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Boston -- With electronic prescribing still far off the radar screen for many physicians just weeks before new Medicare e-prescribing incentives kick in, the Centers for Medicare & Medicaid Services hosted an event here in October to jump-start an all-out push for widespread adoption of the technology.

More than 1,400 people gathered Oct. 6-7 for the National E-prescribing Conference. CMS intended to use the event to reach out to physicians trying to get started with e-prescribing before the Medicare incentives begin Jan. 1, 2009. But it ended up being more of a "train-the-trainer" event, as attendees consisted mostly of vendors, state officials, medical association representatives and physicians who are already e-prescribing.

Kerry Weems, CMS acting administrator, wasn't discouraged by the low attendance of physicians who had yet to adopt the technology. He said the conference would provide valuable talking points for the organizations in attendance to take back to their respective members. With federal incentives soon being offered, he said, those e-prescribing discussions might attract more interest. "Talking about it is one thing and putting money on the table is another. And we have put money on the table."

Starting in January, Medicare will pay a 2% bonus to physicians who successfully e-prescribe under Part D. CMS will assess how often and how consistently physicians prescribe electronically to determine whether they qualify. The bonuses will phase down to 1% in 2011 and 0.5% in 2013 before ending. Weems said a final definition of successful e-prescribing will be issued later this month, along with the CPT codes that can be associated with paperless drug orders.

"Doctors in general are never quite sure where they should focus their efforts, and they usually follow the money," said David Brailer, MD, PhD, former national health IT coordinator, who spoke at the conference. After leaving his government position, Dr. Brailer founded the investment firm Health Evolution Partners. The company's first investment was e-prescribing vendor Prematics.

6% of doctors now prescribe electronically.

Bonuses won't be the only money on the table. Starting in 2012, physicians not complying with the mandate will be docked 1% of their Medicare pay. These penalties increase to 1.5% in 2013 and 2% in 2014 and beyond.

"You can accept it and survive or you can lead and prosper," Health and Human Services Secretary Michael Leavitt said at the conference.

The American Medical Association was initially opposed to any mandate. But in May, AMA Board of Trustees member Steven J. Stack, MD, outlined a new AMA e-prescribing framework that said any Medicare penalty must not take effect until at least two years after CMS finalizes e-prescribing standards for physicians. The AMA, a conference sponsor, joined with other event sponsors to release a new publication, "A Clinician's Guide to Electronic Prescribing." The guide offers practical advice for physicians who want to adopt the technology in their practices as well as a list of incentives offered in various states.

Dr. Stack, who presented at the conference, told the crowd he was "preaching to the choir" after every hand went up when he asked who was already an e-prescribing convert. But he said he was confident that those in attendance would help spread the word to their doubting colleagues.

Studies suggest that early adopters have their work cut out for them.

Only 6% of physicians currently e-prescribe, according to a December 2007 study by SureScripts, the nation's largest provider of electronic prescribing services. While the report also found that many more physicians prescribe through electronic medical records systems that send the prescriptions via fax machines, this method is not considered true e-prescribing. Under the Medicare statute, most computer-generated fax orders no longer will be allowed for Part D starting Jan. 1, 2009.

Barriers to e-prescribing

Physicians attending the conference cited some of the barriers that prevent many of their colleagues from adopting the technology. One mentioned was the Drug Enforcement Administration's ban on e-prescribing controlled substances, which forces physicians to maintain two separate systems. The DEA has proposed rules to lift this ban, but none is yet final.

Rex McCallum, MD, associate medical director of the Private Diagnostic Clinic at Duke University Medical Center in Durham, N.C., said Medicare needs to provide a patient database to ease e-prescribing and ensure patient safety. Medicare patients are not included in the health information exchange provided through SureScripts-owned RXHub, which provides prescription eligibility, benefit, formulary and medication history information for patients with private pharmacy benefit managers.

In 2009 and 2010, Medicare will pay a 2% bonus to doctors who e-prescribe under Part D.

"I think if you provided that, it would help adoption of e-prescribing tremendously," Dr. McCallum told Weems.

Vendors also were on hand to offer ideas on what is needed.

Michael Milne, CEO of Canadian e-prescribing vendor Scriptnetics, said Medicare has not made it easy for vendors to incorporate formularies into their programs, as required for system certification. No standard format exists, which means programmers must build the databases on their own or hire someone to do it.

Weems said the agency would take some of the feedback into consideration as it finalized the definition of successful e-prescribing.

Another barrier is the resistance of small pharmacies to make the necessary changes to receive electronic prescriptions, he said. While the adoption rate of large pharmacy chains is about 97%, it's only about 27% for small pharmacies. Weems encouraged physicians to talk to their local pharmacies about upgrading.

New Federal Trade Commission regulations to combat identity theft have taken physicians and the health care industry by surprise and prompted the agency to delay enforcement from Nov. 1 to May 1, 2009.

The so-called "red flag" rules require entities that regularly extend credit, or defer payment for services, to establish a written program for preventing identity theft as well as detecting and responding to warning signs of such thefts. The commission first released the rules last November as directed by the Fair and Accurate Credit Transactions Act of 2003.

Until recently, physicians and health care facilities were largely unaware of the regulations, which were thought to pertain mainly to banks and other financial institutions that offer credit in the traditional sense. But in recent weeks, the FTC signaled that the rule was intended to apply more broadly, including to the health care arena.

"In the context of health care, medical identity theft is not just a financial matter. It can have real consequences for physical harm to patients," said Naomi Lefkovitz, an attorney with the FTC's Division of Privacy and Identity Protection. "For doctors, [a prevention program] can be especially important, because they might not realize or figure out who is an identity thief until after they provide services."

The rules -- released in conjunction with the U.S. Dept. of Treasury, the Federal Deposit Insurance Corp. and other federal financial oversight agencies -- largely discuss banks, mortgage brokers, auto dealers and other lenders with only a single mention of medical identity theft.

"The vast majority of health care providers did not see this on the radar," said Gerald E. DeLoss, vice chair of the American Health Lawyers Assn.'s Health Information & Technology Practice Group. The trade organization held a conference Oct. 1 to discuss the regulation.

Most physicians and group practices likely will fall under the FTC's definition of a creditor because they generally do not collect payment at the time a service is rendered and often hold off billing patients in full, according to legal experts. While accepting credit card payments does not apply in this case, such routine practices as setting up a payment plan or billing an insurance company before charging the patient likely do.

"If, on a regular basis, a physician allowed a patient to leave knowing they were not going to be paying immediately, even for a co-payment or deductible, the provider would be considered a creditor," DeLoss said.

The rules apply to creditors who maintain so-called covered accounts, designed to handle multiple transactions as part of an ongoing relationship. The FTC also defines a covered account as one involving a "foreseeable" risk of identity theft. For physicians, that means most billing accounts, DeLoss said. While medical records generally do not qualify, they could be included if they are commingled with financial accounts.

A new deadline for physicians

The American Medical Association and more than two dozen national and specialty medical associations are challenging what physicians consider the FTC's overly broad interpretation of the 2003 statute. In a Sept. 30 letter, the groups asked the agency to clarify its position and delay enforcement of the rules until it does.

Physicians should not be considered creditors "simply because [they agree], after the fact, to let the patient pay in installments as opposed to turning the matter over to a collection agency or suing the patient," the letter states. In addition, billing an insurer first does not necessarily mean a patient is in debt for the remainder while the claim is processed, it states. The AMA and the other organizations pointed to appeals court decisions to suggest that the commission's interpretation should not include physicians as creditors.

On Oct. 22, the FTC relented and announced that it would not enforce the rule for six months because it learned that certain entities were not aware that they would be subject to the regulations.

"The commission's delay of enforcement will [give] these entities sufficient time to establish and implement appropriate identity theft prevention programs," the agency said in a statement.

When the FTC begins enforcing the rules, failure to comply could mean administrative penalties or up to $2,500 in fines per violation.

Questions persist as to whether the red flag rules overlap with the Health Insurance Portability and Accountability Act. The AMA letter to the FTC suggested that the agency failed to consider the additional legal and administrative burdens the new rules impose when HIPAA already requires them to keep patient information private and secure.

Some legal experts said the red flag rules go even further than HIPAA.

"HIPAA covers how an entity uses and discloses protected health information" to avoid unauthorized breaches, said Heidi Y. Echols, a partner at the law firm McDermott Will & Emery in Chicago. But the red flag rules add another layer of protection by requiring doctors to respond to evidence of medical identity theft even when it is presented to a physician's office after a patient's information has been stolen from elsewhere.

The red flag rules also focus on financial matters, whereas HIPAA primarily addresses medical records, noted Pam Dixon, executive director of the World Privacy Forum, a public interest group.

Federal officials have not yet said whether a red flag rules violation also could amount to a HIPAA violation. The Dept. of Health & Human Services Office for Civil Rights, which enforces HIPAA, said it is still analyzing the issues raised by the new requirements.

Keys to prevention

In the meantime, experts recommend that physicians seek legal counsel regarding compliance. Making the required changes might not be difficult.

While a compliance program likely will involve some time and expense, doctors may be able to build off HIPAA procedures already in place, Echols said. "This may be another thing added to the to-do list for doctors ... but it is something designed to protect patients."

The rules mandate implementation of a formal program with "reasonable" policies and procedures for recognizing and mitigating patterns, practices or activities that could signal identity theft. The plan, which requires senior management approval, adequate staff training and periodic review, can be tailored to each physician's practice, Lefkovitz said.

Dixon also recommended that physicians revisit internal security policies that could open the door inadvertently to medical identity theft. For example, many practices are reluctant to give patients a copy of their medical records even though that could create an opportunity to identify discrepancies and errors.

"Do you have any monkeys in your ears?" Kim Bennett, DO, asked 4-year-old Chase during a mid-September checkup at a health center in Beckley, W.Va.

The pediatrician's exam found no monkeys, but he held up four fingers, signaling to Chase's mother, Amanda Muellins, that the boy would need four immunizations that day. Chase, catching on quickly, proposed an alternative: "I'll never be sick now. Ever."

Muellins didn't realize it, but because she had brought her son to the office visit and kept current with his shots, West Virginia's Medicaid program was willing to give him more generous coverage. But only if she acted to take advantage of it.

A thin packet mailed to Muellins several weeks earlier -- labeled "Urgent: open immediately" -- informed her that Chase soon would be enrolled automatically in a new Medicaid plan with basic benefits. It also said Chase could receive enhanced benefits if Muellins signed an agreement with his doctor that she would keep the boy's necessary checkups and immunizations up to date. But the enhanced option didn't make an impression on her, so she didn't sign up for it.

"I didn't know that they were doing any additional benefits," Muellins said. "I didn't really see anything different."

West Virginia had 392,000 Medicaid beneficiaries in 2007.

Her response to the Mountain Health Choices enhanced program appears typical for Medicaid beneficiaries and parents of Medicaid kids in West Virginia.

The program, which began almost a year ago in most parts of the state, is a novel attempt to use incentives to boost enrollees' personal responsibility and ownership over their health care. Eligible enrollees who agree to a wellness plan, follow other physician directions, and show up on time for medical appointments can receive free additional benefits, such as help with quitting smoking and membership in Weight Watchers. Those who don't take the option are relegated to a basic plan with somewhat fewer benefits than their existing plan.

Enrollment in the enhanced plan so far has been low. About one-third of West Virginia's Medicaid beneficiaries -- who numbered 392,000 in 2007 -- are eligible for Mountain Health Choices based on their relative good health. But only about 15,500, or 12%, of those eligible had signed up as of Sept. 30, according to state counts. Another 3% had begun the enrollment process.

Why hasn't the program been more popular?

Some patients simply might not know about or understand the program. Others might not read well enough to grasp the details. But even for those who want to pick the enhanced option, it's not always simple.

For starters, Medicaid enrollees are instructed to call their primary care physician. "Many don't have a primary care provider," said Renate Pore, president of the patient advocacy group West Virginians for Affordable Health Care. "They don't know who they're supposed to call."

Several states offer extra benefits to Medicaid recipients who adopt healthier habits.

Some eligible enrollees might not see a need for extra benefits, said Sarah Chouinard, MD, medical director of Primary Care Systems Inc., a health center in Clay, W.Va. For example, a 30-year-old woman with seasonal allergies might think she just needs her allergy prescription and annual Pap smear, not a wellness plan and extra hospital coverage.

The requirement that patients commit to regular office visits could pose a barrier for those with limited transportation options, said Rodney Fink, DO, director of clinical service for Access Health, a group of six health centers in southern West Virginia, including the Beckley facility where Dr. Bennett works.

Some observers say the state needs to do a better job of selling beneficiaries on the extra benefits. Dr. Fink said doctors also need to do a better job of focusing their patients' attention on it.

Looking for proof of concept

If West Virginia improves Mountain Health Choices, other states could be convinced that incentives can work to increase patient compliance with physician orders.

The Deficit Reduction Act of 2005 gives states authority to offer varying benefit levels to Medicaid enrollees. A few states, including Idaho and Kentucky, responded by offering incentives to beneficiaries who adopt healthier behaviors. Other states, such as Florida and Wisconsin, set up similar programs under waivers from the Centers for Medicare & Medicaid Services.

The Deficit Reduction Act of 2005 lets states offer varying benefit levels to Medicaid enrollees.

But West Virginia took the concept one step further by limiting benefits for Medicaid recipients who do not promise to follow a wellness plan and listen to doctors' orders. The state is now on the line to prove the tactic will work.

The ultimate goal of Mountain Health Choices is to forge relationships between patients and physicians that lead to healthier lifestyles and better preventive care, said Shannon Landrum, spokeswoman for the West Virginia Bureau for Medical Services in Charleston. The average age of those eligible for the enhanced plan is 14. "We really want those kids to have a long-term, trusting relationship with a health care provider."

Parents must agree to pick a medical home for their child, bring the child on time for a minimum number of office visits, and ensure that immunizations are up to date and prescriptions are followed. The agreement is similar for adults, with the addition of required screenings, such as colonoscopies, glucose levels and mammograms.

Some points of contention

The West Virginia program is more controversial than other states' because it automatically bounces nonparticipating beneficiaries -- possibly without their knowledge -- into the basic plan. Once there they encounter more restrictions than in traditional Medicaid, such as caps on prescriptions and mental health services.

For example, children in the basic plan are limited to four prescriptions per month, even though a child with asthma and attention deficit disorder could easily hit that limit, said Fernando Indacochea, MD, president of the West Virginia Chapter of the American Academy of Pediatrics. Landrum, however, said a state review of data from three pilot counties prior to implementation showed that children on Medicaid average fewer than one prescription a month.

And while individual mental health therapy is covered under the basic plan, crisis intervention is not, said Bob Hansen, executive director of Prestera Center, a mental health and addictions treatment agency in Huntington.

Georgetown University's Center for Children and Families on Aug. 9 issued a paper criticizing the state for automatically limiting kids' benefits via the basic plan. If the program aims to encourage healthy behaviors among Medicaid enrollees, said Joan Alker, the deputy executive director of the center, "I don't think there's any evidence that they're achieving that."

West Virginia already has learned some lessons that could be applied by other states considering incentives for patient compliance.

Dr. Fink said programs such as Mountain Health Choices won't work unless staff at clinics and health centers proactively advise patients about their health care options. He added that physicians should form a second line of support and also gauge their patients' awareness.

Landrum said it can be difficult to engage Medicaid enrollees as they gain or lose program eligibility. About 40% of Medicaid beneficiaries in West Virginia don't renew their benefits from one year to the next. States that want to change Medicaid from a program that simply pays claims into one that promotes health improvement and wellness need to be patient and look for ways to measure success in the long term, Landrum said.

Hope for the future

Mountain Health Choices has shown some promise. Enrollment in the three pilot counties, which began 20 months ago, is slightly higher than in the rest of the state, Landrum said. Enrollment across most of the state began about a year ago, but eligible beneficiaries in some counties will not receive packets until early 2009.

Some experts predict that enrollees will come around to the major reform. "The startup is not surprising. It'll change over time as people become more familiar with it and as the state refines its approach to it," said Dennis Smith, a senior fellow at the Heritage Foundation in Washington, D.C. He formerly directed the CMS Center for Medicaid and State Operations.

The West Virginia State Medical Assn. supports linking greater patient responsibility to more generous benefits, said President Stephen Sebert, MD, a family physician in Huntington. "It's premature to call the program a failure."

To improve physician awareness, the state could notify doctors of their Medicaid patients' deadlines for choosing a new plan, said Violet Burdette, CEO of Northern Greenbriar Health Clinic in Williamsburg. Eligible beneficiaries receive a Mountain Health Choices enrollment packet 60 days before their Medicaid benefits are changed. They have 90 days to respond.

Burdette also said enrollees might be more engaged if they had to choose either the basic or enhanced plan instead of being channeled into the less generous plan by default. Landrum said only two Medicaid beneficiaries have actively declined the enhanced plan.

The state is working with West Virginia University researchers to analyze Medicaid enrollees' responses to the Mountain Health Choices program to gauge how well it's working.

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