Glossary of Terms

 

Active Participant – An individual who is a participant in an employer sponsored plan.

Actuary – A person professionally trained in the technical and mathematical aspects of insurance.  The actuary estimates how much money must be contributed to a fund each year in order to support the benefits.  Actuaries determine policy rates, reserves as well as conducts various other statistical studies.

Administrative Services Only (ASO) – An arrangement in which a plan hires a third party to handle administrative services such as claims processing while the plan bears the risk for the claims.  Great West HealthCare is contracted under an Administrative Services Only contract for the State of Wyoming.

Adult plus Children Coverage - Coverage where the employee and child(ren) are enrolled in the State’s health program.

Adult plus Spouse Coverage - Coverage where the employee and spouse are enrolled in the State’s health program.

Adverse Selection – The tendency of an individual to recognize his or her health status in selecting the insurance plan that tends to be the most favorable to him or her (and more costly to the plan).  Adverse selection revolves around participants who, because of the premium costs they incur, choose to buy coverage elsewhere for their young and/or healthy dependents.  This leads to an older or higher utilizer pool of people who participate in the program which raises the average costs to the plan.

Allowed Charges – Charges for services rendered or supplies furnished by a health provider that would qualify as covered expenses for which the program will pay in whole or in part, subject to any deductible, coinsurance or table of allowance included in the program.

Amendment – A formal document changing the provisions of a insurance plan.

Assignment of Benefits – The signed transfer of payment by the insured person to a health care provider such as a physician or hospital.

Balance Billing – The practice of charging full fees in excess of the covered amounts and then billing the patient for that portion of the bill that the insurance does not cover.

Beneficiary – A person named by the insured participant to receive any benefits provided the plan if the participant dies.  The Beneficiary(ies) for the State’s life insurance program may be changed by the participant at any time.

Benefit Fund – The monies set aside the plan sponsor for payment of benefits.

Birthday Rule – Coordination-of-benefits rule wherebv, if both spouses are working and carry dependent coverage, the responsibility for primary coverage falls to the parent having the earlier birthday in the calendar year, regardless of which parent is older.

Business Associate – Under HIPAA privacy legislation, an individual who, on behalf of a covered entity, performs or assists with a function or activity involving protected health information.  Examples include lawyers, consultants, third-party administrators, doctors an health care clearinghouses. 

Case Management – A utilization management system focusing on coordinating the health care services needed by a patient.  It includes a standardized, objective assessment of patient needs and the development of an individualized care plan that is based on the needs assessment.  Case management is often used for patients with certain medical conditions who need extensive medical services; usually overseen by an individual or team of medical practitioners.

Certificate of Creditable Coverage – A document provided by a health program which documents the amount of previous qualified health coverage.  Certificates are used to provide coverage credit for health insurance pre-existing condition clauses. 

Claim – An itemized statement of services rendered by a health care provider for a given patient.  The claims is submitted to a health benefits plan for payment.  Monthly billing statements are not itemized statements and cannot be used for claim submissions.

Claim Administrator – Any entity that reviews and determines whether to pay claims to enrollees or physicians on behalf of the health benefit plan.  Great West Healthcare is the claims administrator for the State’s health benefit program.

Claim form – The form used to file for benefits under a health plan.

Claimant – Plan participant who files a claim for benefits.

Claims Experience – The frequency, cost and types of claims insured employees file to receive benefits.  Claims experience is one of the primary factors used in calculating insurance premiums.

COBRA – Consolidated Omnibus Budget Reconciliation Act  of 1985.  The main provision of this legislation with respect to health care coverage is that most group health plans must provide each participant and qualified beneficiaries under the plan the option to pay for continued coverage for a specified period of time under the plan in the event coverage would otherwise have ceased as a result of one of a number of “qualifying events.”

Coding – A mechanism for identifying and defining physician services.

Coinsurance – A policy provision by which the insured person and the insurer share the hospital and medical expenses resulting from an illness or injury in a specified ratio (e.g., 80%:20%), after the deductible is met.

Comprehensive Major Medical Coverage – This coverage provides protection characterized by a deductible, less than 100% reimbursement and a high maximum benefits.  A typical type of comprehensive plan  provides that most types of medical expenses are covered, usually after the satisfaction of a deductible (such as $350).  After covered expenses exceed this initial deductible, the plan typically pays a percentage, such as 80%, of all other covered medical expenses subject to plan provisions.  An annual out-of-pocket maximum (such as $2,000) is a common feature of these plans.

Contract Administration - An arrangement in which a plan hires a third party to handle administrative services such as claims processing while the plan bears the risk for the claims.
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Covered Entity - An employer who is required by statute to participate in the State of Wyoming for the Employees’ and Officials’ Group Insurance Program. Covered Entities include, but not limited to, the State of Wyoming, University of Wyoming, Wyoming Business Council, the Wyoming Community Colleges and participating K-12 school districts who have elected to join the State’s program.

Coordination of Benefits (COB) – A group health insurance policy provision designed to eliminate duplicate payments and provide the sequence in which coverage will apply (primary and secondary) when a person is insured under two contracts.

Cost Containment (Medical) – Methods and programs designed to contain costs by ensuring appropriateness, medical necessity and relatedness of treatment and procedures.  Examples include utilization review and bill review.

Cost Sharing – Arrangements whereby consumers pay a portion of the cost of health services, sharing costs with employers.  Deductibles, co-payments, co-insurance and payroll deductions are forms of cost sharing.

CPT (Current Procedural Terminology) Codes – A five-digit coding system developed by the American Medical Association to categorize medical procedures for billing purposes.

Credentialing – Obtaining and reviewing the documentation of professional providers.  Such documentation includes licensure, certifications, insurance, evidence of malpractice insurance, malpractice history and so forth.

Creditable Coverage - Coverage under a group health plan, individual health insurance coverage, Medicare, Medicaid or other public health plans, TRICARE coverage (formerly known as CHAMPUS) for military personnel and their families, a medical program of the Indian Health Service or of a tribal organization or the Peace Corps, state health benefit risk pools, the Federal Employee Health Benefit Plan (FEHBP) or a State Children’s Health Insurance Program (S-CHIP).

Creditable Health Care - Under HIPAA, health care coverage without a significant break in coverage (a period of 63 consecutive days), which may be credited towards pre-existing waiting periods.

Death Benefit – The payment made to the designated beneficiaries upon the death of a participating employee in the Life insurance program.

Deductible – The amount of out-of-pocket expenses that must be paid for health services by the insured before becoming payable by the health plan. 

Defensive Medicine – The practice by physicians of authorizing medically unnecessary tests and procedures, increasing hospital admissions and extending lengths of stay in an attempt to limit their exposure to malpractice suits.

Dependent – Generally the spouse or child of a covered individual, as defined in the Employees’ and Officials’ Group Insurance Program booklet.

Dependent Care Flexible Spending Account – Employer-sponsored flexible benefits plan feature that permits employees to use pre-tax (tax-free) dollars from their paychecks to pay the cost of care for children or elderly dependents up to a certain limits and within very specific guidelines.

Disease Management – A proactive, integrated systems approach targeting individuals who are or may become at risk for chronic health conditions.  Often uses educational and prevention initiatives, careful monitoring techniques, patient self-care and evidence based clinical practice guidelines to improve health outcomes and reduce health care costs for chronic disease patients. Disease management uses a team approach to managing chronic diseases. Through collaboration with physicians and other health professionals, participants are educated on ways to manage their chronic conditions, taught to recognize and report signs and symptoms, and encouraged to follow their prescribed treatment regimens.

Eligibility Period – A period of time when potential members may enroll in a medical, dental or life program outside of open enrollment or evidence of insurability.

Eligibility Requirements – Conditions that an employee must satisfy to participate in a plan.

Employee Contributions – The amount an employee is required to pay to participate in a plan.

Employee plus Spouse Coverage - Coverage where the employee plus his/her eligible spouse are enrolled in the State’s Plan.

Employee plus Children Coverage - Coverage where the employee plus eligible dependent children are enrolled in the State’s Plan.

Employer - An employer who is required by statute to participate in the State of Wyoming for the Employees’ and Officials’ Group Insurance Program. Employers include, but not limited to, the State of Wyoming, University of Wyoming, Wyoming Business Council, the Wyoming Community Colleges and participating K-12 school districts who have elected to join the State’s program.

Employer Contributions – The amount an employer contributes on behalf of an eligible participant of a plan.

Enrollment – The process by which an eligible individual and/or dependents become subscribers to a plan.

Evidence of Insurability – A statement or proof of a person’s physical condition or other factors affection his or her acceptance for insurance.  Usually used for application for life insurance for late enrollees.

Expected Claims – The claims forecast for a group of covered persons for a future period.  The expected claims forecast is used to develop premiums for medical and dental programs.

Experience Rating – The process of determining the premium rates for a group risk, wholly or partially on the basis of that group’s claims experience.

Experimental Medical Procedures – Health care ser ices or treatments that are not widely accepted as effective by entities such as the Health Care Financing Administration, the American Medical Association, National Institutes of Health or have not been scientifically proven to be effective.  Such services are excluded from our health plan.

Family Coverage - Coverage where the employee plus his/her eligible spouse and dependent children are enrolled in this Plan.

Family Deductible – A deductible that is satisfied by the combined expenses of all covered family members.  For example, a program with a $350 deductible may limit its application to a maximum of two deductibles ($700) for the family, regardless of the number of family members.  An aggregate family deductible may be met by several family members.

Fiduciary Responsibility – Under ERISA, a fiduciary must discharge his or her duties solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits, while defraying reasonable expenses of the plan.  The conduct of a fiduciary will be governed by the “prudent man” or “prudent person” standard: that is, a fiduciary must act with the same care as a prudent person dealing with similar situation would exercise.

First Dollar Coverage – A benefit plan that provides reimbursement for incurred health care costs “from the first dollar,” with no deductible.

Flexible Spending Accounts (FSAs) – Many flexible benefit programs include flexible spending accounts, which give employees the opportunity to set aside pretax funds for the reimbursement of eligible tax-favored welfare benefits.  FSAs are funded through salary reduction.  Employees can pay health insurance deductibles and co-payments, or pay for child-care benefits with FSAs.

Fully Insured – A group insurance plan in which an insurer pays all claims and assumes all risks for an employer in exchange for payment of a regular premium.

Generic Equivalent Drugs – Prescription drugs that are equal in therapeutic power to the brand-name originals because they contain identical active ingredients at the same doses.

Grievance Procedure – A formal process for the resolution of members complaints concerning eligibility and claims.. 

Health Care Flexible Spending Account – Allows employees to set aside pretax funds for eligible health care benefits such as physical exams, vision care, dental care, general health care, including deductibles and co-payments.

Health Care Fraud – As defined by the National health Care Anti-Fraud Association, a deception of misrepresentation that is intentionally made by an individual, knowing that the misrepresentation could result in some unauthorized benefit to the individual or to some other party. 

Health Care Provider – An individual or institution that provides medical ser ices (e.g., physician, hospital, laboratory, etc.).

Health Insurance Portability and Accountability Act of 1996 (HIPAA) – Federal legislation that improves access to health insurance when changing jobs by restricting certain preexisting condition limitations, and guarantees availability and renewability of health insurance coverage for all employers regardless of claims experience or business size. 

Health Risk Assessment – A wellness program instrument that can evaluate the health status of an individual and the relative risk of disease, injury or death associated with a specific set of lifestyle behaviors when combined with specific information about the individual involved.

Health Savings Accounts (HSAs) – These are tax-exempt trusts or custodial accounts created for employees, retirees and the self-employed who are covered under qualified high-deductible health plans.  Funds can be used for medical expenses, including prescription drugs, qualified long-term care insurance premiums and COBRA coverage.  Amounts not distributed can be carried forward.  Like an IRA, the individual who is the account beneficiary owns the HSA, making the plan portable.

High-Deductible Health Plans – Health bvenefit plans that have a minimum deductible of $1,000 for individuals and $2,000 for families, which applies to all health care benefits except preventive care.  Out-of-pocket expenses requirement cannot be more than $4,000 for sing coverage or $10,000 for family coverage.  The plans may be offered in conjunction with an HSA.

High-Risk Pools – State-created insurance pools of individuals with extensive current or anticipated health care needs.  These pools spread the risk of those individuals among the health insurance companies doing business in that state.  These pools have been used by a number of states in an attempt to extend coverage to their medically uninsurable citizens.  People with a chronic disease or illness, such as diabetes or multiple sclerosis, can purchase health care insurance.  Additional funds for these high-risk pools are typically taxes on health insurance premiums.
 
Incurred but Not Reported (IBNR) – Claims that have been incurred (services rendered) but have not been reported to the insurer as of some specific date.  Plans must estimate this liability for accounting purposes based on their experience with claims lags. 

Incurred Claims – Claims where services have been rendered to a plan participant.

Insurance Fraud - Fraud occurs when an individual knowingly lies to obtain some benefit or advantage to which they are not otherwise entitled.  Examples of
health insurance fraud are:

• Providing false information or withhold information to obtain benefits under the plan; or
• Adding Dependent(s) to a plan who are ineligible based upon the Plan’s definition of a Dependent. This can include claiming a Dependent when they would otherwise not be eligible for benefits or claiming someone as a legal spouse who does not meet the definition of legal spouse as defined by the Plan.

Lag – The period of time between the incurring of a claim and the payment of that claim.

Length of Stay (LOS) – The number of days that elapse between admission and discharge from a hospital or health care facility.

Loss Ratio – The ratio of paid and incurred claims plus expenses to premium.

Mandated Benefits – A specific set of benefits required by law to be provided by all insurance carriers and reimbursed under all insurance policies.

Maximum Allowable Cost - All medical benefits are subject to allowable covered expense guidelines. These guidelines help control medical costs by setting a limit on the amount of covered for each medical procedure. When you see a provider who is not a Network provider, the allowable covered expense will be determined by maximum allowable cost guidelines. The maximum allowable cost for each service or supply you recieve will be the lesser of these two amounts:

       The fee usually charged by your Physician for these services and supplies.

       The maximum allowable cost for the same geographical area for these services and supplies.

Network providers under contract agree to a set fee schedule for people enrolled in Network PPO. When you see a Network PPO provider, or any other provider who is under contract with CIGNA, the allowable covered expense will be the lesser of the actual billed amount and the amount allowed for the service under the negotiated fee schedule. The provider cannot bill you for an expenses in excess of the scheduled amount.

Maximum Out-of-Pocket Payment – The maximum amount of money a person will pay under a plan.  The out-of-pocket payment is usually the sum of the deductible and coinsurance payments. 

Medically Necessary – Describes services provided to a patient as judged against generally accepted standards of medical practice.  The term is usually used to determine whether or not a procedure or services is covered by insurance.  The reasonable and appropriate diagnosis, treatment and follow up care as determined and prescribe by qualified, appropriate health care providers in treating any condition, illness, disease or injury.

Medicare - Title 18 of the United States Social Security Act of 1965 as amended from time to time and the coverage provided under it. This includes coverage provided under Medicare Advantage plans.

Member - An Employee/Retiree and any covered Dependent covered under the State’s Plan.

Newborns’ and Mothers’ health Protection Act of 1996 – Federal law that mandates that group health plans (as defined in HIPAA) may not restrict the length of any hospital stay in connection with childbirth for either the mother or the newborn child to less than 48 hours for a normal vaginal delivery or 96 hours for a Caesarean delivery.  Plans may not offer incentives to mothers to accept less time, nor may they penalize providers for adherence to the law.

Open Enrollment – A period during which uninsured eligible employees and their dependents may enroll in coverage.  The State of Wyoming Health program open enrollment happen in November of odd number years which provide the opportunity to enroll if you or your dependents are not currently participating in the health insurance program.

Prescription Drug Formulary – A listing of prescription medications that will be covered by a health plan that often fosters substitution of generic or therapeutic equivalents on a cost effective basis.  This is usually done through tiered co-payment levels that provide lower co-payments for generic or preferred name brand drugs.

Outpatient – A person who visits a clinic, emergency room or health facility and receives health care without being admitted as an overnight patient.

Outpatient Surgery – Same day surgery without anticipation of the overnight stay of patients.  Often performed at an ambulatory surgery center.

Paid Claims – The dollar value of all claims paid (e.g., hospital, medical, surgical) during the plan year, regardless of the date that the services were rendered. 

Participant – An eligible employee or former employee who is enrolled in a plan.

Plan Sponsor – The party that establishes and maintains the plan, which is the State of Wyoming for the Employees’ and Officials’ Group Insurance Program.

Precertification – The process of obtaining authorization from the health plan for hospital admissions or for surgery, based on the judgment of medically appropriate care by a qualified peer.  Failure to obtain precertification results in a financial penalty to either the provider or the subscriber.

Preexisting Condition – A physical and/or mental condition of an insured person that existed prior to the issuance of his or her policy.

Prescription Drug Formulary – A listing of prescription medications that will be covered by a plan or insurance contact designed to foster substitution of generic or therapeutic equivalents on a cost effective basis.  Prescription drugs are generally tiered with lower payments for lower cost medications.

Preventive Care – Comprehensive care emphasizing priorities for prevention, early detection and early treatment of conditions, generally including routine physical examinations and immunizations.

Qualifying Event – An occurrence that may entitle a person to make changes to their benefit elections.  Examples include termination of employment, reduction in hours, death of employee, divorce, a dependent child’s loss of dependent status, etc..

Rating – The process that determines how much a particular package of benefits will cost and what will be charged (premium) to cover those expected costs for a specific group of people.

Reserves – Funds set aside by a self-funded plan to assure the fulfillment of commitments for future claims.  These funds are designed pay for the estimated liability for unpaid insurance claims (losses) that have occurred as of a given date.  The estimated liability includes losses incurred but not reported (IBNR), claims being adjusted and amounts know to be payable in the future.  Reserves also protect a Plan from fluctuations in claims payments where higher than anticipated claims are incurred and paid.

Risk Pool – The population of individuals (or groups) across which costs for insured expenses are spread through premiums or other mechanisms. 

Secondary Payer – The insurance carrier that is second in responsibility under coordination of benefits.  Often mention in the contexts of efforts to recoup payments made as primary payer when other primary, duplicate coverage exists.

Self-Insurance – A self insured plan is where the employer is acting is acting as an insurance company.  The employer pays claims with the money ordinarily earmarked for premiums.  The State of Wyoming health program is a self funded medical plan which means that the State is the “insurance company” for our healthcare.  This allows the state to minimize our costs while maximizing the money available to pay your medical claims which lowers our medical premium rates.

Significant Break in Coverage – Under HIPAA, a period of 63 consecutive days during which and individual does not have any creditable health care.

Single Coverage - Coverage where only the employee is enrolled in the State’s program.

Solvency – The ability of a plan to meet its present and future obligations; the adequacy of provisions for funding.

Split Coverage - Coverage where both husband and wife, with eligible dependent children, are employed by Covered Entities and covered under this Plan.

Step Therapy – In the context of pharmacy benefits the practice of utilizing the most cost-efficient method to treat a patient according to protocol that calls for using one drug therapy before proceeding to another drug therapy that is more expensive or difficult to use.

Stop-Loss Provision – A health insurance policy provision.  A stop-loss provision is determined in two ways: either after a certain amount of benefits are paid from the plan or after a certain amount of out-of-pocket expenses are paid by the individual or family unity.  When the dollar amount specified is reached, the coinsurance factor is raised to 100% generally for the rest of the calendar year.

Tertiary Care – Specialized health care, needed by relatively few people, such as select rehabilitation services, highly technical medical procedures, burn centers and so on.  The highest level of care.

Third-Party Administrator (TPA) – The party to an employee benefit plan that may pay claims and/or provide administrative services.  Usually and out-of-house professional firm proving administrative services for employee benefit plans.

Total Compensation – The sum of all financial and non-financial elements in the employment package, including base salary, incentives, benefits, bonuses and any other reward of employment the employee values.

Unbundling – Charging separately for procedures normally covered as one billing unit so the total exceeds what should be charged.

Underwriting – The process of identifying and classifying the potential degree of risk represented by a proposed insured.