CARD T196
Primary Care Provider (PCP)
A clinician who provides routine care and may coordinate other services. A family doctor can serve as a PCP.
How it works
A PCP supplies routine care, manages ongoing needs, and can coordinate specialist services. Depending on the plan and professional scope, the PCP can be a physician or another qualified clinician. PCP involvement does not itself establish that a service is covered or that plan authorization has been granted. [10] [11]
A family physician evaluates a member and refers the member to a cardiologist when the plan requires a referral.
A clinician’s recommendation and an insurer’s coverage decision are different steps.
CARD T197
Referral
A direction or authorization to obtain another provider’s services. Some plans require a PCP referral before specialist care.
How it works
A referral directs a patient to another clinician, often from a PCP to a specialist. Some plans require it for covered specialist visits. It is different from prior authorization, which is the plan’s approval process for a service or drug. A referral can be necessary without being sufficient for payment. [10] [11]
A PCP refers a patient to an orthopedist; a scheduled procedure still needs the plan’s separate authorization.
Referral is about directing care; prior authorization is about plan approval.
CARD T198
Prior Authorization
A plan’s advance approval requirement for certain services or drugs. Approval does not override all other coverage and payment conditions.
How it works
Prior authorization is advance plan review for specified services or drugs. The plan may evaluate medical necessity, covered indications, and required documentation. Approval does not override eligibility, exclusions, network terms, or all payment conditions. Denials may have appeal rights. Emergency-service protections can limit prior-authorization requirements. [10] [11]
A planned MRI receives authorization, but the claim still must match the approved service and satisfy coverage conditions.
Authorization is not an unconditional promise to pay any related bill.
CARD T199
Medical Necessity
A standard for whether care is appropriate to diagnose or treat a condition. Coverage depends on the plan’s definition and applicable requirements.
How it works
Medical necessity concerns whether a service is appropriate to evaluate, diagnose, or treat a condition under applicable standards. Coverage also depends on the benefit contract, exclusions, and legal requirements. A service can be clinically recommended yet not payable under every plan; a disagreement may be reviewed through an appeal. Cost alone does not prove necessity. [10] [11]
A plan reviews clinical records to determine whether an imaging study meets its medical-necessity criteria.
Medically necessary is not a synonym for automatically covered under every contract.
CARD T200
Formulary
A health plan’s list of covered prescription drugs. Different drugs may have different cost-sharing levels.
How it works
A formulary is a health plan’s list of covered prescription drugs. The list often places drugs into cost levels called tiers, with different copays or coinsurance. Some drugs need advance approval; step therapy means trying a preferred treatment first unless an exception is approved; quantity limits restrict the amount covered over a period. Being on the list does not necessarily make a drug free. Plans may offer exception and appeal processes for restricted or unlisted drugs. [10] [11]
A generic drug is in a lower-cost tier while a brand-name alternative has higher cost sharing and prior authorization.
Formulary inclusion, tier placement, and authorization are three separate questions.
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Practice questions
Select an answer, then check it to see why each option is right or wrong.
T196 · Primary Care Provider (PCP)
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T197 · Referral
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T198 · Prior Authorization
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T199 · Medical Necessity
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T200 · Formulary
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Sources & further reading
Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.