Glossary of Healthcare Reform Terms (Revised)

Glossary of Healthcare Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Beneficiary – An individual who is eligible for and enrolled in the Medicaid program in the state in which he or she resides. Million of individuals are eligible for Medicaid but not enrolled and are therefore not program beneficiaries.

Benefits - The health care services provided under terms of a contract by an MCO or other benefits administrator

Budget Neutrality – Refers to the requirement that if a State applies for Medicaid waivers under sections 1115, 1915(b) and/or 1915(c), they must demonstrate that the program does not exceed what the federal government would have spent without approving the waiver. States can do this by showing that the average per capita expenditure estimated by the State in any fiscal year for medical assistance provided with respect to the group affected by the waiver does not exceed 100 percent of the average per capita expenditure that the State reasonably estimates would have been made in that fiscal year for expenditures under the state plan for such individuals if the waiver had not been granted. States are required to submit data as proof to the federal Centers for Medicare and Medicaid Services (CMS) on a periodic basis to prove that the waiver remains cost neutral.

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Capitation Payment – A payment made by a state Medicaid agency under a risk contract, generally to a managed care organization (MCO). The payment is usually made on a monthly basis at a fixed amount on behalf of each Medicaid beneficiary enrolled in the MCO. In exchange for the capitation payment, the MCO agrees to provide (or arrange for the provision of) services covered under the contract with the state Medicaid agency to enrolled Medicaid beneficiaries. See Fee-For-Service, MCO.

Capitation - A dollar amount established to cover the cost of all health care services delivered per person during a specified period of time. This term may refer to either the amount paid to an MCO by its private and public sector clients or a negotiated per capita rate to be paid periodically to a health care provider by an MCO. The MCO or provider is then responsible for delivering or arranging the delivery of all health services required by the covered person under the conditions of the contract.

Carve-In - A model of delivering and financing healthcare services in which mental health and/or substance abuse services are provided under the same delivery system as physical healthcare; the integration of behavioral healthcare and physical healthcare.

Carve-Out - The practice of having a specific benefit, such as mental health or substance abuse, operated as a distinct program, separate from the general health program.

Case Management - The process of having a person’s healthcare needs coordinated by using an ongoing plan.

Case Manager - A clinician who works with consumers, providers and insurers to coordinate services. This term also is applied to MCO employees who conduct utilization review.

Categorical Eligibility – a phrase describing Medicaid’s policy of restricting eligibility to members of certain groups or categories, such as children, the aged, of individuals with disabilities. Certain categories of individuals – e.g., childless adults under 65 without disabilities – are generally ineligible for Medicaid regardless of the extent of their impoverishment. Individuals who fall into approved categories must also satisfy financial eligibility requirements, including income and, in most cases, resource tests imposed by the states in which they reside.

Categorically Needy - A term that describes the group of individuals that states are generally required to cover under Medicaid in order to receive Federal funds. This group includes people who receive assistance through Temporary Aid for Needy Families (TANF) and Supplemental Security Income (SSI), as well as other Federally assisted income maintenance payments.

Children’s Health Insurance Program (CHIP) – Enacted in the 1997 Balanced budget Act as title XXI of the Social Security Act, CHIP is a federal-state matching program of health care coverage for uninsured low-income children. In contrast to Medicaid, CHIP is a block grant to the states; eligible low-income children have no individual entitlement to a minimum package of health care benefits. Children who are eligible for Medicaid are not eligible for CHIP. States have the option of administering CHIP through their Medicaid programs or through a separate program (or a combination of both). The federal matching rate for CHIP services (on average, 70 percent) is higher than that for Medicaid (on average at least 57 percent), but the federal allotment to each state for CHIP services is capped at a specified amount each year.

Center for Medicaid and State Options (CMSO) – The agency within the Centers for Medicare and Medicaid Services (CMS, formerly the Health Care Financing Administration, HCFA) responsible for administering Medicaid and the Children’s Health Insurance Program (CHIP).

Center for Medicare and Medicaid Services (CMS) – The federal agency in the U.S. Department of Health and Human Services (HHS) responsible for the administration of Medicaid, Medicare, and CHIP (formerly the Health Care Financing Administration, HCFA. http://www.hcfa.gov).

Clinical Criteria - Criteria by which managed care organizations decide whether a specific treatment setting is the appropriate level of care for a given consumer.

Closed Panel - A managed healthcare arrangement in which covered persons are required to select providers only from the plan's participating providers. Also called an Exclusive Provider Organization (EPO).

Community Mental Health Center (CMHC) - Community-based, mental healthcare centers that provide a variable range of services, including inpatient, outpatient, emergency, partial hospitalization, consultation, education, case management, drop-in centers and vocational rehabilitation programs.

Continuum of Care - The availability of a broad range of treatment services so that care can be flexible and customized to meet a consumer’s needs.

Contract Discounts - An economic incentive offered to consumers to encourage them to use providers belonging to a group or organization preferred by a health plan. Usually, the out-of-pocket expenses incurred by the patient are reduced.

Copayment - A cost-sharing arrangement in which a consumer pays a specified charge for a specified service (e.g., $10 for an office visit). The consumer is usually responsible for payment at the time the service is rendered.

Covered Expenses - Hospital, medical and other healthcare expenses paid for under a health insurance policy.

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Deductible - A specified amount of money a consumer must pay before insurance benefits begin. Usually expressed in terms of an annual amount.

Discounted Fee for Service - A contracted payment rate that is discounted from the provider’s customary fee. This agreement may be between the MCO and the provider or between the consumer and the provider

Dispensing or Prescribing Limits - Restrictions on the number of prescriptions per month, or the amount of medication that may be prescribed in a given time frame (e.g., a 90-day limit at each pharmacy).

Disproportionate Share Hospital (DSH) Payments – Payments made by a state’s Medicaid program to hospitals that the state designates as serving a “disproportionate share” of low income or uninsured patients. These payments are in addition to the regular payments such hospitals receive for providing inpatient care to Medicaid beneficiaries. State have some discretion in determining which hospitals qualify for DSH payments and how much they receive. The amount of federal matching funds that a state can use to make payments to DSH hospitals in any given year is capped at an amount specified in statute.

Drug Formulary - A listing of medications that consumers may readily access through their health plans. Non-formulary medications may not be accessible or may be accessible only if prior authorization is obtained. Often, the medications on the formulary tend to be the cheapest, rather than the most effective.

Drug Utilization Review (DUR) - Efforts to control drug utilization and costs by a facility or a health plan. Common methods include the use of a formulary (see above), substitution of generic products for more expensive name brands and encouraging use of drugs that will trigger rebates or discounts.

Dual Eligibles – A term used to describe an individual who is eligible both for Medicare and for full Medicaid coverage, including nursing home services and prescription drugs as well as payments of Medicare premiums, deductibles, and co-insurance. Some Medicare beneficiaries are eligible for Medicaid payments for some of all of the Medicare premiums, deductibles, and co-insurance requirements, but not for Medicaid nursing home or prescription drug benefits.

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Entitlement – A program that creates a legal obligation on the federal government to any person, business, or unit of government that meets the criteria set in law. Federal spending on an entitlement program is controlled through the program’s eligibility criteria and benefit and payment rules, not by the appropriation of a specific level of funding in advance. Entitlement programs such as Medicare and Medicaid are also referred to (for federal budget purposes) as “direct” or “mandatory” spending. Medicaid is both an individual entitlement and an entitlement to the states that elect to participate.

Early and Periodic Screening, Diagnostic, and Treatment Services (EPSDT) – One of the services that states are required to include in their basic packages for all Medicaid-eligible children under age 21. EPSDT services include periodic screenings to identify physical and mental conditions as well as vision, hearing, and dental problems. EPSDT services also include follow-up diagnostic and treatment services to correct conditions identified during a screening, without regard to whether the state Medicaid plan covers those services with respect to adult beneficiaries.

Employee Assistance Program (EAP) - Preventive employer-sponsored services designed to assist employees and their families in addressing both workplace and personal problems before they affect workforce productivity.

Employee Retirement Income Security Act (ERISA) - Enacted in 1974, this is a group of Federal statutes that, among other things, prohibits states from regulating the employee welfare benefit plans, including health plans, of self-insured businesses. ERISA does, however, establish certain regulations related to reporting and disclosure, fiduciary standards, claims review and enforcement. It also provides limited protection against discrimination to ERISA health plan participants.

Enrollment - The total number of covered persons in a health plan. The term also refers to the process by which a health plan signs up groups and individuals for membership or the number of enrollees who sign up in any one group.

Exclusive Provider Organization (EPO - See Closed Panel.

External Quality Review Organization (EQRO) - States are required to contract with an entity that is external to and independent of the State and its managed care contractors to perform a review of the quality of services at least annually.

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Fail-First Policies– Requirement that as a prerequisite for authorization of a specific, often non-formulary medication, the patient fail on at least one other medication (often involves multiple tries). This policy causes problems unnecessarily for consumers by limiting their array of medication options, which causes unnecessary suffering, wastes money and increases the likelihood of relapse.

Federal Financial Participation (FFP) – The technical term for federal Medicaid matching funds paid to states for allowable expenditures for Medicaid services or administrative costs. States receive FFP for expenditures for services at different rates, FMAPs, depending on their per capita incomes. FFP for administrative expenditures also varies in its rate, depending upon the type of administrative cost. See FMAP.

Federal Medicaid Assistance Program (FMAP) – The statutory term for the federal Medicaid matching rate – i.e., the share of the costs of Medicaid services or administration that the federal government bears. In the case of covered services, FMAP varies from 50 to 83 percent depending upon a state’s per capita income; on average, across all state, the federal government pays at least 57 percent of the costs of Medicaid. FMAPs for administrative costs vary not by state, but by function. The general FMAP for administrative costs is 50 percent; some functions (e.g., survey and certification, fraud control units) qualify for enhanced FMAPs of 75 percent or more.

Federally Qualified Health Center (FQHC) – State are required to include services provided by FQHCs in there basic Medicaid benefits package. FQHC services are primary care and other ambulatory care services provided by community health center and migrant health center funded under section 330 of the Public Health Service Act, as well as by “look alike” clinics that meet the requirements for federal funding but not actually receive federal; grant funds. FQHC status also applies to health programs operated by Indian tribes and tribal organizations or by urban Indian organizations.

Federal Poverty Level (FPL) – The federal government’s working definition of poverty that is used as the reference point for the income standard for Medicaid eligibility for certain categories of beneficiaries. Adjusted annually for inflation and published by the Department of Health and Human Services in the form of Poverty Guidelines, the FPL in calendar year 2001 was $14, 630 for a family of 3 in the U.S., $18, 290 in Alaska, and $16,830 in Hawaii.

Fee-For-Service – A traditional method of paying for medical services under which providers are paid for each office visit, treatment, procedure, or other service rendered. See Capitation Payment.

Fee Schedule - A listing of fees or allowances for specific procedures which usually represents the maximum amount the program will pay for specific procedures.

Financial Eligibility – In order to qualify for Medicaid, an individual must meet both categorical and financial eligibility requirements. Financial eligibility requirements vary from state to state and from category to category, but they generally include limits on the amount of income and the amount of resources an individual is allowed to have in order to qualify for coverage.

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Gag Clause - A clause within a contract that restricts the ability of a provider to discuss treatment options with a consumer that may be beneficial but are not covered by the health plan.

Gatekeeper - An arrangement in which a primary care provider determines when a consumer may have access to specialty care, such as to a mental health clinician or service.

Generic Substitution – The practice of substituting a cheaper, generic, medication for a brand-name medication. This can be mandated by the state to occur at the point of sale or can occur at consumer request. NMHA is not opposed to the use of generic medication, as this is a reasonable mechanism that can be used to cut costs to the pharmacy budget when appropriate for specific individuals. However, clinicians and consumers must be aware when such policies are in place. The key factor is the ability for clinicians and consumers to choose the best option for all available types of medication therapies.

Group or Network HMO - An HMO that contracts with one or more independent group practices to provide services to its members.

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Health Insurance Flexibility and Accountability (HIFA) – A Medicaid and States Children’s Health Insurance Program (SCHIP) demonstration waiver that offers States greater flexibility in setting benefits and cost-sharing for some groups of Medicaid beneficiaries. Under this policy, States can use section 1115 waivers to cut benefits and/or increase cost-sharing for certain Medicaid beneficiaries and invest resulting saving into expanding coverage of uninsured individuals through the Medicaid and SCHIP programs.

Health Maintenance Organization (HMO) - An entity that provides, offers or arranges for coverage of designated health services needed by members for a fixed, prepaid premium. There are three basic models of HMOs: group model, individual practice association (IPA) and staff model.

HEDIS - The Health Plan Employer Data and Information Set is a set of performance measures developed to assess the quality of managed care across public and private sectors. It is a product of the National Committee on Quality Assurance.

Health Insuring Organization (HIO) - An entity that contracts on a prepaid, capitated risk basis to provide comprehensive health services to recipients.

Home-and Community-Based Services (HCBS) Waiver – Also known as the “1915c waiver” after the enabling section in the Social Security Act, this waiver authorizes the Secretary of HHS to allow a state Medicaid program to offer special services to beneficiaries at risk of insitutionalization in a nursing facility or facility for the mentally retarded. These home and community-based services, which otherwise would not be covered with federal matching funds, include case management, homemaker/home health aide services, personal care services, adult day health services, habilitation services, and respite care. They also include, in the case of individuals with chronic mental illness, day treatment and partial hospitalization, psychosocial rehabilitation services, and clinic services.

Hospital Affiliation - A contract between an MCO and a hospital in which the hospital agrees to provide inpatient benefits to the MCO’s beneficiaries according to terms negotiated and a (usually discounted) payment schedule.

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Individual Practice Association (IPA) Model HMO - A network of providers that contracts as an entity to provide health care services in return for a negotiated fee. The individual practice association, in turn, compensates its participating clinicians on a per capita, fee schedule or other agreed basis.

Insolvency - A legal determination occurring when a contracted entity no longer has the financial capacity to meet its contractual obligations.

Institution for Mental Diseases (IMD) - A facility of more than 16 beds in which at least 50 percent of the residents have a primary diagnosis of a mental illness. IMDs cannot receive Medicaid funds for services to persons ages 22-64.

Intermediate Care Facility for the Mentally Retarded (ICF/MR) – A public or private facility, the primary purpose of which is to provide health or rehabilitative services to individuals with mental retardation or related conditions (e.g., cerebral palsy). State Medicaid programs may at their option cover services provided by ICFs/MR.

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Joint Commission on Accreditation of Healthcare Organizations (JCAHO) - A private, not-for-profit organization that evaluates and accredits hospitals and other healthcare organizations that provide mental healthcare, home care, ambulatory care and long-term care services.

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Legal Reserves - The minimum reserve that an entity must keep to meet future claims and obligations, as calculated under the state insurance code. The reserve amount is usually determined by an actuary.

Long-term Care – A range of healthcare services that are regularly used over a long period of time; sometimes over the course of a lifetime. Residence-based services, such as nursing home care, are one of the most common forms of long-term care and are what most individuals and policy makers have in mind when they speak of this type of care.

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Managed Behavioral Healthcare Organization (MBHO) - An MCO that specializes in the management, administration and/or provision of behavioral healthcare benefits.

Managed Care Entity (MCE) – The federal statutory term for managed care plan participating in Medicaid. There are two types of MCEs: managed care organization (MCOs) and primary care case managers (PCCMs). MCEs may be public or private.

Managed Care - A term used to describe a set of tools to control costs primarily through resource allocation, volume discounts and service utilization limitations.

Managed Care Organization (MCO) – An MCO is an entity that has entered into a risk contract with a state Medicaid agency to provide a specified package of benefits to Medicaid enrollees in exchange for a monthly capitation payment on behalf of each enrollee. See Capitation Payment.

Mandatory – State participation in the Medicaid program is voluntary. However, if a state elects to participate, as do all, the state must at a minimum offer coverage for certain services to certain populations. These eligibility groups and services are referred to as “mandatory” in order to distinguish them from the eligibility groups and services that a state may, at its option, cover with federal Medicaid matching funds. See Optional.

Matching Rate – See FMAP

Means Testing – The policy of basing eligibility for benefits upon an individual’s lack of means, as measured by his or her income or resources. Means testing by definition requires the disclosure of personal financial information by an applicant as a condition of eligibility. Medicaid and CHIP are meanstested programs; Medicare is not.

Medicaid - A nationwide health insurance program, adopted in 1965, for eligible disabled and low-income persons. It is administered by the Federal government and participating states. The program’s costs, paid for by general tax revenue, are shared by the Federal and state governments.

Medical Necessity - The determination that a specific health care service is: medically appropriate; necessary to meet a consumer’s health needs; consistent with the diagnosis; the most cost-effective option; and consistent with clinical standards of care.

Medically Needy – A term used to describe a Medicaid eligibility group that is optional and is composed of individuals who qualify for coverage because of high medical expenses, commonly for hospital or nursing home care. These individuals meet Medicaid’s categorical requirements – i.e., they are children or parents or aged or individuals with disabilities – but their income is too high to enable them to qualify for “categorically needy” coverage. Instead, they qualify for coverage by “spending down” – i.e., reducing their income by their medical expenses. States that elect to cover the “medically needy” do not have to offer the same benefit package to them as they offer to the “categorically needy.” See Categorically Needy, Spend-Down.

Medicare - A nationwide, federally administered program that covers the costs of hospitalization, medical care and some related services for elderly and select other individuals. Medicare has two parts: Part A generally covers inpatient costs; and part B primarily covers outpatient costs. Pharmaceutical benefits are excluded.

Medicare Buy-in – The informal term referring to the payment of Medicare Part B premiums on behalf of low-income Medicare beneficiaries who qualify for full Medicaid coverage (dual eligibles) or just for assistance with Medicare premiums and cost sharing.

Medicare+Choice - An expansion of the traditional Medicare program that will augment the fee-for-service and HMO health plans currently available to participants to include a variety of new managed care and fee-for-service options.

Medicare Supplement Policy (Medigap) - A policy that pays coinsurance, deductibles and copayments for Medicare recipients. It also guarantees additional coverage for services up to a predefined benefit limit (the portion of the cost of services not covered by Medicare).

Mental Health Statistics Improvement Program (MHSIP) - A project, funded and coordinated through the U.S. Center for Mental Health Services, in which individuals, organizations, state government agencies and associations are working to improve the information management capacity to support decision making in meeting the needs of persons with mental health disorders. The goal of MHSIP is to implement uniform, integrated mental health data collection systems. One of the program’s premier accomplishments has been the production of The MHSIP Consumer-Oriented Mental Health Report Card, which is a prototype consumer-oriented report card developed to assess the quality and cost of mental health and substance abuse services.

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National Committee on Quality Assurance (NCQA) - A private, not-for-profit organization that assesses and accredits managed care organizations, including managed behavioral health organizations.

Network Model HMO - A healthcare model in which the HMO contracts with more than one physician group or IPA, and may contract with single and multi-specialty groups that work out of their own office facilities. The network may or may not provide care exclusively for the HMO's members.

Network Provider - A healthcare professional or facility that is part of the managed care organization’s (MCO's) network and has a contractual arrangement to provide services to the MCO’s covered members.

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Ombudsman - A person or program responsible for investigating and seeking to resolve consumer complaints. An ombudsman should also collect and analyze information that will enable health plans to correct systemic problems in collaboration with consumers, clinicians, purchasers and regulators.

Open Access - A term describing a consumer's ability to self-refer for specialty care. Open access arrangements allow a consumer to see a participating provider without a referral from a gatekeeper. This is also called open panel.

Open Enrollment Period - A period during which consumers have an opportunity to select among health plans, usually without evidence of insurability or waiting periods.

Optional – The term used to describe Medicaid eligibility groups or service categories that states may cover if they so choose and for which they may receive federal Medicaid matching payments at their regular matching rate, or FMAP. About half of all federal Medicaid funds are used to match the cost of optional services or optional populations

Outcomes Measure – A tool that systematically evaluates the impact that services have on the health and mental health of consumers and their families. The measure typically focuses on functioning issues.

Out-of-Pocket Expenses - Costs borne by the consumer that are not covered by a healthcare plan.

Outpatient Prescription Drug Program - A program that provides prescription drug services on an outpatient basis.

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Peer Review - The evaluation of the quality of the services provided by a plan’s clinical staff by equivalently trained clinical personnel.

Peer Review Organization (PRO) - An organization established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) to review quality of care and appropriateness of admissions, readmissions and discharges for Medicare and Medicaid.

Performance Measure - An indicator to help determine the quality of services provided by the health plan, facility or clinician. Many are process measures, such as how many times a phone rings before it is picked up, rather than outcomes measures that deal with a consumer’s functioning.

Pharmaceutical Benefits Manager (PBM) - An entity that is responsible for managing prescription benefits.

Point-Of-Service (POS) - A health plan arrangement in which consumers may choose to receive a service from a participating or a non-participating provider or facility. Generally, the level of coverage is reduced, or the consumer pays more out-of-pocket, for services associated with the use of non-participating providers.

Practice Guidelines - Statements on medical practice that assist physicians and other professionals in developing treatment plans for specific conditions.

Preferred Provider Organization (PPO) - An organized network of healthcare providers, typically reimbursed on a discounted fee-for-service basis. Coverage may or may not be available outside of the network for a higher copayment.

Premium - Money paid in advance for insurance coverage.

Prepaid Health Plan (PHP)
An entity that either contracts on a prepaid, capitated risk basis to provide services that are not risk-comprehensive services, or contracts on a non-risk basis. Additionally, some entities that meet the above definition of HMOs are treated as PHPs through special statutory exemptions.

Prepayment - A method of paying for the cost of health care services in advance of their use.

Primary Care Case Manager (PCCM) – PCCMs are physicians, physician groups, or entities having arrangements with physicians that contract with state Medicaid agencies to coordinate and monitor the use of covered primary care services by enrolled beneficiaries. State Medicaid contracts with PCCMs tend to be less comprehensive in their coverage of benefits and involve less financial risk than those with MCOs.

Primary Care Provider (PCP) - The provider that serves as the initial interface between the consumer and the healthcare system. The PCP is usually a physician, selected by the consumer upon enrollment, who is trained in one of the primary care specialties and who coordinates the treatment of consumers under his/her care.

Prior Authorization/Approval - A cost-control procedure in which a payor requires a service to be approved for coverage in advance of delivery.

Program for All-Inclusive Care for the Elderly (PACE) - A federally initiated program for elderly persons that is funded with both Medicaid and Medicare dollars. The program attempts to integrate the services that are traditionally divided between these two programs and is designed to assist elderly individuals who may qualify for nursing home placement, but who live in the community.

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Qualified Medicare Beneficiary (QMB) Program - A public program that pays the premiums, deductibles and coinsurance for individuals who are on Medicare and at or below the Federal poverty level.

Quality Assurance - A formal methodology designed to assess the quality of services provided. Quality assurance includes formal review of care, problem identification, corrective actions to remedy any deficiencies and evaluation of actions taken.

Quality Improvement - Includes the functions listed under Quality Assurance, plus directs system enhancements on an ongoing basis.

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Rebate – As part of the Omnibus Reconciliation Act of 1990, Congress required that a pharmaceutical company would have to pay a rebate on its products to receive reimbursement by the Medicaid program. For all innovator products, the rebate is the greater of 15.1 percent of the average manufacturer’s price (AMP) or the difference between the AMP and the manufacturer’s “best price,” (the lowest price offered to any other customer, excluding Federal Supply Schedule (FSS) prices, prices to state pharmaceutical-assistance programs, and prices that are nominal in amount, and includes all discounts and rebates). An additional rebate is required for any price increase for a product that exceeds the increase in the Consumer Price Index for all items since 1990. A rebate of 11 percent of each product’s AMP is required for generic drugs.

Reference-based formulary – Identifies categories of drugs that are similar in effectiveness, but with a range of cost. The most cost-effective drug would become the reference drug and set the maximum price paid by the State for that category.

Request For Proposals (RFP) - A request for bids to provide specific services, such as mental health benefits, to a specific population. They are issued by both public and private payors.

Resources – Sometimes referred to as assets, resources are items of economic value that are not income. Resources include financial instruments such as savings accounts and certificates of deposit, personal property such as an automobile (above a specified value), and real estate (other than an individual’s home). Some Medicaid eligibility groups must meet a resource test; others (at state option) are not subject to a resource test. In establishing a resource test, a state Medicaid program must specify both the resource standard (e.g., the amount of countable resources an individual may retain) and the resource methodology (e.g., which resources are counted and how are they valued).

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Section 209(b) State – In amendments to the Social Security Act enacted in 1972, Congress created the Supplemental Security Income (SSI) program of cash assistance for low-income elderly and disabled individuals. Section 209(b) of those amendments allowed states the option of continuing to use their own eligibility criteria in determining Medicaid eligibility for the elderly and disabled rather than extending Medicaid coverage to all of those individuals who qualify for SSI benefits. As of 1998, eleven states had elected the “209(b)” option to apply their 1972 eligibility criteria to aged or disabled individuals receiving SSI benefits for purposes of determining Medicaid eligibility.

Section 1115 Waiver – Under section 1115 of the Social Security Act, the Secretary of Health and Human Services is authorized to waive compliance with many of the requirements of the Medicaid statute to enable states to demonstrate different approaches to “promoting the objectives of” the Medicaid program while continuing to receive federal Medicaid matching funds. In 1999, 17 states or counties were operating Medicaid section 1115 waivers affecting some or all of their eligible populations and involving $38.3 billion in federal matching funds, or over one-third of all federal Medicaid spending that year. The waivers are administered by HCFA and are granted for 5-year periods, after which they may be renewed.

Section 1915(b) Waiver – Under section 1915(b) of the Social Security Act, the Secretary of HHS is authorized to waive compliance with the “freedom of choice” and “statewideness” requirements of federal Medicaid law in order to allow states to operate mandatory managed care programs in all or portions of the state while continuing to receive federal Medicaid matching funds. The waivers, which are granted (or renewed) for 2-year periods, are administered by HCFA.

Section 1931 Parent Coverage – Under section 1931 of the Social Security Act, states can “de-link” eligibility for Medicaid from eligibility for cash assistance in the case of parents with dependent children. Section 1931 gives a state the option of extending Medicaid coverage to parents with family incomes and resources higher than those that would allow the parents to qualify for cash assistance under the state’s TANF program.

Section 1932 State Plan Option – Under section 1932 of the Social Security Act, states may require Medicaid beneficiaries to enroll in managed care entities (MCEs) by submitting an approvable state plan amendment (SPA) to HCFA. Unlike section 1915(b) or 1115 waivers, section 1932 SPAs need not be periodically renewed by HCFA.

Senior Care Organization (SCO) - A Federal program designed to assist the dually eligible population by providing a wide range of medical and social services.

Specified Low-Income Medicare Beneficiary (SLMB) Program - A public program that pays a portion of Medicare premiums for those whose incomes are slightly above the Federal poverty level.

Spend-Down – For most Medicaid eligibility categories, having countable income above a specified amount will disqualify an individual from Medicaid. However, in some eligibility categories – most notably the “medically needy” – individuals may qualify for Medicaid coverage even though their countable incomes are higher than the specified income standard by “spending down.” Under this process, the medical expenses that an individual incurs during a specified period are deducted from the individual’s income during that period. When the individual’s incurred medical expenses have been subtracted from his or her income and the difference is at or below the state-specified income standard, the individual qualifies for Medicaid benefits for the remainder of the period. See Medically Needy.

Staff Model HMO - This model employs physicians and other professionals to provide health care to its consumers. All premiums and other revenues accrue to the HMO, which compensates providers by salary.

Standard – As used in the context of Medicaid eligibility determinations, the dollar amount of income or resources that an individual is allowed to have and qualify for Medicaid. For example, states must cover all pregnant women with family incomes at or below 133 percent of the federal poverty level (FPL), or $19,458 ($1,622 per month) for a family of 3 in 2001. In determining whether a pregnant woman meets this income standard, a state must count her income; the methodology that the state applies will determine what types of income are counted and what income (if any) is disregarded.

State Medicaid Plan – Under Title XIX of the Social Security Act, no federal Medicaid funds are available to a state unless it has submitted to the Secretary of HHS, and the Secretary has approved, its state Medicaid plan (and all amendments to the state plan). The state Medicaid plan must meet over 60 federal statutory requirements.

State Plan Amendment (SPA) – A state that wishes to change its Medicaid eligibility criteria or its covered benefits or its provider reimbursement rates must amend its state Medicaid plan to reflect the proposed change. Similarly, states must conform their state plans to changes in federal Medicaid law. In either case, the state must submit a state plan amendment (SPA) to HCFA for approval.

Statewideness – The requirement that states electing to participate in Medicaid must operate their programs throughout the state and may not exclude individuals residing in, or providers operating in, particular counties or municipalities. This requirement may be waived with Section 1115 Waivers.

Substance Abuse and Mental Health Services Administration (SAMHSA) - Under the U.S. Department of Health and Human Services, SAMHSA is responsible for improving the quality and availability of prevention, treatment and rehabilitation services for substance abuse and mental illnesses.

Supplemental Security Income (SSI) - A national income maintenance program for older and certain other Americans that guarantees a minimum income to those with insufficient financial resources.

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Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) - The Federal law that created the current risk and cost contract provisions under which health plans contract with CMS.

Temporary Assistance for Needy Families (TANF) – A block grant program that makes federal matching funds available to states for cash and other assistance to low-income families with children. TANF was established by the 1996 welfare law that repealed its predecessor, the Aid to Families with Dependent Children (AFDC) program. Prior to this repeal, states were required to extend Medicaid coverage to all families with children receiving AFDC benefits. States may but are not required to extend Medicaid coverage to all families receiving TANF benefits; states must, however, extend Medicaid to families with children who meet the eligibility criteria that states had in effect under their AFDC programs as of July 16, 1996.

Texas Medication Algorithm Project (TMAP) – A project designed to ensure that consumers have access to a range of new, atypical medications and helps to avoid restrictions on access to mental heath treatment.

Therapeutic Class Substitution – A different medication from the same therapeutic class is substituted. Often a formulary will list one or two medications from each therapeutic class, rather than allowing access to a full array of medications.

Tiered Co-payment Structure – Different co-payments are set for brand and generic medications.

Title XIX – Title XIX of the Social Security Act, 42 U.S.C. 1396 et seq., is the federal statute that authorizes the Medicaid program. Related titles of the Social Security Act are Title IV-A (TANF), Title IV-E (Foster Care and Adoption Assistance), Title XVI (SSI), Title XVIII (Medicare), and Title XXI (CHIP).

Transfer of Assets – Refers to the practice of disposing of countable resources such as savings, stocks, bonds, and other real or personal property for less than fair market value in order to qualify for Medicaid coverage. When such transfers occur, it is usually in connection with the anticipated or actual need for long-term nursing home care. Federal law limits (but does not entirely prohibit) such transfers as a means of qualifying for Medicaid coverage.

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Upper Payment Limit (UPL) Mechanism – A financing mechanism under which state Medicaid programs generate additional federal matching payments by paying certain local public hospitals or public nursing facilities at rates substantially in excess of the costs of providing care to Medicaid beneficiaries. Excess payments are transferred by the local public facilities back to the state Medicaid program or the state general treasury.

Utilization - The extent to which beneficiaries within a covered group use a program or obtain a particular service, or category of procedures, during a given period of time. Usually expressed as the number of services used per year or per 1,000 persons covered.

Utilization Management - The process of evaluating the medical necessity, appropriateness and efficiency of healthcare services against established guidelines and criteria.

Utilization Review (UR) - A formal review of healthcare services for appropriateness and medical necessity. UR may be conducted on a prospective, concurrent or retrospective basis.

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Waivers – Various statutory authorities under which the Secretary of HHS may, upon the request of a state, allow the state to receive federal Medicaid matching funds for its expenditures even though it is no longer in compliance with certain requirements or limitations of the federal Medicaid statute. In the case of program waivers such as the 1915(c) waiver for home- and community-based services, states may receive federal matching funds for services for which federal matching funds are not otherwise available. In the case of demonstration waivers such as the section 1115 waivers, states may receive federal matching funds for covering certain categories of individuals for which federal matching funds are not otherwise available, and they may restrict the choice of providers that Medicaid beneficiaries would otherwise have.

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