Benefit mandates*
State or federal requirements to cover a particular medical condition and/or to specify the terms of that coverage.

Catastrophic health insurance
Health insurance that provides protection against the high cost of treating a severe or lengthy illnesses or disability. Generally such policies cover all, or a specified percentage of, medical expenses above an amount that is the responsibility of another insurance policy up to a maximum limit of liability.

Charity care
Generally refers to physicians and hospital services provided to people who are unable to pay for the cost of services, especially those who are low income, uninsured, or underinsured. A high proportion of charity care costs are derived from services for children and pregnant women (such as neonatal intensive care).

Chronic care
Care and treatment rendered to individuals whose health problems are of a long term and continuing nature. Rehabilitation facilities, nursing homes, and mental hospitals may be considered chronic care facilities.

Chronic disease
A disease that has one or more of the following characteristics: is permanent; leaves residual disability; is caused by nonreversible pathological alteration; requires special training of the patient for rehabilitation; or may be expected to require a long period of supervision, observation, or care.

Community rating
A method of calculating health plan premiums using the average cost of actual or anticipated health services for all subscribers within a specific geographic area. The premium does not vary for different groups or subgroups of subscribers to reflect specific claims experience or health status. Under modified community rating (the most common form), rates may vary based on subscribers’ specific demographic characteristics (such as gender and age), but rate variation based on individual’s health status, claims experience, or policy duration is prohibited. “Pure” community rating prohibits rate variation based on demographic as well as health factors, and all subscribers in an area pay the same rate.

Cost-shifting
Recouping the cost of providing uncompensated care by increasing revenues from some payers to offset losses and lower net payments from other payers.

Coverage
The guarantee against specific losses provided under the terms on an insurance policy. The term "coverage" is sometimes used interchangeably with "benefits" or "protection," and it is also used to mean "insurance" or "insurance contract."

Crowd-out
A phenomenon whereby new public programs or expansion of existing public programs designed to extend coverage to the uninsured prompt some privately-insured people to drop coverage and take advantage of the public subsidy.

Deductible
The amount of loss or expense that must be incurred by an insured or otherwise covered individual before an insurer will assume any liability for all or part of the remaining cost of covered services. Deductibles may be either fixed-dollar amounts or the value of a specified service (such as two days of hospital care or per physician visit). Deductibles are usually tied to some reference period over which they must be incurred; for example, $100 per calendar year, benefit period, or spell of illness.

Disease management
The process of identifying and delivering within selected patient populations (such as patients with asthma or diabetes) the most efficient, effective combination of resources, interventions, or pharmaceuticals for the treatment and prevention of a disease. Disease management could include team-based care where physicians and/or other health professionals participate in the delivery and management of care. It also includes the appropriate use of pharmaceuticals.

 

Disproportionate Share Hospital (DSH)*
DSH payments are special Medicare payments made to hospitals that treat a disproportionately high share of low-income patients.

 
Employment Retirement Income Security Act (ERISA)
A federal act passed in 1974 that established standards and reporting/disclosure requirements for employer-funded pension and health benefit programs. To date, self-funded health benefit plans operating under ERISA have been held exempt from state insurance laws.

Evidence-based medicine
Evidence-based medicine is the conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients. This approach must balance the best external evidence with the desires of the patient and the clinical expertise of health care providers.

Experience rating
A method of adjusting health plan premiums based on the historical utilization data and distinguishing characteristics of a specific subscriber group.

Federal Poverty Level (FPL)
The amount of income required, as determined by the U.S. Department of Health and Human Services, to provide a bare minimum for food, clothing, transportation, shelter, and other necessities. FPL is determined annually and varies according to family size (for example, for a family of four in 2004, the FPL was $18,850 annually, or $1,571 per month). Public assistance programs typically use FPL to define income limits for eligibility.

Fee-for-service
A method of billing for health services in which a physician or other practitioner charges separately for each patient encounter and service rendered; it is the method of billing used by the majority of U.S. physicians. Under a fee-for-service payment system, expenditures increase if the fees themselves increase, if more units of service are provided, or if more expensive services are substituted for less expensive ones. This system contrasts with salaried, per capita, or other systems where payment to the physician is not directly tied to the services actually rendered.

Global budgeting
A method of hospital cost containment in which participating hospitals must share a prospectively set budget. Method for allocating funds among hospitals may vary, but the key is that the participating hospitals agree to an aggregate cap on revenues that they will receive each year. Global budgeting may also be mandated under a universal health insurance system.

Guaranteed issue
A requirement that insurance carriers offer coverage to groups and/or individuals during some period each year. The Health Insurance Portability and Accountability Act (HIPAA) requires that insurance carriers guarantee issue all products to small groups (2 to 50 members). Some state laws exceed HIPAA minimum standards and require carriers to guarantee issue to additional groups and individuals.

Healthy Families (See State Children’s Health Insurance Program)

Health Savings Accounts (HSAs)*
An HSA allows an individual to set aside funds on a tax-free basis to pay for medical expenses not covered by insurance. HSAs, established under the Medicare Prescription Drug Improvement and Modernization Act of 2003, are available to all individuals and employer groups. HSAs must be combined with an insurance plan and a deductible of at least $1,000 for an individual. While contributions can be made by employees, employers, or both parties, the employee owns the account, which is fully portable across jobs.

High-risk pool
A subsidized health insurance pool organized by some states as an alternative to individuals who have been denied health insurance because of a medical condition, or whose premiums are rated significantly higher than the average due to health status or claims experience. High-risk pools are commonly operated through an association composed of all health insurers in a state. HIPAA allows states to use high-risk pools as an “acceptable alternative mechanism” that satisfied the statutory requirements for ensuring access to health insurance overage for certain individuals.

Indigent care
Health service provided to the poor or those unable to pay. Because many indigent patients are not eligible for federal or state programs, the costs that are covered by Medicaid are generally recorded separately from indigent care costs.

 

Knox Keene Health Care Service Plan Act of 1975

The Knox Keene Act, along with some other laws, regulates managed care plans in California. Knox Keene protections include physician services, hospital inpatient and outpatient, diagnostic lab and radiology services, preventive health services, home health services and emergency health care including ambulance, out of area coverage, and hospice care.

Managed care
The body of clinical, financial, and organizational activities designed to ensure the provision of appropriate health care services in a cost efficient manner. Managed care techniques are most often practices by organizations and professionals that assume risk for a defined population (e.g. health maintenance organizations).

Managed Risk Medical Insurance Board (MRMIB)*
MRMIB manages California’s Healthy Families Program, the Access for Infants and Mothers program, and the Managed Risk Medical Insurance Program.

Medicaid
A federally-aided, state-operated and administered program that provides medical benefits for certain indigent and low-income people in need of health and medical care. The program, authorized by Title XIX of the Social Security Act, is basically for the poor. It does not cover all the poor, however, but only people who meet specified eligibility criteria. Subject to broad federal guidelines, states determine the benefits covered, program eligibility, rates of payment for providers, and methods for administering the program.

Medi-Cal*
California’s Medicaid program.

Medicare
A national health insurance program for people aged 65 and older, for people eligible for social security disability payments for two years or longer, and for certain workers and dependents who need kidney transplantation or dialysis. Monies from payroll taxes and premiums from beneficiaries are deposited in special trust funds for use in meeting the expenses incurred by Medicare beneficiaries. The program consists of two separate but coordinated programs: hospital insurance (Part A) and supplementary medical insurance (Part B).

Network
An affiliation of providers through formal and informal contracts and agreements. Networks may contract externally to obtain administrative and financial services.

Pay for performance*
A mechanism by which purchasers of health care services (e.g., health plans, Medicare or Medicaid) tie a portion of their payments to physicians or other health care providers to quality, consumer satisfaction, efficiency, or other outcomes.

Preexisting condition
A medical condition developed prior to issuance of a health insurance policy. Some policies exclude coverage of such conditions for a period of time or indefinitely.

Preventive medicine
Care that aims to prevent disease or its consequences. It includes health care programs aimed at warding off illness (immunizations), early detection of disease (Pap smears), and inhibiting further deterioration of the body (exercise or prophylactic surgery). Preventive medicine is also concerned with general healthfulness and the environment. In particular, the promotion of health through altering behavior, especially using health education, is gaining prominence as a component of preventive care.

Primary care
Basic or general health care focused on the point at which a patient ideally first seeks assistance from the medical care system. Primary care is considered comprehensive when the primary provider takes responsibility for the overall coordination of the care of the patient’s health problems, be they biological, behavioral, or social. The appropriate use of consultants and community resources is an important part of effective primary care. Such care is generally provided by physicians but is increasingly provided by other personnel, such as nurse practitioners and physician assistants.

Provider
A licensed health care professional, medical group, hospital, or other entity that provides health services to patients. May also refer to medical supply firms and vendors of durable medical equipment.

Rate setting
A method of paying health care providers in which the federal or state government established payment rates for all payers for various categories of health services.

Safety net
The network of providers and institutions that provide low-cost or free medical care to medically needy, low-income, or uninsured people. The health care safety net can include (but is not limited to) individual practitioners, public and private hospitals, academic medical centers, and smaller clinics or ambulatory care facilities.

Scope of practice*
This term is used by licensing boards for various medical fields to define the procedures, actions, and processes that are permitted for the licensed individual. The scope of practice is limited to that for which the individual has education and clinical experience, and in which he or she has demonstrated competency.

Section 125 Plans*
Section 125 of the Internal Revenue Code allows companies to give their employees the opportunity to pay for health benefits on a pretax basis.

Seismic upgrade requirements*
The California Legislature passed SB 1953, a law establishing specific seismic upgrade/construction deadlines, to ensure that hospitals would remain operational following a large earthquake. The most vulnerable buildings — those subject to collapse during an earthquake — were required to undertake safety retrofitting or reconstruction by 2008 (later extended to 2013). All other buildings not compliant with the new standards were required to be rebuilt by 2030.

Small group market
The insurance market for products sold to groups smaller than a specified size, usually employer groups. The size of the groups included depends on state insurance laws and thus varies from state to state, with 30 employees as the most common size.

Specialist
A physician, dentist, or other health professional who is specially trained in a certain branch of medicine or dentistry related to specified services or procedures (such as surgery, radiology, pathology); certain age categories (geriatrics); certain body types (dermatology, orthopedics, cardiology); or certain types of disease (allergy, periodontics). Specialists usually have advanced education and training related to their specialties.

State Children’s Health Insurance Program (SCHIP) (called Healthy Families in California)
SCHIP was enacted as part of the Balanced Budget Act of 1997, which established Title XXI of the Social Security Act to provide states with $24 billion in federal funds from 1998-2002 to target children in families with incomes up to 200% of the Federal Poverty Level. In California, Healthy Families provides low cost health, dental, and vision coverage to children in families with incomes up to 250% of FPL.

Uncompensated care
Service provided by physicians and hospitals for which no payment is received from the patient or from third-party payers. Some costs for these services may be covered through cost-shifting. Not all uncompensated care results from charity care. It also includes bad debts from people who are not classified as charity care, but are unable or unwilling to pay their bills.

Underwriting
In insurance, this is the process of selecting, classifying, evaluating, and assuming risks according to insurability. Its purpose is to make sure that the group or individual insured has the same probability of loss and probable amount of loss, within reasonable limits, as the universe on which premium rates were based. Since premium rates are based on expectation of loss, the underwriting process must classify risks into groups with about the same expectation of loss.