Glossary

  • 340B: 340B Drug Discount Program: The 340B program is a government program that provides discounts on prescription drugs to healthcare providers who serve vulnerable or low-income populations. Providers that participate in the 340B program purchase drugs for 20%-50% less than the average wholesale price (AWP) of the drug. Today, many hospitals qualify for 340B status. 

 

  • AMP: Average Manufacturer Price: Average Manufacturer Price (AMP) is a pricing benchmark used to determine the payment amount for certain drugs covered by Medicaid. The AMP is defined as the average price paid by wholesalers to drug manufacturers for drugs sold to retail community pharmacies.

 

  • APC: Ambulatory Procedure Code: The APC or Ambulatory procedure code payment limit is used to reimburse hospitals for outpatient services provided to Medicare beneficiaries.

 

  • ASP: Average Sales Price: The ASP describes the real average price that a drug is being sold for including discounts. The ASP is listed at the HCPCS unit level and provides a reimbursement rate benchmark for prescription drugs in government programs, such as Medicare and Medicaid, as well as in private insurance plans.

 

  • AWP: Average Wholesale Price: The AWP, or average wholesale price, is the manufacturer-suggested retail price for a drug. Typically, the AWP is 20% higher than the WAC.

 

  • Box 19: Box 19 on the CMS 1500 form is used to provide additional information or clarification regarding the medical services provided and billed on the claim form. This box may be used to provide a brief explanation of the medical condition being treated, to specify the type of service provided, or to provide any other relevant information that may help the insurance provider process the claim accurately and efficiently. Box 19 is optional and may be left blank if no additional information is needed.

 

  • Box 21: Box 21 on the CMS 1500 form is designated as “Diagnosis or Nature of Illness or Injury.” This box is used to specify the diagnosis or medical condition for which the healthcare provider is billing. The information entered in this box should be the primary or most significant diagnosis code, based on the International Classification of Diseases (ICD) coding system, for the services provided to the patient. Note that this information appears opposite lines with letters A-L. Relate lines A- L to the lines of service in 24E by the letter of the line.

 

  • Box 24: Box 24 on the CMS 1500 form provides a wide variety of information concerning the submitted claim. This includes the date of service, the place of service, the procedure code, the diagnosis pointer (reference Box 21), charge information, drug units administered, certain plan information, the provider ID number, and can also include NDC information. 

 

  • CMS: Centers for Medicare and Medicaid: The Centers for Medicare & Medicaid Services (CMS) is a federal agency which administers the Medicare program, the Children’s Health Insurance Program (CHIP), and the Medicaid program. CMS publishes quarterly Medicare pricing files.

 

  • CMS 1500: The CMS 1500 form is a standard medical claim form used by healthcare providers to bill Medicare and other insurance providers in the United States.

 

  • CPT: Current Procedural Terminology: CPT (Current Procedural Terminology) code is a standardized medical code system used in healthcare to describe medical, surgical, and diagnostic services and procedures performed by healthcare providers. Each CPT code corresponds to a specific service or procedure and is used to identify the specific service provided by the healthcare provider.

 

  • DRG: Diagnosis-related groups: DRGs are primarily used for hospital reimbursement by government payers, such as Medicare in the United States, and are designed to control healthcare costs by setting fixed payment rates for hospital stays based on the patient’s diagnosis, procedures performed, age, and other relevant factors.

 

  • FUL: Federal Upper Limit: The Federal Upper Limit (FUL) in healthcare refers to the maximum amount that Medicaid will reimburse for a specific generic drug product.

 

  • GP: Government Pricing: Government Pricing in healthcare refers to the pricing of drugs and medical devices established by government programs and agencies in the United States. These programs and agencies, such as Medicare and Medicaid, set the reimbursement rates for these products, which determine the payment amounts for healthcare providers and suppliers

 

  • HCPCS: Healthcare Common Procedure Coding System: The HCPCS coding system is maintained by the Centers for Medicare & Medicaid Services (CMS) and is used to classify and reimburse medical services, supplies, drugs, and equipment provided to patients. 

 

  • HCPCS-NDC Crosswalk: Health Care Common Procedure Coding System National Drug Code Crosswalk: The HCPCS NDC Crosswalk is a mapping tool used to link HCPCS codes with their aligned NDC codes. The HCPCS NDC Crosswalk helps healthcare providers and insurance companies accurately identify and match the specific drug product with the corresponding HCPCS code for billing purposes.

 

  • ICD-10: International Classification of Diseases, Tenth Revision: ICD-10 is used to code and classify diagnoses and procedures for healthcare billing purposes. Healthcare providers use ICD-10 codes to communicate the diagnoses and procedures associated with a patient’s care to insurance companies and other healthcare organizations.

 

  • MAC: Maximum Allowable Cost: Maximum Allowable Cost (MAC) in healthcare refers to the maximum amount that a payer will reimburse for a specific drug or medical device.

 

  • MAC: Medicare Administrative Contractor: A MAC is a private company that has been contracted by the Centers for Medicare and Medicaid Services (CMS) to process Medicare claims, provide customer service, and handle other administrative tasks related to the Medicare program.

 

  • NADAC: National Average Drug Acquisition Cost: NADAC is the average price paid by retail pharmacies for prescription drugs, as reported by the Centers for Medicare & Medicaid Services (CMS). NADAC is calculated based on the prices that retail pharmacies pay to purchase drugs from wholesalers.

 

  • NDC: National Drug Code: The NDC is an 11-digit code that consists of three segments: the labeler code, product code, and package code. The NDC is used by Medicare, Medicaid, and private insurance companies to determine reimbursement for these products.

 

  • NOC: Not Otherwise Classified: In medical billing, NOC codes are used to describe diagnoses, procedures, and drugs that are not covered by a specific code in the classification system. The use of NOC codes helps to ensure that all diagnoses and procedures are captured and accounted for in medical billing, even if they do not fit into a specific category or code.

 

  • NTAP: New Technology Add-on Payment: The New Technology Add-on Payment (NTAP) is a payment mechanism used by the Centers for Medicare and Medicaid Services (CMS) in the United States to provide additional payment to hospitals that use qualifying new technologies that are deemed to be significantly costly and demonstrate substantial clinical improvement in the treatment of Medicare beneficiaries.

 

  • Orange Book: Approved Drug Products with Therapeutic Equivalence Evaluations: The FDA’s Orange Book, also known as the Approved Drug Products with Therapeutic Equivalence Evaluations, provides information on drugs that the FDA has determined to be therapeutically equivalent. Healthcare providers and insurance companies can use the FDA Orange Book to determine which drugs can be substituted for one another in the treatment of specific medical conditions.

 

  • TE: Therapeutic Equivalence: Therapeutic Equivalence refers to the concept that two or more drugs have the same clinical effect and can be used interchangeably for the same medical condition.

 

  • UB-04 (CMS 1450): The UB-04 form, also known as the CMS 1450 form, is a standardized claim form used for hospital inpatient and outpatient services. The UB-04 form is used in place of the CMS 1500 form for hospital claims and is used to provide more detailed information about the services provided and the costs associated with those services.

 

  • WAC: Wholesale Acquisition Cost: The WAC, or the wholesale acquisition cost, is a price that pharma manufacturers set when selling their drug to wholesalers.