Wrangling over Medicare Incentives for ePrescribing

The last-minute Medicare fee bill expected to be passed by Congress before it leaves Washington in mid-December may include a major incentive for physicians to adopt ePrescribing.

The Bush administration has proposed a 10 percent reduction in Medicare fees for physicians in calendar 2008, a serious reduction which would be slightly ameliorated for physicians who write electronic prescriptions. Congress is likely to pass legislation, as it has in past Congresses, eliminating that reduction. That bill may well include an amendment introduced on December 5 by House and Senate Democrats and Republicans providing a permanent Medicare bonus of 1 percent for every electronic prescription a physician writes.

It is not clear whether those bonuses in 2008 would amount to more than the $1.35 billion physicians will have access to in 2008 under the initiative which requires physicians to adhere to the terms of Medicare’s Physician Quality Reporting Initiative (PQRI). However, the PQRI is a temporary, one-year program. The Medicare Electronic Medication and Safety Protection (E-MEDS) Act of 2007 introduced on December 5 by Sens. John Kerry (D-Mass.) and John Ensign (R-Nev.) and Reps. Allyson Schwartz (D-Penn.) and Jon Porter (R-Nev.) would provide permanent Medicare funding for 1 percent bonuses to physicians for every electronic prescription they write.

The bill also contains a huge sledgehammer: physicians who are not writing electronic prescriptions as of January 2011 would see their Medicare payments drop 10 percent automatically. The American Medical Association, which has been working hard to avert President Bush’s proposed 10 percent negative update in 2008, is unhappy with the Kerry/Ensign bill for two reasons.

“The American Medical Association is deeply committed to the adoption of ePrescribing, but steps must be taken to implement standards and address other barriers before this technology can fully benefit the health care system,” says Edward Langston, AMA Board Chair. “We look forward to working with the Senate and the House to encourage adoption of ePrescribing without placing an undue burden on physicians.” The AMA also doesn’t like the bill’s provision for a 10 percent cut in the Medicare fees in 2011.

 The E-MEDS Act is being considered as an amendment to the larger Medicare fee bill because use of ePrescribing is expected to save Medicare substantial money based on savings from adverse drug reactions prevented, increased formulary compliance, and increased use of generic drugs. Those savings would balance the revenue loss from paying physicians 10 percent more than expected, because of cancellation of the negative update in 2008.

The Congressional Budget Office (CBO) has not made an estimate yet of the Kerry/Ensign bill financial impact on Medicare. But a Senate staffer says that CBO will show Medicare making a net gain from the ePrescribing incentive.

The Senate staffer says that Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, of which Kerry is a member, will probably include some version of the Kerry/Ensign bill in the end-of-year Medicare fee legislation Baucus is currently negotiating with Rep. Pete Stark (D-Calif.). Stark is chairman of the House Ways & Means health subcommittee, which makes Medicare payment policy.

Mike Leavitt, the secretary of health and human services (HHS), the department which includes the CMS, said on December 3 in a letter to the Senate Finance Committee, “In my view, any new bill should require physicians to implement health information technology that meets department standards in order to be eligible for higher payments from Medicare. Such a requirement would accelerate adoption of this technology considerably, and help to drive improvements in health care quality as well as reductions in medical costs and errors.”

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