Tax Equity and Fiscal Responsibility Act (TEFRA)

Legislation that created the target rate of increase cost based limits on reimbursements for inpatient operating costs. These limits are considered per Medicare discharges total amounts. A facility’s target amount is derived from costs in its base year (1st full fiscal year of operation with application to HCFA as same) updated to the current fiscal year by the annual allowable rate of increase. Medicare payments for operating costs generally may not exceed the facility’s target amount and still be paid by HCFA. These provisions apply to hospitals and units excluded from PPS and DRG. When cost reports fall short of the TEFRA limit, certain pay backs are provided. If costs exceed TEFRA, facilities can submit an exception report and may or may not be provided additional payment. Many facilities which established TEFRA limits in the early 1980s are finding they consistently exceed their TEFRA limits. Units normally under the TEFRA rules are psychiatric units, rehab units, free standing specialty hospitals, oncology outpatient clinics and others.

Telehealth or Telemedicine

The use of telecommunications (i.e., wire, radio, optical or electromagnetic channels transmitting voice, data and video) to facilitate medical diagnosis, patient care, and/or medical learning. Many rural area are finding uses for telehealth and telemedicine in providing oncology, home health, ER, radiology and psychiatry among others. Telehealth services have been used between providers, to provide supervision of one another and to provide evaluation of patients. Medicaid and Medicare provide some limited reimbursement for certain services provided to patients via telecommunication.

Termination Date

Date that a group contract expires or an individual is no longer eligible for benefits.

Tertiary Care

Services provided by highly specialized providers such as neurosurgeons, thoracic surgeons and intensive care units. These services often require highly sophisticated technology and facilities.

Therapeutic Alternatives

Drug products that provide the same pharmacological or chemical effect in equivalent doses. Also see Drug Formulary.

Third Party Administrator (TPA)

An independent organization that provides administrative services including claims processing and underwriting for other entities, such as insurance companies or employers. Often insurance companies will contract as TPAs with other insurance companies or health plans. TPAs are not always insurance companies. TPAs are organizations with expertise and capability to administer all or a portion of the claims process. Self-insured employers will often contract with TPAs to handle their insurance functions. Insurance companies will sometimes outsource the claims, UR or membership functions to a TPA. Sometimes TPAs will only manage provider networks, only claims or only UR. Hospitals or provider organizations desiring to set up their own health plans will often outsource certain responsibilities to TPAs. TPAs are prominent players in the managed care industry.

Third-Party Payer

Any organization, public or private, that pays or insures health or medical expenses on behalf of beneficiaries or recipients. An individual pays a premium for such coverage in all private and in some public programs; the payer organization then pays bills on the individual’s behalf. Such payments are called third-party payments and are distinguished by the separation among the individual receiving the service (the first party), the individual or institution providing it (the second party), and the organization paying for it (third party).

Third-Party Payment

Payment by a financial agent such as an HMO, insurance company or government rather than direct payment by the patient for medical care services. The payment for health care when the beneficiary is not making payment, in whole or in part, in his own behalf.

Title XIX (Medicaid)

The title of the Social Security Act which contains the principal legislative authority for the Medicaid program and therefore a common name for the program.

Title XVIII (Medicare)

The title of the Social Security Act which contains the principal legislative authority for the Medicare program and therefore a common name for the program.

Tort Reform

Legislative limits or changes or judicial reform of the rules governing medical malpractice lawsuits and other lawsuits. Tort simply refers to law suit. Reform implies that limits can be placed on individual rights to sue or on the amounts or situations for which they can seek relief. Tort is considered to be by some as the primary cause of the rising costs of health care. Reform, then, would lower health care costs. On the other hand, patient advocates are against tort reform, claiming that the health care industry and managed care industries require monitoring and that law suits keep health care providers and payers in check. Congress debates tort reform each session, but, to date, few restrictions have been placed on tort cases.

Total Budget

Otherwise known as a “global” budget, a cap on overall health spending.

Total Margin

A measure that compares total hospital revenue and expenses for inpatient, outpatient, and non-patient care activities. The total margin is calculated by subtracting total expenses from total revenue and dividing by total revenue.


Movement of a patient between hospitals or between units in a given hospital. In Medicare, a full DRG rate is paid only for transferred patients that are defined as discharged. In managed care, transfers are often suggested by UR entities to move patients to lower cost care facilities.

Treatment Episode

The period of treatment between admission and discharge from a modality, e.g., inpatient, residential, partial hospitalization, and outpatient, or the period of time between the first procedure and last procedure on an outpatient basis for a given diagnosis. Many healthcare statistics and profiles use this unit as a base for comparisons.


Methods of estimating future costs of health services by reviewing past trends in cost and utilization of these services. Also see Actuarial.


Triage is the act of categorizing patients according to acuity and by determining which need services first. Most commonly occurs in emergency rooms, but, can occur in any healthcare setting. Classification of ill or injured persons by severity of condition. Designed to maximize and create the most efficient use of scarce resources of medical personnel and facilities. Managed care organizations, health plans and provider systems are setting up programs or clinics called “triage centers”. These centers serve as an extension of the utilization review process, as diversions from emergency room care or as case management resources. These triage centers also serve to steer patients away from more costly care (for example, a child with a cold is steered away from an emergency room). Triage can be handled on the telephone and be called a pre-authorization center, crisis center, call center or information line.

Triple Option Plan

A plan (usually offered by a single carrier or a joint venture between two or more carriers) which gives subscribers or employees a choice among HMO, PPO and traditional indemnity plans. Also see Cafeteria Plan.