Healthcare Industry Acronyms and Terms

As a Relentless Health Value (RHV) listener, you may hear a few industry acronyms or terms that are unfamiliar to you. The RHV team tries to define some of these during an episode. To make it easier, we have compiled a list that we thought would be helpful as you listen or read the show notes.

Are we missing an acronym? Let us know.

ACA
Accountable Care Act. This was a law that did many things, but one of them was to regulate health plans with things like a mandated MLR (see below) max.

APC - Advanced Primary Care
This is a patient-centered model of care that moves beyond the traditional seven-minute office visit. High-quality APC focus on "managing risk, not symptoms," providing patients with longer appointments, better access to their clinicians, and coordinated care.

APCD
All-payer claims database. This is a large state-level database that collects healthcare claims data from both public and private insurance plans. These databases aggregate medical, pharmacy, and dental claims, along with enrollment and provider files, to provide a comprehensive picture of healthcare services within a state.

ASO
Administrative services only. Refers to a carrier (such as Blue Cross Blue Shield, United, Cigna, Aetna, for example) who is providing only administrative services on behalf of a self-insured client. A self-insured employer, union, or other plan sponsor is taking all the risk, but an ASO negotiates provider contracts, processes their claims, and does other administrative work. ASOs are a kind of TPA (see below).

ASP
Average sales price.

AWP
Average wholesale price.

BUCAH
An acronym for the big consolidated carriers—Blue Cross Blue Shield, United, Cigna, Aetna, and Humana.

CAA
Consolidated Appropriations Act.

CFO
The chief financial officer who works at a self-insured employer.

Chargemaster
Also known as the Charge Description Master, or CDM, is a comprehensive, internal list of the prices for every service, procedure, supply, and diagnostic test provided by a hospital or healthcare facility. It serves as the starting point for hospital billing, though the "sticker prices" listed are rarely what an insurance company or a patient actually pays. Instead, these rates are used as the basis for negotiations with insurers, who typically receive significant discounts off the chargemaster rates. For uninsured patients or those receiving out-of-network care, however, the chargemaster price can become the actual amount billed, leading to the high-cost "surprise bills" often discussed in healthcare advocacy.

CHDHP
Consumer high deductible health plan.

CHRO
Chief human resources officer.

COE
Center of Excellence.

CPT Code
Current procedural terminology is the code that clinical organizations send to insurance companies/administrators for payment for outpatient services.

Direct Contracting
This is when an employer goes directly to a hospital or physician practice or surgery center and negotiates a “direct contract” directly with that clinical organization and cuts out the carrier/“insurance company” from the mix. This matters because it’s been said that the “spread pricing” (ie, the amount the carrier adds to the top of any provider bill) can be in the range of 30% if we’re talking about status quo carriers or administrators.

DRG Code
Diagnosis-related group is the code that hospitals send to insurance companies for payment for an inpatient stay.

EBC
Employee benefit consultant.

ERISA
Employee Retirement Income Security Act.

Fee-for-service or FFS
This is the traditional healthcare payment model where providers are paid for each individual service, test, or procedure performed. Critics, including many guests on the podcast, argue that FFS creates a "perverse incentive" by rewarding the volume of care rather than the quality or necessity of that care.

HR
The human resources department for self-insured employers is what we’re talking about when we say “HR.”

IRL
In real life. Not an acronym limited to the healthcare sector in this country but extremely pertinent when there are so many instances where theory does, in no way, equal what is happening in reality.

Leapfrog Score
This is a hospital safety grade. The score is represented by an A, B, C, D, or F letter grade, assigned to US hospitals based on their performance in preventing medical errors, accidents, injuries, and infections.

MLR
Medical loss ratio. This is a rule that says that an insurance carrier must spend around 85% of the premiums it collects on medical bills or drugs so their profits and administrative fees are capped. You can see this is a great rationale to buy clinical practices or pharmacies so you can count dollars you pay yourself as medical costs. Also, it drives prices up because the higher the prices, the more dollars you can make when you can only make 15%.

MRF
Machine-readable file.

NADAC
National average drug acquisition cost

NPI
National Provider Identifier.

Operative value index or OVI
This is a scoring framework used—often by clinical organizations or integrated delivery networks (IDNs)—to measure the efficiency and effectiveness of a specific medical procedure or service line. Instead of just looking at the "price" of a surgery, an OVI balances the clinical outcomes (like complication or readmission rates) and the patient experience against the total direct and indirect costs of the entire episode of care. This matters in a value-based care environment because it helps identify which providers or protocols are actually delivering the best "value" rather than just the lowest upfront cost.

PROMs or  Patient-Reported Outcome Measures
These are standardized tools and surveys used to capture a patient's own assessment of their health, functional status, and quality of life. Unlike traditional clinical metrics (like a lab result), PROMs focus on what actually matters to the patient, such as whether they can walk pain-free or return to work after a procedure.

PBM
Pharmacy benefit manager, like CVS, OptumRx, Express Scripts.

Regulatory Capture
A form of corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry it is charged with regulating. In healthcare, this often manifests as policies that protect the profit margins of large incumbents (like health systems or carriers) at the expense of patients and plan sponsors.

Reinsurance
Also known as stop-loss coverage. It’s the insurance a self-insured employer gets to cover any crazy catastrophic healthcare costs that might happen during any given year, like a cell and gene therapy that costs $3.2 million, and possibly bankrupt the self-insured employer.

RFP
Request for proposal.

RUC
The RBRVS Update Committee. A committee managed by the AMA that holds a sole-source contract with CMS to determine the "relative value" of medical procedures. These values (RVUs) serve as a proxy for money, effectively determining how much physicians are paid. The committee is often criticized for a specialist-heavy membership that may disadvantage primary care.

RVU
Relative Value Unit. This is the standardized unit used by Medicare and other payers to determine the value and price of a medical service. Rather than a flat dollar amount, an RVU reflects the resources required to provide care, calculated based on clinician work, practice overhead, and malpractice insurance. RVUs are the engine behind volume-based compensation; they often incentivize the quantity of services performed rather than the quality or outcomes of the care provided.

Steering Navigation
Guides patients and plan members through the complex healthcare system to improve care coordination, access to services, and health outcomes while managing costs. “Steering” is a strategic benefit design by employers, using financial incentives to direct members toward specific high-value providers. “Navigation” is a more personalized approach that helps individuals overcome barriers to care.

Stop-Loss Insurance 
Also known as reinsurance, this is a policy purchased by self-insured employers to protect against catastrophic medical claims that exceed a specific dollar threshold. This matters because it acts as a financial safety net, ensuring that a single high-cost claimant or an unexpected surge in total claims doesn't bankrupt the health plan. It typically includes Individual Stop-Loss (protecting against one person's large claims) and Aggregate Stop-Loss (protecting the entire plan if total annual costs exceed a set budget).

Tiering
A benefit design strategy where health plans categorize providers into "tiers" based on their cost-efficiency and quality metrics. Members pay lower out-of-pocket costs (like co-pays or coinsurance) when they choose "Tier 1" or "high-value" providers compared to those in higher, more expensive tiers. This matters because, as noted in several episodes, tiering is a financial lever used to influence patient behavior, though its success depends heavily on the accuracy of the data used to determine which providers are actually "high-value."

TPA
Third-party administrator. A company working with self-insured employers or other self-insured plan sponsors to administer their health plan. This means negotiating contracts oftentimes, processing claims, managing prior authorization programs, etc. If these TPA services are offered by a large carrier, then see “ASO” above.

WAC
Wholesale acquisition cost.