Health Care Reform Glossary
There has been a lot of debate regarding the need for a change in our healthcare system…changes in delivery, changes in charges and changes in enrollment. As the battle over the best model rages on, we are left with a dizzying array of terms, abbreviations and concepts. Here is a quick glossary of some common terms, concepts and abbreviations that might come in handy over the next few years:
Accountable Care Organization (ACO): An organization of health care providers that agrees to be accountable for the quality, cost and overall care of patients/beneficiaries who are enrolled/assigned to the group. Assignment to an ACO is generally determined by the ACO providing the bulk of primary care services to the individual. With the new Medicare ACO’s the assignment is invisible to the patient and they may not know that they have been assigned to an ACO.
Alternative Delivery Model: Refers to alternatives to fee-for-service systems for delivering healthcare. Examples include health maintenance organizations(HMOs), independent practice associations (IPAs) and preferred provider organizations (PPOs).
Average Adjusted Per Capita Cost (AAPCC): The formula used for determining Medicare reimbursement for managed care. The formula is 95 percent of Medicare PartA and B costs per person by county.
Bundled Billing: The practice of charging an all-inclusive package price for allmedical services associated with selected procedures.
CHIN: Community Health Information Network; also known as a Community Health Management Information System (CHMIS). An electronic information system that transmits healthcare data among hospitals, physicians, employers and third-party payers within a community. The system also contains a data repository for purchasing and quality reports.
Capitation: A method of paying for health services on a per-person basis as opposed to fee-for-services basis. For example, HMOs reimburse doctors a fixed fee per person or family for comprehensive coverage instead of by an individual procedure (fee-for-service)
Carve Out: Services not included in a health plan, but available from another supplier or agent at a different, usually higher, fee.
Catchment Area: Geographic area defined and served by a hospital and delineated on the basis of such factors as population distribution, natural geographic boundaries or transportation accessibility.
Co-Insurance: Requirement of an insurance policy or prepayment plan that the beneficiary pay a predetermined portion or percentage of the provider’s charges.
Co-Payment: Requirement of an insurance policy that the beneficiary (patient) pay an up front portion of the providers charges, at the point of service.
Cost Sharing: Having consumers pay a portion of the cost of their healthcare bills or insurance premiums.
Cost Shifting: Increasing the charges to one group of hospital patients to cover or subsidize losses on other groups of patients.
Deductible: Amount of loss or expense that the insured must incur before the insurance company will assume any liability for all or part of the remaining cost of covered services.
Exclusive Provider Organization (EPO): A healthcare plan in which subscribers are eligible to receive benefits when they use the services of a limited network of providers.
Fiscal Intermediary (FI): Blue Cross Plan, private insurance company, or other public or private agency selected by healthcare providers to pay claims under Medicare.
Global Payments: Fixed dollar payments for care that patients may receive in a given time period, such as a month or a year. Global payments place healthcare providers at financial risk for both the occurrence of medical conditions as well as the management of those conditions. The intention is to contain costs and reduce the use of “unnecessary services” and encourage coordination of medical services.
Health Maintenance Organization (HMO): A prepaid health plan that acts as both an insurer and a provider of comprehensive health services. HMO subscribers pay a capitated fee and are limited to the hospitals and physicians affiliated with the HMO.
Individual Practice Association Model (IPA): In an IPA, independent doctors and/or small group practices contract with an HMO to provide services to an enrolledpopulation. The physicians may own the HMO and are usually reimbursed on a fee-for-service basis, with a percentage withheld. This “pool” of funds held by the IPAs administration can be redistributed to the doctors in a profitable year.
Medical Savings Account (MSA): An insurance concept designed to give individuals greater control in the use of their healthcare dollars. MSAs combine a high deductiblemajor medical insurance policy (which usually costs less than a low-deductible policy) with an employer-funded healthcare savings account. Employers can draw from the account to cover their first dollar healthcare expenses. The funds used to create the account come from the savings realized by purchasing the high-deductible insurance plan.
Physician Hospital Organization (PHO): A legal entity formed by a hospital and a group of physicians, usually for the purpose of obtaining managed care contracts directly with employers. The PHO serves as a collective negotiatingand contracting unit.
Portability: The state of being able to continue health insurance coverage when changing job or residence, without a waiting period or having to meet additional deductible requirements.
Preferred Provider Organization (PPO): PPOs are organizational entities that have a contractual arrangement between healthcare providers (including institutions and professionals) and employers, insurance carriers or third-party payers to provide healthcare services to a defined population.
Prospective Payment: A method of payment for healthcare services in which the amount of payment for services is set prior to the delivery of those services and the hospital (or other provider) is at least partially at risk for losses or stands to gain from surpluses thataccrue in the payment period. Prospective payment rates may be per service, per capita, per diem or per case rates.
Provider Sponsored Organization (PSO): Healthcare systems owned and operated by providers that integrate a wide spectrum of services and contract with various entitieson a managed care basis. Also known as a Provider Sponsored Network (PSN).
There are hundreds of other terms and abbreviations that will be used over the next few years as Health Care Reform continues, but the above is a list to get you started on a better understanding.