PHAR180 Pharmacy Billing and Reimbursement Practice Exam Study Guide
Updated 2026 | Verified Questions and Answers with Detailed Rationales |
Insurance Processing and Claims Submission, Third-Party Billing, Medicare Part D
and Medicaid Coverage, Prescription Drug Plans, Prior Authorization Procedures,
Reimbursement Models, Coding Systems (NDC, CPT, ICD-10), Pharmacy Law and
Compliance, Fraud Waste and Abuse Prevention, Pharmacy Technician
Certification Prep | Complete Exam Prep Resource for Pharmacy Technician
Certification Success
Question 1: Which of the following best describes the primary purpose of a
Pharmacy Benefit Manager (PBM) in the pharmacy billing process?
A. To manufacture generic medications at reduced costs
B. To process pharmacy claims and negotiate drug prices on behalf of insurance plans
C. To provide direct patient counseling on medication adherence
D. To regulate state pharmacy licensing requirements
CORRECT ANSWER: B. To process pharmacy claims and negotiate drug prices on
behalf of insurance plans
Rationale: PBMs act as intermediaries between pharmacies, insurance plans, and drug
manufacturers. Their core functions include claims adjudication, formulary
management, negotiating rebates and discounts with manufacturers, and establishing
pharmacy networks. This reduces overall prescription drug costs for payers while
facilitating reimbursement to pharmacies.
Question 2: When submitting an electronic pharmacy claim via the NCPDP
Telecom Standard, which identifier is used to route the claim to the correct payer
or PBM?
A. National Provider Identifier (NPI)
B. Bank Identification Number (BIN)
C. Drug Enforcement Administration (DEA) number
D. National Drug Code (NDC)
CORRECT ANSWER: B. Bank Identification Number (BIN)
Rationale: The BIN is a six-digit number used in electronic pharmacy transactions to
identify the processor or PBM responsible for adjudicating the claim. It ensures the
claim is routed correctly through the telecommunications network. The NPI identifies
providers, DEA numbers authorize controlled substance prescribing, and NDCs identify
specific drug products.
Question 3: A patient presents a prescription for a brand-name drug that is not on
their insurance plan's formulary. Which billing action is MOST appropriate for the
pharmacy technician to initiate?
A. Automatically substitute the generic equivalent without consultation
B. Submit the claim with a generic substitution code to force approval
,C. Contact the prescriber to discuss formulary alternatives or initiate prior authorization
D. Bill the patient the full cash price without exploring insurance options
CORRECT ANSWER: C. Contact the prescriber to discuss formulary alternatives or
initiate prior authorization
Rationale: When a prescribed medication is non-formulary, the pharmacy technician
should collaborate with the prescriber to either select a covered alternative or begin the
prior authorization process. Automatic substitution without prescriber approval may
violate state laws or plan rules, and billing the patient cash without exploring coverage
options fails to advocate for the patient's benefits.
Question 4: In pharmacy reimbursement, what does the acronym MAC stand for?
A. Maximum Allowable Cost
B. Medication Authorization Code
C. Managed Access Contract
D. Medical Assistance Coverage
CORRECT ANSWER: A. Maximum Allowable Cost
Rationale: MAC refers to Maximum Allowable Cost, which is the highest amount a payer
will reimburse for a multi-source (generic) drug. MAC lists are used by PBMs and
Medicaid programs to control costs by setting reimbursement caps based on available
generic pricing, encouraging use of cost-effective alternatives.
Question 5: Which Medicare part provides outpatient prescription drug coverage
for beneficiaries?
A. Medicare Part A
B. Medicare Part B
C. Medicare Part C
D. Medicare Part D
CORRECT ANSWER: D. Medicare Part D
Rationale: Medicare Part D is the voluntary outpatient prescription drug benefit program
available to all Medicare beneficiaries. It is offered through private plans approved by
CMS. Part A covers hospital insurance, Part B covers medical services including some
injectable drugs, and Part C (Medicare Advantage) bundles Parts A, B, and often D.
Question 6: What is the primary function of a Prior Authorization (PA) in pharmacy
billing?
A. To guarantee immediate payment to the pharmacy upon claim submission
B. To require prescriber justification before a payer approves coverage for specific
medications
C. To allow patients to bypass formulary restrictions without documentation
D. To automatically approve all brand-name drug claims
,CORRECT ANSWER: B. To require prescriber justification before a payer approves
coverage for specific medications
Rationale: Prior Authorization is a utilization management tool used by payers to ensure
appropriate, cost-effective medication use. It requires the prescriber to submit clinical
documentation demonstrating medical necessity before the payer will cover certain
high-cost, non-formulary, or potentially misused medications. This helps control costs
and promote evidence-based prescribing.
Question 7: When a pharmacy claim is rejected with the code "79: Prescription not
covered by plan," what is the MOST likely reason?
A. The patient's insurance has expired or is inactive
B. The drug is excluded from the plan's formulary or benefit structure
C. The pharmacy is not in the plan's network
D. The prescriber's DEA number is invalid
CORRECT ANSWER: B. The drug is excluded from the plan's formulary or benefit
structure
Rationale: Rejection code 79 specifically indicates that the prescribed medication is not
a covered benefit under the patient's current plan. This could be due to formulary
exclusion, benefit limitations (e.g., cosmetic drugs, weight loss medications), or plan
design. The technician should verify coverage details and explore alternatives or appeal
options.
Question 8: Which of the following best defines "coinsurance" in pharmacy benefit
plans?
A. A fixed dollar amount the patient pays per prescription
B. The percentage of the drug cost the patient pays after meeting the deductible
C. The total annual amount the patient must pay before insurance begins covering costs
D. A fee charged by the pharmacy for processing insurance claims
CORRECT ANSWER: B. The percentage of the drug cost the patient pays after
meeting the deductible
Rationale: Coinsurance is a cost-sharing mechanism where the patient pays a specified
percentage (e.g., 20%) of the medication cost, while the insurer pays the remainder.
This differs from a copay (fixed dollar amount) and deductible (amount paid before
coverage starts). Coinsurance typically applies after the deductible is met and varies by
plan tier.
Question 9: What is the purpose of Coordination of Benefits (COB) in pharmacy
billing?
A. To allow patients to use multiple insurance cards simultaneously for the same
prescription
B. To determine the primary and secondary payer when a patient has multiple insurance
, coverages
C. To combine all patient copays into a single monthly bill
D. To coordinate drug delivery schedules between multiple pharmacies
CORRECT ANSWER: B. To determine the primary and secondary payer when a
patient has multiple insurance coverages
Rationale: Coordination of Benefits is a standard process used when a patient has
coverage under more than one insurance plan (e.g., through spouse and employer).
COB rules establish which plan pays first (primary) and which pays second (secondary)
to prevent overpayment and ensure claims are processed correctly according to
contractual agreements.
Question 10: Which NCPDP field is used to indicate that a generic substitution was
performed at the pharmacy level?
A. Submission Clarification Code
B. Product/Service ID
C. Dispense as Written (DAW) Code
D. Prescription Origin Code
CORRECT ANSWER: C. Dispense as Written (DAW) Code
Rationale: The DAW code (also called Product Selection Code) indicates whether the
prescriber authorized generic substitution. Code 0 means substitution permitted, 1
means dispense as written (no substitution), and other codes indicate specific
scenarios. This field is critical for accurate billing, reimbursement, and compliance with
state substitution laws.
Question 11: A patient's insurance plan has a $250 annual deductible for
prescriptions. The patient has already paid $180 toward this deductible this year. If
they fill a prescription with a negotiated price of $100, how much will the patient
likely pay out-of-pocket for this claim?
A. $0, because the deductible is met
B. $70, to complete the deductible, then insurance covers the remaining $30
C. $100, because the full amount applies to the deductible
D. $25, based on a typical 25% coinsurance rate
CORRECT ANSWER: B. $70, to complete the deductible, then insurance covers the
remaining $30
Rationale: Since the patient has $70 remaining to meet their $250 deductible ($250 -
$180 = $70), they would pay the first $70 of the $100 prescription cost. Once the
deductible is satisfied, the plan's cost-sharing (copay or coinsurance) would apply to
the remaining $30. The exact patient responsibility depends on the plan's post-
deductible structure.
Updated 2026 | Verified Questions and Answers with Detailed Rationales |
Insurance Processing and Claims Submission, Third-Party Billing, Medicare Part D
and Medicaid Coverage, Prescription Drug Plans, Prior Authorization Procedures,
Reimbursement Models, Coding Systems (NDC, CPT, ICD-10), Pharmacy Law and
Compliance, Fraud Waste and Abuse Prevention, Pharmacy Technician
Certification Prep | Complete Exam Prep Resource for Pharmacy Technician
Certification Success
Question 1: Which of the following best describes the primary purpose of a
Pharmacy Benefit Manager (PBM) in the pharmacy billing process?
A. To manufacture generic medications at reduced costs
B. To process pharmacy claims and negotiate drug prices on behalf of insurance plans
C. To provide direct patient counseling on medication adherence
D. To regulate state pharmacy licensing requirements
CORRECT ANSWER: B. To process pharmacy claims and negotiate drug prices on
behalf of insurance plans
Rationale: PBMs act as intermediaries between pharmacies, insurance plans, and drug
manufacturers. Their core functions include claims adjudication, formulary
management, negotiating rebates and discounts with manufacturers, and establishing
pharmacy networks. This reduces overall prescription drug costs for payers while
facilitating reimbursement to pharmacies.
Question 2: When submitting an electronic pharmacy claim via the NCPDP
Telecom Standard, which identifier is used to route the claim to the correct payer
or PBM?
A. National Provider Identifier (NPI)
B. Bank Identification Number (BIN)
C. Drug Enforcement Administration (DEA) number
D. National Drug Code (NDC)
CORRECT ANSWER: B. Bank Identification Number (BIN)
Rationale: The BIN is a six-digit number used in electronic pharmacy transactions to
identify the processor or PBM responsible for adjudicating the claim. It ensures the
claim is routed correctly through the telecommunications network. The NPI identifies
providers, DEA numbers authorize controlled substance prescribing, and NDCs identify
specific drug products.
Question 3: A patient presents a prescription for a brand-name drug that is not on
their insurance plan's formulary. Which billing action is MOST appropriate for the
pharmacy technician to initiate?
A. Automatically substitute the generic equivalent without consultation
B. Submit the claim with a generic substitution code to force approval
,C. Contact the prescriber to discuss formulary alternatives or initiate prior authorization
D. Bill the patient the full cash price without exploring insurance options
CORRECT ANSWER: C. Contact the prescriber to discuss formulary alternatives or
initiate prior authorization
Rationale: When a prescribed medication is non-formulary, the pharmacy technician
should collaborate with the prescriber to either select a covered alternative or begin the
prior authorization process. Automatic substitution without prescriber approval may
violate state laws or plan rules, and billing the patient cash without exploring coverage
options fails to advocate for the patient's benefits.
Question 4: In pharmacy reimbursement, what does the acronym MAC stand for?
A. Maximum Allowable Cost
B. Medication Authorization Code
C. Managed Access Contract
D. Medical Assistance Coverage
CORRECT ANSWER: A. Maximum Allowable Cost
Rationale: MAC refers to Maximum Allowable Cost, which is the highest amount a payer
will reimburse for a multi-source (generic) drug. MAC lists are used by PBMs and
Medicaid programs to control costs by setting reimbursement caps based on available
generic pricing, encouraging use of cost-effective alternatives.
Question 5: Which Medicare part provides outpatient prescription drug coverage
for beneficiaries?
A. Medicare Part A
B. Medicare Part B
C. Medicare Part C
D. Medicare Part D
CORRECT ANSWER: D. Medicare Part D
Rationale: Medicare Part D is the voluntary outpatient prescription drug benefit program
available to all Medicare beneficiaries. It is offered through private plans approved by
CMS. Part A covers hospital insurance, Part B covers medical services including some
injectable drugs, and Part C (Medicare Advantage) bundles Parts A, B, and often D.
Question 6: What is the primary function of a Prior Authorization (PA) in pharmacy
billing?
A. To guarantee immediate payment to the pharmacy upon claim submission
B. To require prescriber justification before a payer approves coverage for specific
medications
C. To allow patients to bypass formulary restrictions without documentation
D. To automatically approve all brand-name drug claims
,CORRECT ANSWER: B. To require prescriber justification before a payer approves
coverage for specific medications
Rationale: Prior Authorization is a utilization management tool used by payers to ensure
appropriate, cost-effective medication use. It requires the prescriber to submit clinical
documentation demonstrating medical necessity before the payer will cover certain
high-cost, non-formulary, or potentially misused medications. This helps control costs
and promote evidence-based prescribing.
Question 7: When a pharmacy claim is rejected with the code "79: Prescription not
covered by plan," what is the MOST likely reason?
A. The patient's insurance has expired or is inactive
B. The drug is excluded from the plan's formulary or benefit structure
C. The pharmacy is not in the plan's network
D. The prescriber's DEA number is invalid
CORRECT ANSWER: B. The drug is excluded from the plan's formulary or benefit
structure
Rationale: Rejection code 79 specifically indicates that the prescribed medication is not
a covered benefit under the patient's current plan. This could be due to formulary
exclusion, benefit limitations (e.g., cosmetic drugs, weight loss medications), or plan
design. The technician should verify coverage details and explore alternatives or appeal
options.
Question 8: Which of the following best defines "coinsurance" in pharmacy benefit
plans?
A. A fixed dollar amount the patient pays per prescription
B. The percentage of the drug cost the patient pays after meeting the deductible
C. The total annual amount the patient must pay before insurance begins covering costs
D. A fee charged by the pharmacy for processing insurance claims
CORRECT ANSWER: B. The percentage of the drug cost the patient pays after
meeting the deductible
Rationale: Coinsurance is a cost-sharing mechanism where the patient pays a specified
percentage (e.g., 20%) of the medication cost, while the insurer pays the remainder.
This differs from a copay (fixed dollar amount) and deductible (amount paid before
coverage starts). Coinsurance typically applies after the deductible is met and varies by
plan tier.
Question 9: What is the purpose of Coordination of Benefits (COB) in pharmacy
billing?
A. To allow patients to use multiple insurance cards simultaneously for the same
prescription
B. To determine the primary and secondary payer when a patient has multiple insurance
, coverages
C. To combine all patient copays into a single monthly bill
D. To coordinate drug delivery schedules between multiple pharmacies
CORRECT ANSWER: B. To determine the primary and secondary payer when a
patient has multiple insurance coverages
Rationale: Coordination of Benefits is a standard process used when a patient has
coverage under more than one insurance plan (e.g., through spouse and employer).
COB rules establish which plan pays first (primary) and which pays second (secondary)
to prevent overpayment and ensure claims are processed correctly according to
contractual agreements.
Question 10: Which NCPDP field is used to indicate that a generic substitution was
performed at the pharmacy level?
A. Submission Clarification Code
B. Product/Service ID
C. Dispense as Written (DAW) Code
D. Prescription Origin Code
CORRECT ANSWER: C. Dispense as Written (DAW) Code
Rationale: The DAW code (also called Product Selection Code) indicates whether the
prescriber authorized generic substitution. Code 0 means substitution permitted, 1
means dispense as written (no substitution), and other codes indicate specific
scenarios. This field is critical for accurate billing, reimbursement, and compliance with
state substitution laws.
Question 11: A patient's insurance plan has a $250 annual deductible for
prescriptions. The patient has already paid $180 toward this deductible this year. If
they fill a prescription with a negotiated price of $100, how much will the patient
likely pay out-of-pocket for this claim?
A. $0, because the deductible is met
B. $70, to complete the deductible, then insurance covers the remaining $30
C. $100, because the full amount applies to the deductible
D. $25, based on a typical 25% coinsurance rate
CORRECT ANSWER: B. $70, to complete the deductible, then insurance covers the
remaining $30
Rationale: Since the patient has $70 remaining to meet their $250 deductible ($250 -
$180 = $70), they would pay the first $70 of the $100 prescription cost. Once the
deductible is satisfied, the plan's cost-sharing (copay or coinsurance) would apply to
the remaining $30. The exact patient responsibility depends on the plan's post-
deductible structure.
