Glossary of Financial and Insurance Terms
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y | Z
A
ACCESS: The right or ability to obtain health care services. Often determined by location of facilities, transportation, hours of operation, cost of care and availability.
ACTIVITIES OF DAILY LIVING (ADLs): Daily routine of self-care activities such as dressing, bathing and eating.
ALLOWED EXPENSES: The maximum amount a plan pays for a covered service. See Usual and Customary Charges.
AMBULATORY CARE: Medical services provided on an outpatient (non-hospitalized) basis
ANCILLARY SERVICES: Health care services provided by professionals other than primary care physicians.
AVERAGE LENGTH OF STAY: Average number of inpatient days spent in a hospital or other health care facility per admission or discharge. Calculated by total number of days in the facility for all admissions occurring during a period divided by the number of admission during the same period. This varies and is measured for patients based on age, specific diagnoses or sources of payment.
B
BALANCE BILLING: The practice of billing patients for all charges over the physician rate paid by insurers. Many managed care plans prohibit this practice.
BENEFITS: These are medical services for which your insurance plan will pay, in full or in part.
C
CAPITATION: Method of payment for health services in which a physician or hospital is paid a fixed amount for each enrollee regardless of the actual amount or type of services provided to each person. The provider is responsible for delivering or arranging for the delivery of all health services required by the covered person under the conditions of the provider contract.
CASE MANAGEMENT: A planned approach to manage services or treatments to an individual with specific health care needs. The goal is to contain costs and promote more effective intervention to meet patient needs and achieve optimum patient outcome.
CASE MANAGER: An experienced health care professional (nurse, social worker, doctor or pharmacist) who works with patients, providers and insurers to coordinate all necessary aspects of health care. Case managers evaluate necessity, appropriateness and efficiency of services and drugs provided to individual patients.
CLAIM: A notice to the insurance company that a person received care covered by the plan. A claim is also a request for payment.
CO-INSURANCE: A term that describes a shared payment between an insurance company and an insured individual. It's usually described in percentages; for example, the insurance company agrees to pay 80% of covered charges and the individual picks up 20%.
CO-PAYMENT: The insured individual's portion of the cost of their care, usually a flat dollar amount, like $10 per office visit. Under many plans, co-payments are made at the time of the service and the health plan pays for the remainder of the fee.
COVERAGE: What services the health plan does and does not pay for.
COVERED EXPENSES: What the insurance company will consider paying for as defined in the contract. For example, under some plans generic prescriptions are covered expenses while brand name prescriptions are not.
CUSTOMARY CHARGE: A fee is considered "Customary" if it is within the range of fees that most physicians who practice in the area charge.
D
DEDUCTABLE: A portion of the covered expenses (typically $100, $200 or $500) that an insured individual must pay before insurance coverage with co-insurance goes into effect. Deductibles are standard in many policies, and are usually based on a calendar year.
DIAGNOSIS RELATED GROUPS (DRGs): The hospital classification and reimbursement system that groups patients by diagnosis, surgical procedures, age, sex and presence of complications. This is a financing mechanism used to reimburse hospital and selected other providers for services rendered.
E
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 of those in PPOs but have a more restrictive provider selection and credentialing process.
EXPERIMENTAL PROCEDURES: Any health care services, that are determined by the insurance plan to be either; not generally accepted by informed health care professionals in the United States as effective in treating the condition, illness or diagnosis for which their use is proposed; or not proven by scientific evidence to be effective in treating the condition for which it is proposed.
F
FEE-FOR-SERVICE: A traditional health care payment system in which physicians and other providers receive payment based on each billed charge for a visit or service rendered.
G
H
HEALTH MAINTENANCE ORGANIZATION (HMO): An organization that provides, offers or arranges for a wide range of covered health care services for a specified group of enrollees for a fixed, periodic prepayment. Models include: group model, individual practice association, network model, mixed model and staff model. Under the Federal HMO Act, an entity must have three characteristics to call itself an HMO:
- An organized system for providing health care or otherwise assuring health care delivery in a geographic area.
- An agreed upon set of basic and supplemental health maintenance and treatment services.
- A voluntarily enrolled group of people.
I
INPATIENT CARE: The type of treatment you receive when you are an overnight patient at a hospital or treatment center.
J
K
L
M
MANAGED CARE: A system that integrates financing, delivery and measurement of appropriate medical care through 1) contracts with selected physicians, hospitals and pharmacy benefit networks to furnish a comprehensive set of health care services to enrolled members, usually for a predetermined monthly premium 2) utilization and quality controls that contracting providers agree to accept 3) financial incentives for patients to use providers and facilities associated with the plan and 4) in some cases an assumption of some financial risk by physicians. The goal is to provide value through a system that provides people access to quality, cost-effective health care.
MANAGED CARE PLAN: A term that typically refers to an HMO, Point of Service, or PPO, but technically means any health plan with specific requirements, like pre-authorization or second opinions which enable your primary care physician to coordinate or manage all aspects of your medical care.
MAXIMUM OUT-OF-POCKET: The most money you can expect to pay for covered expenses. The maximum limit varies from plan to plan. Once the maximum out-of-pocket has been met, the health plan will pay 100% of certain covered expenses.
MEDICAID: A program of health insurance provided by the state and federal government for the poor, elderly and disabled.
MEDICARE: Health insurance provided by the federal government for the elderly and disabled.
N
O
OPEN ENROLLMENT: A specified period of time in which employees may change insurance plans and medical groups offered by their employer and have the new insurance effective at a later date.
OUTPATIENT CARE: Treatment in a doctor's office or clinic.
P
PARTICIPATING PROVIDER: A provider who has contracted with the health plan to deliver medical services to covered persons. The provider may be a hospital, pharmacy or other facility or a physician who has contractually accepted the terms and conditions as set forth by the health plan.
PHYSICIAN HOSPITAL ORGANIZATION (PHO): An arrangement between a hospital and physicians to pursue managed care contracts. A PHO fosters mutual interests while allowing for some autonomy. In a physician hospital organization, physicians retain ownership of their practices.
POINT OF SERVICE (POS) PLAN: Managed care product that offers enrollees a choice among options when they need medical services, rather than when they enroll in the plan. Enrollees may use providers outside the managed care network, but usually at higher cost. (This should not be confused with POS as used in retail pharmacy, where it stands for point of sale.)
PREAUTHORIZATION: An insurance plan requirement in which you or your primary care physician need to notify your insurance company in advance about certain medical procedures (like outpatient surgery) in order for those procedures to be considered a covered expense.
PREEXISTING CONDITIONS: Illnesses or problems a patient had before obtaining an insurance policy. Some insurance companies may refuse to issue a policy or not pay for care for the preexisting or may not pay for that condition for a set period of time.
PREFERRED PROVIDER ORGANIZATION: A program in which contracts are established with providers of medical care. Usually the benefit contract provides significantly better benefits (few copayments) for services received from preferred providers, thus encouraging covered persons to use these providers. Covered persons generally are allowed benefits for non-participating providers services, usually on an indemnity basis with significant copayments. A PPO arrangement can be insured or self-funded. Providers may be, but are not necessarily, paid on a discounted fee-for-service.
PREMIUM: The amount paid for any insurance policy.
POINT OF SERVICE: A health plan that allows the patient to choose the type of payment method (traditional, PPO or HMO) at the time service is received.
PRIMARY CARE PHYSICIAN: (PCP) A PCP is the doctor responsible for coordinating all of your care. Any specialist referrals you'll need must first be approved by your PCP in order to be considered a covered expense.
PRIVATE INSURANCE: Traditional health care coverage purchased from an insurance company. Gives you free choice of physicians, hospitals and other health care facilities.
PROVIDER: The supplier of health care services. This could be a physician, a hospital, a physical therapist, etc.
Q
R
REASONABLE CHARGE: A fee is considered "Reasonable" if it is both usual and customary or if it is justified because there is a complex problem involved.
REFERRAL: Approval or consent by a primary care physician for patient referral to ancillary services and specialists.
S
SECOND OPINION: An opinion obtained from an additional health care professional prior to the performance of a medical service or a surgical procedure. May refer to a formalized process, voluntary or mandatory, which is used to help educate a patient regarding treatment alternatives and/or to determine medical necessity.
SINGLE-PAYER: Government-paid health care (often called "socialized medicine") using tax dollars.
SUBSCRIBER: The person responsible for payment of premiums or whose employment is the basis for eligibility for membership in an HMO or other health plan.
SUBSIDIES: Government assistance to help low-income patients pay for basic services like health care.
SPECIALIST: A physician who practices medicine in a specialty area. Cardiologists, orthopedists and gynecologists are all examples of specialists. Under most health plans, family practice physicians, pediatricians and internal medicine physicians are not specialists
T
TERTIARY CARE: Health care services provided by highly specialized providers such as neurosurgeons, thoracic surgeons and intensive care units. These services often require highly sophisticated technologies and facilities.
U
USUAL CHARGE: A fee is considered "Usual" if it is the amount that most physicians in the area charge for this same service.
UTILIZATION REVIEW: Programs designed to reduce unnecessary medical services, both inpatient and outpatient. Utilization reviews may be prospective, retrospective, concurrent, or in relation to discharge planning.
V
VIATICAL SETTLEMENT: An option which involves selling the ill person's life insurance policy for a percentage of the total face value. By selling it while the person is still alive, the insured person can receive a sizable sum of money, to be used entirely at the person's own discretion.