Life & Health Chapter 14 | Health Chapter 5: Health Insurance Providers

Administration Services Only (ASO) Plan

This is a contract in which a self-funded employee welfare benefit plan contracts with an insurer for administrative services while remaining responsible for the cost of claims. The insurer acts as a third-party administrator (TPA).

Adverse Selection

This describes the reality that persons who are most likely to suffer a loss are also the most likely to seek insurance. The term also describes the negative financial impact when the percentage of high-risk participants is too high.

Blue Cross

This is the part of Blue Cross and Blue Shield that covers hospital services.

Blue Cross and Blue Shield

This is an insurance service provider that pays participating medical providers directly for a subscriber’s treatment rather than reimbursing the insured.

Blue Shield

This is the part of Blue Cross and Blue Shield that covers the treatment costs of physicians and other medical providers.

Capitation

This is a method for compensating healthcare providers and is calculated per patient rather than per service. HMOs, pay providers a flat amount per person. If the person never uses the service, the HMO wastes the capitation fee. If the subscriber heavily utilizes HMO services, the provider loses money.

Case Management (Utilization Review)

This is the process by which a specialist within a person’s insurer reviews potentially large claims to discuss treatment alternatives with the insured.

Change of Life Event

This is a commonly experienced occurrence that tends to cause individuals to buy insurance that’s unrelated to a specific increase in risk. Marriage, divorce, or the birth of a child are common “change of life” events.

Certificate of Insurance

This is the document that’s received by group plan participants, which demonstrates their coverage under a group plan. Participants are covered under a single master contract and don’t receive separate policies.

Closed-Panel Network

This is a form of health maintenance organization (HMO) in which providers deliver services within HMO facilities.

COBRA

See Consolidated Omnibus Budget Reconciliation Act.

COBRA Group

A group that has 20 or more employees and must comply with COBRA mandates.

COBRA Qualifying Event

See Qualifying Event (COBRA).

Co-Insurance

This is a cost-sharing formula in which subscribers pay a percentage of their medical costs up to an annual maximum.

Community Rating

This is a measurement that’s used to project a client’s level of risk. Insurers use it when underwriting and setting the premium for small group insurance plans. The insurer bases the client group’s projected claims experience on the surrounding community’s claims experience and costs.

Concurrent Review

This is a form of utilization review in which health care is reviewed as it’s being provided. The reviewer monitors the appropriateness of care with a focus on cost control.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA mandates that employers provide employees and their qualified beneficiaries with continuing coverage through the company’s group health plan following a qualifying event.

Contributory Plan

This is a group insurance plan in which the employees and the employer share the cost of coverage.

Conversion Privilege

This privilege allows individuals who are covered under group plans to convert their coverage to individual policies when their access to insurance through their group plan ends.

Co-Payment or Co-Pay

This is a fixed dollar amount that HMO subscribers pay per visit. Unlike co-insurance, the primary purpose of the co-pay is to cover administration costs.

Creditable Coverage

This is defined by HIPAA as previous coverage under another insurance plan when there has not been a break in coverage that lasts 63 days or longer. When an individual changes plans, creditable coverage for pre-existing conditions reduces or eliminates any new waiting period.

Dental Maintenance Organization (DMO)

This is a health maintenance organization for dental services. Dentists contract with the DMO to provide services at agreed fees. Subscribers have a primary care dentist (PCD) who manages care and provides referrals. Subscribers are responsible for co-pays and, in some cases, co-insurance.

Employee Welfare Benefit Plan

This is an ERISA compliant plan that’s funded by employers and provides employees benefits other than pensions.

Enrollment Card

This must be completed and signed by a new employee during the open enrollment period to enroll in group insurance.

Enrollment Period

This is the limited period during which all members may sign up for a group plan. This period typically happens once per year and is for a set number of days.

Evidence of Insurability

This is considered proof that a prospective group plan participant is an acceptable medical risk. Group plans have traditionally required evidence of insurability when individuals attempt to enroll outside of established enrollment periods to control adverse selection.

Evidence of Insurance

See Certificate of Insurance.

Exclusive Provider Organization (EPO)

This is a hybrid of an HMO and a PPO. An insured has direct access to any in-network provider without a referral, but no coverage is provided for out-of-network care unless there’s an emergency.

Experience Rating

This is a measurement that’s used to project a client’s level of risk when underwriting large group insurance. Insurers use it to help set the premiums for group plans. The insurer bases the client group’s projected claims experience on the average number and cost of claims in past years.

Extension of Benefits

This provision allows a covered individual to continue receiving benefits for a covered claim, even after the individual is no longer eligible for coverage. The extension period may be a fixed period or may last as long as the claim, depending on the contract.

Franchise Health Plans (Wholesale Plans)

These plans provide health insurance coverage to members of an association or professional society. Individual policies are issued to individual members, and the association serves as the plan sponsor. Premium rates are typically discounted for franchise plans.

Gatekeeper

See Primary Care Physician.

Group Health Insurance

This is insurance for a group of people, often employees of a company, under one master contract. Group health plans are available to employers, trade and professional associations, labor unions, credit unions, and other organizations. Insurance is extended to individuals in the group through the master contract. Group insurance doesn’t require individual underwriting or evidence of insurability.

Group Model HMO (Closed Panel)

Under this model, the HMO pays a capitation or a predetermined price for the provider group, while the group pays the physicians for the services they provide.

Health Insurance Portability and Accountability Act (HIPAA)

This is a federal law that was passed in 1997 which guarantees American workers have the ability to transfer and continue health insurance coverage when they change or lose their jobs. HIPAA has also strengthened privacy protections.

Health Maintenance Organizations (HMOs)

This is an organization that offers comprehensive prepaid health care services to its subscribing members. HMOs emphasize preventative care, but they also combine the delivery and financing of healthcare. Subscribers pay a fixed periodic fee rather than a fee per service.

Increased Persistency

Unlike individual policies, group plans continue in existence despite the fact that individual participants may leave or join.

Indemnity Plans (Major Medical Insurance)

These are traditional insurance plans that are not involved with organizing or administering provider networks. Instead, they simply indemnify insureds by reimbursing them for covered costs according to the policy terms.

Independent Practice Association (IPA) HMOs – (Open-Panel)

These HMOs are characterized by a network of physicians who work out of their own facilities and participate in the HMO on a part-time basis.

Individual Practice Association

This is synonymous with an Independent Practice Association.

Master Contract

This is the group insurance policy that’s issued to the group sponsor by the insurance company.

Master Policy owner

This is the group sponsor that has entered into a contract for group insurance with an insurance company. The sponsor is the policy owner and is responsible for premium payments. The employer may pay the entire premium or may require contributions from each member to cover the insurance cost.

Multiple Employer Trust (MET)

An MET combines multiple employers (10 or more) into a single pool to provide group insurance. The MET holds the master contract rather than the participating employers who are members of the trust.

Multiple Employer Welfare Arrangement (MEWA)

MEWAs consist of two or more employers with a common bond who join together to provide health benefits for their employees on a self-insured basis. The law treats them as “employee welfare benefit plans” that are subject to ERISA guidelines and exempt from some state insurance requirements.

Natural Group

This is an organization that exists for some reason other than to obtain insurance.

Network Model HMO (Closed Panel)

This network model is similar to the group model; however, it involves more than one physician group.

Non-Contributory Plan

This is a group insurance plan in which the employer pays the entire group premium.

Notice of Privacy Practices

HIPAA requires health insurance plans to provide new subscribers with a Notice of Privacy Practices at the time of enrollment and every three years thereafter. The notice details the health plan’s compliance with the HIPAA Privacy Rule and the rights of the consumer.

Open-Panel Network

This network is a form of HMO in which providers deliver services while working out of their own offices on a part-time basis.

Participating Providers – These are doctors and hospitals that contractually agree to specific fees for the services they provide to (Blue Cross and Blue Shield) subscribers.

Persistency

This describes the degree to which existing policies remain in force.

Point of Services (POS) Plan

This plan combines in-network care that’s similar to an HMO with limited out-of-network care resembling an indemnity plan.

Pre-Admission Certification

This typically involves evaluating an individual’s overall health before being hospitalized for surgery to determine whether the requested treatment is medically necessary.

Preferred Provider Organization (PPO)

This is a sponsored network of health care providers that contract with the PPO to offer their services to PPO subscribers on a fee-for-service basis at prearranged discount prices.

Pregnancy Discrimination Act of 1978

As an amendment to the Civil Rights Act of 1964, this act requires that women who are affected by a pregnancy, childbirth, or related medical conditions (e.g., abortion) be treated the same as any other person for employment-related purposes.

Primary Care Physician (PCP)

This is a doctor who provides general medical care for individual network members (typically of HMOs or POS plans) and controls all of their referrals for specialized care.

Prospective Review

This is a form of utilization review that involves analyzing a case before admission to determine the type of treatment that’s necessary.

Qualifying Event (COBRA)

This type of event qualifies workers and beneficiaries to access COBRA benefits. Qualifying events include termination, disability, death, and divorce.

Retrospective Review

This is a form of utilization review that occurs after medical treatment is provided.

Service Basis

This is a system of insurance coverage in which consumers contract with service providers (e.g., Blue Cross and Blue Shield) to obtain medical services from participating providers in exchange for a premium.

Service Providers

In exchange for a premium, service providers (e.g., Blue Cross and Blue Shield) offer benefits to subscribers in the form of services by participating providers.

Small Employer

A small employer is generally defined as a business that has 50 or fewer employees; however, the exact definition varies by state. Small employer groups are subject to special regulations.

Staff Model (Closed Panel) HMO

This HMO provides care through physicians and hospitals that are HMO employees.

Taft-Hartley Trusts

These are trusts that are negotiated trusteeships resulting from collective bargaining between a labor union and employer.

Third-Party Administrators (TPAs)

This is an independent organization that provides administrative services for group insurance sponsors that find it more cost-effective than handling such functions in-house.

Utilization Review

See Case Management.