Judi Health's Pharmacy & Health Benefits Glossary

Average Wholesale Price (AWP) is a benchmark used in the pharmaceutical industry to estimate the cost of prescription drugs. Often referred to as the "sticker price," it serves as a reference point for pricing and reimbursement negotiations between pharmacies, insurers, and other stakeholders. AWP is published by drug pricing databases and can vary based on the drug type and manufacturer. It is not necessarily the actual price paid by pharmacies or consumers, but it is widely used across the industry as a starting point for drug cost calculations.

The Centers for Medicare & Medicaid Services (CMS) is the operating division within the Department of Health and Human Services that runs Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the federal health insurance marketplace. CMS establishes the clinical standards, quality metrics, pricing models, and compliance rules that govern federal healthcare programs. Its policies and reimbursement frameworks frequently referenced across the broader healthcare and health insurance industries.

A Concurrent Drug Utilization Review (CDUR) is a real-time clinical safety check that happens exactly when a pharmacist processes a prescription. The system automatically screens a patient's new prescription against their current medication history to identify potential issues such as harmful drug interactions, incorrect dosages, and duplicate therapies. CDUR is a standard component of pharmacy benefit management and is required under Medicaid programs.

A Deductible (DED) is the amount a health plan member pays out-of-pocket for covered medical services before the plan begins paying its share. Deductibles reset annually and vary across plan designs, including high-deductible health plans, which pair lower monthly premiums with high upfront cost-sharing. A deductible differs from a copay, which is a fixed fee paid per transaction regardless of whether the deductible has been met, and from the out-of-pocket maximum, which caps a member's total annual cost-sharing liability.

Dispense as Written (DAW) is an instruction on a prescription that directs pharmacists to dispense the exact brand-name drug specified by the prescribing physician rather than a therapeutically equivalent generic. When a DAW code is present, the pharmacy cannot substitute a cheaper generic version without explicit authorization. Pharmacy benefit managers and health plans use a standardized set of DAW codes to process claims accurately, distinguish between physician-directed and patient-requested brand dispensing, and apply the appropriate cost-sharing rules. DAW codes can also vary by state, as some jurisdictions have specific regulations governing generic substitution.

A Drug Management Program (DMP) is a structured, clinical approach that health plans and pharmacy benefit managers use to monitor and manage medication use among plan members. These programs typically target high-risk medications such as opioids, apply utilization management strategies, and support safe and appropriate prescribing patterns. DMPs may include step therapy protocols, prior authorization requirements, and pharmacist outreach to reduce misuse, prevent adverse events, and promote clinically appropriate medication pathways.

An Enterprise Health Platform (EHP) is a unified technology system that consolidates the administration of healthcare benefits, pharmacy programs, clinical data, and member management into a single integrated environment. EHPs are designed to replace fragmented, siloed systems by connecting employers, health plans, members, and clinical providers through a centralized platform. Judi, developed by Judi Health, is an AI-powered enterprise health platform built for pharmacy and medical benefit administration.

Enterprise Health Tech (EHT) refers to the category of digital tools and platforms organizations use to manage complex medical benefits, clinical data, and pharmacy programs. These systems typically provide real-time visibility into claims data, utilization trends, and member outcomes, and are designed to integrate across benefit administration, pharmacy, and clinical functions.

A Health Benefits Administrator (HBA) is an entity that manages the day-to-day operations of an organization's employee benefit programs, including claims processing, open enrollment, regulatory compliance, and member communications. HBAs may be internal staff, third-party administrators, or technology-enabled platforms that centralize benefit administration functions.

A Health Benefits Manager (HBM) is a professional or organizational role responsible for designing, overseeing, and administering an employer's medical and benefits offerings. Responsibilities typically include evaluating plan designs, negotiating with vendors, analyzing claims data, and ensuring the benefit program meets both regulatory requirements and workforce needs.

The Maximum Allowable Cost (MAC) is the highest reimbursement amount a payer will pay a pharmacy for a specific generic or multi-source brand drug. Pharmacy benefit managers maintain MAC lists that set reimbursement ceilings across their pharmacy networks to control drug spending and reduce price variation. MAC pricing applies broadly across commercial health plans, and government programs including Medicaid and Medicare Part D use similar cost-containment mechanisms for generic drug reimbursement.

A Maximum Out-Of-Pocket (MOOP) is the highest amount a health plan member will pay for covered, in-network healthcare services within a single plan year. Once a member reaches the MOOP threshold, the health plan covers the full cost of covered services for the remainder of the year. The MOOP is distinct from the deductible, which is the amount a member pays before cost-sharing begins, though deductible spending typically counts toward the MOOP. Federal regulations establish annual MOOP limits for plans sold on the health insurance marketplace and for Medicare programs.

Medication Therapy Management (MTM) is a structured clinical service in which a pharmacist works directly with patients to review their current prescriptions, identify potential drug interactions, and optimize their overall medication regimen. MTM programs are designed to improve therapeutic outcomes, reduce unnecessary therapies, and support patients managing multiple chronic conditions. These programs are a required benefit under Medicare Part D and are commonly offered through pharmacy benefit managers.

The National Average Drug Acquisition Cost (NADAC) is a federal benchmark that reflects the average invoice costs retail pharmacies pay to acquire drugs from manufacturers and wholesalers. Published weekly by the Centers for Medicare and Medicaid Services (CMS), it is based on survey data collected directly from retail pharmacies across the country. State Medicaid programs and some commercial health plans use NADAC as a reference point for pharmacy reimbursement rates and drug pricing evaluation.

The National Provider Identifier (NPI) is a unique, ten-digit identification number issued to covered healthcare providers in the United States. Established under HIPAA, the NPI serves as a standard identifier for physicians, hospitals, pharmacies, and other healthcare entities across all administrative and financial transactions. Provider credentials can be verified through the publicly accessible NPI registry maintained by CMS.

Per Employee Member Per Month (PEMPM) is a billing and cost measurement metric that accounts for all individuals enrolled under an employee's benefit plan, including the primary subscriber, spouse, and dependents. Unlike PEPM, which counts only the primary employee, PEMPM provides a more complete view of total benefit costs across a covered population.

Per Employee Per Month (PEPM) is a billing metric used by vendors, insurers, and pharmacy benefit managers to charge organizations a flat rate per eligible employee each month for administrative or benefit services. PEPM is calculated by dividing the total monthly cost of a service by the number of eligible employees. It provides a predictable cost structure that simplifies budgeting for benefit programs.

Per Member Per Month (PMPM)  is a standard cost measurement and billing unit in healthcare that distributes total costs across all enrolled members, including dependents, within a given month. PMPM is calculated by dividing the total monthly cost of a health plan or service by the total number of enrolled members. It provides a consistent basis for comparing costs across plans, populations, and time periods.

Pharmacogenomics (PGX) is the study of how an individual's genetic makeup influences their response to medications. By analyzing genetic variations, pharmacogenomic testing helps identify which drugs are likely to be effective, ineffective, or potentially harmful for a specific patient. The field combines pharmacology and genomics to support more precise prescribing decisions and reduce adverse drug reactions. PGx testing is increasingly integrated into benefit plans as a tool for improving clinical outcomes and reducing spending on ineffective therapies.

Pharmacy Audit and Recovery Benefit Solutions (PARBS) is a structured approach to identifying and recovering funds lost to billing errors, duplicate claims, and contractual violations within pharmacy benefit programs. PARBS processes typically involve systematic review of claims data across retail and specialty pharmacy transactions, as well as cross-referencing pharmacy and medical benefits to identify improper billing.

A Pharmacy Benefit Administrator (PBA) processes pharmacy claims and manages benefit data on behalf of health plans without taking ownership of drug spreads or rebates. Unlike a traditional PBM, a PBA functions as a purely administrative intermediary, handling claims adjudication, formulary administration, and reporting without the financial arrangements that characterize full PBM models.

A Pharmacy Benefit Manager (PBM) is an intermediary organization that administers prescription drug benefits on behalf of health plans, employers, and other payers. PBMs negotiate drug pricing with manufacturers and wholesalers, develop and maintain pharmacy networks, manage formularies, process claims, and administer clinical programs. They play a central role in determining how prescription drugs are accessed and priced for plan members.

Proportion of days covered (PDC) is a medication adherence metric that measures the percentage of days during a given period that a patient has access to their prescribed medication. PDC is calculated by dividing the number of days a patient has medication on hand by the total number of days in the measurement period. A PDC of 80 percent or higher is generally considered indicative of adequate adherence. The metric is commonly used in chronic disease management to identify patients at risk of gaps in therapy.

Utilization Management (UM) is the process of evaluating the medical necessity, appropriateness, and efficiency of healthcare services. In pharmacy benefit administration, UM programs use clinical tools such as prior authorization, step therapy, and quantity limits to ensure that medications are prescribed and dispensed in accordance with evidence-based guidelines. UM is a standard function of pharmacy benefit management and is designed to support appropriate care while managing overall plan costs.