Indiana University Medical Group - Commonly Used Terms

Every industry has its own set of words and abbreviations, and managed care is no exception. These definitions will help you understand managed care systems and health care management.

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access - a patient's ability to obtain medical care at a particular facility or provided by a particular physician or physician group. It also refers to availability of medical services, transportation options, hours of operation and cost of care.

alternative care - medical care received in lieu of inpatient hospitalization. Examples include outpatient surgery, home health care, skilled nursing care and midwifery.

ambulatory care - services which do not require hospitalization, such as those delivered in a physician's office or clinic. Also called outpatient care.

ancillary - additional services performed related to diagnosis or treatment, such as lab work, X-rays or anesthesia.

capitation - a stipulated dollar amount established to cover the cost of health care delivered for a person. It usually refers to a negotiated per capita rate to be paid monthly to a health care provider.

carve out - the separate purchase of a service which is typically a part of an indemnity or HMO plan. For example, an HMO may "carve out" transplant services to a specialized hospital and physician group.

closed access - a plan in which patients are required to select a primary care physician (PCP) from the plan's participating providers and to see this PCP first for care and referrals to other specialty providers within the plan. Typically found in a staff, group or network model HMO. Also called closed panel or gatekeeper model.

co-insurance - the portion of the covered health care costs for which the insured has a financial responsibility, usually according to a fixed percentage. Also called co-pay or co-payment.

covered person - an individual who meets eligibility requirements and for whom premium payments are paid for specific benefits.

date of services - the date when health care services were delivered to the covered person.

deductible - the amount a covered person must pay each year from his/her own pocket before the plan will make payment for eligible benefits.

dependent - an individual who obtains health coverage through a spouse, parent or guardian who is the covered person.

disallowance - a denial by the payer for portions of the claimed amount. Examples of possible disallows include uncovered benefits or amounts over the fee maximum.

disenrollment - the process of terminating individuals or groups from their enrollment with a carrier.

dread disease policy - insurance benefits for the treatment of specific diseases.

DRGs - diagnosis related groups refer to a system of classification used to reimburse hospitals and other providers for services rendered.

drug formulary - a listing of prescription medications which are preferred for use by the health plan. Plans with an "open" formulary will pay for nonformulary medications prescribed by the PCP. A "closed, select or mandatory" formulary limits coverage to those drugs in the formulary.

dual choice - describes a situation where two insurance carriers are contracted by a specific group. For example, an employer offers its employees one HMO and one indemnity plan, or two HMOs.

effective date - the date a contract becomes in force.

eligibility date - the date a covered person becomes qualified to receive benefits under a contract.

employee contribution - the amount an employee must pay toward the premium cost of the contract.

encounter - a face-to-face meeting between a covered person and health care provider when services are rendered.

enrollees - see "members."

EOB - the explanation of benefits is the statement sent to covered persons by their health plan listing services provided, amount billed and payment made.

fee-for-service - the traditional health care payment system, under which physicians and other providers are paid for each service rendered.

fee maximum - the maximum amount a provider may be paid for a specific service.

formulary - see drug formulary.

gatekeeper - primary care physicians are sometimes called "gatekeepers," because they control access to specialists through the referral process in a closed access or closed panel HMO model.

health plan - any plan the covers health care services (i.e. HMOs, PPO,s, self-funded plan, indemnity insurance).

HMO - a health maintenance organization offers coverage of designated health services for plan members for a fixed, prepaid premium. Under the Federal HMO Act, an HMO must have three characteristics: 1) a system for providing health care or assuring health care delivery in a geographic area; 2) an agreed upon set of basic and supplemental health maintenance and treatment services; and 3) a voluntarily enrolled group of people.

hospital affiliation - a contractual relationship between a health plan and one or more hospitals whereby the hospital provides the inpatient benefits offered by the plan.

indemnity - a traditional, open-access insurance program in which the covered person is reimbursed for medical expenses, after paying the deductible.

independent medical evaluation - an examination performed by an impartial health care provider for the purpose of resolving a dispute related to the nature or extent of an illness or injury.

integrated delivery system - refers to a joint effort of physician and hospital continuity for a seamless delivery of care.

managed care - a health care delivery system that influences utilization and cost of services with the goal of providing access to quality, cost-effective health care.

mandated benefits - those benefits which health plans are required by state or federal law to provide to policy holders and eligible dependents.

mandated providers - providers of care, such as psychologists, optometrists or chiropractors, whose licensed services must, under state or federal law be covered by a health plan.

medical necessity - evaluation of health care services to determine if they are: appropriate and necessary; consistent with the diagnosis; rendered in a cost-effective manner; and consistent with national medical practice guidelines.

members - participants in a health plan. Also called: subscribers and enrollees.

modified fee-for-service - system in which physicians and other health professionals are paid when services are performed, with certain fee maximums for each procedure.

morbidity - an actuarial determination of the incidence and severity of sicknesses and accidents in a defined class of persons.

mortality - an actuarial determination of the death rate at each age or within a specific disease group.

multidisciplinary - collaboration by health care professionals with a wide range of specialties.

office visit - physician services provided in an office setting.

open access - a self-referral arrangement allowing members to see participating providers for specialty care without a referral from another physician.

open enrollment - time during which health plan members have an opportunity to re-enroll or select an alternate health plan offered to them by their employer. This is usually done without evidence of insurability or waiting periods.

outcomes - results achieved by a given health care provider, service, prescription drug or medical procedure.

out-of-area - coverage for treatment obtained by a covered person outside the geographic service area (while on vacation for example).

out-of-pocket expenses - the portion of payments for health services that is paid by the enrollee, including co-payments and deductibles.

participating provider - a physician, hospital, pharmacy or other health facility which has contracted with the health plan to deliver medical services to covered persons.

payer - a public or private organization that pays for coverage of health care expenses.

peer review - analsis of quality and appropriateness of care, by medical staff with equivalent training.

PHO - a physician-hospital organization is a legal entity formed by one or more hospitals and physician groups to obtain payer contracts and further mutual interests.

POS - a point-of-service plan allows the covered person to choose to receive care from a participating or non-participating provider, with a different benefit level for using outside providers. POS can be provided within an HMO or a PPO as well.

PPO - a preferred provider organization contracts with specific medical care providers, from whom members receive care with significantly better benefits. They may receive some benefits for non-preferred providers.

pre-certification - a review of the need for inpatient hospital care or other procedure. Sometimes called prior authorization.

pre-existing condition - any medical condition that has been diagnosed or treated within a specified period of time prior to the covered person's effective date.

premium - amount paid to a carrier for providing coverage under a contract.

primary care - basic or general health care, traditionally provided by family physicians, pediatricians or internal medicine physicians.

prior authorization - obtaining approval for a medical service, procedure or medication before it is received. Also called prior approval.

provider - a physician, hospital, group practice, nursing home, pharmacy, individual or group of individuals who offer health care services.

quality assurance - a formal set of activities to review and affect the quality of services rendered.

referral - recommendation from a physician and/or health plan for a covered person to receive care from a specialty physician or facility.

second opinion - a medical evaluation obtained from another health care professional prior to the performance of a medical service or surgical procedure.

self-funded, self-insured - a health care program in which employers fund benefit plans from their own resources without purchasing insurance.

service area - the geographic locations where the health plan has providers.

subscribers - see "members."

superbill - a modified claim form listing specific medical services provided by a physician.

supplemental services - optional services a health plan may cover in addition to its basic health services.

termination date - date a group contract expires, or the date a covered person ceases to be eligible.

tertiary care - health care services proved by highly specialized physicians, such as neurosurgeons, cardiothoracic surgeons, and pediatric subspecialists.

third-party payer - public or private organization that pays for coverage of health care expenses, usually an employer.

TPA - a third party administrator is an independent entity that administers group benefits and claims for a self-insured company or group.

utilization - the extent to which members of a covered group obtain services over a given period of time.

utilization review - a formal assessment of the medical necessity, efficiency and appropriateness of health care services and treatment plans on a concurrent or retrospective basis.