Manual For New Users

• TeleCLAIM Introduction
• Understanding the PBM Business Enterprise
• TeleCLAIM Terms & Definitions
• Structure of TeleCLAIM for PBMs
• 4-Level Hierarchy of Client Organization
• Considerations for the Automated Accounts Receivable Module
• Considerations for the Automated Accounts Payable Module
• Construction of a Benefit Plan by the Client Sponsor
• Constructing CHAIN & PHARMACY Files
• Constructing CLIENT & USER MEMBER Files
• Most Significant Data Files as Source of Parameters
• Calculations for Ingred.Cost, Dispensing Fee & Co-Pay
• Functional Description of TeleCLAIM Operatives & Users

• Browser-driven Internet interfaces that are extremely easy to use by the Pharmacy Providers.
• Virtual elimination of hard-copy production expense and mail costs by fast and comprehensive Browser accessible documents and reports over the Internet under the best security techniques available today.
• 
  PlanBuilder – a module that enables the fast creation of a complex adjudication algorithms. Employs “Global” logic in every instance where large data files are used for quick drug selections eliminating the drudgery of drug-by-drug hand picking.
• 
  Easily operated Prior-Authorizations (PARs) and Formulary management.
• Implemented on the most economical computer platform available today.
• TeleRx is the POS interface to the TeleCLAIM++ system. Its Browser functionality eliminates the need for local POS software. The POS requires only a bare-bones PC employing any one of several popular Browsers available for Internet connectivity (MS Explorer, Mozilla, Firefox, Opera, etc.).
• TeleVISTA is the online report module that enables secure and fast access to a vast portfolio of 40+ standard accounting and management reports. A major reduction in the production and distribution of hardcopy is now possible by an Internet Browser’s access to the entire report list. For those users that need hardcopy of any of these reports, the TeleVISTA module provides PDF files for local PC Adobe Acrobat printing.
  

TeleCLAIM++ enables a seamless transition from its parent legacy system (TeleCLAIM) or with minimal transitioning for other processors. It provides the full PlanBuilder functionality for adjudication and data file content. HIPAA compliance is provided with compatibility for users that are not fully upgraded from NCPDP V3.

An important feature of the new system is its implementation on leading-edge LINUX platforms. Programmed in C++ and PHP, the system offers greater flexibility and scalability. Simpler and easier installation and maintenance procedures are now available to small, as well as large volume users.

The powerful legacy adjudication provided by PlanBuilder is replicated and the popular supporting Browser-based modules of TeleRx and TeleVISTA have been successfully integrated into the new system.

The TeleCLAIM system is primarily designed to accommodate the needs of the PBM as a business enterprise whose goal to serve Client’s efficiently while earning a profit and attaining a sustaining cash flow. 

Therefore the PBM is treated as a profit center that serves Clients (Insurance, Employers, PPOs and HMOs, etc.) by arranging and paying for drugs dispensed by Pharmacies, Pharmacy Chains and Mail Order facilities in support of the drug needs of covered members of the Benefit program.

One source of income for the PBM is to charge monthly for processing each transaction by a unit rate. This processing income ordinarily covers the bulk of operating expenses.

The profit for the PBM comes from two charges made to the Client that have a “differential increase” over that paid to the Providers. This increase is added to the Ingredient Cost and the Dispensing Fee. The drug differential may range between 5% to 20%. The Dispensing fee differential is ordinarily a flat amount between $0.25 and $1.00 (Pharmacy ordinarily receive about $2.50 per Rx and the Client will pay about $2.75 to $3.50 per Rx.).

The PBM also makes “Rebate” income by reporting quarterly their aggregated client utilization to Manufacturers. Individual utilization tapes are provided to each Manufacturer and they pay the aforementioned “Rebates” (like royalties) for the purpose of promoting sales of their products with the PBM, Clients and providers. 

The PBM oftentimes shares this Rebate with the Client to offset their PBM costs. Sharing can be 25%-75%, 50%-50%, or any negotiated split. Note that payment by the Manufacturers occurs about 6 months after utilization tape submittal and can vary in value between 5% to 12% of the ingredient cost paid to the Providers.

There is a special case for some PBMs that offer “Capitated” Coverage to Insurer Clients. In this rarely used instance, the PBM charges a flat rate per member per month (“PMPM”) to the Client Insurer. The PBM is obligated to service the needs of the members without consideration for actual utilization experienced with the membership. This high-risk enterprise offered by the PBM requires a great deal of prior population statistics to estimate utilization. TeleCLAIM users have successfully offered this form of service.

The following are definitions and descriptions of U.S. industry basics used in the Primer and assumed to be understood by the reader:

Adjudication is the algorithm of computation that utilizes custom formulae and parameters attached to Members, Clients, Pharmacies, Drugs, etc. to determine all the distribution of charges and reimbursements due the entities in the Dispensing process. This complex algorithm is constructed by an automated program preparation with declarations of parameters, percentages, restrictions, inclusions/exclusions, deductibles, maximums, etc. A TeleCLAIM module available to Plan administrators, called “Plan Builder”, performs this function with considerable simplicity and ease. Custom plans may be constructed in minutes for rapid inclusion in the system.

Pharmaceutical Benefit Plan is an insurance program to provide Rx drugs to a Plan Member at a discount to the uninsured retail price. The member only pays for a fraction of the gross cost as a co-payment. The insurer, called a Benefit Sponsor, pays the PBM monthly for detail and aggregated charges after presentation of an invoice for actual utilization by the PBM. The PBM contracts with Provider Pharmacies and pays them to supply the drugs to the Members on demand with PBM online approval. The Plan Member or the member’s Employer pays an insurance premium to the Benefit Sponsor of the Plan.

Rx - the original Physician-written prescription required by state law for drug dispensing by presentation to a Pharmacy. Pharmacies are required to archive all Rx originals for inspection, sometimes without notice. (OTC drugs do not require Rxs and are not usually covered by insurers although TeleCLAIM can handle these where needed.)

AWP (Average Wholesale Price) is a standard that is used by all parties in the U.S. for pricing drugs. Several monthly publications issue databases of the latest prices established by the Manufacturers. These prices are ostensibly prices paid by Pharmacies to wholesalers or distributors. This is after a markup by distributors from the pricing charged by the Manufacturers. Actual acquisition costs of the Providers are usually lower than AWP prices by 10% to 30%.

Brand and Generic Drugs. Brand drugs are those that are protected by patent from a competitive exact chemical duplication. Brands command higher prices compared to drugs of the same therapeutic class. Generic drugs are therapeutically equivalent (as medications for treatment of similar ailments) but are not exactly equal in chemical ingredients. Generics usually are priced with greatly reduced rates. Discounts of 40% to 80% discounts are not uncommon versus the corresponding Brand.

GPI (Generic Product Index) is a file of parameters that enables replacement of any drug with another drug that is therapeutically equivalent. This occurs for occasions of inventory depletion or more often for lower pricing which is common with Generic drugs. The Key is this record is the first 6 digits that designate the class of drug (e.g. Anti-inflammatory). The following digits are provided for designations of drug content and type.

A Formulary consists of a selected list of drugs that ordinarily include lower cost drugs (Brands and Generics). Formularies are a method of restricting the drugs available to members of a Drug Benefit Plan. The list is selected by medical professionals to yield satisfactory and adequate comparable therapeutic curative results. A ”Closed” Formulary is one that does not allow any exceptions to the list by a PAR (Prior Authorizing Request - override).

Ingredient Cost is the term used by U.S. Pharma for the gross drug price, usually provided in “each” units, as defined by the current published AWP price. (Some other countries use packages as units for pricing.) Typically Ingredient Cost is used as the basis for calculation of Net Cost - AWP unit price minus a percentage of the AWP price. This percentage reduction is usually greater for the reimbursement of the Provider as compared to the Benefit Sponsor Net Ingredient Cost.

Dispensing Fee is the charge usually made by the Pharmacist for counting/measuring the content of an Rx, preparing a label and for providing Patient consultation. This fee can vary between $1.25 to $3.00+ for each Rx. (Other countries sell drugs like OTC drugs are sold in the U.S. They are pre-packaged and do not require a preparation of a labeled container; therefore, no Dispensing fee is charged to the buyer.)

Co-Pay (co-payment) is a charge borne by the Rx purchaser. (It may not be used in some other countries.) The charge is made to deter over-utilization by prescription purchasers. The Co-Pay may range from 10% to 50% of the AWP Ingredient Cost to influence purchase of the lower cost Brands and Generics (e.g. – high price Brand drug may be burdened by a 50% Co-Pay while a low cost Generic may require only a 10% Co-Pay.) This deterrent can escalate the Buyer’s co-pay by a very large multiple as in the case of a $100 Brand vs. a $25 Generic - $50 Co-pay for the Brand vs. $2.50 Co-pay for the Generic.

Pharmacist Reimbursement. = Pharmacy( Ingredient Cost + Dispensing Fee) – Member Co-Pay.

POS Adjudication Computations for the Approved Claim include the Pharmacy’s Ingredient Cost, the Co-Pay contribution paid by the Member, other ancillary charges if any, and a final payable amount to the Pharmacy. These are produced and appended to a “Claim” record file used for Accounts Payable and other analysis reports. Most of these amount items are determined in the PlanBuilder algorithm process. The Ingredient Cost and Co-pay can be affected by a number of limiting considerations found in the adjudication algorithm of PlanBuilder. Default values for each are found in the Client and Pharmacy files as well.

The TeleCLAIM system is designed for the Drug Benefit operations of a multi-Client PBM. It is important to understand the flow of money between the several parties to the transactions.

Drug Benefit Programs are the alternative to Retail sales of prescribed (Rx) drugs made to uninsured individuals or those insured under an indemnity program. Those covered by a Drug Benefit program secure the prescribed Rx drug(s) from Pharmacies that contract with the PBM as benefit providers. PBMs can demand pricing at a substantial discount versus pharmacy retail prices because of the increased business delivered to the Pharmacy by inclusion in a large network.

The Patient buyer, a member of a Client Benefit Program, does not pay the entire cost of the discounted drug. He/she pays a fraction (Co-Pay) of the ingredient cost. This out-of-pocket Co-pay by the member ranges from 10% of Ingredient Cost, for Generics, to 50% for Brands where Generics are available. 

The PBM’s Client contract usually provides drug prices below AWP. The Client generally realizes a savings of at least 33% of the retail rate. (An indemnity insurer would be paying the higher retail price.)

The hierarchy of entities in a PBM Drug Benefit program links several layers of payers and payees (providers):

• The Patient is the client of the Employer/Insurer (the Patient, in a sense, “pays” by an indebtedness to the Employer/Insurer),
• The Employer/Insurer is the Client of the PBM (Employer/Insurer pays PBM),
• The PBM is the client of the Provider/Pharmacy (PBM pays the Provider), and
• The Provider Pharmacy is the Client of the Distributor “Wholesaler” /Manufacturer (Provider pays the Distributor Wholesaler).

From the PBM perspective, the Client Insurer is the principal of the PBM’s Accounts Receivable system. 

The Pharmacy is the principal of the PBM’s Accounts Payable system. 

The TeleCLAIM system provides these applications as the resulting products of its Internet processing of Online Rx transactions by POS interaction with the dispensing Pharmacy.

In order to manage all these components and entities in the TeleCLAIM system there exists a number of primary data files containing descriptive literals and parameters of adjudication:

• Member Eligibility File – a file of all Plan members included in a Drug Benefit program provided by a Client. A single SQL file containing the members of all Clients in the system.
• Drug Price File – AWP databases purchased from Medispan, FirstDataBank or others. (outside U.S., files are created by an Administrator when no publisher available.) A single SQL data file.
• GPI Datafile – Classifies drugs with an index key (6 digits) that enables substitution of one drug for another and to compare costs for therapeutically equivalent medications. A single SQL data file.
• Pharmacy & Chain Entity Files – developed and maintained by the TeleCLAIM Administrator. A single SQL data file containing individual Pharmacy records.
• Formulary Files – Custom files developed by PBM/Client for various coverages. A separate SQL file and ID for each Formulary used and programmatically attached to an Adjudication Algorithm file.
• Adjudication Algorithm Files – Custom files created with the PlanBuilder module by the Administrator. A separate SQL file and ID for each Plan.

Other files like Plan Physicians, Physician Specialties, Drug Classifications, etc.

All these data files are crucial to the proper execution of the TeleCLAIM system. Most have Browser-driven, online Internet accessible, maintenance programs that may be accessed remotely by various PBM and Client professionals to create and maintain the data file and for editing and oversight. Prudent procedures ordinarily include oversight inspection and confirmation.

A PBM Client may have four levels of control and accountability. 

• The Client company – a single entity
• Account - one or more Accounts under the Company (e.g. Division)
• Group - one or more Groups within an a single Account

Member - one or more members within a single Group

The Eligibility file contains all the individual member data needed for control by TeleCLAIM. The Member Number/ID, DOB and Group affiliation are the most important.

The Group record holds the adjudication pointers for processing. It contains the “Plan ID” identifying a special algorithm developed for a custom Adjudication process chosen for any member in that particular Group. It controls the approval of any Rx that is sent to TeleCLAIM by the Pharmacy. A single Plan File is independent and may be attached to any Group for any Client.

This independent file contains all the parameters that designate the drugs included or excluded, the basis of Co-Pay calculation, restrictions, deductions and maximums if any, and many other factors that affect acceptability, pricing, restrictions, contributions to limiting factors, etc.

The Plan File of Adjudication is created by a system module called “PlanBuilder”. This module is an easy-to-use, step-by-step parameter assembler that “programs” the myriad of controls that are used to limit and restrict dispensing so as to optimize the cost of the Benefit program. PlanBuilder is found in the Administrative section of TeleCLAIM and is accessible for maintenance by only the TeleCLAIM Administrator.

This Plan File, which may be applied to any Group across Client plans, also designates another independent, “floating” data file – the Formulary File. 

There is another TeleCLAIM development module found in the Administrative section of TeleCLAIM that enables easy creation of the list of drugs that constitute a “closed” or “soft” list or formulary attached to the Plan used. 

The PBM Client (Sponsor by Insurer, PPO, HMO, etc.) is billed for a variety of administrative elements. These include:

• Transaction Processing Fee (designated in PlanBuilder under “Administrative”)
• Ingredient Cost Charge (AWP – discount designated in Client File for Brand and Generic drugs and in PlanBuilder)
• Dispensing Fee (Flat or percentage designated based on Ingredient Cost)
• Administrative functions like (a) Formulary management; (b) URLs or manual Rx entries; (c) manual operations by the PBM, etc. provided in contract with PBM.
• Production of member cards, manuals and promotional items, if requested.

Online charges for Eligibility maintenance, Plan Maintenance, etc.

Each of these service items is billed monthly in arrears. Ordinarily fees are payable within thirty days. This suggests that Provider reimbursement becomes a cash flow problem if Providers are paid for one month’s business in advance of receipt of Client’s payment.

Ordinarily Providers will negotiate to be paid by the fifteenth day after closing business for one calendar month. If paid before thirty days elapses after a calendar month closes the cash flow problem is minimal.

The vast majority of drug providers are Drug Chains (as compared to individual Pharmacies) because they offer greater discounts due to their greater drug volumes and collateral store sales income.

TeleCLAIM provides for several levels of designated rates of reimbursement for these providers. Contracts are executed with Drug Chains, Networks of Pharmacies and individual Pharmacies. (Note – TeleCLAIM treats individual pharmacies as one-store chains for simplicity; therefore, a Chain and Pharmacy file are created for each.)

The system has definition templates for individual Provider/Chain Contracts and/or a blanket definition found in the PlanBuilder Plan parameters that may be attached to a Client Group. The precedence order is Contract, Chain and Plan.

The Pharmacy Network is ordinarily a broker that organizes many Pharmacies over many U.S. states of Chains, Mail Order Houses and Pharmacies. This is convenient for most PBMs or individual processors in order to limit the number of contracts to just one instead of many contracts to manage for each provider engaged. The Network oftentimes offer greater discounts because of their size and strength with the industry.

TeleCLAIM distinguishes between Providers and Preferred providers operating under one contract. Preferred Providers can be constructed to give sales advantages by lowering the Co-Pay for the same Benefit Plan. Sometimes a Provider is willing to take less in Reimbursement for increased sales and this distinction enables a better incentive to the buyer.

The Client may have several benefit plans for the various economic strata of employees found in the variety of Accounts and their Groups. Each Benefit Plan is constructed to minimize costs while maintaining Client member satisfaction with the Benefit plan. 

The differences found in the more expensive Plans usually includes broader Brand drug access, lower deductibles, higher maximums, lower Co-Pays in addition to other expanded ancillary benefits. 

It is customary for a Benefit Plan sponsor to distribute a written document in advance explaining the coverage regarding restrictions and how the costs are borne between the Sponsor and the Patient.

Some of the considerations in devising a Benefit Plan are the following 

• Co-Payment (“Co-Pay”) charged to the member by the Pharmacy for the purpose of containing over-utilization. If there were no financial burden for the patient member, utilization would be excessive. This “shared” cost may be as low as 10% of ingredient cost, rounded to an even figure, or as high as 50% for drug options that are more expensive than alternative equivalent drugs.
• Classes of drugs provided (Included) – broad support for most treatment possibilities vs. limited scope of treatment areas of disease, etc. In TeleCLAIM global exclusions by Class of Drug is provided. Appendices are also available to override a small number of reversals to the exclusion a far greater number. Formularies are also possible where the selected Formulary list may be designated as entirely “closed” for non-list items. Otherwise, it is assumed that off-list items may be over-ridden by the PAR (Prior Authorization Request) devise.
• Inclusion of Non-Disease Related Drugs - Birth control drugs, cosmetic class of drugs, smoke cessation, weight control, collateral supplies – usually provided for in premium plans (premium plans that cost more to the sponsor and also to the member).
• Brands vs. Generics inclusions and/or incentives. Physicians tend to prescribe known Brand drugs that are 100% to 500% greater in cost than corresponding Generics. The degree to which Generics are forced (mandatory) or incentivized (by lower Co-pays) is directly proportional to the lowered plan premiums.
• Days Supply – 30 days is the ordinary maximum days supply provided for a chronic illness requiring continuing re-supply (refill regimen). Acute treatment is ordinarily limited by prescribing a quantity that may be less than 30 days supply based on the dosage. (Dosage x Days Supply = Quantity.)

A Chain owns one or more Pharmacies. The PBM contracts with the Chain owner for inclusion in the PBM’s Pharmacy Network. Each Chain may have different contract terms and conditions as a result of negotiations influenced by the Chain’s expected contribution to sales or for their unique and desirable locations.

The Chain reporting level is important for the purpose of aggregating the reporting of Pharmacy totals to the owners. Individual Pharmacy reporting is fundamental to TeleCLAIM’s Accounts Receivable module. All reports are available to access n the Internet with the TeleVISTA module.

The Chain and each Pharmacy have an entry template with calculation parameters used to determine what amount is to be paid to the Pharmacy or aggregated to the owner Chain.

The Pharmacy template contains calculation default parameters used in TeleCLAIM’s Accounts Payable module. These are the following:

• Regular or Preferred Pharmacy selection – greater discounts by the Preferred  
• Where to send the A/P check– Individual Pharmacy or to Chain Aggregated total 
• Brand discount of AWP drug price – for either Regular or Preferred Pharmacies
• Generic discount of AWP drug price - for either Regular or Preferred Pharmacies
• Mail Order provider’s parameters - Special treatment of with higher discounts and days supply parameters

The TeleCLAIM system manages multiple Clients as individual entities all data may be co-mingled in general databases.

The hierarchy of the Client structure is –

• One or more user Members belong to a Group
• One or more Groups belong to an Account

One or more Accounts belong to the one Client

A template is provided for each level of the hierarchy. The template designates the higher level entity that it is a part of and its Rx activity is aggregated for.

Parameters that influence calculations are found in this individual Client hierarchy at the following levels:

The Client level template contains the rates charged by the PBM to the Client for the unit Rx Dispensing Fee and the percentage discount applied to the calculated AWP Ingredient Cost of each Rx. In both cases, different flat amounts and percentages are available for distinctions between Brand and Generic drugs, respectively.

No calculation parameters exist at he Account level template where name and address literals are inserted for the Account and the Client owner designation.

The Group level template is critical to calculations and Rx screening by designating the Benefit Plan ID which contains the Adjudication process applied to each Rx. This process is the comprehensive algorithm of calculations using many primary parameters for multi-faceted screening and computations. The Group template also designates the Account and 

• Client Files – contains contract info and parameters contracted with PBM
• Eligibility File – contains necessary processing details of each member covered by Plan. Start and termination dates for the member are included in this file.
• Drug File (with DUR database) – contains descriptions, specs and AWP prices provided by subscription to database suppliers. (Foreign users construct and maintain there own drug files.)
• Pharmacy/Chain File – contains contract info and parameters contracted with PBM
• Plan Files (Adjudication algorithms created/maintained by PlanBuilder module) – contains formulae, restrictions and terms and conditions of dispensing drugs to members

Formulary Files – contains the preferred, allowable or limited/restricted specific drugs dispensed to members.

Keys to Data File Access

Certain Keys are unique (*) for processing. This means that the literal used for the key to the data file is unique and has no other duplicate. 

• Client*ID
• Account ID (subordinate to Client ID)
• Group ID (subordinate to Account/Client)
• Member ID (subordinate to Group/Account/Client)
• Plan*ID (independent – attached to a Group)
• Formulary*ID (Independent – attached to a Plan)
• Chain*ID
• Pharmacy ID (subordinate to Chain ID)
• NDC*Number (independent)

Ingredient Cost (“IC”) is the drug cost used in Adjudication. The Ingredient Cost discussed here is the same referred to in NCPDP and HIPAA documents.

This cost is neither the Retail Cost nor is it the Acquisition Cost.

IC is nominally the same as AWP, the Average Wholesale Price. AWP is published in Medispan, FirstDataBank and other s on a monthly basis. These are figures polled from the Manufacturers and/or the Wholesalers (Distributors such as Cardinal, McKesson Robbins and American BergenBrunswig). AWP prices are said to represent the sales price to Provider Pharmacies minus customary industry discounts. Such discounts are usually in the range of 5% to 15% but may be as great as 30% or more for Generics.

Nonetheless, AWP is important since it is universally used as the benchmark and basis of most wholesale charges in the U.S. marketplace. Pharmacies engage in contracts with Insurers and PBMs that use AWP as the starting point for pricing. Discounts are commonly expressed as AWP reduced by a percentage of AWP (e.g. “AWP minus 12%).

Other sources of Ingredient Cost are used in special circumstances. These circumstances may be for Alternative Prices like a MAC (Maximum Allowable Cost) usually common to State or Federally sponsored Benefit programs for total coverage or a portion of the total cost (“Coordination of Benefits”). 

Another circumstance is accepting a “Submitted Cost” from the Provider. In these cases it usually limits the Submitted Cost to be equal to or greater than AWP. Compound Rxs are usually treated as a Submitted Cost and can not be limited by any other basis of cost. TeleCLAIM adjudication process has an option to limit the Submitted Cost as a percentage over AWP (e.g. - Submitted Cost <= 140% AWP or 40% overage).

There also exists an option to accept a Submitted Cost that is lower than AWP.

Dispensing Fee is a negotiated contract amount charged by Providers to Sponsors for their efforts and labor expended in the preparation and delivery of a prescription where the Buyer submits an Rx. The Buyer-Member is subsidized by an Insurer who sometimes bears the entirety of this charge (unlike the Ingredient Cost that is shared by the Buyer with the Insurer - called the Co-Pay).

Dispensing Fee is ordinarily a flat charge per prescription thus not shared by Co-Pay. There are some rare contracts Dispensing Fee is determined by a percentage of the Ingredient Cost in which case it may be viewed as sharing the cost. 

Flat charges may be different for Brand drugs versus Generic drugs. Obviously, the work and effort for generics is the same but is accorded a different flat rate to balance its contribution to the total cost since Generics are ordinarily much cheaper than Brands.

Rates for Brands may start with $2.00 and range up to $3.75 per Rx. 

Rates for Generics may start with $1.25 and range up to $2.25 per Rx.

Co-Payment or Co-Pay is the Buyer’s share of the total cost paid directly to the Pharmacy Provider at the time of sale. Co-Pay is usually determined as a percentage of the Gross Ingredient Cost and sometimes rounded up to the nearest convenient $1.00, $0.25 or $0.10.

The Co-Pay Percentage can vary in a wide range. Usually the range starts with 10% and goes up to 50%. This percentage is usually applied to the non-discounted Gross Ingredient Cost such as the AWP, MAC or Submitted Cost.

There are some circumstances where the percentage used is 100% of Ingredient Cost. This occurs when the drug is not covered by the Plan but is accorded the lower cost negotiated by the Insurer with the Provider (e.g. – Charge of AWP minus 12%).

Variations of Determining Ingredient Cost – Gross and Net.

Ingredient Cost ordinarily starts with the price provided by the AWP database and this may be referred to as Gross Ingredient Cost. 

The Adjudication algorithm, created by TeleCLAIM’s PlanBuilder module, has provisions for strategic adjustments to accommodate a customized plan constructed to meet special patient needs and PMPM objectives of the Sponsor.

The following are alternative methods available to determine the Net Ingredient Cost (“NIC”):

1. Percentage discount of AWP for Brands and another for Generics (NIC=AWP-%AWP),

2. Percentage discount of the Alternative Price of a MAC list or any other lists (NIC=AWP-%AWP).

3. Submitted Cost with NO Discount (NIC=IC).

In the case 3. there is an option available to take the lessor value between the Submitted Cost or the Net Ingredient Cost of 1.or 2. Otherwise the Submitted Cost prevails.

Variations of Determining Dispensing fee

Dispensing Fee is also variable based on the method selected for calculation, As above, the choices are similar:

1. Flat Amount

2. Percentage of AWP

3. Submitted Dispensing Fee

4. Maximum Fee for the above choices.

Variations of Determining Co-Pay

Co-Pay is two-dimensional in regard to a Regular Pharmacy matrix versus a Preferred Pharmacy matrix of choices. This variation enables influencing Members to use the Preferred Pharmacy by offering a lessor Co-Pay.

Co-Pay can take several alternative methods and combination of calculations for each matrix mentioned above. These are:

1. Flat amount of Co-Pay for Brand drugs and another for Generic drugs,

2. Percentage of Gross Ingredient Cost for Brand drugs and another for Generic drugs

3. Higher Percentage of Gross Ingredient Cost for a Brand when a Generic is available

4. Higher Flat Amount for a Brand when a Generic is available Brand,

5. Minimum Co-Pay amount, option

6. Maximum Co-Pay amount, option

Another Option is available for the choices given above. The Administrator may designate that the lessor or the greater between the Flat amount selected versus the Percentage calculation selected.

There are additional options for Co-Pay for circumstances of extended Days Supply levels. These define the extended range of values for Days Supply as enables in insertion of different Flat amounts or Ingredient Cost percentage.

Schematic of TeleCLAIM Functionality

Below is an illustration of the utility of the TeleCLAIM system to the various parties involved in the Benefit Plan process. 

POS Operators at Provider Stores

American systems: All activity for drug dispensing starts with the POS clerk operator. He/she receives the Rx from the Buyer and initiates computer activity with the POS PC. 

POS PC is a processor with software that interacts with the PBM Computer. The POS PC possesses data files of drug prices, members, clients and all the ingredients found at the PBM processor. It prepares a Rx transactions that contains Member identification and a “suggested” result of adjudication including Price, Dispensing Fee and other calculations of a completed transaction. 

The POS PC connects with the PBM processor using one of various forms of data communication carriers linked to a Switch. The Switch is a transmission intermediary that logs messages back and forth and switches transmissions to many different PBM processor data centers. The PBM Data Center receives the Rx transmission and adjudicates the claim. The PBM then returns the results, via the Switch, to the originating POS PC.

The “results” confirm or, more often, alters the submitted data in compliance with the agreed to formula of the Benefit Plan approved and offered by the Client Sponsor.

The operator at the POS activates the attached printer and a statement and Rx label are printed. The label is attached to the drug-picked container and the Member buyer pays the indicated Co-Pay to the Store in cash or by credit card. The transaction is completed by the POS PC storing the results for independent accounting by the store.

Non-American (off-shore) Users: The Internet Online features of TeleRx are employed in these scenarios since there are no Switches nor POS software available as standards in these venues.

The Operator, already connected to TeleRx, calls the Rx entry screen and enters the member initials and receives back a list of members to select from. Upon clicking the correct member, he proceeds to select Drug Name (using scrolling process) and finishes with entering Days Supply or #Boxes and the submitted price. The system responds with the correct adjudicated final figures for Gross price, Co-Pay, and Net price. The drug container is dispensed and payment is made to complete the transaction.

PBM Administrator at PBM 

The PBM Administrator is the primary manager of the PBM operations. Pharmacists and computer operations report to this individual. 

The Administrator, aside from Marketing, is the primary contact with the Client management. He arranges for training and installation instructions for new Clients. 

The Administrator is responsible for Member documentation as he coordinates with the Client management.

He is solely responsible for the assignment of security controls (passwords) to all authorized personnel at the Client and within the PBM. Such controls are based on the “Need to Know” as to what information is viewable and/or changeable.

The Administrator or his designated technicians arrange for the development of the necessary Formularies or acts as a coordinator with the Pharmacy Formulary group of the Client. He discusses and confirms the development of the Adjudication algorithm and provides direct or indirect entry of the Plan via PlanBuilder.

PBM Pharmacist

The PBM Pharmacist is an important contributor to Client education and formulation of Plans. Another important responsibility is in the supportive or direct management of the Formularies established with Client approval.

The Pharmacist is the primary person to make Prior Authorizations (PARS) for special situations where Physicians need consultation or collaboration in drug substitution or overriding of Refill-too-Soon rejections.

PBM Computer Operator & IT Personnel

This group or one individual is responsible for all aspects of system installation and maintenance and operations necessary at month end for closings. The IT function requires maintaining communication functioning of the computers with outside vendors and suppliers. Also installation of updates and software corrective action in circumstances that require implementing recovery procedures with the failure of hardware functions.

PBM Management

The management of the PBM have immediate and complete access to all the 40+ reports of TeleVISTA. These reports provide detail and summary analysis of all current TeleCLAIM processed transactions.

Where the PBM has performance criteria established with Clients, the management is capable of recognizing significant deviations from expected performance and take corrective action thorough the Administrator. These actions may involve altering the Plan by imposing additional restrictions and/or excluding certain drugs as examples of timely control.

The Accounting department, acting for management, also has access to the plethora of reports that enable efficient billing and collection actions. 

Provider Management

The Pharmacy chains have a vested interest in an awareness of their Pharmacy activities in summary and in detail by each Pharmacy. The Accounting department of each Chain can also survey current month activity to reconcile the reports emanating out of the POS software reporting that may be reported daily. This enables day-to-day correction of discrepancies between the PBM and the Chain stores, if any. Such current reconciliation capabilities are not ordinarily available to the Chains by any other system.

Client Sponsor Management

The Payer Client (Sponsor) is provided timely financial oversight of the Plans they sponsor and subsidize through the PBM. They no longer need to wait until several days after the completion of a calendar month to assess the financial results of the Plan in service. They too may react to unexpected circumstances by their surveillance and instructions to the PBM for modifications to the Plan enacted.

The Pharmacists of their organization are also provided current data for oversight of the Formularies used in their plans. Based on the policy established with the PBM they may have direct access to the Adjudication algorithm to make adjustments as they deem necessary to accommodate member satisfaction and financial goals.

The Accounts payable department of the Client are also provided access to dispensing data in order to anticipate the next payment cycle and advise Management acordingly.