HMO, PPO, POS and IPA. It all sounds like alphabet soup, not health care. Here’s a quick guide to help you understand your options and get the most out of your managed care plan.
An employee benefit plan that gives workers a set amount of funds that they can choose to spend on a number of different benefit options including health insurance or retirement savings.
A fixed prepayment to a provider to deliver medical services to a particular group of patients. The payment remains the same regardless of how many services each patient uses, so it is possible for the provider to lose money, break-even or profit.
A widely accepted set of medical treatments for a particular condition (for example, asthma) or group of patients (for example, children) endorsed by a national organization, like the Agency for Health Care Policy Research, or the professional division of a society like the American Heart Association.
Medical services that are separated out and contracted for independently from the other arrangements and payments made to provide care.
The coordination of comprehensive services tailored to a patient’s needs, which are designed to improve health outcomes and/or control costs.
Relatively small fixed payments that a patient pays for every doctor visit or prescription.
Medically necessary treatments or other services for which your plan pays at least part of the charge.
The amount of covered expenses a patient must pay before costs (or percentages of costs) are covered by the health plan or insurance company.
Programs for patients with chronic illness, such as asthma or diabetes, that attempt to improve patient’s adherence to prescribed medications and a healthy lifestyle and that emphasize coordinated, comprehensive care along the continuum of disease.
Diagnostic related groups (DRGs)
A system for classifying hospital stays according to the primary diagnosis being treated for the purposes of payment.
The ability to see a doctor or receive a medical service without a referral from your primary care physician.
The sudden onset of a medical condition that requires immediate care.
Medical conditions or services your insurance company will not pay for.
An account that allows workers to set aside pretax dollars to pay for medical benefits, childcare, and other services.
A list of medications that a managed care company encourages or requires physicians to prescribe in order to reduce costs.
A contractual agreement between a managed care organization and a provider that restricts what the provider can say about the managed care company.
A primary care provider who coordinates care and controls costs and whose approval is required for referrals to specialists and other services.
Group model HMO
An HMO that contracts with one independent group practice to provide medical services.
Health Maintenance Organization (HMO)
A health plan which provides comprehensive medical services to its members for a fixed, prepaid premium. Members are required to use participating providers and are enrolled for a fixed period of time.
Home health care
Skilled nurses and trained aides who provide nursing services and related care to someone at home, usually following a hospitalization.
Care given to terminally ill patients, typically restricted to those with less than 6 months to live.
A plan that pays for medical services, usually without attempting to monitor the quality of care or the amount of utilization.
Independent Practice Association (IPA)
A group of private physicians who join together in an association to contract with a managed care organization.
A “cap” on the amount of services that are provided. It may be a dollar amount, or the number of days that a service or treatment is covered.
A term that describes many types of health insurance, including HMOs and PPOs. All of them actively try to control the cost of care by managing the type of medical services their members receive. Many of them also try to improve the quality of care.
The federal government’s health insurance program for people with low incomes.
The federal government’s health insurance program for the elderly and people with certain disabilities.
National Committee on Quality Assurance (NCQA)
An independent organization that accredits managed care plans and measures the quality of care offered by managed care plans by assessing factors such as members’ rights, preventive care, and provider adherence to care guidelines.
A nurse specialist who provides primary and/or specialty care to patients. In some states they do not require the direct supervision of a doctor.
Out of pocket costs
The amount that an individual pays for health care including deductibles, co-pays, payments for uncovered services, and/or health insurance premiums not paid by their employers.
A trained health professional who provides primary and/or specialty care to patients under the supervision of a physician.
Point of Service (POS) plan
A type of insurance in which a member receives the maximum benefits when they see in-plan providers, but can also see an out-of-plan provider and still receive partial coverage of the costs.
The process of seeking approval through which a provider seeks approval from a managed care company before a patient is admitted to the hospital or receives other types of specialty services.
A medical condition (physical or mental) that began before a member was covered under a particular plan.
Preferred Provider Organization (PPO)
A type of insurance in which the managed care company pays a higher percentage of the costs when a preferred (in-plan) provider is used.
Primary care provider (PCP)
The health professional who provides your basic, routine, and urgent health care services. In most plans this will be a physician, but in others it may be a nurse practitioner or physician assistant. They also control your access to the rest of the health care system through the referral system.
A process of measuring and promoting the use of the best known practices and getting the best possible results.
The process through which a primary care provider authorizes a patient to see a specialist to receive additional care.
The responsibility for profiting or losing money based on the cost of health care utilization. Traditionally, health insurance companies have carried the risk. Under capitation, health care providers bear risk.
Coverage, usually limited to large employers, that pays for medical claims as they arise out of their own funds, rather than contracting with an insurance company for coverage.
A type of managed care where the providers are employees of the plan. Frequently, all of the care is delivered under one roof in a medical center.
Traditional “fee for service” insurance
A method of payment in which doctors bill insurance companies and receive reimbursement with no limits or oversight regarding treatment decisions or referrals. This is also known as indemnity insurance.
A managed care department whose function is to limit the amount and the costs of care.
A percentage of a fee that is held back from providers by managed care organizations. It is only given to providers if the amount of care they provide (or that the entire plan provides) is under a budgeted amount for each quarter or the entire year.