[Federal Register: February 4, 2005 (Volume 70, Number 23)]
[Proposed Rules]
[Page 6255-6274]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04fe05-29]
[[Page 6255]]
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Part V
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; E-Prescribing and the Prescription Drug Program;
Proposed Rule
[[Page 6256]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 423
[CMS-0011-P]
RIN 0938-AN49
Medicare Program; E-Prescribing and the Prescription Drug Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to adopt standards for an electronic
prescription drug program under Title I of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (MMA). These proposed
standards would be the foundation standards or the first set of final
uniform standards for an electronic prescription drug program under the
MMA, and represent the first step in our incremental approach to
adopting final uniform standards that are consistent with the MMA
objectives of patient safety, quality of care, and efficiencies and
cost savings 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 April 5, 2005.
ADDRESSES: In commenting, please refer to file code CMS-0011-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments to http://www.cms.hhs.gov/regulations/ecomments
(attachments should be in
Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft
Word).
2. By 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-0011-
P, PO 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 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 (800) 743-3951 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 HHH 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: Gladys Wheeler, (410) 786-0273.
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-0011-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.
Copies: To order copies of the Federal Register containing this
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This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The web site address is: http://www.access.gpo.gov/fr/index.html
.
I. Background
[If you choose to comment on issues in this section, please include the
caption ``BACKGROUND'' at the beginning of your comments.]
A. Statutory Basis
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 the Voluntary
Prescription Drug Benefit Program. Included in the provisions at
section 1860D-4(e) of the Act is the requirement that prescriptions and
certain other information for covered Part D drugs prescribed for Part
D eligible individuals that are transmitted electronically comply with
final uniform standards adopted by the Secretary under an electronic
prescription drug program.
On January 28, 2005, we published the Medicare Prescription Drug
Benefit final rule that establishes the Prescription Drug Benefit
Program and cost control and quality improvement requirements for
prescription drug benefit plans. One of the provisions in that final
rule requires Prescription Drug Plan (PDP) sponsors, Medicare Advantage
(MA) Organizations offering Medicare Advantage-Prescription Drug (MA-
PD) plans, and other Part D sponsors to support and comply with
electronic prescribing standards once
[[Page 6257]]
final standards are in effect, including any standards that are in
effect before the drug benefit begins in 2006.
Although there is no requirement that providers write prescriptions
electronically, in the Medicare Prescription Drug Benefit final rule,
we stated that Part D sponsors that participate in the Part D program
are required to support and comply with electronic prescribing.
Providers that prescribe or dispense Part D drugs would be required to
comply with the final standards only when prescription information or
certain other related information is electronically transmitted once
the final standards for those transactions are effective, which we
anticipate will be in 2006, for this first set of final standards.
Section 1860D-4(e) of the Act specifies that initial standards,
which are to be used in a pilot project that is to be conducted in
calendar year 2006, must be adopted not later than September 1, 2005.
This section of the Act also provides, however, that pilot testing is
not required for those standards for which the Secretary, after
consultation with affected standard setting organizations and industry
users, determines there is ``adequate industry experience.'' Subsequent
to the pilot project, the Secretary must promulgate final uniform
standards not later than April 1, 2008. Those final uniform standards
must become effective not later than 1 year after the date of
promulgation of those final uniform standards. In addition, the
Secretary is required to provide a report to the Congress by April 1,
2007 on his evaluation of the pilot project.
In the context of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) transactions and code sets (TCS)
requirements, a covered entity that conducts a covered transaction
using electronic media must comply with the applicable transaction
standard. Electronic media is defined under HIPAA to include both
electronic storage media and transmission media, including the
``internet (wide-open), extranet (using internet technology to link a
business with information accessible only to collaborating parties),
leased lines, dial-up lines, private networks, and the physical
movement of removable/transportable electronic storage media.'' (45 CFR
160.103). However, given the development of new technologies, we invite
public comment on applying this definition to determine when
prescribers and dispensers are electronically transmitting prescription
and certain other information, and therefore, should be required to
comply with the e-prescribing standards.
Section 1860D-4(e)(1) of the Act states that the final e-
prescribing standards will govern ``prescriptions and other information
described in paragraph (2)(A) for covered part D drugs prescribed for
part D eligible individuals that are transmitted electronically. * *
*'' We believe the best reading of this language, as well of the intent
of the Congress, is that the e-prescribing standards apply only to
information regarding Part D eligible individuals enrolled in Part D
plans--that is, enrollees of prescription drug plans (PDPs) (including
employer-sponsored PDPs); fallback PDPs; Medicare Advantage
Prescription Drug plans (MA-PD plans); and private fee for service
plans, Medicare cost reimbursement plans, or PACE programs receiving
Part D reimbursement. We believe this interpretation realizes the
intent of the Congress, which in the Conference Report for the MMA,
stated that e-prescribing standards are standards that apply to
information, transmitted ``under an electronic prescription drug
program conducted by a PDP or MA plan.'' (H.R. Conf. Rep. 108-391,
108th Cong., 1st Sess. at 455 (2003)) This statement contemplates that
the e-prescribing standards would apply solely to information regarding
Part D enrolled individuals, not simply to information regarding Part D
eligible individuals who are not enrolled in a Part D plan. We have
attempted to clarify the scope of these standards in the proposed
definition of ``electronic prescription drug program'' in proposed
Sec. 423.159, and the ``General Rules'' in proposed Sec. 423.160.
The requirements of the statute are as follows:
``(2) Program Requirements.--Consistent with uniform standards
established under paragraph (3)--
``(A) Provision of Information to Prescribing Health Care
Professional and Dispensing Pharmacies and Pharmacists.--An
electronic prescription drug program shall provide for the
electronic transmittal to the prescribing health care professional
and to the dispensing pharmacy and pharmacist of the prescription
and information on eligibility and benefits (including the drugs
included in the applicable formulary, any tiered formulary
structure, and any requirements for prior authorization) and of the
following information with respect to the prescribing and dispensing
of a covered Part D drug:
``(i) Information on the drug being prescribed or dispensed and
other drugs listed on the medication history, including information
on drug-drug interactions, warnings or cautions, and, when
indicated, dosage adjustments.
``(ii) Information on the availability of lower cost,
therapeutically appropriate alternatives (if any) for the drug
prescribed.
``(B) Application to Medical History Information.--Effective on
and after such date as the Secretary specifies and after the
establishment of appropriate standards to carry out this
subparagraph, the program shall provide for the electronic
transmittal in a manner similar to the manner under subparagraph (A)
of information that relates to the medical history concerning the
individual and related to a covered Part D drug being prescribed or
dispensed, upon request of the professional or pharmacist involved.
``(C) Limitations.--Information shall only be disclosed under
subparagraph (A) or (B) if the disclosure of such information is
permitted under the Federal regulations (concerning the privacy of
individually identifiable health information) promulgated under
section 264(c) of the Health Insurance Portability and
Accountability Act of 1996.
``(D) Timing.--To the extent feasible, the information exchanged
under this paragraph shall be on an interactive, real-time basis.
Section 1860D-4(e)(4)(B) of the Act also requires the National
Committee on Vital and Health Statistics (NCVHS) to develop
recommendations for standards, in consultation with specific groups of
organizations and entities. Section 1860D-4(e)(4)(A) of the Act
requires the Secretary to take these recommendations into consideration
when developing, adopting, recognizing, or modifying initial uniform
standards according to the schedule set forth above. The NCVHS process
for developing and providing recommendations to the Secretary is
detailed below at section B of this proposed rule.
In order to provide for efficient implementation of the
requirements, section 1860D-4(e)(4)(C) of the Act requires the
Secretary to conduct a pilot project to test initial standards
developed under section 1860D-4(e)(4)(A) of the Act, prior to issuing
the final standards that are promulgated in accordance with section
1860D-4(e)(4)(D) of the Act. Section 1860D-4(e)(4)(C)(ii) of the Act
also permits an exception to the pilot testing requirement for
standards for which there already is adequate industry experience, as
determined by the Secretary after consultation with affected standard
setting organizations and industry users. Under this exception,
standards can be proposed and adopted through rulemaking as final
standards without pilot testing, and would then become final standards
under MMA.
In the preamble of the Medicare Prescription Drug Benefit proposed
rule, published in the Federal Register August 3, 2004 (69 FR 46632-
46863),
[[Page 6258]]
we solicited comments to help us identify consensus on e-prescribing
standards ahead of the statutory timeframe and to help us identify and
evaluate whether there is adequate industry experience with those
standards. Concurrently, the NCVHS held hearings with various groups of
constituencies on e-prescribing standards while identifying and
examining standards for possible adoption by the Secretary. We attended
each of these hearings as an active participant.
Under the MMA, proposed standards can be adopted as final standards
prior to the dates specified in the statute because section 1860D-
4(e)(1) of the Act provides for adoption ``as of such date as the
Secretary may specify.'' The statute, moreover, only requires pilot
testing for initial standards for which adequate industry experience is
lacking and calls for final standards ``no later than April 1, 2008.''
Some comments submitted in response to the Medicare Prescription Drug
Benefit proposed rule supported an accelerated timetable based on
adequate industry experience with certain standards, while others
advocated pilot testing of all standards because they felt adequate
industry experience did not exist with any standard. We considered all
public comments on this issue submitted in response to the Medicare
Prescription Drug Benefit proposed rule, along with the NCVHS
observations and associated recommended actions. Despite comments to
the contrary, we believe that there is adequate industry experience for
certain standards and have proposed those standards in this rule. The
rationale for our preliminary conclusion that adequate industry
experience exists is discussed later in this preamble. Finally, we
believe that we have met the statutory requirement for industry
consultation because we actively participated in the NCVHS process, and
we requested and received industry comments on adequate industry
experience with existing standards through the Medicare Prescription
Drug Benefit proposed rule. We are also requesting comments in this
proposed rule. The need for pilot testing of future standards will be
determined when additional standards are recommended.
1. Initial Standards Versus Final Standards
It is important to emphasize that in section 1860D-4(e) of the Act
there are distinct provisions for initial standards and final
standards. Initial standards are standards for an electronic
prescription drug program that the Secretary would adopt, develop,
recognize, or modify before September 1, 2005, taking into
consideration recommendations from the NCVHS. These standards will be
subject to pilot testing that would occur during the 2006 calendar
year. The results of the pilot project will be evaluated and, based
upon those results, final standards would be published not later than
April 1, 2008. In order to conduct the pilot project, the Secretary
will enter into agreements with physicians, physician groups,
pharmacies, hospitals, PDP sponsors, MA organizations, and other
appropriate entities under which health care professionals will
electronically transmit prescriptions to dispensing pharmacies and
pharmacists in accordance with these standards. The Secretary will
conduct an evaluation of the pilot project, and will submit a report to
the Congress on the evaluation, not later than April 1, 2007.
Final standards are standards that would be adopted in regulations
through the rulemaking process. Compliance with those final standards
will be required when prescription information or certain other related
information is electronically transmitted among Part D sponsors (as
this term is defined in the Medicare Prescription Drug Benefit final
rule) and prescribing health care professionals and dispensing
pharmacies and pharmacists as specified at section 1860 D-4(e)(1) of
the Act for covered Part D drugs prescribed for Part D enrolled
individuals.
Final standards may be adopted by the Secretary as a result of the
pilot project. However, if the Secretary, after consultation with
affected standard setting organizations and industry users, determines
that pilot testing is not required because there is adequate industry
experience with the standards, those standards may be adopted as final
without pilot testing.
We refer to the final standards proposed in this rule as foundation
standards because they would be the first set of final standards
adopted for an electronic prescription drug program. As mentioned above
and discussed further below, we believe that adequate industry
experience exists with respect to the standards proposed in this rule
which allows us to propose and adopt these foundation standards as
final standards without pilot testing.
2. State Preemption
Nearly 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:
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\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.
We propose to interpret this section of the Act as preempting State
law provisions that conflict with Federal electronic prescription
program drug requirements that are adopted under Part D. We view 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 Part D drugs for 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 reflects 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.
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\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).
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We understand that some industry representatives believe 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 is based
on the belief that the Congress
[[Page 6259]]
intended to preempt the field of e-prescribing through this provision
in the MMA. It would require an interpretation that the word ``and''
between paragraphs (A) and (B) is 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 enable the standards and
requirements adopted for the Federal electronic prescription drug
program to preempt all State laws and regulations that restrict the
Secretary's ability to carry out the goals of an electronic
prescription drug program, even if they are not related to covered Part
D drugs, or Part D covered individuals. They contend that some States
have 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.
This interpretation, however, does not appear to 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 invite 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 ask
for comment on whether this preemption provision applies only to
transactions and entities that are part of an electronic prescription
drug program under Part D or to a broader set of transactions and
entities. We also ask for comment on whether this preemption provision
applies to only electronic prescription transactions or to paper
transactions as well.
3. Anti-kickback Statute Safe Harbor and Stark Exception
Section 1860D-4(e)(6) of the Act requires the Secretary to
promulgate regulations that provide for a ``safe harbor'' under the
anti-kickback statute (section 1128B(b) of the Act) and an
``exception'' under the physician self-referral statute (section 1877
of the Act) for certain nonmonetary remuneration related to e-
prescribing information technology items and services. The statute
states that--
The Secretary, in consultation with the Attorney General, shall
promulgate regulations that provide for a safe harbor from sanctions
under paragraphs (1) and (2) of section 1128(b) [of the Social
Security Act] and an exception to the prohibition under sub-section
(a)(1) of section 1877 [of the Social Security Act] with respect to
the provision of nonmonetary remuneration (in the form of hardware,
software, or information technology and training services) necessary
and used solely to receive and transmit electronic prescription
information in accordance with the standards promulgated under this
subsection--
(A) In the case of a hospital, by the hospital to members of its
medical staff;
(B) In the case of a group practice (as defined in section
1877(h)(4), by the practice to prescribing health care professionals
who are members of such practice; and
(C) In the case of a PDP sponsor or MA organization, by the
sponsor or organization to pharmacists and pharmacies participating
in the network of such sponsor or organization and to prescribing
health care professionals.
We will propose the new Stark exception for electronic prescribing
in a separate rulemaking to be published in the near future. The new
safe harbor under the anti-kickback statute will be proposed by the
Office of the Inspector General. In the meantime, where relevant,
arrangements involving nonmonetary remuneration related to electronic
prescription hardware, software, information technology and training
must comply with an existing Stark exception (such as the exception for
non-monetary compensation, 42 CFR 411.357(k), or the new community-wide
health information technology exception, 42 CFR 411.357(u)) and must
not violate the anti-kickback statute. They must also comply with
similar state laws.
B. The NCVHS Process
Section 1860D-4(e)(4)(A) of the Act requires the Secretary to
develop, adopt, recognize or modify initial uniform standards relating
to the requirements for an electronic prescription drug program, not
later than September 1, 2005, taking into consideration the
recommendations from the NCVHS (as established under section 306(k) of
the Public Health Service Act (43 U.S.C. 242k (k)) under subparagraph
(B)). In particular, the role of the NCVHS in recommending uniform
standards relating to the requirements for an electronic prescription
drug program is outlined in section 1860D-4(e)(4)(B)(i) through (x) of
the Act. It requires that in developing the recommendations, the NCVHS
consult with the following:
Standard setting organizations (as defined in section
1171(8) of the Act).
Practicing physicians.
Hospitals.
Pharmacies.
Practicing Pharmacists.
Pharmacy Benefit Managers.
State Boards of Pharmacy.
State Boards of Medicine.
Experts on e-prescribing.
Other appropriate Federal agencies.
In response to the requirements of the Act for electronic
prescription drug program standards, the NCVHS increased its number of
meetings and held public hearings at which representatives of
physicians, pharmacists, and experts on e-prescribing, among others,
testified. The NCVHS also consulted with standard-setting organizations
and accelerated the process for developing recommendations for the
Secretary well in advance of the statutory requirement. At the July 21,
2004 Health Information Technology Summit, we announced our intent to
accelerate the implementation of e-prescribing by proposing a first set
of well-established standards for implementation by January 2006, when
the Medicare Part D benefit begins.
To fulfill its responsibilities under the MMA's amendments to the
Act, the NCVHS' Subcommittee on Standards and Security held public
hearings on issues related to e-prescribing on March 30 and 31, 2004;
May 25, 26, and 27, 2004; July 28-30, 2004; and August 17-19, 2004.
These hearings included testimony from e-prescribing networks,
providers, software vendors, and industry experts on patient safety,
drug knowledge databases, and standards currently in use by the
industry. Industry experts involved in e-prescribing studies and
initiatives also presented information on the progress and findings of
these studies. Following the hearings by the NCVHS Subcommittee on
Standards and Security, the Subcommittee developed observations and
associated recommended actions and presented them to the full NCVHS
Committee for consideration. On September 2, 2004, the NCVHS sent a
letter to the Secretary containing the observations and associated
recommended actions for an electronic prescription drug program. The
document included recommendations for the foundation standards that we
are proposing and other long-term recommendations regarding pilot
testing of other standards. For specific details, refer to the letter,
available at http://www.ncvhs.hhs.gov/040902lt2.htm.
In order to develop and provide future recommendations to the
Secretary, the NCVHS Subcommittee on Standards and Security plans to
hold additional hearings on the state-of-the-art in e-prescribing,
including testimony from a broad range of stakeholders. The NCVHS will
be developing
[[Page 6260]]
recommendations for additional standards for consideration by the
Secretary for testing and ultimate adoption through the rulemaking
process. Readers interested in the NCVHS' hearing schedule, testimony
presented at the hearings, and standards recommendations should consult
the NCVHS Web site at http://www.ncvhs.hhs.gov.
C. Standards Design Criteria
Section 1860D-4(e)(3)(C) of the Act, specifies that the design
criteria for electronic prescription drug program standards require
that--
The standards be designed so that, to the extent
practicable, they do not impose an undue administrative burden on
prescribing healthcare professionals and dispensing pharmacies and
pharmacists;
The standards be compatible with standards established
under Part C of Title XI, standards established under section 1860D-
4(b)(2)(B)(i) of the Act, and with general health information
technology standards; and
The standards be designed so that they permit the
electronic exchange of drug labeling and drug listing information
maintained by the Food and Drug Administration (FDA) and the National
Library of Medicine (NLM).
D. Current Prescribing Environment
According to 2002 data from the National Center for Health
Statistics, Americans made more than 823 million visits to physicians'
offices in 2000 and, according to the National Association of Chain
Drug Stores (NACDS), four out of five patients leave a doctor visit
with at least one prescription. More than 3 billion prescriptions are
written in the United States (U.S.), and prescription medications are
used by 65 per cent of the U.S. public in a given year, according to an
Agency for Healthcare Research and Quality (AHRQ) 1999 report. Given
this volume, even small improvements in quality that are attributable
to e-prescribing may translate into significant cost benefits.
Today, physicians and other health care providers make their drug-
prescribing decisions using whatever medical, medication, and
eligibility information that is known or available to them. Then they
give a handwritten prescription to the patient or fax it to the
patient's pharmacy of choice. At the pharmacy, tasks are somewhat more
automated. Through electronic claims, eligibility, and benefits
submission, the dispensing pharmacist may learn about drug
interactions, disease management concerns, the need for prior
authorization, or lower cost alternatives. The pharmacist may then
contact the prescriber by phone for approval of changes, refills, or
renewals. This process can be very repetitive and time consuming for
both the pharmacist's and the prescriber's office staff. According to
some estimates, almost 30 percent of prescriptions require pharmacy
call backs, resulting in 900 million prescription-related telephone
calls that are placed annually.\3\
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\3\ Hutchison, Kevin, SureScripts. Testimony before the NCVHS
Subcommittee on Standards and Security, May 25, 2004.
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Many witnesses before the NCVHS have stated that the current
prescribing process is prone to errors. Prescribers may not have access
to the latest drug knowledge. They often do not have a completely
accurate medication list or even medical history for their patient,
and, as a result, may be unaware of potential drug-drug or drug-disease
interactions or duplicate therapies. Pharmacists often have difficulty
reading handwritten prescriptions and frequently have little or no
information about the patient's condition for which the prescription is
written. Contacting the prescriber by phone to clarify what is ordered
and to make changes often results in delays for the patient and is time
consuming for the prescriber and the pharmacist. There are disconnects
between the prescriber and patient in the medication process, and
little or no feedback is given to the prescriber on whether a
prescription was filled or refilled. These disconnects can lead to
preventable adverse drug events (ADEs) that are common and can be
serious. According to the Center for Information Technology Leadership,
more than 8.8 million ADEs occur each year in ambulatory care, of which
over three million are preventable.\4\ Medication errors account for
one out of 131 ambulatory deaths.\5\ In addition, the current system
results in numerous and pervasive administrative and workflow
inefficiencies, which affect costs and quality of care.
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\4\ Center for Information Technology (CITL, a research
organization chartered in 2002) http://www.citl.org, Wellesley, MA
(781-416-9200) 2003 report: ``The Value of Computerized Order Entry
in ambulatory Care.''
\5\ Institute of Medicine, Committee on Quality in Healthcare in
America. To Err is Human: Building a Safer Health System.
Washington, DC, National Academy Press: 1999.
---------------------------------------------------------------------------
E. Current E-Prescribing Environment
E-prescribing is a complex process that usually involves a number
of stakeholders, including prescribers, pharmacists and associated
staff, vendors, hospitals and health systems, patients, health plans,
and Pharmacy Benefit Managers (PBMs), among others. In a basic e-
prescribing system, clinicians review, enter, manage, and sign
prescriptions using a computerized system, instead of writing them on
paper. The prescription is then electronically transmitted to a
pharmacy. Currently, e-prescribing systems are available in a variety
of graduated levels of technology with associated benefits for each
level. The levels range in sophistication from a basic electronic drug
information reference with dosing calculators and formulary information
to medication ordering that is automatically linked to an electronic
health record.
The value of e-prescribing in preventing medication errors is that
each prescription can be electronically checked at the time of
prescribing for dosage, interactions with other medications, and
therapeutic duplication. E-prescribing could potentially improve
quality, efficiency, and reduce costs by--
Actively promoting appropriate drug usage, such as
following a medication regimen for a specific condition;
Providing information about formulary-based drug coverage,
including formulary alternatives and co-pay information;
Speeding up the process of renewing medications. An
article reported that in a large primary care practice in Kokomo,
Indiana, of 206 daily prescription-related calls, 97 calls were renewal
requests; \6\ and
---------------------------------------------------------------------------
\6\ Ennis K., Maus R. Kokomo Family Care: Automating the
Clinical Practice. MGM Journal, 2001 (July/August): p. 8-11.
---------------------------------------------------------------------------
Providing instant connectivity between the health care
provider, the pharmacy, health plans/PBMs, and other entities,
improving the speed and accuracy of prescription dispensing, pharmacy
callbacks, renewal requests, eligibility checks, and medication
history.
The use of e-prescribing shows promise for improving Medicare
operations by creating efficiencies in the administration of the Part D
drug benefit, by decreasing costs in facilitating patient eligibility
checks, promoting generic drug use, and creating timely interface with
formularies. This also allows enhanced patient safety benefits through
the prevention of medication errors resulting from illegible
handwriting on paper prescriptions.
According to industry surveys, usage rates for e-prescribing vary
in number and in the level of sophistication of the electronic
prescription system used. Somewhere between 5 percent and 18
[[Page 6261]]
percent of physicians are estimated to be using e-prescribing of one
sort or another, although usage is slowly increasing. Some of the
barriers to increased usage of e-prescribing by physicians are the
costs of buying and installing a system, the training involved, time
and workflow impact, lack of reimbursement for costs and resources, and
lack of knowledge about the benefits related to quality of care.
F. Evolution and Implementation of an Electronic Prescription Drug
Program
In this regulation, we propose to adopt foundation standards (that
is, standards that do not need to be pilot tested because adequate
industry experience with those standards already exists). While the
statute includes an exception to the pilot testing requirement for
standards with adequate industry experience, it does not define the
term. The concept was discussed throughout the NCVHS hearings, as
industry participants debated whether specific standards should be
recommended as foundation standards. We propose to use the following
criteria to assess adequate industry experience, based on testimony
presented to the NCVHS and on some of the NCVHS discussions, and we
solicit comments on these criteria:
The standard is American National Standards Institute
(ANSI) accredited. We propose this criterion because the ANSI
accreditation process is open and based upon consensus, so accredited
standards are more likely to adequately address, and effectively
respond to, industry needs.
The standard generally has been implemented by entities to
which the final standard will be applied in multiple e-prescribing
programs with more than one external health care partner. We propose
this criterion because it demonstrates that the standard can be
successfully implemented, the experience can be replicated, and the
standard is interoperable between organizations as well as within an
organization.
The standard is recognized by key industry stakeholders as
the industry standard. We propose this criterion so that we do not
adopt a standard in a situation where there are competing industry
standards and the industry is divided over which one should be
selected.
The Secretary has determined that pilot testing is not required for
the standards proposed in this regulation because they meet the
criteria for adequate industry experience. The need for pilot testing
of future standards will be determined when additional standards are
recommended.
Standards for e-prescribing must not only meet the specific
requirements in section 1860D-4(e)(2) of the Act, but must also be
compatible with standards adopted under Part C of Title XI (the
Administrative Simplification provisions of HIPAA), and technology and
general standards adopted under section 1860D-4(b)(2)(B)(i) of the Act.
The standards should be vendor neutral and technology independent, and
developed by Standards Development Organizations (SDOs) that are
accredited by the ANSI.
The standards proposed in this regulation are important foundation
standards, but do not represent the full set of standards that will be
necessary to implement effectively an electronic prescription drug
program. Further, at least one of the standards with which we are
proposing to address basic e-prescribing functionality could be refined
in the future ultimately to support more advanced functions. For
example, the National Council for Prescription Drug Programs (NCPDP)
SCRIPT Standard contains a segment that supports free text patient
dosage instruction which could be enhanced to structure the patient
instructions.
These proposed foundation standards are a first step toward a more
complete set of standards required for an electronic prescription drug
program under the MMA. Additional final standards will be identified,
pilot tested, and proposed through separate processes in accordance
with the time frames set forth in the statute and will build on these
foundation standards.
In its September 2, 2004 letter to the Secretary, the NCVHS
recommended that HHS work with the industry through the rulemaking
process to determine how best to afford flexibility in keeping current
the adopted standards and those adopted in the future. We invite public
comment on how to establish a process that will be used to evolve
currently adopted and additional standards and to determine an
appropriate implementation sequence, consistent with the Administrative
Procedures Act and other applicable legal requirements. We specifically
invite comment regarding the role of industry standard setting
organizations and the NCVHS.
G. Electronic Prescription Drug Program
Section 1860D-4(e)(2) of the Act specifies that an electronic
prescription drug program for covered Part D drugs for Part D enrolled
individuals shall provide for the electronic transmittal to the
prescribing health care professional and to the dispensing pharmacy and
pharmacist of the--
Prescription;
Information on eligibility and benefits (including the
drugs included in the applicable formulary, any tiered formulary
structure, and any requirements for prior authorization);
Information on the drug being prescribed or dispensed and
other drugs listed on the medication history;
Information on drug-drug interactions, warnings or
cautions, and, when indicated, dosage adjustments;
Information on the availability of lower cost,
therapeutically appropriate alternatives (if any) for the drug
prescribed; and
Information that relates to the medical history concerning
the individual and related to a covered Part D drug being prescribed or
dispensed, upon request of the professional or pharmacist involved.
While it is important to note that, to the extent Part D sponsors,
prescribers, and dispensers are covered entities under HIPAA, they must
continue to abide by the applicable HIPAA standards, including those
for privacy and security. All Part D Plans are covered entities under
HIPAA, and we assume that many of the providers participating in Part D
will likewise be covered entities. Providers are HIPAA covered entities
if they engage in electronic transactions for which there are HIPAA
standards. In general terms, under HIPAA, a covered entity is a health
plan, a health care clearinghouse, and a health care provider who
transmits any health information in electronic form in connection with
a standard transaction. A standard transaction is defined as a
transaction that complies with the applicable standards at Sec.
162.1101 through Sec. 162.1802. Two of the eight Administrative
Simplification Standard Transactions conducted between providers and
health plans at Sec. 162.1101 through Sec. 162.1802 (the NCPDP
Telecommunication Standard for Health Care Claims, and the ASC X12N
270/271 Eligibility Inquiry and Response Standard for eligibility for a
health plan queries), are proposed in this rule for e-prescribing
foundation standards. The NCPDP Telecommunication Standard is proposed
for eligibility inquiries and responses between pharmacies and health
plans, and the ASC X12N 270/271 is proposed for eligibility inquiries
between prescribers and health plans. Complete definitions for HIPAA
covered entities and standard transactions are available at 45 CFR
160.103 and 45 CFR 162.103.
[[Page 6262]]
If a provider is not otherwise a covered entity under HIPAA, it
would become a covered entity if it conducts an e-prescribing
transaction that is also a HIPAA transaction, such as the 270/271
eligibility and response transactions. It should also be noted that
disclosures of protected health information (PHI) in connection with an
e-prescribing transaction that is not a HIPAA transaction would have to
meet the minimum necessary requirements of the Privacy Rule if the
entity is a covered entity. The Privacy Rule excludes from the minimum
necessary requirements those disclosures that are required to comply
with a HIPAA transaction standard. However, this exclusion would not
apply to e-prescribing standards that are not also HIPAA standards,
making compliance with minimum necessary a requirement, unless another
exception applies.
The MMA requires the Secretary to develop, adopt, recognize or
modify initial uniform standards related to the requirements of an
electronic prescription drug program taking into consideration any
recommendations from the NCVHS. The standards must be designated to
enable transmission of basic prescription data to and from prescribers
and dispensers, as well as the transmission of information about the
patient's drug utilization history, possible drug interactions, the
drug plan, and cost information. The design of the standards for an
electronic prescription drug program must be consistent with the
objectives of improving patient safety, quality of care, efficiencies
and cost savings in the delivery of care, and meet the standards design
criteria outlined in this section. The standards also must permit the
use of appropriate messaging, according to section 1860D-4(e)(2)(d) of
the Act, as it relates to the prescribing of drugs and permit patients
to designate a dispensing pharmacy.
In its September 2, 2004 letter, the NCVHS provided its
observations and associated recommended actions related to the
standards needed for the interoperable electronic exchange of
information for most of the categories of information enumerated in
section 1860D-4(e)(2) of the Act. The key NCVHS recommendations
concerning these functions and whether they are included in the NPRM
are summarized in the table below:
----------------------------------------------------------------------------------------------------------------
NCVHS Standards
Function Recommendations-- HHS Standard in NPRM
Should:
----------------------------------------------------------------------------------------------------------------
Provider and Dispenser Identifiers. Adopt NPI when it No.
becomes available.
Prescription (Clinical drug)....... Include in the 2006 No.
pilot tests the RxNorm
terminology in the
NCPDP SCRIPT Standard.
Drug order for new, renewals, Recognize, as a Yes.
cancellations, and change orders. foundation standard,
the most current
version of NCPDP
SCRIPT for new
prescriptions,
prescription renewals,
cancellations, and
changes between
prescribers and
dispensers.
Drug orders for fill status Should include the fill No.
notification. status notification
function of the NCPDP
SCRIPT Standard in the
2006 pilot tests.
Patient instructions (SIG)......... Support NCPDP, HL7, and No.
others (especially
including the
prescriber community)
in addressing SIG
(patient instruction)
components in their
standards.
Medication history................. Participate in and Standard functionality identified.
support rapid
development of an
NCPDP standard for a
medication history
message for
communication from a
payer/PBM to a
prescriber.
Formulary and benefit coverage Participate in and Standard functionality identified.
information. support the rapid
development of an
NCPDP standard for
formulary and benefit
information file
transfer.
Eligibility inquiry and response... Recognize, as a Yes.
foundation standard,
the NCPDP
Telecommunication
Standard and the ASC
X12N 270/271-Health
Care Eligibility
Benefit Inquiry and
Response.
Prior authorization................ Support ASC X12N in No.
their efforts to
incorporate
functionality for real-
time prior
authorization messages
for drugs in the ASC
X12N 278 Health Care
Services Review.
Drug-drug Interaction.............. No recommendations No.
advanced. Subject to
future NCVHS hearings.
Medical History.................... No recommendations No.
advanced. Subject to
future NCVHS hearings.
Exchange of medication history, and No recommendations No.
medical history for e-prescribing advanced. Subject to
program. future NCVHS hearings.
Electronic signature............... No recommendations No.
advanced. Subject to
future NCVHS hearings.
----------------------------------------------------------------------------------------------------------------
In section II of this proposed rule (Provisions of the Proposed
Regulation), we describe the proposed requirements related to the use
of the most current version of NCPDP SCRIPT for new prescriptions,
prescription renewals, cancellations, changes between prescribers and
dispensers, and ancillary messaging and administrative transactions,
the NCPDP Telecommunication Standard, and the ASC X12N 270/271
transaction, for transmitting eligibility data between dispensers and
Part D sponsors and between prescribers and Part D sponsors,
respectively.
The NCVHS also observed that ``there are several areas in the
foundation standards that do not support all the MMA requirements.'' As
can be seen from the Table above, additional standards will be required
to implement many of the functions of an electronic prescription drug
program as envisioned by the MMA. Examples of some of the needed
standards and associated issues are as follows:
Provider and Dispenser Identifiers. The MMA does not
expressly direct the Secretary to require the use of unique identifiers
for prescribers and dispensers in e-prescribing transactions. However,
the NCVHS found that it was important to address the issue of provider
identifiers for various e-
[[Page 6263]]
prescribing standards it reviewed and, more generally, for an
electronic prescription drug program. We agree. After assessing a
number of candidate identifiers, the NCVHS further recommended the use
of the National Provider Identifier (NPI) as the primary identifier for
dispensers and prescribers, once it becomes available.
HHS is considering requiring the use of the NPI as the provider
identifier for an electronic prescription program under Medicare Part
D. We believe that it is necessary to have a unique identifier for
these transactions. The NPI is the preferred option, because it is a
standard that many entities will be required to use under HIPAA. If use
of the NPI is required for e-prescribing transactions involving
Medicare Part D drugs at the time the benefit is available in January
2006, prescribers, pharmacies, pharmacists, Part D sponsors and
potentially other entities would be required to implement the NPI for
e-prescribing transactions earlier than the current compliance date for
the HIPAA covered transactions.
The NCVHS also urged HHS to accelerate the enumeration of all
providers to support transition to the NPI for e-prescribing. We have
been planning to enumerate HIPAA covered providers over the course of
several years.
Accelerated NPI usage for e-prescribing, therefore, may not be
possible, as HHS may not have the capacity to issue NPIs to all covered
providers by January 1, 2006. Furthermore, there is a possibility that
unforeseen system or budget concerns could delay provider enumeration,
and, therefore, the date by which the NPI would be available for use in
e-prescribing under Medicare Part D.
We invite public comments on the possible use of the NPI for
Medicare Part D e-prescribing transactions; the earliest time when the
NPI should be required for use in an electronic prescription drug
program; the effect on industry of accelerating use of NPI in an
electronic prescription drug program ahead of the HIPAA compliance
dates; alternatives to the NPI, particularly in the short term; and
options for phasing in use of the NPI in e-prescribing transactions or
prioritizing budget concerns that could delay the enumeration process.
NCVHS recommended that HHS permit the use of the NCPDP Provider
Identifier Number for identifying dispensers and the NCPDP HCIdea[reg]
for identifying prescribers in the event that the National Provider
System (NPS) cannot enumerate these providers in time for Medicare Part
D electronic prescription drug program implementation. We are looking
at various options for an alternate identifier(s), including using
provider identifiers currently in use in the Medicare program, in the
event the NPI is not available for use, and we invite public comment on
this, as well.
Formulary and Medication History Standards. Adoption of
standards for formulary representation and medication history would
clearly enhance e-prescribing capabilities under Part D. Such standards
would make 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, as well as information on
medications the patient is already taking including those prescribed by
other providers. Significant quality improvement and cost savings could
result from the use of formulary and medication history standards.
The NCVHS noted that formulary and medication history information
are currently communicated between payers and prescribers using
proprietary messages, frequently the Information File Transfer
protocols established by RxHub, a national formulary and benefits
information exchange. In response to industry testimony, RxHub
communicated to the NCVHS its intent to submit its protocols to NCPDP
to be considered for adoption as an ANSI-accredited standard. NCVHS
considered ANSI accreditation to be a criterion in their
recommendations process, and HHS proposes to adopt this as a criterion
for determining adequate industry experience.
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, and indicated its belief
that this appeared possible in time to adopt the standard as a
foundation standard.
We propose to adopt, as foundation standards in the final rule,
formulary representation and medication history standards, if certain
characteristics are met and there is adequate industry experience with
the standards. We would consider adopting an NCPDP standard for
formulary and medication history that are based on the RxHub protocol.
We set out the characteristics we consider to be critical for
formulary, benefit, and medication history messaging at the end of this
section, and solicit comments on those characteristics. We further
solicit comment on the extent to which any candidate standards,
including the RxHub protocols, meet those characteristics and should be
considered for adoption as foundation standards. We propose the
following critical characteristics for formulary and benefit data
standards:
The standards are accredited by an ANSI-accredited
standards development organization.
The standards permit interface with multiple product,
router, and point-of-care (POC) vendors.
The standards 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 POC systems; and
+ POC vendors to receive a range of formulary and benefit
information through these services.
The standards cover a range of formulary and benefit data,
including information on the--
+ Formulary (for example, therapeutic classes and subclasses);
+ Formulary status (for example, drugs that the benefit plan
considers to be ``on formulary'');
+ Preferred alternatives (including, but not limited to
restrictions that may impact whether the plan will cover a drug being
considered, such as quantity limits and need for prior authorization);
and
+ Copayment (that is, not just the single copayment amount for the
drug being considered, but the copayments for one drug option versus
another).
We propose the following critical characteristics for medication
history standards:
The standards are accredited by an ANSI-accredited
standards development organization.
The standards permit interface with multiple product,
router, and POC vendors.
The standards provide a uniform means for a prescriber,
dispenser, or payer to request from a payer, dispenser, or prescriber,
a listing of drugs that have been prescribed or claimed for a patient
within a certain timeframe.
The standards provide a uniform means for a Part D plan,
dispenser, or prescriber to request from a prescriber, dispenser, or
Part D plan, information to describe the patient's medication history.
This includes, for example, the drugs that were dispensed within a
certain timeframe, and may include the pharmacy that filled the
prescription and the physician that wrote the prescription.
Drug Information. Section 1860D-4(e)(2) of the Act
specifies that an electronic prescription drug program
[[Page 6264]]
will include information on drug-drug interactions, warnings or
cautions, and when indicated, dosage adjustments. Given that relevant
e-prescribing standards must permit electronic exchange of drug
labeling and drug listing information maintained by the FDA and the
NLM, medication history standards should be compatible with those
standards when they are adopted by the Secretary. While drug
information standards will not be foundation standards, they will be
supported in the future by the structured product label. While
standards for providing this type of information on drugs have not yet
been considered by the NCVHS and are not yet proposed, we anticipate
proposing standards in the future through rulemaking because they are
required by MMA and we believe that providing this information is
essential to improving the safety and quality of medication management.
We invite public comment on standards that should be required to
support an electronic prescription drug program required under the Part
D benefit.
Medical History. Section 1860D-4(e)(2)(B) of the Act
specifies that an electronic prescription drug program includes the
electronic transmittal of information that relates to the medical
history concerning the individual and related to a covered Part D drug
being prescribed or dispensed. ``Medical history'' differs from
``medication history.'' ``Medication history'' refers to drugs that
have been prescribed to the individual, while ``medical history''
relates more broadly to information about the patient's health care and
health status (for example, allergies, laboratory test results, and
chronic conditions).
The statute treats the electronic transmission of medical history
differently from the electronic transmission of other information in an
electronic prescription drug program. Section 1860D-4(e)(2)(B) of the
Act specifies that the medical history provision is only effective ``on
and after such date as the Secretary specifies and after the
establishment of appropriate standards.'' We intend to propose
standards for communicating medical history at a future date. The NCVHS
has not yet provided recommendations on these standards. This proposed
rule does not address data collection and storage in terms of research.
We will consider any NCVHS recommendations in our design of the pilot
project for 2006.
H. Summary of Status of Standards for an Electronic Prescription Drug
Program
We recognize that the standards we are proposing do not provide all
of the functions for which standards are required by section 1860D-
4(e)(2) of the Act. At this time, we can only propose to adopt, as
final standards, those standards with which there is adequate industry
experience; otherwise, pilot testing is required by section 1860D-
4(e)(4)(c) of the Act prior to the adoption of a standard as a final
standard. We invite public comment on these proposed standards, as well
as on standards currently being used in the industry that meet the
proposed functionalities for formulary and medication history and could
serve as foundation standards. In addition, we invite public comment on
the feasibility of, and alternatives to, the strategy we are proposing
of phasing-in implementation of an electronic prescription drug program
by requiring providers, dispensers, MA-organizations, and PDPs engaged
in e-prescribing to comply initially (beginning January 2006) with the
following proposed standards by requiring, at a future date, compliance
with other necessary standards as they are adopted in subsequent
rulemaking. Pilot testing will be required unless the exception for
adequate industry experience applies (followed by rulemaking to adopt
the final standards.) In addition to the standards regarding formulary
and medication history if certain characteristics are met, we are
proposing to adopt, as foundation standards, the following:
The NCPDP SCRIPT Standard Version 5, Release 0 (Version
5.0), May 12, 2004 (hereafter referred to as the NCPDP SCRIPT
Standard).
The 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 4010, October 2002, Washington Publishing
Company, 004010X092A1 (hereafter referred to as the ASC X12N 270/271
Transaction).
The NCPDP Telecommunication Standard Guide, 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 5, Release 1 (Version 5.1) for the NCPDP
Data Record in the Detail Data Record (hereafter referred to as the
NCPDP Telecommunication Standard).
We acknowledge that an e-prescribing program (including drug-to-
drug interaction checking, dosage adjustments and information on the
availability of lower cost therapeutic alternatives for which standards
will be adopted in the future) is one part of a comprehensive
Electronic Health Record (EHR) system with decision support
functionality and must be interoperable with other functions of an EHR.
The need for interoperability between these systems will become even
more critical in the future when patient medical history standards are
adopted. While one option might be to postpone the establishment and
adoption of standards for e-prescribing until such time as there are
commonly accepted industry standards for EHRs, so that standards for
the interoperability of e-prescribing and EHR systems could be
established at the same time, this would postpone the implementation of
any e-prescribing functionality, including the attendant benefits and
is beyond the scope of the MMA. We are proposing foundation standards
that are ANSI-accredited and have adequate industry experience, which
we believe will facilitate interoperability with later industry-adopted
standards for EHRs as well as interoperability across software and
hardware products. In addition, consideration will be given to future
requirements for interoperability. We solicit comment on this approach,
as well as on other critical success factors for assuring
interoperability.
II. Provisions of the Proposed Regulation
[If you choose to comment on issues in this section, please include the
caption ``PROVISIONS'' at the beginning of your comments.]
A. Proposed Change to Scope (Section 423.150)
Subpart D of part 423 implements provisions of several sections of
the Act, including sections 1860D-4(c), 1860D-4(d), 1860D-4(e), 1860D-
4(j), and 1860D-21(d)(3), as well as sections 102(b) and 109 of Title I
of the MMA. Because section 1860D-4(e) of the Act pertains to standards
for electronic prescription drug programs which require compliance by
e-prescribing entities other than Part D plans, we propose to
explicitly broaden the scope of subpart D. Therefore, we are proposing
to modify the title of subpart D to read, ``Cost Control and Quality
Improvement Requirements,'' and revise the description of the scope at
Sec. 423.150(c) to state expressly that this subpart sets forth
requirements relating to electronic prescription drug programs
[[Page 6265]]
for prescribers, dispensers, and Part D sponsors.
B. Proposed Definitions
We propose to amend Sec. 423.159 of the Medicare Prescription Drug
Benefit final rule to add definitions pertinent to the e-prescribing
process and to amend the title of the section to be consistent with the
term ``Electronic Prescription Drug Program'' which we are proposing to
define below. The proposed definitions are as follows:
Dispenser means a person, or other legal entity, licensed,
registered, or otherwise permitted by the jurisdiction in which the
person practices or the entity is located, to provide drug products for
human use on prescription in the course of professional practice.
Electronic media shall have the same meaning as this term
defined for purposes of HIPAA, in 45 CFR 160.103.
E-prescribing means the transmission, using electronic
media, of a prescription or prescription-related information, between a
prescriber, dispenser, PBM, or health plan, either directly or through
an intermediary, including an e-prescribing network.
Electronic Prescription Drug Program means a program that
provides for e-prescribing for covered Part D drugs prescribed for Part
D eligible individuals who are enrolled in Part D plans.
Prescriber means a physician, dentist, or other person
licensed, registered, or otherwise permitted by the U.S. or the
jurisdiction in which he or she practices, to issue prescriptions for
drugs for human use.
Prescription-related information means information
regarding eligibility for drug benefits, medication history, or related
health or drug information for a Part D eligible individual enrolled in
a Part D plan.
C. Proposed Requirements for Part D Plans
The Medicare Prescription Drug Benefit final rule has specific
language that requires Part D sponsors to support and comply with
electronic prescription drug program standards relating to covered Part
D drugs, for Part D enrolled individuals once final standards are
effective. Effective January 1, 2006, Part D sponsors would be required
to have an electronic prescription drug program and would be required
to support electronic prescribing, once standards are in place.
Many closed networks, such as staff-model HMOs, currently conduct
e-prescribing within the confines of their enterprise. They typically
use HL7 messaging whether it is for computerized physician order-entry
within a hospital or for a prescription transmitted to the
organization's own pharmacy. The e-prescribing standards that these
``closed'' enterprises should use were discussed by the NCVHS. The
committee recommended that organizations that conduct e-prescribing
transactions internally should not be required to convert to the
adopted standards for prescription communications within their
enterprise; however, if they send prescriptions outside the
organization (for example, from an HMO to a non-HMO pharmacy), then
they should use the adopted standards.
It is important to note that the NCVHS recommendation differs from
the HIPAA transaction requirements. The preamble for the Transactions
Rule (65 FR 50316-50317) discusses transmissions within a corporate
entity requires covered entities to use the adopted transaction
standards when conducting covered electronic transactions with other
covered entities. The Transactions Rule also expressly states that if a
covered entity conducts a covered transaction using electronic media
within the same covered entity, it must conduct the transaction as a
standard transaction (45 CFR 162.923). Consequently, whether the
transaction is conducted within or outside the entity is immaterial
with respect to whether compliance with the HIPAA transactions is
required.
This issue is relevant to Medicare Part D in situations where an
MA-PD plan, for example, is a staff-model HMO using an internal
pharmacy. We solicit comment on whether Part D plans should be required
to use the standards for e-prescribing transactions within the
enterprise, the potential implications (including timing) of required
compliance with adopted standards for these transactions, the extent to
which these entities exist, and the advantages and disadvantages
associated with excluding these transactions from the requirement to
comply with adopted e-prescribing standards.
D. Proposed Requirements for Prescribers and Dispensers
Part D sponsors would be required to comply with the applicable
proposed standards in new Sec. 423.160(b) when electronically
transmitting prescriptions and prescription-related information. If
prescribers and dispensers electronically transmit prescriptions and
prescription-related information, they also would be required to comply
with the applicable proposed standards in proposed Sec. 423.160(b).
These entities would be required to comply with the standards whether
they transmit prescriptions or prescription-related information using
electronic media, either directly or through an intermediary, through,
for example, an e-prescribing network.
E. Proposed Standards
The Secretary has tentatively concluded that the proposed standards
discussed below are not subject to pilot testing because adequate
industry experience with these proposed standards already exists.
Entities with electronic prescription drug programs would be required
to comply with the proposed applicable standards no later than January
1, 2006.
1. Prescription
The NCPDP SCRIPT Standard contains a series of business processes,
referred to as transactions, which are included in the NCPDP SCRIPT
Standard. We propose to adopt, as part of the proposed foundation
standards, the transactions included in the NCPDP SCRIPT Standard
Implementation Guide, except for 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). This transaction will not be
adopted at this time because, as discussed during the NCVHS hearings,
we do not believe there is adequate industry experience with the
standard. This transaction and its associated business cases are
identified in sections 6.11 through 6.14 and described on pages 40
through 45 of the Implementation Guide, Version 5.0.
We propose, in new Sec. 423.160(b)(1), to adopt the following
transactions of the NCPDP SCRIPT Standard, for communication of
prescription information between prescribers and dispensers, as part of
an electronic prescription drug program:
New prescription transaction
Prescription refill request and response transactions
Prescription change request and response transactions
Cancel prescription request and response transactions
The following ancillary messaging and administrative
transactions:
+ Get message transaction
+ Status response transaction
+ Error response transaction
+ Verification transaction
+ Password change transaction
We have determined that these transactions of the NCPDP SCRIPT
[[Page 6266]]
Standard meet our proposed criteria for adequate industry experience
for the following reasons:
First, the ANSI recognizes NCPDP as an accredited
standards organization. The NCPDP SCRIPT Standard adheres to Electronic
Data Interchange (EDI) for Administration Commerce and Transport
(EDIFACT) and Accredited Standards Committee (ASC) standards.
NCPDP is a not-for-profit ANSI-Accredited Standards Development
Organization consisting of over 1,300 members representing virtually
every sector of the pharmacy services industry. With over 25 years'
experience in the pharmacy health care industry, NCPDP membership
includes representatives from--
+ Chain and independent pharmacies;
+ Consulting companies and pharmacists;
+ Database management organizations;
+ Federal and State agencies;
+ Health insurers;
+ Health maintenance organizations;
+ Mail service pharmacy companies;
+ Pharmaceutical manufacturers;
+ Pharmaceutical services administration organizations;
+ Prescription service organizations;
+ Pharmacy benefit management companies;
+ Professional and trade associations;
+ Telecommunication and systems vendors;
+ Wholesale drug distributors; and
+ Other parties interested in electronic standardization within the
pharmacy services sector of the health care industry.
The NCPDP SCRIPT Standard is a voluntary consensus-based standard
that was developed by NCPDP, and approved by full ballot voting in
accordance with ANSI's procedures for due process, openness and
consensus. More specifically, the NCPDP SCRIPT Standard transactions we
propose for adoption have been used extensively for messaging between
prescribers and retail pharmacies for new prescriptions, prescription
refill requests, prescription fill status notifications, and
cancellation notifications, as part of the Consolidated Health
Informatics (CHI) Initiative. CHI is the health care component of
President Bush's eGov Initiatives created under the President's
Management Agenda.
Second, the NCPDP SCRIPT Standard transactions proposed
for adoption have been used in multiple e-prescribing programs.
SureScripts, Inc. (SureScripts) selected the NCPDP SCRIPT Standard to
serve as the foundation of their transaction engine software.
SureScripts was founded by the National Community Pharmacists
Association (NCPA) and the NACDS, which represent the interests of
55,000 chain and independent pharmacies. To date, SureScripts has
signed agreements with, and tested and certified the software of,
pharmacies and pharmacy technology vendors representing more than 75
percent of U.S. pharmacies. In addition, SureScripts has signed
contracts with software companies who supply electronic health record
and electronic prescribing applications to physician offices
representing more than 50,000 current physician users.
Third, the NCPDP SCRIPT Standard transactions we propose
for adoption are recognized as the industry standard. Over 25 e-
prescribing vendors (stand-alone and electronic health record
integrated systems) which represent 80 percent of the Nation's covered
lives are either using or actively programming to the NCPDP SCRIPT
standard.
We do include, as part of the proposed foundation standards, the
previously identified ancillary messaging and administrative
transactions. These transactions are an integral part of the NCPDP
SCRIPT Standard, providing the administrative functions to assure that
prescription transactions are accurately exchanged. Industry experience
with the adopted HIPAA transactions has shown the need for standard
acknowledgement and error reports transactions. During the NVCHS
hearings, the only transaction specifically mentioned as lacking
industry experience was the Prescription Fill Status Notification
Transaction and, thus, it has not been included in this proposed rule.
Because these ancillary messaging and administrative transactions are
an integral part of the NCPDP SCRIPT Standard, we believe that the
industry has adequate experience with them, so as to be able to forego
pilot testing. We solicit public comment on the adoption of the
ancillary messaging and administrative transactions in the NCPDP SCRIPT
Standard as proposed foundation standards and whether there is adequate
industry experience to forego pilot testing.
2. Eligibility
We are proposing, at new Sec. 423.160(b)(2)(i), to adopt the ASC
X12N 270/271 Transaction, for conducting eligibility and benefits
inquiries between prescribers and Part D sponsors.
The ASC X12N 270/271 transaction standards were adopted in August
2000 as the HIPAA standard for eligibility inquiry and response
transactions between dentists, (medical) professionals, and
institutions, on one hand, and health plans, or just between health
plans.
We have determined that the ASC X12N 270/271 transaction standard
meets the criteria for adequate industry experience for the following
reasons:
First, the ASC X12N 270/271 are ANSI-accredited standards.
Second, the standards are adopted HIPAA standards. Use of
the ASC X12N 270/271 transaction for conducting eligibility and
response inquiries between providers and health plans and between two
health plans has been required since October 16, 2003, at the latest.
In May 1998, when adoption of this standard was proposed through notice
and comment rulemaking, the majority of comments received expressed
support for adopting this standard.
Currently, there are efforts by the NCPDP to create a guidance
document that will map information on the Medicare Part D Pharmacy ID
Card Standard to the appropriate fields on the ASC X12N 270/271
transaction. However, it is important to note that the level of detail
returned on the 271 by the Part D sponsor must match the level of
detail in the inquiry made by the prescriber in the 270 request, to the
extent that the Part D sponsor's system is capable of handling this
request.
We are proposing to adopt, at proposed Sec. 423.160(b)(2)(ii), the
NCPDP Telecommunication Standard, for conducting eligibility
transactions between dispensers and Part D sponsors. We have determined
that the NCPDP Telecommunication Standard meets our proposed criteria
for adequate industry experience for the following reasons:
First, these standards adhere to EDI for EDIFACT and ASC
standards. As previously stated, NCPDP is a not-for-profit ANSI-
Accredited Standards Development Organization, with over 25 years
experience in the pharmacy health care industry, and its membership
consists of over 1,300 members representing virtually every sector of
the pharmacy services industry. These standards are voluntary,
consensus-based standards that were developed by NCPDP, and approved by
full ballot voting in accordance with ANSI's procedures for due
process, openness and consensus.
Second, these standards are adopted HIPAA standards. In
addition to being required standards for eligibility inquiries and
responses between retail pharmacy dispensers and health plans, they are
also required for submitting retail pharmacy drug claims.
[[Page 6267]]
According to the NACDS, over 4 billion claims were transmitted in 2003
using NCPDP standards. In May 1998, when adoption of these standards
was proposed through notice and comment rulemaking, the majority of
comments received expressed support for adoption.
Third, these standards are recognized as industry
standards and are used by 99 percent of the retail pharmacies and 95
percent of all pharmacies in conducting eligibility transactions.
If standards are updated and newer versions are developed, HHS
would evaluate the changes and consider the necessity of requiring the
adoption of new updates to the standards. This would be done through
the incorporation by reference update approval process, which provides
for publication in the Federal Register of an amendment to a standard
in the Code of Federal Regulations. If the updates include substantive
changes such as new functions that we consider necessary to be
implemented for an e-prescribing transaction, we would modify the
required standards through subsequent notice and comment rulemaking.
If, on the other hand, the updates or newer versions simply correct
technical errors, eliminate technical inconsistencies, or add functions
unnecessary for the specified e-prescribing transaction, the Secretary
would consider waiving notice and comment. In the later case, we would
likely adopt the version that was previously adopted as well as the new
version. This means that compliance with either version would
constitute compliance with the standard.
When determining whether to waive notice and comment and whether to
incorporate by reference multiple existing versions, we would consider
the significance of any corrections or revisions to the standard as
well as whether the newer version is ``backward compatible'' with the
previously adopted version. In this context, we intend the term
``backward compatible'' to mean that the newer version would retain, at
a minimum, the full functionality of the version previously adopted in
regulation, and would permit the successful completion of the
applicable e-prescribing transaction with entities that continue to use
the previous version. We note that, if an e-prescribing transaction
standard has also been adopted under 45 CFR parts 160 through 162, we
would coordinate the updating process for the e-prescribing transaction
standard with the maintenance and modification of the applicable HIPAA
transaction standard. We also seek comment on whether we should simply
reference the relevant HIPAA standard so that this standard will be
updated automatically in concert with any HIPAA standard modification.
F. Compliance Date
The Secretary proposes January 1, 2006 as the compliance date for
these proposed foundation standards. Beginning January 1, 2006,
prescribers and dispensers that conduct e-prescribing transactions for
which standards are adopted, Part D sponsors would be required to use
the standards proposed in this rule for transactions involving
prescription or prescription-related information regarding Part D
enrolled individuals. Compliance is required whether the entity
conducts e-prescribing transactions directly or through an
intermediary. The Secretary determined that compliance with these
foundation standards should be consistent with and coincide with
compliance for the Medicare Prescription Drug Program. In January 2006
when entities begin participation in the Medicare Prescription Drug
Program, these proposed standards will be available for them to use in
their electronic prescription drug program transactions for Medicare
Part D drugs for Part D enrolled individuals.
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.
Section 423.160 Standards for an Electronic Prescribing Program
Discussion: The emerging and increasing use of health care EDI
standards and transactions has 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.
Therefore, as a third-party disclosure requirement subject to the
PRA, Part D sponsors offering qualified prescription drug coverage must
support and must comply with electronic prescription standards relating
to covered Part D drugs, for Part D enrolled individuals as would be
required under Sec. 423.160.
However, the requirement that 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 first set of final
standards, these entities will be required to comply with the adopted
final 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 indicated 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.
Since these standards are already in use, we believe the
requirement to adopt these standards 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).
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: John Burke, CMS-0011-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
[[Page 6268]]
Office Building, Washington, DC 20503, Attn: Christopher Martin, CMS
Desk Officer, CMS-0011-P, Christopher_Martin@omb.eop.gov. Fax (202)
395-6974.
IV. Regulatory Impact Analysis
[If you choose to comment on issues in this section, please include the
caption ``IMPACT ANALYSIS'' at the beginning of your comments.]
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4) and Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties) 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). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in costs and
benefits in any 1 year). Our estimate is that this rulemaking has
``economically significant'' benefits as measured by the $100 million
standard, and is also, therefore, a major rule under the Congressional
Review Act. Accordingly, we have prepared a regulatory impact analysis.
Statistics from the Henry J. Kaiser Family Foundation indicate that
more than 3.1 billion retail prescriptions were written in the United
States in 2003, with the average cost for a prescription ranging from
$45 to $67, totaling $154 billion. Individuals who are age 65 years and
older average 26 prescriptions per year. The Medicare Prescription Drug
Benefit final rule (published in the Federal Register on January 28,
2005, available online at http://www.gpoaccess.gov) estimates that in
calendar year (CY) 2006 about 29 million Medicare beneficiaries will
receive drug coverage through a Medicare Part D plan (that is, a PDP or
MA-PD.) By CY 2010, with growth in the overall Medicare population,
estimates indicate that about 35 million Medicare beneficiaries will be
receiving this drug coverage. This impact analysis discusses the
overall impact of instituting e-prescribing standards under the
Medicare Prescription Drug Program. The overall requirements for
supporting e-prescribing and providing incentives were discussed in the
Medicare Prescription Drug Benefit proposed and final rules. However,
the specific standards were not contained in that proposed rule and the
impact analysis in that proposed rule did not analyze those
requirements. The adoption of standards for the program will enhance
the implementation and provide specific direction for providers,
dispensers, plans, and vendors.
According to testimony before the NCVHS and in the written comments
in response to the Medicare Prescription Drug Benefit proposed rule (69
FR 46632-46863), between 5 and 18 percent of prescribers are conducting
e-prescribing.\7\ However, some studies have indicated increased
prescriber interest and plans to move to e-prescribing. We anticipate
that the use of the standards proposed in this rule, and the fact that
we are proposing that these standards be available for the January 2006
implementation of the Medicare Prescription Drug Program, will
accelerate adoption of e-prescribing due to heightened awareness of the
benefits, the variety of devices and connections available for
prescribers, and the fact that the standards are already successfully
being used. While there are no detailed models predicting specific
rates of adoption for this technology, based on our sense of the likely
expert consensus, we think it likely that the proportion of prescribers
using e-prescribing will increase by about 10 percent annually over the
next five years. The 10 percent annual growth in prescriber
participation is a rough estimate, based on our expectations of--
---------------------------------------------------------------------------
\7\ Howell, Investors Business Daily, September 15, 2003.
---------------------------------------------------------------------------
Publicity surrounding the Medicare Prescription Drug
Program;
More publicity about the benefits of e-prescribing and the
experience of prescribers who are participating;
Increased emphasis on health information technology in
general;
Potential cost savings to providers using e-prescribing;
and
The availability of incentives for participation.
We believe that as prescribers gain experience with e-prescribing,
they will recognize the benefits and share those experiences with
colleagues. We invite public comment on our expectations for prescriber
participation.
According to the Center for Information Technology Leadership
(CITL), more than 8.8 million ADE occur each year in ambulatory care.
E-prescribing helps to deliver relevant patient information at the time
of prescribing. E-prescribing would allow a critical first level of
safety checks to occur when a medication is prescribed (in addition to
the patient safety software used at the point-of-service and the
retrospective drug utilization reviews that are performed). The CITL
estimates that nationwide adoption of e-prescribing would eliminate
nearly 2.1 million ADEs per year in the U.S. This would prevent nearly
1.3 million provider visits, more than 190,000 hospitalizations, and
more than 136,000 life-threatening ADEs. These improvements would
result in improved care and safety for health plans' members.
There is also evidence suggesting that the use of specific drugs
may reduce adverse health events, utilization of other health care
services, and related costs for certain groups of patients. E-
prescribing would promote efficient and effective use of drugs by
ensuring that prescribers have up-to-date information regarding
advances in drug therapies. For example, a recent study found that the
use of statins in cholesterol-lowering drug therapy reduced the
incidence of coronary disease-related deaths by 24 percent in elderly
men and women (ages 70 to 82) with a history of, or risk factors for,
vascular disease, and also reduced the incidence of non-fatal heart
attacks and fatal or non-fatal strokes in these patients (``Pravastatin
in Elderly Individuals at Risk of Vascular Disease (PROSPER): A
Randomised Controlled Trial,'' Lancet 2002, 360:9346, 1623-1630).
In addition to the anticipated reductions in adverse health events
associated with anticipated improvements in prescription drug
compliance, we believe that many elements of the Medicare prescription
drug benefit, including quality assurance, better information on drug
costs (for example, through generic substitution), and medication
therapy management which are designed to improve medication use and
reduce the risk of adverse events, including adverse drug interactions,
will be enhanced by e-prescribing. We believe that these improvements,
enabled by e-prescribing programs, will occur through enhanced
beneficiary education, health literacy and compliance programs;
improved prescription drug-related quality and disease management
efforts; and ongoing improvements in the information systems that are
used to
[[Page 6269]]
detect various kinds of prescribing errors, including duplicate
prescriptions, drug-drug interactions, incorrect dosage calculations,
and problems relating to coordination between pharmacies and health
providers. We also believe that additional reductions in errors and
additional improvements in prescription choices based on the latest
available evidence will occur over time as the electronic prescription
program provisions of the MMA are implemented. (To Err is Human:
Building a Safer Health System, Institute of Medicine of the National
Academies, 1999, pp. 191-193, http://www.iom.edu or http://www.nap.edu.
)
At this time, we cannot predict how fast all of these savings will
occur, nor their precise magnitude, as they are dependent on the rate
at which we are able to adopt final standards for various aspects/
functions of e-prescribing, the adoption of e-prescribing by
prescribers, the quality of the systems implemented for e-prescribing,
and the behavioral responses of prescribers, health care practitioners,
dispensers, insurers (who help manage treatments), and patients.
However, as indicated by the CITL report estimate, the potential is
clearly very substantial.
The ASC X12N 270/271 Transaction and the NCPDP Telecommunication
Standard proposed in this rule for e-prescribing transactions, are
already adopted standards for HIPAA. Thus, any costs associated with
adoption of these transaction standards are already encompassed in the
baseline. (The impact of implementing these standards was analyzed and
adopted in the Health Insurance Reform: Standards for Electronic
Transactions final rule, published on August 17, 2000 in the Federal
Register (65 FR 50312-50372) and available on the Web through http://www.gpoaccess.gov.
)
We note, however, that there is one very important difference
between those HIPAA regulations and this proposal. In that rule, we
knew that many of the electronic claims standards we were requiring
were incompatible with many of those already in use for electronic
billing of Medicare claims. In this proposed rule, we know that a
substantial number of prescribers and other entities are already using
the standards we are proposing. Thus, while the Transactions Rule and
this proposed rule share common goals and methods, they have different
implementation consequences.
It is important to understand that this proposed rule involves both
mandatory and voluntary elements, but that even the mandatory elements
are enabling. For example, the statute might have encouraged e-
prescribing by making it a required condition of participation in
Medicare, through positive financial incentives, by reducing barriers
to adoption, by increasing the value of e-prescribing systems, or
through other means. The primary method chosen by the Congress was to
increase the value of e-prescribing systems by mandating uniform
standards for e-prescribing. Uniform standards reduce barriers to
adoption by reducing uncertainty in the marketplace regarding which
standards will be the industry standards of the future. These
incentives are created without imposing substantial costs. For
potential new e-prescribers, whose choice to adopt e-prescribing is
voluntary, these standards provide the advantages of uniformity and
reduced uncertainty, and, hence, reduce costs or increase benefits of
adoption. For those existing entities that currently engage in e-
prescribing transactions whose systems are currently incompatible with
these standards (if any), transitioning to the foundation standards
will be mandatory to continue e-prescribing (with the option of
returning to paper) and will come at some cost, but will also increase
value of these systems in the long run as it will enable these entities
to communicate with all other e-prescribers. Only for Part D sponsors
is use of these standards mandatory, and even then, only to receive or
reply to e-prescribing transactions initiated by other entities.
We are soliciting public comment on the estimates used to determine
the regulatory impact for this proposed rule. Because of the current
lack of adequate data, we are unable to completely quantify the full
costs and savings that may be achieved in implementing electronic
prescription drug programs under the MMA. We are asking for public
comment and input on the data and issues presented in this impact
analysis. We plan to publish a more complete impact analysis in the
final rule, including an assessment of impacts on the Medicare program,
the effect on Part D spending, annual savings to Medicare, costs to
plans and providers, and estimated costs and savings for the private
sector and other Federal programs.
B. Impact on Health Plans/PBMs
The final rule on the Medicare Program Prescription Drug Benefit
estimates that 100 PDP sponsors and 350 MA organizations will submit
applications on an annual basis for participation in the Medicare
Prescription Drug Program. Testimony presented to the NCVHS (available
on the Web at http://www.ncvhs.hhs.gov) indicated that because most
health plans/PBMs currently have e-prescribing capability, any
additional costs associated with hardware/software connectivity would
be minimal. Since the great majority of health plans contract with PBMs
for pharmacy benefit administration, we do not consider the fees
associated with these contracts to be an additional cost for plans
conducting electronic prescription drug programs, although connectivity
costs could increase based on volume.
Although we believe that costs incurred by health plans will be
minimal, even in those few cases where plans do not currently support
e-prescribing directly or through PBM contracts, it is possible that
some plans will experience consequential costs that we have not
foreseen. We request comments on possible costs to plans, and on steps
we could take to ameliorate any unnecessary costs. We also request
comment on our expectation, discussed below, that plans will experience
substantial financial benefits from e-prescribing and that the new
standards will be cost-beneficial to plans.
The only expense attributable to health plans by this impact
analysis are those that would be incurred by plans/PBMs for voluntarily
providing financial incentives and technical assistance to
participating physicians to conduct e-prescribing. We expect many plans
to provide these incentives to prescribers to offset prescribers'
initial cost of installing the hardware and software, thereby
encouraging the adoption of e-prescribing. We expect that this will be
a transfer of costs from prescribers to health plans, and will neither
increase nor decrease the overall impact of implementing an electronic
prescription drug program. We note that such incentives must not and
will not violate Federal or State laws prohibiting kickbacks and
physician self-referrals. As stated earlier in the preamble, we will
publish a proposed rule to create an exception under section 1877 of
the Act, commonly called the Stark law, for incentives related to e-
prescribing. Also, the Department's Inspector General is considering
how best to establish a safe harbor under the Anti-Kickback Statute.
Health plans have a substantial incentive to subsidize the cost of
physicians' adoption of E-prescribing because the plans would share in
the likely savings in health care spending through reductions in
adverse events and improved compliance. Thus, it is likely that the net
effect on plans would be positive rather than negative. Moreover, there
is no reason to expect
[[Page 6270]]
health plans to incur costs without the expectation of a positive
return. However, we have no basis at this time for estimating the
precise timing or magnitude of either gross or net savings. We request
public comments and information on this topic that we can utilize when
revising this analysis for the final rule.
Health plans that have offered incentives to prescribers have
estimated the hardware and software costs for implementing an E-
prescribing system for a provider to be approximately $1500 per
prescriber. At this time, a number of health plans are developing
incentive packages for prescribers to initiate e-prescribing; however,
we do not have figures to indicate the extent of these offerings, and
invite public comment on the impact for both prescribers and health
plans. Because we cannot estimate at this time the incentives that
plans may provide, we do not know how costs will be shared between
prescribers and plans. Therefore, at this time we are attributing all
of the costs to prescribers, as discussed in the next section.
C. Impact on Prescribers
Current surveys estimate that between 5 and 18 percent of
physicians and other clinicians are using e-prescribing. According to
the Agency for Healthcare Research and Quality, MEPS Highlights
11, more than 3 billion prescriptions are written annually.
The ``2003 CMS Statistics'' publication reports the number of
physicians in active practice at 888,061. We assume that all of these
physicians are considered prescribers. However, the number of
practicing physicians is not a direct measure of the volume or scope of
potential e-prescribing adoption. According to the 2002 Economic
Census, Health Care and Social Assistance industry publication (http://www.census.gov
), there are about 203,000 physician office
establishments. This smaller number reflects the common use of group
practices and other arrangements that allow physicians to share
caseload, facilities, and costs. For these and other prescribers, the
likely focus of a decision to adopt e-prescribing is the office, rather
than the individual physician.
Although physicians are encouraged to adopt e-prescribing
technology, whether physicians prescribe electronically under the MMA
is, nevertheless, voluntary. We expect e-prescribing to reduce
prescriber costs and produce net economic benefits to prescribers, but
the magnitude and timing of savings first will have to be demonstrated
to many prescribers to induce them to make the ``up front'' investment
in new systems. Finally, an additional incentive for prescribers to e-
prescribe exists, which is the improved patient care that e-prescribing
brings. Because we cannot determine the effect of these factors on
prescribers at this time, we do not know how many prescribers will move
to e-prescribing or when they will do so.
After this proposed rule becomes final, once a prescriber decides
to conduct e-prescribing for Part D drugs, for Part D enrolled
beneficiaries, the prescriber would be required to comply with the
standards being proposed in this regulation. However, we have no reason
to believe that the use of these particular proposed standards would
increase costs for new adopters, compared to what costs otherwise would
have been. Even for those (and we think they are few) who are currently
using systems that may be in some respects incompatible with these
standards, we would expect vendors to upgrade those systems at no or
nominal cost as part of their normal version updating process.
Moreover, a system that uses uniform standards would enable a
prescriber to do business with multiple entities, and reduce costs
compared to the alternative of having to deal with multiple conflicting
systems. We do, however, request comments on whether there are some
transition costs attributable to these standards and whether there are
steps that we could take to mitigate those costs.
One of the barriers to early adoption of e-prescribing by
prescribers is the cost of buying and installing a system. Included in
the overall costs of buying and installing systems are several factors
including--
Changing in the business practices of providers' offices.
Changing record systems from paper to electronic; and
Training staff.
Since these costs may be defrayed by the incentives that are being
offered, or that may be offered, to prescribers, we expect a steady
increase in the number electronic prescribers. We do not know all of
the various incentives being offered, but are aware that some health
plans have offered hardware and software for e-prescribing and
reimbursement for the first year's e-prescribing subscription fees (as
indicated above, such arrangements must not violate Federal and State
laws prohibiting kickbacks and physician self-referrals). We invite
public comments on the nature and extent of incentives being offered to
encourage prescribers to conduct e-prescribing or likely to be offered
subsequent to the publishing of regulations to create an exception to
the Stark law and an anti-kickback safe harbor for e-prescribing. We
also anticipate that increased communication regarding the safety
improvements and cost savings experienced with e-prescribing will
encourage prescriber acceptance.
There is anecdotal evidence of direct economic benefits that accrue
to prescribers that implement e-prescribing, in addition to the
previously discussed health benefits to patients. The following
examples of these benefits have been reported:
A 53 percent reduction in calls from, and a 62 percent
reduction in calls to, the pharmacy.
Time savings of one hour per nurse and 30 minutes per file
clerk per day by streamlining medication management processes.
A large practice in Lexington, Kentucky estimates that e-
prescribing saves the group $48,000 a year in decreased time spent
handling prescription renewal requests.
Prior to implementation of e-prescribing, a large practice
in Kokomo, Indiana with 20 providers and 134,000 annual patient office
visits was receiving 370 daily phone calls, 206 of which were related
to prescriptions. Of the 206 prescription-related calls, 97 were
prescription renewal requests. The remainder consisted of clarification
calls from pharmacists or requests for new prescriptions. Staff time to
process these calls included 28 hours per day of nurse time and 4 hours
per day of physician time. Chart pulls were required in order to
process half of the renewal requests. Implementation of an e-
prescribing system produced dramatic time savings that permitted
reallocation of nursing and chart room staff.
Potential reductions in malpractice insurance because of
improvements in the quality of patient care resulting from better
tracking of patients' drug regimen and a reduction of ADEs, which may
occur with e-prescribing.
These examples come from large practices, but we would expect that
most if not all of them would apply equally well to smaller practices.
We request public comments and additional information on actual and
potential savings, particularly in solo and small group practices.
As can be seen from this discussion, there are both potential costs
and potential benefits for providers that implement e-prescribing. The
number of prescriptions that a provider writes is a critical issue for
providers in determining whether an e-prescribing system will be cost
beneficial to them. Although a cost of approximately $1500,
[[Page 6271]]
amortized over several years, would appear very small in the context of
even a solo practitioner's overall practice costs (and certainly far
below the threshold of 3 to 5 percent of revenues that we normally use
for economic significance determinations under the RFA), it is possible
that some providers may be negatively affected. However, the voluntary
nature of e-prescribing for prescribers makes this unlikely, since each
is free to make its own business decision regarding whether and how to
implement e-prescribing. Prescribers that have already implemented e-
prescribing are also unlikely to be negatively affected, because the
standards we are proposing are currently used by most e-prescribing
software products in use.
At this time we do not have sufficient information on either the
costs or benefits for a given type or size of provider to conduct a
cost-benefit analysis for that provider type or size. We are requesting
information on these factors to help us improve our analysis for the
final rule. Additional examples of administrative savings from e-
prescribing, as well as costs of implementing such systems, would be
particularly beneficial.
D. Impact on Pharmacies and Other Dispensers
Testimony from pharmacists and professional pharmacy organizations
provided to the NCVHS (available on the Web at http://www.ncvhs.hhs.gov
) reported the following benefits of e-prescribing for
pharmacies:
Reduced time-consuming phone calls to physicians.
Improved accuracy and less time for refill authorizations.
Additional time available for patient contact and
services.
Improved prescription communication between prescriber and
dispenser (through, among other things, reduction in illegible
handwritten paper prescriptions).
Improved turnaround time for refill authorizations.
We do not expect to see a material change in the volume of
prescriptions written for pharmacies to fill because of e-prescribing.
While we expect to see the efficiencies (discussed at the beginning of
this section) at pharmacies with some possible reductions in
administrative staff time, we do not expect to see a significant
economic effect from the implementation of e-prescribing in the
Medicare Part D program. The industry has provided information
indicating that 75 percent \8\ of the 57,208 pharmacies \9\ in the U.S.
already have e-prescribing capability which suggests that pharmacies
already find this a beneficial investment. In this respect, we note
that the great majority of pharmacies are already highly networked for
other reasons, and, therefore, assume that the marginal costs of e-
prescribing are likely to be small. For example, as indicated earlier
in this preamble, we believe that over 95 percent of pharmacy systems
are already compatible with the NCPDP retail pharmacy drug claim
standard. Since adoption is likely to be profitable, and voluntarily
undertaken only where expected to be profitable, we would expect any
net effects to be positive. We do, however, request additional
information on pharmacy impacts.
---------------------------------------------------------------------------
\8\ Hutchinson, Kevin, SureScripts. Testimony before the NCVHS
Subcommittee on Standards and Security, May 25, 2004.
\9\ National Community Pharmacists' Association, press release,
June 29, 2004.
---------------------------------------------------------------------------
E. Impact on Patients
E-prescribing has the potential for improving beneficiary health
outcomes. E-prescribing systems enable appropriate drug compliance
management and improved medication use, and provide information to
prevent adverse drug events. E-prescribing systems can improve patient
safety by detecting various kinds of prescribing errors, including
duplicate prescriptions; drug-drug, drug-allergy and drug-disease
interactions; incorrect dosage strengths prescribed; and problems
relating to coordination between health care providers and pharmacies.
These reductions in errors and improvements in regimens would occur
over time as more and more providers use the e-prescribing systems for
the Medicare Prescription Drug Benefit.\10\ E-prescribing can also
drive physicians to appropriate formulary choices, which can save money
for the health plans, patients, and health care system.
---------------------------------------------------------------------------
\10\ To Err is Human: Building a Safer Health System, Institute
of Medicine of the National Academies, 1999, pp. 191-193, http://www.oim.edu or http://www.nap.edu._____________________________________-
Nothing in this system creates direct costs for patients. We
believe that reductions in patient mortality and morbidity would be a
substantial benefit resulting from the adoption of e-prescribing,
although we are unable at this time to provide quantitative estimates.
Patient health benefits are likely to far exceed the other categories
of benefits and direct costs.
F. Impact on Others
We see the growth of e-prescribing as business potential for
healthcare information technology vendors. Any costs associated with e-
prescribing and potential business opportunities could be allocated
toward new product development. We have no estimates for these types of
costs, and invite public comment from healthcare information technology
vendors and others on the impact of e-prescribing.
E-prescribing is in widespread use among some segments of the
industry such as pharmacies and PBMs; however, we have not determined
the impact and extent of experience for other entities such as
pharmaceutical and medical device manufacturers, public health
organizations, research and academic institutions, and professional lay
organizations. We invite public comment on the impact of e-prescribing
for these entities. The Health Information Network Weekly Update
(Volume VI, No. 49, November 15, 2004) stated that e-prescribing is at
the top of the list of e-health applications that will see the greatest
growth. Thirty-nine percent of participants predict e-prescribing will
be the most widely embraced e-health application.
G. Impact on Small Businesses
The RFA requires agencies to analyze options for regulatory relief
for small businesses when proposed rules may create a significant
impact on a substantial number 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 having revenues of less than $6 million a year. For purposes of
the RFA, approximately 95 percent of pharmacy firms, which account for
about 51 percent of pharmacy establishments, are small business based
upon 1997 Census data. There are 57,208 retail pharmacy establishments
based upon ``2004 National Community Pharmacists Association Pfizer
Digest.'' Therefore, we estimate that more than 29,000 pharmacy
establishments would be considered small entities. Almost all
physicians in private practice (or the practices of which they are
members) are small entities because their annual revenues do not meet
the Small Business Administration's $8.5 million threshold for
``small'' physician practices. Individuals and States are not included
in the definition of a small entity, and this proposed rule has no
[[Page 6272]]
effect on small governmental jurisdictions.
We believe that this proposed rule would have an impact on a
substantial number of small businesses due to the percentage of
pharmacies and providers that are small businesses. We recognize that
there will be a distribution of costs and benefits with proportionately
higher costs incurred by smaller entities than by larger entities,
primarily as a result of economies of scale. However, as indicated
earlier in this section, as many as 75 percent of pharmacies already
are conducting e-prescribing and 5 to 18 percent of prescribers are
using this technology. Clearly, these rates of voluntary adoption
indicate that it provides net economic benefits. Furthermore, this
proposed rule recognizes that e-prescribing remains voluntary for
entities that are not Part D sponsors. That is, prescribers and
dispensers are only required to comply with the standards under section
1850D-4(e)(1) of the Act if they electronically transmit prescriptions
or other information, with respect to Part D drugs for beneficiaries
enrolled in Part D. Finally, we believe that the effects of adoption
are economically beneficial to affected entities.
We note that this conclusion differs from the impact of the HIPAA
Transactions Rule. The HIPAA Transactions Rule, although voluntary for
health care providers, was determined to have a significant impact. The
basis for that determination was that a significant percentage of
providers were already conducting the relevant transactions
electronically in nonstandard form. For example, over 80 percent of
Medicare claims submitted by physicians were transmitted
electronically. Those providers would have been required to switch to
the HIPAA standards, which were not in widespread use, creating a
burden on a large percentage of affected entities. By contrast, only 5
to 18 percent of prescriptions are conducted electronically, and the
small number of providers who are doing so are very likely already
using the standards we are proposing.
Accordingly, we conclude that this proposed rule would not have a
significant economic impact upon a substantial number of small
entities, and that an Initial Regulatory Flexibility Analysis is not
required. We welcome comments on this conclusion and additional
information on the small business effects of this proposed rule.
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 standards of section 604 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 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 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, we are not providing an analysis. We further estimate that
this proposed rule would not have a significant impact on small rural
hospitals because the e-prescribing provisions are both voluntary and
cost-beneficial for prescribers. In-hospital pharmacy units and staff
physicians should face the same benefit/cost calculus as their
counterparts, and would, therefore, have no net costs imposed upon them
by adoption of e-prescribing.
H. Effects on States and Federalism Statement
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits before issuing 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. The private
sector would incur costs for hardware and software upgrades, and
connectivity for implementation of e-prescribing. However, except for
MA and PDP plans, this proposed rule does not include any mandate that
would result in this spending because it only deals with the
informational standards to be used in voluntarily adopted practices,
and, therefore, that spending does not pertain to the thresholds of the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Furthermore, we
believe that the effects of adoption will be positive, rather than
involve net expenditures. Regardless, even using our estimates of
significant increases in the use of e-prescribing, we do not believe
annual expenditures on installing this capability will reach $110
million annually. Certainly, we would expect the only entities that are
required to comply, Part D sponsors (and possibly a few existing e-
prescribers), to incur only minimal costs, totaling no more than a
small fraction of this threshold.
With respect to States, nothing in this proposed rule mandates any
expenditure by States. While some hospitals and other providers are
State-owned, our conclusions with respect to each type of affected
entity are not affected by ownership status.
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. 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 discussed previously in this preamble, and as
mandated by section 1860D-4(e) of the Act, we are proposing to preempt
State law. 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 suggest as to the scope of preemption
discussed earlier in the preamble provide 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, together with the earlier preamble section entitled
``State Preemption'', constitute the Federalism summary impact
statement required under the Executive Order.
I. Conclusion and Alternatives Considered
For the reasons given above, we are not preparing analyses under
the RFA, section 1102(b) of the Act, or the Unfunded Mandates Reform
Act. We have, nevertheless, considered the alternatives discussed
below. We welcome comments on ways to lessen any unforeseen burden of
our proposals, on alternatives that might be more effective or less
costly, and on any other improvements we can make before issuing a
final rule.
Two sets of standards that we are proposing in this rule already
are required standards under the Administrative Simplification
provisions of HIPAA. The ASC X12N
[[Page 6273]]
270/271--Health Care Eligibility Benefit Inquiry and Response and NCPDP
Telecommunication Standard are adopted standards and required when
conducting standard transactions. We are proposing these standards for
e-prescribing because they are already adopted standards for HIPAA
transactions and meet some of the requirements specified in Title I,
section 1860D-4(e) of the Act, as amended by section 101 of the MMA.
The NCPDP SCRIPT Standard is in widespread use and meets many of
the e-prescribing requirements outlined in section 1860D-4(e) of the
Act. Also, NCPDP is developing NCPDP SCRIPT transactions to meet other
MMA requirements for future consideration or pilot testing. The NCVHS
did not recommend any viable alternatives for e-prescribing foundation
standards because testimony presented by the industry during the NCVHS
hearings strongly supported the NCPDP SCRIPT Standard (available on the
Web at http://www.ncvhs.hhs.gov).
An alternative to adopting these particular standards as final
foundation standards for e-prescribing would be to pilot test the
recommended standards. The NCVHS did not recommend pilot testing for
these foundation standards because they are already adopted standards
with adequate industry experience.
Another alternative considered would be to adopt formulary and
medical history standards based on proprietary standards that are not
ANSI accredited. If the coalition developing these standards is
successful with the accreditation process and there is evidence of
adequate industry experience with these standards, the standards could
be adopted in the final rule. We would consider including a functional
equivalence standard in the final rule if a reasonable one could be
devised. However, the standards proposed allow alternatives, as long as
the informational content and format are comparable.
List of Subjects 42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations, (HMO), Health
professions, Medicare, Penalties, Privacy, Reporting and recordkeeping
requirements.
For reasons set forth in the preamble in this proposed regulation,
the Centers for Medicare & Medicaid Services proposes to amend 42 CFR
part 423 (to be published on January 28, 2005 and effective on March
22, 2005) 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).
Subpart D--Cost Control and Quality Improvement Requirements
2. The title for subpart D is revised to read as set forth above.
3. In Sec. 423.150, paragraph (c) is revised to read as follows:
Sec. 423.150 Scope.
* * * * *
(c) Electronic prescription drug programs for prescribers,
dispensers and Part D sponsors.
* * * * *
4. Section 423.159 is amended by revising the heading and adding a
new paragraph (a) to read as follows:
Sec. 423.159 Electronic Prescription Drug Program.
(a) Definitions. For purposes of this section, the following
definitions apply:
Dispenser means a person or other legal entity licensed,
registered, or otherwise permitted by the jurisdiction in which the
person practices or the entity is located to provide drug products for
human use by prescription in the course of professional practice.
Electronic media shall have the same meaning as this term is
defined in 45 CFR 160.103.
E-prescribing means the transmission, using electronic media, of
prescription or prescription-related information between a prescriber,
dispenser, pharmacy benefit manager, or health plan, either directly or
through an intermediary, including an e-prescribing network.
Electronic Prescription Drug Program means a program that provides
for e-prescribing for covered Part D drugs prescribed for Part D
eligible individuals who are enrolled in Part D plans.
Prescriber means a physician, dentist, or other person licensed,
registered, or otherwise permitted by the U.S. or the jurisdiction in
which he or she practices, to issue prescriptions for drugs for human
use.
Prescription-related information means information regarding
eligibility for drug benefits, medication history, or related health or
drug information for a Part D eligible individual enrolled in a Part D
plan.
* * * * *
5. Section 423.160 is added to read as follows:
Sec. 423.160 Standards for electronic prescribing.
(a) General Rules. (1) Part D sponsors must establish and maintain
an electronic prescription drug program that complies with the
applicable standards in paragraph (b) of this section when
transmitting, directly or through an intermediary, prescriptions and
prescription-related information using electronic media for covered
Part D drugs for Part D eligible individuals enrolled in a Part D plan.
(2) Prescribers and dispensers that transmit, directly or through
an intermediary, prescriptions and prescription-related information
using electronic media must comply with the applicable standards in
paragraph (b) of this section when e-prescribing for covered Part D
drugs for Part D eligible individuals enrolled in a Part D plan.
(b) Standards. (1) Prescription. The National Council for
Prescription Drug Programs SCRIPT Standard, Version 5, Release 0, May
12, 2004, 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.
(2) Eligibility. (i) The American Standards Committee 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 4010, October
2002, Washington Publishing Company, 004010X092A1, for transmitting
eligibility inquiries and responses between prescribers and Part D
sponsors.
(ii) The National Council for Prescription Drug Programs
Telecommunication Standard Guide, Version 5, Release 1 (Version 5.1),
September 1999, and equivalent NCPDP
[[Page 6274]]
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, for transmitting eligibility
inquiries and responses between dispensers and Part D sponsors.
(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 the National Council for
Prescription Drug Programs SCRIPT Standard, Version 5, Release 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); the American Standards Committee X12N 270/
271--Health Care Eligibility Benefit Inquiry and Response, Version
4010, May 2000, 004010X092 and Addenda to Health Care Eligibility
Benefit Inquiry and Response, Version 4010, October 2002, Washington
Publishing Company, 004010X092A1, and the National Council for
Prescription Drug Programs Telecommunication Standard Guide, 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 5, Release 1 (Version 5.1) for the NCPDP
Data Record in the Detail Data Record. You may inspect copies of these
materials 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 information on the
availability of this material at CMS, call 410-786-0273. For
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. You may obtain a copy of the
National Council for Prescription Drug Programs SCRIPT Standard,
Version 5, Release 0, May 12, 2004, from the 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. You may obtain a copy of the American
Standards Committee 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 4010, October 2002, Washington Publishing
Company, 004010X092A1 from the Washington Publishing Company, PMB 161,
5284 Randolph Road, Rockville, MD, 20852-2116; Telephone (301) 949-
9740; and FAX: (301) 949-9742 or http://www.wpc-edi.com/. You may
obtain a copy of the National Council for Prescription Drug Programs
Telecommunication Standard Guide, 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 5,
Release 1 (Version 5.1) for the NCPDP Data Record in the Detail Data
Record, from the 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
.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: November 4, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: January 12, 2005.
Tommy G. Thompson,
Secretary.
[FR Doc. 05-1773 Filed 1-27-05; 11:04 am]
BILLING CODE 4120-01-P