Financial Management of

Financial Management of Health Care Organizations An Introduction to Fundamental Tools, Concepts and Applications, 4e William Zelman, Michael McCue, Noah Glick, Marci Thomas

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1-1 Definitions

a. Accountable Care Organizations (ACOs): A group of healthcare

providers who provide coordinated care to target patient populations, with the intent of tying financial incentives to quality outcomes and lowered costs.

b. Capitation: A system which pays providers a specific amount in

advance to care for the health care needs of a population over a specific time period. Providers are usually paid on per member per month (PMPM) basis. The provider then assumes the risk that the cost of caring for the population will not exceed the aggregate PMPM amount received.

c. Care Mapping: A process which specifies in advance the preferred

treatment regimen for patients with particular diagnoses. This is also referred to as a clinical pathway, clinical protocol, or practice guideline.

d. Compliance: The need to abide by governmental regulations, whether

they be for the provision of care, billing, privacy, security, etc.

e. Elecronic Health Record (EHR): Also called an electronic medical

record (EMR). An on-line version of patients charts which can include patient demographics, insurance information, dictations and notes, medication and immunization histories, ancillary test results, etc. Under strict security permissions, the information can be accessed either in-house or in private office settings. 2 / 4

1-1 (cont.)

f. Evidence based medicine: Using the best evidence currently available

from both individual clinical expertise and outside research-based clinical evidence in making decisions about patient care.

g. Group Purchasing Organizations (GPOs): Third-party entities that

contract with multiple hospitals to offer cost savings in the purchase of supplies and equipment by negotiating large-volume discounted contracts with vendors.

h. Health Insurance Exchange: A state level competitive insurance

marketplace, authorized by the ACA - one for uninsured individuals and one for small businesses.

i. Health Insurance Portability and Accountability Act of 1996 (HIPAA):

A set of federal compliance regulations enacted in 1996 to ensure standardization of billing, privacy, and reporting as institutions convert to electronic systems.

j. ICD-10: The World Health Organization’s International Statistical

Classification of Diseases and Related Health Problems (ICD) is a coding system of diseases used in the U.S. for health insurance claim reimbursement. Currently the United States uses the 9th version of the codes. Other countries use the 10th version, ICD-10. U.S. implementation of ICD-10 has been delayed until October 1, 2014. 3 / 4

1-1 (cont.)

k. Malpractice reform: The ACA addresses medical liability in two ways.

(1) Extension of federal malpractice protections to nonmedical personnel working in free clinics, and (2) Authorization of $50 million over the next five years for HHS to award demonstration project grants. These grants would be provided to states to develop, implement, institute and evaluate alternatives to the present system used by the U.S. to resolve charges against physicians and other health care providers of wrongdoing to patients.

l. Medical Tourism: Patients who travel to foreign countries to obtain

normally expensive medical services at a steep discount. Even including a family escort, who get the added benefit of foreign travel, the total cost is less than what it would be at home.

m. Medicare severity-adjusted diagnosis related groups (MS-DRGs):

CMS's DRG-based payment system that replaced the DRG payment system. It was designed to better correlate payments with patient severity.See diagnosis related groups (DRGs).

n. Patient Centered Medical Home (PCMH): A partnership between

primary care providers (PCPs), the patients, and their families, to deliver coordinated and comprehensive care over the long-term in a variety of settings.

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