Insurance Class
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| NDC (National Drug Code) | 11 digits
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| NDC First Five Digits | The Labeler identifier assigned by the FDA
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| NDC The 6-9 digits | Represents the product drug and strength
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| NDC last two digits | Represent the package size
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| 4-4-2 NDC | A zero placed in position one
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| 5-3-2 NDC | A zero placed in position six
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| 5-4-1 NDC | A zero placed in position ten
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| Universal Product Code UPC - The first five digits | Represent the labeler code. Assigned by the Universal Code Council.
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| UPC next five digits | Represent the product
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| 5-5 (UPC:5-03-2) | a zero placed in the position six
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| 5-5 (UPC:5-4-01) | A zero placed in position ten.
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| 5-5 (UPC:5-4-10) | A zero placed in position Eleven.
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| Participating Pharmacy Agreement | The contract signed by the pharmacy to become part of the PBM's network
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| Four major elements of the Participating Pharmacy Agreement | Reimbursement, Products and Services offered, Patient eligibility, & Claims adjudication and payment
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| Reimbursement to cover | Cost of goods sold (COGS), Overhead costs (COD) and Net Profit
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| Reimbursement include | Amount paid, Cost of drug dispensed and dispensing fee. Frequency of payment
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| Drug Reimbursement usually | a % of AWP. AWP is usually higher than the actual acquisition cost (AAC).
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| Earned Discount = | AWP-AAC
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| Earned Discount dependent on the purchasing agreements made by the pharmacy and | Volume discounts, cash discount (for paying early) and Trade discounts (deals and promotions).
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| Earned discounts decrease the actual acquisition cost | resulting in higher gross margin. Often what allows a managed care plan to be profitable.
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| Gross Margin (GM) = | reimbursement-AAC
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| Estimated acquistion cost (EAC) = | AWP - x% of AWP
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| Maximum Allowable Cost | MAC
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| MAC | Limits reimbursement. Maximus set cost of drug that will be reimbursed regardless of product dispensed.
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| Personnel must take into consideration MAC of the different PBM | when purchasing inventory. Goal to obtain meds at or below MAC while maintaining quality.
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| Personnel must take into consideration | MAC of the different PBM's when purchasing inventory. goal to obtain meds at or below MAC while maintaining quality.
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| patients Brand may be reimbursed if | prescriber indicates on the prescription.
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| DAW | Dispense as Written
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| Tiered co pays encourage | to ask for generics to control costs
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| Reimbursement PBM pays the claim based on contract | minus patient cost sharing (co pay or coinsurance)
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| Total reimbursement will not exceed the | U&C price (usual and customary)
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| Reimbursement will be the lower of | EAC + dispensing fee
MAC + dispensing fee
U&C charge
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| WAC | Wholesale Acquisition Cost
Based on survey taken of whole sale pricing date rather than list prices.
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| AMP | Average Manufacture's Price.
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| Average Manufacture's Price | based on actual prices charged for drug by manufactures after discounts are taken rather than list prices
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| AMP is lower than | Wholesale Acquisition Cost (WAC)
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| Some common exclusions: | OTC, Parenteral products, compounded prescriptions, devices(glucometer, BP machine, oral contraceptives, appetite suppressants, Meds used for cosmetics, Parental products, "lifestyle' meds.
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| Claims adjudication and payment -Soft Edit | Informational only and pharmacist override
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| Claims adjudication and payment Hard Edit | Requires action by the pharmacist, MD often needs to be contacted. PBM may need to be contacted.
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| Most Favored Nations clause | requires the pharmacy to accept the lowest reimbursement rate that is accepted for any play, regardless of the amount specified in the contract.
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| PHI | Protected health information
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| HIPAA | Health Insurance Portability and Accountability Act.
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| PHI only used or disclosed | When necessary for treatment, payment, or health
care operations. This includes spoken, weritten, and electronic information.
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| Formulary | A list of drugs identified as the preferred treatment for specific diseases or conditions.
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| Formulary purpose | To control costs while maintaining appropriate care.
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| Process by which the formulary is managed | Prescribing guidelines, dispensing guidelines, formulary review, DUR, Education of patients and physicians.
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| DUR | Drug utilization Review
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| P&T Committee develops | The formularies
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| P&T Committee | Pharmacy and Therapeutics Committee. Consists of 4-19 members - physicians, pharmacists, medical director, other health professionals.
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| DAW Codes O = | no product selection indicated
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| DAW 1 | substitution not allowed by provider
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| DAW 2 | Substitution allowed-pt requested product dispensed
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| DAW 3 | Substitution allowed -RPH selected product dispensed
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| DAW 4 | Substitution allowed generic drug not in stock
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| DAW 5 | Substituion allowed brand drug dispensed as generic
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| DAW 6 | override
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| DAW 7 | substitution not allowed brand drug mandated by law
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| DAW 8 | Substitution allowed generic drug not available in marketplace
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| DAW 9 | other
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| 2-tier | One price for brand, one for generics
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| 3-tier | One tier for generic, one tier for preferred brand name, one tier for non-preferred brand name.
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| 4-tier | lifestyle drugs
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| 5-tier | not covered 100% copays
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| Pharmacy Cost = | AAC + COD
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| Earned Discount = | AWP - AAC
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| Gross Margin $ = | Reimb-AAC
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| Gross Margin % = | Reimb - AAC/Pharmacy Cost x100
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| Net Profit $ = | Gross Margin - COD
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| Net Profit % = | Goss Margin - COD / Reimb x 100
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| This is the person who performs statistical analyses to determine what premiums nee to be earned by the insurance company to cover expernses | Acturary
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| Three of the four benefits within insurance plans that are often managed separetly | eye care, Dental Care, Mental health care
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| patient cost sharing comes in three forms. They are | Deductables, co-pays, and co-insurance
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| Captitation payments and Withholding funds are used in what type of managed care settings | HMO
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| Mail order pharmacies are used for | Chronic Conditions
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| The Pharmacy Benefit Manager (PBM) | Contract with community pharmacies to create a network from which the patient can chose to receive their prescriptions
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| PBM's control const in 10 different ways. These include | Cost sharing and Therapeutic Interchange.
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| DUR | Drug Utilization Review
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| The Participating Pharmacy Agreement | is the contract signed by the pharmacy to become part of the PBM's network.
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| WAC | Wholesale Aquistion Cost
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| The Pharmacy & Theraputic Committee | Develops the formularies for PBM's and hospitals
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| DAW | are nine codes that explain why a certain multiple source product was used or not used.
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| CDHP | Consumer - Driven Health Plan
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| Some HMOs offer this plan for patients who do not wish to accept services from only network providers. Patients may see physicians outside the HMO's network, but must pay more. It is more like a PPo than a standard HMO plan | This is a Point of Service POS plan
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| Pharmacy information that must be included on a claim includes a number formerly known as the NABP number. this is the | NPI
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| A provision that ensures that when a patient is covered under more than one policy, maximum appropriate benefits are paid, but without duplication | Coordination of Benefits
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| Within the pharmacy system, these claim submission options are in use | Electronic (real time) and Paper
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| The process that a payer follows to examine claims and determine the correct payments is known as | Adjudication
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| The document sent from the payer to the pharmacy explaining the actions taken and status of a claim and shows the dollar amounts paid is the | Remittance Advice
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| Claim Adjustment Group Code, Claim Adjustment Reason Code and Remittance Advice Remark Code can be used when the amount charged on a claim is not equal to the amount paid this is called an | Adjustment
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| Audit | Evaluate a pharmacy's compliance with paer contracts, plan guidelines, as well as applicable federal and state laws.
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| 1965 Social Security Act Was amended to provide government sponsored health insurance coverage for the poor and elderly or disabled | Medicaid - for the poor.
Medicare - for the elderly or disabled
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| Medicare | a federal social insurance program for seniors and certain disabled individuals.
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| Medicaid | Funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families.
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| Health Maintenance Organization Act of 1973 | Provide financial assistance for the development of HMO's. Required employers with more than 24 to offer their workers the option of joining an HMO as an alternative to conventional insurance.
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| HMO's reimbursement system provided incentives for health care providers to | Focus on prevention and wellness rather that just giving 'sick care'
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| Managing inventory | Purchase efficiently, earn volume discounts from suppliers, increase the inventory turnover rate, return out-dated mechandise in a timely manner.
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| Therapeutic alternative | Different chemical entities but have the same therapeutic effect
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| Direct cost | Costs which are incurred only by the prescription department. ie precription vials and labels and pharmacy computer expenses
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| Indirect Costs | Costs that are shared with other departments, costs are allocated so that only a portion of the total costs are included in the total prescription department expenses. ie rent, utilities, advertising, insurance
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| Indirect variable cost | costs incurred by corporate headquarters and staff are allocated to each store. Vary as a function of the level of sales.
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| Indirect fixed cost | Do not vary as a function of sales volume may vary from month to month. (heating and AC)
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| Coinsurance | requires payment of specific % of the cost of the service.
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| copayment | requires payment of a specific amount for a specified service
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| deductible | requires out of pocket payment until a specific dollar amount has been reached.
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| MCO | managed care organization
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| Estimates are that therapeutic substitiution can save as much as | 1-5% per year
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| About how many will elect to go with a substitute to get the lower price | about 12%
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| Typical restriction is a one-month supply | "one" onth depends on the plan
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| Counterdetailing | shows who is prescribing inappropriately as viewed by the health plan
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| Who regulates the PBM's | CMS, HHS, US dept of labor, FTC, State medicated, state dept insurance and board of pharmacy.
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| PMPM | per member per month
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| The Federal Employees Health Benefits Program (FEHB) | Covers more than 8 million federal employees, retirees, and their families. Regulated by the Federal Government's Office of Personnel Management (OPM)
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| % of people with private health insurance have individual plans | 10%
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| The five major types of health insurance plans | PPO, HMO, POS, Indemnity plans, CDHP
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| NPI | National Provider ID. Pharmacy and Prescriber both have one.
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| Five components must be recorded when a claim is submitted | Patient, prescriber pharmacy, insurance, and prescription information. The correct insuranc e plan, codes, pricing and fees need to be assigned.
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| Prescription information includes | Drug name, drug dosage, and DEA number (required for controlled medications)
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| National Council for Prescription Drug Programs Standards | NCPDP
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| Telecommunications Standard Version 5.1 and Batch Standard 1.1 is the | HIPAA standard for electronic retail pharmacy drug claims
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| DUR issues include | Early refill, high or low dose, ingredient or therapeutic duplication, maximum duration, late refill monitoring, several other precautions
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| DME | Durable Medical Equipment
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| DME is comprised of certain medial equipment that is ordered by a doctor for use in the home | such as walkers, wheelchairs, and hospital beds.
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| If you were born after 1929 | you need 40 credits in order to receive Social Security retirement benefits.
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| Medicare administrative contractors | MACs
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| To receive Medicare a individuals must be eligible under one of six beneficiary categories | 65, disabled, disabled before 18, Spouse of entitled individual, Retired federal employees enrolled in CSRS and individuals with ESRD
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| Applying for Medicare | Apply 3 months before age 65
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| Part A | Hospital Insurance
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| Part B | Medical Insurance
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| Part C | Medicare Advantage Plan
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| Part D | Medicare Prescription Drug Coverage
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| Applying for Medicare | Apply 3 months before age 65
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| Part A | Hospital Insurance
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| Part B | Medical Insurance
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| Part C | Medicare Advantage Plan
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| Part D | Medicare Prescription Drug Coverage
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