GLOSSARY

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access
The ability to obtain needed health care services. (PPRC, 1997)

acquisition
the purchase by cash or other compensation or the receipt by exchange or gift of majority voting control of a corporation or of all or substantially all the assets of a corporation.

actuary
is an insurance professional who calculates predictable health risks and rates and helps set health insurance premium costs.

admitting privileges
is the authorization a governing board gives to a provider to admit a patient into a particular hospital or health care facility to provide patient care. Privileges are based on the provider’s license, education, training and level of experience.

advance directive
written instructions recognized under Washington law for the provision of health care when an individual is incapacitated. Advance directives take two forms: living wills and Durable Power of Attorney for Health Care.

adverse selection
the tendency of people who are in poorer than average health to apply for insurance coverage.

affiliation
an agreement, usually formal, between two or more otherwise independent hospitals, programs or providers describing their relationship to each other.

Agency for Health Care Policy and Research (AHCPR)
created by the Omnibus Budget Reconciliation Act (OBRA) of 1989 as a component of the U.S. Public Health Service (PHS). AHCPR is responsible for research on quality, appropriateness, effectiveness and cost of health care, and for using this data to promote improvement in clinical practice and the organization, financing and delivery of health care.

alliance
is a formal organization or association, owned by shareholders or controlled by members, that works on behalf of the common interests of its individual members in the provision of services and products and in the promotion of activities and ventures.

all-payer system
all payers of health care bills, including the government, private insurers, large companies or individuals with pay rates set by the government for services.

allowable expenses
the necessary, customary and reasonable expenses that an insurer will cover.

allowed charge
term used by Medicare to define the amount of an expense it will consider for payment. For most procedures and services, Medicare pays 80 percent of the allowed charge.

alternate delivery systems
health services provided in other than an in-patient, acute care hospital, such as skilled and intermediate nursing facilities, hospice programs and home health care. They are designed to provide needed services in a more effective manner.

alternative treatment plan
provision in managed care arrangements for treatment outside of a hospital.

ambulatory care
health services provided on an outpatient basis.

Ambulatory Patient Classifications (APC)
A system for classifying outpatient services and procedures for purposes of payment. The APC system classifies some 7,000 services and procedures into about 300 procedure groups (MedPac, 1998).

ancillary
support services and procedures offered in hospitals or out-patient settings.

anti-trust laws
are state and national laws that prohibit health care and other providers from price-fixing or developing monopolies that would prevent consumers from having choices in terms of costs and services.

any willing provider
any health care provider that complies with an insurer’s preferred provider terms and conditions may apply for and shall receive designation as a preferred provider.

assisted living facilities
are living arrangements for the elderly and disabled who only need assistance with daily living activities, such as dressing, bathing or cooking.

average length of stay (ALOS)
the total number of hospital bed days divided by the number of admissions or discharges during a specified period.

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benefit levels
the limit or degree of services a person is entitled to receive based on their contract with a health plan or insurer.

benefit package
services an insurer, government agency or health plan offers to a group or individual under the terms of a contract.

Board of Health
The State Board of Health (for Washington State) has ten members, nine of whom are appointed by the Governor. The tenth member is the Secretary of the State Department of Health, or designee. The membership includes people who are experienced in matters of health and sanitation, an elected city official who is a member of a local board of health, a local health officer, and two people representing consumers of health care.

Local boards of health are governing bodies of at least three persons who supervise all matters pertaining to the preservation of the life and health of the people within their jurisdiction. Each local board of health enforces public health statutes and rules, supervises the maintenance of all health and sanitary measures, enacts local rules and regulations, and provides for the control and prevention of any dangerous, contagious, or infectious disease. (PHIP, 1996)

brain death
total irreversible cessation of cerebral function, as well as cessation of spontaneous function of the respiratory and circulatory systems.

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capitation
method of payment for health services in which a provider is paid a fixed amount for each patient served regardless of services provided to each patient.

carve-out benefit
specific benefits that are administered separately from the rest of an organization’s basic health insurance package. Carve-out benefits are frequently managed by an intermediary other than the one that administers the firm’s basic insurance plan. Examples of carve-out benefits include mental health and substance abuse, dental, vision, eye care and prescription drugs.

case management
a managed care technique in which a patient with a serious medical condition is assigned an individual who arranges for cost-effective treatment, often outside a hospital.

case mix
is the range of age, sex, health status and severity of illness of patients for which a health plan, case manager, provider or hospital is responsible.

census
the average number of inpatients who receive hospital care each day, excluding newborns.

CHAMPUS
is a health plan for the dependents of active duty military personnel and retired military personnel and their dependents. CHAMPUS stands for Civilian Health and Medical Program for the Uniformed Services.

chronic illness
is a condition that will not improve, that lasts a lifetime or recurs and may result in long-term care needs. Chronic illnesses include Alzheimer’s disease, diabetes, epilepsy and some mental illnesses.

claims
are bills for health services. Claims are sent by physicians and other providers, hospitals, laboratories, pharmacies, etc.

Clinical Laboratory Improvement Amendment of 1988 (CLIA 88)
certification standards for laboratories. They were established to consolidate the requirements for Medicare participation with rules for laboratories engaged in interstate testing under the CLIA ’67 program. The standards contain quality control and quality assurance, proficiency testing and personnel requirements.

collaboration
any type of merger, acquisition, joint venture or affiliation agreement between two or more health care organizations.

commissioner
an elected official who serves on the Governing Board and provides oversight and direction for a public hospital district.

community accountability
the responsibility of providers in a network to document to members (or enrollees) their progress toward specific community health goals and their maintenance of specific clinical standards.

Community Care Network (CCN)
a set of providers that provide patients with an integrated continuum of care, organized on a community level.

community health needs assessment
a technique for developing a profile of community health that measures factors inside and outside the traditional medical service and public health definitions and practices. Needs assessments identify gaps in health care services; identify special targeted populations; identify health problems in the community; identify barriers to access to health care services and estimate projected future needs.

community rating
a method of calculating health insurance premiums in which employer groups and individuals pay the same rates.

complementary medicine
any number of therapies, such as acupuncture, homeopathy, or herbal medicine that serve to complement traditional western health care approaches.

concurrent review
a managed care technique in which a managed care firm continuously reviews the charts of hospitalized patients for length of stay and appropriate treatment.

Consolidated Omnibus Budget Reconciliation Act (COBRA)
federal law that requires employers with more than 20 employees to extend group health insurance coverage for at least 18 months after employees leave their jobs. Employees must pay 102 percent of the premium.

consolidation
unification of two or more corporations by dissolution of existing ones and creation of a single new corporation.

Consumer Price Index (CPI)
a measure of inflation encompassing the cost of all consumer goods and services.

Consumer Price Index, Medical Care Component
a measure of inflation encompassing the cost of all purchased health care services.

continuum of care
a comprehensive set of services ranging from preventive and ambulatory services to acute care to long-term and rehabilitative services. By providing continuity of care, the continuum focuses on prevention and early intervention for those who have been identified as high risk and provides easy transition from service to service as needs change.

continuous quality improvement (CQI)
an approach to organizational management that emphasizes meeting and exceeding consumer needs and expectations. Scientific methods are used to continually improve work processes, and to empower all employees to engage in continuous improvement of their work.

copayment (copay)
a cost-sharing arrangement in which an insured person pays a specified charge for a specified service, such as $10 for an office visit. The insured is usually responsible for payment at the time the health care is rendered. Typical copayments are fixed or variable flat amounts for physician office visits, prescriptions, or hospital services.

cost containment
control or reduction of inefficiencies in the consumption, allocation or production of health care services that contribute to higher-than-necessary costs.

cost-related reimbursement
method of payment for health services in which the insurer pays the provider based on the provider’s cost of delivering care.

cost-shifting
a phenomenon occurring in the U.S. health care system in which providers are inadequately reimbursed for their costs and subsequently raise their prices to other payers in an effort to recoup costs. Low reimbursement rates from government health care programs often cause providers to raise prices for medical care to private insurance carriers.

covered lives
refers to the total number of people in a health plan or the people covered by an insurer.

credentialing and privileging
process by which hospitals and health facilities determine the scope of practice of practitioners providing services in the hospital. The criteria for granting privileges or credentialing are determined by the hospital and include individual character, competence, training, experience and judgment.

critical access hospitals
A provision of the Balanced Budget Amendment of 1997, allowing rural hospitals to provide a minimum but essential level of health care service to their communities.

critical paths
Critical Paths document a standard pattern of care to be followed for each patient and are developed primarily as a nursing tool specific to a healthcare organization and its unique system (Meyer and Feingold, 1995). Synonyms for Care Paths: critical paths, practice guidelines/parameters, clinical guidelines/protocols/algorithms, care tracks, care maps, care process models, case care coordination, collaborative case management plans, collaborative care tracks, collaborative paths, coordinated care, minimum standards, patient pathways, quality assurance triggers, reference guidelines, service strategies, recovery routes, target tracks, standards of care, standard treatment guidelines, total quality management, key processes, anticipated recovery paths (Lumsdon and Hagland, 1993)

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diagnosis related groups (DRGs)
a method of reimbursing providers based on the medical diagnosis for each patient. Hospitals receive a set amount, determined in advance, based on the length of time patients with a given diagnosis are likely to stay in the hospital. Also called prospective payment system (PPS).

direct contracting
an agreement between a hospital and a corporate purchaser for the delivery of health care services at a certain price. A third party may be included to provide administrative and financial services.

discharge planning
the evaluation of patients’ medical needs in order to arrange for appropriate care after discharge from an inpatient setting.

disease management
refers to the process of a physician managing a patient’s disease (such as asthma or epilepsy) on a long-term, continuing basis, rather than treating a single episode.

disproportionate share (DSH) adjustment
A payment adjustment under Medicare's prospective payment system or under Medicaid for hospitals that serve a relatively large volume of low-income patients. (MedPAC, 1998)

durable medical equipment (DME)
includes wheelchairs, artificial limbs, and other non-disposable equipment. Certain kinds of DME are covered under certain plans and Medicare. Not all DME is covered by insurance or public programs.

durable power of attorney for health care
allows individuals to designate in advance another person to act on their behalf if they are unable to make a decision to accept, maintain, discontinue or refuse any health care services.

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eligibility
defines who receives health care services and benefits, and for what period of time they qualify to use those benefits.

Employee Retirement Income Security Act (ERISA)
federal law that establishes uniform standards for employer-sponsored benefit plans. Because of court decisions, the law effectively prohibits states from experimenting with alternative health-financing arrangements without waivers from Congress. The law generally prohibits states from regulating employers that self-insure their employees’ health plans.

essential community providers
Providers such as community health centers that have traditionally served low-income populations. (PPRC, 1994)

ethics committee
multi-disciplinary group that convenes for the purpose of staff education and policy development in areas related to the use and limitation of aggressive medical technology; acts as a resource to patients, family staff, physicians and clergy regarding health care options surrounding terminal illness and assisting with living wills.

exclusions
medical conditions specified in an insurance policy for which the insurer will provide no benefits.

exclusive provider organization (EPO)
a health care payment and delivery arrangement in which members must obtain all their care from doctors and hospitals within an established network. If members go outside, no benefits are payable.

excess capacity
the difference between the number of hospital beds being used for patient care and the number of beds available.

experience rating
a method of calculating health insurance premiums for a group based entirely or partly on the risks the group presents. An employer whose employees are unhealthy will pay higher rates that another whose employees are healthier.

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fee-for-service (FFS)
a method of payment in which each service provided to patients is associated with a corresponding fee to be paid to the provider.

fee schedule
maximum dollar amounts that are payable to health care providers. Medicare has a fee schedule for doctors who treat beneficiaries. Insurance companies have fee schedules that determine what they will pay under their policies.

first dollar coverage
a health insurance policy with no required deductible.

fiscal intermediary (FI)
an organization that acts as an intermediary between the hospital and a third-party payer. It receives billings from the hospital and makes payments on behalf of the payer for covered services. It is, in turn, reimbursed by the third-party payer.

for-profit hospital
a hospital operated for the purpose of making a profit for its owner(s). The initial source of funding is typically through the sale of stock; profits are paid to stockholders in dividends. Also referred to as a proprietary or investor-owned hospital.

foundation model
involves a hospital or health care system in the formation of a new tax-exempt corporation that acquires the tangible and intangible assets of a medical group and contracts with the medical group for professional services. The foundation employs all non-physician staff and is responsible for management, facilities, equipment and support services. The contracting medical group remains independent, with a board composed entirely of physicians.

full-time equivalent personnel (FTE)
refers to employees; total FTE personnel is calculated by dividing the hospital’s total number of paid hours by 2080, the number of annual paid hours for one full-time employee.

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gatekeeper
a primary care provider who coordinates, manages and authorizes all health care services provided to a covered beneficiary. May be a nurse, social worker, physician’s assistant or a primary care physician (e.g., internist, family/general practitioner, pediatrician and in some cases, OB/GYN).

gatekeeper PPO
a health care payment and delivery system consisting of networks of doctors and hospitals. Members must choose a primary care physician, use doctors in the network or face higher out-of-pocket costs.

global budget
a statewide or nationwide limit on overall public and private spending for health care services.

global payment
payment arrangements where hospitals and physicians share in one prospectively determined/negotiated, comprehensive fee for a specific service, such as heart surgery, often to achieve marketing advantages.

group model HMO
in this arrangement, the HMO contracts with one or more multi-specialty groups to provide services to beneficiaries. The contracting group receives either a capitated payment or a percentage of the HMO’s premium in exchange for providing both primary and specialty care services to persons enrolled in the HMO. Compensation and distributions to the physicians practicing within the medical group is left to the discretion of the medical group itself. Although a group model HMO may serve non-HMO patients, most of its patients usually belong to the HMO.

group practice
the provision of medical services by three or more physicians formally organized to provide medical care, consultation, diagnosis and/or treatment through the joint use of equipment and personnel. The income from the medical practice is distributed in accordance with methods determined by members of the group. Group practices have a single-specialty or multi-specialty focus.

guaranteed renewable
an insurance contract that cannot be terminated when the insured pays the required premiums in a timely manner. Insurers have the right to raise premiums, but only for an entire class of policyholders.

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Health and Human Services (HHS)
the U.S. Department of Health and Human Services, formerly the Department of Health, Education and Welfare.

Health Care Financing Administration (HCFA)
the federal agency that administers the Medicare and Medicaid programs and determines provider certification and reimbursement.

health maintenance organization (HMO)
an organization that provides a wide range of comprehensive health care services for a specified group at a fixed periodic payment, regardless of how much service the HMO provides. An HMO may be established by the government, medical schools, hospitals, employers, labor unions, consumer groups, insurance companies and hospital-medical plans.

health promotion
Health promotion is the science and art of helping people change their lifestyle to move toward a state of optimal health. Optimal health is defined as a balance of physical, emotional, social, spiritual and intellectual health.. (AJHP, 1989)

health plan
a network of doctors, hospitals and insurers that provides coverage through contracts negotiated with health alliances.

Health Plan Employer Data and Information Set (HEDIS)
a data reporting system focusing on quality, access, patient satisfaction, membership, utilization and finances developed by the National Committee on Quality Assurance (NCQA).

Health Services Act of 1993
A Washington State law enacted in May 1993 that sets forth early implementation measures and a process for overall reform of the health services system. The intent is to stabilize health services costs, assure access to essential services for all residents, actively address the health care needs of persons of color, improve the public's health, and reduce unwarranted health services costs. (PHIP, 1996)

home health care
provides health care services in a patient’s home rather than a hospital or other institutional setting. The services provided include nursing care, social services and physical, speech or occupational therapy.

horizontal integration
refers to the combination of similar types of providers, often in different geographic regions and serving different markets.

hospice
the provision of medical care and support services (such as pain and symptom management, counseling and bereavement services) to terminally ill patients and their families. A hospice may be a freestanding facility, a unit of a hospital or other institution or a separate program of a hospital, agency or institution.

hospital market basket index (HMBI)
a measure of inflation of the cost of goods and services purchased by hospitals.

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International Classification of Diseases, Clinical Modification (ICD-9-CM)
A diagnosis and procedure classification system designed to facilitate collection of uniform and comparable health information. This system is used to group patients into DRGs. (HCFA) (MedPAC, 1998)

indemnity insurance
coverage offered by insurance companies in which individual persons insured are reimbursed for medical expenses by the company. Payments may be made to the individual incurring the expense or, in many cases, directly to providers. Indemnity related only to specific loss incurred by the insured person after the fact.

independent (or individual) practice association (IPA)
a type of HMO that is an independently organized network of physicians (IPA) who provide care in their own offices to patients enrolled in HMOs. IPA physicians, unlike their prepaid group practice counterparts, serve other fee-for-service and HMO patients. IPA physicians are sometimes paid prospectively on a capitation basis, although many plans reimburse specialists on a modified fee-for-service basis. In most IPA models, the primary care physician serves as a gatekeeper and patients must receive a referral before going to a specialist.

integrated delivery system (IDS)
a network of organizations that assumes and manages risk and provides or arranges to provide a coordinated continuum of services to a defined population and is held financially and clinically accountable for the health status of the population served.

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Joint Commission on Accreditation of Healthcare Organizations (JCAHO)
the official organization that evaluates and monitors the quality of care provided in hospitals based on standards established by the Joint Commission.

joint venture
a legal arrangement between two or more entities to provide service(s), product(s) or both.

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length of stay (LOS)
the period of hospitalization as measured in days billed; average length of stay (ALOS) is determined by discharge days divided by discharges.

living will
document generated by a person for the purpose of providing guidance about the medical care to be provided if the person is unable to articulate those decisions (see Advance Directive).

long-term care
a continuum of maintenance, custodial and health services to the chronically ill, disabled or retarded provided on an inpatient (rehabilitation facility, nursing home, specialty hospital), out-patient or at-home basis.

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managed care
financing and delivery systems which manage utilization and apply financial controls to providers in order to provide cost-effective health benefits. Managed care arrangements typically include a specific provider network that enrollees are encouraged or required to use, and benefit designs intended to create incentives for enrollees to use cost-effective providers and services. Managed care arrangements take many forms, the best known of which are health maintenance organizations (HMOs)..

managed collaboration
the planned cooperation of multiple providers for the benefit of the community.

managed competition
an economic theory that combines free market forces with government regulation. In this concept, large groups of consumers buy health care from networks of care providers. The aim is to create business competition among those networks, thereby restraining prices and encouraging quality of care.

management service organization (MSO)
a management entity, either for-profit and wholly-owned by a hospital or created via a hospital-physician joint venture. An MSO acquires the tangible assets of a medical group and contracts with the group to provide all facilities, equipment and administrative services for a management fee.

mandated benefits
coverage that states require insurers to include in health insurance policies such as pre-natal care, mammographic screening and care for newborns. Sometimes called state mandates.

market share
in the context of managed care, that part of the market potential that a managed care company has captured; usually market share is expressed as a percentage of the market potential. For instance, the percentage of a market’s population that is enrolled in a managed care company’s plan.

Medicaid
a state-federal program under Title 19 of the Social Security Act that pays the health care bills for people, regardless of age, who have insufficient income and assets to pay the costs themselves.

medically necessary
those covered services required to preserve and maintain the health status of a member or eligible person in accordance with the area standards of medical practice in the medical community where services are rendered.

Medicare
federal program under Title 18 of the Social Security Act that provides hospital and medical coverage to people 65 and over and to certain disabled individuals regardless of age.

Medicare assignment
means a provider will not bill a patient for more than the rates Medicare defines as reasonable and customary.

Medicare+Choice
A program created by the Balenced Budget Act of 1997 to replace the existing system of Medicare risk and cost contracts. Beneficiaries will have the choice during an open season each year to enroll in a Medicare+Choice plan or to remain in traditional Medicare. Medicare+Choice plans may include coordinated care plans (HMOs, PPOs, or plans offered by provider -sponsored organizations); private fee-for-service plans; or plans with medical savings accounts. (MedPAC, 1998)

Medicare Geographic Classification Review Board
established by Congress in1990 to review hospital requests for geographic reclassification for Medicare prospective payment system (PPS) purposes. To be reclassified, hospitals generally must be located in an adjacent county and pay wages equal to at least 85 percent of those paid by hospitals in the area for which reclassification is being requested.

Medicare Part A
the hospital insurance portion of Medicare that pays for inpatient hospital care.

Medicare Part B
the hospital insurance portion of Medicare that pays for outpatient and physician services that are not covered under Part A.

Medicare-supplement policy
a type of health insurance policy that provides benefits for services Medicare does not cover.

Medicare risk contract
a type of contract Medicare enters into with health maintenance organizations to provide benefits to HMO members. Members receiving benefits under this arrangement are locked in; they must receive all their care from the HMO or Medicare will not reimburse them.

merger
union of two or more organizations by the transfer of all assets to one organization that continues to exist while the other(s) is (are) dissolved.

morbidity
the rate at which incidence and severity of illnesses or accidents occurs in a particular area or population.

mortality
incidence of death in a defined population.

multi-hospital system
two or more hospitals owned, leased, contract managed or sponsored by a central organization. They can be either not-for-profit or investor-owned hospitals.

multiple option plan
employees are offered choice of several types of coverage, usually from among an HMO, a PPO and a major medical indemnity plan.

multi-specialty group
a physician practice environment where diverse fields of medicine may converge to bring patients and purchasers a more unified and comprehensive service package.

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network
a group of providers, typically linked through contractual arrangements, which provide a defined set of benefits.

not-for-profit hospital
a hospital that operates on a not-for-profit basis under the ownership of a private corporation. Typically, a not-for-profit hospital is run by a board of trustees, is exempt from federal and state taxes and uses its profits to cover capital expenses and future operating costs.

nursing facility
An institution that provides skilled nursing care and rehabilitation services to injured, functionally disabled, or sick persons. Formerly, distinctions were made between intermediate care facilities (ICFs) and skilled nursing facilities (SNFs). The Omnibus Budget Reconciliation Act of 1987 eliminated this distinction effective October 1, 1990, by requiring all nursing facilities to meet SNF certification requirements. See Skilled Nursing Facility.  (MedPAC, 1998)

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Occupational Safety and Health Administration (OSHA)
agency of the U. S. Department of Labor charged with the responsibility of reducing occupational exposure and risk to workers’ health and safety. OSHA establishes rules, monitors compliance through inspection and enforces rules through penalties and fines for
non-compliant organizations.

open enrollment period
time during which uninsured individuals may join a health care plan or insured individuals can switch plans without proving they are healthy.

outcome
measures of the end result of health care. Outcomes are usually measured in terms of cost, mortality, health status, and quality of life or patient function. Outcome measures are the specific criteria used to determine or describe the outcome.

outcome measurement
the process of systematically tracking a patient’s clinical treatment and responses to that treatment using generally accepted outcomes measures or quality indicators.

outcome research
investigation designed to determine the relative effectiveness of specific treatments for specific health conditions

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payer (payor)
is any agency, insurer or health plan that pays for health care services and is responsible for the costs of those services.

peer review organization (PRO)
(1) An organization contracting with HCFA (Health Care Financing Administration) to review the medical necessity and the quality of care provided to Medicare beneficiaries; formerly called Utilization and Quality Control Peer Review Organization. (PPRC 1993)
(2) An organization that contracts with HCFA to investigate the quality of health care furnished to Medicare beneficiaries and to educate beneficiaries and providers. PROs also conduct limited review of medical records and claims to evaluate the appropriateness of care provided. (ProPAC, 1996)

per diem cost
refers to hospital or other inpatient institutional costs per day or for a day of care. Hospitals occasionally charge for their services on the basis of a per diem rate derived by dividing their total costs by the number of inpatient days of care given.

performance measure
A specific measure of how well a health plan does in providing health services to its enrolled population. Can be used as a measure of quality. Examples include percentage of diabetics receiving annual referrals for eye care, mammography rate, or percentage of enrollees indicating satisfaction with care. (PPRC, 1996)

physician-hospital organization (PHO)
an entity sponsored and jointly governed by a hospital and a subset of its medical staff to negotiate and service managed care contracts and achieve administrative efficiencies.

Physician Payment Review Commission (PPRC)
congressional entity created in 1986 to provide advice on Medicare physician payment issues. It establishes administrative rules, policies and procedures regarding allowable Medicare charges.

plant replacement and expansion fund
a fund restricted by donors or other external parties to the acquisition of plant assets.

point of service (POS) plans
combines the characteristics of indemnity insurance and HMOs. Generally, at the time service is rendered, the insured can elect to receive the service from an HMO network provider, at a discount or with no out-of-pocket cost, or from a non-network provider, subject to substantially higher patient cost-sharing.

portability
describes the ability of the consumer to take health care benefits from job to job.

practice guidelines
are systematically developed statements on medical practices that assist a practitioner in making decisions about appropriate health care for specific medical conditions. Managed care organizations frequently use these guidelines to evaluate appropriateness and medical necessity of care.

pre-existing condition
a physical or mental condition that an insured has prior to the effective date of coverage. Policies may exclude coverage for such conditions for a specified period of time.

preferential discounts
reimbursements to healthcare providers from insurance companies and other payers based on negotiated discounts off of providers’ regular charges.

preferred provider organization (PPO)
a contractual arrangement between independent or institutionally based providers and another entity(often an employer or insurance company) to deliver health services to a defined population at established fees. The PPO contains a panel of physicians and health care institutions that constitute the preferred providers. Health care services are delivered on a fee-for-service basis at established rates, usually discounted from the physician’s usual and customary rates.

preferred risks
people with few, if any, medical problems whom insurance companies like to insure because they present little likelihood of filing claims in the near future.

premium
the money paid for insurance. Often, both employers and employees pay a premium. There are different kinds of premiums. A per-person premium is a fixed amount of money paid by employers and employees for insurance. A wage-based premium is a percentage of payroll paid by employers and employees for insurance.

pre-paid Group Practice Plan
a form of Health Maintenance Organization (HMO) under which specified health services are rendered by participating physicians. Enrollees make fixed periodic payments in advance; or an insurance carrier contracts to pay in advance for the full range of health services to which the enrollee is entitled.

Prepaid Health Care Act
federal law passed in 1973 that sets standards for federally qualified health maintenance organizations. Among the standards are minimum benefits and formal grievance procedures.

preventive health care
health care that has as its aim the prevention of disease and illness before it occurs and thus concentrates on keeping patients well.

primary care
basic care, including initial diagnosis and treatment, preventive services, maintenance of chronic conditions and referral to specialists.

primary care center
a type of free standing ambulatory care center that provides primary care on a scheduled basis and is open approximately eight hours per day.

primary care case management (PCCM)
managed care arrangements where primary care providers receive a per-capita management fee to coordinate a patient’s care in addition to reimbursement (fee-for-service or capitation) for the services they provided. PCCM practices may be held at risk for costs of specialists and/or hospital services and are sometimes responsible for treatment authorization and claims payment.

primary care physicians (PCPs)
general/family practitioners or internists who treat a variety of health problems across all patient age groups and who frequently serve as the patient’s first point of contact with the health care system. In some cases, OB/Gyns and pediatricians are considered PCPs who often serve as gate keepers.

professional (or peer) review organization (PRO)
organization that determines whether care and service provided are medically necessary and meet professional standards under the Medicare and Medicaid programs.

profiling
Expressing a pattern of practice as a rate - some measure of utilization (costs or services) or outcome (functional status, morbidity, or mortality) aggregated over time for a defined population of patients - to compare with other practice patterns. May be done for physician practices, health plans, or geographic areas. (PPRC, 1996)

ProPAC (Prospective Payment Assessment Commission)
a group of independent experts, appointed by the Congressional Office of Technology. Pro PAC’s main duties are to advise Congress on issues relating to the Medicare Prospective Payment System including annual recommendations on the increase in PPS rates.

prospective payment system (PPS)
a payment method in which the payment a hospital will receive for patient treatment is set up in advance. Hospitals keep the difference if they incur costs less than the fixed price in treating the patient, and they absorb any loss if their costs exceed the fixed price (see Diagnostic Related Groups -DRGs).

provider
describes people and/or institutions that give health care services; it includes social workers, physicians, acupuncturists, hospitals, nurses, chiropractors, or any other formal health care giver.

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quality assurance
program designed to objectively and systematically monitor and evaluate the appropriateness of patient care, and to pursue opportunities to improve patient care and resolve identified problems.

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rate setting
determination, by a government agency or commission, of the rates a hospital may charge private pay patients.

rationing
the allocation of medical care by price or availability of services.

reasonable and customary charge
charge for health care which is consistent with the going rate or charge in a certain geographical area for identical or similar services. Also referred to as "customary, prevailing and reasonable" (CPR) - see Resource-Based Relative Value Scale.

report card
a tool that can be used by policy-makers and health care purchasers such as employers, government bodies, employer coalitions and consumers to compare and understand the actual performance of health plans. This tool provides health plan performance data in major areas of accountability such as; quality and utilization, consumer satisfaction, administration efficiency, financial stability and cost control.

Resource-Based Relative Value Scale (RBRVS)
a fee schedule for physicians used by Medicare reflecting the value of one service relative to others in terms of the resources required to perform the service.

restricted funds
includes all hospital resources that are restricted to particular purposes by donors and other external authorities. These funds are not available for the financing of general operating activities but may be used in the future when certain conditions and requirements are met. There are three types of restricted funds: specific purpose, plant replacement and expansion and endowment.

risk contract
An arrangement between a managed health care plan and HCFA under section 1876 of the Social Security Act. Under this contract, enrolled Medicare beneficiaries generally must use the plans' provider network. Capitation payments to plans are set at 95 percent of the AAPCC (ProPAC, 1996)

risk pools
arrangements by states to provide health insurance to the unhealthy uninsured who have been rejected for coverage by insurance carriers.

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safe harbor
a set of federal regulations providing safe refuge for certain health care business arrangements (primarily physician-hospital arrangements), from the criminal and civil sanction provisions of the Medicare Anti-Kickback Statute prohibiting illegal remuneration.

seamless care
the experience by patients of smooth and easy movement from one aspect of comprehensive health care to another, notable for the absence of red tape.

secondary care
attention given to a person in need of specialty services, following referral from a source of primary care.

second opinion review
a managed care technique in which a second physician is consulted regarding diagnosis or course of treatment. It is thought to be of questionable effectiveness in reducing costs.

self-insured health plan
Employer-provided health insurance in which the employer, rather than an insurer, is at risk for its employees' medical expenses. (PPRC, 1996)

service contracts
agreements where hospitals contract with individual physicians or groups of physicians to provide certain services.

shadow pricing
tendency of HMOs to price their services at the same or nearly the same level as indemnity insurance plans.

single payer (payor)
one entity (usually the government) that functions as the only purchaser of health care services.

skilled nursing facility (SNF)
(1) Provides registered nursing services around the clock. (Schulz and Johnson, 1990 p.31)
(2) An institution that has a transfer agreement with one or more hospitals, provides primarily inpatient skilled nursing care and rehabilitative services, and meets other specific certification requirements. (See also Nursing Facility.) (IOM)

socialized medicine
a health care financing and delivery system in which doctors work for the government and receive a salary for their services.

social insurance
an insurance system in which funds are pooled and transferred to a government organization that provides benefits and administers the program for all citizens.

sole community hospital
A hospital that Medicare designates as the only provider of hospital care in its market area. Under PPS, sole community hospitals benefit form payment provisions intended to ensure their financial viability and access to hospital services for Medicare beneficiaries. (ProPAC, 1996)

solo practice
a medical practice where sole responsibility for practice decisions and management falls to the independent physician.

specific-purpose funds
a type of restricted fund that includes all resources restricted by donors to the financing of charity service, educational programs, research projects and other specific purposes other than endowments and plant asset acquisition.

staff model HMO
physicians are employed directly by the HMO and provide services in HMO-owned or managed clinics. Physicians typically serve exclusively HMO members and receive a salary plus a bonus based on the HMO’s performance and/or profits.

swing beds
acute care hospital beds that can also be used for long-term care, depending on the needs of the patient and the community. Only those hospitals with fewer than 100 beds and located in a rural community, where long-term care may be inaccessible, are eligible to have swing beds.

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teaching hospitals
hospitals that have accredited physician residency training program(s) and typically are affiliated with a medical school.

telemedicine
is technology that allows health services to be delivered over a great geographic distance using electronic or other media to transmit images or information.

tertiary care
highly technical services for the patient who is in imminent danger of major disability or death.

tertiary center
A large medical care institution, usually a teaching hospital, that provides highly specialized care.

third-party administration (TPA)
administration of a group insurance plan by some person or firm other than the insurer or policyholder.

third-party payer
an organization that acts as a fiscal intermediary between the provider and consumer of care. Examples include: insurance carriers, HMOs and government as a provider of Medicare and Medicaid.

tort reform
Changes in the legal rules governing medical malpractice lawsuits. (PPRC, 1994)

total quality management (TQM)
see Continuous Quality Improvement (CQI)

triage
the sorting and allocation of treatment to patients, especially disaster victims, according to a system of priorities designated to maximize the number of survivors.

trustee
an individual who voluntarily serves on the Governing Board of a hospital or health system providing oversight and direction.

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underwriting
the process by which an insurance carrier examines a person’s medical history and decides whether it will issue coverage.

Uniform Benefits Package
The subset of the "Uniform Set of Health Services" that is guaranteed to all Washington State residents through an insurance mechanism. (PHIP, 1996)

uniform benefit plan
all health plans offer a basic package of preventive and acute care benefits. Plan enrollees may pay additional premiums for coverage of additional services.

uninsured population
An estimated 35-37 million Americans. 56% are workers. 28% are children. 16.5% are nonworking adults. 83% of workers have private insurance. (AMA, 1993)

uninsurable
those persons an insurance company does not want to insure, usually because of bad health.

universal access/coverage
the provision of a standard minimum level of health care benefits to all individuals residing in a region, state or the U.S. as a whole.

unrestricted fund
includes all hospital resources not restricted to particular purposes by donors or other external authorities. All of the hospital’s resources are available for the financing of general operating activities.

usual, customary and reasonable (UCR)
amounts charged by healthcare providers that are consistent with charges from similar providers for the same or nearly the same services in a given area.

utilization
patterns of use for a particular medical service such as hospital care or physician visits.

utilization review
an evaluation of the care and services that patients receive that is based on pre-established criteria and standards.

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vertical integration
refers to the combination of different types of providers to make available a comprehensive array of services. Full vertical integration exists when the full continuum of care is represented.

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waiver
a provision in a health insurance policy in which specific medical conditions a person already has are excluded from coverage.

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Note: for a more extensive glossary, go online to the University of Washington School of Public Health and Community Medicine, Department of Health Services

http://weber.u.washington.edu/~hserv/hsic/resource/glossary.html

American Hospital Association, A Primer for Hospital Trustees, Chicago, IL.

American Hospital Association, Restructuring Health Care Delivery - Legal and Common Terms, Chicago, IL, 1994.

American Journal of Health Promotion, 1989, 3, 3, 5.

American Medical Association. Advocacy Brief: Health Reform Glossary. October 1993.

Canby, JB. IV, Applying Activity-Based Costing to Healthcare Settings. Healthcare Financial Management, 49(2):50-52,54-56, February 1995.

Carve-out Bundled-service Contracts: A New Type of CBC? Northwest Physician Magazine, Spring 1995: 26-27.

Conrad, DA. Personal Communication. 1995.

Council on Medical Services. Report B (I-91) of the AMA Council on Medical Services, presented by Perry A. Lambird, p.1. 1991.

Gooding, Sandra-K-Smith. Hospital outshopping and perceptions of quality: implications for public policy. Journal of Public Policy and Marketing. Fall, 1994. v13(n2). p271(10).

Health, United States, 1993. Hyattsville, MD: National Center for Health Statistics, Public Health Service, 1994.

Insider Spider: A New Tool Assesses Managed Care Readiness. Hospitals and Health Networks, 71(7):76-77, April 5, 1997.

Integrated Healthcare Association, Managed Health Care - A Brief Glossary

Kent C., Managing Risk Continues to Confound Policymakers. Faulkner & Gray's Medicine & Health Perspectives, 48(41):1, October 17, 1994.

Kralewski JE, de Vries A, Dowd B and Potthoff S. The Development of Integrated Service Networks in Minnesota. Health Care Management Review, 29(4):42-56, 1995.

Laws of Minnesota 1993, chapter 345, House File, 1178.

Lieberman, Trudy, Focus on Healthcare: A Handbook for Journalists, Columbia Journalism Review, May/June 1993.

Lumsdon K, Hagland M., Mapping Care. Hospitals and Health Networks, 67(20):34-40, October 20, 1993.

Making Health Communications Programs Work. Washington, DC: U.S. Department of Health and Human Services, National Institutes of Health, National Cancer Institute, Office of Cancer Communications, April 1992. (NIH Publication No. 92-1493).

Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy. March 1998.

Meyer, John W. and Feingold, Moira G. Integrating Financial Modeling and Patient Care Reengineering. Healthcare Financial Management, 49(2):33-40, February 1995.

National Library of Medicine. HSTAR Fact Sheet. Bethesda, MD: National Library of Medicine, February 1994.

O'Donnell, M.P. Definition of Health Promotion: Part III: Expanding the Definition. American Journal of Health Promotion, 3(3):5, 1989.

Pierson, DA, Williams JB. Compensation via Integration. Hospitals and Health Networks, 68(17):28-30,32-34,36,38, September 5, 1994

Physician Payment Review Commission. Annual Report to Congress, 1993. Washington: Physician Payment Review Commission. 1993.

Physician Payment Review Commission. Annual Report to Congress, 1994. Washington: Physician Payment Review Commission. 1994.

Physician Payment Review Commission. Annual Report to Congress, 1996. Washington: Physician Payment Review Commission. 1996.

Player, Steve. Activity-Based Analyses Lead to Better Decision Making. Healthcare Financial Management, 66-70, August 1998.

Primary Care: America's Health in a New Era. Edited by Molla S. Donaldson, Karl D. Yordy, Kathleen N. Lohr, and Neal Al Vanselow. Washington, DC: National Academy Press, 1996.

Prospective Payment Assessment Commission (ProPAC). Medicare and the American Health Care System. Report to the Congress, Washington, DC: Prospective Payment Assessment Commission, June 1995.

Public Health Improvement Plan, A Progress Report. Washington State Department of Health, March 1994. Olympia, WA: Washington State Department of Health; 1994 Mar Queisser, RL.

Ratner, Pamela A., Lawrence W. Green, C. James Frankish, Treena Chomik, and Craig Larsen. Setting the Stage for Health Impact Assessment. Journal of Public Health Policy, 18(1):67-79, 1997.

Rossi, Peter H., Freeman, Howard E. Evaluation: A Systematic Approach. Newbury Park: Sage Publications, 1993.

Schulz R, Johnson R. Management of Hospitals and Health Services: Strategic Issues and Performance. 3d ed. St. Louis, MO: C.V. Mosby, 1990.

Office of Technology Assessment. Benefit Design: Clinical Preventive Services. Washington, DC: Government Printing Office, 1993.

Source Book of Health Insurance Data, 1993. Washington, DC: Health Insurance Association of America, 1994.

State... Carve-Out Arrangements in Managed Care: Experience Suggests Value Despite Quesitons About Long-term Viability. State Initiatives in Health Care Reform, number 22:8-11, April 1997.

Texas Hospital Association, Planning and Market Research Department, In Other Words, a Glossary of Managed Health Care Terminology, Austin, TX, 1994.

Tokarski C. Riding the Express: Is Your Subacute Strategy on Track?. Hospitals and Health Networks, 69(13):20-23, July 5, 1995.

Kelly MP, Bacon GT, Mitchell, JA. Glossary of Managed Care Terms. Journal of Ambulatory Care Management. 1994; 17 (1):70-76. This article contains 132 definitions of terms related to insurance and to the managed care environment. Many see also references, cross references, acronyms, and alternative terms contained in the article. Very handy reference.

University of Washington School of Public Health and Community Medicine, Department of Health Services website, http://weber.u.washington.edu/~hserv/hsic/resource/glossary.html

Vogel, David E. Family Physicians and Managed Care: A View to the 90s. [Kansas City, MO]: American Academy of Family Physicians, 1993. This book has a wonderfully comprehensive health care reform glossary beginning on p.81.