Accreditation Way to document the fact that health care institutions meet the standards set for offering health benefits.

 

Active life reserve Reserves often found with trusted self-funded plans, set aside for benefits that increase with advancing attained age of participants.

 

Administrative-services-only contract Agreement in which a third party provides administrative services to an employer group. Usually used by employers who utilize self-funded plans. The employer is at risk for the cost of the health care services provided under the agreement.

 

Aggregate excess-loss coverage Coverage that picks up after claims reach a certain dollar amount for the entire plan for a plan year; usually set at 120 % to 125 % of expected claims.

 

Arbitration Dispute is given to a third party for a final and binding decision; most common method of alternative dispute resolution.

 

Capitation Paid a fixed amount in advance.

 
Capitation arrangements Standard way of paying HMO physicians, usually a fixed per member per month (PMPM) payment or a percentage of the premium payment for contracted services.

 

Census data factors Includes age, sex, and dependent status.
Centers of excellence Medical institutions used by many managed care plans that provide advanced form of treatment (e.g., cancer treatments and organ transplants).

 
Complaint Used for situations where an enrollee's expectations have not been met.
Concurrent Review Verifies the need for continued hospitalization and determines the appropriateness of treatment in a hospital setting.

 

Continuous quality improvement (CQI) or total quality management Continual process of improving quality of the total health care organization, which is customer-focused and proactive; attempts to prevent problems and, if problems occur, determine the causes and fix the problems and the processes.

 

Coordination of benefits
(COB)		 Procedure for limiting benefits from two or more group carriers to 100% of covered expenses to eliminate excess reimbursement.
Covered person (participant, eligible employee) Defined by some agreements as a person eligible for benefits under the plan; some agreements have a definition that may or may not be the same as the plan.

 
Credentialing Method of reviewing the previous work history, malpractice history, education, training, practice history, utilization and medical board certification of a provider to determine if the provider meets the criteria of selection to a managed care organization.

 

Defensive medicine The use of expensive and often unnecessary services to avoid malpractice suits.

 
Dual option Offers employees a choice between two plans for better suitability to coverage needs.
Employer accounting The manner in which the plan is reflected in the employer's accounts as well as in any footnote disclosures. Accounting principles are issued by Financial Accounting Standards Board (FASB), of Stamford, Connecticut.

 

Effective case management The supervision of medical and ancillary services to a patient, usually with a catastrophic disorder, who would otherwise require long-term inpatient care.
Employment Retirement Income Security Act of 1974 (ERISA) Designed to create a uniform system of regulating self-funded employee benefit plans, some of which include health care benefits.

 

EOB Explanation of benefits.

 

Exclusive provider organizations 
(EPOs)

 

 Arrangement consisting of a group of providers having contractual arrangements with a sponsoring group, (e.g., a third-party administrator, employer or insurer); the roots of the EPO are in the PPO, but the EPO has a more restrictive selection of providers and credentialing process and is more tightly controlled. Organized similar to PPOs, but beneficiaries are limited to participating providers and no benefits are paid for care outside the network.

SEE: PPO

 
Experience stabilization reserve Contingency type reserves that are sometimes found with modified self-funded plans (e.g., the employer, instead of receiving an experience refund, leaves the refund with the insurer to offset against future rate increases.).

 

Federal Employee Health Benefits Program (FEHBP) Provides health benefits to active and retired federal civilian employees and dependents.

 

Federal Health Maintenance Organization (HMO) Act of 1973 Provides federally qualified HMOs with a limited preemption from restrictive state laws.

 

Fiduciary (under ERISA) One who performs duties involving discretionary authority or control, who offers asset advice and who has administrative responsibility.

SEE: ERISA

 

Individual (or independent) practice association (IPA) HMO contracts either individually or in organized groups, with physicians in private practice; the IPA is separate entity legally; in most cases HMOs compensate IPAs through the use of primary care capitation arrangements. 

SEE: Capitation arrangements

 

Intermediary Firm that performs services for the excess-loss carrier (e.g., marketing, pricing, service).

 
IPA-model HMO Physicians are independent contractors to the payers; the HMO can either contract directly with individual physicians and other providers (known as direct-contracting IPA-model HMO) or contract with an IPA.

 

Managed care A system that combines the financing and delivery of proper health care services to enrollees. Managed care uses one or more of five elements: arrangements with providers who furnish comprehensive health care services to enrollees; specific standards for selecting health care providers; utilization reviews and formal programs that instill ongoing quality improvements; emphasis on continuing health, thereby reducing the use of services; financial incentives are offered for enrollees to use plan providers and procedures.

 
Managed care organizations
(MCOs)		 Organizations that make health care services available to the organization's members by means of plans set up through provider contracting; provide alternative to traditional group insurance.

 

Medical savings account (MSA) Account set up for and owned by an individual; funds are provided either by the individual or by the employer; funds are used to pay un-reimbursed medical expenses.

 
Member satisfaction surveys Help MCOs monitor the ability to deliver products and services that best meet the needs of members.

 

Negotiated fee Set fee agreed upon by both the plan and the provider for a certain service, generally at a discount from what the provider would usually charge.

 

Outpatient pre-certification Common method of pre-authorization used to determine the appropriateness of outpatient procedures; also used to monitor home health care.

 

Peer review Quality assurance programs use physicians to monitor care delivered by other physicians.
Plan Accounting The records that demonstrate how the plan or trust is shown in required reporting and disclosure forms. Governed by the Code, ERISA, DOL and AICPA.

 
Point-of-service (POS) Combine features of HMOs and PPOs; primary care physician is used as gatekeeper to control referrals to specialists; enrollee may use out-of-network providers at a reduced benefit level but must file claims for the out-of-network services; Enrollees may seek care in or out of the network at each point of service. Essentially, POS provides flexible cost management programs; offering managed care, while allowing services outside the plan at higher out-of-pocket cost.

 
Pre-admission certification Determines before the patient is admitted to the hospital the appropriateness of setting, procedure, and length of stay.

 
Preferred Provider Arrangement Model Act Requires plans to inform enrollees that emergency services will be reimbursed if a preferred provider from the network could not be reached.
Preferred Provider Organization (PPO) A managed care arrangement involving a group of physicians, hospitals and other providers who have contracts with a sponsoring group.

SEE: EPO

 
Quality Assurance (QA) Set of activities, possibly including correction methods, that measure the characteristics of health care services.

 
Referral authorization Common method of pre-authorization for referral to specialists and specialized care.

 
Retrospective rating Retrospectively setting rates based on the actual emerging experience of a group.
Specific attachment point Deductible amount; clarifies how the specific is applied to family claims.

 
Specific excess-loss coverage Coverage that picks up after an individual has claims over a certain dollar amount during a plan year.

 
Staff-Model HMO Often owns the clinical facilities used. Physicians are directly employed by the HMO; physicians only provide services to enrollees of the HMO; physicians are salaried, but may receive incentive payments or bonuses based on performance (i.e., Kaiser Perm.).
Subrogation Contract provision allowing MCOs to recover all or a potion of claim payments if the enrollee is entitled to recover the amounts from a third party (e.g., another carrier, person or company that is liable for the illness of or injury to the claimant).

 
Underwriting The process of assessing the risk of a group or population to be enrolled.
Utilization review Method of ensuring quality care within parameters of cost containment; evaluates appropriateness of health care before it is delivered.