DEFINITIONS

Accredited

A process established by an outside organization that measures the quality and regulatory compliance of a service provider.  Each accrediting agency must be certified to be qualified to measure an organization’s services.  The accreditation process frequently includes review of patient care standards, regulatory compliance, billing practices, record keeping and numerous other areas.  Site surveys are included; accreditation may be granted for several years at a time, with periodic unannounced review including site-surveys during that period.  There are numerous accrediting organizations that are specific to the type of service provided (i.e. hospital, insurance company, home medical equipment company). Some types of providers may not be required to obtain accreditation; it is based upon licensing, state and federal laws & regulations. 

 

Allowable

Most insurance companies, including Medicare & Medicaid have pre-determined a maximum approved charge or allowable for each service or type of equipment provided by any authorized provider. The amount is often substantially less than the providers actual or usual and customary fees.  Providers bill their usual and customary fees then your insurance applies their allowable to the claim.  Based upon the allowed charge and your policy benefit levels the insurance determines the amount of payment and what your portion will be, if any.

 

Assignment of Benefits

Providers of service may choose to accept assignment of benefits, but are not generally required to do so.  If the provider agrees to accept assignment, they are consenting to accept the insurance allowable as full payment for their equipment or services.  You will still be responsible for any difference between the insurance allowable and the actual insurance payment, but not the difference between the usual and customary fee and the allowable.  Assignment of benefits also directs the insurance company to pay your benefit directly to the provider of service. 

 

Appeal

A complaint you make in writing to the insurance company if you disagree with their decisions about your claim payment or denial.  Check with the insurance company to determine the process required for appeal.  Some providers will automatically appeal all denials for you.

 

Authorization

Some insurance plans require authorizations to be obtained services or will be denied insurance coverage.  Authorizations generally require a prescription from the treating physician, a determination of medical necessity and review of benefits and benefit levels to determine if the service is eligible for coverage.  Authorization does not guarantee payment.  

 

Benefit

A general term referring to any service (such as an office visit, laboratory test, surgical procedure, etc.) or supply (such as prescription drugs, durable medical equipment, etc.) covered by a health insurance plan in the normal course of a patient’s healthcare.

 

Benefit Level

A specific amount of insurance coverage that is determined by the policy purchased applied to the services provided. 

 

Billed Claims

A billed claim is the billing that has been sent by the provider of service to the insurance company for payment.   

 

Board Certified

A physician who has passed an exam that qualifies him or her as a specialist in a certain field. 

 

Board Eligible

A physician who is eligible to take the board exam by completing all the requirements that will make him or her board certified and is waiting the test to be available.

 

Carrier

A carrier is the insurance company or HMO offering a health plan.

 

Certified

A program or organization can be certified when experts in a field have reviewed the standards and shown the program or organization to be qualified to measure.

Claim

A request for payment for services, equipment or supplies provided under the benefits of an insurance policy is a claim.  The claim is submitted by either the insured or the healthcare service provider.

Centers for Medicare & Medicaid Services

Formerly known as the Health Care Financing Administration, the Centers for Medicare and Medicaid Services (CMS) is part of the federal government’s Department of Health and Human Services, and is responsible for the administration of the Medicare and Medicaid programs.  The CMS establishes standards for healthcare providers that must be complied with in order for providers to meet certain certification requirements.

Co-insurance

Co-insurance is the percentage of a providers claim that an individual must pay, less any deductible remaining.  For example, many insurance benefit levels pay 80% of an allowed amount and the insured is responsible for the 20% remaining.  However, some people also have supplemental insurance or secondary insurance that will pay the coinsurance amount and/or deductibles.

Co-payment

Co-payment is a specific charge that your health insurance plan may require you to pay out-of-pocket for a specific medical service or supply, also referred to as co-pay.  For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.  Deductibles may or may not apply to co-payments based on your benefits.

Deductible

A specific dollar amount that your health insurance company may require you to pay out-of-pocket each year before your health insurance plan begins to make payments for claims.  For covered health services to be applied to the deductible they must be billed to the insurance.  Insurance companies accumulate all the allowed charges until they have reached the deductible amount and then they start paying claims.  Not all health insurance plans require a deductible.   Different deductibles can be applied to different types of service or one deductible may encompass all services provided.

Denial of a claim

The refusal by an insurance company or carrier to honor a request for payment of health care services obtained.   Notification of a denial is generally sent to both the insured person and the provider of services if that provider has accepted assignment of benefits.  Most insurance companies have an appeal process if you disagree with their decision.

Dependents

Dependents are defined as a spouse and/or unmarried children (under a certain age) of an insured.  Some states have also included “life partners” into this definition. 

Effective date

The date your insurance is to actually begin.  You are not covered until the policies effective date.

Estimate

An approximation of the cost of services or patient portion of services provided or to be provided based upon allowable or other factors that have been identified.  

Explanation of Benefits (EOB)

The insurance company’s written explanation of payment for a claim; showing what they paid and what the client must pay based upon the allowable, deductible and benefit level of their plan.   The explanation of benefits (EOB) is sent to the insured and if assignment of benefits was accepted by the provider the EOB also is sent to them along with the payment. 

Group Health Insurance

Group Health Insurance is coverage obtained through an employer or other entity that covers all individuals in the group. 

 Health Maintenance Organization (HMO)

Health Maintenance Organizations represent “pre-paid” or capitated insurance plans in which individuals or their employers pay a fixed monthly fee for services, instead of a separate charge for each visit or service.  The monthly fees remain the same, regardless of types or levels of services provided.  Services are provided by physicians who are employed by, or under contract with the HMO.  HMO”s have a variety of designs.  Depending on the type of the HMO, services may be provided in a central facility, or in a physician’s own office. 

HIPAA

A Federal law passed in 1996 that allows persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships.  It also creates the authority to mandate the use of standards for the electronic exchange of health care data; to specify what medical and administrative code sets should be used within those standards; to require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and to specify the types of measures required to protect the security and privacy of personally identifiable health care.  Full name is “The Health Insurance Portability and Accountability Act of 1996”

In-Network Provider

In-network refers to providers or health care facilities which are part of a health plan’s network of providers, with which it has negotiated a discount.  Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts.

Lifetime Maximum Benefit

The maximum amount a health plan will pay in benefits to an insured individual during the individual’s lifetime.

Limitations

A limit on the amount of benefits paid out for a particular covered expense, as disclosed on the certificate of insurance.

Managed Care

A medical delivery system that attempts to manage the quality and cost of medical services provided.  Most managed care systems offer HMO’s and PPO’s that individuals are encouraged to use for their health care services.  Some managed care plans attempt to improve health quality, by emphasizing prevention of disease.

Maximum Benefit

The maximum amount of money that an insurance company (or self-insured company) will pay for claims within a specific time period.  Maximum dollar limits vary greatly.  They may be based on or specified in terms of types of illnesses or types of services.  Sometimes they are specified in terms of lifetimes, sometimes for a year.

Medical Necessity

Each insurance company determines specific guidelines that must be met to consider an item medically necessary.  The specifics are generally based upon diagnosis, test results and other factors that the patient must meet to qualify for coverage of an item.  A physician prescription is required to verify the medical necessity.

Medicare

Medicare is a national, federally administered health insurance program authorized in 1965 to cover the cost of hospitalization, medical care and some other related health services for most people over age 65 and certain other eligible individuals.  The Medicare program has over the last several years to include coverage for prescription drugs.

Out-of-pocket costs

The financial responsibility a member will be required to pay out-of-pocket for a specific service provided.  This may be a deductible, co-insurance or co-payment.

Medicaid

A state program (with some federal subsidies) to provide services for low income and disabled individuals and families.  Each state generally has specific qualifications and benefits for those deemed eligible.   The Washington State Medicaid program is referred to as DSHS and the Oregon program as OMAP.

Network

A group of doctors, hospital and other healthcare providers contracted to provide services to insurance patients for less than their usual fees.  Provider networks can cover a large geographic market or a wide range of health care services.  Insured individuals typically pay less for using a network provider.

Out-of-Plan Providers

This phrase usually refers to physicians, hospital or other health care providers who are considered non-participants in an insurance plan (usually an HMO or PPO).  Depending on an individual’s insurance benefit levels, expenses incurred for services, provided by out-of-plan health professionals, may not be covered or covered only in part by an individual’s insurance company.

Out-of-Pocket Maximum

The most a member will be required to pay out-of-pocket in a benefit year, often including co-payment, coinsurance and deductibles.  Generally after the out-of-pocket maximum for the calendar year has been reached, the insurance company or self-insured employer will pay 100 percent of any qualified health care expenses for the remainder of that year.  Some out-of-pocket maximums apply to individuals receiving care and some incorporate a family maximum.

Participating Provider

A participating provider is a term generally used with a network.  However, not all healthcare providers contract with health insurance companies at the same level.  Some providers contract with insurance at lower levels and may be referred to as participating providers as opposed to preferred providers.  Insurance plans may pay the benefits when an individual uses a participating provider. 

Preferred Provider

A preferred provider is a term generally used with a network.  Preferred providers generally contract with the insurance at lower rates and therefore both the insured and the insurance company receive better rates.  Patients are encouraged to use preferred providers and in some case their benefits may be reduced or denied if they use other providers.

Preferred Provider Organization (PPO)

Like the name implies, a PPO is a group of healthcare professionals who have made an agreement to provide care for individuals purchasing their services as a group.  With a PPO plan you are required to get your medical care from the list of preferred providers offered by your insurance.  Using preferred providers your claims will be paid at the highest level.  It’s up to you to make sure that the health care providers you use are part of the PPO network as services rendered by out-of-network providers may not be covered or may be paid at a lower rate. 

Premium

The total amount paid to the insurance company for health insurance coverage is called the premium.  Within the context of group health insurance coverage, the premium is paid in whole or in part by the employer on behalf of the employee or the employee’s dependents.

Primary Care Physician (PCP)

A primary care physician usually serves as a patient’s main healthcare provider.  The PCP serves as a first point of contact for healthcare and may refer a patient to specialists for additional services. 

Primary Insurance coverage

When a person is covered under more than one health insurance plan, the coverage that pays first is the primary insurance coverage.  After the primary insurance pays what their benefits allow, any secondary insurance coverage or supplemental insurance coverage may pay part or all of the remaining balance. 

Provider

A term commonly used by heath insurance companies to designate any healthcare provider, whether a doctor or nurse, a hospital or clinic or a home medical equipment provider.

Secondary Insurance coverage

When a person is covered under more than one health insurance plan, this term describes the health insurance plan that provides payment on claims after the primary insurance coverage.   Secondary insurance coverage is generally coverage that is obtained through a spouse’s work or through a second employer.

Supplemental Medical Insurance

Supplemental Medical Insurance is generally insurance that is purchased directly by a person to pay all or part of the balance remaining after the primary insurance plan has paid their portion.  Supplemental insurance is frequently purchased to supplement Medicare and may pay all or part of the co-insurance and deductible.

Usual and Customary Charge

A usual and customary charge is the amount that is usually charged for services, equipment and supplies without any discounts for insurance contracts.

Waiting Period

A waiting period is the time you must wait to be covered by insurance for a particular problem.  Waiting periods will vary by employer and insurance company policy.