DISCLAIMER: This list has been developed to assist in the understanding of commonly used terms and abbreviations. The following terms and definitions have been obtained from various sources including insurance industry guides, reference books, Internet sources, Kentucky Insurance Laws & Regulations and dictionaries. BFH does not intend for this list to be all-inclusive nor considered a final statement for the defining of various terms. These definitions are provided for informational purposes ONLY and do not constitute official text of the statutes or regulations. No representation is made as to the accuracy or completeness of the following definitions.

A.M. Best Rating - A.M. Best is a rating agency that grades property and liability and life Insurance companies on financial strength from A++ to F, S for "suspended" and E for "under regulatory supervision." (A.M. Best online at http://www.ambest.com)

Acute Care - Medical services provided to treat a short-term or episodic illness or medical condition.

Adverse Determination - Determination that a service, treatment, drug or device is not medically necessary or appropriate and denies, reduces or terminates coverage of the service, treatment, drug or device.

Allowable Amount/Charge/Cost - Fees for health services or supplies that are covered under an insurance policy. (Also called Usual, Customary and Reasonable)

Ambulatory Care - Medical service including diagnosis, treatment, surgery, and rehabilitation provided on an outpatient basis.

Ancillary Services - Health care services supplied by professionals other than primary care physicians, such as laboratory work, x-rays and anesthesia.

Appeal - An official request by an insured or provider for review of an adverse determination or a coverage denial.

Authorization - The approval of care.

Authorized Person - A parent, guardian or other person legally authorized to act on behalf of an insured with respect to health care decisions.

Balance Billing - A method of billing patients whereby they are charged for all costs above the allowed amount.

Behavioral Health Care - Treatment for mental and substance abuse disorders.

Birthday Rule - For purposes of coordination of benefits, this rule stipulates that, if two parents are carrying insurance coverage for the same dependents, primary coverage is determined based on which parent’s birthday falls earlier in the calendar year (regardless of their ages). If both parents have the same birthday, the insurance of the parent who has been covered the longest becomes the primary insurer.

Brand Name Drug - A patented drug that can only be manufactured and marketed by those holding the patent.

Capitation - A payment method under which a provider of healthcare services is paid a pre-determined dollar amount per member, per month (PMPM), to render services without regard to the type, frequency or cost of services rendered to the individual.

Carrier - The insurance company that issues a policy.

Case Management - A program in which a case manager (physician, nurse or other healthcare professional) monitors a patient who requires long-term medical care due to a catastrophic illness or injury and works with the patient’s attending physician to help improve the continuity, quality and cost efficiency of care.

CDHP - Consumer Driven Health Plan

Certificate of Coverage (COC) - The legal document given to insureds that lists definitions, describes the benefits, exclusions, rules and other provisions provided by the insurance company.

Certificate of Creditable Coverage - Documentation given to insureds upon leaving a health plan or upon request to show evidence that they have or had health coverage under a plan.

Chronic Care - Care for a patient with a long-term illness.

COBRA (Consolidated Omnibus Budget Reconciliation Act) - Gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.

Coinsurance - The percentage of an eligible expense that must be paid by the covered person. Coinsurance is calculated upon the allowed amount, not the billed amount.

Coordination of Benefits (COB) - A typical insurance provision whereby responsibility for payment for medical services is allocated between carriers when a person is covered by more than one health benefit program. This coordination avoids the possibility that a person will be reimbursed twice for the same services.

Copayment - A specified amount the insured must pay at the time services are rendered. This may not be used as part of the deductible; and does not accumulate toward the maximum out-of-pocket.

Continuation - A program whereby employees and their dependents who lose coverage because of termination of employment, death, divorce, or other life events may be able to continue the coverage under the employer's group health plan for themselves and their families for limited periods of time.

Coverage Denial - The insurer contends that a service, treatment, drug or device is not covered by the person’s health benefit plan.

Conversion - In Kentucky, the insured’s right to convert his or her policy to an individual policy with substantially similar benefits upon leaving a group health plan. Kentucky law stipulates minimum benefit requirements for conversion policies. Such policies may cost more than the group policy.

Covered Expenses - Health care costs accrued by insureds for which the carrier will pay benefits.

Credentialing - Examination of a physician’s or other health care provider’s credentials to determine whether he or she would be entitled to a contract with a carrier.

Date of Service - The day on which a provider service is administered to an insured.

Deductible - The amount of covered expenses that must be incurred before benefits become payable under an insurance policy.

Dependent - A person of the subscriber’s family who is eligible for coverage. Includes lawful spouse, natural child, adopted child and stepchild.

Disease Management - Comprehensive approach to treatment of chronic diseases that relies on integration of methods and early intervention.

DME (Durable Medical Equipment) - Permanent medical equipment, such as a wheel chair or hospital-style bed, that is used repeatedly and can only be used for a medical condition.

Drug Formulary - A list of pharmaceutical products and dosages deemed by a healthcare organization to the best, most economical treatments. The list varies from one organization to another, and in some healthcare systems, providers are expected to use the listed products. (Also called the Preferred Drug List)

Elective Procedure - A medical procedure which is not considered to be an emergency by nature or one which may be delayed by the insured to a later point in time.

Enrollment Period - The period of time when a member of a group covered by an insurance plan may enroll in the plan.

Exclusions - Specific medical conditions, circumstances or medications for which the policy will not provide benefits.

Experimental Procedures - Also called investigational or unproved procedures, this covers all health care services, supplies, treatments, or drug therapies that have been determined by the health plan to not be generally accepted by health care professionals as effective in treating the illness for which their use is proposed. Experimental procedures are said to not be proven scientifically to effectively treat the condition for which their use is prescribed.

Explanation of Benefits (EOB) - A statement an insurance company sends to insureds which lists the services provided, billing amounts for those services, allowable amounts and the corresponding payments that the carrier will make as well as the members financial responsibility.

Fully Insured Group Health Plan - A health insurance plan purchased by an employer under which the maximum cost to the group is the total of premiums for the plan year.

Generic Drugs/Generic Equivalent Drugs - A generic drug is the alternative that is identical, or bioequivalent to the brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use.

HDHP - High Deductible Health Plan

Health Insurance Portability and Accountability Act of 1996 (HIPAA) - Federal law designed to help people buy and keep health insurance, even when they have serious illness or medical conditions. Protections under this law may vary from state to state according to modifications made at that level.

Health Maintenance Organization (HMO) - An organization that offers pre-paid, comprehensive healthcare coverage to members for hospital physician services and ancillary services. Medical care and services must be received from participating providers. When care is rendered by participating providers, members are usually only charged a small co-payment or fee for office visits and other medical services. Benefits are generally not available for non-emergency services obtained from non-participating providers.

Health Plan Employer Data and Information Set (HEDIS) - A set of performance measures designed to help health care purchasers understand the value of health care purchases and measure the performance of multiple health plans.

HIPAA - Health Insurance Portability and Accountability Act of 1996

Home Health Services - Medical materials and services provided by a home health agency to a patient at home.

Hospice - An agency that provides medical care and support services to terminally ill persons and their families.

HRA - Health Reimbursement Arrangement

HSA - Health Savings Account

In-Network - Health-care facilities or providers that are under contract with a carrier.

Inpatient - An insured that is treated as a registered bed patient in a hospital or other institutional provider and for whom a room and board charge is made.

Insured - An individual or group that is covered by an insurance policy.

IRE - Independent Review Entity - A health insurance appeal term. An outside entity that reviews decisions and determines if a service is covered or is medically necessary and appropriate.

KOI - Kentucky Office of Insurance

Lifetime Maximum - The maximum amount of money a plan will pay towards healthcare services over the course of an insured’s lifetime.

Managed Care - A healthcare delivery system under which physicians, hospitals and other healthcare professionals are organized into a group or “network” in order to manage the cost, quality and access to healthcare. Managed care organizations include PPO, HMO, EPO and POS.

Mandated Benefits - Specific coverage or medical services that a health insurance plan must offer all policyholders.

Maximum Age - The oldest age a dependent can be and still be covered by a policy.

Maximum Out-of-Pocket/MOOP - The most money you will be required to pay in a plan year after deductible.

Medically Necessary - Generally, a medical service or supply which is considered appropriate for a patient’s condition and consistent with his or her diagnosis and which complies with currently accepted medical standards.

Medicaid - Health insurance that helps many people who can’t afford medical care pay for some or all of their medical bills. Medicaid is available only to certain low-income individuals and families who fit into an eligibility group that is recognized by federal and state law.

Ninety (90) Day Drug Program - Plan in which a managed care organization or pharmacy benefit management company (PBM) mails renewable prescriptions to members. Such programs can help control prescription drug costs.

Out-of-Network (OON) - Refers to treatment received from a provider who is not under contract to the carrier (also called non-participating).

Office Visit (OV) - Visit made to a health care provider in an office location.

Participating Provider (Par Provider) - Any provider who has an agreement with the carrier to provide covered services.

Pharmacy Benefit Management Company (PBM) - An organization dedicated to providing prescription benefits to enrollees of health insurance plans that utilizes existing community pharmacies.

Plan Delivery System Rules - A section of the Certificate of Coverage that describes the Plan’s specific procedures that must be followed to obtain maximum benefits for covered services.

Plan Year - Each successive twelve-month period of a group contract.

Point of Service (POS) - A healthcare plan that encourages the use of participating providers but does not require it. A POS plan gives the member the option of seeing a provider outside the network but the plan pays a reduced rate and the member will have more out-of-pocket expenses.

Portability - A consumer protection requiring that a person receives credit for health insurance coverage when changing jobs. If the person was covered for a specified period of time under the previous policy, benefits for a pre-existing condition must continue under the new policy.

Preferred Provider Organization (PPO) - A health plan that requires deductible and coinsurance for services rendered. You may choose either in-network or out-of-network providers. When you use the doctors and hospitals that are part of the PPO, you can have a larger part of your medical bills covered. You can use other doctors, but at a higher cost.

Pre-existing Condition - A health problem that existed before the date your insurance became effective. A physical or mental condition, excluding pregnancy, for which an insured individual sought medical treatment within the six months immediately prior to enrolling in a health plan.

Premium - The monthly charges due which the insured or the insured’s group must pay to maintain coverage.

Preventive Care - Medical treatment that focuses on avoiding illness or identifying a disease at an early stage and slowing its progress.

Primary Care Physician (PCP) - A participating provider who is a practitioner specializing in family practice, general practice, internal medicine, OB/GYN services, or pediatrics who supervises, coordinates and provides initial care and basic medical services to an insured.

Prior Authorization - An insurance plan requirement that the insured or the provider notify the insurance company prior to certain medical procedures in order for such procedures to be covered under the plan. Prior authorization does not necessarily guarantee coverage.

Provider - Any person or institution which is licensed to provide medical care.

PT - Physical Therapy

Qualifying Event - An incident that allows a change in existing coverage.

Quality Assurance - An assessment of the delivery portion of healthcare plans to make sure patients are receiving high quality care.

Self-Funded - Employers or other authorized groups which fund healthcare benefits with their own resources, no matter what the total cost.

Service Area - The geographic area in which the Plan is authorized to operate.

Skilled Nursing Facility (SNF) - An inpatient facility other than a hospital that provides skilled nursing care, physical and occupational rehabilitation, and custodial care.

Subscriber - The person in whose name an individual or family contract is issued.

Third Party Administrator (TPA) - An entity that, for fees, processes claims and administers the health benefit plans for self-funded employer groups, but that does not pay the claims.

Underwriting - The act of reviewing and evaluating prospective insureds for risk assessment and appropriate premium.

Usual, Customary and Reasonable (UCR) - See Allowable Amount/Charge/Cost

Utilization Management (UM) - A process that combines review and case management of medical services through the cooperative efforts of patients, providers, employers and insurers.

Utilization Review (UR) - A method by which employers and insurers oversee the suitability, necessity, and quality of health-care services for the purposes of controlling costs.

Waiting Period - The length of time new members must wait before they are eligible to join the plan as set forth by the employer.

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