[Federal Register: November 16, 2007 (Volume 72, Number 221)]
[Proposed Rules]
[Page 64899-64918]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16no07-21]
[[Page 64899]]
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Part IV
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 423
Medicare Program; Proposed Standards for E-Prescribing Under Medicare
Part D; Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 423
[CMS-0016-P]
RIN 0938-AO66
Medicare Program; Proposed Standards for E-Prescribing Under
Medicare Part D
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This rule proposes the adoption of final uniform standards for
an electronic prescription drug program as required by section 1860D-
4(e)(4)(D) of the Social Security Act (the Act). It also proposes the
adoption of a standard identifier for providers and dispensers for use
in e-prescribing transactions under sections 1860D-4(e)(3) and 1860D-
4(e)(4)(C)(ii), and section 1102 of the Social Security Act. The
standards proposed under section 1860D-4(e)(4)(D) have been pilot
tested and evaluated, and the findings indicate that the proposed
standards meet the requirements for final standards that can be used
for the Medicare Part D e-prescribing programs. The standards proposed
in this rule, in addition to the foundation standards that were already
adopted as final standards (see 70 FR 67568), represent an ongoing
approach to adopting standards that are consistent with the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (MMA)
objectives of patient safety, quality of care, and efficiencies and
cost saving in the delivery of care.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on January 15, 2008.
ADDRESSES: In commenting, please refer to file code CMS-0016-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word).
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention
CMS-0016-P, P.O. Box 8014, Baltimore, MD 21244-8014.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare and Medicaid Services, Department of Health and Human
Services, Attention: CMS-0016-P, Mail Stop C4-26-05, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses: If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-9994 in advance to schedule your arrival
with one of our staff members. Room 445-G, Hubert H. Humphrey Building,
200 Independence Avenue SW., Washington, DC 20201; or 7500 Security
Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHS Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the close of the
comment period.
Submission of comments on paperwork requirements: You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Denise M. Buenning, (410) 786-6711.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. Comments will be most useful if they are
organized by the section of the proposed rule to which they apply. You
can assist us by referencing the file code (CMS-0016-P) and the
specific ``issue identifier'' that precedes the section on which you
choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. After the close of the
comment period, CMS posts all electronic comments received before the
close of the comment period on its public website. Comments received
timely will be available for public inspection as they are received,
generally beginning approximately 3 weeks after publication of a
document, at the headquarters of the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an
appointment to view public comments, please call (800) 743-3951.
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.
I. Background
A. Legislative History
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended title XVIII
of the Social Security Act (the Act) to establish
[[Page 64901]]
a voluntary prescription drug benefit program.
Prescription Drug Plan (PDP) sponsors and Medicare Advantage (MA)
organizations offering Medicare Advantage-Prescription Drug Plans (MA-
PD), are required to establish electronic prescription drug programs to
provide for electronic transmittal of certain information to the
prescribing provider and dispensing pharmacy and pharmacist. This would
include information about eligibility, benefits (including drugs
included in the applicable formulary, any tiered formulary structure
and any requirements for prior authorization), the drug being
prescribed or dispensed and other drugs listed in the medication
history, as well as the availability of lower cost, therapeutically
appropriate alternatives (if any) for the drug prescribed. The MMA
directed the Secretary to promulgate uniform standards for the
electronic transmission of such data.
There is no requirement that prescribers or dispensers implement e-
prescribing. However, prescribers and dispensers who electronically
transmit prescription and certain other information for covered drugs
prescribed for Medicare Part D eligible beneficiaries, directly or
through an intermediary, would be required to comply with any
applicable final standards that are in effect.
Section 1860D-4(e)(4) of the Act generally required the Secretary
to conduct a pilot project to test initial standards recognized under
1860D-4(e)(4)(A) of the Act, prior to issuing the final standards in
accordance with section 1860D-4(e)(4)(D) of the Act. The initial
standards were recognized by the Secretary in 2005 and then tested in a
pilot project during calendar year (CY) 2006. The MMA created an
exception to the requirement for pilot testing of standards where,
after consultation with the National Committee on Vital and Health
Statistics (NCVHS), the Secretary determined that there already was
adequate industry experience with the standard(s). The first set of
such standards, the ``foundation standards,'' were recognized and
adopted through notice and comment rulemaking as final standards
without pilot testing. See 70 FR 67568.
Based upon the evaluation of the pilot project, and not later than
April 1, 2008, the Secretary is required to issue final uniform
standards under section 1860D-4(e)(4)(D). These final standards must be
effective not later than 1 year after the date of their issuance.
In the e-prescribing final rule at 70 FR 67589, we also discussed
the estimated start-up costs for e-prescribing for providers and/or
dispensers. Based on industry input, we cited approximately $3,000 for
annual support, maintenance, infrastructure and licensing costs.
Physicians at that time reported paying user-based licensing fees
ranging from $80 to $400 per month. For further discussion of the
start-up costs associated with e-prescribing, see the regulatory impact
analysis section of this proposed regulation, and the e-prescribing
final rule at 70 FR 67589.
For a further discussion of the statutory basis for this proposed
rule and the statutory requirements at section 1860D-4(e) of the Act,
please refer to section I. (Background) of the E-Prescribing and the
Prescription Drug Program proposed rule, published February 4, 2005 (70
FR 6256).
B. Regulatory History
In the e-prescribing final rule at 70 FR 67589, we also discussed
the estimated start-up costs for e-prescribing for providers and/or
dispensers. Based on industry input, we cited approximately $3,000 for
annual support, maintenance, infrastructure and licensing costs.
Physicians at that time reported paying user-based licensing fees
ranging from $80 to $400 per month. For further discussion of the
start-up costs associated with e-prescribing, see the regulatory impact
analysis section of this proposed regulation, and the e-prescribing
final rule at 70 FR 67589.
In the November 7, 2005 final rule, we addressed the issues of
privacy and security relative to e-prescribing in general. We noted
that disclosures of protected health information (PHI) in connection
with e-prescribing transactions would have to meet the minimum
necessary requirements of the Privacy Rule if the entity is a covered
entity (70 FR 6161). It is important to note that health plans,
prescribers, and dispensers are HIPAA covered entities, and that these
covered entities under HIPAA must continue to abide by the applicable
HIPAA standards including these for privacy and security. E-prescribing
provisions do not affect or alter the applicability of the Privacy Act
to a particular entity. Entities which are covered by the Privacy Act
and the HIPAA Privacy Rule must comply with provisions of both.
Entities are responsible for determining whether they fall under the
Privacy Act.
We continue to agree that privacy and security are important issues
related to e-prescribing. Achieving the benefits of e-prescribing
require the prescriber and dispenser to have access to patient medical
information that may not have been previously available to them.
Section 1860-D(e)(2)(C) of the Act requires that disclosure of patient
data in e-prescribing must, at a minimum, comply with HIPAA's privacy
and security requirements.
Although HIPAA standards for privacy and security are flexible and
scalable to each entity's situation, they provide comprehensive
protections. We will continue to evaluate additional standards for
consideration as adopted e-prescribing standards. For further
discussion of privacy and security and e-prescribing, refer to the
final rule at 70 FR 67581 through 82.
1. Foundation Standards
After consulting with the NCVHS, the Secretary found that there was
adequate industry experience with several potential e-prescribing
standards. Upon adoption through notice and comment rulemaking, these
standards were called ``foundation'' standards, because they would be
the first set of final standards adopted for an electronic prescription
drug program. Three standards were adopted for purposes of e-
prescribing in the E-Prescribing and the Prescription Drug Program
final rule, published November 7, 2005 (70 FR 67568). Two of these
standards, Accredited Standards Committee (ASC) X12N 270/271; and The
National Council for Prescription Drug Programs (NCPDP)
Telecommunication Standard Specification, Version 5, Release 1 (Version
5.1), were previously adopted under the Health Insurance Portability
and Accountability Act of 1996 (HIPAA) and have been in effect since
2001.
These foundation standards are as follows:
For the exchange of eligibility information between prescribers and
Medicare Part D sponsors: Accredited Standards Committee (ASC) X12N
270/271--Health Care Eligibility Benefit Inquiry and Response, Version
4010, May 2000, Washington Publishing Company, 004010X092 and Addenda
to Health Care Eligibility Benefit Inquiry and Response, Version
4010A1, October 2002, Washington Publishing Company. 004010X092A1
(hereafter referred to as the ASC X12N 270/271 standard).
For the exchange of eligibility inquiries and responses between
dispensers and Medicare Part D sponsors: The National Council for
Prescription Drug Programs (NCPDP) Telecommunication Standard
Specification, Version 5, Release 1 (Version 5.1), September 1999, and
equivalent NCPDP Batch Standard Batch Implementation Guide, Version 1,
Release 1 (Version 1.1), January 2000 supporting Telecommunications
Standard Implementation Guide Version
[[Page 64902]]
5, Release 1 (Version 5.1) for NCPDP Data Record in the Detail Data
Record (hereafter referred to as the NCPDP Telecommunications
Standard).
For the exchange of new prescriptions, changes, renewals,
cancellations and certain other transactions between prescribers and
dispensers: NCPDP SCRIPT Standard, Implementation Guide, Version 5,
Release 0 (Version 5.0), May 12, 2004, excluding the Prescription Fill
Status Notification Transaction (and its three business cases;
Prescription Fill Status Notification Transaction--Filled, Prescription
Fill Status Notification Transaction--Not Filled, and Prescription Fill
Status Notification Transaction--Partial Fill), hereafter referred to
as NCPDP SCRIPT 5.0.
a. Exemptions to Foundation Standard Requirement for Nonprescribing
Providers
In 42 CFR 423.160(a)(3)(iii) we exempt entities transmitting
prescriptions or prescription-related information where the prescriber
is required by law to issue a prescription for a patient to a non-
prescribing provider (such as a nursing facility) that in turn forwards
the prescription to a dispenser from the requirement to use the NCPDP
SCRIPT Standard 5.0 adopted by this section in transmitting such
prescriptions or prescription-related information.
Industry comments indicated that while the e-prescribing standards
we proposed were proven to have adequate industry experience in the
ambulatory setting, the NCPDP SCRIPT Standard was not proven to support
the workflows and legal responsibilities in the long-term care setting.
As such, we exempted entities from the requirement to use the NCPDP
SCRIPT standard when that entity is required by law to issue a
prescription for a patient to a non-prescribing provider (such as a
nursing facility) that in turn forwards the prescription to a
dispenser. The CY 2006 pilot project tested for such entities' use of
the foundation standards in ``three-way prescribing communications''
between facility, physician, and pharmacy. (For a more detailed
discussion see the November 7, 2005 final rule (70 FR 67583).
b. Use of HL7 or NCPDP SCRIPT Standard To Conduct Internal Electronic
Transmittals for Specified NCPDP SCRIPT Transactions
In the E-Prescribing and the Prescription Drug Program final rule,
published November 7, 2005 (70 FR 67568), we responded to comments on
whether Medicare Part D plans should be required to use the standards
for e-prescribing transactions taking place within their own
enterprises. In the final rule we stated that entities may use either
HL7 or NCPDP SCRIPT standards to conduct internal electronic
transmittals for the specified NCPDP SCRIPT transactions. However,
entities are required to use the NCPDP SCRIPT Standard if they
electronically send prescriptions for Medicare beneficiaries outside
the organizations, such as to a non-network pharmacy. Any pharmacy that
already accepts e-prescriptions, even if only as a part of a larger
legal entity, must be able to receive electronic prescription
transmittals for Medicare beneficiaries via NCPDP SCRIPT from outside
the enterprise.
c. Exemption for Computer-Generated Facsimiles
The November 7, 2005 final rule also exempted entities that
transmit prescriptions or prescription-related information by means of
computer-generated facsimile (faxes) from the requirement to use the
adopted NCPDP SCRIPT standard. ``Electronic media'' was already defined
by regulations issued pursuant to the Health Insurance Portability and
Accountability Act of 1996 (HIPAA), so e-prescribing utilized the same
definition. As a result, faxes that were generated by a prescriber's
computer and sent to a dispenser's computer or fax machine which prints
out a hard copy of the original computer-generated fax (that is,
``computer-generated'' faxes) fell within the definition of
``electronic media'' for e-prescribing. Absent an exemption, computer-
generated faxes would be required to comply with the adopted foundation
standards. The November 7, 2005 final rule exempted computer-generated
faxes from having to comply with the NCPDP SCRIPT standard.
In June 2007, CMS proposed to eliminate this exemption. See 72 FR
38195 through 38196 for a discussion of the elimination of this
exemption.
2. Updating e-Prescribing Standards
In the November 7, 2005 final rule (70 FR 67579), we discussed the
means for updating e-prescribing standards. If an e-prescribing
transaction standard has also been adopted under 45 CFR parts 160
through 162 (that is, as HIPAA transaction standards), the updating
process for the e-prescribing transaction standard must be coordinated
with the maintenance and modification of the applicable HIPAA
transaction standard. As the final rule adopted and incorporated by
reference the relevant HIPAA transaction standards (the ASC X12N 270/
271 and the NCPDP Telecommunication Standard), the e-prescribing
standards can be modified through a parallel rulemaking whenever the
HIPAA transaction standards are modified. A streamlined process was
created for updating adopted e-prescribing standards that were not also
HIPAA transaction standards. This is done by identifying backward
compatible later versions of the standards. This version updating and
maintenance of the implementation specifications for the adopted non-
HIPAA e-prescribing standards will allow for the correction of
technical errors, the elimination of technical inconsistencies, and the
addition of functions that support the specified e-prescribing
transaction. To do this, we adopted a process for the Secretary to
identify a subsequent version(s) of a standard where the new version(s)
are backwards compatible with the adopted standard. Use of such
subsequent versions of an adopted standard is voluntary. Because HIPAA
transaction standards are presently not backward compatible and the
HIPAA transactions standards regulation does not currently address the
use of subsequent versions of adopted standards that are backward
compatible to the adopted standards, the streamlined process cannot
presently be used for those HIPAA transactions standards that are also
e-prescribing standards.
Subsequent industry input indicated that the adopted NCPDP SCRIPT
5.0, should be updated with a later version of the standard NCPDP
SCRIPT Standard, Implementation Guide, Version 8, Release 1 (Version
8.1), October 2005, excluding the Prescription Fill Status Notification
Transaction (and its three business cases; Prescription Fill Status
Notification Transaction--Filled, Prescription Fill Status Notification
Transaction--Not Filled, and Prescription Fill Status Notification
Transaction--Partial Fill), hereafter referred to as NCPDP SCRIPT 8.1.
Using the streamlined process, HHS published an Interim Final Rule
on June 23, 2006 (71 FR 36020) updating the adopted NCPDP SCRIPT
standard, thereby permitting either version to be used. For more
information, see the June 23, 2006 interim final rule with comment (71
FR 36020).
3. National Provider Identifier (NPI)
In the November 7, 2005 final rule (70 FR 67578), we discussed the
use of the National Provider Identifier (NPI) for the Medicare Part D
e-prescribing program once it became available. The NPI is the standard
that was adopted in the final rule published on January 23, 2004 (69
[[Page 64903]]
FR 3434) as the unique health identifier for health care providers that
are HIPAA covered entities for use in the health care system. Health
plans, health care clearinghouses, and those health care providers who
transmit any health information in electronic form in connection with a
transaction for which the Secretary has adopted a standard (known as
``covered health care providers'') are considered ``covered entities''
which must use the identifier in connection with HIPAA standard
transactions. For a discussion of the NPI, see the final rule published
on January 23, 2004 (69 FR 3434).
In the November 7, 2005 final rule (70 FR 67578), in response to
comments received in the February 4, 2005 proposed rule, we indicated
that we would include the NPI in the 2006 pilots to determine how it
worked with e-prescribing standards. However, we also noted that
accelerating NPI usage for e-prescribing might not be possible, as we
might not have had the capacity to issue NPIs to all providers involved
in the e-prescribing program by January 1, 2006. At the time the
Request for Application was released, we had just begun to use the
National Plan/Provider Enumeration System (NPPES) to process provider
requests for NPIs. Upon reconsideration and in view of the short time
period allowed for pilot testing, it was determined that the focus
should be on standards testing and not on NPI as it would constitute a
simple bench testing of the identifier and would have no substantive
results. Therefore, NPI was not assessed during the pilots, which used
other identifiers to accomplish their testing of the standards as
outlined in the Request for Application.
C. Pilot Testing of Initial Standards
The MMA required the Secretary to develop, adopt, recognize or
modify ``initial uniform standards'' relating to the requirements for
the e-prescribing programs in 2005. To ensure the efficient
implementation of the e-prescribing program requirements, the MMA
called for pilot testing of these initial e-prescribing standards in
2006. To fulfill this requirement, the Secretary ultimately recognized
(based on NCVHS input) six ``initial'' standards, which are discussed
below. A Request for Applications (RFA) was issued in September 2005
that laid out the details for how these initial standards were to be
pilot tested (Available through http: //http://www.grants.nih.gov/grants/guide/rfa-files/RFA-HS-06-001.html
). The pilot test was conducted under
four cooperative agreements and one contract that the Agency for
Healthcare Research and Quality (AHRQ) entered into on behalf of CMS.
The final pilot site reports are available at http://www.healthit.ahrq.gov/erxpilots
.
1. Initial Standards
[If you choose to comment on issues in this section, please include
the caption ``Initial Standards'' at the beginning of your comments.]
As HHS had not yet published a final rule identifying the
foundation standards at the time the RFA was published, it
conditionally included the proposed foundation standards among the
``initial standards'' to be tested. Any proposed foundation standards
that were not adopted as foundation standards were to be tested as
initial standards in the pilot project. Furthermore, if the proposed
foundation standards were ultimately adopted as foundation standards,
those standards nevertheless were to be used in the pilot project to
ensure interoperability with the initial standards. A summary of the
initial standards follows:
Formulary and benefit information--The formulary and
benefits standard, NCPDP Formulary and Benefits Standard,
Implementation Guide, Version 1, Release 0 (version 1.0), hereinafter
referred to as the NCPDP Formulary and Benefits Standard 1.0, is
intended to provide prescribers with information from a plan about a
patient's drug coverage at the point of care.
Exchange of medication history--The medication history
standard, included in the National Council for Prescription Drug
Programs (NCPDP) Prescriber/Pharmacist Interface SCRIPT Standard,
Version 8 Release 1 and its equivalent NCPDP Prescriber/Pharmacist
Interface SCRIPT Implementation Guide, Version 8, Release 1, is
intended to provide a uniform means for prescribers and payers to
communicate about the list of drugs that have been dispensed to a
patient.
Structured and Codified SIG--The standard tested was
NCPDP's proposed Structured and Codified SIG Standard 1.0. Structured
and Codified SIG--instructions for taking medications (such as ``by
mouth, three times a day'')--that are currently expressed as free text
at the end of a prescription.
Fill status notification function--The Fill Status
Notification, or RxFill, was included in the NCPDP SCRIPT 5.0, and the
updated NCPDP SCRIPT 8.1 but it previously was not proposed as a
foundation standard due to lack of industry experience. The dispenser
uses the prescription fill status transaction to notify the prescriber
if a patient has picked up a prescribed medication at the pharmacy.
Clinical drug terminology (RxNorm)--RxNorm, a standardized
nomenclature for clinical drugs developed by the National Library of
Medicine (NLM), provides standard names for clinical drugs (active
ingredient + strength + dose form) and for dose forms as administered
to a patient.
Prior authorization messages--The pilot sites tested to
determine the functionality of new versions of the ASC X12N 275,
Version 4010 with HL7 and ASC X12N 278, Version 4010A1 to obtain
certification from the plan to a provider that the patient meets
criteria for a drug to be covered.
The RFA also specified that pilot sites would use NCPDP SCRIPT 5.0.
With the Secretary's recognition of the updated NCPDP SCRIPT 8.1, AHRQ,
in its capacity as the administrator of the pilot project, gave pilot
sites the option to voluntarily use NCPDP SCRIPT 8.1. Accordingly, all
grantees/contractor in the pilot sites voluntarily employed the updated
NCPDP SCRIPT 8.1 in their various testing modalities.
2. Grantees/Contractor and Testing Criteria
[If you choose to comment on issues in this section, please include
the caption ``Grantees/Contractor and Testing Criteria'' at the
beginning of your comments.]
The initial standards were tested in five healthcare/geographic
settings to determine whether they were ready for broad adoption.
Grantees/contractor tested whether the initial standards allowed
participants to effectively communicate the necessary information
between all participants in the transactions, such as the pharmacy,
pharmacy benefits manager (PBM), router, plan and prescriber. They also
tested how the initial standards worked with the foundation standards.
Pilot sites also tracked generally anticipated e-prescribing outcomes,
such as a reduction in medical errors. For more information on testing
parameters and criteria, go to http://www.grants.nih.gov/grants/guide/rfa-files/RFA-HS-06-001.html.
One of the strengths of the pilot project was the diversity and
uniqueness of the five grantees/contractor. Grantees/contractor
represented the spectrum of communities involved with e-prescribing,
including most practice settings, and focused on utilization by
pharmacists, physicians, nurses, and technology vendors. Applications
were considered based on specific
[[Page 64904]]
characteristics/criteria. Each pilot site focused on different
perspectives of the functionality and impact of initial standards by
evaluating them in different sectors of the healthcare system,
different geographies, and different practice settings using different
technology application vendors, pharmacies and other stakeholders in
the e-prescribing industry. The grantees selected were Achieve
Healthcare Information Technologies, L.L.P., Eden Prairie, Minnesota;
Brigham and Women's Hospital, Boston, Massachusetts; RAND Corporation,
Santa Monica, California; SureScripts, L.L.C., Alexandria, Virginia.
The contractor that was selected was the University Hospitals Health
System, Cleveland, Ohio. For more information on the pilot project
criteria, refer to the Request for Application at http://www.grants.nih.gov/guide/RFA-HS-06-001.html
.
3. Pilot Test Findings
[If you choose to comment on issues in this section, please include
the caption ``Pilot test findings'' at the beginning of your comments.]
a. Standard for Formulary and Benefits
In the February 4, 2005 proposed rule, we discussed how the
adoption of the formulary and benefit standard would enhance e-
prescribing capabilities under Medicare Part D by making it possible
for the prescriber to obtain information on the patient's benefits,
including the formulary status of drugs that the physician is
considering prescribing. At that time, we proposed characteristics for
a formulary and benefit standard (for a more detailed discussion refer
to 70 FR 6262 through 6263). We proposed that if those characteristics
for formulary were met by a standard and there was adequate industry
experience with it, we would consider adopting it as a foundation
standard. The NCVHS, in a September 2, 2004 letter to the Secretary
(http://www.ncvhs.hhs.gov), had recommended the development of an NCPDP
formulary and benefit standard, based on an RxHub protocol, to address
the need for these desirable characteristics. RxHub submitted this
protocol to NCPDP for approval and it was included in the October 2005
release of NCPDP Formulary and Benefit standard 1.0. However, the
timing of its release in October 2005 was too late for the Formulary
and Benefit standard 1.0 to be considered for approval as a foundation
standard in the November 7, 2005 final rule. Also, there was little to
no industry experience with the standard. Because of this and other
concerns about its interoperability with other standards, at that time
we did not adopt NCPDP Formulary and Benefit standard 1.0 as a
foundation standard, but agreed to include it in pilot testing. For
more details, refer to 70 FR 67573.
Formulary and benefits data standards must provide a uniform means
for pharmacy benefit payers (including health plans and PBMs) to
communicate a range of formulary and benefit information to prescribers
via point-of-care (POC) systems. These include:
General formulary data (for example, therapeutic classes
and subclasses);
Formulary status of individual drugs (that is, which drugs
are covered);
Preferred alternatives (including any coverage
restrictions, such as quantity limits and need for prior
authorization); and
Copayment (the copayments for one drug option versus
another).
The NCPDP Formulary and Benefits Standard 1.0 enables the
prescriber to consider this information during the prescribing process,
and make the most appropriate drug choice without extensive back-and-
forth administrative activities with the pharmacy or the health plan.
The NCPDP Formulary and Benefits Standard 1.0 was implemented live
in all pilot sites, and technology vendors were certified prior to
production. This standard works in tandem with the eligibility request
and response (ASC X12N 270/271). Once the individual is identified, the
appropriate drug benefit coverage is located and transmitted to the
requestor.
The pilot sites demonstrated that the NCPDP Formulary and Benefits
Standard 1.0 can be successfully implemented between prescriber and
plan. The NCPDP Formulary and Benefits Standard 1.0 is quite broad, and
there are a number of complex data relationships supported by the
standard. This complexity creates a certain level of confusion as to
how to properly use the data and leads to implementation issues. While
complex, the standard can support the transaction, and is ready for
implementation as part of the e-prescribing program under Medicare Part
D.
Formularies by their very nature are complex. They consist of
hundreds of pages of drug names, dosages, etc., that frequently change
due to updates in formulations, coverage decisions, etc. In addition,
each drug plan has their own formulary that they use for coverage
purposes. Coverage of benefits is sometimes a fluid issue; coverage can
change from day to day, depending, for example, as to whether a
Medicare Part D beneficiary has met out-of-pocket spending thresholds,
or has experienced a life-changing situation that might affect their
benefit delivery for example, entering a long-term care facility).
Adoption of this standard for formulary and benefits transactions
between plans and providers may deliver added value in approximating
patients' drug coverage and lead to patient-specific, real-time benefit
information.
b. Standard for Medication History
A medication history standard provides a way for prescribers,
dispensers, and payers to communicate about a listing of drugs that
have been prescribed or claimed for a patient within a certain
timeframe. It may provide information that would be of use in helping
to identify drug interactions, including the dispensing pharmacy and
the prescribing physician. This standard is relatively mature and
widely adopted by the prescribing industry. It has been useful in
preventing medication errors, as well as understanding medication
management compliance. Results demonstrate there is a difference in how
the standard is implemented based on the source of the medication
history.
In the February 4, 2005 proposed rule, we discussed how the
adoption of the medication history standard would enhance e-prescribing
capabilities under Medicare Part D by making it possible for the
prescriber to obtain information on the medications the patient is
already taking, including those prescribed by other providers. At that
time, we proposed characteristics for a medication history standard
(for a more detailed discussion refer to 70 FR 6262 through 6263). We
proposed that if those characteristics for medication history were met,
and there was adequate industry experience with them, we would consider
adopting foundation standards. The NCVHS, in a September 2, 2004 letter
to the Secretary (http://www.ncvhs.hhs.gov), had recommended the rapid
development of an NCPDP medication history standard based on an RxHub
protocol. The NCPDP SCRIPT standard 8.1, based on the RxHub protocol,
was released in October 2005, featuring those desirable
characteristics. However, the timing of its release in October 2005 was
too late for the standard to be considered for approval as a foundation
standard in the November 7, 2005 final rule, and there was little to no
industry experience with the standard. Because of this and other
concerns about its interoperability with other standards, at that time
we did not adopt the NCPDP SCRIPT standard as a foundation standard for
medication history, but agreed to include it in pilot
[[Page 64905]]
testing. For more details, refer to 70 FR 67573.
The pilot sites found that the proposed medication history standard
included as a transaction in the NCPDP SCRIPT 8.1 is well structured,
supports the exchange of information, would not impose an undue
administrative burden on prescribers and dispensers, is compatible with
other health IT standards, and is ready to be used as part of the e-
prescribing program under Medicare Part D.
c. Standard for Structured and Codified SIG
Patient instructions for taking medications are placed at the end
of a prescription. These are called the signatura, commonly abbreviated
SIG. Currently, the Food and Drug Administration (FDA) provides some
terminology for SIGS, for example, route of administration and unit of
presentation. However, there is no standardized format or vocabulary
for SIGs, leaving room for misinterpretation and error. A standard
structure and code set for expressing SIGs has the potential to enhance
patient safety, although free text capability must be preserved for
special circumstances. Pilot sites used a variety of approaches
including review of the proposed NCPDP Structured and Codified SIG
standard 1.0, identification of test cases, using live transactions and
selecting samples of prescriptions with a wide variety of SIGs,
recreating each test case in a laboratory environment, and then
developing a test harness that would include functions of an electronic
information exchange application. Another approach was to analyze an
initial sample that would be statistically valid with an attempt to
represent each distinct SIG using the proposed standard's 128 data
fields.
The pilot sites found that the proposed Structured and Codified SIG
format needs additional work with reference to field definitions and
examples, field naming conventions and clarifications of field use. It
is imperative that the prescriber's instructions be translated exactly
into e-prescribing and pharmacy practice management systems to reduce
medication errors, decrease healthcare costs and improve patient
safety. Contradictions with other structured fields exist, and there
are limitations on directions for topical drugs (such as the area of
application). The pro re nata (PRN) or ``as needed'' designation could
be interpreted as either ``as needed'' or ``as required'', and the
standard does not allow for quick revisions for new drug
administration. Mistranslations and contradictions in dosage/timing
directions leave room for misinterpretation and error. Analysis shows
that the NCPDP's proposed Structured and Codified SIG Standard 1.0 is
not sufficiently developed for use for Medicare Part D e-prescribing in
its current state.
d. Standard for Fill Status Notification
The Fill Status Notification standard is a function within the
NCPDP SCRIPT 8.1, but it was not named a foundation standard due to
lack of adequate industry experience. The standard enables a pharmacy
to notify a prescriber when the prescription has been dispensed
(medication picked up by patient), partially dispensed (partial amount
of medication picked up by the patient), or not dispensed (medication
not picked up by patient, resulting in the medication being returned to
stock).
Pilot sites found that the NCPDP SCRIPT 8.1 standard supports the
activities of a pharmacy sending messages to the prescriber as to the
status of a prescription. The challenges encountered were not related
to the structure and format of the standard, but in its implementation.
RxFill is intended to encourage adherence and compliance with
medication therapy. Although the transaction is technically capable of
performing that function, the pilot sites' experiences and observations
indicate there is no marketplace demand for this information, and may
cause an unnecessary administrative burden on prescribers and
dispensers. Prescribers expressed concerns about being inundated with
data if they were informed every time a prescription was filled or not
filled, and were unsure of the usefulness of the information. Moreover,
implementing the Fill Status transaction would require significant
business process changes at pharmacies as well as development of common
rules for determining when a prescription becomes a ``no-fill.'' We
question the marketplace demand for Fill Status Notification and
solicit comments regarding both stakeholders' and industry's potential
utilization of RxFill.
e. Standard for Clinical Drug Terminology: RxNorm
RxNorm is a vocabulary resulting from a collaboration between the
Food and Drug Administration (FDA) and the National Library of Medicine
(NLM) that provides standard names for clinical drugs (active
ingredient + strength + dose form), and for dose forms as administered
to a patient. These concepts are relevant to how a physician would
order a drug. It provides links from clinical drugs, both branded and
generic, to their active ingredients, drug components (active
ingredient + strength), and related brand names. NDCs (National Drug
Codes) for specific drug products (where there are often many NDC codes
for a single product) are linked to that product in RxNorm. NDCs for
specific drug products identify not only the drug but also the
manufacturer and the size of the package from which it is dispensed.
NDCs are relevant to how a pharmacy would dispense the drug. RxNorm
links its names to many of the drug vocabularies commonly used in
pharmacy management and drug interaction software. By providing links
between these vocabularies, RxNorm can mediate messages between systems
not using the same software and vocabulary.
RxNorm terminology was evaluated in the context of the NCPDP SCRIPT
8.1 for new prescriptions, renewals, and changes. RxNorm was included
in the pilot to determine how well the RxNorm information can be
translated from the prescriber's system to the dispenser's system while
maintaining the prescriber's intent. The grantees/contractor tested
this standard in a laboratory setting, specifically to gain
understanding of the completeness and accuracy of RxNorm.
The pilot sites demonstrated that RxNorm has significant potential
to simplify e-prescribing, create efficiencies, and reduce dependence
on NDCs among dispensers. It was able to represent both new
prescriptions and renewal requests. In some testing, RxNorm erroneously
linked some NDCs to lists of ingredients rather than to the drugs
themselves. Testing also revealed cases in which the NDC codes linked
by RxNorm did not match to a semantic clinical drug (SCD), which always
contains the ingredient(s), strength and dose form, in that order. This
indicates there was either an error in matching to the correct RxNorm
concept, or an error with RxNorm itself, with more than one term being
available for the same clinical drug concept (that is, unresolved
synonymy). There is currently no central repository containing a list
of all NDC codes, nor a reference guide that indicates all of the NDCs
associated with a particular drug. (On August 29, 2006, FDA published a
proposed rule [71 FR 51276] which would result in the creation of an
electronic drug registration and listing system for which FDA would
issue all NDCs, registrants would be required to keep information up to
date, and there would be a centralized electronic repository for these
NDCs. Through the Structured Product Labeling (SPL) for
[[Page 64906]]
each marketed drug product, the NDCs would be linked to the drug
product code, proprietary name, established name of the active
ingredients, Unique Ingredient Identifiers [UNII], active ingredient
strengths and pharmaceutical dosage form.) As with other vocabulary
standards, RxNorm will never cover 100 percent of what is needed in
every circumstance, so some provisions for exceptions will be needed.
One example encountered in the pilots was the lack of standard names
and identifiers for pharmacy-compounded drugs. Analysis shows that, as
of December 2006, RxNorm was not sufficiently developed for effective
and accurate use for Medicare Part D e-prescribing.
f. Standard for Prior Authorization
The prior authorization standard incorporates real-time prior
authorization functionality in the ASC X12N 278 Version 4010A1 Health
Care Services Review transaction. Originally there were two models that
were to be considered, solicited (prescriber proactively solicits prior
authorization criteria/forms from plan) and unsolicited (questions
appear via prompts on a point-of-care software system). The solicited
model is rarely used and usually results in a paper-based response,
versus the unsolicited model which employs e-prescribing technology.
Upon consultation between the pilot sites and AHRQ as the administrator
of the pilot project, AHRQ advised that the pilot sites use the
unsolicited model using the NCPDP Formulary and Benefits Standard 1.0
specification as it would provide a better test of prior authorization
in an e-prescribing environment.
Prior authorization is a very complex standard to implement,
necessitating an understanding of four different standards and multiple
payer requirements. The combination of ASC X12N 278, ASC X12N 275 and
the HL7 prior authorization (PA) attachment is cumbersome, confusing
and requires expertise that may limit adoption. Because health plans
typically require prior authorization only for a small subset of drugs,
the pilot sites had limited live experience with this standard.
Nevertheless, they pilot tested the ASC X12N 278 version 4010A1 and ASC
X12N 275 version 4010 with the HL7 PA attachment and identified several
issues that need to be addressed before this standard should be adopted
as an e-prescribing final standard, including some inconsistencies
between ASC X12N 278 Version 4010A1 and ASC X12N 275 Version 4010 that
need to be addressed. Investigators agreed that the HIPAA-named prior
authorization standard--the ASC X12N 278 version 4010A1--was not
adequate to support prior authorization because it was designed for
service or procedure prior authorizations, not for medication prior
authorization. One of the challenges of the ASC X12N 275 version 4010
with the HL7 PA attachment is that it did not allow vendors to make
questions mandatory, which would ensure that the information required
is complete and reduce the need for back-and-forth communication that
takes place between plan prior authorization representatives and
prescribers. Standards modifications would need to be made prior to
adoption as a final standard for the Medicare Part D e-prescribing
program.
g. Use of Standards in the Long-Term Care (LTC) Setting
Healthcare Delivery in long-term care (LTC) settings is unique for
several reasons. Nurses are frequently the primary caregivers, with
off-site physicians who monitor care; specialized long-term care
pharmacies are located off-site with drugs being delivered to the
facility. While the participants in the Achieve study were drawn from a
convenience sample, the setting provided a special opportunity for
understanding e-prescribing's impact on an entirely different patient
population, provider type, and prescription delivery system.
In long-term care, a prescription order typically remains an open
order with no end date or a date far in the future. A prescriber may
need to modify this order and notify the pharmacy. Changes might
include dose, form, strength, route, modifications of frequency, or a
minor change related to the order. Also, in the long-term care
environment, there is a need to send a refill request from a facility
to a pharmacy. An example is when a medication supply for a resident is
running low (2-3 doses remaining), and a new supply is needed from the
pharmacy. The facility needs a way to notify the pharmacy that a refill
for the medication is needed. E-prescribing was evaluated within the
unique context of long-term care workflow from facility to pharmacy.
The primary purpose of the long-term care pilot site was to test
the NCPDP SCRIPT 8.1 in the long-term care setting and found that
modifications were required in order to ensure accurate transmission of
the data. Through partner agreement, ``work-arounds'' were identified
and implemented. These work-around requests were formally submitted by
the pilot site grantee to NCPDP in the form of a DERF (Data Element
Request Form) to modify the standard as needed. When an updated version
of the NCPDP SCRIPT Standard becomes available that can accommodate the
unique prescription workflow of the LTC setting, we will consider
removing the current exemption. We solicit industry and other
interested stakeholder comments on the impact and timing of lifting
this exemption.
II. Provisions of the Proposed Rule
A. Proposed Retirement of NCPDP SCRIPT 5.0 and Adoption of NCPDP SCRIPT
8.1 as a Final Standard
[If you choose to comment on issues in this section, please include
the caption ``Adoption of NCPDP SCRIPT 8.1'' at the beginning of your
comments.]
We propose to revise Sec. 423.160(b)(1) to replace the NCPDP
SCRIPT 5.0 standard with the NCPDP SCRIPT 8.1. Those providers and
dispensers using e-prescribing to provide for the electronic
communication of a prescription or prescription-related information
would be required to use the NCPDP SCRIPT 8.1 for the following
transactions:
Get message transaction.
Status response transaction.
Error response transaction.
New prescription transaction.
Prescription change request transaction.
Prescription change response transaction.
Refill prescription request transaction.
Refill prescription response transaction.
Verification transaction.
Password change transaction.
Cancel prescription request transaction.
Cancel prescription response transaction.
On June 23, 2006, we published an interim final rule with comment
(71 FR 30620) to solicit comments as to whether the NCPDP SCRIPT 8.1
was a backward compatible update to NCPDP SCRIPT 5.0. We received 5
timely public comments on this interim rule with comment. The comments
came from a standards setting organization, two national industry
associations, and two private corporations actively involved in e-
prescribing. All commenters supported the voluntary use of the backward
compatible Version 8.1 of the NCPDP SCRIPT Standard. Four recommended
that it be adopted as soon as reasonably possible, and that Version 5.0
be retired as soon as reasonably practical. They also indicated that
Version 8.1 was already in widespread use throughout their
[[Page 64907]]
respective industries. One commenter indicated a concern with making
backward compatibility ``the criteria'' for determining if a notice and
comment rulemaking is required. That commenter felt that backward
compatibility must be viewed as just one factor in making a
determination to update, as opposed to modify, a standard.
We continue to find that the NCPDP SCRIPT 8.1 is backward
compatible to the adopted NCPDP SCRIPT 5.0. Both versions are the same,
except that Version 8.1 contains the additional feature of medication
history. One commenter expressed that it has been their experience
that, while capable of processing Version 5.0, the industry is already
implementing Version 8.1, and that few, if any, of their trading
partners are using Version 5.0. This is supported by industry reports
that numerous software systems now using Version 8.1 have been
certified for use by electronic prescribing networks.
Regarding the comment that backward compatibility should not be the
sole criterion for determining whether use of a subsequent version
requires an update or a modification of an e-prescribing standard, we
note that it is not the sole criterion. The ``backward compatibility''
of a subsequent version of an adopted standard simply indicates that
entities may voluntarily upgrade their systems with the subsequent
version that is ``backward compatible,'' and still be compliant with
the adopted standard. With the backward compatible version, entities
may conduct transactions with other entities that continue to use the
adopted version of the standard with no deleterious effect on the
transmission of information or the transaction itself. We also note
that we are required by law to employ notice and comment rulemaking to
modify an adopted standard or when entities would be required to
transition to a subsequent version. Through the rulemaking process, we
must notify the public as to the proposed modifications, receive public
comment on our proposals, and take into consideration an analysis of
factors such as the modification's impact on affected entities relative
to cost, benefit projections, productivity, etc., as well as industry
and stakeholder feedback provided by means of the written comment
process. We are soliciting comments regarding the retirement of Version
5.0 and the adoption of Version 8.1 as the adopted standard for the e-
prescribing functions outlined in 42 CFR 423.160(b)(1), and based on
the proposed compliance date described in section II.E. of this
proposed rule.
B. Proposed Adoption of an E-Prescribing Standard for Medication
History Transaction
[If you choose to comment on issues in this section, please include
the caption ``Medication History'' at the beginning of your comments.]
In the Foundation Standards final rule, 70 FR 67568, we discussed
the need for medication history standards, and that we were unaware of
any standard for these transactions that clearly met the criteria for
adequate industry experience. As a result, a standard for medication
history was tested in the 2006 pilot project.
The NCVHS noted in its September 2, 2004 letter to the Secretary
that medication history information was communicated between payers and
prescribers using proprietary messaging standards, frequently the
Information File Transfer protocols established by RxHub, a national
formulary and benefits information exchange. The NCVHS recommended that
HHS actively participate in and support the rapid development of an
NCPDP standard for formulary and medication history using the RxHub
protocol as a basis. In September 2005, RxHub announced that its
propriety data transaction format for Medication History which they had
submitted to NCPDP, had been approved and incorporated into the NCPDP
Script Standard, and approved by the American National Standard
Institute (ANSI). NCVHS considered ANSI accreditation to be one
criterion in their recommendation process for adoption of e-prescribing
standards, and HHS adopted this as a criterion for determining adequate
industry experience. (See 70 FR 67568, 67577 for a discussion of all
the criterion considered by NCVHS.) The resulting NCPDP SCRIPT standard
was recognized by the Secretary as an initial standard, then pilot
tested in accordance with the MMA.
The pilot sites demonstrated that the standard can be successfully
implemented among a variety of e-prescribing partners and, while
complex, the standard can support the Medication History transaction,
and is ready for implementation under Medicare Part D.
If NCPDP SCRIPT 8.1 is adopted in place of NCPDP SCRIPT 5.0 at
Sec. 423.160(b)(1) as proposed above, we also propose to add Sec.
423.160(b)(3) to adopt the NCPDP SCRIPT 8.1 for electronic medication
history transactions among the plan sponsor, prescriber, and the
dispenser when e-prescribing for covered Medicare Part D drugs for
Medicare Part D eligible individuals. The medication history
transaction in the NCPDP SCRIPT 8.1 standard is based on the
proprietary file transfer protocol developed by RxHub, which is
currently being used to communicate this information in many e-
prescribing products.
Adoption of the NCPDP SCRIPT 8.1 standard for the medication
history transaction will provide a uniform communications mechanism for
prescribers, dispensers and payers, support reconciliation of useful
data from a large number of sources, and raise awareness of its
availability and use among providers. Cost savings to the public will
be generated based on reductions in the number of preventable adverse
drug events (ADEs). Significantly, systems that utilize this proposed
transaction in the NCPDP SCRIPT 8.1 standard will be substantially more
effective at ADE reduction than those merely utilizing the original
foundation standards by allowing prescribers to see what medications
have been prescribed by other providers in the past.
C. Proposed Adoption of an E-prescribing Standard for Formulary and
Benefit Transactions
[If you choose to comment on issues in this section, please include
the caption ``formulary and benefit transactions'' at the beginning of
your comments.]
As a result of pilot testing, we are proposing to add Sec.
423.160(b)(4) to adopt the NCPDP Formulary and Benefit Standard 1.0,
for the transaction of communicating formulary and benefit information
between the prescriber and the plan sponsor when e-prescribing for
covered Medicare Part D drugs for Medicare Part D eligible individuals.
This standard is based on a proprietary file transfer protocol
developed by RxHub, which is currently being used to communicate this
information in many e-prescribing products. The RxHub protocols were
submitted to NCPDP for accreditation, and the resulting standard was
recognized by the Secretary as an initial standard and pilot-tested in
accordance with the MMA.
The NCPDP Formulary and Benefits Standard 1.0 was implemented live
in all pilot sites. This standard works in tandem with the eligibility
request and response (ASC X12N 270/271). Once the individual is
identified, the appropriate drug benefit coverage is located and
transmitted to the requestor.
The pilot sites demonstrated that the NCPDP Formulary and Benefits
Standard 1.0 can be successfully
[[Page 64908]]
implemented among a variety of e-prescribing partners, and while
complex, the standard can support the transaction, and is ready for
implementation under Medicare Part D.
Adoption of this standard for formulary and benefits transactions
between plan sponsors and prescribers may deliver added value in
approximating patients' drug coverage and lead to patient-specific,
real-time benefit information. The NCPDP Formulary and Benefits
Standard 1.0 enables the prescriber to consider this information during
the prescribing process, and make the most appropriate drug choice
without extensive back-and-forth administrative activities with the
pharmacy or the plan sponsors. As prescribers prescribe based on the
coverage offered by a patient's plan formulary, plans will experience
reduced costs through paying for drugs that are specific to their
formularies for which they have negotiated favorable rates. Patients
will see reduced costs in not having to pay increased out-of-pocket
expenses for prescribed drugs that are not on their plan's formularies.
D. Adoption of the National Provider Identifier (NPI) as a Standard for
Use in E-Prescribing Transactions
[If you choose to comment on issues in this section, please include
the caption ``Adoption of the National Provider Identifier'' at the
beginning of your comments.]
We are proposing to add Sec. 423.160(b)(5) to adopt the National
Provider Identifier as a standard for use in e-prescribing transactions
among the plan sponsor, prescriber, and the dispenser. The NCPDP SCRIPT
standard 8.1, which we are proposing for adopting in this proposed
rule, supports the use of NPI.
While the NPI was not tested in the pilot project, we have reason
to believe that there is adequate industry experience with the NPI
which would support its use in e-prescribing transactions under section
1860D-4(e)(4)(C)(ii). Use of the NPI is already required in order to
conduct HIPAA-compliant transactions which require the identity of
HIPAA covered health care providers; and the compliance date for the
NPI, May 27, 2007, has already passed. The NPI is in widespread use by
HIPAA covered entities in HIPAA transactions. Although the NCPDP SCRIPT
transaction is not a HIPAA transaction, the prescribers and dispensers
that conduct it would be HIPAA covered entities, and as such, they
would already be using NPI as they conduct their HIPAA transactions.
They would, therefore, already be familiar with the NPI, even though
they may not currently use it in the NCPDP SCRIPT transaction.
Furthermore, NPI meets the objectives and design criteria laid out at
section 1860D-4(e)(3) of the Act, so adoption of the NPI for use in e-
prescribing standards is supported by section 1860D-4(e)(3)(A) of the
Act as well. Finally, as uniform identifiers are necessary to conduct
electronic transactions such as those in the e-prescribing program,
adoption of NPI is also supported by section 1102 of the Act.
We generally solicit comments from the industry and other
stakeholders on the adoption of NPI as an e-prescribing standard, and
we specifically request comments as to whether use of the NPI in HIPAA-
compliant transactions constitutes adequate industry experience for
purposes of using NPI as a covered health care provider identifier in
Medicare Part D e-prescribing transactions.
E. Proposed Compliance Date
In accordance with section 1860D-4(e) of the Act, the Secretary
must issue certain final uniform standards for e-prescribing no later
than April 1, 2008, to become effective not later than 1 year after the
date of their promulgation. Therefore, in accordance with this
requirement, the Secretary proposes a compliance date of 1 year after
the publication of the final uniform standards. The Secretary also
proposes adopting NCPDP SCRIPT 8.1 as the e-prescribing standard for
the transactions listed in section III. C. of this proposed rule,
effective 1 year after the publication of the final uniform standards.
We solicit comments regarding the impact of these proposed dates on
industry and other interested stakeholders and whether an earlier
compliance date should be adopted.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), agencies are
required to provide a 30-day notice in the Federal Register and solicit
public comment before a collection of information requirement is
submitted to the Office of Management and Budget (OMB) for review and
approval. In order to fairly evaluate whether an information collection
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires
that we solicit comment on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency.
The accuracy of the agency's estimate of the information
collection burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements.
Standards for an Electronic Prescribing Program (Sec. 423.160)
The emerging and increasing use of health care electronic data
interchange (EDI) standards and transactions have raised the issue of
the applicability of the PRA. It has been determined that a regulatory
requirement mandating the use of a particular EDI standard constitutes
an agency-sponsored third-party disclosure as defined under the PRA.
As a third-party disclosure requirement subject to the PRA,
Medicare Part D sponsors offering qualified prescription drug coverage
must support and comply with electronic prescription standards relating
to covered Medicare Part D drugs, for Medicare Part D enrolled
individuals as would be required under Sec. 423.160.
However, the requirement that Medicare Part D sponsors support
electronic prescription drug programs in accordance with standards set
forth in this section, as established by the Secretary, does not
require that prescriptions be written or transmitted electronically by
prescribers or dispensers. After the promulgation of this set of final
standards, these entities will be required to comply with the proposed
standards only if they transmit prescription information electronically
as discussed in section 1860D-4(e)(1) and (2) of the Act.
Testimony presented to the NCVHS indicates that most health plans/
PBMs currently have e-prescribing capability either directly or by
contracting with another entity. Therefore, we do not believe that
conducting an electronic prescription drug program would be an
additional burden for those plans. We solicit industry and other
interested stakeholder comments and input on this issue.
Since these standards are already familiar to industry, we believe
the requirement to adopt them constitutes a usual and customary
business practice and the burden associated with the requirements is
exempt from the PRA as stipulated under 5 CFR 1320.3(b)(2).
[[Page 64909]]
As required by section 3504(h) of the Paperwork Reduction Act of
1995, we have submitted a copy of this document to OMB for its review
of these information collection requirements.
If you comment on any of these information collection requirements,
please mail copies directly to the following: Centers for Medicare &
Medicaid Services, Office of Strategic Operations and Regulatory
Affairs, Regulations Development and Issuances Group, Attn: William
Parham, III, CMS-0016-P, Room C5-14-03, 7500 Security Boulevard,
Baltimore, MD 21244-1850; and Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503. Attn: Carolyn Lovett, CMS Desk
Officer, CMS-0016-P, Carolyn_lovett@omb.eop.gov. Fax: (202) 395-6974.
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a final rule, we will respond to the comments
in the preamble to that document.
V. Regulatory Impact Analysis
[If you choose to comment on issues in this section, please include
the caption ``Regulatory Impact Analysis'' at the beginning of your
comments.]
We have examined the impacts of this rule as required by Executive
Order 12866 of September 30, 1993, as further amended; the Regulatory
Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354); section
1102(b) of the Social Security Act; section 202 of the Unfunded
Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4); and
Executive Order 13132 of August 4, 1999.
Executive Order 12866 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties, and further amended by
Executive Order 13422) directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). According to Executive
Order 12866, a regulatory action may reasonably be ``significant'' if
it meets any one of a number of specified conditions, including if the
action may reasonably be anticipated to lead to:
An annual effect on the economy of $100 million or more,
adversely affecting in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
A serious inconsistency or otherwise interfering with an
action taken or planned by another agency;
Material alteration in the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or
Novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
This proposed rule is anticipated to have an annual benefit on the
economy of $100 million or more and will have ``economically
significant effects.'' We believe that prescribers and dispensers that
are now e-prescribing have already largely invested in the hardware,
software and connectivity necessary to e-prescribe. We do not
anticipate that the proposed modification of the NCPDP SCRIPT 5.0 to
the NCPDP SCRIPT 8.1 at Sec. 423.160(b)(1), the adoption of NCPDP
SCRIPT 8.1 for the Medication History transaction, the adoption of the
NCPDP Formulary and Benefit Standard 1.0 for formulary and benefit
transactions, and the adoption of NPI for use in e-prescribing
transactions will result in significant costs. We solicit industry and
other interested stakeholder comments and input on this issue. We
anticipate that the ability to utilize electronic formulary and benefit
inquiries will result in administrative efficiencies and increased
prescribing of generic drugs versus brand name drugs, and the access to
medication history at the point of care will result in reduced adverse
drug events (ADEs). The benefits accruing from these transactions will
have an economically significant effect on Medicare Part D program
costs and patient safety. As this is a significant rule under Executive
Order 12866, we are required to prepare a regulatory impact analysis
(RIA) for this rule.
The Regulatory Flexibility Act (RFA) requires agencies to analyze
options for regulatory relief of small entities. For purposes of the
RFA, small entities include small businesses, nonprofit organizations,
and small governmental jurisdictions. Most hospitals and most other
providers and suppliers are small entities, either by nonprofit status
or by qualifying as small businesses under the Small Business
Administration's size standards (revenues of $6.5 million to $31.5
million in any 1 year for the health care industry). States and
individuals are not included in the definition of a small entity. For
details, see the Small Business Administration's regulation that set
forth the current size standards for health care industries at http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf
(refer to the 620000 series).
Based on our initial analysis, we expect this proposed rule will
not have a significant impact on a substantial number of small entities
because, while many prescribing physician practices and independent
pharmacies would be small entities, e-prescribing is voluntary for
prescribers and pharmacies. For prescribers and dispensers that have
already implemented e-prescribing, the adoption of NCPDP SCRIPT 8.1
would in most cases be accommodated through software upgrades whose
cost would already be included in annual maintenance fees. Medicare
Part D sponsors are required to support e-prescribing, and would incur
some costs to support the NCPDP Formulary and Benefit Standard 1.0 and
the NCPDP SCRIPT 8.1 medication history transaction. However, using the
SBA revenue guidelines, the majority of Medicare Part D plan sponsors
would not be considered small entities as they represent major
insurance companies with annual revenues of over $31.5 million. We also
do not anticipate that the proposed requirement to use NPI in e-
prescribing would have any effect on Medicare Part D plans, providers
or dispensers as they are already using the NPI in HIPAA-covered
transactions.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a rule may have a significant impact on the
operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a core-bed
Metropolitan Statistical Area and has fewer than 100 beds. This
proposed rule would not affect small rural hospitals because the
program will be directed at outpatient prescription drugs covered under
Medicare Part D and not drugs provided during a hospital stay.
Prescription drugs provided during hospital stays are covered under
Medicare as part of Medicare payments to hospitals. Therefore, for
purposes of our obligations under section 1102(b) of the Act, we are
not providing an analysis.
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
[[Page 64910]]
Federal agencies to prepare written statements before promulgating any
general notice of proposed rulemaking of any rule that includes a
Federal mandate that could result in expenditure in any one year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million. Since only Medicare Part D plan
sponsors are required to support e-prescribing, this proposed rule does
not include any mandate that would result in this spending by State,
local or tribal governments. We acknowledge that there may be
transaction costs borne by payers and pharmacy benefit managers (PBMs),
but, based on our analysis, they would fall below the $110 million
threshold. We would expect that many Medicare Part D plan sponsors
already support the exchange of formulary, benefits and medication
history data, because the standards we are proposing are based on
proprietary transactions developed by Rx-Hub, which are already in use
in the current e-prescribing environment.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct costs on State and local
governments, preempts State law, or otherwise has Federalism
implications. Every State allows for the electronic transmission of
prescriptions. In recent years, many States have more actively
legislated in this area. The scope and substance of this State
activity, however, varies widely among the States.\1\ The MMA addresses
preemption of State laws at section 1860D-4(e)(5) of the Act as
follows:
---------------------------------------------------------------------------
\1\ Catizone, Carmen A., National Association of Boards of
Pharmacy, Testimony before the NCVHS, July 29, 2004.
---------------------------------------------------------------------------
(5) Relation to State Laws. The standards promulgated under this
subsection shall supercede any State law or regulation that--
(A) Is contrary to the standards or restricts the ability to carry
out this part; and
(B) Pertains to the electronic transmission of medication history
and of information on eligibility, benefits, and prescriptions with
respect to covered part D drugs under this part.
In the final rule (70 FR 67568 through 67594), we interpreted this
section of the Act as preempting State law provisions that conflicted
with Federal electronic prescription program drug requirements that are
adopted under Medicare Part D. We viewed it as mandating Federal
preemption of State laws and regulations that are either contrary to
the Federal standards, or that restrict the ability to carry out (that
is, stand as an obstacle to) the electronic prescription drug program
requirements, and that also pertain to the electronic transmission of
prescriptions or certain information regarding covered Medicare Part D
drugs for Medicare Part D enrolled individuals.
Consequently, for a State law or regulation to be preempted under
this express preemption provision, the State law or regulation would
have to meet the requirements of both paragraphs (A) and (B).
Furthermore, there would have to be a Federal standard adopted through
rulemaking that creates a conflict for a State law to be preempted.
This interpretation closely reflected the language of the statute, and
it is consistent with the presumption against Federal preemption of
State law \2\ and with the fundamental Federalism principles set forth
in section 2 of Executive Order 13132. It is also consistent with the
Department of Health and Human Service's (HHS) general position of
deferring to State laws regulating the practice of pharmacy and the
practice of medicine.
---------------------------------------------------------------------------
\2\ See Davies Warehouse Co. v. Bowles, 321 U.S. 144, 153, 64,
S.Ct. 474, 88 L.Ed. 635 (1944), Pharmaceutical Research and
Manufacturers of America v. Walsh, 538 U.S. 644, 661, 123 S.Ct.
1855, 1867, 155 L.Ed.2d 889 (2003).
---------------------------------------------------------------------------
In the final rule at 70 FR 67568 through 67594, we acknowledged
that some industry representatives believed that the Congress intended
this preemption provision to be much broader. For instance, some
expressed the position that this statutory provision preempts all State
laws that would in any way restrict the development of e-prescribing
for all providers and payors. This position was based on the belief
that the Congress intended to preempt the field of e-prescribing
through this provision in the MMA. It would have required an
interpretation that the word ``and'' between paragraphs (A) and (B) was
disjunctive, that is, that ``and'' means ``or'' in this context. Under
this interpretation, the operative language would be ``restricts the
ability to carry out this part'' in paragraph (A), which arguably would
have enabled the standards and requirements adopted for the Federal
electronic prescription drug program to preempt all State laws and
regulations that restricted the Secretary's ability to carry out the
goals of an electronic prescription drug program, even if they were not
related to covered Medicare Part D drugs, or Medicare Part D covered
individuals. They contended that some States had existing statutory or
regulatory barriers that could impede the success of e-prescribing; for
example, laws and regulations that were drafted with only paper
prescriptions in mind, which may not be well-suited to e-prescribing
applications.
We determined that this interpretation did not comport with the use
of the word ``contrary'' in the statutory language which generally
establishes ``conflict preemption.'' This interpretation would seem to
render paragraph (B) virtually meaningless and serve to establish
``field preemption.''
We invited public comment on our proposed interpretation of the
scope of preemption, particularly with respect to relevant State
statutes and regulations which commenters believe should be preempted,
but would not under our proposed interpretation. We specifically asked
for comment on whether this preemption provision applied only to
transactions and entities that are part of an electronic prescription
drug program under Medicare Part D or to a broader set of transactions
and entities. We also asked for comment on whether this preemption
provision applied to only electronic prescription transactions or to
paper transactions as well. For the same reasons given above, we have
determined that States would not incur any direct costs as a result of
this proposed rule. However, as mandated by section 1860D-4(e) of the
Act, and under the Executive Order, we are required to minimize the
extent of preemption, consistent with achieving the objectives of the
Federal statute, and to meet certain other conditions. We believe that,
taken as a whole, this proposed rule would meet these requirements. We
do seek comments from States and other entities on possible problems
and on ways to minimize conflicts, consistent with achieving the
objectives of the MMA, and will be undertaking outreach to States on
these issues.
We have consulted with the National Association of Boards of
Pharmacy directly and through participation in NCVHS hearings and we
believe that the approach we suggested provides both States and other
affected entities the best possible means of addressing preemption
issues. We will consult further with States before issuing the final
rule. This section constitutes the Federalism summary impact statement
required under the Executive Order.
The objective of this regulatory impact analysis is to summarize
the cost and benefits of implementing the standards we are proposing in
this rule for the conversion from NCPDP SCRIPT 5.0 to NCPDP SCRIPT 8.1
at Sec. 423.160(b)(1), the adoption of
[[Page 64911]]
standards for the electronic communication of formulary and benefit and
medication history information, and the adoption of NPI for use in e-
prescribing transactions. These proposed actions build upon the e-
prescribing requirements published as a final rule on November 7, 2005
(70 FR 67568) which included adoption of three foundation standards for
e-prescribing. The final rule contained an impact analysis that
addressed the cost of those foundation standards, and it also discussed
in concept the benefits of e-prescribing in general. In the e-
prescribing final rule at 70 FR 67589, we noted that commenters
suggested that the estimated start-up costs for e-prescribing could be
at least $1,500 and perhaps exceed $2,000. For average e-prescribing
software implementation, according to a 2003 CITL Report, ``The Value
of Computerized Provider Order Entry,'' a basic-e-prescribing system
cost $1,248 plus $1,690 for annual support, maintenance, infrastructure
and licensing costs. The total first year cost averaged approximately
$3,000. The Journal of Healthcare Information Management has published
that physicians reported paying user-based licensing fees ranging from
$80 to $400 per month, although we believe through anecdotal
information that these licensing fees have decreased over time to
between $300 and $800 annually. For further discussion of the start-up
costs associated with e-prescribing, see the e-prescribing final rule
at 70 FR 67589. This proposed rule builds on the final rule analysis,
and we refer to it to assure that costs and benefits are not counted
twice. We solicit industry and other interested stakeholder comment and
input on this issue.
A. Overall Impact
According to 2006 CMS data, approximately 24 million beneficiaries
were enrolled in a Medicare Part D plan, (either a stand-alone
Prescription Drug Plan or a Medicare Advantage Drug Plan). Another 7
million retirees were enrolled in employer or union-sponsored retiree
drug coverage receiving the Retiree Drug Subsidy (RDS); 3 million in
Federal retiree programs such as TRICARE and the Federal Employees
Health Benefits Plans (FEHBP) and 5 million receiving drug coverage
from alternative sources, including 2 million who have coverage through
the Veterans' Administration. The breadth of Medicare's coverage
suggests that e-prescribing under Medicare Part D could impact
virtually every pharmacy and a large percentage of the physician
practices in the country. Standards established for Medicare Part D
beneficiaries will, as a matter of economic necessity, be adopted by
vendors of e-prescribing and pharmacy software, and as a result, would
extend to other populations unless they are manifestly unsuited for the
purpose. However, we note again that e-prescribing is voluntary for
both prescribers and dispensers under the Medicare Part D electronic
prescribing program.
Our pilot testing and industry collaboration activities were
partially intended to prevent the development of multiple, ``parallel''
e-prescribing environments, with their attendant incremental costs. In
general, we attempted to avoid imposing an undue administrative burden
on prescribing health care professionals, dispensing pharmacies and
pharmacists. The standards we are proposing here, like the foundation
standards adopted previously, are maintained by an accredited standards
development organization. These proposed standards have been shown
through pilot testing to work effectively with the foundation
standards.
B. Costs
Because e-prescribing is voluntary, we anticipate that entities who
currently do not now e-prescribe and who will not implement e-
prescribing during the period reflected in the regulatory impact
analysis will incur neither costs nor benefits.
Entities that do not now e-prescribe, but that will implement e-
prescribing during the period reflected in the regulatory impact
analysis will incur the costs and benefits associated with the
foundation standards (which we discussed in the final rule at 70 FR
67568), but we do not claim either in this analysis. We assume that
implementation of the NCPDP SCRIPT standards would not significantly
affect the implementation cost; that is, the cost to implement the
foundation standards and these two standards is not significantly
higher than the cost of implementing the foundation standards alone.
However, these entities could incur some additional costs for the
purchase of new e-prescribing products that include these two
transactions in the standard format. They would also incur the benefits
of the two proposed standards. We solicit industry and other interested
stakeholder comment and input on these issues.
We assume that since these standards are new and not currently
deployed and implemented in vendor products, that entities do not exist
that e-prescribe now and who have software that conducts these two
transactions using the NCPDP SCRIPT standards.
Entities that e-prescribe now using a software product that cannot
conduct the two transactions and cannot be upgraded to conduct them
(for example, stand-alone Microsoft Word-based prescription writers)
are not required to conduct the two new transactions, and if they
decide not to conduct them, they would incur neither cost nor benefit.
However, if they decide to upgrade their entire e-prescribing system to
take advantage of the benefits of these new transactions, they would
incur costs. However, we have no clear sense of how many entities would
fall into this category.
Entities that e-prescribe now using a product that could be
upgraded to conduct the two transactions would incur no cost or benefit
if they decide not to upgrade. This would also apply to entities that
e-prescribe now using a product that can conduct the two transactions
using nonstandard (Non NCPDP SCRIPT) formats, but the functionality is
not used. Based on our research, this category likely is the one in
which most current e-prescribers fall. If they decide to upgrade, they
would incur the cost of the upgrade (unless the upgrade is included in
their maintenance agreement) and any testing costs, and would incur the
benefits of the two transactions.
Entities that e-prescribe now using a product that can conduct the
two transactions using nonstandard formats, and who use the
transactions would have to upgrade. They would not enjoy all the
benefits of the two new transactions since they would have already been
performing them in some manner, but definitely would incur cost savings
due to the increased interoperability of using the NCPDP SCRIPT
standards. In fact, any entity engaging in e-prescribing would incur
benefits due to increased interoperability, as the existence of
standards simplifies data exchange product selection and testing. We
solicit industry and other interested stakeholder comment and input on
these issues.
In the e-prescribing final rule at 70 FR 67589, we also discussed
the estimated start-up costs for e-prescribing for providers and/or
dispensers. Based on industry input, we cited approximately $3,000 for
annual support, maintenance, infrastructure and licensing costs.
Physicians at that time reported paying user-based licensing fees
ranging from $80 to $400 per month. For further discussion of the
start-up costs associated with e-prescribing, see the regulatory impact
analysis section of
[[Page 64912]]
this proposed regulation, and the e-prescribing final rule at 70 FR
67589.
In the November 7, 2005 final rule, we addressed the issues of
privacy and security relative to e-prescribing in general. We noted
that disclosures of protected health information (PHI) in connection
with e-prescribing transactions would have to meet the minimum
necessary requirements of the Privacy Rule if the entity is a covered
entity (70 FR 6161). It is important to note that health plans,
prescribers, and dispensers are HIPAA covered entities, and that these
covered entities under HIPAA must continue to abide by the applicable
HIPAA standards including these for privacy and security.
We continue to agree that privacy and security are important issues
related to e-prescribing. Achieving the benefits of e-prescribing
require the prescriber and dispenser to have access to patient medical
information that may not have been previously available to them.
Section 1860-D(e)(2)(C) of the Act requires that disclosure of patient
data in e-prescribing must, at a minimum, comply with HIPAA's privacy
and security requirements.
Although HIPAA standards for privacy and security are flexible and
scalable to each entity's situation, they provide comprehensive
protections. We will continue to evaluate additional standards for
consideration as adopted e-prescribing standards. For further
discussion of privacy and security and e-prescribing, refer to the
final rule at 70 FR 67581 through 67582.
1. Retail Pharmacy
Because e-prescribing is voluntary for pharmacies, dispensers who
do not currently conduct e-prescribing would not incur any costs
related to any of the provisions of this rule. However, we recognize
that costs would be incurred by those dispensers that currently conduct
e-prescribing transactions, as well as those who voluntarily implement
e-prescribing during the period reflected in our regulatory impact
analysis. Industry estimates are that close to 100 percent of the
nation's retail chain pharmacies are connected live to an e-prescribing
network, with over 95 percent of those connected to networks capable of
receiving and exchanging formulary and benefit and medication history
data. This is in contrast to only 20 percent of independent pharmacies
that are connected to e-prescribing networks.
The transaction using the NCPDP Formulary and Benefit Standard 1.0
is carried out between the plan and prescriber and, therefore,
pharmacies will not incur any cost related to this transaction.
While the NCPDP SCRIPT 8.1 Medication History transaction supports
communication between the dispenser and prescriber, its use is,
nonetheless, voluntary for both. We assume for purposes of this
analysis that the Medication History transaction will be carried out
between the plan and prescriber, and therefore preliminarily conclude
that pharmacies will not incur costs related to this transaction. We
solicit industry and other interested stakeholder comment and input on
this issue.
The modification of the NCPDP SCRIPT 5.0 foundation standard to
NCPDP SCRIPT 8.1 at Sec. 423.160(b)(1) will impact pharmacies.
Pharmacies will have to assure that their software can accept
prescription transactions using the 8.1 standard, and they will need to
test with prescribers to assure that their electronic transactions are
being received and can be processed. We believe there is little, if
any, incremental costs associated with these activities. Software
vendors are already implementing version 8.1 in their products, and we
believe that any needed upgrades will be included in routine version
upgrades. The number of current e-prescribers per pharmacy is small,
and the testing process is not complicated. We believe that the
implementation of the NPI will be accomplished as part of this
transition. Prescribers and dispensers already use the NPI to conduct
retail pharmacy drug claim transactions.
2. Medical Practices
Medical practices, compared to pharmacies, face a different set of
costs in implementing information systems for clinical care and
financial management. Unlike pharmacies, where technology has become an
important part of operations (especially for larger retail chains),
many providers have been cautious in their adoption of health
information technology. We assume that, based on industry estimates,
anywhere from 5 to 18 percent of physicians are e-prescribing today\3\.
Because e-prescribing is voluntary for prescribers, medical practices
that do not currently conduct e-prescribing would not incur any costs
related to any of the provisions of this rule. However, we recognize
that costs would be incurred by those prescribers currently e-
prescribing, as well as those who voluntarily begin to e-prescribe
during the period reflected in our regulatory impact analysis. If a
practice decides to implement e-prescribing at a later time, we
anticipate that the software products on the market would be compliant
with these standards and, therefore, no additional cost would be
incurred. In assessing the cost to prescribers that are currently e-
prescribing, many of the e-prescribing software products generally
already contain some capability to communicate formulary and benefit
and medication history information because they incorporate the RxHub
proprietary format on which the proposed standards were based. We
expect that any changes that might be necessary as a result of this
rulemaking would likely be included in routine version upgrades that
are covered by annual maintenance and/or subscription fees. We solicit
industry and other interested stakeholder comment and input on this
issue. For e-prescribers whose software products are not able to
generate NCPDP SCRIPT 8.1 transactions, they will not have the
capability to conduct the proposed NCPDP Formulary and Benefit Standard
1.0 and NCPDP SCRIPT 8.1 medication history transaction. Costs would be
incurred if they were to replace such software with software that
generates transactions that comply with the proposed standards. We
anticipate that the NCPDP SCRIPT 8.1 will be accommodated in later
software version upgrades where that standard is not already utilized.
We believe that the implementation of the NPI will be accomplished as
part of this transition. Prescribers and dispensers already should be
using the NPI to conduct retail pharmacy drug claim transactions.
---------------------------------------------------------------------------
\3\ E-Prescribing and the Prescription Drug Program final rule,
published November 7, 2005 (70 FR 67568).
---------------------------------------------------------------------------
3. Medicare Part D Plan Sponsors and Pharmacy Benefit Managers (PBMs)
Plan sponsors will be required to support NCPDP SCRIPT 8.1 for the
transactions listed at Sec. 423.160(b)(1), the NCPDP Formulary and
Benefit Standard 1.0, and the NCPDP SCRIPT 8.1 Medication History
transaction. They will need to assure that their software can receive
and create NCPDP Formulary and Benefit Standard 1.0 and NCPDP SCRIPT
8.1 Medication History transaction queries and responses, and that
their internal systems and databases can supply the information needed
to build the transaction. For example, they will need to be able to
extract prescription claims history and format it according to the
Medication History transaction in the NCPDP SCRIPT 8.1 Standard. We
believe that many plans will have already implemented this
functionality because the standards we are proposing are based on
proprietary file transfer protocols developed by Rx-
[[Page 64913]]
Hub that have been included in many e-prescribing products. Plans may
need to restructure systems to assure that the data output is in the
proper format, but, for the most part, the needed functionality is in
place.
We recognize that some Medicare Part D plans may need to make
additional investments to support these standards, and we solicit
industry and other interested stakeholder comment and input on this
issue.
Because plans typically pay the per transaction network fees for
eligibility transactions, which likely includes providing a formulary
and benefit response as well as a medication history response, Medicare
Part D plans will incur increased transaction costs for formulary and
benefit and medication history transactions as the frequency in which
these transactions are conducted electronically increases.
Through information provided by SureScripts and industry
consultants, this transaction fee appears to range from 6 cents to 25
cents per transaction, with the midpoint being 15 cents. In 2006,
RxHub, one of the nation's largest electronic prescription and
prescription-related information routing networks, estimated that their
transaction volume increased 50 percent, from 29 million in 2005 to
more than 43 million in 2006. These transactions were real-time
requests for patient eligibility and benefits, formulary and medication
history information.\4\
---------------------------------------------------------------------------
\4\ RxHub Announces 2006 e-Prescribing Results and Highlights
Milestones for 2007, St. Paul, MN, February 23, 2007, http://www.rxhub.com
.
---------------------------------------------------------------------------
Based on CMS data we estimate that approximately 24 million
Medicare beneficiaries received Medicare Part D benefits in 2006. (This
figure excludes beneficiaries covered under the Retiree Drug Subsidy
[RDS] program.) Approximately 825,000,000 claims (prescription drug
events) were finalized and accepted for 2006 payment.
Based on CMS data, we estimate that approximately 24 million
Medicare beneficiaries received Medicare Part D benefits in 2006. This
figure reflects those Medicare beneficiaries enrolled in a Medicare
Prescription Drug Plan (PDP) and/or a Medicare Advantage plan with
Prescription Drug coverage (MA-PD), for which CMS has prescription drug
event data. Approximately 825,000,000 claims (prescription drug events)
were finalized and accepted for 2006 payment.
The annual percentage increase in the number of Medicare Part D
prescriptions is estimated by CMS at 4.6 percent based on industry
estimates (http://www.imshealth.com/ims/portal/front/articleC/0
,2777,6599--3665--80415465,00.html). So that impact comparisons can be
made equally across all years, inflation was removed from the price
effects. Conservatively, we calculate the increase in the number of
Medicare Part D prescriptions and apply the current estimates of 5 and
18 percent electronic prescribing adoption rates to arrive at the
number of Medicare Part D electronic transactions, and cost them out at
a range of a low of 6 cents per transaction to a high of 25 cents per
transaction. We estimate costs for Medicare Part D plans of between $2
million to $46 million per year.
Table 1.--Transaction Costs for Medicare Part D Plans
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2009
2010
2011
2012
2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Medicare Rxs.............................. 862,950,000
902,645,700
944,167,402
987,599,102
1,033,028,660
-------------------------------------------------------------------------------------------------------------------------------------------
Expected % of e-prescriptions....................... 5% 18% 5% 18% 5% 18% 5% 18% 5% 18%
E-Rx Transaction Cost at $0.06...................... $2,588,850 $9,319,860 $2,707,937 $9,748,573 $2,832,502 $10,197,997 $2,962,797 $10,666,070 $3,099,085 $11,156,709
E-Rx Transaction Cost at $0.25...................... $10,786,875 $38,832,750 $11,283,071 $40,619,056 $11,802,092 $42,487,533 $12,344,498 $44,441,959 $12,912,858 $46,486,289
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Medicare Part D plan sponsors may negotiate the cost of e-
prescribing transactions as part of the dispensing fees included in
their pharmacy contracts, and account for these costs in their annual
bids to participate in the Medicare Part D program. In these instances,
inclusion of these costs may increase the cost of their Medicare Part D
bids. However, we anticipate that these costs would be negated by the
savings from an increased rate of conversion from brand name to generic
prescriptions realized through utilization of the formulary and benefit
transaction, which would more than offset the transaction costs, and
solicit comments on this assumption.
Medicare Part D plan sponsors will not be affected by the proposals
to modify the NCPDP SCRIPT 5.0 foundation standard to adopt NCPDP
SCRIPT 8.1 for the transactions listed at 42 CFR 423.160(b)(1) because
these transactions are conducted between prescribers and dispensers,
and plans are not involved.
Medicare Part D plan sponsors will not be significantly affected by
the proposal to adopt the NPI as a standard for use in e-prescribing
transactions among the plan sponsor, prescriber, and the dispenser
because the plans already use the NPI in HIPAA transactions, such as
the retail pharmacy drug claim.
4. Vendors
Vendors of e-prescribing software will incur costs to bring their
products into compliance with these requirements. However, we consider
the need to enhance functionality and comply with industry standards to
be a normal cost of doing business that will be subsumed into normal
version upgrade activities. Vendors may incur somewhat higher costs
connected with testing activities but vendors should be able to address
this potential workload on a flow basis. We believe these costs to be
minimal, and solicit industry and other interested stakeholder comment
and input on this issue.
C. Benefits
The benefits of the proposed adoption of standards for formulary
and benefits and medication history transactions take place over a
multi-year timeframe. The benefits come in the form of beneficiary cost
savings realized by increases in formulary adherence and/or generic
versus brand name prescribing by physicians as a result of real-time
access to formulary and benefits information, administrative (time and
labor cost) savings through reduced call-backs on the part of both
physicians and pharmacists, and a reduction of the occurrence of
preventable adverse drug events (ADEs) among Medicare beneficiaries,
reducing resultant health care costs.
1. Formulary and Benefit Standard--Generic Drug Usage
We assume that, based on industry estimates, approximately 5
percent to 18 percent of group practices are e-prescribing today, and
use that range for our assumptions. The formulary and benefit
transaction will allow the
[[Page 64914]]
prescriber to view formulary drugs, alternative preferred drugs in a
given class that may offer savings to the patient, and/or to see in
advance what other less costly drugs within a given drug classification
and/or generic drugs can be substituted for a given brand name
prescription drug. This can result in reducing calls to the plan, and/
or reducing the number of callbacks from a pharmacy because a
prescribed drug is not on a beneficiary's drug plan formulary.
In 2006, 60 percent of Medicare Part D prescriptions in the first
two quarters of the program were for generic drugs, and the remaining
40 percent were brand name prescription drugs. During a Medco study of
physicians using e-prescribing technology (http://medco.mediaroom.com/index.php?s=43&item=100
), physicians increased their generic
substitution rates by over 15 percent. However, we recognize that not
all beneficiaries will accept generic prescription drugs and there are
some instances, especially when prescribing for mental health
conditions, in which the brand name prescription drug has proven
through physician experience to be the more effective drug, and
therefore the drug of choice. Therefore, we apply a more conservative 7
percent annual increase in generic prescriptions.
We again apply the previously used 5 and 18 percent e-prescribing
estimate range. Based on industry data, we assume the cost of a brand
name prescription drug at $111.02 and the cost of a generic drug at
$32.23.\5\
---------------------------------------------------------------------------
\5\ http://www.nacds.org/wmspage.cfm?parm1=5507. National
Association of Chain Drug Stores data.
---------------------------------------------------------------------------
While Medicare beneficiaries will be the most direct recipients of
the benefit realized by the conversion of brand name to generic
prescription drugs, the Medicare program will benefit as well. The
Medicare program will save money as it will be paying for an increased
number of lower-cost generic prescriptions versus higher-cost, brand-
name prescription drugs, as outlined in Table 2, and we solicit
comments on both beneficiary and Medicare program savings assumption.
We calculate a cost savings of $95 million to $410 million.
Table 2.--Savings From Switch From Brand Name to Generic Drugs Via Formulary & Benefit Transaction Information
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2009
2010
2011
2012
2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Medicare Rxs.......... 862,950,000
902,645,700
944,167,402
987,599,103
1,033,028,661
---------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Medicare Rxs--BRAND
Only........................... 345,180,000
361,058,280
377,666,961
395,039,641
413,211,465
---------------------------------------------------------------------------------------------------------------------------------------------------------------
Expected % of E-Prescriptions... 5% 18% 5% 18% 5% 18% 5% 18% 5% 18%
Number of Medicare E- 17,259,000 62,132,400 18,052,914 64,990,490 18,883,348 67,980,053 19,751,982 71,107,135 20,660,573 74,378,064
Prescriptions..................
Brand to Generic Rx Conversions 1,208,130 4,349,268 1,263,704 4,549,334 1,321,834 4,758,604 1,382,639 4,977,499 1,446,240 5,206,464
as a Result of E-Prescribing...
Avg. Cost of Brand Name Drug x $134,126,593 $482,855,733 $140,296,416 $505,067,097 $146,750,051 $528,300,184 $153,500,553 $552,601,992 $160,561,579 $578,021,684
Total Elec. Generic Medicare
Rxs............................
Avg. Cost of Generic Drug x $38,938,030 $140,176,908 $40,729,179 $146,625,045 $42,602,722 $153,369,797 $44,562,447 $160,424,808 $46,612,319 $167,804,349
Total Elec. Generic Medicare
Rxs............................
---------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Net Cost Savings $95,188,563 $342,678,826 $99,567,237 $358,442,052 $104,147,329 $374,930,386 $108,938,107 $392,177,184 $113,949,260 $410,217,334
(Reduction in Brand Drug Rx
Payments)..................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2. Formulary and Benefit Standard--Administrative Savings
a. Physician and Physician Office Staff
The 2004 Medical Group Management Association (MGMA) survey
entitled, ``Analyzing the Cost of Administrative Complexity'' (http://www.mgma.com/about/default.aspx?id=280
) estimated the staff and
physician time spent, on a per physician full time equivalent (FTE)
basis, interacting with pharmacies on formulary questions and generic
substitutions. Physician time on the phone discussing formulary issues
was estimated at almost 16 hours a year; another 14 hours were spent
per physician per year on generic substitution issues. Staff spent
almost 26 hours per FTE physician on formulary issues, and another 24
hours per FTE physician on generic substitution issues.
Table 3 shows the administrative savings benefit to physicians and
physician office staffs of performing formulary and benefit
transactions electronically. CMS estimates the number of physicians in
active practice who participated in the Medicare program in 2006 at
1,048,243.\6\ Based on the same CMS data from 2003 through 2006, it
indicates a percentage rise in the number of physicians participating
in the Medicare program of .94 percent per year, so we have applied
that percentage increase to arrive at an estimated number of Medicare
physicians for 2009 through 2013. We also apply the previous assumption
that from 5 to 18 percent of prescribers are e-prescribing today. Per
the MGMA survey, we assume a physician labor cost of $100 per hour and
an average staff labor cost of $22 per hour per physician FTE.
---------------------------------------------------------------------------
\6\ 2006 CMS Statistics, U.S. Department of Health and Human
Services CMS Pub. No. 03470, July 2006, Table 22.
---------------------------------------------------------------------------
Pilot site experience shows that, among prescribers or their agents
who adopted e-prescribing, obtaining prior approvals, responding to
refill requests, and resolving pharmacy callbacks were all done more
efficiently with e-prescribing than before. Both groups perceived a
greater than 50 percent reduction in time to manage refill requests and
significant time savings in managing pharmacy call backs.\7\ However,
we are realistic in our assumption that full implementation would be
difficult to achieve, and use an estimate of 25 percent. Our model
calculates that physicians and staff would realize savings ranging from
$55 million to $206 million at a 25 percent implementation rate.
---------------------------------------------------------------------------
\7\ Findings from the Evaluation of E-Prescribing Pilot Sites,
http://www.healthit.ahrg.gov.
[[Page 64915]]
Table 3.--Administrative Savings for Physicians and Medical Office Staff
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2009
2010
2011
2012
2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
of Medicare Physicians.................... 1,078,081 1,078,081 1,088,215 1,088,215 1,098,444 1,098,444 1,108,769 1,108,769 1,119,191 1,119,191
Expected % of e-rx prescribers...................... 5% 18% 5% 18% 5% 18% 5% 18% 5% 18%
Estimated of Medicare physicians e- 53,904 194,055 54,411 195,879 54,922 197,720 55,438 199,578 55,960 201,454
prescribing........................................
Total MD hrs spent on formulary and generic $161,712,150 $582,163,740 $163,232,250 $587,636,100 $164,766,600 $593,159,760 $166,315,350 $598,735,260 $167,878,650 $604,363,140
substitution pharmacy calls (30 hrs) x labor cost
($100/hr)..........................................
Total staff hrs spent on formulary and generic $59,294,455 $213,460,038 $59,851,825 $215,466,570 $60,414,420 $217,491,912 $60,982,295 $219,536,262 $61,555,505 $221,599,818
substitution pharmacy calls (50 hrs) x labor cost
($22/hr)...........................................
-------------------------------------------------------------------------------------------------------------------------------------------
Total Labor Costs............................... $221,006,605 $795,623,778 $223,084,075 $803,102,670 $225,181,020 $810,651,672 $227,297,645 $818,271,522 $229,434,155 $825,962,958
-------------------------------------------------------------------------------------------------------------------------------------------
Total Anticipated Labor Savings (25%)....... $55,251,651 $198,905,945 $55,771,019 $200,775,668 $56,295,255 $202,662,918 $56,824,411 $204,567,881 $57,358,539 $206,490,740
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
b. Pharmacists
In Table 4, we draw a correlation from the potential administrative
savings realized by physicians and staff for pharmacists. If each
physician and their office staff save a total of 80 hours a year by
using the formulary and benefit transaction and reducing the time spent
on the phone with pharmacists, we assume that pharmacists are saving
the equivalent amount of time by not making these calls. Since the MGMA
survey assumes a pharmacist labor rate of $60 per hour, our model
predicts that, at an annualized cost savings, pharmacists would realize
an annualized cost benefit savings ranging from a low of $65 million to
a high of $242 million at 25 percent implementation.
Table 4.--Administrative Savings for Pharmacists
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2009
2010
2011
2012
2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
of Medicare Physicians.................... 1,078,081 1,078,081 1,088,215 1,088,215 1,098,444 1,098,444 1,108,769 1,108,769 1,119,191 1,119,191
Expected % of e-prescribers......................... 5% 18% 5% 18% 5% 18% 5% 18% 5% 18%
Estimated of Medicare physicians e- 53,904 194,055 54,411 195,879 54,922 197,720 55,438 199,578 55,960 201,454
prescribing........................................
Total MD and staff hrs spent on formulary and $258,739,440 $931,461,984 $261,171,591 $940,217,760 $263,626,613 $949,055,616 $266,104,650 $957,976,416 $268,605,943 $966,981,024
generic substitution pharmacy calls (80 hrs) x
pharmacist labor cost ($60/hr).....................
-------------------------------------------------------------------------------------------------------------------------------------------
Total Anticipated Labor Savings (25%)........... $64,684,860 $232,865,496 $65,292,898 $235,054,440 $65,906,653 $237,263,904 $66,526,162 $239,494,104 $67,151,486 $241,745,256
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3. Medication History Standard--Reduction of Adverse Drug Events (ADEs)
Automating the transmission of medication history information will
simplify medication reconciliation through transitions in care and, in
so doing, provide a safer and more effective health care system.
Consumers will benefit from a safer medication delivery system, and
greater convenience.
Although outpatient ADEs are difficult to estimate, current
literature estimates that, as of 2005, there were 530,000 preventable
ADEs for Medicare beneficiaries.\8\ Moreover, the estimated cost per
ADE ranges from $2,000 \9\ to upwards of $6,000 \10\ depending on the
care setting. We chose to compute the benefits of medication history
based on ADEs as a percentage of the total Medicare population. Based
on CMS data from 1999 through 2006, the total Medicare population
increased on average 1.13 percent per year.\11\ We calculated that of
the total Medicare population, ADEs occur in about 1.24 percent of that
population each year.
---------------------------------------------------------------------------
\8\ Field TS, Gilman BH, Subramanian S, Fuller JC, Bates DW,
Gurwitz JH. 2005. The costs associated with adverse drug events
among older adults in the ambulatory setting. Medical Care
43(12):1171.1176.
\9\ Field TS, Gilman BH, Subramanian S, Fuller JC, Bates DW,
Gurwitz JH. 2005. The costs associated with adverse drug events
among older adults in the ambulatory setting. Medical Care
43(12):1171.1176.
\10\ Institute of Medicine of the National Academies. Preventing
Medication Errors. July, 2006. Field TS, Gilman BH, Subramanian S,
Fuller JC, Bates DW, Gurwitz JH. 2005. The costs associated with
adverse drug events among older adults in the ambulatory setting.
Medical Care 43(12):1171.1176.
\11\ 2006 CMS Statistics, U.S. Department of Health and Human
Services CMS Pub. No. 03470, July 2006, Table 1.
---------------------------------------------------------------------------
Brigham and Women's Hospital discovered in their analysis of ADEs,
conducted as part of the CMS e-prescribing pilot project, that e-
prescribing could reduce the risk of ADEs by approximately 50
percent.\12\ As medication history is a transaction that most directly
impacts ADEs (versus formulary and benefit, codified SIG, etc.), we
assume that the reduction in the risk of ADEs can be attributed mostly
to the use of medication history rather than to e-prescribing in
general. The pilot project demonstrated that 50 percent of preventable
ADEs could be eliminated via e-prescribing, and possibly more as
prescriber familiarity with the medication history function and full
clinical decision support tools become available in all e-prescribing
software. We also recognize that the Brigham and Women's Hospital ADE
analysis brings with it a degree of uncertainty, as it was a by-product
of the pilot project itself, and may not accurately represent the
experiences of all entities (that is, small rural settings). Given
that, we conservatively assume that the number of ambulatory ADEs
associated with Medicare Part D beneficiaries could be reduced by 25
percent for the proportion of patients for whom prescriptions are
written electronically; we use the same uptake e-prescribing estimates
(5 to 18 percent) as earlier for e-prescribing adoption. Table 5
summarizes potential savings to the public based on these assumptions.
---------------------------------------------------------------------------
\12\ Findings from the Evaluation of E-Prescribing Pilot Sites,
http://www.healthit.ahrq.gov.
[[Page 64916]]
Table 5.--Potential Savings to Public Due to Reduction in Preventable Adverse Drug Events (ADEs)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year 2009
2010
2011
2012
2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Medicare Population Estimates................. 44,577,662 44,577,662 45,081,390 45,081,390 45,590,809 45,590,809 46,105,985 46,105,985 46,626,983 46,626,983
Potential Avoidable ADEs via E-Rx................... 552,763 552,763 559,009 559,009 565,326 565,326 571,714 571,714 578,175 578,175
% of E-Rx Adoption.................................. 5% 18% 5% 18% 5% 18% 5% 18% 5% 18%
Avoided ADEs........................................ 27,638 99,497 27,950 100,622 28,266 101,759 28,586 102,909 28,909 104,071
Avoided ADEs Estimate (x25%)........................ 6,910 24,874 6,988 25,155 7,067 25,440 7,146 25,727 7,227 26,018
Cost Avoided Estimate (25%x$2k)..................... $13,819,075 $49,748,671 $13,975,231 $50,310,831 $14,133,151 $50,879,343 $14,292,855 $51,454,280 $14,454,365 $52,035,713
Cost Avoided Estimate (25%x$6k)..................... $41,457,226 $149,246,012 $41,925,692 $150,932,492 $42,399,453 $152,638,029 $42,878,566 $154,362,839 $43,363,094 $156,107,139
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Table 5 shows that the introduction of e-prescribing can
potentially realize a cost savings of $13 million to $156 million from
avoided ADEs. We solicit industry and other interested stakeholder
comment and input on this issue. Besides lower rates of ADEs, the
public will also realize other benefits related to the medication
history function of e-prescribing. Through improved collaboration and
communication between physicians and plans, patients will be more
likely to have greater access to information which will encourage them
to become more involved in their own treatment, which studies show
decreases the probability of experiencing an ADE-related error.\8\
C. Total Impact
This analysis has focused on the costs and benefits of two new e-
prescribing standards, and the adoption of NCPDP SCRIPT 8.1 in place of
version 5.0. We conclude that the cost of implementing these proposals
is minimal, with quantifiable benefits reaped by pharmacies, providers,
and beneficiaries. Over time, we expect that these groups will see
average benefits in a range from $218.0 million to $863.9 million from
the utilization of formulary and benefit and medication history
transactions and the promulgation of these standards (Table 6).
D. Alternatives Considered
In developing this proposed rule, we considered a range of
alternatives. While required by statute to issue a regulation, we were
not required to issue standards for specific functionality if
appropriate standards were not available.
We considered not issuing an additional rule, and allowing the
foundation standards to become the complete set. Since we had
successful results from the pilot project, and the value added by the
proposed additional standards is substantial, we chose to proceed.
Given the existing foundation standards, our failure to proceed would
not have averted many costs, but the lack of a medication history
standard, for example, would have limited benefits, particularly for
consumers.
We considered proposing the prior authorization and RxNorm
standards for adoption, and elected not to do so. In both cases, the
decision was based on the results of the pilot project. We expect that
both standards, in their current forms and given the current state of
the industry, would impose substantial additional costs while
delivering marginal additional benefits. In the case of prior
authorization, much of the additional cost is likely to be on the
health plan side. We expect that software vendors will explore adding
this functionality to provider-based systems and that health plans will
adopt it as doing so becomes feasible.
In the case of the RxFill standard, we did not get a clear
indication from the pilot project as to its added value.
We considered not proposing adoption of the NPI as a standard for
Medicare Part D e-prescribing transactions, but, given the need for an
identifier in e-prescribing transactions and the fact that large
portions of the health care industry are required to use NPI as a HIPAA
standard, we felt that adoption at this time was feasible and
desirable.
Table 6.--Cost/Benefits for the Adoption of Standards for Medication History and Formulary and Benefits, 2009-2013
[$ Millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2009
2010
2011
2012
2013
Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BENEFITS:
Expected % of E-Prescribing Adoption.................... 5% 18% 5% 18% 5% 18% 5% 18% 5% 18% 5% 18%
Generic versus Brand Name Drugs......................... $95.1 $342.6 $99.5 $358.4 $104.1 $374.9 $108.9 $392.1 $113.9 $410.2 $521.5 $1,878.2
Administrative--Physician/Office Staff.................. $55.2 $198.9 $55.7 $200.7 $56.2 $202.6 $56.8 $204.5 $57.3 $206.4 $281.2 $1,013.1
Administrative--Pharmacies.............................. $64.6 $232.8 $65.2 $235.0 $65.9 $237.2 $66.5 $239.4 $67.1 $241.7 $329.3 $1,186.1
Reduction in ADEs....................................... $13.8 $49.7 $13.9 $50.3 $14.1 $50.8 $14.2 $51.4 $14.4 $52.0 $70.4 $254.2
Total Benefits.......................................... $228.7 $824.0 $234.3 $844.4 $240.3 $865.5 $246.4 $887.4 $252.7 $910.3 $1,202.4 $4,331.6
*COSTS:
Transaction Costs....................................... $10.7 $38.8 $11.2 $40.6 $11.8 $42.4 $12.3 $44.4 $12.9 $46.4 $58.9 $212.6
-----------------------------------------------------------------------------------------------------------------------------------
NET BENEFITS................................................ $218.0 $785.2 $223.1 $803.8 $228.5 $823.1 $234.1 $843.0 $239.8 $863.9 $1,143.5 $4,119.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* These costs reflect only transaction costs as outlined in Table 1, and do not take into account the potential costs of systems and/or software upgrades, etc., for which stakeholder/industry
information and input is being solicited.
E. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf
), in Table 7 below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this proposed rule. This
table provides our best estimate of the costs and benefits associated
with the adoption of the two new e-prescribing standards, and the
adoption of NCPDP SCRIPT 8.1 in place of version 5.0. Costs will be
incurred by plans/PBMs paying transaction charges to networks. Generic
versus brand name drug benefits will accrue from physicians to
beneficiaries; administrative savings to physicians, physician offices
and pharmacists; from pharmacists to physicians and physician offices;
and from physicians to beneficiaries in the reduction in the number of
ADEs.
[[Page 64917]]
Table 7.--Accounting Statement: Annualized Monetized Transaction Costs and Benefits
[$ Millions/year]
----------------------------------------------------------------------------------------------------------------
5% Expected 18% Expected
annual E-Rx annual E-RX
adoption rate adoption rate
----------------------------------------------------------------------------------------------------------------
COSTS:
Transaction costs....................................................... $58.9 $212.6
Annualized monetized costs:
7% Discount rate........................................................ 11.7 42.2
3% Discount rate........................................................ 11.7 42.3
0% Discount rate........................................................ 11.8 42.5
Paid by plans/PBMs to networks.
BENEFITS:
Generic versus brand name drugs, administrative for physicians and 1,202.4 4,331.6
pharmacists, reduction in ADEs.........................................
Annualized monetized benefits:
7% Discount rate........................................................ 239.6 862.9
3% Discount rate........................................................ 240.1 864.8
0% Discount rate........................................................ 240.4 866.3
Generated physicians to pharmacists, pharmacists to physicians, and
physicians to beneficiaries.
-----------------------------------
NET BENEFIT......................................................... 1,143.5 4,119.0
----------------------------------------------------------------------------------------------------------------
List of Subjects in 42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professions, Incorporation by reference, Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble in this proposed
regulation, the Centers for Medicare & Medicaid Services proposes to
amend 42 CFR part 423 as follows:
PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT
1. The authority citation for part 423 continues to read as
follows:
Authority: Secs. 1102, 1860D-1 through 1860D-42, and 1871 of the
Social Security Act (42 U.S.C. 1302, 1395W-101 through 1395W-152,
and 1395hh).
2. Section 423.160 is amended by--
A. Revising paragraph (b)(1).
B. Adding new paragraphs (b)(3), (b)(4), and (b)(5).
C. Revising paragraph (c).
The revisions and additions read as follows:
Sec. 423.160 Standards for electronic prescribing.
* * * * *
(b) Standards--(1) Prescription. The National Council for the
Prescription Drug Programs Prescriber/Pharmacist Interface SCRIPT
Standard, Implementation Guide Version 8, Release 1 (Version 8.1),
October 2005 to provide for the communication of a prescription or
prescription-related information between prescribers and dispensers,
for the following:
(i) Get message transaction.
(ii) Status response transaction.
(iii) Error response transaction.
(iv) New prescription transaction.
(v) Prescription change request transaction.
(vi) Prescription change response transaction.
(vii) Refill prescription request transaction.
(viii) Refill prescription response transaction.
(ix) Verification transaction.
(x) Password change transaction.
(xi) Cancel prescription request transaction.
(xii) Cancel prescription response transaction.
* * * * *
(3) Medication history. The National Council for Prescription Drug
Programs (NCPDP) Prescriber/Pharmacist Interface SCRIPT Standard,
Implementation Guide, Version 8, Release 1 (Version 8.1), October 2005
to provide for the communication of Medicare Part D medication history
information among Medicare Part D sponsors, prescribers, and
dispensers.
(4) Formulary and benefits. The National Council for Prescription
Drug Programs (NCPDP) Formulary and Benefits Standard, Implementation
Guide, Version 1, Release 0 (Version 1.0), October 2005 for
transmitting formulary and benefit information between prescribers and
Medicare Part D sponsors.
(5) Provider identifier. The National Provider Identifier (NPI), as
defined at 45 CFR 162.406, to identify a health care provider in
Medicare Part D e-prescribing or prescription-related transactions
conducted among Medicare Part D plan sponsors, prescribers, and
dispensers when a health care provider's identifier is required.
(c) Incorporation by reference. The Director of the Federal
Register approves, in accordance with 5 U.S.C. 552(a) and 1 CFR part
51, the incorporation by reference of certain publications into this
section. You may inspect copies of these publications at the
headquarters of the Centers for Medicare & Medicaid Services (CMS),
7500 Security Boulevard, Baltimore, Maryland 21244, Monday through
Friday from 8:30 a.m. to 4 p.m. or at the National Archives and Records
Administration (NARA). For more information on the availability of this
material at NARA, call 202-741-6030, or go to http://www.archives.gov/federal_register/code_of_federal_
regulations/ibr--locations.html.
The publications approved for incorporation by reference and their
original sources are as follows:
(1) National Council for Prescription Drug Programs, Incorporated,
9240 E. Raintree Drive, Scottsdale, AZ 85260-7518; Telephone (480) 477-
1000; and FAX (480) 767-1042 or http://www.ncpdp.org.
(i) National Council for Prescription Drug Programs Prescriber/
Pharmacist Interface SCRIPT Standard, Implementation Guide, Version 8,
Release 1, October 2005, excluding the Prescription Fill Status
Notification Transactions (and its three business cases; Prescription
Fill Status Notification Transaction--Filled, Prescription Fill Status
Notification Transaction--Not Filled, and Prescription Fill Status
Notification Transaction--Partial Fill).
[[Page 64918]]
(ii) The National Council for Prescription Drug Programs Formulary
and Benefits Standard, Implementation Guide, Version 1, Release 0,
October 2005.
(iii) National Council for Prescription Drug Programs
Telecommunication Standard Specification, Version 5, Release 1 (Version
5.1), September 1999 and equivalent National Council for the
Prescription Drug Program (NCPDP) Batch Standard Batch Implementation
Guide, Version 1, Release 1 (Version 1.1), January 2000 supporting
Telecommunications Standard Implementation Guide, Version 5, Release 1
(Version 5.1) for the NCPDP Data Record in the Detail Data Record.
(2) Accredited Standards Committee, 7600 Leesburg Pike, Suite 430,
Falls Church, VA 22043; Telephone (301) 970-4488; and fax: (703) 970-
4488 or http://www.x12.org.
(i) Accredited Standards Committee (ASC) X12N 270/271-Health Care
Eligibility Benefit Inquiry and Response, Version 4010, May 2000,
Washington Publishing Company, 004010X092 and Addenda to Health Care
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002,
Washington Publishing Company, 004010X092A1.
(ii) [Reserved].
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: July 19, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: September 20, 2007.
Michael O. Leavitt,
Secretary.
[FR Doc. 07-5681 Filed 11-13-07; 10:00 am]
BILLING CODE 4120-01-P