[Federal Register Volume 85, Number 251 (Thursday, December 31, 2020)]
[Rules and Regulations]
[Pages 86824-86835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28877]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 423
[CMS-4189-F]
RIN 0938-AT94
Medicare Program; Secure Electronic Prior Authorization For
Medicare Part D
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule names a new transaction standard for the
Medicare Prescription Drug Benefit program's (Part D) e-prescribing
program as required by the ``Substance Use-Disorder Prevention that
Promotes Opioid Recovery and Treatment for Patients and Communities
Act'' or the ``SUPPORT Act.'' Under the SUPPORT Act, the Secretary is
required to adopt standards for the Part D e-prescribing
[[Page 86825]]
program to ensure secure electronic prior authorization request and
response transmissions. In this final rule, we amend the Part D e-
prescribing regulations to require Part D plan sponsors' support of
version 2017071 of the National Council for Prescription Drug Programs
(NCPDP) SCRIPT standard for use in certain electronic Prior
Authorization (ePA) transactions with prescribers regarding Part D-
covered drugs to Part D-eligible individuals.
DATES: These regulations are effective on February 1, 2021. The
incorporation by reference of certain publications listed in the rule
was approved by the Director of the Federal Register as of July 28,
2017.
FOR FURTHER INFORMATION CONTACT: Joella Roland (410) 786-7638.
SUPPLEMENTARY INFORMATION:
I. Background
The purpose of this final rule is to adopt a new standard for
certain transactions concerning Part D-covered drugs prescribed to Part
D-eligible individuals under the Part D e-prescribing program. Under
this final rule, Part D plan sponsors will be required to support
version 2017071 of the National Council for Prescription Drug Programs
(NCPDP) SCRIPT standard for four electronic Prior Authorization (ePA)
transactions, and prescribers will be required to use that standard
when performing ePA transactions for Part D-covered drugs they wish to
prescribe to Part D-eligible individuals. Part D plans, as defined in
42 CFR 423.4, include Prescription Drug Plans (PDPs) and Medicare
Advantage Prescription Drug Plans (MA-PDs); Part D sponsor, as defined
in 42 CFR 423.4, means the entity sponsoring a Part D plan, MA
organization offering a MA-PD plan, a Programs of All-Inclusive Care
for the Elderly (PACE) organization sponsoring a PACE plan offering
qualified prescription drug coverage, and a cost plan offering
qualified prescription drug coverage. The ePA transaction standard will
provide for the electronic transmission of information between the
prescribing health care professional and Part D plan sponsor to inform
the sponsor's determination as to whether or not a prior authorization
(PA) should be granted. The NCPDP SCRIPT standard version 2017071 was
adopted as a Part D e-prescribing program standard for certain defined
transactions in the April 16, 2018 final rule (83 FR 16440) titled
``Medicare Program; Contract Year 2019 Policy and Technical Changes to
the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service,
the Medicare Prescription Drug Benefit Programs, and the PACE Program''
that became effective June 15, 2018.
A. Legislative Background
1. Health Insurance Portability and Accountability Act of 1996 (HIPAA)
The Health Insurance Portability and Accountability Act of 1996
(HIPAA) (Pub. L. 104-191) was enacted on August 21, 1996. Title II,
Subtitle F, of HIPAA requires covered entities--health plans, health
care providers that conduct covered transactions, and health care
clearinghouses--to use the standards HHS adopts for certain electronic
transactions. The standards adopted by HHS for purposes of HIPAA are in
regulations at 45 CFR part 162.
2. Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA)
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) (Pub. L. 108-173) was enacted on December 8, 2003. It
amended Title XVIII of the Social Security Act (the Act) by
redesignating Part D as Part E and inserting a new Part D to establish
a voluntary prescription drug benefit program. As part of that program,
section 1860D-4(e) of the Act, as added by the MMA, required the
adoption of Part D e-prescribing standards for electronic prescriptions
and prescription-related transactions between Part D plan sponsors,
providers, and pharmacies. The Secretary's selection of standards is
informed by the National Committee on Vital and Health Statistics
(NCVHS), an advisory committee that gives advice to the Secretary in
accordance with the Federal Advisory Committee Act, including regarding
implementation of the administrative simplification provisions of
HIPAA. Under section 1860D-4(e)(4)(B) of the Act, NCVHS develops
recommendations for Part D e-prescribing standards, in consultation
with specified groups of organizations and entities. These
recommendations are then taken into consideration when developing,
adopting, recognizing, or modifying Part D e-prescribing standards. The
statute further requires that the selection of standards be designed,
to the extent practicable, so as not to impose an undue administrative
burden on prescribers or dispensers, but to be compatible with
standards established under Part C of title XI of the Act (the HIPAA
standards), comport with general health information technology
standards, and permit electronic exchange of drug labeling and drug
listing information maintained by the Food and Drug Administration and
the Library of Medicine.
The standards adopted by CMS for purposes of the Part D e-
prescribing program are in regulations at 42 CFR 423.160. Part D plan
sponsors are required to support the Part D e-prescribing program
transaction standards, and providers and pharmacies that conduct
electronic transactions for which a program standard has been adopted
must do so using the adopted standard. (For additional information
about the MMA program authority, see the February 4, 2005 proposed rule
(70 FR 6256).)
3. Substance Use-Disorder Prevention That Promotes Opioid Recovery and
Treatment for Patients and Communities Act
The Substance Use-Disorder Prevention that Promotes Opioid Recovery
and Treatment for Patients and Communities Act (Pub. L. 115-271),
hereinafter referred to as the ``SUPPORT Act,'' was enacted on October
24, 2018. Section 6062 of the SUPPORT Act amended section 1860D-4(e)(2)
of the Act to require the adoption of transaction standards for the
Part D e-prescribing program to ensure secure ePA request and response
transactions between prescribers and Part D plan sponsors no later than
January 1, 2021. Such transactions are to include an ePA request
transaction for prescribers seeking an ePA from a Part D plan sponsor
for a Part D-covered drug for a Part D-eligible individual, as well as
an ePA response transaction for the Part D plan sponsor's response to
the prescriber. A facsimile, a proprietary payer portal that does not
meet standards specified by the Secretary or an electronic form are not
treated as electronic transmissions for the purposes of ePA requests.
The ePA standards adopted under this authority are to be adopted in
consultation with the NCPDP or other standards development
organizations the Secretary finds appropriate, as well as other
stakeholders.
Finally, the SUPPORT Act also authorized the adoption of ePA
transaction standards for Part D-covered drugs prescribed to Part D-
eligible individuals ``notwithstanding'' any other provision of law.
B. Regulatory History
In 2000, the Secretary adopted HIPAA transaction standards for the
``referral certification and authorization transaction''. The term
``referral certification and authorization transaction'' is defined at
45 CFR
[[Page 86826]]
162.1301 as the transmission of any of the following: (1) A request
from a health care provider to a health plan for the review of health
care to obtain an authorization for the health care; (2) a request from
a health care provider to a health plan to obtain authorization for
referring an individual to another health care provider; and (3) a
response from a health plan to a health care provider to a request
described in (1) or (2). The first HIPAA standard adopted for this
transaction was version 4010 of the X12 278 (65 FR 50371, August 17,
2000). In 2003, the Secretary adopted another standard, the NCPDP
version 5.1, for retail pharmacy drug referral certification and
authorization transactions, and specified that version 4010 of the X12
278 was to be used only for dental, professional, and institutional
referral certification and authorization transactions. (For more
detailed information, see the February 20, 2003 Federal Register (68 FR
8398).) Still, as of 2003, the Secretary had not adopted a standard for
ePA for medications specifically.
In 2004, NCPDP formed a multi-industry, multi-Standards Development
Organization (SDO) ePA Task Group to evaluate existing ePA standards
and promote standardized ePA, with a focus on the medication context.
The Task Group considered the X12 278 standard, but determined that
there were certain gaps in the X12 278 standard that made the standard
difficult to use for ePA for medications, including that the standard
was unable to support attachments for PA determinations, did not
incorporate free text in certain fields, and did not at the time allow
functionality for real-time messaging. As a result of these findings,
the Task Group wrote a letter to the HHS Secretary stating that the X12
278 standard offered limited support for ePA for medications.
On January 16, 2009, the Secretary adopted later versions of the
HIPAA transaction standards, requiring NCPDP Telecommunications D.0
instead of NCPDP 5.1, and version 5010 instead of version 4010 of the
X12 278 for referral certification and authorization transactions (74
FR 3326). These standards are specified at 45 CFR 162.1302(b)(2).
In the meantime, the industry continued to work to develop and test
alternative ePA transaction standards for use in the medication
context. Such work led NCPDP to develop what would ultimately become
its first standard to support ePA. In a May 15, 2014, letter to the HHS
Secretary, NCVHS stated that they had received a letter from the NCPDP
recommending its SCRIPT Standard Version 2013101 as a standard for
carrying out medication ePA transactions. (For more information see,
https://ncvhs.hhs.gov/wp-content/uploads/2014/05/140515lt2.pdf.) In
support of this recommendation, NCVHS reported that NCPDP investigators
tasked with reviewing the X12 278 standards (the 278 v4010 or v5010)
for medication ePA transactions found impediments. These impediments
were grounded in the standards having been designed for requests for
review and corresponding responses for the ePA of health care services
(such as for procedures/services and durable medical equipment),
resulting in an inability to facilitate medication ePA. NCPDP also
noted the lack of widespread use of the X12 278 transaction in the
medication ePA context as evidence of its inadequacy for this purpose.
Despite these findings and NCPDP recommendation to NCVHS, we did
not pursue proposing the NCPDP SCRIPT Standard Version 2013101 as a
Part D eRx program standard for medication ePA transactions because it
was contrary to the HIPAA requirements, which continued to require use
of the X12 278 standard. Similarly, when NCPDP wrote to CMS on May 24,
2017 to recommend the adoption of its NCPDP SCRIPT Standard Version
2017071, we were unable to consider it for the Part D e-Rx program due
to the HIPAA transaction standards in effect at that time.
Of note, the Part D e-Rx program's authorizing statute requires the
selection of Part D standards that are compatible with the HIPAA
standards. See section 1860D-4(e)(2)(C) of the Act. However, given the
new authority under the SUPPORT Act, we believe we now have authority
to adopt Part D eRx ePA transaction standards ``notwithstanding'' any
other provision of law, if such proposals are framed in consultation
with stakeholders and the NCPDP or other standard setting organizations
the Secretary finds appropriate. See section 1860D-4(e) of the Act, as
amended by section 6062 of the SUPPORT Act. We believe that this
provision explicitly authorizes us to require the use of an ePA
standard in the Part D context that is different from the HIPAA
standard, as long as it is for use in the ePA of Part D-covered drugs
prescribed to a Part D-eligible individuals.
As previously described, Part D plan sponsors are required to
establish electronic prescription drug programs that comply with the e-
prescribing standards adopted under the Part D e-prescribing program's
authorizing statute. There is no requirement that prescribers or
dispensers implement eRx. However, prescribers and dispensers who
electronically transmit and receive prescription and certain other
information regarding covered drugs prescribed for Medicare Part D-
eligible beneficiaries, directly or through an intermediary, are
required to comply with any applicable standards that are in effect.
As of January 1, 2020, prescribers and dispensers are required to
use the NCPDP SCRIPT standard, Implementation Guide Version 2017071,
for the communication of the same prescription or prescription-related
information between prescribers and dispensers for the transactions for
which prior versions of the NCPDP SCRIPT standard were adopted, as well
as a handful of new transactions named at Sec. 423.160(b)(2)(iv). For
more information, see the April 16, 2018 final rule (83 FR 16635) and
for a detailed discussion of the regulatory history of the Part D e-
prescribing standards see the November 28, 2017 proposed rule (82 FR
56437).
While not currently adopted as part of the Part D eRx standard, the
NCPDP SCRIPT standard version 2017071 includes 4 transaction standards
that will enable prescribers to initiate, request, and review the 4
response transactions from Part D plan sponsors at the time of the
patient's visit. These eight response transactions include: The PA
initiation request/response, PA request/response, PA appeal request/
response, and PA cancel request/response. As noted previously,
historically we were unable to name this ePA transaction standard as a
Part D e-prescribing program standard. Prior to the passage of the
SUPPORT Act, the Part D program was required to adopt standards that
were compatible with the HIPAA standards, and HIPAA covered entities
are currently required to use the X12 278 to conduct referral
certification and authorization transactions between health plans and
health care providers.
II. Adoption of the NCPDP SCRIPT Standard Version 2017071 as the Part D
ePA Transaction for the Part D Program
A. PA in the Part D Context
All Part D plans, as defined under Sec. 423.4, including PDPs, MA-
PDs, PACE Plans offering qualified prescription drug coverage, or Cost
Plans offering qualified prescription drug coverage, may use approved
PA processes to ensure appropriate prescribing and coverage of Part D-
covered drugs prescribed to Part D-eligible individuals. We review all
PA
[[Page 86827]]
criteria as part of the formulary review process. In framing our PA
policies, we encourage PDP and MA-PD sponsors to consistently utilize
PA for drugs prescribed for non-Part D covered uses and to ensure that
Part D drugs are only prescribed when medically appropriate. Non-Part D
covered uses may be indicated when the drug is frequently covered under
Parts A or B as prescribed and dispensed or administered, is otherwise
excluded from Part D coverage, or is used for a non-medically accepted
indication. (For more information, see the Medicare Prescription Drug
Manual, chapter 6, section 30.2.2.3.) Part D sponsors must submit to
CMS utilization management requirements applied at point of sale,
including PA.
We may also approve PA for prescriptions when the Part D plan
desires to manage drug utilization, such as when step therapy is
required, when it needs to establish whether the utilization is a
continuation of existing treatment that should not be subject to the
step therapy requirements, or to ensure that a drug is being used
safely or in a cost-effective manner. Formulary management decisions
must be based on scientific evidence and may also be based on pharmaco-
economic considerations that achieve appropriate, safe, and cost-
effective drug therapy.
The PA process has historically been handled via facsimile exchange
of information or telephone call, and only recently via payer-specific
web portals. However, stakeholders testifying to NCVHS generally agree
that there is a need to move to a user-friendly, real-time ePA for use
by prescribers. Minutes from NCVHS meetings can be accessed at https://ncvhs.hhs.gov/meetings-meeting/all-past-meetings/. Therefore, we
believe the adoption of an ePA standard for the Part D eRx program will
improve patient access to required medications.
B. PA for Part D E-Prescribing
In order to meet the SUPPORT Act's mandate to adopt an ePA
transaction standard for the Part D-covered drugs prescribed to Part D-
eligible individuals, CMS identified ePA transaction standards
currently available for use by pharmacies and prescribers. These
included the X12 278 and NCPDP Telecommunications D.0 standards, the
NCPDP SCRIPT standard version 2017071, and earlier versions of the
NCPDP SCRIPT standard. We quickly ruled out the use of older NCPDP
SCRIPT standards based on the improvements incorporated in the current
HIPAA Administrative Simplification transaction standards and our
assessment of the enhanced functionality available in the NCPDP SCRIPT
standard version 2017071.
Then we considered the needs of the Part D eRx program; the
functionalities offered by the remaining two sets of standards; NCVHS
recommendations, stakeholder recommendations based on their experience
developing, vetting, evaluating, revising, and using the standards
constructed by the respective Standards Development Organizations
(SDOs) including NCPDP, the burden on stakeholders to use the
standards, the security offered by the standards; and the current EHR
capabilities of the industry in order to estimate the potential burden
each standard will impose if it were to be adopted in the Part D
context.
The NCPDP Telecommunications D.0 standard was designed to be a
standard for insurance companies to approve claims, and, to our
knowledge, is only used in ``pharmacy to plan'' transactions. We found
that it does not include all of the content fields that may be relevant
to ePA for medications, and had understood that it does not have the
ability to support transmission of information in real time. Then we
considered the X12 278 standard. The X12 278 is already used as the
HIPAA standard for referral certification and PA for dental,
professional and institutional transactions, and retail pharmacy drugs
transactions, respectively.
Based on review of NCPDP's testimony and the letters received from
NCVHS, we had found that the NCPDP and its participant organizations
have historically concluded (and presented to NCVHS via testimony at
hearings) that the X12 278 standard is not adequate to enable ePA in
the medication e-prescribing context because it does not support
``real-time'' medication e-prescribing, meaning a prescriber seeking an
ePA determination during the patient encounter. We understood that this
was due to the content logic of the standard not having the technical
capabilities to allow for next question logic, which allows the
prescriber to determine medication alternatives and determine within
minutes if the medication will be authorized or if a coverage
determination is required. In addition, we found that the fields,
transaction messaging, and software functioning were not structured to
include information relevant to ePA, and contained mandatory questions
that were unnecessary for medication ePA. Unfortunately, we also found
that prescribers are unable to customize these fields as may be needed
for medication ePA.
These findings were largely based on NCPDP's 2016 written testimony
to NCVHS, which is available via this web link: https://www.ncvhs.hhs.gov/wp-content/uploads/2016/01/Part-2-Attachments-NCPDP-WrittenOnly.pdf. The NCPDP testimony urged the exemption of medication
transactions from the X12 278 standard. The testimony also advocated
for NCPDP's May 24, 2017 recommendation to adopt the NCPDP SCRIPT
Standard Version 2017071 for ePA transactions in the HIPAA context,
with a 24-month implementation time period due to the extensive coding
required by health IT developers and Part D plans to implement the
change.
Although NCPDP's recommendation was to adopt this standard for all
HIPAA transactions, the Department did not elect to make the suggested
changes to the HIPAA Administrative Simplification transaction
standards. Based on conversations with the industry, our own assessment
of the standard, and under the authority provided by Congress to
require the use of a standard for Part D ePA notwithstanding any other
provision of law, we concluded that the potential benefits of adopting
user-friendly ePA for the Part D eRx program outweigh any difficulties
that may arise by virtue of Part D using a different standard than the
rest of the industry.
More specifically, we concluded that the NCPDP SCRIPT standard
version 2017071 would support an electronic version of today's PA
process by providing standardized information fields that are relevant
for medication use, mandatory questions, transaction messaging, and
standardized ePA data elements and vocabulary for exchanging the PA
questions and answers between prescribers and payers, while also
allowing the payers to customize the wording of the questions using
free form fields. Although the X12 278 standard has standard
information fields, mandatory questions, transaction messaging, and
standardized data element and values, we believed those fields were
more relevant to use in dental, professional, and institutional
requests for review and response, and would not be conducive to
medication ePA. Since the X12 278 standard does not allow payers to
customize the wording of questions, we believe it would be difficult
for parties to decide how to fill out the fields. In contrast, we found
that NCPDP SCRIPT Standard version 2017071 was specifically designed to
support medication ePA. The standard supports features that minimize
what the prescriber is asked, creating a customized experience based
[[Page 86828]]
on earlier answers or data automatically pulled by their EHR system.
These features would reduce the amount of time a prescriber or their
staff spend reviewing and responding to the ePA questions. We
understood that this functionality exists in most EHR systems, and can
be customized based on what information is requested by the plans. We
found great value in this potential to automate the collection of data
required for ePA from data available within most EHR systems.
Furthermore, unlike the X12 278 standard, NCPDP SCRIPT standard
version 2017071 supports solicited and unsolicited models. A solicited
model occurs when the prescriber notifies the payer that they wish to
initiate the PA process to determine if an authorization is needed for
the patient and their desired medication. The prescriber requests
guidance as to what information will be required for an ePA request for
a particular patient and medication. The payer then responds either
with a description of the information required, or an indication that a
PA is not required for that patient and medication. An unsolicited
model can be used when the information generated in this first
interchange of the solicited model is not required. In such a case, the
prescriber presumes or knows that an authorization will be required
based on past experience or other knowledge, anticipates what the payer
needs, and submits the needed information.
We also found that while X12 278 uses Electronic Data Interchange
(EDI) syntax, the NCPDP SCRIPT standard version 2017071 uses XML
syntax. XML helps to ensure the security of transactions through the
encryption of personal health information and through use of XML
transaction processing. XML is a newer syntax that provides for an
easier interaction among different formats and is more easily readable
between disparate systems and when system issues arise. By contrast,
EDI is an older syntax more commonly used when there are fewer
companies that conduct standard interactions among one another.
Based on this evaluation of the candidate standards, coupled with
the recommendations from NCPDP, CMS concluded that the NCPDP SCRIPT
standard version 2017071 was the most appropriate standard to propose
for the Part D eRx program.
We explicitly recognized that this final rule would not change the
ePA transaction standards that will be used outside of the Part D
context. We did not believe that it would be problematic to use one
standard for Part D and another standard outside of Part D, because we
believed that the industry was already equipped to use different
standards for different health plans and programs.
Finally, we considered whether adopting the NCPDP SCRIPT standard
version 2017071 for Part D ePA would create any difficulties if an
individual had multiple forms of drug coverage or wished to pay cash
for a prescription. The SUPPORT Act specifies that the adopted standard
shall be applicable for ePA of Part D-covered drugs prescribed to Part
D-eligible individuals, but it stops short of requiring that the
prescribed drug be paid for by the Part D plan. Thus, even if a
prescriber were to use the NCPDP SCRIPT standard version 2017071 to
seek Part D ePA, the beneficiary's right to pay for the drug directly,
or to use non-Part D coverage to pay for the drug would be unaffected.
However, we noted that the prescriber may not use the NCPDP SCRIPT
standard version 2017071 to seek ePA with non-Part D plans. We expected
that their EHR's eRx function would be capable of using the appropriate
HIPAA standard or that they may use alternative means to seek PA
outside of the Part D context. Furthermore, where a patient has both a
Part D plan and a supplementary payer, the NCPDP SCRIPT standard
version 2017071 could be used to process the Part D ePA transactions in
real time, with the subsequent claims processing transactions made in
the usual manner if the prescription is filled. Thus, we believed our
proposal would not be overly burdensome for regulated parties, even if
beneficiaries seek to use their non-Part D coverage or elect to self-
pay.
However, in recognition of patient rights, we also noted that while
the prescriber can use the NCPDP SCRIPT standard version 2017071 for
all Part D-covered drugs prescribed to Part D-eligible individuals, it
should refrain from doing so in instances in which the patient
specifically requests that the Part D benefits not be accessed.
As a result of these observations and our understanding that most
of the industry is able to support NCPDP SCRIPT standard version
2017071 using their current EHRs, we believed that requiring plans to
support, and prescribers to use the NCPDP SCRIPT standard version
2017071 ePA transactions when prescribing Part D-covered drugs to Part
D-eligible individuals will not impose an undue administrative burden
on plans, prescribers or dispensers. Therefore, based on its inherent
features designed to accommodate prescriptions, we believed that the
NCPDP SCRIPT standard version 2017071, which includes the following ePA
transaction capabilities, would be the best available option to support
ePA between prescribers and payers for Part D covered drugs prescribed
to Part D-eligible individuals:
PAInitiationRequest and PAInitiationResponse
PARequest and PAResponse
PAAppealRequest and PAAppealResponse
PACancelRequest and PACancelResponse.
We believed finalization of the ePA transaction proposals would
enable the electronic presentation of ePA questions and responses using
secure transactions.
The SUPPORT Act states that the Secretary must adopt, and a Part D
sponsor's electronic prescription program must implement the adopted
ePA by January 1, 2021. As of January 1, 2020, plans will already be
required to use the NCPDP SCRIPT 2017071 standard for certain Part D-
specified transactions, so we believed that giving plans an additional
year to add ePA to that list of other NCPDP SCRIPT 2017071 transactions
would not be overly burdensome and would ensure that the SUPPORT Act
was implemented as required.
In addition, the SUPPORT Act, allows us to finalize the adoption of
an ePA standard for Part D-covered drugs to Part D-eligible individuals
notwithstanding any other provision of law. Furthermore, we noted our
belief that our proposal, if finalized, being later in time, more
specific, and authorized by the SUPPORT Act, would prevail in a
conflict of law analysis.
Therefore, we proposed adding Sec. 423.160(b)(7) which would
require Part D plans' support the noted NCPDP SCRIPT standard version
2017071 ePA transactions beginning on January 1, 2021, and that
prescribers use that standard when conducting ePA for Part D-covered
drugs prescribed to Part D-eligible individuals by the same date. This
applies to the following list of ePA transactions:
PAInitiationRequest and PAInitiationResponse
PARequest and PAResponse
PAAppealRequest and PAAppealResponse
PACancelRequest and PACancelResponse
We welcomed comments on the proposed adoption of the NCPDP SCRIPT
standard version 2017071 for these ePA transactions for Part D covered
drugs prescribed to Part D eligible individuals. We also solicited
[[Page 86829]]
comments regarding the impact of the proposed transactions and the
proposed effective date on industry and other interested stakeholders,
including whether the implementation of these NCPDP SCRIPT standard
version 2017071 ePA transactions for use by prescribers and plans in
the Part D program would impose an additional burden on the industry as
a whole. We were also interested in hearing input as to whether
implementation of the proposed transactions would constitute a
significant change for Part D sponsors, such that a January 1, 2021
implementation date would not be feasible. We also sought comment on
strategies to mitigate burden in order to support successful adoption
of this policy, should it be finalized. We also sought comment on any
additional ways that we can support plans if they were to be required
to transition to the ePA standard by the proposed 2021 deadline.
Finally, we solicited comments on the alternatives considered for the
proposed rule.
In the June 19, 2019 Federal Register (84 FR 28450), we published
the proposed rule that would, if finalized, establish a new ePA
transaction standard for the Part D e-prescribing program as required
by SUPPORT Act. We received 53 timely pieces of correspondence in
response to the June 2019 proposed rule. Commenters included Part D
sponsors, beneficiaries, beneficiary advocacy groups, pharmacy benefit
managers (PBMs), pharmaceutical manufacturers, pharmacies, IT vendors,
and other interested parties. Of the comments received, most commenters
supported the rule. Summaries of the public comments, our responses to
those public comments, and our final policies are set forth as follows.
Comment: Many commenters supported the proposed rule, stating that
the standard is already used in the industry, and that any
encouragement to use it for ePA will help streamline the PA process.
Response: We thank commenters for their support and agree that ePA
will likely help streamline the PA process in the Part D eRx program
context.
Comment: A few commenters expressed their dissatisfaction with
having to perform PAs so often and stated that providers should be paid
to perform PA.
Response: While we appreciate commenters' concerns, the use of PA
is outside the scope of this rule. This final rule is limited to
establishing the means by which ePA will be conducted in the Part D eRx
program context, not the frequency of PAs or provider reimbursement.
However, we note that as a part of the agency's Patients Over Paperwork
initiative,\1\ we are working towards improving the prior-authorization
process, and solicited comment on ways to do so in the June 11, 2019,
Request for Information; Reducing Administrative Burden to Put Patients
Over Paperwork (84 FR 27070). We also solicited comment on how to
improve prior authorization in Medicare fee-for-service through our
Request for Information on the Future of Program Integrity issued in
October 2019.
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\1\ https://www.cms.gov/About-CMS/story-page/patients-over-paperwork.html.
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Comment: A number of commenters provided comments relating to the
proposed January 1, 2021, implementation date. Some of these commenters
stated that the January 1, 2021 deadline was achievable. However, other
commenters encouraged a later deadline for implementation or the use of
enforcement discretion for the first 2 years. The reasons given for the
requested delay include a desire to focus on the requirement for Part D
plans to implement a prescriber real time benefit tool (RTBT) by
January 1, 2021 (84 FR 23832) and to allow more time for development
and testing. One commenter requested that we allow 24 months after the
publication of the final rule for implementation: 12 months for
development and testing and 12 months for providers to adopt software
updates.
Response: We are sympathetic to commenters requesting a longer
period in which to implement these requirements, especially in light of
the toll that the current public health emergency (PHE) related to the
2019 Novel Coronavirus Disease (COVID-19) is taking on the industry,
our prescriber RTBT requirement, and the need to test the technology
before use. However, as noted in the proposed rule and previously in
this final rule, the SUPPORT Act established the deadline by which we
are required to implement this program standard. The SUPPORT Act
requires that the Part D eRx program ``provide for the secure
electronic transmission of . . . a prior authorization request . . .''
by January 1, 2021. In light of this mandate and the benefits of
encouraging ePA, including increased interoperability between parties
and a decrease in time spent performing prior authorizations, we are
allowing Part D sponsors to use NCPDP SCRIPT 2017071 for prior
authorizations beginning January 1, 2021. In an attempt to balance the
statutory mandate and the benefits of use of this standard with the
concerns of the commenters requesting more time and the burden on Part
D plans in light of the current PHE, we are only requiring use of the
standard beginning January 1, 2022. We believe that the January 1, 2022
deadline affords sufficient time to ensure compliance with this rule.
Although we understand the request for a 24-month implementation
timeframe, we believe that the implementation date in this final rule
appropriately balances the benefits of adoption of the standard and the
time needed to ensure compliance. We also note that this is only a
requirement for Part D plans--not providers--so we do not believe that
the additional 12 months for providers to adopt updates needs to be
accounted for in the implementation timeframe. As a result of our
decision to delay requiring use of the standard until January 1, 2022,
we do not anticipate using enforcement discretion.
As discussed later in this final rule, we are finalizing proposed
Sec. 423.160(b)(7) as Sec. 423.160(b)(8). Additionally, to
effectively finalize the implementation date changes, we are
restructuring the regulation text at Sec. 423.160(b)(8). As finalized,
paragraph (b)(8)(i) allows for use of the NCPDP SCRIPT standard by
January 1, 2021, and paragraph (b)(8)(ii) requires use of the standard
by January 1, 2022. Accordingly, we have redesignated proposed
paragraphs (b)(7)(i) through (iv), which list the covered electronic
prior authorization transactions, as paragraphs (b)(8)(i)(A) through
(D).
Comment: Some commenters stated that although they applaud
implementing the NCPDP SCRIPT standard version 2017071 ePA transactions
for Part D, they believe that it should be acceptable for all pharmacy
transactions. The reasons commenters gave for this were their belief
that the SCRIPT standard is the most appropriate standard for all
pharmacy transactions, regardless of payer or inclusion in Part D, and
that using two standards for the same workflow will cause an
unnecessary burden.
Response: We thank the commenters for their support for
implementing this rule, and appreciate their feedback. However,
suggestions regarding the use of these standards outside of the Part D
eRx program are outside the scope of this rule. This final rule
implements section 6062 of the SUPPORT Act, which requires the program
to provide for the secure electronic transmission of Part D drugs for a
Part D eligible individual enrolled in a Part D plan. As such,
electronic transmissions outside of the Part D context go beyond the
scope of this rule.
[[Page 86830]]
Although we are sympathetic to concerns about having to support two
standards within the same workflow, we are unable to remedy this issue
within the scope of this final rule, which implements section 6062 of
the SUPPORT Act. We believe that having the two standards is consistent
with Congress' intent when promulgating this section of the SUPPORT
Act, since the statutory mandate only extended to providing for
electronic transmissions in Part D.
Comment: A commenter requested that CMS either issue clarifying
guidance in the final rule to indicate that HIPAA's Referral
Certification and Authorization standards do not apply to ePA
transactions for prescription drugs, or name the NCPDP SCRIPT standard
version 2017071 as the HIPAA standard for ePA transactions for
prescription drugs. The commenter stated that the ASC X12 prior
authorization transaction named under HIPAA is for medical benefits and
is not effective for the exchange of information related to prior
authorizations of products covered under a pharmacy benefit.
Response: We are unable to do as requested. Suggestions regarding
the use of these standards outside of the Part D eRx program are
outside the scope of this rule. This final rule implements section 6062
of the SUPPORT Act, which requires the program to provide for the
secure electronic transmission of Part D drug for a Part D eligible
individual enrolled in a Part D plan. As such, electronic transmissions
outside of the Part D context go beyond the scope of this rule.
Comment: Several commenters stated that CMS should allow and
encourage other ePA standards, such as the Fast Healthcare
Interoperability Resources (FHIR) standard promulgated by the standards
development organization Health Level 7 (HL7). This standard supports
application programming interfaces (APIs), and encouraged us to adopt
these standards for other eRx contexts.
Response: Although we appreciate this feedback, these comments are
outside the scope of this rule. The proposed rule only covered our
proposals to implement the SUPPORT Act's mandate to implement an ePA
standard under Part D. At this time, the suggested standard and
application programming interfaces are not used to support most
pharmacy transactions. We will continue to monitor the development,
maturity, and industry adoption of HL7 FHIR standards for future
rulemaking.
In addition, to the extent the commenters were suggesting the
adoption of more broadly applicable standards outside of the Part D eRx
program, section 6062 of the SUPPORT Act, which this rule implements,
only allows for the use of an ePA standard that is different from the
HIPAA standard if it is for a Part D covered drug prescribed to a Part
D eligible individual. Other ePA medication transactions outside of
Part D are still governed by HIPAA standards.
Comment: Some commenters requested more guidance surrounding the
use of PA generally, including information about PA processing times
allowed under Part D and how PAs interact with subregulatory guidance
for Medicare health and drug programs.
Response: Although we appreciate commenters' interest in learning
more about use of PA in the Medicare programs, these comments are not
within the scope of this rule. As previously mentioned, the sole
purpose of this rule is to implement the SUPPORT Act's mandate that
requires our adoption of a new standard for ePA in the Part D eRx
program. However, we would note that PA is a key component of
utilization management under a Part D plan, and consistent with Sec.
423.153, we would further remind commenters that each Part D plan is
required to review the effectiveness of its utilization management
policies and systems. Such review should include ensuring the
prevention of over-utilization and under-utilization of prescribed
medications. To the extent that automation of the PA function will
allow plans to improve their ongoing monitoring of utilization
management programs through enhanced reporting, they should use that
improved functioning. In addition, as coverage of drugs that undergo a
PA constitutes a coverage determination, such determinations are
subject to all applicable coverage determination standards, timelines,
and requirements.
Comment: A commenter requested clarification about whether the
proposed rule, if finalized, would ban prescribers from conducting PA
using non-electronic means or whether it would only require prescribers
to use the NCPDP SCRIPT standard version 2017071 ePA transactions if
they intend to process PA via electronic means. Another commenter
believed that naming the NCPDP SCRIPT standard version 2017071 ePA
transactions was premature given the challenges inherent in the
practice of rural medicine, which can be impacted by limited or
inconsistent technological capabilities.
Response: This rule only requires plans support the NCPDP SCRIPT
standard version 2017071. Prescribers who elect to conduct PA
electronically in the Part D eRx context will be required to do so
using the adopted standards. Prescribers remain free to use non-
electronic means of conducting PA, and Part D plans are still required
to accept prior authorization requests via existing means, such as via
facsimile (FAX).
Comment: A commenter requested that CMS adopt the same electronic
prescribing standards used for prescribers to communicate with
Prescription Drug Management Program (PDMP) databases. The commenter
did not identify the standard generally used by PDMPs.
Response: We did not consider the standard the commenter alluded to
because without knowing the details of the standard generally used by
PDMPs we are unable to assess whether it was or was not a standard
considered for Part D eRx ePA. We appreciate the commenter's concerns
about interoperability, but we are unable to delay naming of the
proposed transactions while we evaluate the degree to which PDMPs may
or may not be using the NCPDP SCRIPT standard version 2017071 or some
alternative. Due to the statutory deadline to implement ePA in the Part
D eRx program, we needed to select a standard that is ready for use in
ePA transactions.
Comment: Another commenter urged CMS to allow voluntary use of
other standards if mutually agreed upon between trading partners.
Response: We would like to emphasize that this rule proposed the
NCPDP SCRIPT standard version 2017071 ePA transactions in part because
health plans are already required to support use of that same version
of the standard for other transactions beginning January 1, 2020, in
accordance with the April 2018 final rule. As the ePA transactions are
part of version 2017071 of the NCPDP SCRIPT standard, we do not believe
it would be advisable to allow voluntary use of a different version of
the NCPDP SCRIPT standard as that would require all trading partners to
support different versions of the standard at the same time in order to
comply with Part D program requirements, which we believe would impose
unnecessary burden. CMS will consider proposing use of future updates
to the NCPDP SCRIPT standard in future Part D e-prescribing rules as
the need arises.
In order to ensure that ePA permeates across the industry for Part
D and that multiple Part D stakeholders can participate in it, we
believe that one Part D ePA standard should be used rather
[[Page 86831]]
than simply allowing any stakeholder to use his/her preferred standard.
In addition, based on our analysis of available standards that led
to our proposing to adopt the NCPDP SCRIPT standard version 2017071 for
ePA under Part D, we question how many trading partners would wish to
support the added cost and complexity of using ePA transactions drawn
from an entirely different standard. Requiring consistent use of the
same ePA standards throughout the Part D eRx program also ensures all
plans and prescribers serving Part D eligible patients are able to
conduct ePA transactions with one another.
Comment: One commenter noted that although they do not disagree
with our characterization of the X12 278 transaction as the wrong type
of standard for this transaction, they did alert us to the fact that
the X12 278 transaction can now be used in real-time transactions, in
addition to batched transactions.
Response: We thank the commenter for alerting us to this new
development, and have consequently amended the statement in the
background section to clarify that the X12 278 standard was not a real-
time transaction in 2004.
Comment: A commenter disagreed with our statement that the SCRIPT
transaction can determine whether the beneficiary's plan requires a PA
for a given transaction, stating that the standard is not designed to
determine whether prior authorization is required for a given
transaction.
Response: We thank the commenter for this correction. We have not
included this statement in the background section of this final rule.
Comment: A commenter expressed concern that this final rule would
conflict with the information blocking and certification requirements
from the March 4, 2019, Office of the National Coordinator for
Information Technology (ONC) notice of proposed rulemaking (NPRM) (84
FR 7424), should it be finalized. Another commenter urged HHS to
incorporate the NCPDP ePA transaction standard into future
certification editions from ONC.
Response: In ONC's May 1, 2020 final rule titled ``21st Century
Cures Act: Interoperability, Information Blocking, and the ONC Health
IT Certification Program'' (ONC 21st Century Cures Act final rule), ONC
finalized policies which directly align with the standard adopted in
this final rule that supports ePA transactions and standards (85 FR
25642). Specifically, the ONC 21st Century Cures Act final rule adopted
the NCPDP SCRIPT standard version 20170701 for Health IT Modules
seeking certification to the Sec. 170.315(b)(3) electronic prescribing
criterion under the ONC Health IT Certification Program. The ONC 21st
Century Cures Act final rule also adopted the ePA transactions in the
NCPDP SCRIPT standard version 2017071 as optional for the updated Sec.
170.315(b)(3) electronic prescribing criterion (85 FR 25685). As noted
in the 21st Century Cures Act final rule, ONC believes the adoption of
the ePA transactions included in version 2017071 of the NCPDP SCRIPT
standard as optional transactions within this certification criteria
supports alignment between the health IT certification program and Part
D ePA policy.
We also note that CMS published the Patient Access and
Interoperability final rule (85 FR 25510) concurrently with ONC's 21st
Century Cures Act final rule on May 1, 2020. The CMS final rule
requires certain payers, such as such as MA plans and Medicaid and CHIP
programs, to make enrollee electronic health information held by the
payer available through application programming interfaces (APIs)
conformant to HL7 FHIR and other API standards that ONC adopted in 45
CFR 170.215.
Neither rule finalized a standard for conduct of ePA, nor did they
require ePA be conducted through APIs conformant with the FHIR
standard. The purpose of the current rule is to encourage the exchange
of electronic health information by naming a standard suitable to
support ePA by January 1, 2021. We will continue to monitor efforts
within the health IT industry to support electronic prescribing
transactions through emerging standards such as HL7 FHIR and
technologies like APIs and will consider such developments in future
rulemaking.
Comment: A commenter expressed concern that this rule would
conflict with the CMS Interoperability and Patient Access proposed rule
that was issued on March 4, 2019 (84 FR 7610), should it be finalized.
In CMS Interoperability and Patient Access proposed rule, we noted that
in June 2018, in support of the Da Vinci project (a private-sector
initiative led by Health Level 7 (HL7), the CMS Medicare FFS program
began: (1) Developing a prototype Documentation Requirement Lookup
Service for the Medicare FFS program and (2) populating it with the
list of items/services for which prior authorization is required by the
Medicare FFS program (84 FR 7613).
Response: This rule can be finalized, as proposed, without
conflicting with the CMS Interoperability and Patient Access final rule
(85 FR 25510) which did not require payers to develop a prototype
Documentation Requirement Lookup Service (DRLS). The DRLS was described
in the proposed rule as work CMS was doing related to HL7 FHIR
standards. We believe that the listing of items or services for
purposes of a DRLS, as encouraged by CMS, is separate and distinct from
requiring that a certain standard be used for ePA transactions for
prescribers. This rule would require only the latter in the Part D eRx
program context. Although CMS has recently proposed a rule requiring
payers to use DRLS (85 FR 82586), this requirement does not extend to
Part D. As a result, we continue to believe that this is separate and
distinct from the requirements of this final rule.
Comment: A few commenters questioned whether pharmacies would be
permitted to actively use the NCPDP SCRIPT standard version 2017071
transactions for ePAs performed on behalf of a beneficiary enrolled in
Part D. One of these commenters stated that pharmacies that serve
beneficiaries in long term care (LTC) settings would benefit from using
the ePA transactions. They noted that applicable state laws permit
dispensers to fulfill the terms of a prior authorization and suggest
that we change the verbiage of the proposed regulation to allow
``dispensers (as applicable)'' to the parties required to use the NCPDP
SCRIPT standard version 2017071 ePA transactions adopted in this final
rule.
Response: We appreciate the commenters' concerns. However, this
rule does not seek to change the current regulation with regard to who
may request a PA on behalf of the beneficiary. Under our regulation at
Sec. 423.566(c), a pharmacy cannot request a coverage determination on
behalf of an enrollee, unless the pharmacy is the enrollee's appointed
representative. We believe that changing who may request a PA is
outside the scope of the proposed rule. However, we will take the
suggestion under advisement.
Comment: A commenter requested that CMS use this regulation as an
opportunity to implement other provisions of the SUPPORT Act, such as
section 2003 of the SUPPORT Act requiring the use of e-prescribing for
opioids.
Response: We understand the importance of ensuring that all
provisions of the SUPPORT Act are implemented. However, what is
suggested in this comment is outside the scope of this rule, as the
proposed rule only sought to implement section 6062 of the SUPPORT
Act--not the entirety of the Act.
[[Page 86832]]
Comment: A commenter noted that the proposed NCPDP SCRIPT standard
does not in itself prepopulate National Drug Codes (NDCs), rather NDCs
are prepopulated by eRx and EHR systems if they are capable of doing so
and set up to pre-fill such fields with known values.
Response: Upon re-evaluation we now understand that these NDCs are
indeed completed by eRx and EHR systems with certain capabilities that
are set up to do this work. During our initial research we had seen
that the NDCs were widely prepopulated and incorrectly attributed this
to the NCPDP SCRIPT standard. We appreciate this correction. In light
of this understanding, we believe that the promulgation of a single
standard electronic ePA for Part D-covered drugs prescribed to Part D-
eligible individuals will encourage any remaining eRx and EHR vendors
that do not offer the functionality to prepopulate NDCs to begin to do
so, and continue to follow the NCPDP SCRIPT implementation guide.
Comment: A commenter clarified that the NCPDP Telecommunications
standard D.0 is, indeed, a real time transaction.
Response: We appreciate the opportunity to further explain our
assertions in the proposed rule. As the commenter states, the NCPDP
Telecommunications D.0 standard is, indeed, a real time standard.
However, because it is designed as a transaction between the pharmacy
and the plan, it does not allow a prescriber to transmit information
necessary to satisfy a prior authorization in real time. In practical
terms when a drug is subject to prior authorization the
Telecommunications standard conveys a real-time rejection to the
pharmacy but leaves the prescriber unaware of the rejection, and unable
to convey information to the plan which would satisfy the terms of the
PA. To our knowledge, the NCPDP SCRIPT standard version 2017071 remains
the only mechanism by which a prescriber can satisfy the terms of a
prior authorization electronically in real time.
Comment: One commenter recommended that we amend our regulation
text so that it states that the prescription-related information flows
between prescribers and Part D sponsors, rather than prescribers and
dispensers, which is what we stated in the proposed rule.
Response: We thank the commenter for the correction and have
amended the text accordingly.
Comment: A commenter noted that since the May 2019 final rule
amended the regulation text to include Sec. 423.160(b)(7), the
proposed rule should have been amended to include a new Sec.
423.160(b)(8).
Response: We appreciate this comment and are finalizing the
proposal in Sec. 423.160(b)(8).
Comment: A commenter noted that some of the citations to the HIPAA
standards at section 1860D-4(e)(4) of the Act and the new SUPPORT Act
mandate at section 1860D-4(e)(2)(E)(ii)(III) of the Act were incorrect.
Response: We have revised the preamble to correct the citations
noted by the commenter.
After review and consideration of the comments received, and for
the reasons discussed herein and in the proposed rule, we are
finalizing our proposed revision, with the following modifications:
We are finalizing proposed Sec. 423.160(b)(7) as Sec.
423.160(b)(8).
We are restructuring the final regulation text to permit
Part D sponsors to use the standard beginning January 1, 2021 at Sec.
423.160(b)(8)(i), but not require its use until January 1, 2022 at
Sec. 423.160(b)(8)(ii).
We are redesignating proposed Sec. 423.160(b)(7)(i)
through (iv) which list the covered electronic prior authorization
transactions, as Sec. 423.160(b)(8)(i)(A) through (D) in this final
rule.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 60-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. For the purposes of the PRA and this section
of the preamble, collection of information is defined under 5 CFR
1320.3(c) of the PRA's implementing regulations.
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:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Our June 19, 2019 (84 FR 28450) proposed rule solicited public
comment on each of the required issues under section 3506(c)(2)(A) of
the PRA for our proposed information collection requirements, burden,
and assumptions. Two comments were received. A summary of the comments
is set out in this section of the document in this section of this rule
along with our response.
The following changes will be submitted to OMB for approval under
control number 0938-TBD (CMS-10755). Please note that our proposed rule
indicated that the changes would be submitted under control number
0938-0763 (CMS-R-262). However, based on internal review we have since
determined that the changes should be set out under a new collection of
information request. Importantly, the new collection of information
request (0938-TBD; CMS-10755) has no effect on our proposed and final
requirements and burden estimates. Rather, we are simply changing the
location of those requirements and burden estimates. Please note that
OMB will issue the new control number when ready. In the meantime it is
to be determined (or ``TBD''). The new collection of information
request's CMS identification number (CMS-10755) is not subject to
change.
This rule implements section 6062 of the SUPPORT Act, which
requires the adoption of technical standards for the Part D e-
prescribing program to help ensure secure ePA requests and response
transactions. Specifically, this final rule amends the Prescription
Drug Benefit program (Part D) regulations to require under Sec.
423.160(b)(8) that Part D plan sponsors (hereinafter, ``Part D plans''
or ``plans'') have the technical capability to support the National
Council for Prescription Drug Programs (NCPDP) SCRIPT standard version
2017071 when performing ePA for Part D-covered drugs prescribed to Part
D-eligible individuals. While this final rule will not impact the PA
criteria which Part D plans have in place, the electronic process will
make the PA process less burdensome for plans and prescribers.
Prescribers who are currently capable of using an electronic
prescribing software likely already have access to the ePA transaction
standards, and would be expected to generally be able to access the
transactions without cost. As ePA is implemented, the current system of
manual processing (fax and phone calls) will fade in the Part D context
since plans will be able to use the adopted standard, and incentivize
their prescribers to conduct ePA. We expect that prescribers will be
more likely to conduct ePA now that
[[Page 86833]]
this less burdensome standard is currently available to them.
We estimate a one-time cost for plans to implement the necessary
changes to support the ePA transactions within NCPDP SCRIPT standard
version 2017071. After consulting with industry stakeholders, we have
concluded that implementing or building the type of logic which will
allow systems engineers to produce the interactive logic which the
NCPDP SCRIPT standard requires can vary based on how the PA criteria
are currently documented, but $6,500 is the approximate average cost as
the cost varies based on the size and expertise of the plan. The $6,500
figure includes only the plan's internal costs including labor, initial
development and programming, and systems support to transform each of
its CMS-approved PA criteria from a free flowing manual process
suitable for telephonic or facsimile communication with a clinical
professional into a 2017071-compliant step-by-step query process that
can be adapted for use by programmers. Based on our internal data, we
estimate that this rule will apply to 774 plans. We estimate that only
2 percent (or 15) of the plans (774 plans x 0.02) do not already have
the internal ePA process capabilities that will be required to build
the logic to support NCPDP SCRIPT standard version 2017071's ePA
transactions. In that regard we estimate a one-time implementation cost
of approximately $100,000 (15 plans x $6,500/plan) or $33,000 annually
when factoring in OMB's 3-year approval period, which is required for
all new Paperwork Reduction Act activities ($100,000/3 years). We are
annualizing the one-time estimate since we do not anticipate any
additional burden after the 3-year approval period expires.
Based on our informal conversations with the industry, we believe
that the ongoing cost that plans will incur to process ePA transactions
range from $1.20 to $2.85 per transaction, which varies based on vendor
and volume. Based on internal CMS data, for the 774 plans we estimate
that 560,430 PAs are performed every year and that each authorization
requires two individual transactions, one for receiving and one for
responding. Using $2.03 as the average cost per transaction ([$1.20 +
$2.85]/2) we estimate $4.06 per authorization ($2.03/transaction x 2
transactions/authorization). In aggregate we project an ongoing
transaction (both receiving and responding) cost of $2,275,346 annually
($4.06/authorization x 560,430 authorizations) for all plans.
With regard to current practice, 98 percent (or 15) of the plans
(774 plans x 0.02) already have the capacity to process automated PAs.
However, when they perform these processes manually, they spend an
average of $10.00/fax PA for 549,221.4 authorizations (560,430
authorizations x 0.98) at a cost of $5,492,214 (549,221 PAs x $10.00/
PA). The remaining 15 plans that rely on phone or fax and manual review
spend an average of $25.00/manual PA for 11,209 authorizations (560,430
authorizations x 0.02) at a cost of $280,225, (11,209 PAs x $25.00/PA).
In this regard the transaction cost for the current practice is
approximately $5,729,439 ($5,492,214 + $280,225).
In addition, we believe that there will be added savings due to
fewer appeals being processed. We estimate that 900 appeals are
processed annually due to mistakes emanating from the use of manual PA,
including missing PA information and the PAs not being received by the
correct party. We believe that these appeals would be eliminated, since
ePA requires input of all necessary information for the transactions to
be processed and provides a secure means of delivery to the recipients.
We estimate that it costs $101.63 to process each of these appeals
based on the 1.25 hours at $69.72/hr that it takes a quality officer at
each organization to process the appeal and the cost of sending the
appropriate notices, which would lead to a savings to plans of $91,467
(900 appeals x $101.63). When we add this savings to the $3,454,093
already saved, we project a total annual savings of $3,454,560
($3,454,093 + $91,467). This figure differs slightly from the estimate
that was set out in our June 19, 2019 proposed rule. That rule had
inadvertently excluded the savings emanating from the revised number of
appeals. In addition, the rule had overestimated the amount of plans
that would need to make changes to implement the standard and the
burden to implement it. We are correcting that oversight in this final
rule.
Since this final rule only requires plans, and not prescribers, to
implement the standard, we are not estimating costs that assume
prescribers will transition to this standard. As a result, we did not
include the aforementioned transaction costs and appeals savings in our
tabulation of the final costs of implementing this rule. Therefore, we
believe that the final cost of this rule will be the $100,000 for plans
to implement this standard. As indicated, we received public comments
related to the PRA. The following summarizes the comments and provides
our response:
Comment: A commenter requested that CMS include the burden to
physicians. Another commenter expressed concern about the potential
costs to practices to switch to the new standard, and requested that we
bar EHR vendors from passing on additional transaction costs to
providers or patients. Another commenter stated that they believe our
assumption incorrectly assumed that a provider's electronic prescribing
software already has support for all NCPDP SCRIPT transactions.
Response: We thank commenters for the information about other
factors that we should consider when estimating the implementation
costs for providers to implement a new standard. However, we clarify
that this rule imposes requirements only on Part D plans--if physicians
elect to utilize ePA in the Part D program context, they will be
required to do so using the adopted standard, but they are free to
conduct PA through other means. We believe our proposed rule
incorrectly included prescriber costs in our estimates. We have removed
these estimates from the calculations on this final rule. While we
understand the potential costs for providers and EHR vendors to pass on
transaction costs to providers or plans, we do not have the statutory
authority to regulate EHRs. As previously mentioned, this final rule
implements section 1860D-4(e)(2)(E) of the Act requiring that the
program provide for the secure electronic transmission of prior
authorization requests and responses. However, this section of the Act
does not expand CMS's authority to allow the agency to regulate EHR
vendors or specify who may bear the cost of implementing the
transaction. As a result, we are not able to adopt this commenter's
suggestion that we bar EHR vendors from passing on transactions costs
to providers or patients.
Comment: A commenter requested that CMS revise its estimates to
account for ongoing maintenance costs associated with ePA.
Response: We acknowledged in the proposed rule that there would be
a cost associated with maintenance of systems to support electronic
prior authorizations. These costs are included in our ongoing
methodology which, based on our research, we estimated to range from
$1.20 to $2.85 per transaction for a total of $2.27 million. Since
commenters did not provide specific feedback on the veracity of this
estimate, we will finalize the estimates as initially presented.
[[Page 86834]]
IV. Regulatory Impact Statement
A. Statement of Need
This rule implements provisions of the SUPPORT Act, which require
the adoption of transaction standards for the Part D program that will
help ensure secure electronic PA request and response transactions.
Specifically, this final rule amends the Prescription Drug Benefit
program (Part D) regulations to require that Part D sponsors have the
technical capability to support the National Council for Prescription
Drug Programs (NCPDP) SCRIPT standard version 2017071 when performing
electronic Prior Authorization (ePA) for Part D-covered drugs
prescribed to Part D-eligible individuals.
B. Overall Impact
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999), the Congressional
Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing
Regulation and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any one
year). This rule does not reach the economic threshold and thus is not
considered a major rule.
The 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 having revenues of
less than $7.5 million to $38.5 million annually. Individuals and
states are not included in the definition of a small entity. We are not
preparing an analysis for the RFA, because we have determined, and the
Secretary certifies, that this final rule will not have a significant
economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA 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 Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and the Secretary certifies, that this rule will not have a significant
impact on the operations of a substantial number of small rural
hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any one year of
$100 million in 1995 dollars, updated annually for inflation. In 2020,
that threshold is approximately $156 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. Since this rule does not impose any costs on state or
local governments, the requirements of Executive Order 13132 are not
applicable.
If regulations impose administrative costs on reviewers, such as
the time needed to read and interpret this final rule, then we should
estimate the cost associated with regulatory review. There are
currently 774 PD contracts (excluding PACE organizations, since they
are not affected by this regulation)). We assume each entity will have
one designated staff member who will review the entire rule. Other
assumptions are possible and will be reviewed after the calculations,
in this section of this rule.
Using the wage information from the Bureau of Labor Statistics
(BLS) for medical and health service managers (code 11-9111), we
estimate that the cost of reviewing this final rule is $107.38 per
hour, including fringe benefits and overhead costs (http://www.bls.gov/oes/current/oes_nat.htm). Assuming an average reading speed, we
estimate that it will take approximately 12.5 hours for each person to
review this final rule. For each entity that reviews the rule, the
estimated cost is therefore, $1,342 (12.5 hours x $107.38). Therefore,
we estimate that the total cost of reviewing this final rule is
$1,342,000 ($1,342 x 1,000 reviewers).
Note that this analysis assumed one reader per contract. Some
alternatives include assuming one reader per parent entity. Using
parent organizations instead of contracts will reduce the number of
reviewers to approximately 500 (assuming approximately 250 parent
organizations), and this will cut the total cost of reviewing in half.
The argument for this is that a parent organization might have local
reviewers; even if that parent organization has several contracts that
might have a reader for each distinct geographic region, to be on the
lookout for effects of provisions specific to that region.
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017 (82 FR 9339, February
3, 2017). It has been determined that this rule does not impose more
than a de minimis costs; and thus, is not a regulatory action for
purposes of E.O. 13771.
C. Anticipated Effects
As stated previously, section 6062 of the SUPPORT Act requires the
adoption of technical standards for the Part D program that will ensure
secure ePA request and response transactions no later than January 1,
2022, and allows for Part D sponsors to begin using the standard by
January 1, 2021. We are codifying requirements at Sec. 423.160, which
require plans to support the National Council for Prescription Drug
Programs (NCPDP) SCRIPT standard version 2017071 by January 1, 2022
when performing ePA for Part D-covered drugs prescribed to Part D-
eligible individuals. This final rule has the following impacts.
Entities affected by the PA processes include pharmacies receiving
ePAs from providers and filling the prescription, prescribers who use
ePA, the Medicare Part D Program, Part D plans, EHR vendors who need to
modify their products, and the Promoting Interoperability Programs, for
any Part D prescribers in these programs. Information about what
programs are included in the Medicare Promoting Interoperability
Programs is available via this web link: https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/index.html?redirect=/EHRincentiveprograms. We do not
[[Page 86835]]
anticipate any impacts to the Medicare program, beneficiaries, or other
stakeholders.
There are three primary aspects of the provision that could affect
its cost and the amount saved. The most immediate cost comes from the
one-time implementation cost for the few EHR vendors that need to need
to change their programming to use two standards; the NCPDP SCRIPT
standard version 2017071 for Part D ePA and the HIPAA standard for
other contexts. Based on our conversations with EHR vendors, we believe
that it will take the EHR vendors approximately 200 developing hours
and 800 programming hours to enable the EHRs to utilize two standards.
We also estimated what it will cost plan sponsors to implement this
standard. After consulting with industry stakeholders, we have
concluded that implementing or building to the SCRIPT standard can
vary, but $6,500 is the approximate amount per plan and $100,000 is the
approximate amount for the industry. We estimate that only 2 percent of
the 774 plans will have to make changes to their ePA process to
implement the NCPDP SCRIPT standard version 2017071 ePA transactions,
which gives us an approximate one time implementation cost of $100,000
(15 * $6,500).
E. Alternatives Considered
We considered requiring the adoption of the standard by January 1,
2021 to ensure that this important mandate was implemented quickly.
However, we want to help ensure that plans have as much time to comply
with the statutory mandate as possible.
F. Accounting Statement and Table
The following table summarizes overall costs for this rule. The
cost comes from implementing the new standard.
----------------------------------------------------------------------------------------------------------------
2022 2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
Total Costs.................... $100,000 .............. .............. .............. ..............
Net Savings.................... ............... .............. .............. .............. ..............
----------------------------------------------------------------------------------------------------------------
List of Subjects in 42 CFR Part 423
Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professionals, Incorporation by reference, Medicare, Penalties,
Privacy, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR part 423 as set forth below:
PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT
0
1. The authority citation for part 423 continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152,
and 1395hh.
0
2. Section 423.160 is amended by adding paragraph (b)(8) to read as
follows:
Sec. 423.160 Standards for electronic prescribing.
* * * * *
(b) * * *
(8) Electronic prior authorization. (i) Beginning January 1, 2021,
Part D sponsors and prescribers may use the National Council for
Prescription Drug Programs SCRIPT standard, Implementation Guide
Version 2017071 approved July 28, 2017 (incorporated by reference in
paragraph (c)(1)(vii) of this section), to provide for the
communication of a prescription or prescription-related information
between prescribers and Part D sponsors for the following transactions:
(A) PAInitiationRequest and PAInitiationResponse.
(B) PARequest and PAResponse.
(C) PAAppealRequest and PAAppealResponse.
(D) PACancelRequest and PACancelResponse.
(ii) Beginning January 1, 2022, Part D sponsors and prescribers
must use the standard specified in paragraph (b)(8)(i) of this section
for the transactions listed in paragraphs (b)(8)(i)(A) through (D) of
this section.
* * * * *
Dated: February 6, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: March 13, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
Editorial note: This document was received for publication by
the Office of the Federal Register on December 23, 2020.
[FR Doc. 2020-28877 Filed 12-29-20; 4:15 pm]
BILLING CODE 4120-01-P