Medicare Program; Proposed Standards for E-Prescribing Under Medicare Part D, 64900-64918 [07-5681]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 72, Number 221 (Friday, November 16, 2007)]
[Proposed Rules]
[Pages 64900-64918]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-5681]



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Part IV





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 423



Medicare Program; Proposed Standards for E-Prescribing Under Medicare 
Part D; Proposed Rule

Federal Register / Vol. 72, No. 221 / Friday, November 16, 2007 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 423

[CMS-0016-P]
RIN 0938-AO66


Medicare Program; Proposed Standards for E-Prescribing Under 
Medicare Part D

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This rule proposes the adoption of final uniform standards for 
an electronic prescription drug program as required by section 1860D-
4(e)(4)(D) of the Social Security Act (the Act). It also proposes the 
adoption of a standard identifier for providers and dispensers for use 
in e-prescribing transactions under sections 1860D-4(e)(3) and 1860D-
4(e)(4)(C)(ii), and section 1102 of the Social Security Act. The 
standards proposed under section 1860D-4(e)(4)(D) have been pilot 
tested and evaluated, and the findings indicate that the proposed 
standards meet the requirements for final standards that can be used 
for the Medicare Part D e-prescribing programs. The standards proposed 
in this rule, in addition to the foundation standards that were already 
adopted as final standards (see 70 FR 67568), represent an ongoing 
approach to adopting standards that are consistent with the Medicare 
Prescription Drug, Improvement and Modernization Act of 2003 (MMA) 
objectives of patient safety, quality of care, and efficiencies and 
cost saving in the delivery of care.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on January 15, 2008.

ADDRESSES: In commenting, please refer to file code CMS-0016-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to https://www.cms.hhs.gov/eRulemaking. Click 
on the link ``Submit electronic comments on CMS regulations with an 
open comment period.'' (Attachments should be in Microsoft Word, 
WordPerfect, or Excel; however, we prefer Microsoft Word).
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention 
CMS-0016-P, P.O. Box 8014, Baltimore, MD 21244-8014.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare and Medicaid Services, Department of Health and Human 
Services, Attention: CMS-0016-P, Mail Stop C4-26-05, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses: If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-9994 in advance to schedule your arrival 
with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    (Because access to the interior of the HHS Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)

    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the close of the 
comment period.
    Submission of comments on paperwork requirements: You may submit 
comments on this document's paperwork requirements by mailing your 
comments to the addresses provided at the end of the ``Collection of 
Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Denise M. Buenning, (410) 786-6711.

SUPPLEMENTARY INFORMATION:
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. Comments will be most useful if they are 
organized by the section of the proposed rule to which they apply. You 
can assist us by referencing the file code (CMS-0016-P) and the 
specific ``issue identifier'' that precedes the section on which you 
choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. After the close of the 
comment period, CMS posts all electronic comments received before the 
close of the comment period on its public website. Comments received 
timely will be available for public inspection as they are received, 
generally beginning approximately 3 weeks after publication of a 
document, at the headquarters of the Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday 
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an 
appointment to view public comments, please call (800) 743-3951.
    Copies: To order copies of the Federal Register containing this 
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Register.
    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 https://
www.gpoaccess.gpo.gov/fr/.

I. Background

A. Legislative History

    Section 101 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended title XVIII 
of the Social Security Act (the Act) to establish

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a voluntary prescription drug benefit program.
    Prescription Drug Plan (PDP) sponsors and Medicare Advantage (MA) 
organizations offering Medicare Advantage-Prescription Drug Plans (MA-
PD), are required to establish electronic prescription drug programs to 
provide for electronic transmittal of certain information to the 
prescribing provider and dispensing pharmacy and pharmacist. This would 
include information about eligibility, benefits (including drugs 
included in the applicable formulary, any tiered formulary structure 
and any requirements for prior authorization), the drug being 
prescribed or dispensed and other drugs listed in the medication 
history, as well as the availability of lower cost, therapeutically 
appropriate alternatives (if any) for the drug prescribed. The MMA 
directed the Secretary to promulgate uniform standards for the 
electronic transmission of such data.
    There is no requirement that prescribers or dispensers implement e-
prescribing. However, prescribers and dispensers who electronically 
transmit prescription and certain other information for covered drugs 
prescribed for Medicare Part D eligible beneficiaries, directly or 
through an intermediary, would be required to comply with any 
applicable final standards that are in effect.
    Section 1860D-4(e)(4) of the Act generally required the Secretary 
to conduct a pilot project to test initial standards recognized under 
1860D-4(e)(4)(A) of the Act, prior to issuing the final standards in 
accordance with section 1860D-4(e)(4)(D) of the Act. The initial 
standards were recognized by the Secretary in 2005 and then tested in a 
pilot project during calendar year (CY) 2006. The MMA created an 
exception to the requirement for pilot testing of standards where, 
after consultation with the National Committee on Vital and Health 
Statistics (NCVHS), the Secretary determined that there already was 
adequate industry experience with the standard(s). The first set of 
such standards, the ``foundation standards,'' were recognized and 
adopted through notice and comment rulemaking as final standards 
without pilot testing. See 70 FR 67568.
    Based upon the evaluation of the pilot project, and not later than 
April 1, 2008, the Secretary is required to issue final uniform 
standards under section 1860D-4(e)(4)(D). These final standards must be 
effective not later than 1 year after the date of their issuance.
    In the e-prescribing final rule at 70 FR 67589, we also discussed 
the estimated start-up costs for e-prescribing for providers and/or 
dispensers. Based on industry input, we cited approximately $3,000 for 
annual support, maintenance, infrastructure and licensing costs. 
Physicians at that time reported paying user-based licensing fees 
ranging from $80 to $400 per month. For further discussion of the 
start-up costs associated with e-prescribing, see the regulatory impact 
analysis section of this proposed regulation, and the e-prescribing 
final rule at 70 FR 67589.
    For a further discussion of the statutory basis for this proposed 
rule and the statutory requirements at section 1860D-4(e) of the Act, 
please refer to section I. (Background) of the E-Prescribing and the 
Prescription Drug Program proposed rule, published February 4, 2005 (70 
FR 6256).

B. Regulatory History

    In the e-prescribing final rule at 70 FR 67589, we also discussed 
the estimated start-up costs for e-prescribing for providers and/or 
dispensers. Based on industry input, we cited approximately $3,000 for 
annual support, maintenance, infrastructure and licensing costs. 
Physicians at that time reported paying user-based licensing fees 
ranging from $80 to $400 per month. For further discussion of the 
start-up costs associated with e-prescribing, see the regulatory impact 
analysis section of this proposed regulation, and the e-prescribing 
final rule at 70 FR 67589.
    In the November 7, 2005 final rule, we addressed the issues of 
privacy and security relative to e-prescribing in general. We noted 
that disclosures of protected health information (PHI) in connection 
with e-prescribing transactions would have to meet the minimum 
necessary requirements of the Privacy Rule if the entity is a covered 
entity (70 FR 6161). It is important to note that health plans, 
prescribers, and dispensers are HIPAA covered entities, and that these 
covered entities under HIPAA must continue to abide by the applicable 
HIPAA standards including these for privacy and security. E-prescribing 
provisions do not affect or alter the applicability of the Privacy Act 
to a particular entity. Entities which are covered by the Privacy Act 
and the HIPAA Privacy Rule must comply with provisions of both. 
Entities are responsible for determining whether they fall under the 
Privacy Act.
    We continue to agree that privacy and security are important issues 
related to e-prescribing. Achieving the benefits of e-prescribing 
require the prescriber and dispenser to have access to patient medical 
information that may not have been previously available to them. 
Section 1860-D(e)(2)(C) of the Act requires that disclosure of patient 
data in e-prescribing must, at a minimum, comply with HIPAA's privacy 
and security requirements.
    Although HIPAA standards for privacy and security are flexible and 
scalable to each entity's situation, they provide comprehensive 
protections. We will continue to evaluate additional standards for 
consideration as adopted e-prescribing standards. For further 
discussion of privacy and security and e-prescribing, refer to the 
final rule at 70 FR 67581 through 82.
1. Foundation Standards
    After consulting with the NCVHS, the Secretary found that there was 
adequate industry experience with several potential e-prescribing 
standards. Upon adoption through notice and comment rulemaking, these 
standards were called ``foundation'' standards, because they would be 
the first set of final standards adopted for an electronic prescription 
drug program. Three standards were adopted for purposes of e-
prescribing in the E-Prescribing and the Prescription Drug Program 
final rule, published November 7, 2005 (70 FR 67568). Two of these 
standards, Accredited Standards Committee (ASC) X12N 270/271; and The 
National Council for Prescription Drug Programs (NCPDP) 
Telecommunication Standard Specification, Version 5, Release 1 (Version 
5.1), were previously adopted under the Health Insurance Portability 
and Accountability Act of 1996 (HIPAA) and have been in effect since 
2001.
    These foundation standards are as follows:
    For the exchange of eligibility information between prescribers and 
Medicare Part D sponsors: Accredited Standards Committee (ASC) X12N 
270/271--Health Care Eligibility Benefit Inquiry and Response, Version 
4010, May 2000, Washington Publishing Company, 004010X092 and Addenda 
to Health Care Eligibility Benefit Inquiry and Response, Version 
4010A1, October 2002, Washington Publishing Company. 004010X092A1 
(hereafter referred to as the ASC X12N 270/271 standard).
    For the exchange of eligibility inquiries and responses between 
dispensers and Medicare Part D sponsors: The National Council for 
Prescription Drug Programs (NCPDP) Telecommunication Standard 
Specification, Version 5, Release 1 (Version 5.1), September 1999, and 
equivalent NCPDP Batch Standard Batch Implementation Guide, Version 1, 
Release 1 (Version 1.1), January 2000 supporting Telecommunications 
Standard Implementation Guide Version

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5, Release 1 (Version 5.1) for NCPDP Data Record in the Detail Data 
Record (hereafter referred to as the NCPDP Telecommunications 
Standard).
    For the exchange of new prescriptions, changes, renewals, 
cancellations and certain other transactions between prescribers and 
dispensers: NCPDP SCRIPT Standard, Implementation Guide, Version 5, 
Release 0 (Version 5.0), May 12, 2004, excluding the Prescription Fill 
Status Notification Transaction (and its three business cases; 
Prescription Fill Status Notification Transaction--Filled, Prescription 
Fill Status Notification Transaction--Not Filled, and Prescription Fill 
Status Notification Transaction--Partial Fill), hereafter referred to 
as NCPDP SCRIPT 5.0.
a. Exemptions to Foundation Standard Requirement for Nonprescribing 
Providers
    In 42 CFR 423.160(a)(3)(iii) we exempt entities transmitting 
prescriptions or prescription-related information where the prescriber 
is required by law to issue a prescription for a patient to a non-
prescribing provider (such as a nursing facility) that in turn forwards 
the prescription to a dispenser from the requirement to use the NCPDP 
SCRIPT Standard 5.0 adopted by this section in transmitting such 
prescriptions or prescription-related information.
    Industry comments indicated that while the e-prescribing standards 
we proposed were proven to have adequate industry experience in the 
ambulatory setting, the NCPDP SCRIPT Standard was not proven to support 
the workflows and legal responsibilities in the long-term care setting. 
As such, we exempted entities from the requirement to use the NCPDP 
SCRIPT standard when that entity is required by law to issue a 
prescription for a patient to a non-prescribing provider (such as a 
nursing facility) that in turn forwards the prescription to a 
dispenser. The CY 2006 pilot project tested for such entities' use of 
the foundation standards in ``three-way prescribing communications'' 
between facility, physician, and pharmacy. (For a more detailed 
discussion see the November 7, 2005 final rule (70 FR 67583).
b. Use of HL7 or NCPDP SCRIPT Standard To Conduct Internal Electronic 
Transmittals for Specified NCPDP SCRIPT Transactions
    In the E-Prescribing and the Prescription Drug Program final rule, 
published November 7, 2005 (70 FR 67568), we responded to comments on 
whether Medicare Part D plans should be required to use the standards 
for e-prescribing transactions taking place within their own 
enterprises. In the final rule we stated that entities may use either 
HL7 or NCPDP SCRIPT standards to conduct internal electronic 
transmittals for the specified NCPDP SCRIPT transactions. However, 
entities are required to use the NCPDP SCRIPT Standard if they 
electronically send prescriptions for Medicare beneficiaries outside 
the organizations, such as to a non-network pharmacy. Any pharmacy that 
already accepts e-prescriptions, even if only as a part of a larger 
legal entity, must be able to receive electronic prescription 
transmittals for Medicare beneficiaries via NCPDP SCRIPT from outside 
the enterprise.
c. Exemption for Computer-Generated Facsimiles
    The November 7, 2005 final rule also exempted entities that 
transmit prescriptions or prescription-related information by means of 
computer-generated facsimile (faxes) from the requirement to use the 
adopted NCPDP SCRIPT standard. ``Electronic media'' was already defined 
by regulations issued pursuant to the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA), so e-prescribing utilized the same 
definition. As a result, faxes that were generated by a prescriber's 
computer and sent to a dispenser's computer or fax machine which prints 
out a hard copy of the original computer-generated fax (that is, 
``computer-generated'' faxes) fell within the definition of 
``electronic media'' for e-prescribing. Absent an exemption, computer-
generated faxes would be required to comply with the adopted foundation 
standards. The November 7, 2005 final rule exempted computer-generated 
faxes from having to comply with the NCPDP SCRIPT standard.
    In June 2007, CMS proposed to eliminate this exemption. See 72 FR 
38195 through 38196 for a discussion of the elimination of this 
exemption.
2. Updating e-Prescribing Standards
    In the November 7, 2005 final rule (70 FR 67579), we discussed the 
means for updating e-prescribing standards. If an e-prescribing 
transaction standard has also been adopted under 45 CFR parts 160 
through 162 (that is, as HIPAA transaction standards), the updating 
process for the e-prescribing transaction standard must be coordinated 
with the maintenance and modification of the applicable HIPAA 
transaction standard. As the final rule adopted and incorporated by 
reference the relevant HIPAA transaction standards (the ASC X12N 270/
271 and the NCPDP Telecommunication Standard), the e-prescribing 
standards can be modified through a parallel rulemaking whenever the 
HIPAA transaction standards are modified. A streamlined process was 
created for updating adopted e-prescribing standards that were not also 
HIPAA transaction standards. This is done by identifying backward 
compatible later versions of the standards. This version updating and 
maintenance of the implementation specifications for the adopted non-
HIPAA e-prescribing standards will allow for the correction of 
technical errors, the elimination of technical inconsistencies, and the 
addition of functions that support the specified e-prescribing 
transaction. To do this, we adopted a process for the Secretary to 
identify a subsequent version(s) of a standard where the new version(s) 
are backwards compatible with the adopted standard. Use of such 
subsequent versions of an adopted standard is voluntary. Because HIPAA 
transaction standards are presently not backward compatible and the 
HIPAA transactions standards regulation does not currently address the 
use of subsequent versions of adopted standards that are backward 
compatible to the adopted standards, the streamlined process cannot 
presently be used for those HIPAA transactions standards that are also 
e-prescribing standards.
    Subsequent industry input indicated that the adopted NCPDP SCRIPT 
5.0, should be updated with a later version of the standard NCPDP 
SCRIPT Standard, Implementation Guide, Version 8, Release 1 (Version 
8.1), October 2005, excluding the Prescription Fill Status Notification 
Transaction (and its three business cases; Prescription Fill Status 
Notification Transaction--Filled, Prescription Fill Status Notification 
Transaction--Not Filled, and Prescription Fill Status Notification 
Transaction--Partial Fill), hereafter referred to as NCPDP SCRIPT 8.1.
    Using the streamlined process, HHS published an Interim Final Rule 
on June 23, 2006 (71 FR 36020) updating the adopted NCPDP SCRIPT 
standard, thereby permitting either version to be used. For more 
information, see the June 23, 2006 interim final rule with comment (71 
FR 36020).
3. National Provider Identifier (NPI)
    In the November 7, 2005 final rule (70 FR 67578), we discussed the 
use of the National Provider Identifier (NPI) for the Medicare Part D 
e-prescribing program once it became available. The NPI is the standard 
that was adopted in the final rule published on January 23, 2004 (69

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FR 3434) as the unique health identifier for health care providers that 
are HIPAA covered entities for use in the health care system. Health 
plans, health care clearinghouses, and those health care providers who 
transmit any health information in electronic form in connection with a 
transaction for which the Secretary has adopted a standard (known as 
``covered health care providers'') are considered ``covered entities'' 
which must use the identifier in connection with HIPAA standard 
transactions. For a discussion of the NPI, see the final rule published 
on January 23, 2004 (69 FR 3434).
    In the November 7, 2005 final rule (70 FR 67578), in response to 
comments received in the February 4, 2005 proposed rule, we indicated 
that we would include the NPI in the 2006 pilots to determine how it 
worked with e-prescribing standards. However, we also noted that 
accelerating NPI usage for e-prescribing might not be possible, as we 
might not have had the capacity to issue NPIs to all providers involved 
in the e-prescribing program by January 1, 2006. At the time the 
Request for Application was released, we had just begun to use the 
National Plan/Provider Enumeration System (NPPES) to process provider 
requests for NPIs. Upon reconsideration and in view of the short time 
period allowed for pilot testing, it was determined that the focus 
should be on standards testing and not on NPI as it would constitute a 
simple bench testing of the identifier and would have no substantive 
results. Therefore, NPI was not assessed during the pilots, which used 
other identifiers to accomplish their testing of the standards as 
outlined in the Request for Application.

C. Pilot Testing of Initial Standards

    The MMA required the Secretary to develop, adopt, recognize or 
modify ``initial uniform standards'' relating to the requirements for 
the e-prescribing programs in 2005. To ensure the efficient 
implementation of the e-prescribing program requirements, the MMA 
called for pilot testing of these initial e-prescribing standards in 
2006. To fulfill this requirement, the Secretary ultimately recognized 
(based on NCVHS input) six ``initial'' standards, which are discussed 
below. A Request for Applications (RFA) was issued in September 2005 
that laid out the details for how these initial standards were to be 
pilot tested (Available through http: //www.grants.nih.gov/grants/
guide/rfa-files/RFA-HS-06-001.html). The pilot test was conducted under 
four cooperative agreements and one contract that the Agency for 
Healthcare Research and Quality (AHRQ) entered into on behalf of CMS. 
The final pilot site reports are available at https://
www.healthit.ahrq.gov/erxpilots.
1. Initial Standards
    [If you choose to comment on issues in this section, please include 
the caption ``Initial Standards'' at the beginning of your comments.]

    As HHS had not yet published a final rule identifying the 
foundation standards at the time the RFA was published, it 
conditionally included the proposed foundation standards among the 
``initial standards'' to be tested. Any proposed foundation standards 
that were not adopted as foundation standards were to be tested as 
initial standards in the pilot project. Furthermore, if the proposed 
foundation standards were ultimately adopted as foundation standards, 
those standards nevertheless were to be used in the pilot project to 
ensure interoperability with the initial standards. A summary of the 
initial standards follows:
     Formulary and benefit information--The formulary and 
benefits standard, NCPDP Formulary and Benefits Standard, 
Implementation Guide, Version 1, Release 0 (version 1.0), hereinafter 
referred to as the NCPDP Formulary and Benefits Standard 1.0, is 
intended to provide prescribers with information from a plan about a 
patient's drug coverage at the point of care.
     Exchange of medication history--The medication history 
standard, included in the National Council for Prescription Drug 
Programs (NCPDP) Prescriber/Pharmacist Interface SCRIPT Standard, 
Version 8 Release 1 and its equivalent NCPDP Prescriber/Pharmacist 
Interface SCRIPT Implementation Guide, Version 8, Release 1, is 
intended to provide a uniform means for prescribers and payers to 
communicate about the list of drugs that have been dispensed to a 
patient.
     Structured and Codified SIG--The standard tested was 
NCPDP's proposed Structured and Codified SIG Standard 1.0. Structured 
and Codified SIG--instructions for taking medications (such as ``by 
mouth, three times a day'')--that are currently expressed as free text 
at the end of a prescription.
     Fill status notification function--The Fill Status 
Notification, or RxFill, was included in the NCPDP SCRIPT 5.0, and the 
updated NCPDP SCRIPT 8.1 but it previously was not proposed as a 
foundation standard due to lack of industry experience. The dispenser 
uses the prescription fill status transaction to notify the prescriber 
if a patient has picked up a prescribed medication at the pharmacy.
     Clinical drug terminology (RxNorm)--RxNorm, a standardized 
nomenclature for clinical drugs developed by the National Library of 
Medicine (NLM), provides standard names for clinical drugs (active 
ingredient + strength + dose form) and for dose forms as administered 
to a patient.
     Prior authorization messages--The pilot sites tested to 
determine the functionality of new versions of the ASC X12N 275, 
Version 4010 with HL7 and ASC X12N 278, Version 4010A1 to obtain 
certification from the plan to a provider that the patient meets 
criteria for a drug to be covered.
    The RFA also specified that pilot sites would use NCPDP SCRIPT 5.0. 
With the Secretary's recognition of the updated NCPDP SCRIPT 8.1, AHRQ, 
in its capacity as the administrator of the pilot project, gave pilot 
sites the option to voluntarily use NCPDP SCRIPT 8.1. Accordingly, all 
grantees/contractor in the pilot sites voluntarily employed the updated 
NCPDP SCRIPT 8.1 in their various testing modalities.
2. Grantees/Contractor and Testing Criteria
    [If you choose to comment on issues in this section, please include 
the caption ``Grantees/Contractor and Testing Criteria'' at the 
beginning of your comments.]

    The initial standards were tested in five healthcare/geographic 
settings to determine whether they were ready for broad adoption. 
Grantees/contractor tested whether the initial standards allowed 
participants to effectively communicate the necessary information 
between all participants in the transactions, such as the pharmacy, 
pharmacy benefits manager (PBM), router, plan and prescriber. They also 
tested how the initial standards worked with the foundation standards. 
Pilot sites also tracked generally anticipated e-prescribing outcomes, 
such as a reduction in medical errors. For more information on testing 
parameters and criteria, go to https://www.grants.nih.gov/grants/guide/
rfa-files/RFA-HS-06-001.html. 
    One of the strengths of the pilot project was the diversity and 
uniqueness of the five grantees/contractor. Grantees/contractor 
represented the spectrum of communities involved with e-prescribing, 
including most practice settings, and focused on utilization by 
pharmacists, physicians, nurses, and technology vendors. Applications 
were considered based on specific

[[Page 64904]]

characteristics/criteria. Each pilot site focused on different 
perspectives of the functionality and impact of initial standards by 
evaluating them in different sectors of the healthcare system, 
different geographies, and different practice settings using different 
technology application vendors, pharmacies and other stakeholders in 
the e-prescribing industry. The grantees selected were Achieve 
Healthcare Information Technologies, L.L.P., Eden Prairie, Minnesota; 
Brigham and Women's Hospital, Boston, Massachusetts; RAND Corporation, 
Santa Monica, California; SureScripts, L.L.C., Alexandria, Virginia. 
The contractor that was selected was the University Hospitals Health 
System, Cleveland, Ohio. For more information on the pilot project 
criteria, refer to the Request for Application at https://
www.grants.nih.gov/guide/RFA-HS-06-001.html.
3. Pilot Test Findings
    [If you choose to comment on issues in this section, please include 
the caption ``Pilot test findings'' at the beginning of your comments.]
a. Standard for Formulary and Benefits
    In the February 4, 2005 proposed rule, we discussed how the 
adoption of the formulary and benefit standard would enhance e-
prescribing capabilities under Medicare Part D by making it possible 
for the prescriber to obtain information on the patient's benefits, 
including the formulary status of drugs that the physician is 
considering prescribing. At that time, we proposed characteristics for 
a formulary and benefit standard (for a more detailed discussion refer 
to 70 FR 6262 through 6263). We proposed that if those characteristics 
for formulary were met by a standard and there was adequate industry 
experience with it, we would consider adopting it as a foundation 
standard. The NCVHS, in a September 2, 2004 letter to the Secretary 
(https://www.ncvhs.hhs.gov), had recommended the development of an NCPDP 
formulary and benefit standard, based on an RxHub protocol, to address 
the need for these desirable characteristics. RxHub submitted this 
protocol to NCPDP for approval and it was included in the October 2005 
release of NCPDP Formulary and Benefit standard 1.0. However, the 
timing of its release in October 2005 was too late for the Formulary 
and Benefit standard 1.0 to be considered for approval as a foundation 
standard in the November 7, 2005 final rule. Also, there was little to 
no industry experience with the standard. Because of this and other 
concerns about its interoperability with other standards, at that time 
we did not adopt NCPDP Formulary and Benefit standard 1.0 as a 
foundation standard, but agreed to include it in pilot testing. For 
more details, refer to 70 FR 67573.
    Formulary and benefits data standards must provide a uniform means 
for pharmacy benefit payers (including health plans and PBMs) to 
communicate a range of formulary and benefit information to prescribers 
via point-of-care (POC) systems. These include:
     General formulary data (for example, therapeutic classes 
and subclasses);
     Formulary status of individual drugs (that is, which drugs 
are covered);
     Preferred alternatives (including any coverage 
restrictions, such as quantity limits and need for prior 
authorization); and
     Copayment (the copayments for one drug option versus 
another).
    The NCPDP Formulary and Benefits Standard 1.0 enables the 
prescriber to consider this information during the prescribing process, 
and make the most appropriate drug choice without extensive back-and-
forth administrative activities with the pharmacy or the health plan.
    The NCPDP Formulary and Benefits Standard 1.0 was implemented live 
in all pilot sites, and technology vendors were certified prior to 
production. This standard works in tandem with the eligibility request 
and response (ASC X12N 270/271). Once the individual is identified, the 
appropriate drug benefit coverage is located and transmitted to the 
requestor.
    The pilot sites demonstrated that the NCPDP Formulary and Benefits 
Standard 1.0 can be successfully implemented between prescriber and 
plan. The NCPDP Formulary and Benefits Standard 1.0 is quite broad, and 
there are a number of complex data relationships supported by the 
standard. This complexity creates a certain level of confusion as to 
how to properly use the data and leads to implementation issues. While 
complex, the standard can support the transaction, and is ready for 
implementation as part of the e-prescribing program under Medicare Part 
D.
    Formularies by their very nature are complex. They consist of 
hundreds of pages of drug names, dosages, etc., that frequently change 
due to updates in formulations, coverage decisions, etc. In addition, 
each drug plan has their own formulary that they use for coverage 
purposes. Coverage of benefits is sometimes a fluid issue; coverage can 
change from day to day, depending, for example, as to whether a 
Medicare Part D beneficiary has met out-of-pocket spending thresholds, 
or has experienced a life-changing situation that might affect their 
benefit delivery for example, entering a long-term care facility). 
Adoption of this standard for formulary and benefits transactions 
between plans and providers may deliver added value in approximating 
patients' drug coverage and lead to patient-specific, real-time benefit 
information.
b. Standard for Medication History
    A medication history standard provides a way for prescribers, 
dispensers, and payers to communicate about a listing of drugs that 
have been prescribed or claimed for a patient within a certain 
timeframe. It may provide information that would be of use in helping 
to identify drug interactions, including the dispensing pharmacy and 
the prescribing physician. This standard is relatively mature and 
widely adopted by the prescribing industry. It has been useful in 
preventing medication errors, as well as understanding medication 
management compliance. Results demonstrate there is a difference in how 
the standard is implemented based on the source of the medication 
history.
    In the February 4, 2005 proposed rule, we discussed how the 
adoption of the medication history standard would enhance e-prescribing 
capabilities under Medicare Part D by making it possible for the 
prescriber to obtain information on the medications the patient is 
already taking, including those prescribed by other providers. At that 
time, we proposed characteristics for a medication history standard 
(for a more detailed discussion refer to 70 FR 6262 through 6263). We 
proposed that if those characteristics for medication history were met, 
and there was adequate industry experience with them, we would consider 
adopting foundation standards. The NCVHS, in a September 2, 2004 letter 
to the Secretary (https://www.ncvhs.hhs.gov), had recommended the rapid 
development of an NCPDP medication history standard based on an RxHub 
protocol. The NCPDP SCRIPT standard 8.1, based on the RxHub protocol, 
was released in October 2005, featuring those desirable 
characteristics. However, the timing of its release in October 2005 was 
too late for the standard to be considered for approval as a foundation 
standard in the November 7, 2005 final rule, and there was little to no 
industry experience with the standard. Because of this and other 
concerns about its interoperability with other standards, at that time 
we did not adopt the NCPDP SCRIPT standard as a foundation standard for 
medication history, but agreed to include it in pilot

[[Page 64905]]

testing. For more details, refer to 70 FR 67573.
    The pilot sites found that the proposed medication history standard 
included as a transaction in the NCPDP SCRIPT 8.1 is well structured, 
supports the exchange of information, would not impose an undue 
administrative burden on prescribers and dispensers, is compatible with 
other health IT standards, and is ready to be used as part of the e-
prescribing program under Medicare Part D.
c. Standard for Structured and Codified SIG
    Patient instructions for taking medications are placed at the end 
of a prescription. These are called the signatura, commonly abbreviated 
SIG. Currently, the Food and Drug Administration (FDA) provides some 
terminology for SIGS, for example, route of administration and unit of 
presentation. However, there is no standardized format or vocabulary 
for SIGs, leaving room for misinterpretation and error. A standard 
structure and code set for expressing SIGs has the potential to enhance 
patient safety, although free text capability must be preserved for 
special circumstances. Pilot sites used a variety of approaches 
including review of the proposed NCPDP Structured and Codified SIG 
standard 1.0, identification of test cases, using live transactions and 
selecting samples of prescriptions with a wide variety of SIGs, 
recreating each test case in a laboratory environment, and then 
developing a test harness that would include functions of an electronic 
information exchange application. Another approach was to analyze an 
initial sample that would be statistically valid with an attempt to 
represent each distinct SIG using the proposed standard's 128 data 
fields.
    The pilot sites found that the proposed Structured and Codified SIG 
format needs additional work with reference to field definitions and 
examples, field naming conventions and clarifications of field use. It 
is imperative that the prescriber's instructions be translated exactly 
into e-prescribing and pharmacy practice management systems to reduce 
medication errors, decrease healthcare costs and improve patient 
safety. Contradictions with other structured fields exist, and there 
are limitations on directions for topical drugs (such as the area of 
application). The pro re nata (PRN) or ``as needed'' designation could 
be interpreted as either ``as needed'' or ``as required'', and the 
standard does not allow for quick revisions for new drug 
administration. Mistranslations and contradictions in dosage/timing 
directions leave room for misinterpretation and error. Analysis shows 
that the NCPDP's proposed Structured and Codified SIG Standard 1.0 is 
not sufficiently developed for use for Medicare Part D e-prescribing in 
its current state.
d. Standard for Fill Status Notification
    The Fill Status Notification standard is a function within the 
NCPDP SCRIPT 8.1, but it was not named a foundation standard due to 
lack of adequate industry experience. The standard enables a pharmacy 
to notify a prescriber when the prescription has been dispensed 
(medication picked up by patient), partially dispensed (partial amount 
of medication picked up by the patient), or not dispensed (medication 
not picked up by patient, resulting in the medication being returned to 
stock).
    Pilot sites found that the NCPDP SCRIPT 8.1 standard supports the 
activities of a pharmacy sending messages to the prescriber as to the 
status of a prescription. The challenges encountered were not related 
to the structure and format of the standard, but in its implementation. 
RxFill is intended to encourage adherence and compliance with 
medication therapy. Although the transaction is technically capable of 
performing that function, the pilot sites' experiences and observations 
indicate there is no marketplace demand for this information, and may 
cause an unnecessary administrative burden on prescribers and 
dispensers. Prescribers expressed concerns about being inundated with 
data if they were informed every time a prescription was filled or not 
filled, and were unsure of the usefulness of the information. Moreover, 
implementing the Fill Status transaction would require significant 
business process changes at pharmacies as well as development of common 
rules for determining when a prescription becomes a ``no-fill.'' We 
question the marketplace demand for Fill Status Notification and 
solicit comments regarding both stakeholders' and industry's potential 
utilization of RxFill.
e. Standard for Clinical Drug Terminology: RxNorm
    RxNorm is a vocabulary resulting from a collaboration between the 
Food and Drug Administration (FDA) and the National Library of Medicine 
(NLM) that provides standard names for clinical drugs (active 
ingredient + strength + dose form), and for dose forms as administered 
to a patient. These concepts are relevant to how a physician would 
order a drug. It provides links from clinical drugs, both branded and 
generic, to their active ingredients, drug components (active 
ingredient + strength), and related brand names. NDCs (National Drug 
Codes) for specific drug products (where there are often many NDC codes 
for a single product) are linked to that product in RxNorm. NDCs for 
specific drug products identify not only the drug but also the 
manufacturer and the size of the package from which it is dispensed. 
NDCs are relevant to how a pharmacy would dispense the drug. RxNorm 
links its names to many of the drug vocabularies commonly used in 
pharmacy management and drug interaction software. By providing links 
between these vocabularies, RxNorm can mediate messages between systems 
not using the same software and vocabulary.
    RxNorm terminology was evaluated in the context of the NCPDP SCRIPT 
8.1 for new prescriptions, renewals, and changes. RxNorm was included 
in the pilot to determine how well the RxNorm information can be 
translated from the prescriber's system to the dispenser's system while 
maintaining the prescriber's intent. The grantees/contractor tested 
this standard in a laboratory setting, specifically to gain 
understanding of the completeness and accuracy of RxNorm.
    The pilot sites demonstrated that RxNorm has significant potential 
to simplify e-prescribing, create efficiencies, and reduce dependence 
on NDCs among dispensers. It was able to represent both new 
prescriptions and renewal requests. In some testing, RxNorm erroneously 
linked some NDCs to lists of ingredients rather than to the drugs 
themselves. Testing also revealed cases in which the NDC codes linked 
by RxNorm did not match to a semantic clinical drug (SCD), which always 
contains the ingredient(s), strength and dose form, in that order. This 
indicates there was either an error in matching to the correct RxNorm 
concept, or an error with RxNorm itself, with more than one term being 
available for the same clinical drug concept (that is, unresolved 
synonymy). There is currently no central repository containing a list 
of all NDC codes, nor a reference guide that indicates all of the NDCs 
associated with a particular drug. (On August 29, 2006, FDA published a 
proposed rule [71 FR 51276] which would result in the creation of an 
electronic drug registration and listing system for which FDA would 
issue all NDCs, registrants would be required to keep information up to 
date, and there would be a centralized electronic repository for these 
NDCs. Through the Structured Product Labeling (SPL) for

[[Page 64906]]

each marketed drug product, the NDCs would be linked to the drug 
product code, proprietary name, established name of the active 
ingredients, Unique Ingredient Identifiers [UNII], active ingredient 
strengths and pharmaceutical dosage form.) As with other vocabulary 
standards, RxNorm will never cover 100 percent of what is needed in 
every circumstance, so some provisions for exceptions will be needed. 
One example encountered in the pilots was the lack of standard names 
and identifiers for pharmacy-compounded drugs. Analysis shows that, as 
of December 2006, RxNorm was not sufficiently developed for effective 
and accurate use for Medicare Part D e-prescribing.
f. Standard for Prior Authorization
    The prior authorization standard incorporates real-time prior 
authorization functionality in the ASC X12N 278 Version 4010A1 Health 
Care Services Review transaction. Originally there were two models that 
were to be considered, solicited (prescriber proactively solicits prior 
authorization criteria/forms from plan) and unsolicited (questions 
appear via prompts on a point-of-care software system). The solicited 
model is rarely used and usually results in a paper-based response, 
versus the unsolicited model which employs e-prescribing technology. 
Upon consultation between the pilot sites and AHRQ as the administrator 
of the pilot project, AHRQ advised that the pilot sites use the 
unsolicited model using the NCPDP Formulary and Benefits Standard 1.0 
specification as it would provide a better test of prior authorization 
in an e-prescribing environment.
    Prior authorization is a very complex standard to implement, 
necessitating an understanding of four different standards and multiple 
payer requirements. The combination of ASC X12N 278, ASC X12N 275 and 
the HL7 prior authorization (PA) attachment is cumbersome, confusing 
and requires expertise that may limit adoption. Because health plans 
typically require prior authorization only for a small subset of drugs, 
the pilot sites had limited live experience with this standard. 
Nevertheless, they pilot tested the ASC X12N 278 version 4010A1 and ASC 
X12N 275 version 4010 with the HL7 PA attachment and identified several 
issues that need to be addressed before this standard should be adopted 
as an e-prescribing final standard, including some inconsistencies 
between ASC X12N 278 Version 4010A1 and ASC X12N 275 Version 4010 that 
need to be addressed. Investigators agreed that the HIPAA-named prior 
authorization standard--the ASC X12N 278 version 4010A1--was not 
adequate to support prior authorization because it was designed for 
service or procedure prior authorizations, not for medication prior 
authorization. One of the challenges of the ASC X12N 275 version 4010 
with the HL7 PA attachment is that it did not allow vendors to make 
questions mandatory, which would ensure that the information required 
is complete and reduce the need for back-and-forth communication that 
takes place between plan prior authorization representatives and 
prescribers. Standards modifications would need to be made prior to 
adoption as a final standard for the Medicare Part D e-prescribing 
program.
g. Use of Standards in the Long-Term Care (LTC) Setting
    Healthcare Delivery in long-term care (LTC) settings is unique for 
several reasons. Nurses are frequently the primary caregivers, with 
off-site physicians who monitor care; specialized long-term care 
pharmacies are located off-site with drugs being delivered to the 
facility. While the participants in the Achieve study were drawn from a 
convenience sample, the setting provided a special opportunity for 
understanding e-prescribing's impact on an entirely different patient 
population, provider type, and prescription delivery system.
    In long-term care, a prescription order typically remains an open 
order with no end date or a date far in the future. A prescriber may 
need to modify this order and notify the pharmacy. Changes might 
include dose, form, strength, route, modifications of frequency, or a 
minor change related to the order. Also, in the long-term care 
environment, there is a need to send a refill request from a facility 
to a pharmacy. An example is when a medication supply for a resident is 
running low (2-3 doses remaining), and a new supply is needed from the 
pharmacy. The facility needs a way to notify the pharmacy that a refill 
for the medication is needed. E-prescribing was evaluated within the 
unique context of long-term care workflow from facility to pharmacy.
    The primary purpose of the long-term care pilot site was to test 
the NCPDP SCRIPT 8.1 in the long-term care setting and found that 
modifications were required in order to ensure accurate transmission of 
the data. Through partner agreement, ``work-arounds'' were identified 
and implemented. These work-around requests were formally submitted by 
the pilot site grantee to NCPDP in the form of a DERF (Data Element 
Request Form) to modify the standard as needed. When an updated version 
of the NCPDP SCRIPT Standard becomes available that can accommodate the 
unique prescription workflow of the LTC setting, we will consider 
removing the current exemption. We solicit industry and other 
interested stakeholder comments on the impact and timing of lifting 
this exemption.

II. Provisions of the Proposed Rule

A. Proposed Retirement of NCPDP SCRIPT 5.0 and Adoption of NCPDP SCRIPT 
8.1 as a Final Standard

    [If you choose to comment on issues in this section, please include 
the caption ``Adoption of NCPDP SCRIPT 8.1'' at the beginning of your 
comments.]

    We propose to revise Sec.  423.160(b)(1) to replace the NCPDP 
SCRIPT 5.0 standard with the NCPDP SCRIPT 8.1. Those providers and 
dispensers using e-prescribing to provide for the electronic 
communication of a prescription or prescription-related information 
would be required to use the NCPDP SCRIPT 8.1 for the following 
transactions:
     Get message transaction.
     Status response transaction.
     Error response transaction.
     New prescription transaction.
     Prescription change request transaction.
     Prescription change response transaction.
     Refill prescription request transaction.
     Refill prescription response transaction.
     Verification transaction.
     Password change transaction.
     Cancel prescription request transaction.
     Cancel prescription response transaction.
    On June 23, 2006, we published an interim final rule with comment 
(71 FR 30620) to solicit comments as to whether the NCPDP SCRIPT 8.1 
was a backward compatible update to NCPDP SCRIPT 5.0. We received 5 
timely public comments on this interim rule with comment. The comments 
came from a standards setting organization, two national industry 
associations, and two private corporations actively involved in e-
prescribing. All commenters supported the voluntary use of the backward 
compatible Version 8.1 of the NCPDP SCRIPT Standard. Four recommended 
that it be adopted as soon as reasonably possible, and that Version 5.0 
be retired as soon as reasonably practical. They also indicated that 
Version 8.1 was already in widespread use throughout their

[[Page 64907]]

respective industries. One commenter indicated a concern with making 
backward compatibility ``the criteria'' for determining if a notice and 
comment rulemaking is required. That commenter felt that backward 
compatibility must be viewed as just one factor in making a 
determination to update, as opposed to modify, a standard.
    We continue to find that the NCPDP SCRIPT 8.1 is backward 
compatible to the adopted NCPDP SCRIPT 5.0. Both versions are the same, 
except that Version 8.1 contains the additional feature of medication 
history. One commenter expressed that it has been their experience 
that, while capable of processing Version 5.0, the industry is already 
implementing Version 8.1, and that few, if any, of their trading 
partners are using Version 5.0. This is supported by industry reports 
that numerous software systems now using Version 8.1 have been 
certified for use by electronic prescribing networks.
    Regarding the comment that backward compatibility should not be the 
sole criterion for determining whether use of a subsequent version 
requires an update or a modification of an e-prescribing standard, we 
note that it is not the sole criterion. The ``backward compatibility'' 
of a subsequent version of an adopted standard simply indicates that 
entities may voluntarily upgrade their systems with the subsequent 
version that is ``backward compatible,'' and still be compliant with 
the adopted standard. With the backward compatible version, entities 
may conduct transactions with other entities that continue to use the 
adopted version of the standard with no deleterious effect on the 
transmission of information or the transaction itself. We also note 
that we are required by law to employ notice and comment rulemaking to 
modify an adopted standard or when entities would be required to 
transition to a subsequent version. Through the rulemaking process, we 
must notify the public as to the proposed modifications, receive public 
comment on our proposals, and take into consideration an analysis of 
factors such as the modification's impact on affected entities relative 
to cost, benefit projections, productivity, etc., as well as industry 
and stakeholder feedback provided by means of the written comment 
process. We are soliciting comments regarding the retirement of Version 
5.0 and the adoption of Version 8.1 as the adopted standard for the e-
prescribing functions outlined in 42 CFR 423.160(b)(1), and based on 
the proposed compliance date described in section II.E. of this 
proposed rule.

B. Proposed Adoption of an E-Prescribing Standard for Medication 
History Transaction

    [If you choose to comment on issues in this section, please include 
the caption ``Medication History'' at the beginning of your comments.]

    In the Foundation Standards final rule, 70 FR 67568, we discussed 
the need for medication history standards, and that we were unaware of 
any standard for these transactions that clearly met the criteria for 
adequate industry experience. As a result, a standard for medication 
history was tested in the 2006 pilot project.
    The NCVHS noted in its September 2, 2004 letter to the Secretary 
that medication history information was communicated between payers and 
prescribers using proprietary messaging standards, frequently the 
Information File Transfer protocols established by RxHub, a national 
formulary and benefits information exchange. The NCVHS recommended that 
HHS actively participate in and support the rapid development of an 
NCPDP standard for formulary and medication history using the RxHub 
protocol as a basis. In September 2005, RxHub announced that its 
propriety data transaction format for Medication History which they had 
submitted to NCPDP, had been approved and incorporated into the NCPDP 
Script Standard, and approved by the American National Standard 
Institute (ANSI). NCVHS considered ANSI accreditation to be one 
criterion in their recommendation process for adoption of e-prescribing 
standards, and HHS adopted this as a criterion for determining adequate 
industry experience. (See 70 FR 67568, 67577 for a discussion of all 
the criterion considered by NCVHS.) The resulting NCPDP SCRIPT standard 
was recognized by the Secretary as an initial standard, then pilot 
tested in accordance with the MMA.
    The pilot sites demonstrated that the standard can be successfully 
implemented among a variety of e-prescribing partners and, while 
complex, the standard can support the Medication History transaction, 
and is ready for implementation under Medicare Part D.
    If NCPDP SCRIPT 8.1 is adopted in place of NCPDP SCRIPT 5.0 at 
Sec.  423.160(b)(1) as proposed above, we also propose to add Sec.  
423.160(b)(3) to adopt the NCPDP SCRIPT 8.1 for electronic medication 
history transactions among the plan sponsor, prescriber, and the 
dispenser when e-prescribing for covered Medicare Part D drugs for 
Medicare Part D eligible individuals. The medication history 
transaction in the NCPDP SCRIPT 8.1 standard is based on the 
proprietary file transfer protocol developed by RxHub, which is 
currently being used to communicate this information in many e-
prescribing products.
    Adoption of the NCPDP SCRIPT 8.1 standard for the medication 
history transaction will provide a uniform communications mechanism for 
prescribers, dispensers and payers, support reconciliation of useful 
data from a large number of sources, and raise awareness of its 
availability and use among providers. Cost savings to the public will 
be generated based on reductions in the number of preventable adverse 
drug events (ADEs). Significantly, systems that utilize this proposed 
transaction in the NCPDP SCRIPT 8.1 standard will be substantially more 
effective at ADE reduction than those merely utilizing the original 
foundation standards by allowing prescribers to see what medications 
have been prescribed by other providers in the past.

C. Proposed Adoption of an E-prescribing Standard for Formulary and 
Benefit Transactions

    [If you choose to comment on issues in this section, please include 
the caption ``formulary and benefit transactions'' at the beginning of 
your comments.]

    As a result of pilot testing, we are proposing to add Sec.  
423.160(b)(4) to adopt the NCPDP Formulary and Benefit Standard 1.0, 
for the transaction of communicating formulary and benefit information 
between the prescriber and the plan sponsor when e-prescribing for 
covered Medicare Part D drugs for Medicare Part D eligible individuals. 
This standard is based on a proprietary file transfer protocol 
developed by RxHub, which is currently being used to communicate this 
information in many e-prescribing products. The RxHub protocols were 
submitted to NCPDP for accreditation, and the resulting standard was 
recognized by the Secretary as an initial standard and pilot-tested in 
accordance with the MMA.
    The NCPDP Formulary and Benefits Standard 1.0 was implemented live 
in all pilot sites. This standard works in tandem with the eligibility 
request and response (ASC X12N 270/271). Once the individual is 
identified, the appropriate drug benefit coverage is located and 
transmitted to the requestor.
    The pilot sites demonstrated that the NCPDP Formulary and Benefits 
Standard 1.0 can be successfully

[[Page 64908]]

implemented among a variety of e-prescribing partners, and while 
complex, the standard can support the transaction, and is ready for 
implementation under Medicare Part D.
    Adoption of this standard for formulary and benefits transactions 
between plan sponsors and prescribers may deliver added value in 
approximating patients' drug coverage and lead to patient-specific, 
real-time benefit information. The NCPDP Formulary and Benefits 
Standard 1.0 enables the prescriber to consider this information during 
the prescribing process, and make the most appropriate drug choice 
without extensive back-and-forth administrative activities with the 
pharmacy or the plan sponsors. As prescribers prescribe based on the 
coverage offered by a patient's plan formulary, plans will experience 
reduced costs through paying for drugs that are specific to their 
formularies for which they have negotiated favorable rates. Patients 
will see reduced costs in not having to pay increased out-of-pocket 
expenses for prescribed drugs that are not on their plan's formularies.

D. Adoption of the National Provider Identifier (NPI) as a Standard for 
Use in E-Prescribing Transactions

    [If you choose to comment on issues in this section, please include 
the caption ``Adoption of the National Provider Identifier'' at the 
beginning of your comments.]

    We are proposing to add Sec.  423.160(b)(5) to adopt the National 
Provider Identifier as a standard for use in e-prescribing transactions 
among the plan sponsor, prescriber, and the dispenser. The NCPDP SCRIPT 
standard 8.1, which we are proposing for adopting in this proposed 
rule, supports the use of NPI.
    While the NPI was not tested in the pilot project, we have reason 
to believe that there is adequate industry experience with the NPI 
which would support its use in e-prescribing transactions under section 
1860D-4(e)(4)(C)(ii). Use of the NPI is already required in order to 
conduct HIPAA-compliant transactions which require the identity of 
HIPAA covered health care providers; and the compliance date for the 
NPI, May 27, 2007, has already passed. The NPI is in widespread use by 
HIPAA covered entities in HIPAA transactions. Although the NCPDP SCRIPT 
transaction is not a HIPAA transaction, the prescribers and dispensers 
that conduct it would be HIPAA covered entities, and as such, they 
would already be using NPI as they conduct their HIPAA transactions. 
They would, therefore, already be familiar with the NPI, even though 
they may not currently use it in the NCPDP SCRIPT transaction. 
Furthermore, NPI meets the objectives and design criteria laid out at 
section 1860D-4(e)(3) of the Act, so adoption of the NPI for use in e-
prescribing standards is supported by section 1860D-4(e)(3)(A) of the 
Act as well. Finally, as uniform identifiers are necessary to conduct 
electronic transactions such as those in the e-prescribing program, 
adoption of NPI is also supported by section 1102 of the Act.
    We generally solicit comments from the industry and other 
stakeholders on the adoption of NPI as an e-prescribing standard, and 
we specifically request comments as to whether use of the NPI in HIPAA-
compliant transactions constitutes adequate industry experience for 
purposes of using NPI as a covered health care provider identifier in 
Medicare Part D e-prescribing transactions.

E. Proposed Compliance Date

    In accordance with section 1860D-4(e) of the Act, the Secretary 
must issue certain final uniform standards for e-prescribing no later 
than April 1, 2008, to become effective not later than 1 year after the 
date of their promulgation. Therefore, in accordance with this 
requirement, the Secretary proposes a compliance date of 1 year after 
the publication of the final uniform standards. The Secretary also 
proposes adopting NCPDP SCRIPT 8.1 as the e-prescribing standard for 
the transactions listed in section III. C. of this proposed rule, 
effective 1 year after the publication of the final uniform standards. 
We solicit comments regarding the impact of these proposed dates on 
industry and other interested stakeholders and whether an earlier 
compliance date should be adopted.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 30-day notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
submitted to the Office of Management and Budget (OMB) for review and 
approval. In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comment on the following issues:
     Whether the information collection is necessary and useful 
to carry out the proper functions of the agency.
     The accuracy of the agency's estimat