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This page contains links to external Web sites. Abbreviations and GlossaryList of Abbreviations
Glossary of TermsAccess: An individual's ability to obtain needed health care services. Barriers to access can be financial, geographic, organizational, and sociological. Accreditation: A process whereby a recognized external organization determines that a hospital, health care plan, provider network, or other service delivery system complies with established standards. Actuarial Study: Analyses of past health services utilization data and other statistical information to estimate future utilization and costs for specific groups and to establish insurance premiums and/or provider payments. Acute Care: Services provided to protect the decompensating patient and/or resolve his/her urgent and severe problems so that he/she can return as quickly as possible to the previous level of function. Adjusted Average Per Capita Cost (AAPCC): The basis of reimbursement to health maintenance organizations (HMOs) under Medicare risk contracts; the average monthly amount received per enrollee is currently calculated as 95 percent of the average costs to deliver medical care in the fee-for-service sector. Administrative Capitation: Establishment of per member payments for services required to administer a health care delivery system, calculated by dividing the projected costs of administrative services by the projected number of enrollees, in order to tie an MCO's risk and payments to enrollment. Administrative Services Only (ASO): A type of contract in which the contracted organization provides only administrative or management services (e.g., claims processing, utilization review) but not direct treatment services, which are provided by the purchaser or by another organization. Adverse Selection: When a payer has a disproportionately large share of high-risk enrollees (i.e., those with high service use and high costs) due to offering relatively generous benefits for certain types of care; to avoid adverse selection, some plans limit coverage of certain services. Agency for Health Care Policy and Research (AHCPR): A U.S. Public Health Service agency that is the Federal Government's focal point for reviewing health services research in order to enhance the quality, appropriateness, and effectiveness of health care services. Aid to Families With Dependent Children (AFDC): A State-based Federal cash assistance program for low-income families that was abolished in 1997 by Congress and replaced by the Transitional Assistance for Needy Families Program. Alcohol and Other Drug (AOD) Use Disorders: A term used to describe substance use disorders, which is designed to emphasize that alcohol is indeed a drug. Related terms include substance use disorders, addictive disorders, chemical dependency, and substance abuse. All-Payer System: A health care delivery system in which prices for health services and payment methods are the same, regardless of who is paying, to minimize the shifting of costs from one payer to another. Allowable Costs: Charges for care that are reimbursable as predetermined by the payer/purchaser. Ambulatory Care: Health care services provided in an outpatient setting (e.g., a physician's office, clinic, or community mental health center) rather than an inpatient setting. American Managed Behavioral Healthcare Association (AMBHA): A trade association, founded in 1994, of managed behavioral health care companies that manage care and that are not primarily engaged in delivering clinical services. Americans With Disabilities Act: A federal law enacted in July 1990 that prohibits discrimination on the basis of disability in employment, programs, and services provided by State and local governments, goods and services provided by private companies, and in commercial facilities. Ancillary Services: Supplemental hospital services other than room and board (e.g., laboratory tests and x-rays). Any Willing Provider Law: A law that requires managed care organizations to contract with any interested health care provider in the geographic area who is able to meet contractual terms and conditions for service delivery. Average Length of Stay (see also Length of Stay): The mean length of an inpatient stay for a specific patient group, population, or time period; calculated by dividing the total number of treatment days by the number of patients discharged. The term also applies to outpatient services; it is calculated by summing the number of visits and dividing by number of patients discharged. Behavioral Health, Behavioral Health Care>: Health in the areas of mental and emotional well-being and the use of alcohol and other drugs (as opposed to physical or somatic health), and the care provided for problems in these areas. Services provided for conditions related to mental health and/or AOD disorders. Behavioral Health Care Firm: A specialized, managed care organization that manages mental health and/or substance abuse care rather than care for physical illnesses. Also referred to as managed behavioral healthcare organization (MBHO). Benchmark (see also Performance Goal, Performance Measure): A level of achievement of a performance goal that generally represents an industry-best standard. Beneficiary (see also Consumer, Enrollee, Member, Subscriber): An individual who receives benefits from or is covered by an insurance policy or other health care financing program. Benefit Package: A set of health care services that a payer is legally obligated to pay for either by contract, law, or regulation. The package usually also specifies excluded services, limitations on covered services, and the means by which medical necessity is determined. Beta Risk: A form of direct financial risk undertaken by a health care organization when it assumes that the cost of patients with catastrophic illnesses will be more than adequately made up for by fees received for the remaining covered population. Bundled Services: Similar individual services that can be billed separately or in a "bundle"; bundled services may be billed at a greater or lesser rate than the total of the individual service charges. Capitation, Capitation Fee, Capitation Payment (see also Full Capitation, Partial Capitation, Per Capita): A method of prospective payment in which a fixed amount is paid to an MCO, a health plan, or a provider for each enrollee or each person served, without regard to the actual number or nature of services provided in a set period of time or defined episode. A capitation fee is usually expressed as a per member-per month rate. The terms "soft capitation" and "hard capitation" are sometimes used to describe partial- and full-risk situations, respectively. Caps on Profits (see also Risk Corridors): A contractual limitation on the amount of profit and/or loss that an MCO can realize in a risk-transfer system; designed either to minimize an MCO's financial incentives to excessively reduce service utilization or to limit their financial risk in high utilization situations. Risk corridors can be set up to limit profit and reduce risk (e.g., in a too high utilization situation, the purchaser or reinsurer might pay; in a too low utilization, the MCO might pay the purchaser back). Carve-Out: An arrangement whereby a particular type of health care service, such as behavioral health care, is managed and/or provided separately from the total health care benefit package, generally so that the payer can maintain greater control of the costs. Services for certain populations or patient groups are also sometimes "carved out" of the overall package. Case Management (see also Intensive Case Management, Utilization Management): Coordination and monitoring of an individual patient's treatment by a third party, either by a single case manager or a case management team. The goals of case management are to ensure that a patient receives and makes the best use of needed services and adheres to the treatment plan, so that he or she maintains a stable life in the community and avoids costly care, such as inpatient treatment. Case management can occur at the provider level or the payer level. Case Mix: The overall clinical profile of a particular group or subpopulation of consumers, determined by assessing such factors as diagnosis, severity of illness, and service utilization patterns; case mix is a key variable in establishing capitation rates and estimating costs. Case Rate: A fixed, per-patient rate for delivery of specific procedures or services to specified types of consumers, such as persons with serious and persistent mental illness (SPMI), which are often time-limited (e.g., per episode, per year). Catchment Area (see also Service Area): A geographically defined service area for a health plan or provider delineated by such factors as population distribution, natural geographic boundaries, and transportation accessibility; all residents of the area are usually eligible for services, although additional eligibility criteria may be established. "Cherry Picking": A practice employed by some managed care plans whereby they compete for the healthiest people and try to avoid enrolling people with the most expensive treatment needs. Claim: A request by a provider to a payer for reimbursement for benefits/services delivered. Closed Panel: A managed care plan that offers only a fixed group of providers to an enrollee from which he or she must select a primary care provider. In carve-out arrangements, the enrollee may only choose a provider from a predetermined list. Coinsurance (see also Copayment, Cost Sharing, Deductible): A cost-sharing feature that requires the insured party to assume a percentage of the costs of covered services, in addition to any deductible amounts. Community Rating: A method of calculating a health plan premium or capitation rate for all enrollees within a specific geographic area, based on average actual or anticipated costs for the entire group; under this method the premium or capitation rate does not vary for different subgroups of subscribers based on their previous service utilization. Community Rating by Class (Class Rating): An adjustment to a community rated premium or capitation rate whereby certain subscriber subgroups may have different rates based on factors such as age, sex, family size, marital status, and industry classification; such adjustments are permissible in federally qualified HMOs. Concurrent Review: A kind of utilization review using predetermined patient placement criteria, conducted while the consumer is receiving services to determine whether the care being delivered is medically necessary or appropriate, and eligible for payment; performed either by an internal or external reviewer. Consumer (see also Beneficiary, Enrollee, Member, Subscriber): An individual who receives health care or health-care-related services. Continued Stay Criteria: Predefined conditions or characteristics of consumers to be considered by providers and/or payers in deciding whether a consumer should continue to receive a certain type or intensity of care (e.g., inpatient services) or should be referred to what is deemed to be a more appropriate level, type, or intensity of care. For example, in decisions about substance abuse treatment, six categories of criteria are usually considered: acute intoxication and/or withdrawal potential, biomedical conditions and/or complications, emotional and behavioral conditions and/or complications, treatment resistance or acceptance, relapse potential, and the recovery environment. Coordination of Benefits: Standard rules and procedures that help determine which of two or more payers is primary and which is supplementary; such procedures seek to avoid duplicate claims payments. Copayment (see also Coinsurance, Cost Sharing, Deductible): A cost-sharing arrangement whereby a beneficiary is responsible for paying a fixed fee per unit of treatment service (e.g., $5 per visit, $20 per inpatient day) that does not vary with the provider's charge. Copayments are designed to reduce the third-party payer's costs and decrease service utilization. Cost-Based Reimbursement: A traditional, and sometimes required, reimbursement method between public funding agencies and not-for-profit organizations in which providers are paid for services based on the documented cost of providing them; it generally involves monthly negotiated payments reconciled to the actual costs of service periodically (e.g., quarterly or annually). Cost-Plus Reimbursement: Similar to cost-based reimbursement with the addition of a profit, or earnings factor, to the reimbursement for profit-making organizations. Cost Sharing (see also Copayment, Coinsurance, Deductible): A feature of a benefit plan that requires enrollees to pay some portion of the costs for services in an attempt to control utilization and to lower premiums. Covered Days: Maximum number of inhospital or residential days for which a payer will reimburse a provider for services to an individual; days may be limited based on an episode of illness, a year, a lifetime, or the length of time the beneficiary has been covered by the contract. Credentialing: The process of validating the qualifications of a licensed independent practitioner to provide services in a health care network or its components; involves evaluating and verifying the individual's license, education, training, experience, and ability to perform the services requested. Cultural Competence: A set of congruent behaviors, approaches, and policies in a system, agency, or among professionals that enable the system, agency, or professional group to work effectively in crosscultural situations; an ability to meet the needs of clients and patients from diverse cultural backgrounds. Current Procedural Terminology (CPT): Five-digit codes assigned to services and procedures to standardize claims processing and data analysis. Customary, Prevailing, and Reasonable (CPR): The current method of paying physicians under Medicare. Payment for a service is limited to the lowest among the following: (1) the physician's billed charge for the service, (2) the physician's customary charge for the service, and (3) the prevailing charge for that service in the community. Deductible (see also Coinsurance, Copayment, Cost Sharing): The expenses that must be incurred by a consumer before a payer will assume liability for all or part of the remaining cost of covered services; usually tied to a period of time (e.g., $100 per calendar year or $200 per episode of illness). Deeming: The acceptance of another accreditation organization's competency standards and/or review process in place of one's own in some or all areas. Default Enrollment: A process used by an MCO to assign an individual to a primary care provider if the individual has not selected one within a specified period of time. Dependents: Generally, the spouse and children of a beneficiary, or other persons as defined by the contract. Diagnosis-Related Group (DRG): Classification of patients by diagnosis or other criteria (such as treatment procedure) into groups for the purpose of determining a prospective payment for each group, based on the premise that treatment of similar diagnoses will generate similar costs. Direct Contracting (see also Physician-Hospital Organization): A direct, contractual relationship between a purchaser and a provider or provider system in which no intermediary manager of care is involved. Direct Payment Subscribers: Persons enrolled in a plan who make individual premium payments directly to the payer rather than through a group. Rates of payment are generally higher, and benefits may not be as extensive. Disallowance: A payer's denial of payment for all or a portion of claimed amount. Discounted Fee-for-Service Payment: An agreed-upon reimbursement rate for a specific service that is usually less than the provider's full fee and based on an expectation of volume. Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT): A Medicaid program mandated by Federal law for eligible children under age 21 covering any medically necessary service allowable under Medicaid regulations; the law requires all States (1) to have a system in place to provide active outreach, screening, and assistance in obtaining appropriate treatments for physical and emotional/behavioral disorders and (2) to provide health care treatments and other measures necessary to adequately address these disorders. Employee Retirement Income Security Act (ERISA): A 1974 Federal law that established new standards and reporting and disclosure requirements for self-insured employers and their health benefit programs; self-funded health benefit plans operating under ERISA are exempt from State insurance laws and regulations. Enrollee (see also Beneficiary, Consumer, Member, Subscriber): An individual enrolled in a health plan or a dependent of an enrolled individual, who is also covered by the plan. Episode of Care: All treatments provided for a specific condition over a period of time (e.g., an episode of substance abuse treatment is all services provided to a patient after a detoxification admission with a gap between services lasting longer than 90 days); used to analyze service costs, quality, and utilization patterns, and may be used to control the rate of payment. Essential Community Providers (ECPs): Generally, not-for-profit public behavioral health care community-based agencies, which are required to be included in an MCO's provider network, usually with a defined transition period. This permits beneficiaries who had received grant-funded services to continue to receive services from the same provider in a managed care system. Exclusive Provider Organization (EPO): A closed panel of providers that beneficiaries must use to receive covered benefits; some exceptions are usually included for emergency and out-of-area services. Exclusivity Clause: A legal provision binding a provider to contract only with a single health plan. Ex Parte Communication: By one party. Communication of one party, without an adversary's being notified or given an opportunity to be heard. Experience Rating: A method of establishing payer premiums or capitation rates based on historical utilization data and characteristics of potential subscribers, such as age, gender, and health status, that are believed to affect utilization and costs. Explanation of Benefits: A communication to a beneficiary explaining which claims submitted have been fully paid, partially paid, or not paid, along with an explanation for each action. Federally Qualified Health Plans: Health maintenance organizations (HMOs) that have applied for qualification and have met a set of standards established by the HMO Act of 1973 and its many amendments. Fee-for-Service Payment: A traditional reimbursement method that involves paying fees to providers for procedures or services for beneficiaries after those services have been delivered, often with a maximum based on what is a usual, customary, and reasonable fee. A plan based on this form of reimbursement is sometimes referred to as an indemnity health plan (compare Capitation). First-Dollar Coverage: Coverage for services in which the beneficiary pays no deductible, although a copayment or coinsurance may be required. Fixed Fee (see Capitation, Prospective Payment System): A method of reimbursement to an MCO or a provider for administrative services, contract deliverables, or some other service unit, usually paid monthly; such fees are often established through competitive bidding and through budget negotiations and remain fixed for a specified time, regardless of the actual costs. Freedom of Choice (see also Section 1915(b) Medicaid Waiver): A Medicaid term describing the requirement that a State must ensure that beneficiaries are generally free to obtain services from any qualified provider; based on section 1902(a)(23) of the Social Security Act. Full Capitation (see also Capitation and Partial Capitation): A payment method in which the health care entity is prepaid a fixed amount for each enrollee for providing all contractually defined administrative and covered clinical services; under this method the health care entity bears the financial risk for all services included in the benefit package. Full Utilization Risk (see also Risk-Bearing Entity, Risk Sharing): Risk-transfer arrangement in which the payer transfers to the service provider full responsibility for the potential rewards and costs of service utilization. Gatekeeper (see also Primary Care Case Management): An individual at the entry point of treatment, such as a utilization reviewer at an MCO or a primary care provider, who is responsible for initially assessing a consumer's needs, guiding the consumer to appropriate services, and restricting access to, or reimbursement for services, judged to be not medically necessary. Global Budgets: A method of financing managed care based on a fixed, historically determined overall budget to serve the eligible population, often used when MCOs are unable to predict or reliably determine the number of eligible individuals or the likely number of enrollees; global budgets are often used to purchase a fixed amount of treatment capacity from providers to control the risk of overspending. Group Model HMO (see Health Maintenance Organization) Group Practice: An organized group of health care providers who generally share centralized administration and financial systems and who pool their income from the practice and redistribute it to group members according to prearranged terms; group practices vary widely in size, composition, and financial arrangements. Health Benefit Plan: One of several methods of paying for health services by third-party payers, including HMOs, employers, insurance companies, various forms of pre-paid care, and government programs. Health Care Financing Administration (HCFA): The agency within the U.S. Department of Health and Human Services that oversees the Medicaid and Medicare programs and conducts research to support those programs; HCFA maintains regional offices throughout the country, each responsible for working with a group of States. Health Maintenance Organization (HMO): An entity with four essential attributes: (1) an organized health care system in a defined geographic area that accepts the responsibility to provide or otherwise ensure the delivery of (2) an agreed-upon set of basic and supplemental health maintenance, prevention, treatment, and rehabilitation services to (3) a voluntarily enrolled group of persons, and (4) for which services the entity is reimbursed through a predetermined fixed periodic prepayment made by, or on behalf of, each person or family unit enrolled. Six types of HMO models have been defined: Staff model: The HMO delivers health services through a salaried group of physicians and other professionals who are employees of the HMO and provide services only to enrollees. Group model: The HMO contracts with one independent group practice to provide health services. Network model: The HMO contracts with two or more independent group practices, possibly including a staff group, to provide health services. Although a network may include a few solo practices, it is predominantly organized around groups. Individual practice association model: The HMO contracts directly with physicians in independent practices, and/or contracts with one or more associations of physicians in independent practice, and/or contracts with one or more multi-specialty group practices; however, the plan is predominantly organized around solo/single specialty practices. Mixed model: The HMO combines the model types listed above with no single predominant model. Open-ended model: HMO enrollees can use out-of-plan providers or choose a provider at the point of service and receive partial or full coverage for the services. Health Plan Employer Data and Information Set (HEDIS) (see also Report Card on Health Care): A set of performance measures designed by the National Committee for Quality Assurance (NCQA) to enable health plans, employers, and others to compare the performance of different health plans. Holdback (see also Withhold): A form of reimbursement whereby an MCO withholds or sets aside payments to a provider until the end of a specified period, at which time the MCO distributes any surplus funds based on measures of providers' efficiency or performance; the measures reflect pre-established criteria for financial performance, productivity, utilization, and/or quality of care. Hold Harmless Clause: A provision in a managed care contract that protects ("holds harmless") the MCO from all costs involved in defense, settlement, and judgment of patients' claims of injury, regardless of potential malpractice, negligence, or policies of the MCO. Also a clause that prohibits a provider from seeking payment from an enrollee if the health plan becomes bankrupt. Horizontal Network (see also Individual/Independent Practice Association (IPA), Physician-Hospital Organizations, Vertical Network): A network formed by similar types of providers to enhance efficiencies and improve service delivery, negotiate with a vertical network, and/or negotiate managed care contracts directly with payers. Incentives: Economic or other rewards often included in a contract to encourage an MCO to achieve the purchaser's goals for care delivery and outcomes. Incurred But Not Reported (IBNR) Claims: Claims associated with services already provided but not yet submitted to a payer. Indemnity Insurance: An insurance contract that provides benefits in the form of cash payments for covered services already provided; rates and limits for different services are pre-established, and the beneficiary or provider must file a claim. Indicator (see also Outcome Measure, Performance Measure): A defined and measurable variable used to assess patient outcome or MCO and provider effectiveness and quality of care. Indigent Care: Health services provided to those who cannot pay for them because of insufficient income or assets and/or lack of adequate health insurance. Individual/Independent Practice Association (IPA) (see also Horizontal Network, Provider-Sponsored Network, Vertical Network): A form of health care practice in which providers are organized into a group via a contract, an arrangement that facilitates their contracting with several health care plans; providers generally remain in their independent offices, seeing both enrollees of the IPA and private-pay patients. Inpatient Care: Twenty-four hour in-residence health care in an acute care setting, such as a hospital, nursing home, or other medical or psychiatric institution. Institution for Mental Disease (IMD): A hospital, nursing facility, or other institution with more than 16 beds engaging primarily in the diagnosis and treatment of persons with mental diseases. Integrated Services Network: A network of organizations, usually including hospitals and physician groups, that provides or arranges to provide a coordinated continuum of services to a defined population and is clinically and fiscally accountable for outcomes. Also known as an organized delivery system. Intensive Case Management: Comprehensive community services for patients with severe and persistent mental illness, including evaluation, outreach, and support services, usually provided on patients' own turf; the case manager (or the team) generally advocates for the patient with community agencies and arranges services and supports; the case manager may teach community living and problem-solving skills, model productive behaviors, and help patients help themselves. Joint Commission on Accreditation of Healthcare Organizations (JCAHO): A national, private, nonprofit organization whose purpose is to encourage the attainment of uniformly high standards of medical care via stringent accreditation; JCAHO establishes standards for the operation of hospitals and other health care facilities. Lag Factor: Percentage of claims incurred in a given accounting period but received, processed, and paid in a subsequent period. Last-Dollar Coverage: Coverage for services in which no arbitrary upper limits or maximums are imposed, such as a maximum or lifetime limit. Lead Agency: A provider agency designated as the leader in a collaborative venture of several agencies and vested with full clinical responsibility, fiscal authority, and overall responsibility for contracting or otherwise arranging for needed services from external specialized agencies or other health and human service systems. Length of Stay: The number of days a consumer spends in an inpatient facility, such as a hospital, usually reported as the number of days between admission and discharge; can also refer to number of visits in a nonresidential setting. Loading (see also Risk Load): A factor incorporated into a capitation rate to adjust for coverage of individuals and groups with certain characteristics used in conjunction with straightforward discounting. Lock-In Feature: A requirement that enrollees in a health plan must obtain all nonemergency care from that plan. Maintenance Interventions: Behavioral health services, which are generally supportive, educational, and/or pharmacological in nature, that are designed to avoid deterioration of a condition or illness and are provided on a long-term basis to individuals who have met Diagnostic and Statistical Manual (DSM) diagnostic criteria and whose underlying illness continues. The two components of maintenance interventions are (1) the provision of rehabilitative aftercare, and (2) support of patients' compliance with long-term treatment to prevent recurrence of acute incidents. Managed Care: A system used by payers to control health care costs while ensuring accessible, effective, and efficient care for beneficiaries. The system uses gatekeepers, a preselected provider network, service preauthorization, case management, utilization review, and medical necessity review, as well as formal programs, such as provider credentialing and outcomes evaluation, to monitor quality; financial incentives are employed for beneficiaries to use the plan's providers and for providers to contain costs. Managed Care Organization (MCO): An entity that employs the methods of managed care for the purpose of controlling health care utilization and costs and improving access and quality. Some MCOs provide only administrative, and not clinical, services (see Administrative Services Only (ASO) Organization). Managed Fee-for-Service (Indemnity) Plan (see also Fee-for-Service Payment, Indemnity Insurance): A health care benefit 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, utilization review, and preselected provider panels are used to control inappropriate utilization. Management Information System (MIS): Computer-based methods of information collection, storage, management, analysis, and reporting to support the operation and management of an organization or system. Manual Rates: Standard rate tables included in an insurer's rate manual or an underwriter's manual that are used to determine premiums. Maximum Dollar Limit: The maximum amount of money that a health plan or insurance company will pay for claims; limits may be based on types of illnesses, types of services, or annual or lifetime amounts. Annual or lifetime limits for treatment for mental illness are often less than the limits for other illnesses. Medicaid: A Federal program enacted in 1965 (authorized by Title XIX of the Social Security Act) operated individually by participating State and Territorial governments that provides medical benefits for eligible aged, blind, disabled, and low-income persons. Subject to broad Federal guidelines, States determine who is eligible, benefits covered, rates of payment for providers, and methods of administering the program. Costs are shared by the Federal and State governments. Medicaid Mandatory Services: Services that the Federal Government requires to be included in a State's Medicaid program, such as a hospital nursing facility, physicians' services, and laboratory and x-ray services. The State can limit mandatory services (e.g., number of days, visits). Medicaid Optional Services: More than 30 different services that a State may elect to cover under Medicaid; mental health optional services include case management, clinic services, and psychosocial rehabilitation. Medicaid State Plan: The document describing a State's Medicaid program. Each state is required to submit a plan to HCFA for approval. It can be amended annually, with HCFA approval, to delete or add optional services or alter limits on the amount, duration, and scope of services. Medicaid Waiver (see also Section 1115 Medicaid Waiver): A provision of Federal law that allows HCFA to approve a State's Medicaid plan even though it does not comply with all Federal requirements as long as certain safeguards and other criteria are met. Medical Management Information System: A data system that allows payers and purchasers to track health care utilization and expenditures. Medical Necessity: Services and supplies that are (1) appropriate and necessary for the symptoms, diagnosis, or treatment of sickness or injury; (2) provided for the diagnosis or direct care or treatment of sickness or injury; (3) within the standards of good practice; (4) not primarily for the convenience of the plan member or provider; and (5) the most appropriate level of care that can safely be provided. Medical necessity can be interpreted restrictively to deny clinically appropriate services to address psychosocial problems of persons with addictive and mental disorders. Medicare: A Federal health insurance program (authorized by Title XVIII of the Social Security Act) for people aged 65 and over, for persons eligible for Social Security Disability Insurance (SSDI) payments for two years or longer (severely disabled individuals), and for certain workers and their dependents who need kidney transplantation or dialysis. Medicare consists of two separate but coordinated programs: hospital insurance/inpatient costs (Part A) and supplementary medical insurance/outpatient costs (Part B). Member (see also Beneficiary, Consumer, Enrollee, Subscriber): An individual or dependent who is enrolled in and covered by a health care plan. Mental Health Statistical Improvement Program (MHSIP) Report Card (see also Report Card on Health Care): A provider report card, developed by the Mental Health Statistics Improvement Program of the Center for Mental Health Services and published in April 1996, that focuses on data of particular relevance to consumers, such as quality of life outcomes. Morbidity: Incidence and severity of illness, injury, or disability in a defined population, usually expressed in rates of incidence or prevalence (e.g., 150 cases per 100,000 population). Morbidity Risk: A form of direct financial risk assumed by a health plan or insurer that results from the amount of psychopathology and psychiatric morbidity in the population. Mortality: Death; the mortality rate expresses the number of deaths in a population within a given time and may be expressed as a crude death rate (e.g., total deaths in an entire population in a given year) or as rates for specific diseases or for groups based on age, sex, or other attributes (e.g., number of deaths from cancer in white males in a given year). Multiple Option Plan: A health plan that offers the enrollee a choice of plan types, such as an indemnity plan, an indemnity plan with a preferred provider organization option, or a health maintenance organization. National Committee for Quality Assurance (NCQA): An organization founded in 1979 and governed by a 14-member board of directors representing consumers, purchasers, and providers of managed health care that accredits programs in prepaid managed health care organizations and develops and coordinates standards and programs for quality assessment in the managed care industry. Network (see also Horizontal Network, Individual/Independent Practice Association, Physician-Hospital Organizations, Provider-Sponsored Network, Vertical Network): A system of provider groups and solo providers contracted by a managed care plan to deliver services. A structure of health care providers that allows for collaborations, affiliations, consolidations, joint ventures, and strategic alliances through formal and informal contracts and agreements. Nonparticipating Provider: A provider who has not contracted with a given health plan. Omnibus Budget Reconciliation Act of 1986 (OBRA '86): A comprehensive Federal law taking effect in 1991, one provision of which prohibits HMOs from making payments directly or indirectly to providers as an inducement to reduce or limit services to Medicare or Medicaid patients. Open Enrollment Period: A specified time during which a health plan must accept all who apply, and members are allowed to change plans without restriction; it is a method to ensure that plans do not exclusively select enrollees who are good risks. Open Panel: A feature of a health plan that offers a variety of types of treatment providers that subscribers can use for their health care without overly restrictive liability. Outcome Measure: An indicator used to assess a consumer's change in health status after having received health care services. Outcomes: The results of receiving health care services; outcomes are measured in a variety of ways, including decreased morbidity and mortality, symptom reduction, recovery from substance use disorders, physical and emotional functioning, quality of life, and consumer satisfaction. Both short- and long-term outcomes are measured. Outcomes Management: Systematic efforts to improve the results of health care services, using established outcome measures. Outcomes Research: Formal studies measuring changes in consumers' status resulting from specific interventions; such studies require careful methodologies to distinguish the effects of care from the effects of the many other factors that influence patients' health and satisfaction. Outlier: Departure from an average, usually defined as at least two standard deviations from the mean; a hospital admission requiring either substantially more expense or a much longer length of stay than is typical for patients with a given condition or illness. Under Diagnosis-Related Group payment, patients who are outliers are given exceptional treatment subject to peer review and organization review. Outpatient Care (see also Ambulatory Care): Treatment delivered in a noninpatient (i.e., non-24-hour) setting; generally a less costly and less restrictive form of care. Overutilization: Unnecessary or excessive use of services, often said to be a risk in fee-for-service reimbursement systems. Partial Capitation (see also Full Capitation, Per Capita): A method of payment in which some services are funded based on a risk-transfer contracting arrangement and some are funded through fee-for-service or other traditional forms of payment (e.g., inpatient services may be capitated while outpatient services are provided on a fee-for-service basis). Payer: An employer, insurance company, prepaid health plan, or government agency that is legally obligated to pay for certain health-related services. Peer Review: Evaluation by practicing physicians or other professionals of the effectiveness and efficiency of services ordered or performed by their peers; a form of utilization review. Also refers to the review of research by other researchers. Peer Review Organization (PRO): A professionally sponsored and operated system, usually a physician-directed organization or program, for review of professional judgment about quality or appropriateness (medical necessity) of treatment; PROs arbitrate disagreements between physicians and other providers and third parties. Penetration: A marketing concept that describes the proportion of a market or population that has contracted for services with an MCO; the percentage of possible enrollees accessing care. Per Capita Payment (see also Capitation, Full Capitation, Partial Capitation): A fixed per person amount paid by a purchaser to a provider for services during a specific time, usually expressed as a per member, per month rate; based on the number of enrollees or individuals covered, regardless of the number actually receiving services or the amount of services delivered. Performance Goal: The desired level of achievement of standards of care or service; may be expressed as minimum performance levels (thresholds), industry-best performance (benchmarks), or the permitted variance from the standard. Performance goals usually are not static but change as performance improves and/or the standard of care is refined. Performance Measure: An indicator used to assess a health plan's or provider's delivery of care as it conforms to practice guidelines, medical review criteria, or standards of quality; adherence to performance standards is expected to lead to desirable outcomes, but performance measures do not directly measure these outcomes. Performance Payments: Incentive payments or bonuses to reward managed care organizations and providers for achievement of the purchaser's desired performance goals. Personal Responsibility and Work Opportunity Act of 1996: A law that turns control of welfare over to the States; limits lifetime benefits to 5 years; requires adults to work after 2 years; and denies assistance to noncitizens. Physician-Hospital Organization (PHO) (see also Individual/Independent Practice Association, Provider-Sponsored Network, Vertical Network): A legal entity formed by combining a hospital and a group of physicians/providers into a collective negotiating and contracting unit for the purpose of obtaining contracts with health plans; typically owned and governed jointly by a hospital and shareholder physicians. Providers maintain ownership of their practices and accept managed care patients according to the contract terms. Plan Administration (see also Administrative Services Only): Management of a health benefit plan, including accounting, billing, personnel, marketing, legal services, claims paying, purchasing, and servicing of accounts. Point-of-Service Plan: A health plan in which members can choose non-network providers who are reimbursed by a standard indemnity coverage, with members paying a larger portion of the fee. This plan is sometimes called an open-ended HMO. Practice Guidelines: Systematically developed recommendations for the most appropriate diagnostic and treatment approaches for certain medical and mental illnesses, developed to standardize care and to facilitate decisions about appropriate care; generally, guidelines are based on scientific evidence and expert opinion. Also referred to as clinical criteria, practice parameters, protocols, algorithms, review criteria, preferred practice patterns, and guidelines. Pre-Existing Condition: An illness or condition that is excluded from coverage by a purchaser because the condition existed before enrollment in the plan; coverage may be limited for a period of time, or indefinitely, creating significant obstacles to access to care. Preferred Provider Organization (PPO): A formally organized entity of hospital and outpatient providers that agrees to accept discounted fees for treating enrollees of a managed care plan in return for prompt payment and an expectation of a larger volume of patients. Enrollees may choose non-PPO providers but usually pay a higher portion of the costs than for PPO providers. Premium: Rate that a subscriber (either an employer or an individual) pays for a health benefit plan. Prepaid Group Practice (PGP): A group model HMO or multispecialty association of physicians and other health professionals that accepts a fixed payment from a managed care plan to provide a wide range of preventive, diagnostic, and treatment services to a defined population; the fixed amount is determined in advance for each year. Prepaid Health Plan (PHP): A health plan, such as an HMO, in which subscribers (or employers) pay the insurer in advance for access to a defined set of health care benefits. Prepaid Individual Practice (see also Independent/Individual Practice Association): Individual physicians or small physician groups who accept a fixed payment from a managed care plan for providing care in their offices to enrollees. Preventive Care: Health care interventions that emphasize wellness, via prevention, early detection, and early treatment, including routine physical examination, immunization, well-person care, and patient education. Preventive Interventions: Services designed to reduce the probability of development of clinically demonstrable substance abuse and mental health problems. They consist of (1) universal interventions targeted to a population group that has not been identified on the basis of individual risk (e.g., substance abuse prevention curricula required of all public school students); (2) selective interventions targeted to individuals or a subgroup of the population whose risk of developing clinical problems is significantly higher than average (e.g., bereavement support groups for low-income widows and widowers, life skills programs for chronically truant students); and (3) indicated interventions for individuals with minimal but detectable signs or symptoms foreshadowing mental or substance use disorders (e.g., parent-child interaction training for children identified as having persistent conduct problems). Prevention Strategies: Prevention strategies include a broad array of activities including: (1) information, (2) education, (3) alternative activities, (4) problem identification and referral, (5) community-based processes, and (6) environmental approaches. (Reference 96.125 of the Federal Register, March 31, 1993, for definitions of these strategies.) Primary Care Case Management (PCCM), Primary Care Gatekeeper Model: A utilization management strategy in which a primary care physician manages a patient's use of health services by acting as a gatekeeper who approves all referrals and monitors all covered services and who is paid for performing this role. Primary Care, Primary Care Provider: Basic health care services that are generally administered by internists, family practitioners, pediatricians, or obstetricians/gynecologists in an ambulatory setting; usually regarded as general care received at the point at which the patient first seeks care from a medical system. Primary care is increasingly provided by nurse practitioners and physician assistants. Comprehensive primary care involves a primary provider who takes responsibility for a patient's overall health, whether problems are biological, behavioral, or social. Primary Prevention: Programs directed at individuals and a subgroup of the population who do not require treatment for substance abuse. This includes educating and counseling on such abuse and providing for activities that reduce substance abuse and/or use. Prior Authorization: A utilization management strategy that requires a provider to justify, in advance to a third-party utilization reviewer, the need for a particular treatment in order to be reimbursed for that treatment. Also called precertification, preauthorization, predetermination. Proprietary: Owned and operated for the purpose of making a profit, whether or not one is actually made; often refers to materials developed and owned by the company that cannot be freely shared. Prospective Payment System (PPS) (see also Full Capitation, Partial Capitation, Per Capita Payment): Any payment system in which the amount to be paid to the provider is set before services are delivered, generally for the coming year. That amount is paid regardless of the number of enrollees served or the amount of services delivered. Provider-Sponsored Network (PSN) (see also Individual/Independent Practice Association, Physician-Hospital Organizations, Vertical Network): A formal alliance of providers formed into an integrated health care network for the purpose of contracting with payers to provide services to beneficiaries. Purchaser (see also Payer): A person, insurer, employer, health plan, or government agency that purchases health care for an individual. Quality Assessment: Measurement of the structure of care, its processes, and its outcomes using predetermined performance and outcome indicators. Quality Assurance: Objectively and systematically monitoring the process and outcomes of care to ensure and improve its quality by use of frequent performance and outcomes measurement. Quality Assurance Reform Initiative (QARI): A process developed by the Health Care Financing Administration (HCFA), which created a health care quality improvement system for Medicaid managed care plans. Quality Improvement: A set of techniques based on a feedback loop that focus on the ongoing improvement of treatment processes and outcomes by identifying problem areas, introducing improvements, and reassessing changes. Continuous Quality Improvement (CQI) and Total Quality Management (TQM) use consumer-oriented interdisciplinary teams to gather and assess data and to implement changes to better meet the needs and expectations of consumers. Quality of Care: The degree to which health services meet established standards, are consistent with current professional knowledge, and maximize the probability of beneficial health outcomes while minimizing risk and other untoward outcomes. Quality is often described as having three dimensions: quality of resources (certification and training of providers), quality of the process of service delivery (the use of appropriate procedures), and quality of outcome of services (improvements in a patient's condition or reduction of harmful effects). Reconciliations: Adjustments, usually retroactive, to capitation rates or other risk-transfer payments and an accounting reconciliation at the end of the agreed-upon period of performance. Referral: The process of a health care provider or gatekeeper sending a patient to another provider for health care services; some health plans require primary care providers to authorize referral for specialty services. Reimbursement: The process by which health care providers receive payment for their services. In health care, providers are often reimbursed by third parties who insure and represent patients. Reinsurance: Separate insurance purchased by a health benefit plan from a third party to protect itself against losses that are not easily managed or are unpredictable; it limits the losses of the health benefit plan if expenses exceed the revenues from capitation payments. Report Card on Health Care(see also Health Plan Employer Data and Information Set [HEDIS]): A systematic presentation of data collected periodically from health plans that profiles their performance and outcomes; it can be used by policymakers and health care purchasers (employers, government bodies, employer coalitions, and consumers) to compare these plans. Data in major areas of accountability are provided, such as health care quality and utilization, delivery of appropriate services, patient outcomes, consumer satisfaction, administrative efficiencies and financial stability, and cost control. Request for Information (RFI): A document used to solicit input from interested individuals on such issues as program design and network development and capacity, and to seek information on potential bidders. Request for Proposal (RFP): A solicitation document issued to obtain offers from bidders that propose to provide products or services under a contract to be awarded using the process of negotiation. Reserves: The practice of withholding a certain percentage of premiums to provide a fund for committed but undelivered health care, uncertainties, contingencies, overutilization of referrals, accidental catastrophes, and other situations; such accounts are sometimes used by public purchasers to safeguard public funds in the event of the managed care organization's financial weakness or failure. Retrospective Reimbursement (see also Fee-for-Service Payment): Payment made after services are delivered on the basis of the costs incurred to deliver them (compare Prospective Payment System). Retrospective Review (see also Concurrent Review): A form of utilization review conducted after services are provided to determine if the services met the requirements of the payer to justify reimbursement. Rider: A legal addendum or provision that modifies a contract, usually in regard to expanding or decreasing coverage of certain conditions or expanding or limiting certain services. Risk: The cost of health services. In managed care, the liability and chance of financial loss that a health plan or provider organization assumes when it agrees in a prospective payment system to provide a defined set of services to a specific population for a predetermined fee per enrollee, regardless of the amount of services eventually provided; loss occurs when the revenues of the purchaser are not sufficient to cover expenditures incurred in the delivery of services. Capitation financing has moved risk, as well as the potential reward, from the purchaser to the provider. Risk Adjustment: A process that takes into account the health status and risk profile of enrollees in certain health plans (e.g., severity of illness, comorbidity, consumption of cigarettes and alcohol) and shifts premium dollars from a plan with relatively healthy enrollees to another with sicker members; this process minimizes financial incentives plans may have to select healthier than average enrollees. Those that attract higher risk enrollees are thus compensated for any differences in the proportion of their members that require high levels of care. Risk-Bearing Entity: An organization that assumes financial responsibility for the provision of a defined set of benefits for some or all of the cost of care; the entity may be an insurer, a health plan or self-funded employer, a physician-hospital organization, a government agency, or another form of provider-sponsored network (PSN). Risk Corridors, Risk Bands: The practice of limiting to a specified amount an MCO's exposure to losses and potential for profits; for example, losses and profits might be limited to 5 percent of premium or a predetermined dollar amount. Risk Factor: An epidemiological term used in examining and quantifying the likelihood that morbidity or mortality will occur; a risk factor is analyzed along with many such factors and not regarded as a definitive predictor. Risk Load (see also Loading): A factor incorporated into a capitation rate to adjust for some adverse factor in the population or group in question. Risk Pool: A defined account (e.g., defined by size, geographic location, claim dollars that exceed the level per individual, etc.) to which revenue and expenses are posted. A risk pool attempts to define expected claim liabilities and required funding to support the claim liability (combines risk for all or several groups of persons); an arrangement whereby part of a provider's payment is withheld and returned in proportion to the financial well-being of a health plan. Risk Sharing: A variation of risk-transfer systems in which losses and profits are shared between two or more parties (e.g., between the purchaser and the managed care organization) in a contractually defined manner, rather than being assumed by one entity alone; this method spreads the risk of unplanned, unexpected financial loss resulting from underestimations of service needs. Risk Transfer Systems: Methods of payment, including capitation, global budgets, and case-rate payment, that transfer the cost of services from the purchaser to an MCO or the provider. Section 1115 Medicaid Waiver: A provision of the Social Security Act that waives, with the approval of the Health Care Financing Administration (HCFA), certain Medicaid requirements, allowing States to implement and evaluate the efficacy and cost-effectiveness of alternative delivery systems as long as the alternatives are likely to promote the objectives of Medicaid. The waivers allow States to radically change Medicaid program provisions, including eligibility requirements, the scope of services available, the freedom to choose a provider, a provider's choice to participate in a plan, the method of reimbursing providers, and the statewide application of the program. Section 1915(b) Medicaid Waiver: A provision of the Social Security Act that allows States to require Medicaid recipients to enroll in HMOs or other managed care plans in an effort improve access to quality services and to control costs. The waivers allow States to implement a primary care case management system, require Medicaid recipients to choose from a number of competing health plans, provide additional benefits in exchange for savings resulting from recipients' use of cost-effective providers, and limit the providers from whom beneficiaries can receive nonemergency treatment. The waivers are granted for 2 years, with 2-year renewals. Self-Insurance, Self-Funding: A practice by which an organization (employer or group of employers) assumes complete financial responsibility for medical and/or behavioral health treatment costs for its members; insurance protection against excessive loss can be purchased. Benefits may be administered by the employer or handled through an administrative services only agreement with an insurance carrier or third-party administrator. Self-insured plans are exempt from State insurance laws and regulations. Service Area (see also Catchment Area): A geographic area served by a health plan or provider organization, such as a hospital or community mental health center, defined on the basis of such factors as population distribution, health resources, political boundaries, natural geographic boundaries, and/or transportation accessibility; facilitates effective planning, development, and delivery of health services. Single-Stream Funding (Unified Funding Stream): The consolidation of multiple sources of funding into a single unified stream; a key approach used in progressive mental health systems to ensure that funds follow consumers and their service needs. Skimming (see also "Cherry Picking"): A practice, usually in a prospective payment system, by which a health plan attempts to enroll (by selection, policy, or other practices) only the most healthy subscribers and to systematically exclude less healthy individuals at higher risk for difficult or expensive treatment. A variation of skimming is the practice of providing only those services that are most favorably reimbursed by payers. Social Health Maintenance Organization (S/HMO): A health maintenance organization that also provides a variety of social and preventive services to a special-needs population with unique long-term care requirements. "Soft" Capitation: A capitation payment method in which the capitation rate can be modified by some form of risk sharing, allowing the rate to increase or decrease in certain circumstances. <Solo Practice: Professional practice as a self-employed individual rather than in a group; also called private practice. It is not necessarily fee-for-service practice, as solo practitioners can be part of provider networks and accept capitated rates. >Staff Model HMO (see Health Maintenance Organization) Stop-Loss Insurance (see also Reinsurance): Insurance coverage purchased by a payer to provide protection from losses that result when claims exceed prospective payments; used when risk is difficult to predict or manage. Such insurance often covers claims for any enrollee that exceed a predetermined deductible, such as $25,000 or $50,000, or situations in which total claims exceed a predetermined level, such as 125% of the amount expected in an average year. Stop-Loss Provision: A provision in a risk-based contract that caps the amount of money for which an MCO is liable or establishes the maximum expense a provider can incur before the capitation rate structure changes. In a stop-loss agreement, the purchaser agrees to provide additional payment to the MCO in certain situations of loss. Also the maximum amount a beneficiary will have to pay out-of-pocket for deductible or coinsurance or copayments. Subcapitation: A form of payment in which an MCO enters into prepaid agreements with providers, thus transferring some or all of the risk. Subscriber (see also Beneficiary, Consumer, Enrollee, Member): The individual (or employment group) who contracts for services with a prepaid health plan; the term does not include other individuals (e.g., family members) who may receive services as a result of this contract. Substance Abuse and Mental Health Services Administration (SAMHSA): A U.S. Public Health Services agency whose mission is to provide a national focus for the Federal effort to promote effective strategies for prevention and treatment of addictive and mental disorders. It is primarily a grantmaking organization, promoting knowledge and scientific state-of-the-art practice. It strives to reduce barriers to high quality, effective programs and services for individuals who suffer from, or are at risk for, these disorders, as well as for their families and communities. Supplemental Security Income (SSI): Title XVI of the Social Security Act established the Social Security Administration's program of direct payments to the aged, blind, and disabled poor. In most States, SSI recipients are categorically eligible for Medicaid. Targeted Case Management: Medicaid term for case management services covered under Title XIX of the Social Security Act (as of November 1995). Federal law defines targeted case management as services that will assist individuals eligible under the State Medicaid plan in gaining access to needed medical, social, educational, and other services. Third-Party Payer: The entity (e.g., insurer, State agency) responsible for paying for health care services delivered by a provider to a beneficiary; the first party is the person receiving the services and the second party is the provider. Third-Party Payment: Payment for health care by a party other than the beneficiary. Third-Party Revenue: Revenue for health services from commercial payers or from a State or government agency that offsets the costs of the program purchased by the county. Transferability: An agreement between two or more health plans that they will accept the other's enrollees when an enrollee changes residency from one plan's service area to another's. Treatment Interventions: Therapeutic services designed to reduce the length of time a disorder exists, halt its progression of severity, or if not possible, increase the length of time between acute episodes. An Institute of Medicine typology divides treatment into (1) case identification and (2) treatment for the identified disorder, to include interventions to reduce the likelihood of future co-occurring disorders. Triage: The process of determining the degree of urgency of a client's needs and arranging for the appropriate level of care, either through referral or immediate treatment. Underwriting: The process by which an insurer assumes liability for an insured party. Usual, Customary, and Reasonable (UCR): The average fee charged by a type of health care practitioner for a specific service in a geographic area; the amount is often used by payers as the basis for reimbursing providers. Utilization: The extent to which enrollees use a program or service; commonly examined in terms of patterns or rates of use of a single service or type of service (e.g., inpatient care, physician visits). Utilization Management (see also Case Management, Concurrent Review, Prior Authorization, Retrospective Review, Utilization Review): A set of techniques used by or on behalf of purchasers of health benefits to manage health care costs by influencing decisions about patient care made by providers, payers, and patients themselves. Utilization Rates: Patterns of use of a single service or type of service, usually expressed in rates per enrollee, per 100,000 population, or for a period of time, such as a calendar year. Utilization Review (see also Utilization Management): A process used by a third party to assess whether a recommended treatment is medically necessary and appropriate based on standards of practice, practice guidelines, and other protocols. Vertical Network (see also Individual/Independent Practice Association, Provider-Sponsored Network): A network formed by different types of providers to offer comprehensive services (e.g., inpatient, residential, outpatient, specialized, and primary care) and to enhance efficiencies for the purpose of negotiating managed care contracts. Withholds (see also Holdback): A form of reimbursement whereby an MCO withholds or sets aside payments to a provider until the end of a specified period, at which time the MCO distributes any surplus funds based on measures of providers' efficiency or performance. Withholds often are 10 to 20 percent of fees and give providers an incentive to operate cost-effectively. Top of Page
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