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Managed Care Glossary

By: the Center for Mental Health Services/Knowledge Exchange Network


The extent to which an individual who needs care and services is able to receive them. Access is more than having insurance coverage or the ability to pay for services. It is also determined by the availability of services, acceptability of services, cultural appropriateness, location, hours of operation, transportation needs, and cost.


An official decision made by a recognized organization that a health care plan, network, or other delivery system complies with applicable standards.

Administrative Costs

Costs not linked directly to the provision of medical care. Includes marketing, claims processing, billing, and medical record keeping, among others.

Adverse selection

Occurs when plan enrollees include a higher percentage of high-risk individuals than in the average population, resulting in the potential for greater health care utilization and therefore increased costs.

Any willing provider

A requirement that a health plan sign a contract for the delivery of health care services with any provider in the area who would like to provide such services to the plan's enrollees.


The extent to which a particular procedure, treatment, test, or service is clearly indicated, not excessive, adequate in quantity, and provided in the setting best suited to a patient's or member's needs.

Behavioral healthcare

Continuum of services for individuals at risk of or suffering from mental, addictive, or other behavioral health disorders.

Behavioral heath care firm

Specialized (for-profit) managed care organizations, focusing on mental health and substance abuse benefits which they term "behavioral healthcare." These firms offer employers and public agencies a managed mental health and substance abuse benefit.


For particular indicator or performance goal, the industry measure of best performance. The benchmarking process identifies the best performance in the industry (health care or non-health care) for a particular process or outcome, determines how that performance is achieved, and applies the lessons learned to improve performance.


A person certified eligible for health care services. A beneficiary may be a dependent or a subscriber.

Benefit Package

Services covered by a health insurance plan and the financial terms of such coverage. These include cost, limitation on the amounts of services, and annual or lifetime spending limits.


A fixed amount of money paid per person for covered services for a specific time; usually expressed in units of per member per month (pmpm).


A generic term that refers to any of a continuum of joint efforts between clinicians and service providers; also used specifically to refer to health care delivery and financing arrangements in which all covered benefits (e.g., behavioral and general health care) are administered and funded by an integrated system.


A health care delivery and financing arrangement in which certain specific health care services that are covered benefits (e.g., behavioral health care) are administered and funded separately from general health care services. The carve-out is typically worked out through separate contracting or sub-contracting for services to the special population.

Case Management

A system requiring that a single individual in the provider organization is responsible for arranging and approving all devices needed under the contract embraced by employers, mental health authorities, and insurance companies to ensure that individuals receive appropriate, reasonable health care services.


A request by an individual (or his or her provider) to an individual's insurance company for the insurance company to pay for services obtained from a health care professional.


Any individual who does or could receive health care or services. Includes other more specialized terms, such as beneficiary, client, customer, eligible member, recipient, or patient.

Continuous quality improvement (CQI)

An approach to health care quality management borrowed from the manufacturing sector. It builds on traditional quality assurance methods by putting in place a management structure that continuously gathers and assesses data that are then used to improve performance and design more efficient systems of care. Also known as total quality management (TQM).


A health insurance policy provision that requires the insured party to pay a portion of the costs of covered services. Deductibles, coinsurance, and copayment are types of cost-sharing.


The amount an individual must pay for health care expenses before insurance (or a self-insured company) begins to pay its contract share. Often insurance plans are based on yearly deductible amounts.

Drug Formulary

The list of prescription drugs for which a state Medicaid program will pay.


A person eligible for services from a managed care plan.


The total number of covered persons in a health plan. Also refers to the process by which a health plan signs up groups and individuals for membership or the number of enrollees who sign up in any one group.


The Employment Retirement Income Security Act of 1974 (ERISA). Health plans that are self-insured are exempt from state regulation under ERISA.

Fee for Service

A type of health care plan where health care providers are paid for individual medical services rendered.


Primary care physician or local agency responsible for coordinating and managing the health care needs of members. Generally, in order for specialty services such as mental health and hospital care to be covered, the gatekeeper must first approve the referral.

Group-model HMO

A health care model involving contracts with physicians organized as a partnership, professional corporation, or other association. The health plan compensates the medical group for contracted services at a negotiated rate, and that group is responsible for compensating its physicians and contracting with hospitals for care of their patients.

Health Maintenance Organization (HMO)

A type of managed care plan that acts as both insurer and provider of a comprehensive set of health care services to an enrolled population. Services are furnished through a network of providers.

Intensive case management

Intensive community services for individuals with severe and persistent mental illness designed to improve planning for their service needs. Services include outreach, evaluation, and support.

Length of Stay

The duration of an episode of care for a covered person. The number of days an individual stays in a hospital or inpatient facility.

Local Mental Health Authority

Local organizational entity (usually with some statutory authority) that centrally maintains administrative, clinical, and fiscal authority for a geographically specific and organized system of health care.

Managed Care

An organized system for delivering comprehensive mental health services that allows the managed care entity to determine what services will be provided to an individual in return for a prearranged financial payment. Generally, managed care controls health care costs and discourages unnecessary hospitalization and overuse of specialists, and the health plan operates under contract to a payer.

Medical group practice

A number of physicians working in a systematic association with the joint use of equipment and technical personnel and with centralized administration and financial organization.

Medical review criteria

Screening criteria used by third-party payers and review organizations as the underlying basis for reviewing the quality and appropriateness of care provided to selected cases.


Used synonymously with the terms enrollee and insured. A member is any individual or dependent who is enrolled in and covered by a managed health care plan.


The system of participating providers and institutions in a managed care plan.


The results of a specific health care service or benefit package.

Outcomes measure

A tool to assess the impact of health services in terms of improved quality and/or longevity of life and functioning.

Outcomes research

Studies that measure the effects of care or services.


The public or private organization that is responsible for payment for health care expenses.

Performance measure

A measure that describes the health care being provided. Current performance measures indicate whether a health plan or provider has appropriately provided certain services expected to lead to desirable outcomes.

Point-of-service plan

A modified managed care plan where members do not have to choose how to receive services until they need them. Members receive coverage at a reduced level if they choose to use a non-network provider.

Practice guidelines

Systematically developed statements to standardize care and to assist in practitioner and patient decisions about the appropriate health care for specific circumstances. Practice guidelines are usually developed through a process that combines scientific evidence of effectiveness with expert opinion. Practice guidelines are also referred to as clinical criteria, protocols, algorithms, review criteria, and guidelines.

Pre-existing condition

A medical condition that is excluded from coverage by an insurance company because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company.

Primary care physician (PCP)

Physicians with the following specialties: group practice, family practice, internal medicine, obstetrics/gynecology, and pediatrics. The PCP is usually responsible for monitoring an individual's overall medical care and referring the individual to more specialized physicians for specialist care.

Prior authorization

The approval a provider must obtain from an insurer or other entity before furnishing certain health services, particularly inpatient hospital care, in order for the service to be covered under the plan.

Quality Assurance

An approach to improving the quality and appropriateness of medical care and other services. Includes a formal set of activities to review, assess, and monitor care to ensure that identified problems are addressed.

Report Card

An accounting of the quality of services, compared among providers and compared over time. The report card grades providers on predetermined, measurable, quality, and outcome indicators. Generally, consumers use report cards to choose a health plan or provider, while policymakers may use report card results to determine overall program effectiveness, efficiency, and financial stability.


Possibility that revenues of the insurer will not be sufficient to cover expenditures incurred in the delivery of contractual services. A managed care provider is at risk if actual expenses exceed the payment amount.

Risk adjustment

The adjustment of premiums outcome measure to compensate health plans for the risks associated with individuals who are more likely to require costly treatment. Risk adjustment takes into account the health status and risk profile of patients.

Risk sharing

Situation in which the managed care entity assumes responsibility for services for a specific group but is protected against unexpected high costs by a pre-arranged agreement for higher payments for those individuals who need significantly more costly services. Risk is usually shared by the managed care entity and the state.

Section 1115 Waiver

A statutory provision that allows a state to operate its system of care for Medicaid enrollees in a manner different from that proscribed by the Centers for Medicare and Medicaid Services (CMS), in an attempt to demonstrate the efficacy and cost-effectiveness of an alternative delivery system through research and evaluation.

Section 1915(b) Waiver

A statutory provision that allows a state to partially limit the choice of providers for Medicaid enrollees; for example, under the waiver, a state can limit the choice of enrollees to disenroll from an HMO on more than a yearly basis.

Single-stream funding

The consolidation of multiple sources of funding into a single stream. It is a key approach used in progressive mental health systems to see that "funds follow consumers."

Staff-model HMO

An HMO that directly employs on a salaried basis the doctors and other providers who furnish care.

State Mental Health Authority or Agency

State government agency charged with administering and funding its state's public mental health services.


An arrangement whereby a capitated health plan pays its contracted providers on a capitated basis.


Employment group or individual that contracts with an insurer for medical services.

Third party payer

A public or private organization that is responsible for the health care expenses of another entity.


The review of prospective or renewing cases to determine the risk they pose and their potential costs.


The level of use of a particular service over time.

Utilization management

A system of procedures designed to ensure that the services provided to a specific client at a given time are cost-effective, appropriate, and least restrictive.

Utilization review

Retrospective analysis of the patterns of service usage in order to determine means for optimizing the value of services provided (minimize cost and maximize effectiveness/appropriateness).

Utilization risk

The risk that actual service utilization might differ from utilization projections.