Key Terms
the average price that wholesalers charge the pharmacy for a drug, serving as the benchmark price to estimate reimbursement rates and retail price without insurance.
AWP (Average Wholesale Price
Coordination of Benefits (COB)
– online billing of both a primary and a secondary insurer
Health Savings Account (HSA)
savings accounts that can be started by patients or their employers to set aside tax-deferred money specifically for healthcare costs not covered by their insurance
Medigap insurance –
private insurance coverage in addition to Medicare Part B that covers a portion of the costs for outpatient physician visits as well as laboratory and x-ray fees not covered by Medicare Part B
Preferred drug list –
a formulary provided by an insurance company that indicates preferred prescription generic and brand name drugs and their corresponding copays
a plan that is aimed at protecting oneself from the high costs of a severe accident or unexpected, debilitating illness or disease; it has low monthly premium payments in exchange for a very high deductible (i.e., $5,000–$10,000) and is also referred to as catastrophic coverage
Catastrophic Insurance
Copayment –
the amount that the patient is to pay for each prescription as determined by the insurance carrier
Medicare Part A
federally sponsored insurance plan that covers 80% of the cost of hospital stays, as well as limited coverage of skilled nursing facilities, rehabilitation, and home health care; drugs are not covered under this plan
Medicare Part D
– a federal- and state-partnered insurance program that provides partial coverage of prescriptions, primarily for patients who are eligible for Medicare
online adjudication –
real-time insurance claims processing via electronic wireless telecommunications
COBRA Insuranc
an insurance policy in which a former employer is required to keep a former employee on the employee insurance plan at full premium cost for 18 to 36 months; the ACA guarantees such patients cannot lose coverage with job changes
Dual copay
insurance coverage in which a patient pays one copay for brand name drugs and a lower copay for generic drugs; also known as two-tier
Medicaid –
a state governmental health insurance program for low-income and disabled citizens
Medicare Part B
– federally sponsored insurance that partially covers the cost of outpatient doctor visits; may cover the cost of nebulizer, nebulizer medication, and diabetic supplies
Out-of-network provider
– prescribers and pharmacies that do not have a contract with the insurance provider; the cost of services is generally higher
Coinsurance
a percentage-based insurance plan in which the patient must pay a certain percentage of the prescription price; commonly used in high-cost specialty drugs
Dual eligible –
a patient who has both a primary and secondary insurance plan
in-network providers
prescribers and pharmacies that have a contract with the insurance provider
monthly premium
– the cost a patient pays each month for health and/or drug insurance
Preferred Provider Organization –
private practice prescriber that has signed a contract with the health insurer to provide services at a discounted rate
Commercial Insurance
coverage for medical or prescription costs provided by an employer or purchased by an individual; also called private insurance
Durable Medical Equipment (DME)
– medically necessary, reusable equipment such as nebulizers, hospital beds, wheelchairs, and walkers that may be purchased in a community pharmacy or billed to Medicare Part B
ICD-10 –
the International Classification of Diseases, 10th revision; a coding system used by prescribers and insurance companies to offer billing codes for specific diagnoses and diseases
NPI (National Provider Identifier) –
the unique number assigned to the provider by the federal government to allow authorized healthcare providers to process insurance claims for pharmacy reimbursement
Prior Authorization (PA) – prior approval for coverage of a high-cost medication or a medication not on the insurer’s approved formulary obtained after a prescriber calls the insurance to justify the use of the drug; must be obtained before the drug is dispensed by the pharmacy to be covered by insurance
– prior approval for coverage of a high-cost medication or a medication not on the insurer’s approved formulary obtained after a prescriber calls the insurance to justify the use of the drug; must be obtained before the drug is dispensed by the pharmacy to be covered by insurance