Benico, Ltd. - Employee Benefits and Insurance

A|B |C |D |E |F |G |H |I |J | K |L |M |N |O |P | Q |R |S |T |U |V |W | X | Y | Z

A

Access: Right to enter or use health care services.

Acquisition Cost: The cost to an insurer to acquire new business. It includes costs such as underwriting the risk, issuing a new policy, paying commissions and overhead or office expenses.

Actual Charge: The amount a physician or supplier actually bills for a particular medical services or supply.

Actuary: A professional who mathematically analyzes and determines the price of the risk associated with providing insurance coverage. An actuary may also determine the anticipated cost of providing future benefits. Factors considered in the study include the projection of future claims experience, administrative expenses and anticipated investment return.

Acute Care: Care for illness or injury that develops rapidly, has pronounced symptoms ad is finite in length. Traditional medical insurance, Medicare and Medicare supplements are designed to provide coverage for acute illness.

Adjusted Average Per Capita Cost (AAPCC): Health Care Financing Administration (HCFA) basis of payment to HMOs and CMPs.

Adjusted Community Rate (ACR): Uniform capitation rate that is charged to all enrollees in a plan based on adjustments for risk factors such as age and sex.

Administrative Services Only (ASO): A type of contract with an insurance company or a third party administrator that provides an employer with administrative services. It does not provide coverage for risk or insurance protection. The usual expenses covered include claims processing, plan design advice and printing benefit booklets. These contracts are usually entered into by large employers who can afford the risk of providing insurance protection with their own money.

Administrator: A person who is designated to be responsible for the proper operation and administration of a plan. When the plan sponsor does not designate a person for this duty, then ERISA considers the plan sponsor to be the plan administrator.

Adult Day Care: Social, recreational and/or rehabilitative services provided for persons who benefit from daytime supervision. An alternative between care in the home or in a institution.

Adverse Selection: A tendency which occurs when a person makes a decision based on his/her diminished health condition or frequency of needed treatment and is, therefore, considered a poorer claims risk than most others in the group.

Aid to Families with Dependent Children (AFDC): Public assistance program that provides payment to families with children 18 years of age and under who have an income below a defined poverty line.

Agent: Licensed by the state, performs the functions for sole proprietors and small businesses that Human Resource Departments do for larger businesses, gathers census data, prepares proposals, makes presentations to businesses, explains benefits to employers, does field underwriting when required, delivers policies and certificates, explains benefits to employees, assists in handling claims, services the business in any other related tasks required by the employer or sole proprietor.

Aggregate Amount (limit): Maximum amount a plan sponsor (employer) is liable for any single loss or series of losses.

Ageism: Prejudice against people because of their age.

Alternate Care Benefit: Payment for a special arrangement of services specifically designed to allow the person to reside in a setting other than a nursing facility (i.e. services to provide assistance, capital improvements such as a ramp, and/or durable medical support.

Alternate Care Facility: (1) A hospice; or (2) a place that provides ongoing care to inpatients in one location and which (a) provides 24-hour care and services sufficient to support needs resulting from inability to perform activities of daily living or cognitive impairment; (b) has a trained and ready-to-respond employee to provide such care; (c) provides three meals a day and accommodates special dietary needs; (d) is appropriately licensed or accredited; (e) has formal arrangements for the services of a physician or nurse to provide emergency medical care; and (f) has appropriate procedures for handling administering drugs.

Alzheimer's Disease: A form of organic dementia resulting in premature mental deterioration, first described in 1906 by German neurologist, Alois Alzheimer. In California, as well as most of the rest of the United States, Alzheimer's Disease is considered a cognitive impairment, thus triggering benefits under long term care insurance policy.

Ambulatory Care: Medical services provided on an outpatient (non-hospitalized) basis. Services may include diagnosis, treatment, surgery, and rehabilitation.

Ancillary Services: Health care services conducted by providers other than physicians and surgeons. These will usually include such services as physical therapy and home health care.

Annual Benefit Cap: Maximum amount paid for specific medical services or total medical services.

Appeals Consideration: Clinical review conducted by appropriate independent clinical peers, when a decision not to certify a requested admission, procedure, or service has been appealed. Sometimes referred to as "third level review."

Approved Amount: The amount Medicare determines is reasonable for a service covered under Medicare Part B. It may be less than the actual charge. For many services, including physician services, the approved amount is taken from a fee schedule that assigns a dollar value to all Medicare-covered services that are paid under that fee schedule.

Assessment: A determination of physical and/or medical status by a health professional based on established medical guidelines. The assessment is a central component in home care coverage's and the payment of home care claims. Upon the triggering of benefits, due either to the loss of some number or activities of daily living or a cognitive impairment, an assessment is performed by a multidisciplinary team. This "team" usually spearheaded by the insured's physician, determines the level of functional incapacity and develops a plan of care that will be followed in assisting the insured in the performing the ADLs and IADLs (instrumental activities of daily living).

Assignment: An arrangement whereby a physician or medical supplier agrees to accept the amount approved by Medicare as full payment for services and supplies under Part B. Medicare usually pays 80% of the approved amount directly to the physician or supplier after the beneficiary meets the annual Part B deductible of $100. The beneficiary pays the other 20 percent.

Assignment of Benefits: Authorization by the insured which allows the insurer or claims payer to pay benefits directly to the medical care provider.

Assisted Living: A non-medical institution providing room, board, laundry, some form of personal care and usually recreational and social services. Licensed by state departments of social services, these facilities exist under several names including domiciliary care facility,, sheltered house, board and care, community based residential care facilities and alternate care facilities.

ASO: A type of contract with an insurance company or a third party administrator that provides an employer with administrative service. It can include coverage for a certain amount of claims risk. The usual administrative expenses include claims processing, plan design advice and printing benefit booklets. Large employers who can afford the risk of providing insurance protection with their own money usually enter into these contracts.

Attachment Point: For aggregate stop-loss insurance, it is the point at which the stop-loss insurance carrier begins to reimburse the employer based upon the cumulative total of claims paid within a policy year.

Attending Physician The doctor of medicine or doctor of osteopathic medicine with primary responsibility for the care provided to a patient in a hospital or other health care facility.

Authorizations: Consent or endorsement by a primary care physician for patient referral to ancillary services and specialists.

Average Length of Stay: One measure of use of health facilities, reported as an average number of inpatient days spent in a hospital or other health care facility per admission or discharge. It is calculated as follows: total number of days in the facility for all admissions during a particular period divided by the number of admissions during the same period. Average lengths of stay vary and are measured by age, specific diagnosis, or sources of payment.

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B

Balance Billing: For specific stop-loss insurance, it is the point at which the stop-loss insurance carrier begins to reimburse the employer based upon the individual's total of claims paid within a policy year.

Also, the practice of medical care providers (such as doctor, hospital or other medical practitioner) billing the insurer for full costs, then billing the insured for the portion of the bill which was not paid.

Benchmark: Point of comparison between desired clinical outcome and actual practice.

Beneficiary: The person entitled to receive benefits under a plan, including the covered employee and his or her dependents.

Benefit: Amount an insurance company pays to a claimant, assignee, or beneficiary when the insured suffers a loss covered by the policy.

Benefit Increase Options: Also known as automatic benefit increase option, automatic increase benefit, and cost of living adjustment benefit. These are optional benefits that provide for annual increases in the benefit amount to offset the effects of inflation. Benefit increase options are paid for at the time of issue and either increases the daily policy benefits by a 5% compounded or simple interest factor. A key element to remember is that the increases begin at the second policy anniversary and continue for the duration of the policy, except where the insurance carrier "caps" the increase at some predetermined amount. These increase options are not to be mistaken with future insurability options.

Benefit Period: A period of time during which benefits are payable under a plan or insurance contract.

Birthday Rule A plan provision in which the plan of the parent with the earliest birth month and day provides primary benefits; under “fall-back”, if one plan has a “gender rule” provision, the plan with the parent that is male is primary.

Board-Certified A label that indicates a physician has passed an examination given by a medical specialty board and has met other eligibility requirements that certify the physician as a specialist in that area.

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C

Cafeteria Plan: A plan which offers a choice between two or more qualified benefits or a choice between cash and one or more qualified benefits and which complies with Section 125 of the Internal Revenue Code (also known as flexible benefit plans or flex plans).

Capitation: A form of compensation used primarily by HMOs to pay providers a periodic fee (usually a per member/per month fee) in return for delivering as much necessary health care services as the insured may need.

Carve-Out: Term used to describe certain services not included in capitated benefits that are paid for separately on a predetermined fee-for-service basis.

Case Management: A collaborative process which accesses, plans, implements, coordinates, monitors, and evaluates options and services to meet an individual’s health needs using communication and available resources to promote quality cost-effective outcomes.

Centers of Excellence: Providers who are selected to perform certain specialized procedures because of their expertise and willingness to provide discounts.

Certification: A determination by a Utilization Management Organization that an admission, extension of stay, or other health care service has been reviewed and, based on the information provided, meets the clinical requirements for medical necessity, appropriateness, level of care, or effectiveness under the auspices of the applicable health benefit plan.

Chronic Care: Care for illness continuing over a long period of time or recurring frequently. Chronic conditions often begin inconspicuously and symptoms are less pronounced than acute conditions. Long term care insurance is designed to assist people who have a loss of capacity due to chronic illnesses.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS): Federal program providing cost-sharing health benefits for dependents and survivors of active duty personnel and for retirees and their dependents and survivors.

Claim: An insured's request for reimbursement from an insurance company or plan for covered medical expenses.

Claims Administrator: Any entity that recommends or determines to pay claims to enrollees, physicians, hospitals, or others on behalf of the health benefit plan. Such payment determinations are made on the basis of contract provisions. Claims administrators may be insurance companies, self-insured employers, third party administrators, or other private contractors.

Clinical Peer: A physician or other health professional who holds an unrestricted license and is in the same or similar specialty as typically manages the medical condition, procedures, or treatment under review. Generally, as a peer in a similar specialty, the individual must be in the same profession, i.e., and the same licensure category as the ordering provider.

Clinical Rationale: A statement which provides additional clarification of the clinical basis for a non-certification determination. The clinical rationale should relate the non-certification determination to the patient’s condition or treatment plan, and should supply a sufficient basis for a decision to pursue an appeal.

Clinical Review Criteria: The written screens, decision rules, medical protocols, or guidelines used by the Utilization Management Organization as an element in the evaluation of medical necessity and appropriateness of requested admissions, procedures, and services under the auspices of the applicable health benefit plan.

Closed Panel: Refers to a health care program that requires the insured to use certain providers from a list provided by the plan. The primary care provider is responsible for all health care needs and refers to a specialty physician or hospitalization only when medically needed.

Coalitions: An association of health care plan sponsors who pool their resources to negotiate with insurers or other health care payors and providers.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985): A federal law that requires most employers to allow eligible employees and their beneficiaries to continue to self-pay for their coverage after it normally terminates for up to 18, 24, 29 or 36 months.

Cognitive Impairment: Deterioration in intellectual capacity which (1) requires regular supervision to protect patients and others; (2) must be determined by clinical diagnosis or test; and (3) may be the result of Alzheimer's disease, senile dementia, or other nervous or mental disorders of organic origin.

Co-insurance: An agreement between the insured and the insurance company where payment is shared for all claims covered by the policy. A typical arrangement is 80%/20% up to $5,000. The insurance company pays 80% of the first $5,000 and the insured pays 20%. Usually after 80% of $5,000, the insurance company then pays 100% of covered expenses during the remainder of the calendar year up to any limits of the policy.

Commission: Part of an insurance premium which is paid by an insurance company to an agent or broker in payment for procuring and servicing the business for the insurance company/ client. Depending upon the size of the group being insured, these commissions average between three and ten percent of the premium paid by the employer.

Community-Rated: Method of developing group-specific capitation rates by a health plan that generally does not account for unique characteristics of the group. The rate is based on the total experience of a given geographic area or "community."

Community Rating: A rating method that determines a single average premium based on the characteristics and claims experience of an entire membership such as an HMO or an insurance pool. Age, lifestyle, industry, health factors and gender are not used to determine rates (see Adverse Selection).

Competing Health Plans: A health plan is an insurer, PPO, HMO or other type of managed care arrangement.

Competitive Medical Plans (CMPS): Health care organization that meets specific government criteria for Medicare risks contracting but is not necessarily a HMO.

Concurrent Review: Method of utilization review that takes place on-site when a patient is confined to a hospital.

Congregate Housing: Apartment houses or group accommodations that provide health care and other support services to functionally impaired older persons who do not need routine nursing care.

Conversion Privilege: A contractual right given to an insured person whose group coverage terminates to be able to convert to an individual policy without providing evidence of insurability.

Coordination of Benefits (COB): A contractual provision to prevent an insured from receiving duplicate benefits from two or more group plans and profiting from over-insurance.

Co-Payment: A small charge paid at the time a medical service is received. It does not accumulate towards a plan's deductible or out-of-pocket maximum and is designed to discourage utilization.

Cosmetic Surgery: Surgery for the restoration, or reconstruction of body structures directed toward altering appearance.

Cost Containment: Efforts or activities designed to reduce or slow down the cost increases of medical care services.

Cost Sharing: The sharing of costs between the payment of premium costs and medical expenses by the health care plan and its insured through employee contributions, deductibles, coinsurance and copayments.

Cost Shifting: The increased cost of medical care to other patients to make up for losses incurred in providing care to patients who are under-insured or who have no coverage.

Coverage: The different types of options selected and the benefits paid under a plan or insurance contract.

Covered Expense(s): An expense which will be reimbursed by the terms of the plan or insurance contract.

Creditable Coverage Creditable coverage generally includes period of coverage under an individual or group health plan not followed by a break in coverage of 63 days. Creditable coverage excludes liability, limited scope dental, vision, specified disease or other supplemental-type benefits.

Current Procedural Terminology (CPT): Set of five-digit codes describing medical services that are used for billing by professional providers.

Custodial Care Facilities: A licensed facility that provides personal assistance to persons who are unable to care for themselves due to age, illness, physical or mental infirmity, but who do not require daily nursing care.

Customary And Reasonable Amount: The fee assessed by a provider of service for services, supplies or treatment which shall not exceed the general level of charges made by others rendering or furnishing such services, supplies or treatment within the area where the charge is incurred and is comparable in severity and nature to the illness or injury. Due consideration shall be given to any medical complications or unusual circumstances which require additional time, skill or experience. The customary and reasonable amount is determined from a statistical review and analysis of the charges for a given procedure in a given area. The term “area” as it would apply to any particular service, supply or treatment means a county or such greater area as is necessary to obtain a representative cross-section of the level of charges.

Customer: User of health care services, such as patients getting care or providers getting support services from laboratories; payer of service, such as individuals, employers, or the government; or the general public.

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D

Deductible: The amount that the covered insured must pay before a plan or insurance contract starts to reimburse for eligible expenses

Defense Medicine: Extensive use of laboratory testing, treatment, increased hospital admissions, and extended hospital stays that are not medically necessary for the treatment of the patient; the sole purpose of reducing the possibility of malpractice suits by the patient or providing a good legal defense in the event of such lawsuits.

Dementia: The severe impairment of cognitive functions (thinking, memory and personality). Of our elderly population, 5 to 6 percent have dementia. Alzheimer's Disease causes approximately one-half of these causes, vascular disorders (multiple strokes) case one-fourth and the other dementia's are caused by alcoholism, heart disease, infections, toxic reaction to medication and other rarer conditions. While impairment from Alzheimer's Disease and vascular disorders is permanent, dementia caused by other conditions can usually be corrected.

Diagnosis-Related Groups (DRGs): System of determining specific reimbursement fees based on the medical diagnosis of a patient.

Discharge Planning: Assessment of an inpatient's medical condition for the purpose of arranging for appropriate continuing care upon leaving the facility. This planning includes how long the patient will be in the hospital, the expected outcome, and whether there are special needs or requirements on discharge.

Divestment: In reference to eligibility for Medicaid, the disposal of resources at less than fair market value in order to qualify for benefits.

Dual Choice: An arrangement where an employer will offer an alternative in addition to its original health plan.

Durable Power of Attorney: An individual's appointment of a representative to act on his or her behalf via a legal document that remains in effect of incapacity of the grantor.

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E

ERISA (Employee Retirement Income Security Act of 1974): A federal law which originally set minimum standards for funding, vesting and termination of employer-sponsored pension plans. ERISA also contains provisions to protect the interests of participants and beneficiaries in welfare plans. Welfare plans must be in written form, describe the benefits and name the persons responsible for the operation of the plan.

Eligible Expense(s): The portion of the medical care provider's services that is covered for payment under the terms of the health plan or insurance contract.

Elimination Period: The number of days in which you receive covered care or services before benefits are payable.

Emergency: The sudden onset of an illness or injury where the symptoms are of such severity that the absence of immediate medical attention could reasonably result in:

• Placing the covered person’s life in jeopardy.
  Causing other serious medical consequences.
  Causing serious impairment to bodily functions.
  Causing serious dysfunction of any bodily organ or part.

Employee Retirement Income Security Act of 1974 (ERISA): A federal law that originally set minimum standards for funding, vesting and termination of employer-sponsored pension plans. ERISA also contains provisions to protect the interests of participants and beneficiaries in welfare plans. Welfare plans must be in written form, describe the benefits and name the persons responsible for the operation of the plan.

Enrollee: health plan participant, member, or eligible individual in a managed Care program.

Evidence of Insurability: A procedure used to review factors concerning a person's physical condition and medical history. From this information, the plan or insurance company evaluates whether the risk of the individual will be accepted and if they will offer coverage.

Exclusive Provider Organization (EPO): A different type of Preferred Provider Organization (PPO) which requires the insured to use only the listed providers or to otherwise forfeit benefit reimbursement altogether.

Exclusion: Specific conditions or services that are not covered by the terms of the plan or insurance contract.

Expected Claims: A dollar amount which represents the expected claims which will be paid during any plan or contract period.

Expedited Appeal: A request by telephone for additional review of a determination not to certify imminent or ongoing services requiring a review conducted by a clinical peer who was not involved in the original decision not to certify.

Experience: Refers to the history of actual claims paid for the contract period (see Paid Claims) or can refer to the history of claims incurred during a contract period.

Experience-Rated: Determination of premium or capitation rates for a group risk based wholly or partly on that group's previous cost and utilization experience.

Explanation of Benefits (EOB): A document sent to an insured when a claim is handled by the plan or insurance company. The document explains how reimbursement was made, or why the claim was not paid, and if any additional information is needed. The appeals procedure should be outlined to advise the insured of his/her rights if there is dissatisfaction with the decision.

Extended Benefits: Benefits which continue, or become payable, after the termination of coverage from a plan or insurance contract, for example a hospitalization which continues after coverage would normally cease.

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F

Facility Rendering Service The institution or organization in which the requested admission, procedure, or service is provided. Such facilities may include, but are not limited to: hospitals; outpatient surgical facilities; individual practitioner offices; rehabilitation centers; residential treatment centers; skilled nursing facilities; laboratories; and imaging centers.

Family DeductibleThis type of provision may require individual family members to satisfy a deductible or the family, as a group, to satisfy a total amount. (E.g. upon satisfaction of deductibles by three family members in the same calendar year, no further deductibles are required in that calendar year.) The carry over provision rarely applies to the family deductible.

Federally Qualified: Voluntary federal certification for HMOs.

Federally Qualified Health Center: Another way to limit your health care costs is to go to a federally qualified health center (FQHC) for the type of care generally provided in a doctor's office.

Fee for Service Reimbursement: The traditional reimbursement system where the providers of medical care receive a benefit payment calculated on the basis of their billed charge. Under this arrangement Plans or Insurers have not established contracted or capitated rates of payment with providers prior to the insured's claim occurrence.

Fee Schedule: Maximum dollar or unit allowances for health services that apply under a specific contract.

Fiduciary: Under ERISA, any person who exercises discretionary authority or control over a plan or plan assets.

Fixed Costs: Refers to those costs which are payable monthly and which do not relate to actual claims paid or incurred, for example, premium and administration costs.

Flexible Spending Accounts: Special accounts typically funded by an employee's salary reduction to help pay for certain expenses not covered by the employer's plan or insurance contract. The advantage of these accounts is that after-tax dollars are converted to before-tax dollars, thereby reducing the actual cost of expenses.

Formulary: List of preferred pharmaceutical products to be used by a managed care plan's network physicians. Formularies are based on evaluations of the efficacy, safety, and cost effectiveness.

Fraud: Fraud in the health care system may include areas such as offering free tests or services and billing the insurer or plan, or for charging for services not rendered.

Freestanding Plan: Unbundled or separate health care benefits apart from the basic health care plan, usually dental or vision care. Employees are allowed either to select the separate benefit or decline it for other alternatives. This choice of freestanding plans is often referred to as "cafeteria-type" benefits.

Full-Time Student Or Full-Time Student Status: An employee’s dependent child who is enrolled in and regularly attending secondary school, an accredited college, university, or institution of higher learning for the minimum number of credit hours required by that institution in order to maintain full-time student status.

Fully Insured Plan: The employer pays all of the premium and, in return, transfers all of the risk and responsibility for claims payment to the insurance company.

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G

Gatekeeper: (Primary Care Physician) A health professional within a managed-care environment who determines the patient's access to treatment. The primary care physician treats the patient and determines necessity of access to further treatment and specialists.

Gatekeeper Question: A qualifying question asked by an insurance company at the time of application to help identify risk(s). Example: "Have you ever been treated for a heart attack or heart condition?"

Gatekeeper (Primary Care Physician): A health professional within a managed-care environment who determines the patient's access to treatment. The primary care physician treats the patient and determines access to further treatment and specialists.

Geriatrics: The study of physical and mental changes in persons as they age - including the diagnostic, treatment and prevention of disorders.

Gender Rule: COB provision for determining primary status; in Gender Rule, the male’s plan pays primary benefits on the eligible dependent before a female’s plan; under “fallback”, if either plan has a Gender Rule provision, the Gender Rule takes precedence; Gender Rule is a Traditional COB provision.

Grace Period: Time period that follows the premium due date when the coverage and policy remain in force.

Global Fees: Negotiated fees that are all-inclusive (one fee is paid for the entire range of services provided for a specific episode or episode of care.)

Group-Model HMO: HMO staffing that occurs by contracting with multi-speiciality medical groups to care for plan members. Physicians are not employees of the HMO but are considered as a closed panel.

Guaranteed Issue Underwriting: The applicant is guaranteed coverage up to an agreed amount or level without evidence of insurability (see Evidence of Insurability).

Guaranteed Renewable: The insured's right to continue an in-force policy by the timely payment of premiums. The insurance company cannot change the coverage or refuse to renew the coverage for other than non-payment of premiums (includes health conditions and/or marital or employment status).

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H

Health Alliances: Health Alliances or Health Insurance Purchasing Cooperatives (HlPCs) are groups or entities whose primary purpose is to negotiate with health plans to provide coverage at competitive prices to members of the alliance.

Health Insurance Purchasing Cooperatives (HIPCS): See Health Alliances.

Health Care Financing Administration (HCFA): Branch of the U.S Department of Health and Human Services charged with oversight and financial management of government-related health care programs such as Medicare and Medicaid.

Health Care Prepayment Plan (HCPP): HCFA program allowing managed care groups that organize, finance, and deliver Medicare Part B services be reimbursed for such services on a reasonable cost basis.

Health Insurance Purchasing Cooperatives (HIPCS): See Health Alliances

Health Maintenance Organization (HMO): An organization that provides a wide range of health services for a fixed, pre-paid premium. The HMO may provide all services or may contract with other sources for additional services. HMO's fall into four categories:

1. Group Model
2. Individual Practice Association (IPA)
3. Staff Model
4. Network Model

Home and Community-Based Care Benefits: To be eligible for Home and Community-Based Care Benefits, you must require covered services while your policy is in force that are due to (1) medical necessity, or (2) your inability to perform two or more activities of daily living, or (3) cognitive impairment.

Home Health Services: Comprehensive medically necessary services provided by a recognized provider to a patient in the home.

Hospice: Care provided to terminally ill patients and their families that emphasize emotional needs and coping with pain and death.

Hospital Bill Audit: Independent examination of hospital bills by a third party to determine if services and supplies charged to the patient were actually delivered, and if the price charged was correct.

Hospital Indemnity Insurance: Hospital indemnity coverage is insurance that pays a fixed cash amount for each day you are hospitalized up to a designated number of days. Some coverage may have added benefits such as surgical benefits or skilled nursing home confinement benefits. Some policies have a maximum number of days or a maximum payment amount.

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I

Illness A bodily disorder, disease, or physical sickness. Pregnancy of a covered employee or their covered spouse shall be considered an illness.

Inability to Perform Activities of Daily Living: Dependence on someone else because of need, due to injury, sickness, or frailty of age, for regular human assistance or supervision in performing normal activities of daily living.

Incontestability: Provision in a policy which provides that an insurance company cannot contest the validity a claim after the policy has been in force for a certain period, usually two or three years.

Incurred But Not Reported (IBNR): Claims which have been incurred by the insured but have not been submitted to the plan or insurance company for reimbursement (also known as lagged claims).

Indemnity Insurance: Health care insurance plan providing benefits in a predetermined amount for covered services. Traditionally, the insurer pays on a fee-for-service basis with no involvement in the actual delivery of health care services.

Individual Practice Association (IPA): A type of HMO which contracts with a physician-controlled entity, usually on a capitated or discounted fee for service basis to compensate physicians for their medical services. IPAs may also serve non-HMO patients.

Initial Clinical Review: Clinical review conducted by appropriate licensed or certified health professionals. Initial clinical review staff may approve requests for admissions, procedures, and services that meet clinical review criteria, but must refer requests that do not meet clinical review criteria to peer clinical review for certification or non-certification. Sometimes referred to as “first level review.”

Injury: A physical harm or disability, which is the result of a specific incident, caused by external means. The physical harm or disability must have occurred at an identifiable time and place. Injury does not include illness or infection of a cut or wound, or self-inflicted injury.

Institutionalization: Admission of an individual to an institution, such as a nursing home.

Instrumental Activities of Daily Living (IADLs): The more complex tasks associated with independent living. California State Bill 1943 stipulates that any long term care insurance policy that purports to cover home care, must provide benefits for the IADLs. The IADLs include lighthouse keeping, taking medications, using the telephone, meal preparation, moving about outside, and shopping for essentials. IADLs define the services covered by policies covering home care.

Insurability: The health status of an insurance applicant which makes him/her acceptable to an insurance company, i.e. health, financial condition, occupation.

Integrated Coverage: Combinations of HMOs, indemnity plans, or PPO's into one health care plan.

Intermediate Care: Care that may, but does not necessarily need to be delivered by a skilled professional.

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J

Joint Commission on Accreditation of Healthcare Organizations (JCAHO): Private voluntary accrediting organization for all types of health care organizations. Its focus is the outcome, process, and excellence in health care.

L

Lagged Claims: The time between when a service is incurred and it is submitted and processed for payment.

Lapse: Termination of insurance coverage for failure to pay premiums.

Lifetime Aggregate or Maximum: The maximum benefit payment provided under a plan or insurance contract.

Long-term Care: The services required over a lengthy period of time due to an insured's chronic illness or disability. It may include skilled nursing care and custodial care, or adult day care or house care servers.

Long-Term Care Facility: A place which is (1) licensed by the state; (2) provides skilled, intermediate, or custodial nursing care on an inpatient basis under the supervision of a physician; (3) keeps a daily medical record of each patient.

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M

Malpractice: Unprofessional, incompetent, or inappropriate medical care.

Malpractice Reform: Proposed changes may include required arbitration and limits to the amount of attorneys' fees.

Managed Care: A health care system which imposes controls on the utilization of medical services and on the providers who render the care. Managed care is provided through managed indemnity plans; Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Health Maintenance Organizations (HMOs), or any other cost management environment.

Managed Competition: Proposed system in which the government restricts the consumer to purchasing insurance from government-approved carriers.

Managed Indemnity: Use of utilization controls in traditional fee-for-service health insurance plans in order to reduce cost and inappropriate care.

Mandate: A specific procedure or coverage that a plan or insurance contract must offer dictated by state or federal law.

Mandated Benefits: Health care coverage required by state and federal law to be included in health insurance contracts.

Medicaid: A medical benefits plan available for low income persons paid by federal and state government, but administered by the state.

Medical Necessity: Term used by insurers to describe medical treatment that is appropriate and in accordance with generally accepted standards of medical practice.

Medicare: A federal program of medical care benefits designed for those permanently disabled or over age 65.

Medicare-Approved Amount: Medicare has a fee schedule that list the dollar amount that Medicare considers to be the reasonable charge for the services provided by a doctor that Medicare approves for a covered service provided by a doctor is the lesser of the Medicare fee schedule amount for a particular service or the amount charged by the doctor.

Medicare Part A (Hospital Insurance): Helps pay for medically necessary inpatient care in a hospital, skilled nursing facility or psychiatric hospital, and for hospice and home health care.

Medicare Part B (Medical Insurance): Helps pay for medically necessary physician services and many other medical services and supplies not covered by Part A.

Medicare-Qualified Providers: Providers who have been approved by Medicare.

Medicare Risk Plan: A type of Medicare supplement coverage where the Medicare recipient "assigns" his/her benefits to an HMO. The HMO contracts with the Federal Government to provide medical services to the Medicare recipient at a discounted rate to the government.

Medicare Select: Federal programs designed to introduce Medicare beneficiaries to managed care plans through Preferred Provider Organization supplemental (MedSup) health insurance.

Medigap-Medicare Supplement Insurance: Medigap insurance is specifically designed to supplement Medicare's benefits and is regulated by federal and state law. It must be clearly identified as Medicare supplemental insurance and it must provide specific benefits that help fill the gaps in your Medicare coverage. Other kinds of insurance may help you with out-of- pocket health care costs but they do not qualify as Medigap plans.

Mental Health Services: Behavioral health care services that may be provided on an inpatient, outpatient, or partial hospitalization basis.

Military Health Services System (MHSS): Federal health benefits program for active duty military personnel, retirees, their dependents, and survivors.

Multiple Employer Trust (MET): A trust established by a sponsor that allows small employers | in the same or related industries to provide medical insurance under a trust arrangement.

Multiple Employer Welfare Arrangement (MEWA): An employee welfare arrangement designed to provide benefits to employees of two or more employers.

Multiple Provider Arrangement: Managed care plan consisting of group, staff, or IPA structures in combination.

Multi-specialty Group Practice: Independent physicians' group that is organized to contract with a managed care plan to provide medical services to enrollees. The physicians are not employees of the HMO, but are employed by the group practice.

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National Association of Health Underwriters (NAHU): A professional organization founded in 1929, of more than 13,000 men and women in the health insurance industry representing more than 119 million consumers. NAHU promotes excellence in the insurance industry through legislative advocacy, education, participation and quality leadership.

National Association of Insurance Commissioners (NAIC): An organization that assists state insurance departments and helps draft model laws.

National Committee on Quality Assurance (NCQA): Private, voluntary organization for accrediting managed care. It assesses quality, credentialing utilization management, customer rights, preventive health services, and medical records. Developed the Health Plan Employer Data Set.

Negotiated Fees: Managed care plans and providers mutually agree on set fees for each service. This negotiated rate is usually based on services defined by the Current Procedural Terminology (CPT) codes, generally at a discount from what the provider would usually charge. Providers cannot charge more than this fee.

Network: Contracted providers of health care (physicians, hospitals, testing centers, rehabilitation centers etc.) that have negotiated discount fees for their services in return for higher patient volume. This can apply to HMO, PPO, POS and EPO arrangements.

Network or Mixed-Model HMO: Provider arrangements that contract with a number of Independent Practice Associations or group practices to provide physician services to HMO enrollees in return for higher patient volume. This model is a multiple provider arrangement that can be either an open or closed panel.

Network Providers: Limited grouping or panels of providers in a managed care arrangement with several delivery points. Enrollees may be required to use only network providers or may have financing liability for using non-network providers for medical services.

Non-Forfeiture Benefits: A guarantee for a refund of all of the premiums paid in one of two way; (1) to a named beneficiary at the death of the insured, or, (2) as an "extended term" type benefit for as long as all premiums accrued will last with the balance (if any) left to a named beneficiary. See Return of Premium

Non-Network Providers: Non-contracted or unapproved health providers who are outside a managed care arrangement.

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Omnibus Budget Reconciliation Act (OBRA): Term given by Congress to many of its annual tax and budget reconciliation acts. Most of these tax and budget acts have language or provisions related to health care and managed care, particularly in relation to Medicare.

Open-Ended HMO: Hybrid HMO product that allows members to use physicians outside the plan in exchange for additional financial liability in the form of a deductible, coinsurance, or co-payment.

Open Panel: A right included in an HMO which allows the covered person to obtain non-emergency covered services from a specialist without a referral from the primary care physician or gate keeper.

Ordering Provider: The physician or other provider who specifically prescribes the health care service being reviewed.

Out-of-Network Care: Medical services obtained by managed care plan members from unaffiliated or non-contracted health care providers. In many plans, such care will not be reimbursed unless previous authorization is obtained.

Out-of-Pocket Expenses: Those health care costs that must be borne by the insured.

Out-of-Pocket Maximum: The maximum amount that an insured is required to pay under a plan or insurance contract.

Outcomes Measurement: A documented program which tracks physician treatment patterns for purposes of evaluating efficiency.

Overutilization: Inappropriate or excessive use of medical services that add to health care costs.

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Paid Claims: The total claims payment made by the plan or insurance company. It does not include any employee cost sharing or provider discounts.

Partial Capitation Risk Contracts: State Medicaid contracts with HMOs or similar managed care organizations that accept risk for a defined set of services (for example, physician services and laboratory, x-ray, or clinic services). Other services are reimbursed on a fee-for-services basis.

Participating Provider: A provider who has agreed to contract with a managed care program to provide eligible services to covered persons.

Peer Review: Traditional quality assurance program to monitor standard processes of care or adverse outcomes of provider practice by other professional peers. The goal of peer review is to find and correct medical practices that do not conform to the standard processes of care.

Per Diem: Literally, per day. Term that is applied to determining costs for one day of care. It is an average cost and does not reflect true cost for each patient.

Per Member Per Month (PMPM): Computational designation for each enrollee in a managed care program.

Personal Care Advocate: A representative of the nursing facility resident who reviews care, address concerns, and provides advocacy support for a patient and his or her family.

Physician: A Doctor of Medicine (M.D.) or a Doctor of Osteopathy (D.O.) who is practicing within the scope of his license, other than a close relative of the covered person.

Physician-Hospital Organization (PHO): Group practice arrangement that occurs when hospitals and physicians organize for purposes of contracting with managed care organizations. These relationships are formally organized, contractual, or corporate in character and include physicians outside the boundaries of a hospital's medical staff.

Plan of Care: Also known as Home Care Plan. It is the result of an assessment; a program for providing home care services. In most policies, a physician and the multi-disciplinary team will prepare such a program. It will be appropriate for the level of care needed for the physician's diagnosis. All long term care policies qualifying under California Senate Bill 1943 require plans of care.

Play or Pay: A concept that would require employers to provide health insurance to their employees and dependents (play) or pay a tax or premium toward a publicly_provided system that covers people without private insurance (pay).

Point of Service Plans (POS): Combination of HMO and PPO features. They provide a comprehensive set of health benefits and offer a full range of health services much the same as the HMO. However, the member does not have to choose how to receive services until they need them. The member can then opt to use the defined managed care program, or can go out-of-plan for services but pay the difference for non-plan benefits (e.g. 100 percent coverage for managed care Vs. 80 percent coverage out-of-plan).

Pool(ing): Used by insurance companies to combine all premiums, claims and expenses in order to spread the risk of insurance coverage. This process ensures that small employers will not be singled out and unfairly assessed with a large rate increase due to unanticipated medical catastrophic claims of its insured employee(s).

Portability: Provides access to continuous health coverage so the insured does not lose insurance coverage due to any change in health or personal status (such as employment, marriage or divorce).

Practice Guidelines: Specific, professionally agreed upon recommendation for medical practice used within health care organizations to standardize the practice to achieve consistent quality outcomes. Practice guidelines may be instituted when triggered by specific clinical indicators.

Pre-authorization: Previous approval required for referral to a specialist or non-emergency health care services.

Pre-certification: Utilization management program that requires the individual or provider to notify the insurer before hospitalization or surgical procedure. Notification allows the insurer to authorize payment and to recommend alternate courses of action.

Pre-existing Conditions: An illness or injury, which existed within three (3) months before the covered person’s enrollment date of coverage under this Plan. An illness or injury is considered to have existed when the covered person:

• Sought or received professional advice for the illness or injury.
• Received medical care or treatment for that illness or injury.
• Received medical supplies, drugs, or medicines for that illness or injury.

Preexisting Condition Clause: A clause in an insurance contract or plan which specifies if benefits will or will not be paid for a pre existing condition. (Example: "The insured must be covered by the plan for a certain period of time or have gone a certain amount of time without any treatment.") Additionally, the clause may limit the benefit payable for treatment of pre_existing conditions until a certain time period of coverage has elapsed, usually six months to a year.

Preferred Provider: A physician, hospital or other health care facility who has an agreement in effect with the Preferred Provider organization at the time services are rendered. Preferred providers agree to accept the negotiated rate as payment in full.

Preferred Provider Organization (PPO): An organization of participating providers that have agreed to provide their services at negotiated discount fees in exchange for prompt payment and increased patient volume.

Premiums: Periodic payment to keep an insurance policy in force.

Premium Tax: A state tax on insurance premiums.

Prepaid Group Practice: A type of HMO plan where participating providers render specific services to the insured in exchange for an advance fixed payment.

Prevailing Charges: Amounts charged by health care providers that are consistent with charges from similar providers for identical or similar services in a given locale.

Preventive Medicine: Wellness and health promotion services that are part of the basic benefits package of a managed health care plan.

Primary Care: Routine office medical care. Provided by a family physician.

Primary Plan: the group plan that pays benefits first.

Primary Care Case Management: Single provider is responsible for coordinating, arranging, and monitoring all patient care, even for those patients with no serious medical conditions.

Primary Care Physician (PCP): Primary deliverers and managers of health care, central to controlling costs and utilization. The PCP provides basic care to the enrollee, initiates referrals to a specialist, and provides follow-up care. Refers exclusively to other contracted providers and admits patients only to contracted hospitals. Usually defined as a physician practicing in such areas as internal medicine, family practice, and pediatrics.

Primary Plan: the group plan that pays benefits first.

Principal Reasons: A clinical or non-clinical statement describing the general reason(s) for the non-certification determination (“lack of medical necessity” is not sufficient to meet this).

Profiling: Systematic method of collecting, collating, and analyzing patient data to develop provider-specific information about medical practice.

Prospective Review: Data-gathering technique that uses projected figures or current data to determine future costs or services.

Protocol: Tool for enhancing quality in a health care organization by developing customary methods for medical interventions. Treatment protocols are developed for clinical areas of medicine where diagnostic or therapeutic approaches are defined. Technology assessment and quality studies are used to establish decision protocols for particular diseases or treatments.

Provider: A physician, hospital, skilled nursing facility, intensive care facility or health care professional or other entity which provides health care services.

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Readmission: Patient admission to a hospital for the same or similar diagnosis as a previous, recent admission. Often used as a measure of inappropriate discharge or treatment from the first admission.

Reasonable and Customary: The maximum amount a plan or insurance contract will consider eligible for reimbursement, based upon prevailing fees in a geographic area.

Rebating: The practice (illegal in most states) of giving an insurance applicant anything of value as an inducement to purchase or renew an insurance policy.

Referral: Primary care physician-directed transfer of a patient to a specialty physician or specialty care.

Referral Pool: Capitation set-aside for referrals or inpatient medical services. If utilization targets are met at the end of the year, primary care physicians may share what is left in the pool.

Rehabilitation: Process and goal of restoring a disabled insured person to maximum physical, mental, and vocational independence and productivity commensurate with their limitations.

Reinsurance: The transfer of part o f the insurance risk to another insurer or insurers -self-funded plans generally buy specific and/or aggregate stop-loss coverage to cover losses in excess of certain limits (also known as stop loss). (See Attachment Point)

Reserves: A specific amount of money pre-funded and set aside to assure adequate funds to cover future claims. Both insurance companies and self-insured employers must "reserve" in order to preserve cash-flow and protect solvency.

Resource-Based Relative Value Scale (RBRVS): Developed by the Health Care Financing Administration (HCFA) of the federal government to redistribute physician payments more adequately to encourage the use of PCP services. The amount of resources devoted to produce a health care service serve as the basis for the fee that is paid.

Retention: The portion of the insurance premium which is allocated for expenses, administration, commissions, risk charges and profit.

Retrospective Claim Review: Examination of claim data after completion of medical services to assess appropriateness of care or reimbursement for services.

Review Of Service Request: Review of information submitted to the Utilization Management Organization for health care services that do not need medical necessity certification nor result in a non-certification decision.

Rider (Exclusion): An amendment to insurance contracts limiting, or excluding an existing coverage for certain conditions. For example, a rider to a policy may exclude coverage for treatment to an applicant's knee.

Risk: Chance of incurring financial loss by an insurer or provider.

Risk Adjustment: Correction of capitation or fee rates based upon factors that can cause an increase in medical costs such as age or sex.

Risk Contract: See Medicare Risk Contact.

Risk Sharing: Apportionment of chance of incurring financial loss by insurers, managed care organization, and health care providers.

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Second Opinion: Requirement of some health plans to obtain an opinion about the medical necessity and appropriateness of specified proposed services by a practitioner other than the one originally making the recommendation.

Secondary Plan: The group plan that pays benefits only after the primary plan has paid.

Self-funding: An arrangement under which all or some of the risk associated with providing coverage is not covered by an insurance contract.

Self-Referral: Choice by the insured or patient of medical specialists or specialty services without need for primary care physician or health plan controls.

Service Area: A geographic area of operation for a managed care entity.

Set Aside: See Withdrawal Arrangements

Seventy-five/twenty-five (75/25) Rule: HMOs participating in the Medicaid program are required to limit Medicaid and Medicare recipients to no more that 75 percent of enrollees and to draw at least 25 percent of their enrollees from the private sector. This "75/25" is imposed to ensure that care provided to Medicaid enrollees is comparable to that provided to enrollees with private insurance.

Skilled Nursing Facilities: Institution providing the degree of medical care required from, or under the supervision of, a registered nurse or a physician.

Social Security Act: Law under which the federal government operates the Old Age, Survivors, Disability, and Health Insurance Program (OASDHI).

Specialty Managed Care Arrangements: Those group practices and organizations of providers who contract with managed care organizations to provide non primary-care medical services.

Specialty Physicians: Those physicians practicing in areas other than internal medicine, family practice, or pediatrics.

Specified Disease Insurance: Specified disease insurance, which is not available in some states, provides benefits for only a single disease, such as cancer, or for a group of specified diseases. The value of such coverage depends on the chance you will get the specific disease or diseases covered. Benefits are usually limited to payment of a fixed amount for each type of treatment.

Specified Low-Income Medicare Beneficiary (SLMB): Persons entitled to Medicare Part A whose incomes are slightly higher than the National Poverty Level. Your income cannot exceed the National Poverty Level by more than 20 percent.

Spend Down: See "Divestment"

Staff Model HMO: HMO that owns the clinical facilities used by patients enrolled in the HMO. The HMO directly employs the physicians providing service and they provide service only to patients enrolled in the HMO plan.

Stakeholders: Those with a stake in the cost and quality of health care services, including patients, employers, providers, and government.

Standard Appeal: A request to review a determination not to certify an admission, extension of stay, or other health care service conducted by a peer reviewer who was not involved in any previous non-certification pertaining to the same episode of care.

Stop-Loss Insurance: Protection purchased by self-insured and some managed care arrangements against the risk of large losses or severe adverse claim experience.

Subacute Care: Health care services that are less intense than hospital care but more intense than skilled nursing home services.

Supplementary Coverage: Insurance to help cover those parts of Medicare Part B that are non-reimbursable.

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Third-Party Administrator (TPA): An organization that provides specific administrative duties (including premium accounting, claims review and payment, arranges for utilization review and stop_loss coverage) for a self' funded plan.

Tort Reform: The purpose of reform is to eliminate unnecessary practices and testing which are performed defensively by a physician with little or no value to the person seeking treatment. It may also include reasonable limits placed on non-economic damages paid to a patient or beneficiary.

Total Disability: Generally, a disability that prevents insureds from performing all occupational duties.

Trend Factor: The percentage of increase used by an insurance company or plan to reflect the projected rise in health care costs. Calculation factors also include inflation, utilization, technology and geographic area.

Triggers: Data point or indicator that suggests further study or review. Also refers to the assessments conducted by a licensed health care practitioner to determine eligibility for private long term care insurance benefits.

Triple Option Plan: An employer plan that usually offers an insured an opportunity to choose between an indemnity HMO or PPO level of benefits at time of claim.

Twenty-four (24-hour) Coverage: Any combination of traditional health insurance and workers' compensation insurance that attempts to dissolve the occupational and non-occupational boundaries between the two coverages.

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Unbundled: Health services or benefits that are a stand-alone or carved-out benefit under a separate contract or bill.

Unbundling: To increase the reimbursement paid by a plan or insurance contract, each medical procedure is billed under a separate code as a separate item, instead of part of one overall procedure.

Underwriters: Insurance professionals who determine if and on what basis an insurer will accept an application for insurance.

Usual, Customary, and Reasonable (UCR) Fees: Charges of health care providers that are consistent with charges from similar providers for identical or similar services in a given locale.

Utilization: Patterns of usage for single medical service or type of service (hospital care, prescription drugs, physician visits). Measurement of utilization of all medical services in combination usually is done in terms of dollar expenditures. Use is expressed in rates per unit of population at risk for a given period, such as number of annual admissions to a hospital per 1,000 persons over age 65.

Utilization Management (UM): Evaluation of the medical necessity, appropriateness, and efficiency of the use of health care services, procedures, and facilities under the auspices of the applicable health benefit plan; sometimes called “utilization review.”

Utilization Review (UR): Programs designed to reduce unnecessary medical services, both inpatient and outpatient. Utilization reviews may be prospective, retrospective, concurrent, or in relation to discharge planning.

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Vendors: Term describing a person, persons, groups, and organizations providing health care services for reimbursement.

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Waiting Period: The time period between an employee's date of hire and their eligibility to receive benefits under a plan or insurance contract.

Waivers: Term usually associated with the Medicare or Medicaid programs by which the government waives certain regulations or rules for a managed care or insurance program to operate in a certain geographic area. Can also relate to exclusions in life and disability insurance (reference "Rider").

Waiver of Premium: A provision in a plan or insurance contract which relieves the insured of paying the premiums while totally disabled.

Wellness: Programs or benefits which are introduced to encourage fitness, preventive care and early detection of illness to help reduce the costs of future health care (also known as Preventive Care).

Withhold Arrangements: Portion of a provider's salary, fees, or capitation that is held back until performance in relation to quality and utilization are examined at the end of each year. If performance was at least satisfactory, withholds are released to the provider.

Worker's Compensation Coverage: Programs mandated by the states which require employers to provide coverage to compensate employees for work-related injuries or disabilities.

Workers Compensation Insurance: Programs mandated by the states, which requires employers to provide liability insurance coverage and pay benefits to dependents of employees killed to compensate for work related injuries or disabilities.

Wrap-Around Coverage: Programs of HMOs that, in some states, were prevented by state law from taking on financial risk for out-of-plan care and joined with insurers to cover the out-of-plan portion of care. Such programs led to the development of point-of-service (POS) plans.

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