Glossary of insurance & appeal terms

The Patient Protection and Affordable Care Act of 2010, the federal statute that created the individual marketplace, expanded Medicaid in adopting states, banned pre-existing condition exclusions, required coverage of essential health benefits, capped out-of-pocket maximums, banned annual and lifetime limits on essential benefits, required preventive services to be covered at 100 percent, and established the internal-and-external appeal process. Most ACA appeal protections apply to all non-grandfathered plans, including self-funded ERISA plans.

See also: Essential Health Benefits, External Review / IRO

A formal decision by a health plan to deny, reduce, terminate, or refuse to pay for a benefit. The phrase comes from federal ERISA and ACA regulations and is the trigger that opens your right to file an internal appeal and, if that fails, an external review. Any denial of medical necessity, prior authorization, coverage, or payment is an adverse benefit determination, and the plan must give you a written notice explaining the reason and your appeal deadlines.

See also: Internal Appeal, External Review / IRO

The maximum dollar figure your insurance plan considers reasonable to pay for a covered service. For in-network care it usually equals the contracted rate the plan negotiated with the provider. For out-of-network care it is set by the plan's own fee schedule or a benchmark like Medicare rates. Your coinsurance and deductible are calculated against the allowed amount, not the provider's billed charge. Anything above the allowed amount may be written off (in network) or balance-billed to you (out of network).

See also: Balance Billing, Usual, Customary and Reasonable (UCR)

A formal written request asking your health plan to reverse a denial, reduction, or other adverse benefit determination. Federal law gives you at least one level of internal appeal with the plan and, after that fails, the right to an independent external review. Most insurers give you 180 days from the date on the denial notice to file an internal appeal. Appeals must be in writing, must reference the claim, and should include clinical documentation, citations to your policy, and any applicable state or federal law.

See also: Internal Appeal, External Review / IRO, Expedited Review

When a provider bills you for the difference between their full charge and the amount your insurer paid (plus your cost-sharing). It is generally lawful for true out-of-network care, but the federal No Surprises Act bans it for emergency services, for out-of-network providers at in-network facilities, and for air ambulance services. State surprise-billing laws add further protections. If you receive a balance bill that may violate the No Surprises Act, you can file a complaint at 1-800-985-3059 before paying.

See also: No Surprises Act, Surprise Bill, Out-of-Network

The full plan document, sometimes called the Evidence of Coverage, Certificate of Coverage, or Summary Plan Description, that spells out exactly what your plan covers, excludes, and how it processes claims and appeals. It is the controlling legal document if there is a conflict with shorter marketing materials. Your insurer must provide it on request, usually free, and you should reference its specific exclusion or coverage language by section number when writing an appeal.

See also: EOB (Explanation of Benefits), Summary of Benefits and Coverage (SBC)

A request for payment that a provider (or sometimes the patient) submits to an insurer for a covered service. A claim moves through eligibility verification, adjudication (the system applying plan rules), and payment or denial. The result is communicated to the provider on a remittance advice and to the patient on an EOB. Every claim has a unique claim number that should be referenced in any appeal letter, phone call, or written communication with the insurer.

See also: Claim Form, EOB (Explanation of Benefits), Remittance Advice

The standardized X12 code (such as 50, 11, 204) that explains why a claim or service line was paid differently than billed. The two-letter prefix indicates Group Code: CO (Contractual Obligation, provider responsibility), PR (Patient Responsibility), OA (Other Adjustment), PI (Payer Initiated). CARCs are paired with Remittance Advice Remark Codes (RARC) that provide additional context. Together they tell you exactly why a claim was denied and where to focus an appeal.

See also: Denial Code, Remittance Advice

The standardized document a provider submits to the insurer to request payment for a service. The CMS-1500 form is used by physicians and other professional providers, the UB-04 (CMS-1450) is used by hospitals and other institutional providers. Claim forms include patient demographics, provider identifiers (NPI, taxonomy), diagnosis codes (ICD-10), procedure codes (CPT, HCPCS), service dates, and charges. Errors on a claim form are the most common cause of denials with codes like CO-16 (missing information) and CO-4 (procedure or modifier inconsistency).

See also: Denial Code, Remittance Advice

The Consolidated Omnibus Budget Reconciliation Act, a federal law that lets you keep your employer-sponsored health insurance for 18 to 36 months after a qualifying event such as job loss, reduced hours, divorce, or aging off a parent's plan. You typically have 60 days from the loss-of-coverage notice to elect COBRA, and the election is retroactive to the date coverage ended. You pay the full premium plus up to a 2 percent administrative fee, but the same plan continues to cover claims with no gap.

See also: ERISA

The percentage of the allowed amount you owe for a covered service after meeting your deductible. A 20 percent coinsurance on a $1,000 allowed amount means you pay $200 and the insurer pays $800. Coinsurance applies until you hit your annual out-of-pocket maximum, after which the plan pays 100 percent of covered services. Out-of-network coinsurance is almost always higher than in-network and is calculated against a different (often lower) allowed amount.

See also: Deductible, Out-of-Pocket Maximum, Copayment

A fixed dollar amount you pay at the time of service for a specific type of visit or prescription, regardless of the underlying cost. A typical plan might have a $25 copay for a primary care visit, $50 for a specialist, and $10 to $200 for prescriptions depending on tier. Copays usually count toward your out-of-pocket maximum but not always toward your deductible. Unlike coinsurance, copays do not change with the price of the service.

See also: Coinsurance, Deductible

Current Procedural Terminology code, a five-digit code maintained by the American Medical Association that identifies a specific medical procedure or service. CPT codes are used to bill professional services. Insurers process and price each claim line by line based on its CPT code, and a single wrong digit can produce a denial. CPT codes are paired with ICD-10 diagnosis codes to justify medical necessity. HCPCS Level II codes cover supplies and services not in the CPT codebook.

See also: ICD-10 Code, Claim Form

The annual dollar amount you must pay out of pocket for covered services before your insurer starts paying its share. A plan with a $2,000 individual deductible requires you to pay the first $2,000 of allowed charges before coinsurance kicks in. Family plans usually have both individual and family aggregate deductibles. Preventive services required by the ACA are covered at 100 percent without a deductible. Out-of-network deductibles are typically separate from in-network and are usually much larger.

See also: Coinsurance, Out-of-Pocket Maximum

A short alphanumeric code, such as CO-50 or PR-204, that appears on your Explanation of Benefits or remittance advice and tells you in standardized X12 / CARC language why a claim was denied or reduced. The two-letter prefix identifies who is responsible (CO contractual, PR patient responsibility, OA other adjustment, PI payer initiated). The numeric portion is the specific reason. Knowing the exact code is the first step in choosing the right appeal strategy and the right legal authority to cite.

See also: EOB (Explanation of Benefits)

A statement your insurer sends after processing a claim that shows the billed charge, the allowed amount, what the plan paid, what was applied to your deductible or coinsurance, and what (if anything) you owe. It is not a bill. The EOB also lists any denial codes and brief reason text. Save every EOB, you will need it to verify provider bills, calculate deductible accumulation, and reference specific claim numbers and dates in any appeal letter.

See also: Denial Code, Remittance Advice

The Employee Retirement Income Security Act of 1974, the federal law that governs most employer-sponsored health plans, including self-funded plans. ERISA preempts most state insurance regulation for self-funded plans and sets minimum standards for claims procedures, appeal rights, fiduciary duties, and disclosures. ERISA appeals are governed by Department of Labor regulations at 29 C.F.R. Section 2560.503-1, which require plans to give you a full and fair review and access to all documents the plan relied on in denying your claim.

See also: Self-Insured Plan, Internal Appeal

Ten broad categories of services that the Affordable Care Act requires individual and small-group health plans to cover: ambulatory care, emergency services, hospitalization, maternity and newborn care, mental health and substance use treatment, prescription drugs, rehabilitative services and devices, lab services, preventive and wellness services, and pediatric services including vision and dental. Each state defines a benchmark plan that sets the specifics. EHB requirements do not apply to self-funded large-group plans, grandfathered plans, or short-term limited-duration plans.

See also: ACA (Affordable Care Act)

The full, controlling legal document that describes a plan's benefits, exclusions, cost-sharing, claim and appeal procedures, and member rights. The EOC is also called the Certificate of Coverage, Schedule of Benefits, or Summary Plan Description, depending on the plan type. It governs over any conflicting language in marketing brochures or the SBC. Insurers must provide the EOC on request, usually within 30 days, free of charge. Quote specific section and page numbers when citing the EOC in an appeal letter.

See also: Benefits Booklet, Summary of Benefits and Coverage (SBC)

The legal doctrine that requires you to complete all available internal appeal levels before pursuing external review or filing suit under ERISA. Federal regulations create a deemed exhaustion exception when the insurer fails to follow the claim procedures, including missing decision deadlines. Note the specific procedural failures in writing, this triggers your right to skip directly to external review and (for ERISA plans) federal court without further internal appeals.

See also: Internal Appeal, External Review / IRO, ERISA

An accelerated appeal track for situations where waiting for a standard decision would seriously jeopardize your life, health, or ability to regain maximum function, or for ongoing or imminent treatment. Federal law requires plans to issue an expedited internal decision within 72 hours and an expedited external review within 72 hours (sometimes shorter for urgent prescription drug cases). Mark your appeal urgent in writing and have your physician confirm the clinical urgency in a short letter included with the appeal.

See also: Internal Appeal, External Review / IRO

An insurer's classification of a treatment, drug, device, or procedure as lacking sufficient clinical evidence to meet the plan's coverage criteria. The classification is made by the insurer's internal medical policy department, not by the FDA or specialty societies, and is frequently challenged on appeal. Many states have laws limiting an insurer's ability to label FDA-approved treatments experimental for their approved indications. CO-55 is the standard denial code. Successful appeals usually cite NCCN, ASCO, AHA, or ACC clinical guidelines.

See also: Medical Necessity, Letter of Medical Necessity

An independent appeal decided by a third-party physician reviewer working for an Independent Review Organization, available after the insurer denies your internal appeal. Established by the ACA, the external review process is binding on the plan and free to the patient. Each state administers its own program (sometimes named IMR, IRO, IHCAP, or External Appeal). Self-funded ERISA plans use a federal external review program through HHS-contracted IROs. External reviewers overturn insurer decisions in roughly 39 to 47 percent of cases.

See also: Internal Appeal, Appeal

The list of maximum amounts an insurer will pay for each procedure or service code. In-network providers contractually accept the plan's fee schedule as payment in full and write off any difference between their billed charge and the schedule. Out-of-network providers are not bound by the schedule and may bill the patient for the balance unless protected by the No Surprises Act or a state surprise-billing law. The CO-45 denial code signals a fee-schedule reduction.

See also: Allowed Amount, Usual, Customary and Reasonable (UCR)

The list of prescription drugs your plan covers, organized into tiers (typically generic, preferred brand, non-preferred brand, specialty). Your copay or coinsurance varies by tier. Drugs not on the formulary are usually not covered at all unless you obtain a formulary exception based on medical necessity. Plans can change the formulary mid-year, and many require step therapy or prior authorization for higher-tier drugs. Always check the current formulary before filling a prescription, and ask for an exception when a non-formulary drug is medically required.

See also: Step Therapy, Prior Authorization, Tier (Drug Formulary)

The window of time after a premium payment is due during which coverage stays in force even though the premium has not yet been paid. Most commercial plans offer a 30 to 90 day grace period. ACA marketplace plans with Premium Tax Credit subsidies have a three-month grace period, during which the insurer must pay claims for the first month and may pend claims for months two and three. Coverage terminations during a grace period are often improper and can be appealed.

See also: Premium, COBRA

A formal complaint to your health plan about service quality, access, billing, or other plan operations, distinct from an appeal of a specific benefit decision. In some states, particularly California, grievance is also the term used for what other states call an internal appeal. Plans typically must acknowledge a grievance within 5 days and resolve it within 30 to 60 days. Filing a grievance often runs in parallel with a state insurance department complaint and an internal appeal of the underlying claim.

See also: Appeal, Internal Appeal

A Health Maintenance Organization, a managed-care plan that requires you to pick a primary care physician and to get referrals from that PCP before seeing specialists. HMO plans typically only cover in-network care except in emergencies, and out-of-network care is paid by the patient. Premiums and out-of-pocket costs are usually lower than PPOs in exchange for tighter network and referral rules. CO-242 referral-required denials are most common on HMO plans.

See also: PPO, Network,

A Health Savings Account, a tax-advantaged savings account you can fund only if you are enrolled in a qualifying high-deductible health plan. Contributions are pre-tax, growth is tax-free, and withdrawals are tax-free if used for qualified medical expenses. HSAs roll over year to year and are owned by you, not the employer, so they follow you between jobs. The 2026 contribution limits are set annually by the IRS. HSAs are distinct from FSAs, which are use-it-or-lose-it employer-owned accounts.

See also: Deductible

International Classification of Diseases, Tenth Revision, the standardized diagnosis code set used on claims to describe the patient's condition. ICD-10 codes can be three to seven characters and are required to support the medical necessity of any billed CPT or HCPCS code. A mismatch between the diagnosis (ICD-10) and the procedure (CPT) is a common trigger for CO-11 and CO-50 denials. Insurers maintain coverage policies that list which ICD-10 codes justify each CPT code.

See also: CPT Code, Claim Form, Medical Necessity

A formal request asking the insurer to cover an out-of-network provider at the in-network benefit level because no in-network provider with the necessary expertise is available within a reasonable distance or time. Insurers are typically required to grant gap exceptions when network adequacy is genuinely lacking. Document the unavailability of in-network alternatives, include a treating physician's letter on medical necessity, and request the exception in writing. Approved exceptions cap your cost at the in-network coinsurance and deductible.

See also: Network, Out-of-Network

The first formal level of appeal, decided by your insurer itself (though under federal law it must be reviewed by someone not involved in the original denial). Standard internal appeals must be decided within 30 days for pre-service denials and 60 days for post-service denials. Plans may have one or two internal levels depending on contract. Most insurers give you 180 days from the date on the denial notice to file. Exhausting internal appeals usually unlocks your right to external review.

See also: Appeal, External Review / IRO, Adverse Benefit Determination

A formal written letter to your insurer requesting reversal of an adverse benefit determination. A complete appeal letter includes: patient and policy identifiers, claim number, date of denial, the specific denial code and reason being challenged, the relief requested (claim payment, prior authorization, etc.), the factual and clinical basis for reversal, citations to plan language and applicable state and federal law, attached supporting documents (LMN, records, guidelines), and a signature. Mail certified with return receipt or submit through the insurer's documented appeal channel.

See also: Appeal, Internal Appeal, Letter of Medical Necessity

A signed letter from your treating physician explaining why a specific treatment, drug, or device is medically necessary for your particular condition. The strongest letters cite peer-reviewed clinical evidence (such as NCCN, AHA, ASCO, or ACC guidelines), describe what alternatives have been tried and failed, identify any contraindications to less expensive options, and tie the recommendation to your clinical history. A well-written letter of medical necessity is the single most important document in any medical-necessity (CO-50) or experimental-treatment (CO-55) appeal.

See also: Medical Necessity, Experimental / Investigational

The clinical standard insurers use to decide whether a service should be covered. Federal regulations and most state laws define it as care that is consistent with generally accepted standards of medical practice, clinically appropriate, and not primarily for the convenience of the patient or provider. Insurers maintain their own internal medical necessity criteria, often stricter than the standard of care, and apply them through clinical coverage policies. CO-50 is the most common denial code used to assert lack of medical necessity.

See also: Letter of Medical Necessity, Utilization Review

A privately administered alternative to traditional Medicare, also called Medicare Part C. Insurers contract with CMS to cover all Part A and Part B benefits and usually Part D drug benefits, in exchange for a per-member capitated payment. Medicare Advantage plans use HMO or PPO networks, prior authorization, and step therapy in ways traditional Medicare does not. Appeal rights run through a CMS-defined five-level process: plan reconsideration, IRE reconsideration, ALJ hearing, Medicare Appeals Council, and federal court review.

See also: HMO, PPO

The principle, enforced through the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), that group health plans cannot impose stricter limits on mental health and substance use disorder benefits than they apply to comparable medical and surgical benefits. The 2021 Consolidated Appropriations Act strengthened the law by requiring plans to perform and disclose comparative analyses of their non-quantitative treatment limits. Plans that apply tighter prior authorization, narrower networks, or stricter medical necessity criteria to mental health than to physical health are likely violating MHPAEA.

See also: Prior Authorization, Utilization Review

The set of doctors, hospitals, labs, and other providers that have signed contracts with your insurer to accept negotiated rates. In-network care is paid at the higher benefit level and the provider cannot balance bill you for the difference. Out-of-network care is paid at a lower rate (or not at all on HMO and EPO plans), and you may owe a balance bill outside the protections of the No Surprises Act. Network adequacy is regulated by state insurance departments and CMS.

See also: HMO, PPO, Out-of-Network, Balance Billing

A federal law effective January 1, 2022 that bans balance billing in three situations: emergency care at any facility, non-emergency care at in-network facilities by out-of-network providers (when you did not knowingly consent in writing in advance), and air ambulance services from out-of-network providers. In these situations, your cost is capped at your in-network cost-sharing and the out-of-network provider must resolve the payment dispute with the insurer through a federal Independent Dispute Resolution process. Complaints: 1-800-985-3059 or nsa-help.cms.gov.

See also: Balance Billing, Surprise Bill, Out-of-Network

A provider who has not signed a contract with your insurer. PPO plans cover out-of-network care at a lower benefit level (typically a higher deductible and higher coinsurance), HMO and EPO plans usually do not cover it at all except in emergencies. Even when covered, out-of-network providers can balance bill you for the difference between their charge and the plan's allowed amount, unless protected by the No Surprises Act or a state surprise-billing law.

See also: Network, Balance Billing, No Surprises Act

The annual cap on what you can pay in cost-sharing for covered in-network essential health benefits. After your deductibles, coinsurance, and copays add up to this amount, the plan must pay 100 percent of covered in-network services for the rest of the plan year. Premiums, balance bills, and out-of-network charges (in most cases) do not count. The federal cap for 2026 is set annually by HHS, and many plans have lower out-of-pocket maximums than the legal ceiling.

See also: Deductible, Coinsurance, Copayment

An individual who helps patients navigate medical billing, insurance appeals, and access to care. Some advocates are employed by hospitals, insurers, or employers, others work independently for fees or on contingency. State Departments of Insurance often have free consumer assistance programs that function as advocates. Nonprofits like the Patient Advocate Foundation provide free case management for insured patients facing access or billing problems related to chronic illness and disability.

See also: Appeal, Grievance

A phone call between your treating physician and the insurer's medical director to discuss a denied prior authorization or post-service denial. A peer-to-peer is faster than a written appeal and often results in immediate reversal when your doctor can directly explain the clinical rationale. You can ask your doctor to request one within a few days of the denial. Successful peer-to-peer reviews should be confirmed in writing by the insurer to protect your record.

See also: Prior Authorization, Internal Appeal

A Preferred Provider Organization, a plan that lets you see any provider but pays at a higher benefit level for in-network providers. PPOs do not require a primary care physician or referrals, and they do cover out-of-network care, though at higher cost-sharing and with a separate (usually larger) deductible. PPO premiums are typically higher than HMO premiums in exchange for the wider choice of providers and the ability to self-refer to specialists.

See also: HMO, Network, Out-of-Network

A synonym for prior authorization, the requirement that you (or your provider) get the insurer's approval before a specific service, drug, or device is delivered. Failure to obtain it usually results in a CO-11 denial. Some services are exempt by federal law (emergencies, ACA preventive care, certain mental health crisis services). Pre-authorization is the single largest source of administrative friction in US health care and the subject of state reform laws limiting turnaround times.

See also: Prior Authorization

The fixed monthly amount you (or your employer on your behalf) pay to keep an insurance policy in force, regardless of how much care you use. Premiums do not count toward your deductible or out-of-pocket maximum. Marketplace premiums are partially offset for many enrollees by Premium Tax Credits based on income. Employer-sponsored premiums are typically deducted pre-tax from your paycheck. Falling behind on premiums can trigger a CO-27 coverage-terminated denial after the grace period expires.

See also: Deductible, Out-of-Pocket Maximum

Screening, counseling, and immunization services that the ACA requires non-grandfathered plans to cover at 100 percent with no cost-sharing when delivered by an in-network provider. The list is set by the US Preventive Services Task Force (USPSTF Grade A and B), the CDC's ACIP for vaccines, and HRSA for women's and children's services. Common examples: annual physicals, mammograms, colorectal cancer screening, blood pressure screening, flu shots, contraception, well-child visits. These services should never be applied to your deductible.

See also: Essential Health Benefits, Deductible

The insurer's advance approval, in writing, that a specific service or drug is covered before it is delivered. Plans require it for high-cost imaging, brand-name drugs, elective surgeries, specialty referrals, and many therapies. CO-11 is the standard denial code when prior authorization was not obtained or did not match what was billed. Federal law forbids requiring prior authorization for emergency services, and many states require turnaround times as short as 24 to 72 hours for urgent requests.

See also: Pre-authorization, Peer-to-Peer Review, Step Therapy

Any individual or facility that delivers a covered health care service: physicians, nurse practitioners, hospitals, ambulatory surgery centers, labs, imaging centers, durable medical equipment suppliers, pharmacies, behavioral health clinicians, and so on. Each provider is identified on a claim by a National Provider Identifier (NPI). Network status (in or out) is determined provider by provider, so it is possible to receive in-network and out-of-network care during the same hospital stay, which is exactly the situation the No Surprises Act addresses.

See also: Network, No Surprises Act

A change in life circumstance that triggers a Special Enrollment Period during which you can buy or change individual market or employer health coverage outside the annual open enrollment window. Examples: marriage, divorce, birth or adoption of a child, loss of other coverage, permanent move to a new coverage area, loss of Medicaid or CHIP, citizenship or immigration status change. You typically have 60 days from the event to enroll. Documentation may be required.

See also: COBRA

An older synonym for the allowed amount on out-of-network claims, sometimes still used in older plan documents. The R&C amount is what the insurer considers a reasonable charge for the service in your geographic area, often calculated against a benchmark like the FAIR Health database or a percentage of Medicare. Anything above R&C is the patient's responsibility on most legacy out-of-network plans, though the No Surprises Act has changed this for emergency and surprise billing situations.

See also: Allowed Amount, Usual, Customary and Reasonable (UCR), Balance Billing

The document the insurer sends to the provider explaining how each line item on a claim was paid, denied, or adjusted, with X12 reason codes (CARC) and remark codes (RARC). The patient-facing equivalent is the Explanation of Benefits. The remittance advice contains more detail than an EOB and is the single best document for understanding exactly why a claim was denied, request a copy from the provider's billing department if your EOB is unclear.

See also: EOB (Explanation of Benefits), Denial Code

An employer-sponsored health plan in which the employer pays claims out of its own funds rather than buying insurance from a carrier. The carrier (Aetna, UnitedHealthcare, Cigna, BCBS) typically administers the plan but does not bear the financial risk. Self-insured plans are governed by federal ERISA law and are not subject to most state insurance mandates. Roughly 65 percent of US employees with employer coverage are in self-insured plans. Appeal rights flow through ERISA and the federal external review program rather than the state insurance commissioner.

See also: ERISA

A high-cost prescription drug, usually a biologic, gene therapy, or complex small molecule, that requires special handling, administration, or monitoring. Specialty drugs are typically placed on the highest formulary tier, are dispensed only through designated specialty pharmacies, and almost always require prior authorization. Coinsurance on specialty drugs can be 20 to 40 percent of the drug's cost, even after deductible, which is why so many appeals involve specialty-tier denials and step-therapy requirements for biologics.

See also: Formulary, Tier (Drug Formulary), Step Therapy

A protocol that requires you to try and fail on one or more lower-cost medications before the insurer will cover the drug your physician originally prescribed. PR-50 is the standard denial code. Over 30 states have step-therapy reform laws requiring insurers to grant exceptions when the patient has already failed the alternative, has a documented contraindication, or when the alternative is expected to be ineffective. Federal law also limits step therapy in some Medicare Advantage and Medicaid contexts.

See also: Formulary, Prior Authorization

The insurer's right to recover what it paid for treatment of an injury when a third party (such as a driver who hit you) was legally responsible. After paying your medical claims, the insurer asserts a lien against any settlement you obtain from the responsible party or your auto, workers' compensation, or homeowners insurer. Subrogation rules vary by state and ERISA preempts many state limits for self-funded plans. Always notify your attorney and your health plan when an injury claim involves possible third-party liability.

See also: ERISA

A short, standardized federally required document (usually 4 to 6 pages) that summarizes a plan's deductibles, copays, coinsurance, out-of-pocket maximums, and key covered and excluded services in a uniform format that lets you compare plans side by side. The SBC includes coverage examples for common scenarios (childbirth, diabetes care, fracture). It is not the controlling plan document, the full benefits booklet (Evidence of Coverage / Certificate of Coverage) is, but it is the easiest place to start when reading a plan.

See also: Benefits Booklet

An unexpected bill from an out-of-network provider in a situation where you had no meaningful choice, typically an emergency or an ancillary service (anesthesiology, radiology, pathology, surgical assistant) at an in-network hospital or surgery center. The federal No Surprises Act prohibits balance billing in these situations and caps your responsibility at the in-network cost-sharing. State surprise-billing laws add further protections in many states. You can dispute a suspected surprise bill before paying through the federal Independent Dispute Resolution patient-provider portal.

See also: Balance Billing, No Surprises Act, Out-of-Network

The cost-sharing classification of a drug on your plan's formulary. Most plans use 4 or 5 tiers: Tier 1 generics (lowest cost), Tier 2 preferred brand, Tier 3 non-preferred brand, Tier 4 specialty drugs (highest cost), and sometimes a Tier 5 for ultra-high-cost biologics. You can request a formulary tier exception when a Tier 3 or 4 drug is medically necessary and the lower-tier alternatives are inappropriate, contraindicated, or have failed for you.

See also: Formulary, Specialty Drug, Step Therapy

The process by which an insurer evaluates an applicant's health risk to set premiums or accept the application. The ACA largely banned medical underwriting for individual and small-group major medical plans starting in 2014, premiums can vary only by age, geography, tobacco use, and family size. Short-term limited-duration plans, supplemental products, and dental and vision plans can still medically underwrite. ERISA group plans cannot medically underwrite individual employees but the employer can underwrite the group as a whole.

See also: ACA (Affordable Care Act)

An older method of pricing out-of-network claims based on a benchmark of what providers in your geographic area typically charge for the service. UCR was historically calculated by the insurer using its own internal data, which led to artificially low benchmarks and substantial balance bills, including the New York Attorney General's 2009 lawsuit that forced creation of the independent FAIR Health database. Today most plans benchmark out-of-network rates to FAIR Health or a percentage of Medicare rather than legacy UCR.

See also: Allowed Amount, Reasonable & Customary

The systematic process insurers use to decide whether a requested service is medically necessary and should be covered. Prospective utilization review is what happens during a prior authorization decision, concurrent review happens during an inpatient stay, retrospective review happens after the service when the claim is processed. Most state insurance laws require utilization review decisions to be made by a clinician with appropriate expertise and within specific timeframes. URAC and NCQA accredit utilization review organizations.

See also: Prior Authorization, Medical Necessity, Peer-to-Peer Review