HealthMay 29, 2019

NCPDP makes changes to accommodate rebate rules

At the recent NCPDP Joint Technical Work Group Meetings, held in Scottsdale in early May, the membership voted to approve three emergency external code list changes.

These changes are in response to the Office of the Inspector General (OIG), Department of Health and Human Services (HHS) Proposed Rule (OIG-0936-P), “Fraud and Abuse; Removal of Safe Harbor Protection for Rebates involving Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees.”

The changes made will allow for either PBMs or a third party to identify the chargeback amount on a prescription claim.

The final rule is expected shortly, as the proposed rule indicated that the safe harbor would be removed as of January 1, 2020. NCPDP went forward with these changes without a final rule so that the contingencies presented in the proposed rule would be supported.

The following are areas of consideration relating to the implementation of these changes and other topics that entities might contemplate when moving forward to comply with the requirements of the final rule.


The changes approved by NCPDP are not limited to government programs; they could be used by commercial plan sponsors if so desired. More analysis is needed to understand the ramifications of expanding the concept of chargebacks to more stakeholders. There are also open questions related to Medicaid, coordination of benefits, taxes, retrospective adjustments, PDE reporting, and how information will be communicated to Medicare Part D beneficiaries.

System Changes

Claims adjudication and pharmacy systems will have to be modified to support the new values allowed by NCPDP. This will require development and testing before implementation can occur. The NCPDP changes will be published by July 2019; some entities may choose to wait until publication of both the changes and the final rule before investing in remediation efforts.

In addition to the adjudication and pharmacy system, reporting and financial systems will also have to be modified to support the new values. All system modifications need to be planned and resources assigned. Most entities have already planned their systems projects for 2019, so they will incur additional expense and potentially delay other projects in order to complete these changes by January 1, 2020. If the minimum implementation period is 180 days, the industry technically will not have that full length of time. Even if the final rule is released the first week in June, as most entities have a strict IT blackout period during the last 6 weeks of the year, they will not be able to take advantage of the full 180 days. It is unknown how the industry is supposed to test and implement this completely new reimbursement model to mitigate risks as of January 1, 2020.

Operational Changes

In addition to the system changes required to support the new values, operational changes will also be needed. How will the claim transaction data flow between the PBM, chargeback administrator, and the pharmacy for payments to occur and not risk disclosure of proprietary information? If a chargeback administrator is used, the timing of the payment to the pharmacy needs to be determined. Staff will have to be trained on the usage of the new values added to the standard, clients made aware of the changes to their reports, and pharmacies communicated to regarding the new values and expectations regarding member communication. A project of this magnitude will need executive sponsorship and resources allocated to ensure all necessary actions are completed by January 1, 2020. Most entities have not planned for a project of this size, so resources will likely be diverted from other work in order to complete these efforts.

Chargeback Administrator

If a chargeback administrator will be part of the required solution, these entities will have to be established, identified, contracted with, systems tested, implementation must occur, and reporting requirements documented. It is not known who will determine which chargeback administrator will manage the payments to the PBM, payer, manufacturer, and pharmacy. All of these steps will take months to complete. If the final rule does not allow for a chargeback administrator, NCPDP will need to follow their process to remove the changes made in May 2019 to the Telecommunication Standard that supported a chargeback administrator.

835 Changes

If a chargeback administrator is used, modifications will need to be made to the 835 to support inclusion of the chargeback information. For example, there could be multiple 835s for a single claim. How is the pharmacy to determine if the initial payment is payment in full or if the claim needs to stay open until the final payment is received? How will the pharmacy determine who the other payer is? Disputing differences in reconciliation is yet another process that needs to be developed. As the 835 is federally named standard, any changes will have to go through the standards development process of X12 and then potentially a regulatory process to allow the new version to be used. NCPDP has created a new task group to review related changes, including those possibly needed within the 835. This new task group will begin meeting shortly and will report progress on a quarterly basis, beginning in August.

Stay in close contact with your system vendor and your third-party payer contacts. The final rule, when published, will likely get significant media attention, which will be your indication that action is needed.

Marsha K. Millonig, MBA, BPharm, is president and CEO of Catalyst Enterprises, LLC, and an Associate Fellow at the University of Minnesota College of Pharmacy’s Center for Leading Healthcare Change.

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