Practice Management
Terms You Should Know
Access
Accountable Health Plan (AHP)
Adverse Selection
Affiliated Provider
Ambulatory Care
"Any Willing Provider" Law
Assignment
Average Length of Stay (ALOS)
Beneficiary
Benefit Package
Capitation
Carve-Out
Coinsurance
Collaborative Arrangements
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Contractual Indemnification
Co-payment
Credentialing
Deselection
Discounted Fee-For-Service
Drug Formulary
Experience Rating
Federally Qualified HMO
Fee-for-Service
Full-Risk Contract
Gatekeeper System
Group Model HMO
Health Maintenance Organization
"Hold Harmless"
Independent Physician Association
(IPA)
Integrated Delivery System (IDS)
Managed Care Organization (MCO)
Management Service Organization (MSO)
Medicaid
Network Model HMO
Outcomes Management
Physician-Hospital Organization (PHO)
Point of Service (POS)
Population Elasticity Measure (PEM)
Preferred Provider Organization (PPO)
Reinsurance
Risk Sharing
Stark Legislation
Stop-Loss
Subcapitation
Utilization Management
Access—A person's ability to obtain
health services. Measures of access include the location of health
facilities and their hours of operation, travel time and distance
to health facilities, availability of medical services, and cost
of care.
Accountable Health Plan (AHP)—An AHP
provides coverage for the nationally guaranteed comprehensive benefit
package through contracts with regional or corporate alliances. Only
the state-certified health plans are allowed to provide health insurance
and benefits in regional alliances.
Adverse Selection—The disproportionate
enrollment of high-risk individuals from a given population into one
or more health plans, usually resulting in a significantly increased
utilization of health care services.
Affiliated Provider—A health
care provider or facility subcontracted by an HMO to provide additional
services to the HMO member.
Ambulatory Care—Health services
rendered in a hospital outpatient facility, a clinic, or a physician's
office; often used synonymously with "outpatient care".
"Any Willing Provider" Law—A law that
is in force in some states; it requires a managed care organization
to open its panels for contracting opportunities to any interested
provider.
Assignment—Agreement by the provider
to accept any reimbursement from a third party payor as payment in
full for the services rendered. When a provider accepts assignment,
balance billing for charges that were not paid in full is not permitted
(except for collection of any deductible, co-payment and/or coinsurance
that the patient is required to pay).
Average Length of Stay (ALOS)—The average
number of days in the hospital for each admission. The formula for
this measure: total patient days incurred divided by the number of
admissions during the period.
Beneficiary—Synonymous with "enrollee" and "member"—a
person eligible to receive benefits from an HMO or insurance policy.
Benefit Package—A collection of
specific services or benefits that the managed care company is obligated
to provide under terms of its contracts with subscriber groups.
Capitation—A fixed rate of payment
for a fixed period of time, which the provider accepts in return for
accepting risk to provide a specified set of health services at any
frequency that is necessary. The rate is usually provided on a per-member-per-month
(PMPM) basis, with adjustments for age and sex.
Carve-out—An arrangement whereby
an employer eliminates coverage for a specific category of services
(e.g., mental health/psychological services, prescription drugs) and
contracts with a separate set of providers for those services, according
to a predetermined fee schedule or capitation arrangement.
Coinsurance—The percentage of
the costs of medical care that a patient pays individually. Coinsurance
rates are generally in the 10% to 20% range. Coinsurance and deductibles
are most commonly found in indemnity, fee-for-service insurance and
the PPO market.
Collaborative Arrangements—Partnering
arrangements with other physicians or with hospitals to maintain patient
volume.
Consolidated Omnibus Budget Reconciliation
Act (COBRA)—A federal law that, among other things, requires
an employer to offer continued health insurance coverage to certain
employees and their beneficiaries who have had their group health
insurance coverage terminated.
Contractual Indemnification—Or "Hold
Harmless"—a clause that appears in some contracts; it attempts
to shift liability from one party to another (e.g. from a medical equipment
manufacturer to a health care provider who purchases the equipment
from an MCO to a contracting physician, etc.; some MCOs try to make
contracting physicians responsible for MCO legal liabilities). Courts
may modify of refuse to uphold such agreements if they are deemed harmful
to the public or if the parties are perceived to have unequal bargaining
power. Such provisions are dangerous and should be avoided.
Co-payment—The payment by a patient
of a flat dollar amount per unit of service at the time of the service.
The amount paid should be nominal, but sufficient to provide incentives
for appropriate utilization of health services.
Credentialing—The review and
verification of a provider's credentials (i.e., training, experience,
malpractice actions, and licensure) to determine clinical privileges.
Deselection—MCOs select physicians
for their panels based on physician willingness to "work smart", control
costs, and embrace the philosophy of managed care. If the MCO accepts
physicians for a panel that eliminates him or her from that panel,
that physician is deselected, often for failing to live up to MCO expectations
or because the MCO has too few patients to keep all its practices busy.
Discounted Fee-For-Service—A
financial reimbursement system whereby a provider agrees to provide
services on a fee-for-service basis, with the fees discounted by a
certain percentage from the physician's usual charges.
Drug Formulary—A listing of prescription
medicines that are approved for use and/or coverage by a health plan
or other entity and will be dispensed through participating pharmacies
to covered persons. A drug formulary is subject to periodic review
and modification.
Experience Rating—A method of
determining health plan premiums based on the claims experience of
a specific subscriber group. It is not permitted under federal HMO
qualification guidelines.
Federally Qualified HMO—An HMO
that meets 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). HMOs must
apply to the federal government for qualification. The process is administered
by the Office of Prepaid Health Care of the Health Care Financing Administration
(HCFA) and the U.S. Department of Health and Human Services (DHHS).
Fee-For-Service—A system of payment
for health care whereby a fee is charges for each service delivered.
The traditional method contrasts with that used in the prepaid sector,
whereby services are covered by a fixed payment that is made in advance
and is independent of the number of services rendered.
Full Risk Contract—A contractual
arrangement between an HMO and provider in which the provider is capitated
to provide all medical services to HMO patients. The medical group
is at risk and responsible to provide both professional (physician)
and hospital services.
Gatekeeper System—The primary
care providers (e.g. family or general practitioners, internists, pediatricians,
and obstetricians/gynecologists) who have an economic and medical responsibility
for managing all referrals for specialty, ancillary, and hospital services
as a condition of their coverage by the insurer. The word
"conductor" or "coordinator of care" is preferred to the term
"gatekeeper".
Group Model HMO—An HMO model involving
contracts with physicians organized as a partnership, professional
corporation, or other association. The health plan compensates the
medical group for contracted services at the negotiated date, and that
group is responsible for compensating its physicians and contracting
with hospitals for the care of their patients.
Health Maintenance Organization (HMO)—An
organized health care system that is responsible for both the financing
and delivery of a broad range of comprehensive health services to an
enrolled population for a prepaid, fixed fee. An HMO can be viewed
as a combination of health insurer and health care delivery system.
HMOS are responsible for providing health care services to their covered
members through contracted providers, on a prepaid basis. The five
common models of HMOs are staff, group, network, IPA, and mixed.
"Hold Harmless"—See Contractual
Indemnification.
Independent Physician Association (IPA)—The
IPA contracts with individual physicians who see HMO members as their
own patients, in their own private offices. It is the ability of IPA
physicians to see both HMO and private patients in their own offices
that principally differentiates an IPA from a group or staff HMO. Physicians
in an IPA are paid either on a capitated or reduced fee-for-service
basis.
Integrated Delivery System (IDS)—A group
of hospitals, physicians, and ancillary providers that have joined
to create a system that provides comprehensive health care services
through a coordinated, client-centered continuum designed to improve
health care services in specified geographic markets and within economic
limits (e.g., capitation).
Managed Care Organization (MCO)—A generic
term applied to a managed care plan. These plans usually integrate
the financing and delivery of health care services to an enrolled population.
MCO contracting providers either share financial risks or have some
incentive to deliver quality, cost-effective services.
Management Service Organization (MSO)—A
legal entity that provides administrative, practice management, and
support services to individual physicians and/or group practices. A
physician entity owned by participating physicians contracts with the
MSO for services. Usually a direct subsidiary of a hospital, the MSO
also may be owned by investors.
Medicaid—A federal program administered
and operated individually by participating state and territorial governments;
it provides medical benefits to eligible low income persons who need
health care. The costs of the program are shared by the federal and
state governments. Medicaid is known as Medi-Cal in California.
Network Model HMO—A type of HMO
in which a network of two or more existing group practices has contracted
to care for the majority of patients enrolled in an HMO plan. It also
may contract with individual providers in roughly the same way an IPA
does. Providers contracting with this type of HMO are usually free
to serve fee-for-service patients as well as those enrolled in other
HMOs and PPOs.
Outcomes Management—The process
of systematically tracking a patient's clinical treatment and responses
to the treatment, including measures of morbidity and functional status.
Physician-
Hospital Organization (PHO)—A
legal entity that combines physicians and hospital into a single organization
for the purpose of obtaining payor contracts. Doctors maintain ownership
of their practices, but accept managed care patients according to the
terms of the contract.
Point of Service (POS)—A type of HMO
in which the enrollees are not "locked in"; they may receive services
from other providers and still have those services covered by theHMO.
Such "out-of-plan" utilization is usually subject to a significant
degree of cost sharing (e.g., deductibles), unlike those services delivered
within the plan.
Population Elasticity Measure (PEM)—An
indication of the percentage change in a market's HMO enrollment for
each 1% change in that market's population. The PEM is intended to
explain HMO enrollment growth in terms of a market's population growth,
with all other factors constant.
Preferred Provider Organization (PPO)—Typically,
a group of hospitals, physicians and/or pharmacists; the PPO contracts
on a discounted fee-for-service basis with employers, insurance carriers,
or a third-party administrator to provide services to subscribers.
Provider charges are usually 10% to 20% below usual fees.
Reinsurance—Similar to "enrollment
protection" and "stop-loss"—the practice of an HMO or insurance
company of protecting itself or its contracted medical groups against
part or all losses, above a specified dollar amount, incurred in the
process of caring for its policyholders.
Risk Sharing—Sharing the opportunity
for reward or loss. Commonly, physicians and the managed care plan
will share the risk.
Stark Legislation—Stark I—Passed
in 1989 as the "Ethics in Patient Referral Act," it prohibited Meidcare
payment for clinical lab tests if the physician referring patients
to the lab had a financial interest in it. Hospitals later obtained
a broad-based exemption from this legislation. Stark II—Went into
effect January 1, 1995. It bans Medicare and the federal portion of
Medicaid payments for certain "designated health services" provided
to patients who are referred for these services by a physician who
has an ownership interest or other compensation arrangements with providers
of these services. Stark III—Proposed legislation by Rep. Fortney "Pete"
Stark of California to ban physician investments and physician self-referral
arrangements in all instances—not just Medicaid and Medicare cases.
Stop-Loss—Similar to "reinsurance" and "enrollment
protection"—the practice of an HMO or insurance company of protecting
itself or its contracted medical groups against part or all losses,
above a specified dollar amount, incurred in the process of caring
for its policyholders. It usually involves the HMO or insurance company
purchasing insurance from another company to protect itself.
Subcapitation—A portion of
the overall capitated payment-per member per month, for all physician
services—paid to a medical specialist for the expected amount
of specialty care; also based on past history.
Utilization Management—Evaluation
of the necessity, appropriateness, and efficiency of the use of medical
services and facilities.
Contact membership@acc.org;
800-253-4636, ext. 5603; 202-375-6000, ext. 5603
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