Insurance Terms and Definitions

We know understanding insurance benefits and coverage can be confusing and overwhelming. Here are some common insurance terms and definitions:

• Affordable Care Act: A comprehensive health care reform law passed in 2010 designed to make affordable health insurance available to more people.
  
  
• Claim: A request by a member of an insurance plan, or a member's health care provider, for the insurance company to pay for medical services after the services take place.
  
  
• Claims address: The address used by health care provider to send claims to; usually found on the back of an insurance card.
  
  
• Co-insurance: Set percentage of medical expenses you pay (20%, for example) after you have paid your deductible.
  
  
• Coordination of benefits (COB): Process of determining which plan pays first when individual has insurance coverage through two or more health insurances. This process is based on insurance industry standards.
  
  
• Copayment (or Copay): A set dollar amount you pay prior to or at the time of the service.
  
  
• CPT Code: The CPT (Current Procedural Terminology) is a set of medical codes for medical, surgical, and diagnostic services that help communicate uniform information about medical services and procedures among physicians, coders, patients, accreditation organizations, and payers for administrative, financial, and analytical purposes. CPT's are maintained by the American Medical Association through the CPT Editorial Panel.
  
  
• Deductible: A set dollar amount you must pay before the insurance company begins covering part or all of your and your dependent’s medical expenses. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you usually only pay a copayment or coinsurance for covered services, your insurance company pays the rest.
  
  
• Denial: An insurance company denies a request for coverage and/or payment for a claim. This may happen for a variety of reasons, including if the insured has not updated his/her information with the insurance company, more information is needed to process the claim, the medical care was not deemed medically necessary, etc.
  
  
• Dependent: Any person who is covered by your plan.
  
  
• Deposit/Pre-Service Payment:  A monetary payment made by families toward their future expected balance due. Deposits are requested for patient who are uninsured or insured. Deposits can be requested prior to or at the time of service.
  
  
• Group number: A unique identification number assigned to each group insured with the same insurance company. For example, each person insured through the same employer will have the same group number. Individuals, along with their dependents, who get an independent insurance policy may have their own group number.
  
  
• Insurance card: The card that lists persons covered under a specific health insurance plan.
  
  
• Managed care organization (MCO): An MCO is a type of health care company consisting of a group of providers or health care professionals that work together and coordinate care to provide services at affordable rates.
  
  
• Marketplace: A service that helps people shop for and enroll in health insurance plans for individuals, families, and small businesses. The federal government operates the Health Insurance Exchange Marketplace, available at HealthCare.gov. Also known as the Health Insurance Exchange or Exchange.
  
  
• Network: A group of physicians, hospitals, and other health care providers working with a health insurance plan to offer care at discounted rates.
  
  
  • In-Network: A network plan that has a contract with Children's Mercy and our professionals; services are covered at a discounted rate.
    
    
  • Narrow network: A network plan that covers only selected providers (i.e., hospital or physician groups) and/or services. Often is indicated by “limited benefits” on an insurance card.
    
    
  • Out-of-Network (OON):A health care professional, hospital, or pharmacy that is not part of a health plan's network of preferred providers. Families will generally pay more for services received from out-of-network providers and locations, as the insurance company may only pay a small percentage of a claim or may not pay at all.
    
    
• Out-of-pocket (OOP) maximum/limit: The dollar amount you must pay during a policy period before the insurance plan will start paying 100% of the allowed amount. The out-of-pocket limit never includes the premium, balance-billed charges or services the insurance plan doesn’t cover.
  
  
• Payor: An insurance company that finances/reimburses the cost of health services for its members (example: Cigna, Aetna, etc.).
  
  
• Policy number/Member ID: A unique identification number assigned to an individual that allows Children's Mercy and your insurance company to review your specific policy terms and information.
  
  
• Pediatric care network (PCN): A pediatric network coordinates the medical care of pediatric patients enrolled in various managed care organizations (MCOs). Children’s Mercy PCN is made up of Children’s Mercy Hospital and its employed physicians, community pediatricians and other health care providers in the Kansas City area.
  
  
• Pre-certification: A process used to determine if a treatment or service will be covered by an insurance company. Also called pre-authorization or prior authorization. This is not a promise your health insurance will cover the cost.
  
  
• Prior Authorization: A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment is medically necessary. Sometimes called prior authorization, prior approval, or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency. Pre-authorization isn't a promise your health insurance or plan will cover the cost.
  
  
• Prior Authorization status: Current state of the request for prior authorization submitted by the provider to the patient’s insurance plan.  Examples of some common statues include not required, approved, denied, or pending.
  
  

• Referral: A pre-approval required from a Primary Care Provider (PCP) to the patient’s insurance company before seeking care from a specialist. If a referral is not obtained, and it is a requirement of the payor, this could result in a reduction or denial of benefit coverage.

• Subscriber (member or enrollee): The primary person enrolled for benefits with the insurance company, under group plans, private policies, or governmental agencies.
  
  
• Third-party payor: An entity (other than the patient or the health care provider) that reimburses and manages health care expenses. Third-party payors include insurance companies, governmental agencies and employers.