Accountable Care Organization (ACO)

A group of medical professionals (hospitals, physicians, and suppliers) responsible for serving a specific patient population. Subject to quality standards. An ACO may keep a percentage of cost savings if it saves money on care.

Actuarially Fair Premium

One component of the overall premium set by an insurance provider based solely on predicted medical costs for enrollees.

Adverse Tiering

A generally prohibited practice in which all drugs used to treat the same condition (angina, bipolar disorder, multiple sclerosis, etc) are placed in a high (expensive) formulary tier, even generic drugs. The Affordable Care Act views this practice as discrimination.

Allowed Amount Maximum

Amount on which payment is based for covered health care services. This may be called “eligible expense,” “payment allowance" or "negotiated rate." If your provider charges more than the allowed amount, you may have to pay the difference.

Appeal

A request for your health insurer or plan to review a decision or a grievance again.

Balance Billing

When a medical professional bills you for the difference between their charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance-bill you for covered services.

Benefit Design

Differences in how individual plans meet Benefit Mandates. For example, Plan A requires a $30 co-payment for a primary care appointment with a lower premium, while Plan B provides a free primary care appointment with a higher premium. Both plans meet the mandate for primary care but share costs with their patients in different ways.

Benefit Mandate

A legal requirement that health insurance plans cover certain services or products provided by hospitals or physicians. Self-funded plans are exempt from state benefit mandates, but fully-insured plans must comply with both state and federal mandates.

Broker

A licensed person or organization you pay to look for insurance on your behalf.

Bundled Payment

A payment model in which an insurer pays a healthcare facility for one entire episode of care. For example, for a knee surgery, a bundled payment would cover all presurgical tests, the surgery itself, hospital stay, and follow-up care. Also called a Case Rate.

Cancellation

The termination of insurance coverage during the policy period. Flat cancellation is the cancellation of a policy as of its effective date, without any premium charge.

Capitation

A fixed fee paid by an insurance plan to a health care professional for services, per patient per month. This is the "budget" for each enrollee. Utilized by HMO plans.