Managed Care Glossary of Terms

(PMPM) Per Member Per Month
Applies to a revenue or cost for each enrolled member each month. The number of units of something divided by member months. Often used to describe premiums or capitated payments to providers, but can also refer to the revenue or cost for each enrolled member each month. Many calculations, other than cost or premium, use PMPM as a descriptor.

(PTMPY) Per Thousand Members Per
A common way of reporting utilization. The most common example of hospital utilization, expressed as days PTMPY.

Performance Standards
Standards set by the MCO or payer which the provider will need to meet in order to maintain its credentialing, renew its contract or avoid penalty. These will vary from payer to payer, and contract to contract. Standards an individual provider is expected to meet, especially with respect to quality of care. The standards may define volume of care delivered per time period. Thus, performance standards for obstetrician/gynecologist may specify some or all of the following office hours and office visits per week or month, on-call days, deliveries per year, gynecological operations per year, etc.

Physician Attestation
The requirement that the attending physician certify, in writing, the accuracy and completion of the clinical information used for DRG assignment.

(PCR) Physician Contingency Reserve
Portion of a claim deducted and held by a health plan before payment is made to a capitated physician. Revenue that is withheld from a provider's payment to serve as an incentive for providing less expensive service. A typical withhold is approximately 20 percent of the claim. This amount can be paid back to the provider following analysis of his/her practice and service utilization patterns. See also Withhold.

(CPT) Physician Current Procedural Teminology
List of services and procedures performed by providers, with each service/procedure having a unique 5-digit identifying code. CPT is the health care industry's standard for reporting of physician services and procedures. Used in billing and records.

Physician Organization
This term describes physician linkages and alliances that allow physicians to manage risk and capitation. Information systems, physician relationships, and financial integration allow these organizations to be more integrated than the traditional solo practice or IPA relationship between healthcare providers and/or managed care organizations that are working to develop a "seamless" continuum of healthcare services.

Physician Payment Review Commission
Established by Congress in 1986 to advise it on reforms of Medicare policies for paying physicians. Submits a report to Congress annually.

(PPMC) Physician Practice Management Company
A company that provides management and administrative support, often with capital for clinical expansion. The usual management fee is 15-30% of net revenue minus the non-provider related clinic expenses.

(PHO) Physician-Hospital Organization
An organization representing hospitals and physicians as an agent. A legal entity formed by a hospital and a group of physicians to further mutual interests and to achieve market objectives. A PHO generally combines physicians and a hospital into a single organization for the purpose of obtaining payer contracts. A contracted arrangement among physicians and hospital(s) wherein a single entity, the PHO, agrees to provide services to insurers' subscribers. The PHO serves as a collective negotiating and contracting unit. A PHO may be structured to share the risk of contracting between hospital(s) and doctors. PHOs may also own, operate or subcontract MSOs, health plans or providers. A PHO can manage risk. It is typically owned and governed jointly by a hospital and shareholder physicians.

Plan Administration
A term often used to describe the management unit with responsibility to run and control a managed care plan - includes accounting, billing, personnel, marketing, legal, purchasing, possibly underwriting, management information, facility maintenance, servicing of accounts. This group normally contracts for medical services and hospital care.

Plan Document
The document which contains all of the provisions, conditions, and terms of operation of a pension or health or welfare plan. This document may be written in technical terms as distinguished from a summary plan description (SPD) which, under ERISA, must be written in a manner calculated to be understood by the average plan participant.

Play or Pay
Proposal to make employers provide health care coverage for employees or pay a special government tax.

(POS) Point-of-Service Plan
Managed care plan which specifies that those patients who go outside of the plan for services may pay more out of pocket expenses. A health insurance benefits program in which subscribers can select between different delivery systems (i.e., HMO, PPO and fee-for-service) when in need of health care services and at the time of accessing the services, rather than making the selection between delivery systems at time of open enrollment at place of employment. Typically, the costs associated with receiving care from the "in network" or approved providers are less than when care is rendered by non-contracting providers. Or the costs are less if provided by approved providers in either the HMO or PPO rather than "out of network" or "out of plan" providers. This is a method of influencing patients to use certain providers without restricting their freedom of choice too severely.

Pooling
Combining risks for groups into one risk pool. See Also Risk.

Portability
Requirement that health plans guarantee continuous coverage without waiting periods for persons moving between plans. This is a new protection for beneficiaries involving the issuance of a certificate of coverage from previous health plan to be given to new health plan. Under this requirement, a beneficiary who changes jobs is guaranteed coverage with the new plan, without a waiting period or having to meet additional deductible requirements. Primarily, this refers to the requirement that insurers waive any pre-existing condition exclusion for beneficiaries previously covered through other insurance.

PPS Inpatient Margin
A measure that compares DRG based operating and capital payments with Medicare-allowable inpatient operating and capital costs. It is calculated by subtracting total Medicare-allowable inpatient operating and capital costs from total PPS operating and capital payments and dividing by total PPS operating and capital payments.