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Copyright© 1997 - 2011, Pam Pohly, All Rights Reserved.
This glossary can also be purchased in printed book format.
Glossary of Terms in Managed Health Care
The following are definitions of commonly used terms in the medical provider, hospital and managed care industries. This dictionary is comprised of 26 individual pages, one for each letter of the alphabet. To find a certain word that starts with this letter of the alphabet, may we suggest that you please try the "find" or "search" function in your browser. Or you may simply scroll down the list. If your word starts with another letter, please use the alphabet index below.
This glossary can also be purchased in printed book format if you would like to have it handy.
Fail First Requirements (also called Step Therapy) - Drug plans may require an enrollee to try one drug before the plan will pay for another drug. Step therapy aims to control costs by requiring that enrollees use more common drugs which are usually less expensive. The process of beginning drug therapy for a medical condition with the most cost-effective and safest drug therapy and progressing to other more costly or risky therapy is called Step Therapy or Fail First Requirement. Progression to a new medication is predicated on the former medication failing to provide symptomatic relief or cure; hence “fail first.” Physicians and drug plans may disagree on the proper Step Therapy and patients are encouraged to become knowledgeable and decisive in agreeing to protocols. Also called “step protocol.”
Favorable Selection - Selection of subscribers or covered lives based on data that shows a tendency for utilization of health services in that population group to be lower than expected or estimated.
Federal Bureau of Investigation (FBI) - As an agency under the DOJ, the FBI investigates violations of federal criminal law and provides law enforcement assistance to federal, state, local and international agencies. The FBI has investigated hospitals for fraud and abuse. Also see Fraud.
Federal Employee Health Benefits Program (FEHBP) - A voluntary health insurance program for federal employees, retirees, and their dependents and survivors.
Federal Medicaid Managed Care Waiver Program - The process used by States to receive permission to implement managed care programs for their Medicaid or other categorically eligible beneficiaries.
Federally Qualified Health Center (FQHC) - A federal payment option that enables qualified providers in medically underserved areas to receive cost-based Medicare and Medicaid reimbursement and allows for the direct reimbursement of nurse practitioners, physician assistants and certified nurse midwives. Many outpatient clinics and specialty outreach services are qualified under this provision that was enacted in 1989.
Federally Qualified HMO - A prepaid health plan that has met strict federal standards and has been granted qualification status. A federally qualified HMO is eligible for loans and loan guarantees not available to non-qualified plans. Employers of 25 or more workers were, until recently, required to offer a federally qualified HMO if the plan requested to be included in the company's health benefits program.
Federal Qualification - A status designated by CMS after conducting an extensive evaluation of an HMO's organization and operations. An organization must be federally qualified or be designated as a competitive medical plan (CMP) to be eligible to participate in Medicare and cost and risk contracts. Federal designation that allows an organization to participate in certain Medicare cost and risk contracts.
Fee Disclosure - Physicians and caregivers discussing their charges with patients prior to treatment.
Fee-For-Service (FFS) - Traditional method of payment for health care services where specific payment is made for specific services rendered. Usually people speak of this in contrast to capitation, DRG or per diem discounted rates, none of which are similar to the traditional fee for service method of reimbursement. Under a fee-for-service payment system, expenditures increase if the fees themselves increase, if more units of service are provided, or if more expensive services are substituted for less expensive ones. This system contrasts with salary, per capita, or other prepayment systems, where the payment to the physician is not changed with the number of services actually used. Payment may be made by an insurance company, the patient or a government program such as Medicare or Medicaid. With respect to the physicians or other supplier of service, this refers to payment in specific amounts for specific services rendered--as opposed to retainer, salary, or other contract arrangements. In relation to the patient, it refers to payment in specific amounts for specific services received, in contrast to the advance payment of an insurance premium or membership fee for coverage, through which the services or payment to the supplier are provided.
Fee Schedule - A listing of accepted fees or established allowances for specified medical procedures. As used in medical care plans, it usually represents the maximum amounts the program will pay for the specified procedures. The fee determined by an MCO to be acceptable for a procedure or service, which the physician agrees to accept as payment in full. Also known as a fee allowance, fee maximum, or capped fee.
FFS - See Fee-For-Service.
Fiduciary - Relating to, or founded upon, a trust or confidence. A legal term. A fiduciary relationship exists where an individual or organization has an explicit or implicit obligation to act in behalf of another person's or organization's interests in matters which affect the other person or organization. This fiduciary is also obligated to act in the other person's best interest with total disregard for any interests of the fiduciary. Traditionally, it was generally believed that a physician had a fiduciary relationship with patients. This is being questioned in the era of managed care as the public becomes aware of the other influences that are effecting physician decisions. Doctors are provided incentives by managed care companies to provide less care, by pharmaceutical companies to order certain drugs and by hospitals to refer to their hospitals. With the pervasive monetary incentives influencing doctor decisions, consumer advocates are concerned because the patient no longer has an unencumbered fiduciary.
Financial Services Modernization Act - Legislation that allows convergence among the traditionally separate components of the financial services industry - banks, securities firms, and insurance companies. Also known as the Gramm-Leach-Bliley (GLB) Act.
First Dollar coverage - Insurance coverage with no front-end deductible where coverage begins with the first dollar of expense incurred by the insured for any covered benefit.
Fiscal Intermediary - The agent (e.g., Blue Cross) that has contracted with providers of service to process claims for reimbursement under health care coverage. In addition to handling financial matters, it may perform other functions such as providing consultative services or serving as a center for communication with providers and making audits of providers' needs. A private organization, usually an insurance company, that serves as an agent for the Health Care Financing Administration (CMS), which is part of HHS, that determines the amount of payment due to hospitals and other providers and paying them for the Medicare services they have provided. A private company that has a contract with Medicare to pay Part A and some Part B bills (for example, bills from hospitals). Intermediaries make initial coverage determinations and handle the early stages of beneficiary appeals. This entity may also be referred to as TPA or third party administrator.
Fiscal Soundness - The requirement that managed care organizations have sufficient operating funds, on hand or available in reserve, to cover all expenses associated with services for which they have assumed financial risk.
Fixed Costs - Costs that do not change with fluctuations in census or in utilization of services.
Flat Fee-Per-Case - Flat fee paid for a client's treatment based on their diagnosis and/or presenting problem. For this fee the provider covers all of the services the client requires for a specific period of time. Often characterizes "second generation" managed care systems. After the MCOs squeeze out costs by discounting fees, they often come to this method. If provider is still standing after discount blitz, this approach can be good for provider and clients, since it permits a lot of flexibility for provider in meeting client needs. DRGs are an example of flat fees paid by diagnosis.
Flexible Benefit Plan - Program offered by some employers in which employees may choose among a number of health care benefit options. See also Cafeteria Plan.
Flexible Spending Account (FSA) - A plan that provides employees a choice between taxable cash and non-taxable benefits for unreimbursed health care expenses or dependent care expenses. This plan qualifies under Section 125 of the IRS Code. See also Medical Spending Account.
Formatting and Protocol Standards - Data exchange standards which are needed between CPR systems, as well as CPT and other provider systems, to ensure uniformity in methods for data collection, data storage and data presentation. Proactive providers are current in their knowledge of these standards and work to ensure their information systems conform to the standards.
Formulary - An approved list of prescription drugs; a list of selected pharmaceuticals and their appropriate dosages felt to be the most useful and cost effective for patient care. Organizations often develop a formulary under the aegis of a pharmacy and therapeutics committee. When used by hospitals or clinics, a formulary is intended as a recommendation usually and not considered a requirement. However, when used In HMOs or Prescription Drug Plans, such as Medicare Part D Plans, physicians are often required to prescribe from the formulary. If a physician prescribes a drug not on the formulary, the patient may not be able to experience any discount or reimbursement for the expense. Formularies are supposed to be based on evaluations of efficacy, safety, and cost-effectiveness of drugs, but increasingly formularies are based on cost and expense factors. Patients pay varying co-pays for drugs that are on formulary. For drugs that are not on formulary, patients must pay the entire cost of the drug. Formularies vary between drug plans and differ in the breadth of drugs covered and costs of co-pay and premiums. Most formularies cover at least one drug in each drug class, and encourage generic substitution. A list of drugs covered by a plan. Also known as a preferred drug list. See also Tiered Formulary or Prescription Drug Plan.
Formulation Substitution (also called therapeutic equivalency) - As patients and prescription benefit plans seek to lower their healthcare costs, they may substitute a less expensive therapeutically equivalent drug for a more costly drug. Formulation substitution can include switching from a brand-name drug to a generic drug, switching from one generic drug to another generic drug, or (rather uncommonly) switching from a generic drug to a brand-name drug. In most states, formulation substitution is allowed and encouraged, provided that the replacement formulation is deemed to be “therapeutically equivalent” to the innovator formulation by the Food and Drug Administration (FDA). The FDA publishes a list of drug products and equivalents entitled Approved Drug Products with Therapeutic Equivalence Evaluations; this is commonly referred to as the Orange Book. The FDA’s designation of “therapeutic equivalence” indicates that the generic formulation is bioequivalent to the innovator formulation. This means that drug products are considered to be therapeutic equivalents only if they have identical active ingredients and if they can be expected to have the same clinical effect and safety profile when administered to patients under the conditions specified in the labeling. See also Generic Drugs.
Fully Funded Plan - A health plan under which an insurer or MCO bears the financial responsibility of guaranteeing claim payments and paying for all incurred covered benefits and administration costs.
Functional Health Status - Refers to a patient’s ability to perform typical daily physical and social/role functions, plus other measures of self-perceived health status such as well-being, vitality and mental health.
Funding Level - Amount of revenue required to finance a medical care program.
Funding Method - System for employers to pay for a health benefit plan. Most common methods are prospective and / or retrospective premium payment, shared risk arrangement, self-funded, or refunding products. See also Self-insured, Risk and Premium.
Funding Vehicle - In a self-funded plan, the account into which the money that an employer and employees would have paid in premiums to an insurer or MCO is deposited until the money is paid out.
FQHC - Federally Qualified Health Center.
Fraud - Intentional misrepresentations that can result in criminal prosecution, civil liability and administrative sanctions. This is a broad definition and can be applied in many different circumstances. In health care, most commonly it refers to hospitals and doctors that are suspected of charging fees for services not provided or have, in some other way, incorrectly documented a medical record is such a way to increase their revenues or avoid scrutiny.Freedom of Choice - A principle of Medicaid that allows a recipient the freedom to choose among participating Medicaid providers. This term is also used by indemnity plans to indicate that subscribers may use the providers of their choice.
FSA - See Flexible Spending Account.
This glossary can also be purchased in printed book format if you would like to have a copy for your briefcase or desk.
Copyright© 1997 - Present Date, Pam Pohly, All Rights Reserved.