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Health Policy Glossary
To see all glossary entries, click here.
ACA: The Patient Protection and Affordable Care Act
A landmark law enacted March 23, 2010 that expands access to quality, stable, affordable health care; slows the growth of health care costs; and improves the quality of care.
Academic detailing
Academic detailing programs provide prescribers with objective information on prescription drugs, based on the best available evidence-based science. By providing outreach visits to practitioners, the approach resembles the marketing approach of drug companies, but instead uses clinicians, pharmacists or nurses to present balanced, evidence-based information about common prescribing choices without a sales agenda.
Actuarial value
The percentage of health care costs covered by an insurance company for the average enrollee. For example, if a plan has an actuarial value of 70 percent, on average, a patient would be responsible for 30 percent of the costs of all covered benefits.
Adverse selection
The trend of people only purchasing insurance when they are sick and have significant health expenses; or, the separation of healthier individuals into some insurance plans and sicker individuals into others.
Annual or lifetime benefit caps
The maximum amount that health insurance plans will cover in claims for their members during a one-year period (annual benefit cap) or throughout that individual's membership (lifetime benefit cap). Annual or lifetime caps may be on all claims, or only on certain benefits within a plan.
Balance billing
When a patient receives services from a health care provider that does not participate in his or her insurer's network, the health care provider is not obligated to accept the insurer's payment as payment in full and may bill the patient for the unpaid amount.
Basic Health Plan (BHP)
A state-run health plan that would cover moderate-income adults who are not eligible for Medicaid (people with income between 133 and 200 percent of the federal poverty level) and legal immigrants with incomes below 133 percent FPL whose immigration status disqualifies them from Medicaid. These plans must provide at least the essential health benefits under ACA, and consumers may not be charged more than what they would have paid for a plan in the Exchange.
Benefits
Health care items or services covered by a health insurance plan. Covered benefits are defined in the health insurance plan's coverage documents.
Benefit mandate
A law that requires insurance coverage for screening, diagnosis or treatment of a specific disease or condition; for specific types of health care treatments or services; or for coverage for services by specific types of health care providers.
Brand name
The name a company gives their product. For instance, Tylenol is one brand name for the generic drug acetaminophen. Usually brand name drugs are more expensive than their generic counterparts.
Broker (also called agent or producer)
An individual or business entity licensed to sell or negotiate insurance contracts on behalf of a client. A broker typically purchases insurance on behalf of a consumer or small business, while an agent typically works for the health insurer.
Budget neutrality
A health expansion plan in which new costs are balanced by spending cuts elsewhere, so that overall spending remains unchanged. Medicaid waivers often carry a budget neutrality requirement by the federal government.
Certificate of need
A regulatory process that requires hospitals and other health care facilities to obtain state approval before offering certain new or expanded services.
Children's Health Insurance Program (CHIP)
A federal health insurance program created in 1997 to provide coverage to uninsured low and moderate-income children who were not eligible for Medicaid. Like Medicaid, the federal government matches state spending for CHIP (at an enhanced rate compared to Medicaid), however, federal CHIP funds are capped in each state. The Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2009 was signed by President Obama in February 2009. The Act expanded the program by adding $33 billion in federal funds for children's coverage over the next four and half years, and is expected to provide coverage for 4.1 million children who otherwise would have been uninsured.
Co-insurance
The patient's share (calculated as a percentage) of a health care provider's negotiated charge for a covered health care service. For example, the insurance may pay 80% of a charge for certain benefits. The remaining 20% of the charge for services is the patient's co-insurance. In this case, if the total bill were $100, the co-insurance payment would be $20.
Co-payment
A flat-dollar amount a patient must pay when visiting a health care provider, receiving a medical service, or filling a prescription. For instance, a health insurer may set doctor visit co-payments at $15 and brand-name drug co-payments at $35.
Community rating
Pure community rating requires insurers to set the same premiums for everyone, regardless of age, health, gender or other factors. Adjusted community rating prohibits insurers from varying premiums based on health status or claims history, but it may allow insurers to vary rates (within limits) based on factors such as age, geography, gender and family composition.
Connector
A common marketplace of health insurance options for individuals designed to help individuals and businesses compare plans and make informed choices. Also known as an Exchange.
Cost-sharing
Any payment -- such as a deductible or co-insurance -- that a patient is required to make towards his or her health care expenses. Also referred to as out-of-pocket expenses.
Crowd-out
The concept that publicly financed health coverage prompts employers and individuals to drop private insurance to enroll in public programs.
Deductible
A dollar amount that a patient must pay for health care services each year before the insurer will begin paying claims under a health plan. The ACA limits annual deductibles at $2,000 for individuals, and $4,000 for families.
Deemer
Insurers required to file proposed premium rate increases with the governing insurance department may have requested increases "deemed" reasonable if the insurance department does not disapprove or reduce the proposed increase within a specified period of time (generally 30, 60 or 90 days).
Delivery System Reform
Wide-ranging reforms that would fundamentally change the way the health care is provided and organized. Strategies include strengthening the primary care system, encouraging care coordination, promoting care management of high-cost patients with complex conditions, and reform of the payment system.
Direct Purchase Market
The health insurance market that can be bought directly from an insurer, rather than through a group (such as an employer). Also called the individual market or non-group market.
Disproportionate Share Hospital (DSH) Funding
Payments that provide additional help to hospitals that serve a significant, disproportionate number of low-income patients; eligible hospitals are referred to as DSH hospitals. States receive an annual DSH allotment to cover the costs of hospitals that provide care to low-income patients that are not paid by other payers, such as Medicare, Medicaid, the Children's Health Insurance Program (CHIP) or other health insurance.
ERISA (Employee Retirement Income Security Act of 1974)
A federal law that governs employee benefit programs and includes general protections about the disclosure of information. Among other policies, ERISA prevents states from creating laws that directly regulate employer heath plans if the employer "self insures." ERISA also prohibits states from requiring employers to provide health benefits.
Essential health benefits
A set of health care service categories that must be covered by most health plans, starting in 2014. Categories include emergency services, hospitalizations, maternity and newborn care, and laboratory services. Insurance plans must cover these benefits to be offered through Exchanges or in the small group or individual markets, and all Medicaid plans must cover these services by 2014.
Exchange
A common marketplace of health insurance options for individuals designed to help individuals and businesses compare plans and make informed choices. Also known as a Connector.
Federal match
The federal government matches each state's Medicaid and CHIP (Children's Health Insurance Program) spending according to a formula called the Federal Medical Assistance Percentage (FMAP). Every state receives at least a 50% match. For example, for every $1 in state spending, a state with a 65 percent matching rate would receive an additional $1.86 from the federal government.
Fee-for-service
A payment system in which health insurance plans reimburse physicians and hospitals for individual services provided. These plans allow clients to choose any physician or hospital. However, they also give providers incentives to increase volume of services and increase costs of services.
Federal Poverty Level (FPL)
A minimum amount of income - as set by the U.S. government - that a family needs for necessities. If a person or family is below the federal poverty level, they are classified as living in poverty. The Federal Poverty Level is used as a measure of eligibility for numerous programs including Medicaid and CHIP (Children's Health Insurance Program).
File and Use
Under file and use systems, proposed premium rate increases are allowed to go into effect after a certain period of time. States insurance departments can act later if a rate is unreasonable. In general, complaints from consumers or policyholders are required to initiate state action on an existing rate. What, if anything, is actually filed as a companion to a rate increase varies from state to state.
Formulary
A list of drugs that a health plan will cover, either fully or in part. Formularies vary by health plan. Also called a Preferred Drug List (PDL).
Fully-insured plan
A plan is fully insured when all health benefits are guaranteed under a contract of insurance that transfers that risk from the employer group to an insurer.
Guaranteed issue
A requirement that insurers sell insurance policies to anyone who seeks one, regardless of health, income, age or other factors.
Global budget
A fixed budget or expenditure target for health care spending to providers, which aim to contain health care costs and improve quality. A global budget requires one payment per patient for an extended period of time. For example, a hospital could receive one payment for a particular patient to cover all health needs for one month. The type of payment can vary depending on services covered.
Go-bare period
A requirement that people remain uninsured for a period of time before they enroll in a public health insurance program, unless they have recently lost a job where they had employer-sponsored coverage. (This practice is common in state CHIP and other public insurance programs.)
Group health plan
A benefit plan for employees run by an employer or employee organization (or union) that provides insurance for participants. Plans may be small group or large group plans.
Group insurance market
Pertaining to all group health plans, or where an employer purchases a group health insurance plan. May be small group or large group.
Health Information Technology (HIT)
Health information technology allows comprehensive management of medical information and its secure exchange between health care consumers and providers. Broad use of HIT has the potential to improve health care quality, prevent medical errors, increase the efficiency of care provision and reduce unnecessary health care costs, increase administrative efficiencies, decrease paperwork, expand access to affordable care, and improve population health.
Health Insurance Portability and Accountability Act (HIPAA)
A federal law that prevents workers from being locked out of insurance or having to wait for coverage due to preexisting medical conditions. The law also prohibits insurers from discriminating against workers based on their medical history and provides privacy protections for patients.
Health status
A patient's medical conditions (both physical and mental health), claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.
High risk pool (state)
High-risk pool plans offer health insurance coverage that is subsidized by a state government to people who have been locked out of the individual market because of a pre-existing condition.
High risk pool
Typically, a nonprofit association created by a state to provide health insurance for people with pre-existing health conditions who cannot otherwise access insurance.
HMOs (Health Maintenance Organizations)
A type of health insurance plan that usually limits coverage to a network - a group of doctors and health care providers who work for or contract with the HMO. Receiving care generally has to happen within the network, except in an emergency.
Individual health insurance plan
Health insurance coverage for people who do not have a connection to a group health plan, either through an employer or another means. Also called the non-group or the direct purchase
Individual insurance market
Health insurance coverage for people who do not have a connection to a group health plan. Also called the non-group market or the direct purchase market.
Individual responsibility requirement
A requirement that people obtain health insurance that meets minimum standards, with a tax penalty for not doing so. Under the Affordable Care Act, some groups are exempt from the penalty.
There are no entries for J. There are no entries for K. There are no entries for L.Medicaid
A state-administered health insurance program for low-income families and children, pregnant women, the elderly, people with disabilities, and in some states, other adults. The federal government provides a portion of the funding for Medicaid and sets guidelines for the program. States have choices in how they design their program, so Medicaid varies state by state and may have a different name in your state.
Medicaid managed care organizations
Managed care organizations that provide services to Medicaid beneficiaries. This system of health delivery and financing coordinates the use of health services by its members, designates covered health services, provides a specific provider network, and directs the use of medical care services using a monthly capitated payment.
Medicaid waiver
Sections 1115 and 1915 of the Social Security Act define specific circumstances under which the federal government may, at a state's request, "waive" certain provisions of federal Medicaid laws. The "waiver" is the agreement between the federal government and the state that exempts the state from these provisions and includes special terms and conditions that define who may be covered by the state. For example, some states use Medicaid waivers to extend Medicaid coverage to adults who do not have dependent children -- a group that does not ordinarily qualify for Medicaid under federal law.
Medical home
An approach to providing comprehensive primary care through partnerships between patients and their physicians in a accessible, coordinated, comprehensive, family-centered, and culturally effective manner. The provision of medical homes may allow better access to health care and improve health.
Medical loss ratio
The percentage of premium dollars an insurer spends on expenses for medical care as compared to dollars spent on administrative costs, marketing, and profit. The Affordable Care Act sets this ratio at 80 percent in the individual and small group insurance markets and at 85 percent in the large group market. States may set rules that exceed this ratio.
Medical Underwriting
Medical underwriting is the practice that allows insurance carriers to decide whom to sell coverage to, what benefits to offer, and what premiums to charge based on a number of criteria, including health status, prior medical claims, age, gender, and other factors. Medical underwriting is common in the individual insurance market, but is prohibited in some states. Many states have some restrictions on medical underwriting, or provide other options, such as high risk pools, to individuals turned down for insurance.
Medicare
Medicare is the health insurance program for Americans ages 65 and older, and for younger adults with permanent disabilities. Established in 1965 under Title XVIII of the Social Security Act, Medicare was initially established to provide health insurance to individuals age 65 and older, regardless of income or medical history. The program was expanded in 1972 to include individuals under age 65 with permanent disabilities. Medicare has four parts, each covering different benefits. Part A covers inpatient hospital services, skilled nursing facility, home health, and hospice care, and is funded by a dedicated tax of 2.9 percent of earnings paid by employers and workers. Part B helps pay for physician, outpatient, home health, and preventive services, and is funded by general revenues and beneficiary premiums ($96.40 per month in 2009). Part C, also known as the Medicare Advantage program, allows beneficiaries to enroll in a private plan, that receives payments from Medicare to provide Medicare-covered benefits. Part D is the prescription drug benefit, delivered through private plans that contract with Medicare. Part D is funded by general revenues, beneficiary premiums, and state payments.
Medicare Savings Programs
Medicare Savings Programs provide eligible Medicare beneficiaries with financial assistance for Medicare premiums and cost-sharing. There are several different programs for beneficiaries:
1) Qualified Medicare Beneficiaries (QMBs) have their Medicare Part B premiums paid through federal and state Medicaid matching funds. In addition, if they see health providers who accept Medicaid, QMBs do not have to pay cost-sharing for Medicare services.
2) Specified Low-Income Medicare Beneficiaries (SLMBs) also have their Medicare Part B premiums paid by federal and state Medicaid-matching funds. However, SLMBs are responsible for cost-sharing for Medicare services, which is typically 20% of charges for doctor visits.
3) Qualified Individuals (QIs) have their Medicare Part B premiums paid through a federal block grant to state Medicaid agencies. However, QIs are responsible for cost sharing for Medicare, and if the state exhausts its funds, the state is not required to continue paying premiums for QIs.
Mid-level Providers
Providers labeled mid-level include nurse practitioners, physician assistants, community health workers, and other providers that support clinical care either with or without physician supervision.
Minimum Participation Rates
A minimum participation rate requires a certain proportion of employees sign up for an employer’s health plan. Insurers do this to ensure that not just sick employees will participate. Insurance companies sometimes impose minimum participation rates and contribution rates that small employers must meet in order to buy coverage.
Monthly capitation
A monthly fee per person, rather than a payment per service, paid by a managed care plan to a provider network.
Network
A group of doctors, hospitals, and other health care providers that an insurance company contracts with to provide services to its customers. These doctors and hospitals may directly work for the insurance company (on a salaried basis) or have contracts to provide specific services.
“Never Events”
Medical errors or threats to patient safety by providers for which there exist safety guidelines that could prevent these from occurring. Also called potentially preventable complications (PPCs).
Non-group market
The health insurance market that can be bought directly from an insurer, rather than through a group (such as an employer). Also called the direct purchase market or individual market.
Non-profit health plans
Insurance plans which cannot sell shares of stock and which must operate in the interest of the public good. In return, they receive a tax benefit.
Out of network
An out-of-network provider does not contract with your insurance company. Health plans often require higher out-of-pocket costs or may not cover out-of-network providers at all.
Out-of-pocket expenses
Any payment -- such as a deductible or co-insurance -- that a patient is required to make towards his or her health care expenses. Also referred to as cost sharing.
Out-of-pocket maximum
A limit on the cost a patient may be required to pay for covered services after your deductible is reached. In most cases, after you have hit this limit, your future charges will be paid for by the plan. This limit does not apply to premiums, balance-billing or services that are not covered by the plan.
Pay for performance (P4P)
The idea that there should be a direct linkage between what is paid for health services and the value of the services purchased. Pay-for-performance changes reimbursement methods to reward providers for providing higher quality and cost-efficient care.
Pay or play
The policy that provides employers the choice of whether to "play" by providing health care benefits to their employees or "pay" by paying a fine to the state.
Potentially preventable complications (PPCs)
Medical errors or threats to patient safety by providers for which there exist safety guidelines that could prevent these from occurring. Also called "never events."
Pre-existing condition
A condition, disability or illness (either physical or mental) that a patient has before enrolling in a health plan.
Pre-existing condition exclusionary period
Health insurance plans sometimes accept a person conditionally by providing a pre-existing condition exclusion period. Although a person is enrolled in a health plan, s/he may not be covered for any care related to a pre-existing condition for a certain period of time. Depending on the policy and your state's insurance regulations, this exclusion period can range from six to 18 months.
Pre-existing condition exclusionary rider
The time period during which a health plan won't pay for care related to a pre-existing condition. Under an individual health plan, conditions may be excluded permanently, as a rider.
Pre-existing condition health insurance plan (PCIP)
A federal program created by the ACA that provides health coverage for people who have been uninsured for at least six months, have a pre-existing condition or have been denied health coverage because of a health condition.
Preferred Drug List (PDL)
A list of drugs that a health plan will cover, either fully or in part. Formularies vary by health plan. Also called a Formulary.
Premium
A payment (usually monthly) a person makes to her/his insurer to get and keep insurance coverage. Premiums can be paid by employers, unions, employees, individuals or shared among different payers.
Premium assistance
The use of public funds to purchase (or subsidize the purchase of) private insurance.
Preventive care
Medical care that helps prevent people from getting sick in the first place. Childhood immunizations are an example of preventive care.
Primary Care Case Management (PCCM)
The use of primary care physicians to manage all medical and surgical care for patients, typically structured through a fee-for-service system.
Prior Approval
The state insurance department's authority to approve, disapprove or reduce proposed premium rate increases. Prior approval authority frequently accompanies deemer procedures, whereby if the insurance department does not disapprove or reduce a premium rate within a particular time period, the rate is deemed approved.
There are no entries for Q.Rate bands or Rating variation
The variation in insurance premiums allowed by state regulations, expressed as a ratio or as a percentage of average rate. Rate bands are used to limit the variation in premiums between different individuals. For example, a 2:1 age rate band means that an older person can be charged no more than twice as much for insurance, if all other factors are equal, than a younger person.
Referral
In some plans, such as most HMOs, your primary care doctor needs to provide written permission for you to see a specialist. If you don't have a referral, you may not be able to see the specialist, or insurance may not cover the visit.
Rescissions
An insurance company's retroactive cancellation of a health insurance plan, usually because a person makes a mistake on the initial application for an individual market insurance plan. Under the Affordable Care Act, rescission is illegal except in cases of fraud or intentional misrepresentation of fact.
Reinsurance
Reinsurance is insurance for insurance companies. A primary insurance company transfers risks of high cost claims to another private carrier or to a government-sponsored program. The insurer or government-sponsored program then assumes this risk and pays for some or all of these high cost claims. There are two types of reinsurance programs: in one, the government pays for some or all of the claims through general revenues; in the other, state law establishes an association of insurance companies and requires these companies to pool their resources to pay high cost claims.
Risk Adjustment
Risk adjustment is a method to compensate insurers or providers for any people they cover or care for who may have more health issues, or "risk," than others. The goal is to limit the extent that insurers or providers engage in activities that limit coverage and care for sicker, higher-cost enrollees, through a financial incentive.
Section 125 Cafeteria plans
So called after Section 125 of the Internal Revenue Code, these plans allow employees to set aside pre-tax dollars for health benefits even if their employer does not contribute to the employee's premium. Some states encourage or require certain businesses to establish cafeteria plans so that their workers will be able to pay for premiums with pre-tax dollars.
Self-insured plan
A group health plan is self-insured (or self-funded) when the employer assumes the financial risk for providing health care benefits to its employees.
Some self-insured employers purchase additional insurance for large health care costs, while others bear all of the risk of health costs for their employees. A self-insured employer may have a health insurer coordinate medical benefits, while the employer covers the costs directly. Self-insured plans exist in both the small group and large group market
Sliding scale premium assistance
Public funds are used to pay a portion of insurance premiums for eligible people based on family income. The individual or family pays the remaining premium cost.
Small group insurance market
The market that sells plans to employers who are smaller than a certain size. Most commonly, the cut-off is fewer than 50 employees, but it varies by state insurance laws.
Standardized benefit plans
Certain standards set by a state for health coverage benefits and cost-sharing.
State-mandated benefits
In order to sell health insurance, insurers must cover certain services and providers, which vary by state. Mandated benefits often include maternity care and treatment for diabetes.
State plan amendment
A proposed change to a state's Medicaid plan, which must be submitted to the Centers for Medicare and Medicaid (CMS) for approval.
TEFRA option (Tax Equity and Fiscal Responsibility Act)
The TEFRA option, also known as the "Katie Beckett option," allows states to cover home- and community- based care for disabled children who are not in residential programs, under Section 134 of the Tax Equity and Fiscal Responsibility Act of 1982. Eligibility depends upon the level of disability and care needed by the child, rather than the family's income. Under this option, states can avoid institutionalizing children in skilled nursing facilities.
Tiers
The ACA defines levels of health coverage through "tiers" based on actuarial values (or the share of medical expenses the health plan pays for a standard member) to help consumers make apples to apples comparisons when choosing a health insurance plan. Those tiers are set at Bronze (60 percent actuarial value), Silver (70 percent), Gold (80 percent), and Platinum (90 percent).
Tricare
The health care program serving active duty service members, National Guard and Reserve members, retirees, families and survivors worldwide.
Uncompensated (or charity) care funds
Funds used to pay for physician or hospital services when no payment is received from the patient or from insurance. Sometimes, uncompensated care is defined to include costs that come from cost-shifting or bad debt, as well as charity care; other times, uncompensated care is defined to exclude bad debt and only refer to care for people who are determined in advance to be in need of care at no charge.
Underinsured
People whose insurance does not cover their necessary health care services, leaving them with out-of-pocket expenses that exceed their ability to pay. While there is no exact definition of underinsurance, the Commonwealth Fund considers someone underinsured if they a) have insurance all year, and b) either spend more than 10 percent of income on out-of-pocket medical expenses or had an income below 200 percent of the federal poverty level (FPL) and spend more than 5 percent of income on out-of-pocket medical expenses, or had a deductible of 5 percent or more of their income.
There are no entries for V.Wrap-around benefits
For people covered by both Medicaid (or CHIP) and private insurance, Medicaid acts as a secondary insurer, and pays for benefits not covered by the private plan. This is often utilized in premium-assistance programs.
There are no entries for X. There are no entries for Y. There are no entries for Z.Individual insurance market
Health insurance coverage for people who do not have a connection to a group health plan. Also called the non-group market or the direct purchase market.
