Healthcare Terminology Glossary

Adverse Selection

idea that people in poor health are more likely to enroll in insurance and use healthcare services

Annual Deductible

amount paid out of pocket before the insurance kicks in each year; plans usually reset the first of every year

Capitated Provider Reimbursement

healthcare providers are prepaid for providing care to a group of patients, regardless of amount of healthcare services actually used; providers are at risk for financial loss if their patients are high utilizers of healthcare services

Claims Adjudication

real-time data exchange between dispensing pharmacies, the payer, and the PBM to determine coverage for a medication

Co-insurance

specific percentage paid for prescriptions or doctor’s visits by patient

Consultant pharmacist

provides clinical advice to healthcare teams and patients.

Continuum-of-care

coordination of care for an individual across healthcare providers; requires communication among healthcare providers (e.g. electronic health record)

Copay

set dollar amount paid for prescriptions or doctor’s visits by patient

Durable Medical Equipment (DME)

reusable, medically necessary equipment prescribed by a doctor for at home use (ex. canes, blood pressure monitors, nebulizers, walkers)

Discounted fee-for-service reimbursement

healthcare provider paid a discounted amount, as agreed upon in contract, each time a service is provided

Drug Utilization Review (DUR)

examining prescription drug use in the insured population; can be retrospective, prospective, or concurrent; for prospective DUR, the pharmacist must review the patient profile for: over/under-utilization, therapeutic duplication, drug-disease state contraindications, drug-drug interactions, incorrect drug dose or duration of treatment, drug-allergy interactions, and abuse/misuse

Drug wholesaler

middleman of drug supply chain; purchases drugs from the manufacturer and then pharmacies order the drugs from the wholesaler

Fee-for-service insurance/provider reimbursement

physician gets fee for each service provided to a patient (ex. For each lab test conducted); insurance company is at risk for financial loss

Formulary

list of drugs covered by the insurance company; usually divided into four tiers with the lowest tier (generics) having the lowest patient cost-sharing and the highest tier (specialty medications and biosimilars) having the highest patient cost-sharing

Gatekeeping/Gatekeeper

patient must have referral from PCP to see a specialist or get a medical test

Gross domestic product (GDP)

total value of all goods and services produced in the U.S. in one year

Health Maintenance Organization (HMO)

type of MCO that emphasizes limited consumer out-of-pocket expenses (lower patient copays) but are very restrictive (no out-of-network coverage and gatekeepers/PCP selected when starting HMO plan); place providers at financial risk with capitation

Healthcare flexible spending account (FSA)

pre-tax dollars you set aside for health care expenses with your employer; good for things not usually covered by insurance plan like OTCs; funds must be spent in the calendar year or they are lost

Insured/enrollee

person protected from risk of financial loss via insurance

Integrated Healthcare Delivery System (IHDS)

one healthcare organization that provides a coordinated continuum of services to a defined population and is held clinically and fiscally accountable for the outcomes of the patients (e.g. the VA, ACOs, MCOs)

Long-term care (LTC) services

services for people who can’t care for themselves independently (either due to chronic illness or mental or physical disability)

Managed Care Organization (MCO)

organization that coordinates financing, insurance, delivery, and payment in an effort to control costs and improve healthcare quality; financial risk is shifted to the contracted providers due to prepaid reimbursement

Medicaid

joint federal/state program for underserved and other patient groups; based on income level; eligibility requirements and standard benefits set by the federal government while state governments are responsible for administering the Medicaid program within the federal guidelines

Medicare

federal program for older persons (> 65 years of age)

Medication Therapy Management (MTM) services

personalized healthcare services provided by PBMs to help patients optimize their medications and increase patient adherence

Moral Hazard

idea that if you have insurance, you are more likely to use healthcare goods and services than if you had to pay price out-of-pocket; could lead to healthcare overuse

National Health Expenditures (NHE)

what we spend as a nation on healthcare in one year

Out-of-pocket maximum/limit

amount paid by the patient out-of-pocket in a year before the insurance starts paying for everything; going out-of-network does not count towards the out-of-pocket maximum

Patient Protection and Affordable Care Act (ACA)

“Obamacare” healthcare reform that expanded access to health insurance for patients and created the health insurance marketplace

Pharmacy and Therapeutics (P & T) Committee

committee made up of pharmacists, doctors, registered nurses, and patient advocates that incorporates best available evidence-based medicine to determine the formulary

Pharmacy Benefit Manager (PBM)

manages the pharmacy side of healthcare for the insurance companies; negotiates with the pharmacy over reimbursement for drugs and dispensing fees and receives rebates from manufacturers for putting their drugs on the formulary

Point of Service Plan (POS)

hybrid of HMO and PPO that allows patients to select providers at the time of service; there is freedom of provider choice but also utilization controls that HMOs have like capitated reimbursement and gatekeeping

preferred provider

a provider that is contracted with the insurance company to make services less expensive for the insured

Preferred provider organization (PPO)

type of MCO that emphasizes freedom of choice for patients when choosing health care providers (patient has coverage out-of-network but there is financial incentive to stay in network and there are no gatekeepers); usually use discounted fee-for-service reimbursement

Premium

money paid to the insurance company each month to have the insurance plan

Prior Authorization (PA)

criteria that must be met and submitted to the insurance company by the doctor before authorization can be granted for the medication

Private health insurance

primarily employer-based or self-insured via an individual health insurance policy

Provider Induced Demand

healthcare provider has the ability to create demand for healthcare goods and services, due to incentive to be reimbursed

Provider network

providers (physicians, pharmacies, hospitals, LTCs) contracted with the insurance company to provide discounted services to patients 

Public health insurance

health insurance provided by the government/tax-payer dollars (ex. Medicare, Medicaid, SCHIP, VA/TRICARE)

Skilled nursing facility (SNF)

an institutional-based LTC facility where medical care is provided by a license nurse and other health care professionals for residents with a variety of medical conditions, often with cognitive problems (aka nursing homes)

Specialty pharmacy

special pharmacy that dispenses specialty drugs, including “white bag” and “brown bag” prescriptions

State Children’s Health Insurance Program (SCHIP)

government program that extends health coverage to children in families with incomes too high for Medicaid but too low to afford private insurance; administered by states but funded jointly by federal and state governments

Step therapy

insurance requires prior, unsuccessful treatment with earlier drugs (first-line treatments) before authorization can be granted

Value-based reimbursement

payment model that rewards physicians based on the quality of care they provide and the quality of patient outcomes rather than the quantity of services performed