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Glossary of Health Care Terms

Access
Patients' ability to obtain necessary health services.

Accountable Health Plans
One term for the competing health plans forged under managed competition. Published data on the performance of each plan would allow consumers and employers to select the best plan.

Acute Care
Health care provided to treat conditions that are short term and episodic in nature.

Adverse Selection
The phenomenon of the enrollment of a disproportionate percentage of persons who are poorer risks--that is, persons who are more ill, more prone to suffer loss, or to make claims--than the average person.

All-Payer System
A plan requiring all payers of health care bills--the government, private insurers or an individual--to pay the same price for the same medical service. Uniform fees would eliminate cost shifting.

Ambulatory Care
Health services rendered in a hospital outpatient facility, a clinic, or a physician's office; often synonymous with the term outpatient care.

Ancillary Services
Supplemental services provided with medical or hospital care.

Balance Billing
A process whereby the provider bills a patient for the difference between the provider's charge and the amount of payment already received by the provider from a third party payer other than for co-pays, co-insurance or deductibles.

Capitation
A payment plan for health care providers. Under it, a managed-care health organization pays a doctor or other provider a fixed amount to care for a patient for a specific period of time -regardless of the actual cost of treatment or quantity of services provided. It is the payment of a per capita amount for a defined package of health care services. A specific dollar amount per member is paid to providers or organizations of providers.

Carrier
Insurance company, prepayment plan or government agency that, under a health insurance or prepayment program, administers claims submitted for or by its beneficiaries and, in certain cases, directly provides services.

Case Management
The monitoring, planning, and coordination or treatment provided to patients with conditions requiring high cost or extensive services.

Case-Mix Index
The sum of all DRG relative weights, divided by the number of Medicare cases. A low CMI may denote DRG assignments that do not adequately reflect the resources used to treat Medicare patients.

Catchment Area
Geographic area defined and served by a hospital on the basis of such factors as population distribution, natural geographic boundaries and transportation accessibility.

Certificate of Need
Certificate of approval issued usually by a state health planning agency to health care facilities that propose to construct or modify a health care facility, incur a major capital expenditure or offer a new or different health service.

CFIS (Clinical/Financial Information System)
A national comparative database used as a tool for finding areas of clinical and financial improvement within hospitals. CFIS allows the opportunity to generate various internal studies such as demographic, cost management and utilization. CFIS also affords the ability to compare one hospital against others on a DRG, diagnosis or procedural level.

Charges
The dollar amount charged by a provider for a unit of service.

Charity Allowance
Reduced charge for health care service in recognition of a patient's indigence.

CHPAs (Community Health Purchasing Alliances)
See Health Alliances

Clinical Pathways
A broad set of policies and procedures that promote structured thinking and include practice guidelines across the continuum of care. The goal is to promote primary screening and prevention activities, reduce variation and improve quality of care.

Closed-Panel System
A medical practice in which admission of other doctors is limited by the group and in which members can use only doctors in the group for their medical care. A staff-based HMO is a closed-panel system, while a PPO is an open panel system.

CMP (Competitive Medical Plan)
A type of managed care organization created to facilitate the enrollment of Medicare beneficiaries into managed care plans. CMPs are organized and financed much like HMOs but are not bound by all the regulatory requirements facing HMOs.

COB (Coordination of Benefits)
A typical insurance provision whereby responsibility for primary payment for medical services is allocated among carriers when a person is covered by more than one employer-sponsored health benefit program. This coordination prevents duplicate reimbursement for the same medical services.

Community Rating
Calculating the price of health insurance premiums according to the characteristics or utilization of the entire community, not just the insured population. Today, insurers frequently charge higher rates for less healthy individuals. With community rating, everyone who lives in the same area pays an equal amount for health insurance.

Co-insurance (Co-payment)
The portion of the bill for a medical service that must be paid by the patient (Co-insurance refers to a percentage; co-payments are stated as flat amounts).

Comprehensive Benefits Package
The health care services that will be guaranteed to every American citizen and legal resident.

Comprehensive Health Care
Services that meet the total health care needs of a patient.
Comprehensive Health Care Delivery System
Health care facilities and professionals organized and coordinated to provide comprehensive health care to a defined population group.

Continuum of Care
An integrated, client-oriented, cost-efficient system comprised of integrated services patients can enter at any point to receive a spectrum of health care over a lifetime.

Conversion Factor
A standard dollar value that converts Relative Value Units (RVUs) to dollar amounts. The RVUs for each service are multiplied by the conversion factor to produce a fee schedule amount for that service. This is typically used to establish fees for physician services.

Cost Sharing
The portion of health expenses that a health plan beneficiary must pay including deductibles, co-payments and coinsurance.

Cost Shifting
One group of patients pays more in order to make up for underpayment by others. In the past, privately insured patients paid more in order to make up for underpayment by Medicaid and Medicare and for those who cannot pay at all. With privately insured patients receiving managed care contractual discounts, this is rapidly changing. All patients are "charged" the same for the same product or service yet some "pay" more or less than others.

CQI (Continuous Quality Improvement)
The enhancement of quality assurance programs to incorporate the industrial models of Demming, Juran and Crosby into a systematic scientific program to continuously improve hospital functions.

Critical Pathways
A carefully programmed plan of action for the medical management of any given illness. These are jointly developed by medical and nursing staffs to identify the most efficient and effective care possible.

DCRS (Data Comparison Reporting System)
A national comparative database designed to help identify ways a hospital can improve its financial and operational performance. Departmental productivity can be compared with other hospitals.

Deductible
The amount that the patient must pay to the provider directly (usually each year) before the insurance plan begins paying for benefits.

Discounted-Fee-for-Service
A financial reimbursement system whereby a provider agrees to provide services on a fee-for-service basis, but with the fees discounted by a certain percentage from the usual charges.

DRG (Diagnostic Related Groups)
A system used by Medicare and some insurers to classify illnesses according to diagnosis and treatment.

Economies of Scale
A decrease in unit costs because of the volume.

ERISA
Employee-Retirement Income Security Act of 1974. HMOs that contract with firms subject to ERISA compliance can be expected to provide certain annual information to these firms in order to meet federal reporting requirements.

Experience Rating
A method of determining the premium for a health insurance policy based on the average cost of actual or anticipated utilization of care by various groups.

Federally Qualified HMOs
HMOs that meet certain federally stipulated provisions aimed at protecting consumers, e.g., providing a broad range of basic health services, assuring financial solvency and monitoring the quality of care.

Fee for Service
Medicine as it has been traditionally practiced (also called indemnity). Patients pay doctors, hospitals and other health care providers for each service provided. Most patients are reimbursed by the private insurer or the government.

Fee Schedule
A list of accepted fees or predetermined monetary allowances for specified services and procedures.

Flexible Benefit Plan
A type of benefits program offered by some employers whereby employees are presented with a menu of various benefit options from which they are allowed to tailor their benefits to their individual needs.

Gatekeeper
The primary care provider responsible for managing medical treatment provided to an individual enrolled in a health plan.

Global Budget
The term frequently used for imposing a nationwide limit on overall spending for health care services.

Health Alliances
Key players in managed competition. Collective purchasing agents. These regional purchasing pools would represent large groups of employers and individual and would comparison shop for the highest-quality health plan at the lowest price. Also known as Health Insurance Purchasing Cooperatives (HIPCs) or Community Health Purchasing Alliances (CHPAs) in Florida.

HMO (Health Maintenance Organization)
A health plan that offers an organized system of health care to assure the delivery of an agreed upon set of comprehensive health maintenance and treatment services, ranging from vaccinations to cardiac surgery, in exchange for a set annual fee. HMO members have very few out-of-pocket expenses.

Hold Harmless
A clause frequently found in managed care contracts, whereby the HMO and the physician hold each other to be not liable for malpractice or corporate malfeasance if either of the parties is found to be liable.

IBNR
Incurred But Not Reported claims. Accounting term to represent an appraisal of potential liabilities resulting from the delivery of services that have not been reported as of the time of the report.

Indemnify
To make good a loss.

Indemnity
A benefit paid by an insurance policy for an insured loss.

Long-Term Care
The provision of health, personal and social services to individuals who lack some functional capacity. Care is provided on a long-term basis in institutions or at home with a skilled level of care rather than an acute level.

Managed Care
A general term for organizing networks of doctors, hospitals and other providers to deliver high-quality, cost-effective health care. These networks "manage" or control costs in many ways, such as by limiting referrals to costly specialists. HMOs are a common form of managed care.

Managed Competition
This proposal would overhaul the current health care system. It is an economic theory that organizes health care delivery and financing in an attempt to combine government regulation with free-market competition and has yet to be tested in any country.

Medicaid
A federal program created by Title XIX-Medical Assistance, a 1966 amendment to the Social Security Act, administered by states, that provides health care benefits to indigent and medically indigent persons.

Medicare
A federal program, created by Title XVIII-Health Insurance for the Aged, a 1965 amendment to the Social Security Act, that provides health insurance benefits primarily to persons over the age of 65 and others eligible for Social Security benefits.

MSO (Management Service Organization)
An organization with the primary function of providing medical professionals with such services as medical practice surveys, business planning, medical practice management, reimbursement review, marketing/public relations, etc. These services are rendered for a fee that allows a cost savings to the practice due to economies of scale.

Mandated Employer-Sponsored Insurance
A proposal requiring employers to provide some or all of the health insurance coverage for their employees.

Network
A group of providers that mutually contract with carriers or employers to provide health care services to participants in a specified managed care plan.

Occupational Health
A grouping of health care services that encompasses the general health and wellness of employees, routine physical examinations, compliance with government regulations (OSHA) that relate to employee safety, and treatment of work-related injuries or illnesses.

Open Access
Health plan flexibility to obtain medical services from a specialist (within the plan) without referral from a primary care physician. Also called an Open Panel Plan.

Open Enrollment
The time span during which persons in a dual choice health benefits program can select one of the health plans being offered.

Open-Panel HMO
An HMO in which any licensed physician in an area is eligible to join the HMO.

Outcomes Management
Quantified measurement of a patient's response to specific treatment; includes morbidity and functional status.

Outcome Studies
Structured research projects designed to measure responses to treatment and health status responses with the goal of supporting practice guideline development and improving quality of care.

Patient Focused Care
The redesign of patient care delivery based on the principles of work simplification, multi-skilled workers and placement of services as close to the patient as possible to achieve significant quality and efficiency improvements.

(PCP) Primary Care Physician
The doctor a patient sees first for medical care, usually a physician who is in some sense a generalist such as a family or general practitioner, general internist, pediatrician or obstetrician/gynecologist. While these physicians deal with the entire person, sub-specialist physicians deal with a single body system.

PHO (Physician Hospital Organization)
An organization that has contractual arrangements with a hospital or hospitals and physicians with the basic purpose of entering into managed care contracts to provide services to enrollees of the plan.

Play or Pay
A plan forcing employers either to provide health insurance for their employees or pay a tax to support a special government insurance program.

Per Member, Per Month
Refers to the ratio of some service or cost divided into the number of members in a particular group on a monthly basis. For example, if a 10,000 member HMO in one month's time spends $20,000 on cardiovascular surgery, the cost on a per member, per month basis would be $20,000 divided by 10,000 equaling $2 per member per month.

(PPO) Prospective Payment System
A payment system in which the amount a hospital receives for treating a patient is fixed in advance by Medicare or an insurer. If the treatment costs more than the payment, the hospital absorbs the loss; if the treatment costs less, hospitals keep the difference.

Preferred Provider Organization
A type of insurance product in which beneficiaries receive a high level of benefits by utilizing a network of health care providers. The health care providers in the network agree to accept discounted rates in return for an anticipated or contractual higher volume of patients.

Pre-Existing Condition
A provision in insurance policies that denies or delays coverage for a disease or disability that existed before enrollment. These limitations can cause a critical gap in health benefits when an individual changes jobs and signs up for a new insurance plan.

Premium
The money paid for insurance. Often, both employers and employees pay a premium.

Quality and Resource Management
An organized program that combines the functions and monitoring of quality improvement, infection control, utilization review and risk management.

Reinsurance
A type of protection purchased by some managed care companies from insurance companies specializing in underwriting specific tasks for a stipulated premium.

Reserves
Restricted cash investments or highly liquid investments intended to protect the HMO membership against insolvency or bankruptcy.

Risk
The chance of possibility of loss. For example, physicians may be held at risk if hospitalization rates exceed agreed upon thresholds. Risk sharing is often used as a control mechanism in the HMO setting.

Risk Pool
A pool of money that is at risk for being used for defined expenses. Commonly, if the pool of money that is put at risk is not used by the end of the year, some, or all of it, is returned to those managing the risk.

Single Payer System
One government fund pays for everyone's health care.

Spending Targets
An amount set at the federal level that would identify a preferred level of spending on health care.

Stop Loss
An arrangement between a managed care company and a reinsurer whereby absorption of prepaid patient expenses is limited, either in terms of overall expenditures and deficit, or by limiting losses on an individual expensive hospital and/or professional services claim.

Tertiary Care
The most complex medical care.

Uncompensated Care
Services provided by a hospital or by a physician or other health care professional for which no payment is received.

Universal Coverage
A proposal guaranteeing health insurance coverage for all Americans.

Utilization
The amount and rate at which patients/consumers use health care services.

Utilization Review/Utilization Management
An independent determination of whether health care services are appropriate and medically necessary on a prospective, concurrent, and/or retrospective basis to ensure that appropriate and necessary health care services are provided.

Volume
The number of patients in each DRG.

Withhold
The portion of the monthly capitation payment or fee schedule amount to physicians withheld by an HMO until the end of the year or other time period to create an incentive for efficient care. The withhold is "at risk." If the physician (or group of physicians) exceeds utilization norms, he/she does not receive it. It serves as a financial incentive for lower utilization. The withhold can cover all services or be specific to hospital care, laboratory usage or specialty referrals.

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