Drug billing terms
Glossary
157 terms you meet on drug claims and FDA listings, each defined in one sentence.
A–Z
0–9
- 10-digit NDCThe form the FDA publishes, which may be 4-4-2, 5-3-2 or 5-4-1 depending on how the labeler's segments were assigned.
- 11-digit NDCThe 5-4-2 billing form of an NDC, produced by padding a leading zero into whichever 10-digit segment is short.
- 340B modifierThe JG or TB modifier identifying a drug purchased under the 340B discount program.
- 340B programA federal program requiring manufacturers to sell outpatient drugs at discounted prices to qualifying safety-net providers.
- 4-4-2 formatA 10-digit NDC with a four-digit labeler code; the leading zero goes into the first segment.
- 5-3-2 formatA 10-digit NDC with a three-digit product code; the leading zero goes into the middle segment.
- 5-4-1 formatA 10-digit NDC with a one-digit package code; the leading zero goes into the last segment.
- 5-4-2 formatThe 11-digit billing shape: five labeler digits, four product digits, two package digits.
- 505(b)(2)A hybrid application pathway that relies partly on data the applicant did not generate.
- 837IThe X12 electronic transaction for institutional claims.
- 837PThe X12 electronic transaction for professional claims.
A
- A-codeA HCPCS Level II code for medical supplies, ambulance transport and administrative items.
- AB ratingThe most common therapeutic equivalence rating, meaning a generic is substitutable for the brand.
- Abbreviated New Drug Application (ANDA)The application for a generic drug, which relies on the brand's safety and efficacy data and proves bioequivalence instead.
- Active ingredientThe substance in a drug product that produces the intended effect, listed with its strength per dosage unit.
- Active moietyThe part of a molecule responsible for its pharmacological action, excluding salts and esters.
- Adverse event (AE)Any untoward medical occurrence in a clinical trial participant administered an investigational drug, regardless of suspected causality.
- Allowed amountThe maximum a payer will recognise for a line, regardless of what was billed.
- AMP (Average Manufacturer Price)The average price wholesalers pay manufacturers for drugs distributed to retail pharmacies, used to calculate Medicaid rebates.
- ASP (Average Sales Price)The volume-weighted average price manufacturers actually realise for a drug, net of most discounts and rebates, reported quarterly to CMS.
- ASP plus 6 percentThe standard Medicare Part B payment formula for a clinician-administered drug.
- AWP (Average Wholesale Price)A published benchmark price historically used for reimbursement, widely criticised as unrelated to actual transactions.
B
- Best priceThe lowest price a manufacturer makes available to almost any purchaser, used in the Medicaid rebate calculation.
- Billable unitThe quantity denominator built into a HCPCS drug code, which converts an administered dose into the number reported on the claim.
- Biologics License Application (BLA)The application for a biological product — a monoclonal antibody, vaccine, cell or gene therapy.
- BiosimilarA biological product highly similar to an already-licensed reference product, with no clinically meaningful differences.
- Boxed warningThe most serious warning the FDA requires on a drug label, set inside a black border.
- Brown baggingThe patient collects the drug from a pharmacy and brings it to the appointment.
- Bundled paymentA single payment covering a group of related services, so individual items are not separately reimbursed.
- Buy and billThe model in which a provider purchases a drug, holds it in inventory, administers it and bills the payer afterwards.
C
- C-codeA temporary HCPCS Level II code used by hospital outpatient departments under the OPPS.
- CARCClaim Adjustment Reason Code — the standardised reason a payment differs from the billed amount.
- Chemical structure (CS)A pharmacologic class describing the drug's chemical family.
- Clean claimA claim with no defect or omission that prevents timely adjudication.
- ClearinghouseAn intermediary that validates, formats and routes claims between providers and payers.
- CMS-1500The paper claim form used by physicians and other non-institutional providers; the 837P is its electronic equivalent.
- Contractual adjustmentThe write-off between the billed charge and the contracted allowed amount.
- Coordination of benefitsThe rules deciding which payer is primary when a patient has more than one coverage.
- CPT 20610A CPT code for injecting or aspirating a major joint or bursa.
- CPT 67028A CPT code for the procedure of injecting a drug into the vitreous of the eye (intravitreal injection).
- CPT 90471A CPT immunization-administration code used for giving a single vaccine by injection.
- CPT 96365A CPT drug-administration code used for the first hour of an intravenous infusion of a drug that is not chemotherapy or another highly complex agent.
- CPT 96372A CPT drug-administration code used when a clinician gives a therapeutic, preventive or diagnostic drug by subcutaneous or intramuscular injection.
- CPT 96401A CPT code used when non-hormonal chemotherapy is given by subcutaneous or intramuscular injection.
- CPT 96413A CPT code used for the first hour of an intravenous infusion of chemotherapy or another highly complex drug or biologic.
- CPT codeA five-digit Current Procedural Terminology code identifying a procedure or service performed by a clinician.
D
- Denial codeA code on a remittance advice explaining why a claim or line was not paid as billed.
- Dosage formThe physical form in which a drug is supplied — tablet, capsule, injection, solution, kit and so on.
- DSCSAThe Drug Supply Chain Security Act, which requires unit-level traceability of prescription drugs.
E
- Electronic Data Capture (EDC)Software platforms used by clinical trial sites and sponsors to collect, validate, and manage patient case report form (eCRF) data electronically.
- Established Pharmacologic Class (EPC)The FDA-assigned class that appears in a drug's label as its scientifically valid pharmacologic classification.
- Exclusion criteriaThe characteristics that disqualify a person from a study.
- Expanded accessA pathway allowing a patient to receive an investigational drug outside a clinical trial, sometimes called compassionate use.
F
G
H
- HCPCSThe Healthcare Common Procedure Coding System: the CMS code set used to bill procedures, drugs, supplies and equipment under Medicare and most other payers.
- HCPCS dosage descriptorThe text of a HCPCS drug code, which defines both the substance and the unit of measure.
- HCPCS Level IThe CPT code set, maintained by the American Medical Association, covering physician and facility procedures.
- HCPCS Level IIThe CMS-maintained alphanumeric code set for drugs, supplies, equipment and services that CPT does not describe.
- HIPAA transaction standardsThe federally mandated formats for electronic healthcare transactions, including claims, remittance and eligibility.
- HL7The standards organisation and message family used to exchange clinical data between systems.
I
- ICD-10-CMThe diagnosis code set used on US claims to state why a service was provided.
- ICD-10-PCSThe procedure code set used for inpatient hospital reporting.
- Incident toBilling a service performed by clinical staff under a physician's supervision as though the physician performed it.
- Inclusion criteriaThe characteristics a person must have to be eligible for a study.
- Interchangeable biosimilarA biosimilar that meets an additional standard permitting pharmacy-level substitution without prescriber involvement.
- Investigational New Drug (IND)The FDA submission that permits an unapproved drug to be shipped across state lines for clinical study.
- Invoice pricingManual pricing of a drug from the provider's acquisition invoice, used where the code carries no established rate.
J
- J-codeA HCPCS Level II code beginning with J that identifies a drug administered by a clinician rather than self-administered.
- J3490The HCPCS miscellaneous code for unclassified drugs, used when no permanent J-code exists.
- J3590The HCPCS miscellaneous code for unclassified biologics.
- JW modifierReports the amount of a single-dose container that was discarded rather than administered.
- JZ modifierAttests that no amount of a single-dose container was discarded.
K
L
- Labeler codeThe first NDC segment, four or five digits, assigned by the FDA to the company that puts its name on the package.
- Leading zero paddingThe rule that converts a 10-digit NDC to 11 digits by inserting a zero at the start of whichever segment is one digit short.
- Least costly alternativeA now largely retired policy of paying for a drug at the rate of a cheaper clinically comparable product.
- Line itemOne service line on a claim, carrying a single procedure or drug code with its own units, charge and modifiers.
- Listing expiration dateThe date after which a drug listing lapses unless the labeler renews it in the FDA's annual listing cycle.
- LOINCA terminology for laboratory tests and clinical observations.
M
- Marketing categoryThe FDA field stating the legal basis on which a product is marketed — NDA, ANDA, BLA, OTC monograph and others.
- Marketing end dateThe date a labeler expects to stop distributing a product; after it, the NDC is treated as discontinued.
- Marketing start dateThe date the labeler first placed a product into commercial distribution.
- Mechanism of action (MoA)A pharmacologic class describing the molecular target through which a drug acts.
- MedDRAThe Medical Dictionary for Regulatory Activities: the global standard terminology used to code adverse events and medical conditions in clinical trials.
- Medicaid Drug Rebate ProgramThe agreement under which manufacturers rebate a share of Medicaid drug spending in exchange for coverage.
- Medicare Part B drugA drug covered under the medical benefit because it is administered by a clinician rather than self-administered.
- Medicare Part D drugA drug covered under the outpatient prescription benefit and dispensed by a pharmacy.
- Miscellaneous codeAlso called a NOC (not otherwise classified) code: a placeholder used when no specific code describes the item.
- ML qualifierUnit qualifier meaning millilitre — used for injectables and liquids measured by volume.
- ModifierA two-character suffix that qualifies a procedure or drug code without changing its identity.
N
- N4 qualifierThe two-character prefix that tells a payer the value following it is an 11-digit NDC.
- NADACNational Average Drug Acquisition Cost — a survey-based benchmark of what retail pharmacies actually pay.
- National Drug Code (NDC)The National Drug Code is the FDA's universal product identifier for a human drug: a three-segment number that names the labeler, the specific formulation and the package size.
- NCPDPThe standards body for pharmacy transactions, whose telecommunication standard carries retail pharmacy claims.
- NCT numberThe unique registry identifier assigned to a study on ClinicalTrials.gov.
- NDC DirectoryThe FDA's published file of every drug currently or recently listed, updated daily and distributed through openFDA.
- NDC exclusion listA payer-maintained list of drug codes that will not be reimbursed under a given benefit, regardless of medical necessity.
- NDC quantityThe amount of drug actually taken from the package, expressed in the unit named by the unit qualifier.
- New Drug Application (NDA)The application through which a sponsor seeks FDA approval to market a new brand-name drug.
- NPINational Provider Identifier — the ten-digit number identifying a provider on every HIPAA transaction.
O
- openFDAThe FDA's public API, which exposes drug listing, labeling, adverse event and enforcement data as JSON.
- Orange BookThe FDA publication listing approved drug products with their therapeutic equivalence evaluations and patent data.
- OTC monographA rulebook that lets an over-the-counter drug be marketed without individual approval, provided it conforms to the monograph.
P
- Package codeThe third NDC segment, one or two digits, identifying a specific commercial package configuration of a product.
- Package NDCA three-segment NDC identifying an exact commercial package — the form that belongs on a claim.
- Pass-through paymentTemporary separate payment for a new drug or device in the hospital outpatient setting that would otherwise be bundled.
- Payer IDThe identifier that tells a clearinghouse which payer a claim is destined for.
- Phase 1The first stage of human testing, focused on safety, tolerability and dose range in a small group.
- Phase 2Mid-stage testing for preliminary efficacy and further safety in several hundred patients with the target condition.
- Phase 3Large confirmatory trials, usually randomised and controlled, that form the basis of an approval application.
- Phase 4Post-marketing studies conducted after approval to monitor long-term safety and real-world effectiveness.
- Physiologic effect (PE)A pharmacologic class describing the observable bodily effect a drug produces.
- Place of serviceA two-digit code stating where a service was delivered.
- Primary endpointThe pre-specified outcome a trial is designed and powered to measure.
- Prior authorizationA payer requirement that a drug or service be approved before it is provided.
- Private label distributorA retailer or wholesaler whose store-brand drugs carry its own labeler code.
- Product codeThe second NDC segment, three or four digits, identifying one specific formulation: a given strength in a given dosage form.
- Product NDCA two-segment NDC (labeler plus product) that identifies a formulation regardless of how it is packaged.
- Purple BookThe FDA database of licensed biological products, including biosimilars and interchangeables.
R
- RARCRemittance Advice Remark Code — supplementary detail that qualifies a CARC.
- Recruiting statusWhether a study is currently enrolling participants.
- Reference productThe originally licensed biological product against which a biosimilar is compared.
- RelabelerA firm that applies its own label to a drug manufactured by someone else, assigning its own NDC.
- Remittance advice (835)The X12 transaction explaining what a payer paid, adjusted or denied on each claim line.
- REMSRisk Evaluation and Mitigation Strategy — a required safety program for drugs with serious risks.
- RepackagerA firm that takes a finished drug and puts it into different containers, assigning its own NDC.
- Revenue codeA four-digit code on an institutional claim identifying the hospital department or cost centre a charge came from.
- Revenue code 0636Drugs requiring detailed coding — the revenue line for clinician-administered drugs billed with a HCPCS code.
- Route of administrationHow a drug enters the body — oral, intravenous, subcutaneous, intramuscular, ophthalmic and so on.
- RxCUIThe concept identifier within RxNorm — one number for one clinical drug concept.
- RxNormA normalised naming system for clinical drugs, maintained by the National Library of Medicine.
S
- S-codeA HCPCS Level II code used by commercial payers and Medicaid but not recognised by Medicare.
- Self-administered drugA drug that a patient can reasonably administer themselves, which therefore falls outside the medical benefit.
- SerializationAssigning a unique serial number to each saleable drug package so it can be traced individually.
- SNOMED CTA comprehensive clinical terminology used for problems, procedures and findings in electronic health records.
- SponsorThe organisation that takes responsibility for a clinical trial and holds its regulatory filings.
- Structured Product Labeling (SPL)The XML document standard in which manufacturers submit drug labeling to the FDA; it is the source of prescribing information shown in drug databases.
T
- Taxonomy codeA code describing a provider's specialty, used to route and price claims when the NPI alone is ambiguous.
- Therapeutic equivalence codeA two-character Orange Book rating stating whether a generic is substitutable for its reference brand.
- Timely filingThe deadline by which a claim must reach the payer, counted from the date of service.
U
- UB-04The institutional claim form used by hospitals and facilities; the 837I is its electronic equivalent.
- UN qualifierUnit qualifier meaning each — used for tablets, capsules, vials and pre-filled syringes counted as whole items.
- Unapproved drug otherA marketing category for products legally marketed without FDA approval, largely for historical reasons.
- Unfinished drugAn active pharmaceutical ingredient or bulk material listed with the FDA but not in a finished dosage form.
- UNIIUnique Ingredient Identifier — a non-proprietary code the FDA assigns to a specific substance.
- Unit qualifierA two-character code stating the unit in which the NDC quantity is expressed.
W
- WAC (Wholesale Acquisition Cost)The manufacturer's list price to wholesalers, before discounts and rebates.
- White baggingA specialty pharmacy ships the drug directly to the provider for a named patient; the pharmacy bills, not the provider.
- WHODrugThe international drug dictionary maintained by the Uppsala Monitoring Centre (UMC) used to standardize concomitant medications in clinical research.
NDC & product identity
10-digit NDC · 11-digit NDC · 4-4-2 format · 5-3-2 format · 5-4-1 format · 5-4-2 format · Kit (NDC) · Labeler code · Leading zero padding · Listing expiration date · Marketing end date · Marketing start date · N4 qualifier · National Drug Code (NDC) · NDC Directory · NDC exclusion list · Package code · Package NDC · Private label distributor · Product code · Product NDC · Relabeler · Repackager · Structured Product Labeling (SPL) · Unfinished drug
HCPCS & CPT coding
340B modifier · A-code · Billable unit · C-code · CPT 20610 · CPT 67028 · CPT 90471 · CPT 96365 · CPT 96372 · CPT 96401 · CPT 96413 · CPT code · HCPCS · HCPCS dosage descriptor · HCPCS Level I · HCPCS Level II · J-code · J3490 · J3590 · JW modifier · JZ modifier · KX modifier · Miscellaneous code · Modifier · Q-code · S-code · Vaccine product code
Claims & billing
837I · 837P · Brown bagging · Buy and bill · CARC · Clean claim · Clearinghouse · CMS-1500 · Coordination of benefits · Denial code · F2 qualifier · GR qualifier · Invoice pricing · Line item · ML qualifier · NDC quantity · NPI · Payer ID · Place of service · Prior authorization · RARC · Remittance advice (835) · Revenue code · Revenue code 0636 · Taxonomy code · Timely filing · UB-04 · UN qualifier · Unit qualifier · White bagging
Pricing & reimbursement
340B program · Allowed amount · AMP (Average Manufacturer Price) · ASP (Average Sales Price) · ASP plus 6 percent · AWP (Average Wholesale Price) · Best price · Bundled payment · Contractual adjustment · Fee schedule · Incident to · Least costly alternative · Medicaid Drug Rebate Program · Medicare Part B drug · Medicare Part D drug · NADAC · Pass-through payment · Self-administered drug · WAC (Wholesale Acquisition Cost)
FDA regulatory
505(b)(2) · AB rating · Abbreviated New Drug Application (ANDA) · Active ingredient · Active moiety · Biologics License Application (BLA) · Biosimilar · Boxed warning · Chemical structure (CS) · Dosage form · Established Pharmacologic Class (EPC) · Interchangeable biosimilar · Marketing category · Mechanism of action (MoA) · New Drug Application (NDA) · Orange Book · OTC monograph · Physiologic effect (PE) · Purple Book · Reference product · REMS · Route of administration · Therapeutic equivalence code · Unapproved drug other · UNII
Data & standards
DSCSA · FHIR · GS1 GTIN · HIPAA transaction standards · HL7 · ICD-10-CM · ICD-10-PCS · LOINC · NCPDP · openFDA · RxCUI · RxNorm · Serialization · SNOMED CT · X12
Clinical trials
Adverse event (AE) · Electronic Data Capture (EDC) · Exclusion criteria · Expanded access · Inclusion criteria · Investigational New Drug (IND) · MedDRA · NCT number · Phase 1 · Phase 2 · Phase 3 · Phase 4 · Primary endpoint · Recruiting status · Sponsor · WHODrug