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Glossary of Insurance Terms

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Partial Disability
A condition in which, as a result of injury or sickness, the insured cannot perform all of the duties of his occupation but can perform some. Exact definitions vary from policy to policy.

Partial Hospitalization Services
Additional services provided to mental health or substance abuse patients which provides outpatient treatment as an alternative or follow-up to inpatient treatment.

Participant

An employee or former employee who is eligible to receive benefits from an employee benefit plan or whose beneficiaries may be eligible to receive benefits from the plan.

Participating Provider
A health care provider approved by Medicare to participate in the program and receive benefit payments directly from carriers or fiscal intermediaries.

Peer Review
Review of health care provided by a medical staff with training equal to the staff which provided the treatment.

Peer Review Organization (PRO)
Groups of physicians who are paid by the federal government to conduct pre-admission, continued stay and services reviews provided to Medicare patients by Medicare approved hospitals.

Percentage Participation
A provision in a Health Insurance contract which states that the insurer will share losses in an agreed proportion with the insured. An example would be an 80-20 participation where the insurer pays 80% and the insured pays the 20% of losses covered under the contract. Often erroneously referred to as coinsurance.

Physical Therapist
A trained medical person who provides rehabilitative services and therapy to help restore bodily functions such as walking, speech, the use of limbs, etc.

Place of Service
This designates where the actual health services are being performed, whether it be home, hospital, office, clinic, etc.

Point-of-Service (POS) Plan
A type of managed care plan combining features of health maintenance organizations (HMOs) and preferred provider organizations (PPOs). You can decide whether to go to a network provider and pay a flat dollar or to an out-of-network provider and pay a deductible and/or a coinsurance charge.

Policy Term
The period for which an insurance policy provides coverage.

Practical Nurse
A licensed individual who provides custodial type care such as help in walking, bathing, feeding, etc. Practical nurses do not administer medication or perform other medically related services.

Pre-Admission Authorization
A cost containment feature of many group medical policies whereby the insured must contact the insurer prior to a hospitalization and receive authorization for the admission.

Pre-Admission Certification
Before being admitted as an inpatient in a hospital, certain criteria are used to determine whether the inpatient care is necessary.

Preauthorization
Previous approval for specialist referral or non emergency health care services.

Pre-existing Condition
A health problem that existed or was treated before the date your insurance became effective. Most health insurance contacts have a pre-existing condition clause that describes under what conditions they will cover medical expenses related to a pre-existing condition.

Pre-existing Condition exclusion
Generally, a "pre-existing condition exclusion" is a limitation or exclusion of health benefits based on the fact that a physical or mental condition was present before the first day of coverage. HIPAA limits the extent to which a group health plan or issuer can apply a preexisting condition exclusion, and, as stated above, prohibits issuers of individual health insurance from applying a preexisting condition exclusion to an "eligible individual."

During the preexisting condition exclusion period, the group health plan or issuer may opt not to cover or pay for treatment of a medical condition based on the fact that the condition was present prior to your enrollment date under the new plan or policy. (The plan or issuer must, however, pay for any unrelated covered services or conditions that arise once coverage has begun.) The enrollment date is the first day of coverage, or if there is a waiting period before coverage takes effect, the first day of the waiting period.
A group health plan can apply a pre-existing condition exclusion for no more than 12 months (18 months for a late enrollee) after your enrollment date and the preexisting condition exclusion period must be reduced by your prior creditable coverage.

A group health plan cannot apply a pre-existing condition exclusion to an individual who had creditable coverage (without a break of 63 or more days) of 12 months (18 months for a late enrollee).

PPO (Preferred Provider Organization)
A network of health care providers that have agreed to provide medical services to a health plan's members at discounted costs. PPO members typically make their own decisions about their health care rather than going through a primary care physician like HMO member. The cost to use physicians within the PPO network is less than using a non-network provider.

Premium
The amount you pay in exchange for health insurance coverage.

Prescription Medication
A drug which can be dispensed only by prescription and which has been approved by the Food and Drug Administration.

Preventive Care
This type of care is best exemplified by routine physical examinations and immunizations. The emphasis is on preventing illnesses before they occur.

Primary Care
Basic health care provided by doctors who are in the practice of family care, pediatrics, and internal medicine.

Primary Care Physician
Under a health maintenance organization (HMO) or point-of-service (POS) plan, a primary care physician is usually the first contact for health care. This is often a family physician, internist, or pediatrician. A primary care physician makes referrals to specialists if necessary.

Primary Coverage
This is the coverage which pays expenses first, without consideration whether or not there is any other coverage. See also Coordination of Benefits.

Prior Authorization
A cost containment measure which provides full payment of health benefits only when the hospitalization or medical treatment has been approved in advance.

Probationary Period
A period of time between the effective date of a Health Insurance policy, and the date coverage begins for all or certain physical conditions.

Professional Review Organization
An organization of physicians which reviews services to determine if they are medically necessary.

Proration of Benefits
The adjustment of Health Insurance policy benefits by reason of the existence of other insurance covering the same contingency.

Prospective Payment System
A system of Medicare reimbursement for Part A benefits which bases most hospital payments on the patient's diagnosis at the time of hospital admission.

Prospective Reimbursement
A system where hospitals or other health care providers are paid annually according to rate of payment which have been established ahead of time.

Provider
Any person (doctor or nurse) or institution (hospital, clinic, or laboratory) that provides medical care.

Qualified Medicare Beneficiary (QMB)
This is a person whose income is below the federal poverty guidelines. In these cases, the state is required to pay the Medicare Part B premiums, plus any deductibles or copayments.

Qualifying Event
An occurrence (such as death, termination of employment, divorce, etc.) that triggers an insured's protection under COBRA, which requires continuation of benefits under a group insurance plan for former employees and their families who would otherwise lose health care coverage.

Rapid Approval
Participating health insurance companies working exclusively with eHealthInsurance Services, Inc. to provide instant, preliminary approval to individuals that meet certain eligibility requirements. Individuals who have non-conforming applications or applications that do not require additional medical information will receive preliminary approval within 24 hours.

Rating Process
The steps used to determine a premium rate for a particular group based on the amount of risk that group presents. Items that generally go into the rating process include age, sex, type of industry, benefits, and administrative costs.

Reasonable and Customary Charges
The charge for medical services which refers to the amount approved by the Medicare Carrier for payment. Customary charges are those which are most often made by a provider for services rendered in that particular area.

Recipient
Anyone designated by Medicaid as being eligible to receive Medicaid benefits.

Recurring Clause
Health Insurance policy provision defining the duration of a period of time during which the recurrence of a condition will be considered a continuation of a prior period of disability or confinement.

Referral
A formal process that authorizes an HMO member to get care from a specialist or hospital. Most HMOs require patients to get a referral from their primary care doctor before seeing a specialist.

Registered Nurse (RN)
A licensed professional with a four-year nursing degree. Able to provide all levels of nursing care including the administration of medication.

Rehabilitation Clause
A clause in a Health Insurance policy, particularly a Disability Income policy, that is intended to assist the disabled policyholder in vocational rehabilitation.

Reinstatement
Resumption of coverage under a policy that had lapsed.

Relative Value Schedule
A surgical schedule which basically compares the value of one surgical procedure to another and establishes the surgical fee to be paid.

Relative Value Unit
Sometimes used instead of dollar amounts in a surgical schedule, this number is multiplied by a conversion factor to arrive at the surgical benefit to be paid.

Renewal
Continuance of coverage beyond original terms signified by acceptance of a premium payment for a new term.

Resource-based relative value scale (RBRVS)
A scale of national uniform relative values for all physicians' services. The relative value of each service must be the sum of relative value units representing physician work, practice expenses net of malpractice expenses, and the cost of professional liability insurance.

Respite Care
Normally associated with Hospice care, respite care is a benefit to family members of a patient whereby the family is provided with a break or respite from caring for the patient. The patient is confined to a nursing home for needed care for a short period of time.

Restoration of Benefits
A provision in many Major Medical Plans which restores a person's lifetime maximum benefit amount in small increments after a claim has been paid. Usually, only a small amount ($1,000 to $3,000) may be restored annually.

Retention
The portion of the premium which is used by the insurance company for administrative costs.

Retrospective Rate Derivation (RETRO)
A rating system whereby the employer becomes responsible for a portion of the group's health care costs. If health care costs are less than the portion the employer agrees to assume, the insurance company may be required to refund a portion of the premium.

Return of Premium
A rider or provision in a Health Insurance policy agreeing to pay a benefit equal to the sum of all the premiums paid, minus claims paid, if claims over a stated period of time do not exceed a fixed percentage of the premiums paid. 3

Rider
A document that modifies or amends an insurance contract

Risk Analysis
The process of determining what benefits to offer and premium to charge a particular group.

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