Glossary of Managed Care Terms

These definitions may help you navigate the language of managed care. Many of these definitions were taken from the National Committee for Quality Assurance website.

Alternate benefits: Under our PriorityPOS^SM 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 will pay more for alternate benefits than for preferred (in-network) benefits.

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.

Claim: A request made by an individual or a health care provider to the individual's insurance company for the insurance company to pay for covered services.

Clinical Practice Guidelines: See Practice Guidelines.

Certificate of coverage (COC): A booklet given to each person covered by a PriorityHMO^SM plan describing what is covered and what is not, subject to changes stated in any riders that might be added by their employer.

Coinsurance: A payment arrangement where the patient pays a percentage of his or her health care costs and their health insurance plan pays a percentage. These are often referred to by the percentages, such as "80/20 plan" or "90/10 plan," indicating what percentage the plan pays and what percentage the member pays.

Copay, copayment: A fixed amount that the patient pays each time he or she receives a covered service. Depending on the patient's plan, they may pay a copayment for a visit to the doctor, to a specialist, to the ER, or even when they receive high-level radiology tests such as CT scans.

Coverage documents: A document that tells exactly what the health plan 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.

Deductible: A fixed amount the patient must pay up front each year for their health care services before the insurer begins covering the cost of care.

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.
  

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.

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.

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.

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.

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.

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.

Network: (Also called "participating" or "in-network") The doctors, clinics, health centers, medical group practices, hospitals, and other health care providers that an HMO, PPO, or other managed care network plan has selected and contracted with to care for its members.

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.

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 HMO's network. In-network care from participating health care providers is more fully covered; for out-of-network care, members pay deductibles and a percentage of the cost of care, much like traditional health insurance coverage.

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^SM plan, this refers to covered services received from 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.

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

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.

Primary care physician, primary care provider (PCP): A health care professional, usually an internist, pediatrician or family physician, devoted to general medical care of patients. Most managed-care plans require members to choose a primary care physician or other primary care provider (such as a nurse practitioner) who then provides or coordinates all care for that patient.

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

Provider: A person, practice or facility that provides health care services. Providers include doctors, specialists, nurses, health centers, physical therapists, labs, hospitals, etc.

Referral: A formal process that authorizes a member 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.

Rider: An addition to a member's coverage documents that describes any changes to the basic plan that has been requested and approved by the employer, for example, a contraceptive rider which adds or deletes contraceptive coverage.

Specialist: A doctor or other health professional whose training and expertise are in a specific area of medicine, such as cardiology or dermatology.

State Medicaid carve out: A group of drugs for which the State of Michigan, not Priority Health, determines the conditions of coverage.