E-prescribing encouraged by new federal law

September 15, 2008

Lawmakers are using financial carrots and sticks to induce doctors to begin electronic prescribing.

Key Points

Bootman is referring to recent Congressional passage of the Medicare Improvements for Patients and Providers Act of 2008, which contained bonuses for doctors who adopt e-prescribing and financial penalties for those who don't. Doctors who use e-prescribing for Medicare patients will receive a 2 percent bonus in 2009 and 2010, a 1 percent bonus the following two years, and a 0.5 percent bonus in 2013. Those who don't will suffer payment reductions of 1 percent in 2012, 1.5 percent in 2013, and 2 percent thereafter.

Notwithstanding its value as a safety and cost-savings technology, adoption has been painfully slow. Of the 4 billion prescriptions written last year, only 25 million were transmitted electronically - mainly because only about 10 percent of physicians use the technology, Bootman and others said.

Pharmacists, on the other hand, are much more prepared for e-prescribing. According to officials of the prescription transmission network SureScripts-RxHub, better than 7 of 10 community pharmacies can now accept electronic prescriptions.

Pharmacist adoption is expected to approach 90 percent or higher within the next few years as more doctors adopt the technology and pharmacists move to meet that demand. "We believe the law will have a very positive effect on widespread adoption," said Rick Ratliff, co-CEO of SureScripts-RxHub, which is partly owned by the National Association of Chain Drug Stores and National Community Pharmacists Association. "It addresses the issue of [physician] cost, which has been a huge obstacle."

The single biggest barrier to electronic prescribing among physicians has been the expense of buying and setting up the necessary equipment and software, according to the U.S. Department of Health and Human Services (HHS). The agency estimates the cost to be about $3,000 per prescribing doctor. But the American Medical Association (AMA) estimates that implementation of e-prescribing can cost a clinician up to $25,000, including training, hardware, and software.

Although the front-end cost of e-prescribing falls heavily on physicians, the ongoing cost hits pharmacists. Several of the large chain drugstores have proprietary software, but independent pharmacists must purchase software and hire vendors to manage transactions. The software vendors pay a 21.5-cent per transaction fee to SureScripts-RxHub for each new prescription and each renewal. The charges, at varying competitive rates, are passed on to pharmacists. SureScripts-RxHub officials said, however, that wider adoption could help reduce costs to pharmacists. The merger will streamline the initial vendor application process and may make transaction fees more competitive."The market is moving toward consolidation, and that could drive down overall implementation and utilization costs," J.P. Little, SureScripts-RxHub co-CEO, said, adding that "studies demonstrate that e-prescribing saves pharmacists time on calls to physicians and improves workflow efficiency with a good return-on-investment."