What is the difference between a PBM, a managed care organization, and a third party administrator?

by Confused
(Columbus, OH, USA)

PBMs & Managed Care & Third Party Administrators... Health Insurance

PBMs & Managed Care & Third Party Administrators... Health Insurance

I get these three confused. How are they different from each other, and how are they interrelated to my work as a pharmacy tech?

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Differences between a PBM, Managed Care Org, and a Third Party Administrator
by: David

A PBM (or Pharmacy Benefit Manager) is a Third Party Administrator (TPA) of US-based prescription insurance. The main goal of the PBM is to reduce drug costs and improve safety and convenience for all stakeholders involved.

PBM's administer member insurance plans for over 266 million covered Americans. These covered individuals have a variety of plan sponsors. These sponsors include a plethora of sources: Medicare Part D, State Government Employee Plans, Federal Employee Plans, Commercial Plans, Managed Medicaid, Union Plans, and Self-Insured Plans from Employers.

A Third Party Administrator processes insurance claims (for the purposes of this question: prescription insurance claims) for a separate entity.

Managed Care Organizations include the following: Anthem, Aetna, United Health Group, Medicare, Medicaid, Harvard Pilgrim, Federal Blue Cross & Blue Shield, etc.

Managed Care, boiled down, is all about money. Managed Care plans often focus on and implement financial incentives for their members to regulate their prescription expenses. One such example is the different "Tiers" or levels of coverage for members medications. Generics would be less expensive. Then Brand name drugs would be more expensive. Specialty Drugs would be more expensive than Brand name drugs. Prior Authorizations and Step Therapy would be required, on select prescriptions as a cost containment measure.

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