Consumer Addiction Healthcare Definitions and Terminology

Consumer Addiction Healthcare Definitions and Terminology

Access: An individual's ability to obtain needed health care services. Barriers to access can be financial,
geographic, organizational, and sociological.

Accreditation: A process whereby a recognized external organization determines that a hospital, health
care plan, provider network, or other service delivery system complies with established standards.

Actuarial Study: Analyses of past health services utilization data and other statistical information to
estimate future utilization and costs for specific groups and to establish insurance premiums and/or
provider payments.

Acute Care: Services provided to protect the decompensating patient and/or resolve his/her urgent and
severe problems so that he/she can return as quickly as possible to the previous level of function.

Adjusted Average Per Capita Cost (AAPCC): The basis of reimbursement to health' maintenance
organizations (HMOs) under Medicare risk contracts; the average monthly amount received per
enrollee is currently calculated as 95 percent of the average costs to deliver medical care in the
fee-for-service sector.

Administrative Capitation: Establishment of per member payments for services required to administer
a health care delivery system, calculated by dividing the projected costs of administrative services
by the projected number of enrollees, in order to tie an MCO's risk and payments to enrollment.

Administrative Services Only (ASO): A type of contract in which the contracted organization provides
only administrative or management services (e.g., claims processing, utilization review) but not
direct treatment services, which are provided by the purchaser or by another organization.

Adverse Selection: When a payer has a disproportionately large share of high-risk enrollees (i.e., those
with high service use and high costs) due to offering relatively generous benefits for certain types
of care; to avoid adverse selection, some plans limit coverage of certain services.

Agency for Health Care Policy and Research (AHCPR): A U.S. Public Health Service agency that is
the Federal Government's focal point for reviewing health services research in order to enhance
the quality, appropriateness, and effectiveness of health care services.

Aid to Families With Dependent Children (AFDC): A State-based Federal cash assistance program for
low-income families that was abolished in 1997 by Congress and replaced by the Transitional
Assistance for Needy Families Program.

Alcohol and Other Drug (AOD) Use Disorders: A term used to describe substance use disorders, which
is designed to emphasize that alcohol is indeed a drug. Related terms include substance use
disorders, addictive disorders, chemical dependency, and substance abuse.

All-Payer System: A health care delivery system in which prices for health services and payment
methods are the same, regardless of who is paying, to minimize the shifting of costs from one
payer to another.

Allowable Costs: Charges for care that are reimbursable as predetermined by the payer/purchaser.

Ambulatory Care: Health care services provided in an outpatient setting (e.g., a physician's office, clinic,
or community mental health center) rather than an inpatient setting.

American Managed Behavioral Healthcare Association (AMBHA): A trade association, founded in
1994, of managed behavioral health care companies that manage care and that are not primarily
engaged in delivering clinical services.

Americans With Disabilities Act: A federal law enacted in July 1990 that prohibits discrimination on
the basis of disability in employment, programs, and services provided by State and local
governments, goods and services provided by private companies, and in commercial facilities.

Ancillary Services: Supplemental hospital services other than room and board (e.g., laboratory tests and
x-rays).

Any Willing Provider Law: A law that requires managed care organizations to contract with any
interested health care provider in the geographic area who is able to meet contractual terms and
conditions for service delivery.

Average Length of Stay (see also Length of Stay): The mean length of an inpatient stay for a specific
patient group, population, or time period; calculated by dividing the total number of treatment
days by the number of patients discharged. The term also applies to outpatient services; it is
calculated by summing the number of visits and dividing by number of patients discharged.

Behavioral Health, Behavioral Health Care: Health in the areas of mental and emotional well-being
and the use of alcohol and other drugs (as opposed to physical or somatic health), and the care
provided for problems in these areas. Services provided for conditions related to mental health
and/or AOD disorders.

Behavioral Health Care Firm: A specialized, managed care organization that manages mental health
and/or substance abuse care rather than care for physical illnesses. Also referred to as managed
behavioral healthcare organization (MBHO).

Benchmark (see also Performance Goal, Performance Measure): A level of achievement of a
performance goal that generally represents an industry-best standard.

Beneficiary (see also Consumer, Enrollee, Member, Subscriber): An individual who receives benefits
from or is covered by an insurance policy or other health care financing program.

Benefit Package: A set of health care services that a payer is legally obligated to pay for either by
contract, law, or regulation. The package usually also specifies excluded services, limitations on covered services, and the means by which medical necessity is determined.

Beta Risk: A form of direct financial risk undertaken by a health care organization when it assumes that
the cost of patients with catastrophic illnesses will be more than adequately made up for by fees
received for the remaining covered population.

Bundled Services: Similar individual services that can be billed separately or in a "bundle"; bundled
services may be billed at a greater or lesser rate than the total of the individual service charges.

Capitation, Capitation Fee, Capitation Payment (see also Full Capitation, Partial Capitation, Per
Capita): A method of prospective payment in which a fixed amount is paid to an MCO, a health
plan, or a provider for each enrollee or each person served, without regard to the actual number
or nature Of services provided in a set period of time or defined episode. A capitation fee is
usually expressed as a per member-per month rate. The terms "soft capitation" and "hard
capitation" are sometimes used to describe partial- and full-risk situations, respectively.

Caps on Profits (see also Risk Corridors): A contractual limitation on the amount of profit and/or loss
that an MCO can realize in a risk-transfer system; designed either to minimize an MCO's financial
incentives to excessively reduce service utilization or to limit their financial risk in high utilization
situations. Risk corridors can be set up to limit profit and reduce risk (e.g., in a too high utilization
situation, the purchaser or reinsurer might pay; in a too low utilization, the MCO might pay the
purchaser back).

Carve-Out: An arrangement whereby a particular type of health care service, such as behavioral health
care, is managed and/or provided separately from the total health care benefit package, generally
so that the payer can maintain greater control of the costs. Services for certain populations or
patient groups are also sometimes "carved out" of the overall package.

Case Management (see also Intensive Case Management, Utilization Management): Coordination
and monitoring of an individual patient's treatment by a third party, either by a single case
manager or a case management team. The goals of case management are to ensure that a patient
receives and makes the best use of needed services and adheres to the treatment plan, so that he
or she maintains a stable life in the community and avoids costly care, such as inpatient treatment.
Case management can occur at the provider level or the payer level.

Case Mix: The overall clinical profile of a particular group or subpopulation of consumers, determined
by assessing such factors as diagnosis, severity of illness, and service utilization patterns; case mix
is a key variable in establishing capitation rates and estimating costs.

Case Rate: A fixed, per-patient rate for delivery of specific procedures or services to specified types of
consumers, such as persons with serious and persistent mental illness (SPMI), which are often
time-limited (e.g., per episode, per year).

Catchment Area (see also Service Area): A geographically defined service area for a health plan or
provider delineated by such factors as population distribution, natural geographic boundaries, and
transportation accessibility; all residents of the area are usually eligible for services, although
additional eligibility criteria may be established.

"Cherry Picking": A practice employed by some managed care plans whereby they compete for the
healthiest people and try to avoid enrolling people with the most expensive treatment needs.

Claim: A request by a provider to a payer for reimbursement for benefits/services delivered.

Cost-Plus Reimbursement: Similar to cost-based reimbursement with the addition of a profit, or
earnings factor, to the reimbursement for profit-making organizations.

Cost Sharing (see also Copayment, Coinsurance, Deductible): A feature of a benefit plan that
requires enrollees to pay some portion of the costs for services in an attempt to control utilization
and to lower premiums.

Covered Days: Maximum number of in hospital or residential days for which a payer will reimburse a
provider for services to an individual; days may be limited based on an episode of illness, a year,
a lifetime, or the length of time the beneficiary has been covered by the contract.

Credentialing: The process of validating the qualifications of a licensed independent practitioner to
provide services in a health care network or its components; involves evaluating and verifying the
individual's license, education, training, experience, and ability to perform the services requested.

Cultural Competence: A set of congruent behaviors, approaches, and policies in a system, agency, or
among professionals that enable the system, agency, or professional group to work effectively in
cross-cultural situations; an ability to meet the needs of clients and patients from diverse cultural
backgrounds.

Current Procedural Terminology (CPT: Five-digit codes assigned to services and procedures to
standardize claims processing and data analysis.

Customary, Prevailing, and Reasonable (CPR): The current method of paying physicians under
Medicare. Payment for a service is limited to the lowest among the following: (1) the physician's
billed charge for the service, (2) the physician's customary charge for the service, and (3) the
prevailing charge for that service in the community.

Deductible (see also Coinsurance, Copayment, Cost Sharing): The expenses that must be incurred
by a consumer before a payer will assume liability for all or part of the remaining cost of covered
services; usually tied to a period of time (e.g., $100 per calendar year or $200 per episode of
illness).

Deeming: The acceptance of another accreditation organization's competency standards and/or review
process in place of one's own in some or all areas.

Default Enrollment: A process used by an MCO to assign an individual to a primary care provider if the
individual has not selected one within a specified period of time.

Dependents: Generally, the spouse and children of a beneficiary, or other persons as defined by the
contract.

Diagnosis-Related Group (DRG): Classification of patients by diagnosis or other criteria (such as
treatment procedure) into groups for the purpose of determining a prospective payment for each
group, based on the premise that treatment of similar diagnoses will generate similar costs

Direct Contracting (see also Physician-Hospital Organization): A direct, contractual relationship
between a purchaser and a provider or provider system in which no intermediary manager of care
is involved.

Direct Payment Subscribers: Persons enrolled in a plan who make individual premium payments
directly to the payer rather than through a group. Rates of payment are generally higher, and
benefits may not be as extensive.

Disallowance: A payer's denial of payment for all or a portion of claimed amount.

Discounted Fee-for-Service Payment: An agreed-upon reimbursement rate for a specific service that
is usually less than the provider's full fee and based on an expectation of volume.

Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT: A Medicaid program
mandated by Federal law for eligible children under age 21 covering any medically necessary
service allowable under Medicaid regulations; the law requires all States (1) to have a system in
place to provide active outreach, screening, and assistance in obtaining appropriate treatments for
physical and emotional behavioral disorders and (2) to provide health care treatments and other
measures necessary to adequately address these disorders.

Employee Retirement Income Security Act (ERISA): A 1974 Federal law that established new
standards and reporting and disclosure requirements for self-insured employers and their health
benefit programs; self- funded health benefit plans operating under ERISA are exempt from State
insurance laws and regulations.

Enrollee (see also Beneficiary, Consumer, Member, and Subscriber): An individual enrolled in a health
plan or a dependent of an enrolled individual, who is also covered by the plan.

Episode of Care: All treatments provided for a specific condition over a period of time (e.g., an episode
of substance abuse treatment is all services provided to a patient after a detoxification admission
with a gap between services lasting longer than 90 days); used to analyze service costs, quality,
and utilization patterns, and may be used to control the rate of payment.

Essential Community Providers (ECPs): Generally, not-for-profit public behavioral health care
community-based agencies, which are required to be included in an MCO's provider network,
usually with a defined transition period. This permits beneficiaries who had received grant-funded
services to continue to receive services from the same provider in a managed care system.

Exclusive Provider Organization (EPO): A closed panel of providers that beneficiaries must use to
receive covered benefits; some exceptions are usually included for emergency and out-of-area
services.

Exclusivity Clause: A legal provision binding a provider to contract only with a single health plan.

Ex Parte Communication: By one party. Communication of one party, without an adversary's being
notified or given an opportunity to be heard.

Experience Rating: A method of establishing payer premiums or capitation rates based on historical
utilization data and characteristics of potential subscribers, such as age, gender, and health status,
that are believed to affect utilization and costs.

Explanation of Benefits: A communication to a beneficiary explaining which claims submitted have
been fully paid, partially paid, or not paid, along with an explanation for each action.

Federally Qualified Health Plans: Health maintenance organizations (HMOs) that have applied for
qualification and have met a set of standards established by the HMO Act of 1973 and its many
amendments.

Fee-for-Service Payment: A traditional reimbursement method that involves paying fees to providers
for procedures or services for beneficiaries after those services have been delivered, often with
a maximum based on what is a usual, customary, and reasonable fee. A plan based on this form
of reimbursement is sometimes referred to as an indemnity health plan (compare Capitation).

First-Dollar Coverage: Coverage for services in which the beneficiary pays no deductible, although a
copayment or coinsurance may be required.

Fixed Fee (see Capitation, Prospective Payment System): A method of reimbursement to an MCO
or a provider for administrative services, contract deliverables, or some other service unit, usually
paid monthly; such fees are often established through competitive bidding and through budget
negotiations and remain fixed for a specified time, regardless of the actual costs.

Freedom of Choice (see also Section 1915(b) Medicaid Waiver): A Medicaid term describing the
requirement that a State must ensure that beneficiaries are generally free to obtain services from
any qualified provider; based on section 1902(a)(23) of the Social Security Act.

Full Capitation (see also Capitation and Partial Capitation): A payment method in which the health
care entity is prepaid a fixed amount for each enrollee for providing all contractually defined
administrative and covered clinical services; under this method the health care entity bears the
financial risk for all services included in the benefit package.

Full Utilization Risk (see also Risk-Bearing Entity, Risk Sharing): Risk-transfer arrangement in
which the payer transfers to the service provider full responsibility for the potential rewards and
costs of service utilization.

Gatekeeper (see also Primary Care Case Management): An individual at the entry point of treatment,
such as a utilization reviewer at an MCO or a primary care provider, who is responsible for
initially assessing a consumer's needs, guiding the consumer to appropriate services, and
restricting access to, or reimbursement for services, judged to be not medically necessary.

Global Budgets: A method of financing managed care based on a fixed, historically determined overall
budget to serve the eligible population, often used when MCO’s are unable to predict or reliably
determine the number of eligible individuals or the likely number of enrollees; global budgets are
often used to purchase a fixed amount of treatment capacity from providers to control the risk of
overspending.

Group Model HMO (see Health Maintenance Organization)