Prescription Drug Data Basics - Major NCPDP Transaction Standards

1. Prescription Drug Data Basics - Major NCPDP Transaction Standards Catherine C. Graeff, R.Ph., MBA FourThought Group, Inc. NCPDP Board of Trustees April 29, 2004 For the past day you have heard distinguished presenters describe strategies for For the past day or so, you have heard distinguished presenters describe strategies for controlling drug benefit costs through various means such as designing a drug benefit program, formularies, e-Prescribing, disease management, new drugs in the pipeline, consumer-directed plan designs and more. I�m here to discuss one of the major enablers in the prescription drug industry, the presence of which allows much of what we have been learning today to exist. These are telecommunication and other standards. And, yet, I would imagine that there are many of you that don�t know much about how these standards are developed and maintained and how they help manage and control drug benefit costs.For the past day you have heard distinguished presenters describe strategies for For the past day or so, you have heard distinguished presenters describe strategies for controlling drug benefit costs through various means such as designing a drug benefit program, formularies, e-Prescribing, disease management, new drugs in the pipeline, consumer-directed plan designs and more. I�m here to discuss one of the major enablers in the prescription drug industry, the presence of which allows much of what we have been learning today to exist. These are telecommunication and other standards. And, yet, I would imagine that there are many of you that don�t know much about how these standards are developed and maintained and how they help manage and control drug benefit costs.

2. Presentation Overview Introduction to NCPDP What is the NCPDP Pharmacy Claim Telecommunication Standard v5.1? How Does NCPDP Maintain the Standard? What is the NCPDP �SCRIPT� Prescriber-Pharmacist Standard and how does it facilitate ePrescribing?? Over the next 45 minutes, I plan on introducing you to the National Council of Prescription Drug Programs and its role in the prescription drug industry. I plan on discussing standards we have developed most important to you, what changes are underway and how these changes impact you as a plan sponsor. In addition, if we have time, I�ll touch on other standards used in the health care industry and which of those standards might have the greatest impact on drug benefit quality and costOver the next 45 minutes, I plan on introducing you to the National Council of Prescription Drug Programs and its role in the prescription drug industry. I plan on discussing standards we have developed most important to you, what changes are underway and how these changes impact you as a plan sponsor. In addition, if we have time, I�ll touch on other standards used in the health care industry and which of those standards might have the greatest impact on drug benefit quality and cost

3. Who is NCPDP? An ANSI-accredited standards development organization (SDO). Develops and maintains standards for the pharmacy services sector of the health care industry. NCPDP maintains the HIPAA-named national standard for the transmission of pharmacy claims (Telecom Version 5.1) An ANSI accredited standards development organization (SDO) that develops and maintains standards for the pharmacy services sector of the health care industry. NCPDP maintains the HIPAA-named national standard for the transmission of pharmacy claims which is version 5.1. That is not to say that NCPDP is not continually attempting to update and improve its standard so when future HIPAA versions are released we�ll have everything industry needs today in the new standard if possible. An ANSI accredited standards development organization (SDO) that develops and maintains standards for the pharmacy services sector of the health care industry. NCPDP maintains the HIPAA-named national standard for the transmission of pharmacy claims which is version 5.1. That is not to say that NCPDP is not continually attempting to update and improve its standard so when future HIPAA versions are released we�ll have everything industry needs today in the new standard if possible.

4. NCPDP Mission Statement The mission. Data interchange standards for pharmacy services sector. Impacts many stakeholders Provider pharmacies prescribers manufacturers hospitals systems vendors PBMs claims processors switches just to name a fewThe mission. Data interchange standards for pharmacy services sector. Impacts many stakeholders Provider pharmacies prescribers manufacturers hospitals systems vendors PBMs claims processors switches just to name a few

5. Segmented our membership Producer/Provider Retail Pharmacy, Mail Service Pharmacy, Consulting Pharmacists, and Manufacturers Payer/Processor BCBS Organizations, HMOs, PBMs, and Government Payers, Large Employers Vendors and General Interest Drug Wholesalers, Consultants, Clinical Programs, and Software & Hardware Vendors, Physician Services Organizations With the advent of ePrescribing as well as the requirement that QIOs develop medication management programs for Medicare beneficiaries, new organizations beginning to join to participate in standards developmentSegmented our membership Producer/Provider Retail Pharmacy, Mail Service Pharmacy, Consulting Pharmacists, and Manufacturers Payer/Processor BCBS Organizations, HMOs, PBMs, and Government Payers, Large Employers Vendors and General Interest Drug Wholesalers, Consultants, Clinical Programs, and Software & Hardware Vendors, Physician Services Organizations With the advent of ePrescribing as well as the requirement that QIOs develop medication management programs for Medicare beneficiaries, new organizations beginning to join to participate in standards development

6. Standardization of Paper Claims NCPDP was formed in 1977 to standardize the drug insurance claim. NCPDP�s developed the paper Universal Claim Form (UCF) which was adopted in 1978. Over three billion claim forms have been distributed to date. Paper claim form dramatically lowered administrative costs for pharmacy claimsPaper claim form dramatically lowered administrative costs for pharmacy claims

7. The Evolution of Pharmacy Claims Processing - 80s Eligibility checked on-line prior to Rx. Claims submitted on tape or diskettes in NCPDP Batch Claims Standard Version 1.0 in 1984. Claims processed after prescription was filled. Claims pended and processor �worked� or denied. Still very little in terms of copay differentials and benefit plan designs all pretty much looked alikeStill very little in terms of copay differentials and benefit plan designs all pretty much looked alike

8. Administration of Complex Drug Benefit Designs Tiered Copay Proliferation of Prescription Drug Plans Drug Utilization Review � movement to perform concurrent reviews and not just reports. How to Administer Drug Benefit Limitations & Formularies? At that time, third party prescription drug plans bean to proliferate and copay tiers for brand, generic, preferred networks and even some caps on benefits began to emerge. Clear that transaction needed to be real time so pharmacies had access to benefit information at the point of sale from the processor and not rely on what were called �plan sheets� which were housed in large notebooks. We needed...At that time, third party prescription drug plans bean to proliferate and copay tiers for brand, generic, preferred networks and even some caps on benefits began to emerge. Clear that transaction needed to be real time so pharmacies had access to benefit information at the point of sale from the processor and not rely on what were called �plan sheets� which were housed in large notebooks. We needed...

9. Industry Needed a �Real Time� Drug Claim Transaction Verify Eligibility at Point-of-Sale Verify Plan Design Check for Early Refills, Drug Interactions, Therapeutic Duplication Lower Administrative Transaction Costs Improved Pharmacy Cash Flow

10. From Pharmacies to PBM/Payers back to Pharmacies in 7 Seconds Improved cash flow of pharmacy lowered administrative costs Allowed for more creative benefit plan designs Provided management reports monthly Still mounds of paper...Improved cash flow of pharmacy lowered administrative costs Allowed for more creative benefit plan designs Provided management reports monthly Still mounds of paper...

11. Advantages of Real Time Rx Claims Transaction Concurrent DUR and management possible. Technically, data can reside within health plan�s system within 24 hours. Early warning flag for upcoming medical claims. Could signal the beginning of an �episode of care.�

12. Real Time Claims Process Flow The NCPDP version 5.1 Telecommunications Standard defines the record layout for real-time prescription claim transactions between providers and adjudicators. Since the communication between these parties is two way, the record layout for both the transmitted claim and the response to the claim are defined by the 5.1 standard. PROVIDER may be a retail pharmacy, mail order pharmacy, doctor�s office, clinic, hospital, long term care facility or any other entity which dispenses prescription drugs and submits those claims to a payer for reimbursement. ADJUDICATOR, or PROCESSOR is often a third-party administrator of prescription drug programs on behalf of insurers. The Adjudicator may also be an insurer, a governmental program or any other entity which received prescription drug claims. Providers may choose to transmit certain prescription drug claims to an INTERMEDIARY. Intermediaries receive claims from switches or providers, perform editing/messaging and then either pass the claims to the appropriate switch or adjudicator, or return (reject) claims to the providers. The reply may also pass through an intermediary. Reasons: Consolidated provider reporting Inventory tracking Consolidated claim editing and messaging The SWITCH also receives transactions from providers and intermediaries as claims pass from providers to adjudicators. Switches accept claims, optionally perform format conversions, may perform pre-editing, correcting then pass the claims to the appropriate processor. The reply from the processor also may pass through the switch on its return to the provider pharmacy. Providers utilize the services of a SWITCH for a number of reasons, including the following: A processor may not support �Dial-Up� communications All claims can be transmitted to one central point, the Switch Increased reliability of communicationsThe NCPDP version 5.1 Telecommunications Standard defines the record layout for real-time prescription claim transactions between providers and adjudicators. Since the communication between these parties is two way, the record layout for both the transmitted claim and the response to the claim are defined by the 5.1 standard. PROVIDER may be a retail pharmacy, mail order pharmacy, doctor�s office, clinic, hospital, long term care facility or any other entity which dispenses prescription drugs and submits those claims to a payer for reimbursement. ADJUDICATOR, or PROCESSOR is often a third-party administrator of prescription drug programs on behalf of insurers. The Adjudicator may also be an insurer, a governmental program or any other entity which received prescription drug claims. Providers may choose to transmit certain prescription drug claims to an INTERMEDIARY. Intermediaries receive claims from switches or providers, perform editing/messaging and then either pass the claims to the appropriate switch or adjudicator, or return (reject) claims to the providers. The reply may also pass through an intermediary. Reasons: Consolidated provider reporting Inventory tracking Consolidated claim editing and messaging The SWITCH also receives transactions from providers and intermediaries as claims pass from providers to adjudicators. Switches accept claims, optionally perform format conversions, may perform pre-editing, correcting then pass the claims to the appropriate processor. The reply from the processor also may pass through the switch on its return to the provider pharmacy. Providers utilize the services of a SWITCH for a number of reasons, including the following: A processor may not support �Dial-Up� communications All claims can be transmitted to one central point, the Switch Increased reliability of communications

13. NCPDP Standardizes Electronic Claims for Pharmacy In 1989, NCPDP developed the �real time� Telecommunication Standard v1.0 By HIPAA Final Rule in 2000, 98% of all �third party� prescription drug claims processed using v3.x. HIPAA required v5.1. No more data entry or batch processing. Lowered cost of administration Increased flexibility in drug benefit design. Online, real-time submission with real-time responses. Pharmacy notified of issues before prescription is filled. No more data entry or batch processing. Lowered cost of administration Increased flexibility in drug benefit design. Online, real-time submission with real-time responses. Pharmacy notified of issues before prescription is filled.

14. Transactions Supported in v5.1 Eligibility Verification Claim Billing Claim Reversal Claim Rebill PA Request & Billing PA Reversal PA Inquiry PA Request Only Information Reporting Reporting Reversal Reporting Rebill CS Reporting CS Reporting Reversal CS Reporting Rebill

15. General Structure of v5.1 Transaction Transmission Header Segment Patient Segment Insurance Segment Transaction (up to 4) Claim Segment Pharmacy Provider Segment Prescriber Segment Coordination of Benefits Segment Version 5.0 introduced the usage of a segment. Data elements have been grouped into segments to assist in usage of similar information. Header Segment all fields are mandatory and in all segments, the segment identifier is mandatory is the segment is to be sent. Segments are not allowed to repeat within a transaction (not transmission which can have 4 transactions). Some data elements are further defined with the use of qualifiers. For example, if the Prescriber Segment is submitted, the �prescriber Last Name� field OR the Prescriber ID Field AND the Prescriber ID Qualifier must be submitted.Version 5.0 introduced the usage of a segment. Data elements have been grouped into segments to assist in usage of similar information. Header Segment all fields are mandatory and in all segments, the segment identifier is mandatory is the segment is to be sent. Segments are not allowed to repeat within a transaction (not transmission which can have 4 transactions). Some data elements are further defined with the use of qualifiers. For example, if the Prescriber Segment is submitted, the �prescriber Last Name� field OR the Prescriber ID Field AND the Prescriber ID Qualifier must be submitted.

16. General Structure of v5.1 Transaction, cont. Transaction, continued Worker�s Compensation Segment DUR/PPS Segment Pricing Segment Coupon Segment Prior Authorization Segment Clinical Segment

17. General Structure of v5.1 Transaction, cont. Response Response Header Segment Response Message Segment Response Insurance Segment Transaction Response Response Status Segment Response Claim Segment Response Pricing Segment Response DUR/PPS Segment Response Prior Authorization Segment

18. Relevant Documents NCPDP Telecommunication Standard Format 5.1 Implementation Guide 5.1 Data Element Dictionary Data Dictionary Quick Reference Manual Billing Unit Standard Version 1.4 Format 5.1 specifies formats for claims submission and response. Imp Guild - Includes over 50 pages of examples and FAQs. Data Dictionary - full reference to all fields and values used in the 5.0 standard with examples Quick Reference Manual an abridged version of the above DED. Standardized billing units used for claims transmissionFormat 5.1 specifies formats for claims submission and response. Imp Guild - Includes over 50 pages of examples and FAQs. Data Dictionary - full reference to all fields and values used in the 5.0 standard with examples Quick Reference Manual an abridged version of the above DED. Standardized billing units used for claims transmission

19. Mandatory and Optional Fields Which fields are used is upon agreement of trading partners. Pharmacy providers usually contact their software vendors for assistance. Trading partners agree upon the inclusion/exclusion. We are currently working on a Protocol document that outlines under what situations a field may be considered mandatory. It will likely be a supplement to the implementation guide or, if it�s a long time before another version is names as the HIPAA standard, it may be embedded in the imp guide.Which fields are used is upon agreement of trading partners. Pharmacy providers usually contact their software vendors for assistance. Trading partners agree upon the inclusion/exclusion. We are currently working on a Protocol document that outlines under what situations a field may be considered mandatory. It will likely be a supplement to the implementation guide or, if it�s a long time before another version is names as the HIPAA standard, it may be embedded in the imp guide.

20. Mandatory Fields in a Request HEADER SEGMENT PATIENT SEGMENT Bin Number Counts and control numbers Service Provider Qual. and ID (pharmacy) Date of Service Not required. Often used.

21. Mandatory Fields in a Request INSURANCE SEGMENT CLAIM SEGMENT COB SEGMENT Cardholder ID Person code optional Prescription Qual & Number Product Qual & Number Other payer coverage/type

22. Mandatory Fields in a Request WORKER�s COMP DUR/PPS SEGMENTPRICING COUPON COMPOUND SEGMENT Date of Injury None Required Repeating capability None Required Coupon Type, Number Dosage Form, Dispensing Unit, Product ID repeats

23. Mandatory Fields in a Request PRIOR AUTHORIZATION SEGMENT CLINICAL SEGMENT Request Type Request Begin/End Date Basis of Request None Required. Optional, repeating diagnosis code, measurement date, time, dimension, unit values

24. Mandatory Fields in a Response HEADER SEGMENT MESSAGE INSURANCE STATUS SEGMENT DOS, Pharmacy ID, etc. If used, field None required None, unless rejected. Then, repeating codes, etc.

25. Mandatory Fields in a Response CLAIM SEGMENT PRICING SEGMENT RX qualifier and number. Optional fields for preferred product None (encounter) Copay, Ingredient cost paid, disp. fee paid, sales tax fields, other amounts deductible, basis of calculation fields

26. Mandatory Fields in a Response DUR/PPS PRIOR AUTHORIZATION If used, fields for previous date of fill, reason for service, clinical significance code, other prescriber indicator, free text. If used, begin/end date, quality, amount, refilled, Number

27. How is the Standard Maintained? Business need brought to Work Group (WG1) for discussion in the form of a DERF. Currently approved 8.3 with additional features requested by industry and WG1 Working on A.0. Creating a �protocol document� which discusses under what circumstances optional fields may become mandatory. Consensus building process among industry segments. Everyone�s voice is heard.

28. NCPDP SCRIPT Standard V4.3

29. Drivers to Electronic Prescribing Physicians can�t know all there is to know about their patient at the point-of-care. Adverse Drug Events (ADE) are high in human and financial terms. Lack of access to comprehensive drug information between outpatient and hospital settings contributes to ADEs. Medicare Prescription Drug, Improvement & Modernization Act of 2003 Medication errors account for 7,000 deaths annually (in and out of hospital) Over 770,000 people are injured or die each year in hospitals from ADS National hospital expenses to treat patients who suffer ADEs are estimated at $1.56-$5.6 Billion per year. Another byproduct along the line will be bridging the gap between the patient discharged at the hospital and the outpatient environment. Currently little communication to pharmacy about what was going on in the hospital clinical environment. Clinical decision making through support by IT tools can have a great impact on quality and is absolutely essential given the complexity of our health care system and the plethora of new medications. Need access to information at the point of care. Prescriptions and eligibility, formulary and drug safety information written and transmitted electronically for Medicare beneficiaries receiving covered Medicare drugs must conform to uniform standards established under this legislation no later than April 1, 2009, however the Secretary HHS may require conformity soonerMedication errors account for 7,000 deaths annually (in and out of hospital) Over 770,000 people are injured or die each year in hospitals from ADS National hospital expenses to treat patients who suffer ADEs are estimated at $1.56-$5.6 Billion per year. Another byproduct along the line will be bridging the gap between the patient discharged at the hospital and the outpatient environment. Currently little communication to pharmacy about what was going on in the hospital clinical environment. Clinical decision making through support by IT tools can have a great impact on quality and is absolutely essential given the complexity of our health care system and the plethora of new medications. Need access to information at the point of care. Prescriptions and eligibility, formulary and drug safety information written and transmitted electronically for Medicare beneficiaries receiving covered Medicare drugs must conform to uniform standards established under this legislation no later than April 1, 2009, however the Secretary HHS may require conformity sooner

30. Process Improvements Needed Physician Handwriting misunderstood. Physician has insufficient information. Interruptions in pharmacy due to the telephone (New Rxs and Refills). Sound alike or look alike drug names. Misunderstood dosage or instructions. Patient non-compliance

31. SCRIPT Standard v4.3 for ePrescribing Physician-Pharmacist data transmission standard. First standard in 1999 Adheres to EDIFACT syntax requirements and utilizes EDIFACT & ASC X12 data tables where possible. Guideline for developers of practice management systems who wish to add Rx transmission functionality.

32. SCRIPT Standard v4.3 for ePrescribing Supports messages regarding new prescriptions prescription changes refill requests prescription fill status notification prescription cancellation The data included in the segments within the Message types are subject to agreements between business partners as well as State and Federal laws.The data included in the segments within the Message types are subject to agreements between business partners as well as State and Federal laws.

33. NCPDP Standard Identifiers NCPDP Pharmacy Number Uniquely identifies each pharmacy as well as chain affiliations. File purchased by PBMs/payers and others NCPDP HCId Prescriber Identifier Alternative to DEA as a prescriber ID (which has been improperly used). Allows plan sponsors to collect data and analyze by prescriber. NCPCP Pharmacy id number will be replaced on a claim with HIPAA NPI. But file maintained by NCPDP has many data elements used by processors and pharmacy chains and so the file will be maintained. HCIdea came along because of the need�.. No NPI� Additional fields of information including all offices linked to one provider ID.NCPCP Pharmacy id number will be replaced on a claim with HIPAA NPI. But file maintained by NCPDP has many data elements used by processors and pharmacy chains and so the file will be maintained. HCIdea came along because of the need�.. No NPI� Additional fields of information including all offices linked to one provider ID.

34. SCRIPT Exchange Parties Communication Modes: DIRECT CONNECT where there is a dedicated line between entities MAILBOX - where each business partner retrieves messages that are placed in their mailbox COMBINATION - where communication modes may include a combination of Mailbox and Direct Connect among business partners. In any case, a switch or transmission services may act as an intermediary providing various services.Communication Modes: DIRECT CONNECT where there is a dedicated line between entities MAILBOX - where each business partner retrieves messages that are placed in their mailbox COMBINATION - where communication modes may include a combination of Mailbox and Direct Connect among business partners. In any case, a switch or transmission services may act as an intermediary providing various services.

35. SCRIPT - Possible Future Enhancements Lab values Diagnosis Patient Drug Profiles DUR Alerts Prescription Transfers Formulary Inquiries

37. Barriers to Implementation Funding at prescriber offices Organizational and cultural change - process re-engineering Critical Mass Issue State regulations Lack of consensus on standards - best model

38. NCPDP Standards Improve With Your Input Standards developed by members for members. Administrative support from the Council. Member diversity is NCPDP�s strength. Get involved. NCPDP needs input from physicians and QIOs to bridge the �A-C gap�. In closing, the NCPDP doesn�t develop standards, our members do. We only provide a forum wherein they can bring their business problem to the table with their trading partners and work toward a solution that incorporates data they need to manage their businesses and their patients. The role of standards is increasing at a dramatic rate as we move toward a National Health Information Infrastructure wherein systems are interoperable and your medical records are available, with proper security and privacy measures to the people that need access on a timely basis. Standards make this interoperability possible, so I encourage you to get involved.In closing, the NCPDP doesn�t develop standards, our members do. We only provide a forum wherein they can bring their business problem to the table with their trading partners and work toward a solution that incorporates data they need to manage their businesses and their patients. The role of standards is increasing at a dramatic rate as we move toward a National Health Information Infrastructure wherein systems are interoperable and your medical records are available, with proper security and privacy measures to the people that need access on a timely basis. Standards make this interoperability possible, so I encourage you to get involved.

39. Thank youfor member information visit: http://www.NCPDP.org If there�s any additional information I can provide to you, please email me at cgraeff@4tginc.com, or if you wish to learn more about NCPDP� Entertain any questions you may have�.If there�s any additional information I can provide to you, please email me at cgraeff@4tginc.com, or if you wish to learn more about NCPDP� Entertain any questions you may have�.