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Glossary of Insurance Terms

Adjudication: The claims adjudication is a process when a PBM receives a claim, makes a decision on coverage and advises payment. We use an online adjudication process that begins when we submit the BIN, PCN and/or Group# and patient ID# to the PBM. The PBM uses these numbers to determine whether a claim has been accepted or rejected. 

 

BIN/IIN (Bank Identification Number): a number that tells the pharmacy database which PBM is to receive the claim for a particular prescription. Despite the name, banks are not involved in the insurance billing process.

 

Co-Insurance: money that an individual is required to pay for services, after a deductible has been paid. In some health care plans, co-insurance is called “copayment.” Coinsurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.

 

Co-pay: The amount of out of pocket expenses for prescription drugs a patient pays at the time the prescription is dispensed, with the PBM paying the remaining cost to the pharmacy. A flat co-pay is generally not driven by the quantity dispensed, but by the drug dispensed. For example, if a person has a three tiered co-pay program they may pay $50 for 3-Follistim 900’s, but $75 for 3-Gonal-f 900’s.

 

Deductible: the amount of expenses that must be paid out of pocket before an insurer will pay any expenses.

 

Dependent: a person relying on a policy for coverage; may include spouse and/or children of the subscriber.

 

Group Number: a number defined by the PBM to differentiate plans. (Not all entities use a group number.) These numbers ensure we will be correctly reimbursed in a timely and efficient manner.

 

Member: anyone covered under an insurance plan.

 

PBM (Pharmacy Benefit Manager): a company that administers, or handles, the drug benefit programs for an employer or health plan. PBMs process and pay prescription drug claims. The PBM reimburses all contracted pharmacies the same dollar amount for each prescription.

 

Processor Control Number (PCN): secondary identifier that may be used in routing of pharmacy transactions. The PCN is defined by the PBM as this identifier is unique to their business needs. Not all entities use a PCN.

 

Reimbursement: The amount of money the PBM pays the pharmacy for a claim.

 

Rx: Shorthand term for “prescription.”

 

Subscriber: the policy holder of an insurance policy.