[Federal Register Volume 73, Number 67 (Monday, April 7, 2008)]
[Rules and Regulations]
[Pages 18918-18942]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-1094]



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Part III





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; Standards for E-Prescribing Under Medicare Part D and 
Identification of Backward Compatible Version of Adopted Standard for 
E-Prescribing and the Medicare Prescriptions Drug Program (Version 
8.1); Final Rule

Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Rules 
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 423

[CMS-0016-F and CMS-0018-F]

RINs 0938-AO66 and 0938-AO42


Medicare Program; Standards for E-Prescribing Under Medicare Part 
D and Identification of Backward Compatible Version of Adopted Standard 
for E-Prescribing and the Medicare Prescription Drug Program (Version 
8.1)

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

ACTION: Final rule.

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SUMMARY: This final rule adopts uniform standards for medication 
history, formulary and benefits, and fill status notification (RxFill) 
for the Medicare Part D electronic prescribing (e-prescribing) drug 
program as required by section 1860D-4(e)(4)(D) of the Social Security 
Act (the Act). In addition, we are adopting the National Provider 
Identifier (NPI) as a standard for identifying health care providers in 
e-prescribing transactions. It also finalizes the June 23, 2006 interim 
final rule with comment period that identified the National Council for 
Prescription Drug Programs (NCPDP) Prescriber/Pharmacist Interface 
SCRIPT standard, Implementation Guide, Version 8.1 (``NCPDP SCRIPT 
8.1'') as a backward compatible update of the NCPDP SCRIPT 5.0 (``NCPDP 
SCRIPT 5.0''), until April 1, 2009. This final rule also retires NCPDP 
SCRIPT 5.0 and adopts the newer version, NCPDP SCRIPT 8.1, as the 
adopted standard. Finally, except as otherwise set forth herein, we are 
implementing our compliance date of 1 year after the publication of 
these final uniform standards. This is the second set in a continuing 
process of issuing e-prescribing final standards for the Medicare Part 
D program,

DATES: Effective Date: These regulations are effective on June 6, 2008. 
The incorporation by reference of the publications listed in this final 
rule is approved by the Director of the Federal Register June 6, 2008.

FOR FURTHER INFORMATION CONTACT: Denise M. Buenning, (410-786-6711) or 
Andrew Morgan, (410) 786-2543.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 101 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended Title XVIII 
of the Social Security Act (the Act) to establish a voluntary 
prescription drug benefit program. Prescription Drug Plan (PDP) 
sponsors, Medicare Advantage (MA) organizations offering Medicare 
Advantage-Prescription Drug Plans (MAPDs) and other Medicare Part D 
sponsors are required to establish electronic prescription drug 
programs to provide for electronic transmittal of certain information 
to the prescribing provider and dispensing pharmacy and the dispenser. 
This includes information about eligibility, benefits (including drugs 
included in the applicable formulary, any tiered formulary structure 
and any requirements for prior authorization), the drug being 
prescribed or dispensed and other drugs listed in the medication 
history, as well as the availability of lower cost, therapeutically 
appropriate alternatives (if any) for the drug prescribed. Section 101 
of the MMA established section 1860D-4(e)(4)(D) of the Act, which 
directed the Secretary to promulgate final uniform standards for the 
electronic transmission of such data.
    There is no requirement that prescribers or dispensers implement e-
prescribing. However, prescribers and dispensers who electronically 
transmit prescription and certain other prescription-related 
information for Medicare Part D covered drugs prescribed for Medicare 
Part D eligible individuals, directly or through an intermediary, are 
required to comply with any applicable final standards that are in 
effect.
    Section 1860D-4(e)(4) of the Act generally requires the Secretary 
to conduct a pilot project to test initial standards recognized under 
section 1860D-4(e)(4)(A) of the Act, prior to issuing final standards 
in accordance with section 1860D-4(e)(4)(D) of the Act. Section 1860D-
4(e)(4)(C)(ii) of the Act created an exception to the requirement for 
pilot testing of standards where, after consultation with the National 
Committee on Vital and Health Statistics (NCVHS), the Secretary 
determined that there already was adequate industry experience with the 
standards. Such standards could be recognized by the Secretary and 
adopted through notice and comment rulemaking as final standards 
without pilot testing.
    We exercised this option in the E-Prescribing and Prescription Drug 
Program final rule, published on November 7, 2005 (70 FR 67568), when 
we adopted three ``foundation standards'' that met the criteria for 
adoption without pilot testing. Those foundation standards are as 
follows:
    <bullet> The National Council for Prescription Drug Programs 
(NCPDP) SCRIPT standard, Implementation Guide, Version 5, Release 0 
(Version 5.0), hereinafter referred to as ``NCPDP SCRIPT 5.0,'' for 
communicating prescription or prescription related information between 
prescribers and dispensers for the transactions listed at Sec.  
423.160(b)(2).
    <bullet> Accredited Standards Committee (ASC) X12N 270/271-Health 
Care Eligibility Benefit Inquiry and Response, Version 4010 and Addenda 
to Health Care Eligibility Benefit Inquiry and Response, Version 4010A1 
for communicating eligibility information between Medicare Part D 
sponsors and prescribers.
    <bullet> NCPDP Telecommunication Standard Specification, Version 5, 
Release 1 (Version 5.1) and equivalent NCPDP Batch Standard Batch 
Implementation Guide, Version 1, Release 1 (Version 1.1) supporting 
Telecommunications Standard Implementation Guide, Version 5, Release 1 
(Version 5.1) for NCPDP Data Record in the Detail Data Record, 
hereinafter referred to as ``NCPDP Telecom 5.1'' for communicating 
eligibility information between Medicare Part D sponsors and 
dispensers.
    In that same final rule, we established three exemptions to the use 
of the NCPDP SCRIPT foundation standard. The first exemption provided 
for entities transmitting prescriptions or prescription-related 
information by means of computer-generated facsimile. We ultimately 
modified this exemption in the CY 2008 Physician Fee Schedule final 
rule with comment period, which was published November 27, 2007 (72 FR 
66222). (For a more in-depth discussion of the computer-generated 
facsimile exemption, please see the preamble discussion in the November 
27, 2007 final rule with comment at 72 FR 66334.)
    The second exemption required the use of either HL7 or the adopted 
NCPDP SCRIPT standards in electronic transmittals of prescriptions or 
prescription related information when the sender and recipient are part 
of the same legal entity (for example, within a staff model HMO). The 
third exemption was when an entity is required by law to issue a 
prescription for a patient to a nonprescribing provider (such as a 
nursing facility) that in turn forwards the prescription to a 
dispenser. This

[[Page 18919]]

exemption was established to accommodate many legitimate business needs 
of entities in the long-term care setting.
    The November 7, 2005 final rule (70 FR 67579) also established a 
means of addressing the industry's desire for a streamlined standards 
updating and maintenance process that could keep pace with changing 
business needs. That process provided that a standard could be updated 
with a new version, and identified whether and when the update/
maintenance would necessitate notice and comment rulemaking. Where it 
is determined that the notice and comment rulemaking is not required, 
the new version is adopted by incorporating the new version by 
reference through a Federal Register publication. In that case, use of 
either the new or old version would be considered compliant. ``Backward 
compatible'' new versions of standards are eligible for recognition 
through this process. This version updating and maintenance of the 
implementation specifications for the adopted identifying and e-
prescribing standards allows for the correction of technical errors, 
the elimination of technical inconsistencies, and the addition of 
functions that are unnecessary for the specified e-prescribing 
transaction.
    Subsequent industry input indicated that the adopted e-prescribing 
standard for the transactions listed at Sec.  423.160(b)(2) should be 
updated to permit the use of NCPDP SCRIPT 5.0 or a later version of the 
standard, NCPDP SCRIPT standard, Implementation Guide, Version 8, 
Release 1 (Version 8.1), October 2005, hereinafter referred to as NCPDP 
SCRIPT 8.1.
    Using the streamlined process established in the November 7, 2005 
rule, we published an interim final rule with comment period on June 
23, 2006, updating the adopted NCPDP SCRIPT standard, thereby 
permitting either NCPDP SCRIPT 5.0 or 8.1 to be used. (For more 
information, see section III of this final rule and the June 23, 2006 
interim final rule with comment period (71 FR 36020).)
    Previously, six initial standards were recognized by the Secretary 
in 2005 and then tested in a pilot project during calendar year (CY) 
2006. Based upon the evaluation of the pilot project, the Secretary 
issued a report to Congress on the pilot results. The Secretary is 
required to issue this set of final uniform standards for e-prescribing 
by no later than April 1, 2008. These final standards must be effective 
not later than 1 year after the date of their issuance.
    Based on the pilot results as detailed in the report to Congress, 
we issued a notice of proposed rulemaking on November 16, 2007 (72 FR 
64900) and solicited comments from stakeholders and other interested 
parties on industry experience with certain standards. In that proposed 
rule (72 FR 64906 through 64907), we also solicited comments regarding 
the impact of adopting NCPDP SCRIPT 8.1 and retiring SCRIPT 5.0. Those 
comments and our responses are addressed in section III. B.1. of this 
final rule.
    For a complete discussion of the statutory basis for this final 
rule and the statutory requirements at section 1860D-4(e) of the Act, 
please refer to the E-Prescribing and the Prescription Drug Program 
proposed rule published November 16, 2007 (72 FR 64901).

II. Pilot Testing of Initial Standards

    In the November 16, 2007 proposed rule (72 FR 64901), we discussed 
the provision at section 1860D-4(e)(4)(A) of the Act which requires the 
Secretary develop, adopt, recognize or modify ``initial uniform 
standards'' for e-prescribing in 2005 and pilot test these initial e-
prescribing standards in 2006. To fulfill this requirement, the 
Secretary ultimately recognized (based in part on NCVHS input) six 
``initial'' standards in a September 2005 ``Request for Applications''. 
For more information on the pilot test findings, refer to the November 
16, 2007 proposed rule (72 FR 64904 through 64906).
    In the November 16, 2007 proposed rule (72 FR 64903) we noted that, 
as we had not published a final rule identifying the foundation 
standards at the time the Request for Applications was published, the 
proposed foundation standards were included among the Request for 
Applications list of ``initial standards'' to be tested. Any proposed 
foundation standards that were not adopted as foundation standards were 
to be tested as initial standards in the pilot project. Furthermore, if 
the proposed foundation standards were ultimately adopted as foundation 
standards, those standards nevertheless were to be used in the pilot 
project to ensure interoperability with the initial standards.
    The Request for Applications also specified that pilot sites would 
use NCPDP SCRIPT 5.0. With the Secretary's adoption of the updated 
NCPDP SCRIPT 8.1, the Agency for Healthcare Research and Quality 
(AHRQ), in its capacity as the administrator of the pilot project, gave 
pilot sites the option to voluntarily use NCPDP SCRIPT 8.1 in place of 
NCPDP SCRIPT 5.0.
    As a result, all grantees/contractors in the pilot sites 
voluntarily decided to use the updated NCPDP SCRIPT 8.1 in their 
various testing modalities.
    The initial standards and the results of the pilot test are as 
follows:
    <bullet> Formulary and benefits information--NCPDP Formulary and 
Benefits Standard, Implementation Guide, Version 1, Release 0 
(hereinafter referred to as NCPDP Formulary and Benefits 1.0), to 
provide prescribers with information from a plan about a patient's drug 
coverage at the point of care.
    The Medicare Part D e-prescribing formulary and benefits standard 
must provide a uniform means for pharmacy benefit payers (Medicare Part 
D sponsors) to communicate a range of formulary and benefits 
information to prescribers via point-of-care (POC) systems. These 
include general formulary data; formulary status of individual drugs; 
preferred alternatives (including any coverage restrictions, such as 
quantity limits and need for prior authorization); and co-payment. 
NCPDP Formulary and Benefits 1.0 enables the prescriber to consider 
this information at the point of care and make the most appropriate 
drug choice without extensive back-and-forth administrative activities 
with the pharmacy or the health plan. The pilot sites demonstrated that 
NCPDP Formulary and Benefits 1.0 can be successfully implemented 
between prescriber and plan, and is ready to be used as part of the e-
prescribing program under Medicare Part D.
    <bullet> Exchange of medication history--``The Medication History 
Standard'', included in the National Council for Prescription Drug 
Programs (NCPDP) Prescriber/Pharmacist Interface SCRIPT standard, 
Version 8, Release 1 and its equivalent NCPDP Prescriber/Pharmacist 
Interface SCRIPT Implementation Guide, Version 8, Release 1 
(hereinafter referred to as the Medication History Standard), provides 
a uniform means for prescribers and payers to communicate about the 
list of drugs that have been dispensed to a patient. It may provide 
information that would help identify potential drug interactions. This 
Medication History Standard meets the requisite objectives, 
functionality and criteria required by the MMA for use in the Medicare 
Part D e-prescribing program and has been widely adopted by the 
prescribing industry. The pilot sites found that the Medication History 
Standard supported the exchange of this information, and is ready to be 
used for the Medicare Part D e-prescribing program.

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    <bullet> Structured and Codified Sig--NCPDP Structured and Codified 
Sig Standard 1.0, (hereinafter referred to as NCPDP Structured and 
Codified Sig 1.0), provides a standard structured code set for 
expressing patient instructions for taking medications (such as ``by 
mouth, three times a day''). These instructions are currently generally 
provided as free text at the end of a prescription. Pilot sites tested 
NCPDP Structured and Codified Sig 1.0 and found that it needed 
additional work on field definitions and examples, field naming 
conventions, and clarifications of field use. There were contradictions 
with other structured fields, and there were limitations on the ability 
to capture directions for use of topical drugs (such as the area of 
application). Analysis showed that NCPDP Structured and Codified Sig 
1.0 was not able to meet the requisite objectives, functionality and 
criteria required by the MMA for use in the Medicare Part D e-
prescribing program.
    <bullet> Fill status notification--The Fill Status Notification, or 
RxFill, was included in NCPDP SCRIPT 5.0 and the updated NCPDP SCRIPT 
8.1, but it previously was not proposed as a foundation standard due to 
a lack of adequate industry experience. RxFill is a function within 
versions 5.0 and 8.1 of the NCPDP SCRIPT standard that enables a 
pharmacy to notify a prescriber when the prescription has been 
dispensed (medication picked up by patient), partially dispensed 
(partial amount of medication picked up by the patient), or not 
dispensed (medication not picked up by patient, resulting in the 
medication being returned to stock). This information can provide 
prescribers with information regarding their patients' adherence to a 
prescribed medication regimen, especially for those patients with 
chronic conditions such as hypertension and diabetes, which require 
medication management. It also has the potential to assist in combating 
fraud and abuse, and contribute to preventing prescription drug 
diversion. While the standard was technically capable of performing the 
function, the pilot sites' experiences and observations indicated there 
was no marketplace demand for this information. Prescribers had 
previously expressed concerns about being inundated with data if they 
were to receive fill status notifications every time a patient picked 
up a prescription at the pharmacy, and weren't sure how useful the 
information that the Fill Status Notification transaction generated 
would be in their medical practices. Dispensers were concerned about 
having to make significant business process changes, such as, having to 
check to make sure that fill status notification information was being 
transmitted by their pharmacy to those prescribers who requested it. 
The proposed rule therefore relayed that adoption of RxFill ``May cause 
an unnecessary administrative burden on prescribers and dispensers.'' 
(72 FR 64905). As such, in the proposed rule, we asked about the 
marketplace demand for Fill Status Notification and solicited 
stakeholder comments regarding their potential utilization of RxFill 
for the Fill Status Notification transaction. Those comments and our 
responses are addressed in section III.C.1. of this final rule.
    <bullet> Clinical drug terminology--RxNorm, a standardized 
nomenclature for clinical drugs developed by the National Library of 
Medicine (NLM), provides standard names for clinical drugs (active 
ingredient + strength + dose form) and for dose forms as administered 
to a patient. These concepts are relevant to how a physician would 
order a drug. It provides links from clinical drugs, both branded and 
generic, to their active ingredients, drug components (active 
ingredient + strength), and related brand names. National Drug Codes 
(NDCs) for specific drug products (where there are often many NDCs for 
a single product) are linked to that product in RxNorm. NDCs for 
specific drug products identify not only the drug but also the 
manufacturer and the size of the package from which it is dispensed. 
NDCs are relevant to how a pharmacy would dispense the drug. There are 
often several NDCs for any specific drug product, which are linked to a 
specific drug product code in RxNorm. RxNorm links its drug product 
codes to many of the drug vocabularies commonly used in pharmacy 
management and drug interaction software. By providing links between 
these vocabularies, RxNorm can mediate messages between systems not 
using the same software and vocabulary.
    The pilot sites demonstrated that RxNorm had significant potential 
to simplify e-prescribing, create efficiencies, and reduce dependence 
on NDCs among dispensers. In some testing, RxNorm erroneously linked 
some NDCs to lists of ingredients rather than to the drugs themselves 
and sometimes the NDCs linked by RxNorm did not match to the semantic 
clinical drug (SCD), which always contains the ingredient(s), strength 
and dose form, in that order. This indicates either an error in 
matching to the correct RxNorm concept, or an error with RxNorm itself, 
with more than one term being available for the same clinical drug 
concept (that is, unresolved synonymy). Analysis showed that, as of the 
time of the pilot study, RxNorm was not able to meet the requisite 
objectives, functionality and criteria required by section 1860D-
4(e)(3) of the Act for use for Medicare Part D e-prescribing.
    <bullet> Prior authorization--The Accredited Standards Committee 
(ASC) X12N 275 Version 4010 with HL7, and ASC X12N 278, Version 4010 
and addendum 4010A1, (hereinafter collectively referred to as the Prior 
Authorization standard), were utilized in concert to allow prescribers 
to obtain certification from a plan that a patient meets the coverage 
criteria for a given drug. Prior Authorization is a very complex 
standard to implement, involving four different standards and multiple 
payer requirements. The pilot sites found that the combination of the 
ASC X12N 278, and the ASC X12N 275 with the HL7 Prior Authorization 
(PA) attachment was cumbersome, confusing and required expertise that 
may limit adoption. Because health plans typically require prior 
authorization only for a small subset of drugs, the pilot sites had 
limited live experience with this standard.
    Investigators agreed that the HIPAA Prior Authorization standard--
the ASC X12N 278 Version 4010, and Addendum 4010A-- was not adequate to 
support e-prescribing prior authorization because it was designed for 
service or procedure prior authorizations, not for medication prior 
authorization. Modifications to the standard would need to be made 
prior to adoption as a final standard for the Medicare Part D e-
prescribing program.
    As required by section 1860D-4(e)(4)(C)(iv)(II), the Secretary 
issued a report to Congress, ``Pilot Testing of Initial Electronic 
Prescribing Standards,'' in April 2007 on the results of the pilot test 
of the initial standards. The report is available at http://www.healthit.ahrq.gov/erxpilots.

III. Provisions of and Analysis and Response to Public Comments for the 
June 23, 2006 Interim Final Rule With Comment Period and the November 
16, 2007 Proposed Rule

A. June 23, 2006 Interim Final Rule With Comment Period

    Using the streamlined process established in the November 7, 2005 
rule, we published an interim final rule with comment on June 23, 2006 
updating the adopted NCPDP SCRIPT standard, thereby permitting either 
NCPDP SCRIPT 5.0 or 8.1 to be used for the covered transactions listed 
below

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effective June 23, 2006. Version 8.1 of the NCPDP SCRIPT standard is an 
update to Version 5.0, and we had determined that it was backward 
compatible with the adopted NCPDP SCRIPT Version 5.0. (Although Version 
8.1 of the NCPDP SCRIPT standard has additional e-prescribing 
functionalities, we did not adopt any of these additional 
functionalities at that time.) Use of Version 8.1 of the NCPDP SCRIPT 
standard for the communication of a prescription or prescription-
related information between prescribers and dispensers, for the 
following functions, therefore constituted compliance with the adopted 
e-prescribing standard:
    <bullet> Get message transaction.
    <bullet> Status response transaction.
    <bullet> Error response transaction.
    <bullet> New prescription transaction.
    <bullet> Prescription change request transaction.
    <bullet> Prescription change response transaction.
    <bullet> Refill prescription request transaction.
    <bullet> Refill prescription response transaction.
    <bullet> Verification transaction.
    <bullet> Password change transaction.
    <bullet> Cancel prescription request transaction.
    <bullet> Cancel prescription response transaction.

We received 5 timely public comments on this interim final rule with 
comment period. The following is a summary of the comments and our 
responses:
    Comment: All commenters supported the voluntary use of the backward 
compatible functions of version 8.1 of the NCPDP SCRIPT standard. Four 
commenters recommended that it be adopted as soon as reasonably 
possible, and that NCPDP SCRIPT 5.0 be retired as soon as reasonably 
practicable. They also indicated that NCPDP SCRIPT 8.1 was already in 
widespread use throughout their respective industries. One commenter 
indicated a concern with making backward compatibility ``the criteria'' 
for determining if notice and comment rulemaking is required. The 
commenter stated that backward compatibility must be viewed as just one 
factor in making a determination to adopt a modified standard.
    Response: We agree with the commenters who supported the retirement 
of NCPDP SCRIPT 5.0 in favor of NCPDP SCRIPT 8.1. Regarding the comment 
that backward compatibility should not be the single criterion for 
determining if notice and comment rulemaking is used for the purpose of 
adopting a modified standard and that we should look for and support 
other effective alternatives to the backward compatibility issue, we 
note that we are required by law to employ notice and comment 
rulemaking to modify an adopted e-prescribing standard. We are also 
required by section 1860D-4(e)(3) of the Act to ensure, among other 
things, that the adopted standards meet certain objectives and design 
criteria. Based on these various statutory requirements and our own 
policies, we analyze various factors in addition to backward 
compatibility such as the standard modification's impact on affected 
entities relative to cost and benefit projections, productivity and 
workflow losses/gains, etc., as well as industry and stakeholder 
feedback by both the written comment process and input from the NCVHS. 
(For more information, see the June 23, 2006 interim final rule with 
comment (71 FR 36020).

B. November 16, 2007 Proposed Rule

    In the November 16, 2007 proposed rule (72 FR 64900) we discussed 
the results of the pilot test, and based largely on those results, we 
proposed the following:
    <bullet> To retire NCPDP SCRIPT 5.0 and adopt NCPDP SCRIPT 8.1 as a 
final standard for the transactions listed at Sec.  423.160(b)(1).
    <bullet> To adopt a final e-prescribing standard for the medication 
history transaction.
    <bullet> To adopt a final e-prescribing standard for the formulary 
and benefits transaction.
    <bullet> To adopt the National Provider Identifier (NPI) as a 
standard for identifying health care providers in e-prescribing 
transactions.
    <bullet> To establish a compliance date of 1 year after the 
publication of the final uniform standards.
    We received 70 timely comments on the November 16, 2007 proposed 
rule from dispensers and physicians; national retail drug store chains; 
vendors; national healthcare industry professional and trade 
associations; a standards development organization (SDO); state 
pharmacy associations; a state department of health; healthcare plans 
and systems; consumer/beneficiary advocacy groups; national 
prescription information exchange networks; long-term care industry 
representatives; corporations and pharmaceutical manufacturers, and a 
federal government agency. These documents frequently contained 
multiple comments on the various proposals and issues detailed in the 
proposed rule.
    We also received comments outside the scope of the proposed rule. 
These included one set of comments on another, unrelated notice of 
proposed rulemaking, and comments on Medicare program operations that 
are outside the scope of this final rule. The relevant and timely 
comments within the scope of the proposed rule that we received and our 
responses to those comments, are discussed in the following sections.
1. Proposed Retirement of NCPDP SCRIPT 5.0 and Adoption of NCPDP SCRIPT 
8.1 as a Final Standard
    In section III.A. of this final rule we discussed the 
identification of NCPDP SCRIPT 8.1 as a backward compatible update to 
NCPDP SCRIPT 5.0. In that discussion, we noted that under the interim 
final rule with comment, the use of NCPDP SCRIPT 8.1 was voluntary. 
Commenters to this rule recommended that NCPDP SCRIPT 8.1 be adopted as 
soon as possible and that NCPDP SCRIPT 5.0 be retired.
    Therefore, in the November 16, 2007 proposed rule (72 FR 64906 
through 64907), we summarized comments received on the voluntary use of 
NCPDP SCRIPT 8.1 and proposed to revise Sec.  423.160(b)(1) and (c) to 
replace the NCPDP SCRIPT 5.0 standard with NCPDP SCRIPT 8.1 for the 
transactions listed at Sec.  423.160(b)(1) (see section III.A. of this 
final rule). We also solicited additional comments on the retirement of 
NCPDP SCRIPT 5.0.
    Comment: Most commenters supported the adoption of NCPDP SCRIPT 
8.1, and retirement of NCPDP SCRIPT 5.0, for the transactions listed at 
Sec.  423.160(b)(1). They noted that NCPDP SCRIPT 8.1 will provide a 
uniform communications mechanism for prescribers, dispensers, and 
payers, support reconciliation of useful data from a larger number of 
sources, and raise awareness of the availability of medication history 
and, subsequently, its use among prescribers. Some commenters noted 
that the industry is already using NCPDP SCRIPT 8.1, so there would be 
limited impact of converting to NCPDP SCRIPT 8.1 to only those few 
still using NCPDP SCRIPT 5.0. They indicated that conversion from NCPDP 
SCRIPT 5.0 to NCPDP SCRIPT 8.1 would not require any significant 
enhancements for the majority of entities. Seven commenters supported 
ultimately moving to NCPDP SCRIPT 10.5, but only one commenter 
recommended bypassing NCPDP SCRIPT 8.1 and adopting version NCPDP 
SCRIPT 10.5 directly.
    Response: NCPDP SCRIPT 8.1 is already in widespread use, has 
adequate industry experience, and supports the

[[Page 18922]]

e-prescribing transactions for which it was pilot tested (with the 
exception of long-term care e-prescribing applications). Therefore, we 
believe at this time that NCPDP SCRIPT 8.1 should be adopted in place 
of NCPDP SCRIPT 5.0 at Sec.  423.160(b)(2)(ii) and (c). In keeping with 
the pilot findings, the exception to this standard at Sec.  
423.160(a)(3)(iii) for e-prescribing in long-term care settings will be 
retained until a subsequent version of NCPDP SCRIPT is adopted that 
will support transactions in that setting.
    Regarding the comment that we bypass NCPDP SCRIPT 8.1, and adopt 
NCPDP SCRIPT 10.5, NCPDP SCRIPT 10.5 has not yet been approved by the 
NCPDP Board of Directors and the Accredited National Standards 
Institute (ANSI).\1\ Based on the Department's criteria consistently 
applied to the adoption of e-prescribing standards, NCPDP SCRIPT 10.5 
will not be considered by the Secretary for adoption until such time as 
that SDO/ANSI approval process has been completed.
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    \1\ ANSI accredits the procedures of national standards 
development organizations. Accreditation by ANSI signifies that the 
procedures used by the standards body in connection with the 
standard's development meet the Institute's requirements for 
openness, balance, consensus and due process. Refer to www.ansi.org 
for additional information.
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    Comment: A number of commenters favored adoption of NCPDP SCRIPT 
8.1, but with the caveat that CMS not preclude stakeholders who need to 
use the advanced functionalities of NCPDP SCRIPT 10.2 or higher, such 
as those in long-term care settings, from doing so voluntarily. One 
commenter noted that any version of NCPDP SCRIPT 10.0 or higher would 
be acceptable. Others said that NCPDP SCRIPT 10.2 or 10.3 would be the 
appropriate standard for use in long-term care. We also received 
comments that the agency should retire NCPDP SCRIPT 8.1 in favor of 
NCPDP SCRIPT 10.5 by the year 2010, and one commenter supported the 
current adoption of NCPDP SCRIPT 8.1, but with adoption of NCPDP SCRIPT 
10.5 within a year's time.
    Response: By their very nature, standards are subject to updating 
and modifications as new business needs, workflows and other issues are 
identified and resolved. We recognize industry's desire for adoption of 
the most current and robust versions of standards. We note that, in 
instances where a subsequent standard is backward compatible with 
previously adopted standards, the streamlined process described earlier 
can allow for use of subsequent versions of the adopted standard as 
well as the previously adopted version of the standard. Under this 
process, the Secretary may identify a subsequent backward compatible 
version(s) of an adopted non-HIPAA standard, and, with publication of 
an interim final rule with comment in the Federal Register, adopt such 
subsequent versions of the standard for voluntary use. As new backward 
compatible versions of non-HIPAA e-prescribing standards such as NCPDP 
SCRIPT are identified, they could be adopted under this process for 
voluntary use as an alternative to NCPDP SCRIPT 8.1.
    With regard to the recommendation that we adopt versions of 
standards ``X.X or higher,'' we cannot adopt versions of standards that 
do not currently exist. Notice and comment rulemaking requires a 
meaningful opportunity to comment. It is not possible to comment 
meaningfully on a version of a standard that is not yet in existence, 
and as such, is not available for public review.
    Comment: One commenter suggested voluntary use of the Get Message 
and Password Change transactions supported by NCPDP SCRIPT 8.1.
    Response: The NCPDP SCRIPT 5.0 standard includes standards for the 
Get Messsage and Password Change transactions (70 FR 67594). The NCPDP 
SCRIPT 8.1 standard also includes standards that support these 
transactions. Those who elect to electronically transmit prescription 
and prescription-related information for Medicare Part D covered drugs 
prescribed for Medicare Part D eligible individuals, directly or 
through an intermediary, are required to comply with final standards 
that are in effect.
    We will finalize the recognition of NCPDP SCRIPT 8.1 as a backward 
compatible version of the adopted NCPDP SCRIPT 5.0, but in response to 
the comments that were received to that interim final rule with 
comment, as of April 1, 2009, we will retire NCPDP SCRIPT 5.0 and leave 
NCPDP SCRIPT 8.1 as the adopted standard. To effectuate this, we are--
    <bullet> Redesignating and amending proposed Sec.  423.160(b)(1) as 
Sec.  423.160(b)(2)(ii) to apply to transactions on or after April 1, 
2009;
    <bullet> Adding a new Sec.  423.160(b)(1) to identify which 
paragraphs are applicable to which timeframes; and
    <bullet> Adding new Sec.  423.160(b)(2)(i) to apply to transactions 
before April 1, 2009 and adding the appropriate regulatory citations to 
Sec.  423.160(b) to identify where each standard is incorporated by 
reference, if applicable.
2. Proposed Adoption of an E-Prescribing Standard for Medication 
History Transaction
    In the November 16, 2007 proposed rule (72 FR 64907), we discussed 
that if NCPDP SCRIPT 8.1 is adopted in place of NCPDP SCRIPT 5.0 at 
Sec.  423.160(b)(1), we would also add a new Sec.  423.160(b)(3) to 
adopt the NCPDP SCRIPT 8.1 Medication History Standard for electronic 
medication history exchange among the Medicare Part D sponsor, 
prescriber, and the dispenser when e-prescribing Medicare Part D 
covered drugs for Medicare Part D eligible individuals.
    We also discussed how the adoption of the NCPDP SCRIPT 8.1 
Medication History Standard will provide a uniform communications 
mechanism for prescribers, dispensers and payers, support 
reconciliation of useful data from a large number of sources, and raise 
awareness of medication history availability and use among prescribers.
    Comment: Most commenters supported the adoption of the NCPDP SCRIPT 
8.1 Medication History Standard, noting that over time, medication 
history will help reduce adverse drug events, doctor shopping, and 
prescription drug diversion/fraud, and provide for emergency 
prescription drug histories in case of natural disasters. One commenter 
believes that large scale implementation of the NCPDP SCRIPT 8.1 
Medication History Standard will result in significant challenges as 
well as useful refinement of the standard.
    A number of commenters supported adoption of the standard, but only 
on a voluntary basis between trading partners, noting that requiring 
use of the medication history function could cause some current e-
prescribers to revert to paper prescribing if they cannot meet the 
compliance date. One commenter on the NCPDP SCRIPT 8.1 Medication 
History Standard stated that the pilot test was performed in a closed 
system and is not scalable in larger deployments, and also indicated 
that the medication history transaction, while relatively mature in the 
prescribing sector, is not widely used in the dispensing sector. The 
commenter recommended that the use of the standard be encouraged but 
not required.
    Response: The Medication History Standard was tested in four of 
five pilot project sites, among community physicians, dispensers, plans 
and payers. The testing included the two national prescription 
information exchange networks. While tested within closed systems, the 
pilot project

[[Page 18923]]

evaluators determined that the testing adequately supported concluding 
that the standard met the requisite objectives, functionality and 
criteria (including not imposing an undue burden on the industry thanks 
to there being adequate health care industry experience with the 
standard) for adoption as a Medicare Part D e-prescribing standard. The 
pilot project demonstrated that the NCPDP SCRIPT 8.1 Medication History 
Standard works effectively, and includes the functionality and meets 
the e-prescribing standards criteria and objectives identified in 
sections 1860D-4(e)(2) and 1860D-4(e)(3) of the Act, and we will adopt 
it as a standard. We note that, while Medicare Part D sponsors are 
required to support all e-prescribing functions for which standards 
have been adopted, prescribers and dispensers are not required to do 
so. As a result, prescribers and dispensers who currently use e-
prescribing but do not utilize the medication history function will not 
be required to conduct transactions using the NCPDP SCRIPT 8.1 
Medication History Standard. However, if they choose to conduct an 
electronic medication history transaction in the context of e-
prescribing Medicare Part D covered drugs for Medicare Part D eligible 
individuals, they must use the adopted standard. Regarding the comment 
that some current e-prescribers might revert to paper prescribing if 
they are required to use the NCPDP SCRIPT 8.1 Medication History 
Standard by the proposed compliance date, we refer back to comments 
received from a wide spectrum of the industry, that NCPDP SCRIPT 8.1 is 
already in widespread use, and the Medication History function already 
resides on the standard. Most providers need only to enable the 
function on their software system. For those who already enjoy the 
benefits of e-prescribing, reverting to paper would constitute a 
setback for their practices. We assume that they would continue to 
build upon the investment they have already made in their e-prescribing 
systems and become current, within the time allowed, with the adopted 
standards for those e-prescribing functionalities they choose to 
transact.
    Comment: Commenters made a number of recommendations about the 
completeness and availability of medication history data to prescribers 
and dispensers. Several noted that information about all medications 
should be made available through the medication history transaction, 
including controlled substances (which cannot be e-prescribed under 
current law), over-the-counter drugs, drugs for which the beneficiary 
paid in cash, and drugs not covered under Medicare Part D, including 
those prescribed in the hospital setting. Other commenters recommended 
that medication history should be available 24 hours a day, 7 days a 
week through downloads to any prescriber and pharmacy, and that 
medication history data should not be limited to those who subscribe to 
any given e-prescribing system or network. One commenter suggested that 
any Medicare Part D e-prescribing standard for medication history 
should accommodate family and medical history information that supports 
linkage of these data sources to an electronic health record system.
    Response: Our intent for the scope of this final rule is to 
establish standards that will be used to support the Medicare 
electronic prescription program. These standards will provide 
additional common language and terminology for those operating in the 
Medicare Part D e-prescribing environment that will further the 
electronic exchange of information in a data format that is consistent 
and recognizable.
    We agree that the more complete a medication history is, the more 
useful it will be to the prescriber. However, prescriptions paid for in 
cash that are not adjudicated through insurance claims systems, and 
over-the-counter medications, for example, may not be captured by the 
patient's Medicare Part D sponsor medication history, and therefore 
would not be available for communication using the standard. The 
suggestion that we include family and medical history information in 
the NCPDP SCRIPT 8.1 Medication History Standard is outside of the 
scope of this rule. While the MMA does provide for the establishment of 
appropriate medical history standards, no initial standards were 
identified for this function. The NCPDP SCRIPT 8.1 Medication History 
Standard is the product of NCPDP, a voluntary consensus standards 
development organization. Only NCPDP could expand the NCPDP SCRIPT 8.1 
Medication History Standard to encompass medical history. Despite its 
limited function, we believe that the NCPDP SCRIPT 8.1 Medication 
History Standard will facilitate the flow of available medication 
history data from Medicare Part D sponsors, and we expect this will 
have a positive impact on medication errors and ADEs.
    Comment: Several commenters noted operational and business flow 
shortcomings that could limit the utility of medication history. One 
commenter indicated that the current criteria for medication history 
match is higher than that for formulary and benefits, and that current 
experience with one prescription information exchange network 
demonstrates a 50 to 65 percent match rate for submitted eligibility 
requests. Another commenter mentioned that many physicians are unable 
to access all medication history information, and that physicians 
should be able to add medications to the medication history without 
having to generate a prescription. Another commenter noted that as the 
pilot results showed, clinicians' willingness to access medication 
history was limited due to incomplete information, and that further 
testing of the standard is needed prior to adoption to clarify 
requirements for completeness and usability of information, and to 
determine where the information can be most effectively introduced and 
exchanged within the provider's workflow. Another commenter noted that 
the current medication history transaction does not support drug 
utilization review and medication management.
    Response: In the November 16, 2007, proposed rule, we acknowledged 
that many physicians were unaware of the medication history function 
likely because, while it resides within the widely used NCPDP SCRIPT 
8.1 suite of functional standards, most users have apparently not 
activated this feature on their e-prescribing systems. We expect that, 
as the standard achieves widespread use, industry feedback to the SDO 
will result in improvements and modifications that support more robust 
and complete medication history capacities. While industry input 
indicates there may be many reasons for less than a 100 percent match 
rate, including incomplete access to eligibility data, data 
inconsistencies and inaccuracies, etc., they also indicate that this 
could be corrected through the use of a unique identifier. While there 
is significant opportunity to improve the use of medication history, we 
believe that adopting the standard and expanding its use will help 
identify and drive process improvements.
    We have adopted the NCPDP SCRIPT 8.1 Medication History Standard as 
proposed with two technical changes. We redesignated the standard from 
Sec.  423.160(b)(3) to Sec.  423.160(b)(4) and added a reference to the 
paragraph regarding the incorporation by reference of this standard.

[[Page 18924]]

3. Proposed Adoption of an E-prescribing Standard for Formulary and 
Benefits
    In the November 16, 2007, proposed rule (72 FR 64907), we discussed 
that, as a result of pilot testing, we proposed to add Sec.  
423.160(b)(4) to adopt NCPDP Formulary and Benefits 1.0, as a standard 
for electronic transactions communicating formulary and benefits 
information between the prescriber and the Medicare Part D sponsor when 
e-pre scribing for covered Medicare Part D drugs for Medicare Part D 
eligible individuals.
    Comment: We received many comments supporting adoption of the NCPDP 
Formulary and Benefits 1.0, which noted that the pilot test 
demonstrated that NCPDP Formulary and Benefits 1.0 was technically 
capable of communicating the intended information to support this 
transaction. A prescription information exchange network also 
concurred, relaying that they began certifying physician software 
vendors and payers for formulary and benefits functionality last year, 
and have had good results implementing it since that time. A few 
commenters also pointed to the inherent complexities associated with 
implementing the standard, saying that without real-time information, 
patient information is often outdated and lacks detail, which can lead 
to higher co-pays and confusion for patients. They said that plans, 
carriers, and pharmacy benefit managers (PBMs) should be required to 
provide accurate, timely and complete formulary and benefits 
information. One commenter recommended that plans not be required to 
conduct the transaction, but if they do so, they must use the standard. 
Several commenters indicated that use of the transaction be voluntary 
among trading partners.
    Response: Based on pilot test results and industry comments on the 
proposed rule, we agree that NCPDP Formulary and Benefits 1.0 has met 
the requisite objectives, functionality and criteria requirements of 
the MMA for use in the Medicare Part D e-prescribing program, and we 
will adopt it as a standard.
    E-prescribing under Medicare Part D, as outlined in section 101 of 
the MMA, is voluntary for providers and dispensers. However, Medicare 
Part D sponsors must support the use of, and comply with, these 
standards when electronically transmitting prescriptions or 
prescription-related information for covered Medicare Part D drugs for 
Medicare Part D eligible individuals.
    We do not believe that there would be any additional value gained 
from continued pilot testing of the standard. We acknowledge that 
formularies are complex, frequently change due to updates in coverage 
decisions, and that coverage benefits are fluid, sometimes changing 
from day to day. Currently, the industry practice is to send formulary 
and benefits information periodically and in batch-file format. We 
agree that the capacity to provide this information on a real-time 
basis is an important step toward realizing the full potential of the 
benefit of the standard, and expect that, as the standard gains 
widespread use, marketplace forces will encourage incorporation of 
real-time transaction capacities into the formulary and benefits e-
prescribing process. In the meantime, we believe that additional 
testing, not of the standard itself but of the ability to provide real-
time benefit responses, is desirable as the industry seeks to maximize 
e-prescribing system capabilities, and it is our understanding that 
industry efforts are underway to test real-time transactions through 
electronic prescription information exchange networks.
    Also, as the NCPDP commented, there is an effort underway to bring 
industry participants together for further analysis and testing to 
address any remaining NCPDP Formulary and Benefits 1.0 implementation 
issues, which result from missing or incomplete data, and are not the 
result of the standard functioning inadequately for the transaction. 
NCPDP also is following up on a Healthcare Information Technology 
Standards Panel (HITSP) recommendation that NCPDP evaluate data 
element/list requirements and propose solutions to any outstanding 
issues.
    Comment: Several commenters stated the need to restrict the ``list 
of alternative drugs'' to only those products that are bioequivalent or 
that have received the ``AB'' designation from the Food and Drug 
Administration (FDA), preventing the prescribing of potentially 
inappropriate or unsafe therapeutic substitutions. They supported 
adoption of the standard, but not the current version that includes 
``preferred'' or ``formulary alternatives lists.''
    Response: NCPDP Formulary and Benefits 1.0 supports a codified way 
of sending information that includes ``preferred'' or ``formulary 
alternatives lists,'' if a health plan offers such products. The 
standard does not assess the appropriateness of the alternatives, 
rather it merely conveys the applicable formulary requirements, 
including any step therapy requirements, of a given patient's health 
coverage. The Medicare Part D program provides for formularies in which 
therapeutically non-equivalent and non-bioequivalent drugs are offered 
in each category and class of a Medicare Part D drug formulary. (See 
Sec.  423.120(b)(2).) The Medicare Part D program allows Medicare Part 
D sponsors to have utilization review management procedures, including 
step therapy guidelines, within approved formularies. Our adoption of 
NCPDP Formulary and Benefits 1.0 applies specifically to e-
prescriptions for Medicare Part D covered drugs prescribed for Medicare 
Part D eligible individuals. As such, we believe that it should support 
conveying formulary information about the non-equivalent and non-
bioequivalent drugs that are part of an approved Medicare Part D 
sponsor's formulary.
    We have adopted the NCPDP Formulary and Benefits 1.0 standard as 
proposed with two technical changes. We redesignated the standard from 
the proposed Sec.  423.160(b)(4) to Sec.  423.160(b)(5) and added a 
reference to the paragraph regarding the incorporation by reference of 
this standard.
4. Adoption of the National Provider Identifier (NPI) as a Standard for 
Use in E-Prescribing
    In the November 16, 2007, proposed rule (72 FR 64908), we proposed 
to add Sec.  423.160(b)(5) to adopt the National Provider Identifier 
(NPI) as a standard identifier for health care providers for use in e-
prescribing among the Medicare Part D sponsor, prescriber, and the 
dispenser. NCPDP SCRIPT 8.1, which we proposed to adopt, supports the 
use of the NPI.
    We solicited comments from the industry and other stakeholders on 
the adoption of the NPI as an e-prescribing standard, and we 
specifically requested comments as to whether use of the NPI in HIPAA-
compliant transactions constitutes adequate industry experience for 
purposes of using NPI as a covered health care provider identifier in 
Medicare Part D e-prescribing transactions.
    Comment: Commenters generally acknowledged industry familiarity 
with the NPI from having used it in HIPAA standard transactions. While 
most commenters supported the use of the NPI on electronic 
prescriptions to identify the prescriber and the dispenser, they agreed 
that the NPI must not be used for routing transactions (message 
envelope), or sender/receiver-level information used in e-prescribing 
routing transactions, as it does not offer the clarity needed for 
routing data to destinations. However, it can be used to identify an 
organization or a provider involved in electronic prescribing

[[Page 18925]]

transactions. We received several comments about how the adoption of 
the NPI as a health care provider identifier for use in e-prescribing 
would improve the ability to uniquely identify a prescriber, but that 
the NPI must be used to identify a prescriber at the individual versus 
organizational level. A number of commenters urged CMS to provide more 
specific guidance on the use of the NPI in e-prescribing.
    Three commenters opposed the adoption of the NPI as a standard 
identifier for use in Medicare e-prescribing because they contend that, 
as it is currently constructed, the NPI does not convey appropriate 
location and routing information which is essential to the e-
prescribing process. One commenter said the NPI works as a name, but 
not as an address (that is, the location and setting of the 
prescriber). Another commenter stated that they do not use the NPI for 
e-prescribing because its use would force the industry to incur 
significant implementation costs. This commenter took issue with CMS' 
assumption that experience in using NPI in HIPAA-covered transactions 
constitutes adequate industry experience for adopting it for use in e-
prescribing Medicare Part D covered drugs for Medicare Part D eligible 
individuals. One other commenter stated that, since it was not pilot 
tested, the NPI should be adopted only after pilot testing has been 
conducted and evaluated.
    Response: Our intention in proposing the use of the NPI in e-
prescribing transactions was to extend the functionality of the NPI 
from HIPAA-covered transactions to non-HIPAA e-prescribing transactions 
so that those with NPIs could use one identifier for both HIPAA-covered 
transactions and non-HIPAA e-prescribing transactions, versus a 
separate identifier(s), and allow the identification of both an 
individual prescriber and the dispensers. As the NPI has the ability to 
identify health care providers such as prescribers and dispensers, and 
as NCPDP SCRIPT 8.1 supports the NPI, its use in the e-prescribing of 
Medicare Part D covered drugs for Medicare Part D eligible individuals 
would fulfill the function for which it was intended. If the NPI is 
used as we proposed, as that of an identifier of individual, non-
institutional health care providers, and not for routing or location 
purposes, we see nothing that would preclude its use for purposes of 
identification, or that would require pilot testing. Therefore, in 
NCPDP SCRIPT 8.1, the NPI would be used in the PVD Provider Segments to 
identify the prescriber or the dispenser. However, the NPI would not be 
used in the UIH Interactive Interchange Control Segment to route the 
transaction.
    Based on our analysis of the comments received, we will adopt the 
NPI for use in e-prescribing to identify the individual healthcare 
prescriber and the dispenser. We note that, in doing this, we do not 
alter the compliance dates or other requirements under HIPAA for 
covered entities with respect to e-prescribing transactions that are 
also HIPAA covered transactions. For instance, we do not intend to 
alter any provisions requiring the use of the NPI for identifying 
institutional providers in HIPAA transactions, including those HIPAA 
transactions which are also e-prescribing transactions. We will also 
provide specific guidance in the future regarding how the NPI should 
and should not be used in e-prescribing Medicare Part D covered drugs 
for Medicare Part D eligible individuals.
    Comment: A number of commenters noted that not all prescribers are 
covered entities under HIPAA, and expressed concern that if the NPI 
were mandated as the sole identifier for prescribers, prescribers who 
do not have an NPI may not be able to engage in e-prescribing.
    Response: While not all providers are required by HIPAA to obtain 
an NPI, they are all permitted to do so. Moreover, we believe that 
most, if not all, providers who treat Medicare beneficiaries, already 
have an NPI, either because they are HIPAA-covered entities, or if not, 
because as providers they are otherwise identified on HIPAA 
transactions (for example, as a rendering physician) or on submitted 
paper claims, as Medicare requires the use of the NPI on paper claims.
    Comment: One commenter suggested that the DEA number be used to 
clarify the identity of the prescribing provider when the NPI number is 
not adequately specific. Another noted that the DEA number is still 
required for prescribing controlled substances, but it is unclear as to 
whether prescribers will need to use their DEA number in the e-
prescribing of controlled substances once it is allowable under law.
    Response: Not all providers prescribe controlled substances and 
thus, not all providers have DEA numbers. As e-prescribing of 
controlled substances is still not allowed by law, we cannot speculate 
as to the potential role of the DEA number in that process. We also 
note that as the intent of the NPI is to consolidate multiple and/or 
proprietary prescriber identifiers for use in the Medicare program, it 
would appear to be counterproductive to use one number, namely the DEA 
number, to clarify another number, the NPI.
    Comment: One commenter requested that CMS allow adequate time for 
adoption.
    Response: We will monitor industry feedback regarding this issue 
and respond accordingly.
    Comment: One commenter stated that dispensers should not be deemed 
to be in violation of e-prescribing standards if the prescriber does 
not have an NPI or fails to include an NPI in an e-prescribing message, 
and questioned what effect that may have on the dispenser's compliance 
with e-prescribing regulations.
    Response: If a prescriber is e-prescribing under the Medicare Part 
D program, the prescriber is required to use the adopted standards, in 
this case, the NPI, to identify an individual e-prescribing provider. 
By the compliance date of this final rule, we expect that providers who 
participate in Medicare, including those who submit paper claims, will 
have already have obtained their NPI for claims reimbursement purposes.
    Absent an NPI, prescribers likely would not be engaged in e-
prescribing. However, in the instance of a dispenser receiving an e-
prescription for a Part D covered drug for a Part D eligible individual 
from a prescriber without an NPI, the prescriber, not the dispenser, 
would be considered to be in violation of Part D e-prescribing 
regulations.
    We have adopted the NPI as a standard identifier as proposed with a 
technical change. We redesignated this standard from the proposed Sec.  
423.160(b)(5) to Sec.  423.160(b)(6).
5. Proposed Compliance Date
    In accordance with sections 1860D-4(e)(1) and 1860D-4(e)(4)(D) of 
the Act, the Secretary must issue certain final uniform standards for 
e-prescribing no later than April 1, 2008, to become effective not 
later than 1 year after the date of their promulgation. Therefore, in 
accordance with this requirement, we proposed a compliance date of 1 
year after the publication of the final rule. We also proposed adopting 
NCPDP SCRIPT 8.1 as the e-prescribing standard for the transactions 
listed in section II.A. of the proposed rule (72 FR 64906), effective 1 
year after publication of the final rule. We solicited comments in the 
proposed rule regarding the impact of these proposed dates on industry 
and other interested stakeholders, and whether an earlier compliance 
date should be established.
    Comment: Many commenters supported a compliance date of 1 year 
after issuance of the final rule, stating that based on their 
respective industry feedback and experience with NCPDP

[[Page 18926]]

SCRIPT 8.1, 1 year should be adequate time for the industry to work 
toward implementation of these standards with minimum impact. A few 
thought that industry compliance prior to that time could be achieved. 
A few other commenters said that the proposed compliance date is 
extremely aggressive and does not take into consideration vendor system 
development life cycles, release dates of supporting systems, and time 
and resources required for health systems to adopt and deploy the 
needed infrastructure to attain the expected financial and safety 
benefits of e-prescribing. One commenter stated that the proposed 
implementation date is problematic for Medicare Part D sponsors that 
own dispensers that have already begun to adopt e-prescribing, because 
having to retrofit standards into existing systems may be more costly 
and time consuming. This commenter suggested an additional year or two 
beyond the proposed compliance date to allow adopters to bring current 
e-prescribing systems into compliance. Another recommended that 
providers be given a minimum of 2 years to comply. Two commenters 
requested that we consider contingency plans if the industry is unable 
to meet the 1 year compliance timeframe. One commenter recommended that 
CMS conduct a study to identify pharmacy preparedness, and that once 
the final rule is released, that CMS monitor the progress of the 
industry in implementing the standards, and develop an extended 
adoption timeframe as warranted.
    Response: Section 1840D-4(e)(4)(D) of the Act requires that final 
e-prescribing standards be promulgated by the Secretary by April 1, 
2008, with implementation no more than 1 year following that date, 
which would place the latest possible implementation date at April 1, 
2009. We agree that, based on comments received, adoption of these 
standards with the 1 year compliance date imposes no undue burden on 
the industry, and concur with commenters who supported the proposed 1 
year compliance date.
    Based on industry feedback, numerous e-prescribing software systems 
now using NCPDP SCRIPT 8.1 have been certified for use by electronic 
prescribing networks. The NCPDP Formulary and Benefits 1.0 standard is 
based on a proprietary transaction developed by RxHub, which is 
currently being used to communicate this information in many e-
prescribing products. The NCPDP SCRIPT 8.1 Medication History Standard 
is already contained in NCPDP SCRIPT 8.1, which is in widespread use. 
We anticipate that any e-prescribing software vendor or service has 
already, or will provide, these standards upgrades as part of a monthly 
subscription charge or annual maintenance fee, and that it would not 
require massive systems changes that would be overly burdensome. We 
have received no extensive stakeholder or vendor feedback that upgrades 
to current e-prescribing systems are more burdensome than installations 
of new e-prescribing systems. There will always be modifications to 
standards to which e-prescribing systems must be retrofitted, and we 
trust that industry software vendors will anticipate these 
modifications and accommodate standards upgrades to make their use by 
existing customers as smooth and seamless a transition as possible. We 
cannot delay the implementation date for the standards adopted under 
section 1860D-4(e)(4)(D) of the Act, which is set by statute, and 
continue to believe that 1 year is adequate time to accomplish any 
system changes necessitated by the adoption of these final standards. 
However, we will monitor industry feedback relative to their ability to 
meet the 1 year compliance timeframe and determine the need for any 
other action based on that information within the applicable statutory 
parameters.
    We are adopting a compliance date of 1 year after publication of 
the final standards as proposed. Therefore, to clarify the compliance 
dates for the revised and existing standards, we have revised Sec.  
423.160(b) as follows:
    <bullet> Redesignated the proposed paragraphs (b)(1) through (b)(5) 
(we proposed to add new paragraphs (b)(3) through (b)(5)) as paragraphs 
(b)(2) through (b)(6).
    <bullet> Added a new paragraph (b)(1) that identifies the 
compliance dates for each standards in paragraphs (b)(2) through 
(b)(6).
    <bullet> In newly redesignated (b)(2) (the prescription standard), 
revised the standard to separately identify the NCPDP SCRIPT 8.1 and 
NCPDP SCRIPT 5.0 based on the compliance dates of these standards.

C. Related Issues Included in and Analysis and Response to Public 
Comments for the November 16, 2007 Proposed Rule

    In the November 16, 2007 proposed rule, we requested comments on 
various issues related to the e-prescribing process. We received 
numerous comments on those and other issues and we discuss those 
comments and our responses below.
1. Fill Status Notification (RxFill)
    In the November 16, 2007 proposed rule, we explained that the Fill 
Status Notification within the NCPDP SCRIPT 8.1 enables a pharmacy to 
notify a prescriber when the prescription has been dispensed, partially 
dispensed, or not dispensed. The pilot test demonstrated that the 
standard was technically capable of performing this function, but pilot 
sites questioned whether prescribers would be inundated with data, and 
dispensers would be burdened by the business process changes that would 
ensue. We solicited industry comments regarding RxFill's usefulness.
    Comment: Many commenters noted that RxFill contains useful 
functionality, such as monitoring patient adherence to a medication 
regimen, or identifying drug diversion/abuse. However, most recommended 
that the transaction be used on a voluntary basis among trading 
partners, noting that the need for information provided by RxFill 
varies by prescriber. One commenter predicted that physician demand for 
this standard will increase dramatically following the rollout of the 
2008 Physician Quality Reporting Initiative (PQRI) measures, as 
performance on these measures is influenced by patient compliance with 
therapy.
    Several commenters stated that the NCPDP SCRIPT 8.1 Medication 
History Standard offers prescribers and dispensers similar but richer 
information, making RxFill unnecessary.
    A number of commenters noted that there were business process and 
implementation issues associated with RxFill. Others noted shortcomings 
in the standard, such as omission of features such as pharmacy receipt, 
patient pick up, reason for refusal of fill, and the placement of the 
order in the prescription filling process. They recommended additional 
analysis and testing prior to adoption.
    Response: As stated in the November 16, 2007 proposed rule, we 
previously referenced industry feedback that had indicated that the 
adoption of RxFill ``may cause an unnecessary administrative burden on 
prescribers and dispensers'' as a basis for not proposing the adoption 
of RxFill. This feedback was derived from the findings contained in the 
report to Congress on the results of the CY 2006 e-prescribing pilot 
(http://www.healthit.ahrq.gov/erxpilots). The report noted that the 
industry feared that adoption of the RxFill standard for electronic 
fill status notification transactions might result in increased 
``administrative workflow''

[[Page 18927]]

issues, namely being inundated with fill status notifications every 
time a patient picked up (or conversely, did not pick up) a 
prescription. However, it is now clear from the comments received in 
response to the November 16, 2007 proposed rule that the industry, upon 
further consideration, now perceives there to be no administrative 
burden associated with the adoption of the RxFill standard. This is a 
result of the realization by the industry that the prescriber would 
have to use their e-prescribing system to electronically ``flag'' or 
switch on the fill status notification transaction for those patients 
whose medication adherence they wish to monitor. When a patient picks 
up a prescription at the pharmacy, they likely sign an electronic 
signature log. In instances in which the prescriber has switched on the 
fill status notification transaction in their eRx system, this 
electronic signature triggers a pharmacy software system update which, 
in turn, would trigger a fill status notification message using the 
RxFill standard to be sent back to the prescriber. Prescriber comments 
in response to the proposed rule indicates that they perceived real 
value in RxFill for prescribers whose patients with chronic conditions 
may benefit from closer medication adherence monitoring. In addition, 
the pilot demonstrated that RxFill supports the transactions for which 
it was tested. Given the voluntary nature of e-prescribing for 
dispensers and prescribers under Medicare Part D, prescribers can 
choose whether or not they want to avail themselves of the information 
that use of this standard in the electronic Fill Status Notification 
transaction would provide, and voluntarily incur costs, if any, 
associated with its use. Therefore, we will revise Sec.  423.160(c) and 
add a paragraph (M) to Sec.  423.160(b)(2)(ii) to adopt the Rxfill 
standard by adding the prescription Fill Status Notification and its 
three business cases; Prescription Fill Status Notification 
Transaction--Filled, Prescription Fill Status Notification 
Transaction--Not Filled, and Prescription Fill Status Notification 
Transaction--Partial Fill) to provide for the communication of fill 
status notification of Medicare Part D prescription drugs for Medicare 
Part D eligible individuals, among Medicare Part D sponsors, 
prescribers and dispensers, to the list of transactions for which NCPDP 
SCRIPT 8.1 is used.
    Comment: Several commenters who supported RxFill's adoption 
suggested modifications that they believed might make it less 
burdensome to providers. These included the suggestion of identifying 
only key categories of drugs, such as blood pressure or diabetes 
medications, that would trigger an RxFill notification to a provider 
from a pharmacy; or an RxFill notification if a patient did not pick up 
an e-prescribed prescription at their pharmacy within one week to 10 
days after its transmission. One commenter also suggested the use of 
RxFill as a way to auto-populate medication history fields.
    Response: We expect that increased use of RxFill will allow the 
industry to identify a variety of functional and business flow 
improvements that could be incorporated through the standards 
maintenance process. The Department will continue to monitor the 
further development of, and revisions to, this standard and will 
consider updating the adopted standard when and as appropriate.
2. RxNORM, Structured and Codified Sig, and Prior Authorization
    In the proposed rule we identified three of the six initial 
standards that the pilot results showed were not ready for adoption: 
RxNORM, NCPDP Structured and Codified Sig 1.0, and the Prior 
Authorization Standard. We also noted that RxFill was technically ready 
for adoption, but as previously discussed, we were unsure as to 
industry's desire to adopt it as a standard. As a result, we did not 
propose to adopt these standards, but we solicited public comment on 
this decision.
    Comment: Most commenters agreed that the standards for NCPDP 
Structured and Codified Sig 1.0, clinical drug terminology (RxNorm) and 
the Prior Authorization Standard were technically unable to convey the 
needed information and lacked adequate industry experience. Only one 
commenter asserted that all six initial standards tested in the CY 2006 
pilot could feasibly be implemented by 2009.
    Response: We agree that these standards are not ready for 
implementation, and are not adopting them at this time.
    Comment: Many commenters stressed the potential value of these 
standards, and urged us to work actively with the industry to promptly 
mitigate the problems and concerns with the standards. Commenters also 
noted that there are efforts underway to bring industry participants 
together for further analysis and testing of RxNorm, NCPDP Structured 
and Codified Sig 1.0, and the Prior Authorization Standard, to expand 
upon and bring to completion the work begun in the CY 2006 e-
prescribing pilot. Several commenters asked that CMS include language 
``in the standards that commits it (CMS) to development and pilot 
testing of the Prior Authorization Standard.''
    One commenter who was familiar with the pilot of the initial 
standards stated that many of the shortcomings of RxNorm that were 
identified in the pilot test were focused on difficulties in conveying 
information about drug delivery devices and packages, and not the 
overall function of the standard in other contexts. They said that 
while there may have been instances of unresolved synonymy, that at 
least half of them, if not all of them, have already been resolved.
    Commenters stated that they believed the Prior Authorization 
Standard is an inefficient, time consuming process that is a source of 
frustration for both physicians and patients, and a process that is 
ripe for improvement. One commenter recommended additional research on 
the Prior Authorization Standard to alleviate the manual administrative 
burden associated with the high volume of prior authorizations in the 
long-term care setting.
    Response: One commenter asked that CMS include language in the 
standards that commits it to development and pilot testing of the prior 
authorization standard. We note that standards are guidelines, rules or 
characteristics for activities, and are the purview of the standards 
development organizations and not CMS; therefore, the inclusion of such 
language as part of the technical specifications of a standard would be 
inappropriate.
    We agree that these three standards would contribute significant 
value to e-prescribing, and will continue to work with the SDOs, 
industry, and interested stakeholders toward readying these standards 
for consideration by the Secretary for adoption as final standards for 
e-prescribing Medicare Part D covered drugs for Medicare Part D 
eligible individuals.
3. Exemption for Computer-Generated Facsimiles
    The November 2, 2005 foundation standards final rule (70 FR 67568) 
exempted entities that transmit prescriptions or prescription-related 
information by means of a computer-generated facsimile from the 
requirement to use the adopted NCPDP SCRIPT standard for the 
transactions that, prior to this rule, were listed at Sec.  
423.160(b)(1). In response to industry concerns that the exemption was 
hindering the movement toward computer-to-computer e-prescribing, we 
included a proposal to eliminate the exemption in the CY 2008 Physician 
Fee Schedule proposed rule (July 12, 2007

[[Page 18928]]

(72 FR 38122, 38196)), effective January 2009. In the November 27, 2007 
CY 2008 Physician Fee Schedule Final Rule with Comment, 72 FR 66334, we 
modified the computer-generated facsimiles exemption, but did not 
eliminate it entirely, allowing computer-generated facsimiles to be 
used in the event that an EDI-transmitted prescription fails due to 
network transmission failures or similar, temporary communication 
problems that are episodic and nonrepetitive in nature.
    In the November 16, 2007 proposed rule (72 FR 64902) we referenced, 
but did not solicit comments on our inclusion of a proposal to remove 
the exemption for computer-generated facsimiles in the CY 2008 
Physician Fee Schedule proposed rule (72 FR 8196). However, we received 
comments on this provision in response to our solicitation for comments 
on the November 16, 2007 proposed rule.
    Comment: Several commenters requested that we not eliminate the use 
of all facsimiles (including computer-generated facsimiles) as a means 
of transmitting prescriptions and prescription-related information 
between provider and pharmacy, and vice versa. Commenters stated that 
if all facsimiles of prescriptions and prescription-related information 
were eliminated, it would constitute a burden on dispensers and 
provider offices that would have to revert to paper, which would result 
in decreased productivity and increased costs. Another commenter stated 
that use of secure facsimile via computer to computer link or computer 
to facsimile link, should be allowed when the NCPDP SCRIPT 8.1 standard 
transmission is ``not available'' to all prescribers.
    Two commenters stated that the elimination of the exemption for 
computer-generated facsimiles should be delayed until January 2010; and 
that the provisions of the final rule should be modified to allow its 
use when transmitting prescription or prescription-related information 
to dispensers and facilities that do not e-prescribe, or when 
prescribing controlled substances.
    Response: First, we note that transmitting paper prescriptions from 
one facsimile machine to another for Medicare Part D covered drugs for 
Medicare Part D eligible individuals, as described by one of the 
commenters, does not constitute electronic data interchange. Such paper 
faxing is not subject to the Medicare Part D e-prescribing standards 
adopted for the e-prescribing of Medicare Part D covered drugs for 
Medicare Part D eligible individuals.
    In the July 2007 proposed rule, we did not propose the elimination 
of the use of paper facsimiles as a way to transmit prescriptions and 
prescription-related information. Rather, we proposed eliminating the 
exemption for computer-generated e-prescribing facsimiles from the 
adopted NCPDP SCRIPT standard for the communication of prescriptions 
and prescription-related information between prescribers and dispensers 
for the transactions listed at Sec.  423.160(b)(1)(i) through (xii). In 
the final rule, we acknowledged that computer-generated facsimiles may 
be needed for prescriptions which fail due to network transmission 
failures or similar, temporary communication problems that are episodic 
and non-repetitive in nature and preclude the use of NCPDP SCRIPT. 
However, this exception applies only to transmission failures, and not 
simply to those who choose to use e-prescribing software that does not 
employ the NCPDP SCRIPT standard. We assume the commenter is referring 
to such a situation when referencing that computer to computer link or 
computer to facsimile link, should be allowed when the NCPDP SCRIPT 8.1 
standard transmission is ``not available'' to all prescribers.
    During the time period allotted for comment following the issuance 
of the July 2007 proposed rule we received several comments regarding 
the elimination of the exemption for computer-generated facsimiles. A 
number of commenters disagreed with the lifting of the exemption, 
indicating that its elimination could be problematic in performing a 
certain e-prescribing function, that of prescription refill requests, 
but only one of those commenters offered substantiation. Absent receipt 
of any other industry feedback on the impact of the elimination of 
computer-generated facsimiles on prescription refill requests, and not 
considering these comments to constitute widespread concern regarding 
the refill request function, we proceeded in CY 2008 Physician Fee 
Schedule final rule (72 FR 66334) to amend the exemption to eliminate 
the exemption except, as noted above, in cases of network failure. 
Taken in the aggregate, we determined that the 1 year time period was 
adequate time during which providers and dispensers would have the 
opportunity to change over to conducting true e-prescribing (computer 
to computer EDI) and that costs would be mitigated due to the growing 
volume of e-prescriptions and practice of e-prescribing, with a 
commensurate reduction in transmission, software and other costs during 
that 1 year time period. These changes are due to become effective in 
January 2009.
    Since that time, we have been informed by the industry that the 
elimination of the exemption for computer-generated facsimiles would 
have a significant adverse effect in the electronic transmission of 
prescription refill requests, and interested stakeholders have provided 
us with more specific information regarding the economic and workflow 
impact that will result from the modification of the exemption that was 
not forthcoming during the public comment period. In particular, 
dispensers have indicated that they use computer-generated facsimiles 
for a significant volume of refill requests, and that eliminating the 
exemption would require them to revert to paper facsimiles for those 
transactions. We are now in the process of examining and considering 
these data, and may soon issue a proposed solution through the 
rulemaking process that we intend to finalize prior to the scheduled 
January 2009 effective date. Through this process the public will, once 
again, be afforded an opportunity to offer public comment.
4. Elimination of the Exemption for Non-Prescribing Providers (Long 
Term Care)
    In the proposed rule (72 FR 64902 through 64906), we noted that, 
because NCPDP SCRIPT was not proven to support the workflows and legal 
responsibilities in the long-term care setting, entities transmitting 
prescriptions or prescription-related information where the prescriber 
is required by law to issue a prescription for a patient to a non-
prescribing provider (such as a nursing facility) that in turn forwards 
the prescription to a dispenser (``three-way prescribing 
communications'' between facility, physician, and pharmacy), were 
provided with an exemption from the requirement to use NCPDP SCRIPT 5.0 
in transmitting such prescriptions or prescription-related information. 
We also noted the results of the CY 2006 e-prescribing pilot relative 
to the use of NCPDP SCRIPT 8.1 in the long-term care setting, namely 
that workarounds were needed to accommodate the unique workflow needs 
in long term care. We conveyed that, when an updated version of the 
NCPDP SCRIPT standard in the long-term care setting, we would consider 
removing the current exemption. We then solicited comments on the 
impact and timing of lifting this exemption.

[[Page 18929]]

    Comment: Commenters generally acknowledged that progress is being 
made toward accommodating the specific needs of the long term industry 
in e-prescribing standards, and supported the eventual elimination of 
the long-term care exemption to the NCPDP SCRIPT standard. They noted 
that, while NCPDP SCRIPT 8.1 may work well in most instances, each 
higher level of NCPDP SCRIPT (10.0 or higher) contains more 
functionality that ultimately will build to that which will be needed 
for long-term care applications. They noted that one of these higher 
level standards should be the designated standard for use if/when the 
exemption for e-prescribing in the long-term care setting is 
eliminated. Several commenters stated that the exemption for e-
prescribing in long-term care could be lifted upon adoption of NCPDP 
SCRIPT version 10.2. This newer version of the standard is ANSI 
approved, and, according to these commenters, meets the basic e-
prescribing needs of the long-term care industry. Another commenter 
recommended adoption of NCPDP SCRIPT 10.3, citing its expanded ability 
to support resupply requests, fill status and census notification 
messages in the long-term care setting. Still other commenters insisted 
that CMS should adopt NCPDP SCRIPT 10.5 for use in e-prescribing in the 
long-term care setting. Commenters also stated that they anticipated 
that the Certification Commission for Healthcare Information Technology 
(CCHIT) would begin work in 2009 to launch certification of electronic 
health records products for long-term care, and that in preparation for 
that activity, national standards for e-prescribing for long-term care 
will need to be in place. One commenter stated that the long-term care 
exemption should remain in place until such time as e-prescribing 
standards can support the needs of long-term care, taking in account 
medication management across multiple care settings and providers. 
Another stated that the exemption should not be lifted until all 
standards for e-prescribing had been adopted, and the industry had 
conducted adequate testing. One commenter recommended that CMS should, 
with this final rule, remove the current exemption for long term care 
entities from using the Medicare Part D e-prescribing standards, 
effective with the compliance date of this rule.
    Response: While NCPDP SCRIPT 10.2 was approved in July 2007, NCPDP 
SCRIPT 10.3 is not scheduled for approval until April 2008, and NCPDP 
SCRIPT 10.5 is not scheduled for approval until July 2008. We agree 
with commenters that NCPDP SCRIPT 10.5 appears to meet all of the long-
term care business needs that have been identified to date, and 
therefore would be appropriate for adoption. When NCPDP SCRIPT 10.5 is 
approved by NCPDP, we will review it with the purpose of ascertaining 
whether it is backward compatible with the adopted standard, and thus a 
candidate for the streamlined process outlined earlier that would 
permit its use in place of NCPDP SCRIPT 8.1, or if rulemaking will be 
required. We anticipate eliminating the long-term care exemption when 
rulemaking is utilized to retire the then-existing standard in favor of 
version 10.5. From feedback received from the industry, NCPDP SCRIPT 
10.2 meets the basic needs of the long-term care industry relative to 
e-prescribing, including the ``need no later than'' date/time added for 
special delivery needs. NCPDP SCRIPT 10.3 features this as well as 
additional functionality, including medication history source and fill 
number information for de-duplicate processing. NCPDP SCRIPT 10.5 
features all of the functionality of these previous NCPDP SCRIPT 10.0 
and above versions, and supports federal medication terminologies code 
sets. We agree with commenters that NCPDP SCRIPT 10.5 appears to meet 
all of the long-term care business needs identified to date. Therefore, 
it would be appropriate to adopt the standard with the most robust 
functions, since this is what vendors will incorporate into their 
products. As we indicated in the previous discussion, once NCPDP SCRIPT 
10.5. is balloted and approved by the NCPDP, and then approved by the 
Accredited National Standards Institute (ANSI), we will review it with 
the intent of moving forward if appropriate. However, we note that 
long-term care facilities may voluntarily use the standard at any time, 
and we encourage its adoption in that setting.
5. Electronic Prescribing for Controlled Substances
    Comment: Several commenters noted that all categories of 
prescriptions--including controlled substances--should be able to be 
electronically prescribed, and that to require handwritten 
prescriptions for controlled substances would necessitate a dual paper/
electronic system which would be a major barrier to adoption. For 
example, a physician noted that one out of every ten prescriptions he 
wrote could not be e-prescribed because they were for controlled 
substances. One commenter recommended that it be mandated that 
prescribers should check the identification of patients before 
prescribing for them electronically.
    Response: We agree that the inability to e-prescribe controlled 
substances can hinder broader e-prescribing adoption. The Drug 
Enforcement Administration (DEA) which has responsibility for 
administering the Controlled Substances Act, currently requires that 
controlled substances be prescribed on paper with a written signature. 
We continue to work with the DEA toward revised requirements that would 
permit such e-prescribing while maintaining safeguards against drug 
diversion.
6. Diagnosis on Prescription
    Comment: One commenter proposed that Medicare require diagnosis 
information on electronic prescriptions, arguing that this would allow 
the pharmacy to evaluate the drug prescribed against the diagnosis and 
thus identify potential errors.
    Response: NCPDP SCRIPT 8.1 does contain an optional field for 
diagnosis, but requiring its use is outside the scope of our proposed 
rule. We have not solicited nor have we received any industry feedback 
on this issue, and therefore cannot attest as to the industry's use 
and/or perceived value of this feature.
7. Issues Related to State Law
    Comment: One commenter urged CMS to take a broader view of the 
authority to preempt state law than we outlined in the November 7, 2005 
final rule (70 FR 67574 through 67576). They stated that the lack of 
national applicability of the standards we adopt serves as a barrier to 
broader adoption of e-prescribing.
    Response: In the November 7, 2005 final rule, we identified four 
categories of State law that restrict the ability to carry out Medicare 
Part D standards, and which pertain to electronic transmission of 
prescription-related information. We encouraged States to consider the 
impact on Federal e-prescribing standards of laws that could directly 
or indirectly impede the adoption of e-prescribing technology and 
standards on a statewide and national basis. We also urged States to 
enact legislation consistent with, and complementary to, the goals of 
the MMA's e-prescribing provisions. This included removing existing 
barriers to e-prescribing.
    The commenter did not identify any specific State laws that stand 
as an obstacle to Congress's goal of implementing uniform e-prescribing 
standards that are to be used in e-prescribing of Medicare Part D 
covered drugs for Medicare Part D

[[Page 18930]]

eligible individuals. Therefore, we will not re-evaluate the scope of 
preemption at this time. We would consider recommendations related to 
any specific statute or regulation if such laws and recommendations are 
brought to our attention at some point in the future.
    Comment: Another commenter noted that some State laws restrict 
communication of ``sensitive'' medication information (for example, 
drugs indicative of HIV status, substance abuse, genetic disorder, 
etc.). The commenter recommended that we preempt any State or local 
statute or regulation that would limit disclosure of a patient's 
medication history, noting that these laws and regulations are often 
inconsistent and hard to find, impeding the ability of vendors to 
display this information to the prescriber at the point of care.
    Response: We acknowledge that medication history data will be most 
valuable to the prescriber when it is complete. However, these laws do 
provide patients with additional safeguards for certain categories of 
medical information. We believe that, as medication history becomes 
more available to prescribers, these limitations will be identified, 
and may be appropriate for future regulation. We will not, however, 
address this issue at this time since it is outside of the scope of 
this final rule.
8. Incentives to e-prescribing
    Comment: A number of commenters suggested that CMS should support 
adequate financial incentives, and should itself provide financial 
incentives, to physicians and dispensers to assist them with their 
investments in, and implementation of, e-prescribing.
    Response: The Administration supports the adoption of health 
information technology as a normal cost of doing business. However, 
other means of encouraging the adoption of e-prescribing are already in 
place, such as regulations that provide a safe harbor under the federal 
anti-kickback statute and an exception under the federal Physician 
Self-Referral (``Stark'') Law for certain arrangements involving the 
donation of e-prescribing and electronic health records technology. 
These regulations pave the way for increased adoption of health 
information technology by physicians and other health care providers. 
We also note that providers may participate in, and receive incentives 
through, the 2008 Physician Quality Reporting Initiative (PQRI). This 
project includes measures for patient compliance with therapy, which 
can be supported through the utilization of e-prescribing transactions 
such as fill status notification.
9. ``Pharmacist'' versus ``Dispenser''
    Comment: One comment included a recommendation that we refer to 
``pharmacists'', rather than ``dispensers'' in the final rule because 
referring to a pharmacist as a ``dispenser'' ignores the clinical 
component of pharmacist-patient interactions.
    Response: We fully recognize and appreciate the importance of the 
pharmacist-patient relationship, which provides critical clinical and 
educational support to the patient. However, we wish to clarify that we 
have defined the term ``dispenser'' at 42 CFR 423.159 to mean a person 
or other legal entity licensed, registered, or otherwise permitted by 
the jurisdiction in which the person practices or the entity is located 
to provide drug products for human use by prescription. Based on this 
definition, we will continue to use the term ``dispenser'' when 
referencing these entities.
    Comment: A number of commenters stated that the benefits of e-
prescribing will not be fully realized until e-prescribing is included 
among CCHIT-certified interoperable electronic health records (EHR) 
featuring robust decision-making software.
    Response: We recognize the immediate benefits that e-prescribing as 
a stand-alone function can bring to the health care community. However, 
we support the Administration's health information technology 
initiatives including EHR certification and standards harmonization, 
and agree that the full benefits of e-prescribing will be realized 
through the adoption of certified interoperable electronic health 
records. Additionally, CMS has participated in the development of the 
medication management use case that will ultimately result in 
harmonized standards and support interoperable e-prescribing 
functionality.
10. Mandatory e-prescribing
    Comment: One commenter expressed support for the recommendation 
from the American Health Information Community (AHIC) that the 
Secretary seek authority to mandate e-prescribing under Medicare. 
Another commenter opposed mandating e-prescribing, and another 
suggested it not be mandated until at least 50 percent of prescribers 
and dispensers are e-prescribing.
    Response: Currently, e-prescribing under Medicare Part D, as 
outlined in the MMA, is voluntary for prescribers and dispensers. 
Medicare Part D sponsors must support the use of these standards in e-
prescribing transactions. The breadth of this final rule is limited to 
that statutory authority.
11. Exemption for e-prescribing in a Closed Enterprise
    Comment: Several commenters requested clarification regarding 
whether prescriptions transmitted within a closed enterprise (for 
example, from prescribers within an HMO plan to a plan-owned pharmacy) 
are exempted from the use of the NCPDP SCRIPT standard.
    Response: Entities may use either HL7 messages or the adopted NCPDP 
SCRIPT standard to conduct internal electronic transmittals (that is, 
when all parties to the transaction are employed by, and part of, the 
same legal entity) for the specified NCPDP SCRIPT transactions as 
described above.
12. Commercial Messaging
    Comment: One commenter said that commercially oriented messages 
should not be permitted in e-prescribing until adequate standards for 
content, integrity, and display of these messages have been developed.
    Response: We agree that there needs to be an appropriate balance 
between providing appropriate information at the point of care, and 
messaging that might steer the prescriber to use specific drugs and 
therapeutics as specified at section 1860 D-4(e)(3)(D) of the Act. We 
also recognize the potential for inappropriate messaging to occur in e-
prescribing and share concerns about how the provision of certain 
information may unduly influence physician prescribing patterns. For 
example, inappropriate messages include those that would steer the 
filling of a prescription to a particular mail order pharmacy versus a 
retail pharmacy, and electronic ``detailing'' messages from a 
manufacturer promoting a particular brand or brand-name drug over and 
above that which the Medicare Part D sponsor requires or to which it 
gives preference. Moreover, if a drug manufacturer engages in this 
practice to promote unapproved uses for a drug, this could be a 
violation of the Federal Food, Drug, and Cosmetic Act. We will monitor 
this as an operational issue and will provide guidance to Medicare Part 
D sponsors at a future date and, if necessary, propose more specific 
standards for messaging.
13. E-prescribing Errors
    Comment: One commenter noted an increasing number of new errors are 
associated with electronic prescribing. Computerized Physician Order 
Entry (CPOE) systems have the potential to contribute to errors in 
certain situations,

[[Page 18931]]

such as the selection of a wrong drug or dose selection from a drop 
down menu that a dispenser, if they are aware of the error, must then 
communicate to the prescriber to address. The commenter urged us to 
consider the potential for new types of errors as the industry 
implements e-prescribing standards and clarify in the final regulation 
ways the agency will address or prevent such errors.
    Response: We cite this commenter's example to raise the point that 
no system, whether electronic or paper, is infallible. Just as in paper 
prescribing, errors can still take place. E-prescribing helps to 
substantially mitigate some risk, such as illegible prescriber hand 
writing on a paper script that could be mis-interpreted by the 
dispenser; and medication history, which supports the reduction of the 
occurrence of adverse drug events at the prescriber level. We would 
expect that e-prescribing software systems would employ safeguards and 
redundancies, such as multiple prompts asking for prescriber review and 
confirmation of non-conforming information, prior to transmission.
14. Privacy and Medication History
    Comment: Two commenters expressed concern with privacy and 
medication history. One inquired as to who would have access to 
medication history under the HIPAA Privacy Rule; the other stated that 
the HIPAA notice of privacy practices should make it very clear that e-
prescribing is taking place and that prescription information is part 
of one's medical record. One commenter felt that individuals should 
have the right not to participate in either e-prescribing or electronic 
medical records, and to have the right to determine who has access to 
their prescription histories.
    Response: Patients can always ask their physicians to refrain from 
requesting their personal medication histories as derived from the 
patient's Medicare Part D sponsor. While there is no legal guarantee a 
provider would agree to their request, patients may always ask that 
their prescribers only use paper prescriptions when prescribing for 
them.
15. Regular Cycle of Rulemaking
    Comment: Two commenters suggested that CMS consider creating a 
regular cycle of rulemaking in order to keep standards adoption in sync 
with the rapid pace of standards development by the industry. For 
example, CMS could issue a new notice of proposed rulemaking for e-
prescribing standards every 2 years in a particular month.
    Response: The creation of a regular cycle of rulemaking to adopt e-
prescribing standards would restrict CMS' ability to adopt standards 
when they meet the requisite objectives, functionality and other 
criteria required that CMS employs in deciding whether to adopt e-
prescribing standards. We further reiterate that in response to 
industry's desire for a streamlined updating process that could keep 
pace with changing business needs, as previously discussed in this 
final rule, we adopted a process for the Secretary to adopt subsequent 
version(s) of a standard for voluntary use where the new version(s) are 
backwards compatible with the adopted standard. The industry's request 
for a regular cycle of rulemaking clearly indicates a desire to adopt 
standards as soon as possible, which is contrary to a bi-annual 
rulemaking process.
16. Medicaid Prescription Requirements
    Comment: One commenter raised the issue that federal Medicaid 
regulations require a prescriber's hand written authorization for 
dispensers to dispense brand name drugs when an equivalent generic is 
available, which would appear to be in conflict with federal e-
prescribing guidelines.
    Response: The issue that the commenter raised applies to 
prescriptions obtained under their Medicaid benefits. Under section 
1860D-4(e) of the Act, e-prescribing regulations apply only to covered 
Medicare Part D covered drugs prescribed for Medicare Part D eligible 
individuals. In those instances in which Medicare Part D provides 
prescription drug coverage for beneficiaries who receive their Medicaid 
prescription drug benefits through the Medicare program (dual-eligible 
beneficiaries), Medicare Part D e-prescribing regulations would apply.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 30-day notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
submitted to the Office of Management and Budget (OMB) for review and 
approval. In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comment on the following issues:
    <bullet> Whether the information collection is necessary and useful 
to carry out the proper functions of the agency.
    <bullet> The accuracy of the agency's estimate of the information 
collection burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on each of these issues for 42 CFR 
423.160, ``Standards for Electronic Prescribing.''
    The emerging and increasing use of health care electronic data 
interchange (EDI) standards and transactions have raised the issue of 
the applicability of the PRA. It has been determined that a regulatory 
requirement mandating the use of a particular EDI standard constitutes 
an agency-sponsored third-party disclosure as defined under the PRA.
    As a third-party disclosure requirement subject to the PRA, 
Medicare Part D sponsors must support and comply with the adopted e-
prescribing standards relating to covered Medicare Part D drugs, 
prescribed for Medicare Part D eligible individuals.
    However, the requirement that Medicare Part D sponsors support 
electronic prescription drug programs in accordance with standards set 
forth in this section, as established by the Secretary, does not 
require that prescriptions be written or transmitted electronically by 
prescribers or dispensers. These entities are required to comply with 
the adopted standards when they electronically transmit prescription or 
prescription-related information for covered transactions.
    Testimony presented to the NCVHS indicates that most health plans/
PBMs currently have e-prescribing capability either directly or through 
contract with another entity. Therefore, we do not believe that 
utilizing the adopted standards will impose an additional burden on 
Medicare Part D sponsors.
    Since the standards that have been adopted are already familiar to 
industry, we believe the requirement to utilize them in covered e-
prescribing transactions constitutes a usual and customary business 
practice. As such, the burden associated with the requirements is 
exempt from the PRA as stipulated under 5 CFR section 1320.3(b)(2). As 
required by section 3504(h) of the Paperwork Reduction Act of 1995, we 
have submitted a copy of this document to OMB for its review of these 
information collection requirements.

[[Page 18932]]

V. Regulatory Impact Analysis

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, as further amended, Regulatory Planning 
and Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, 
Pub. L. 96-354), section 1102(b) of the Social Security Act, the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4), 
Executive Order 13132 on Federalism and the Congressional Review Act (5 
U.S.C. 804(2)).
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties, and as further amended by 
Executive Order 13422) directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Among other things, a 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year).
    We estimate that this rulemaking will have an annual benefit on the 
economy of $100 million or more and will have ``economically 
significant effects.'' We believe that prescribers and dispensers that 
are now e-prescribing have already largely invested in the hardware, 
software and connectivity necessary to e-prescribe. We do not 
anticipate that the retirement of NCPDP SCRIPT 5.0 in favor of NCPDP 
SCRIPT 8.1 for the transactions listed at Sec.  423.160(b)(2), the 
adoption of the NCPDP SCRIPT 8.1 Medication History Standard for the 
exchange of medication history information, the adoption of the NCPDP 
Formulary and Benefits 1.0 for formulary and benefits transactions, the 
adoption of NPI for use in e-prescribing transactions and the adoption 
of NCPDP SCRIPT 8.1 (RxFill) for electronic fill status notification 
purposes will result in significant costs. We solicited industry and 
other interested stakeholder comment and input on this issue.
    We anticipate that the ability to utilize electronic formulary and 
benefits inquiries will result in administrative efficiencies and 
increased prescribing of generic drugs versus brand name drugs, and the 
access to medication history at the point of care will result in 
reduced adverse drug events (ADEs). The benefits accruing from using 
the adopted standards in these transactions will have an economically 
significant effect on Medicare Part D program costs and patient safety. 
As this is a significant rule under Executive Order 12866, we are 
required to prepare a regulatory impact analysis (RIA) for this final 
rule.
    The Regulatory Flexibility Act (RFA) requires agencies to analyze 
options for regulatory relief of small entities. For purposes of the 
RFA, small entities include small businesses, nonprofit organizations, 
and small governmental jurisdictions. Most hospitals and most other 
providers and suppliers are small entities, either by nonprofit status 
or by qualifying as small businesses under the Small Business 
Administration's size standards (revenues of $6.5 million to $31.5 
million in any 1 year for the health care industry). States and 
individuals are not included in the definition of a small entity. For 
details, see the Small Business Administration's regulation that set 
forth the current size standards for health care industries at http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (refer to the 620000 series).
    Based on our initial analysis, we expect this rulemaking will not 
have a significant impact on a substantial number of small entities 
because, while many prescribing physician practices and independent 
dispensers would be small entities, e-prescribing is voluntary for 
prescribers and dispensers. For prescribers and dispensers that have 
already implemented e-prescribing, the adoption of NCPDP SCRIPT 8.1 
would in most cases be accommodated through software upgrades whose 
cost would already be included in annual maintenance fees. Medicare 
Part D sponsors are required to support e-prescribing, and may incur 
some costs to support the NCPDP Formulary and Benefits 1.0, the NCPDP 
SCRIPT 8.1 Medication History Standard, the NCPDP SCRIPT 8.1 standard 
for fill status notification (RxFill), and the National Provider 
Identifier (NPI). However, using the SBA revenue guidelines, the 
majority of Medicare Part D sponsors would not be considered small 
entities as they represent major insurance companies with annual 
revenues of over $31.5 million. We also do not anticipate that the 
requirement to use NPI in e-prescribing would have any effect on 
Medicare Part D sponsors, prescribers or dispensers as they likely are 
already using the NPI in HIPAA-covered transactions.
    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis if a rule may have a significant impact on the 
operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a core-bed 
Metropolitan Statistical Area and has fewer than 100 beds. This rule 
will not affect small rural hospitals because the program will be 
directed at outpatient prescription drugs covered under Medicare Part D 
and not drugs provided during a hospital stay. Prescription drugs 
provided during hospital stays are covered under Medicare Part A as 
part of Medicare payments to hospitals. Therefore, for purposes of our 
obligations under section 1102(b) of the Act, we are not providing an 
analysis.
    Comment: It was recommended by one commenter that CMS prepare a 
regulatory impact analysis for small rural hospitals, as this rule may 
have a significant impact on small rural hospitals that dispense 
discharge medication and ``after hours'' emergency medications to 
patients.
    Response: In the November 16, 2007 proposed rule (72 FR 64909), we 
considered how adoption of these standards might affect small rural 
hospitals. We determined that drugs dispensed to Medicare beneficiaries 
by small rural hospitals are, for the most part, drugs dispensed in an 
inpatient setting and as such, are covered under Medicare Part A. The 
smaller volume of Medicare Part D drugs that might be dispensed as 
noted by the commenter did not constitute a major impact to the extent 
that it that would necessitate a regulatory impact analysis.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2008, that 
threshold is approximately $127 million. Since only Medicare Part D 
sponsors are required to support e-prescribing, this rule does not 
include any mandate that would result in this spending by State, local 
or tribal governments. We acknowledge that there may be transaction 
costs borne by payers and pharmacy benefit managers (PBMs), but, based 
on our analysis, they would fall below the $127 million threshold. We 
would expect that many Medicare Part D sponsors already support the 
exchange of formulary, benefits, and medication history, because the 
standards we are proposing are based on proprietary transactions 
originally developed by RxHub which are already in use in the current 
e-prescribing environment.

[[Page 18933]]

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a rule that imposes substantial 
direct costs on State and local governments, preempts State law, or 
otherwise has Federalism implications. No State categorically bars e-
prescribing. In recent years, many States have more actively legislated 
in this area. Should a State law be contrary to the Medicare Part D e-
prescribing standards, or should it restrict the ability to carry out 
the Medicare Part D e-prescribing program, section 101 of the MMA 
established preemption of that State law at section 1860D-4(e)(5) of 
the Act. It provides the following:
    (5) Relation to State Laws. The standards promulgated under this 
subsection shall supersede any State law or regulation that--
    (A) Is contrary to the standards or restricts the ability to carry 
out this part; and
    (B) Pertains to the electronic transmission of medication history 
and of information on eligibility, benefits, and prescriptions with 
respect to covered Medicare Part D drugs under this part.
    For the same reasons given above, we have determined that States 
would not incur any direct costs as a result of this proposed rule. We 
believe that, taken as a whole, this final rule would meet these 
requirements. We have consulted with the National Association of Boards 
of Pharmacy directly and through participation in NCVHS hearings, and 
we believe that the approach we suggested provides both States and 
other affected entities the best possible means of addressing 
preemption issues. This section constitutes the Federalism summary 
impact statement required under the Executive Order.
    The objective of this regulatory impact analysis is to summarize 
the cost and benefits of implementing the standards for the conversion 
from NCPDP SCRIPT 5.0 to NCPDP SCRIPT 8.1 at Sec.  423.160(b)(2); the 
adoption of final uniform standards for the electronic communication of 
prescription and prescription-related information on formulary and 
benefits, medication history, and prescription fill notification 
status; and the adoption of NPI for use as a health provider identifier 
in e-prescribing. The adoption of these standards for use in Medicare 
Part D e-prescribing will build upon the foundation standards e-
prescribing requirements that were published as a final rule on 
November 7, 2005 (70 FR 67568). That rule contained an impact analysis 
that addressed the costs associated with implementing the use of those 
foundation standards, and it also discussed, in concept, the benefits 
that will accrue from e-prescribing in general. In the November 7, 2005 
final rule (70 FR 67589), we noted that commenters had suggested that 
the estimated e-prescribing start-up costs for an individual physician 
to be at least $1,500 and perhaps in excess of $2,000. For average e-
prescribing software implementation, according to a 2003 Center for 
Information Technology Leadership (CITL) Report, ``The Value of 
Computerized Provider Order Entry'' (http://www.citl.org/research), a 
basic-e-prescribing system cost $1,248 plus $1,690 for annual support, 
maintenance, infrastructure and licensing costs. The total first year 
cost averaged approximately $3,000. The Journal of Healthcare 
Information Management has published that physicians reported paying 
user-based licensing fees ranging from $80 to $400 per month, although 
we believe through anecdotal information that these licensing fees have 
decreased over time to between $25 to $66 a month ($300 to $800 
annually). (For further discussion of the start-up costs associated 
with e-prescribing, see the November 7, 2005 final rule (70 FR 67589)). 
The impact analysis built upon the foundation rule analysis, and we 
referred to the foundation rule analysis to assure that costs and 
benefits were not counted twice.
    Comment: One commenter discussed CMS' assumptions regarding the 
cost of e-prescribing systems for physicians, especially those 
practices which have five or less physicians, which they categorize as 
small practices. One commenter suggested that CMS consider scaling the 
savings to be realized through e-prescribing according to practice 
size. Another comment was that CMS omitted opportunity costs, and that 
advanced e-prescribing systems that have more robust features differ 
significantly from basic systems and are therefore, more costly, which 
CMS did not take into account. They contend that CMS may have double 
counted licensing fees that were already included in overall cost 
figures, and that there are significant technology, training and 
upgrade costs, as well as significant differences between the cost of a 
T1 Internet access line in a rural versus urban area which the agency 
should take into account. As only three of the six initial standards 
were found to be technologically ready for use, they asked that the 
adoption of standards should continue to be voluntary for physicians, 
thus keeping their costs at a minimum. Another commenter also asked 
that CMS recognize additional costs related to processing e-
prescriptions, and the ongoing expenses incurred by prescribers for 
hardware/software and other associated costs.
    Response: In the impact analysis for the November 16, 2007 proposed 
rule, we attempted to address the cost and benefit of implementation of 
the two standards that were proposed for adoption at that time, namely 
medication history and formulary and benefits, and not that of e-
prescribing in general, so as not to double count costs already 
attributed to the implementation of the foundation standards. In the 
November 7, 2005 final rule (70 FR 67589), we considered the cost of e-
prescribing in general. At that time, all of the commenters suggested 
estimated start-up costs for an individual physician to be at least 
$1,500 and perhaps exceeding $2,000. This estimate would vary based on 
market share, covered lives and local market competition. Given that, 
we proffered a conservative estimate of $3,000, taking into account 
variations in products, level of adoption, etc., and industry feedback 
indicated that vendors often provided free and low cost handheld or 
similar devices. The Journal of Healthcare Information Management 
report cited by one commenter took this practice into account, but also 
noted that physicians reported paying user-based licensing fees ranging 
from $80 to $400 per month. We did not note that this cost was included 
in the overall cost of e-prescribing as cited in that report, nor at 
that time did we account for opportunity costs because e-prescribing 
for Medicare Part D is voluntary for providers and dispensers, and we 
received no feedback from industry and other interested stakeholders 
indicating that opportunity costs should be considered.
    As one commenter noted, The Journal of Healthcare Information 
Management also reported that in some instances prescribers had to 
invest in new or updated hardware, such as computer servers, and 
networking infrastructure to use an e-prescribing system, but again, 
that the amount varied significantly by product and level of adoption. 
Since that time, we note that the cost of new or updated hardware in 
particular has come down dramatically due to increased semi-conductor 
production, improved computer manufacturing methods and total factor 
productivity growth.\2\ One commenter said that e-prescribing requires 
a T1 data transmission line, which may be

[[Page 18934]]

true for very large practices, but if the mainstream physician practice 
constitutes less than five physicians, we believe that e-prescribing 
can be initiated by many physician practices without the installation 
of a T1 data transmission line.
---------------------------------------------------------------------------

    \2\ Congressional Budget Office, The Role of Computer Technology 
in the Growth of Productivity May 2002, http://www.cbo.gov/.
---------------------------------------------------------------------------

    We have acknowledged, and continue to acknowledge, that e-
prescribing has both initial and ongoing costs associated with it. 
Those include, and for the most part we have accounted for, some 
initial loss of productivity, hardware costs, software costs, training, 
etc., but with widespread e-prescribing, we anticipate that prescribers 
will eventually absorb these as a cost of doing business, much as they 
would any purchase of equipment. Additionally, provider costs for e-
prescribing are very much contingent on a wide variety of factors, 
including the size of the practice; whether an e-prescribing system 
under consideration for purchase is a stand-alone versus integrated 
into an electronic health record system; the level at which a provider 
enters into e-prescribing (in other words, entry-level necessitating 
the purchase of hardware/software, versus integrating into existing 
hardware/software); whether the provider is located in an urban versus 
rural area, and the related costs/availability of connectivity; the 
features, whether basic, intermediate or advanced, of any given e-
prescribing package; the number of patients seen per year, and the 
number of prescriptions written, etc. Physicians in some medical 
specialties (such as geriatrics or internal medicine) may regularly 
prescribe a higher volume of prescription drugs per patient due to 
severity of illness, multiple diagnoses, etc., versus other medical 
specialties, and thus realize more benefits through more frequent, 
repeated use. We also acknowledged in the proposed rule that benefits 
will not be immediately recognized, that benefits will accrue over a 
multi-year timeframe and that, with more widespread adoption, we 
anticipate that costs will come down, systems capabilities will be more 
robust, and the full benefits of e-prescribing will be realized.
    We again reiterate that nothing in the proposed rule or this final 
rule changes the tenet of section 101 of the MMA that e-prescribing 
Medicare Part D covered drugs for Medicare Part D eligible individuals 
is voluntary for prescribers and dispensers. Because adoption of e-
prescribing is voluntary under Medicare Part D, we also assume that an 
individual provider or group practice will perform their own cost/
benefit analysis, and will make the decision to invest in e-prescribing 
if they determine that their investment will yield a net benefit and 
positive patient outcome results. Dispensers may incur higher 
transaction fee costs as a result of the increased volume of electronic 
prescriptions, and any costs associated with dispenser access to 
medication history. Again, we anticipate that with this increased 
volume of e-prescriptions, transaction fees will decrease, and whatever 
residual transaction and/or access costs associated with medication 
history remain, eventually will be absorbed into the dispenser's cost 
of doing business, while benefits continue to accrue.
    Comment: One commenter said that there currently is no way to 
verify that the pharmacy has received an electronically transmitted 
prescription or renewal, which, since many dispensers do not routinely 
check their electronic prescription messages or facsimiles, results in 
an increase of physician office inquiries and call backs from the 
pharmacy. The commenter noted that this workflow issue was not 
accounted for in the impact analysis relative to physician costs of e-
prescribing.
    Response: We have received industry feedback that most physician e-
prescribing software packages feature a response mechanism that 
indicates a successful transmission of the electronic prescription to 
the pharmacy. In the case of EDI transmissions, we also understand that 
the failure rate of EDI transmission is less than three tenths of one 
percent. We assume that the small failure rate of EDI transmission, 
combined with basic pharmacy workflow adjustments to routinely check on 
the receipt of electronic prescriptions, that any resulting call backs 
to physicians' offices would be minimized, and would not represent a 
significant cost for either the dispenser or provider.

A. Overall Impact

    In the November 7, 2007 proposed rule (72 FR 64912) we noted that 
according to 2006 CMS data, approximately 24 million beneficiaries were 
enrolled in a Medicare Part D sponsor's plan, either a stand-alone 
Prescription Drug Plan or a Medicare Advantage Drug Plan. This data has 
since been revised to approximately 25 million Medicare 
beneficiaries.\3\ Another 7 million retirees were enrolled in employer 
or union-sponsored retiree drug coverage receiving the Retiree Drug 
Subsidy (RDS); 3 million in Federal retiree programs such as TRICARE 
and the Federal Employees Health Benefits Plans (FEHBP) and 5 million 
receiving drug coverage from alternative sources, including 2 million 
who have coverage through the Veterans' Administration. The breadth of 
Medicare's coverage suggests that e-prescribing under Medicare Part D 
could impact virtually every pharmacy and a large percentage of the 
physician practices in the country. Standards established for the e-
prescribing of Medicare Part D covered drugs for Medicare Part D 
eligible individuals will, as a matter of economic necessity, be 
adopted by vendors of e-prescribing and pharmacy software, and as a 
result, would extend to other e-prescribing populations unless they are 
manifestly unsuited for the purpose. However, we note again that e-
prescribing Medicare Part D covered drugs for Medicare Part D eligible 
individuals is voluntary for both prescribers and dispensers under the 
Medicare Part D e-prescribing program.
---------------------------------------------------------------------------

    \3\ CMS, Total Medicare Beneficiaries with Prescription Drug 
Coverage as of January 2008, 1-31-08, http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/.
---------------------------------------------------------------------------

    Our pilot testing and industry collaboration activities were 
partially intended to prevent the development of multiple, ``parallel'' 
e-prescribing environments, with their attendant incremental costs. We 
have worked to avoid imposing an undue administrative burden on 
prescribing health care professionals, and dispensers. With the 
exception of the NPI, the standards we are adopting in this final rule, 
as with the foundation standards adopted previously, are maintained by 
accredited standards development organizations. The standards for the 
Medication History, Formulary and Benefits, and Fill Status 
Notification transactions have been shown through pilot testing to work 
effectively with the foundation standards.

B. Costs

    Because e-prescribing is voluntary for prescribers and dispensers, 
we anticipate that entities who currently do not now e-prescribe and 
who will not implement e-prescribing during the period reflected in the 
regulatory impact analysis will incur neither costs nor benefits.
    Entities that do not now e-prescribe, but that will implement e-
prescribing during the period reflected in the regulatory impact 
analysis will incur the costs and benefits associated with the 
foundation standards (which we discussed in the November 7, 2005 final 
rule (70 FR 67568) but we do not claim either in this analysis). We 
assume that as e-prescribing becomes more widespread, workflow 
adjustments will follow that will result in the full range

[[Page 18935]]

of benefits that can potentially be realized through e-prescribing. 
Also, implementation of the standards that are adopted in this rule 
will not materially affect the implementation cost that was projected 
for NCPDP SCRIPT 5.0 in the foundation standards final rule. That is, 
the cost to implement NCPDP SCRIPT 8.1 under Sec.  423.160(b)(2), the 
NCPDP SCRIPT 8.1 Medication History Standard, NCPDP Formulary and 
Benefits 1.0, the National Provider Identifier (NPI) and the NCPDP 
SCRIPT 8.1 standard for fill status notification (RxFill) are not 
materially higher than the cost of implementing the NCPDP SCRIPT 5.0 
foundation standard alone. These entities could incur additional costs 
for the purchase of new e-prescribing products that include functions 
that support the ability to conduct transactions using these e-
prescribing standards. They would also incur the benefits of the all of 
these final standards.
    Comment: One commenter stated that our analysis did not take into 
account the adoption of RxFill, and any associated costs and benefits.
    Response: In the November 16, 2007, proposed rule we asked for 
stakeholder comments on the potential utilization of RxFill in Medicare 
Part D e-prescribing, but did not propose its adoption. As previously 
discussed, in the proposed rule we referenced industry feedback that 
the adoption of RxFill ``may cause an unnecessary administrative burden 
on prescribers and dispensers,'' and solicited feedback regarding 
industry's views on any potential administrative burden associated with 
its use. Therefore, no cost/benefit analysis was performed in 
consideration of the adoption of RxFill as a final uniform standard. As 
a result of comments received through the notice and comment rulemaking 
process, and as we discussed above, the industry has now indicated that 
it believes there will be no administrative burden associated with the 
adoption of the RxFill standard. Therefore, we will adopt both the NPI, 
and the RxFill standard for fill status notification transactions for 
use by providers who see value in utilizing electronic transaction 
using the adopted standards to support patient medication management 
and discuss both the costs and benefits here.
    Because use of the electronic fill status notification transaction 
is voluntary, we have no clear indication from the industry as to how 
many providers potentially will see value in, and use transactions 
utilizing the adopted e-prescribing standards for this function. The 
feedback we have received from provider organizations indicates that 
they envision that its use will be more prevalent among those providers 
who wish to track medication adherence for Medicare Part D 
beneficiaries who have chronic medical conditions, such as diabetes, 
hypertension, etc., for whom following a medication regimen is 
imperative. We also note that RxFill is limited to informing the 
prescriber that the prescription has been filled, not filled, etc., and 
it is but an initial indicator of a patient's intention to actually 
take the prescribed medication. The assumption here is that a patient 
is more likely to take a medication prescribed for him/her if they know 
that the prescriber will be monitoring this information, and more 
likely to take the medication if they have made the effort to go to the 
pharmacy, purchase and take the prescription drug home.
    We also understand from industry feedback that prescription 
information exchange networks have fill status notification 
functionality (RxFill) built into their systems but that most 
physicians currently are not signed up to use it. When a patient picks 
up a prescription at the pharmacy, they likely sign an electronic 
signature log. This electronic signature triggers a pharmacy software 
system update which, in turn, triggers a fill status notification 
message transaction using the RxFill standard to be sent to the 
prescriber, if the prescriber has requested receipt of such 
information. Conversely, when a prescription is not picked up and 
returned to inventory, this activity also triggers a similar message if 
the prescriber has requested receipt of such information. Stand alone 
e-prescribing systems usually send such updates to requesting 
prescribers overnight; however, there are integrated e-Signature 
systems which employ real-time notification. Given that most dispensers 
who are already e-prescribing use an electronic signature pad to verify 
prescription pick-up by the patient are already gathering this 
information and need acknowledgement from the prescriber through a 
``flag'' in their e-prescribing software system that they want to 
receive this information, we do not believe that there will be any 
significant changes to pharmacy or prescriber workflows once that 
``flag'' is activated, and no cost impact associated with the use of 
RxFill for those prescribers and dispensers who are currently e-
prescribing.
    Those dispensers still using paper logs to record patient pick-up 
of a prescription likely are not e-prescribing and therefore, would not 
be impacted either from a workflow or economic perspective.
    We agree with commenters who stated that neither the medication 
history nor the formulary and benefits standard would result in 
additional e-prescribing costs for those already e-prescribing, and 
apply that rationale to RxFill. As the fill status notification 
function resides on the NCPDP SCRIPT 8.1 standard alongside the 
medication history function, we expect that it would also not result in 
any additional costs being incurred. For those not currently e-
prescribing, they would incur the costs and benefits associated with 
the foundation standards (which we discussed in the final rule at 70 FR 
67568), but which we did not claim in our analysis.
    One potential benefit anticipated from the use of RxFill are those 
associated with better medication adherence on the part of patients, 
and this varies depending on the clinical condition. According to a 
study entitled, ``Impact of Medication Adherence on Hospitalization 
Risk and Healthcare Cost'',\4\ adherence with medication therapy is 
generally low--approximately 50 to 65 percent, on average, for common 
chronic conditions such as hypertension and diabetes. In this study, 
for diabetes, the average annual incremental drug cost associated with 
a 20 percent increase in drug utilization was $177, and the associated 
disease-related medical cost reduction was $1,251, for a net savings of 
$1,074 per patient, or an average return on investment of 7.1:1. Other 
studies of a mental health condition such as schizophrenia estimate the 
cost of non-compliance with medication therapy to be about $705 million 
over a 2-year period.\5\ Another study on medication therapy adherence 
in hypertensive patients showed that interventions aimed at improving 
compliance with medication regimens increased patient adherence by up 
to 11 percent, and that when it came to prescription refills, partial 
compliance with prescription refills identified important clinical 
consequences of reduced compliance, with gaps in taking medication 
resulting in an increase in hospitalizations.\6\
---------------------------------------------------------------------------

    \4\ Michael C. Sokol, M.D., M.S.; Kimberly A. McGuigan, PhD; 
Robert R. Vebrugge, PhD. And Robert S. Epstein, M.D., M.S.. Impact 
of Medication Adherence on Hospitalization Risk and Healthcare Cost. 
Medical Care. 2005;43:521-530.
    \5\ Theida, Patricia, M.A., Beard, Stephen, M.S., Richter, Anke, 
Ph.D., and Kane, John, M.D. An Economic Review of Compliance with 
Medication Therapy in the Treatment of Schizophrenia. Psychiatric 
Services. April 2003: 54:508-516.
    \6\ Steiner, J.F., Prochazka, A.V. The assessment or refill 
compliance using pharmacy records: methods, validity and 
applications. Journal of Clinical Epidemiology. 1997: 50:105-116.

---------------------------------------------------------------------------

[[Page 18936]]

    Researchers generally agree that it is difficult to arrive at a 
dollar figure that would reflect the outcomes of medication adherence 
for all clinical conditions, but we believe that, based on studies such 
as those cited, it is prudent to assume that in the Medicare Part D 
program, an increase in prescription drug utilization by patients as a 
result of better medication adherence would be far offset by a larger 
reduction in the cost of Medicare beneficiary hospitalizations, 
outpatient procedures and other clinical treatments that might result 
from non-adherence to medication regimens.
    Relative to the NPI, in the proposed rule we discussed that we did 
not anticipate any significant costs to be associated with the use of 
the NPI by vendors, prescribers, dispensers or Medicare Part D sponsors 
for e-prescribing transactions under section 1860D-4(e). Use of the NPI 
is already required in order to conduct HIPAA-covered transactions 
which require the identity of HIPAA-covered health care providers; and 
the compliance date for the NPI, May 27, 2007, has already passed. The 
NPI is easily obtainable, and there is no cost associated with applying 
for and/or obtaining an NPI. Once received, the NPI is usually entered 
by the physician initially into their e-prescribing software system, 
and it is carried thereafter by the system, which automatically 
populates the NPI field on the NCPDP SCRIPT 8.1 standard. The NPI is in 
widespread use by HIPAA-covered entities in HIPAA transactions. 
Although the transactions using the NCPDP SCRIPT standard are not HIPAA 
transactions, the prescribers and dispensers that conduct such 
transactions would be HIPAA-covered entities, and as such, they would 
already be using NPI as they conduct their HIPAA transactions. They 
would, therefore, already be familiar with the NPI, even though they 
may not currently use it in the context of transactions using the NCPDP 
SCRIPT standard.
    For e-prescribers whose software products are not able to generate 
transactions using the NCPDP SCRIPT 8.1 standard, they will not have 
the capability to use the NCPDP Formulary and Benefits Standard 1.0, 
the NCPDP SCRIPT 8.1 Medication History transaction, or the NCPDP 
SCRIPT 8.1 RxFill standard. Costs would be incurred if they were to 
replace such software with software that generates transactions that 
comply with the adopted standards. We anticipate that the NCPDP SCRIPT 
8.1 will be accommodated in later software version upgrades where that 
standard is not already utilized. We believe that the implementation of 
the NPI would be accomplished as part of this transition. Prescribers 
and dispensers already should be using the NPI to conduct retail 
pharmacy drug claim transactions.
    Medicare Part D sponsors will not be significantly affected by the 
adoption of the NPI because the Medicare Part D sponsors already use 
the NPI in HIPAA transactions, such as the retail pharmacy drug claim.
    Software vendors are already implementing NCPDP SCRIPT 8.1 in their 
products, NPI is supported by NCPDP SCRIPT 8.1, and we believe that any 
needed upgrades will be included in routine version upgrades.
    Benefits for the use of the NPI in e-prescribing under Medicare 
Part D have not been quantified by the industry. The NPI provides a 
standard way for dispensers to identity individual prescribers in an e-
prescribing transaction. We anticipate that its use will help 
dispensers reduce the number of callbacks to a physicians office to 
verify an e-prescriber's identity, although it is unclear and 
unsubstantiated from industry feedback as to what percentage of 
callbacks between the dispenser and the prescriber can be attributed 
solely to this inquiry.
    Comment: One commenter offered that neither the adoption of NCPDP 
SCRIPT 8.1 nor adoption of the standards for medication history and 
formulary and benefits would result in significant costs as the 
majority of the e-prescribing industry is already using these 
standards. The commenter agreed that the costs for entities that do not 
now e-prescribe, but will be implementing the e-prescribing technology 
in the future, would not be substantially increased by the adoption of 
these standards. Another commenter said although the NCPDP SCRIPT 8.1 
Medication History transaction and the NCPDP Formulary Benefit Standard 
1.0 are relatively new, it is not accurate for CMS to state that they 
are not currently deployed for use in the functions that were listed at 
Sec.  423.160(b)(1).
    Response: From industry feedback, we have learned that the 
medication history and formulary and benefits functions were adopted by 
some entities nearly two years ago, and there are others in the 
industry that have been using them for even longer. As such, our 
conclusion remains the same that adoption of these standards now would 
result in no new additional costs.
    Entities that e-prescribe now using a software product that cannot 
use the NPI and conduct medication history, formulary and benefits, and 
fill status notification standards, and that cannot be upgraded to 
conduct them (for example, stand-alone Microsoft Word-based 
prescription writers) will not be required to conduct these 
transactions (if they choose to conduct these transactions) using the 
NCPDP SCRIPT standard until April 2009. If they decide to upgrade their 
entire e-prescribing system to take advantage of the benefits of these 
new standards, they would incur costs. However, we have no clear sense 
of how many entities would fall into this category.
    Entities that e-prescribe now using a product that could be 
upgraded to conduct medication history, formulary and benefits, and 
fill status notification using the three adopted standards would incur 
no cost or benefit if they decide not to upgrade. If they decide to 
upgrade, they would incur the cost of the upgrade (unless the upgrade 
is included in their maintenance agreement) and any testing costs, and 
would incur the benefits of utilizing these three standards. This would 
also apply to entities that e-prescribe now using a product that 
conducts the three transactions using nonstandard (Non NCPDP SCRIPT) 
formats, but the functionality is not used. Based on our research, this 
category likely is the one in which most current e-prescribers fall.
    Entities that e-prescribe now using a product that conducts one or 
more of the three transactions using nonstandard formats and who 
continue to use the electronic transactions would have to upgrade their 
software. They would not enjoy all the benefits of conducting 
transactions using the three new standards since they would have 
already been performing them in some manner, but definitely would incur 
cost savings due to the increased interoperability of using the NCPDP 
SCRIPT standards. However, any entity engaging in e-prescribing would 
incur benefits due to increased interoperability, as the existence of 
standards simplifies data exchange product selection and testing.
1. Retail Pharmacy
    Because e-prescribing is voluntary for dispensers, unless they were 
to commence e-prescribing, those who do not currently conduct e-
prescribing would not incur any costs related to any of the provisions 
of this rule. However, we recognize that costs would be incurred by 
those dispensers that currently conduct e-prescribing transactions, as 
well as those who voluntarily implement e-prescribing during the period 
reflected in our regulatory impact analysis. Industry estimates are 
that 97 percent of the

[[Page 18937]]

nation's retail chain dispensers currently e-prescribe, in contrast to 
only 27 percent of independent dispensers that e-prescribe.\7\
---------------------------------------------------------------------------

    \7\ Surescripts, National Report on E-prescribing, December 
2007. http://www.surescripts.com/report/ report/.
---------------------------------------------------------------------------

    Transactions using NCPDP Formulary and Benefits 1.0 are carried out 
between the plan and prescriber and, therefore, dispensers will not 
incur any cost related to this transaction.
    While the NCPDP SCRIPT 8.1 Medication History Standard can be used 
in transactions to support communication between the dispenser and 
prescriber, its use is, nonetheless, voluntary for both. We assume for 
purposes of this analysis that the NCPDP SCRIPT 8.1 Medication History 
Standard will be used in medication history exchange transactions.
    Effective May 23, 2008 dispensers are required under HIPAA to use 
the NPI to conduct retail pharmacy drug claim transactions. Therefore, 
we associate no additional costs with the use of the NPI in Medicare 
Part D e-prescribing for retail dispensers.
    Comment: One commenter remarked that the cost of migrating to NCPDP 
SCRIPT 8.1 has already been borne by dispensers and their system 
vendors, and that there should be no cost associated with adoption of 
NCPDP Formulary and Benefits 1.0. However, the commenter acknowledged 
that there may be some costs to dispensers that supply data to support 
the medication history functionality and these costs are already being 
borne by participating dispensers.
    Response: The benefits of e-prescribing in general, and the 
specific standards to be adopted through this final rule, are 
significant, especially in terms of patient safety. As noted in the 
November 16, 2007 proposed rule (72 FR 64912), depending on their stage 
of e-prescribing adoption, there may be costs associated with the 
adoption of these standards for dispensers. These costs are far 
outweighed by the eventual economies realized by improved workflows and 
productivity savings within the pharmacy environment; marketplace 
forces should come into play as e-prescribing volume increases, which 
will help drive down costs and realize economies of scale.
    The adoption of NCPDP SCRIPT 8.1 in place of the NCPDP SCRIPT 5.0 
foundation standard for the transactions listed at Sec.  423.160(b)(2) 
will impact dispensers that conduct e-prescribing. Dispensers will have 
to ensure that their software can accept prescription transactions 
using the NCPDP SCRIPT 8.1 standard, and they will need to test with 
prescribers to assure that their electronic transactions are being 
received and can be processed. We believe there is little, if any, 
incremental costs associated with these activities. Software vendors 
have or are already incorporating NCPDP SCRIPT 8.1 in their products, 
and we believe that any needed upgrades will be included in routine 
version upgrades. The number of current e-prescribers per pharmacy is 
small, and the testing process is not complicated. We believe that the 
implementation of the NPI will be accomplished as part of this 
transition. Prescribers and dispensers already use the NPI to conduct 
retail pharmacy drug claim transactions.
2. Medical Practices
    Medical practices, compared to dispensers, face a different set of 
costs in implementing information systems for clinical care and 
financial management. Unlike dispensers, where technology has become an 
important part of operations (especially for larger retail chains), 
many providers have been cautious in their adoption of health 
information technology. We assume that, based on industry estimates, 
anywhere from 5 to 18 percent of physicians are e-prescribing today.\8\ 
Because e-prescribing is voluntary for prescribers, medical practices 
that do not currently conduct e-prescribing would not incur any costs 
related to any of the provisions of this rule. However, we recognize 
that costs would be incurred by those prescribers currently e-
prescribing, as well as those who voluntarily begin to e-prescribe 
during the period reflected in our regulatory impact analysis. If a 
practice decides to implement e-prescribing at a later time, we 
anticipate that the software products on the market would be compliant 
with these standards and, therefore, no additional cost would be 
incurred. In assessing the cost to prescribers that are currently e-
prescribing, many of the e-prescribing software products generally 
already contain some capability to communicate formulary and benefits 
and medication history information because they incorporate the RxHub 
proprietary format on which the proposed standards were based. We 
expect that any changes that might be necessary as a result of this 
rulemaking would likely be included in routine version upgrades that 
are covered by annual maintenance and subscription fees.
---------------------------------------------------------------------------

    \8\ E-Prescribing and the Prescription Drug Program final rule, 
published November 7, 2005 (70 FR 67568).
---------------------------------------------------------------------------

    For e-prescribers whose software products are not able to generate 
transactions using the NCPDP SCRIPT 8.1 standards, they will not have 
the capability to conduct electronic transactions using the NCPDP 
Formulary and Benefits Standard 1.0 and NCPDP SCRIPT 8.1 Medication 
History Standard. Costs would be incurred if they were to replace such 
software with software that can conduct transactions that comply with 
the proposed standards. We anticipate that the NCPDP SCRIPT 8.1 will be 
accommodated in later software version upgrades where that standard is 
not already utilized. We believe that the implementation of the NPI 
will be accomplished as part of this transition.
    As the fill status notification function resides on the NCPDP 
SCRIPT 8.1 standard alongside the medication history function, we 
expect that it would also not result in any additional costs being 
incurred. However, we recognize that the use of RxFill may result in 
workflow changes for the prescriber who must determine what he/she will 
do with the information provided by the RxFill transaction relative to 
their clinical practices. For those not currently e-prescribing, they 
would incur the costs and benefits associated with the foundation 
standards (which we discussed in the final rule at (70 FR 67568)), but 
which we did not claim in our analysis.
3. Medicare Part D Sponsors and Pharmacy Benefit Managers (PBMs)
    Medicare Part D sponsors will be required to support NCPDP SCRIPT 
8.1 for the transactions listed at Sec.  423.160(b)(2), the NCPDP 
Formulary and Benefits 1.0, and the NCPDP SCRIPT 8.1 Medication History 
Standard. They will need to assure that their software can receive and 
conduct transactions utilizing NCPDP Formulary and Benefits 1.0 and the 
NCPDP SCRIPT 8.1 Medication History Standard, and that their internal 
systems and databases can supply the information needed to build the 
transaction. For example, they will need to be able to extract 
prescription claims history and format it according to the NCPDP SCRIPT 
8.1 Medication History Standard. We believe that many Medicare Part D 
sponsors will have already implemented this functionality because the 
standards we are proposing are based on proprietary file transfer 
protocols developed by Rx-Hub that have been included in many e-
prescribing products. Medicare Part D sponsors may need to restructure 
systems to assure

[[Page 18938]]

that the data output is in the proper format, but, for the most part, 
the needed functionality is in place.
    We recognize that some Medicare Part D sponsors may need to make 
additional investments to support these standards.
    Because plans typically pay the per transaction network fees for 
eligibility transactions, which likely includes providing a formulary 
and benefits response as well as a medication history response, 
Medicare Part D sponsors will incur increased transaction costs for 
formulary and benefits and medication history transactions as the 
frequency in which these transactions are conducted electronically 
increases.
    Through information provided by SureScripts and industry 
consultants, this transaction fee appears to range from 6 cents to 25 
cents per transaction, with the midpoint being 15 cents. In 2006, 
RxHub, one of the nation's largest electronic prescription and 
prescription-related information routing networks, estimated that their 
transaction volume increased 50 percent, from 29 million in 2005 to 
more than 43 million in 2006. These transactions were real-time 
requests for patient eligibility and benefits, formulary, and 
medication history information.\9\
---------------------------------------------------------------------------

    \9\ RxHub Announces 2006 e-Prescribing Results and Highlights 
Milestones for 2007, St. Paul, MN, February 23, 2007, http://www.rxhub.com.
---------------------------------------------------------------------------

    Based on data available at that time, we estimated that 
approximately 24 million Medicare beneficiaries received Medicare Part 
D benefits in 2006. (These data have since been revised to 
approximately 25 million Medicare beneficiaries). \10\ This figure 
reflected those Medicare beneficiaries enrolled in a Medicare 
Prescription Drug Plan (PDP) or a Medicare Advantage plan with 
Prescription Drug coverage (MA-PD) or both, for which we have 
prescription drug event data. Approximately 825,000,000 claims 
(prescription drug events) were finalized and accepted for 2006 
payment. The annual percentage increase in the number of Medicare Part 
D prescriptions was estimated by CMS at 4.6 percent based on industry 
feedback (http://www.imshealth.com/ims/portal/front/articleC/0,2777,6599_3665_80415465,00.html). So that impact comparisons could 
be made equally across all years, inflation was removed from the price 
effects. Conservatively, we calculated the increase in the number of 
Medicare Part D prescriptions and applied the current estimates of 5 
and 18 percent electronic prescribing adoption rates to arrive at the 
number of Medicare Part D electronic transactions, and cost them out at 
a range of a low of 6 cents per transaction to a high of 25 cents per 
transaction. We estimated costs for Medicare Part D sponsors of between 
$2 million to $46 million per year.
---------------------------------------------------------------------------

    \10\ CMS, Total Medicare Beneficiaries with Prescription Drug 
Coverage as of January 2008, 1-31-08, http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/.
---------------------------------------------------------------------------

    Medicare Part D sponsors may negotiate the cost of e-prescribing 
transactions as part of the dispensing fees included in their pharmacy 
contracts, and account for these costs in their annual bids to 
participate in the Medicare Part D program. In these instances, 
inclusion of these costs may increase the cost of their Medicare Part D 
bids. However, we anticipated that these costs would be negated by the 
savings from an increased rate of conversion from brand name to generic 
prescriptions realized through utilization of NCPDP Formulary and 
Benefits 1.0, which would more than offset the transaction costs.
    Medicare Part D sponsors would not be affected by the adoption of 
the NCPDP SCRIPT 8.1 for the transactions listed at Sec.  423.160(b)(2) 
because these transactions are conducted between prescribers and 
dispensers, and Medicare Part D sponsors are not involved.
    Medicare Part D sponsors would not be significantly affected by the 
adoption of the NPI as a standard for use in e-prescribing transactions 
among the Medicare Part D sponsors, prescribers, and dispensers because 
the Medicare Part D sponsors already use the NPI in HIPAA transactions, 
such as the retail pharmacy drug claim.
4. Vendors
    Vendors of e-prescribing software would incur costs to bring their 
products into compliance with these requirements. However, we 
considered the need to enhance functionality and comply with industry 
standards to be a normal cost of doing business that will be subsumed 
into normal version upgrade activities. Vendors may incur somewhat 
higher costs connected with testing activities but vendors should be 
able to address this potential workload on a flow basis. We believed 
these costs to be minimal.
    Comment: A commenter noted that the costs to vendors of migrating 
to NCPDP SCRIPT 8.1 for the transactions listed at Sec.  423.160(b)(2), 
as well as adding the NCPDP SCRIPT 8.1 Medication History Standard, the 
fill status notification standard (RxFill), and the NCPDP Formulary and 
Benefits 1.0 to their applications, are a normal cost of vendors doing 
business, and these costs have in large part already been borne by e-
prescribing vendors.
    Response: We agree with the commenter's contention that minimal 
additional costs will be incurred by vendors by switching to the NCPDP 
SCRIPT 8.1 standard, nor by adding the use of the NPI, RxFill, the 
NCPDP SCRIPT 8.1 Medication History Standard and the NCPDP Formulary 
and Benefits 1.0 to their applications. Many of them have already 
incorporated Formulary and Benefits 1.0 into their software products, 
and have already transitioned to NCPDP SCRIPT 8.1, which houses the 
RxFill and the Medication History functionality on its platform. As 
previously discussed in the Cost section of this regulatory impact 
analysis, software vendors are already implementing NCPDP SCRIPT 8.1 in 
their products, NPI is supported by NCPDP SCRIPT 8.1, and we believe 
that any needed upgrades will be included in routine version upgrades. 
Vendors did not indicate in their comments in response to the proposed 
rule that the use of the NPI in e-prescribing will create any 
additional vendor costs, and we assume that any costs that might be 
incurred, such as testing, would be absorbed by vendors as a cost of 
doing business.

C. Benefits

    In the November 16, 2007 proposed rule (72 FR 64913), we assumed 
that the benefits of the proposed adoption of standards for formulary 
and benefits and medication history transactions would take place over 
a multiyear timeframe. (For discussion of the benefits associated with 
the adoption of these standards, refer to the discussion in the 
November 16, 2007 proposed rule (72 FR 64913).)
1. Formulary and Benefits Standard--Generic Drug Usage
    We based our assumptions on industry estimates that approximately 5 
percent to 18 percent of group practices are e-prescribing today. We 
anticipated that transactions utilizing NCPDP Formulary and Benefits 
1.0 would allow the prescriber to view formulary drugs, alternative 
preferred drugs in a given class that may offer savings to the patient, 
or to see in advance what other, less costly drugs within a given drug 
classification or generic drugs can be substituted for a given brand 
name prescription drug, resulting in reduced calls to the plan, and 
fewer callbacks from a pharmacy because a prescribed drug is not on a 
beneficiary's drug plan formulary.
    In the first half of 2006, the ratio of generic versus brand name 
prescription drugs in the Medicare Part D program was 60 percent versus 
40 percent. An

[[Page 18939]]

industry study indicated a 15 percent increase in generic substitution 
rates for physicians with e-prescribing. However, not all beneficiaries 
will accept generic prescription drugs and there are some instances in 
which the brand name prescription drug has proven through physician 
experience to be the more effective drug. Therefore, we applied a more 
conservative 7 percent increase in generic prescriptions.
    Based on industry data, we assumed the cost of a brand name 
prescription drug at $111.02 and the cost of a generic drug at 
$32.23.\11\
---------------------------------------------------------------------------

    \11\ http://www.nacds.org/wmspage.cfm?parm1=5507. National 
Association of Chain Drug Stores data.
---------------------------------------------------------------------------

    While Medicare beneficiaries will be the most direct recipients of 
the savings realized by the conversion of brand name to generic 
prescription drugs, the Medicare program also will save money as it 
will be paying for an increased number of lower cost generic 
prescriptions versus higher cost, brand-name prescription drugs. We 
calculated a ten-year cost savings of $95 million to $410 million.
    Comment: A commenter agreed that while they did not conduct a 
financial analysis, the benefits identified by CMS in the proposed rule 
appeared to be reasonable. Another commenter stated that CMS 
underestimated the benefits that the switch from brand name to generic 
drugs would generate as a result of prescribers having access to 
formulary and benefits information at the point of care, and that it 
would vastly exceed CMS' 7 percent estimate.
    Response: We made a good faith effort to estimate both costs and 
benefits associated with the adoption of these standards using very 
conservative assumptions on the benefit side, and estimating costs so 
as to elicit industry and stakeholder comments on the feasibility of 
our approach. While we believe that the benefits of adoption of these 
standards could far exceed expectations, we also caution that any one 
of a number of factors--for example, delays in making real-time 
formulary and benefits information available to prescribers at the 
point of care--could hinder the adoption of e-prescribing and the 
benefits to be realized through, for example, anticipated wider use of 
generic versus brand name prescription drugs in the Medicare Part D 
prescription drug program. Given this, we estimated that realistically, 
a 7 percent increase in the prescribing of generic versus brand name 
drugs could be achieved through the use of formulary and benefits 
information.
2. Formulary and Benefits Standard--Administrative Savings
a. Physician and Physician Office Staff
    The 2004 Medical Group Management Association (MGMA) survey 
entitled, ``Analyzing the Cost of Administrative Complexity'' (http://www.mgma.com/about/default.aspx?id=280) estimated the staff and 
physician time spent, on a per physician full time equivalent (FTE) 
basis, interacting with dispensers on formulary questions and generic 
substitutions. Physician time was estimated at almost 16 hours a year; 
another 14 hours were spent per physician per year on generic 
substitution issues. Staff spent almost 26 hours per FTE physician on 
formulary issues, and another 24 hours per FTE physician on generic 
substitution issues.
    CMS estimated the number of physicians in active practice who 
participated in the Medicare program in 2006 at 1,048,243, and a 
percentage rise in the number of physicians participating in the 
Medicare program of .94 percent per year, so we applied that percentage 
increase to estimate the number of Medicare physicians for 2009 through 
2013. We also applied the previous assumption that from 5 to 18 percent 
of prescribers are e-prescribing today. Per the MGMA survey, we assumed 
a physician labor cost of $100 per hour and an average staff labor cost 
of $22 per hour per physician FTE.
    Pilot site experience shows that with e-prescribing, responding to 
refill requests, and resolving pharmacy callbacks were all done more 
efficiently with e-prescribing than before. However, full 
implementation would be difficult to achieve, and we used an estimate 
of 25 percent implementation. Our model calculated that, at that rate 
of implementation, physicians and staff would realize savings ranging 
from $55 million to $206 million.
b. Dispensers
    If each physician and their office staff saved a total of 80 hours 
a year by using the NCPDP Formulary and Benefits 1.0, and reduced the 
time spent on the phone with dispensers, we assumed that dispensers 
would save the equivalent amount of time by not making these calls. 
Since the MGMA survey assumed a dispenser labor rate of $60 per hour, 
our model predicted an annualized cost benefit savings ranging from a 
low of $65 million to a high of $242 million at 25 percent 
implementation.
    Comment: A commenter expressed concern that the administrative 
savings for dispensers as represented in Table 4 of the proposed rule 
overestimated the administrative cost savings for dispensers. They 
stated that while dispensers are on the phone waiting for a response 
from a physician on a formulary question, dispensers often perform 
other work concurrently, and thus devote less time than was estimated 
for this particular task, which in turn affects the overall estimate of 
administrative cost-savings benefits to dispensers.
    Response: When estimating the benefits accrued to dispensers in 
Table 4 of the proposed rule, we were conservative in our assumptions 
so as not to unnecessarily inflate the benefit projections. We used the 
generally accepted 5 and 18 percent e-prescribing adoption rates versus 
much higher rates as projected in some widely read industry 
publications. We relied upon the Medical Group Management Association 
(MGMA) study of physician and staff time spent on the phone resolving, 
among other things, formulary and benefits issues, and further reduced 
our benefit projects down to the 25 percent level.
3. Medication History Standard--Reduction of Adverse Drug Events (ADEs)
    Utilizing the medication history standard in the transmission of 
medication history information will simplify medication reconciliation 
through transitions in care and, in so doing, provide consumers with a 
safer medication delivery system, and greater convenience.
    Although outpatient ADEs were difficult to estimate, literature 
estimated that, as of 2005, there were 530,000 preventable ADEs for 
Medicare beneficiaries annually. Moreover, the estimated cost per ADE 
ranged from $2,000 to upwards of $6,000 depending on the care setting. 
We computed the benefits of using the NCPDP SCRIPT 8.1 Medication 
History Standard based on data regarding ADEs as a percentage of the 
total Medicare population. Based on CMS Medicare population data, we 
calculated that of the total Medicare population, ADEs occur in about 
1.24 percent of that population each year.
    Based on pilot experience, we assumed that the reduction in the 
risk of ADEs could be attributed mostly to the use of the NCPDP SCRIPT 
8.1 Medication History Standard history rather than to e-prescribing in 
general. The pilot project demonstrated that 50 percent of preventable 
ADEs could be eliminated if e-prescribing is used, but also recognized 
that the pilot project may not have accurately represented mainstream 
experience. Given that, we conservatively assumed that the number

[[Page 18940]]

of ambulatory ADEs associated with Medicare Part D beneficiaries could 
be reduced by the use of medication history by 25 percent for those 
patients for whom prescriptions were written electronically; we used 
the same uptake e-prescribing estimates (5 to 18 percent) as earlier 
for e-prescribing adoption. We estimated a potential cost savings over 
10 years of $13 million to $156 million from avoided ADEs.
4. RxFill--Medication Adherence
    As previously discussed in the Cost section of this regulatory 
impact analysis, one potential benefit anticipated from the use of 
RxFill are those associated with better medication adherence on the 
part of patients, and this varies depending on the clinical condition. 
Researchers generally agree that it is difficult to arrive at a dollar 
figure that would reflect the outcomes of medication adherence for all 
clinical conditions, but we believe that it is prudent to assume that 
in the Medicare Part D program, an increase in prescription drug 
utilization by patients as a result of better medication adherence 
would be far offset by a larger reduction in the cost of Medicare 
beneficiary hospitalizations, outpatient procedures and other clinical 
treatments that might result from non-adherence to medication regimens. 
See the Cost section of this regulatory impact analysis for more 
details regarding our benefit assumption for the use of RxFill.
5. National Provider Identifier (NPI)--Reduced Callbacks
    We reiterate our previous discussion in the Cost section of this 
regulatory impact analysis that benefits for the use of the NPI in e-
prescribing under Medicare Part D have not been quantified by the 
industry. We anticipate that its use will help dispensers reduce the 
number of callbacks to a physicians office to verify an e-prescriber's 
identity, although it is unclear and unsubstantiated from industry 
feedback as to what percentage of call backs between the dispenser and 
the prescriber can be attributed solely to this inquiry.

D. Total Impact

    We concluded that the cost of implementing these standards is 
minimal, with quantifiable benefits reaped by dispensers, prescribers, 
and beneficiaries. Over five years, we expected that these groups will 
see average net benefits in a range from $218.0 million to $863.9 
million from the utilization of formulary and benefits and medication 
history transactions, and the promulgation of these standards. As 
previously discussed, we do not expect that the adoption of RxFill and 
the use of the NPI in e-prescribing will result in any additional 
costs. We expect that their use will result in unquantifiable benefits 
which include the assumption, in the case of RxFill, of better patient 
medication adherence that will likely result in long-term savings for 
the Medicare program; and for the NPI, in improved pharmacy workflows 
via reduced call backs to physician offices to identify individual 
prescribers.
    Comment: A prescription information exchange network agreed that 
the benefits to all stakeholders of utilizing the NCPDP Formulary and 
Benefits 1.0 and adopting NCPDP SCRIPT 8.1 for the transactions listed 
at Sec.  423.160(b)(2) will far exceed the financial costs. In their 
estimation, the total benefits range of $218 to $863.9 million appears 
to be realistic.
    Response: Again, efforts were made to estimate both costs and 
benefits associated with the adoption of the final standards using very 
conservative assumptions on the benefit side, and conversely, 
overestimating costs so as to elicit industry and stakeholder comments 
on the feasibility of our approach. As previously discussed, in 
addition to the anticipated costs and benefits associated with use of 
medication history and formulary and benefits, we expect there will be 
minimal or no cost associated with the use of either the NPI, or RxFill 
by providers who find value in use of an electronic fill status 
transaction for purposes of tracking patient adherence to medication 
therapies. We expect use of the NPI will assist dispensers to identify 
individual e-prescribing providers, resulting in a reduction of call 
backs to physician offices. The use of the Fill Status Notification 
standard by those providers who use an electronic fill status 
transaction to monitor patient medication adherence will realize 
benefits such as reduced patient hospitalizations, outpatient 
procedures, and clinical treatments, and improved patient outcomes.
    Comment: One commenter made the observation that actual drug costs 
will increase due to increased volume related to improved patient 
compliance, and that CMS should account for this in its discussions of 
costs and benefits.
    Response: We believe that the commenter was referring to the 
increased drug cost to the Medicare Part D program because the number 
of prescriptions being picked up at the pharmacy by a Medicare 
beneficiary might increase with the use of the fill status 
notification, and not an increase in the the actual cost of the drug 
itself. It is true that the Medicare Part D program may incur 
additional costs if more patients had their prescriptions filled, and 
in some studies this could account for as much as an 11 percent 
increase, depending on the clinical condition for which the 
prescription is being dispensed (for example, diabetes versus 
hypertension). However, we anticipate that medication adherence could 
result in lower disease-related medical costs, such as hospitalization, 
that would benefit the Medicare program. In the study, ``Impact of 
Medication Adherence on Hospitalization Risk and Healthcare Cost,'' 
results showed that, for the four clinical conditions studied, 
hospitalization rates were significantly lower for patients with high 
medication adherence, and that drug costs are a relatively small 
fraction of total healthcare costs. Drug costs have high leverage; in 
other words, a small increase in drug costs (associated with improved 
adherence) can produce a much larger reduction in medical costs. This 
leverage will become even stronger as medications become available, and 
are prescribed as generic drugs, lowering drug costs even more.\12\
---------------------------------------------------------------------------

    \12\ Michael C. Sokol, M.D., M.S.; Kimberly A. McGuigan, PhD; 
Robert R. Vebrugge, PhD; and Robert S. Epstein, M.D., M.S. Impact of 
Medication Adherence on Hospitalization Risk and Healthcare Cost. 
Medical Care. 2005;43:521-530.
---------------------------------------------------------------------------

E. Alternatives Considered

    For more information on all the alternatives considered, refer to 
the discussion in the November 16, 2007 proposed rule (72 FR 64916).
    As we had successful results from the e-prescribing pilot project, 
and the value added by the proposed additional standards is 
substantial, we chose to proceed to a final rule. We considered 
adopting the prior authorization, Structured and Codified Sig and 
RxNorm standards for adoption, and elected not to do so until 
outstanding issues with these standards have been resolved. In the case 
of the RxFill standard, we considered not adopting it, but based on 
industry feedback, opted for adoption so that those providers who felt 
it was of value could benefit from the existence of a standard for use 
in electronic fill status transactions.
    We considered not adopting the NPI as a standard for identifying 
health care providers in e-prescribing transactions for Medicare Part D 
covered drugs for Medicare Part D eligible individuals. The fact that 
large portions of the health care industry are required to use NPI as a 
HIPAA standard, convinced us that

[[Page 18941]]

adoption at this time was feasible and desirable.
    We considered providing for an effective date for these new and 
updated standards that was less than the maximum amount of time allowed 
by the MMA. Based on industry feedback, however, we decided to provide 
the maximum allowed time prior to the effective date of this rule.

List of Subjects in 42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Health 
professions, Incorporation by Reference, Medicare, Penalties, Privacy, 
Reporting and recordkeeping requirements.


0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR part 423 as follows:

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
1. The authority citation for part 423 continues to read as follows:

    Authority: Secs. 1102, 1860D-1 through 1860D-42, and 1871 of the 
Social Security Act (42 U.S.C. 1302, 1395W-101 through 1395w-152, 
and 1395hh).

0
2. Section 423.160 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec.  423.160  Standards for electronic prescribing.

* * * * *
    (b) Standards. (1) Entities described in paragraph (a) of this 
section must comply with the following adopted standards for 
transactions under this section:
    (i) Before April 1, 2009 the standards specified in paragraphs 
(b)(2)(i) and (b)(3) of this section.
    (ii) On or after April 1, 2009, the standards specified in 
paragraphs (b)(2)(ii) and (b)(3) through (b)(6) of this section.
    (2) Prescription. (i) The National Council for Prescription Drug 
Programs SCRIPT Standard, Implementation Guide, Version 5, Release 0, 
(Version 5.0) May 12, 2004 (incorporated by reference in paragraph 
(c)(1)(iv) of this section), or the National Council for Prescription 
Drug Programs Prescriber/Pharmacist Interface SCRIPT Standard, 
Implementation Guide, Version 8, Release 1, (Version 8.1) October 2005 
(incorporated by reference in paragraph (c)(1)(i) of this section), to 
provide for the communication of a prescription or prescription-related 
information between prescribers and dispensers, for the following:
    (A) Get message transaction.
    (B) Status response transaction.
    (C) Error response transaction.
    (D) New prescription transaction.
    (E) Prescription change request transaction.
    (F) Prescription change response transaction.
    (G) Refill prescription request transaction.
    (H) Refill prescription response transaction.
    (I) Verification transaction.
    (J) Password change transaction.
    (K) Cancel prescription request transaction.
    (L) Cancel prescription response transaction.
    (ii) The National Council for the Prescription Drug Programs 
Prescriber/Pharmacist Interface SCRIPT standard, Implementation Guide, 
Version 8, Release 1 (Version 8.1) October 2005 (incorporated by 
reference in paragraph (c)(1)(i) of this section), to provide for the 
communication of a prescription or prescription-related information 
between prescribers and dispensers, for the following:
    (A) Get message transaction.
    (B) Status response transaction.
    (C) Error response transaction.
    (D) New prescription transaction.
    (E) Prescription change request transaction.
    (F) Prescription change response transaction.
    (G) Refill prescription request transaction.
    (H) Refill prescription response transaction.
    (I) Verification transaction.
    (J) Password change transaction.
    (K) Cancel prescription request transaction.
    (L) Cancel prescription response transaction.
    (M) Fill status notification transaction.
    (3) Eligibility. (i) The Accredited Standards Committee X12N 270/
271-Health Care Eligibility Benefit Inquiry and Response, Version 4010, 
May 2000, Washington Publishing Company, 004010X092 and Addenda to 
Health Care Eligibility Benefit Inquiry and Response, Version 4010, A1, 
October 2002, Washington Publishing Company, 004010X092A1 (incorporated 
by reference in paragraph (c)(2)(i) of this section), for transmitting 
eligibility inquiries and responses between prescribers and Part D 
sponsors.
    (ii) The National Council for Prescription Drug Programs 
Telecommunication Standard Specification, Version 5, Release 1 (Version 
5.1), September 1999, and equivalent NCPDP Batch Standard Batch 
Implementation Guide, Version 1, Release 1 (Version 1.1), January 2000 
supporting Telecommunications Standard Implementation Guide, Version 5, 
Release 1 (Version 5.1), September 1999, for the NCPDP Data Record in 
the Detail Data Record (incorporated by reference in paragraph 
(c)(1)(iii) of this section), for transmitting eligibility inquiries 
and responses between dispensers and Part D sponsors.
    (4) Medication history. The National Council for Prescription Drug 
Programs Prescriber/Pharmacist Interface SCRIPT Standard, 
Implementation Guide, Version 8, Release 1 (Version 8.1), October 2005 
(incorporated by reference in paragraph (c)(1)(i) of this section) to 
provide for the communication of Medicare Part D medication history 
information among Medicare Part D sponsors, prescribers, and 
dispensers.
    (5) Formulary and benefits. The National Council for Prescription 
Drug Programs Formulary and Benefits Standard, Implementation Guide, 
Version 1, Release 0 (Version 1.0), October 2005 (incorporated by 
reference in paragraph (c)(1)(ii) of this section) for transmitting 
formulary and benefits information between prescribers and Medicare 
Part D sponsors.
    (6) Provider identifier. The National Provider Identifier (NPI), as 
defined at 45 CFR 162.406, to identify an individual health care 
provider to Medicare Part D sponsors, prescribers and dispensers, in 
electronically transmitted prescriptions or prescription-related 
materials for Medicare Part D covered drugs for Medicare Part D 
eligible individuals.
    (c) Incorporation by reference. The Director of the Federal 
Register approves, in accordance with 5 U.S.C. 552(a) and 1 CFR Part 
51, the incorporation by reference of certain publications into this 
section. You may inspect copies of these publications at the 
headquarters of the Centers for Medicare & Medicaid Services (CMS), 
7500 Security Boulevard, Baltimore, Maryland 21244, Monday through 
Friday from 8:30 a.m. to 4 p.m. or at the National Archives and Records 
Administration (NARA). For more information on the availability of this 
material at NARA, call (202) 741-6030, or go to http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. The publications approved for incorporation by 
reference and their original sources are as follows:
    (1) National Council for Prescription Drug Programs, Incorporated, 
9240 E. Raintree Drive, Scottsdale, AZ 85260-7518; Telephone (480) 477-
1000; and

[[Page 18942]]

Facsimile (480) 767-1042 or http://www.ncpdp.org.
    (i) National Council for Prescription Drug Programs Prescriber/
Pharmacist Interface SCRIPT Standard, Implementation Guide, Version 8, 
Release 1, October 2005.
    (ii) The National Council for Prescription Drug Programs Formulary 
and Benefits Standard, Implementation Guide, Version 1, Release 0, 
October 2005.
    (iii) National Council for Prescription Drug Programs 
Telecommunication Standard Specification, Version 5, Release 1 (Version 
5.1), September 1999 and equivalent National Council for Prescription 
Drug Programs (NCPDP) Batch Standard Batch Implementation Guide, 
Version 1, Release 1 (Version 1.1), January 2000 supporting 
Telecommunication Standard Implementation Guide, Version 5, Release 1 
(Version 5.1) for the NCPDP Data Record in the Detail Data Record.
    (iv) National Council for Prescription Drug Programs SCRIPT 
Standard, Implementation Guide, Version 5, Release 0, May 12, 2004, 
excluding the Prescription Fill Status Notification Transaction (and 
its three business cases; Prescription Fill Status Notification 
Transaction--Filled, Prescription Fill Status Notification 
Transaction--Not Filled, and Prescription Fill Status Notification 
Transaction--Partial Fill).
    (2) Accredited Standards Committee, 7600 Leesburg Pike, Suite 430, 
Falls Church, VA 22043; Telephone (301) 970-4488; and Facsimile: (703) 
970-4488 or http://www.x12.org.
    (i) Accredited Standards Committee (ASC) X12N 270/271-Health Care 
Eligibility Benefit Inquiry and Response, Version 4010, May 2000, 
Washington Publishing Company, 004010X092 and Addenda to Health Care 
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002, 
Washington Publishing Company, 004010X092A1.
    (ii) Reserved.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: March 14, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.

    Approved: March 28, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. 08-1094 Filed 4-2-08; 10:44 am]
BILLING CODE 4120-01-P