HEALTH DEFINITIONS Allowed Amount The amount of the billed charge the insurance company deems is payable by the plan. Ambulatory Care Medical care on an outpatient basis, such as hospital outpatient clinics and ER Departments, physician's office and home health care are examples. Ancillary Services The name given to professional services such as laboratory tests and radiology exams. Assignment of Benefits The patient or guardian signs the Assignment of Benefits form so that the physician or medical provider will receive the insurance payment directly. Authorization If a physician wants to perform a surgery, order a medical supply, or refer the patient to a specialist an authorization and approval by the health plan is required. Average Wholesale Price This value is generally accepted as a standard measure of evaluating the cost of a particular medication. Benefit Penalty A method used by the insurance company to reduce payment on a claim when the patient or medical provider does not fulfill the rules of the health plan. The Birthday Rule A method of determining coordination of benefits under both parent's plans of medical insurance. Bundling a method by which the insurance company decides to combine payment for two or more medical services. Capitation A payment methodology in which the physician is paid a set dollar amount determined by a per member per month (pmpm) calculation to deliver medical services to a specified group of people. Carve-out Medical services that are separated from a contract and paid under a different arrangement. Case Management A method by which a health plan attempts to control costs by directing all of the procedures for care of an individual through a nurse or other health care professional. Claim A request for payment by a medical provider for a given medical service or item. COBRA Consolidated Omnibus Budget Reconciliation Act Co-insurance A percentage the patient is responsible for on a given insurance claim Contracted Provider A medical provider that has an agreement with a health plan to accept their patients at a previously agreed upon rate for payment. Conversion Plan When an individual terminates his/her group policy, an option to continue coverage is by purchasing an individual health plan called a conversion policy. Co-payment A per occurrence payment Cost Containment When the insurance company devises a way to reduce the benefit payment or costs associated with the health plan. Covered Expense A medical procedure or item that is deemed payable by the insurance plan. CPT Code Current Procedural Terminology Deductible A set dollar amount, which must be satisfied within a specific time frame before the health plan begins making payments on claims Exclusions Those items or medical services that are not covered by the health plan. Exclusive Provider Organization (EPO) A health plan that has the characteristics of an HMO or PPO plan. Explanation of Benefits A summary of the payment made by your health plan to the medical provider. Extension of Benefits The health plans offers an additional 12 months of coverage due to a disabling condition Fee for Service A method of payment for medical services rendered Fee Schedule A list of CPT codes and dollar amounts an insurance company will pay for a particular medical service Formulary A listing of pharmaceuticals the health plan pays for. Fully Insured An Employer purchases insurance coverage from a licensed insurance company and the insurance company assumes all of the risk. HCFA 1500 The standard claim format used by health plans on which to consider payment to the medical provider. HMO Health Maintenance Organization ICD-9 (International Classification of Diseases 9th Edition) A standard format of identifying the illness, injury or diseases by using a three-digit code. Indemnity Plan A non-PPO or HMO plan, a plan that does not have preferred provider networks or many cost containment features. Integrated Delivery System An organization that combines hospital, physician and other medical services as part of a larger health care system. IPA (Independent Practice Association) An organization of physicians who are contracted with an HMO plan. Managed Care A method by which cost containment features are applied to a health plan either by limiting the reimbursement levels paid to providers or by reducing utilization. Medical Loss Ratio The amount of the premium revenues actually spent on paying for medical services. Medical Necessity A medical procedure or service must be performed only for the treatment of an accident, injury or illness and is not considered experimental, investigational or cosmetic. Off-label Use The prescribing of a medication for use not approved by the FDA (Federal Drug Administration). Out of Pocket Expense The amount the patient must pay themselves and not paid for by the insurance plan Participating Provider A physician or other medical provider has agreed to accept a set fee for services provided to members of a specific health plan.  They are deemed to be "in-network". PCP Primary Care Physician PPO Preferred Provider Organization Pre-Existing A medical condition diagnosed prior to the effective date of the health plan. Self-Insured An Employer who underwrites their own risk. This may is good for groups with a favorable claims history. Usual & Customary A reduction in the payment of benefits on a claim which is justified by the insurance company as "the going rate" to be paid in that geographical area. Untimely Submission A medical claim must be submitted within the time frame given by the insurance company or the claim will be denied.