Practice Operations Glossary

Accountable Care Organization (ACO)

A group of coordinated health care providers who form a healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for their population of patients. The ACO is accountable to patients and the third-party payer for the quality, appropriateness, and efficiency of the care provided.

Billing Function Structure

The method by which a practice performs their medical billing operations and tasks. Combination of In-house and Outsourced: Some tasks of medical billing operations were performed inside the practice while others were performed by a third-party company.

In-house: Medical billing operations were performed within a practice. Outsourced: Medical billing operations were performed by a third-party company. Other: Another method was used to perform medical billing operations.

Demographic Classification

Metropolitan Area (50,000 or More): The county in which the practice is located is defined as a metropolitan (metro) county by the Office of Management and Budget (OMB), based on recent Census Bureau data.

Nonmetropolitan Area (49,999 or Fewer): The county in which the practice is located is defined as a nonmetropolitan (nonmetro) county by the Office of Management and Budget (OMB), based on recent Census Bureau data.

Federally Qualified Health Center (FQHC)

A reimbursement designation that refers to several health programs funded under Section 330 of the Public Health Service Act of the US Federal Government. These 330 grantees in the Health Center Program include:

• Community Health Centers which serve a variety of underserved populations and areas;
• Migrant Health Centers which serve migrant and seasonal agricultural workers;
• Health Care for the Homeless Programs which reach out to homeless individuals and families and provide primary and preventive care and substance abuse services; and
• Public Housing Primary Care Programs that serve residents of public housing and are located in or adjacent to the communities they serve.

FQHCs are community-based organizations that provide comprehensive primary and preventive health, oral, and mental health/substance abuse services to persons in all stages of the life cycle, regardless of their ability to pay.

Full Time Equivalent (FTE)

A measure based upon the number of actual hours worked regardless of whether it’s spent in clinical or nonclinical activities. A 1.0 FTE provider works the number of hours the practice considers to be the minimum for a normal workweek, which could be 37.5, 40, 50 hours, or some other standard. Regardless of the number of hours worked, a provider cannot be counted as more than 1.0 FTE.

Legal Organization 

Business Corporation: A for-profit organization recognized by law as a business entity separate and distinct from its shareholders. Shareholders need not be licensed in the profession practiced by the corporation.

Limited Liability Company (LLC): A legal entity that is a hybrid between a corporation and a partnership, because it provides limited liability to owners like a corporation while passing profits and losses through to owners like a partnership.

Not-for-profit Corporation/Foundation: An organization that has obtained special exemption under Section 501(c) of the Internal Revenue Service code that qualifies the organization to be exempt from federal income taxes. To qualify as a tax exempt organization, a practice or faculty practice plan would have to provide evidence of a charitable, educational, or research purpose.

Partnership: An unincorporated organization where two or more individuals have agreed that they will share profits, losses, assets, and liabilities, although not necessarily on an equal basis. The partnership agreement may or may not be formalized in writing.

Professional Corporation/Association: A for-profit organization recognized by law as a business entity separate and distinct from its shareholders. Shareholders must be licensed in the profession practiced by the organization.

Sole Proprietorship: An organization with a single owner who is responsible for all profit, losses, assets, and liabilities.

Number of FTE Physicians 

The practice's full-time-equivalent (FTE) physician count. For further detail on FTE, see Full-Time Equivalent above.

Organization Ownership

Hospital/IDS Owned:

• Hospital: A hospital is an inpatient facility that admits patients for overnight stays, incurs nursing care costs, and generates bed-day revenues.
• Integrated Health System or Integrated Delivery System (IDS): A network of organizations that provide or coordinate and arrange for the provision of a continuum of health care services to consumers and is willing to be held clinically and fiscally responsible for the outcomes and the health status of the populations served. Generally consisting of hospitals, physician groups, health plans, home health agencies, hospices, skilled nursing facilities, or other provider entities, these networks may be built through “virtual” integration processes encompassing contractual arrangements and strategic alliances as well as through direct ownership.
• Management Services Organization (MSO): An entity organized to provide various forms of practice management and administrative support services to health care providers. These services may include centralized billing and collections services, management information services, and other components of the managed care infrastructure. MSOs do not actually deliver health care services. MSOs may be jointly or solely owned and sponsored by physicians, hospitals, or other parties. Some MSOs also purchase assets of affiliated physicians and enter into long-term management service arrangements with a provider network. Some expand their ownership base by involving outside investors to help capitalize the development of such practice infrastructure.
• Physician Practice Management Company (PPMC): Publicly held or entrepreneurial directed enterprises that acquire total or partial ownership interests in physician organizations. PPMCs are a type of MSO, however their motivations, goals, strategies, and structures arising from their unequivocal ownership character – development of growth and profits for their investors, not for participating providers – differentiate them from other MSO models.

Physician Owned:

• Advanced Practice Providers: Any advanced practice provider (e.g. nurse practitioners, physical therapists, etc.) duly licensed and qualified under the law of jurisdiction in which treatment is received.
• Physicians: Any Doctor of Medicine (MD) or Doctor of Osteopathy (DO) who is duly licensed and qualified under the law of jurisdiction in which treatment is received.

Other Majority Owner:

• Insurance company (including HMO and PPO): An insurance company is an organization that indemnifies an insured party against a specified loss in return for premiums paid, as stipulated by a contract. An HMO is an insurance company that accepts responsibility for providing and delivering a predetermined set of comprehensive health maintenance and treatment services to a voluntarily enrolled population for a negotiated and fixed periodic premium.
• Government: A governmental organization at the federal, state, or local level. Government funding is not enough criterion. Government ownership is the key factor. An example would be a medical clinic at a federal, state, or county correctional facility.
• Privately Operated: A company or individual that takes their own money and uses it to fund another organization. Some investors have the option to invest passively, which means they give their funding and play no further role, while others have a more significant role in the organization. Includes non-clinical investors or owners.
• University or Medical School: An institution of higher learning with teaching and research facilities comprising undergraduate, graduate and professional schools. A medical school is an institution that trains physicians and awards medical and osteopathic degrees.
• Foundation: Foundations are very similar to nonprofit legal entities to allow physicians, organizations or other healthcare providers a mechanism to provide medical services or perform research. Foundations are generally organizations that do not qualify as a public charity, but are often set up via an endowment to support charitable purposes or as a memorial or similar healthcare related purpose. They are usually non-stock corporations and are eligible for federal tax exempt status.

Patient Centered Medical Home (PCMH)

A care delivery model where patient treatment and care is coordinated through their primary care provider to ensure they receive high quality care when care is necessary. The objective is collaboration between the patient and physicians with care delivered in a way the patient can understand. PCMHs seek to improve the quality, effectiveness, and efficiency of the care delivered while focusing on meeting patient needs first.

Rural Health Clinic (RHC)

A clinic certified to receive special Medicare and Medicaid reimbursement. The purpose of the RHC program is to improve access to primary care in underserved rural areas. RHCs are required to use a team approach of physicians and advanced practice providers (nurse practitioners, physician assistants, and certified nurse midwives) to provide services. The clinic must be staffed at least 50% of the time with an advanced practice provider. RHCs may also provide other healthcare services such as mental health or vision services, but reimbursement for those services may not be based on their allowable cost.

Total Medical Revenue

The sum of fee-for-service collections (revenue collected from patients and third-party payers for services provided to fee-for service, discounted fee-for-service, and non-capitated Medicare/ Medicaid patients), capitation payments (gross capitation revenue minus purchased services for capitation payments), and other medical activity revenues.

• Net Prepaid (Capitation/Sub-Capitation) Revenue: Includes all capitation revenue received from Health Maintenance Organizations (HMOs), risk-sharing revenue, hospital/ utilization withholds, co-payments and revenue received from a benefits coordination and/or reinsurance recovery situation minus professional and medical services purchased from outside providers.
• Net Other Patient Care/Medical Services Revenue: Includes all revenue received from the sale of goods and services such as durable medical equipment rental, revenue from medical service contracts with nursing homes or ambulatory care centers, hospital reimbursements for direct patient care, and revenue from providing ancillary services on a fixed fee or percentage contract that are not billed as fee-for-service.
• Other Medical Revenue: Includes grants, honoraria, research contract revenues, government support payments, and educational subsidies plus the revenue from the sale of medical goods and services.
• Total Department Revenue: All revenue received by the department from patient care activities, net of all refunds, returned checks, contractual discounts and allowances, bad debts and write-offs. The sum of total fee-for-service (FFS) revenue, net prepaid (capitation/sub-capitation) revenue and net other patient care/medical services revenue equals total patient care revenue.
• Total FFS Revenue: Includes net collections (receipts) from patients who are self-insured, or reimbursements from a third-party insurer that compensates the department (practice plan) on a fee-for-service, or discounted fee-for service basis.