A list of frequently utilized terms relating to pharmacy reimbursement and their definitions are listed below.

Advance Beneficiary Notice: written notification given to a patient that payment may be denied or reduced, thereby holding the patient responsible for any residual amount.

Ambulatory Payment Classification: part of Medicare’s Outpatient Prospective Payment System for hospital outpatient clinics.

Average Sales Price: average price from the manufacturer, net of all discounts, rebates, charge backs, and credits for drugs.

Average Wholesale Price: suggested retail price determined by the manufacturer.

Adjudication: process used to receive payment for a claim.

Appeal: process for reconsideration of a denied claim.

Assignment: agreement that a provider will bill Medicare directly and accept the allowable amount of payment.

Carrier: insurer contracted by Medicare to administer Medicare Part B benefits.

Case Management: management of a specific patient’s care by a registered nurse or other qualified individual.

Charge Description Master: central file containing billing elements for all generated charges.

Claim: information submitted to insurers requesting payment for covered services.

Commerical Carriers: for-profit insurance companies offering health insurance.

Co-payment: amount not covered by insurers the patient is responsible for paying.

Centers for Medicare and Medicaid Services: agency charged with administering Medicare and Medicaid.

Current Procedural Terminology: numeric codes supplied by the American Medical Association used to charge for physicians’ services.

Durable Medical Equipment: medical equipment used repeatedly in the treatment of illness and injury.

Diagnosis Related Groups: classification of diagnoses for the purpose of hospital reimbursement in the Inpatient Prospective Payment System.

Deductible: fixed payment a patient must make before insurer provides coverage.

Dual Eligibility: eligible for both Medicaid and Medicare.

Evaluation and Management Codes: included in the current procedural terminology codes to classify cognitive services performed for patients by health care providers.

Fiscal intermediary: insurance company contracted by the Centers for Medicare and Medicaid Services to administer Medicare Part A.

HCFA-1500: claim form used to submit claims for Medicare Part B.

Health Maintenance Organization: Health plan in which members are required to use a network of providers for a specific time period.

Healthcare Common Procedure Codes: billing codes used to submit claims for procedures, supplies, drugs, and physician services.

International Classification of Diseases, 9^{th edition}: codes used to classify diseases, symptoms, conditions, and procedures.

Incident to services: services or supplies provided by a physician used as an integral, but incidental part of diagnosing and treatment of injuries or illness of Medicare B covered patients usually excluding drugs that can be self-administered.

Innovator multi-source drugs: brand name drugs with generic equivalents.

Intermediaries: insurers who have a contract with the Centers for Medicare and Medicaid Services to process Medicare Part A claims.

Inpatient Prospective Payment System: used by the Centers for Medicare and Medicaid Services to determine payment of claims.

Major Diagnostic Category: used in Diagnosis Related Groups reimbursement by classifying diagnoses grouped according to body system.

Medicare Part A: program administered through intermediaries by the Medicare and Medicaid Services to cover inpatient care.

Medicare Part B: program administered through carriers by the Centers for Medicare and Medicaid Services to cover outpatient care.

Medicare Part C:optional purchased coverage in addition to Medicare Part A and B. Examples include Medicare + Choice and Medicare Risk Plus. Includes managed care plans.

Medicare Part D: new Medicare plan providing prescription drug coverage for Medicare recipients that will be offered in 2006.

Medicaid: Centers for Medicare and Medicaid Services program administered by both federal and state governments providing coverage for needy people of all ages. Programs vary by state.Medigap: supplemental insurance for Medicare recipients sold by private insurance companies.

Medicare Prescription Drug, Improvement and Modernization Act: act signed into law on December 8, 2003 designed to improve benefits to seniors and disabled people. Includes a prescription drug benefit.

Non-innovator multi-source drugs: generic medications.

Preferred Provider Organization: fee-for-service organization offering a variety of plans and contracts with providers to pay a discounted fee for their services.

Outpatient Prospective Payment System: used by the Centers for Medicare and Medicaid Services to determine payment of claims submitted for inpatients with Medicare.

Outlier: medical cases with higher than average established cost or length of stay.

Packaged drugs: drugs whose costs are packaged into the payment for the assigned Ambulatory Payment Classification and not separately reimbursed.

Pass-through drugs:drugs designated for a maximum of two to three years to be reimbursed separately from Ambulatory Payment Classifications prior to determination of payment method by the Outpatient Prospective Payment System.

Revenue codes:billing code used by hospitals to identify cost centers affiliated with services, pharmaceuticals, and supplies charged to Medicare patients. Also referred to as UB-92 codes.

Relative Value Unit:weight assigned to current procedural terminology codes representing value based on the complexity of service.

Specified Covered Outpatient Drugs:covered drugs assigned an Ambulatory Payment Classification for which the designation of pass-through (separate) payment was made prior to 12/31/2002.

Self-administered drugs: non-covered injectable medications not usually self-administered by more than 50% of outpatients.

Sole source drugs: brand name drugs without generic equivalents.

Status indicators:list of alphabetical codesused to determine if a drug is paid separately under the Outpatient Prospective Payment System.

TRICARE: triple option healthcare program bringing together the Civilian Health and Medical Program of the Uniformed Services as well as the healthcare delivery services of each of the military services.

UB-92: synonymous with the CMS-1450 form used by hospitals to file Medicare claims for services rendered to both inpatients and outpatients.