Medicare Glossary

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Term Definition
Medicare Secondary Payer

Medicare Secondary Payer (MSP) is the term used by Medicare when Medicare is not responsible for paying first. (The private insurance industry generally talks about "Coordination of Benefits" when assigning responsibility for first and second payment.) The MSP provisions ensure that Medicare does not pay for services and items that certain health insurance or coverage is primarily responsible for paying. The MSP provisions apply to situations when Medicare is not the beneficiary’s primary health insurance coverage.

Medicare Select

A type of Medicare supplement insurance which has lower premiums in return for a limited choice of beneficiaries: they will use only providers who have been selected by the insurer as "preferred providers". Also covers emergency care outside the preferred provider network.

Medicare Shared Savings Program

The Affordable Care Act requires CMS to establish a shared savings program to facilitate coordination and cooperation among providers to improve the quality of care for Medicare fee-for-service beneficiaries and reduce unnecessary costs. Eligible providers, hospitals and suppliers may participate in the Shared Savings Program by creating or joining an Accountable Care Organization, also called an ACO.

Medicare Supplement

An insurance policy that provides coverage to Medicare beneficiaries in addition to Medicare, usually covering portions or all of Medicare deductibles, coinsurance and copayment amounts.


The name used prior to "Medicare Advantage" to refer to the CMS Medicare managed care program


An insurance policy that’s a supplement to Medicare.


See Medicare Payment Advisory Commission


In managed care each patient with insurance coverage under a health plan is called a member. Other terms used include enrollees and covered lives. Subscribers and covered dependents are all members. A subscriber with a covered spouse and three children would equal five members.


See Medicare Modernization Act

National Provider Identifier

National Provider Identifier is the standard unique health identifier for health care providers (including Medicare suppliers) and is assigned by the National Plan and Provider Enumeration System (NPPES).

Observation Status

A patient's hospital observation status is whether the hospital considers them an "inpatient" or "outpatient". Someone is an inpatient starting the day they're formally admitted to the hospital with a doctor's order. The day before they're discharged is their last inpatient day. They're an outpatient if they're getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays, and the doctor hasn't written an order to admit them to the hospital as an inpatient. Medicare Part A (Hospital Insurance) covers inpatient hospital services. Medicare Part B covers outpatient hospital services.

Optional supplemental benefits

Services that Medicare doesn't cover, but that a Medicare health plan may choose to offer. If a beneficiary enrolls in a plan with these services, they may choose to buy the services. If they choose to buy these benefits, they will pay for them directly, usually as a premium, copayment, and/or coinsurance. These services may be offered individually or as a group of services, and they may be different for each Medicare health plan.


Services rendered outside pre-defined service area.

Out-of-Pocket Expenses

The dollar amounts the subscriber is still responsible to pay after the Plan has made payment for provider services rendered. Out-of-pocket expenses result from cost sharing requirements including deductibles, coinsurance, and copayments, as well as non-covered benefits, and costs in excess of plan maximums.

Outpatient Prospective Payment System

The way that Medicare will pay for most outpatient services at hospitals or community mental health centers under Medicare Part B.