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ancillary services.
Auxiliary or sup-plemental services, such as diagnostic services, home health services, physical therapy, and occupational therapy, used to support diagnosis and treatment of a patient's condition.

annual and lifetime maximum benefit amounts.
Maximum dollar amounts set by MCOs that limit the total amount the plan must pay for all healthcare services provided to a subscriber per year or in his or her lifetime.

arbitration.
A process in which the parties to a dispute submit their dispute to an impartial third party for a final, binding decision.

authorization.
A health plan's system of approving payment of benefits for services that satisfy the plan's requirements for coverage.

capitation.
A method of paying for healthcare services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided.

carve-out.
The separation of a medical service (or a group of services) from the basic set of benefits in some way.

claim.
An itemized statement of healthcare services and their costs provided by a hospital, physician's office, or other provider facility. Claims are submitted to the insurer or managed care plan by either the plan member or the provider for payment of the costs incurred.

claimant.
The person or entity submitting a claim.

closed access.
A provision which specifies that plan members must obtain medical services only from network providers through a primary care physician to receive benefits.

closed formulary.
The provision that only those drugs on a preferred list will be covered by a PBM or MCO.

COBRA.
See Consolidated Omnibus Budget Reconciliation Act.

community rating.
A rating method that sets premiums for financing medical care according to the health plan's expected costs of providing medical benefits to the community as a whole rather than to any sub-group within the community. Both low-risk and high-risk classes are factored into community rating, which spreads the expected medical care costs across the entire community.

Consolidated Omnibus Budget Reconciliation Act (COBRA).
A federal act which requires each group health plan to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduced work hours, death or divorce of a covered employee, and termination of employment.

copayment.
A specified dollar amount that a member must pay out-of-pocket for a specified service at the time the service is rendered.

deductible.
A flat amount a group member must pay before the insurer will make any benefit payments.

drug cards.
See pharmaceutical cards.

Employee Retirement Income Security Act (ERISA).
A broad-reaching law that establishes the rights of pension plan participants, standards for the investment of pension plan assets, and requirements for the disclosure of plan provisions and funding.

ethics.
The principles and values that guide the actions of an individual or population when faced with questions of right and wrong.

experience.
The actual cost of providing healthcare to a group during a given period of coverage.

fee-for-service (FFS) payment system.
A benefit payment system in which an insurer reimburses the group member or pays the provider directly for each covered medical expense after the expense has been incurred.

formulary.
A listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given managed population and that are to be used by an MCO's providers in prescribing medications.

fully funded plan.
A health plan under which an insurer or MCO bears the financial responsibility of guaranteeing claim payments and paying for all incurred covered benefits and administration costs.

generic substitution.
The dispensing of a drug that is the generic equivalent of a drug listed on a pharmacy benefit management plan's formulary. In most cases, generic substitution can be performed without physician approval.

Health Insurance Portability and Accountability Act (HIPAA).
A federal law that outlines the requirements that employer-sponsored group insurance plans, insurance companies, and managed care organizations must satisfy in order to provide health insurance coverage in the individual and group healthcare markets.

HIPAA.
See Health Insurance Portability and Accountability Act.

immunization programs.
Preventive care programs designed to monitor and promote the administration of vaccines to guard against childhood illnesses, such as chicken pox, mumps, and measles, and adult illnesses, such as pneumonia and influenza.

independent agents.
Agents that rep-resent several health plans or insurers.

individual market.
A market segment composed of customers not eligible for Medicare or Medicaid who are covered under an individual contract for health coverage.

individual stop-loss coverage.
A type of stop-loss insurance that provides benefits for claims on an individual that exceed a stated amount in a given period. Also known as specific stop-loss coverage.

length of stay (LOS).
The number of days, counted from the day of admission to the day of discharge, that a plan member is confined to a hospital or other facility for each admission.

mail-order pharmacy programs.
Programs that offer drugs ordered and delivered through the mail to plan members at a reduced cost.

managed care.
The integration of both the financing and delivery of health-care within a system that seeks to manage the accessibility, cost, and quality of that care.

Medicaid.
A joint federal and state program that provides hospital expense and medical expense coverage to the low-income population and certain aged and disabled individuals.

medical underwriting.
The evaluation of health questionnaires submitted by all proposed plan members to determine the insurability of the group.

Medicare.
A federal government program established under Title XVIII of the Social Security Act of 1965 to provide hospital expense and medical expense insurance to elderly and disabled persons.

Medicare medical savings account (MSA) plans.
The Medicare+Choice delivery option that consists of a high-deductible catastrophic insurance policy and a tax-preferred medical savings account established for individual Medicare beneficiaries.

Medicare Part A.
The Medicare component that provides basic hospital insurance to cover the costs of inpatient hospital services, confinement in nursing facilities or other extended care facilities after hospitalization, home care services following hospitalization, and hospice care.

Medicare Part B.
The Medicare component that provides benefits to cover the costs of physicians' professional services, whether the services are provided in a hospital, a physician's office, an extended-care facility, a nursing home, or an insured's home.

Medicare SELECT.
A Medicare supplement that uses a preferred provider organization to supplement Medicare Part B coverage.

Medicare supplement.
A private medical expense insurance policy that provides reimbursement for out-of-pocket expenses, such as deductibles and coinsurance payments, or benefits for some medical expenses specifically excluded from Medicare coverage.

Medigap policies.
Individual medical expense insurance policies sold by state-licensed private insurance companies.

Newborns' and Mothers' Health Protection Act (NMHPA).
A law which specifies that group health plans or group healthcare insurers cannot mandate that hospital stays following childbirth be shorter than 48 hours for normal deliveries or 96 hours for cesarean births.

open formulary.
The provision that drugs on the preferred list and those not on the preferred list will both be covered by a PBM or MCO.

outpatient care.
Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility.

pharmaceutical cards.
Identification cards issued by a pharmacy benefit management plan to plan members. These cards assist PBMs in processing and tracking pharmaceutical claims. Also known as drug cards or prescription cards.

preadmission testing.
A utilization management technique that requires plan members who are scheduled for inpatient care to have preliminary tests, such as X-rays and laboratory tests, performed on an outpatient basis prior to admission.

precertification.
A utilization management technique that requires a plan member or the physician in charge of the member's care to notify the plan, in advance, of plans for a patient to undergo a course of care such as a hospital admission or complex diagnostic test. Also known as prior authorization.

pre-existing condition.
In group health insurance, generally a condition for which an individual received medical care during the three months immediately prior to the effective date of coverage.

preferred provider arrangement (PPA).
As defined in state laws, a contract between a healthcare insurer and a healthcare provider or group of providers who agree to provide services to persons covered under the contract. Examples include preferred provider organizations (PPOs) and exclusive provider organizations (EPOs).

preferred provider organization (PPO).
A healthcare benefit arrangement designed to supply services at a discounted cost by providing incentives for members to use designated healthcare providers (who contract with the PPO at a discount), but which also provides coverage for services rendered by healthcare providers who are not part of the PPO network.

premium.
A prepaid payment or series of payments made to a health plan by purchasers, and often plan members, for medical benefits.

prescription benefit management plan.
See pharmacy benefit management plan.

primary care.
General medical care that is provided directly to a patient without referral from another physician. It is focused on preventive care and the treatment of routine injuries and illnesses.

primary care physician.
See primary care provider.

primary care provider (PCP).
A physician or other medical professional who serves as a group member's first contact with a plan's healthcare system. Also known as a primary care physician, personal care physician, or personal care provider.

prior authorization.
In the context of a pharmacy benefit management (PBM) plan, a program that requires physicians to obtain certification of medical necessity prior to drug dispensing. Also known as a medical-necessity review. See also precertification.

rating.
The process of calculating the appropriate premium to charge purchasers, given the degree of risk represented by the individual or group, the expected costs to deliver medical services, and the expected marketability and competitiveness of the MCO's plan.

receivership.
A situation in which the state insurance commissioner, acting for a state court, takes control of and administers an HMO's assets and liabilities.

reserves.
Estimates of money that an insurer needs to pay future business obligations.

self-funded plan.
A health plan under which an employer or other group sponsor, rather than an MCO or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members. Also known as a self-insured plan.

self-insured plan.
See self-funded plan.

senior market.
A market segment that is comprised largely of persons over age 65 who are eligible for Medicare benefits.

small group.
Although each MCO's size limit may vary, generally a group composed of 2 to 99 members for which health coverage is provided by the group sponsor.

stock company.
A company that is owned by the people and organizations that purchase shares of the company's stock.

stop-loss insurance.
A type of insurance coverage that enables provider organizations or self-funded groups to place a dollar limit on their liability for paying claims and requires the insurer issuing the insurance to reimburse the insured organization for claims paid in excess of a specified yearly maximum.

termination provision.
A provider contract clause that describes how and under what circumstances the parties may end the contract.

termination with cause.
A contract provision, included in all standard provider contracts, that allows either the MCO or the provider to terminate the contract when the other party does not live up to its contractual obligations.

termination without cause.
A contract provision that allows either the MCO or the provider to terminate the contract without providing a reason or offering an appeals process.

therapeutic substitution.
The dispensing of a different chemical entity within the same drug class of a drug listed on a pharmacy benefit management plan's formulary. Therapeutic substitution always requires physician approval.

third party administrator (TPA).
A company that provides administrative services to MCOs or self-funded health plans but that does not have the financial responsibility for paying benefits.

turnaround time.
The amount of time required to complete a particular member-initiated transaction.

usual, customary, and reasonable (UCR) fee.
The amount commonly charged for a particular medical service by physicians within a particular geographic region. UCR fees are used by traditional health insurance companies as the basis for physician reimbursement.

wait time.
The length of time, on average, that members must stay on the telephone before they receive assistance.

workers' compensation.
A state-mandated insurance program that provides benefits for healthcare costs and lost wages to qualified employees and their dependents if an employee suffers a work-related injury or disease.

workers' compensation indemnity benefits.
Benefits that replace an employee's wages while the employee is unable to work because of a work-related injury or illness.