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Employer Glossary of Terms

Affordable Care Act (ACA) – The Patient Protection and Affordable Care Act (PPACA)– also known as the Affordable Care Act or ACA, a comprehensive law passed in 2010 aimed at reforming America’s health care system to improve access and affordability of healthcare for Americans.

Average Length of Stay (ALOS) – The average number of days in a hospital for each admission. The formula for this measure is total patient days incurred divided by the number of admissions and discharges during the period.

Case Management – A shared process between the enrollee and family, case management team, and involved health care providers. This process includes assessing, planning, implementing, coordinating, monitoring and evaluating options and services in order to meet an enrollee’s and his/her family’s needs.

ConnectCare – MidMichigan Health Network’s managed health care products with medical management services intended as a partnership between patients and their providers to provide access and to coordinate quality health care in appropriate settings.

Consumer Driven Health Plan (CDHP) – A high-deductible health plan paired with a spending account for out-of-pocket costs such as a Health Savings Account (HSA) or Integrated Health Reimbursement Arrangement (HRA).

Days Per Thousand (Days/1000) – The number of inpatient days per 1,000 health plan members used to indicate the total number of days of hospital care provided.

Discharges Per Thousand (Discharges/1000) – The number of hospital discharges 1,000 health plan members per month or per year.

Explanation of Benefits (EOB) – The statement sent to covered persons by their health plan listing services provided, amount billed, and payment made.

Health Insurance Portability and Accountability Act (HIPAA) – Enacted in 1996 to create a set of requirements that allow for insurance portability, and guaranteed issue of all health insurance products to small groups. HIPAA was amended in 2002 to establish minimum Federal privacy standards to protect patients' medical records and other health information provided to health plans, doctors, hospitals and other health care providers.

Medical Necessity – The determination that an intervention recommended by a treating practitioner is the most appropriate available supply or level of service for the individual in question, considering potential benefits and harms to the individual; known to be effective in improving health outcomes. For interventions that are not yet in widespread use, an organization determines effectiveness based on scientific evidence. For established interventions, an organization determines effectiveness based on scientific evidence, professional standards and expert opinion.

Network: The doctors, clinics, health centers, medical group practices, hospitals, and other health care providers that a Preferred Provider Organization or other managed care network plan has selected and contracted with to care for its members.

Out of Network (OON) – Coverage for treatment obtained by a covered person outside the network service area.

Pharmacy Benefit Manager (PBM) – A third-party administrator (TPA) of prescription drug programs for a self-insured company or group.

Per Member Per Month (PMPM) – A unit of measurement related to each enrollee for each month.

Preauthorization – The process of obtaining prior approval as to the appropriateness of targeted services to ensure that the services follow accepted standards of care, are deemed medically necessary, and take place at the most appropriate level of service.

Precertification– The process of obtaining prior approval as to the appropriateness of routine services in order to notify the concurrent review system that a case will be occurring, and ensure that care takes place in the most appropriate setting.

Preferred Provider Organization (PPO) – An organization that contracts with independent providers at a discount for services.

Protected Health Information (PHI) – Health information, such as medical records, claims, and other administrative data, that identifies or can lead to identification on an individual.

Self-Funding – A health care program in which employers fund benefit plans from their own resources without purchasing insurance.

Stop Loss Insurance – Insurance coverage taken out by a health plan or self-funded employer to provide protection form losses resulting from claims greater that a specific dollar amount per covered person per year.

Summary of Benefits and Coverage (SBC) – An easy-to-understand summary about a health plan’s benefits and coverage.

Summary Plan Description (SPD) – A description of the entire benefits package available to an employee as required to be given to persons covered by self-funded plans.

Third Party Administrator (TPA) – An independent person or corporate entity that administers group benefits, claims, and administration for a self-insured company or group.

Underwriting – A review of prospective and renewing cases for appropriate pricing, risk assessment, and administrative feasibility.

Utilization Management (UM) –The process of evaluating and determining the coverage for and the appropriateness of medical services, as well as providing any needed assistance to clinicians or enrollees in cooperation with other parties to ensure the appropriate use of available resources. A critical aspect of UM is attention to quality, which denotes adherence to standards and a commitment to improvement.

Utilization Review (UR) –A formal evaluation of the coverage, medical necessity, efficiency or appropriateness of health care services and treatment plans.


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