E-prescribers see Medicare bonus, but late adopters will face pay cut

Meanwhile, the government proposes new rules that would lift the ban on e-prescribing of controlled substances.

By — Posted Aug. 4, 2008

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The Bush administration is running a full-court press on physicians to get them to embrace electronic prescribing well ahead of a new Medicare mandate that is a little more than three years away.

Under the Medicare payment bill that became law in July, doctors who prescribe electronically for Part D patients in 2009 will get an incentive payment equal to 2% of all the Medicare services they provide for the year. This bonus will phase down over five years and disappear at the beginning of 2014.

Starting in 2012, physicians who are still paper-only will see a cut in their total Medicare payment for the year.

A physician may be eligible for an exemption from the penalties if Medicare determines that compliance would represent a significant hardship. The law cites an example of a doctor who practices in a rural area that has insufficient Internet access.

The Bush administration did not support the measure as a whole but is moving forward aggressively to implement the e-prescribing provision, which President Bush did endorse. The Centers for Medicare & Medicaid Services will issue rules later this year that will determine exactly how the incentive system will work and when bonuses will be paid.

Plans also are in the works for a CMS conference this fall that will educate physicians about what technology to use and how to use it. The agency wants to take advantage of its "bully pulpit" to get as many doctors on board with this technology as soon as possible, said Kerry Weems, CMS acting administrator.

The question of cost

Physicians consider the incentive program a good first step, and the bonuses could help doctors absorb the costs of the new technology, said American Medical Association Board of Trustees member Steven J. Stack, MD. But additional government payments alone likely will not provide enough financial support for what can be an expensive undertaking, he said. Private industry partners need to provide doctors with extra assistance.

Although the prospect of future Medicare physician payment cuts for noncompliance is very real, Congress could step in to stop them if it determines that too many doctors would take a hit, Dr. Stack said. "Whether these financial penalties will prove insurmountable, we are going to have to take the optimistic approach and hope that we can work through them."

American Academy of Family Physicians President James King, MD, said the fact that several years worth of positive incentives will go by before penalties kick in takes some of the sting out of the e-prescribing mandate.

CMS estimates that it would cost each physician about $3,000 to purchase and install a basic electronic prescribing system and $80 to $400 per month to maintain it. A 2% Medicare payment bonus in many cases could cover these costs, Weems said.

To give an idea of the money available, he cited the lump-sum payments Medicare made last month for the Physician Quality Reporting Initiative. For the 2007 PQRI, which featured a 1.5% bonus and covered only six months of reporting, the average incentive paid to individual physicians was more than $600, and the average for group practices exceeded $4,700. The largest single payment to a group practice topped $200,000.

Under the new Medicare law, CMS will drop e-prescribing use from the list of PQRI measures. The quality reporting program will run all of next year, and Congress boosted the possible bonus to 2%. So in 2009, physicians could receive the additional 2% for e-prescribing under the new Medicare law and another 2% for reporting quality measures under PQRI.

The Bush administration expects that the e-prescribing incentive program will save Medicare an estimated $156 million over five years by reducing the number of adverse drug events. Without the safety and accuracy of electronic drug orders, patients have poorer health outcomes, and practices use up unnecessary resources clarifying orders to pharmacies, said Dept. of Health and Human Services Secretary Michael Leavitt.

"That's a lot of people needlessly hurt and a lot of time wasted," he said.

Barriers to overcome

The AMA has argued that physicians cannot fully adopt e-prescribing in Medicare until the government allows electronic drug orders for controlled substances. Physicians complain that the need to maintain a separate paper system for these medications, which make up about 10% of all prescriptions, renders moot any potential savings or efficiency gains from going electronic.

The White House took a big step toward removing that barrier to adoption in late June when the Drug Enforcement Administration proposed new regulations that would lift the ban on e-prescribing controlled substances. The rules would apply to all controlled substances Schedule II and higher. Schedule I drugs cannot be prescribed for medical purposes. The DEA is accepting comments on its proposal through Sept. 25.

The AMA's Dr. Stack welcomed the proposed end to the ban and said it was long overdue. But the additional requirements on physicians proposed by the DEA for e-prescribing controlled substances are too cumbersome to be practical, he added.

For example, the requirement that physicians carry around a portable data drive or other "hard token" that must be used to authenticate their identities on the e-prescribing system is too big a burden for practices, he said. Dr. Stack also criticized the proposed requirement that doctors review monthly prescription logs for all the controlled substances they order. He said the DEA's layers of protection are too stringent, given that electronic prescribing is less prone to drug diversion than is a paper-based system.

In addition, CMS still needs to finalize three additional standards on e-prescribing use before physicians can truly embrace the technology, Dr. Stack said. The agency must complete this work a minimum of two years before any Medicare penalties take effect, he said. This means CMS would need to finish the task by the end of 2009 to meet the AMA framework.

The DEA proposal hits on just one of the major roadblocks to e-prescribing adoption, but more daunting impediments remain, said Ned Milenkovich, a registered pharmacist and an associate with the law firm McDermott Will & Emery in Chicago.

"At the end of the day, the barriers are all going to come down to dollars and cost," he said. Physicians are going to need to determine if the positive benefits associated with going electronic outweigh the economic downsides that go along with taking on the new technology.

Some physicians who already have made the leap into e-prescribing have run into other problems that need addressing.

For example, state laws still prohibit electronically prescribing over state lines, and many independent pharmacies lack the ability to receive paperless drug orders, said the AAFP's Dr. King, who prescribes electronically when he can in his Tennessee practice.

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Carrots, then sticks

Doctors who prescribe Medicare Part D drugs electronically next year will be rewarded with additional pay. However, those incentives eventually will run out, and penalties will begin for physicians who stick with paper.

Percent of annual Medicare pay:


Source: The Medicare Improvements for Patients and Providers Act of 2008

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E-prescribing controlled substances

The proposed Drug Enforcement Administration rules would establish a more stringent process for e-prescribing controlled substances than for other medications.

  • The physician must provide his or her e-prescription service provider with a document from an approved entity that conducted an in-person check to prove the doctor's identity.
  • The physician receives a private authentication key that must be stored on a "hard token," such as a smart card or a thumb drive, that is kept in the doctor's possession and used to approve electronic orders. The physician must notify the service provider within 12 hours if the token is lost, stolen or compromised.
  • When e-prescribing controlled substances, the physician must follow the same rules that apply to paper and oral prescriptions for the same drugs.
  • Every month, the physician must review a log that lists all of his or her controlled substance orders to make sure they are correct and to compare them with the doctor's usual prescribing pattern. The physician must inform the service provider and Medicare within 12 hours if any of the information is questionable.
  • Every year, the physician must review a third-party audit of his or her e-prescription service provider to ensure that it is meeting DEA requirements. If not, the doctor must immediately stop using the provider.

Source: Drug Enforcement Administration

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