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PTCB Billing & Reimbursement study materials
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PTCB Billing & Reimbursement practice questions

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Question 1Pharmacy Billing Fundamentals and Payer Types

A patient pays a fixed monthly amount to an insurance plan to maintain coverage. This payment is called the:

  1. Copayment
  2. Deductible
  3. Premium Correct answer.
  4. Coinsurance

Explanation

A premium is the recurring amount a member pays to keep insurance coverage active, regardless of whether services are used. Copays, deductibles, and coinsurance are cost-sharing amounts tied to specific claims.

Question 2Pharmacy Billing Fundamentals and Payer Types

A patient enrolled in Original Medicare asks which program part covers most self-administered outpatient prescription drugs. The correct answer is:

  1. Part B
  2. Part C
  3. Part A
  4. Part D Correct answer.

Explanation

Medicare Part D is the outpatient prescription drug benefit, offered through standalone prescription drug plans or Medicare Advantage prescription drug plans. Part A covers inpatient hospital care, and Part B covers medical services and certain provider-administered drugs.

Question 3Pharmacy Billing Fundamentals and Payer Types

Which statement best describes how Medicaid is financed?

  1. Funded by private insurers through subsidies
  2. Funded entirely by state governments
  3. Funded entirely by the federal government
  4. Jointly funded by federal and state governments Correct answer.

Explanation

Medicaid is a joint federal-state program: the federal government sets minimum requirements and contributes matching funds, while states administer the program and share costs. The federal matching rate varies by state and eligibility group.

Question 4Pharmacy Billing Fundamentals and Payer Types

A fixed dollar amount a patient pays the pharmacy at the point of sale for a covered prescription is best described as a:

  1. Coinsurance
  2. Copayment Correct answer.
  3. Premium
  4. Deductible

Explanation

A copayment, or copay, is a flat dollar amount the member pays for a covered drug at the time of service. Coinsurance is a percentage of the allowed amount rather than a flat dollar figure.

Question 5Pharmacy Billing Fundamentals and Payer Types

A plan has a $500 annual deductible that has not yet been met. For a covered drug costing $120, what will the patient generally pay at the pharmacy, assuming the plan applies the deductible to prescriptions?

  1. A $10 copay with the deductible waived
  2. Nothing, because the plan pays first
  3. The full $120 toward the deductible Correct answer.
  4. 20% coinsurance with no deductible applied

Explanation

Before the deductible is satisfied, the member generally pays the negotiated drug cost, and that payment is applied toward the deductible. Once the deductible is met, the plan's copay or coinsurance rules begin to apply.

Question 6Pharmacy Billing Fundamentals and Payer Types

Which identifier is used on a pharmacy claim to specify the exact manufacturer, product, and package size of a dispensed drug?

  1. Group number
  2. BIN
  3. PCN
  4. NDC Correct answer.

Explanation

The National Drug Code (NDC) is an 11-digit identifier comprising labeler, product, and package segments. It tells the processor exactly which drug and package was dispensed.

Question 7Pharmacy Billing Fundamentals and Payer Types

When a pharmacy transmits a claim electronically, which field directs the claim to the correct pharmacy benefit processor?

  1. Days supply
  2. DAW code
  3. BIN Correct answer.
  4. NDC

Explanation

The Bank Identification Number (BIN) routes the electronic claim to the correct payer or processor. The NDC identifies the drug, while the DAW code indicates brand substitution instructions.

Question 8Pharmacy Billing Fundamentals and Payer Types

A payer's list of prescription drugs it covers, often organized into cost-sharing tiers, is called the:

  1. Formulary Correct answer.
  2. Remittance advice
  3. Fee schedule
  4. Compendium

Explanation

A formulary is the plan's covered drug list, usually tiered to set different cost-sharing levels. Drugs not on the formulary generally require an exception or are not covered.

Question 9Pharmacy Billing Fundamentals and Payer Types

A patient has commercial insurance as primary and Medicaid as secondary. How should the pharmacy generally bill the claim?

  1. Both plans at once for the full amount
  2. Medicaid first, then commercial for the balance
  3. Commercial first, then Medicaid for the balance Correct answer.
  4. Commercial only, waiving the balance

Explanation

Coordination of benefits requires the primary payer to adjudicate first, after which the secondary payer considers the remaining patient responsibility. Medicaid is generally the payer of last resort.

Question 10Pharmacy Billing Fundamentals and Payer Types

The cash price a pharmacy charges a self-pay patient for a prescription is known as the:

  1. Professional dispensing fee
  2. Average wholesale price benchmark
  3. Usual and customary price Correct answer.
  4. Maximum allowable cost ceiling

Explanation

Usual and customary (U&C) is the pharmacy's retail cash price. Payers typically reimburse the lesser of the contracted rate or U&C, so accurate U&C reporting matters.

Question 11Pharmacy Billing Fundamentals and Payer Types

A plan rejects a claim with a message that the drug requires prior authorization. What is the appropriate next step?

  1. Change the NDC to bypass the rejection
  2. Resubmit the same claim repeatedly
  3. Dispense at the cash price without informing the patient
  4. Contact the prescriber to start a prior authorization Correct answer.

Explanation

A prior authorization rejection means the plan requires clinical documentation and approval before it will cover the drug. The pharmacy should notify the prescriber, who submits the required information to the plan.

Question 12Pharmacy Billing Fundamentals and Payer Types

A payer requires that a patient try and fail two preferred drugs before it will cover a more expensive non-preferred agent. This utilization management tool is:

  1. Step therapy Correct answer.
  2. Quantity limit
  3. Formulary tiering
  4. Therapeutic interchange

Explanation

Step therapy requires documented trials of lower-cost preferred therapies before the plan covers a higher-cost drug. It differs from prior authorization, which requires approval but not necessarily a defined sequence of trials.

Question 13Pharmacy Billing Fundamentals and Payer Types

A prescriber writes 'dispense as written' on a prescription for a brand-name drug even though a generic equivalent exists. Which DAW code is transmitted on the claim?

  1. DAW 3
  2. DAW 0
  3. DAW 2
  4. DAW 1 Correct answer.

Explanation

DAW 1 means the prescriber explicitly requested the brand product, so the brand must be dispensed. DAW 0 indicates no product selection was indicated and generic substitution is permitted.

Question 14Pharmacy Billing Fundamentals and Payer Types

TRICARE provides health coverage primarily for:

  1. Low-income families, pregnant women, and children
  2. State government workers, teachers, and retirees
  3. Military members, retirees, and dependents Correct answer.
  4. Employees of private corporations and their families

Explanation

TRICARE is the Department of Defense health care program for active-duty service members, retirees, and eligible family members. Medicaid serves low-income populations, and commercial plans serve employers.

Question 15Pharmacy Billing Fundamentals and Payer Types

A patient's prescription is for an injury that occurred at work and is covered by the employer's workers' compensation insurer. Which statement is generally correct?

  1. The patient's commercial plan is always primary
  2. The workers' comp carrier is primary for the injury Correct answer.
  3. Medicare Part D must be billed before any other payer
  4. Medicaid must be billed as the primary payer

Explanation

Workers' compensation insurance covers medical care for work-related injuries and is generally primary for those claims. Medicare and group health plans usually pay secondary in work-injury cases.

Question 16Pharmacy Billing Fundamentals and Payer Types

Under federal rules, which payer is generally considered the payer of last resort?

  1. Medicaid Correct answer.
  2. Commercial insurance
  3. TRICARE
  4. Medicare Part D

Explanation

Medicaid is generally the payer of last resort, meaning other liable third-party payers must be billed first. Federal law requires states to pursue other coverage before Medicaid pays.

Question 17Pharmacy Billing Fundamentals and Payer Types

A commercially insured patient presents a manufacturer copay card to reduce out-of-pocket cost. Which statement is correct?

  1. They cover the pharmacy's full ingredient cost
  2. They are generally prohibited with federal programs like Medicare Correct answer.
  3. They can be used with any plan, including Medicaid and Medicare
  4. They must be applied before the primary claim pays

Explanation

Manufacturer copay assistance is generally restricted in federal health care programs because of federal Anti-Kickback Statute concerns. The card is applied after the primary payer adjudicates, and it covers only the patient's cost-sharing up to a limit.

Question 18Pharmacy Billing Fundamentals and Payer Types

After a claim has been paid, the pharmacy discovers the wrong quantity was dispensed and needs to undo the transaction. The process is called a:

  1. Adjudication
  2. Rebill
  3. Reversal Correct answer.
  4. Transmission

Explanation

A reversal cancels a previously adjudicated claim so it can be corrected and resubmitted. A rebill is the corrected resubmission that follows the reversal.

Question 19Pharmacy Billing Fundamentals and Payer Types

A claim rejects as 'refill too soon.' Which action is most appropriate?

  1. Override the rejection by changing the date of service to an earlier date
  2. Review fill history and call the plan if an early refill is justified Correct answer.
  3. Dispense the full quantity and bill cash without informing the patient
  4. Submit the claim under a different patient's member ID

Explanation

Refill-too-soon edits prevent stockpiling and waste; they can be resolved by waiting, or by obtaining a plan override if there is a documented clinical reason. Altering dates or patient IDs is fraudulent.

Question 20Pharmacy Billing Fundamentals and Payer Types

Under the 2025 Medicare Part D benefit redesign, once a beneficiary's annual out-of-pocket spending for covered Part D drugs reaches the statutory threshold, what happens?

  1. The beneficiary pays 25% coinsurance for the remainder of the year
  2. The beneficiary must switch to a Medicare Advantage plan
  3. The beneficiary enters the coverage gap and pays 100%
  4. The beneficiary pays $0 for covered drugs for the rest of the year Correct answer.

Explanation

The 2025 redesign caps annual out-of-pocket spending at the statutory threshold, after which the beneficiary pays no cost sharing for covered Part D drugs for the remainder of the year. The prior coverage gap phase was eliminated.

Question 21Pharmacy Billing Fundamentals and Payer Types

A payer's maximum reimbursement amount for a multi-source generic drug is typically based on:

  1. The manufacturer's suggested retail price
  2. The pharmacy's usual and customary price only
  3. Average wholesale price (AWP) of the brand
  4. Maximum allowable cost (MAC) Correct answer.

Explanation

MAC sets a ceiling for generic reimbursement, usually derived from market pricing for therapeutically equivalent products. AWP is a list-price benchmark more often used for brand drugs.

Question 22Pharmacy Billing Fundamentals and Payer Types

Retroactive pharmacy price concessions, often called direct and indirect remuneration (DIR) fees, primarily affect a pharmacy by:

  1. Reducing reimbursement after the claim is paid Correct answer.
  2. Eliminating the patient's copay at the pharmacy counter
  3. Increasing the dispensing fee paid at the point of sale
  4. Changing the NDC that is billed on the claim

Explanation

DIR fees are reconciled after the point of sale, reducing the pharmacy's ultimate reimbursement and making true margin difficult to know at dispensing. Recent CMS rules have begun requiring these price concessions to be reflected at the point of sale in Medicare Part D.

Question 23Pharmacy Billing Fundamentals and Payer Types

Which statement best describes the 340B Drug Pricing Program?

  1. It allows any pharmacy to buy discounted drugs for cash patients
  2. It lets covered entities buy outpatient drugs at reduced prices Correct answer.
  3. It sets the copay for Medicare Part D drugs
  4. It requires manufacturers to give Medicaid the lowest possible price

Explanation

Section 340B requires manufacturers participating in Medicaid to offer discounted outpatient drugs to eligible covered entities such as certain hospitals and clinics. The program does not set patient copays or apply to arbitrary pharmacies.

Question 24Pharmacy Billing Fundamentals and Payer Types

An employed patient aged 68 has group health coverage through a large employer with 20 or more employees and is also enrolled in Medicare. For outpatient prescription drugs, which payer is generally primary?

  1. Medicare Part A hospital insurance
  2. The employer group health plan Correct answer.
  3. TRICARE military pharmacy coverage
  4. State Medicaid fee-for-service

Explanation

Under Medicare Secondary Payer rules, the employer group health plan is primary for working beneficiaries aged 65 or older when the employer has 20 or more employees. Medicare then pays secondary.

Question 25Pharmacy Billing Fundamentals and Payer Types

A Medicaid beneficiary is enrolled in a Medicaid managed care organization (MCO). How is a pharmacy claim for a covered prescription generally billed?

  1. Directly to the state Medicaid fee-for-service program
  2. To Medicare Part D using the Part D card
  3. To the manufacturer's copay assistance program
  4. To the MCO or its pharmacy benefit manager Correct answer.

Explanation

In Medicaid managed care, the MCO, often through a pharmacy benefit manager, is responsible for the pharmacy benefit, so claims are billed to the MCO rather than straight fee-for-service Medicaid. The MCO's BIN, PCN, and member ID are used.

Question 26Pharmacy Billing Fundamentals and Payer Types

In pharmacy billing, a third-party payer is best described as:

  1. An entity other than the patient that pays part of a claim Correct answer.
  2. The prescriber who authorizes the medication order
  3. The patient who receives the medication and pays a copayment
  4. The wholesaler that delivers the drug to the pharmacy

Explanation

A third-party payer is an insurer, government program, or PBM that assumes financial responsibility for covered services. The patient is the first party, and the pharmacy is the second party in the billing relationship.

Question 27Pharmacy Billing Fundamentals and Payer Types

Which government health program is jointly funded by the federal government and the states and primarily covers low-income individuals?

  1. Veterans Health Administration
  2. Medicare
  3. TRICARE
  4. Medicaid Correct answer.

Explanation

Medicaid is jointly funded by the federal government and the states and primarily serves low-income individuals. Medicare is primarily federal, TRICARE serves military beneficiaries, and the Veterans Health Administration serves eligible veterans.

Question 28Pharmacy Billing Fundamentals and Payer Types

A patient must pay the first $500 of covered prescription costs each year before the plan begins paying. This amount is the:

  1. Premium
  2. Copayment
  3. Coinsurance
  4. Deductible Correct answer.

Explanation

A deductible is the amount a patient must pay for covered services before the plan begins to pay. It is separate from premiums, copayments, and coinsurance.

Question 29Pharmacy Billing Fundamentals and Payer Types

A plan pays 80% of the allowed amount for a covered prescription and the patient pays 20%. The patient's 20% share is called:

  1. Coinsurance Correct answer.
  2. A premium
  3. A deductible
  4. A copayment

Explanation

Coinsurance is the percentage of covered costs that the patient pays after any deductible is met. A copayment, by contrast, is a fixed dollar amount.

Question 30Pharmacy Billing Fundamentals and Payer Types

A fixed dollar amount, such as $10, that a patient pays for a covered prescription at the point of service is called a:

  1. Coinsurance
  2. Premium
  3. Copayment Correct answer.
  4. Deductible

Explanation

A copayment is a fixed dollar amount a patient pays for a covered prescription or service. Coinsurance is a percentage share, while a deductible is an amount paid before benefits begin.

Question 31Pharmacy Billing Fundamentals and Payer Types

What is the primary role of a pharmacy benefit manager (PBM) in the prescription drug benefit?

  1. To administer pharmacy benefits and process claims Correct answer.
  2. To license pharmacists and inspect pharmacy practice sites
  3. To provide direct inpatient care in hospitals
  4. To manufacture and package generic prescription drugs for distribution

Explanation

A PBM administers pharmacy benefits for payers, including claims processing, network management, and formulary-related functions. PBMs do not manufacture drugs or provide direct inpatient care.

Question 32Pharmacy Billing Fundamentals and Payer Types

The amount a patient pays monthly to maintain health insurance coverage is called the:

  1. Coinsurance
  2. Premium Correct answer.
  3. Copayment
  4. Deductible

Explanation

A premium is the recurring amount paid to maintain insurance coverage. Copayments, deductibles, and coinsurance are forms of cost sharing paid when services are used.

Question 33Pharmacy Billing Fundamentals and Payer Types

What is the out-of-pocket maximum in a health plan?

  1. The highest usual and customary price a pharmacy may charge
  2. The maximum number of prescriptions a patient may fill each month
  3. The annual cap on a patient's cost sharing for covered services Correct answer.
  4. The largest dispensing fee a payer will reimburse

Explanation

An out-of-pocket maximum limits how much a patient pays in cost sharing for covered services during a plan year. After the limit is reached, the plan generally pays 100% of covered costs.

Question 34Pharmacy Billing Fundamentals and Payer Types

Which statement accurately describes Medicare Part D?

  1. It covers inpatient hospital stays
  2. It covers only physician visits and laboratory tests
  3. It provides outpatient prescription drug coverage through private plans Correct answer.
  4. It is a state-run program for low-income adults

Explanation

Part D is the voluntary Medicare benefit for outpatient prescription drugs, delivered through private stand-alone or Medicare Advantage plans. Hospital stays are covered under Part A, and physician services under Part B.

Question 35Pharmacy Billing Fundamentals and Payer Types

A 70-year-old Medicare beneficiary requests a shingles vaccine at the pharmacy. Under Medicare, which part generally covers this vaccine?

  1. Part A
  2. Part B
  3. Medicaid
  4. Part D Correct answer.

Explanation

Medicare Part D generally covers commercially available vaccines such as the shingles vaccine. Part B covers influenza, pneumococcal, hepatitis B, and COVID-19 vaccines.

Question 36Pharmacy Billing Fundamentals and Payer Types

A Medicare Advantage plan that includes prescription drug coverage is commonly called:

  1. A Medicaid MCO
  2. A Medigap plan
  3. A stand-alone PDP
  4. An MA-PD plan Correct answer.

Explanation

A Medicare Advantage plan with prescription drug coverage is known as an MA-PD plan. A stand-alone PDP provides drug coverage only, and Medigap does not generally include drug coverage.

Question 37Pharmacy Billing Fundamentals and Payer Types

The Medicare Part D Low-Income Subsidy, also known as Extra Help, primarily helps eligible beneficiaries by:

  1. Providing free over-the-counter vitamins
  2. Reducing Part D premiums and cost sharing Correct answer.
  3. Paying for inpatient hospital deductibles
  4. Covering dental and vision services

Explanation

Extra Help reduces or eliminates Part D premiums, deductibles, and copayments for beneficiaries with limited income and resources. It does not extend to hospital, dental, or vision benefits.

Question 38Pharmacy Billing Fundamentals and Payer Types

A Medicare beneficiary who delays enrolling in Part D without other creditable drug coverage may face:

  1. A higher Part D premium from a late enrollment penalty Correct answer.
  2. A permanent ban from joining any Part D plan
  3. Loss of Medicare Part A eligibility
  4. A mandatory switch to Medicaid

Explanation

Part D imposes a late enrollment penalty when a beneficiary goes without creditable prescription drug coverage for a continuous period after initial enrollment. The penalty is added to the monthly premium, generally for as long as the beneficiary remains enrolled in Part D.

Question 39Pharmacy Billing Fundamentals and Payer Types

Which pricing benchmark is defined as the manufacturer's list price to wholesalers, before discounts and rebates?

  1. Usual and customary price (U&C)
  2. Maximum allowable cost (MAC)
  3. Wholesale acquisition cost (WAC) Correct answer.
  4. Average wholesale price (AWP)

Explanation

WAC is the manufacturer's published list price to wholesalers before discounts. AWP is a separate published wholesale benchmark, while U&C is a pharmacy's cash price and MAC is a payer's reimbursement limit.

Question 40Pharmacy Billing Fundamentals and Payer Types

In a pharmacy reimbursement formula, the dispensing fee is intended to cover:

  1. The manufacturer's rebate to the PBM
  2. The pharmacy's professional services and overhead Correct answer.
  3. The cost of the drug product itself
  4. The patient's annual deductible

Explanation

The dispensing fee is meant to cover the pharmacy's professional services and overhead for dispensing a prescription. It is separate from the ingredient cost of the drug product.

Question 41Pharmacy Billing Fundamentals and Payer Types

When a dependent child is covered by both parents' commercial plans, the birthday rule generally determines:

  1. Which pharmacy may dispense the medication
  2. Which plan is primary based on the parents' birth dates Correct answer.
  3. Whether the child needs prior authorization
  4. Which parent must sign the prescription

Explanation

Under the birthday rule, the plan of the parent whose birthday falls earlier in the calendar year is primary. The other parent's plan is then billed as secondary.

Question 42Pharmacy Billing Fundamentals and Payer Types

What does it mean for a pharmacy to be 'in network' for a payer?

  1. The pharmacy may dispense any drug without a prescription
  2. The pharmacy has agreed to the payer's contract terms Correct answer.
  3. The pharmacy accepts only cash payments
  4. The pharmacy is owned and operated by the payer

Explanation

In-network pharmacies have contracted with the payer or its PBM to provide services under specified reimbursement and program rules. Patients often pay less when using an in-network pharmacy.

Question 43Pharmacy Billing Fundamentals and Payer Types

A prescription discount card, such as those offered by some retailers, generally:

  1. Provides major medical coverage for hospital care
  2. Guarantees the lowest price on every drug
  3. Offers negotiated discounts but is not health insurance Correct answer.
  4. Is a form of Medicaid

Explanation

Discount cards negotiate reduced cash prices at participating pharmacies but do not provide insurance benefits. They are not a substitute for Medicaid or major medical coverage.

Question 44Pharmacy Billing Fundamentals and Payer Types

Which statement about health savings accounts (HSAs) and prescription purchases is correct?

  1. HSA funds may pay for qualified medical expenses, including many prescriptions Correct answer.
  2. HSA funds cannot be used at a pharmacy
  3. HSA funds may be used only for over-the-counter vitamins
  4. HSAs are available only to Medicare beneficiaries

Explanation

HSAs allow tax-advantaged funds to be used for qualified medical expenses, which commonly include prescription drugs. They are paired with high-deductible health plans and are not limited to Medicare beneficiaries.

Question 45Pharmacy Billing Fundamentals and Payer Types

In pharmacy claims processing, a rejected claim generally means:

  1. The pharmacy must discard the medication
  2. The claim was not paid and may be corrected and resubmitted Correct answer.
  3. The payer has paid the claim in full
  4. The patient's prescription is permanently invalid

Explanation

A rejection occurs when the claim is not processed to payment, often because of missing data, eligibility issues, or edits. The pharmacy can usually correct the problem and resubmit the claim.

Question 46Pharmacy Billing Fundamentals and Payer Types

Under Medicaid, the Federal Upper Limit (FUL) is a reimbursement cap that applies primarily to:

  1. Compounded sterile preparations
  2. Multiple-source outpatient drugs Correct answer.
  3. Over-the-counter vitamins
  4. Brand-name single-source drugs

Explanation

The FUL is a federal upper payment limit for Medicaid outpatient drugs that have at least two therapeutically equivalent products. It is intended to control costs for multiple-source drugs, not single-source brands.

Question 47Pharmacy Billing Fundamentals and Payer Types

The federal Medicaid rebate for a brand-name outpatient drug is generally calculated using which two figures?

  1. Average manufacturer price and best price Correct answer.
  2. Average wholesale price and usual and customary price
  3. Dispensing fee and copayment
  4. Wholesale acquisition cost and federal upper limit

Explanation

The brand-drug rebate includes a basic rebate based on the difference between average manufacturer price and best price, plus an inflation adjustment. This helps ensure Medicaid receives a substantial discount.

Question 48Pharmacy Billing Fundamentals and Payer Types

In a PBM contract, 'spread pricing' refers to:

  1. Retaining the difference between plan charges and pharmacy payments Correct answer.
  2. Applying manufacturer rebates directly to the patient's deductible
  3. Charging the same copay at all network pharmacies
  4. Publishing the pharmacy's actual acquisition cost to patients

Explanation

Spread pricing occurs when a PBM bills the health plan one amount and reimburses the pharmacy a lower amount, retaining the difference. Transparent or pass-through contracts instead disclose and pass along actual pharmacy costs.

Question 49Pharmacy Billing Fundamentals and Payer Types

A large employer offers a self-funded health plan governed by ERISA. Which statement about state pharmacy benefit mandates is generally correct?

  1. The plan may cover only generic drugs by federal law
  2. The plan must follow every state pharmacy mandate because it operates in the state
  3. The plan is generally exempt from state insurance mandates under ERISA Correct answer.
  4. The plan is automatically converted to Medicaid

Explanation

ERISA generally preempts state insurance laws for self-funded employer plans, so they are not bound by state benefit mandates in the same way as fully insured plans. They may still choose to follow some mandates voluntarily.

Question 50Pharmacy Billing Fundamentals and Payer Types

A Medicare beneficiary receives intravenous chemotherapy in a hospital outpatient department. Under Medicare, this drug is generally covered under:

  1. Part A
  2. Part D
  3. Part B Correct answer.
  4. Medicaid

Explanation

Part B covers drugs and biologicals administered incident to a physician's service, including outpatient intravenous chemotherapy. Part D generally covers self-administered outpatient prescription drugs.