The leadership of HHS had a tele-conference on Monday to highlight the new Medicare incentives for physicians to adopt e-prescribing systems. What the Washington Post and Kaiser Family Foundation reported about this press briefing that wasn’t in the HHS press release was that the Acting Administrator of CMS said that the per physician cost of e-prescribing systems is about $3,000 up front, and then $80-400/month for operation and maintenance.
These numbers caught my eye, because with the incentives in the Medicare bill, the break-even point for physicians is as follows:
First, let’s assume that the per month cost is $240 (the mid-point between $80 and $400), or $2,800 per year. Since the Medicare incentives for e-prescribing are a net 2% of Medicare reimbursements, that means to break-even the physician has to have $144,000/year in Medicare reimbursements – just for the operation and maintenance costs. Additionally if the up front costs are spread over two years ($1,500/year), that raises the break-even point another $75,000, to $219,000/year.
For some clinicians, this amount of revenues from Medicare might be low, and therefore, it would make sense to get an e-prescribing system. However, if the doctor only sees a minority of Medicare patients, then the incentives could be a penalty. Which is exactly what Congress expects the financial effects of the e-prescribing incentives to be. According to the Congressional Budget Office, “CBO estimates that the net budgetary effect of the electronic prescribing provision will be to reduce Medicare spending by $0.2 billion over the 2008-2013 period and $2.1 billion over the 2008-2018 period.”
Of course, if other insurers were to match (or exceed) Medicare’s incentive payments for having e-prescribing systems, then obviously the break-even point for physicians would come down, since the calculations wouldn’t balance solely on Medicare revenues. However, I’m not aware that other insurers are rushing to provide financial incentives for physicians to use e-prescribing systems.
There are additional important points about e-prescribing that need to be made. First, e-prescribing can have additional costs for physicians’ offices in the form of training time and lost productivity, and unlike electronic medical records, e-prescribing itself is unlikely to improve the office’s billing accuracy and revenues. Second, e-prescribing can certainly provide clinical benefits by reducing medical errors with better communications about individual prescriptions. I wrote about these issues a couple of weeks ago (see “Challenges to Making E-Prescribing Increase Efficiency and Improve Quality”), but want to reinforce one point here: Going from paper to computer communications can also introduce new opportunities for medical errors – particularly if people rely on the computer generated information while they might question the legibility or accuracy of a hand-written prescription. That is, technology is great, but its appropriate role needs to be understood by the users, who also have to use it correctly for it to provide real value.