Commonly used health benefit industry terms

Whether you work in business, health care, government or academia, you learn quickly that each sector has its own special language. Jargon can be irritating and confusing, yes. But these terms have an important purpose: they ensure everyone within a sector agrees upon a precise definition.

When translated into more universally understood language for public or cross-sector audiences, something is often lost – a nuance, connotation or subtext that signals potentially important information.

For this reason, it can be helpful for us to be familiar with some of the common terms used in the drug benefit sector.

Let’s start with:

Carrier

In common conversation, “insurance carriers” and “insurance companies” are synonymous. But in the drug benefit sector, a carrier is – very specifically – the insurance company that designs, develops, manages and administers an employer’s benefit plan.

This all becomes relevant in the relationship between payers, PBMs and carriers. For example, an employee of a Western Canadian university has a prescription drug benefit plan paid for by his employer, the payer. His carrier is the insurance company’s name that appears on his benefit card and information package.

Plan Sponsor

A plan sponsor is the employer organization that funds a benefit plan. If you are employed by ABC Co., and participate in the company’s health benefits plan, ABC Co. is your plan sponsor.

Plan member

A plan member is a unique person who submits a prescription drug claim, including all dependants that are eligible for coverage.

Payer

Whatever sector you work in, a payer is an individual or organization that pays. In the health benefit sector, more specifically, a payer is an employer who funds a benefit plan.

Payer is also often used with other terms to describe the funding responsibility taken on by specific plans, and the order in which that payment responsibility is applied.

For instance, Canada’s public healthcare system is often described as a “single payer” system.

Another commonly used term in the health benefit sector is “first payer.” When a patient is prescribed a drug treatment, the cost may be covered by a public plan and/or by one or more private plans. In Canada, public plans are generally first payers, although there are more exceptions to this rule emerging.

Pharmacy Benefit Manager (PBM)

Express Scripts Canada is a PBM. We are the administrators of drug benefit plans. We process and pay covered prescription drug claims.

PBMs also usually develop and maintain formularies (the list of drugs approved for coverage by each plan), and sometimes contract billing and payment with pharmacies and negotiate discounts and rebates with drug manufacturers.

Read: A strategic approach to safeguarding prescription drug benefits

Drug Utilization Management (DUM)

DUM uses clinical guidelines, health research and doctor and patient inquiry to determine if a prescribed treatment is the most medically and financially effective for each specific situation.

Drug Utilization Review (DUR)

DURs look at all the prescriptions a plan member is taking to identify any potential interactions, overlaps, or non-adherence issues. They may also reveal opportunities to collaborate with the member and health professionals to substitute more cost-effective treatments when appropriate.

Therapeutic Substitution

When two drugs produce the same effects, “therapeutic substitution” makes it possible for the pharmacist to supply the lower cost drug (when the patient agrees, of course).

Who is Express Scripts Canada®?

In Canada, we are one the leading providers of health benefits management services. We work with our clients (employees, employers, insurance carriers, third-party administrators and government health programs) to provide a full range of services that are clinically sound, cost-effective and offer sustainable benefit management solutions that align with our clients’ business needs.

Our PBM solution focuses on a patients-first approach to care by utilizing a holistic patient care model to create better health outcomes for plan members and reduce plan sponsor costs.

Read: How a collaborative, patient first approach to healthcare empowers patients to make better health decisions

Want to learn more about us and what we can do to help reduce benefit plan costs? See our products and services. Or for more terms and their definitions, see page 20 of our Express Scripts Canada® 2016 Drug Trend Report.

Any other terms you’d like to see defined? Tweet @ExpressRxCanada and we’d be happy to help!