Pharmacy Insurance and Claims Basics
Updated October 27, 2026
Order Entry and Processing includes billing prescriptions to insurance and handling rejected claims. Here are the terms and situations pharmacy technicians deal with most, followed by free practice questions.
Key terms
| Term | Meaning |
|---|---|
| Copay | A fixed amount the patient pays for a prescription |
| Coinsurance | A percentage of the cost the patient pays |
| Deductible | The amount the patient pays before insurance starts to pay |
| Formulary | The list of drugs a plan covers |
| PBM | Pharmacy benefit manager: processes prescription claims for the plan |
| Prior authorization (PA) | The plan requires approval from the prescriber before it will cover a drug |
Common claim rejections
| Rejection | What it usually means |
|---|---|
| Refill too soon | The patient should still have medication left from the last fill |
| Prior authorization required | The prescriber must get the plan’s approval first |
| Not on formulary (non-covered drug) | The plan doesn’t cover this drug; an alternative or an exception may be needed |
| Patient not covered or eligible | The insurance information is wrong or out of date |
| Quantity limit exceeded | The plan limits how much can be dispensed at once |
DAW codes
“Dispense as written” codes tell the plan whether a generic was substituted, and why not.
| Code | Meaning |
|---|---|
| DAW 0 | No product selection indicated; substitution allowed |
| DAW 1 | Substitution not allowed by the prescriber |
| DAW 2 | Substitution allowed, but the patient requested the brand |
Free insurance and claims practice questions
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A claim rejects with "refill too soon." What does this usually mean?Answer: A"Refill too soon" means the plan's records show the patient should still have medication from the last fill, so it won't pay for another fill yet.
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A drug requires the prescriber to get the plan's approval before it's covered. This is called:Answer: BPrior authorization requires the prescriber to justify the drug to the plan and get approval before the plan covers it.
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The prescriber writes "brand medically necessary." Which DAW code applies?Answer: DDAW 1 means the prescriber doesn't allow substitution. DAW 2 is used when the patient requests the brand.
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A patient's plan requires them to pay $10 for each prescription. This is a:Answer: CA copay is a fixed dollar amount per prescription. Coinsurance is a percentage of the cost.
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What is a formulary?Answer: AA formulary is the list of drugs a prescription plan covers, often in tiers with different copays.
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The patient asks for the brand-name drug even though the prescriber allows a generic. Which DAW code applies?Answer: CDAW 2 means substitution was allowed by the prescriber, but the patient requested the brand.
Pass the PTCB exam on your first try
- All 194 questions across medications, federal requirements, patient safety and order entry
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