Insurance Terms

The extent to which a particular procedure, treatment, test, or service is clearly indicated, not excessive, adequate in quantity, and provided in the setting best suited to a patient's or member's needs.

Appropriate Services
Designed to meet the specific needs of each individual child and family. For example, one family may need day treatment, while another may need home-based services. Appropriate services for one child and family may not be appropriate for another. Appropriate services usually are provided in the child's community.

The automatic assignment of a person to a health insurance plan (typically done under Medicaid plans).

Behavioral Heath Care Firm
Specialized (for-profit) managed care organizations focusing on mental health and substance abuse benefits, which they term "behavioral health care." These firms offer employers and public agencies a managed mental health and substance abuse benefit.

A person certified as eligible for health care services. A beneficiary may be a dependent or a subscriber.

Benefit Package
Services covered by a health insurance plan and the financial terms of such coverage. These include cost, limitation on the amounts of services, and annual or lifetime spending limits.

A fixed amount of money paid per person for covered services for a specific time; usually expressed in units of per member per month.

A generic term that refers to any of a continuum of joint efforts between clinicians and service providers; also used specifically to refer to health care delivery and financing arrangements in which all covered benefits (e.g., behavioral and general health care) are administered and funded by an integrated system.

A health care delivery and financing arrangement in which certain specific health care services that are covered benefits (e.g., behavioral health care) are administered and funded separately from general health care services. The carve-out is typically done through separate contracting or sub-contracting for services to the special population.

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.

Clinical Social Worker
Clinical social workers are health professionals trained in client-centered advocacy that assist clients with information, referral, and direct help in dealing with local, State, or Federal government agencies. As a result, they often serve as case managers to help people "navigate the system." Clinical social workers cannot write prescriptions.

Consolidated Omnibus Budget Reconciliation Act (COBRA)
An act that allows workers and their families to continue their employer-sponsored health insurance for a certain amount of time after terminating employment. COBRA imposes different restrictions on individuals who leave their jobs voluntarily versus involuntarily.

Any individual who does or could receive health care or services. Includes other more specialized terms, such as beneficiary, client, customer, eligible member, recipient, or patient.

Continuum of Care
A term that implies a progression of services that a client moves through, usually one service at a time. More recently, it has come to mean comprehensive services.

A health insurance policy provision that requires the insured party to pay a portion of the costs of covered services. Deductibles, coinsurance, and co-payment are types of cost sharing.

Creditable Coverage
Any prior health insurance coverage that a person has received. Creditable coverage is used to decrease exclusion periods for pre-existing conditions when an individual switches insurance plans. Insurers cannot exclude coverage of pre-existing conditions, but may impose an exclusion period (no more than 12 months) before covering such conditions.

A sudden intensification of symptoms that results in marked inability to function and possibly raising the risk of harm to others or the person in crisis because of overwhelming emotion, disturbed thinking or risky behavior.

The amount an individual must pay for health care expenses before insurance (or a self-insured company) begins to pay its contract share. Often insurance plans are based on yearly deductible amounts.

DSM-IV (Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition)
An official manual of mental health problems developed by the American Psychiatric Association. Psychiatrists, psychologists, social workers, and other health and mental health care providers use this reference book to understand and diagnose mental health problems. Insurance companies and health care providers also use the terms and explanations in this book when discussing mental health problems.

Drug Formulary
The list of prescription drugs for which a particular employer or State Medicaid program will pay. Formularies are either "closed," including only certain drugs or "open," including all drugs. Both types of formularies typically impose a cost scale requiring consumers to pay more for certain brands or types of drugs.

Emergency Medical Treatment and Labor Act (EMTALA), also referred to as the Federal Anti-patient Dumping Law
An act pertaining to emergency medical situations. EMTALA requires hospitals to provide emergency treatment to individuals, regardless of insurance status and ability to pay.

Employee Assistance Plan (EAP)
Resources provided by employers either as part of, or separate from, employer-sponsored health plans. EAPs typically provide preventive care measures, various health care screenings, and/or wellness activities.

A person eligible for services from a managed care plan.

The total number of covered persons in a health plan. Also refers to the process by which a health plan enrolls groups and individuals for membership or the number of enrollees who sign up in any one group.

Fee for Service
A type of health care plan under which health care providers are paid for individual medical services rendered.

Primary care physician or local agency responsible for coordinating and managing the health care needs of members. Generally, in order for specialty services such as mental health and hospital care to be covered, the gatekeeper must first approve the referral.

Group-model Health Maintenance Organization (HMO)
A health care model involving contracts with physicians organized as a partnership, professional corporation, or other association. The health plan compensates the medical group for contracted services at a negotiated rate, and that group is responsible for compensating its physicians and contracting with hospitals for care of their patients.

Health Employer Data and Information Set
A set of HMO performance measures that are maintained by the National Committee for Quality Assurance. HEDIS data is collected annually and provides an informational resource for the public on issues of health plan quality.

Health Insurance Portability and Accountability Act (HIPAA)
This 1996 act provides protections for consumers in group health insurance plans. HIPAA prevents health plans from excluding health coverage of pre-existing conditions and discriminating on the basis of health status.

Health Maintenance Organization (HMO)
A type of managed care plan that acts as both insurer and provider of a comprehensive set of health care services to an enrolled population. Services are furnished through a network of providers.

Horizontal Consolidation
When local health plans (or local hospitals) merge. This practice was popular in the late 1990s and was used to expand regional business presence.

Indemnity Plan
Indemnity insurance plans are an alternative to managed care plans. These plans charge consumers a set amount for coverage and reimburse (fully or partially) consumers for most medical services.

Length of Stay
The duration of an episode of care for a covered person. The number of days an individual stays in a hospital or inpatient facility.

Local Mental Health Authority
Local organizational entity (usually with some statutory authority) that centrally maintains administrative, clinical, and fiscal authority for a geographically specific and organized system of health care.

Managed Care
A system requiring that a single individual in the provider organization is responsible for arranging and approving all devices needed under the contract embraced by employers, mental health authorities, and insurance companies to ensure that individuals receive appropriate, reasonable health care services.

Medicaid is a health insurance assistance program funded by Federal, State, and local monies. It is run by State guidelines and assists low-income persons by paying for most medical expenses.

Medical Review Criteria
Screening criteria used by third-party payers and review organizations as the underlying basis for reviewing the quality and appropriateness of care provided to selected cases.

Medically Necessary
Health insurers often specify that, in order to be covered, a treatment or drug must be medically necessary for the consumer. Anything that falls outside of the realm of medical necessity is usually not covered. The plan will use prior authorization and utilization management procedures to determine whether or not the term "medically necessary" is applicable.

Medicare is a Federal insurance program serving the disabled and persons over the age of 65. Most costs are paid via trust funds that beneficiaries have paid into throughout the courses of their lives; small deductibles and some co-payments are required.

MediGap plans are supplements to Medicare insurance. MediGap plans vary from State to State; standardized MediGap plans also may be known as Medicare Select plans.

Used synonymously with the terms enrollee and insured. A member is any individual or dependent who is enrolled in and covered by a managed health care plan.

Mental Health Parity (Act)
Mental health parity refers to providing the same insurance coverage for mental health treatment as that offered for medical and surgical treatments. The Mental Health Parity Act was passed in 1996 and established parity in lifetime benefit limits and annual limits.

The system of participating providers and institutions in a managed care plan.

Network Adequacy
Many States have laws defining network adequacy, the number and distribution of health care providers required to operate a health plan. Also known as provider adequacy of a network.

Pharmacy Benefit Manager (PBM)
PBMs are third party administrators of prescription drug benefits.

Point-of-service Plan (POS)
A modified managed care plan under which members do not have to choose how to receive services until they need them. Members receive coverage at a reduced level if they choose to use a non-network provider.

Pre-existing Condition
A medical condition that is excluded from coverage by an insurance company because the condition was believed to exist prior to the individual obtaining a policy from the insurance company. Many insurance companies now impose waiting periods for coverage of pre-existing conditions. Insurers will cover the condition after the waiting period (of no more than 12 months) has expired.

Preferred Provider Organization (PPO)
A health plan in which consumers may use any health care provider on a fee-for-service basis. Consumers will be charged more for visiting providers outside of the PPO network than for visiting providers in the network (American Association of Preferred Provider Organizations).

Primary Care Physician (PCP)
Physicians with the following specialties: group practice, family practice, internal medicine, obstetrics/gynecology, and pediatrics. The PCP is usually responsible for monitoring an individual's overall medical care and referring the individual to more specialized physicians for additional care.

Prior Authorization (Pre-Certification)
The approval a provider must obtain from an insurer or other entity before furnishing certain health services, particularly inpatient hospital care, in order for the service to be covered under the plan.

Psychiatric Emergency Walk-in
A planned program to provide psychiatric care in emergency situations with staff specifically assigned for this purpose. Includes crisis intervention, which enables the individual, family members and friends to cope with the emergency while maintaining the individual's status as a functioning community member to the greatest extent possible and is open for a patient to walk-in.

Possibility that revenues of the insurer will not be sufficient to cover expenditures incurred in the delivery of contractual services. A managed care provider is at risk if actual expenses exceed the payment amount.

Risk Adjustment
The adjustment of premiums to compensate health plans for the risks associated with individuals who are more likely to require costly treatment. Risk adjustment takes into account the health status and risk profile of patients.

Risk Sharing
Situation in which the managed care entity assumes responsibility for services for a specific group but is protected against unexpected high costs by a pre-arranged agreement for higher payments for those individuals who need significantly more costly services. Risk is usually shared by the managed care entity and the State.

Staff-model HMO
An HMO that directly employs, on a salaried basis, the doctors and other providers who furnish care.

State Children's Health Insurance Plan (SCHIP)
Under Title XXI of the Balanced Budget Act of 1997, the availability of health insurance for children with no insurance or for children from low-income families was expanded by the creation of SCHIP. SCHIPs operate as part of a State's Medicaid program.

State Coverage
The total unduplicated count of mental health patients/clients served through State programs, exclusive of Medicaid and Other Coverage.

State Hospital
A publicly funded inpatient facility for persons with mental illness.

State Mental Health Authority or Agency
State government agency charged with administering and funding its State's public mental health services.

An arrangement whereby a capitated health plan pays its contracted providers on a capitated basis.

Employment group or individual that contracts with an insurer for medical services.

Third Party Payer
A public or private organization that is responsible for the health care expenses of another entity.

Utilization Management
A system of procedures designed to ensure that the services provided to a specific client at a given time are cost-effective, appropriate, and least restrictive.

Utilization Review
Retrospective analysis of the patterns of service usage in order to determine means for optimizing the value of services provided (minimizes cost and maximizes effectiveness/appropriateness).