Prescription Drug Coverage Terminology
A quick-reference glossary for interpreting conversations about formularies, pharmacy access, medication costs, and coverage exceptions.
Prescription drug benefits define which medicines are covered and the requirements for obtaining them. Coverage may depend on the drug, formulation, dose, pharmacy, and applicable program rules.
Plans and covered medicines
- Prescription drug coverage: A benefit that helps pay for medicines requiring a prescription.
- Medicare Part D: Medicare prescription drug coverage provided through approved private plans.
- Prescription Drug Plan (PDP): A stand-alone Medicare Part D plan.
- Medicare Advantage Prescription Drug plan (MA-PD): A Medicare Advantage plan that includes Part D coverage.
- Formulary: A plan’s list of covered medicines, including relevant coverage rules.
- Formulary tier: A grouping of covered medicines used to assign cost-sharing levels.
- Generic drug: An approved medicine with the same active ingredient as its reference brand-name drug and meeting applicable regulatory standards.
- Brand-name drug: A medicine marketed under a trade name.
- Specialty drug: A medicine that may require special handling, monitoring, or dispensing arrangements.
Pharmacies and dispensing
- Network pharmacy: A pharmacy contracted with the member’s plan.
- Preferred pharmacy: A network pharmacy with preferred cost-sharing arrangements under certain plans.
- Mail-order pharmacy: A pharmacy dispensing medicines for delivery by mail or another shipping method.
- Specialty pharmacy: A pharmacy providing medicines that require specialized handling or support.
- Days’ supply: The number of days a dispensed amount is expected to last under the prescribed directions.
- Refill: An additional dispensing permitted by an existing prescription.
- Refill-too-soon rejection: A claim rejection because the plan’s permitted refill timing has not been met.
Coverage requirements and exceptions
- Prior authorization: Required plan approval before coverage of a particular medicine under specified circumstances.
- Step therapy: A rule generally requiring use of a specified medicine before coverage of another, unless an exception applies.
- Quantity limit: A restriction on the amount covered during a defined period.
- Formulary exception: A request for coverage of a non-formulary drug or relief from certain formulary restrictions under applicable rules.
- Tiering exception: A request for a covered medicine to be available at a lower cost-sharing tier, where allowed.
- Prescriber supporting statement: Clinical information from the prescriber explaining why an exception is needed.
- Coverage determination: In Medicare Part D, a plan decision about drug coverage, payment, cost sharing, or applicable coverage restrictions.
- Redetermination: In Medicare Part D, the plan’s review of an initial unfavorable coverage decision at the first appeal level.
- Transition fill: A temporary supply available under applicable transition rules while ongoing coverage arrangements are addressed.
- Extra Help: Assistance for eligible people with limited income and resources to pay Medicare Part D costs.
Drug lists, pharmacy arrangements, costs, and exception processes vary by plan and may change. Some medicines are covered through a medical benefit rather than a pharmacy benefit. A pharmacist, prescriber, or plan representative can clarify which benefit and coverage requirements apply. A pharmacy claim rejection is not always the same as a formal appealable coverage denial.