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Understanding Health Insurance – Chapter 2

Health Insurance
A contract between a policyholder and a third-party payer or government program to reimburse the policyholder for all or a portion of the cost of medically necessary treatment or preventive care provided by healthcare professionals.
Group Health Insurance
Traditional healthcare coverage subsidized by employers and other organizations (e.g., labor unions, rural and consumer health cooperatives) whereby part or all of premium costs are paid for and/or discounted group rates are offered to eligible individuals.
Federal Employees’ Compensation Act (FECA)
Replaced the 1908 workers’ compensation legislation, and civilian employees of the federal government were provided medical care, survivor’s benefits, and compensation for lost wages. Administered by the Office of Worker’s Compensation Programs (OWCP).
Hill-Burton Act
This provided federal grants for modernizing hospitals that had become obsolete because of a lack of capital investment during the Great Depression and WWII (1929-1945). In return for federal funds, facilities were required to provide services free or at reduced rates to patients unalble to pay for care.
Third-party Administrators
An indirect result of the Taft-Hartly Act of 1947. Administers healthcare plans and process claims, thus serving as a system of checks and balances for labor and management.
World Health Organization (WHO)
Developed the International Classification of Diseases (ICD), a classification system used to collect data for statistical purposes.
International Classification of Diseases (ICD)
A classification system used to collect data for statistical purposes.
Major Medical Insurance
Provides coverage for catastrophic or prolonged illnesses and injuries. Most of these program incorporate large deductibles and lifetime maximum amounts.
The amount for which the patient is financially responsible before an insurance policy provides payment.
Lifetime Maximum Amount
The maximum benefits payable to a health care participant.
(Title XVIII of the SSA of 1965) provides healthcare services to Americans over the age of 65. (Originally administered by the Social Security Administration).
(Title XIX of the SSA of 1965) is a cost-sharing program between the federal and state governments to provide healthcare services to low-income Americans. (Originally administered by the Social and Rehabilitation Service [SRS]).
Civilian Health and Medical Program -Uniformed Services (CHAMPUS)
Designed as a benefit for dependents of personnel serving in the armed forces and uniformed branches of the Public Health Service and the National Oceanic and Atmospheric Administration. This program is now called TRICARE.
Self-insured (or self-funded) employer-sponsored group health plans
Allows large employers to assume the financial risk for providing healthcare benefits to employees. The employer does not pay a fixed premium to a health insurance payer, but establishes a trust fund (of employer and employee contributions) out of which claims are paid.
Occupational Safety and Health Administration Act of 1970 (OSHA)
Designed to protect all employees against injuries from occupational hazards in the workplace.
Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA)
Provides healthcare benefits for dependents of veterans rated as 100 percent permanently and totally disabled as a result of service-connected conditions, veterans who died as a result of service-connected conditions, and veterans who dies on duty with less and 30 days of active service.
Health Maintenance Organization Assistance Act of 1973
Authorized federal grants and loans to private organizations that wished to develop health maintenance organizations (HMOs).
Health Maintenance Organizations (HMOs)
Responsible for providing healthcare services to subscribers in a given geographic area for a fixed free.
Employee Retirement Income Security Act of 1974 (ERISA)
Mandated reporting and disclosure requirements for group life and health plans (including managed care plans), permitting large employers to self-insure employee healthcare benefits, and exempted large employers from taxes on health insurance premiums.
Copayment (Copay)
A provision in an insurance policy that requires the policyholder or patient to pay a specified dollar amount to a healthcare provider for each visit or medical service received.
The percentage of costs a patient shares with the heath plan. (Example: Plan pays 80%, patient pays 20%)
Omnibus Budget Reconciliation Act of 1981 (OBRA)
Federal legislation that expanded the Medicare and Medicaid programs.
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
Created Medicare risk programs, which allowed federally qualified HMOs and competitive medical plans that met specified Medicare requirements to provide Medicare-covered services under a risk contract.
Prospective Payment System (PPS)
Issues a predetermined payment for services.
Per Diem Basis
The method by which issued payments are calculated based on daily rates.
Diagnosis-related Groups (DRGs)
PPS implemented in 1983 that reimburses hospitals for inpatient stays.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
Allows employees to continue healthcare coverage beyond the benefit termination date.
CHAMPUS Reform Initiative (CRI)
Resulted in new program..TRICARE..which includes options such as TRICARE Prime, TRICARE Extra, and TRICARE Standard.
Clinical Laboratory Improvement Act (CLIA)
Established quality standards for all laboratory testing to ensure the accuracy, reliability, and timeliness of patient test results regardless of where the test was performed.
Evaluation and Management (E/M)
Describes patient encounters with providers for the purpose of evaluation and management of general health status.
Resource-Based Relative Value Scale (RBRVS)
A payment system that reimburses physicians’ practice expenses based on relative values for three components of each physician’s service: physician work, practice expense, and malpractice insurance expense.
Usual and reasonable payments
Based on fees typically charged by providers by specialty within a particular region of the country.
Fee schedule
A list of predetermined payments for healthcare services provided to paitents (e.g., a fee is assigned to each CPT code)
National Correct Coding Initiative (NCCI)
Created to promote national correct coding methodologies and to eliminate improper coding.
Health Insurance Portability and Accountability Act of 1996 (HIPPAA)
Mandates regulations that govern privacy, security, and electronic transactions standards for healthcare information. The primary intent for HIPPAA is to provide better access to health insurance, limit fraud and abuse, and reducte administrative costs.
Balanced Budget Act of 1997 (BBA)
Addresses healthcare fraud and abuse issues.
State Children’s Health Insurance Program (SCHIP)
Established to provide health assistance to uninsured, low-income children, either through separate programs or through expanded eligibility under state Medicaid programs.
Skilled Nursing Facility Prospective Payment System (SNF PPS)
Implemented (as a result of the BBA of 1997) to cover all costs (routine, ancillary, and capital) related to services furnished to Medicare Part A beneficiaries.
Resource Utilization Groups (RUGs)
A resident classification system based on data collected from resident assessments (using data elements called the Minimum Data Set, or MDS) and relative weights developed from staff time data.
Home Health Prospective Payment System (HH PPS)
Implemented October 1, 2000. Reimburses home health agencies at a predetermined rate for healthcare services provided to patients.
Outcomes and Assessment Information Set (OASIS)
A group of data elements that represent core items of a comrehensive assessment for an adult home care patient and form the basis for measuring patient outcomes for purposes of outcome-based quality improvement.
Financial Services Modernization Act (or Gramm-Leach-Bliley Act)
Prohibits sharing of medical information among health insurers and other financial institution for use in making credit decisions.
Outpatient Prospective Payment System (OPPS)
Implemented for billing of hospital-based Medicare outpatient claims. Uses Ambulatory Payment Classifications to calculate reimbursements.
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA)
Requires implementation of a $400 billion prescription drug benefit, improved Medicare Advantage benefits, faster Medicare appeals decisions, and more.
Consumer-driven health plans
Introduced as a way to encourage individuals to locate the best healthcare at the lowest possible price with the goal of holding down healthcare costs.Organized into three categories.
1) Employer-paid high-deductible insurance plans with special health spending accounts to be used by employees to cover diductibles and other medical costs when covered amounts are exceeded.
2) Defined contribution plans, which provide a selection of insurance options; employees pay the difference between what the employer pays and the actual cost of the plan they select.
3) After-tax savings accounts, which combine a traditional health insurance paln for major medical expenses with a savings account that the employee uses to pay for routine care.
Inpatient Rehabilitation Facilities Prospective Payment System (IRF PPS)
Implemented as a result of the BBA, utilizes information from a patient assessment instrument to classify patients into distinct groups based on clinical characteristics and expected resource needs.Separate payments are calculated for each group, including the application of case- and facility-level adjustments.
Quality Improvement Organizations (QIOs)
Performs utilization and quality control review of health care furnished, or to be furnished, to Medicare beneficiaries.
Medicare Prescription Drug, Improvement, and Modernization Act (MMA)
Adds new prescription drug and preventive benefits and provides extra assistance to people with low incomes.
Inpatient Psychiatric Facility Prospective Payment System (IPF PPS)
Includes a patient classification system that reflects differences in patient resource use and costs; the new system replaces the cost-based system with a per diem IPF PPS. (Impacted approximately 1,800 inpatient psychiatric facilities, including freestanding psychiatric hospitals and certified psychiatric units in general acute care hospitals)
Automobile Insurance Policy
A contract between an individual and an insurance company whereby the individual pays a premium and, in exchange, the insurance company agrees to pay for specific car-related financial losses during the term of the policy.
Base period
Ususally covers 12 months and is divided into 4 consecutive quarters.
Disability Insurance
Reimbursement for income lost as a result of a temporary or permanent illness or injury.
Liability Insurance
a policy that covers losses to a third party caused by the insured, by an object owned by the insured, or on the premises owned by the insured.
Medical care
The identification of disease and the provision of care and treatment such as that provided by members of the health care team to persons who are sick, injured, or concerned about their health status.
The contractual right of a third-party payer to recover health care expenses from a liable party
Individual Health Insurance
Private health insurance policy purchased by individuals or families who do not have access to group health insurance coverage. Applicants can be denied coverage, they can also be required to pay higher premiums due to age, gender, and/or pre-existing conditions.
Public Health Insurance
Federal and state government health programs (e.g., Medicare, Medicaid, SCHIP, TRICARE) available to eligible individuals.
Single-payer Plan
Centralized healthcare system adopted by some Western nations (e.g., Canada, Great Britain) and funded by taxed. The government pays for each resident’s health care, which is considered a basic social service.
Socialized medicine
A type of single-payer system in which the government owns and operates healthcare facilities and providers (e.g., physicians) receive salaries. The VA healthcare program is a form of socialized medicine.
Universal health insurance
The goal of providing every individual with access to health coverage, regardless of the system implemented to achieve that goal.
Health Care Financing Administration (HCFA)
To combine healthcare financing and quality assurance programs into a single agency the HCFA was formed within the Department of Health and Human Services (DHHS). The Medicare and Medicaid programs were also transferred to the newly created agency. (HCFA is now called the Centers for Medicare and Medicaid Services or CMS.)
Medicare Contracting Reform initiative (MCR)
Established to integrate the administration of Medicare Parts A and B fee-for-services benefits with new entities called Medicare administrative contractors (MACs)
American Recovery and Reinvestment Act of 2009 (ARRA)
Authorized an expenditure of $1.5 illion for grants for construction, renovation, and equipment, and for the acquisition of health information technology systems.
Health Information Technology for Economic and Clinical Health Act (HITECH)
Included in the ARRA, this act ammended the Public Health Services Act to establish an Office of National Coordinator for Health Information Technology within HHS to improve healthcare quality, safety, and efficiency.
Patient record
(Medical record) documents healthcare services provided to a patient, and healthcare providers are responsible for documenting and authenticating legible, complete, and timely entries, according to federal regulations and accreditation standards. Serves as a comunication tool for physicians and other patient care professionals, and assists in planning individual patient care and documenting a patients illness and treatment.
Continuity of Care
Involves documenting patient care services so that others who treat the patient have a source of information to assist with additional care and treatment.
Problem-oriented Record (POR)
A systematic method of documentation that serves as the table of contents for the patient record. It consists of four components: Database, Problem List, Initial Plan, & Progress Notes (documented using the SOAP format). It includes the chief complaint, present conditions and diagnosis, social data; past, personal, medical, and social history, review of systems, physical examination, & baseline laboratory data.
Electronic Health Record (EHR)
A global concept that includes the collection of patient information documented by a number of providers at different facilities regarding one patient.
Record Linkage
Allows patient information to be created at differnet locations accourding to a unique patient identifier or identificaton number.
Electronic Medical Record (EMR)
Has a more narrow focus (as compared with the EHR). The patient record created for a single medical practice and is generated using total practice management software (TPMS).
Total Practice Management Software (TPMS)
Used to generate the EMR, automating the following medical practice funcitons; registering patients scheduling appointments, generating insurance claims and patient statements, processing payments from patients and third-party payers, and producing administrative and clinical reports.
Personal Health Record (PHR)
A web-based application that allows individuals to maintain and manage their health information (and that of others for whom they are authorized, such as family members) in a private, secure, and confidential environment.

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