Canon Medical Systems USA

Healthcare Economics Glossary of Terms


Healthcare Economics is a comprehensive subject with many acronyms and terms that are added, updated, or changed with frequency.  CMSU has compiled a list of common healthcare economic terms and definitions that can be helpful when discussing healthcare economics, taking courses, or reviewing articles.

Search by Alphabet

A |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I  |  J  |  K  |  L  |  M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  X  |  Y  |  Z
Accountable Care Organization - An association of hospitals, healthcare providers and insurers in which all parties voluntarily assume financial and medical responsibility for Medicare patients. The purpose of an ACO is to enable care coordination that allows a patient to receive the right care at the right time while reducing the risk of medical errors and duplicate services.
Advanced & MIPS APMs
Most Advanced APMs are also MIPS APMs. MIPS Eligible clinicians participating in Advanced APMs are included in MIPS if they do not meet the threshold for payments or patients sufficient to become a Qualifying APM Participant (QP). The MIPS eligible clinician will be scored under MIPS according to the APM scoring standard.
Advanced APMs
Must use certified Electronic Health Record (EHR) technology.  Provides payment for covered professional services based on quality measures comparable to those used in the MIPS quality performance category; and either: (1) is a Medical Home Model expanded under CMS Innovation Center authority OR (2) requires participants to bear a significant financial risk.  Benefits include a 5% bonus, exclusion from MIPS, and other APM-specific rewards.
Affordable Health Care Act of 2010
The “Affordable Care Act” (ACA) is the name for the comprehensive health care reform law and its amendments. The law addresses health insurance coverage, health care costs, and preventive care. The law was enacted in two parts: The Patient Protection and Affordable Care Act was signed into law on March 23, 2010 and was amended by the Health Care and Education Reconciliation Act on March 30, 2010.  Also referred to as ACA and “Obamacare”.
Alternative Price Models (APMS)
APMs are payment models that give added incentive payments to provide high-quality and cost efficient care.  According to the Centers for Medicare and Medicaid Services (CMS), APMs can apply to a specific clinical condition, a care episode, or a population.  CMS defines several types of APMs with different eligibility and criteria. 
American Medical Association - The largest association of physicians (both MDs and Dos) and medical students in the United States.
Ambulatory Payment Classification - Hospital Outpatient Imaging payments are made to the facility (hospital) from the Ambulatory Payment Classification (APC) Fee Schedule.   Reimbursement from this schedule covers the hospital’s technical/facility charge, supplies, and drugs/radiopharmaceuticals.  Reimbursement for each APC is based upon an average cost of all services included within each APC group.  Each APC is assigned an RVU that is multiplied by the CMS HOPPS Conversion Factor and Wage Indices to determine payment value.  Wage Index is applied to 60% of the procedure payment, but is not applied to drug or radiopharmaceutical supplies.
ASC Payment Schedule
Ambulatory Surgical Center - Under the ASC payment system, Medicare will make facility payments to ASCs only for the specific ASC covered surgical procedures on the ASC list of covered surgical procedures published in Addendum AA of the hospital outpatient prospective payment system (OPPS)/ASC final rule for the relevant payment year.  Payment is lower than OPPS-based procedures.
Ambulatory surgery centers (ASCs) are medical facilities that specialize in elective same-day or outpatient surgical procedures. They do not offer emergency care. The patients treated in these surgical centers do not require admission to a hospital and are well enough to go home after the procedure.
Congressional Budget Office - Since 1975, CBO has produced independent analyses of budgetary and economic issues to support the Congressional budget process. Each year, the agency’s economists and budget analysts produce dozens of reports and hundreds of cost estimates for proposed legislation.
CBO is strictly nonpartisan; conducts objective, impartial analysis; and hires its employees solely on the basis of professional competence without regard to political affiliation. CBO does not make policy recommendations, and each report and cost estimate summarizes the methodology underlying the analysis.
Centers for Medicare and Medicaid Services - The Centers for Medicare & Medicaid Services (CMS) is part of the U.S. Department of Health and Human Services. CMS oversees many federal healthcare programs, including Medicare, Medicaid, Children's Health Insurance Program (CHIP), the meaningful use incentive program for electronic health records (EHR), HIPPA, and MACRA.
Current Procedural Terminology - A medical code set that is used to report medical, surgical, and diagnostic procedures and services to entities such as physicians, health insurance companies and accreditation organizations. CPT codes are used in conjunction with ICD-9-CM or ICD-10-CM numerical diagnostic coding during the electronic medical billing process.
Cybersecurity is the protection of internet-connected systems, including hardware, software and data, from cyberattacks.
Diagnosis Related Groups  - A classification system that groups patients according to diagnosis, type of treatment, age, and other relevant criteria.  Under the Inpatient Prospective Payment System (IPPS), hospitals are paid a set fee for treating patients in a single MS-DRG category, regardless of the actual cost of care for the individual.  MS-DRGs allow an efficiently operated hospital to earn a reasonable rate of return on a per case basis.
MS-DRGs began fiscal year 2007
Electronic Health Record - is an individual's official health document that is shared among multiple facilities and agencies. An EHR contains many data records including: contact information, past visits to providers, Allergies, Insurance information, Family History, Immunization status, list of medications, etc.

Gross Domestic Product - Gross domestic product is the total value of everything produced in the country.  In the United States, the Bureau of Economic Analysis measures GDP quarterly. 
Healthcare Economics
A branch of economics that is focused on issues related to efficiency, effectiveness, social determinants, value and behavior in the production and consumption of health and healthcare.  Health economics is leveraged in measuring cost-effectiveness of new technologies, drugs, delivery, education and behavioral programs that guides design of policy with the intent of improving the general welfare.
Health Insurance Portability and Accountability Act of 1996 - is United States legislation that provides data privacy and security provisions for safeguarding medical information.
The Health Information Technology (HIT) policy committee is a federal committee created by the American Recovery and Reinvestment Act of 2009 (ARRA) that advises the National Coordinator for Health IT on the creation of a nationwide health IT infrastructure.
Hospital Outpatient Prospective Payment System - Used by CMS to reimburse for hospital outpatient services. The CMS created HOPPS to reduce beneficiary copayments in response to rapidly growing Medicare expenditures for outpatient services and large copayments being made by Medicare beneficiaries.

All covered outpatient services belong to an Ambulatory Payment Classification (APC) group. Each group of procedure (i.e., codes) within an APC is supposed to be “similar clinically and with regard to resource consumption.”
An IDTF is a facility that is independent both of an attending or consulting physician’s office and of a hospital.  When an IDTF furnishes diagnostic procedures in a physician’s office, IDTF general coverage and payment policy rules apply.
Inpatient Prospective Payment System - Payment system, defined the Social Security Act, for the operating costs of acute care hospital inpatient stays under Medicare Part A based on prospectively set rates.  Under the IPPS, each case is categorized into a diagnosis-related group (DRG). Each DRG has a payment weight assigned to it, based on the average resources used to treat Medicare patients in that
Interoperability is the ability of different systems, devices, applications or products to connect and communicate in a coordinated way, without effort from the end user.
Medicare Access and CHIP Reauthorization Act of 2015 - is U.S. healthcare legislation that provides a new framework for reimbursing clinicians who successfully demonstrate value over volume in patient care. The CHIP in the full MACRA name stands for the Children's Health Insurance Program, for which MACRA extends funding.
Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources and offers benefits not normally covered by Medicare, like nursing home care and personal care services.
Medicare is the federal health insurance program for:
  • People who are 65 or older
  • Certain younger people with disabilities
  • People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)
Medicare Part A (Hospital Insurance)
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B (Medical Insurance)
Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services.
Medicare Part D (Prescription drug coverage
Part D adds prescription drug coverage to:
  • Original Medicare
  • Some Medicare Cost Plans
  • Some Medicare Private-Fee-for-Service Plans
  • Medicare Medical Savings Account Plans
These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
Merit-based Incentive Payment System - Under MIPS, clinicians are included if they are an eligible clinician type and meet the low volume threshold, which is based on allowed charges for covered professional services under the Medicare Physician Fee Schedule (PFS) and the number of Medicare Part B patients who are furnished covered professional services under the Medicare Physician Fee Schedule.  Performance is measured through the data clinicians report in four areas - Quality, Improvement Activities, Promoting Interoperability (formerly Advancing Care Information), and Cost.

APM bases payment incentives on performance, cost/utilization, and quality measures. APM entities that participate must have an agreement with CMS and include one or more MIPS eligible clinicians.
Medicare Physician Fee Schedule - CMS uses the MPFS to reimburse physician services associated with: physician work, practictice expense, and professional liability insurance.  Under the MPFS, each of these three elements is assigned a Relative Value Unit (RVU) for each Current Procedural Terminology (CPT®) code. These RVUs are then adjusted based on the Geographical Practice Cost Index associated with various geographic areas for different medical costs and wage differentials. The conversion factor is the national dollar amount that is multiplied by the total geographically adjusted RVU to determine the Medicare-allowed payment amount for a particular physician service.
The Outpatient Prospective Payment System (OPPS) is the system through which Medicare decides how much money a hospital or community mental health center will get for outpatient care to patients with Medicare. The rate of reimbursement varies with the location of the hospital or clinic.
Per Capita
Per capita means the average per person and is often used in place of per person in statistical observances. The phrase is used with economic data or reporting 
Price Transparency
Hospitals will have to disclose contracted rates on a set group of procedures and an additional grouping agreed upon with CMS.
Resource Based Relative Value Scale - Physician Fee Schedule payment source for hospital based radiologists (Professional Component), IDTFs, and physician office setting. 
Relative Value Unit - Rank the resources used to provide each physician service on a common scale. These resources include the physician’s work, the expenses of the physician’s practice, and professional liability insurance. To determine the Medicare fee, a service’s RVUs are multiplied by a dollar conversion factor.  Estimating and updating the RVUs is a labor-intensive process because there are no readily available, up-to-date data on the resource requirements of each service.

Also known as "Surprise Medical Bill" describes charges arising when an insured person unintentionally receives care from an out-of-network provider.  Surprise billing can occur in emergency care where the patient might not choose the ambulance, hospital, etc.  This can also occur when a patient receives care from a provider that is not in their network but operates out of an in-network facility.
TRICARE is the health care program for uniformed service members, retirees, and their families around the world.  TRICARE provides comprehensive coverage to all beneficiaries, including: Health plans, Special programs, Prescriptions, and Dental plans.  Most TRICARE health plans meet the requirements for minimum essential coverage under the Affordable Care Act.  TRICARE is managed by the Defense Health Agency under leadership of the Assistant Secretary of Defense (Health Affairs).
Value-Based Healthcare
Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare. These programs are part of our larger quality strategy to reform how health care is delivered and paid for. Value-based programs also support our three-part aim:
  • Better care for individuals
  • Better health for populations
  • Lower cost
Volume-Based Healthcare
Volume-based care refers to the payment a health care provider receives for services a patient might need. The type of service and quality of service does not really make a difference in the amount a provider might receive. This is volume-based care in a nutshell, which is sometimes referred to as a fee-for-service care.


A |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I  |  J  |  K  |  L  |  M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  X  |  Y  |  Z
Back to the top of the page.

CPT 2005 Manual

Back to the top of the page.