The process of evaluating, or underwriting, a group or individual to determine a health insurance premium rate relative to the financial risk of the person or group. Key components of the rating formula include age, sex, location and plan design.

rating bands

Amounts by which insurance rates for a specific class of insured individuals may vary.


A primary care doctor’s written permission for a patient to see a certain specialist or to receive certain services. Required by some managed care health plans.

refundable tax credit

A way of providing a tax subsidy to an individual or business, even if no taxes are owed. (See tax credit.) If a person owes no tax, the government sends the person (or a third party) a check for the amount of the refundable tax credit.


Also known as risk control insurance, a practice allowing an insurance company to transfer a portion of its risks to another insurer (the reinsurer). This practice does not affect policyholder rights in any way, and the original insurer remains liable to the policyholders for benefits and claims.

relative value scale (RVS)

An index that assigns weights to each medical service; the weights represent the relative amount to be paid for each service. To calculate a fee for a particular service, the index for that service is multiplied by a constant dollar amount (known as the conversion factor). Medicare uses an RVS to calculate payments to physicians.

report card

An assessment of the quality of care delivered by health plans, hospitals or physicians. For example, report cards provide information on how well a health plan treats its members, keeps them healthy and provides access to needed care. Report cards can be published by states, private health organizations, consumer groups or health plans.

resource-based relative value scale (RBRVS)

The way Medicare determines how much it will pay physicians, based on the resource costs needed to provide a Medicare-covered service. The RBRVS is calculated using three components: physician work, practice expense and professional insurance. The Medicare payment to physicians is determined by multiplying the combined costs by a conversion factor set by the Centers for Medicare and Medicaid Services, adjusted for geographical differences in the cost of resources. Physician work typically accounts for 50 percent of the value while practice expense accounts for 45 percent.

respite care

Short-term relief for caregivers – family members and friends – who are providing care to a frail elder or person with disabilities.


The probability of financial loss, based on the probability of having to provide services to a patient or patient population at a cost that exceeds the payments received. Under capitation payment systems, providers share the risk that is borne by insurers.

risk adjustment

Increases or reductions in payment made to a health plan on behalf of a group of enrollees to compensate for health care expenditures that are expected to be higher or lower than average.

risk corridor

The temporary risk corridor program was a provision of the Affordable Care Act from 2014 through 2016 that was intended to discourage insurers from setting premiums high in response to uncertainty about who will enroll and what they will cost. The program worked by cushioning insurers participating in exchanges and marketplaces from extreme gains and losses. It set a target for exchange participating insurers to spend 80 percent of premium dollars on health care and quality improvement. Insurers with costs less than 3 percent of the target amount must pay into the risk corridors program; the funds collected were used to reimburse plans with costs that exceed 3 percent of the target amount.

Risk Evaluation and Mitigation Strategy (REMS)

A strategy to manage a known or potential serious risk associated with a drug or biological product, which is sometimes required by the Food & Drug Administration to ensure that benefits of a drug or biological product outweigh its risks.

risk selection

Enrollment choices made by health plans – or by enrollees – on the basis of perceived risk relative to the premium to be paid.

risk sharing

A method by which the financial risk of covering a group of enrollees is shared by plan sponsors and purchasers, typically managed care organizations and states. In contrast, indemnity plans assume all risk of providing care paid for through insurance premiums which belong solely to the insurance company.