health plan

This is a health insurance option (or product) offered by an MCO. Variables in plans are premiums, choice of providers, out of pocket expenses, treatments covered, and so on. Large MCO's typically offer a selection of health plans.

MCO (Managed Care Organization)

Health care insurer where the insuring company is involved in the delivery of care. This is contrasted with the traditional indemnity plan where the insurer is not involved in care delivery. MCOs offer HMO, PPO, POS health plans.

Formulary

The list of products, usually drugs that are available to patients subscribing to the MCO.

Formulary may be managed:

• In-house by the MCO, or
• Outsourced to a PBM

PBM (Pharmacy Benefit Manager)

These are organizations that contract with MCOs to administer pharmacy benefits to members. In many cases, the MCO delegates the pharmacy benefit management to the PBM.

Large PBMs may have their own P & T committee who develop a universal formulary. Individual MCOs then appoint their own P & T committees who select products from the universal formulary to develop formularies for the MCO's health plans.

Managed Care Account Managers

These are the sales representatives who work for pharmaceutical and medical companies and who specialize in working with MCOs and in order to influence which products appear in the MCO's formularies.

HMO (Health Maintenance Organization)

In this type of health plan, members pay a fixed monthly premium and receive health care without charge or for a small fixed co-payment. There are several different types of HMOs and also hybrids of the different types available in the U.S.A. Some of these types are described in this table.

Staff Model HMO

In this type of health plan, the MCO employs salaried physicians and owns the medical facilities. Typically, the co-payment charge is minimal. Patients may only consult with the doctors in the HMO; though, in very rare cases these doctors refer patients to sub-specialists outside the network.

Group Model HMO

In this type of health plan, the MCO contracts with one or more large multi-specialty physician group practices to provide care. Doctors are not employed directly, instead the group practice employs the physicians.

IPA (Independent Practitioner Association Model)

In this type of health plan, a MCO contracts with many individual and group physician practices to form one or more associations of independent practitioners (IPAs). The IPA pays the physicians, but these physicians remain as contractors, not salaried employees, and maintain their offices independently.

POS (Point of Service)

This type of health plan is a mix of HMO and a traditional indemnity plan. When a patient stays in the HMO network of physicians and follows the referral path, care is fully covered (with the usual co-payment). When the patient seeks care outside the network specialist care without a primary care physician (PCP) referral within the network, the patient is covered at a lower level.

PPO (Preferred Provider Organization)

This type of health plan is similar to POS, except that a patient does not need a PCP referral to see a specialist within the network.

P & T (Pharmacy & Therapeutics) Committee

This committee is a group of health-care specialists, including physicians and pharmacists. The committee determine which products are in the MCO's or PBM's formulary.

SWOT analysis

This is a planning tool to help you evaluate the strengths, weaknesses, opportunities, and threats of your business and product in the marketplace. SWOT analysis is a component of a business plan.

Tiered Benefit

A tiered pharmacy benefit is one where the member's co-payments vary.

For example, in a typical three-tiered system, generic drugs require the lowest co-payment, brand name drugs on the formulary require a higher co-payment, and brand name drugs off formulary require the highest co-payment.

Open Formulary

An open formulary is one where the MCO allows any drug to be prescribed.

Closed Formulary

A closed formulary is one where only the drugs on formulary may be prescribed. A closed formulary may be limited or unlimited.

Limited Formulary

A limited formulary is one where only a given number of drugs is allowed in each therapeutic class. In order for a new drug to be added, an existing drug must be removed from the formulary.

Unlimited Formulary

An unlimited formulary is one where there is no set limit on the number of drugs allowed in a therapeutic class.