Medicaid Program; Drug Use Review Program and Electronic Claims Management System for Outpatient Drug Claims

DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 456

[MB-050-F]

RIN 0938-AF67

Medicaid Program; Drug Use Review Program and Electronic Claims

Management System for Outpatient Drug Claims

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

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SUMMARY: This final rule revises some of the regulatory requirements

for the drug use review (DUR) program for covered outpatient drugs

furnished to recipients under the Medicaid program. The regulatory

requirements became effective on January 2, 1993, as a result of an

interim final rule with comment period that we published on November 2,

1992. Specifically, these revisions--

Clarify the definitions of overutilization,

underutilization, consensus process, peer-reviewed literature, adverse

medical result, adverse drug-drug interaction, appropriate and

medically necessary, and individual medical history;

Change the requirements for licensure of DUR board

members, and telephone counseling arrangements for mail order

pharmacies;

Include non-prescription drugs in the consideration of

alteration of therapeutic effect;

Require hospitals to give assurances that they have met

the requirements of the statute before claiming the hospital exemption

from DUR;

Specify the issues that State agencies must address when

formulating counseling standards;

Clarify the bases for DUR board recommendations;

Clarify the distinction between DUR and surveillance and

utilization review (SUR); and

Make certain technical and editorial corrections.

The November 1992 interim final rule with comment period

incorporated and interpreted certain provisions of section 4401 of the

Omnibus Budget Reconciliation Act of 1990.

DATES: These regulations are effective on October 24, 1994.

FOR FURTHER INFORMATION CONTACT: Thomas Fulda, (410) 966-3343.

SUPPLEMENTARY INFORMATION:

I. Background

Section 1927(g) of the Social Security Act (the Act), as added by

section 4401 of the Omnibus Budget Reconciliation Act of 1990 (OBRA

'90), provides that, for Federal financial participation (FFP) payment

to be made for covered outpatient drugs under the Medicaid program, the

State must have in operation a drug use review (DUR) program. The DUR

program must consist of prospective drug review, retrospective drug use

review, the application of explicit predetermined standards, and an

educational program. The purpose of the DUR program is to improve the

quality of pharmaceutical care by ensuring that prescriptions are

appropriate and medically necessary, and that they are not likely to

result in adverse medical effects. Section 1927(g) of the Act specifies

detailed requirements for conducting drug use reviews under the DUR

program, and requirements for the establishment, composition, and

functions of State DUR boards.

Section 1927(h) of the Act (also added by OBRA '90) requires the

Secretary to encourage each State Medicaid agency to establish a point-

of-sale electronic claims management (ECM) system for processing claims

for covered outpatient drugs. The ECM system must be capable of

performing on-line, real-time eligibility verifications, claims data

capture, and adjudication of claims and assisting pharmacists and other

authorized persons in applying for and receiving payment. If the State

acquired, through the applicable competitive procurement process, the

most cost-effective telecommunications network and automatic data

processing services and equipment, FFP at a matching rate of 90 percent

was available for expenditures made in calendar quarters during fiscal

years 1991 and 1992 for the development of the ECM system.

Section 1927(j)(1) of the Act exempts covered outpatient drugs

dispensed by health maintenance organizations (HMOs) from the

requirements of section 1927 of the Act. Section 1927(j)(2) further

requires that the Medicaid State plan provide that covered outpatient

drugs dispensed by a hospital using drug formulary systems and billed

to the State plan at no more than the hospital's purchasing costs are

not subject to the requirements of section 1927 of the Act.

In an interim final rule with comment period, published in the

Federal Register on November 2, 1992 (57 FR 49397), we established

regulations to incorporate and interpret the provisions of sections

1927 (g), (h), and (j) of the Act under 42 CFR part 456, subpart K. In

the interim final rule, we prescribed requirements for--

An outpatient DUR program that includes prospective drug

review, retrospective drug use review, and an educational program;

The establishment, composition, and functions of a State

DUR Board; and

An optional point-of-sale ECM system for processing claims

for covered outpatient drugs.

In response to the November 2, 1992, interim final rule, we

received comments from 72 pharmacists and organizations on a timely

basis. We summarize these comments and present our responses to them

under section II of this preamble. Prior to discussion of the public

comments, we present a summary of the individual provisions of the

interim final regulations related to each grouping of comments.

Note: Sections 1927 (g) and (h) of the Act use the term ``drug

use review'' to describe the total program (prospective review,

retrospective review, and education) and in speaking of the

retrospective review activity. These same sections use the term

``drug review'' to mean the prospective review activity. We maintain

that distinction in terminology in the following discussion.

II. Public Comments and Departmental Responses

A. Definitions

In Sec. 456.702 of the interim final regulations we define several

terms that are used in the DUR program to assess drug use, including

``adverse medical result'', ``appropriate and medically necessary'',

``overutilization'', and ``underutilization''.

Comment: Five commenters suggested that the definition of

``appropriate and medically necessary'' be expanded to permit the use

of professional prerogatives to allow for individualized drug therapy.

(We defined the term to mean drug prescribing and dispensing that is in

conformity with predetermined standards established in accordance with

provisions in the regulations under Sec. 456.703.) The commenters had a

concern that a specific criterion might identify one approach as

appropriate and, by omission, indicate that an equally acceptable

approach is inappropriate.

Response: Section 456.703 states that the goal of the State's DUR

program must be to ensure appropriate drug therapy, while permitting

sufficient professional prerogatives to allow for individualized drug

therapy. We believe that predetermined standards are necessary to

identify provider outliers whose prescribing, dispensing, and drug use

practices may not conform to accepted medical practice. Without

predetermined standards, each provider may claim ``professional

prerogative'' for any action taken. Within this system for developing

criteria and standards, there is adequate room for the exercise of

professional prerogatives because States may adopt standards to modify

criteria. Also, during retrospective DUR, States may use peer review to

recognize professional prerogatives in the prescribing and dispensing

of drugs. We do not believe that it is necessary to change this

definition.

Comment: Four commenters suggested that the definition of

``overutilization'' should be changed to conform with the definition of

``underutilization''. ``Overutilization'' is defined as the use of a

drug in quantities or for durations that put the recipient at risk of

an adverse medical effect while ``underutilization'' is defined as the

use of a drug by a recipient in insufficient quantity to achieve a

desired therapeutic goal. The commenters suggested that the definitions

indicate the use of a drug in quantities or duration greater than

necessary to achieve a desired therapeutic goal, and only when the use

of the drug puts the recipient at risk of a clinically significant

undesirable effect.

Response: We concur with the commenters and have revised these

definitions to incorporate their suggested language.

Comment: Two commenters suggested that the definition of

``underutilization'' also include a statement regarding insufficient

duration for drug therapy.

Response: We concur and have revised the regulation accordingly.

B. Exception for Nursing Facilities and HMOs

Section 456.703(b) of the interim final regulations provides an

exception to the DUR requirements for drugs dispensed to residents of

nursing facilities that are in compliance with the drug regimen review

requirements specified in regulations at Sec. 483.60, and an exception

for drugs dispensed by HMOs.

Comment: One commenter suggested clarification of Sec. 456.703(b)

to state that pharmacies owned by nursing homes, where reimbursement of

drugs is not included in the per diem rate, are subject to the DUR

requirements.

Response: We do not believe that this section needs any further

clarification. The regulation already states that the nursing

facilities exception applies only to drugs given to patients in a

nursing facility that is in compliance with the drug regimen review

requirements in Sec. 483.60. Ownership of the pharmacy by the nursing

home is not a factor.

Comment: Two commenters asked for clarification of the

applicability of DUR requirements to various types of residential care

facilities.

Response: The term ``facility'', as it applies to the exception to

the DUR requirements, is described at Sec. 483.5 and means a nursing

facility (NF) as defined in section 1919(a) of the Act. Drugs dispensed

by any facilities not meeting this definition would not be exempt from

drug use review. Residential care facilities for the treatment of

mental diseases do not meet the definition of section 1919(a) of the

Act. These facilities are subject to the DUR requirements and do not

qualify for the nursing facility exception.

Comment: One commenter suggested clarification that the nursing

facility exception also applies to rural health clinics and Federally

qualified health centers.

Response: Rural health clinics and Federally qualified health

centers do not meet the requirements for nursing facilities as defined

in section 1919(a) of the Act. Therefore, the DUR requirements under

section 1927(g) apply to these facilities.

Comment: One commenter suggested that States should not be able to

apply additional nursing home requirements without appropriate Federal

guidelines.

Response: The statute precludes Federal action to require DUR for

drugs dispensed by nursing facilities meeting the section 1927(g)(1)(D)

guidelines but leaves the States free to issue additional requirements.

The interim regulations that we issued explain the DUR requirements and

include guidelines for the States to implement the DUR requirements.

Comment: Four commenters suggested that HMOs not be excluded from

the DUR requirements.

Response: The exemption of drugs dispensed by HMOs from the DUR

requirements is in the statute and can only be changed by the Congress.

We are removing the HMO exception provision under Sec. 456.703(b),

because this is a technically incorrect location, and adding a

paragraph (c)(2) under Sec. 456.703 which specifies the exemption for

HMOs.

Comment: One commenter suggested that the nursing facility

exception to the DUR requirement be mandatory, rather than making the

exception optional.

Response: The Act precludes the Federal Government from requiring

States to perform additional drug use reviews with respect to drugs

dispensed to residents of nursing facilities in compliance with the

drug regimen review requirements specified at section 1919 of the Act,

as set forth in Sec. 483.60. States may nonetheless impose DUR

requirements on nursing facilities (see Sec. 456.703(b)).

C. Exemptions for Certain Covered Outpatient Drugs Dispensed by

Hospitals

Section 456.703(c) of the interim final regulations specifies that

a State plan must provide that covered outpatient drugs dispensed by

hospitals using a formulary system and billing Medicaid no more than

the hospital's purchasing cost are not subject to the DUR requirements.

Comment: One commenter suggested that a hospital pharmacy that is

separate from the inpatient pharmacy should be subject to the DUR

requirements as are other retail pharmacies.

Response: Section 1927(j) of the Act applies the exemption to

outpatient covered drugs dispensed by hospitals under certain specified

conditions. Pharmacies located on the hospital premises that are

separate in terms of ownership and fill only outpatient prescriptions

are not entitled to the exemption.

Comment: Two commenters suggested that outpatient prescription

drugs dispensed by hospital pharmacies should not be exempt from the

DUR requirements.

Response: Pharmacies that operate as part of a hospital and also

fill outpatient prescriptions are, by statute, entitled to the

exemption. We have amended Sec. 456.703(c)(1) to indicate that

hospitals which apply for the exemption must provide the State agency

with an assurance that they qualify for the exemption by meeting the

requirements at section 1927(j)(2).

Comment: One commenter suggested the need for clarification of

Sec. 456.703(c) by defining ``hospital's purchasing cost'' and

``formulary system''.

Response: The statute permits States, if they wish, to define the

terms ``formulary system'' and ``hospital's purchasing cost''. We do

not believe that it is necessary to do so in the regulations.

D. Predetermined Standards

Section 456.703(d) of the interim final regulations specifies that

the DUR program must assess drug use information against predetermined

standards as provided for in section 1927(g)(1)(B) of the Act. Sections

456.703 (e)(1) through (e)(4) specify the sources of predetermined

standards. Section 456.703(f) lists eight specific requirements that

predetermined standards must meet, including the requirement that the

source material for development of the standards must be consistent

with peer-reviewed medical literature. Section 456.703(g) requires that

predetermined standards be available to the public, and that

pharmacists and physicians must be informed of their existence and how

they may obtain copies.

Comment: One commenter requested clarification of the distinction

between criteria and standards.

Response: Section 1927(g)(1)(B) indicates that the DUR program is

to assess drug use, based on predetermined standards that are

consistent with three compendia and the peer-reviewed medical

literature. The compendia and the peer-reviewed literature are source

materials for criteria, but additional work is necessary to resolve

differences of opinion in source material and to consider the input of

professional experts. ``Criteria'', as defined in Sec. 466.1 and cross-

referenced in Sec. 456.702, are the predetermined elements of health

care, developed by health professionals relying on professional

expertise, prior experience, and the professional literature, with

which aspects of the quality, medical necessity, and appropriateness of

a health care service may be compared. ``Standards'', as defined in

Sec. 466.1, are professionally developed expressions of the range of

acceptable variation from a norm or criterion, which may be developed

by the States. If, for example, a criterion for the use of H2 receptor

antagonists indicates that acute therapy should not exceed 62 days, a

standard might indicate that acute therapy of up to 67 days would not

warrant consideration of intervention. Although section 1927(g)(1)(B)

of the Act does not define predetermined standards, we believe that the

definitions of criteria and standards at Sec. 466.1 provide an adequate

base to interpret the meaning of predetermined standards.

Comment: One commenter suggested that Sec. 456.703(e)(3) should

delete specific examples of independent organizations from which

predetermined standards may be obtained to broaden the sources of

independent standards. This comment also indicated a typographical

error in paragraph references at Sec. 456.703(e)(4).

Response: We need to specify certain organizations in the

regulations to indicate that criteria should be developed by

organizations which have no vested interest in the sale of drugs

covered by the criteria. Organizations with a vested interest would

have an opportunity to provide input during the DUR board approval

process. Therefore, we have retained the specific organization names.

We have corrected Sec. 456.703(e)(4) to refer to paragraphs (e)(1)

through (e)(4) rather than (f)(1) through (f)(4).

Comment: One commenter suggested the inclusion of additional

sources of predetermined standards, including relevant guidelines from

professional groups, experience of practitioners with expertise in drug

therapy, information from pharmaceutical manufacturers, and data as

well as experience from the DUR program.

Response: The statute provides that criteria developers are to

place primary reliance on compendia and peer-reviewed literature. They

may rely on other source materials to supplement what is in the

compendia and the peer-reviewed literature. In the event of conflicts

between primary materials and supplementary information, such as

professional experience, if the professional consensus process (as

specified in Sec. 456.703(f)(2)) is unable to resolve the conflict, the

supplementary information must not be relied on by the criteria

developer.

Comment: One commenter suggested an amendment to require Food and

Drug Administration (FDA) labeling as the primary source of DUR

criteria.

Response: The statute is specific regarding the primary sources for

predetermined standards. FDA labeling is not included as a primary

source.

Comment: Five commenters requested clarification of

Sec. 456.703(f)(2) regarding the consensus process and what to do if

consensus cannot be reached. Several commenters suggested resolving

disagreements with additional input from professional or medical

organizations or other outside sources. Others indicated that if

consensus is not reachable because of insufficient data or lack of

sufficient knowledge of therapeutic outcomes, it would be satisfactory

to have no criteria or to have more than one standard. One of these

commenters recommended taking into account community practice standards

in seeking consensus. One commenter suggested that the DUR board have

final authority in the case of disagreements.

Response: We have amended Sec. 456.703(f)(2) to specify that

consensus process means that the criteria developers should rely on

professional experts in drug therapy to consider differences in

criteria source materials and come to agreement on how differences

should be resolved. It is expected that the differences would be

resolved before a criterion was submitted to the DUR board for

approval. The DUR board must know the sources, decision guidelines used

in developing criteria, and any other information necessary to evaluate

criteria.

Comment: One commenter suggested a revision of Sec. 456.703(f)(5)

to consider patient as well as provider outliers in identifying

problems and to consider both dispensing and consumption practices. In

addition, the commenter suggested that standards may be considered in

deciding if in-depth review is needed to determine whether to

intervene, once potential therapeutic problems have been identified

through the use of clinical criteria.

Response: We agree and have revised Sec. 456.703(f)(5) to consider

recipients' consumption practices.

Comment: One commenter suggested that Sec. 456.703(f)(6) should be

clarified to indicate that testing against claims data should be to

test the accuracy and ability of criteria to detect significant

problems without undue levels of false positives.

Response: We have amended Sec. 456.703(f)(6) to specify that

criteria be tested against claims data prior to adoption by the

developer in order to validate the level of possibly significant

therapeutic problems without undue levels of false positives.

Comment: Two commenters suggested that criteria for predetermined

standards should be modified to conform to State standards of practice.

Four commenters were concerned with the process used to modify

criteria. One commenter suggested that the State should be required to

establish a process for review and modification of criteria which

provides a mechanism to get input from providers. One commenter

suggested an annual period for receipt of petitions for modification of

criteria. Another commenter suggested that the DUR board issue public

notice when it considers changing criteria. Another commenter suggested

that there is a risk of bogging down the process by establishing

procedures.

Response: The State may require DUR Boards to specify the

procedures suggested by the commenters. The DUR board would then

establish the mechanisms to obtain input, where appropriate, from

providers, the public, and other interested parties concerning

modification of the criteria or the approval of the criteria. To avoid

the possibility that these procedures might impede the efficient

operation of the DUR program, the State may use informal mechanisms

that it deems appropriate. There is no Federal requirement for the use

of notice and comment procedures during the criteria development

process.

Comment: Two commenters suggested that standards be accessible

during development, and public comment should be obtained during

criteria development. Two commenters suggested that it is unnecessarily

burdensome to have to furnish providers with criteria. One of these

commenters suggested providing only a general description, not the

complete criteria. One commenter suggested giving criteria to providers

and allowing reasonable time for compliance.

Response: We believe that making criteria and standards accessible

for public comment during the development period would impede the

development process. Section 456.703(g) does not require distribution

of the criteria to the public or to providers; nor does it require that

the State distribute the predetermined standards to the public. The

regulations, however, do require that predetermined standards must be

made available to the public after they are adopted by the State. They

also require that physicians and pharmacists be informed of what

predetermined standards have been adopted and how they can obtain

copies.

Comment: One commenter suggested that criteria should consider the

needs of the geriatric population. Another commenter suggested that

peer reviewers, not criteria and standards, determine what is necessary

and appropriate. One commenter suggested that professional

prerogatives, to allow for individualized therapy, be linked to the use

of criteria and standards.

Response: To the extent that the peer-reviewed medical literature

and the three compendia specified in the statute reflect the results of

the testing of drugs on elderly subjects, the needs of the geriatric

population will be taken into consideration. Criteria and standards

involve peer reviewers in the development and approval process. Also,

standards provide a basis for State DUR boards to decide the degree of

variation from a criterion which is acceptable to allow for such things

as individualized therapy. In most instances where retrospective drug

use review is conducted, peer reviewers evaluate the results of the

screening process to decide which types of interventions should be

applied to particular situations.

Comment: One commenter suggested that the description of ``peer-

reviewed'' medical literature in Sec. 456.703(f)(1) be revised to

indicate that original manuscripts are ``accepted'' for publication

rather than ``rejected''.

Response: We agree that if a manuscript was rejected, it would mean

that the manuscript had not become peer-reviewed literature. We have

deleted the words ``rejected or'' from the description of peer-reviewed

medical literature.

Comment: One commenter suggested that the Sec. 456.703(f)(1)

provision on ``peer-reviewed'' medical literature should address

conflicts between such literature and compendia.

Response: We realize that there will be conflict between peer-

reviewed medical literature and compendia. However, the resolution of

any such conflict will occur in the consensus process described in

Sec. 456.703(f)(2).

E. Confidentiality

Section 456.703(h) of the interim final regulations requires States

to establish policies concerning the confidentiality of patient-related

data consistent with Federal confidentiality requirements at part 431,

subpart F of the Medicaid regulations, State Pharmacy Practice Acts,

and guidelines adopted by the State Board of Pharmacy or other relevant

licensing authority.

Comment: Six commenters suggested that Sec. 456.703(h) should be

more detailed and should require that States provide pharmacies with

detailed information on how to comply with confidentiality

requirements. The commenters suggested that the section include

guidelines on protection of patient confidentiality in the electronic

claims environment and physician-to-pharmacist confidentiality; and

specify that confidentiality requirements which apply to medical

records also apply to patient profiles maintained by pharmacists.

Response: We believe that the Federal confidentiality requirements

in the regulations at part 431, subpart F, the State requirements

contained in Pharmacy Practice Acts, and the policies developed by

State bodies which regulate the practices of medicine and pharmacy

should be sufficient to protect the confidentiality of patient-related

data and at the same time allow providers access to data to make

informed judgments necessary to effectively conduct DUR. With regard to

the problem of maintaining confidentiality in an electronic

environment, the Workshop on Electronic Data Interchange (WEDI) is

studying these issues but has not yet developed policy recommendations.

In the interim, since use of the electronic drug claims processing

systems may present unique confidentiality problems, particularly with

prospective DUR, States may wish to establish policies to address these

problems.

Comment: One commenter indicated that, as important as

confidentiality is, it should not be allowed to be used to restrict

pharmacist access to relevant data needed to permit accurate assessment

of patient needs so the pharmacist can make informed medication-related

judgments.

Response: Section 456.703(h) of the regulations requires States to

establish policies concerning the confidentially of patient-related

data which is consistent with Federal confidentiality requirements and

State Pharmacy Practice Acts and State Pharmacy Board guidelines. We

believe that this can be accomplished in a manner which both protects

patient confidentiality and allows for access to data needed to

efficiently administer the Medicaid DUR program.

Comment: One commenter asked how HCFA will ensure that patient

confidentiality rules are adequate and how HCFA will monitor compliance

with them.

Response: Since States are primarily responsible for regulating

pharmacy and medical practice, they must determine the adequacy of

confidentiality rules and ensure compliance with them. HCFA will

monitor compliance with the confidentiality requirements through its

review process conducted by regional offices and through review of the

DUR annual reports required by Sec. 456.712.

Comment: Two commenters requested an explanation of why Federal

confidentiality requirements do not apply to patient profile

requirements at Sec. 456.705(d).

Response: The Federal Privacy Act requirements do not apply where

the Federal Government does not control the records in question.

F. Prospective DUR

Section 456.705(a) of the interim final regulations requires review

of drug therapy before each prescription is filled or delivered to a

recipient. This review, as described in Sec. 456.705(b)(1) through (7),

is done at the point of sale, based on predetermined standards, before

a prescription is filled or delivered to the recipient or the

recipient's caregiver. Reviews are to detect drug-disease

contraindications, therapeutic duplication, adverse drug-drug

interaction, incorrect drug dosage or duration of therapy, drug-allergy

interactions, and clinical abuse and/or misuse. Counseling and

maintenance of patient profiles by the pharmacist are required by

Secs. 456.705(c) and (d).

Comment: One commenter suggested that the word ``prescription'' be

changed to ``drug'' in the description of drug-disease

contraindications because contraindications can also occur with over-

the-counter drugs. The commenter also suggested that the term

``clinically significant'' be used to describe adverse medical effect.

This latter terminology would ensure that only significant events would

be reviewed and these regulations would not identify all adverse

effects as contraindications.

Response: We have revised Sec. 456.705(b)(2)(i) to incorporate the

commenter's suggestions.

Comment: Two commenters suggested that the definition of ``adverse

drug-drug interaction'' include the phrase ``clinically significant''

to describe ``adverse medical effect''. Again, this would ensure that

only significant effects would meet this definition, since all adverse

effects need to be reviewed.

Response: We have revised Sec. 456.705(b)(3) to incorporate the

commenters' suggestion. We have made a conforming change to

Sec. 456.703(f)(5).

Comment: One commenter suggested that the definition of ``adverse

drug-drug interaction'' should prohibit substitution of the FDA orange

book ``B'' rated drugs.

Response: It is not HCFA's responsibility to require generic

substitution of the FDA orange book ``B'' rated drugs. State laws

regarding product selection will determine the requirements regarding

generic substitution.

Comment: One commenter suggested an error in the definition of

``incorrect drug dosage'' at Sec. 456.705(b)(4) as a potential drug

therapy problem type that must be included in the screening in point-

of-sale or point-of-distribution reviews. The commenter pointed out

that the reference to ``daily dosage range'' should be ``daily dosage''

as the term ``range'' applies to the standard and is not a part of the

definition. A second commenter suggested that the correct ``duration''

of drug treatment was hard to assess as a potential drug therapy

problem type under Sec. 456.705(b)(5).

Response: We have deleted the references to ``range'' in

Sec. 456.705(b)(4), since we believe that the term is redundant. We

agree with the commenter that duration, in some instances, may be

difficult to assess. However, ranges provided in the predetermined

standards would allow for some variance in individual cases.

Comment: One commenter suggested that the definition of ``drug-

allergy interactions'' include a statement that such problems can only

be identified based upon history obtained from the patient or the

physician.

Response: We agree that information regarding drug- allergy

problems may be only available through contact with the physician or

the patient. However, such a statement is not a proper part of the

definition.

Comment: One commenter suggested that the prospective DUR screening

elements definitions should be consistent with definitions developed by

the National Council for Prescription Drug Programs (NCPDP).

Response: We did review the definitions of prospective DUR,

retrospective DUR, and concurrent DUR developed and recommended by the

NCPDP in developing the interim final regulations. Section 456.705

describes prospective DUR in detail and Sec. 456.709 describes

retrospective DUR in detail. We see no reason to define these terms in

Sec. 456.703. Because the statute does not refer to concurrent DUR, we

have no reason to include this term in the regulation.

Comment: Four commenters were concerned about performing

prospective DUR in an on-line electronic drug claims management

environment. Two commenters suggested not implementing prospective DUR

in an on-line ECM environment until demonstration projects required by

the statute have been completed. Another commenter suggested a

comparison of ECM-based DUR and pharmacy on-site DUR and the

implementation of the most effective approach. One commenter warned

against making prospective DUR too automated because the pharmacist is

essential as a problem solver. One commenter suggested that detailed

prospective DUR rules are unnecessary because prospective DUR can be

performed based on the pharmacist's professional judgment manually, or

electronically, or a combination of the two.

Response: Establishing electronic drug claims management systems

and including prospective DUR as part of such systems are options

available to the States; they are not required. Therefore, prospective

DUR can be done electronically or on site by each pharmacy. The purpose

of the demonstration project required by Congress at section

4401(c)(1)(d) of OBRA '90 is to determine the relative effectiveness of

the ECM-based prospective DUR versus the on-site pharmacy prospective

DUR, and thus assure implementation of ECD-based DUR. We recognize

that, even with automation, prospective DUR cannot be done without the

pharmacist because his or her professional judgment determines whether

and how to respond to an automated alert of a potential problem.

Comment: One commenter suggested that if electronic prospective DUR

is implemented, a professional oversight committee should work to keep

focus on serious problems and to avoid false positives.

Response: We agree that if an electronic prospective DUR is

implemented, a professional oversight committee is needed to ensure

that prospective DUR is focused on serious problems and avoids false

positives. We believe that the State DUR board would be the appropriate

entity to provide such oversight.

Comment: One commenter suggested that in the course of the

prospective DUR, prescriptions should not be changed or denied without

the physician's knowledge.

Response: Except for the quantity dispensed, State law prohibits

changing a prescription. It would be appropriate for the pharmacist to

notify the physician if the prescription is not filled for therapeutic

reasons. Establishing rules requiring such notification is in the

province of State boards of pharmacy and could be included in the State

Pharmacy Practice Acts. In the absence of such rules, the State

Medicaid agency could, where appropriate, establish them.

Comment: One commenter suggested that we define a prescription.

Response: The definition of a prescription is included in the State

Pharmacy Practice Acts.

Comment: One commenter suggested that approval of State plans for

DUR should be contingent on the State providing adequate financial

incentives for pharmacist interventions.

Response: There is no prohibition in the statute or the regulations

against the State providing financial incentives for pharmacist

interventions. The State is free to include, in its reimbursement for

the cost of filling a prescription, consistent with the requirements of

section 1902(a)(30)(A) of the Act with regard to efficiency, economy

and quality of care, amounts to compensate for DUR services.

Comment: One commenter suggested that instructions for compliance

with prospective DUR should go to the pharmacist, not the pharmacy.

Response: We believe that the instructions for compliance with

prospective DUR should be directed to the pharmacies since they are the

Medicaid providers. It would be more burdensome to furnish this

information to pharmacists in part because changes in the pharmacy

staff occur more frequently than do changes in the status of

pharmacies. The owners or managers of pharmacies, as Medicaid

providers, are responsible for furnishing their staff with information

pertaining to DUR.

Comment: One commenter suggested that pharmacists should not be

required to take medical histories.

Response: Nothing in the statute or the regulations requires

pharmacists to take medical histories. Pharmacists must make a

reasonable effort to maintain patient profiles and may, based on their

professional judgment, seek patient specific information for those

profiles.

Comment: Seven commenters pointed out the importance of diagnosis

information and the difficulty of conducting prospective DUR screening

to identify drug-disease and drug- allergy screening without patient-

specific information. One commenter suggested that inaccurate diagnosis

information would generate needless communication between physicians

and pharmacists.

Response: We agree that it is difficult to screen for drug-disease

contraindications and drug-allergy interactions without access to

patient-specific information. Clearly, access to such information

improves the ability to conduct prospective DUR, and obtaining accurate

information is a difficult technical problem. There is also the

question of the relationship of the diagnosis to the use of the

prescription, for example, the diagnosis may be cancer and the

prescription may be for pain. Given these difficulties, problems

associated with access to patient-specific information can best be

resolved by pharmacists cultivating relationships with physicians so

that it becomes possible for the pharmacist to seek patient-specific

information about diagnosis, allergies, and other matters when, in his

professional judgment, it is appropriate for counseling.

Comment: One commenter suggested that HCFA require physicians to

submit diagnosis information, while another suggested that physicians

not be required to provide diagnosis information. Other commenters

pointed to the difficulty of getting diagnosis information from

providers.

Response: Since States regulate the practice of medicine, placing

diagnosis information on prescriptions is a matter for States to

decide.

G. Counseling

Section 456.705(c) of the interim final regulations provides that

applicable State law, or other method satisfactory to the State, must

establish standards for counseling of the recipient or the recipient's

caregiver. The State must provide pharmacies with detailed information

as to what they must do to comply with prospective DUR requirements,

including guidelines on counseling, profiling, and documentation of

prospective DUR activities by the pharmacists. The State law, or other

method satisfactory to the State, must specify how counseling

requirements apply to mail order pharmacies.

The standards must specify whether the pharmacist or an ancillary

person may make the offer to counsel; must specify what documentation

must be maintained on refusals of counsel; and must include in the

counseling those matters considered significant by the pharmacist. The

standards need not require a pharmacist to provide consultation when a

recipient or recipient's caregiver refuses such consultation.

Comment: Five commenters addressed the physician-pharmacist

relationship concerning the provision of counseling services. One

commenter stated that counseling that involves the pharmacist

contacting the physician would create a hassle factor for the

physician. Four commenters suggested the expansion of Sec. 456.705(c)

to include specific statements regarding the physician-pharmacist

relationship: the physician should be able to direct the pharmacist to

include or exclude specific topics for specific patients; the

pharmacist should notify the physician if the patient refuses the

prescription after counseling. In addition, if the pharmacist

identifies a significant risk of an adverse medical result, he or she

should consult the physician prior to counseling. The commenters

indicated concern that inappropriate counseling would result without

the addition of these requirements.

Response: The individual State has the responsibility of

establishing standards of counseling for the pharmacist. Some States

may want to incorporate requirements regarding physician-pharmacist

interaction in their standard; others may not. We believe these

interactions will occur in the normal day-to-day relationships between

physicians and pharmacists. In any event, States should be given the

flexibility of either including, or not including, the suggested

requirements.

Comment: Seven commenters suggested that mail order pharmacies

should be treated the same as all other pharmacies. Counseling

requirements should apply equally to all pharmacy providers of

outpatient drugs.

Response: We concur and have removed the statement concerning mail

order pharmacies from Sec. 456.705(c). Since delivery of a prescription

to a person at home by a pharmacy and mail order prescriptions raise

the same issues about how to offer and provide counseling, we have

amended Sec. 456.705(c) to require State counseling standards to

address this issue.

Comment: Three commenters suggested that the regulations specify

whether the offer to provide counseling is required for new

prescriptions only, both new and refill prescriptions, or whether the

decision to make the offer should be left to the professional judgment

of the pharmacist. One commenter suggested limiting the offer to new

prescriptions; one commenter suggested that it apply to both new and

refill prescriptions; and the third commenter suggested leaving the

decision to the professional judgment of the pharmacist. Six commenters

suggested that the regulations specify the role of ancillary personnel

in making the offer to counsel to the patient or the patient's

representative. The commenters indicated that pharmacists may have

ancillary personnel make the offer of counseling on their behalf, but

the pharmacists must personally conduct counseling if the offer is

accepted.

Response: Since the statute requires each State to establish

standards for counseling, these State standards rather than Federal

regulations must, at a minimum, address the following issues:

Whether the offer to counsel is required for new

prescriptions only, or both new and refill prescriptions;

Whether only pharmacists must make the offer to counsel or

whether auxiliary personnel are authorized to make the offer;

Whether only a patient's refusal of the offer to counsel

must be documented or whether documentation of all offers is required;

Whether documentation of counseling is required; and

How counseling is to be addressed in situations where the

patient's representative is not readily available to receive a

counseling offer or the counseling itself.

We have amended Sec. 456.705(c) to specify that State counseling

standards must address these issues.

Comment: Seven commenters discussed the method of documenting a

patient's refusal of the offer to provide counsel. Six commenters

suggested that pharmacists be given the maximum flexibility in the

method of documenting a patient's refusal of the offer to provide

counsel. One of the six commenters suggested that documentation should

not be mandatory. The seventh commenter suggested that a recipient

should be able to sign a blanket refusal for all prescriptions.

Response: Again, we leave to the States decisions regarding

documentation of offers to counsel.

Comment: Five commenters addressed documentation of counseling in

general, although such documentation was not discussed in the interim

final regulation. Two commenters suggested that guidelines on

documentation be included and three commenters suggested that

documentation standards should be general and not specific.

Response: The statute requires the States to establish standards

for counseling. We have amended Sec. 456.705(c)(1) (formerly the

undesignated introductory paragraph of Sec. 456.705(c)) to specify the

subject matter that must be addressed by these standards.

Comment: Five commenters suggested that Sec. 456.705(c)(1) specify

that the content of counseling should be left to the professional

prerogative of the pharmacist, who should be given proper flexibility

in selecting how patient counseling should be administered in each

circumstance. One commenter requested that the control of the content

not be given to the prescriber.

Response: Section 456.705(c)(3), formerly Sec. 456.705(c)(2),

clearly specifies that the content of counseling is subject to the

professional judgment of the pharmacist. Determining how counseling

should be administered, that is, whether counseling must be oral or to

what extent written communication may be used, depends on the State

standards for counseling.

Comment: Six commenters discussed making an oral offer to counsel.

Two of the six suggested that, in all instances, the offer must be

oral. Three suggested that a written offer should be used where an oral

offer was not possible. The sixth commenter advised that written

material alone should not be substituted for the oral offer.

Response: We believe that the issue of whether the offer to counsel

must be oral, and the extent to which written material may be

substituted for an oral offer of counseling, are matters to be

addressed by State standards for counseling.

Comment: Six commenters suggested additional requirements for

offers of counseling when the patient was not available, when

deliveries were made via mail service or offsite deliveries outside the

area covered by the local telephone exchange. They suggested use of

written instructions (offer to counsel) with the prescription plus a

toll-free telephone number for the patient to call if there were any

questions.

Response: We concur and have amended Sec. 456.705(c)(2) to require

mail order pharmacies to provide toll-free telephone service for all

long distance calls. As stated in the regulation, other pharmacies

whose primary patient population is accessible through a local measured

or toll-free exchange may not be required to offer toll-free service. A

State agency's counseling standards must address special situations

where the patient, or the patient's representative, is not readily

available to receive the offer to counsel or the actual counseling, for

example, prescriptions delivered off site or through the mail.

Comment: Five commenters addressed the provision of a toll-free

telephone number for the patient to use to ask questions or obtain

additional information concerning his or her prescription. One

commenter stated that requiring such a number was not practical. One

commenter requested more information regarding toll-free numbers. One

commenter stated ``access to'' should mean that every patient has the

opportunity to telephone the pharmacist without cost to the patient.

The fourth commenter stated that managed care pharmacies should provide

a toll-free telephone counseling service. A fifth commenter also stated

that pharmacies should provide a toll-free number on the prescription

label which would, in part, meet the ``offer to counsel'' standard.

Response: As stated in the regulation, pharmacists whose primary

patient population is accessible through a local measured or toll-free

exchange may not be required to offer toll-free service. States are

free to further define, under the counseling standards, the term

``primary patient population'', or otherwise specify under what

circumstances pharmacies would or would not be required to provide

toll- free telephone service. Otherwise, pharmacists whose primary

population is not accessible as indicated above, would be required to

provide toll-free telephone service.

Comment: Four commenters suggested that counseling requirements

will alarm, confuse, or raise fears among recipients. Two commenters

indicated that recipients would not understand that refusal to provide

medical history or to accept counseling would not affect their

eligibility for medical services under the Medicaid program.

Response: We do not agree that counseling would alarm, confuse, or

raise fears among recipients. Overall, the program will increase the

knowledge, and the understanding by patients, of the impact of drugs on

their lives. With such increased knowledge, patients can better

participate in the administration of the medical care that they are

receiving. Rather than alarm patients, the offer to counsel and the

actual counseling can be used to alleviate their fears by providing an

explanation which could cover not only the items suggested in the law

and regulations but also the impact of the counseling program on the

individual's eligibility for medical services under the Medicaid

program.

Comment: One commenter suggested that the regulations be amended to

acknowledge what many States had done to implement model patient

counseling legislation that established how the ``offer to counsel'' is

made to the patient.

Response: We do not believe that an acknowledgement of what States

have done thus far would serve any purpose. It would not be feasible to

include a current list of such States in the regulations since the list

would be growing constantly. If such recognition is provided for model

patient counseling legislation, then recognition should also be

provided to States that have model retrospective review programs,

prospective programs, and point-of-sale ECM systems. HCFA intends to

share with the States information and technology that various States

have found effective for administering DUR.

Comment: One commenter suggested that the regulation distinguish

between the ``offer to counsel'' and the act of counseling itself.

Response: We believe that Secs. 456.705 (c)(1) and (c)(3) already

distinguish between the offer and the content of counseling.

Comment: Two commenters suggested that the counseling requirements

are an unwarranted Federal intrusion and may have adverse consequences

for the mentally ill. They stated that absolute confidentiality must be

maintained and counseling must be done in a discreet, supportive,

informative, and non-threatening manner.

Response: We agree that the protection of confidentiality and the

sensitivity with which counseling is conducted are critically

important. Since the States and pharmacists, not the Federal

Government, are responsible for counseling, we do not believe that an

unwarranted Federal intrusion has occurred.

Comment: One commenter asked whether the $1 to $2 cost estimate per

prescription for counseling services was based upon the pharmacist or

the ancillary personnel making the offer to counsel.

Response: This estimate was based upon the pharmacist making the

offer of counseling.

Comment: One commenter noted that the timing of the issuance of the

rule placed States and pharmacies at a serious disadvantage as it

permitted only 60 days for the adoption of counseling standards through

legislation or regulation.

Response: We agree that the timeframe for issuing the regulations

was unusually short and placed a burden on the States. However, most

States have successfully established counseling standards to comply

with the regulations.

H. Profiling

Section 456.705(d) of the interim final regulations requires

States, in the case of Medicaid recipients, to require pharmacists to

make a reasonable effort to obtain, record, and maintain patient

profiles. The profiles, at a minimum, must contain the following

information: (1) name, address, telephone number, date of birth (or

age), and gender of the patient; (2) individual history, if

significant, including disease state or states, known drug reactions,

and a comprehensive list of medications and relevant devices; and (3)

the pharmacist's comments relevant to the individual's drug therapy.

Comment: Two commenters suggested that ``individual history''

rather than ``individual medical history'' should be one of the minimum

information items.

Response: We agree and we have changed Sec. 456.705(d)(2) to delete

the word ``medical''. The term ``medical history'' is not appropriate,

as ``medical history'' includes obtaining specific information

regarding laboratory results, diagnosis, and other medical findings.

Comment: Three commenters suggested that the regulations should

include a statement that profile information can be obtained by

ancillary personnel, but the pharmacist must review and interpret the

information obtained.

Response: We believe this is an individual State decision. A State

that decides to authorize auxiliary personnel to obtain profile

information may include such authorization and the appropriate

requirements for the use of auxiliary personnel in their standards for

counseling.

Comment: Three commenters addressed the use of the term

``reasonable effort'' for obtaining profile information in

Sec. 456.705(d). One commenter suggested the term should be further

defined or deleted. One commenter suggested expansion of the term to

state that ``the pharmacist is responsible for ensuring that a

reasonable effort is made to obtain profile information.'' The third

commenter suggested expanding the statement to indicate that

``reasonable effort'' should not include additional burden or cost to

the pharmacist.

Response: We have decided not to define reasonable effort in the

regulations to allow States flexibility in implementing the DUR

requirements. States and their pharmacy boards may, or may not, choose

to further define ``reasonable effort''.

Comment: One commenter stated that Sec. 456.705(d)(2) should be

amended to make it explicit that the profiling requirements are limited

to recording information concerning drugs and devices dispensed at the

pharmacy where the pharmacist is employed.

Response: We have retained the phrase ``a comprehensive list of

medications and relevant devices'' as the statute specifies in section

1927(g)(2)(A)(ii) of the Act. Neither the statute nor the regulation

defines a ``comprehensive list''; therefore the State, if it chooses,

may further define the term according to section 1927(g)(2)(A)(ii) of

the Act. Methods for securing this information could include checking

the pharmacy's own record, receiving an alert message from the

electronic claims management system, or asking the patient, physician,

or other pharmacies for additional information if, in the professional

judgment of the pharmacist, it was appropriate to do so.

Comment: One commenter suggested that HCFA study the advantages and

disadvantages of requiring the collection of information for profiles.

Response: We will consider these matters as a subject for HCFA

studies of the DUR program and its impact on the industry and the

public.

I. Retrospective DUR

Section 456.709 of the interim final regulations requires that the

State Medicaid plan provide for a retrospective DUR program for ongoing

periodic examination of claims data and other records in order to

identify patterns of fraud, abuse, gross overuse, or inappropriate or

medically unnecessary care among physicians, pharmacists, and Medicaid

recipients, or associated with specific drugs or groups of drugs. This

examination must involve pattern analysis, using predetermined

standards of physician prescribing practices, dispensing practices of

pharmacies, and drug use by individual patients. This program must be

provided through the State's mechanized drug claims processing and

information retrieval system or an electronic drug claims processing

system that is integrated with the Medicaid Management Information

System (MMIS).

Comment: Two commenters suggested peer review prior to any

intervention suggested by DUR reports or outliers identified by

computerized DUR programs. A third commenter suggested that the

regulations state that the system should not produce punitive decisions

against physicians.

Response: It is up to each State to determine whether, and under

what circumstances, peer reviews of therapeutic problems identified

through screening applications based upon predetermined standards, will

be required. States may require peer review prior to all interventions

or identify circumstances where peer reviews are, or are not, required.

We do not believe that it is appropriate to address the question of

punitive decisions against physicians. The objective of the DUR is to

improve pharmaceutical care through education.

J. Education Program

Section 456.711 of the interim final regulations requires that the

State plan must provide for ongoing outreach programs that educate

practitioners on common drug therapy problems with the aim of improving

prescribing and dispensing practices. Section 456.716(d)(5) requires

the DUR Board to: (1) identify and develop educational programs if

needed; (2) make recommendations regarding interventions; and (3)

periodically reevaluate and, if necessary, modify interventions.

Section 456.716(d)(6) specifies that the Medicaid agency, or its

contractor, should apply predetermined standards to drug claims data

and generate reports for use by the board and carry out educational

programs specified by the board.

Comment: Five commenters suggested expanding Sec. 456.716(d)(5) to

make it more specific. One commenter suggested the creation of a fifth

provision to require more in-depth review prior to intervention. Other

commenters stressed ``appropriate and balanced'' education programs

based upon program experience, matching the education program to the

drug therapy problem identified, and placing more emphasis on

preliminary education.

Response: We have expanded Sec. 456.716(d)(5)(ii) to address the

commenters' suggestions. The DUR Board recommendations for educational

interventions must be based on an in-depth review of claims data

reports. The board may decide which educational intervention approaches

are suitable for the drug therapy problems identified. We have changed

Sec. 456.703(f)(5) to specify that standards (that is, exceptions to

criteria) may be used in deciding whether or not to intervene after the

potential therapeutic problems have been identified.

K. Annual Report

Section 456.712 of the interim final regulations provides that a

State must require the DUR Board to prepare and submit annual DUR

reports to the Medicaid agency. The Medicaid agency is required to

prepare and submit an annual report to the Secretary of the Department

of Health and Human Services that incorporates the DUR board's report

and includes detailed information on the DUR program operations and an

estimate of the cost savings attributable to the DUR program.

Comment: Ten commenters addressed the DUR cost savings estimate

required in the annual report. Three commenters suggested that

Sec. 456.712 should specify that savings resulting from reduced

physician visits and hospitalizations should be taken into account. Two

commenters suggested that we require comprehensive evaluations,

including both clinical and economic evaluations that would estimate

total savings of DUR.

Response: The requirement that State Medicaid agencies submit a

cost savings estimate refers to those savings that can be attributed to

the operation of prospective and retrospective DUR. The report on cost

savings must identify what is spent annually to operate the DUR program

and also identify the savings to the Medicaid drug program as a result

of DUR. It may include savings that result from reduced physician

visits and reduced hospitalizations if the State can document such

savings. We agree that evaluating both the economic and clinical impact

of DUR is important and the States should, to the extent that they are

able, take both types of outcomes into account when evaluating their

DUR programs. Demonstration projects are also addressing outcomes,

including physician visits, emergency room visits, and

hospitalizations. The Agency for Health Care Policy and Research of the

Public Health Service is conducting an evaluation of pharmaceutical

outcomes, and may cover this topic in its study.

Comment: Three commenters stated that it would be difficult to

estimate cost savings as a result of the DUR program and asked for

suggestions as how to perform this task. One commenter recommended that

HCFA define the word ``costs'' in Sec. 456.712(b)(10) when referring to

the cost savings estimates to be included in the annual report. Another

commenter suggested that the cost of DUR be expressed in terms of cost

per recipient.

Response: Currently HCFA is developing a cost savings methodology

for use by State Medicaid agencies, at their option, when estimating

the cost savings that result from DUR. These guidelines will specify

data collection needs. They will also suggest what costs are to be

considered and whether or not to express costs in terms of cost per

recipient. The guidelines for reporting cost savings will be

distributed to the States on an advisory basis.

Comment: One commenter suggested that Sec. 456.712(b)(3) be revised

to require States to include information in the annual report that

describes the process and sources used for establishing and revising

criteria.

Response: HCFA will provide guidance to the States about the

contents of the annual reports which will include information relating

to sources for criteria. We do not believe it is necessary to include

this as a regulatory requirement. The State DUR Boards will have such

information available if there are any questions about the selection of

criteria and standards.

Comment: One commenter suggested that providing complete criteria

in annual reports would be cumbersome and costly. Another questioned

whether the provision of criteria in the annual report would eliminate

the need for the State's cost savings estimate.

Response: Section 1927(g)(3)(D) of the Act identifies specific

information that must be included in the annual report to allow us to

evaluate the effectiveness of each State's DUR program. HCFA's Medicaid

Bureau has provided additional informal guidance with regard to the

contents of the annual reports. This guidance indicates that detailed

information about DUR-approved criteria must be provided but not

necessarily the criteria themselves. This approach addresses concerns

about the burdensome nature of submitting complete criteria in the

annual reports. The statute requires inclusion of a cost savings

estimate in the annual report; therefore provision of detailed

information on the criteria does not eliminate the requirement that the

State must submit a cost savings estimate.

Comment: One commenter suggested that a requirement be established

for adequate data to be collected by State Medicaid agencies, to prove

that the DUR program is beneficial.

Response: State agencies are required to submit an annual DUR

report to HCFA. As previously indicated, HCFA will provide guidance as

to what data are needed to determine cost effectiveness.

L. Drug Use Review and Surveillance and Utilization Review (SUR)

Section 456.714 of the interim final regulations states that the

retrospective DUR requirements parallel some portion of the

Surveillance and Utilization Review (SUR) requirements in subpart A of

part 456 and in part 455 of the Medicaid regulations.

Comment: Two commenters suggested that SUR and DUR activities

should be completely separate and distinct.

Response: We agree with the commenters and we have revised

Sec. 456.714 to indicate that the SUR program and the DUR program have

overlapping responsibilities to identify and reduce the frequency of

patterns of fraud, abuse, and gross overuse of drugs. Given the

historical emphasis of SUR units in this area, we believe that the DUR

staffs should focus their limited resources on what constitutes

appropriate and medically necessary pharmaceutical care. It is the

State's option, however, to establish what it considers to be the

appropriate balance between fraud and abuse and medical appropriateness

concerns.

Comment: One commenter requested clarification of Sec. 456.714 and

an explanation of how cost savings from SUR are to be taken into

account in calculating DUR cost savings required by

Sec. 456.712(b)(10).

Response: HCFA is developing specific guidance to assist the States

in determining DUR costs savings as required by Sec. 456.712(b)(10).

This guidance will address the issue of whether or not to include SUR

cost savings.

M. DUR Board

Sections 456.716(a) and (b) of the interim final regulations

require that each State establish a DUR Board and establish

requirements for the composition of the DUR Board and expertise of its

members. Section 456.716(c) specifies the relationship between the DUR

Board and the State Medicaid agency; Sec. 456.716(d) discusses

activities of the DUR Board; and Sec. 456.716(e) specifies funding

available for DUR Boards.

Comment: Five commenters expressed concern about the relationship

between the DUR Board and the State Medicaid agency as provided for in

Sec. 456.716(c). Four commenters suggested that the DUR Board be

separate from the Medicaid agency or have final authority with regard

to clinical issues such as approval of criteria. One commenter

suggested the DUR Board should have rulemaking authority. One commenter

suggested that DUR Boards should not be independent.

Response: Section 1902(a)(5) of the Act, which specifies that a

single State agency must administer or supervise the administration of

the Medicaid program, precludes making DUR Boards independent of the

State agency. While it is expected that a State will rely heavily on

the clinical expertise of the DUR Board, this does not preclude the

State agency from independently assessing the DUR Board's

recommendations to assist it in reaching its decisions.

Comment: Four commenters addressed the issue of procedures for DUR

Board action if a State agency overrules the DUR Board. Two commenters

suggested that DUR Boards have procedures to make their activities

public, including possible public comment procedure for responses to

outside input. Two commenters indicated that when the State agency

overrules the DUR Board, it must make public the reasons for its

actions and consider public comment.

Response: States may require DUR Boards to establish informal

procedures through which outside parties may contribute input with

regard to the application of predetermined standards. Section

456.716(c) gives the State agency the authority to overrule the DUR

Board. The State agency may or may not make its reasons public,

depending on the rules which it establishes for the creation of the DUR

Board.

Comment: Five commenters addressed the composition of the DUR

Boards. Some commenters suggested the need for more specifics about

membership such as the possibility of having public members,

representatives of chain pharmacies, and psychiatrists. One commenter

suggested that pharmacist members have DUR experience.

Response: The State agency is free to determine the size of the DUR

board and may include any types of members that it considers

appropriate so long as it complies with Secs. 456.716 (a) and (b).

Comment: One commenter suggested that the issue of possible

conflict of interest of Board members be dealt with.

Response: Section 1927(g)(3)(b) of the Act and Sec. 456.716 of this

regulation specify that members of the DUR boards must be health

professionals who have recognized knowledge and expertise in one or

more of the following: the clinically appropriate prescribing of

covered outpatient drugs; the clinically appropriate dispensing and

monitoring of covered outpatient drugs; drug use review, evaluation,

and intervention; or medical quality assurance. We are monitoring

compliance with these requirements and expect that States will take

whatever actions they deem appropriate, consistent with their laws and

regulations concerning conflict of interest, to protect against

conflict of interest in the operation of the DUR boards.

Comment: One commenter suggested that DUR Boards have the

flexibility to determine appropriate interventions and when to use

them. The commenter also suggested that there is no need to have all

interventions reviewed by peers before they are carried out.

Response: DUR Boards do have the flexibility to determine

appropriate interventions and when to perform them. It is up to the DUR

Board to decide under what circumstances peer review must occur prior

to interventions and when interventions may occur without such review.

Comment: Eighteen commenters responded to the request for comment

on the interim final regulations about the appropriateness of having

DUR Boards certify prospective DUR software. Ten of these commenters

indicated that the DUR Board should not take on the task of certifying

individual pharmacy prospective DUR software because of the enormity of

the task, the DUR Board's lack of expertise in this area, and because

the Board should not be put in a position of providing something

equivalent to a seal of approval for software products. Five of the

commenters suggested that DUR Boards should approve prospective DUR

software. One commenter suggested that it would be more economical for

HCFA to undertake evaluation of software packages. Two commenters

suggested that DUR Boards should not deal with evaluation of individual

pharmacy prospective DUR software but should provide guidance as to

which products available to pharmacies would meet statutory

requirements.

Response: We agree with those commenters who indicated that the DUR

Boards should not take on the task of certifying individual pharmacy

prospective DUR software. DUR Boards should know and understand the

criteria upon which the software is based, but they often do not have

the expertise to evaluate the quality and efficiency of the software

itself. Undertaking such certification would be excessively burdensome

and create the impression that some packages have State government

approval while others do not.

Comment: One commenter suggested that the requirement in

Sec. 456.716(b) that pharmacists must be licensed and actively

practicing in the State on whose DUR Board they serve would be

burdensome to small States seeking to recruit experts from nearby

States.

Response: We concur and have revised Sec. 456.716(b) by eliminating

the requirement for licensure by the State on whose DUR Board the

pharmacist is serving.

N. Electronic Drug Claims Processing

Section 456.722 of the interim final regulations establishes

functional requirements for those State Medicaid agencies that choose

to develop an on-line, real-time point-of-sale electronic claims

management (ECM) system to perform eligibility verification, claims

data capture, claims adjudication, and to assist pharmacists in

applying for and receiving reimbursement for services.

Comment: Four commenters addressed the costs of in-store

telecommunications and the installation and use of on-line dedicated

telecommunications lines. They recommended that pharmacy providers

should be compensated for the additional costs incurred. One commenter

suggested that the States should pay costs, charges, and fees related

to on-line communication. Four commenters addressed the issue of costs

associated with establishing an on-line, real-time ECM system and asked

who would be responsible for the costs. They questioned whether access

to the system would be toll free. They suggested that providers be

compensated for costs associated with telecommunications, software

enhancements, etc., that HCFA or fiscal agents, rather than pharmacies,

take responsibility for telecommunication costs, and that HCFA require

States to pay associated costs.

Response: State Medicaid agencies, who may receive FFP for the ECM

systematic MMIS at enhanced rates if functional requirements are met,

may also decide the amount of funding they will offer providers for

hardware, software, and telecommunications charges, if any. A State may

base this decision on such variables as what the average cost will be

for pharmacies to participate, the amount of FFP received by the State

for the ECM subsystem, and whether the State's budgets will enable it

to compensate pharmacies who have incurred additional costs due to ECM.

The State agency is free to pay transmission charges and other costs

associated with participation in an ECM system or to require pharmacies

to cover these costs.

Comment: One commenter stated that ``ECMS'' should require only the

minimum data elements necessary for processing and paying claims. No

variable data elements should be permitted.

Response: HCFA requires at least the minimum data set for

processing and paying claims as defined in Part 2 of the State Medicaid

Manual. Given the wide variation in State programs, however, we believe

that it would be unwise at this time to restrict data that States may

need for proper program administration. Thus, States have the option to

add other data elements, as necessary.

Comment: Eight commenters suggested that HCFA require State

Medicaid agencies to comply with one industry telecommunications

standard. Six of the eight commenters recommend NCPDP's Version 3.2 to

be incorporated into Sec. 456.722. One commenter suggested that HCFA

require the use of RFDS 3C in all State POS/ECM systems.

Response: Currently, the State may decide the format for its ECM as

long as it meets the requirements of the minimum data set provided in

Part 2, section 11375 of the State Medicaid Manual. However, with the

growing use of the Electronic Data Interchange (EDI) and the

possibility of a Federal requirement that mandates its use by the

Medicaid program, a standard format requirement for ECM subsystems may

be forthcoming. Moreover, HCFA announced in an advance notice of

proposed rulemaking in the Federal Register on October 19, 1992 (57 FR

47587) that it endorses electronic standards established by the

American National Standards Institute (ANSI). We anticipate final

adoption of the ANSI electronic standards as the required

telecommunications standard.

Comment: One commenter recommended that the ECM system develop

electronic payment capabilities by incorporating the electronic funds

transfer (EFT) program, or it will be of little value.

Response: The States may decide whether their ECMs will have an EFT

capability. HCFA requires only that ECMs take steps toward the payment

of the claim, in order to receive FFP, but not that funds be sent

electronically.

Comment: Four commenters addressed the establishment of ECM

systems. Two commenters suggested that providers be required by HCFA to

use ECM systems. One commenter suggested that participation in an ECM

system be an option for the pharmacy. One commenter requested that

batch processing of claims for prescriptions be included in any ECM

program.

Response: State Medicaid agencies may determine whether providers

will be required to use ECM systems and whether providers using the ECM

system will be required to rely on the State's prospective DUR, if the

State has one. At this time, HCFA does not require State Medicaid

agencies to establish ECM systems or to use them to accomplish

prospective DUR.

Comment: Two commenters suggested that HCFA should require mail

order pharmacies' ECM systems to be on-line, real-time. One commenter

suggested that the exemption allowing batch claims submission mentioned

in Sec. 456.722(b) also be available to retail pharmacies.

Response: States are responsible for determining whether mail order

dispensers and other providers are required to operate a real-time ECM

system, or a batch processing system at the end of each day or at a

time specified by the State Medicaid agency.

Comment: One commenter recommended that HCFA not require States to

obtain cost/benefit analyses prior to procuring point-of-sale ECM.

Response: An analysis that shows the cost effectiveness of the ECM

is required in order for the States to receive enhanced FFP for the

system.

O. Dispensing Physicians

The interim final regulations are silent on the subject of

dispensing physicians.

Comment: One commenter pointed out that the regulations do not deal

with the situation of dispensing physicians.

Response: Section 1927(k)(3) of the Act states that the term

``covered outpatient drug'' does not apply to drugs provided as

physicians services unless there is a separate reimbursement for the

drug. If there is a separate reimbursement claim for a drug dispensed

by a physician, all the requirements of section 1927(g) apply to that

physician, except for the requirements to offer patient counseling and

to collect, record, and maintain patient profiles. This is because the

Act specifically speaks to a pharmacist's responsibilities in these two

areas. The State is free to develop State requirements with regard to

patient counseling and patient profiles for dispensing physicians.

Comment: One commenter suggested that dispensing physicians not be

allowed to submit claims through ECM systems.

Response: While the Secretary has been explicitly directed by the

statute to encourage the use of ECM systems, States are free to

establish policy with regard to the submission of claims through ECM

systems.

P. Renal Dialysis

Section 1927(k)(3) of the Act does not include as a ``covered

outpatient drug'' under Medicaid, drugs provided for renal dialysis

unless direct reimbursement for the drug is involved.

Comment: One commenter pointed out that drugs administered to

Medicaid recipients in renal dialysis centers are or are not subject to

DUR, depending on whether or not there is separate reimbursement for

the drug.

Response: We agree with the commenter. Section 1927 (k)(3) of the

Act provides that drugs provided to Medicaid recipients in renal

dialysis centers are not subject to DUR unless there is a separate

reimbursement for the drug product.

Q. Liability

The Act and the interim final regulations are silent with regard to

additional liability incurred by pharmacists as a result of DUR

requirements.

Comment: Three commenters suggested that the preamble language that

pharmacies would not incur additional liability is not correct and

pharmacists should expect to have additional liability problems.

Response: Suits may result from pharmacy practice of DUR, but we

have no evidence to support or refute the contention that the level of

liability suits will increase. Since the DUR requirements specified in

OBRA '90 constitute standards of pharmacy practice for Medicaid

recipients, compliance with these standards provides the best

protection against possible liability actions.

Comment: Five commenters suggested that pharmacists be held

harmless from liability associated with conducting DUR or that HCFA

assume such liability.

Response: We know of no statutory basis for holding pharmacists

harmless from such liability or for having HCFA assume such liability

that may result from compliance with the DUR requirements.

Comment: One commenter asked about product liability.

Response: We do not believe that product liability would be

impacted by the OBRA '90 DUR requirements.

R. Comments on the Regulatory Impact Analysis

Comment: Two commenters questioned the Congressional Budget Office

estimate of $10 million to $40 million savings annually. One commenter

suggested that the DUR provisions will cost more than they save. The

other commenter stated that significant hardware and software costs

will reduce cost savings.

Response: Since these commenters provided no specific data, we will

not make changes to the Congressional Budget Office estimates.

Comment: Ten commenters questioned the hardware-software costs

associated with the DUR program. They included estimates for software

costs of: $1,500, $1,900, $2,000 to $5,000, and $3,500. One commenter

suggested the cost of a new computer would be $3,600 to $6,000; a

second commenter indicated that 10 percent of their group would need

new computers. One commenter indicated annual upgrade and modification

costs would be $995 per pharmacy.

Response: We concur with the majority opinion that our original

estimates may be low and probably should reflect costs in the $1,500 to

$3,500 range. However, due to the lack of any empirical data, we are

unable at this time to make this determination with any degree of

certainty.

Comment: Four commenters questioned the cost of counseling, all

indicating cost estimates should be higher; however, only two provided

their own estimates. One commenter suggested that 5 minutes would be

necessary for counseling and profiling at a cost of $2.50 per

prescription. Another commenter indicated that the time and cost per

prescription for the DUR requirements would be 4 minutes and $2.98

($2.98 includes 50 cents for hardware- software costs). One commenter

suggested that the usual and customary charge should be reimbursed to

ensure adequate compensation for DUR services. Four commenters

suggested that the dispensing fee will need to be changed to reflect

the increased requirements for DUR. None of the commenters suggested

specific cost figures.

Response: We believe that 5 minutes at a cost of $2.50 per

prescription is a reasonable estimate that would raise our top estimate

from $140 million to $175 million. However, as we stated earlier, we

lack any empirical data to substantiate this claim.

Comment: Six commenters suggested that the estimates in the interim

final regulations did not include, or consider, the cost of

interventions or consultations with physicians. One commenter, using

data from a study that the commenter conducted, reported that 1.9

percent of all prescriptions require interventions. Where interventions

are made, 87 percent of these interventions involve contact with the

physician. This commenter estimated that with 2 to 4 minutes per

consultation, at a pharmacist hourly rate of $30, the total cost would

be $10 to $20 million for approximately 140 million new prescriptions

per year.

Response: We generally agree that some of our estimates may be low.

However, we do not believe, absent any additional definitive research

studies that we can make any provisional changes as a result of this

study at this time.

Comment: Three commenters suggested reimbursement for ``cognitive

services.'' One commenter suggested that the cognitive fee be separate

from the dispensing fee. The second commenter indicated that a

cognitive fee payment would ensure that pharmacists would maximize

program efficiencies. The third simply advocated payment for such

services.

Response: Currently, there is no authorization in Federal statute

or regulation for a separate payment for cognitive services. However,

section 4401(c)(2) of OBRA '90 authorizes a demonstration project on

the cost-effectiveness of reimbursement for pharmacists' cognitive

services. When this demonstration project is completed, consideration

may be given to the inclusion of reimbursement for cognitive services

in the payments made to pharmacists.

Comment: The commenters addressed various subjects, all indicating

their impact on increasing costs. One commenter suggested that

recordkeeping and liability costs will increase. Three commenters

indicated that costs associated with establishing and maintaining

profiles were not included in the estimates. Six commenters were

concerned about increased costs (one comment indicated DUR costs would

be shifted to other payers).

Response: Some of these costs will be considered by the State in

establishing the dispensing fee. As indicated in existing Secs. 447.331

and 447.332 of the Medicaid regulations, the State is authorized to

include a reasonable dispensing fee in its payments to pharmacies. This

area is discussed in response to the comment regarding liability costs

in section II. Q. of this preamble.

Comment: One commenter stated that the regulatory impact analysis

was not adequate and seriously underestimated the impact of the rule on

small pharmacies. The commenter suggested a more comprehensive

regulatory flexibility analysis and recommended a longer compliance

schedule for small businesses and looking at other alternatives to ease

the burden.

Response: We disagree with the commenter. The analysis in the

interim final rule did address the impact on pharmacies, States,

dispensing fees, cost of counseling, and the costs of educational

outreach. Since the commenter offered no data to support the comment

and did not suggest a methodology for conducting the analysis, we are

not making a change in the regulation at this time.

III. Changes to the Interim Final Rule

In developing the November 1992 interim final regulations, we

essentially relied on the language of sections 1927 (g) and (h) of the

Act. We also sought and received advice from various national provider

associations, pharmaceutical companies, States, drug utilization review

firms, and others. The interim final regulations became effective on

January 2, 1993.

We have reviewed all of the public comments received on the interim

final regulations and, in summary, have made the following changes.

We have amended Sec. 456.702 to clarify the definitions of

``overutilization'' and ``underutilization''.

We have removed the technically incorrect HMO exception

from Sec. 456.703(b) and added a new paragraph at Sec. 456.703(c)(2) to

indicate the HMO exemption from DUR.

We have included under Sec. 456.703(c)(1) a provision that

those hospitals that claim the exemption from DUR must give assurances

to the State that they meet the requirements of section 1927(j)(2) of

the Act.

We have removed the words ``rejected or'' from

Sec. 456.703(f)(1) to clarify that only published peer-reviewed

literature is an acceptable criterion.

We have added a definition of ``the consensus process'' to

Sec. 456.703(f)(2).

We have amended Secs. 456.703(f)(5) and 456.705(b)(3) to

clarify that only ``clinically significant'' adverse medical results

warrant consideration in the prospective drug review. We also added

wording under Sec. 456.703(f)(5) to include the consideration of

patient consumption practices and standards.

We have added wording to Sec. 456.703(f)(6) to clarify the

reason for testing criteria against claims data.

We have changed the word ``prescription'' to ``drug'' in

Sec. 456.705(b)(2)(i) in order to include consideration of non-

prescription drugs with regard to alteration of therapeutic effect.

In Sec. 456.705(b)(4), we have specified ``daily dosage''

rather than ``daily dosage range'' in the description of what

constitutes incorrect drug dosage.

We have removed the reference to how drug counseling

requirements apply specifically to mail order pharmacies from

Sec. 456.705(c) (now designated as Sec. 456.705(c)(1)) so that we do

not give the impression that they are treated differently than other

pharmacies. Also, we have added language in Sec. 456.705(c)(1) (i)

through (v) to specify the issues that State agencies must address when

formulating their counseling standards.

We have added wording to Sec. 456.705(c)(2)(i), previously

Sec. 456.705(c)(1), to require mail-order pharmacies to provide toll-

free telephone service for long distance calls for counseling.

In Sec. 456.705(d)(2), we have replaced the phrase

``individual medical history'' with ``individual history'' since

medical history would indicate the need for much more complete records,

including such items as laboratory reports, X-rays, consultation

reports, and unrelated surgeries and illnesses.

We have added a paragraph to Sec. 456.714 clarifying the

distinction between the responsibilities of DUR and SUR.

We have amended Sec. 456.716(b) to change the requirement

for licensure of a DUR board member in the State on whose board he or

she serves, to licensure in any State.

In Sec. 456.716(d)(5)(ii) we have added wording to clarify

the bases for DUR board recommendations, and we have added wording to

Sec. 456.703(f)(5) to allow the consideration of standards if an in-

depth review is needed to determine whether to intervene once the

potential therapeutic problems have been identified through the use of

clinical criteria.

Also, we have made certain technical corrections and

corrections of typographical errors that appeared in the interim final

rule.

VI. Regulatory Impact Statement

A. Regulatory Flexibility Act

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) unless the Secretary certifies that a rule will not have a

significant economic impact on a substantial number of small entities.

For purposes of the RFA, all pharmacies and prescribing physicians are

considered to be small entities.

B. Comments on Regulatory Impact Analysis and Regulatory Flexibility

Analysis

In the interim final rule with comment period, we included a

regulatory impact and regulatory flexibility analysis because of the

financial impact on the operation of pharmacies, the States, and on

recipients. The analysis described the effects that the interim final

rule with comment period would have on these individuals and entities.

We received 35 comments concerning the costs of the drug use review

program, the cost of the DUR requirements on pharmacies, and the cost

estimates included in the interim final rule. All commenters indicated

that the actual costs of implementing the provisions will be higher

than the amounts presented. Eight of the commenters furnished specific

cost figures either for their particular operation or they supplied

estimates of specific costs per prescription, type of service rendered,

equipment costs, or total program costs.

The comments covered the following specific areas:

Initial hardware and software computer costs

Upgrade costs for computer programs

Counseling

Cognitive services

Dispensing fees

Consultation with physicians

Interventions by pharmacies

Recordkeeping

Additional liability for the pharmacist

Profiles

The other commenters suggested the cost saving estimate was too

high, advocated increased Federal funds to offset DUR costs, urged

voluntary compliance of prospective DUR requirements for small fragile

pharmacies, warned that DUR cost estimates were too low, and requested

a comprehensive regulatory analysis for small businesses. For a

complete summarization of these comments and our responses, see section

II of this preamble.

We were unable to provide a more quantitative analysis due to the

lack of empirical data. However, we did receive several studies from

commenters. Although these data were somewhat limited, we agree that

some of our estimates were low. We believe, however, that additional

research in the future concerning these issues is needed to provide us

with more specific results.

This final rule revises the November 2, 1992, interim final rule

with comment period based on comments submitted by the public. Costs

associated with implementing these regulations are a consequence of

section 4401 of OBRA '90, not the regulations. We do not believe,

absent any additional definitive research studies, that the changes

incorporated into this final rule as a result of public comments will

have any significant effect on DUR costs.

C. Impact on Small Rural Hospitals

Section 1102(b) of the Act requires the Secretary to prepare a

regulatory impact analysis if a final 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 and has fewer than 50 beds.

We are not preparing a rural impact analysis since we have

determined, and the Secretary certifies, that this final rule will not

have a significant impact on the operations of a substantial number of

small rural hospitals. In accordance with the provisions of Executive

Order 12866, this regulation was reviewed by the Office of Management

and Budget.

V. Collection of Information Requirements

Sections 456.703, 456.705, 456.709, 456.711, 456.712, 456.716, and

456.722 contain information collection or recordkeeping requirements or

both that are subject to review by the Office of Management and Budget

(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et

seq.). The information collection requirements concern the collection

of information for patient profiles of Medicaid recipients, preparation

by the State DUR boards of annual reports to the State agency, and

preparation of annual reports by the State agency to the Secretary.

These are statutory requirements. The respondents who will provide the

information include Medicaid recipients who will provide information

for profiles to pharmacists, State DUR boards that will provide annual

report information to the State agencies and State agencies that will

provide annual report information to the Secretary. Public reporting

burden for the collection of profile information is estimated to be 5

minutes for each initial encounter and 2 minutes for each subsequent

encounter. Public reporting burden for the collection of the annual

report information, which includes activities by the DUR board and by

the State agency, is estimated to be up to 60 hours a year per State.

A notice will be published in the Federal Register after approval

is obtained.

List of Subjects in 42 CFR Part 456

Administrative practice and procedure, Grant programs--health,

Health facilities, Medicaid, Reporting and recordkeeping requirements.

42 CFR part 456 is amended as set forth below:

PART 456--UTILIZATION CONTROL

1. The authority citation continues to read as follows:

Authority: Sec. 1102 of the Social Security Act (42 U.S.C.

1302), unless otherwise noted.

2. In Sec. 456.702 the definitions of ``overutilization'' and

``underutilization'' are revised to read as follows:

Sec. 456.702 Definitions.

* * * * *

Overutilization means use of a drug in a quantity, strength, or

duration that is greater than necessary to achieve a desired

therapeutic goal or that puts the recipient at risk of a clinically

significant undesirable effect, or both.

* * * * *

Underutilization means use of a drug by a recipient in insufficient

quantity, strength, or duration to achieve a desired therapeutic goal

or that puts the recipient at risk of a clinically significant

undesired effect, or both.

3. In Sec. 456.703, paragraphs (b), (c), and (e)(4) are revised,

the introductory text of paragraphs (e) and (f) are republished and

paragraphs (f)(1), (f)(2), (f)(5), (f)(6) and (h) are revised to read

as follows:

Sec. 456.703 Drug use review program.

* * * * *

(b) Exception for drugs dispensed to certain nursing facility

residents. Prospective drug review and retrospective drug use review

(including interventions and education) under the DUR program are not

required for drugs dispensed to residents of nursing facilities that

are in compliance with the drug regimen review procedures set forth in

part 483 of this chapter. This does not preclude the State agency from

making such drugs subject to prospective DUR or retrospective DUR or

both, provided the State agency makes the drugs subject to all the

requirements of this subpart applicable to the respective review.

(c) Exemption for certain covered outpatient drugs dispensed by

hospitals and health maintenance organizations.

(1) The State plan must provide that covered outpatient drugs

dispensed by a hospital using drug formulary systems and billed to the

plan at no more than the hospital's purchasing costs are not subject to

the requirements of this subpart. Individual hospitals requesting this

exemption must provide assurances to the State agency that they meet

the requirements specified in section 1927(j)(2) of the Act.

(2) The State plan must provide that covered outpatient drugs

dispensed by health maintenance organizations are not subject to the

requirements of this subpart.

* * * * *

(e) Source of predetermined standards. The predetermined standards

must be--

* * * * *

(4) Any combination of paragraphs (e)(1) through (e)(3) of this

section.

(f) Requirements for predetermined standards. The predetermined

standards used in the DUR program must meet the following requirements:

(1) The source materials for their development are consistent with

peer-reviewed medical literature (that is, scientific, medical, and

pharmaceutical publications in which original manuscripts are published

only after having been critically reviewed by unbiased independent

experts) and the following compendia:

(i) American Hospital Formulary Service Drug Information;

(ii) United States Pharmacopeia-Drug Information;

(iii) American Medical Association Drug Evaluations.

(2) Differences between source materials were resolved by

physicians and pharmacists developing consensus solutions. The

consensus process means the reliance, by the criteria developers, on

the expertise of physicians and pharmacists to evaluate differences in

criteria source materials and to come to agreement on how differences

should be resolved.

* * * * *

(5) The review based on clinical criteria uses predetermined

standards to determine the population at risk of a clinically

significant adverse medical result and applies standards, appropriate

to this population, across providers and patients to determine the

provider outliers whose prescribing, dispensing, or consumption

practices may not conform to accepted standards of care. Various

statistical measures (including mean, range, or other measures at the

discretion of the State) may be applied to these data. Standards may be

considered in deciding if an in-depth review is needed to determine

whether to intervene once the potential therapeutic problems have been

identified through the use of clinical criteria.

(6) They have been tested against claims data prior to adoption in

order to validate the level of possibly significant therapeutic

problems without undue levels of false positives.

* * * * *

(h) Confidentiality of patient related data. In implementing the

DUR program, the agency must establish, in regulations or through other

means, policies concerning confidentiality of patient related data that

are consistent with applicable Federal confidentiality requirements at

part 431, subpart F of this chapter; the State Pharmacy Practice Act;

and the guidelines adopted by the State Board of Pharmacy or other

relevant licensing bodies.

4. In Sec. 456.705, paragraph (b) introductory text is republished

and paragraphs (b)(2)(i), (b)(3), (b)(4), (c), and (d) are revised to

read as follows:

Sec. 456.705 Prospective drug review.

* * * * *

(b) Point-of-sale or point-of-distribution review.

* * * * *

(2) Drug-disease contraindication, that is, the potential for, or

the occurrence of--

(i) An undesirable alteration of the therapeutic effect of a given

drug because of the presence, in the patient for whom it is prescribed,

of a disease condition; or

* * * * *

(3) Adverse drug-drug interaction, that is, the potential for, or

occurrence of, a clinically significant adverse medical effect as a

result of the recipient using two or more drugs together.

(4) Incorrect drug dosage, that is, the dosage lies outside the

daily dosage specified in predetermined standards as necessary to

achieve therapeutic benefit. Dosage is the strength multiplied by the

quantity dispensed divided by day's supply.

* * * * *

(c) Drug counseling. (1) As part of the prospective drug review

program, standards for counseling by pharmacists of recipients or the

recipients' caregivers must be established by State law or other method

that is satisfactory to the State agency. A State agency's counseling

standards must address special situations where the patient or the

patient's representative, is not readily available to receive the offer

to counsel or the actual counseling, for example, prescriptions

delivered offsite or through the mail. The State agency, at a minimum,

must also address the following issues in their counseling standards:

(i) Whether the offer to counsel is required for new prescriptions

only, or for both new and refill prescriptions;

(ii) Whether pharmacists must make the offer to counsel or

auxiliary personnel are authorized to make the offer;

(iii) Whether only a patient's refusal of the offer to counsel must

be documented, or whether documentation of all offers is required;

(iv) Whether documentation of counseling is required; and

(v) Whether counseling is required in situations where the

patient's representative is not readily available to receive a

counseling offer or the counseling itself.

(2) The standards must meet the following requirements:

(i) They must require pharmacists to offer to counsel (in person,

whenever practicable, or through access to a telephone service that is

toll-free for long-distance calls) each recipient or recipient's

caregiver who presents a prescription. A pharmacist whose primary

patient population is accessible through a local measured or toll-free

exchange need not be required to offer toll-free service. Mail order

pharmacies are required to provide toll-free telephone service for long

distance calls.

(ii) They need not require a pharmacist to provide consultation

when a Medicaid recipient or the recipient's caregiver refuses that

consultation.

(iii) They must specify what documentation by the pharmacy of

refusal of the offer of counseling is required.

(3) The standards must specify that the counseling include those

matters listed in paragraphs (c)(3)(i) through (c)(3)(viii) of this

section that, in the exercise of his or her professional judgement

(consistent with State law regarding the provision of such

information), the pharmacist considers significant as well as other

matters the pharmacist considers significant.

(i) The name and description of the medication;

(ii) The dosage form, dosage, route of administration, and duration

of drug therapy;

(iii) Special directions and precautions for preparation,

administration, and use by the patient;

(iv) Common severe side or adverse effects or interactions and

therapeutic contraindications that may be encountered, including their

avoidance, and the action required if they occur;

(v) Techniques for self-monitoring drug therapy;

(vi) Proper storage;

(vii) Prescription refill information; and

(viii) Action to be taken in the event of a missed dose.

(d) Profiling. The State agency must require that, in the case of

Medicaid recipients, the pharmacist make a reasonable effort to obtain,

record, and maintain patient profiles containing, at a minimum, the

information listed in paragraphs (d)(1) through (d)(3) of this section.

(1) Name, address, telephone number, date of birth (or age), and

gender of the patient;

(2) Individual history, if significant, including disease state or

states, known allergies and drug reactions, and a comprehensive list of

medications and relevant devices; and

(3) Pharmacist's comments relevant to the individual's drug

therapy.

5. Section 456.714 is revised to read as follows:

Sec. 456.714 DUR/Surveillance and utilization review relationship.

(a) The retrospective DUR requirements in this subpart parallel a

portion of the surveillance and utilization review (SUR) requirements

in subpart A of this part and in part 455 of this chapter.

(b) A State agency may direct DUR staffs to limit review activities

to those that focus on what constitutes appropriate and medically

necessary care to avoid duplication of activities relating to fraud and

abuse under the SUR program.

6. In Sec. 456.716, paragraph (d) introductory text is republished

and paragraphs (b), (d)(5) introductory text and (d)(5)(ii) are revised

to read as follows:

Sec. 456.716 DUR Board.

* * * * *

(b) Board composition. At least one-third but not more than 51

percent of the DUR Board members must be physicians, and at least one-

third of the Board members must be pharmacists. These physicians and

pharmacists must be actively practicing and licensed.

* * * * *

(d) DUR Board activities.

* * * * *

(5) Education program (including interventions): Board's

activities. The DUR Board must perform the following activities:

* * * * *

(ii) Make recommendations as to which mix of the interventions set

forth in Secs. 456.711 (a) through (d) would most effectively lead to

improvement in the quality of drug therapy. The DUR board

recommendations must be based upon an in-depth review of the results of

the application of predetermined standards against claims data reports,

must be appropriate based upon program experience, and must match the

educational program with the drug therapy problems identified.

* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical

Assistance Program)

Dated: April 1, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: June 28, 1994.

Donna E. Shalala,

Secretary.

[FR Doc. 94-23280 Filed 9-22-94; 8:45 am]

BILLING CODE 4120-01-P