A list of terms and definitions.


  • 340B

    A government program that requires drug manufacturers to sell outpatient drugs to eligible health care organizations at significantly reduced prices.


  • ABD

    See “Aged, Blind & Disabled”

  • Access

    The ability to get needed medical care and services.

  • Accreditation

    An evaluative process in which a healthcare organization undergoes an examination of its policies, procedures and performance by an external organization ("accrediting body") to ensure that it is meeting predetermined criteria.

  • Accumulator

    An amount that represents a beneficiary’s current Deductible, Out-of-Pocket payment, or Benefit Maximum status.

  • Acute

    Requiring short-term treatment.

  • Adherence

    The decision to continue use of drugs that have been prescribed by a health professional to treat an individual’s health conditions.

  • Adjudication

    The process of determining if a claim should be paid, the amount to reimburse the provider, and how much the patient cost share should be after comparing the claim to the benefits

  • Adverse Benefit Determination

    When a claim or request for prior authorization is denied for a covered benefit because the required conditions for approval have not been met.

  • Adverse Drug Reaction

    An unintended and often dangerous response to a drug; an adverse drug reaction should be immediately reported to a health professional.

  • Aged, Blind & Disabled (ABD)

    A Medicaid program that provides health care for beneficiaries who are either age 65 or older, legally blind, or that meet the Supplemental Security Income (SSI) criteria for disability; SSI is administered by the Social Security Administration.

  • Allergy Treatment
    Medical treatment by or under the direction of a physician for allergies, which may include testing, evaluation, injections, or administration of serum.
  • Analgesic

    A drug used to relieve pain.

  • Anti-infective

    A drug used to treat or prevent an infection.

  • Antineoplastic

    A drug used to treat cancer.

  • Appeal

    A request to overturn an Adverse Benefit Determination or Benefit Denial made by a plan sponsor or Pharmacy Benefit Manager (PBM).

  • Attention Deficit Hyperactivity Disorder (ADHD)

    A condition affecting some children and adults that is demonstrated as inattention, excessive activity, and impulsivity.

  • Authorization

    The approval by the health plan for care and/or claim payment.


  • Behavioral Health

    Treatment of mental health and/or substance abuse disorders.

  • Beneficiary

    A person who is eligible for and enrolled in a state Medicaid program. Also referred to as member, recipient, or enrollee.

  • Benefit Limit

    A predetermined amount of pharmacy benefit expenses that your plan sponsor will cover before you must pay for your medications at 100%. In most cases, the plan sponsor paid amount is tracked and, once your benefit limit is met, you are responsible for a 100% copayment amount.

  • Benefit Period

    The period of time for which we pay Benefits for Covered Services rendered while the Health Benefit Plan was in effect.

  • Benefits

    The health care items or services covered under a health insurance plan.

  • Biologic Drug

    A drug that is derived from a living organism; biologics are often highly advanced, specialized drugs that are appropriate only in rare cases.

  • Brand Name Drug

    A drug approved by the Federal Drug Administration (FDA) that is manufactured and distributed by or with the approval of the drug company that received the patent approval.


  • Cardholder

    The individual that qualifies for coverage under a health plan; in some cases, coverage may extend to dependents of the cardholder that would not qualify themselves.

  • Cardholder Identifier (ID)

    A unique number that is assigned to a cardholder and is used to identify eligibility under a health plan; cardholder ID is required to be submitted on claims and encounters for covered health items and services.

  • Cardiovascular Drug

    A drug that is used to treat conditions of the cardiovascular system, which can include high blood pressure, coronary artery disease, and heart failure.

  • Care Plan

    Identifies the medications and other treatments a health professional prescribes or recommends for treating an individual’s health conditions.

  • Case Management

    A program that helps a patient identify and receive the most appropriate and cost-effective care; often includes ongoing monitoring and assistance.

  • Centers for Medicare and Medicaid Services (CMS)

    The federal agency that runs the Medicare program. In addition, CMS works with the States to run the Medicaid program. CMS works to make sure that the beneficiaries in these programs are able to get high quality health care.

  • Central Nervous System (CNS) Drug

    A drug that is used to treat conditions affecting the brain or spinal cord; CNS drugs can be used to treat depression, anxiety, movement disorders, strokes, seizures, and many other conditions.

  • Chemotherapy Drug

    A drug that is used to treat cancer; chemotherapy typically targets specific types of cancer cells to either kill them or to stop them from reproducing.

  • Chronic

    Requiring long-term treatment.

  • Claim

    A request for payment for a health item or service that was provided; a claim could be submitted by a provider or a beneficiary.

  • Coinsurance

    A fixed amount or percentage that must be paid by a beneficiary for each covered health item or service. See “Copayment”

  • Complaint

    See “Grievance”

  • Compliance

    Taking a drug as it is prescribed or following a health professional’s instructions. 

  • Contraceptive

    A drug or device, often requiring a prescription, that is used to prevent pregnancy.

  • Contraindication

    Any condition that would be a reason not to receive a drug or treatment due to a potential health risk. For example, pregnancy may be a contraindication for some medications due to potential harm to the fetus.

  • Controlled Substance

    A drug that the U.S. Food and Drug Administration (FDA) has determined to be habit-forming or addictive, and that is subject to limits in prescribing or use, including complete prohibition in some cases.

  • Coordination of Benefits (COB)

    A program that determines which plan or insurance policy will pay first if two health plans or insurance policies cover the same benefits. Medicaid typically pays last. If one of the plans is a Medicare or Medicaid health plan, Federal law may decide who pays first.

  • Copayment

    A dollar amount paid by a Medicaid beneficiary at the time of receiving a covered service from a participating provider. Copayments may not apply to all beneficiaries or services.

  • Cost Sharing

    Amounts that might be paid by a Medicaid beneficiary at the time of receiving a covered service; cost sharing includes copayments, deductibles, and amounts that exceed maximum benefits.

  • Covered Benefit

    A health service or item that is included in your health plan, and that is paid for either partially or fully.

  • Covered Outpatient Drug

    A drug that is covered by Medicaid outside of a hospital stay; covered outpatient drugs may be subject to utilization management guidelines.

  • Customer Service Representative (CSR)

    An individual that works for a PBM or health plan, and that is available by phone to answer your questions during standard business hours.


  • Deductible

    A predetermined amount that some plans require a Medicaid beneficiary to pay before the plan begins covering the beneficiary’s costs.

  • Denial

    When a claim or encounter is not approved for payment by a health plan or PBM; denials often occur when the item or service is not covered under the benefit.

  • Dependent

    A person who is covered by a health plan under another person’s eligibility; dependents are often children, spouses, or domestic partners of the cardholder.

  • Dermatological Drug

    A drug used to treat conditions of the skin.

  • Diagnosis

    The name for the health problem that you have.

  • Diagnosis Code

    A code used by health professionals to describe your health problem.

  • Diagnostic

    A treatment or procedure administered by a health professional to identify a health condition.

  • Dialysis

    A treatment that cleans your blood when your kidneys don’t work. It gets rid of harmful wastes and extra salt and fluids that build up in your body. It also helps control blood pressure and helps your body keep the right amount of fluids.

  • Direct Member Reimbursement (DMR)

    Direct member reimbursement is a paper claim submitted directly by a member. This method of reimbursement is used when a member has to pay full price for a drug or does not have their drug identification card with them at the pharmacy store.

  • Disability

    Any condition of the body or mind that makes it more difficult for the person with the condition to do certain activities and interact with the world around them.

  • Disclosure

    When information about you is shared by your health plan, caregivers or others with or without your permission.

  • Disenroll

    Ending your health care coverage with a health plan.

  • Drug Interaction

    An unintended reaction between a drug and another substance in an individual’s body, often another drug, that affects how the drug works; drug interactions can make a drug less effective, more effective, or cause other unrelated effects.   

  • Drug Utilization/Use Review (DUR)

    Processes that PBMs, plans, and state Medicaid programs use to review prescriptions you are using at the same time to make sure prescriptions are safe and medically necessary.

  • Dual Eligible

    Persons who are entitled to Medicare (Part A and/or Part B) and who are also eligible for Medicaid.

  • Durable Medical Equipment (DME)

    Medical equipment that is ordered by a doctor for use in the home.


  • Eligible

    Meets the requirements of the health plan for benefit coverage. 

  • Encounter

    Individual service provided by a health care provider, billed to a PBM or Payer.

  • End Stage Renal Disease (ESRD)

    Permanent kidney failure requiring dialysis or a kidney transplant.

  • Enroll/Enrollment

    The process by which a Medicaid eligible person becomes a member of a managed care plan.

  • Enrollee

    A person who is eligible for and enrolled in a state Medicaid program. Also referred to as member, recipient, or beneficiary.

  • Evidence

    Facts that something is true or not true. Doctors may provide evidence that you require a specific drug.

  • Excluded

    Not covered by your Medicaid health plan.

  • Exclusion

    An Item or service that Medicaid does not cover

  • Experimental Drug

    A drug that does not have enough clinical evidence to prove that it is safe or effective in treating the condition it is intended to treat.

  • Explanation of Benefits (EOB)

    A form or letter that is sent to a pharmacy or a beneficiary to describe the payment for prescriptions or services you received.


  • Fee-For-Service

    A traditional way to pay for medical services where doctors and hospitals are paid for each service they provide.

  • Food and Drug Administration (FDA)

    Agency, that was created to protect American consumers by enforcing the Federal Food, Drug, and Cosmetic Act and public health laws regulating food, drugs, medical devices, biologics, cosmetics, and other products.

  • Formulary

    A list of certain drugs that are approved for use and coverage by a health plan.

  • Formulary Exclusion

    A drug that is not covered by a health plan.

  • Fraud

    Intentional deception or mistruth (a lie) used to obtain some unauthorized benefit.


  • Gastrointestinal Drug

    A drug used to treat conditions of the stomach or intestines.

  • Generic Drug

    A prescription drug that has the same active-ingredient formula as a brand name drug. Generic drugs usually cost less than brand name drugs and are rated by the Food and Drug Administration (FDA) to be as safe and effective as brand name drugs

  • Generic Substitution

    When a generic drug is dispensed instead of the brand name drug equivalent. This can only occur when it is allowed both by law and by the prescriber of the medication.

  • Grievance

    A complaint about the way your health plan is giving care. For example, you may file a grievance if you have a problem calling the plan or if you are unhappy with the way a staff person at the plan has behaved toward you. A grievance is not the way to deal with a complaint about a treatment decision or a service that is not covered (see Appeal).

  • Guidelines

    A set of rules that are developed and used to help make decisions about appropriate health care for very specific situations. For example, clinical guidelines may be applied to determine if a specific drug is appropriate for your use.


  • Health Care Provider

    A person who is trained and licensed to give health care. Also, a place that is licensed to give health care. Doctors, nurses, hospitals, and pharmacies are examples of health care providers.

  • Health Insurance Claims Number (HICN)

    The number assigned by the Social Security Administration to an individual identifying him/her as a Medicare beneficiary. This number is shown on the beneficiary's insurance card and is used in processing Medicare claims for that beneficiary.

  • Health Insurance Portability and Accountability Act (HIPAA)

    A law passed in 1996 that is also sometimes called the "Kassebaum-Kennedy" law. This law guarantees patients new rights and protections against the misuse or disclosure of their health records, along with several other protections that promote ongoing health coverage.

  • Health Plan

    An entity that assumes the risk of paying for medical treatments, i.e. uninsured patient, self-insured employer, payer, or (Health Maintenance Organization (HMO).

  • Hearing

    A procedure that gives a dissatisfied claimant an opportunity to present reasons for the dissatisfaction and to receive a new determination based on the record developed at the hearing.

  • Home Infusion

    See “Infusion.” Provided in the home rather than a hospital or outpatient facility.


  • ICD-10

    International Classification of Diseases Revision 10; See “Diagnosis Code”

  • Identification (I.D.) Card

    Printed card or form issued to a beneficiary, containing the Cardholder ID and instructions for providers to submit claims or request authorizations; health providers typically require a beneficiary to present their I.D. card before providing covered services. 

  • Immunization

    See “Vaccine”

  • Immunosuppressive Drug

    A prescription drug used to slow down or stop the immune system.

  • Infertility Drug

    A drug that is used to promote pregnancy in patients that have difficulty conceiving or carrying a pregnancy to full term.

  • Infusion

    Fluids or medications that are given into a vein for treatment; infusion drugs typically require slow administration over a period of time and are administered by or under the supervision of health professionals.

  • Infusion Pump

    Pumps for giving fluid or medication into your vein at a specific rate or over a set amount of time.

  • Injectable Drug

    A drug that is administered by needle into a vein, muscle, or other bodily tissue, including under the skin.


  • Legend Drug

    A drug that cannot be legally obtained without a written prescription; see “Prescription Drug”

  • Lifetime Maximum

    A limit that the health plan applies for the total dollar benefit that can will be paid for an individual by the plan; in pharmacy, lifetime maximums can apply to all drugs or specific categories of drugs


  • Mail Order Pharmacy

    A pharmacy that is not open to the walk-in general public but instead ships or mails drugs to patients; mail order pharmacies typically dispense maintenance drugs in larger quantities at lower costs to beneficiaries and health plans.

  • Maintenance Drug

    A drug that is typically used to treat a chronic condition, and that is usually used regularly for a lengthy period of time; maintenance drugs can sometimes be dispensed in greater quantities than medications used to treat acute conditions.

  • Managed Care

    Health coverage administered by an insurance company on a pre-paid basis.

  • Managed Care Organization

    An insurance company that provides health services on a pre-paid basis through a network of providers.

  • Maximum Allowable Cost (MAC)

    The limit the State/Commonwealth applies to payments made to pharmacies for drugs; usually applies to a list of generic drugs.

  • Maximum Benefit

    A limit that the payer applies to the amount that will be paid for a service or services for a period of time or for the life of a beneficiary.

  • Maximum Out-of-Pocket

    The maximum amount a beneficiary would spend for pharmacy and medical expenses a specified period of time.

  • Medicaid

    A joint federal and state program that helps with medical costs for some people with low incomes and limited resources.

  • Medicaid Managed Care Organization (MCO)

    A Medicaid MCO is contracted with a State/Commonwealth to provide comprehensive services to Medicaid beneficiaries, but not commercial or Medicare enrollees.

  • 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).

  • Medication

    A drug used to treat or prevent a health condition.

  • Member

    A person who is eligible for and enrolled in a state Medicaid program. Also referred to as beneficiary, recipient, or enrollee.

  • Multi-Source Brand

    A brand-named drug that is distributed by more than one manufacturer.


  • National Drug Code (NDC)

    A medical code set maintained by the Food and Drug Administration that contains codes for drugs that are FDA-approved.

  • Nebulizer

    Equipment to give medicine in a mist form to your lungs.

  • Network

    A group of doctors, hospitals, pharmacies, and other health care experts hired by a health plan to take care of its members.

  • Non-Formulary

    Drugs not on a plan-approved list.

  • Non-Preferred Drug

    A drug that that has been identified by the Commonwealth as non-preferred because it not as clinically effective or cost effective as some alternatives; non-preferred drugs often require prior authorization before a plan will cover them.


  • Out-of-Network

    Services provided to beneficiaries by providers that have no contractual or other relationship with a health plan.

  • Out-of-Pocket

    Health care costs that you must pay on your own because they are not covered by Medicaid or other insurance.

  • Outpatient

    A service you get that is not related to an overnight stay at a hospital outpatient department or community mental health center.

  • Over-the-Counter Drug (OTC)

    Does not require a doctor’s written prescription. Some OTCs may be covered under your benefit; refer to your benefit plan.


  • Patient

    The person who receives health services from a provider.

  • Payer

    In health care, an entity that assumes responsibility for paying for medical treatments. This can be patient or a health plan.

  • Payment

    When a provider is reimbursed for a health service.

  • Pharmacy

    A store or clinic where medications are sold.

  • Pharmacy Benefit Manager (PBM)

    An organization that is responsible for managing pharmacy services and benefits for a payer.

  • Physician

    A medical doctor; licensed by a State to provide medical services.

  • Plan

    See “Health Plan.”

  • Plan Limit

    A maximum that a payer applies to a single service that is provided; a maximum day supply of a drug is a common plan limit.

  • Plan Maximum

    See “Maximum.”

  • Plan Sponsor

    An organization that sponsors and funds a health plan; a State or Commonwealth is a Medicaid plan sponsor.

  • Preferred Drug

    A drug that has been identified by the Commonwealth as preferred because it is both clinically and cost effective; preferred drugs are the most cost effective drugs for the beneficiary and health plan.

  • Preferred Drug List (PDL)

    A list of drugs that are preferred by the Commonwealth.

  • Prescriber

    A health professional that is legally permitted to and that does write prescriptions for prescription drugs.

  • Prescription Drug

    A type of drug that cannot be sold or dispensed without the written prescription of a doctor or other permitted health professional.

  • Preventive Drug

    A drug that is used to avoid a health condition; preventive drugs are usually prescribed for individuals at risk for the condition.

  • Prior Authorization

    A process to approve items or service before a plan will pay a provider; medications may require prior authorization when they are not on a Plan formulary.

  • Protected Health Information (PHI)

    Information about your health conditions and treatments, or that can be used to identify you or your health information, and that is protected from disclosure by HIPAA or other regulations.

  • Provider

    A doctor, hospital, health care professional, or health care facility.


  • Qualified Medicare Beneficiary (QMB)

    This is a Medicaid program for beneficiaries who need help in paying for Medicare services.

  • Quantity Limit

    A maximum days of supply or quantity that is permitted under a health plan’s pharmacy benefit; quantity limits may vary based on drug.


  • Recipient

    A person who is eligible for and enrolled in a state Medicaid program. Also referred to as member, beneficiary, or enrollee.

  • Refill

    When a pharmacy dispenses a drug that an individual is already taking, usually for a prescription that has been written for an extended period of time.

  • Refill-Too-Soon

    A denial of a pharmacy claim because a refill is being requested before enough of the previous fill has been used; refill-too-soon denials help to ensure that a drug is not being overused.

  • Reject

    A claim or encounter that did not meet a PBM’s information requirements or exceeded plan limits; rejected claims need to be corrected and resubmitted.

  • Retail Pharmacy

    A pharmacy that is open to dispense prescription drugs to the walk-in general public.

  • Rx

    See “Prescription”


  • Secondary Payer

    An insurance policy, plan, or program that pays second on a claim for medical care. This could be Medicare, Medicaid, or other insurance depending on the situation.

  • Side Effect

    A problem caused by treatment. For example, medicine you take for high blood pressure may make you feel sleepy. Most treatments have side effects.

  • Single-Source Brand

    A brand name drug with a single source of manufacturing.

  • Specialty Drug

    A type of drug that requires special care, administration, handling, education, or monitoring and that may only be available from a specialty pharmacy.

  • Specialty Pharmacy

    A pharmacy that can provide the additional services required to obtain and dispense specialty drugs; some specialty pharmacies may focus on a specific health condition or type of drug.

  • Step Therapy

    A type of utilization management process that requires the use of one or more preferred drugs before a non-preferred drug will be approved for


  • TANF

    See “Temporary Assistance for Needy Families”

  • Temporary Assistance for Needy Families (TANF)

    An assistance program for low-income families with children; TANF recipients are often eligible for Medicaid.

  • Therapeutic Class

    A way to categorize drugs based on the health conditions they are used to treat.

  • Therapeutic Interchange

    When a drug that has been prescribed is substituted with another drug that will have the same effect; a therapeutic interchange is often made to save a health plan or a beneficiary money.

  • Third Party Liability

    Other sources of payment for services covered under Medicaid; these sources usually apply before Medicaid will make a payment.

  • Transplant Drug

    A medication used to reduce the risk of rejection of a new organ after transplant.

  • Treatment

    Something done to help with a health problem. For example, medicine and surgery are treatments.


  • Utilization

    When a member uses items or services that are covered by and paid for by the health plan.

  • Utilization Management

    A process to evaluate guidelines to determine if a prescription drug is safe and appropriate and should be covered; quantity limits, prior authorizations and step therapy are types of utilization management.


  • Vaccine

    A substance that is usually injected and that provides a patient with immunity against one or more specific diseases.