Private Health Care

Front 1

Catastrophic
Hazard

Back 1

A situation in which an insurance company incurs excessive losses due to widespread and catastrophic events such as hurricanes, acts of war, and earthquakes

Front 2

Coordination
of Benefits

Back 2

Provision in insurance contracts that is designed to prevent duplicate payments by more than one insurance plan for the same medical care by limiting total reimbursement from all insurance plans for the same event to the amount of the actual loss

Front 3

First-dollar
Coverage

Back 3

A reimbursement mechanism in which there is no provision for patient cost sharing

Front 4

Co-payment

Back 4

A form of patient cost sharing that requires patients to pay a specified dollar amount every time a service is received

Front 5

Estimated
Acquisition Cost

Back 5

The amount paid by a pharmacy benefit manager for drug ingredient costs, calculated as a percentage of the average wholesale price

Front 6

Patient Cost
Sharing

Back 6

A provision in health insurance plans that provides financial incentives for patients to avoid using unnecessary healthcare services by making them pay a portion of the cost of the service

Front 7

Subrogation

Back 7

The process in which an insurance company enforces a coordination of benefits provision by determining which insurance company is required to pay first if a particular patient has duplicate coverage

Front 8

Fiscal
Intermediary

Back 8

An organization that facilitates exchanges between healthcare payers and healthcare providers by underwriting and/or administering health benefit programs

Front 9

Underwriting

Back 9

The process of insuring

Front 10

Insurable
Interest

Back 10

A situation in which the individual who will receive payment for an insurance claim actually experiences a loss when an insurable hazard occurs

Front 11

Average Manufacturer's
Price (AMP)

Back 11

A proposed method for estimating pharmacy acquisition costs that is based on actual costs charged by manufacturers rather than the wholesale price list

Front 12

Coinsurance

Back 12

A form of patient cost sharing that requires patients to pay a specified percentage (usually 20%) of the cost of covered services; the plan pays the remainder

Front 13

Elimination
Period

Back 13

A restriction found in group insurance policies that is aimed at reducing adverse selection by restricting coverage for preexisting conditions until after the policyholder has been covered for a given period of time

Front 14

Average Wholesale
Price (AWP)

Back 14

The list price established by the manufacturer

Front 15

Induced
Demand

Back 15

The increased demand for healthcare services that is created by the availability of insurance payment

Front 16

Indemnity

Back 16

A form of insurance that traditionally required patients to submit claims for reimbursement

Front 17

Adverse
Selection

Back 17

A situation in which individuals or companies purchase insurance only when they expect a loss

Front 18

Law of Large
Numbers

Back 18

An insurance principle that states that the larger the number of insured persons, the more accurate the predictions regarding losses

Front 19

Actuary

Back 19

An insurance company employee who conducts a statistical analysis of an insured population to estimate the income (premiums) that must be earned to cover the estimated expenses

Front 20

Deductible

Back 20

A form of patient cost sharing that requires patients to pay their own healthcare expenses until a specified dollar amount has been paid out of pocket during a given period of time

Front 21

Major Medical
Insurance

Back 21

A type of insurance policy designed to help offset expenses incurred by catastrophic illness or injury

Front 22

Actual Acquisition
Cost (AAC)

Back 22

The price that pharmacies pay for drug products after subtracting all discounts

Front 23

Maximum
Allowable Cost

Back 23

The amount paid by a pharmacy benefit manager for the drug ingredient cost for a multiple-source drug

Front 24

Moral
Hazard

Back 24

A situation in which patients with insurance coverage over-consume healthcare services to the extent that the additional health benefits achieved from consuming additional health services are not really worth their full costs

Front 25

Open Enrollment
Period

Back 25

A short period of time when employees are allowed to join the employer's health insurance plan

Front 26

Experience
Rating

Back 26

A method of setting insurance premiums based on the insurance company's overall expenses for a specific subset of insured individuals based on the group's experience for the previous year

Front 27

Gross
Margin

Back 27

The difference between the selling price and the cost to the pharmacy for the product that was sold

Front 28

Insurable
Hazard

Back 28

A type of pure risk that can lead to specific, measurable, and substantial losses that are unanticipated for an individual, but that are anticipated and relatively predictable for the group as a whole

Front 29

Wholesale
Acquisition Cost (WAC)

Back 29

The manufacturer's list price for drug products sold to wholesalers or direct purchasers as reported in wholesale price guides or other publications of drug pricing data

Front 30

Dispense as
Written (DAW)

Back 30

A provision in the participating pharmacy agreement that allows full reimbursement for the higher cost multiple-source drug product if the pharmacy indicates that the prescriber demanded a brand-name product instead of its generic

Front 31

Speculative
Risk

Back 31

A type of risk in which there is the possibility of either a gain or a loss

Front 32

Adjudication

Back 32

The process of reviewing or screening claims to determine payment

Front 33

Service
Benefit

Back 33

A form of health insurance plan in which healthcare providers submit claims and are paid directly by the insurance plan

Front 34

Earned
Discount

Back 34

The difference between the average wholesale price and the pharmacy's actual acquisition cost

Front 35

Pure
Risk

Back 35

A type of risk in which there is a possibility of a loss but no possibility of a gain

Front 36

Risk
Pool

Back 36

An arrangement in which a heath maintenance organization places a portion of payments in a pool as a source for any subsequent claims that exceed projections

Front 37

Participating
Pharmacy Agreement

Back 37

A contract between a pharmacy and a pharmacy benefit manager that specifies the rights and duties of each party with regard to prescription drug coverage

Front 38

Group
Policies

Back 38

Insurance plans sponsored by employer groups for employees and their dependents

Front 39

Community
Rating

Back 39

A method of setting insurance premiums based on the insurance company's overall expenses for a specific geographic are during the previous year

Front 40

Reinsurance

Back 40

A type of insurance that protects companies from extraordinary, unexpected losses