In a carve-out pharmacy benefit, the plan sponsor “carves out” or separates the pharmacy benefit from the medical benefit rather than integrating the two and typically hire a PBM separate from the medical benefits administrator to provide and manage the pharmacy benefit.

Catastrophic coverage refers to insurance coverage that begins after an individual or an entity has spent or incurred a specified, usually significant sum of money. Under the Medicare Part D prescription drug benefit, starting January 1, 2024, after an enrollee’s total drug costs reach $8,000 (i.e., coverage gap limit), the enrollee will not be responsible to pay any OOP cost share for covered Part D drugs for the rest of the year.

An intermediary pharmacy that is permitted by the state to prepare orders for dispensing by a registered retail pharmacy. The central fill pharmacy returns the labeled and filled prescription(s) to the retail pharmacy for delivery to the ultimate user. Such central fill pharmacy is “authorized” to fill prescriptions on behalf of a retail pharmacy only if the retail pharmacy and central fill pharmacy have a contractual relationship providing for such activities or share a common owner. Central fill pharmacies can add efficiency for retail pharmacies and can also provide mail-order pharmacy services.

A COC is a contract that sets forth an individual’s health insurance coverage as issued by their health plan sponsor. The COC details the health benefits the individual (and their dependents) have under the plan, including exclusions and applicable cost shares.

A group of pharmacies with four or more pharmacy locations under common ownership. (also see Independent Pharmacy)

A request from a dispensing entity (e.g., a pharmacy or pharmacist, hospital, or clinician’s office) to be reimbursed for the cost of filling or refilling a prescription or for providing a medical service, supply, or device to a patient.

A term that may be used to describe the practice of a plan sponsor or PBM retroactively changing the amount reimbursed to a pharmacy for a claim after review, often after finding overpayment or underpayment due to (i) clerical errors submitted by the pharmacy, (ii) the pharmacy not meeting agreed-upon performance metrics; or (iii) the pharmacy’s failure to otherwise meet the terms of a network contract. Retractive reconciliations, which may include both increased and decreased payments, are performed to ensure payments align with contract terms.

Determined by the plan benefit design, coinsurance is a type of OOP patient cost sharing calculated as a predetermined percentage of the billed or allowed costs for a medical service or products, including drugs covered under the plan, where the plan sponsor is responsible for the rest of the costs.

(see Retail Pharmacy)

A health plan program designed to allow a patient to use the value of a drug manufacturer’s coupon offerings without it counting toward the patient’s deductible and annual out-of-pocket maximum. While the coupon is applied to minimize the increasing impacts  of these programs on the  plan costs, the patient continues to be responsible for their out of pocket costs under the plan.

 

A health plan program designed to lower initial member out-of-pocket costs for higher-cost specialty medications by maximizing the application of available manufacturer copay assistance. Under this model, the total value of the coupon is applied evenly throughout the benefit year.

 

Determined by a plan benefit design, copayments are a type of OOP patient cost sharing calculated as a predetermined flat fee a patient pays when visiting a doctor, hospital, or other health care provider or receiving a prescription from the pharmacy.

The amount the patient is required to pay OOP that is not covered by the plan sponsor. Coinsurance and copayments are both cost shares.

(see Medicare Part D Redesign) The Medicare Part D coverage gap or donut hole is the phase of coverage after the initial coverage period. Enrollees enter the donut hole when their total covered drug costs, including what they and their plan sponsor have paid, reach a certain limit (the 2024 limit is $5,030); 2024 is the last year for the donut hole.