Tanner, Ballew and Malloof, Inc.

Glossary

administrative services only (ASO) contract. A contract under which a third party administrator or an insurer agrees to provide administrative services to an employer in exchange for a fixed fee per employee

aggregate stop-loss coverage. A type of stop-loss insurance that provides benefits when a group's total claims during a specified period exceed a stated amount.

ambulatory care facility (ACF). A medical care center that provides a wide range of healthcare services, including preventive care, acute care, surgery, and outpatient care, in a centralized facility. Also known as a medical clinic or medical center.

ancillary services. Auxiliary or supplemental services, such as diagnostic services, home health services, physical therapy, and occupational therapy, used to support diagnosis and treatment of a patient's condition.2

annual and lifetime maximum benefit amounts. Maximum dollar amounts that limit the total amount the plan must pay for all healthcare services provided to a participant per year or in his or her lifetime.

benchmarking. A method of planning and implementing quality management programs that consists of identifying the best practices and best outcomes for a specific process and emulating the best practices to equal or surpass the best outcomes.

benefit design. The process to determine which benefits or the level of benefits that will be offered to its participants, the degree to which participants will be expected to share the costs of such benefits, and how a participant can access medical care through the health plan.

blended rating. For groups with limited recorded claim experience, a method of forecasting a group's cost of benefits based partly on manual rates and partly on the group's experience.

broker. A salesperson who has obtained a state license to sell and service contracts of multiple health plans or insurers, and who is ordinarily considered to be an agent of the buyer, not the health plan or insurer.

capitation. A method of paying for healthcare services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided.

captive agents. Agents that represent only one health plan or insurer

carve-out. The separation of a medical service (or a group of services) from the basic set of benefits in some way.

case management. A process of identifying plan participants with special healthcare needs, developing a health-care strategy that meets those needs, and coordinating and monitoring care.

claim. An itemized statement of healthcare services and their costs provided by a hospital, physician's office, or other provider facility.

claim form. An application for payment of benefits under a health plan.

claimant. The person or entity submitting a claim.

community rating. A rating method that sets premiums for financing medical care according to the health plan's expected costs of providing medical benefits to the community as a whole rather than to any sub-group within the community. Both low-risk and high-risk classes are factored into community rating, which spreads the expected medical care costs across the entire community.

community rating by class (CRC). The process of determining premium rates in which a managed care organization categorizes its members into classes or groups based on demographic factors, industry characteristics, or experience and charges the same premium to all members of the same class or group.

concurrent review. A type of utilization review that occurs while treatment is in progress and typically applies to services that continue over a period of time.

Consolidated Omnibus Budget Reconciliation Act (COBRA). A federal act which requires each group health plan to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduction in hours worked, death or divorce of a covered employee, birth of a child, and termination of employment.

copayment. A specified dollar amount that a member must pay out-of-pocket for a specified service at the time the service is rendered.

deductible. A flat amount a participant must pay before the insurer will make any benefit payments.

dental point of service (dental POS) option. A dental service plan that allows a member to use either a DHMO network dentist or to seek care from a dentist not in the HMO network.

Participants choose in-network care or out-of-network care at the time they make their dental appointment and usually incur higher out-of-pocket costs for out-of-network care.

dental preferred provider organization (dental PPO). An organization that provides dental care to its members through a network of dentists who offer discounted fees to the plan members.

drug utilization review (DUR). A review program that evaluates whether drugs are being used safely, effectively, and appropriately. 

"dual choice" provisions. Provisions in the HMO Act of 1973 that required employers that  offered healthcare coverage to more than 25 employees to offer a choice of traditional indemnity coverage or managed healthcare coverage under an HMO.

electronic data interchange (EDI). The computer-to-computer transfer of data between organizations using a data format agreed upon by the sending and receiving parties.

employee benefits consultant. A specialist in employee benefits and insurance who is hired by a group buyer to provide advice on a health plan purchase. 

Employee Retirement Income Security Act (ERISA). A broad-reaching law that establishes the rights of pension plan participants, standards for the investment of pension plan assets, and requirements for the disclosure of plan provisions and funding. ethics. The principles and values that guide the actions of an individual or population when faced  with questions of right and wrong.

exclusive provider organization (EPO). A healthcare benefit arrangement that is similar to a  preferred provider organization in administration, structure, and operation, but which does not cover out-of-network care

experience. The actual cost of providing healthcare to a group during a given period of coverage.

experience rating. A rating method where a grou[‘s recorded healthcare costs are analyzed by type and calculates the group's premium partly or completely according to the group's experience.

fee schedule. The fee determined to be acceptable for a procedure or service, which the physician agrees to accept as payment in full. Also known as a fee allowance, fee maximum, or capped fee.

fee-for-service (FFS) payment system. A benefit payment system in which an insurer reimburses the group member or pays the provider directly for each covered medical expense after the expense has been incurred.

forecasting. A process that involves predicting incoming and outgoing cash flows-primarily revenues and expenses-and predicting the values of its assets, liabilities, and capital or capital and surplus.

formulary. A listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given managed population and that are to be used by providers in prescribing medications.

fully funded plan. A health plan under which an insurer bears the financial responsibility of  guaranteeing claim payments and paying for all incurred covered benefits and administration costs.

funding vehicle. In a self-funded plan, the account into which the money that an employer and employees would have paid in premiums to an insurer is deposited until the money is paid out.

generic substitution. The dispensing of a drug that is the generic equivalent of a drug listed on a pharmacy benefit management plan's formulary.

Health Insurance Portability and Accountability Act (HIPAA). A federal law that outlines the requirements that employer-sponsored group insurance plans, insurance companies, and managed care organizations must satisfy in order to provide health insurance coverage in the individual and group healthcare markets.

health maintenance organization (HMO). A healthcare system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee.

incurred but not reported (IBNR) claims. Claims or benefits that occurred during a particular time period, but that have not yet been reported or submitted to an insurer so they remain unpaid.independent agents. Agents that represent several health plans or insurers 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.

mail-order pharmacy programs. Programs that offer drugs ordered and delivered through the mail to plan members sometimes at a reduced cost.

managed care. The integration of both the financing and delivery of health-care within a system that seeks to manage the accessibility, cost, and quality of that care.

managed care organization (MCO). Any entity that utilizes certain concepts or techniques to manage the accessibility, cost, and quality of health-care.

managed dental care. Any dental plan offered by an organization that provides a benefit plan that differs from a traditional fee-for-service plan.

managed indemnity plans. Health insurance plans that are administered like traditional indemnity plans but which include managed care "overlays" such as pre-certification and other utilization review techniques.

Management Services Organization (MSO). An organization, owned by a hospital or a group of investors, that provides management and administrative support services to individual physicians or small group practices in order to relieve physicians of non-medical business functions so that they can concentrate on the clinical aspects of their practice.

manual rating. A rating method under which a health plan uses the plan's average experience with all groups-and sometimes the experience of other health plans-rather than a particular group's experience to calculate the group's premium.

market segmentation. The process of dividing the total market for a product or service into smaller, more manageable subsets or groups of customers.

marketing. The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Medicaid. A joint federal and state program that provides hospital and medical expense coverage to the low-income population and certain aged and disabled individuals medical underwriting. The evaluation of health questionnaires submitted by all proposed plan members to determine the insurability of the group.

medically appropriate services. Diagnostic or treatment measures for which the expected health benefits exceed the expected risks by a margin wide enough to justify the measures.

medically necessary services. Services or supplies as provided by a physician or other healthcare provider to identify and treat a member's illness or injury, which, as determined by the payor, are consistent with the symptoms, diagnosis, and treatment of the member's condition; in accordance with the standards of good medical practice; not solely for the convenience of the member, member's family, physician, or other healthcare provider; and furnished in the least intensive type of medical care setting required by the member's condition.

Medicare. A federal government program established under Title XVIII of the Social Security Act  of 1965 to provide hospital expense and medical expense insurance to elderly and disabled persons.

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 SELECT. A Medicare supplement that uses a preferred provider organization to supplement Medicare Part B coverage.

Medicare supplement. A private medical expense insurance policy that provides reimbursement for out-of-pocket expenses, such as deductibles and coinsurance payments, or benefits for some medical expenses specifically excluded from Medicare coverage.

Mental Health Parity Act (MHPA). A law which prohibits group health plans from applying more restrictive annual and lifetime limits on coverage for mental illness than for physical illness.

network. The group of physicians, hospitals, and other medical care professionals that a managed care plan has contracted with to deliver medical services to its members.

Newborns' and Mothers' Health Protection Act (NMHPA). A law which specifies that group health plans or group healthcare insurers cannot mandate that hospital stays following childbirth be shorter than 48 hours for normal deliveries or 96 hours for cesarean births.

no balance billing provision. A provider contract clause which states that the provider agrees to accept the amount the plan pays for medical services as payment in full and not to bill plan members for additional amounts (except for copayments, coinsurance, and deductibles).

open access. A provision that specifies that plan members may self-refer to a specialist, either in-network or out-of-network, at full benefit or at a reduced benefit, without first obtaining a referral from a primary care provider.

out-of-pocket maximums. Dollar amounts 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.

outpatient care. Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility.

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

physician-hospital organization (PHO). A joint venture between a hospital and many or all of its admitting physicians whose primary purpose is contract negotiations and marketing.

plan funding. The method that an employer or other payor or purchaser uses to pay medical benefit costs and administrative expenses.

point-of-service (POS) product. A healthcare option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan's network or seek medical care outside the network.

pooling. The practice of underwriting a number of small groups as if they constituted one large group.

preadmission testing. A utilization management technique that requires plan members who are scheduled for inpatient care to have preliminary tests, such as X-rays and laboratory tests,performed on an outpatient basis prior to admission.

pre-certification. A utilization management technique that requires a plan member or the physician in charge of the member's care to notify the plan, in advance, of plans for a patient to undergo a course of care such as a hospital admission or complex diagnostic test.

pre-existing condition. In group health insurance, generally a condition for which an individual received medical care during a specified number of months immediately prior to the effective date of coverage.

preferred provider organization (PPO). A healthcare benefit arrangement designed to supply  services at a discounted cost by providing incentives for members to use designated healthcare providers (who contract with the PPO at a discount), but which also provides coverage for services rendered by healthcare providers who are not part of the PPO network.

premium. A prepaid payment or series of payments made to a health plan by purchasers, and often plan members, for medical benefits.

premium taxes. State income taxes levied on an insurer's premium income.

primary care. General medical care that is provided directly to a patient without referral from another physician. It is focused on preventive care and the treatment of routine injuries and illnesses

primary care provider (PCP). A physician or other medical professional who serves as a group member's first contact with a plan's healthcare system. Also known as a primary care physician, personal care physician, or personal care provider

renewal underwriting. The process by which an underwriter reviews each year all the selection factors that were considered when the contract was issued, then compares the group's actual utilization rates to those predicted to determine the group's renewal rate.

reserves. Estimates of money that an insurer needs to pay future business obligations.

self-funded plan. A health plan under which an employer is financially responsible for paying plan expenses, including claims made by group plan members. Also known as a self-insured plan.

specialist. A healthcare professional whose practice is limited to a certain branch of medicine, specific procedures, certain age categories of patients, specific body systems, or certain types of diseases.

standard of care. A diagnostic and treatment process that a clinician should follow for a certain type of patient, illness, or clinical circumstance.

stop-loss insurance. A type of insurance coverage that enables provider organizations or selffunded 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.

termination provision. A provider contract clause that describes how and under what circumstances the parties may end the contract.

third party administrator (TPA). A company that provides administrative services to self-funded health plans but that does not have the financial responsibility for paying benefits.

three-tier co-payment structure. A pharmacy benefit co-payment system under which a member is required to pay one co-payment amount for a generic drug, a higher co-payment amount for a brand-name drug included on the health plan's formulary, and an even higher copayment amount for a non-formulary drug.

unbundling. A coding inconsistency that involves separating a procedure into parts and charging for each part rather than using a single code for the entire procedure.

underwriting. The process of identifying and classifying the risk represented by an individual or group

underwriting requirements. Requirements, sometimes relating to group characteristics or financing measures that is imposed in order to provide healthcare coverage to a given group and which are designed to balance a health plan's knowledge of a proposed group with the ability of the group to voluntarily select against the plan (anti-selection).

usual, customary, and reasonable (UCR) fee. The amount commonly charged for a particular medical service by physicians within a particular geographic region. UCR fees are used by traditional health insurance companies as the basis for physician reimbursement.

utilization guidelines. A utilization review resource that indicates accepted approaches to care for common, uncomplicated healthcare services.

utilization management (UM). Managing the use of medical services to ensure that a patient receives necessary, appropriate, high-quality care in a cost-effective manner.

utilization review (UR). An evaluation of the medical necessity, appropriateness, and cost-effectiveness of healthcare services and treatment plans for a given patient.

Women's Health and Cancer Rights Act (WHCRA). A law which requires health plans that offer medical and surgical benefits for mastectomy to provide coverage for reconstructive surgery following mastectomy.