BioNJ Healthcare Reform Glossary

BioNJ has compiled the following glossary to help Members understand the mechanics of healthcare reform: 

Accountable Care Organizations (ACOs) — A system of health care delivery whereby heath care providers coordinate the care for an individual patient in an effort to provide more effective medical care and hopefully save costs.  An ACO consists of a network of doctors and hospitals that receives payment based on an overall assessment of the care necessary for a particular patient.  Generally, the care delivery coordination will be executed by a primary care physician or a team at the primary care level in order to focus on preventative care and specialist coordination.  Certain clinical endpoints and shared savings bonuses provide incentives for physicians and care providers to join an ACO.   The Patient Protection and Affordable Care Act (PPACA) created the “Medicare Shared Savings Program” under which an ACO can contract to receive payments from the Medicare program. [1]

Affordable Care Act (ACA) — Also known as Patient Protection and Affordable Care Act (PPACA) and as “Obamacare.”  Signed into law March 23, 2010, PPACA aims both to expand insurance coverage for those not already covered by a plan and to reduce costs and improve outcomes of care. [2]

Biosimilars/Biologics — Biological drugs manufactured to be similar to, but not necessarily the same as, an innovator biologic product.  Biosimilars are different than generic drugs.  Generic drugs are copies of chemicals, whereas biosimilars are derived from biological products to closely imitate the treatment profile of an innovator biologic, but will be produced using different cell lines under potentially differing manufacturing processes. Intending to foster competition and reduce costs, PPACA directed the FDA to create a pathway for the approval of biosimilars. [3]

Cadillac Insurance Policies — Subject to a tax under PPACA, Cadillac Insurance Policies are expensive health plans exceeding $10,200 for individuals or $27,500 for families.  The tax, called the “High-Cost Excise Tax,” is meant to curb overuse of healthcare.  It takes effect in 2018. [4]

Community Rating — Risk underwritten not on an individual basis but according to overall risk profile of a given market.  Consequently, premiums will not vary according to an individual’s health status. [5]

Donut Hole — Formally known as the Medicare Part D coverage gap, the “donut hole” refers to the out-of-pocket costs that a beneficiary must pay between the end of the initial benefit coverage and the start of catastrophic coverage. [6]  PPACA will close this gap by 2020, but in the meantime it creates discounts for drugs during an individual beneficiary’s donut-hole period.

Employer Responsibility — If an employer with at least 50 FTE does not provide insurance and an employee puts a tax credit toward buying insurance from an exchange, the employer must pay a fee that helps the Federal government cover the cost of that tax credit. [7] 

Essential Health Benefits — The package of health benefits that non-grandfathered health insurance plans, plans offered in health insurance exchanges, and certain Medicaid plans must provide.  Essential health benefits include ten categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. [8]

Excessive Waiting Periods — Starting January 1, 2014, a group health plan cannot have a waiting period for coverage to start that exceeds 90 days. [9]

Exchanges — PPACA requires that states have places, known as “exchanges,” where those who need health insurance can shop for it and compare plans and rates between participating insurers.  The purpose of exchanges is to allow individuals to band together to get the premiums offered to large groups.  Individuals and those who work for businesses with fewer than 100 employees can shop at the exchanges.  Each state is supposed to establish exchanges before January 1, 2014, or else defer to the Federal Government, which will step in an establish exchanges in its place. [10]

Exclusionary Rider — Prohibited by PPACA.  An exclusionary rider is an amendment to an insurance policy that changes the terms of a policy to exclude coverage for a condition, body part, or body system.  In September 2010, exclusionary riders could no longer be applied to children.  Beginning in 2014, no exclusionary riders will be permitted in any policy. [11]

Formulary — The list of drugs covered by an insurance plan.  A “tiered” formulary is one that has different costs for different drugs. [12]

Grandfathered Health Plan — To enable consumers to keep plans they had before the passage of PPACA, grandfathered plans are exempted from some of its provisions, including its preventative care provision.   (The preventative care provision eliminates out-of-pocket costs for preventative medicine such as certain cancer screenings, flu shots, vaccinations, and the like.)  But plans can lose their grandfathered status is they reduce benefits or increase costs. [13]

Guaranteed Issue — A policy must be offered to an applicant regardless of health status or preexisting conditions.  All policies issued by 2014 will have guaranteed issue. [14]

Guaranteed Renewal — Health insurers must offer to renew a policy as long as premiums are kept current. [15] 

HIT — “Health Information Technology.”  PPACA encourages use of electronic medical records in the Department of Health and Human Services. [16]

HIX — Acronym for “Health Insurance Exchanges.” [17]

Individual Mandate — Officially called “Individual Responsibility.”  Starting in 2014, PPACA requires anyone not covered to enroll in health insurance plan.  It levies an assessment on anyone who does not buy insurance. [18]

Lifetime Limit — The PPACA eliminates lifetime limits on coverage. [19]

Medicaid Expansion — Expands Medicaid eligibility to those individuals and families with incomes up to 133% of Federal poverty line.  The Supreme Court struck down the provision of the law that required states to participate in Medicaid expansion, and as a consequence, CBO anticipates the impact on the uninsured will not be as great as initially projected. [20]  In states that choose to expand their Medicaid programs in line with the ACA, beginning in 2014, the Federal government will cover 100% of states’ cost of covering this expansion population; the Federal share declines gradually until it covers 90% in 2020 and thereafter. [21]

Medicare Shared Savings Program — Provides savings to ACOs that receive payments from Medicare. [22]

Patient-Centered Outcomes Research Institute — Created by PPACA to study outcomes and evidence and funded by fee paid by health plans. [23]  The fee is $1 per insured individual during the first year, and in the second through seventh years, it is $2 per insured individual. [24]

National Federation of Independent Business v. Sebelius — The June 28, 2012 Supreme Court decision upholding  Obamacare.  At issue were the individual mandate and the Medicaid expansion.  Justice John Roberts’ majority opinion holds that the individual mandate cannot be justified under the Constitution’s Commerce Clause, but that it can be justified as falling under the power of Congress to tax.  The majority ruled, further, that the PPACA’s expansion of Medicaid was an unconstitutional coercion of states, insofar as Medicaid expansion threatens non-compliant states with losing Medicaid funding. [25]

Patient Protection and Affordable Care Act (PPACA) — Also known as the ACA, or “Obamacare.”  Signed into law March 23, 2010.   Aims to expand insurance coverage for those not already covered by a plan.  Aims also to reduce costs and improve outcomes. [26]

Payment Bundling — PPACA created a program wherein Medicare will establish demonstration programs in certain areas of the US intended to pay participating providers to treat a condition, rather than being paid for each individual procedure, treatment, or test. [27]

Pre-Existing Condition — A health condition that an individual has before beginning coverage, for which an insurer will deny or limit coverage.  Diabetes would be an example of a pre-existing condition.  Starting in 2014, PPACA outlaws denying coverage based on preexisting conditions.  Until then, the Act provides for a temporary high-risk pool insurance plan, the Pre-Existing Condition Insurance Plan (PCIP). [28]

Pre-Existing Condition Insurance Plan (PCIP) — Covers those who have pre-existing conditions, have been uninsured at least six months, or have been offered coverage but denied coverage of a pre-existing condition.  In effect until 2014. [29]

Preventive Care Provision — PPACA eliminates out-of-pocket costs such as deductibles and co-pays for preventive medical care such as cholesterol tests, blood pressure screening, and vaccines. [30]

Qualified Health Plan — A plan that provides essential health benefits and limits cost-sharing mechanisms like deductibles and co-pays.  A qualified health plan is certified by the Exchange in which it is sold. [31]

Uncompensated Care — Care provided by hospitals that doesn’t get reimbursed.  Uncompensated care is most often provided to the uninsured. [32]

Value-Based Purchasing — Links provider payments to outcomes.  PPACA directs Medicare and Medicaid to implement value-based purchasing programs [33] by October 1, 2012. [34]