Insurance & Billing

INSURANCE TERMS AND DEFINITIONS

It is important to understand the following definitions that insurance companies use when you are choosing your next insurance carrier. If you need help in evaluating the different plans you are offered, contact the Human Resources representative at your place of employment. If you acquired your insurance plan directly from the insurance company, please contact them for assistance.

PPO – Preferred Provider Organization

PPO means that you can see the physician of your choice. Physicians may be “in-network” with the PPO or “out-of-network”. Physicians who join a network offer their services to the insurance company at a discounted rate. If your physician is not contracted (out-of-network) with the insurance company, your PPO should still cover some of the exams. The exact coverage is different for each policy and should be listed in your insurance booklet that was provided with your card. Additionally, PPOs do not require a primary care physician or any referrals.

POS – Point of Service

The patient may use the plan like an HMO or use it like a PPO and be able to choose their health care providers. With the HMO option, the patient is responsible for a co-payment. With the PPO option, the patient may have a deductible and coverage similar to a PPO.

HMO – Health Maintenance Organization

Any organization that delivers health maintenance, usually through a specified medical group. A Primary Care Provider (PCP) manages all specialist referrals with the exception of OB/GYN services. You are required to stay within the same medical group for all of your care.

EPO – Exclusive Provider Organization

A delivery system similar to an HMO consists of a contracted panel of providers. The difference is that the patient may elect to see a specialist without a referral from the primary care physician. If the patient does not see an in-network physician, she does not have any coverage for any services.

Usual and Customary Charges

A term that insurance companies use to cap insurance company payments. If the physician is contracted, the amount is what the insurance company will pay for a procedure or service. If the physician is out-of-network, the insurance company will pay a percentage of the “usual and customary” charge. Because a contract does not exist between the physician and the insurance company, the patient is responsible for the difference between the usual and customary, as well as their percentage charge.

Co-Insurance

A requirement under a health insurance policy where the patient is responsible for a portion or percentage of the cost of covered services. Example: The insurance company may be required to pay 80% leaving the subscriber to pay 20% as co-insurance. Usually, the health insurance policy provides that the insurer reimburses a specific percentage of the covered services after the deductible.

Deductible

A fixed amount that the patient contributes in payment for medical services during a specified period. Example: The insurer’s policy may state that the patient has a $200.00 deductible per year. The first $200.00 in services billed to the insurance company would be denied reimbursement, as the deductible is the patient’s responsibility.

Co-payment

A provision under a health insurance policy where the patient assumes a fixed amount of the costs of covered services such as a $10.00 co-payment per office visit.

Exclusions

Specific conditions not covered or services not paid for under a health insurance contract. Typical exclusions may be cosmetic or elective surgery, infertility services, or preventative care.

Medical Savings Account

Available to a self-employed person or an employee in a small business with less than 50 employees – this type of account is paired with a specific high deductible, comprehensive major medical insurance policy. It allows the insured to set aside pre-tax funds to use to meet the deductible and co-insurance liabilities. There are specific Internal Revenue Service guidelines for setting up and using this type of account. Your Human Resource Department should be able to discuss the specifics of this type of account with you.

Flexible Spending Account

This type of account is set up through your employer and allows you to designate pre-tax deductions to reimburse you for qualifying medical expenses that your insurance company does not pay. There are specific Internal Revenue Service guidelines for setting up and using this type of account. Your Human Resources Department should be able to discuss this type of account with you.

Dual Insurance

It exists when you are covered by both your company and your partner’s company or if you are covered through your employment and have purchased individual coverage in addition. Generally speaking, the insurance through your employer is primary and the insurance through your partner’s employer is secondary. In order for your secondary insurance to process your claims for payment, your primary insurance has to have been billed and processed your claim first.