Glossary of Terms


Adjudication Processing a claim according to contract language.

Allowed Charge The maximum dollar amount eligible for payment of a procedure or service as determined by your plan. This may include billed charged amounts, contracted amounts or usual and customary rates.

Annual Out-of-Pocket Maximum The maximum amount a member is required to pay for Covered Services received in a Calendar Year.

Appeal A complaint or dissatisfaction regarding payment, services or claims administration. Each health plan has their own policies that patients must follow in the appeal process.


Balance Billing When a healthcare provider is billing the patient for the amount remaining after insurance payments have been made.

Benefit Package Services defined specifically by an insurance policy that is offered to group or individuals under the terms of a contract.


Calendar Year A one-year period from January 1 - December 31.

Case Management The monitoring and coordination of treatment given to patients with specific health care needs. The process by which all health related matters of a patient's case are managed by a nurse, physician, or other health care personnel to attain the most desirable outcome.

Claim A request by an individual (or his or her provider) to that individual's insurance company to pay for services obtained from a health care professional. 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 of service.

Claimant The Facility, office or person submitting a claim.

Claim Administration The process of receiving, reviewing, adjudicating and processing claims.

COBRA The Consolidated Omnibus Budget Reconciliation Act of 1985 that allows workers and their families to continue their employer-sponsored health insurance for a certain amount of time after terminating employment.

Coding A mechanism for identifying and defining physicians' and hospitals' services. Coding provides universal definition and recognition of diagnoses, procedures and level of care. Coders usually work in medical records departments and coding is a function of billing.

Co-Insurance A cost sharing requirement under a health insurance policy. It requires that the insured person will pay a specified percentage of the costs of covered services. Health care cost which the covered person is responsible for paying according to a fixed percentage or amount.

Confinement A continuous stay in the hospital.

Contract Provider A hospital, physician, skilled nursing facility, doctor's office, durable medical equipment provider, chiropractor or other facility that has a contractual agreement with an insurer for the provisions of services under a contract.

Contract Year or Benefit Plan Year A period of twelve (12) consecutive months. May or may not coincide with a calendar year.

Coordination of Benefits (COB) Rules and procedures that determine how health care claims are paid when a member is covered by more than one health insurance plan. Together, the health plans cannot pay more than the charge for the services.

Co-Payment, Copayment, Copay A flat dollar amount that you pay for a specific covered service under your health plan.

Cost Sharing Amounts A health insurance policy condition that requires the insured person to pay a portion of the costs of covered services. Deductibles and coinsurance are examples of cost sharing.

Covered Services Health care services that will be paid for, in part or whole, by an insurance plan based on your specific health plan benefits, exclusions and limitations.

Creditable Coverage Defined by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended from time to time and generally means coverage without a lapse of more than 63 days for each member. Health coverage that a new enrollee has had in the past that gives the enrollee certain rights when he or she applies for new coverage.

Custodial Care A type of care designed to assist an individual to meet the activities of daily living. Non skilled, personal care that includes assistance in walking, getting in and out of bed, bathing, eating, dressing, using the bathroom, and preparing meals. In most cases, health plans do not cover custodial care.


Deductible Amount of money an insured person is required to pay for services before benefits become payable. Typically non-covered services do not apply to a deductible.

Disposable Supplies Medical supplies that are medically necessary for a specific therapeutic purpose in treating an illness or injury and that are designed for one use only.

Durable Medical Equipment (DME) Items of medical equipment owned or rented, prescribed by a healthcare provider for a specific therapeutic purpose in treating an illness or injury. Examples are walkers, hospital beds or wheelchairs that can generally withstand repeated use.


Effective Date The date on which an insurance policy begins.

Exclusions Conditions, services or situations not considered covered under a contract or insurance policy.

Explanation of Benefits (EOB) A notice sent from the health plan to the member describing the resolution of a claim. It includes services provided, amount billed, payment made and any costs that are the member's or the provider's responsibility.

Explanation of Payment (EOP) A notice sent from the health plan to the provider describing the resolution of a claim. It includes services provided, amount billed, payment made and any costs that are the member's or the provider's responsibility.


Flexible Spending Account (FSA) A plan that provides employees a choice between taxable cash and non-taxable benefits for unreimbursed health care expenses or dependent care expenses.

Formulary A continually updated list of preferred Prescription Drugs.


Health Care Provider Licensed, registered or certified clinics, hospitals, doctors, dentists, chiropractors and other professionals who provide health care services for patients.


Injury A non-occupational accidental bodily injury caused directly and exclusively by external and purely accidental means.

Inpatient Care A person who occupies a hospital, crib or bassinet while under observation, care, diagnosis, or treatment for at least 24 hours.

In network/In Plan Provider Institutional Healthcare Provider or Individual Healthcare Provider (Practitioner) that has an agreement or contract with the health plan.


Lifetime Maximum A cap on the benefits paid under a policy in a lifetime.


Medical Necessity Healthcare Services determined by the Plan to be appropriate, in terms of type, frequency, level, settings, and duration, to the member's diagnosis or condition, and diagnostic testing and preventive services, that are not otherwise excluded under the benefit plan.

Member The enrollee or insured. A member is any individual or dependent who is enrolled in or covered under the health plan.

Membership Card An identification card issued in the subscriber's name with the identification number of the subscriber.

Member Responsibility The dollar amount that an insured is legally obligated to pay for services rendered by a provider and not covered under the health plan. These may included co-payments, deductibles, and non covered services.


Network A specific group of health care providers under contract with a health plan company.


Out of Network/Non plan provider A health care provider without a contract or agreement with the health plan.

Outpatient Care A patient who visits a hospital or another health care facility for a specific treatment, procedure or test and is not admitted over night in the facility.


Pharmacy Benefit Manager (PBM) A third party administrator of prescription drug benefits.

Plan Document The document that contains all of the provisions, conditions, and terms of operation of a pension or health or welfare plan.

Prescription Drug Medications and drugs that bear the legend, "Federal"

Provider Responsibility The dollar amount that a provider is obligated to adjust off that is not covered by the health plan.

Pre Existing Condition A condition, disease, illness or injury for which the member received medical advice or treatment within a specific period immediately preceding the member's effective date of coverage or first day of a waiting period, if any, (whichever comes first) under the benefit plan. Pre Existing clauses vary for each health plan.

Primary Care Basic or general healthcare as opposed to specialist or sub specialist care. Primary care providers often oversee the total care of patients, referring the patient to other professionals as appropriate.

Prior Authorization Authorization from the plan that is required for specific covered services before they are received. If authorization is not received when required, coverage may be reduced or denied.

Provider Directory A list of in-network healthcare providers for a specific medical plan.


Referral The recommendations by a physician/practitioner for a member to receive are from a different physician or facility.


Specialist A doctor who treats only certain parts of the body, certain health problems, or certain age groups based on specialized education, training, or experience.

Summary of Benefits A written summary of benefits under an employee welfare benefit plan.


Third Party Administrator (TPA) An independent organization that provides administrative services including claim processing and underwriting for other entities, such as insurance companies or employers. TPA's are organizations with expertise and capability to administer all or a portion of the claims process including customer service, network management and utilization review.


Usual and Customary Charges Usual and customary dollar amounts refer to the difference between what a provider or facility charges and what the plan allows as payment for those services. The plan's allowances are based on a national standard specific to the zip code for the Healthcare Provider.

Utilization Review A cost-control mechanism for reviewing the appropriateness and quality of care provided to patients. UR may be before, at the same time or after the services are rendered.

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