Access: The ability to obtain healthcare services.

Accountable health plan: This term is used to refer to managed competition, including the health plans that are authorized to offer the uniform benefits package.

Administrative services only (ASO): Usually associated with self-funded groups, this is when an insurance company, HMO, or third-party administrator provides claims-processing services, but the employer pays the claim costs. Administrative services usually include billing, enrollment, coordination of benefits, payment check processing, subrogation, fraud investigation, and network rental.

Balance billing: The practice of billing a patient for the amount remaining after the insurer payment and co-payment has been made. For example, a physician may charge $100 for an office visit and if the insurance company only reimburses the doctor $85, the patient would be billed the additional balance of $15 by the physician. This practice is usually not allowed under most HMOs, but is dependent on the contractual arrangement between the healthcare provider and the health plan.

Beneficiary: In reference to Medicare, a person who is eligible to receive healthcare benefits.

Benefit package: Services offered by an employer, government agency, insurer, or HMO under the terms of the contract.

Benefit period: The way that Original Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you go to a hospital or skilled nursing facility. The benefit period ends when you haven’t received any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period begins.

Cafeteria plan: The method by which employees can pick and choose from a variety of benefits on a tax-favored basis. For example, employees may be able to choose from life insurance, disability insurance, dental coverage, cancer supplements, or child care reimbursement, and have costs deducted from paychecks before taxes are calculated; this lowers the amount of taxed income and increases net compensation.

Carrier: An industry term used to describe an insurance company or HMO that provides life, health, or other insurance programs with a financial risk.

Coordination of benefits (COB): Provision regulating payments when a person is covered by more than one healthcare policy. For example, if an employee is covered under a group plan and also under a spouse’s plan, the companies will coordinate payment of benefits so that each company pays the correct portion of the charges and doesn’t reimburse the claimant for more than the cost of the medical care.

Coinsurance: An amount you may be required to pay as your share of the cost for services, after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).

Co-payment: A cost-sharing arrangement in which a covered person pays a specific charge for a specified service. For example, an HMO may have a $10 office co-payment for physician office visits, so the employee pays $10 at each doctor’s appointment. This amount is paid at the time services are rendered.

Cost sharing: A broad term representing the ways in which a covered member shares in the cost of healthcare services with the health plan. Examples of this include deductibles, co-payments, and coinsurance.

Creditable prescription drug coverage: Prescription drug coverage (for example, from an employer or union) that is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.

Critical access hospital: A small facility that provides outpatient services, as well as inpatient services on a limited basis, to people in rural areas.

Custodial care: Nonskilled personal care, such as help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom. It may also include the kind of health-related care that most people do themselves, like using eye drops. In most cases, Medicare doesn’t pay.

Deductible: Amount that must be paid prior to receiving medical benefits from a health plan. This is most often associated with PPOs and indemnity companies and can vary from $100 to as high as $2,500 or more. Office visit co-payments are usually paid regardless of whether or not the deductible has been met. Usually, the deductible is based on the calendar year.

Dependent: An individual, other than the employee, who’s eligible to receive coverage under the employee’s healthcare plan. This is usually limited to spouses and children but can include grandchildren and foster children in some circumstances. The individual must usually rely on the employee for financial support.

Disallowance: This occurs when an insurance company or health plan denies payment for certain benefits. For example, if a claim is submitted for teeth whitening, it may be disallowed because of the cosmetic nature of the procedure.

Drug formulary: A listing of prescription drugs that are approved by a health plan through participating pharmacies. If the plan is “open formulary” then coverage is provided for drugs that aren’t on the formulary list; if the plan is “closed, select or mandatory” then coverage is only provided for drugs approved by the health plan on the formulary.

Duplication of benefits: This occurs when a person is covered by two or more health plans with similar coverage. For example, a person could be covered as an employee under a group plan and as a dependent under a spouse’s health insurance policy.

Enrollee: A person who’s enrolled in a health plan as an employee, not as a dependent.

Exclusions: Specific illnesses, injuries or methods of treatment that aren’t covered under an employee benefit plan. An example of this would be a pre-existing condition or a procedure, such as cosmetic surgery, that’s not medically necessary.

Exclusive provider organization (EPO): A term used to describe a health plan that is similar to an HMO in that it provides benefits only if the insured uses the specified network of providers, but is usually offered as an insured or self-funded product. EPOs usually mandate that coverage be channeled through a primary care physician. Also, EPOs are governed by the state’s Department of Insurance, as are PPOs, whereas most HMOs are governed under the Department of Commerce or the Department of Corporations, depending on specific state structures.

Explanation of benefits (EOB): A statement sent to covered individuals by a health plan explaining the services provided, the amount billed and the level of payment by the health plan.

Formulary: The list of prescription drugs approved for use and covered by an HMO when dispensed through participating pharmacies. Typically, this includes generic drugs that have been found to be safe and effective, and excludes brand-name drugs.

Gatekeeper: Refers to a primary care physician who controls referrals of patients for tests, specialty physician services and hospitalizations.

Gatekeeper model: This is a model for an HMO in which the primary care physician (PCP) serves as the patient’s “gatekeeper,” or initial contact for all health care. This is also referred to as “closed access” or a “closed panel.” Most HMOs operate under the gatekeeper model, although many are now allowing patients to see some types of specialists, such as an ob/gyn or dermatology physician, without first going through their primary care physician.

Health Maintenance Organization (HMO): HMO plans have a network of doctors and hospitals that chose to join the plan.  Because of this, you must get medical services from your HMO network. Check with your HMO to see if they offer a point-of-service option.  This option would allow you to go to more doctors and hospitals that are not part of your HMO network. HMO Plans will also ask you to choose a primary care doctor.  This is the doctor that your will see first for any health problems.  If your health problems need to be addressed by a specialist, your doctor will write you a referral. HMO plans allow you to change your primary care doctor at any time.  Doctors may also choose to leave the network.  In this case, Medicare will notify you and you will be able to choose a new primary care doctor. If you choose to get health care outside of your HMO network, the fees for services provided may not be covered by Medicare. The only exception would be for receiving emergency care outside of your HMO’s service area.

Indemnity: An insurance program in which members are reimbursed for covered medical expenses. This term refers to insurance plans that include little or no managed care components and simply pay a portion of medical bills incurred by the member.

Inpatient: A person who has been admitted to a hospital as a patient and remains in the hospital for more than 24 hours under the direction of a physician.

Inpatient rehabilitation facility: A hospital, or part of a hospital, that provides an intensive rehabilitation program to inpatients.

Institution A facility that meets Medicare’s definition of a long‑-term care facility, such as a nursing facility or skilled nursing facility, not including assisted or adult living facilities, or residential homes.

Integrated delivery system: A financial or contractual relationship between physicians and hospitals to offer a range of healthcare services through a separate legal entity. Models of these arrangements include physician-hospital organizations (PHOs), medical foundations, integrated provider organizations (IPOs), and management service organizations (MSOs).

Lifetime Reserve Days:  In Original Medicare, these are additional days that Medicare will pay for when you are in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.

Maximum out-of-pocket costs: The maximum amount that a member would have to pay in either a calendar or contract year that includes deductibles, co-payments, and coinsurance payments.

Medicaid: A federal program that’s administered and operated individually by states that provide healthcare benefits for low-income people under the age of 65. The federal government matches each state’s contribution on a specific minimal level of coverage. Each state can choose or provide additional services or even privatize the program, such as TennCare in Tennessee.

Medical necessity: The evaluation of medical services to determine if they’re: 1) medically necessary and appropriate to meet basic health needs, 2) consistent with the diagnosis, 3) rendered in a cost-effective manner and 4) consistent with national medical practice guidelines.

Medicare: A federally administered entitlement program operated by the Center for Medicare Services, or CMS, which covers the costs of hospitalization, medical care, and some related services for eligible persons. The two parts of Medicare are: Part A, which covers hospitalization and is a compulsory benefit, and Part B, which covers outpatient services and is a voluntary program. Medicare also pays for drugs provided in the hospitals, but not for pharmaceuticals prescribed in outpatient settings

Medicare beneficiary: A person designated by the Social Security Administration to receive Medicare benefits.

Medicare supplement policy: Insurance provided to supplement the reimbursements by Medicare for covered medical services. This guarantees that the deductible, coinsurance, and co-payments covered by Medicare will be paid up to a predetermined benefit level. Also called “Medigap” or “Medicare wrap.”

Medigap: refers to various private supplemental health insurance plans sold to Medicare beneficiaries in the United States that provide coverage for medical expenses not or only partially covered by Medicare. Medigap’s name is derived from the notion that it exists to cover the difference or “gap” between the expenses reimbursed by Medicare and the total amount charged. As of 2006, 18% of Medicare beneficiaries were covered by a Medigap policy.

Network: A generic term used to describe all organized groups of healthcare providers. Examples of networks include PPOs, HMOs, and IPAs.

Non-participation provider (non-par): A healthcare provider that doesn’t have a contract with the health plan as a provider of care.

Open access (OA): This arrangement allows HMO members to see participating specialists without having to obtain a referral from their primary care physician. These are most often found in IPA-model HMOs and are also referred to as “open panel.”

Open enrollment: A specified time period that occurs, usually annually at the anniversary date, when subscribers are allowed to change healthcare plans or re-enroll in their current plan. This is usually allowed without having to submit evidence of insurability or incur waiting periods.

Open panel: An HMO that contracts with existing physicians and hospitals, rather than a closed panel, which is made up of salaried healthcare providers.

Closed panel: A type of HMO in which the physicians are employed by the health plan and only see patients who are members of the HMO.

Outpatient: A patient who receives healthcare services without being admitted to a hospital for an overnight stay.

Participating provider: A healthcare provider who is contracted with a health plan to deliver services to covered persons. The provider may be a hospital, physician, pharmacy or other facility that has contractually accepted the terms and conditions set forth by the health plan.

Participation: The requirement of a health plan for a certain percentage of eligible employees to participate in the employee benefit plan. For example, if a health plan has a 75% participation requirement and a group has 100 eligible employees, then 75 must enroll for coverage. Some plans also have participation requirements for eligible dependents.

Payer or payor: A private or public organization that underwrites or pays for healthcare expenses. This usually refers to an insurance company or HMO.

Point-of-service plan (POS): An HMO or PPO that includes an option allowing members to receive services outside the health plan’s provider network. These services are usually provided at a reduced benefit with much greater out-of-pocket costs and different benefit levels, and were created to offer additional flexibility in managed care plans.

Pre-certification: The process of communicating the need for health care to the health plan prior to receiving care. This is a standard requirement for most managed care plans and is designed to help reduce unnecessary hospital admissions and medical procedures. Many plans have penalties if a member receives care without pre-certification, and some won’t pay benefits if pre-certification isn’t obtained.

Pre-existing condition (PEC): Any medical condition that has been diagnosed or treated within a specified period of time before the member’s effective date of health coverage. Treatment may be excluded or limited for a set amount of time, after which these conditions would be covered.

Preferred provider organization (PPO): A group of healthcare providers that contract with an employer or other entity to provide certain healthcare services at a discounted rate. Usually, the benefit contract provides much better benefits for services received from these preferred providers. Covered persons are usually allowed benefits for non-participating providers’ services at a reduced level. Providers are usually reimbursed on a discounted fee-for-service basis. The PPO providers benefit from increased market share of patients. Many PPOs lease their networks to a variety of insurance companies in one geographic region, and they may be fully insured or offered on a self-funded basis.

Preferred Provider Organization Plans (PPO): Preferred Provider Organization Plans tend to offer more medical benefits at lower costs than the Original Medicare Plan.  This plan allows you to go to any doctor that accepts Medicare without having to choose a primary care doctor.  Most PPO’s offer prescription drug coverage so you do not have to buy a Part D plan. You do not need to obtain a referral to see a specialist but you will usually pay more for their services.  Contact your plan before you obtain the services to get information on the fees you would be required to pay.

Premium: The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.

Primary care: Basic health care provided by pediatricians, family practice physicians and internal medicine doctors that focuses on preventive care and differs from healthcare services provided by specialists.

Primary care physician: Often referred to as a “gatekeeper physician,” this physician is usually the first healthcare provider a person sees for an illness or injury. PCPs are devoted to internal medicine, gynecology, family practice or pediatrics.

Prior authorization: This is the process of obtaining prior approval by a health plan as to the appropriateness of a service or medication. This process doesn’t guarantee coverage or ensure that benefits will be paid.

Provider: A physician, hospital, nursing home, pharmacy, or any individual or group that provides healthcare services or supplies.”

Quality Improvement Organization (QIO): A group of practicing doctors and other health care experts paid by the Federal government to check and improve the care given to people with Medicare.

Reasonable and customary (R & C): This term refers to the most commonly charged or prevailing fees for a health plan in a specific geographic area. Most insurers pay a percentage of the “reasonable and customary” fees, while the insured individual is responsible for paying any amount charged over this “reasonable and customary” fee.

Referral: Authorization by the health plan to send a member to another provider, including specialists and hospitals. Referral requests are made by participating health providers and approved by the primary care plan’s medical directors.

Referral provider: Physicians who provide services to patients who are referred to them by a participating provider in the health plan.

Second opinion: An opinion obtained from an additional healthcare professional prior to the performance of a medical procedure or service. This may be a mandatory, formal process, which is used to educate the patient, seek alternative treatments, and determine the medical necessity of the care.

Service Area: A geographic area where a health insurance plan accepts members if it limits membership based on where people live. For plans that limit which doctors and hospitals you may use, it’s also generally the area where you can get routine (non-emergency) services. The plan may disenroll you if you move out of the plan’s service area.

Skilled Nursing Facility (SNF) Care: This is a level of care that requires the daily involvement of skilled nursing or rehabilitation staff. Examples of skilled nursing facility care include intravenous injections and physical therapy. The need for custodial care (such as help with activities of daily living, like bathing and dressing) can’t qualify you for Medicare coverage in a skilled nursing facility if that’s the only care you need. However, if you qualify for coverage based on your need for skilled nursing care or rehabilitation, Medicare will cover all of your care needs in the facility, including help with activities of daily living.

Standard benefits package: A specific set of healthcare benefits that would be offered by an integrated delivery system. This could include preventive care, hospital and physician services, prescription drugs, long-term care, and mental health services.

Subscriber: The individual who’s responsible for the payment of premiums through the employer or directly to the health plan. Also, the person who’s the primary member forming the basis for eligibility for membership in an HMO or other health plan.

Third-party administrator (TPA): An organization that provides administrative services, including claims processing and underwriting for other entities, such as insurance companies and employers. TPAs are used by organizations that actually fund the health benefit costs but find it more cost effective to outsource the administrative functions.

TTY: A teletypewriter (TTY) is a communication device used by people who are deaf, hard-of-hearing, or have a severe speech impairment. People who don’t have a TTY can communicate with a TTY user through a message relay center (MRC). An MRC has TTY operators available to send and interpret TTY messages.

Workers’ compensation: The state-governed system that addresses work-related injuries and illnesses. Under this system, employers assume the cost of medical treatment and lost wages due to an employee’s job-related injury or illness, regardless of who is at fault. In return, employees give up their right to sue employers, even if injuries are the result of employer negligence.