Bad Debt
Cost of services for which provider anticipated but did not receive payment.

Capitation/Capitated Payments
A dollar amount established to cover the cost of health care services delivered to a person during a specified length of time. The term usually refers to a negotiated per capita rate to be paid to a health care provider by an MCO. The provider is then responsible for delivering or arranging the delivery of all health services required by the covered person under the conditions of the provider contract.

Capitated Contract
A contract involving capitated payments. Capitated payments can be for a full or limited range of services.

Centers for Medicare and Medicaid Services (CMS)
The agency within the U.S. Department of Health and Human Services that has responsibility for administering Medicare, Medicaid, the State Children’s Health Insurance Program, and other programs. Prior to July 1, 2001, CMS was called the Health Care Financing Administration (HCFA).

Charity Care
Cost of services for which the provider neither received, nor expected to receive, payment because it had determined the patient’s inability to pay.

Conventional Fee-For-Service (FFS) Plan
A payment system by which doctors, hospitals, and other providers bill and are reimbursed a specific amount or percentage for each service performed, after the services have been received.

Copayment
A cost-sharing arrangement where a health plan enrollee pays a specified charge for a specified service (e.g., $10 for an office visit). The enrollee is usually responsible for payment at the time the service is rendered.

Deductible
A specified amount of money a health plan enrollee must pay before insurance benefits begin, usually expressed in terms of an annual amount.

Health Maintenance Organization (HMO)
A health delivery system that offers comprehensive health coverage for a prepaid, fixed fee. HMOs contract with or directly employ participating health care providers—i.e., hospitals, physicians, and other health professionals—and HMO enrollees choose from among those providers for all health care services. There are four basic HMO model types:

• Staff Model HMOs employ health care providers directly. The providers are employees of the HMO and provide care exclusively to HMO enrollees.
  
• Group Model HMOs contract with one or more group practices to provide health care services, and each group primarily treats the HMO’s enrollees.
  
• Network Model HMOs contract with one or more group practices and/or Independent Practice Associations (IPAs) to provide health care services. The network may or may not provide care exclusively for the HMO’s enrollees.
  
• Independent Practice Association (IPA) Model HMOs contract with physicians in solo practice, or with associations of physicians that in turn contract with their enrollee physicians, to provide health care services to enrollees. Solo practice physicians in IPA model HMOs may have a significant number of patients who are not HMO enrollees.

Some HMOs combine two or more of the four basic model types, such that some of their enrollees are in options or components that function as one model type (for example, a Group Model) and others are in plans that function as another model type (for example, a Network Model), although all belong to the same HMO. These are often called “Mixed Model” HMOs.

Managed Care
A general term for a health care system that manages health care delivery in order to improve quality and control costs.

Managed Care Contract
A contract between a provider and any managed care organization, including HMOs, PPOs, and POS plans. These contracts do not necessarily use capitated payments.

Managed Care Organization (MCO)
A health care plan that integrates financing and management with the delivery of health care services to an enrolled population. It employs or contracts with an organized system of providers which delivers services and frequently shares financial risk, typically relying on a primary care physician to act as gatekeeper for specialty services.

Nonelderly
Persons aged 0 to 64.

Point-Of-Service (POS) Plan
A health services delivery arrangement (either prepaid or fee-for-service) that allows its enrollees to choose to receive a service from participating or a non-participating provider. Generally the level of coverage is reduced (or cost-sharing is increased) for services associated with the use of non-participating providers.

Preferred Provider Organization (PPO)
A fee-for-service health plan that contracts with providers of medical care to provide services at discounted fees to enrollees. Enrollees may seek care from non-participating providers but generally are financially penalized for doing so by the loss of the discount and subjection to copayments and deductibles.

Premium
Money paid in advance for insurance coverage.

Primary Care Provider (PCP)
The provider that serves as the initial interface between the plan enrollee and the medical care system. The PCP is usually a physician, selected by the enrollee upon enrollment, who is trained in one of the primary care specialties and who treats and is responsible for coordinating the treatment of enrollees assigned to the plan.

Specialty Care Physician
A physician who is certified to practice in a specific field, not in general or family practice.