Deciphering the emerging health-care acronyms

“A mentor is someone who allows you to see the hope inside yourself.” – Oprah Winfrey

It’s important to speak in a language that your audience understands. As many of you know, accountants are not necessarily known for clarity in speaking the language of finance and accounting. Unexplained acronyms are used all too frequently including terms that are only known to those who have studied business and finance.

In today’s health-care industry, new acronyms are flourishing. Everyone knows about physicians, hospitals, insurance companies, and surgery, etc. Lately, however, we have seen the rise of MCO, MSO, ACO, PPS, and more. What follows is an explanation of 10 of these acronyms that will help you more clearly understand our “far too complex” health-care delivery system.

Readers of this column know that both the federal (Obamacare) and New York State (Medicaid Managed Care) governments are again attempting to reform our health-care delivery system.

The following “Top 10 List” of current health-care acronyms should help clarify what I describe as the health-care “Ball of Confusion.” Many thanks to the Temptations for that 1970 hit song.

Some of the following terms are new to health care, others are “retreads” which have returned from earlier reform iterations.

DSRIP
DSRIP is a recent New York state Medicaid reform initiative that stands for Delivery Service Reform Incentive Program. Under DSRIP, the federal and state governments agreed that up to $8 billion of federal funding would be passed to the state of New York from the federal government in order to effect Medicaid reform initiatives.

The DSRIP funding is performance-based and has, as a primary objective, the reduction of high-cost, facility-based (i.e., hospital admissions and emergency room visits) health-care services. One of the key performance targets under the DSRIP funding model is a reduction in hospital admissions and emergency room visits of 25 percent over the next five years. A tall task, which focuses on providing enhanced preventive and community-based services that will result in reducing “avoidable” facility-based services.

PPS
For the past 30 years, PPS has generally referred to a health-care payment methodology known as a Prospective Payment System. Within the past three months, under DSRIP, New York has added to the “Ball of Confusion” by using PPS to represent Performing Providing Systems.

Under a DSRIP PPS model, a multi-county region of health-care service providers, led by hospitals and health systems, are expected to restructure and reform our current fragmented delivery system to achieve an integrated health-care service-delivery system focused on community-based supports and services.

The initial applications for regional PPS planning grants were due at the end of June. If successful, the PPS model, coupled with the federal ACO model described below, will result in massive restructuring of health-care service providers with a plethora of mergers, affiliations, and acquisitions.

ACO
Under the Affordable Care Act, also known as Obamacare, ACOs (Accountable Care Organizations) are intended to accomplish similar objectives to the PPS model. ACOs are generally led by hospitals and health systems in a regional delivery network that is designed to provide coordinated, efficient, and appropriate health care to individuals enrolled in the particular ACO for purposes of receiving health-care services.

Both the ACO and PPS structural models are based on the presumption that a coordinated and integrated provider-delivery system will achieve better service quality, better service outcomes with a cost-effective result. These models have spawned a new term known as “population health,” which focuses on services and costs for a large group of enrollees as a pool of individuals. The larger the group, the more potential that exists for achieving cost reductions for avoidable or unnecessary care. If this sounds like health insurance to you, read on, because, in many ways, it is.

MCO
Managed Care Organizations are the current generation of what began in the early 1970s as HMOs (Health Maintenance Organizations). The MCO structure requires the linkage/integration of both insurance risk with the development of a coordinated group of health-care service providers, most commonly in an IPA or ACN entity described further below.

IPA
Originally designed in the 1970s in response to the 1972 HMO Act, IPAs were known as Individual Practice Associations made up of the physicians and clinical-service providers who were, at the time, operating in private, solo, or group practices. While physician and clinical IPAs are still operational, the new iteration of IPA refers to Independent Provider Associations. That is, service providers in a particular health-care service sector (e.g., long-term care, home-care, etc.) joining together to achieve clinical and financial integration ,while, at the same time, being prepared to collectively accept some degree of performance based contracting incentives and/or financial risk for providing services to a PPS, ACO, or MCO group of enrollees.

ACN
Accountable Care Networks are under development by ACOs for purposes of coordinating both the service delivery and the cost controls for the population of individuals enrolled in the ACO through the Affordable Care Act. As the integration of heretofore independent providers joining together in either an IPA or ACN delivery model, the need for technology sophistication and real-time electronic communication expands exponentially.

MSO
Managed Service Organizations are designed, in part, to address the need for increased technology and electronic-communication sophistication. Originally referred to as ASOs (Administrative Service Organizations) or SSOs (Shared Service Organizations), the current MSO model is similar in the fact that groups of providers can achieve cost efficiencies by sharing certain administrative and support functions. The most common functions for an MSO to consider are: information technology, marketing, public relations and communications, human resources, fundraising and development, finance and accounting, managed-care provider contracting, regulatory compliance,        facilities/ occupancies/ maintenance costs, transportation, access to capital financing / credit facilities, quality assurance and utilization review, and strategic planning.

FI
A Fiscal Intermediary has been in place since the inception of the Medicare and Medicaid Programs in 1965. Essentially, a Fiscal Intermediary is any entity, frequently an insurance company, that enters into a contract with government, an employer, or consortium of employers to “manage” the delivery and payment for services required by the responsible party required to pay for the health-care services provided (e.g., federal, state, and local government units, employers, or employer consortium).

The primary responsibility of the Fiscal Intermediary is to ensure prompt payment for services provided as well as controlling the overall cost of services in balance with the contractually agreed-upon amount. The financial structure of a contract between a responsible government/employer and the Fiscal Intermediary is frequently referred to as a “capitation rate” or some other actuarially determined cost estimate necessary to cover the cost of services delivered under the contractual arrangement (i.e., commonly referred to as the “covered benefit plan”).

CM
CM refers to either Care Management or Case Management. The core principle that supports the objectives of better service quality, better service outcomes at a reduced cost is the development and implementation of a well-coordinated Care/Case Management system. The Care/Case Management system must be designed to identify and prevent avoidable and/or unnecessary services by using a real-time communications technology system that allows the individual case manager to intercept, prevent, or redirect health-care services to the most appropriate and least costly site of care.

VPs
Vulnerable populations include the frail elderly, mental health, substance abuse, developmentally disabled, and at-risk youth. These populations, in many ways, represent the key to solving our nation’s health-care cost crisis. Each of these vulnerable populations is and continues to be, integrated into Managed Care models. These populations incur a significant component of our nation’s total health-care costs. Unfortunately, they are also individuals who do not generally have a strong voice to represent themselves individually. As a result, acceptable levels of ethics, morality and integrity will all be necessary in order to effectively reform our health-care delivery system using these new, and in some cases previously tried, models of care delivery.

HH, PACE, BHO
Health Homes, Programs for All-Inclusive Care to the Elderly, and Behavioral Health Organizations are just three of a number of examples of structures designed to provide and deliver the Care/Case Management to vulnerable populations. These organizations are generally linked contractually in some way to the responsible payer source (e.g., government or employer) or through a contractual commitment to provide Case Management on behalf of an MCO or ACO.

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at The Bonadio Group. Contact him at (585) 381-1000, or via email at garchibald@bonadio.com