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Insurance Terminolog

Orange Tech Avalon

out-of-pocket Out-of-pocket expenses are the costs that are considered the responsibility of the patient, including non-covered items, deductibles, and copays.
third-party payer A third-party payer is an organization other than the patient (first party) or pharmacy/health care provider (second party) involved in the financing of personal health services including, but not limited to, prescriptions medication.
fraud Fraud can be broadly defined as an act of deliberate deception performed to acquire an unlawful benefit. In a pharmacy, that may include billing for a medication the patient did not receive, or over billing for a medication the patient did receive.
bank identification number (BIN) On a health insurance card, a BIN is a six digit number used to identify a specific plan from a carrier making it easier for the PBM to process your prescription online.
group number A group number identifies your group, or business, from other groups, or businesses, who are insured by the same insurance company.
member number A member number is a number in correlation to relationship to the family member that provides the insurance. insured has a member number of '00' or '01'
Processor Control Number (PCN) The Processor Control Number (PCN) is a secondary identifier for insurance that may be used in the routing of pharmacy transactions by the processor to aid in the receipt and adjudication of prescription claims. alphanumeric number
private insurance Private insurance plans are ones that consumers receive through their employer (or their family member's employer), or through individual purchases.
public insurance Public insurance is insurance either provided by or subsidized by the government, such as Medicare and Medicaid.
managed care Managed care (a term used to describe most health insurance policies) is used to describe a variety of techniques intended to reduce the cost of health benefits and improve the quality of care.
health maintenance organization (HMO A health maintenance organization (HMO) covers care provided by health professionals who have signed up with the HMO, and have agreed to treat patients according to the HMO’s policies.
preferred provider organization (PPO) A preferred provider organization (PPO) is an insurance plan in which participating health care professionals and hospitals treat patients for an agreed upon rate.
exclusive provider organization (EPO) An exclusive provider organization (EPO) is an insurance plan in which only authorized health care professionals and hospitals treat patients for an agreed upon rate. This plan is usually more exclusive than a PPO.
Centers for Medicare & Medicaid Services (CMS) 1 The Centers for Medicare & Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is a federal agency within the United States Department of Health and Human Services (DHHS)
Centers for Medicare & Medicaid Services (CMS) 2 that administers the Medicare program and works in partnership with state governments to administer Medicaid, the State Children's Health Insurance Program (SCHIP), and health insurance portability standards.
Medicare Federal health insurance program for patients 65 years old and above, some younger patients with disabilities, and some people with permanent kidney failure (end-stage renal disease).
Medicare Part A Medicare Part A is the part of Medicare that pays for hospital care.
Medicare Part B Medicare Part B is the part of Medicare that pays for doctor visits, certain injections, durable medical equipment, chemotherapy, and diabetes supplies (not insulin).
Medicare Part C Medicare Part C, also called a Medicare Advantage Plan, is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits.
Medicare Part D Medicare Part D is the part of Medicare that pays for prescription drug coverage. Medicare Part D covers outpatient prescription drugs exclusively through private plans or through Medicare Advantage plans that offer prescription drugs.
Medicaid This is a joint federal and state program that helps with medical costs for some people with low incomes and limited resources. Medicaid programs vary from state to state. Some patients are covered by both Medicaid and Medicare.
National Council for Prescription Drug Programs (NCPDP) is a nonprofit organization that create national standards for electronic health care transactions used in prescribing, dispensing, monitoring, managing and paying for medications and pharmacy services.
prior authorization If a medication is not normally covered by an insurance, is a particularly high dose, has significant risk potential, is being used to treat or ameliorate off-label disease(s)/condition(s), or is not usually recommended for a particular age or gender
NCPDP The NCPDP also develop standardized business solutions and best practices that safeguard patients.
coordination of benefits Determining which insurance should be considered primary, secondary, tertiary, etc. is sometimes referred to as coordination of benefits; although, that term is more commonly used if one of the insurance plans involve Medicare.
adjudication Adjudication is a term used in the insurance industry to refer to the process of paying claims submitted or denying them after comparing claims to the benefit or coverage requirements.
remittance advice (RA) Remittance advice (RA) is a document sent to the pharmacy by the insurance company providing the details of a paid claim. This is also referred to as an explanation of benefits (EOB).
fee-for-service reimbursement Fee-for-service reimbursement is a payment method in which providers receive payment for each service rendered.
Insurance processing When the prescription transmits, it is either accepted (approved) or sent on to the PBM. (This is adjudication) If declined, the pharmacy, the prescriber, and/or the patient will need to contact either the PBM, or the third-party
Common reasons for rejection of meds: 1 a non covered medication, or a medication requiring prior authorization,incorrect days' supply of medication, refill too soon, or invalid quantity of medication being dispensed,
Common reasons for rejection of meds: 2 the patient's insurance on file is not currently active, or has been incorrectly entered, and the prescriber's information is either incomplete or entered incorrectly
01 Missing/Invalid BIN
09 Missing/Invalid Birth Date
11 Missing/Invalid Relationship Code
19 Missing/Invalid Days’ Supply
25 Missing/Invalid Prescriber ID
66 = Patient Age exceeds Maximum Age
70 = Product/Service Not Covered
75 = Prior Authorization Required
79 = Refill Too Soon
1=Lowest co-payment Most generic prescription drugs
2= Higher Co-pay Brand-name prescription drugs categorized as preferred by an insurance company
3= Higher co-payment than the first or second tier co-payments Brand-name prescription drugs categorized as “Non-preferred” by an insurance company
4= Highest copayment or coinsurance (patients pay a percentage of the drug) Unique, high-cost prescription drugs
Customer ID (enrollee ID) 9 characters long (some with alpha characters at the beginning) Some require a 2 digit suffix (example below)
RxBin # 6 digits long
RxPCN# 3 characters long
RxGroup # Usually 5-7 alpha/numeric characters long
Created by: roseoforlando



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