HIT Chapter 6

Accept assignment
A term used to refer to a provider’s or a supplier’s acceptance of the allowed charges (from a fee schedule) as payment in full for services or materials provided.

Accounts receivable (A/R)
Records of the payments owed to the organization by outside entities such as third-party payers and patients.

Administrative services only (ASO) contract
An agreement between an employer and an insurance organization to administer the employer’s self-insured health plan.

Advance Beneficiary Notice (ABN)
A statement signed by the patient when he or she is notified by the provider, prior to a service or procedure being done, that Medicare may not reimburse the provider for the service, wherein the patient indicates that he will be responsible for any charges.

All patient DRGs (AP-DRGs)
A case-mix system developed by 3M and used in a number of state reimbursement systems to classify non-Medicare discharges for reimbursement purposes.

Ambulatory payment classification (APC)
Hospital outpatient prospective payment system (HOPPS). The classification is a resource-based reimbursement system. The payment unit is the APC group.

Ambulatory payment classification group (APC group)
Basic unit of the ambulatory payment classification (APC) system. Within a group, the diagnoses and procedures are similar in terms of resources used, complexity of illness, and conditions represented. A single payment is made for the outpatient services provided. They are based on HCPCS/CPT codes. A single visit can result in multiple APC groups. They consist of five types of service: significant procedures, surgical services, medical visits, ancillary services, and partial hospitalization. It was formerly known as the ambulatory visit group (AVG) and ambulatory patient group (APG).

Ambulatory surgery center (ASC)
Under Medicare, an outpatient surgical facility that has its own national identifier; is a separate entity with respect to its licensure, accreditation, governance, professional supervision, administrative functions, clinical services, recordkeeping, and financial and accounting systems; has as its sole purpose the provision of services in connection with surgical procedures that do not require inpatient hospitalization; and meets the conditions and requirements set forth in the Medicare Conditions of Participation.

Auditing
The performance of internal and/or external reviews (audits) to identify variations from established baselines (for example, review of outpatient coding as compared with CMS outpatient coding guidelines).

Balance billing
A reimbursement method that allows providers to bill patients for charges in excess of the amount paid by the patients’ health plan or other third-party payer (not allowed under Medicare or Medicaid).

Balanced Budget Refinement Act (BBRA) of 1999
The amended version of the Balanced Budget Ace of 1997 that authorizes implementation of a per-discharge prospective payment system for care provided to Medicare beneficiaries by inpatient rehabilitation facilities.

Blue Cross and Blue Shield (BC/BS)
The first prepaid healthcare plans in the United States; Blue Shield plans traditionally cover hospital care and Blue Cross plans cover physicians’ services.

Blue Cross and Blue Shield Federal Employee Program (FEP)
A federal program that offers a fee-for-service plan with preferred provider organizations and a point-of-service product.

Bundled payments
A category of payments made as lump sums to providers for all healthcare services delivered to a patient for a specific illness and/or over a specified time period; they include multiple providers of care.

Capitation
A method of healthcare reimbursement in which an insurance carrier prepays a physician, hospital, or other healthcare provider a fixed amount for a given population without regard to the actual number or nature of healthcare services provided to the population.

Case-mix groups (CMGs)
The 97 function-related groups into which inpatient rehabilitation facility discharges are classified on the basis of the patient’s level of impairment, age, comorbidities, functional ability, and other factors.

Case-mix group (CMG) relative weights
Factors that account for the variance in cost per discharge and resource utilization among case-mix groups.

Case-mix index (CMI)
The average relative weight of all cases treated at a given facility or by a physician, which reflects the resource intensity or clinical severity of a specific group in relation to the other groups in the classification system; calculated by dividing the sum of the weights of diagnosis-related groups for patients discharged during a given period divided by the total number of patients discharged.

Categorically needy eligibility groups
Categories of individuals to whom states must provide coverage under the federal Medicaid program.

Chargemaster
A financial management form that contains information about the organization’s charges for the healthcare services it provides to patients.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
A federal program providing supplementary civilian-sector hospital and medical services beyond that which is available in military treatment facilities to military dependents, retirees and their dependents, and certain others.

Civilian Health and Medical Program-Veterans Affairs (CHAMPVA)
The federal healthcare benefits program for dependents of veterans rated by the Veterans Administration as having a total and permanent disability, for survivors of veterans who died from VA-rated service-connected conditions or who were rated permanently and totally disabled at the time of death from a VA-rated service-connected condition, and for survivors of persons who died in the line of duty.

Claim
Itemized statement of healthcare services and their costs provided by a hospital, physician’s office, or other healthcare provider; submitted for reimbursement to the healthcare insurance plan by either the insured party or by the provider.

CMS-1500
The universal insurance claim form developed and approved by the American Medical Association and the Centers for Medicare and Medicaid Services. Physicians use it to bill Medicare, Medicaid, and private insurers for services provided.

Coinsurance
Cost-sharing in which the policy or certificate holder pays a pre-established percentage of eligible expenses after the deductible has been met.

Co-morbidity
A medical condition that coexists with the primary cause for hospitalization and affects the patient’s treatment and length of stay.

Compliance
1. The process of established an organizational culture that promotes the prevention, detection, and resolution of instances of conduct that do not conform to federal, state, or private payer healthcare program requirements or the healthcare organization’s ethical and business policies. 2. The act of adhering to official requirements.

Compliance program guidance
The information provided by the Office of the Inspector General of the Department of Health and Human Services to help healthcare organizations develop internal controls that promote adherence to applicable federal and state guidelines.

Complication
A medical condition that arises during an inpatient hospitalization (for example, a postoperative wound infection).

Coordination of benefits (COB) transaction
The electronic transmission of claims and/or payment information from a healthcare provider to a health plan for the purpose of determining relative payment responsibilities.

Cost outlier
Exceptionally high costs associated with inpatient care when compared with other cases in the same diagnosis-related group.

Cost outlier adjustment
Additional reimbursement for certain high-cost home care cases based on the loss-sharing ratio of costs in excess of a threshold amount for each home health resource group.

Diagnosis-related groups (DRGs)
A unit of case-mix classification adopted by the federal government and some other payers as a prospective payment mechanism for hospital inpatients in which diseases are placed into groups because related diseases and treatments tend to consume similar amounts of healthcare resources and incur similar amounts of cost; in the Medicare and Medicaid programs, one of more than 500 diagnostic classifications in which cases demonstrate similar resource consumption and length-of-stay patterns.

Discharge planning
The process of coordinating the activities related to the release of a patient when inpatient hospital care is no longer needed.

Discounting
The application of lower rates of payment to multiple surgical procedures performed during the same operative session under the outpatient prospective payment system; the application of adjusted rates of payment by preferred provider organizations.

DRG grouper
A computer program that assigns inpatient cases to diagnosis-related groups and determines the Medicare reimbursement rate.

Employer-based self-insurance
An umbrella term used to describe health plans that are funded directly by employers to provide coverage for their employees exclusively in which employers establish accounts to cover their employees’ medical expenses and retain control over the funds but bear the risk of paying claims greater than their estimates.

Episode-of-care (EOC) reimbursement
A category of payments made as lump sums to providers for all healthcare services delivered to a patient for a specific illness and/or over a specified time period; also called bundled payments because they include multiple services and may include multiple providers of care.

Exclusive provider organization (EPO)
Hybrid managed care organization that provides benefits to subscribers only when healthcare services are performed by network providers; sponsored by self-insured (self-funded) employers or associations and exhibits characteristics of both health maintenance organizations and preferred provider organizations.

Explanation of Benefits (EOB)
A statement issued to the insured and the healthcare provider by an insurer to explain the services provided, amounts billed, and payments made by a health plan.

External review (audit)
A performance or quality review conducted by a third-party payer or consultant hired for the purpose.

Federal Employees’ Compensation Act (FECA)
The legislation enacted in 1916 to mandate workers’ compensation for civilian federal employees, whose coverage includes lost wages, medical expenses, and survivors’ benefits.

Fee schedule
A list of healthcare services and procedures (usually CPT/HCPCS codes) and the charges associated with them developed by a third-party payer to represent the approved payment levels for a given insurance plan; also called table of allowances.

Fee-for-service basis
A method of reimbursement through which providers retrospectively receive payment based on either billed charges for services provided or on annually updated fee schedules; also called fee-for-service reimbursement.

Fiscal intermediary (FI)
An organization that contracts with the Centers for Medicare and Medicaid Services to serve as the financial agent between providers and the federal government in the local administration of Medicare Part B claims.

Fraud and abuse
The intentional and mistaken misrepresentation of reimbursement claims submitted to government-sponsored health programs.

Geographic practice cost index (GPCI)
An index developed by the Centers for Medicare and Medicaid Services to measure the differences in resource costs among fee schedule areas compared to the national average in the three components of the relative value unit: physician work, practice expenses, and malpractice coverage.

Global payment
A form of reimbursement used for radiological and other procedures that combines the professional and technical components of the procedures and disperses payments as lump sums to be distributed between the physician and the healthcare facility.

Global surgery payment
A payment made for surgical procedures that includes the provision of all healthcare services, from the treatment decision through postoperative patient care.

Group health insurance
A prepaid medical plan that covers the healthcare expenses of an organization’s full-time employees.

Group model health maintenance organization
A type of health plan in which an HMO contracts with an independent multi-specialty physician group to provide medical services to members of the plan.

Group practice without walls (GPWW)
A type of managed care contract that allows physicians to maintain their own offices and share administrative services.

Hard-coding
The process of attaching a CPT/HCPCS code to a procedure located on the facility’s chargemaster so that the code will automatically be included on the patient’s bill.

Health maintenance organization (HMO)
Entity that combines the provision of healthcare insurance and the delivery of healthcare services, characterized by: 1. an organized healthcare delivery system to a geographic area, 2. a set of basic and supplemental health maintenance and treatment services, 3. voluntarily enrolled members, and 4. predetermined fixed, periodic prepayments for members’ coverage.

Healthcare provider
A provider of diagnostic, medical, and surgical care as well as the services or supplies related to the health of an individual and any other person or organization that issues reimbursement claims or is paid for healthcare in the normal course of business.

Home Assessment Validation and Entry (HAVEN)
A type of data-entry software used to collect Outcome and Assessment Information Set (OASIS) data and then transmit them to state databases; imports and exports data in standard OASIS record format, maintains agency/patient/employee information, enforces data integrity through rigorous edit checks, and provides comprehensive online help.

Home health agency (HHA)
A program or organization that provides a blend of homebased medical and social services to homebound patients and their families for the purpose of promoting, maintaining, or restoring health or of minimizing the effects of illness, injury, or disability.

Home health prospective payment system (HH PPS)
The reimbursement system developed by the Centers for Medicare and Medicaid Services to cover home health services provided to Medicare beneficiaries.

Home health resource group (HHRG)
A classification system with 80 home health episode rates established to support the prospective reimbursement of covered home care and rehabilitation services provided to Medicare beneficiaries during 60-day episodes of care.

Hospice
An interdisciplinary program of palliative care and supportive services that addresses the the physical, spiritual, social, and economic needs of terminally ill patients and their families.

Hospital-acquired conditions
Select, reasonably preventable conditions for which hospitals do not received additional payment when one of the conditions was not present on admission.

Hospitalization insurance (Medicare Part A)
A federal program that covers the costs associated with inpatient hospitalization as well as other healthcare services provided to Medicare beneficiaries.

Indemnity plans
Health insurance coverage provided in the form of cash payments to patients or providers.

Independent practice association (IPA)
An open-panel health maintenance organization that provides contract healthcare services to subscribers through independent physicians who treat patients in their own offices; the HMO reimburses the IPA on a capitated basis; the IPA may reimburse the physicians on a fee-for-service or a capitated basis.

Indian Health Services (IHS)
The federal agency within the Department of Health and Human Services that is responsible for providing federal healthcare services to American Indians and Alaska natives.

Inpatient psychiatric facility (IPF)
A healthcare facility that offers psychiatric medical care on an inpatient basis; CMS established a prospective payment system for reimbursing these types of facilities using the current DRGs for inpatient hospitals.

Inpatient rehabilitation facility (IRF)
A healthcare facility that specializes in providing services to patients who have suffered a disabling illness or injury in an effort to help them achieve or maintain their optimal level of functioning, self-care, and independence.

Inpatient Rehabilitation Validation and Entry (IRVEN)
A computerized data-entry system used by inpatient rehabilitation facilities.

Insured
A holder of a health insurance policy.

Insurer
An organization that pays healthcare expenses on behalf of its enrollees.

Integrated delivery system (IDS)
A system that combines the financial and clinical aspects of healthcare and uses a group of healthcare providers, selected on the basis of quality and cost management criteria, to furnish comprehensive health services across the continuum of care.

Integrated provider organization (IPO)
An organization that manages the delivery of healthcare services provided by hospitals, physicians (employees of the IPO), and other healthcare organizations (for example, nursing facilities).

Long-term care hospital (LTCH)
A hospital with an average length of stay of 25 days or more.

Low-utilization payment adjustment (LUPA)
An alternative (reduced) payment made to home health agencies instead of the home health agencies instead of the home health resource group reimbursement rate when a patient receives fewer than four home care visits during a 60-day episode.

Major diagnostic category (MDC)
Under diagnosis-related group (DRGs), one of 25 categories based on single or multiple organ systems into which all diseases and disorders relating to that system are classified.

Major medical insurance
Prepaid healthcare benefits that include a high limit for most types of medical expenses and usually require a large deductible and sometimes place limits on coverage and charges (for example, room and board).

Managed care
1. Payment method in which the third-party payer has implemented some provisions to control the costs of healthcare while maintaining quality care. 2. Systematic merger of clinical, financial, and administrative processes to manage access, cost, and quality of healthcare.

Management service organization (MSO)
An organization, usually owned by a group of physicians or a hospital, that provides administrative and support services to one or more physician group practices or small hospitals.

Medicaid
An entitlement program that oversees medical assistance for individuals and families with low incomes and limited resources; jointly funded between state and federal governments.

Medical foundation
Multipurpose, nonprofit service organization for physicians and other healthcare providers at the local and county level; as managed care organizations, medical foundations have established preferred provider organizations, exclusive provider organizations, and management service organizations, with emphases on freedom of choice and preservation of the physician-patient relationship.

Medically needy option
A option in the Medicaid program that allows states to extend eligibility to persons who would be eligible for Medicaid under one of the mandatory or optional groups but whose income and/or resources fall above the eligibility level set by their state.

Medicare
A federally funded health program established in 1965 to assist with the medical care costs of Americans 65 years of age and older as well as other individuals entitled to Social Security benefits owing to their disabilities.

Medicare Advantage (Medicare Part C)
Optional managed care plan for Medicare beneficiaries who are entitled to Part A, enrolled in Part B, and live in an area with a plan; types include health maintenance organization, point-of-service plan, preferred provider organization, and provider-sponsored organization; formerly Medicare+Choice.

Medicare carrier
A health plan that processes Part B claims for services by Physicians and medical suppliers (for example, the Blue Shield plan in a state).

Medicare fee schedule (MFS)
A feature of the resource-based relative value system that includes a complete list of the payments Medicare makes to physicians and other providers.

Medicare severity diagnosis-related groups (MS-DRGs)
The U.S. government’s 2007 revision of the DRG system, the MS-DRG system better accounts for severity of illness and resource consumption.

Medicare Summary Notice (MSN)
A summary sent to the patient from Medicare that summarizes all services provided over a period of time with an explanation of benefits provided.

Medigap
A private insurance policy that supplements Medicare coverage.

National conversion factor (CF)
A mathematical factor used to convert relative value units into monetary payments for services provided to Medicare beneficiaries.

National Correct Coding Initiative (NCCI)
A series of code edits on Medicare Part B claims.

National Uniform Billing Committee (NUBC)
The national group responsible for identifying data elements and designing the CMS-1500.

Network model health maintenance program
Program in which participating HMOs contract for services with one or more multispecialty group practices.

Network provider
A physician or another healthcare professional who is a member of a managed care network.

Nonparticipating providers
A healthcare provider who did not sign a participation agreement with Medicare and so is not obligated to accept assignment on Medicare claims.

Omnibus Budget Reconciliation Act (OBRA)
Federal legislation passed in 1987 that required the Health Care Financing Administration (now renamed the Centers for Medicare and Medicaid Services) to develop an assessment instrument (called the resident assessment instrument ) to standardize the collection of patient data from skilled nursing facilities.

Outpatient code editor (OCE)
A software program linked to the Correct Coding Initiative that applies a set of logical rules to determine whether various combinations of codes are correct and appropriately represent the services provided.

Outpatient prospective payment system (OPPS)
The Medicare prospective payment system used for hospital-based outpatient services and procedures that is predicated on the assignment of ambulatory payment classifications.

Out-of-pocket expenses
Healthcare costs paid by the insured (for example, deductibles, copayments, and coinsurance) after which the insurer pays a percentage (often 80 or 100 percent) of covered expenses.

Packaging
A payment under the Medicare outpatient prospective payment system that includes items such as anesthesia, supplies, certain drugs, and the use of recovery and observation rooms.

Partial hospitalization
A term that refers to limited patients stays in the hospital setting, typically as part of a transitional program to a less intense level of service; for example, psychiatric and drug and alcohol treatment facilities that offer services to help patients reenter the community, return to work, and assume family responsibilities.

Payer of last resort
A Medicaid term that means that Medicare pays for the services provided to individuals enrolled in both Medicare and Medicaid until Medicare benefits are exhausted and Medicaid benefits begin.

Payment status indicator (PSI)
An alphabetic code assigned to CPT/HCPCS codes to indicate whether a service or procedure is to be reimbursed under the Medicare outpatient prospective payment system.

Per member per month (PMPM)/Per patient per month (PPPM)
A type of managed care arrangement by which providers are paid a fixed fee in exchange for supplying all of the healthcare services an enrollee needs for a specified period of time (usually one month but sometimes one year)

Physician-hospital organization (PHO)
An integrated delivery system formed by hospitals and physicians (usually through managed care contracts ) that allows for cooperative activity but permits participants to retain some level of independence.

Point-of-service (POS) plan
A type of managed care plan in which enrollees are encouraged to select healthcare providers from a network of providers under contract with the plan but are also allowed to select providers outside the network and pay a larger share of the cost.

Policyholder
An individual or entity that purchases healthcare insurance coverage.

Preferred provider organization (PPO)
A managed care arrangement based on a contractual agreement between healthcare providers (professional and/or institutional) and employers, insurance carriers, or third-party administrators to provide healthcare services to a defined population or enrollees at established fees that may or may not be a discount from usual and customary or reasonable charges.

Premium
Amount of money that a policyholder or certificate holder must periodically pay an insurer in return for healthcare coverage.

Present on admission (POA)
A condition present at the time of inpatient admission.

Principal diagnosis
The disease or condition that was present on admission, was the principal reason for admission, and received treatment or evaluation during the hospital stay or visit.

Principal procedure
The procedure performed for the definitive treatment of a condition (as opposed to a procedure performed for diagnostic or exploratory purposes) or for care of a complication.

Professional component (PC)
1. The portion of a healthcare procedure performed by a physician. 2. A term generally used in reference to the elements of radiological procedures performed by a physician.

Programs of All-Inclusive Care for the Elderly (PACE)
A state option legislated by the Balanced Budget Act of 1997 that provides an alternative to institutional care for individuals 55 years old or older who require the level of care provided by nursing facilities.

Public assistance
A monetary subsidy provided to financially needy individuals.

Relative value unit (RVU)
A number assigned to a procedure that describes its difficulty and expense in relationship to other procedures.

Remittance advice (RA)
An explanation of payments (for example, claim denials) made by third-party payers.

Resident Assessment Validation and Entry (RAVEN)
A type of data-entry software developed by the Centers for Medicare and Medicaid Services for long-term care facilities and used to collect Minimum Data Set assessments and to transmit data to state databases.

Resource Utilization Groups, Version III (RUG-III)
A case-mix-adjusted classification system based on Minimum Data Set assessments and used by skilled nursing facilities.

Resource-based relative value scale (RBRVS)
A Medicare reimbursement system implemented in 1992 to compensate physicians according to a fee schedule predicted on weights assigned on the basis of the resources required to provide the services.

Respite care
A type of short-term care provided during the day or overnight to individuals in the home or institution to temporarily relieve the family home caregiver.

Retrospective payment system
Type of fee-for-service reimbursement in which providers receive recompense after health services have been rendered.

Revenue codes
A three- or four-digit number in the chargemaster that totals all items and their charges for printing on the form used for Medicare billing.

Skilled nursing facility prospective payment system (SNF PPS)
A per-diem reimbursement system implemented in July 1998 for costs (routine, ancillary, and capital) associated with covered skilled nursing facility services furnished to Medicare Part A beneficiaries.

Social Security Act of 1935
The federal legislation that originally established the Social Security program as well as unemployment compensation, and support for mothers and children; amended in 1965 to create the Medicare and Medicaid programs.

Staff model health maintenance organization
A type of health maintenance that employs physicians to provide healthcare services to subscribers.

State Children’s Health Insurance Program (SCHIP)
The children’s healthcare program implemented as part of the Balanced Budget Act of 1997; sometimes referred to as the Children’s Health Insurance Program, or CHIP.

State workers’ compensation insurance funds
Funds that provide a stable source of insurance coverage for work-related illnesses and injuries and serve to protect employers from underwriting uncertainties by making it possible to have continuing availability of workers’ compensation coverage.

Supplemental medical insurance (Medicare Part B)
A voluntary medical insurance program that helps pay for physicians’ services, medical services, and supplies not covered by Medicare Part A.

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
The federal legislation that modified Medicare’s retrospective reimbursement system for inpatient hospital stays by requiring implementation of diagnosis-related groups and the acute care prospective payment system.

Technical component (TC)
The portion of radiological and other procedures that is facility based or nonphysician based (for example, radiology films, equipment, overhead, endoscopic suites, and so on)

Temporary Assistance for Needy Families (TANF)
A federal program that provides states with grants to be spent on time-limited case assistance for low-income families, generally limiting a family’s lifetime cash welfare benefits to a maximum of five years and permitting states to impose other requirements.

Traditional fee-for-service reimbursement
A reimbursement method involving their-party payers who compensate providers after the healthcare services have been delivered; payment is based on specific services provided to subscribers.

TRICARE
The federal healthcare program that provides coverage for the dependents of armed forces personnel and for retirees receiving care outside military treatment facilities in which the federal government pays a percentage of the cost; formerly known as the Civilian Health and Medical Program of the Uniformed Services.

TRICARE Extra
A cost-effective preferred provider network TRICARE option in which costs for healthcare are lower than for the standard TRICARE program because a physician or medical specialist is selected from a network of civilian healthcare professionals who participate in TRICARE Extra.

TRICARE Prime
A TRICARE program that provides the most comprehensive healthcare benefits at the lowest cost of the three TRICARE options, in which military treatment facilities serve as the principal source of healthcare and a primary care manager is assigned to each enrollee.

TRICARE Standard
A TRICARE program that allows eligible beneficiaries to choose any physician or healthcare provider, which permits the most flexibility but may be the most expensive.

Uniform Bill-04 (UB-04)
The single standardized Medicare form for standardized uniform billing, schedules for implementation in 2007 for hospital inpatients and outpatients; this form will also be used by the major third-party payers and most hospitals.

Unbundling
The practice of using multiple codes to bill for the various individual steps in a single procedure rather than using a single code that includes all of the steps of the comprehensive procedure.

Upcoding
The practice of assigning diagnostic or procedural codes that represent higher payment rates than the codes that actually reflect the services provided to patients.

Usual, customary, and reasonable (UCR) charges
Method of evaluating providers’ fess in which the third-party payers pays for fees that are “usual” in that provider’s practice; “customary” in the community; and “reasonable” for the situation.

Veterans Health Administration
The component of the U.S. Department of Veterans Affairs that implements the medical assistance program of the VA.

Voluntary Disclosure Program
A program unveiled in 1998 by the Office of the Inspector General (OIG) that encourages healthcare providers to voluntarily report fraudulent conduct affecting Medicare, Medicaid, and other federal healthcare programs.

Workers’ compensation
The medical and income insurance coverage for certain employees in unusually hazardous jobs.

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TRICARE government health program serving dependents of active-duty service members, military retirees and their families, some former spouses, and survivors of deceased military members. Civilian Health and Medical program of the Uniformed Services (CHAMPUS) TRICARE replaced this program. TRICARE is …

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