The Language Of Managed Care

Co-insurance: The portion of covered health care expenses that must be met by the policyholder in addition to the deductible. This figure is usually expressed as a percentage. For example, in a traditional 80/20 plan, the insurer pays 80 percent of the doctor's bill and the patient pays 20 percent. This is based on the insurance company's definition of what constitutes a physician's "reasonable and customary" fee. NOTE: Many physicians' charges are higher than the "reasonable and customary" fee and the patient is responsible for 100 percent of the excess amount. This is known as "balance billing."

Co-payment: The amount a plan member has to pay--usually $5 to $15-- every time he or she visits an affiliated physician or receives services.

Credentialing: A managed-care plan's review of a physician's background and current professional standing, which is done before an HMO contracts with a doctor. The review usually requires evidence of graduation from an accredited medical school, a current state medical license, hospital privileges in good standing, and a professional liability claims history, including chemical dependency, felony convictions and disciplinary actions.

Deductible: The amount a person must pay before the insurance company begins to pay its portion of claims. The higher the deductible, the lower the premium of the health plan.

Group Model: An HMO that contracts with a group practice of physicians to provide services to enrollees. These contracts can be either exclusive (the group can only treat plan members), or non-exclusive (the practices are free to contract with other plans and see fee-for-service patients). The latter are often referred to as Network models.

Health Maintenance Organization (HMO): An HMO provides members, through a network of selected physicians and hospitals, a defined set of comprehensive benefits in exchange for a prepaid premium. There are generally no deductibles, small co-payments, and no claims to file. The HMO provides no reimbursement (or a reduced amount) for non-emergency care with a physician or hospital outside of the network. There are several types of HMOs: Group Model, Staff Model, Independent Practice Association (IPA), and Point of Service Plan (POS).

Independent Practice Association (IPA): An "HMO without walls," in which patients choose doctors from a select list and are treated at the physicians' private offices. IPA physicians are free to contract with more than one HMO at a time and they can treat fee-for-service patients.

Indemnity, or Fee-for-Service, Plans: Medicine the old-fashioned way. Patients receive a bill from their doctor or hospital for each service rendered. They submit the bill to their insurance company and the company pays it. These plans provide the maximum choice of physicians and hospitals but are the most expensive kinds of plans.

Managed Care: A general term for organizing doctors and hospitals into health care delivery networks with the intent of lowering costs and "managing" the medical care provided. HMOs were the earliest form of managed care. Today there are many different kinds of plans.

Network: A selected group of physicians, hospitals, laboratories and other health care providers who participate in a managed-care plan's health delivery program and agree to follow the plan's procedures.

Out-of-Pocket Maximum: A limit on all of the insured's out-of-pocket expenses (including deductibles and co-payments) for treatment of illness or injury. At this point, the insurance company will begin covering 100 percent of the charges. For members who use non-network providers, the out-of-pocket maximum could be as high as $10,000.

Point of Service Plan (POS): The latest development in managed care, this type of HMO allows the patient to see either an in-network or out-of-network provider. But patients who go outside the network are reimbursed less (perhaps only 50 to 80 percent of the doctor's fee), and they must submit a claim and pay a deductible plus co-payment charges.

Preferred Provider Organization (PPO): A managed-care plan that doctors and hospitals agree to provide discounted rates to. PPOs usually exercise looser management over medical care. For example, they usually don't use primary-care physicians to coordinate patient care. Patients are reimbursed 80 percent to 100 percent for treatment within the PPO versus 50 percent to 70 percent outside of it.

Premium: The cost of the health plan coverage. It does not include any deductibles or co-payments the plan may require.

Staff Model: A type of HMO that hires its own doctors. These physicians usually practice under one roof and are salaried by the plan.

Bookmark & Share