GLOSSARY - GLOSSARY
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Content Last Updated: 10/1/2013 10:29:06 AM
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ACCOUNTABLE CARE ORGANIZATION (ACO) –A health provider–led organization designed to manage a patient’s full continuum of care and be responsible for the overall costs and quality of care for a defined population. Multiple forms of ACOs are possible, including large integrated delivery systems, physician–hospital organizations, multi–specialty practice groups with or without hospital ownership, independent practice associations and virtual interdependent networks of physician practices. (See Innovation and Delivery System Reform Chapter.)
ACTIVITIES OF DAILY LIVING (ADL) – An index or scale that measures a patient’s degree of independence in bathing, dressing, using the toilet, eating and transferring (moving from a bed to a chair, for example). Used to determine need for long–term services and supports, and eligibility for payments for care by insurers. (Contrast with Instrumental Activities of Daily Living.)
ACUTE CARE – Medical services provided to treat an illness or injury, usually for a short time. (Contrast with Chronic Care.)
ADDICTION – When a person engages in an activity that can be pleasurable, such as drinking alcohol or even exercising, but the continued action becomes compulsive and interferes with ordinary life responsibilities.
ADMINISTRATIVE SERVICES ONLY (ASO) AGREEMENT – A contract typically between an insurance company and a self–funded plan or group of providers in which the insurance or management company performs only administrative services (billing, plan design, claim processing, marketing, for example) and does not assume any risk. (Also see Self–Insurance.)
ADVANCEABLE TAX CREDIT – A subsidy to help pay for health insurance that is available when the insurance premium is due, without having to wait until a year–end tax return is filed. (Also see Tax Credit.)
ADVERSE SELECTION – When a disproportionately high number of individuals in poorer-than-average health enroll in a health plan.
AGENCY FOR HEALTHCARE RESEARCH AND QUALITY (AHRQ) – The lead federal agency for research on health care quality, costs, outcomes and patient safety.
AGING AND DISABILITY RESOURCE CENTER PROGRAM (ADRC) – Supports state efforts to streamline access to long–term services and supports (LTSS). ADRCs simplify access to LTSS and are a key component to long–term care systems reform. ADRCs are designed to serve as highly visible and trusted places available in communities across the country where people get information and counseling on LTSS options.
AFFORDABLE CARE ACT – see Patient Protection and Affordable Care Act of 2010
ALIGNING FORCES FOR QUALITY (AF4Q) –A national program of the Robert Wood Johnson Foundation designed to help communities across the country improve the quality of health care for patients with chronic conditions such as diabetes, asthma, depression and heart disease. (See Quality of Care chapter.)
AMBULATORY CARE – Medical service provided on an outpatient basis (no overnight hospital stay). Services may include diagnosis, treatment, surgery and rehabilitation.
AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) OF 2009 – Commonly referred to as the Stimulus or The Recovery Act, the ARRA was an economic stimulus package enacted by Congress in February 2009 and signed into law on February 17, 2009 by President Obama. The law temporarily granted higher federal matching funds for states to help with the costs of higher enrollments in Medicaid as a result of the 2007–2009 recession.
ANNUAL BENEFIT LIMIT – Limit on the amount of claims an insurer will pay in a given year for an individual.
ANNUAL WELLNESS VISIT (AWV) – Annual visits covered by Medicare to develop a personalized prevention plan that takes a comprehensive approach to improving health and preventing disease.
ANTI–KICKBACK STATUTE – A criminal statute that prohibits the exchange of anything of value in an effort to encourage the referral of federal health care program business.
ANY WILLING PROVIDER – A requirement — typically a state law — that a managed care organization must accept any properly licensed provider willing to meet the terms of a plan’s contract, whether the organization wants or needs that provider. Often described by managed care groups as “anti–managed care” legislation.
APPEAL– A request for review of a denial of coverage of a particular medical service or inadequate payment for services already received. Medicare beneficiaries have the right to appeal in either of these circumstances, whether they are enrolled in traditional Medicare or in a Medicare Advantage plan. Under the ACA, all consumers will have the right to appeal decisions, including coverage denials and rescissions, made by their health plans first through the plan’s internal process and then to an outside, independent decision–maker. (Also see Grievance.)
ASSISTED LIVING FACILITY (ALF) – A group residence offering 24–hour assistance to those who may need some help with activities of daily living, but who do not need the level of medical and nursing care offered by skilled nursing facilities.
BABY BOOMER – A person who was born between 1946 and 1964.
BALANCE BILLING – A provider’s bill to a covered person for charges above the amount paid by the health plan or insurer.
BASIC HEALTH PLAN (BHP) – Beginning in 2014, states will have the option of creating a basic health plan to provide coverage to individuals with incomes between 133 and 200 percent of poverty, in lieu of having these individuals get coverage through the state’s health insurance exchange and receive premium subsidies. The plan would exist outside of the health insurance exchange and include the essential health benefits as defined under the ACA. Cost–sharing under this plan would also be limited. If states choose to offer this plan, the federal government will provide states 95 percent of what it would have paid to subsidize these enrollees in the health insurance exchange.
BEHAVIORAL HEALTH – Medical services encompassing mental health care and substance abuse treatment.
BENCHMARKS – Goals set as a way for hospitals and doctors to analyze quality data, both internally, and against data from other hospitals and doctors to identify best practices of care and improve quality.
BEST PRACTICES – The most up–to–date patient care methods, which result in the best patient outcomes and minimize patient risk of death or complications.
BIOSURVEILLANCE – Automated monitoring of health data sources to identify trends that may indicate an emerging epidemic, whether naturally occurring or as a result of bioterrorism.
BLOCK GRANT – A lump sum of money that the federal government gives to a state or local government to spend for certain purposes. Normally, it is based on a formula, the objectives are broadly defined and the grant’s source places relatively few limits on the money’s use.
BUNDLING – See Payment Bundling
CAFETERIA PLAN (Section 125 Plan) – Provides participants an opportunity to receive certain benefits, such as reimbursement for some out–of–pocket medical expenses, on a pretax basis. It is a separate written plan maintained by an employer for employees that meets the requirements of Section 125 of the Internal Revenue Code.
CAHPS (H–CAHPS or CAHPS Hospital Survey) –The Consumer Assessment of Healthcare Providers and Systems is a national, standardized survey instrument and data collection methodology for measuring patients’ perspectives of hospital care, thus enabling valid comparisons to be made across all hospitals. CAHPS was developed by the Agency for Healthcare Research and Quality in partnership with numerous private organizations.
CAP – See Out–of–Pocket Cap
CAPITATION – Method of payment for health services in which a health care provider is paid a fixed amount for each person on the provider’s patient roster, regardless of the actual number or nature of services provided to each person.
CARRIER – An entity that may underwrite or administer a range of health benefit programs. May refer to an insurer or a managed health plan.
CARVE–OUTS – A payer strategy in which a health maintenance organization (HMO) or insurance company isolates (“carves out”) a benefit and hires another organization to provide this service. Common carve–outs include behavioral health and prescription drugs. The technique is intended to allow the insurer to better control its costs.
CASE MANAGEMENT – A process where a health plan identifies covered persons with specific health care needs, then devises and carries out for them a plan to achieve the best patient outcome in the most cost–effective manner.
CASE MIX – The mix of patients treated within a particular institutional setting, such as a hospital or within a particular health plan. Case mix may be measured by the severity of patients’ illnesses or the prospective use of care resources.
CASE MIX ADJUSTMENT – Change in payment to a health plan or provider to avoid overpaying or underpaying when health status or likely use of services varies from average.
CASH AND COUNSELING– A Medicaid program that allows certain Medicaid beneficiaries, frail elders and adults with disabilities to purchase their own personal care and related services. Medicaid provides a monthly allowance, the amount of which is determined after assessing the beneficiary’s need for community–based long–term care services. As of October 2011, Cash and Counseling is to be replaced by the Community First Choice Option, a provision of the ACA that will be available in all states. (See Long–Term Services and Supports chapter.)
CATASTROPHIC HEALTH INSURANCE – Health insurance that provides protection against the high cost of treating severe or lengthy illnesses. Such policies cover all or most medical expenses above a relatively high specified amount.
CATEGORICAL ELIGIBILITY– Medicaid’s eligibility pathway for individuals who can be covered. The program’s 25+ categories have been organized into five broad groups – children, pregnant women, adults in families with dependent children, individuals with disabilities and the elderly. The ACA expands Medicaid eligibility to all individuals under age 65 with incomes up to 133 percent of the federal poverty level and who are not eligible for Medicare, effective January 1, 2014. (See Medicaid chapter.)
CENTERS OF EXCELLENCE – Health care facilities selected to deliver specific services, often exclusively, based on criteria such as experience, outcomes, efficiency and effectiveness.
CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT – Created by the ACA to ensure compliance with the new insurance market rules, this agency of the U.S. Dept. of Health and Human Services oversees the new medical loss ratio rules and assists states in reviewing insurance rates. In addition, it oversees the state–based insurance exchanges, the temporary high–risk pool program and the early retiree reinsurance program. It also compiles and maintains data for an Internet portal providing information on insurance options. Formerly the Office of Consumer Information and Insurance Oversight.
CENTER FOR MEDICARE AND MEDICAID INNOVATION (CMMI) – Congress created the “Innovation Center” as part of the ACA to test innovative payment and service delivery models to reduce program expenditures, while preserving or enhancing the quality of care for those who receive Medicare, Medicaid or CHIP benefits.
CENTERS for Medicare & Medicaid Services (CMS) (formerly Health Care Financing Administration, HCFA)– The federal agency administers Medicare, Medicaid and Children’s Health Insurance Program.
CERTIFICATE OF NEED – The requirement that a health care institution obtain permission from an oversight agency before making major changes to its facilities or facility–based services, or before building new facilities.
CHECKLIST – A tool increasingly used by physicians in hospitals as a reminder to follow certain steps to reduce hospital–acquired infections or surgical errors.
CHERRY PICKING – The practice of insurance companies taking only those businesses or individuals that are good health risks, and avoiding higher health risks. Also called “skimming.”
CHILDREN’S HEALTH INSURANCE PROGRAM (CHIP) – A program enacted by Congress in 1997 that provides federal matching funds for states to spend on health coverage for uninsured kids. The program is designed to reach uninsured children whose families earn too much money to qualify for Medicaid but not enough to afford private coverage. Congress initially authorized CHIP for a 10–year period that expired at the end of September 2007. CHIP was reauthorized and enlarged early in 2009. The bill increases CHIP funding by about $32 billion through 2013 to cover an additional 4 million children. The ACA requires states to maintain existing income eligibility levels for children in CHIP (and Medicaid) until 2019 and extends funding for CHIP through 2015. Beginning in 2015, states will receive a 23 percentage point increase in the share of CHIP funding paid by the federal government, up to a cap of 100 percent. (See Medicaid and CHIP chapter.)
CHOOSING WISELY – An initiative of the American Board of Internal Medicine (ABIM) Foundation that promotes conversations between patients and physicians by helping patients choose care that is supported by evidence, not duplicative of other tests or procedures already received, free from harm, and truly necessary.
CHRONIC CARE – Medical services provided to those with chronic conditions. (Contrast with Acute Care.)
CHRONIC CONDITION – A condition that is not expected to improve, that lasts a year or longer or recurs, and may result in long–term care needs. Examples include Alzheimer’s disease, arthritis, diabetes, epilepsy and some mental illnesses.
CHURNING – Individual‘s frequent movement in and out of Medicaid.
CLAWBACK– Popular term for “phased–down state contribution” that describes how the federal government is recovering (or “clawing” back, from the states’ perspective) money spent on Medicare–covered drugs for persons dually eligible for Medicare and Medicaid. Since January 2006, states have made monthly payments to the federal Medicare program, reflecting the amount of money they spent on prescription drugs for Medicaid–eligible seniors (known as dual eligibles) before the enactment of Medicare Part D. Payments were set at 90 percent of costs in FY 2006, decreasing to 75 percent by FY 2015. However, because of the recession of 2007–2009, the federal government reduced the amount each state must pay from October 1, 2008 through the end of 2010. This provision was extended through June 30, 2011 by the Education, Jobs and Medicaid Assistance Act.
CLOSED PANEL/CLOSED ACCESS – A term that describes health plans in which enrollees are permitted to receive non–emergency services only through specified providers. Group– and staff–model HMOs are examples of closed panel plans.
COINSURANCE – A portion of the bill for a medical service that is not covered by the patient’s health insurance policy and therefore must be paid out of pocket by the patient. Coinsurance refers to a percentage, e.g., 10 percent of the total charge up to a specified maximum. (Contrast with Copayment, which is stated as a flat amount, e.g., $5 per office visit.)
COMMUNITY FIRST CHOICE OPTION (CFCO) – A new state plan option under Medicaid that encourages primary care practices to provide home– and community–based care to chronically-ill Medicare patients. States that take up this option receive a 6 percentage point increase in federal matching payments for costs associated with the program.
COMMUNITY HEALTH CLINIC / CENTER (CHC) – Organization providing comprehensive primary care to medically underserved populations, regardless of their ability to pay. These public and non–profit entities receive federal funding under Section 330 of the Public Health Service Act, as amended.
COMMUNITY LIVING ASSISTANCE SERVICES and SUPPORTS (CLASS) Program – Enacted as part of the ACA, the CLASS program aimed to establish a national voluntary insurance program for purchasing non–medical services and supports necessary for individuals with functional limitations to maintain community residence. HHS was to release details of the program by October 2012. However, HHS found the program to be unfeasible. The CLASS Act was later repealed in January 2013 as part of the American Taxpayer Relief Act of 2012.
COMMUNITY MENTAL HEALTH SERVICES BLOCK GRANT (MHBG) – Also known as the Mental Health Block Grant, it is provided by SAMHSA to establish or expand an organized community–based system of care for providing mental health services to people with serious emotional disturbances or mental illness.
COMMUNITY RATING – A method for setting premiums at the same price for everyone, based on the average cost of providing health services to all. The premium is not adjusted for the individual beneficiary’s medical history or likelihood of using medical services. (Contrast with Experience Rating and Modified Community Rating.)
COMMUNITY TRANSFORMATION GRANT (CTG) PROGRAM – Allows the Centers for Disease Control and Prevention to award state and local government agencies, tribes and territories, and nonprofit organization funding to design and implement community–level programs that prevent chronic diseases.
COMPARATIVE EFFECTIVENESS – Research that compares clinical outcomes, or the “clinical effectiveness,” of alternative therapies for the same condition. Many analysts believe that comparative effectiveness research evidence can lead to better health care decisions and thus to improved quality of care, improved efficiency, and ultimately, to the potential for cost savings throughout the health system.
CO–MORBIDITY – A medical condition that exists at the same time as the primary condition in the same patient (e.g., hypertension is a co–morbidity of many conditions such as heart disease, end–stage renal disease and diabetes).
CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985 (COBRA) – This law includes one part that entitles former employees of companies with 20 or more workers to continue to receive their employer–sponsored coverage under the group plan for up to 18months. Under the original legislation, individuals were required to pay the full premium to continue their insurance through COBRA. The American Recovery and Reinvestment Act provided a temporary subsidy of 65 percent of the premium cost for the purchase of COBRA coverage to people who lost their job between September 1, 2008 and May 31, 2010.
CONSUMER–DIRECTED OR CONSUMER–DRIVEN HEALTH PLAN – A form of health insurance that combines a high–deductible health plan with tax–favored health spending accounts into which employers or individuals contribute pre–tax dollars to be used for health care purchases. These mechanisms aim to change employees from receivers of health care into purchasers by having them participate more fully in health care and cost decisions. (Also see Health Reimbursement Arrangement and Health Savings Account.)
CONSUMER PRICE INDEX (CPI) – A statistical measure of the annual change in cost to workers of purchasing a market basket of goods and services. It is expressed as a percentage of the cost of these goods and services during a base period. CPI is also known as retail price index or cost–of–living index.
CONTINUING CARE RETIREMENT COMMUNITY (CCRC) – Housing community designed to provide different levels of long–term care under contract. Services usually include home care, support in an assisted living facility and care in a nursing home.
Coordination of care – A set of mechanisms that ensure patients and clinicians have access to, and take into consideration, all required information on a patient’s conditions and treatments to ensure that the patient receives appropriate health care services.
COPAYMENT – A flat amount paid out of pocket per medical service, e.g., $5 per office visit.
Core measures – Specific clinical measures that, when viewed together, permit a robust assessment of the quality of care provided in a given focus area, such as acute myocardial infarction.
COST SHARING – Any out–of–pocket payment the patient makes for a portion of the costs of covered services. Deductibles, coinsurance, copayments and balance bills are types of cost sharing.
COST SHIFTING – The practice by which a seller of a health service, such as a hospital, increases charges for some payers to offset losses due to uncompensated or indigent care or lower payments from other payers.
CRITICAL ACCESS HOSPITAL (CAH) – Limited–service hospitals located in rural areas and meeting certain size, location and other requirements. CAHs are subject to less rigorous staffing standards and receive reimbursement from Medicare based on their actual costs, rather than by the more common (and less favorable) payment tied to average costs for treating a particular diagnosis.
CROSS–SUBSIDY – The concept of certain purchasers paying more for medical services than they otherwise would so that others can pay less (or nothing at all), so another activity can be funded. In the U.S. health system, this mechanism has been used to pay for medical services for the poor and uninsured, medical education and research.
CROWD–OUT – A phenomenon whereby public health coverage programs encourage some employers to drop health coverage, urging their employees instead to take advantage of the subsidies available to them in the public program.
CUSTODIAL (LONG TERM) CARE – Long–term care services that do not seek to cure, provided during periods when the medical condition of the patient is not changing or does not require continued delivery by medical personnel.
DEDUCTIBLE – A fixed amount, usually expressed in dollars in the form of an annual fee, that the beneficiary of a health insurance plan must pay directly to the health care provider before a health insurance plan begins to pay for any costs associated with the insured medical service.
DEFENSIVE MEDICINE – The practice of health care providers ordering tests that may not be necessary to protect themselves from potential malpractice lawsuits. Said by some to be a major cause of high health care costs.
DEFICIT REDUCTION ACT OF 2005 (DRA) – Made significant changes to the Medicaid program by allowing states to increase premiums and cost–sharing for families and to base benefits on private plans. The law also tightened long–term care asset transfers and capped the exemption for home equity at $500,000. Requires Medicaid beneficiaries to show proof of citizenship upon applying for or renewing their benefits.
DEFINED BENEFIT – A health insurance model used by an employer or government program where specified health services covered under the plan are standardized and guaranteed. The cost of providing the standard benefits may fluctuate. One example of a defined benefit plan is traditional Medicare. (Contrast with Defined Contribution.)
DEFINED CONTRIBUTION – A health benefit model used by employers or government programs where health services covered may fluctuate based on choice of plan, but the employer or government contributes a set amount (percentage or dollar amount) towards the purchase of the selected health plan. A defined contribution plan limits the financial liability of employers or the government, because the contribution is defined, or fixed. (Contrast with Defined Benefit.)
DELIVERY SYSTEMS – Networks of providers and payers that provide care and compete with other systems for enrollees. Systems may include hospitals, physicians and other providers and sites offering a full range of preventive and treatment services. Also known as coordinated care networks, community care networks and integrated health systems.
DEMONSTRATION PROJECT – An experimental program supported through a grant or a cooperative agreement, generally to establish or demonstrate the feasibility of new methods or types of services.
DIAGNOSIS– RELATED GROUP (DRG) – A way of determining payments to hospitals, used under Medicare’s prospective payment system (PPS) and by some other public and private payers. The DRG system classifies patients into groups based on the principal diagnosis, treatments and other relevant criteria. Hospitals are paid the same for each case classified in the same DRG, regardless of the actual cost of treatment.
DIRECT CARE WORKER DEMONSTRATION FOR PERSONAL AND HOME CARE AIDES – Provides $85 million per year in mandatory funding for three years to conduct a Medicaid demonstration in up to six states for development of training programs for personal and home care aides. This provision also establishes a national panel of long–term care workforce experts to develop core competencies for these training programs and to recommend their implementation.
DIRECT CARE WORKERS – Nursing assistants, home health aides, and personal care aides provide an estimated 70 to 80 percent of the paid hands–on long–term care and personal assistance received by Americans who are elderly or living with disabilities or other chronic conditions.
DIRECT GRADUATE MEDICAL EDUCATION PAYMENT – Medicare payment to approved teaching hospitals to help cover the direct costs of training residents to become board–eligible in their field. Hospitals receive full payments to help cover resident salaries, fringe benefits and compensation for attending physicians, for residents in their initial residency period (the minimum number of years required to qualify for board certification in that specialty) and half payments for residents who have completed their initial training and are sub–specializing. Direct GME payments vary significantly among hospitals and depend on the number of residents at the hospital, the hospital-specific per resident amount and the size of the hospital’s inpatient Medicare population.
DIRECT– TO – CONSUMER (DTC) ADVERTISING – The use of mass media (television, newspapers, magazines, etc.) to reach the general public. DTC advertising is often used by the pharmaceutical industry to promote their products. These advertisements must meet certain standards under federal regulations.
DISPROPORTIONATE SHARE HOSPITAL (DSH) ADJUSTMENT – An increased payment under Medicare’s prospective payment system or under Medicaid for hospitals that serve a large share of low–income uninsured patients.
DOUGHNUT HOLE – Also known as “donut hole.” Coverage gap in Medicare Part D prescription drug coverage, as originally enacted, where enrolled beneficiaries paid 100 percent of their prescription drug costs after their total drug spending exceeded an initial coverage limit until they qualified for catastrophic coverage. Beginning January 1, 2011, the ACA shrinks the doughnut hole by reducing beneficiary copayments each year, until the doughnut hole is essentially eliminated by 2020. (See Medicare chapter.)
DUAL ELIGIBLE – A Medicare beneficiary who also receives either a full range of Medicaid benefits offered in his or her state, or help with Medicare out–of–pocket expenses, usually through Medicaid. (Also see Medicare Savings Programs, Qualified Medicare Beneficiary and Specified Low–Income Medicare Beneficiary.) To promote better coordination of Medicare and Medicaid services for dual eligibles, the ACA created a new Federal Coordinated Health Care Office — an “Office of Duals” — within the Centers for Medicare & Medicaid Services.
DUAL ELIGIBLE SPECIAL NEEDS PLANS – Health plans that enroll beneficiaries who are entitled to both Medicare and Medicaid, and offer the opportunity of enhanced benefits by combining those available through both programs.
DURABLE MEDICAL EQUIPMENT (DME) – Medical devices such as wheelchairs, oxygen tanks and apnea monitors.
EARLY AND PERIODIC SCREENING, DIAGNOSTIC AND TREATMENT SERVICES (EPSDT) – A range of services that states are required to include in their basic benefits package for all Medicaid–eligible children under age 21. EPSDT services include periodic screenings to identify physical and mental conditions, as well as vision, hearing, and dental problems. Services also include follow–up diagnostic and treatment services to correct conditions identified during a screening, whether or not the state Medicaid plan covers those services for adult beneficiaries.
ELDER JUSTICE ACT – Signed into law by President Obama as part of the ACA, the act requires that the Department of Health and Human Services oversee the development and management of federal resources to protect seniors from elder abuse.
ELECTRONIC HEALTH RECORD (EHR) – Some in the health care field consider the term “electronic health record” to be virtually identical to “electronic medical record” (see Electronic Medical Record). Others consider an electronic health record to be a more patient–oriented Web–based set of information about the patient and his or her care, easily accessible by the patient and owned by the patient.
ELECTRONIC MEDICAL RECORD – A computer–based record containing details about a patient’s encounter with a health care provider or facility, such as the patient’s chief complaint, vital signs, medical history, medical orders, plans and prescriptions. An EMR is a legal document and must meet all of the statutory and regulatory requirements for paper medical records. It is owned by a professional practice, hospital or other health care facility. Also known as a computerized patient record. (Contrast with Electronic Health Record.)
EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA) – Enacted in 1974, ERISA was primarily designed to secure workers’ pension rights. The law established federal reporting and disclosure requirements for most private employee health plans. Under ERISA, companies that pay for their workers’ health benefits directly (e.g., by self–insuring and assuming all or most financial risk) are exempt from state insurance regulations and taxes. ERISA also limits workers’ ability to sue their insurer.
EMPLOYER HEALTH CARE TAX CREDIT – An incentive mechanism designed to encourage employers, usually small employers, to offer health insurance to their employees. The tax credit enables employers to deduct an amount, usually a percentage of the contribution they make toward their employees’ premiums, from their federal taxes. These tax credits are typically “refundable,” so they are available to organizations with no federal tax liability. The ACA includes a tax credit for small employers that provide health coverage to their employees. The tax credit is available to employers with 25 or fewer employees and average annual wages of less than $50,000.
EMPLOYER MANDATE – An approach that requires all employers to provide health care benefits to their workers or pay a fee (see “Pay or Play”) that contributes to the cost of covering them. The ACA creates a type of employer mandate, in that employers with 50 or more employees who don’t offer coverage as of January 1, 2015 will have to pay a fee per full–time employee.
EMPLOYER PAY– OR–PLAY – An approach requiring employers to offer and pay for health benefits on behalf of their employees, or to pay a specified dollar amount or percentage of payroll into a designated public fund. The fund would provide a source of financing for coverage for those who do not have employment–based coverage. Currently, two states, Massachusetts and Vermont, and the City of San Francisco impose pay–or–play requirements on employers.
EMPLOYER–SPONSORED INSURANCE (ESI) – A voluntary system in which employers choose to provide health insurance for employees.
END–STAGE RENAL DISEASE (ESRD) – Kidney disease that is severe enough to require lifetime dialysis or a kidney transplant. People of all ages who have ESRD are eligible for Medicare.
ENTITLEMENT PROGRAM – A program, such as Medicare or Medicaid, for which people who meet eligibility criteria have a right to benefits. Changes to eligibility criteria and benefits require legislation. For Medicare and Medicaid, the federal government is required to spend the funds necessary to provide benefits for individuals in these programs, unlike discretionary programs for which spending is set by Congress through the appropriations process. Enrollment in these programs cannot be capped and neither states nor the federal government may establish waiting lists.
ESSENTIAL HEALTH BENEFITS – A benchmark level of benefits created by the ACA that is meant to ensure a health plan provides a comprehensive set of services. Plans both within and outside of the health insurance exchanges will be required to offer at least this level of coverage. Out-of-pocket expenses will be limited to the HDHP limits ($6,350 for individuals and $12,700 for families in 2014). The secretary of health and human services is required to define and annually update the benefit package.
EVIDENCE–BASED MEDICINE – The use of current best clinical research evidence in making decisions about the care of individual patients, often with the assistance of information technology.
EXCHANGE – See Health Insurance Exchange/Marketplace
EXPANDED SPOUSAL IMPOVERISHMENT PROTECTION – Currently, both members of a couple do not have to become impoverished for one to received long–term services in Medicaid. This protection does not apply if the spouse needing care is not institutionalized. With the enactment of the ACA, for five years beginning in 2014, states will be required to extend the same spousal impoverishment protections that apply to institutional care to home– and community–based care.
EXPERIENCE RATING – Process of determining insurance premiums for a group that is based wholly or partially on that particular group’s past use of services and expenses incurred. (Contrast with Community Rating and Modified Community Rating.)
FAMILY CAREGIVER – Spouses, daughters and daughters–in–law, sons and other relatives and friends who volunteer to help with personal care, medication management and a range of household and financial matters. Sometimes referred to as “informal caregiver.”
FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM (FEHBP) – Health care plans offered to federal civilian employees who can annually choose among a number of approved, community–rated private health insurance plans. The federal government pays a major portion of the cost of the coverage.
FEDERAL MEDICAL ASSISTANCE PERCENTAGE (FMAP) – Percentage used to determine the amount of federal matching funds for state Medicaid expenditures. Before the recession of 2007–2009, the FMAP was not less than 50 percent or more than 80 percent. Congress increased the federal matchin the American Recovery and Reinvestment Act of 2009 to help states during the recession, and later extended increased FMAP payments through June 2011.
FEDERAL POVERTY GUIDELINE – The federal government’s working definition of poverty that is used as the reference point to determine eligibility for certain public programs, including Medicaid and the Children’s Health Insurance Program. Sometimes called federal poverty level/line (FPL). (The poverty guidelines are different from the U.S. Census Bureau’s “poverty thresholds,” which are used for Census statistical purposes.)
FEDERALLY QUALIFIED HEALTH CENTER (FQHC) – Facilities that have been approved by the government for a program to provide low–cost health care. They include community health centers, tribal health clinics, migrant health centers, rural health centers and health centers for the homeless.
FEE SCHEDULE – A complete listing of fees used by health plans to pay doctors or other providers.
FEE–FOR–SERVICE (FFS) – A method of paying health care providers a fee for each medical service rendered, rather than paying them salaries or capitated payments.
FINANCIAL ALIGNMENT DEMONSTRATION –A three year, multi–state demonstration that began in January 2013, which tests new service delivery and payment models for people dually eligible for Medicare and Medicaid. These demonstrations enroll full dual eligibles in managed fee–for–service or capitated managed care plans that seek to integrate benefits and align financial incentives between the two programs.
FIRST–DOLLAR COVERAGE – Insurance plans that provide benefits without first requiring payment of a deductible.
FISCAL CLIFF – A simultaneous increase in tax rates and decrease of government spending through sequestration (automatic federal budget cuts) that would have occurred January 2013 through a series of previously enacted laws. The Congressional Budget Office (CBO) had estimated that the fiscal cliff would have likely led to a mild recession with higher unemployment in 2013, followed by strengthening in the labor market with increased economic growth.
FISCAL INTERMEDIARY – A private contractor that pays hospital bills on behalf of Medicare.
FISCAL YEAR (FY) – The 12–month period used for calculating annual fiscal spending. The U.S. government fiscal year runs from October 1 of the previous year to September 30 of the calendar year for which the fiscal year is numbered. States’ fiscal years do not always correspond to the federal fiscal year.
FLEXIBLE SPENDING ACCOUNT/ARRANGEMENT (FSA) – An employee benefit program that enables the employee to set aside pre–tax money to be used for certain health care and dependent care expenses.
FORMULARY – A list of selected pharmaceuticals and their appropriate dosages created by health insurance plans and state Medicaid programs, which are usually intended to include a broad array of prescription drugs that are also cost–effective for patient care. Physicians are often required or urged to prescribe from the formulary developed by the insurance plans, pharmacy benefit managers or health maintenance organizations with which they are affiliated.
GATEKEEPER/CARE MANAGER – A health care professional, usually a primary care physician, who coordinates, manages, and authorizes all health services provided to a person covered by certain types of health plans. Unless an emergency exists, the gatekeeper generally must pre–authorize referrals to specialists, hospitalizations and lab and radiology tests.
GENETIC INFORMATION NONDISCRIMINATION ACT (GINA) – Enacted in 2008, GINA provides federal protection from genetic discrimination in health insurance and employment.
GLOBAL BUDGET – A fixed maximum expenditure for a defined set of health care services for a covered population. Global budgets are intended to constrain both the level and rate of increase in health care costs by limiting them directly.
GRADUATE MEDICAL EDUCATION (GME) PAYMENT – Medicare payment to approved teaching hospitals to cover the costs of training residents. The GME payment comprises both the direct GME payment, which pays for the direct costs of training residents, and the Indirect Medical Education Adjustment, which pays for the increased operating costs of a teaching hospital.
GREEN HOUSE® PROJECT – Small communities of elders and staff set in a home–like environment that function as long–term care facilities. The centers provide the assistance and support necessary for each resident, but focus on social living, rather than on medical care.
GRIEVANCE – In a health policy sense, a complaint filed because of dissatisfaction with the quality of care by a provider or with customer service or some other action by a health plan. Medicare fee–for–service, Medicare health maintenance organizations and Medicare Part D prescription drug plans, as well as Medicaid and most other health plans, have formal procedures for handling and responding to grievances. If a Medicare beneficiary files a grievance against a hospital, a Quality Improvement Organization will review the case and guarantee the patient’s stay, possibly free–of–charge, until the review has been completed. Under the ACA, all consumers will have the right to appeal decisions, including coverage denials and rescissions, made by their health plans. (Also see Appeal.)
GROSS DOMESTIC PRODUCT (GDP) – The market value of all finished goods and services produced within a country’s borders in a given period of time.
GROUP INSURANCE – Health insurance offered through business, union trusts or other groups and associations. The policy holder is generally the employer or other entity. This system of health insurance is the most common in the United States.
GROUP–MODEL HMO – A health maintenance organization (HMO) that contracts with a single multi–specialty medical group to provide care for HMO members. The HMO compensates the group for contracted services at a negotiated rate, and that group is responsible for compensating its physicians and contracting with hospitals for care of its patients. (Also see HMO, Staff–Model HMO and Network–Model HMO.)
GUARANTEED ISSUE/RENEWAL – A requirement that health plans cannot reject coverage for an applicant based on the person’s medical history. Under the ACA, guaranteed issue for new coverage and guaranteed renewability for existing coverage is the law of the land as of January 1, 2014, and applies to policies issued after that date. For those under age 19, the provision went into effect September 23, 2010.
HEALTH CARE COOPERATIVE (CO–OP) – A non–profit, member–run health insurance organization, governed by a board of directors elected by its members. Co–ops provide insurance coverage to individuals and small businesses and can operate at state, regional, and national levels. The ACA contains loans and grants for the development of new nonprofit health cooperatives to be sold as qualified health plans through state insurance exchanges in the individual and small group insurance markets.
HEALTH CARE INNOVATION AWARDS – Awarded by the Center for Medicare and Medicaid Innovation to organizations that are carrying out the most inventive ideas to deliver better health, improved care and lower costs to people enrolled in Medicare, Medicaid, and CHIP.
HEALTH COVERAGE TAX CREDITS – A refundable tax credit that is paid on a monthly basis, or on a yearly basis when a person files their tax return, to help certain workers, retirees and their families pay for health insurance premiums. Under the ACA, certain small businesses are eligible for tax credits to offset part of the cost of covering their workers.
HEALTH INFORMATION TECHNOLOGY – An umbrella term (which encompasses electronic health records and personal health records) to indicate the use of computers, software programs, electronic devices and the Internet to store, retrieve, update and share information about patients’ health electronically.
HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC AND CLINICAL HEALTH (HITECH) ACT – Signed into law on February 17, 2009, HITECH was enacted as a part of the American Recovery and Reinvestment Act of 2009 to promote the adoption and meaningful use of health information technology.
HEALTH INSURANCE EXCHANGE/MARKET-PLACE – A mechanism that creates a single marketplace facilitating the buying and selling of private health insurance. Similar to a stock exchange or a farmers market where buyers and sellers are brought together, the system is intended for individuals, small businesses, and their employ-ees, while maintaining existing employer–based access to health insurance. The Affordable Care Act calls for the creation in every state of exchanges through which individuals who are U.S. citizens or legal residents, and businesses, can buy coverage.
HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) – A 1996 federal law that provides some protection for employed persons and their families against discrimination in health coverage based on past or present health. Generally, the law guarantees the right to renew health coverage, but does not restrict the premiums that insurers may charge. HIPAA does not replace the states’ role as primary regulators of insurance. HIPAA also requires the collection of certain health care information by providers and sets rules designed to protect the privacy of that information.
HEALTH MAINTENANCE ORGANIZATION (HMO) – A managed care plan that combines the function of insurer and provider to give members comprehensive health care from a network of affiliated providers. Enrollees typically pay limited copayments and are usually required to select a primary care physician through whom all care must be coordinated. HMOs generally will not reimburse all costs for services obtained from a non–network provider or without a primary care physician’s referral. HMOs often emphasize prevention and careful assessment of medical necessity. (See Group–Model HMO, Network–Model HMO and Staff–Model HMO.)
HEALTH OPPORTUNITY ACCOUNT (HOA) –A type of health savings account for Medicaid beneficiaries created by the Deficit Reduction Act of 2005. States may deposit annual sums of up to $2,500 per adult and $1,000per child into the account, to be used to pay for medical expenses not covered by the high deductible health plan with which the account is coupled. (Compare to Health Savings Account and Health Reimbursement Arrangement.)
HEALTH PLAN EMPLOYER DATA AND INFORMATION SET (HEDIS) – A set of standardized measures of health plan performance allowing comparisons on quality, access, patient satisfaction, membership, utilization, finance and health plan management. HEDIS was developed by employers, health maintenance organizations and the National Committee on Quality Assurance.
HEALTH PROFESSIONAL SHORTAGE AREA (HPSA) – A geographic area determined by the U.S. Public Health Service to have a shortage of physicians and other health professionals. Physicians who provide services in HPSAs qualify for a Medicare bonus payment or student loan forgiveness.
HEALTH RESOURCES AND SERVICES ADMINISTRATION (HRSA) – An agency of the U.S. Department of Health and Human Services that works to improve access to health care services for people who are uninsured, isolated or medically vulnerable. Its goals, pursued through more than 100 programs, are to improve access, strengthen the health workforce, build healthy communities and improve health equity.
HEALTH REFORM LAW (formally known as the Patient Protection and Affordable Care Act or simply the Affordable Care Act, ACA) – Law enacted in March 2010, phasing in major expansions in insurance coverage, changes in insurance rules, and delivery system changes, over the next several years.
HEALTH REIMBURSEMENT ARRANGEMENT (HRA) – A type of health insurance plan also known as “health reimbursement account” or “personal care account,” HRAs are tax–preferred accounts with funds established by employers to reimburse employees for qualified medical expenses; often HRAs are paired with a high–deductible health plan. An HRA may be used by an employee to pay for medical coverage until funds are exhausted. Once the deductible is reached, normal coverage begins. Any unused funds are rolled over at the end of the year, but do not follow the employee once he or she changes jobs. (Compare to Health Savings Account.)
HEALTH SAVINGS ACCOUNT (HSA) – A type of health insurance plan similar to HRAs (see above), but which is owned by workers. An HSA is a tax–preferred savings account and is paired with a high–deductible health plan. Any employer can offer an HSA (or a self–employed individual can set one up on his or her own), and both employers and employees can contribute to it. The worker must pay for all services until the amount of the deductible is reached (in 2013, a minimum of $1,250 for an individual and $2,500 for family coverage). The worker can withdraw money from the HSA to pay for medical services under the deductible. Once the deductible is reached, normal coverage begins. Any unused funds are rolled over at the end of the year. Unlike HRAs, HSAs follow an employee when he or she changes jobs. (Also see Health Reimbursement Arrangement and Medical Savings Account.)
HEALTHY PEOPLE 2020 – Healthy People is a program created by HHS that sets out to meet nationwide health–promotion and disease–prevention goals. The Healthy People program first set goals in 1979 for the following decade. These goals have been updated every 10 years for Healthy People 2000, Healthy People 2010, and Health People 2020.
HIGH–DEDUCTIBLE HEALTH PLAN – Health insurance plans that have higher deductibles but lower premiums than traditional plans. Qualified high–deductible plans that may be combined with a health savings account must have a deductible of at least $1,250 for single coverage and $2,500 for family coverage in 2013.
HIGH–RISK POOL – A health insurance pool organized as a source of coverage for individuals who have been denied health insurance because of a medical condition, or whose premiums are significantly higher than the average due to health status or claims experience. The ACA calls for the establishment of a temporary high–risk pool in every state — run by the state or by the federal government — with premiums on a par with those in the individual market for persons without pre–existing medical problems. These pools, which exist alongside high–risk pools already in operation in many states, went into effect June 21, 2010 and will end on January 1, 2014. On the later date, coverage will be available to high–risk individuals through state health insurance exchanges.
HOME AND COMMUNITY–BASED SERVICES (HCBS) – State-designed HCBS encompass case management, adult day care, home health aide assistance, personal care, assisted living services and respite care. Section 1915(c) of the Social Security Act permits the HHS Secretary to approve Medicaid waivers that allow for long–term care services to be delivered in the community instead of institutional settings. The Deficit Reduction Act also created a capped HCBS option that allows states to offer these services without having to obtain administrative waiver approval. See Programs for All Inclusive Care of the Elderly. Provisions in the ACA give states incentives to expand their HCBS programs to balance spending between institutional care and HCBS.
HOMEBOUND – Condition required to receive home health care services under Medicare and generally interpreted to mean that the beneficiary cannot leave home without excessive effort and does so only infrequently, for no more than 16 hours per month for non–medical reasons.
HOME HEALTH CARE – Health services rendered in the home, including skilled nursing care, speech therapy, physical therapy, occupational therapy, rehabilitation therapy and social services. Medicare covers some home health care services if the beneficiary is homebound but does not require more than 35 hours of services per week. Medicaid pays for home health care services in 12 states.
HOME HEALTH AGENCY (HHA) – Health care provider organization that renders skilled nursing and health care services in the home. (See Home Health Care and Homebound.)
HOSPICE – An organization providing medical, emotional, spiritual and social help, often in the patient’s own home, for those expected to live less than six months. If a person qualifies for Medicare Part A and has a terminal illness, Medicare pays for hospice care, including payment of drugs for symptom control and pain relief, hospice aide and homemaker service, and spiritual counseling, among other services.
HOSPITAL INSURANCE (HI) TRUST FUND –The Part A Medicare trust fund that pays for inpatient hospital services; skilled nursing facility care for up to 100 days following hospitalization; and some care from home health providers, hospices and rehabilitation facilities for the elderly and permanently disabled. (Also see Trust Fund.)
HOSPITAL QUALITY ALLIANCE (HQA) – A public–private collaboration seeking to improve the quality of care provided by the nation’s hospitals by measuring and publicly reporting on that care.
HOSPITAL REFERRAL REGION – Geographic regions used by the Dartmouth Atlas of Health Care to define regional health care markets. These regions are defined by where patients in surrounding areas are most often referred to for tertiary care. Each HRR contains at least one hospital that performs major cardiovascular procedures and neurosurgery. HRRs can cross state lines.
HYDE AMENDMENT – A federal law first enacted in 1980, and attached to appropriations bills every year since, that prohibits the use of federal Medicaid funds for abortion, except for reasons of life endangerment, rape or incest.
INCOME–RELATED PREMIUM – Premiums for Medicare Part B and Part D that apply to higher–income Medicare beneficiaries. The Medicare Modernization Act of 2003 established an income–related Part B premium requiring higher–income Medicare beneficiaries to pay a greater share of average Part B costs (35 percent to 80percent, depending on their income). Beneficiaries are required to pay the income–related Part B premium if their income is equal to or greater than $85,000 for an individual and $170,000 for a couple in 2010. The ACA freezes the threshold for the income–related Part B premium at 2010 levels through 2019. The ACA also creates an income–related Part D premium, effective in 2011, using the same surcharge percentages and income thresholds as for Part B. Similar to the Part B premium provision, the income thresholds for the Part D income–related premium are not indexed to increase annually, thus making more beneficiaries subject to the higher premiums each year.
INDEMNITY INSURANCE – A health insurance plan that pays providers on a fee–for–service basis for delivering health care. Consumers face very few restrictions on provider selection, but may have greater financial liability in the form of deductibles and coinsurance than in many managed care plans.
INDEPENDENT PAYMENT ADVISORY BOARD (IPAB) – Created in the ACA, a board of 15members appointed by the president and confirmed by the Senate for six–year terms. The board is tasked with submitting proposals to Congress to reduce Medicare spending by specified amounts if the projected per beneficiary spending exceeds the target growth rate. If the board fails to submit a proposal, the secretary of the Department of Health and Human Services is required to develop a detailed proposal to achieve the required level of Medicare savings. The secretary is required to implement the board’s (or his or her own) proposals, unless Congress adopts alternative proposals that result in the same amount of savings. The board is prohibited from submitting proposals that would ration care, increase taxes, change Medicare benefits or eligibility, increase beneficiary premiums and cost–sharing requirements, or reduce low–income subsidies under Part D.
INDEPENDENT PRACTICE ASSOCIATION (IPA) –A physician organization which typically contracts with a health maintenance organization to provide services to the HMO’s enrollees. The HMO usually makes capitated payments to the IPA, but the IPA may choose to reimburse its physicians on a fee–for–service basis. Physicians can contract with other HMOs and see other fee–for–service patients.
INDIRECT MEDICAL EDUCATION (IME) ADJUSTMENT – A Medicare payment supplemental to diagnosis–related group (DRG) payments for each beneficiary inpatient stay. It is intended to compensate teaching hospitals for the various costs associated with running an academic health center that trains and employs large numbers of medical residents. Many teaching hospitals tend to treat sicker patients with less insurance coverage, requiring a more costly mix of staff, and may use more expensive and complex interventions. For more information, see www.cogme.gov. Also see Graduate Medical Education Payment and Direct Medical Education Payment.
INDIVIDUAL INSURANCE MARKET – The market where individuals who do not have group (usually employer–based) coverage purchase private health insurance. This market is also referred to as the non–group market.
INDIVIDUAL MANDATE – A law requiring individuals to obtain health care coverage, and in some cases, forcing individuals to pay a penalty if they choose not to participate. The individual mandate of the ACA was scheduled to go into effect January 1, 2014. In July 2013, the Obama Administration announced that exemptions will be granted for certain people, including American Indians, those with religious objections and those facing financial hardships.
INPATIENT – A person who is admitted to a hospital, usually for 24 hours or more.
INSTITUTE OF MEDICINE (IOM) – A nonprofit organization that works outside the framework of government to ensure scientifically informed analysis and independent guidance on matters of biomedical science, medicine and health. The institute provides unbiased, evidence–based and authoritative information and advice concerning health and science policy to policy–makers, professionals, leaders in every sector of society and the public at large.
INSTRUMENTAL ACTIVITIES OF DAILY LIVING (IADLs) – Activities relating to independent living, which include preparing meals, keeping a budget, purchasing groceries, performing housework and using a telephone. IADLs refer to skills beyond basic self care, or activities of daily living.
INTEGRATED PROVIDER – A group of providers that offer comprehensive and coordinated care, and usually provide a range of medical care facilities and service plans including hospitals, physician group practices, a health plan and other related healthcare services.
INTERGOVERNMENTAL TRANSFER (IGT) – Transfer of funds among or between different levels of government, including state–owned or operated health care providers, local governments, and non–state–owned or operated health care providers. The term is most often used in Medicaid, where transfers of governmental funds to the state Medicaid agency are used as the non–federal share to draw down federal matching funds for allowable Medicaid expenditures. States also use IGTs as the non–federal share to draw down federal matching funds for Medicaid Disproportionate Share Hospital payments.
INTERMEDIATE CARE FACILITY FOR THE MENTALLY RETARDED (ICF/MR) – An institution providing diagnosis, treatment or rehabilitation of individuals with mental retardation or related conditions. ICF/MRs provide a protected residential setting, ongoing evaluations, 24–hour supervision and health services. Under Medicaid, states may cover ICF/MR services.
INTEROPERABILITY – The ability to exchange and use information; usually in a large heterogeneous network made up of several local networks.
JOINT COMMISION – A national private, nonprofit organization that accredits health care organizations and agencies and sets guidelines for these facilities.
LOCK–IN – The period of time an individual is required to, or agrees to, remain registered with a particular provider or group of providers, or remain enrolled in a particular health care plan.
LONG–TERM SERVICES AND SUPPORTS (LTSS) – Ongoing health and social services provided for individuals who need continuing assistance with activities of daily living and/or instrumental activities of daily living (see glossary). Services can be provided in an institution, the home or the community, and include informal services provided by family and friends as well as formal services provided by professionals or agencies. Medicaid is the primary payer of LTSS services in nursing homes.
LONG–TERM CARE PARTNERSHIP PROGRAM – A program that combines private LTC insurance with special access to Medicaid. This program encourages qualified individuals to purchase a limited, and therefore more affordable, amount of LTC insurance coverage, with the assurance that they could receive additional LTC services through the Medicaid program as needed after their insurance coverage is exhausted, without having to deplete their assets to the level typically required in order to be Medicaid eligible.
LOSS RATIO – See Medical Loss Ratio
MANAGED CARE – A health care delivery system that seeks to control access to and utilization of health care services both to limit health care costs and to improve the quality of the care provided. Managed care arrangements typically rely on primary care physicians to act as “gatekeepers” and manage the care their patients receive.
MANDATE – Used in two senses in health policy discussions. (1) Employer or individual mandate, in which a government body imposes a requirement on some employers to help pay for insurance coverage for their workers (and perhaps their families), and/or on certain individuals to obtain coverage. (2) State mandate, a requirement imposed by states on insurance companies to include, as part of any health insurance policy they sell, coverage for a specific service, such as well baby care, or a specific provider, such as a psychologist or optometrist.
MARKET BASKET INDEX – An index of the annual change in the prices of a selection of goods and services providers used to produce health services. Also referred to as an input price index.
MATCHING FUNDS – Funds that are set to be paid in a set proportionate amount to funds available from other sources.
MEANINGFUL USE – In an HIT context, meaningful use defines the use of electronic health records and related technology within a healthcare organization. Achieving meaningful use also helps determine eligibility for incentive payments from the federal government under CMS Incentive Programs.
MEANS TEST(ING) – Determining eligibility for government benefits based on an individual’s lack of means, as measured by income and/or assets. Under current Medicaid eligibility guidelines, means–testing may differ for different eligibility groups. The Medicare Prescription Drug Improvement and Modernization Act of 2003 introduced a form of means–testing in Medicare, which now sets higher premiums for higher–income seniors and provides more generous drug benefits to lower–income beneficiaries.
MEDICAID – Public health insurance program that provides coverage for low–income persons for acute and long–term care. It is financed jointly by state and federal funds (the federal government pays at least 50 percent of the total cost in each state) and is administered by states within broad federal guidelines. See the chapter on Medicaid, for more information.
MEDICAID AND CHIP PAYMENT AND ACCESS COMMISSION (MACPAC) – Established by the Children’s Health Insurance Program Reauthorization Act of 2009 and later expanded and funded by the Affordable Care Act, it reviews state and federal Medicaid and CHIP access and payment policies and makes recommendations to Congress, HHS, and the states.
MEDICAID WAIVER – Authority granted by the secretary of Health and Human Services to allow a state to continue receiving federal Medicaid matching funds even though it is no longer in compliance with certain requirements of the Medicaid statute. States can use waivers to implement home and community–based services programs or managed care, and to expand coverage to populations who are not otherwise eligible for Medicaid.
MEDICAL HOME – see Patient–Centered Medical Home
MEDICAL IRA – See Medical Savings Account
MEDICAL LOSS RATIO – The ratio of money paid out by an insurer for claims, divided by premiums collected for a particular type of insurance policy. Low loss ratios indicate that a small proportion of premium dollars was paid out for benefits, while a high loss ratio indicates that a high percentage of the premium dollars was paid out for benefits. The ACA sets minimum medical loss ratios for health plans effective Jan. 1, 2011.
MEDICAL SAVINGS ACCOUNT (MSA) – A health insurance option consisting of a high–deductible insurance policy coupled with a tax–preferred savings account. MSA policies, enacted in 1996, have been largely replaced by health savings accounts.
MEDICAL UNDERWRITING – See Underwriting
MEDICALLY NEEDY – An optional Medicaid category in which states can cover individuals and families who qualify for coverage because of high medical expenses, usually hospital or nursing home care. To qualify, individuals must be categorically eligible and their monthly incomes minus accumulated medical bills must be below state income limits for the Medicaid program. This allows Medicaid coverage for people who have extensive health care needs but too much income to be eligible for Medicaid. (Also see Spend–Down.)
MEDICALLY UNDERSERVED AREAS & POPULATIONS (MUA/P) – Designations that identify areas and populations that have too few primary care providers, high infant mortality, high poverty and/or high elderly population. MUAs and MUPs involve the application of the Index of Medical Underservice to a service area or population group. MUAs may include groups of census tracts that have a population–to–provider ratio indicating a shortage. MUPs may include groups of persons who face economic, cultural or linguistic barriers to health care.
MEDICARE – Federal health insurance program for virtually all persons age 65 and older, and permanently disabled persons under age 65, who qualify by receiving Social Security Disability Insurance. (See chapter on Medicare.)
MEDICARE ADVANTAGE – A part of Medicare designed to offer beneficiaries a choice of managed care and other private plan options. Also called Part C of Medicare, Medicare Advantage encompasses health maintenance organizations (HMOs), preferred provider organizations (PPOs), Medicare HSAs, regional PPOs, and other options. Not all options are available in all areas.
MEDICARE ADVANTAGE PRESCRIPTION DRUG PLAN (MA–PD) – Medicare Part D prescription drug coverage that is sponsored by a Medicare Advantage plan.
MEDICARE ADVANTAGE QUALITY BONUS PAYMENT DEMONSTRATION – Established with the enactment of the ACA, this demonstration program awards bonus payments to high–performing plans as an incentive to improve quality. This demonstration program takes place from 2012 to 2014.
MEDICARE IMPROVEMENT FUND – Established in 2008, the fund allows the Department of Health and Human Services to make improvements under the original Medicare fee–for–service program under Parts A and B. For fiscal year 2014 through fiscal year 2017, $19.9 billion would be made available from the Parts A and B trust funds. The ACA eliminated the Medicare Improvement Fund and created a new Innovation Center within CMS, making the Fund redundant.
MEDICARE–MEDICAID COORDINATION OFFICE (MMCO) – Also known as the Federal Coordinated Health Care Office, this office serves people who are enrolled in both Medicare and Medicaid to ensure full access to seamless, cost–effective, high quality health care. The MMCO works with the Medicaid and Medicare programs, across Federal agencies, states and stakeholders to align and coordinate benefits between the two programs effectively and efficiently. The MMCO partners with states to develop new care models and improve the way Medicare–Medicaid enrollees receive health care.
MEDICARE PART A – Also known as the Hospital Insurance (or HI) program, Part A of the Medicare program covers inpatient hospital care, skilled nursing care for up to 100 days after a hospitalization, home health and hospice care.
It is funded by a portion of the wage tax —2.9 percent, with employers and employees each paying 1.45percent.
MEDICARE PART B – Also known as Supplementary Medical Insurance (or SMI), Part B of Medicare covers physician services, outpatient care and home health care after 100 visits. It is funded partly by premiums paid by beneficiaries. The rest comes from the federal government’s general revenue.
MEDICARE PART D – See Medicare Prescription Drug, Improvement and Modernization Act of 2003 below.
MEDICARE PAYMENT ADVISORY COMMISSION (MedPAC) – Established by the Balanced Budget Act of 1997, it is an independent congressional agency that advises Congress on issues affecting the Medicare program.
MEDICARE PRESCRIPTION DRUG, IMPROVEMENT & MODERNIZATION ACT OF 2003 (MMA) – Legislation signed into law in December 2003 that provides seniors and disabled individuals on Medicare with a prescription drug benefit, delivered through private stand–alone prescription drug plans or managed care plans integrating Part A and Part B benefits (Medicare Advantage). The law expanded the array of Medicare managed care plans and changed payment methodologies.
MEDICARE SAVINGS PROGRAM (MSP) –The program provides assistance through Medicaid with Medicare premiums — and sometimes cost–sharing requirements — to Medicare beneficiaries of limited income and resources who do not qualify for full Medicaid benefits. The program encompasses qualified Medicare beneficiaries (QMBs), specified low–income Medicare beneficiaries (SLMBs) and other groups of beneficiaries who need help with cost–sharing to access services.
MEDICARE+CHOICE – Originated from passage of the Balanced Budget Act of 1997 (BBA), Medicare+Choice offered Medicare beneficiaries the option to receive their benefits through a private insurer. The 2003 Medicare Prescription Drug, Improvement, and Modernization Act (MMA) overhauled the Medicare program and Medicare+Choice became what is now known as Medicare Advantage.
MEDIGAP INSURANCE/MEDICARE SUPPLEMENTAL INSURANCE – Medigap policies are sold by private insurance companies to fill “gaps” in fee–for–service Medicare. Except in Minnesota, Massachusetts and Wisconsin, there are 10 standardized policy designs, known as Plans A through J. Plans H, I and J include limited drug coverage. No new Medigap policies that include drug coverage are now being be sold. Beneficiaries with existing Medigap policies that include drug coverage may maintain them if they wish. However, they may be subject to late enrollment penalties if they later want Part D drug benefits.
MENTAL HEALTH – A state of well–being in which the individual can cope with daily stresses, can work productively, and able to make community contributions.
MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT (MHPAEA) – Formerly known as the Mental Health Parity Act (MHPA), an act requiring group health plans with more than 50 employees to ensure that financial requirements and treatment limitations applicable to mental health/substance use disorder benefits are no more restrictive than the predominant requirements and limitations placed on substantially all medical/surgical benefits. (See Mental Health chapter.)
MENTAL ILLNESS – A medical condition that disrupts a person’s mental health. Serious mental illnesses include major depression, schizophrenia, and posttraumatic stress disorder.
MILLION HEARTS CAMPAIGN – A national initiative, launched by the Department of Health and Human Services, to prevent 1 million heart attacks and strokes by 2017.
MISUSE – describes care that is provided poorly or erroneously, such as wrong–site surgery. (See Quality chapter.)
MODIFIED COMMUNITY RATING – A method for setting health insurance premiums for everyone in a state taking into account demographic variables, but not the applicant’s medical history. (Contrast with Community Rating and Experience Rating.)
MONEY FOLLOWS THE PERSON REBALANCING GRANT DEMONSTRATION (MFP) – Assists states in their efforts to reduce reliance on institutional care, while developing community–based long–term care opportunities that enable the elderly and people with disabilities to transition back into their communities.
MORBIDITY – A determination of the incidence and severity of sicknesses and accidents in a well–defined class of persons.
MORTALITY – An actuarial determination of the death rate at each age as determined from prior experience.
MULTIPLE EMPLOYER WELFARE ASSOCIATION (MEWA) – A group of employers who band together for purposes of purchasing group health insurance, often through a self–funded approach. MEWAs are sometimes exempt from state benefit mandates, taxes and other regulations.
NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) – A nonprofit association whose members comprise the insurance commissioners of the individual states and territories. NAIC members are elected or appointed state government officials who regulate the conduct of insurance agencies and agents. NAIC was delegated significant responsibilities under the ACA, including developing uniform definitions for calculating medical loss ratios and assisting HHS with establishing rate review procedures.
NATIONAL COMMITTEE on QUALITY ASSURANCE (NCQA) – An independent national organization that reviews and accredits managed care plans and measures the quality of care offered by managed care plans and other entities.
NATIONAL HEALTH SERVICE CORPS (NHSC) – Created in response to the health care crisis in the 1950s and 1960s, NHSC offers loan repayment and scholarships to primary care physicians and students serving in federally designated HPSAs.
NATIONAL INSTITUTE ON MINORITY HEALTH AND HEALTH DISPARITIES (NIMHD) – A part of the National Institutes of Health, NIMHD is a government agency that leads scientific research to improve minority health and eliminate health disparities.
NATIONAL INSTITUTES OF HEALTH (NIH) – A part of the U.S. Department of Health and Human Services, the primary federal agency for conducting and supporting medical research. NIH scientists investigate ways to prevent disease as well as the causes, treatments, and cures for common and rare diseases.
NETWORK–MODEL HMO – A health maintenance organization (HMO) that contracts with more than one independent physician group to provide health services. The providers may see patients who are not members of the HMO. Also see HMO, Group–Model HMO and Staff–Model HMO.
NEVER EVENT – 28 occurrences that the National Quality Forum has identified as events that should never happen in a hospital and can be prevented. These events include surgical events, product or device events, and criminal events. The Centers for Medicare and Medicaid Services (CMS) announced in January 2009 that Medicare would stop paying for three never events — wrong invasive procedures, invasive procedures performed on the wrong body part and invasive procedures performed on the wrong patient.
NURSE PRACTITIONER (NP/RNP) – A registered nurse with advanced academic and clinical experience who diagnoses and manages most common and many chronic illnesses, either independently or as part of a health care team. A nurse practitioner provides some care previously offered only by physicians and in most states has the ability to prescribe medications.
NURSING HOME COMPARE – A consumer engagement tool that has detailed information about every Medicare and Medicaid–certified nursing home in the country.
NURSING HOME TRANSPARENCY AND IMPROVEMENT ACT OF 2009 – Incorporated into the ACA, this act improves nursing home transparency by allowing consumers and regulators to hold providers accountable for compliance with federal requirements.
OFFICE OF CONSUMER INFORMATION AND INSURANCE OVERSIGHT – See Center for Consumer Information and Insurance Oversight
OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION TECHNOLOGY (ONC)
– A division in HHS, Office of the Secretary, it is focused on building an interoperable, private and secure nationwide health information system, coordination of nationwide efforts to implement health information technology, and the electronic exchange of health information.
OLDER AMERICANS ACT (OAA) – Enacted in 1965, this act was the first federal level initiative aimed at providing comprehensive services for older adults. It established the U.S. Administration on Aging (AoA) as well as state agencies on aging to address the social services needs of the elderly. The network provides funding for nutrition and supportive home and community–based services, disease prevention/health promotion services, elder rights programs, the National Family Caregiver Support Program, and the Native American Caregiver Support Program. This Act is currently due for reauthorization and stakeholders are hoping Congress will update and improve the OAA.
OLMSTEAD DECISION – Also known as Olmstead v. L.C., is a 1999 United States Supreme Court case regarding discrimination against people with disabilities. The Supreme Court held that under the Americans with Disabilities Act, public entities must provide community–based services to individuals with disabilities when (1) such services are appropriate; (2) these individuals do not oppose community–based treatment; and (3) community–based services can be reasonably accommodated.
ON LOK PROGRAM – A San Francisco project that uses an HMO model to provide all acute care and long–term care services needed by a frail elderly population at risk of nursing home placement.
(See Program of All–Inclusive Care for the Elderly.)
OPEN ENROLLMENT – The period of time during which health insurance coverage options are offered to a specified population, regardless of health status and without medical screening. Open enrollment periods are characteristic of some Blue Cross–Blue Shield plans and health maintenance organizations, and all plans in the Federal Employees Health Benefits Program.
OPEN PANEL/OPEN ACCESS – A self–referral arrangement allowing health plan enrollees to see participating providers for specialty care without a referral from a primary care physician or other doctor.
OUT–OF–POCKET CAP/MAXIMUM – An annual limit on how much an individual has to pay in deductibles, coinsurance and copayments, excluding the premium. The ACA requires new plans offered beginning in 2014 to include an out–of–pocket maximum set at the current maximum level for contribution to a health savings account, or $6,350 for an individual or $12,700 for a family policy in 2014.
OUTCOMES RESEARCH – Research that attempts to evaluate particular health services by tracking and analyzing clinical results (e.g., death, illness, ability to function) of various treatments. (See also Patient Centered Outcomes Research Institute.)
OUTPATIENT – A person receiving medical services who has not been admitted to a hospital.
OUTPATIENT HOSPITAL SERVICES – Services provided to a hospital outpatient. They are covered by Part B for Medicare beneficiaries. For more information, see chapter on Medicare.
OVERUSE – A term used when patients receive care that is not medically indicated. Typical examples are use of antibiotics to treat a cold or the use of imaging devices for someone with the first signs of lower back pain. (See chapter on Quality of Care.)
PARTIAL CAPITATION – An insurance arrangement where the payment made to a health plan is a combination of a capitated amount and a payment based on actual use of services. The proportions specified for these components determine the insurance risk faced by the plan.
PATIENT–CENTERED CARE – An approach that takes into consideration the patients’ cultural traditions, personal preferences and values, family situations and lifestyles. Responsibility for important aspects of self–care and monitoring is put in patients’ hands—along with the tools and support they need.
PATIENT–CENTERED MEDICAL HOME – An approach to providing comprehensive primary care for individuals through creating a setting that facilitates partnerships between individual patients and their personal physicians. This approach to care is aided by registries, information technology, health information exchanges and other means to assure that patients get the indicated care when and where they need and want it in a culturally and linguistically appropriate manner.
PATIENT–CENTERED OUTCOMES RESEARCH INSTITUTE (PCORI) – A private, nonprofit institute created in the ACA to set an agenda for, and oversee the conduct of, comparative effectiveness research in the U.S.
PATIENT PROTECTION AND AFFORDABLE CARE ACT (ACA) – Law enacted in March 2010, phasing in major expansions in insurance coverage, changes in insurance rules, and delivery system changes. Known informally as the Affordable Care Act or ACA.
PATIENT SAFETY AND ABUSE PREVENTION ACT – This Act prevents those with criminal histories from working within long–term care settings by created a comprehensive nationwide system of background checks.
PAY FOR PERFORMANCE – Also known as Value–Based Payments or Value–Based Purchasing, a method of paying health care providers differing amounts based on their performance on measures of quality and efficiency. Payment incentives can be in the form of bonuses or financial penalties.
PAYMENT BUNDLING – A form of provider payment where providers or hospitals receive a single payment for all of the care provided for an episode of illness, rather than per service rendered. Total care provided for an episode of illness may include both acute and post–acute care. The ACA establishes pilot programs in Medicare and Medicaid to pay a bundled payment for episodes of care involving hospitalizations.
PAYMENT REFORM – Payment reform seeks to improve current mechanisms for reimbursing providers by including rewards for provider quality in the reimbursement mechanisms. (See ACA chapter.)
PAY OR PLAY – See Employer Pay–or–Play
PAYROLL TAX – A flat percentage tax collected on salaries and wages. A payroll tax of 7.65 percent on both employers and employees finances, Social Security cash benefits and Medicare Part A hospital services. Of that 7.65 percent, 1.45percent each, or a total of 2.9 percent of payroll with both employer and employee contributions, is allocated for Medicare. Funding of the ACA will come in part from higher Medicare payroll taxes on families making more than $250,000, starting in 2013.
PERSONALIZED MEDICINE – A medical model that emphasizes the customization of healthcare to the individual patient. Personalized medicine commonly denotes the use of some kind of technology or discovery that allows a level of personalization that was not previously feasible. Currently, the use of genetic information has played a major role in aspects of personalized medicine.
PERSONALIZED PREVENTION PLAN SERVICES (PPPS) – Established and maintained during annual wellness visits, PPPSs aid in a comprehensive approach to improving health and preventing disease.
PHARMACY BENEFIT MANAGER (PBM) –A company that contracts with insurers and employers to manage the prescription drug benefit for enrollees or employees. The vast majority of managed care plans use PBMs.
PHYSICIAN QUALITY REPORTING INITIATIVE (PQRI) – Authorized through the Medicare, Medicaid, and SCHIP Extension Act of 2007, it offers a financial incentive for health care professionals to report on the quality of care that they provide.
PIONEER ACO MODEL – Designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. It allows these provider groups to move more rapidly from a shared savings payment model to a population–based payment model on a track consistent with the Medicare Shared Savings Program. It also works in coordination with private payers by aligning provider incentives, which is intended to improve quality and health outcomes for patients across the ACO, and achieve cost savings for Medicare, employers and patients.
POINT–OF–SERVICE PLAN (POS) – A managed care plan that combines features of both prepaid and fee–for–service insurance. POS plan enrollees decide whether to use network or non–network providers at the time care is needed, but usually are subject to reduced coverage and larger copayments for using non–network providers.
POSTTRAUMATIC STRESS DISORDER (PTSD) – A serious mental illness that develops after a person is exposed to one or more traumatic events.
POVERTY LEVEL – See Federal Poverty Guidelines
PRACTICE GUIDELINES/PARAMETERS – A statement of the known benefits, risks and costs of particular courses of medical action, developed to give physicians information about treatment alternatives.
PRE–EXISTING CONDITION – A physical or mental condition of an individual which is known to the individual before an insurance policy is issued. Insurers may choose not to cover treatment for such a condition, at least for a period, may raise rates because of it, or may deny coverage altogether. Pre–existing condition exclusions are prohibited by the ACA now for children and in 2014 for adults.
PRE–EXISTING CONDITION INSURANCE PLANS (PCIP) – A program, run by either states or the Federal government, which provides a new health coverage option for people who have been without health coverage for at least 6 months and have a pre–existing condition or have been denied health coverage because of their health condition. PCIP covers major medical and prescription drug expenses, but enrollees are responsible for paying premiums, deductibles, copayments, and coinsurance amounts. PCIP does not cost enrollees more just because of their medical condition.
PREFERRED PROVIDER ORGANIZATION (PPO) – A health care delivery system through which a number of providers contract to serve health plan enrollees on a fee–for–service basis at discounted fees. Providers agree to PPO discounts in the hope of gaining more patients. Patients may use any provider without a referral, in network or out, but have a financial incentive — for example, lower coinsurance payments — to use doctors on the preferred list.
PREMIUM – The cost of health plan coverage, not including any required deductibles or copayments. The cost of the premium may be shared between employers or government purchasers and individuals.
PREMIUM ASSISTANCE – The use of funds available through public health coverage programs especially Medicaid and CHIP — to purchase or help purchase private insurance.
PREMIUM SUBSIDIES – A fixed amount of money or a designated percentage of the premium cost that is provided to help people purchase health coverage. Premium subsidies are usually provided on a sliding scale based on an individual’s or family’s income. The ACA provides premium subsidies through refundable pre–tax credits to individuals with incomes between 133 percent and 400 percent of the federal poverty level who purchase policies through the health insurance exchanges beginning in 2014.
PREMIUM SUPPORT – A health benefit model that is considered by its designers to be a hybrid of the defined contribution and defined benefit approaches. This model requires general categories of health services to be covered, but benefits could be added or deleted within limits. The employer or government then contributes a set amount of the premium for the purchased plan. Plans could set premiums at whatever dollar level they choose, with beneficiaries liable for any costs above the employer or government contribution. A Medicare demonstration designed to test a model similar to premium support began in 2010.
PREVENTION AND PUBLIC HEALTH FUND – Established by the ACA, the Prevention and Public Health Fund provides expanded and sustained national investments in prevention and public health, to improve health outcomes, and to enhance health care quality.
PREVENTIVE HEALTH SERVICES – Services aimed at preventing a disease from occurring, or preventing or minimizing its consequences. This includes care aimed at warding off illnesses (immunizations), at early detection of disease (Pap smears), and at stopping further deterioration (cholesterol–lowering medication).
PRIMARY CARE – Care at “first contact” with the health care system, including an array of non–specialist services provided by physicians, nurse practitioners, or physician’s assistants. More simply, the care that most people receive for most of their problems that bother them most of the time.
PRIMARY CARE BONUS PAYMENTS – Established under the ACA, a program that makes Medicare bonus payments to primary care physicians for primary care services. A typical office–based, general internist who qualifies for the bonus would get approximately $8,000 in Medicare revenue each year for five years, beginning in 2011.
PRIMARY CARE CASE MANAGEMENT, INITIATIVE, OR CLINICIAN – (PCCM/PCI/PCC) – A Medicaid managed care program in which an eligible individual may use services only with authorization from his or her assigned primary care provider. That provider is responsible for locating, coordinating, and monitoring all primary and other medical services for enrollees. Those services are usually paid on a fee–for–service basis.
PRIMARY CARE PROVIDER – A provider, usually a physician, specializing in internal medicine, family practice, pediatrics, or geriatrics (but can also be a nurse practitioner, physician assistant or health care clinic), who serves as the patient’s first point of contact with the health care system and coordinates the patient’s medical care.
PROGRAM OF ALL–INCLUSIVE CARE FOR THE ELDERLY (PACE) – A program for people who are eligible for Medicaid or Medicare, or both; age 55 or older; live in a PACE organization service area; are eligible for nursing home care, and are able to live safely in the community. It allows eligible persons to meet health care needs in the community instead of a nursing home or other care facility. Core services integrate acute and long term care services, which include adult day care, social support, home health, hospital care, nursing home care, and case management. PACE is a capitated managed care benefit provided by a not–for–profit or public entity.
PROSPECTIVE PAYMENT SYSTEM (PPS) – A method used by Medicare to pay for many services, including inpatient and outpatient hospital services as well as services provided at skilled nursing and rehabilitation facilities. Payment rates are linked to diagnosis and determined before services are rendered, rather than being based on actual costs or charges of a specific facility. Rates are intended to cover treatment costs for a typical patient with a given diagnosis and are adjusted for factors like wages and indigent care.
PROVIDER – Any health care professional or institution that renders a health service or provides a health care product. Major providers are hospitals, nursing homes, physicians and nurses.
PROVIDER NETWORK – Those providers who agree by contract with a health insurance plan to be available for services and products to the plan’s members for agreed upon fees.
PUBLIC HEALTH – The protection and improvement of population health by organized community effort. Public health activities are very broad and include immunization, sanitation, preventive medicine, disease control, education about reducing personal risks, occupational health and safety, pollution control, water safety, food safety, epidemiology, etc. (See chapter on Public Health and Prevention.)
PURCHASING POOL – A group of people, businesses or associations who come together to enhance their bargaining power and negotiate lower premiums from health insurance plans than they could on their own, while also pooling risks across sick and healthy individuals.
QUALIFIED DISABLED AND WORKING INDIVIDUAL (QDWI) – A person who is eligible to buy–in to Medicare Part A, is disabled, under the age of 65, and has returned to work is eligible to receive assistance on their Medicare Part A premium if they aren’t getting medical assistance from their state, and meet the income and resource limits of the program.
QUALIFIED INDIVIDUAL – A person who is eligible or enrolled in Medicare Part A and meets the requirements of QMB or SLMB, but has excessive income for those programs. A QI has an income between 120 percent and 135 percent of the federal poverty level and may apply for benefits to cover their Medicare Part B premium.
QUALIFIED MEDICARE BENEFICIARY (QMB) – A person who is eligible for Medicare, has an income below 100 percent of the federal poverty level and has limited assets, is eligible to receive assistance with Medicare’s cost sharing. Under the QMB program, state Medicaid agencies are required to pay the cost of Medicare Part A and B premiums, deductibles and coinsurance.
QUALITY–ADJUSTED LIFE YEARS (QALYs) – Years of life saved by a medical technology or service, adjusted to reflect the health quality of those years (as determined by some evaluative measure). QALYs are the most commonly used unit to express results in certain cost–effectiveness analyses. A year of perfect health is considered equal to 1.0 QALY.
QUALITY IMPROVEMENT ORGANIZATION (QIO) – One of 53 groups with which Medicare contracts to monitor hospital use and quality of care received by Medicare patients in a given state or other area.
RATE SHOCK – The substantial increase in health insurance premiums that some say may result from implementation of the ACA.
RATING – The process of evaluating, or underwriting, a group or individual to determine a health insurance premium rate relative to the financial risk the person or group presents of needing healthcare. Key components of the rating formula include age, sex, location and plan design.
RATING BANDS – Amounts by which insurance rates for a specific class of insured individuals may vary.
REFERRAL – A primary care doctor’s written permission for a patient to see a certain specialist or to receive certain services. Required by some managed care health plans.
REFUNDABLE TAX CREDIT – A way of providing a tax subsidy to an individual or business, even if no taxes are owed. (See Tax Credit.) If a person owes no tax, the government sends the person (or a third party) a check for the amount of the refundable tax credit.
REGIONAL EXTENSION CENTER PROGRAM (REC) – Created under HITECH, RECs offer technical assistance, guidance, and information to support and accelerate health care providers’ efforts to become meaningful users of electronic health records.
REINSURANCE/RISK CONTROL INSURANCE – A practice allowing an insurance company (the insurer) to transfer a portion of its risks to another insurer (the reinsurer). This practice does not affect policyholder rights in any way, and the original insurer remains liable to the policyholders for benefits and claims.
RELATIVE VALUE SCALE (RVS) – An index that assigns weights to each medical service; the weights represent the relative amount to be paid for each service. To calculate a fee for a particular service, the index for that service is multiplied by a constant dollar amount (known as the conversion factor). Medicare uses an RVS to calculate payments to physicians.
REPORT CARD – An assessment of the quality of care delivered by health plans, hospitals or physicians. For example, report cards provide information on how well a health plan treats its members, keeps them healthy and provides access to needed care. Report cards can be published by states, private health organizations, consumer groups or health plans.
RESOURCE–BASED RELATIVE VALUE SCALE (RBRVS) – The way Medicare determines how much it will pay physicians, based on the resource costs needed to provide a Medicare–covered service. The RBRVS is calculated using three components: physician work, practice expense and professional insurance. The Medicare payment to physicians is determined by multiplying the combined costs by a conversion factor set by the Centers for Medicare and Medicaid Services, adjusted for geographical differences in the cost of resources. Physician work typically accounts for 50 percent of the value while practice expense accounts for 45 percent.
RESPITE CARE – Short–term relief for caregivers – family members and friends – who are providing care to a frail elder or person with disabilities.
RISK – The probability of financial loss, based on the probability of having to provide services to a patient or patient population at a cost that exceeds the payments received. Under capitation payment systems, providers share the risk that is borne by insurers.
RISK ADJUSTMENT – Increases or reductions in payment made to a health plan on behalf of a group of enrollees to compensate for health care expenditures that are expected to be higher or lower than average.
RISK SELECTION – Enrollment choices made by health plans – or by enrollees – on the basis of perceived risk relative to the premium to be paid.
RISK SHARING – A method by which the financial risk of covering a group of enrollees is shared by plan sponsors and purchasers, typically managed care organizations and states. In contrast, indemnity plans assume all risk of providing care paid for through insurance premiums which belong solely to the insurance company.
SAFE HARBOR – A provision of a statute or a regulation that reduces or eliminates a party’s liability under the law on the condition that the actions were performed in good faith or in compliance with defined standards. For example, safe harbor regulations help employers determine affordability of health coverage for their employees under provisions of the ACA.
SAFETY NET PROVIDERS – Health care providers who deliver health care services to patients regardless of their ability to pay. These providers may consist of public hospitals, community health centers, local health departments, and other providers who serve a disproportionate share of uninsured and low–income patients.
SECTION 125 PLAN – A Section 125 plan provides participants an opportunity to receive certain benefits, such as reimbursement for some out–of–pocket medical expenses, on a pretax basis. It is a separate written plan, maintained by an employer for employees that meets the specific requirements of Section 125 of the Internal Revenue Code. Also known as flexible benefits plans.
SELF–EMPLOYED DEDUCTION FOR HEALTH INSURANCE – Self–employed taxpayers and their families can deduct all their payments for health insurance, including insurance premiums, when figuring their annual income for tax purposes.
SELF–INSURANCE – Large and medium–size companies often assume all or most financial risks of providing health insurance to their workers, as opposed to purchasing insurance coverage from commercial carriers (and having the carrier assume all risk). Claims processing is often handled through an administrative services contract with an independent organization, often an insurance company.
SEQUESTRATION – Cuts to the federal budget that began on March 1, 2013 as an austerity fiscal policy. Enacted by the Budget Control Act of 2011, the cuts were initially set to begin on January 1, but were postponed by two months by the American Taxpayer Relief Act of 2012. The spending reductions are approximately $85.4billion during fiscal year 2013, with similar cuts for years 2014 through 2021. Medicaid was exempt and cuts to Medicare were limited to 2percent.
SINGLE PAYER SYSTEM – A health care system, either at the national or state level, which would designate one entity (usually the government) to function as the central purchaser of health care services. Canadian provinces operate health insurance coverage for residents under this system.
SKILLED NURSING FACILITY (SNF) – An institution that offers skilled services similar to those given in a hospital, such as intravenous injections and physical therapy given by professional staff, to aid rehabilitation following hospitalization of patients who have been discharged. SNFs differ from nursing homes or nursing facilities, which are intended primarily to support elderly and disabled individuals in the tasks of daily living (custodial care). Medicare does not cover custodial care in nursing homes; however, Medicare does cover skilled nursing care, rehabilitation and associated custodial care in SNFs for a limited period of time. Medicaid covers care in all Medicaid–certified nursing facilities.
SMALL BUSINESS HEALTH OPTIONS PROGRAM (SHOP) – A small employer health insurance marketplace that gives employers with 50 or fewer workers clear, straightforward information about plans’ pricing and benefit packages. This tool will help small employers compare plans and decide how much they can contribute toward health insurance costs for their full–time employees. (See chapter on Health Insurance Exchanges.)
SMALL GROUP MARKET – A private insurance market, regulated by state government, where firms with two to 50 employees can purchase health insurance for their employees.
SOCIAL SECURITY DISABILITY INSURANCE (SSDI) – Financed with Social Security taxes, SSDI provides cash assistance to people who are permanently disabled and unable to work, and who previously worked and paid Social Security payroll taxes. Although the number of work credits required to qualify for SSDI depends on the age of disability onset, one must typically have 40 credits, of which 20 must be from the last 10 years (four work credits can be earned per year). The size of the monthly benefit depends on the beneficiary’s earnings record. Widows, widowers and adults who are blind or disabled since childhood are also eligible for SSDI.
SOCIALIZED MEDICINE – A system of health care in which all health personnel and health facilities, including doctors and hospitals, work for the government and draw salaries from the government. Doctors in the U.S. Veterans Administration and the Armed Services are paid this way. Veterans and U.S. military hospitals are also supported this way. Examples also exist in Great Britain and Spain.
SPECIALTY DRUG – High–cost drugs used to treat complex or rare conditions such as multiple sclerosis. These drugs typically require special handling, administration, or monitoring.
SPECIFIED LOW–INCOME MEDICARE BENEFICIARY (SLMB) – A person who is eligible for Medicare, has an income of between 100 to 120 percent of the federal poverty level and has limited assets, is eligible to receive cost–sharing assistance if enrolled in the Specified Low–Income Medicare Beneficiary program. Under the SLMB program, state Medicaid agencies are required to pay the beneficiary’s Part B premiums, but not deductibles or copayments. Also see Qualified Medicare Beneficiary.
SPEND–DOWN – Can apply to reducing assets or income in the process of qualifying for Medicaid. Individuals in many states can qualify for Medicaid because of high medical expenses, availble usually hospital or nursing home care, that reduce their available monthly income to below state income limits for the Medicaid program. The amount that each individual must “spend down” is determined at the time eligibility is determined. (Also see Medically Needy.)
STAFF–MODEL HMO – A health maintenance organization (HMO) that delivers health services through salaried physicians who are employed by the HMO exclusively to care for HMO enrollees. (Also see HMO, Group–Model HMO and Network–Model HMO.)
STARK LAW – Prohibits physicians from making referrals for certain designated health services payable by Medicare to an entity in which the physician has a financial interest. It originally applied to clinical laboratory service only. It was expanded in 1995 to include other services and Medicaid.
STATE BALANCING INCENTIVES PAYMENT PROGRAM – Running from October 2011 through September 2015, this program provides Medicaid matching incentives to increase home– and community–based services (HCBS). Participating states make structural reforms to reduce institutional care as appropriate and increase the use of HCBS. The Department of Health and Human Services has a maximum of $3 billion in federal enhanced matching payments available for this program.
STATE HEALTH INSURANCE ASSISTANCE PROGRAM (SHIP) – A federal program that provides funding to states to provide Medicare beneficiaries and other consumers with free health insurance counseling and assistance.
STATE MANDATE – State coverage laws requiring private insurers to cover specific services (such as well–baby care) or reimbursement for specific providers (such as psychologists). The Employee Retirement Income Security Act generally exempts self–insured companies from these requirements.
STATE PHARMACY ASSISTANCE PROGRAM (SPAP) – State–funded program providing pharmacy benefits to seniors and other low–income groups. Before the enactment of Medicare Part D, 22 states funded SPAPs while six states operated waiver programs funded jointly by state and federal governments through Medicaid (see Medicaid 1115 Waiver). With Part D in operation, most states have begun providing wrap–around benefits to coordinate and ease the enrollment of their Medicare beneficiaries by, for example, covering deductibles, co–insurance or the gap in Medicare Part D coverage.
STOP–LOSS – See Out–of–Pocket Cap
SUBSTANCE ABUSE – A maladaptive pattern of using certain drugs, alcohol, medications, and toxins that leads to clinically significant impairment or distress.
SUBSTANCE DEPENDENCE – When a person continually uses a particular substance, resulting in compulsive substance–taking behavior, tolerance for the substance, and withdrawal symptoms if the person stops using the substance.
SUPPLEMENTAL MEDICAL INSURANCE – Any private health insurance plan held by a Medicare beneficiary that is purchased to fill in “gaps” in traditional Medicare coverage, or to finance cost–sharing requirements, e.g., Medicare’s hospital deductible. Among the most common types of supplemental insurance are some employer–sponsored retiree coverage and Medigap insurance.
SUPPLEMENTARY MEDICAL INSURANCE (SMI) TRUST FUND – The Medicare trust fund that pays for physician procedures and treatments delivered in hospital outpatient departments, ambulatory surgical centers, and other non–hospital facilities; most home health care services; durable medical equipment such as wheelchairs; and the prescription drug benefit. The SMI account is financed with beneficiary premiums (25 percent) and general revenues (75 percent).
SUPPLEMENTAL SECURITY INCOME (SSI) – A federal income support program for low–income disabled, aged and blind individuals. Eligibility for SSI monthly cash payments does not depend on previous employment or contributions to a trust fund. Eligibility for SSI usually confers eligibility for Medicaid.
SUSTAINABLE GROWTH RATE (SGR) – The formula for determining annual targets for spending on physicians’ services under Medicare, established by the Balanced Budget Act of 1997. The SGR is intended to control growth in total Medicare expenditures for physician services. If expenditures exceed the SGR target, the fee schedule update is decreased. Four factors are used to calculate the SGR: (1) average percent change in physician fees; (2) change in the average number of fee–for–service beneficiaries; (3) 10–year average annual growth in GDP per capita; and (4) change in expenditures due to new laws or regulations.
TAX CREDIT – A flat amount that can be subtracted from taxes owed. Under the 2010 health care reform law, tax credits are available to some small businesses to subsidize their workers’ health insurance premiums. A tax credit is more valuable than a tax deduction of the same amount, since the deduction reduces taxable income, not taxes owed, by the amount of the deduction.
TAX DEDUCTION – An amount that can be subtracted from taxable income if spent on a specific purpose. Currently, businesses and the self–employed can deduct the cost of health insurance provided to employees, but health expenses (including insurance) are a deduction for families with group health insurance only after they reach 7.5 percent of income.
TAX PREFERENCE (FOR HEALTH BENEFITS) – Employer–paid health benefits are treated under federal tax law as a deductible business expense for the employer, and excluded from taxable income for the worker. This creates incentives for some employers and workers to prefer extra compensation in the form of more health coverage rather than wages.
TERTIARY CARE – Health care services provided by highly specialized providers such as neurosurgeons, thoracic surgeons, and intensive care units. These services often require highly sophisticated technologies and facilities.
THERAPEUTIC SUBSTITUTION – Replacement of one drug with another drug from the same therapeutic class that the Food and Drug Administration has determined to be equivalent; the substitute has the same active ingredient with the same absorption rate as the original drug. Often, this results in prescribing the less costly compound.
THIRD PARTY ADMINISTRATOR (TPA) – A professional firm that provides administrative services to employers who want to self–insure their employees. The TPA does not underwrite the financial risk of providing coverage.
THIRD PARTY PAYER – Organization, public or private, that pays or insures medical expenses on behalf of enrollees. An individual pays a premium, and the payer organization pays providers’ actual medical bills on the individual’s behalf. Such payments are called third–party payments and are distinguished by the separation among the individual receiving the service (the first party), the individual or institution providing it (the second party), and the organization paying for it (third party).
TRADE ACT HEALTH INSURANCE SUBSIDY– Premium subsidy program that covers a portion of the cost of health insurance for early retirees, their families and other workers who have lost their employer–sponsored health coverage as a consequence of company failure due to trade practices or bankruptcy. The subsidy to former workers is provided in the form of a federal tax credit either to be claimed when the income tax return is filed, or sent directly to the beneficiary’s health insurance provider each month.
TRAINING OPPORTUNITIES FOR DIRECT CARE WORKERS – The ACA authorized $10 million over three years, effective 2011 to 2013, to establish advanced training opportunities, such as specialized training, for direct care workers (certified nurse aides, home health aides and personal/home care aides).This provision requires that trainees work in the field of geriatrics, long–term care or chronic care management for at least two years.
TRANSITIONAL MEDICAL ASSISTANCE (TMA) – Medicaid coverage for up to one year for families leaving welfare to become self–supporting through work. During this transition period, states are required to continue Medicaid benefits even if earnings increase.
TRANSPARENCY – In health care, usually, the process of collecting and reporting health care cost, performance and quality data in a format that can be accessed by the public. It is intended to improve individual decision–making, or the delivery of services, or both, and ultimately to improve the health care system as a whole.
TRIAGE – The classification of sick or injured persons according to severity in order to direct care and ensure the efficient use of medical and nursing staff and facilities.
TRICARE – Program providing medical care to the dependents of active duty members of the military and to retired members of the military. Formerly known as the Civilian Health and Medical Program (CHAMPUS), the program is run by the Department of Defense.
TRUST FUNDS – Federal trust funds are created in the U.S. Treasury to account for all program income, such as Social Security and Medicare taxes, and disbursements, such as benefit payments and program administrative costs. Revenues not needed in a particular year are invested in special non–marketable government securities; therefore, the trust funds represent the total value, including interest, of all prior program annual surpluses and deficits. There are two Medicare trust funds: the Hospital Insurance (HI) Trust Fund, which pays for inpatient hospital and related care, and the Supplementary Medical Insurance (SMI) Trust Fund, which pays for physician and outpatient services. Medicare Part D prescription drug expenditures are paid out of the SMI Trust Fund. See Hospital Insurance Trust Fund and Supplementary Medical Insurance Trust Fund.
U.S. PREVENTIVE SERVICES TASK FORCE (USPSTF) – An independent volunteer panel of primary care providers who are non–Federal experts in prevention and evidence–based medicine. Created in 1984, it conducts scientific reviews of clinical preventive health care services and develops recommendations about services such as screenings, counseling services, and preventive medications. The task force is convened by the Agency for Healthcare Research and Quality (AHRQ).
UNCOMPENSATED CARE – Care rendered by hospitals or other providers without payment from the patient or a government–sponsored or private insurance program. It includes both charity care, which is provided without the expectation of payment, and bad debt, for which the provider has made an unsuccessful effort to collect payment due from the patient.
UNDERINSURED – People with public or private insurance policies that do not cover all necessary health services, resulting in out–of–pocket expenses that often exceed their ability to pay.
UNDERUSE – The failure to provide a health care service when it would have produced a favorable outcome for a patient. Standard examples include failure to provide appropriate preventive services to eligible patients (e.g., Pap smears, flu shots for elderly patients, screening for hypertension) and proven medications for chronic illnesses (steroid inhalers for asthmatics; aspirin, beta–blockers and lipid–lowering agents for patients who have suffered a recent myocardial infarction).
UNIVERSAL COVERAGE – Health insurance coverage for all people, through either public or privately funded programs.
UTILIZATION REVIEW (UR) – A healthcare organization’s review of health care services — particularly specialist referrals, emergency room use and hospitalizations — to evaluate their appropriateness, necessity, and quality. The review can be performed before, during, or after the delivery of care.
VALUE–BASED INSURANCE DESIGN (VBID) – Aims to increase health care quality and efficiency by using financial incentives to promote cost efficient health care services and consumer choices. It may also use disincentives, such as high cost sharing, to discourage the use of services with minimal or no proven beneficial results over less costly options.
VOUCHER – In various health reform proposals, a certificate or fixed dollar amount that is provided to persons, which is used to pay all or part of the cost of health insurance or services.
WELLNESS PLAN/PROGRAM – Employment–based program to promote health and prevent chronic disease. Goals of these programs include: reducing health care costs, sustaining and improving employee health and productivity and reducing absenteeism due to illness.
YOUNG ADULT HEALTH PLAN – Health plans designed to meet the needs of young adults. These plans tend to offer lower premiums in exchange for high deductibles and/or limited benefit packages.