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Insurance and Healthcare Terms Glossary

This glossary defines 200+ insurance and healthcare terms in plain language, covering everything from prior authorization to biosimilars to appeal rights. It is for anyone navigating a specialty drug denial, a confusing insurance decision, or the financial assistance process.

A

ACA (Affordable Care Act) — The federal law, passed in 2010, that created the Health Insurance Marketplace, expanded Medicaid, and established protections like coverage for pre-existing conditions and the requirement to cover essential health benefits. Most individual and small-group insurance plans must follow ACA rules. ADL (Activities of Daily Living) — Basic self-care tasks including bathing, dressing, eating, toileting, and moving around. Insurers and disability reviewers sometimes use ADL assessments to evaluate how a condition affects your daily functioning, which can support medical necessity documentation in an appeal. Adverse Determination — The formal term for a denial. When your insurer decides not to cover a service, medication, or procedure, that decision is called an adverse determination. You have the right to appeal an adverse determination. Adverse Event — An unwanted or harmful reaction that occurs during medical treatment or while taking a medication. Documenting adverse events from prior treatments can strengthen your case when appealing a step therapy or formulary denial. AFP (Alternative Funding Program) — A cost-management strategy used by some self-insured employers in which a third-party company routes high-cost specialty drugs through patient assistance programs (often intended for uninsured or low-income individuals) to reduce employer costs. If your employer uses an AFP, your ability to access manufacturer copay cards may be affected. The full term is Alternative Funding Program. Not to be confused with any pharmacy abbreviation. Appeal — A formal request to your insurer to reconsider a denial. You have the right to appeal most adverse determinations under federal and state law. Appeals are reviewed by your insurer (internal appeal) and, if denied again, by an independent third party (external review). Appeals succeed more often than most people expect. ASP (Average Sales Price) — The average price manufacturers receive for a drug after rebates and discounts, as reported to the federal government. Medicare uses ASP to set reimbursement rates for drugs administered in a doctor's office or infusion center (Part B drugs). Attending Physician — The doctor primarily responsible for your care during a hospital stay or treatment episode. The attending physician's documentation and clinical notes carry significant weight in appeals and medical necessity reviews. Auth Number — See PA Number. Automatic Substitution — When a pharmacist or insurer substitutes a biosimilar for a prescribed biologic, or a generic for a brand-name drug, without asking you first. Interchangeable biosimilars can be substituted automatically in most states unless your doctor writes "Dispense as Written." AWP (Average Wholesale Price) — A benchmark price for drugs used in insurance billing and reimbursement calculations. AWP is not what anyone actually pays; it is a reference point. Drug costs in your EOB may be expressed relative to AWP.

B

Biologic — A medication derived from living cells (human, animal, or microbial) rather than synthesized chemically. Biologics are used to treat conditions like rheumatoid arthritis, Crohn's disease, multiple sclerosis, and cancer. They are typically very expensive and require prior authorization. Examples include Humira, Dupixent, Ocrevus, and Keytruda. Biosimilar — A medication that is highly similar to an already-approved biologic (the "reference" drug) with no clinically meaningful differences in safety or effectiveness. Biosimilars are generally less expensive than the original biologic. Your insurer may require you to try a biosimilar before the original biologic; this is called biosimilar step therapy. Examples include Inflectra (biosimilar to Remicade) and Hadlima (biosimilar to Humira). Brand Name Drug — A medication sold under the name given to it by the original manufacturer. When a patent expires, other companies can make and sell the same drug as a generic. Brand name drugs typically cost more than generics. See also Reference Listed Drug. Bronze/Silver/Gold/Platinum — The four metal tiers used to classify ACA Marketplace health insurance plans. Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs. Platinum plans have the highest premiums but the lowest out-of-pocket costs. The tier affects your deductible, copay, and out-of-pocket maximum, not the quality of care you receive. Brown Bagging — When a specialty pharmacy ships a drug directly to the patient, who then brings it to a doctor's office or infusion center for administration. This is in contrast to white bagging (shipped to the facility) or traditional dispensing (picked up by the patient for self-injection at home). Some infusion centers refuse to administer brown-bagged drugs for liability and storage reasons.

C

Claim — A request submitted to your insurer for payment of a medical service or prescription. Claims can be submitted by your provider, pharmacy, or (in some cases) by you. If a claim is denied, you will receive an Explanation of Benefits (EOB) explaining the reason. Clinical Criteria — The specific medical standards your insurer uses to decide whether a treatment is medically necessary. These criteria are usually based on guidelines from InterQual, MCG, or the insurer's own medical policy. Understanding the exact clinical criteria that apply to your drug is key to writing an effective appeal. Clinical Notes — Written documentation of your medical visits, including your doctor's observations, your symptoms, test results, and treatment decisions. Clinical notes are the foundation of any appeal or medical necessity review. Request them from your doctor before submitting an appeal. Clinical Necessity — Used interchangeably with medical necessity in many contexts. Some insurers distinguish between clinical necessity (meeting clinical criteria) and medical necessity (broader standard of appropriate care). When in doubt, ask your insurer which standard applies to your denial. Clinical Trial — A research study that tests whether a new treatment is safe and effective in people. Clinical trials are organized into phases (Phase I, II, III, and IV). Participating in a clinical trial can give you access to treatments not yet approved or covered by insurance. Trial participation is almost always free to patients for the study drug and related care. Coinsurance — Your share of the cost of a covered service, expressed as a percentage. For example, if your plan has 20% coinsurance, you pay 20% of the allowed amount after your deductible is met and your insurer pays 80%. Specialty drugs can have very high coinsurance, sometimes 30-50%. Compassionate Use — See Expanded Access. Compendium — A reference database that lists FDA-approved and accepted off-label uses for drugs. Insurers are often required by law to cover drug uses listed in recognized compendia (such as the NCCN Compendium). If your drug was denied as off-label, check whether it is listed in a compendium and cite that in your appeal. Concurrent Review — A utilization review conducted while you are already receiving a treatment or during a hospital stay. The insurer evaluates whether continued treatment is medically necessary. Concurrent review denials can result in loss of coverage mid-treatment. Contraindication — A condition or factor that makes a particular drug or treatment inadvisable or dangerous for a specific patient. If you cannot take a drug your insurer requires you to try first (step therapy), documenting a contraindication to that drug is one of the strongest grounds for a step therapy exception. Coordination of Benefits — When you have coverage from more than one insurance plan (for example, your own employer plan and a spouse's plan), coordination of benefits rules determine which plan pays first (primary) and which pays second (secondary). Getting this right can reduce your out-of-pocket costs significantly. Copay — A fixed dollar amount you pay for a covered service or prescription, regardless of the total cost. Copays are typically due at the time of service or when you pick up a prescription. Many manufacturer copay assistance cards cover or reduce your copay. Copay Assistance — Financial help from a drug manufacturer (or a foundation) to cover your out-of-pocket costs for a specific medication. Copay assistance typically comes as a copay card, a rebate, or a grant. Commercial insurance members are generally eligible. Medicare and Medicaid members usually are not eligible for manufacturer copay programs due to federal anti-kickback rules, but may qualify for foundation assistance. Copay Accumulator — An insurer or plan feature that prevents manufacturer copay assistance from counting toward your deductible or out-of-pocket maximum. This means you may exhaust your copay card mid-year and then owe the full cost yourself. Not all plans use accumulators; check your plan documents. Coinsurance — See above.

D

DAW (Dispense as Written) — An instruction written by your doctor on a prescription indicating that the pharmacist must dispense the specific drug prescribed and not substitute a generic or biosimilar. If your doctor wants you to stay on a specific biologic brand, a DAW notation may prevent automatic substitution, though insurers can still require prior authorization. Days Supply — The number of days a dispensed prescription covers. Insurers often set limits on how many days' supply can be dispensed at once (commonly 30 or 90 days). Quantity limits may restrict how much of a medication you can receive per days supply. Deductible — The amount you pay out of pocket for covered services before your insurance starts paying. For example, if you have a $2,000 deductible, you pay the first $2,000 of covered medical costs each year. Specialty drug costs often apply to the deductible, which can make the first months of a new therapy very expensive. Denial — See Adverse Determination. A denial is your insurer's decision not to cover a service, drug, or procedure. Every denial should include the specific reason and your right to appeal. Drug Interaction — When two or more drugs affect each other's behavior in the body, potentially changing how they work or causing harm. Drug interaction documentation from your prescriber can support appeals when a standard formulary drug would interact badly with other medications you take. Drug Rebate — A payment made by a drug manufacturer to a health plan or pharmacy benefit manager (PBM) in exchange for favorable formulary placement. Rebates reduce the net price the plan pays for the drug but are not always passed through to patients. Rebate arrangements heavily influence which drugs end up on formularies.

E

ERISA (Employee Retirement Income Security Act) — A federal law that governs most employer-sponsored health plans. If your insurance is through an employer (especially a large employer that self-insures), ERISA applies. ERISA plans are not subject to state insurance laws, which limits your rights compared to individual or fully-insured plans. Notably, ERISA plans still must allow internal appeals and external review under ACA rules. Essential Health Benefits — Ten categories of coverage that ACA-compliant individual and small-group plans must include: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services, laboratory services, preventive and wellness services, and pediatric services. Large employer plans and grandfathered plans may not be required to cover all ten. Evidence-Based Medicine — Medical practice that relies on the best available scientific research rather than tradition or anecdote. When you appeal a denial, citing evidence-based guidelines (such as those from major medical societies or the NCCN) strengthens your case by showing that the requested treatment meets the standard of care. Expanded Access (also Compassionate Use) — A pathway that allows patients with serious or life-threatening conditions to access investigational drugs outside of a clinical trial. The FDA oversees expanded access. You and your doctor can apply for expanded access if you cannot participate in a clinical trial and have no other options. The manufacturer must agree to provide the drug. Expedited Appeal — An accelerated internal appeal timeline available when waiting for a standard appeal decision would seriously jeopardize your health, life, or ability to regain maximum function. Expedited appeals must generally be decided within 72 hours. If you are in the middle of treatment or urgently need a medication, you may be entitled to an expedited appeal rather than a standard one. Explanation of Benefits (EOB) — A document your insurer sends after processing a claim. It shows what was billed, what the insurer allowed, what they paid, and what you owe. The EOB also explains why a claim was denied or paid at a different rate than billed. Your EOB is the starting point for understanding and appealing a denial. External Review — An independent review of an insurer's denial conducted by a third party that has no financial relationship with your insurer. Under federal law, you have the right to external review after exhausting internal appeals (or in some urgent situations, without waiting for internal appeals). External reviewers make binding decisions in most states. External review overturns insurer denials in a meaningful percentage of cases.

F

Fail First — See Step Therapy. FDA-Approved Indication — A specific use of a drug that the FDA has reviewed and approved based on clinical evidence. When a drug is used for an approved indication, coverage is generally more straightforward. When used off-label, you may need to appeal using compendium references or published evidence. FEHBA (Federal Employees Health Benefits Act) — The law governing health insurance for federal government employees. FEHBA plans have their own appeal rights and processes, separate from ERISA and state insurance law. Federal employees appealing denials should follow FEHBA-specific procedures. Formulary — The list of drugs your insurance plan will cover. Formularies are organized into tiers, with lower tiers generally having lower copays. If your drug is not on the formulary (non-formulary), you may still be able to get coverage through a formulary exception request. Formulary Exception — A request to have your insurance cover a drug that is not on its formulary, or to cover a drug at a lower tier cost-share. You typically need a letter from your doctor explaining why the formulary drugs are not appropriate for your specific situation. Formulary exceptions are often granted when you have documented an allergy, contraindication, or treatment failure with the formulary alternatives. Formulary Rebate — See Drug Rebate. Foundation Assistance — Financial help for specialty drug costs provided by independent patient assistance foundations such as the PAN Foundation, HealthWell Foundation, Good Days, NORD, and NeedyMeds. Foundation grants are income-based and disease-specific. Unlike manufacturer programs, many foundation grants are available to Medicare and Medicaid patients. Free Drug Program — See Patient Assistance Program (PAP). Functional Assessment — An evaluation of your ability to perform everyday tasks and activities. Used in medical necessity reviews and disability determinations. A functional assessment from your physician or occupational therapist can document the real-world impact of your condition and strengthen an appeal.

G

Generic Drug — A copy of a brand-name drug with the same active ingredient, dosage, strength, and intended use. Generics are FDA-approved and must meet the same standards as brand-name drugs. They are typically 80-85% less expensive. Insurers strongly prefer generics and may require you to try them before covering a brand-name equivalent. Gold Carding — A practice where an insurer exempts a provider from prior authorization requirements for specific services or drugs because that provider has a strong track record of appropriate prescribing. If your doctor has gold-carding status with your insurer for your medication, you may not need to go through standard PA review. Grievance — A formal complaint about the quality of care you received or your insurer's behavior (as opposed to an appeal, which contests a coverage denial). Grievances might address things like long hold times, rude treatment, or failure to follow required processes. Filing a grievance creates a paper trail but does not typically overturn a denial.

H

Home Infusion — When intravenous or subcutaneous medication is administered at home rather than at an infusion center or hospital. Home infusion requires a home infusion pharmacy and trained nursing support. Some drugs require hospital or clinic administration; others can be done at home, often at lower cost. HowTo Schema — A structured data markup used on web pages to help search engines and AI models identify step-by-step instructions. Mentioned here because it affects how information about the appeal process is indexed and surfaced to patients searching for help.

I

Imaging — Medical images such as X-rays, MRIs, CT scans, and PET scans. Insurers often require imaging results as part of medical necessity documentation. Providing imaging that shows the extent of your condition strengthens a denial appeal. IMR (Independent Medical Review) — See External Review. Some states use the term IMR specifically for their state-run external review process, which may have different timelines and procedures than federally facilitated external review. In-Network — A provider, hospital, or pharmacy that has a contract with your insurance plan to provide services at a negotiated rate. Using in-network providers generally means lower out-of-pocket costs. For specialty drugs, whether a specialty pharmacy is in-network can significantly affect your costs. InterQual — A clinical decision support tool published by Change Healthcare (now part of Optum) that insurers use to evaluate whether a treatment meets evidence-based medical necessity criteria. Many coverage denials cite InterQual criteria. Understanding what InterQual says about your specific drug or treatment helps you frame an appeal around the same criteria the insurer used. Internal Appeal — A formal request for your insurer to reconsider a denial, reviewed by the insurer's own staff or an independent reviewer hired by the insurer. You are generally entitled to at least one level of internal appeal before external review. Request the specific clinical criteria used to deny your claim as part of your appeal. Investigational Drug — A drug that has not yet received FDA approval and is being studied in clinical trials. Insurance plans generally do not cover investigational drugs. However, some states require coverage of routine costs (doctor visits, labs) associated with clinical trial participation.

J

J-Code — A billing code used to identify drugs administered in a medical setting (such as a doctor's office or infusion center) under the medical benefit rather than the pharmacy benefit. J-codes are assigned by CMS. If your drug has a J-code, it may be billed differently than a pharmacy prescription, which affects how prior authorization works.

L

Lab Results — Results from blood tests, urine tests, biopsies, and other laboratory studies. Lab results often serve as objective clinical evidence in medical necessity documentation. For biologics, labs showing inflammatory markers, disease activity scores, or biomarkers can be essential to an appeal. Letter of Medical Necessity (LMN) — A letter written by your doctor that explains why a specific treatment, drug, or service is medically necessary for your condition. An LMN is the single most important document in most specialty drug appeals. It should reference the specific clinical criteria the insurer used to deny the claim and explain why those criteria are met. List Price — The publicly stated price for a drug before any discounts, rebates, or negotiations. List prices are often dramatically higher than what anyone actually pays. The gap between list price and net price is largely driven by rebate arrangements between manufacturers and PBMs.

M

Managed Medicaid — A version of Medicaid in which the state contracts with private insurance companies to manage benefits for Medicaid enrollees. Most Medicaid enrollees in the U.S. are in managed Medicaid plans. These plans have prior authorization requirements and appeal rights similar to commercial plans. Marketplace Plan — Health insurance purchased through the ACA Health Insurance Marketplace (HealthCare.gov or a state exchange). Marketplace plans must follow ACA rules, including coverage of essential health benefits and external review rights. Premium subsidies are available based on income. MCG (Milliman Care Guidelines) — Clinical guidelines published by Milliman, used by insurers alongside InterQual to evaluate medical necessity. Some insurers use MCG exclusively; others use InterQual or proprietary criteria. If your denial letter references MCG criteria, request the specific guideline cited. Medicaid — A joint federal-state program that provides health coverage to low-income individuals and families. Medicaid coverage rules, drug formularies, and appeal rights vary significantly by state. Many specialty drugs require prior authorization under Medicaid. Medical Benefit — Coverage for drugs administered by a healthcare provider in a clinical setting (doctor's office, hospital, infusion center) rather than dispensed by a pharmacy. Drugs covered under the medical benefit are typically billed using J-codes and may follow different prior authorization rules than pharmacy benefit drugs. Medical Director — A physician employed by an insurance company who reviews prior authorization requests and appeal decisions. You have the right to request a peer-to-peer review with the medical director who denied your claim. This conversation can be the fastest way to reverse a denial. Medical Necessity — The standard insurers use to decide whether a service, drug, or procedure is covered. A service is generally considered medically necessary when it is appropriate, consistent with accepted medical practice, and not primarily for the convenience of the patient or provider. Insurers must apply their medical necessity criteria consistently and transparently. Medical Records — The complete documentation of your health history, including clinical notes, lab results, imaging, prescription history, and correspondence with providers. Gathering your medical records before filing an appeal is essential. You have the right to access your records under HIPAA. Medically Necessary — See Medical Necessity. Used interchangeably in most insurance documents. Medicare Advantage — A type of Medicare coverage offered by private insurers (also called Medicare Part C) as an alternative to traditional fee-for-service Medicare. Medicare Advantage plans must cover everything traditional Medicare covers but can have different rules for prior authorization, networks, and drug formularies. Appeals for Medicare Advantage drug denials follow a specific CMS-governed process. Medicare Part B — The portion of Medicare that covers outpatient medical services, including drugs administered by a healthcare provider (infusion drugs, injections). Many specialty biologics are covered under Part B when given in a clinic or infusion center. Medicare Part D — The Medicare prescription drug benefit, which covers drugs dispensed from a pharmacy. Medicare Part D plans have their own formularies and prior authorization requirements. Medicare patients cannot use manufacturer copay assistance cards due to anti-kickback rules. Medigap — Supplemental insurance that Medicare beneficiaries can purchase to cover gaps in original Medicare (Parts A and B), such as deductibles and coinsurance. Medigap does not cover Part D prescription drugs.

N

NCCN Compendium — The National Comprehensive Cancer Network's drug compendium, which lists evidence-supported uses for cancer drugs, including off-label uses. Insurers are often required to cover cancer drug uses listed in the NCCN Compendium. If your oncology drug was denied as off-label, citing the NCCN listing in your appeal is essential. NCQA (National Committee for Quality Assurance) — An organization that accredits and certifies health plans, measuring quality through performance standards. NCQA accreditation is a marker of whether a health plan meets certain quality benchmarks. It does not directly affect your appeal rights, but plans that pursue NCQA accreditation are held to higher standards of care management. NDC (National Drug Code) — A unique 10- or 11-digit number that identifies every drug product sold in the U.S., including manufacturer, product, and package size. NDC numbers are used on pharmacy claims and prior authorization requests. Providing the correct NDC for your specific medication helps avoid administrative delays. Net Price — The actual price paid for a drug after all rebates, discounts, and concessions are subtracted. The difference between the list price and the net price is often substantial for specialty and biologic drugs. Non-Formulary — A drug that is not included on your insurance plan's formulary list. Non-formulary drugs may still be covered if you receive a formulary exception, but you will typically pay more out of pocket, and coverage is not guaranteed. NPI (National Provider Identifier) — A unique 10-digit number assigned to every healthcare provider in the U.S. Your doctor's NPI appears on prescriptions and medical claims. Providing the correct NPI avoids prior authorization processing errors.

O

Off-Label Use — Using an FDA-approved drug for an indication, dosage, or patient population not specifically listed in the FDA-approved labeling. Off-label use is common and often supported by strong medical evidence. Many insurance denials cite off-label use as the reason. Appealing with compendium references and published clinical studies can overcome off-label denials. Out-of-Network — A provider, hospital, or pharmacy that does not have a contract with your insurance plan. Using out-of-network providers typically means higher out-of-pocket costs and less predictable coverage. Some plans do not cover out-of-network services at all except in emergencies. Out-of-Pocket Maximum — The most you will pay for covered services in a plan year, including your deductible, copays, and coinsurance. After you reach the out-of-pocket maximum, your insurance covers 100% of covered services for the rest of the year. For patients on expensive specialty drugs, tracking your out-of-pocket maximum is important.

P

PA (Prior Authorization) — See Prior Authorization. Often abbreviated as PA in communications from your insurer or pharmacy. PA Number — Also called the Auth Number or authorization number. The unique reference number your insurer assigns when a prior authorization is approved. Keep this number. Your pharmacy needs it to process your prescription. If a PA is denied, the PA number is used to reference the specific denial in your appeal. Partial Denial — When your insurer approves some but not all of what was requested. For example, approving 12 doses of a drug when your doctor requested 24. A partial denial is still an adverse determination and can be appealed. Patient Assistance Program (PAP) — A program offered by a drug manufacturer to provide free or reduced-cost medication to patients who meet income and eligibility requirements. PAPs are typically for uninsured patients or those with very limited coverage. If you have commercial insurance with a high out-of-pocket burden, a PAP may still help during coverage gaps. Application is usually done through your doctor's office. PBM (Pharmacy Benefit Manager) — A company that manages prescription drug benefits on behalf of insurance plans, employers, and government programs. PBMs negotiate drug prices, develop formularies, and process pharmacy claims. PBM decisions have significant influence over which drugs are covered and at what cost. PBM names do not appear in patient-facing EllenRx content. PCP (Primary Care Physician) — Your main doctor, responsible for general health management and referrals to specialists. For many insurance plans, especially HMOs, you need a referral from your PCP before seeing a specialist or receiving specialty treatments. Peer-to-Peer Review — A conversation between your doctor and the insurer's medical director to discuss why a treatment is appropriate for you. Peer-to-peer reviews are often the fastest way to overturn a denial. Your prescribing physician should request a peer-to-peer with the specific medical director who made the denial decision. Many denials are overturned or modified after peer-to-peer review. Phase I / II / III (Clinical Trial Phases) — Clinical trials are organized into phases. Phase I tests a drug's safety in a small group of people. Phase II tests its effectiveness and further evaluates safety. Phase III tests it in a large group to confirm effectiveness, monitor side effects, and compare it to existing treatments. Phase III results are typically required for FDA approval. Phase IV studies occur after approval to monitor long-term effects. Premium — The monthly amount you pay to maintain your health insurance coverage, regardless of whether you use any healthcare services. Premiums do not count toward your deductible or out-of-pocket maximum. Preventive Care — Health services that detect or prevent illness rather than treat existing conditions. ACA-compliant plans are required to cover a specific set of preventive services at no cost to you, including certain screenings, vaccinations, and counseling. Prior Auth Exception — A request to waive the prior authorization requirement for a specific drug or service. Prior auth exceptions may be granted when a patient's clinical situation is urgent or when the standard PA process would cause harm due to delays. Prior Authorization (PA) — A requirement that your doctor get approval from your insurance company before you receive a specific drug or service. Prior authorization is the most common reason specialty drugs are initially denied. If a PA is denied, you have the right to appeal. Prospective Review — A utilization review conducted before a treatment begins, to determine whether it will be covered. Prior authorization is a form of prospective review.

Q

Quality of Life — A measure of your overall wellbeing and ability to function in daily life. Quality of life assessments can be used to document the impact of your condition in an appeal, especially for chronic conditions where the burden extends beyond measurable clinical markers. Quantity Limit — An insurance plan's restriction on how much of a drug you can receive in a given time period. For example, a plan may cover only 30 tablets per 30 days. Quantity limits can be appealed if your doctor can document that you need more than the plan allows.

R

Reference Listed Drug — The brand-name drug to which a generic or biosimilar is compared during FDA review. The reference drug serves as the standard against which equivalence or biosimilarity is demonstrated. Referral — An order from your primary care physician directing you to see a specialist or receive a specific service. Some insurance plans (typically HMOs) require a referral for specialist visits. Without a referral, your insurer may deny the claim or pay at a reduced rate. Refractory — Describes a condition that does not respond adequately to standard treatment. If your condition is refractory to first-line treatments, documenting this in an appeal can satisfy step therapy requirements and support medical necessity for a second-line or specialty drug. Retrospective Review — A utilization review conducted after a service has already been provided, to determine whether it was medically necessary and therefore covered. If a retrospective review results in a denial, you have the right to appeal.

S

Side Effect — An expected but unwanted reaction to a medication. If you experienced a side effect from a drug your insurer required you to try first (step therapy), documenting that side effect is a key part of your appeal for the next-line treatment. Site of Care — Where a medical service or drug infusion is provided (hospital, infusion center, doctor's office, home). Insurers may try to redirect you to a lower-cost site of care, which can affect coverage and reimbursement rates. You have the right to receive care in the medically appropriate setting. Specialist — A physician with advanced training in a specific area of medicine. Prior authorization for specialty drugs typically requires documentation from the relevant specialist (rheumatologist, oncologist, neurologist, immunologist, etc.). Specialty Drug — A high-cost medication that typically requires special handling, storage, or administration, and is used to treat complex chronic conditions. Specialty drugs are usually biologics or other complex molecules. Most insurers manage specialty drugs through a specialty tier on the formulary, often with higher cost-sharing requirements. Specialty Pharmacy — A pharmacy that specializes in dispensing and managing complex specialty medications, including biologics, infusion drugs, and other high-cost therapies. Specialty pharmacies often provide additional support services such as prior authorization assistance, copay card enrollment, and clinical monitoring. EllenRx does not name specific specialty pharmacies in patient-facing content. Specialty Tier — The formulary tier assigned to specialty drugs, which typically carries the highest cost-sharing requirements. Some plans charge a percentage (coinsurance) rather than a flat copay for specialty tier drugs, which can result in thousands of dollars in out-of-pocket costs. Standard Appeal — An internal appeal that is reviewed within the standard timeframe required by law, typically 30 to 60 days. If your situation is not urgent, a standard appeal is the default process. For urgent situations, request an expedited appeal instead. Standard of Care — The widely accepted treatment approach for a given medical condition, based on clinical evidence and expert consensus. Demonstrating that the treatment you need is the standard of care for your condition strengthens a medical necessity appeal. Step Edit — See Step Therapy. Some insurers use the term step edit for the automated pharmacy-level enforcement of step therapy requirements (the system rejects your prescription because you have not yet tried the required drugs). Step Therapy (also called Fail First) — A prior authorization requirement that you must first try and fail one or more lower-cost drugs before your insurer will approve a different medication your doctor requested. Step therapy is common for specialty drugs. If you have already tried the required drugs, have a documented contraindication, or are already stable on your current medication, you may qualify for a step therapy exception.

T

Tier Exception — A request to have a drug covered at the cost-sharing level of a lower tier than it is currently placed on. If a drug is on the specialty tier (highest cost) but equivalent drugs are available at lower tiers, your insurer may or may not grant a tier exception. Your doctor needs to provide documentation of why the lower-tier drugs are not appropriate for you. Treating Physician — The doctor who is actively responsible for managing your care for a specific condition. In the context of appeals, the treating physician's documentation and records are the most persuasive clinical evidence, because they reflect direct knowledge of your case. Treatment Experienced — Describes a patient who has already tried one or more treatments for a condition. Being treatment experienced often means you have met step therapy requirements, which can support your case for a preferred or alternative drug. Treatment Naive — Describes a patient who has not yet tried any treatments for a condition. Insurers often require treatment-naive patients to go through step therapy, starting with first-line drugs before approving specialty medications.

U

URAC — An accreditation organization for healthcare entities including health plans, specialty pharmacies, and utilization review organizations. URAC accreditation signals that a plan meets certain quality and accountability standards. Urgent Care Appeal — See Expedited Appeal. Some plan documents use the term urgent care appeal for situations involving urgent but not immediately life-threatening situations. Utilization Review (UR) — The process by which your insurer evaluates whether a requested treatment is medically necessary and appropriate. Utilization review includes prospective review (before treatment), concurrent review (during treatment), and retrospective review (after treatment). UR denials are the most common source of specialty drug coverage denials.

W

WAC (Wholesale Acquisition Cost) — The price at which a manufacturer sells a drug to wholesalers. WAC does not include rebates or discounts and is typically higher than what health plans actually pay. WAC is sometimes used as a reference point in formulary negotiations. White Bagging — When a specialty pharmacy ships a drug directly to a healthcare facility for administration, rather than to the patient (brown bagging) or from the facility's own inventory. White bagging is increasingly required by payers as a cost-control measure. It can create delays if the drug arrives late or needs to be returned if a patient cancels.
Glossary prepared by Colette for EllenRx | March 2026 This glossary is for educational purposes only. It is not legal or medical advice. EllenRx is not a healthcare provider, law firm, or pharmacy.