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Account: Refers to a Plan Sponsor (client) for whom SIHO administers the employee health benefit plan.
Allowable Charge: The maximum fee a third party will reimburse a provider for a given service.
Annual Stop Loss: Refers to the maximum amount of eligible charges paid by a covered person. This is
referred to as the Out-of-Pocket maximum amount. Once the stop loss amount is met, eligible medical expenses
for the remainder of the calendar year are paid at 100%.
Authorization: As it applies to managed care, authorization is the approval of care. Preauthorization may be
required before admission takes place or care is given by non-contracted providers. At SIHO the term refers to
approval of a precertification or referral request.
Balance Billing: Provider practice of billing the patient for the difference (or balance) of charges above
the amount reimbursed by the health plan. Managed care plans commonly prohibit providers from balance billing except
for allowed copayments, coinsurance and deductibles.
Benefits Less Benefit: This is a coordination of benefits rule whereby the total payment is not any more than
the higher benefit of the two plans, whichever that may be. As long as the primary carrier pays 80% of more of the
billed charges, SIHO will not pay anything.
Calendar Year Deductible: A deductible that applies to any eligible medical expenses incurred by the insured
during any one calendar year.
Claim: A bill to an insurer by or on behalf of an insured person for the payment of benefits under a policy.
COBRA (Consolidated Omnibus Budget Reconciliation Act): U.S. legislation relative to mandated benefits for
all types of employee benefits plans. The Act established the requirement for continued coverage for employees
and/or their dependents, who would otherwise lose coverage, for 18 months (36 months for dependents in the event
of the employee’s death.) The member pays for the cost of the coverage.
Co-insurance: Arrangement by which the health plan and the member share, in a specific ratio, payment for
losses covered by the plan after the deductible is met (for example, 80/20, meaning the plan pays 80% and the member
Coordination of Benefits (COB): A way to integrate benefits payable under more than one health insurance plan
that the insured may have. As a result, the benefits from all sources do not exceed 100% of allowable medical expenses
or eliminate appropriate patient incentives to contain costs.
Copayment: A type of cost sharing that requires the insured or subscriber to pay a specified flat dollar amount
for the provided services. It is usually on a per unit of service basis, with the third-party payer reimbursing some
portion of the remaining charges.
Deductible: Amount of covered expenses that must be incurred and paid by the insured before benefits become
payable by the insurer.
Dependent: A covered person’s spouse (wife or husband), not legally separated for the insured, and unmarried
child(ren) who meet certain eligibility requirements. See Standard Plan Document for more details.
Diagnosis: The identification of a disease or condition through an examination.
Duplication of Benefits: Overlapping or identical health coverage of an insured person under two or more plans,
usually the result of contracts with different health organizations, insurance companies, or prepayment plans.
Durable Medical Equipment: Medical equipment that aids in the activities of daily living when those activities
are limited by illness or injury. Generally is not useful to a person in the absence of illness or injury, and is
appropriate for use at home. Examples include hospital beds, wheelchairs, and oxygen equipment.
Effective Date: Date on which insurance coverage under a policy begins.
Eligibility: The provisions of a group policy that state requirements group members must satisfy to become insured,
with respect to themselves or their dependants. See an SPD for details.
EOB (Explanation of Benefits): Worksheet that explains the claim payment to the member and health care provider.
Health Care Financing Administration (HCFA): The federal agency that oversees all aspects of financing for
Medicare and also oversees the Office of Prepaid Health Care Operation and Oversight. SCFA is the contracting agency
for HMOs who seek direct contractor/provider status for provision of the Medicare benefit package.
Health Insurance Portability & Accountability Act of 1996 (HIPAA): Establishes federal requirements for the
availability and portability of group and individual health insurance coverage. It limits the circumstances under
which coverage may be excluded for medical conditions present before a person enrolls. Under the law, a preexisting
condition exclusion generally may not be imposed for more than 12 months (18 months for a late enrollee). The 12 month
(or 18 month) exclusion period is reduced by a person’s prior health coverage.
“In-Area” SIHO Service Area: Includes the following counties: Bartholomew, Brown, Clark, Crawford, Decatur,
Dearborn, Floyd, Green, Harrison, Jackson, Jefferson, Jennings, Johnson, Lawrence, Martin, Monroe, Morgan, Orange,
Ohio, Ripley, Scott, Shelby, Switzerland and Washington. SIHO emphasizes the use of “in-area” providers or services
Insurance: Plan of risk management that, for a price, offers the insured an opportunity to share the cost of
possible economic loss through an entity called an insurer.
Insured: The person (employee or dependent member) covered for insurance under the group policy and to whom or
on behalf of whom the insurer agrees to pay benefits.
Lifetime Maximum: (a) Maximum payable under the employer’s plan per person. (b) Maximum payable under the
Specific Stop Loss contract per person.
Maximum Out-of-Pocket: The maximum amount of money an insured will pay in a benefit period, in addition to
regular premium payments. The out-of-pocket payment is usually the sum of the deductible and coinsurance payments.
Medicare: A government insurance program that provides hospital benefits (Medicare Part A) and medical
benefits (Medicare Part B) to persons age 65 and older, and to some other eligible. (Medicare covers short-term
acute medical conditions rather than long term, chronic conditions that require custodial care.) Medicare is
administered by the Social Security Administration.
Medicare Supplement (also Medigap): Private insurance products that can be purchased to supplement Medicare.
Open Enrollment: A period of time in which eligible subscribers may elect to enroll in, or transfer between,
available programs providing health care coverage.
Out of Area: Locations outside of SIHO’s designated service area counties. (See the definition for “In-Area”
SIHO Service Area) Referrals to “out-of-area” hospitals and physicians are considered when necessary and appropriate
care is not available among the “in-area” providers.
Paid Claim: Payment occurs on the date the payment check is issued (or on the draft is drawn), provided it is
promptly delivered to the payee and is paid upon presentment.
Participating or Contracted Provider: Physician who practices within the SIHO service area. They are the
primary SIHO physician network. Members living within the SIHO service area are encouraged to use primary care and
specialty physicians from this network.
Physicians’ Current Procedural Terminology (CPT): A listing of descriptive terms and identifying codes for
reporting medical services and procedures performed by physicians. The purpose of the terminology is to provide a
uniform language that accurately describes medical, surgical and diagnostic services.
Precertification: A program that requires the individual or the provider to notify the insurer prior to
hospitalization or surgical procedure. The notification allows the insurer to authorize payment, as well as recommend
alternative courses of action.
Preexisting Condition: Any physical and/or mental condition or conditions of an insured that exist prior to the
effective date of coverage, and therefore may be excluded from coverage depending on the plan.
Primary Care Physician (PCP): A family practice physician, a pediatrician or a general internal medicine
physician. The primary care physician provides, coordinates and/or is actually aware of all aspects of the member’s
health care and history.
Reasonable and Customary (R&C): A payment rate based on the fees for medical services charges by health care
providers in a specified area (usually a zip code or group of related zip codes).
Schedule of Benefits: An outline of the benefits described in the plan document or policy.
SIHO (Southeastern Indiana Health Organization): SIHO was formed in 1987 as a locally based, not-for-profit
prepaid group health benefit program. SIHO is a cooperative effort among health care providers and major employers
in southern Indiana.
Summary Plan Document (SPD): The description of benefits under which the employer’s self-funded health and
welfare plan is administered.
Third Party Administration (TPA): Method by which an outside person or firm, not a party to a contract,
maintains all records regarding the persons covered under the insurance plan. Entity also may pay claims.
Waiting Period: The amount of time a person must wait from the date of entry into an eligible class (or from
application of coverage) to the date the insurance becomes effective. See SPD for details.