Glossary of Managed Care Definitions. Full Moon, LLC

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1 Glossary of Managed Care Definitions Full Moon, LLC Full Moon, LLC is a privately held, electronic educational information company that provides both employers and their employees the ability to make critical quality, cost effective medical decisions regarding their health care through transparency. Full Moon offers the health care consumer the unique ability to evaluate, challenge and compare thousands of health care providers of service throughout the United States such as hospitals, physicians, allied health professionals, dialysis centers, nursing homes and home health agencies. The Full Moon informational system offers an extensive array of both quality and price information on both a health care provider or medical procedure specific basis. The result allows the consumer the ability to gain consumer informational leverage to make sound, value based, cost effective health care decisions. In addition, Full Moon provides answers to most health care questions combined with the ability for the user to access hundreds of full-length common surgery videos from surgery start to finish along with the Glossary of Managed Care Definitions shown immediately below. Access The patient's ability to obtain medical care. The ease of access is determined by such components as the availability of medical services and their acceptability to the patient, the location of health care facilities, transportation, hours of operation and cost of care. Accountable Care Act aka The Patient Protection and Affordable Care Act (Obama Care) On March 23, 2010, President Barack Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act. This law alters how consumer s access health insurance coverage by creating exchanges to facilitate enrollment in health plans, changing insurance market rules, reforming Medicare and Medicaid and imposing taxes on various health care stakeholders. The law includes a large number of health-related provisions to take effect over a four year period including expanding Medicaid eligibility, subsidizing insurance premiums, providing incentives for businesses to provide health care benefits, prohibiting denial of coverage and claims based on pre-existing conditions, establishing health insurance exchanges and support medical research. Accountable Health Plan (AHP) A joint venture between practitioners and institutions (insurance companies, HMO's, or hospitals) that would assume responsibility for delivering medical care. Physicians and other providers would either work for or contract with these health plans. In the 1994 debate on healthcare reform, the proposed system of managed competition provided for an Accountable Health Plan that would have combined delivery and financing, and assumed accountability for patient care.

2 Accreditation A systematic review of a managed care plan by one of three private, nonprofit agencies (the National Committee for Quality Assurance, the Joint Commission on the Accreditation of Health Care Organizations, and the American Accreditation HealthCare Commission/Utilization Review Accreditation Commission). The review assesses how the plan compares to standards developed by each organization in specific areas, such as credentialing of health care providers, quality assurance programs, consumer satisfaction, etc. Plans that meet standards receive a stamp of approval called accreditation. Maintaining accreditation requires undergoing review on a periodic basis. Actual Charge The price levied by a health care provider (for example, a hospital, physician or other health care facility or health care professional) on a consumer or a managed care plan, for a specific medical product or service. Actuarial The statistical calculations used to determine the managed care company's rates and premiums charged their customers based on projections of utilization and cost for a defined population. Acute Care The short-term treatment for an illness that is limited in its duration and resolves before becoming chronic (long-term) and requiring on-going management. Examples of acute care include a physician office visit to suture a wound, treat a common cold or hospitalization for a heart attack. The goal of acute care is to cure the illness or prevent worsening. Adjusted Average Per Capita Cost (AAPCC) HCFA's best estimate of the amount of money care costs for Medicare recipients under fee-for-service Medicare in a given area. The AAPCC is made up of 122 different rate cells; 120 of them are factored for age, sex, Medicaid eligibility, institutional status, and whether a person has both part A and part B of Medicare. Adjudication Processing claims according to contract. Administrative Costs 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 Only (ASO) ASO is usually associated with self-funded groups which establish a contract between an insurance company, HMO or third-party administrator and the self-funded plan which provides claim-processing administration services but the employer pays the claim costs. Administrative services usually include billing, enrollment, coordination of benefits, payment check processing, subrogation, fraud investigation, and network rental. 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.

3 Admission Certification 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. Adverse Selection A situation in which a managed care plan's population of consumers is older or sicker than expected and, consequently, more likely to incur higher expenses for the plan. Allowed Amount Maximum dollar amount assigned for a procedure based on various pricing mechanisms. Also known as a maximum allowable. Allowable Charge The amount that a managed care plan determines is the appropriate amount to pay health care provider for a specific product or service. The allowable charge is frequently lower than a health care provider's actual charge. Ambulatory Care 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. American Accreditation HealthCare Commission/ Utilization Review Assessment Commission (URAC) URAC is a private, nonprofit agency located in Washington, D.C., that reviews managed care plans against dedicated performance standards. Plans that compare favorably to the standards are accredited (approved) for a specific period of time and are re-examined periodically to maintain their accreditation. Ancillary Services Professional charges for x-ray, laboratory tests, and other similar patient services. Anniversary Date 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. Any Willing Provider Laws that require managed care plans, such as health maintenance organizations, to contract with all physicians or hospitals in the area served by the plan that wish to serve the plan's members. Appeal The review of an adverse coverage decision by a managed care plan. Appeals are typically initiated by consumers or their physicians when they and the plan disagree with a plan's decision to deny or limit care.

4 Assignment The process by which a health care provider, such as a physician, agrees to accept payment for a product or service directly from the managed care plan. Assignment typically also limits the amount the health care provider can collect from the consumer, in addition to the allowable charge, as determined by the managed care plan. (See balance billing below.) Audit of Provider Treatment or Charges A qualitative or quantitative review of services rendered or proposed by a health provider. The review can be carried out in a number of ways: a comparison of patient records and claim form information, a patient questionnaire, a review of hospital and practitioner records, or a pre- or post-treatment clinical examination of a patient. Some audits may involve fee verification. Something we had better get used to being subjected to since this is usually first type or "first generation" managed care approach. Authorization The approval by a managed care plan for a consumer to receive a health care product or service, such as a specific medical treatment, surgical procedure, or diagnostic test. Average Sales Price (ASP) Commonly used in pharmacy contracting, the ASP is generally determined through reference to a common source of information. Average Wholesale Price (AWP) Commonly used in pharmacy contracting, the AWP is generally determined through reference to a common source of information. Balance Billing The practice of billing a patient for the fee amount remaining after insurer payment and co-payment have been made. Most managed care provider contracts will not allow balance billing for covered health care services. Behavioral Health Care Products and services intended to diagnose and treat mental and emotional illnesses, such as depression or substance abuse. Beneficiary (also Eligible; Enrollee; Member) A consumer, or his or her dependent, who enrolls with a managed care plan, and is entitled to receive coverage and payment for health care products and services covered by the contract with the plan. Benefit Limitations Limits placed on how much the managed care plan will pay for specific health care products or services, or the quantity of services a consumer may receive (such as the number of visits to specialty physicians). Benefits Package The set of health care products and services covered by the contract between a managed care plan and the purchaser of care (typically an employer or individual consumer). The benefits package can include items such as hospital and physician care, prescription drugs, diagnostic testing, and other services.

5 Benefit Payment Schedule List of amounts an insurance plan will pay for covered health care services. Benefits Benefits are specific areas of medical coverage's, i.e., outpatient visits, hospitalization, etc. that make up the range of medical services that a payer markets to its subscribers or members. Also, a contractual agreement, specified in an Evidence of Coverage, reflecting covered services provided by insurers to members. Board Certified or Board Certification (Boarded, Diplomate) Describes the level of training and competency testing successfully completed by a physician. A board certified physician has completed medical school, post medical school training (known as residency), and passed an exam in one of the areas of specialization or sub-specialization recognized by the American Board of Medical Specialties. Board Eligible Describes a physician who is eligible to take the specialty board examination by virtue of being graduated from an approved medical school, completing a specific type and length of training, and practicing for a specified amount of time. Some HMOs and other health facilities accept board eligibility as equivalent to board certification, significant in that many managed care companies restrict referrals to physicians without certification.. Brand Name Drug A drug that carries a specific, trademarked name and is produced by one manufacturer. Cafeteria Plan The method by which employees can pick and choose from a variety of benefits on a tax-favored basis. For example, employees may be able to choose from life insurance, disability insurance, dental coverage, cancer supplements, or child care reimbursement, and have costs deducted from paychecks before taxes are calculated; this lowers the amount of taxed income and increases net compensation. Capitation A method a managed care plans use to pay physicians, hospitals or other health care provider types by which the providers receive a fixed, predetermined sum of money, typically on a monthly basis, from the plan to care for plan members whether services are provided or not. Capitation places providers at risk for financial profits or losses. Carrier An insurer; an underwriter of risk. Carve-Outs Product or services (such as prescription drug benefits or mental health care benefits) provided by a managed care company that specializes in the particular service.

6 Case Management 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 mis-utilization of facilities and resources. It also attempts to match the appropriate intensity of services with the patient's needs over time. Case Mix 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. Case-mix Index: 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. Case Rate A payment system in which the managed care plan pays health care providers an all-inclusive fee to provide care for a patient, based on the patient's diagnosis, or the medical treatments or surgical procedures provided to the patient. Center of Excellence (COE) A designation assigned by the managed care industry to provide hospitals or a network of hospitals selected to provide managed care plan for patients with a specific set of clinical services, such as transplants. Hospitals designated as Centers of Excellence may be chosen because they meet criteria developed by the plan, such as quality of care goals and competitively priced services. Certificate of Need (CON) A state agency must review and approve certain proposed capital expenditures, changes in health services provided, and purchases of expensive medical equipment. Before the request goes to the state, a local review panel (the health systems agency or HSA) must evaluate the proposal and make a recommendation. Chronic Care Long term care of individuals with long standing, persistent diseases or conditions. It includes care specific to the problem as well as other measures to encourage self-care, to promote health, and to prevent loss of function. Chronic illness Any ailment that requires ongoing treatment and management, beyond its acute phase, sometimes for a lifetime.

7 Claim Form Paperwork that patients and health care providers file with managed care plans in order to receive payment for services. Claim Review The method by which an enrollee's health care service claims are reviewed prior to reimbursement. The purpose is to validate the medical necessity of the provided services and to be sure the cost of the service is not excessive. Clinical Data Repository That component of a computer-based patient record (CPR) which accepts, files, and stores clinical data over time from a variety of supplemental treatment and intervention systems for such purposes as practice guidelines, outcomes management, and clinical research. May also be called a data warehouse. Clinical or Critical Pathways A medical "roadmap" that helps health care providers identify the most appropriate course of treatment for a specific patient, based on that patient's clinical situation. Clinical Trial A medical research study in which physicians assess the effect of a new test or treatment versus an existing test or treatment or none at all. Clinical trials typically have four parts or phases. Closed Panel A situation in which the physicians who work for a managed care plan see and treat only patients belonging to the plan. Co-Insurance The portion of health care costs not paid by the managed care plan, for which the consumer is responsible. Coinsurance usually is expressed as a fixed proportion of the managed care plan's allowable charge. A policy provision frequently found in comprehensive major medical insurance policies under which the insured individual and the insurer share hospital and medical expenses according to a specified ratio. Closed Panel Medical services are delivered in the HMO-owned health center or satellite clinic by physicians who belong to a specially formed, but legally separate, medical group that only serve the HMO. This term usually refers to a group or staff HMO models. Community Rating Under the HMO Act, community rating is defined as a system of fixing rates of payment for health services which may be determined on a per person or per family basis and may vary with the number of persons in a family, but must be equivalent for all individuals and for all families of similar composition. With community rating, premiums do not vary for different groups of subscribers or with such variables as the group's claims experience, age, sex or health status. Although there are certain exceptions, in general, federally qualified HMOs must community rate. The intent of community rating is to spread the cost of illness evenly over all subscribers rather than charging the sick more than the healthy for coverage.

8 Comorbid Condition A medical condition that, along with the principal diagnosis, exists at admission and is expected to increase hospital length of stay by at least one day for most patients. Complication A medical condition that arises during a course of treatment and is expected to increase the length of stay by at least one day for most patients. Comprehensive Major Medical Insurance A policy designed to provide the protection offered by both a basic and major medical health insurance policy. It is generally characterized by a deductible, a co-insurance feature, and high maximum benefit limits. 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. Concurrent Review Review of a procedure or hospital admission done by a health care professional (usually a nurse) other than the one providing the care. 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. Contract A legal agreement between a managed care plan and either an employer or a consumer that describes the monthly premiums due to the plan, the health care services covered by the plan, and how much the plan is obligated to pay for each service. Contracts are usually renegotiated annually. Managed care companies may also sign contracts with health care providers to care for plan members for negotiated fees. Contract Year The twelve (12) month period (not necessarily a calendar year) covered by the agreement between the plan and the employer, consumer, or provider. Contracted Provider A hospital, physician, network of hospitals and physicians, or other health care providers who enter into a legal agreement with a managed care plan to care for the plan's members for negotiated prices.

9 Conversion Privilege In group health insurance, the opportunity given the insured and any covered dependents to change his or her group insurance to some form of individual insurance, without medical evaluation upon termination of his group insurance. Conversion Factor (CF) The dollar amount used to multiply the Relative Value Schedule (RVS), normally expressed in numeric units of a procedure to arrive at the maximum allowable for that procedure. Conversion Privilege The right of an individual insured under a group policy to certain kinds of individual coverage, without a medical examination, upon termination of his association with the group. Coordination of Benefits (COB) The provision regulating payments when a person is covered by more than one healthcare policy. For example, if an employee is covered under a group plan and also under a spouse s plan, the companies will coordinate payment of benefits so that each company pays the correct portion of the charges and doesn t reimburse the claimant for more than the cost of the medical care. Co-payment A cost-sharing arrangement in which a covered person pays a specific charge for a specified service. For example, a Schedule of Benefits may have a $10 office co-payment for physician office visits, so the employee or dependent pays $10 at each doctor s appointment. This amount is paid at the time services are rendered. Cost Outlier In Medicare, a patient who is more costly to treat compared with other patients in a particular diagnosis related group. Cost Sharing A broad term representing the ways in which a covered member shares in the cost of healthcare services with the health plan. Examples of this include deductibles, co-payments, and coinsurance. Cost Shifting Charging one group of patients more in order to make up for underpayment by others. Most commonly, charging some privately insured patients more in order to make up for underpayment by Medicaid or Medicare. Cost-based Reimbursement A payment system in which managed care plans pay health care providers based on the actual cost of a test or treatment provided to a plan member.

10 Covered Benefit A medically necessary service that is specifically provided for under the provisions of an Evidence of Coverage. A covered benefit must always be medically necessary, but not every medically necessary service is a covered benefit. For example, some elements of custodial or maintenance care, which are excluded from coverage, may be medically necessary, but are not covered. Coverage A decision making process that identifies what services or products are benefits under the employer's or consumer's contract with the plan. Covered products or services are eligible to be paid for by the plan. Covered Expenses The costs of health care products or services that are eligible for payment by the managed care plan. Credentialing A system used by managed care plans to assess the qualifications of physicians or other health care providers who may be offered contracts with the plan. Current Procedural Terminology (CPT) A standardized mechanism of reporting services using numeric codes as established and updated annually by the AMA. Customer Service A resource available to the managed care plan member to answer member's questions, help resolve disputes or complaints, and explain plan operations. Day Outlier A patient with an atypically long length of stay compared with other patients in a particular diagnosis related group. Deductibles A form of cost sharing in a managed care plan, in which a consumer pays a fixed dollar amount of covered expenses each year, before the plan begins paying its share of costs. Denial of Care The refusal by a managed care plan to cover a specific test or treatment. Dependent An individual, other than the employee, who s eligible to receive coverage under the employee s healthcare plan. This is usually limited to spouses and children but can include grandchildren and foster children in some circumstances. The individual must usually rely on the employee for financial support. Diagnosis Related Groups (DRGs) A patient classification scheme used by Medicare that clusters patients into hundreds of categories on the basis of patients' illnesses, diseases and medical problems.

11 Disallowance This occurs when an insurance company or health plan denies payment for certain benefits. For example, if a claim is submitted for non-covered services, it may be disallowed (denied) because of the nature of the procedure such as lack of medical necessity or cosmetic in nature. Direct Contracting Providing health services to members of a health plan by a group of providers contracting directly with an employer, thereby butting out the middleman or third party insurance carrier. Discounted Fee-For-Service A payment system in which a managed care plan pays a health care provider a negotiated fee for each specific health care service, after the service is rendered to a plan member. The payment is usually a proportion of the provider's actual charge for a product or service. Disease Management An organized, integrated program of health care and patient education aimed at providers or patients with a specific diagnosis, such as cancer or diabetes. The goals of disease management are to improve care, lower costs, and measure patient outcomes or satisfaction with care. Drug Formulary An exclusive list of drugs covered by a managed care plan that are approved by a health plan through participating pharmacies. Drug Utilization Review: systematic oversight of prescription medicines used by managed care plans to assess costs, prescription patterns, and the appropriateness of drug therapy. Dual Choice (Multiple Choice, Dual Option) The opportunity for an individual within an employer group to choose from two or more types of health care coverage such as an HMO, a PPO and a traditional fee-for-service insurance plan. Duplication of Benefits This occurs when a person is covered by two or more health plans with similar coverage. For example, a person could be covered as an employee under a group plan and as a dependent under a spouse s health insurance policy. 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 that 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.

12 Effective Date The date on which a policy's coverage of a risk goes into effect. Emergency 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. Emergency Care Urgently needed medical tests and treatment provided to patients with severe or life-threatening symptoms. Employee Retirement Income Security Act (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. Enrollee (also Subscriber; Beneficiary; Individual; Member;) Any person eligible as either a subscriber or a dependent for service in accordance with a contract. Enrolled Group Persons with the same employer or with membership in an organization in common, who are enrolled collectively in a health plan. Often, there are stipulations regarding the minimum size of the group and the minimum percentage of the group that must enroll before the coverage is available. Same as Contract group. ERISA (Employee Retirement Income Security Act) A federal law that regulates the pension, health and welfare benefits offered by employers to their employees. Under ERISA, some employer group health plans are exempt from state laws and regulation that govern insurance. Evidence of coverage: a detailed description of the medical benefits available to a member of a managed care plan, most often provided to members after they enroll in the plan. Evidence or Explanation of Coverage (EOC) or Explanation of Benefits (EOB) A booklet provided by the carrier to the insured summarizing benefits under an insurance plan. Exclusions Specific illnesses, injuries or methods of treatment that aren t covered under an employee benefit plan. An example of this would be a pre-existing condition or a procedure, such as cosmetic surgery, that s not medically necessary.

13 Exclusive Provider Organization (EPO) A managed care organization that is organized similarly to PPOs in that physicians do not receive capitated payments, but that only allows patients to choose medical care from network providers. If a patient elects to seek care outside of the network, then he or she will not be reimbursed for the cost of the treatment. Experience Rating A method of determining the premium based on a group's claims experience, age, sex or health status. Experience rating is not allowed for federally qualified HMOs due to the requirement for Community Rating. Experience-Rated Premium A premium with is based upon the anticipated claims experience of, or utilization of service by, a contract group according to its age, sex, constitution, and any other attributes expected to affect its health service utilization, and which is subject to periodic adjustment in line with actual claims or utilization experience. Explanation of Benefits (EOB) A statement sent to covered individuals by a health plan explaining the services provided, the amount billed and the level of payment by the health plan. Extended Care Facility (ECF) A nursing or convalescent home offering skilled nursing care and rehabilitation services. Federally Qualified HMO A prepaid health plan that has met strict federal standards and has been granted qualification status. Fee-for-Service (FFS) A method of reimbursement based on payment for services rendered. An insurance company, the patient, or a government program, such as Medicare or Medicaid, may make payment arrangements. In relation to the patient, it refers to payment in specific amounts for specific services received. Fee Schedule 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. First Dollar Coverage Managed care plan benefits that do not require plan members to meet any out-of-pocket expenses before plan coverage and payment begin. Fiscal Intermediary The agent that has contracted with providers of service to process claims for reimbursement under health care coverage, normally governmental plans such as Medicare or Medicaid. In addition to handling financial matters, it may perform other functions such as providing consultative services or serving as a center for communication with providers and making audits of providers' needs.

14 Fixed Costs Costs that do not change with fluctuations in census or in utilization of services. Formulary A list of selected pharmaceuticals and their appropriate dosages felt to be the most useful and cost effective for patient care. Organizations often develop a formulary under the aegis of a pharmacy and therapeutics committee. In HMOs, physicians are often required to prescribe from the formulary. Gatekeeper A primary care physician responsible for overseeing and coordinating all aspects of a patient's medical care. In order for a patient to receive a specialty care referral or hospital admission, the gatekeeper must preauthorize the visit, unless there is an emergency. Gatekeeper Model This is a model for an HMO in which the primary care physician (PCP) serves as the patient s "gatekeeper," or initial contact for all health care. This is also referred to as "closed access" or a "closed panel." Many HMOs operate under the gatekeeper model, although many are now allowing patients to see some types of specialists without first going through their primary care physician. Generic Drug A prescription drug that is the chemical equivalent of a brand-name drug. Generic drugs typically less costly to consumers than equivalent brand-name drugs. Grievance A complaint brought to the administration of a managed care plan by a plan member. The complaint may pertain to quality of care issues, a plan coverage decision, or financial issues, such as a dispute between the plan and the member over how much the plan has paid for a particular health care product or service. Grievance Procedures The process by which an insured can air complaints and seek remedies. Group Insurance 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 to their employer or other group entity. Group Model HMO A type of managed care plan in which the plan has contracted with a multispecialty physician group to care for plan members. The physicians who treat plan members are employed by the physician group.

15 Group Practice 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. HCFA 1500 The Health Care Finance Administration's standard form for submitting physician service claims to third party (insurance) companies. Health Care Financing Administration (HCFA) Now called the Centers for Medicare and Medicaid Services (CMS), a federal agency that runs the Medicare and Medicaid programs. Health Care Spending Account A benefit option offered by some employers that lets employees set aside a specific sum of money each year to pay for certain medical expenses, such as premiums, copayments, deductibles, and co-insurance amounts, or services such as eyeglasses or dental care. Money not spent in any given calendar year generally cannot be returned to the employee. Health Education Programs or classes offered by some managed care plans to their members to help plan members enhance their understanding of specific issues, such as nutrition or contraception, or meet personal goals, such as smoking cessation, weight loss, or stress management. Health Insurance Purchasing Cooperative A mechanism in which individuals and small businesses join together to purchase medical benefits from managed care plans. By forming a larger group than they would constitute as individual entities, the employers try to get a lower price from managed care plans for a specific set of benefits. Health Plan Employer Data Information Set (HEDIS) A set of managed care plan performance measures collected, organized, and reported by the National Committee for Quality Assurance (NCQA, see below). 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) Health Plan Employer Data and Information Set (HEDIS) A set of performance measures designed to standardize the way health plans report data to employers. HEDIS currently measures five major areas of health plan performance: quality, access and patient satisfaction, membership and utilization, finance, and descriptive information on health plan management.

16 HHS The Department of Health and Human Services that is responsible for health-related programs and issues. Formerly HEW, the Department of Health, Education, and Welfare. The Office of Health Maintenance Organizations (OHMO) is part of HHS and detailed information on most companies is available here through the Freedom of Information Act. Hold Harmless Clause A clause frequently found in managed care contracts whereby the HMO and the physician hold each other not liable for malpractice or corporate malfeasance if either of the parties is found to be liable. Many insurance carriers exclude this type of liability from coverage. It may also refer to language that prohibits the provider from billing patients if their managed care company becomes insolvent. State and federal regulations may require this language. Home Health Care Full range of medical and other health related services such as physical therapy, nursing, counseling, and social services that are delivered in the home of a patient, by a provider. Hospital Any institution duly licensed, certified, and operated as a Hospital. In no event shall the term "Hospital" include a convalescent facility, nursing home, or any institution or part thereof which is used principally as a convalescence facility, rest facility, nursing facility, or facility for the aged. Hospital Days per 1,000 A measurement of the number of days of hospital care HMO members use in a year. It is calculated as follows: Total Number Of Days Spent In A Hospital By Members divided by Total Members. This information is available through HHS, OHMO and a variety of sources. Hospital Privileges Permission granted by a hospital to a physician to admit patients to the institution and manage their care while hospitalized. Incurred But Not Reported (IBNR) Refers to claims that reflect services already delivered, but, for whatever reason, have not yet been reimbursed. These are bills "in the pipeline." This is a crucial concept for proactive providers who are beginning to explore arrangements that put them in the role of adjudicating claims--as the result, perhaps, of operating in a sub-capitated system (see below). Failure to account for these potential claims could lead to some very bad decisions. Good administrative operations have fairly sophisticated mathematical models to estimate this amount at any given time. Indemnity An insurance program in which members are reimbursed for covered medical expenses. This term refers to insurance plans that include little or no managed care components and simply pay a portion of medical bills incurred by the member. Indemnity Carrier Usually an insurance company or insurance group that provides marketing, management, claims payment and review, and agrees to assume risk for its subscribers at some pre-determined rate.

17 Indemnity Insurance Plan A type of health insurance that pays for care after consumers receive it, usually on a fee-for-service basis, with little oversight to assess the cost or appropriateness of care. Individual Plans 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. Inpatient A person who has been admitted to a hospital as a patient and remains in the hospital for more than 23 hours under the direction of a physician. Inpatient Care Care given a registered bed patient in a hospital, nursing home or other medical or post acute institution. Integrated Delivery System A financial or contractual relationship between physicians and hospitals to offer a range of healthcare services through a separate legal entity. Models of these arrangements include physician-hospital organizations (PHOs), medical foundations, integrated provider organizations (IPOs), and management service organizations (MSOs). Maximum Out-of-Pocket Costs The maximum amount that a member would have to pay in either a calendar or contract year that includes deductibles, co-payments, and coinsurance payments. Internal Medicine 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, serve as primary care physicians to supervise general medical care. International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) A coding method 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.

18 Malpractice Insurance 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. Managed Care 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, POS, etc. Managed Competition A health insurance system that bands together employers, labor groups and others to create insurance purchasing groups; employers and other collective purchasers make a specified contribution toward insurance purchase for the individuals in their group; the employer's set contribution acts as an incentive for insurers and providers to compete. Market Area The targeted geographic area or areas of greatest market potential. The market area does not have to be the same as the post acute facility's catchment area. Medicaid A federal program that is administered and operated individually by states that provides healthcare benefits for low-income people under the age of 65. The federal government matches each state s contribution on a specific minimal level of coverage. Each state can choose or provide additional services or perhaps privatize the program. Medicaid HMO: a managed care plan approved by a state government to enroll persons eligible for Medicaid. Medical Director The chief physician in a managed care plan who is part of the plan's administration personnel and oversees plan coverage decisions and the performance of the physicians who work for the plan or sign contracts to serve plan members. Medical Group Practice The provision of health care services by a group of at least three licensed physicians engaged in a formally organized and legally recognized entity sharing equipment, facilities, common records and personnel involved in both patient care and business management. Medical Licensing Board A state regulatory agency that authorizes physicians to practice in a state and disciplines physicians who are found to have violated the state's laws or regulations that govern the practice of medicine.

19 Medical Loss Ratio The amount of money spent on medical care for plan members by a managed care plan. Methods of calculating medical loss ratios vary across plans. Medical Necessity The evaluation of medical services to determine if they re: 1) medically necessary and appropriate to meet basic health needs, 2) consistent with the diagnosis, 3) rendered in a cost-effective manner and 4) consistent with national medical practice guidelines. Medically Necessary Services or supplies that meet the following tests: they are appropriate and necessary for the symptoms, diagnosis, or treatment of the medical condition; they are provided for the diagnosis or direct care and treatment of the medical condition; they meet the standards of good medical practice within the medical community in the service area; they are not primarily for the convenience of the plan member or a plan provider; and they are the most appropriate level or supply of service that can safely be provided. Medical Loss Ratio (MLR) The amount of revenues from health insurance premiums that is spent to pay for the medical services covered by the plan as opposed to premiums. Medicaid A federal governmental program, run and partially funded by individual states to provide medical benefits to certain low-income people. Each state, under broad federal guidelines, determines what benefits are covered, who is eligible and how much providers will be paid. Medicare A nationwide, federal health insurance program for people age 65 and older. It also covers certain people under 65 who are disabled or have chronic kidney disease (ESRT). Medicare Part A is the hospital insurance program; Part B covers physicians' services. Part C covers prescription drug services. Medical Record The official documentation of the care provided to a patient by a health care provider. The medical record includes notes from physician visits, hospitalization records, test results, and consultations by specialists. Each health care provider who treats a patient usually creates and maintains a medical record on the patient. Medical Underwriting The process by which a managed care plan evaluates the level of risk posed by an individual consumer or group of consumers, based upon age, sex, health history, or other factors. The plan uses medical underwriting to determine what premium it will charge the consumers.

20 Medically Necessary Health care products or services covered by the managed care plan that are appropriate and indicated to assist in the diagnosis or treatment of disease. Medicare Beneficiary A person designated by the Social Security Administration to receive Medicare benefits. Medicare HMO A managed care plan that meets federal standards and is eligible to enroll persons who receive Medicare benefits. Medicare Supplement Policy: Insurance provided to supplement the reimbursements by Medicare for covered medical services. This guarantees that the deductible, coinsurance, and co-payments covered by Medicare will be paid up to a predetermined benefit level. Also called "Medigap" or "Medicare wrap policies. Medicare Secondary Payer A circumstance in which a Medicare beneficiary has both Medicare and private insurance. Medicare pays for the portion of covered health care services that are not paid by the beneficiary's private insurance. Medigap Private health insurance plans that supplement Medicare benefits by covering some costs not paid for by Medicare. Mental Health Care Medical services, such as counseling or therapy, hospitalization, and prescription drugs, used to diagnose and treat emotional and psychological illness, such as depression, bipolar disorder, or substance abuse. Midlevel Practitioner Nurse practitioners, certified nurse-midwives and physicians' assistants who have been trained to provide medical services that otherwise might be performed by a physician. Midlevel practitioners practice under the supervision of a doctor of medicine or osteopathy who takes responsibility for the care they provide. Physician extender is another term for these personnel. Miscellaneous Expenses Hospital charges, other than room and board, such as those for x-rays, drugs, laboratory fees, and other ancillary services. Monthly Premium The amount paid each month to a managed care plan by an employer, employees, or individual consumers to obtain coverage from the plan.

21 Morbidity Rates The frequency with which an illness occurs in a given population. Morbidity is usually expressed as the number of illnesses per 100,000 population Mortality Rates The frequency of death from a given cause in a population. Mortality is usually expressed at the number of deaths per 100,000 population. 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. Multi-specialty Group 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. The NCQA also gathers and reports managed care plan performance data through its Health Plan Employer Data Information Set (HEDIS) reports. Neonatal Intensive Care Unit (Neo ICU) A hospital unit with special equipment for the care of premature and seriously ill newborn infants. Network A generic term used to describe all organized groups of healthcare providers. Examples of networks include PPOs, HMOs, and IPAs. 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. Non-Plan Provider A health care provider without a contract with an insurer. Similar to a non-participating provider under Medicare. Non-participation Provider (non-par) A healthcare provider that does not have a contract with the health plan as a provider of care.