Nurses, Nursing Education, and Nursing Workforce: Definitions

E. MODELS OF HEALTH CARE REIMBURSEMENT

1. Managed Care. An organized way to manage the cost, use, and quality of the health care system. There are several major forms of managed care that are described below.
   
   
2. Fee-for-Service with Utilization Review. This is similar to Fee-for-Service, with the addition that the third party payer assumes the power to authorize, deny, or limit payment for health care interventions. (Source: Bodenheimer, Grumbach; Understanding Health Policy, 1995)
   
   
3. Health Maintenance Organization (HMO). A health care organization that acts as both insurer and provider of comprehensive but specified medical services. Most services are financed through prospective per capita (capitation) payments. The organization has responsibility for managing the provision of comprehensive health care services and typically provides preventive care. Depending on whether the services are organized under a staff or group model versus being contracted with physicians separately, services are provided at organization's own facility or those hospitals, physicians, and clinics with which it has a network agreement for the provision of care. Typically, primary care physicians coordinate and refer for treatment. Provision
   
   
4. Independent Practice Association (IPA). A loose network of private physicians, other health care professionals, and facilities in which insurers contract with the provider or facility. Rates for fees are negotiated separately with each provider or facility. (Bodenheimer, Grumbach; Understanding Health Policy, 1995)
   
   
5. Prepaid Group Practice. A multi-specialty group of physicians or other health professionals who contract to provide services on an ongoing or continuous basis to a group of enrollees.
   
   
6. Preferred Provider Organization (PPO). A loose-knit organization of providers in which the insurer contacts with a limited number of physicians and hospitals to provide health care at specific levels of reimbursement for each service. The preferred providers are often subject to other stipulations regarding the monitoring of utilization, the appropriateness of care provided, and the terms of the provision of care allowed under the arrangements. While the patient does have some flexibility in health care decisions and selecting providers, through self-referrals both inside and outside the network of PPO providers, patients have financial incentives to select PPO network providers.
   
   
7. Point-of-Service (POS). A hybrid network model that combines features of HMOs, IPAs, and PPOs. Like an HMO, IPA, or PPO, the patient only pays a co-payment or low co-insurance for contracted services within a network of preferred providers for what is termed in-network care. However, like traditional fee-for-service insurance, enrollees have the flexibility to seek out-of-network care under the terms of traditional indemnity plans with a deductible and a percentage co-insurance charge.
   
   
8. Fee-for-Service. A system of provision of care where the health provider is paid a fee for each service or supply provided. Fees are billed at rates established by the provider. Fee for Service is not a form of managed care. Retrospectively, patients may receive reimbursement for health care services under a fee schedule. Fees and reimbursements from any applicable insurance arrangement based on a complex variety of factors, including the number and type of services provided, standardized coding system, the geographic area of service, and certain office and training expenses of the provider.