42 C.F.R. Subpart K—Drug Use Review (DUR) Program and Electronic Claims Management System for Outpatient Drug Claims
Title 42 - Public Health
Source: 57 FR 49408, Nov. 2, 1992, unless otherwise noted.
This subpart prescribes requirements for— (a) An outpatient DUR program that includes prospective drug review, retrospective drug use review, and an educational program; (b) The establishment, composition, and functions of a State DUR Board; and (c) An optional point-of-sale electronic claims management system for processing claims for covered outpatient drugs. For purposes of this subpart— Abuse is defined as in §455.2 of this chapter. Adverse medical result means a clinically significant undesirable effect, experienced by a patient, due to a course of drug therapy. Appropriate and medically necessary means drug prescribing and dispensing that is in conformity with the predetermined standards established in accordance with §456.703. Criteria is defined as in §466.1 of this chapter. Fraud is defined as in §455.2 of this chapter. Gross overuse means repetitive overutilization without therapeutic benefit. Inappropriate and medically unnecessary means drug prescribing and dispensing not in conformity with the definition of appropriate and medically necessary. 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. Predetermined standards means criteria and standards that have been established in accordance with the requirements of §456.703. Standards is defined as in §466.1 of this chapter. 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. [57 FR 49408, Nov. 2, 1992, as amended at 59 FR 48824, Sept. 23, 1994] (a) General. Except as provided in paragraphs (b) and (c) of this section, in order for FFP to be paid or made available under section 1903 of the Act for covered outpatient drugs, the State must have in operation, by not later than January 1, 1993, a DUR program consisting of prospective drug review, retrospective drug use review, and an educational program that meets the requirements of this subpart. 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. (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. (d) Use of predetermined standards. A DUR program must assess drug use information against predetermined standards. (e) Source of predetermined standards. The predetermined standards must be— (1) Developed directly by the State or its contractor; (2) Obtained by the State through contracts with commercial vendors of DUR services; (3) Obtained by the State from independent organizations, such as the United States Pharmacopeial Convention, or entities receiving funding from the Public Health Service, CMS, or State agencies; or (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. (3) They are non-proprietary and readily available to providers of services. Systems and algorithms using the predetermined standards may remain proprietary. (4) They are clinically-based and scientifically valid. (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. (7) The predetermined standards for prospective and retrospective DUR are compatible. (8) They are subjected to ongoing evaluation and modification either as a result of actions by their developer or as a result of recommendations by the DUR Board. (g) Access to predetermined standards. Upon their adoption, predetermined standards must be available to the public. Pharmacists and physicians must be informed of the existence of predetermined standards and of how they can obtain copies of them. (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. [57 FR 49408, Nov. 2, 1992, as amended at 59 FR 48824, Sept. 23, 1994] (a) General. Except as provided in §§456.703 (b) and (c), the State plan must provide for a review of drug therapy before each prescription is filled or delivered to a recipient, and applicable State law (including State Board policy incorporated in the State law by reference) 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 pharmacies, in turn, must provide this information to their pharmacists. This information is to be based on guidelines provided by this subpart and by other sources that the State may specify. (b) Point-of-sale or point-of-distribution review. Except as provided in §§456.703 (b) and (c), the State plan must provide for point-of-sale or point-of-distribution review of drug therapy using predetermined standards before each prescription is filled or delivered to the recipient or the recipient's caregiver. The review must include screening to identify potential drug therapy problems of the following types: (1) Therapeutic duplication, that is, the prescribing and dispensing of two or more drugs from the same therapeutic class such that the combined daily dose puts the recipient at risk of an adverse medical result or incurs additional program costs without additional therapeutic benefit. (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 (ii) An adverse effect of the drug on the patient's disease condition. (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. (5) Incorrect duration of drug treatment, that is, the number of days of prescribed therapy exceeds or falls short of the recommendations contained in the predetermined standards. (6) Drug-allergy interactions, that is, the significant potential for, or the occurrence of, an allergic reaction as a result of drug therapy. (7) Clinical abuse/misuse, that is, the occurrence of situations referred to in the definitions of abuse, gross overuse, overutilization, and underutilization, as defined in §456.702, and incorrect dosage and incorrect duration, as defined in paragraphs (b)(4) and (b)(5) of this section, respectively. (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. [57 FR 49408, Nov. 2, 1992, as amended at 59 FR 48824, Sept. 23, 1994] (a) General. The State plan must provide for a retrospective DUR program for ongoing periodic examination (no less frequently than quarterly) 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, drug use by individual patients and, where appropriate, dispensing practices of pharmacies. This program must be provided through the State's mechanized drug claims processing and information retrieval systems approved by CMS (that is, the Medicaid Management Information System (MMIS)) or an electronic drug claims processing system that is integrated with MMIS. States that do not have MMIS systems may use existing systems provided that the results of the examination of drug claims as described in this section are integrated within their existing system. (b) Use of predetermined standards. Retrospective DUR includes, but is not limited to, using predetermined standards to monitor for the following: (1) Therapeutic appropriateness, that is, drug prescribing and dispensing that is in conformity with the predetermined standards. (2) Overutilization and underutilization, as defined in §456.702. (3) Appropriate use of generic products, that is, use of such products in conformity with State product selection laws. (4) Therapeutic duplication as described in §456.705(b)(1). (5) Drug-disease contraindication as described in §456.705(b)(2). (6) Drug-drug interaction as described in §456.705(b)(3). (7) Incorrect drug dosage as described in §456.705(b)(4). (8) Incorrect duration of drug treatment as described in §456.705(b)(5). (9) Clinical abuse or misuse as described in §456.705(b)(7). The State plan must provide for ongoing educational outreach programs that, using DUR Board data on common drug therapy problems, educate practitioners on common drug therapy problems with the aim of improving prescribing and dispensing practices. The program may be established directly by the DUR Board or through contracts with accredited health care educational institutions, State medical societies or State pharmacists associations/societies, or other organizations. The program must include the interventions listed in paragraphs (a) through (d) of this section. The DUR Board determines the content of education regarding common therapy problems and the circumstances in which each of the interventions is to be used. (a) Dissemination of information to physicians and pharmacists in the State concerning the duties and powers of the DUR Board and the basis for the standards required by §456.705(c) for use in assessing drug use. (b) Written, oral, or electronic reminders containing patient-specific or drug-specific information (or both) and suggested changes in prescribing or dispensing practices. These reminders must be conveyed in a manner designed to ensure the privacy of patient-related information. (c) Face-to-face discussions, with follow up discussions when necessary, between health care professionals expert in appropriate drug therapy and selected prescribers and pharmacists who have been targeted for educational intervention on optimal prescribing, dispensing, or pharmacy care practices. (d) Intensified review or monitoring of selected prescribers or dispensers. (a) DUR Board report. The State must require the DUR Board to prepare and submit an annual DUR report to the Medicaid agency that contains information specified by the State. (b) Medicaid agency report. The Medicaid agency must prepare and submit, on an annual basis, a report to the Secretary that incorporates the DUR Board's report and includes the following information: (1) A description of the nature and scope of the prospective drug review program. (2) A description of how pharmacies performing prospective DUR without computers are expected to comply with the statutory requirement for written criteria. (3) Detailed information on the specific criteria and standards in use. After the first annual report, information regarding only new or changed criteria must be provided and deleted criteria must be identified. (4) A description of the steps taken by the State to include in the prospective and retrospective DUR program drugs dispensed to residents of a nursing facility that is not in compliance with the drug regimen review procedures set forth in part 483 of this chapter. After the first annual report, only changes must be reported. (5) A description of the actions taken by the State Medicaid agency and the DUR Board to ensure compliance with the requirements for predetermined standards at §456.703(f) and with the access to the predetermined standards requirement at §456.703(g). After the first annual report, only changes must be reported. (6) A description of the nature and scope of the retrospective DUR program. (7) A summary of the educational interventions used and an assessment of the effect of these educational interventions on the quality of care. (8) A description of the steps taken by the State Agency to monitor compliance by pharmacies with the prospective DUR counseling requirements contained in Federal and State laws and regulations. After the first annual report, only changes must be reported. (9) Clear statements of purpose that delineate the respective goals, objectives, and scopes of responsibility of the DUR and surveillance and utilization (SUR) functions. These statements must clarify the working relationships between DUR and SUR functions and other entities such as the Medicaid Fraud Control Unit and State Board of Pharmacy. The annual report also must include a statement delineating how functional separation will be maintained between the fraud and abuse activities and the educational activities. After the first annual report, only changes must be reported. (10) An estimate of the cost savings generated as a result of the DUR program. This report must identify costs of DUR and savings to the Medicaid drug program attributable to prospective and retrospective DUR. (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. [59 FR 48825, Sept. 23, 1994] (a) State DUR Board requirement and member qualifications. Each State must establish, either directly or through a contract with a private organization, a DUR Board. The DUR Board must include health care professionals who have recognized knowledge and expertise in at least one of the following: (1) Clinically appropriate prescribing of covered outpatient drugs. (2) Clinically appropriate dispensing and monitoring of covered outpatient drugs. (3) Drug use review, evaluation, and intervention. (4) Medical quality assurance. (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. (c) Medicaid agency/DUR Board relationship. The Medicaid agency is ultimately responsible for ensuring that the DUR program is operational and conforms with the requirements of this subpart. The agency has the authority to accept or reject the recommendations or decisions of the DUR Board. (d) DUR Board activities. The State agency must ensure that the operational tasks involved in carrying out the DUR Board activities set forth at section 1927(g)(3)(C) of the Act are assigned, limited only by the requirements of section 1927(g)(3)(C) of the Act, based on consideration of operational requirements and on where the necessary expertise resides. Except as limited by the requirements of section 1927(g)(3)(C) of the Act, the State agency may alter the suggested working relationships set forth in this paragraph. (1) Application of predetermined standards: Board's activities. The DUR Board should perform the following activities: (i) Review and make recommendations on predetermined standards submitted to it by the Medicaid agency or the agency's contractor. (ii) Evaluate the use of the predetermined standards, including assessing the operational effect of the predetermined standards in use, and make recommendations to the Medicaid agency or the agency's contractor concerning modification or elimination of existing predetermined standards or the addition of new ones. (iii) Recommend guidelines governing written predetermined standards that pharmacies not using approved software must use in conducting prospective DUR. (2) Application of predetermined standards: Medicaid agency role. The Medicaid agency or its contractor should perform the following activities: (i) Submit predetermined standards to the DUR Board for its review and recommendations before the Medicaid agency applies them to drug claims data. (ii) If prospective DUR is conducted using an electronic claims management (ECM) system, apply software approved by the Board. (iii) If prospective DUR is not conducted through an ECM system, as part of general compliance monitoring, ensure that Medicaid participating pharmacies conduct prospective drug review that screens for the potential drug therapy problems listed in section 1927(g)(2)(A) of the Act. (3) Retrospective DUR: Board's activities. The DUR Board should perform the following activities: (i) Review and make recommendations on predetermined standards submitted to it by the Medicaid agency or the agency's contractor. (ii) Make recommendations to the Medicaid agency or the agency's contractor concerning modification or elimination of existing predetermined standards or the addition of new ones. (4) Retrospective DUR: Medicaid agency role. The Medicaid agency or its contractor should apply the predetermined standards to drug claims data in order to generate reports that identify patterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessary care. (5) Education program (including interventions): Board's activities. The DUR Board must perform the following activities: (i) Identify and develop educational topics if education of practitioners on common drug therapy problems is needed to improve prescribing or dispensing practices. (ii) Make recommendations as to which mix of the interventions set forth in §§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. (iii) Periodically re-evaluate and, if necessary, modify the interventions. (6) Education program (including interventions): Medicaid agency's role. The Medicaid agency or its contractor should perform the following activities. (i) Apply predetermined standards to drug claims data to generate reports that provide the basis for retrospective education and interventions and furnish those reports to the Board. (ii) Carry out the educational programs and interventions specified by the Board. (e) Funding for the Board. FFP is available for expenses associated with the operation of the DUR Board in carrying out its responsibilities, and payment is made under procedures established in part 433 of this chapter as follows: (1) If the requirements for skilled professional medical personnel at §432.50 of this chapter are met, at the rate of 75 percent. (2) If the requirements for skilled professional medical personnel at §432.50 of this chapter are not met, at the rate specified in §456.719. [57 FR 49408, Nov. 2, 1992, as amended at 59 FR 48825, Sept. 23, 1994] FFP is available for sums that the Secretary determines are attributable to the Statewide adoption of a DUR program as described in this subpart, and payment is made under procedures established in part 433 of this chapter as follows: (a) For funds expended by the State during calendar years 1991 through 1993, at the rate of 75 percent. (b) For funds expended by the State after December 31, 1993, at the rate of 50 percent. (a) Point-of-sale system. Each Medicaid agency, at its option, may establish, as its principal (but not necessarily exclusive) means of processing claims for covered outpatient drugs, a point-of-sale electronic claims management (ECM) system to perform on-line, real-time (that is, immediate) eligibility verifications, claims data capture, adjudication of claims, and to assist pharmacists and other authorized persons (including dispensing physicians) in applying for and receiving payment. The State determines who must participate in an ECM system and who may decline to do so. If the State exercises this option and wishes to receive FFP for its ECM system, the system must meet the functional and additional procurement and system requirements in paragraphs (b) and (c) of this section. (b) Functional requirements. The ECM system developed by the State must include at least the on-line, real-time capabilities specified in paragraphs (b)(1) through (3) of this section. The real-time requirement for prescriptions filled for nursing facilities and prescriptions filled by mail order dispensers may be waived by the State to permit claims to be processed in the batch mode at the end of the day or other time mutually agreed to by the nursing facility or mail order dispenser and Medicaid agency. (1) Eligibility verification, including identification of the following: (i) Third-party payers. (ii) Recipients in managed care programs. (iii) Recipients and providers in restricted service programs (for example, lock-in and lock-out). (iv) Properly enrolled providers. (2) Claims data capture, including the following: (i) Transfer of claims information from the pharmacy to the Medicaid agency or the Medicaid agency's contractor. (ii) Identification of prescriber. (iii) Minimum data set (as defined in Part 11 of the State Medicaid Manual). (3) Claims adjudication, including the following: (i) Performing all edits and audits contained in the State's Medicaid Management Information System (MMIS) applicable to prescription drugs. (ii) Notifying the pharmacist (or other authorized person, such as the dispensing physician) about the claim status. (iii) Taking steps up to, but not including, payment of the claim. (c) Additional requirements. In order to receive FFP for its ECM system, the State must meet the following requirements: (1) The ECM system must be acquired through applicable competitive procurement process in the State and must be the most cost-effective telecommunications network and automatic data processing services and equipment. The procurement must meet the procurement requirements set forth in 45 CFR part 74, subpart P, and appendix G-O of OMB circular A–102. The request for proposal (RFP) may be substituted for the advance planning and implementation documents otherwise required by part 433 of this chapter, 45 CFR 95.205, and 45 CFR part 307. A cost-benefit analysis must accompany the RFP. If in its advance planning document, a State establishes that a separate procurement is not cost-effective, modification of an existing fiscal agent contract will be acceptable. In this case, procurement of network services and equipment (but not software modifications) must be competitively procured. (2) States wishing to do prospective DUR as part of their ECM must do the following: (i) Submit a cost benefit analysis showing the cost-effectiveness of such a system. A State's decisions as to who must participate in the ECM system and who may decline to do so must be included in the cost-benefit analysis. (ii) Establish a central State-wide electronic repository for capturing, storing, and updating data for all prescriptions dispensed and for providing access to such data by all authorized participants. (iii) Design the system to assess data for a review of drug therapy before each prescription is filled or delivered to a Medicaid recipient. The type of review conducted must meet the requirements for prospective drug review set forth in §456.705. (3) ECM is considered a subsystem and must be fully integrated with the remainder of the State's MMIS. In addition, information about ECM claims must be part of the single comprehensive utilization and management reporting system used by the DUR program. (a) For funds expended during calendar quarters in fiscal years 1991 and 1992 and attributable to the design, development, and implementation of an on-line, real-time claims management system (that is, the most cost-effective telecommunications network and automatic data processing services and equipment) that meets the requirements of §456.722, FFP is available at a matching rate of 90 percent. After fiscal year 1992, ECM subsystems are funded at the standard applicable MMIS enhanced rates, subject to the requirements of part 433, subpart A of this chapter. (b) FFP is available at a matching rate of 75 percent for funds expended for the following: (1) Telecommunications equipment and other equipment to directly access MMIS files. (2) Telecommunications equipment (such as modems and point of sale terminals) furnished to providers. (3) Operational costs including telecommunications network costs, provided that the ECM system includes eligibility verification systems, electronic claims capture, claims adjudication (except for payment), and a claims data process that is integrated into a single comprehensive utilization and information reporting system.
Title 42: Public Health
PART 456—UTILIZATION CONTROL
Subpart K—Drug Use Review (DUR) Program and Electronic Claims Management System for Outpatient Drug Claims
§ 456.700 Scope.
§ 456.702 Definitions.
§ 456.703 Drug use review program.
§ 456.705 Prospective drug review.
§ 456.709 Retrospective drug use review.
§ 456.711 Educational program.
§ 456.712 Annual report.
§ 456.714 DUR/surveillance and utilization review relationship.
§ 456.716 DUR Board.
§ 456.719 Funding for DUR program.
§ 456.722 Electronic claims management system.
§ 456.725 Funding of ECM system.
