Fee-for-Service: A payment structure in which the insurer will either reimburse the group or pay the provider directly for each medical expense incurred by the member and covered by the group contract.

Formulary: A list containing the names of certain prescription drugs that an HMO covers when dispensed to its members who have drug coverage.

Fully Insured Plan: A group health care plan funding arrangement in which the group policy holder makes monthly premium payments to the organization that provides the health coverage, and the insurer bears the responsibility of guaranteeing claims payments.

Gatekeeper: A term used to describe one role of a primary care physician in an HO or other managed care network that requires its members to have their care provided, arranged or authorized by member’s primary care physicians.

Global Capitation: Providers are paid a single per-member-per month rate to cover all care (professional, facilities and technical services) for a population of people.

Global Case Rates: Providers are paid a lump sum upon referral to cover all care (professional, facilities and technical services) specific to a defined episode.

Group Model HMO: This type of closed-panel HMO generally is made up of one or more physician group practices that are not owned by the HMO but operate as independent partnerships or professional corporations. Instead of employing the doctors and paying them salaries, the HMO contracts with the group practice to provide or arrange covered services for each HMO member who is a patient of the group.

Group Practice Without Walls: A legal entity formed by a network of physicians who maintain their individual practice locations. The Group Practice Without Walls acquires the assets of the practices and provides administrative services.

HEDIS (Health Plan Employer Data and Information Set): The NCQA’s standardized set of performance measures for HMOs.

HMO (Health Maintenance Organization): A health care delivery system that provides comprehensive services for subscribing members in a particular geographic area. Most HMO care is provided through a managed network made up of doctors, hospitals and other medical professionals selected by the HMO. HMO enrollees are required to obtain care from this network of providers in order for their care to be covered, except incases of emergency. All the care that members may need is paid for by the single monthly fee, plus nominal copayments. Generally, there are five types of HMOs: Staff Model, Group Model, IPA, Network Model and Mixed Model.

Incurred But Not reported (IBNR): These are medical expenses that the authorization system has not captured and for which claims have not yet his the door. Unexpected IBNRs have torpedoed more managed care plans than any other cause.

IDS (integrated Delivery System): A network of hospitals, physicians and other medical services, along with an HMO or insurance plan, formed to cost-effectively provide a population with a full “continuum of care” for prevention through check-ups, tests, surgery, rehabilitation, long-term and home care-and is accountable for costs, quality of care and customer satisfaction.

Indemnity Insurance: Also known as traditional health insurance, it pays a certain percentage of the charges billed by the provider, and the patient is responsible for the balance.

IPA (Independent Practice Association): A confederation of physicians and other providers assembled for the purpose of contracting with payers. Participating providers accept the fee schedules negotiated by the IPA, but typically may continue to see patients covered by other plans.

IPA Model HMO: A type of open-panel HMO that typically includes large numbers of individual private practice physicians. Under this structure, physicians practice in their own offices.

Length of Stay: The number of consecutive days a patient is hospitalized.

Managed Care: The integration of both the financing and delivery of health care within a system that seeks to manage the accessibility, cost and quality of that care.

Mandated Benefits: State legislatures have passed statutes requiring any health plans being offered in the state to include certain treatments for coverage. These treatments may include chiropractic care, mental and nervous disorder coverage, routine mammograms and organ transplants.

MCO (Managed Care Organization): Refers to any type of organizational entity providing managed care such as an HMO, PPO etc.

Medical Loss Ratio: The difference between premiums collected and claims paid out.

MSO (Management Services Organization): often owned by hospitals, MSOs contract with physicians (individually or in groups) to provide administrative and practice-management services.

Mixed Model HMO: A type of HMO that combines certain characteristics of two or more HMO models.

NCQA (National Committee for Quality Assurance): An independent, nonprofit organization that assesses and reports on MO quality.

Network Model HMO: A type of HMO that contracts with a number of IPAs an/or medical groups to form a physician network. This allows an HMO to market its services in a broader geographic area.

Open Access: Open access arrangements allow members to see participating providers, usually specialist, without referral from the health plan’s gatekeeper. These types of arrangement are most often found in IPA model HMOs.

Outcomes Measurement: This process measures the results of specific medical treatments in an effort to pinpoint a pattern and develop reliable practice patterns for providers to follow that keep care quality high, while delivering cost-effective medicine.

PCP (Primary Care Physician): A physician who serves as a group member’s personal physician and first contact in a managed care system. PCPs include family/general practitioners, internists, pediatricians and OB/GYNs.

PHO (Physician Hospital Organization): An organizational entity that is formed between hospitals and physicians that allows for cooperative activity, while allowing for a level of independence to the participating parties. The PHO functions as a contracting representative in negotiations with HMOs and other MCOs.

PO (Physician Organization): The PO is a managed care contracting entity owned by and composed exclusively of physicians. The PO tends to be more tightly controlled in terms of members and adherence to treatment protocols than an IPA. POS typically share information systems, claims-processing procedures, financial data, medical records and other technical support functions.

POS (Point of Service) Plan: A type of managed care plan that allows members to choose whether to seek medical care within the plan’s network or seek medical care out of network at the point of service (i.e., at the time services are rendered).

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