Health Insurance Terms - Part 2 | Read With Ves

Health Insurance Terms - Part 2
Mick Mick
Minimum premium plan (MPP) – A plan where the employer and the insurer agree that the employer will be responsible for paying all claims up to an agreed-upon aggregate level, with the insurer responsible for the excess.  The insurer usually is also responsible for processing claims and administrative services.

Multiple Employer Welfare Arrangement (MEWA) – MEWA is a technical term under federal law that encompasses essentially any arrangement not maintained pursuant to a collective bargaining agreement (other than a State-licensed insurance company or HMO) that provides health insurance benefits to the employees of two or more private employers.

Some MEWAs are sponsored by associations that are local, specific to a trade or industry, and exist for business purposes other than providing health insurance.  Such MEWAs most often are regulated as employee health benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA), although States generally also retain the right to regulate them, much the way States regulate insurance companies.   They can be funded through tax-exempt trusts known as Voluntary Employees Beneficiary Associations (VEBAs) and they can and often do use these trusts to self-insure rather than to purchase insurance policies.

Other MEWAs are sponsored by Chambers of Commerce or similar organizations of relatively unrelated employers.  These MEWAs are not considered to be health plans under ERISA.  Instead, each participating employer’s plan is regulated separately under ERISA.  States are free to regulate the MEWAs themselves.  These MEWAs tend to serve as vehicles for participating employers to buy insurance policies from Statelicensed insurance companies or HMOs.  They do not tend to self-insure.

Premium - Agreed upon fees paid for coverage of medical benefits for a defined benefit period.  Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.

Premium equivalent - For self-insured plans, the cost per covered employee, or the amount the firm would expect to reflect the cost of claims paid, administrative costs, and stop-loss premiums.

Primary care physician (PCP) - A physician who serves as a group member's primary contact within the health plan.  In a managed care plan, the primary care physician provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.

Reinsurance – The acceptance by one or more insurers, called reinsurers or assuming companies, of a portion of the risk underwritten by another insurer that has contracted with an employer for the entire coverage.

Self-insured plan – A plan offered by employers who directly assume the major cost of health insurance for their employees.  Some self-insured plans bear the entire risk.  Other self-insured employers insure against large claims by purchasing stop-loss coverage. Some self-insured employers contract with insurance carriers or third party administrators for claims processing and other administrative services; other self-insured plans are selfadministered.  Minimum Premium Plans (MPP) are included in the self-insured health plan category. 

All types of plans (Conventional Indemnity, PPO, EPO, HMO, POS, and PHOs) can be financed on a self-insured basis.  Employers may offer both self-insured and fully insured plans to their employees.

Stop-loss coverage – A form of reinsurance for self-insured employers that limits the amount the employers will have to pay for each person’s health care (individual limit) or for the total expenses of the employer (group limit).
Third party administrator (TPA) – An individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance.  The TPA is not the policyholder or the insurer.

Types of health care provider arrangements Exclusive providers - Enrollees must go to providers associated with the plan for all non-emergency care in order for the costs to be covered. Any providers - Enrollees may go to providers of their choice with no cost incentives to use a particular subset of providers. Mixture of providers - Enrollees may go to any provider but there is a cost incentive to use a particular subset of providers.

Usual, customary, and reasonable (UCR) charges - Conventional indemnity plans operate based on usual, customary, and reasonable (UCR) charges.  UCR charges mean that the charge is the provider’s usual fee for a service that does not exceed the customary fee in that geographic area, and is reasonable based on the circumstances.  Instead of UCR charges, PPO plans often operate based on a negotiated (fixed) schedule of fees that recognize charges for covered services up to a negotiated fixed dollar amount.