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Medicare

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A federally funded program that provides health insurance to Americans at age 65

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Prospective Payment

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A system by which Medicare reimburses hospitals for the expected cost of a service, rather than a services actual cost

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Diagnosis-related group

answer

Groupings of similar healthcare cases that should require similar resource consumption. Used by Medicare to calculate prospective payments

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Peer Review Organization

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An organization that ensures that providers give appropriate care to Medicare recipients

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Resource-based relative value system

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A Medicare reimbursement system that provides a flat, per-visit fee to physicians rather than reimbursing them according to their customary charges

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Recovery Audit Contractor

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A private business that detects and recovers improper Medicare payments to provders

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Fraud

answer

An intentional misrepresentation of fact designed to induce reliance by another

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Abuse

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An unintentional misrepresentation of fact

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Second-Party Payment

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Payment for healthcare that come from the person receiving the service (patient pays own bill)

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Compulsory Health Insurance

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A requirement that everyone have health insurance

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Direct Service Plan

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An arrangement whereby an employer prepays specific hospitals and physicians to care for employees (used in 1940s)

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Commercial Indemnity Plan

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An arrangement whereby an employer pays an insurance company, which in turn reimburses hospitals and physicians chosen by the employees

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Community Rating

answer

A premium-setting method in which all groups covered by an insurance company pay essentially the same premiums, regardless of their health risks.

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Experience Rating

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A premium-setting method in which different groups covered by an insurance company pay different premiums based on their risk

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MAnaged Care Organizations

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Organizations that manage the cost, quality, and access to healthcare

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Preferred Provider Organizations

answer

Organizations that provide discounted healthcare services to insurance carriers and employers

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Health Maintenance Organizations

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Organizations that integrate the financing and delivery of healthcare into one organization

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Open Panel HMO

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An HMO that exerts moderate control over physicians by contracting with them to provide care for enrollees. These physicians can see other patients

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Closed Panel HMO

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An HMO that contracts with or employs physicians to treat enrollees exclusively (the physicians do not see other patients)

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Network HMO

answer

An HMO that contracts with physician groups to provide care for enrollees. May be either open or closed.

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Defined Benefit Plan

answer

A health plan in which the employer pays the premium, or an established part of the premium, regardless of the cost.

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Defined Contribution plan

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A health plan in which the employer pays a set amount toward the cost of the premium and the employee pays the rest. Thus is an employee chooses an expensive plan, he pays more than if he chose a less-expensive plan

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Direct Contracting

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The practice of contracting directly with an integrated health organization to service the health needs of a large employer (Think Dell)

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Consumer-Driven Plan

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A health plan that provides information and incentives to encourage enrollees to make wise healthcare choices

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Charge

answer

The amount patients are charged for services; also called prices or rates

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Per Diem rate

answer

A method of paying for healthcare in which the hospital is paid a flat fee per day, regardless of the service delivered on any given day

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Per diagnosis rate

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A method of paying for healthcare in which the hospital is paid a flat fee for each given diagnosis, regardless of the actual service provided

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Capitation

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A payment method in which a healthcare organization receives a fixed amount of money each month for every person enrolled in a given plan, regardless of whether or not a given person receives care.

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Bad Debt

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Unpaid patient bills (can pay but won't)

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Charity Care

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Care provided to patients who the organization knows cannot pay for the care

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Cost shifting

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The practice of shifting costs to some payers to offset losses from other payers

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Tax-Exempt

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The status that allows an organization to pay no taxes, including sales tax, income tax, and property tax. May also raise capital by selling tax-exempt bonds, for which they can pay lower interest than comparable taxable bonds

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Charitable Organization

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An organization that provides community benefit or serves that public interest. In the case of healthcare, a hospital is a charitable organization if it provides care to people who cannot pay for their care or provides community health benefits

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Inurement

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Providing a benefit to an employee, such as salary, that is greater than the value of the employees work

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Specialization

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Dividing tasks into manageable categories and assigning the categories to employees with appropriate skills

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Departmentalization

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Dividing employees into groups or team that have similar responsibilities

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Defining the span of managment

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Determining the optimum number of employees that a manager can manage based on the nature of tasks and the background of the employees

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Defining Authority

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Determining the amount of authority to delegate to employees so they can perform assigned tasks

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Defining responsibility

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Determining the obligation necessary to perform the assigned task

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Establishing a unity of command

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Appointing one manager to be responsible for a group of employees

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Defining the nature of relationships

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Determining whether employees and managers have a line or staff relationship

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Governing body

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Responsible for the proper development, utilization, and maintenance of all resources in the HCO

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Executive Committee

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A committee of the governing body of an organization that monitors all other committees

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Finance committee

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A committee of the governing body of an organization that monitors the CEO's performance in financial affairs

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Fiduciary

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A person, or a governing body, in a position of great trust and confidence. Typically used to describe the duty of an entity to be loyal and responsible.

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Controller

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The chief accounting officer in an organization

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Treasurer

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The person responsible for managing the capitol of an organization

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Corporate Restructureing

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A legal strategy involving the establishment of subsidiaries or related corporations in order to maximize the economic position of a healthcare organization

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Foundation

answer

A not-for-profit corporation, usually a subsidiary of a for-profit organization, that facilitates education and research or otherwise undertakes charitable projects

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Integrate Delivery System

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A system of healthcare providers capable of accepting financial responsibility for and delivering a full range of clinical services

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Physician-Hospital Organizations

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Joint venture between healthcare organizations and physicians that are capable of contracting with managed care organizations

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Accountable care organization

answer

An organization that coordinates care among healthcare organizations and physicians. A key element is that some portion of its reimbursement is tied to accoutability

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Management Functions

answer

The key functions of a manger, including planning, organizing, staffing, directing, and controlling

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Management Connective Processes

answer

Management functions that connect elements of the healthcare organization, including communicating, coordinating, and decision making

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The Joint Commission

answer

The primary Accrediting Organization of HCOs

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HFMA

answer

Confers two certification, Certified Healthcare Financial Professional, and Fellow of the Healthcare Financial Management Association

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Admissions

answer

Number of patients, excluding newborns, accepted for inpatient srvices

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Average Daily cencus

answer

Average number of inpatients, excluding newborns, receiving care each day during the reporting period

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Average Length of Stay

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Derived by dividing the number of inpatient days by the number of admissions

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Occupancy rate

answer

Ratio of average daily census to the average number of statistical (set up and staffed for use) beds

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Ratio Analysis

answer

A financial analysis tool that compares various key financial indicators. Ex. debt to equity and revenue to assets

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Capitol Analysis

answer

A process to determine how much a capitol expenditure will cost and what return it will generate

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Third-Party Payer

answer

An entity, such as an insurance company, that pays for health care for another entity, such as a patient.

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Prospective payment system

answer

Payment system in which a HCO accepts a fixed, predetermined amount to treat a patient, regardless of the true ultimate cost of that treatment. DRGs are one type; Medicare pays hospitals a fixed amount for an episode of treatment based on that treatment's DRG

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Capitation

answer

Payment system in which an organization accepts a monthly payment from a third-party payer for each individual covered by that payer's plan, regardless of whether a given individual is treated in a given month. Provides a financial incentive to HCO to keep its population from using more healthcare than necessary

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Sentinel Indicator

answer

An indicator that alerts a manager every time a particular event occurs. Ex. A manager may be alerted every time a patient in the department goes into cardiac arrest

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Rate-based indicator

answer

An indicator that alerts a manager only when a measure reaches a particular tipping point. Ex. A manager might be alerted every time the number of empty bed in the department fall below a certain level

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National Patient Safety Goals

answer

A set of goals established by the JC to address safety areas of special concern for hospitals

Finance Terms–Chapters 1-5 – Flashcards

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