MANAGED CARE GLOSSARY
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A B C D E F G H I J L M N O P Q R S T U V W
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Access: A patient’s ability to obtain medical
care determined by factors such as the availability of medical services,
their acceptability to the patient, the location of health care facilities,
transportation, hours of operation, and cost of care.
Accreditation: Accreditation programs give an
official authorization or approval to an organization against a set of
industry-derived standards.
Accrete: A term used by Medicare to describe
the process of adding new enrollee to a health plan.
Accrual: Money set aside to
cover expected expenses. The accrual is an estimate of medical expenses
based on data from the authorization and claims systems and history.
Actual Acquisition
Cost: The pharmacist’s net
payment made to purchase a drug product, after taking into account such
items as purchasing allowances, discounts, and rebates.
Actual Use
Effectiveness: The effectiveness of
a product in real-life situations. Actual uses effectiveness considers
compliance rates, physical condition of the patient, and the side
effects associated with the product’s use.
Actuary: A person in the insurance field who
decides insurance policy rates and reserves dividends as well as
conducts various other statistical studies.
Adjudication: Processing a claim through a series of
edits to determine proper payment.
Adjusted Average per
Capita Cost: The estimated average
cost of Medicare benefits for an individual in a particular county. It
is based on the following population factors: age, sex, institutional
status, Medicaid status, and disability status. The Health Care
Financing Administration uses this formula to make monthly payments to
risk and cost contractors.
Adjusted Community
Rating: Also called
prospective rating, adjusted community rating is set by group
demographics and prior experience in the region.
Administrative
Services Only (ASO): An agency that
delivers administrative services to an employer group. This type of
arrangement usually requires the employer to be at risk for the cost of
health care services provided.
Adverse Selection: A particular health
plan, whether indemnity or managed care, is selected by the enrollee,
and thus an inequitable proportion of enrollees requiring more medical
services are found in that plan. Example: Low enrollee out-of-pocket
costs might lure those individuals requiring more health services into
an HMO.
Allowable
Charge: The maximum fee that
a third party will reimburse a provider for a given service.
Allowable Costs: Items or elements of an institution’s
costs that are reimbursable under a payment formula. Allowable costs may
exclude, for example, uncovered services, luxury accommodations, costs
that are not reasonable, and expenditures that are unnecessary.
Alternate Care: Medical care received in lieu of
inpatient hospitalization. Examples include outpatient surgery, home
health care, and psychiatric day treatment.
Alternative
Medicine: Outside the realm of
traditional medical practice, alternative medicine can include such
therapies as acupuncture, holistic medicine, homeopathy, massage
therapy, herbal therapy, hypnosis, naturopathy, etc.
Ancillary Care: Additional health care services
performed, such as lab work and x-rays.
At Risk: Term used to designate financial
liability in compensation/reimbursement arrangements. A provider may be
“at risk” for additional costs, for example, if the expense of caring
for a particular panel of patients exceeds the providers capitation
payment.
Average Cost (or
Benefit): The total cost (or
benefit) divided by the total units of output.
Authorization: As it applies to managed care, authorization is the approval of care, such as hospitalization. Preauthorization may be required before admission takes place or care is given by non-HMO providers.
Balanced Budget Act
of 1997: Enacted legislation
that has wide-ranging implications for health care. Principally, the
Balanced Budget Act formally allows provider-sponsored organizations to
participate in the Medicare program, changes the way in which health
plans are paid for Medicare enrollees, alters greatly what types of home
health services the Medicare program will pay for and how they will be
reimbursed, and provides funding to states for the Children’s Health
Insurance Program.
Bed Days: A measurement used by managed care
plans to indicate the total number of days of hospital care provided to
a health plan member.
Behavioral Health
Care: Treatment
of mental health and/or substance abuse disorders, with comprehensive
systems of care.
Benefit Bank: A flexible spending arrangement under
which a reimbursement account is established. Reimbursements are made
from the account, and the employee is entitled to any remaining amounts
at the end of the year.
Benefit Levels: The extent or degree of service a
person is entitled to receive based on his or her contract with a health
plan or insurer.
Benefit Package: Services an insurer, government
agency, health plan, or employer offers under the terms of a contract.
Business
Coalition: A group of employers
who use their pooled resources and leverage to study health benefits
and, in some cases, purchase health benefit packages.
Cafeteria Plan: A corporate benefits
plan under which employees are permitted to choose among two or more
options that consist of cash and certain qualified benefits. Cafeteria
plans are also called flexible benefit plans or flex plans.
Capitation: A per-member, monthly payment to a
provider that covers contracted services and is paid in advance of its
delivery. In essence, a provider agrees to provide specified services to
plan members for this fixed, predetermined payment for a specified
length of time (usually a year), regardless of how many times the member
uses the service. The rate can be fixed for all members or it can be
adjusted for the age and sex of the member, based on actuarial
projections of medical utilization.
Carve Out: To separately purchase services that
are typically part of a managed care package. For example, an HMO may
“carve out” mental health and substance abuse services and select a
specialized vendor to supply these services on a stand-alone basis.
Case Management: The process whereby a health care professional
supervises the administration of medical or ancillary services to a
patient, typically one who has a catastrophic disorder or who is
receiving mental health services.
Case Manager: An experienced professional (usually a
nurse, physician, or social worker) who handles catastrophic or
high-cost cases as a member of a utilization management team.
Catastrophic Health
Insurance: Insurance beyond
basic and major medical coverage for severe and prolonged illness that
poses the threat of financial ruin.
Certificate of
Coverage: A description of the
benefits included in a carrier’s plan. The certificate of coverage is
required by state law and represents the coverage provided under the
contract issued to the employer.
Certification: Certification is the official
authorization for use of services.
Channeling: Use of incentives and plan design to
encourage members to utilize network providers.
Chemical Dependency
Services: Services and supplies used in the diagnosis and treatment of alcoholism,
chemical dependency, and drug dependencies, as defined and classified by
the U.S. Department of Health and Human Services.
Chemical Equivalents: Those
multiple-source drug products containing essentially identical amounts
of the same active ingredients, in equivalent dosage forms, and that
meet existing physical/chemical standards.
Claim: Information submitted
by a provider or covered person to establish that medical services were
provided to a covered person, from which processing for payment to the
provider or covered person is made.
Clinical Outcome: The state of a
patient’s health after receiving medical care.
Coding Systems –
ICD-9 System: A diagnosis and procedure coding system for hospital care, which
is the basis of reimbursement.
Coding Systems – CPT-4 System: Used to identify physician services, such as
injections and surgeries, for purposes of reimbursement.
Coding Systems – NDC
Coding System: System used by insurers to pay outpatient pharmaceutical claims.
Coding Systems –
HCPCS System: A Medicare system for identifying a host of services, including
injectable drugs, used in physicians’ offices.
Co-insurance: The percentage of the
costs of medical services paid by the patient. This is a characteristic
of indemnity insurance, POS, and PPO plans. The co-insurance is usually
about 20% of the cost of medical services after the deductible is paid.
Concurrent Review: A screening method by
which a health care provider reviews a procedure or hospital admission
performed by a colleague to assess its necessity.
Consolidated Omnibus
Budget Reconciliation Act (COBRA): A law that requires employers to
offer continued health insurance coverage to employees who have had
their health insurance coverage terminated because of a change in
employment.
Continuous Quality
Improvement (see also Total Quality
Management): A cycle of monitoring, evaluation, action, and more
monitoring that has the intended effect of continuously raising the
level of quality delivered.
Continuum of Care: A range of clinical
services provided during a single inpatient hospitalization or for
multiple conditions over a lifetime. It provides a basis for evaluating
quality, cost, and utilization over the long term.
Copayment: A fee charged to HMO members
to offset costs of paperwork and administration for each office visit or
pharmacy prescription filled.
Cost-Based
Reimbursement: A method of paying hospitals for actual costs incurred by the
patient. Those costs must conform to explicit principles that are
defined by third-party payers.
Cost Contract: An agreement between HCFA and a health plan in which the plan
receives an interim capitated amount derived from an estimated annual
budget, which may be periodically adjusted during the course of the
contract to reflect actual cost experience. The plan’s expenses are
audited at the end of the contract to determine the final rate the plan
should have been paid.
Cost Effectiveness: Usually considered as
a ratio, the cost effectiveness of a drug or procedure, for example,
relates the cost of that drug or procedure to the health benefits
resulting from it. In health terms, it is often expressed as the cost
per year per life saved.
Cost Sharing: Financing arrangement
whereby the member of a health plan must pay some of the costs to
receive care.
Cost Shifting: The redistribution of
payment sources. Typically, cost shifting occurs when a discount on
provider services is obtained by one payer, and the providers increase
costs to another payer to make up the difference.
Covered Person: An individual who
meets a health plan’s eligibility requirements and for whom premium
payments are paid for specified benefits of the contract between the
insurance carrier and a contract holder.
Credentialing: Examination of a
physician’s or other health care provider’s credentials to determine
whether he or she should be entitled to clinical privileges at a
hospital or to a contract with an MCO.
Credentialing
Verification Organization: An external organization that contracts with
a health plan to handle all provider credentialing requirements. These
organizations may also be subject to accreditation requisites, according
to state regulations.
Current Procedural
Terminology (CPT): A five-digit code that accompanies a list of medical services
performed by physicians and other providers.
Customary Charge: The typical amount
charged by a provider for a particular service. Payers typically pay the
provider a percentage of this amount.
Decision Tree: The fundamental analytic
tool for decision analysis, displaying the temporal and logical sequence
of a clinical decision problem. It has three structural components: the
alternative actions that are available to the decision maker; the
probabilistic events that follow from and affect these actions, such as
clinical information obtained or the clinical consequences revealed; and
the outcomes for the patient that are associated with each possible
scenario of actions and consequences.
Deductible: A fixed amount of
health care dollars of which a person must pay 100% before his or her
health benefits begin. Most indemnity plans feature a $200 to $500
deductible, and then pay up to 100% of money spent for covered services
above this level.
Demand Curve: A demand curve is
derived from utility maximization by a rational and informed consumer.
Then the demand curve can be interpreted as revealing the marginal
benefit of the units of consumption measured in dollars. The demand
curve can be used to evaluate the effects of supply-side rationing
inducted by prospective payment and by rationing in managed care.
Demand Management: In its most basic
form, the appropriate use of decision and self-management support
systems that enable health care consumers to make the best use of
medical care. Demand management is information-based in that it
recognizes that decision making is often influenced by factors other
than information, such as personal experience, societal pressures, and
cultural norms.
Diagnosis-Related
Groups (DRG): A program in which hospital procedures are rated in terms of
cost and intensity of services delivered. A standard rate per procedure
is derived from this scale, which is paid by Medicare for their
beneficiaries, regardless of the cost to the hospital to provide that service.
Direct Contracting: A contractual
relationship between a health care provider and an employer, in which
services are provided on a predefined price schedule in exchange for the
purchase of services in defined volume. Direct contracting creates a direct
relationship between the provider and the employer.
Disallowance: A denial by a health
care payer for portions of the claimed amount. Examples could include
coordination of benefits, services that are not covered, or amounts over
the fee maximum.
Disease Episode: The time period in
which a person has a specific disease or disorder (see also Episode of Care).
Disease Management: A philosophy toward
the treatment of the patient with an illness (usually chronic in nature)
seeking to prevent recurrence of symptoms, maintain high quality of
life, and prevent future need for medical resources by using an
integrated, comprehensive approach to health care. Continuous quality
improvement, practice guidelines, and case management all play key roles
in this effort, which (in theory) will result in decreased health care
costs as well.
Drug Regimen Review (DRR): A
frequent evaluation of the medications being taken by a patient in
intermediate- or long-term care facilities. Typically performed by a
pharmacist, DRR is especially useful in avoiding adverse drug reactions
and drug interactions in patients taking multiple medications.
Duplication of
Benefits: Overlapping or identical health coverage of an insured person under
two or more plans, usually the result of contracts with different health
organizations, insurance companies, or prepayment plans.
Durable Medical
Equipment: Equipment that can be repeatedly used, is primarily and
customarily used to serve a medical purpose, generally is not useful to
a person in the absence of illness or injury, and is appropriate for use
at home. Examples include hospital beds, wheelchairs, and oxygen
equipment.
Economic Clinical
Trials:
Studies, usually conducted by pharmaceutical manufacturers, that
evaluate drugs based on economic endpoints.
Electronic Data
Interchange (EDI): The electronic exchange (through computers) of information
between two or more organizations. In the health care setting, EDI has
made enormous gains in the transmission of claims information.
Employee Assistance
Plan (EAP): A department designated to assist employees, their family
members, and employers in finding solutions for workplace and personal
problems. Services may include assistance for family/marital concerns,
legal or financial problems, elder care, child care, substance abuse,
emotional issues, and other daily living concerns.
Employee Retirement
Income Security Act of 1974 (ERISA): A law that mandates reporting and
disclosure requirements for group life and health plans.
Episode of Care: All treatment
rendered in a specified time frame for a specific disease.
Exclusive Provider
Organization (EPO): A form of PPO in which patients must visit a caregiver who is on
its panel of providers. If an outside provider is visited, the EPO will
offer limited or no coverage for the office or hospital visit.
Extension of
Benefits: A component of some insurance policies that allows medical
coverage to continue past the termination date of the policy for
employees not actively at work.
Federal Employees
Health Benefits Program (FEHBP): The health benefits program for federal
employees that is administered through the U.S. Office of Personnel
Management.
Federally Qualified
HMO:
An HMO that meets certain standards mandated by the Public Health
Service Act. Two of these standards include prepaid care for a fixed
amount per month or year and community rating.
Fee for Service: Traditional provider
reimbursement in which the physician is paid according to the service
performed. This is the reimbursement system used by conventional
indemnity insurers.
First-Dollar
Coverage: A feature of an insurance plan in which there is no deductible,
and therefore the plan’s sponsor pays a proportion or all of the covered
services provided to a patient as soon as he or she enrolls.
Formulary: The panel of drugs
chosen by a hospital, MCO, or other health plan that is used to treat
patients. Drugs outside of the formulary are only used in rare, specific
circumstances.
Foundation Model: A type of integrated health care system whereby the hospital or health care organization creates a new nonprofit organization, which purchases the tangible and intangible assets of physicians, usually in a group practice. The foundation then manages, contracts for, and pays the hospital and physician group. The physician professional corporation has its own governance, management structure, and control over its clinical decision making.
Gag Clause: A statement in a MCO
provider contract that prohibits the provider from revealing financial
compensation relationships with the health plan and possibly from
criticizing the MCO under threat of removal from the provider network.
Such clauses have generally been abandoned by MCOs or are now prohibited
by state law.
Gatekeeper: Most HMOs rely on the
primary care physician, or “gatekeeper,” to screen patients seeking
medical care and effectively eliminate costly and sometimes needless
referrals to specialists for diagnosis and management. The gatekeeper is
responsible for the administration of the patient’s treatment, and must
coordinate and authorize all medical services, laboratory studies,
specialty referrals, and hospitalizations.
Generic Drug: A chemically
equivalent copy designed from a brand-name drug whose patent has
expired. Typically less expensive and sold under the common name for the
drug, not the brand name.
Generic Substitution:
In
cases in which the patent on a specific pharmaceutical product expires and
drug manufacturers produce generic versions of the original branded
product, the generic version of the drug (which is theorized to be the
exact same product manufactured by a different firm) is dispensed even
though the original product is prescribed.
Global payment: A method of
compensation in which a hospital, for example, receives one negotiated
payment for all care rendered to a patient undergoing a particular
surgical procedure. Therefore, the hospital is at risk for all expenses
incurred beyond the global payment.
Group: A body of subscribers
eligible for group insurance by virtue of some common identifying
attribute, such as common employment by an employer, or a membership in
a union, association, or other organization.
Group Practice
Without Walls: Physicians are organized to share common administrative costs in
a corporate structure, but they still maintain separate practices and
revenue streams. Group practices without walls can be single or
multispecialty and are often formed by physicians in an attempt to gain
the security that goes along with teaming up with other physicians in a
very competitive environment.
HCFA 1500: A form developed by
the Health Care Financing Administration to be used by health care
providers to bill health carriers.
Health Alliances: Purchasing pools that
are responsible for negotiating health insurance for employers and
employees. Alliances use their leverage as large health care purchasers
to negotiate contracts.
Health Care Financing
Administration (HCFA): The federal agency responsible for
administering Medicare and overseeing states’ management of Medicaid.
HCFA Common
Procedural Coding System (HCPCS): A listing of services, procedures, and
supplies offered by physicians and other providers. The HCPCS includes
CPT (Current Procedural Terminology) codes and national and local
alpha-numeric codes. They include physician services not included in CPT
as well as non-physician services, such as ambulance, physical therapy,
and durable medical equipment.
Health Insurance
Portability and Accountability Act (HIPAA) of 1996: Also known as the Kennedy-Kassebaum Act, HIPAA intends to provide better portability of
employer-sponsored insurance from one job to another, thus preventing
“job lock,” or the need to stay in the same position because of its
health care benefits. The Act also outlaws excluding people from
obtaining health insurance because of preexisting conditions and offers
tax deductions to those who are self-employed to help pay for their
health benefits. It is widely viewed as a first step in the federal
initiative to significantly reduce the number of uninsured people in
this country.
Health Maintenance
Organization (HMO): A form of health insurance in which its members prepay a premium
for health services, which generally includes inpatient and ambulatory
care. For the patient, it means reduced out-of-pocket costs (i.e., no
deductible), no paperwork (i.e., insurance forms), and only a small
co-payment for each office visit
to cover the paperwork handled by the HMO.
HMO, Staff-Model: The purest form of
managed care. All of the physicians are in a centralized site in which
all clinical and perhaps inpatient and pharmacy services are offered.
The HMO holds the tightest management reins in this setting because none
of the physicians traditionally practice on an independent,
fee-for-service basis.
HMO, Individual
Practice Association-Model (IPA): The IPA contracts with independent
physicians who work in their own private practices and see fee-for-service
patients as well as HMO enrollees. They are paid by capitation for the
HMO patients and by conventional means for their fee-for-service
patients. Physicians belonging to the IPA guarantee that the care needed
by each patient for which they are responsible will fall under a certain
amount of money. They guarantee this by allowing the HMO to withhold an
amount of their payments (e.g., usually about 20% per year). If, by the
end of the year, a physician’s cost for treatment falls under this set
amount, then the physician receives his entire “withhold fund.” If the
opposite is true, the HMO can then withhold any part of this amount, at
its discretion, from the fund. Essentially, the physician is put “at
risk” for keeping down the treatment cost. This is the key to the HMO’s
financial viability.
HMO, Group-Model: In the group-model
HMO, the HMO contracts with a physician group, which is paid a fixed
amount per patient to provide specific services. Popularized by Kaiser
Permanente, one of the pioneers of the HMO movement, the administration
of the group practice then decides how the HMO payments are distributed
to each member physician.
HMO, Hybrid-Model: A combination of at
least two managed care organizational models that is melded into a
single health plan. Since its features do not uniformly fit only one
type of model, it is called a hybrid – for example, a combination
network and staff model HMO.
HMO, Network-Model: A network of group
practices that are under the administration of one HMO.
HMO,
Point-of-Service-Model (POS): Sometimes referred to as an “open-ended” HMO,
the POS model is one in which the patient can receive care from
physicians who do or do not contract with the HMO. Physicians not
contracting with the HMO but who see an HMO patient are paid according
to the services performed. The patient is incentivized to utilize
contracted network providers through the comprehensive coverage
offerings.
HMO Act of 1973: Federal law that
required employers with more than 24 employees to offer an alternative
to conventional indemnity health insurance in the form of a federally
qualified HMO. The main intention of the Act was to encourage HMO
development.
Health Plan Employer
Data and Information Set (HEDIS): A set of performance measures designed
to help health care purchasers understand the value of health care
purchases and measure the performance of multiple health plans.
Homeopath: A practitioner who
follows the philosophy that “like cures like.” Homeopaths try to match a
person’s personality, habits, and symptoms with a remedy. The remedy is
usually a highly diluted substance that is believed to create the same
symptoms that an illness has created in the consumer. Some homeopaths
are physicians or other health practitioners who are licensed to
practice their profession; others might be unlicensed “laypeople.”
Hospice: A facility that
provides supportive care for the terminally ill.
Hospital Alliance: A group of hospitals
that have joined together to improve competitive positions and reduce
costs by sharing common services and developing group purchasing
programs.
Incurred but not
Reported (IBNR) Expenses: A financial accounting of all services that
have been performed, but as a result of a short period of time, they have
not yet been invoiced or recorded.
Indemnity Insurance: Traditional
fee-for-service coverage in which providers are paid according to the
service performed.
Integrated Health
Care Systems: Health care financing and delivery organizations created to provide
a “continuum of care,” ensuring that patients get the right care at the
right time from the right provider. This continuum of care from primary
care provider to specialist and ancillary provider under one corporate
roof guarantees that patients get the appropriate care, thus saving
money and increasing quality of care.
International
Classification of Diseases, 9th Edition (Clinical
Modification) (ICD-9CM): A listing of diagnoses and identifying codes
used by physicians for reporting codes used by physicians for reporting
diagnoses of health plan enrollees. The coding and terminology provide a
uniform language that can accurately designate primary and secondary
diagnoses and provide for reliable, consistent communication on claim
forms.
Jackson Hole Group: A nonprofit advocacy
organization of health care analysts led by Drs. Paul Ellwood and Alain
Enthoven that studies and lobbies for health care reform issues.
Joint Commission on
Accreditation of Healthcare Organizations (JCAHO): A private, nonprofit
organization that evaluates and accredits health care organizations that
provide inpatient mental health care, ambulatory care, home care, and
long-term care services.
Legend Drug: A drug that, by law,
can be obtained only by prescription and bears the label, “Caution:
Federal law prohibits dispensing without a prescription.”
Length of Stay: The number of
consecutive days a patient is hospitalized.
Mail Order Pharmacy: A method of
dispensing medication directly to the patient through the mail. Mail
order drug distributors can purchase drugs in larger volumes than retail
or wholesale outlets.
Managed Health Care: The sector of health
insurance in which health care providers are not independent businesses run
by, for example, the private practitioner, but by administrative firms
that manage the allocation of health care benefits. In contrast with
conventional indemnity insurers, who do not govern the provision of
medical services and simply pay for them, managed care firms have a
significant say in how services are administered so that they may better
control health care costs. HMOs and PPOs are examples of MCOs.
Managed Competition: One type of health
care reform that would correct the inequalities of the health delivery
system through increased competition. Health plans would compete on the
basis of cost and other factors; health care purchasers would have
information at their disposal that would allow them to compare competing
health plans across several dimensions of performance.
Managed
Fee-for-Service: A plan in which the cost of covered services is paid by the
insurer after services have been used. Various managed care tools, such
as precertification, second surgical opinion, and utilization review are
used to control inappropriate utilization.
Mandated Benefits: Health benefits that
health care plans are required by state or federal law to provide to
members.
Medicaid: An entitlement
program run by both the state and federal government for the provision
of health care insurance to patients younger than 65 years of age who
cannot afford to pay private health insurance. The federal government
matches the states’ contribution on a certain minimal level of available
coverage. The states may institute additional services, but at their own
expense.
Medicaid Prudent
Pharmaceutical Purchasing Act (MPPPA): Enacted as part of the Omnibus Budget
Reconciliation Act of 1990, MPPPA provides that Medicaid must receive
the best discounted price of any institutional purchaser of
pharmaceuticals.
Medical Loss Ratio: A financial term
that defines the percentage of every dollar of revenue that goes either
toward directly paying for health benefits or paying for administrative
services, overhead, promotion, etc. For instance, a health plan with a
medical loss ratio of 89% pays $0.89 of every dollar it receives
directly for health care services.
Medical Savings
Accounts (MSA): A method of paying for health insurance, made available through
a pilot program mandated by the Health Insurance Portability and
Accountability Act of 1996. The MSA allows a person to place money in an
interest-bearing account that can be used to purchase health insurance
policies and to pay co-pays, deductibles, etc. Anything remaining in the
account at the end of the year is carried over to the next year,
allowing the account to grow.
Medicare: An entitlement
program run by the Health Care Financing Administration of the federal
government through which people aged 65 years or older receive health
care insurance. Medicare part A covers hospitalization and is a
compulsory benefit. Medicare part B covers outpatient services and is a
voluntary service.
Medicare+Choice: The federal program
promulgated through the Balanced Budget Act of 1997 that offers Medicare
recipients a wider variety of health plan options than previously,
including preferred provider organizations and provider-sponsored
organizations.
Medigap: Insurance provided by
carriers to supplement the monies reimbursed by Medicare for medical
services. Since Medicare pays physicians for services according to their
own fee schedule, regardless of what the physician charges, the
individual may be required to pay the difference between Medicare’s
reimbursable charge and the physician’s fee. Medigap insurance is meant
to fill this gap in reimbursement.
Member: A participant in a
health plan who makes up part of the plan’s enrollment population.
Morbidity: The incidence and
severity of sickness in a defined population.
Multioption Plan: A health plan design
that offers employees the option to choose from one of several coverage
types, including an HMO, a PPO, and a major indemnity plan.
National Drug Code (NDC): A
national listing of drugs.
Negotiated Discount: A method of
reimbursement for managed care providers that stipulates specific
percentages by which charges may be reduced if included in the
provider’s contract or agreement.
National Commission
for Quality Assurance (NCQA): A national nonprofit organization that
accredits HMOs based on access, quality of care, etc.
Negotiated Fee
Schedule: The most controversial form of reimbursement. The basis of the
PPO network; doctors and hospitals agree to treat PPO patients at a
lower rate than non-PPO patients.
Net Loss Ratio: The result of total
claims liability and all expenses divided by premiums. This represents
the carrier’s loss ratio after accounting for all expenses.
Network: A defined group of
providers, typically linked through contractual arrangements, which
supply a full range of primary and acute health care services. A
“closed” network is one in which beneficiaries are not allowed to access
non-network providers whereas an “open” network allows access to other
providers at some cost to the beneficiary.
Nonparticipating Provider:
A
health care provider who has not contracted with the carrier or health
plan to be a participating provider of health care.
Nonprofit Plan: A term applied to a
prepaid health plan under which no part of the net earnings may lawfully
accrue to the benefit of any private shareholder or individual.
Synonymous with “not-for-profit” plan.
Open Access: Open-access
arrangements allow members to see participating providers, usually specialists,
without referral from the health plan’s gatekeeper. These types of
arrangements are most often found in IPA-model HMOs.
Open Enrollment: A period during which
an MCO allows persons not previously enrolled to apply for plan
membership.
Outcomes Management: A clinical outcome is
the result of medical or surgical intervention or nonintervention.
Improved clinical outcomes may increase patient and payer satisfaction
while holding down costs. It is thought that through a database of
outcomes experience, caregivers will know better which treatment
modalities result in consistently better outcomes for patients. Outcomes
management will, as a natural consequence, lead to medical protocols.
Outcomes Research: Studies that evaluate
the effect of a given product, procedure, or medical technology on
health or costs.
Outlier: One who does not fall
within the norm; typically used in utilization. A provider who uses
either too many services or too few services (for example, anyone whose
utilization differs two standard deviations from the mean on a bell
curve is termed an outlier).
Partial Hospital
Services: A mental health or substance abuse program operated by a
hospital which provides clinical services as an alternative or follow-up
to inpatient care.’
Patients’ Bill of
Rights: Referring to federal or state proposals (or signed legislation)
that typically mandates that health plans offer expanded external
appeals policies, faster appeals decisions than offered in the past,
greater access to specialists than was previously available in many
managed care plans, and other specific consumer protections.
Peer Review
Organization: A group founded by the Tax Equity and Fiscal Responsibility Act
of 1982 (TEFRA) to review quality of care and appropriateness of
admissions for Medicare and Medicaid beneficiaries.
Per Member per Month (PMPM): A unit of measurement related to each enrollee for each month.
Pharmacy and
Therapeutics (P&T) Committee: A group of physicians, pharmacists,
and other health care providers from different specialties, who advise a
managed care plan regarding safe and effective use of medications.
Pharmacy Benefit
Management Company (PBM): An organization dedicated to providing prescription
benefits to enrollees of managed care plans that utilizes existing
community pharmacies. The PBM contracts as a provider group with the
managed care organization.
Physiatrist: A physician who
specializes in physical medicine and rehabilitation, and who evaluates
the physical functioning of an individual and oversees the individual’s
rehabilitation program.
Physician Contingency
Reserve: the “at-risk” portion of a claim that is deducted and withheld
by the health plan before payment is made to a participating physician
as an incentive for appropriate utilization and quality of care. This
amount – for example. 20% of the claim – remains within the plan and is
credited to the doctor’s account. The contingency reserve can be used in
instances where the plan needs additional funds to pay for claims. The
withheld amount may be returned to the physician in varying levels which
are determined based on analysis of his or her performance or
productivity compared against his or her peers.
Physician-Hospital
Organization (PHO): A type of integrated health care system that, in its simplest
form, is an organization that collectively commits both physicians and
the hospital to payer contracts. In its most effective form, the PHO
must commit the entire physician and hospital panel, without an opt-out,
to the PHO organization.
Practice Guidelines: Also called practice
parameters or medical protocols, physicians may be required to follow
these in order to obtain the best clinical outcome. The guideline
provides the caregiver with specific treatment options or steps when
faced with a particular set of clinical symptoms, signs, or laboratory
data.
Preadmission
Certification: The practice of reviewing claims for hospital admission before
the patient actually enters the hospital. This cost-control mechanism is
intended to eliminate unnecessary hospital expenses by denying medically
unnecessary admissions.
Preexisting
Condition: Any medical condition that has been diagnosed or treated within
a specified period before the member’s effective date of coverage under
the group contract.
Preferred Providers: Physicians,
hospitals, and other health care providers who contract to provide
health services to persons covered by a particular health plan.
Preferred Provider
Health Care Act of 1985: A federal law easing restrictions on PPOs and
allowing subscribers to use health care providers outside of the PPO.
Preferred Provider
Organization (PPO): PPOs are managed care organizations that offer integrated
delivery systems (i.e., networks of providers) that are available
through a vast array of health plans and are readily accountable to
purchasers for cost, quality, access, and services associated with their
networks. They use provider selection standards, utilization management,
and quality assessment techniques to complement negotiated fee
reductions as an effective strategy for long-term cost savings. Under a
PPO benefit plan, covered individuals retain the freedom of choice of
providers but are given financial incentives to use the preferred
provider network.
Prepaid Group
Practice: A multispecialty association of physicians and other health
professionals who contract to provide a wide range of preventive,
diagnostic, and treatment services on a continuing basis for enrollees.
Preventive Care: Health care
emphasizing priorities for prevention, early detection, and early
treatment of conditions, generally including routine physical
examination, immunization, and well-person care.
Primary Care Network:
A
group of primary care physicians who have joined together to share the
risk of providing care to their patients, who are members of a given
health plan.
Primary Care
Physician (PCP): Sometimes referred to as a “gatekeeper,” the primary care
physician is usually the first doctor a patient sees for an illness. The
physician then treats the patient directly, refers the patient to a
specialist (secondary care), or admits the patient to a hospital. Often,
the primary care physician is a family doctor or internist.
Professional Review Organization (PRO): An organization that reviews the activities and records of a health care provider, institution, or group. The reviewer is generally a physician if a physician is the subject of the review; a group of administrators, physicians, and allied health care personnel if a hospital is the subject of the review; etc. The PRO can be state-sponsored or indepen