Health insurance is a contractual arrangement
Whether your health insurance is provided through your employer or on an individual basis, it is important for you to understand the terminology used in the plan because the plan is a legal, binding contract. Below are some of the more common terms that are present in most contracts.
Adverse determination - A determination by a health care plan or by a utilization review program that a health care service is not medically necessary.
Drug formulary - A listing of prescription medications approved for use and/or coverage by the plan and dispensed through participating pharmacies to a covered person.
Grievance procedure - The process by which a health plan member or participating provider can air complaints and seek remedies.
Medically necessary - A service or treatment which is appropriate under the provisions of the health care plan and consistent with diagnosis, and which, in accordance with the accepted standards of practice in the medical community of the area in which the health services are rendered, could not have been omitted without adversely affecting the member's condition or the quality of medical care rendered.
Post-stabilization medical services means health care services provided to an enrollee that are furnished in a licensed hospital by a provider that is qualified to furnish such services, and determined to be medically necessary and directly related to the emergency medical condition following stabilization.
Pre-certification, also known as pre-admission certification, pre-admission review and "precert," means the process of obtaining certification or authorization from the health plan for non-emergency hospital admissions (inpatient or outpatient). Often involves appropriateness review against criteria and assignment of length of stay. Failure to obtain pre-certification often results in a financial penalty to either you or your health care provider.
"Reasonable and customary" or "usual" charges are terms used to refer to the commonly charged or prevailing fees for health services within a geographic area. A fee is considered to be reasonable if it falls within the parameters of the average or commonly charged fee for the particular service within that specific community.
Stabilization means, with respect to the emergency medical condition, to provide such medical treatment of the condition as may be necessary to assure, within reasonable medical probability, that no material deterioration of the condition is likely to result.
Utilization review means an evaluation of the medical necessity, appropriateness and the efficiency of the use of health care services on a prospective, concurrent or retrospective basis.
Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.
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If you have questions about the application of the law in a particular case, consult your lawyer. The law is constantly changing. Information on this site or any site to which we link does not constitute legal advice.