Managed Care Glossary of Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

PPS Operating Margin
A measure that compares PPS operating payments with Medicare-allowable inpatient operating costs. This measure excludes Medicare costs and payments for capital, direct medical education, organ acquisition, and other categories not included among Medicare-allowable inpatient operating costs. It is calculated by subtracting total Medicare-allowable inpatient operating costs from total PPS operating payments and dividing by total PPS operating payments.

PPS Year
A designation referring to hospital cost reporting periods that begin during a given Federal fiscal year, reflecting the number of years since the initial implementation of PPS. For example, PPS1 refers to hospital fiscal years beginning during Federal fiscal year 1984, which was the first year of PPS. For a hospital with a fiscal year beginning July 1, PPS 1 covers the period from July 1, 1984, through June 30, 1985. (See also Fiscal Year)

Practical Nurses
Practical nurses, also known as vocational nurses, provide nursing care and treatment of patients under the supervision of a licensed physician or registered nurse. Licensure as a licensed practical nurse (L.P.N.) or in California and Texas as a licensed vocational nurse (L.V.N.), is required.

Practice Parameters
The American Medical Association defines practice parameters as strategies for patient management, developed to assist physicians in clinical decision making. Practice parameters may also be referred to as practice options, practice guidelines, practice policies, or practice standards.

Preadmission Review, Pre-Admission Certification, Pre-Certification, or Pre-authorization
Review of "need" for inpatient care or other care before admission. This refers to a decision made by the payer, MCO or insurance company prior to admission. The payer determines whether or not the payer will pay for the service. Most managed care plans require pre-cert. This is a method of controlling and monitoring utilization by evaluating the need for service prior to the service being rendered. The practice of reviewing claims for inpatient admission prior to the patient entering the hospital in order to assure that the admission is medically necessary. A method of monitoring and controlling utilization by evaluating the need for medical service prior to it being performed. The process of notification and approval of elective inpatient admission and identified outpatient services before the service is rendered. An administrative procedure whereby a health provider submits a treatment plan to a third party before treatment is initiated. The third party usually reviews the treatment plan, monitoring one or more of the following: patient's eligibility, covered service, amounts payable, application of appropriate deductibles, copayment factors and maximums. Under some programs, for instance, predetermination by the third party is required when covered charges are expected to exceed a certain amount. Similar processes: preauthorization, precertification, pre-estimate of cost, pretreatment estimate, prior authorization.

Pre-existing condition, Preexisting Condition
A medical condition developed prior to issuance of a health insurance policy which may result in the limitation in the contract on coverage or benefits. Some policies exclude coverage of such conditions is often excluded for a period of time or indefinitely. Federally-qualified HMOs cannot limit coverage for pre-existing conditions. New statutes in 1997 and 1998 altered the freedom other health plans have enjoyed in setting preexisting time limits. Certification of prior coverage may mean new insurers would need to waive preexisting clauses for some subscribers.

(PPO) Preferred Provider Organization
Some combination of hospitals and physicians that agrees to render particular services to a group of people, perhaps under contract with a private insurer. The services may be furnished at discounted rates and the insured population may incur out-of-pocket expenses for covered services received outside the PPO if the outside charge exceeds the PPO payment rate. A PPO can also be a legal entity or it may be a function of an already formed health plan, HMO or PHO. The entity may have a health benefit plan which is also referred to as a PPO. PPOs are a common method of managing care while still paying for services through an indemnity plan. Most PPO plans are point of service plans, in that they will pay a higher percentage for care provided by providers in the network. Many insurers will offer PPOs as well as HMOs. Generally PPOs will offer more choice for the patient and will provide higher reimbursement to the providers. See also point of service.

Premium
Amount paid to a carrier for providing coverage under a contract.

Prepaid Capitation
A prospectively paid, fixed, annual, quarterly, or monthly premium per person or per family which covers specified benefits. A cost containment alternative to fee-for-service usually employed by HMOs.

Prepaid Group Practice
Prepaid Group Practice Plans involve multi-specialty associations of physicians and other health professionals, who contract to provide a wide range of preventive, diagnostic and treatment services on a continuing basis for enrolled participants.

Prepayment
A method providing in advance for the cost of predetermined benefits for a population group, through regular periodic payments in the form of premiums, dues, or contributions, including those contributions which are made to a Health and Welfare Fund by employers on behalf of their employees.

Prevailing Charge
One of the factors determining a physician's payment for a service under Medicare, set at a percentile of customary charges of all physicians in the locality.

Prevalence
The number of cases of disease, infected persons, or persons with some other attribute, present at a particular time and in relation to the size of the population from which drawn. It can be a measurement of morbidity at a moment in time, e.g., the number of cases of hemophilia in the country as of the first of the year.