Measure includes bonus pay to encourage more e-prescribing

July 1, 2008

Washington, D.C. - Several Congressional leaders, the Bush administration and major players in the e-health community are promoting electronic prescribing systems as an achievable step toward broader health information interconnectivity. Legislation to postpone a cut in Medicare payments to physicians includes a provision that encourages electronic prescribing by physicians.

WASHINGTON, D.C. - Several Congressional leaders, the Bush administration and major players in the e-health community are promoting electronic prescribing systems as an achievable step toward broader health information interconnectivity. Legislation to postpone a cut in Medicare payments to physicians includes a provision that encourages electronic prescribing by physicians. The measure offers bonus payments to doctors who transmit Medicare prescriptions electronically to pharmacies. The carrot switches to a stick in 2011 when prescribers would face a 2% rate cut if they fail to use e-prescribing systems.

The Congressional Budget Office (CBO) calculated that such a policy would save $1.7 billion over 10 years, making it more palatable for Congress to enact. E-prescribing has been championed by insurers and pharmacy benefit managers (PBMs) as an important strategy for promoting prescriber compliance with formulary coverage policies and restrictions, and for encouraging more generic prescribing.

The legislation also builds on new Medicare e-prescribing standards. The Centers for Medicare and Medicaid Services (CMS) issued regulations in April establishing standards for e-transmission of key prescribing information: formulary coverage policies; patient medication history; whether a patient picked up a prescription; and prescriber identification. All Part D plans must implement these standards by April 2009. So far, physicians have not been required to prescribe electronically, but those who do must follow the new standards.

The new Medicare bill aims to spur more physicians to adopt health IT. Some 35,000 healthcare providers are now transmitting prescriptions to pharmacists electronically-but that represents only 6% of office-based physicians. An estimated 35 million prescriptions were routed electronically in 2007, and 100 million e-prescription are expected this year. Even the larger volume, though, amounts to only 7% of eligible prescriptions.

The legislation fits a policy for implementing e-prescribing recently outlined by the American Medical Assn. (AMA) which says doctors should have two years to adopt e-prescribing technology before facing penalties, and exceptions should be allowed for small practices and rural doctors.

The AMA also seeks an end to current curbs on e-prescribing of controlled substances. The Drug Enforcement Administration insists that prescriptions for certain painkillers and potentially addictive drugs-which account for 20% of all prescriptions-must be written on paper. Physicians don't want two prescribing systems; they fear they would violate the law if they inadvertently transmit electronically an order for a high-risk drug. Policy makers seek to resolve this issue in order to remove a major roadblock to e-prescribing.

Consumer advocates continue to raise concerns that e-prescribing could undermine patient privacy. They also object that electronic information systems could encourage data mining by insurers, pharmacies and pharmaceutical companies. But the potential for controlling pharmacy costs and for reducing drug-to-drug interactions and enhancing patient safety is building support for e-prescribing on all sides.