Glossary of Commonly Used Health Care Terms

GLOSSARY OF
COMMONLY USED
HEALTH CARE TERMS
AND
ACRONYMS
Vermont Health Care Resources 1 Health Care Terms

A and dividends, as well as conducted other
statistical studies.
academic medical center A group of acute care Medical treatment rendered to
related institutions including a teaching individuals whose illnesses or health
hospital or hospitals, a medical school and problems are of short-term or episodic
its affiliated faculty practice plan, and other nature. Acute care facilities are those
health professional schools. hospitals that mainly serve persons with
short-term health problems.
access An individual’s ability to obtain
appropriate health care services. Barriers to acute disease A disease characterized by a
access can be financial (insufficient single episode of a relatively short duration
monetary resources), geographic (distance to from which the patient returns to his/her
providers), organizational (lack of available normal or pervious state of level of activity.
providers) and sociological (e.g., While acute diseases are frequently
discrimination, language barriers). Efforts to distinguished from chronic diseases, there is
improve access often focus on no standard definition or distinction. It is
providing/improving health coverage. worth noting that an acute episode of a
chronic disease (for example, an episode of
accident insurance A policy that provides
diabetic coma in a patient with diabetes) is
benefits for injury or sickness directly
often treated as an acute disease.
resulting from an accident.
adjusted average per capita cost
accreditation A process whereby a program
(AAPCC) The basis for HMO or CMP
of study or an institution is recognized by an
(Competitive Medical Plan) reimbursement
external body as meeting certain
under Medicare-risk contracts. The average
predetermined standards. For facilities,
monthly amount received per enrollee is
accreditation standards are usually defined
currently calculated at 95 percent of the
in terms of physical plant, governing body,
average costs to deliver medical care in the
administration, and medical and other staff.
fee-for-service sector.
Accreditation is often carried out by
organizations created for the purpose of adjusted community rate (ACR) An
assuring the public of the quality of the HMO’s estimate of the premium it would
accredited institution or program. The State charge to Medicare beneficiaries if these
or Federal governments can recognize beneficiaries were enrolled as commercial
accreditation in lieu of, or as the basis for enrollees and not covered by Medicare. The
licensure or other mandatory approvals. ACR is intended to gauge the
Public or private payment programs often appropriateness of CMS’s (Center for
require accreditation as a condition of Medicare and Medicaid Services)
payment for covered services. Accreditation reimbursements to plans. If CMS’s payment
may either be permanent or may be given is higher than a plan’s ACR, the plan is
for a specific period of time. required by law to provide the difference to
Medicare enrollees through lower premiums
activities of daily living (ADL) An index or
or higher benefits or to return it to the
scale which measures a patient’s degree of
Medicare program (see also
independence in bathing, dressing, using the
Medicare+Choice).
toilet, eating, and moving from one place to
another. administrative costs Costs the insurer
incurs for utilization review, insurance
actuary A person trained in the insurance
marketing, medical underwriting, agents’
field who determines policy rates, reserves
commissions, premium collection, claims National Center for Health Services
processing, insurer profit, quality assurance Research and Health Care Technology
activities, medical libraries, and risk Assessment. AHCPR is now AHRQ
management. Agency for Healthcare Research and Quality
www.ahcpr.gov
Administrative Services Organization
(ASO) An arrangement under which an The Agency for Healthcare Research and
insurance carrier or an independent Quality's (AHRQ) mission is to improve the
organization will, for a fee, handle the quality, safety, efficiency, and effectiveness
administration of claims, benefits and other of health care for all Americans. Information
administrative functions for a self-insured from AHRQ's research helps people make
group. more informed decisions and improve the
quality of health care services. AHRQ was
adverse selection A tendency for utilization formerly known as the Agency for Health
of health services in a population group to Care Policy and Research.
be higher than average. From an insurance
perspective, adverse selection occurs when aggregate The maximum amount of money
persons with poorer-than-average health an insurance company will pay on an
status apply for, or continue, insurance insured’s policy per year, regardless of the
coverage to a greater extent than do persons number of claims.
with average or better health expectations.
Aid to Families with Dependent Children
affiliated provider A health care (AFDC) A state-based federal cash
professional or facility that is part of the assistance program for low-income families.
Managed Care Organization’s (MCO) In all states, AFDC recipiency may be used
network and has a contractual arrangement to establish Medicaid eligibility.
to provide services to the MCO’s covered
members.
affiliation agreement An agreement

(usually formal) between two or more
otherwise independent entities or individuals
that defines how they will relate to each
other. Affiliation agreements between
hospitals may specify procedures for
referring or transferring patients from one
facility to another, joint faculty and/or
medical staff appointments, teaching
relationships, sharing of records or services,
or provision of consultation between
programs.
Agency for Health Care Policy and

Research (AHCPR) The Agency’s primary
goal is to enhance the quality,
appropriateness and effectiveness of health
care services by conducting and sponsoring
credible and timely research. It is the federal
government’s focal point for health services
research, AHCPR’s predecessor, the
all patient diagnosis related groups and Medicaid reimburse hospitals on the
(APDRG) An enhancement of the original basis of only certain costs. Allowable costs
DRGs (diagnosis related groups), designed may exclude, for example, luxury
to apply to a population broader than that of accommodations, costs that are not
Medicare beneficiaries, who are reasonable expenditures that are unnecessary
predominately older individuals. The for the efficient delivery of health services
APDRG set includes groupings for pediatric to persons covered under the program in
and maternity cases as well as of services for question, or depreciation on a capital
HIV- related conditions and other special expenditure that was disapproved by a
cases. health-planning agency.
allowable costs Charges for services alternative delivery systems A phrase used
rendered or supplies furnished by a mental to describe all forms of health care delivery
health professional that qualify as covered except traditional fee-for-service, private
expenses. practice and inpatient hospitalization. The
term may also include HMOs, PPOs, IPAs,
all payer contract An arrangement and other systems of providing health care.
allowing for payment of health services
delivered by a contracted clinician American Association of Health Plans
regardless of product type (e.g., HMO, PPO, (AAHP) The trade organization that
indemnity) or revenue source (e.g., premium represents managed care organizations
or self-funded) (HMOs and PPOs).
all-payer system A system in which prices ambulatory care All types of health
for health services and payment methods are services that are provided on an outpatient
the same, regardless of who is paying. For basis, in contrast to services provided in the
instance, in an all-payer system, federal or home or to persons who are inpatients.
state government, a private insurer, a self- While many inpatients may be ambulatory,
insured employer plan, an individual or any the term ambulatory care usually implies
other payer could pay the same rates. The that the patient must travel to a location to
uniform fee bars health care providers from receive services that do not require an
shifting costs from one payer to another. See overnight stay. See also ambulatory setting
cost shifting. and outpatient.
allied health personnel Specially trained ambulatory setting A type of institutional

and licensed (when necessary) health organized health setting in which health
workers other than physicians, dentists, services are provided on an outpatient basis.
optometrists, chiropractors, podiatrists, and Ambulatory care settings may be either
nurses. The term has no constant or agreed- mobile (when the facility is capable of being
upon detailed meaning; sometimes used moved to different locations) or fixed (when
synonymously with paramedical personnel, the person seeking care must travel to a
sometimes meaning all health workers who fixed service site).
perform tasks that must otherwise be
performed by a physician, and at other times amendment A formal document changing
referring to health workers who do not the provisions of an insurance policy signed
usually engage in independent practice. jointly by the insurance company and by the
policyholder or his authorized representative
allowable costs Items or elements of an See also endorsement.
institution’s costs that are reimbursable
under a payment formula. Both Medicare
ancillary services Supplemental services, and the provider agrees to accept the
including laboratory, radiology, physical Medicare approved charge as payment in
therapy and inhalation therapy, which are full. Medicare pays 80 percent of the cost
provided in conjunction with medical or and the beneficiary 20 percent, for most
hospital care. services. See participating physician.
annual out of pocket maximum The most authorization The process of receiving
you will have to pay in any given year for all approval from an insurance company for a
services received under an insurance policy. specific service from a specific provider
This amount includes co-payments, before you get that service. See referral.
coinsurance and deductibles. If you exceed
this amount, the insurance company will pay average manufacturer price (AMP) The
all other expenses for the remainder of that price at which the manufacturer sells drugs
year. to purchasers. There is an AMP for
wholesalers and an AMP for pharmacies.
antitrust A legal term encompassing a For sales to wholesalers, AMP represents
variety of efforts on the part of government the Wholesale Acquisition Cost after all
to assure that sellers do not conspire to discounts. For sales directly to pharmacies,
restrain trade or fix prices for their goods or AMP represents the price pharmacies pay
services in the market. for drugs after all the discounts they receive.
any willing provider laws Laws that average wholesale price (AWP) The AWP
require managed care plans to contract with is the price that pharmaceutical
all health care providers that meet their manufacturers suggest that wholesalers
terms and conditions. charge retail pharmacies. Manufacturers
generally offer lower prices or rebates to
appropriateness Appropriate health care is favored customers that have purchasing
care for which the expected health benefit power, such as large insurance companies or
exceeds the expected negative consequences governments, meaning that those customers
by a wide enough margin to justify pay significantly less than the AWP.
treatment.
avoidable hospital condition Medical
Area Health Education Center (AHEC) diagnosis for which hospitalization could
An organization or organized system of have been avoided if ambulatory care had
health and educational institutions whose been provided in a timely and efficient
purpose is to improve the supply, manner.
distribution, quality, use and efficiency of
health care personnel in specific medically
underserved areas. AHEC’s objectives are to
educate and train the health personnel
specifically needed by the underserved areas
and to decentralize health workforce
education, thereby increasing supply and
linking the health and educational
institutions in scarcity areas.
assignment A process in which a Medicare

beneficiary agrees to have Medicare’s share
of the cost of a service paid directly
(“assigned”) to a doctor or other provider,
B individual in a given time period, which is
usually one year.
bad debt Income lost to a provider because benefit package A group of guaranteed
of failure of patients to pay amounts owed. services provided by a health plan to its
Bad debt may sometimes be recovered by members.
increasing charges to paying patients. Some
cost-based reimbursement programs benefits The health care services provided
reimburse certain bad debt. The impact of under terms of a contract by an MCO or
the loss of revenue from bad debt may be other benefits administrator.
partially offset for proprietary institutions by
the fact that income tax is not payable on Blue Cross plan A non-profit, tax-exempt
income not received. insurance plan providing coverage for
hospital care and related services. (the
balance billing In Medicare and private fee- individual plans should be distinguished
for-service health insurance, the practice of from their national association, the Blue
billing patients for charges that exceed the Cross Association.) Historically, the plans
amount that the health plan will pay. Under were largely the creation of the hospital
Medicare, the excess amount cannot be industry and designed to provide hospitals
more than 15 percent above the approved with a stable source of revenue. A Blue
charge. See approved charge and Cross plan should be a nonprofit community
participating physician. service organization with a governing body
whose membership includes a majority of
Balanced Budget Act of 1997 (BBA) 1) public representatives.
created the Children’s Health Insurance
Program, which expanded coverage to poor Blue Shield plan A nonprofit, tax-exempt
children not covered under Medicaid; 2) insurance plan, which provides coverage for
added a new part to Medicare, called physicians’ services. Blue Shield coverage is
Medicare+Choice, which includes an array sometimes sold in conjunction with Blue
of private health plan options among which Cross coverage, although this is not always
beneficiaries may choose; 3) gave states the case.
greater authority to structure their Medicaid
programs, including the authority to board certified Status granted a medical
mandatorily enroll beneficiaries without a specialist who completes a required course
waiver from HHS; and 4) added new of training and experience (residency) and
beneficiary protections to both Medicaid and passes an examination in his/her specialty.
Medicare. Individuals who have met all requirements
except examination are referred to as “board
basic health services Benefits that all eligible.”
federally qualified HMOs must offer, as
defined under Subpart A, 100.112 of the
federal HMO regulations.
beneficiary An individual who receives

benefits from or is covered by an insurance
policy or other health care financing
program.
benefit cap A dollar limit placed on the

assistance that can be provided to an

Boren Amendment Part of the Medicaid actual number or nature of services provided
law, known by the name of its principle to each person in a set period of time.
Congressional sponsor. It provides that state Capitation is the characteristic payment
payment for hospitals and nursing facilities method in certain health maintenance
must be reasonable and adequate to meet the organizations. It also refers to a method of
costs incurred by efficiently and Federal support of health professional
economically operated facilities to provide schools. Under these authorizations, each
care and services meeting state and federal eligible school receives a fixed payment,
standards. called a “capitation grant” from the Federal
government for each student enrolled.
bulk-purchasing programs Single or
multi-state programs that combine various care management A process by which
groups or programs—such as state providers work to improve the quality of
employees, the Medicaid program, the care by analyzing variations in and
pharmacy assistance program—to create a outcomes for current practice in the care of
larger group that can negotiate better drug specific health conditions. An intervention
prices from manufacturers. Bulk-purchasing (quality improvement) is designed to reduce
programs may include people without the variations in care, optimize the use of
prescription drug insurance. generalists and specialists, and to measure
and improve the outcome, while reducing
C costs if possible.
carrier A private organization, usually an

capital Fixed or durable non-labor inputs or
insurance company that finances health care.
factors used in the production of goods and
services, the value of such factors, or the carve in A model of delivering and
money specifically allocated for their financing healthcare services in which
acquisition or development. Capital costs mental health and/or substance abuse
include, for example, the buildings, beds and services are provided under the same
equipment used in the provision of hospital delivery system as physical health care; the
services. Capital assets are usually thought integration of behavioral health care with
of as permanent and durable as distinguished physical health care.
from consumable such as supplies.
carve out Regarding health insurance, an
capital costs Depreciation, interest, leases arrangement whereby an employer
and rentals, taxes and insurance on tangible eliminates coverage for a specific category
assets like physical plant and equipment. of services (e.g., vision care, mental
health/psychological services and
capital expenditure review A review of
prescription drugs) and contracts with a
proposed capital expenditures of hospitals
separate set of providers for those services
and/or other health facilities to determine the
according to a predetermined fee schedule or
need for, and appropriateness of, the
capitation arrangement. Carve out may also
proposed expenditures. The review is done
refer to a method of coordinating dual
by a designated regulatory agency and has a
coverage for an individual.
sanction attached which prevents or
discourages unneeded expenditures. carve-out service A “carve-out” is typically
a service provided within a standard benefit
capitation A method of payment for health
package but delivered exclusively by a
services in which an individual or
designated provider or group. Mental health
institutional provider is paid a fixed amount
for each person served, without regard to the
services are a typical carve-out within many statute defines over 50 distinct population
insurance plans. groups as potentially eligible, including
those for whom coverage is mandatory in all
case management The monitoring and states and those that may be covered at a
coordination of treatment rendered to state’s option. The scope of covered services
patients with specific diagnosis or requiring that states provide to the categorically needy
high-cost or extensive services. is much broader than the minimum scope of
services for the other, optional groups
case manager A clinician who works with receiving Medicaid benefits. See medically
consumers, providers and insurers to needy.
coordinate services.
Centers for Disease Control and
case-mix A measure of the mix of cases Prevention (CDC) The Centers for Disease
being treated by a particular health care Control and Prevention, based in Atlanta,
provider that is intended to reflect the Georgia is charged with protecting the
patients’ different needs for resources. Case nations’ public health by providing direction
mix is generally established by estimating in the prevention and control of
the relative frequency of various types of communicable and other diseases and
patients seen by the provider in question responding to public health emergencies.
during a given time period and may be Within the U.S. Public Health Service, CDC
measured by factors such as diagnosis, is the agency that led efforts to prevent such
severity of illness, utilization of services and diseases as malaria, polio, small pox, toxic
provider characteristics. shock syndrome, Legionnaire’s disease, and
more recently, acquired immunodeficiency
catastrophic health insurance Health syndrome (AIDS), and tuberculosis. CDC’s
insurance that provides protection against responsibilities evolve as the agency
the high cost of treating severe of lengthy addressed contemporary threats to health,
illnesses or disability. Generally such such as injury, environmental and
policies cover all, or a specified percentage occupational hazards, behavioral risks and
of, medical expenses above an amount that chronic diseases.
is the responsibility of another insurance
policy up to a maximum limit of liability. Centers for Medicare and Medicaid
Services (CMS) CMS is the new name for
catchment area A geographic area defined the agency within the U. S. Department of
and served by a health program or Health and Human Services (HHS) that
institution, such as a hospital or community oversees Medicare and Medicaid. Formerly
mental health center that is delineated on the known as the Health Care Financing
basis of such factors as population Administration (HCFA).
distribution, natural geographic boundaries
and transportation accessibility. By certificate The formal document received
definition, all residents of the area needing by an employee that describes the specific
the services of the program are usually benefits covered by the policyholder’s
eligible for them, although eligibility may health care contract with the insurer. The
also depend on additional criteria. certificate contains co-payment and/or
deductible requirements, specific coverage
categorically needy Persons whose details, exclusions, and the responsibilities
Medicaid eligibility is based on their family, of both the certificate holder and the
age or disability status. Persons not falling insurance company.
into these categories cannot quality, no
matter how low their income. The Medicaid
Certificate of Need (CON) A certificate chronic disease A disease which has one or
issued by a governmental body to an more of the following characteristics: is
individual or organization proposing to permanent, leaves residual disability; is
construct or modify a health facility, acquire caused by nonreversible pathological
major new medical equipment, modify a alternation, requires special training of the
health facility, or offer a new or different patient for rehabilitation, or may be
health service. Such issuance recognizes that expected require a long period of
a facility or service, when available, will supervision, observation or care.
meet the needs of those for whom it is
intended. CON is intended to control clinic A facility, or part of one, devoted to
expansion of facilities and services by diagnosis and treatment of outpatients.
preventing excessive or duplicate “Clinic” is irregularly defined. It may either
development of facilities and services. include or exclude physicians’ offices; may
be limited to describing facilities that serve
certification The process by which a poor or public patients; and may be limited
governmental or nongovernmental agency or to facilities which graduate or graduate
association evaluates and recognizes an medical education is done.
individual, institution, or educational
program as meeting predetermined clinical criteria Criteria by which managed
standards. One so recognized is said to be care organizations (MCOs) decide whether a
“certified.” It is essentially synonymous specific treatment setting is the appropriate
with accreditation, except that certification level of care for a given consumer.
is usually applied to individuals, and
accreditation to institutions. Certification closed access A managed health care
programs are generally nongovernmental arrangement in which covered persons are
and do not exclude the uncertified from required to select providers only from the
practice as do licensure programs. plan’s participating providers. Also called an
Exclusive Provider Organization (EPO).
CHAMPUS (Civilian Health and Medical
Program of the Uniformed Services) A CMS Center for Medicare and Medicaid
Department of Defense program supporting Services (formerly CHFA the Health Care
private sector care for military dependents. Financing Administration)
chronic care Care and treatment rendered to COBRA (Consolidated Omnibus Budget
individuals whose health problems are of a Reconciliation Act of 1986) This federal
long-term and enduring nature. law allows employees (and their
Rehabilitation facilities, nursing homes and dependents) who had health insurance
mental hospitals may be considered chronic coverage through their employer to purchase
care facilities. and continue the coverage under certain
circumstances for a limited period of time
after their employment ends.
coinsurance A cost-sharing requirement

under a health insurance policy. It provides
that the insured party will assume a portion
or percentage of the costs of covered
services. The health insurance policy
provides that the insurer will reimburse a
specified percentage of all, or certain
specified, covered medical expenses in
excess of deductible amounts payable by the comprehensive mental health services
insured. The insured is then liable for the (principally ambulatory), primarily to
remainder of the costs until their maximum individuals residing or employed in a
liability is reached. defined catchment area.
community-based care The blend of health community rating A method of calculating

and social services provided to an individual health plan premiums using the average cost
or family in their place of residence for the of actual or anticipated health services for
purpose of promoting, maintaining, or all subscribers within a specific geographic
restoring health or minimizing the effects of area. The premium does not vary for
illness and disability. different groups or subgroups of subscribers
on the basis of their specific claims
Community Health Accreditation experience.
Program (CHAP) Similarly to JCAHO,
CHAP is a national, private, not-for profit community rating by class (class rating)
agency that accredits home health care (CRC) For federal qualified HMOs, the
organizations. CHAP is a subsidiary of the Community Rating by Class (CRC)
National League of Nursing. CHAP adjustment of community-rated premiums
establishes guidelines for the operation of on the basis of such factors as age, sex,
home health agencies. family size, marital status and industry
classification. These health plan premiums
community health center An ambulatory reflect the experience of all enrollees of a
health care program (defined under Section given class within a specific geographic
330 of the Public Health Service Act) area, rather than the experience of any one
usually serving a catchment area that has employer.
scarce or nonexistent health services or a
population with special health needs; Community Medical Plan (CMP) A state-
sometimes known as “neighborhood health licensed entity, other than a federally
center.” Community health centers attempt qualified HMO, that signs a Medicare Risk
to coordinate Federal, State and local Contract and agrees to assume financial risk
resources in a single organization capable of for providing care to Medicare eligible on a
delivering both health and related social prospective, prepaid basis.
services to a defined population.
While such a center may not directly comprehensive medical A health insurance
provide all types of health care, it usually policy designed to cover a broad range of
takes responsibility to arrange all health care hospital, doctor and other related services
services needed by its patient population. (for example, lab or radiology services).
See also Federally Qualified Health Center
or FQHC Consumer Price Index (CPI) A
measurement of inflation at the consumer
Community Health Management level. Many state programs use the CPI as a
Information Systems (CHMIS) An measure of changes in consumer buying
automated communication network power and increase the level of benefit
supporting the transfer of clinical and provided through pharmacy assistance
financial information, currently under programs to reflect those changes. The
development with the support of the John A. Bureau of Labor Statistics within the
Hartford Foundation. Department of Labor tracks the CPI.
Community Mental Health Center continuing medical education (CME)

(CMHC) An entity that provides Formal education obtained by a health
professional after completing his/her degree expressed in dollars, as an aid in
and full-time postgraduate training. For determining the best investment of
physicians, some states require CME resources. For example, the cost of
(usually 50 hours per year) for continued establishing an immunization service might
licensure, as do some specialty boards for be compared with the total cost of medical
certification. care and lost productivity that will be
eliminated as a result of more persons being
continuum of care The availability of a immunized. Cost-benefit analysis can also
broad range of treatment services so that be applied to specific medical tests and
care can be flexible and customized to meet treatments.
a consumer’s needs.
cost cap A predetermined ceiling, above
contract The formal legal document, also which costs are not reimbursed. Providers
known as the “policy,” that describes the are only reimbursed for their costs up to the
agreement between the policyholder and the cost limit; providers assume the risk for any
insurance carrier. This document contains costs above the limit. Note that “cost caps”
the specific responsibilities of the are not the same as “capitation”—the two
policyholder and the insurance carrier in terms are often confused and used
relation to the benefits provided under the interchangeably when, in fact, their
contract. meanings are completely different.
contract discounts An economic incentive cost center An accounting device whereby

offered to consumers to encourage them to all related costs attributable to some
use providers belonging to a group or “financial center” within an institution, such
organization preferred by a health plan. as department or program are segregated for
Usually, the out-of-pocket expenses incurred accounting or reimbursement purposes.
by the patient are reduced.
cost containment Control or reduction of
coordination of benefits (COB) Procedures inefficiencies in the consumption, allocation
used by insurers to avoid duplicate payments or production of health care services that
for losses insured under more than one contribute to higher than necessary costs.
insurance policy. A coordination of benefits, (Inefficiencies in consumption can occur
or “nonduplication,” clause in either policy when health services are inappropriately
prevents double payment by making one utilized; inefficiencies in allocation exist
insurer the primary payer, and assuring that when health services could be delivered in
not more than 100 percent of the cost is less costly settings without loss of quality;
covered. Standard rules determine which of and inefficiencies in production exist when
two or more plans, each having COB the costs of producing health services could
provisions, pay its benefits in full and which be reduced by using a different combination
becomes the supplementary payer on a of resources.
claim.
cost contract An arrangement between a
co-payment or co-pay A form of cost managed health care plan and CMS under
sharing in which a fixed amount of money is Section 1876 or 1833 of the Social Security
paid by the insured for each health care Act, under which the health plan provides
service provided. health services and is reimbursed its costs.
The beneficiary can use providers outside
cost-benefit analysis An analytic method in the plan’s provider network.
which a program’s cost is compared to the
program’s benefits for a period of time,
cost sharing Any provision of a health only secondary roads OR certified by the
insurance policy that requires the insured State as being a “necessary provider” of
individual to pay some portion of medical healthcare services to residents in the area.
expenses. The general term includes
deductibles, co-payments and coinsurance. Current Procedural Terminology, fourth
edition (CPT-4) A manual that assigns five-
cost shifting The condition that occurs when digit codes to medical services and
health care providers are not reimbursed or procedures to standardize claims processing
not fully reimbursed for providing health and data analysis.
care so charges to those who pay must be
increased. This typically results from customary charge One of the factors
providing health care to the medically determining a physician’s payment for a
indigent or Medicare patients. service under Medicare. Calculated as the
physician’s median charge for that service
covered expenses Hospital, medical and over a prior 12-month period.
other health care expenses incurred by
consumers that entitle them to a payment of customary, prevailing and reasonable
benefits under a health insurance policy. (CPR) Current method of paying physicians
under Medicare. Payment for a service is
covered services Health care services limited to the lowest of (1) the physician’s
covered by an insurance plan. billed charge for the service, (2) the
physician’s customary charge for the
credentialing The recognition of service, or (3) the prevailing charge for that
professional or technical competence. The service in the community. Similar to the
credentialing process may include Usual, Customary, and Reasonable system
registration, certification, licensure, used by private insurers.
professional association membership, or the
award of a degree in the field. Certification D
and licensure affect the supply of health
personnel by controlling entry into practice
daily care Medicare and Medicaid rules
and influence the stability of the labor force
limit the amount of service a home health
by affecting geographic distribution,
agency can provide. In order to qualify for
mobility, and retention of workers.
these home care benefits a patient must be in
Credentialing also determines the quality of
need of “intermittent” as opposed to daily,
personnel by providing standards for
24-hour care. Medicare usually defines
evaluating competence and by defining the
intermittent care as care needed five times a
scope of functions and how personnel may
week or less.
be used.
deductible The amount of loss or expense
Critical Access Hospital (CAH) Created by
that must be incurred by an insured or
Congress in the Balanced Budget Act of
otherwise covered individual before an
1997, the CAH program is designed to
insurer will assume any liability for all or
support limited-service hospitals located in
part of the remaining cost of covered
rural areas. To be designated a CAH, a
services. Deductibles may be either fixed-
hospital must be located in a rural area,
dollar amounts or the value of specified
provide 24-hour emergency care services,
services (such as two days of hospital care
have an average patient length of stay of 96
or one physician visit). Deductibles are
hours or less, be more than 35 miles from a
usually tied to some reference period over
hospital or another CAH or more than 15
which they must be incurred, e.g., $100 per
miles in areas with mountainous terrain or
calendar, benefit period, or spell of illness.
defined benefit Funding mechanisms for Diseases and modified by the presence of a
pension plans that can also be applied to surgical procedure, patient age, presence or
health benefits. Typical pension approaches absence of significant comorbidities or
include: (1) pegging benefits to a percentage complications, and other relevant criteria.
of an employee’s average compensation DRGs are the case-mix measure used in
over his/her entire service or over a Medicare’s prospective payment system.
particular number of years; (2) calculation of
a flat monthly payment; (3) setting benefits direct contracting A contractual
based upon a definite amount for each year relationship in which health services are
of service, either as a percentage of provided by a provider or group of providers
compensation for each year of service or as contracting directly with an employer or
a flat dollar amount for each year of service. public sector client. Finances go directly
from an employer or the public system to the
defined contribution Funding mechanism provider without passing through a middle
for pension plans that can also be applied to entity, such as managed care organization or
health benefits based on a specific dollar third party insurance carrier.
contribution, without defining the services to
be provided. disability Any limitation of physical, mental
or social activity of an individual as
deinstitutionalization Policy that calls for compared with other individuals of similar
the provision of supporting care and age, sex and occupation. Frequently refers to
treatment for medically and socially limitation of a person’s usual or major
dependent individuals in the community activities, most commonly vocational. There
rather than an institutional setting. are varying types (functional, vocational,
learning), degrees (partial, total) and
dental insurance A contract that reimburses durations (temporary, permanent) of
an insured for some or all of the costs of disability. Public programs often provide
caring for teeth, oral surgery and gums. benefits for specific disabilities, such as total
and permanent.
developmental disability A severe, chronic
disability which is attributable to a mental or
physical impairment or combination of
mental and physical impairments; is
manifested before the person attains age 22;
is likely to continue indefinitely; results in
substantial functional limitations in three or
more of the following areas of major life
activity: self-care, receptive an expressive
language, learning, mobility, self-direction,
capacity of independent living, economic
self-sufficiency; and reflects the person’s
needs for a combination and sequence of
special, interdisciplinary or generic care
treatments or services that are of lifelong or
extended duration and are individually
planned and coordinated.
Diagnosis Related Groups (DRGs)

Groupings of diagnostic categories drawn
from the International Classification of
disability insurance A type of insurance adjustment was designed to compensate
that provides the policyholder with hospitals that treat a greater proportion of
replacement income when he or she is low-income persons. Such patients were
unable to perform the major duties of his or believed to incur higher-than-average costs,
her regular occupation, or an occupation for so hospitals that served many of them would
which the policyholder is qualified by likely encounter greater costs for their
reason of education, training or experience. Medicare patients than would other
facilities. These hospitals often have higher
discharge The release of a patient from a uncompensated care costs and fewer patients
provider’s care, usually referring to the date with private insurance than other hospitals.
at which a patient checks out of a hospital. In recent years, DSH payments have been
increasingly viewed as serving the broader
discounted fee for service A contracted purpose of ensuring continued access to
payment rate that is discounted from the hospital care for Medicare beneficiaries and
provider’s customary fee. This agreement low-income populations.
may be between the Managed Care
Organization (MCO) and the provider or drug formulary A listing of prescription
between the consumer and the provider. medications that are preferred or required
for use within a health plan. Often, the
disenrollment The process of voluntary or medications tend to be the cheapest rather
involuntary termination of coverage. than the most effective. A plan that has
Voluntary termination includes a member adopted an open or voluntary formulary
quitting because s/he prefers to leave. allows coverage for both formulary and non-
Involuntary termination includes a member formulary medications. A plan that has
leaving the plan because of switching jobs adopted a closed, select or mandatory
or when the plan terminates a member’s formulary limits coverage to those drugs in
coverage against a member’s will. the formulary unless an exception is made
through a prior authorization process.
disease May be defined as a failure of the
adaptive mechanisms of an organism to drug treatment protocols Documents that
counteract adequately, normally or outline the clinical decision-making
appropriately to stimuli and stresses to processes related to prescribing drugs.
which it is subjected, resulting in a Protocols typically include a detailed
disturbance in the function or structure of clinical decision-making tree and generally
some part of the organism. This definition recommend initiating therapy with the
emphasizes that disease is multifactorial and lowest-cost alternative.
may be prevented or treated by changing
any or a combination of the factors. Disease drug utilization review (DUR) Review of
is a very elusive and difficult concept to physician prescribing, typically used to
define, being largely socially defined. control costs and monitor quality of care.
DUR programs are based on prescribing
dispensing fee A transaction fee that information collected electronically. They
pharmacists charge to process and fill a can be used prospectively to alert
prescription. pharmacists when a patient might be taking
drugs that could adversely interact. They can
Disproportionate Share Hospital (DSH) be used retrospectively to review physician
Adjustment (pronounced “dish”) Medicare prescribing practices.
makes special payments to hospitals that
treat a disproportionately high share of low- dually eligible To be eligible for health
income patients. The DSH payment benefits under the federal Medicare program
and the federal/state Medicaid programs treatment for medical, physiological, or
simultaneously. psychological illness or injury.
durable medical equipment Prescribed Employee Retirement Income Security

medical equipment (e.g., wheelchair, Act (ERISA) A Federal act, passed in 1974
respirator) that can be used for an extended that established new standards and
period of time. reporting/ disclosure requirements for
employer-funded pension and health benefit
E programs. To date, self-funded health
benefit plans operating under ERISA have
Early and Periodic Screening, Diagnosis been held to be exempt from state insurance
and Treatment Program (EPSDT) A laws.
program mandated by law as part of the
encounter A contract between an individual
Medicaid program. The law requires that all
and the health care system for a health care
states have in effect a program for eligible
service or set of services related to one or
children under age 21 to ascertain their
more medical conditions.
physical or mental defects and to provide
such health care treatments and other endorsement A formal document that
measures to correct or ameliorate defects changes the provisions of an insurance
and chronic conditions discovered. The State policy. See also amendment.
programs also have active outreach
components to inform eligible persons of the Enrollment The total number of covered
benefits available to them, to provide persons in a health plan. The term also refers
screening and, if necessary, to assist in to the process by which a health plan signs
obtaining appropriate treatment. up groups and individuals for membership
or the number of enrollees who sign up in
effectiveness The net health benefits any one group.
provided by a medical service or technology
for typical patients in community practice epidemic A group of cases of a specific
settings. disease or illness clearly in excess of what
one would normally expect in particular
efficacy The net health benefits achievable geographic area. There is no absolute
under ideal conditions for carefully selected criterion for using the term epidemic; as
patients. standards and expectations change, so might
the definition of an epidemic, e.g., an
electronic claim A digital representation of
epidemic of violence.
a medical bill generated by a provider or by
the provider’s billing agent for submission epidemiology The study of the patterns of
using telecommunications to a health determinants and antecedents of disease in
insurance payer. human populations. Epidemiology utilizes
biology, clinical medicine and statistics in
electronic data interchange (EDI) The
an effort to understand the etiology (causes)
mutual exchange of routine information
of illness and/or disease. The ultimate goal
between businesses using standardized,
of the epidemiologist is not merely to
machine-readable formats.
identify underlying causes of a disease but
emergency medical services (EMS) to apply findings to disease prevention and
Services utilized in responding to the health promotion.
perceived individual need for immediate

exclusions Specific conditions or to perform an annual review of the quality of
circumstances listed in the policy that the services.
health insurer will not pay for.
exclusive provider arrangement (EPA) An

F
indemnity or service plan that provides
family practice A form of specialty practice
benefits only if care is rendered by the
in which physicians provide continuing
institutional and professional providers with
comprehensive primary care within the
which it contracts (with some exceptions for
context of the family unit.
emergency and out-of-area services).
favorable selection A tendency for
Exclusive Provider Organization (EPO)
utilization of health services in a population
See closed access.
group to be lower than expected or
exclusivity clause A clause in a contract estimated.
which prohibits healthcare providers from
federal poverty level (FPL) Guidelines
participating in more than one MCO
established by the U.S. Department of
(Managed Care Organization) network.
Health and Human Services that are used to
expenditure target (ET) A mechanism to determine an individual’s or family’s
adjust fee updates (for the fees themselves) eligibility for various federal and non-
based on how actual expenditures in an area federal programs. Federal poverty thresholds
compare to a target for those expenditures. vary by family size and, to a small extent,
location (Alaska and Hawaii have higher
expense Funds actually spent or incurred rates than the 48 contiguous states and the
providing goods, rendering services, or District of Columbia). In 2004, in the
carrying out other mission related activities contiguous United States, the federal
during a period. Expenses are computed poverty level is $9,310 for an individual and
using accrual accounting techniques that $12,490 for a family of two and $18,850 for
recognize costs when incurred and revenues a family of four.
when earned and include the effect of
accounts receivables and accounts payable Federal Medicaid Managed Care Waiver
on determining annual income. Program The process by which states
obtain permission to implement managed
experience rating A method of adjusting care programs for their Medicaid or other
health plan premiums based on the historical categorically eligible beneficiaries.
utilization data and distinguishing
characteristics of a specific subscriber federal qualification A status defined by
group. the HMO Act, conferred by HCFA after
conducting an extensive evaluation of the
explanation of benefits (EOB) The HMO’s organization and operations. An
statement sent to an insured by the health organization must be federally qualified or
plan listing services provided, the amount be designated as a CMP (competitive
billed and the payment made. medical plan) to be eligible to participate in
Medicare cost and risk contracts. Likewise,
External Quality Review Organization an HMO must be federally qualified or State
(EQRO) States are required to contract with plan defined to participate in the Medicaid
an entity that is external to and independent managed care program.
of the State and its managed care contractors
federal supply schedule (FSS) The price
available to all federal government
purchasers. FSS prices are intended to equal exists where an individual or organization
or better the prices manufacturers charge has an explicit or implicit obligation to act in
their “most favored” non-federal customers behalf of another person or organization’s
under comparable terms. interests in matters that affect the other
person or organization. A physician has such
Federally Qualified HMO An HMO that a relation with his/her patient, and a hospital
has satisfied certain federal qualifications trustee has one with a hospital.
pertaining to organizational structure,
provider contracts, health service delivery fiscal intermediary A private organization,
information, utilization review/quality usually an insurance company, that has a
assurance, grievance procedures, financial contract with CMS to process claims under
status, and marketing information as Parts A of Medicare.
specified in Title XIII of the Public Health
Service Act. fiscal soundness The requirement that
managed care organizations have sufficient
Federally Qualified Health Center operating funds, on hand or available in
(FQHC) A federal payment option that reserve, to cover all expenses associated
enables qualified providers in Medically with services for which they have assumed
Underserved Areas (MUA/MUP) to receive financial risk. This term also refers to an
cost-based Medicare and Medicaid MCO’s (Managed Care Organization)
reimbursement and allows for the direct ability to remain solvent.
reimbursement of nurse practitioners,
physician assistants and certified nurse formulary A list of drugs covered by a
midwives. Federal legislation creating the health plan or pharmacy assistance program.
FQHC category was enacted in 1989. See In some cases, the payers will only cover
also CHC formulary drugs. More commonly, non-
formulary drugs are available to consumers,
fee-for-service Method of billing for health but the consumer must pay a higher co-
services under which a physician or other payment (see “Tiered Formulary”).
practitioner charges separately for each
patient encounter or service rendered; it is freedom of choice A Medicaid provision
the method of billing used by the majority of that requires states to allow recipients the
U.S. physicians. Under a fee-for-service freedom to choose providers. States can seek
payment system, expenditures increase if the CMS Section 1915 and 1115 waivers of the
fees themselves increase, if more units of freedom of choice requirement.
service are provided, or if more expensive
services are substituted for less expensive fully capitated A stipulated dollar amount
ones. This system contrasts with salary, per established to cover the cost of all health
capita, or other prepayment systems, where care services delivered to a person.
the payment to the physician is not changed
with the number of services actually used. G
fee schedule An exhaustive list of physician gag clause A clause within a contract that
services in which each entry is associated restricts the ability of a provider to discuss
with a specific monetary amount that treatment options with a consumer that may
represents the approved payment level for a benefit the consumer but are not covered by
given insurance plan. the health plan.
fiduciary Relating to, or founded upon, a gatekeeper The primary care practitioner in
trust or confidence. A fiduciary relationship managed care organizations that determine
whether the presenting patient needs to see a make the payment by the regular due date. If
specialist or requires other non-routine you pay within the 14-day period, the
services. The goal is to guide the patient to company cannot cancel the policy.
appropriate services while avoiding
unnecessary and costly referrals to Graduate Medical Education (GME)
specialists. Medical education after receipt of the
Doctor of Medicine (MD) or equivalent
general practice A form of practice in degree, including the education received as
which physicians without specialty training an intern, resident (which involves training
provide a wide range of primary health care in a specialty) or fellow, as well as
services to patients. continuing medical education. CMS partly
finances GME through Medicare direct and
generalists Physicians who are indirect payments.
distinguished by their training as not
limiting their practice by health condition or grievance procedure Defined process in a
organ system, who provide comprehensive health plan for consumers or health care
and continuous services, and who make providers to use when there is disagreement
decisions about treatment for patients about a plan’s services, billing, or general
presenting with undifferentiated symptoms. procedures.
Generalists typically include family
practitioners, general internists and general group-model HMO An HMO that pays a
pediatricians, and many believe it also medical group a negotiated, per capita rate,
includes Obstetrician-Gynecologists. which the group distributes among its
physicians often under a salaried
generic drug A drug product that is no arrangement. (See “Health Maintenance
longer covered by patent protection and thus Organization” and “Staff—Model HMO”).
may be produced and/or distributed by many
firms. group or network HMO An HMO that
contracts with one or more independent
global budgeting A method of hospital cost group practices to provide services to its
containment in which participating hospitals members.
must share a prospectively set budget.
Method for allocating funds among hospitals group practice A formal associate of three
may vary but the key is that the participating or more physicians or other health
hospitals agree to an aggregate cap on professionals providing health services.
revenues that they will receive each year. Income from the practice is pooled and
Global budgeting may also be mandated redistributed to the members of the group
under a universal health insurance system. according to some prearranged plan (often,
but not necessarily, through partnership).
global fee A total charge for a specific set of Groups vary a great deal in size,
services, such as obstetrical services that composition and financial arrangements.
encompass prenatal, delivery and post-natal
care. guaranteed eligibility A defined period of
time (3-6 months) that all patients enrolled
grace period The period of time after a in prepaid health programs are considered
premium becomes due in which you can still eligible for Medicaid, regardless of their
pay for the insurance and keep it in force. actual eligibility for Medicaid. A State may
Vermont law requires health insurers to apply to HCFA for a waiver to incorporate
provide at least 14 days’ notice before this into their contracts.
canceling a policy because you failed to
guaranteed issue Requirement that health Social Security Act) and conducts research
plans offer coverage to all businesses or to support those programs. (The agency has
individual who wish to purchase coverage, been renamed CMS—Centers for Medicare
during some period each year. and Medicaid Services)
guaranteed renewable policy A health health care provider An individual or

insurance policy that must be continued in institution that provides medical services
force, and must be renewed regularly, if the (e.g., a physician, hospital, laboratory). This
premium is paid on time. term should not be confused with an
insurance company that “provides”
guidelines Systematic sets of rules for insurance.
choosing among alternate drug therapies.
Treatment guidelines, or protocols, generally Health Insurance Portability and
require that the drug therapy with the fewest Accountability Act (HIPAA) A federal law
side effects (often the oldest and cheapest to help workers maintain coverage when
therapy) be tried first, before more potent they change jobs. Limits the ability of plans
therapies are recommended. Administrative to refuse to pay for “pre-existing
guidelines generally focus more on cost and conditions.” Additionally, privacy and
may require that the least expensive therapy security provisions regulate personal health
be used first; only if that fails should more information and electronic transactions.
expensive therapies be used. Covered entities under HIPAA include most
health plans, health care clearing houses and
H those health care providers who conduct
certain financial and administrative
handicapped As defined by Section 504 of transactions electronically.
the Rehabilitation Act of 1973, any person
health education Any combination of
who has a physical or mental impairment
learning opportunities designed to facilitate
that substantially limits one or more major
voluntary adaptations of behavior (in
life activity, has a record of such
individuals, groups or communities)
impairment, or is regarded as having such an
conducive to health.
impairment.
health facilities Collectively, all physical
health The state of complete physical,
plants used in the provision of health
mental and social well-being and not merely
services; usually limited to facilities built for
the absence of disease or infirmity. It is
the purpose of providing health care, such as
recognized, however, that health has many
hospitals and nursing homes. They do not
dimensions (anatomical, physiological, and
include an office building that includes a
mental) and is largely culturally defined.
physician’s office. Health facility
The relative importance of various
classifications include: hospitals (both
disabilities will differ depending upon the
general and specialty), long-term care
cultural milieu and the role of the affected
facilities, kidney dialysis treatment centers
individual in that culture. Most attempts at
and ambulatory surgical facilities.
measurement have been assessed in terms of
morbidity and mortality. health insurance Financial protection
against the medical care costs arising from
Health Care Financing Administration
disease or accidental bodily injury. Such
(HCFA) The government agency within the
insurance usually covers all or part of the
Department of Health and Human Services
medical costs of treating the disease or
that directs the Medicare and Medicaid
programs (Titles XVIII and XIX of the
injury. Insurance may be obtained on either amounts of actual services provided to an
an individual or a group basis. individual enrollee. Individual practice
associations involving groups or
Health Plan Employer Data and independent physicians can be included
Information Set (HEDIS) The Health Plan under the definition.
Employer Data and Information Set is a set
of performance measures developed to Health Manpower Shortage Area
access the quality of managed care across (HMSA) An area or group that the U.S.
public and private sectors. It is a product of Department of Health and Human Services
the National Committee on Quality designates as having an inadequate supply of
Assurance. health care providers. HMSAs can include:
(1) an urban or rural geographical area, (2) a
Health Insuring Organization (HIO) An population group for which access barriers
entity that contracts on a prepaid, capitated can be demonstrated to prevent members of
risk basis to provide comprehensive health the group from using local providers, or (3)
services to recipients. medium and maximum-security correctional
institutions and public or non-profit private
health insurance purchasing cooperatives residential facilities.
(HIPCs) Public or private organizations that
secure health insurance coverage for the health personnel Collectively, all persons
workers of all member employers. The goal working in the provision of health services,
of these organizations is to consolidate whether as individual practitioners or
purchasing responsibilities to obtain greater employees of health institutions and
bargaining clout with health insurers, plans programs whether or not professionally
and providers, to reduce the administrative trained, and whether or not subject to public
costs of buying, selling and managing regulation. Facilities and health personnel
insurance policies. Private cooperatives are are the principal health resources used in
usually voluntary associations of employers producing health services.
in a similar geographic region who band
together to purchase insurance for their health plan An organization that provides a
employees. Public cooperatives are defined set of benefits including private and
established by state governments to governmental plans, high-risk pools and
purchase insurance for public employees, HMOs.
Medicaid beneficiaries and other designated
populations. Health Plan Employer Data and
Information Set (HEDIS) National
Health Maintenance Organization Committee for Quality Assurance See above
(HMO) An entity with four essential
attributes: (1) an organized system providing health policy An insurance contract
health care in a geographic area, which consisting of a defined set of benefits. See
accepts the responsibility to provide or health insurance.
otherwise assure the delivery of (2) an
agreed-upon set of basic and supplemental Health Professional Shortage Area
health maintenance and treatment services to (HPSA) A federal designation of shortage
(3) a voluntarily enrolled group of persons similar to the MUA/MUP. An area can be
and (4) for which services the entity is designated as a HPSA based on the ratio of
reimbursed through a predetermined fixed, clinical service providers to the population
periodic prepayment made by, or on behalf of a specific geographic area or of a special
of, each person or family unit enrolled. The population within a geographic area. A
payment is fixed without regard to the health care organization in a HPSA is
eligible to have the services of health care specific population’s medical care system,
professionals who receive loan forgiveness although attempts to relate effects of
or scholarships through the National Health available medical care to variations in health
Service Corps. status have proved difficult.
health promotion Any combination of Health Systems Agency (HSA) A health

health education and related organizational, planning agency created under the National
political and economic interventions Health Planning and Resources
designed to facilitate behavioral and Development Act of 1974. HSAs were
environmental adaptations that will improve usually nonprofit private organizations and
or protect health. served defined health service areas as
designated by the States.
Health Resources and Services
Administration (HRSA) One of eight Hill-Burton Coined from the names of the
agencies of the U.S. Public Health Service, principal sponsors of the Public Law 79-725
HRSA has responsibility for addressing (the Hospital Survey and Construction Act
resource issues relating to access, equity and of 1946); this program provided Federal
quality of health care, particularly to the support for the construction of
disadvantaged and underserved. HRSA modernization of hospitals and other health
provides leadership assures the support and facilities. Hospitals that have received Hill-
delivery of primary health care services, Burton funds incur an obligation to provide
particularly in underserved areas and the a certain amount of charity care.
development of qualified primary care
health professionals and facilities to meet hold-harmless A contractual requirement
the health needs of the nation. HRSA prohibiting a provider from seeking payment
focuses on support of states and from an enrollee for services rendered prior
communities in their efforts to plan, to a health plan solvency.
organize and delivery primary health care,
as well as strengthen the overall public holism Refers to the integration of mind,
health system. body and spirit of a person and emphasizes
the importance of perceiving the individual
health service area (HSA)Geographic area (regarding physical symptoms) in a “whole”
designated on the basis of such factors as sense. Holism teaches that the health care
geography, political boundaries, population system must extend its focus beyond solely
and health resources, for the effective the physical aspects of disease and particular
planning and development of health organ in question, to concern itself with the
services. whole person and the interrelationships
between the emotional, social, spiritual, as
health status The state of health of a well as physical implications of disease and
specified individual, group or population. It health.
may be measured by obtaining proxies such
as people’s subjective assessments of their home health care Health services rendered
health; by one or more indicators of in the home to the aged, disabled, sick or
mortality and morbidity in the population, convalescent individuals who do not need
such as longevity or maternal and infant institutional care. The services may be
mortality; or by sing the incidence or provided by a visiting nurse association
prevalence of major diseases (VNA) home health agency, county public
(communicable, chronic or nutritional). health department, hospital, or other
Conceptually, health status is the proper organized community group and may be
outcome measure for the effectiveness of a specialized or comprehensive. The most
common types of home health care are the provide some outpatient services,
following—nursing services; speech, particularly emergency care. Hospitals may
physical, occupational and rehabilitation be classified by length of stay (short term or
therapy; homemaker services; and social long term), as teaching or non-teaching, by
services. major type of service (psychiatric,
tuberculosis, general and other specialties,
homebound Medicare eligibility definition such as maternity, pediatric or ear, nose and
that sometimes restricts coverage. In order throat), and by type of ownership or control
to be eligible for certain Medicare services, (federal, state or local government; for-profit
the law requires that a physician certify the and nonprofit). The hospital system is
client is confined to his/her home. dominated by the short-term, general,
nonprofit community hospital, often called a
home health care Health services rendered voluntary hospital.
in the home to the aged, disabled, sick or
convalescent individuals who do not need hospital affiliation A contract between an
institutional care. The services may be HMO and a hospital in which the hospital
provided by a visiting nurse association agrees to provide inpatient benefits to HMO
(VNA), home health agency, county public members according to terms negotiated and
health department, hospital or other a (usually discounted) payment schedule.
organized group and may be specialized or
comprehensive. The most common types of I
home health care services include nursing
services; speech, physical and occupational
incidence In epidemiology, the number of
therapy; homemaker services; and social
cases of disease, infection or some other
services.
event having their onset during a prescribed
horizontal integration Merging of two or period of time in relation to the unit of
more firms at the same level of production population in which they occur. Incidence
in some formal, legal relationship. See measures morbidity or other events as they
vertical integration. happen over a period of time. Examples
include the number of accidents occurring in
hospice A program that provides palliative a manufacturing plant during a year in
and supportive care for terminally ill relation to the number of employees in the
patients and their families, either directly or plant, or the number of cases of mumps
on a consulting basis with the patients’ occurring in a school during a month in
physician or another community agency. relation to the number of pupils enrolled in
Originally a medieval name for a way the school. It usually refers only to the
station of crusaders where they could be number of new cases, particularly of chronic
replenished, refreshed and care for, hospice diseases.
is used her for an organized program of care
for people going through life’s “last station.” incurred but not reported (IBNR) Claims
The whole family is considered the unit of that have not been reported to the insurer as
care, and care extends through their period of some specific date for services that have
of mourning. been provided. The estimated value of these
claims is a component of an insurance
hospital An institution whose primary company’s current liabilities.
function is to provide inpatient diagnostic
and therapeutic services for a variety of indemnity Health insurance benefits
medical conditions, both surgical and provided in the form of cash payments
nonsurgical. In addition, most hospitals rather than services. An indemnity insurance

contract usually defines the maximum percent of the residents have a primary
amounts that will be paid for covered diagnosis of a mental illness at the time of
services. admission. IMDs cannot receive Medicaid
services for persons ages 22-64.
independent practice association (IPA) An
organized form of prepaid medical practice institutional health services Health
in which participating physicians remain in services delivered on an inpatient basis in
their independent office settings, seeing both hospitals, nursing homes, or other inpatient
enrollees of the IPA and private-pay institutions. The term may also refer to
patients. Participating physicians may be services delivered on an outpatient basis by
reimbursed by the IPA on a fee-for-service departments or other organizational unites
basis or a capitation basis. of, or sponsored by, such institutions.
indigent care Health services provided to instrumental activities of daily living An

the poor or those unable to pay. Since many index or scale that measures a patient’s
indigent patients are not eligible for federal degree of independence in aspects of
or state programs, the costs that are covered cognitive and social functioning including
by Medicaid are generally recorded shopping, cooking, doing housework,
separately from indigent care costs. managing money and using the telephone.
individual (nongroup) insurance Health insured A participant in a health care plan

insurance bought directly by an individual who makes up part of the plan’s enrollment.
not eligible for group coverage through an Insureds may be the subscriber, the
employer or association. subscriber’s spouse, or other eligible
dependents. In managed care plans, often
inlier A patient whose course or cost of called “member.”
treatment resembles those of most other
patients in a diagnosis-related group. integrated delivery system (IDS) An entity
that usually includes a hospital, a large
in-network A provider, hospital, pharmacy medical group, and an insurance vehicle
or other facility is “in network” when it has such as HMO or PPO. Typically, all
contractually accepted the health insurance provider revenues flow through the
company’s terms and conditions for organization.
payments of services.
integrated services network (ISN) A
inpatient A person who has been admitted network of organizations usually including
at least overnight to a hospital or other hospitals and physician groups, that provides
health facility (which is therefore or arranges to provide a coordinated
responsible for his/her room and board) for continuum of services to a defined
the purpose of receiving diagnostic population and is held both clinically and
treatment or other health services. fiscally accountable for the outcomes of the
populations served.
insolvency A legal determination occurring
when a managed care plan no longer has the interim payment system (IPS) The
financial reserves or other arrangements to Medicare home care payment system that
meet its contractual obligations to patients started in October 1998 and was replaced
and subcontractors. October 2000 by the Prospective Payment
System (PPS). IPS replaced the former fee-
institution for mental disease A facility of for-service system. Under IPS agencies were
more than 16 beds in which at least 50

paid either on a per visit basis, or cost per
year for their patients, whichever is less.
intermediate care facility (ICF) An

K
institution that is licensed under State law to
Katie Beckett children Disabled children
provide on a regular basis, health-related
who qualify for home care coverage under a
care and services to individuals who do not
special provision of Medicaid, named after a
require the degree of care or treatment that a
girl who remained institutionalized solely to
hospital or skilled nursing facility is
continue Medicaid coverage.
designed to provide. Public institutions for
care of the mentally retarded or people with
related conditions are also included in the L
definition. The distinction between “health-
related care and services” and “room and large group insurance Health insurance
board” has often proven difficult to make provided to employer or association groups
but is important because ICFs are subject to of 51 or more persons.
quite different regulations and coverage
requirements than institutions, which do not legal reserves The minimum reserve that a
provide health-related care and services. company must keep to meet future claims
and obligations as they are calculated under
international medical graduate (IMG) A the state insurance code. The reserve amount
physician who graduated from a medical is usually determined by an actuary.
school outside of the United States, usually
Canada. U.S. citizens who go to medical license/licensure Permission granted to an
school abroad are classified as international individual or organization by a competent
medical graduates just as are foreign-born authority, usually public, to engage lawfully
persons who are not trained in a medical in a practice, occupation or activity.
school in this country. U.S. citizens Licensure is the process by which the
represent only a small portion of the IMG license is granted. It is usually granted on
group. the basis of examination and/or proof of
education rather than on measures of
intervention strategy A generic term used performance. A license is usually permanent
in public health to describe a program or but may be conditioned on annual payment
policy designed to have an impact on an of a fee, proof of continuing education or
illness or disease. Hence a mandatory seat proof of competence.
belt law is an intervention designed to
reduce automobile- related fatalities. lifetime benefit maximum The total
amount an insurance company will pay for
health care services over your lifetime. If the
J cost of the benefits you receive since
enrolling in a plan exceeds this amount, your
Joint Commission on Accreditation of coverage ends and no additional services
Healthcare Organizations (JCAHO) A will be covered.
national private, nonprofit organization
whose purpose is to encourage the limited benefit policy An insurance policy
attainment of uniformly high standards of that provides benefits only for certain
institutional medical care. Establishes specific diseases or accidents.
guidelines for the operation of hospitals and
other health facilities and conducts survey
and accreditation programs.

limited service hospital A hospital, often Managed Care Organization (MCO) A
located in rural areas, that provides a limited system of health service delivery and
set of medical and surgical services. financing that coordinates the use of health
services by its members, designates covered
lock-in A contractual provision by which health services, provides a specific provider
members are required to receive all their network, and influences use of medical care
care from the network health care providers services.
except in cases of urgent or emergency need.
managed care plan A health plan that uses
long-term care A set of health care, managed care arrangements and has a
personal care and social services required by defined system of selected providers that
persons who have lost, or never acquired, contract with the plan. Enrollees have a
some degree of functional capacity (e.g., the financial incentive to use participating
chronically ill, aged, disabled or retarded) in providers that agree to furnish a broad range
an institution or at home, on a long-term of services to them. Providers may be paid
basis. The term is often used more narrowly on a pre-negotiated basis. (See also “Health
to refer only to long-term institutional care Maintenance Organization,” “Point of
such as that provided in nursing homes, Service Plan,” and “Preferred Provider
homes for the retarded and mental hospitals. Organization.”
Ambulatory services such as home health
care, which can also be provided on a long- magnetic resonance imaging (MRI) This
term basis, are seen as alternatives to long- relatively new form of diagnostic radiology
term institutional care. is a method of imaging body tissues that
uses the response or resonance of the nuclei
long-term care insurance This type of of the atoms of one of the bodily elements,
insurance is designed to help pay for some typically hydrogen or phosphorus, to
or all long-term care costs, including care in externally applied magnetic fields.
a nursing home, adult day care facility or at
home. Benefits are paid when the insured malpractice Professional misconduct or
person needs assistance with activities of failure to apply ordinary skill in the
daily living, or when the insured person performance of a professional act. A
suffers from a cognitive impairment. practitioner is liable for damages or injuries
caused by malpractice. For some professions
M like medicine, malpractice insurance can
cover the costs of defending suits instituted
Managed Behavioral Healthcare against the professional and/or any damages
Organization (BHO) An MCO (Managed assessed by the court, usually up to a
Care Organization) that specializes in the maximum limit. To prove malpractice
management, administration, and/or requires that a patient demonstrate some
provision of behavioral healthcare benefits. injury and that the injury be caused by
negligence.
managed care Health care
financing/delivery systems that coordinate managed care The body of clinical,
the use of services by its members to contain financial and organizational activities
costs and improve quality. These systems designed to ensure the provision of
have arrangements (employment or appropriate health care services in a cost-
contractual) with selected physicians, efficient manner. Managed care techniques
hospitals and others to provide services and are most often practiced by organizations
include incentives for members to use and professionals that assume risk for a
network providers.
defined population (e.g., health maintenance medical audit Detailed retrospective review
organizations). and evaluation of selected medical records
by qualified professional staff. Medical
management services organization The audits are used in some hospitals, group
management services organization provides practices, and occasionally in private,
administrative and practice management independent practices for evaluating
services to physicians. An MSO may professional performance by comparing it
typically be owned by a hospital, hospitals with accepted criteria, standards, and current
or investors. Large group practices may also professional judgment. A medical audit is
establish MSOs to sell management services usually concerned with the care of a given
to other physician groups. illness and is undertaken to identify
deficiencies in that care in anticipation of
mandate A state or federal statute or educational programs to improve it.
regulation that requires coverage for certain
health care services. medically indigent Persons who cannot
afford needed health care because of
maximum allowable actual charge insufficient income and/or lack of adequate
(MAAC) A limitation on billed charges for health insurance.
Medicare services provided by
nonparticipating physicians. For physicians medical management information system
with charges exceeding 115 percent of the (MMIS) A data system that allows payers
prevailing charge for nonparticipating and purchasers to track health care
physicians, MAACs limit increases in actual expenditure and utilization patterns.
charges to 1 percent a year. For physicians
whose charges are less than 115 percent of medical necessity The eligibility
the prevailing, MAACs limit actual charge requirements for Medicaid, Medicare or
increases so they may not exceed 115 third party insurers to qualify for specific
percent. healthcare interventions.
McCarran-Ferguson Act A 1945 Act of medical savings account (MSA) An

Congress exempting insurance business account in which individuals can accumulate
from federal commerce laws and delegating contributions to pay for medical care or
regulatory authority to the states. insurance. Some states give tax-preferred
status to MSA contributions, but such
Medicaid (Title XIX) A federally aided, contributions are still subject to federal
state-operated and administered program income taxation. MSAs differ from Medical
that provides medical benefits for certain reimbursement accounts, sometimes called
indigent or low-income persons in need of flexible benefits of Section 115 accounts, in
health and medical care. The program, that they need not be associated with an
authorized by Title XIX of the Social employer. MSAs are not currently
Security Act, is basically for the poor. It recognized in federal statute.
does not cover all of the poor, however, but
only persons who meet specified eligibility medically needy Persons who are
criteria. Subject to broad federal guidelines, categorically eligible for Medicaid and
states determine the benefits covered, whose income, less accumulated bills, are
program eligibility, rates of payment for below income limits for the Medicaid
providers, and methods of administering the program.
program.
medically underserved area/population
(MUA/MUP) MUAs and MUPs are
geographic areas and population groups that Medicare risk contract An agreement by
have inadequate access to primary health an HMO or competitive medical plan to
care, as determined by a federally approved accept a fixed dollar reimbursement per
formula. Areas seeking MUA designation Medicare enrollee, derived from costs in the
must be consistent throughout the defined fee-for-service sector, for delivery of a full
service area in terms of distance from range of prepaid health services.
population centers, characteristics of its
population, and geographic barriers to Medigap insurance (Medicare
access. The criteria for an MUP focus on the Supplement Policy) Privately purchased
needs of specific population groups within a individual or group health insurance policies
geographic area. designed to supplement Medicare coverage.
Benefits may include payment of Medicare
Medicare (Title XVIII) A U.S. health deductibles, coinsurance, and balance bills,
insurance program for people aged 65 and as well as payment for services not covered
over for persons eligible for social security by Medicare. Medigap insurance must
disability payments for two years or longer, conform to one of ten federally standardized
and for certain workers and their dependents benefit packages.
who need kidney transplantation and
dialysis. Monies from payroll taxes and mental health services Comprehensive
premiums from beneficiaries are deposited mental health services, as defined under
in special trust funds for use in meeting the some state laws and federal statutes, include:
expenses incurred by the insured. It consists inpatient care, outpatient care, day care and
of two coordinated programs: hospital other partial hospitalization and emergency
insurance (Part A) and supplementary services; specialized services for the mental
medical insurance (Part B). health of children; specialized services for
the mental health of the elderly; consultation
Medicare + Choice A program created by and education services; assistance to courts
the Balanced Budget Act of 1997 to replace and other public agencies in screening
the existing system of Medicare risk and catchment area residents; follow-up for
cost contracts. Beneficiaries have the choice catchment area residents discharged from
during an open season each year to enroll in mental health facilities or who would require
a Medicare+Choice plan or to remain in inpatient care without such halfway house
traditional Medicare. Medicare+Choice services; and specialized programs for the
plans may include coordinated care plans prevention, treatment and rehabilitation of
(HMOs, PPOs or plans offered by provider- alcohol and drug abusers.
sponsored organizations); private fee-for-
service plans; or plans with medical savings Mental Health Statistics Improvement
accounts. Program (MHSIP) A project, funded and
coordinated through the U.S. Center for
Medicare approved charge The amount Mental Health Services, in which a group of
Medicare approves for payment to a individuals, organizations, state government
physician. Typically, Medicare pays 80 agencies and associates are working to
percent of the approved charge and the improve information management capacity
beneficiary pays the remaining 20 percent. to support decision making in meeting the
Physicians may bill beneficiaries for the needs of persons with mental health
additional amount (not balance) not to disorders. The goal of MHSIP is to
exceed 15 percent of the Medicare approved implement uniform, integrated mental health
charge. See balance billing. data collection systems.

mental illness All forms of illness in which N
psychological, emotional, or behavioral
disturbances are the dominating feature. The
National Committee for Quality
term is relative and variable in different
Assurance (NCQA) A national organization
cultures, schools of thought and definitions.
founded in 1979 composed of 14 directors
It includes a wide range of types and
representing consumers, purchasers and
severities.
providers of managed health care. It
morbidity The extent of illness, injury or accredits quality assurance programs in
disability in a defined population. The rate, prepaid managed health care organizations
incidence or prevalence of disease. develops and coordinates programs for
assessing the quality of care and service in
mortality Death. Used to describe the the managed care industry.
relation of deaths to the population in which
they occur. The mortality rate (death rate) National Health Services Corps (NHSC)
expresses the number of deaths in a unit of A program administered by the U.S. Public
population within a prescribed time and may Health Service that places physicians and
be expressed as crude death rates (e.g., total other providers in health professions
deaths in relation to total population during shortage areas by providing scholarship and
a year) or as death rates for specific diseases loan repayment incentives. Since 1970, the
and, sometimes, for age, sex or other Corps members have worked in community
attributes (e.g., number of deaths from health centers, migrant centers, and Indian
cancer in white males in relation to the white health facilities and in other sites targeting
male population during a given year). underserved populations.
multiple employer trust (MET) network An affiliation of providers through

Arrangement through which two or more formal and informal contracts and
employers can provide benefits, including agreements. Networks may contract
health coverage, for their employees. externally to obtain administrative and
Arrangements formed by associations of financial services.
similar employers were exempt from most
network model HMO A health care model
state regulations. Redefined as a MEWA by
in which the HMO contracts with more than
the Multiple Employer Welfare
one physician group or IPA, and may
Arrangement Act of 1982.
contract with single and multi-specialty
multiple employer welfare arrangement groups that work out of their own facilities.
(MEWA) As defined in 1983 Erlenborn The network may or may not provide care
ERISA (Employee Retirement Income exclusively for the HMO’s members.
Security Act) Amendment, an employee
nurse An individual trained to care for the
welfare benefit plan or any other
sick, aged or injured. A nurse can be defined
arrangement providing any of the benefits of
as a professional qualified by education and
an employee welfare benefit plan to the
authorized by law to practice nursing. There
employees of two or more employers.
are many different types, specialties and
MEWAs that do not meet the ERISA
grades of nurses.
definition of employee benefit plan and are
not certified by the U.S. Department of nurse practitioner A registered nurse
Labor may be regulated by states. MEWAs qualified and specially trained to provide
that are fully insured and certified must only primary care, including primary health care
meet broad state insurance laws regulating in homes and in ambulatory care facilities,
reserves. long-term care facilities and other health
care institutions. Nurse practitioners Olmstead Decision U.S. Supreme Court
generally function under the supervision of a 1999 decision interpreting ADA anti-
physician but not necessarily in his/her discrimination provisions which led the
presence. They are usually salaried rather federal government to direct State Medicaid
than reimbursed on a fee-for-service basis, authorities to provide services in the most
although the supervision physician may integrated setting appropriate for those in or
receive fee-for-service reimbursement for at risk of institutionalization. Each state is
their services. required to develop an Olmstead plan with
the active involvement of individuals with
nursing home Includes a wide range of disabilities.
institutions that provide various levels of
maintenance and personal or nursing care to Ombudsman A person responsible for
people who are unable to care for investigating and seeking to resolve
themselves and who have health problems consumer complaints.
that range from minimal to very serious. The
term includes freestanding institutions, or open access A term describing a consumer’s
identifiable components of other health ability to self-refer for specialty care. Open
facilities that provide nursing care and access arrangements allow a consumer to
related services, personal care and see a participating provider without a
residential care. Nursing homes include referral from a gatekeeper. All called open
skilled nursing facilities and extended care panel.
facilities, but not boarding homes.
open enrollment A method for assuring that
insurance plans, especially prepaid plans, do
O not exclusively select good risks. Under an
open enrollment requirement, a plan must
occupancy rate A measure of inpatient accept all who apply during a specific period
health facility use, determined by dividing each year.
available bed days by patient days. It
measures the average percentage of a open enrollment period A period during
hospital’s beds occupied and may be which consumers have an opportunity to
institution-wide or specific for one select among health plans, usually without
department or service. evidence of insurability or waiting periods.
occupational health services Health organized delivery system (ODS) See
services concerned with the physical, mental integrated services network (ISN).
and social well-being of an individual in
relation to his/her work environment and the out-of-network Any provider, hospital,
adjustment of individuals to their work. The pharmacy or other facilitator who has not
term applies to more than the safety of the contracted with the health insurance plan to
workplace and includes health and job provide services to the plan’s members.
satisfaction. In the U.S. the principal Federal
statute concerned with occupational health is out-of-pocket expense Payments made by
the Occupational Safety and Health Act an individual for medical services. These
administered by the Occupational Safety and may include direct payments to providers as
Health Administration (OSHA) and the well as payments for deductibles and
National Institute of Occupational Safety coinsurance for covered services, for
and Health (NIOSH). services not covered by the plan, for
provider charges in excess of the plan’s
limits and for enrollee premium payments.

outcome The consequence of an use participating providers, but usually pay
intervention on a patient. more if they do not.
outcome measurement A process of passive intervention Health promotion and

systematically measuring individual or disease prevention initiatives that do not
collective response to treatment services require the direct involvement of the
typically focusing on functioning issues. individual (e.g., water system fluoridation
programs) are termed “passive.” Most often
outcomes research Research on measures these types of initiatives are government
of changes in patient outcomes, that is, sponsored.
patient health status and satisfaction
resulting from specific interventions. patient origin study A study generally
Attributing changes in outcomes to care undertaken by an individual health program
requires distinguishing the effects of care or health planning agency, to determine the
from the effects of the many other factors geographic distribution of the residences of
that influence patients’ health and the patients served by one or more health
satisfaction. programs. Such studies help define
catchment and medical trade areas and are
outlier A hospital admission requiring either useful in locating and planning the
substantially more expense or a much longer development of new services.
length of stay than average. Under DRG
(diagnosis related groups) reimbursement, peer review Generally, the evaluation by
outliers are given exceptional treatment practicing physicians or other professionals
(subject to peer review and organizational of the effectiveness of services ordered or
review). performed by other members of the
profession (peers). Frequently, peer review
outline of coverage The document given to refers to the activities of the Professional
each health plan member that summarizes Review Organizations, and also to review of
the benefits, co-payment, coinsurance, research by other researchers.
deductibles, and other requirements for
obtaining services covered by the health Peer Review Organization (PRO) An
plan that are listed in full detain in the organization that contracts with CMS to
contract. investigate the quality of health care
furnished to Medicare beneficiaries, to
outpatient A patient who is receiving educate beneficiaries and medical providers,
ambulatory care at a hospital or other and to conduct a limited review of medical
facility without being admitted to the records and claims to evaluate the
facility. appropriateness of care provided.
P personal needs allowance (PNA) The

amount of an institutionalized Medicaid
participating provider A provider who has beneficiary’s own money that can be
agreed to accept a certain level of payment withheld each month from Social Security
from an indemnity plan for treating the and other retirement income sources to pay
plan’s insureds. The provider may be a for personal incidentals. The minimum PNA
hospital, pharmacy, other facility or a is $30 per month/per individual.
physician who has contractually accepted
pharmacy assistance subsidy programs
the terms and conditions as set forth by the
State-funded programs that provide
health plan. Insureds may not be required to
prescription drug insurance coverage. Most
programs focus on low-income seniors; advise it on reforms of the methods used to
some are opened to all Medicare pay physicians under the Medicare program.
beneficiaries. Generally, programs only The Commission has conducted analyses of
cover individuals without any other drug physician payment issues and worked
insurance. closely with the Congress to bring about
comprehensive reforms in Medicare
pharmacy assistance discount programs physician payment policy. Its
State programs that give members a discount recommendations formed the basis of 1989
on prescription drug purchases. These legislation that created the RBRVS
programs do not insure individuals against (resource-based relative value scale), a
the cost of drugs. resource-based fee schedule limiting the
amount physicians may charge patients.
Pharmacy Benefit Managers (PBMs)
Companies that manage pharmacy benefits Point of Service (POS) Plan A health
under contract on behalf of payers (e.g., insurance benefits program in which
state Medicaid or pharmacy assistance pro- subscribers can select between different
grams, self-insured employers). PBMs can delivery systems (i.e., HMO, PPO and fee-
be stand-alone companies or a division of a for-service) when in need of health care
larger insurance company, such as Aetna or services, rather than making the selection
Blue Cross. PBMs typically use a variety of between delivery systems at time of open
clinical and administrative procedures to enrollment at place of employment.
reduce pharmacy costs. Typically, the costs associated with
receiving care from HMO providers are less
physician assistant (PA) Also know as a than when care is rendered by PPO or non-
physician extender, a PA is a specially contracting providers.
trained and licensed or otherwise
credentialed individual who performs tasks, portability Requirement that health plans
which might otherwise be performed by a guarantee continuous coverage without
physician, under the direction of a waiting periods for persons moving between
supervising physician. plans.
physician-hospital organization (PHO) A practice guidelines Systematically

legal entity formed by a hospital and a group developed statements on medical practice
of physicians to further mutual interests and that assist physicians and other professionals
to achieve market objectives. A PHO with developing appropriate health care
generally combines physicians and a plans for specific conditions.
hospital into a single organization for the
purpose of obtaining payer contracts. preadmission certification A process under
Doctors maintain ownership of their which admission to a health institution is
practices and agree to accept managed care reviewed in advance to determine need and
patients according to the terms of a appropriateness and to authorize length of
professional services agreement with the stay consistent with norms for the
PHO. The PHO serves as a collective evaluation.
negotiating and contracting unit. It is
typically owned and governed jointly by a preauthorization The requirement of some
hospital and shareholder physicians. health care plans that an insured obtain the
plan’s approval for certain services before
Physician Payment Review Commission the service can be received and paid for by
(PPRC) Congress created the Physician the company.
Payment Review Commission in 1986 to
preexisting condition A medical condition by participating physicians to an enrolled
developed prior to issuance of a health group of persons, with a fixed periodic
insurance policy. Some policies exclude payment made in advance by (or on behalf
coverage of such conditions for a period of of) each person or family. If a health
time or indefinitely. insurance carrier is involved, then the plan is
a contract to pay in advance for the full
preexisting condition exclusion A range of health services to which the insured
contractual limitation or exclusion of is entitled under the terms of the health
benefits for a pre-existing condition. insurance contract. A Health Maintenance
Organization (HMO) is an example of a
Preferred Drug List (PDL) The purpose of prepaid group practice plan.
a PDL is to assure that clinically appropriate
benefits are available to eligible prepaid health plan (PHP)An entity that
beneficiaries at the most reasonable cost either contracts on a prepaid, capitated risk
available. It consists of drug classes that basis to provide services that are not risk-
have been selected for clinical, utilization, comprehensive services, or contracts on a
and/or cost reasons. VT Medicaid’s PDL is non-risk basis. Additionally, some entities
reviewed and approved by the DUR Board. that meet the above definition of HMOs are
The List, though, is not a representation of treated as PHPs through special statutory
all drugs covered in all of Vermont’s exemptions.
publicly funded programs. Coverage is
dependent on the program. prepayment Usually refers to any payment
to a provider for anticipated services (such
Preferred Provider Arrangement (PPA) as an expectant mother paying advance for
Selective contracting with a limited number maternity care). Sometimes prepayment is
of health care providers, often at reduced or distinguished from insurance as referring to
pre-negotiated rates of payment. payment to organizations which, unlike an
insurance company, take responsibility for
Preferred Provider Organization (PPO) arranging for, and providing, needed
Formally organized entity generally services as well as paying for them (such as
consisting of hospital and physician health maintenance organizations, prepaid
providers. The PPO provides health care group practices and medical foundations).
services to purchasers usually at discounted
rates in return for expedited claims payment prescription drug (Rx)A drug available to
and a somewhat predictable market share. In the public only upon prescription written by
this model, consumers have a choice of a physician, dentist or other practitioner
using PPO or non-PPO providers; however, licensed to do so.
financial incentives are built in to benefit
structures to encourage utilization of PPO prevailing charge One of the factors
providers. determining a physician’s payment for a
service under Medicare, set at a percentile of
premium The amount paid to an insurance customary charges of all physicians in the
company in exchange for providing locality.
coverage for a specified period of time
under a contract. Premiums are usually paid prevalence The number of cases of disease,
for a one-month period, but can be on an infected persons or persons with some other
annual or quarterly basis. attribute, present at a particular time and in
relation to the size of the population from
prepaid group practice plan A plan by which it is drawn. It can be a measurement
which specified health services are rendered of morbidity at a moment in time, e.g., the
number of cases of hemophilia in the Typically includes internists, family
country as of the first of the year. practitioners, and pediatricians.
preventive medicine Care that has the aim primary care provider (PCP) The provider
of preventing disease or its consequences. It that serves as the initial interface between
includes health care programs aimed at the member and the health care system. The
warding off illnesses (e.g., immunizations), PCP is usually a physician, selected by the
early detection of diseases (e.g., Pap member upon enrollment, who is trained in
smears), and inhibiting further deterioration one of the primary care specialties who
of the body (e.g., exercise of prophylactic treats and is responsible for coordinating the
surgery). Preventive medicine developed treatment of members assigned to his/her
following discovery of bacterial disease and plan.
was concerned in its early history with
specific medical control measures taken prior authorization A cost-control
against the agents of infectious diseases. procedure which an insurer requires a
Preventive medicine is also concerned with service or medication to be approved in
general preventive measures aimed at advance for coverage.
improving the healthfulness of the
environment. In particular, the promotion of prospective payment Any method of
health through altering behavior, especially paying hospitals or other health programs in
using health education, is gaining which amounts or rates of payment are
prominence as a component of preventive established in advance for a defined period
care. (usually a year). Institutions are paid these
amounts regardless of the costs they actually
primary care Basic or general health care incur. These systems of payment are
focused on the point at which a patient designed to introduce a degree of constraint
ideally first seeks assistance from the on charge or costs increases by setting limits
medical care system. Primary care is on amounts paid during a future period. In
considered comprehensive when the primary some cases, such systems provide incentives
provider takes responsibility for the overall for improved efficiency by sharing savings
coordination of the care of the patient’s with institutions that perform at lower than
health problems, be they biological, anticipated costs. Prospective payment
behavioral or social. The appropriate use of contrasts with the method of payment
consultants and community resources is an originally used under Medicare and
important part of effective primary care. Medicaid (as well as other insurance
Such care is generally provided by programs) where institutions were
physicians but is increasingly provided by reimbursed for actual expenses incurred.
other personnel such as nurse practitioners
or physician assistants. Prospective Payment Assessment
Commission (ProPAC) In 1983, the
primary care case management (PCCM) Congress created the Prospective Payment
The use of a primary care physician to Assessment Commission to advise the
manage the use of medical or surgical care. secretary of the Department of Health and
PCCM programs usually pay for all care on Human Services on Medicare’s diagnosis
a fee-for-service basis. related group- (DRG) based prospective
payment system. The director of the Office
primary care physician A generalist of Technology Assessment appoints its
physician who provides comprehensive members. The commission’s main
services, as opposed to a specialist. responsibilities include recommending an
appropriate annual percentage change in
DRG payments; recommended needed personal health services. Public health
changes in the DRG classification system activities include: immunizations; sanitation;
and individual DRG weights; collecting and preventive medicine, quarantine and other
evaluating data on medical practices, disease control activities; occupational
patterns and technology; and reporting on its health and safety programs; assurance of the
activities. healthfulness of air, water and food; health
education; epidemiology and others.
prospective payment system (PPS) The
payment system for home care, which began purchasing organization See health
October 1, 2000, replaced the Interim insurance purchasing cooperative (HIPC).
Payment System (IPS). Under PPS, agencies
are paid a single payment per person, per Q
60-day episode.
Qualified Medicare Beneficiaries (QMB)
protected health information Individually
Individuals eligible for Medicare Part A
identifiable health information that has been
with incomes at or below the federal poverty
received or created by a HIPAA covered
level who do not have resources exceeding
entity.
twice the level allowed under SSI
provider Hospital or licensed health care (Supplemental Security Income). State
professional or group of hospitals or health Medicaid agencies are required to pay the
care professionals that provide health care cost of Medicare Part A and Part B
services to patients. May also refer to premiums, deductibles, and co-insurance for
medical supply firms and vendors of durable Qualified Medicare Beneficiaries.
medical equipment.
quality assurance (QA) A formal
provider service organization (PSO) See methodology and set of activities designed
Provider Sponsored Network (PSN) and to access the quality of services provided.
Physician-Hospital Organization (PHO). Quality assurance includes formal review of
care, problem identification, corrective
provider sponsored network (PSN) actions to remedy any deficiencies and
Formal affiliations of providers, organized evaluation of actions taken.
and operated to provide an integrated
network of health care providers with which quality assurance plan A formal set of
third parties, such as insurance companies, managed care plan activities used to review
HMOs or other health plans, may contract and affect the quality of services provided.
for health care services to covered Quality assurance includes quality
individuals. Some models of integration assessment and corrective actions to remedy
include Physician Hospital Organizations any deficiencies identified in the quality of
(PHO) and Management Service direct patient, administrative, and support
Organizations (MSO). services.
public health The science of dealing with Quality Assurance Reform Initiative
the protection and improvement of (QARI) A process developed by the Health
community health by organized community Care Financing Administration to develop a
effort. Public health activities are generally health care quality improvement system for
those that are less amenable to being Medicaid managed care plans.
undertaken by individuals or which are less
quality of care Can be defined as a measure
effective when undertaken on an individual
of the degree to which delivered health
basis and do not typically include direct
services meet established professional
standards and judgments of value to the rehabilitation The combined and
consumer. Quality may also be seen as the coordinated use of behavioral, medical,
degree to which actions taken or not taken social, educational and vocational measures
maximize the probability of beneficial for training or retraining individuals
health outcomes and minimize risk and other disabled by disease, trauma or injury to the
untoward outcomes, given the existing state highest possible level of functional ability.
of medical science and art. Quality is Several different types of rehabilitation are
frequently described as having three distinguished: vocational, social,
dimensions: quality of input resources psychological, medical and educational.
(certification and/or training of providers);
quality of the process of services delivery reimbursement The process by which
(the use of appropriate procedures for a health care providers receive payment for
given condition); and quality of outcome of their services. Because of the nature of the
service use (actual improvement in health care environment, providers are often
condition or reduction of harmful effects). reimbursed by third parties who insure and
represent patients.
quality improvement (QI) Includes the
functions listed under quality assurance, plus reinsurance The resale of insurance
direct system enhancements on an ongoing products to a secondary market thereby
basis. spreading the costs associated with
underwriting.
R report card A report presented on quality of
health services designed to inform patients
random audit The first level of audit of a and health care purchasers of practitioner
home care agency by Medicare. If Medicare and organizational performance.
finds more than 10 percent “errors,” a more
intensive focused audit is likely to follow. resource-based relative value scale
(RBRVS) Established as part of the
rate band The allowable variation in Omnibus Reconciliation Act of 1989,
insurance premiums as defined in state Medicare payment rules for physician
regulations. Acceptable variation may be services was altered by establishing an
expressed as a ratio from highest to lowest RBRVS fee schedule. This payment
(e.g., 3:1) or as a percent from the methodology has three components: a
community rate (e.g., +/- 20%). Usually relative value for each procedure, a
based on risk factors such as age, gender, geographic adjustment factor and a dollar
occupation or residence. conversion factor.
rate review Review by a government or respite care Patient care provided
private agency of a hospital’s budget and intermittently in the home or institution in
financial data, performed for the purpose of order to provide temporary relief to the
determining the reasonableness of the family home caregiver.
hospital rates and evaluating proposed rate
increases. retrospective reimbursement Payment
made after-the-fact for services rendered on
referral The process of sending a patient the basis of costs incurred by the facility.
from one practitioner to another for health See also prospective payment.
care services. Health plans may require that
designated primary care providers authorize rider Optional coverage for benefits not
a referral for coverage of specialty services. covered in a base policy, purchased for an

additional premium. Riders may contain co- contractually offered services without regard
payments or deductibles that differ from the to cost.
base policy. Some of the more common
riders cover prescription drugs and durable risk pool A defined account to which
medical equipment. revenues and expenses are posted. A risk
pool attempts to define expected claim
risk Responsibility for paying for or liabilities and required funding to support
otherwise providing a level of health care such claims.
services based on an unpredictable need for
these services. risk pooling The process of combining risk
for all groups into one risk pool.
risk adjustment A process by which
premium dollars are shifted from a plan with risk-selection Any situation in which health
relatively healthy enrollees to another with plans differ in the health risk associated with
sicker members. It is intended to minimize their enrollees because of enrollment
any financial incentives health plans may choices made by the plans or enrollees. The
have to select healthier than average problem of risk-selection is especially
enrollees. In this process, health plans that troublesome in the Medicare HMO context.
attract higher risk providers and members Currently, evidence suggests that Medicare
would be compensated for any differences in HMOs enroll healthier Medicare
the proportion of their members that require beneficiaries, resulting in excess federal
high levels of care compared to other plans. payments to this population. Without better
risk-adjustment payments, Medicare HMOs
risk assessment The statistical method by will have incentives to either enroll healthier
which plans and policymakers estimate the beneficiaries or to deny services to high-cost
anticipated claims cost of enrollees. This enrollees.
estimation attempts to identify and measure
the presence of direct causes and risk factors risk sharing The distribution of financial
which, based on scientific evidence or risk among parties furnishing a service. For
theory, are through to directly influence the example, if a hospital and a group of
level of a specific health problem. physicians from a corporation provide health
care at a fixed price, a risk-sharing
risk-bearing entity An organization that arrangement would entail both the hospital
assumes financial responsibility for the and the group being held liable if expenses
provision of a defined set of benefits by exceed revenues.
accepting prepayment for some or all of the
cost of care. A risk-bearing entity may be an Rule 10 Quality assurance and consumer
insurer, a health plan or self-funded protections for Vermont managed care plans
employer; or a PHO (Provider Health established by the State of Vermont
Organization) or other form of PSN Department of Banking, Insurance,
(Provider Sponsored Network). Securities and Health Care Administration
(BISHCA).
risk contract A contract payment
methodology that requires the delivery of rural health network Refers to any of a
specified covered services to consumers as variety of organizational arrangements to
medically necessary in return for a fixed link rural health care providers in a common
monthly payment rate from the private or purpose.
public sector client. The MCO (Managed
Care Organization) is then liable for those rural health clinic (RHC) a clinic located
in a non-urbanized, medically underserved

area. An RHC must also: Employ a and that primary prevention was not
midlevel practitioner 50 percent of the time successful and the goal is to diminish the
the clinic is open; Provide routine diagnostic impact of disease or illness through early
and laboratory services; Establish detection, diagnosis and treatment. For
arrangements with providers and suppliers example, blood pressure screening,
to furnish medically necessary services not treatment and follow-up programs.
available at the clinic; and Provide first
response emergency care. Section 1931 The category of Medicaid that
covers low-income families. Established in
S 1996 as part of the federal welfare reform
law, Section 1931 provides Medicaid
eligibility for families that, in the past, have
screening The use of quick procedures to
been eligible for Medicaid as a result of their
differentiate apparently well persons who
eligibility for the Aid to Families with
have a disease or a high risk of disease from
Dependent Children (AFDC) program and
those who probably do not have the disease.
for other families that meet income and
It is used to identify high-risk individuals for
resource limits established by states. Section
more definitive study or follow-up. Multiple
1931 also allows states to define income and
screening (or multiphasic screening) is the
resources in ways that, in effect, increase
combination of a battery of screening tests
Medicaid eligibility levels for families.
for various diseases performed by
technicians under medical direction and service area The geographic area serviced
applied to large groups of apparently well by a health plan hospital or other provider
persons. organization, as approved by state regulatory
agencies and/or detailed in a certificate of
secondary opinions/second opinion In
authority.
cases involving non-emergency or elective
surgical procedures, the practice of seeking Section 1115 Medicaid Waiver Section
judgment of another physician in order to 1115 of the Social Security Act grants the
eliminate unnecessary surgery and contain secretary of Health and Human Services
the cost of medical care. broad authority to waiver certain laws
relating to Medicaid for the purpose of
secondary care Services provided by
conducting pilot, experimental or
medical specialists who generally do not
demonstration projects that are “likely to
have first contact with patients (e.g.,
promote the objectives” of the program.
cardiologist, urologists, dermatologists). In
Section 1115 demonstration waivers allow
the U.S., however, there has been a trend
states to change provisions of the Medicaid
toward self-referral by patients for these
programs, including: eligibility
services, rather than referral by primary care
requirements, the scope of services
providers. This is quite different from the
available, the freedom to choose to
practice in England, for example, where all
participate in a plan, the method of
patients must first seek care from primary
reimbursing providers and the statewide
care providers and are then referred to
application of the program.
secondary and/or tertiary providers, as
needed. Section 1915 Medicaid Waiver Section
1915(b) waivers allow states to require
secondary prevention Early diagnosis,
Medicaid recipients to enroll in HMOs or
treatment and follow-up. Secondary
other managed care plans in an effort to
prevention activities start with the
control costs. The waivers allow states to:
assumption that illness is already present
implement a primary care case management
system; additional benefits in exchange for more otherwise independent hospitals or
savings resulting from recipients’ use of other health programs. The sharing of
cost-effective providers; and limit the medical services might include an
providers from whom beneficiaries can agreement that one hospital provide all
receive non-emergency treatment. The pediatric care needed in a community and no
waivers are granted for two years, with two- obstetrical services while another provide
year renewals. Often referred to as a obstetrics and no pediatrics. Examples of
“freedom-of-choice waiver.” shared nonmedical services would include
joint laundry or dietary services for two or
self-funding/self-insurance An employer or more nursing homes.
group of employers sets aside funds to cover
the cost of health benefits for their skilled nursing facility (SNF) A nursing
employees. Benefits may be administered by care facility participating in the Medicaid
the employer(s) or handled through an and Medicare programs that meets specified
administrative service only agreement with requirements for services, staffing and
an insurance carrier or third-party safety.
administrator. Under self-funding, it is
generally possible to purchase stop-loss small-group market The insurance market
insurance that covers expenditures above a for products sold to groups that are smaller
certain aggregate claim level and/or covers than a specified size, typically employer
catastrophic illness or injury when groups. The size of groups included usually
individual claims reach a certain dollar depends on state insurance laws and thus
threshold. varies from state to state, with 50 employees
the most common size.
service period Period of employment that
may be required before an employee is Social Security Disability Insurance
eligible to participate in an employer- (SSDI) The portion of Social Security that
sponsored health plan, most commonly one pays monthly benefits to disabled workers
to three months. under the age of 65 and their dependents. To
be eligible for SSDI, individuals must have
severity of illness A risk prediction system contributed a minimum of 40 quarters into
to correlate the “seriousness” of a disease in the Security System. SSDI recipients (but
a particular patient with the statistically not their dependents) automatically become
“expected” outcome (e.g., mortality, eligible for Medicare after a two-year
morbidity, efficiency of care). Most waiting period.
effectively, severity is measured at or soon
after admission, before therapy is initiated, sole community hospital (SCH) A hospital
giving a measure of pretreatment risk. that (1) is more than 50 miles from any
similar hospital, (2) is 25-to-50 miles from a
shadow pricing Within a given employer similar hospital and isolated from it at least
group, pricing of premiums by HMO(s) one month a year as by snow, or is the
based upon the cost of indemnity insurance exclusive provider of services to at least 75
coverage, rather than strict adherence to percent of its service area populations, (3) is
community rating or experience rating 15-to-25 miles from any similar hospital and
criteria. is isolated from it at least one month a year,
or (4) has been designed as an SCH under
shared services The coordinated, or previous rules. The Medicare DRG
otherwise explicitly agreed upon, sharing of (Diagnosis Related Groups) program makes
responsibility for provision of medical or special optional payment provisions for
nonmedical services on the part of two or SCHs, most of which are rural, including
providing that their rates are permanently so health insurance program for children, or (3)
that 75 percent of their payment is hospital do both. The program is financed with
specific and only 25 percent is based on federal and state funds, with the federal
regional DRG rates. government paying a greater share than it
pays for the state’s regular Medicaid
solo practice Lawful practice of a health program. Each state has a different SCHIP
occupation as a self-employed individual. program.
Solo practice is by definition private practice
but is not necessarily general practice or fee- stop-loss insurance A form of health
for-service practice (solo practitioners may insurance for a health plan or self-funded
be paid by capitation, although fee-for- employer that provides protection from
service is more common). Solo practice is medical expense claims over a certain limit
common among physicians, dentists, each year.
podiatrists, optometrists and pharmacists.
student rider A rider that extends coverage
specialist A physician, dentist or other for children beyond the usual age limit if the
health professional who is specially trained children are enrolled as full-time students.
in a certain branch of medicine or dentistry The rider will include the new age limit for
related to specific services or procedures coverage of the students.
(e.g., surgery, radiology, pathology); certain
age categories of patients (e.g., geriatrics); subscriber The person responsible for
certain body systems (e.g., dermatology, payment of premiums or whose employment
orthopedics, cardiology); or certain types of is the basis for eligibility for membership in
diseases (e.g., allergy, periodontics). a health plan.
Specialists usually have advanced education
and training related to their specialties. substance abuse A maladaptive pattern of
frequent and continued usage of a
spend down The amount of expenditures for substance—a drug or medicine—that results
health care services, relative to income, that in significant problems, such as failing to
qualifies an individual for Medicaid in states meet major obligations and having multiple
that cover categorically eligible, medically legal, social, family, health, work or
indigent individuals. Eligibility is interpersonal difficulties.
determined on a case-by-case basis.
Substance Abuse and Mental Health
Staff—Model HMO An HMO in which Services Administration (SAMHSA) The
physicians practice solely as employees of mission of SAMHSA is to provide through
the HMO and usually are paid a salary. (See the U.S. Public Health Service, a national
“Group Model HMO” and “Health focus for the federal effort to promote
Maintenance Organization.” effective strategies for the prevention and
treatment of addictive and mental disorders.
State Children’s Health Insurance SAMHSA is primarily a grant making
Program (SCHIP) The federal block grant organization, promoting knowledge and
program established in 1997 through Title scientific state-of-the-art practice. SAMHSA
XXI of the Social Security Act. SCHIP strives to reduce barriers to high quality,
provides funds to states to establish a health effective programs and services for
insurance program for targeted low-income individuals who suffer from, or are at risk
children in families with income below 200 for, these disorders, as well as for their
percent of the federal poverty level (FPL). families and communities.
States can: (1) expand Medicaid to cover
children at higher incomes, (2) create a new
Supplemental Security Income (SSI) A therapeutic class that the Food and Drug
federal cash assistance program for low- Administration (FDA) has determined to be
income aged, blind and disabled individuals “bioequivalent” (same active ingredient with
established by Title XVI of the Social the same absorption rate). This includes
Security Act. States may use SSI income substitution of a brand name for a brand
limits to establish Medicaid eligibility. name or substitution of a generic drug for a
brand name. Generally, this results in
T prescribing the less costly compound.
third-party payer Any organization, public

Tax Equity and Fiscal Responsibility Act
or private that pays or insures health or
of 1982 (TEFRA)The Federal law that
medical expenses on behalf of beneficiaries
created the current risk and cost contract
or recipients. An individual pays a premium
provisions under which health plans contract
for such coverage in all private and in some
with CMS.
public programs; the payer organization then
technology assessment A comprehensive pays bills on the individual’s behalf. Such
form of policy research that examines the payments are called third-party payments
technical, economic and social and are distinguished by the separation
consequences of technological applications. among the individual receiving the service
It is especially concerned with unintended, (the first party), the individual or institution
indirect, or delayed social impacts. In health providing it (the second party) and the
policy, the term has come to mean any form organization paying for it (third party).
of policy analysis concerned with medical
third-party administrator (TPA) A fiscal
technology, especially the evaluation of
intermediary, a person or an organization
efficacy and safety.
that serves as another’s financial agent. A
telemedicine The use of telecommunications TPA processes claims, provides services and
(i.e., wire, radio, optical or electromagnetic issues payments on behalf of certain private,
channels transmitting voice, data and video) federal and state health benefit programs or
to facilitate medical diagnosis, patient care, other insurance organization.
and/or distance learning.
tiered formulary Use of multiple co-
tertiary care Services provided by highly payment rates for formulary drugs, designed
specialized providers (e.g., neurologists, to encourage use of the least expensive
neurosurgeons, thoracic surgeons, intensive alternative. Typically, tiered formularies
care units). Such services frequently require have either two or three co-payment tiers. A
highly sophisticated equipment and support three-tiered formulary generally features a
facilities. The development of those services generic co-payment, preferred brand co-
has largely been a function of diagnostic and payment, and non-preferred brand or off-
therapeutic advances attained through basic formulary co-payment.
and clinical biomedical research.
Title XVIII (Medicare) The title of the
tertiary prevention Prevention activities Social Security Act that contains the
that focus on the individual after a disease or principal legislative authority for the
illness has manifested itself. The goal is to Medicare program and therefore a common
reduce long-term effects and help name for the program.
individuals better cope with symptoms.
Title XIX (Medicaid) The title of the Social
therapeutic substitution Replacement of Security Act that contains the principal
one drug with another drug from the same legislative authority for the Medicaid
program and therefore a common name for utilization review (UR) Evaluation of the
the program. necessity, appropriateness and efficiency of
the use of health care services, procedures
U and facilities. In a hospital, this includes
review of the appropriateness of admissions,
uncompensated care Service provided by services ordered and provided, length of stay
physicians and hospitals for which no and discharge practices, both on a
payment is received from the patient or from concurrent and retrospective basis.
third party payers. Some costs for these Utilization review can be done by a peer
services may be covered through cost review group or a public agency.
shifting. Not all uncompensated care results
from charity care. It also includes bad debts V
from persons who are not classified as
charity cases but who are unable or vertical integration Organization of
unwilling to pay their bill. production whereby one business entity
controls or owns all states of the production
underinsured People with public or private and distribution of goods or services.
insurance policies that do not cover all
necessary health care services, resulting in VIPER A Vermont law that requires
out-of-pocket expenses that exceed their continuation of coverage for people who
ability to pay. leave employer groups with 20 or less
employees. This law requires employers to
uninsured People who lack public or offer those employees the option to continue
private health insurance. their group health care coverage for up to six
months.
usual, customary and reasonable (UCR)
fees The use of fee screens to determine the vital statistics Statistics relating to births
lowest value of physician reimbursement (natality), deaths (mortality), marriages,
based on: (1) the physician’s usual charge health and disease (morbidity). Vital
for a given procedure, (2) the amount statistics for the United States are published
customarily charged for the service by other by the National Center for Health Statistics.
physicians in the area (often defined as a
specific percentile of all charges in the W
community), and (3) the reasonable cost of
services for a given patient after medical
waiting period A set period of time that an
review of the case.
employer may make a new employee wait
utilization Use; commonly examined in before enrolling in the company’s health
terms of patters or rates of use of a single care plan. The health insurance policy
service or type of service, e.g., hospital care, cannot impose a waiting period, but the
physician visits, prescription drugs. Use is employer may.
also expressed in rates per unit of population
wellness A dynamic state of physical,
at risk for a given period.
mental and social well-being; a way of life
utilization management the process of which equips the individual to realize the
evaluating the medical necessity, full potential of his/her capabilities and to
appropriateness and efficiency of health care overcome and compensate for weaknesses; a
services against established guidelines and lifestyle that recognizes the importance of
criteria. nutrition, physical fitness, stress reduction
and self-responsibility. Wellness has been
viewed as the result of four key factors over wrap around coverage A continuum of
which an individual has varying degrees of benefits designed around an individual
control: human biology, environment, health enrollee’s treatment needs.
care organization (system) and lifestyle.
wholesale acquisition price The factory

charge, before discounts to wholesalers.

Glossary of Commonly Used Health Care Terms

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GLOSSARY OF

Vermont Health Care Resources 1 Health Care Terms

affiliation agreement An agreement

Agency for Health Care Policy and

allied health personnel Specially trained ambulatory setting A type of institutional

assignment A process in which a Medicare

beneficiary An individual who receives

benefit cap A dollar limit placed on the

Vermont Health Care Resources 6 Health Care Terms

carrier A private organization, usually an

coinsurance A cost-sharing requirement

community-based care The blend of health community rating A method of calculating

Community Mental Health Center continuing medical education (CME)

contract discounts An economic incentive cost center An accounting device whereby

Diagnosis Related Groups (DRGs)

durable medical equipment Prescribed Employee Retirement Income Security

Vermont Health Care Resources 15 Health Care Terms

exclusive provider arrangement (EPA) An

guaranteed renewable policy A health health care provider An individual or

health promotion Any combination of Health Systems Agency (HSA) A health

Vermont Health Care Resources 22 Health Care Terms

indigent care Health services provided to instrumental activities of daily living An

individual (nongroup) insurance Health insured A participant in a health care plan

Vermont Health Care Resources 23 Health Care Terms

intermediate care facility (ICF) An

Vermont Health Care Resources 24 Health Care Terms

McCarran-Ferguson Act A 1945 Act of medical savings account (MSA) An

Vermont Health Care Resources 27 Health Care Terms

multiple employer trust (MET) network An affiliation of providers through

Vermont Health Care Resources 29 Health Care Terms

outcome measurement A process of passive intervention Health promotion and

P personal needs allowance (PNA) The

physician-hospital organization (PHO) A practice guidelines Systematically

Vermont Health Care Resources 35 Health Care Terms

Vermont Health Care Resources 36 Health Care Terms

third-party payer Any organization, public

wholesale acquisition price The factory

Vermont Health Care Resources 42 Health Care Terms

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