This site is operated by a third party, not by Costco. Use of this site (and any destination sites you reach through this site) is subject to the site's Terms of use and Privacy Policy , rather than those of Costco.    
Welcome to the CBC Health Insurance
Marketplace for Costco Members
Costco Services
Level Funded Advantage Medical Dental Vision Worksite Bundle




Access: A person's ability to obtain affordable medical care on a timely basis.
Accident: For health insurance purposes, an accident is an unforeseen, unexpected and unintended event resulting in bodily injury.
Accreditation: An evaluative process in which a healthcare organization undergoes an examination of its operating procedures to determine whether the procedures meet designated criteria as defined by the accrediting body, and to ensure that the organization meets a specified level of quality. 
Accumulation Period: The period of time during which an insured person incurs eligible medical expenses toward the satisfaction of a deductible.
ACF: See ambulatory care facility.
Actively-at-work: Most group health insurance policies state that if an employee is not "actively-at-work" on the day the policy goes into effect, the coverage will not begin until the employee returns to work.
Acquisition: The purchase of one organization by another organization. 
ACR: See adjusted community rating. 
Actual Charge: The actual dollar amount charged by a physician or other provider for medical services rendered, as distinguished from the allowable charge.
Actuaries: The insurance professionals who perform the mathematical analysis necessary for setting insurance premium rates. 
Acupuncture: Typically, acupuncture services include services performed by a licensed acupuncturist.
Acute Care: Medical care administered, frequently in a hospital or by nursing professionals, for the treatment of a serious injury or illness or during recovery from surgery. Medical conditions requiring acute care are typically periodic or temporary in nature, rather than chronic.
Adjusted Community Rating (ACR): A rating method under which a health plan or MCO divides its members into classes or groups based on demographic factors such as geography, family composition, and age, and then charges all members of a class or group the same premium. The plan cannot consider the experience of a class, group, or tier in developing premium rates. Also known as modified community rating or community rating by class. 
Admissions/1,000: A statistic used by health insurance companies describing the number of hospital admissions for each 1000 persons covered under a health insurance plan within a given time period.
Admits:Hospital admissions. A term used to describe the number of persons admitted to a hospital within a given period.
Adverse Selection: See antiselection. 
Agent: A person who is authorized by an MCO or an insurer to act on its behalf to negotiate, sell, and service managed care contracts. 
Age Change: For insurance purposes, this is the date on which a person's age changes. Note that this may not correspond with the individual's actual birthday, but may fall midway between birthdays. An age change may result in an increase in rates.
Age Limits: Ages below and above which an insurance company will not accept applications or renew policies.
Age/Sex Factor: A factor employed by insurance companies in the underwriting process, used to determine a group's risk of incurring medical costs, based on the ages and genders of the persons in that group.
Allied Health Personnel: Also referred to as paramedical personnel, these are health workers (often licensed) who perform duties that would otherwise be performed by physicians, optometrists, dentists, podiatrists, nurses and chiropractors.
Allowable Charge: Also referred to as the Allowed Amount, Approved Charge or Maximum Allowable. See also,Usual, Customary and Reasonable Charge. This is the dollar amount typically considered payment-in-full by an insurance company and an associated network of healthcare providers. The Allowable Charge is typically a discounted rate rather than the actual charge. It may be helpful to consider an example: You have just visited your doctor for an earache. The total charge for the visit comes to $100. If the doctor is a member of your health insurance company's network of providers, he or she may be required to accept $80 as payment in full for the visit - this is the Allowable Charge. Your health insurance company will pay all or a portion of the remaining $80, minus any co-payment or deductible that you may owe. The remaining $20 is considered provider write-off. You cannot be billed for this provider write-off. If, however, the doctor you visit is not a network provider then you may be held responsible for everything that your health insurance company will not pay, up to the full charge of $100.

This term may also be used within a Medicare context to refer to the amount that Medicare considers payment in full for a particular, approved medical service or supply.
Allowable Costs: Charges for healthcare services and supplies for which benefits are available under your health insurance plan.
Allowed Amount: See Allowable Charge.
Alternate Delivery System: Healthcare services or facilities which "deliver" care that is more cost-effective than that provided in a hospital. Alternate Delivery Systems may include skilled nursing facilities, hospice programs and home health care services.
Alternative Medicine: Any medical practice of form of treatment not generally recognized as effective by the medical community at large. Alternative medicine may encompass a broad range of services and practices including acupuncture, homeopathy, aromatherapy, naturopathy, etc.. Many insurance companies do not provide coverage for these services.
Ambulatory Care: Medical care rendered on an outpatient basis and which may include diagnosis, certain forms of treatment, surgery and rehabilitation. See also, Ambulatory Setting.
Ambulatory Setting: Medical facilities such as surgery centers, clinics and offices in which healthcare is provided on an outpatient basis.
Ambulatory Care Facility (ACF): A medical care center that provides a wide range of healthcare services, including preventive care, acute care, surgery, and outpatient care, in a centralized facility. Also known as a medical clinic or medical center.
Ancillary Fee: An extra fee sometimes associated with obtaining prescription drugs which are not listed on a health insurance plan's formulary of covered medications.
Ancillary Products: Additional health insurance products (such as vision or dental insurance) that may be added to a medical insurance plan for an additional fee.
Ancillary Services: Auxiliary or supplemental services, such as diagnostic services, home health services, physical therapy, and occupational therapy, used to support diagnosis and treatment of a patient's condition. 
Annual limit: Many health insurance plans place dollar limits upon the claims the insurer will pay over the course of a plan year. Beginning September 23, 2010,the Affordable Care Act phases annual dollar limits will be phased out over the next 3 years until 2014 when they will not be permitted for most plans. There is an exception to this phase out forGrandfathered Plans. Except for Grandfathered Plans, beginning September 23, 2012 annual limits can be no lower than $2 million. Except for Grandfathered Plans, beginning January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited.
Annual Maximum Benefit Amount: The maximum dollar amount set by an MCO that limits the total amount the plan must pay for all healthcare services provided to a subscriber in a year. 
Antitrust Laws: Legislation designed to protect commerce from unlawful restraint of trade, price discrimination, price fixing, reduced competition, and monopolies. See also Sherman Antitrust Act, Clayton Act, and Federal Trade Commission Act. 
Application Fee: The health insurance company may require a one-time application fee. Some insurance companies may refund this fee if the application is not approved. See More Insurance Plan Details section for additional information.
Appropriate Care: A diagnostic or treatment measure whose expected health benefits exceed its expected health risks by a wide enough margin to justify the measure.
Appropriateness Review: An analysis of healthcare services with the goal of reviewing the extent to which necessary care was provided and unnecessary care was avoided. 
Approved Charge: See Allowable Charge.
Approved Health Care Facility or Program: A medical facility or healthcare program (often organized through a hospital or clinic) that has been approved by a health insurance plan to provide specific services for specific conditions.
Assignment of Benefits: The payment of health insurance benefits to a healthcare provider rather than directly to the member of a health insurance plan.
Associate Medical Director: Manager whose duties are often defined as a subset of the overall duties of the medical director. 
At-Risk: Term used to describe a provider organization that bears the insurance risk associated with the healthcare it provides. 
Attending Physician Statement (APS): A physician's assessment of a patient's state of health as outlined in office notes and test results compiled by the physician. An APS may be requested by an insurance company in lieu of a medical examination in order to determine the state of a health insurance applicant's health for underwriting purposes.
Autonomy: An ethical principle which, when applied to managed care, states that managed care organizations and their providers have a duty to respect the right of their members to make decisions about the course of their lives. 


Balance Billing: The amount you could be responsible for (in addition to any co-payments, deductibles or coinsurance) if you use an out-of-network provider and the fee for a particular service exceeds the allowable charge for that service.
Bed Days/1,000: A statistic used by health insurance companies describing the number of inpatient hospital days for each 1000 persons covered under a health insurance plan within a given time period.
Behavioral Healthcare: The provision of mental health and substance abuse services.
Beneficence: An ethical principle which, when applied to managed care, states that each member should be treated in a manner that respects his or her own goals and values and that managed care organizations and their providers have a duty to promote the good of the members as a group. 
Benefit: A general term referring to any service (such as an office visit, laboratory test, surgical procedure, etc.) or supply (such as prescription drugs, durable medical equipment, etc.) covered by a health insurance plan in the normal course of a patient's healthcare.
Benefit Design: The process an MCO uses to determine which benefits or the level of benefits that will be offered to its members, the degree to which members will be expected to share the costs of such benefits, and how a member can access medical care through the health plan. 
Benefit Level: The maximum amount a health insurance company agrees to pay for a specific covered benefit.
Benefit Package: A description of the healthcare services and supplies that a health insurance company covers for members of a specific health insurance plan.
Benefit Riders: This term may be used to describe ancillary products purchased in conjunction with a medical insurance plan.
Binding Receipt: When you submit an application for health insurance and include an initial payment, the health insurance company may provide you with a binding receipt. A binding receipt indicates that, if coverage is approved, the health insurance company is required to initiate coverage from the date on which payment was received.
Birthday Rule: One method used by health insurance companies to determine which parent's health insurance coverage will be primary for a dependent child, when both parents have separate coverage. Typically, the health insurance plan of the parent whose birthday falls earliest in the year will be considered primary. For more information, see also,COB.
Blended Rating: For groups with limited recorded claim experience, a method of forecasting a group's cost of benefits based partly on an MCO's manual rates and partly on the group's experience. 
Board-certified: A board-certified physician is one that has successfully completed an educational program and evaluation process approved by the American Board of Medical Specialties, including an examination designed to assess the knowledge, skills and experience required to provide quality patient care in a specific specialty.
Brand: A name, number, term, sign, symbol, design, or combination of these elements that an organization uses to identify one or more products.
Broker: A salesperson who has obtained a state license to sell and service contracts of multiple health plans or insurers, and who is ordinarily considered to be an agent of the buyer, not the health plan or insurer. 
Business Integration: The unification of one or more separate business (nonclinical) functions into a single function.
Business License: A license from a governmental agency authorizing an individual or an employer to conduct business.
Business Structure: A state-designated legal structure that governs business taxes, liability, and operational requirements. Examples include: sole proprietorship, partnership, corporation, or LLC.


Capitation: A method of paying for healthcare services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided. 
Capped Fee: See fee schedule.
Captive Agents: Agents that represent only one health plan or insurer. 
Carrier: Any insurer, managed care organization, or group hospital plan, as defined by applicable state law.
Carry-over Provision: A provision of some health insurance plans allowing medical expenses paid for by the member in the last three months of the year to be carried over and applied toward the next year's deductible.
Carve-Out: Specialty health service that an MCO obtains for members by contracting with a company that specializes in that service. See also carve-out companies. 
Carve-Out Companies: Organizations that have specialized provider networks and are paid on a capitation or other basis for a specific service, such as mental health, chiropractic, and dental. See also carve-out. 
Case Management: A process of identifying plan members with special healthcare needs, developing a health-care strategy that meets those needs, and coordinating and monitoring the care, with the ultimate goal of achieving the optimum healthcare outcome in an efficient and cost-effective manner. Also known as large case management (LCM). 
Case-Mix Adjustment: See risk-adjustment. 
Categorically Needy Individuals: Enrollees in Medicaid programs who meet traditional Medicaid age and income requirements. 
Centers for Medicare and Medicaid Services: Formerly known as the Health Care Financing Administration, the Centers for Medicare and Medicaid Services (CMS) is part of the federal government's Department of Health and Human Services, and is responsible for the administration of the Medicare and Medicaid programs. The CMS establishes standards for healthcare providers that must be complied with in order for providers to meet certain certification requirements.
Certificate of Authority (COA): The license issued by a state to an HMO or insurance company which allows it to conduct business in that state. 
Certificate of Coverage: A document given to an insured that describes the benefits, limitations and exclusions of coverage provided by an insurance company.
CHAMPUS: See Civilian Health and Medical Program of the Uniformed Services. 
Chemical Dependency Inpatient: Typically, chemical dependency inpatient services include services relating to the treatment of a chemical dependency that requires a stay at a hospital or other medical facility.
Children's Health Insurance Program (CHIP): A program, established by the Balanced Budget Act, designed to provide health assistance to uninsured, low-income children either through separate programs or through expanded eligibility under state Medicaid programs. 
CHIP: See Children's Health Insurance Program. 
Chiropractic: Typically, chiropractic services include services provided by a licensed chiropractor.
Chronic: In healthcare and insurance terminology, a chronic condition is one that is permanent, recurring or long lasting, as opposed to an acute condition.
Civilian Health and Medical Program of the Uniformed Services (CHAMPUS): A program of medical benefits available to inactive military personnel and military spouses, dependents, and beneficiaries through the Military Health Services System of the Department of Defense. See also TRICARE.
Claim: An itemized statement of healthcare services and their costs provided by a hospital, physician's office, or other provider facility. Claims are submitted to the insurer or managed care plan by either the plan member or the provider for payment of the costs incurred. 
Claim Form: An application for payment of benefits under a health plan. 
Claimant: The person or entity submitting a claim. 
Claims Administration: The process of receiving, reviewing, adjudicating, and processing claims. 
Claims Analysts: See claims examiners. 
Claims Examiners: Employees in the claims administration department who consider all the information pertinent to a claim and make decisions about the MCO's payment of the claim. Also known as claims analysts. 
Claims Investigation: The process of obtaining all the information necessary to determine the appropriate amount to pay on a given claim. 
Claims Supervisors: Employees in the claims administration department who oversee the work of several claims examiners. 
Clayton Act: A federal act which forbids certain actions believed to lead to monopolies, including (1) charging different prices to different purchasers of the same product without justifying the price difference and (2) giving a distributor the right to sell a product only if the distributor agrees not to sell competitors' products. The Clayton Act applies to insurance companies only to the extent that state laws do not regulate such activities. See also antitrust laws. 
Clinic Model: See consolidated medical group. 
Clinical Integration: A type of operational integration that enables patients to receive a variety of health services from the same organization or entity, which streamlines administrative processes and increases the potential for the delivery of high-quality healthcare. 
Clinical Practice Guideline: A utilization and quality management mechanism designed to aid providers in making decisions about the most appropriate course of treatment for a specific clinical case. 
Clinical Status: A type of outcome measure that relates to improvement in biological health status. 
Closed Access: A provision which specifies that plan members must obtain medical services only from network providers through a primary care physician to receive benefits. 
Closed Formulary: The provision that only those drugs on a preferred list will be covered by a PBM or MCO.
Closed-Panel HMO: An HMO whose physicians are either HMO employees or belong to a group of physicians that contract with the HMO.
Closed PHO: A type of physician-hospital organization that typically limits the number of participating specialists by type of specialty. 
Closed Plans: According to the NAIC's Quality Assessment and Improvement Model Act, managed care plans that require covered persons to use participating providers. 
CMP: See competitive medical plan. 
COA: See certificate of authority. 
COB (Coordination of Benefits): This is the process by which a health insurance company determines if it should be the primary or secondary payer of medical claims for a patient who has coverage from more than one health insurance policy. See also,Non-duplication of Benefits.
COBRA: See Consolidated Omnibus Budget Reconciliation Act. 
Coinsurance: A method of cost-sharing in a health insurance policy that requires a group member to pay a stated percentage of all remaining eligible medical expenses after the deductible amount has been paid. 
Community Rating: A rating method that sets premiums for financing medical care according to the health plan's expected costs of providing medical benefits to the community as a whole rather than to any sub-group within the community. Both low-risk and high-risk classes are factored into community rating, which spreads the expected medical care costs across the entire community. 
Community Rating by Class (CRC): The process of determining premium rates in which a managed care organization categorizes its members into classes or groups based on demographic factors, industry characteristics, or experience and charges the same premium to all members of the same class or group. See adjusted community rating (ACR). 
Company: The insurance company that is offering this health insurance plan.
Compensation Committee: Committee of the board of directors that sets general compensation guidelines for a managed care plan, sets the CEO's compensation, and approves and issues stock options. 
Competitive Advantage: A factor, such as the ability to demonstrate quality, that helps a managed care organization compete successfully with other MCOs for business. 
Competitive Medical Plan (CMP): A federal designation that allows a health plan to enter into a Medicare risk contract without having to obtain federal qualification as an HMO. 
Concurrent Authorization: Authorization to deliver healthcare service that is generated at the time the service is rendered. 
Conflict of Interest: For an MCO board member, a conflict between self-interest and the best interests of the plan. 
Consolidated Medical Group: A large single medical practice that operates in one or a few facilities rather than in many independent offices. The single-specialty or multi-specialty practice group may be formed from previously independent practices and is often owned by a parent company or a hospital. Also known as a medical group practice or clinic model. 
Consolidated Omnibus Budget Reconciliation Act (COBRA): A federal act which requires each group health plan to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduced work hours, death or divorce of a covered employee, and termination of employment. 
Consolidation: A type of merger that occurs when previously separate providers combine to form a new organization with all the original companies being dissolved. 
Contract Management System: An information system that incorporates membership data and reimbursement arrangements, and analyzes transactions according to contract rules. The system may include features such as decision support, modeling and forecasting, cost reporting, and contract compliance tracking. 
Copayment: A specified dollar amount that a member must pay out-of-pocket for a specified service at the time the service is rendered. 
Corporation: A type of organizational structure that is an artificial entity, invisible, intangible, and existing only in contemplation of the law. 
Cost-sharing: Health care provider charges for which a patient is responsible under the terms of a health plan. Common forms of cost-sharing include deductibles, coinsurance, and co-payments. Balance-billed charges from out-of-pocket physicians are not considered cost-sharing. Beginning in 2014, PPACA limits total cost-sharing to $5,950 for an individual and $11,900 for a family. These amounts will be adjusted annually to reflect the growth of premiums.
Co-payment: A specific charge that your health insurance plan may require that you pay for a specific medical service or supply, also referred to as a "co-pay." For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.
CRC: See community rating by class. 
Credentialing: The process of obtaining, reviewing, and verifying a provider's credentials (the documentation related to licenses, certifications, training, and other qualifications) for the purpose of determining whether the provider meets the MCO's preestablished criteria for participation in the network. 
Credentialing Committee: Committee, which may be a subset of the QM committee, that oversees the credentialing process. 
Credibility: A measure of the statistical predictability of a group's experience.
Cure Provision: A provider contract clause which specifies a time period (usually 60--90 days) for a party that breaches the contract to remedy the problem and avoid termination of the contract.


Date of Service: The date on which a healthcare service was provided.
Deductible: A flat amount a group member must pay before the insurer will make any benefit payments. 
Deductible Carry-over Credit: See,Carry-over Provision
Demand Management: The use of strategies designed to reduce the overall demand for and use of healthcare services, including any benefit offered by a plan that encourages preventive care, wellness, member self-care, and appropriate utilization of health services.
Dental Health Maintenance Organization (DHMO): An organization that provides dental services through a network of providers to its members in exchange for some form of prepayment.
Dental Point of Service (dental POS) Option: A dental service plan that allows a member to use either a DHMO network dentist or to seek care from a dentist not in the HMO network. Members choose in-network care or out-of-network care at the time they make their dental appointment and usually incur higher out-of-pocket costs for out-of-network care.
Dental POS Option: See dental point of service option.  Dental PPO. See dental preferred provider organization.
Dental Preferred Provider Organization (dental PPO): An organization that provides dental care to its members through a network of dentists who offer discounted fees to the plan members. 
Department of Health and Human Services: A department of the federal government responsible for certain social service functions, such as the administration and supervision of the Medicare program.
Dependent Coverage: Health insurance coverage extended to the spouse and unmarried children of the primary insured member. Certain age restrictions on the coverage of children may apply. 
Designated Mental Health Provider: An organization hired by a health insurance plan to provide mental health and/or substance abuse treatment services. 
DHMO: See dental health maintenance organization. 
Diagnostic and Treatment Codes: Special codes that consist of a brief, specific description of each diagnosis or treatment and a number used to identify each diagnosis and treatment. 
Direct Response Marketing: See direct marketing. 
Disease Management (DM): A coordinated system of preventive, diagnostic, and therapeutic measures intended to provide cost-effective, quality healthcare for a patient population who have or are at risk for a specific chronic illness or medical condition. Also known as disease state management. 
Disease State Management: See disease management.  
Drive Time: See disease management.A measure of geographic accessibility determined by how long members in the plan's service area have to drive to reach a primary care provider. 
Drug Cards: See pharmaceutical cards.  
Drug Formulary: A list of prescription medications selected for coverage under a health insurance plan. Drugs may be included on a drug formulary based upon their efficacy, safety and cost-effectiveness. Some health insurance plans may require that patients obtain preauthorization before non-formulary drugs are covered. Other health insurance plans may require that a patient pay a greater share or all of the cost involved in obtaining a non-formulary prescription.  
Drug Maintenance List: A list of commonly prescribed drugs intended for patients' ongoing or long-term use. 
Due Process Clause: A provider contract provision which gives providers that are terminated with cause the right to appeal the termination.  
DUR: See drug utilization review. 
Durable Medical Equipment (DME): Medical equipment used in the course of treatment or home care, including such items as crutches, knee braces, wheelchairs, hospital beds, prostheses, etc.. Coverage levels for DME often differ from coverage levels for office visits and other medical services.


Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) Services: Services, including screening, vision, hearing, and dental services, provided under Medicaid to children under age 21 at intervals which meet recognized standards of medical and dental practices and at other intervals as necessary in order to determine the existence of physical or mental illnesses or conditions. Plans offering Medicaid coverage to EPSDT participants must provide any service that is necessary to treat an illness or condition that is identified by screening.
EDI: See electronic data interchange. 
Edits: Criteria that, if unmet, will cause an automated claims processing system to "kick out" a claim for further investigation. 
Effective Date: The date on which health insurance coverage comes into effect. 
Electronic Data Interchange (EDI): The application-to-application interchange of business data between organizations using a standard data format.
Electronic Medical Record (EMR): An automated, on-line medical record containing clinical and demographic information about a patient that is available to providers, ancillary service departments, pharmacies, and others involved in patient treatment or care. 
Eligibility Date: The date on which a person becomes eligible for insurance benefits.
Eligibility Requirements: Conditions that must be met in order for an individual or group to be considered eligible for insurance coverage.
Eligible Dependent: A dependent (usually spouse or child) of an insured person who is eligible for insurance coverage.
Eligible Employee: An employee who is eligible for insurance coverage based upon the stipulations of the group health insurance plan.
Eligible Expenses: Expenses defined by the health insurance plan as eligible for coverage.
Eligible Person: This term is used to designate a person who is eligible for insurance coverage even though he or she may not be an employee, but rather a member of an organization or union.
Emergency Room: Typically, emergency room services include all services provided when a patient visits an emergency room for an emergency condition. An emergency condition is any medical condition of recent onset and severity, including but not limited to severe pain, that would lead to a prudent layperson, possessing an average knowledge of medicine and health, to believe that his or her condition, sickness, or injury is of such a nature that failure to obtain immediate medical care could result in placing the patient's health in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of bodily organ or part.
Employee Benefits Consultant: A specialist in employee benefits and insurance who is hired by a group buyer to provide advice on a health plan purchase. 
Employee Certificate of Insurance: See Certificate of Coverage. 
Employee Contribution: The portion of the health insurance premium paid for by the employee, usually deducted from wages by the employer. 
Employee Retirement Income Security Act (ERISA): A broad-reaching law that establishes the rights of pension plan participants, standards for the investment of pension plan assets, and requirements for the disclosure of plan provisions and funding. 
Employer Purchasing Coalitions: See purchasing alliances. 
Employer Wage and Tax Statement: An employer tax reporting statement submitted to the applicable governmental agency to establish and report the employer's tax responsibilities.
Employment-Model IDS: An IDS that generally owns or is affiliated with a hospital and establishes or purchases physician practices and retains the physicians as employees. 
EMR: See electronic medical record. 
Enrollee: An eligible person or eligible employee who is enrolled in a health insurance plan. Dependents are not referred to as enrollees.
Enrollment: The process through which an approved applicant is signed up with the health insurance company and coverage is made effective. This term may also be used to describe the total number of enrollees in a health insurance plan.
Enrollment Period: The period of time during which an eligible employee or eligible person may sign up for a group health insurance plan.
Enterprise Scheduling Systems: Information systems that control the use of facilities and resources for such organizations as physician groups, hospitals, and staff model HMOs.
EPO: See exclusive provider organization.
EPSDT services: See early and periodic screening, diagnostic, and treatment services. 
ERISA: See Employee Retirement Income Security Act. 
Essential Benefits: PPACA requires all health insurance plans sold after 2014 to include a basic package of benefits including hospitalization, outpatient services, maternity care, prescription drugs, emergency care, and preventive services among other benefits. It also places restrictions on the amount of cost-sharing that patients must pay for these services.
Estimated Cost: The amount quoted is an estimated cost of the health plan, which is subject to change during the enrollment process of the health plan, the optional benefits you selected, if any, and other relevant factors. It may be the sum of estimated premiums and other recurring charges, if the insurance company has such charges.
Ethics in Patient Referrals Act: A federal act and its amendments, commonly called the Stark laws, which prohibit a physician from referring patients to laboratories, radiology services, diagnostic services, physical therapy services, home health services, pharmacies, occupational therapy services, and suppliers of durable medical equipment in which the physician has a financial interest.
Evidence of Coverage: See Certificate of Coverage.
Evidence of Insurability: When applying for an individual health insurance plan, an applicant may be asked to confirm his or her health condition in writing, through a questionnaire or through a medical examination. When applying for group health insurance, evidence of insurability is only required in specific cases (for instance, when a person fails to enroll in the group plan during the enrollment period).
Examination: In health insurance usage, this generally refers to a medical examination performed as part of an application for a life or health insurance plan. See, Evidence of Insurability.
Exchange: The act of one party giving something of value to another party and receiving something of value in return. 
Exclusions: Specific conditions, services or treatments for which a health insurance plan will not provide coverage.
Exclusive Provider Organization (EPO): A healthcare benefit arrangement that is similar to a preferred provider organization in administration, structure, and operation, but which does not cover out-of-network care. 
Exclusive Remedy Doctrine: A rule which states that employees who are injured on the job are entitled to workers' compensation benefits, but they cannot sue their employers for additional amounts.
Executive Committee: Committee whose purpose is to provide rapid access to decision making and confidential discussions for an MCO board of directors. 
Executive Director: In a managed care plan, individual responsible for all operational aspects of the plan. All other officers and key managers report to this person, who in turn reports to the board of directors. 
Experimental or Investigational Procedures: Any healthcare services, supplies, procedures, therapies or devices the effectiveness of which a health insurance company considers unproven. These services are generally excluded from coverage.
Experience Rating: A rating method under which an MCO analyzes a group's recorded healthcare costs by type and calculates the group's premium partly or completely according to the group's experience.
Expert System: Software that attempts to replicate the process an expert uses to solve a problem in order to arrive at the same decision that an expert would reach. 
Explanation of Benefits (EOB): A statement sent from the health insurance company to a member listing services that were billed by a healthcare provider, how those charges were processed, and the total amount of patient responsibility for the claim.
Extended Coverage: A provision of some health insurance plans allowing for coverage of certain healthcare services after the member is no longer covered on the plan. For example, a member's maternity benefits may be extended beyond the expected end of coverage if the woman was already receiving covered maternity services.
Extension of Benefits: A provision of some health insurance plans allowing for coverage to be extended beyond a scheduled termination date. The extended coverage is made available only when the member is disabled or hospitalized as of the intended termination date, and continues only until the patient leaves the hospital or returns to work.


Federal Employee Health Benefits Program (FEHBP): A voluntary health insurance program administered by the Office of Personnel Management (OPM) for federal employees, retirees, and their dependents and survivors. 
Federal Trade Commission Act: A federal act which established the Federal Trade Commission (FTC) and gave the FTC power to work with the Department of Justice to enforce the Clayton Act. The primary function of the FTC is to regulate unfair competition and deceptive business practices, which are presented broadly in the Act. As a result, the FTC also pursues violators of the Sherman Antitrust Act. See also antitrust laws.
Fee Allowance: See fee schedule. 
Fee-For-Service (FFS) Payment System: A system in which the insurer will either reimburse the group member or pay the provider directly for each covered medical expense after the expense has been incurred. 
Fee Maximum: See fee schedule. 
Fee Schedule: The fee determined by an MCO to be acceptable for a procedure or service, which the physician agrees to accept as payment in full. Also known as a fee allowance, fee maximum, or capped fee. 
FEHBP: See Federal Employee Health Benefits Plan. 
FFS Payment System: See fee-for-service payment system. 
Fictitious Business Name Statement: A certificate provided by a local or state governmental office that clarifies the true owner of a business or company. When a company or individual conducts business under an assumed name, this is referred to as a "fictitious name." It may also be referred to as a "trade name" or "doing-business-as (DBA)" name. For the purposes of group health insurance, this statement confirms the identity of the business applying for coverage with a health insurance company.
Finance Committee: Committee of the board of directors whose duty it is to review financial results, approve budgets, set and approve spending authorities, review the annual audit, and review and approve outside funding sources. 
Finance Director: Chief financial officer responsible for the oversight of all financial and accounting operations, such as billing, management information services, enrollment, and underwriting as well as accounting, fiscal reporting, and budget preparation.  
Formulary: A listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given managed population and that are to be used by an MCO's providers in prescribing medications. 
Fully Funded Plan: A health plan under which an insurer or MCO bears the financial responsibility of guaranteeing claim payments and paying for all incurred covered benefits and administration costs. 
Functional Status: A patient's ability to perform the activities of daily living. 
Funding Vehicle: In a self-funded plan, the account into which the money that an employer and employees would have paid in premiums to an insurer or MCO is deposited until the money is paid out.  


Gatekeeper: A term used to describe the role of the primary care physician in an HMO plan. In an HMO plan, primary care physicians serves as the patient's main point of contact for healthcare services and refer patients to specialists for specific needs. 
Generic Drug: A drug which is exactly the same as a brand name prescription drug, but which can be produced by other manufacturers after the brand name drug's patent has expired. Generic drugs are usually less expensive than brand name drugs.
Generic Substitution: The dispensing of a drug that is the generic equivalent of a drug listed on a pharmacy benefit management plan's formulary. In most cases, generic substitution can be performed without physician approval. 
Geographic Accessibility: Health plan accessibility, generally determined by drive time or number of primary care providers in a service area. 
GPWW: See group practice without walls. 
Grace Period: A time period after the payment due date, during which insurance coverage remains in force and the policyholder may make a payment without penalty. 
Grandfathered plan: Health insurance coverage that existed as of March 23, 2010 that is subject only to certain provisions of the PPACA. Any policy sold in the individual health insurance market after March 23, 2010 will not be grandfathered even if the product sold was offered before that date. New employees may be added to group plans that are grandfathered, and new family members may be added to all grandfathered plans. If you're not sure whether you have a Grandfathered plan, please contact the plan directly. 
Grievances: Formal complaints demanding formal resolution by a managed care plan.  
Group: A number of individuals covered under a single health insurance contract, usually a group of employees. 
Group Health Insurance: A health insurance plan that provides benefits for employees of a business or members of an organization, as opposed to individual and family health insurance.
Group Market: A market segment that includes groups of two or more people that enter into a group contract with an MCO under which the MCO provides healthcare coverage to the members of the group. 
Group Model HMO: An HMO that contracts with a multi-specialty group of physicians who are employees of the group practice. Also known as a group practice model HMO. 
Group Practice Model HMO: See group model HMO. 
Guaranteed Issue: An insurance policy provision under which all eligible persons who apply for insurance coverage and who meet certain conditions are automatically issued an insurance policy. 
Guaranteed Renewable Contract: A contract under which the insured person has the right (usually up to a certain age) to renew and continue his or her health insurance policy by the timely payment of premiums. 


HCQIA: See Health Care Quality Improvement Act. 
HCQIP: See Health Care Quality Improvement Program.  
Health Care Financing Administration (HCFA): See the Centers for Medicare and Medicaid Services.
Healthcare Quality: The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge. 
Health Care Quality Improvement Act (HCQIA): A federal act which exempts hospitals, group practices, and HMOs from certain antitrust provisions as they apply to credentialing and peer review so long as these entities adhere to due process standards that are outlined in the Act. 
Health Care Quality Improvement Program (HCQIP): A program, established by the Balanced Budget Act of 1997, that seeks to improve the quality of care provided to Medicare beneficiaries by requiring Medicare+Choice coordinated care plans to undergo periodic quality review by a peer review organization. 
Health Information Network (HIN): An electronic system that uses telecommunications devices to link various healthcare entities within a geographic region in order to exchange patient, clinical, and financial information in an effort to reduce costs and practice better medicine.  
Health Insurance Portability and Accountability Act (HIPAA): A federal act that protects people who change jobs, are self-employed, or who have pre-existing medical conditions. HIPAA standardizes an approach to the continuation of healthcare benefits for individuals and members of small group health plans and establishes parity between the benefits extended to these individuals and those benefits offered to employees in large group plans. The act also contains provisions designed to ensure that prospective or current enrollees in a group health plan are not discriminated against based on health status. 
Health Insurance Purchasing Co-Ops (HPCs): See purchasing alliances.
Health Maintenance Organization (HMO): A healthcare system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee. 
HSA (Health Savings Account): A tax advantaged savings account to be used in conjunction with certain high-deductible (low premium) health insurance plans to pay for qualifying medical expenses. Contributions may be made to the account on a tax-free basis. Funds remain in the account from year to year and may be invested at the discretion of the individual owning the account. Interest or investment returns accrue tax-free. Penalties may apply when funds are withdrawn to pay for anything other than qualifying medical expenses. Click here for more information on HSAs. 
Health Service Agreement: An agreement between an employer and a health insurance company outlining benefits, enrollment procedures, eligibility standards, etc.
High Deductible Health Plan (HDHP): A type of health insurance plan that, compared to traditional health insurance plans, requires greater out-of-pocket spending, although premiums may be lower. In 2012, an HSA-qualifying HDHP must have a deductible of at least $1,200 for single coverage and $2,400 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $6,050 for single coverage and $12,100 for families. In 2013, an HSA-qualifying HDHP must have a deductible of at least $1,250 for single coverage and $2,500 for family coverage. The plan must also limit the total amount of out-of-pocket cost-sharing for covered benefits each year to $6,250 for single coverage and $12,500 for families.
HIN: See Health Information Network. 
HIPAA: See Health Insurance Portability and Accountability Act.  
HMO: See health maintenance organization.  
HMO Act: 1973 federal law that ensured access for HMOs to the employer-based insurance market.  
Hold Harmless Provision: A contract clause which forbids providers from seeking compensation from patients if the health plan fails to compensate the providers because of insolvency or for any other reason. 
Home Health Agency: A certified healthcare agency that provides home health care services. See,Home Health Care.
Home Health Care: Part-time care that is provided by medical professionals in the home setting rather than in a hospital or skilled nursing facility.
Hospice Care: Care rendered either on an inpatient basis or in the home setting for a terminally ill patient. Often referred to as "palliative" or "supportive" care, hospice care emphasizes the management of pain and discomfort and the emotional support of the patient and family. See also,Respite Care.
Hospital Benefits: Benefits payable for hospital room and board and other miscellaneous charges resulting from hospitalization.
Hospitalization: Typically, hospitalization services include services related to staying at a hospital for either scheduled procedures, accidents or medical emergencies. Hospitalization services typically do not include hospital stays for giving birth to a child.
Hospitalization Insurance: Insurance intended to provide coverage in case of hospitalization, including benefits for room and board and miscellaneous expenses, within certain limitations.


IBNR Claims: See incurred but not reported claims. 
IDS: See integrated delivery system. 
Incontestable Clause: A provision in an insurance policy that states that the validity of the insurance contract cannot be contested after two (or sometimes three) years.
Incorporation by Reference: The method of making a document a part of a contract by referring to it in the body of the contract. 
Indemnity Plan: Also called "fee-for-service" plans, Indemnity plans typically allow you to direct your own health care and visit whatever doctors or hospitals you like. The insurance company then pays a set portion of your total charges. You may be required to pay for some services up front and then apply to the insurance company for reimbursement. Indemnity plans typically require that you fulfill an annual deductible. Because of the freedom they allow members, Indemnity plans are sometimes more expensive than other types of plans.
Indemnity Wraparound Policy: An out-of-plan product that an HMO offers through an agreement with an insurance company. 
Independent Agents: Agents that represent the products of several health plans or insurers. 
Independent Practice Association (IPA): An organization comprised of individual physicians or physicians in small group practices that contracts with MCOs on behalf of its member physicians to provide healthcare services. 
Individual and Family Health Insurance: A type of health insurance purchased by an individual or family, independent of any employer group or organization.
Individual Market: A market segment composed of customers not eligible for Medicare or Medicaid who are covered under an individual contract for health coverage. 
Individual Stop-Loss Coverage: A type of stop-loss insurance that provides benefits for claims on an individual that exceed a stated amount in a given period. Also known as specific stop-loss coverage.  
Infertility: Typically, infertility services include any medical services, both inpatient and outpatient, to assist with the conception of child.  
Inpatient: A term used to describe a person admitted to a hospital for at least 24 hours. It may also be used to describe the care rendered in a hospital when the duration of the stay is at least 24 hours.
Integrated Delivery System (IDS): A provider organization that is fully integrated operationally and clinically to provide a full range of healthcare services, including physician services, hospital services, and ancillary services. 
Integration: For provider organizations, the unification of two or more previously separate providers under common ownership or control, or the combination of the business operations of two or more providers that were previously carried out separately and independently.  
Intermediate Care: A level of nursing care, considered less intensive than skilled nursing care, but which may be rendered in a skilled nursing or intermediate care facility. 
IPA: See independent practice association.
IPA model HMO: A health maintenance organization which contracts with one or more associations of physicians in independent practice who agree to provide medical services to HMO members.


Joint Venture: A type of partial structural integration in which one or more separate organizations combine resources to achieve a stated objective. The participating companies share ownership of the venture and responsibility for its operations, but usually maintain separate ownership and control over their operations outside of the joint venture.




Lab/X-Ray: Typically, lab/x-ray is any diagnostic lab test or diagnostic/therapeutic x-ray performed in support of basic health services. Lab services typically include services like blood panels and urinalysis. X-ray services typically include basic outpatient skeletal or other plain film x-ray, outpatient ultrasound, GI series, MRI, and CT scan. Prostate cancer screening, mammograms, and pap smears may be covered by Lab/X-Ray benefit, or they may be covered by Periodic OB-GYN benefit or Preventative Care benefits. Typically, dental x-rays are not included in Lab/X-ray benefits.
Lapse: The termination of insurance coverage due to lack of payment after a specific period of time.
Large Group: A large pool of individuals for which health coverage is provided by the group sponsor. A large group may be defined as more than 250, 500, 1,000, or some other number of members, depending on the MCO.  
Length of Stay (LOS): The total number of days that a patient stays in a facility such as a hospital. 
Lifetime Maximum Benefit Amount: The maximum dollar amount set by an MCO that limits the total amount the plan must pay for all healthcare services provided to a subscriber in the sub-scriber's lifetime. 
Limitations: A term referring to any maximums that a health insurance plan imposes on specific benefits.
Long-term Care: Care provided on a continuing basis for the chronically ill or disabled. Long-term care may be provided on an inpatient basis (at a long-term care facility) or in the home setting.
Loss Rate: The number and timing of losses that will occur in a given group of insureds while the coverage is in force.


Mail-Order Pharmacy Programs: Programs that offer drugs ordered and delivered through the mail to plan members at a reduced cost. 
Major Medical Insurance: A type of medical insurance plan that provides benefits for a broad range of healthcare services, both inpatient and outpatient. Major medical insurance plans often carry a high deductible.
Managed Behavioral Health Organization (MBHO): An organization that provides behavioral health services using managed care techniques. 
Managed Care: The integration of both the financing and delivery of healthcare within a system that seeks to manage the accessibility, cost, and quality of that care. 
Managed Care Organization (MCO): Any entity that utilizes certain concepts or techniques to manage the accessibility, cost, and quality of healthcare. Also known as a managed care plan. 
Managed Care Plan: See managed care organization (MCO). 
Managed Dental Care: Any dental plan offered by an organization that provides a benefit plan that differs from a traditional fee-for-service plan. 
Managed Indemnity Plans: Health insurance plans that are administered like traditional indemnity plans but which include managed care "overlays" such as precertification and other utilization review techniques. 
Management Services Organization (MSO): An organization, owned by a hospital or a group of investors, that provides management and administrative support services to individual physicians or small group practices in order to relieve physicians of non-medical business functions so that they can concentrate on the clinical aspects of their practice. 
Manual Rating: A rating method under which a health plan uses the plan's average experience with all groups and sometimes the experience of other health plans rather than a particular group's experience to calculate the group's premium. An MCO often lists manual rates in an underwriting or rating manual.  
Market Segmentation: The process of dividing the total market for a product or service into smaller, more manageable subsets or groups of customers. 
Market Segments: Subsets or manageable groups of customers in a total market. 
Marketing Director: Individual responsible for marketing a managed care plan, whose duties include oversight of marketing representatives, advertising, client relations, and enrollment forecasting. 
Maternity (Inpatient): Typically, inpatient maternity services include hospitalization and physician fees associated with the birth of a child. 
Maternity (Outpatient): Typically, outpatient maternity services include OB-GYN office visits during pregnancy and immediately after giving birth. 
Maternity Coverage: Maternity coverage means the insurance covers part or all of the medical cost during a woman's pregnancy. Coverage is broken down into inpatient and outpatient services. Typically, inpatient coverage includes hospitalization and physician fees associated with child birth. Outpatient coverage pays for prenatal and postnatal OB-GYN office visits. 
Maximum Allowable: See Allowable Charge.
Max Duration: Maximum duration is the longest coverage period offered by the plan. You should choose a plan which has a coverage period which will safely cover your insurance needs while you are waiting for a standard long-term policy to begin. You should apply for short-term coverage only if you know with certainty that you will have standard, long-term coverage (or coverage through an employer) at a future date.
Maximum Out-Of-Pocket Costs: An annual limitation on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed charges from out of network health care providers or services that are not covered by the plan.
MBHO: See managed behavioral health organization. 
McCarran-Ferguson Act: A federal act that placed the primary responsibility for regulating health insurance companies and HMOs that service private sector (commercial) plan members at the state level.  
MCO: See managed care organization.  
Medicaid: A jointly funded federal and state program that provides hospital expense and medical expense coverage to the low-income population and certain aged and disabled individuals.  
Medical Advisory Committee: Committee whose purpose is to review general medical management issues brought to it by the medical director.  
Medical Center: See ambulatory care facility (ACF). 
Medical Clinic: See ambulatory care facility (ACF).  
Medical Director: Manager in a healthcare organization responsible for provider relations, provider recruiting, quality and utilization management, and medical policy.  
Medical Foundation: A not-for-profit entity, usually created by a hospital or health system, that purchases and manages physician practices.  
Medical Group Practice: See consolidated medical group. 
Medical-Necessity Review: See prior authorization. 
Medical Savings Account (MSA): A trust that employees of small businesses may establish to pay for out-of-pocket medical expenses. 
Medical Underwriting: The evaluation of health questionnaires submitted by all proposed plan members to determine the insurability of the group.  
Medically Needy Individuals: Enrollees in Medicaid programs whose income or assets exceed the maximum threshold for certain federal programs. 
Medicare: A federal government hospital expense and medical expense insurance plan primarily for elderly and disabled persons. See also Medicare Part A, Medicare Part B, and Medicare Part C.  
Medicare Part A: The part of Medicare that provides basic hospital insurance coverage automatically for most eligible persons. See also Medicare.  
Medicare Part B: A voluntary program that is part of Medicare and provides benefits to cover the costs of physicians' services. See also Medicare. 
Medicare Part C: The part of Medicare that expands the list of different types of entities allowed to offer health plans to Medicare beneficiaries. Also known as Medicare + Choice or Medicare Advantage. See also Medicare. 
Medicare+Choice: See Medicare Part C. 
Medicare+Choice MSAs: Accounts created by contributions from HCFA to pay out-of-pocket medical expenses for Medicare beneficiaries. The accounts are used in conjunction with high-deductible, catastrophic healthcare policies. 
Medicare Supplement: A private medical expense insurance plan that supplements Medicare coverage. Also known as a Medigap policy. 
Medigap Policy: See Medicare supplement. 
Member: Anyone covered under a health insurance plan, an enrollee or eligible dependent.
Member Services: The department responsible for helping members with any problems, handling member grievances and complaints, tracking and reporting patterns of problems encountered, and enhancing the relationship between members of the plan and the plan itself. 
Mental Health Parity Act (MHPA): A federal act which prohibits group health plans that offer mental health benefits from applying more restrictive limits on coverage for mental illness than for physical illness.  
Mental Health Inpatient: Typically, mental health inpatient refers to services rendered when a patient stays at a hospital or other medical facility for treatment of a mental health condition.  
Mental Health Office Visits: Typically, mental health office visits include visits to a licensed medical provider for treatment of a mental health condition.
Merger: A type of structural integration that occurs when two or more separate providers are legally joined. 
Messenger Model: A type of independent practice association (IPA) that simply negotiates contract terms with MCOs on behalf of member physicians, who then contract directly with MCOs using the terms negotiated by the IPA. This type of IPA is most often used with fee-for-service or discounted fee-for-service compensation arrangements. 
MHPA: See Mental Health Parity Act. 
Modified Community Rating: See adjusted community rating. 
Monthly Operating Report (MOR): A document that reports the month- and year-to-date financial status of a managed care plan. 
MOR: See monthly operating report. 
MSA: See medical savings account.  
MSO: See Management Services Organization.  


National Accounts: Large group accounts that have employees in more than one geographic area that are covered through a single national contract for health coverage. Contrast with large local groups. 
National Association of Insurance Commissioners (NAIC): The NAIC is a national association of state officials charged with regulating insurance. The NAIC was formed to help provide some measure of national uniformity in insurance regulation.
National Drug Code (NDC): A system employed by healthcare providers and insurance companies for classifying and identifying drugs. Each prescription drug in common use is assigned an NDC number.
National Practitioner Data Bank (NPDB): A database maintained by the federal government that contains information on physicians and other medical practitioners against whom medical malpractice claims have been settled or other disciplinary actions have been taken. 
Network: The group of physicians, hospitals, and other medical care providers that a specific managed care plan has contracted with to deliver medical services to its members. 
Network Model HMO: An HMO that contracts with more than one group practice of physicians or specialty groups. 
Network Provider: A healthcare provider who has a contractual relationship with a health insurance company. Among other things, this contractual relationship may establish standards of care, clinical protocols, and allowable charges for specific services. In return for entering into this kind of relationship with an insurance company, a healthcare provider typically gains in numbers of patients and a primary care physician may receive a capitation fee for each patient assigned to his or her care.
Newborns' and Mothers' Health Protection Act (NMHPA): A federal law which mandates that coverage for hospital stays for childbirth cannot generally be less than 48 hours for normal deliveries or 96 hours for cesarean births. 
NMHPA: See Newborns' and Mothers' Health Protection Act.  
No Balance Billing Provision: A provider contract clause which states that the provider agrees to accept the amount the plan pays for medical services as payment in full and not to bill plan members for additional amounts (except for copayments, coinsurance, and deductibles).  
Non-Group Market: A market segment that consists of customers who are covered under an individual contract for health coverage or enrolled in a government program.  
Non-Maleficence: An ethical principle which, when applied to managed care, states that managed care organizations and their providers are obligated not to harm their members.  
NPDB: See National Practitioner Data Bank. 
Nursing Home: A licensed facility which provides general nursing care to those who are chronically ill or who require constant supervision and assistance with the needs of daily living.


OBRA: See Omnibus Budget Reconciliation Act of 1990. 
Omnibus Budget Reconciliation Act (OBRA) of 1990: A federal act which established the Medicare SELECT program, a Medicare supplement that uses a preferred provider organization to supplement Medicare Part B coverage.  
Open Access: A provision that specifies that plan members may self-refer to a specialist, either in-network or out-of-network, at full benefit or at a reduced benefit, without first obtaining a referral from a primary care provider.  
Open Formulary: The provision that drugs on the preferred list and those not on the preferred list will both be covered by a PBM or MCO. 
Open-Panel HMO: An HMO in which any physician who meets the HMO's standards of care may contract with the HMO as a provider. These physicians typically operate out of their own offices and see other patients as well as HMO members. 
Open PHO: A type of physician-hospital organization that is available to all of a hospital's eligible medical
Operational Integration: The consolidation into a single operation of operations that were previously carried out separately by different providers. 
Operations Director: Individual who typically oversees claims, management information services, enrollment, underwriting, member services, and office management. 
Outcomes Measures: Healthcare quality indicators that gauge the extent to which healthcare services succeed in improving patient health.  
Out-of-Pocket Maximums: Dollar amounts set by MCOs that limit the amount a member has to pay out of his or her own pocket for particular healthcare services during a particular time period. 
Outpatient Care: Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility. 


Parent Company: A company that owns another company.  
Patient Bill of Rights: Refers to the Consumer Bill of Rights and Responsibilities, a report prepared by the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry in an effort to ensure the security of patient information, promote healthcare quality, and improve the availability of healthcare treatment and services. The report lists a number "rights," subdivided into eight general areas, that all healthcare consumers should be guaranteed and describes responsibilities that consumers need to accept for the sake of their own health. 
Patient Perception: A type of outcomes measure related to how the patient feels after treatment.  
PCCM: See primary care case manager.  
PCP: See primary care provider. 
Peer Review: The analysis of a clinician's care by a group of that clinician's professional colleagues. The provider's care is generally compared to applicable standards of care, and the group's analysis is used as a learning tool for the members of the group.  
Peer Review Organizations (PROs): According to the Balanced Budget Act of 1997, organizations or groups of practicing physicians and other healthcare professionals paid by the federal government to review and evaluate the services provided by other practitioners and to monitor the quality of care given to Medicare patients. 
Pended: A claims term that refers to a situation in which it is not known whether an authorization has or will be issued for delivery of a healthcare service, and the case has been set aside for review. 
Performance Measures: Quantitative measures of the quality of care provided by a health plan or provider that consumers, payors, regulators, and others can use to compare the plan or provider to other plans and providers. 
Personal Care Physician: See primary care provider. 
Personal Care Provider: See primary care provider. 
Pharmaceutical Cards: Identification cards issued by a pharmacy benefit management plan to plan members. These cards assist PBMs in processing and tracking pharmaceutical claims. Also known as drug cards or prescription cards. 
Pharmacy and Therapeutics Committee: Committee charged with developing a formulary, reviewing changes to that formulary, and reviewing abnormal prescription utilization patterns by providers. 
Pharmacy Benefit Management (PBM) Plan: A type of managed care specialty service organization that seeks to contain the costs, while promoting safer and more efficient use, of prescription drugs or pharmaceuticals. Also known as a prescription benefit management plan. 
PHO: See physician-hospital organization. 
Physician-Hospital Organization (PHO): A joint venture between a hospital and many or all of its admitting physicians whose primary purpose is contract negotiations with MCOs and marketing.  
Physician Practice Management (PPM) company: A company, owned by a group of investors, that purchases physicians' practice assets, provides practice management services, and, in most cases, gives physicians a long-term contract to continue working in their practice and sometimes an equity (ownership) position in the company.  
Physician Profiling: In the context of a pharmacy benefit plan, the process of compiling data on physician prescribing patterns and comparing physicians' actual prescribing patterns to expected patterns within select drug categories. Also known as profiling. 
Plan Funding: The method that an employer or other payor or purchaser uses to pay medical benefit costs and administrative expenses. 
Point-of-Service (POS) Product: A healthcare option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan's network or seek medical care outside the network. 
Pooling: The practice of underwriting a number of small groups as if they constituted one large group. 
POS Product: See point-of-service product. 
PPA: See preferred provider arrangement. 
PPM company: See Physician Practice Management Company. 
Practice Guideline: See clinical practice guideline. 
Precertification: See prospective authorization.  
Pre-Existing Condition: In group health insurance, generally a condition for which an individual received medical care during the three months immediately prior to the effective date of coverage. 
Preferred Provider Arrangement (PPA): As defined in state laws, a contract between a healthcare insurer and a healthcare provider or group of providers who agree to provide services to persons covered under the contract. Examples include preferred provider organizations (PPOs) and exclusive provider organizations (EPOs).  
Preferred Provider Organization (PPO): A healthcare benefit arrangement designed to supply services at a discounted cost by providing incentives for members to use designated healthcare providers (who contract with the PPO at a discount), but which also provides coverage for services rendered by healthcare providers who are not part of the PPO network.  
Premium: A prepaid payment or series of payments made to a health plan by purchasers, and often plan members, for medical benefits. 
Premium Taxes: State income taxes levied on an insurer's premium income. 
Prepaid Care: Healthcare services provided to an HMO member in exchange for a fixed, monthly premium paid in advance of the delivery of medical care.  
Prepaid Group Practices: Term originally used to describe healthcare systems that later became known as health maintenance organizations. 
Prescription Cards: See pharmaceutical cards. 
Primary Care: General medical care that is provided directly to a patient without referral from another physician. It is focused on preventative care and the treatment of routine injuries and illnesses. 
Primary Care Case Manager (PCCM): In states that have obtained a Section 1915(b) waiver, a primary care provider who contracts directly with the state to provide case management services, such as coordination and delivery of services, to Medicaid patients in an effort to reduce emergency room use, increase preventive care, and improve overall effectiveness by fostering a close physician-patient relationship. 
Primary Care Physician: See primary care provider. 
Primary Care Provider (PCP): A physician or other medical professional who serves as a group member's first contact with a plan's healthcare system. Also known as a primary care physician, personal care physician, or personal care provider. 
Primary Source Verification: A process through which an organization validates credentialing information from the organization that originally conferred or issued the credentialing element to the practitioner. 
Prior Authorization: In the context of a pharmacy benefit management (PBM) plan, a program that requires physicians to obtain certification of medical necessity prior to drug dispensing. Also known as a medical-necessity review.  
Process Measures: Healthcare quality indicators related to the methods and procedures that a managed care organization and its providers use to furnish care. 
Profiling: See physician profiling. 
Promise Keeping/Truthtelling: An ethical principle which, when applied to managed care, states that managed care organizations and their providers have a duty to present information honestly and are obligated to honor commitments. 
PROs: See peer review organizations.  
Prospective Authorization: Authorization to deliver healthcare service that is issued before any service is rendered. Also known as precertification. 
Provider Manual: A document that contains information concerning a provider's rights and responsibilities as part of a network.  
Provider-Sponsored Organization (PSO): A healthcare organization established and organized, or operated, by a healthcare provider or a group of affiliated healthcare providers to arrange for the delivery, financing, and administration of healthcare that meets requirements established by the Balanced Budget Act of 1997 and that has the authority to contract directly with Medicare.  
PSO: See Provider-Sponsored Organization. 
Purchasing Alliances: Locally based, privately operated organizations that offer affordable group health coverage to businesses with fewer than 100 employees. Also known as purchasing pools, health insurance purchasing co-ops (HPCs), employer purchasing coalitions, or purchasing coalitions. 
Purchasing Coalitions: See purchasing alliances.  
Purchasing Pools: See purchasing alliances.  
Pure Community Rating: See standard community rating.  


QM: See quality management. 
QM Committee: MCO committee responsible for oversight of the quality management program including the setting of standards, review of data, feedback to providers, follow-up, and approval of sanctions and for the quality of care delivered to members. 
Quality: In a managed care context, an MCO's success in providing healthcare and other services in such a way that plan members' needs and expectations are met. 
Quality Management (QM): An organization-wide process of measur-ing and improving the quality of the healthcare provided by an MCO.  
Quality Program: An organization-wide initiative to measure and improve the service and care provided by an MCO. 


Underwriting Manual: The difference between the highest and lowest rates that a health plan charges small groups. The NAIC Small Group Model Act limits a plan's allowable rate spread to 2 to 1. 
Underwriting Requirements: The process of calculating the appropriate premium to charge purchasers, given the degree of risk represented by the individual or group, the expected costs to deliver medical services, and the expected marketability and competitiveness of the MCO's plan. 
RBRVS: See Resource-Based Relative Value Scale. 
Rebate: A reduction in the price of a particular pharmaceutical obtained by a PBM from the pharmaceutical manufacturer.  
Recredentialing: Reexamination by an MCO of the qualifications of a provider and verification that the provider still meets the standards for participation in the network.  
Relative Value of Services: See relative value scale. 
Relative Value Scale (RVS): A method used by MCOs of determining provider reimbursement that assigns a weighted value to each medical procedure or service. To determine the amount the MCO will pay to the physician, the weighted value is multiplied by a money multiplier. Also known as a relative value of services. 
Renewal Underwriting: The process by which an underwriter reviews each year all the selection factors that were considered when the contract was issued, then compares the group's actual utilization rates to those the MCO predicted to determine the group's renewal rate. 
Report Card: A set of performance measures applied uniformly to different health plans or providers. 
Reserves: Estimates of money that an insurer needs to pay future business obligations. 
Resource-Based Relative Value Scale (RBRVS): A method used by MCOs of determining provider reimbursement that attempts to take into account, when assigning a weighted value to medical procedures or services, all resources that physicians use in providing care to patients, including physical or procedural, educational, mental (cognitive), and financial resources. 
Retrospective Authorization: Authorization to deliver healthcare service that is granted after service has been rendered. 
Revenues: The amounts earned from a company's sales of products and services to its customers. 
Risk-Adjustment: The statistical adjustment of outcomes measures to account for risk factors that are independent of the quality of care provided and beyond the control of the plan or provider, such as the patient's gender and age, the seriousness of the patient's illness, and any other illnesses the patient might have. Also known as case-mix adjustment. 
RVS: See relative value scale. 


Section 1115 waivers: Waivers that states could obtain from the federal government which allowed them to set up managed care demonstration projects.  
Section 1915(b) waivers: Waivers that states could obtain from the federal government that allowed them to restrict a Medicaid beneficiary's choice of providers by using a primary care case manager or other arrangement. 
Segments: See market segments. 
Self-Funded Plan: A health plan under which an employer or other group sponsor, rather than an MCO or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members. Also known as a self-insured plan. 
Self-Insured Plan: See self-funded plan. 
Senior Market: A market segment that is comprised largely of persons over age 65 who are eligible for Medicare benefits. 
Service Quality: An MCO's success in meeting the nonclinical customer service needs and expectations of plan members. 
Sherman Antitrust Act: A federal act which established as national policy the concept of a competitive marketing system by prohibiting companies from attempting to (1) monopolize any part of trade or commerce or (2) engage in contracts, combinations, or conspiracies in restraint of trade. The Act applies to all companies engaged in interstate commerce and to all companies engaged in foreign commerce. See also antitrust laws. 
Small Group: Although each MCO's size limit may vary, generally a group composed of 2 to 99 members for which health coverage is provided by the group sponsor. 
Specialty Health Maintenance Organization (specialty HMO): An organization that uses an HMO model to provide healthcare services in a subset or single specialty of medical care.  
Specialty HMO: See specialty health maintenance organization. 
Specialty Services: Services that are provided by independent, specialty organizations rather than by the MCO providing the basic health plan. 
Specific Stop-Loss Coverage: See individual stop-loss coverage. 
Standard Community Rating: A type of community rating in which an MCO considers only community-wide data and establishes the same financial performance goals for all risk classes. Also known as pure community rating. 
Standard of Care: A diagnostic and treatment process that a clinician should follow for a certain type of patient, illness, or clinical circumstance.  
Stark laws: See Ethics in Patient Referrals Act.  
Statutory Solvency: An insurer's ability to maintain at least the minimum amount of capital and surplus specified by state insurance regulators. 
Stop-Loss Insurance: A type of insurance coverage that enables provider organizations or self-funded groups to place a dollar limit on their liability for paying claims and requires the insurer issuing the insurance to reimburse the insured organization for claims paid in excess of a specified yearly maximum. 
Structural Integration: The unification of previously separate providers under common ownership or control. 
Structure Measures: Healthcare quality indicators related to the nature and quality of the resources that a managed care organization has available for patient care.  
Subauthorization: The authorization of one healthcare service concurrently with the authorization of another service. For example, an authorization for hospitalization may cover surgery, anesthesia, pathology, and radiology performed during the hospitalization.
Subsidiary: A company that is owned by another company, its parent. 
Surplus: The amount that remains when an insurer subtracts its liabilities and capital from its assets. 


Termination Provision: A provider contract clause that describes how and under what circumstances the parties may end the contract. 
Termination With Cause: A contract provision, included in all standard provider contracts, that allows either the MCO or the provider to terminate the contract when the other party does not live up to its contractual obligations. 
Termination Without Cause: A contract provision that allows either the MCO or the provider to terminate the contract without providing a reason or offering an appeals process. 
Therapeutic Substitution: The dispensing of a different chemical entity within the same drug class of a drug listed on a pharmacy benefit management plan's formulary. Therapeutic substitution always requires physician approval. 
Third Party Administrator (TPA): A company that provides administrative services to MCOs or self-funded health plans. 
TPA: See third party administrator.  
Treatment Codes: See diagnostic and treatment codes. 
TRICARE: A healthcare plan, available to more than 6 million military personnel and their families, which is administered by private contractors who are selected for participation through a competitive procurement process. TRICARE offers members three plan options: TRICARE Prime (a capitated HMO with nominal premiums and copayments), TRICARE Extra (a PPO with standard CHAMPUS deductibles), and TRICARE Standard (the current fee-for-service CHAMPUS plan with provider choice and no premiums). See also Civilian Health and Medical Program of the Uniformed Services.  


UCR Fee: See usual, customary, and reasonable fee. 
UM: See utilization management. 
Underwriting. The process of identifying and classifying the risk represented by an individual or group.  
Underwriting Impairments: Factors that tend to increase an individual's risk above that which is normal for his or her age. 
Underwriting Manual: A document that provides background information about various underwriting impairments and suggests the appropriate action to take if such impairments exist.
Underwriting Requirements: Requirements, sometimes relating to group characteristics or financing measures, that MCOs at times impose in order to provide healthcare coverage to a given group and which are designed to balance a health plan's knowledge of a proposed group with the ability of the group to voluntarily select against the plan (antiselection). 
UR: See utilization review.  
URO: See utilization review organization.   
Usual, Customary, and Reasonable (UCR) Fee: The amount commonly charged for a particular medical service by physicians within a particular geographic region. UCR fees are used by traditional health insurance companies as the basis for physician reimbursement.  
Utilization Review (UR): The evaluation of the medical necessity, efficiency, and/or appropriateness of healthcare services and treatment plans.  
Utilization Review Committee: Committee that reviews utilization issues brought to it by the medical director, often approving or reviewing policy regarding coverage, reviewing utilization patterns of providers, and approving or reviewing the sanctioning process against providers.  
Utilization Review Organization (URO): External reviewers who assess the medical appropriateness of suggested courses of treatment for patients, thereby providing the patient and the purchaser increased assurance of the appropriateness, value, and quality of healthcare services. 


Variances: The differences obtained from subtracting actual results from expected or budgeted results. 


Withhold: A percentage of a provider's payment that is "held back" during the plan year to offset or pay for any cost overruns for referral or hospital services. Any part of the withhold not used for these purposes is distributed to providers. 
Workers' Compensation: A state-mandated insurance program that provides benefits for healthcare costs and lost wages to qualified employees and their dependents if an employee suffers a work-related injury or disease. 
Workers' Compensation Indemnity Benefits: Benefits that replace an employee's wages while the employee is unable to work because of a work-related injury or illness. 








Contact us at (855) 332-3821 to speak with a
representative or to access to our language line.

All written materials from Qualified Health Plans
(QHP) can be translated and made available from QHP issuers.

Privacy Policy | Terms of Service | Data Requests | Interest-Based Ads | Sitemap | Accessibility
Copyright © 2024 CBC. All Rights Reserved.
All insurance products are sold by Custom Benefit Consultants, Inc., Ken Bahl, NPN: 4579133
Need Language Assistance?

Language Assistance:

Spanish / Español
Russian / русский

Polish / Polskie

Japanese / 日本語

Chinese / 中文

French Creole-Haitian Creole / Franse - Kreyòl

Portuguese / Português

German / Deutsche

Vietnamese / Tiếng Việt

Arabic / العربية

French / Français

Persian-Farsi / فارسی

Korean / 한국어


Italian / italiano

More Languages...



Attention: This website is operated by Custom Benefit Consultants, Inc. and is not the Health Insurance Marketplace website. In offering this website, Custom Benefit Consultants, Inc. is required to comply with all applicable federal law, including the standards established under 45 CFR 155.220(c) and (d) and standards established under 45 CFR 155.260 to protect the privacy and security of personally identifiable information. This website may not display all data on Qualified Health Plans (QHPs) being offered in your state through the Health Insurance Marketplace website. To see all available data on QHP options in your state, go to the Health Insurance Marketplace website at


Costco Insurance Agency, Inc. is a licensed insurance agent. Insurance plans are offered by licensed insurance companies or health maintenance organizations. Health insurance plans on the CBC Health Insurance Marketplace for Costco Members are brokered and /or serviced by CBC Benefit & Insurance Services; CA License #: 0D75486 and Costco Insurance Agency License #: 0D08407.


If you would like assistance in another language, please visit or contact us at (800) 611-9056 to access our language line.

All insurance products are issued by licensed insurance companies and made available to applicants through Costco Insurance Agency, Inc., which receives a commission from insurers to distribute these products. Your insurance policy, not the information on this site, determines the applicable terms and conditions of the insurance product. Neither Costco Insurance Agency, Inc. nor its affiliates guarantee the services of any insurance company. The plan rates and benefits displayed on this site are for illustrative purposes only. Plan benefits and rates are based on final enrollment and insurance carrier confirmation.

L0317492651[exp0418][All States]