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Information technology has enhanced operational activities throughout the health care industry. Much has been discussed in financial analysis, price, and acquisition discrepancies. The decision to acquire and implement technology, and justify the cost has perplexed physicians and health care facilities.
Assume you are an office manager in a physician’s group practice. As the office manager, you have been asked to review and explain the financial implications of implementing electronic medical records (EMR). You will address potential areas of financial concernand provide your recommendation to the physician’s group on whether or not to implement EMR.
Create a 12- to 15-slide Microsoft® PowerPoint® in which you outline the following areas of financial concern and conclude with your decision on whether you would recommend EMRs to the stakeholders. Include detailed speaker notes.Cite at least three outside sources and your textbook. Discuss the following areas with the focus on the financial aspects:
·
Implementation process; This should be your introductory slide.
o
Why implement?
o What is involved?
· Financing technology; Choose at least five.
o Capital expenditures
o Opportunity costs
o Budgeting, cash flow
o Depreciation
o Present value
o Payback
o Projected revenue
o Overall costs
· Costs not considered in the implementation process; Choose at least two.
o Threat of litigation
o Layout of facility
o Life expectancy and value of the equipment
o Maintenance
o Increase in operational costs
· Financial incentives for implementing new forms of technology: Choose at least one.
o Government, as in Medicare reimbursement
o Health care professional societies
o Health plans, as in pay-for-performance programs
o Quality improvement agencies that may offer financial incentives, such as the National Committee for Quality Assurance, the Utilization Review Accreditation Committee, or the Joint Commission
· Advantages and disadvantages
· Final recommendation
Format your presentation consistent with APA guidelines:
· Title slide
· Introductory or overview slide
· Slides presenting the information required for the assignment
· Detailed speaker notes with in-text citations
· Recommendation or summary slide
· Reference slide
Post your final project as an attachment.
ELECTRONIC MEDICAL RECORDS
IMPLEMENTATION
1
Why to use New System?
Electronic Medical Records
Medical Record Errors
Illegible handwriting
Medical Abbreviations
Handwritten medical notes
Accuracy
But is costly
Training
Setting up software
There are various reasons as to why medical abbreviations are not used any more in the hospitals. One of main reasons is the medical errors. Stopping the medical abbreviations use helps in reducing medical errors. Though this does reduce some medical errors, but still there are mistakes that do exist. There may be some charting errors that could be minimized by keeping a person to check through before submitting the record. This would, however, cause to increase scheduling time and thereby increase the cost through overtime. The most productive way to deal with this would be a computerized system where patients’ charts and notes are placed. Like in other programs, a red flag could be used to question any medical abbreviations and the medical staff has to accept this before proceeding. The system would be a bit expensive but would be hassle free from inaccuracy and having to undergo lawsuit for malpractice. Electronic Medical Records are thus the best means to reduce medical errors.
2
Steps for Implementation
Choosing Software
Choosing Vendor
Testing
Training
Support
Beginning of this year, a testing of Practice Partner Patient Records was tried. This software was chosen as it provided a set of new innovative tools for improving efficiency of the office and clinic along with improving the quality of care. The software helps to replace the paper charts with a completely intuitive and user-friendly interface with built-in security. This easy-to-learn and easy-to-use EHR system is suitably enough for any office (Sunrise Services, 2005). This software was installed in one of our clinics with 14 examination rooms and 2 treatment rooms. In terms of staffs, there are 8 full-time physicians, 2 part-time physicians, 2 Certified Physician Assistants, 2 fulltime lab technicians, 26 full- and part time office and medical staffs. There are around 15,000 patients annually visiting the clinic.
3
Financial Pros and Cons
Capital Expenditure
Long-term improvement Costs
Medical equipment expenditure
Very costly lawsuits
Electronic Medical Records will reduce medical errors
To shift to paperless system, we do need to have sufficient capital. Though most medical personnel voiced using Electronic Medical Records, there is still in need of convincing a large group of people on why we require Electronic Medical Records. The privacy and security of the patients are the growing concerns in regards to Electronic Medical Records. It would follow HIPAA guidelines. The Electronic Medical Records would definitely help to reduce medical errors, thereby decreasing hassles of expensive lawsuits. The Electronic Medical Records allows us to provide patients with the latest technology in healthcare sector.
4
Financial Pros and Cons
continued
Current value
value of a future payment on a given date
Definitely financial gain – Huge saving on implementing an EMR
Reduction in
Lawsuits
Undesirable Drug Events
Needless medical testing
Additional hospital stays
Unapproved claims
The studies regarding financial effects through Electronic Medical Records have not been conducted much, though some studies are available. One of such study was conducted in ambulatory setting. The collected data showed that on approximately 86,400 savings to the healthcare provider on an average in 5 years’ time period. This saving came from expenses in drugs, reduction in expenses in radiological testing, reduction in errors in billing and improved billing charge capturing system (Wang, 2003). The study also showed that the Electronic Medical Records prevented 47,000 undesirable drug events.
5
Financial Pros and Cons
continued
Projected Revenue
to estimate what will the revenue be
Electronic Medical Records save expenses by
Reduction in
Office personnel and staffs
transcriptionists
chart storage cost
Enhances
emergency room coding
evaluation and management coding
Today’s advanced technology allows medical personnel accessing the medical records from their clinics or hospitals or even from their homes. The medical doctors even can have video conference or chat with specialists residing in different state, city or country for improving the quality of healthcare service they provide. There is added advantages and financial benefits with the implementation of Electronic Medical Records. It eliminates the chart storing area and expensive paper files. It helps in increasing revenue through improved evaluation and management coding system. The financial benefits arises from the increased revenue and reduced operational costs, right from the first year of its implementation. The study also showed that there is approximately 8.2 million financial saving over the 5 years’ time period.
6
Financial Pros and Cons
continued
Opportunity Costs
The cost of passing the next best choice when acquiring a decision
One option vs another option
Implementation cost
Comparing financial loss in each options
Installation of an Electronic Medical Records system in a clinic costs approximately $45,000 per full-time physician. The initial setup cost is $45,000 per physician along with $8500 yearly maintenance cost of the system and approximately $25,000 for the training. During the negotiation, extra training can be placed as a condition for purchasing and installing the EMR System. It is projected that we could regain the cost back from the system in 2 ½ years with a profit of $23,000 per physician. There are some drawbacks too with the installation of the system. There would be decrease in patient seen per day for the first month as it would take some time to get into the system and use it and the number of patient would then increase. Another issue is hardware cost which may account up to $140,000 or more along with software for lab. Apart from this, there would also be bugs to work out with.
7
Financial Pros and Cons
continued
Overall Costs
Costs required to implementing EMR
Hardware
Software
Training
staff
support
user friendly
It is very necessary that we do study on Return on Investment before we do any purchase decision. It is more so for Electronic Medical Record system as the installation cost is pretty high and may vary from one company to the other. For an instance, if a physician checks 30 patients a day with around 2500 active patient base. Now taking a ratio of 3:1, the clinic receives approximately 100 calls per day for appointment, medication refill, billing request and other queries. The license on Electronic Medical Records software ranges from $1,000 – $25,000 with an average of $10,000 for a license of full Electronic Medical Records system while an entry level system costs around $1,000. The implementation costs ranges from $75 to $150 an hour. The average implementation time is about 35 hours. The training hours is of 35 out of which 10 hour is for actual computer training and 10 hours for customizing the system so as to fit the organizational need. Higher the number of physician, lower will be the overall cost of implementation cost. To make it more clear, let’s see an example. Let’s assume an hourly rate of $100 and the assistant ratio 3:1. We are assuming that every provider has an IPad costing $1000, a server costing around $2,000, and a room accommodating 3 nurses costing up to $1,000. Apart from these, there is recurring annual maintenance cost to be contracted with the vendor which would cover for both technical support along with software updates. Then, there would be a need of local IT guy who would deal with other technical issues with hardware or the network as required.
8
Surprise costs
Legal Threats
Reduction in Lawsuits
Lifetime storage
Maintenance
Yearly maintenance cost
Increase in utility bill
Though the initial set up cost for an Electronic Medical Records system is pretty high, we can save lots of time any money in the long run that is spent on charting files, arranging papers, filing personnel, storage area and fees and salaries. The cost for filling charts and billing of all the patients would keep on increasing. With the implementation of EMR, the legal threats decreases since all the information could be stored for a longer period should lawsuits do arise. There is also power consumption increment and yearly maintenance associated with the EMR software implementation that would increase expenses.
9
Incentives
Federal grants
Medicare incentives
Tax credits
Software stimulus packages
There are some financial supports given by government for setting up Electronic Medical Records system. There are even federal grants supporting financially the Electronic Medical Record system. There are Medicare incentives of up to $44,000 or Medicare up to $63,750 for the significant use of certified EMR software system (Medical Software and EMR/EHR Software). Tax credits for 2011 equals to sum of about $250,000 with a depreciation bonus of 50% (Medical Software and EMR/EHR Software). The government is showing keen interest in decreasing medical errors through the Electronic Medical Records system use. There is lots of information regarding Electronic Medical Record system which one must read and select the one that suits the facility the most. The benefits of EMR implementation is the financial incentives provided through different agencies, reduction in expenses of initial capital and the increased efficiency with tie implementation of EMR system.
10
Review
Advantages
Patients
Improved healthcare
Accuracy
Faster treatment & decisions
Organization
Transferring patient information
Increased number of patient seen daily
Reduced operational costs
Let’s look at some of the advantages from the patients’ perspective. From the patients’ point of view, they get improved diagnosis and faster treatment. Considerably less errors in the patients’ clinical records. The decision of treatment plan and healthcare are faster and better from the physician assigned to them.
From the viewpoint of the physicians’ point of view, the transfer of data from one department to other is faster and efficient. It’ll also help to increase the number of patient seen per day. The significant advantage comes from the reduced operational cost like transcription services and salaries (Pros & Cons of Electronic Medical Records).
11
Review
Disadvantages
Patient
Privacy
Distractions
Reduced personal touch
Organization
Costly
Maintenance
Training
There is high concern regarding patient information security. If the patient’s personal information is leaked, it would be violation of HIPAA laws. Since the physicians type out the information in computer, the personal touch between physician and patient is lost or reduced. Some even believe the computer becomes a distraction between physician and patient, making the patient feel they are less cared than they are seeking or deserve. Apart from these, the EMR system is expensive, as have been discussed throughout the presentation. Training of medical personnel to use it makes it further costly. So is for the maintenance, updates and technical support. Some of the people don’t even adapt to technical changes so easily and they don’t prefer to change.
12
Conclusion
There are various advantages on implementation of an Electronic Medical Record system. There are some disadvantages associated with it too. Electronic Medical Records helps to improve patient healthcare. Electronic Medical Records are not misplaced like paper files or records. The information kept in Electronic Medical Records is far more accurate and legible compared to paper record ones. Potential human errors are reduced considerably through Electronic Medical Record system as opposed to paper charts entered manually. Some of the medical staffs would not prefer using EMR System as they are less adaptive to the technology changes and would be overwhelmed using computerized system entering the medical records. Since the initial set up cost is high, there is loss of revenue at the initial phase though it has many positive gains. EMR not only maintains the information but also organizes these for further use. EMRs can also be used as guides for providers for their daily rounds. To sum up, EMR implementation will provide best healthcare possible to the patients.
13
References
Reference:
Choosing an EMR: Pricing and Cost. (2008). Retrieved ————-, from Medscape news: http://www.medscape.com/viewarticle/571849_3
EMR Costs. (2011). Retrieved November 2, 2011, from EMR Consultant: http://www.emrconsultant.com/education/emr-costs
EMR ROI (Return on Investment). (n.d.). ——————–, from EMR Experts: http://www.emrexperts.com/emr-roi/index.php
Gurley, L. (2004). Advantages and Disadvantages of the Electronic Medical Record. Retrieved —————-, from American Academy of Medical Administrator: http://www.aameda.org/MemberServices/Exec/Articles/spg04/Gurley%20article
Medical Software and EMR/HER Software (n.d.). ———————-, from MDS Medical Software: http://www.mdsmedicalsoftware.com/
Pros & Cons of Electronic Medical Records (n.d.). —————–from Micro MD: http://www.micromd.com/emr/advantages.html
14
References
References:
Smith, P. (2003, May). Implementing an EMR System: One Clinic’s Experience. Retrieved ————————–, from American Academy of Family Physician: http://www.aafp.org/fpm/2003/0500/p37.html
Stein, L. D. (1997). The Electronic Medical Record: Promises and Threats. Retrieved ——————, from Oreilly: http://oreilly.com/catalog/wjsum97/excerpt/
Sunrise Services. (2005). Retrieved —————-, from Practice Parteners Electronic medical Records: http://www.ppemr.com/
Wang, S. (2003, April 1). A Cost-Benefit Analysis of Electronic Medical. Retrieved ————————–, from http://www.tss.dsu.edu/sdehra/documents/WangEMRCostBenefit
Weil, I. S. (n.d.). Top 10 Factors to Consider Before Purchasing and Implementing and EMR System . Retrieved —————–, from The Camden Group: http://www.thecamdengroup.com/pdfs/Weil_EMR_Consider_Before_Purchasing_and_Implementing_EMR_System
15
231
Information
Systems Changes:
The Manager’s
Challenge
20
C H A P T E R
OVERVIEW: THE MANAGER’S CHALLENGE
Information systems changes are both a challenge and
an opportunity for the manager. Chapter 19 described
the overall healthcare system changes that are occurring
right now. This chapter follows up by discussing the tech-
nical aspects of both ICD-10, e-prescribing, and what you
need to know about implementing them. These changes
are expected to transition over a period of years (see Fig-
ure 19-1 in the preceding chapter for an overview of
compliance dates). During this transition period a man-
ager who understands the underlying technology issues
can develop and/or strengthen needed skills. Then, he
or she is in a position to support the implementation
plan and work to assist change within the organization.
SYSTEMS AND APPLICATIONS AFFECTED BY
THE ICD-10 CHANGE
The ICD-10 technology changes that we will discuss in
the following section impact a broad variety of systems
and applications. It is important for the manager to fully
understand the breadth and depth of change that is re-
quired by the technological transition from ICD-9 to
ICD-10. Figure 20-1 illustrates the types of systems and
applications that must change.
Twenty-five different examples of various systems and
applications are contained in Figure 20-1, divided into
three categories as follows:
1. Necessary revisions to vendor software and systems
2. Systems used to model or calculate that are impacted
3. Specifications that will need to be revised1
After completing this chapter,
you should be able to
1. Understand why the change to
ICD-10 codes is a technology
problem.
2. Compute ICD-10 training
costs.
3. Define lost productivity costs.
4. Understand the three
categories of “eligible
professionals” within the
e-prescribing incentive
program.
5. Understand the five
requirements for a qualified
e-prescribing system.
6. Understand why claim form
inputs are required to receive
e-prescribing incentive
payments.
P r o g r e s s N o t e s
ICD-10 TECHNOLOGY CHANGE
DETAILS
Examining the details of ICD-10 code set
changes will help you more fully understand
the technological problems that manage-
ment will face in this transition.
Understand Technology Issues and
Problems
The scope of change is illustrated in the
next three exhibits as follows.
Comparison of ICD-9-CM and
ICD-10-CM Diagnosis Codes
There were approximately 13,000 ICD-9-CM
diagnosis codes; now ICD-10-CM has ap-
proximately 68,000 diagnosis codes, or
more than a five hundred percent increase.
ICD-9-CM diagnosis codes had three to five
characters in length, while ICD-10-CM’s
characters are three to seven characters in
length. This generally means input fields
have to be lengthened in order to accom-
modate seven characters. In addition, ICD-
9-CM’s first digit may be alpha (E or V) or
numeric, and digits two to five are numeric,
while ICD-10-CM’s first digit is alpha, digits
two and three are numeric, and digits four
to seven are either alpha or numeric. This
change means reprogramming will be re-
quired for many applications. Exhibit 20-1
sets out a comparison of ICD-9-CM versus
ICD-10-CM diagnosis codes. The exhibit in-
cludes six benefits of the new code set in ad-
dition to the three differentials previously
discussed in this paragraph.
Comparison of ICD-9-CM and
ICD-10-CM Procedure Codes
There were approximately 3,000 ICD-9-CM
procedure codes; now ICD-10-CM has ap-
proximately 87,000 available procedure codes, or 29 times as many available codes. ICD-9-
CM procedure codes had three to four numbers in length, while ICD-10-CM’s characters
232 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
Necessary Revisions to Vendor
Software and Systems for Transition
from ICD-9 to ICD-10 include:
Ambulatory systems
Billing systems
Patient accounting systems
Physician office systems
Practice management systems
Quality measurement systems
Emergency department software
Contract management programs
Reimbursement modeling programs
Financial functions such as-
Code assignment
Medical records abstraction
Claims submission
Other financial functions
Systems used to model or calculate are
also impacted by the use of ICD-10
code sets:
Acuity systems
Decision support systems and content
Patient care systems
Patient risk systems
Staffing needs systems
Selection criteria within electronic medical
records
Presentation of clinical content for support of
plans of care
Specifications that will need to be revised
for ICD-10 use include specifications for:
Data file extracts
Reporting programs and external interfaces
Analytic software that performs business analysis
Analytic software that provides decision support
analytics for financial and clinical management
Business rules guided by patient condition or
procedure
Figure 20–1 Systems and Applications Affected by
the ICD-10 Change.
Source: 74 Federal Register 3348-9 (January 16, 2009).
are alpha-numeric and seven characters in length. This generally means input fields have
to be lengthened in order to accommodate seven characters and possibly reprogrammed
to accept alpha characters. Exhibit 20-2 sets out a comparison of ICD-9-CM versus ICD-10-
CM procedure codes. The exhibit includes seven benefits of the new code set in addition
to the two differentials previously discussed in this paragraph.
An Example: Comparison of Old and New Angioplasty Codes
Exhibit 20-3 sets out one example of the proliferation of codes. In the ICD-9-CM, angio-
plasty had one code (39.50). In the ICD-10-PCS, angioplasty has 1,170 codes.2 The Wall
Street Journal even used this example in a headline: “Why We Need 1,170 Angioplasty
Codes.”3
The Manager’s Role
You the manager need to identify tasks required during the transition period and perform
them. These tasks could involve aspects of planning, creating, evaluating, testing, or even
ICD-10 Technology Change Details 233
Exhibit 20–1 Comparison of ICD-9-CM and ICD-10-CM Diagnosis Codes
ICD-9-CM Diagnosis Codes ICD-10-CM Diagnosis Codes
3-5 characters in length
Approximately 13,000 codes
First digit may be alpha (E or V) or
numeric; digits 2-5 are numeric
Limited space for adding new codes
Lacks detail
Lacks laterality
Difficult to analyze data due to
non-specific codes
Codes are non-specific and do not
adequately define diagnoses needed
for medical research
Does not support interoperability because
it is not used by other countries
Source: 73 Federal Register 49803 (August 22, 2008).
3-7 characters in length
Approximately 68,000 available codes
Digit 1 is alpha; digits 2 and 3 are
numeric; digits 4-7 are alpha or
numeric
Flexible for adding new codes
Very specific
Has laterality
Specificity improves coding accuracy and
richness of data for analysis
Detail improves the accuracy of data used
for medical research
Supports interoperability and the
exchange of health data between other
countries and the United States
234 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
all of the above. In other words, you as an observant manager can work to support aspects
of the implementation plan that fall within your areas of responsibility, whether it involves,
for example, information technology or the training plans.
ICD-10 TRAINING AND LOST PRODUCTIVITY COSTS
This section describes training and lost productivity costs for the ICD-10 transition.
Who Gets Trained on ICD-10?
CMS identified three types of individuals who would require varying levels of training on
ICD-10. These included coders, code users, and physicians.
Coders
It is vital that coders receive adequate training on the ICD-10 coding changes. CMS, there-
fore, estimated training costs for both full-time and part-time coders. In producing cost es-
Exhibit 20–2 Comparison of ICD-9-CM and ICD-10-CM Procedure Codes
ICD-9-CM Procedure Codes ICD-10-CM Procedure Codes
3-4 numbers in length
Approximately 3,000 codes
Based upon outdated technology
Limited space for adding new codes
Lacks detail
Lacks laterality
Generic terms for body parts
Lacks description of methodology and
approach for procedures
Limits DRG assignment
Lacks precision to adequately define
procedures
Source: 73 Federal Register 49803 (August 22, 2008).
7 alpha-numeric characters in length
Approximately 87,000 available codes
Reflects current usage of medical
terminology and devices
Flexible for adding new codes
Very specific
Has laterality
Detailed descriptions for body parts
Provides detailed descriptions of
methodology and approach for
procedures
Allows DRG definitions to better
recognize new technologies and
devices
Precisely defines procedures with
detail regarding body part,
approach, any device used, and
qualifying information
timates, CMS assumed that full-time coders were primarily dedicated to hospital inpatient
coding and that part-time coders worked in outpatient ambulatory settings. The difference
is based on the job setting for a reason. CMS further assumed that all coders will need to
learn ICD-10-CM, while the coders who work in the hospital inpatient job setting will also
need to learn ICD-10-PCS.4
Code Users
CMS refers to the American Health Information Management Association (AHIMA) defi-
nition of code users as “anyone who needs to have some level of understanding of the cod-
ing system, because they review coded data, rely on reports that contain coded data, etc.,
but are not people who actually assign codes.”5 These users can be people who are outside
of healthcare facilities: individuals such as researchers, consultants, or auditors, for exam-
ple. Or these users might actually be inside the healthcare facility but are not coders. Such
facility users might include upper-level management, business office and accounting per-
sonnel, clinicians and clinical departments, or corporate compliance personnel.6
ICD-10 Training and Lost Productivity Costs 235
Exhibit 20–3 Comparison of Old and New Angioplasty Codes
Old Code:
ICD-9-CM
Angioplasty
1 code (39.50)
New Code:
ICD-10-PCS
Angioplasty Codes
1,170 codes
Specifying body part, approach, and device, including:
047K04Z Dilation of right femoral artery with drug-eluting intraluminal
device, open approach
047KODZ Dilation of right femoral artery with intraluminal device, open
approach
047KOZZ Dilation of right femoral artery, open approach
047K24Z Dilation of right femoral artery with drug-eluting intraluminal
device, open endoscopic approach
047K2DZ Dilation of right femoral artery with intraluminal device, open
endoscopic approach
Source: Centers for Medicare & Medicaid Services (CMS) ICD-10 Fact Sheet
236 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
P h y s i c i a n s
CMS believed that the majority of physicians did not work with codes and thus would not
need training. The initial assumption was that only one-in-ten physicians would require such
knowledge. (CMS also believed that physicians would probably obtain the needed training
through continuing professional education courses that they would attend anyway.)7
Costs of Training
ICD-10 training costs were estimated for each category described above: coders, code users,
and physicians.
Coder Training Costs
CMS initially assumed the following:
1. There were 50,000 full-time hospital coders that would need 40 hours of training
apiece on both ICD-10-CM and ICD-10-PCS. The 40 hours of training was estimated
to cost $2,750 apiece, including lost work time of $2,200, plus $550 for the expenses
of training, for a total of $2,750 per coder.
2. Training of full-time coders would start the year before ICD-10 implementation. It
was further assumed that 15% of training costs would be expended in this initial year;
75% would be expended in the year of implementation; and the remaining 15%
would be expended in the year after implementation.
3. There were approximately 179,000 part-time coders who would require training only
on ICD-10-CM (and not on ICD-10-PCS). The part-time coders’ training expense
would amount to $110 for the expenses of training, plus $440 for lost work time, for
a total of $550.8
Code Users Training Costs
CMS estimated there were approximately 250,000 code users, of which 150,000 would work
directly with codes. Each code user was estimated to need eight hours of training at $31.50
per hour or approximately $250 apiece.9
Physician Training Costs
CMS estimated there were approximately 1.5 million physicians in the United States, of
which one in ten would require training. Each physician was estimated to need four hours
of training at $137 per hour or approximately $548 apiece.10
Costs of Lost Productivity
CMS used a productivity loss definition as follows: “The cost resulting from a slow-down in
coding bills and claims because of the need to learn the new coding systems.”11 Thus, the
productivity loss slow-down reflects the extra staff hours that are needed to code the same
number of claims per hour as prior to the ICD-10 conversion. (For instance, Jane normally
codes x claims per hour; during the first month learning the new system, she slows down to
xx claims per hour.)
CMS estimated that inpatient coders would incur productivity losses for the first six
months after ICD-10 implementation; and further, that productivity would increase (and
losses thus decrease) month by month over the initial six-month period until by the end of
six months, productivity has returned to its former level. It was estimated that inpatient
coders would take an extra 1.7 minutes per inpatient claim in the first month. At $50 per
hour, 1.7 minutes equates to $1.41 per claim.12 ($50.00 per hour divided by 60 minutes
equals $0.8333 per minute times 1.7 minutes equals $1.41 per claim.)
CMS assumed the same six-month productivity loss period for outpatient coders. CMS
further assumed that outpatient claims require much less time to code. In fact, the initial
assumption was that outpatient claims would take one hundredth of the time for a hospital
inpatient claim. Thus, one hundredth of the inpatient 1.7 minute productivity loss equals
0.017 minutes. At the same $50 per hour, one hundredth of the $1.41 inpatient loss equals
0.014 per claim, or about one and one half cents.13 (To compute one hundredth of $1.41,
move the decimal to the left two places. Thus $1.41 becomes $0.014.) The reasoning for
this small amount of coding time per claim is that physician offices “may use preprinted
forms or touch-screens that require virtually no time to code.”14
E-PRESCRIBING FOR PHYSICIANS: OVERVIEW
This overview contains e-prescribing definitions and commentary about the traditionally
low adoption rate.
Definitions
In the definitions that follow, be aware that over time the precise wording of such defini-
tions may shift and/or expand for regulatory purposes.
• E-prescribing means “the transmission, using electronic media, of a prescription or
prescription-related information, between a prescriber, dispenser, PBM, or health
plan, either directly or through an intermediary, including an e-prescribing network.”
• Prescriber means “a physician, dentist, or other person licensed, registered, or other-
wise permitted by the U.S. or the jurisdiction in which he or she practices, to issue pre-
scriptions for drugs for human use.”
• Dispenser means “a person, or other legal entity, licensed, registered, or otherwise per-
mitted by the jurisdiction in which the person practices or the entity is located, to pro-
vide drug products for human use on prescription in the course of professional
practice.”15
Generally speaking, transactions recognized as part of e-prescribing include:
• New prescription transaction
• Prescription refill request and response
• Prescription change request and response
E-Prescribing for Physicians: Overview 237
238 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
• Cancel prescription request and response
• Ancillary messaging and administrative transactions16
As to the definition for “prescriber” above, CMS has commented elsewhere about other
individuals who “are permitted to issue prescriptions for drugs for human use. These non-
physician providers could include certified registered nurse anesthetists (CRNAs), nurse
practitioners, and others.”17 (Naturally, these individuals would have to be properly li-
censed or registered in order to be a prescriber.)
Also note that this discussion is limited to the impact of e-prescribing on physicians and
other eligible professionals who prescribe, because the technical aspects of other applica-
tions of e-prescribing (such as the impact on pharmacies as dispensers) are not within the
scope of this book.
Traditionally Low Adoption Rate
Electronic prescribing among physicians and other professionals who prescribe has tradi-
tionally been low. A study published a few years ago estimated only five to eighteen percent
of providers used e-prescribing at that time.18
As to a real-life example of the low adoption rate, several years ago a Massachusetts col-
laborative project was partially funding the adoption of e-prescribing by physicians. While
this project offered the technology to 21,000 physicians, it reported that only about 2,700,
or thirteen percent, of the targeted physicians had adopted the technology.19
E-PRESCRIBING BENEFITS AND COSTS
This section describes both benefit and costs of e-prescribing.
Benefits
The benefits of e-prescribing can be administrative, financial, and/or clinical. CMS has
listed the following benefits as potentially improving quality and efficiency, and reducing
costs:
• Speeds up the process of renewing medication
• Provides information about formulary-based drug coverage, including formulary al-
ternatives and co-pay information
• Actively promotes appropriate drug usage, such as following a medication regimen
for a specific condition
• Prevents medication errors, in that each prescription can be electronically checked at
the time of prescribing for dosage, interactions with other medications, and thera-
peutic duplication
• Provides instant connectivity between the healthcare provider, the pharmacy, health
plans/pharmacy benefit managers (PBMs), and other entities, improving the speed
and accuracy of prescription dispensing, pharmacy callbacks, renewal requests, eligi-
bility checks, and medication history20
Costs
The cost of implementation to a practice may vary widely, based on practice size, location,
and the degree of electronic adoption already under way within the office. However, three
types of costs associated with e-prescribing can be identified as follows:
1. The initial purchase of hardware and software
2. Costs associated with daily use and maintenance, including on-line connectivity
3. Education and training21
Because of the wide variability, no official estimate of e-prescribing costs exists at the time
of this writing. An older estimate of implementation costs has been published as follows. As
background, in the past some health plans have offered to install an e-prescribing system
for physicians that participate in their plan. In that regard, several years ago a health plan
responded with comments to a CMS proposed rule about e-prescribing. The health plan
stated that:
. . . it had spent three million dollars to equip 700 physicians with hardware and
installation, software and training in their e-prescribing initiative (an average of
almost $4,300 per physician). To boost participation, the health plan [was] piloting
a program to grant honoraria (between $600 and $2,000) to physicians who write
electronic prescriptions. The commenter believed that without the financial
hardware/software and support incentives, the average physicians’ practice would
incur costs up to $2,500 per physician to adopt e-prescribing.22
In conclusion, at the time of this writing, adoption of e-prescribing by physicians is vol-
untary. Therefore each physician can make an individual decision about the costs and ben-
efits of e-prescribing.
A View of the Future
We anticipate that the near future will bring a stream of information about implementation
costs as the e-prescribing incentives described later in this chapter begin to show results.
But we already have one view of the future. As of the date of this writing, the Wall Street Jour-
nal announced that Wal-Mart Stores, Inc. has formed a partnership with Dell, Inc. and a pri-
vately held software maker to sell a medical records system through its Sam’s Club
membership warehouse. According to the Journal story, a Wal-Mart spokesman stated
“Whether it is a single physician or a physician’s group, we can offer a system that enables
them to electronically prescribe medication, set appointments, track billings and keep
records.”23 Note that the system is more comprehensive than just e-prescribing, as it in-
cludes office and patient management and billing tracking. The Journal story quoted the
cost of the first installed system as $25,000, plus $10,000 for each additional system, plus
$4,000 to $5,000 a year in maintenance costs.24
The significance of this announcement is that a big-box store and a prominent computer
firm have joined forces to offer an electronic package that can be obtained, complete with
E-Prescribing Benefits and Costs 239
240 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
installation and maintenance, from a membership warehouse. It seems to us that with this
announcement the adoption of electronic medical records, including e-prescribing, has en-
tered the commercial mainstream and may even shortly become commonplace.
E-PRESCRIBING IMPLEMENTATION
Implementation barriers and successes are described below.
Barriers
Barriers to physicians’ implementation and increased usage of e-prescribing include:
• costs of buying and installing a system
• training
• time and workflow impact
• lack of knowledge about the benefits related to quality care
• lack of reimbursement for costs and resources25
At least the “lack of reimbursement” barrier is lessening somewhat with the physician in-
centives that are now in place.
While the primary barrier to adoption of e-prescribing by physicians appears to be the
cost of buying and installing the system, change is also a significant barrier, since imple-
mentation of a new system involves at least three types of change:
1. changing the business practices of the physician’s office
2. changing record systems (from paper to electronic)
3. training staff for change26
Another change-related barrier is resistance to actually using the electronic system, both by
staff and by the physicians themselves.
Anecdotal Successes
Certain physician practices that have provided anecdotal evidence of successful e-prescrib-
ing implementation to CMS, are quoted as follows:
• A 53% reduction in calls to the pharmacy.
• Time savings of one hour per nurse and 30 minutes per file clerk per day by stream-
lining medication management processes.
• A large practice in Lexington, Kentucky, estimates that e-prescribing saves the group
$48,000 a year in decreased time spent handling prescription renewal requests.
• Before implementation of e-prescribing, a large practice in Kokomo, Indiana, with 20
providers and 134,000 annual patient office visits was receiving 370 daily phone calls,
206 of which were related to prescriptions. Of the 206 prescription-related calls, 97
were prescription renewal requests. The remainder consisted of clarification calls
from pharmacists or requests for new prescriptions. Staff time to process these calls in-
cluded 28 hours per day of nurse time and 4 hours per day of physician time. Chart
pulls were required in order to process half of the renewal requests. Implementation
of an e-prescribing system produced dramatic time savings that permitted reallocation
of nursing and chart room staff.27
E-PRESCRIBING INCENTIVES AND PENALTIES FOR PHYSICIANS AND
OTHER ELIGIBLE PRESCRIBERS
The E-Prescribing Incentive Program was authorized by the Medicare Improvements for
Patients and Providers Act (MIPPA) which was enacted on July 15, 2008. The incentive pro-
gram is for eligible professionals who are successful electronic prescribers (e-prescribers)
as defined by MIPPA. It is separate from, and is in addition to, the Physician Quality Re-
porting Initiative (PQRI).28 Only services paid under the Medicare Physician Fee Schedule
(MPFS) are included in the E-Prescribing Incentive Program.29
Note an important difference: the AARA incentives described in the previous Chapter
19 are paid only to “physicians,” as defined by law. The E-Prescribing Incentive Program de-
scribed in this section pays “eligible professionals,” which includes other eligible prescribers
in addition to physicians.
The E-Prescribing Incentives Program
Components of the program are briefly described below. This is a general description
for purposes of illustration only; for additional details refer to the relevant rules and
regulations.
Eligible Pro f e s s i o n a l
An “eligible professional” includes the following individuals, divided into three categories:
Medicare physicians, practitioners, and therapists.
1. Medicare physicians
• Doctor of Medicine
• Doctor of Osteopathy
• Doctor of Podiatric Medicine
• Doctor of Optometry
• Doctor of Oral Surgery
• Doctor of Dental Medicine
• Doctor of Chiropractic
2. Practitioners
• Physician Assistant
• Nurse Practitioner
• Clinical Nurse Specialist
• Certified Registered Nurse Anesthetist (and Anesthesiologist Assistant)
• Certified Nurse Midwife
• Clinical Social Worker
E-Prescribing Incentives and Penalties for Physicians and Other Eligible Prescribers 241
242 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
• Clinical Psychologist
• Registered Dietician
• Nutrition Professional
• Audiologists
3. Therapists
• Physical Therapist
• Occupational Therapist
• Qualified Speech-Language Therapist30
Note that some professionals who would otherwise be eligible are excluded from the pro-
gram due to their billing methods.31 Also note that in order to participate, these individu-
als must be “authorized by his or her respective state laws to prescribe medication and
prescribing medications must fall within the individual eligible professional’s scope of
practice.”32
Qualified E-Prescribing System
According to the CMS ERxIncentive brochure, a qualified e-prescribing system must be
able to perform the following five tasks:
1. Generate a complete active medication list, using e-data received from applicable
pharmacies and pharmacy benefit managers (PBMs) (if available).
2. Allow eligible professionals to select medications, print prescriptions, transmit pre-
scriptions electronically, and conduct all alerts (including automated prompts).
3. Provide information on lower cost therapeutically appropriate alternatives, if any.
4. Provide information on formulary or tiered formulary medications, patient eligibil-
ity, and authorization requirements received electronically from the patient’s drug
plan (if available).
5. Meet specifications for messaging.33
Successful Electronic E-Prescriber
At the time of this writing an eligible professional was considered to be a “successful elec-
tronic e-prescriber” if “he or she reported the applicable e-prescribing quality measure in at
least 50% of the cases in which such measure is reportable by the eligible professional dur-
ing the reporting period.”34 (Note that this percentage may change over time.)
Program Incentives and Penalties
The program incentive payment for 2010 is 2% of “the total estimated allowed charges for
all such MPFS covered professional services”35 that are furnished during the calendar year
and received by CMS by February 28th of the following year. (The payment was also 2% in
2009.) The payments continue as follows: 1.0% for 2011 and for 2012, and 0.5% for 2013.36
Note, however, that the incentive does not apply if only a minimum percentage of covered
professional services are reported to which the measure applies (for example, this mini-
mum was 10% in 2009).37
If, however, the professional does not adopt e-prescribing, a percent reduction in the fee
schedule amount paid will be imposed as follows: minus 1.0% in 2012; minus 1.5% in 2013;
and minus 2.0% in 2014 and in each subsequent year.38 The program incentives and penal-
ties are illustrated in Exhibit 20-4.
Manner of Reporting
Because this is a claims-based reporting program, specific claim form inputs are required in
order to receive e-prescribing incentive payments. Quality data codes for the e-prescribing
measure are submitted through the Medicare claims processing system. Thus, there is no need
to enroll or register, because the entire program reporting is accomplished through the sub-
mission of the data codes.39 As a manager you need to remember this, because if the data code
isn’t entered properly (or isn’t there at all), then the opportunity for payment is lost.
Three G-codes represent the quality data codes that are used to report the e-prescribing
measure. One of these three codes should be entered on the claim:
1. Report G8443 if all of the prescriptions generated for this patient during this visit
were sent via a qualified e-prescribing system. (This code is used for the example on
Exhibit 20-5.)
2. Report G8445 if no prescriptions were generated for this patient during this visit.
3. Report G8446 if some or all of the prescriptions generated for this patient during this
visit were printed or phoned in as required by state or federal law or regulations, due
to patient request, or due to the pharmacy system being unable to receive electronic
transmission; or because they were for narcotics or other controlled substances.40
A particular array of 33 professional service CPT or HCPCS codes represents the permissi-
ble codes to enter on the claim form in order to qualify for the incentive.41 In other words,
E-Prescribing Incentives and Penalties for Physicians and Other Eligible Prescribers 243
Exhibit 20–4 E-Prescribing for Physicians and Other Eligible Prescribers: Incentives & Penalties
INCENTIVE PAYMENTS FINANCIAL PENALTIES
for e-prescribers for non-e-prescribers
Additional % of allowed charges paid % Reduction in fee schedule amount paid
2010 �2.0 2010 0
2011 �1.0 2011 0
2012 �1.0 2012 �1.0
2013 �0.5 2013 �1.5
2014 0 2014 �2.0
Each subsequent year 0 Each subsequent year �2.0
Source: 73 Federal Register 69847-8 (November 19, 2008).
244 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
Exhibit 20–5 Prescribing Claim Form Input Example
Diagnoses for the encounter
are placed in Item 21
CMS-1500 Claim Form [adapted for Electronic Prescribing Example]
21 Diagnosis or Nature of Illness or Injury
1. 714.00
2. 250.00
24. A. Date(s) of Service 24.B. 24.D. F. I. J.
Place Procedures, Rendering
From To of Services or $ ID Provider
Service Supplies Charges Qual. #
CPT/
HCPCS
01 12 09 01 12 09 11 99202 45.00 NPI 0123456789
01 12 09 01 12 09 11 G8443 0.00* NPI 0123456789
99202 = 24.D. Line 1
Code for a
patient encounter
during the reporting
period shown in 24 A
G8443 = 24.D. Line 2
Code for “all
prescriptions generated
via qualified e-prescribing
system”
0.0 = 24.F. Line 2
Is the line item
indicator for the
quality measure*
24.I.
Indicates Type of
Physician ID # (NPI)
24.J.
Indicates the rendering
NPI number of the
individual EP who
performed the service
*The field for the quality measure cannot be left blank.
**A sole practitioner enters the NPI in a field not shown on this example.
Note: Item 24 Columns C, E, G, and H not shown on this example because they would be blank.
Source: Adopted from “Sample Electronic Prescribing Claim” available at
www.cms.hhs.gov/ERxIncentive.
two codes will be present on an acceptable claim form: one of the 33 professional service
codes, plus one of the three quality data codes (G8443, G8445, or G8446).
Remember, you are a successful electronic e-prescriber only if you report the quality data
codes (the “applicable e-prescribing quality measure”) in at least 50% of the applicable
cases (in other words, 50% of the claims where one of the 33 applicable professional service
codes are present). Therefore, CMS suggests reporting one of the three G codes on all of
the claims that contain one of the 33 applicable codes. That way you will be sure to meet the
50% reporting requirement.
E-PRESCRIBING TECHNICAL INPUT EXAMPLE
Exhibit 20-5 presents an example of the form input items for a claim that is eligible for the
e-prescribing incentive. Only applicable fields (“items”) of the CMS-1500 claim form are
shown in the exhibit. Inputs for an e-prescribing incentive encounter are described below
as illustrated on Exhibit 20-5:
1. Diagnoses for the encounter are placed in item 21.
2. Dates of service are entered in item 24.A, on both the first line where the professional
service code appears, and again on the second line where the quality data code for
the incentive program will appear.
3. The place of service code is entered on both lines in item 24.B.
4. The CPT code for the professional service is placed on the first line in item 24.D. A
particular array of 33 CPT or HCPCS codes representing professional services repre-
sent the permissible codes to enter on the claim form in order to qualify for the in-
centive. The example on Exhibit 20-5 uses 99202 for the professional service. CPT
code 99202 is one of the 33 acceptable codes.
5. The quality data code for the e-prescribing measure is entered on the second line.
The example on Exhibit 20-5 uses G8443, which indicates all of the prescriptions gen-
erated for this patient during this visit were sent via a qualified e-prescribing system.
6. The charge for the professional service is placed on the first line in item 24.F.
7. Zeroes (0.00) are placed on the second line in item 24.F. It is important to make sure
the zeroes are there, because the quality data measure will not be recognized if this
field (item) is left blank.
8. The acronym NPI (National Provider Identifier) is entered on both lines in item 24.I.
This acronym indicates what type of identifier will be present in the next column (in
item 24.J).
9. The National Provider Identifier (NPI) number of the individual eligible profes-
sional providing, or “rendering,” the service is entered on both lines in item 24.J.
(Item 24.J. is labeled “Rendering Provider #”). Note that if the eligible professional is
a sole practitioner, the NPI is entered in a different field (item 33) that is not shown
on this claim form example.
TECHNOLOGY IN HEALTHCARE MINI-CASE STUDY
Information systems changes are the manager’s challenge. But implementing such change
is made much easier if the change will visibly ease the staff’s workload. Such was the case
Technology in Healthcare Mini-Case Study 245
246 CHAPTER 20 Information Systems Changes: The Manager’s Challenge
described in Mini-Case Study 4, entitled “Technology in Health Care: Automating Admis-
sions Processes.” See the description of the mountains of paperwork in this case, and then
see the number of hours saved by implementing an automated solution. This type of
change to an information system is a win-win situation.
INFORMATION CHECKPOINT
What Is Needed? If possible, find an actual CMS-1500 claim form. (But be
extremely careful to have the provider completely mark
out or eliminate all privacy items.) You might have to
print one out from an electronic system. Or, as an alter-
native, locate a superbill that contains codes for profes-
sional services.
Where Is It Found? In the administrative offices of an “eligible professional”
How Is It Used? The claim form might be submitted, if eligible, to be counted
for the claim-based reporting of the e-prescribing incen-
tive program.
KEY TERMS
Code Users
Dispenser
Eligible Professional
Electronic Prescribing (E-Prescribing)
Prescriber
DISCUSSION QUESTIONS
1. Do you believe your place of work will be affected by the ICD-10 transition?
If so, how will your employer be affected? If not, why not?
2. Have you seen newsletters or other materials announcing ICD-10 training?
If so, where and what have you seen? Do you think the materials adequately explain
the necessity for the ICD-10 training?
3. Do you believe any individuals at your place of work are performing professional ser-
vices that are eligible for the e-prescribing incentive program?
If so, do you believe they are reporting the quality data measures?
4. Have you seen newsletters or other materials describing the e-prescribing incentive
program? If so, where and what have you seen? Do you think the materials adequately
explain how the incentive program works? (That is, that it is entirely claim-based
reporting?)
