Chapter Twenty-Four: Health Insurance

Question 1

advance beneficiary notice (ABN)

Answer 1

document used to notify a Medicare beneficiary that it is either unlikely that Medicare will pay or certain that Medicare will not pay for the service they are going to be provided. Beneficiaries are required to sign this document if they wish to have the service with the understanding that they will be responsible for payment

Question 2

allowed amount

Answer 2

the maximum amount an insurer will pay for any given service

Question 3

assignment of benefits

Answer 3

the authorization, by signature of the patient, for payment to be made directly by the patient’s insurance to the provider for services

Question 4

beneficiary

Answer 4

person entitled to benefits of an insurance policy. This term is most widely used by Medicare

Question 5

birthday rule

Answer 5

a means to identify primary responsibility in insurance coverage; identifies the primary insurance carrier when children have coverage through more than one parent. The insurance of the parent with the birthday earliest in the year, month and day only, is identified as the primary insurer. If both parents have the same birth date, the policy that has been in effect the longest is the primary carrier

Question 6

capitation

Answer 6

the health care provider is paid a fixed amount per member per month for each patient who is a member of a particular insurance organization regardless of whether services were provided

Question 7

CMS-1500

Answer 7

the standard claim form designed by the Centers for Medicare and Medicaid Services to submit physician services for third-party (insurance companies) payment; the standard paper claim form to bill Medicare Fee-For-Service (FFS) Contractors when a paper claim is allowed

Question 8

coinsurance

Answer 8

a percentage that a patient is responsible for paying for each service after the deductible has been met

Question 9

conversion factor

Answer 9

the dollar amount that converts the RVUs into a fee

Question 10

coordination of benefits (COB)

Answer 10

when both spouses have health insurance, the policy provision that limits benefits to 100 percent of the cost; also known as dual coverage; procedures insurers use to avoid duplication of payment on claims when the patient has more than one policy. One insurer becomes the primary payer, and no more than 100 percent of the costs are covered

Question 11

co-payment

Answer 11

a specified amount the insured must pay toward the charge for professional services rendered at the time of service

Question 12

deductible

Answer 12

an amount to be paid before insurance will pay

Question 13

dependent

Answer 13

person covered under a subscriber’s insurance policy; refers to spouses and dependent children

Question 14

Diagnosis-related groups (DRGs)

Answer 14

method of determining reimbursement from medical insurance according to diagnosis on a prospective basis

Question 15

exclusive provider organization (EPO)

Answer 15

EPOs are like HMOs in that patients must use their EPO’s provider network when receiving care. There is no partial coverage for out-of-network care

Question 16

explanation of benefits (EOB)

Answer 16

a printed description of the benefits provided by the insurer to the beneficiary; provides information to the patient about how an insurance claim from a health provider (such as a physician or hospital) was paid on their behalf

Question 17

fee-for-service

Answer 17

payment for each service that is provided; individuals who choose to pay high premiums so that they have the flexibility to seek medical care from health care professionals of their choice

Question 18

fee schedule

Answer 18

a list of predetermined payment amounts for professional services provided to patients

Question 19

flexible spending arrangement (FSA)

Answer 19

pretax funds set aside for use in payment of medical services and supplies not covered by insurance; referred to as a cafeteria plan. Qualified medical expenses are those specified in the plan that would generally qualify for the medical and dental expenses deduction, which is explained in IRS Publication 502. The plan is usually funded by the employee with pretax dollars. In some instances, an employer might contribute small amounts. This is a “use it or lose it’ type plan.

Question 20

gatekeeper

Answer 20

one who regulates access to someone or something; in insurance, a primary care physician who coordinates the patient’s referral to specialists and hospital admissions

Question 21

geographic practice cost index (GPCI)

Answer 21

each of the RSRVS components is then adjusted for geographical cost differences by multiplying each by a geographic practice cost index. This results in different payment amounts, depending on the location of the provider’s practice, and amounts can vary from state to state and even within the same state, depending on whether the location is considered urban or suburban.

Question 22

Health maintenance organizations (HMOs)

Answer 22

a type of managed care operation that is typically set up as a for-profit corporation with salaried employees; group insurance that entitles members to services provided by participating hospitals, clinics, and providers

Question 23

health reimbursement arrangement (HRA)

Answer 23

pays for medical expenses. It can be paired with a standard or high-deductible health plan. An employer can contribute to an HRA, but an employee cannot

Question 24

health savings account (HSA)

Answer 24

a tax-sheltered savings account, which contributions from the employer and employee, which can be used to pay for medical expenses.

Question 25

indemnity-type insurance

Answer 25

a type of insurance plan that has the least amount of structural guidelines for patients to follow. Patients are able to see the provider of their choice without having to deal with listings of participating providers and other managed care guidelines

Question 26

Independent practice associations (IPA)

Answer 26

an association of independent physicians, or other organization that contracts with independent physicians, and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis; also known as individual practice associations, they consist of providers who practice in their own individual offices and retain their own office staff and operations; a type of HMO in which contracted services are provided by providers who maintain their own offices

Question 27

Medicare

Answer 27

a federal program for providing health care coverage for individuals over the age of 65 or those who are disabled

Question 28

Medicare Advantage

Answer 28

the Part C segment of Medicare that enables beneficiaries to select a managed care plan as their primary coverage

Question 29

Medicaid

Answer 29

a joint funding program by federal and state governments (excluding Arizona) for the medical care of low-income patients on public assistance

Question 30

Medigap

Answer 30

private insurance to supplement Medicare benefits for payment of the deductible, co-payment, and coinsurance

Question 31

preauthorization

Answer 31

prior approval of insurance coverage and necessity of procedure; refers to obtaining plan approval for services prior to the patient receiving them; related not only to whether the services are covered but also whether the proposed treatment is medically necessary

Question 32

precertification

Answer 32

refers to obtaining plan approval for services prior to the patient receiving them; refers to seeking approval for a treatment (surgery, hospitalization, diagnostic test) under the patient’s insurance contract

Question 33

predetermination

Answer 33

refers to the discovery of the maximum amount of money the carrier will pay for primary surgery, consultation service, postoperative care, and so on

Question 34

preferred provider organization (PPO)

Answer 34

an organization of physicians who network together to offer discounts to purchasers of health care insurance

Question 35

primary

Answer 35

occurring first in time, development, or sequence; earliest

Question 36

quality assurance

Answer 36

inclusive policies, procedures, and practices as standards for reliable laboratory results that includes documentation, calibration, and maintenance of all equipment, quality control, proficiency testing, and training

Question 37

secondary

Answer 37

one step removed from the first; not primary

Question 38

subscriber

Answer 38

the person who has been insured; an insurance policyholder

Question 39

third-party reimbursement

Answer 39

a phrase coined to indicate payment of services rendered by someone other than the patient. With this came the need for some form of paperwork as the means of reporting the health care provided to the source of payment, and the claim was developed. Today, the most common third-party payers are federal and state agencies, insurance companies, and workers’ compensation

Question 40

third-party liability (TPL)

Answer 40

refers to the legal obligation of third parties (e.g., certain individuals, entities, insurers, or programs) to pay part or all of the expenditures for medical assistance furnished under a state plan

Question 41

TRIC ARE for Life

Answer 41

a Medicare-wraparound coverage for TRICARE-eligible beneficiaries who have Medicare Part A and B

Question 42

utilization management (review)

Answer 42

includes preauthorization, precertification, predetermination, concurrent review, and discharge planning

Question 43

waivers

Answer 43

to give up; forgo; waiving of a right or claim; a document outlining services that will not be covered by a patient’s insurance carrier and the cost associated with those services. Patient signature indicates they understand that these services will not be covered and that they agree to pay for the service out of pocket