Medicare Program; Medicare Part D Claims Data, 30664-30685 [08-1298]

Agencies

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

[Federal Register Volume 73, Number 103 (Wednesday, May 28, 2008)]
[Rules and Regulations]
[Pages 30664-30685]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 08-1298]



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Part II





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; Medicare Part D Claims Data; Final Rule

Federal Register / Vol. 73, No. 103 / Wednesday, May 28, 2008 / Rules 
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 423

[CMS-4119-F]
RIN 0938-AO58


Medicare Program; Medicare Part D Claims Data

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

ACTION: Final rule.

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SUMMARY: This final rule allows the Secretary to collect claims data 
that are presently being collected for Part D payment purposes for 
other research, analysis, reporting, and public health functions. The 
Secretary needs to use these data because other publicly available data 
are not, in and of themselves, sufficient for the studies and 
operations that the Secretary needs to undertake as part of the 
Department of Health and Human Service's obligation to oversee the 
Medicare program, protect the public's health, and respond to 
Congressional mandates. These data will also be used to better 
identify, evaluate and measure the effects of the Medicare 
Modernization Act of 2003, (MMA).

DATES: Effective Date: This regulation is effective June 27, 2008. Date 
of Applicability: This regulation applies to Part D claims data 
collected on or after January 1, 2006. Following the effective date of 
this final rule, we will recollect under section 1860D-12(b)(3)(D) of 
the Act any data that were first submitted prior to the effective date 
of this final rule by extracting them from the Part D claims data 
already collected for payment purposes.

FOR FURTHER INFORMATION CONTACT: Alissa DeBoy, (410) 786-6041; Nancy 
DeLew, (202) 690-7351.

SUPPLEMENTARY INFORMATION: Copies: To order copies of the Federal 
Register containing this document, send your request to: New Orders, 
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Depository Libraries and at many other public and academic libraries 
throughout the country that receive the Federal 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.access.gpo.gov/fr/
index.html.

I. Background

A. Requirements for Issuance of Regulations

    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended section 
1871(a)(3) of the Social Security Act (the Act) and requires the 
Secretary, in consultation with the Director of the Office of 
Management and Budget (OMB), to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final regulation. Section 
1871(a)(3)(B) of the Act also states that the timelines for these 
regulations may vary, but shall not exceed 3 years after publication of 
the preceding proposed or interim final regulation, except under 
exceptional circumstances. This final rule finalizes provisions set 
forth in our October 18, 2006 proposed rule. In addition, this final 
rule is being published within the 3-year time limit imposed by section 
1871(a)(3)(B) of the Act. Therefore, we believe that the final rule is 
in accordance with the Congress's intent to ensure timely publication 
of final regulations.

B. General Overview

    As stated in the October 18, 2006 proposed rule, under the Act, the 
Secretary has the authority to include in Part D sponsor contracts any 
terms or conditions the Secretary deems necessary and appropriate, 
including requiring the organization to provide the Secretary with such 
information as the Secretary may find necessary and appropriate. (See 
section 1857(e)(1) of the Act as incorporated into Part D through 
section 1860D-12(b)(3)(D) of the Act.)
    We proposed to implement section 1860D-12(b)(3)(D) of the Act to 
allow the Secretary to collect the same claims information now 
collected under the authority of section 1860D-15 of the Act for 
purposes including reporting to the Congress and the public, conducting 
evaluations of the overall Medicare program, making legislative 
proposals to Congress, and conducting demonstration projects. While the 
purposes underlying such collection are discussed in more detail in 
this final rule, they include, but are not limited to, evaluating the 
effectiveness of the new prescription drug benefit and its impact on 
health outcomes, performing Congressionally mandated or other 
demonstration and pilot projects and studies, reporting to Congress and 
the public regarding expenditures and other statistics involving the 
new Medicare prescription drug benefit, studying and reporting on the 
Medicare program as a whole, and creating a research resource for the 
evaluation of utilization and outcomes associated with the use of 
prescription drugs.
    We note that because this final rule applies to all Part D 
sponsors, it applies to any entity offering a Part D plan, including 
both prescription drug plan sponsors and Medicare Advantage 
organizations offering qualified prescription drug coverage. We further 
note that the Part D prescription drug event data (hereinafter also 
referred to as ``Part D claims data'') collected in accordance with 
section 1860D-12(b)(3)(D) of the Act will include 37 drug claim 
elements submitted by drug plan sponsors to the Secretary, which in 
accordance with Sec.  423.100, include not only data from claims for 
drugs, but also data from claims for insulin, biological products, 
certain medical supplies, and vaccines.

II. Provisions of the Proposed Rule With an Analysis of and Response to 
Public Comments

    We received approximately 118 items of timely correspondence 
containing comments on the October 18, 2006 proposed rule. Commenters 
included health policy organizations, pharmacies and pharmacy-related 
organizations, members of the Congress, researchers, insurance industry 
representatives, physicians and other health care professionals, 
beneficiary advocacy groups, representatives of hospitals, Part D 
beneficiaries, a pharmacy benefit managers' trade association and 
others.
    In this final rule, we address all comments and concerns on the 
policies included in the proposed rule. The following lists the 
provisions of the proposed rule that received the most comments:
     External access to the data
     Uses for the data
     Privacy protections for the data
    Generally, the vast majority of commenters expressed strong support 
for the proposed rule, declaring it essential for the success and 
accurate evaluation of the Medicare Part D program. There was also a 
significant

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amount of agreement among the commenters that external entities be 
allowed access to Part D claims data. Commenters pointed out that CMS 
could not possibly fund all the research needed, and because of that, 
allowing external entities access to these data is necessary in order 
to evaluate the many health care issues arising from the new 
prescription drug benefit. Commenters also noted that research by 
external entities is likely to result in lower government expenditures 
and better delivery of health care to beneficiaries. Many of the 
commenters supporting the rule cited multiple examples of the potential 
benefits to the public health that could result with the access to Part 
D claims data by qualified organizations and individuals, including 
assessing the impact prescription drugs have on the health outcomes of 
the elderly, cost efficiencies, quality of care measures, and the 
efficacy of prescription drugs.
    A number of comments addressed privacy protections, which impact 
the collection and release of claims data, and other commenters 
expressed concern about sensitive financial information being released. 
The majority of commenters acknowledged that a risk to protected 
information exists; however, they believed that the risk is no greater 
than the risk involved when allowing access to currently available 
Medicare data.
    Several commenters raised concerns about the inherent limitations 
associated with the use of claims data for research purposes and 
requested that we acknowledge these limitations. In the following 
sections, we address all of these comments.

A. General Provisions

1. Statutory Basis
    On December 8, 2003, the Congress enacted the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-
173). Title I of the MMA amended the Act to establish a new voluntary 
prescription drug benefit program, Medicare Part D. As we stated in the 
preamble to the January 28, 2005 final rule (70 FR 4197) implementing 
the new prescription drug benefit, we believe that the addition of 
outpatient prescription drug coverage to the Medicare program is the 
most significant change to the Medicare program since its inception in 
1965.
    Unlike Parts A and B of the Medicare program, where Medicare acts 
as the payer and insurer and generally pays for items and services on a 
fee-for-service basis, the prescription drug benefit is based on a 
private market model. Under this model, CMS contracts with private 
entities--prescription drug plan (PDP) sponsors, Medicare Advantage 
(MA) organizations, as well as other types of Medicare health 
organizations--who then act as the payers and insurers for prescription 
drug benefits. These private entities are generally referred to as 
``Part D sponsors'' in our rules. Section 1860D-12 of the Act contains 
the majority of provisions governing the contracts CMS enters into with 
the Part D sponsors. That section, entitled, ``Requirements for and 
contracts with prescription drug plan (PDP) sponsors,'' incorporates by 
reference many of the contract requirements that previously were 
applicable to Medicare Advantage organizations.
    One of the incorporated provisions at section 1860D-12(b)(3)(D) of 
the Act, is section 1857(e)(1) of the Act, which provides broad 
authority for the Secretary to add terms to the contracts with Part D 
sponsors, including terms that require the sponsor to provide the 
Secretary ``with such information * * * as the Secretary may find 
necessary and appropriate.'' We believe that the broad authority of 
section 1860D-12(b)(3)(D) of the Act authorizes us to collect most of 
the information we currently collect to properly pay sponsors under the 
statute. However, section 1860D-15 of the Act contains provisions that 
might be viewed as limiting such collection. Therefore, we engaged in 
this rulemaking in order to resolve the statutory ambiguity, as well as 
to implement the broad authority of section 1860D-12(b)(3)(D) of the 
Act.
    Most of the payment provisions with respect to Part D sponsors are 
found in section 1860D-15 of the Act.\1\ Subsections (d) and (f) of 
section 1860D-15 of the Act authorize the Secretary to collect any 
information he needs to carry out that section. However, those 
subsections also state that ``information disclosed or obtained under 
[section 1860D-15 of the Act] may be used by officers, employees, and 
contractors of the Department of Health and Human Services only for the 
purposes of, and to the extent necessary in, carrying out [section 
1860D-15 of the Act].'' (Sections 1860D-15(d)(2)(B) and (f)(2) of the 
Act).
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    \1\ We note that there are other provisions outside of section 
1860D-15 of the Act that also contain payment provisions. For 
example, section 1860D-14 of the Act discusses how CMS pays the low-
income subsidy.
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    In the January 28, 2005 Medicare prescription drug benefit final 
rule (70 FR 4399), we stated that the section 1860D-15 of the Act 
restriction applies only in cases where section 1860D-15 of the Act is 
the authority for collecting the information. When information is 
collected under an independent authority (even if the collected 
information duplicates the data collected under section 1860D-15 of the 
Act) the restrictions under 1860D-15 of the Act would not apply. In the 
January 28, 2005 final rule (70 FR 4399), we noted that because quality 
improvement organizations (QIOs) have independent authority to collect 
Part D claims data in order to evaluate the quality of services 
provided by Part D sponsors, QIOs would not be barred from collecting 
such data despite the restrictions of section 1860D-15 of the Act. We 
refer readers to the October 18, 2006 proposed rule for the exact 
citation to the discussion in the January 28, 2005 final rule (71 FR 
61447). Similar to the statutory provisions authorizing QIOs to collect 
the information they need to perform their statutory duties, section 
1860D-12(b)(3)(D) of the Act recognizes that the Secretary will need to 
collect a broad array of data in order to properly carry out his 
responsibilities as head of the Department of Health and Human Services 
(DHHS). Thus, if the Secretary determines it is necessary and 
appropriate under section 1860D-12 of the Act for him to collect Part D 
claims data in order to carry out responsibilities outside section 
1860D-15 of the Act, then section 1860D-15 of the Act would not serve 
as an impediment to such collections.
    As stated in the October 18, 2006 proposed rule, we also believe 
that language in sections 1860D-12(b)(3)(D) and 1857(e)(1) of the Act 
indicating that the authority to collect information exists only 
``except as otherwise provided,'' and in a manner that is ``not 
inconsistent with this Part,'' would not serve as a hindrance to the 
independent collection of Part D claims data, since on its face, 
section 1860D-15 of the Act restricts use of information only when 
collected under that authority.
    As we stated in the proposed rule, the Congress most likely 
included the broad grant of authority in section 1860D-15 of the Act in 
order to ensure that the Secretary, without engaging in any rulemaking, 
would have the legislative authority to collect any necessary data in 
order to pay Part D sponsors correctly. However, we do not believe that 
the Congress intended to restrict the Secretary when the Secretary 
otherwise has independent authority to collect identical information to 
that collected under section 1860D-15 of the Act. Rather, we noted that 
the Secretary will need to evaluate Part D claims information in order 
to determine how access to Part D drug benefits affects beneficiary 
utilization of services under Parts A and B of the Medicare program.

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Specifically, when Congress enacted the MMA, one of the stated reasons 
was to ensure that ``by lowering the cost of critical prescription 
drugs, seniors will better be able to manage their health care, and 
ultimately live longer, healthier lives.'' (Press Release, House Ways 
and Means Committee, Seniors Wait for Affordable Rx Drugs Comes to an 
End. President Bush Signs Historic Medicare Bill into Law (December 8, 
2003) (available at https://waysandmeans.house.gov/news.asp )). In order 
to determine whether lowering the costs of prescription drugs actually 
reduces health expenditures or improves health outcomes for 
beneficiaries, the Secretary will need to match individual level Parts 
A and B data with Part D claims data. In this way, the Secretary will 
be able to evaluate the effectiveness and efficiency of the Part D 
benefit and report to the Congress and others on the progress of the 
program.
    We are required to report to the Congress regarding whether 
mandated disease management demonstrations are budget neutral and 
whether beneficiaries in these demonstrations are on the appropriate 
medications. As we stated in the preamble of the proposed rule we may 
also need to make reports under the Part D program, for example, the 
publication of statistics detailing aggregate Medicare and beneficiary 
spending by class of drug, average number of drugs used by 
beneficiaries, total Medicare program spending, and other similar 
statistics. In order to derive such statistics, we would need to use 
Part D claims data. In the proposed rule, as well as in this final 
rule, we outlined a wide variety of situations in which it will be 
``necessary and appropriate'' for CMS to evaluate the same information 
collected under section 1860D-15 of the Act, even though such 
information would not be used to implement section 1860D-15 of the Act. 
In these situations, we believe the clear language of section 1860D-
12(b)(3)(D) of the Act provides the authority to collect the necessary 
information, and nothing about such collection will be inconsistent or 
in conflict with any other part of the statute.
    In addition, as discussed in this preamble, we are adding section 
1106 of the Act as a statutory basis for this final rule, as that 
section authorizes release of data by the agency through regulation.
    Comment: Some commenters stated that the proposed rule was 
inconsistent with the statute. Commenters also asserted that the 
collection is neither necessary nor appropriate, and some contended 
that the rule would improperly allow the release of proprietary data.
    Response: We refer readers to our discussion of the statutory basis 
in both the proposed rule (71 FR 61446) and in section II.A.1. of this 
final rule. As noted in the proposed rule, section 1860D-12(b)(3)(D) of 
the Act (and its incorporation of section 1857(e)(1)) of the Act 
provide broad authority to the Secretary to require Part D sponsors to 
provide the Secretary with ``such information as the Secretary may find 
necessary and appropriate.'' In addition, sections 1860D-15(d)(2)(B) 
and (f)(2) of the Act, by their own terms, restrict information only 
when ``disclosed or obtained under the provisions of [section 1860D-15 
of the Act].'' Thus, we continue to believe that when information is 
collected through a statutory authority independent of section 1860D-15 
(such as in the case of QIOs, who have independent authority to collect 
data) the restrictions of section 1860D-15 of the Act would not apply, 
and nothing about the collection or use of the claims data would create 
an inconsistency or conflict in the statute.
    We also believe the collection of claims data under section 1860D-
12 of the Act is both necessary and appropriate for the reasons 
discussed in the proposed rule and in this final rule. For example, the 
collection of such claims data will permit the Secretary to conduct 
high level, internal analyses of the Part D benefit, such as which 
drugs are commonly used by the Medicare population, the utilization of 
generic drugs in the Part D benefit, the effect of benefit design on 
catastrophic costs (costs for which reinsurance is available), the 
number of individuals who entered the catastrophic phase of the 
benefit, and many more types of analysis. Similarly, the Secretary will 
have the opportunity to crosswalk Part D claims data to Parts A and B 
data in order to analyze the effect of access to prescription drugs on 
utilization under hospital and supplementary medical insurance.
    We know that one of the stated reasons for the drug benefit was to 
modernize Medicare and ensure that beneficiaries were not enduring 
unnecessary hospitalizations due to failure to access preventive 
prescription drug regimens. At the time the prescription drug benefit 
was being enacted into law, then-chairman of the Senate Finance 
Committee, Senator Charles Grassley, stated:

    [T]his bill is about enhancing quality of life * * *. Today, the 
practice of medicine--and a lot of the thanks can go to prescription 
drugs--is to keep people out of hospitals and out of operating 
rooms. So people who cannot afford drugs, who go to the doctor very 
sick, are going to not only end up in a place they do not want to 
go, because people would rather not go to hospitals, rather not go 
to operating rooms. It is going to save our programs a lot of money, 
both private and public payment programs, for doctors and hospitals, 
when we can have people go into programs where they can get 
prescription drugs and keep their health up so they do not go to the 
hospital.
    (Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003--Conference Report, 149 Cong. Rec. S15882-03, *S15883 and 
S15884 (November, 25, 2003)).

    Access to Parts A, B, and D claims data will allow the Secretary to 
analyze the prescription drug utilization of chronically ill patients 
over time, and determine whether increases in prescription drug 
utilization do, in fact, result in fewer hospitalizations. This is the 
type of analysis we believe the Congress expected the Secretary to 
engage in, and such analysis is both necessary and appropriate under 
the law.
    Finally, in response to concerns about releasing proprietary data 
to external entities as a result of this rulemaking, we note that data 
which could affect Medicare program spending, such as rebates, bids, 
reinsurance, and risk-sharing data, are not part of this rulemaking. In 
addition, as discussed later in this preamble, this rulemaking places 
certain limitations on data when released outside of CMS. We believe 
that it is in the interest of public health to share information 
collected under the regulations promulgated by this rule with entities 
outside of CMS for legitimate research, or in cases of other 
governmental agencies, for purposes consistent with their mission. 
Through the application of our ``minimum data necessary policy'', with 
some additional restrictions to protect beneficiary confidentiality and 
commercially sensitive data of Part D sponsors, and our data sharing 
procedures (which ensure the agency's compliance with the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA), the 
Privacy Act of 1974, and other applicable laws), we will limit the use 
and disclosure of Part D claims data to ensure that the data are only 
used or disclosed as permitted or required by applicable law, and not 
inappropriately disclosed in a manner which could undermine the 
competitive nature of the Part D program.
    Comment: One commenter requested that CMS postpone implementation 
of this regulation until the Congress clarifies CMS's statutory 
authority and that CMS answer certain questions in a second posting for 
comment.

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    Response: We believe we have the authority to collect Part D claims 
data under sections 1860D-12 and 1860D-15 of the Act, and to disclose 
Part D claims data collected under section 1860D-12 of the Act, in 
accordance with section 1106 of the Act. This final rule is 
sufficiently related to the proposals in the proposed rule, which were 
the subject of vigorous review and comment by the public, and we are 
not posting the proposal for a second round of comments.
    Comment: One commenter questioned why we were equating collecting 
data with accessing data.
    Response: As stated in both the proposed rule and this final rule, 
in order to ensure that Part D sponsors are not required to submit a 
second set of the same data already collected under section 1860D-15, 
we would collect the data that are the subject of this final rule by 
extracting them from Part D claims data already collected for payment 
purposes. This is the same approach we used when we discussed QIO 
access to data in the January 28, 2005 Part D final rule (70 FR 4399), 
where we stated that ``to the extent QIOs need access to data from the 
transactions between pharmacies and Part D sponsors, these data could 
be extracted from the claims data submitted to us''. Thus, in the 
preamble to this final rule, as in the preamble to the proposed rule 
(71 FR 61447), we may refer to ``accessing'' rather than ``collecting'' 
Part D data.
2. Information To Be Collected
    In the proposed rule, we proposed to independently collect the same 
claims information collected under section 1860D-15 of the Act under 
the authority of section 1860D-12(b)(3)(D) of the Act. The Part D 
claims data for 2006 and 2007 includes 37 data elements. We referred 
readers to the Prescription Drug Event data instructions which can be 
accessed at https://www.cms.hhs.gov/DrugCoverageClaimsData/01_
PDEGuidance.asp#TopOfPage for a full description of this information.
    These instructions define each data element and its specific 
potential use for CMS's payment process. Generally stated, these data 
elements include the following:
     Identification of the Part D sponsor and Part D plan 
through contract number and plan benefit package identification number.
     Health insurance claim number, which identifies the 
particular beneficiary receiving the prescription.
     Patient date of birth and gender.
     Date of service.
     Date paid by the plan.
     Identification of pharmacy where the prescription was 
filled.
     Identification of prescribing health care professional.
     Identification of dispensed product using national drug 
code (NDC) number.
     Indication of whether drug was compounded or mixed.
     Indication of prescriber's instruction regarding 
substitution of generic equivalents or order to ``dispense as 
written.''
     Quantity dispensed (for example, number of tablets, grams, 
milliliters, or other unit).
     Days supply.
     Fill number.
     Dispensing status and whether the full quantity is 
dispensed at one time, or the quantity is partially filled.
     Identification of coverage status, such as whether the 
product dispensed is covered under the plan benefit package or under 
Part D or both. This code also identifies whether the drug is being 
covered as part of a Part D supplemental benefit.
     Indication of whether unique pricing rules apply, for 
example because of an out-of-network or Medicare as Secondary Payer 
services.
     Indication of whether beneficiary has reached the annual 
out-of-pocket threshold, which triggers reduced beneficiary cost-
sharing and reinsurance subsidy.
     Ingredient cost of the product dispensed.
     Dispensing fee paid to pharmacy.
     Sales tax.
     For covered Part D drugs, the amount of gross drug costs 
that are both below and above the annual out-of-pocket threshold.
     Amount paid by patient and not reimbursed by a third party 
(such as copayments, coinsurance, or deductibles).
     Amount of third party payment that would count toward a 
beneficiary's true out-of-pocket (TrOOP) costs in meeting the annual 
out-of-pocket threshold, such as payments on behalf of a beneficiary by 
a qualifying State Pharmaceutical Assistance Program (SPAP).
     Low income cost sharing subsidy amount (if any).
     Reduction in patient liability due to non-TrOOP-eligible 
payers paying on behalf of the beneficiary. This would exclude payers 
whose payments count toward a beneficiary's true out of pocket costs, 
such as SPAPs.
     Amounts paid by the plan for basic prescription drug 
coverage and amounts paid by plan for benefits beyond basic 
prescription drug coverage.
    In 2008, the number of elements collected in the Part D claims data 
was expanded from 37 to 39. Specifically, we added additional elements 
to reflect the estimated rebate amount applied to the point-of-sale 
price and the vaccine administration fee. Because these elements were 
added for 2008, they were not addressed in the October 18, 2006 
proposed rule. Furthermore, in the October 2006 proposed rule (71 FR 
61447), we did not explicitly discuss how we would respond to future 
changes in the elements collected as part of the claim. Rather, the 
proposed rule included only a discussion of the 37 elements that then 
comprised the Part D claim and proposed that we would collect these 37 
elements under section 1860D-12(b)(3)(D) of the Act. As a result, 
interested parties had an opportunity to comment only upon our proposal 
to collect the original 37 elements of the Part D claim under section 
1860D-12(b)(3)(D) of the Act, and there has not been any similar 
opportunity for interested parties to submit comments on whether the 
two new elements should also be collected under section 1860D-
12(b)(3)(D) of the Act, such that they may also be used for non-
payment-related purposes. Accordingly, we will not be collecting these 
two data elements under section 1860-12(b)(3)(D) of the Act at this 
time. We are finalizing a regulation establishing our authority to 
collect under section 1860D-12(b)(3)(D) of the Act only those 37 data 
elements that were part of the prescription drug event (PDE) record in 
2006. Data regarding these 37 elements may be used for both payment-
related and nonpayment-related purposes. As discussed later in this 
preamble, such use will be subject to our minimum necessary data 
policy, our data sharing procedures, and the encryption of certain 
identifiers and aggregation of cost data to protect beneficiary 
confidentiality and commercially sensitive data of Part D sponsors. 
Because data regarding the 38th and 39th elements will continue to be 
collected only under section 1860D-15(d)(2) and (f)(1) of the Act, 
consistent with Sec.  423.322(b), these data may be used only for 
payment-related purposes.
    We note that this final rule does not extend to rebate or other 
price concession data, otherwise known as ``direct or indirect 
remuneration'' or ``DIR'', with the exception of DIR that may be 
reflected in the negotiated price paid for a drug at the point of sale. 
Again, the collection of Part D data under the authority of section 
1860D-12 of the Act in accordance with this final rule, is limited to 
the original 37 data elements collected as part of the Part D claims 
data. We have clarified this in

[[Page 30668]]

response to comments and in the regulatory text.
    Comment: Commenters were generally supportive of CMS's proposal to 
access Part D claims data for research and non-research purposes, and 
agreed that the data will provide valuable information and be essential 
in the evaluation of the Part D benefit. Several commenters requested 
additional elements be added to the original 37 PDE elements outlined 
in the proposed rule.
    Response: We agree that the PDE data elements we now collect will 
provide a valuable tool for evaluating the Part D program, and 
appreciate the suggestions to add other elements for collection. This 
final rule is first and foremost a clarification of the statutory 
authority that allows us to collect the original 37 PDE elements 
outlined in the proposed rule and this final rule and to access them 
for purposes other than payment. Since these data are already being 
collected under the Part D program, we would access the already-
collected data and make them available for research and non-research 
purposes, without undue burden to Part D sponsors or beneficiaries.
    As discussed above, in 2008, the number of PDE data elements was 
expanded to 39. In future years, we may revise our guidance on PDE 
Reporting to include additional elements on the claim beyond the 
elements presently collected. Through separate rulemaking, we will 
address whether we intend to collect any of these additional elements 
under our authority in section 1860D-12(b)(3)(D) of the Act.
    Comment: Several commenters noted that the proposed rule relates to 
drug claims and related information and asked for clarification as to 
what is meant by this phrase. A few commenters noted that the presence 
of this phrase in the proposed regulatory text suggests that CMS may be 
contemplating using and sharing rebate and other discount and pricing 
concession data.
    Response: Rebate and other price concession data are not the 
subject of this final rule. This rulemaking applies to Part D claims 
data only, and is limited to the original 37 elements reported on the 
PDE. To further clarify this point we are amending proposed Sec.  
423.505(f)(3) to delete the applicable reference to ``related 
information.''
    Comment: Several commenters expressed concern about access to cost 
and pricing data. Several commenters noted that pricing data contained 
on the Part D claim are not an accurate reflection of the actual costs 
to plans. These commenters also requested clarification that the 
information we are proposing to collect and disclose relate only to 
Part D claims data, and not to competitively sensitive financial data 
regarding rebates, discounts or other negotiated price concessions. The 
commenters expressed a concern that release of competitively sensitive 
data could undermine the competitive bid process. They assert that 
plans will be able to adjust their bids on the basis of knowledge of 
each others' data, resulting in higher drug costs for all.
    Response: We share the commenters concerns about the need to 
protect the sensitive data under the Part D program. Because the 
Medicare drug benefit is based on a competitive business model, to 
release commercially or financially sensitive data to the public could 
negatively impact Part D sponsors' ability to negotiate for better 
prices, and ultimately affect the ability of sponsors to hold down 
prices for beneficiaries and taxpayers. Therefore, we have adopted a 
number of protections to mitigate these concerns.
    First, we have clarified that this final rule applies only to the 
37 original elements of Part D claims data and not to rebate and other 
price concessions data. As discussed above, to the extent that the PDE 
record was amended in 2008 to include data on estimated rebates applied 
at the point of sale, we have clarified it in the regulation that we 
will not be collecting this information under that authority. In 
addition, we note that plan-specific bid information is not included on 
the claim, and therefore, would not be the subject of this rulemaking.
    Second, with respect to our disclosures of information collected 
under this rulemaking to external entities, we have developed an 
approach to minimize the risk of unauthorized disclosure of beneficiary 
identifiable information, as well as the use of commercially sensitive 
data of Part D sponsors. Similar to the process used under Parts A and 
B program:
     We will require research using beneficiary identifiable 
data to be conducted by an experienced entity at a reputable 
organization, with an appropriate research design, and with assurances 
to protect beneficiary confidentiality. Research is to be made 
available to the public and identifiable data is not released for 
commercial purposes.
     We will only release beneficiary identifiable data for 
research purposes if the CMS privacy board approves the data release 
and then, will only release the minimum data necessary for the study.
     Requesters who receive identifiers to link to another 
dataset will be required to re-encrypt beneficiary identifiers, after 
data linkage, to minimize the risk of accidental disclosure.
     Requesters will sign a data use agreement which carries 
penalties for misuse or intentional release of beneficiary identifiable 
information.
    In addition to these protections of beneficiary identifiable 
information, we plan to impose additional restrictions to further 
protect beneficiary confidentiality and plan commercially sensitive 
information. When releasing data to external entities, we will restrict 
releases according to the following principles:
     Only the minimum necessary elements from the PDE will be 
released for a project. In accordance with this principle, cost data 
will not be released unless necessary for the project.
     Drug cost elements (that is, ingredient cost, dispensing 
fee, and sales tax) will be aggregated.
     Beneficiary identifiers, pharmacy identifiers and 
prescriber identifiers will be encrypted where not needed to link to 
other datasets. Additionally, an element representing the internal 
prescription service reference number assigned by pharmacies will not 
be released so as to not indirectly reveal pharmacy identifiers.
     Plan identifiers will always be encrypted for external 
entities. We note that the internal plan identification numbers on the 
claim would also not be available to external entities as these 
represent reference numbers assigned by the plan at the time a drug is 
dispensed and release of such numbers could lead to a de facto 
identification of the plan. We also note that when we state in this 
preamble that an identifier will be encrypted, this means that it will 
be replaced with a non-identifiable number or code such that there is a 
low probability of assigning any meaning to the replacement number or 
code. Unless otherwise noted, encryption will occur without any 
decryption, and we would not provide a key that allows for an encrypted 
identifier to be converted back into its original form. We believe 
these restrictions will protect both the commercially sensitive data of 
Part D plans, such as the plan identifiers, pharmacy identifiers, 
prescriber identifiers and cost elements, as well as the beneficiary 
identifiable data included on the claim. Similar protections for both 
beneficiary identifiable information as well as commercially sensitive 
data of Part D sponsors will be in place for releases to governmental 
entities as well including

[[Page 30669]]

States, Congress and other executive branch agencies. For both States 
and non-HHS executive branch agencies, the drug cost elements on the 
claim (ingredient cost, dispensing fee, and sales tax) will be 
aggregated together, and will not be available in a disaggregated 
format, except that, upon request, CMS will exclude sales tax from the 
aggregation at the individual claim level if necessary for the project. 
We believe this aggregation will serve to ensure that some of the most 
confidential data on the claim--the separate costs paid by Part D 
sponsors for ingredient cost or dispensing fee--will not be vulnerable 
to any unauthorized release. However, because these government agencies 
may need other data on the claim in order to coordinate treatment of 
beneficiaries or further study care received by individual 
beneficiaries, we will make the beneficiary, plan, pharmacy, and 
prescriber identifiers available to these entities where needed. For 
example, as discussed later in this preamble, States have specifically 
requested claims data for beneficiaries dually eligible for Medicaid 
and Medicare. By understanding the care received by these 
beneficiaries, the State Medicaid agencies may be able to better 
coordinate the medical costs they reimburse under Medicaid with the 
drug regimens being reimbursed under the Medicare Part D program. In 
coordinating care, these State agencies may need to understand which 
plan a beneficiary is enrolled in. Releases to Congressional oversight 
agencies are discussed in response to comment later in this preamble. 
We have included these restrictions in our amended regulations at Sec.  
423.505(m).
    The appendix to this rule also contains a CMS chart, explaining in 
more specific detail the restrictions relative to the available PDE 
elements for various parties. We will evaluate all requests for these 
data to ensure that any release is consistent with the restrictions 
contained in our regulations, and we will release only the minimum data 
that are necessary for the specific project. Additionally, as part of 
our data sharing procedures, we will ensure that any disclosure is for 
an appropriate purpose and does not undermine the competitive nature of 
the Part D program, such as a disclosure that would result in Part D 
sponsors being able to adjust their plan bids on the basis of knowledge 
of each others' data.
    Finally, while we agree with commenters that cost data on the Part 
D claim may not reflect the actual costs to plans, such data does 
reflect costs incurred at point-of-sale, and may be of use to CMS, 
other governmental entities, and other external entities for projects 
unrelated to a plan's total costs.
    Comment: One commenter asked that CMS appropriately use and 
differentiate between the terms ``sex'' and ``gender'' in its data 
collection process.
    Response: The Patient Gender Code field in the Part D claim is 
defined by the National Council of Prescription Drug Programs (NCPDP). 
We have found it helpful in working with the industry and other 
stakeholders to rely on the NCPDP industry standard whenever possible. 
The NCPDP data dictionary defines ``Gender Code'' under definition of 
field, ``For eligibility, and identifying the gender of the member.'' 
Values are: M=Male, F=Female, and U=Unknown.

B. Purpose of CMS Collecting Information

    In the proposed rule, we outlined our intended use of Part D claims 
data for a wide variety of statutory and other purposes including--
     Reporting to the Congress and the public on the overall 
statistics associated with the operation of the Medicare prescription 
drug benefit;
     Conducting evaluations of the Medicare program;
     Making legislative proposals with respect to the programs 
we administer, including the Medicare, Medicaid, and the State 
Children's Health Insurance Program; and
     Conducting demonstration projects and making 
recommendations for improving the economy, efficiency, or effectiveness 
of the Medicare program.
    In the final rule, we continue to believe such uses are necessary 
and appropriate. In addition, as discussed below and later in this 
preamble, we also intend to use these data for ``other studies 
addressing public health questions,'' ``pilot projects,'' ``supporting 
quality improvement and performance measurement activities,'' and 
``populating personal health records,'' and have added these purposes 
to the list in Sec.  423.505(f)(3).
    Comment: Many commenters believe analyses of Part D claims data are 
necessary for CMS to administer the Medicare program, and for planning, 
evaluation, and policy development. Examples of program research and 
evaluation uses suggested by commenters include--
     Assuring that Part D has not promoted adverse selection 
into certain health plans with less generous medication coverage;
     Examining the effects of drug coverage and cost 
containment on Medicare spending and the health of vulnerable elderly 
and disabled persons;
     Measuring the success of prescription drug plans in 
encouraging the use of generic medicines;
     Examining the transition effects of moving dual eligibles 
from Medicaid programs to Part D;
     Analyzing the effects of a coverage gap on drug 
utilization and spending;
     Determining the impact of Part D coverage on non-
pharmaceutical treatments and services use;
     Evaluating the effect of changing copayments, copay 
structures, and coverage limits on beneficiary drug choices and 
compliance with drug regimens;
     Assessing the extent to which risk adjustment methodology 
influences enrollment dynamics;
     Assessing the impact of adding a prescription drug benefit 
on health outcomes of beneficiaries;
     Researching the extent to which disparities in care (based 
on race, socioeconomic status, rural residence, etc.) might be affected 
by Part D; and
     Understanding the impact of Part D on related public 
programs, such as the State Children's Health Insurance Program 
(SCHIP), SPAPs, Medicaid, and the VA.
    Commenters also noted that being able to explore how Part D 
functions on its own and in relation to other parts of the Medicare 
program is essential to guiding future policy decisions. They further 
assert that use of Part D claims data is critical to CMS's credibility 
and should be considered as part of the Secretary's value-based health 
care purchasing initiative. Without access to Part D claims data for 
research and other purposes, CMS will limit its ability to monitor 
expenditures for the new program, to study the impact of the program on 
public health, and to respond to Congressional requests for 
information.
    Response: We agree with the many comments that Part D claims data 
will be essential to us for reporting, conducting program evaluations 
and demonstrations, research analyses, and other public health 
functions. We also agree that research uses of these data should help 
promote and protect the health and well-being of Medicare 
beneficiaries. While we believe these uses were implied in the 
regulatory text set forth in the proposed rule, we are expanding the 
list of necessary and appropriate purposes for which data will be 
collected in this final rule to address public health functions 
specifically.
    Comment: Commenters expressed widespread support for using Part D

[[Page 30670]]

claims data to improve our knowledge base on medication adherence and 
other aspects of pharmacotherapy among the elderly and disabled. Some 
specific suggested uses of Part D claims data for this purpose include 
the following:
     Describing current medication use among the elderly and 
disabled and examining trends, specifically enhancing our awareness of 
poly-pharmacy, off-label uses, avoidance of contraindicated drugs and 
dangerous drug-drug interactions.
     Examining the extent to which Medicare beneficiaries 
receive medicines according to evidence based guidelines.
     Assessing whether beneficiaries are adhering to prescribed 
therapy, and if not, the clinical and economic impact of nonadherence.
     Testing new interventions to improve medication 
prescribing and adherence.
     Evaluating the impact of medication therapy management 
programs mandated under the new Medicare prescription drug benefit.
    Response: We consider examining medication use, inappropriate use, 
and factors influencing medication adherence in the Medicare population 
to be crucial aspects of Part D program monitoring and evaluation, and 
public health. As noted by commenters, the Congress mandated that we 
examine best practices of medication therapy management, and Part D 
claims data are critical for our being able to complete that study.
    Comment: A few commenters noted that sharing of research results is 
critical to CMS credibility and should be considered part of the 
transparency initiative.
    Response: We recognize Part D claims data research, and any 
subsequent results, are critical to evaluating multiple aspects of the 
Medicare Prescription Drug program. Many quality measures developed by 
the American Medical Association Physician Consortium and National 
Committee for Quality Assurance, and subsequently adopted by Ambulatory 
Care Quality Alliance, and the Hospital Quality Alliance require Part D 
claims data to run the measures. All of the following quality measures 
involve Part D claims data: Drug Therapy for Lowering Cholesterol, 
Beta-Blocker Therapy within 7 days post myocardial infarction, and 
Beta-Blocker therapy at 6 months post myocardial infarction. These 
measures will be used by many of the Better Quality Information to 
Improve Care for Medicare Beneficiaries Project pilots, including the 
new local collaboratives being chartered under the Secretary's value-
based health care initiative to foster public reporting. All of this 
makes Part D claims data an integral part of our transparency efforts. 
Thus, in this final rule, we are clarifying our intent to use Part D 
data for these necessary and appropriate purposes by adding 
``supporting quality improvement and performance measurement 
activities'' as an explicit use of these data under Sec.  
423.505(f)(3).
    Comment: A commenter asserts that we did not adequately justify the 
use of Part D claims data by the Secretary for public reporting 
purposes, apart from its use to develop reports to the Congress, which 
may become publicly available records.
    Response: As we stated in the proposed rule, we believe it is 
appropriate and necessary for the Secretary to use Part D claims data 
for the purposes of reporting to the Congress on the effectiveness and 
performance of the prescription drug benefit--including reporting that 
is not related to payment. In addition, we may need Part D claims data 
to report to the public on aggregate statistics associated with the 
Part D program. Finally, the Secretary has determined that it is 
necessary and appropriate, under section 1860D-12 of the Act, that the 
public should have access to certain data, so that the public may 
monitor the progress of the Part D program and, in fact, perform 
research that will improve the health of, not only Medicare 
beneficiaries, but all Americans. This is why we have created Part D-
related public use files relating to plan benefits and formularies (for 
example, files such as geographic locator files, plan information 
files, formulary files, beneficiary cost files, pharmacy network files, 
and record layout files as described at https://www.cms.hhs.gov/
NonIdentifiableDataFiles/09_
PrescriptionDrugPlanFormularyandPharmacyNetworkFiles.asp.). We may also 
create additional public use files subsequent to the publication of 
this final rule.
    Comment: Several commenters suggested that the reporting of overall 
statistics and development of evaluations and/or legislative proposals 
can be achieved without CMS having to use or disclose the Part D 
sponsors' Part D claims data. The commenter suggested that CMS use 
information that is separately collected from the claim to develop 
statistics, noting however, that this information will not necessarily 
allow CMS to do every type of analysis described in the proposed rule. 
Additionally, CMS could partner with one or more sponsors to use their 
data, alone, or in combination, to do additional statistics and 
analysis.
    Response: Although we are willing to partner with plan sponsors as 
needed, we do not believe that voluntary cooperation by Part D sponsors 
would provide the kind of comprehensive data sets we need to perform 
the research, evaluations, reporting and other functions that are 
described this final rule. Voluntary agreements with plan sponsors 
would lead to an incomplete file of data. In addition, because we 
possess the authority under section 1860D-12(b)(3)(D) of the Act to 
collect Part D claims data, we do not believe an exclusive reliance on 
such voluntary agreements is necessary.
    Comment: A commenter noted that a recent Report to Congress 
recommended that the Secretary should have a process in place for the 
timely delivery of Part D data to congressional support agencies to 
enable them to report to the Congress on the drug benefit's impact on 
cost, quality, and access.
    Response: We agree that congressional support agencies should have 
timely access to appropriate Part D data. This final rule allows 
congressional oversight agencies access to all elements on the Part D 
claim in order to carry out their functions. Like other agencies 
outside of CMS, such congressional agencies would be subject to our 
minimum necessary policies and data sharing policies. Thus, we would 
release only the minimum amount of Part D claims information necessary 
to support given projects. In addition, as discussed later in this 
preamble, the Congressional Research Service has the authority to 
require data releases only when acting on behalf of a committee. Thus, 
that agency would be treated the same as a congressional oversight 
agency when acting on behalf of committee. Otherwise, it would be 
subject to the same restrictions that apply to external entities in our 
regulation.
    Comment: Several commenters requested that we establish specific, 
explicit procedures to ensure that if comparative effectiveness or 
safety research informs coverage or payment decisions for specific 
items and services (whether decisions are made by CMS or its agents 
under Parts A and B or by private plans under Part D), stakeholders 
have an opportunity to evaluate the evidentiary basis of proposed 
decisions and provide input.
    Response: Since our proposed rule did not address the development 
of national coverage or payment decisions, but rather our access to 
Part D claims data, we believe that our development of coverage or 
payment decisions is beyond the scope of this rulemaking.

[[Page 30671]]

We do note that section 1860D-4(b)(3) of the Act requires pharmacy and 
therapeutic committees to base clinical formulary decisions on the 
strength of the scientific evidence and standards of practice. We have 
issued further formulary guidance available at https://www.cms.hhs.gov/
Pharmacy/07_Formulary%20Guidance.asp#TopOfPage.
    Comment: Some commenters noted potential uses for Part D claims 
data, linked with Parts A and B data, which extend beyond research into 
the actual provision of care, including disease management.
    Response: We believe the implementation of disease management 
programs and the evaluation of these programs could potentially be 
strengthened by the use of Part D claims data. However, we believe 
these data must be used with caution for these purposes since we 
collect Part D claims data only for Medicare Part D enrollees. We do 
not collect drug claims data for those beneficiaries who receive their 
drug insurance solely from other sources, such as employer or retiree 
sponsored health plans, the Veterans Health Administration, or TRICARE.
    Comment: Some commenters noted that Part D claims data can help 
improve Medicare's current basis of risk adjustment for plan payments.
    Response: Section 1860D-15(d)(2)(B) of the Act provides us 
authority to use Part D claims data for determining Medicare payments 
to prescription drug plan sponsors. This includes their use for 
refining our drug plan payment system. Thus, when claims data are used 
for risk adjustment they are collected under section 1860D-15 of the 
Act, and not under section 1860D-12 of the Act.
    Comment: A commenter recommended adding the phrase ``and pilot'' 
into the text of the Sec.  423.505(f)(3)(iv), so that the regulation 
would read ``The Part D plan sponsor agrees to submit to CMS * * * 
[d]ata included in drug claims submitted by Part D plan sponsors, as 
the Secretary deems necessary and appropriate for purposes including 
but not limited to * * * [(f)(3)(iv) c]onducting demonstration and 
pilot projects and making recommendations for improving the economy, 
efficiency, or effectiveness of the Medicare program.'' The commenter 
wants to ensure that Medicare Health Support Organizations are able to 
access Part D claims utilization data.
    Response: We agree that pilot projects, as appropriate, should have 
access to these data, as appropriate, and have added the phrase ``and 
pilot'' to Sec.  423.505(f)(3)(iv).
    Comment: Several commenters requested that the list of purposes for 
which the data would be used be expanded to include program integrity.
    Response: We agree that it is important that our program integrity 
components have access to necessary data in order to protect the 
program. The existing regulation at Sec.  423.322(b) already allows 
information collected under section 1860D-15 of the Act to be used in 
determinations of payments and payment-related oversight and program 
integrity activities. To the extent that program integrity activities 
may include investigations of issues that are not directly payment-
related, this rule will provide access to Part D claims data for these 
purposes.
    Comment: One commenter requested we clarify in the final rule that 
Part D claims data can be used by CMS to oversee and protect the 
program. Other commenters stated that we should clarify that Medicare 
Drug Integrity Contractors (MEDICs) can obtain Part D claims data where 
necessary to fully investigate complaints and fraudulent claims.
    Response: Our regulations already address use of payment data for 
payment-related oversight. We are constantly working with our MEDICs to 
determine the types of data to which they will have access. However, we 
believe our interactions with our contractors involve internal agency 
procedures, and are not the subject of this final rule.

C. Sharing Data With Entities Outside of CMS (Final Sec.  423.505(f)(3) 
and (l) Through (o))

    As stated in the October 18, 2006 proposed rule, in addition to 
collecting Part D claims data for use in administering the Medicare 
Part D program under the authority of section 1860D-12(b)(3)(D) of the 
Act, we also believe that it is in the interest of public health to 
share the information collected under that authority with entities 
outside of CMS. When information is collected under the authority of 
section 1860D-12(b)(3)(D) of the Act, we do not believe that the 
statutory language in section 1860D-15(d) and (f) of the Act (requiring 
the information collected under the authority of that section to be 
used only in implementing such section) would apply, since any 
collection would be effectuated outside of section 1860D-15 of the Act. 
Therefore, as we stated in the October 18, 2006 proposed rule, we 
proposed to add a new Sec.  423.505(f)(5) to the regulations (now Sec.  
423.505(l) and (m)) that would specify that we could use and share the 
Part D claims information we collect under Sec.  423.505(f)(3), without 
regard to any restriction included in Sec.  423.322(b). In response to 
comments, we clarify in this final rule that our regulation permitting 
release of Part D claims data to other government agencies and outside 
entities is authorized by section 1106 of the Act.
1. Other Government Agencies
    We stated in the proposed rule that the Department of Health and 
Human Services' (DHHS') public health agencies such as the National 
Institutes of Health (NIH), the Food and Drug Administration (FDA), and 
the Agency for Healthcare Research and Quality (AHRQ) have, or support, 
researchers that would need to use Medicare Part D prescription drug 
event data for studies, and other projects, to improve public health 
consistent with the missions of these agencies. We also stated that 
oversight agencies may need access to both aggregated and non-
aggregated claims data in order to conduct evaluations of the Part D 
program that are unrelated to payment and therefore not authorized 
under section 1860D-15 of the Act. In addition, agencies in the 
legislative branch, such as the GAO, MedPAC, and CBO, may need access 
to data in order to evaluate the program. We continue to believe this.
    We also continue to believe that other agencies within DHHS, such 
as the Centers for Disease Control and Prevention, the Health Resources 
and Services Administration, or the Office of the Assistant Secretary 
for Planning and Evaluation, may also need Part D claims data to 
perform evaluations or assess policies. However, we note specifically 
that OIG has independent authority to collect Part D claims data from 
Part D sponsors to perform its statutory duties in accordance with the 
Inspector General Act of 1978, as amended, 5 U.S.C. App. This final 
rule provides OIG an additional avenue for access to these data for 
both payment and nonpayment purposes.
    Given these necessities, we proposed to allow broad access for 
other Federal government executive branch agencies to our Part D claims 
data, linked to our other claims data files. As stated in the preamble 
of the proposed rule, other agencies generally would enter into a data 
sharing agreement, similar to what is used today. This would allow the 
sharing of event level cost data, protect the confidentiality of 
beneficiary information, and ensure that the use of Part D claims data 
serves a legitimate purpose. We also stated in the proposed rule that 
we would also ensure that any

[[Page 30672]]

system of records with respect to Part D claims data is updated to 
reflect the most current uses of such data.
    In the proposed rule, we requested comments that would help us in 
our efforts to improve knowledge relevant to the public health. 
Specifically, we requested guidance on how we can best serve the needs 
of other agencies through the sharing of information we collect under 
section 1860D-12(b)(3)(D) of the Act, while at the same time addressing 
the legitimate concerns of the public and of Part D plan sponsors that 
we appropriately guard against the potential misuse of data in ways 
that would undermine protections put in place to ensure confidentiality 
of beneficiary information, and the nondisclosure of proprietary data 
submitted by Part D plans.
    After considering the comments received, we will make Part D claims 
data available under a process that builds upon the practice that is 
currently in place today with respect to the release of Medicare Parts 
A and B data. Thus, we specify in this final rule that, of the data we 
collect under the authority of section 1860D-12 of the Act, only the 
minimum information necessary, subject, in certain cases, to encryption 
and aggregation of certain elements, will be shared with other Federal 
executive branch agencies, which would include contractors acting on 
their behalf, in accordance with section 1106 of the Act, based on data 
sharing procedures established by CMS and agreed to by the Federal 
executive branch agency requesting the data. The attached appendix, as 
well as our amended rules at Sec.  423.505(m), explain how in this 
final rule we would group the governmental entities outside of CMS that 
request access to the data collected under 1860D-12 of the Act. 
Agencies within HHS, as well as the Congressional oversight agencies 
(including CRS when acting on behalf of a committee) would receive only 
the elements of the PDEs on the claim that are minimally necessary for 
the applicable project. Plan, pharmacy, and prescriber identifiers 
would be encrypted unless necessary for the project. In addition, for 
States and non-HHS executive branches, the dispensing fee, ingredient 
cost and sales tax elements on the claim would be aggregated together 
prior to any release, except that, upon request, we will exclude sales 
tax from the aggregation at the individual claim level if necessary.
    Comment: One commenter objected to the use of the word 
``necessities,'' stating that it is not necessary to allow broad access 
to Part D claims data.
    Response: We continue to believe that it is both necessary and 
appropriate for the Secretary to collect the Part D claims data under 
section 1860D-12(b)(3)(D) of the Act in order to carry out his broad 
range of duties under the Act, including the duties that are listed at 
Sec.  423.505(f)(3). Once the Secretary collects the information for 
his own necessary and appropriate purposes, we do not believe that the 
external release of such information must be categorized as necessary 
in order for it to occur, as section 1860D-12(b)(3)(D) of the Act 
refers to the collection of, not the release of, data. Release of data 
will be authorized under section 1106 of the Act. In addition, any 
release will be intended for the benefit of the public health and 
welfare.
    Comment: Several commenters requested that the FDA play a central 
role in any use of Part D cla