A patient’s ability to obtain appropriate health care services as needed.

Accident Fund Company

An independent, for-profit subsidiary of BCBSM that offers workers’ compensation and administrative services to employers.

accidental injury

Any physical damage caused by an action, object or substance outside the body. This includes: strains, sprains, cuts and bruises; allergic reactions caused by an outside force such as a bee sting or another insect bite; burns, frostbite, sunburn, sunstroke; swallowing poisons; drug overdosing; inhaling smoke, carbon monoxide or fumes; attempted suicide.


The formal evaluation of an organization or a program by an external body according to certain predetermined standards. The process is often carried out by a private organization created for the purpose of assuring the public of the quality of an institution or program. For example, the National Committee for Quality Assurance, a nationally recognized independent organization, evaluates managed care plans using objective, scientific measures. See also NCQA.

activities of daily living

An index or scale that measures an individual’s degree of independence in bathing, dressing, using the toilet, eating and moving across a small room.

actual acquisition cost

Amount pharmacies actually pay for drugs, less any discounts, rebates and price or trade concessions.

actual charge

The amount a health care provider would bill a patient for a particular medical service or procedure if there were no participation arrangement with a health care plan.

acute care facility

A facility that offers a wide range of medical, surgical, obstetric and pediatric services. These facilities primarily treat patients with conditions that require a hospital stay of fewer than 30 days. The facility is not used primarily for custodial, convalescent, tuberculosis or rest care; care of the aged or substance abusers; skilled nursing or other nursing care.


The Blue Cross process — automated or manual — of determining the allowable payments on a particular claim. This process examines factors such as eligibility, medical necessity, coverage, etc.

administrative costs

Blue Cross costs for such services as claims processing, billing and overhead.

administrative services contract

An agreement under which the Blue Cross, for a fee, handle claims and other administrative services for a self-funded group plan.


Entry to a facility as an inpatient to treat a medical condition.

admission certification

Process to determine whether an admission is medically necessary for the type of services to be received by a member. This determination can be granted before admission (preadmission) or shortly after (concurrent). It also includes the number of days the member would be eligible for benefits during the admission. See also preauthorization. See also precertification. See also predetermination.

advance directive

A written statement, recognized by state law, of a patient’s wishes for health care should the individual not be able to make such decisions. The two types of advance directives include Durable Power of Attorney for Health Care, used in Michigan, and living wills, which are not authorized by Michigan law. See also Durable Power of Attorney for Health Care.

adverse selection

A health plan’s tendency to have a larger proportion of individuals who are more likely to file claims and use services because of their poor health risk, while persons with better health enroll in other plans.

age or sex rating

A method of structuring capitation payments based on member age and gender.

allowable amount, allowable charge

The maximum dollar amount that Blue Cross will pay a provider for a given service or procedure as negotiated.

alternative delivery system

Any type of health care delivery system other than traditional fee-for-service health care. Most managed care organizations are called alternative delivery systems.

alternative funding arrangement

Any funding arrangement other than one that is fully underwritten, such as are self-insured and partially self-insured groups. Also called flexible funding.

alternative medicine

Therapeutic practices and medical interventions that do not follow conventional biomedical explanations. Alternative therapies include, but are not limited to, the following disciplines: folk medicine, herbal medicine, homeopathy, faith healing, new age healing, acupuncture, naturopathy, massage and music therapy.

ambulatory care

Medical services provided on an outpatient basis, including in an office, where no overnight stay in a health care facility is required. Although this term may be used as if synonymous with outpatient, some outpatient services may be excluded.

ambulatory surgery

Elective surgery that is performed in a hospital rather than in a doctor’s office but does not require an overnight stay.

ambulatory surgery facility

A freestanding outpatient surgery facility — not a physician’s office or other private practice office — offering surgery and related care that can be safely performed without the need for overnight, inpatient hospitalization.

ancillary services

Services exclusive of room, board and nursing care that supplement the primary care the patient receives, such as drugs, dressings, laboratory services or physical therapy.

anniversary date

The first effective day of a 12-month period of coverage for members of a group, which may not conform to a calendar year that starts Jan. 1 and ends Dec. 31.


The ability of a professional provider, facility or member to have a previous decision reviewed.

approved amount

The lesser amount between the billed charge and our maximum payment for the covered service. Any required copayments and deductibles are subtracted from this amount before payment is made.

approved facility

A specialized facility (outpatient psychiatric, hospice, skilled nursing) approved by Blue Cross to provide services to members.

area rating

See community rating.


An agreement between a provider of services and a health care payer (Medicare or BCN) by which the provider, in accepting a member for treatment also accepts the payment arrangement of the payer.

attending physician

The doctor who accepts treatment or billing responsibility for a patient’s care.


Programs developed to approve the care given to Blue Cross members. Care that is not authorized can result in payment reductions or denials. Also referred to as precertification. See also preauthorization. See also precertification. See also predetermination.

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balance billing

The practice of billing a patient for the difference between the actual charge and what the provider receives from Blue Cross and the member copayment.

base-year costs

The amount a hospital actually spent to render care to Medicare patients in a previous time period.

basic benefits

The minimum set of health services that BCBSM offers through its Traditional plan.


A person eligible to receive Medicare benefits.


A health care service payable under a subscriber’s contract.

benefit dollar maximum, benefit maximum

The highest amount Blue Cross will pay for a specific benefit or class of benefits. A benefit may have an annual or a lifetime maximum.

benefit limitation

Any provision that restricts coverage under the subscriber’s contract, regardless of medical necessity.

benefit package

The health services that Blue Cross offers to a group or individual.

benefit period

  1. Medicare term for a period of consecutive days that begins with the first day a patient enters a hospital or skilled nursing facility and ends when the patient has been out of the facility 60 days.
  2. General Motors term indicating when an enrollee is eligible to receive benefits, or denoting a period of time for specific coverage, such as hospice.

benefit year

See anniversary date.

best practice

The most desirable or most effective level of activity, which becomes a standard to which other practices are compared.

billed charge

The amount a health care provider bills a patient for a particular medical service or procedure.

birthday rule

The process used to determine which parent’s coverage pays first when a dependent child has health coverage through both parents. According to this coordination of benefits rule, the dependent child’s primary coverage is that of the parent whose birthday falls earlier in the calendar year.


A program that provides member savings and special offers on a variety of healthy products and services from national companies (see HealthyBlueXtras℠ for Michigan discount offerings).


A program that allows Blue Cross and Blue Shield Traditional, PPO and HMO members to receive the same health care benefits as their home plan while out of the plan’s area. A telecommunications system allows the interchange of provider pricing agreements and electronic claims among Blue Cross plans.

Blue Care Network of Michigan

An independent, nonprofit subsidiary of Blue Cross Blue Shield of Michigan, this health maintenance organization combines the delivery and the financing of comprehensive health services.

Blue Cross and Blue Shield Association®

An association of independent Blue Cross and Blue Shield plans that licenses individual plans to offer health benefits under the brand name and logo. The Association establishes uniform financial standards but does not guarantee an individual plan’s financial obligations.

Blue Cross Blue Shield of Michigan

A nonprofit health care corporation organized under Michigan law and an independent licensee of the Blue Cross and Blue Shield Association.

Blue Preferred® PPO

A BCBSM PPO plan that reimburses covered services at 100 percent when members use in-network providers and requires member copayments when services are provided outside the network without a referral from a network provider.

board certified

A physician who has passed a written and oral examination given by a medical specialty board.

board eligible

A physician who is eligible to take a specialty board examination by virtue of having graduated from an approved medical school, having completed a specific training program and having practiced for a period of time.

branded products

Products that carry the Blue Cross and Blue Shield name, such as Blue Choice.


The setting of an inclusive package price for all the medical services required for a specific procedure (for example, maternity care). The bundled price generally includes professional and facility services.

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Method of payment for health services in which a health care provider is paid a fixed amount for each person served regardless of the actual services provided.

care management 
See case management.


A provision in some major medical plans that allows individuals to apply expenses incurred in the last quarter of a calendar year to the following year’s deductible.


Specific benefits administered separately from the rest of an organization’s health insurance package, such as mental health, dental, vision and prescription drugs.

case management

A program of individual planning and care for seriously ill people, with a case or care manager working with patient and physician to ensure that all appropriate care and appliances are provided and paid for, including specific services that may not be covered by the subscriber’s contract.

case mix

The different types of patients that a provider treats, whose age, gender or diagnosis directly influences the scope of services provided.

catastrophic health insurance

Protection against the high cost of treating severe or lengthy illnesses or disabilities. Generally such policies cover all, or a specified percentage of, medical expenses above an amount that is the responsibility of another insurance policy. As well, there is generally a ceiling on the amount paid out.


The American Dental Association manual, Current Dental Terminology, that lists descriptive terms and identifying codes for reporting dental services and procedures.

Central Review Organization

BCBSM’s medical staff (physicians and nurses) who review requests for predeterminations, recertifications and member appeals. The group determines if a request is appropriate for the setting and assigns length of stay according to established medical criteria.

Centers for Medicare and Medicaid Services

A division of the federal Department of Health and Human Services that administers Medicare and oversees each state’s administration of Medicaid. Formerly called the Health Care Financing Administration.

centers of excellence

A network of select hospitals whose specialty programs and staffs have met the Blue Cross quality criteria and also may provide added value to managed care customers by offering competitive prices on certain high-risk specialty procedures.


A legal document approved by the state insurance bureau, that lists the terms, benefits and limitations of the health care coverage Blue Cross provides in all lines of business, including any riders that amend this certificate.

certificate of creditable coverage

A document that proves an individual previously had health care coverage. It can be applied to reduce or eliminate any preexisting exclusion period that might otherwise apply when someone changes jobs.

certificate of need

A document issued by a state governmental body to an organization that is proposing to build or modify a health facility, offer a new or different health service or purchase a major piece of equipment.


The process by which an agency or association evaluates and recognizes an individual, institution or educational program as meeting predetermined standards. The term is synonymous with accreditation, except that certification is usually applied to individuals and accreditation to institutions. See also accreditation.

certified nurse midwife

A registered nurse with no less than one-and-a-half years of post-nursing school education in midwifery who is certified by the American College of Nurse Midwives to provide well-woman gynecological and low-risk obstetrical care.

certified nurse practitioner

A specialty nurse licensed in Michigan to practice a specific discipline who is also a Michigan-licensed registered nurse with a degree from an approved course of nurse-practitioner education and certified by a national nursing organization and the state Board of Nursing.

certified registered nurse anesthetist

A Michigan-licensed, registered professional nurse who has graduated from an approved course of nurse-practitioner education, is certified by a national nursing organization and the Michigan Board of Nursing, and has the requisite additional hours of training in the administration of anesthesia to qualify for state certification and to function as an anesthetist under the direction of a physician.

certified social worker

The preferred term for a master’s-level social worker who specializes in the treatment of mental disorders. Certification from the Michigan Department of Consumer and Industry Services implies that these individuals have an MSW degree and two years’ post-graduate clinical practice.


A request for retrospective payment by a member or by a health care provider on the member’s behalf for health care services or devices supplied.


An auditing solution by McKesson Corporation that assists payors with reimbursement, physician evaluations and outpatient hospital surgical claims.

claim control number

A 10-digit number assigned to each claim for hospital admission processed by BCBSM.

claims review

The methods by which health care service claims are professionally examined before any reimbursement is made to validate the medical appropriateness of the services provided and to be sure the cost of the service is not excessive.

clinical care standards

Blue Cross criteria indicating expected levels of performance regarding care management and patient care outcomes.

clinical indicators

Measures of performance showing patterns of care among defined populations, as the result of a certain program of care (for example, mental health) in facilities and among clinicians.

clinical nurse specialist

A registered nurse who becomes expert in a defined area of knowledge, through study and supervised practice at the graduate level, and practices in a selected clinical area of nursing.

clinical pathway

A treatment regimen that describes the treatment and intervention activities to be performed for a specific illness.

clinical practice guidelines

Protocols based on the most current scientific findings, clinical expertise and community standards of practice that assist the practitioner in determining appropriate health care for specific situations.

clinical psychologist

See fully licensed psychologist.

clinical review criteria

Guidelines used to evaluate medical necessity and appropriateness of care.

clinical social worker

See certified social worker.

closed panel

A centrally based group of salaried physicians, such as BCN’s Health Centers, that provides health services to an HMO’s members. Also referred to as a group model or staff model.


Federal laws applying to groups of 20 or more, the Consolidated Omnibus Budget Reconciliation Act offers extended coverage for enrollees and family members after group coverage would normally end.


Term used by Centers for Medicare and Medicaid Services to mean the fixed amount or percentage of the Medicare-approved amount that a Medicare beneficiary must pay the provider for a covered service. Same as copayment. See also copayment.

Community Blue

BCBSM’s PPO benefit that includes a wide range of preventive services as basic benefits payable directly to network physicians.

community rating

A system of calculating health insurance premiums based on the average cost of providing medical services to all people in a geographic area without adjusting for an individual’s medical history. Also known as area rating.

Comprehensive Major Medical

A plan that covers hospital and medical-surgical services and other benefits, characterized by a deductible, coinsurance and maximum benefits.

concurrent review

A review of patient care while the patient is still in the hospital to determine the medical necessity for the treatment and the length of stay. See also admission certification.

contingency reserves

An amount of cash and other assets that the state insurance bureau determines Blue Cross must hold in reserve to ensure financial solvency and to cover claim payments in the event of extreme underwriting losses.

continuity of care

Continuation of care by a primary care physician or specialist even after the doctor’s relationship with BCN ends.

continuum of care

A range of health-related services provided to an individual or group, which may reflect treatment rendered during a single hospitalization or care for multiple conditions over a lifetime. The continuum of care provides a basis for analyzing quality, cost and utilization over the long term.


The legal agreement that exists between Blue Cross and the subscriber, consisting of the certificate, the signed application for coverage and the Blue Cross Blue Shield of Michigan or Blue Care Network identification card.

contract number

A nine-digit number on the Blue Cross identification card, usually the same as the subscriber’s Social Security number.

contract year

The 12-month period beginning on the effective date of a group’s coverage.

control plan

A local Blue Cross or Blue Shield plan that is responsible for administering a national account.


The right of eligible group members to convert to individual policies with no health statement requirements when their group insurance ends. Benefits under the new policy may be different from those under the group policy. See also group conversion.

coordinated care management

Voluntary disease management program for patients with chronic conditions such as heart disease, asthma and diabetes that uses care managers who work with the patient, the physician and other health care providers to manage the condition and improve the patient’s health.

coordination of benefits

A program that coordinates the subscriber’s health benefits when the person is covered under more than one group health plan.


A fixed amount or percentage of the Blue Cross approved amount that the member must pay the provider for a covered service. See also coinsurance.

cosmetic services

Procedures used primarily for improving appearance rather than for treating an illness or disease; generally not covered by Blue Cross.

cost avoidance 
See coordination of benefits.

cost containment

See cost management.

cost management

Preferred term for programs that monitor the appropriateness of health care through utilization review, coordination of benefits, predetermination of benefits and antifraud efforts. This general term includes cost avoidance programs that prevent unnecessary expenditures and cost savings programs that recover dollars paid inappropriately.


The total scope of benefits under a subscriber’s certificate.

covered services

Those services, drugs or supplies identified as payable in the subscriber’s certificate that are determined to be medically necessary.


The American Medical Association manual, Current Procedural Terminology, that lists descriptive terms and identifying codes for reporting medical services and procedures performed by physicians.


The process of licensing, accrediting and certifying health care providers prior to allowing them to participate in a provider critical pathway. See clinical pathway.

custodial care

Care provided by people without professional skills or training to help a patient with activities of daily living.

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Dartmouth Atlas of Health Care in Michigan

An extensive study of medical care in Michigan, The Dartmouth Atlas uses Blue Cross claims data and other information to analyze the use and supply of health care services.


The dollar amount members must pay the provider for covered services before Blue Cross payments begin.

defined contributions

A funding mechanism for health care, with the group making a specific dollar contribution toward the cost of insurance coverage for its members without specifying benefits to be covered.

delegated facility

The preferred term for a hospital that performs its own admission precertifications, meeting BCBSM requirements.


A computer application designed for medical offices, the Dial-In Eligibility Network and Information System provides immediate information about a Blue Cross member, including eligibility, benefits and claims for professional services.


A DDS (doctor of dental surgery) or DMD (doctor of dental medicine) who is licensed by the state to diagnose and treat the human tooth, the alveolar process, and gums and jaws or their dependent tissues. See also oral and maxillofacial surgeon.

dependent continuation

A rider for the continued coverage of children between 19 and 25 years who meet certain conditions.

designated facility
See delegated facility.

diagnosis related group
See DRG.

diagnostic coding system
See ICD-9-CM.

discharge planning

The process that helps patients and their families arrange for follow-up care — from medical equipment to in-home care services — that will be needed after the patient leaves the hospital.

disease management

Programs designed to help members manage chronic conditions through a partnership between members, physicians and the health plan. Disease management programs focus on member education and self-management strategies in an effort to reduce costs and improve quality.

dispense as written

Physician’s DAW instructions on a prescription specify a brand-name pharmaceutical or medical device.


See durable medical equipment.

doctor of chiropractic

A practitioner of a science of applied neurophysiologic diagnosis based on the theory that health and disease are life processes related to the function of the nervous system.

doctor of medicine

A practitioner who has received a degree from a college of medicine and has been licensed by the appropriate board for the diagnosis and treatment of a human physical or mental condition.

doctor of osteopathy

A practitioner who is a graduate of an accredited school of osteopathic medicine that emphasizes the need for the body’s systems to be in correct relationship with one another and the importance of the musculoskeletal system.

doctor of podiatry

A specialist who deals with the care of the foot, including its anatomy, pathology, medical and surgical treatment.

domiciliary care

See custodial care.


A reimbursement system, the diagnostic related group classifies patients according to the severity of their illnesses and the resources needed to treat them.

durable medical equipment

Medically necessary equipment that can be used repeatedly (for example, wheelchair or respirator) to facilitate treatment and rehabilitation at home.

Durable Power of Attorney for Health Care

A legally binding document that appoints an advocate to make medical decisions for a member who becomes unable to make them. See also advance directive.

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elective surgery

A surgical procedure that is not associated with an emergency or maternity condition and can be scheduled for the convenience of the member or surgeon.

eligibility date

The date on which an individual becomes entitled to benefits under an insurance plan.

emergency first aid

The initial exam and treatment of conditions resulting from accidental injury.


Used in managed care to define a face-to-face meeting between a professional provider and a member during which health care services or supplies are provided but no claim is generated. Encounters are included in the capitation agreement with the provider.


Another term for member; preferred by automotive groups and by Medicare.

enrollment period

The period of time when individuals in a group may enroll for health benefits.


See explanation of benefits.


See explanation of Medicare benefits.

episode of care

A defined period of illness that has a definite start and end date.


A federal law, the Employment Retirement Income Security Act of 1974 regulates employee retirement and welfare plans.

evidence-based medicine

A set of procedures, pre-appraised resources and information tools that help practitioners apply evidence from research to the care of individual patients.

exact fill

Product name used by Blue Cross automotive groups and others for supplemental coverage that brings Medicare beneficiaries in their group plans to the same level of benefits as active employees.

experience rating

A method of determining a group’s premium rates based wholly or partly on the group’s own claims experience.


See investigational.

explanation of benefits

A statement to Blue Cross subscribers or members that details what services have been paid and what may be owed.

explanation of Medicare benefits

A statement to beneficiaries that details what services Medicare has paid and what they may owe.

extended care

Long-term care, especially after hospitalization, requiring inpatient stay in a facility such as a nursing home or rehabilitation facility.

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family continuation rider

A rider that provides continuation of coverage for dependents if they meet age and support guidelines.

family deductible

A deductible that is satisfied by the combined expenses of all family members.

FDA (Food And Drug Administration)

The Food and Drug Administration is authorized by Congress to enforce the Federal Food, Drug and Cosmetic Act and several other public health laws.

Federal Employee Program

A nationwide Blue Cross and Blue Shield program for employees of the federal government that provides both basic and supplemental coverage.


A method of paying the provider a specific amount for each procedure performed after the service is rendered.

fee schedule

A list of medical procedures and associated maximum payments.

first-dollar coverage

Describes benefits that are not subject to a deductible or copayments.

flexible funding

See alternative funding arrangement.

focused concurrent review

A Blue Preferred program for managing the care of patients with certain diagnoses who need extensive lengths of stay in a facility.


A regularly updated list of FDA-approved medications the plan may cover based on the member's prescription benefit, subject to applicable limits and conditions.

freestanding facility

Entity that is not affiliated with a participating hospital.

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gender rule

Infrequently used rule requiring that the father’s insurance carrier be the primary insurer when a dependent child has two parents with health care coverage and the birthday rule is not in effect.

generic drug

A medication that has the same active ingredients, is available in the same strength and dosage form, and is administered in the same way as its equivalent brand-name drug. Generics are usually less costly than brand-name equivalents.

general provisions

General conditions that apply to a member’s health care plan.

GI letter

A general information letter to providers or members asking for missing or additional information.


An employer or other entity that has entered into a contract to provide health care for its eligible members.

group conversion

Process by which members who are no longer enrolled through a group may obtain individual coverage, paying premiums directly to the plan. See also conversion.

group number

The unique number assigned to a group health plan to identify members of the plan.

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HCFA-1500 Claim

The Centers for Medicare and Medicaid Services standard form for submitting professional services to third-party companies or insurance carriers. This form has largely replaced the Michigan Health Benefits Claim.

HCPCS codes

Alphanumeric codes in the Common Procedure Coding System used by the Centers for Medicare and Medicaid Services to report services provided to Medicare and Medicaid beneficiaries. BCBSM uses these codes for nonphysician procedures, such as ambulance services, durable medical equipment and medical supplies.

health maintenance organization

See HMO.

Healthcare Effectiveness Data and Information Set


Health Security Program

A credit plan under which BCBSM pays the patient’s deductible and copayment and later recovers the payment through an arrangement with the patient, the group or a financial institution.


A comprehensive set of performance indicators, the Healthcare Effectiveness Data and Information Set ensures that purchasers and consumers have the information they need to reliably compare the performance of managed health care plans. HEDIS measures are sponsored, supported and maintained by the National Committee for Quality Assurance, a not-for-profit organization committed to evaluating and publicly reporting on the quality of managed care plans.


A federal law affecting all participants in the country’s health care system, the Health Insurance Portability and Accountability Act of 1996 was developed to improve the portability of coverage for people who lose or change employment, to promote administrative simplification through the use of electronic transactions and to ensure the security and privacy of member information.


A state-licensed health maintenance organization that delivers physician and hospital services to members directly or through contracts with affiliated providers. The plan requires members to choose a network provider (a primary care physician) to coordinate their health care.

HMO model

One of several ways to define the relationship between the health plan and its providers:

  • Group — a multispecialty practice of professional and institutional providers
  • Independent practice association — a financial organization of individual physicians who provide health care to members
  • Network — a health plan that contracts with physician groups as well as with hospitals and other health care providers
  • Staff — a facility that employs physicians and other health care providers to care for members

home health care

An array of services provided directly in the home under medical and nursing direction and supervision.

home plan

The Blue Cross and Blue Shield plan where the member is enrolled. The term is usually used in connection with services received under the BlueCard program.


Health care provider, usually a physician, whose practice is devoted to treating patients in a hospital setting.

host plan

The Blue Cross and Blue Shield plan serving the area where a member of another Blue Cross and Blue Shield plan receives services.

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An abbreviated reference to the American Medical Association guide to diagnosis codes, the International Classification of Diseases, 9th edition, Clinical Modification manual. Diagnosis codes are sometimes referred to as ICD-9-CM codes.

incidental procedure

A procedure that is performed at the same time as a primary procedure and requires no additional physician resources.

indemnity plan

Traditional fee-for-service health insurance in which members have free choice of physicians.

individual consideration

A written explanation from the provider requesting payment for procedures justified by unusual circumstances.


A child through 12 months.

inpatient days

Calculation of hospitalization time during which services are provided, including the day of admission and excluding the day of discharge.

inpatient episode

Facility-based treatment given immediately before or right after an inpatient stay that may include transfers between facilities or to another unit within the same facility.

integrated health management

The combination of various cost-management programs, such as utilization management and disease management, to promote healthy lifestyles and encourage cost-effective delivery of care.

interim billing

Bills sent at regular intervals for patients who have lengthy stays in a hospital or facility.

Inter-Plan Teleprocessing Services

A communications system, ITS provides an interface among all claims processing systems for Blue Cross and Blue Shield plans across the country. See also BlueCard.

InterQual criteria

Created by physician-led teams of health care professionals, these standards have been selected by BCBSM for prospective and retrospective utilization management programs to assess the appropriate level of care and the medical necessity of procedures.


Any procedure, treatment, supply, device or drug that has not received FDA approval or is not yet supported by the clinical community because the scientific evidence available does not demonstrate the effectiveness of the service or technology.

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Joint Commission on the Accreditation of health care Organizations

An organization sponsored by the American Hospital Association and the American College of Surgeons, the JCAHO inspects and accredits hospitals, skilled nursing facilities and other health care facilities.

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The termination of a policy for failure to pay the premium within the time required.

length of stay

The number of days a patient is in the hospital.

lifetime maximum

A specified dollar amount or a set number of services that the health plan will provide for each member on the contract.

lifetime reserve days

A Medicare term specifying the number of days of inpatient hospital care available over an individual’s lifetime that may be used after the maximum 90 days allowed in a single benefit period have been exhausted.

limiting charge

Under Medicare, the maximum amount a nonparticipating physician is allowed to charge, currently limited to 115 percent of the Medicare-approved amount.

living will 
A document, not authorized by Michigan law, that identifies which medical treatments a terminally ill member would want. See also advance directive.

long-term care

Continuing maintenance and health services — inpatient, outpatient or at home — to the chronically ill, disabled or developmentally disabled.

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maintenance drug

A prescription medication that BCN’s prescription drug program allows to be dispensed in quantities that exceed a 34-day supply when dispensed at a retail pharmacy.

Major Medical

See Master/Major Medical.

managed care

Systems and techniques used to help direct the utilization, cost and quality of health care services.

managed care organization

A health plan that manages health care delivery by having a defined network of select providers who contract to provide health care services to members. See also HMO. See also point of service. See also PPO.

mandated benefits

Benefits required by law to be offered or provided by some or all health plans.

Master/Major Medical Coverage

The hospital, surgical and medical plans that supplement basic benefits by extending hospital days and providing additional benefits. Major Medical is used for national accounts, while Master Medical is used for local Michigan accounts.

maximum allowable cost

BCBSM’s prescription drug program feature, the MAC caps reimbursement for commonly dispensed drugs when there are generic products available.

maximum payment

The payment level BCBSM has established for a given procedure.


A federal program administered and operated by participating state and territorial governments that share the costs of providing medical benefits to eligible, disabled and low-income persons needing health care.

medical management

A general term for programs that promote high-quality, cost-effective health care through such activities as utilization management, quality management and risk management.

medical policy

Blue Cross guidelines determining the status of a service or technology as a standard of care or as investigational.

medical review 
The process of determining the appropriateness of care or treatment. Usually part of claims adjudication.

medical underwriting

The process of reviewing and possibly denying applications for coverage, based on health criteria.


The federal health insurance program for the aged, disabled and individuals with end stage renal disease established by Title XVIII of the Social Security Act of 1965, as amended.

  • Original Medicare are services provided by the federal government as opposed to those provided by individual health plans through Part C.
  • Part A covers inpatient hospital, home health, hospice, and limited skilled nursing facility services.
  • Part B covers physician services, medical supplies and other outpatient treatment.
  • Part C, now known as Medicare Advantage, provides coverage options that include PPOs, HMOs, point of service products, medical savings accounts and fee-for-service arrangements. 

Medicare Advantage

Sometimes referred to as Part C, these Medicare plans are administered by private insurance companies that have contracted with the federal government. These plans cover Medicare Parts A, B and sometimes D.

Medicare carve-out

A benefit offered to members of a group who are 65 or older that pays the difference between the Medicare allowance and the group’s contract allowance for the same service.

Medicare secondary-payer laws

A series of laws defining when a health plan is required to pay its benefits before Medicare and including parts of many federal statutes such as the Tax Equity and Fiscal Responsibility Act, the Deficit Reduction Act, the Balanced Budget Act, the Omnibus Budget Reconciliation Act, the Consolidated Omnibus Budget Reconciliation Act and others.

Medicare Supplemental

The preferred term for coverage that pays many of the costs not covered by the federal program.


Used by the National Association of Insurance Commissioners and federal agencies to denote approved Medicare Supplemental coverage.


Any person eligible for health care services under the subscriber’s contract, which includes spouse and dependents.

Member Liability

The title of a rider that limits the amounts a member must pay for X-rays, lab work and EKGs.

metropolitan statistical area

Area with a population greater than 50,000, as defined by the Office of Management and Budget.

Michigan Health Benefits claim

Replaced by the HCFA-1500. The Michigan Health Benefits Review form is used for supplemental claims and status inquiries.

Mixed-model HMO

See HMO models.


A code that eliminates the need to provide additional documentation when submitting claims.

MSW certified social worker

See certified social worker.

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The National Accounts Service Company connects several Blue Cross and Blue Shield plans across the country through a common automated system to administer health benefit programs.

national account

A group whose subscribers live in more than one Blue Cross or Blue Shield plan service area.


A nationally recognized independent organization, the National Committee for Quality Assurance evaluates managed care plan performance using objective, scientific measures, such as HEDIS, the Healthcare Effectiveness Data and Information Set.

Blue Cross' preferred term for a group of physicians, hospitals and other health care providers under contract to offer care at negotiated rates to its managed care members.


Insurance purchased by the individual subscriber rather than a group. See also other-than-group coverage.

nonparticipating providers

Providers who have not signed a participation agreement with Blue Cross to accept our approved charge as payment in full.

nonpayment code

Code for a message explaining why payment for a medical service was reduced or denied.

nurse care managers

Licensed registered nurses who have received specific training and education in disease management and help patients receive the most efficient and effective care while coordinating their benefits.

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open access

Managed care plan that allows members to see participating providers, usually specialists, without a referral from a primary care doctor.

open enrollment

  1. A period during which subscribers in a health plan can change their health coverage.
  2. A period when uninsured individuals can obtain coverage without presenting health statements.

oral and maxillofacial surgeon

A licensed dentist who has advanced training and demonstrated competency through examination or other evaluative processes to perform surgery on the lower jaw and dental structure. See also dentist.

orthotic appliance

A device, such as a leg brace, worn outside the body to correct a body defect of form or function. See also prosthetic appliance.

other-than-group coverage

Coverage provided for individuals who are not associated with any kind of group.

outcome measures

System used to track clinical treatment and responses to that treatment.

outcomes management

Collection and analysis of medical performances based on certain specifications.


Services or costs that differ substantially from the standard established in a statistical profile of cost or usage.

out-of-area benefits

Coverage available to individuals living or traveling outside a health plan’s service area.

out-of-network copayment

The dollar amount or percentage of the Blue Cross approved amount that the member must pay under a PPO, POS or other managed care plan when going to a non-network provider without an appropriate referral. Same as sanction.

out-of-network services

Services performed by a provider who has not signed a contract with the member’s health plan to be part of a provider network.

out-of-pocket maximum

The highest dollar amount a member or family must pay in combined copayments and deductibles during any given year.

outpatient surgery

See ambulatory surgery.

outside referral

Service provided by a consultant provider, usually a specialist who is outside the plan’s network.

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Blue Cross Blue Shield Michigan’s automated telephone system, the Provider Automated Response System, informs professional providers about members, including eligibility, benefits, copays, deductibles and the benefit year.


The term used by the medical and insurance industry for network. See also network.

partial hospitalization

A program that provides less than 24-hour care (usually during the day) for mental health care, rehabilitative care or other services, often for patients in transition from full-time inpatient care to outpatient care.

Participating Hospital Agreement

The contract between a hospital and Blue Cross Blue Shield of Michigan, the PHA defines the legal rights and obligations of the parties.

participating plan

A participant in the Blue Cross and Blue Shield Association that uses our plan to process claims for its members or processes claims for ours.

participating provider

A facility or other provider that contracts with Blue Cross to provide care or services to members under specific reimbursement terms.

pay and pursue

A coordination-of-benefits approach to determine primary and secondary liability after claims are paid. Replaced by a pursue-and-pay approach. See also pursue and pay.

peer grouping

Classification system that groups providers for comparison purposes.

peer review

Evaluation by practicing physicians or other professionals of the effectiveness and efficiency of services ordered or performed by colleagues.

pended claim

A claim that has been received and assigned an interim status until it is paid or rejected.

per-claim participation

Decision by nonparticipating providers to accept our payment as full reimbursement for a particular claim with no further charge to the member.

per-diem rate

Negotiated daily payment for facility inpatient services.

performance indicators

Measures used to rate the performance of a health plan or its providers, including mortality rates, costs, rates of specific procedures, rates of hospitalization for preventable diseases or patient satisfaction.


Term used in BCBSM certificates to reference medical doctors, doctors of osteopathy, doctors of podiatric medicine, doctors of chiropractic, fully licensed psychologists, doctors of dental surgery and doctors of medicine in dentistry.

physician assistant

Individual who has received at least two years of training to provide diagnostic, therapeutic and preventive health care services as delegated by a physician.

physician hospital organization

A legal entity formed and owned by one or more hospital and physician groups that serves as a negotiating, contracting and marketing unit.


An independent Blue Cross or Blue Shield organization that operates in a given area of the country.

point of service 

A managed care plan in which the members choose providers at the point of service — in or out of network — with copayment or deductibles determined by their choice.


A written contract or agreement between a commercial insurance company and the insured person or policyholder that includes all amendments and a copy of the application, if attached. See also subscriber contract.


Government requirement that health plans guarantee continuous coverage without waiting periods for persons moving between plans and ensures that individuals changing jobs are guaranteed coverage with their new plans.


A health care network of primary care doctors, specialists, hospitals and other providers of care, the preferred provider organization focuses on delivering cost-effective, quality patient care. Members save money when they use network providers and avoid a sanction for out-of-network services. 

practice guidelines

A document that used algorithms (if/then statements or questions) to guide evaluation or management of a clinical condition or to review the appropriateness of clinical interventions.

preadmission review

The practice of reviewing an inpatient admission before the patient enters the hospital to ensure that the admission is medically necessary. See also admission certification.


The Michigan Insurance Bureau’s preferred term for a combination of precertification and preauthorization procedures for certain surgical procedures such as organ transplants. At the bureau’s request, this term is used in certificates covering organ transplants.


A voluntary process that allows physicians and other professional providers to determine, before treating a patient, if BCBSM will cover the cost of a proposed service.


BCBSM’s review of a patient’s symptoms and proposed treatment to determine, in advance, whether they meet nationally recognized clinical screening criteria for inpatient treatment. The process is also used to review selected outpatient procedures, such as MRIs.


Term used only by automotive customers for preauthorization and precertification.

preexisting condition

A condition for which medical advice, diagnosis, care or treatment was recommended or received within the six-month period ending on the enrollment period after the effective date. This provision is subject to statutory limitations.

preferred provider organization

See PPO.

Preferred Rx Plan

A prescription drug plan that provides an open-access network of pharmacies.


A process by which participating hospitals notify BCBSM of a member’s inpatient admission, allowing for the identification of cases that may need care management or other health care services.

prevailing charge

Preferred term for the range of fees usually charged by physicians with similar skills and experience for the same service within the same geographic area.

preventive care

Covered services provided for health maintenance — such as routine health exams and tests, well-baby and well-child care and immunizations — based on a member’s age and gender.

primary care

Medical practice based on direct contact with the patient without referral from another physician.

primary care physician (PCP)

A physician a member chooses to provide and coordinate all of their medical health care, including specialty and hospital care, for Blue Cross HMO or Point-of-Service (POS) plans. The primary care physician is licensed in the state of Michigan in one of the following medical fields: internal medicine, family practice, general practice, pediatrics, and internal medicine/pediatrics.

primary payer

The carrier responsible for providing benefits before any other insurer makes payment.

principal diagnosis

The medical condition that is the primary reason for a patient’s admission to the hospital.

prior agreement

An agreement between the patient and a nonparticipating physician before any service is billed, stating that the patient will be responsible for paying any amount over BCBSM’s payment for approved services.

prior authorization

A prescription drug plan requirement for prescribers to obtain authorization from the health plan before prescribing certain drugs.

probationary period

The period that an individual must wait after beginning a job before becoming eligible for group insurance coverage.

procedure code

A series of numeric or alphanumeric characters and corresponding descriptions for each medical service.


Type or class of coverage — Traditional, HMO, PPO and point of service — as presented to the market by the Blue Cross sales force and independent agents.

professional component

The portion of a charge for services performed in a hospital that is allocated to the professional services of a physician, as distinct from a technical facility component.

professional provider

A doctor (of medicine, osteopathy or podiatric medicine) or other practitioner (chiropractor, fully licensed psychologist or dentist) who is licensed, certified or approved by the appropriate agency to render covered services in a state.

professional service coverage code

The characters of the coverage code on the member’s identification card that indicate coverage for services additional to hospital and medical-surgical.


Groupings of tests that laboratories or physicians design to simplify orders for lab services that are frequently performed together.

prospective payment system

A payment methodology that establishes rates and prices before services are rendered and costs incurred.

prosthetic appliance

An artificial device that replaces all or part of a body part, or all or part of the functions of a permanently disabled or poorly functioning body organ. See also orthotic appliance.


Person or facility providing services or supplies related to medical care.

pursue and pay

A coordination of benefits approach to determine primary and secondary liability before claims are paid. Also called cost avoidance.

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quantity limits

A prescription drug plan requirement that limits the number of doses of certain drugs that can be dispensed at any given time.

quality management

Activities and programs intended to ensure the quality of care in a defined medical setting or program. Also referred to as quality assurance.

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The method used to determine the cost of premiums.


A repeat admission, after discharge for the same diagnosis or condition as the original admission, that is considered part of the first admission when it occurs within a specified period.


A request for additional hospital days beyond the originally approved length of stay.


A critical review of a claim that has been processed when the member or a representative is dissatisfied with the original decision.


The recommendation by a primary care physician for a member to receive specialized care from a practitioner or facility.

regular business

Obsolete term once used to distinguish BCBSM product lines from government programs, such as Medicare.


The process by which health care providers are paid for their services.


A type of insurance protection, such as stop loss, to cover extraordinary losses.

relative value scale

A financing tool, the RVS uses relative value units to reflect the complexity and intensity of services performed in various medical and surgical specialties. Units are multiplied by a conversion factor to compute the appropriate payment level for any given service.

report card

Information developed by consumer-focused organizations about the cost and quality of health services of a plan and its practitioners.


Money held by an insurance company or health plan to cover extra or unexpected liabilities. Most states require carriers to hold a specified minimum level of reserves.

resource-based relative value scale

A methodology introduced by the Centers for Medicare and Medicaid Services to create the Medicare fee schedule, the RBRVS incorporates factors such as the amount of time and resources expended in treating patients, overhead costs and geographical differences.

respite care

Care intended to provide temporary relief to a full-time caregiver.

retrospective review

The evaluation of medical necessity and appropriate billing for services that have already been rendered.

revenue code

A three-character code that identifies facility services provided.


A legal document that amends a certificate by increasing, limiting, deleting or clarifying the scope of coverage.

risk adjustment

  1. A method used to predict resource consumption.
  2. A method used to compare and monitor clinical outcomes of care.

risk factors

Conditions that determine how much chance of loss there is in insuring an individual or a group.

risk management

A program to identify and take action against risks that might lead to injury or loss.

risk pool

Money held in reserve for provider payments.

risk sharing

The distribution of financial risk among parties furnishing a service.

rural health clinic

A public or private hospital, clinic or physician practice licensed by the state to provide preventive services that complies with the Rural Health Clinics Act by being located in a medically underserved area and using physician assistants or nurse practitioners.

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The amount deducted from the usual payment if certain program guidelines are not followed by the member or provider.


See prevailing charge.

second opinions

Opinions obtained from more than one provider as to the best course of treatment, usually with regard to surgery. Some groups require second opinions for certain procedures.

secondary payer

See Medicare secondary payer.

selection bias

A correlation between the health plan and the characteristics of the employees who use it, as related to their health, provider preferences and tendency to use health services. See also adverse selection.

self-funded plan

The preferred term for a group health plan in which the employer assumes the risk for (or underwrites) the cost of all covered health care services.

self-insured plan

See self-funded plan.

service area

  1. The geographic boundaries established for HMO care.
  2. The geographic area a BCBS plan is licensed to serve.

single-payer system

Financing system in which the government acts as the only insurer and sets rates for providers.

skilled nursing facility

A freestanding facility or part of a hospital that is licensed to provide convalescent and short-term illness care with continuous nursing and other health care services provided by or under the supervision of a physician and a registered nurse.

standard of care

A predefined process of care that the patient can expect from a health care encounter based on current scientific knowledge and clinical expertise.

standard of practice

An acceptable level of performance or an expectation for professional intervention, formulated by professional organizations based upon current scientific knowledge and clinical expertise.

step therapy

A prescription drug plan requirement for prescribers to use certain lower-cost drugs before trying others used for the same treatment.


The additional insurance a self-funded group may purchase to limit the total amount it must pay for health care claims in a given year as protection against unanticipated high costs due to catastrophic illness or accidents.

subacute care

A level of care for patients not requiring the intensity of services of a hospital.


The right to recover payment when another person, insurance company or organization may be legally obligated to pay for health care services that Blue Cross have already paid; for example, in the case of a court judgment.


The person who signs and submits the application for coverage and whose name appears on the ID card.

subscriber contract

The legal agreement that exists between Blue Cross and the subscriber, consisting of three documents: the certificate, the signed application for coverage and the identification card.

subscriber liability

Any cost a subscriber is responsible for, such as deductibles and copayments.

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technical surgical assistance

Professional, active assistance given to the operating physician during surgery by another physician not in charge of the case.

third-party administrator

An entity that performs all or part of administrative services for health plans, including the processing of claims. See also administrative services only.

Traditional coverage

A product line that includes comprehensive major medical benefits with a variety of deductibles and copayments. Members can use all participating providers who agree to file claims.

treatment episode

The period of treatment used as a base for comparison in health care statistics.


The evaluation of patients to assess the seriousness of their conditions and prioritize the urgency for care. In the setting of managed care, triage is often performed after office hours on the telephone by a nurse or other health professional to screen patients for emergency treatment.


A regionally managed health care program for active duty and retired members of the uniformed services, their families and survivors. 

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A standard billing format for submitting hospital claims.


The billing of separate charges for services that are normally included under one procedure code.

underwritten plan

Health care coverage for which Blue Cross assumes the risk for the cost of all covered services.

unearned premium

A portion of the paid premium that applies to the unexpired portion of the contract term.

urgent care

Services provided for a condition that occurs suddenly and unexpectedly and requires prompt diagnosis and treatment; otherwise, the member might suffer chronic illness, prolonged impairment or the need for more hazardous treatment. Fever, earache, most fractures, sprains, most lacerations, repeated kidney stones and dizziness are examples of conditions that are considered urgent.

usual customary and reasonable charge

A reimbursement methodology based on the amount a plan determines to be the prevailing charge for a particular covered service in the geographical area in which it is performed. Used now only to describe the reimbursement level for the automotive groups and the State of Michigan group.

utilization management

A process of integrating review and case management of services in a cooperative effort with members, groups and providers to optimize cost-effective patient care that doesn’t minimize quality.

utilization review

A system that analyzes the necessity, appropriateness and efficiency of the medical services and facilities used for patient care.

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A face-to-face meeting between a professional provider and a member during which health care services or supplies are provided and a claim is generated.

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waiting period

See preexisting condition.

well-baby care

Services provided in a physician’s office to monitor the health and growth of a healthy child.


The portion of the HMO’s monthly capitation payment to physicians that is reserved to create an incentive for efficient care.

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