Ch 06 Flashcards
Adjusted Community Rating
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.
Adverse Selection
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.
Beneficiary
Anyone covered under a particular health insurance plan.
Benefit Period
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.
Benefits
Services covered by an insurance plan.
Capitation
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.
Case Mix
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.
Categorical Programs
Public health care programs designed to benefit only a certain
category of people.
Charge
The amount a provider bills for rendering a service.
Churning
A phenomenon in which people gain and lose health insurance
periodically.
Claim
A demand for payment of covered medical expenses sent to an
insurance company.
Coinsurance
A set proportion of the medical costs that the insured must pay
out of pocket when health care services are received
Community Rating
A system in which all members of a community are charged the
same insurance rate.
Consumer-Directed Health Plan
High-deductible health plans that include a savings option to
pay for routine health care expenses.
Copayment
A flat amount the insured person must pay each time health
services are received.
Cost-Plus Reimbursement
A payment scheme in which reimbursement to a provider is
based on cost plus a factor to cover the value of capital.
Deductible
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.
Entitlement
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.
Experience Rating
Setting of insurance rates based on a group’s actual health care
expenses in a prior period, which allows healthier groups to pay
less.
Fee Schedule
A list of fees charged for various health care services
GDP
A measure of all the goods and services produced by a nation in
a given year
Group Insurance
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.
High-Deductible Health Plans (HDHP)
Health plans that combine a savings option with a health
insurance plan carrying a high deductible.
Insurance
A mechanism for protection against risk.
Insurer
An insurance agency or managed care organization that offers
insurance.
Means Tested Program
A government-run health insurance program in which eligibility
depends on people’s financial resources.
Medical Loss Ratio (MLR)
The percentage of premium revenue spent on medical
expenses.
Medicare Physician Fee Schedule (MPFS)
A national price list for physician services established by
Medicare.
Medigap
Commercial health insurance policies purchased by individuals
covered by Medicare to insure the expenses not covered by
Medicare.
National Health Expenditures
Total amount spent for all health services and supplies and
health-related research and construction activities consumed in
a country during a calendar year.
Plan
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.
Play-or-Pay
A type of employer mandate in which employers must choose to
provide health insurance to employees (“play”) or pay a penalty.
Preexisting Conditions
Physical and/or mental conditions that existed before the
effective date of an insurance policy.
Premium
The insurer’s charge for insurance coverage; the price for an
insurance plan.
Prospective Reimbursement
A method of payment in which certain preestablished criteria are
used to determine in advance the amount of reimbursement.
Rate
The price for a health care service set by a third-party payer.
Reinsurance
Stop-loss coverage that self-insured employers purchase to
protect themselves against any potential risk of high losses.
Relative Value Units (RVUs)
Measures based on physicians’ time, skill, and intensity required
to provide a service.
Retrospective Reimbursement
A payment scheme in which reimbursement rates are based on
costs actually incurred.
Risk
The possibility of a substantial financial loss from an event for
which the probability of occurrence is relatively small.
Risk Rating
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.
Self-Insured Plan
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.
3rd Party Administration (TPA)
An administrative organization, other than the employee benefit
plan or health care provider, that collects premiums, pays
claims, and/or provides administrative services.
Third Party Payers
An intermediary between patients and providers, which carries
out the functions of insurance and payment for health care
delivery
Underwriting
A systematic technique used by an insurer for evaluating,
selecting (or rejecting), classifying, and rating risks.
