care, but need 24-hour nursing care and other health care services.

Stop Loss Insurance – insurance purchased by an insurance company or health plan from another insurance company to protect itself against losses. A type of insurance coverage that enables provider organizations or self-funded groups to place a dollar limit on their liability for paying claims and requires the insurer issuing the insurance to reimburse the insured organization for claims paid in excess of a specified yearly maximum.

Subrogation – the right of an employer or insurance company to recover benefits paid to a plan participant through legal suit, if the action causing the medical expense was the fault of another individual.

Summary Plan Description (SPD) – in self-funded plans, a written explanation of the eligibility for and benefits available to employees required by ERISA.

Supplemental Insurance – any private health insurance plan held by a Medicare beneficiary or commercial beneficiary, including Medigap policies and post-retirement health benefits. Supplemental insurance usually pays the deductible or co-pay and sometimes will pay the entire bill when the primary carrier’s benefits are exhausted.

Surgeon – a physician who specializes in treating disease and illness by surgery.

T

Terminal illness – life expectancy of six months or less.

Termination Date – the date that a group contract expires or an individual is no longer eligible for benefits.

Tertiary Care – specialized health care, needed by relatively few people, such as select rehabilitation services, highly technical medical procedures such as burn centers.

Tiers – to have lower costs, many prescription drug plans place drugs into different “tiers,” which cost different amounts. Each plan can form their tiers in different ways. Here is an example of how a plan might form its tiers: Tier 1 – Generic drugs; Tier 2 – Preferred brand-name drugs; Tier 3 – Non-preferred brand-name drugs.

Third-party Administrator (TPA) – a firm that provides administrative functions (e.g. claims processing, membership, etc.) for a self-insured health plan.

Third-Party Payment – payment by a financial agent such as an HMO, insurance company or government rather than direct payment by the patient for medical care services. The payment for health care when the beneficiary is not making payment, in whole or in part, on his own behalf.

TRICARE – a health care program for active duty and retired uniformed services members and their families.

Two-Tier Copayment Structure – a pharmacy benefit copayment system under which a member is required to pay one copayment amount for a generic drug and a higher copayment amount for a brand-name drug.

U

Unassigned Claim – a claim submitted for a service or supply by a provider who does not accept assignment.

Unbundling – the practice of a provider charging separately for services that normally are covered under one procedure code.

Uninsured – people who lack public or private health insurance.

Universal Coverage – a type of government-sponsored health plan that would provide healthcare coverage to all citizens.

Urgent Services – benefits covered in an Evidence of Coverage that are required to prevent serious deterioration of an insured’s health that results from an unforeseen illness or injury.

Urologist – a physician who specializes in treatment of urinary tract and kidneys.

Urgent Care Center – an ambulatory care facility that provides 24-hour service to treat minor conditions such as cuts, bruises, sprains and suture removal that is less costly than emergency room treatment.

Utilization – use of services and supplies. Utilization is commonly examined by patterns or rates of use of a single service or type of service such as hospital care, physician visits and prescription drugs.

Utilization Review (UR) – a formal review of utilization for appropriateness of health care services delivered to a member on a prospective, concurrent or retrospective basis. In a hospital, this includes review of the appropriateness of admissions, services ordered and provided, length of a stay, and discharge practices, both on a concurrent and retrospective basis. A peer review group, or a public agency can do utilization review. UR is a method of tracking, reviewing and rendering opinions regarding care provided to patients.

V

Vital Statistics – statistics relating to births (natality), deaths (mortality), marriages, health, and disease (morbidity). An individual patient’s vital statistics in a health care setting may also refer simply to blood pressure, temperature, height and weight, etc.

W

Waiting Periods – the length of time an individual must wait to become eligible for benefits for a specific condition after overall coverage has begun. Also refers to the period that must pass before an employee or dependent is eligible to enroll (becomes covered) under the terms of the group health plan. If the employee or dependent enrolls as a late enrollee or on a special enrollment date, any period before the late or special enrollment is not a waiting period. If a plan has a waiting period and a pre-existing condition exclusion, the pre-existing condition exclusion period begins when the waiting period begins. Days in a waiting period are not counted toward creditable coverage unless there is other creditable coverage during that time.

Waiver – approval that the Centers for Medicare and Medicaid Services (CMS, formerly called HCFA), the federal agency that administers the Medicaid program, may grant to state Medicaid programs to exempt them from specific aspects of Title XIX, the federal Medicaid law.

Wellness – a dynamic state of physical, mental and social well-being; a way of life that equips the individual to realize the full potential of their capabilities and to overcome and compensate for weaknesses; and a lifestyle that recognizes the importance of nutrition, physical fitness, stress reduction and self-responsibility. Wellness has been viewed as the result of four key factors over which an individual has varying degrees of control: human biology, environment, health care organization and lifestyle.

Workers’ Compensation – insurance that employers are required to have to cover employees who get sick or injured on the job. A state-mandated program providing insurance coverage for work-related injuries and disabilities.