HEALTH INSURANCE TERMS

Capitation — Capitation is a method of paying medical providers through a prepaid, flat monthly fee for each covered person. The payment is independent of the number of services received or the costs incurred by a provider in furnishing those services.
COBRA — The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), requires group health plans with 20 or more employees to offer continued health coverage for you and your dependents for 18 months after you leave your job. Longer durations of continuance are available under certain circumstances. If you opt to continue coverage, you must pay the entire premium. 
Co-insurance — Co-insurance is the portion of covered health care expenses that must be made by the policyholder, in addition to the deductible. This figure is usually expressed as a percentage. For example, in a traditional 80/20 plan, the insurer pays 80 percent of the doctor's bill and the patient pays 20 percent. This is based on the insurance company's definition of what constitutes a physician's "reasonable and customary" fee. NOTE: Many physicians' charges are higher than the "reasonable and customary" fee and the patient is responsible for 100 percent of the excess amount. This is known as "balance billing."  In a PPO network, physician charges are negotiated and the UCR isn't a factor.  Thus, there is no balance billing within a PPO network.
Co-payment — A co-payment is the amount a plan member has to pay — usually $5 to $15 — every time he or she visits an affiliated physician or receives services.
Credentialing — Credentialing is the process by which managed care plans review  a physician's background and current professional standing before contracting with him or her. This will usually require evidence of graduation from an accredited medical school, a current state medical license, hospital privileges in good standing, and a professional liability claims history, including chemical dependency, felony convictions and disciplinary actions.
Deductible — The amount a person must pay before the insurance company begins to pay its portion of claims is a deductible. The higher the deductible, the lower the health care plan premium.
Exclusions — Exclusions are specific conditions or circumstances for which the policy will not provide benefits.
Fee-for-Service — A payment system for health care where the provider is paid for each service rendered.
Health Maintenance Organization (HMO) — An HMO provides members, through a network of selected physicians and hospitals, a defined set of comprehensive benefits in exchange for a prepaid premium. There are generally no deductibles, small co-payments, and no claims to file. The HMO provides no reimbursement (or a reduced amount) for non-emergency care with a physician or hospital outside of the network. There are several types of HMOs including:   
Group Model — AN HMO that contracts with one or more independent group practices of physicians to provide services to its enrollees on an exclusive basis, meaning the group can only treat the plan's members.
Network Model — Like a Group Model except that the contract is non-exclusive so the group can treat non-plan members.
Staff Model — A type of HMO that hires its own doctors. These physicians usually practice under one roof and are salaried by the plan.  Kaiser Permanente is an example of a staff model.
Independent Practice Association (IPA) — An "HMO without walls," where patients choose doctors from a select list and are treated at the physicians' private offices. IPA physicians are free to contract with more than one HMO at a time, as well as see fee-for-service patients.
Point of Service Plan (POS) — The latest development in managed care, this type of HMO allows the patient to see either an in-network or out-of-network provider. But the patient pays more for opting out of the system. In those instances, reimbursement is only 50 to 80 percent, the patient must submit a claim and has deductible and co-insurance charges, just as he would under a traditional fee-for-service insurance policy.  Usual, Customary & Reasonable charges and balance billing are a factor once outside the HMO network. 
Indemnity Plans (sometimes called Fee-for-Service Plans) — Medicine the way it used to be done. Patients receive a bill from their doctor or hospital for each service rendered. They submit the bill to their insurance company and the company pays it. These plans provide the maximum choice of physicians and hospitals but are the most expensive kinds of plan.
Lifetime Limit — A cap on the benefits paid under a policy. Many policies have a lifetime limit of $1-6 million, which means that the insurer agrees to cover up to $1 million in covered services over the life of the policy.  HMO lifetime limits are usually unlimited provided the insured stays in-network.
Managed Care — A general term for organizing doctors and hospitals into health care delivery networks with the intent of lowering costs and "managing" the medical care provided. HMOs were the earliest form of managed care. Today there are many different kinds of plans offered.
Medicaid — Medicaid is a joint federal-state health insurance program that is run by the states and covers certain low-income people (especially children and pregnant women), and disabled people.
Medicare — The federally sponsored health insurance program of hospital and medical insurance primarily for people age 65 and over.
Medical Savings Accounts (MSAs) — These health insurance plans provide incentives for individuals to replace high premium low-deductible policies with affordable, high deductible catastrophic coverage. Premiums for this coverage are lower and the savings may be used to fund a tax-preferred medical savings account from which you can pay on a pre-tax basis for qualified medical care and expenses, including annual deductibles and co-payments.
Network — A selected group of physicians, hospitals, laboratories and other health care providers who participate in a managed care plan's health delivery program and agree to follow the plan's procedures.
Out-of-pocket Maximum — A limit on all of the insured's out-of-pocket expenses (including deductibles and co-payments) for treatment of illness or injury. At this point, the insurance company will begin covering 100 percent of the charges. If you use non-network providers, the out-of-pocket maximum could be as high as $10,000.
Point-of-Service (POS) Plan — A POS plan is a managed care plan that combines features of HMOs and PPO. In a POS plan individuals decide whether to go to a network provider and pay a flat dollar co-payment (i.e. $10 for a doctor's visit), or to an out-of-network provider and pay a deductible and a coinsurance charge.
Portability — The ability for an individual to transfer from one health insurer to another health insurer in regard to pre-existing conditions or other risk factors.
Pre-authorization — Pre-authorization is a cost containment feature of many group medical policies whereby the insured must contact the insurer prior to a hospitalization or surgery and receive authorization for the service.
Pre-existing Condition — A health problem that existed before the date your insurance became effective. Many insurance plans will not cover preexisting conditions. Some will cover them only after a waiting period.
Preferred Provider Organization (PPO) — A managed care plan into which doctors and hospitals agree to provide discounted rates. PPOs usually don’t exercise tight management over medical care. For example, they usually don’t use primary care physicians to coordinate patient care. Patients are reimbursed 80 percent to 90 percent for treatment within the PPO versus 50 percent to 70 percent outside of it.
Premium — The cost of the health plan coverage, not including any required deductibles or co-payments.
Primary Care Physician — A primary care physician is listed under an HMO or POS plan, usually your first contact for health care. They are often a family physician, internist, or pediatrician. They monitor your health, treat most health problems, and refer you to specialists if necessary.
Provider — A provider is any person (doctor or nurse) or institution (hospital, clinic or laboratory) that provides medical care.
Third-Party Payer — This is anyone who pays for your health care services other than yourself. This includes an insurance company, an HMO, a PPO, or the federal government.
Usual and Customary Charge (UCR) — A usual and customary charge pertains to the amount a health plan will recognize for payment for a particular medical procedure. It is typically based on what is considered "reasonable" for that procedure in your service area.  The difference between UCR and the billed charges are the responsibility of the insured.  This is known as balance billing. 
Utilization Review — A utilization review is a cost control mechanism monitored by both insurers and employers focused on the appropriateness, necessity and quality of health care services.

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