Healthcare Glossary
Here's are some definitions....to save you from Googling your way into a blackhole.
Healthcare Glossary
Extra important definitions are highlighted in green like this…
This is a pretty long list, so I’d recommend reviewing just the important definitions and referring back to this article when you need to!
Payor: Insurers, governments, and individuals pay for healthcare services. These are considered ‘payors’.
Outpatient/ambulatory care: Hospital or medical care that patients receive without being admitted for more than 24 hours
In-patient care: When patients are admitted into hospitals beyond 24 hours and receive complex procedures, these are considered ‘in-patient’ services.
EMR: A digital version of a paper chart that contains all of a patient’s medical history from one practice (Source)
Durable Medical Equipment (DME): Equipment and supplies ordered by a health care provider for everyday or extended use. Typically DME may be considered a separate category under a health insurance plan. Coverage for DME may include: oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics. (Source)
Pharmacy Benefit Manager: Health plans have contracts with third-party organizations called Pharmacy Benefit Managers to handle the claims processing with prescription drug programs. This is pretty complicated, so here’s a good video if you’re looking for a detailed explanation.
Health insurance marketplaces (HIM): Organizations operated by state governments. People can purchase health insurance online through these organizations.
Coverage: refers to medical services that are will be paid for (to some extent) by an insurer
Claim: A request for payment that you or your healthcare provider submits to your health insurer after you receive covered items or services (Source)
Copay: When an insured individual receives medical care, part of it is paid for by their insurer and a small fixed part of it is typically paid out-of-pocket by the individual. The part that the individual pays is referred to as a copay.
Deductible: The amount an individual pays out-of-pocket for medical services before their insurance plan starts to pay. For example, you pay the first $1,000 of medical expenses yourself, and after you hit $1000 you usually only have to pay copays or coinsurance for medical services (your insurer takes care of the rest)
Co-insurance: After you reach the deductible, you may pay a percentage of every medical service you receive, while your insurer pays the rest. For instance, you may pay 10% of the cost for a visit and your insurer pays the other 90%. 10% is your co-insurance.
Fee-for-service (FFS): A payment model where each medical services is paid for separately. A percentage of the fee is covered by an insurer and the rest is covered by the insured individual. This incentivizes physicians and hospitals to provide more treatments (i.e. potentially increasing quantity of care, rather than quality of care). Fee-for-service insurance plans existed before the rise of HMOs, PPOs, and other network-type plans. The insurance company pays a set percentage of the fees for a medical service, and the insured individual pays the rest.
Capitated payments: In a capitated payment model, a health care organization is paid a set amount for each patient they see, regardless of the types of services they receive. This is different from FFS plans, which pay organizations according to what procedures are used to treat a patient. Read more here.
Managed care plans: are offered by organization who have contracts with healthcare providers and medical facilities and attempt to move towards capitated payment models (hospitals systems or doctor networks are paid per patient they see) instead of FFS (hospital systems or doctor networks are paid for each medical service they perform). Theoretically, managed care plans should reduce costs since capitated payments incentivize doctors to provide more effective care at lower cost (instead of fee for service, where they’re incentivized to provide more services). Managed care organizations attempt to economically incentivize physicians and patients to choose less costly types of care. They also create networks of contracted doctors/providers. (Read more here.)
Value-based care: A payment model where providers are paid for resolving a patient diagnosis or for the health outcome of the patient they are treating. This model is meant to incentivize providers to prioritize quality of care over providing a high volume of services.
HDHP: High deductible health plans are insurance programs which usually have lower premiums, but require you to pay a higher sum out-of-pocket for medical care. The expenses can come out of an HRA or HSA.
PPO: Preferred Provider Organizations provide medical care plans using a network of doctors and facilities who agree to treat patients on that plan at reduced rates. If you’re on a PPO plan, you can see any physician in the PPO’s network or outside the network —seeing doctors outside of the network usually costs more out-of-pocket.
HMO: A health maintenance organization provides health insurance coverage for a monthly or annual fee. The HMO has contracts with doctors and facilities and covers care only provided by these providers. If you’re on an HMO plan, you can only see doctors that are within its contracted network.
HSA: A Health Savings Account is a tax-advantaged account typically set up by an individual and their employer (you or your employer might contribute to the HSA). This is for individuals who are enrolled in HDHPs. For example, you can allocate a portion of your paycheck to go into this HSA account instead of your usual bank account. The money in your HSA is protected from federal income tax, and you can use this money for any medical expenses that your high-deductible plan doesn’t cover. Individuals are in control of their own HSAs.
HRA: Health Reimbursement Accounts are similar to HSAs, but instead of being controlled by an individual, the account is controlled by their employer. It’s usually combined with an insurance plan offered by your employer. An employer can allocate a certain amount of funds into your HRA for you to use on medical expenses (this money is not from your paycheck, it’s from the employer). These funds are taxed advantaged like an HSA.
FSA: Flexible Spending Accounts are offered by some employers to their employees. The employer will deduct an amount that you request from every paycheck you receive and place the funds into your FSA. This money can be used on medical expenses, and you don’t need to pay income taxes on it.
Self-insured employers: Self insured employers pay for all of your medical services out-of-pocket, instead of paying an insurance company a flat fee per head to take care of all medical benefits and payments. A self-insured employer might use another organization (third-party administrator (TPA)) to manage all the payments, and to figure out how to provide you medical services. (Most employer offers you an insurance plan through an insurance company, the insurer takes on the risk of you falling ill and paying for the services you need.)
Formulary: Formulary: Sometimes referred to as a “drug list,” it is a list of drugs your insurance plan covers and may include how much you pay for each drug. If the plan categorizes drugs into different groups with different copays, also known as tiers, then the formulary may list drugs by these tiers. Formularies may include both generic drugs and brand-name drugs. (Source)
Explanation of Benefits (EOB): A form sent by an insurance company to an insured that includes a such items as a summary of the claims processed for an insured since their last claim, a summary of what the insurer paid for the claim and what the insured’s responsibility may be, and a summary of the person’s year-to-date costs in the plan. (Source)
Generic: A prescription drug which is the generic equivalent of a drug listed on your health plan's formulary (Source)
Lifetime limit: A cap on the total lifetime benefits you may get from your insurance company for certain conditions. (Source)
Pre-authorization: The process by which members or their primary care physicians (PCP) notify the health plan in advance of treatment plans, such as a hospital admission or a complex diagnostic test. (Source)
The FDA: The Food and Drug Administration oversees the safety and viability of medical devices, drugs, and procedures. Drug manufacturers, researchers, and medical device manufacturers have to get their products approved by the FDA before it enters market. Whether insurers and the government are willing to pay for the technology is determined after it’s approved. The drug must be deemed necessary by another federal organization called the Center for Medicaid and Medicare services. We’ll go over that process in detail in a future article.
The CMS: The Centers for Medicare and Medicaid Services is a federal agency which oversees the Medicare, Medicaid, CHIP public insurance programs. The organization works with state governments to make these public benefits available, establishes and oversees many medical administrative requirements (e.g. the type of medical records hospitals use, IT systems, drug usage data, prices/costs of care).
Reimbursement: Every time a doctor, hospital network, or clinic provides a service, medicine, or medical device, they are paid a fixed amount by an insurer (e.g. Cigna) or a public healthcare plan (e.g. Medicare). These payments are called reimbursements. How much these reimbursements should be is largely determined by a government agency called the Center for Medicaid and Medicare services (and other insurance–related organizations). These payments are decided after a product or procedure is approved by the FDA.
Physician Fee Schedules: How much doctors should be paid for services and procedures is negotiated by and determined by insurers and government agencies who pay for care (the payors).
HIPAA: The Health Insurance Portability and Accountability Act of 1996 is a federal law that required the creation of national standards to protect sensitive patient health information from being disclosed without the patient's consent or knowledge. (Source)
Medicare: Is a federal health insurance program, which covers medical costs, for people 65 (and certain individuals with disabilities or End-Stage-Renal Disease patients). There are several types of Medicare plans offered by insurers, in partnership with the government. Here’s a helpful summary of Parts A,B,C, and D. Find an explanation of the types of Medicare plans here.
Medicaid: Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government. (Source)
CHIP: The Children’s Health Insurance Program (CHIP) provides health coverage to eligible children, through both Medicaid and separate CHIP programs. CHIP is administered by states, according to federal requirements. The program is funded jointly by states and the federal government. (Source)
ACA (Obamacare): At a high level, the policy was enacted to make affordable health insurance available to more people by providing consumers subsidies (called premium tax credits, which are returned to low/moderate income individuals through their tax refund). The policy also expands the eligible population for Medicaid to include a wider population of low–income individuals, and requires states to establish insurance marketplaces where people can purchase insurance. The ACA also established new laws to prevent the insurance industry from discriminating against certain patient populations. The policy also mandates that all Americans sign up for health insurance and levies tax penalties on those who do not. The policy has a number of other goals, which can be found here.
HRRP: The Hospital Readmissions Reduction Program (HRRP) is a Medicare value-based purchasing program that reduces payments to hospitals with excess readmissions. The program supports the national goal of improving healthcare for Americans by linking payment to the quality of hospital care. (Source)
Here’s a more comprehensive glossary, if you couldn’t find what you’re looking for here.