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LEARNING THE LANGUAGE
The language of health care can often be challenging.
The following definitions should help you gain a better understanding of
your health care plan:
Actual Charge
Amount a provider charges for a particular medical service or procedure.
The actual charge may differ from the allowed amount by the insurer.
 Allowed
Benefit/Allowed Amount
The maximum dollar amount allowed for covered services, regardless of
the provider’s actual charge. A provider who participates in the
insurer’s network cannot charge the member more than this amount for any
covered service.
Appeal
A process used by a member or provider to request that the insurer
reconsider a claim decision.
Benefit
Member health care services or treatment covered under a specific health
benefits plan on behalf of a member.
Benefits Administrator
Individual responsible for handling employee health benefits for the
employer.
Claim
A request for payment for benefits received or services rendered. Either
the member or the provider submits claims to the insurance company.
COBRA - Consolidated Omnibus Budget Reconciliation
Act of 1986
Federal legislation that includes a requirement for groups with 20 or
more employees to offer extended health insurance coverage at the
member’s expense to members and eligible dependents who leave the group
or are otherwise no longer eligible for the group’s coverage.
Coinsurance
The percentage or amount determined by the insurer that members are
required to pay for medical expenses. In some cases, a health benefits
plan will first require satisfaction of a deductible. For example, if
BCBSD covers a physician’s visit at 80 percent, the coinsurance you
would pay is 20 percent of the allowed amount.
Copayment
The dollar amount a member must pay at the time that services are
received. A visit to a primary care physician might require a copayment
of $15, a visit to a specialist $25 and a prescription $20.
Covered Member
Person, including eligible dependents, entitled to benefits under the
contract and also known as the “insured.”
Covered Services
Applies to services or supplies specified in the contract for which
benefits are available under the member’s plan. Examples are office
visits, lab work, emergency room care and maternity care.
Deductible
The dollar amount of covered services which must be paid by an
individual or family per benefit period before BCBSD benefits are
provided as specified in the member’s plan.
 Eligibility
Whether the member qualifies for coverage under the contract at the time
health care is rendered.
Explanation of Benefits (EOB)
A written statement issued to a member that provides detail concerning
processing and payment of a claim for benefits, including the member’s
financial responsibility for services rendered.
Health Insurance Portability and Accountability Act (HIPAA)
of 1996
The Health Insurance Portability and Accountability Act (HIPAA) of 1996
was designed to streamline all areas of the health care industry and to
provide additional rights and protections to members in health benefits
plans.
Health Maintenance Organization (HMO)
A health benefits plan that usually has the lowest out-of-pocket costs.
HMOs require that the member select a primary care physician, generally
a family practitioner, internist or pediatrician, who is part of the
plan’s network. There are generally small copayments and no claims for
members to file. In an HMO, a referral is required from the primary care
physician to see any specialist in its network, with limited exceptions.
Independent or Individual Practice Association (IPA)
An organization which contracts with individual providers or groups of
providers to provide care to members of a Health Maintenance
Organization (HMO).
Lifetime Maximum
The maximum dollar amount the plan will pay in benefits for each member
during his/her lifetime.
Managed Care
Organizes doctors and hospitals into health care networks to lower costs
and manage the medical care provided. HMOs were the earliest form of
managed care health benefits plans. Today there are many different kinds
of plans that have a managed care component.
Medicare
The health care benefits provided to Social Security pensioners 65 and
older and to eligible disabled individuals under Title XVII of the
Social Security Act.
Mental Health Services
Services primarily to treat any disorder that affects the mind or
behavior. Also called behavioral health.
Out-of-Network
Health care providers who have not contracted with the health insurance
plan to provide service are considered out-of-network. Members enrolled
in Preferred Provider Organizations (PPO) and Point-of-Service (POS)
plans can go out-of-network, but will pay higher out-of-pocket costs.
 Policyholder/Member
The employee or member of a group who maintains coverage for themselves
or another dependant. Also, an individual named on a
non-employer-sponsored health benefits plan.
Pre-Authorization
Approval required by an insurer prior to receiving certain medical
procedures or being admitted to a hospital.When care is received
in-network, the primary care physician or specialist is
usually responsible for obtaining pre-authorization. For out-of-network
services, the member is responsible for obtaining preauthorization.
Pre-Existing Condition
An illness or condition for which a member has recieved medical services
or treatment prior to applying for health insurance. In some cases,
coverage for these conditions may be subject to a waiting period or be
excluded from coverage.
Preferred Drug List (PDL)
Also known as a formulary, this is a list of covered brand name and
generic prescription drugs. The PDL was developed and is maintained by
the CareFirst BlueCross BlueShield Pharmacy and Therapeutics Committee,
which is made up of a group of physicians and pharmacists who practice
in the CareFirst BlueCross BlueShield region. CareFirst BlueCross
BlueShield may change this list periodically to provide the most
cost-effective prescription drug options to members.
Premiums
Periodic amounts paid by or on behalf of members for ongoing health care
coverage. It does not include any deductibles, coinsurance or copayments
the plan may require.
Primary Care Physician (PCP)
A physician selected by the member, who is part of the health plan’s
network. The PCP provides routine care and coordinates other specialized
care. The physician you choose
as your PCP may be a family or general practitioner, internist or
pediatrician.
Provider
Physician, organization or institution licensed to provide health care
services.
Provider Network
The group of providers who have contracted with an insurer to provide
services to the plan’s members. For non-network health plans (such as
BlueClassic Traditional), the
provider network is generally all licensed providers of covered
services.
Referral
A written recommendation by a primary care physician that a member may
receive care from a specialty provider.
Three-Tier Prescription Drug Benefit
A benefit option in which a member pays a lower copay for generic drugs
(Tier 1), a higher copay for preferred brand name drugs (Tier 2) and the
highest copay for nonpreferred
brand name drugs (Tier 3).
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