WORDS, PHRASES AND ACRONYMS IN HEALTHCARE LAW
by
Smeeta S. Rishi
Health care is a new and evolving area of the law. Although there are healthcare lawyers whose careers have focused entirely upon the representation of clients in the healthcare industry, most healthcare practitioners are business lawyers whose clients include one or more healthcare providers. It has only been in the last several years that public and government attention has become focused on the healthcare industry. This focus has led to enormous changes in the industry and the manner in which healthcare is paid for and delivered. This focus has also resulted in a plethora of new laws, both on the federal and state levels, affecting virtually all healthcare providers.
The rapid changes in the healthcare industry have resulted in the creation of many new terms of art, phrases and acronyms. It has also given new meaning to some terms which have been around for a long time. This article defines the most commonly used terms of art, phrases and acronyms. The list will help readers understand certain words and phrases frequently used in articles in this magazine. It may also enable readers to become more sophisticated purchasers of health insurance and consumers of healthcare services.
Acronyms
HCFA or the Health Care and Financing Administration, is the federal government agency delegated the responsibility for administering the Medicare and Medicaid programs.
HIPPA or the Health Insurance Portability and Accountability Act of 1996 contains provisions relating to the portability of health insurance after termination of employment, authorizes a demonstration project of medical savings accounts (MSA) to be monitored by the Internal Revenue Service and strengthens the enforcement provisions of the federal fraud and abuse laws.
HMO or a health maintenance organization is an entity that delivers covered healthcare services for a fixed fee and on a prepaid basis so that payment for covered services does not vary with the quantity or type of service provided. Kaiser Permanente is an example of one of the largest national HMOs. The more traditional manner of financing for healthcare services is the indemnity or fee-for-service arrangement where providers are paid in direct proportion to the number of services provided. Generally, HMOs do not charge deductibles but often require copayments.
IDS or an integrated delivery system is a system that provides a full spectrum of healthcare services on an integrated basis. "Integrated" can refer to operational integration where several entities, such as a hospital, a physicians' group such as an IPA, an out-patient services delivery center and an MSO provide services in a cohesive manner but do not share financial risk. An IDS is generally partially integrated - its participants share risk and accordingly, profits and losses, on certain activities or on certain payor contracts. The corporate practice of medicine rules in most states generally preclude full integration between physicians and non-physician providers of healthcare services.
IPA or an individual or independent practice association is a partially integrated organization, usually a professional corporation, of physicians. An IPA can be made up of physicians all in the same specialty or of many different specialties. An IPA does not consolidate the participants' practices. In business terms, an IPA is a joint venture among physicians to contract with one or more payors, either on a capitated basis or on a discounted fee-for-service basis. The physicians remain competitors for non-IPA contracts as well as patients other than those whose care is contracted to be provided through the IPA.
MSA or a medical savings account authorized by HIPPA. HIPPA authorizes a limited number of MSAs which can be established by individuals who are self-employed or are employed by a small business (having 50 or fewer employees) and who have no health insurance other than a high deductible health plan.
MSO or a management services organization provides practice management services to physician groups and other healthcare providers. MSOs may be sponsored by hospitals, physicians or a joint venture between the two. More recently, MSOs are being organized by laymen with expertise in management and experience in the healthcare industry. Some MSOs are large publicly held organizations, others are start-ups with plans to become public corporations.
OIG or the Office of Inspector General is the agency within the Department of Health and Human Services which investigates fraud and abuse. The Department of Justice also investigates fraud and abuse.
PCP or primary care provider or physician is a physician who is selected by a subscriber to render first contact medical care (most often an internist, family practitioner or pediatrician, and sometimes a gynecologist and obstetrician).
PHO or a physician hospital organization is a joint venture between a hospital and a physicians' group such as an IPA, to contract with third party payors, generally on a capitated or other risk sharing basis.
POS or point of service insurance plans combine elements of HMOs and the more traditional indemnity or fee-for-service plans. Subscribers pay a relatively small copayment and generally little else, including deductibles, if they remain within the plan's network of participating providers, but subscribers retain the right to reach outside the network provided that they pay generally higher copayments and deductibles.
PPM or a practice management company provides management services, much the same as an MSO, primarily for physicians.
PPO or a preferred provider organization can refer to a variety of organizations including a single specialty IPA. The term can also refer to a pool of providers (both physicians and hospitals) with whom a third party payor contracts to provide services to its enrollees on a discounted fee-for-service basis. If an enrollee uses a provider that is not included in the PPO panel, the enrollee pays a greater percentage of the cost of the services. For example, many PPO plans cover 80% of the cost of services if the provider is on the PPO panel and 70% or less of the cost if the provider is not on the PPO panel.
RBRVS or resource based relative value scale is the basis which Medicare uses to determine the amount it pays for a physician's services under Medicare Part B.
RFP or a request for proposal is frequently used in order to solicit competitive bids to provide a service.
Words And Phrases
Antitrust Safety Zones refers to safe harbors for joint ventures in the healthcare industry, both for hospitals and physicians, issued by the Department of Justice and Federal Trade Commission, in the Statements of Antitrust Enforcement Policy in Health Care, in August, 1996.
Capitation is a financing arrangement in which third party payors, such as health insurance companies, pay healthcare providers for covered services on a prepaid fixed fee basis depending on the number of plan members to which the provider is required to provide services, without regard to the volume of covered services provided by the healthcare provider. For example, an HMO may enter into a capitated arrangement with a radiologist pursuant to which the HMO will pay the radiologist a per month per member fee of $3.50 per enrollee of that HMO in a designated geographic area, without regard to the volume of services provided by the radiologist to the enrollees. The phrase "per month, per member," or "pmpm", refers to the amount paid monthly to healthcare providers for each plan member they are required to provide services under the agreement with the third party payor.
Corporate Practice of Medicine refers to state laws which prohibit physicians from practicing medicine through business entities, other than professional corporations and partnerships, and prevent non-professional entities from practicing medicine.
Copayment is a payment made by an enrollee to a provider at the time services are rendered.
Credentialing is the process by which third party payors decide whether to include a provider in its pool of providers. Traditionally, credentialing has primarily involved reviewing the physician's educational and professional history. Economic credentialing is a more recent and controversial form of credentialing in which a payor considers price, prior utilization, range of services and need for additional providers to service the payor's needs in a given geographic market.
Deductible is the part of an enrollee's healthcare expenses that he or she must pay before coverage from the plan begins.
De-Selection occurs when a third party payor terminates a provider agreement with a physician, either with or without cause. In some states, de-selection without cause is subject to laws granting physicians hearing rights. In most states, de-selection with cause is subject to hearing rights.
Discounted Fee-For-Service is a form of an indemnity financing arrangement in which the third party payor pays its providers a specified percentage less than the providers' usual and customary charge for services. The reduction is negotiated by a third party payor in return for steering its enrollees to that provider.
Enrollee is the individual enrolled in a plan, including any dependents who are covered by the plan.
False Claims Act is a federal law enacted in 1986 which makes it unlawful for a provider to knowingly bill Medicare or Medicaid for a false claim. The False Claims Act is a major weapon used by enforcement agencies to investigate and enforce fraud and abuse laws. Examples of conduct which can run afoul of the False Claims Act include billing for services which are not provided, provision of unnecessary services, payment of referral fees in cash or kind and payment of referral fees disguised as excessive medical director fees or other compensation.
Fraud and Abuse is a body of federal law which makes it unlawful to pay, or receive or solicit the receipt of anything of value for the referral of a patient. Most states also have counterparts to the federal laws. These laws are also known as laws against fee-splitting or kickbacks.
Gag Clause is a provision in a managed care provider agreement prohibiting certain communications between a physician and a patient. Common examples are provisions prohibiting a physician from disparaging the plan or from encouraging a patient to seek services outside the plan. Several states have laws limiting the enforceability of gag clauses. Also, certain rules relating to Medicare and Medicaid reimbursement limit the enforceability of gag clauses.
Gatekeeper System refers to an arrangement whereby the subscriber is required to select a primary care physician from a plan's pool of participating providers. The subscriber is required to obtain a referral or authorization from the primary care provider to access a specialist. The primary care physician is referred to as the "gatekeeper." Gatekeeper systems are common in capitated financing arrangements.
Global or Bundled Payments are a single payment to a provider which include reimbursement for both the hospital or the out-patient facility fee for the technical component and physician fee for the professional component of the service.
Group Practice refers to a fully integrated group of physicians, generally in the form of a professional corporation or partnership, which operates under one name and shares the profits and losses of a business enterprise.
Indemnity is an arrangement for financing healthcare services on a fee-for-service method where providers are paid for each service they render at their usual and customary rate or other agreed upon rate.
Integration refers to the level of risk shared by the participants in the endeavor. An IPA is a partially integrated entity as the physician participants only share the risk on the contracts the IPA enters into. The remainder of the participants practice remains independent from each other. A group practice is fully integrated for the reasons described above.
Inurement occurs when an individual benefits from the activities of a tax-exempt organization by virtue of his or her relationship with the organization. Inurement is prohibited in a tax-exempt organization.
Managed Care refers to a manner of financing healthcare services through either an exclusive or preferred panel of providers, either on a capitated basis or a discounted fee-for-service basis. Managed care insurance products generally include utilization management, claims adjudication, quality assurance and grievance procedures.
Medicare Part A refers to the portion of Medicare reimbursement primarily for hospital services.
Medicare Part B refers to the portion of Medicare reimbursement primarily for out-patient services and physicians' services.
Most Favored Nations refers to a clause in a provider agreement that requires the contracting physician or group to provide the plan with the lowest price it charges to any other plan.
Open Enrollment Period is the period of time agreed upon in a contract in which subscribers can switch to a different plan for the coming benefit year.
Physician Recruitment refers to incentives offered to physicians, generally by hospitals, to relocate or open a practice in a generally under-served area.
Plan or Third Party Payor is any organization or institution, public or private, which provides payment for medical services for its enrollees (i.e., insurance company or an HMO).
Price Fixing is an unlawful arrangement among competing physicians relating to the amounts charged by them for their services. Subject to complying with federal and state law, physicians who otherwise compete may be able to agree on prices, such as in an IPA or PPO, provided that the physicians share substantial risk through a capitated arrangement or fee-for-service arrangement with a substantial risk withhold.
Provider Agreement or Contract is the agreement between the provider (a physician, a hospital, an entity providing ancillary services such as a home health agency) and the plan pursuant to which the providers renders specified services to the plan's enrollees.
Risk refers to the chance a payor or provider takes on whether the amount it is paid or receives for providing covered healthcare services is greater or lesser than the amount it costs the payor or provider to provide the services. In an indemnity arrangement, the risk is borne by the payor who receives premiums as payment from enrollees (or employers) and then pays providers to provide care on a fee-for-service basis. In a capitated arrangement, the payor limits its risk by paying a fixed fee for services, regardless of the amount of services. In such an arrangement, the provider bears the risk since the provider is paid the same amount irrespective of the frequency, nature, or scope of covered services required by the enrollees.
Risk Withhold is common in capitated arrangements and involves a percentage of the physician's fee being deducted and placed in a pool. The physician may or may not receive back the fee placed in the pool depending on a variety of factors which can include utilization, the cost of providing care and quality issues. Risk withholds are also created occasionally in fee-for-service contracts where the participating providers want to bear some risk for the services rendered.
Self Referral Prohibitions are a body of federal law which make it illegal for physicians to refer certain types of services to an entity in which the physician or his or her family member has a financial or ownership interest. Approximately 13 states have enacted similar, but not generally identical laws. The federal law in this area is often referred to as the "Stark" law, after Congressman Pete Stark of California who sponsored the legislation.
Subscriber is the individual whose employment status is the basis for eligibility to be enrolled in a plan.
Telemedicine is the provision of certain types of medical care via electronic communications line. In teleradiology, images are sent from the location at which the images are taken via computer to another location at which the images are interpreted.
Utilization Review refers to the process of determining retrospectively whether a physician's use of diagnostic tests and/or treatment was appropriate in specified circumstances.
This article does not contain a comprehensive glossary of terms of art, phrases or acronyms in the healthcare industry or in health law. Health care reform is a relatively new force in the healthcare industry. Health care law is a relatively new and evolving area of the law. New terms of art, phrases and acronyms are created as fast as healthcare lawyers and healthcare providers originate new mechanisms for the delivery of healthcare services in a rapidly changing market place.
