Definitions

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


Approved provider = A provider with whom the insurance company has a contract or an agreement specifying payment levels and other contract requirements.

Archer Medical Savings Account (Archer MSA or MSA) See Spending/Savings Accounts

Association Health Plans = This term is sometimes used loosely to refer to any health plan sponsored by an association. The Health Insurance Portability and Accountability Act of 1996 exempts insurers of small employers from certain requirements if they go through Association Health Plans.


Cafeteria Plans = Employer health plans that allow employees to select from a number of tax-exempt health benefits, as well as flexible spending accounts.

Capitation = A fixed annual fee paid in advance by each plan participant either to the insurance plan or directly to a physician or group of physicians, guaranteeing enrollees unlimited access to specified medical services, whether they take advantage of them or not. From the physician’s perspective, the same fee is received whether they treat an enrollee many times or not at all.

Coinsurance = The stated percentage of medical expenses an insured person must pay.

  • If the plan has a deductible, coinsurance kicks in after the deductible is paid.
  • The insurance company reimburses the health care provider for the remaining costs of the allowable charges; the individual could be held responsible for any charges in excess of what the insurer determines to be “usual, customary and reasonable”.
  • Coinsurance rates may differ depending on whether services are received from an approved provider or not.

Copayment = The fixed dollar amount an insured person must pay when a medical service is received.

  • The insurance company is responsible for the rest of the reimbursement.
  • There may be different co-payments for different services.
  • Some plans require that a deductible first be met for some specific services before a co-payment applies.

Deductible = A fixed dollar amount for individuals or families during the insurance policy’s benefit period - usually a year - that must be paid before the policy will make payments on varying covered medical services.

  • Some plans may have separate deductibles for specific services, e.g. a hospitalization deductible per admission.
  • Deductibles may differ or not be required depending on whether services are received from an approved provider.


First dollar coverage = Insurance coverages or benefits that pay the entire covered amount without subtraction of or use of a deductible.

Flexible Spending Accounts or Arrangement (FSA or HCFSA) Spending/Savings Accounts

Group purchasing arrangement = Any of a wide array of arrangements in which two or more small employers purchase health insurance collectively, often through a common purchaser who acts for them.

  • Such arrangements may go by many different names, including cooperatives, alliances, or business groups on health.
  • They differ from one another along a number of dimensions, including governance, functions and status under Federal and State laws.
  • Some are set up or chartered by States while others are entirely private enterprises.
  • Some centralize more of the purchasing functions than others, including functions such as: risk pooling, price negotiation, choice of health plans offered to employees, and various administrative tasks.
  • Depending on their functions, they may be subject to different State and/or federal rules.

Health care = A system of delivery for medical services and products in the course of disease prevention or treatment and for the promotion of physical and mental well-being.

Health care provider = Any hospital, physician, lab, pharmacy, medical group or clinic that provides a medical service or product.

Health coverage = The protection against medical expenses paid for by health insurance.

Health insurance = Insurance that pays for all or part of the medical expenses incurred through illness and general health promotion; paid for by the insured and by the spread of risk throughout the pool of those covered.

Health Maintenance Organization (HMO) = A health care system that provides “managed care” through a network of providers and fixed, pre-paid rates rather than fee-for-service.

  • Assumes both the financial risks associated with providing comprehensive medical services (insurance and service risk); financial risk may be shared with the providers participating in the HMO.
  • Assumes the responsibility for health care delivery in a particular geographic area to HMO members.
  • Group Model HMO = An HMO that contracts with a single multi-specialty medical group to provide care to the HMO’s membership.
    • The group practice may work exclusively with the HMO, or it may provide services to non-HMO patients as well.
    • The HMO pays the medical group a negotiated, per capita rate, which the group distributes among its physicians, usually on a salaried basis.
  • Network Model HMO = An HMO model that contracts with multiple physician groups to provide services to HMO members; may involve large single and multi-specialty groups. The physician groups may provide services to both HMO and non-HMO plan participants.
  • Individual Practice Association (IPA) HMO = A type of health care provider organization composed of a group of independent practicing physicians who maintain their own offices and band together for the purpose of contracting their services to HMOs. An IPA may contract with and provide services to both HMO and non-HMO plan participants.
  • Staff Model HMO = A type of closed-panel HMO (where patients can receive services only through a limited number of providers) in which physicians are employees of the HMO. The physicians see patients in the HMO’s own facilities.
  • Point-Of-Service (POS) plan = A POS plan is an “HMO/PPO” hybrid; sometimes referred to as an “open-ended HMO.” In-network services are dealt with in a way resembling HMOs. Out-of-network services are usually reimbursed in a manner similar to conventional indemnity plans.

Health Reimbursement Arrangement (HRA) See Spending/Savings Accounts

Health Savings Account (HSA) See Spending/Savings Accounts

HIPPA: Health Insurance Portability and Accountability Act of 1996 = Enacted by the federal government to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes.

  • HIPAA Title I deals with protecting health insurance coverage for people who lose or change jobs.
  • HIPAA Title II includes a section that deals with the standardization of healthcare-related information systems. In the information technology industries, this section is what most people mean when they refer to HIPAA.

Hospitalist = A physician that only treats hospitalized patients.

Indemnity plan = A traditional fee-for-service plan in which the insurer reimburses the patient and/or provider as expenses are incurred.

  • In a conventional indemnity plan, the participant has the choice of any provider without effect on reimbursement.
  • Preferred Provider Organization (PPO) plan = An indemnity plan where coverage is provided to participants through a network of selected health care providers. The enrollees may go outside the network, but they will incur larger costs in the form of higher deductibles, higher coinsurance rates, or non-discounted charges from the providers.
  • Exclusive Provider Organization (EPO) plan = A more restrictive type of preferred provider organization plan under which employees must use providers from the specified network to receive coverage; there is no coverage for care received from a non-network provider except in an emergency situation.

Major medical insurance = Health plan that protects individuals from extended illnesses or injuries by expanding the list of eligible hospital charges and extending the duration of coverage typically found in basic plans (such as Blue Cross/Blue Shield). Usually funded through high deductibles. Sometimes called a catastrophic policy.

Managed care plans = Generally provide comprehensive health services to their members and offer financial incentives for patients to use the providers who belong to the plan. Examples include:

  • Health Maintenance Organizations (HMOs)
  • Preferred Provider Organizations (PPOs)
  • Exclusive Provider Organizations (EPOs)
  • Point Of service Plans (POSs).

Managed care provisions, features allowing health plans to manage the cost, use and quality of health care services received by group members:

  • Preadmission certification : A required authorization for hospital admission given by a defined health care provider to a group member prior to their hospitalization. Failure to obtain a preadmission certification in non-emergency situations reduces or eliminates the insurance company’s obligation to pay for services rendered.
  • Utilization review: The process of reviewing the appropriateness and quality of care provided to patients. Utilization review may take place before, during, or after the services are rendered.
  • Preadmission testing: A requirement designed to encourage patients to obtain necessary diagnostic services on an outpatient basis prior to non-emergency hospital admission. The testing is designed to reduce the length of a hospital stay.
  • Non-emergency weekend admission restriction: A requirement that imposes limits on reimbursement to patients for non-emergency weekend hospital admissions.
  • Second surgical opinion: A cost-management strategy that encourages or requires patients to obtain the opinion of another doctor after a physician has recommended that a non-emergency or elective surgery be performed. Programs may be voluntary or mandatory with reimbursement being reduced or denied if the patient does not obtain the second opinion. Plans usually require that such opinions be obtained from board-certified specialists with no personal or financial interest in the outcome.

Medicaid = A state and federal program providing some health care benefits for people who meet minimum income limits and are defined under State eligibility requirements that may include age, pregnancy, disability, blindness or deafness.

Medicare = A federal program that provides health benefits for people who qualify: usually those over 65 and the disabled.

  • Part A covers hospitalization, and is funded by the government.
  • Part B, also called Supplemental Medical Insurance, covers basic medical expenses, and is paid jointly by the government and the insured.
  • Part D is a prescription plan that allows subscribers to purchase drug coverage from private insurance companies, without federal supervision; available to those on Medicare and mandated for over 6 million low-income elderly Medicaid subscribers.

Out-of-Pocket Expenses = Refers to monies paid by health care consumer for fees not reimbursed by health insurance.

Physician-Hospital Organization (PHO) = Alliances between physicians and hospitals to help providers attain market share, improve bargaining power, and reduce administrative costs. These entities sell their services to managed care organizations or directly to employers.

Portable = In health care, refers to health coverage or health account funds that can be taken with the consumer to another job or used when unemployed.

Premium = Agreed upon fees paid for medical coverage for a defined benefit period. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.

Primary Care Physician (PCP) = A physician who serves as a group member’s primary contact within the health plan. In a managed care plan, the primary care physician provides basic medical services, and may authorize and coordinate referrals to specialists and hospitals if required to do so by the plan.

Single-Payer = A system of health care characterized by universal (all people) and comprehensive (all services) coverage. Medicare is a kind of single-payer system for those over 65 and the disabled.

  • The government pays for care that is delivered in the private (mostly not-for-profit) sector.
  • Doctors are in private practice and are paid from government funds.
  • The government does not own or manage medical practices or hospitals.

Socialized medicine = A health care system in which medical providers are government employees and treatment centers are government-owned /managed.

Spending/Savings Accounts

  • Archer Medical Savings Account (Archer MSA or MSA)
  • Flexible Spending Accounts or Arrangement (FSA or HCFSA)
  • Health Reimbursement Arrangement (HRA)
  • Health Savings Account (HSA)

Workmen’s Compensation = A state insurance program that provides money for workers injured on the job and for the dependents of workers killed on the job; first created on a state level in 1902; not legalized by the Federal Government until the Social Security Act of 1935.

Info mainly from http://stats.bls.gov/ncs/ebs/sp/healthterms.pdf.

Additional information from: http://www.medterms.com/script/main/art.asp?articlekey=25520
http://www.bankrate.com/brm/news/insur/20020709a.asp#h
http://www.answers.com/topic/health-care
http://www.answers.com/topic/health-insurance
http://www.answers.com/topic/workmen-s-compensation
http://www.ssa.gov/history/1900.html
http://aspe.hhs.gov/admnsimp/pl104191.htm
http://www.cms.hhs.gov/MedicaidGenInfo/
http://searchcio.techtarget.com/sDefinition/0,,sid19_gci862786,00.html

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