Costs related to utilization review, insurance marketing, medical underwriting, agents' commissions, premium collection, claims processing, insurer profit, quality assurance programs, and risk management.
Administrative Services Organization (ASO)
A contract between an insurance company and a self-funded plan where the insurance company performs administrative services only and the self-funded entity assumes all risk.
A method of assuring that only those patients who need hospital care are admitted. Certification can be granted before admission (preadmission) or shortly after (concurrent). Length-of-stay for the patient's diagnosed problem is usually assigned upon admission under a certification program.
Admissions Per 1,000
An indicator calculated by taking the total number of inpatient and/or outpatient admissions from a specific group, e.g., employer group, HMO population at risk, for a specific period of time (usually one year), dividing it by the average number of covered members in that group during the same period, and multiplying the result by 1,000. This indicator can be calculated for behavioral health or any disease in the aggregate and by modality of treatment, e.g., inpatient, residential, and partial hospitalization, etc.
(a) Occurs when premium doesn't cover cost. Some populations, perhaps due to age or health status, have a great potential for high utilization.
(b) Some population parameter such as age (e.g., a much greater number of 65-year-olds or older to young population) that increases the potential for higher utilization and often increases costs above those covered by a payers capitation rate.
Maximum dollar amount assigned for a procedure based on various pricing mechanisms. Also known as a maximum allowable.
Health services provided without the patient being admitted. The services of ambulatory care centers, hospital outpatient departments, physicians' offices and home health care services fall under this heading.
Professional charges for x-ray, laboratory tests, and other similar patient services.
The beginning of an employer group's benefit year. The first day of effective coverage as contained in the policy Group Application and subsequent annual anniversaries of that date. An insured has the option to transfer from an indemnity plan (which may have maximum benefit levels) to an HMO.
A payer strategy in which a payer separates ("carves-out") a portion of the benefit and hires an MCO to provide these benefits. This permits the payer to create a health benefits package, get to market quicker with such a package, and greater control of their costs. Many HMOs and insurance companies adopt this strategy because they do not have in-house expertise related to the service "carved out."
The process by which all health-related matters of a case are managed by a physician or nurse or designated health professional. Physician case managers coordinate designated components of health care, such as appropriate referral to consultants, specialists, hospitals, ancillary providers and services. Case management is intended to ensure continuity of services and accessibility to overcome rigidity, fragmented services, and the misutilization of facilities and resources. It also attempts to match the appropriate intensity of services with the patient's needs over time.
The types of inpatients a hospital or post acute facility treats. The more complex the patients' needs, the greater the amount spent for patient care.
A measure of the relative costliness of treating in an inpatient setting. An index of 1.05 means that the facility's patients are 5 % more costly than average.
Flat fee paid for a client's treatment based on their diagnosis and/or presenting problem. For this fee the provider covers all of the services the client requires for a specific period of time. Also bundled rate, or Flat Fee-Per-Case. Very often used as an intervening step prior to capitation. In this model, the provider is accepting some significant risk, but does have considerable flexibility in how it meets the client's needs. Keys to success in this mode: (1) properly pricing case rate, if provider has control over it, and (2) securing a large volume of eligible clients.
Computer-based Patient Record (CPR)
A term for the process of replacing the traditional paper-based chart through automated electronic means; generally includes the collection of patient-specific information from various supplemental treatment systems, i.e., a day program and a personal care provider; its display in graphical format; and its storage for individual and aggregate purposes. Also called Electronic Medical Record, On-Line Medical Record, Paperless Patient Chart.
Review of a procedure or hospital admission done by a health care professional (usually a nurse) other than the one providing the care.
Consumer Health Alliance
Regional cooperatives between government and the public that will oversee the new payment system. Once all health insurance purchasing cooperatives (HIPPC's), the alliance would make sure health plans within a region conformed to federal coverage and quality standards, and oversee costs within any mandated budget.
Continued Stay Review
A review conducted by an internal or external auditor to determine if the current place of service is still the most appropriate to provide the level of care required by the client.
A legal agreement between a payer and a subscribing group or individual which specifies rates, performance covenants, the relationship among the parties, schedule of benefits and other pertinent conditions. The contract usually is limited to a 12-month period and is subject to renewal thereafter. Contracts are not required by statute or regulation, and less formal agreements may be made.
A period of twelve (12) consecutive months, commencing with each Anniversary Date. May or may not coincide with a calendar year.
Any hospital, skilled nursing facility, extended care facility, individual, organization, or agency licensed that has a contractual arrangement with an insurer for the provision of services under an insurance contract.
A type of product or service now being offered by many large pharmaceutical companies to get them into broader healthcare services. Bundles use of prescription drugs with physician and allied professionals, linked to large databases created by the pharmaceutical companies, to treat people with specific diseases. The claim is that this type of service provides higher quality of care at more reasonable price than alternative, presumably more fragmented, care. The development of such products by hugely-capitalized companies should be all the indicator necessary to convince a provider of how the healthcare market is changing. Competition is coming from every direction--other providers of all types, payers, employers (who are developing their own in-house service systems), the drug companies.
Dual Choice (Multiple Choice, Dual Option)
The opportunity for an individual within an employed group to choose from two or more types of health care coverage such as an HMO and a traditional insurance plan. Section 1310 of the HMO Act provides for dual choice.
Durable Medical Equipment (DME)
Items of medical equipment owned or rented which are placed in the home of an insured to facilitate treatment and/or rehabilitation. DME generally consist of items which can withstand repeated use. DME is primarily and customarily used to serve a medical purpose and is usually not useful to a person in the absence of illness or injury.
Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)
EPSDT program covers screening and diagnostic services to determine physical or mental defects in recipients under age 21, as well as health care and other measures to correct or ameliorate any defects and chronic conditions discovered.
The date on which a policy's coverage of a risk goes into effect.
Sudden unexpected onset of illness or injury which requires the immediate care and attention of a qualified physician, and which, if not treated immediately, would jeopardize or impair the health of the Member, as determined by the payer's Medical Staff. Significant in that Emergency may be the only acceptable reason for admission without pre-certification.
Employee Retirement Income Security Act of 1974 (ERISA)
Also called the Pension Reform Act, this act regulates the majority of private pension and welfare group benefit plans in the U.S.. It sets forth requirements governing, among many areas, participation, crediting of service, vesting, communication and disclosure, funding, and fiduciary conduct. Key legislative battleground now, because ERISA exempts most large self-funded plans from State regulation and, hence, from any reform activities undertaken at state level--which is now the arena for much healthcare reform.
Physicians and caregivers discussing their charges with patients prior to treatment.
(a) A method of reimbursement based on payment for services rendered. Payment may be made by an insurance company, the patient or a government program such as Medicare or Medicaid.
(b) With respect to the physicians or other supplier of service, this refers to payment in specific amounts for specific services rendered--as opposed to retainer, salary, or other contract arrangements. In relation to the patient, it refers to payment in specific amounts for specific services received, in contrast to the advance payment of an insurance premium or membership fee for coverage, through which the services or payment to the supplier are provided.
A listing of accepted fees or established allowances for specified medical procedures. As used in medical care plans, it usually represents the maximum amounts the program will pay for the specified procedures.
Any insurance policy or health services contract by which groups of employees (and often their dependents) are covered under a single policy or contract, issued by their employer or other group entity.
Group Model HMO
(a) An HMO model in which the HMO contracts with one or more medical groups to provide services to members. As with the staff model, all services except hospital care are generally provided under one roof. Both group and staff models are known collectively as prepaid group practice plans.
(b) (Also direct service plan, group practice prepayment plan; prepaid health care): A plan which provides health services to persons covered by a prepayment program through a group of physicians usually working in a group clinic or center.
A group of persons licensed to practice medicine in the State, who, as their principal professional activity, and as a group responsibility, engage or undertake to engage in the coordinated practice of their profession primarily in one or more group practice facilities, and who (in their connection) share common overhead expenses (if and to the extent such expenses are paid by members of the group), medical and other records, and substantial portions of the equipment and the professional, technical, and administrative staffs.
Group Practice without Walls
Similar to an independent practice association, this type of physician group represents a legal and formal entity where certain services are provided to each physician by the entity, and the physician continues to practice in his/her own facility. It can include marketing, billing and collection, staffing, management, and the like.
The Health Care Finance Administration's standard form for submitting physician service claims to third party (insurance) companies.
Health Maintenance Organization (HMO)
HMOs offer prepaid, comprehensive health coverage for both hospital and physician services. An HMO contracts with health care providers, e.g., physicians, hospitals, and other health professionals, and members are required to use participating providers for all health services. Members are enrolled for a specified period of time. Model types include staff, group practice, network and IPA (for additional information, see staff, group, network and IPA model definitions)
A type of insurance plan for individuals and their dependents who are not eligible for coverage through an employer group (group coverage).
Individual Practice Association (IPA)
An HMO model in which the HMO contracts with a physician organization that in turn contracts with individual physicians. The IPA physicians provide care to HMO members from their private offices and continue to see their fee-for-service patients.
Care given a registered bed patient in a hospital, nursing home or other medical or post acute institution.
Generally, that branch of medicine that is concerned with diseases that do not require surgery, specifically, the study and treatment of internal organs and body systems; it encompasses many subspecialties; internists, the doctors who practice internal medicine, often serve as family physicians to supervise general medical care.
International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM)
A coding scheme used to document the incidence of disease, injury, mortality and illness.
Major Medical Expense Insurance
Policies designed to help offset the heavy medical expenses resulting from catastrophic or prolonged illness or injury. They generally provide benefits payments for 75 to 80 percent of most types of medical expenses above a deductible paid by the insured.
Insurance against the risk of suffering financial damage due to professional misconduct or lack of ordinary skill. Malpractice requires that the patient prove some injury and that the injury was the result of negligence on the part of the professional.
A general term for organizing doctors, hospitals, and other providers into groups in order to enhance the quality and cost-effectiveness of health care. Managed Care Organizations include HMOs, PPOs, POSs, EPOs, etc.
One of the following:
- Medical Staff Organization An organized group of physicians, usually from one hospital, into an entity able to contract with others for the provision of services, or
- Management (or Medical) Services Organization An entity formed by, for example, a hospital, a group of physicians or an independent entity, to provide business-related services such as marketing and data collection to a grouping of providers like an IPA, PHO or CWW. This second definition is becoming the almost exclusive usage.
Multiple Employer Trust (MET)
A legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self-funded basis. Not quite a Health Plan Purchasing Cooperative, but along the same lines. More market-oriented and usually smaller in scale.
A group of doctors who represent various medical specialties and who work together in a group practice.
National Committee for Quality Assurance (NCQA)
A non-profit organization created to improve patient care quality and health plan performance in partnership with managed care plans, purchasers, consumers, and the public sector.
Network Model HMO
A health plan that contracts with multiple physician groups to deliver health care to members. Generally limited to large single or multi-specialty groups. Distinguished from group model plans that contract with a single medical group, IPA's that contract through an intermediary, and direct contract model plans that contract with individual physicians in the community.
Neonatal Intensive Care Unit (Neo ICU)
A hospital unit with special equipment for the care of premature and seriously ill newborn infants.
The American Medical Association defines practice parameters as strategies for patient management, developed to assist physicians in clinical decision making. Practice parameters may also be referred to as practice options, practice guidelines, practice policies, or practice standards.
The practice of reviewing claims for inpatient admission prior to the patient entering the hospital in order to assure that the admission is medically necessary.
A method of monitoring and controlling utilization by evaluating the need for medical service prior to it being performed.
The process of notification and approval of elective inpatient admission and identified outpatient services before the service is rendered.
An administrative procedure whereby a health provider submits a treatment plan to a third party before treatment is initiated. The third party usually reviews the treatment plan, monitoring one or more of the following: patient's eligibility, covered service, amounts payable, application of appropriate deductibles, copayment factors and maximums. Under some programs, for instance, predetermination by the third party is required when covered charges are expected to exceed a certain amount. Similar processes: pre-authorization, pre-certification, pre-estimate of cost, pretreatment estimate, prior authorization.
(a) A physical condition of an insured person which existed prior to the issuance of his policy or his enrollment in a Plan, and which may result in the limitation in the contract on coverage or benefits.
(b) A physical condition including an injury or disease that was contracted or occurred prior to enrollment in the HMO. Federally-qualified HMOs cannot limit coverage for pre-existing conditions.
Preferred provider organization (PPO)
Some combination of hospitals and physicians that agrees to render particular services to a group of people, perhaps under contract with a private insurer. The services may be furnished at discounted rates and the insured population may incur out-of-pocket expenses for covered services received outside the PPO if the outside charge exceeds the PPO payment rate.
(a) A contract by which an insurer procures a third party to insure it against loss or liability by reason of such original insurance.
(b) The practice of an HMO or insurance company of purchasing insurance from another company to protect itself against part or all the losses incurred in the process of honoring the claims of policy-holders. Also referred to as "stop loss" or "risk control" insurance.
(a) A fiscal method of withholding a certain percentage of premium to provide a fund for committed but undelivered health care and such uncertainties as: longer hospital utilization levels than expected, overutilization of referrals, accidental catastrophes and the like.
(b) The fiscal method of providing a fund for committed but undelivered health services or other financial liabilities. A percentage of the premiums supports this fund.
Resource-Based Relative Value Scale (RBRVS)
A Medicare weighting system to assign units of value to each CPT code (procedure) performed by physicians and other providers. The number of units or value for each procedure includes a portion for physician skill, expenses associated with the procedure, and geographic area.
Retrospective Review Process
A review that is conducted after services are provided to a patient. The review focuses on determining the appropriateness, necessity, quality, and reasonableness of health care services provided. Becoming seen as least desirable method; supplanted by concurrent reviews.
The chance or possibility of loss. For example, physicians may be held at risk if hospitalization rates exceed agreed upon thresholds. The sharing of risk is often employed as a utilization control mechanism within the HMO setting. Risk is also defined in insurance terms as the possibility of loss associated with a given population.
Preventive medicine associated with lifestyle and preventive care that can reduce health-care utilization and costs.
A state-mandated program providing insurance coverage for work-related injuries and disabilities.
The amount withheld from a PCP's capitation payment or a specialists payment amount to cover excess expenditures of his or a groups referral or other pool
(a) Payment by a financial agent such as an HMO, insurance company or government rather than direct payment by the patient for medical care services.
(b) The payment for health care when the beneficiary is not making payment, in whole or in part, in his own behalf.
Otherwise known as a "global" budget, a cap on overall health spending.
Movement of a patient between hospitals or between units in a given hospital. n Medicare, a full DRG rate is paid only for transferred patients that are defined as discharged.
The length of time an individual must wait to become eligible for benefits for a specific condition after overall coverage has begun.
Third Party Administrator (TPA)
Organizations with expertise and capability to administer all or a portion of the claims process