Chapter 4 - Basics of Health Insurance

Claim

A bill sent to an insurance carrier requesting payment for services rendered; also known as encounter record

Guaranteed renewable

A clause in an insurance policy that means the insurance company must renew the policy as long as premium payments are made. However, the premium may be increased when it is renewed. These policies may have age limits of 60, 65, or 70 years or may be renewable for life.

Implied contract

A contract between physician and patient not manifested by direct words but implied or deduced from the circumstance, but general language, or conduct of the patient

Health insurance

A contract between the policy holder or member and insurance carrier or government program to reimburse the policy holder or member for all or portion of the cost of medical care rendered by health care professionals

Workers' compensation

A contract that insures a person against on-the-job injury or illness. The employer pays the premium for his or her employees

Coinsurance

A cost-sharing requirement under a health insurance policy in which the insured will assume a percentage of the costs for covered services

Medicaid

A federally aided, state-operated, and state-administered program that provides medical benefits for certain low-income persons in need of health and medical care

Predetermination

A financial inquiry done before treatment to determine the maximum dollar amount the insurance company will pay for surgery, consultations, postoperative care, and so forth

Disability income insurance

A form of health insurance that provides periodic payments to replace income when the insured is unable to work as a result of illness, injury, or disease and not as a result of a work-related accident or condition

TRICARE

A government-sponsored program that provides military and nonmilitary hospital and medical services. It covers spouses and dependents of active service personnel, retired service personnel and their dependents, and dependents of members who died in active duty

Participating physician or provider (par)

A health care organization, physician, or provider who has entered into a contractual agreement with a specific insurance carrier

Nonparticipating physician or provider (Nonpar)

A health care organization, physician, or provider who has not entered into a contractual agreement with a specific insurance plan

Major medical

A health insurance policy designed to offset heavy medical expenses resulting from catastrophic or prolonged illness/injury.

Contract

A legally enforceable agreement when relating to an insurance policy; for workers' compensation cases, and agreement involving two or more parties in which each is obligated to the other to fulfill promises made

Point-of-service plan

A managed care plan in which members are given a choice as to how to recieve services, whether through a HMO, PPO, or fee-for-service plan

Health Maintenance Organization (HMO)

A medical insurance group that provides coverage of health services for a prepaid, fixed annual fee

Fee-for-service (FFS)

A method of payment in which the patient pays the health care organization or provider for service performed from an established schedule of fees

Medicare

A nationwide health insurance program for people age 65 and older, and certain disabled or blind persons regardless of income, administered by Centers for Medicare and Medicaid Services (CMS)

Physician's representative

A person on a physician's staff who obtains signature authorization to sign insurance claims

High Deductible Health Plan (HDHP)

A plan that requires individuals to pay a higher deductible to cover medical expenses before insurance plan payments begin; chosen to save money on premiums.

Precertification

A procedure done to determine whether treatment (surgery, tests, or hospitalization) is covered under a patient's health insurance policy

Medicare/Medicaid

A program that covers those persons eligible for both Medicare and Medicaid. In some areas, dual coverage may be referred to as Medi-Medi.

Daysheet

A register for recording daily business transactions (charges, payments, or adjustments); also known as daybook, daily log, or daily record sheet.

Cancelable

A renewal provision in an insurance agreement that grants the insurer the right to cancel the policy at any time and for any reason.

Preauthorization

A requirement of some health insurance plans to obtain permission for a service or procedure before it is done and to see whether the insurance program agrees that it is medically necessary

Maternal and Child Health Program (MCHP)

A state service organization to assist children younger than 21 years of age who have conditions leading to health problems

State Children's Health Insurance Program (SCHIP)

A state-sponsored program that provides free or low-cost health coverage to low-income children

Copayment (copay)

A type of cost-sharing that requires the patient to pay a predetermined fee to the health care provider at the time the service is rendered

Preferred Provider Organization (PPO)

A type of health benefit program in which enrollees receive the highest level of benefits when they obtain services from a physician, hospital, or other health care provider designated by their program as a "preferred provider"

Health Reimbursement Account (HRA)

A type of health plan which allows the employer to own the account and only the employer is eligible to make contributions. Usually offered in tandem with high-deductible health plans

Competitive Medical Plan (CMP)

A type of managed care organization created by the 1982 Tax Equity and Fiscal Responsibility Act to facilitate the enrollment of Medicare beneficiaries into managed care plans. CMPs are organized and financed much like HMOs but are not bound by all the regulatory requirements.

Independent or Individual Practice Association (IPA)

A type of managed care organization in which a program administrator contracts with a number or physicians who agree to provide treatment to subscribers in their own offices. Physicians are not employees of the MCO and are not paid salaries. They receive reimbursement on a capitation or fee-for-service basis.

Health Savings Account (HSA)

A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses such as deductibles, copayments, and coinsurance

Medical Savings Account (MSA)

A type of tax-free savings account that allows individuals and their employers to set aside money to pay for health care expenses

Expressed contract

A verbal or written agreement

Conversion privilege

An element of some group insurance policies which allow an insured to continue coverage under an individual policy if they are leaving the employer or organization or if the group contract is terminated.

Flexible Spending Account (FSA)

An employee sponsored health plan which allows individuals to put aside a certain amount of wages for qualified medical expenses and dependent care. Not subject to payroll taxes

Guarantor

An individual who promises to pay the medical bill by signing a form agreeing to pay or who accepts treatment constitutes an expressed promise.

Birthday rule

An informal rule that the health insurance industry has adopted for the coordination of benefits when children are listed as dependents on two parents' health plans. The health plan of the parent whose birthday comes first in the calendar year is the primary plan

Noncancelable policy

An insurance policy clause that prevents the insurance company from increasing premium rates and requires them to renew the policy until the insured reaches the age stated in the contract. Some disability income policies have noncancelable-terms.

Optionally renewable

An insurance policy renewal provision in which the insurer has the right to refuse to renew the policy on a date and may add coverage limitations or increase premium rates

Conditionally renewable

An insurance policy renewal provision that grants the insurer a limited right to refuse to renew a health insurance policy at the end of a premium payment period

Blanket Contract

Comprehensive group insurance coverage through plans sponsored by professional associations for their members

Veterans Health Administration (CHAMPVA)

Formerly known as Civilian Health and Medical Program of the Department of Veterans Affairs. A program for veterans with total, permanent, service-connected disabilities or surviving spouses and dependents of veterans who died of service-connected disabilities

Mandated benefits

Health service (treatment or procedure) required by state and/or federal law that may be given to a patient for a specific health condition. This health service may be delivered by certain types of health care providers for some categories of dependents, such as children placed for adoption. AKA Mandated services

Preexisting conditions

Illness or injury acquired by the patient before enrollment in an insurance plan

Assignment

In health care, this is an agreement signed by the patient to allow the insurance carrier to send payment directly to the service provider

State Disability Insurance (SDI)

Insurance that covers off-the-job injury or sickness and is paid for by deductions from a person's paycheck. AKA Unemployment Compensation Disability (UCD)

Health Care and Education Reconciliation Act (HCERA)

Legislation enacted in 2010 and divided into two titles, one addressing health care reform and the other addressing student loan reform. Modified certain provisions of PPACA

Exchanges

Organized marketplace where uninsured individuals and small-business owners can find health insurance coverage and select from all of the qualified health plans available in their area. AKA Health Benefit Exchanges

Emancipated minor

Person younger than 18 years of age who lives independently, is totally self-supporting, is married or divorced, is a parent even if not married, or is in the military and possesses decision-making rights.

Exclusions

Provisions written into the insurance contract denying coverage or limiting the scope of coverage.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Requires employers with 20 or more workers to extend group health insurance coverage in light of certain events. Coverage is extended to the employee and his or her dependents at group rates for up to 18 months. Qualifying events include being laid off, reduction in hours, or termination. Death or divorce of the employee extends coverage of the spouse and dependents for 36 months.

Unemployment Compensation Disability

See State Disability Insurance (SDI) AKA Temporary Disability Insurance (TDI)

Capitation

System of payment used by managed care plans in which physicians and hospitals are paid a fixed, per capita amount for each patient enrolled over a stated period regardless of the type and number of services provided; reimbursement to the hospital on a per-member/per-month basis to cover costs for the members of the plan. Can also mean a set amount to be paid per claim.

Revenue Cycle

The administrative and clinical functions that are required to capture and collect payment for services provided by a health care organization

Premium

The cost of insurance coverage paid annually, semiannually, or monthly to keep the policy in force

Date of Service (DOS)

The date the service is provided.

Accounts receivable management

The organization and administration of coding and billing in a medical practice or health care organization

Medically necessary

The performance of services and procedures that are consistent with the diagnosis in accordance with standards of good medical practice, performed at the proper level, and provided in the most appropriate setting. Must be established before the carrier can make payment

Cost sharing

The portion of the allowable charges (20% or 25%) after the deductible has been met that the TRICARE patient is responsible for

Indemnity health insurance

Traditional or fee-for-service health insurance plan that allows patients maximum flexibility and choice of provider for a fixed monthly premium. Medical services are paid at a percentage of covered benefits after an annual deductible is paid. Providers are paid each time a service is rendered on a fee-for-service basis. AKA indemnity benefits plan

Coordination of Benefits (COB)

Two insurance carriers coordinating the payment of benefits to avoid duplication.

Consumer-Directed Health Plan (CDHP)

Type of health insurance that allows the consumer to design and customize the plan based on their specific needs and circumstances. AKA Self-Directed Health Plan (SDHP)

Practice Management Software/System (PMS)

Used for scheduling, electronic health records, coding, billing, accounts receivable management, and other administrative functions

Deductible

a type of cost-sharing that requires a specific dollar amount to be paid by the insured before a medical insurance plan or government program begins covered health care costs

Exclusive Provider Organization (EPO)

a type of managed health care plan that combines features of HMO's and PPO's. It is offered to large employers who agree not to contract with any other plan. Regulated under state health insurance laws.

Encounter form

financial record source document used by providers and other personnel to record treated diagnoses and services rendered to the patient during the current encounter. AKA charge slip, multipurpose billing form, patient service slip, routing form, superbill, or transaction slip