Glossary

Appointed Representative: Any person, such as a friend, relative, or doctor, who is appointed by the Medicare beneficiary to act on his or her behalf in the appeal process.

Beneficiary: An individual who has benefits under Medicare.

Brand name, single-source (drug): A one-of-a-kind drug that is still protected by a patent. There are no other medicines exactly like it on the market.

Claim: A paper or electronic form submitted to the PDP to show that a covered service or product was provided to a beneficiary and that payment is needed.

Co-insurance: A percentage of the cost of a health service, for example 25%, paid by the beneficiary.

Co-pay (or co-payment): A fixed amount, for example $10, that an insured individual pays for health services or medicines, regardless of the actual cost of that service or medicine. See also “Tiered Co-pay.”

Co-pay exception: See “Exception.”

Contraindication: Also called “drug interaction” or “adverse event.” A warning that a medicine may react badly with another medication you’re taking or because of another medical condition you have.

Coverage determination: When you ask for a coverage determination, the PDP will decide—or “determine”—whether or not to pay for your medication because it’s medically necessary even if it would be against the plan’s rules to pay for it. This decision is called an “exception.”

Coverage Gap: The coverage gap (sometimes called the “donut hole”) is when Medicare temporarily stops paying for your prescriptions and you have to pay the entire cost yourself.

Covered Drug: A medicine for which you plan pays at least part of the cost at some time during the year.

Deductible: An amount a beneficiary must pay for health services before their Medicare prescription drug plan begins to pay any benefits. Medicare PDPs will generally have a $250 deductible.

Exception: The first step in the appeal process is to ask for an “exception.” This is also called asking for a “coverage determination” in official Medicare terms. Asking for an exception means that you are asking the PDP to bends its rules and pay for a medication it would not usually pay for. PDPs may have rules—such as a formulary or step therapy requirements—that prevent them from paying for certain drugs unless you get an exception, or you appeal further and win your appeal. PDPs may also have tiered co-pays. If your medication is in the highest co-pay tier and you can’t take any of the medications in a lower co-pay tier that treat your condition, you may ask for an “exception” from the co-pay rules. If you are granted an exception from the co-pay rules, you will pay a lower co-pay amount for that medication than would normally apply.

Formulary: A list established by a PDP to indicate which drugs they cover and at what level of co-pay.

Generic drug: A drug that is a copy of a brand name drug. When the brand name drug is no longer patent protected, many companies can copy and manufacture the drug with the same active ingredient as the original inventor. A generic drug should produce the same effect as the brand name medicine.

Mail Order/Mail Order Pharmacy: Prescriptions that are received in the mail from your PDP.

Medicare Advantage Prescription Drug Plan (MA-PD plan): Medicare Advantage plans (MA plans) must offer their enrollees pharmacy benefits in addition to basic health care coverage. Enrollees may choose whether or not to purchase these additional benefits, called the Medicare Advantage Prescription Drug Plan. Individuals enrolled in an MA plan may only purchase their pharmacy benefits from the MA-PD plan offered by their MA plan.

Out-of-Pocket Threshold (or Limit): The upper limit on how much an individual beneficiary must pay in a year for medicines before catastrophic coverage begins. In 2006, this amount will be $3600 for Medicare prescription drug plans. Once the limit is reached, co-payments will be much lower.

OTC Drugs: Over-the-counter (OTC) drugs can be purchased without a prescription and are generally not paid for by insurance.

Pharmacy Benefit Management Company (PBM): A company that manages pharmacy benefits and may assist an insurer in providing a Medicare PDP or MA-PD plan.

Prescription Drug Plan (PDP): Prescription drug plans offered through Medicare Part D must offer certain minimum benefits and consumer protections. They may be offered by insurance companies, pharmacy benefit management companies, or Medicare Advantage plans.

Prior authorization: A requirement that a physician obtain approval from the prescription drug plan before the plan will pay for the medicine.

Re-determination: If a PDP refuses to give you an exception, the second step in the appeal process is to ask the PDP to re-consider that decision. This is called a re-determination. You can be sure that your request will get a fresh look because the doctor making the decision on the re-determination can’t be the same person that denied your request for an exception.

Step therapy: A requirement to try a less expensive medicine first to see if it works, before a more expensive medication may be paid for by the prescription drug plan.

Therapeutic substitution: The process of switching an existing prescription to another—usually less expensive—medicine that is chemically different (not a generic), but is used to treat the same clinical condition.

Tiered co-pay (co-payments): A co-payment that is determined by which tier the drug is assigned to by the prescription drug plan. There may be a few tiers, each with a different co-payment amount. This design is intended to encourage the use of drugs that are in the less expensive tiers.