Chapter 2: Introduction to Health Insurance and Managed Care

Accreditation

voluntary process that a health care facility or organization (e.g., hospital or managed care plan) undergoes to demonstrate that it has met standards beyond those required by law.

Advanced Alternative Payment Models(advanced APMs)

include new ways for CMS to reimburse health care providers for care provided to Medicare beneficiaries; providers who participate in an Advanced APM through Medicare Part B may earn an incentive payment for participating in the innovative payment model.

Adverse Selection

covering members who are sicker than the general population.

Alternative Payment Model(APM)

payment approach that includes incentive payments to provide high-quality and cost-efficient care; APMs can apply to a specific clinical condition, a care episode, or a population.

Amendment to the HMO Act of 1973

legislation that allowed federally qualified HMOs to permit members to occasionally use non-HMO physicians and be partially reimbursed.

American Recovery and Reinvestment Act of 2009(AARA)

authorized an expenditure of $1.5 billion for grants for construction, renovation, and equipment, and for the acquisition of health information technology systems.

Benchmarking

practice that allows an entity to measure and compare its own data against that of other agencies and organizations for the purpose of continuous improvement (e.g., coding error rates).

Cafeteria Plan

also called triple option plan; provides different health benefit plans and extra coverage options through an insurer or third-party administrator.

Capitation

prospective payment per patient for a prescribed period of time; provider accepts preeestablished payments for providing health care services to enrollees over a specified period of time (usually one year or monthly).

Carve-out Plan

arrangement provided by a health insurance company to offer a specific health benefit that is managed separately from the health insurance plan.

Case Manager

submits written confirmation, authorizing treatment, to the provider; include nurses and social workers who help patients and families navigate complex health care and support systems; also coordinate health care services to improve patient outcomes while considering financial implications as part of severity of illness and intensity of services [SI/IS] to address the balance of medical necessity, procedures/services provided, and level of care needed.

Clinical Practice Guidelines

define modalities for the diagnosis, management, and treatment of patients, and they include recommendations based on a methodical and meticulous evaluation and synthesis of published medical literature; the guidelines are not protocols that must be followed, and instead are to be considered.

Closed-panel HMO

health care is provided in an HMO-owned center or satellite clinic or by providers who belong to a specially formed medical group that serves the HMO.

CMS-1500 Claim

claim submitted for reimbursement of physician office procedures and services; electronic version is called ANSI ASC X12N 837P.

Coinsurance

also called coinsurance payment; the percentage the patient pays for covered services after the deductible has been met and the copayment has been paid.

Competitive Medical Plan(CMP)

an HMO that meets federal eligibility requirements for a Medicare risk contract, but is not licensed as a federally qualified plan.

Consolidated Omnibus Budget Reconciliation Act of 1985(COBRA)

allows employees to continue health care coverage beyond the benefit termination date.

Consumer-directed Health Plans(CDHPs)

define employer contributions and ask employees to be more responsible for health care decisions and cost-sharing.

Continuity of Care

documenting patient care services so that others who treat the patient have a source of information on which to base additional care and treatment.

Copayment(copay)

provision in an insurance policy that requires the policyholder or patient to pay a specified dollar amount to a health care provider for each visit or medical service received.

Customized Sub-capitation Plan(CSCP)

managed care plan in which health care expenses are funded by insurance coverage; the individual selects one of each type of provider to create a customized network and pays the resulting customized insurance premium; each provider is paid a fixed amount per month to provide only the care that an individual needs from that provider (called a sub-capitation payment).

Deductible

amount for which the patient is financially responsible before an insurance policy provides reimbursement (to the provider).

Direct Contract Model HMO

contracted health care services delivered to subscribers by individual providers in the community.

Electronic Clinical Quality Measures(eCQMs)

processes, observations, treatments, and outcomes that quantify the quality of care provided by health care systems; measuring such data helps ensure that care is delivered safely, effectively, equitably, and timely.

Electronic Health Record(EHR)

global concept that includes the collection of patient information documented by a number of providers at different facilities regarding one patient.

Electronic Medical Record(EMR)

considered part of the electronic health record (EHR), the EMR is created using vendor software, which assists in provider decision-making.

Employee Retirement Income Security Act of 1974(ERISA)

mandated reporting and disclosure requirements for group life and health plans (including managed care plans), permitted large employers to self-insure employee health care benefits, and exempted large employers from taxes on health insurance premiums.

Exclusive Provider Organization(EPO)

managed care plan that provides benefits to subscribers if they receive services from network providers.

Express Contract

provisions that are stated in a health insurance contract.

External Quality Review Organization(EQRO)

responsible for reviewing health care provided by managed care organizations.

Federal Employee Health Benefit Plan(FEHBP)

an employer-sponsored health benefits program established by an act of Congress in 1959 to allow federal employees, retirees, and their survivors to select appropriate health plans that meet their needs.

Federal Employees’ Compensation Act(FECA)

provides civilian employees of the federal government with medical care, survivors’ benefits, and compensation for lost wages.

Federal Employers’ Liability Act(FELA)

legislation passed in 1908 by President Theodore Roosevelt that protects and compensates railroad workers who are injured on the job.

Federally Qualified HMO

certified to provide health care services to Medicare and Medicaid enrollees.

Fee Schedule

list of predetermined payments for health care services provided to patients (e.g., a fee is assigned to each CPT code).

Fee-for-service

reimbursement methodology that increases payment if the health care service fees increase, if multiple units of service are provided, or if more expensive services are provided instead of less expensive services (e.g., brand name vs. generic prescription medication).

Fee-for-service Plans

reimburses providers according to a fee schedule after covered procedures and services have been provided to patients.

Flexible Spending Account(FSA)

consumer-directed health plan that allows tax-exempt accounts to be created by employees for the purpose of paying health care bills.

Gag Clauses

prevents providers from discussing all treatment options with patients, whether or not the plan would provide reimbursement for services.

Gatekeeper

primary care provider for essential health care services at the lowest possible cost, avoiding nonessential care, and referring patients to specialists.

Group Health Insurance

private health insurance model that provides coverage, which is subsidized by employers and other organizations (e.g., labor unions, rural and consumer health cooperatives) whereby part or all of premium costs are paid for and/or discounted group rates are offered to eligible individuals.

Group Model HMO

contracted health care services delivered to subscribers by participating providers who are members of an independent multi-specialty group practice.

Group Practice Without Walls(GPWW)

contract that allows providers to maintain their own offices and share services (e.g., appointment scheduling and billing).

Guaranteed Renewal

a provision, when included in a health insurance contract, that requires a health insurance company to renew the policy as long premiums continue to be paid.

Health Care

expands the definition of medical care to include preventive services.

Health Care and Education Reconciliation Act(HCERA)

includes health care reform initiatives that amend the Patient Protection and Affordable Care Act to increase tax credits to buy health care insurance, eliminate special deals provided to senators, close the Medicare “donut hole,” delay taxing of “Cadillac-health care plans” until 2018, and so on.

Health Care Reimbursement Account(HCRA)

tax-exempt account used to pay for health care expenses; individual decides, in advance, how much money to deposit in an HCRA (and unused funds are lost).

Health Information Technology for Economic and Clinical Health Act(HITECH Act)

included in the American Recovery and Reinvestment Act of 2009 and amended the Public Health Service Act to establish an Office of National Coordinator for Health Information Technology within HHS to improve health care quality, safety, and efficiency.

Health Insurance

contract between a policyholder and a third-party payer or government program to reimburse the policyholder for all or a portion of the cost of medically necessary treatment or preventive care by health care professionals.

Health Insurance Marketplace

method Americans use to purchase health coverage that fits their budget and meet their needs, effective October 1, 2013, as a result of passage of the Affordable Care Act.

Health Maintenance Organization(HMO)

responsible for providing health care services to subscribers in a given geographical area for a fixed fee.

Health Maintenance Organization(HMO) Assistance Act of 1973

authorized grants and loans to develop HMOs under private sponsorship; defined a federally qualified HMO as one that has applied for, and met, federal standards established in the HMO Act of 1973; required most employers with more than 25 employees to offer HMO coverage if local plans were available.

Health Reimbursement Arrangement(HRA)

tax-exempt accounts funded by employers, which individuals use to pay health care bills.

Health Savings Account(HSA)

Participants enroll in a relatively inexpensive high-deductible health plan (HDHP), and a tax-deductible savings account is opened to cover current and future medical expenses.

Healthcare Effectiveness Data and Information Set(HEDIS)

created standards to assess managed-care systems using data elements that are collected, evaluated, and published to compare the performance of managed health care plans.

Hill-Burton Act

provided federal grants for modernizing hospitals that had become obsolete because of a lack of capital investment during the Great Depression and WWII (1929–1945). In return for federal funds, facilities were required to provide services free, or at reduced rates, to patients unable to pay for care.

Implied Contract

results from actions taken by the health care facility or provider, such as registering a patient to provide treatment.

Indemnity Plan

allows patients to seek health care from any provider, and the provider receives reimbursement according to a fee schedule; indemnity plans are sometimes called fee-for-service plans.

Individual Health Insurance

private health insurance policy purchased by individuals or families who do not have access to group health insurance coverage; applicants can be denied coverage, and they can also be required to pay higher premiums due to age, gender, and/or pre-existing medical conditions.

Individual Practice Association(IPA) HMO

also called independent practice association (IPA); type of HMO where contracted health services are delivered to subscribers by providers who remain in their independent office settings.

Integrated Delivery System(IDS)

organization of affiliated provider sites (e.g., hospitals, ambulatory surgical centers, or physician groups) that offer joint health care services to subscribers.

Integrated Provider Organization(IPO)

manages the delivery of health care services offered by hospitals, physicians employed by the IPO, and other health care organizations (e.g., an ambulatory surgery clinic and a nursing facility).

Legislation

federal, state, county and municipal (city) laws, which are rules of conduct enforced by threat of punishment if violated.

Lifetime Maximum Amount

maximum benefit payable to a health plan participant, such as annually or during a lifetime.

Major Medical Insurance

coverage for catastrophic or prolonged illnesses and injuries, which can include hospital, medical, and surgical benefits that supplement basic coverage benefits.

Managed Care

health care delivery system organized to manage health care costs, utilization, and quality.

Managed Care Organization(MCO)

responsible for the health of a group of enrollees; can be a health plan, hospital, physician group, or health system.

Management Service Organization(MSO)

usually owned by physicians or a hospital and provides practice management (administrative and support) services to individual physician practices.

Mandates

official directive, instruction, or order to take or perform a certain action, such as regulations written by federal government administrative agencies; they are also authoritative commands, such as by courts, governors, and legislatures.

Meaningful EHR User

providers who demonstrate that certified EHR technology is used for electronic prescribing, electronic exchange of health information in accordance with law and HIT standards, and submission of information on clinical quality measures; and hospitals that demonstrate that certified EHR technology is connected in a manner that provides for the electronic exchange of health information to improve quality of care and that the technology is used to submit information on clinical quality measures.

Meaningful Use

objectives and measures that achieved goals of improved patient care outcomes and delivery through data capture and sharing, advance clinical processes, and improved patient outcomes; replaced by quality payment program (QPM).

Medical Care

includes the identification of disease and the provision of care and treatment as provided by members of the health care team to persons who are sick, injured, or concerned about their health status.

Medical Foundation

nonprofit organization that contracts with and acquires the clinical and business assets of physician practices; the foundation is assigned a provider number and manages the practice’s business.

Medicare Contracting Reform(MCR) Initiative

established to integrate the administration of Medicare Parts A and B fee-for-service benefits with new entities called Medicare administrative contractors (MACs); MACs replaced Medicare carriers, DMERCs, and fiscal intermediaries.

Medicare Improvement for Patients and Providers Act(MIPPA)

Benefit programs that support states’ and tribes’ eligible Medicare beneficiaries to help lower costs of Medicare premiums and deductibles.

Medicate Prescription Drug, Improvement, and Modernization Act(MMA)

adds new prescription drug and preventive benefits and provides extra assistance to people with low incomes.

Medicare Risk Programs

federally qualified HMOs and competitive medical plans (CMPs) that meet specified Medicare requirements provide Medicare-covered services under a risk contract.

Merit-Based Incentive Payment System(MIPS)

eliminated PQRS, value-based payment modifier, and the Medicare EHR incentive program, creating a single program based on quality, resource use, clinical practice improvement, and meaningful use of certified EHR technology.

National Committee for Quality Assurance(NCQA)

a private, not-for-profit organization that assesses the quality of managed care plans in the United States and releases the data to the public for its consideration when selecting a managed care plan.

Network Model HMO

contracted health care services provided to subscribers by two or more physician multi-specialty group practices.

Network Provider

physician, other health care practitioner, or health care facility under contract to the managed care plan.

Obamacare

nickname for the Patient Protection and Affordable Care Act (PPACA), which was signed into federal law by President Obama on March 23, 2010, and created the Health Care Marketplace.

Office of Managed Care

CMS agency that facilitates innovation and competition among Medicare HMOs.

Omnibus Budget Reconciliation Act of 1981(OBRA)

federal law that requires providers to keep copies of any government insurance claims and copies of all attachments filed by the provider for a period of five years; also expanded Medicare and Medicaid programs.

Open-panel HMO

health care provided by individuals who are not employees of the HMO or who do not belong to a specially formed medical group that serves the HMO.

Patient Protection and Affordable Care Act(PPACA)

focuses on private health insurance reform to provide better coverage for individuals with pre-existing conditions, improve prescription drug coverage under Medicare, extend the life of the Medicare Trust fund by at least 12 years, and create the health insurance marketplace.

Patient Record

documents health care services provided to a patient.

Payer Mix

different types of health insurance payments made to providers for patient services.

Performance Measurements

strengthen organization accountability and support performance improvement initiatives by assessing the degree to which evidence-based treatment guidelines are followed and include an evaluation of results of care.

Personal Health Record(PHR)

web-based application that allows individuals to maintain and manage their health information (and that of others for whom they are authorized, such as family members) in a private, secure, and confidential environment.

Physician Incentive Plan

requires managed care plans that contract with Medicare or Medicaid to disclose information about physician incentive plans to CMS or state Medicaid agencies before a new or renewed contract receives final approval.

Physician Incentives

include payments made directly or indirectly to health care providers to serve as encouragement to reduce or limit services (e.g., discharge an inpatient from the hospital more quickly) to save money for the managed care plan.

Physician Referral

written order by a primary care provider that facilitates patient evaluation and treatment by a physician specialist.

Physician-hospital Organization(PHO)

owned by hospital(s) and physician groups that obtain managed care plan contracts; physicians maintain their own practices and provide health care services to plan members.

Point-of-service Plan(POS)

delivers health care services using both managed care network and traditional indemnity coverage so patients can seek care outside the managed care network.

Policyholder

a person who signs a contract with a health insurance company and who, thus, owns the health insurance policy.

Preferred Provider Health Care Act of 1985

eased restrictions on preferred provider organizations (PPOs) and allowed subscribers to seek health care from providers outside of the PPO.

Preferred Provider Organization(PPO)

network of physicians, other health care practitioners, and hospitals that have joined together to contract with insurance companies, employers, or other organizations to provide health care to subscribers for a discounted fee.

Premium

amount paid for a health insurance policy.

Prepaid Health Plan

capitation contract between a health plan and providers who manage all of the health care for a patient population and are reimbursed a predetermined amount of money either monthly or annually.