June 17, 2004

The Honorable Tommy G. Thompson
U.S. Department of Health and Human Services
200 Independence Avenue S.W.
Washington, D.C. 20201

Dear Secretary Thompson:

As part of its responsibilities under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the National Committee on Vital and Health Statistics (NCVHS) is responsible for studying, selecting and recommending standards under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  This letter addresses a request made by the Designated Standards Maintenance Organizations (DSMOs) that NCPDP Telecommunication Standard Version 5.1, developed by the National Council for Prescription Drug Programs (NCPDP), is adopted as a HIPAA standard for electronic billing for certain supplies by a retail pharmacy.

NCVHS did not make a recommendation to the Secretary on this issue when it was first raised in 2001.   In response to a second request by the DSMO Steering Committee in February 2004, the issue was revisited in a hearing on March 31, 2004.  Testimony indicated a business case by retail pharmacies to have a real-time standard under HIPAA for billing for certain supplies, and the current widespread use of the NCPDP Telecommunication Standard by the industry for this purpose.  NCVHS recommends the continued use of the NCPDP Telecommunication Standards for billing of supplies that are consumed or used during, or as a consequence of, the administration of a drug therapy or commonly dispensed via a retail pharmacy channel.  We also recommend that the Department investigate this issue further, especially as it relates to possible overlaps in the use of NCPDP and X12 standards for the billing of certain supplies by pharmacies.

The DSMO Steering Committee also requested that when supplies are billed by the dispensing pharmacy, the National Drug Code (NDC) be designated as the standard code set that must be used for supplies with the NCPDP standards when an NDC number is available.  If there is no NDC, they recommended that the parties may use any codes in the NCPDP Telecommunication Standard that they mutually agree to, such as the Universal Product Code (UPC), the Health Related Item Code (HRI), or the Healthcare Common Procedure Coding System (HCPCS) codes (where non-specific codes will not lead to potential for problems in patient care, fraud and abuse).

Currently, the NDC is the HIPAA standard for reporting drugs and biologics by retail pharmacies, while HCPCS codes were adopted as the HIPAA standard for supplies, equipment and other items without regard to setting.  Testimony indicated that the UPC and HRI codes currently are used by the industry to identify supplies on retail pharmacy claims.  These codes are used within the NCPDP Telecommunication Standard, but are external code sets that are separately maintained and updated outside of the NCPDP standard setting process.  Their continued use is necessary to provide the industry with the level of detail needed to handle claims processing, ordering, supply management or the recall of products.  Testifiers noted that HCPCS codes do not provide the specificity needed for the day-to-day operations for retail pharmacies.

NCVHS recommends that the Department allow continued use of UPC and HRI codes within the NCPDP Telecommunication Standard 5.1 and investigate rulemaking if necessary.

NCVHS appreciates the opportunity to provide these recommendations.



John R. Lumpkin, M.D., M.P.H.
Chairman, National Committee on Vital and Health Statistics

Cc: HHS Data Council Co-Chairs