Glossary of Terms



Adverse selection

A term used to describe a situation in which a health plan enrolls a poorer risk than the average risk of the group.

All-payer system

An arrangement allowing for payment of health services delivered by a contracted provider regardless of product type (e.g., HMO, PPO, indemnity) or revenue source (e.g., premium or self-funded).

Allied Health Organization

Allied Health organizations are involved with the delivery of health or related services pertaining to the identification, evaluation and prevention of diseases and disorders; dietary and nutrition services; rehabilitation and health systems management, among others. Allied health professionals, to name a few, include dental hygienists, diagnostic medical sonographers, dietitians, medical technologists, occupational therapists, physical therapists, radiographers, respiratory therapists, and speech language pathologists.


American Health Information Management System (AHIMA)

AHIMA is the worldwide professional association of recognized leaders in health information management, informatics, heath data technology, and innovation. AHIMA proactively promotes the technological advancement of health information systems that enhance the delivery of quality healthcare.

Ancillary charge

The fee associated with additional service performed prior to and/ or secondary to a significant procedure, such as lab work, x-ray, and anesthesia; or a charge in addition to the copayment and deductible amount which the covered person is required to pay to a participating pharmacy for a prescription which, through the request of the covered person or participating prescriber, has been dispensed in nonconformance with the plan’s maximum allowable cost (MAC) list.



A stipulated dollar amount established to cover the cost of health care delivered for a person. 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 required by the covered person under the conditions of the provider contract.


An entity that may underwrite or administer a range of health benefit programs.  May refer to an insurer or a health plan

Carve out

A decision to purchase separately a service which is typically a part of an indemnity or managed care. Example: an HMO may carve out” the behavioral health benefits and select a specialized vendor to supply these services on a stand-alone basis.

Case Management

A process whereby covered persons with specific health care needs are identified and a plan which efficiently utilizes health care resources is formulated and implemented to achieve the optimum patient outcome in the most cost-effective manner.

Certificate of Coverage

A description of the benefits included in a carrier’s plan. The certificate of coverage is required by state laws and represents the coverage provided under the contract issued to the employer. The certificate is provided to the employee.


The portion of covered health care costs for which the covered person has a financial responsibility, usually according to a fixed percentage. Often coinsurance applies after first meeting a deductible requirement.

Community Rating

A method of determining a premium structure that is influence not by the expected level of benefit utilization by specific groups, but by expected utilization by the population as a whole.

Computerized Provider Order (CPOE)

A computerized system that allows a physician’s order for services, such as medications, laboratory tests and other tests, to be entered electronically instead of being recorded on order sheets or prescription pads.  This allows for the order to be compared against standards for dosing, checks for allergies or interactions with other medications, and warns the physician about potential problems.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

A federal law that, among other things, requires employers to offer continued health insurance coverage to certain employees and their beneficiaries whose group health insurance coverage has been terminated.

The Consumer Assessment of Healthcare Providers and Systems (CAHPS)

Program is a public-private initiative to develop standardized surveys of patients’ experiences with ambulatory and facility-level care.

Health care organizations, public and private purchasers, consumers, and researchers use CAHPS results to:

  • Assess the patient-centeredness of care;
  • Compare and report on performance; and
  • Improve quality of care.

The Consumer Assessment of Healthcare Providers and Systems (CAHPS) program develops and supports the use of a comprehensive and evolving family of standardized surveys that ask consumers and patients to report on and evaluate their experiences with health care. These surveys cover topics that are important to consumers, such as the communication skills of providers and the accessibility of services.

Consumer Driven Healthcare

In the consumer-driven model, consumers make their own decisions regarding their health care. From an employee benefits perspective, consumer driven health care refers to limited employer contribution or dual option plans featuring high deductible health coverage with tax advantaged savings vehicles such as Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs)

Consumer Empowerment

The active involvement of consumers in managing their health care and gaining the benefits of having their health information in an easily accessible format to them. Key elements of empowerment were identified, including access to information, ability to make choices, assertiveness, and self-esteem. Empowerment has both an individual and a group dimension.

Contributory Program

A method of payment for group coverage in which part of the premium is paid by the employee and part is paid by the employer or union.

Coordination of Benefits (COB)

A provision in a contract that applies when a person is covered under more than one group medical program. It requires that payment of benefits will be coordinated by all programs to eliminate overinsurance or duplication of benefits.


A cost-sharing arrangement in which a covered person pays a specified charge for a specified service. The covered person 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 coinsurance, with the distinguishing characteristics that copayments are flat or variable dollar amounts and coinsurance is a defined percentage of the charges for services rendered.


A general set of financing arrangements via deductibles, copay and/or coinsurance in which a person covered by the health plan must pay some of the costs to receive care.


Decision-Support System (DSS)

Computer tools or applications to assist physicians in clinical decisions by providing evidence-based knowledge in the context of patient-specific data.  Examples include drug interaction alerts at the time medication is prescribed and reminders for specific guideline-based interventions during the care of patients with chronic disease.  Information should be presented in a culturally appropriate, patient-centric view of individual care and also in a population or aggregate view to support population management and quality improvement.

Diagnosis Related Groups (DRGs)

A system of classification for inpatient hospital services based on principal diagnosis, secondary diagnosis, surgical procedures, age, sex and presence of complications. This system of classification is used as a financing mechanism to reimburse hospital and selected other providers for services rendered.

Disease Management

Disease management is a system of coordinated health care interventions and communications for populations with conditions in which patient self-care efforts are significant.  Disease management components include:

  • Population identification processes;
  • Evidence-based practice guidelines;
  • Collaborative practice models to include physician and support-service providers;
  • Patient self-management education (may include primary prevention, behavior modification programs, and compliance/surveillance);
  • Process and outcomes measurement, evaluation, and management;
  • Routine reporting/feedback loop (may include communication with patient, physician, health plan and ancillary providers, and practice profiling).

Drug Formulary

A listing of prescription medications which are preferred for use by the health plan and which will be dispensed through participating pharmacies to covered persons. This list is subject to periodic review and modification by the health plan. A plan that has adopted an “open or voluntary” formulary allows coverage for both formulary and nonformulary medications. A plan that has adopted a “closed, select or mandatory” formulary limits coverage to those drugs in the formulary.

Drug Utilization Review (DUR)

A quantitative evaluation of prescription drug use, physician prescribing patterns or patient drug utilization to determine the appropriateness of drug therapy.

Duplicated Coverage Inquiry (DCI)

A request to an insurance company or group medical plan by another insurance company or medical plan to find out whether other coverage exists for the purpose of coordination of benefits.


E-Counseling (E-Therapy)

A new modality of helping people resolve life and relationship issues. It utilizes the power and convenience of the Internet to allow simultaneous (synchronous) and time-delayed (asynchronous) communication between an individual and a professional. The focus of e-therapy varies from client to client. Some clients will want to discuss interpersonal relationships, or learn new ways of dealing with stress. Other clients may use e-therapy as an adjunct to other types of real-world services, or to help clarify issues they are currently working on. Still others will use e-therapy to “check-in” from time to time with an objective third-party professional to take stock in their life and work on more philosophical life issues

Electronic Data Capture (EDC)

A computerized system designed for the collection of clinical data in electronic format for use mainly in human clinical trials.

Typically, EDC systems provide:

  • a graphical user interface component for data entry
  • a validation component to check user data
  • a reporting tool for analysis of the collected data (Wikipedia)

Electronic Data Exchange (EDI)

The computer-to-computer exchange of business or other information between two organizations (trading partners).  The data may be in either a standardized or proprietary format.

Electronic Medical Record (EMR)

A computer-based patient medical record. An EMR facilitates access of patient data by clinical staff at any given location; accurate and complete claims processing by insurance companies; building automated checks for drug and allergy interactions; clinical notes; prescriptions; scheduling; sending to and viewing by labs. The term has become expanded to include systems that keep track of other relevant medical information. The practice management system includes the medical office functions that support and surround the EMR.

E-prescribing (eR1)

The electronic transmission of prescription or prescription-related information among a prescriber, dispenser, pharmacy benefit manager, or health plan, either directly or through an intermediary, including an e-prescribing network.  E-prescribing includes, but is not limited to, two-way transmissions between the point of care and the dispenser.  It also encompasses clinical decision support to aid in safer, more informed prescribing such as access to information on drug-drug interactions, drug-allergy interactions, patient medication history, pharmacy eligibility, formulary (which specifies a patient’s drug coverage), and benefits information

Employee Assistance Program (EAP)

Services designed to assist employees, their family members, and employers in finding solutions for workplace and personal problems. Services may include assistance for family/marital concerns, legal or financial problems, elder care, child care, substance abuse, emotional/stress issues, and other daily living concerns. EAPs may address violence in the workplace, sexual harassment, dealing with troubled employees, transition in the workplace, and other events that increase the rate of absenteeism or employee turnover, lower productivity and other issues that impact an employer’s financial success or employee relations management. EAPs also can provide the voluntary or mandatory access to behavioral health benefits through an integrated behavioral health program.

Employee Retirement Income Security Act of 1974 (ERISA)

This law mandates reporting and disclosure requirements for group life and health plans.

Employer Coverage Mandate

A government requirement that employers provide health care benefits for employees. A mandate may address a single service or a range/package of services, e.g., preventive care coverage.

Employer-Sponsored Health Insurance

Of Americans who have health coverage, nearly 60 percent secure that coverage through an employer sponsored plan, also known as group health insurance. A carrier covers all applicants whose employment qualifies them for coverage. Employer-sponsored plans typically are able to include a range of plan options from HMO and PPO plan to additional coverage such as dental, life, short- and long-term disability

Employer-Sponsored Health Plans

Provided by larger companies; an estimated 99 percent of companies with 200 or more workers offer health benefits9.

Essential Health Benefits

A set of health care service categories that must be covered by certain plans, starting in 2014.The Affordable Care Act ensures health plans offered in the individual and small group markets, both inside and outside of the Affordable Insurance Exchanges (Exchanges), offer a comprehensive package of items and services, known as essential health benefits. Essential health benefits must include items and services within at least the following 10 categories: 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; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care

Evidence of Insurability (EOI)

Proof presented through written statements (e.g., an application form) and/or a medical examination that an individual is eligible for a certain type of insurance coverage. This form is required for eligibles who do not enroll during the open enrollment period (generally a 31-day period), or who apply to excess amounts of group life insurance.

Experience Rating

The process of setting rates based partially or in whole on previous claims experience and projected required revenues for a future policy year for a specific group or pool of groups.


Federal Qualification

A designation made by HFCA after conducting an extensive evaluation process of an HMO’s entire method of doing business: documents, contracts, systems, facilities, etc. An organization must be federally qualified or a designated competitive medical plan to be eligible to participate in certain Medicare cost and risk contracts.

Fee-For-Service Reimbursement
The traditional health care payment system, under which physicians and other providers receive a payment that does not exceed their billed charge for each unit of service provided.


Gatekeeper Model

A situation in which a primary care physician, the “gatekeeper,” serves as the patient’s initial contact for medical care and referrals.

Generic Drug

A chemically equivalent copy designed from a brand-name drug whose patent has expired. A generic is typically less expensive and sold under a common or “generic” name for that drug.

Group Model HMO

A health care model involving contracts with physicians organized as a partnership, professional corporation, or other association. The health plan compensates the medical group for contracted services at a negotiated rate, and that group is responsible for compensating its physicians and contracting with hospitals for care for their physicians.


Health Alliances or Regional Health Alliances

Purchasing pools which would be responsible for negotiating health insurance arrangements for employers and/or employees. Alliances would use their leverage to negotiate contracts that would ensure care is delivered in economic and equitable ways.

Health Care Disparities

Health disparities are differences in the incidence, prevalence, mortality, burden of diseases, and other adverse health conditions or outcomes that exist among specific population groups in the United States.  Health disparities can affect populations groups based on race/ethnicity, gender, age, socioeconomic status, geography, sexual orientation, disability, or special health care needs.   Health gaps occur among groups who have persistently experienced historical trauma, social disadvantage, or discrimination and who systematically experience worse health or greater health risks than more advantaged social groups.

The term “racial and ethnic health disparities” is an umbrella term that includes disparities experienced by communities of color in health and disparities in health care.  Although these two terms are often incorrectly used interchangeably, they are two different concepts.

Disparities in health- Disparities in health refer to differences between two or more population groups in health status and outcomes and in the prevalence, incidence, or burden of disease, disability, injury, or death

Disparities in health care- Disparities in health care refer to the differences between two or more population groups in health care access, coverage, and quality of care, including differences in preventive, diagnostic, and treatment services

Healthcare Effectiveness Data and Information Set (HEDIS)

Is a tool used by more than 90 percent of America’s health plans to measure performance on important dimensions of care and services.

Health Care Financing Administration (HCFA)

The federal agency responsible for administering Medicare and overseeing states’ administration of Medicaid.

Health Care Prepayment Plan (HCPP)

A cost contract with the Health Care Financing Administration that prepays a health plan a flat amount per month to provide Medicare-eligible Part B medical services to enrolled members. Members pay premiums to cover the Medicare coinsurance, deductibles and copayments, plus any additional non-Medicare covered services that the plan provides. The HCPP does not arrange for Part A services.

Health Information Exchange (HIE)

The movement of health information electronically across organizations within a region or community.  HIE provides the capability to electronically move clinical information between disparate health care information systems while maintaining the meaning of the information being exchanged.  The goal of HIE is to facilitate access to and retrieval of clinical data to provide safer, more timely, efficient, effective, equitable, and patient-centered care, utilizing effective privacy safeguards.

Health Information Management (HIM)

Focuses on improving the quality of health care by ensuring that the best information is available to make any health care decision.  HIM professionals manage health care data and information resources.  The profession encompasses services in planning, collecting, aggregating, analyzing, and disseminating individual patient and aggregate clinical data.  It serves the health care industry including patient care organizations, payers, research, and policy agendas, and other health care-related industries.

Health Information Technology (HIT)

The application of information processing involving both computer hardware and software that deals with the storage, retrieval, sharing, and use of health care information, data, and knowledge for communication and sharing, and use of health care information, data, and knowledge for communication and decision making.  HIT allows comprehensive management of medical information and its secure exchange between health care consumers and providers.  Broad use of health IT will:

  • Improve health care quality
  • Prevent medical errors
  • Reduce health care costs
  • Increase administrative efficiencies
  • Decrease paperwork
  • Expand access to affordable care

Interoperable health IT will improve individual patient care.  It will also bring many public health benefits including:

  • Early detection of infectious disease outbreaks around the country
  • Improved tracking of chronic disease management
  • Evaluation of health care base on value enabled by the collection of de-identified price and quality information that can be compared.

Health Insurance Exchange

An organized marketplace for the purchase of health insurance set up as a governmental or quasi-governmental entity to help insurers comply with consumer protections, compete in cost-efficient ways, and to facilitate the expansion of insurance coverage to more people. Exchanges do not bear risk themselves – they are not insurers. Rather, they would contract with private insurers and possibly offer a public plan option to cover specified populations (such as those obtaining coverage through small employers and those without employer coverage).

Ideally, an exchange would promote insurance transparency and accountability, facilitate enrollment and the delivery of subsidies, while also playing roles in spreading risk (i.e., ensuring that the costs associated with those with high medical need are shared broadly) and containing costs.

Health Maintenance Organizations (HMOs)

An entity that provides, offers, or arranges for coverage of designated health services needed by plan members for a fixed, prepaid premium.  There are four basic models of HMOs: group model, individual practice association, network model, and staff model.

Under the Federal HMO Act, an entity must have three characteristics to call itself an HMO:

  1. An organized system for providing health care or otherwise assuring health care delivery in a geographic area,
  2. An agreed upon set of basic and supplemental health maintenance and treatment services, and
  3. a voluntarily enrolled group of people.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

Federal act that set forth guidelines for standardizing the electronic data interchange of administrative and financial transactions, exposing fraud and abuse in government programs, and protecting the security and privacy of health information.

Hospital Alliance

A group of voluntary hospitals that have joined together to reduce costs by sharing commons services and developing group purchasing programs.  Hospital alliances are formed to improve competitive positions over other voluntary institutions and chains.

Human Risk Management

A service designed to reduce the demand for treatment by identifying, assessing, and managing individuals’ medical or behavioral health risks before treatment becomes imperative.  Human risk management is designed to respond proactively to employee risk areas and to address problems/issues before they become psychological, medical, or financial crises.


ICD-9 & ICD-10

A listing of diagnoses and identifying codes used by physicians for reporting diagnoses of health plan enrollees.  The coding and terminology provide a uniform language that can accurately designate primary and secondary diagnoses and provide for reliable, consistent communication on claim forms.  The ICD-10 is the 10th revision of this list.

Incurred but Not Reported (IBNR)

Costs associated with a medical service that has been provided, but for which a claim has not yet been received by the carrier.  IBNR reserves are recorded by the carrier to account for estimated liability based on studies of prior lags in claim submissions.

Incurred Claims

The actual carrier liability for a specified period, including all claims with dates of service within a specified period (usually called the experience period).  Due to the time lag between dates of service and the dates claims payments are actually processed, adjustments must be made to any paid claims data to determine incurred claims.


An insurance program in which the insured person is reimbursed for covered expenses.

Independent Medical Evaluation (IME)

An examination carried out by an impartial health care provider, generally board certified, for the purpose of resolving a dispute related to the nature and extent of an illness or injury.

Individual Practice Association (IPA) Model HMO

A health care model that contracts with an entity, which in turn contracts with physicians, to provide health care services in return for a negotiated fee.  Physicians continue in their existing individual or group practices and are compensated on a per capita, fee schedule, or fee-for-service basis.

Integrated Behavioral Health

A carve-out benefit plan that combines independent managed care services into a seamless delivery system for behavioral health concerns.  Components could include employee assistance services, a telephone counseling triage, utilization management, behavioral health treatment networks, claims payments, and data management.

Integrated Delivery Network

A network of facilities and providers working together to offer a continuum of care to a specific market or geographic area.  Developed in the early 1980s, IDNs emerged to address common concerns such as capitation, excess capacity, decreased margins, and complaints from patients regarding access.  IDNs include many types of associations across the continuum of care and one network may include a short- and long-term hospital, HMO, PHO, PPO, Home Health agency, and hospice services, for example.  Multi-hospital systems and mergers may be considered limited IDNs in that different entities join forces to provide care.  Some members of a network provide identical or complementary services to patients.  Such associations in which a similar level of care is provided by members of a network is sometimes called horizontal integration or, as opposed to different levels of care, or vertical integration, generally seen in the more traditional IDN model.

Integrated Provider Organization

A corporate umbrella for the management of a diversified health care delivery system.  The system may include one or more hospitals, a large group practice and other health care operations.  Physicians practice as employees of the organization or in a closely affiliated physician group.


Managed Care

A system of health care delivery that influences utilization and cost of services and measures performance.  The goal is a system that delivers value by giving people access to quality, cost-effective health care.

Managed Competition

A proposed policy approach whereby health plans would compete on the basis of cost and other factors.  Purchasers would join cooperatives and be given the ability to compare plans across several dimensions of performance.  The principle behind this approach is improvement of the health economy through increased health plan competition.

Managed Health Care Plan

One or more products which integrate financing and management with the delivery of health care services to an enrolled population; employ or contract with an organized provider network which delivers services and which (as a network or individual provider) either shares financial risk or has some incentive to delivery quality, cost-effectiveness services; and use an information system capable of monitoring and evaluating patterns of covered persons’ use of medical services and the cost of those services.

Management Service Organization (MSO)

A legal entity that provides practice management, administrative and support services to individual physicians or group practices.  An MSO may be a direct subsidiary of a hospital or may be owned by investors.

Mandated Benefits

Those benefits which health plans are required by state or federal law to provide to policy holders and eligible dependents.

Meaningful Use

A qualification to receive federal funding for health information technology. For instance, if a health information technology (HIT) system is used in a meaningful way to provide better patient care, a health system can qualify to receive federal subsidies to help to pay for the technology.


A federal program administered and operated individually by participating state and territorial governments which provides medical benefits to eligible low income persons needing health care.  The program’s costs are shared by the federal and state governments.

Medical Homes

A patient-centered medical home is a “one-stop” source of medical care, which ideally involves patients as active participants in their own health and well-being. Patients are cared for by a physician who leads the medical team that coordinates all aspects of preventive, acute, and chronic needs of patients using the best available evidence and appropriate technology. These relationships offer patients comfort, convenience, and optimal health throughout their lifetimes. In 2007, the American Academy of Family Physicians, American Academy of Pediatrics, American College of Physicians, and American Osteopathic Association – the leading primary care physician organizations – released the Joint Principles of the Patient-Centered Medical Home. This document presents the characteristics of the patient-centered medical home:

  • Personal Relationship: Each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous, and comprehensive care.
  • Team Approach: The personal physician leads a team of individuals at the practice level who collectively take responsibility for the ongoing patient care.
  • Comprehensive: The personal physician is responsible for providing for all the patient’s health care needs at all stages of life, or for taking responsibility for appropriately arranging care with other qualified professionals.
  • Coordination: Care is coordinated and integrated across all domains of the health care system, facilitated by registries, information technology, HIE, and other means to assure that the patient gets the indicated care when and where they want it.
  • Quality and Safety: Quality and Safety are hallmarks of the medical home. This includes using EMRs and technology to provide decision support for evidence-based treatments and patient and physician involvement in continuous quality improvement.
  • Expanded Access: Enhances access to care is available through systems such as open scheduling, expanded hours, and new options for communication between patients, physicians, and practice staff.
  • Added Value: Payment that appropriately recognizes the added value provided to patients who have a patient-centered medical home.


A nationwide, federally-administered health insurance program which covers the costs of hospitalization, medical care, and some related services for eligible persons.

Multiple Option Plan

A health care plan design which offers employees the option of electing to enroll under one of several types of coverage and usually from among an HMO, a PPO, and a major medical indemnity plan.


The National Committee for Quality Assurance (NCQA)

Is a private, 501(c) (3) not-for-profit organizations dedicated to improving health care quality. Since its founding in 1990, NCQA has been a central figure in driving improvement throughout the health care system, helping to elevate the issue of health care quality to the top of the national agenda.

NCQA has helped to build consensus around important health care quality issues by working with large employers, policymakers, doctors, patients and health plans to decide what’s important, how to measure it, and how to promote improvement.

NCQA makes this process possible in health care by developing quality standards and performance measures for a broad range of health care entities. These measures and standards are the tools that organizations and individuals can use to identify opportunities for improvement. The annual reporting of performance against such measures has become a focal point for the media, consumers, and health plans, which use these results to set their improvement agendas for the following year.

Network Model HMO

An HMO type in which the HMO contracts with more than one physician group, and may contract with single- and multi-specialty groups.  The physician works out of his/her own office.  The physician may share in utilization savings, but does not necessarily provide care exclusively for HMO members.


Open Access (OA)

A self-referral arrangement allowing members to see participating providers for specialty scare without a referral from another doctor.  Typically found in an IPA HMO.

Open Enrollment Period

A time during which subscribers in a health benefit program have an opportunity to re-enroll or select an alternate health plan being offered to them, usually without evidence of insurability or waiting periods.

Organized Delivery Systems

Proposed networks of providers and payers which would provide care and compete with other systems for enrollees in their region.  Systems cold include hospitals, primary care physicians, specialty care physicians, and other providers and sites that could offer a full range of preventative and treatment services.  Also referred to as accountable health plans (AHP), coordinated care networks (CCN), community care networks (CCN), integrated health systems (HIS), and integrated service networks (ISN).


Peer Review Organization (PRO)

An entity established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) to review quality of care and appropriateness of admissions, readmissions, and discharges for Medicare and Medicaid.  These organizations are held responsible for maintaining and lowering admission rates, and reducing lengths of stay while insuring against inadequate treatment.

Personal Health Record (PHR) – An electronic record of health-related information about an individual to whom that person has full access, which may take several forms and, ideally, conforms to nationally recognized interoperability standards.  Information contained in the PHR can be drawn from multiple sources while being managed, shared, and controlled by the individual.

Physician-Hospital Organization (PHO)

A legal entity formed and owned by one or more hospitals and physician groups in order to obtain payer contracts and to further mutual interests.  Physicians maintain ownership of their practices while agreeing to accept managed care patients under the terms of the PHO agreement.  The PHO serves as a negotiating, contracting, and marketing unit.

Point-Of-Service (POS) Plan

A health plan allowing the covered person to choose to receive a service from a participating or non-participating provider, with different benefit levels associated with the use of participating providers.  Point-of-service can be provided in several ways:

  • An HMO may allow members to obtain limited services from non-participating provides;
  • An HMO may provide non-participating benefits through a supplemental major medical policy;
  • A PPO may be used to provide both participating and non-participating levels of coverage and access; or
  • Various combinations of the above may be used.

Pre-Existing Condition (PEC)

Any medical condition that has been diagnosed or treated within a specified period immediately preceding the covered person’s effective date of coverage under the master group contract.

Preferred Provider Organization (PPO)

A program in which contracts are established with providers of medical care.  Providers under such contracts are referred to as preferred providers.  Usually, the benefit contract provides significantly better benefits (fewer copayments) for services received from preferred providers, thus encouraging covered persons to use these providers.  Covered persons are generally allowed benefits for non-participating providers’ services, usually on an indemnity basis with significant copayments.  A PPO arrangement can be insured or self-funded.  Providers may be, but are not necessarily, paid on a discounted fee-for-service basis.

Primary Care Network

A group of primary care physicians who have joined together to share the risk of providing care to their patients who are covered by a given health plan.

Professional Review Organization (PRO)

A physician-sponsored organization charged with reviewing the services provided patients.  The purpose of the review is to determine if the services rendered are medically necessary; provided in accordance with professional criteria, norms and standards; and provided in the appropriate setting.

Prospective Reimbursement

Any method of paying hospitals or other health care providers for a defined period (usually one year) according to amounts or rates of payment established in advance.


Quality Assurance

A formal set of activities to review and affect the quality of services provided.  Quality assurance includes quality assessment and corrective actions to remedy any deficiencies identified in the quality of direct patient, administrative, and support services.

Quality Compass: RRU Quality Index

Quality Compass is an online database of comparable information on clinical performance and patient experience on hundreds of health plan products. It is an indispensable tool for selecting a health plan, conducting competitor analysis, examining quality improvement and benchmarking plan performance.

Quality Compass: RRU Quality Index (Commercial) reports measures that capture the total resources used by health plans to treat patients with select chronic conditions and aligns their utilization with their HEDIS quality results. This dataset provides detailed information that allows for the comparison of plans based on both value and quality.

Measures focus on traditionally high-cost conditions:

  • Asthma
  • Cardiovascular conditions
  • COPD
  • Diabetes
  • Hypertension

Populations captured in the resource use measures are risk adjusted for clinical category, presence of comorbidities, age and gender so that plans that serve an older or sicker population are not at a disadvantage when compared to other plans that serve younger and healthier populations.

Quality Improvement

A continuous process that identifies problems in health care delivery, tests solutions to those problems, and constantly monitors the solutions for improvement.



Insurance purchased by an HMO, insurance company, or self-funded employer from another insurance company to protect itself against all or part of the losses that may be incurred in the process of honoring the claims of its participating providers, policy holders, or employees and covered dependents.

Resource Based Relative Value Scale (RBRVS)

A fee schedule introduced by HCFA to reimburse physicians’ Medicare fees based on the amount of time and resources expended in treating patients, with adjustments for overhead costs and geographical differences.

Report Card on Health Care

An emerging tool that can be used by policy makers and health care purchasers, such as employers, government bodies, employer coalitions and consumers, to compare and understand the actual performance of health plans.  The tool provides health plan performance data in major areas of accountability, such as health quality and utilization; consumer satisfaction; administrative efficiencies and financial stability; and cost control.


Single-Payer System

A health care financing arrangement in which money, usually from a variety of taxes, is funneled to a single entity (usually the government) which then is responsible for the financing and administration of the health system.  Single payer systems can be regional, statewide, or nationwide.

Staff Model HMO

A health care model that employs physicians to provide health care to its members.  All premiums and other revenues accrue to the HMO, which compensates physicians by the salary and incentive programs.

Standard Class Rate

A base revenue requirement on a per member or per employee basis, multiplied by group demographic information to calculate monthly premium rates.


Tiered Networks

Plan feature that pays more to providers that the plan rates as providing the highest-quality, most cost-effective medical services.


Utilization Review (UR)

A formal assessment of the medical necessity, efficiency, and/or appropriateness of health care services and treatment plans on a prospective, concurrent, or retrospective basis.


Value-Based Health Care

The concept of value-based health care purchasing is that buyers should hold providers of health care accountable for both cost and quality of care. Value-based purchasing brings together information on the quality of health care, including patient outcomes and health status, with data on the dollar outlays going towards health. It focuses on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers