Appendix C:
Glossary of Health Care Terms and Acronyms

Primary Sources: The National Library of Medicine's (NLM) controlled vocabulary database, Medical Subject Headings (MeSH), at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?db=mesh, and Peter R. Kongstvedt, Glossary of Terms and Acronyms, in Essentials of Managed Health Care (Peter R. Kongstvedt ed., 4th ed. 2003).

Term Definition
Allied Health Professional (AHP) AHPs are individuals trained to support, complement, or supplement the professional functions of physicians, dentists, and other health professionals in the delivery of health care to patients. They include physician assistants, dental hygienists, medical technicians, nurse midwives, nurse practitioners, physical therapists, psychologists, and nurse anesthetists.
Ambulatory Care Health care services provided to patients on an ambulatory basis, rather than by admission to a hospital or other health care facility. The services may provided at a hospital or a free-standing facility.
Ambulatory Payment Classification (APC) This is the method used by CMS to implement prospective payment for ambulatory procedures. APC clusters many different ambulatory procedures into groups for purposes of payment.
Ambulatory Surgery Center (ASC) Surgery performed on an outpatient basis, either hospital-based or performed in an office or surgicenter.
Any Willing Provider Laws Any willing provider laws take many different forms, but they typically restrict the ability of managed-care organizations to use a closed panel of physicians, hospitals, or other providers.
Average Wholesale Price (AWP) Average Wholesale Price of brand-name pharmaceuticals, as stated by the manufacturer, is used as a basis for determining discounts and rebates.
Capitation Capitation pays the provider a fixed amount for each of the patients for whom he agrees to provide care, regardless of whether those patients seek care or not. Payment is typically based on a set number of dollars "per member-per month."
Care Management Protocols (CMPs) Care Management Protocols specify utilization and treatment standards for various diagnoses.
Certificate of Need (CON) A certificate issued by a governmental body to an individual or organization proposing to construct or modify a health facility, or to offer a new or different service. The process of obtaining the certificate is included in the term.
Certification Certification is a voluntary system of standards that practitioners can choose to meet to demonstrate accomplishment or ability in their profession. Certification standards are generally set by non-governmental agencies or associations.
Chronic Illness Diseases which have one or more of the following characteristics: they are permanent, leave residual disability, are caused by nonreversible pathological alteration, require special training of the patient for rehabilitation, or may be expected to require a long period of supervision, observation, or care.
CMS Centers for Medicare and Medicaid Services.
COBRA Consolidated Omnibus Budget Reconciliation Act of 1986.
Collective Bargaining Collective bargaining refers to bargaining by union members, which is authorized by the NLRA, or non-unionized physicians' attempts to obtain the right to bargain collectively.
Computerized Physician Order Entry (CPOE) Computer physician order entry (CPOE) is an electronic prescribing system. With CPOE, physicians enter orders into a computer rather than on paper. Orders are integrated with patient information, including laboratory and prescription data. The order is then automatically checked for potential errors or problems.
Coronary Artery Bypass Graft (CABG) Surgical therapy of ischemic coronary artery disease, achieved by grafting a section of saphenous vein, internal mammary artery, or other substitute between the aorta and the obstructed coronary artery distal to the obstructive lesion.
Critical Loss Analysis A two step analysis is used to perform a critical loss analysis. The first step identifies, for any given price increase, the amount of sales that can be lost before the price increase becomes unprofitable. The second step considers whether or not the actual level of sales lost due to the price increase will exceed this amount.
Diagnosis Related Group (DRG) DRGs form the cornerstone of the prospective payment system. A DRG is a cluster of diagnoses that are expected to require comparable hospital resources and lengths of stay.
Durable Medical Equipment (DME) Devices which are very resistant to wear and may be used over a long period of time. DME includes items such as wheelchairs, hospital beds, artificial limbs, etc.
EMTALA Emergency Medical Treatment and Active Labor Act of 1986.
End-Stage Renal Disease (ESRD) An irreversible and usually progressive reduction in renal function in which both kidneys have been damaged by a variety of diseases to the extent that they are unable to adequately remove the metabolic products from the blood and regulate the body's electrolyte composition and acid-base balance. Chronic kidney failure requires hemodialysis or kidney transplantation.
ERISA Employee Retirement Income Security Act.
Fee-for-Service (FFS) In FFS, a provider is paid based on the number and type of services that are performed.
Formulary A list of approved drugs for treating various diseases and conditions.
Group Purchasing Organization (GPO) A shared service which combines the purchasing power of individual organizations or facilities in order to obtain lower prices for equipment and supplies.
HIPAA Health Insurance Portability and Accountability Act of 1996 .
Health Plan Employer Data and Information Set (HEDIS) A set of standardized performance measures designed to ensure that purchasers and consumers have reliable information with which to compare the performance of MCOs.
Herfindahl- Hirschman Index (HHI) The Herfindahl-Hirschman Index is a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. The HHI takes into account the relative size and distribution of the firms in a market. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.
Independent Practice Association (IPA) IPAs are networks of independent physicians that contract with MCOs and employers. IPAs may be organized as sole proprietorships, partnerships, or professional corporations.
Inpatient Prospective Payment System (IPPS) Medicare's payment system for inpatient hospitals and facilities. The specific amount that is paid is based on the DRG for the hospital admission.
Licensure A mandatory system of state-imposed standards that practitioners must meet to practice a given profession.
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
Managed Care Organization (MCO) MCOs integrate, to varying degrees, the financing and delivery of health care services.
Maximum Allowable Cost (MAC) Maximum Allowable Cost, or Charge. The maximum that a vendor may charge for something. This term is often used in pharmaceutical contracting.
Medicare + Choice (M+C) Also known as Medicare Part C. The Balanced Budget Act of 1997 (BBA) established the Medicare+Choice program. Under this program, an eligible individual may elect to receive Medicare benefits through enrollment in a Medicare+Choice plan, which generally takes the form of a MCO.
Medicare Advantage (MA) As of 2003, the new name for Medicare+Choice (M+C).
Medicare Payment Advisory Commission (MedPAC) The Commission was created by the BBA through a merger of the Prospective Payment Assessment Commission and the Physician Payment Review Commission. MedPAC reviews payment policies under Medicare Parts A and B and the effects of Medicare Part C. MedPAC also evaluates the effect of prospective payment policies and their impact on health care delivery in the US.
Medigap A supplemental health insurance policy sold by private insurance companies that is designed to pay for health care costs and services that are not paid for by Medicare and any private health insurance benefits.
Metropolitan Statistical Areas (MSA) Standard metropolitan statistical areas are defined by the U.S. Census so that institutions and individuals gathering statistics on urban areas can use a common definition.
Most Favored Nation (MFN) A "Most Favored Nation" (MFN) clause is a contractual agreement between a supplier and a customer that requires the supplier to sell to the customer on pricing terms at least as favorable as the pricing terms on which that supplier sells to other customers. These clauses are sometimes found in the contracts health insurers enter into with providers.
Outpatient Prospective Payment System (OPPS) Medicare's system for payment to outpatient departments of hospitals and other outpatient facilities. The specific amount that is paid is determined by the relevant APC.
Patient Flow Data Patient flow data identifies the zip code of each patient discharged from a hospital.
Payment for Performance (P4P) Payment for Performance pays providers based on their success in meeting specific performance measures.
Pharmacy Benefit Manager (PBM) A company under contract with managed care organizations, self-insured companies, and government programs to manage pharmacy network management, drug utilization review, outcomes management, and disease management.
Physician-Hospital Organization (PHO) A PHO is a joint venture between a hospital and some or all of the physicians who have admitting privileges at the hospital.
Point of Service (POS) A health insurance plan in which members do not have to choose how to receive services until they need them. The most common use of the term applies to a plan that enrolls each member in both an HMO (or HMO-like) system and an indemnity plan. These plans provide different benefits, depending on whether the member chooses to use plan providers or go outside the plan for services.
Preferred Provider Organization (PPO) A health insurance plan with an established provider network ("preferred providers) that provides maximum benefits when members use a preferred provider.
Quality Improvement Organization (QIO) Organizations that contract with CMS to review care provided to Medicare beneficiaries.
Resource-Based Relative Value Scale (RBRVS) The RBRVS determines the rate at which Medicare reimburses physicians on an FFS basis. The RBRVS is calculated based on the cost of physician labor, practice overheads, materials, and liability insurance. The resulting figures are adjusted for geographical differences and are updated annually.
Single Specialty Hospital (SSH) Specialized hospitals that provide treatment relating to a single specialty (e.g., cardiac or orthopedic services). Many of the physicians who refer patients to an SSH have an ownership interest in the facility.
State Action Doctrine First articulated in Parker v. Brown, the state action doctrine shields certain anticompetitive conduct from federal antitrust scrutiny.
State Board of Medical Examiners State Boards of Medical Examiners are typically responsible for licensure and promulgate regulations governing physicians and AHPs.
State Children's Health Insurance Program (SCHIP) Also referred to as Children's Health Insurance Program (CHIP). A program created by the federal government to encourage states to provide insurance coverage for children. SCHIP is funded through a combination of federal and state funds, and administered by the states in conformity with federal requirements.
Telemedicine Telemedicine involves the use of electronic communication and information technologies to provide or support clinical care at a distance.
Third-Party Administrator (TPA) A firm that performs administrative functions (e.g., claims processing, membership) for a self-funded plan or a start-up MCO.
Utilization Review An organized procedure carried out through committees to review admissions, duration of stay, professional services furnished, and to evaluate the medical necessity of those services and promote their most efficient use.