Health policy and advocacy starts with a grasp of the terms and acronyms used. Sometimes terms are used interchangeably or incorrectly which can create further confusion. The favored terms, definitions and connotations may change quickly in order to drive messaging in a health policy issue and attempt to alter the angle in which a health policy issue is considered and addressed. Make certain you understand the lexicon so you can become a better advocate.
Health insurance network – the hospitals, outpatient clinics, physicians and other health care providers that a patient’s health insurer or health insurance plan has contracted with to provide health care services.
In-Network – refers to a hospital, physicians, or other health care providers (ie. midlevels) that have a negotiated contract and fees; are included in a patient’s health insurance plan.
Out-of-Network – hospital, physicians, or other health care providers that are not included in a patient’s insurance plan’s network and therefore, do not have a negotiated contract and rates with the patient’s insurance plan.
Co-pay – the amount a patient pays for a certain type of healthcare service under their insurance plan (Ex. A primary care office visit costs the patient a $20 co-pay).
Co-insurance – a pre-determined percentage of a healthcare service that a patient pays, typically after the annual deductible is met.
Deductible – the fixed amount a patient pays toward the cost of healthcare bills and services before their health insurance coverage begins to pay fully for medical care
Ex. Imagine a patient has a $10,000 surgery and hospital stay. If the patient has not paid for any other medical expenses during the year prior to that and they have a $7000 deductible, they would have to pay the first $7000 out-of-pocket. Then, the patient’s insurance would kick in and cover a pre-determined percentage, the patient may still be responsible for part of the remaining medical bill via co-insurance.
Out-of-pocket (OOP) amount – the portion of health care expenses a patient has to cover on their own. This can include deductibles, co-pays, and co-insurance. Some health plans have an out-of-pocket maximum – (cap or limit) on the total amount of expenses a patient must pay per year. Once the OOP limit is met, a health insurer may then cover 100% of the health care costs incurred. However, whether co-pays, deductibles, co-insurance or out-of-network bills are included in a patient’s OOP maximum varies amongst health insurers and health insurance plans.
Premium – From Healthcare.gov:
“The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible, copayments, and coinsurance. If you have a Marketplace health plan, you may be able to lower your costs with a premium tax credit.”
High Deductible Health Plan – From Healthcare.gov:
“A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.
For 2019, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,750 for an individual or $13,500 for a family. (This limit doesn't apply to out-of-network services.)
For 2020, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,900 for an individual or $13,800 for a family. (This limit doesn't apply to out-of-network services.)”
Balance billing – the act of billing a patient for the remainder of charges for a medical service. It is the difference between the charge for a medical service and the allowed amount covered by a patient’s health insurance plan. The act of balance billing is NOT allowed if the patient is seeing a preferred provider.
Out-of-Network (OON) billing – can occur if a patient gets a bill for a medical service that was provided by a hospital, physician or other health care provider that is not part of their health insurance plans network. The health insurance plan may or may not cover part of medical services provided by an entity that is OON. The pay then can be billed directly for the health care services rendered.
Surprise billing – a general (and loose) term that is used to describe any bill a patient receives for medical services that they are not expecting. This could be the result of out-of-network services, patients’ not fully understanding their out-of-pocket responsibilities and deductibles, or a balance bill from a non-preferred medical service provider (i.e. the service may be partially covered by the patient’s health insurance but because the health care service provider does not have a specific contract with the patient’s insurance they can bill for the amount of charges not covered by the patient’s insurance).
This is typically used to describe bills that patients receive from emergency department visits or from use of air ambulances. However, surprise bills can occur for many reasons and from any specialty or medical service.
Private Equity – “Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity.”
In the surprise billing and other health policy issues “Private Equity” often just referred to as PE has developed a negative connotation. Some ‘experts’ will conflate PE held companies with ‘wall street investors’. By definition they are not the same as PE companies are just that, private, and NOT publicly traded. They are beholden to their investors.
Contract Management Group (CMG) – Medscape offers an excellent definition and provides further explanation of CMGs:
“Corporate groups are those that are managed by corporations as opposed to being run by the physicians in the group. A contract management group (CMG) holds contracts with individual hospitals with the promise to provide physician services, and it, in turn, employs physicians to fulfill those contracts. From a hospital perspective, because of the large network of contracts, billing services and physician employees, CMGs may be able to offer lower contract costs to smaller hospitals, which are also looking at the bottom line.”
Emergency physicians are typically used as examples when it comes to CMGs (think EmCare, TeamHealth, US Acute Care Solutions and others) but in reality, hospitals may use CMGs to staff many different specialties including radiology (or teleradiology), anesthesia, hospitalists and other specialists. Hospitals across the US may use these companies to lower overall costs, but hospitals may also turn to CMGs when they have a lack of resources or inability to recruit and/or maintain their own physician staff due to being in an underserved or rural region. CMGs may be non-for profit, held by private equity or publicly traded.
Emergency Medical Treatment & Labor Act (EMTALA) –
The Centers for Medicare & Medicaid Services defines EMTALA:
"In 1986, Congress enacted the Emergency Medical Treatment & Labor Act (EMTALA) to ensure public access to emergency services regardless of ability to pay. Section 1867 of the Social Security Act imposes specific obligations on Medicare-participating hospitals that offer emergency services to provide a medical screening examination (MSE) when a request is made for examination or treatment for an emergency medical condition (EMC), including active labor, regardless of an individual's ability to pay. Hospitals are then required to provide stabilizing treatment for patients with EMCs. If a hospital is unable to stabilize a patient within its capability, or if the patient requests, an appropriate transfer should be implemented.”
According the American College of Emergency Physicians:
“The Emergency Medical Treatment and Labor Act (EMTALA) is a federal law that requires anyone coming to an emergency department to be stabilized and treated, regardless of their insurance status or ability to pay, but since its enactment in 1986 has remained an unfunded mandate.”
Benchmarking – a proposed method to solve surprise medical bills by using federal rate-setting. It is believed that this is a pro-health insurance method for solving surprise medical bills as it will lead to a race to the bottom in rates reimbursed by health insurance companies for medical services. Benchmarking becomes more dangerous to the medical safety net as health insurers will cancel contracts and may be rewarded the ability to utilize their own medical service cost references their own rate databases instead of a third-party referencing regional rates for medical care services.
Aptly put by Jason Altmire in a Morning Consult opinion piece:
“This would mean many doctors — particularly those working in hospitals that operate in rural and underserved communities — would end up holding the bag as insurance companies leverage the set rates to lowball physicians and tie reimbursement to the lowest levels within their networks, regardless of quality or procedural differences. This race to the bottom would result in costs being further shifted to local hospitals and emergency departments, many of which are already struggling to survive.”
Independent Dispute Resolution (IDR) or Arbitration – also referred to as “baseball style arbitration” in which for disputed claims, the medical service provider (a hospital, clinic, physician, etc) and the health insurer submits a monetary offer for the service. Ideally, an independent, third party arbiter evaluates both offers and by referencing a regional and fair database (such as FAIR Health) determines a winner and a loser. As in the New York State model legislation, the loser would pay the costs required to enter arbitration, disincentivizing future disagrees that require the arbitration process. Patients are held harmless and do not have to be involved or pay for any of the arbitration process, they may or may not see the final result.
Usual, Customary and Reasonable (UCR) – from Healthcare.gov:
“The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.”
The UCR can be determined using a health insurer’s own internal charges database, base their UCR for out-of-network providers on the Medicare fee schedule or reference a third-party database, such as FAIRHealth to determine what amount the insurance plan will reimburse for a medical procedure.
Cost – the expense that is incurred by a hospital, clinic, or other health care facility to provide medical services and/or patient care. Typically includes direct and indirect costs.
Direct costs: physician and nursing staff, medicines, room and board, supplies.
Indirect costs: Overhead such as administration, infection control, building
maintenance and rent/mortgage, meeting state and federal requirements.
Charges – “the initial, individual list prices a hospital must set for what can be tens of thousands of items and services it provides. The internal list of all these charges for, among other things, procedures, pharmaceuticals and supplies is known as a “chargemaster.”
The historical chargemaster has little or no relevance to contemporary hospital patients and to the payments a hospital actually receives. The charge setting process is rooted in legacy systems that have evolved over decades and vary significantly across hospitals.”
Payment – the amount a health care facility actually receives in patient care. This varies widely and is dependent on the payer: Government (Ex. Medicare, Medicaid, Tricare), private insurance, self-pay or patients.
Uncompensated care – medical care services that is provided and for which no payment is received, it excludes other underfunded costs of care such as underpayment from Medicaid or Medicare.