Glossary of Health Care
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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.
Health care provided to treat conditions that are short term
and episodic in nature.
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.
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
Health services rendered in a hospital outpatient facility,
a clinic, or a physician's office; often synonymous with the
term outpatient care.
Supplemental services provided with medical or hospital
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.
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
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.
The monitoring, planning, and coordination or treatment
provided to patients with conditions requiring high cost or
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
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.
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.
The dollar amount charged by a provider for a unit of
Reduced charge for health care service in recognition of a
CHPAs (Community Health
See Health Alliances
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
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
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
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.
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.
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).
The health care services that will be guaranteed to every
American citizen and legal resident.
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.
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
The portion of health expenses that a health plan
beneficiary must pay including deductibles, co-payments and
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
CQI (Continuous Quality
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
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
A national comparative database designed to help identify
ways a hospital can improve its financial and operational
performance. Departmental productivity can be compared with
The amount that the patient must pay to the provider
directly (usually each year) before the insurance plan begins
paying for benefits.
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
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.
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.
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.
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
The primary care provider responsible for managing medical
treatment provided to an individual enrolled in a health plan.
The term frequently used for imposing a nationwide limit on
overall spending for health care services.
Key players in managed competition. Collective purchasing
pools would represent large groups of employers and individuals
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)
HMO (Health Maintenance
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.
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.
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.
To make good a loss.
A benefit paid by an insurance policy for an insured loss.
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.
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.
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.
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.
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
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.
A proposal requiring employers to provide some or all of the
health insurance coverage for their employees.
A group of providers that mutually contract with carriers or
employers to provide health care services to participants in a
specified managed care plan.
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.
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.
The time span during which persons in a dual choice health
benefits program can select one of the health plans being
An HMO in which any licensed physician in an area is
eligible to join the HMO.
An HMO in which any licensed physician in an area is
eligible to join the HMO.
Structured research projects designed to measure responses
to treatment and health status responses with the goal of
supporting practice guideline development and improving quality
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
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
PHO (Physician Hospital
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
Per Member, Per Month
Refers to the ration 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.
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.
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.
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
The money paid for insurance. Often, both employers and
employees pay a premium.
Quality and Resource
An organized program that combines the functions and
monitoring of quality improvement, infection control,
utilization review and risk management.
A type of protection purchased by some managed care
companies from insurance companies specializing in underwriting
specific tasks for a stipulated premium.
Restricted cash investments or highly liquid investments
intended to protect the HMO membership against insolvency or
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.
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.
An amount set at the federal level that would identify a
preferred level of spending on health care.
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.
The most complex medical care.
Services provided by a hospital or by a physician or other
health care professional for which no payment is received.
A proposal guaranteeing health insurance coverage for all
The amount and rate at which patients/consumers use health
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.
The number of patients in each DRG
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.