New Federal Financial Incentives for E-Prescribing

Effective January 1, 2009, the federal Centers for Medicare and Medicaid Services (CMS) has enacted a program to pay certain physicians a bonus of 2% of allowable charges to incentivize utilization of e-prescribing systems. Such systems are expected to improve patient safety through computerized transmission of legible prescriptions directly to pharmacies and can also more effectively check for potentially harmful drug interactions. E-prescribing systems result in fewer prescription errors and reduce patients’ waiting time for prescriptions, as well as avoid unnecessary phone calls between providers and pharmacies to clarify orders. Finally, it is anticipated that such a system will result in easier data collection of physician prescribing patterns and improved formulary compliance for employers, pharmacy benefit managers and health plans. This incentive program is an opportunity for physicians, as well as technology companies that have developed, or are able to develop, the appropriate e-prescribing products.

E-Prescribing System Qualifications

A qualified e-prescribing system must: (i) generate a complete active medication list incorporating electronic data from applicable pharmacies and benefit managers; (ii) allow a physician to select medications, print and electronically transmit prescriptions, and access various medication alerts; (iii) provide information related to therapeutically appropriate, lower cost drug alternatives; and (iv) provide information from the patient’s health plan on formulary medications and eligibility and authorization requirements.

Physician Eligibility

In order to be eligible for the CMS bonus, a physician must adopt and have access to a qualified e-prescribing system and annually bill at least 10% of his/her allowable charges to certain specific e?prescribing “measure” codes. These codes, known as “evaluation and management” codes, are generally used for office visit patient encounters. At least 50% of a provider’s eligible patient encounters each year must be billed using one of three specific “G?codes,” identifying use of the e-prescribing system during the particular patient encounter. A participating physician can receive an incentive bonus payment from CMS of 2% of all allowable charges in 2009 and 2010 (not just charges for the E&M/G-coded claims), as well as lesser amounts in 2011 through 2013. Importantly, starting in 2012, eligible physicians who fail to utilize the e-prescribing G-codes for at least 50% of their eligible patient encounters will have the Medicare fee schedule amounts for such services reduced by 1%, such discount to increase to 1.5% in 2013 and 2% for 2014 and each year thereafter. For this reason, it is anticipated that the demand for qualified e-prescribing systems will continue to increase.

For more information, please contact the attorney with whom you work, or any Health Care attorney on our website (www.seyfarth.com/healthcarepharmaceutical).