To get the most from a health care plan, it is important to understand the terms and phrases used by those providing health care coverage- the health insurance companies and your physician.
Admitting Privileges: The ability of a doctor to admit a patient to a certain hospital.
Advocacy: Any activity performed to help a person or group get something the person or group wants or needs to occur.
Assignment of Benefits: When you assign benefits, you sign a document allowing your hospital or doctor to collect your health insurance benefits directly from your health carrier. Otherwise, you pay for the treatment and then the company reimburses you.
Association: A group of individuals or employers or combination of the two.
Capitation: Capitation represents a set dollar limit that your health maintenance organization (HMO) pays to your primary care physician for providing medical treatment to you and your dependents. This fee is usually paid to the physician on a monthly basis. The physician gets this set fee no matter how much you use their services.
Case Management: A system that insurance companies and HMO’s use to ensure that individuals receive appropriate, timely, and reasonable health care services.
Claim: A request by an individual or their health care provider to an individual’s insurance company requesting payment for services obtained from a health care professional.
Co-insurance: Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. In some health plans, coinsurance is called a “copayment.” Co-insurance is often specified by a certain percentage. For example, in a particular medical service the employee pays 10% toward the charges and the employer or insurance company pays 90%.
Copayment: Co-payment is a small pre-set fee that an individual pays for health care services. This is in addition to what the insurance covers. For example, some HMOs require a $20 “co-payment” for each office visit, regardless of the type or level of services provided during the visit. Not that Co-payments are not usually specified by percentages.
Deductible: The amount an individual must pay for health care services before an insurance covers any of the costs. In most cases, deductibles are charged on an annual basis rather than on a per event basis.
Denial of a Claim: Refusal by an insurance company to pay a claim submitted to them on behalf of an insured individual.
Employee Assistance Programs (EAPs): These are mental health counseling services that are occasionally offered by insurance companies or employers. Typically, individuals or employers do not have to directly pay for EAP services.
Exclusions and Limitations: These are medical services that are either not covered or limited in benefit by an individual’s insurance company or policy.
Guaranteed Issue: This refers to an insurance company or HMO that issues coverage to an applicant regardless of prior medical history. For example, in California, small employers (defined as 3 to 50 employees) cannot be refused coverage for their employees regardless of the medical history of one or more employees.
Health Maintenance Organizations (HMOs): Health Maintenance Organizations represent “pre-paid” or “capitated” health care plans in which individuals pay small fees or copayments for specified health care services. This is over and above the monthly premiums paid to be a member of the HMO. Services are provided by physicians and allied health care personnel who are employed by, or under contract with the HMO. Depending on the type of HMO, services may be provided in a central facility, or in an individual physicians office. They are also available on both an individual and employer group basis.
Indemnity Health Plan: Indemnity health insurance plans are also called “fee-for-service.” These are the types of plans that primarily existed before the rise of HMOs, IPAs and PPOs. With indemnity plans, the individual pays a predetermined percentage of the cost of health care services, and the insurance company pays the additional percentage. This ultimately adds up to 100% of the total charges. For example, an individual might pay 25% for services and the insurance company pays 75%. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans offer individuals the freedom to choose any physician or hospital.
Independent Practice Associations: A group of independent practicing physicians who join together for the purpose of contracting their services to HMOs, PPOs and / or insurance companies.
Long-Term Care Policy: Insurance policies that cover the costs of providing nursing care, home health care services and custodial care for the aged and infirmed.
Managed Care: The system that HMOs, PPOs and indemnity plans use to provide quality health care while simultaneously controlling the costs of medical services that individuals receive.
Maximum Dollar Limit: The maximum amount of money that an insurance company will pay for claims within a specific period of time. For instance, most PPO programs have an overall lifetime maximum expressed in millions of dollars (usually a minimum of $1M). Maximum dollar limits vary greatly on these policies. They may also be based on the type of illness or expressed in a period of time.
Medically Necessary: Many insurance policies will pay only for treatment that is deemed “medically necessary” to restore a persons health. For instance, many policies will not cover routine physical exams or plastic surgery for cosmetic reasons.
Medigap Insurance Policies: Offered by private insurance companies, not the government. Please note that it is not the same as Medicare or Medicaid. The difference is that these policies are designed to pay for some of the costs that Medicare does not cover.
Open-ended HMOs: HMOs which allow enrolled individuals to use out-of-plan providers and still receive partial or full coverage and payment for the professional’s services under a traditional indemnity plan. These type of plans are also known as Point of Service Programs.
Out-Of-Plan: This phrase usually refers to physicians, hospitals or other health care providers who do not contract with the insurance plan (usually HMOs and PPOs). Depending upon the insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered by an individual’s insurance company.
Out-Of-Pocket Maximum: A predetermined and limited amount of money that an individual must pay out of pocket, before an insurance company will pay 100% for an individual’s health care expenses.
Pre-Admission Certification: Also called pre-certification review, or pre-admission review. This is the approval by a case manager or insurance company representative for a person to be admitted to a hospital or in-patient facility in advance of their admission. Typically, the patient’s physician requests that this process be completed. The goal of pre-admission certification is to ensure that individuals are not hospitalized for unnecessary surgical procedures or services that are not medically necessary.
Pre-Existing Medical Conditions: Any illness or health problem that existed prior to an individual obtaining medical insurance coverage. Group health plans will cover pre-existing conditions after an insured has been covered for at least six months; for individual plans, its 12 months.
Preferred Provider Organizations (PPOs): This is a group of health care providers or doctors who have agreed by contract to furnish medical services to members of a health plan at discounted rates.
Primary Care Provider (PCP): A health care professional who is responsible for monitoring an individual’s overall health care needs. The way it normally works is that a PCP serves as a “gatekeeper” for an individual’s medical care. They refer the individual to specialists and admit them to hospitals when needed.
Reasonable and Customary Charges: The charges that a carrier determines “normal” for a particular medical procedure in a certain geographic area. If charges are higher than what the carrier considers normal, the carrier will not pay the full amount charged. The balance then becomes the responsibility of the insured.
Waiting Period: A period of time when an insured is not covered by insurance for a particular medical problem or situation.