GME Managed Care
Overview of Healthcare in the State of Michigan
Managed Care: What Is It's Definition Today?
Evidence-Based Medicine
Disease Management
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Age/gender adjustment: Provision of care at extremes of age and to fertile women is more expensive so capitation rates need to be adjusted to account for this.

Authorization: Get approval of the insurer for medical services.

Bed days per 1000 or BDPK: the number of days spent in the hospital by a group of 1000 patients over the course of a year. Ran around 800 20 years ago. Now less than 300.

Capitation: Fixed monthly payment based on the number of patients assigned to a doctor by an HMO. Doctor provides any needed professional services for this payment. Doctor paid same no matter how much or little s/he sees patient. Typically adjusted for age and sex to reflect typical needs of the patient.

Carve-outs: areas that get their own "sub-capitation" in return for agreeing to provide any services sent their way.

  • Lab
  • Mental health

Discount FFS: Fee for service paid at below usual levels. Used in PPO’s

HMO: Health Maintenance Organization. Typically, pays a doctor a flat amount each month based on how many patients from the HMO are assigned to him/her.

  • Staff HMO: the practitioner is employed by the HMO.
  • Group Model: the HMO contracts with a practicing group of physicians to send HMO patients to them
  • IPA: a group of doctors who are in separate practices who band together for negotiating with an insurer.

Indemnity: Payment for services rendered. Each encounter with the patient generates a charge in the expectation that the provider will be paid. Also known as Fee for Service.

In/out of network: Insurer arranges fair or discounted fees with hospitals and specialists for their services. These are in-network. Out of network specialists or hospitals typically charge more and may not be covered by the insurer. In this case, the patient may have to pay.

MCO: Managed Care Organization; any insurance or organization that restricts use of health care resources by a patient, i.e., a patient cannot use unlimited discretion in obtaining care. This includes HMOs and PPOs.

NCQA: Voluntary organization that monitors the quality of care and levels of patient satisfaction among managed care plans.

PHO: Physician Hospital Organization. A PO joins with the hospital to have bargaining clout with insurers.

PMPM: Per member per month. Amount paid by an HMO for services for any member in a particular month. This could be the primary care capitation or the amount paid for other services.

PO: Physician Organization. A group of physicians, typically the medical staff of a hospital, band together to gain bargaining clout with insurers.

PPO: Preferred Provider Organization. Doctor accepts a discount in his/her payments in return for being in a limited group of doctors. Supposed gets more patients in return for the smaller payments. Most prevalent insurance model.

Provider: entity providing care. Typically, a doctor but could be other practitioners or facilities.

Risk: The risk of losing money if patients require high levels of services. Capitated doctors are at risk since they cannot bill for additional services.

Subscriber: the patient or the entity that pays for the insurance for patients.

Withhold/risk sharing: Premium moneys held by the insurer to pay for services needed outside of the primary care doctors’ offices. If these pools have leftover funds, the insurer will share part of the surplus with the physician.

  • Hospital: pays the nonphysician costs of hospitalization.
  • Specialty: reimburses the specialists when they see authorized referrals.
  • Ancillary: pays for equipment (like wheelchairs) lab and imaging.
  • Pharmacy: pays for prescription drugs.
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