Glossary

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A-D

Access

The ability of a provider or provider group to secure product to appropriately treat patients according to a physician's prescription or the ability of a patient to fill a physician's prescription.

Allowable

The approved reimbursement for a medicine or service paid to a provider by an individual payer.

Ancillary Services

Supplemental services such as home health services used to support the treatment of a patient's diagnosis.

Annual/Lifetime Maximum

Maximum dollar amounts set by health insurance plans that limit the total amount the plan must pay for all health care services provided to a subscriber per year or in his or her lifetime.

Appeal

A request for reconsideration of services that were denied proper reimbursement by the health insurance plan. An appeal is filed if the health insurance plan does not pay or does not pay enough for a procedure or service. The appeal is made to the health insurance plan and there are usually specific guidelines.

ASP

See Average Sales Price.

Authorization

A health insurance plan's system of approving payment of benefits for products or services that meet requirements for coverage.

Average Sales Price (ASP)

The manufacturer's sales in dollars to all purchasers in the United States (excluding certain exemptions) for a specific drug in a single calendar quarter divided by the total number of units of the drug sold by the manufacturer in that quarter.

Average Wholesale Price (AWP)

The "suggested retail price" that drug wholesalers should charge purchasers for a drug, as determined by the drug manufacturer. This price does not necessarily represent the actual price that the wholesalers deem appropriate to charge purchasers. Instead, the AWP serves as a price point for determining reimbursement rates.

AWP

See Average Wholesale Price.

Benefit

The amount payable by a health insurance plan to a provider, group, hospital, pharmacy or patient, as stated in the policy, toward the cost of a medical good or service. (See Blount LL, Waters JM. Mastering the Reimbursement Process, Third Edition. 2001. Chicago: American Medical Association.)

Benefit Cap

The entire dollar amount that a health insurance plan will pay for covered medical services during a specific period of time.

Benefits Investigation

An investigation of the benefits available through the patient's health insurance plan.

Billing

The process by which a health care practice invoices a health insurance plan for products and services provided to a patient who is covered by that plan.

Buy and Bill

"Buy and bill" is when a payer requires a health care provider to purchase and bill for a specific pharmaceutical product in order to be reimbursed, i.e., the physician's office purchases the product for their patients instead of referring them to a retail pharmacy or a specialty pharmacy.

C-Code

A type of Healthcare Common Procedure Coding System (HCPCS) code that hospital outpatient departments use to identify injections.

Capitation

A fixed dollar amount that managed care organizations (MCOs) pay providers to cover the cost of health care services for the MCOs' members. Prescribers typically receive capitated payments on a per member per month (PMPM) basis.

Carrier

A commercial health insurance company that acts on behalf of the Centers for Medicare & Medicaid Services (CMS) to process claims for Medicare Part B reimbursement in a specific geographic area. (By October 1, 2011, all fiscal intermediaries and carriers will be replaced by Medicare Administrative Contractors or MACs.)

Carve-out

The separation of a medical service or group of services from the basic set of benefits. For example, pharmacy benefits are often separate from medical benefits and covered by a different entity.

Case Management

A process of coordinating patient services to ensure patients seek and receive the necessary care to minimize duplication of services, tests and costs. (See Blount LL, Waters JM. Mastering the Reimbursement Process, Third Edition. 2001. Chicago: American Medical Association.)

Centers for Medicare & Medicaid Services (CMS)

Federal agency responsible for administering public health-related programs such as Medicare and Medicaid.

Certificate of Coverage

A description of the benefits included in a health insurance plan. The certificate of coverage is required by state insurance laws and represents the coverage provided to subscribers via the certificate booklet.

Claim

A request for payment for services and benefits received. Claims are also called "bills" for all Medicare services billed through fiscal intermediaries. "Claim" is the word used for Medicare Part B health care provider/supplier services billed through the carrier. (See Medicare Part A; Medicare Part B; Medicare Part D.)

Claim Inquiry

A follow-up regarding status of claims submission.

"Clean" Claim

A claims form in which all of the appropriate fields are filled with complete and accurate information.

Clinical Trial

A controlled study involving human subjects, designed to evaluate prospectively the safety and effectiveness of new drugs, new indications, devices or behavioral interventions.

COBRA

See Consolidated Omnibus Budget Reconciliation Act.

Coding

The process by which a health care provider itemizes the specific products and services that have been provided to a patient in order to ensure that the provider is appropriately reimbursed.

Co-insurance

The proportion of reimbursement that patients are responsible for paying.

Compendia ("Drug Information Compendia")

Publications that provide legally recognized clinical information (e.g., on- and off-label indications, side effects, dosage recommendations) for all FDA-approved drugs. In developing coverage policies, public and private payers often refer to the compendia for information on the appropriate off-label usage of drugs. The three primary compendia currently in publication are the AHFS Drug Information (AHFS-DI), DRUGDEX^® and DrugPoints^®.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

A federal act that requires each group health insurance plan to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage.

Coordination of Benefits

An insurance policy clause that defines how the health insurance plan will reimburse for services when more than one health insurance plan is applied to the claim for health care provider services; the process of adjudicating claims between two or more health insurance plans.

Co-pay Assistance

Financial assistance provided by independent, non-profit organizations to assist eligible patients to cover their co-pay or co-insurance obligations for drugs and services.

Co-payment ("co-pay")

A cost-sharing arrangement in which members of health insurance plans pay a specified charge for a product or service, such as a prescription or an office visit. Members are typically responsible for this payment at the time of the service.

Coverage

See Certificate of Coverage.

CPT Code

See Current Procedural Terminology (CPT) Code.

Current Procedural Terminology (CPT) Code

A five-digit code that identifies the medical procedures provided in an outpatient setting (e.g., physician's office, hospital outpatient department). CPT codes are part of the Healthcare Common Procedure Coding System (HCPCS).

DEA Number

Drug Enforcement Agency license number, which is required of physicians who prescribe controlled substances.

Deductible

The portion of health care expenses that health insurance plan members must pay out of pocket before insurance coverage kicks in.

Denial

Sometimes insurers will refuse to pay for a specific drug for a particular patient, even though the doctor thinks that drug is appropriate for that patient. This is known as "coverage denial." There are many possible reasons for such denials. If a health insurance plan denies coverage, the physician may submit an appeal on behalf of the patient.

Dispensing Fee

Fixed fee paid by a managed care organization (MCO) or a pharmacy benefit manager (PBM) to a retail pharmacy every time a prescription is filled.

Distributor

A drug distribution company that manages the process of getting medicines from drug manufacturers to health care providers' offices.

Drug Fee Paid

The amount a pharmacy is reimbursed for a dispensed drug; typically a percent reduction off the average wholesale price (AWP).

Drug Formulary

See Formulary.

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E-H

Eligibility

The process of ensuring that a specific patient is entitled to receive certain types of benefits, based on their insurance coverage, their age, their income level or other criteria.

Exclusion

A health insurance contract clause that defines conditions or treatments not covered by a health policy.

Explanation of Benefits (EOB)

A statement from the payer that explains the reason for payment or no payment for each procedure.

Fee-for-Service (FFS)

A health care payment system in which prescribers and hospitals receive a direct payment for each service they provide to a patient. (See also Indemnity Plan.)

Financial Assistance

Any form of monetary assistance provided to help a patient get appropriate medical treatment.

Fiscal Intermediary

A commercial health insurance company that acts on behalf of the Centers for Medicare & Medicaid Services (CMS) to process claims for Medicare Part A reimbursement in a specific geographic area. (By October 1, 2011, all fiscal intermediaries and carriers will be replaced by Medicare Administrative Contractors or MACs.)

Formulary

A list of prescription medications and their proper dosages that are approved for coverage by a payer or for use by a specific institution (e.g., a hospital). The list is subject to periodic review and modification. In some health insurance plans and institutions, doctors must order or use only drugs listed on the formulary.

G-Code

Used to identify professional health care procedures and services that would otherwise be coded in Current Procedural Terminology (CPT) but for which there are no CPT codes. These are temporary codes. Healthcare Common Procedure Coding System (HCPCS) Level II codes: Ingenix 2005 HCPCS Level II Expert.

Gatekeeper

Any physician who serves as a patient's primary contact for medical care and referrals. Most health maintenance organizations (HMOs) rely on a gatekeeper to control their members' utilization of services.

Genentech^® Access to Care Foundation (GATCF)

The Genentech Access to Care Foundation was established to help patients with unmet medical needs who are uninsured or rendered uninsured due to payer denial and who meet specific medical criteria. The Genentech Access to Care Foundation may be available to help those who are not able to obtain Genentech products for financial reasons.

Grievance

An official complaint about a service provider. For example, a patient may file a grievance if he or she has a problem with the cleanliness of the health care facility, calling the plan, staff behavior or operating hours. A grievance is not the way to deal with a complaint about a treatment decision or a service that is not covered.

Group Model HMO

A health maintenance organization (HMO) that contracts with a medical group for health care services and compensates the group for contracted services at negotiated rates. Group models exercise relatively tight control over their providers' clinical practices and prescribing behavior.

Group Purchasing Organization (GPO)

A commercial organization that negotiates contracts for supplies and pharmaceuticals on behalf of member hospitals and health care providers. GPOs provide members with competitive prices through volume discounts.

Health Insurance Portability & Accountability Act (HIPAA)

A law passed in 1996 that is also sometimes called the "Kassebaum-Kennedy" law. This law expands health care coverage if a person has lost his or her job or has moved from one job to another. In this situation, HIPAA protects people and their families if they have pre-existing medical conditions and/or problems getting health coverage that are based on past or present health.

Health Maintenance Organization (HMO)

A type of managed care plan where a group of doctors, hospitals and other health care providers agree to provide health care to HMO members for a set fee schedule. In an HMO, patients usually must get all their care from the providers that are part of the plan.

Healthcare Common Procedure Coding System (HCPCS)

The standard coding system for services provided in the outpatient setting. Health care providers' offices and hospital outpatient departments use these codes to bill Medicare and other payers for services rendered. The three types of HCPCS codes are Current Procedural Terminology codes, national codes (including J-codes and Q-codes) and local codes.

Hybrid Model HMO

See Point-of-Service (POS) Model HMO.

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I-L

ICD-9 Code

CM International Classification of Diseases, 9th Revision, Clinical Modification Code that identifies the diagnosis for a patient's condition. In addition to identifying a patient's condition, hospital inpatient departments use certain ICD-9 codes to identify procedures they have provided to a patient.

IHS

See Integrated Health System.

Indemnity Plan

The traditional type of fee-for-service (FFS) health insurance plan in which the patient has open access to health care services, and providers have unlimited autonomy over the types of services they can provide.

Independent Practice Association (IPA) Model HMO

A health maintenance organization (HMO) that contracts with individual health care providers who see HMO members for a negotiated fee. The health care providers are members of the IPA but remain independent practitioners with their own offices, medical equipment and staff. Relative to other HMOs, IPA model HMOs loosely control their providers' clinical practices and prescribing behavior.

Infusion

A drug delivery method where the drug is given through a needle placed in a vein in the arm or hand or through a central line (such as a port).

In-Network Provider

Service provider contracted with a managed care organization (MCO) to participate in a network.

Integrated Health System (IHS)

A managed care organization (MCO) that is composed of health care provider groups, hospitals and, in some cases, insurance companies. These organizations form a single entity that contracts with purchasers to provide a continuum of health care services.

J-Code

A type of Healthcare Common Procedure Coding System (HCPCS) code that hospitals and physician offices use to identify injectable drugs they have administered to a patient.

Legacy Provider Identifier

Legacy provider identifiers include the following: Online Survey Certification and Reporting (OSCAR) system numbers; National Supplier Clearinghouse (NSC) numbers; Provider Identification Numbers (PINs); and Unique Physician Identification Numbers (UPINs) used by Medicare. They do not include taxpayer identifier numbers (TINs) such as Employer Identification Numbers (EINs) or Social Security Numbers (SSNs). Medicare required that all such identifiers must be replaced by National Provider Identifier (NPI) numbers as of May 23, 2007 (or May 23, 2008, for small health insurance plans).

Local Code

A type of Healthcare Common Procedure Coding System (HCPCS) code that identifies new procedures or supplies that do not yet have a national code.

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M-P

Managed Care Organization (MCO)

A health care delivery system that controls costs by closely managing its members' utilization of health services and shifting some (or all) of the financial risk to providers and patients. The two primary types of MCOs are health maintenance organizations (HMOs) and preferred provider organizations (PPOs).

Maximum Allowable Cost

The maximum cost that a health insurance plan or pharmacy benefit manager (PBM) will pay for a product.

Medicaid

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, but most health care costs may be covered if the individual qualifies for both Medicare and Medicaid.

Medical Benefit

A type of benefit provided by health insurance plans that encompasses services provided in a hospital, a health care provider's office or some other institutional setting.

Medical Necessity

Services or supplies that are proper and needed for the diagnosis or treatment of a patient's medical condition; meet the standards of good medical practice in the local area; and are not mainly for the convenience of the patient or physician.

Medicare

The federal health insurance program for people 65 years of age or older, certain younger people with disabilities and people with end-stage renal disease (permanent kidney failure with dialysis or a transplant, sometimes called ESRD).

Medicare Administrative Contractor (MAC)

A commercial company that acts on behalf of the Centers for Medicare & Medicaid Services (CMS) to process claims for Medicare reimbursement in a specific geographic area. (By October 1, 2011, all fiscal intermediaries and carriers will be replaced by MACs.)

Medicare Advantage Plans

Health insurance plan options that are approved by Medicare but run by private companies. They help Medicare beneficiaries cover their Medicare-related costs (e.g., 20 percent co-insurance, Part B premium) and gain access to prescription drug coverage.

Medicare Part A

Hospital insurance that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care.

Medicare Part B

Medical insurance that helps pay for doctors' services, outpatient hospital care and other medical services that are not covered by Medicare Part A.

Medicare Part D

Pharmacy benefit that helps pay for prescription drugs dispensed by pharmacies. This coverage became available on January 1, 2006 for Medicare beneficiaries who enroll.

Medigap

See Supplemental Health Insurance.

National Code

A type of Healthcare Common Procedure Coding System (HCPCS) code that identifies non-physician services (e.g., injectable drugs, durable medical equipment) provided in the outpatient setting. J-codes for infused/injectable drugs fall under this category.

National Drug Code (NDC)

Universal code that identifies prescription and some over-the-counter drugs.

National Provider Identifier (NPI)

The NPI is a 10-position, intelligence-free numeric identifier (10-digit number) that does not carry other information about health care providers, such as the state in which they live or their medical specialty. Beginning May 23, 2007 (or May 23, 2008, for small health insurance plans), the NPI must be used in lieu of legacy provider identifiers.

Network Model

A health maintenance organization (HMO) that contracts with multiple provider groups. (In contrast, a group model HMO only contracts with one provider group.) Network model HMOs exercise relatively tight control over their providers' clinical practices and prescribing behavior.

Off Label

Any use of a drug or other medical product that is not explicitly included in the indicated (i.e., approved) uses by the U.S. Food and Drug Administration (FDA) as outlined in the product's prescribing information.

On Label

Any use of a drug or other medical product that is explicitly included in the indicated (i.e., approved) uses by the U.S. Food and Drug Administration (FDA) as outlined in the product's prescribing information.

Out-of-Network Provider

Service provider that has not entered into a service agreement with a particular payer to provide benefits upon certain terms including specific rates.

Patient Assistance

The process of providing some form of assistance — financial or otherwise — to help patients get access to drugs they cannot afford, potentially including services provided to help with treatment-related issues.

Patient Assistance Program

A specific program usually designed to provide some form of assistance to help uninsured and underinsured patients get access to a specific drug that they need but that they can't afford.

Patient Authorization and Notice of Release of Information (PAN)

A three-page form that a patient must sign and date to release his or her personal medical information for the purpose of ensuring coverage and/or reimbursement. It is necessary for enrollment in Genentech Access Solutions™ programs.

Pharmacy Benefit

A type of benefit offered by health insurance plans that encompasses outpatient drugs that a patient can self-administer, such as oral and self-injectable drugs.

Pharmacy Benefit Manager (PBM)

A commercial organization that manages drug benefit programs on behalf of health insurance plans. In many cases, PBMs take on the financial risk for controlling their health insurance plan members' drug utilization.

Physician Practice Management Company (PPMC)

A commercial organization that assists health care providers in managing the "business side" of their practices. PPMC services include contract negotiating, purchasing and billing/collecting.

Point-of-Service (POS) Model HMO

A health maintenance organization (HMO) that incorporates attributes of several different types of HMOs. POS plan members often have access to providers outside of the HMO's network but have financial incentives to use network providers. POS model HMOs are also referred to as "hybrid HMOs."

PPMC

See Physician Practice Management Company.

Pre-certification

A method for pre-approving all elective hospital admissions, surgeries and other provider services as required by insurance carriers.

Preferred Provider Organization (PPO)

The most loosely controlled type of health maintenance organization (HMO). PPO members can see any provider they choose, but they have incentives to see providers who belong to the PPO's network of "preferred providers." Providers are reimbursed on a discounted fee-for-service (FFS) basis, and the PPO does not exert much control over the providers' clinical and prescribing behavior.

Prior Authorization

Prior approval that a patient or practice must receive from a health insurance plan to use certain drugs or services. Managed care organizations (MCOs) often rely on the prior authorization process to ensure that high-cost products and services are used appropriately.

Prompt Payer Laws

State laws that require all insurers to reimburse providers within a specified time frame after a "clean" claim has been submitted. Failure to reimburse within the specified time frame results in a financial penalty. Each state has a prompt payer law.

Provider

A health care provider (e.g., a physician or group of physicians) or organization (e.g., a hospital, nursing home or pharmacy) that provides health care goods and/or services.

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Q-Z

Q-Code

A type of Healthcare Common Procedure Coding System (HCPCS) code that hospital outpatient departments use to identify chemotherapy and other infusions.

Recertification

Process of obtaining reauthorization of an ongoing medical treatment from a health insurance plan. When a medical treatment is authorized for a specific and limited period of time, it will generally require recertification for coverage of continued treatment.

Reimbursement

The process by which a physician practice or a hospital obtains payment from a health insurance plan for drugs and other products purchased in advance. For example, a practice may purchase a drug in advance for injection in the office. Once the drug has been injected into the patient, the practice will need to obtain reimbursement from the patient's health insurance plan.

Relative Value Unit (RVU)

A unit that measures the resources necessary to provide a given service in a health care provider's office. RVUs are used by the Centers for Medicare & Medicaid Services (CMS) to calculate Medicare payment rates for health care providers.

Resource-Based Relative Value Scale (RBRVS)

A prospective payment system for health care providers in which payments are based on the estimated level of resources necessary to provide a service, which are measured in terms of relative value units (RVUs). This reimbursement system is also referred to as the "Medicare Fee Schedule."

Risk Sharing

A cost-control mechanism employed by managed care organizations (MCOs) to put providers at risk for the services they provide patients. The most common form of risk sharing is capitation.

Secondary Carrier/Payer

The insurance carrier/payer that pays benefits after the primary health insurance plan has reimbursed first.

Self-Insured Employer

An employer that administers (or contracts with a third-party administrator [TPA] to manage) a defined health benefits package for its employees.

Specialty Distributor

A drug distribution company that specializes in a certain area of therapeutics. (See also Specialty Pharmacy.)

Specialty Pharmacy

A specialized pharmacy or group of specialized pharmacies that have been selected to provide reimbursement support and product distribution to health care providers and patients for certain specific products.

Staff Model HMO

A health maintenance organization (HMO) that directly employs providers and owns its hospitals, pharmacies and other facilities. Members of staff model HMOs may only see the HMO's providers. Staff models exercise extremely tight control over their providers' clinical practices and prescribing behavior.

Statement of Medical Necessity (SMN)

A form that contains patient, insurance, prescriber and clinical information. (See also Medical Necessity.) The form may also be used as a legal prescription, but only when signed by the prescriber.

Supplemental Health Insurance (Medicare Supplement)

Supplemental health insurance that helps Medicare beneficiaries cover their Medicare-related costs (e.g., 20 percent co-insurance, Part B premium) and gain access to services not covered by Medicare (e.g., prescription drugs). The primary sources of secondary insurance for Medicare beneficiaries include Medigap policies, retiree health benefits and Medicaid.

Third-Party Administrator (TPA)

A claims processing organization that handles insurance claims and reimbursement of providers.

Tiered Co-payment System

A cost-sharing arrangement between health insurance plans and their members in which the member must pay a higher co-payment for more expensive medications within a therapeutic class.

TRICARE

The managed health care program operated by the U.S. Department of Defense (DOD). TRICARE covers active duty personnel, military retirees and civilian DOD employees.

Usual, Customary and Reasonable Charge (UCR)

Fees charged for health-related services that are consistent with other similar services within the local area.

Utilization Review (UR)

A process used by managed care organizations (MCOs) to compare the practice patterns of health care providers in their networks. Through this review, MCOs can identify which health care providers may be overusing costly services relative to their peers.

Veterans Health Administration (VHA)

The federal agency that provides health care coverage for all U.S. veterans. The VHA owns and operates its own hospitals, clinics and pharmacies.

VHA

See Veterans Health Administration.

WAC

See Wholesale Acquisition Cost.

Wholesale Acquisition Cost

The list price that drug distributors pay for a drug. This price does not include the discounts associated with any contractual arrangements between the manufacturer and the distributor.

Wholesaler

A drug distribution company that maintains product inventories and dispenses drugs to hospitals.

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