By Neil Versel, contributing editor

July 22, 2008 | Digital HealthCare & Productivity | The Medicare program could save as much as $156 million over the next five years from error avoidance and efficiency gains from a newly authorized electronic prescribing incentive program, federal officials say.

Legislation adopted last week to halt a scheduled 10.6 percent Medicare physician fee cut also includes financial incentives for ePrescribing. Eligible physicians and other authorized prescribers will receive 2 percent bonuses for writing electronic scripts for Medicare beneficiaries in 2009 and 2010. The bonus payments drop to 1 percent in 2011 and 2012 and to 0.5 percent in 2013.

But beginning in 2012, those who are not using ePrescribing technology for their Medicare patients will be subject to fee reductions. “We hope that we don’t get to the penalty, that we have ubiquitous ePrescribing by 2013,” American Academy of Family Physicians president James King said Monday in a conference call organized by the Department of Health and Human Services (HHS).

King said about 9 percent of AAFP members currently are ePrescribing, which means they are sending true electronic orders and messages to pharmacies, not computer-generated faxes.

Congress passed the Medicare bill over the veto of President Bush, who objected to reduced payments to third-party payers in the Medicare Advantage managed care program. The administration strongly supported the ePrescribing portion of the legislation, however.

“[ePrescribing] was not one of the reasons for the veto,” acting Centers for Medicare and Medicaid Services (CMS) administrator Kerry Weems said during the conference call with reporters.

“Advancing ePrescribing has been a top priority of this administration,” added HHS secretary Mike Leavitt.

Leavitt said HHS arrived at the $156 million figure by extrapolating to the Medicare population an Institute of Medicine (IOM) estimate that 1.5 million Americans are injured by prescribing errors each year and other studies suggesting that pharmacists make 150 million unnecessary phone calls annually to providers to clarify prescription orders. According to Leavitt, there are as many as 530,000 adverse drug events involving Medicare patients every year.

Weems said ePrescribing technology runs about $3,000 per prescriber in one-time acquisition costs, plus ongoing maintenance fees. He was not sure if the financial incentives would be enough to offset these expenses, as CMS still has to develop rules for administering the program. Weems said CMS will publish the incentive schedule as part of the agency’s 2009 fee revisions due out in the fall. The bill replaces the planned 10.6 percent fee cut with a 0.5 percent increase for 2008 and 1.1 percent rise next year.

The new bill also authorizes a case-by-case “hardship” exemption from the ePrescribing penalties. King says the hardship waiver “makes us a little more comfortable with the legislation.”

Leavitt said CMS will hold a conference this fall to help Medicare providers work through some of the logistical and technical issues related to the incentive program. He did not offer further details.