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Transaction Standards

Health Claims or Equivalent Encounter Information

National Council for Prescription Drug Programs (NCPDP)

The scope of the standards that NCPDP develops are those for information processing for the pharmacy services sector of the health care industry.

ANSI Accredited:

NCPDP was accredited by ANSI on August 6, 1996. The type of accreditation was the Accredited Organization Method.

NCPDP Standard Claims Billing Version 2.0

This batch format is compatible to and consistent with the standard Universal Claim Form to

enable logical progression from a manual paper claims submission system to an automated

billing process. The Standard Claims Billing format utilizes both data elements and program

logic that include the following items or understandings:

• Use of industry accepted data elements (National Drug Code Number (NDC), National Association of Boards of Pharmacy Number (NABP) Processor number, etc.).
• Contingency allowance for future enhancements.
• Compatibility of the format to most existing processing systems.

NCPDP Telecommunications Standard Format Version 3.2

NCPDP recommends the use of a standardized format for electronic communication of claims between pharmacy providers, insurance carriers, third-party administrators, and other responsible parties. This standard addresses the data format and content, the transmission protocol, and other appropriate telecommunication requirements and was developed to accommodate the eligibility verification process at the point-of-sale and to provide a consistent format for electronic claims processing. The standard supports the submission and adjudication of third party prescription drug claims in an on-line, real-time environment.

NCPDP Version 3 Release 2 was a standard created by the NCPDP Telecommunication Work Group (Work Group One). The objective of the standard is to provide a standard format for on-line real time adjudication for pharmacy claims. Functions include billing of pharmaceutical products including compound medications; billing of professional drug utilization review situations. Users of the standard include administrative/reimbursement and clinical environment. Pharmacies submit claims for drugs and professional services and when applicable receive clinical DUR information derived from payer/prescription benefit manager databases. The standard is used in all operating system environments and claims are submitted and then adjudicated directly from pharmacy to payer and via network. The standard satisfies the needs of public and private prescription benefit plans for well over 100,000,000 health plan members. In addition, this standard facilitates a specific type of business communication between a large number of diverse parties within the third party environment. To do this successfully, it must accomplish the following tasks:

• Support the needs of as wide a base of potential users as possible.
• Maximize use of existing relevant standards wherever possible (e.g. Version 1.0 of this standard).
• Be flexible enough to change as needs and technology change.
• Be unambiguous.
• Be easy to implement by payers and pharmacy management software developers.

User Environment:

A given organization might serve multiple roles (for example, Administrator and Processor). Certain roles might be split between multiple organizations, the administrator and processor could be different.

This standard addresses the submission of a claim and/or professional service by a dispenser to an administrator/processor, and identifies the response of the administrator/processor to the dispenser. For the purpose of this document, the term "processor" will be used to identify the identity actually performing the authorization/adjudication function.

Types of Messages:

This standard addresses two types of communication between the dispenser (sender) and the processor (receiver). These communication types are claim submission/response and claim reversal/response. These are described in detail below:

Claim Submission/Response:

This transaction is used by the dispenser to request the administrator verify the eligibility of a specific claimant according to the appropriate plan parameters. The message sent by the dispenser contains four types of data:

1) Control Data: This identifies the message type, destination, etc.

2) Dispenser Data: This identifies the provider of the service.

3) Claimant Data: This identifies the person for whom the service is being provided.

4) Prescription Data: This describes the specific service being provided by the Dispenser.

Each claim submission message contains control, dispenser, and claimant data, and up to four occurrences of prescription data. A special case message is where there are zero occurrences of the prescription data. This identifies a request to only verify the eligibility of the claimant.

Depending upon the particular claim submission message, the processor can provide one of the following general types of responses:

• Eligibility verification only- This occurs when the processor is verifying the eligibility of the claimant. The claim must be submitted for processing at another time.
• Claim capture only- This occurs when the processor acknowledges receipt of the claim, but is not making any judgment regarding eligibility of the claimant.
• Claim capture, eligibility verification, and adjudication- This occurs when the processor captures and processes the claim, and returns to the originator the dollar amounts allowed under the terms of the plan.

Claim Reversal/Response:

This transaction is used by the dispenser to request the administrator to reverse a previously submitted claim. The results of a successfully submitted reversal are as if the claim was not submitted in the first place. The message sent by the dispenser contains four types of data:

1) Control Data: This identifies the message type, destination, etc.

2) Dispenser Data: This identifies the provider of the service.

3) Prescription Data: This describes the specific service being provided by the Dispenser.

Each claim reversal message contains control, dispenser, and one occurance of prescription data.

The claim reversal response tells the dispenser if the administrator was able to reverse the claim or not.

Business Flow:

The prescription information is transmitted electronically either through a value-added network switch or directly to a payer or pharmacy benefit management company, where the various transaction functions described above are completed. A paid or rejected response is sent back either through a value-added network switch or directly to the pharmacy in a matter of seconds. This is completed in an on-line real-time environment.

Application Function/Domain Completeness:

Version 3.2 was completed in February 1992 and ongoing maintenance continues. A Drug Utilization Review (DUR) component and a Professional Pharmacy Services (PPS) component have been added to enhance the standard to fit the business needs of the pharmacy community. Drug Utilization Review provides information to the pharmacist regarding potential drug interactions of the prescription drug being billed with the claimant's drug history. In addition, a compound standard has also been developed.

TABLE OF NCPDP TELECOMMUNICATION

STANDARD VERSION/RELEASE

This standard has no competing standard to date. The membership of NCPDP has established this widely accepted and implemented standard for on-line real-time prescription claims processing. Implementing this standard required the coordinated efforts and timely response of software developers, payers/claims processors, managed care organizations, pharmacy providers, and numerous other organizations. This standard is being used to process over 1 billion prescription drug claims per year.

Readiness of Standard:

A)NCPDP Version 3.2 is not a guideline, but a completed standard. This standard was submitted recently to ANSI to become an American National Standard.

B)This standard has been implemented by the vast majority of the pharmacy benefits industry since 1992. It was developed to be a natural progression from the previously implemented version.

C)The standard can be obtained by contacting NCPDP's office at (602) 957-9105.

D)NCPDP Version 3.2 has a separate implementation guide. Work is under way for 3.3 and 3.4 implementation guides.

E)There is only one implementation guide. There are no major options that impact compatibility.

F)Yes, a conformance standard is specified (certification procedures). It is important to note that trading partners accomplish this, not NCPDP

G)Yes, conformance test tools are available.

H)The test tools are developed by trading partners based on business agreements.

I)The standard is complete and undergoes periodic enhancements.

J)A compound drug enhancement was recently completed, as well as different data elements for new versions and releases.

AA) A data element request form (DERF) process (data maintenance) has been developed at NCPDP to enable the standard to be modified by the NCPDP membership to fit the business needs of the industry.

BB) This standard is modified periodically upon review of DERFs.

Indicator of Market Acceptance:

A) The standard is virtually used by every pharmacy processor, PBM (Pharmacy Benefit Management Company) submitting on-line real-time pharmacy claims. Every Pharmacy Practice Management Software Vendor in the United States supports the standard. Over 1,000,000,000 claims from 100,000,000 health plan members were submitted in 1996 using the standard. The standard will be used in South Africa in early 1997. In addition, 43 State Medicaid Agencies utilize our standard for their business needs.

B)The language will be English only.

Level of Specificity:

A) Version 3.2 allows for both fixed length transactions or variable length transactions. Implementation of variable length transactions gives the sender and receiver the option of compressing or eliminating optional data elements to reduce message length where these data elements are not required by the processor. As of Version 3.3, fixed length transactions are no longer supported.

B)There is no implementation guideline for the Compound standard for V3.2. There is one for Compounds (V3.3) and Prior Authorization (V3.4).

A) Data sets referenced include :

1. FDA's National Drug Code (NDC)
2. NABP #s - National Association for Boards of Pharmacy Number, an universal identifier for pharmacies in the United States
3. DAW codes - Dispense as written codes

A) The code sets are updated as new data elements are approved by the membership.

A) The data dictionary can be acquired by contacting NCPDP's office at 602-957-9105.

A) There is an instruction sheet.

A) It is used by virtually all users of the standard. (in the hundreds).

I) It is not under development.

Relationships With Other Standards:

A) PPS and DUR are used as part of the NCPDP standard.

A) The X12 835 is used to report on the remittances for claims submitted.

A) Not applicable.

A) Not applicable.

A) No, this standard is not consistent with international standards.

A) There are no gaps.

A) Not applicable.

Identifiable Costs:

The costs for licenser, cost of acquisition, cost time frames for education, training, and implementation are contingent upon the usage and trading partner agreements.

Contact For More Information:

NCPDP, Inc. 4201 North 24th Street, Suite 365, Phoenix, AZ 850160-6268,

Phone (602) 957-9105,

Lee Ann C. Stember - President,

Daniel J. Staniec, R.Ph., MBA Executive Vice President of External Affairs

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