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HEALTH INSURANCE: OPEN ENROLLMENT

What It All Means

A Glossary of Health Insurance Terms

September 29, 1997|LOS ANGELES TIMES

Adverse selection

A situation in which people with more serious and costly illnesses apply for membership in particular health insurance plans, resulting in those plans having higher medical costs than groups that have healthier members.

Allowable expenses

The necessary, customary and reasonable expenses that an insurer will cover.

Alternative treatment plan

Provision in managed-care arrangements for treatment outside of a hospital.

Ambulatory care

Medical care provided on an out-patient (non-hospital) basis.

Average length of stay

Measure used by hospitals to determine the average number of days patients spend in their facilities. A managed care firm will often assign a length of stay to patients when they enter a hospital and will monitor them to see that they don't exceed it.

Capitation

Method of payment for health services in which the insurer pays providers a fixed amount for each person served regardless of the type and number of services used. Some HMOs pay monthly capitation fees to doctors, often referred to as per-member, per-month amount.

Case management

A managed care technique in which a patient with a serious medical condition is assigned an individual who arranges for cost-effective treatment, often outside a hospital.

Coinsurance or co-payment

An amount a health insurance policy requires the insured to pay for medical and hospital service, after payment of a deductible.

Community rating

A method, based on geographical area, of calculating health insurance premiums for which employer groups and individuals pay the same rates.

Concurrent review

A managed care technique in which a representative of a managed care firm continuously reviews the charts of hospitalized patients to determine if they are staying too long and if the course of treatment is appropriate.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Federal law that requires employers with more than 20 employees to extend group health insurance coverage for at least 18 months after employees leave their jobs. Employees must pay 102% of the premium.

Cost containment

An attempt to reduce the higher-than-necessary costs surrounding the allocation and consumption of health care. These costs may arise from inappropriately used services and from care that can be provided in less costly settings without harming the patient.

Cost shifting

A phenomenon occurring in the U.S. health care system in which providers are reimbursed for their costs and subsequently raise their prices to other payers in an effort to recoup costs. Low reimbursement rates from government health care programs often cause providers to raise prices for medical care to private insurance carriers.

Deductible

An amount of covered expenses that must be paid by the insured before the insurance company begins to pay benefits.

Diagnosis-related groups (DRGs)

A method of reimbursing providers based on the medical diagnosis for each patient. Hospitals receive a set amount determined in advance based on the length of time patients with a given diagnosis are likely to stay in the hospital. Also called prospective payment system.

Employee Retirement Income Security Act (ERISA)

Federal law that establishes uniform standards for employer-sponsored benefit plans. Because of court decisions, law effectively prohibits states from experimenting with alternative health-financing arrangements without waivers from Congress.

Exclusions

Medical conditions specified in a policy for which the insurer will provide no benefits.

Exclusive provider organization (EPO)

A health care payment and delivery arrangement in which members must obtain all their care from doctors and hospitals within an established network. If members go outside, no benefits are payable.

Experience rating

A method of calculating health insurance premiums for a group based entirely or partly on the risks the group presents. An employer whose employees are unhealthy will pay higher rates than another whose employees are healthier.

Fee for service

A method doctors use to charge for their services, setting their own fees for each service or procedure they perform.

Fee schedule

Maximum dollar amounts that are payable to health care providers. Medicare has a fee schedule for doctors who treat beneficiaries. Insurance companies have fee schedules that determine what they'll pay under the policies.

First dollar coverage

A health insurance policy with no required deductible.

Gatekeeper

Term given to a primary care physician in a managed care network who controls patient access to medical specialists.

Gatekeeper PPO

A health care payment and delivery system consisting of networks of doctors and hospitals. Members must choose a primary care physician, use doctors in the network, or face higher out-of-pocket costs.

Health Insurance Purchasing Cooperative (HIPC)

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