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Insurance
Managed Care Basic Definitions
"Managed care plan" is used to describe a variety
of health coverage plans which attempt to contain health care
costs by offering services through an established network of
providers. Managed care plans include HMOs and PPOs described
below.
Alternative Delivery System
Describes non-traditional health insurance programs that finance
and provide health care to members. These include HMOs and PPOs.
DRG
Diagnostic-Related Group. This is a system where the hospital
receives a fixed payment for each type of medical procedure
regardless of whether the hospital’s cost is greater or less
than the payment itself.
Fee-for-Service
The traditional way of billing for health care services. Under
this system, there is a separate charge for each patient visit
and service provided.
HMO
A health maintenance organization (HMO) is a plan which arranges
for or provides health care to enrollees on a pre-paid basis.
The prepayment to providers is called "capitation." Enrollees
must use providers who are part of the HMO’s network of providers
and referrals to specialists ordinarily must be made by the
enrollee's "primary care physician" and approved
by the HMO.
Independent Practice Association (IPA)
A group of individual physicians that do not practice as a group,
but have formed a legal entity to contract with managed healthcare
organizations.
Medicaid
Federal program that covers various medical expenses for the
under privileged and other classes of uninsured persons.
Medicare
Federal health insurance program for individuals 65 years or
older and those disabled who have been eligible for Social Security
disability payments over two years.
PPO
A preferred provider organization (PPO), also called a preferred
provider plan, is a type of free-for-service managed care plan
whereby the insurance company contracts with certain providers
who agree to reimbursed by the PPO at a discounted fee. PPO
insured may go to any provider they choose but are encouraged
to go to "preferred providers" because their deductible will
be lower. The insured have greater freedom of choice with a
PPO than with an HMO.
Primary Care Physician
Usually a family doctor, general internist or other entity which
provides medial services or supplies to the public.
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