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Abbreviations and Key Terms
Gail Carlson, MPH Ph.D, State Health Education Specialist, University of Missouri Extension
Balance Billing - The practice of a provider billing a patient for all charges not paid for by the insurance plan. Balance billing is generally prohibited by managed care plans.
Capitation - The insurer pays health providers
a set amount for each person enrolled in the managed
care plan rather than for the number and type of
services delivered. The amount paid may vary by factors
such as age and sex of the enrolled member.
Closed panel - A managed care plan that
contracts with physicians on an exclusive basis for
services and does not allow those physicians to see
patients for another managed care organization.
Coinsurance - Under conventional insurance
plans, there is often a limit on the amount covered by
the plan, commonly 80% of UCR charges. Any additional
costs are paid by the member out of pocket.
Copayment - That portion of a claim or medical
expense that a member of a health plan must pay out of
pocket. Usually this is a fixed amount, $5 or $10, for
Credentialing - The process of obtaining and
reviewing the documentation (licensure, certifications,
insurance, etc.) of health professionals. Generally,
this includes reviewing information given by the
provider and verifying that the information is correct
Deductible - That portion of an individual's
health care expenses that must be paid out of pocket
before insurance coverage applies. A common deductible
is $200. Deductibles are used in insurance plans and
PPOs, but usually not in HMOs.
Fee-for-service - The traditional method of
reimbursing physicians, hospitals and other health care
providers for their services. Providers are paid each
visit. The fees increase as more services are provided
or as more expensive services are substituted for less
Formulary - A listing of drugs that a
physician may prescribe. The physician is requested or
required to use only formulary drugs unless there is a
valid medical reason to use a nonformulary drug.
Gatekeeper - A primary care physician (PCP) in
a managed-care plan who is responsible for monitoring a
patient's care and deciding when specialized care or
tests are needed. Except in actual emergencies, all care
from providers other than the member's PCP must be
authorized by the gatekeeper.
Group model - An HMO that contracts with a
medical group for the provision of health care services.
The relationship between the HMO and the medical group
is generally very close, although there are wide
variations in the independence of the group from the
Managed-care - A general term for any system
of health care delivery organized to improve cost
effectiveness. It includes arrangements with doctors and
hospitals to supply health care services to members for
a set fee, criteria for the selection of health care
providers, significant financial incentives for members
to use providers in the plan and formal programs to
monitor the amount of care and quality of services.
Midlevel Practitioner (MLP) - Nonphysicians
who deliver medical care, generally under the
supervision of a physician. Some examples of MLPs are
physician's assistants, clinical nurse practitioners and
Network - A selected group of physicians,
hospitals, laboratories, and other health care providers
who participate in a managed-care plan's health delivery
program. Providers agree to follow the plan's
procedures, permit the monitoring of their practices and
provide certain negotiated discounts in exchange for a
guaranteed patient pool.
Open panel - A managed care plan that
contracts with private physicians to deliver care in
their own offices.
Primary Care Physician (PCP) - The term
usually applies to internists, pediatricians, family
physicians, and general practitioners. It may also apply
Point Of Service (POS) - Generally, the plan
enrolls each member in both an HMO (or HMO-like) system
and a conventional insurance plan. Members do not have
to choose how they will receive services until they need
them. The amount the member is reimbursed depends on
whether the member chooses to use the plan or go outside
the plan for services.
Service plan - A health insurance plan that
has direct contracts with providers but is not
necessarily a managed care plan. Providers bill the plan
directly rather than billing of the member and are paid
directly by the plan.
Staff model - AN HMO that employs providers
directly. These providers see members at the HMO's own
Usual, Customary, or Reasonable Fees (UCR) - A
method of reimbursing providers on the basis of a
profile of prevailing fees in an area. One common method
is to average all fees and then pay providers 80% or 90%
of that average amount.
Utilization Review (UR) - A general term for an insurance or managed care plan's review of the health care provided to its members. This includes such activities as granting prior approval before hospitalization or doing certain procedures; coordinating a patient's care and rehabilitation once they have left the hospital; and making decisions about whether a second opinion is necessary .
Last Updated 05/05/2009