Medicare e-Rx Incentives/Penalites

ODs should e-Rx to avoid future Medicare pay penalties

Health care practitioners should prescribe pharmaceuticals electronically during 2011 if they wish to avoid new Medicare e-prescribing (e-Rx) payment penalties that are scheduled to begin in the near future, the U.S. Centers for Medicare & Medicaid Services (CMS) warns.

Optometrists - unlike most health care practitioners - will not be subject to payment penalties under the Medicare e-Rx Incentive Program during 2012. However, they may wish to meet the program's e-prescribing standards this year in order to avoid any chance of penalties during 2013, according to the AOA Advocacy Group.

Medicare e-Rx payment penalties during 2012 and 2013 will be based on practitioner e-prescribing patterns in 2011.

During a meeting with AOA and other health care specialty organizations last fall, CMS officials confirmed that optometrists will not be subject to Medicare e-Rx penalties during 2012. The officials did not specifically indicate whether optometrists will be subject to penalties under the program in 2013. Doctors of medicine, osteopathy and podiatry who do not e-prescribe will be subject to the reimbursement penalties beginning in 2012.

"E-prescribing payment penalties will be a major source of controversy and annoyance for most health care practitioners during 2012," said Jon Hymes, AOA Advocacy Group director. "Optometrists will be temporarily spared. However, AOA strongly encourages members to prescribe pharmaceuticals at least 25 times during 2011 in order to earn a bonus under the program and preclude the possibility of a penalty in 2013."

Under the program, health care practitioners must report the use of qualified e-prescribing systems at least 25 times over the course of 2011 or see their Medicare reimbursements reduced 1.5 percent during 2013. Practitioners who do not meet CMS e-Rx utilization targets over ensuing years will continue to see their Medicare payments reduced, the AOA Advocacy Group warns.

Practitioners who do not e-prescribe at least 10 times over the first half of 2011 will see their Medicare reimbursements docked 1 percent during 2012. Although CMS officials have said that optometrists will not be subject to penalties next year, they may want to take steps now to avoid penalties in the future, the AOA Advocacy Group emphasizes.

Less than a third (30.1 percent) of AOA-member optometrists now e-prescribe, according to the AOA 2010 Electronic Health Records Survey. Most (40.1 percent) report they have e-prescribing capacity in their offices but do not use it. Almost a third (29.1 percent) report they neither have nor use e-prescribing technology.

Medicare e-Rx program

The federal Medicare Improvements for Patients and Providers Act of 2008 authorized the CMS to encourage e-prescribing through a system of bonuses and penalties (see Box 1). Practitioners are required to use qualified software systems and meet e-prescribing utilization targets in order to receive the bonuses or avoid the penalties. The e-Rx incentive program is distinct from the federal Medicare and Medicaid electronic health records (EHR) incentive programs.

Practitioners with qualified software systems who met specified e-Rx targets during 2009 received bonus payments equaling 2 percent of their total, estimated, Medicare-allowed charges for that year. E-prescribing practitioners who met program objectives during 2010 similarly earned a 2 percent bonus for that year. The incentive will be reduced to 1 percent for 2011 and 0.5 percent for 2012. It will be phased out by 2013.

Doctors of medicine, osteopathy, and podiatry who do not electronically issue at least 10 prescriptions for appropriate patients during the first six months of 2011 will be subject to a 1 percent pay reduction in 2012.

All health care practitioners - including optometrists - who fail to issue at least 25 prescriptions for appropriate patients over the course of 2011 will see their Medicare payments reduced 1.5 percent in 2013.

The penalty for all practitioners will increase to 2 percent for 2014 and beyond.

(Congress has authorized the CMS to increase penalties further in future years should specified percentages of health practitioners fail to implement e-Rx systems.)

Avoiding the penalties

To avoid payment penalties that will be applied in 2013, individual health care practitioners will have to report at least 25 unique electronic prescribing events this year using code G8553 in conjunction with patient visits (as indicated by the codes in Box 2). Special rules apply to group practices.

Practitioners must use a qualified e-prescribing system that provides for two-way communications between prescriber and pharmacy as well as other features, the CMS emphasizes.

AOA members can access the criteria for a qualified e-prescribing system, a step-by-step guide to e-Rx implementation, and a list of national and regional e-prescribing networks on the Get Rx Connected Web site (

Click here to download all CMS Links for e-Rx.

All electronic health records programs certified for use under the new Medicare and Medicaid EHR incentive programs must provide e-prescribing functions. Practitioners who do not have certified EHRs can still use e-Rx services such as Surescripts, the AOA Health Information Technology Subcommittee notes. The National ePrescribing Safety Initiative offers a free e-prescribing service open to all health care practitioners (

AOA members can access information on all of the above-mentioned resources on the AOA Web site's EHR page (

Medicare e-Rx bonuses, incentives

Medicare e-prescribing program incentives and penalties, by year, are as shown below.

Year Bonus Penalty
2009 2.0 percent
2010 2.0 percent
2011 1.0 percent
2012 1.0 percent 1.0 percent
2013 0.5 percent 1.5 percent
2014 and beyond 2.0 percent

e-Rx patient visit codes

The e-Rx reporting G-code can be used with the following patient visit codes that are commonly used in optometric practices.

--92002 --99212 --99310 --99336
--92004 --99213 --99315 --99337
--92012 --99214 --99316 --99341
--92014 --99215 --99324 --99342
--99201 --99304 --99325 --99343
--99202 --99305 --99326 --99344
--99203 --99306 --99327 --99345
--99204 --99307 --99328 --99347
--99205 --99308 --99334 --99348
--99211 --99309 --99335 --99349
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