PHARMACY MANAGEMENT

GLOSSARY OF TERMS

Copyright © 2001 Prime Therapeutics, Inc. All rights reserved. This manual may not be copied, photocopied, reproduced, translated, or converted to any electronic or machine-readable form in whole or part without prior written approval of Prime Therapeutics, Inc. The information and policies in this document are subject to change without notice.

First Edition, July 23, 2001

Prime Therapeutics, Inc.
1020 Discovery Road No. 100
Eagan, MN 55121

Prime Therapeutics ® is a registered trademark and service mark of Prime Therapeutics, Inc. Prime Therapeutics, Inc. logos are registered service marks of Prime Therapeutics, Inc.

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ADR	(Adverse Drug Reaction)  A patient's reaction to a drug which results in a change in therapy.
ANSI	(American National Standards Institute)  This institute specifies directly or by reference the requirements for industry standards for all businesses. This may include ID cards, claim forms, and BIN#.
AWP	(Average Wholesale Price)  The average wholesale price of a prescription drug or product as published by Medi-Span, a national pricing resource for prescription drugs, and the price used by Prime Therapeutics in adjudicating claims with pharmacies.
Academic Detailing	A process by which drug experts inform prescribers about the cost and efficacy of particular products, either for educational or sales purposes.
Account	The second level in the hierarchy below carrier. It further identifies the entity that sponsors the group benefit plan. This account is generally used for reporting purposes. Examples may identify subsidiary organizations within the main client plan, regional areas within which the client operates or other major breakouts within the client carrier.
Adjudication	(Claim Adjudication)  The process by which the criteria and parameters of the drug benefit plan are used to determine eligibility for pharmacy benefit management services, perform concurrent (on-line at point of service) drug utilization review and determine drug pricing reimbursement amount.
Adjusted Amount	The adjusted amount submitted, calculated and approved for the payment of a claim.
Administrative Fees	Fees charged for the administration of pharmacy services (e.g., claims, network, and manufacturer relations).

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BIN	(Bank Identification Number)  A unique number that allows pharmacy claims to be routed electronically to the appropriate adjudication processor. This number is to be printed on every member's plan ID card.
Benefit Design	Defines the specific pharmacy coverage for a group including copays, drug exclusions, number of days supply and limitations.
Benefit Limitation	(e.g., 100 units/34 day supply)  Unit quantity applies to products that are individually counted such as tablets and capsules. 100-unit quantity limitation does not apply to products that cannot be divisible such as inhalers, oral contraceptive packets, creams, liquids, etc.
Benefit Maximum	The maximum benefit amount for each member as defined within the plan. After the benefit maximum is met, the member pays 100% out-of-pocket.
Benefit Plan	A plan that provides Prescription Drug Benefits and is sponsored or administered by Prime Therapeutics to process claims and provide contracted services. It is defined by the benefit design and includes the benefit design elements.
Billed Charges	The amount reported by the pharmacy as the total amount charged by the pharmacy for the covered services dispensed. This amount shall not exceed the pharmacy's usual and customary charge for the prescription drug or other item constituting the covered services.
Billed Days Supply	The number of days supply is dispensed and billed on the claim.
Bioequivalent Drugs	Drugs that have the same active ingredients, strength, dosage form, and have been determined by the FDA to be within a certain range of availability of the drug in a person's body.
Birthdate	Patient date of birth.
Brand Compound Prescription Drug	A compound prescription drug of which a majority consists of one or more brand prescription drugs.
Brand Standardization	A policy or contract to purchase or put one brand of a multi-source drug on the formulary occurs when no generic is available and results in preferential pricing or rebates (also known as NDC [National Drug Code] lock).
Brand-Name Drug or Brand Drug	A product for which a manufacturer has initial patent; product may be a single source or multi-source (e.g., TylenolŪ is a brand name for acetaminophen).

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Calculated Cost	Amount or quantity resulting from a plan-defined algorithm.
Capitation	Fixed dollar amount of member paid to a provider in advance per member covered, regardless of the number or type of services subsequently used; usually expressed as "per member per month."
Captured	Method of processing an electronic claim for the purpose of applying pricing and DUR edits without actually paying the claim.
Carrier	The highest level breakout within the claim processing system. The carrier owns all accounts, group and members.
Carve-Out	A Benefit Plan separately designed and administered from a Medical Services Plan for particularly high-cost benefits (pharmacy, mental health, etc.)
Case Management	A process to enhance quality of care and contain costs that includes developing a coordinated plan of treatment for patients. This is overseen by a case manager.
Chemical Equivalent	A multi-source drug containing essentially identical amounts of the same active ingredients, in equivalent dosage forms and meets existing physical/chemical standards.
Claim(s)	Requests for payment submitted by network pharmacies or members for covered prescription drug services.
Client Effective Date	The date the client is effective with the agreement. This will be a manual effective date. Otherwise, it will be the effective eligibility date.
Client Term Date	The date the client is termed with the agreement. This will be a manual termination. Otherwise, the term date will be the one in effect on eligibility.
Closed Formulary	A comprehensive specific list of covered drugs. The member will not receive reimbursement for drugs not on the list.
Coinsurance	The portion of the amount claimed for covered prescription drug services, calculated as a percentage of the charge, which is to be paid by members.
Compliance	Patient adherence to a prescribed drug regimen or treatment plan, or provider adherence to health plan guidelines such as formulary, practice protocols, etc.
Compound Claims	All claims with a compound indicator are excluded from rebates.
Compound Prescription Drug	A prescription where two or more medications are mixed together. One of these drugs must be a Federal legend drug to be reimbursable by Prime Therapeutics.
Contracted Price	A price specified in the contract that is not available on Medi-Span for the specified NDC.
Contracting Pharmacy	A pharmacy that has entered into an agreement with Prime Therapeutics (or the Benefit Plan/Carrier) to provide the prescription drug benefit to eligible person(s) and shall include all pharmacy locations specified in the contracting pharmacy agreement.
Controlled Drugs	Drugs that have been designated as having greater restrictions for prescribing and dispensing by the Drug Enforcement Administration. These drugs are typically narcotics or sedatives.
Copay	(Copayment)  A portion of the amount claimed for covered prescription drug services, which is paid by the member and collected by the contracting pharmacy. Copayments may be expressed as dollar amounts, as percentages or as formulas. The amount or computation of the copayment may vary from one covered person to another, even within the same plan. With respect to a particular transaction, the amount of the copayment, plus deductible and applicable brand/generic differentials will be displayed in the point-of-sale response to claim submission.
Cost	The cost of ingredients in a prescription product. Submitted cost is sent by the pharmacy, calculated cost is calculated by the claims system and approved cost amount is the amount to be paid.
Cost Shifting	The redistribution of payment sources from one payer to another (e.g., increasing copays or coinsurance).
Covered Person	Each eligible-enrolled employee, retiree, dependent or other person entitled to pharmacy-covered services under a benefit plan at the time the covered services are dispensed.
Covered Prescription Drug	Any prescription drug that meets the requirements for coverage under a benefit plan when dispensed to a covered person under the benefit plan.
Covered Services	The managed pharmacy services/pharmaceuticals available to members for reimbursement as determined by the group's plan design.

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DAW	(Dispense as written)  Also termed PSC (Product Selection Code). This indicates whether the prescription must be filled as written or whether a generic drug substitution is allowed.
DEA	(Drug Enforcement Administration)  A Federal agency.
DEA Number	Each prescriber is given a unique number for identification by the DEA that must be used when prescribing controlled drugs. DEA numbers are not collected on all pharmacy claims.
DESI Drug	(Drug Efficacy Study Implementation)  Drugs classified by the FDA as safe but not proven fully effective by today's standards. These drugs are currently on the market pending final approval of efficacy issue.
DUR	(Drug Utilization Review)  The process whereby the therapeutic effects and cost effectiveness of various drug therapies are reviewed, monitored and acted upon, consistent with the member's Benefit Plan. This can be done prospectively at the point-if-sale or retrospectively.
Date Paid	The date a claim was paid (a check was cut to the payee).
Dependent ID	An identification number given to a member's dependent.
Dispensing Fee	A contracted fee between a network pharmacy provider and Prime Therapeutics to pay the pharmacy for the dispensing service of each prescription. This is one component of the total reimbursement to a pharmacy for dispensing drugs to a member.
Dispensing Limitations	(Quantity Limits)  This is defined in the Benefit Plan. It describes the maximum and/or minimum quantity to be dispensed under that plan. The dispensing limitation may be defined by the number of days supplied or units supplied.
Dosage Form	The form of the drug being dispensed (i.e., tablets, cream, suspension, etc.)
Dose	The unit of medication. A measured quantity to be taken or administered at one time.
Dual Copays	There are two common types of dual copays: generic/brand and formulary/non-formulary. The type of drug (generic or brand) or the formulary status of the drug will determine a member's copay. The type of copay is specified in the benefit design.

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ECS	(Electronic Claims Submission)  Submission by the contracting pharmacy of a claim for processing on a magnetic tape, diskette or other medium acceptable to a plan in a format acceptable to the plan.
EDI	(Electronic Data Interchange)  The electronic exchange (through computers) of information between two or more organizations (e.g., electronic claims).
Edits	Instructions for pharmacists, patients or physicians transmitted electronically through point-of-service (POS) technology as prescription is being filled.
Effective Date	The effective date of individual participation in the current group or the effective date of a change. The individual is represented by cardholder ID or by the cardholder/person code combination.
Eligible Person	A person entitled to a prescription drug benefit at the time the prescription drug is dispensed.

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FDA	(Food and Drug Administration)  A Federal agency.
Fee for Service	(FFS)  A traditional indemnity reimbursement method where the patient pays for pharmaceutical or medical services up-front and files for reimbursement later. Providers are paid a fee for each service they deliver.
Fill Date	Identifies the date a single prescription was filled.
First Data Bank	A company that provides current information regarding drugs (NDC [National Drug Code]) including pricing information for each NDC number. Also see Medi-Span.
Formulary	A document listing various prescription-only pharmaceutical products which are selected on the basis of quality, efficacy and cost by a professional committee of physicians and pharmacists. A drug formulary serves as a guide to the provider community identifying which drugs are covered or covered at the lowest payment for the member. It is typically updated quarterly and includes brands and generics.

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GCN	(Generic Code Number)  A general classification of drugs used by First Data Bank to identify a group of drugs with identical chemical name, strength, dosage form and route of administration. GPI (Generic Product Indicator) is a similar indicator used by Medi-Span.
GEO Access	A software package that provides pharmacy access statistics for a particular group of members based on the member's zip code. A report is created using the actual pharmacy location and probable member location within a zip code area. It is used to identify areas with potential access problems for the members.
GPI	(Generic Product Indicator)  A general classification of drugs used by Medi-Span to identify a group of drugs into like-therapeutic classes. Each successive two-digit subfield of the GPI represents this data: drug group, drug class, and drug subclass, drug name, drug name extension, dosage form and strength. GCN (Generic Code Number) is a similar indicator used by First Data Bank.
Generic	Bioequivalent, lower cost version of a brand-name drug, available when patent protection expires on a brand-name drug.
Generic Compound Prescription Drug	A compound prescription drug of which a majority consists of one or more generic prescription drugs.
Generic Substitution	The process of substituting a lower cost generic version of a brand-name drug, when available.
Group	The third level of the hierarchy below carrier and account. Each account may be broken down into multiple groups representing individual stores or groups of employees. The group number links a member to the appropriate benefit plan for claims adjudication.

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HCFA	(Health Care Financing Administration)  A Federal agency within the Department of Health and Human Services which administers Medicare, Medicaid and Child Health programs and sets the threshold drug reimbursement levels for Federally-paid benefits programs.
HEDIS	(Health Plan Employer Data and Information Set)  A set of performance measures designed to help health care purchasers understand value and measure performance of multiple health plans.
HIPAA	(Health Insurance Portability and Accountability Act)  Passed in 1996, HIPAA outlines privacy regulations for electronic health information. The final regulations go into effect in February 2003, with small health plans given an additional year to comply. The final rule seeks to directly protect the confidentiality of an individual's identifiable health information by regulating the use and dissemination of the information by covered entities - health care providers, group health plans, and clearinghouses - and indirectly by regulating the business arrangements between covered entities and their business associates.
Help Desk	A Provider Service Department established to answer questions from pharmacies concerning claim processing. The Help Desk will answer only claim transmission questions. Questions related to member eligibility and drug coverage will be directed to the account's provider service department. Inquiries from members will be directed to the customer service departments at the client.

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Legend Drug	A drug which cannot legally be obtained without a doctor's prescription. The original product container bears the words: "Federal Law prohibits dispensing without a prescription." or "Rx Only."

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MAC	(Maximum Allowable Cost)  The upper limit reimbursement on a per-unit basis for a multiple source prescription drug at the time a claim is processed. Prime Therapeutics determines and maintains its own MAC pricing
MRL	(Minimum Reimbursement Level)  A set minimum payment to a network pharmacy for a prescription drug when the contracted price falls below the agreed-upon minimum level. Each client is allowed to determine the minimum fee to pay for each prescription.
Mail Order	Indicates if a mail order provider filled the claim. These claims could potentially be excluded from certain agreements.
Maintenance Drug	A covered prescription drug prescribed for a chronic condition (i.e., diabetes, arthritis, high blood pressure, or heart conditions) which the prescription indicates is to be dispensed in a quantity greater than a 34-day supply unless otherwise defined in the applicable rate page of the contract.
Manufacturer	A company that manufactures and/or distributes pharmaceutical drug products.
Me-Too Drugs	Drugs that are no better, therapeutically, than their predecessors in the same drug class.
Medi-Span	A company that provides current information regarding drugs (NDC [National Drug Code]) including pricing information for each NDC number. See First Data Bank.
Member Count	The current member count within a group as of the latest member load.
Member Eligibility	A drug which is available from multiple manufacturers. This usually refers to generics. Multi-source patented refers to drugs that are available from two or more manufacturers but that are not available generically.
Member(s)	An individual who is eligible to receive covered prescription drug services.

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NABP	National Association of the Board of Pharmacy
NABP#	A unique number assigned by the NABP (National Association of the Board of Pharmacy) to each licensed pharmacy. The first 2 digits of the NABP number identify the state in which the pharmacy is located. See Pharmacy Number.
NCPDP	(National Council for Prescription Drug Programs)  The council that sets the national standards for on-line prescription drug processing and general communications between a pharmacy benefit manager and manufacturers. Almost all pharmacy claims processors and software vendors use these formats and guidelines.
NCPDP#	(formerly NABP#)  A unique 7-digit number assigned by the NCPDP (formerly NABP) to each licensed pharmacy. The NCPDP format is SSNNNNC where SS = state code NNNN = unique number within the state C = Check Digit
NCQA	(National Council on Quality Assurance)  An independent, private-sector group that promotes standards for quality assurance and performance measures, surveys HMOs and similar plans, and awards accreditations.
NDC	(National Drug Code)  The unique 11-digit number assigned by the manufacturer to this drug. It identifies the drug, manufacturer, strength and package size. The 1st 5 digits represent the manufacturer or labeler ID, the next 4 digits represent the product number, and the last 2 digits represent the package size.
NDC Lock	See Brand Standardization.
Network or Pharmacy Network	The group of pharmacies that have been accepted as a participating pharmacy and have entered into an agreement with Prime Therapeutics to provide covered prescription drug services to members. "Network participant" or "participating pharmacy" means each individual pharmacy or chain that has entered into an agreement with Prime Therapeutics ("network contract") to provide covered prescription drug services to members.
Non-Formulary	A drug that has not been approved by the formulary committee for inclusion in the drug formulary for this client. Some benefit plans may require a higher copay or full payment by the member for a non-formulary drug.

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OTC	(Over the Counter)  Drugs that do not require a prescription to purchase. Most benefit plans do not cover these items, even though a prescription may have been written for them. Some benefit plans cover only a small subset of these drugs.
Off-Label	Drugs prescribed or used for purposes other than those originally intended. Not explicitly approved for alternative uses by the FDA, but legal for physicians to prescribe.
Open Formulary	An open formulary provides coverage for drugs not listed on the formulary. Benefit design structure does not differentiate between formulary and non-formulary drugs for payment purposes.
Outlier	A prescriber, drug use or member filing prescriptions that falls outside an average, normal range. Often responsible for high costs.
Over the Counter	See OTC.

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PBM	(Pharmacy Benefit Manager)  A company responsible for administering prescription drug benefits for a plan. These services may include formulary management, rebate contracting, network services, claims processing and clinical programs.
PCN	Processor Control Number
PMPM	(Per Member Per Month)  Unit of measurement related to each member for each month. Usually refers to the dollar amount of services spent per member per month.
POS Messaging	Messages that are communicated via the POS system during adjudication between Prime Therapeutics and the provider. There are multiple forms of POS messaging including NCPDP standard messaging, RxCLAIM standard messaging, and enhanced formulary messaging.
PSC	(Product Selection Code)  Also termed DAW (Dispense As Written). This indicates whether the prescription must be filled as written or whether a generic drug substitution is allowed. Valid values are in the Appendix.
Package Size	Identifies the dispensing package size of a product.
Paper Claim	A claim submitted by a member for reimbursement of a prescription claim.
Patient Relationship	Indicates a patient's connection to an insured person (cardholder).
Patient Sex	Indicates whether a patient is male or female.
Payor	The entity who has financial responsibility for payment for a prescription drug benefit. A benefit sponsor, an eligible person, or both may be the payor.
Pharmaceutical Care	A responsible provision of pharmacy services (assessment, monitoring, education, etc.) that promote comprehensive, coordinated management of patient's medication use, with the goal of optimum outcomes.
Pharmacoeconomics	The field involving the assessment of cost effectiveness of drug therapy in terms of long-term benefits to the patient and in terms of medical versus prescription drug intervention.
Pharmacoepidemiology	Science of detecting and preventing inappropriate prescribing either on a patient population or individual physician basis.
Pharmacology	Science of dealing with the preparation, uses, and effects of drugs.
Pharmacy and Therapeutics (P & T) Committee	A group of physicians and pharmacists from different specialties who advise a PBM or managed care plan regarding safe and effective use of medications. The P & T Committee manages the formulary and acts as the organizational line of communication between the medical and pharmacy components of the health plan.
Pharmacy Benefit Manager	See PBM.
Pharmacy Benefits Management	See PBM.
Pharmacy Payment	The amount described in the applicable benefit plan which is payable to the contracting pharmacy for the prescription drug benefit. Same as "amount paid."
Plan	See Benefit Plan.
Point of Service	See POS.
POS	(Point of Service)  Refers to computerized technology that allows pharmacists to electronically access and enter data in real-time as prescriptions are being filled. Link between delivery system (retail or mail) and PBM that facilitates eligibility verification, claims adjudication and DUR.
Prescribing Provider	A Doctor of Medicine or other health care professional who is licensed to prescribe prescription drugs under the laws of the jurisdiction in which they are dispensed.
Prescription Drug Benefit	Any prescription drug or other item that is furnished to an eligible person as stated in the benefit plan.
Prior Authorization	A method of allowing drugs for a member that would not normally be covered under the benefit plan. Prior authorizations are usually the result of a medical review by a pharmacist on staff at the plan.
Prospective Drug Utilization Review	A procedure under which the claims processor screens a claim prior to approval for indication that the dispensing of such covered services may not be compatible with information in the plan's file, such as previous dispensing date, age, sex or other medications dispensed. If such indications are found, the processor may withhold the approval of the claim.

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Quantity Dispensed	Identifies the dosage amount of a product that was dispensed for a prescription. Indicated in units (not packages).
Quantity Limits	See Dispensing Limitations.
Quantity Supply	Identifies the number of days supply that was dispensed.

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RFI	(Request for Information)  A type of instrument used to solicit information by plans or companies from vendors interested in requesting a service from vendors (e.g., employer solicits information about services from a PBM company).
RFP	(Request for Proposal)  A type of instrument used to solicit information by plans or companies from vendors interested in requesting a service from vendors (e.g., employer solicits information about services from a PBM company).
Rebate(s)	A retrospective reimbursement discount payment by a manufacturer under a manufacturer's discount program with Prime Therapeutics for pharmaceutical products of that manufacturer dispensed to a member.
Repackager	The repackager purchases bulk packaging of pharmaceuticals from the manufacturer and 'repackages' the product into smaller units intended for immediate distribution.
Restricted Formulary	A benefit design that uses a formulary and has in place a higher copay for drugs not listed on the formulary. An example might be a $7.00 copay for formulary drugs and a $12.00 copay for non-formulary drugs. This provides an incentive for the member to use formulary drugs.
Retail Price	See Usual and Customary Charge.
Retrospective Drug Utilization Review	A process by which the plan or PBM reviews claims after such claims have been adjudicated to verify that payment made was based on the appropriateness of, and in compliance with, the prescribed therapy.
Reversal	A claim that was paid but has been "backed out" of the payment cycle. An adjustment to the claim file usually due to an error or payment issue. Reversals and the original submission are visible on the Rx Claim system.
Run-In	Refers to when the previous insurance processor will not be processing claims after the contract has expired. The run-in claims would have a date of service prior to the plan effective date of coverage under the new processor.
Rx Number	See Prescription Number.

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Sales Tax	Sales tax for the prescription dispensed.
Single-Source	A term used when a drug can only be purchased from one source, usually the original manufacturer.
Standard Benefit	The part of the benefit plan that is frequently duplicated to many benefit plans.
Step Therapy	A utilization management tool which requires use of one or more drugs in a step-wise graduated manner for cost or quality reasons. If a patient does not respond satisfactorily, progressively more or different therapy is prescribed as needed. Protocols for step therapy can govern which prescription drug claims adjudicate for a given member.
Submission Date	Date that a claim was submitted to the pharmacy
Submitted Cost	Cost submitted on a claim by the pharmacy.
Suppressed Copay	Patient copay is waived on particular drug(s) due to benefit design. This benefit is also called "Copay per item with copay suppressed." An example would be when a patient receives insulin with a copay applied and their diabetic supplies are dispensed with no copay.

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Tax	See Sales Tax.
Tax Paid	The amount of tax paid on a claim. This may include provider tax or sales tax depending on the state where the pharmacy is located.
Therapeutic Classification	A system to categorize drugs into groups with similar activities and uses.
Therapeutic Equivalency Code	A code assigned by the FDA which rates generic or therapeutically equivalent drugs on their effectiveness. "A" codes are considered generically bio-equivalent. "B" codes are not generically bio-equivalent.
Therapeutic Substitution	The dispensing of a chemically different drug, considered therapeutically equivalent, in place of a drug originally prescribed by a physician. In most pharmacy practice settings, prescription charges require a new prescription from the physician.
Total Amount Paid	See Amount Paid.

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U & C	See Usual and Customary Charge.
UCF	(Universal Claim Form)  A standard format claim form used by member pharmacies for prescription drugs.
Universal Claim Form	See UCF.
Utilization Management	Using scientifically based medical guidelines to make determinations regarding healthcare delivery retrospectively, concurrently or prospectively.

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