Defining Stuff
Your HealthCare Glossary
Consider this the authoritative source for finding out what stuff means in the complex world of healthcare. If it isn't eventually on this list it means some politician made the word up and it is a waste of your time to remember the definition.
Balanced Billed - If someone goes to a hospital, doctor, or other provider service that is not part of a Preferred Provider Network (those listed as PPO providers in your benefit book or on their website) most plans allow the that "out-of-network provider to bill you for anything that your insurance does not cover. If you use a provider that is "in-network" the contract between your benefit plan and that provider most often strictly prohibits that provider from billing you for costs not covered by the plan. This is an element of Managed Care that is supposed to give the consumer an incentive to go to in-network providers. Under managed care, this process is known as "steerage" or the probability that the consumer will choose the in-network provider to prevent balance billing. In addition, most plans also pay a lesser coinsurance percentage if a consumer chooses to use a provider that is not in the network. In return for this "steerage" the provider agrees to give certain discounts to lower the cost of care.
Bipartisan - a simple definition would be that, in a two party system both parties agree on a bill, amendment, or other issue related to their citizens. In the modern congress saying that something is bipartisan becomes more important than what is agreed upon. In other words, if both parties agree the bill should be passed...because they agree...not because it is the right thing to do, becomes the sound bite. What is being debated takes second place to what is being discussed. The news media reports that the two sides agree instead of the facts related to what was agreed upon. This effort also gives the impression that to be "partisan" is bad. If there were no partisan positions there would be no need for a two party system. More than bipartisan, each side should be willing to support issues proposed by the other side, not because they agree with them, but because they are sound, common sense solutions to a given problem.
BUCA - This is an acronym for the four largest health insurance companies - Blue Cross, United Health Care, Cigna, and Aetna.
Charge Master - A hospital charge description master (CDM), also known as a chargemaster, contains the prices of all services, goods, and procedures for which a separate charge exists. It is used to generate a patient’s bill. It also contains the discounts agreed upon between the provider and the insurance company. The provider, in most cases, protects this information with more security than their bank account. In most states it is impossible for the consumer to see inside this document. The provider is fearful that if word gets out that they have given a certain discount to one insurer that they will be forced to renegotiate with all of the other insurance carriers that cover patients in their facilities. Some states have passed laws that require that this information be public. Some states require a limited number of procedures be disclosed. The end result is that the consumer never really knows the difference between insurance company discounts and cannot make a factual decision about which insurer would be the most cost effective for their needs. This is another reason that total transparency is needed within all cost-drivers.
Competition - This word is often used to describe the price variation between two like entities that are trying to steer business out of the competitors store and into theirs. This word can also mean two competing teams where one is expected to win at the end of the event, winner take all. In the healthcare debate this term is used to suggest that there is currently no competition between insurance carriers and that somehow, the government is capable of creating competition in the private sector by forcing the private sector to lower their premiums for fear that the governments newly formed insurance company will cause the private sector to lose all their business. On the other hand, America is assured that only a small percent of those covered under private insurance will leave and be attracted to the government run insurance company. Confusing? Yes, and that is what is intended.
There are two elements at play here. First, there is a real lack of competition in certain private insurance markets and that needs to be addressed (see solution tab.) Second, the government is already in competition with the private sector through huge, bankrupt entitlement programs voted into law in 1965; Medicare and Medicaid. Wait you say; "These two programs are run by private insurance companies." They may be on the surface but there are two guiding principles when considering who runs something. First, who sets the rates, and second, who makes the rules? In both cases it is the government. Logic would say that the government runs these programs.
On the first valid point, that there is a lack of competition on certain private markets, let me define which markets. Any market that is dominated by one or two carriers because they are allowed to have the best discounts with providers is a competition deprived market. That is true in several states. This problem was brought about by "managed care" (see definition of managed care.) Also, see the following link outlining the history of managed care in America. Also, see this additional link. As I will discuss under the label of managed care, the first thing that needs to be changed is the name. This concept was sold as managed care but in reality it is "managed cost." Nothing about the modern concept of managed care, manages care. The program, over almost two decades, has allowed consolidation of carriers - and therefore a reduction in those competing, super inflation of masked provider costs, holding hostage the very providers it was intended to help, significant reduction in independent third party administrators who offer self-funded plans, and the opening act for the pharmaceutical problem that has erupted since drug manufacturers were allowed to advertise directly to the public.
On the second valid point, with the passage of Medicare and Medicaid in July of 1965, tremendous pressure has been applied to private insurers and the insureds they represent by continued "push down" on what the government plans will pay for care. That pressure, in addition to the managed care cost reduction, has forced most providers to play a silly game with the large carriers who benefit the most from this outdated, over utilized virus called managed care. The proof is simple. With all the advantages these super insurance giants hold, their rates are in most cases no better than the others who are left to pick up their scraps.
The amazing part of this ruse is that the large carriers beat down the provider on what they are willing to pay causing the provider, combined with the shortage from the price-setting of the government, to take what they can get. That means that the claims paid by the carrier are significantly less. On the other side the large carrier often charges self-funded clients 30% more to administer their programs than the remaining independent third party administrators. In reality the providers are giving up dollars to satisfy the large carrier and the client is paying more to the large carrier to administer their benefits, so the large carrier wins on both ends. See the following article from the Chattanooga Times Free Press. This article also speaks for a "public plan option." The writers do this because they are convinced that the Federal Employees Plan, supposedly run by the government, is doing so well and offers such great benefits. In reality the plans that cover our elected officials are run by each individual state where the elected official resides. In one Tennessee congressman's case, Blue Cross Blue Shield of Tennessee is his carrier. The plan that he chose can be purchased by any like Tennessee citizen for about $150 less than the government is paying for his coverage through the so-called federal employees plan. There are thousands of individuals covered under these plans and yet they are priced no better than the rest of America. Why? Because bigger is not cheaper in health care. More on that under another topic. Remember, this is about how the government can make the private sector compete. Does your head hurt yet?
DSH (Referred to as "Dish Payments) - If you listen to hospital administrators you will often hear that, due to caring for indigent patients, the hospital will write off a significant amount of services, often in the millions of dollars. What you may not hear is that possibly over two-thirds of that money is reimbursed through "DSH" payments from various sources. Click this link to read more about how those are figured in an article from the Association of American Medical Colleges (AAMC.) For a look at what each state was paid in 2009 click here for a listing published by Health and Human Services (HHS.) For a better look inside this seldom discussed federal financing mechanism click here. What does all of this mean? Often insurance companies are criticized, sometimes rightly so, for building large marble temples on very expensive street corners across America. This action is seen as extravagance at the cost of those who buy insurance. What often goes uncriticized are the gleaming towers of technology that sit at strategic exits off our interstates called hospitals. They are built with the same flow of money that built the marble insurance company towers. Hospitals can advertise how they are interested in treating patients and that they do a better job than the other hospital down the street, but there will always remain one core truth. If the hospital don't fill their beds they will go out of business. The hospital depends on a nation of sick people. In summary, when you hear a discussion about hospital costs, ask a lot of questions; about your bill, and about how the hospital pays theirs.
Managed Care - This topic is with out a doubt the most volatile of all subjects not being discussed in the healthcare cost crisis debate. "Oh, really," you say. "Then how come I don't ever hear it on TV or in the newspaper?" Notice I said, "Not being discussed." However, let me be clear with my answer to your very good question; MONEY! Whose money should be your next question. That would be...your money. And lots of it. In fact nearly all of the healthcare dollars. I know what you are thinking. "This is it. The silver bullet that will fix this mess. Let's hear it Bob, what do we need to do with Managed Care that will make my healthcare costs go down? What? What? What?"
The disappointing answer to all your questions is that it is not the single bullet. And, it is not likely to be changed without an all out war. The reason that you have not heard this come up in any of the legislative bills or in the news is that neither the insurance companies nor the providers want it discussed. The irony is that they both know it is a broken, worn out system. The reason they don't want it discussed - one of several - is that they don't have a replacement that will protect their interests. And the one that I would propose bears just to much raw skin. Not to hold you in anticipation, here is the replacement word; transparency. The word doesn't seem that intrusive or threatening, does it? Oh, but the pond scum that rises to the surface when transparency starts vibrating the silt floor of the bayou.
First, a short discourse explaining what managed care is supposed to be. This is not a new concept. Click here for a lesson. Managed care simply implies that there are pre-paid services available to certain qualified individuals. In other words when you get sick you go for treatment and pay nothing. It is pre-paid. One of the first records of this system was in 1917 in the lumber industry in Tacoma. Later, Henry J. Kaiser, in 1938 , established a pre-paid program for the employees of the Grand Coulee Dam Project. Make no mistake, managed care, in its purest form, does save money and provide quality care. The key is, in its purest form. Its purest form would be that an employer owns a hospital, employs the doctors and staff and the only way you can have your treatment covered is to go to that hospital and see those doctors. Otherwise, you pay 100 percent out of your pocket. A form of that was tried a few years ago. It was called an HMO (Health Maintenance Organization.) The public didn't like it. The doctors didn't like it, and it almost went away. Yes, there are still HMO's.
So what's the rub? True managed care doesn't have anything to do with discounts to steer patients to a menu of hospitals and doctors. That was morphed into the definition within the last two decades as insurance companies and providers searched for a way to control the flow of patients who had no clue what the providers costs were. Managed care became, managed cost. That was the beginning of the end. The current managed care system is complicated, tilted, and secret. It has allowed the formation of super insurers who garner unprecedented power in the negotiation of discounts, driving out competition. That my friend is why the word transparency is such a hated word. A word that means just the opposite of what managed care has become, a patchwork of three letter acronyms all designed to control, not cost, but cash flow.
Transparency simply means that everything is public knowledge. State and local governments work that way already; yes, except for the crooked guys who eventually get caught. And no, the federal government does not operate that way. They have their own set of rules in addition to excluding themselves from most of the laws they pass. We could use a dose of transparency in Washington DC as well. but that is another topic. Individuals, employers, study groups, analysts, media, competing insurance companies, everybody should be able to see what a provider charges and where ALL costs go. Consumers should be able to compare providers costs and outcomes.
I will close by saying that, not just the providers, but everyone involved in the delivery and financing of healthcare must be transparent; everyone. Only then can we begin to develop and reform our system. Any other approach, by the government, or the private sector, is doomed. Any reform built on anything other than total transparency would be like building a 150 story building on a ten-acre quicksand lot.
Out of Pocket - This is a term often used when telling you how good your benefits are. It is simply how much an individual or a family will pay, from their own bank account, during a calendar or contract year for their incurred bills. Some times this includes your deductible and sometimes it does not. There is no regulation or law that makes insurance companies state this the same way. This is something you need to know, so ask somebody. It can make a great deal of difference in your annual planning for medical expenses.
This usually works like this; you incur a medical cost, visit, surgery, shot, etc - notice I did not say prescription. If you do not have a copay then you will pay the first dollar until the deductible has been met. After you meet the deductible then you will start paying a percentage, usually 20% of the bill, and the insurance will pay the remainder. When that 20% you pay reaches a predetermined amount (the out-of-pocket) then the insurance will pay 100% of covered costs. Two important points; first, if you have a copay then the insurance covers all other covered charges after the copay. The copay however does not count toward your out of pocket limit. You will pay the copay every time you incur a covered expense. Second, I mentioned before that prescriptions are not normally included in your deductible calculation or your out of pocket limit. Prescriptions are usually covered 100% after you pay a copay. That prescription copay also does not count toward your deductible or your out of pocket limit.
So why is this so important? In today's medical world your deductible and coinsurance percentage are not really that important. Most often people get upset when the deductible goes up or the coinsurance percentage is raised. In reality if you have any significant medical procedure you are going to hit your out of pocket limit. If the coinsurance percentage is raised, say from 29% to 40%, you just get to the pot of pocket quicker. If you go into the hospital, for any reason, you most likely just hit your out of pocket limit. If you are considering your coverage, either individually or if you are on the employers plan, you need to concentrate on the out of pocket limit. That limit should be what you have placed in savings or you are certain that you can borrow it from a bank, family or friend.
Now, about high deductibles, $5,000 and higher. Most of the time these policies or coverage plans will have a matching $5,000 out of pocket limit. That means that when you hit $5,000 the plan then pays 100%. If you can buy insurance cheaper with this high deductible and remain relatively well for two to three years you can save enough to cover the $5,000 claim, if you ever have one. If not that is your money. Yes, that puts the responsibility back in your lap to change your life style and start taking care of yourself! Stop smoking and go on a 2,000 calorie a day eating spree.
Soon to be defined:
per diem
Self-funded
Transparency
DRG
Consumer driven healthcare plan
Deductible
Discount
Fully insured
Bigger is cheaper
Outcomes
Disincentives
Incentives
CPT Code
Others to be listed