Assignment of Benefits for Health Care Glossary

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Glossary of Terms in Health Care

The following are definitions of commonly used terms in the medical provider, hospitaland Insurance Companies.

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Abuse

When used as a legal term in healthcare, it normally refers to actions that do not involveintentional misrepresentations in billing but which, nevertheless, result in improper conduct. Consequences can result in civil liability and administrative sanctions. Anexample of abuse is the excessive use of medical supplies. (also see Fraud, OIG, FBI,Compliance)

Access

The patient's ability to obtain medical care. The ease of access is determined by suchcomponents 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.An individual's ability to obtain appropriate health care services. Barriers to access can befinancial (insufficient monetary resources), geographic (distance to providers),organizational (lack of available providers) and sociological (e.g., discrimination,language barriers). Efforts to improve access often focus on providing/improving healthcoverage.

Accountable Health Plan (AHP)

AHPs can be IDSs, MCOs, Health Networks, partnerships or joint ventures between practitioners, providers or payers that would assume responsibility for delivering medicalcare and managing the funds required to pay for the services rendered. Physicians andother providers would either work for, contract with or own these health plans. When anIDS or hospital group or IPA operates one or more health insurance benefit products, or amanaged care organization acquires a large scale medical delivery component, it qualifiesas an Accountable Health System or Accountable Health Plan.

Accountable Health Partnership

An organization of doctors and hospitals which provides care for people organized intolarge groups of purchasers.

Accreditation

The process by which an organization recognizes a program of study or an institution asmeeting predetermined standards. Two organizations that accredit managed care plans are

the National Committee for Quality Assurance (NCQA) and the Joint Commission onAccreditation of Health Care Organizations (JCAHO).

Accrete

The addition of new recipients to a health plan; Medicare term.

Accrual

The amount of money that is set aside to cover expenses. The accrual is the plan's bestestimate of what those expenses are, and (for medical expenses) is based on acombination of data from the authorization system, the claims system, lag studies, and the plan's prior history.

Actively-at-work

Describes insurer's policy requirement indicating that coverage will not go into effectuntil the employee's first day of work on or after the effective date of coverage. May alsoapply to dependents disabled on the effective date.

Activities of daily living (ADL's, ADL)

An individual's daily habits such as bathing, dressing and eating. ADLs are often used asan assessment tool to determine an individual's ability to function at home, or in a lessrestricted environment of care.

Activity-based Costing (ABC)

Activity-based costing defines healthcare costs in terms of a healthcare organization's processes or activities. The costs are then associated with significant activities or events.It relies on the following 3 step process: 1) Activity mapping, which involves mappingactivities in an illustrated sequence; 2) Activity analysis, which involves defining andassigning a time value to activities; and , 3) bill of activities, which involves generating acost for each main activity.

Actuarial

Refers to the statistical calculations used to determine the managed care company's ratesand premiums charged their customers based on projections of utilization and cost for adefined population.

Actuary

In insurance, a person trained in statistics, accounting and mathematics who determines policy rates, reserves, and dividends by deciding what assumptions should be made withrespect to each of the risk factors involved (such as the frequency of occurrence of the

peril, the average benefit that will be payable, the rate of investment earnings, if any,expenses, and persistency rates), and who endeavors to secure as valid statistics as possible on which to base his assumptions. Professionally trained individual, usually withexperience or education in insurance, who conducts statistical studies such as determininginsurance policy rates, dividend reserves and dividends, as well as conducts various other statistical studies. A capitated health provider would not accept or contract for capitatedrates, or agree to a capitated contract without an actuarial determining the reasonablenessof the rates.

Acute Care

A pattern of health care in which a patient is treated for an acute (immediate and severe)episode of illness, for the subsequent treatment of injuries related to an accident or other trauma, or during recovery from surgery. Acute care is usually given in a hospital byspecialized personnel using complex and sophisticated technical equipment andmaterials. Unlike chronic care, acute care is often necessary for only a short time.

Adjudication

Processing claims according to contract.

Adjusted Admissions

Adjusted admissions are equivalent to the sum of inpatient admissions and an estimate of the volume of outpatient services. This is a measure of all patient care activity undertakenin a hospital, both inpatient and outpatient. This estimate is calculated by multiplyingoutpatient visits by the ratio of outpatient charges per visit to inpatient charges per admission.

Adjusted Average Per Capita Cost (AAPCC)

The basis for HMO or CMP reimbursement under Medicare-risk contracts. The averagemonthly amount received per enrollee is currently calculated as 95 percent of the averagecosts to deliver medical care in the fee-for-service sector. HCFA's best estimate of theamount of money care costs for Medicare recipients under fee-for-service Medicare in agiven area. The AAPCC is made up of 122 different rate cells; 120 of them are factoredfor age, sex, Medicaid eligibility, institutional status, and whether a person has both partA and part B of Medicare. Actuarial projections of per capita Medicare spending for enrollees in fee-for-service Medicare. Separate AAPCCs are calculated - usually at thecounty level - for Part A services and Part B services for the aged, disabled, and peoplewith ESRD. Medicare pays risk plans by applying adjustment factors to 95 percent of thePart A and Part B AAPCCs. The adjustment factors reflect differences in Medicare per capita fee-for-service spending related to age, sex, institutional status, Medicaid status,and employment status. A county-level estimate of the average cost incurred by Medicarefor each beneficiary in the fee-for-service system. Adjustments are made so that theAAPCC represents the level of spending that would occur if each county contained the

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