CMS Also Reinstates Fax Exception to Medicare e-Prescribing Standards

The Centers for Medicare and Medicaid Services (CMS) today published guidelines for implementing the Medicare electronic-prescribing financial incentives program established by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The Medicare e-prescribing financial incentives program rewards “successful” e-prescribing physicians and other “eligible professionals” with bonus payments on their total annual Medicare Part B charges, starting with calendar year 2009.[1]

CMS also reinstated the exception allowing prescribers and dispensers to use computer-generated facsimiles to transmit prescriptions and related information for Medicare Part D drugs for Medicare beneficiaries. CMS had eliminated this exception, to be effective January 1, 2009, by rulemaking last November.[2]

CMS published its explanation for implementing the Medicare e-prescribing financial incentives program and its rule change reinstating the Medicare computer-generated fax exception within the massive (513 page) Medicare Part B 2009 physician fee schedule final rule at 73 Federal Register 69725 (Nov. 19, 2008). The explanation of the Medicare e-prescribing financial incentives program is at pages 69847-52 of the final rule preamble. The rule change reinstating the Medicare e-prescribing fax exception is at page 69938, with its preamble discussion at pages 69783-88.

Medicare e-Prescribing Financial Incentives Program

Congress enacted the Medicare e-prescribing financial incentives to address the “limited adoption and use of electronic prescribing by physicians and other professionals,” despite the substantial benefits of e-prescribing. According to CMS, these benefits include (a) improving patient safety and quality of care by reducing medical errors up to 86%; (b) enhancing administrative efficiency (thus, lowering costs) by reducing time-consuming phone calls and faxing related to prescribing; (c) automating prescription authorizations and renewals; (d) improving drug surveillance and recalls; and (e) increasing formulary adherence to 88%. CMS anticipates that increased formulary adherence alone will, by encouraging generic and therapeutic equivalent medication substitution, yield substantial savings for Medicare beneficiaries and Part D plans.

Opportunity for Health Plans. Health plans could see similar benefits if their network physicians use e-prescribing. Accordingly, health plans may want to follow Medicare’s lead and implement similar e-prescribing financial incentives for their network physicians. Health plans that structure e-prescribing incentives based on the Medicare model may find less resistance as their incentive programs should cause little or no added administrative or technology burdens for physicians adopting e-prescribing to gain the Medicare e-prescribing financial incentives.

Health plans considering e-prescribing financial incentives should pay attention to the e-prescribing safe harbor and exception from, respectively, the anti-kickback statute and the Stark physician anti-self referral law to avoid potential fraud and abuse complications in their Medicare Advantage, Medicare Part D or other federal health care program operations.

Medicare e-Prescribing Incentives. MIPPA authorizes CMS to pay financial incentives to “successful” e-prescribing “eligible professionals.” The financial incentives are a percentage payment of the eligible professionals’ total Medicare Part B charges per calendar year. For 2009 and 2010, the percentage payment is 2%. The incentive payment drops to 1% in 2011 and 2012, 0.5% in 2013, and is eliminated thereafter. Eligible professionals who do not e-prescribe will have their Medicare Part B payments reduced by 1% in 2012, 1.5% in 2013, and 2% in 2014 and subsequent years.

Eligible Professionals. “Eligible professionals” encompass physicians and the following practitioners if they have prescribing authority: physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, certified nurse-midwives, clinical social workers, clinical psychologists, physical and occupational therapists, qualified speech-language pathologists, qualified audiologists, registered dietitians, and nutrition professionals. To qualify for the 2% Medicare e-prescribing financial incentive in 2009, an eligible professional must have at least 10% of total Medicare Part B allowed charges under billing codes “typically billed for services in the office or outpatient setting,” as identified by CMS.[3]

An eligible professional must also use a “qualified” e-prescribing system that complies with the Medicare e-prescribing standards[4] and:

  • Generates a complete active medication list, incorporating electronic data received from applicable pharmacies and pharmacy benefits managers;
  • Allows medication selection, prints prescriptions, electronically transmits prescriptions, and conducts alerts that warn of potentially undesirable or unsafe situations (e.g., inappropriate dosage, inappropriate drug administration, drug-to-drug interactions, allergies, other adverse drug events);
  • Provides information on formulary or tiered formulary medications, patient eligibility, and authorization requirements received electronically from patients’ prescription drug plans; and
  • Provides information (once the application is widely available) on lower cost, therapeutically appropriate alternatives.

Successful e-Prescribing. A “successful” e-prescribing eligible professional must e-prescribe on at least 50% of eligible Medicare patient encounters to earn the 2% Medicare e-prescribing financial incentive for 2009. The eligible professional demonstrates compliance with this measure by reporting to CMS on each eligible Medicare patient encounter claim that:

  • All prescription medications in connection with the encounter were e-prescribed;
  • No prescriptions were generated during the encounter; or
  • Some or all prescriptions generated during the encounter were written or phoned in because (a) the patient requested it, (b) state or federal law required it, (c) the pharmacy was unable to receive e-prescriptions, or (d) a controlled substance was prescribed.

CMS may revise various program elements, including the standards for becoming a “successful” e-prescribing eligible professional, from year to year.

Computer-Generated Fax Exception to Medicare e-Prescribing Standards

CMS reversed course on its elimination of the computer-generated fax exception to the Medicare e-prescribing standards because industry comments demonstrated that “elimination of the use of computer-generated facsimiles would adversely impact the electronic transmission of prescription refill requests.” CMS feared the elimination of the exception “would force dispensers . . . to revert to paper prescribing” for prescription refills.

The exception will expire January 1, 2012, except for transient/temporary network transmission failures. CMS expects that the Medicare e-prescribing financial incentives will by then “provide the ‘tipping point’—an adequate level of industry adoption of e-prescribing using electronic data interchange (EDI) that would in turn move the entire industry toward widespread e-prescribing adoption.”