access. A person's ability to obtain affordable medical care on a timely basis.

accreditation.¹ An evaluative process in which a health care organization undergoes an examination of its operating procedures to determine whether the procedures meet designated criteria as defined by the accrediting body, and to ensure that the organization meets a specified level of quality.

acquisition. The purchase of one organization by another organization.

actuaries. Insurance professionals who perform the mathematical analysis necessary for setting insurance premium rates.

administrative services only (ASO) contract. The contract between an employer and a third party administrator.

aggregate stop-loss coverage. A type of stop-loss insurance that provides benefits when a group's total claims during a specified period exceed a stated amount.

allowable amount. The maximum amount determined by a third party payor to be eligible for consideration of payment for a particular service, supply, or procedure.

ambulatory care facility (ACF). A medical care center that provides a wide range of health care services, including preventive care, acute care, surgery and outpatient care, in a centralized facility. Also known as a medical clinic or medical center.

ancillary services.² Auxiliary or supplemental services, such as diagnostic services, home health services, physical therapy and occupational therapy, used to support diagnosis and treatment of a patient's condition.

annual maximum benefit amount. The maximum dollar amount set by a Managed Care Organization that limits the total amount the plan must pay for all health care services provided to a subscriber in a year.

antitrust laws. Legislation designed to protect commerce from unlawful restraint of trade, price discrimination, price fixing, reduced competition and monopolies. See also Sherman Antitrust Act, Clayton Act and Federal Trade Commission Act.

appropriate care.³ A diagnostic or treatment measure whose expected health benefits exceed its expected health risks by a wide enough margin to justify the measure

appropriateness review. An analysis of health care services with the goal of reviewing the extent to which necessary care was provided and unnecessary care was avoided.

at-risk. Term used to describe a provider organization that bears the insurance risk associated with the health care it provides.

behavioral health care. The provision of mental health and substance abuse services.

benefit design. The process a Managed Care Organization uses to determine which benefits or the level of benefits that will be offered to its members, the degree to which members will be expected to share the costs of such benefits and how a member can access medical care through the health plan.

brand. A name, number, term, sign, symbol, design or combination of these elements that an organization uses to identify one or more products.

broker. A salesperson who has obtained a state license to sell and service contracts of multiple health plans or insurers and who is ordinarily considered to represent the buyer, not the health plan or insurer.

business integration. The unification of one or more separate business (nonclinical) functions into a single function.

calendar year. The period commencing on a January 1 and ending on the next succeeding December 31.

capitation.⁴ A method of paying for health care services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided.

captive agents. Agents that represent only one health plan or insurer.

carve-out. Specialty health service that a Managed Care Organization obtains for members by contracting with a company that specializes in that service. See also carve-out companies.

carve-out companies. Organizations that have specialized provider networks and are paid on a capitation or other basis for a specific service, such as mental healthor dental. See also carve-out.

case management. A process of identifying plan members with special health care needs, developing a health-care strategy that meets those needs and coordinating and monitoring the care, with the ultimate goal of achieving the optimum health care outcome in an efficient and cost-effective manner. Also known as large case management (LCM).

categorically needy individuals. Enrollees in Medicaid programs who meet traditional Medicaid age and income requirements.

certificate of authority (COA). The license issued by a state to a Health Maintenance Organization or insurance company which allows it to conduct business in that state.

Children's Health Insurance Program (CHIP). A program, established by the Balanced Budget Act, designed to provide health assistance to uninsured, low-income children either through separate programs or through expanded eligibility under state Medicaid programs.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). A program of medical benefits available to inactive military personnel and military spouses, dependents and beneficiaries through the Military Health Services System of the Department of Defense. See also TRICARE.

claim. An itemized statement of health care services and their costs provided by a hospital, physician's office or other provider facility. Claims are submitted to the insurer or managed care plan by either the plan member or the provider for payment of the costs incurred.

claim form. An application for payment of benefits under a health plan.

claimant. The person or entity submitting a claim.

claims administration. The process of receiving, reviewing, adjudicating and processing claims.

claims examiners.⁵ Employees in the Claims Administration Department who consider all the information pertinent to a claim and make decisions about the Managed Care Organization's payment of the claim. Also known as claims analysts.

claims investigation.⁶ The process of obtaining all the information necessary to determine the appropriate amount to pay on a given claim.

Clayton Act. A federal act which forbids certain actions believed to lead to monopolies, including (1) charging different prices to different purchasers of the same product without justifying the price difference and (2) giving a distributor the right to sell a product only if the distributor agrees not to sell competitors' products. The Clayton Act applies to insurance companies only to the extent that state laws do not regulate such activities. See also antitrust laws.

clinic model. See consolidated medical group.

clinical integration. A type of operational integration that enables patients to receive a variety of health services from the same organization or entity, which streamlines administrative processes and increases the potential for the delivery of high-quality health care.

clinical practice guideline. A utilization and quality management mechanism designed to aid providers in making decisions about the most appropriate course of treatment for a specific clinical case.

clinical status. A type of outcome measure that relates to improvement in biological health status.

closed access. A provision which specifies that plan members must obtain medical services only from network providers through a primary care physician to receive benefits.

closed formulary.⁷ The provision that only those drugs on a preferred list will be covered by a Managed Care Organization.

closed-panel HMO. A Health Maintenance Organization whose physicians are either HMO employees or belong to a group of physicians that contract with the HMO.

COBRA. See Consolidated Omnibus Budget Reconciliation Act.

coinsurance. A method of cost-sharing in a health insurance policy that requires a group member to pay a stated percentage of all remaining eligible medical expenses after the deductible amount has been paid.

competitive advantage. A factor, such as the ability to demonstrate quality, that helps a managed care organization compete successfully with other MCOs for business.

competitive medical plan (CMP). A federal designation that allows a health plan to enter into a Medicare risk contract without having to obtain federal qualification as a Health Maintenance Organization.

consolidated medical group. A large, single medical practice that operates in one or a few facilities rather than in many independent offices. The single-specialty or multi-specialty practice group may be formed from previously independent practices and is often owned by a parent company or a hospital. Also known as a medical group practice or clinic model.

Consolidated Omnibus Budget Reconciliation Act (COBRA). A federal act which requires each group health plan to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduced work hours, death or divorce of a covered employee, and termination of employment.

consolidation. A type of merger that occurs when previously separate providers combine to form a new organization with all the original companies being dissolved.

copayment. A specified dollar amount that a member must pay out-of-pocket for a specified service at the time the service is rendered.

corporation. A type of organizational structure that is an artificial entity, invisible, intangible and existing only in contemplation of the law.

credentialing. The process of obtaining, reviewing and verifying a provider's credentials - the documentation related to licenses, certifications, training and other qualifications - for the purpose of determining whether the provider meets the Managed Care Organization's preestablished criteria for participation in the network.

credibility. A measure of the statistical predictability of a group's experience.

deductible. The amount of eligible charges a member must pay before the insurer will make any benefit payments.

dental health maintenance organization (DHMO). An organization that provides dental services through a network of providers to its members in exchange for some form of prepayment.

dental PPO. See dental preferred provider organization.

dental preferred provider organization (dental PPO). An organization that provides dental care to its members through a network of dentists who offer discounted fees to the plan members.

diagnostic and treatment codes.⁸ Special codes that consist of a brief, specific description of each diagnosis or treatment and a number used to identify each diagnosis and treatment.

disease management (DM). A coordinated system of preventive, diagnostic and therapeutic measures intended to provide cost-effective, quality health care for a patient population who have or are at risk for a specific chronic illness or medical condition. Also known as disease state management.

drive time. A measure of geographic accessibility determined by how long members in the plan's service area have to drive to reach a primary care provider.

drug utilization review (DUR).⁹ A review program that evaluates whether drugs are being used safely, effectively and appropriately.

due process clause. A provider contract provision which gives providers that are terminated with cause the right to appeal the termination.

early and periodic screening, diagnostic and treatment (EPSDT) services. Services, including screening, vision, hearing and dental services, provided under Medicaid to children under age 21 at intervals which meet recognized standards of medical and dental practices and at other intervals as necessary in order to determine the existence of physical or mental illnesses or conditions. Plans offering Medicaid coverage to EPSDT participants must provide any service that is necessary to treat an illness or condition that is identified by screening.

edits. Criteria that, if unmet, will cause an automated claims processing system to "kick out" a claim for further investigation.

electronic data interchange (EDI).¹⁰ The application-to-application interchange of business data between organizations using a standard data format.

eligible expenses. Either Inpatient Hospital Expense, Medical-Surgical Expense, or Extended Care Expense, all as specified in the BCBSTX contract.

employee benefits consultant. A specialist in employee benefits and insurance who is hired by a group buyer to provide advice on a health plan purchase.

Employee Retirement Income Security Act (ERISA). A broad-reaching law that establishes the rights of pension plan participants, standards for the investment of pension plan assets and requirements for the disclosure of plan provisions and funding.

Ethics in Patient Referrals Act. A federal act and its amendments, commonly called the Stark Laws, which prohibit a physician from referring patients to laboratories, radiology services, diagnostic services, physical therapy services, home health services, pharmacies, occupational therapy services and suppliers of durable medical equipment in which the physician has a financial interest.

exclusive provider organization (EPO). A health care benefit arrangement that is similar to a preferred provider organization in administration, structure and operation, but which generally has a lesser number of network providers.

executive committee. Committee whose purpose is to provide rapid access to decision making and confidential discussions for a Managed Care Organization board of directors.

experience. The actual cost of providing health care to a group during a given period of coverage.

experience rating. A rating method under which a Managed Care Organization analyzes a group's recorded health care costs by type and calculates the group's premium partly or completely according to the group's experience.

Federal Employee Health Benefits Program (FEHBP). A voluntary health insurance program administered by the Office of Personnel Management (OPM) for federal employees, retirees and their dependents and survivors.

Federal Trade Commission Act. A federal act, which established the Federal Trade Commission (FTC) and gave the FTC power to work with the Department of Justice, to enforce the Clayton Act. The primary function of the FTC is to regulate unfair competition and deceptive business practices, which are presented broadly in the Act. As a result, the FTC also pursues violators of the Sherman Antitrust Act. See also antitrust laws.

fee-for-service (FFS) payment system. A system in which the insurer will either reimburse the group member or pay the provider directly for each covered medical expense after the expense has been incurred.

fee schedule.¹¹ The fee determined by a Managed Care Organization to be acceptable for a procedure or service, which the physician agrees to accept as payment in full.

formulary.¹² A listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given managed population and that are to be used by a Managed Care Organization's providers in prescribing medications.

fully funded plan. A health plan under which an insurer or Managed Care Organization bears the financial responsibility of guaranteeing claim payments and paying for all incurred covered benefits and administration costs.

funding vehicle. In a self-funded plan, the account into which the money that an employer and employees would have paid in premiums to an insurer or Managed Care Organization is deposited until the money is paid out.

generic substitution.¹³ The dispensing of a drug that is the generic equivalent of a drug listed on a Managed Care Organization's formulary. In most cases, generic substitution can be performed without physician approval.

geographic accessibility. Health plan accessibility, generally determined by drive time or number of primary care providers in a service area.

grievances. Formal complaints demanding formal resolution by a managed care plan.

group market. A market segment that includes groups of two or more people that enter into a group contract with a Managed Care Organization under which the MCO provides health care coverage to the members of the group.

group model HMO. A Health Maintenance Organization that contracts with a multi-specialty group of physicians who are employees of the group practice. Also known as a group practice model HMO.

guaranteed issue. An insurance policy provision under which all eligible persons who apply for insurance coverage and who meet certain conditions are automatically issued an insurance policy.

health care quality.¹⁴ The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.

Health Care Quality Improvement Act (HCQIA). A federal act which exempts hospitals, group practices, and Health Maintenance Organizations from certain antitrust provisions as they apply to credentialing and peer review so long as these entities adhere to due process standards that are outlined in the Act.

Health Care Quality Improvement Program (HCQIP). A program, established by the Balanced Budget Act of 1997, that seeks to improve the quality of care provided to Medicare beneficiaries by requiring Medicare+Choice coordinated care plans to undergo periodic quality review by a peer review organization.

Health Insurance Portability and Accountability Act (HIPAA). A federal act that protects people who change jobs, are self-employed, or who have pre-existing medical conditions. HIPAA standardizes an approach to the continuation of health care benefits for individuals and members of small group health plans and establishes parity between the benefits extended to these individuals and those benefits offered to employees in large group plans. The act also contains provisions designed to ensure that prospective or current enrollees in a group health plan are not discriminated against based on health status.

health insurance purchasing co-ops (HPCs). See purchasing alliances.

health maintenance organization (HMO). A health care system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee.

HIPAA. See Health Insurance Portability and Accountability Act.

HMO. See health maintenance organization.

HMO Act. 1973 federal law that ensured access for Health Maintenance Organizations to the employer-based insurance market.

hold harmless provision. A contract clause which forbids providers from seeking compensation from patients if the health plan fails to compensate the providers because of insolvency or other stated reasons.

home health care. The health care services for which benefits are provided under the BCBSTX Contract when such services are provided during a visit by a Home Health Agency to patients confined at home due to a sickness or injury requiring skilled health care services on an intermittent, part-time basis.

indemnity wraparound policy. An out-of-plan product that a Health Maintenance Organization offers through an agreement with an insurance company.

independent agents. Agents that represent the products of several health plans or insurers.

independent practice association (IPA). An organization comprised of individual physicians or physicians in small group practices that contracts with Managed Care Organizations on behalf of its member physicians to provide health care services.

individual market. A market segment composed of customers not eligible for Medicare or Medicaid who are covered under an individual contract for health coverage.

individual stop-loss coverage. A type of stop-loss insurance that provides benefits for claims on an individual that exceed a stated amount in a given period. Also known as specific stop-loss coverage.

integrated delivery system (IDS). A provider organization that is fully integrated operationally and clinically to provide a full range of health care services, including physician services, hospital services and ancillary services.

integration. For provider organizations, the unification of two or more previously separate providers under common ownership or control, or the combination of the business operations of two or more providers that were previously carried out separately and independently.

IPA model HMO. A health maintenance organization which contracts with one or more associations of physicians in independent practice who agree to provide medical services to HMO members.

joint venture. A type of partial structural integration in which one or more separate organizations combine resources to achieve a stated objective. The participating companies share ownership of the venture and responsibility for its operations, but usually maintain separate ownership and control over their operations outside of the joint venture.

large group. A large pool of individuals for which health coverage is provided by the group sponsor.

lifetime maximum benefit amount. The maximum dollar amount set by an Managed Care Organization that limits the total amount the plan must pay for covered health care services provided to a subscriber in the subscriber's lifetime.

loss rate. The number and timing of losses that will occur in a given group of insuredswhile the coverage is in force.

mail-order pharmacy programs.¹⁵ Programs that offer drugs ordered and delivered through the mail to plan members, usually at a reduced cost.

managed behavioral health organization (MBHO). An organization that provides behavioral health services using managed care techniques.

managed care. The integration of both the financing and delivery of health care within a system that seeks to manage the accessibility, cost and quality of that care.

managed care organization (MCO). Any entity that utilizes certain concepts or techniques to manage the accessibility, cost and quality of health care. Also known as a managed care plan.

managed dental care.¹⁶ Any dental plan offered by an organization that provides a benefit plan that differs from a traditional fee-for-service plan.

managed indemnity plans. Health insurance plans that are administered like traditional indemnity plans but which include managed care "overlays" such as precertification and other utilization review techniques.

Management Services Organization (MSO). An organization, owned by a hospital or a group of investors, that provides management and administrative support services to individual physicians or small group practices in order to relieve physicians of non-medical business functions so that they can concentrate on the clinical aspects of their practice.

market segmentation. The process of dividing the total market for a product or service into smaller, more manageable subsets or groups of customers.

marketing director. Individual responsible for marketing a managed care plan, whose duties include oversight of marketing representatives, advertising, client relations and enrollment forecasting.

McCarran-Ferguson Act. A federal act that placed the primary responsibility for regulating health insurance companies and Health Maintenance Organizations that service private sector (commercial) plan members at the state level.

Medicaid. A jointly funded federal and state program that provides hospital expense and medical expense coverage to the low-income population and certain aged and disabled individuals.

medical advisory committee.¹⁷ Committee whose purpose is to review general medical management issues brought to it by the medical director.

medical foundation. A not-for-profit entity, usually created by a hospital or health system, that purchases and manages physician practices.

medical group practice. See consolidated medical group.

medical underwriting. The evaluation of health questionnaires submitted by all proposed plan members to determine the insurability of the group.

medically needy individuals. Enrollees in Medicaid programs whose income or assets exceed the maximum threshold for certain federal programs.

Medicare. A federal government hospital expense and medical expense insurance plan primarily for elderly and disabled persons. See also Medicare Part A, Medicare Part B and Medicare Part C.

Medicare Part A. The part of Medicare that provides basic hospital insurance coverage automatically for most eligible persons. See also Medicare.

Medicare Part B. A voluntary program that is part of Medicare and provides benefits to cover the costs of physicians' services. Persons wanting Part B coverage have to pay a premium. See also Medicare.

Medicare Part C. The part of Medicare that expands the list of different types of entities allowed to offer health plans to Medicare beneficiaries. Also known as Medicare+Choice. See also Medicare.

Medicare+Choice MSAs. Accounts created by contributions from HCFA to pay out-of-pocket medical expenses for Medicare beneficiaries. The accounts are used in conjunction with high-deductible, catastrophic health care policies.

Medicare supplement. A private medical expense insurance plan that supplements Medicare coverage. Also known as a Medigap policy.

member services. The department responsible for helping members with any problems, handling member grievances and complaints, tracking and reporting patterns of problems encountered, and enhancing the relationship between members of the plan and the plan itself.

Mental Health Parity Act (MHPA). A federal act which prohibits group health plans that offer mental health benefits from applying more restrictive limits on coverage for mental illness than for physical illness.

merger. A type of structural integration that occurs when two or more separate entities are legally joined.

messenger model. A type of independent practice association (IPA) that negotiates contract terms with Managed Care Organizations on behalf of member physicians, who then contract directly with MCOs using the terms negotiated by the IPA. This type of IPA is most often used with fee-for-service or discounted fee-for-service compensation arrangements.

national accounts.¹⁸ Large group accounts that have employees in more than one geographic area that are covered through a single national contract for health coverage. Contrast with large local groups.

National Practitioner Data Bank (NPDB). A database maintained by the federal government that contains information on physicians and other medical practitioners against whom medical malpractice claims have been settled or other disciplinary actions have been taken.

network. Group of physicians, hospitals and other medical care providers that a specific managed care plan has contracted with to deliver medical services to its members.

network model HMO. A Health Maintenance Organization that contracts with more than one group practice of physicians or specialty groups.

Newborns' and Mothers' Health Protection Act (NMHPA). A federal law which mandates that coverage for hospital stays for childbirth cannot generally be less than 48 hours for normal deliveries or 96 hours for cesarean births.

no balance billing provision. A provider contract clause which states that the provider agrees to accept the amount the plan pays for medical services as payment in full and not to bill plan members for additional amounts (except for copayments, coinsurance and deductibles).

non-group market. A market segment that consists of customers who are covered under an individual contract for health coverage or enrolled in a government program.

Non-ParPlan. If care is received from non-ParPlan providers, participants will be responsible for precertifying care, submitting claims, and paying any charges over the "allowable amount."

Omnibus Budget Reconciliation Act (OBRA) of 1990. A federal act which established the Medicare SELECT program, a Medicare supplement that uses a preferred provider organization to supplement Medicare Part B coverage.

open access. A provision that specifies that plan members may self-refer to a specialist, either in-network or out-of-network, at full benefit or at a reduced benefit, without first obtaining a referral from a primary care physician.

open PHO. A type of physician-hospital organization that is available to all of a hospital's eligible medical staff.

operational integration. The consolidation into a single operation of functions that were previously carried out separately by different entities.

outcomes measures. Health care quality indicators that gauge the extent to which health care services succeed in improving patient health.

out-of-pocket maximums. Dollar amounts set by MCOs that limit the amount a member has to pay out of his or her own pocket for eligible health care services during a particular time period.

outpatient care. Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other inpatient facility.

parent company. A company that owns another company.

ParPlan Providers. ParPlan Providers have contracted with BCBSTX and have agreed not to bill participants for charges over the "allowable amount." ParPlan providers will generally precertify care and may file claims for participants.

Patient Bill of Rights. Refers to the Consumer Bill of Rights and Responsibilities, a report prepared by the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry in an effort to ensure the security of patient information, promote health care quality, and improve the availability of health care treatment and services. The report lists a number of "rights," subdivided into eight general areas, that all health care consumers should be guaranteed and describes responsibilities that consumers need to accept for the sake of their own health.

patient perception. A type of outcomes measure related to how the patient feels after treatment.

peer review. The analysis of a clinician's care by a group of that clinician's professional colleagues. The provider's care is generally compared to applicable standards of care, and the group's analysis is used as a learning tool for the members of the group.

peer review organizations (PROs). According to the Balanced Budget Act of 1997, organizations or groups of practicing physicians and other healthcare professionals paid by the federal government to review and evaluate the services provided by other practitioners and to monitor the quality of care given to Medicare patients.

pended. A claims term that refers to a situation in which it is not known whether an authorization has or will be issued for delivery of a health care service, and the case has been set aside for review.

performance measures. Quantitative measures of the quality of care provided by a health plan or provider that consumers, payors, regulators and others can use to compare the plan or provider to other plans and providers.

physician-hospital organization (PHO). A joint venture between a hospital and many or all of its admitting physicians whose primary purpose is contract negotiations with Managed Care Organizations and marketing.

plan funding. The method that an employer or other payor or purchaser uses to pay medical benefit costs and administrative expenses.

point-of-service (POS) product. A health care option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan's network or seek medical care outside the network.

pooling. The practice of underwriting a number of small groups as if they constituted one large group.

POS product. See point-of-service product.

PPO. See preferred provider organization.

preferred provider arrangement (PPA). As defined in state laws, a contract between a health care insurer and a health care provider or group of providers who agree to provide services to persons covered under the contract. Examples include preferred provider organizations (PPOs) and exclusive provider organizations (EPOs).

preferred provider organization (PPO). A health care benefit arrangement designed to supply services at a discounted cost by providing incentives for members to use designated health care providers (who contract with the PPO at a discount), but which also provides coverage for services rendered by health care providers who are not part of the PPO network.

premium. A prepaid payment or series of payments made to a health plan by purchasers, and often plan members, for medical benefits.

premium taxes. State income taxes levied on an insurer's premium income.

prepaid care. Health care services provided to a Health Maintenance Organization member in exchange for a fixed, monthly premium paid in advance of the delivery of medical care.

primary care.¹⁹ General medical care that is provided directly to a patient without referral from another physician. It is focused on preventive care and the treatment of routine injuries and illnesses.

primary care case manager (PCCM). In states that have obtained a Section 1915(b) waiver, a primary care provider who contracts directly with the state to provide case management services, such as coordination and delivery of services, to Medicaid patients in an effort to reduce emergency room use, increase preventive care, and improve overall effectiveness by fostering a close physician-patient relationship.

primary care physician (PCP). A physician who serves as a group member's first contact with a plan's health care system.

primary source verification.²⁰ A process through which an organization validates credentialing information from the organization that originally conferred or issued the credentialing element to the practitioner.

provider manual. A document that contains information concerning a provider's rights and responsibilities as part of a network.

purchasing alliances.²¹ Locally based, privately operated organizations that offer affordable group health coverage to businesses with fewer than 100 employees. Also known as purchasing pools, health insurance purchasing co-ops (HPCs), employer purchasing coalitions or purchasing coalitions.

QM committee. Managed Care Organization committee responsible for oversight of the quality management program - including the setting of standards, review of data, feedback to providers, follow-up and approval of sanctions - and for the quality of care delivered to members.

quality. In a managed care context, a Managed Care Organization's success in providing health care and other services in such a way that plan members' needs and expectations are met.

quality management (QM). An organization-wide process of measuring and improving the quality of the health care provided by a Managed Care Organization.

quality program. An organization-wide initiative to measure and improve the service and care provided by a Managed Care Organization.

rating. The process of calculating the appropriate premium to charge purchasers, given the degree of risk represented by the individual or group, the expected costs to deliver medical services, and the expected marketability and competitiveness of the Managed Care Organization's plan.

recredentialing. Reexamination by a Managed Care Organization of the qualifications of a provider and verification that the provider still meets the standards for participation in the network.

relative value scale (RVS). A method used by Managed Care Organizations of determining provider reimbursement that assigns a weighted value to each medical procedure or service. To determine the amount the MCO will pay to the provider, the weighted value is multiplied by a money multiplier. Also known as a relative value of services.

report card. A set of performance measures applied uniformly to different health plans or providers.

reserves. Estimates of money that an insurer needs to pay future business obligations.

Resource-Based Relative Value Scale (RBRVS). A method used by Managed Care Organizations of determining provider reimbursement that attempts to take into account, when assigning a weighted value to medical procedures or services, all resources that physicians use in providing care to patients, including physical or procedural, educational, mental (cognitive) and financial resources.

retrospective authorization. Authorization to deliver health care service that is granted after service has been rendered.

revenues. The amounts earned from a company's sales of products and services to its customers.

risk-adjustment. The statistical adjustment of outcome measures to account for risk factors that are independent of the quality of care provided and beyond the control of the plan or provider, such as the patient's gender and age, the seriousness of the patient's illness, and any other illnesses the patient might have. Also known as case-mix adjustment.

self-funded plan. A health plan under which an employer or other group sponsor, rather than a Managed Care Organization or insurance company, is financially responsible for paying plan expenses, including claims made by group plan members. Also known as a self-insured plan.

senior market. A market segment that is comprised largely of persons over age 65 who are eligible for Medicare benefits.

service quality. A Managed Care Organization's success in meeting the nonclinical customer service needs and expectations of plan members.

Sherman Antitrust Act. A federal act which established as national policy the concept of a competitive marketing system by prohibiting companies from attempting to (1) monopolize any part of trade or commerce or (2) engage in contracts, combinations, or conspiracies in restraint of trade. The Act applies to all companies engaged in interstate commerce and to all companies engaged in foreign commerce. See also antitrust laws.

skilled nursing facility. A facility, licensed in accordance with state law and which is Medicare eligible as a supplier of skilled inpatient nursing care, that is primarily engaged in providing skilled nursing services and other therapeutic services.

small group. In Texas, a group composed of 2 to 50 members for which health coverage is provided by the group sponsor.

specialty health maintenance organization (specialty HMO). An organization that uses a Health Maintenance Organization model to provide health care services in a subset or single specialty of medical care.

specialty services. Services that are provided by independent, specialty organizations rather than by the Managed Care Organization providing the basic health plan.

staff model HMO. A closed-panel Health Maintenance Organization whose physicians are employees of the HMO.

standard of care. A diagnostic and treatment process that a clinician should follow for a certain type of patient, illness or clinical circumstance.

statutory solvency. An insurer's ability to maintain at least the minimum amount of capital and surplus specified by state insurance regulators.

stop-loss insurance. A type of insurance coverage that enables provider organizations or self-funded groups to place a dollar limit on their liability for paying claims and requires the insurer issuing the insurance to reimburse the insured organization for claims paid in excess of a specified yearly maximum.

structure measures. Health care quality indicators related to the nature and quality of the resources that a Managed Care Organization has available for patient care.

subsidiary. A company that is owned by another company, its parent.

surplus. The amount that remains when an insurer subtracts its liabilities and capital from its assets.

termination provision. A provider contract clause that describes how and under what circumstances the parties may end the contract.

termination with cause. A contract provision, included in many standard provider contracts, that allows either the Managed Care Organization or the provider to terminate the contract when the other party does not live up to its contractual obligations.

termination without cause. A contract provision that allows either the Managed Care Organization or the provider to terminate the contract without providing a reason or offering an appeals process.

third party administrator (TPA). A company that provides administrative services to Managed Care Organizations or self-funded health plans.

TRICARE. A health care plan, available to more than 6 million military personnel and their families, which is administered by private contractors who are selected for participation through a competitive procurement process. TRICARE offers members three plan options: TRICARE Prime (a capitated HMO with nominal premiums and copayments), TRICARE Extra (a PPO with standard CHAMPUS deductibles), and TRICARE Standard (the current fee-for-service CHAMPUS plan with provider choice and no premiums). See also Civilian Health and Medical Program of the Uniformed Services.

underwriting. The process of identifying and classifying the risk represented by an individual or group.

underwriting impairments. Factors that tend to increase an individual's risk above that which is normal for his or her age.

underwriting manual. A document that provides background information about various underwriting impairments and suggests the appropriate action to take if such impairments exist.

underwriting requirements. Requirements, sometimes relating to group characteristics or financing measures, that Managed Care Organizations at times impose in order to provide health care coverage to a given group and which are designed to balance a health plan's knowledge of a proposed group with the ability of the group to voluntarily select against the plan (antiselection).

utilization management (UM). Managing the use of medical services to ensure that a patient receives necessary, appropriate, high-quality care in a cost-effective manner.

utilization review (UR). The evaluation of the medical necessity, efficiency or appropriateness of health care services and treatment plans.

utilization review organization (URO). External reviewers who assess the medical appropriateness of suggested courses of treatment for patients, thereby providing the patient and the purchaser increased assurance of the appropriateness, value and quality of health care services.

variances. The differences obtained from subtracting actual results from expected or budgeted results.

withhold. A percentage of a provider's payment that is "held back" during the plan year to offset or pay for any cost overruns for referral or hospital services. Any part of the withhold not used for these purposes is usually distributed to providers.

workers' compensation. A state-mandated insurance program that provides benefits for health care costs and lost wages to qualified employees and their dependents if an employee suffers a work-related injury or disease.

workers' compensation indemnity benefits. Benefits that replace an employee's wages while the employee is unable to work because of a work-related injury or illness.

1 Guide to Accreditation (Washington, D.C.: American Association of Health Plans, June 1996), 83.

2 Managed Care at a Glance: Common Terms (Boston, MA: Tufts Managed Institute, 1996), 6.

3 The National Coalition on Health care, "Why the Quality of U.S. Health Care Must Be Improved," (October 1997): 7, online, Available http://www.nchc.org/emerge/quality.html Accessed 30 Dec 1997.

4 Capitation: Questions and Answers, (Washington, D.C.: American Association of Health Plans, 1996).

5 Kenneth Huggins and Robert D. Land, Operations of Life and Health Insurance Companies, 2nd ed. (Atlanta, GA: LOMA, 1992), 259-60.

6 Kenneth Huggins and Robert D. Land, Operations of Life and Health Insurance Companies, 2nd ed. (Atlanta, GA: LOMA, 1992), 259-60.

7 Drug Benefit Trends [1995, 7(2):6-10] 1997, SCP Communications, Inc.

8 Jane Lightcap Brown, Insurance Administration (Atlanta, GA LOMA, 1997), 395.

9 Drug Benefit Trends [1995, 7(2):6-10] 1997, SCP Communications, Inc.

10 U.S. Congress, Office of Technological Assessment, "Bringing Health Care Online: The Role of Information Technologies," OTA-ITC-624 (Washington, D.C.: U.S. Government Printing Office, September 1995).

11 Peter R. Kongstvedt, The Managed Care Handbook, 3rd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1996), 132.

12 Drug Benefit Trends [1995, 7(2): 6-10 1997, SCP Communications, Inc.]

13 Drug Benefit Trends [1995, 7(2): 6-10] 1997, SCP Communications, Inc.]

14 Institute of Medicine, 1990.

15 Mail-order pharmacy programs open formulary

16 Peter R. Kongstvedt, The Managed Care Handbook, 3rd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1996), 802.

17 Peter R. Kongstvedt, Essentials of Managed Health Care, 2nd ed. (Gaithersburg, VA: Aspen Publishers, Inc. 1997), 75.

18 Blue Cross Blue Shield Association, Marketing and Selling the Product (Blue Cross and Blue Shield Association, 1993), 34-35.

19 Managed Care at a Glance: Common Terms (Boston, MA: Tufts Managed Institute, 1996), 5.

20 1997 Standards for Credentialing and Recredentialing (Washington, D.C.: National Committee for Quality Assurance, 1997), 70.

21 Stephen Blakely, "An Update on Health care Pools," Nation's Business 85 (May 1997):51-2.

This glossary is excerpted from Managed Healthcare: An Introduction, Second Edition ©1999 and used with permission from the Academy for Healthcare Management, Washington, D.C. For additional information on the Academy and its educational programs, visit the Academy's Website at www.academyforhealthcare.com. Acrobat Reader will allow you to access Portable Document Format (PDF) files. If you currently don't have the software, you can get a free copy from the Adobe Systems Incorporated Web site. Here are a few quick and easy steps to view or download a PDF file.