Medicare Glossary of Terms

Find out answers to your questions about medicare and medicare supplements.

Glossary of Medicare Terms

Appeal: A special kind of complaint you make if you disagree with certain kinds of decisions made by Original Medicare or by your health plan. You can appeal if you request a health care service, supply or prescription that you think you should be able to get from your health plan, or you request payment for health care you already received, and Medicare or the health plan denies the request. You can also appeal if you are already receiving coverage and Medicare or the plan stops paying. There are specific processes your Medicare Advantage Plan, other Medicare Health Plan, Medicare drug plan, or Original Medicare must use when you ask for an appeal.

Beneficiary: The name for a person who has health care insurance through the Medicare or Medicaid program.

Broker: An individual or firm which acts as an intermediary between insurance companies and those looking for insurance. Brokers are usually paid by commission. For insurance brokers a license is required.

Carrier: An insurance company or managed care company.

Catastrophic Coverage: Once your total drug costs reach the $5451.25 maximum, you pay a small coinsurance (like 5%) or a small co-payment for covered drug costs until the end of the calendar year.

Copayment: In some Medicare health and prescription drug plans, the amount you pay for each medical service, like a doctor’s visit, or prescription. A copayment is usually a set amount you pay. For example, this could be $10 or $20 for a doctor’s visit or prescription. Copayments are also used for some hospital outpatient services in Original Medicare.

Covered Benefit: These are medically necessary services which are provided for under the terms of a plan.

Customary Charge: This is the amount of money a provider most frequently charges for a given service. It is one of the factors used to determine how much Medicare will pay the provider for a service. These charges are determined based on charge information collected from the different providers in a geographical area.

Deductible: This is the amount that the insured needs to spend on covered services before a plan begins paying for services.

Duplication of Benefits: This is when someone is covered by multiple policies which have the same types of benefits.

Effective Date: The date a policy goes into effect.

Exclusions: Conditions not covered under a plan.

Excess Charges: If you are in Original Medicare, this is the difference between a doctor’s or other health care provider’s actual charge (which may be limited by Medicare or the state) and the Medicare-approved payment amount.

Exclusivity Clause: This is a clause in the contract between a carrier and a provider which prohibits the provider from working for other managed care organizations.

Fee Schedule: This lists the maximum a plan will pay for specified medical procedures.

Formal Care: Care provided in the home by a home health aide, nurse, social worker or therapist. This can include such things as administering medication, wound care, dressing, mobility, and bathing. Non-medical services and services provided by non-professionals are usually not covered by Medicare.

Gatekeeper: A primary care physician, some other individual or individuals who determine what services a patient can have access to. In many, but not necessarily all, cases the gatekeeper has to provide a referral for a person to be able to see a specialist. A referral is not usually required for emergency care. HMOs use the gatekeeper mechanism.

Group Model HMO: In most group model HMOs, the HMO contracts with physician groups to provide all services to the members of the HMO. Under this system the physicians are not actually employees of the HMO. The physician groups are typically paid using the capitation system. The actually groups are typically owned by the doctors in the group. The doctors in the groups usually have control over how the services of the HMOs members are provided, and have in control over referrals within the group.

Health Maintenance Organization: A popular form of managed care. HMOs offer a prepaid system of health coverage where the providers are usually paid under the capitation system. There are medical and dental HMOs. HMOs are a very restrictive form of managed care. This is because one of their primary functions is to control the costs of health care by controlling the usage of health care resources. The main control tool in accomplishing this is the use of gatekeepers. Members are typically restricted to having to use the HMOs providers. Kaiser is one of the largest and most well known HMOs.

Home Care: This is care provided at an individual's home an can include such services as nursing care, occupational therapy, physical, respiratory therapy, speech therapy, assistance with activities of daily living, meal preparation, laundry, and cleaning.

Home Health Aide: This is a person who provides health services to people in their homes.

Home Health Care: This covers a range of services, from skilled care and physical therapy to personal care delivered at home.

Hospice: A facility which specializes in treating people who are terminally ill. The idea of the hospice is that a person who is terminally ill deserves to live out his or her life with respect and dignity, free of pain, in an environment that promotes the highest possible quality of life. Before the hospice was developed the vast majority of terminally ill people died in the hospital. One of the issues the hospice addresses is that terminal illness profoundly impacts not only the patient, but family and loved ones as well.

Inpatient Care: This is care given to a person who has been admitted to a hospital.

Lapse: The termination of an insurance contract due the premium not being paid.

Limiting Charge: This is the maximum amount a doctor can charge a Medicare beneficiary for a covered service if the physician does not accept assignment. Patients are not required to pay more than the limiting charge for the service.

Long Term Care: Extended care which may be provided in a nursing home, adult day care, an assisted living facility or a person's home. This type of care is not covered my Medicare, but is instead covered by long term care insurance. Long term care assists people with the activities of daily or who need supervision because of severe cognitive impairment. It can become very expensive and this is why many people purchase long term care insurance.

Medicare Approved Charge: The amount Medicare thinks is appropriate for a service covered by Part B.

Medicare Part A: This side of Medicare pays for several different types of health care expenses not covered under Part B. Part A pays for much of the expenses relating to hospitals. It pays for the room, general nursing, and various hospital supplies. It can also pay for inpatient mental health expenses It also pays for the expenses of skilled nursing facilities after a three-day inpatient hospital stay. This also covers hospice care. Some home health care costs are covered under Medicare Part A. Most people do not have to pay for Medicare Part A.

Medicare Part B: This side of Medicare pays for several different types of health care costs not covered under Part A. Part B covers physician costs. One exception it that it does not pay for routine physical examinations. This part of Medicare also covers outpatient medical and surgical expenses. This include outpatient mental health care and physical therapy. It also pays for items like wheel chairs and walkers. Most people pay a monthly premium for Medicare Part B.

Medicare: Medicare is a government program that provides health insurance for people who qualify. This includes people who are 65 or older, certain people who are not yet 65 but have disabilities, and people who have end-stage renal disease. Medicare is broken up into two parts. Part A is hospital insurance. Part B is medical insurance. Congress enacted the Medicare program in 1965 to help the elderly and disabled with their health care costs.

Primary Care Physician: A doctor or group of doctors responsible for providing primary care services and coordinating all aspects of medical care for members of the plan. This may include referring the member to specialists, and making sure the member receives proper rehabilitative services when needed. HMOs use the primary care physician mechanism.

Nursing Home: A nursing home is a facility that provides a room and 24 hour assistance with help with activities of daily living. They take care of things like meals and also provide forms of recreation for the people living there. Typically, nursing home Residents have physical or mental problems that don't allow them to live on their own. Much of the care provided in nursing homes is considered to be long term care.

Outpatient Care: Medical or surgical care that does not require a person to have to stay in the hospital overnight.

Premium: The amount of money paid to an insurance company in return for coverage under a policy.

Preventive Care: Medical care services directed at the prevention or early detection of disease.

Primary Care Physician: A physician or group of physicians responsible for providing primary care services and coordinating all aspects of health care for members of the plan. This may include referring the member to specialists, and making sure the member receives proper rehabilitative services when needed. HMOs use the primary care physician mechanism.

Referral: The process of one health care provider sending a patient to some other health care provider for further treatment or evaluation. With HMOs it often a requirement that a member receive a referral from the gatekeeper in order to use a provider other than the primary care physician for treatment under the plan.

Rehabilitation: Rehabilitative services are ordered by your doctor to help you recover from an illness or injury. These services are given by nurses and physical, occupational, and speech therapists. Examples include working with a physical therapist to help you walk and with an occupational therapist to help you get dressed.

Side Effect: A problem caused by treatment. For example, medicine you take for high blood pressure may make you feel sleepy. Most treatments have side effects.

Skilled Nursing Facility Care: This is a level of care that requires the daily involvement of skilled nursing or rehabilitation staff and that, as a practical matter, can’t be provided on an outpatient basis. Examples of skilled nursing facility care include intravenous injections and physical therapy. The need for custodial care (for example, assistance with activities of daily living, like bathing and dressing) cannot, in itself, qualify you for Medicare coverage in a skilled nursing facility. However, if you qualify for coverage based on your need for skilled nursing or rehabilitation, Medicare will cover all of your care needs in the facility, including assistance with activities of daily living.

Stroke: Occurs when a blood vessel to the brain bursts or is clogged by a blood clot. Part of the brain doesn't get the flow of blood it needs, depriving it of oxygen and causing severe damage to that part of the brain. The damage done by a stroke can be devastating and is often fatal. Strokes often result in dementia and to the inability to perform the activities of daily living.

Tiers: To have lower costs, many plans place drugs into different "tiers," which cost different amounts. Each plan can form their tiers in different ways. Here is an example of how a plan might form its tiers.

Example:

Tier 1 - Generic drugs. Tier 1 drugs will cost you the least amount.
Tier 2 - Preferred brand-name drugs. Tier 2 drugs will cost you more than Tier 1 drugs.
Tier 3 - Non-preferred brand-name drugs. Tier 3 drugs will cost you more than Tier 1 and Tier 2 drugs.

Treatment Options: The choices you have when there is more than one way to treat your health problem.

Urgently Needed Care: Care that you get for a sudden illness or injury that needs medical care right away, but is not life threatening. Your primary care doctor generally provides urgently needed care if you are in a Medicare health plan other than Original Medicare. If you are out of your plan's service area for a short time and cannot wait until you return home, the health plan must pay for urgently needed care.

Waiting Period: The period that must pass before an employee or dependent is eligible to enroll (becomes covered) under the terms of the group health plan. If the employee or dependent enrolls as a late enrollee or on a special enrollment date, any period before the late or special enrollment is not a waiting period. If a plan has a waiting period and a pre-existing condition exclusion, the pre-existing condition exclusion period begins when the waiting period begins. Days in a waiting period are not counted toward creditable coverage unless there is other creditable coverage during that time. Days in a waiting period are not counted when determining a significant break in coverage.

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