E-prescribing Can Make a Difference for Medicare Part D

APRIL 01, 2007
Wendy K. Bodine, Assistant Editor

In an effort to reduce medication errors, the law implementing Medicare Part D included a provision that all prescription health plans enrolled in the program be able to provide electronic prescribing (e-prescribing) by 2009. To help establish standards for e-prescribing and to test their feasibility in practice, the Department of Health and Human Services (HHS) initiated pilot programs across the country during 2006. As a result of one such pilot program—at Brigham and Women's Hospital in Boston, Mass—the facility experienced a 55% decrease in serious medication errors.

In its report Preventing Medication Errors, the National Institute of Medicine (IOM) estimated that 1.5 million preventable adverse drug events (ADEs) occur each year in the United States. A study reported in the Journal of the American Medical Association found that about 530,000 preventable ADEs occur each year among outpatient Medicare beneficiaries. The cost of treating preventable ADEs in Medicare enrollees alone is ~$887 million every year.

The IOM recommended that all prescriptions be written electronically by 2010 to help reduce these medication errors. E-prescribing has been shown to improve patient safety and to reduce health care costs by decreasing prescription errors caused by hard-to-read handwriting and other communication errors, as well as automating the process of checking for drug interactions and allergies. As of now, e-prescribing is still optional for prescribers and pharmacies.

"All of the Medicare prescription drug plans must comply with...newly established foundation standards for e-prescribing, which will improve drug safety and reduce costs," said Mark B. McClellan, MD, PhD, former administrator of the Centers for Medicare & Medicaid Services (CMS). "We are making e-prescribing easier to implement, to accelerate the use of e-prescribing in Medicare and throughout the nation's health care system," he added.

Benefit to Patients and Pharmacies

Significant evidence has shown the benefit to patients and pharmacies alike after the inception of e-prescribing in facilities such as Brigham and Women's Hospital. Furthermore, when that hospital enhanced its system with improved decision-support features, the decline in serious errors there reached 86%. One of the enhancements to the hospital's system was a menu of a physician's most-prescribed medications with standard doses and instructions for each one, allowing for 1-click ordering for most prescriptions.

Another example of the difference e-prescribing can make involved the Southeast Michigan E-Prescribing Initiative. When the Henry Ford Medical Group signed on, its 600 participating physicians wrote >1 million e-prescriptions within 18 months. Of those prescriptions, >98,000 were changed or cancelled due to drug-drug interaction alerts, and >63,000 were changed or cancelled because of formulary alerts. The medical group is expected to save >$1 million per year by using e-prescribing.

A key benefit of e-prescribing is a decrease in the time spent receiving and processing prescription orders at the pharmacy. Pharmacies using e-prescribing could expect to see an estimated 27% reduction in labor costs for new prescriptions and a 10% drop in these costs for prescription renewals, compared with using paper or faxed orders.

CMS Standards

CMS published the first set of e-prescribing standards for use in the Medicare Part D program in the Federal Register in November 2005. These standards were already in use by enough stakeholders that CMS officials were confident about requiring universal adoption of these standards by the time Part D was launched in January 2006. These "foundation standards" cover the following items:

•Transactions between prescribers and dispensers for new prescriptions, refill requests and responses, prescription change requests and responses, prescription cancellation requests and responses, and related messaging and administrative transactions

•Eligibility and benefits queries and responses between prescribers and Part D sponsors

•Eligibility queries between dispensers and Part D sponsors

The pilot programs are testing additional standards, including the following criteria:

•The ability to transmit information about insurance benefits, eligibility, and formulary

•Data on drug interactions, cost comparisons, and therapeutic alternatives to any drug prescribed

•The ability to transmit and process prior-authorization requests, display patient medication histories, and record when the prescriptions are dispensed

Pharmacists must be able to communicate with prescribers via the e-prescribing system, and the system must allow for the cancellation of or changes to any prescription already transmitted.

The criteria were compiled based on recommendations solicited from the National Committee on Vital and Health Statistics. The committee consulted a variety of experts, including physicians, pharmacists, hospital officials, e-prescribing experts, and federal agency officers, in order to assess standards for adequate industry experience. The standards are necessary to ensure interoperability and recognition by key stakeholders.

The Medicare Modernization Act also laid out criteria for e-prescribing standards that include the following specifics:

•The standards do not impose undue administrative burdens on doctors, other health care providers, and pharmacies or pharmacists

•They will be compatible with federal general health information technology standards, such as those in the Health Insurance Portability and Accountability Act

•They allow for the electronic exchange of drug-labeling and drug-listing information retained by the FDA and the National Library of Medicine

Pilot Programs

The pilot programs also were designed to assess the impact of e-prescribing on the work flow among prescribers, pharmacies, and insurance companies. HHS dispensed ~$6 million in grants to help run the programs, which will help determine which uniform standards for e-prescribing will be adopted by Medicare by 2008. In addition to Brigham and Women's Hospital, contracts were awarded to the RAND Corp (Santa Monica, Calif); SureScripts (Alexandria, Va); and Achieve Healthcare Information Technology (Eden Prairie, Minn).

Results of the tests were due to be presented to Congress by April 1, 2007. Any additional standards required are to be publicized no later than April 2008.

To allow health plans and providers to furnish hardware or software to physicians to help facilitate e-prescribing, CMS had to clarify the Stark Law, which "prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she has a financial relationship," unless an exception applies. In that case, the exception involves the physician self-referral prohibition for certain arrangements in which a physician receives necessary nonmonetary compensation that is used solely to receive and transmit e-prescribing information.

According to CMS, between 5% and 18% of physicians in America are estimated to be using e-prescribing in 1 form or another. This percentage is projected to grow by 10% every year over the next 5 years. About 75% of the 57,208 pharmacies across the United States already have e-prescribing capabilities.

State Barriers to E-prescribing

Several states have laws in place that hinder the initiation of e-prescribing, however. CMS has identified several categories of state laws that are preempted, either in whole or in part, because they are contrary to the federal standards or because they restrict the ability to carry out the e-prescription drug program requirements for Medicare Part D. Some of these categories of state laws are as follows:

•Laws that expressly prohibit e-prescribing

•Laws that prohibit the transmission of e-prescriptions via intermediaries, such as networks or pharmacy benefit managers, or that prohibit access to these prescriptions by plans, their agents, or other duly authorized third parties

•Laws that require specific language to be used, such as "dispense as written," to indicate whether generic drugs may or may not be substituted for branded drugs, when this language is not consistent with the standard

•Laws that require handwritten signatures or other handwriting on all prescriptions

After announcing the regulations, HHS Secretary Michael O. Leavitt stated that "[the] proposed e-prescription rules would set standards to help Medicare, physicians, and pharmacies take advantage of new technology that can improve the health care of seniors and persons with disabilities."