Ch 06

Question 1

Adjusted Community Rating

Answer 1

Also called modified community rating; a method of determining
health insurance premiums that takes into account demographic
factors such as age, gender, geography, and family
composition, while ignoring other risk factors.

Question 2

Adverse Selection

Answer 2

A phenomenon in which individuals who are likely to use more
health care services than other persons due to their poor health
enroll in health insurance plans in greater numbers, compared to
people who are healthy.

Question 3

Beneficiary

Answer 3

Anyone covered under a particular health insurance plan.

Question 4

Benefit Period

Answer 4

The period of illness beginning with hospitalization and ending
when the beneficiary has not been an inpatient in a hospital or a
skilled nursing facility for 60 consecutive days.

Question 5

Benefits

Answer 5

Services covered by an insurance plan.

Question 6

Capitation

Answer 6

A reimbursement mechanism under which the provider is paid a
set monthly fee per enrollee (sometimes referred to as per
member per month [PMPM] rate) regardless of whether the
enrollee sees the provider and how often the enrollee sees the
provider.

Question 7

Case Mix

Answer 7

An aggregate of the severity of conditions requiring medical
intervention. Case-mix categories are mutually exclusive and
differentiate patients according to the extent of resource use.

Question 8

Categorical Programs

Answer 8

Public health care programs designed to benefit only a certain
category of people.

Question 9

Charge

Answer 9

The amount a provider bills for rendering a service.

Question 10

Churning

Answer 10

A phenomenon in which people gain and lose health insurance
periodically.

Question 11

Claim

Answer 11

A demand for payment of covered medical expenses sent to an
insurance company.

Question 12

Coinsurance

Answer 12

A set proportion of the medical costs that the insured must pay
out of pocket when health care services are received

Question 13

Community Rating

Answer 13

A system in which all members of a community are charged the
same insurance rate.

Question 14

Consumer-Directed Health Plan

Answer 14

High-deductible health plans that include a savings option to
pay for routine health care expenses.

Question 15

Copayment

Answer 15

A flat amount the insured person must pay each time health
services are received.

Question 16

Cost-Plus Reimbursement

Answer 16

A payment scheme in which reimbursement to a provider is
based on cost plus a factor to cover the value of capital.

Question 17

Deductible

Answer 17

The portion of health care costs that the insured must first pay
(generally up to an annual limit) before insurance payments kick
in. Insurance payments may be further subject to copayment.

Question 18

Entitlement

Answer 18

A health care program to which certain people are entitled by
right. For example, almost everyone at 65 years of age is
entitled to Medicare coverage because of contributions made
through taxes.

Question 19

Experience Rating

Answer 19

Setting of insurance rates based on a group’s actual health care
expenses in a prior period, which allows healthier groups to pay
less.

Question 20

Fee Schedule

Answer 20

A list of fees charged for various health care services

Question 21

GDP

Answer 21

A measure of all the goods and services produced by a nation in
a given year

Question 22

Group Insurance

Answer 22

An insurance policy obtained through an entity, such as an
employer, a union, or a professional organization, under the
assumption that a substantial number of people in the group will
participate in purchasing insurance through that entity.

Question 23

High-Deductible Health Plans (HDHP)

Answer 23

Health plans that combine a savings option with a health
insurance plan carrying a high deductible.

Question 24

Insurance

Answer 24

A mechanism for protection against risk.

Question 25

Insurer

Answer 25

An insurance agency or managed care organization that offers
insurance.

Question 26

Means Tested Program

Answer 26

A government-run health insurance program in which eligibility
depends on people’s financial resources.

Question 27

Medical Loss Ratio (MLR)

Answer 27

The percentage of premium revenue spent on medical
expenses.

Question 28

Medicare Physician Fee Schedule (MPFS)

Answer 28

A national price list for physician services established by
Medicare.

Question 29

Medigap

Answer 29

Commercial health insurance policies purchased by individuals
covered by Medicare to insure the expenses not covered by
Medicare.

Question 30

National Health Expenditures

Answer 30

Total amount spent for all health services and supplies and
health-related research and construction activities consumed in
a country during a calendar year.

Question 31

Plan

Answer 31

The form in which health insurance, particularly private health
insurance, is obtained. The plan specifies, among other details,
information pertaining to costs, covered services, and how to
obtain health care when needed.

Question 32

Play-or-Pay

Answer 32

A type of employer mandate in which employers must choose to
provide health insurance to employees (“play”) or pay a penalty.

Question 33

Preexisting Conditions

Answer 33

Physical and/or mental conditions that existed before the
effective date of an insurance policy.

Question 34

Premium

Answer 34

The insurer’s charge for insurance coverage; the price for an
insurance plan.

Question 35

Prospective Reimbursement

Answer 35

A method of payment in which certain preestablished criteria are
used to determine in advance the amount of reimbursement.

Question 36

Rate

Answer 36

The price for a health care service set by a third-party payer.

Question 37

Reinsurance

Answer 37

Stop-loss coverage that self-insured employers purchase to
protect themselves against any potential risk of high losses.

Question 38

Relative Value Units (RVUs)

Answer 38

Measures based on physicians’ time, skill, and intensity required
to provide a service.

Question 39

Retrospective Reimbursement

Answer 39

A payment scheme in which reimbursement rates are based on
costs actually incurred.

Question 40

Risk

Answer 40

The possibility of a substantial financial loss from an event for
which the probability of occurrence is relatively small.

Question 41

Risk Rating

Answer 41

Insurance rating according to which high-risk individuals pay
more than the average premium price, and low-risk individuals
pay less than the average price.

Question 42

Self-Insured Plan

Answer 42

A health plan in which a large company acts as its own insurer
by collecting premiums and paying claims. Such businesses
most often purchase reinsurance against unusually large claims.

Question 43

3rd Party Administration (TPA)

Answer 43

An administrative organization, other than the employee benefit
plan or health care provider, that collects premiums, pays
claims, and/or provides administrative services.

Question 44

Third Party Payers

Answer 44

An intermediary between patients and providers, which carries
out the functions of insurance and payment for health care
delivery

Question 45

Underwriting

Answer 45

A systematic technique used by an insurer for evaluating,
selecting (or rejecting), classifying, and rating risks.