Diving Deeper into CMS’ Proposed Rule on Electronic Prior Authorization for Medicare Part D Drugs

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By Jocelyn Keegan, Payer Practice Lead, and Ken Kleinberg, Innovative Technologies Practice Lead

Rules Concept. Word on Folder Register of Card Index. Selective Focus.

The Center for Medicare and Medicaid Services (CMS) recently announced a proposed rule that would require use of a standards-based way to automate the prior authorization (PA) process for drugs prescribed under Medicare Part D. Comments are due August 16.

With implementation of this proposal, the agency hopes to significantly reduce use of today’s paper-and-fax PA methods. Current PAs create enormous administrative burdens, endless frustration and delayed speed to therapy. The proposed implementation also dovetails with other federal initiatives to improve interoperability of electronic health records (EHRs) and reduce physician burden.

We applaud CMS in taking another step forward to stimulate adoption of ePA for drugs covered under the patient’s pharmacy benefit. Private payers tend to follow Medicare’s lead. However, there still are concrete gaps and issues that need to be addressed. Let’s take a deeper dive.

What’s being proposed?

The proposed rule essentially has three parts. It would:

1) Require Part D plan sponsors to support version 2017071 of the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard for use in ePA transactions beginning on January 1, 2021.

2) Require that the standard be used for the following ePA transactions:

  • PAInitiationRequest and PAInitiationResponse
  • PARequest and PAResponse
  • PAAppealRequest and PAAppealResponse
  • PACancelRequest and PACancelResponse

3) Require that prescribers and pharmacies must use the SCRIPT standard when handling transactions for prescriptions covered under Part D.

It is important to note that these four transactions are already part of NCPDP SCRIPT 20170701 and the core functionality has been available and in use for years. In addition, this version of SCRIPT will become the official ePrescribing standard for Part D beginning on January 1, 2020 but the rule fell short of requiring it.

ePA transactions in NCPDP SCRIPT 20170701 could not previously be mandated for use in Part D or elsewhere because of conflicts with current CMS requirements for implementing the Health Insurance Portability and Accountability Act (HIPAA). Provisions under the SUPPPORT Act resolved the conflicts by giving CMS authority to approve the NCPDP SCRIPT transaction for adoption for Part D. Many the EHR vendors and payers today are able to support NCPDP SCRIPT standards for ePA, but to date there have been no official instructions to the industry on how that could work.

What’s still needed?

There are several gaps in the proposal.

  • Overarching challenges with pharmacy and X12 278. The SUPPORT for Patients and Communities Act granted CMS an exception for the required use of the batch-oriented 278 for ePA, but only for Part D-covered drugs. The proposed rule’s impact analysis noted some of the X12 278 challenges including that the standard was designed to conduct batch transactions, which cannot be used to support real time prescribing, and is unsuitable for medications. It also cannot accommodate attachments even if one were required. So far, the HIPAA requirement for a claims attachment standard has not been promulgated. Resolving these challenges is important to stakeholders.
  • Potential for rich ePA content. The proposed rule deals with how PA information must be exchanged electronically under Part D. It stops short of addressing content requirements: that is, whether Question Sets, Coded Responses (CRs), or both must be implemented. The proposed rule states that the four types of ePA transactions must be supported and that there are benefits of implementing Coded References (without specifically using this terminology). We hope CMS will clarify which response types should be used. We think many payers would support mandated use of CRs, which would help automate the PA process on both sides of the transaction. Leaving the status of Question Sets and CRs unresolved could create problems for EHR vendors. The delay in use of coded references continues to miss the opportunity for deeper integration and automation between payers and provider systems.
  • Scope of the mandate. Even with the narrow focus, the scope of the proposed rule is unclear in several areas. Is the use of NCPDP SCRIPT transactions mandated for all ePA transactions for Part D, just those being ePrescribed or solely on electronic PA submissions? Will any electronic requirement extend to ePA portals? Clarification is needed.
  • Terminology. The proposed rule does not define terms. A glossary would be helpful.

Implementation opportunities and challenges.

There are several opportunities and challenges in implementing the proposed rule including:

  • Bringing future consistency to the market. If implemented, CMS’ proposal will help lay out a clear path to consistency to the market by driving states to adopt its requirements. States almost always follow Medicare’s lead. Currently, states are interested in promoting ePA; about a quarter require it and another quarter allow it. However, requirements vary all over the map. That said, while CMS’ requirements ultimately will gain traction in states, it’s unlikely to be anytime soon. State legislatures operate on varying schedules (some don’t even convene every year). Most are pre-occupied with addressing the opioid crisis, such as legislating electronic prescribing for controlled substances.
  • Supporting Real-Time Benefit Check (RTBC). CMS recently proposed the mandated use of an RTBC tool beginning on January 1, 2020. ePA and RTBC go hand in hand. When used together, the two transactions deliver more accurate information about coverage and costs of drugs at the point of prescribing and allow physicians to help their patients get on therapy faster. Use of the newly-proposed ePA transactions would improve the ability for the prescriber to submit the required information in real time and increase patient-specific accuracy of whether PA is truly needed within the workflow. RTBC challenges include:
    • Aligning HIPAA requirements with new standards and use cases. It is becoming increasingly evident that HIPAA requirements for ePA are outdated, unworkable and burdensome. This point was driven home recently by testimony at a series of sessions held this summer by the National Committee on Vital and Health Statistics (NCVHS). Many testifiers, including Point-of-Care Partners’ CEO & Managing Partner, Tony Schueth, pointed out the challenges of using the 278 in an evolving, real-time world. At its core, the 278 was designed for batch transactions and is neither specific nor flexible enough to handle complexities of medication-specific prior authorization without significant efforts by all parties.

A statement from CMS’ Health Informatics Office offered additional insights on the impacts of the 278’s required use. It noted that, “CMS’ HIPPA regulations for prior authorization require that every prior-authorization transaction between covered entities must use the ASX X12 278 standard. The Medicare Fee-For-Service (FFS) program expended considerable resources to comply with this regulation. It made modifications to its Electronic Submission of Medical Documentation (esMD) system to be able to accept 278s from providers. In the four years since the esMD system has been capable of receiving a 278 transaction, not a single one has been submitted by a provider.”

    • Use of FHIR. The CMS team also drew attention to the work underway to streamline prior authorization workflows by leveraging HL7’s Fast Healthcare Interoperability Resources (FHIR) standard, which is open source. CMS Fee for Service, in support of the HL7 Da Vinci Project, has developed a number of use cases to better create knowledge about PA requirements in workflows using FHIR-based ePAs. To facilitate forward progress and support consistency with existing HIPAA compliance, there is a subgroup of volunteer experts mapping FHIR to X12 resources. Outputs of this effort will available as a download under license by X12. Given widespread adoption of NCPDP SCRIPT ePA, it is not likely such a crosswalk is necessary.

Given the momentum and market adoption of ePA SCRIPT transactions, is legislative relief needed and available for pharmacy benefit covered items from HIPAA requirements?


Point-of-Care Partners (POCP) offers the following recommendations to CMS. The agency should:

  1. Seek a path forward through legislative relief to eliminate the inconsistency with pharmacy PA standards and the current HIPAA-named standards. This will to help eliminate confusion and aid further stimulate innovation, especially with regard to development and use of FHIR-based transactions and application program interfaces.
  2. Clarify content requirements for ePA transactions, specifically whether Question Sets, Coded Responses (CRs), or both must be implemented and how such implementations would work.
  3. Clarify the scope of the requirement, specifically whether it applies to all Part D covered drugs that are ePrescribed and its use in payer portals.
  4. Require state Medicaid agencies to adopt the same or similar ePA requirements. This will help accelerate real-time, standards-based ePA adoption in general and spur state legislatures to pass complementary legislation.
  5. Continue to support and invest in the Da Vinci Project’s efforts; in particular, implementation efforts and pilot activities by the industry.
  6. Support and invest in efforts for ePA for drugs covered under the medical benefit. This will take ePA to the next level.
  7. Continue to work with stakeholders to develop the infrastructure and resolve the technical issues needed for standards-based ePA for medical devices, services and procedures.

Need more information? Need help with your comment letter?  POCP is here to help. Drop us a line (jocelyn.keegan@pocp.com and ken.kleinberg@pocp.com). Also don’t overlook the wealth of information in POCP’s new ePA report. This extensive report — with 40+ diagrams and tables, and 90+ references — offers healthcare stakeholders an independent analysis of the market, realistic maturity models, and a profile of what vendors and service companies are currently doing around ePA so they can arm themselves with the information needed to plan strategically and meet their goals. Set up a one-on-one meeting to discuss how this report may help your organization by calling us at 877-312-7627, option 4 or dropping us an email at info@pocp.com.