Medicare Advantage glossary

173 plain-language definitions of the terms you meet in plan documents, on this site and in Medicare itself. Dollar figures are the 2026 amounts published by CMS. Your plan's Evidence of Coverage and Medicare.gov govern if anything here differs.

Medicare basics Enrollment periods and plan documents What you pay Plan types and networks Covered services and extra benefits Prescription drugs (Part D)Approvals, denials and your rights Quality and star ratings For professionals

All terms A–Z

Accountable Care Organization ACO REACH Actuarial equivalence Adverse selection Agent and broker Annual Enrollment Period Annual Notice of Change Annual wellness visit Anti-Kickback Statute Appeal Assignment Balance billing Base beneficiary premium Benchmark Benchmark plan (Extra Help)Beneficiary Benefit design Benefit period Bid Bid Pricing Tool Biosimilar C-SNP CAHPS Capitation Chronic Care Management CMS Coding intensity adjustment Coinsurance Contract and plan ID Contract year Coordination-only D-SNP Copayment Cost plan Cost sharing Coverage determination Coverage determinations (NCD and LCD)Creditable coverage Crosswalk D-SNP Death spiral Deductible Denial Dental, vision and hearing Disenrollment Drug tier Dual and Extra Help Special Enrollment Periods Dual eligible Durable medical equipment Emergency care Employer group plan Encounter data Evidence of Coverage Expedited appeal Extra Help Fee-for-service FIDE SNP Five-star Special Enrollment Period FMAP Formulary Formulary exception Fraud, waste and abuse General Enrollment Period Generic drug Grievance Guaranteed issue rights Health Outcomes Survey Health risk assessment HEDIS HIDE SNP Hierarchical Condition Category HMO HMO-POS Home health care Hospice I-SNP Independent Review Entity Initial Enrollment Period Inpatient Insulin cost cap IRMAA Late enrollment penalty Long-term services and supports Low-performing icon MA-only MA-PD Mail-order pharmacy Maximum fair price Maximum out-of-pocket Medicaid Medical director Medical loss ratio Medical necessity Medical Savings Account plan Medical trend Medicare 1-800-MEDICARE Medicare Administrative Contractor Medicare Advantage Medicare Advantage Open Enrollment Period Medicare drug price negotiation Medicare Plan Finder Medicare Prescription Payment Plan Medicare Savings Programs Medicare-approved amount Medigap Member months Model of Care Network Network adequacy Network design Non-renewal Normalization factor Notice of Medicare Non-Coverage Observation status Optional supplemental benefits Organization determination Original Medicare Out-of-network Out-of-pocket cap (Part D)Over-the-counter allowance PACE Parent organization Part A Part B Part B premium reduction Part D Part D coverage phases Part D manufacturer discount program Part D vaccines Per member per month PFFS Population health PPO Preferred pharmacy Premium Prescription Drug Plan Preventive services Primary care provider Prior authorization Prior authorization (drugs)Provider directory Qualified Medicare Beneficiary Quality bonus payment Quality Improvement Organization Quantity limit RADV Rate Announcement Ratebook Rebate Reconsideration Referral Remote Patient Monitoring Risk adjustment Risk score Service area SHIP Skilled Nursing Facility Social determinants of health Special Enrollment Period Special Needs Plan Special Supplemental Benefits for the Chronically Ill Specialty tier Star ratings Step therapy Summary of Benefits Supplemental benefits Third-Party Marketing Organization Transition fill Urgently needed care Utilization management V28 Value-based care Zero-premium plan

Medicare basics

The parts of Medicare and the people and agencies involved.

1-800-MEDICARE

Medicare's own help line, 1-800-633-4227 (TTY 1-877-486-2048), open 24 hours a day, 7 days a week, for questions, enrollment, complaints and help with plan problems.

Beneficiary (enrollee, member)

A person who has Medicare.

Benefit period

How Original Medicare Part A measures hospital and skilled nursing facility use. It starts the day you are admitted as an inpatient and ends after you have gone 60 days in a row without inpatient hospital or skilled nursing care. The Part A deductible applies once per benefit period, so you can pay it more than once a year. Medicare Advantage plans set their own inpatient cost sharing, often per day or per stay.

CMS (Centers for Medicare & Medicaid Services)

The Centers for Medicare & Medicaid Services, the agency within the U.S. Department of Health and Human Services that runs Medicare, contracts with Medicare Advantage and Part D plans, and publishes the public data this site is built from.

Contract and plan ID (H-number, segment)

How CMS identifies a plan. The contract ID is a letter and four digits — H for most Medicare Advantage contracts, R for regional PPOs, S for standalone drug plans, E for employer direct contracts. The plan ID is three digits, and a segment ID splits one plan into parts of its service area with different premiums or benefits: H1234-001-000.

Contract year (plan year)

The calendar year (January 1 to December 31) a plan's benefits apply to. Plans file their bids for a contract year the June before, and CMS publishes the new year's plans in late September and on Plan Finder October 1.

Creditable coverage

Drug coverage (for example from an employer, union, TRICARE or the VA) that is expected to pay, on average, at least as much as standard Part D coverage. Having it lets you delay Part D without a penalty; employers send a notice each year saying whether their coverage is creditable.

Dual eligible

A person enrolled in both Medicare and Medicaid. "Full-benefit" dual eligibles get full Medicaid benefits; "partial-benefit" dual eligibles get help only with Medicare premiums and, in some cases, cost sharing through a Medicare Savings Program. Medicare pays first; Medicaid pays after.

IRMAA (Income-Related Monthly Adjustment Amount)

Income-Related Monthly Adjustment Amount: an extra charge added to the Part B and Part D premiums of people with higher incomes, based on the income on your tax return from two years before (2024 income for 2026). It applies whether you have Original Medicare or a Medicare Advantage plan. Social Security sets it; you can ask for a new determination after a life-changing event such as retirement.

Late enrollment penalty

A permanent premium surcharge for signing up late. Part B: 10% of the standard premium for each full 12-month period you could have had Part B but did not, in most cases for as long as you have Part B. Part D: if you go 63 days or more in a row without Part D or other creditable drug coverage after you first become eligible, 1% of the national base beneficiary premium ($38.99 in 2026) for every full month without coverage, rounded to the nearest $0.10, for as long as you have drug coverage. Months in which you qualified for Extra Help do not count.

Medicaid

A joint federal–state program for people with limited income and resources. Eligibility and benefits vary by state. For people with Medicare, Medicaid can pay Medicare premiums and cost sharing and covers services Medicare does not, notably long-term services and supports.

Medicare

Federal health insurance for people 65 and older and for younger people with certain disabilities, end-stage renal disease or ALS. It has four parts: A (hospital), B (medical), C (Medicare Advantage) and D (prescription drugs).

Medicare Advantage (Part C, MA)

Private health plans approved by Medicare that provide all Part A and Part B benefits (hospice stays with Original Medicare) and usually Part D drug coverage and extra benefits. Medicare pays the plan a set monthly amount for each member. Plans have networks, their own cost sharing and rules such as prior authorization, and an annual out-of-pocket limit.

Medicare Plan Finder

The official plan comparison and enrollment tool at Medicare.gov. It is the authoritative source for plan costs, drug pricing at specific pharmacies and enrollment; this site publishes CMS's plan filings for research and does not replace it.

Medigap (Medicare Supplement)

Medicare Supplement insurance sold by private companies to help pay Original Medicare's deductibles and coinsurance. Most states use standardized plans identified by letters (Massachusetts, Minnesota and Wisconsin standardize differently). Medigap does not work with Medicare Advantage, and policies sold since 2006 do not cover drugs. Outside your Medigap open enrollment period and a few guaranteed-issue situations, insurers in most states can use medical underwriting.

Original Medicare (Traditional Medicare, fee-for-service Medicare)

Part A and Part B, run directly by the federal government. You can use any doctor or hospital in the U.S. that takes Medicare, there is no annual out-of-pocket limit, and drug coverage comes from a separate Part D plan. Many people add a Medigap policy to cover gaps.

Parent organization (carrier, Medicare Advantage Organization, MAO)

The company that ultimately owns a plan's CMS contracts — for example, one insurer may hold dozens of contracts under different brand names. Carrier pages on this site group plans by parent organization as reported to CMS.

Part A

Hospital insurance: inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, hospice, and some home health care. Most people pay no Part A premium because they or a spouse paid Medicare taxes long enough. In 2026 the inpatient deductible is $1,736 per benefit period.

Part B

Medical insurance: doctor visits, outpatient care, preventive services, lab tests, durable medical equipment and some home health care. In 2026 the standard premium is $202.90 a month and the deductible is $283; after that Original Medicare generally pays 80% and you pay 20%. You keep paying the Part B premium if you join a Medicare Advantage plan.

Part D

Outpatient prescription drug coverage sold by private plans, either as a standalone drug plan (PDP) alongside Original Medicare or built into a Medicare Advantage plan (MA-PD). In 2026 the deductible can be no more than $615, and your out-of-pocket drug costs are capped at $2,100 for the year.

SHIP (State Health Insurance Assistance Program)

State Health Insurance Assistance Program: free, unbiased one-on-one Medicare counseling in every state, funded by federal grants. SHIP counselors do not sell plans. National line 1-877-839-2675; shiphelp.org finds your local program.

Enrollment periods and plan documents

When you can join or switch, and the documents each plan must give you.

Annual Enrollment Period (AEP, Open Enrollment, Annual Election Period)

October 15 to December 7 each year. Anyone with Medicare can join, switch or drop a Medicare Advantage or Part D plan, or return to Original Medicare; changes take effect January 1.

Annual Notice of Change (ANOC)

A notice your plan sends each fall, to arrive by September 30, listing what changes next year — premiums, cost sharing, drug coverage, networks. Read it before the Annual Enrollment Period starts.

Crosswalk

When a plan changes, merges or consolidates for the new year, CMS lets the company move ("crosswalk") its members automatically into a plan it will offer next year. Members are told in the Annual Notice of Change and can still choose a different plan during enrollment periods.

Disenrollment

Leaving a plan. Usually it happens automatically when you join another plan during a valid enrollment period; you can also ask the plan or 1-800-MEDICARE to disenroll you. Dropping a Medicare Advantage plan without choosing another returns you to Original Medicare.

Dual and Extra Help Special Enrollment Periods

Since 2025, people with Medicaid or Extra Help can, once a month, leave a Medicare Advantage plan for Original Medicare with a standalone drug plan, or switch standalone drug plans. People with full Medicaid can also, once a month, join an integrated D-SNP (FIDE SNP, HIDE SNP or an applicable integrated plan) where one is available.

See also: D-SNP, Extra Help, Dual eligible · Source

Evidence of Coverage (EOC)

The full, legally binding description of a plan's benefits, costs, rules and your rights — typically 200+ pages. When the Summary of Benefits and the EOC differ, the EOC governs.

Five-star Special Enrollment Period

From December 8 through November 30 of the following year you can switch once into a Medicare Advantage or Part D plan whose overall star rating is 5 stars, if one is available where you live.

See also: Star ratings

General Enrollment Period (GEP)

January 1 to March 31 for people who missed their Initial Enrollment Period and have no Special Enrollment Period. Coverage starts the month after you sign up, and late enrollment penalties may apply.

Guaranteed issue rights

Situations in which a Medigap insurer must sell you a policy without medical underwriting — for example during your six-month Medigap open enrollment period, when your Medicare Advantage plan leaves your area, or in some cases when you leave Medicare Advantage within your first year. Some states add broader rights.

Initial Enrollment Period (IEP)

The seven-month window when you first qualify for Medicare: the three months before the month you turn 65, that month, and the three months after. Signing up before your birthday month avoids a gap in coverage.

Medicare Advantage Open Enrollment Period (MA OEP)

January 1 to March 31. If you are in a Medicare Advantage plan you can make one change: switch to another Medicare Advantage plan, or drop it for Original Medicare and join a standalone drug plan. People newly eligible for Medicare who join a Medicare Advantage plan also get this option in their first three months of Medicare. The change takes effect the first of the following month.

Non-renewal

When a plan leaves Medicare or leaves your county at the end of the year. You get a written notice, a Special Enrollment Period to choose new coverage, and Medigap guaranteed-issue rights. If you do nothing you return to Original Medicare.

Special Enrollment Period (SEP)

A chance to change coverage outside the usual windows because of a life event — for example moving out of your plan's service area, losing employer coverage, gaining or losing Medicaid or Extra Help, moving into or out of a nursing home, or your plan leaving Medicare. The rules and timing depend on the event.

Summary of Benefits (SoB)

A short, standardized overview of a plan's premium, deductibles, copays and coinsurance for the main services. This site links each plan's SoB from the carrier's own website.

What you pay

Premiums, cost sharing, limits, and programs that help with costs.

Assignment

A doctor or supplier's agreement to accept the Medicare-approved amount as full payment for covered services in Original Medicare. You pay only the deductible and coinsurance.

Balance billing (limiting charge)

When a provider bills you more than the approved amount. Medicare limits it: in Original Medicare, doctors who do not accept assignment can charge at most 15% above the Medicare-approved amount (the "limiting charge"); network providers cannot balance-bill Medicare Advantage members; and providers may not bill people in the QMB program for Medicare cost sharing at all.

Coinsurance

A percentage of the cost you pay for a service or prescription, such as 20%.

Copayment (copay)

A fixed dollar amount you pay for a service or prescription, such as $20 for a specialist visit.

Deductible

What you pay for covered services before the plan starts paying. A plan may have separate medical and drug deductibles, or none.

Extra Help (Low-Income Subsidy, LIS)

A federal program that helps people with limited income and resources pay Part D premiums, deductibles and copays. You qualify automatically if you have Medicaid, a Medicare Savings Program or SSI; otherwise apply through Social Security.

Maximum out-of-pocket (MOOP, out-of-pocket limit)

The most a Medicare Advantage plan member pays in a year for covered Part A and Part B services; after that the plan pays 100%. For 2026 CMS caps it at $9,250 for in-network care and $13,900 for in- and out-of-network care combined (PPOs); many plans set lower limits. Premiums and Part D drug costs do not count toward it. Original Medicare has no such limit.

See also: Out-of-pocket cap (Part D), PPO · Source

Medicare Savings Programs (MSP, SLMB, QI, QDWI)

State Medicaid programs that pay Medicare costs for people with limited income: QMB (premiums and cost sharing), SLMB and QI (Part B premium), and QDWI (Part A premium for certain working people with disabilities). Qualifying for one also qualifies you for Extra Help.

Medicare-approved amount

The amount Original Medicare sets as payment for a covered service. It is the base for your 20% Part B coinsurance.

Out-of-network

Care from a provider that has no contract with your plan. HMOs generally pay only for emergencies, urgently needed care and out-of-area dialysis; PPOs pay at higher cost sharing, and the costs count toward the combined out-of-pocket limit.

Part B premium reduction (Part B giveback)

A benefit some Medicare Advantage plans offer that lowers the Part B premium you pay, funded from the plan's rebate. The reduction is applied to your Social Security check or Part B bill. If a state already pays your Part B premium (for example through Medicaid), the reduction goes to the state, not you.

Premium

The monthly amount you pay for coverage. Medicare Advantage members pay the plan's premium, if any, plus the Part B premium.

Qualified Medicare Beneficiary (QMB)

A Medicare Savings Program that pays Part A and Part B premiums, deductibles, coinsurance and copays. Providers may not bill QMB members for Medicare cost sharing, including in Medicare Advantage.

Zero-premium plan ($0 premium plan)

A Medicare Advantage plan with no plan premium. You still pay the Part B premium, and the plan's deductibles, copays and coinsurance still apply — a $0 premium does not mean $0 cost.

Plan types and networks

The kinds of Medicare Advantage and drug plans, and how networks work.

C-SNP (Chronic Condition Special Needs Plan)

Chronic Condition Special Needs Plan, for people with a specific severe or disabling chronic condition such as diabetes, chronic heart failure or cardiovascular disorders. Enrollment requires verification of the condition.

Coordination-only D-SNP

A D-SNP that generally does not itself cover Medicaid benefits but must coordinate them with the state and notify it of certain hospital and nursing home admissions.

Cost plan

A Medicare Cost plan, available only in limited areas: it has a network, but if you go out of network Original Medicare pays as usual.

D-SNP (Dual Eligible Special Needs Plan)

Dual Eligible Special Needs Plan, for people with both Medicare and Medicaid. Every D-SNP must have a contract with the state Medicaid agency; how much Medicaid coverage the plan itself provides depends on its type (FIDE, HIDE or coordination-only).

Employer group plan (EGWP, employer group waiver plan)

A Medicare Advantage or Part D plan offered only to retirees of a particular employer or union. Enrollment goes through the employer; these plans are not sold to the public and are not listed on this site.

FIDE SNP (Fully Integrated Dual Eligible Special Needs Plan)

Fully Integrated Dual Eligible SNP: one organization covers both Medicare and Medicaid benefits, including long-term services and supports, under a capitated contract with the state, with members enrolled in the matching Medicaid plan. Because Medicaid covers most cost sharing, members often pay little or nothing.

HIDE SNP (Highly Integrated Dual Eligible Special Needs Plan)

Highly Integrated Dual Eligible SNP: a D-SNP whose organization (or an affiliate) also holds a capitated Medicaid contract covering long-term services and supports, behavioral health, or both — more integrated than a coordination-only D-SNP, less than a FIDE SNP.

HMO

Health Maintenance Organization: a Medicare Advantage plan that covers care from its network, except emergencies, urgently needed care and out-of-area dialysis. Many require you to choose a primary care provider and get referrals to specialists.

HMO-POS

An HMO with a point-of-service option that covers some services out of network, usually at higher cost sharing.

I-SNP (Institutional Special Needs Plan)

Institutional Special Needs Plan, for people who live in a nursing home or other institution, or who need that level of care and live at home.

MA-only

A Medicare Advantage plan without drug coverage. Members of Medicare Advantage HMOs and PPOs cannot add a standalone drug plan (only PFFS plans without drug coverage and MSA plans allow one), so MA-only plans suit people with other creditable drug coverage such as the VA.

MA-PD

A Medicare Advantage plan that includes Part D drug coverage.

Medical Savings Account plan (MSA)

A high-deductible Medicare Advantage plan paired with a savings account the plan deposits money into each year. MSA plans do not include drug coverage; the maximum deductible for 2026 is $18,100.

Network

The doctors, hospitals, pharmacies and other providers that contract with a plan. Networks can change during the year; check the plan's provider directory.

Network adequacy

CMS standards requiring each Medicare Advantage plan to have enough providers of each type within set travel times and distances, which differ for urban and rural counties.

PACE (Program of All-Inclusive Care for the Elderly)

Program of All-Inclusive Care for the Elderly: for people 55 and older who need a nursing-home level of care but can live safely in the community with support. A PACE organization provides all Medicare and Medicaid services through an interdisciplinary team, usually built around a day center.

PFFS (Private Fee-for-Service)

Private Fee-for-Service: a Medicare Advantage plan that sets its own payment terms; many PFFS plans have no network, and each provider decides visit by visit whether to accept the plan's terms. Rare today.

PPO (local PPO, regional PPO)

Preferred Provider Organization: a Medicare Advantage plan with a network that also covers out-of-network care at higher cost sharing, with two out-of-pocket limits (in-network and combined). Regional PPOs serve an entire CMS region of one or more states.

Prescription Drug Plan (PDP, standalone drug plan)

A standalone Part D plan used with Original Medicare (and with PFFS, MSA and Cost plans).

Primary care provider (PCP)

The doctor or practitioner who handles your routine care and, in many HMOs, coordinates referrals.

Provider directory

The plan's list of network providers. Call the provider as well — directories are not always current.

Referral

A primary care provider's approval to see a specialist or get a service; many HMOs require one.

Service area

The counties (or parts of counties) where a plan is offered. You must live in the service area to join; moving out gives you a Special Enrollment Period.

Special Needs Plan (SNP)

A Medicare Advantage plan limited to people with specific needs, with benefits, networks and care coordination designed for them. The three kinds are D-SNPs, C-SNPs and I-SNPs.

Covered services and extra benefits

What Medicare covers, how hospital status works, and the extras plans add.

Annual wellness visit

A yearly visit to create or update a personalized prevention plan. It is not a head-to-toe physical; tests or treatment during the visit may have cost sharing.

Dental, vision and hearing

Original Medicare does not cover routine dental care, eyeglasses or hearing aids. Many Medicare Advantage plans do, usually with annual dollar maximums, network rules and limits on how often services are covered.

Durable medical equipment (DME)

Equipment prescribed for use at home, such as walkers, wheelchairs, hospital beds and oxygen. Plans may require specific suppliers.

Emergency care

Care for a condition a reasonable person would believe could seriously endanger health without immediate attention. Medicare Advantage plans must cover it anywhere in the U.S., in or out of network, without prior authorization. Coverage outside the U.S. is an optional extra benefit.

Health risk assessment (HRA)

A questionnaire or visit a plan uses to learn a new member's health, functional and social needs. Special Needs Plans must complete one within 90 days of enrollment and at least yearly.

Home health care

Part-time skilled nursing, therapy and related services at home for people who are homebound and under a doctor's plan of care.

Hospice

Comfort care for people with a terminal illness and a life expectancy of six months or less who choose comfort care over curative treatment. If you are in a Medicare Advantage plan, Original Medicare pays for hospice; your plan can still cover unrelated care and extra benefits.

Inpatient

You are an inpatient from the day a doctor formally admits you to a hospital with an order. Spending the night in a hospital bed does not by itself make you an inpatient.

Long-term services and supports (LTSS, long-term care, custodial care)

Help with daily activities such as bathing, dressing and eating over a long period, at home or in a nursing home. Medicare does not cover long-term custodial care; Medicaid is the main public payer, and some integrated D-SNPs deliver it.

Observation status (MOON)

Hospital outpatient care while doctors decide whether to admit you, even if you stay overnight in a regular room. It is billed as outpatient care, and in Original Medicare observation days do not count toward the three-day stay needed for skilled nursing coverage. If you receive more than 24 hours of observation, the hospital must give you a Medicare Outpatient Observation Notice (MOON) no later than 36 hours after observation began.

Optional supplemental benefits

Extra benefits, often dental packages, that a plan lets you add for an additional monthly premium.

Over-the-counter allowance (OTC allowance, flex card)

A monthly or quarterly credit for health items such as pain relievers, first-aid supplies and vitamins. Allowances for healthy food or utilities are usually SSBCI benefits limited to eligible members.

Preventive services

Screenings, vaccines and counseling meant to prevent illness or catch it early, such as the annual wellness visit, mammograms and flu shots. Most cost nothing when you use a provider who accepts Medicare or is in your plan's network.

Skilled Nursing Facility (SNF)

Short-term skilled nursing or rehabilitation care. Original Medicare covers up to 100 days per benefit period after a qualifying inpatient hospital stay of at least three days: days 1–20 at $0 and days 21–100 at $217 a day in 2026. Medicare Advantage plans can waive the three-day stay and set their own cost sharing, and often require prior authorization.

Special Supplemental Benefits for the Chronically Ill (SSBCI)

Benefits that are not primarily health-related — for example food and produce, help with utilities or pest control — that plans may offer only to members with qualifying chronic conditions who meet the plan's criteria. Plans must state that not every member qualifies.

Supplemental benefits (extra benefits)

Benefits a Medicare Advantage plan adds beyond Original Medicare — dental, vision, hearing, fitness, over-the-counter allowances, transportation and more. They are funded mostly by the plan's rebate. Amounts, networks and limits vary widely; the Evidence of Coverage has the details.

Urgently needed care

Care for a sudden illness or injury that is not an emergency but needs prompt attention, such as when you are temporarily away from your plan's service area. Plans cover it out of network in those situations.

Prescription drugs (Part D)

Formularies, tiers, restrictions, the 2026 drug benefit and pharmacies.

Base beneficiary premium

A national figure CMS sets each year from plan bids ($38.99 for 2026). It is used to calculate the Part D late enrollment penalty.

See also: Late enrollment penalty · Source

Benchmark plan (Extra Help)

A standalone drug plan whose premium is at or below its region's low-income benchmark. People with full Extra Help pay no premium for a benchmark plan's basic coverage.

Biosimilar

A biologic drug the FDA has found highly similar to an existing brand biologic, with no clinically meaningful differences.

Drug tier (tier)

The cost-sharing level a plan assigns each drug. Lower tiers (usually generics) cost less; the highest is usually the specialty tier. Each plan sets its own tiers.

Formulary (drug list)

A plan's list of covered drugs, with each drug's tier and any restrictions. Plans must cover at least two drugs in most drug categories and substantially all drugs in six protected classes: antidepressants, antipsychotics, anticonvulsants, immunosuppressants for transplant, HIV drugs and cancer drugs. Formularies can change during the year.

Formulary exception (tiering exception)

A request, supported by your prescriber, for the plan to cover a drug that is not on its formulary, waive a restriction, or charge a lower tier's cost sharing. The plan must decide within 72 hours, or 24 hours if expedited.

Generic drug

A drug with the same active ingredient, strength and dosage form as a brand-name drug, approved by the FDA as equivalent and usually much cheaper.

Insulin cost cap

Part D plans may charge no more than $35 for a month's supply of each covered insulin, with no deductible.

Mail-order pharmacy

A pharmacy that ships prescriptions, often as 90-day supplies and sometimes at lower cost sharing.

Maximum fair price (MFP)

The price Medicare negotiated for a selected drug under the drug price negotiation program.

Medicare drug price negotiation

Under the Inflation Reduction Act, Medicare negotiates prices for selected high-cost drugs. The first ten negotiated prices took effect January 1, 2026; fifteen more drugs are scheduled for 2027. Your copay depends on your plan; the negotiated price is what the plan pays.

Medicare Prescription Payment Plan

Since 2025, an option to spread your out-of-pocket Part D costs into monthly bills across the calendar year instead of paying at the pharmacy. There is no interest or fee, but it does not lower what you pay in total; it helps most when costs are high early in the year.

Out-of-pocket cap (Part D) (TrOOP)

The most you pay for covered Part D drugs in a year: $2,100 in 2026. What you pay, and certain payments made on your behalf (such as Extra Help), count toward it; premiums and drugs not on the formulary do not.

Part D coverage phases (donut hole, coverage gap, catastrophic coverage)

Since 2025 there are three: the deductible (up to $615 in 2026), initial coverage (you pay the plan's copays or coinsurance), and catastrophic coverage, where you pay nothing for covered drugs after your out-of-pocket costs reach $2,100 in 2026. The old coverage gap ("donut hole") ended in 2025.

See also: Out-of-pocket cap (Part D) · Source

Part D vaccines

Adult vaccines recommended by the CDC's Advisory Committee on Immunization Practices, such as shingles and RSV, cost nothing under Part D.

Preferred pharmacy (standard pharmacy, preferred cost sharing)

A network pharmacy where the plan charges lower cost sharing than at its other ("standard") network pharmacies. Plan pages on this site list preferred and standard pharmacies near your ZIP from CMS's pharmacy network file.

Prior authorization (drugs) (PA)

The plan must approve the drug before it will cover it, usually based on information from your prescriber. Shown as PA on this site's drug pages.

Quantity limit (QL)

A cap on how much of a drug the plan covers in a period, such as 30 tablets per 30 days. Shown as QL.

Specialty tier

The tier for very high-cost drugs; plans usually charge coinsurance rather than a flat copay, and you generally cannot ask for a lower-tier price.

Step therapy (ST)

The plan requires you to try a lower-cost drug first before it covers the one prescribed. Shown as ST.

Transition fill

If you are new to a plan, or your drug is dropped or restricted at the start of a year, the plan must give you a temporary supply during the first 90 days so you have time to switch drugs or request an exception.

Approvals, denials and your rights

Prior authorization, coverage decisions, appeals and complaints.

Appeal

Asking for a coverage decision to be reviewed. There are five levels: the plan's own review (reconsideration, or redetermination for drugs); an Independent Review Entity; an Administrative Law Judge; the Medicare Appeals Council; and federal court. For Medicare Advantage medical care you have 65 days from the notice to file the first appeal, and a plan that upholds its denial must send the case to the independent reviewer automatically.

Coverage determination

A Part D plan's decision about whether it will cover a drug and how much you pay, including decisions on exceptions.

Denial (adverse determination)

A plan's decision not to cover or pay for all or part of a service, item or drug. The written notice must explain why and how to appeal.

Expedited appeal (fast appeal)

A fast decision — within 72 hours — when waiting could seriously jeopardize your life, health or ability to regain function. A doctor's request for one is generally granted.

Grievance

A complaint that is not about a coverage decision — for example about customer service, wait times, or the quality of care. Plans must have a process and respond; quality-of-care complaints can also go to the Quality Improvement Organization.

Independent Review Entity (IRE)

The independent organization under contract with Medicare that handles the second level of appeals for Medicare Advantage and Part D.

Medical necessity

The standard that a service is reasonable and necessary to diagnose or treat an illness or injury. Coverage decisions and prior authorization turn on it.

Notice of Medicare Non-Coverage (NOMNC)

A notice you must get at least two days before covered skilled nursing, home health, outpatient rehabilitation or hospice services end, explaining how to ask the Quality Improvement Organization for a fast appeal.

Organization determination

A Medicare Advantage plan's decision about whether it will cover or pay for a medical item or service.

Prior authorization (preauthorization, PA)

Approval a Medicare Advantage plan requires before it will cover certain services. Plans must follow Original Medicare's coverage rules when making these decisions. Since January 1, 2026, plans must decide within 72 hours for expedited requests and 7 calendar days for standard requests, and must give a specific reason when they deny.

Quality Improvement Organization (QIO, BFCC-QIO)

Medicare's independent reviewers for quality-of-care complaints and for fast appeals when a hospital discharges you or a plan ends skilled nursing, home health, rehabilitation or hospice services.

Reconsideration

The first-level appeal of a Medicare Advantage decision, decided by the plan: 30 days for standard pre-service requests, 60 for payment requests, 72 hours if expedited.

Quality and star ratings

How CMS measures and rates plans.

CAHPS

Consumer Assessment of Healthcare Providers and Systems: CMS's annual member-experience survey (getting care quickly, customer service, rating of the plan). Its measures count toward Star Ratings.

See also: Star ratings

Health Outcomes Survey (HOS)

A Medicare survey that follows members' physical and mental health over two years; several Star Ratings measures come from it.

See also: Star ratings

HEDIS

Healthcare Effectiveness Data and Information Set: standardized clinical quality measures, such as cancer screening and diabetes care, that plans report and that feed Star Ratings.

See also: Star ratings

Low-performing icon

A warning Medicare Plan Finder shows on plans whose Part C or Part D summary rating has been below 3 stars for three years in a row.

See also: Star ratings

Star ratings (Star Ratings)

CMS's 1-to-5-star quality ratings (in half-star steps) for Medicare Advantage and Part D contracts, built from clinical measures, member surveys, complaints and administrative data. They are published each October for the next plan year and apply to the whole contract, not a single plan.

For professionals: how plans are paid and run

Bids, benchmarks, risk adjustment and plan operations — the vocabulary behind the numbers on this site.

Accountable Care Organization (ACO, Medicare Shared Savings Program, MSSP)

A group of providers that takes responsibility for the cost and quality of care for a defined Original Medicare population, through the Medicare Shared Savings Program or Innovation Center models. Medicare Advantage plans use similar arrangements by contract with provider groups.

ACO REACH

An Innovation Center model (Realizing Equity, Access, and Community Health) in which ACOs take on higher financial risk for Original Medicare beneficiaries; its performance years run 2023 through 2026.

Actuarial equivalence

Medicare Advantage cost sharing for Part A and B services, taken as a whole, may not exceed what Original Medicare members pay on an actuarially equivalent basis; CMS also caps cost sharing for specific services.

Adverse selection

When a plan attracts members who are costlier than it priced for — for example because its benefits appeal most to people who expect heavy use.

Agent and broker (broker, agent)

Licensed individuals who sell Medicare Advantage and Part D plans. They must be appointed by each carrier and complete annual training and testing, and CMS limits how they may be paid and how they may market.

Anti-Kickback Statute (AKS)

A federal criminal law that prohibits knowingly offering, paying, soliciting or receiving anything of value to induce or reward referrals of business paid for by federal health programs. Regulatory safe harbors protect certain arrangements.

Benchmark

The most Medicare will pay per member for Part A and B benefits in a county. It is based on projected Original Medicare spending in the county, multiplied by 95%, 100%, 107.5% or 115% depending on the county's spending quartile (the highest-spending counties get 95%), raised for plans with quality bonuses, and capped at the pre-Affordable Care Act level.

See also: Bid, Rebate, Quality bonus payment, Ratebook · Source

Benefit design

Setting a plan's premium, deductibles, copays, out-of-pocket limit and extra benefits within CMS rules on actuarial equivalence, out-of-pocket limits and service-level cost sharing, and against the bid.

Bid

The pricing a Medicare Advantage organization submits to CMS for each plan by the first Monday in June for the next year: the revenue it needs to provide Part A and B benefits to an average-risk member, plus separate Part D and supplemental pricing, prepared in the Bid Pricing Tool and certified by an actuary.

See also: Benchmark, Rebate, Bid Pricing Tool · Source

Bid Pricing Tool (BPT)

CMS's required actuarial workbook for Medicare Advantage and Part D bids.

Capitation

A fixed payment per member per month regardless of how much care the member uses. CMS pays Medicare Advantage plans this way, and plans may pay provider groups the same way.

Chronic Care Management (CCM)

Medicare billing codes for non-face-to-face care coordination for patients with two or more chronic conditions expected to last at least 12 months. Requires patient consent; Part B cost sharing applies in Original Medicare.

Coding intensity adjustment (MA coding pattern difference adjustment)

A statutory across-the-board reduction to Medicare Advantage risk scores (5.9% for 2026) reflecting that MA plans record diagnoses more completely than Original Medicare.

Coverage determinations (NCD and LCD) (NCD, LCD)

National Coverage Determinations (set by CMS) and Local Coverage Determinations (set by Medicare Administrative Contractors) define when Original Medicare covers an item or service. Medicare Advantage plans must follow them.

Death spiral

A cycle in which rising premiums drive healthier members away, raising average costs and premiums again until the plan becomes unviable.

Encounter data

Claim-like records Medicare Advantage plans submit to CMS for every service a member receives; used for risk adjustment and oversight.

Fee-for-service (FFS)

Paying separately for each service. In Medicare shorthand, "FFS" also means Original Medicare itself.

FMAP (Federal Medical Assistance Percentage)

Federal Medical Assistance Percentage: the federal share of a state's Medicaid costs, set by formula from state per capita income, by law no lower than 50% and no higher than 83%.

Fraud, waste and abuse (FWA)

The umbrella term for improper payments and conduct in federal health programs; Medicare Advantage and Part D sponsors must run compliance programs that include FWA training and monitoring.

Hierarchical Condition Category (HCC)

A group of related diagnosis codes in the CMS-HCC risk model; within a hierarchy only the most severe related condition counts.

Medical director

A physician employed by a plan who oversees clinical policy, utilization management and quality. Medicare Advantage denials based on medical necessity must be reviewed by a physician or other appropriate professional.

Medical loss ratio (MLR)

The share of revenue a plan spends on medical claims, drug costs and quality improvement. Medicare Advantage and Part D plans must reach at least 85% or pay the shortfall back to CMS, with enrollment and contract sanctions for repeated misses. (Commercial individual and small-group plans: 80%; large group: 85%.)

Source

Medical trend

The year-over-year change in medical cost per member, driven by prices, use of services, intensity and mix. Plans project it when pricing bids.

Medicare Administrative Contractor (MAC)

A private company that processes Original Medicare Part A and B claims for a region and writes local coverage determinations.

Member months

The number of members multiplied by the months each was enrolled; the denominator for per-member-per-month figures.

Model of Care

The written plan every Special Needs Plan must have approved, describing its target population, care coordination, provider network and how it measures results.

Network design

Choosing which providers to contract with and on what terms — broad or narrow, tiered, or built around particular provider groups — within CMS network adequacy standards.

Normalization factor

An annual adjustment that keeps average risk scores at 1.0 in the payment year as coding and population change.

Part D manufacturer discount program

Since 2025, drug makers pay discounts on brand drugs and biologics in Part D: 10% in the initial coverage phase and 20% in catastrophic coverage (phased in for some smaller manufacturers).

Per member per month (PMPM)

The standard unit for plan revenue and cost: a dollar amount divided by member months.

Population health

Managing the health of a whole membership: identifying risk, closing care gaps and targeting care management to those who will benefit most.

Quality bonus payment (QBP)

For contracts rated 4 stars or higher, the county benchmark's applicable percentage rises by 5 percentage points (10 in certain qualifying counties), subject to the benchmark cap.

See also: Star ratings, Benchmark · Source

RADV (Risk Adjustment Data Validation)

Risk Adjustment Data Validation: CMS audits of medical records to confirm diagnoses that raised payments, with recovery of payments for unsupported ones. How audit samples are extrapolated to whole contracts has been the subject of rulemaking and litigation.

Rate Announcement (Advance Notice)

CMS's annual notice, issued by the first Monday in April, of Medicare Advantage and Part D payment rates and methods for the next year, finalizing proposals in the Advance Notice published earlier that winter.

Ratebook

CMS's county-by-county table of benchmark rates, published with the annual Rate Announcement.

Rebate

If a plan bids below the benchmark, it receives a share of the difference — 70% for contracts rated 4.5 stars or higher, 65% for 3.5 to 4 stars, 50% below 3.5 — and must return it to members as extra benefits, lower cost sharing, or lower Part B or Part D premiums. If it bids above, members pay the difference as a premium.

Remote Patient Monitoring (RPM)

Medicare billing codes for collecting and reviewing physiologic data, such as blood pressure or glucose, transmitted from a device the patient uses at home.

Risk adjustment

CMS adjusts each member's monthly payment for expected cost, using demographics and the diagnoses reported from the prior year, so plans are paid more for sicker members and less for healthier ones.

Risk score (RAF, risk adjustment factor)

A member's expected cost relative to the average Medicare beneficiary (1.0), from the risk adjustment model; CMS multiplies the plan's base rate by it.

Third-Party Marketing Organization (TPMO)

An organization or individual paid to perform lead generation, marketing, sales or enrollment for Medicare Advantage or Part D plans; CMS requires specific disclaimers and plan oversight. MedicareBenefits.care is not one — it sells no plans and takes no payment from plans.

Utilization management (medical management, UM)

Plan processes that review whether services are necessary and appropriate — prior authorization, concurrent review of inpatient stays, and retrospective review. Medicare Advantage plans must have a utilization management committee that reviews these policies each year.

V28 (2024 CMS-HCC model)

The 2024 CMS-HCC risk adjustment model (version 28), phased in from 2024; 2026 is the first year it is used in full for Medicare Advantage (other than PACE). It removed or reconfigured many diagnosis codes that had carried payment.

Value-based care

Payment arrangements that tie provider pay to quality and total cost rather than volume — shared savings, shared risk, or full capitation.

Missing a term or see something out of date? info@medicarebenefits.care. Free, unbiased help with your own situation: 1-800-MEDICARE and your State Health Insurance Assistance Program.