Sunday, 22 July 2012

Health insurance: GLOSSARY OF TERMS Part1 A-D

Accidental Death and Dismemberment
A policy or a provision in a policy which pays benefits if the insured dies, loses his or her sight, or loses two limbs as the result of an accident. A lesser amount, usually half, is payable for the loss of one eye, arm, leg, hand, or foot. Generally companion coverage to group term life insurance, LHSIC offers this as a benefit in its individual health insurance policies.

A designation indicating that an insurer’s networks or a managed care organization has been evaluated and has met the standards of a certifying body, such as the National Committee for Quality Assurance (NCQA) or the Utilization Review Accreditation Commission (URAC). The designation can help purchasers, regulators, and consumers assess managed care plans.

An accounting term to describe the practice of recognizing an expense or revenue that has been realized but has not yet been recorded.

ACR (Adjusted Community Rate)
The equivalent of the premium that an HMO organization would have charged to Medicare+Choice enrollees independently of HCFA payments for Medicare covered services, using as a basis the same rates it charges to its non-Medicare enrollees and adjusting for Medicare enrollees’ utilization.

A provision in most group health insurance policies 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 does return to work. Under HIPAA, the employee is eligible to enroll even though he is not at work, but he may not be eligible for benefits.

Activities of Daily Living (ADL)
A term usually used in disability or long term care policies. Everyday living functions and activities performed by individuals without assistance. These functions would include mobility, dressing, personal hygiene and eating.

Activities of Daily Living (ADL) Standards
Used to assess the ability of an individual to live independently, measured by the ability to perform unaided such activities as eating, bathing, toiletry, dressing, and walking. ADL standards are sometimes discussed as a way to measure or define eligibility for long term care.

Actual Charge
The actual amount charged by a provider for medical services rendered. Sometimes referred to as “Billed Charge.”

Acute Care
Skilled, medically necessary care provided by medical and nursing personnel in order to restore a person to good health.

Additional Monthly Benefit
Riders added to disability income policies to provide additional benefits during the first year of a claim while the insured is waiting for Social Security benefits to begin.

Accelerated Life Benefit
Benefits of a life insurance policy paid in advance of death to an insured in certain specific circumstances such as contracting cancer or AIDS or suffering a heart attack or a stroke.

Adjusted Average Per Capita Cost (AAPCC)
The estimated average cost of Medicare benefits established on a per county basis -factors include age, sex, Medicaid, institutional status, disability, and end stage renal disease status and working aged. Used to determine payments to cost contractors for Medicare benefits.

Administrative Expense
A company’s operating costs, fees for medical examinations and inspection reports, underwriting, printing costs, commissions, advertising, agency expenses, premium taxes, salaries, rent, etc. Such costs are a component of premium. See also Retention.

Administrative Services Only (ASO)
A contract under which a third party will deliver administrative services to an employer for its health benefits plan. Usually the plan is self-insured (the employer is at risk for the cost of health care services). Sometimes referred to as Administrative Service Contracts (ASCs).

The number of hospital admissions for each 1,000 members of the health plan.

The number of admissions to facilities, including outpatient and inpatient facilities.

Adverse Selection
A situation in which a carrier enrolls a poorer risk than the average risk of the group.

Age Change
The date on which a person’s age, for insurance purposes, changes. For products that are rated specific to a person’s age, changes in rates due to age are based on the age of the person at his last birth date. Rating structures may vary to use age bands (such as 1, 5 or 10 year age bands) and use age at last birthday, age at nearer birthday, or age at next birthday in placing persons within age bands. Generally, rates for individual products are based on a person’s specific age while rates for group products are based on a compositing of the age for all members and adjusting rates accordingly.

Age/Sex Factor
Compares the age and sex risk of medical costs of one group relative to another. An age/sex factor above 1.00 indicates higher than average risk of medical costs due to that factor. Conversely, a factor below 1.00 indicates a lower than average risk.

Aggregate Indemnity
 A maximum dollar amount that may be collected by the claimant for any disability, for any period of disability, or under the policy as a whole. 

Allowable Charge
Under Medicare, this term is the lesser of the actual charge, the customary charge and the prevailing charge. It is the amount on which Medicare will base its Part B payment. Under LHSIC and HMOLA policies, the Allowable Charge is the lesser of the billed charge or an amount set by the Company as reasonable for the service.

Alternative Delivery Systems
Systems, which cover health, care costs, other than on the usual fee-for-service basis. Could include HMOs, IPAs, PPOs, etc.

Alternative Medicine
Nontraditional health care treatments, such as chiropractic services and acupuncture.

Ambulatory Care
Care that does not require hospitalization.

Ambulatory Setting
Institutions such as surgery centers, clinics, or other outpatient facilities which provide health care on an outpatient basis.

Ancillary Services
Additional services provided by a facility (other than room and board charges) such as X-rays, anesthesia, lab work, etc.

Approved Charge
Amounts paid under Medicare as the maximum fee for a covered service.

An authorization to pay benefits directly to the provider. Under Medicare, payments may be assigned to participating providers only. Under LHSIC policies, assignment of benefits is prohibited. Louisiana law requires honoring assignments to hospitals; this law may be preempted by federal law (ERISA) for group plans other than church and governmental plans and for the federal employees benefit plan (FEP).

Average Cost Per Claim
The total cost of administrative and/or medical services divided by the number of units of exposure such as costs divided by number of admissions, or cost divided by number of outpatient claims, etc.

Average Length of Stay (ALOS)
 The average number of days in a hospital for each admission. The formula for this measure is a follows: total patient days incurred, divided by the number of admissions and discharges during the period.

Average Wholesale Price (AWP)
A term usually applicable to prescription drugs. It is the average of prices charged by manufacturers for a particular drug.

Balanced Budget Act of 1997 (BBA)
Federal legislation that established Medicare+Choice, which broadens the array of health plans available to Medicare recipients. This Act established a new Medicare Part C, allowing Medicare beneficiaries the option of choosing the Medicare fee-for-service (FFS) program (Parts A and B) or to enroll in Medicare+Choice plans, effective January 1, 1999.

Bed Days/1,000
The number of inpatient hospital days per 1,000 members of the health plan.

Benefit Period
A period of time during which benefits may be provided or limited. Usually a calendar year, but may be shorter for certain benefits (ex. a quarter for prescription drugs).

Birthday Rule
Used when coordinating benefits for a person covered by more than one policy. This method determines which parent’s medical coverage will be primary for dependent children: the parent whose birthday falls earliest in the year will be considered as having the primary plan. See Coordination of Benefits.

Capitation (CAP)
A rate paid, usually monthly, to a health care provider. In return, the provider agrees to deliver the health services agreed upon to any covered person.

Usually a commercial insurer contracted by the Department of Health and Human Services to process Medicare Part B claims payments. BCBS Arkansas is the Medicare Part B carrier for Louisiana.

Carry Over Provision
In major medical policies, these provisions allow an insured who has submitted no claims during the year to apply any medical expenses incurred in the last three months of the year toward the new calendar year’s deductible. Many LHSIC health policies carry this provision.

Type of service separately designed and contracted to an exclusive, independent provider. For example, mental health care, drug and vision coverage are often carve-out services.

Case Management
The assessment of a person’s long term care needs and the appropriate recommendations for care, monitoring and follow-up as to the extent and quality of services to be provided.
 Case Manager
A person, usually an experienced professional, who coordinates the services necessary under the case management approach.

Case Mix
The relative frequency and intensity of hospital admissions or services, which reflects the different needs and uses of hospital resources. Case mix can be measured based on patients’ diagnoses or the severity of their illnesses, the utilization of services, and the characteristics of a hospital.

Case Rate
Flat fee paid for patients’ treatment based on their diagnosis and/or presenting problem. For this fee, the provider covers all of the services the patient requires for a specific period of time.

Centers of Excellence
In the insurance industry, this term refers to a network of health care facilities selected for specific services and determined to be exemplary based on criteria such as experience, outcomes, and effectiveness. BCBSA has designated Centers of Excellence for organ transplant procedures (also known as Blue Quality Centers for Transplant (BCCT)).

Certificate of Authority (COA)
A license issued by the state Department of Insurance (in Louisiana) to operate an insurer or HMO (Health Maintenance Organization).

Chronic Case Management
The coordination of care by a health care professional for an individual whose illness or condition is characterized by slow progression and/or long continuance such that care is required on an ongoing basis.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
Part of the Uniformed Services Health Benefits Program which supplements the medical care available for families of active, deceased, and retired military personnel.

Claims Adjudication
The processing and payment of claims.

Closed Access
A benefit structure under which covered insureds must select a primary care physician. That physician is the only one allowed to refer the patient to other health care providers within the plan. Also called Closed Panel or Gatekeeper model.

The portion of the cost for care received for which an individual is financially responsible. Usually this is determined by a fixed percentage, as in major medical coverage. Often co-insurance applies after a specific deductible has been met and may be subject to an individual out-of-pocket limit.

 Community Rating
Under this rating system, the charge for insurance to all insured’s depends on the medical and hospital costs in the community or area to be covered. Individual characteristics of the insured’s are not considered at all. Louisiana law imposes modified community rating for groups under 35 in size and for individual coverage.

Composite Rate
One rate for all members of the group regardless of their status as single or members of a family.

Comprehensive Major Medical
A plan of insurance which has a low deductible, high maximum benefits, and a coinsurance feature. It is a combination of basic coverage and major medical coverage which has virtually replaced separate hospital, surgical and medical policies with each having its own deductible requirements.

Concurrent Review
A case management technique which allows insurers to monitor an insured’s hospital stay and to know in advance if there are any changes in the expected period of confinement and the planned release date.

Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986
Federal legislation applicable to groups of 20 or more, providing for a continuation of group health care benefits under the group plan for a period of time when benefits would otherwise terminate due to loss of employment or eligibility as a dependent. Coverage may be continued for up to 18, 36, or 54 months, depending on the circumstances of the loss of coverage.

Allows continuation of group health insurance coverage under certain conditions. Louisiana law provides for continuation for employees losing employment, if not eligible for COBRA, and for surviving spouses age 55 and over, as well as for their dependents.

The right to receive an individual policy after group coverage ends. Once mandatory under Louisiana law, now persons entitled to conversion are covered under the Louisiana Health Plan’s “HIPAA” pool. BCBSA requires Blue Plans to issue conversion policies to persons covered by a sister Blue Plan when they move to the Blue Plan’s service area.

Coordination of Benefits (COB)
A policy provision which helps determine the primary carrier in situations where an insured is covered by more than one policy. This provision prevents an insured from receiving more than 100% coverage. Traditionally appears only in group policies but trend is moving toward allowing COB between group and individual policies. See also Birthday Rule.


This is a cost sharing arrangement where the covered person pays a specified amount for various services and the health care provider pays the remainder. The covered person usually must pay his or her share when the service is rendered. Similar to coinsurance, except that coinsurance is usually a percentage of certain charges where the co-payment is a dollar amount.

Cost of Living Benefit
An optional disability benefit where the monthly benefit will be increased annually once the insured is on claim for 12 months.

Covered Expenses
Health care expenses incurred by an insured or covered person that qualifies for reimbursement under the terms of a policy.

Covered Person
A person for whom premiums are paid and who also meets eligibility requirements.

The process of approving a provider, based on certain criteria, to provide health care services or participate in a health plan.

Current Procedural Terminology (CPT)
This terminology includes medical services and procedures performed by physicians and other providers of health care. The health care industry uses it as a standard for describing services and procedures.

Custodial Care
Care that is primarily for meeting personal needs such as help in bathing, dressing, eating or taking medicine. It can be provided by someone without professional medical skills or training but must be according to doctor’s orders.

Date of Service
For professional claims, the date of service is the date that the health service was provided. For hospital claims, this is the date of admission.

Death Spiral
The potentially destructive cycle that occurs when the health status of a pool of insured lives declines as a result of: (1) HMO’s penetrating an indemnity plan, pulling off healthier employees and causing the indemnity plan’s costs to significantly increase as measured on a per member basis; (2) The discontinued enrollment of new, healthy members into a block of business; or (3) The election of healthier small group members of an association to seek coverage elsewhere (outside the association) by shopping rates. Since rates are established based on the pool of individuals covered and the health status of those individuals significantly deteriorates, the rates for the pool will increase, causing the selection to continue to occur.


The amount a policyholder must pay for health care, as established under the terms of his or her contract, before insurance benefits begin.

Dependent Coverage
Insurance coverage on the head of a family that is extended to his or her dependents, including only the lawful spouse and unmarried children who are full time students or are mentally or physically impaired and incapable of self support. “Children” may be step, foster, and adopted, as well as natural and, under the Louisiana law, grandchildren who are in the legal custody of, and residing with, the grandparent. The age limit in Louisiana is 24, but coverage is not limited by age if the child is impaired and incapable of self-support. LHSIC policies extend the age limit to 25.

Diagnosis Related Groups (DRGs)
Set reimbursement for a hospital stay based on a given diagnosis, regardless of the length of stay or the level of services provided. Adjustments may be made for inordinately short or long stays as compared to the norm. Used by Medicare as well as other insurers.

Disability Income Insurance
A form of health insurance that provides periodic payments to replace income, actually or presumptively lost, when the insured is unable to work as a result of sickness or injury.

Discharge Planning
Determining what the patient’s medical needs will be after discharge from a hospital or other inpatient treatment.

Disease Management
A comprehensive integrated approach to care designed to influence the progression of disease within select patient populations. In disease management, the emphasis is on prevention, proactive case management, patient education, and population-based interventions.

Dread (or Specified) Disease Policy
Coverage for medical expenses arising out of diseases named in the contract. LHSIC offers a Cancer and Serious Disease (CSD) policy offering three benefit options, which covers cancer, poliomyelitis, leukemia, diphtheria, tetanus, spinal meningitis, encephalitis, rabies, and sickle cell anemia.

Drug Utilization Review (DUR)
A method for evaluating or reviewing the use of drugs in order to determine the appropriateness of the drug therapy.

Durable Medical Equipment (DME)
Reusable medical equipment, such as hospital beds and wheelchairs, which can be used by patients either in a hospital or a home setting.


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