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Medicare Incentives, Penalties Help Drive Increase in E-Prescribing

By Elham Khatami, CQ Roll Call

August 16, 2013 -- Medical providers are increasingly e-prescribing medications since Congress passed legislation in 2008 that created Medicare payment incentives to do so, and experts say the phenomenon is likely to keep growing.

Physicians were slow to adopt e-prescribing technology until the 2008 law (PL 110-275) was enacted, directing the Centers for Medicare and Medicaid Services to provide incentive payments and payment adjustments to encourage electronic prescribing. As a result, the number of e-prescribers has grown from about 75,000 in 2008 to more than 500,000 today, Max J. Sow, director of business intelligence at Surescripts, said during a webinar hosted by the National eHealth Collaborative late last week. Surescripts operates a nationwide network used for e-prescribing.

"We are still seeing sustained growth on the network every month," Sow said. "Our estimate today is about half of eligible prescriptions are flowing through the network electronically."

The reason for the continued growth is partly due to the long-term design of the incentive program, said Seth Joseph, vice president of pharmacy business at Surescripts.

Because the plan was structured over a number of years, prescribers are able to demonstrate use each year, which gives them time to adjust and become comfortable with the system.

In addition, the program is outcome-based, requiring providers to show results in terms of the number of e-prescriptions in order to qualify for incentives. A successful e-prescriber is one who issued at least 50 percent of their Medicare prescriptions electronically.

Under the program, eligible providers who were deemed to be successful e-prescribers were rewarded with a 2 percent incentive payment in 2009. The 2 percent Medicare payment reward decreased to 1 percent in 2011, 0.5 percent in 2012 and disappeared in 2013. The design was aimed at rewarding providers who signed up early.

The program also built in penalties for providers who are not classified as successful. The penalty for 2014 and for subsequent years will be a 2 percent reduction e-prescribers will receive a 2 percent reduction in payments. These penalties have grown larger over the years, from a 1 percent reduction in 2012 to a 1.5 percent decrease in 2013. Such a structure, the experts said, pushed providers to keep writing prescriptions electronically.

The experts touted the benefits of e-prescribing, from eliminating handwriting legibility issues to providing drug allergy checks and reconciling medications prescribed by multiple providers. The gradual move toward e-prescribing of controlled substances will also allow for a "movement beyond traditional care delivery into public health issues," said Michael Furukawa, director of the office of economic analysis, evaluation and modeling at the Health and Human Services Department.

However, the experts acknowledged that electronic prescription renewals often pose problems within the e-prescribing network because the service is used inconsistently. According to a 2011 study by the Journal of American Medical Informatics Association, some pharmacies that sent renewal requests electronically also sent requests by phone and fax, even after the physician had already responded electronically. A 2011 Surescripts progress report suggested that pharmacies keep their prescriber files up-to-date and that prescribers respond to renewal requests  within  24  hours in an effort to streamline the process.

Citing the results of a July 2013 study published in Health Affairs by Sow, Joseph and Furukawa, which found that implementation of the incentive program and the increase in e-prescribers suggested a causal relationship, Joseph said that such findings could shed light on other federal incentive programs that seek to increase use of health information technology.

"Incentive programs like [the 2008 law] can be effective in driving not just adoption of health IT, but the use and sustained use of it, as well," Joseph said.

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