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Copyright© 1997 - 2011, Pam Pohly, All Rights Reserved.
This glossary can now 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.
Rate Band - The allowable variation in insurance premiums as defined in state regulations. Acceptable variation may be expressed as a ratio from highest to lowest (e.g., 3:1) or as a percent from the community rate (e.g., +/-20%). Usually based on risk factors such as age, gender, occupation or residence.
Rate Review - Review by a government or private agency of a hospital's budget and financial data, performed for the purpose of determining the reasonableness of the hospital rates and evaluating proposed rate increases.
Rate Spread - The difference between the highest and lowest rates that a health plan charges small groups. The National Association of Insurance Commissioners' Small Group Model Act limits a plan's allowable rate spread to 2 to 1.
Rating - The process of calculating the appropriate premium to charge purchasers, given the degree of risk represented by the individual or group, the expected costs to deliver medical services, and the expected marketability, profitability and competitiveness of the MCO's plan.
RBRVS - See Resource-Based Relative Value Scale.
Real Value - Measurement of an economic amount corrected for change in price over time (inflation), thus expressing a value in terms of constant prices. A common term in economics.
Rebate - A reduction in the price of a particular pharmaceutical obtained by a PBM from the pharmaceutical manufacturer.
Receivership - A situation in which the state insurance commissioner, acting for a state court, takes control of and administers the assets and liabilities of an MCO.
Recredentialing - An MCO's periodic review of the qualifications of a current network provider to verify that the provider still meets the standards for participation in the network. See Credentialing.
Referral - The process of sending a patient from one practitioner to another for health care services. Health Plans may require that designated primary care providers authorize a referral for coverage of specialty services.
Normally, this type of referral means a written order from the enrollee's primary care doctor for the enrollee to see a specialist or get certain services. In many HMOs or Health Plans, an enrollee must get a referral before the enrollee can get care from anyone except the primary care doctor. Without a formal referral, the plan may not pay for the care. See also Primary Care Physician.
Referral Center, also called Triage, Call Center, 24 Hour Certification or 1-800 - This is a mechanism established by health plans to direct patients to approved hospitals and doctors. Often the Referral Center serves a UR function and certified or pre-certifies the care. These centers are also used by hospitals to refer patients to certain doctors, reduce use of the emergency room or to provide follow-up patient contact. Manage care organizations utilize these centers as their central hub of communications with patients and providers at the time of service.
See also Pre-Certification, Utilization Review, Prior Approval or Case Management.
Referral Pool - An amount set aside to pay for non-capitated services provided by a PCP, services provided by a referral specialist and/or emergency services.
Referral Services - Medical Services arranged for by the physician and provided outside the physician's office other than Hospital Services.
Refinement - The correction of relative values in Medicare's relative value scale that was initially set incorrectly.
Regional Home Health Intermediary (RHHI) - A private company that contracts with Medicare to pay home health and hospice bills under Original Medicare and check on the quality of home health care.
Registered Nurses (RN) - Registered nurses are responsible for carrying out the physician's instructions. They supervise practical nurses and other auxiliary personnel who perform routine care and treatment of patients. Registered nurses provide nursing care to patients or perform specialized duties in a variety of settings from hospital and clinics to schools and public health departments. A license to practice nursing is required in all states. For licensure as a registered nurse (R.N.), an applicant must have graduated from a school of nursing approved by the state board for nursing and have passed a state board examination.
Rehabilitation - Rehabilitative services are normally ordered by a doctor to help a patient recover from an illness or injury. These services are given by nurses and physical, occupational, and speech therapists. Examples include working with a physical therapist to help a patient walk after surgery or working with an occupational therapist to help a patient learn how to get dressed after a stroke.
Reinsurance - An insurance arrangement whereby the MCO or provider is reimbursed by a third party for costs exceeding a pre-set limit, usually an annual maximum. A method of limiting the risk that a provider or managed care organization assumes by purchasing insurance that becomes effective after set amount of health care services have been provided. This insurance is intended to protect a provider from the extraordinary health care costs that just a few beneficiaries with extremely extensive health care needs may incur. Insurance purchased by an insurance company or health plan from another insurance company to protect itself against losses. A contract by which an insurer procures a third party to insure it against loss or liability by reason of such original insurance. The practice of an HMO or insurance company of purchasing insurance from another company to protect itself against part or all the losses incurred in the process of honoring the claims of policyholders. See also stop loss. Also called "risk control" insurance. See risk.
Relative Value Scale (RVS) - An index assigning various weights to various medical services. Each weight represents a relative amount to be paid for each service. The RVS used in the development of the Medicare Fee Schedule for physicians consists of three cost components: physician work, practice expense, and malpractice expense.
Relative Value Unit (RVU) - The unit of measure for a relative value scale. RVUs must be multiplied by a dollar conversion factor to become payment amounts. This is a common term in economics. RVUs are often used in physician practice management to compare performance of doctors within a group.
Renewal - Continuance of coverage for a new policy term.
Renewal Underwriting - The process by which an underwriter reviews each year all the selection factors that were considered when the contract was issued, then compares the group's actual utilization rates to those the MCO predicted to determine the group's new renewal rate.
Also see Premium.
Report Card - An accounting of the quality of services, compared among providers over time. The report card measures and compares providers on predetermined, measurable quality and other outcome indicators. Hospitals and insurance companies may publish their report card results if favorable. Generally, consumers use report cards to choose a health plan or provider, while policy makers may use report card results to determine overall program effectiveness, efficiency, and financial stability.
Repricer, Re-Pricer, or Pricer - A person, an organization, or a software package that reviews procedures, diagnoses, fee schedules, and other data and determines the eligible amount for a given health care service or supply. Additional criteria can then be applied to determine the actual allowance, or payment, amount.
Research – When used by HIPAA, this term refers to a systematic investigation, including research development, testing and evaluation, designed to develop or contribute to generalizable knowledge.
Reserves - Monies earmarked by health plans to cover anticipated claims and operating expenses A fiscal method of withholding a certain percentage of premium to provide a fund for committed but undelivered health care and such uncertainties as: longer hospital utilization levels than expected, over-utilization of referrals, accidental catastrophes and the like. The fiscal method of providing a fund for committed but undelivered health services or other financial liabilities. A percentage of the premiums support this fund. Businesses other than health plans also manage reserves. For example, hospitals document reserves as that portion of the accounts receivables that they hope to collect but have some doubt about its collectability. Rather than book these amounts as income, hospitals will "reserve" these amounts until paid.
Resource-Based Relative Value Scale (RBRVS) - A schedule of values assigned to health care services that give weight to procedures based upon resources needed by the provider to effectively deliver the service or perform that procedure. Unlike other relative value scales, RBRVS ignores historical charges and includes factors such as time, effort, technical skill, practice cost, and training cost. Established as part of the Omnibus Reconciliation Act of 1989, Medicare payment rules for physician services were altered by establishing an RBRVS fee schedule. This payment methodology has three components: a relative value for each procedure, a geographic adjustment factor, and a dollar conversion factor. This payment methodology has three components: a relative value for each procedure, a geographic adjustment factor, and a dollar conversion factor. A Medicare weighting system to assign units of value to each CPT code (procedure) performed by physicians and other providers.
See Relative Value Scale.
Retiree, for the RDS Program - An individual who is provided coverage under a group health plan after that individual has retired.
Retrospective Rating (Retro) - Insurance coverage that provides for premium determination at the end of the coverage period, subject to a minimum and maximum based upon actual experience.
Retrospective Review Process - System for analyzing medical necessity and appropriateness of services rendered. A review that is conducted after services are provided to a patient. The review focuses on determining the appropriateness, necessity, quality, and reasonableness of health care services provided. Becoming seen as least desirable method; supplanted by concurrent reviews.
When conducted by an MCO, this occurs after treatment is completed in order to authorize payment and medical necessity and appropriateness of care.
Revenue Share - The proportion of a practice's total revenue devoted to a particular type of expense. For example, the practice expense revenue share is that proportion of revenue used to pay for practice expense.
RHC - See Rural Health Clinic.
RHHI - See Regional Home Health Intermediary.
Risk - The chance or possibility of loss. For example, physicians may be held at risk if hospitalization rates exceed agreed upon thresholds. Potential financial liability, particularly with respect to who or what is legally responsible for that liability. With insurance, the patient and insurance company share risk but the company's risk is limited by the policy's dollar limitations. In HMO's, the patient is at risk only for copayments and the cost of non-covered services. The HMO, however, with its income fixed, is at risk for whatever volume of care is entailed, however costly it turns out to be. Providers may also bear risk if they are paid a fixed amount (capitation) by the HMO. The sharing of risk is often employed as a utilization control mechanism within the HMO setting. Risk is also defined in insurance terms as the possibility of loss associated with a given population.
Risk-Adjusted Capitation - An actuarial term, this refers to methodology of payment to providers which reflects fixed payment amounts per member per month and then is adjusted further to take into account the lower or higher costs of providing care to individuals or groups of individuals, based on health status or characteristics.
Risk Adjuster - A measure used to adjust payments made to carriers or payers on behalf of a group of enrollees in order to compensate for spending, that is expected to be lower or higher than average, based on the health status or demographic characteristics of the enrollees. An actuarial result of analysis.
Risk Adjustment - The way that payments to health plans are changed to take into account a person's health status. A system of adjusting rates paid to managed care providers to account for the differences in beneficiary demographics, such as age, gender, race, ethnicity. Medical condition, geographic location, at-risk population (i.e. homeless), etc. A process by which premium dollars are shifted from a plan with relatively healthy enrollees to another with sicker members. It is intended to minimize any financial incentives health plans may have to select healthier than average enrollees. In this process, health plans that attract higher risk providers and members would be compensated for any differences in the proportion of their members that require high levels of care compared to other plans. A statistical method of paying managed care organizations different capitated payments based on the composition and relative healthiness of their beneficiaries. This procedure would generally compensate providers of HIV services with a higher capitated payment than providers of other (often less costly) health care services. In a competitive and voluntary health insurance market, like that in the US, health plans have a strong financial incentive to attract the healthiest enrollees, while excluding sicker, higher risk enrollees. This incentive encourages health plans to compete on the basis of risk selection rather than on the basis of cost efficiency and quality of health care. In the private insurance market, risk adjustment is a corrective tool designed to re-orient the incentives for health plans and enrollees, reducing the negative consequences of enrolling high-risk users by compensating plans according to the health risk of plans' enrollees.
Risk Assessment - Anticipating the cost of providing health care to groups of enrollees. Actuarial assessments examine utilization history, demographics, health characteristics, environmental attributes, and other sociological, economic and market characteristics. Risk assessment can also include, less commonly, the identification of etiology of health problems.
Risk-Bearing Entity - An organization that assumes financial responsibility for the provision of a defined set of benefits by accepting prepayment for some or all of the cost of care. A risk-bearing entity may be an insurer, a health plan or self-funded employer; or a PHO or other form of PSN. Health plans (except under employer self-insured programs) usually are risk bearing. Providers and provider organizations, if capitated, can also be risk bearing. There are 2 types of risk: insurance risk and business risk, each calculated and considered separately.
Risk Contract - A risk contract is broadly any contract that results in any party assuming insurance or business risk. Normally this means, in health care, that if the employer, health plan or provider assumes risk, it is agreeing to cover the expense of increased utilization beyond the projected costs or payment provided. Normally risk is assumed by the health plan or insurance carrier but can be carried by the provider in capitated arrangements or by the employer in self-insured arrangements. A contract payment methodology between HCFA and an HMO or CMP that requires the delivery of (at least) all covered services to members as medically necessary in return for a fixed monthly payment rate from the government and (often) a premium paid by the enrollee. The HMO is then liable for those contractually offered services without regard to cost. (Note: Medicaid beneficiaries enrolled in risk contracts are not required to pay premiums.)
Risk Corridor - A financial arrangement between a payer of health care services, such as a state Medicaid agency, and a provider, such as a managed care organization that spreads the risk for providing health care services. Risk corridors protect the provider from excessive care costs for individual beneficiaries by instituting stop-loss protections and they protect the payer by limiting the profits that the provider may earn.
Risk Factor - Any characteristic, behavior, or condition which, based on history, utilization, or theory, is thought to directly influence susceptibility to a specific health problem, increase costs or result in increased utilization.
Risk Load - In underwriting, a factor that is multiplied into the rate to offset some adverse parameter of the group.
Risk Measure - The expected per capita costs of health care services to a defined group in a specific future period.
Risk Pool - A pool of money that is at risk for being used for defined expenses. Commonly, if the pool money that is put at risk is not expended by the end of the year, some or all of it is returned to those managing the risk. Two different definitions are in use: 1) A pool of funds set aside as reserves to be used for defined expenses. Under capitation, if all of the risk pool is not used by the end of the contract year, it is usually disseminated to participating providers, and, 2) Legislatively created programs that group individuals who cannot secure coverage in the private market. Funding comes from government or assessment on insurers.
Risk Selection - Occurrence when a disproportionate share of high or low users of care joins a health plan. See Adverse Selection.
Risk Sharing - The distribution of financial risk among parties furnishing a service. For example, if a hospital and a group of physicians from a corporation provide health care at a fixed price, a risk-sharing arrangement would entail both the hospital and the group being held liable if expenses exceed revenues. Methods by which medical insurance premiums are shared by plan sponsors and participants. In contrast to traditional indemnity plans in which insurance premiums belonged solely to insurance company that assumed all risk of using these premiums. Key to this approach is that the premiums are only payment providers receive; provides powerful incentive to be parsimonious with care.
Rural Health Clinic (RHC) - A public or private hospital, clinic or physician practice designated by the federal government as in compliance with the Rural Health Clinics Act (Public Law 95-210). The practice must be located in a Medically Underserved area or a Health Professions Shortage Area and use a physician assistant and/or nurse practitioners to deliver services. A rural health clinic must be licensed by the state and provide preventive services. These providers are usually qualified for special compensations, reimbursements and exemptions.Rural Health Clinics Act - Establishes a reimbursement mechanism to support the provision of primary care services in rural areas. Public Law 95-210 was enacted in 1977 and authorizes the expanded use of physician assistants, nurse practitioners and certified nurse practitioners; extends Medicare and Medicaid reimbursement to designated clinics; and raises Medicaid reimbursement levels to those set by Medicare.
RVS - See Relative Value Scale or RBRVS.
RVU - See Relative Value Unit.
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.