Getting Connected: C A L I FOR N I A The Outlook for Electronic Prescribing in California H EALTH C ARE F OU NDATION Introduction Accelerating e-prescribing adoption in California Over the past three years, electronic prescribing will require a coordinated effort from all (e-prescribing) has gained considerable attention stakeholders. This could include advocacy to from policymakers at both the state and national model state policy after federal legislation and level. Successful pilot projects in Florida, education to describe benefits that generate Massachusetts, southeast Michigan, and elsewhere support for e-prescribing programs. Collaboration Issue Brief have demonstrated the technology’s value to among payers to align incentives (and penalties) providers, health plans, pharmacies, and patients in to support e-prescribing by contracted providers improving patient safety, producing efficiency, and and similar programs for pharmacies should be reducing out-of-pocket expenses. However, despite considered. Finally, providers and pharmacies may the considerable benefits of e-prescribing, it has yet need tools and technical assistance to support to be widely adopted. Persistent barriers remain, e-prescribing. including the costs involved in implementing the technology at provider practices, clinics, Background and pharmacies; legal restrictions that prevent Paper-based prescribing processes are inefficient; electronic prescribing of controlled substances; and relying on phone calls and faxes between fees associated with using e-prescribing networks. pharmacies and physician offices can account for up to 25 percent of pharmacists’ time and 20 This year, Congress passed the Medicare percent of the workload for the staff in physician Improvements for Patients and Providers Act offices.1 In California, the administrative cost (MIPPA), a package that mandates e-prescribing associated with dispensing drugs for a Medicaid incentive payments starting in 2009 and beneficiary is $13.18 per prescription — the imposes penalties for those who do not adopt highest in the nation.2 e-prescribing by 2012. The introduction of such federal incentives (which often prompt private Paper-based prescribing is also unsafe. The payers to follow suit) has sharpened the focus Institute of Medicine estimates that, nationwide, on e-prescribing. This issue brief examines the as many as 7,000 people die each year from technology’s progress in California and describes medication errors. Most of these deaths could be how greater alignment of health care stakeholders avoided if providers had access to accurate and can stimulate adoption. Definition of E-Prescribing E-prescribing is the transmission, using electronic media, of prescription or prescription-related information between a prescriber, dispenser, pharmacy benefit manager, or health plan, either directly or through an intermediary, including an e-prescribing network. E-prescribing includes, but is not limited to, two-way transmissions between the point of care and the dispenser. Centers for Medicare and Medicaid Services. 42 C.F.R. Part 423. N ovember 2008 complete information about their patients and could Connecting Providers and Payers avoid writing their prescription orders by hand.3 E-prescribing is most valuable to providers when it gives them complete information about their patients. Americans increasingly rely on prescription medicines The majority of such information, including pharmacy to manage their health. Fifty-one percent of children history, insurance eligibility, and formulary information and adults in the United States are taking one or more is delivered to providers through RxHub, a network of prescription drugs for a chronic condition, and one in three major pharmacy benefit managers who formed a four seniors are taking five or more medicines regularly.4 joint venture in 2001 to enable electronic data exchange. Given the increased administrative burden imposed by Through this network, providers can retrieve a patient’s the growing demand for drug therapies, e-prescribing has eligibility, medication history, and formulary information the potential to help reduce costs while improving patient from health plans that make it available. According to safety and the quality of care. one national survey, such transparency may account for as much as 70 percent of the value and patient safety The State of E-Prescribing in California benefits attributable to e-prescribing.8 In California, In 2007, California’s retail pharmacies filled more than however, it is estimated that less than 30 percent of payers 268 million prescriptions. Of these transactions, an are making this information available through RxHub.9 estimated 2.4 million were sent electronically between physician practices and pharmacies.5 While this is a Connecting Providers and Pharmacies significant improvement from the 311,097 recorded Retail pharmacies and physicians transmit prescription in 2005, it represents only 1.2 percent of the total information electronically using the SureScripts network. prescriptions written in California each year.6 (These SureScripts was founded in 2001 by the National figures do not include closed systems such as Kaiser Association of Chain Drug Stores (NACDS) and the Permanente or the Veterans Administration; prescriptions National Community Pharmacists Association (NCPA). generated electronically and printed at the point of care; In 2008, SureScripts reported that 70 percent of or those sent to pharmacies via fax.) California’s 6,557 retail pharmacies were able to connect with the Pharmacy Health Information Exchange Physicians who want to switch to e-prescribing face (PHIE) network, yet only 53 percent use it regularly. a myriad of barriers, including technology costs, On the provider side of the transaction, the inability productivity and workflow disruption, and lack of to connect to a particular pharmacy through the PHIE technical support. Successful initiatives are characterized means physicians must revert to using handwritten, by providers who: printed, or faxed prescriptions. The interdependency between providers and pharmacies highlights the K Have realistic expectations for and understanding of importance of the local pharmacy participation and the e-prescribing; need to promote pharmacy readiness alongside provider K Effectively integrate e-prescribing technology into adoption. Encouraging e-prescribing will require that their clinical workflow; and both pharmacies and providers receive adequate technical assistance and support. K Receive sufficient technical support, either from on-site staff or a helpdesk.7 E-Prescribing Tools and Standards Technology vendors offer both stand-alone applications and e-prescribing tools embedded in electronic health 2  |  California HealthCare Foundation record systems. Over 130 technology vendors are able to Federal Support route prescriptions to retail pharmacies using the PHIE A number of federal agencies, most notably CMS and and over 50 vendors have access via RxHub.10 the Drug Enforcement Administration (DEA), are taking steps to support e-prescribing, either through E-prescribing also requires the use of standards to modifications to existing programs or regulations. exchange data. A successful 2006 Centers for Medicare and Medicaid Services (CMS) pilot project resulted in a Medicare Package final CMS rule requiring Medicare providers to follow In July 2008, Congress passed the Medicare the approved standards beginning in April 2009. The Improvements for Patients and Providers Act, which rule details key components of the e-prescribing standard, includes e-prescribing incentives and penalties that including: combine to impose a carrot-and-stick approach to promoting broader adoption. The law provides a K Formulary and drug benefit plan information; reimbursement bonus of 2 percent for providers who K Medication history; have switched to e-prescribing by 2009, an amount that shrinks to 1 percent in 2011 and 0.5 percent in 2013. K Fill-status notification; and Providers who fail to make use of the technology will K Required use of the National Provider Identifier begin to see their payments reduced by 1 percent in 2012, system mandated under the Health Insurance 1.5 percent in 2013, and 2 percent in 2014 and beyond. Portability and Accountability Act of 1996. The CMS planning efforts around the rule’s Other medication standards, terminology, and real-time implementation include regional telephone briefings and prior-authorization standards are being refined. a national conference to explain the new e-prescribing incentives for Medicare and address potential obstacles. Policymaking and E-Prescribing Medicare Part D California The most immediate change likely to spur e-prescribing Citing the overwhelming number of patient deaths and adoption is the Medicare Part D requirement that costs due to medical errors and adverse drug interactions, prescription drug plans accept such transactions. The Governor Arnold Schwarzenegger proposed universal federal mandate applies to patients and prescriptions e-prescribing by 2010 as a key component to achieving covered under Medicare Part D and will become effective affordable, safe, and accessible health care for all in April 2009. The data sharing that must be supported Californians.11 between providers and pharmacies include: K Patients’ medication histories; California’s legislative leadership has also highlighted the need to support greater adoption of e-prescribing. K Health plan formularies and benefits information, In California, the Medication Errors Panel, authorized including the availability of generic drugs; and through a resolution introduced by Senator Jackie K Prescription fill-status notification, enabling Speier, recommended that the state improve prescription pharmacies to alert providers when patients’ transcription and transmission processes by supporting prescriptions are dispensed.14 the adoption of e-prescribing.12,13 Getting Connected: The Outlook for Electronic Prescribing in California  |  3 In anticipation of these requirements, payers are project includes an incentive program, as well as baseline upgrading their systems to accept and support electronic and follow-up surveys to measure physician satisfaction. transactions before the April 2009 deadline. Because Benefits identified to date include time savings to payers’ reimbursement structures tend to follow CMS’s providers and staff from electronic renewals and the lead, it is expected that those participating in Medicare elimination of illegible handwriting; fewer adverse drug Part D will likely extend their electronic prescribing interactions; and greater use of generic medications. capabilities to other lines of business. DEA-Proposed Rule Change Regional Successes Across the Country The Drug Enforcement Administration prohibits Florida: ePrescribe Florida is a collaborative effort controlled substances (Schedule II-V drugs) from being driven by Florida health plans. To date, the collaborative has released a registered vendor list tied to the state’s prescribed electronically. This presents a significant hurdle existing pay-for-performance program and developed a for e-prescribing providers who are forced to maintain Web “clearinghouse” designed to foster the adoption parallel workflows — an electronic one for non-controlled of e-prescribing throughout the state. The clearinghouse substances and a paper process for controlled drugs. A can be found at www.fhin.net/eprescribe/Index.shtml. proposed rule from the DEA would impose tight controls Massachusetts: Massachusetts Health Data Consortium for e-prescribing of controlled substances with several (a.k.a. MA-SHARE) members initiated a project in 2006 to provide e-prescribing capability to the state’s restrictions. In anticipation of the DEA’s rule change, the two largest academic medical centers. The resulting California Legislature has enacted a statute stating that RxGateway product is intended to be a springboard for electronic prescriptions need not be replicated on paper.15 larger clinical data exchange. The participating payers However, until the DEA modifies its Schedule II-V harmonized their incentives to encourage physician adoption. standards, California pharmacies must continue to create paper copies of these prescriptions. Michigan: The Southeast Michigan E-Prescribing Initiative (SEMI), initiated by the region’s major automotive employers, used direct incentives to Regional Pilot Programs encourage physicians to adopt e-prescribing technology. While state and national leaders are focused on Active in seven counties, SEMI is approaching 3,000 developing policies and financial incentives to encourage prescribers and generating 4,000 prescriptions per adoption of e-prescribing, privately funded initiatives are month. fostering their own efforts that may provide insights into Mississippi: The state Medicaid program has reported best practices, as well as useful lessons. Together, these over $14 million in savings following the implementation of an e-prescribing and clinical decision-support system programs have the potential to demonstrate e-prescribing’s for over 200 providers. Providers are able to access value to providers throughout the spectrum of care 100-day prescription histories and other tools for settings, including rural and safety-net clinics and private Medicaid patients via handhelds and a mobile-phone practices. network. L.A. Care Health Plan The L.A. Care Health Plan is the largest public health Northern Sierra Rural Health Network plan in America, with 10,000 physicians serving 780,000 The Northern Sierra Rural Health Network (NSRHN) members from low-income and vulnerable populations. is implementing e-prescribing through a stand-alone L.A. Care is providing a stand-alone e-prescribing system application, meaning one that is not integrated with and training to 150 high-volume prescribers. The pilot an electronic health record system. The pilot program, 4  |  California HealthCare Foundation funded by the Blue Shield of California Foundation and insurance eligibility, formulary, and medication history the California HealthCare Foundation, includes rural as part of electronic transactions. hospitals, clinics, providers, and pharmacies, as well as .Increase pharmacy participation. Thirty percent of 2 the SureScripts-RxHub network, and the California California’s retail pharmacies cannot electronically Department of Health Care Services (DHCS). DHCS is receive or transmit prescriptions. Most connected sharing eligibility, formulary information, and medication pharmacies are members of or affiliated with large histories to participating NSRHN pilot sites. The project chains, while smaller and independent pharmacies will bring the data to six clinics and two hospitals over are less likely to be connected and are thus impeding 12 months. providers’ abilities to route electronic prescriptions to their patients’ pharmacies of choice. California Health Care Safety Net Institute The California Health Care Safety Net Institute (SNI) .Increase provider adoption. Most of the providers 3 promotes quality improvement and innovation among the who now use e-prescribing are affiliated with large members of the California Association of Public Hospitals closed systems. While California’s physicians are and Health Systems (CAPH). SNI designed a program distributed across urban and rural regions and among to promote safe and efficient e-prescribing practices for various practice sizes and settings, the majority provide the underserved and uninsured in California’s public patient care in solo and small group practices. Targeted hospital clinics. SNI has engaged four CAPH member efforts and investments should be made to overcome organizations, their outpatient pharmacies, and two barriers to adoption in solo and small group practices, outpatient clinics per site in a pilot program to extend including cost and lack of technical support. e-prescribing technology to ambulatory care providers. .Raise awareness and demand among purchasers 4 As the sites go live with their selected e-prescribing tools and consumers. Communications targeted to the throughout 2009, CAPH hopes that the program will health plans, employers, and consumers outlining the help pave the way for broader use among their remaining benefits of e-prescribing are limited to a few national member public hospitals and health systems. initiatives and resources. As more purchasers and consumers understand how e-prescribing can improve A Framework for E-Prescribing Adoption convenience, communication, and patient care, they in California will direct business toward health systems that use The California HealthCare Foundation recently electronic methods. conducted a California market assessment in which more than 30 health care industry leaders were interviewed Recommended Approaches for Adoption about their respective roles in advancing e-prescribing. Accelerating e-prescribing adoption in California will Stakeholders discussed strategies for overcoming barriers, require a coordinated, multi-stakeholder effort. The suggested tactics to accelerate adoption, and identified approach could focus on three categories: (1) strategies several key objectives to support a statewide program: for improving e-prescribing awareness that address .Increase payer participation. The majority of 1 privacy issues and education for consumers, providers, California payers are not connected to RxHub, and pharmacies; (2) collaboration to ensure alignment of limiting the value of e-prescribing to most providers. incentives and a shared common vision and objectives; The April 2009 Medicare Part D requirement is a and (3) support for providers and pharmacies to help critical incentive that can be used to expand payers’ them implement e-prescribing technology. ability to provide information about a patient’s Getting Connected: The Outlook for Electronic Prescribing in California  |  5 Advocacy and Education Conclusion To gain traction, e-prescribing initiatives should increase California policymakers face a difficult task in visibility and define the technology’s benefits and progress spearheading the promotion of e-prescribing and will to decisionmakers. In addition, stakeholders could need to develop a comprehensive strategy to support encourage the state to consider modeling a policy on the providers, pharmacies, and patients. While the sheer recent successful federal Medicare legislation, following size and diversity of California’s population and health through on the governor’s recommended legislative care infrastructure is daunting, coordination of public language outlining specific e-prescribing activities and and private sector initiatives, actions, and programs is acting on the recommendations of the Medication Errors necessary. Panel. For their part, California stakeholders must also come Stakeholders should create a forum for developing together to develop and agree upon a statewide plan that models that describe the benefits of e-prescribing to their sets forth goals and principles to support e-prescribing constituencies, and guide executive-level understanding and ensure accountability. Such a plan cannot be led by and support for e-prescribing programs. A statewide any one stakeholder alone — it is dependent upon all to education campaign could help promote understanding of align their efforts and achieve success. e-prescribing among consumers and purchasers. Collaboration Preparing for the broad adoption of e-prescribing About the Author will require that providers, payers, and pharmacy Timathie Leslie, managing director, Manatt Health Solutions organizations find ways to coordinate their efforts and Libby Sagara, manager, Manatt Health Solutions bring their incentives into alignment. Many successful Kier Wallis, analyst, Manatt Health Solutions e-prescribing initiatives across the country rely on varying levels of collaboration, ranging from loose affiliations About the F o u n d at i o n to public-private partnerships with formal governance The California HealthCare Foundation is an independent structures convened under executive mandate.16 Exploring philanthropy committed to improving the way health care the spectrum of collaborative models will help determine is delivered and financed in California. By promoting the appropriate level of public and private stakeholder innovations in care and broader access to information, our engagement and investment necessary to develop a goal is to ensure that all Californians can get the care they statewide e-prescribing program for California. need, when they need it, at a price they can afford. For more information, visit www.chcf.org. Program Support Greater adoption of e-prescribing is predicated upon the development and distribution of technical, implementation, and operational tools for providers and pharmacies. By enabling them to optimize and manage the technology, as well as supporting their willingness to use it, those who have not yet made the switch to e-prescribing may become more open to its possibilities. 6  |  California HealthCare Foundation Endnotes 1 2.Medication Errors Panel report. Prescription for Improving Patient Safety: Addressing Medication Errors. March 2007. 1.Sarasohn-Kahn, J, Holt, M. The Prescription Infrastructure: Available at www.cdcan.us/health/medicationserrorpanel- Are We Ready for ePrescribing, California HealthCare fullfinalreport.pdf. Foundation, Oakland, CA. January 2006. Available at www.chcf.org/topics/view.cfm?itemID=118337. 1 3.Recognizing that electronic systems alone cannot solve the medication error epidemic in California, the panel also 2.National Study to Determine the Cost of Dispensing recommended establishing programs to increase consumer Prescriptions in Community Retail Pharmacies. Grant education about safe medication practices; creating incen- Thorton, LLP. January 2007. tives for pharmacist medication consultation activities; 3.Institute of Medicine. To Err is Human: Building a Safer conducting additional training for health care providers; Health System. November 1999. and increasing research on the nature and frequency of medication errors in the state. 4.Medco Health Solutions Inc., 2008. 1 4.Department of Health and Human Services. Centers for 5.SureScripts. National Progress Report on E-Prescribing. Medicaid and Medicare Services. Electronic Prescription December 2007. Available at www.surescripts.com/report. Drug Program, 42 C.F.R. sec. 423.159 (2008). 6.SureScripts Pharmacy Health Information Exchange, 2008. 1 5.CA Health and Safety Code § 11164.5. 7.Crosson J, Isaacson N, Lancaster D, McDonald E, Schueth 1 6.eHealth Initiative and the Center for Improving Medicaid A, DiCicco-Bloom B, et al. “Variation in electronic Management. Electronic Prescribing: Becoming Mainstream prescribing implementation among twelve ambulatory Practice. Washington D.C. June 2008. p. 64. practices.” Journal of General Internal Medicine. April 2008. 23(4):364 – 71. 8.“Options to Increase E-Prescribing in Medicare: Reducing Medication Errors and Generating Up to $29 Billion in Savings for the Federal Government.” Gorman Health Group. July 2007. 9.One major step toward achieving greater pharmacy and payer connectivity occurred when SureScripts and RxHub merged on July 1, 2008 to form one single network for the exchange of pharmacy information. SureScripts- RxHub expects to transmit information affecting over 200 million patients in 2008. 1 0.“RxHub Technology Solution Partners for the Ambulatory Setting.” Available at www.rxhub.net/images/pdf/partners/ rxhub_technology_solution_providers-ambulatory.pdf. 1 1.Governor‘s Health Care Proposal. January 8, 2007. Available at gov.ca.gov/pdf/press/Governors_HC_ Proposal.pdf. Getting Connected: The Outlook for Electronic Prescribing in California  |  7