The Department of Health and Human Services (“HHS”) has proposed a rule that updates retail pharmacy standards for electronic transactions adopted under the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  There is a 60-day public comment period for this rule, which closes on January 9, 2023.  This proposed rule, if finalized, would modify the currently adopted National Council for Prescription Drug Programs (“NCPDP”) Telecommunications Standard Implementation Guide (“TSIG”) and its equivalent batch standards. 

Specifically, the proposed rule would adopt TSIG version F6, and its equivalent batch standards NCPDP Batch Standard Implementation Guide, Version 15, and Batch Standard Pharmacy Subrogation Implementation Guide Version 10 (for non-Medicaid health plans).

The new standards will allow retail pharmacies with multiple locations to send one batch mode transaction that meets the F6 standard.  Among the changes from version to version are new data fields, new data segments, and new functionality.

Stakeholders requested changes to standards

The current pharmacy standards were adopted and finalized in a January 2009 final rule.  The standards were adopted for the following retail pharmacy transactions:  health care claims or equivalent encounter information; referral certification and authorization; and coordination of benefits.  The same regulation also adopted a subrogation standard for Medicaid agencies to seek reimbursement from a responsible health plan for a pharmacy claim the State has paid on behalf of a Medicaid recipient.

The National Committee on Vital and Health Statistics recommended in an April 2020 letter that HHS publish a proposed rule to address evolving industry changing business needs.  According to the text of the proposed rule that was eventually published in early November of this year, the intent of the modifications would be to provide “more robust data exchange, improved coordination of benefits, and expanded financial fields that would avoid the need to manually enter” certain data.  The proposed rule would also broaden the applicability of the Medicaid pharmacy subrogation transaction to all health plans – not just with state Medicaid agencies.

Modifications under the proposed rule

In the text of the rule, HHS noted that, “the current Medicaid pharmacy subrogation guide was adopted to support federal and state requirements for state Medicaid agencies to seek reimbursement from the correct responsible health plan.”  Additionally, HIPAA regulations “currently require only Medicaid agencies to use Version 3.0 in conducting the Medicaid pharmacy subrogation transaction,” whereas under the new standard, “all health plans would be required to use the Pharmacy Subrogation Implementation Guide for Batch Standard, Version 10, to transmit pharmacy subrogation transactions, which would allow better tracking of subrogation efforts and results across all health plans.”

Some other modifications under the proposed rule would include:

  1. the expansion of financial fields needed for drugs priced at or in excess of $1 million that are now available;
  2. information needed for prior authorizations and enhancements to the drug utilization fields in the claim response transaction;
  3. coordination of benefits segment fields to make it easier to identify the previous payer;
  4. prescriber validation enhancements (including using DEA and NPI and Prescriber Place of Service);
  5. adjustments to the controlled substances fields to make it easier to monitor and document compliance with opioid restrictions;
  6. Expanded Issuer Identification Number field to allow use of  40 character long Unique Device Identifiers (as opposed to the current standard that only allows 11 characters);
  7. adding more discrete codified fields instead of free-text fields in the Pharmacy Claim and Payer Claim Response segments; and
  8. increased ability to allow more plan-specific benefit information to be transmitted through new Payer Response fields.

The Quantity Prescribed Field (460-ET) is still required for all controlled substances in the proposed rule. Although HHS has proposed that covered entities would generally need to comply with the new standards within 24 months after the effective date of the final rule, covered entities that engage in covered transactions electronically should begin to implement a plan.

The subrogation standard compliance date will also be 24 months after the effective date of the rule, with the exception of small health plans (those with annual receipts of $5 million or less), which will have 36 months to comply.  Small health plans would have 36 months after the effective date of the final rule to comply.

Reed Smith will continue to follow developments as this proposed rule is finalized. If you have any questions about HIPAA regulations or additional privacy concerns, please reach out to the health care attorneys at Reed Smith.