Published 10/1/2008
Jackie Ryan, MPA

Nuts and bolts of e-prescribing

Government initiatives are encouraging adoption of eRX solutions

Outside of surgical intervention, the physician’s most frequently used, efficacious, and potentially dangerous therapeutic tool is a prescription for medication. In 2007 alone, more than 4.5 billion prescriptions were written—literally. Approximately 80 percent of all prescriptions are hand-written, and many patients are taking multiple prescription medications, a situation that is often viewed as the “perfect storm” for medication errors.

E-prescribing (eRX) is viewed by many patient safety advocates—as well as those interested in reforming the current healthcare system—as the first step to the adoption of full electronic health records (EHRs). They believe that the adoption of eRX will lead to improving medication safety, management of medication costs, practice efficiency, and quality of care.

This article, the first in a two-part series, provides important information on various eRX solutions, reviews the provisions of the Physicians Quality Reporting Initiative (PQRI) and electronic prescribing standards proposed by the Centers for Medicare and Medicaid Services (CMS), and includes an overview of national and state eRX initiatives. The next article in the series will discuss the benefits and challenges to adopting eRX, including best practices and implementation strategies.

What is eRX?
CMS defines e-prescribing as “the transmission, using electronic media, of prescription or prescription-related information between a prescriber, dispenser, pharmacy benefit manager, or health plan, either directly or through an intermediary, including an e-prescribing network. E-prescribing includes, but is not limited to, two-way transmission between the point of care and the dispenser.”

All 50 states and the District of Columbia have laws and regulations governing eRX. Some variability exists, however, in the legal requirements for e-prescribing among states. More than 100 technology vendors offer products certified to transmit electronically via the Pharmacy Health Information Exchange (PHIE). Typically, these products are either stand-alone, prescribing-focused solutions or integrated solutions that integrate eRX with EHRs.

More than 50 EHR systems have eRX capabilities. Usually, this means a computer-to-computer connection between the physician’s practice and a pharmacy.

E-prescribing is paperless and involves no faxing. But many EHR systems generate paper faxes at the pharmacy, which is not truly electronic prescribing.

EHRs can provide broader eRX functionality and support increased accuracy, but initial costs for these systems are higher than for stand-alone eRX systems. Currently, 60 percent of e-prescribers on the PHIE have EHRs.

Electronic prescribing functionality is not specific to a particular hardware or software program. Technology vendors offer various hardware choices, including the traditional desktop computer, sophisticated hand-held devices, and tablet PCs. The system infrastructure may be based on the hardware requirements of a server located either in the physician’s office or through a remote application service provider (ASP) environment. Fig. 1 depicts the typical e-prescribing process.

The push for adopting eRX
The momentum for using information technology to help address systemic healthcare shortfalls in the United States has been building during the past decade. A prescriber’s ability to send an accurate, error-free, and understandable prescription to a pharmacy from the point of care is an important element in improving the quality and safety of patient care.

Adoption of eRX as a goal was first identified in the Medicare Prescription Drug Improvement and Modernization Act of 2003. The widely publicized report by the Institute of Medicine (IOM), Preventing Medication Errors, and the IOM’s subsequent recommendation that all prescriptions be written electronically by 2010 pushed the national agenda for reducing medication errors and built awareness of electronic prescription’s role in improving patient safety and quality of care.

The Medicare Improvements for Patients and Providers Act (MIPPA) passed this year contains new e-prescribing provisions. MIPPA established a 5-year program of incentive payments to eligible professionals who are “successful electronic prescribers.” Successful prescribers are those who either report applicable electronic prescribing measures established under the PQRI or electronically submit prescriptions under Medicare Part D at a level determined by CMS. Congress already requires Part D drug plans to support e-prescribing, and CMS has developed four e-prescribing standards: formulary and benefits, medication history, fill status, and National Provider Identifier.

Under MIPPA, e-prescribing will be dropped from the list of PQRI measures in 2009. Instead, e-prescribing is to be reported for every patient visit included in the denominator. Providers who do so will qualify for an additional 2 percent bonus. Also, beginning Jan. 1, 2009, all computer-generated prescriptions covered by the Medicare Part D program must be transmitted electronically and not via computer-generated fax.

The additional incentive payment is designed to take some of the sting out of the e-prescribing mandate. Physicians who adopt eRX technology and participate in PQRI could receive a Medicare payment bonus of up to 4 percent in 2009 (Table 1). The final 2009 PQRI provisions will be included in the final 2009 Physician Fee Schedule Rules, which are scheduled for publication in mid-November. However, the Secretary reserves the right to make changes to the Final PFS Rules through Dec. 31 2008.

The e-prescribing bonus, which will continue through 2013, is designed to accelerate the adoption of eRX and EHRs by streamlining the prescription process and reducing errors. Medicare expects to save up to $156 million over the life of the eRX program in fewer adverse drug events. After 5 years, the bonuses will be phased out; beginning in 2012, however, physicians who have not adopted e-prescribing will be penalized and will be reimbursed at lower rates. (Exceptions for doctors who have legitimate reasons for not complying are allowed.)

Details of the e-prescribing incentive program will also be outlined in the final 2009 Physician Fee Schedule Rules. For more information visit www.cms.hhs.gov/pqri or www.cms.hhs.gov/EPrescribing

The national landscape
In spite of the apparent benefits of e-prescribing and the increased use of technology by physicians, adoption of eRX systems by physicians has been slow. In 2007, only 6 percent of physicians reported using eRX. In most states (44) less than 3 percent of prescriptions are transmitted electronically. Only Massachusetts achieved a double-digit eRX rate of 13.43 percent.

Pharmacies, on the other hand, are much more prepared for e-prescribing. At the end of 2007, 41,000 chain and independent pharmacies nationwide (72 percent) are live on the PHIE and able to receive electronic prescriptions and send e-prescription renewal requests to prescribers.

The 2 percent eRX bonus could help physicians absorb the initial costs of implementing the new technology. But additional government payments alone are unlikely to provide enough financial support for such an expensive undertaking. Private industry will need to provide extra assistance. Many state governments, payors, medical associations, and technology vendors have developed initiatives and programs designed to encourage prescribers to adopt and use eRX technology.

For more information
Visit the AAOS online Practice Management Center (
www.aaos.org/pracman) for information on the PQRI, an e-prescribing fact sheet, a state-by-state ranking of e-prescribing habits, and a listing of national and state programs and initiatives.

Jackie Ryan, MPA, is a practice management program coordinator in the AAOS practice management group. She can be reached at ryan@aaos.org

Read the second article in this series...