Glossary of Terms

Health Care Payment and Delivery Models

The following is a glossary of terms commonly used in the discussion on reform of payment and delivery models in health care.

Accountable care organization (ACO): A network of health care professionals and organizations that band together to provide health care services for a defined population of patients; the network is paid to provide coordinated comprehensive care to patients and assumes responsibility for the cost and quality of that care.

Blended payment:
A payment model that blends various methods of paying for health care services; for example, CMS' Comprehensive Primary Care initiative touts a blended payment model that combines fee-for-service with a per-patient, per-month care coordination fee and the opportunity for practices to receive a portion of any resulting shared savings if quality targets are achieved.

Bundled payment: A payment model that combines payment for physicians, the hospital and other health care services into a singled predetermined amount intended to cover all services provided to a patient during a defined episode of care.

A method of paying for health care services in which, for example, the physician providing services receives a predetermined payment for each patient on a periodic basis (e.g. per month) rather than receiving payment based on the number or cost of services provided; capitation may be global, covering all services provided to the patient, or partial, covering only a selected subset of services (e.g. primary care services). A per-patient, per-month care coordination fee is an example of partial capitation.

Care coordination fee (or care management fee):
A separate fee most often paid to a patient's primary care physician on a capitated basis for the work involved in coordinating or managing all aspects of the patient's care so as to ensure that the patient receives appropriate and necessary care in a timely fashion; the fee typically is intended to help cover practice costs and non-face-to-face services needed to effectively provide care coordination and management.

Comprehensive Primary Care initiative (CPC initiative):
A multipayer initiative overseen by CMS' Center for Medicare and Medicaid Innovation that fosters collaboration between public and private payers to strengthen primary care; the initiative first will be tested in seven regions across the United States and features a blended payment model that combines fee-for-service with a per-patient, per-month care coordination fee and the opportunity for shared savings.

Disease registry:
A system that tracks all patients with a particular disease or condition and that is used to ensure patients receive evidence-based care and preventive services on a timely basis.

Episodic payment: A single payment made to health care professionals for all services provided to a patient for an entire episode of care; for example, all of the inpatient and outpatient services provided to a patient following a heart attack.

Fee-for-service (FFS):
A payment method by which physicians and other health care professionals are paid separately for each service provided; FFS payment also is applicable to entities providing services such as lab tests and imaging studies.

Global payment (or global capitation):
A fixed payment made to health care professionals or organizations for the care their patients may require during a contract period regardless of how many services are provided to patients and that can be adjusted to account for severity of illness.

Group visit: A type of medical appointment most often used for treatment of patients with chronic diseases, such as asthma or diabetes, that provides patients with the opportunity to interact with other patients in a group setting facilitated by a physician or other health care professional.

International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM):
A standardized system currently used in the United States that classifies diseases, injuries and external causes by etiology and anatomic location and assigns each entry an identifier that may be up to five alpha-numeric characters in length.

International Classification of Disease, 10th Revision, Clinical Modification (ICD-10-CM):
A standardized system of disease classification that will replace ICD-9-CM on Oct. 1, 2014 and thereby, increase the number of diagnosis codes from about 13,000 codes to more than 68,000 codes.

Independent practice association (IPA): An independent group of physicians who legally organize as an entity and agree to contract as a group to provide patient services; the practices maintain their own offices and continue to see their own patients.

Medicare Advance Payment Model: An ACO intended by CMS to be physician-based and/or rural and that allows selected participants to receive upfront monthly payments to help offset the cost of creating the necessary care coordination infrastructure; advance funding later will be deducted from any shared savings determination.

Medicare Pioneer Model: An ACO intended by CMS to specifically assist health care organizations and health care professionals who already are experienced in coordinating care for patients across settings and that allows CMS to pay a portion of money directly to the ACO in the later years of the contract.

Medicare Shared Saving Program: A program established by CMS to facilitate coordination and cooperation among health care professionals so as to improve the quality of care received by Medicare patients while reducing the cost of that care; the model requires FFS payment to physicians and other professionals throughout the course of the program with a potential for shared savings distribution at the end. Participants must be part of an ACO.

Patient registry: A patient database maintained by a physician practice, hospital or health plan that allows health care professionals to identify their patients according to disease or demographic characteristics and helps them monitor treatment and improve overall quality of care.

Regional health information organization (RHIO): A multi-stakeholder organization created to facilitate the electronic transfer of health information across organizations and communities.

Regional extension center (REC):
One of as many as 70 organizations defined by a specific geographic area, funded through the Health Information Technology for Economic and Clinical Health (HITECH) Act, and charged with helping physicians choose, implement and achieve meaningful use of electronic health records.

Relative value units (RVUs): One element in the formula used to calculate the Medicare allowance for a given service in a specific fee schedule area; each Medicare physician fee schedule service is assigned RVUs for physician work, for practice expenses and malpractice expenses.

Resource-based relative value scale (RBRVS): The list of services and RVUs from which Medicare physician payment is determined; services are assigned a relative value that is adjusted by a geographic price cost index (GPCI) and multiplied by a conversion factor.

Risk adjustment: A statistical process of adjusting payment that takes into account the underlying health status of individuals when looking at their health care outcomes or health care costs.

Shared savings: A payment strategy that offers incentives to physicians to reduce health care spending for a defined patient population by offering physicians a percentage of the net savings realized as a result of their efforts. Savings typically are calculated as the difference between actual and expected expenditures and then shared between the payer and physicians.

Team-based care: The delivery of comprehensive health care services to a patient by two or more physicians or other health care professionals who work collaboratively with the patient and the family to provide care that is timely, efficient, effective and patient-centered.

Triple aim in health care: A framework developed by the Institute for Healthcare Improvement that aims to optimize the U.S. health care system by enhancing the patient experience, improving the health of populations and reducing the per capita cost of health care.

Value-based purchasing: A form of payment that holds physicians accountable for the cost and quality of care they provide to patients; the overall goal is to reduce inappropriate care and reward physicians, other health care professionals and organizations for delivering value to patients.