resource-based relative value scale (RBRVS)

The way Medicare determines how much it will pay physicians, based on the resource costs needed to provide a Medicare-covered service. The RBRVS is calculated using three components: physician work, practice expense and professional insurance. The Medicare payment to physicians is determined by multiplying the combined costs by a conversion factor set by the Centers for Medicare and Medicaid Services, adjusted for geographical differences in the cost of resources. Physician work typically accounts for 50 percent of the value while practice expense accounts for 45 percent.

respite care

Short-term relief for caregivers – family members and friends – who are providing care to a frail elder or person with disabilities.


The probability of financial loss, based on the probability of having to provide services to a patient or patient population at a cost that exceeds the payments received. Under capitation payment systems, providers share the risk that is borne by insurers.

risk adjustment

Increases or reductions in payment made to a health plan on behalf of a group of enrollees to compensate for health care expenditures that are expected to be higher or lower than average.

risk corridor

The temporary risk corridor program was a provision of the Affordable Care Act from 2014 through 2016 that was intended to discourage insurers from setting premiums high in response to uncertainty about who will enroll and what they will cost. The program worked by cushioning insurers participating in exchanges and marketplaces from extreme gains and losses. It set a target for exchange participating insurers to spend 80 percent of premium dollars on health care and quality improvement. Insurers with costs less than 3 percent of the target amount must pay into the risk corridors program; the funds collected were used to reimburse plans with costs that exceed 3 percent of the target amount.

Risk Evaluation and Mitigation Strategy (REMS)

A strategy to manage a known or potential serious risk associated with a drug or biological product, which is sometimes required by the Food & Drug Administration to ensure that benefits of a drug or biological product outweigh its risks.

risk selection

Enrollment choices made by health plans – or by enrollees – on the basis of perceived risk relative to the premium to be paid.

risk sharing

A method by which the financial risk of covering a group of enrollees is shared by plan sponsors and purchasers, typically managed care organizations and states. In contrast, indemnity plans assume all risk of providing care paid for through insurance premiums which belong solely to the insurance company.

safe harbor

A provision of a statute or a regulation that reduces or eliminates a party’s liability under the law on the condition that the actions were performed in good faith or in compliance with defined standards. For example, safe harbor regulations help employers determine affordability of health coverage for their employees under provisions of the Affordable Care Act (ACA).

safety net providers

Health care providers who deliver health care services to patients regardless of their ability to pay. These providers may consist of public hospitals, community health centers, local health departments, and other providers who serve a disproportionate share of uninsured and low-income patients.

Section 125 Plan

A plan that provides participants an opportunity to receive certain benefits, such as reimbursement for some out-of-pocket medical expenses, on a pretax basis. It is a separate written plan, maintained by an employer for employees that meets the specific requirements of Section 125 of the Internal Revenue Code. Also known as flexible benefits plans.


Large and medium-size companies often assume all or most financial risks of providing health insurance to their workers, as opposed to purchasing insurance coverage from commercial carriers (and having the carrier assume all risk). Claims processing is often handled through an administrative services contract with an independent organization, often an insurance company.


Cuts to the federal budget that began on March 1, 2013 as an austerity fiscal policy. Enacted by the Budget Control Act of 2011, the cuts were initially set to begin on January 1, but were postponed by two months by the American Taxpayer Relief Act of 2012. The spending reductions were approximately $85.4 billion during fiscal year 2013, with similar cuts for years 2014 through 2021. Medicaid was exempt, and cuts to Medicare were limited to 2 percent.

single payer system

A health care system, either at the national or state level, that would designate one entity (usually the government) to function as the central purchaser of health care services. Canadian provinces operate health insurance coverage for residents under this system.

skilled nursing facility (SNF)

An institution that offers skilled services similar to those given in a hospital, such as intravenous injections and physical therapy given by professional staff, to aid rehabilitation following hospitalization of patients who have been discharged. SNFs differ from nursing homes or nursing facilities, which are intended primarily to support elderly and disabled individuals in the tasks of daily living (custodial care). Medicare does not cover custodial care in nursing homes; however, Medicare does cover skilled nursing care, rehabilitation and associated custodial care in SNFs for a limited period of time. Medicaid covers care in all Medicaid-certified nursing facilities.

small group market

The private insurance market, regulated by state government, where firms with two to 50 employees purchase health insurance for their employees.

Social Security Disability Insurance (SSDI)

Financed with Social Security taxes, SSDI provides cash assistance to people who are permanently disabled and unable to work, and who previously worked and paid Social Security payroll taxes. Although the number of work credits required to qualify for SSDI depends on the age of disability onset, an individual must typically have 40 credits, of which 20 must be from the last 10 years (four work credits can be earned per year). The size of the monthly benefit depends on the beneficiary’s earnings record. Widows, widowers and adults who are blind or disabled since childhood are also eligible for SSDI.

socialized medicine

A system of health care in which all health personnel and health facilities, including doctors and hospitals, work for the government and draw salaries from the government. Doctors in the U.S. Veterans Administration and the Armed Services are paid this way. Veterans and U.S. military hospitals are also supported this way. Examples also exist in Great Britain and Spain.

specialty drug

High-cost drugs used to treat complex or rare conditions such as multiple sclerosis. These drugs typically require special handling, administration, or monitoring.


Can apply to reducing assets or income in the process of qualifying for Medicaid. The amount that each individual must”spend down”is determined at the time eligibility is determined. (Also see medically needy.)

Stark Law

Prohibits physicians from making referrals for certain designated health services payable by Medicare to an entity in which the physician has a financial interest. It originally applied to clinical laboratory service only. Congress expanded the law in 1995 to include other services and Medicaid.