ALTERNATIVE DELIVERY SYSTEMS

A catch-all phrase used to cover all forms of health care delivery except traditional fee-for-service, private practice. The terms includes HMOs, PPOs, IPAs and other systems of providing healthcare.

AMBULATORY CARE

Health care services that do not require hospitalization of a patient, such as those delivered at a physician’s office, clinic, medical center, or outpatient service.

ANCILLARY

A term used to describe additional services performed related to care, such as lab work, x-ray and anesthesia.

COPAYMENT

A cost-sharing arrangement in which a plan member pays a specified charge for a specified service, such as $10 for an office visit. The member is usually responsible for payment at the time the health care is rendered. Typical copayments are fixed or variable flat amounts for physician office visits, prescriptions or hospital services. Some copayments are referred to as co-insurance with the distinguishing characteristics that copayments are flat or variable dollar amounts and co-insurance is a defined percentage of the charges for services rendered. Also called copay.

Hint: For the provider, if you collect copayments in your office, make sure you have a system in place to be able to audit that you actually did collect the copayments in full at time of service.

CO-INSURANCE

The portion of covered healthcare cost for which the covered person has a financial responsibility, usually according to a fixed percentage. Often co-insurance applies after first meeting a deductible requirement.

COVERED SERVICES

A service that is covered under the terms of the contract between the HMO/PPO and the contract holder (employer or noncommercial subscriber).

Hint: If you are the provider and entering into a managed care contract be very careful with what is considered a “Covered Service” that you are to provide under the contract. Make sure you are able to provide those services and still make a profit.

PROVIDER

A person, entity or facility which provides medical care or services (ex. A physician, medical group practice, hospital, nursing home, or pharmacy).

Consider: In the 1980s physicians did not like to be called the generic term of “Provider” and by the 2000’s this seemed like less of an issue.

RISK

The chance or possibility of loss. Risk in managed care is the current movement to put physicians at financial risk for treatment decisions that mixes “probability risk” – the likelihood of medical events based on characteristics of populations in a given pool (which is the typical responsibility of insurance) – with “efficiency risk – how competently the doctor treats the patient.

Hint: The financial Risk of Losing more money than making money under managed care contracts is a HUGE area for physicians to be aware of.

PAYMENT METHODS:

FEE-FOR-SERVICE (FFS)

The traditional healthcare payment system using reimbursement under which physicians and other providers receive a payment for services rendered. Payment may be made by an insurance company, the patient or a government program such as Medicare or Medicaid. Fee-For-Service is a system of payment under which a fee is charged for each service provided on a retrospective basis. Typically, under Fee-For-Service, Providers charge their cost plus a profit margin for actual services rendered. In contrast, most HMO’s pay for services on a prospective, fixed rate basis which means the charges are agreed to in advance to services being rendered. Contrast Fee-For-Service payment method with “Per Member/ Per Month” (PM/PM) payment method under Capitation.

DISCOUNTED FEE-FOR-SERVICE

A reimbursement methodology in which the Provider is paid a fixed percentage discount off of full charges (ex. 80% of charges). Discounts may be made in a variety of ways such as package pricing, or established prices for specific items or services (i.e. fee schedules) or maximum price limits imposed through determination of reasonableness.

Discounted-Fee-for-Service is commonly used by PPOs – paying for example 80% of the physician’s usual and customary rate of charges

PER DIEM

A set daily amount, frequently used in conjunction with a hospital contract whereby a daily charge is established for HMO/ PPO members in the hospital regardless of the actual services provided. Per diem is a flat rate per day paid for all “Covered Services”.

Per diem is a flat rate per day.

CAPITATION (CAP)

Internists earned 32% of their income from HMOs in 2000 compared with 23% in 1998 with median gross income form HMOs at $64,900 and earned more of their income from PPOs but the dollar amount they took in from PPOs declined 12% to $47,300.

— Source: Ken Terry, “Managed Care: Could You Live Without It?” Medical Economics, (Dec 03, 2001)

A stipulated dollar amount established to cover the cost of health care services delivered to a person, usually expressed in units of per member per month (PMPM). The term usually refers to a negotiated per capita rate to be paid periodically, usually monthly, to a health care provider. The provider is responsible for delivering or arranging for the delivery of all health services as required by the covered person under the condition of the provider contract. Capitation is a fixed periodic prospective payment to a Provider, regardless of the number of services provided to each member. This payment is the same regardless of the amount of services rendered by the Provider.

Capitation is a method of paying providers in advance before services are rendered (i.e. prospectively) such as HMOs paying a flat rate per member per month in advance to the provider before any health care services are rendered

TYPES OF ORGANIZATIONS:

INDEMNITY INSURANCE

The traditional type of health insurance that pays for medical services after the services are performed, usually on a fee for service basis. For example, where the insurance carrier pays 80% of the bill and the patient pays 20% after satisfying the deductible.

MANAGED CARE

The term “Managed Care” is a broad term typically referring to HMOs, PPOs and many of the tools used by such entities including:

  • Contracting with a network of physicians and other health care providers to create a preferred panel of providers
  • Implementing utilization review and quality assurance type of controls such as eligibility and authorization processes, patient satisfaction surveys and physician profiling so that physicians can see how they are doing compared to their peers – i.e. see where the outliers are
  • Financial incentives so that typically the more choice patients have in choosing their provider the more they pay
  • Assumption of some financial risk by physicians and other providers entering into such managed care arrangements

A system of health care delivery that influences utilization of services and measures performance. The goal is a system that delivers value by giving people access to quality, cost-effective health care. Umbrella label referring to any organization which directs and manages the delivery of health care to ensure high quality and cost effectiveness. Generally, managed care is any system that integrates the financing and delivery of appropriate medical care by means of (one or more of) the following four features:

  1. contracts with selected physicians and hospitals that furnish a comprehensive set of health care services to enrolled members, usually for a predetermined monthly premium;
  2. utilization and quality controls that contracting providers agree to accept;
  3. financial incentives for patients to use providers and facilities associated with the Managed Care Organization’s (“MCO”) plan;
  4. assumption of some financial risk by doctors.

TYPES OF MANAGED CARE ORGANIZATIONS (“MCO”):

HEALTH MAINTENANCE ORGANIZATION (HMO)

Health Maintenance Organization (“HMO”) is an organized system of care that provides health care services to a defined population for a fixed, prospective per-person fee. Typically, members are not reimbursed for care not provided or authorized by the HMO. HMOs primarily use Capitation, but may use other methods of payment such as Discounted Fee-For-Service. Typically, HMOs have at least four characteristics to call itself an HMO: (1) an organized system for providing health care in a geographic area, for which the HMO is responsible for providing or otherwise assuring its delivery; (2) an agreed upon set of basic and supplemental health maintenance and treatment services; (3) a voluntary enrolled group of people; (4) community rating. There are four basic models of HMOs: group model, individual practice association model, network model and staff model.

PREFERRED PROVIDER ORGANIZATION (PPO)

An organized system of care in which the PPO contracts with independent physicians, who become the “preferred” Providers, typically accepting reimbursement on a negotiated fee schedule rather than capitation. Patients may seek treatment from nonmember physicians for a higher co-payment or fee, and PPO physicians may also see non-PPO patients. In essence, PPO’s contract to provide hospital, physician, and other health care services at discounted rates to employer groups.

MANAGEMENT SERVICES ORGANIZATION (MSO)

Provides practice management services to doctor groups and other healthcare providers. MSOs may be sponsored by hospitals, doctors or a joint venture between the two. Also, MSOs may be organized by those with expertise in management and experience in the health-care industry. Some MSOs are large publicly held organizations, others are start-ups with plans to become public companies. The range of services offered by MSOs vary. Some MSOs may acquire the tangible assets of a medical group and contracts with the group to provide all facilities, equipment and administrative services for a management fee. Other MSOs may offer only administrative services and give the Providers a menu to choose from. Some MSOs may offer the Provider the choice between these two approaches.

INDEPENDENT PRACTICE ASSOCIATION or INDEPENDENT PROVIDER ASSOCIATION (IPA)

A legal entity comprised of physicians in separate private practices which allows them to contract with health plans as a unified network. Generally, IPAs contract with HMOs, PPOs and possibly employer groups on behalf of the network of affiliated Providers. Also, the affiliated Providers of the IPA may contract with a variety of IPAs, HMOs, PPOs and employer groups, unless an exclusive arrangement is made.

THIRD PARTY ADMINISTRATOR (TPA)

An independent person or corporate entity (third party) who administers group benefits, claims and administration for a self-insured company or group. A TPA does not underwrite the risk. A TPA collects premiums, pays claims, and/or provides administrative services.

Overview:

  • Health Maintenance Organizations (HMOs):

Traditionally, typically, uses capitation and extensive utilization management tools. There are different kinds of HMOs such as the staff model where physicians are employees of the HMO as compared to other types of HMOs where physicians or groups or networks contract with the H….ospitals(?)

  • Preferred Provider Organizations (PPOs):

Contracts with providers (hospitals, doctors, pharmacies, etc.) to create a preferred network of contracted participating providers. Traditionally uses discounted fee for service to pay providers and through the years started using utilization management tools.

  • Third Party Administrators (TPAs):

Collects premium money and pays claims. PPOs may contract with or create their own TPAs.

  • Independent Practice Associations or Independent Provider Associations (IPAs):

Network of physicians joined together for contracting purposes. Sole practitioners can join an IPA.

AFFORDABLE CARE ACT

AFFORDABLE CARE ACT

The Affordable Care Act refers to the federal Act signed into law in March 2010 cited as the ” Patient Protection and Affordable Care Act”, Public Law 111-148, March 23, 2010, and includes the “Health Care and Education Reconciliation Act of 2010″, Public Law 111-152, March 30, 2010. The ” Patient Protection and Affordable Care Act” (PPACA), commonly called “ObamaCare” or the “Affordable Care Act” (ACA) or “Health Care Reform”. Enrollment begins October 1, 2013 for coverage beginning January 1, 2014.

The Affordable Care Act has ten sections; the titles are:

Title I. Quality, Affordable Health Care for All Americans
Title II. The Role of Public Programs
Title III. Improving the Quality and Efficiency of Health Care
Title IV. Prevention of Chronic Disease and Improving Public Health
Title V. Health Care Workforce
Title VI. Transparency and Program Integrity
Title VII. Improving Access to Innovative Medical Therapies
Title VIII. Community Living Assistance Services and Supports Act
Title IX. Revenue Provisions
Title X. Re-authorization of the Indian Health Care Improvement Act

ACCOUNTABLE CARE ORGANIZATION (ACO)

An Accountable Care Organization (ACO) is a group of health care providers with collective responsibility for patient care that helps providers coordinate services – delivering high quality care while holding down costs.

The Affordable Care Act authorizes Medicare to contract with accountable care organizations, networks of physicians and other providers that would work together to improve quality of health care services and reduce costs for patients.

CARE PATHWAYS OR CLINICAL PATHWAYS OR EVIDENCE BASED CLINICAL PATHWAYS OR EVIDENCE-BASED CARE OR CARE PLATFORMS OR CLINICAL PRACTICE GUIDELINES

The Cost Containment under the Accountable Care Act allowed providers organized as accountable care organizations (ACOs) that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries, have adequate participation of primary care physicians, define processes to promote evidence-based medicine, report on quality and costs, and coordinate care. (Shared savings program. The Prevention/Wellness National Strategy included create task forces on Preventive Services and Community Preventive Services to develop, update, and disseminate evidenced-based recommendations on the use of clinical and community prevention services. Also, Prevention/Wellness National Strategy included establish a grant program to support the delivery of evidence-based and community-based prevention and wellness services aimed at strengthening prevention activities, reducing chronic disease rates and addressing health disparities, especially in rural and frontier areas.

ELECTRONIC HEALTH RECORDS (EHR)

Electronic Health Records are built to go beyond standard clinical data collected in a provider’s office and are inclusive of a broader view of a patient’s care. EHRs contain information from all the clinicians involved in a patient’s care and all authorized clinicians involved in a patient’s care can access the information to provide care to that patient. EHRs also share information with other health care providers, such as laboratories and specialists. EHRs follow patients – to the specialist, hospital, nursing home, or across the country.

ELECTRONIC MEDICAL RECORDS (EMR)

Electronic Medical Records are digital versions of the paper charts in clinician offices, clinics, and hospitals. EMRs contain notes and information collected by and for the clinicians in that office, clinic, or hospital and are mostly used by providers for diagnosis and treatment. EMRs enable providers to track data over time, identify patients for preventive visits and screenings, monitor patients, and improve health care quality.

PERSONAL HEALTH RECORDS (PHR)

Personal Health Records (PHRs) contain the same types of information as EHRs—diagnoses, medications, immunizations, family medical histories, and provider contact information—but are designed to be set up, accessed, and managed by patients. Patients can use PHRs to maintain and manage their health information in a private, secure, and confidential environment. PHRs can include information from a variety of sources including clinicians, home monitoring devices, and patients themselves.

EHR INCENTIVES & CERTIFICATION

The American Recovery and Reinvestment Act of 2009 authorizes the Centers for Medicare & Medicaid Services (CMS) to provide incentive payments to eligible professionals (EPs) and hospitals who adopt, implement, upgrade, or demonstrate meaningful use of certified electronic health record (EHR) technology.

MEANINGFUL USE

Meaningful use sets specific objectives that eligible professionals (EPs) and hospitals must achieve to qualify for Centers for Medicare & Medicaid Services (CMS) Incentive Programs. Meaningful use is using certified electronic health record (EHR) technology to improve quality, safety, efficiency, and reduce health disparities; engage patients and family; improve care coordination, and population and public health; maintain privacy and security of patient health information. Ultimately, it is hoped that the meaningful use compliance will result in better clinical outcomes; improved population health outcomes; increased transparency and efficiency; empowered individuals; more robust research data on health systems.

HEALTH HOMES

Coordinating comprehensive and timely high-quality services and supports for people across the lifespan with chronic illness.

HEALTH INSURANCE EXCHANGE (HIX)

The ObamaCare Health Insurance Exchange (HIX) opens October 1, 2013 are State and Federal or join-run online marketplaces for health insurance. Americans can use their State’s “Affordable” Insurance Exchange marketplace to obtain coverage from competing private health care providers. Shoppers can use a calculator so see if they qualify for subsidies and see side-by-side comparisons of qualified health plans. The health insurance exchanges are estimated to provide up to 29 million people with affordable health insurance by 2019. The Health Insurance Exchange can also be referred to as the HIX, ObamaCare Exchange, Health Benefits exchange, Health Care Exchange, Health Insurance Marketplace, and Affordable Insurance Exchanges. The terms are interchangeable. ObamaCare Exchanges = Online Marketplaces for Insurance

PROVIDER-PREVENTABLE CONDITIONS INCLUDING HEALTH CARE-ACQUIRED CONDITIONS

Providing a payment adjustment for health care-acquired conditions (HACs).

QUALIFYING HEALTH PLANS

Qualifying Health Plans are plans that meet the minimum standards set forth by ObamaCare. All plans sold on and off the ObamaCare Health Care Exchange must include the following to be considered a Qualifying Health Plan: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; pediatric services, including oral and vision care.