The following alphabetically arranged business, industry, and product-related terms and acronyms
will help you learn about Medicare Part D.

 

Annual out-of-pocket threshold

Applicant

Catastrophic Coverage

Coordination of Benefts (COB)

Coverage gap

Deemed Eligible Individual

Dual Status

Eligibility Transaction (E1)

Employer/Union-Group Waiver Plan (EGWP)

FIR Series

Financial Information Reporting Transaction (FIR)

Full Benefit Dual Eligible Individual

Full Subsidy Eligible Individual

Full Subsidy

Full-benefit Dual Eligible Individual

Government-funded health program

Group Health Plan

Health Insurance Claim Number (HICN)

Low Income Subsidy

Medicare Advantage Plan (MA)

Medicare Advantage Prescription Drug Plan (MA-PDP)

N Transactions (Nx)

Other Health Information (OHI)

Other Health Insurance (OHI)

Other TrOOP

PACE Plan

PBP-Plan Benefit Package

PDP Sponsor

Parent Organization

Part D Eligible Individual

Part D Plan Sponsor or Part D Sponsor

Partial Subsidy

Partial subsidy eligible individual

Patient Liability Reduction Due to Other Payer Amount (PLRO)

Patient Liability Reduction Due to Other Payer amount (PLRO)

Pharmacy Benefits Manager (PBM)

Prescription Drug Plan (PDP)

Processor

Processor

Qualified status

Supplemental Drugs

Switch

Transaction Facilitator

Transaction Reply Report (TRR)

True Out-of-Pocket (TrOOP)


Annual out-of-pocket threshold
The point in the Part D benefit when a beneficiary enters the catastrophic coverage phase. Detailed description is found in chapter 5 of the Prescription Drug Benefit Manual. For years subsequent to 2006, it is the annual out-of-pocket threshold for 2006 ($3600) increased by the annual percentage increase specified at 42 CFR 423.104(d)(5)(iii).

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Applicant
The Part D eligible individual applying for the low-income subsidy with either the Social Security Administration (SSA) or the State Medicaid agency

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Catastrophic Coverage
The Part D benefit phase above the annual out-of-pocket threshold described in 42 CFR 423.100.

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Coordination of Benefts (COB)
Activities that result when multiple payers exist for claims to ensure the appropriate costs are paid by the responsible payer.

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Coverage gap
Means the period in prescription drug coverage that occurs between the initial coverage limit and the out-of-pocket threshold. For purposes of applying the initial coverage limit, Part D sponsors must apply their plan-specific initial coverage limit under basic alternative, enhanced alternative or actuarially equivalent Part D benefit designs.

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Deemed Eligible Individual
An individual who is deemed as meeting the eligibility requirements for full subsidy eligible individuals if the individual is entitled to Medicare and:

  • A full benefit dual eligible individual (eligible for full Medicaid benefits);
  • A recipient of Supplemental Security Income (SSI) benefits; or
  • Eligible for full Medicaid benefits, and/or the Medicare Savings Program as a Qualified Medicare Beneficiary (QMB), Specified Low Income Medicare Beneficiary (SLMB), or Qualifying Individual (QI) under a State’s Medicaid plan.

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Dual Status
Entitlement to Medicare and concurrent eligibility for a Title XIX benefit (i.e., Medicaid or a Medicare Savings Program).

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Eligibility Transaction (E1)
A Medicare Eligibility Verification transaction intended to provide the status of a beneficiary’s Medicare health plan covering the individual, along with details regarding primary and supplemental coverage if applicable.

The E1 is a named HIPAA transaction.

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Employer/Union-Group Waiver Plan (EGWP)
Medicare-approved prescription drug plans that qualify for waivers or modifications to their plan offerings consistent with Pub. 100-16, Medicare Managed Care Manual, Chapter 9, Section 10 and Pub. 100-18, Medicare Prescription Drug Benefit Manual, Chapter 12, Section 10.

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FIR Series
A predefined number of FIR Sequences that are caused by an event such as a change in a contract ID, or a change in PBP with a change in BIN or BIN/PCN or PCN

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Financial Information Reporting Transaction (FIR)
An NCPDP Transaction designed to facilitate the real-time transfer of beneficiary information and TrOOP and Drugs Spend dollars accumulated between all Part D plans the beneficiary may have had during a calendar year.

FIR transactions are not HIPAA-named transactions.

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Full Benefit Dual Eligible Individual
An individual who is entitled to Medicare and is eligible for comprehensive Medicaid benefits and meets the requirements of the definition at 42 CFR 423.772.

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Full Subsidy Eligible Individual

  • A subsidy eligible individual whose income is below 135 percent of the FPL applicable to the individual’s family size and whose resources do not exceed the resources described in 42 CFR 423.773(b)(2)(ii). For current year resource limits see https://secure.ssa.gov/apps10/poms.nsf/lnx/0603030025; and
  • An individual deemed eligible as a full subsidy eligible individual.

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Full Subsidy
The amount of reductions to a full subsidy eligible individual’s costs under a Part D plan, including:

  • 100% subsidy of the monthly premium for basic prescription drug coverage up to the regional low-income premium subsidy amount;
  • Elimination of the annual deductible;
  • Reduced cost-sharing if the copayment under the basic or enhanced portion of the plan's benefit package is more than the applicable LIS copayment amounts provided in Appendix A for Part D covered drugs (further explained in section 60.4);
  • Elimination of the coverage gap;
  • Elimination of cost-sharing above the annual out-of-pocket threshold; and,
  • Waiver of late enrollment penalty.

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Full-benefit Dual Eligible Individual
Has the meaning given the term at 42 CFR 423.772, except where otherwise provided.

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Government-funded health program
Any program established, maintained, or funded, in whole or in part, by the Government of the United States, by the government of any State or political subdivision of a State, or by any agency or instrumentality of any of the foregoing, which uses public funds, in whole or in part, to provide to, or pay on behalf of, an individual the cost of Part D drugs, including any of the following: (1) An approved State child health plan under title XXI of the Act providing benefits for child health assistance that meets the requirements of section 2103 of the Act; (2) The Medicaid program under title XIX of the Act or a waiver under section 1115 of the Act; (3) The veterans' health care program under Chapter 17 of title 38 of the United States Code; (4) The Indian Health Service program under the Indian Health Care Improvement Act under Chapter 18 of title 25 of the United States Code; and (5) Any other government-funded program whose principal activity is the direct provision of health care to persons. 42 CFR 423.100, has the meaning given such term in 29 U.S.C. 1167(1), but specifically excludes a personal health savings vehicle.

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Group Health Plan
A health plan that provides, or pays the cost of Part D drugs, including, but not limited to, any of the following: (1) health insurance coverage (as defined in 42 U.S.C. 300gg-91(b)(1)); (2) a Medicare Advantage (MA) plan (as described under section 1851(a)(2) of the Act); and (3) a PACE organization (as defined under sections 1894(a)(3) and 1934(a)(13) of the Act). This definition specifically excludes a personal health savings vehicle

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Health Insurance Claim Number (HICN)
The Social Security Administration (SSA) assigns all HICNs (commonly referred to as the Medicare ID number) and provides them to CMS for use by the Medicare program. A HICN is almost universally based on an individual’s SSN. Eligibility to participate in Medicare is linked to eligibility to participate in the SSA program, but participation in one program is not absolutely dependent on eligibility to participate in the other. The Medicare tax (withholding) all employees pay during their working years is not linked to employee Social Security Administration withholding, for example

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Low Income Subsidy
Low Income Subsidy – Extra help (a subsidy) with prescription drug costs for eligible individuals whose income and resources are limited.  This provides assistance to certain low-income individuals to supplement the premium and cost-sharing.

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Medicare Advantage Plan (MA)
Stands for Medicare Advantage, which refers to the program authorized under Part C of title XVIII of the Act. For the meaning see 42 CFR 422.2.

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Medicare Advantage Prescription Drug Plan (MA-PDP)
A Medicare Advantage Plan (MA) that provides qualified prescription drug coverage.

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N Transactions (Nx)
NCPDP Transaction utlized to report record of payment by a Supplemental Payer to a Part D play. Part D plans determine the amount paid by the Supplemental Payer by taking the Part D Plan beneficiary liability and subtracting the Supplemental Payer's beneficiary liability.

N Transactions are not currently a HIPAA-named transaction.

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Other Health Information (OHI)
Other Health Information data provides the beneficiary’s coordination of benefits detail information. CMS, through the COB Contractor, provides a data sharing partner with medical or prescription coverage from a beneficiary’s other payer(s) and refers to this as other health information.

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Other Health Insurance (OHI)
Other insurance that can be primary or supplemental to Part D

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Other TrOOP
Payments paid by a supplemental payer that count toward the member’s TrOOP (e.g., a qualified SPAP,  ADAPs, some charities).

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PACE Plan
Program of All-Inclusive Care for the Elderly (PACE) Plan: A plan offered by a PACE organization,as defined in 42 CFR 460.6.

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PBP-Plan Benefit Package
A set of benefits for a defined MA or PDP service area. The PBP is submitted by PDP sponsors and MA organizations to CMS for benefit analysis, marketing and beneficiary communication purposes.

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PDP Sponsor
A nongovernmental entity that is certified under 42 CFR Part 423 as meeting the requirements and standards of 42 CFR Part 423 that apply to entities that offer prescription drug plans. This includes fallback entities.

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Parent Organization
An organization that holds at least the majority of the voting stock in a legal entity that holds a Medicare Prescription Drug Plan (PDP) sponsor contract or a Medicare Advantage (MA) Organization contract.

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Part D Eligible Individual
An individual who meets the requirements at 42 CFR 423.30(a).Part D plan (or Medicare Part D plan): A PDP, an MA-PD plan, a PACE plan offering qualified prescription drug coverage, or a cost plan offering qualified prescription drug coverage.

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Part D Plan Sponsor or Part D Sponsor
A PDP sponsor, MA organization offering an MA-PD plan, a PACE organization offering a PACE plan including qualified prescription drug coverage, and a cost plan offering qualified prescription drug coverage.

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Partial Subsidy
Partial reductions in a beneficiary’s costs imposed under a Part D plan, including:

  • Reduction to the deductible when the deductible is greater than the maximum deductible amounts for partial subsidy eligible individuals (See Appendix A);
  • 25% to 100% subsidy of the monthly premium for basic prescription drug coverage up to the regional low-income premium subsidy amount;
  • Reduction to 15% coinsurance per prescription for covered Part D drugs, up to the annual out-of-pocket threshold, and copayments of not more than the maximum copayments for Partial subsidy eligible individuals above the annual out-of-pocket threshold (See Appendix A);
  • Elimination of the coverage gap; and,
  • Waiver of late enrollment penalty (LEP).

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Partial subsidy eligible individual
Referred to as other low-income subsidy eligible individuals at 42 CFR 423.773, or a subsidy eligible individual who has:

  • Income less than 150% of the Federal Poverty Level (FPL) applicable to the individual’s family size; and
  • Resources that do not exceed the amounts at https://secure.ssa.gov/apps10/poms.nsf/lnx/0603030025 (for the current year resource limitations).

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Patient Liability Reduction Due to Other Payer Amount (PLRO)
The amount by which patient liability is reduced due to payment by other payers that are not TrOOP eligible.

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Patient Liability Reduction Due to Other Payer amount (PLRO)
The amount by which patient liability is reduced due to payment by other payers that are not TrOOP-eligible and do not participate in Part D is reported to the CMS in defined fields of PLRO on the PDE. These dollars are to be deducted from TrOOP. Examples of such non-TrOOP eligible payers include group health plans, non-Part D government-funded programs such as VA and TRICARE, Workers’ Compensation, Auto/No-Fault/Liability Insurances

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Pharmacy Benefits Manager (PBM)
A company under contract with insurance companies, managed care organizations, self-insured companies, and government programs, to administer pharmacy network management, drug utilization review, outcomes management, and disease management.. A pharmacy benefit manager may negotiate prices and fill drug prescriptions by mail order as part of a corporate health insurance plan.

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Prescription Drug Plan (PDP)
Prescription drug coverage that is offered under a policy, contract, or plan that has been approved as specified in 42 CFR 423.272 and that is offered by a PDP sponsor that has a contract with CMS that meets the contract requirements under subpart K of 42 CFR 423. This includes fallback prescription drug plans.

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Processor
An entity that does the physical transaction processing (inbound and outbound) of pharmacy claims.

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Processor
A Processor may be an insurer, a governmental program or another financially responsible entity or a third-party administrator or intermediary contracted on the behalf of those entities which receives prescription drug claims, makes a decision regarding the level of reimbursement to the provider, and transmits a response to the provider submitting a claim.

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Qualified status
The status assigned to supplemental payers where their payments are considered TrOOP eligible.

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Supplemental Drugs
Drugs that would be covered Part D drugs but for the fact that they are specifically excluded as Part D drugs under 42 CFR 423.100, and as described in chapter 6, section 20.1 of this manual. Because such drugs must have otherwise qualified as covered Part D drugs (as defined in chapter 6, section 10.2 of the PrescriptionDrug Benefit Manual) in order to be covered as a supplemental benefit, and because only prescription drugs are included in the definition of a Part D drug, over-the-counter drugs cannot be supplemental drugs, as discussed in chapter 6, section 10.10. Supplemental drugs may be included as a supplemental benefit under enhanced alternative coverage, as described in chapter 5, section 20.4.2 of the Prescription Drug Benefit Manual.

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Switch
An entity that routes pharmacy claims to plans. The relationship is usually between the pharmacy and switch.

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Transaction Facilitator
The entity formally known as TrOOP Facilitator  (RelayHealth) that assists in:

Eligibility Services to enable pharmacies to quickly determine insurance coverage information for Medicare Part D  beneficiaries.

Financial Information Reporting services to allow Part D Plans to transfer beneficiary accumulators

Information Reporting services that provide a record of Supplemental Payers’ payments against Part D copays/coinsurance

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Transaction Reply Report (TRR)
A report that CMS provides to Part D sponsors containing details of the rejected and accepted enrollment transactions that CMS has processed for a Part D sponsor’s contract(s) over a specified time period. There are two types of TRRs: the Weekly TRR that covers the processing week (typically Sunday through Saturday) and the Monthly TRR that covers the payment processing month.

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True Out-of-Pocket (TrOOP)
True Out-of-Pocket costs paid by a beneficiary or others on the beneficiary’s behalf that accumulate towards the annual out-of-pocket threshold.

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Contact Support:
General E1 Support:
(800) 388-2316
E1 Enhancement Support
FIR Support
Nx Support