Glossary

Sanction

Reprimand of a provider by a health plan.

Secondary Care

Services provided by medical specialists who generally do not have first contact with patients (e.g., cardiologist, urologists, dermatologists). In the U.S., however, there has been a trend toward self-referral by patients for these services, rather than referral by primary care providers. This is quite different from the practice in England, for example, where all patients must first seek care from primary care providers and are then referred to secondary and/or tertiary providers, as needed.

Secondary Coverage

Health plan that pays costs not covered by primary coverage under coordination of benefits rules. Any insurance that supplements Medicare coverage. The three main sources for secondary insurance are employers, privately purchased Medigap plans, and Medicaid.

Section 1115 Medicaid Waiver

The Social Security Act grants the secretary of HHS broad authority to waive certain laws relating to Medicaid for the purpose of conducting pilot, experimental or demonstration projects which are “likely to promote the objectives” of the program. Section 1115 demonstration waivers allow states to change provisions of their Medicaid programs, including: eligibility requirements, the scope of services available, the freedom to choose a provider, a provider’s choice to participate in a plan, the method of reimbursing providers, and the statewide application of the program. Health plans and capitated providers can seek waivers through their state intermediaries.

Section 1915(b) Medicaid Waiver

Section 1915(b) waivers allow states to require Medicaid recipients to enroll in HMOs or other managed care plans in an effort to control costs. The waivers allow states to: implement a primary care case-management system; require Medicaid recipients to choose from a number of competing health plans; provide additional benefits in exchange for savings resulting from recipients’ use of cost-effective providers; and limit the providers from which beneficiaries can receive non-emergency treatment. The waivers are granted for two years, with two-year renewals. Often referred to as a “freedom-of-choice waiver”.

Self-Funding

Employer or organization assume complete responsibility for health care losses of its covered employees. This usually includes setting up a fund against which claim payments are drawn and claims processing is often handled through an administrative services contract with an independent organization. In this case, the employer does not pay premiums to an insurance carrier, but, rather pays administrative costs to the insurance company or health plan, and, in essence, treats them as a third party administrator (TPA) only. However, the employee may not be able to detect any difference because the plan description and membership card may carry the name of the insurance company not the employer. Same as self-insured, see below.

Self-Insurance or Self-Insured

This term is usually used to describe the type of insurance which an employer provides. When an employer is self-insured, this means that the payer or managed care company manages the employer’s funds whether than requiring the employer to pay premiums. Many employers choose to self-insure because they are then exempted from certain insurance laws and also think that they will spend less money in the short run. Employers assume the risks involved and also have full rights to all insurance claim information. Typically, the self-insured employer is a large employer. The employees or patients will not be able to discern if their employer is self-insured easily since all paperwork or benefits cards usually contain the name of the insurance company.

Sentinel Event

An adverse health event that may have been avoided through appropriate care or alternate interventions. Providers are required to alert JCAHO and often state licensing authorities of all sentinel events, including a review of risk factors, preventative measures and case analysis.

Shadow Pricing

Within a given employer group, pricing of premiums by HMO based upon the cost of indemnity insurance coverage, rather than strict adherence to community rating or experience rating criteria.

Shared Risk Pool for Referral Services

In capitation, the pool established for the purpose of sharing the risk of costs for referral services among all participating providers. Commonly, this involves a group or specialty category of physicians and is based on utilization. Sometimes, risk pools are established in partnered or limited partner or foundation capitation systems, whereby risk is shared in a limited way by both providers and health plans.

Site-of-Service Differential

The difference in the monies paid when the same service is performed in different practice setting or by a different provider. One example would be an examination in an ER versus in a family doctor’s office.

Skilled Nursing Facility (SNF)

A licensed institution, as defined by Medicare, which is primarily engaged in the provision of skilled nursing care. SNFs are usually DRG or PPS exempt and are located within hospitals, but, sometimes are located in rehab facilities or nursing homes.

Small-group Market

The insurance market for products sold to groups that are smaller than a specified size, typically employer groups. The size of groups included usually depends on state insurance laws and thus varies from state to state, with 50 employees the most common size.

Sole Community Hospital (SCH)

A hospital which (1) is more than 50 miles from any similar hospital, (2) is 25 to 50 miles from a similar hospital and isolated from it at least one month a year as by snow, or is the exclusive provider of services to at least 75 percent of its service area populations, (3) is 15 to 25 miles from any similar hospital and is isolated from it at least one month a year, or (4) has been designated as an SCH under previous rules. The Medicare DRG program makes special optional payment provisions for SCHs, most of which are rural, including providing that their rates are set permanently so that 75 percent of their payment is hospital-specific and only 25 percent is based on regional DRG rates.

Solo Practice

A physician who practices alone or with others but does not pool income or expenses. This form of practice is becoming increasingly less common as physicians band together for contracting, overhead costs and risk sharing.

Specific Stop Loss

The form of excess risk coverage that provides protection for the employer against high claim on any one individual. This is protection against abnormal severity of a single claim rather than abnormal frequency of claims in total. Also see Reinsurance and Stop Loss.

Spend Down

A term used in Medicaid for persons whose income and assets are above the threshold for the state’s designated medically needy criteria, but are below this threshold when medical expenses are factored in. The amount of expenditures for health care services, relative to income, that qualifies an individual for Medicaid in States that cover categorically eligible, medically indigent individuals. Eligibility is determined on a case-by-case basis.

Spider Graphs/Charts

A technique or tool developed by Ernst & Young, to combine analyses of a market’s level of managed care evolution with an internal readiness review.

Staff Model HMO

A model in which the HMO hires its own physicians. All premiums and other revenues accrue to the HMO, which, in turn, compensates physicians. Very much like the group model, except the doctors are employees of the HMO. Generally, all ambulatory health services are provided under one roof in the staff model.

Standard Class Rate (SCR)

Base revenue requirement per member multiplied by demographic information to determine monthly premium rates.

Standing Referral

A referral to a specialist provider that covers routine visits to that provider. It is a common practice to permit the gatekeeper to make referrals for only a limited number of visits (often 3 or fewer). In cases where the medical condition requires regular visits to a specialist, this type of referral eliminates the need to return to the gatekeeper each time the initial referral expires.

State Children’s Health Insurance Program (SCHIP)

Although Medicaid has made great strides in enrolling low-income children, significant numbers of children remain uninsured. From 1988 to 1998, the proportion of children insured through Medicaid increased from 15.6% to 19.8%. At the same time, however, the percentage of children without health insurance increased from 13.1% to 15.4%. The increase in uninsured children is mostly the result of fewer children being covered by employer-sponsored health insurance. The Balanced Budget Act of 1997 created a new children’s health insurance program called the State Children’s Health Insurance Program. This program gave each state permission to offer health insurance for children, up to age 19, who are not already insured. SCHIP is a state administered program and each state sets its own guidelines regarding eligibility and services.

Stop Loss Insurance

Insurance purchased by an insurance company or health plan from another insurance company to protect itself against losses. Reinsurance purchased to protect against the single overly large claim or the excessively high aggregated claim during a set period. Also see Reinsurance and Specific Stop Loss.

Sub-Capitation

An arrangement that exists when an organization being paid under a capitated system contracts with other providers on a capitated basis, sharing a portion of the original capitated premium. Can be done under Carve Out, with the providers being paid on a PMPM basis.

Subrogation

Procedure where insurance company recovers from a third party when the action resulting in medical expense (e.g. auto accident) was the fault of another person. The recovery of the cost of services and benefits provided to the insured of one health plan when other parties are liable.

Subscriber

Person responsible for payment of premiums, or person whose employment is the basis for membership in a health plan.

Subscriber Contract

A written agreement that describes the individual’s health care policy. Also called subscribe certificate or member certificate.

Summary Plan Description (SPD)

In self-funded plans, a written explanation of the eligibility for and benefits available to employees required by ERISA

Supplemental Insurance

Any private health insurance plan held by a Medicare beneficiary or commercial beneficiary, including Medigap policies and post-retirement health benefits. Supplemental usually pays the deductible or co-pay and sometimes will pay the entire bill when the primary carrier’s benefits are exhausted.

Supplemental Medical Insurance (SMI)

Part B of the Medicare program. Part B normally covers the outpatient services, as opposed to Part A which covers inpatient. This voluntary program requires payment of a monthly premium, which covers 25 percent of pro-ram costs. Beneficiaries are responsible for a deductible and coinsurance payments for most covered services. See also Part B.

Supplemental Security Income (SSI)

A federal cash assistance program for low-income aged, blind and disabled individuals established by Title XVI of the Social Security Act. States may use SSI income limits to establish Medicaid eligibility.

Supplemental Services

Optional services a health plan covers or provides.

Surplus Lines Tax

A tax imposed by state law when coverage is placed with an insurer not licensed or admitted to transact business in the state where the risk is located. Unlike premium tax for admitted insurers, the surplus lines tax is not included in the premium and must be collected from the policy holder and remitted to the state.