Glossary of terms contained within LAN Work Products:

Alternative Payment Models (APMs)

Alternative payment models deviate from traditional fee-for-service (FFS) payment, insofar as they adjust FFS payments to account for performance on cost and quality metrics, or insofar as they use population-based payments that are linked to quality performance.

“Big dot” measures

Big dot measures assess the overall system performance based largely on the outcomes produced, rather than on the processes used to produce them.

Clinical Episode Payment

A clinical episode payment is a bundled payment for a set of services that occur over time and across settings. This payment model can be focused on a: setting (such as a hospital or a hospital stay); procedure (such as elective surgery); or condition (such as diabetes).

Clinical Episode Payment Work Group

The LAN Guiding Committee convened the Clinical Episode Payment (CEP) Work Group to create a set of recommendations that can facilitate the adoption of clinical episode-based payment models.

Clinical Episode Payment Models

Clinical episode payment models are different from traditional fee-for-service (FFS) health care payment models, in which providers are paid separately for each service they deliver. Instead, clinical episode payment models take into consideration the quality, costs, and outcomes for a patient-centered course of care over a set period of time and across multiple settings.

Core Set of Logic

This will assist the industry in developing the capacity for grouping claims into bundles by standardizing some of the logic and allowing each payer to customize some of the more specific rules.

Design Elements

The design elements address questions stakeholders must consider when designing an episode-based payment model, including, but not limited to, the definition, the duration of the episode, and what services are to be included.

Fee-for-Service (FFS)

Clinical episode payment models are different from traditional fee-for-service (FFS) health care payment models, in which providers are paid separately for each service they deliver.

Financial Benchmark

A financial benchmark is a population-based spending level that is used to establish PBP rates for providers. Financial benchmarks may be based on a provider organization’s spending in the previous year (i.e., “historical” benchmarks), on regional or national spending levels (i.e., “regional” and “national” benchmarks), or through some mechanism (e.g., bidding). Once a method for setting benchmarks is in place, updated benchmarks must be risk-adjusted to take into account patient mix. Additionally, financial benchmarks should be adjusted to account for geographic variation in input costs (e.g., wages, rents, etc.) if variations exist across the covered region, but they should not be adjusted on account of variation in utilization of medical care.

Measure sets

A collection of measures that are mutually reinforcing to produce positive outcomes for a defined patient population.

Operational Considerations

Operational considerations relate to implementing an episode payment model, including the roles and perspectives of stakeholders, data infrastructure issues, and the regulatory environment in which APMs must operate.

Patient Attestation

Patient attestation includes patient self-reporting, declaration, or confirmation of which provider is their primary care provider.

Patient Attribution

The method used to determine which provider group is responsible for a patient’s care and costs.

Performance Measurement

Performance measurement encompasses the development and implementation of metrics that assess the clinical quality, health outcomes, patient care experience, and cost of care provided to patients. Performance measurement can be used both for accountability and improvement purposes. Performance measurement makes it possible to monitor and quantify how well population-based payment models achieve and reward the Triple Aim of better care, better health, and lower costs.


A group of people who are cared for by a particular provider, live in a particular community, or share a similar characteristic (e.g., condition, age, gender, race, or ethnicity).

Population-Based Payment (PBP)

Population-based payment models offer providers the incentives and flexibility to strategically invest delivery system resources, treat patients holistically, and coordinate care.

Population-Based Payment Model

A payment model in which a provider organization is given a population-based global budget or payment and accepts accountability for managing the total cost of care, quality, and outcomes for a defined patient population across the full continuum of care. PBP models discussed in this paper correspond to payment models in Categories 3 and 4 of the LAN’s APM Framework.

Total Cost of Care (TCOC)

A broad indicator of spending for a given population (i.e., payments from payer to provider organizations). In the context of PBP models, in which provider accountability spans the full continuum of care, TCOC includes all spending associated with caring for a defined population, including provider and facility fees, inpatient and ambulatory care, pharmacy, behavioral health, laboratory, imaging, and other ancillary services.