Glossary of Health Care Industry Terms and Phrases

Break through the health industry noise. Below you will find we’ve translated jargon you may hear.

Accountable Care Organization (ACO) — A legal entity made up of providers supplying medical services across all settings and assuming accountability for assigned patients. ACO providers include hospitals, health systems, physicians and anyone else involved in patient care. This approach is designed to promote provider accountability for a patient population, as the providers and stakeholders share in the cost savings — and risk of losses — related to delivery of services.

Bundled payment (also known as episode-based payment, episode payment, episode-of-care payment, case rate, evidence-based case rate, global bundled payment, global payment, package pricing, or packaged pricing) — The reimbursement of health care providers such as hospitals and physicians on the basis of expected costs for clinically defined episodes of care.

Capitation — A payment plan for health care providers. Under it, a managed-care health organization pays a doctor or other provider a fixed amount to care for a patient for a specific period of time — regardless of the actual cost of treatment or quantity of services provided. It is the payment of a per capita amount for a defined package of health care services. A specific dollar amount per member is paid to providers or organizations of providers.

Coinsurance — A percentage of a health care provider's charge for which the patient is financially responsible under the terms of the policy.

Co-payment — A flat-dollar amount which a patient must pay when visiting a health care provider.

Deductible — A dollar amount that a patient must pay for health care services each year before the insurer will begin paying claims under a policy.

Disease management — A broad approach to appropriate coordination of the entire disease treatment process that often involves shifting away from more expensive inpatient and acute care to areas such as preventive medicine, patient counseling and education, and outpatient care. The process is intended to reduce health care costs and improve the quality of life for individuals by preventing or minimizing the effects of a disease, usually a chronic condition.

Electronic medical record (EMR) — A computerized medical record created in an organization that delivers care, such as a hospital or physician's office. An electronic medical record (EMR) is a digital version of a paper chart that contains all of a patient’s medical history from one practice. An EMR is mostly used by providers for diagnosis and treatment.

Exchange — See Health Insurance Marketplace

Fee-for-Service — Physicians or other providers bill separately for each patient encounter or service they provide. This method of billing means the insurance company pays all or some set percentage of the fees that hospitals and doctors set and charge. Expenditures increase if the number of services increase.

Health insurance cooperative — A nonprofit health plan owned and operated by a collection of small businesses or individuals that group together to purchase health insurance so they have greater negotiating power.

Health insurance marketplace — The Patient Protection and Affordable Care Act creates new “American Health Benefit Exchanges” in each state to assist individuals and small businesses in comparing and purchasing qualified health insurance plans. The Marketplace will offer a choice of health plans that meet certain benefits and cost standards.

Independent Practice Association (IPA) — A group of private physicians who join together in an association to contract with a managed care organization.

(The) Joint Commission — An independent, not-for-profit organization that accredits and certifies health care organizations and programs in the United States.

Managed care plans — This term describes many types of health insurance plans, including HMOs and PPOs. These types of insurance control the use of health services by their members so that they can contain healthcare costs and/or improve the quality of care. 

Patient-Centered Medical Home (PCMH) — A care delivery model where patient treatment is coordinated through the patient’s primary care physician (PCP) to ensure they receive the necessary care when and where they need it, in a manner they can understand. The objective is to have a centralized setting that facilitates partnerships between individual patients, and their personal physicians, and when appropriate, the patient’s family.

Patient Protection and Affordable Care Act (PPACA) — The comprehensive health care reform law enacted in March 2010. The law was enacted in two parts: The Patient Protection and Affordable Care Act was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “Affordable Care Act” is used to refer to the final, amended version of the law.

Pay-for-Performance — A health care payment system in which providers receive incentives for meeting or exceeding quality, and sometimes cost, benchmarks. Some systems also penalize providers who do not meet established benchmarks. The goal of pay for performance programs is to improve the quality of care over time.

Per Employee, Per Month (PEPM) — Refers to the average cost of services to an employee for a one-month period. The PEPM cost is distinctly different from the PMPM (per member per month) cost, as the PEPM represents, on average, the cost for the employee plus covered dependents per month, whereas the PMPM represents the cost for one individual per month.

Per Member, Per Month (PMPM) — PMPM stands for cost per member per month. This calculation is often used by health insurance companies to determine the average cost of health care for each of their members. PMPM is useful because it allows companies to estimate how much each individual member should be charged for coverage.

Population health management or population management — The coordination of care delivery across a population to improve clinical and financial outcomes, through disease management, case management and demand management.

Preventive care — Health care services that prevent disease or its consequences. It includes primary prevention to keep people from getting sick (such as immunizations), secondary prevention to detect early disease (such as Pap smears) and tertiary prevention to keep ill people or those at high risk of disease from getting sicker (such as helping someone with lung disease to quit smoking).

Primary care provider — The health care professional (physician, nurse, or other) mainly responsible for the care of a patient, particularly in an outpatient setting.

Reimbursement — The amount paid to providers for services they provide to patients.

Self-insured (also self-funded) — Group health plans may be self-insured or fully insured. A plan is self-insured (or self-funded), when the employer assumes the financial risk for providing health care benefits to its employees. A plan is fully insured when all benefits are guaranteed under a contract of insurance that transfers that risk to an insurer.

The Joint Commission — An independent, not-for-profit organization that accredits and certifies health care organizations and programs in the United States.

Uncompensated Care — Health care provided to people who cannot pay for it and who are not covered by any insurance. This includes both charity care which is not billed and the cost of services that were billed but never paid.

Utilization — The amount and rate at which patients/consumers use health care services.

Value-based purchasing (VBP) — VBP is a payment methodology in the health care industry that rewards quality of care through payment incentives and transparency. In VBP, providers are held accountable for the quality and cost of the health care services they provide by a system of rewards and consequences, conditional upon achieving pre-specified performance measures.

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