Terms
AWP (Average Wholesale Price)
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.
Coordination of Benefits (COB)
online billing of both a primary and a secondary insurer
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
Medicare Part D
a federal and state-partnered insurance program that provides partial coverage of prescriptions, primarily for patients who are eligible for Medicare
Out-of-network provider
prescribers and pharmacies that do not have a contract with the insurance provider; the cost of services is generally higher
Catastrophic Insurance
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
Copayment
the amount that the patient is to pay for each prescription as determined by the insurance carrier
in-network providers
prescribers and pharmacies that have a contract with the insurance provider
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 Provider Organization
private practice prescriber that has signed a contract with the health insurer to provide services at a discounted rate
COBRA Insurance
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
monthly premium
the cost a patient pays each month for health and/or drug insurance
Preferred drug list
a formulary provided by an insurance company that indicates preferred prescription generic and brand name drugs and their corresponding copays
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
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
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
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
Pharmacy Benefit Manager (PBM)
a company that administers drug benefits for many insurance companies
Commercial Insurance
coverage for medical or prescription costs provided by an employer or purchased by an individual; also called private insurance
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
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
online adjudication
real-time insurance claims processing via electronic wireless telecommunications
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