Managed Care Glossary



Access: A person’s ability to obtain affordable medical care on a timely basis. Barriers to access can be financial, geographic, organizational or sociological.

Accreditation: An evaluative process in which a health care organization undergoes an examination of its operating procedures to determine whether the procedures meet designated criteria as defined by the accrediting body, and to ensure that the organization meets a specified level of quality.

ACF: See ambulatory care facility.

Acquisition: The purchase of one organization by another organization.

ACR: See adjusted community rating.

Actuaries: The insurance professional who perform the mathematical analysis necessary for setting insurance premium rates.

Ad hoc committees: Committees that are convened to address specific management concerns. Also, known as special committees.

Adequacy: The extent to which a network offers the appropriated types and numbers of providers in the appropriate geographic distribution according to the needs of the plan’s members.

Adjudication: Processing claims according to the contract.

Adjusted community rating (ACR): A rating method under which a health plan or MCO divides its’ members into classes or groups based on demographic factors such as geography, family composition, and age, and then charges all members of a class or group the same premium. The plan can not consider the experience of a class, group, or tier in developing premium rates. Also known as modified community rating.

Administrative services only (ASO) contract: A contract under which a third party administrator or an insurer agrees to provide administrative services to an employer in exchange for a fixed fee per employee.

Administrative supervision: A situation in which operations are placed under the direction and control of the state commissioner of insurance or a person appointed by the commissioner.

Advanced Aggregate: is reinsurance provided for ERISA (Employee Retirement Income Security Act) exempt Single Employer Trusts. Reinsurance over multiple self-funded employers is provided by advancing aggregated coverage recoveries for risk between specific retention and a percentage of the fully funded and underwritten major medical insurance premium.

Adverse event: Any harm a patient suffers that is caused by factors other than the patient’s underlying condition.

Adverse selection: See anti-selection.

Affiliated provider: A health care provider that is part of a network, usually having a formal arrangement to provide services.

Agent: A person who is authorized by an MCO or an insurer to act on its behalf to negotiate, sell, and service managed care contracts.

Aggregate Stop Loss/Reinsurance: Aggregate Stop Loss provides coverage against an entire population’s budget overrun in a calendar year. Coverage typically reimburses the policy owner when claims exceed 110 percent – 125 percent of the expected annual claim volume.

Aggregate Pharmacy Reinsurance: this type of insurance is a program of coverage which shifts the financial risk of pharmacy benefits from the employer, or HMO, to the PBM and/or reinsurer. Coverage typically attached at 110-125% of the expected annual budget amount.

Ambulatory care facility (ACF): A medical care center that provides a wide range of healthcare services, including preventative care, acute care, surgery and outpatient care, in a centralized facility. Also, know as a medical clinic or medical center.

Ancillary services: Auxiliary or supplemental 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 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.

Anti-selection: The tendency of people who have a greater-than-average likelihood of loss to seek healthcare coverage to a greater extent than individuals who have an average or less-than-average likelihood of loss. Also known as adverse selection.

Antitrust laws: Legislation designed to protect commerce from the unlawful restraint of trade, price discrimination, price fixing, reduced competition, and monopolies. See also Sherman Antitrust Act, Clayton Act, and Federal Trade Commission Act.

Any willing provider law: Laws that require managed care plans to contract with all appropriate health care providers that meet their terms and conditions.

Appeal: A formal request by an insured person or provider for reconsideration of a decision.

Appeals review committee: The committee that reviews member appeals related to medical management or coverage determinations.

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

ASO contract: See administrative services only contract.

Assets: All items of value that a company owns.

At-risk: Term used to describe a provider organization that bears the insurance risk associated with the healthcare it provides.

Authorization: A health plan’s system of approving payment of benefits for services that satisfy the plan’s requirements for coverage.

Autonomy: An ethical principle which, when applied to managed care, states that managed care organizations and their providers have a duty to respect the right of their members to make decisions regarding the course of their lives.


Balance Sheet: A financial statement that shows the financial status on a specified date.

Benchmarking: A method of planning and implementing quality management programs that consist of identifying the best practices and best outcomes for a specific process and emulating the best practices to equal or surpass the best outcomes.

Beneficence: An ethical principle which, when applied to managed care, states that each member should be treated in a manner that respects his or her own goals and values and that managed care organizations and their providers have a duty to promote the good of the members as a group.

Beneficiary liability: The amount beneficiaries must pay providers for covered services, liabilities can include co-payments, deductibles, and balance billing amounts. CMS (HCFA) has very strict rules about health providers billing patients for their liabilities.

Benefit: Specific areas of a plan’s coverage, i.e., outpatient visits, hospitalization and so forth, that make up the range of medical services that a payer covers.

Benefit limitations: Any provision, other than an exclusion, which restricts coverage, regardless of medical necessity.

Benefit design: The process used to determine which benefits or the level of benefits that will be offered to its members, the degree to which members will be expected to share the costs of such benefits, and how a member can access medical care through the health plan.

Best practices: Actual practices in use by qualified providers following the latest treatment modalities, that produce the best measurable results on a given dimension.

Blended rating: For groups with limited recorded claim experience, a method of forecasting a group’s cost of benefits based partly on manual rates and partly on the group’s experience.

Board of directors: The primary governing body of an organization.

Brand: A name, number, term, sign, symbol, design, or combination of these elements that an organization uses to identify one or more products.

Broker: Brokers are licensed agents who represent multiple carriers who are legally bound to serve the best interests of their clients.

Budgeting: A process that includes creating a financial plan of action that an organization believes will help it to achieve its goals, given the organization’s forecast.

Business integration: The unification of one or more separate business (non-clinical) functions into a single function.


Capital: The money that a public company’s owners have invested in the company.

Capital Aggregate Program: This is an aggregate reinsurance program which provides two major features:

  • Aggregate reinsurance attaching at 100% (not 125% as is typical).
  • Capital placed on the client’s balance sheet of $1-2 million. The capital is priced at 5% of placement.

This product offers a very competitive alternative to the venture capital markets which typically requires equity, 15%-20% + return, pay out in less than three years and 10% interest.

Capitation: A rate paid, usually monthly, to a health care provider. In return, the provider agrees to deliver the health services agreed upon to any covered person. The payment structure shifts the financial risk from the insurance company to the physician or hospital accepting payment. Physicians and hospitals buy stop loss to limit any potential catastrophic medical financial loss on any one member per year.

Capped fee: See fee schedule.

Captive agents: Agents that represent only one health plan or insurer.

Carry Forward: A negotiated endorsement to a policy allowing a member’s medical charges incurred in the last 31 days of the expiring policy year to accrue toward the new policy year member’s deductible.

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

Case management: A process of identifying plan members with special healthcare needs, developing a health-care strategy that meets those needs, and coordinating and monitoring care.

Case Rates: These are typically fixed hospital reimbursements by diagnosis or DRG (Diagnosis Related Codes). Most case rates provide for “outlier” codes which allow additional reimbursement for extra sick patients.

Categorically needy individuals: Under initial Medicaid eligibility requirements, individuals who received Medicaid benefits because of their welfare status.

CCPs: See coordinated care plans.

CEO: See chief executive officer

Certificate of Authority (COA): The license issued by a state to an HMO or insurance company, which allows it to conduct business in that state.

CHAMPUS (theCivilian Health and Medical Program of the United States) – see TRICARE.

Charge master: This is a price list typically classified by CPT-4 and ICD-9 or RBRVS codes. All stop loss and reinsurance policies refer to a specific list to avoid any confusion of the eligible covered charge amounts. Examples of such lists are MDR, HIAA, RBRVS, DRG, etc.

Chief financial officer: See finance director.

Chief information officer (CIO): The manager responsible for the plan’s computer hardware and software systems, its telephone and electronic communication systems, and its electronic commerce capabilities.

Chief marketing officer: See marketing director

Chief medical officer: See medical director.

Chief operations officer: see director of operations.

Chronic case: A patient with one or more medical conditions that persist for long periods of time or for the patient’s lifetime.

CIO: See chief information officer.

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.

Claim form: An application for payment of benefits under a health plan.

Claimant: The person or entity submitting a claim.

Claims administration: The process of receiving, reviewing, adjudicating, and processing claims.

Claims analysts: See claim examiners.

Claims basis: The allowable period of time in which the allowable claims can incur and the allowable period of time in which claims can be reported and paid.

Claims examiners: Employees in the claims administration department who consider all the information pertinent to a claim and make decisions about the payment of the claim. Also known as claims analysts.

Claims investigation: The process of obtaining all the information necessary to determine the appropriate amount to pay on a given claim.

Claims supervisors: Employees in the claims administration department who oversee the work of several claims examiners.

Clayton Act: A federal act that forbids certain actions believed to lead to monopolies, including (1) charging different prices to different purchasers of the same product without justifying the price difference and (2) giving a distributor the right to sell a product only if the distributor agrees not to sell competitors’ products. The Clayton Act applies to insurance companies only to the extent that state laws do not regulate such activities. See also antitrust laws.

Clinic model: See consolidated medical group.

Clinic without walls: See group practice without walls.

Clinical integration: A type of operational integration that enables patients to receive a variety of healthcare services from the same organization or entity, which streamlines administrative processes and increases the potential for the delivery of high-quality health-care.

Clinical practice guideline: A utilization and quality management mechanism designed to aid providers in making decisions about the most appropriate course of treatment for a specific clinical case.

Clinical practice management: The development and implementation of parameters for the delivery of health-care services to plan members.

Clinical status: A type of outcomes measure that relates to biological health outcomes.

CLM: A Career Limiting Move is defined as bankruptcy or insolvency. This usually occurs when stop loss coverage is not understood.

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.

Closed PHO: A type of physician-hospital organization that typically limits the number of participating specialists by the type of specialty.

Closed plans: According to the National Association of Insurance Commissioners’ Quality Assessment and Improvement Model Act, managed care plans that require covered persons to use participating providers.

Closed panel HMO: An HMO whose physicians are either HMO employees or belong to a group of physicians that contract with the HMO.

CMP: See competitive medical plan.

COA: See Certificate of authority.

COBRA: See Consolidated Omnibus Budget Reconciliation Act.

Coinsurance: The percentage applied to the eligible claim amount prior to reimbursement. The percentage is applied after the deductible has been met.

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.

Community rating by class (CRC): The process of determining premium rates in which a managed care organization categorizes its members into classes or groups based on demographic factors, industry characteristics, or experience and charges the same premium to all members of the same class or group.

Competitive advantage: A factor, such as the ability to demonstrate quality, that helps organizations to compete successfully with other firms for business.

Competitive medical plan (CMP): A federal designation that allows MCOs to enter into Medical risk contracts without having to obtain federal qualification as an HMO.

Complaint: A health plan member’s expressions that his expectations regarding the product of the services associated with the program have not been met.

Computer-based patient record: See electronic medical record.

Concurrent review: A type of utilization review that occurs while treatment is in progress and typically applies to services that continue over a period of time.

Consolidated medical group: A large single medical practice that operates in one or a few facilities rather than in many independent offices. The single-specialty or multi-specialty practice group may be formed from previously independent practices and is often owned by a parent company or a hospital. Also known as a medical group practice or clinic model.

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.

Consolidation: A type of merger that occurs when previously separate providers combine to form a new organization with all the original companies being dissolved.

Contract management system: An information system that incorporates membership data and provider reimbursement arrangements and analyzes transactions according to contract rules.

Coordinated care plans (CCPs): The Medicare+Choice delivery options that include HMOs (with or without a point-of-service component), preferred provider organizations (PPOs), and provider-sponsored organizations (PSOs).

Contingency Fees: This is a fee as compensation to the agent above the commission. This fee is not usually discussed with the client. It is similar or identical to an underwriting profit or override on profitable business sales. In larger brokerages, these “fees” are usually negotiated by senior management, where the local agent is unaware the fees exist. RIMS (Risk and Insurance Management Society) recently mandated a policy statement that these fees be clearly divulged by all agents to avoid the appearance of impropriety.

Co-payment: Co-payment is a fixed (flat) dollar fee an individual insured pays each time he gets a professional service from a physician or ancillary medical technician.

Corporate compliance committee:The committee that monitors and guides all compliance activities, including appointment of a corporate compliance officer, approval of compliance program policies and procedures, review of the organization’s annual compliance plan, evaluation of internal and external audits to identify potential risks, and implementation of corrective and preventative actions.

Corporation: An organization that is recognized by the authority of a governmental unit as a legal entity separate from its owners.

Cost shifting: The practice of charging more for services provided to paying patients or third-party payers to compensate for lost revenue resulting from services provided free or at a significantly reduced cost to other patients.

CRC: See community rating by class.

Credentialing: The review and verification process used to determine the current clinical competence of a provider and whether the provider meets the pre-established criteria for participation in the network.

Credentialing committee: The committee that establishes and updates credentialing processes and criteria and reviews provider credentials during the credentialing and re-credentialing processes.

Credibility: A measure of the statistical predictability of a group’s experience.

Cure provision: A provider contract clause, which specifies a time period (usually 60-90 days) for a party that breaches the contract to remedy the problem and avoid termination of the contract.

Customary, prevailing and reasonable (CPR): Method of paying physicians under Medicare. Payment is limited to the lowest of the physicians billed charge or the physician’s customary charge or the prevailing charge for that service in the community. Similar to the UCR system used by private insurers.


Declaration: A declaration is an addendum to all stop loss and reinsurance policies which warrants all members expected to exceed 50% of retention have been reported prior to binding coverage.

Deductible: The amount subtracted from the eligible claim amount prior to reimbursement from the insurance carrier. The deductible is applied after the maximum allowable schedule is applied to the eligible services.

Diagnostic and treatment code: Special codes that consist of a brief, specific description of each diagnosis or treatment and a number used to identify each diagnosis and treatment.

Diagnosis-related group: An inpatient classification used to pay the hospital or other provider for their services and to categorize illness by diagnosis and treatment.

Director of operations: The manager who oversees the programs and services that support the organization as a whole, such as enrollment, claims, member services, office management, human resources, and other “back room” functions.

Discharge planning: A process used to help determine what activities must occur before the patient is ready for discharge and the most efficient way to conduct those activities.

Disease management: A coordinated system of preventative, diagnostic, and therapeutic measures intended to provide cost-effective, quality healthcare for a patient population who have or are at risk for a specific chronic illness or medical condition. Also known as disease state management.

Distribution: The activities and systems designed to make products or services available so that consumers can buy them.

Drive time: The length of time that members must drive to reach a primary care provider, which is typically set at a maximum of 15 minutes for urban areas and up to 30 minutes for rural areas.

Drug card: See pharmaceutical cards.

Drug utilization review (DUR): A review program that evaluated whether drugs are being used safely, effectively, and appropriately.

Dual eligible: Elderly and disabled Medicaid recipients who also qualify for Medicare coverage.

Due process clause: A provider contract provision that gives providers that are terminated with cause the right to appeal the termination.

DUR: See drug utilization review.


Early periodic screening, diagnostic, and treatment (EPSDT) services: A Medicaid program for recipients younger than 21 that provides screening, vision, hearing, and dental services at intervals that meet recognized standards of medical and dental practices and at other intervals as necessary to determine the existence of physical or mental illnesses or conditions.

EDI: Electronic data interchange.

Edits: Criteria that, if unmet, will cause an automated claims processing system to “kick out” a claim for further investigation.

Effective Date: The first day that stop-loss coverage is in place and effective.

Electronic data interchange (EDI): The computer-to-computer transfer of data between organizations using a data format agreed upon by the sending and receiving parties.

Electronic medical record (EMR): A computerized record of a patient’s clinical, demographic, and administrative data. Also know as a compute-based patient record or electronic health record (EHR).

Eligible medical expense: Charges allowed up to the company reimbursement schedules for covered services.

Eligible Services: The services covered under the stop-loss coverage.

Employee benefits consultant: A specialist in employee benefits and insurance who is hired by a group buyer to provide advice on a health plan purchase.

Employee Retirement Income Security Act or ERISA Type Plans for Trusts: The ERISA Act provides federal laws and regulations pertaining to the operation of self-funded or partially self-funded health plans for single employers, unions, and municipalities. ERISA plans are effectively immune to state insurance laws and regulations regarding assumption of risk and solvency standards. However, plans sponsored by municipalities may be regulated by the domiciled state. These plans may include Life, Health, and Disability benefits. Managed Care plan designs may be used in ERISA type plans. The purchase of Specific and Aggregate reinsurance is optional but usually done to transfer the risk of unpredictable catastrophic claims.

Employer purchasing coalitions: See purchasing alliances.

Employment-model IDS: An integrated delivery system that generally owns or is affiliated with a hospital and establishes or purchases physician practices and retains the physicians as employees.

EMR: See electronic medical record.

Encounter: A healthcare visit of any type by an enrollee to a provider of care or services.

Encounter report: A report that supplies management information about services provided each time a patient visits a provider.

EPO: See exclusive provider organization.

EPSDT: See Employee Retirement Income Security Act.

Errors and Omissions: What is What Is Errors And Omissions (E&O) Insurance?

Errors and Omissions Insurance is business liability insurance for professionals such as insurance agents, real estate agents and brokers, architects, third party administrators and other business professionals. An error or omission, a mistake, which causes financial harm to another, can occur on almost any transaction in any profession. This type of insurance helps to protect a professional, an individual or a company, from bearing the full cost of defense for lawsuits relating to an error or omission in providing covered Professional Services. This is a separate coverage from a standard general liability or property insurance policy.

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

Ethics in Patient Referrals Act: A federal act which, along with its amendments, prohibits a physician from referring patients to laboratories, radiology services, diagnostic services, physical therapy services, home health services, pharmacies, occupational therapy services, and suppliers of durable medical equipment in which the physician has a financial interest. Also known as the Stark Laws.

Excess and Surplus Clause: This is a standard clause that means coverage is afforded after all other available insurances have been exhausted. It can also be associated with language stating coverage being applied to all medical charges the client is a risk for unless specifically excluded by design.

Excess of Loss: Excess of Loss is a Stop Loss/Reinsurance coverage that responds after a specific retention of fixed dollar amount per individual or occurrence. This coverage may employ a specific deductible or variations within an aggregating specific deductible.

Exchange: The act of one party giving something of value to another party and receiving something of value in return.

Exclusive provider organization (EPO): A healthcare benefit arrangement that is similar to a preferred provider organization in administration, structure, and operation, but which does not cover out-of-network care.

Exclusive remedy doctrine: A rule, which states that employees who are injured on the job are entitled to workers’ compensation, benefits, but they cannot sue their employers for additional amounts.

Executive committee: The committee responsible for handling issues related to overall organization policy, including lines of business and employment policies.

Expansion populations: Medicaid recipients who do not meet categorically needy or medically needy criteria and therefore fall outside the traditional Medicaid population.

Expected Claim Value: The expected Claim value is the underwritten and forecasted medical expense liability used to rate premium.

Expenses: The amounts spent or committed by an organization to pay for the covered benefits and their administration.

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

Experience rating: A rating method under which an organization analyzes a group’s recorded healthcare costs by type and calculates the group’s premium partly or completely according to the group’s experience.

Experience-based criteria: A utilization review resource that recognizes generally accepted community standards of practice and the overall experience and expert opinion of medical directors and other healthcare providers.

Experience Refund: The amount that may be returned to the Insured for favorable claims experience.

Expert system: A knowledge-based computer system whose purpose is to provide expert consultation to information users for solving specialized and complex problems.

External standards: Performance standards that are based on outside information such as published industry-wide averages of best practices.

Extranet: A private computer network that incorporates Web-based technologies and links selected resources of a firm to external entities or individuals.


Facultative reinsurance: Facultative reinsurance is coverage where a Reinsurer evaluates a specific risk on a case-by-case basis. The primary insurer has no obligation to submit any risks to the reinsurer, and the reinsurer is free to accept or reject any risks submitted by the primary insurer or ceding company. Facultative reinsurance can be in the form of either Pro Rata or Excess of Loss coverage.

Federal Employee Health Benefits Program (FEHBP): A federal act, which established the Federal Trade Commission (FTC) and gave the FTC power to work with the Department of Justice to enforce the Clayton Act. The primary function of the FTC is to regulate unfair competition and deceptive business practices, which are presented broadly in the Act. As a result, the FTC also pursues violators of the Sherman Antitrust Act. See also antitrust laws.

Fee allowance: See fee schedule.

Fee maximum: See fee schedule.

Fee schedule: The fee determined to be acceptable for a procedure or service, which the physician agrees to accept as payment in full. Also known as a fee allowance, fee maximum, or capped fee.

Fee for Service (FFS): Fee for Service is the full billed charge a provider invoices an insurer for services rendered.

FEHBP: See Federal Employee Health Benefits Program.

FFS: See fee-for-service payment system.

Finance committee: The committee that sets the organization’s broad investment policies and is responsible for reviewing and approving financial and accounting activities.

Finance director: The manager who is responsible for accounting activities such as budget planning, accounting, and internal audits, and financial operations such as membership billing and underwriting.

Financial management: The process of managing financial resources, including management decisions concerning accounting and financial reporting, forecasting, and budgeting.

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 providers in prescribing medications.

Fully disabled limitation: A fully disabled limitation means no coverage is afforded a member who is in the hospital at the time the new policy becomes effective. This provision should be waived by the carrier by proper claims declaration.

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.

Functional status: A patient’s ability to perform the activities of daily living.

Funding vehicle: In a self-funded plan, the account into which the money that an employer and employees would have paid in premiums to an insurer or MCO is deposited until the money is paid out.


Gate keeper: The primary care physician who much authorize or allow most medical services.

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.

GPWW: See group practice without walls.

Group market: A market segment that includes groups of two or more people that enter into a group contract under which the insuring entity provides healthcare coverage to the members of the group.

Group model HMO: An HMO that contracts with a multi-specialty group of physicians who are employees of the group practice. Also known as a group practice model HMO.

Group practice model HMO: See group model HMO.

Group practice without walls (GPWW): A legal entity that combines multiple independent physician practices under one umbrella organization and performs certain business operations for the member practices or arranges for these operations to be performed. The GPWW may maintain its own facility for business operations or it may hire another company to provide this function. Also known as a clinic without walls.

Grace Period: A Grace Period is the number of days past the premium due date the premium will be accepted before canceling the policy for non-payment of premium. A typical grace period is 30 days.


Haphazard change: Change that is unplanned and uncontrolled and produces unpredictable results. Also known as a random change.

HCQIA: See Health Care Quality Improvement Act.

HCQIP: See Health Care Quality Improvement Program.

Health Care Quality Improvement Act (HCQIA): A federal act which exempts hospitals, group practices, and HMOs from certain antitrust provisions as they apply to credentialing and peer review as long as these entities adhere to due process standards that are outlined in the Act.

Health Care Quality Improvement Program (HCQIP): A program initiated by the Health Care Financing Administration, now CMS, to improve the quality of care delivered to Medicare enrollees in managed care plans.

Health information network (HIN): A computer network that provides access to a database of medical information. Also known as a health data network.

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 much satisfy in order to provide health insurance coverage to the individual and group healthcare markets.

Health insurance purchasing co-ops: See purchasing alliances.

Health insuring organization (HIO): An organization that contracts with a state Medicaid agency as a fiscal intermediary.

HMO: A Health Maintenance Organization (HMO) is a state-designated insurance entity authorized to sell commercial, Medicare or Medicaid health insurance in certain counties. HMO’s are known for emphasizing preventative medicine, and paying their doctors and hospitals a fixed dollar capitation for each member assigned to a provider group. An HMO is typically separated from a PPO or Indemnity Health Insurance by two major things:

Health of Seniors Survey: A Health Care Financing Administration survey that measures Medicare patients’ functional status.

Health Plan Management System (HPMS): A database of information on Medicare Part A and Part B recipients who are enrolled in coordinated care plans.

Health promotion programs: Preventative care programs designed to educate and motivate members to prevent illness and injury and to promote good health through lifestyle choices, such as smoking cessation and dietary changes. Also known as wellness programs.

Health risk appraisal: See health risk assessment.

Health risk assessment (HRA): A process by which an organization uses information about a plan member’s health status, personal and family health history, and health-related behaviors to predict the member’s likelihood of experiencing specific illnesses or injuries. Also known as health risk appraisal.

Healthcare quality: According to the Institute of Medicine, “the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.”

High-cost case: A patient whose condition requires large financial expenditures or significant human technological resources.

High-risk case: A patient whose condition requires large financial expenditures or significant human and technological resources.

HIN: See health information network.

HIPAA: See Health Insurance Portability and Accountability Act.

HMO: See health maintenance organization.

Hold harmless provision: A contract clause that forbids providers from seeking compensation from patients if the health plan failed to compensate the providers because of insolvency or for any other reason.

Holding company: A company whose sole business is the ownership of other companies, which are its subsidiaries.

Horizontal division of markets: An illegal business practice that occurs when two or more organizations agree not to compete by dividing geographic marketing areas, product offerings, or customers.

Hospice care: A set of specialized healthcare services that provide support to terminally ill patients and their families.

Hospitalists: Physicians who spend a substantial amount of their time in a hospital setting where they accept admissions to their inpatient services from local primary care providers.

HPMS: See Health Plan Management System.

HRA: See health risk assessment.


IBNR: See incurred but not reported claims.

IDS: See integrated delivery system.

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.

Incurred but not reported (IBNR) claims: Claims or benefits that occurred during a particular time period, but that have not yet been reported or submitted to an insurer or MCO, so they remain unpaid.

Independent agents: Agents that represent several health plans or insurers.

Independent practice association (IPA): An organization comprised of individual physicians or a physician in small group practices that contract with entities on behalf of its member physicians to provide healthcare services.

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

In-Network (Contracted): Services provided by providers within the Insured’s network or by any other provider which has a contract with the Insured.

Integrated delivery system (IDS): A provider organization that if fully integrated operationally and clinically to provide a full range of health care services, including physician services, hospital services, and ancillary services.

Internal standards: Performance standards that are developed and are based on the organization’s historic performance levels.

IPA: An Independent Practice Association (IPA) is typically a group of physicians who organize themselves into a contracting entity to care for an HMO’s or PPO’s members. It can also be a licensed HMO owned by its member physicians.

Insurance Carrier: The insurance company which is providing the coverage for the stop-loss coverage.


Large group: A large pool of individuals for which health coverage is provided by the group sponsor. A large group may be defined as more than 250, 500, 1,000, or some other number of members, depending on the insurer or MCO.

Large local groups: Accounts that contract on a local basis for group employee health benefits. Contrast with national accounts.

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.

Length of stay guidelines: A utilization review resource that establishes an average inpatient length of stay based on the patient’s diagnosis, the severity of the patient’s condition, and the type of service and procedures prescribed for the patient’s care.

LOS: Length of stay.

Loss rate: The number of timing of losses that will occur in a given group of insureds while the coverage is in force.


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.

Managed care organization (MCO): Any entity that utilizes certain concepts or techniques to manage the accessibility, cost, and quality of health-care.

Managed indemnity plans: Health insurance plans that are administered like traditional indemnity plans but which include managed care “overlays” such as pre-certification and other utilization review techniques.

Managed Services Organization (MSO): An organization, owned by a hospital or group of investors, that provides management and administrative support services to individual physicians or small group practices in order to relieve physicians of non-medical business functions so that they can concentrate on the clinical aspects of their practice.

Manual rating: A rating method under which a health plan uses the plan’s average experience with all groups and sometimes the experience of other health plans-rather in an underwriting or rating manual.

Maximum Allowable: The highest possible amount allowed for a service or procedure, subject to reasonable and customary and the amount actually paid.

Maximum Benefit: The highest possible amount that the insurance carrier will pay for a member during a contract year and/or lifetime and/or for all members for the policy period.

McCarran-Ferguson Act: A federal act that placed the primary responsibility for regulating health insurance companies and HMOs that service private sector (commercial) plan members at the state level.

MCO: See managed care organization.

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 center: See ambulatory care facility.

Medical director: the health plan physician executive who is responsible for the quality and cost-effectiveness of the medical care delivered by the plan’s providers.

Medical error: A mistake that occurs when a planned treatment or procedure is delivered incorrectly or when a wrong treatment or procedure is delivered.

Medically necessary services: Services or supplies as provided by a physician or other healthcare provider to identify and treat a member’s illness or injury, which as determined by the payer, are consistent with the symptoms, diagnosis, and treatment of the member’s condition; in accordance with the standards of good medical practice; not solely for the convenience of the member, member’s family, physician, or other healthcare provider; and furnished in the least intensive type of medical care setting required by the member’s condition.

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.

Medicare+Choice: The Medicare component that addresses how covered services are delivered to enrollees and increases the numbers and types of healthcare organizations allowed to participate in Medicare.

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

MHS: See Military Health System.

Military Health System (MHS): Hospitals, clinics and treatment centers that Army, Navy, Air Force, and Coast Guard operate to deliver care to Military Health System Beneficiaries.


Network: The group of physicians, hospitals, and other medical care professionals that a managed care plan has contracted with to deliver medical services to its members.

Network management director: A health plan manager who is responsible for developing and managing the provider networks including such activities as recruiting, credentialing, contracting, service, and performance management for providers.

New business underwriting: The risk evaluation an organization performs when it first issues coverage to a group.

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.

NMHPA: See Newborns’ and Mothers’ Health Protection Act.

Non-group market: A market segment that consists of customers who are covered under an individual contract for health coverage or enrolled in a government program.


Open access: A provision that specifies that plan members may self-refer to a specialist, either in-network or out-of-network, at full benefit or at a reduced benefit, without first obtaining a referral from a primary care provider.

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 MEO.

Open PHO: A type of physician-hospital organization that is available to all of a hospital’s eligible medical staff.

Open-panel HMO: An HMO in which any physician who meets the HMO’s standards of care may contract with the HMO as a provider. These physicians typically operate out of their own offices and see other patients as well as HMO members.

Operational integration: The consolidation into a single operation of operations that were previously carried out separately by different providers.

Outcomes measures: Healthcare quality indicators that gauge the extent to which healthcare services succeed in improving or maintaining satisfaction and patient health.

Out-of-network (Non-Contracted): Services provided by providers outside the Insured’s network or who do not have a contract with the Insured.

Out-of-pocket maximum: Dollar amounts set by companies that limit the amount a member has to payout of his or her own pocket for particular healthcare services during a particular time period.

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.

Outside directors: Members of a company’s board of directors who do not hold other positions with the company.

Outsourcing: The hiring of external vendors to perform specified functions, such a data, and information management activities.


PACE: See Programs of All-inclusive Care for the Elderly.

Patient perception: A type of outcome measure related to whether the patient feels completely “better” after treatment or feels improved compared to how he or she felt prior to receiving treatment.

PBM: See pharmacy benefit management plan.

PCCM: See primary care case manager.

PCP: See primary care provider.

Peer review: A system in which the appropriateness of healthcare services delivered by a provider to health plan members is evaluated by a panel of medical professionals.

Peer review committee: The committee that reviews cases of health-care services delivery in which the quality of care is questionable or problematic.

Peer review organization (PRO): An organization or group of practicing physicians and other healthcare professional paid by the federal government to evaluate the services provided by other practitioners and to monitor the quality of care given to Medicare patients.

Per diem: A form of payment for services in which the provider is paid a daily fee for specific services or outcomes, regardless of the cost of provision.

Performance measure: A quantitative measure of the quality of care provided by a health plan or provider that consumer payers, regulators, and others can use to compare the plan or provider to other plans or providers.

Personal care physician: See primary care provider.

PFFS: See private fee-for-service plans.

Pharmacy benefit management (PBM) plan: A type of managed care specialty service organization that seeks to contain the costs of prescription drugs or pharmaceuticals while promoting more efficient and safer drug use. Also known as a prescription benefits management plan.

Physician Practice Management (PPM) Company: A company, owned by a group of investors, that purchases physicians’ practice assets, provides practice management services, and in most cases, gives physicians a long-term contract to continue working in their practice and sometimes an equity (ownership) position in the company.

Physician-hospital organization (PHO): A joint venture between a hospital and many or all of its admitting physicians whose primary purpose is contract negotiations with companies and marketing.

Plan funding: The method that an employer or other payor or purchaser uses to pay medical benefit costs and administrative expenses.

Point-of-service (POS) product: A healthcare option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan’s network or seek medical care outside the network.

Pooling: The practice of underwriting a number of small groups as if they constituted one large group.

POS product: See point-of-service product.

PPA: See preferred provider arrangement.

PPM: See Physician Practice Managment Company.

PPO: See preferred provider organization.

Pre-admission 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.

Pre-certification: 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 completes a 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 a stated time period 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.

Prepaid care: Healthcare services provided to an HMO member in exchange for a fixed, monthly premium paid in advance of the delivery of medical care.

Prepaid group practice: A healthcare system that offered plan members a wide range of medical services through an exclusive group of providers in return for a monthly premium payment.

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

Premium taxes: State income taxes levied on an insurer’s premium income.

Prepaid care: Healthcare services provided to an HMO member in exchange for a fixed, monthly premium paid in advance of the delivery of medical care.

Prepaid group practice: A healthcare system that offered plan members a wide range of medical services through an exclusive group of providers in return for a monthly premium payment.

Prescription benefit management plan: See pharmacy benefit management plan.

Price fixing: An illegal business practice that occurs when two or more independent competitors agree on the prices or fees that they will charge for services.

Pricing: The process of deciding the premium to charge for a health plan or a given set of benefits.

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

Primary care case manager (PCCM): A primary care provider who contracts directly with the state to provide case management services, such as coordination and delivery of services, to Medicaid patients.

Primary care physician: See primary care provider.

Primary care provider: A physician or other medical professional who serves as a group member’s first contact with a plan’s healthcare system. Also known as primary care physician, personal care physician, or personal care provider.

Primary source verification: A process through which an organization validates credentialing information from the organization that originally conferred or issued the credentialing element to the practitioner.

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 pre-certification.

Private fee-for-service (PFFS) plans: The the Medicare+Choice delivery option under which coverage is provided by private insurance carriers rather than through the federal government.

PRO: See peer review organization.

Process measures: Healthcare quality indicators related to the methods and procedures that an organization and its providers use to furnish service and care.

Professionalism: A set of characteristics or behaviors that are worthy of the high standards of an occupation that require advanced training in a specialized field.

Programs of All-inclusive Care for the Elderly (PACE): A community-based program, involving both Medicare and Medicaid, that provides integrated healthcare and long-term care to elderly persons who require a nursing-facility level of care.

Promise keeping/truth telling: An ethical principle which, when applied to managed care, states that managed care organizations and their providers have a duty to present information honestly and are obligated to honor commitments.

Promotion: The element of the marketing mix that an organization uses (1) to inform consumers about its products, the prices of its products, and how to obtain its products, (2) to persuade consumers to purchase its products, and (3) to remind consumers about the benefits associated with transacting business with the organization.

Promotion mix: The four tools of promotion-advertising, personal selling, sales promotion, and publicity.

Prospective review: The review and possible authorization of proposed treatment plans for a patient before the treatment is implemented.

Provider Manual: A document that contains information concerning a provider’s rights and responsibilities as part of a network.

Provider profiling: The collection and analysis of information about the practice patterns of individual providers.

Provider excess loss insurance: Provider stop-loss/provider excess loss coverage is coverage for catastrophic claims incurred based on a capitation agreement between the health plan and a provider.

Purchasing alliances: Locally based, privately operated organizations that offer affordable group health coverage to businesses with fewer than 100 employees. Also knows as purchasing pools, health insurance purchasing co-ops, employer purchasing coalitions, or purchasing coalitions.

Purchasing coalition: See purchasing alliances.

Purchasing pools: See purchasing alliances.

Pure community rating: See standard community rating.


QISMC: See Quality Improvement System for Managed Care.

Quality: In a managed care context, an MCO’s success in providing health-care and other services in such a way that plan members’ needs and expectations are met.

Quality Improvement System for Managed Care (QISMC): A CMS program designed to strengthen MCOs’ efforts to protect and improve the health and satisfaction of Medicare and Medicaid enrollees.

Quality management (QM): An organization-wide process of measuring and improving the quality of the healthcare provided.

Quality management committee: The committee that oversees the organization’s quality assessment and improvement activities in both clinical and non-clinical areas.


Random change: See haphazard change.

Rate speed: The difference between the highest and lowest rates that a health plan charges small groups. The National Association of Insurance Commissioners’ Small Group Model Act limits a plan’s allowable rate spread to 2 to 1.

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 plan.

RBRVS: See Resource-Based Relative Value Scale.

Reactive change: Change that is controlled, but rarely planned, and that can lead to positive, negative, or even unintended results.

Rebate: A reduction in the price of a particular pharmaceutical obtained by a PBM from the pharmaceutical manufacturer.

Receivership: A situation in which the state insurance commissioner, acting for a state court, takes control of and administers an organizations assets and liabilities.

Re-credentialing: A periodic review of the qualifications of a current network provider to verify that the provider still meets the standards for participation in the network.

Reinsurance: Insurance that is purchased by an insurance company from another insurance company as a means of managing risk.

Relative value of services: See relative value scale.

Relative value scale (RVS): A method used to determine provider reimbursement that assigns a weighted value to each medical procedure or service. To determine the amount that will be paid to the physician, a money multiplier multiplies the weighted value. Also, known as relative value of services.

Referral: The process of sending a patient from one practitioner to another for health care services.

Renewal underwriting: The process by which an underwriter reviews each year all the selection factors that were considered when the contract was issued, then compares the group’s actual utilization rates to those predicted to determine the group’s renewal rate.

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

Resource-Based Relative Value Scale (RBRVS): A method used to determine provider reimbursement that attempts to take into account when assigning a weighted value to medical procedures or services, all resources that physicians use in providing care to patients, including physical procedural, educational, mental (cognitive), and financial resources.

Retrospective review: A type of utilization review that occurs after treatment is completed in order to authorize payment and medical necessity and appropriateness of care.

Revenue: The amounts earned from a company’s sales of products and services to its customers.

Risk-adjustment: The statistical adjustment of outcomes measures to account for risk factors that are independent of the quality of care provided and beyond the control of the plan or provider, such as the patient’s gender and age, the seriousness of the patient’s condition, and any other illnesses the patient might have. Also known as case-mix adjustment.

RVS: See relative value scale.


SCHIP: See State Children’s Health Insurance Program.

Screening programs: Preventative care programs designed to determine if a health condition is present even if a member has not experienced symptoms of the problem.

Section 115 waivers: Waivers that gave states the authority to offer more comprehensive services to specified categories of Medicaid recipients through demonstration projects.

Section 1915(b) waivers: Waivers that allowed states to manage Medicaid recipients’ access to providers by assigning recipients to a primary care case manager or by enrolling recipients in an HMO.

Segments: Subsets or manageable groups of customers in a total market.

Self-funded plan: A health plan, under which an employer or other group sponsors, 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.

Service levels: The performance standards that an MCO sets for its member services activities.

Service quality: A success in meeting the non-clinical customer service needs and expectations of plan members.

Sherman Antitrust Act: A federal act which established as national policy the concept of a competitive marketing system by prohibiting companies from attempting to (1) monopolize any part of trade or commerce or (2) engage in contracts, combinations, or conspiracies in restraint of trade. The Act applies to all companies engaged in interstate commerce and to all companies engaged in foreign commerce. See also antitrust laws.

Site appropriateness listings: A resource for the review of surgery and certain non-surgical interventions that indicate the most appropriate setting for common procedures.

Small group: Although each plan size limit may vary, generally, a group composed of 2 to 99 members for which the group sponsor provides health coverage.

Special committees: See ad hoc committees.

Specialist: A healthcare professional whose practice is limited to a certain branch of medicine, specific procedures, certain age categories of patients, specific body systems, or certain types of diseases.

Specialty health maintenance organization (specialty HMO): An organization that uses an HMO model to provide healthcare services in a subset or single specialty of medical care.

Specialty HMO: See specialty health.

Specialty services: Healthcare services that are generally considered outside standard medical-surgical services because of the specialized knowledge required for service delivery and management.

Specific stop-loss coverage: See individual stop-loss coverage.

Staff model HMO: A closed-panel HMO whose physicians are employees of the HMO.

Staffing ratios: Ratios that relate the number of providers in the network to the number of enrollees in the health plan.

Standard community rating: A type of community rating that considers only community-wide data and establishes the same financial performance goals for all risk classes. Also known as pure community rating.

Standard of care: A diagnostic and treatment process that a clinician should follow for a certain type of patient, illness, or clinical circumstance.

Standards: “Authoritative statements of (1) minimum levels of acceptable performance of results, (2) excellent levels of performance or results, or (3) the range of acceptable performance or results,” according to the Institute of Medicine.

Standing committees: Long-term advisory bodies on ongoing issues such as finance management, compliance, quality management, utilization management, strategic planning, and compensation.

State Children’s Health Insurance Program (SCHIP): A program, established by the Balanced Budget Act, designed to provide health assistance to uninsured, low-income children either through separate programs or through expanded eligibility under state Medicaid programs.

Statutory solvency: An HMO’s ability to maintain at least the minimum amount, of capital and surplus specified by state insurance regulators.

Step-down unit: A ward or section of a ward in a hospital that is devoted to delivering sub-acute care to patients following a period of acute care.

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.

Strategic planning committee: The committee responsible for directing the company’s strategic direction and goals.

Structural integration: The unification of previously separate providers under common ownership or control.

Structure measures: Healthcare quality indicators related to the nature, quantity, and quality of the resources that an insurer or MCO has available for member service and patient care.

Subsidiary: A company that is owned by another company, its parent.

Surplus: The amount that remains when an insurer subtracts its liabilities and capital from its assets.


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 entity 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 entity or the provider to terminate the contract without providing a reason of offering an appleals 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 physcian approval.

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

Three-tier co-payment structure: A pharmacy benefit or physician co-payment system under which a member is required to pay one co-payment amount for a generic drug, a higher co-payment amount for a brand-name drug included on the health plan’s formulary, and an even higher co-payment amount for a non-formulary drug. In the case of physician charges the co-pay may vary between PCPs and SCPs as well as added services.

TPA: See third party administrator.

TRICARE: A department of Defense regionally managed health-care program for active duty and retired members of the uniformed services and their families that combines militart healthcare resources and networks of civilian healthcare professionals.

TRICARE Extra: A reduced fee-for-service (FFS) plan similar to the network portion of a PPO.

TRICARE Prime: An enrollment-based managed care option designed to provide coordinated care managed by a primary care manager, who is similar to a primary care provider in a commercial HMO.

TRICARE Standard: A fee-for-service plan that allows participants to use TRICARE authorized providers or non-network providers.

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

Two-tier co-payment structure: A pharmacy or physician co-payment system under which a member is required to pay one co-payment amount for a generic drug and a higher co-payment amount for a brand-name drug. In the case of physician services the member would pay the co-payment to see their PCP and a higher co-payment to visit with a Specialist.

Tying arrangements: An illegal business practice that occurs when an organization conditions the sale of one product or service on the sale of other products or services.


UCR: See usual, customary, and reasonable fee.

Unbundling: A coding inconsistency that involves separating a procedure into parts and charging for each part rather than using a single code for the entire procedure.

Underwriting: The process of identifying and classifying the risk represented by an individual or group.

Underwriting impairments: Factors that tend to increase an individual’s risk above that which is normal for his or her age.

Underwriting requirements: Requirements, sometimes relating to group characteristics or financing measures, that carriers at times, impose in order to provide healthcare coverage to a given group and which are designed to balance a health plan’s knowledge of a proposed group with the ability of the group to voluntarily select against the plan (anit-selection).

Up-coding: A coding inconsistency that involves using a code for a procedure or diagnosis that is more complex than the actual procedure of diagnosis and that results in higher reimbursement to the provider.

UR: See utilization review.

URO: See utilization review organization.

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

Utilization guidelines: A utilization review resource that indicates accepted approaches to care for common, uncomplicated healthcare services.

Utilization management (UM): Managing the use of medical services to ensure that a patient receives necessary, appropriate, high-quality care in a cost-effective manner.

Utilization review (UR): An evaluation of the medical necessity, appropriateness, and cost-effectiveness of healthcare services and treatment plans for a given patient.

Utilization review organization (URO): An external organization that conducts reviews to assess the medical appropriateness of suggested courses of treatment for patients, thereby providing the patient and the purchaser increased assurance of the value and quality of healthcare services.


Value-Added Services: Additional services or programs offered to the Insured. There may be a charge by the insurance carrier for some of the services provided.

Variances: The differences obtained from subtracting actual results from expected or budgeted results.


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

WHCRA: See Women’s Health and Cancer Rights Act:

Withold: A percentage of provider’s payment that is “held back” during the plan year to offset or pay for any cost overruns for referral or hospital services. Any part of the withold not used for these purposes is distributed to providers.

Women’s Health and Cancer Rights Act (WHCRA): A law that requires health plans that offer medical and surgical benefits for mastectomy to provide coverage for reconstructive surgery following mastectomy.

Workers’ compensation: A state-mandated insurance program tht 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.