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Glossary

Accident rider: Accident coverage is an extra feature, or "rider," that will cover the costs of an accident or injury. It is available for an extra cost on some Priority Health individual health insurance plans.

Agent: An independent insurance agent can explain health insurance terms to you and suggest what plan would work best for your needs, your health and your budget. You don't pay more when you use an agent to buy your policy.

Allowed amount: Maximum amount on which payment is based for covered health care services. This may be called "eligible expense," "payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference.

Alternate benefits: Under our PriorityPOSSM plan, this refers to covered services received from providers who do not participate in the PriorityPOS network. This is sometimes referred to as "out-of-network benefits." Members pay more for alternate benefits than for preferred (in-network) benefits.

Appeal: A request for your health insurer or plan to review a decision or a grievance again.

Balance billing: When a provider bills you for the difference between the provider's charge and the allowed amount. For example, if the provider's charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

Benefit: A health care product or service that is paid for (in part or whole) by the insurance company.

CPT: Current Procedural Terminology, the medical service coding system managed by the American Medical Association. Most services patients receive can be identified by CPT code, from office visits to complex surgeries.

Capitation: A method of paying for medical services on a per-person rather than a per-procedure basis. Under capitation, an insurance company pays a participating doctor a fixed amount per month for every member who is his or her patient, regardless of how much or how little care the member receives.

Case management: Coordinated health care for members who are at risk for or have suffered a catastrophic health episode or who have a condition that could lead to an increased use of services.

Claim: A request or bill from an individual or a health care provider to pay for covered services.

Clinical Practice Guidelines: See Practice Guidelines.

Certificate of coverage (COC): A booklet given to each person covered by a PriorityHMOSM plan describing what is covered and what is not, subject to changes stated in any rider that might add to or delete some covered benefits.

Co-insurance, coinsurance: Your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. You pay co-insurance plus any deductibles you owe. For example, if the health insurance or plan's allowed amount for an office visit is $100 and you've met your deductible, your co-insurance payment of 20% would be $20. The health insurance or plan pays the rest of the allowed amount.

Complications of pregnancy: Conditions due to pregnancy, labor and delivery that require medical care to prevent serious harm to the health of the mother or the fetus. Morning sickness and a non-emergency caesarean section aren't complications of pregnancy.

Consumer-engaged health care (CEH): Health insurance coverage that gives members more control over their health plan costs and overall health care. Generally combines a high deductible health plan with a health savings account, health reimbursement arrangement or wellness program.

Copayment: A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.

Coverage documents: Documents that explain exactly what coverage includes and what it does not include, how to access health care, what services require prior approval from Priority Health, and much more. Depending on what plan they have, members of Priority Health plans may receive an insurance policy, a Certificate of Coverage, an Explanation of Coverage, or a Summary Plan Description. If you don't receive one of these documents after you've been enrolled, contact your Human Resources staff or call our Customer Service number.

Covered: When a service is "covered," it means the health plan will pay for it after the member meets his or her deductible. Some services are covered before the member meets the deductible. Some services, plastic surgery for example, are usually not covered by a health plan.

Deductible: The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay. For example, if your deductible is $1000, your plan won't pay anything until you've met your $1000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.

Durable Medical Equipment (DME): Equipment and supplies ordered by a health care provider for everyday or extended use. Coverage for DME may include: oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics.

Disease management: Educational materials and counseling from nurse case managers that can help people with chronic illnesses by keeping their conditions from getting worse.

Drugs:

  • First Line Agent: A drug considered to be the first choice to treat a specific condition.
  • Second Line Agent: A drug that is used to treat a specific condition if the first line agent fails, or if a patient is unable to take the first line agent.
Emergency medical condition: An illness, injury, symptom or condition so serious that a reasonable person would seek care right away to avoid severe harm.

Emergency medical transportation: Ambulance services for an emergency medical condition.

Emergency room care: Emergency services you get in an emergency room.

Emergency services: Evaluation of an emergency medical condition and treatment to keep the condition from getting worse.

Excluded services: Excluded Services Health care services that your health insurance or plan doesn't pay for or cover.

Fee-for-service: The traditional method of paying for medical services. A doctor charges a fee for each service provided, and the insurer pays all or part of that fee. Sometimes the patient pays a copayment for each visit to the doctor.

Flexible spending account (FSA): A special account that allows individuals to set aside tax-free dollars to pay for dependent care and certain health expenses that are not paid for by a health insurance plan.

Formulary: Also called "approved drug list," a formulary is a list of medications that a health plan, working with pharmacists and physicians, approves for coverage. Drugs are included in a plan's formulary based on their proven effectiveness and cost-effectiveness. Drugs not included in a plan's formulary are not covered.

Generic: A drug that has only a chemical name, as opposed to a brand name. Every drug is given a generic name to describe its chemical makeup. A generic equivalent drug is a chemical copy of the original brand-name drug. There are also generic alternative drugs, which are not chemically identical but which treat the same disease or condition.

Grievance: A complaint that you communicate to your health insurer or plan.

Guaranteed issue: In certain situations, such as losing your employer-sponsored retiree health insurance, a health insurance company cannot deny you from enrolling in its Medigap policies or increase your Medigap premium because of your health conditions. This period is called your "guaranteed issue" period. During this period, you have a "guaranteed issue right" to enroll.

HCPCS: HCFA (see below) Common Procedural Coding System, an expansion of the AMA's CPT codes to account for additional services such as ambulance services, supplies, and equipment.

HCFA: Health Care Financing Administration, the agency that administers the Medicare, Medicaid, and Child Health Insurance programs.

Habilitation services: Health care services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who isn't walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.

Health insurance: A contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium.

Health maintenance organization (HMO): An organization that provides health care in return for pre-set monthly payments. Most HMOs provide care through a network of doctors, hospitals and other medical professionals that their members must use in order to be covered for that care.

Health reimbursement arrangement (HRA): A type of health insurance plan that reimburses employees for qualified medical expenses.

Health savings account (HSA): A special account owned by an individual used to pay for current and future medical expenses.

High deductible health plan (HDHP): Insurance that requires members to pay for all covered benefits, except preventive care services, until they meet a set deductible. HDHPs typically have lower premiums and higher deductibles than other health plans.

HMO models: HMOs come in different forms, or "models."

  • Staff Model HMO: A type of HMO in which the doctors and other medical professionals are salaried employees of the HMO, and the clinics or health centers in which they practice are owned by the HMO.
  • Group Model HMO: An HMO made up of one or more physician group practices that are not owned by the HMO, but that operate as independent partnerships or professional corporations. The HMO pays the groups at a negotiated rate, and each group is responsible for paying its doctors and other staff and for paying for hospital care or care from outside specialists.
  • Independent Practice Association (IPA): IPAs generally include large numbers of individual private practice physicians who are paid either a fee or a fixed amount per patient to take care of the IPA's members.
  • Mixed Model HMO: A health plan that includes more than one form of HMO within a single plan. For instance, a staff model HMO might also contract with independent physician groups or with individual private practice physicians.
Home health care: Health care services a person receives at home.

Hospice services: Services to provide comfort and support for persons in the last stages of a terminal illness and their families.

Hospitalization: Care in a hospital that requires admission as an inpatient and usually requires an overnight stay. An overnight stay for observation could be outpatient care.

Hospital outpatient care: Care in a hospital that usually doesn't require an overnight stay.

In-network co-insurance: The percent (for example, 20%) you pay of the allowed amount for covered health care services to providers who contract with your health insurance or plan. In-network co-insurance usually costs you less than out-of-network co-insurance.

In-network co-payment: A fixed amount (for example, $15) you pay for covered health care services to providers who contract with your health insurance or plan. In-network co-payments usually are less than out-of-network co-payments.

Leased network/partner network: A network Priority Health has contracted with to provide services to members who live or travel outside of our standard coverage area.

Managed care organization: A general term for HMOs and all health plans that provide health care in return for pre-set monthly payments and that coordinate care through a specific network of primary care physicians and hospitals.

Medically necessary: Health care services or supplies needed to prevent, diagnose or treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of medicine.

Network: The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.

Non-preferred provider: A provider who doesn't have a contract with your health insurer or plan to provide services to you. You'll pay more to see a non-preferred provider. Check your policy to see if you can go to all providers who have contracted with your health insurance or plan, or if your health insurance or plan has a "tiered" network and you must pay extra to see some providers.

Out-of-network co-insurance: The percent (for example, 40%) you pay of the allowed amount for covered health care services to providers who do not contract with your health insurance or plan. Out-of-network co-insurance usually costs you more than in-network co-insurance.

Out-of-network co-payment: A fixed amount (for example, $30) you pay for covered health care services from providers who do not contract with your health insurance or plan. Out-of-network co-payments usually are more than in-network co-payments.

Out-of-pocket limit: The most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount. This limit never includes your premium, balance-billed charges or health care your health insurance or plan doesn't cover. Some health insurance or plans don't count all of your co-payments, deductibles, co-insurance payments, out-of-network payments or other expenses toward this limit.

Physician services: Health care services a licensed medical physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) provides or coordinates.

Open enrollment period: Under Medigap, your open enrollment period is the six-month time period after enrolling in Medicare Part B. It begins on the first day of the month in which you are BOTH 1) age 65 or older and 2) enrolled in Medicare Part B.

Out-of-network: Not in the health plan's network of selected and approved doctors and hospitals. Members who get care out-of-network (sometimes called out-of-area) without getting permission from their health plan to do so may have to pay for all or most of that care themselves. Exceptions are usually made for extreme emergencies or urgent care needed when traveling away from home.

Out-of-pocket maximum: The most a plan member will pay for covered services each year, including the deductible and coinsurance.

Patient-centered medical home (PCMH): A model for care provided by physician practices aimed at strengthening the physician-patient relationship by replacing care based on illnesses and patient complaints with coordinated care and a long-term healing relationship.

Plan: A benefit your employer, union or other group sponsor provides to you to pay for your health care services.

Preauthorization: A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Preauthorization isn't a promise your health insurance or plan will cover the cost.

Preferred provider: A provider who has a contract with your health insurer or plan to provide services to you at a discount. Check your policy to see if you can see all preferred providers or if your health insurance or plan has a "tiered" network and you must pay extra to see some providers. Your health insurance or plan may have preferred providers who are also "participating" providers. Participating providers also contract with your health insurer or plan, but the discount may not be as great, and you may have to pay more.

Point-of-service (POS) plan: A type of managed-care coverage that allows members to choose to receive services either from participating providers or from providers outside the PriorityPOS plan's network. In-network care from participating health care providers is more fully covered; for out-of-network care, members pay deductibles and coinsurance, much like traditional health insurance coverage.

There are two slightly different versions of the PriorityPOSSM health plan.
  • POS A refers to the network used by the traditional fully funded point-of-service (POS) plan, where for a set premium per member, Priority Health covers both the administrative and the medical costs of all members.
  • POS B refers to the network used by the self-funded and shared funded versions of the POS plan, where the members' employer covers all or part of the medical costs.
Polypharmacy: When a patient uses multiple medications that duplicate or interact with each other, possibly causing an adverse drug reaction. Generally occurs when a patient visits more than one physician and is prescribed more drugs than needed for a certain condition, doesn't follow dosage or pharmacist instructions, or has too many pills to take (also called pill burden).

Practice guidelines (also called Clinical Practice Guidelines): Carefully developed guidelines on how best to diagnose and treat specific medical conditions. Practice guidelines are usually based on clinical literature showing effectiveness and on the opinions of experts. They are designed to help physicians and patients make decisions, and to help a health plan evaluate appropriateness and medical necessity of care.

Preferred benefits: Under our PriorityPOS plan, this refers to covered services received from health care providers who participate in the PriorityPOS network. This is sometimes referred to as "in-network benefits."

Preferred provider organization (PPO): A network of doctors and hospitals that provides care at a lower cost than through traditional insurance. PPO members get better benefits (more coverage) when they use the PPO's network of health care providers. They pay higher out-of-pocket costs when they choose to get care outside the PPO network.

Premium: The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly or yearly.

Prescription drug coverage: Health insurance or plan that helps pay for prescription drugs and medications.

Prescription drugs: Drugs and medications that by law require a prescription.

Preventive care: Care designed to prevent disease altogether, to detect and treat it early, or to manage its course most effectively. Examples include immunization shots, screenings like Pap smears, mammograms and colonoscopies, and cholesterol checks.

Primary care physician: A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine) who directly provides or coordinates a range of health care services for a patient.

Primary care provider: A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), nurse practitioner, clinical nurse specialist or physician assistant, as allowed under state law, who provides, coordinates or helps a patient access a range of health care services.

Primary care: Preventive health care and routine medical care that is typically provided by a doctor trained in internal medicine, pediatrics, or family practice, or by a nurse, nurse practitioner or physician's assistant.

Product: A health plan, such as HMO, POS, or PPO.

Provider: A physician (M.D. – Medical Doctor or D.O. – Doctor of Osteopathic Medicine), health care professional or health care facility licensed, certified or accredited as required by state law.

Reconstructive surgery: Surgery and follow-up treatment needed to correct or improve a part of the body because of birth defects, accidents, injuries or medical conditions.

Referral: A formal request to get care from a specialist or hospital. Some specialists require a referral from a patient's primary care doctor before they will see a patient.

Rehabilitation services: Health care services that help a person keep, get back or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt or disabled. These services may include physical and occupational therapy, speech-language pathology and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.

Rider: An addition to a member's coverage documents that describes any changes to their basic plan. For example, a contraceptive rider may add or delete contraceptive coverage.

Skilled nursing care: Services from licensed nurses in your own home or in a nursing home. Skilled care services are from technicians and therapists in your own home or in a nursing home.

Specialist: A physician specialist focuses on a specific area of medicine or a group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions. A non-physician specialist is a provider who has more training in a specific area of health care.

Specialty drug: A drug that requires special handling. It is generally self-administered and used for a chronic illness.

Specialty pharmacy: A pharmacy that specializes in the handling, distribution, and patient management of specialty drugs.

State Medicaid carve out: A group of drugs that the State of Michigan, not Priority Health, determines to be covered or not for Medicaid plan members.

Tier: Classification for drugs listed in our formulary or approved drug list.

  • Generic: Equivalent or alternative to brand-name drugs, but they cost less.
  • Preferred brand: Brand-name drug that requires a higher copayment than generic, but a lower copay than a non-preferred drug. These drugs are commonly prescribed and selected based on their effectiveness.
  • Non-preferred brand: Brand-name drug that requires an even higher level of copayment. These drugs usually have lower-cost alternatives with the same or better effectiveness.
  • Preferred specialty: Specialty drug that is selected based on its effectiveness, safety and cost-effectiveness.
  • Non-preferred specialty: Specialty drug that requires the highest level of copayment. These drugs usually have lower-cost alternatives with the same or better effectiveness.
UCR (Usual, Customary and Reasonable): The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.

Urgent care: Care for an illness, injury or condition serious enough that a reasonable person would seek care right away, but not so severe as to require emergency room care.

Health insurance and managed care are complicated topics. We hope these definitions help you make sense of your coverage. Many of these definitions were taken from the National Committee for Quality Assurance (www.ncqa.org) and United States Department of Labor (www.dol.gov) websites.

Last modified: 6/5/2013
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