Glossary of Managed Care Definitions

Question 1

Accredidation

Answer 1

a systematic review of a managed care plan by one of three private, nonprofit agencies (the National Committee for Quality Assurance, the Joint Commission on the Accreditation of Health Care Organizations, and the American Accreditation HealthCare Commission/Utilization Review Accreditation Commission).

Question 2

Actual Charge

Answer 2

the price levied by a health care provider (for example, a hospital or physician) on a consumer or a managed care plan, for a specific medical product or service.

Question 3

Acturial

Answer 3

methods and calculations used to estimate the financial risk for a managed care plan of enrolling a specific consumer or group of consumers

Question 4

acute care

Answer 4

short-term treatment for an illness that is limited in its duration

Question 5

acute illness

Answer 5

an ailment (illness or injury) that is limited in its duration and resolves before becoming chronic and requiring on-going management.

Question 6

administrative costs

Answer 6

expenses related to running an organization, such as overhead (rent, utilities, and supplies), advertising and marketing.

Question 7

Adverse Selection

Answer 7

a situation in which a managed care plan’s population of consumers is older or sicker than expected and, consequently, more likely to incur higher expenses for the plan.

Question 8

Allowable Charge

Answer 8

amount that a managed care plan determines is the appropriate amount to pay health care provider for a specific product or service

Question 9

Alternative Health Care

Answer 9

products and services such as acupuncture, homeopathy, nutrition therapy, and massage, that can complement the services provided by hospitals and physicians.

Question 10

American Accreditation HealthCare Commission/ Utilization Review Assessment
Commission (URAC)

Answer 10

a private, nonprofit agency located in Washington, D.C., that reviews managed care plans against its own performance standards.

Question 11

Ancillary Services

Answer 11

imaging (such as x-rays and CAT scans) and laboratory testing (such as blood or urine testing) that are provided to a consumer in conjunction with hospital or physician care to assist with diagnosis and
treatment.

Question 12

any willing provider

Answer 12

laws that require managed care plans, such as health maintenance organizations, to contract with all physicians or hospitals in the area served by the plan who wish to serve the plan’s members.

Question 13

Appeal

Answer 13

review of an adverse coverage decision by a managed care plan

Question 14

Assignment

Answer 14

process by which a health care provider, such as a physician, agrees to accept payment for a product or service directly from the managed care plan.

Question 15

At-risk

Answer 15

a situation that occurs when a health care provider receives a fixed, predetermined sum of money to care for a consumer (or group of consumers) and stands to lose money if total expenses for care exceed the amount paid.

Question 16

Authorization

Answer 16

approval by a managed care plan for a consumer to receive a health care product or service, such as a specific medical treatment, surgical procedure, or diagnostic test.

Question 17

Balanced Billing

Answer 17

a system in which a health care provider can collect from a consumer the difference between the provider’s actual charge and the insurer’s allowable charge.

Question 18

Behavioral Health care

Answer 18

products and services intended to diagnose and treat mental and emotional illnesses, such as depression or substance abuse.

Question 19

Benefit limit

Answer 19

caps on how much the managed care plan will pay for specific health care products or services, or the quantity of services a consumer may receive (such as the number of visits to specialty physicians).

Question 20

Benefits package

Answer 20

the set of health care products and services covered by the contract between a managed care plan and the purchaser of care

Question 21

Board certified

Answer 21

describes the level of training and competency testing successfully completed by a physician.

Question 22

Brand-named drug

Answer 22

a drug that carries a specific, trademarked name and is produced by one manufacturer.

Question 23

Capitation

Answer 23

a system managed care plans use to pay physicians or hospitals, in which the providers receive a fixed, predetermined sum of money, typically on a monthly basis, from the plan to care for plan members

Question 24

Carve out

Answer 24

a product or service (such as prescription drug benefits or mental health care) provided by a managed care company that specializes in the particular service.

Question 25

Case Management

Answer 25

process managed care plans may use to review the care that patients receive

Question 26

Case Rate

Answer 26

a payment system in which the managed care plan pays health care providers an all-inclusive fee to provide care for a patient, based on the patient’s diagnosis, or the medical treatments or surgical procedures provided to the patient.

Question 27

Center of excellence

Answer 27

is a designation assigned by the managed care industry to provide hospitals or a network of hospitals selected to provide managed care plan for patients with a specific set of clinical services, such as transplants.

Question 28

chronic care

Answer 28

supportive care for an ongoing or lengthy illness

Question 29

chronic illness

Answer 29

any ailment that requires ongoing treatment and management, beyond its acute phase, sometimes for a lifetime.

Question 30

Claims form

Answer 30

paperwork that patients and health care providers file with managed care plans in order to receive payment for services.

Question 31

clinical pathway

Answer 31

a medical “roadmap” that helps health care providers identify the most appropriate course of treatment for a specific patient, based on that patient’s clinical situation.

Question 32

clinical trial

Answer 32

a medical research study in which physicians assess the effect of a new test or treatment versus an existing test or treatment or none at all.

Question 33

closed panel

Answer 33

situation in which the physicians who work for a managed care plan see and treat only patients belonging to the plan.

Question 34

coinsurance

Answer 34

the portion of health care costs not paid by the managed care plan, for which the consumer is responsible.

Question 35

Contract

Answer 35

legal agreement between a managed care plan and either an employer or a consumer that describes the monthly premiums due to the plan, the health care services covered by the plan, and how much the plan is obligated to pay for each service.

Question 36

contract year

Answer 36

the 12 month period covered by the agreement between the plan and the employer, consumer, or provider.

Question 37

contracted provider

Answer 37

a hospital, physician, network of hospitals and physicians, or other health care providers who enter into a legal agreement with a managed care plan to care for the plan’s members for negotiated prices.

Question 38

coordination of benefits

Answer 38

a process that takes place between two or more managed care plans that cover the same consumer, to ensure that plans do not make duplicative or unnecessary payments for services.

Question 39

copayment

Answer 39

a fixed sum of money that a consumer pays each time he or she receives a covered service from a plan contracted provider.

Question 40

cost sharing

Answer 40

the responsibility of a consumer in a managed care plan to pay a portion of the costs for his or her care

Question 41

cost based reimbursement

Answer 41

a payment system in which managed care plans pay health care providers based on the actual cost of a test or treatment provided to a plan member.

Question 42

coverage

Answer 42

decision making process that identifies what services or products are benefits under the employer’s or consumer’s contract with the plan.

Question 43

covered expenses

Answer 43

the costs of health care products or services that are eligible for payment by the managed care plan.

Question 44

credentialing

Answer 44

a system used by managed care plans to assess the qualifications of physicians or other health care providers who may be offered contracts with the plan.

Question 45

customer service

Answer 45

a resource available to the managed care plan member to answer member’s questions, help resolve disputes or complaints, and explain plan operations.

Question 46

deductible

Answer 46

a form of cost sharing in a managed care plan, in which a consumer pays a fixed dollar amount of covered expenses each year, before the plan begins paying its share of costs.

Question 47

denial of care

Answer 47

a refusal by a managed care plan to cover a specific test or treatment.

Question 48

direct contracting

Answer 48

the legal relationship between a managed care plan and an employer, in which the managed care plan agrees to provide a specific set of health care benefits for employees, for specified premiums.

Question 49

discounted FFS

Answer 49

a payment system in which a managed care plan pays a health care provider a negotiated fee for each specific health care service, after the service is rendered to a plan member

Question 50

Disease management

Answer 50

an organized, integrated program of health care and patient education aimed at providers or patients with a specific diagnosis, such as cancer or diabetes

Question 51

Drug formulary

Answer 51

an exclusive list of drugs covered by a managed care plan.

Question 52

drug utilization review

Answer 52

systematic oversight of prescription medicines used by managed care plans to assess costs, prescription patterns, and the appropriateness of drug therapy.

Question 53

emergency care

Answer 53

urgent medical tests and treatment provided to patients with severe or life-threatening symptoms.

Question 54

employer group health plan

Answer 54

package of medical benefits offered to all the employees at a company, typically using one or more managed care plans.

Question 55

ERISA - Employee retirement income security act

Answer 55

a federal law that regulates the pension, health and welfare benefits offered by employers to their employees.

Question 56

Evidence of coverage

Answer 56

a detailed description of the medical benefits available to a member of a managed care plan, most often provided to members after they enroll in the plan.

Question 57

exclusion

Answer 57

a health care product or service which a managed care plan will not cover or pay for.

Question 58

EOB

Answer 58

a statement sent to some managed care plan members from the plan that shows the following information: the actual charges levied by a health care provider for health care services provided to the plan
member, the plan’s allowable charge for each service, the plan’s payment for each service, and the amount owed by the plan member (coinsurance or deductible).

Question 59

Fee schedule

Answer 59

a predetermined list of prices a managed care plan will pay for specific health care products or services given to plan members by health care providers.

Question 60

FFS

Answer 60

reimbursement made by a managed care plan to a health care provider after the provider renders care to a plan member.

Question 61

first dollar coverage

Answer 61

managed care plan benefits that do not require plan members to meet an annual deductible before plan coverage and payment begin.

Question 62

Gag rules

Answer 62

: portions of contracts between managed care plans and physicians that may limit the communication between physicians and their patients

Question 63

Gatekeeper

Answer 63

a primary care physician who controls a patient’s access to certain tests, treatments, and specialty physicians in a managed care plan.

Question 64

Generic Drug

Answer 64

a medicine that is the chemical equivalent of a brand-name drug.

Question 65

Grievance

Answer 65

a complaint brought to the administration of a managed care plan by a plan member.

Question 66

Group model HMO

Answer 66

a type of managed care plan in which the plan has contracted with a multispecialty physician group to care for plan members

Question 67

Health care Financing administration

Answer 67

now called the Centers for Medicare and Medicaid Services (CMS), a federal agency that runs the Medicare and Medicaid programs.

Question 68

Health care spending account

Answer 68

a benefit option offered by some employers that lets employees set aside a specific sum of money each year to pay for certain medical expenses, such as premiums, copayments, deductibles, and
coinsurance amounts, or services such as eyeglasses or dental care.

Question 69

health education

Answer 69

programs or classes offered by some managed care plans to their members to help plan members enhance their understanding of specific issues, such as nutrition or contraception, or meet personal goals, such as smoking cessation, weight loss, or stress management.

Question 70

Health insurance purchasing co-op

Answer 70

a mechanism in which individuals and small businesses join together to purchase medical benefits from managed care plans.

Question 71

Health plan employer data information set

Answer 71

a set of managed care plan performance measures collected, organized, and reported by the National Committee for Quality Assurance (NCQA, see below).

Question 72

Hospice care

Answer 72

supportive services provided to patients who have reached the terminal stage of their illness when aggressive, curative therapy is no longer appropriate.

Question 73

hospital privileges

Answer 73

permission granted by a hospital to a physician to admit patients to the institution and manage their care while hospitalized

Question 74

Indemnity insurance plan

Answer 74

type of health insurance that pays for care after consumers receive it, usually on a fee-for-service basis, with little oversight to assess the cost or appropriateness of care.

Question 75

Independent practice association

Answer 75

a type of managed care plan which contracts with many physicians or physicians groups in an area to provide care to plan members.

Question 76

Joint commission on the accreditation of healthcare organizations

Answer 76

a private, non-profit agency that evaluates and accredits managed care plans, hospitals, networks of health care providers, and other health care
entities.

Question 77

Lifetime Cap

Answer 77

maximum dollar amount of benefits available to a consumer in a managed care plan.

Question 78

Major Medical

Answer 78

health insurance benefits found most commonly in indemnity insurance plans that provide coverage and payment for services such as hospitalization, surgery, or durable medical equipment.

Question 79

malpractice

Answer 79

negligent care provided to a patient by a health care provider or managed care plan that results in harm to the patient.

Question 80

Managed Care

Answer 80

a broad term that describes the health insurance products available to most consumers in the health care marketplace today

Question 81

Managed indemnity insurance

Answer 81

an indemnity insurance plan that incorporates some managed care features, such as utilization review, to help
control costs.

Question 82

mandated benefits

Answer 82

products or services offered in managed care plans that are required by either federal or state law.

Question 83

medicaid

Answer 83

a joint federal and state program that provides health insurance to low income persons who meet specific eligibility requirements.

Question 84

medicaid HMO

Answer 84

a managed care plan approved by a state government to enroll persons eligible for Medicaid.

Question 85

Medical director

Answer 85

the chief physician in a managed care plan who is part of the plan’s administration, and oversees plan coverage decisions and the performance of the physicians who work for the plan or sign contracts to serve plan members.

Question 86

medical licensing board

Answer 86

a state regulatory agency that authorizes physicians to practice in a state and disciplines physicians who are found to have violated the state’s laws or regulations that govern the practice of
medicine.

Question 87

medical loss ratio

Answer 87

the amount of money spent on medical care for plan members by a managed care plan

Question 88

Medical record

Answer 88

the official documentation of the care provided to a patient by a health care provider

Question 89

medical underwriting

Answer 89

the process by which a managed care plan evaluates the level of risk posed by an individual consumer or group of consumers, based upon age, sex, health history, or other factors.

Question 90

medically necessary

Answer 90

health care products or services covered by the managed care plan that are appropriate and indicated to assist in the diagnosis or treatment of disease.

Question 91

medicare

Answer 91

a federal health insurance program that provides medical benefits to all persons over age 65 who receive Social Security benefits or are disabled and meet specific eligibility requirements

Question 92

medicare Hmo

Answer 92

a managed care plan that meets federal standards and is eligible to enroll persons who receive Medicare benefits.

Question 93

medicare secondary payer

Answer 93

a circumstance in which a Medicare beneficiary has both Medicare and private insurance.

Question 94

medigap

Answer 94

Medicare supplemental health insurance that pays for some of the deductibles and coinsurance for which Medicare beneficiaries are responsible.

Question 95

mental health care

Answer 95

medical services, such as counseling or therapy, hospitalization, and prescription drugs, used to diagnose and treat emotional and psychological illness, such as depression, bipolar disorder, or substance
abuse.

Question 96

mixed model or network HMO

Answer 96

a managed care plan that contracts with individual physicians, as well as physicians groups to provide care for plan members.

Question 97

monthly premium

Answer 97

the amount paid each month to a managed care plan by an employer, employees, or individual consumers to obtain coverage from the plan.

Question 98

morbidity rates

Answer 98

the frequency with which an illness occurs in a given population. Morbidity is usually expressed as the number of illnesses per 100,000 population.

Question 99

mortality rates

Answer 99

the frequency of death from a given cause in a population. Mortality is usually expressed at the number of deaths per 100,000 population.

Question 100

national committee for quality assurance

Answer 100

a private, nonprofit organization that evaluates and accredits managed care plans.

Question 101

networks of health care providers

Answer 101

groups of hospitals, physicians, and other providers that come together to offer managed care plans and consumers an organized, comprehensive system of care.

Question 102

ombudsman

Answer 102

a troubleshooter who can help managed care plan members resolve problems or complaints with the plan

Question 103

open enrollment

Answer 103

a specific period of time (one or more times annually or monthly) during which consumers can select and enroll in, or disenroll from, a managed care plan.

Question 104

open panel

Answer 104

a situation in which physicians care for patients from many different managed care plans, as well as other insurers, such as Medicaid and Medicare.

Question 105

out of pocket expense

Answer 105

costs of health care products or services which managed care plan members pay themselves

Question 106

outcome data

Answer 106

information that describes the result of care provided to managed care plan members

Question 107

participating provider

Answer 107

a hospital or physician who signs a contract with a managed care plan and agrees to care for plan members for negotiated fees and conditions specified in the contract

Question 108

payer

Answer 108

another term for an insurer that covers and pays for a specific set of health care benefits for plan members.

Question 109

per member per month

Answer 109

refers to the incremental sum paid by a managed care plan to a health care provider who cares for plan members under a capitation arrangement.

Question 110

pharmacy and therapeutics committee

Answer 110

a group of physicians, pharmacists, and other health care professionals within a managed care plan who review new drugs and biotechnology products to decide which ones the plan will cover, under what circumstances, and at what cost to the plan and its members.

Question 111

Pharmacy benefit manager

Answer 111

a type of managed care plan that specializes in the distribution and management of prescription drugs for plan members.

Question 112

Physician hospital organization

Answer 112

an entity formed by physicians and hospitals under the authority of state or federal law to negotiate and sign contracts with managed care plans or contract directly with employers to serve the health care needs of their employees.

Question 113

plan member

Answer 113

a consumer or his or her dependent who enrolls in a managed care plan through an employer, the Medicare or Medicaid programs, or as an individual enrollee.

Question 114

Point of service

Answer 114

the most rapidly expanding form of managed care in the marketplace.

Question 115

practice guidelines

Answer 115

suggestions or mandates for how physicians can manage patients with a particular symptom or diagnosis to achieve the best possible outcome.

Question 116

practice profiling

Answer 116

also known as practice evaluation; the process by which managed care plans measure how well physicians who treat plan members are performing against plandeveloped financial and clinical criteria.

Question 117

pre-existing condition

Answer 117

a medical condition, ailment, or disease for which a managed care plan member was treated during a specific period of time before joining the plan, typically one or two years

Question 118

preadmission certification

Answer 118

prior approval by a managed care plan to admit a member to hospital for medical treatment, testing, or surgery.

Question 119

preauthorization

Answer 119

prior approval by a managed care plan for a plan member to receive a medical treatment, test, or surgical procedure on an outpatient basis.

Question 120

PPO

Answer 120

a large group of hospitals and physicians under contract to a managed care plan

Question 121

Premature Hospital discharge

Answer 121

termination of an inpatient hospital stay before it is medically appropriate to send the patient home.

Question 122

preventative health care

Answer 122

health care products and services aimed at forestalling the development of illness or injury

Question 123

PCP

Answer 123

a class of physicians that typically includes internists, family physicians, pediatricians, and obstetricians/gynecologists

Question 124

Provider

Answer 124

a qualified, licensed professional (physician, dentist, optometrist, etc.) or institution (hospital, clinic, skilled nursing facility, etc.) that renders health care services to managed care plan members under a contract with a plan.

Question 125

Quality Assurance

Answer 125

an oversight program used by health care providers and managed care plans to evaluate the care provided to plan members and identify and rectify problems in care delivery.

Question 126

Referral

Answer 126

authorization by a managed care plan or primary care physician for a plan member to use other services in the plan, such as diagnostic tests, care from a specialist, or physical therapy.

Question 127

report card

Answer 127

information on how well a managed care plan performs compared to other managed care plans, or national standards, along specific clinical, financial, or consumer satisfaction criteria

Question 128

screening tests

Answer 128

health care services intended to identify diseases at an early stage of development when they are typically easier and less costly to treat

Question 129

Secondary payer

Answer 129

a second plan a consumer has. Through coordination of benefits (see above), the second plan will pay for covered services that are not covered and paid for by the first plan.

Question 130

shared financial risk

Answer 130

a concept in which health care providers, through payment arrangements with managed care plans such as capitation (see above), share risk on the health care services they provide to managed care plan members

Question 131

specialist

Answer 131

physician who has received extensive training (beyond that of a primary care physician) in a specific, often highly focused area of medicine.

Question 132

staff model HMO

Answer 132

a type of managed care plan in which physicians who care for plan members are employees of the plan.

Question 133

state insurance commissioner

Answer 133

a regulatory official who enforces the state insurance laws and regulations to which managed care plans are subject

Question 134

stop loss insurance

Answer 134

a type of back-up insurance that limits financial risk for physicians or hospitals who accept capitation payments to care for managed care plan members.

Question 135

symptom

Answer 135

manifestation of a disease or illness that a patient expresses to a physician or other health care provider, such as pain, nausea, or dizziness.

Question 136

technology assessment

Answer 136

process that managed care plans use to evaluate new tests, treatments, drugs, medical devices, biotechnology products, and surgical procedures, to decide what the plan will cover, for which patients, and at what costs to the plan and planmembers.

Question 137

therapeutic substitution

Answer 137

replacement of a drug prescribed by a physician with a similar or equivalent product, usually with permission of the prescribing physician.

Question 138

Third Party Administrator

Answer 138

a managed care plan or other health insurer that processes claims, pays bills, and manages contracts with health care providers for self-insured health plans.

Question 139

Triage

Answer 139

a system by which managed care plans or health care providers prioritize patients to ensure that patients with the greatest need receive care first.

Question 140

Usual, customary reasonable charges

Answer 140

a calculation by a managed care plan of what it believes is the appropriate fee to pay for a specific health care product or service, in the geographic area in which the plan operates.

Question 141

Utilization review

Answer 141

a mechanism of assessing the care received by a patient in a managed care plan to assess whether the care is medically necessary and appropriate to the patient’s needs.

Question 142

Withhold

Answer 142

portion of the fees paid to health care providers by managed care plans that are held back by the plan until the end of the contract year