Healthcare Terms and Definitions

Contingency: Insurance premiums often include a small component for "contingency." This expense is designed to protect against the risk that the average expected costs upon which the premium is based underestimate the actual claims expenditures.

Delivery Plan: Health insurance industry definitions that reflect variable access to providers and member costs have been used to assign individuals to one of the following coverage plans: 1) HMO (Health Maintenance Organization), 2) PPO (Preferred Provider Organization), 3) POS (Point of Service), or 4) Other (largely Indemnity). At this time, enrollment in Consumer Driven Health Plans (CDHPs) is relatively quite small, thus it is included in the PPO classification.

Employee Premium Contribution: The portion of the employer-sponsored health insurance premium which the employee is responsible for paying, including employee responsibility for spouse, partner, and/or dependent coverage premiums. (Employees typically pay a larger portion of the premium for a spouse, partner, and dependents than they do for their own coverage.)

Employer Premium Contribution: The portion of the employer-sponsored health insurance premium contributed by the employer. Employers typically contribute a higher percentage of the premium for employee coverage than coverage for a spouse, partner, and/or dependents.

Government: Public sector employers, including the state, counties, and cities/municipalities, and the TriCare coverage of retired military personnel and dependents of active duty personnel.

Healthcare Dollars: Total dollars consumed in the delivery of services. Typically, in healthcare contracts and billing this is referred to as the "allowed" amount. Non-medical expenses are also included in this total.

Large Employers: Employers with 51 or more full-time employees in the United States.

Median Household Income: Household income is the sum of monetary income received by all household members 15 years old and over, including household members not related to the householder, people living alone, and other non-family household members. Included are in the total are amounts reported separately for wage or salary income; net self-employment income; interest, dividends, or net rental or royalty income or income from estates and trusts; Social Security or Railroad Retirement income; Supplemental Security Income (SSI); public assistance or welfare payments; retirement, survivor, or disability pensions; and all other income.

Medicaid: Estimated health care costs for the Medicaid population are derived from AHCCCS Acute Care financial data from the time periods 10/1/01-9/30/02 and 10/1/02-9/30/03. These data represent cost and utilization experience of multiple population groups, including TANF, SSI without dual Medicare Eligibility, MN/MI, MED, NON-MED, SOBRA FP, and SOBRA MOMS. Mercer actuaries have made assumptions to estimate non-medical expenses and out-of-pocket costs associated with the AHCCCS population.

OOP: Out-of-Pocket expenses include amounts paid by an individual when a healthcare service is provided, including all deductibles, co-payments, and co-insurance.

PEPM: Per Employee Per Month refers to the average cost of services to an employee for a one-month period. The PEPM may also include costs for a spouse, partner, and/or dependents if they are covered under the employer-sponsored health plan. The PEPM cost is distinctly different from the PMPM (per member per month) cost, as the PEPM represents, on average, the cost for multiple covered individuals per month, whereas the PMPM represents the cost for one individual per month.

PMPM: Per Member Per Month, or the average cost of services per individual per month.

Primary Market Segment: The segments represent the six primary sources of health coverage: 1) Government, 2) Individual, 3) Large Employers, 4) Medicaid, 5) Small Employers, and 6) Uninsured. Individuals with Medicare as their primary source of health coverage are not included in the data charts at this time. Where individuals have multiple sources of health coverage, they are grouped into the category which provides the most extensive coverage; e.g., individuals with both Medicare and Medicaid coverage ("Dual Eligibles") are included in the Medicare market segment.

Reserve: Reserves are established and maintained by insurance companies and health plans to ensure that funds are available to pay claims or cover other insurance-related liabilities.

Service Category: Healthcare service costs are allocated to one of six service categories: 1) inpatient hospital; 2) outpatient hospital; 3) physician; 4) pharmacy; 5) other; and, 6) non-medical expenses (administrative costs, commission, profit and contingency). Per industry standards, costs have been assigned to the category where the majority of care and expense occurred. For example, pharmacy costs incurred during an inpatient hospital stay have been assigned to the inpatient hospital service category, while a prescription filled by a pharmacy is assigned to the pharmacy service category.

Oral health, behavioral/mental health, long-term care, and elective (non-covered) services are not included in the data charts at this time.

Small Employers: Employers with 50 or fewer full-time employees in the United States

Uncompensated Care: Services provided for which payment was not received, also representing the portion of payment that was not received. This amount reflects the cost of services, not billed charges. Hospitals frequently use billed charges as their measure to calculate uncompensated hospital care. The Uninsured primary market segment has a significant portion of services provided which meet the criteria for Uncompensated Care.