As Medicare Goes, so Goes Managed Care (Or so the Saying Goes)

MDNG Primary CareMarch 2009
Volume 11
Issue 3

Who will lead the way in promoting greater adoption of e-prescribing, and how can physicians get the most out of using this technology in their practice?

Who will lead the way in promoting greater adoption of e-prescribing, and how can physicians get the most out of using this technology in their practice?

Private payers often set their reimbursement rates based on Medicare payment schedules and take their lead on policy changes from the government as well. But with e-prescribing, the relationship might be more of a codependency, with each sector taking cues from the other. Thanks to the Medicare Improvements for Patients and Providers Act (MIPPA) that became law last July, the Centers for Medicare and Medicaid Services this year and next is providing physicians who “successfully” e-prescribe—according to CMS’s definition—with 2% bonus payments on top of regular Medicare Part B fees. That rate falls to 1% in 2011 and to 0.5% in 2013. And starting in 2012, CMS will dock 1% from anyone not writing electronic prescriptions for a majority of Medicare-eligible patients, a penalty that climbs to 1.5% in 2013 and 2% in 2014. Any bonuses are in addition to the extra money doctors can earn for participating in the Physician Quality Reporting Initiative program (this year, the PQRI bonus is 2%). Under the new CMS rules, a qualified e-prescribing system must be able to:

• Generate a “complete active medication list” based on data sent by pharmacies and pharmacy benefit managers;

• Select medications, produce safety alerts, and both print and electronically transmit prescriptions to pharmacies, though CMS backed off from an earlier ruling that electronic faxes would not qualify as e-prescriptions;

• Receive details on tiered formularies or otherwise provide information on lower-cost options;

• Provide formularies, and if available, patient eligibility and authorization requirements.

This incentive program replaces PQRI measure 125, which listed three G-codes to indicate whether the participating practice attempted to write electronic prescriptions. Reporting continues to go through the PQRI framework. CMS also says that federally qualified health centers that do not bill under Medicare Part B and others that apply the e-prescribing measure to less than 10% of total Part B charges are ineligible for the bonus payments. The agency also may exclude providers that do not submit an adequate volume of prescriptions under Medicare Part D.


The Medicare bonus is the first truly national incentive program to encourage physicians to ditch their prescription pad in favor of an electronic link to pharmacies, though Cigna has included e-prescribing in its “virtual house call” reimbursement plan that went nationwide in January 2008. Other payers have been supporting e-prescribing at the state level for several years. Henry Ford Health System, through its Health Alliance Plan of Michigan, has a program similar to Cigna’s in its home state. Notably, the eRx Collaborative has been promoting and subsidizing e-prescribing hardware and software in Massachusetts since 2003. The group, which includes Blue Cross Blue Shield of Massachusetts, Neighborhood Health Plan, and Tufts Health Plan, plus e-prescribing technology vendors DrFirst and ZixCorp, report that participating clinicians wrote 2.1 million electronic scripts during the first half of 2008. Automatic checking for drug—drug and drug–allergy interactions at the point of care led to 104,000 prescriptions being changed in 2007, potentially preventing thousands of medication errors, according to the eRx Collaborative. Nationally, the Institute of Medicine estimates that medication errors cause 7,000 deaths and 1.5 million injuries annually. “It’s the old thing that I don’t know what I don’t know,” says Rick Spurr, chief executive of Dallas-based ZixCorp, producer of PocketScript e-prescribing software for personal digital assistants and other mobile devices. What doctors don’t always know is the complete list of all medications a patient is on, patient-specific allergies, and—without actively taking the time to consult a reference guide—all potential interactions. E-prescribing software checks the relevant databases automatically and provides immediate warnings. The proper technology also can connect to payer formularies so the prescriber knows exactly what the patient’s health plan covers, and at what cost to the patient. Elsewhere, Zix alone has announced regional partnerships with Aetna, United-Healthcare, LA Care Health Plan in Los Angeles County, and Blues plans in Louisiana, Illinois, Alabama, and Pennsylvania. Blue Cross and Blue Shield of North Carolina (BCBSNC) started an e-prescribing incentive program in early 2006 by covering the cost of PDAs, e-prescribing software, and wireless Internet interfaces for about 1,000 physicians in the state. But utilization initially was very low; less than 1% of all prescriptions that BCBSNC processed statewide in 2006 were electronic, according to Ron Smith, PharmD, vice president of employer health and corporate pharmacy for the health insurer. “The No. 1 complaint from physicians was that pharmacies weren’t participating,” Smith says. So North Carolina Blues added incentives for pharmacies to connect to the Pharmacy Health Information Exchange, an e-prescribing connectivity service operated by SureScripts, a company founded by the National Association of Chain Drug Stores and the National Community Pharmacists Association. Smith says 87% of North Carolina pharmacies are capable of receiving e-scripts, higher than the national average of 70—75%. SureScripts says that 98% of chain pharmacies are connected, though only about one in five independent pharmacies is part of the network. The health plan also teamed with Community Care of North Carolina, a state-run network of small, rural healthcare providers that serve Medicaid patients to help train physicians to use e-prescribing technology. After bumping utilization up to about 2% in 2007, North Carolina Blues offered some more financial motivation last year, a one-time bonus of $1,000 to physicians who registered with a certified e-prescribing vendor and then accessed medication history online for at least 20 patients during the fourth quarter of 2008. Payments will go out in the first quarter of 2009 for about 2,000 doctors who qualified, Smith says. At the same time, the Blues entered into partnerships with several technology companies to offer discounted e-prescribing hardware, software, and wireless services, including a free e-prescribing service through a portal on the BCBSNC website. The latter comes from the National ePrescribing Patient Safety Initiative, an initiative spearheaded by Chicago-based health IT vendor Allscripts-Misys Healthcare Solutions.


Allscripts, in part, sees the free service not only as a means of boosting e-prescribing, but also as a way to drive interest in EMRs. “It leads to questions about what’s the pathway from e-prescribing to a full EMR,” says President and Chief Operating Officer Lee Shapiro. “Doctors know that they’re going to have to do more,” agrees David Rosenblum, president of MTBC, a healthcare revenue cycle management and practice management firm in Somerset, NJ. MTBC added e-prescribing services to its portfolio last July. “Right now, we’re at the point where people are asking questions,” Rosenblum says, though physicians are not exactly jumping on the e-prescribing bandwagon just yet. One major reason is that the Drug Enforcement Agency currently prohibits electronic prescribing of controlled substances, forcing doctors who prescribe Schedule II drugs to choose between either running dual systems or simply sticking with paper. The choice usually is an easy one. Though the DEA has proposed easing the restriction, former acting CMS Administrator Kerry Weems said that as long as the bar remains in place, Medicare will not penalize providers in the bonus program for writing paper prescriptions for controlled substances. Physicians are still eligible for the bonus if the patient specifically requests a paper script. Since the MIPAA incentive is new, CMS does not have hard numbers on participation, but the agency is pushing e-prescribing as a way to save taxpayers money. The agency estimates that Medicare could save $156 million over the five-year life of the program through error prevention and efficiency improvements, but that figure is based on the 6% of US physicians said to have e-prescribing systems at the end of 2007. That number now is closer to 9% and rising. “E-prescribing needs to be routine in every doctor’s office and every clinic in America,” Weems said at an October conference meant to drum up interest in the Medicare incentive. Weems had a lot of help from other e-prescribing advocates, including former national health IT coordinator David Brailer, MD, PhD, who called e-prescribing “bite-sized in terms of what physicians need to change and do,” something that will help doctors make the first step toward full EMRs. “You won’t go wrong investing your time and money,” said Brailer, whose San Francisco-based investment firm Health Evolution Partners chose e-prescribing vendor Prematics for one of its first investments. “What’s the thin end of the spear? What’s the thing that really drives this [technology] into physician offices?” Brailer asked. He said e-prescribing is the answer, and that bonus payments are the enticement. “Doctors are never sure what to focus their time on, so they do follow the money,” he said. Whether an extra 2% of total Medicare billing is enough to shift doctors to e-prescribing remains to be seen. But in this economy, every little bit helps. “I don’t have any question that e-prescribing is going to happen,” Spurr says, “and the health plans are going to play an important role.”

US automakers got this one right

Unlike so many other forms of information technology, electronic prescribing seems to be winning over physicians. Though the vast majority of prescriptions still are written by hand, those who have tried e-prescribing are pretty much thrilled with it—at least according to one survey. More than 70% of e-prescribing users in the four-year old Southeast Michigan E-Prescribing Initiative (SEMI) were “highly satisfied” with the technology. “When we saw that number, we nearly fell out of our chairs,” says SEMI project manager Anthony J. Schueth. Only 6% of the 500 respondents expressed a high level of dissatisfaction. SEMI started in January 2005 as a way for the Big Three US automakers to reduce healthcare expenditures on their Detroit-area employees and retirees— the very same benefits blamed for adding $1,500 to the price of every vehicle General Motors makes. They engaged Blue Cross Blue Shield of Michigan, Health Alliance Plan of Michigan, and physicians from Henry Ford Health System, as well as pharmacy benefit managers and technology vendors. The program has since expanded to include 12 Detroit-area physician organizations. Through November, 3,375 physicians had enrolled in SEMI. About 500 took the survey. A whopping 90% of participants said that their current e-prescribing systems either met or exceeded their expectations. Nearly three-quarters indicated a belief that e-prescribing improves patient safety, and close to 70% said the technology raises the quality of care. Though there was no consensus on whether e-prescribing saves money for patients and practices, a majority of those surveyed said that e-prescribing saves them time and makes clinicians more efficient. Payers like it, too. “There’s a real return on investment. It’s not just conceptual anymore,” Schueth said during a January 14 Webcast on payer-sponsored e-prescribing efforts, convened by a national project called the eHealth Initiative.

Will private payers follow Medicare’s lead and reimburse for e-prescribing? Are the workflow disruptions associated with this technology a bigger barrier than proponents claim? Is a 2% Medicare bonus payment enough incentive?

Neil Versel is a freelance writer and proprietor of Neil Versel’s Healthcare IT Blog.

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