Glossary of Terms

Ambulatory Care

Health care services that do not require hospitalization of a patient, such as those delivered at a physician's office, clinic, medical center or outpatient facility.



An approval of care, such as for hospitalization. Authorizations can be granted by health plans, hospitals or medical groups, depending on who is financially responsible for the health services to be rendered.


Clinical Trials

Scientifically controlled research studies involving people. Such studies are used to determine the effectiveness of a new treatment or pharmaceutical, or to compare standard medications or procedures with others that may be equal or better.



Portion of covered health care costs for which the covered person has financial responsibility, usually according to a fixed percentage. Often coinsurance applies after meeting a deductible requirement.


Coordination of Benefits

Provision that applies when a person is covered by more than one insurance plan. Coordination of benefits requires that payment of benefits be coordinated by all plans in order to eliminate overinsurance or duplication of benefits.



Cost-sharing arrangement in which the insured person pays a specified share of the charge for a specified service, such as $10 for an office visit. The insured person is usually responsible for payment at the time the health care is rendered.



Amount of eligible expense an insured person must pay from his or her own pocket before the insurance company will pay for eligible benefits.


EPO (Exclusive Provider Organization)
As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside the network for care. There are no out-of-network benefits with EPO plans.


HMO (Health Maintenance Organization)

A health care service plan that requires its subscribers or members, except in a medical emergency, to use the services of designated physicians, hospitals or other providers of medical care.


IPA (Independent Practice Association)

A group of physicians that contracts for services with insurance plans.


Knox-Keene Act

This legislation provides protection to patients through a variety of requirements imposed on HMOs in California. Requirements cover services and characteristics such as marketing, financial, administrative, access and quality assurance.



California's version of Medicaid, this federal health insurance program is administered and operated individually by participating state and territorial governments. It provides medical benefits to eligible low-income and disabled persons needing health care. The federal and state governments share the program costs.


MediCal Managed Care

MediCal benefits for which the eligible person must choose a primary care physician who manages all care provided to the eligible person via treatment or referrals for treatment by specialists. Patients who do not follow the prescribed guidelines are responsible for all charges associated with that episode of care and are not covered by the state MediCal program.



Federally administered health insurance program that covers the cost of hospitalization, medical care and some related services for eligible persons. Medicare has two parts: PART “A” covers inpatient services, nursing home care, home health care and hospice care; PART “B” covers outpatient services, physician services, medical equipment and supplies. Medicare covers those individuals 65 years or older and younger disabled people and dialysis patients.

Medicare Advantage 
Medicare Advantage plans allow Medicare beneficiaries to receive Medicare-covered benefits through private health plans instead of through Original Medicare. These private Medicare Advantage HMOs and PPOs often include additional benefits beyond Medicare Part A and B; including, but not limited to prescription drug coverage, dental and vision coverage, and even gym memberships.



Refers to those individuals who are dually eligible for Medicare and MediCal programs.


Non-covered Services

Services not covered by a benefits policy.



Any insured person who receives care from a provider not holding a contract with the insured person's insurance company is receiving services out-of-network. When a patient receives care out-of-network, he or she may be financially responsible for the care provided to them.


PCP (Primary Care Physician)

A physician whose practice is devoted to internal medicine, family/general practice or pediatrics.


POS (Point of Service)

An option offered by a health plan allowing the covered person to choose to receive a service from a participating or nonparticipating provider, with different benefit levels associated with the use of each.


PPO (Preferred Provider Organization)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating health care providers. You pay less if you use providers that belong to the plan's network. You can use doctors, hospitals and providers outside of the network for an additional cost.


Payor or Payer

A health plan, medical group, hospital, employer, individual or other entity that is financially responsible for payment of health care services.



The amount paid to an insurance carrier or health plan for providing insurance coverage under a contract.



In this document, provider refers to physician, hospital, nurse, pharmacy or any individual or group of individuals that provides a health care service.


*Most of the terms and definitions herein were taken from the Aventis Managed Healthcare: A Reference Guide.