Healthcare Glossary
Every term. Plain English.
Pricing
90-Day Supply
A 90-day supply is a prescription fill that provides three months of medication at once, rather than the stand…
Alternative Funding Program (AFP)
An Alternative Funding Program (AFP) is a third-party service that helps self-funded employers move specialty …
Bundled Price
A bundled price is a single all-inclusive fee for a defined episode of care — surgeon, anesthesia, facility, i…
Cash Price
A cash price is what a facility charges when a patient pays directly at the time of service, with no insurance…
Chargemaster
A chargemaster is the master price list a hospital keeps for every single item and service it can bill for — f…
Drug Tiers (Tier 1 through Tier 5)
Drug tiers are the pricing levels a health plan or PBM assigns to prescription drugs on the formulary. The tie…
Episode of Care
An episode of care is a defined bundle of services related to a single medical event — from initial diagnosis …
Fail First
"Fail first" is the informal name for a step-therapy protocol, where a health plan or PBM requires a patient t…
Generic Substitution
Generic substitution is the practice of a pharmacy dispensing an FDA-approved generic version of a drug instea…
List Price
The list price of a prescription drug is the manufacturer's publicly stated price before any negotiated discou…
Maintenance Medication
A maintenance medication is a prescription drug taken on an ongoing basis to manage a chronic condition — typi…
Manufacturer Rebate
A manufacturer rebate is a payment a pharmaceutical company sends to a PBM (and often further downstream to a …
Medical Tourism
Medical tourism is the practice of traveling — domestically or internationally — to receive planned medical ca…
Negotiated Rate
A negotiated rate is the price a health plan and a provider have agreed to in a written contract. It sits betw…
Non-Medical Switching
Non-medical switching is when a PBM or health plan changes the drug that a patient is required to take for a s…
Pharmacy Carve-Out
A pharmacy carve-out is when a self-funded employer separates the pharmacy benefit from the medical benefit an…
Prompt Pay Discount
A prompt pay discount (also called a self-pay or cash discount) is a reduction a provider offers when a patien…
RBP (Reference-Based Pricing)
Reference-based pricing is a self-funded plan design that pays providers a defined multiple of Medicare rates …
Spread Pricing
Spread pricing is a PBM revenue model where the pharmacy benefit manager charges the plan sponsor one price fo…
Therapeutic Alternative
A therapeutic alternative is a different drug in the same drug class that produces a similar clinical effect f…
Transparent-Pricing PBM
A transparent-pricing PBM is a pharmacy benefit manager that charges a defined per-script or per-member admini…
Insurance
ACA Marketplace
The ACA Marketplace (also called the Health Insurance Marketplace, the Exchange, or by state-specific names li…
Advance Premium Tax Credit (APTC)
The Advance Premium Tax Credit (APTC) is a federal subsidy that reduces the monthly premium a household pays f…
Aggregate Attachment Point
The aggregate attachment point is the total dollar amount of claims a self-funded plan must pay in a year befo…
Aggregate Deductible (Family Plan)
An aggregate family deductible (also called a non-embedded deductible) is a family plan design where no single…
ASO (Administrative Services Only)
An ASO arrangement is a self-funded plan where a major carrier (Aetna, BCBS, Cigna, UHC) provides the administ…
Coinsurance
Coinsurance is the percentage of the allowed amount you pay after your deductible is met, up until you hit you…
Contribution Limit (HSA / FSA)
The contribution limit is the maximum annual amount the IRS allows a taxpayer to deposit into a specific tax-a…
Copay
A copay is a flat dollar amount you pay for a specific service, usually collected at the time of care. A $30 p…
Cost Sharing Reduction
A Cost Sharing Reduction (CSR) is an ACA subsidy that lowers the deductibles, copays, coinsurance, and out-of-…
Deductible
A deductible is the dollar amount you pay out of pocket for covered services each plan year before your health…
Deductible Waiver
A deductible waiver is a plan design feature where specific services are covered by the plan without requiring…
Direct Primary Care (DPC)
Direct Primary Care (DPC) is a primary-care delivery model where the patient (or the employer) pays the primar…
Embedded Deductible
An embedded deductible is a family plan design where each individual family member has their own deductible th…
EPO (Exclusive Provider Organization)
An EPO is a plan design that sits between an HMO and a PPO. Like a PPO, you generally don't need a referral to…
Federal Poverty Level (FPL)
The Federal Poverty Level (FPL) is an income threshold updated annually by the U.S. Department of Health and H…
HDHP (High-Deductible Health Plan)
An HDHP is a health plan with a deductible above IRS-set minimums ($1,600 individual / $3,200 family for 2024)…
HMO (Health Maintenance Organization)
An HMO is a health plan built around a primary care physician (PCP) who acts as the coordinator for all care. …
In-Network
In-network means a provider or facility has a written contract with your health plan's network. That contract …
Individual Stop-Loss (ISL)
Individual Stop-Loss (ISL) is the self-funded plan protection that reimburses the plan sponsor for any single …
Integrated HRA
An integrated Health Reimbursement Arrangement (HRA) is a traditional HRA that's paired with — and can only be…
Laser (Stop-Loss Laser)
A laser is a stop-loss provision that carves out a specific individual — usually a known high-claimant — with …
Out-of-Network
Out-of-network means a provider has no contract with your health plan. The plan will typically pay something t…
Out-of-Pocket Maximum
The out-of-pocket maximum is the most you'll pay for covered, in-network care in a plan year. Once you hit it,…
PPO (Preferred Provider Organization)
A PPO is a health plan design that gives members access to a broad network of contracted providers without req…
Preventive Care
Preventive care is a defined list of services that ACA-qualified health plans must cover at 100 percent, with …
Specific Attachment Point
The specific attachment point is the dollar amount any single covered member must accrue in claims before spec…
Stop-Loss Insurance
Stop-loss insurance is what makes self-funded health plans safe for employers below a few thousand employees. …
Telemedicine
Telemedicine is the delivery of clinical care through video visits, phone consultations, secure messaging, or …
Tobacco Surcharge
A tobacco surcharge is a premium differential that employers and insurers charge tobacco users on their health…
TPA (Third-Party Administrator)
A TPA is a company that administers a self-funded health plan on behalf of the employer. The employer is the p…
Wellness Program
A wellness program is a set of employer-sponsored activities and incentives designed to encourage healthier em…
Billing
Advanced EOB
An Advanced EOB is a predictive Explanation of Benefits that health plans are supposed to send to insured memb…
Allowed Amount
The allowed amount is the maximum dollar figure your health plan will recognize for a covered service. It's th…
Balance Billing
Balance billing is when a provider bills you for the difference between what they charged and what your plan a…
Claim Adjudication
Adjudication is the process by which a health plan or PBM decides how a claim is paid — reviewing the submitte…
CPT Code
CPT stands for Current Procedural Terminology. It's the five-digit code system, maintained by the American Med…
Duplicate Charges
Duplicate charges are billing errors where the same service, medication, or supply appears more than once on a…
EOB (Explanation of Benefits)
An EOB is the statement your health plan sends after a claim is processed. It shows what the provider billed, …
Evaluation and Management (E&M) Codes
Evaluation and Management (E&M) codes are the CPT codes used to bill for a physician's or other qualified heal…
Good Faith Estimate
A Good Faith Estimate is a written cost estimate that providers are required to give uninsured and self-pay pa…
ICD-10
ICD-10 is the diagnosis coding system used on every medical claim. Where CPT codes describe what the provider …
Itemized Bill
An itemized bill is the detailed, line-by-line breakdown of every charge on a medical bill — every medication …
Provider Write-Off
A provider write-off (or contractual adjustment) is the difference between a provider's billed charge and the …
Superbill
A superbill is an itemized receipt from a provider that a patient can submit to their insurance plan themselve…
Unbundling
Unbundling is billing separately for components of a procedure that should be included in a single bundled cod…
Upcoding
Upcoding is billing a higher-paying code than the service actually delivered — coding a 15-minute office visit…
Usual and Customary
Usual and Customary (sometimes UCR — Usual, Customary, and Reasonable) is a methodology some health plans use …
Year-to-Date (YTD)
Year-to-date, in a health plan context, is the running total of covered expenses a member has accumulated duri…
Rx
Biologic
A biologic is a medication made from living cells or biological systems — cultured proteins, monoclonal antibo…
Biosimilar
A biosimilar is the biologic equivalent of a generic drug — a near-identical version of an original biologic m…
Brand-Name Drug
A brand-name drug is the version of a medication sold by the company that originally developed it, under a tra…
Copay Accumulator
A copay accumulator is a plan design that prevents manufacturer copay card assistance from counting toward the…
Copay Maximizer
A copay maximizer is a cousin of the accumulator — a plan design that also prevents manufacturer copay card as…
Formulary
A formulary is your plan's list of covered prescription drugs, usually organized into tiers that determine wha…
Gene Therapy
Gene therapy is a category of treatments that work by modifying, replacing, or adding genes to a patient's cel…
Generic Drug
A generic drug is the chemically identical version of a brand-name drug, made and sold after the brand-name ma…
Mail-Order Pharmacy
A mail-order pharmacy dispenses maintenance medications in 90-day supplies and ships them directly to the pati…
Manufacturer Copay Card
A manufacturer copay card is a discount program run by a drug company that reduces the member's out-of-pocket …
Manufacturer Drug Rebate
A drug rebate is a payment from a pharmaceutical manufacturer to a PBM or health plan, made after the drug is …
Patient Assistance Program
A Patient Assistance Program (PAP) is a manufacturer program that provides prescription drugs at little or no …
PBM (Pharmacy Benefit Manager)
A PBM is the middleman that administers the prescription drug portion of a health plan. PBMs build formularies…
Specialty Drug
Specialty drugs are high-cost medications used to treat complex, chronic, or rare conditions — rheumatoid arth…
Specialty Pharmacy
A specialty pharmacy is a pharmacy that dispenses high-cost, high-complexity medications requiring special han…
WAC (Wholesale Acquisition Cost)
WAC stands for Wholesale Acquisition Cost — the manufacturer's published list price for a drug sold to wholesa…
Facility
ASC (Ambulatory Surgery Center)
An ASC is a freestanding facility that performs same-day outpatient surgical procedures — colonoscopies, catar…
Centers of Excellence
A Center of Excellence is a facility a health plan designates as preferred for a specific high-cost, high-comp…
DPC (Direct Primary Care)
Direct Primary Care is a practice model where the patient (or employer) pays the physician a flat monthly memb…
HOPD (Hospital Outpatient Department)
An HOPD is an outpatient service department owned by and physically or administratively attached to a hospital…
Financial
DCFSA (Dependent Care FSA)
A Dependent Care FSA is a pre-tax account that lets employees set aside money to pay for qualifying childcare …
FSA (Flexible Spending Account)
An FSA is an employer-sponsored account that lets you set aside pre-tax dollars for qualified medical expenses…
HRA (Health Reimbursement Arrangement)
An HRA is an account funded entirely by the employer that reimburses employees for qualified medical expenses.…
HSA (Health Savings Account)
An HSA is a tax-advantaged savings account you can only contribute to if you're enrolled in a qualified high-d…
HSA Rollover
HSA rollover refers to the fact that unused funds in a Health Savings Account carry over indefinitely from yea…
ICHRA (Individual Coverage HRA)
An ICHRA is a type of Health Reimbursement Arrangement that lets an employer reimburse employees for individua…
QSEHRA (Qualified Small Employer HRA)
A QSEHRA is a Qualified Small Employer HRA — a specific type of HRA available only to employers with fewer tha…
Compliance
21st Century Cures Act
The 21st Century Cures Act is federal legislation enacted in December 2016 that mandated significant changes i…
ACA (Affordable Care Act)
The Affordable Care Act is the 2010 federal health reform law that reshaped US health insurance. Its major pro…
CAA Gag Clause Prohibition
The Consolidated Appropriations Act of 2021 (CAA) included a prohibition on gag clauses in health plan contrac…
Continuity of Care
Continuity of care is the legal and contractual protection that lets a patient continue to see their current p…
Cross-Plan Offsetting
Cross-plan offsetting is a practice where a health insurer or TPA that overpays a provider on one member's cla…
ERISA
ERISA is the Employee Retirement Income Security Act of 1974 — the federal law that governs private-sector emp…
Expedited Review
An expedited review is an accelerated appeal process available when a health plan's standard review timeframes…
External Review
External review is the appeal step that comes after a health plan's internal appeals process has been exhauste…
Gold Carding
Gold carding is a health plan program that exempts high-performing physicians from prior-authorization require…
HIPAA
HIPAA is the Health Insurance Portability and Accountability Act of 1996. It has two main pieces: portability …
IDR (Independent Dispute Resolution)
Independent Dispute Resolution (IDR) is the federal arbitration process created by the No Surprises Act to res…
Independent Review Organization (IRO)
An Independent Review Organization (IRO) is an accredited third-party entity that conducts external appeal rev…
Medical Exception
A medical exception (also called a medical-necessity exception or formulary exception) is a formal request to …
Medical Necessity
Medical necessity is the standard a health plan uses to decide whether a service is covered. Generally, a serv…
MRF (Machine-Readable File)
Machine-Readable Files are the negotiated-rate and out-of-network-payment data files that health plans are req…
Network Adequacy
Network adequacy is the regulatory standard that requires health plans to have enough contracted providers, in…
No Surprises Act
The No Surprises Act is federal legislation that took effect January 2022 to protect patients from balance bil…
Prior Authorization
Prior authorization is a requirement from your health plan that the provider get approval before performing ce…
Prior Authorization Appeal
A prior authorization (PA) appeal is the formal process for challenging a health plan's denial of a prior-auth…
Prudent Layperson Standard
The prudent layperson standard is the legal test used to decide whether an emergency room visit qualifies as a…
Step Therapy
Step therapy is a plan requirement that a member try one or more lower-cost medications (and document that the…
Summary of Benefits and Coverage (SBC)
The Summary of Benefits and Coverage (SBC) is a standardized, plain-language document that health plans are re…
Summary Plan Description (SPD)
The Summary Plan Description (SPD) is the ERISA-required document that spells out the full terms of an employe…
Transparency in Coverage Rule
The Transparency in Coverage rule is a federal regulation that took effect July 2022 requiring health plans to…