Healthcare industry dictionary

The healthcare industry is full of acronyms and unusual terminology.  Maybe your doctor's bill has an acronym you don't understand?  Or your insurance paperwork has a term you've never seen?  Use this alphabetical dictionary to help you decipher the heiroglyphics of healthcare.

• Authorization (prior authorization): Confirmation from a health insurer that a service or procedure will be covered by the insurance policy, usually because it has been deemed "medically necessary".
• Cash pay discount: A discount offered to patients paying by cash or something relatively similar, like credit/debit card or personal check.  This discount is offered because cash payment by the patient is generally preferred over payment through insurance because it is so much faster and simpler.  A similar alternative is a "Prompt pay discount."
• Catastrophic health insurance: Health insurance with a high deductible, so coverage only begins if you incur large expenses after becoming very sick or injured.
• Coinsurance: The percent amount of each healthcare bill the patient must pay, where their health insurer covers the rest.  For example, a patient might have a health insurance policy with coinsurance of 20%.  That means the patient must pay $20 if they receive a healthcare bill for $100, and their insurer will cover the remaining $80.  Coinsurance is an alternative to a copay.
• Copay: The flat amount of each healthcare bill the patient must pay, where their health insurer covers the rest.  For example, a patient might have a health insurance policy with a copay of $30.  That means the patient must pay $30 if they receive a healthcare bill for $100, and their insurer will cover the remaining $70.  Copay is an alternative to a copay.
• CPT code: Current Procedural Terminology codes are used to classify different healthcare services.  For example, 31505 is an endoscopy procedure on the larnyx.  Different CPT codes are generally associated with different prices.  CPT represents Level 1 of the HCPCS codes, so these terms are somewhat interchangeable.
• Deductible: The amount you must pay out of pocket for healthcare before your health insurance starts to help you pay for services.  What you have paid toward your deductible resets every year.
• HCPCS code: Pronounced "hick-picks"; Healthcare Common Procedure Coding System codes are used to classify different healthcare services.  For example, H0031 is a mental health assessment by a non-physician.  Different HCPCS codes are generally associated with different prices.  Level 1 of the HCPCS codes are the CPT codes, so these terms are somewhat interchangeable.
• HDHP: "High deductible health plan."  This is primarily a government term that is defined as health insurance with a deductible over $1,400 for an individual (or $2,800 for a family).
• HIPAA: Health Insurance Portability and Accountability Act, which became law in 1996. It is usually regarded as increasing protections on patient privacy, but it also covers topics like health insurance after an employment ends.
• HSA: Health Savings Account.  These are basically a special type of bank account with federal tax incentives.  If you have an HSA, you can put some of your income into it every year tax-free.  Then, you can use that money in the future if you need to pay for healthcare expenses.
• Indemnity plan: A type of health insurance plan, also called a fee-for-service plan.  The insurer pays a percentage of the "usual and customary" price, usually 80%, and the insured patient pays the rest.
• Medically necessary: A service or procedure is considered medically necessary when it is 1) in accordance with accepted standards of medical practice, 2) required to protect and enhance the patient's health, and 3) could adversely effect the patient's health if not rendered.
• Narrow network: An insurance network that is especially limited because providers have not only agreed to accept reimbursement at discounted prices, they must also maintain minimum quality and/or outcome requirements.
• Out of pocket: When a patient pays for healthcare directly.  The patient might pay by cash, credit/debit card, bank account, personal check, wire transfer, etc. - it depends what the patient prefers among the options the healthcare provider accepts.
• Premium: The price of health insurance for a certain period of time.  It's basically the price of recurring membership.  Generally premiums are paid every 2 weeks or every 1 month.
• Prompt pay discount: A discount offered to patients who pay on the day of service (sometimes a grace period of multiple days is allowed).  This discount is offered because prompt payment by the patient is generally preferred over payment through insurance because it is so much faster and simpler.  A similar alternative is a "Cash pay discount."

Are we missing a term?  Please let us know!

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