Managed Care Glossary of Terms

Approval
A term used extensively in managed care and, to many, implies the primary process of "managing" managed care. Approval usually is used to describe treatments or procedures that have been certified by utilization review. Can also refer to the status of certain hospitals or doctors, as members of a plan. Can describe benefits or services which will be covered under a plan. Generally, approval is either granted by the managed care organization (MCO), third party administrator (TPA) or by the primary care physician (PCP), depending on the circumstances.

Approved Charge
Limits of expenses paid by Medicare in a given area of covered service. Charges approved by payment by private health plans. Items that are likely to reimbursed by the insurance company.

Approved health care facility, hospital
A facility or program authorized to provide health services and allowed by a given health plan to provide services stipulated in contract.

ASP
Application Service Provider: These third party groups distribute and manage software-based services and solutions for customers.

Assignment of Benefits
Method used when a claimant directs that payment be made directly to the health care provider by the health plan.

Assisted Living
Broad range of residential care services, but does not include nursing services. Normally lower in cost than nursing homes.

Audit of Provider Treatment or Charges
A qualitative or quantitative review of services rendered or proposed by a health provider. The review can be carried out in a number of ways: a comparison of patient records and claim form information, a patient questionnaire, a review of hospital and practitioner records, or a pre- or post-treatment clinical examination of a patient. Some audits may involve fee verification. Something we had better get used to being subjected to since this is usually first type or "first generation" managed care approach.

Autoassignment
A term used with Medicaid mandatory managed care enrollment plans. Medicaid recipients who do not specify their choice for a contracted plan within a specified time frame are assigned to a plan by the state.

ALOS) Average Length of Stay
Refers to the average length of stay per inpatient hospital visit. Figure is typically calculated for both commercial and Medicare patient populations.

AWP) Average Wholesale Price
Commonly used in pharmacy contracting, the AWP is generally determined through reference to a common source of information. Average cost of a non-discounted item to a pharmacy provider by wholesale providers. Drug manufacturers commonly publish suggested wholesale prices.

Avoidable hospital condition
Medical diagnosis for which hospitalization could have been avoided if ambulatory care had been provided in a timely and efficient manner.