GLOSSARY OF COMMONLY USED TERMS

Annual out-of-pocket maximum for prescription

The annual out-of-pocket maximum is the most a patient has to pay for prescription medications in a plan year. After a patient spends this amount on deductibles, co-payments, and co-insurance, their insurance plan pays 100% of the costs of prescription medications.

Appeal

An appeal is a formal request to a patient's health plan to reconsider their decision to deny coverage.

Buy and bill

Buy and bill is a process in which providers directly acquire prescription drugs that are administered in the office or infusion center. After the drug is administered to the patient, the provider then bills the patient's health plan for both the drug and its administration.

Co-insurance

Co-insurance is the percentage of healthcare costs the patient pays after meeting their deductible, but before reaching their out-of-pocket maximum. For example, an insurer might pay 75% and the patient would pay 25%.

Co-pay accumulator program

The co-pay accumulator program is an approach taken by some health plans that does not count the cost of a prescription drug toward a patient's annual deductible if a co-pay card or co-pay reimbursement is used.

Co-payment

A co-payment is a cost-sharing arrangement in which an insured person pays a specified charge when they receive a covered service, such as office visits, prescription medications, and other healthcare services.

Deductible

A deductible is the dollar amount patients are responsible for paying before their insurer starts contributing to the cost of their treatment.

Exception

An exception is a coverage request made to a patient's health plan to remove a plan restriction placed on a treatment.

Explanation of benefits (EOB)

An explanation of benefits is a statement from the health plan sent to members to track the use of medications and/or healthcare services and their associated costs and payments.

Formulary

A formulary is a list of prescription medications covered under a health plan's pharmacy benefit. Medications administered by a healthcare provider are typically covered under a health plan's medical benefit.

Group purchasing organizations (GPOs)

A GPO is a company that works with manufacturers and distributors to negotiate the pricing of prescription drugs, healthcare supplies, and medical equipment for providers.

Health plan

A health plan is an organization or program that provides financial coverage for healthcare services or medications.

HIPAA

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a federal law that required the creation of national standards to protect sensitive patient health information from being disclosed without the patient's consent or knowledge.

In-network providers

In-network providers are healthcare professionals with whom a patient's plan has contracted to provide healthcare services.

Intravenous (IV)

Intravenous means occurring within or entering by way of a vein.

Medical benefit

The medical benefit is coverage from a health plan for healthcare services, including office and hospital visits, surgery, lab tests, preventative care, and medications administered by healthcare professionals (HCPs), such as IV infusions. Most health plans cover HCP-administered products under a medical benefit rather than a pharmacy benefit.

National Drug Code (NDC)

NDC is a universal product identifier with a unique set of numbers used for human drugs in the United States.

Out-of-network providers

Out-of-network providers are healthcare providers who do not contract with a patient's health insurance or plan. Out-of-network co-insurance and co-payments are usually more expensive than those in-network.

Pharmacy benefit

The pharmacy benefit is coverage from a health plan for prescription medications that are typically self-administered.

Pharmacy benefit manager (PBM)

A pharmacy benefit manager is a third-party organization hired to manage pharmacy benefits.

Predetermination

Predetermination is a process used by health plans to review and inform patients of their coverage and share of costs for a service before it is performed.

Preferred drug

A preferred drug is a medication designated as a valuable, cost-effective treatment option. In a multiple-tiered plan, preferred drugs are assigned to a lower tier than nonpreferred drugs.

Premedication

Premedication is medicine given prior to an operation or treatment.

Premium

The premium is the amount people pay for health insurance every month. In addition to premiums, people pay other costs for their healthcare, including a deductible, co-payments, and co-insurance.

Prescription deductible

The prescription deductible is the amount a patient pays for drugs before their health plan starts to pay a portion of the costs.

Prior authorization (PA)

Prior authorization, also called preauthorization, is an administrative tool used by health plans to determine if they will cover a prescribed procedure, service, or medication based on the patient's medical necessity.

Private insurance

Private, or commercial, insurance is any type of health insurance policy not offered or provided by the government. Providers are generally for profit and offer group and individual plans. The majority of Americans receive their insurance through an employer that covers all or part of the premium.

Reconstitution

Reconstitution is the process of making a powder or dry medicine into a liquid by adding a diluting agent.

Step therapy

Step therapy is a health plan policy that requires a patient to try and fail treatment with 1 or more plan-preferred drugs before the plan will cover a different drug for their health condition.

Subcutaneous (SC)

Subcutaneous means located or administered underneath the skin.

Tiers

Tiers are used by most health plans to categorize prescription drug coverage with scaled co-payments. Tiers are commonly based on brand or generic medications, preferred or nonpreferred medications, and traditional or specialty medications.