anthology 2001 table 4.1

Table 4.1. Glossary of Terms.
Term	Definition

Ambulatory Care	All types of health services that are provided on an outpatient basis in contrast to services provided in the home or for inpatients in health care institutions. In other words, health services provided without admitting the patient to a hospital or long-term care facility.
Block Grants	Grant funds made to local and state government units by the federal government. Although states are required to submit an annual plan explaining how such funds will be used, there is great flexibility in the distribution of grant money as long as the funds are used for acceptable purposes.
Capitation	A method of payment for health services in which an individual or institutional provider is paid a fixed, per capita amount for each person served without regard to the actual number or nature of services provided to each person. Capitation is a set money amount received or paid out, usually under a contract, and is paid in advance on the basis of membership enrollments rather than on services delivered.
Diagnosis-Related Group (DRG)	An approach to classifying a patient's disease or condition and treatment procedures in terms of the expected consumption of hospital resources. Medicare began using Diagnosis-Related Groups in 1983 to reduce hospital costs by encouraging the reduction of the length of stay of patients.
Fee-For-Service	A method of charging patients for medical care services or treatment whereby a physician or other practitioner bills the insurance company or the patient for each patient encounter, treatment, or service rendered
Group Practice	A formal association of three or more physicians or other health professionals who share expenses, facilities, staff and diagnostic equipment, lab, information management systems, and administrative overhead.
Health Maintenance Organization (HMO)	A prepaid health plan that provides comprehensive health care services for a specified group or members at a fixed cost or through prepaid periodic payments. Members are required to seek services from the health plan's set of physicians and other health practitioners, except in certain specified situations.
Integrated Delivery System	A single organization or a group of affiliated organizations, which consists of physicians, dispersed clinic settings, hospitals, a referral network, and full continuum of after-care offerings, that provides the full range of health care services to a population of enrollees within a market area or fairly large regional area.
Preferred Provider Organization (PPO)	Specialized health care delivery organizations formed by hospitals, physicians, medical groups, or health plans that negotiate fee schedules with insurance companies, thus becoming preferred. The patient has a financial incentive-stemming from lower copayments and deductibles-to use the preferred provider.
Prepaid Group Practice	A formal association of three or more physicians or other health professionals that provides a defined set of services to persons over a specified time period in return for a fixed periodic prepayment made in advance of the use of service.
Risk Adjustment	The process of trying to compensate companies that have an unusually high number of high-cost enrollees by adjusting reimbursement for enrollee characteristics such as severity of illness.

Sources: Thomas C. Timmreck, Health Services Cyclopedic Dictionary: A Compendium of Health-Care and Public Health Terminology, Third Edition (Sudbury, Mass.: Jones and Bartlett Publishers, 1997) and Richard Rognehaugh, The Managed Health Care Dictionary, Second Edition (Gaithersburg, Md.: Aspen Publishers, 1998).