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Ambulatory Care: If care is determined in the doctor's office or surgical center without an overnight stay, it is considered ambulatory care.
Ambulatory Payment Classification (APC): The basic unit of payment in the Medicare Prospective Payment System for outpatient visits or procedures will be the APC. Under the APC system, outpatient services and procedures are classified for purchases of payment (similar to DRGs). The APC system classifies some 7,000 services and procedures into 346 procedures groups.
Ambulatory Surgical Center (ASC): An organization which provides surgical services on an outpatient basis for patients who do not need to occupy an inpatient, acute care hospital bed.
Authorization: As it applies to managed care, authorization is the approval of care, such as hospitalization. Pre-authorization may be required before admission takes place or care is given by non-HMO providers.

Balance Billing: The practice of a provider billing a patient for all charges not paid for by the insurance plan, even if those charges are above the plan's UCR or are considered medically unnecessary. Managed care plans and service plans generally prohibit providers from balance billing except for allowed co-payments, coinsurance, and deductibles. Such prohibition against balance billing may even extend to the plan's failure to pay at all (e.g., because of bankruptcy).

Centers for Medicare and Medicaid Services: The U.S. Government agency with responsibility for the administration of the Medicare and Medicaid programs. Prior to June 14, 2001, known as the Health Care Financing Administration (HCFA).
Certification: Certification is the official authorization for use of services.
Claims Review: The method by which an enrollee's health care service claims are reviewed before reimbursement is made. The purpose of this monitoring system is to validate the medical appropriateness of the provided services and to be sure the cost of service is not excessive.
COB (Coordination of Benefits): An agreement to prevent double payment for services when a subscriber has coverage from two or more sources. For example, a husband may be covered by Blue Cross and Blue Shield through work, and his wife may be covered by an HMO through her place of employment. The agreement determines which organization has primary responsibility for payment and which organization has secondary responsibility.
Coinsurance: A provision in a member's coverage that limits the amount of coverage by the plan to a certain percentage, commonly 80%. Any additional costs are paid by the member. This is characteristic of indemnity insurance plans and PPO plans. The coinsurance usually is about 20% of the cost of medical services after the deductible is paid.
Co-payment: That portion of a claim or medical expense that a member must pay out of pocket. Usually a fixed amount, such as $5 in many HMOs.
CPT-4 -- Current Procedural Terminology (4th edition): CPT is the abbreviation for current procedural terminology, a set of 5-digit codes that apply to medical services delivered. These codes are used by medical providers and insurance companies by which doctors are paid.
Current Procedural Technology (CPT): The coding system for physicians' services developed by the American Medical Association (AMA) and the basis for the HCPCs coding system.

Deductible: The portion of a subscriber's (or member's) health care expenses that must be paid by the subscriber before any insurance coverage applies, commonly $100 to $300. Common in insurance plans and PPOS, uncommon in HMOs. May apply only to the out-of-network portion of a point-of-service plan.
Diagnosis (Dx): The provider's determination of a patient's condition, sign, or symptom, using the ICD-9-CM coding system. See International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) Coding.
Diagnosis Code: The first of these codes is the ICD-9-CM diagnosis code describing the principal diagnosis (i.e. the condition established after study to be chiefly responsible for causing this hospitalization). The remaining codes are the ICD-9-CM diagnosis codes corresponding to additional conditions that coexisted at the time of admission, or developed subsequently, and which had an effect on the treatment received or the length of stay.
Direct Data Entry: Under HIPAA, this is the direct entry of data that is immediately transmitted into a health plan's computer.
Diagnosis-Related Groups (DRG): A statistical system of classifying any inpatient stay into groups for purposes of payment. This is the form of reimbursement that HCFA uses to pay hospitals for Medicare recipients. Also used by a few states for all payers and by some private health plans for contracting purposes. A standard flat rate per procedure is derived from this scale, which is paid by Medicare for their beneficiaries.
Durable Medical Equipment (DME): DME is any medical equipment that can usually withstand repeated use, is useable at home, and is not beneficial to a person without an illness or injury. Splinting, orthopedic bracing, and wheelchairs are good examples of DME.

EOB (Explanation of Benefits): A statement mailed to a covered insured person explaining how and why a claim was or was not paid: the Medicare version is called an EOMB.

Fee-For-Service (FFS): Refers to paying medical providers for individual services rendered. UCR, CPR and Fee Schedules are examples of fee for service systems.
Fee Schedule: A listing of the maximum fee that a health plan will pay for a certain service based on CPT billing codes. (Also referred to as Fee Maximums or as a Fee Allowance Schedule.)

HCFA - 1500: A claims form used by professionals to bill for services. Required by Medicare and generally used by private insurance companies and managed care plans.
Also, the U.S. Government agency with responsibility for the administration of the Medicare and Medicaid programs. Effective June 14, 2001, HCFA's name was changed to the Centers for Medicare and Medicaid Services (CMS).
(HCPCS) - HCFA Common Procedure Coding System: A three-level coding system, consisting of: CPT, National or Level 2, and Local or Level 3 codes. CPT and National Level 2 codes are recognized and used by the majority of health care insurers.
HMO (Health Maintenance Organization): Originally, an HMO was defined as an organization that provided health care to members in return for a preset amount of money. Today the term encompass two possibilities: a health plan that places at least some of the providers at risk for medical expenses, and a health plan that utilizes primary care physicians as gatekeepers (although there are some HMOs that do not).

ICD-9-CM - International Classification of Disease (9th revision): ICD9 is the abbreviation for international classification of diseases codified into 6-digit numbers. These codes are used by medical providers and insurance companies by which doctors are paid.

Length of Stay (LOS): This is the length or number of days that an individual stay in an inpatient setting.

Managed Health Care: A general term which refers to a system of health care delivery that tries to manage the costs of health care, the quality of that health care, and access to that care. Common elements include a restricted group of contracted providers, some limitations on benefits to subscribers who use non-contracted providers (unless authorized to do so), and some type of authorization system. Managed care is actually a spectrum of systems, ranging from so-called managed indemnity, through PPOs, Point of Service, open panel HMOs and closed panel HMOs.
Medicaid: A program financed jointly by the federal government and the states, that provides health coverage for mostly low income women and children as well as nursing home care for low-income elderly. Levels of funding and benefits and the portion of low-income people covered vary widely from state to state.
Medicare: The federal program providing health insurance for people aged 65 and older and for disabled people of all ages. Medicare part A covers hospitalization and is a compulsory benefit. Medicare part B covers outpatient services and is a voluntary service.
Medigap: Insurance provided by carriers to supplement the monies reimbursed by Medicare for medical services. Since Medicare pays physicians for services according to their own fee schedule, regardless what the physician charges, the individual may be required to pay the physician the difference between Medicare's reimbursable charge and the physician's fee. Medigap is meant to fill this gap in reimbursement, so that the Medicare beneficiary is not at risk for the difference.

Non-Participating Provider (Medicare): A provider who does not sign a Medicare participating agreement, and therefore is not obligated to accept assignment on all claims.

Participating Provider (PAR): A hospital, pharmacy, physician or ancillary services provider who has contracted with a health plan to provide medical services for a determined fee or payment.
PCP (Primary Care Physician): Sometimes referred to as a "gatekeeper," the primary-care physician is usually the first doctor a patient sees for an illness. This physician treats the patient directly, refers the patient to a specialist (secondary care), or admits the patient to a hospital. The primary-care physician can be a family physician, internist, pediatrician and occasionally obstetrician/gynecologist.
Per Diem Reimbursement: Reimbursement of an institution, usually a hospital, based on a set rate per day rather than on charges. Per Diem reimbursement can vary by service (e.g.. medical/surgical, obstetrics, mental health, and intensive care) or can be a set rate, regardless of intensity of services.
Pre-admission Certification: The practice of reviewing claims for hospital admission before the patient actually enters the hospital. This cost-control mechanism is intended to eliminate unnecessary hospital expenses by denying medically unnecessary admissions.
POS (Point of Service): A plan in which members do not have to choose the coverage for services until they need them. The most common use of the term applies to a plan that enrolls each member in both an HMO (or HMO-like) system and an indemnity plan. Occasionally referred to as an "HMO swing-out plan" or "out-of-plan benefits rider" to an HMO, or a "primary care PPO." These plans provide different benefits (e.g.. 100% coverage rather than 70%) depending on whether the member chooses to use the plan or go outside the plan of services. Dual choice refers to an HMO-like plan with an indemnity plan, and triple choice refers to the addition of a PPO to the dual choice. An archaic but still valid definition applies to a simple PPO, where members receive coverage at a greater level if they use preferred providers (albeit without a gatekeeper system) than if they choose not to do so.
PPO (Preferred Provider Arrangement): A plan that contracts with independent providers at a discount for services. The physicians in a PPO are paid on a fee-for-service schedule that is discounted, usually about 10% to 20% below normal fees. The panel of providers is limited and usually has some type of utilization review system associated with it. PPOs are often formed as a competitive reaction to HMOs by physicians who contract out with insurance companies, employers, or third-party administrators. A patient can use a physician outside of the PPO providers, but he or she will have to bear a bigger portion of the fee.
Prospective Payment System (PPS): Under Medicare, payments to hospitals for inpatient services are prospectively determined amounts based on the DRG assigned at discharge.
Pre-certification: Also known as pre-admission certification, pre-admission review and pre-cert. They also describe the process of obtaining authorization from the health plan for routine hospital admissions (inpatient or outpatient). Often involves appropriateness review against criteria and assignment of length of stay. Failure to obtain pre-certification often results in a financial penalty to either the provider or the subscriber.
Provider: Any supplier of services, i.e.. physician, pharmacist, case management firm, etc.

Resource Based Relative Value Scale (RBRVS): A government mandated relative value system implement January 1992 that is used for calculating national fee schedules for services provided to Medicare patients. Physicians are paid on relative value units (RVUs) for procedures and services. The three components of each established value are: work RVU, practice expense RVU, and malpractice expense RVU.

Self-Insured or Self-Funded Plan: A health plan where the risk for medical cost is assumed by the company rather than an insurance company or managed care plan. Under ERISA, self-funded plans are exempt from state laws and regulations such as premium taxes and mandatory benefits. Self-funded plans often contract with insurance companies or third party administrators to administer the benefits.
Skilled Nursing Facility (SNF): Typically an institution for convalescence or a nursing home. The skilled nursing facility provides a high level of specialized care for long-term or acute illness. It is an alternative to extended hospital stays or difficult home care.

TPA (Third Party Administrator): An organization outside the insuring organization that handles the administrative duties and sometimes utilization review. Third-party administrators are used by organizations that actually fund the health benefits but who delegate the administration of the plan to someone else.

UB-92: An updated version of UB-82, a uniform billing form required for submitting and processing claims for institutional providers. All services are billed in a standardized, consistent format on each invoice. It merges billing information with diagnostic codes, including almost all the elements from the uniform hospital discharge data set. The UB-92 is also referred to as the HCFA-1450 form.
UCR (Usual, Customary, or Reasonable): A method of profiling prevailing fees in an area and reimbursing providers on the basis of that profile. One common method is to average all fees and choose the 80th or 90th percentile. Sometimes this term is used synonymously with a fee allowance schedule when that schedule is set relatively high.
Utilization Review: A review by an HMO of the treatment patterns of particular providers to see how their usage of drugs, x-rays, lab tests and other services compares with their peers. Utilization Review affects the amount of income providers will relive from the HMO.