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Glossary of Terms
This comprehensive glossary is designed to help you understand your PBM Plus prescription benefit program.
Additional Copay
Additional Copay is charged once a member uses his/her maximum allowable benefit. The member is responsible for any fees that exceed the amount allowed by his/her
health plan. Additional copays are sometimes referred to as "out-of-pocket" expenses.
Adjudication
Processing a pharmacy claim.
AWP
The average wholesale price (AWP) is the cost of pharmaceuticals determined by the industry's Blue Book unit price.
Benefits Package
The combination of various drugs and therapies, which a medical provider covers for its members. Examples may include the substitution of higher cost brand-name drugs
for equally effective generic equivalents.
Brand-Name Drug
A drug, which is being marketed under a trademark name.
Calendar Year
The period covering January 1 through December 31 of any given year. This term is usually used to calculate deductibles paid by a member.
Claim
An itemized statement from the pharmacy that includes the drug provided and its cost. PBM Plus processes all drug claims for its clients and members.
COB Coordination of benefits
(COB) refers to instances where a member is entitled to benefits from more than one plan or carrier. The most common COB codes used to adjudicate claims are:
- primary coveragesecondary coverage
- double coverage
Copay
Is the "out of pocket cost" paid by the member that helps defer the cost of prescription drugs. If a copayment applies to a member, he/she will pay a percentage
of the drug cost to the pharmacist. The copay amount is determined by the member's health plan and is administered at the benefit level.
DAW
A dispense as written (DAW) designation limits the pharmacist to dispensing a prescription according to a specific provision authorized by the member's health plan.
Deductible
A clause in a prescription benefit for which the member is responsible. This means that the member must pay the deductible amount set up by the health plan prior to
when his/her true copay benefit starts.
DMR
A direct member reimbursement (DMR) is processed when a member pays out-of-pocket for a prescription and submits the receipt and claim form for reimbursement.
Drug Formulary
A list of preferred drugs or products that are covered by the plan. Formularies can be:
- open - there is little or no limitations to the drugs covered
- closed - drugs are limited to what is contained in the formulary
- restricted - a formulary which allows for some flexibility in drug choice.
DUR
Drug utilization review (DUR) is a process, which evaluates particular drugs for use by a specific member. This process is conducted using specific edits-designed by the health
plan and our Pharmacy and Therapeutics (P&T) committee-which are programmed into PBM Plus’s claims processing computer. Examples of DUR edits include: pregnancy, therapeutic
duplication, and age precautions, dose range, drug interaction precautions, and gender compliance.
Edit
An edit is used to alter the way a certain drug product is dispensed or processed. Edits include: point-of-sale restrictions (or DUR), benefit design edits (pricing and copay structure
to be applied), restriction edits (not in formulary), or carrier edits (does claim fall into the required time and date parameters?).
Eligibility
Eligibility defines the specific requirements that members of a plan must satisfy in order to be insured. Eligibility is also used to determine the drugs and therapies that are covered
by the plan. For example, a plan may cover certain brand-name blood pressure medications, while others may require that special criteria-such as a prior authorization-are met in order to be eligible.
EOB
An explanation of benefits (EOB) is a report generated by PBM Plus that details exactly how a check amount is generated. Checks issued to pharmacies or members are accompanied by EOB reports.
FDA
The U.S. Food and Drug Administration (FDA) is the public health agency responsible for protecting American consumers by enforcing the federal food, drug, and cosmetic act, as well as several other related health laws.
Fill Fee
A fill fee is an amount that is determined by the plan that is paid to the pharmacy in addition to the calculated price of the drug. Also known as dispensing fee.
Generic Drug
A drug that is manufactured by a company that is not the innovator. Generic drugs are chemically equivalent, and have been approved by the FDA. Most generic drug names reflect the chemical name of the drug.
These drugs are less expensive-yet has the same therapeutic value-so their use is widespread.
Group
A group is a subdivision within a main organization that separates members who have different eligibility benefits. Each group of members is divided by a unique code, and may be further subdivided into divisions.
For example, certain members of a company may elect to have more coverage at a higher premium. These individuals would be "grouped" apart from the rest of the company's employees.
HMO
A health maintenance organization (HMO) is a corporation that provides comprehensive maintenance and acute medical care to patients. HMOs usually prescribe their own eligibility limits to their members that coincide
with the level of insurance held by the patient. HMOs provide preventive medicine, while employing primary care physicians as referrals for more substantial treatment.
MAB
The maximum allowable (dollar) benefit (MAB) is an amount set by the health plan limiting the prescription benefits available to a member or family. Once the maximum is met, members are usually required to pay cash for future prescriptions.
MAC
A maximum allowable cost (MAC) is applied to a multi-source drug to encourage generic utilization and offer an alternative to AWP pricing, resulting in cost savings for the health plan.
Mail Order Pharmacy
Mail order pharmacies are used by many plans as a cost saving and convenient alternative to retail pharmacies. Members typically order their drugs via fax, telephone, email, or the Internet. Prescriptions can be paid with
a personal check, Visa, or MasterCard. Once a prescription order is transmitted to the mail order pharmacy, members usually receive their prescription within 10 to 14 days.
Maintenance Drug
A drug is considered a maintenance medication when it is being taken to treat chronic condition for an extended amount of time.
Non-Preferred
A non-preferred drug is an alternative that may be prescribed instead of a rebate-producing drug. Usually, non-preferred drugs are associated with higher copay amounts. These drugs are often restricted-requiring a
prior authorization (PA)-or excluded from the formulary completely.
Out of Pocket
Out-of-pocket (OOP) refers to a member's cash expenses.
OTC
An over-the-counter (OTC) drug is a drug or product that is sold directly to the general public and does not need a prescription. An example of an OTC drug is aspirin.
PA
Prior authorizations (PAs) are necessary to override claims that would otherwise be denied. Guidelines are established by the health plan, which determine the criteria that must be met before a "prior authorization
required" claim will be processed.
POS
The point-of-sale (POS) is the actual pharmacy or drugstore where the prescription is being filled or delivered to the member.
POS edits
Edits set up by the plan that are processed when the claim is submitted electronically by a pharmacy. Some point-of-sale (POS) edits give pharmacists dispensing restrictions or instructions, as well as alternative
therapeutic substituting messages such as "Use generic" or "Substitute with_____."
PPO
A Plan Physician Only (PPO) designation limits members to a specific panel of physicians.
Preferred
A "preferred" drug status is usually driven by rebates. The health plan-in an attempt to encourage the use of a particular manufacturer's product-may lower a copay applied to a member or raise the pharmacy's fill
fee for that product as an incentive.
Prescription Drug
A drug that has been approved by the FDA, and under federal or state law, is prohibited to be dispensed without a prescription written by a licensed physician.
Restriction
A limitation on a particular drug or group of drugs. Examples of restriction edits are: PA required, member age restriction, not in formulary, or quantity limits.
If you need additional clarification on terms please send us an email and we will provide the answer to you. If we get enough inquiries about a certain term we will add it to our glossary.
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