Pharmacy Benefits Manager Exam 3 Lecture From 10/23/20 Flashcards
Per claim fees paid by clients to PBMs for services like claims processing. Also used
to denote the fees paid by manufacturers to PBMs for administering formulary rebate contracts
Administrative Fees
A published suggested wholesale price for a drug, based on the
average cost of the drug to the pharmacy. AWP is often used by pharmacies to price prescription drugs
Average Wholesale Price (AWP)
The administration of drug benefit designs. It includes setting up and
maintaining the drug coverage and exclusions, setting limits on drug coverages, and defining member
cost sharing requirements
Benefit Administration
A very rare contract among PBMs. It is used when a PBM agrees to assume
financial risk for a client’s drug spending. Capitation is a set dollar amount, established by analysis of
pharmacy claims data, used to cover the prescription costs for a member, usually set at a per member
per month rate (PMPM)
Capitated Contract
The online processing of a prescription drug claim. Most claims are submitted
electronically at the point of service (the retail or mail pharmacy)
Claims Adjudication
A MCO, employer, or insurer that contracts with a PBM to administer their drug benefits and
cost control programs.
Client
A fixed dollar amount paid for every prescription
Co-pay
The fixed percentage members pay of the cost of each prescription
Co-insurance
A specific annual dollar amount that a member must pay out-of-pocket for prescription
drugs before the drug benefit program begins
Deductible
Programs developed by PBMs to identify and categorize patients
(especially those with chronic conditions) and to direct these patients towards a specific treatment
protocol
Disease Management Programs
The most common pricing arrangement PBMs have with their clients. Under
the contract, PBMs are paid for the administrative services they provide, and they do not assume the
risk for the cost of the drugs dispensed
Fee-for-Services Contract
An approved list of branded (and generic) drugs developed by the PBM, or the client
Formulary
A list of recommended drugs. Under this structure all drugs are reimbursed
irrespective of formulary status. However, a client’s plan design may exclude certain drugs (OTC,
cosmetic, and lifestyle drugs)
Open Formulary
An incented formulary applies differential co-pays or other financial
incentives to influence patients to use, pharmacists to dispense, and physicians to write
formulary products
Incented Formulary
A closed formulary limits reimbursement to those drugs listed on the
formulary. Non-formulary drugs are reimbursed if the drugs are determined to be medically
necessary, and the member has received prior authorization
Closed Formulary
The cost to the pharmacy for dispensed drugs (AWP – discount %)
Ingredient Cost
Mail pharmacies dispense a 90-day supply of drugs through the mail; typically used for
chronic conditions. Most pharmacy benefit plans offer a mail pharmacy service as a way to promote cost
savings and improve access
Mail Pharmacy
A broad term encompassing a variety of healthcare delivery
systems utilizing group practice and providing an alternative to fee-for-service health plans. The primary
goal of a MCO is to create incentives to use a prepaid and organized healthcare system that serves a
defined population
Managed Care Organization (MCOs)
A company that manufacturers branded and/or generic pharmaceuticals
Manufacturer
The price basis for generic drugs which is typically 50–60% below
AWP. PBMs can either set the MAC prices themselves, or use the MAC prices set by HCFA for Medicaid
beneficiaries
Maximum Allowable Cost (MAC)
Per member per month; in an employer plan includes employees and their covered
dependents
PMPM
A company providing administrative and clinical
services through a complex system that includes retail pharmacies, manufacturers, clients, physicians,
and members. These companies administer drug benefits and drug cost control programs for their
clients, and secure substantial discounts from retail pharmacies and drug manufacturers. PBMs establish
and maintain large pharmacy networks with chain and independent pharmacies. Also, PBMs contract
with manufacturers of branded products to receive rebates and administrative fees
Pharmacy Benefit Manager/Management (PBM)
Specifies which pharmacies are approved for members, and includes retail, mail,
and in some cases specialty pharmacies
Pharmacy Network
A prior approval process that allows prescription drugs to be dispensed to
members only when specific conditions have been met
Prior Authorization
