Health Insurance Glossary

Allowable Fee, or Usual and Customary Reimbursement (UCR)

The maximum amount a health insurer will pay for a service or procedure.

Adjusted community rating (ACR)

A rating method under which a health plan or MCO divides its members into classes or groups based on demographic factors such as geography, family composition, and age, and then charges all members of a class or group the same premium. The plan cannot consider the experience of a class, group, or tier in developing premium rates. Also known as modified community rating or community rating by class.

ASO (Administrative Services Only)

An arrangement in which an employer hires a
third party to deliver administrative services to the employer such as claims processing
and billing; the employer bears the risk for claims.

• This is common in self-insured health care plans.

Benefit

A health care product or service that is paid for (in part or whole) by the insurance company.

Coinsurance

A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid.

• Once any deductible amount and coinsurance are paid, the insurer is responsible for the rest of the reimbursement for covered benefits up to allowed charges: the individual could also be responsible for any charges in excess of what the insurer determines to be “usual, customary and reasonable”.
• 
  Coinsurance rates may differ if services are received from an approved provider (i.e., a provider with whom the insurer has a contract or an agreement specifying payment levels and other contract requirements) or if received by providers not on the approved list.
• 
  In addition to overall coinsurance rates, rates may also differ for different types of services.

Coordination of Benefits

A system to eliminate duplication of benefits when you are covered under more than one group health insurance plan. Benefits under the two health insurance plans usually are limited to no more than 100 percent of the health claim.

Co-payment

A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement.

• There may be separate co-payments for different services.
• 
  Some plans require that a deductible first be met for some specific services before a co-payment applies.

Deductible

A fixed dollar amount during the benefit period - usually a year - that an insured person pays before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles.

• Some plans may have separate deductibles for specific services. For example, a plan may have a hospitalization deductible per admission.
• 
  Deductibles may differ if services are received from an approved provider or if received from providers not on the approved list.

Covered Expenses

Most health insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay for all health care services. Some may not pay for prescription drugs. Others may not pay for mental health care. Covered health care services are those medical procedures the health insurer agrees to pay for. They are listed in the health insurance policy.

Customary Fee

Most health insurance plans will pay only what they call a reasonable and customary fee for a particular health care service. If your doctor charges $1,000 for a hernia repair while most doctors in your area charge only $600, you will be billed for the $400 difference. This is in addition to the deductible and coinsurance you would be expected to pay. To avoid this additional cost, ask your doctor to accept your health insurance company's payment as full payment. Or shop around to find a doctor who will. Otherwise you will have to pay the rest yourself.

Specific conditions or circumstances for which the health insurance policy will not provide benefits. 

Electronic Health Record

An electronic health record is a long-term aggregate of a patient’s health information and may be a record of a variety of providers and types of medical care. This record is sometimes confused with an electronic medical record, which is a record of a patient’s health maintained by a physician as a record primarily of the physician’s care of the patient.

Electronic Medical Record

An electronic medical record is a record of patient health maintained by the patient’s physician as a record of that physician’s care of the patient. This record is often confused with an electronic health record, which is a more comprehensive, long-term aggregate of a patient’s health information and may be a record of a variety of providers and types of medical care.

Flexible spending accounts or arrangements (FSA)

Accounts offered and administered by employers that provide a way for employees to set aside, out of their paycheck, pretax dollars to pay for the employee’s share of insurance premiums or medical expenses not covered by the employer’s health plan. The employer may also make contributions to a FSA. Typically, benefits or cash must be used within the given benefit year or the employee loses the money. Flexible spending accounts can also be provided to cover childcare expenses, but those accounts must be established separately from medical FSAs.

Flexible benefits plan (Cafeteria plan) (IRS 125 Plan)

A benefit program under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including cash, and nontaxable benefits such as life and health insurance, vacations, retirement plans and child care. Although a common core of benefits may be required, the employee can determine how his or her remaining benefit dollars are to be allocated for each type of benefit from the total amount promised by the employer. Sometimes employee contributions may be made for additional coverage.

Fully insured plan

A plan where the employer contracts with another organization to assume financial responsibility for the enrollees’ medical claims and for all incurred administrative costs.

Gatekeeper

Under some health insurance arrangements, a gatekeeper is responsible for the administration of the patient’s treatment; the gatekeeper coordinates and authorizes all medical services, laboratory studies, specialty referrals and hospitalizations.

Generic Drug

A drug which is the same as a brand name drug and which is allowed to be produced after the brand name drug’s patent has expired.

Group purchasing arrangement

Any of a wide array of arrangements in which two or more small employers purchase health insurance collectively, often through a common intermediary who acts on their collective behalf. Such arrangements may go by many different names, including cooperatives, alliances, or business groups on health. They differ from one another along a number of dimensions, including governance, functions and status under federal and State laws. Some are set up or chartered by States while others are entirely private enterprises. Some centralize more of the purchasing functions than others, including functions such as risk pooling, price negotiation, choice of health plans offered to employees, and various administrative tasks. Depending on their functions, they may be subject to different State and/or federal rules. For example, they may be regulated as Multiple Employer Welfare Arrangements (MEWAs).

Health Care Plans and Systems

Managed care plans

Managed care plans generally provide comprehensive health services to their members, and offer financial incentives for patients to use the providers who belong to the plan. Examples of managed care plans include:

• Health maintenance organizations (HMOs),
• Preferred provider organizations (PPOs),
• Exclusive provider organizations (EPOs), and
• Point of service plans (POSs).

Managed care provisions

Features within health plans that provide insurers with a way to manage the cost, use and quality of health care services received by group members.

Examples of managed care provisions include:

• Preadmission certification - An authorization for hospital admission given by a health care provider to a group member prior to their hospitalization. Failure to obtain a preadmission certification in non-emergency situations reduces or eliminates the health care provider’s obligation to pay for services rendered.
  
  
• Utilization review - The process of reviewing the appropriateness and quality of care provided to patients. Utilization review may take place before, during, or after the services are rendered.
  
  
• Preadmission testing - A requirement designed to encourage patients to obtain necessary diagnostic services on an outpatient basis prior to non-emergency hospital admission. The testing is designed to reduce the length of a hospital stay.
  
  
• Non-emergency weekend admission restriction - A requirement that imposes limits on reimbursement to patients for non-emergency weekend hospital admissions.
  
  
• Second surgical opinion - A cost-management strategy that encourages or requires patients to obtain the opinion of another doctor after a physician has recommended that a non-emergency or elective surgery be performed. Programs may be voluntary or mandatory in that reimbursement is  reduced or denied if the participant does not obtain the second opinion. Plans usually require that such opinions be obtained from board-certified specialists with no personal or financial interest in the outcome.

Maximum plan dollar limit

The maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan.

• Plans can have a yearly and/or a lifetime maximum dollar limit.
• The most typical of maximums is a lifetime amount of $1 million per individual.

Maximum out-of-pocket expense

The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses, often up to a lifetime maximum. (See previous definition.)

Medical savings accounts (MSA)

Savings accounts designated for out-of-pocket medical expenses. In an MSA, employers and individuals are allowed to contribute to a savings account on a pre-tax basis and carry over the unused funds at the end of the year. One major difference between a Flexible Spending Account (FSA) and a Medical Savings Account (MSA) is the ability under an MSA to carry over the unused funds for use in a future year, instead of losing unused funds at the end of the year. Most MSAs allow unused balances and earnings to accumulate. Unlike FSAs, most MSAs are combined with a high deductible or catastrophic health insurance plan.

Minimum premium plan (MPP)

A plan where the employer and the insurer agree that the employer will be responsible for paying all claims up to an agreed-upon aggregate level, with the insurer responsible for the excess. The insurer usually is also responsible for processing claims and administrative services.

Multiple Employer Welfare Arrangement (MEWA)

MEWA is a technical term under federal law that encompasses essentially any arrangement not maintained pursuant to a collective bargaining agreement (other than a State-licensed insurance company or HMO) that provides health insurance benefits to the employees of two or more private
employers.

Multi-employer health plan

Generally, an employee health benefit plan maintained pursuant to a collective bargaining agreement that includes employees of two or more employers. These plans are also known as Taft-Hartley plans or jointly-administered plans. They are subject to federal but not State law (although States may regulate any insurance policies that they buy). They often self-insure.

Premium

Agreed upon fees paid for coverage of medical benefits for a defined benefit period. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.

Premium equivalent

For self-insured plans, the cost per covered employee, or the amount the firm would expect to reflect the cost of claims paid, administrative costs, and stop-loss premiums.

Primary care physician (PCP) 

A physician who serves as a group member's primary contact within the health plan. In a managed care plan, the primary care physician provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.

Reinsurance

The acceptance by one or more insurers, called reinsurers or assuming companies, of a portion of the risk underwritten by another insurer that has contracted with an employer for the entire coverage.

Self-insured plan

A plan offered by employers who directly assume the major cost of health insurance for their employees. Some self-insured plans bear the entire risk. Other self-insured employers insure against large claims by purchasing stop-loss coverage. Some self-insured employers contract with insurance carriers or third party administrators for claims processing and other administrative services; other self-insured plans are selfadministered. Minimum Premium Plans (MPP) are included in the self-insured health plan category. All types of plans (Conventional Indemnity, PPO, EPO, HMO, POS, and PHOs) can be financed on a self-insured basis. Employers may offer both self-insured and fully insured plans to their employees.

Stop-loss coverage

A form of reinsurance for self-insured employers that limits the amount the employers will have to pay for each person’s health care (individual limit) or for the total expenses of the employer (group limit).

Third party administrator (TPA)

An individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance. The TPA is not the policyholder or the  insurer.

Types of health care provider arrangements

• Exclusive providers - Enrollees must go to providers associated with the plan for all non-emergency care in order for the costs to be covered.
  
  
• Any providers - Enrollees may go to providers of their choice with no cost incentives to use a particular subset of providers.
  
  
• Mixture of providers - Enrollees may go to any provider but there is a cost incentive to use a particular subset of providers.

Usual, customary, and reasonable (UCR) charges 

Conventional indemnity plans operate based on usual, customary, and reasonable (UCR) charges. UCR charges mean that the charge is the provider’s usual fee for a service that does not exceed the customary fee in that geographic area, and is reasonable based on the circumstances. Instead of UCR charges, PPO plans often operate based on a negotiated (fixed) schedule of fees that recognize charges for covered services up to a negotiated fixed dollar amount.

source :

http://www.healthinsexpo.com/glossary.html

http://www.foreignborn.com/self-help/health_insurance/5-ins_terms.htm

http://www.bls.gov/ncs/ebs/sp/healthterms.pdf