Medical Cost Containment - Definitions
Benchmarking: The identification of best practices in your own or another industry that exemplifies superior performance.
Bill Review: The evaluation and adjudication of provider bills for appropriateness of charges relating to medical necessity, prevailing rates, duplicate charges, unbundling of charges, relativeness of services to injury or illness, necessity of assistant surgeons, adjudication of multiple procedures, number of modalities, global procedures, and any other prevailing adjudication issues that may apply.
Bundling: A method by which payment is made by combining two or more medical services.
Carve-out: Medical services that are separated from a contract and paid under a different arrangement.
Case Management: The directing of all the procedures for care of an individual through a nurse or other health care professional.
Complete Care Organization (CCO): Hospitals and providers work cooperatively to provide care within a community.
Continuum of Care: Health care services provided either during inpatient hospitalization or for multiple diagnoses over a lifetime to give a basis for evaluating effectiveness, quality and cost of care.
Contracted Provider: A medical provider that has an agreement with a health plan, PPO provider or individual company to accept patients at a previously agreed upon rate for payment.
CPT Code: Current Procedural Terminology, an accepted method developed by the American Medical Association in connection with the Health Care Financing Administration Common Procedure Coding System to describe a medical service by use of a numeric code. This has been established as the standard code set for reporting health care services in electronic transactions.
Diagnostic Related Groups (DRGs): Classification system developed at Yale University using 383 major diagnostic categories based on the ICD-9 codes. This procedure assigns patients into case types. DRGs were originally designed to facilitate the utilization review process but they are also used to analyze patient case mix in hospitals and determine hospital reimbursement policy.
Direct Contracting: Individual employers or business coalitions which contract directly with providers for health care services with no HMO/PPO intermediary. This enables the employer to include in the plan the specific services preferred by their employees and is usually done under ERISA guidelines.
Discounted Fee-For-Service: Physician services are provided as fee-for-service but at a negotiated rate less than his/her usual fee.
Durable Medical Equipment: Equipment with a primary medical purpose and continually reused, such as wheelchairs, etc.
Electronic Data Interchange (EDI): Exchange of information between two or more organizations using electronic transmissions.
Episode of Care: All care provided for a specific diagnosis for a specific time frame.
Evergreen Contracts: Refers to managed care contracts that renew automatically after the initial term has been completed.
Fee-For-Service: The patient or payer is charged according to a fee schedule set for each service and/or procedure to be provided. The patient's total bill will vary by the number of services/procedures actually provided. The payer is billed at the time of service.
Fee Schedule: A list of CPT Codes and dollar amounts for each specific service that is the amount a medical provider can expect for the service.
Health Care Financing Administration (HCFA): The Health Care Financing Administration is part of the U. S. Department of Health and Human Services. In addition to its many other functions, HCFA is the contracting agency for HMOs who seek direct contractor/provider status for provision of the Medicare benefit package.
Individual Practice Association/Organizations (IPA/IPO): This is a network of licensed providers practicing in their own offices and participating in a managed care plan. The providers charge agreed-upon rates to enrolled patients and bill the IPA for their services.
Integrated Healthcare Systems (HIS): Combines physicians, hospitals and other medical services to provide coordinated, continuing ambulatory and tertiary care to a defined population of enrollees. May be associated with a health plan. May also be called an Integrated Healthcare Organization (IHO) or Integrated Delivery System (IDS). Integrated healthcare organizations facilitate the efficient delivery of appropriate, timely, and coordinated patient care, using multiple economic, organizational, and risk models.
Managed Care (or Coordinated Care): Use of a planned and coordinated approach to providing health care with the goal of quality care at a lower cost. Usually emphasizes preventive care and is often associated with an HMO or PPO. Under managed care, the financial risk is shifted from the patient and payer to the provider. Managed care is characterized by specific standards for selecting providers, contractual agreements to bring providers in to networks, formal mechanism for tracking the efficiency and effectiveness of the networks and economic incentives for enrollees to use the network's providers.
Managed Care Organization (MCO): Any organization that contracts with physicians for the delivery of medical care and exercises control over the care provided. These range from closed panel HMOs with all physicians as employees to loosely structured PPOs, hospital-owned physician practices and other arrangements with non-insurers who have a financial interest in the medical care physicians deliver.
Medical Protocols: Outlines the specific treatment options for a defined set of clinical symptoms or laboratory results. Accumulated outcomes databases are used to design these protocols.
Peer Review: Evaluation of a physician's performance by other physicians, usually within the same geographic area and medical specialty.
Pre-certification: Evaluation by the payer or financial intermediary to determine if specific medical services, such as hospitalization, is appropriate treatment for a patient. Also called prior authorization.
Preferred Provider Organization (PPO): A group of physicians and /or hospitals who contract with an employer or managed care organization to provide medical services at a discounted fee.
Resource-Based Relative Value Scale (RBRVS): This relative value scale was developed by HCFA for Medicare reimbursement. Relative values are assigned CPT-4 codes on the basis of the resources needed to perform the services. This scale is recognized and used in most fee schedules and was put together by the AMA for the HCFA.
Specialty Case Rate: Fixed amount of money paid to a specialist for all professional care for a specific procedure or diagnosis. Can include technical and /or facility charges.
Unbundling: Billing separately for the components of a service previously included in a single fee.
Usual and Customary: A reduction in the payment of medical bills which is justified by determining the "going rate" for like services in the same geographical area.
Utilization Management: A process that monitors the use of a comprehensive set of integrated components including: pre-certification review, admission review, continued stay review, retrospective review, discharge planning, bill review and individual medical case management as required to determine medical necessity, cost effectiveness, and conformity to criteria for optimal use.
Utilization Review: The determination of medical necessity for medical and surgical in-hospital, outpatient, and alternative setting treatments for acute and rehabilitation care.