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.
Participation
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.”
Rebate
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.
Referral
Occurs when a physician or other health plan provider
receives permission to consult another physician or hospital.
Reinsurance
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.
Retention
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.
Subscriber
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.
Underwriting
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.
Utilization
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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