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 Vermont Health Care Resources 2 Health Care Terms 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 Vermont Health Care Resources 3 Health Care Terms 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 Vermont Health Care Resources 4 Health Care Terms 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, Vermont Health Care Resources 5 Health Care Terms 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

Vermont Health Care Resources 6 Health Care Terms 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 Vermont Health Care Resources 7 Health Care Terms 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 Vermont Health Care Resources 8 Health Care Terms 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 Vermont Health Care Resources 9 Health Care Terms 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 Vermont Health Care Resources 10 Health Care Terms 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, Vermont Health Care Resources 11 Health Care Terms 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. Vermont Health Care Resources 12 Health Care Terms 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 Vermont Health Care Resources 13 Health Care Terms 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 Vermont Health Care Resources 14 Health Care Terms 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

Vermont Health Care Resources 15 Health Care Terms 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. F exclusive provider arrangement (EPA) An 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 Vermont Health Care Resources 16 Health Care Terms 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 Vermont Health Care Resources 17 Health Care Terms 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 Vermont Health Care Resources 18 Health Care Terms 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 Vermont Health Care Resources 19 Health Care Terms 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 Vermont Health Care Resources 20 Health Care Terms 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 Vermont Health Care Resources 21 Health Care Terms 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 Vermont Health Care Resources 22 Health Care Terms 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

Vermont Health Care Resources 23 Health Care Terms paid either on a per visit basis, or cost per year for their patients, whichever is less. K intermediate care facility (ICF) An 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.

Vermont Health Care Resources 24 Health Care Terms 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. Vermont Health Care Resources 25 Health Care Terms 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 Vermont Health Care Resources 26 Health Care Terms 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.

Vermont Health Care Resources 27 Health Care Terms 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 Vermont Health Care Resources 28 Health Care Terms 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.

Vermont Health Care Resources 29 Health Care Terms 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 Vermont Health Care Resources 30 Health Care Terms 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 Vermont Health Care Resources 31 Health Care Terms 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 Vermont Health Care Resources 32 Health Care Terms 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 Vermont Health Care Resources 33 Health Care Terms 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 Vermont Health Care Resources 34 Health Care Terms 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

Vermont Health Care Resources 35 Health Care Terms 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

Vermont Health Care Resources 36 Health Care Terms 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 Vermont Health Care Resources 37 Health Care Terms 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 Vermont Health Care Resources 38 Health Care Terms 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 Vermont Health Care Resources 39 Health Care Terms 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 Vermont Health Care Resources 40 Health Care Terms 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 Vermont Health Care Resources 41 Health Care Terms 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.

Vermont Health Care Resources 42 Health Care Terms