On September 1, 2011, CMS finalized changes to the 2011 Electronic Prescribing Incentive Program (eRx Program) to address several concerns raised by participants regarding the impact of payment adjustments (i.e., reductions) scheduled to occur in 2012 for those providers who did not become significant eRx prescribers during the 2011 reporting period of January 1, 2011, through June 30, 2011. The final regulations, which were published in the Federal Register, clarify the relationship between the eRx Incentive Program and the Medicare and Medicaid Certified Electronic Health Records (EHR) Incentive Program enacted under the Health Information Technology for Economic and Clinical Health Act (HITECH Act), and add four new hardship exemptions allowing eligible professionals who qualify for such exemptions to avoid the 2012 payment adjustments.


Section 1848 of the Social Security Act, as enacted under Section 132 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), established a new reporting and financial incentive program for qualifying physicians (referred to as "eligible professionals") who are successful electronic prescribers, which began on January 1, 2009. As of 2011, eligible professionals or a group practice meeting the requirements for successful eRx prescribing could earn a one percent incentive payment (based on the allowed Medicare Part B charges of the professional or group practice, as determined by the Secretary of HHS).

After 2011, MIPPA called for a Medicare Physician Fee Schedule (MPFS) payment adjustment to eligible professionals (or their group practice) who are not successful electronic prescribers, as defined in the Calendar Year (CY) 2011 MPFS final rule. For eligible professionals who are subject to the 2012 eRx Program payment adjustment, the fee schedule adjustment would be comprised of a one percent reduction from the MPFS amount reported and that would otherwise apply for 2012. For CYs 2013 and 2014, the potential MPFS reductions are 1.5 percent and 2 percent, respectively, applied to those eligible professionals or their group practices which fail to demonstrate successful e-prescribing during the applicable reporting periods.

Final Rule Changes

In brief, the final eRx Program regulations for the 2011 reporting period make four significant changes to the Program’s measurement, hardship, timing and documentation requirements.

Measurement Criteria Changed to Allow for Use of Certified EHR Technology

With the enactment in July 2010 of the final regulations specifying the "meaningful use" measurement criteria under the Medicare and Medicaid financial incentive program for the meaningful use of Certified EHR Technology under the HITECH Act, uncertainty was created as to whether and how the two incentive programs (eRx Program and EHR Meaningful Use) could be reconciled, or whether providers would be forced to adapt their e-prescribing systems to meet two separate criteria. Under the eRx Program final regulations published September 1, the existing electronic prescribing measure has been revised to state that a qualified electronic prescribing system now includes either a qualified electronic prescribing program that performs the four functionalities originally described in the eRx Program quality measures published in the 2011 MPFS Final Rule (November 29, 2010), or a system comprising "certified EHR technology" as defined under the EHR incentive program regulations at 45 C.F.R. § 495.4 and 45 C.F.R. § 170.102. Thus, by becoming a "meaningful user" of "certified EHR technology" under the EHR Meaningful Use incentive program, an eligible professional also may qualify as a successful eRx prescriber under the eRx Program.

Additional Hardship Exemptions for the 2012 Payment Adjustment

To avoid payment reductions in 2012 under Medicare, an eligible professional or group practice must satisfy and report one of the following exemptions for the 2011 reporting period:

  • The eligible professional is (or the group’s eligible professionals are) registered in the Medicare or Medicaid EHR Incentive Programs and adopted certified EHR technology;
  • The eligible professional or group practice is unable to electronically prescribe due to local, state or federal law or regulation;
  • The eligible professional or group practice had limited prescribing activity; or
  • There were insufficient opportunities to report the electronic prescribing measure.

The above exemptions are in addition to the two exemptions originally contained in the 2011 eRx Incentive Program final regulations published in MPFS Final Rule on November 29, 2010. Those exemptions are: (1) the practice is located in a rural area without high speed internet access, or (2) the practice is located in an area without sufficient available pharmacies for electronic prescribing. See 42 C.F.R. § 414.92 (as amended).

In sum, an eligible professional or group practice will not be subject to the 2012 payment adjustment if any one of the following applies:

  • The eligible professional reports a significant hardship under the exemptions described above, and CMS determines that the hardship code applies and approves the exemption;
  • The eligible professional demonstrates successful electronic prescribing by satisfying the electronic prescribing measure with respect to claims for at least ten unique electronic prescribing events, as reported in the denominator of the eRx Program measure during the 2011 reporting period;
  • The eligible professional does not have at least 100 cases containing an encounter code in the electronic prescribing measure’s denominator;
  • The eligible professional’s allowed charges for covered professional services submitted for the eRx Program’s e-prescribing measure denominator is less than 10 percent of the total 2011 Medicare Part B PFS allowed charges for the eligible professional;
  • The professional is not an "eligible professional" (e.g., a physician (MD, DO or podiatrist), nurse practitioner or physician assistant) as of June 30, 2011, as determined using the primary taxonomy code in the National Plan and Provider Enumeration System (NPPES) and does not hold prescribing privileges. The professional must report g-code G8644 (defined as not having prescribing privileges) at least one time on an eligible claim prior to June 30, 2011.

A participating group practice will not be subject to the 2012 payment adjustment if one of the following applies and is reported to CMS:

  • The group practice satisfies and reports a significant hardship, as described above, in the 2011 self-nomination letter for participation in the eRx Incentive Program and CMS grants the exemption; or
  • The group practice achieves and reports successful e-prescribing by satisfying the e-prescribing measure with respect to claims representing between 75 to 2,500 unique e- prescribing events (depending on the size of the group practice), as reported in the denominator of the e-prescribing measure during the 2011 reporting period.

Extension of Deadline for Requesting Hardship Exemptions

The final regulations extend the deadline for requesting significant hardship exemptions to November 1, 2011. This extended deadline applies to the two significant hardship exemptions established in the 2011 eRx Incentive Program requirements contained in the 2011 MPFS Final Rule, as well as the four additional significant hardship exemptions outlined above.

Web-Based Tool for Requesting Significant Hardship Exemption

To avoid the 2012 eRx payment adjustment, individual eligible professionals will be required to submit significant hardship exemption requests via a web-based tool, and group practices will be required to mail a letter requesting such exemption. Exemption requests are required under MIPPA to be reviewed on a case-by-case basis. Instructions on how to request a hardship via the web-based tool will be available on the eRx Incentive Program website.