health terms
Following is a quick reference guide which explains some behavioral health terms you may come into contact with:

Accreditation
Acceptance by a nongovernmental state of national peer body as meeting prescribed or desirable standards set by the body.

Actuary
A person trained in the insurance field, who determines policy rates, reserves and dividends as well as conducts various other statistical studies.

Administrative Services Only (ASO)
An arrangement under which an insurance carrier or an independent organization will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group.

Admissions per 1,000
A measure used to evaluate utilization management performance that is calculated by taking the total number of admissions from a specific group for a specific period of time (usually one year), dividing it by the average number of covered members or lives in that group during the same time period, and multiplying the result by 1,000.

Allowable Charges
Generic term referring to the maximum fee that a third party will use in reimbursing a provider for a given service.

Allowable Costs
Items or elements of a provider’s costs that are reimbursable under a payment formula.

ALOS
Average length of stay.

At Risk
The state of being subject to some uncertain event occurring which connotes loss or difficulty.  In the financial sense, this refers to an individual, organization or insurance company assuming the chance of loss through running the risk of having to provide or pay for more services than paid for through premiums or per capita payments.

Broker
The go-between for individuals, companies and health insurers.  A broker helps locate, negotiate, and negotiate health insurance contracts.  A broker may also be an agent for the insurance company, delivering policies and collecting premiums.

Capitation
A method for payment of providers.  Usually this is a prepaid amount per month to the provider per covered member.  In risk arrangements, the provider is then responsible for providing all behavioral health services required by members of that group during that month for the fixed fee, regardless of the amount of charges incurred.

Capitated Measurement Programs
The provider is required to provide all management services (precertification, utilization review, case management, discharge planning, etc.) required for the fixed fee, while the costs of treatment services are paid separately.

Carve Outs
The process of withdrawing benefits or services from the medical plan and insuring separately.  The financial risks for the coverage of the benefits are transferred from the group insurer or purchaser of health care to the organization that has contracted for provision of the services.

Case Management
The monitoring, planning and coordination of treatment rendered to patients with conditions requiring high cost or extensive services.  Case management is intended to ensure an appropriate and cost-effective course of treatment in an appropriate setting.

Cost Shifting
The practice by some providers of redistribution of the difference between normal charges and amounts received from certain payers by increasing charges made to other payers.

Customary Charges
Term used interchangeably with usual charge and referring to that amount the provider normally charges the majority of patients for a particular medical service.

Days per 1,000
A measure used to evaluate utilization management performance.  It is calculated by taking the total number of days (for inpatient, residential, or partial hospitalization) or visits (for outpatient) received by a specific group for a specific time period (usually one year).  This number is then divided by the average number of covered members or lives in that group during the same period and multiplied by 1,000.

Discounted Fee-for-Service
An agreed upon rate for service between the provider and payer that is usually less than the provider’s full fee.  This may be a fixed amount per service, or a percentage discount.

Doctoral Psychologist
Doctoral psychologists generally provide individual psychotherapy and psychological testing.  In a managed care environment, psychologists who have a group psychotherapy orientation are a valuable asset as a group is seen as being a cost-effective type of service delivery for some types of treatment.

EAP
Traditional Employee Assistance Programs are a type of service offered to employees and their family members, by the employer, to help them locate assistance needed for behavioral health, legal, and/or financial difficulties.  The employee or family member speaks to a counselor confidentially.  The counselor then either provides short-term treatments (usually between 2 and 10 visits) or refers them to an appropriate service provider.

ERISA
Employee Retirement Income Security Act of 1974 regulates the majority or private pension and welfare group benefit plans in the U.S.

Gatekeeper
An individual, usually a clinician, who controls the access to behavioral health services for members of a specific group.

HMO
A payer organization that limits beneficiaries’ choice of providers to a finite provider network and requires the referral of a primary care physician (PCP) to obtain specialty care.  The PCP is usually at financial risk for the care of the beneficiary. Seeking care from a non-Network Provider without a referral from the PCP usually results in no payment for services by the payer organization.

Managed Health Care
A system created with the intent to control the cost of health care that uses financial incentives and management controls to direct patients to providers who are responsible for giving appropriate care in cost-effective treatment settings.

Negotiated Rates
The reduction in physician or other health service fee schedule components which results from the contractual agreement between a provider and a preferred provider organization (PPO).

Per Capita
Payments for health care based on number of beneficiaries enrolled in the insurer’s program, regardless of the number who actually receive services.

Per Diem
An agreed upon rate per inpatient, residential, or partial hospitalization day that is all inclusive.  All ancillary services, in addition to therapies and room and board are included in this rate.

Per Member Per Month (pmpm)
A unit of measurement related to each enrollee for each month.

Per Service
Payment for healthcare based on number and types of health and medical services provided.

Pharmacoeconomics
The field involving the assessment of the cost effectiveness of drug therapy in terms of long-term benefits to the patient.

PPO
A preferred provider organization. A PPO is a network of providers that have agreed to discount services that, in turn, are retailed either to insurance groups or other direct purchasers of care, such as self-insured companies.

Problem Focused Therapy
A type of outpatient psychotherapy, generally short term (average of six to eight sessions) with the emphasis focused on the problem the client brings to the therapy session.  When this problem has been resolved, therapy is terminated.

Risk Sharing
An arrangement in which the health care system assumes total responsibility for all health care services related to a specific diagnosis-related group or disease process for a fixed dollar amount or in which the system receives capitation for a specific number of members and in turn provides health care services.

Sliding Fee Scale
A schedule of discounts in charges, or a deductible not set at a fixed amount, for services based on the consumer’s ability to pay, according to income and family size.

TPA
A third party administrator is the party which pays claims and/or provides administrative services for an employee benefit plan.

Utilization Review
The activity of determining the medical necessity and appropriateness of treatment being provided.