Glossary of Terms

Acute Care

Care that is generally provided for a short period of time to treat a certain illness or condition. This type of care can include short-term hospital stays, doctor's visits, surgery, and X-rays.
Medical treatment rendered to individuals whose illnesses or health problems are of a short-term or episodic nature. Acute care facilities are those hospitals that mainly serve persons with short-term health problems.

Adjusted Average Per Capita Cost (AAPCC)

The basis for HMO or CMP reimbursement under Medicare-risk contracts. The average monthly amount received per enrollee is currently calculated as 95% of the average costs to deliver medical care in the fee-for-service sector.

Allowable Costs

Items or elements of an institution's costs that are reimbursable under a payment formula. Both Medicare and Medicaid reimburse hospitals on the basis of only certain costs. Allowable costs may exclude, for example, luxury accommodations, costs that are not reasonable expenditures, or that are unnecessary for the efficient delivery of health services to persons covered under the program in question.

Annual maximum

The maximum amount a health insurance plan will pay for covered services during a plan year.

Coinsurance

The percentage of costs shared by the insured and the insurance company for covered healthcare services after meeting the deductible.

Coordination of benefits

The process of determining which insurance plan pays for covered services when an individual has multiple health insurance policies.

Copayment

A fixed amount paid by the insured for a covered healthcare service, typically paid at the time of service.

Deductible

The amount you pay for healthcare services before your health insurance starts to cover costs.

Explanation of Benefits (EOB)

A statement from the insurance company explaining the costs of a healthcare service, how much the insurer paid, and the patient's responsibility.

Flexible Spending Account (FSA)

A tax-advantaged account that allows individuals to set aside pre-tax dollars for eligible healthcare expenses.

Formulary

A list of prescription medications covered by a health insurance plan.

Health Maintenance Organization (HMO)

A type of health insurance plan that requires members to use healthcare providers within the plan's network and often requires a primary care physician referral for specialist services.

Health Savings Account (HSA)

A tax-advantaged savings account available to individuals enrolled in a high-deductible health plan, used to pay for eligible healthcare expenses.

In-network provider

A healthcare provider who has a contract with the insurance company to provide services at a negotiated rate.

Lifetime maximum

The maximum amount a health insurance plan will pay for covered services during an individual's lifetime.

Out-of-network provider

A healthcare provider who doesn't have a contract with the insurance company, resulting in higher costs for the insured.

Out-of-pocket maximum

The most an individual will pay for healthcare expenses in a year, excluding premiums.

Pre-authorization

The process of obtaining approval from a health insurance company before receiving certain healthcare services or medications, ensuring that the service is covered by the plan.

Pre-existing condition

A medical condition that existed before an individual obtained health insurance coverage.

Preferred Provider Organization (PPO)

A type of health insurance plan that allows members to choose any healthcare provider but offers lower costs for using in-network providers.

Premium

The amount paid periodically to the insurance company for a health insurance policy.

Primary Care Physician (PCP)

A healthcare provider who serves as the main point of contact for an individual's healthcare, typically providing preventive care and coordinating specialist referrals.

Waiting period

The amount of time an individual must wait after enrolling in a health insurance plan before coverage begins for certain services or pre-existing conditions.