1. US Healthcare Insurance Overview:

1

US Healthcare

Basic

Content

1. Overview of Healthcare Insurance

2. Types of Health Insurance Plans

3. How Healthcare Insurance works

4. Major entities of Healthcare Insurance

5. Life Cycle of a Health Insurance Claim

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6. Cost Sharing Mechanism

7. HIPAA

8. Health Insurance Coding System

9. Sample HCFA and UB Claim Form

10. Basic Terminology

1. US Healthcare Insurance Overview:What is Insurance?Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. Insurer: An Insurer is a Company selling the insurance.Insured or Policy Holder: A person or entity buying the insurance. What is Healthcare Insurance?Health insurance is a contract or a written agreement (the insurance policy) wherein, for premium payments, the healthcare payer (the insurance company) promises to compensate the member (the insured) for the medical expenses as defined in the agreement. Coverage is the services or the benefits that the member gets, under certain defined circumstances, which can vary greatly from policy to policy. The contract, or policy, spells out what the insurance company will pay for and how much of the bill the insured will have to pay. Example: The Policy may cover a physician office visit, but the policy holder or member may have to pay $30.00 as a co-payment.

Alternatively, the policy may not cover anything until the member has paid an agreed upon amount out of pocket, which is known as a deductible. These deductibles and co-payments, along with any other non-reimbursable expenses are out-of-pocket-expenses. Out-of-pocket expense cap is the amount the member pays for certain medical services or treatments before the insurance company pays for 100 percent of the reasonable and customary fee. Other policies may have co-insurance, which is a percentage of the bill that the member is required to pay, which may be in addition to the deductible and co-payment. Often, the total amount of co-insurance in a given policy is capped by the policy's maximum. The policy will also state the amount the member pays each month for the coverage, known as the premium, and the total amount the insurance company will pay out for the life of the policy - commonly referred to as a lifetime maximum. Health care in the United States is provided by many separate legal entities including private (e.g. BCBS, UHG, Aetna, Humana, Cigna, etc) and public spending (e.g. Medicaid, Medicare etc). More is spent per person on health care in the United States than in any other nation in the world. These health insurance organizations can be categorized as follows:  Public health care coverage: - Medicare - State Children's Health Insurance Program (SCHIP) - Medicaid - Military health benefits (TRICARE)

Private health care coverage: - Employer sponsored - Self purchased 3

MedicareMedicare is the federal health insurance program that covers most people age 65 and older. Some younger people who are disabled or who have End-Stage Renal Disease (permanent kidney failure) are also eligible for coverage. Eligibility Criteria:- People age 65 or older,- People under age 65 with certain disabilities, and- People of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant). Medicare Part A (Hospital Insurance)One part of the Medicare program is called Part A. Most people do not have to pay a premium for Part A because the individual or their spouse paid Medicare taxes while working. Others can buy Part A if they meet certain criteria. Medicare Part A is a type of hospital insurance provided by Medicare. The coverage provided by Part A includes inpatient care in hospitals, nursing homes, skilled nursing facilities, and critical access hospitals. Part A does not include long-term or custodial care. If an individual meets specific requirements, then they may also be eligible for hospice or home health care. What does Part A Cover:- Hospital Stays- Blood Transfusions- Nursing Home or Skilled Nursing Facility- Home health services Medicare Part B (Medical Insurance)Medicare Part B is a medical insurance provided by the federal government to eligible beneficiaries. The coverage provided by Part B includes medically necessary doctor's services, outpatient care, and most other services that Part A does not cover such as some physical or occupational therapies and some home health care services. Part B covers preventive services as well. Most people have to pay a premium for Part B. The state may pay for premiums or deductibles for those qualified to receive help. Otherwise, the premium is usually deducted from a Social Security, Railroad Retirement or Civil Service Retirement check. The Part B premium can also be paid every quarter or through the electronic payment option, or Medicare Easy Pay.

What does Part B Cover:- Tests, Labs and Screenings.- Preventive services include exams, lab tests.- Glaucoma tests are covered once per year if performed by a legally authorized eye examiner.- Bone mass measurement is covered every two years (or as medically necessary).- Lab Services such as blood tests or urinalysis are covered.- Diabetic screenings are covered if you have high blood pressure, dyslipidemia, obesity, or high blood sugar.- Ambulatory surgery center fees are covered for approved services.- Emergency room services for bad injuries, severe illness, or any time the insured believes the insured‘s life is in danger.

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What Medicare Part A and Part B do not Cover:- Dental care and dentures- Routine vision and hearing care- Most eyeglasses and hearing aids- Custodial or long term care- Routine physical exams (except for an entry-year exam)- Some shots, tests and lab tests- Some diabetic supplies- Routine foot care- Acupuncture and certain chiropractic services- Cosmetic surgery Medicare Part C (Medicare Advantage)Medicare Part C combines Part A and Part B options and covers all medically needed services. The difference is that private insurance companies that are approved by Medicare provide this type of coverage. In most cases, Part C is a lower-cost alternative to the Original Medicare Plan, and providers usually offer extra benefits and include prescription drug coverage (Part D). There are several plans available for Medicare Advantage. The Part C plans include the following: Medicare Preferred Provider Organization (PPO) The insured can visit any doctor or specialist that they choose. If they are not in their PPO network, the cost increases. They usually can see a specialist without a referral. Medicare Health Maintenance Organization (HMO) The insured can visit doctors in the HMO network only. In most cases, they are required to have a referral to visit a specialist. Medicare Private Fee-for-Service (PFFS)The insured can visit any doctor or specialist, but the doctor must be willing to accept the PFFS's fees, terms, and conditions. They do not need to have a referral to see a specialist.

Medicare Special NeedsThese plans are designed for people with certain chronic diseases or other special health needs. These plans must include Part A, Part B, and Part D coverage. Medicare Medical Savings Account (MSA) There are two parts to this plan: - A high-deductible plan with which coverage will not begin until the annual deductible is met.- A savings account plan where Medicare deposits money for the insured to use towards health care costs.

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Medicare Part D (Prescription Drug Coverage)

Part D is prescription drug coverage insurance that is provided by private companies approved by Medicare.

How Can You Get Part D Coverage There are two ways to join the Medicare prescription drug coverage plan: The first is by adding it to the Original Medicare Plan or some Medicare cost plans, private fee-for-service plans, and Medical savings account plans. The second way is to join an HMO or PPO plan that includes Part D coverage. The insured usually have to pay a monthly premium that will vary according to the plan chosen. Adding Part D to the Original Medicare Plan or Medicare Advantage Plan If the insured are in the Original Medicare Plan, they may add Part D coverage.Generally, they pay a separate premium or yearly deductible. If the insured are in the Medicare Advantage Plan, then chances are they already have Part D coverage. However, a few plans do not include a drug plan; therefore, they may add Part D to those plans. How Part D Works After the insured join, they receive a membership card and materials via mail. They pay a co-pay, co-insurance, or deductible when they use their card. Some Part D plans have a "coverage gap." A coverage gap means when members have spent a certain amount of money, they are responsible for paying the entire cost of prescriptions while they are in the gap until they reach the out-of-pocket limit. After they meet the out-of-pocket obligation, they only have to pay a small co-pay or co-insurance for the remainder of the calendar year.

State Children’s Health Insurance Program (SCHIP) The State Children‘s Health Insurance Program (SCHIP) is a joint state/federal program to provide health insurance to children in families who earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance. The statutory authority for SCHIP is under title XXI of the Social Security Act. SCHIP programs are run by the individual states according to requirements set by the federal Centers for Medicare and Medicaid Services, and may be structured as independent programs separate from Medicaid (separate child health programs), as expansions of their Medicaid programs (SCHIP Medicaid expansion programs), or combine these approaches (SCHIP combination programs). States receive enhanced federal funds for their SCHIP programs at a rate above the regular Medicaid match.

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MedicaidMedicaid is the United States health program for eligible individuals and families with low incomes and resources. It is a means-tested program that is jointly funded by the states and federal government, and is managed by the states. Among the groups of people served by Medicaid are eligible low-income parents, children, seniors, and people with disabilities. Low income is only one test for Medicaid eligibility for those within designated groups and does not necessarily qualify an individual for Medicaid. It is estimated that Medicaid does not cover approximately 60 percent of low-income Americans. Medicaid is the largest source of funding for medical and health-related services for people with limited income in the US. Because of the aging population, the fastest growing aspect of Medicaid is nursing home coverage. Medicaid Services:- Inpatient hospital services- Outpatient hospital services- Prenatal care- Vaccines for children- Physician services- Nursing facility services for persons aged 21 or older- Family planning services and supplies- Rural health clinic services- Home health care for persons eligible for skilled-nursing services- Laboratory and x-ray services- Pediatric and family nurse practitioner services- Nurse-midwife services

Military Health Benefits (TRICARE) TRICARE is a regionally managed health care program for active duty and retired members of the uniformed services, their families, and survivors. TRICARE brings together the health care resources of the uniformed services and civilian health care professionals to provide better access and high quality health care service The Department of Defense Military Health System (MHS) provides health benefits to active duty service members, retired service members and their dependents. The MHS consists of a direct care network of Military Treatment Facilities and a purchased care network known as TRICARE. Additionally, veterans may also be eligible for benefits through the Veterans Health Administration.

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Group Health InsuranceGroup health insurance describes the situation whereby the insurance company contracts with a group, usually an employer, and then issues certificates for each member of that group. Group Health Insurance is a Health insurance purchased through a group that exists or some purpose other than buying insurance, such as a workplace, labor union, or professional association. It has been reported that over 60% of the U.S. population that has health insurance receives their health care coverage through an employer-sponsored group health insurance plan.Most health insurance companies in the U.S. will have three classification levels based on the number of enrolled employees on the health plan: - Small group- Mid-size group- Large group Not all employees maybe consider eligible. Temporary or part-time employees are seldom eligible to participate in an employer’s health insurance benefits plan.

Individual Health InsuranceIndividual health insurance is purchased directly by an Individual from the insurance company. It is a health coverage purchased on an individual basis rather than through a group. What Individual Health Insurance Plans are Available? Under the individual and family health insurance product category, there are several different types of private health insurance plans available, such as indemnity (fee-for- service) health insurance, health maintenance organization (HMO) plans, preferred provider organization (PPO) plans, point-of-service (POS) plans, and health savings account (HSA) plans. Each plan type differs on two major features: cost and choice.

Individual vs. Group InsuranceIndividual Insurance:- A personal policy designed to protect the individual and dependents-  Individual is also known as the policyholder- Policyholder must show evidence of good health…this is called Insurability- The individual pays the premium

Group Insurance:- Designed to provide protection (coverage) to a specific group of people under a single insurance contract- The employer is the policyholder- The premium contribution is shared between the employer and the employees (usually the employer is the major contributor)- Evidence of insurability is usually not required

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Healthcare Plans and Systems:

- Indemnity Plan: A type of medical plan that reimburses the patient and/or provider as expenses are incurred.

- Conventional Indemnity Plan: An indemnity that allows the participant the choice of any provider without effect on reimbursement. These plans reimburse the patient and/or provider as expenses are incurred.

- Managed care plans: 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 of managed care plans include: • Health Maintenance Organizations (HMOs),• Preferred Provider Organizations (PPOs),• Exclusive Provider Organizations (EPOs),and• Point of Service Plans (POSs).

HMO Network:Health maintenance organizations deliver comprehensive medical care to plan members by entering into negotiated contracts with providers to form a network. Alternatively, an HMO may own its network facilities or employ the physicians in its network. The provider network, which consists of participating physicians, hospitals, and ancillary service providers, delivers medical care to HMO members in exchange for negotiated compensation.

Physicians: The relationship between an HMO and its participating physicians is a contractual one, through either direct employment or an independent contractor arrangement. As noted earlier, to establish a network that provides HMO members with direct access to medical care, an HMO must contract with sufficient numbers and types of physicians.

Selecting a Primary Care Provider: In an HMO network, a member is required to select a primary care physician (PCP) to manage the health care. The PCP will guide the member through the medical system and co-ordinate the medical care among various specialists. A member cannot directly consult a specialist. A PCP refers a member to a specialist.

Hospitals: Health maintenance organizations also negotiate contracts with hospitals and other inpatient facilities to provide medical services to HMO members. Again, the issues of access, credentialing, and contractual arrangement are considered. Accreditation by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and verification of the existence of a state license are typically minimum requirements for a hospital to participate as a network provider. Other factors that an HMO considers in contracting with one or more hospitals include the level and cost of hospital services, the quality of the physicians on the hospital‘s medical staff, the type of specialty facilities and services offered by the hospital, and member access within a geographic area.

Ancillary Service Providers: An HMO also contracts with ancillary service providers. Ancillary services are auxiliary or supplemental services used to support diagnosis and treatment of a patient‘s condition and include laboratory, radiology, other diagnostic services, home health services, physical therapy, and occupational therapy. An HMO contracts with the appropriate number and type of ancillary service providers so that its provider network includes the healthcare services that are commonly needed by plan members.

2. Types of Insurance Plans:

Cont’d9

Payer (Cigna)

Physician 1

Physician 2

Hosp 1

Hosp 2

PCP Specialist

Out of Network

Physician 3

Hosp 4

Hosp 3

HMO In - Network

No Cov

erage

No Co

verag

e

CoveredPatient

Refereed by PCP

Contractual Agreement

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PPO Network:Preferred provider organizations (PPO) are a healthcare benefit arrangement designed to supply services at a discounted cost by providing incentives for members to use designated healthcare providers (who contract with the PPO at a discount), but which also provide coverage for services rendered by healthcare providers who are not part of the PPO network. 

  Payer (Cigna)

Physician 1

Physician 2

Hosp 1

Hosp 2

PCP Specialist

PPO Out of

Network

Physician 3

Hosp 4

Hosp 3

PPO In - Network

Cove

red, b

ut les

ser

Bene

fits

Cove

red

Covered

Patient

Contractual Agreement

No Contractual Agreement

Covered

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POS Network: A POS is a hybrid product that combines some aspects of traditional group health insurance with aspects of HMOs and PPOs. The POS allows consumers to "customize" their healthcare, choosing at the point of service either medical provider from within the plan‘s network orout of network providers. 

  Payer (Cigna)

Physician 1

Physician 2

Hosp 1

Hosp 2

PCP Specialist

POS Out of

Network

Physician 3

Hosp 4

Hosp 3

POS In - Network

Cove

red, b

ut les

ser

Bene

fits

No Co

verag

e

Covered

Patient

Contractual Agreement

No Contractual Agreement

Covered

Refereed by PCP

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EPO Network: Plan-A more restrictive type of preferred provider organization plan under which employees must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider except in an emergency situation. 

  Payer (Cigna)

Physician 1

Physician 2

Hosp 1

Hosp 2

PCP Specialist

EPO Out of

Network

Physician 3

Hosp 4

Hosp 3

EPO In - Network

No Cov

erageNo

Cove

rage

Covered

Patient

Contractual Agreement

No Contractual Agreement

Covered

Refereed by PCP

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- Medicare Supplemental Plan (“Medigap”): An insurance plan that covers the Medicare patient’s deductible and co-payment obligations. These plans are designed to pay the 20% difference between the Medicare allowed amount and the amount Medicare pays. These policies may be purchased individually, or premiums may be paid through an employer-sponsored program, for retirees of a company. There are ten standard, approved, Medicare supplement programs called Plans A through J. Plan A is the least expensive and has the least coverage. Plan J is the most expensive and the most comprehensive. Plans H, I and J offer limited prescription drug coverage. If plans H, I, J are chosen when the person is first eligible, they are guaranteed issue.

Funding ArrangementsFunding Arrangement is the method used to fund accounts that cover claim payment and fees associated with services incidental to claim administration Below mentioned are some of the funding arrangements offered to our policyholders:- Fully Insured (FI)- Administrative Services Only (ASO)- Modified Premium (MP), Modified Minimum Premium (MMP)  Fully Insured (FI) Under the fully insured method, premiums are collected to:- Adequately cover claim payment- Allow for reserve- Cover retention services

How Does Fully Insured (FI) WorkThe insurance company determines the premium that is needed to adequately cover claims, reserve needs, and retention. This premium is billed and collected from the customer according to the provision of the company policy. In turn, the company maintains a responsibility in the contract to pay for claims that were incurred during the effective dates of coverage. - This method of funding is commonly known as ―insurance.- Fully insured policies are subject to state mandates. Administrative Services Only (ASO)Under an administrative services only agreement, the insurance company reviews claims and makes payment from the employer‘s funds while providing services normally considered to claim administration. Generally, full administrative and underwriting are also provided to the customer. 

 

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 How Does ASO Work?The ASO agreement takes the form of a service contract between the insurer as administrator and the buyer, as a self-funded employer. It specifies services to be provided by the insurer, the rights and obligations of both parties, and the administrative fee. Note: Since this is a service contract, it is not considered “insurance”. Consequently, no insurance contract is involved and there are no premiums or premium taxes.

Modified Minimum Premium (MMP) The Modified Minimum Premium arrangement combines insurance ‘with self-funding‘. MMP plans create a partially self-funded arrangement aimed primarily at premium tax savings for the employer. How Does Modified Minimum Premium (MMP) Work Under the MMP arrangement, the policyholder assumes liability for claims up to a specific amount, such as 90% of the estimated monthly claims. As needed, the policyholder deposits funds into this account.  These plans are partially self-funded by the employer and partially funded by premiums. The employer deposits funds into an account to cover claim payment up to a specified percentage. Premiums are collected from the employer to cover the remaining percentage.    

Healthcare Insurance

Public Insuranc

e

Medicare SCHIP Medicaid Tricare

Private Insuranc

e

Group Individual

UHG Aetna Cigna BCBS Etc.

US Healthcare Insurance Structure:

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How Healthcare Insurance Works: In order to understand how health insurance works, let us have a look at the four major parties entities involved in health insurance: - Healthcare Insured (Individuals/Businesses)- Government- Private Insurers- Health Care Service Providers

Individuals / Businesses

Health Service Providers

Government

Private Insurers

Direct Out Of Pocket Payments

Public Employees Premiums

Payments to

ProvidersPremiums

Medicare, Medicaid,

SCHIP

SubsidiesTaxes

3. How Healthcare Insurance Works:

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4. AN OVERVIEW OF THE RELATIONSHIP BETWEEN MAJOR ENTITIES:

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Member

Supplier Purchaser

Provider Payer

EnrollBenefit

(Plan)Servi

ce

Cons

ults

PurchasesSupplies

Submit ClaimReimburse

Overview There are five major entities in insurance industry that participate in the quality delivery of health care. They are 1. Member / Beneficiary / Enrollee 2. Provider 3. Suppliers 4. Payer / Insurer 5. Purchaser

    

 1. Member / Beneficiary / Enrollee: A Member is any person eligible as either a subscriber or a dependent for a health care service or managed care service in accordance with a contract. A member or beneficiary is an individual who is eligible for receiving benefits under an insurance policy or plan. A dependent could be spouse or dependent child (covered till the age of 18 years or beyond if the child is disabled or covered till the age of 22 years if the child is a full time student under public school or college). Member is enrolled under a benefit plan with Insurer by paying premiums. This can be a group health insurance or individual insurance.

2. Provider: A health care provider or health professional is an organization or person who delivers proper health care in a systematic way professionally to any individual in need of health care services.

3. Suppliers: Suppliers are subcategory of health care providers. A supplier is an organization of specified health care products / services and plays a major role in the delivery of the various health products that are used by the patient prescribed by the provider. These include but are not limited to: · Drug companies· Pharmacies· Medical supply companies

4. Payer / Insurer: The Payer or Insurer is the organization that pays for the claims. Payer plays a major role in the negotiation of contract with the provider and creating payment schemes that tie providers more strongly to the interest of patients.

5. Purchaser: Purchasers are the entity that pays the premium to Insurer and purchase the health coverage for the medical services. Purchaser could be · Individuals· Employers· Government

Member and Purchaser could be the same entity in case of Individual Purchaser. Member and Purchaser could be different entity if the Purchaser is Employer or Government. In this case, employer is purchasing the coverage for all the employees. Therefore, there is a purchaser for multiple members (employees).

   

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3. Patient Demographic

Entry

4. ICD, CPT, HCPCS Coding

5. Charge Entry

6. Claims Submissions –

Electronic Billing & Paper

Billing

7. Insurance Company

(Claim Adjudication)8. Payment

and Denial Posting from

EOBs and Correspondenc

es

9. A/R Follow-ups – Denial

Management & Appeals

10. Payments and MIS

Reports send to the

Providers

1. Clinical / Doctor Visit

2. Insurance Verification

5. Life Cycle of a Healthcare Insurance Claim:

Life Cycle of a Healthcare Insurance

Claim

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Make an Appointment Find a provider within the specified network and schedule an appointment. The receptionist will ask for basic information to schedule the visit. He or she will also ask for unique ID numbers given by the insurance company. Verification of Coverage from Insurance Companies After arriving for an appointment, a receptionist may ask for a copy of insurance card. Once the card is copied on the front and back, the receptionist will call the insurance company to ensure that the beneficiary is still eligible and verify for which services they are eligible. Receive Care from Provider Once the services are verified, the beneficiary will go in to receive care from the provider. The provider will assess the patient and suggest follow up appointments with specialists if necessary. In some cases, an insurance company may require that the primary care physician provide an official referral. Submission of Claim by Provider to Insurance The office manager or billing representative will submit a claim to the insurance company. The claim contains basic demographic and ICD-9 information, which is coding that, describes the beneficiary's condition as well as procedures that were performed. This claim may be on a standard claim form or on one specified by the insurance company. It is sent electronically or mailed to the insurance company. Follow up on Claim Claims usually pay within 30 to 60 days and this varies from one insurance company to another. The office manager will follow up with the insurance company if payment does not occur in a timely manner. The insurance company may send explanation of nonpayment prior to follow up. EOB is sent to Beneficiary and Provider An Explanation of Benefits is sent to the beneficiary and the provider outlining what was paid to who and any remaining amount that is due to the provider by the beneficiary. 20

OverviewInsurance is a mechanism for protection against risk. In the context of insurance, risk refers to the possibility of a substantial financial loss from some event. Insurance requires some type of cost sharing so that the Insured assumes at least part of the risk. The purpose of Cost sharing is to reduce the misuse of insurance benefits. There are four main types of cost sharing mechanism in the health Insurance industry apart from the premium cost sharing. They are:

 · Copayment · Deductibles · Coinsurance Insured individuals generally pay a portion of the actual cost of medical services out of their own pockets. These expenses are called Out of pocket expenses and are in the form of Copayments, Deductibles and Coinsurance. These out of pocket expenses are incurred if and when medical care is used. Since members have to pay these expenses from their pockets, they become their liabilities and are termed as Member Liabilities.

Copayment: A specific charge that your health insurance plan may require that you pay for a specific medical service or supply, also referred to as a "co-pay." For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.

Deductibles:

A deductible is a fixed amount of money which the member have to pay before most, if not all, of the policy's benefits can be started. However, in many health insurance policies (plan) member can use some services (emergency room etc) without meeting the deductible first. These services will vary with each type of plan. A deductible amount is calculated yearly, so member has to meet a new deductible for each year of the policy. Before member meets this amount, they are required to pay for health care.

Coinsurance:

Coinsurance is a form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid. Once any deductible amount and coinsurance are paid, the insurer is responsible for the rest of the reimbursement for covered benefits up to allowed charges. Coinsurance rates may differ if services are received from an approved provider (i.e. participating provider - a provider with whom the insurer has a contract or an agreement specifying payment levels and other contract requirements) or if received by providers not on the approved list (non-participating provider).

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6. Cost Sharing Mechanism:

Out-of-Pocket Maximum: Insured individuals pay a portion of the actual cost of medical services out of their own pockets. These expenses are called out-of-pocket expenses and are in the form of copayments, deductibles and coinsurance. These out of pocket expenses are incurred if and when medical care is used.

Allowable Amount:

Also referred to as the Allowed Amount, Approved Charge or Maximum Allowable. This is the dollar amount typically considered payment-in-full by an insurance company and an associated network of healthcare providers.

(Co-pay + Coins + Deductible + Payment) = Allowable

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DOS Services Description Billed amount Allowed amount Copayment Deductible Coinsurance (by member) Payment

1/1/2012 99213 Office visit $250.00 $150.00 $25.00 $25.00 20% ?

1/1/2012 97110 Physical therapy $1,500.00 $700.00 $0.00 $500.00 20% ?

Total $1,750.00 $850.00 $25.00 $525.00 ?

Question: How much will be the payment amount? L1 - $80.00 and L2 - $160.00

DOS Services Description Billed amount Allowed amount Copayment DeductibleCoinsuranc

e (by member)

Payment

6/18/2012 99213 Office visit $300.00 ? $25.00 $25.00 20% $120.00

6/18/2012 97110 Physical therapy $2,000.00 ? $100.00 $500.00 20% $320.00

Total $1,750.00 ? $25.00 $525.00 Question: How much will be the allowable amount? L1 - $200.00 and L2 - $1000.00

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7. HIPAA: Health Insurance Portability and Accountability Act

To improve the efficiency and effectiveness of the health care system, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, included Administrative Simplification provisions that required the Department of Health and Human Services (HHS) to adopt national standards for electronic health care transactions and code sets, unique health identifiers, and security. At the same time, Congress recognized that advances in electronic technology could erode the privacy of health information. Consequently, Congress incorporated into HIPAA provisions that mandated the adoption of Federal privacy protections for individually identifiable health information.

Following the passage of HIPAA, two additional laws have been enacted that add requirements to HIPAA and strengthen various aspects of administrative simplification. These laws are:

Health Information Technology for Economic and Clinical Health Act (HITECH) enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA)

Subtitle D of the HITECH Act addresses the privacy and security concerns associated with the electronic transmission of health information, in part, through several provisions that strengthen the civil and criminal enforcement of the HIPAA rules.

Patient Protection and Affordable Care Act of 2010 (ACA)

ACA builds upon HIPAA with new and expanded provisions, including requirement to adopt operating rules for each of the HIPAA covered transactions; a unique, standard Health Plan Identifier; and a standard for electronic funds transfer. ACA requires that health plans certify their compliance with the standards and operating rules, and increases penalties for noncompliance.

AMA Advocates for Administrative Simplification

Because physician practices can save significant time and money through automation of the claims process, the AMA diligently advocates for continued administrative simplification. Review AMA-developed whitepapers and AMA testimonials about administrative simplification, to address the ongoing problems in the claims revenue cycle—problems which contribute to increased complexity and expense.The following are highlights of some of the HIPAA-related topics. Click on the links for more information.

Privacy Standards

The HIPAA Privacy Rule provides federal protections for personal health information held by physicians and gives patients an array of rights with respect to that information. At the same time, the Privacy Rule is balanced so that it permits the disclosure of personal health information needed for patient care and other important purposes.

Cont’d

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Security Standards

The HIPAA Security Rule establishes national standards to protect individuals’ electronic personal health information that is created, received, used, or maintained by a covered entity. The Security Rule requires appropriate administrative, physical and technical safeguards to ensure the confidentiality, integrity, and security of electronic protected health information.

Physicians Click & Complain About Health Plan Hassles and HIPAA Transactions

Tell the AMA about problems you've encountered in having your claims and other submissions accepted by payers.

HIPAA Plain & Simple: A Healthcare Professionals Guide to Achieve HIPAA and HITECH Compliance

Simplifies the complex HIPAA regulations for those in the medical office who have direct patient contact or are responsible for safeguarding patient information.

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8. Health Insurance Coding System:

1. CPT Code - CPT (Current Procedural Terminology) codes are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical and diagnostic services. They are then used by insurers to determine the amount of reimbursement that a practitioner will receive by an insurer. Since everyone uses the same codes to mean the same thing, they ensure uniformity.

CPT codes are developed, maintained and copyrighted by the AMA (American Medical Association.) As the practice of health care changes, new codes are developed for new services, current codes may be revised, and old, unused codes are discarded. Thousands of codes are in use, and they are updated annually. Development and maintenance of these codes is overseen by editorial boards at the AMA, and the publications of all the software, books and manuals needed by those who use them brings millions in income to the AMA each year.

2. HCPCS Code - HCPCS Codes, Healthcare Common Procedure Coding System numbers, are the codes used by Medicare and monitored by CMS, the Centers for Medicare and Medicaid Services. They are based on the CPT Codes (Current Procedural Technology codes) developed by the American Medical Association.

3. ICD – 9 Code - ICD codes were first developed in 1893 in France by a physician, Jacques Bertillion. They were called the Bertillon Classification of Causes of Death. In 1898, they were adopted in the United States, and were considered, in effect, ICD-1 because that was the first version of code numbers.

Since then, as medical science has progressed and new diagnoses have been developed, named and described, the code lists have been updated. The number designation changes when the updates are so extensive that a wholesale change needs to be made. There may be annual updates, too, but those are considered to be relatively minor, and the basic code set doesn't change. For example, the upgrade in 1949, ICD-6, was the first time mental disorders were added to the code set. The upgrade in 1977 to ICD-9 was the first time procedure codes were added, and the CM designation was included.

Medicine CPT code range 90281 to 96999; 97001 to 97799; 98925 to 99199Surgery CPT code range 10021 to 69999

Radiology CPT code range 70010 to 79999Anesthesia CPT code range 00100 to 01999; 99100 to 99142Pathology CPT code range 80002 to 89399

Evaluation and Management CPT code range 99201 to 99499Hospital DRG code range DRG 001 to DRG 999

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9. Sample HCFA and UB Claim Form:

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Required fields on the form are marked "REQUIRED".Patient Information (blocks 2-8). REQUIREDBox 2 - Last Name, First Name, Middle Initial (if any)Box 3 - Date of Birth and SexBox 4 - Medi-Cal Beneficiary Name (if different than the name in block 2)Box 5 - Patient's AddressBox 6 - Patient's Relationship to Insured (used in conjunction with information on block 9)Box 7 - Insured Address (used in conjunction with information on block 9)Box 8 - Patient's Marital and Work StatusOther insurance information (blocks 9-9d) - This section is completed if the Patient has other insurance. REQUIREDBox 9 - Other Insured's Name. Enter the last name, first name, and middle initial of the enrollee in the other insurance policy9a - Other Insured's Policy or Group Number9b - Other Insured's Date of Birth, Sex9c - Other Insured's Employer's Name9d - Insurance Plan Name or Program NamePlease see under Section X, Claims Processing and Payment, Coordination of Benefits, for more information. SFMHP is the payor of last resort; therefore, claims for patients who are covered under Medi-Cal and another insurance plan must include a copy of the insurance Explanation of Benefits or Claim Denial Letter in order for SFMHP to determine payment liability. Medicare/Medi-Cal crossover claims are sent to the State's fiscal intermediary (EDS) or the Medicare fiscal intermediary. They are not processed by the SFMHP Claims Unit.Patient's Condition (blocks 10a-c) - Is the Patient's condition related to Employment? Auto Accident?Other Accident? REQUIREDCheck "YES" or "NO" to indicate whether employment, auto liability, or other accident involvement applies to one or more of the services described in Item 24. Any item checked "YES" indicates there may be other insurance primary to MediCal. Identify primary insurance information on Item 11.Enter the State postal code (i.e.: CA for California)Patient Signatures (blocks 12-13) REQUIREDBox 12 - Release of Information: Patient's or Authorized Person's SignatureBox 13 - Assignment of Benefit: Insured or Authorized Person's SignatureComments (block 19)Free-form "comments" field to insert additional claim information not designated to appear in another block.Diagnosis Coding (block 21) REQUIREDEnter the patient's DSM IV diagnosis.No narrative information is needed in block 21.Document the condition(s) to the highest degree of specificity.Prior Authorization Number (block 23) REQUIREDRecord the Authorization number issued by the ACCESS Team for the services being claimed.

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Dates of Service (block 24A) REQUIREDEnter the month, day, and year for each procedure or service. When "from" and "to" dates are shown for a series of identical services, enter the number of days or units in block 24d. If the "from" and "to" dates of services are the same, code only the "from date" of service using the appropriate six-digit format (e,g,: 010197)Do not date range services in different months on one detail line. Instead, you must split up the dates, prorating the charges and quantity billed appropriately.Place of Service (block 24B) REQUIREDEnter the appropriate place of service code (list follows these instructions). Make sure that the procedure code you are using matches the place of service. For example, do not bill 99220 (Hospital Observation Care:Initial Problem = High) with a place of service code 11 (Office). List the name and address of the facility where service was rendered on block 32.Use the 2 digit code only - do not use abbreviations such as "O" for Office, etc.Procedure Code (block 24d) REQUIREDEnter the authorized HCPCS (HCFA Common Procedure Coding System) codes listed in the authorization letter.Diagnosis Pointer (block 24E) REQUIREDEnter the diagnosis code reference number as shown in block 21, to relate the date of service and the procedures performed to the appropriate diagnosis.Do not use DSM IV codes in this block. Use only the reference number(s) from block 21.$ Charges (block 24F) REQUIREDEnter the charge for each item.Days or Units of Service (block 24G) REQUIREDEnter the number of days or units. When multiple services are provided, enter the actual number provided.EPSDT Service (block 24H)Check if the service being claimed is an EPSDT procedure.COB - Coordination of Benefits (block 24J)Check if the service is covered by another insurance carrier. Please attach an Explanation of Benefits form showing this service was claimed to the other carrier. Note other health coverage information in blocks 9 a-d, 6, and 7.Federal Tax ID Number (block 25)Enter Physician's Social Security Number (check SSN box) or Tax ID Number. If a Group Practice, enter the Employer Identification Number (EIN)Total Charge (block 28)Enter the total amount of the services you are claiming.Amount Paid (block 29) REQUIREDEnter any co-payment amounts paid to you by the Patient or their responsible party during the period covered by your claim.

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Balance Due (block 30)

Enter the amount due to you for this claim. Please note, the actual claim payment is subject to SFMHP Published Rate Schedule, coordination of benefits policies, and the service amount(s) listed on the authorization; and, is limited to the unpaid balance of the Provider's charge.

Signature of Physician or Supplier (block 31) REQUIREDSign and record the date you are submitting the claim. The signature represents the provider's certification that all information on the document is true and accurate.

Name and Address of Facility where services were rendered, if other than Practitioner's Office. (block 32) REQUIREDEnter the name and address of the facility if the services were furnished in a hospital, clinic, patient's home, or facility other than the physicians' office. If the practitioner's address listed on block 33 and the place of service is the same, please write "SAME".

This block must be completed whether the provider performs the work at the office or at another location.

Provider Billing Information (block 33) REQUIREDEnter the name, address, zip code and telephone number of the practitioner or provider group billing for the service. Enter under "PIN#" your SFMHP Provider ID Number.

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S A M P L E

Sample UB Claim Form:

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 1. Enter the provider's, or facility's, name and address in Box 1. Format the information with the provider's full name on line one, the street address on line two, and the city, state and zip code on line three.

2. Move to Box 3 and enter the patient's control number or account number. Enter the numbers from left to right.

3. Place the provider's federal tax identification number in Box 5. Box 6 is reserved for the dates of coverage. Boxes 7 thorough 11 are not required unless specified by the insurance company.

4. Enter the patient's name in Box 12 along with his address in Box 13. The patient's birthday is required in Box 14. Box 15 requires an "M" for male or "F" for female.

5. Provide the admission information in Boxes 17 through 22. The medical records number for the patient is required in Box 23. Condition codes go in Boxes 24 through 31.

6. Complete Boxes 32 through 37 by providing any applicable occurrence codes that affect the way the claim should be processed by the payer. Boxes 39 through 41 are reserved for value codes. These specialized codes represent data elements required by the payer organization to process the claim, such the hour of accident according to NADHO.

7. Enter the procedure codes and charges in Boxes 42 through 49. Use the Current Procedural Terminology (CPT) manual for the acceptable codes.

8. Provide the payer's name in Box 50 and the provider's number in Box 51. Mark a "Y' in Box 53 to accept assignment. This allows the insurance to pay the provider directly.

9. Enter previous payments and the amount due in Boxes 54 and 55, respectively. Boxes 58 though 66 require information from the patient regarding insurance. Supply the requested information in each box.

10. Place the primary diagnosis code in Box 67. Enter additional codes in the boxes provided. Use Box 79 through 81 and report the procedures performed. Supply the attending physician's information in Box 82. Add another physician if necessary in Box 83.

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10. Basic Terminology:24 Hour Approval:"24 Hour Approval" is a special feature offered on some health insurance plans. When you apply for coverage under plans offering "24 Hour Approval", you can be advised via email of the insurance company's coverage decision within 24 hours.How It Works:

1) Apply online for a health insurance plan with this symbol.  2) Complete and submit the application online through our website.3) The insurance company will then review your application and you can receive an update within 24 hours on whether you are approved; though in some cases you may receive a status update or request for further information instead. Depending on whether the insurance company needs more information, when you submit your application or other conditions, some exceptions may apply.

Access:The availability of medical care. The quality of one's access to medical care is determined by location, transportation options, and the type of medical care facilities available in the area, etc..

Accident:For health insurance purposes, an accident is an unforeseen, unexpected and unintended event resulting in bodily injury.

Accumulation Period:The period of time during which an insured person incurs eligible medical expenses toward the satisfaction of a deductible.

Actively-at-work:Most group health insurance policies state that if an employee is not "actively-at-work" on the day the policy goes into effect, the coverage will not begin until the employee returns to work.

Actual Charge:The actual dollar amount charged by a physician or other provider for medical services rendered, as distinguished from the allowable charge.

Actuary:A person professionally trained in the mathematical and statistical aspects of the insurance industry.Actuaries frequently calculate premium rates, reserves and dividends and assist in estimating the costs and savings of benefit changes.

Acupuncture:Typically, acupuncture services include services performed by a licensed acupuncturist.

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Acute Care:Medical care administered, frequently in a hospital or by nursing professionals, for the treatment of a serious injury or illness or during recovery from surgery. Medical conditions requiring acute care are typically periodic or temporary in nature, rather than chronic.

Additional Drug Benefit List:see Drug Maintenance List.

Administrative Services Only (ASO) Agreement:A business contract under which an insurance company agrees to perform specific administrative duties for the maintenance of a self-funded health insurance plan.

Admissions/1,000:A statistic used by health insurance companies describing the number of hospital admissions for each 1000 persons covered under a health insurance plan within a given time period.

Admits:Hospital admissions. A term used to describe the number of persons admitted to a hospital within a given period.

Adverse Selection:The tendency of those who experience greater health risks to apply for and continue their coverage under any given health insurance plan. When adverse selection increases, health insurance companies experience greater expenses and may raise rates.

Age Change:For insurance purposes, this is the date on which a person's age changes. Note that this may not correspond with the individual's actual birthday, but may fall midway between birthdays. An age change may result in an increase in rates.

Age Limits:Ages below and above which an insurance company will not accept applications or renew policies.

Age/Sex Factor:A factor employed by insurance companies in the underwriting process, used to determine a group's risk of incurring medical costs, based on the ages and genders of the persons in that group.

Agent:A state-licensed individual or entity representing one or more insurance companies. An agent solicits and facilitates the sale of insurance contracts or policies and provides services to the policyholder on behalf of the insurer. See also, Broker.

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Allied Health Personnel: Also referred to as paramedical personnel, these are health workers (often licensed) who perform duties that would otherwise be performed by physicians, optometrists, dentists, podiatrists, nurses and chiropractors.

Allowable Charge:Also referred to as the Allowed Amount, Approved Charge or Maximum Allowable. See also, Usual, Customary and Reasonable Charge. This is the dollar amount typically considered payment-in-full by an insurance company and an associated network of healthcare providers. The Allowable Charge is typically a discounted rate rather than the actual charge. It may be helpful to consider an example: You have just visited your doctor for an earache. The total charge for the visit comes to $100. If the doctor is a member of your health insurance company's network of providers, he or she may be required to accept $80 as payment in full for the visit - this is the Allowable Charge. Your health insurance company will pay all or a portion of the remaining $80, minus any co-payment or deductible that you may owe. The remaining $20 is considered provider write-off. You cannot be billed for this provider write-off. If, however, the doctor you visit is not a network provider then you may be held responsible for everything that your health insurance company will not pay, up to the full charge of $100.

This term may also be used within a Medicare context to refer to the amount that Medicare considers payment in full for a particular, approved medical service or supply.

Allowable Costs:Charges for healthcare services and supplies for which benefits are available under your health insurance plan.

Allowed Amount:See Allowable Charge.

Alternate Delivery System:Healthcare services or facilities which "deliver" care that is more cost-effective than that provided in a hospital. Alternate Delivery Systems may include skilled nursing facilities, hospice programs and home health care services.

Alternative Medicine:Any medical practice of form of treatment not generally recognized as effective by the medical community at large. Alternative medicine may encompass a broad range of services and practices including acupuncture, homeopathy, aromatherapy, naturopathy, etc.. Many insurance companies do not provide coverage for these services.

Ambulatory Care:Medical care rendered on an outpatient basis and which may include diagnosis, certain forms of treatment, surgery and rehabilitation. See also, Ambulatory Setting.

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Ambulatory Setting:Medical facilities such as surgery centers, clinics and offices in which healthcare is provided on an outpatient basis.

Ancillary Fee:An extra fee sometimes associated with obtaining prescription drugs which are not listed on a health insurance plan's formulary of covered medications.

Ancillary Products:Additional health insurance products (such as vision or dental insurance) that may be added to a medical insurance plan for an additional fee.

Ancillary Services:Supplemental healthcare services such as laboratory work, x-rays or physical therapy that are provided in conjunction with medical or hospital care.

Annual limit:Many health insurance plans place dollar limits upon the claims the insurer will pay over the course of a plan year. Beginning September 23, 2010, PPACA phases annual dollar limits will be phased out over the next 3 years until 2014 when they will not be permitted for most plans. There is an exception to this phase out for Grandfathered Plans. Except for Grandfathered Plans, beginning September 23, 2012 annual limits can be no lower than $2 million. Except for Grandfathered Plans, beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited.

Application Fee:The health insurance company may require a one-time application fee. Some insurance companies may refund this fee if the application is not approved. See More Insurance Plan Details section for additional information.

Approved Charge:See Allowable Charge.

Approved Health Care Facility or Program:A medical facility or healthcare program (often organized through a hospital or clinic) that has been approved by a health insurance plan to provide specific services for specific conditions.

Assignment of Benefits:The payment of health insurance benefits to a healthcare provider rather than directly to the member of a health insurance plan.

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Attending Physician Statement (APS):A physician's assessment of a patient's state of health as outlined in office notes and test results compiled by the physician. An APS may be requested by an insurance company in lieu of a medical examination in order to determine the state of a health insurance applicant's health for underwriting purposes.please note, however, that definitions of certain terms may vary across insurance companies. Balance Billing:The amount you could be responsible for (in addition to any co-payments, deductibles or coinsurance) if you use an out-of-network provider and the fee for a particular service exceeds the allowable charge for that service.

Basic Hospital Expense Insurance:See Hospitalization Insurance.

Bed Days/1,000:A statistic used by health insurance companies describing the number of inpatient hospital days for each 1000 persons covered under a health insurance plan within a given time period.

Benefit:A general term referring to any service (such as an office visit, laboratory test, surgical procedure, etc.) or supply (such as prescription drugs, durable medical equipment, etc.) covered by a health insurance plan in the normal course of a patient's healthcare.

Benefit Level:The maximum amount a health insurance company agrees to pay for a specific covered benefit.

Benefit Package:A description of the healthcare services and supplies that a health insurance company covers for members of a specific health insurance plan.

Benefit Riders:This term may be used to describe ancillary products purchased in conjunction with a medical insurance plan.

Benefit Year:The annual cycle in which a health insurance plan operates. At the beginning of your benefit year, the health insurance company may alter plan benefits and update rates. Some benefit years follow the calendar year, renewing in January, whereas others may renew in late summer or fall.

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Binding Receipt:When you submit an application for health insurance and include an initial payment, the health insurance company may provide you with a binding receipt. A binding receipt indicates that, if coverage is approved, the health insurance company is required to initiate coverage from the date on which payment was received.

Birthday Rule:One method used by health insurance companies to determine which parent's health insurance coverage will be primary for a dependent child, when both parents have separate coverage. Typically, the health insurance plan of the parent whose birthday falls earliest in the year will be considered primary. For more information, see also, COB.

Board-certified:A board-certified physician is one that has successfully completed an educational program and evaluation process approved by the American Board of Medical Specialties, including an examination designed to assess the knowledge, skills and experience required to provide quality patient care in a specific specialty.

Broker:Though sometimes used in a sense synonymous with the term agent, a broker typically works to match applicants with a health insurance company or plan best matched to their needs. The broker is paid a commission by the insurance company, but represents the applicant rather than the insurance company itself.

Business License:A license from a governmental agency authorizing an individual or an employer to conduct business.

Business Structure:A state-designated legal structure that governs business taxes, liability, and operational requirements. Examples include: sole proprietorship, partnership, corporation, or LLC. COB (Coordination of Benefits):This is the process by which a health insurance company determines if it should be the primary or secondary payer of medical claims for a patient who has coverage from more than one health insurance policy. See also, Non-duplication of Benefits.

Capitation:A method of compensation sometimes employed by health insurance companies, in which payment is made to a healthcare provider on a per-patient rather than a per-service basis. For example, under capitation an HMO doctor may be paid a fixed amount each month to serve as the primary care physician for a specific number of HMO members assigned to his or her care, regardivess of how little or how much care each member needs.

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COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985):Federal legislation allowing an employee or an employee's dependents to maintain group health insurance coverage through an employer's health insurance plan, at the individual's expense, for up to 18 months in certain circumstances. COBRA coverage may be extended beyond 18 months in certain circumstances. COBRA rules typically apply when an employee loses coverage through loss of employment (except in cases of gross misconduct) or due to a reduction in work hours. COBRA benefits also extend to spouses or other dependents in case of divorce or the death of the employee. Children who are born to, adopted, or placed for adoption with the covered employee while he or she is on COBRA coverage are also entitled to coverage. All companies that have averaged at least 20 full-time employees over the past calendar year must comply with COBRA regulations.

Carrier:Any insurer, managed care organization, or group hospital plan, as defined by applicable state law.

Carry-over Provision:A provision of some health insurance plans allowing medical expenses paid for by the member in the last three months of the year to be carried over and applied toward the next year's deductible.

Case Management:When a member requires a great deal of medical care, the health insurance company may assign the member to case management. A case manager will work with the patient's healthcare providers to assist in the management of the patient's long-term needs, with appropriate recommendations for care, monitoring and follow-up. A case manager will also help ensure that the member's health insurance benefits are being properly and fully utilized and that non-covered services are avoided when possible.

Centers for Medicare and Medicaid Services:Formerly known as the Health Care Financing Administration, the Centers for Medicare and Medicaid Services (CMS) is part of the federal government's Department of Health and Human Services, and is responsible for the administration of the Medicare and Medicaid programs. The CMS establishes standards for healthcare providers that must be complied with in order for providers to meet certain certification requirements.

Certificate of Coverage:A document given to an insured that describes the benefits, limitations and exclusions of coverage provided by an insurance company.

Chemical Dependency Inpatient:Typically, chemical dependency inpatient services include services relating to the treatment of a chemical dependency that requires a stay at a hospital or other medical facility.

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Chiropractic:Typically, chiropractic services include services provided by a licensed chiropractor.

Chronic:In healthcare and insurance terminology, a chronic condition is one that is permanent, recurring or long lasting, as opposed to an acute condition.

Claim:A bill for medical services rendered, typically submitted to the insurance company by a healthcare provider.

Coinsurance:The amount that you are obliged to pay for covered medical services after you've satisfied any co-payment or deductible required by your health insurance plan. Coinsurance is typically expressed as a percentage of the charge or allowable charge for a service rendered by a healthcare provider. For example, if your insurance company covers 80% of the allowable charge for a specific service, you may be required to cover the remaining 20% as coinsurance.

Company:The insurance company that is offering this health insurance plan.

Cost-sharing:Health care provider charges for which a patient is responsible under the terms of a health plan. Common forms of cost-sharing include deductibles, coinsurance, and co-payments. Balance-billed charges from out-of-pocket physicians are not considered cost-sharing. Beginning in 2014, PPACA limits total cost-sharing to $5,950 for an individual and $11,900 for a family. These amounts will be adjusted annually to reflect the growth of premiums.

Co-payment:A specific charge that your health insurance plan may require that you pay for a specific medical service or supply, also referred to as a "co-pay." For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.

Date of Service:The date on which a healthcare service was provided.

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Deductible:A specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims. Not all health insurance plans require a deductible. As a general rule (though there are many exceptions), HMO plans typically do not require a deductible, while most Indemnity and PPO plans do.

Deductible Carry-over Credit:See, Carry-over Provision

Department of Health and Human Services:A department of the federal government responsible for certain social service functions, such as the administration and supervision of the Medicare program.

Dependent Coverage:Health insurance coverage extended to the spouse and unmarried children of the primary insured member. Certain age restrictions on the coverage of children may apply.

Designated Mental Health Provider:An organization hired by a health insurance plan to provide mental health and/or substance abuse treatment services.

Drug Formulary:A list of prescription medications selected for coverage under a health insurance plan. Drugs may be included on a drug formulary based upon their efficacy, safety and cost-effectiveness. Some health insurance plans may require that patients obtain preauthorization before non-formulary drugs are covered. Other health insurance plans may require that a patient pay a greater share or all of the cost involved in obtaining a non-formulary prescription.

Drug Maintenance List:A list of commonly prescribed drugs intended for patients' ongoing or long-term use.

Drug Utilization Review (DUR):The process by which health insurance companies evaluate or review the use of prescription drugs for appropriateness in the treatment of a patient.

Durable Medical Equipment (DME):Medical equipment used in the course of treatment or home care, including such items as crutches, knee braces, wheelchairs, hospital beds, prostheses, etc.. Coverage levels for DME often differ from coverage levels for office visits and other medical services.

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ERISA (Employment Retiree Income Security Act of 1974):Federal legislation designed to protect the rights of retirees and beneficiaries of benefit plans offered by employers.

Effective Date:The date on which health insurance coverage comes into effect.

Eligibility Date:The date on which a person becomes eligible for insurance benefits.

Eligibility Requirements:Conditions that must be met in order for an individual or group to be considered eligible for insurance coverage.

Eligible Dependent:A dependent (usually spouse or child) of an insured person who is eligible for insurance coverage.

Eligible Employee:An employee who is eligible for insurance coverage based upon the stipulations of the group health insurance plan.

Eligible Expenses:Expenses defined by the health insurance plan as eligible for coverage.

Eligible Person:This term is used to designate a person who is eligible for insurance coverage even though he or she may not be an employee, but rather a member of an organization or union.

Emergency Room:Typically, emergency room services include all services provided when a patient visits an emergency room for an emergency condition. An emergency condition is any medical condition of recent onset and severity, including but not limited to severe pain, that would lead to a prudent layperson, possessing an average knowledge of medicine and health, to believe that his or her condition, sickness, or injury is of such a nature that failure to obtain immediate medical care could result in placing the patient's health in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of bodily organ or part.

Employee Certificate of Insurance:See Certificate of Coverage.

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Employee Contribution:The portion of the health insurance premium paid for by the employee, usually deducted from wages by the employer.

Employer Contribution:The portion of an employee's health insurance premium paid for by the employer.

Employer Wage and Tax Statement:An employer tax reporting statement submitted to the applicable governmental agency to establish and report the employer's tax responsibilities.

Enrollee:An eligible person or eligible employee who is enrolled in a health insurance plan. Dependents are not referred to as enrollees.

Enrollment:The process through which an approved applicant is signed up with the health insurance company and coverage is made effective. This term may also be used to describe the total number of enrollees in a health insurance plan.

Enrollment Period:The period of time during which an eligible employee or eligible person may sign up for a group health insurance plan.

EPO (Exclusive Provider Organization):An EPO is a Exclusive Provider Organization. As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside of the network for care. There are no out-of-network benefits.

Essential Benefits:PPACA requires all health insurance plans sold after 2014 to include a basic package of benefits including hospitalization, outpatient services, maternity care, prescription drugs, emergency care, and preventive services among other benefits. It also places restrictions on the amount of cost-sharing that patients must pay for these services.

Estimated Cost:The amount quoted is an estimated cost of the health plan, which is subject to change based on your medical history, the underwriting practices of the health plan, the optional benefits you selected, if any, and other relevant factors. It may be the sum of estimated premiums and other recurring charges, if the insurance company has such charges.

Evidence of Coverage:See Certificate of Coverage.

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Evidence of Insurability:When applying for an individual health insurance plan, an applicant may be asked to confirm his or her health condition in writing, through a questionnaire or through a medical examination. When applying for group health insurance, evidence of insurability is only required in specific cases (for instance, when a person fails to enroll in the group plan during the enrollment period).

Examination:In health insurance usage, this generally refers to a medical examination performed as part of an application for a life or health insurance plan. See, Evidence of Insurability.

Exclusions:Specific conditions, services or treatments for which a health insurance plan will not provide coverage.

Experimental or Investigational Procedures:Any healthcare services, supplies, procedures, therapies or devices the effectiveness of which a health insurance company considers unproven. These services are generally excluded from coverage.

Explanation of Benefits (EOB):A statement sent from the health insurance company to a member listing services that were billed by a healthcare provider, how those charges were processed, and the total amount of patient responsibility for the claim.

Extended Coverage:A provision of some health insurance plans allowing for coverage of certain healthcare services after the member is no longer covered on the plan. For example, a member's maternity benefits may be extended beyond the expected end of coverage if the woman was already receiving covered maternity services.

Extension of Benefits:A provision of some health insurance plans allowing for coverage to be extended beyond a scheduled termination date. The extended coverage is made available only when the member is disabled or hospitalized as of the intended termination date, and continues only until the patient leaves the hospital or returns to work.

Fee-For-Service Plan:See Indemnity Plan.

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Gatekeeper:A term used to describe the role of the primary care physician in an HMO plan. In an HMO plan, primary care physicians serves as the patient's main point of contact for healthcare services and refer patients to specialists for specific needs.

Generic Drug:A drug which is exactly the same as a brand name prescription drug, but which can be produced by other manufacturers after the brand name drug's patent has expired. Generic drugs are usually less expensive than brand name drugs.

Grace Period:A time period after the payment due date, during which insurance coverage remains in force and the policyholder may make a payment without penalty.

Grandfathered plan:Health insurance coverage that existed as of March 23, 2010 that is subject only to certain provisions of thePPACA. Any policy sold in the individual health insurance market after March 23, 2010 will not be grandfathered even if the product sold was offered before that date. New employees may be added to group plans that are grandfathered, and new family members may be added to all grandfathered plans. If you're not sure whether you have a Grandfathered plan, please contact the plan directly.

Grievance Procedure:The procedure by which a member or healthcare provider is allowed to file a complaint with a health insurance company and seek a remedy.

Group:A number of individuals covered under a single health insurance contract, usually a group of employees.

Group Health Insurance:A health insurance plan that provides benefits for employees of a business or members of an organization, as opposed to individual and family health insurance.

Guaranteed Issue: A term used to describe insurance coverage that must be issued regardivess of health status. In most states, group health insurance plans are often described as guaranteed issue plans, because a health insurance company generally cannot refuse coverage to a qualifying business or organization based on the health status of their employees or members. In some states, all health insurance plans are guaranteed issue.

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HIPAA (Health Insurance Portability and Accountability Act of 1996):Legislation mandating specific privacy rules and practices for medical care providers and health insurance companies, designed to streamline the healthcare and insurance industries and to protect the privacy and identity of healthcare consumers. HIPAA also provides additional protections for consumers, designed to help them obtain or retain health insurance coverage in certain circumstances. For more information on HIPAA rules and regulations.

HMO:HMO means "Health Maintenance Organization." HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agree to provide services to members at a pre-negotiated rate. As a member of an HMO, you will need to choose a primary care physician ("PCP") who will provide most of your health care and refer you to HMO specialists as needed. Some HMO plans require that you fulfill a deductible before services are covered. Others only require you to make a copayment when services are rendered. Health care services obtained outside of the HMO are typically not covered, though there may be exceptions in the case of an emergency. 

An HMO may be right for you if:You're willing to play by the rules and coordinate your care through a primary care physicianYou're looking for comprehensive benefits at a reasonable monthly premiumYou value preventive care services: coverage for checkups, immunizations and similar services are often emphasized by HMOs

HSA (Health Savings Account):A tax advantaged savings account to be used in conjunction with certain high-deductible (low premium) health insurance plans to pay for qualifying medical expenses. Contributions may be made to the account on a tax-free basis. Funds remain in the account from year to year and may be invested at the discretion of the individual owning the account. Interest or investment returns accrue tax-free. Penalties may apply when funds are withdrawn to pay for anything other than qualifying medical expenses.

Health Care Financing Administration (HCFA):See the Centers for Medicare and Medicaid Services (CMS).

Health Service Agreement:An agreement between an employer and a health insurance company outlining benefits, enrollment procedures, eligibility standards, etc.

Home Health Agency:A certified healthcare agency that provides home health care services. See, Home Health Care.

Home Health Care:Part-time care that is provided by medical professionals in the home setting rather than in a hospital or skilled nursing facility.

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High Deductible Health Plan (HDHP):A type of health insurance plan that, compared to traditional health insurance plans, requires greater out-of-pocket spending, although premiums may be lower. In 2010, an HSA-qualifying HDHP must have a deductible of at least $1,200 for single coverage and $2,400 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $5,950 for single coverage and $11,900 for families.

Hospice Care:Care rendered either on an inpatient basis or in the home setting for a terminally ill patient. Often referred to as "palliative" or "supportive" care, hospice care emphasizes the management of pain and discomfort and the emotional support of the patient and family. See also, Respite Care.

Hospital Benefits:Benefits payable for hospital room and board and other miscellaneous charges resulting from hospitalization.

Hospitalization:Typically, hospitalization services include services related to staying at a hospital for either scheduled procedures, accidents or medical emergencies. Hospitalization services typically do not include hospital stays for giving birth to a child.

Hospitalization Insurance:Insurance intended to provide coverage in case of hospitalization, including benefits for room and board and miscellaneous expenses, within certain limitations.

IPA (Individual Practice Association):An organization of physicians who may maintain separate offices but who negotiate contracts with insurance companies and medical facilities as a group. Some health insurance applications will ask you to provide your primary care physician's IPA number. It can usually be found in the health insurance plan's online directory.

In-area Services:Healthcare services rendered within a health insurance plan's coverage area.

Incontestable Clause:A provision in an insurance policy that states that the validity of the insurance contract cannot be contested after two (or sometimes three) years.

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Indemnity Plan:Also called "fee-for-service" plans, Indemnity plans typically allow you to direct your own health care and visit whatever doctors or hospitals you like. The insurance company then pays a set portion of your total charges. You may be required to pay for some services up front and then apply to the insurance company for reimbursement. Indemnity plans typically require that you fulfill an annual deductible. Because of the freedom they allow members, Indemnity plans are sometimes more expensive than other types of plans.

An Indemnity plan may be right for you if:You want the greatest level of freedom possible in choosing which doctors or hospitals to visitYou don't mind coordinating the billing and reimbursement of your claims yourself

Individual and Family Health Insurance:A type of health insurance purchased by an individual or family, independent of any employer group or organization. In most states, a health insurance company may decline coverage for an individual or family health insurance plan based on the medical conditions or health histories of the applicants or dependents.

Infertility:Typically, infertility services include any medical services, both inpatient and outpatient, to assist with the conception of child.

Inpatient:A term used to describe a person admitted to a hospital for at least 24 hours. It may also be used to describe the care rendered in a hospital when the duration of the stay is at least 24 hours.

Integrated Delivery System:A group of doctors, hospitals and other providers who work together to deliver a broad range of healthcare services.

Intermediate Care:A level of nursing care, considered less intensive than skilled nursing care, but which may be rendered in a skilled nursing or intermediate care facility.

Lab/X-Ray:Typically, lab/x-ray is any diagnostic lab test or diagnostic/therapeutic x-ray performed in support of basic health services. Lab services typically include services like blood panels and urinalysis. X-ray services typically include basic outpatient skeletal or other plain film x-ray, outpatient ultrasound, GI series, MRI, and CT scan. Prostate cancer screening, mammograms, and pap smears may be covered by Lab/X-Ray benefit, or they may be covered by Periodic OB-GYN benefit or Preventative Care benefits. Typically, dental x-rays are not included in Lab/X-ray benefits.

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Lapse:The termination of insurance coverage due to lack of payment after a specific period of time.

Length of Stay (LOS):The total number of days that a patient stays in a facility such as a hospital.

Lifetime Limit:Many health insurance plans place dollar limits upon the claims that the plan will pay over the course of an individual's life. PPACA prohibits lifetime limits on the dollar value of benefits deemed essential by the Department of Health and Human Services, for plan or policy years beginning on Sept. 23, 2010.

Lifetime Maximum:Lifetime maximum or lifetime limits refers to the maximum dollar amount that a health insurance company agrees to pay on behalf of a member for covered services during the course of his or her lifetime. For plan or policy years beginning on or after Sept. 23, 2010, plans may not establish any lifetime limit on the dollar amount of benefits for any individual. All plans are required by PPACA to remove the lifetime maximum restrictions.

Limitations:A term referring to any maximums that a health insurance plan imposes on specific benefits.

Long-term Care:Care provided on a continuing basis for the chronically ill or disabled. Long-term care may be provided on an inpatient basis (at a long-term care facility) or in the home setting.

MSA (Medical Savings Account):A tax-advantaged personal savings account used in conjunction with a high-deductible health insurance plan. MSAs are currently being phrased out and replaced with HSAs. See HSA.

Major Medical Insurance:A type of medical insurance plan that provides benefits for a broad range of healthcare services, both inpatient and outpatient. Major medical insurance plans often carry a high deductible.

Managed Care:A general term used to describe a variety of healthcare and health insurance systems that attempt to guide a member's use of benefits, typically by requiring that a member coordinate his or her healthcare through a primary care physician, or by encouraging the use of a specific network of healthcare providers. The management of healthcare is intended to keep costs -and monthly premiums- as low as possible. There are several different types of managed care health insurance plans, including HMO, PPO, and POS plans

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Maternity (Inpatient):Typically, inpatient maternity services include hospitalization and physician fees associated with the birth of a child.

Maternity (Outpatient):Typically, outpatient maternity services include OB-GYN office visits during pregnancy and immediately after giving birth.

Maternity Coverage:Maternity coverage means the insurance covers part or all of the medical cost during a woman's pregnancy. Coverage is broken down into inpatient and outpatient services. Typically, inpatient coverage includes hospitalization and physician fees associated with child birth. Outpatient coverage pays for prenatal and postnatal OB-GYN office visits.

Maximum Allowable:See Allowable Charge.

Max Duration:Maximum duration is the longest coverage period offered by the plan.

You should choose a plan which has a coverage period which will safely cover your insurance needs while you are waiting for a standard long-term policy to begin. You should apply for short-term coverage only if you know with certainty that you will have standard, long-term coverage (or coverage through an employer) at a future date.

Maximum Out-Of-Pocket Costs:An annual limitation on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed charges from out of network health care providers or services that are not covered by the plan.

Medicaid:A state-funded healthcare program for low income and disabled persons.

Medical Necessity:A basic criterion used by health insurance companies to determine if healthcare services should be covered. A medical service is generally considered to meet the criteria of medical necessity when it is considered appropriate, consistent with general standards of medical care, consistent with a patient's diagnosis, and is the least expensive option available to provide a desired health outcome. Of course, preventive care services that may be covered under a health insurance plan are not always subject to the criteria of medical necessity.

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Medicare:A national, federally-administered health insurance program authorized in 1965 to cover the cost of hospitalization, medical care, and some related health services for most people over age 65 and certain other eligible individuals.

Medicare Beneficiary:Anyone entitled to Medicare benefits based on the rules for eligibility outlined by the Social Security Administration.

Medicare Supplement Insurance:Health insurance provided to an individual or group that is intended to help fill in the gaps in the coverage provided by Medicare.

Member:Anyone covered under a health insurance plan, an enrollee or eligible dependent.

Mental Health Inpatient:Typically, mental health inpatient refers to services rendered when a patient stays at a hospital or other medical facility for treatment of a mental health condition.

Mental Health Office Visits:Typically, mental health office visits include visits to a licensed medical provider for treatment of a mental health condition.

National Association of Insurance Commissioners (NAIC):The NAIC is a national association of state officials charged with regulating insurance. The NAIC was formed to help provide some measure of national uniformity in insurance regulation.

National Drug Code (NDC):A system employed by healthcare providers and insurance companies for classifying and identifying drugs. Each prescription drug in common use is assigned an NDC number.

Network:A "Network" plan is a variation on a PPO plan. With a Network plan you'll need to get your medical care from doctors or hospitals in the insurance company's network if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the network. Services rendered by out of network providers may not be covered or may be paid at a lower level. 

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Network Provider:A healthcare provider who has a contractual relationship with a health insurance company. Among other things, this contractual relationship may establish standards of care, clinical protocols, and allowable charges for specific services. In return for entering into this kind of relationship with an insurance company, a healthcare provider typically gains in numbers of patients and a primary care physician may receive a capitation fee for each patient assigned to his or her care.

Non-duplication of Benefits:See, COB.

Nursing Home:A licensed facility which provides general nursing care to those who are chronically ill or who require constant supervision and assistance with the needs of daily living.

Office Visit:An office visit is the amount you pay when you see the doctor or dentist for routine care. 

Examples for $100 office visit:If the plan's office visit is $25, then you pay $25.If the plan's office visit is 30% before deductible, then you pay $30.If the plan's office visit is 35% after deductible, then, if you have not yet reached your deductible, you pay $100; if you have reached your deductible you pay $35.Select higher amounts to lower your monthly premiums.

Office Visit (IFP):Typically, an office visit is an outpatient visit to a physician's office for illness or injury.

Open Enrollment Period:A time period during which eligible persons or eligible employees may opt to sign up for coverage under a group health insurance plan. During an open enrollment period, applicants typically will not be required to provide evidence of insurability.

Out-of-network Care:Healthcare rendered to a patient outside of the health insurance company's network of preferred providers. In many cases, the health insurance company will not pay for these services.

Out-of-pocket Costs:See Maximum Out-of-pocket Costs.

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Out-of-Pocket Maximum:See Maximum Out-of-pocket Costs.

Outpatient:A term referring to a patient who receives care at a medical facility but who is not admitted to the facility overnight, or for 24 hours or less. The term may also refer to the healthcare services that such a patient receives.

Outpatient Surgery:Typically, outpatient surgery is defined as any surgical procedure that does not require an overnight stay in a hospital.

Over-the-counter (OTC) Drugs:Drugs that may be obtained without a prescription.

POS:POS stands for "Point of Service." POS plans combine elements of both HMO and PPO plans. As a member of a POS plan, you may be required to choose a primary care physician who will then make referrals to specialists in the health insurance company's network of preferred providers. Care rendered by non-network providers will typically cost you more out of pocket, and may not be covered at all.

PPO:PPO means "Preferred Provider Organization." Like the name implies, with a PPO plan you'll need to get your medical care from doctors or hospitals on the insurance company's list of preferred providers if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the PPO. Services rendered by out of network providers may not be covered or may be paid at a lower level. A broad variety of PPO plans are available, many with low monthly premiums.

Part-Time Employee:For the purposes of qualifying for group health insurance, a part-time employee is one working between 20-29 hours per week.

Partial Disability:A condition in which, as the result of an illness or injury, a group health insurance member cannot perform all the duties of his or her occupation, but can perform some. Exact definitions differ between health insurance plans.

Partial Hospitalization Services:Also referred to as "partial hospital days," this is a healthcare term used to refer to outpatient services performed in a hospital setting as an alternative or follow-up to inpatient mental health or substance abuse treatment.

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Participating Provider:Generally, this term is used in a sense synonymous with Network Provider. However, not all healthcare providers contract with health insurance companies at the same level. Some providers contracting with insurers at lower levels may sometimes be referred to as "participating providers" as opposed to "preferred providers."

Peer Review:This term refers to the process by which a physician or team of healthcare specialists review the services, course of medical treatment, or the conclusions of a scientific medical study conducted by another physician or group of medical experts. Peer review must be provided by a physician or team of medical experts with training and expertise equal to the physician or team conducting the treatment or research in question.

Periodic Health Exam:Typically, a periodic health exam is an exam that is occurs on a regular basis for preventative purposes, like a routine physical or annual check-up.

Periodic OB-GYN Exam:Typically, a periodic OB-GYN exam is a routine OB-GYN exam that occurs on a regular basis, typically for preventative purposes, like a PAP smear.

Physical Therapy:Typically, physical therapy services include rehabilitative services provided by a licensed physical therapist to help restore bodily functions such as walking, speech, the use of limbs, etc.

Place of Service:The type of facility in which healthcare services were provided, whether it be the home, hospital, clinic, office, etc..

Plan Name:The name of the health plan offered by the insurance company.

Plan Type: PPOPPO means "Preferred Provider Organization." Like the name implies, with a PPO plan you'll need to get your medical care from doctors or hospitals on the insurance company's list of preferred providers if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the PPO. Services rendered by out of network providers may not be covered or may be paid at a lower level. A broad variety of PPO plans are available, many with low monthly premiums.

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HMOHMO means "Health Maintenance Organization." HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agree to provide services to members at a pre-negotiated rate. As a member of an HMO, you will need to choose a primary care physician ("PCP") who will provide most of your health care and refer you to HMO specialists as needed. Some HMO plans require that you fulfill a deductible before services are covered. Others only require you to make a copayment when services are rendered. Health care services obtained outside of the HMO are typically not covered, though there may be exceptions in the case of an emergency.

An HMO may be right for you if:You're willing to play by the rules and coordinate your care through a primary care physicianYou're looking for comprehensive benefits at a reasonable monthly premiumYou value preventive care services: coverage for checkups, immunizations and similar services are often emphasized by HMOs

NetworkA "Network" plan is a variation on a PPO plan. With a Network plan you'll need to get your medical care from doctors or hospitals in the insurance company's network if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it's up to you to make sure that the health care providers you visit participate in the network. Services rendered by out of network providers may not be covered or may be paid at a lower level.

POSPOS stands for "Point of Service." POS plans combine elements of both HMO and PPO plans. As a member of a POS plan, you may be required to choose a primary care physician who will then make referrals to specialists in the health insurance company's network of preferred providers. Care rendered by non-network providers will typically cost you more out of pocket, and may not be covered at all.

EPO (Exclusive Provider Organization).An EPO is a Exclusive Provider Organization. As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside of the network for care. There are no out-of-network benefits.

Policy Form Number:A unique number that identifies each health insurance policy filed with a state's department of insurance.

Policy Term:The period of time for which a health insurance policy provides coverage.

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PPACA:On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law. Legislation (Public Law 111-148), commonly referred to as the health reform law. Among other things, the new law requires that all Americans maintain minimum essential coverage starting in 2014. At that time, health insurance companies will not be able to deny insurance coverage to individuals based on a pre-existing condition.

Practical Nurse:A licensed nurse who provides "custodial" care services, such as assistance in walking, bathing, feeding, etc.. Practical nurses do not administer medications or perform other strictly medical services.

Pre-Admission Authorization:See Preauthorization/Precertification .

Preauthorization/Precertification:These are terms that are often used interchangeably, but which may also refer to specific processes in a health insurance or healthcare context.

1) Most commonly, "preauthorization" and "precertification" refer to the process by which a patient is pre-approved for coverage of a specific medical procedure or prescription drug. Health insurance companies may require that patients meet certain criteria before they will extend coverage for some surgeries or for certain drugs. In order to pre-approve such a drug or service, the insurance company will generally require that the patient's doctor submit notes and/or lab results documenting the patient's condition and treatment history. 

2) The term "precertification" may also be used to the process by which a hospital notifies a health insurance company of a patient's inpatient admission. This may also be referred to as "pre-admission authorization."

Pre-existing Condition:A health problem that existed or was treated before the effective date of your health insurance coverage. Most health insurance contracts have a pre-existing condition clause that describes conditions under which the health insurance company will cover medical expenses related to a pre-existing condition. For more information, see also Pre-existing Condition Exclusion.

Pre-existing Condition Exclusion:see Pre-existing Condition. In some cases, a health insurance company may exclude a patient's pre-existing conditions from coverage under a new health insurance plan. This is more typical with individual and family health insurance plans and less common with group health insurance plans. HIPAA legislation imposes certain limitations on when a health insurance company can exclude coverage for a pre-existing condition. PPACA prohibits pre-existing condition exclusions for all plans beginning January 2014 and prohibits pre-existing condition exclusions for all children under the age of 19 in new policies sold on or after September 23, 2010.

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Premium:The total amount paid to the insurance company for health insurance coverage. This is typically a monthly charge. Within the context of group health insurance coverage, the premium is paid in whole or in part by the employer on behalf of the employee or the employee's dependents.

Prescription Medication:A drug that may be obtained only with a doctor's prescription and which has been approved by the Food and Drug Administration.

Prescription Drug Coverage:Prescription drug coverage varies by carrier and plan type. Typically, prescription drugs are covered in one of the two ways below:- Insurance covers a percentage after plan deductible is met.- Insurance covers cost of the drug but a copay is required with prescription.

Preventive benefits:Covered services that are intended to prevent disease or to identify disease while it is more easily treatable. PPACA requires insurers to provide coverage for certain preventive benefits without deductibles, co-payments, or coinsurance. This rule does not apply to Grandfathered Plans. HHS is continuing to update what it defines as Preventative Benefits.

Preventive Care:Medical care rendered not for a specific complaint but focused on prevention and early-detection of disease. This type of care is best exemplified by routine examinations and immunizations. Some health insurance plans limit coverage for preventive care services, while others encourage such services. Note that well-baby care, immunizations, periodic prostate exams, pap smears and mammograms, though considered preventive care, may be covered even if your health insurance plan limits coverage for other preventive care services.

Primary Care:Basic healthcare services, generally rendered by those who practice family medicine, pediatrics or internal medicine.

Primary Care Physician (PCP):A patient may be required to choose a primary care physician (PCP). A primary care physician usually serves as a patient's main healthcare provider. The PCP serves as a first point of contact for healthcare and may refer a patient to specialists for additional services.

Primary Coverage:If a person is covered under more than one health insurance plan, primary coverage is the coverage provided by the health insurance plan that pays on claims first. See also, COB.

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Prior Authorization:See Preauthorization/Precertification .

Probationary Period:A waiting period determined by the health insurance company during which coverage for certain pre-existing conditions may be excluded.

Provider:A term commonly used by health insurance companies to designate any healthcare provider, whether a doctor or nurse, a hospital or clinic.

Provider Write-off:The difference between the actual charge and the allowable charge, which a network provider cannot charge to a patient who belongs to a health insurance plan that utilizes the provider network. See Allowable Charge for more information.

Qualifying Event:An event (such as termination or employment, divorce or the death of the employee) that triggers a group health insurance member's protection under COBRA. See COBRA for more information.

Rating Process:The process by which a premium or rate for a group is determined. Items that may be considered in the rating process include age, sex, type of industry, benefits and administrative costs.

Reasonable and Customary Charges:See Usual, Customary and Reasonable (UCR) Charge.

Referral:The process through which a patient under a managed care health insurance plan is authorized by his or her primary care physician to a see a specialist for the diagnosis or treatment of a specific condition.

Registered Nurse (RN):A licensed professional nurse with a four-year nursing degree, trained to provide all levels of nursing care including the administration of medication.

Renewal:Renewal occurs when a member continues coverage under a health insurance plan beyond the original time frame of the contract. At the end of each benefit year, a plan member is generally invited to renew his or her coverage.

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Renewal Date:The date on which a member's health insurance plan benefit year renews.

Respite Care:Normally associated with hospice care, respite care is a benefit often made available for family members of a patient, providing the patient's primary caretaker with a break or respite from caring for the patient. Respite care may be provided for the patient in either the home or a nursing home setting.

Rider:An amendment or modification to an insurance contract. See also, Benefit Riders. Schedule C:The federal tax form used to report business income or business losses. A copy of this form may be required when applying for a group health insurance plan.

Schedule K-1:The federal tax form used to report a business partner's share or the income, credits and deductions from a business organized as a partnership. This is submitted to the federal government with the partner's federal tax return. A copy of this form may be required when applying for a group health insurance plan.

Second Surgical Opinion:Some health insurance companies may require a second opinion from a qualified physician or specialist before extending coverage for certain surgical procedures.

Secondary Care:Medical care rendered by a specialist (e.g. urologist, cardiologist) rather than a primary care physician. See also Primary Care and Tertiary Care.

Secondary Coverage:When a person is covered under more than one health insurance plan, this term describes the health insurance plan that provides payment on claims after the primary coverage. See also Primary Coverage and COB.

Self-funded Health Insurance Plan: A health insurance plan that is funded by an employer rather than through a health insurance company. A health insurance company will typically handive the administration of such a plan, but the cost of claims will be paid for by the employer through a fund set up for this purpose. See also, Administrative Services Only (ASO) Agreement.

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Service Area:The geographic area in which a health insurance plan's benefits are made available. Some health insurance plans will not provide coverage outside of a plan's service area.

Short-term Plans:Short-term health insurance plans are similar to individual and family health insurance plans. However, coverage typically extends for no more than 6 months and benefits are often less comprehensive than those provided by a long-term health insurance plan.

Skilled Nursing Care:Intensive care usually required around the clock and rendered by, or under the supervision of, a Registered Nurse or licensed Practical Nurse. It is provided only when prescribed by a doctor and usually on an inpatient basis at a hospital or skilled nursing facility. Skilled nursing care may include the administration of medications, tube feeding, the changing of wound dressings, and some types of minor surgery.

Small group market:The market for health insurance coverage offered to small businesses - those with between 2 and 50 employees in most states. PPACA will broaden the market to those with between 1 and 100 employees, though until 2016 states may continue to limit small group to 50 employees or less.

Specialist:A doctor who does not serve as a primary care physician, but who provides secondary care, specializing in a specific medical field. See also, Secondary Care.

Standard Industrial Classification (SIC) Codes:These are codes used to describe or classify businesses based upon the products or services they provide. When you apply for group health insurance coverage, you may be asked to provide the SIC code for your business. This code provides the insurance company with information about the kind of work your employees are likely to perform and may be used to help determine a monthly premium.

Subrogation: The process by which a health insurance company determines whether medical bills should be paid for by the health insurance company itself or by another insurer or third party. For example, claims are frequently subject to subrogation when medical care is rendered as the result of an automobile accident. In most cases the automobile insurer is considered the primary payer. When a health insurance company has determined through the subrogation process that the automobile insurer will no longer pay on medical claims, then the health insurance company will typically become the primary payer.

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Subscriber:This term may be used in two senses: First, it may refer to the person or organization that pays for health insurance premiums; Secondivy, it may refer to the person whose employment makes him or her eligible for group health insurance benefits. Temporary Partial Disability:This term is used to describe a the condition of a person who due to injury is unable to work at full capacity but who is able to work at reduced efficiency and is expected to fully recover.

Temporary Total Disability:This term describes the condition of a person who due to injury is unable to work, but who is expected to fully recover.

Tertiary Care:This term is used to describe services rendered by such specialized providers as intensive care units, neurologists, neurosurgeons and thoracic surgeons. Such services frequently require highly sophisticated equipment and facilities.

Terminally Ill:In healthcare and insurance usage, this term is used to describe a person who is not expected to live beyond six months due to a specific illness.

Treatment Facility:May refer to any facility, either residential or non-residential, which is authorized to provide treatment for mental illness or substance abuse.

Triage:A method of classifying sick or injured patients according to the severity of their conditions in order to ensure that medical facilities and staff are most effectively utilized.

Underwriting:The process by which an insurer determines whether it will accept an application for insurance based upon risks and projections, and through which a determination on monthly premium is made.

Uniform Billing Code of 1992 (UB-92):The Uniform Billing Code of 1992 set industry-wide standards for medical billing practices.

Usual, Customary and Reasonable (UCR) Charge:This refers to the standard or most common charge for a particular medical service when rendered in a particular geographic area. It is often employed in determining Medicare payment amounts.

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Utilization:This term refers to how frequently a group uses the benefits associated with a particular health insurance plan or healthcare program.Utilization Management/Review:This term is often used to describe a group (or the work performed by a group) of nurses and doctors who work with health insurance plans to determine if a patient's use of healthcare services was medically necessary, appropriate, and within the guidelines of standard medical practice. Utilization Management/Review may also be referred to as Medical Review.

Vision Care Coverage:An insurance plan typically offered only on a group basis which covers routine eye examinations and which may also cover all or part of the costs associated with contact lenses or eyeglasses.W-2:The federal tax form used to report an employee's wages and taxes.

Waiting Period:A period of time (often 12 months) beginning with your effective date during which your health insurance plan does not provide benefits for pre-existing conditions. This period may be reduced or waived based on any prior health care coverage you had before applying for your new health insurance plan.

Waiver (Exclusion Endorsement):An agreement under which a member agrees to waive coverage for specific pre-existing conditions or for specific future conditions.Waiver of Premium:In some cases, a waiver of premium may be granted, allowing a member to maintain health insurance coverage in full force without payment. A waiver of premium is typically only granted in cases of permanent and total disability.

Well-Baby/Well-Child Care:Regularly scheduled, preventive care services, including immunizations, provided to children up to an age specified by a health insurance company or mandated by a government agency. HMO and POS plans typically provide coverage for well-baby care, though coverage for these services may be limited under a PPO plan.PPACA requires health insurers to provide coverage for certain recommended preventive care services, screenings, and immunizations with no cost sharing requirement for plan or policy years beginning on or after September 23, 2010. The Department of Health and Human Services will issue regulations to define what specific benefits are required to be covered under the new law.Well-Woman Care:A term sometimes used by insurance companies and healthcare providers to refer to mammograms and pap smears and other preventive care services rendered to a woman.PPACA requires health insurers to provide coverage for certain recommended preventive care services and screenings with no cost sharing requirement. The Department of Health and Human Services will issue a ruling to define what specific benefits are required to be covered under the new law.

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