Below are commonly used terms by insurance companies:
- Allowed Amount: The amount the insurance company pays for a service (may be less than what we have billed).
- Authorization/Pre-Authorization: Formal approval by insurance to assist patient and provider in securing payment for health care services.
- Contractual Allowance/Adjustment: The difference between what an insurance company approves according to its contract and what the health care provider charges for the service.
- Co-payment: One of the ways you share in your medical costs. You pay a flat fee for certain medical expenses (i.e. $20 for every visit to the doctor, while your insurance pays the rest).
- CPT Code: Five digit code(s) used to describe the service being performed.
- Cost: Patient’s out-of-pocket responsibility for services rendered.
- Deductible: A specific dollar amount that your health insurance company may require you to pay out of pocket each year before your health insurance plan begins to make payments.
- EOB/EOP/EOM/MSN: Documents showing a detailed listing of how your insurance company is processing the services rendered.
- Coordination of Benefits (COB) is a provision included in both member and physician and provider contracts. When two or more health plans cover a member, COB protects against double or over-payment.We abide by the following COB standards to determine which insurance plan pays first (primary carrier) and which pays second (secondary carrier). Briefly, these rules are as follows:
- A member is primary on the plan in which he/she is the subscriber versus the plan in which he/she is a dependent. When a member is the subscriber on more than one plan, when both plans have a COB provision, the plan with the earliest start date pays first (primary).
- When a dependent is double-covered under married parents’ health plans, the primary plan is the coverage of the parent with his/her birthday earlier in the year, regardless of their actual age. This standard is called the ““Birthday Rule.”
- When dependent children are double-covered by divorced parents, coverage depends on any court decrees. Generally, if the court decrees financial responsibility for the child’s healthcare to one parent, that parent’s health plan always pays first. If there are no court decrees, the plan of the parent with custody is primary.
- Non-Covered Service: A service, test, supply, or procedure that is not a benefit in a patient’s health insurance policy. Patients are responsible for paying for all non-covered services. The insurance company can give the details of what test, procedure, or service is not covered.
- Out of Network (OON): Health care rendered to a patient outside of the health insurance company’s network of preferred providers. In many cases, the health insurance company will not pay for these services. Emergency medical care is usually an exception to the OON rule.
- Health Maintenance Organization (HMO): An HMO requires the member to choose a provider network and a Primary Care Provider (PCP) within the chosen network. An approved referral from his/her PCP must be in place for a member to see a specialist. If a referral is not in place prior to receiving non-emergent care, the HMO may not cover incurred services.
- Referral: An insurance pre-approval required from the patient’s PCP BEFORE seeing a specialist.
- Out-of-Pocket Maximum: The most money you will pay during your coverage period, includes deductibles, co-payments, co-insurance and balance-billed charges, but is in addition to your regular premiums.
- Point of Service Program (POS): A POS has the same requirements as an HMO. However, members are given the additional option of self-referring outside of their PCP network. Members who choose to self-refer will incur a higher out of pocket cost.
- Preferred Provider Organization (PPO): A PPO offers a network of providers. Members have the freedom to access a number of providers but are given financial incentives (i.e., lower out-of-pocket costs) to use the preferred provider network.
- Prior-Authorization: A request for payment authorization submitted in advance by a health care provider to the insurance plan for their approval to admit a patient, perform a procedure or provide a service. Pre-authorization / prior-authorization requirements are specific to each insurance plan. The insurance plan will determine medical necessity, appropriateness of services and level of care based upon their own guidelines.
- Self-refer: An insurance member’s ability to obtain specialty care services without written referral from member’s primary care provider and approval from their insurance. These services, however, may be denied or paid at a lesser benefit.
- Medicare A: Medicare Part A provides payments for inpatient hospital services, excluding those of physicians and surgeons.
- Medicare B: Part B provides payments to physicians and surgeons, as well as for medically necessary outpatient hospital services (such as ER, laboratory, X-rays and diagnostic tests) and certain durable medical equipment and supplies. Part B is used for mental health.