News You Can Use: Health Care Glossary

Oct. 13, 2006 — -- It takes almost a new vocabulary to understand what health care is and how it works. But the definitions below might make the system easier to navigate:

Acute Care: A pattern of health care in which a patient is treated for an episode of immediate and severe illness or disability, such as the treatment of injuries after an accident or other trauma, or during recovery from surgery. Unlike chronic care, acute care is often short-term.

Brand-name drug: When a new drug is developed, the makers get a patent for the drug giving them the right to make that drug without any competition. A brand-name drug is this drug marketed by the original drug maker or manufacturer. A brand-name drug is usually known by its trade name (Advil, for example) rather than for its chemical or generic name (ibuprofen, for example).

Chronic Care: Long-term care of individuals with long-standing, persistent diseases or conditions. It includes care specific to a problem as well as other measures to encourage self-care, promote health and prevent loss of function.

Co-insurance: A method of cost-sharing that requires members to pay a certain percentage of all remaining eligible medical expenses after the deductible amount has been paid.

Co-payment: A method of cost-sharing that requires members to pay a set amount for a specific service, such as $15 for any prescription.

Deductible: A flat amount a member must pay before the insurer, employer or plan administrator will make any benefit payments.

Drug formulary: Each health plan develops its own preferred list of Food and Drug Administration-approved generic and brand-name drugs, called a drug formulary. These drugs generally have the lowest out-of-pocket cost to members. The formulary is chosen by a committee of doctors, pharmacists and other medical experts who consider many cost and quality issues as they make their decisions.

Generic drug (also called generic equivalent or generic substitute): A drug that is the generic, biological equivalent of a brand-name drug. Generic drugs must contain the same active ingredients as the brand name, and must deliver the same amount of medicine into the body in the same way. In most cases, generic drugs can be substituted for brand names without physician approval.

Health Insurance Portability and Accountability Act of 1996 (HIPAA): A federal law passed in 1996 that allows people to qualify immediately for comparable health insurance coverage when they change their employment or relationships. It also creates the authority to mandate the use of standards for the electronic exchange of health care data; specify what medical and administrative code sets should be used within those standards; require the use of national identification systems for health care patients, providers, payers (or plans), and employers (or sponsors); and specify the types of measures required to protect the security and privacy of personally identifiable health care.

Health maintenance organization (HMO): A health care system that assumes or shares both the financial risks and the delivery risks associated with providing access to in-network medical services to members in a particular geographic area, usually in return for a fixed, prepaid fee.

Long-term care: Refers to the broad range of medical and personal services for individuals who need assistance with daily activities for an extended period of time.

Medicaid: A joint federal and state program that provides hospital and medical expense coverage to low income populations and certain elderly and disabled individuals.

Medicare: A federal government program established under Title XVIII of the Social Security Act of 1965 to provide hospital expense and medical expense insurance to the elderly and disabled. Medicare Part A is hospital insurance, and Part B is medical insurance. There is no premium required for Part A, but there is a monthly premium for Part B. Medicare Part C, or Medicare + Choice, includes coordinated care plans such as HMOs and PPOs. Medicare Part D plans are private insurance plans that help cover the cost of prescription drugs.

Over-the-counter drug: A drug product that does not require a prescription under federal or state law.

Preferred Provider Organization (PPO): A health benefits plan that lets members choose any provider without designating a primary care physician but offers benefit incentives to members who choose "preferred" or in-network physicians or hospitals.

Preventive Care: Health care that emphasizes prevention, early detection and early treatment, thereby reducing the costs of health care in the long run. Health care that seeks to prevent or foster early detection of disease and morbidity, and focuses on keeping patients well in addition to helping them while they are sick.

Primary Care: Basic or general health care usually rendered by general practitioners, family practitioners, internists, obstetricians and pediatricians, who are often referred to as primary care practitioners or PCPs. Professional and related services administered by an internist, family practitioner, obstetrician-gynecologist or pediatrician in an ambulatory setting, with referral to secondary care specialists, as necessary.

Tiered co-payments: A pharmacy benefit system where a member pays one co-payment amount for a generic drug and a higher co-payment amount for a brand-name drug. There are many variations of tiered co-payment and co-insurance designs.

Underinsured: People with public or private insurance policies that do not cover all necessary health care services, resulting in out-of-pocket expenses that exceed their ability to pay.

Universal Coverage: A type of government sponsored health plan that would provide health care coverage to all citizens. This is an aspect of Clinton's original health plan in the mid-1990s, and is an attribute of national health insurance plans similar to those offered in places such as the United Kingdom or Canada.