MAPE

Health Care Glossary

MAPE Health Care Task Force

September 2004

Access	The availability of medical care to a patient. Access can depend on factors such as location, transportation, and types of medical services in the area.
Actuary	An insurance professional who performs the mathematical analysis necessary for setting insurance premium rates.
Advantage Health Plan	DOER explains the Advantage Health Plan at http://www.doer.state.mn.us/ei-segip/qa.htm#Q1. See information about cost levels and other issues at http://www.doer.state.mn.us/ei-segip/qa.htm. The SEGIP booklet is at http://www.doer.state.mn.us/ei-segip/pdf/Highlights.pdf.
Allowable	The amount that an insurance company or a medical benefits program will pay for specific medical services or products. Typically, to participate in an insurance company’s network, a provider must agree to accept the insurance company’s allowable rates. Providers typically submit claims for their “usual and customary” charges and then write off the amount not allowed by the insurance company. The health care provider should not bill the insured individual for the disallowed portion of the charges. Coinsurance owed by the insured party is based on the allowed expense.
Appeal	The formal process established by an insurance company or a medical benefits program that allows a covered individual or health care provider to contest a decision regarding treatment or coverage.
Assignment of Benefits	An agreement by the insured individual to allow the insurance company to make payments directly to the health service provider. Typically, the person who carries the insurance must sign a form to allow this. Otherwise, the insurance company must pay the insurance benefit directly to the insured party.
Capitation	This represents a set dollar limit that you or your employer pays to a health maintenance organization (HMO), regardless of how much you use (or don't use) the services offered by the health maintenance providers or how much that costs.
CHIP ( Children's Health Insurance Program )	A program, established by the Balanced Budget Act [1997], designed to provide health assistance to uninsured, low-income children either through separate programs or through expanded eligibility under state Medicaid programs.
CHAMPUS ( Civilian Health and Medical Program of the Uniformed Services )	A federal medical benefits program that helps pay for civilian medical care provided to the spouses and children of active duty and retired personnel. It is administered by private contractors selected for participation through a competitive procurement process. Since March 1995, it is known as TRICARE.
Claim	A request by an individual (or his or her health care provider) to an individual's insurance company for the insurance company to pay for services obtained from a health care professional.
COBRA ( Consolidated Omnibus Budget Reconciliation Act )	A federal law that, among other things, requires employers to offer continued health insurance coverage for a stated period of time to certain employees and their beneficiaries whose group health insurance has been terminated if they undergo a triggering event. These events include reduced work hours, death or divorce of a covered employee, and termination of employment. See more information at the U.S. Department of Labor web site at http://www.dol.gov/dol/topic/health-plans/cobra.htm
Coinsurance	See copayment.
Community rating	A rating method that sets premiums for financing medical care according to the health plan's expected costs of providing medical benefits to a whole community rather than to any subgroup within the community. Both low-risk and high-risk classes are factored into community rating, which spreads the expected medical care costs across the entire community.
Coördination of benefits	A provision in the health care insurance contract that applies when a person is covered under more than one medical plan. It requires that payment of benefits be coördinated by all the plans to eliminate duplication of benefits. The claim is submitted to each insurance company in turn, starting with the one providing primary coverage. Each plan applies its rules (e.g., allowable charges, deductibles, copayments, exclusions) to the remaining unpaid charges.
Copayment (or copay)	The portion of covered health care costs for which the covered person has a financial responsibility. A group member pays a stated dollar amount or percentage of the eligible medical expenses. Usually, covered individuals or families must first pay all eligible medical expenses up to a specified annual deductible amount, after which they are responsible to pay the copayment amount. Common examples include a fixed dollar amount for prescription drugs; a fixed dollar amount for health care provider office visits a percentage split, such as 80%/20%, of what the insurance company will pay and what the insured individual must pay. Copayment often refers to a specific dollar amount the individual must pay, while coinsurance refers to a percentage split.
Covered expense	A health care expense incurred by an insured or covered person that qualifies for reimbursement under the terms of a policy contract.
Deductible	The specified amount an individual must pay for health care expenses before insurance (or a self-insured employer) covers the costs. Often, insurance plans base coverage on yearly deductible amounts.
Dental insurance	A health insurance contract that provides payment for certain defined dental services.
Dependent	A covered person who gets health care coverage through another person who is the covered person under a plan.
Dependent coverage	Insurance coverage on the head of a family that is extended to his or her dependents.
Direct mail	A method of filling prescriptions for maintenance drugs that can save a lot of money under the Advantage Plan (e.g., 1/3 of copays).
Employee contribution	The amount of the insurance premium that must be paid by the covered individual.
Employer contribution	The amount of the insurance premium that will be paid by the employer.
Exclusion	Medical services that an individual's insurance policy doesn’t cover.
Explanation of Benefits (EOB)	The statement sent to an insured person by their insurance company listing services provided, amount billed, eligible expenses, and payment made by the health insurance company. An EOB is not a bill , although it may show that part or all of the health care providers’ charges are to be paid by the insured individual.
First dollar deductible	An amount the insured person must pay before health insurance plan starts paying for benefits.
Formulary	A list of prescription drugs approved for use that the plan will cover and that participating pharmacies will dispense.
Generic drug	A drug that is the same as a brand name drug and can be produced after the brand name drug's patent has expired. Generic drugs are usually less expensive.
Health Care Expense Account (HCEA)	A pretax medical account that allows employees to take advantage of provisions in the U.S. tax code by using pretax income to pay for health care expenses. During an open enrollment period, an employee specifies the total amount to have deducted from their pay for the following calendar year for the pretax medical account. That total is divided by the number of pay periods in the calendar year to determine the amount that is deducted each payday. As the employee or their covered family members pay for health care expenses, they can submit claims to the medical account administrator to recover the deducted funds, up to the total deducted for the calendar (tax) year. Because the payroll deductions are pretax, they reduce the employee’s taxable income. However, any money contributed but not claimed by the employee for actual health care expense reimbursement is lost.
Health insurance	Insurance against loss by sickness, disease, or bodily injury.
HIPAA (Health Insurance Portability and Accountability Act)	A federal law [1996] that protects people who change jobs, are self-employed, or who have preëxisting medical conditions. HIPAA standardizes an approach to the continuation of health care benefits for individuals and members of small group health plans and establishes parity between the benefits extended to these individuals and those benefits offered to employees in large group plans. The act also contains provisions designed to ensure that prospective or current enrollees in a group health plan are not discriminated against based on health status.
HSA (Health savings account)	Individuals can use HSA funds to cover the health insurance deductible and any copayments for medical services, prescriptions, or products. In addition, HSA funds can be used to purchase over-the-counter drugs and long-term care insurance and to pay health insurance premiums during any period of unemployment. HSAs are similar to medical savings accounts (MSAs) which existed through 2003. However, MSA eligibility was restricted to employees of small businesses and the self-employed. HSAs are open to everyone with a high-deductible health insurance plan. The only limitation on the health plan is that the annual deductible must be at least $1,000 for individual coverage and at least $2,000 for family coverage. Contributions to the HSA by an employer are not included in the individual's taxable income. Contributions by an individual are tax deductible. Individuals, their employers, or both can contribute tax-deductible funds each year up to the amount of the policy's annual deductible, subject to a cap of $2,600 for individuals and $5,150 for families. Individuals aged 55-64 can make additional contributions. The interest and investment earnings generated by the account are also not taxable while in the HSA. Amounts distributed are not taxable as long as they are used to pay for qualified medical expenses such as prescription and over-the-counter drugs and long-term care services, as well as the purchase of continued health care coverage for the unemployed individual (via COBRA). Amounts distributed which are not used to pay for qualified medical expenses are taxable, plus an additional 10% tax will be applied in order to prevent the use of the HSA for nonmedical purposes. HSAs are portable. Like an individual retirement account (IRA), the HSA is owned by the individual, not the employer. If the individual changes jobs, the HSA goes with the individual. In addition, individuals over age 55 can make extra contributions to their accounts and still enjoy the same tax advantages. In 2004, an additional $500 can be added to the HSA. By 2009, an additional $1,000 can be added to the HSA. (This description is based on U.S. government information at http://www.ustreas.gov/press/releases/reports/1061hsafactsheet.pdf. For more information, see this industry web page: http://www.msainfo.net/)
Inpatient	Health care that requires that the patient be admitted to and treated in a hospital.
Insured	A person who has health insurance coverage under a health insurance plan.
Insurance pool	Provides insurance to a defined group of people (the pool).
JMLHCC (Joint Management-Labor Health Care Committee)
Lifetime maximum	The total amount, specified in the contract, that the insurance company will pay. A lifetime maximum can apply to coverage for a specific ailment, prescription drugs, treatment for an individual, or total benefits for a family. Not all insurance plans specify a lifetime maximum amount of coverage.
Long term care insurance	A policy that covers defined health care services for a specific period of time. Covered services often include nursing care, home health care services, and custodial care.
Long-term disability (LTD)	A group or individual policy that provides coverage for longer than a short term, often until the insured reaches age 65 in the case of illness and for the remainder of the insured’s lifetime in the case of accident. (Contrast with short-term disability.)
Mail-order pharmacy	A pharmacy that does business and ships drugs by mail. Health insurance plans may establish a relationship with a mail-order pharmacy and allow participants to get more than one-month supplies of prescription drugs for a single copayment. Typically, this type of prescription must be for a maintenance drug that the individual’s doctor has prescribed for long-term use.
Maintenance drug	A prescription drug that the individual must take on an ongoing basis, typically for long-term daily use. These types of prescription drugs often can be purchased in more than one-month quantities from a mail-order pharmacy for a single copayment.
Managed care	A health care system where physicians, hospitals, and other health care professionals are organized into a group or network to manage the cost, quality, and access to health care. Managed care organizations include Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs).
Maximum out-of-pocket (OOP)	See Out-of-pocket (OOP) maximum.
McCarran-Ferguson Act	A federal act [1945] that placed the primary responsibility for regulating health insurance companies and HMOs that service private sector (commercial) plan members at the state level. -- See http://www.ohioinsurance.org/factbook2002/chapter6/chapter6_j.shtml and http://insurance.cch.com/rupps/mccarran-ferguson-act.htm.
Medicaid (Medical Assistance [MA])	A jointly-funded federal and state program that provides hospital and medical expense coverage to low-income people and certain aged and disabled individuals. It is technically referred to as Title XIX Benefits.
Medicare	A federal government hospital and medical expense insurance plan primarily for elderly and disabled persons. Part A: The part of Medicare that provides basic hospital insurance coverage automatically for most eligible persons. Part B: A voluntary program that is part of Medicare and provides benefits to cover the costs of physicians' services. Part C: The part of Medicare that expands the list of different types of entities allowed to offer health plans to Medicare beneficiaries. Also known as Medicare+Choice.
Medigap insurance (aka Medicare supplement)	A private medical expense insurance plan, purchased by individuals, that supplements Medicare coverage.
Morbidity	The relative incidence of disease.
Mortality	The relative incidence of death.
MSA (Medical Savings Account)	Replaced 1/1/04 by Health Savings Accounts ( HSAs).
Network	The group of physicians, hospitals, and other medical care providers that a specific managed care plan has contracted with to deliver medical services to its members. Health care given by a provider that is “in network” is covered by the insurance plan. Health care given by an “out of network” provider may not be covered by the insurance plan or may cost the individual more in out-of-pocket payments.
Non-formulary	A prescription drug that is not on the insurance plan’s list of covered products. Typically, the individual must pay either a higher copayment or the entire cost to buy non-formulary prescription drugs.
Open enrollment period	A time of year specified by an employer during which eligible employees can sign up for or change their enrollment in the company’s insurance plan(s).
Out-of-pocket (OOP) maximum	The total payments (deductibles, copayments, and coinsurance) that a covered person or family must pay as defined by the insurance contract. Once this limit is reached, covered health services received during the rest of that benefit year are paid at 100%. Insurance plans often specify separate out-of-pocket maximum amounts for each individual and for the entire family. If one individual’s out-of-pocket maximum has been reached, additional treatment for that individual the rest of the benefit year is covered at 100%. However, another family member whose out-of-pocket maximum has not been reached may still have to make copayments. Typically, once the family out-of-pocket maximum has been reached, all covered health services received the rest of the benefit year by any covered family member will be paid at 100%.
Outpatient	Treatment or services received in a setting such as a clinic or doctor’s office and not as an admitted patient in a hospital . Many insurance companies have identified a list of tests and procedures, including surgery, that will not be covered (paid for) unless they are performed on an outpatient basis. The term outpatient is also used synonymously with ambulatory to describe health care facilities where procedures are performed.
Over-the-counter (OTC) drug	A drug that can be purchased without a prescription.
Performance measures	Measurements of the quality of care provided by a health plan or provider that consumers, payers, regulators, and others can use to compare the plan or provider to other plans and providers.
Post-retirement Health Care Saving	An employer-sponsored plan administered by the Minnesota State Retirement System (MSRS) that allows employees to save money in an account to pay medical expenses and health insurance premiums after the end of their state service. Most severance pay, other than for layoff or death, is converted to such an account. (See MAPE contract, Article 13, section 2.)
Preauthorization	An authorization to deliver health care service that is issued before any service is provided.
Preexisting condition	A medical condition that is excluded from coverage by an insurance company because the condition was believed to exist before the individual got a policy from that insurance company.
Premium	A payment or series of payments made to a health plan by plan members for medical benefits before medical care is given.
Prescription drug	A drug that can be bought only with a doctor's written permission. Under the Advantage Plan, a month's prescription is a 34-day supply.
Preventive care	Medical services that try to reduce the chances of illness, injury, or other conditions. This contrasts with acute care, which is given to a patient after the condition has occurred.
Primary care	Routine medical care that is provided directly to a patient without referral from another physician. It is focused on preventative care and the treatment of routine injuries and illnesses.
Provider	Any individual or group of individuals, such as physicians or hospitals, who provide a health care service.
Rationing	Limiting the availability of health care. Rationing can be open (e.g., based on a list of services that are and aren't provided) or hidden (e.g., based on being able to afford health care or working at a job that provides insurance).
Referral	Occurs when a physician or other health plan provider receives permission to consult another physician or hospital.
SEGIP (State Employee Group Insurance Program)	All benefits-eligible state employees can get health, dental, and other insurance coverage under the Minnesota Advantage Health Plan. See http://www.doer.state.mn.us/Index/Insurancebenefits.htm.
Self-insured plan	A health plan under which an employer or other group sponsor, rather than a managed care organization or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members. The State of Minnesota (as an employer) is self-insured.
Short-term disability (STD)	An injury or illness that keeps a person from working for a short time. The definition of short-term disability (and the time over which coverage extends) differs among insurance companies and employers. Short-term disability insurance coverage is designed to protect an individual's full or partial wages during a time of injury or illness (that is not work-related) that would prohibit the individual from working.
Single payer	A health care system in which one entity or agency collects the money that finances the health care system and pays all the providers. There are no insurance companies. Financing usually is done through the tax system. Individuals pay no deductibles or copayments and have coverage everywhere within the state, province, or country comprising the system, irrespective of employment status, employer, or location. Existing single payer systems (such as in Canada ) have universal coverage.
Structural	Relating to the health care system itself.
Underwriting	The process of identifying and classifying the risk represented by an individual or group to set appropriate premiums.
Universal coverage	A health care system in which everyone is eligible and covered by a plan or insurance.
Usual, customary, and reasonable (UCR)	The fee a health care provider charges for a specific procedure or product is called the usual, customary, and reasonable rate (UCR). This is a marketing term and doesn't represent any kind of mathematical calculation of what a provider actually charges. Most insurance companies negotiate allowed rates that are deeply discounted from the UCR. However, an uninsured person may be responsible to pay the entire amount charged by the provider.
Utilization management	Managing the use of medical services to ensure that a patient receives necessary, appropriate, high-quality care in a cost-effective manner.
Utilization review	The evaluation of the medical necessity, efficiency, and/or appropriateness of health care services and treatment plans.
Workers' compensation	A state-mandated insurance program that provides benefits for health care costs and lost wages to qualified employees and their dependents if an employee suffers a work-related injury or disease.