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Executive Summary

The technology for a nationwide electronic drug claims processing network is already available to the federal government for the administration of the Medicare outpatient drug benefit, consultant Harry Soza, president, Preferred Solutions, Inc., noted at the NACDS annual Pharmaceutical Conference. Soza predicted that the Health Care Financing Administration will adopt a system made up of a pharmacy "black box" connected via a network -- an "800" number, WATS line or purchased service like TymNet -- to a federal clearinghouse, or national switch, that would route the claim to the appropriate processing center. The entire Medicare data base would be split up among a number of processing centers connected to the national switch, which would be contracted out by HCFA. "All of the technology is in place today," Soza declared. "From my side, all of the technology issues of what you need to do are a slam dunk." HCFA, Soza suggested, will "take U.S. lists of eligible social security numbers, they will divide them up into processing centers somehow, by number, by region or by birthdate." The pharmacist, Soza continued, will "hand" his claim "to a national switch and the national switch will route the data." He predicted that the candidates for the Medicare system's national switch will be the same companies that provide claims processing hardware to credit card companies and banks, such as FirstData Resources, NDC, Envoy and McDonnell Douglas. Pharmacists will need only a "black box" device that costs as little as $ 250, Soza said. Medicare will take that solution because it makes sense," Soza stated. "One, this is the best way it can work from the perspective of technology . . . given the capabilities and limitations of phone systems, of Tandem computers, of the switches, and all of the computers that make up this sort of network." Second, Soza continued, "this is the right answer from a financial perspective: when the banks built VISA/Mastercard, when the oil companies built their networks, and when regional ATM networks were built, they all looked at every possible way and they always come back to this because it is the most cost effective solution." Third, Soza said, "this is the best solution from a political aspect." Citing the VISA model, Soza noted that although the banks compete fiercely, "they cooperate on the electronic side because it is a level playing field." Soza forecast the existence of a pharmacy consortium to standardize electronic transaction processing for pharmacies within a year. "It is being pressured by Medicare Catastrophic," Soza explained, "and I believe in the next 12 months that it will come to pass." Although such a group does not exist today, Soza observed that "there are discussions with the heads of NACDS and other pharmacy and affiliated trade associations, and at a certain level the knowledge is becoming clearer that they are going to have a meeting some day and kick this off in a unified fashion." Soza predicted that the National Council of Prescription Drug Programs and NACDS will be a part of the consortium, as well as other pharmacy associations and "the major insurers." Soza cast the third party payors in the same role as the banks with VISA. He noted that a number of third party payors are looking closely at New York State's experience with its electronic claims system for Medicaid.

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