Sunday, 22 July 2012


Paid Claims
Amounts paid to providers based on the health plan. 

Paid Claims Loss Ratio 
Paid claims divided by total premiums. 

Participating Provider 
(1) A health care provider under contract with a health insurer or managed care organization. (2) A health care provider approved by Medicare to participate in the program and receive benefit payments directly from carriers or fiscal intermediaries. 

The number of employees enrolled compared to the total number eligible for coverage. LHSIC usually requires a minimum participation percentage of 75%. Minimum participation percentages are no longer legally required in Louisiana. 

Peer Review 
Review of health care provided by a medical staff with training equal to the staff which provided the treatment. 

Per Member Per Month (PMPM )
Refers to the cost to cover one member for one month. 

Pharmacy and Therapeutics (P&T) Committee 
A panel of physicians - usually from different specialties - who advise the health plan regarding the proper use of prescription drugs. 

Pharmacy Benefit Manager (PBM)
A managed care organization for prescription drug benefits, using discounted pharmacy networks and utilization management to control costs. 

Physician Contingency Reserve (PCR) 
A portion of the claim which is deducted and withheld by the health plan before payment is made to the physician. It serves as an incentive for proper quality and utilization of health care. A portion of this reserve may be returned to the physician or to pay claims where the plan needs additional funds. It is also sometimes called “withhold.” 

Point-of-Service (POS) Plan
A health plan that is a “hybrid HMO” allowing the covered person to choose to receive a service from a participating or nonparticipating provider, with different benefit levels associated with the use of participating providers. 

Pre-Admission Authorization
A cost containment feature of many group medical policies whereby the insured must contact the insurer prior to a hospitalization and receive authorization for the admission. LHSIC and HMOLA require preauthorization for organ transplants. 

Pre-Admission Certification 
A cost containment feature of many group medical policies whereby the insured must contact the insurer prior to a hospitalization and receive certification for the admission, as being medically necessary and in an appropriate setting. 

Pre-existing Condition 
A physical condition that existed prior to the effective date of a policy. HIPAA and state law limit the time preceding the effective date of a policy during which a condition exists to be considered preexisting. In many health policies these are not covered until after a stated period of time, called a “waiting period” has elapsed, usually one year. 

Preferred Provider Organization (PPO) 
An organization of contracts with hospitals and physicians who provide services to insurance company clients. These providers are listed as preferred and the insured may select from any number of hospitals and physicians without being limited as with an HMO. The insured’s cost sharing is less if he utilizes a PPO provider. 

Premium Stabilization Agreement
A financial agreement LHSIC offers to a fully insured merit rated (100+) group, designed to allow a group to accumulate a source of funds to offset future rate increases. The nature of the agreement is to define a calculation of net ending financial results for a policy year. Should the group terminate coverage, at the end of 15 months any remaining positive balance after all expenses have been charged are returned to the group. Under this agreement, premiums paid in excess of claims and administrative expenses are accumulated in a fund, the balance of which can be used to offset rate increases. 

Preventive Care 
This type of care is best exemplified by routine physical examinations and immunizations. The emphasis is on preventing illnesses before they occur. 

Primary Care 
Basic health care provided by doctors who are in the practice of family care, pediatrics, and internal medicine. Louisiana law requires insurers to recognize OB/GYNs as primary care physicians. 

Prior Authorization
Procedure used in managed care to control utilization of services by requiring prior review and approval. Certain procedures or drugs may require prior authorization. 

Prospective Reimbursement 
A system where hospitals or other health care providers are paid annually according to rate of payment which have been established ahead of time. 

Quality Assurance 
A formal set of activities to review and affect the quality of services provided. Quality assurance includes quality assessment and corrective actions to remedy any deficiencies identified in the quality of direct patient, administrative, and support services. 

Quality Improvement
A continuous process that identifies problems in health care delivery, tests solutions to those problems, and constantly monitors the solutions for improvement. 

Quality Improvement System for Managed Care (QISMC)
An initiative backed by the Health Care Financing Administration to improve the public health by developing a uniform quality oversight system. The initiative addresses quality assessment and performance improvement, enrollee rights, health services management, and delegation. 

Reasonable and Customary Charges 
The charge for medical services which refers to the amount approved for payment. Customary charges are those which are most often made by a provider for services rendered in that particular area. Sometimes called “C&R.” 

A monetary amount that is returned to a payor from a prescription drug manufacturer based upon utilization by a covered person or purchases by a provider. 

Occurs when a physician or other health plan provider receives permission to consult another physician or hospital. 
Reinsurance is a transaction whereby one insurer, usually for a fee or premium, agrees to indemnify another insurer against all or part of a loss (risk) that the latter incurs under the insurance policies that it issues. The indemnifying insurer assumes the risk and is known as the “Reinsurer.” The insurer being indemnified cedes the risk and is known the “Reinsured.” 

Relative Value Schedule 
A surgical schedule which basically compares the value of one surgical procedure to another and establishes the surgical fee to be paid. 

Relative Value Unit 
Sometimes used instead of dollar amounts in a surgical schedule, this number is multiplied by a conversion factor to arrive at the surgical benefit to be paid. 

Resource Based Relative Value Scale (RBRVS) 
This is a classification system which is used to determine how physicians will be compensated for services provided under Medicare benefits. May be utilized by private insurers. 

Restoration of Benefits 
A provision in many Major Medical Plans which restores a person’s lifetime maximum benefit amount in small increments after a claim has been paid. Usually, only a small amount ($1,000 to $3,000) may be restored annually. 

The portion of the premium which is used by the insurance company for administrative costs. 

Second Surgical Opinion 
A cost containment technique to help patients and insurance companies determine whether a recommended procedure is necessary, or whether an alternative method of treatment could accomplish the same result. Some health policies require a second surgical opinion before specified procedures will be covered, and many policies pay for the second opinion. 

Section 125 Plan 
A plan which provides flexible benefits. This plan qualifies under the IRS code which allows employee contributions to meet with pre-tax dollars. Also called a Cafeteria Plan. 

Self-Funded Plan 
Plan of insurance where an employer, which has fairly predictable claim costs, pays the claims rather than an insurance company. See also Administrative Services Only and Third Party Administrator. 

Service Area 
The area, allowed by state agencies or by the certification of authority, in which a health plan can provide services. 

Short-Term Disability Insurance 
A group or individual policy usually written to cover disabilities of 13 or 26 weeks duration, though coverage for as long as two years is not uncommon. Contrast with Long-Term Disability Insurance. 

Split Dollar Coverage 
An arrangement of Disability Income Insurance in which the employer and employee each pay a portion of the premium. The employer purchases coverage for the sick pay or paid disability leave provided as an employee benefit. The employee pays for disability coverage beyond what the employer provides as a benefit. 

Stop-Loss Insurance 
This is a type of reinsurance which can be taken out by a health plan or self-funded employer plan. The plan can be written to cover excess losses over a specified amount either on a specific or individual basis, or on a total basis for the plan over a period of time such as one year. 

Subacute Care
An intermediate level of care provided to medically fragile patients who are too ill to be cared for at home, but require medical and nursing services at a higher intensity level than is offered in a typical skilled nursing facility. Subacute care may be provided in long-term care hospitals, hospital-based skilled nursing units, transitional, or intermediate care units within community-based nursing facilities, as well as in certain other settings. 

This term has two meanings - first, it refers to a person or organization who pays the premiums, and second, the person whose employment makes him or her eligible for membership in the plan. 

Summary Plan Description
This is a recap or summary of the benefits provided under the plan. It is used most often with employees covered by self-funded plans. 

Supplemental Medical Insurance (SMI) 
Part B of Medicare is a voluntary program which generally covers physician’s services and various outpatient services. A premium is charged for electing Part B coverage. 

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) 
This act defines the primary and secondary coverage responsibilities of the Medicare program and also the provisions to be used by health plans in their contracts with the HCFA (Health Care Financing Administration). 

Ten Day Free Look 
A notice, placed prominently on the face page of the policy, advising the insured of his or her right to examine a health policy, and if dissatisfied return the policy within ten days for a full refund of premium and no further obligation. 

Tertiary Care 
Services provided by such providers as thoracic surgeons, intensive care units, neurosurgeons, etc. 

Third Party Administrator (TPA) 
An entity that provides administrative services for employers and other associations having group insurance plans. TPA’s usually administer employer self-funded plans but may act as a liaison between an employer and its insurer. 

Third-Party Payor 
This refers to any organization such as Blue Cross/ Blue Shield, Medicare, Medicaid, or commercial insurance companies which is the payor for coverages provided by a health plan. 

Trend Factor 
The factor applied to rates which allows for such changes as increased cost of medical providers, the cost of new and expensive medical technology, etc. 

Triple Option 
A plan where employees have their choice, among different types of provides such as HMO, PPO, or basic indemnity plan. Usually, their choice depends on how much they want to pay for the coverage. 

An insurer’s procedure for analyzing a group or individual applicant to determine whether or not to offer insurance coverage and, if so, at what price. Insurers weigh risk assessment and feasibility based on an applicant’s past usage and health-risk factors. 

Uniform Billing Code of 1992 (UB-92) 
A federal directive that states how a hospital must provide their patients with bills, itemizing all services included and billed on each invoice. The UB-92 is the standard bill submitted by hospitals to insurers. 

A measure of medical service consumption. 

Utilization Review 
A formal assessment of a patient’s course of treatment to evaluate the appropriateness of care. 

Waiting Period 
The period of time between the beginning of coverage and the start of benefits. In case of disability insurance, this is called an “elimination period.” In health policies it means either (1) the time between the effective date of coverage and the date benefits will be paid for a pre-existing condition (“pre-ex waiting period”) or (2) the time between an employee’s date of hire and the date on which he is eligible for benefits under his plan. 


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