MGMA e-Source, Aug. 12, 2008

What the Medicare act's e-prescribing financial incentives mean to you

When Congress overrode the president’s veto of H.R. 6331, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), it approved not only critical Medicare payment provisions, but also an important set of financial incentives to encourage practices to adopt electronic prescribing (e-prescribing).

E-prescribing offers significant benefits to medical practices. It can reduce the number of medical errors caused by drug-to-drug interactions and, from an administrative perspective, can improve a practice’s performance. By automating the prescription refill process and reducing the number of pharmacy callbacks due to improved formulary compliance and illegible handwritten prescriptions, the technology can boost a practice’s bottom line. 

Financial incentives

The bonus program outlined in the legislation is designed to address some of the costs of implementing and maintaining an e-prescribing system — significant barriers to adoption of the technology. Practices that have not adopted e-prescribing at that point will be reimbursed at lower rates.

 

Highlights of the e-prescribing program under the MIPPA incentive program:

In 2009 and 2010, Medicare will pay a 2 percent e-prescribing bonus in addition to the practice’s Medicare fee, for e-prescribing;

In 2011 and 2012, the bonus will drop to 1 percent;

In 2013, the bonus will drop to 0.5 percent; and

If eligible practices do not e-prescribe, the legislation imposes penalties of -1 percent in 2012, -1.5 percent in 2013 and -2 percent in 2014 and beyond.

In a recent press briefing, Department of Health and Human Services Secretary Mike Leavitt indicated that the new bonuses for e-prescribing will be in addition to those paid as part of Medicare’s Physician Quality Reporting Initiative and other Medicare reimbursements. This could mean that a practice could receive up to a 4 percent bonus. .  

 

A study by MGMA’s Group Practice Research Network estimated that unnecessary administrative complexity related to prescriptions costs practices on average $15,700 a year for each full-time physician. This figure is based on time and cost associated with manually processing refills, resolving issues related to formulary (which specifies a patient’s drug coverage) as well as issues related to dosage and legibility. It is important to note that this estimate does not take into consideration the time spent managing faxes…doing so may drive these drive these estimates even higher*.*2004 MGMA – Analyzing cost of administrative complexity in group practice.