Glossary of Terms

Glossary of Terms

Basic & Supplemental Care:

Basic health care services that an HMO is required to offer. They generally include:

  1. Physician’s services;
  2. Inpatient hospital services;
  3. Outpatient medical services;
  4. Emergency health services;
  5. Diagnostic laboratory services and diagnostic and therapeutic radiology services;
  6. Preventative health services.

Capitation:

Capitation is a method of payment from the HMO to the primary care physician. The payment is not for services rendered, but to the number of members who have chosen that doctor as their PCP.

Community Rating:

Community rating is a method of HMO rate calculation where the rate charged to a group or to an individual for HMO coverage is based on the profit or loss experience of the HMO’s entire population.

Coordination of Benefits:

The method of determining which company pays as primary insurer and which company pays as secondary or excess insurer when a working couple or their dependents have a claim covered by more than 1 group insurance contract.

Copayment/Out-of-Pocket Expense:

The amount of dollars the member must pay for a service, a minimum part of the entire charge for any given service. HMO pays the remaining charges.

Deductible:

The amount of dollars that the member must pay to the provider before a health plan is obligated to make any payment.

Experience Rating:

Experience rating is a method of HMO rate calculations where the rate charged to a group for HMO coverage is based on the profit or loss experience of that particular group.

Fee for Service:

Fee for Service is a method of payment from the HMO to the physician for services rendered to HMO members the physician is paid a fee for service.

Fixed Periodic Prepayment:

The periodic prepayment is the "rate" or "premium" established by the HMO to be paid by or on behalf of the subscriber at specific intervals in return for basic and supplemental health care services.

Gatekeeper Concept:

A system under which the member must select a primary care physician who in turn provides or authorizes all care for the particular member. Any referrals must go through primary care physician. The PCP can open or refuse to open the gate between the member and the health care provider.

Grievance:

This procedure is a function required by law, which gives a dissatisfied member the opportunity to file a written complaint with the HMO and move through several administrative layers in an attempt to get the complaint resolved.

Health Care Facility:

This may be a hospital, urgent care center, skilled nursing facility, or mental healthcare facility.

Managed Care:

An organized method of providing healthcare services; it involves a 3rd party in the planning, approval, and monitoring of an HMO member’s healthcare.

Medical Emergency:

Medically necessary services immediately required because of unforeseen illness, injury or condition.

Medical Necessity/Utilization Review:

A general requirement for HMO coverage of any procedure or treatment: that the treatment is necessary for the medical health of the member; that not receiving such treatment would amount to substandard medical care. Utilization review is an activity conducted by the HMO, which monitors the healthcare services and supplies received by HMO members. This is one measure of the quality of care. Types of utilization reviews:

Preadmission Certification:

The HMO is notified before a member is admitted to a hospital. A decision is made to either 1) approve the hospital admission; 2) deny the hospital admission; 3) disapprove the request altogether based on the absence of needed necessity or ineligibility for coverage under this policy.

Concurrent Review:

An HMO representative goes on site at the hospital during a member’s hospital stay to access the level of care needed and the estimated discharge date.

Retrospective Review:

The HMO, in hindsight, evaluates the patient diagnosis and length of hospital stay. It determines whether all treatment and the length of stay were appropriate.

Open Enrollment:

After two years of operation, an HMO must hold a 30-day open enrollment period at least once every year. During this open enrollment period, it must accept individuals up to its capacity on a first-come, first-served basis. Public notice must be provided and capacity is at the discretion of the Director of Insurance. The HMO is exposed to possible "poor risks" and may lose money on this group as a whole. Open enrollment period for employers are times when the contract is being renewed and new members may join.

Out of Area Services/Non Participating Providers:

Out of area care is a benefit an HMO provides to its members. Out of area care allows for treatment of an enrollee when outside the geographical limits of the HMO. The treatment is usually restricted to emergency care. Providers are hospitals, clinics, physicians, dentists, optometrists, pharmacies, nursing homes, home health agencies, etc. Non-Participating providers would not be under contract with the HMO.

Participating Provider:

A participating physician or specialist under contract with the HMO.

Primary Care Physician:

Physician who provides or authorizes all care for that particular member, any referrals to specialists must be authorized.

Primary Care/Specialty Care:

Primary care is rendered by a physician, which is routine in nature; care which does not require a specialist. Specialty care is care rendered by a specialist in a specific field such as: cardiologist, neurologist.

Prior Authorization/PreCertification:

Prior authorization is receiving permission from the HMO’s Medical Director, as required by the Evidence of Coverage, before a certain medical procedure is performed. Quality Assurance: An activity conducted by the HMO whereby the HMO monitors the quality of healthcare services rendered to its members. This activity is required by law, and the state performs quality assurance audits at least once every 3 years.

Referral:

A Referral is given by the member’s PCP when there is a need for the member to see a specialist. Without a referral from the PCP, the treatment may not be covered.

Restrictions on Choice of Providers:

Members must use participating providers of the HMO to ensure coverage.

Risk Sharing:

Is a financial arrangement between the HMO and its providers whereby the provider shares some of the loss if an HMO’s utilization or medical costs cause an unexpected operational deficit. The provider also shares in the profits.

Self-Referral/Point of Service Contract:

Self-referral is the act of allowing the member to decide when he needs to see a specialist. The member makes his own appointment without any prior authorization or referral from HMO or the PCP. In such "open access" systems, patients make their own appointments with specialists, rather than always having the point of service originate at the PCP.

Service Area:

Service area is the part of the State that the HMO is licensed to operate in. The HMO can only enroll people who live within the service area.

Solicitation Documents:

Advertising materials.

Supplemental Health Care Services:

Are the services that an HMO may offer, but is not required to offer. For example: prescription drugs, vision care, dental care, etc.

Urgent Care:

Medical care which is necessary when a member’s condition must be treated very soon to ensure that the condition does not worsen. Urgent care is for conditions not as severe as conditions requiring emergency care.