Every time I read an article it seems like I come across healthcare terms I haven’t heard before. Here are some that I had to explain in conversations recently.
What is a Pharmacy Benefit Manager, or, PBM?
A PBM is a Pharmacy Benefit Manager. PBM’s are large corporations (some larger than the insurance companies) that manage your pharmacy needs. Some examples are OptumRx, CVS Health and Express Scripts.
Managing prescription drugs is a tall order. The Centers for Medicare and Medicaid Services (CMS) report that the National Healthcare Expenditures (NHE) for prescription drugs in 2016 was $328.6 billion dollars and made up approximately 10% of the overall NHE. In the 1980s insurers started utilizing PBMs more commonly, letting someone else do the complicated work of managing prescription drugs.
What is a Copay Accumulator?
A copay accumulator sounds like some hand-held device with knobs and lights on it. It’s not, it’s a policy. To put it simply, a copay accumulator is a means by which insurers accept the value of copay assistance cards or programs without applying that value towards a patient’s deductible. Unfortunately, that means that when copay assistance runs out, patients only then start paying out of pocket to satisfy their deductible.
One school of thought is that if patients don’t have to pay out of pocket towards their deductible, and instead get their copayments made by a coupon or a copay assistance program, then what is to stop them from wanting the most expensive drugs?
The other side of that argument is that there are MANY drugs that don’t have cheaper equivalents, like drugs that treat rare or orphaned diseases. In that case, why should patients still have to pay out of pocket when the drug company is already getting paid for the drug by the copay assistance program?
What is the difference between a Health Savings Account and a Flexible Spending Account?
A Health Savings Account (HSA) is paired with a Consumer Directed Health Plan (CDHP) to help you pay the higher out-of-pocket costs. It uses pre-tax money (like some retirement accounts do) and can only be applied towards your own out-of-pocket healthcare expenses. If you have any other kind of health insurance other than a CDHP, you don’t get to have one of these. I’ll define a CDHP a couple paragraphs down.
A Flexible Spending Account (FSA) is like an employer-paid Health Savings Account – pre-tax money, earmarked for healthcare costs only. But, because your employer runs it, you must use the funds, or your employer takes them back. It is their money after all.
What is a Consumer Directed Health Plan?
A CDHP is a high deductible plan that uses a Health Savings Account (HSAs) to “increase consumer accountability” for their own health care spending. That’s another way of saying, since you must pay more you are more likely to make frugal choices when seeking health care options. What makes it different from a High Deductible Health Plan (HDHP) is the presence of the HSA which helps the insured person pay their out-of-pocket expenses with pre-tax money.
I think I know your next question…
What is a High Deductible Health Plan?
An HDHP has the insured person paying a large amount of money before the insurer begins to pay for services. Thus, a high deductible. The idea is that insured people who pay a lot will make more frugal choices about their care. They will choose cheaper drugs, avoid unnecessary testing, or go to their doctor rather than the ER, etc.
These were originally marketed as being great plans for healthy young people who had to obtain insurance as part of the Affordable Care Act. It went on to become a type of insurance that insurers like to push because it cost them less money.
I hope that helped. If you have some terms or concepts you don’t understand but would like to, reach out to me at jsliney@PatientsRising.org .
Jim Sliney Jr. is a Registered Medical Assistant and a Columbia University trained Writer/Editor who creates education and advocacy materials for patient support groups. He has worked closely with several rare disease communities. Jim also coordinates the patient content for PatientsRising and collaborates with other writers to hone their craft. He’s a native New Yorker where he lives with his wife and all their cats. Connections: Twitter Quora Email