Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

 

 

MEDICARE PART D 

E-PRESCRIBING STANDARDS: 

EARLY ASSESSMENT SHOWS 

PARTIAL CONNECTIVITY 

 

 

Daniel R. Levinson 

Inspector General 

October 2009 

OEI-05-08-00320 
 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

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Δ EXECUTIVE SUMMARY 

OBJECTIVE

To determine the extent of Medicare Part D plan sponsors’ 

implementation of electronic prescribing (e-prescribing) standards to 

support connectivity with prescribers and dispensers. 

BACKGROUND 

The Medicare Prescription Drug, Improvement, and Modernization Act 

of 2003 established the Medicare Part D e-prescribing program, which 

stipulates that plan sponsors must implement e-prescribing standards 

specified by the Secretary of the Department of Health and Human 

Services (the Secretary). E-prescribing standards facilitate the 

communication of prescription information among prescribers (e.g., 

physicians), Part D plan sponsors, and dispensers (e.g., pharmacies). 

On behalf of the Secretary, the Centers for Medicare & Medicaid 

Services (CMS) established e-prescribing standards. Three of these 

standards enable the flow of eligibility, medication history, and 

formulary and benefits information between plan sponsors and 

prescribers at the point of care. These plan-to-prescriber standards are 

Accredited Standards Committee X12N 270/271, SCRIPT 8.1, and 

Formulary & Benefits Standard 1.0. Further, Formulary & Benefits 

Standard 1.0 consists of four components: Formulary Status List, 

Formulary Alternatives List, Coverage List, and Copayment List. The 

flow of eligibility information and copayment amounts between plan 

sponsors and dispensers is supported by one standard, 

Telecommunication 5.1. CMS required that plan sponsors implement 

two standards by January 2006 and the remaining standard by April 

2009. In some cases, however, plan sponsors are exempt from 

implementing SCRIPT 8.1. 

Between August and September 2008, we surveyed all Part D plan 

sponsors for plan year 2008 to determine the extent of their 

implementation of the standards. We received responses from 262 plan 

sponsors for a 94-percent response rate. 

FINDINGS 

Nearly 80 percent of plan sponsors reported at least partial 

plan-to-prescriber connectivity but few reported complete 

connectivity. Seventy-seven percent of plan sponsors responding to our 

survey reported either partial or complete implementation of the 

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EXECUTIVE SUMMARY 

plan-to-prescriber standards. Sixty-nine percent of plan sponsors 

reported partial plan-to-prescriber connectivity. In contrast, only 

8 percent of plan sponsors reported complete connectivity. Additionally, 

16 percent of plan sponsors reported no plans to achieve 

plan-to-prescriber connectivity. The remaining plan sponsors did not 

provide information on plan-to-prescriber connectivity. 

Problems implementing Formulary & Benefits Standard 1.0 limit 

complete plan-to-prescriber connectivity. Plan sponsors’ 

plan-to-prescriber connectivity is limited because only 8 percent of plan 

sponsors have completely implemented Formulary & Benefits Standard 

1.0. In contrast, over 70 percent of plan sponsors reported complete 

implementation of each of the other two plan-to-prescriber standards. 

To achieve complete plan-to-prescriber connectivity, plan sponsors have 

to completely implement all three plan-to-prescriber standards. 

Of the Formulary & Benefits Standard 1.0 components, fewer plan 

sponsors reported complete implementation of the Coverage List and 

the Copayment List than the Formulary Status List and the Formulary 

Alternatives List. According to plan sponsors, the batch data upload 

process (a way of transmitting data at specified intervals) is a barrier to 

complete implementation of the Coverage List and the Copayment List. 

Only 5 percent of plan sponsors reported no plan-to-dispenser 

connectivity. Five percent of plan sponsors responding to our survey 

reported no plans to implement the plan-to-dispenser standard. These 

plan sponsors are Program for All-Inclusive Care for the Elderly (PACE) 

plan sponsors. Most of these PACE plans reported that they believed 

that they were exempt from e-prescribing requirements. Entities that 

only send prescriptions internally are exempt from implementing 

SCRIPT 8.1, but no exemption exists for the plan-to-dispenser standard, 

Telecommunication 5.1. 

Eighty-three percent of plan sponsors reported complete 

plan-to-dispenser connectivity. The remaining plan sponsors did not 

provide information on plan-to-prescriber connectivity. 

RECOMMENDATIONS 

Based on the results of our review, CMS should: 

Ensure that plan sponsors completely implement the 

plan-to-prescriber and plan-to-dispenser standards. To achieve this, 

CMS could: (1) continue to educate plan sponsors about e-prescribing 

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EXECUTIVE SUMMARY 

requirements; (2) clarify e-prescribing standards exemptions; or (3) use 

available compliance mechanisms when necessary, such as corrective 

action plans and civil monetary penalties, to bring plan sponsors into 

compliance. 

Collaborate with plan sponsors and industry representatives to 

address barriers to full implementation of Formulary & Benefits 

Standard 1.0. CMS should collaborate with plan sponsors, 

pharmaceutical benefits managers, and standards-development 

organizations to address the batch-processing problems identified in 

this report. CMS could consider pilot-testing a real-time standard that 

enables plan sponsors to transmit beneficiary-specific formulary and 

benefits information. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with each of our recommendations. To address our 

recommendations, CMS will continue to educate plan sponsors about 

e-prescribing requirements. If necessary, CMS will also use available 

compliance mechanisms to bring plan sponsors into compliance. In 

addition, CMS plans to continue its collaboration with the National 

Council for Prescription Drug Programs, Inc., to continually update and 

develop new e-prescribing standards. 

Although CMS concurred with our recommendations, it asserted there 

were significant methodological limitations with our data collection and 

analysis, resulting in inflated findings of plan sponsor noncompliance 

with e-prescribing standards. Specifically, CMS asserted that our 

results would have likely been different if our plan sponsor survey had 

been conducted closer to the implementation deadline. If we had 

conducted our survey at a later date, we acknowledge that 

implementation rates could have risen. However, we do not believe that 

the results reported here are inflated. CMS did conduct educational 

activities that clarified requirements; however, plan sponsors reported 

that technical difficulties were often a barrier to complete 

implementation, rather than a lack of clarity regarding the regulations. 
 

Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY .....................................i

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

Nearly 80 percent of plan sponsors reported at least partial 

plan-to-prescriber connectivity but few reported complete 

connectivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

 Problems implementing Formulary & Benefits Standard 1.0 

limit complete plan-to-prescriber connectivity. . . . . . . . . . . . . . . . 14 

Only 5 percent of plan sponsors reported no plan-to-dispenser 

connectivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 

 

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 

Agency Comments and Office of Inspector General Response . . . 20 

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 

 A: Formulary & Benefits Standard 1.0 Components . . . . . . . . . . 23 

 B: Analysis Categories for Plan-to-Prescriber and 

Plan-to-Dispenser Connectivity . . . . . . . . . . . . . . . . . . . . . . . . 24 

 C: Implementation of Plan-to-Prescriber Standards . . . . . . . . . . 26 

 D: Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
 

1

ΔI NTRODUCTION INTRODUCTION 

OBJECTIVE 

To determine the extent of Medicare Part D plan sponsors’ 

implementation of electronic prescribing (e-prescribing) standards to 

support connectivity with prescribers and dispensers. 

BACKGROUND 

In general, e-prescribing is the electronic communication of prescription 

information among health insurance companies, doctors, and 

pharmacies. E-prescribing is one example of health information 

technology, which the Presidential agenda outlines as a way to improve 

care and lower health care costs.1 E-prescribing benefits that may 

lower costs include decreased adverse drug events, increased cli

efficiency, and increased generic utilization. A 2008 study indicated 

that, with access to formulary information, doctors prescribed lower cost 

medications, leading to an estimated savings of $845,000 per 100,000 

patients.

nical 

2 

E-prescribing benefits result from prescriber access to prescription 

information at the point of care. To make prescription information 

available at the point of care, e-prescribing systems use uniform 

standards that enable multiple data systems to exchange information 

with one another. Without e-prescribing standards, different data 

systems cannot send and receive drug information, limiting benefits 

such as improved patient safety, increased clinical efficiency, and cost 

savings. 

Traditional Prescribing Versus E-Prescribing 

Traditional prescribing occurs when a prescriber provides a written 

prescription to a beneficiary. Prescribers are persons licensed to issue 

prescriptions for drugs (e.g., physicians, dentists, or physician 

assistants).3 Then, a beneficiary takes the prescription to a dispenser to 

be filled. Dispensers are persons or other legal entities licensed to 

dispense prescription drugs (e.g., pharmacies).4 A dispenser may call a 

1 The White House, “The Agenda: Technology.” Available online at 

http://www.whitehouse.gov/agenda/technology/. Accessed on March 13, 2009. 

2 M. Fischer, et al. (2008). “Effect of Electronic Prescribing with Formulary Decision 

Support on Medication Use and Cost.” Archives of Internal Medicine, 168 (22), 

pp. 2433–2439. 

3 42 CFR § 423.159(a). 

4 Ibid. 

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INTRODUCTION 

prescriber to verify a drug dosage or to ask for authorization to dispense 

a generic drug. This followup may take several attempts if the 

prescriber is not available when the dispenser calls. 

In contrast to traditional prescribing, e-prescribing occurs when a 

prescriber uses a computer or an electronic hand-held device, such as a 

personal digital assistant, to write and send a prescription directly to a 

dispenser. Before a prescriber sends a prescription to a dispenser, he or 

she can request beneficiary eligibility, formulary and benefits, and 

medication history information from a plan sponsor or its 

pharmaceutical benefits manager (PBM). PBMs are companies that 

provide pharmacy support services to plan sponsors, including claims 

processing and adjudication. 

Prescribers can use prescription information to prescribe low-cost, 

alternative drugs and potentially avoid adverse drug events, such as 

drug allergies or drug-to-drug interactions. Plan-to-prescriber 

communication is a new feature in the prescribing process that is not 

available in traditional prescribing. 

Plan-to-dispenser communication in e-prescribing works the same as in 

traditional prescribing. Dispensers electronically communicate with 

health insurers or with the insurers’ PBMs to obtain beneficiary 

eligibility information and copayment amounts. PBMs communicate 

prescription information to dispensers on behalf of the health insurers 

with which they contract. 

Figures 1 and 2 illustrate the communication among health insurers, 

PBMs, prescribers, and dispensers in traditional prescribing and 

e-prescribing. 
 

INTRODUCTION 

Prescriber

PBM Dispenser

Health Insurer 

Prescription: Prescriber 

provides written prescription to 

beneficiary. The beneficiary 

takes the prescription to the 

dispenser to be filled. 

Health insurer 

provides PBM 

with beneficiary 

eligibility and 

benefit 

information. 

Plan Eligibility: PBM communicates 

electronically with dispenser to verify 

beneficiary enrollment and copayment 

amounts.

Followup: If needed, 

dispenser calls prescriber to 

ask questions about the 

prescription (e.g., dosage, 

generic substitutions, etc.) 

and to make refill requests. 

Figure 1. Flow of Prescription-Related Information in Traditional Prescribing 

Source: Office of Inspector General (OIG) analysis, 2008. 

PBM Dispenser

Prescriber

Health Insurer 

Medication History: PBM electronically 

sends the prescriber a list of drugs that 

have been dispensed to the beneficiary to 

give the prescriber information to help 

prevent potential drug interactions. 

Prescription Order: Prescriber 

electronically sends a prescription to 

the dispenser. As part of this process, 

the prescriber can request medication 

history from the dispenser. The 

dispenser can notify the prescriber 

when the prescription has been filled. 

Plan Eligibility: PBM electronically 

communicates with the prescriber to verify 

beneficiary enrollment.

Plan Eligibility: PBM communicates 

electronically with the dispenser to verify 

beneficiary enrollment and copayment 

amounts. 

Health insurer 

provides PBM 

with beneficiary 

eligibility and 

benefit 

information. 

Formulary & Benefits: PBM 

electronically sends the prescriber 

information about the beneficiary’s 

formulary, preferred drug alternatives, 

coverage, and copayment amounts to help 

the prescriber make the most appropriate 

drug choice without extensive 

communication with the dispenser or 

health insurer. 

Followup: If needed, the 

dispenser can make refill 

requests electronically. For 

other questions, the dispenser 

can call the prescriber. 

Figure 2. Flow of Prescription-Related Information in E-Prescribing 

Source: OIG analysis, 2008. 

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INTRODUCTION 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

The Medicare Prescription Drug, Improvement, and Modernization Act 

of 2003 (MMA) established the Medicare prescription drug program, 

known as Medicare Part D, which provides optional drug benefits to 

Medicare beneficiaries.5 The Centers for Medicare & Medicaid Services 

(CMS) contracts with private insurance companies, known as plan 

sponsors, to provide prescription drug coverage for beneficiaries who 

choose to enroll in the program. Plan sponsors may offer prescription 

coverage as a stand-alone prescription drug plan or as part of a 

managed care plan, known as a Medicare Advantage Prescription Drug 

Plan.6 As of February 2009, approximately 26.6 million beneficiaries 

were enrolled in Medicare Part D.7 

MMA and E-Prescribing 

The MMA also established the Medicare Part D e-prescribing program,8

which requires that plan sponsors support e-prescribing activities by 

implementing e-prescribing standards specified by the Secretary of the 

Department of Health and Human Services (the Secretary).9 

E-prescribing standards enable interoperability among e-prescribing 

systems. With interoperable systems, plan sponsors, prescribers, and 

dispensers can exchange drug information with one another. The 

Secretary delegated oversight of plan-sponsor implementation of the 

e-prescribing standards to CMS. 

The requirement to implement e-prescribing standards is incorporated 

into plan sponsors’ contracts.10 CMS contracts with plan sponsors by 

4

5 Title I of the MMA, P.L. No. 108-173, Part D of Title XVIII of the Social Security Act, 

42 U.S.C. § 1395w-101 et seq. 

6 MMA, P.L. No. 108-173 § 101(a), Social Security Act, § 1860D-1(a)(1), 

42 U.S.C. § 1395w-101(a)(1). 

7 CMS, “Total Medicare Beneficiaries With Prescription Drug Coverage.” 2009. Available 

online at http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/. Accessed on February 23, 

2009. 

8 MMA, P.L. No. 108-173 § 101(a), Social Security Act, § 1860D-4(e), 42 U.S.C. 

§ 1395w-104(e). 

9 42 CFR § 423.160(a). Although the MMA does not explicitly mandate that plan 

sponsors support e-prescribing, CMS has interpreted the e-prescribing program established 

at section 1860D(4) of the Social Security Act as being unworkable without such mandatory 

support. See 69 Fed. Reg. 46632, 46671 (Aug. 3, 2004). 

10 42 CFR § 423.505(b)(6). 

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INTRODUCTION 

September for the following plan year, which begins in January.11 

Because CMS includes e-prescribing requirements in plan sponsor 

contracts, it may institute corrective action plans, issue civil monetary 

penalties, and terminate plan sponsors’ contracts for plan sponsors that 

fail to implement the e-prescribing standards.12 

E-Prescribing Standards 

CMS established four e-prescribing standards to support the 

interoperability of plan sponsors’ e-prescribing systems with other 

e-prescribing systems. CMS required that plan sponsors implement two 

standards by January 2006.13 In April 2008, CMS issued a final rule 

requiring that plan sponsors implement two additional standards by 

April 2009.14 Table 1 describes the e-prescribing standards and groups 

them according to whether they facilitate plan-to-prescriber or 

plan-to-dispenser connectivity. 

Table 1: E-Prescribing Standards for Medicare Part D Plan Sponsors 

Connectivity E-Prescribing Standard 

Implementation 

Deadline Flow of Prescription Information 

Accredited Standards 

Committee (ASC) X12N 

270/271 January 2006 

Plan sponsors respond to prescribers’ requests about beneficiary 

eligibility. 

SCRIPT 8.1 April 2009 

Plan sponsors respond to prescribers’ requests for a beneficiary’s 

Part D medication history. 

Plan-to-Prescriber 

Connectivity 

Formulary & Benefits 

Standard 1.0 April 2009 

Plan sponsors respond to prescribers’ requests for formulary, 

alternative drug, coverage, and copayment information. 

Plan-to-Dispenser 

Connectivity Telecommunication 5.1 January 2006 

Plan sponsors respond to dispensers’ requests about eligibility and 

copayment amounts. 

Source: OIG analysis of e-prescribing standards, 2008.

CMS provided education to plan sponsors about e-prescribing 

requirements. In September 2008, CMS issued a memorandum 

reminding plan sponsors of the implementation deadlines for each 

standard and reiterating the expectation that all components of each 

11 CMS, “Solicitation for Applications for New Prescription Drug Plans Sponsors: 

2010 Contract Year,” 2009. Available online at 

http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/PDPApplication.pdf. 

Accessed on June 12, 2009. 

12 42 CFR §§ 423.509(a)(1) and (c) and 42 CFR § 423.752(c)(1). 

13 42 CFR §§ 423.160(b)(2)(i) and (ii), as promulgated in 70 Fed. Reg. 67568, 67573 

(Nov. 7, 2005), now found at 42 CFR §§ 423.160(b)(3)(i) and (ii). CMS also established a 

standard for transmitting prescriptions at what is now 42 CFR § 423.160(b)(2), effective 

January 2006. However, we did not test this standard as it is the only standard in use for 

the transmission of electronic prescriptions. 

14 42 CFR §§ 423.160(b)(1), (b)(4), and (b)(5), as promulgated in 73 Fed. Reg. 18918, 

18926 (Apr. 7, 2008). 

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INTRODUCTION 

standard be implemented.15 Additionally, CMS held an e-prescribing 

conference in October 2008. The conference included educational 

sessions and presentations about e-prescribing, e-prescribing standards, 

and the effective date for standards implementation. 

Plan-to-prescriber connectivity. CMS established three e-prescribing 

standards to be used by plan sponsors, or PBMs on their behalf, when 

communicating prescription information to prescribers. These are 

ASC X12N 270/271, SCRIPT 8.1, and Formulary & Benefits Standard 

1.0. 

ASC X12N 270/271 and SCRIPT 8.1 require that plan sponsors populate 

drug information through a real-time transaction. A real-time 

transaction is a process by which plan sponsors send current eligibility 

and medication history information for each beneficiary upon request. 

Formulary & Benefits Standard 1.0 is composed of four components: 

Formulary Status List, Formulary Alternatives List, Coverage List, and 

Copayment List. Each component is further divided into several 

elements. See Appendix A for a detailed description of Formulary & 

Benefits Standard 1.0 components. 

Formulary & Benefits Standard 1.0 requires that plan sponsors 

populate component information through a batch data upload process. 

A batch data upload is the process by which plan sponsors send batches 

of formulary and benefit information at specified intervals, such as 

weekly or monthly, rather than providing information for each 

beneficiary upon request. CMS adopted this process because of 

successful pilot-testing and because it was the current industry practice 

for sending Formulary Status List information.16

Plan-to-dispenser connectivity. CMS established one e-prescribing 

standard to be used when plan sponsors, or PBMs on their behalf, 

communicate prescription information to dispensers. This standard is 

Telecommunication 5.1. Plan sponsors use a real-time transaction for 

Telecommunication 5.1 to communicate beneficiary eligibility 

15 CMS, Memorandum to Part D Sponsors, “Supporting Electronic Prescribing Under 

Medicare Part D,” September 19, 2008. 

16 73 Fed. Reg. 18918, 18924 (Apr. 7, 2008). 

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INTRODUCTION 

information and copayment amounts to dispensers. CMS adopted 

this standard because it was already widely used in the pharmacy 

industry.17 

E-Prescribing Standards Exemptions 

In some cases, plan sponsors are exempt from implementing SCRIPT 

8.1. Implementation of SCRIPT 8.1 is optional for entities18 that 

transmit prescriptions or prescription information internally.19 In these 

cases, sometimes referred to as “closed e-prescribing systems,” the 

prescriber and the recipient (e.g., a pharmacy) are part of the same legal 

entity. However, the entity is required to use SCRIPT 8.1 for any 

electronic prescriptions for a Part D beneficiary sent to an external 

recipient. 20 Entities that transmit prescriptions by computer-generated 

facsimile or are required by law to issue a written prescription for a 

patient to a nonprescribing provider, such as a nursing facility, are also 

exempt from using this standard.21 

Related OIG Reports 

In 2007, OIG conducted a study that evaluated State Medicaid agencies’ 

implementation of health information technology initiatives, which 

included e-prescribing initiatives. OIG found that in 2007 several State 

Medicaid agencies were developing networks to enable health care 

providers and payers to securely exchange clinical information, such as 

prescription history.22

OIG plans to release a companion e-prescribing report to this report. 

The companion report will provide details about Part D plan sponsor 

initiatives to promote e-prescribing among prescribers. 

METHODOLOGY 

Scope 

We assessed plan sponsor e-prescribing connectivity by reviewing plan 

sponsors’ implementation of, or plans to implement, the four 

17 70 Fed. Reg. 67568, 67574 (Nov. 7, 2005). 

18 Entities include plan sponsors, prescribers, PBMs, and other organizations that 

transmit prescriptions or prescription-related information. 

19 42 CFR § 423.160(a)(3)(iii). 

20 42 CFR § 423.160(a)(1). 

21 42 CFR §§ 423.160(a)(3)(i) and (iv). 

22 OIG, “State Medicaid Agencies’ Initiatives on Health Information Technology and 

Health Information Exchange,” OEI-02-06-00270, August 2007. 

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INTRODUCTION 

e-prescribing standards. We did not evaluate prescriber or dispenser 

e-prescribing volume or use of the standards. 

Data Collection 

We used CMS’s Health Plan Management System (HPMS) data from 

July 2008 to identify plan sponsors and their associated PBMs for plan 

year 2008.23 The HPMS provides information about Part D plans. 

We also used HPMS data to identify the number of beneficiaries 

enrolled with each plan sponsor in 2008. As of July 2008, 26.2 million 

beneficiaries were enrolled in Part D. 

Survey. Between August and September 2008, we conducted an email 

survey of all plan sponsors or their PBMs for plan year 2008. Although 

CMS allows exemptions to the e-prescribing standards, we did not 

exclude any plan sponsors from our study because CMS had not granted 

any exemptions. 

The survey consisted of questions about the extent to which plan 

sponsors had implemented or planned to implement Part D 

e-prescribing standards. Where applicable, we asked plan sponsors to 

explain why they had not implemented the standards. 

We followed up with plan sponsors and PBMs if they reported that they 

did not currently support e-prescribing and did not indicate their future 

plans to implement the e-prescribing standards. Through this 

followup, we determined these plan sponsors’ and PBMs’ future plans to 

implement the e-prescribing standards. We also placed phone calls and 

sent emails to plan sponsors and PBMs to clarify survey responses, 

when necessary. 

We surveyed 278 plan sponsors. We received responses from 262 plan 

sponsors for a 94-percent response rate. Two-hundred eleven responses 

were provided by 29 of 31 PBMs that we surveyed on behalf of plan 

sponsors. Responses were provided by 51 of 61 plan sponsors without 

PBMs. 

We conducted a pretest of the survey. Where appropriate, we revised 

the survey based on feedback from this pretest. 

23 The plan year begins in January and ends in December. 

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INTRODUCTION 

Data Analysis 

We conducted our analysis at the plan sponsor level because plan 

sponsors are responsible for implementing the regulations. We did not 

assess the implementation of e-prescribing standards by individual 

plans offered by plan sponsors. 

For our analysis of plan sponsor implementation of e-prescribing 

standards, we grouped the standards by the e-prescribing connectivity 

they facilitated: plan-to-prescriber or plan-to-dispenser. 

Plan-to-prescriber connectivity includes three e-prescribing standards: 

ASC X12N 270/271, SCRIPT 8.1, and Formulary & Benefits Standard 

1.0. Plan-to-dispenser connectivity includes only one e-prescribing 

standard: Telecommunication 5.1. 

We then categorized plan sponsors’ responses based on implementation 

status. To analyze plan-to-prescriber connectivity, we used four 

categories: complete, partial, no connectivity, and missing information. 

Of the three plan-to-prescriber standards, only Formulary & Benefits 

Standard 1.0 can be partially implemented because it has four distinct 

components. 

In our analysis of these categories, we combined plan sponsors that 

reported implementation with those that reported that they were 

planning implementation. For example, the number of plan sponsors 

that have complete plan-to-prescriber connectivity includes plan 

sponsors that have complete connectivity and plan sponsors with plans 

to achieve complete connectivity. We took this approach to give plan 

sponsors as much credit for their efforts as possible because this is an 

early implementation review and we collected data before the 

April 2009 implementation deadline for SCRIPT 8.1 and Formulary & 

Benefits Standard 1.0. 

Because Formulary & Benefits Standard 1.0 has several components, 

we conducted additional analysis of plan sponsors’ implementation of 

this standard. To analyze plan sponsor implementation of the four 

Formulary & Benefits Standard 1.0 components, we divided each of the 

four components into the same four implementation categories outlined 

in the previous paragraph. 

To analyze plan-to-dispenser connectivity, we divided the 

plan-to-dispenser standard into three implementation categories: 

complete, no connectivity, and missing information. Plan sponsors 

having complete connectivity have implemented or have plans to 

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INTRODUCTION 

completely implement this standard. We did not have a partial 

connectivity category because Telecommunication 5.1 cannot be 

partially implemented. 

See Appendix B for a detailed description of the plan-to-prescriber, 

plan-to-dispenser, and Formulary & Benefits Standard 1.0 component 

analysis categories. 

Limitations 

This report relies on self-reported data. We did not validate plan 

sponsor or PBM responses. 

Standards 

This study was conducted in accordance with the “Quality Standards for 

Inspections” approved by the Council of Inspectors General on Integrity 

and Efficiency. 

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Seventy-seven percent of plan 

sponsors responding to our 

survey reported either partial or 

complete implementation of the 

plan-to-prescriber standards. Sixty-nine percent of plan sponsors 

reported that they had partially implemented or planned to partially 

implement the plan-to-prescriber standards. In contrast, only 8 percent 

of plan sponsors (23 plan sponsors) reported that they had implemented 

or planned to implement all three plan-to-prescriber standards to 

achieve complete plan-to-prescriber connectivity. See Appendix C for 

plan sponsors’ implementation of each standard. Chart 1 shows the 

status of plan sponsor plan-to-prescriber connectivity. 

Nearly 80 percent of plan sponsors reported at 

least partial plan-to-prescriber connectivity but few 

reported complete connectivity 

Δ FINDINGS

Planning 

complete 

implementation

8%

Complete 

implementation

0.4%

Missing 

information

7%

No connectivity

16%

Planning

partial

implementation

24%

Partial 

implementation

45%

Complete 

connectivity

 8%

Partial 

connectivity 

 69%

 

Chart 1. Plan 

Sponsors’ 

Plan-to-Prescriber 

Connectivity 

Source: OIG analysis of survey data, 2008.

While our assessment took place 7 months before the April 2009 

deadline for two of the plan-to-prescriber standards, it is reasonable to 

expect that, at that time, all plan sponsors would have been aware of 

these standards and would have either implemented them or had plans 

to implement them. 

Plan sponsors should have known of the final implementation deadline 

by April 2008. CMS required plan sponsors to implement one of the 

plan-to-prescriber standards by January 2006. Further, CMS issued 

the final rule for the other two standards in April 2008. Also, CMS 

 

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FINDINGS 

issued a memorandum in September of 2008 reminding plan sponsors of 

the standards implementation requirements and deadlines. Further, 

fiscal year 2009 contracts with CMS required that plan sponsors 

support e-prescribing activities. As in other years, these contracts 

would have been in place by September. 

In addition, for plan sponsors to achieve complete connectivity by the 

April 2009 deadline, implementation planning would have to begin 

earlier. Industry representatives have indicated that setup and 

implementation of e-prescribing standards takes 3 to 6 months on 

average. 

Sixty-nine percent of plan sponsors reported partial plan-to-prescriber 

connectivity 

Forty-five percent of plan sponsors reported that they had partially 

implemented the plan-to-prescriber standards, and 24 percent reported 

plans to partially implement the plan-to-prescriber standards. These 

plan sponsors did not report plans to achieve complete implementation. 

Partial implementation of these standards limits prescriber access to 

prescription information at the point of care, which may limit the 

potential benefits of e-prescribing. In 2008, 69 percent of Part D 

beneficiaries (18.1 million beneficiaries) were enrolled with plan 

sponsors that reported partial plan-to-prescriber connectivity. 

Of the 24 percent of plan sponsors planning to partially implement the 

plan-to-prescriber standards, 34 percent planned to do so by April 2009. 

Sixteen percent reported plans to partially implement these standards 

after April 2009 but did not provide specific dates for implementation. 

Another 50 percent of plan sponsors did not specify whether they 

planned to implement these standards before or after April 2009. 

Eight percent of plan sponsors reported complete plan-to-prescriber 

connectivity 

Of the 8 percent of plan sponsors reporting complete plan-to-prescriber 

connectivity, one plan sponsor reported that it had completely 

implemented all three plan-to-prescriber standards. The remaining 

22 plan sponsors reported plans to completely implement the 

plan-to-prescriber standards. Approximately 30 percent of Part D 

beneficiaries (7.8 million beneficiaries) were enrolled with these 23 plan 

sponsors in 2008. Approximately 90 percent reported that they would 

implement all three of the standards by the April 2009 deadline. 

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FINDINGS 

Sixteen percent of plan sponsors reported no plans to achieve 

plan-to-prescriber connectivity 

Plan sponsors that do not implement any of the plan-to-prescriber 

standards limit potential e-prescribing benefits, such as savings from 

increased generic substitution and decreased adverse drug events. In 

2008, approximately 200,821 beneficiaries, or less than 1 percent, of 

Part D beneficiaries were enrolled with these plan sponsors. 

Seventy percent of these plan sponsors are Program of All-Inclusive Care 

for the Elderly plan sponsors that may be exempt from the standards. 

Seventy percent of plan sponsors that reported no plans to implement 

any of the plan-to-prescriber standards were Program of All-Inclusive 

Care for the Elderly (PACE) plan sponsors.24 Of these 30 PACE plan 

sponsors, 18 reported that they are exempt from implementing the 

plan-to-prescriber standards because they are PACE plan sponsors. 

Some of these PACE plan sponsors offered a more specific explanation. 

They stated that they are exempt because they are closed prescribing 

systems. They reported that their prescriptions for beneficiaries are 

prescribed and filled internally or through a contracted pharmacy. 

A few PACE plan sponsors provided additional reasons for not 

implementing the plan-to-prescriber standards related to being a closed 

prescribing system. Four PACE plan sponsors do not plan to implement 

SCRIPT 8.1. They reported that as PACE employees in a closed 

prescribing system, PACE prescribers already have access to 

beneficiaries’ medication history. One PACE plan sponsor expressed 

confusion about whether it is required to implement the e-prescribing 

standards. The plan sponsor asked for clarification from CMS about its 

responsibilities regarding the e-prescribing standards. 

Although some of these plan sponsors may be exempt from 

implementing SCRIPT 8.1 under the closed system exemption, PACE 

plan sponsors are not explicitly exempt. In addition, they are not 

exempt from implementing the remaining plan-to-prescriber standards, 

as the exemption covers only SCRIPT 8.1. None of the PACE plan 

sponsors provided us with official documentation stating that they were 

exempt from implementing the e-prescribing standards. 

24 A PACE organization is a not-for-profit private or public entity that is engaged 

primarily in providing comprehensive medical and social services. PACE services use an 

interdisciplinary team approach in an adult day health center. 

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FINDINGS 

A few PACE plan sponsors provided other reasons for not planning to 

implement the plan-to-prescriber standards. Five PACE plan sponsors 

stated that they do not need to implement Formulary & Benefits 

Standard 1.0 because they do not use formularies. One other PACE 

plan sponsor expressed concern about the financial burden that may be 

caused by implementing the standards. 

An additional 28 percent of plan sponsors gave no reason for not planning 

to implement any of the plan-to-prescriber standards. Twelve plan 

sponsors gave no reason for not planning to implement any of the 

plan-to-prescriber standards. Three PBMs represent 10 of these plan 

sponsors. The other two plan sponsors do not work with a PBM. 

Problems implementing Formulary & Benefits Because only 8 percent of plan 

Standard 1.0 limit complete plan-to-prescriber sponsors reported that they had 

connectivity completely implemented or 

planned to completely implement 

all four components of Formulary & Benefits Standard 1.0, complete 

plan-to-prescriber connectivity is also low. On the other hand, over 

70 percent of plan sponsors reported complete implementation of each of 

the other two plan-to-prescriber standards. In particular, 76 percent 

reported complete implementation of ASC X12N 270/271 and 79 percent 

reported complete implementation of SCRIPT 8.1. Despite these high 

implementation rates, plan sponsors’ overall plan-to-prescriber 

connectivity is low because plan sponsors have to completely implement 

all three plan-to-prescriber standards to achieve complete 

plan-to-prescriber connectivity. For more details on the implementation 

status of each plan-to-prescriber standard, see Table C1 in Appendix C. 

Plan sponsors reported varying rates of complete implementation of the 

four components that make up Formulary & Benefits Standard 1.0: 

Formulary Status List, Formulary Alternatives List, Coverage List, and 

Copayment List. Complete implementation rates for each of the four 

components ranged from a high of 71 percent to a low of 24 percent. 

Only one plan sponsor reported complete implementation of all four 

components. 

 

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FINDINGS 

Fewer plan sponsors reported complete implementation of the Coverage 

List and the Copayment List than the Formulary Status List and the 

Formulary Alternatives List 

Complete implementation rates were the lowest for the Coverage List 

and the Copayment List. Thirty percent and twenty-four percent of 

plan sponsors reported that they had completely implemented or 

planned to completely implement the Coverage List and the Copayment 

List, respectively. In contrast, 71 percent and 56 percent of plan 

sponsors reported that they had completely implemented or planned to 

completely implement the Formulary Status List and the Formulary 

Alternatives List, respectively. Table 2 provides the implementation 

status of each component of Formulary & Benefits Standard 1.0. For 

more details on the implementation status by component, see Table C2 

in Appendix C. 

Table 2: Plan Sponsors’ Implementation of Formulary & Benefits Standard 

1.0 Components 

Component

Complete 

Implementation 

Partial 

Implementation 

Not Planning 

Implementation 

Missing 

Information 

Formulary Status List 

(n = 262) 71% 7% 2% 20% 

Formulary Alternatives 

List 

(n = 262) 56% 0% 24% 20% 

Coverage List* 

(n = 262) 30% 37% 13% 21% 

Copayment List * 

(n = 262) 24% 14% 44% 20% 

* Totals add to greater than 100 percent because of rounding. 

Source: OIG analysis of survey data, 2008.

Plan sponsors offered reasons for not completely implementing the 

Formulary Alternatives List, Coverage List, and Copayment List.25 In 

some cases, the reasons were specific to the component. For example, 

some plan sponsors not planning to implement the Formulary 

Alternatives List stated that this component duplicates information in 

the Formulary Status List. Others reported that determining 

alternative drug information was a clinical decision they did not feel 

they were in a position to make. For the Coverage List and the 

Copayment List, plan sponsors reported difficulties transmitting 

25 Plan sponsors did not offer any reasons for not completely implementing the 

Formulary Status List. 

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FINDINGS 

complete data, which prevents complete implementation of these 

components. 

The batch data upload process is a barrier to complete implementation of 

the Coverage List and the Copayment List 

According to 80 percent of plan sponsors that lacked complete 

plan-to-prescriber connectivity, the batch data upload process is a 

barrier to complete implementation of the Coverage List and the 

Copayment List components of Formulary & Benefits Standard 1.0. 

Eleven PBMs represent these plan sponsors. 

Plan sponsors explained that their current processing systems are not 

compatible with the batch process. Their processing systems are built 

to handle real-time transactions for claims processing. Plan sponsors 

reported that they would have to make custom changes to their systems 

to make them compatible with batch processing. Some plan sponsors’ 

PBMs have taken this step but reported that it is expensive and does 

not enable plan sponsors to transmit comprehensive beneficiary-level 

data for coverage and copayment information. 

According to industry comments in CMS’s final e-prescribing rule, using 

the batch process instead of a real-time process results in beneficiary 

information that is often outdated and lacks detail. 26 This can lead to 

higher copayments for patients.27 Thus, it prevents plan sponsors, 

PBMs, prescribers, and beneficiaries from fully realizing the benefits of 

e-prescribing. Figure 3 explains limitations of the batch data upload 

process. 

16

26 73 Fed. Reg. 18918, 18924 (Apr. 7, 2008). 

27 Ibid. 

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FINDINGS 

Figure 3: Explanation and Examples of Problems With the Batch Data Upload Process in 

Formulary & Benefits Standard 1.0 

Coverage and copay data are inadequately represented in a batch format as the batch data are provided only 

once a month and are often out of date. Additionally, batch data do not provide the patient level of information 

required to display the patient’s coverage and copay information. For example: 

• If a medication requires a coverage review but that review was already completed and the medication approved 

for a specific member, there is no way to display the patient’s status in a batch framework. 

• Most batch copay displays provide a simple reference point (for example, symbols that represent copay 

amounts ranging from low to high: $, $$, $$$), not the actual copay amount; this level of information is not as 

useful to a prescriber or patient as knowing the actual expense for the patient. 

Source: OIG analysis of survey data, 2008. 

CMS has also recognized the importance of a real-time formulary and 

benefits standard. In the April 2008 final rule, CMS indicated that a 

real-time standard for formulary and benefits information would be an 

important step towards realizing the potential benefit of the standard.28 

CMS also stated that once the current Formulary & Benefits Standard 

1.0 is widely used, it expects marketplace forces to encourage 

incorporation of a real-time standard for formulary and benefits 

information.29

Five percent of plan sponsors 

(12 plan sponsors) responding to 

our survey reported no plans to 

implement the plan-to-dispenser 

standard, which had an implementation date of January 2006. In 2008, 

less than 1 percent of Part D beneficiaries (17,375 beneficiaries) were 

enrolled with these plan sponsors. All 12 plan sponsors are PACE plan 

sponsors that also reported no plans to implement the plan-to-prescriber 

standards. Ten of the twelve plan sponsors reported that they did not 

implement the plan-to-dispenser standard because, as closed 

prescribing systems, they believed they were exempt from e-prescribing 

requirements. Entities that only send prescriptions within their 

organization are exempt from implementing SCRIPT 8.1, but no 

exemption exists for the plan-to-dispenser standard, 

Only 5 percent of plan sponsors reported no 

plan-to-dispenser connectivity 

17

28 73 Fed. Reg. 18918, 18924 (Apr. 7, 2008). 

29 Ibid. 

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FINDINGS 

Telecommunication 5.1. None of these PACE plan sponsors requested 

an exemption from CMS. Chart 2 shows the status of plan sponsor 

plan-to-dispenser connectivity. 

Planning complete

implementation 

3%

Complete 

implementation

80%

No connectivity

5%

Missing 

information

12%

Complete 

connectivity

83%

Chart 2. Plan 

Sponsors’ 

Plan-to-Dispenser 

Connectivity 

Source: OIG analysis of survey data, 2008.

Eighty-three percent of plan sponsors reported that they had 

implemented or planned to implement Telecommunication 5.1. 

Eighty percent of plan sponsors reported that they had implemented the 

standard and an additional 3 percent of plan sponsors reported 

planning to implement the standard. In 2008, 78 percent of Part D 

beneficiaries (20.4 million beneficiaries) were enrolled with these plan 

sponsors. 

An additional 12 percent of plan sponsors did not provide any 

information about implementation of the plan-to-dispenser standard. 

Twenty of these plan sponsors are PACE plan sponsors, one PBM 

represents five plan sponsors, and seven plan sponsors have no PBMs. 

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ΔBANNER 2ND PAGE RECOMMENDATIONS 

As of September 2008, most plan sponsors had at least partial 

plan-to-prescriber connectivity but few reported complete connectivity. 

Plan-to-prescriber connectivity is limited because of problems with 

batch processing that prevent plan sponsors from completely 

implementing Formulary & Benefits Standard 1.0. 

Partial plan-to-prescriber connectivity limits the potential benefits of 

e-prescribing because most e-prescribing benefits rely on prescriber 

access to prescription information at the point of care. These benefits 

include decreased adverse drug events, increased clinical efficiency, and 

increased generic utilization resulting in savings. A 2008 study 

indicated that, with access to formulary information, prescribers 

prescribed lower cost medications, leading to an estimated savings of 

$845,000 per 100,000 patients. 

On the other hand, 83 percent of plan sponsors reported complete 

plan-to-dispenser connectivity. Only 5 percent of plan sponsors reported 

no plans to implement the plan-to-dispenser standard. All of these plan 

sponsors are PACE plan sponsors. 

Although CMS educational activities in the fall of 2008 may have 

increased plan sponsor awareness of requirements, complete 

connectivity remains a problem likely because of plan sponsors’ 

technical difficulties with the batch data upload process. Most plan 

sponsors indicated that their implementation is limited because of 

system incompatibility with Formulary & Benefits Standard 1.0 rather 

than a lack of knowledge about requirements. 

Based on the results of our review, CMS should: 

Ensure that plan sponsors completely implement the plan-to-prescriber and 

plan-to-dispenser standards 

To ensure plan sponsor compliance with requirements to implement 

e-prescribing standards, CMS could implement all of the following: 

• Continue to educate plan sponsors about e-prescribing standards 

requirements. In September 2008, CMS issued a memorandum 

clarifying e-prescribing requirements for plan sponsors. In October 

2008, CMS held an e-prescribing conference with educational 

sessions and presentations about e-prescribing standards and the 

effective date for standards implementation. In addition, CMS has 

conducted e-prescribing open door forums to educate plan sponsors 

and prescribers about e-prescribing requirements. 

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RECOMMENDATIONS 

• Clarify the e-prescribing standard exemption for closed prescribing 

systems and the way to claim the exemption when appropriate. 

CMS should consider clarifying the exemption with PACE plan 

sponsors specifically. 

• Use available compliance mechanisms when necessary, such as 

corrective action plans and civil monetary penalties, to bring plan 

sponsors into compliance. 

Collaborate with plan sponsors and industry representatives to address 

barriers to full implementation of Formulary & Benefits Standard 1.0 

CMS should collaborate with plan sponsors, PBMs, and 

standards-development organizations to address the batch processing 

problems identified in this report. CMS could consider pilot-testing a 

real-time standard that enables plan sponsors to transmit 

beneficiary-specific formulary and benefits information. Several plan 

sponsors and PBMs indicated that a real-time formulary and benefits 

standard would enable them to transmit comprehensive 

beneficiary-specific formulary and benefits information to prescribers. 

Currently, a few industry organizations are developing a real-time 

formulary and benefits standard. CMS acknowledged the benefits of a 

real-time formulary and benefits standard in the comment and response 

section of the April 2008 final e-prescribing rule. 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with each of our recommendations. To address our 

recommendations, CMS will continue to educate plan sponsors about 

e-prescribing requirements. If necessary, CMS will also use available 

compliance mechanisms to bring plan sponsors into compliance. In 

addition, CMS plans to clarify the e-prescribing requirements for PACE 

plan sponsors. In the 2011 PACE application, CMS will formally waive 

the e-prescribing requirements for PACE plan sponsors. Finally, CMS 

plans to continue collaboration with the National Council of Prescription 

Drug Program, Inc., to continually update and develop new e-prescribing 

standards. 

Although CMS concurred with our recommendations, it asserted there 

were significant methodological limitations with our data collection and 

analysis, resulting in inflated findings of plan sponsor noncompliance with 

e-prescribing standards.

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RECOMMENDATIONS 

Specifically, CMS asserted that our results would have likely been 

different if our plan sponsor survey had been conducted closer to the 

implementation deadline. First, CMS stated that our surveys did not 

capture the impact of CMS’s plan sponsor e-prescribing educational 

activities, which clarified that all standards had to be adopted. Second, 

CMS stated that, at the time of our survey, plan sponsors did not fully 

appreciate the potential impact of Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA) e-prescribing incentive payments. As 

a result, CMS stated it believes that, after our survey, more plan sponsors 

may have decided to comply with e-prescribing requirements to prepare 

for the increasing number of prescribers adopting e-prescribing to obtain 

MIPPA incentive payments. 

If we had conducted our survey at a later date, we acknowledge that 

implementation rates could have risen. However, we do not believe that 

the results reported here are inflated. While CMS’s educational activities 

clarified requirements and MIPPA may have increased the desire to 

implement the standards, neither would have changed the technical 

difficulties reported in our findings. The primary reason plan sponsors 

reported incomplete implementation of the standards was technical 

difficulties with Formulary & Benefits Standard 1.0, which CMS’s 

educational activities did not address. 

CMS also noted that it does not consider plan sponsors to be out of 

compliance with the e-prescribing standards if prescribers do not request 

e-prescribing information. Specifically, CMS does not expect many 

prescribers to request information on the Formulary Alternatives List 

because this information is available through other sources. According to 

CMS’s response, as long as no prescribers request the Formulary 

Alternatives List, then a plan sponsor is not out of compliance for not 

implementing the Formulary Alternatives List. 

We note that the primary focus of this study was not on plan sponsors’ 

compliance with the e-prescribing standards. Rather, this study focused 

on plan sponsors’ ability to support and implement the foundation for 

e-prescribing connectivity between plan sponsors and prescribers. 

Because this study is focused on plan sponsors’ ability to support 

e-prescribing connectivity with prescribers, our findings describe the 

completeness of plan sponsors’ implementation of the e-prescribing 

standards that CMS identified as the foundation for connectivity. 

In addition, although information in the Formulary Alternatives List may 

be available from other sources, this and other e-prescribing standards are 

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RECOMMENDATIONS 

still required if at least one prescriber requests the information provided 

by those standards, according to CMS guidance. Further, our findings 

show nonimplementation of the Formulary Alternatives List is not the 

main contributor to plan sponsors’ reported problems with Formulary & 

Benefits Standard 1.0. Plan sponsors reported higher implementation of 

the Formulary Alternatives List and the Formulary Status List than the 

Copayment List and the Coverage List. Plan sponsors reported that the 

batch data upload process prevented them from fully implementing the 

Copayment List and the Coverage List. 

Finally, CMS recommended that we remove PACE plan sponsors from our 

findings because CMS has now waived the e-prescribing requirement for 

PACE plan sponsors. We did not remove PACE plan sponsors from our 

findings because, at the time of our data collection, PACE plan sponsors 

were required to implement e-prescribing standards. In addition, our 

findings show that PACE plan sponsors were confused about the 

e-prescribing standards. Based on this finding, we suggested that CMS 

clarify requirements for PACE plan sponsors, which it has now done. 

For the full text of CMS’s comments, see Appendix D. 

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Δ APPENDIX ~ A 

Formulary & Benefits Standard 1.0 Components 

Formulary & Benefits Standard 1.0 is composed of four components: 

Formulary Status List, Formulary Alternatives List, Coverage List, and 

Copayment List.30 Each component includes several elements that can 

assist prescribers in prescribing the most appropriate drug for a 

beneficiary. 

The four components are: 31 

1. Formulary Status List: This component provides prescribers with 

the drug name and indicates whether the drug is preferred, not 

preferred, or not reimbursable according to a plan’s formulary. 

2. Formulary Alternatives List: This component provides prescribers 

with a list of alternative drugs, such as generic drugs, low-cost 

alternatives, and therapeutically equivalent alternatives that are 

covered for a beneficiary. 

3. Coverage List: This component provides prescribers with 

information on the conditions under which the patient’s policy covers 

a medication, such as prior authorization requirements, step therapy 

lists,32 quantity limits, age limits, and gender limits. 

4. Copayment List: This component provides the cost of the 

prescription to the beneficiary, such as dollar or percentage 

copayment amounts, copayment tiers (higher tiers mean higher 

copayments), and prescription quantity covered under the 

copayment. 

23

30 National Council for Prescription Drug Programs, Inc. (NCPDP). NCPDP Formulary 

and Benefits Standard Implementation Guide excerpt, version 2.0, May 2008. 

31 Ibid. 

32 A step therapy list describes a progression of drugs for a medical condition, beginning 

with the most cost-effective and safest medications and then moving on to more costly or 

risky medications if necessary. 

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Analysis Categories for Plan-to-Prescriber and Plan-to-Dispenser 

Connectivity 

 

Table B1: Detailed Description of Plan-to-Prescriber and Plan-to-Dispenser Connectivity 

E-Prescribing 

Connectivity

Implementation 

Category 

Implementation 

Phase Description 

Implemented 

Plan sponsor has completely implemented Accredited Standards Committee (ASC) 

X12N 270/271, SCRIPT 8.1, and all four components of Formulary & Benefits 

Standard 1.0. 

Complete 

connectivity 

Planning 

implementation 

Plan sponsor has plans to completely implement all three plan-to-prescriber 

standards. Plan sponsor may have implemented one or two standards and is 

planning to implement the rest. For example, the plan sponsor has completely 

implemented ASC X12N 270/271 and is planning to implement SCRIPT 8.1 and all 

four components of Formulary & Benefits Standard 1.0. 

Implemented 

Plan sponsor has implemented some, but not all, of the plan-to-prescriber 

standards and has no plans to implement the other standards. For example, the 

plan sponsor has implemented ASC X12N 270/271 and SCRIPT 8.1 but is not 

planning to implement Formulary & Benefits Standard 1.0. Partial 

connectivity 

Planning 

implementation 

Plan sponsor has plans to implement some, but not all, of the plan-to-prescriber 

standards. For example, the plan sponsor plans to implement ASC X12N 270/271, 

SCRIPT 8.1, and two of the four components of Formulary & Benefits Standard 1.0. 

It has no plans to implement the remaining two Formulary & Benefits Standard 1.0 

components. 

No connectivity N/A Plan sponsor has no plans to implement ASC X12N 270/271, SCRIPT 8.1, or any of 

the four components of Formulary & Benefits Standard 1.0. 

Plan-to-Prescriber 

Missing 

information N/A Plan sponsor did not answer any plan-to-prescriber questions. 

Implemented Plan sponsor has implemented Telecommunication 5.1. Complete 

connectivity Planning 

implementation Plan sponsor has plans to implement Telecommunication 5.1. 

No connectivity N/A Plan sponsor has no plans to implement Telecommunication 5.1. Plan-to-Dispenser 

Missing 

information N/A Plan sponsor did not answer the plan-to-dispenser question. 

Source: Office of Inspector General (OIG) analysis of survey data, 2008. 

Δ APPENDIX ~ B 

Analysis Categories for the Formulary & Benefits Standard 1.0 Components 

To assess plan sponsor implementation of each of the four Formulary & 

Benefits Standard 1.0 components, we divided plan sponsors into four 

implementation categories. Table B2 provides a detailed description of 

the categories for the Formulary & Benefits Standard 1.0 components: 

Formulary Status List, Formulary Alternatives List, Coverage List, and 

Copayment List. 

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APPENDIX ~ B 

Table B2: Detailed Description of Implementation Categories for the Formulary & Benefits Standard 1.0 

Components 

Implementation Category Implementation Phase Description 

Implemented Plan sponsor has implemented all elements of a component. Complete 

Planning implementation Plan sponsor plans to completely implement all elements of a component. 

Implemented 

Plan sponsor has completely implemented some, but not all, of the 

elements of a component. For example, a plan sponsor that has partially 

implemented Coverage List has implemented quantity limits and age limits 

but not the other Coverage List elements. Partial 

Planning implementation N/A – We did not ask plan sponsors to indicate plans to partially implement 

each component. 

Not planning N/A Plan sponsor has no plans to implement any elements of a component. 

Missing information N/A Plan sponsor did not answer any component questions. 

Source: OIG analysis of Formulary & Benefits Standard 1.0, 2008.

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APPENDIX ~ C 

Implementation of Plan-to-Prescriber Standards 

More plan sponsors reported complete implementation of Accredited 

Standards Committee (ASC) X12N 270/271 and SCRIPT 8.1 than 

Formulary & Benefits Standard 1.0. Table C1 shows the 

implementation status of each plan-to-prescriber standard. 

Table C1: Plan Sponsors’ Current and Planned Implementation of Plan-to-Prescriber Standards 

Complete Implementation Partial Implementation 

Standard Implemented 

Planning 

Implementation Implemented 

Planning 

Implementation 

Not Planning 

Implementation 

Missing 

Information 

ASC X12N 270/271 

(n = 262) 58% 18% N/A N/A 20% 4% 

SCRIPT 8.1 

(n = 262) 45% 34% N/A N/A 16% 5% 

Formulary & Benefits 

Standard 1.0* 

(n = 262) 0.4% 8% 46% 20% 16% 9% 

* Total does not add to 100 percent because of rounding. 

Source: Office of Inspector General (OIG) analysis of survey data, 2008. 

Δ APPENDIX ~ C 

ASC X12N 270/271. Fifty-eight percent of plan sponsors reported that 

they had completely implemented ASC X12N 270/271. These plan 

sponsors can respond to prescribers’ requests about beneficiary 

eligibility at the point of care. Prescribers can use this information to 

identify beneficiaries’ eligibility for drug benefits. As a result, a 

prescriber may see administrative cost savings because of fewer 

callbacks from a dispenser requesting permission to change the 

prescription to a drug that is covered for a beneficiary. 

An additional 18 percent of plan sponsors reported plans to completely 

implement ASC X12N 270/271. Of these plan sponsors, 86 percent 

reported plans to implement the standard by April 2009. Nine percent 

reported plans to implement the standard after April 2009 but did not 

provide specific dates for implementation. Five percent of plan sponsors 

did not provide any information about their timeframe for implementing 

this standard. Plan sponsors did not provide reasons why they had not 

implemented ASC X12N 270/271 by the January 2006 deadline. 

Twenty percent of plan sponsors reported no plans to implement 

ASC X12N 270/271. Additionally, 4 percent of plan sponsors did not 

reply to questions about this standard. 

SCRIPT 8.1. Forty-five percent of plan sponsors reported that they had 

completely implemented SCRIPT 8.1. These plan sponsors can provide 

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APPENDIX ~ C 

prescribers with a list of Part D drugs dispensed to beneficiaries. 

Prescribers can use this medication history to reduce adverse drug 

events, such as drug-to-drug allergies or interactions. 

An additional 34 percent of plan sponsors reported plans to completely 

implement SCRIPT 8.1. Of these plan sponsors, 82 percent reported 

plans to implement SCRIPT 8.1 by the April 2009 deadline. 

Sixteen percent plan to implement the standard after April 2009 but did 

not provide specific dates for implementation. Two percent of plan 

sponsors did not provide any information about their timeframe for 

implementing this standard. 

Sixteen percent of plan sponsors reported no plans to implement 

SCRIPT 8.1. Additionally, 5 percent of plan sponsors did not reply to 

questions about this standard. 

Formulary & Benefits Standard 1.0. One plan sponsor, or less than 

1 percent of plan sponsors, reported that it had completely implemented 

all components of Formulary & Benefits Standard 1.0. This plan 

sponsor can provide prescribers with complete formulary and benefits 

information for beneficiaries. Prescribers can use this information to 

save beneficiaries money by identifying and prescribing low-cost, 

alternative drugs. Prescribers and dispensers may also save on 

administrative costs by reducing callbacks. 

An additional 8 percent of plan sponsors reported plans to completely 

implement all elements of Formulary & Benefits Standard 1.0. Of these 

plan sponsors, 64 percent planned to completely implement the 

standard by the April 2009 deadline. Fourteen percent plan 

implementation after April 2009 but did not provide specific dates. 

Twenty-two percent of plan sponsors did not provide any information 

about their timeframe for implementing this standard. 

Sixteen percent of plan sponsors reported no plans to implement 

Formulary & Benefits Standard 1.0. Additionally, 9 percent of plan 

sponsors did not reply to questions about this standard. 

Implementation Detail for Formulary & Benefits Standard 1.0 Components 

Table C2 shows plan sponsors’ implementation status for each 

Formulary & Benefits Standard 1.0 component. 

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 A

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PPENDIX ~ C 

Table C2: Plan Sponsors’ Implementation of Formulary & Benefits Standard 1.0 Components 

Complete Implementation Partial Implementation 

Component Implemented 

Planning 

Implementation Implemented 

Planning 

Implementation 

Not Planning 

Implementation 

Missing 

Information 

Formulary Status List 

(n = 262) 51% 20% 7% N/A 2% 20% 

Formulary 

Alternatives List 

(n = 262) 23% 33% 0% N/A 24% 20% 

Coverage List* 

(n = 262) 10% 20% 37% N/A 13% 21% 

Copayment List* 

(n = 262) 3% 20% 14% N/A 42% 20% 

* Totals do not add to 100 percent because of rounding. 

Source: OIG analysis of survey data, 2008. 
.. A P PEN D x D

Agency Comments

. .""''Vlot..

r L PEIAREN OF_em" HUJ;ERCf '~,-:'r ' G~nt~rs fOr Msc;icare & MØc;lcalc; Seivices

Ad11inistriitor

Washington, DC 20201

DATE: AUG 2 i 2009

TO: Daniel R. Levinson

Inspector General

FROM: Charle.n Frizzera

Acting Administrator

SUBJECT: Offce of Inspector Geneta (OlG) Draf Report: "Medicare Part DE-Prescribing

Standards: Early Assessment Shows Partial Connectivity"(OEl-05-08-00320)

Than you forthe opportunity to review and comment on this OIG draft report discussing the

extent of Medìcare Pai1 0 sponsors' implementation of electronic prescribiii.~ (e-prescribing)

standards to support connectivity with prescrìbers and dispensers. The Centers for Medicare &

Medicaid Services (CMS) fully supports the advancement ofe-prescribing and is committed to

ensuring that the Part D sponsors support the adopted Part 0 e-prescribing standards.

The CMS generally concurs with the report's recommendations. However. we believdhatthere

W~re significant rnethodologicallimitations in the data collection and analysis utilized in this

report, which inflated the findings related to sponsor non-compliance with our e-prescribjtig

stadards. As the sponsoi:survey used in this report was conducted 7 months prior to the

deadline forcornpliance with two ofthe e~prescribing staiidards examined in this repolt. the

report failed to capHlle the impact of the sponsor and provider e-prescribing education and

outreach activities that occUlTed aftçr the date upon whjchthe survey' \Vas complete. As

, discussed in mOre detail below. the res!Jlts would have likely bèen difterel1jf the survey waS

.conducted c1oserto theimplementation deadline.

The report findings related to the National CouncilofPrescdption Drug Programs (NCPDP)

Formular & Benefits Standard, Version i, Release 0 (NCPDP Fomnílary ahd Benefits 1.0) are

the main driver behind the conclusion that most sponsors are only partially coinpliant with

'provider to plan" communication standards. CMS believes it is important to clarify two issues

Wi~h the findings in this report with respect to the discussion ofthis standard in the report:

,

· First, the findings regarding implementation status reflect initial confusion among Part 0

sponsors that eMS addressed in a Septemher 20Ò8 memorandum to Part D sponsors.

Further claritication was ptovided at the October 2008 national e-prescribing conference.

Specifically, many Part D sponsors initially beHcvéd that they only needed to support

transactions using the Formulary Status List function of the NCPOP Formulary &

Benefits 1.0 staiidill'd. The Septernbel' 2008 memorandum clarified that Part 0 sponsors

OEI.05.08.00320 MEDICARE PART DE-PRESCRIBING STANDARDS: EARLY ASSESSMENT SHOWS PARTIAL CONNECTIVITY 29
 

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APPENDIX ~ D 
 

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APPENDIX ~ D 
 

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APPENDIX ~ D 
 

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ΔAPPENDIX ~ A ACKNOWLEDGMENTS 

This report was prepared under the direction of Ann Maxwell, Regional 

Inspector General for Evaluation and Inspections in the Chicago 

regional office, and Thomas Komaniecki, Deputy Regional Inspector 

General. 

Kelly Waldhoff served as the project leader for this study. Other 

principal Office of Evaluation and Inspections staff from the Chicago 

regional office who contributed to the report include Suzanne Bailey, 

Abby Lopez, and Michelle Park. Other principal central office staff who 

contributed include Robert Gibbons, Kevin Manley, and Matt 

McMullen.