Managed Care Glossary of Terms

Preventive Care
Health care which emphasizes prevention, early detection and early treatment, thereby reducing the costs of healthcare in the long run.

Primary Care
Basic or general health care usually rendered by general practitioners, family practitioners, internists, obstetricians and pediatricians -- who are often referred to as primary care practitioners or PCPs. Professional and related services administered by an internist, family practitioner, obstetrician-gynecologist or pediatrician in an ambulatory setting, with referral to secondary care specialists, as necessary.

(PCP) Primary Care Physician
A "generalist" such as a family practitioner, pediatrician, internist, or obstetrician. In a managed care organization, a primary care physician is accountable for the total health services of enrollees including referrals, procedures and hospitalization.

Primary Coverage
Plan that pays its expenses without consideration of other plans, under coordination of benefits rules.

Primary Physician Capitation
The amount paid to each physician monthly for services based on the age, sex and number of the Members selecting that physician.

Principal Diagnosis
The medical condition that is ultimately determined to have caused a patient's admission to the hospital. The principal diagnosis is used to assign every patient to a diagnosis related group. This diagnosis may differ from the admitting and major diagnoses.

Prior Authorization
A formal process requiring a provider obtain approval to provide particular services or procedures before they are done. This is usually required for nonemergency services that are expensive or likely to be abused or overused. A managed care organization will identify those services and procedures that require prior authorization, without which the provider may not be compensated.

(PSRO) Professional Standards Review
A physician-sponsored organization charged with reviewing the services provided patients who are covered by Medicare, Medicaid and maternal and child health programs. The purpose of the review is to determine if the services rendered are medically necessary; provided in accordance with professional criteria, norms and standards; and provided in the appropriate setting.

Profile
Aggregated data in formats that display patterns of health care services over a defined period of time.

Profile Analysis or Profiling
Review and analysis of profiles to identify and assess patterns of health care services. Expressing a pattern of practice as a rate - some measure of utilization ( of costs or services) or outcome (as functional status, morbidity, or mortality) aggregated over time for a defined population of patients. This is used to compare with other practice patterns. May be used for physician practices, health plans, or geographic areas.

(PPS) Prospective Payment System
A payment method that establishes rates, prices or budgets before services are rendered and costs are incurred. Providers retain or absorb at least a portion of the difference between established revenues and actual costs. (1) The Medicare system used to pay hospitals for inpatient hospital services; based on the DRG classification system. (2) Medicare's acute care hospital payment method for inpatient care. Prospective per-case payment rates are set at a level intended to cover operating costs in an efficient hospital for treating a typical inpatient in a given diagnosis-related group. Payments for each hospital are adjusted for differences in area wages, teaching activity, care to the poor, and other factors. Hospitals may also receive additional payments to cover extra costs associated with atypical patients (outliers) in each DRG. Capital costs, originally excluded from PPS, are being phased into the system. By 2001, capital payments will be made on a fully prospective, per-case basis.

Provider
Usually refers to a hospital or doctor who "provides" care. A health plan, managed care company or insurance carrier is not a healthcare provider. Those entities are called payers. The lines are blurred sometimes, however, when providers create or manage health plans. At that point, a provider is also a payer. A payer can be provider if the payer owns or manages providers, as with some staff model HMOs.

Provider Excess
Specific or aggregate stop loss coverage extended to a provider instead of a payer or employer.

(PSO) Provider Services Organization
Defined by HCFA as a public or private entity that is established or organized by a health care provider or group of affiliated providers; that provides a substantial proportion of the services under its Medicare contract directly through the provider or group of affiliated providers; and in which the provider or affiliated providers directly or indirectly share substantial financial risk and have at least a majority financial interest. Similar to the concept of MSO, see Medical Services Organization, or Management Services Organization.

Purchaser
This entity not only pays the premium, but also controls the premium dollar before paying it to the provider. Included in the category of purchasers or payers are patients, businesses and managed care organizations. While patients and businesses function as ultimate purchasers, managed care organizations and insurance companies serve a processing or payer function.