Allowed amount


The maximum fee that is reimbursable for a given service.

Ambulatory care


Care provided on an outpatient basis.

American Accreditation Healthcare Commission/URAC URAC A non-profit organization that reviews and accredits managed care organizations such as HMO's, PPO's health networks, workers' compensation networks and other health care organizations

Ancillary services


Generally refers to services not categorized as hospital room and board or services provided by an entity or person other than a hospital or physician. Example: laboratory, durable medical equipment, home health care, ambulance, etc.



Written or verbal request to reconsider the initial decision to deny a health care service (before service is provided) or claim (after service is provided). Health care organizations usually have separate processes for the review and resolution of denied services and claims.

Balanced Budget Act of 1997


Federal legislation that enacted significant changes to the laws governing the Medicare and Medicaid programs. This change creates a new Medicare Part C or "Medicare + Choice.


Also known as Member, Enrollee


A person eligible to receive insurance or health coverage benefits. Frequently used in connection with the Medicare program.

Beneficiary Appeal


A request by a Medicare beneficiary to have a health care decision altered or reversed.

Benefit Period


The period of time used to measure a memberís use of benefits. Frequently, this is used with benefits that have limitations or maximums on a calendar year basis or a cycle of care basis. A common Medicare example:

A Benefit Period begins on the first day of an inpatient hospital or skilled nursing facility stay and ends when the member has been out of a hospital or skilled nursing facility for 60 consecutive days.



A set rate given to a provider each month, in advance on a per-member, per-month (PMPM) basis, for a specified set of services. The capitation amount paid is independent of the number of services rendered. Capitation agreements can be made with almost any type of provider: physicians, hospitals, laboratories, dentists, independent practice associations, etc.

Case management


A systematic, coordinated approach to patient centered care that provides for quality along the continuum, integration of care delivery across many settings, enhancement of the quality of life and encourages education and accountability.

Chronic care


On-going care for a disease or condition that slowly progresses or is long term in nature.



A billing request to the health care plan or insurance organization to pay for a covered health care service.

Centers for Medicare & Medicaid Services CMS The federal agency responsible for administering Medicare and overseeing the statesí administration of Medicaid (Medi-Cal in California).



The percentage of the allowed amount that is the member responsibility to pay after meeting a deductible.

Concurrent review


The process by which one assesses the medical necessity of a patientís need for continuation of inpatient care or to continue a cycle of ongoing ambulatory or ancillary services.

Consolidated Omnibus Budget Reconciliation Act


The 1985 federal law that requires employers to offer continued health care coverage to employees who have had their group health care coverage terminated.

Coordination of Benefits



This is a process by which the order of payment is determined when a person is covered under more than one group health plan.



A type of cost sharing where the member pays a specified flat fee for certain services at the time of receiving the service. Example: $10.00 for a physician office visit.



A general term referring to financial arrangements in which a covered member must pay a portion of the costs associated with receiving care, e.g. copayment, coinsurance, or deductible.

Covered Services


All medical, institutional and ancillary services and supplies to which a member is entitled to as described in their health care benefit plan.



A formal process to review and evaluate the qualifications of licensed health care practitioners to provide services to a health care organizationís members.

Current Procedural Terminology (Procedure code)


The coding system used to identify physician services, such as injections, in-office procedures, etc. for purposes of reimbursement.

Custodial or Maintenance Care


Care furnished for the purpose of meeting personal needs or assisting with the activities of daily living, which could be safely provided by a person without professional skills or training.



A fixed amount that a member must pay before their health care plan begins to pay. The deductible is generally applied on a calendar year or benefit period basis.



The formal process whereby a health care organization gives another entity the authority to perform a function on its behalf. Typical functions delegated include claim payment, credentialing, and utilization management.



A decision by a health care organization to refuse payment for a health care service already provided.

A decision by a health care organization to refuse (deny) an authorization request for services prior to receipt of the health care service.

In some cases, a partial payment, modification of an authorization request, a partial authorization approval, or a termination of current care may also be considered denials.



Any individual who receives health care coverage through the plan covering their parent, spouse or other family member.



Establishing the nature or cause of a disease or condition through evaluation and examination.

Discharge planning


The process of coordinating and evaluating a patient's health care needs in order to arrange for appropriate care following discharge from a hospital or other institutional care setting.



The termination of health care coverage.

Durable Medical Equipment


Equipment that is used at home, can withstand repeated use, is customarily used for medical purposes, and is generally not useful to a person in the absence of illness or injury.

Emergency Care

Also see related definitions:

Emergency Medical Condition

Emergency Services

Prudent Layperson

Urgent Care


The emergency definitions come from the Code of Federal Regulations as they are used in Medicare, Medicaid and many commercial health plans and insurers.

Emergency Medical Condition


[42 CFR ß422.113] Means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, with an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in:

1.     Serious jeopardy to the health of the individual or, in the case of a pregnant woman, the health of the woman or her unborn child;

2.     Serious impairment to bodily functions; or

3.     Serious dysfunction of any bodily organ or part.

Emergency Services





[42 CFR ß422.113] Means covered inpatient and outpatient services that are:

1.     Furnished by a provider qualified to furnish emergency services; and

2.     Needed to evaluate or stabilize an emergency condition.


Also known as Member, Beneficiary


Any person who is enrolled in a health care plan and who is a recipient of services from that plan.

Employee Retirement Income Security Act


A 1974 federal regulation mandating certain reporting and disclosure requirements for group health care and life plans. Allows exemptions from some state laws for certain self-insured plans.

Evidence of coverage

Also called certificate of coverage



Any certificate, agreement, contract, brochure, or letter of entitlement issued to an enrollee setting forth the coverage and its conditions to which an enrollee is entitled.

Exclusive Provider Organization


EPO is an insured product marketed by health insurance companies as a variation of a PPO product, usually with a more limited provider network. In most EPOís, members choose a Primary Care Provider who is responsible for coordinating care, and members must use the EPO limited network to obtain maximum benefits. If a member chooses to go outside the EPO network, the services may not be paid or may be paid only at a lesser benefit level.

Expedited Appeal

Also known asurgent/emergent appeal




An appeal where there is an imminent and serious threat to the health of the member, including, but not limited to, potential loss of life, limb, or major bodily function. This type of appeal request usually requires an immediate resolution. More frequently state and federal regulators set the timeframe for resolution.

Medicare: 72 hours

Explanation of Benefits


A written (usually computer generated) document describing the disposition of a claim. The EOB usually includes details about the service, provider, amount allowed, amount paid, cost sharing details, member liability, denial reasons, and appeal rights.

Fee for Service


A system of payment for healthcare services whereby a fee is charged for each service delivered and a provider is paid a fee according to each service rendered.



A verbal or written expression of dissatisfaction with the quality of care or services provided. This usually includes any complaints that are not considered to be an appeal.

Health Care Financing Administration




The old federal agency responsible for administering Medicare since renamed Centers for Medicare & Medicaid Services (CMS).

Health Maintenance Organization

also known as Health Care Plans or Managed Care Organizations




An organized system that arranges or provides a set of health care services to members in return for a prepaid or periodic charge paid by or on the behalf of the enrollees. (There are varying federal and state definitions for these entities.)

Health Insurance Portability and Accountability Act


1996 federal legislation that included health care coverage protections for employees and their families leaving or changing a job. This Act also includes provisions for health data security, standardizing electronic claim data and formats, and the requirement to enact medical confidentiality laws.



A medical and psychosocial program designed to provide for and relieve the suffering of terminally ill people.

Indemnity or Traditional Health Care Insurance


Coverage for health care services is provided on a fee for service basis. These policies frequently include deductibles and co-insurance amounts, maximum benefit limitations per service or overall policy. Members can generally receive care from any provider at any location and time they wish. If the provider is non-participating with the insurance plan, then the member is usually responsible for obtaining authorizations, submitting claim forms and liable for any balances for covered services.

Independent Practice Association

Also known as Participating Medical Group, Primary Medical Group




A partnership, association, corporation, or other legal entity which delivers or arranges for the delivery of health services and which has entered into a written services arrangement with health professionals, the majority of whom are licensed to practice medicine.

International Classification of Disease, 9th Edition (Clinical Modification)


A standard list of diagnoses and codes used for reporting patient diagnoses.

Joint Commission on Accreditation of Healthcare Organizations


This is a non-profit organization that reviews and accredits health care organizations such as hospitals, skilled nursing facilities, home care agencies, managed care plans, provider organizations and other healthcare delivery organizations.

Managed Care Organizations


A general term used to describe health care organizations that manage the quality, utilization, and cost of health care delivery. This term is usually applied to HMO, PPO, POS, and PSO entities.

Mandated benefits


Health benefits that health care plans or insurers are required by state or federal law to provide to members.

Medicaid (Medi-Cal in California)




A health welfare program jointly funded by federal and state governments and run by individual states, to provide medical benefits to certain low-income people. The state, under broad federal guidelines, determines what benefits are covered, who is eligible, and how much providers will be paid.

Medical management


Formal processes and systems utilized to help assure that members receive timely and appropriate health care and services.

Medically Necessary




Services or supplies which meet the following conditions:

Are appropriate and necessary for the symptoms, diagnosis, or treatment of the medical condition;

Are provided for the diagnosis or direct care and treatment of medical conditions;

Meet professionally recognized standards of practice at the time of treatment;

Are not primarily for the convenience of the patient or provider;

Are at the most appropriate level or supply of service that can safely be provided.



A nationwide, federal health insurance program for people aged 65 and older, people with disabilities, or people with End-Stage Renal Disease (ESRD). Medicare Part A covers hospital insurance; Medicare Part B covers physicians' services.

Medicare Approved Amount   The maximum fee that Medicare determines is reimbursable to a provider. The Medicare approved amount for each service is included on the Medicare Summary Notice.

Medicare + Choice


The program that replaces previous Medicare managed care risk programs. Effective 1/1/99 all Medicare risk contractors converted to the Medicare + Choice contract. These are now called Coordinated Care Plans and include HMO, POS, PPO, and PSO.

Medicare risk








A contractual relationship between CMS and managed care plans where the plan provides specific health care benefits to beneficiaries in exchange for a prepaid fixed monthly amount from CMS. These benefits replace traditional Medicare benefits

Medicare Summary Notice MSN A printed notice describing the determination made on Part A & Part B claims. It contains details about the service, provider, approved amounts, amounts the beneficiary may owe, denial reasons and appeal rights.

National Committee for Quality Assurance


Is an independent, not-for-profit organization dedicated to assessing and reporting on the quality of managed care plans, managed behavioral health care organizations, physician organizations, and credentials verification organizations.

Open enrollment



The period of time when a member can enroll in or change health insurance. Open enrollment is usually an annual event.

Out of Area


Outside of the geographical service area served by the health care organization.

Out of Plan


Within the health care organizationís geographical service area but the services of non-participating or non-contracted providers are being used.

Out of Pocket Costs


Refers to any portion of payment for medical services that are a memberís responsibility.

Peer review


The process in which practicing health care professionals evaluate the performance or services of other health care professionals who have similar types of practices and degrees of expertise.



An individual with an MD, DO, DDS, DMD, DC or DPM degree who is currently licensed to practice medicine.

Point of Service Plan


A plan that offers HMO coverage along with a benefit for members to obtain care from providers outside of the HMO network. Usually the services obtained outside the HMO network are subject to higher patient cost sharing requirements.



Any individual entitled by training and experience to practice a profession. Established laws govern practice licensure and the practice boundaries.

Pre-existing Condition


A medical condition that existed prior to the memberís effective date of coverage.

Preferred Provider Organization


A plan that usually combines features of indemnity and HMO coverage. It generally offers traditional indemnity benefits plus some preventive and office visit coverage.

PPOís usually have some medical management guidelines, such as pre-authorization of hospital admissions and designated outpatient procedures.

Members usually obtain services from contracted providers for lower cost sharing amounts and pay larger out-of-pocket amounts when receiving care from non-PPO providers.

Preventive Health Services


Services utilized for the prevention and early detection of medical conditions. Preventive care may include routine physical exams and tests, immunizations, and other health promotion and wellness activities.

Primary care


A level of care that includes basic, routine, or general care of individuals. Primary care is usually the memberís first point of contact with the health care system and includes preventive care, and care for common health problems and chronic illnesses.

Primary Care Case Management


Applies to Medicaid and Medi-Cal


This program is a Freedom of Choice waiver program, under the authority of section 1915(b) of the Social Security Act. States contract directly with primary care providers who agree to be responsible for the provision and/or coordination of medical services to Medicaid recipients under their care. Currently, most PCCM programs pay the primary care physician a monthly case management fee in addition to receiving fee-for-services payment

Primary Care Physician




A physician or other qualified practitioner who provides primary care services and manages routine health care needs.

Prior authorization

Also called Pre-certification or Pre-authorization


Prior review of a proposed service using established criteria to determine the appropriateness of care.



General term used to refer to those that provide a health care service. In itís most common usage provider includes: Health professionals (physicians, practitioners), Institutions (hospitals, skilled nursing facilities), and Ancillary entities (home care agencies, pharmacies, medical suppliers).

Provider Sponsored Organization


Entities established and operated by health care providers in which the substantial proportion of services are delivered through the sponsoring providers or affiliated providers. The BBA includes PSOs as a type coordinated care plan.

Prudent Layperson


An individual with average knowledge of health and medicine who could reasonably determine that the absence of medical care could result in any condition outlined in the emergency care definitions.

Qualifying event


An event in a member life that may allow enrollment in a group plan outside of the open enrollment period. An example of such an event is marriage, the birth of baby, or loss of other coverage.



Meeting or exceeding customer expectations.

Quality improvement/quality management

QI or QM

Formal systems of continuous activities to assess, monitor, and improve the performance level of health care outcomes and processes delivering care and service to members.

Retrospective review


A process to assess the billing practices, or medical appropriateness and quality of health care services after the services have been provided

Service area


A geographical area approved by regulatory agencies, within which a health care organization provides health care services.

Skilled Nursing Facility



An institution, or distinct part of a facility, primarily engaged in providing skilled nursing care or rehabilitative services to residents.

Tax Equity and Fiscal Responsibility Act of 1982


The Federal law that created the financial and contractual arrangements under which managed care plans contract with CMS.

Third Party Liability


Refers to the entity responsible for payment when a third party may be the cause of an accident or injury to a person, be it an automobile, work-related or personal.

Urgent Care


Covered services required to prevent serious deterioration of a memberís health that results from an unforeseen illness or injury if either of the following conditions are met:

The member is temporarily absent from the health care organizationís service area, and the services cannot be delayed until the member returns to the area, or

The PCP or provider office is not accessible and services are not emergent, but cannot be delayed until the next business day.

Usual, Customary, and Reasonable


A method of reimbursement on a fee for service basis that reflects the usual and customary rates for the same services in a geographic location.

Utilization Management


The process of evaluating the necessity, appropriateness and efficiency of health care services using established guidelines and criteria. UM includes but is not limited to prior authorization, concurrent review, discharge planning and case management.