Do you have questions about the complex terminology that governs employee group insurance?  Following are the definitions to many terms, which should enhance your understanding of employee benefits plans and how they work.

Managed Care Basics
Managed Care – a system of delivering health care that is characterized by contractual arrangements with selected providers (doctors, hospitals, laboratories, etc.), ongoing quality control and utilization review programs, and financial incentives for members to use providers and procedures covered by the plan; a broad term that encompasses a variety of different types of organizations.
Managed Health Care plan – an organization that integrates finance, management, and delivery of health care services using a contracted, organized provider network which delivers health care services to the plan’s members. These providers typically either share some financial risk with the plan, or have financial incentives to delivery quality, cost-effective services to plan members.
Accreditation – professional review and certification of a health plan’s quality standards.
Grievance procedure – a specific procedure that allows health plan members to express complaints and seek remedies.
Independent review organization – an independent entity or organization that is retained by a private health plan, or state or federal agency, to review member appeals of coverage denials based on medical necessity.
Service Area – the geographic area serviced by a health plan or insurance carrier, as approved by state regulatory agencies. In and out-of-area services are defined below.
In-Area Services – health care services received within a health plan’s authorized service area.
Out-of-Area Services – medical services or treatment given to an HMO member outside the geographical service area of his HMO. Coverage for out-of-area services is generally limited to emergency care.

Plan Types and Characteristics
Health Maintenance Organization (HMO) – a managed care organization that provides, offers, or arranges for coverage of designated health services for plan members for a fixed, prepaid premium. Patients must choose doctors, hospitals, and other health care providers from the plan’s provider list in order to be fully covered. Emphasis is placed on preventive care and cost management. HMO models vary and are defined below.
Closed-Panel HMO – an HMO that provides coverage only for services received by health care providers who contract with the plan. Member care is usually performed by a “gatekeeper” physician who is the patient’s initial contact for medical treatment, referrals, and coordination of care. Physicians only see members of a single plan. Under certain circumstances, coverage will be granted for non-network providers (e.g. for out-of-area emergencies or when referrals are required to supply the necessary expertise). Also called closed access plan or gatekeeper model.
Group Model HMO – a type of HMO in which the plan contracts with one or more independent practice groups to provide services to plan members. Contracts can be either exclusive (the group can only treat that plan’s members) or non-exclusive (the group is free to contract with other plans and provide services to other individuals).
Independent Practice Association (IPA) Model HMO – an HMO in which the plan contracts with individual independent physicians and physician groups to provide services in their own private offices. IPA physicians are free to contract with multiple HMOs and health plans at once, and to see any individual patients they choose.
Network Model HMO – an HMO in which the plan contracts with one or more independent physician practice groups to provide services to plan members. These contracts are always non-exclusive, meaning that the physicians or practice groups are free to contract with other health plans or provide services to patients who are not members of a particular plan.
Open Panel HMO – a health maintenance organization that contracts with individual physicians who work out of their own offices and perform services for plan members on a part- time basis.
Staff Model HMO – an HMO in which physicians and other providers are employed and paid salaries directly by the HMO, and work exclusively in the HMO’s facilities.
Open Access – a managed care concept in which members are allowed to “self-refer” themselves to participating physicians for specialty care without a referral from a primary care physician or authorization from the plan.
Point-of-Service (POS) Plan – a fairly new form of managed care plan which allows the patient to see either in-network specialists without a referral, or out-of-network providers, but the patient is required to pay more out of her own pocket when seeking these services. While coverage for in-network services or in-network referral services may be close or equal to 100%, in-network services without a referral and out-of-network services are usually subject to deductibles, co-payments, and coinsurance.
Preferred Provider Organization (PPO) – a managed care plan in which the network of doctors and hospitals provides services to plan members at discounted rates. Unlike HMOs, most PPOs do not use the primary care physician to oversee patients’ overall care, allowing members to consult specialists or out-of-network providers whenever they wish. Coverage is usually less for out-of-network providers. PPOs usually do not exercise tight management over medical care.

Providers and Provider Networks
Credentialing – a managed care plan’s process of reviewing a provider applicant’s background and current professional standing before contracting with the provider. Plans usually require providers to conform to specific criteria for initial and ongoing participation in the plan.
Network – a selected group of physicians, hospitals, laboratories, and other health care providers and facilities that contract with a health plan to provide health care services to that plan’s members.
Non-Participating Provider – a health care provider who has not contracted with a particular insurance carrier or health plan to provide health care services to its members. Also known as out-of-network provider.
Out-of-Network Services – treatment obtained from a non-participating provider. Out-of-network services typically require the member to pay higher deductibles, copayments, and coinsurance than in-network services, or services may not be covered at all.
Participating Provider – a health care provider who has contracted with a particular insurance carrier or health plan to provide health care services to its members. Also known as in-network provider.
Primary Care Physician (PCP) – a physician who is responsible for monitoring and coordinating a patient’s overall health care, and refers the patient to appropriate specialists when necessary. Many managed care plans require members to choose PCPs (usually a family practitioner, internist, pediatrician, or obstetrician/gynecologist) as part of their strategy to increase quality of care and control costs.
Referral – a physician’s or health plan’s recommendation for a covered person to receive care from a different physician or facility.

Health Care Cost Management
Case Management – the medical management process wherein health plans identify patients with specific or chronic health conditions, and interact with their physician(s) to ensure that these individuals receive medically necessary and appropriate health care services.
Case Manager – a health care professional (e.g. nurse, doctor, or social worker) who works with patients, physicians and other health care providers, and health plans to help determine medically necessary and appropriate health care for certain individuals with specific or chronic health conditions.
Disease Management – the process of identification and evaluation of patients with chronic diseases, using interventions designed to promote ongoing management and prevent worsening of the disease.
Medical Cost Management – processes and procedures used by health plans to control how members use health care services.
Medical Necessity – a health plan’s evaluation of health care services to determine if they are medically appropriate and necessary to meet health care needs, are consistent with the diagnosis or condition, are rendered in a cost-effective manner, and are consistent with national medical practice guidelines.
Pre-Admission Certification – a cost containment feature of many group health plans whereby a review of the need for inpatient hospital care is completed prior to actual admission. The review is usually performed by a case manager or health plan representative (typically a nurse), and is based upon pre-established criteria. The goal of such reviews is to ensure that inpatient care is medically necessary, appropriate, and cost-effective. Also called prior authorization, pre-admission review, or pre-admission authorization.
Second Surgical Opinion – a cost containment technique to help patients and health plans determine the medical necessity of a particular procedure, or whether an alternative treatment method is appropriate.
Utilization – the extent to which a particular group uses the benefits of a particular health plan or program.

This information is not intended to replace the advice of an insurance professional.