States can negotiate these waivers with HHS to modify their Medicaid and CHIIP programs to expand eligibility, provide services not always covered by Medicaid, or test new delivery systems that attempt to improve care while cutting or slowing the growth of spending. Under the Trump administration, conservative states are likely to get modifications to Medicaid – such as charging beneficiaries small co-pays or adding work requirements- that they could not get under President Obama.
Accountable Care Organization (ACO)
There is no single definition for an ACO; models are still evolving. Medicare has four major models, and Medicaid has its own. Private payers and providers have created similar models, although they may not call them Accountable Care Organizations. But basically an ACO is an organization that links (physically or virtually) physicians, hospitals and other providers, and provides more coordinated and integrated care. An ACO is supposed to emphasize primary care and be accountable for the cost of care and the quality of care. Within the current Medicare models, the beneficiary can choose a doctor inside or outside the ACO, unlike an HMO.
When a health plan has similar coverage to that of a standard benefit plan, the two plans are described as being actuarially equivalent because the expected costs for claims that the health insurers would incur for the different plans would be the same. At the same time, the two plans may not necessarily have the same premiums, cost sharing requirements or even benefits.
The average share of medical costs that a health plan will cover for a beneficiary population. The covered individual pays the rest. The metal tiers on the exchange reflect different actuarial values.
Advanceable tax credit (or tax credit)
The health law gives subsidies to certain low- and middle-income people purchasing insurance in the exchanges through tax credits that are available when the insurance premium is due, meaning the buyer doesn’t have to wait until a tax return in the next calendar year.
This occurs when more sick people - or those who have a high chance of becoming sick - purchase insurance than healthier people. If too many sick or high-cost people buy and too few healthier ones are in the risk pool, premiums rise. Then, even more of the healthier people drop out, so premiums rise even more. This is also known as a death spiral.
Affordable Care Act
Also known as Patient Protection and Affordable Care Act or “Obamacare.” It became law on March 23, 2010. The main coverage provisions – Medicaid expansion, the state-based health insurance exchanges, the subsidies for low- and moderate-income people to buy insurance – went into effect in 2014. As of 2016, about 20 million people were covered through the exchanges or through Medicaid expansion. The law has always been politically divisive, and many states have either refused to create their own exchange or declined to expand Medicaid. The Republican Congress under the Trump administration will begin to dismantle it.
The Affordable Care Act bans insurers from charging older people more than three times as much as younger people in the small group and individual markets. Some groups, including major insurers, want to push it to a five to one ratio – but critics say that will crowd out older and sicker people from the insurance markets, undermining the law’s goals.
Agents and brokers
Agents and brokers are trained, state-licensed professionals who can help people enroll in a health plan. As a general rule, agents work for a single insurance company; brokers may represent several. They can sign up to enroll people in ACA exchange plans (reminder that consumers eligible for federal subsidies can only get that financial assistance through the exchanges, not on outside plans.) The insurance company pays the commission, not the person signing up.
A system in all payers – state and federal health programs, private insurers, employers, and individuals – all pay the same rate for a given health service. Under an all payer system, health care providers can’t shift costs among payers. (This isn’t the same thing as All-Payer Claims Data Bases, which figured in a recent Supreme Court case. That involves collecting data from all the payers. It doesn’t mean that all the payers use the same rate scale.)
Alternative payment models
Encouraged by the ACA and later the MACRA Medicare payment statute, APMS are based on financial incentives regarding quality and cost-efficiency not just the volume or length of care.
Before the ACA, many health plans had a yearly limit on what they would pay, either in total costs or for services such as prescriptions or hospitalizations. After hitting the limit, the beneficiary must pay the costs for the rest of the year. While the ACA has deductibles and out-of-pocket costs that can be burdensome, it also ended the yearly (and lifetime) limits so that people who get a catastrophic, high-cost disease or condition don’t have to worry about hitting benefit limits.
Any willing provider
Some states require a managed care organization to accept any provider, such as a doctor or hospital, into the network. This may broaden the choice of consumers facing narrow networks, but insurers say it undermines efforts to control costs.
Health care plan enrollees are automatically signed up again for the next year, unless they opt out or proactively choose a different plan. Under the ACA, this can happen in the exchanges and in employer health plans, although the precise rules have not been finalized for the business setting as of mid-2014.
When a health care provider bills the patient for the difference between what the provider charges and what the insurers says is the allowed amount. This isn’t allowed if it’s a preferred provider (in-network) and a covered service. (note –it’s not balanceD billing)
Basic Health Plan (BHP)
Under ACA, people under 133 percent of poverty will be absorbed in Medicaid, and other low (and some middle) income people will get subsidies to get health insurance on the state insurance exchange. But states have another option – the Basic Health Plan – for covering people with incomes between 133 and 200 percent of poverty – the group above the new Medicaid limits but still quite low-income. The basic plan will be outside the state insurance exchange, include the essential benefits, and be subsidized. The federal government will pay the states 95 percent of what it would have paid had they been subsidized through the exchanges.
How hospitals or doctors measure quality – they measure against a benchmark, which can be a starting point or a standard. It can also be a starting point from which to measure a program’s impact on the federal budget.
Bending the curve
A phrase that means changing the trajectory of health care cost growth – making it grow more slowly. It’s usually used as part of a discussion about ways of using payment and delivery system reform to create a more efficient health care system, with more sensible incentives, that will slow spending growth.
The Birthday rule
The Birthday rule dictates which health insurance company would be the primary source of insurance coverage for a newborn when both parents have health insurance coverage. The rule requires that the parent whose birthday comes first in the calendar year would cover the cost of delivering the new baby regardless of whether one parent has better health coverage for a newborn than the other. The rule is unfair to parents because it prevents them from choosing which insurer would cover their baby.
A lump sum usually given to a state or local government for a specific purpose. There can be some requirements attached to the grant, but within the context of the ongoing Medicaid debate, the gist of the GOP idea is to give the money to the states with few strings attached. That would give governors great flexibility in who to cover and what benefits to offer, changing the nature of the Medicaid entitlement.
This is means that a waiver, demonstration or pilot program can’t cost more than whatever would have been spent without the waiver.
A fast-track budget procedure in Congress that requires only a simple majority – it can’t be filibustered – but it can be vetoed by the president. The measure has to follow arcane budgetary rules, that are interpreted by the Senate parliamentarian. It’s unlikely lawmakers could use to it repeal all of the ACA, but they could try to strike tax- and spending-related elements including the individual and employer mandates, and some of the taxes in the health law.
“Cadillac” health plan
An employee health benefit plans where coverage exceeds a certain dollar threshold. The portion above a certain annual level ($10,200 for individuals and $27,500 for self and spouse or family coverage) will be subject to a 40 percent excise tax starting in 2018.
When a health care provider is paid a fixed or per capita amount for each enrolled patient, regardless of how much medical care each person actually receives.
The health law encourages better care coordination, so that providers work together to avoid complications, recurrences, and rehospitalizations, particularly for patients with chronic diseases such as diabetes or congestive heart failure.
A catastrophic plan is just what it sounds like; it’s a high deductible plan that kicks in when medical expenses mount. The catastrophic plans in the ACA exchanges also cover preventive care and some primary care.
Centers for Medicare and Medicaid Services (CMS)
(formerly Health Care Financing Administration, HCFA) Part of the Department of Health and Human Services, this federal agency runs Medicare, Medicaid and the Children’s Health Insurance programs. It now includes centers, or offices, responsible for key elements of health reform.
Center for Consumer Information and Insurance Oversight
State Certificate of Need laws and regulations are aimed at preventing building of excess capacity or overbuilding of health care facilities – ie needing state approval to build a new hospital, significantly modify an existing one or expanding certain services. The idea is that too much capacity leads to overuse and higher prices. Critics say it lead to overregulation, monopolization and decreased competition.
Insurers used to “cherry pick” to get healthier customers, who cost less. This isn’t supposed to happen under the Affordable Care Act, although critics say some plans have set up their drug coverage in ways that discourage sick people from signing up.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
This allows someone who loses a job to keep the group coverage for 18 months. The beneficiary pays the whole cost - the employer and the employee portions – plus a small administrative fee. It may become less popular now that people who lose a job have the option of getting covered through the ACA exchanges (and a job loss often allows someone to enroll outside of the usual open season).
A copay is a fixed fee for each health care service, i.e. $15 for primary care, $50 for a specialist (it varies from plan to plan and certain preventive services are now free under the law). Co-insurance is a percentage -- the patient, for instance, could pay 20 percent and the plan 80 percent (subject to out-of-pocket limits). copays tend to be for in-network providers, co-insurance for out of network – but all these arrangements vary from plan to plan.
Community mental health centers
These clinics have been around since the 1960s but they are getting more attention amid greater appreciation of the inadequacy of the mental health care systems. A center certified by CMS must provide outpatient services, including specialized ones for children, the elderly, people with chronic mental illness and those who have been discharged from a mental health inpatient facility. They must have 24 hour a day emergency care services. Under health reform (and related subsequent legislation) there has been a push to better integrate behavioral health and primary care in the community setting.
Before the passage of the ACA, insurers could charge people based on gender, their health status (pre-existing conditions), age or other factors – or they could choose not to cover them at all. Starting in 2014, “community rating” was limited. Older people can be charged three times as much as younger people (in some states it had been much higher) and there is no extra charge for women of child-bearing years or people who have been sick. Smokers can be charged more and participation in wellness programs can affect premiums. There will also be some geographic variation and, of course, families will pay more than individuals.
Comparative effectiveness research
Research that looks at different approaches or treatments for a condition to determine which are most likely to have the best outcomes. It does not necessarily take cost into account.
Coordination of benefits
In the event of coverage from two sources (e.g., Medicare plus supplementary coverage, or two employer plans, which occurs when two people in the family have coverage) the insurers will "coordinate benefits," meaning they will determine which insurer is the primary payer and which is secondary payer.
Cost sharing subsidies
In addition to the tax credits to help pay premiums, many people can also get cost-sharing subsidies to help with their deductibles, co-pays and other out of pocket expenses. Insurers are legally bound to make these payments on a sliding scale to people up to 250 percent of the federal poverty level. Under the law, the government was supposed to reimburse the insurers – but that was the subject of a legal dispute between Congress and the Obama administration, and President Trump halted the payments in Oct. 2017. Congress might resume them to create more stability in the marketplace – but it’s not definite.
A doctor, clinic or hospital may “cost shift” so that people who are covered make up the losses for charity care, uncompensated care or lower payments from other health plans. For example, someone with a generous employer-sponsored health plan may be overpaying to cover costs of the uninsured or of people on health plans that pay less to providers.
Critical access hospital
Certain small hospitals mostly in rural areas are designated as “critical access” hospitals. The staffing standards are less rigorous than other hospitals, and they are paid by Medicare based on their cost, not the usual payment scales. Not all rural hospitals are “critical” access. They have to be able to provide emergency care, but may not have all the services of a larger hospital.
This occurs when more sick people - or those who have a high chance of becoming sick - purchase insurance than healthier people. If too many sick or high-cost people buy and too few healthier ones are in the risk pool, premiums rise. Then, even more of the healthier people drop out, so premiums rise even more. This is also known as adverse selection.
When doctors or other health providers order tests or screening or even treatments that may not be necessary in order to protect themselves from later malpractice suits. It contributes to overuse (and the risk of harm from unnecessary treatments) and higher health care costs — although there is disagreement among experts as to how much. In a 2010 Health Affairs article, the cost was pegged at $55.6 billion in 2008 dollars, or 2.4 percent of total health care spending. Others put it higher.
There's also a lot of debate about whether how much over-treatment and over-screening is motivated by fear of lawsuits — defensive medicine — and how much arises from other reasons. That includes how doctors are trained. The default is often "do more," not "do less and then do more if you have to." It's also how doctors are paid in the fee for service system; more treatment brings in more money, and whether the treatment is necessary or beneficial is largely irrelevant.
Defined benefit vs. defined contribution
When a health plan, whether through a private employer or a government program like Medicare or Medicaid, promises specified benefits (even if the costs can fluctuate, benefits are guaranteed), it's a defined benefit, and an entitlement. Under Medicare and Medicaid, the government by law has to spend the money to provide benefits for everyone eligible for — or entitled to — these programs. Beneficiaries may have cost sharing, but the benefit is not capped or limited. Most private health plans are still defined benefits — the employer pays a certain percentage of the premium, and the employee pays the rest.
The shift toward a defined contribution — which is what many Republicans want to see happen for Medicare and Medicaid — is a limited, set, fixed amount toward health coverage, whether through a voucher or another form of payment. Beneficaries may have their choice of health plans, but the contribution is fixed. That means the government or employer has fixed financial liability. In the world of employer sponsored insurance, it means that the employer gives the employee a fixed amount and the employee then goes and buys insurance. (This is how the small business exchange works in Utah.)
Disproportionate share hospital
This refers to a hospital that has a disproportionate share of low-income payments as defined by standards set in Medicare and Medicaid. Hospitals get “dsh” payments to help compensate for the cost and the health status of patients.
Doughnut hole (or Donut hole)
A coverage gap in the Medicare drug benefit, during which beneficiaries pay all the costs until another level of coverage kicks in. The health law gradually fills it in.
The health reform law creates a new Federal Coordinated Health Care Office (aka "Office of Duals") at the Centers for Medicare and Medicaid Services to improve quality and efficiency of care for the "dual eligibles," low-income people who qualify for both Medicare and Medicaid. They tend to be poorer and sicker than the rest of the population and use more health care resources.
Items such as ventilators, wheelchairs, hospital bed, or home oxygen system that may be prescribed.
Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Services
States must cover these services for all Medicaid-eligible children under age 21. They include screening for vision, hearing, dental problems, as well as physical and mental health conditions. Services must include follow-up and treatment for identified problems or conditions.
Insurers use this word to describe finalizing enrollment. Coverage has been effectuated once someone signs up, selects a plan on the ACA exchange, pays the premium, and has the policy finalized.
Small businesses using the SHOP exchange are supposed to decide how much they will contribute to workers’ health coverage, and then let the employees choose from a menu of plan choices through the exchange, instead of having the employer choose the health plan. But that “employee choice” option was delayed – and then delayed again in 18 states until at least 2016. Most of the state-run exchanges have gone ahead with it. Without employee choice, there is less incentive for small businesses to switch to the exchange.
The requirement that businesses with more than 50 workers offer affordable coverage, sometimes know nas the “shared responsibility” provision. The deadline, originally in 2014, was changed to phase in the requirement more slowly. But as of 2016, businesses with more than 50 workers generally had to offer them insurance that meets federal affordability and minimum coverage standards.
The federal Employee Retirement Income Security Act sets requirements for employer-sponsored health plans, both self-insured and fully insured. ERISA plans are overseen by the Department of Labor and generally are not covered by state insurance regulations, such as coverage mandates. The act went into effect in 1974.
Essential health benefits
A set of benefits created by the health reform law that will ensure that a plan covers comprehensive services. All plans, inside and outside of the state-based exchanges, will have to offer at least this much coverage.
A charge for seeing a doctor at a hospital-owned facility (even if looks like a regular outpatient doctor’s office – ownership, not appearance, is what matters). Insurers do not always cover the facility fee, or they may cover only a part of it.
Federal Medical Assistance Percentage (FMAP)
How the federal government matches state contributions to Medicaid. Under the ACA, the match for the expansion population is 100 percent from 2014 through 2016. Then it gradually drops down to 90 percent. That’s a higher match than for traditional Medicaid.
According to the Affordable Care Act, an employee who works an average of at least 30 hours per week is considered a full time worker and eligible for coverage. (And part time would be fewer than 30 hours per week.)
A group health plan that began – or an individual health insurance policy that was purchased – on or before March 23, 2010. These plans are exempt from many of the requirements under the ACA. They may lose their “grandfathered” status if they are changed to reduce benefits or add costs to beneficiaries. New employees or family members can still be added to these plans.
Plans that were slated to be canceled in 2014 but were instead extended have been dubbed “grandmothered” plans. They are different than the “grandfathered” plans, which haven’t changed substantially since the health law was passed and don’t have to comply with key parts of the law.
The essential benefits requirements of the health law include both habilitation and rehabilitation services. Rehabilitation helps a patient regain a lost ability; habilitation helps them develop an ability that they never had (i.e. a child with developmental delays who isn’t walking or talking when expected). It can include physical, and occupational therapy, and speech and language pathology. It can be inpatient or outpatient. (See also: Rehabilitation services.)
Health care sharing ministry
Health care sharing ministries are not exactly the same as insurance, but people in them can be exempt from the ACA mandate to have minimum essential coverage. They are typically much less expensive than commercial health insurance. The payments get put into a shared fund, which is then used to pay members’ medical bills (although they are not required to cover everything that an ACA plan covers and there may not be enough money in the fund to pay all the bills.) People have to share a common religious faith and agree to live by certain shared religious principles in order to be part of these health ministries. But they’ve grown in popularity for people seeking ACA alternatives.
Health insurance exchanges/marketplaces
New marketplaces where individuals and small businesses can purchase health insurance, with new rules and consumer protections laid out in the health reform legislation. States have some leeway in how they design their exchanges, but if a state does not set up the exchange, the federal government will run the state marketplace. States can have one exchange for small business and another for individuals, or they can merge them.
Health insurance tax
A tax on health insurance plans was supposed to have helped offset ACA costs, but it’s been suspended twice as part of budget or spending deals Congress has passed, (starting in 2015 when it was suspended for one year – 2017, and again recently suspended for 2019) The industry says it raises the cost of insurance for everyone, at a time when insurance premiums are already rising. The health plans want it permanently repealed, but politics have dictated several shorter suspensions.
Health Reimbursement Arrangements
An HRA is an employer-funded account that helps workers pay for certain medical bills not covered by their health plans. Unlike a Health Savings Account, the HRA is employer owned – a worker leaving a job doesn’t take it with him or her.
Hospital Consumer Assessment of Healthcare Providers and Systems
A Patient Satisfaction survey developed by CMS and the Agency for Healthcare Research. It’s a component of how hospitals are paid under Medicare’s Hospital Value-Based Purchasing. It has 32 questions, addressing 21 aspects of patient perspective on care including communication with doctors and nurses, responsiveness of hospital staff, pain management and care transitions.
Hybrid health care
Hybrid health care describes the practices of physicians and other providers who offer both telehealth and in-person treatment. These practices may use video conferencing for patient monitoring and text messaging for appointment scheduling and follow-up. Some patients may be managed remotely, face-to-face or both.
Individual coverage health reimbursement arrangements (ICHRAs)
In 2019, the Trump administration established ICHRAs to allow employers of any size to reimburse employees for some or all medical expenses, out-of-pocket costs and monthly premiums for health insurance purchased on their own. Available in 2020, ICHRAs allow employers to cut costs by not offering traditional group health insurance but critics say they offer weaker benefits while creating a potentially discriminatory and expensive form of coverage.
A provision of the ACA (and now some state laws) that requires individuals to have health insurance, or face a penalty (though there are many federal exemptions). Dispute over whether mandate is constitutional was the basis of many of the lawsuits about health reform. The Supreme Court upheld the mandate in 2012 – but the 2017 tax law repealed it for all practical purposes effective in 2019. (Technically the mandate is still on the books, but the penalty was zeroed out so it’s meaningless.)
Invisible risk pool
A program that reimburses insurers for especially high-risk beneficiaries (based on an annual cost threshold or set of diagnoses determined in advance). The individuals are in the same risk pool as others – not segregated in a separate high risk pool with higher costs for them.
Low-income pool (LIP)
This is a revenue stream, currently (mid-2015) in nine states. It’s federal and state dollars that help hospitals that treat many low-income, uninsured people. It is separate from the DSH (disproportionate share) funds, and is part of a Medicaid waiver negotiated between the state and CMS.
An advisory committee on Medicaid and the Children’s Health Insurance Program, MACPAC was established in a 2009 law and expanded and funded in the health reform law. It reviews state and federal policies and makes recommendations to Congress, HHS and the states on matters related to Medicaid and children’s access to care.
Market Basket (MB)
CMS uses "market baskets" – a defined set of health expenditures in a defined time period – to measure price changes for hospitals and other providers and to set payment adjustments. (More details here.)
Drug manufacturers use patent protections that the federal Food and Drug Administration grants to market brand-name drugs exclusively in the U.S. market, blocking the introduction of other drugs, particularly generic and biosimilar medications to U.S. consumers.
Created in 1965, joint state-federal program provides health care for the low-income and disabled. It also covers long term care, such as nursing homes, for low-income elderly people. It was expanded under the Affordable Care Act to cover more people right around and just above the poverty line – including those who had no children and were previously ineligible. The Supreme Court made that expansion optional for states, and so far about 30 have done so. Enrollment fluctuates but roughly 75 million people are covered by Medicaid (both traditional and expansion) and the Children’s Health Insurance Program, known as CHIP.
Medical device tax
A sales tax on medical devices – a 2.3 percent tax that went into effect on Jan. 1, 2103 – had helped pay for the Affordable Care Act. The device industry steadily fought for its repeal – and won a partial but significant victory in late 2015, when Congress voted to suspend the tax for the next two years. The tax was later suspended for an additional two years, through 2019.
The manufacturer pays the tax – not the consumer. Most simple devices that a consumer would buy at a retail store (i.e. a thermometer) are exempt. There are some other exemptions including glasses, hearing aids and wheelchairs. The device industry had argued that the levy was a “job killer.”
Medical loss ratio (MLR)
The MLR is the amount a health plan spends on actual health care vs profit, administration, marketing etc. The ACA requires small group and individual health plans to spend at least 80 cents of every dollar on health activities, or provide a rebate. Large group plans have an 85 percent requirement. The less comprehensive options – Association Health Plans and Short Term Limited Duration Plans – promoted by the Trump administration do not have to meet MLR rules.
Federal health program for all Americans starting at age 65, and some of the disabled. Part A covers hospital care, Part B is doctors, labs and other outpatient treatment, Part C covers those who choose to get covered in private Medicare Advantage Plans, and Part D is prescription drug coverage.
The Medicare Payment Advisory Commission is an independent Congressional agency established in 1997 to advise Congress on Medicare payment issues, including physicians, hospitals and Medicare Advantage plans.
Navigators are supposed to help educate people about their options under the health law, including what subsidies they can get, and help people enroll in a qualified health plan. Navigators also can connect them to ombudsmen or other resources when problems arise. They have to meet certain conflict of interest and training/certification rules. However, the Trump administration has significantly cut back funding for navigators, saying that they were not cost-effective and that they are unnecessary now that people have gotten used to Healthcare.Gov. Advocates of the health law strongly disagree, noting that outreach is still needed to uninsured and hard to reach people, and that many people churn in and out of the individual market because of job changes, and need assistance.
Health plans contract with doctors, hospitals, labs and other health care providers to supply in-network care for lower costs. Many of the health plans in the new exchanges are expected to have “narrow networks” or a relatively limited set of providers to choose from, although they still have to satisfy Affordable Care Act requirements about coverage and access. Patients have to pay more – sometimes much more – for out-of-network care.
Enrollment in the individual market in plans outside the exchange. Most meet ACA requirements. However starting in late 2018, the Trump administration is allowing Association Health Plans and short-term limited duration plans as alternatives to the ACA – and these are not considered the legal equivalent of health insurance and do not have to offer Essential Health Benefits and certain consumer protections.
Pharmaceutical companies use patents from the federal Food and Drug Administration to gain market exclusivity on their medications and other tactics to delay the introduction of generic competition. Such delays help to keep the prices of brand-name drugs high.
Partial Medicaid expansion
Several states are seeking permission from CMS to do a partial Medicaid expansion – up to 100 percent of poverty, rather than 138 percent. People over 100 percent would be eligible for subsidized coverage in the ACA exchanges. So far CMS hasn’t granted these requests. (Neither did the Obama administration.) There are questions whether this can be allowed legally through a waiver, or whether Congress would have to amend the ACA to make this a state option.
The date that a health plan begins. Some of the new rules under the health law may go into effect on a certain date, but individual health plans may not have to comply until their next “plan year.” Example: the contraceptive coverage rule starts Aug. 1. Plans may not have to offer the coverage until their plan year, whether that be October, January, etc.
When an insurer investigates someone’s health history after a health plan has been sol d- and usually after a claim has been filed. This can lead to cancellation of a policy or “rescission.” The ACA makes rescission illegal (except in the case of fraud or intentional misrepresentation). Also see Recission.
This is a term critics of the ACA use to describe rising insurance prices, or anticipated rises in premiums, particularly for younger, healthier people.
The Affordable Care Act has three tools to try to encourage health plans to participate in the new state-based exchanges, to discourage insurers from trying to find ways of avoiding covering people in poor health, and to try to stabilize premiums and spread risk in case some health plans do end up with more high-cost beneficiaries than others. They are risk adjustment, risk corridors and reinsurance (see separate glossary entries) Reinsurance and the risk corridors are for the first three years of the exchanges (2014-16) Risk adjustment is permanent.
Proposal to give people a voucher or coupon to help pay for health insurance. At the moment, it’s most often used in the context of Medicare. There are several variants of premium support. Some would make it an alternative to traditional Medicare, some would make it a substitute for traditional Medicare. (The House-passed budget would make it a substitute, with the voucher unlikely to keep up with the rising health care costs) Premium support lets the federal government cap its Medicare spending, but the costs could get shifted to individuals.
Remember the debate over the “public option” in the health law? Some states have pursued what’s been dubbed the “private option.” Arkansas paved the way (and won over some liberal doubters). The “private option” means that the state takes the federal Medicaid expansion money and uses it to buy insurance in the exchange for low-income people rather than putting them in traditional Medicaid.
Qualified small employer health reimbursement arrangements (QSEHRAs)
Were established under the Cures Act of 2016 to allow small employers with fewer than 50 full-time equivalent employees (meaning the employers are not subject to the large-employer mandate under the Affordable Care Act) to pay or reimburse employees through health reimbursement arrangements for health insurance premiums as long as those insurance plans qualify as minimum essential coverage. The payments are tax free, cannot exceed a certain limit that the IRS establishes annually and the employer must fund the HRA without employee contributions.
Process through which state insurance officials review proposed premium increases. Some states can approve or disapprove rates, others can just review and seek information about them.
This is usually used as shorthand for when a patient returns to the hospital within 30 days. (Patients of course can return after 30 days, but the policy right now is focused on the first month.) The ACA included financial penalties for hospitals that had high rates of avoidable readmissions for Medicare patients with certain specified conditions, such as congestive heart failure or COPD.
The essential benefits requirements of the health law include both habilitation and rehabilitation services. Rehabilitation helps a patient regain an ability or function for daily living that they lost, such as mobility after a stroke or accident. It can include physical and occupational therapy, speech and language pathology. (See also: Habilitation services.)
This is what it sounds like – insurance for the insurers. Reinsurance provides a backstop so an insurer doesn’t end up with deep losses. To make the exchanges work, the government has an interest in reinsuring the health plans and limiting their financial exposure so that they are willing to participate in the exchanges – and don’t try to game the system and avoid covering people with preexisting conditions or health risks. CMS has projected reinsiurance will keep premiums in the exchanges 10 percent to 15 percent lower.
Retroactive cancellation of health insurance policy, usually after someone files a claim. The health law outlaws this (except in the case of fraud or intentional misrepresentation). Also see Post-claims underwriting.
This is a way of spreading the financial risk that insurers bear – in and out of the exchanges – and encouraging them to offer a variety of health plans with stable premiums. Basically a health plan that enrolls a lot of healthy, low-risk individuals will shift some money (under a government formula) to a health plan that enrolls a lot of sicker, more expensive and high-risk beneficiaries. There are elaborate formulas for measuring and evaluating the relative risks. Because the money goes from one insurer to another, it’s deficit neutral – meaning it doesn’t add to the government’s costs. The states can establish their own risk adjustment programs if they are running exchanges, or they can use the federal system.
Given the uncertainty for insurers in the exchanges the first few years, risk corridors were established to enable the federal government to share the risk with the health plans from 2014-16 If a health plan has costs that are at least 3 percent lower than expected, they turn some of the money over to HHS. And those that have higher costs than expected will get payments from HHS to offset part of it. If it’s in between – within that corridor – no money is transferred.
However Congress have required risk corridor payments to be revenue neutral – meaning taxpayer funds couldn’t supplement payments from the health plans themselves. That created a significant shortfall; for 2014, plans got 12.6 cents on the dollars. It is unclear how Congress, the courts, or the new administration will resolve this.
Usually involving larger businesses, in these plans the employer collects the premiums and pays the medical claims for workers and dependents. They often contract with an insurer as a “third party administrator” to do the enrollment, claims processing, and provider networks.
Automatic budget cuts. It can be across the board, or some programs or agencies can be exempted or partially shielded from cuts.
Shadow pricing describes a practice pharmaceutical companies use to raise prices on prescription drugs by raising prices in lockstep with competitors to keep prices high.
The Small Business Health Options Program (SHOP) provide health and/or dental insurance coverage for businesses in every state. They are open to businesses with fewer than 50 full-time equivalent employees (i.e. those businesses and nonprofit organizations that are not covered by the employer mandate). They are supposed to offer a variety of plan options, although choices have been limited in some states.
Superuser (or Super utilizer)
This refers to a patient who uses a lot of health care, particularly a lot of avoidable expensive health care in hospitals and emergency departments. The term is usually used to describe low-income patients with multiple chronic conditions, often including a mental health problem.
Beginning with the W-2s for 2012, the year-end income tax forms include the value of the employer’s contribution to the worker’s health plan. This does not mean the payment is taxable – that hasn’t changed. But the disclosure rule aims to give people more information about the true cost of health insurance. This IRS page explains it in more detail.
See “self-insured plan.”
An insurer or government program that pays medical bills for a patient or “first party” given care by a hospital, doctor or other “second party.”
This federal health care program has almost 9.5 million members worldwide. It covers active duty service members, National Guard and Reserve members, and military retirees. Tricare also serves the families of armed-service members, survivors, certain former spouses, and others registered in the Defense Enrollment Eligibility Reporting System (DEERS) (for family members and dependents). People who have Tricare coverage do meet the individual mandate requirement. People who lose Tricare coverage eligibility generally can move into the exchanges.
When clinics, hospitals or doctors provide care without pay – from an insurer, the patient, or a government program such as Medicaid. This can include charity care or bad debt when the provider tries and fails to collect the payment due.
People who have insurance but either face very high deductibles and out of pocket costs or skimpy benefits (or both) are considered underinsured. The Commonwealth Fund estimated that, as of 2016, about 28 percent of adults who had some form of health insurance were actually underinsured. The advent of new health plans that don’t have to comply with ACA rules will exacerbate this.
Usual, Customary and Reasonable (UCR)
This is the amount paid for a certain medical service, and it often varies geographically. It’s based on what providers usually charge, and health plans use it to determine their “allowable” payments.
Health insurers in the small group and individual markets use “underwriting” – weighing an individual’s health status, “pre-existing conditions” and risk factors – to decide whether to offer coverage and how much to charge. In health plans sold in the exchanges starting in 2014, underwriting won’t be allowed although some rate variations will be allowed based on age and tobacco use.
Value-based Hospital Purchasing
A Medicare initiative that rewards hospitals with incentive payments for the quality of care they provide.
Work requirement/community engagement
Under waivers approved by the Trump administration, some states are requiring certain Medicaid recipients to work (usually about 20 hours a week) or take part in “community engagement” such as job training or qualified volunteer activities.
Low-income people who qualify for various government programs may also qualify for wrap-around benefits – meaning some extra help to plug in coverage gaps or pick up costs so they don’t come out of pocket. These extra benefits “wrap around” the health plan the individual is in.