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Below are some words and phrases you may hear in connection with
Medicare Advantage and a brief explanation of what they mean.
Accepting assignment:
In traditional Medicare, this means that the doctor agrees to
accept the Medicare approved amount as payment in full and
not to bill the beneficiary anything over and above the
co-pay (and deductible).
Balance Billing:
The amount a provider can bill a beneficiary over and above what
Medicare pays. Generally this amount is limited to 115%
of what Medicare approves. In Medicare managed care
plans, there should not be any balance billing. However,
in traditional Medicare and private fee-for-service plans,
there may be balance billing unless a physician "accepts
assignment".
Beneficiary:
The person who is receiving Medicare benefits and services.
Capitated payment:
A system of payment to insurance companies where the company is
paid a set amount of money each year to take care of a
beneficiary. This involves a risk by the insurance
company because there is no additional payment to the company
if the services provided to that beneficiary cost more than
the payment amount. On the other hand, if the services
cost less, the company makes a profit. For Medicare
Advantage plans, some of the savings, if there are any, must be
passed on to beneficiaries in the form of additional services.
CMS:
The federal Centers for Medicare and Medicaid Services is
responsible for regulating and administering Medicare programs,
managed care organizations like HMOs, Medicare Advantage and
Medicare Part D plans.
Coinsurance (co-pay):
The amount the beneficiary pays toward the cost of a particular
service. This can be expressed either as a percentage
of the approved cost (20%) or as a set fee ($10 per visit).
The coinsurance can vary based upon the type of insurance plan
or even for different services within a plan itself. This
term is often used interchangeably with the term "co-pay".
However, a co-pay is generally limited to a set fee per service.
Copayment (coinsurance):
The amount a beneficiary pays each time a service is received.
Coordinated care plans:
This term is used to refer to a variety of managed care plans
within the Medicare Advantage program including: Health Maintenance
Organizations (HMOs); Preferred Provider Organizations (PPOs);
and Provider-Sponsored Organizations (PSOs). This phrase
describes plans where a beneficiary receives services from a
fixed group of providers. A coordinated care plan
generally includes most health care services needed by a
beneficiary. Coordinated care plans may even include
those services that are not covered by Medicare.
Deductible:
The amount a beneficiary pays out-of-pocket before insurance
benefits are paid.
Disenrollment:
Cancellation of a beneficiary's enrollment in a health plan.
Fee-for-Service:
The traditional method of paying providers for health care
expenses on a service-by-service basis after services are
performed. The method used in traditional Medicare is an
"approved amount" based on usual, customary and reasonable
charges or a set fee based upon a "fee schedule". A
similar process may be used by the private fee-for-service
plans in Medicare Advantage.
Gatekeeper:
A care provider who monitors a patient's care and decides
whether or not tests, specialists, hospitalization, or
other treatment is needed. The gatekeeper also makes
referrals if necessary. Where the gatekeeper is a
physician, (s)he can also be called the "primary care physician".
Grievance:
Process where a Medicare Advantage enrollee can contest decisions made
by the insurer that are not related to health care and treatment
or payment.
HCFA:
This acronym (for the federal Health Care Financing
Administration) has been changed. See "CMS".
Health Maintenance Organization (HMO):
A type of managed care plan where a
beneficiary's "primary care physician" coordinates and controls
access to care. The beneficiary must receive medical
services from an approved network of doctors, hospitals, skilled
nursing facilities, and other providers included in the plan.
Independent Practice Association (IPA):
A type of HMO that contracts with physicians who are in private
practice (instead of groups) to provide services to patients
in the physician's private office.
Lock-In:
This is a provision of certain managed care plans. A
lock-in requires a beneficiary to receive all covered services
through the HMO plan using its own network of providers.
Medical Savings Account (MSA):
Under this type of plan, beneficiaries would combine tax-free
contributions from CMS to an interest-bearing savings account
with a high deductible health policy. The policy would have to
pay for at least all Medicare-covered items and services, after
the beneficiary meets the annual deductible of up to $6,000.
The money in the account could be used for medical
expenses, even if those expenses would not have been covered by
Medicare.
Medically Necessary:
This phrase is used to describe medical treatment given in
accordance with generally accepted standards of medical practice.
Opt-out:
This is an option available in some HMOs, (also known as a
point-of-service program) which allow the beneficiary to "opt"
to receive services from a provider outside of the HMO's plan,
for which the beneficiary pays higher out of pocket costs.
Point-of-Service Program (POS):
An option offered by an HMO in which beneficiaries can choose
to go outside of the plan of network providers to receive
medical care. Beneficiaries, however, will most likely
have to pay a higher amount for the service.
Precertification (see prior authorization):
Approval required before either admission to a hospital or for
a surgical procedure.
Pre-existing condition limitation:
The time after initial enrollment in an insurance plan where
policy holders are not covered for conditions that existed before
enrollment in the plan. Medicare Advantage plans cannot
have a pre-existing condition limitation.
Preferred Provider Organization (PPO):
A health care delivery system in which an insurer or employer
negotiates price discounts with certain providers.
Primary Care Physician:
A doctor or other health care professional who provides regular
basic care to the enrollee of a managed care plan. The
primary care physician is usually a family or general practitioner,
pediatrician, internist, or obstetrician/gynecologist. The
primary care physician is also responsible for making referrals
to specialists, ordering tests, or seeking authorization for
hospitalization or surgery.
Prior Authorization:
Approval required in advance of providing particular services to
a beneficiary.
Private fee-for-service plans:
These new Medicare Advantage plans will reimburse providers on
a fee-for-service basis similar to traditional Medicare.
The plan's providers may require beneficiaries to pay
per-service costs in addition to co-insurance and deductibles,
up to 115% of the plan's payment schedule. For example:
if a doctor charges $120 for a service and the private
fee-for-service plan approves $100, the doctor could then charge
the beneficiary another $15 over what the plan approved
(for a total payment of $115), but not the $20 that would add up
to the doctor's full charge. The plan's rates may be
different from the Medicare fee schedule.
Provider:
Individual (doctor, nurse, therapist, etc.) or institution
(hospital, nursing facility, etc.) providing medical care.
Provider Sponsored Organization (PSO):
A PSO is defined as a public or private entity established by
health care providers, which provide a substantial proportion
of health care items and services directly through affiliated
providers who share, directly or indirectly, substantial
financial risk.
Reconsideration:
The process of requesting a review of the provider's determination
(or what is called Medicare's determination in traditional
Medicare) that a service is not covered, that a beneficiary
cannot receive a service, or that a service is no longer
medically necessary.
Referral:
The process in most HMOs where the patient's primary care
physician authorizes special tests, treatment from a specialist,
or other non-routine services.
Religious fraternal benefit society plans:
These are health plans which may restrict enrollment to members
of the church, convention, or group with which the society is
associated.
Risk Contract:
This type of managed care plan receives a set fee from the
sponsoring group (such as an insurer or employer) in exchange
for providing all covered care. Once enrolled, the
beneficiary is "locked-in" to using the plan's network of
providers in order to have the plan cover the costs of care.
Service Area:
The geographical area defined by a managed care plan within which
it will provide health care services to its beneficiaries.
Utilization review:
The process in which a team of doctors and other professionals
regularly review treatment given to a patient in order to determine whether the
treatment is appropriate and necessary. For example, a
utilization review committee could review a request for
admission to a hospital and determine that the admission is
either necessary or not and therefore, it is either covered
or not covered by the insurance or Medicare. Medicare
utilization review committee decisions can be appealed by a
beneficiary.
Waiting period:
The time period after initial enrollment in an insurance plan in
which policy holders are not covered at all or they are not
covered for conditions that existed before enrollment in the
plan (also known as a "pre-existing condition limitation").
Medicare Advantage plans cannot have a waiting period after
they become effective and they cannot have a pre-existing
condition limitation.
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