Glossary
A glossary of terms and their definitions has been provided to offer assistance in understanding the complex language and terminology within the managed care environment. A printable version of the glossary, may be downloaded and will require the use of Adobe Acrobat Reader. Please feel free to contact an employee within the department should you have any additional questions.
A
ADMINISTRATIVE SERVICES ONLY (ASO): Reference to a self-funded plan that contracts with an insurance company or HMO for administrative services such as claims processing, stop-loss coverage, etc. but is not insured by the company.
ALTERNATIVE DELIVERY SYSTEM (ADS): A method of providing health benefits that departs from traditional indemnity methods. An HMO, for example, can be said to be an alternate delivery system.
ARTICLE 43 PLAN: A plan covered by the portion of New York State Insurance Law governing various non-profit health insurers.
ARTICLE 44 PLAN: A plan covered by the portion of New York State Insurance Law governing HMOs.
ATTRITION RATE: Dis-enrollment expressed as a percentage of total membership. An HMO with 50,000 members experiencing a 2 percent monthly attrition rate would need to gain 1,000 new members per month in order to retain its 50,000-member base.
B
BASIC HEALTH SERVICES: Benefits that all federally qualified HMOs must offer, defined under Subpart A, 110.102 of the Federal HMO Regulations.
BENCHMARKING: This involves identifying best practices of high-quality institutions or programs that other institutions may emulate to achieve better care. May also refer to comparisons of care patterns between high-quality hospitals and those desiring to improve.
BENEFIT PACKAGE: A collection of specific services or benefits that the HMO or insurer is obligated to provide under terms of its contracts with subscriber groups or in/*HERE*/iduals.
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C
CAPITATION: The per capita payment for providing a specific menu of health services to a defined population over a set period of time. Fee-for-service/prepaid medical groups usually receive, in advance, a negotiated monthly payment from the HMO. This payment is the same regardless of the amount of service rendered by the group.
CASE MANAGEMENT: Coordination of patient care to insure care provided is appropriate and to reduce costs of providing service.
CATCHMENT AREA: The geographic area from which an HMO draws its patients.
CHILD HEALTH PLUS (CHP): A health insurance plan, subsidized by New York State under Title XXI of the Federal Social Security Act, for children up to the age of 19 who are not Medicaid eligible and have no other health insurance. There are no income limits and premiums are on a sliding fee scale based on family income. Most insurance plans offering CHP coverage also offer a Medicaid Managed Care product.
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 serves the HMO. This term usually refers to group and staff HMO models.
CONSOLIDATED OMNIBUS RECONCILIATION ACT (COBRA): It includes a provision requiring every hospital that participates in Medicare and has an Emergency Room to treat any patient in an emergency condition or active labor, whether or not covered by Medicare and regardless of their ability to pay.
COMMUNITY RATING: A method for establishing health insurance premiums whereby an insurer's premium is the same for everyone in a premium class within a specific geographic area. In New York State, all HMO products must be community rated.
CO-PAYMENT: A cost sharing arrangement in which a covered person pays a specified charge for a specified service, such as $10 for an office visit. The covered person is usually responsible for payment at the time the service is rendered. Co-payments may vary by type of service such as office visits, emergency room, pharmacy benefits and inpatient admissions.
D
DEDUCTIBLE: The amount the patient must pay directly to the provider before an insurance plan begins to pay benefits.
DIAGNOSIS RELATED GROUPS (DRGS): Classification system developed at Yale University using 383 major diagnostic categories based on the ICD-9 codes. This procedure assigns patients into case types. DRGS were originally designed to facilitate the utilization review process but they are also used to analyze patient case mix in hospitals and determine hospital reimbursement policy.
DIRECT CONTRACTING: In/*HERE*/idual employers or business coalitions contract directly with providers for health care services with no HMO/PPO intermediary. This enables the employer to include in the plan the specific services preferred by their employees and is usually done under ERISA guidelines.
DISCOUNTED FEE-FOR-SERVICE: A provider's services are reimbursed as fee-for-service but at a negotiated rate less than his or her usual fees.
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E
EMPLOYEE HEALTH BENEFIT PLAN: Health insurance plan for their employees and dependents provided by the employer as a benefit not included in the employees gross salaries, usually on a cost sharing basis with employees paying a percentage of the premium.
EMERGENCY MEDICAL TREATMENT ACTIVE LABOR ACT (EMTALA): Federal law designed to address the patient anti-dumping statute and the obligation of all hospitals to screen all patients seeking emergency services and provide stabilizing treatment to enrollees of managed care plans if their condition warrants it.
EMPLOYMENT RETIREMENT INCOME SECURITY ACT (ERISA): The Employee Retirement Income Security Act sets federal requirements for private pension plans. Employer self-funded benefit plans are sometimes referred to as ERISA plans because they follow ERISA guidelines rather than State Insurance Law.
EXCLUSIVE PROVIDER ORGANIZATION (EPO): While similar to a PPO in that an EPO allows the patient to go outside the network for care, if he or she does so in an EPO, they are required to pay the entire cost of care. An EPO differs from an HMO in that EPO physicians do not receive capitation but instead are reimbursed only for actual services provided.
F
FAMILY HEALTH PLUS: This plan is similar to Child Health Plus, but expanded to adults. It is targeted to lower income adults who are not Medicaid eligible and are not covered by employer sponsored health plans or other health insurance coverage. FHP is expected to become available in 2001.
FEE-FOR-SERVICE: The patient or insurer is charged according to a fee schedule set for each service and/or procedure to be provided and the total bill will vary by the number of services/procedures actually received. The patient or insurer is billed at the time of service.
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G
GATEKEEPER: A primary care physician in an HMO with responsibility for making referrals to other providers for the members assigned to him or her. His or her function is to reduce health care utilization and costs by eliminating unnecessary procedures.
GROUP CONTRACT: An agreement between the HMO and a subscribing group specifying rates, performance covenants, relationships among parties, schedule of benefits, and other conditions. The term is generally limited to a 12 month period and may be renewed after that.
GROUP MODEL HMO: There are two kinds of group model HMOs. The first type of group model is called the closed panel, in which 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 serves the HMO. The group is paid a negotiated capitation fee by the HMO and the physicians in turn are salaried and generally prohibited from carrying on any fee-for-service practice. In the second type of group model, the HMO contracts with an existing, independent group of physicians to deliver medical care. Usually, an existing multi-specialty group practice adds a prepaid component to its fee-for-service mode and affiliates with, or forms, an HMO. Medical services are delivered at the group's clinic facilities (both for fee-for-service patients and for prepaid HMO members). The group may contract with more than one HMO.
H
HEALTH MAINTENANCE ORGANIZATION (HMO): An organization of health care personnel and facilities that provides a comprehensive range of health services to an enrolled population for a fixed sum of money paid in advance for a specified period of time. These health services include a wide variety of medical treatments and consults, inpatient and outpatient hospitalization, home health service, ambulance service, and sometimes dental and pharmacy services. The HMO may be organized as a group model, an in/*HERE*/idual practice association (IPA), a network model, or a staff model.
HEALTHY NEW YORK: A New York State sponsored health insurance program for eligible businesses with 50 or less employees. Benefits are streamlined and cover essential services such as inpatient and outpatient hospital services, diagnostic x-ray, emergency services and a limited pharmacy benefit. It will be initially available through HMOs and other insurers approved by the State Insurance Department. It will be available beginning January 1, 2001.
HOSPITAL BASED PHYSICIAN: A physician who provides services in a hospital setting and who has a contractual relationship with the hospital, i.e. someone who is paid a salary or receives compensation from or through the hospital. Contractual arrangements will vary greatly.
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I
INDEMNITY CARRIER: Usually an insurance company or benevolent association that offers selected benefit coverages within a framework of fee schedules, limitations, and exclusions as negotiated with subscriber groups. Insureds are reimbursed after their carrier reviews and processes filed claims. Aetna, Connecticut General, and Prudential are examples of indemnity carriers.
IN/*HERE*/IDUAL PRACTICE ASSOCIATION (IPA): Under this structure, physicians practicing in their own offices, participate in a prepaid health care plan. The physicians charge agreed-upon rates to enrolled patients and bill the IPA on a fee-for-service basis.
M
MANAGED CARE: Use of a planned and coordinated approach to providing health care with the goal of quality care at a lower cost. Usually emphasizing preventive care and often associated with an HMO.
MANAGED CARE ORGANIZATION (MCO): This refers to any type of organizational entity providing managed care such as an HMO, PPO, EPO, etc.
MANAGEMENT SERVICES ORGANIZATION (MSO): A legally separate entity that provides practice management services to a hospital, physicians, or PHO. The MSO may own the facilities and employ the non-physician staff used to deliver care.
MANDATORY MEDICAID MANAGED CARE: Reference to the practice of forcing Medicaid eligible people into approved Medicaid Managed Care plans rather than traditional Medicaid. These are usually county-wide initiatives and there are always exempt populations. Enrollment in Managed Care for the majority of Medicaid recipients became mandatory in 1998 for Onondaga County. As Medicaid recipients come up for re-certification, they are asked to choose one of the plans that best suits their needs. If they do not select a plan, one is auto-assigned. In Onondaga County, enrollees must choose from Total Care, Fidelis, United HealthCare, or after October 1, 2000, Blue Cross Blue Shield of CNY.
MARKET AREA: The targeted geographic area or areas in which the principal market potential is located. It may be the same as an HMO's defined service area, but not necessarily. Frequently market areas overlap service areas (See service area).
MARKET SHARE: That part of the market potential that an HMO or a fee-for-service/prepaid medical group has captured; usually market share is expressed as a percentage of the market potential.
MEDICAID MANAGED CARE: HMOs are paid a PMPM (per member/ per month) payment by New York State to manage care for Medicaid eligible recipients. All benefit coverage then comes from the HMO unless there is a special exclusion specified in the State Contract with the HMO, i.e. family planning benefits are excluded from the coverage provided by the Church sponsored HMO. In that event, the non-covered services may be covered by traditional, fee-for-service Medicaid. Patients covered by Medicaid Managed Care do not have Medicaid as a secondary payer for benefits covered by the HMO.
MEDICAL COST RATIO (MCR): Compares the cost of providing service to the amount paid for the service.
MEDICARE RISK CONTRACT (or MEDICARE+CHOICE): A contract between Medicare and a health plan under which the plan receives monthly capitated payments (similar to Medicaid Managed Care) to provide a Medicare recipient with services, and thereby assumes the insurance risk for those enrollees.
MEDICARE SELECT: A Medigap (see below, under Medicare Supplemental) policy that includes coverage for participating network hospitals only. If a beneficiary uses a non-network hospital other than for emergency services, the Medicare Select Plan is not obligated to provide benefits.
MEDICARE SUPPLEMENTAL POLICY: A policy guaranteeing that a health plan will pay a policy holders co-insurance, co-payments and deductibles for Medicare and may provide some additional health plan or Non-Medicare benefits up to a predefined limit. Also called Medigap or Medicare Wrap. This is not a secondary insurance; benefits usually supplement Medicare.
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N
NETWORK MODEL: An organizational form in which the HMO contracts for medical services within a network of medical groups. For federal qualification purposes, such models are designated as IPAs.
O
OPEN ENROLLMENT PERIOD: The period of time stipulated in a group contract in which eligibles of the group can choose a health plan alternative for the coming benefit year. There is also an open enrollment period as defined in the Federal HMO Regulations requiring HMOs who meet certain criteria to conduct annual open enrollments for periods of not less than 30 days (refer to 110.107 of the Federal HMO Regulations). This federally required open enrollment of in/*HERE*/iduals should not be confused with enrollment of in/*HERE*/iduals many HMOs pursue as a normal part of their marketing strategies.
OPEN PANEL: Private physicians contract with a plan to provide care in their own offices.
OUTLIERS: Reference to a patient who varies significantly from other patients in the same DRG (such as a longer or shorter length of stay, death, leaving against medical advice, etc.).
OUT-OF-AREA BENEFITS: The scope of emergency benefits (and related limitations) available to HMO members while temporarily outside their defined service areas. Some HMOs offer unlimited out-of-area emergency coverage. Others impose a stated maximum annual dollar benefit. Emergency coverage is usually the only HMO benefit in the total benefit package for which members may need to file claims forms for reimbursement of their out-of-pocket expenditures for care.
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P
PEER REVIEW: The evaluation of a physician's performance by other physicians, usually by physicians within the same geographic area and medical specialty.
PER MEMBER PER MONTH (PMPM): The unit of measure related to each effective member for each month that member was effective. The calculation is #of units/member months (MM).
PHYSICIAN/HOSPITAL ORGANIZATION (PHO): An organizational entity that is formed between hospitals and physicians that allows for cooperative activity while allowing a level of independence to the participating parties. This organizational structure is usually formed to pursue managed care contracts.
POINT-OF-SERVICE (POS) PLAN: This product may also be called an open-ended HMO and offers a transition product incorporating features of both HMOs and PPOs. Beneficiaries are enrolled in an HMO but have the option of going outside the provider network for care, but with additional out-of-pocket costs for the member.
PREFERRED PROVIDER ORGANIZATION (PPO): A group of physicians and/or hospitals that contract with an employer, insurance company, or network management company to provide services to their employees or clients at a negotiated reimbursement rate. PPOs are utilized in benefit plans designed around network providers and coverage levels associated with them. Usually in this type of plan the patient may go to the physician of his or her choice, even if that physician does not participate in the PPO, but the patient receives care at a lower benefit level if the physician is not a preferred provider.
PRIMARY CARE PHYSICIAN (PCP): A physician who provides treatment of routine injuries and illnesses and focuses on preventive care. May serve as gatekeeper for managed care. The American Academy of Family Practice defines primary care as care from doctors to handle health concerns not limited by problem origin, organ systems, gender, or diagnosis.
PRIMARY CARE NETWORK: The structure for these networks will vary considerable depending on the specific network. It may range from a loose association of physicians in a geographic area with a limited sharing of overhead, patient referral, call, etc. to a more structured association with commonly owned satellite clinics, etc.
PRIOR AUTHORIZATION: Procedure used in managed care to control utilization of services by prospective reviewing and approval.
PROVIDERS: Those institutions and in/*HERE*/iduals that are licensed to provide health care services (for example, hospitals, skilled nursing facilities, physicians, pharmacists, etc.). Providers in a defined service area are principally owned by, affiliated with, employed by, or under contract to an HMO.
PROVIDER CONTRACT: A legal agreement between a provider of health care services or hospital and a health insurance company specifying the terms of reimbursement for services rendered to members of that health plan, performance covenants, relationships among parties, and other conditions. Provider contracts will specify details of claims submission, payment, medical records release, confidentiality and utilization management, and the particular issues surrounding compliance with laws and regulations.
Q
QUALITY ASSURANCE PROGRAM: An internal peer review process that audits the quality of care delivered. The program should include an educational mechanism to identify and prevent discrepancies in care.
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R
RESERVES: Restricted cash investments or highly liquid investments intended to protect the HMO membership against insolvency or bankruptcy. Regulatory agencies may mandate reserve requirements; also, some HMOs establish voluntary reserves by systematically setting aside a small portion of each month's realized revenue.
RISK: 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 probability of loss associated with a given population.
RISK POOL: Funds are set aside to cover over utilization or to encourage limits on utilization. More commonly seen in primary care than with specialists.
S
SELF-INSURANCE: An entity itself assumes the risk of coverage and makes appropriate financial arrangements rather than purchasing insurance from a third party and paying a premium for this coverage. Self-insurance plans are exempt from State Laws that require HMOs to adhere to certain standards and policies.
SERVICE AREA: The territory within certain boundaries that an HMO designates for providing service to members. Since easy access into the health delivery system is a primary HMO tenet, it is generally believed that a member should not have to drive longer than 30 minutes in order to gain access to the system. Some HMOs establish a mileage radius from their medical delivery sites; some rely on zip codes; others use county boundaries in defining service areas.
STAFF MODEL HMO: The staff model consists of a group of physicians who are either salaried employees of a specially formed professional group practice which is an integral part of the HMO plan or salaried employees of the HMO. Medical services in staff models are delivered at HMO-owned health centers and, generally, only to HMO members. The physicians in either form of staff model are usually limited in their fee-for-service activities.
STOP-LOSS: The purchase of insurance coverage from a third party in the event of unexpected financial loss to the plan or provider, may be individual or aggregate. In the event of a catastrophic claim, stop-loss limits the exposure for both the insurer and the purchaser.
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T
THIRD PARTY ADMINISTRATOR (TPA): An administrative organization other than the employee benefit plan or health care provider that collects premiums, pays claims, and/or provides administrative services.
U
UTILIZATION: The frequency with which a benefit is used, for example 3,200 doctor office visits per 1,000 HMO members per year. Utilization experience multiplied by the average cost per unit of service delivered equals total plan costs.
UTILIZATION MANAGEMENT: A process that measures use of available resources (including professional staff, facilities, and services) to determine medical necessity, cost effectiveness, and conformity to criteria for optimal use.
W
WITHHOLD: A percentage of payment to the provider held back by the HMO until the cost of referral or hospital services has been determined. The amount of withhold returned depends on individual utilization by the gatekeeper, referral patterns through the year by the gatekeeper, groups of physicians or the plan pool, and financial indicators for the overall plan.
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