Compounding Pharmacy CA

Insurance Glossary

Glossary Of Frequently Used Health Insurance Terms

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Actual charge
The charge(s) for a particular service/treatment by a health care provider.

Administrative expense charge
An amount charged by the plan and/or administrator (sometimes separately delineated) to pay the costs of administering the policy.

Adverse Selection
A tendency for those with higher risk exposure to obtain more insurance coverage than others with lower risk exposure. Adverse selection concentrates carrier risks instead of spreading it evenly across a large group of customers.

Affinity Sales
The selling of insurance through groups, associations, and other aggregating organizations. For example, AARP, AAA, Sam's Club, Sears, Ford, many college alumni associations, etc... have partnered with insurance companies to create Affinity Sales programs for their groups.

Alternative medicine
Some medical techniques once considered outside the boundaries of standard practice have become more accepted in recent years and may now be eligible for coverage. Acupuncture, compounded medications, midwives, and osteopathic treatments are examples of formerly excluded treatments that are now covered under many health insurance policies.

Amendment
An attachment to a policy that modifies certain policy benefits.

Annual limits
Maximums on the dollar amounts the plan will pay for any given year.

Approved charge
The dollar amount on which your insurer bases its payments and your co-payments.

Assigned risk plan
A state-supervised insurance plan for people who are unable to obtain insurance coverage in the regular market. The cost of this insurance is substantially higher.

Assignments of benefits
You allow a hospital or doctor to collect your health insurance benefits directly from your insurance company.

Associated group plans
Fully insured plans issued to employee groups, including those formed by labor unions, nonprofit membership corporations, etc.

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Benefit Maximum
The maximum amount of payments for benefits of an insurance policy.

Benefit period
The time period for which payments for benefits of an insurance policy are available.

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Chronic condition
Prolonged conditions or illness, such as asthma, diabetes, etc.

Claim
A request for reimbursement for damages on an insured loss. Your claims to your company are “first-party claims.” Claims made by one person against another person’s company are known as "third-party claims."

Closed practice
A primary care physician that is not accepting new patients.

CLUE report
Short for Comprehensive Loss Underwriting Exchange which keeps insurance claims history.

Co-insurance
The share of the covered charges, usually a percentage, that you and the plan each pay. If the plan has a deductible, the coinsurance is applied after the deductible has been satisfied. For example, if you have bills amounting to $400 and the plan has a $100 deductible amount, you are responsible for paying the first $100 and the plan will begin paying after that. But because of the coinsurance, the plan will pay only a percentage of the covered expenses and you must pay the remaining percentage. Between the two 100% will be paid. So, in our example, if the plan pays 80% of the $300 remaining after the deductible, the plan will pay $240 (80% of $300) and you will pay $60 (20% of $300).

Co-Pay
Fixed dollar payments that you must pay directly to the provider at the time services are received. For example, the contract for a certain network of doctors may require that patients pay a $10 co-pay each time they visit one of the doctors who is a member of that network. Or, you may have to pay $10 for each pharmacy prescription filled.the term "variable copay" has to do more with where services are rendered rather than by whom. Many doctors are able to practice at more than one hospital or more than one type of facility. The contracts each particular doctor has with each insurance company and with each facility affects the copay.

COBRA
A Federal law that gives the right to a worker to continue group health care coverage for a specified period if the worker loses coverage because of reduced work hours or loses the job.

Conversion privileges
Group plans generally have a conversion privilege that allows an employee to covert to an individual health insurance plan upon termination of employment. Alternatively, coverage under a COBRA plan may be available.

Coordination of benefits (COB)
When you are covered under more than one plan (for example under a group plan at work, and as a family member on a spouse’s plan) the benefits from the plans are coordinated so as to limit the total benefits from all plans. Usually, the benefits from all plans will not exceed 100% of the covered medical expenses.

Covered dependents
Traditionally, under group health insurance plans dependent coverage was only available for spouses and children. More recently, reflecting the changing lifestyles of Americans, some groups have also begun covering domestic partners of homosexuals and lesbians, children of divorced parents, and dependent parents of employees. Also, common law marriages have been recognized by some plans because they need to be in compliance with legal requirements.

Covered services and supplies
Usually, you will receive a booklet that describes the services and supplies that are covered and reimbursable under the plan. This booklet will probably also describe the types of services and supplies that are not covered and reimbursable under the plan.

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Deductible
The amount you must pay from your own pocket for each claim or accident before the plan pays on a claim. The bigger the deductible, the cheaper the coverage.

Discount fees for service to providers
HMOs contract with health providers to provide services at discounted rates.

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Effective date
The date the insurance policy begins.

Elimination period
The number of days of care that you pay before your insurance plan picks up the benefits.

Enrollment period
The period during which individuals may enroll for an insurance policy, Medicare, HMO benefits.

ERISA
Employee Retirement Income Security Act, a federal law that regulates employer-sponsored pension and insurance plans for employees.

Exclusions
Conditions or procedures that are not covered. Every health care plan has its own list of exclusions and limitations. Some of the more common ones are experimental medications/treatments/procedures, sickness or injury as a result of war, attempted suicide, cosmetic surgery, etc.

Experimental and investigational procedures
Health insurance coverage generally excludes medical treatments that are deemed to be unproven, ineffective, or non-standard. — things like surgical techniques and medicines not approved by the Food and Drug Administration. Sometimes such treatments may be available by traveling to another country, but these treatments would generally not be covered.

Explanation of benefits (EOB)
The insurance company’s explanation of its decision regarding your claim.

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Fee for service
A health plan that allows you, as the patient, to use any doctors you want, but requires you pay for the services yourself and file (or your provider files) claims for reimbursement.

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Grace period
The time, usually 30-31 days, following the premium date, during which you can pay an overdue premium while keeping your insurance policy in force throughout this period.

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Health care reimbursement accounts
Accounts that allow you to set aside pre-tax dollars to pay for medical care or costs

HIPAA
Health Insurance Portability & Accountability Act, a federal law that guarantees health care plan eligibility for people who change jobs, if the new employer offers group insurance.

HMO (Health Maintenance Organizations)
Provides health services through a network of hospitals, doctors, laboratories, and so forth.

Hospital indemnity policy
Pays a fixed dollar amount for each day you are hospitalized, regardless of the actual costs.

Hospital pre-certification
Managed care plans often require prior approval before you enters the hospital. In the case of an emergency, or other situation where pre-certification is not possible, such plans often require prompt notification – often in 48 hours after admission.

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Lifetime maximum
The total dollar amount the plan will pay for all types of medical expenses, for all benefit periods, while you are alive and covered under the plan.

Limitations
Conditions or circumstances for which benefits are not payable or are limited.

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Managed Care Plans
A system that organizes a network of doctors, hospitals, and other providers to provide comprehensive health services to their members at lower costs.

Mandated benefits
Health care benefits that state or federal law says must be included in health care plans.

Medical or Health Savings Account (MSA or HSA)
An account held in trust for the account holder. The employer or employee makes annual tax-free contributions to the account that must be maintained in conjunction with a high deductible health insurance policy.

Medically necessary
A provision in a health care insurance policy that excludes coverage for treatment that is not “medically necessary”. This term may be defined differently from one health care plan to another.

Multiple employer plans
Benefit plans that serve employees of more than one employer and are set up under collective bargaining agreements.

Multiple Employer Welfare Arrangements (MEWA)
A type of employee association plan that provides benefits to employees of more than one employer.

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Network
Physicians, specialists, hospitals and other health care providers who agree to provide medical care to HMO/PPO members under the terms of a contract.

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Open enrollment
A specified period of time when new subscribers may enroll in a health insurance plan or HMO regardless of their health.

Out-of-pocket limit
A dollar limit on the portion of covered medical expenses and supplies that you must pay during a benefit period (usually a calendar year). When the out of pocket limit is met, you will not have to pay further deductibles or coinsurance for that year. To illustrate, say the out of pocket is $1000 per calendar year and your coinsurance is 20%. When $5000 of covered medical expenses have been incurred, the $1000 out of pocket limit will be met ($5000 at 20%). Thereafter, the plan will pay benefits at 100% and your portion will be $0 for the remainder of that year.

Outpatient services
Services usually provided in clinics, physician or provider officers, ambulatory surgical centers, hospices, home health services, and so forth.

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Point-of-service (POS) plans
Plans that allow members the option of using services outside an HMO network without prior approval

Portability
Under HIPAA, workers with pre-existing medical conditions must receive credit for time in a previous health plan if they join an employer plan.

Pre-certification
A requirement that you notify the insurance company for its approval before you check into a hospital, have elective surgery, visit specialists, have expensive tests (e.g., MRI). Pre-certification does not guarantee the insurance company will pay the medical bills. Also called “utilization review”.

Pre-existing medical condition
A health problem/condition/illness you had prior to applying for insurance and for which you received medical advice, diagnosis, care or treatment. Policies can exclude coverage of any medical condition for a period of time. In most cases, there is a 9 month waiting period for pre-existing medical condition coverage. That means that if a company offers you coverage, they may not provide coverage for that specific pre-existing medical condition for 9 - 12 months. Typical language will say something like: any condition for which you received care or treatment for the past (generally 6 or 12 months) will not be covered for the first (generally 6 or 12 months). In many cases, if have had coverage in place for at least 18 months with no more than a 63 day gap in coverage, and you are just switching insurance companies, the new company will give you credit for having coverage in place and waive the waiting periods for your conditions. This allows you to switch plans if you need to.

Premium waiver provision
An optional provision that takes effect if you become disabled. You will not have to pay premiums for the duration of the disability, including lifetime disability.

Primary care physician
The physician selected by HMO members who serves as a personal doctor and provides all medical treatments and any referrals to medical specialists.

Primary plan
The plan that pays first when you are covered by more than one insurance plan

Prior qualifying coverage
Health plan coverage that was in effect before the effective date of the current or new coverage

Provider
A doctor, hospital, x-ray company, pharmacy, etc. that provides medical health care service.

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Rated policy
A policy issued at a higher than standard premium to cover a person classified as a greater than-average risk, usually due to impaired health or a hazardous occupation. Sometimes called an extra-risk policy.

Rating tables
Tables that companies use to classify risks

Reasonable and customary fees
When a doctor or other provider of medical services submits a bill, the plan will make an evaluation of whether the charges are reasonable and customary for that medical service provider and for the type of service performed. What is reasonable and customary depends on factors such as the specific medical service provided, the qualifications and skill level of the doctor (or other care provider), the geographic area (fees can vary widely in different areas) and anything else that the plan may consider to be pertinent to the evaluation. Companies maintain large computerized databases of information and sophisticated computer programs to determine what is reasonable and customary in a specific situation.

Rescission
When a plan voids your policy back to the beginning. There is no coverage at all and the plan will return the money you paid.

Reinstatement
Resumption of coverage under a policy that has lapsed because of nonpayment of the premium after the grace period has ended.

Renewability
Group health insurance plans are normally 1 year term. Insurers generally review the claims experience of the group at each renewal date and make a renewal offer – often at a different premium. The plan then decides whether to accept the renewal offer.

Risk
The likelihood that you will have a claim while insured.

Risk factor
Things about you that affect your risk (e.g., older age, smoking, heart disease, occupation.

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Second surgical opinion
If surgery is recommended, your plan may require, or in some cases you may request, a review of the case by a second surgeon. If a second opinion is deemed warranted the plan would pay a second surgeon to review the case and concur with the first doctor or suggest an alternative treatment.

Secondary plan
Applies only when you have more than one health insurance plan. The second plan pays only after the primary plan has processed the claim.

Self-insured plan
An organization that pays health care costs out of the organization’s own pocket

Specific disease policy
A plan that covers expenses only for a specific disease identified in the policy. Also called Dread Disease policy.

Spell of illness provision
A period of time during which a patient is being treated for a particular incidence of an illness. Some companies use the terminology “per cause” rather than “spell of illness.” The exact definition can also vary from plan to plan. Here is one example of how it might work: If a patient is confined in a hospital for 5 days for a specific condition, the spell of illness is 5 days. If the confinement continues for an additional 7 days because of another non-related condition, that might be considered to be another 7 day spell of illness. On the other hand, if the total confinement of 12 days (5 days plus 7 days) results from the initial condition or a related condition -- hospital plans usually have lists of conditions that are considered closely related and so constitute a single spell of illness -- the entire confinement might be considered to be one spell of illness lasting 12 days.

Stop-loss clause
A clause in the contract between the plan and you that specifies the maximum payment that will be made for particular types of coverages – for example the total payments for psychiatric coverage or surgery may be limited to some maximum dollar amount. Sometimes the term stop-loss is also used to refer to an arrangement of risk management where the risk is shared among several insurance companies.

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Third party administrator
People who administer employee benefit plans under contract with insurance companies, HMOs and self-funded plans.

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Underwriter
an individual in an insurance company who determines what insurance risks will be accepted and on what terms.

Underwriting
The insurance company’s process for determining whom it will insure.

Usual, customary & reasonable (UCR)
The dollar amount the insurance companies believe to be a fair price for the medical service/procedure in a specific geographic area. Companies have developed their own UCR, which often do not reflect the doctor’s actual bill. If the doctor’s chargers are higher than the companies UCR charge, you generally have to pay the balance.

Utilization review services
A process that reviews, on a case-by-case basis, the utilization, appropriateness, or quality of medical services provided to a person. Examples of utilization review are pre-hospital admission, pre-inpatient certification, second opinions, etc.

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Waiting period
(1) the time period you must wait before you can get health insurance from a new employer;
(2) the time that must pass after becoming insured before the policy will begin to pay benefits for a pre-existing condition or specified illness.

Waiver
An amendment to a policy that excludes coverage for certain medical conditions.

Partners & Associations

International Academy of Compounding Pharmacists California Pharmacists Association Health Insurance Portability and Accountability Act Pharmacy Compounding California national community pharmacists association Greater Ukiah Chamber of Commerce

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