Volume 6, Issue 2 May 2011

It’s Time to Get Our Ducks in a Row - Value Based Purchasing is the Future

In this issue, we look at two key components of Medicare’s transition from the current fee-for-service reimbursement to a Value-Based Purchasing methodology of reimbursement, the Medicare eRx and EHR Incentive Programs.

What You Need to Know about Medicare’s eRx Program

Electronic prescribing is the transmission of prescription or prescription related information through electronic media. Electronic prescribing takes place between a prescriber, dispenser, pharmacy benefit manager (PBM), or health plan. It can take place directly or through an intermediary such as an electronic prescribing network.

While electronic prescribing can save time and enhance practice and pharmacy productivity and efficiency, the main goal of electronic prescribing is to improve patient safety and quality of care. In fact, eRx is a key component of Medicare’s transition from the current fee-for-service reimbursement to a value-based purchasing (VBP) methodology of reimbursement. Furthermore, electronic prescribing represents nearly half of the actions necessary to meet Medicare’s meaningful use requirements under the Electronic Health Record (EHR) incentive program.

With the goals of increased patient safety and the transition to VBP in mind, Medicare’s Electronic Prescribing (eRx) Incentive Program was authorized under section 132 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) to promote adoption and use of eRx systems. The eRx incentive program, which began on January 1, 2009, provides an incentive payment for eligible professionals who are successful electronic prescribers as defined by MIPPA. The eRx program is separate from Medicare’s EHR and Physician Quality Reporting System (PQRS) program. Each year CMS implements the eRx program through the annual rulemaking process published in the Federal Register.

Qualified eRx Systems

For purposes of the eRx program, CMS defines eligible professionals (EPs) to include physicians and other recognized practitioners under the Medicare Act who have prescribing authority within their scope of practice. To be eligible for the eRx incentive, EPs must have and use a qualified eRx system, report on the adoption and use of the eRx system, and meet the criteria for successful electronic prescribing.

Qualified eRx systems may be either:

  • A stand-alone eRx system, or
  • An electronic health record (EHR) system with eRx functionality

Qualified eRx systems have all of the following capabilities:

  • Generating a complete active medication list incorporating electronic data received from applicable pharmacies and PBMs.
  • Selecting medications, printing prescriptions, electronically transmitting prescriptions, and conducting all alerts.
  • Providing information related to lower cost, therapeutically appropriate alternatives (if any). The availability of an eRx system to receive tiered formulary information, if available, would meet this requirement in 2011.
  • Providing information on formulary or tiered formulary medications, patient eligibility, and authorization requirements received electronically from the patient’s drug plan, if available.

You can find the list of 2011 Qualified EHR Vendors for the eRx Incentive Program on the CMS eRx Webpage by clicking on the link “How to Get Started” and scrolling to the bottom of the page.

eRx Incentives & Penalties

In 2011, EPs who are successful electronic prescribers can earn an incentive payment of 1% of their total allowed charges for professional services covered by the Medicare Part B Physician Fee Schedule (MPFS) and furnished during the reporting period. This is a reduction from the 2% incentive successful e-prescribers earned in 2009 and 2010.

In 2011, the eRx incentive is limited to EPs whose estimated allowed charges for the e-prescribing denominator codes (payable CPT codes) listed below, represent at least 10% of their total MPFS allowed charges for the reporting period.

Denominator codes for eRx:

  • 90801, 90802, 90804-90809, 90862, 92002, 92004, 92012, 92014, 96150-96152, 99201-99205, 99211-99215, 99304-99310, 99315, 99316, 99324-99328, 99334-99337, 99341-99345, 99347, 99348-99350, G0101, G0108, G0109

Additionally, in accordance with Section 132 of the MIPPA, EPs who are not successful e-prescribers may be subject to a penalty beginning January 1, 2012. In 2012, the penalty adjustment for not being a successful electronic prescriber is 1% and this penalty adjustment increases to 1.5% in 2013 and 2% in 2014 see Figure 1 below. The eRx payment adjustment is applied to the allowed amount the provider would have otherwise received for their covered Part B services paid under the MPFS.

The criteria for the application of the eRx penalty in 2012 & 2013 is the subject of much criticism in the medical community as CMS is basing the 2012 penalty on e-prescribing activity that occurs during January 1, 2011 – June 30, 2011, and the 2013 penalty on e-prescribing activity occurring throughout 2011.

Although CMS has indicated they may consider revisiting the criteria for the 2013 eRx penalty in future rulemaking, there has been no indication to date that they are willing to reconsider the criteria for the 2012 penalty.

What Does This Mean to You?

If you have prescribing authority, and if the face-to-face services listed as the eRx denominator codes represent at least 10% of your covered MPFS charges (this does not include labs and drugs as they are not paid under the MPFS), you must e-prescribe and report the e-prescribing G-code, G8553, at least 10 times for applicable Medicare office visits between January 1, 2011 and June 30, 2011 in order to avoid the 2012 eRx penalty. Furthermore, you must report those 10 eRx events through the claims-based reporting process even if you are otherwise planning to report through a qualified registry or EHR.

Moreover, unless CMS changes the 2013 eRx penalty criteria in future rulemaking, EPs must report at least 25 times throughout the reporting period of January 1, 2011 – December 31, 2011 to avoid the 1.5% penalty in 2013.

Electronic Prescribing eRx Incentives & Penalties

2011 1%
2012 1%
2013 0.5%
2012 Receive 99% of EP or group practice Part B covered services
2013 Receive 98.5%
2014 Receive 98%
It is possible to receive an eRx incentive payment
for 2011 AND an eRx payment adjustment for 2012

Figure 1

Exceptions to the 2012 eRx Penalty

The 2012 eRx penalty will not apply to:

  • A professional who is not a physician (MD, DO, or podiatrist), Nurse Practitioner, or Physician Assistant as of June 30, 2011, based on their primary taxonomy code in the National Plan and Provider Enumeration System (NPPES);
  • A physician who does not have prescribing privileges and reports G-code G8644 eligible professional does not have prescribing privileges, at least one time on an eligible claim prior to June 30, 2011; or
  • A physician who does not have at least 100 cases containing an encounter code in the measure’s denominator.

In addition to the exceptions listed above, there are also two significant hardship exemptions. An eligible professional may request an exemption to the eRx Incentive Program and the 2012 payment adjustment, by reporting one of two hardship codes at least one time on a denominator-eligible claim during the 2012 payment adjustment reporting period (January 1 through June 30, 2011) if one of the following situations apply:

  • G8642 - The eligible professional practices in a rural area without sufficient high speed internet access and requests a hardship exemption from the application of the payment adjustment under section 1848(a)(5)(A) of the Social Security Act.
  • G8643 - The eligible professional practices in an area without sufficient available pharmacies for electronic prescribing and requests a hardship exemption from the application of the payment adjustment under section 1848(a) (5) (A) of the Social Security Act.

3 Methods for Successful eRx Reporting in 2011

3 Methods for Successful ERX Reporting in 2011The 2011 eRx reporting period is the entire calendar year, January 1-December 31, 2011. There is no registration necessary and EPs may begin reporting the eRx measure at any time throughout the reporting period to be eligible for the incentive.

In 2011, eRx data can be reported through:

  • Claims-based reporting of the eRx measure. Report only one G-code (G8553) for 2011.
  • Registry-based reporting using a CMS-selected registry to submit 2011 data to CMS during the first quarter of 2012.
  • EHR-based reporting using a CMS-selected EHR product, submitting 2011 data to CMS during the first quarter of 2012.

Only those registries and EHRs qualified by CMS to report the 2011 PQRS are eligible to become qualified for purposes of submitting data on the eRx measure on behalf of eligible professionals. A list of CMS 2011 qualified registries and EHRs, is available on the Alternative Reporting Mechanisms page on the CMS Physician Quality Reporting site at www.cms.gov/pqrs.

Remember, to avoid the 1% penalty in 2012 you must report G8553 at least 10 times through the claims process between January 1, 2011 and June 30, 2011 even if you otherwise plan to report through a qualified registry or EHR. EPs, who are participating in the EHR Incentive Program and therefore not eligible for the eRx incentive, must still report the eRx measure to avoid the penalty.

To be a successful electronic prescriber and be eligible to receive the 1% eRx incentive payment, EPs must report G8553 the eRx measure (numerator) code, attesting that during the patient visit at least one prescription was electronically prescribed through a qualified eRx system, along with the qualifying visit (denominator) code on at least 25 unique encounters.

Nonetheless, it is possible for EPs to receive both an eRx incentive in 2011 and a penalty in 2012 as the criteria for applying the 2012 penalty is based on eRx activity occurring during the first six months and the incentive payment is based on eRx activity occurring anytime during the reporting period of calendar year 2011.

EPs who successfully report the eRx measure and associated denominator code at least 25 times during 2011, through claims or a qualified EHR or registry, may earn the incentive payment in 2012. However, if less than 10 of the qualifying events were reported through the claims process within the first six months of 2011, the EP will also be subject to the 1% payment penalty in 2012.

Claims Based eRx Reporting Tips

For those of you familiar with claims-based reporting under the CMS PQRS program, you will find that claims-based reporting for the eRx program is very similar. Below is a summary of the claims-based eRx reporting and coding tips available on the E-Prescribing Measure page of the CMS eRx Website.

  • The eRx numerator G-code G8553 At least one prescription created during the encounter was generated and transmitted electronically using a qualified eRx system must be reported:
    • On the claim with the denominator billing code (payment code) that represents the eligible encounter
    • For the same beneficiary
    • For the same date of service (DOS)
    • By the same EP (individual NPI) who performed the covered service (denominator code)
  • The eRx G-code must be submitted with a line-item charge of zero dollars ($0.00)
    • The submitted charge field cannot be blank
    • If a system does not allow a $0.00 line-item charge, a nominal amount can be substituted - the beneficiary is not liable for this nominal amount
    • Entire claims with a zero charge will be rejected
    • The eRx G-code line is denied and tracked
    • eRx line items will be denied for payment, but are passed through the claims processing system to the National Claims History database (NCH), used for eRx claims analysis.
    • EPs will receive a Remittance Advice (RA) that includes standard remark code N365 “This procedure code is not payable. It is for reporting/information purposes only.”
    • The N365 remark code does not indicate whether the eRx G-code is accurate for that claim or for the measure the EP is reporting. N365 only indicates that the eRx G-code passed into NCH.
  • When a group bills, the group NPI is submitted at the claim level, therefore, the individual rendering/performing physician’s NPI must be placed on each line item, including all allowed charges and quality-data line items.
  • Solo practitioners should follow their normal billing practice of placing their individual NPI in the billing provider field.
  • Claims may not be resubmitted for the sole purpose of adding or correcting an eRx code.
  • Claims processed by the Carrier/MAC must reach the NCH file by February 24, 2012 to be included in the analysis.
  • Claims that are resubmitted only to add QDCs will not be included in the analysis.

Medical Societies Urge Change to eRx Penalty Program

In a letter dated December 9, 2010, the American Medical Association (AMA), the American Society of Clinical Oncology (ASCO), and 102 state and specialty medical societies urged the Department of Health and Human Services to intervene and revise the current CMS policy for imposing eRx penalties in 2012 and 2013. As discussed in detail in this newsletter, to avoid penalties in 2012, CMS is requiring eligible providers to report the eRx G-Code, G8553, via claims, at least ten times for applicable Medicare office visits and services during the January 1, 2011 through June 30, 2011 reporting period.

The letter recommends that at the very minimum, CMS extend the reporting period so that physicians can report the eRx code, G8553, at least ten times during the first ten, rather than six, months of 2011 to avoid the 2012 penalty. The letter also calls for CMS to add more exception categories so that more providers will be eligible for an exemption from eRx penalties in 2012 and suggests that physicians who attest to meaningful use in 2011 or 2012 should be exempt from eRx penalties.

There is now less than 6 weeks left in the January 1, 2011- June 30, 2011 eRx reporting period during which EPs who do not qualify for an exemption may report the eRx measure to avoid the 2012 penalty. To date, CMS has not indicated a willingness to change the 2012 eRx penalty policy.

Medicare's Electronic Health Record Incentive Program

The Electronic Health Record (EHR) Incentive Program was established by the Health Information Technology for Economic and Clinical Health (HITECH) Act of the American Recovery & Reinvestment Act (ARRA) of 2009. The stated goal of the EHR program is to transform the nation's health care system and improve the quality, safety and efficiency of patient health care through the use of electronic health records.

Along with eRx, the EHR Incentive Program is another step forward in Medicare’s transition from the current fee-for-service reimbursement to a value-based purchasing (VBP) methodology of reimbursement.

The EHR program is a rather complicated program and while this article will focus on its key elements readers who have yet to register and attest in this program are urged to devote the necessary time to review the program details on the CMS EHR Website. As mentioned earlier in this newsletter, EPs can wait until 2012 to participate in the EHR program and still qualify for the maximum allowed incentive payment.

The Medicare and Medicaid EHR Incentive Programs provide incentive payments to eligible professionals (EPs), eligible hospitals and critical access hospitals (CAHs) as they adopt, implement, upgrade or demonstrate “meaningful use” of certified EHR technology. Meaningful use in the EHR Incentive Program is defined as, “Using certified EHR technology to improve quality, safety, efficiency, and reduce health disparities.”

Under the Medicare EHR program, an EP is a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor, who is legally authorized to practice under state law. Moreover, a qualifying EP is one who successfully demonstrates meaningful use for the EHR reporting period.

Providers can only participate in one EHR incentive program. Therefore, providers who meet the eligibility requirements for both the Medicare and Medicaid EHR incentive programs will need to select which program they would like to participate in when they register. It is unlikely that many oncologists would meet the criteria for the Medicaid EHR incentive program as they must have a minimum 30% Medicaid patient volume or practice predominantly in a Federally Qualified Health Center or Rural Health Center and have a minimum 30% patient volume attributable to needy individuals. Therefore, this article will focus on the Medicare EHR program.

The program starts in 2011 and continues through 2016. Depending on the first year they participate, eligible professionals can participate for up to 5 years throughout the duration of the program. The last year to begin participation in the Medicare EHR Incentive Program is 2014.

Future EHR program rules and criteria are still being developed; sign up for the CMS EHR listserv to stay abreast of the latest EHR Incentive Program news.

EHR Incentive Payments & Penalties

The maximum incentive payments available in the Medicare EHR incentive program varies depending on the year the EP becomes eligible for the incentive. EPs who begin participation in either 2011 or 2012 are eligible to earn the maximum incentive payment of up to $44,000 over 5 years. The maximum payment that a physician can receive is limited to 75% of their professional part B allowable charges submitted to Medicare in the calendar year. Physicians who practice in a health-care provider shortage area receive an additional 10% of their qualifying amount. As illustrated below in Figure 2, you can enroll in 2011 or 2012 and still earn the maximum allowable incentive of up to $44,000.

Beginning in 2015, Medicare payment adjustments will begin for EPs and eligible hospitals that are not meaningful users of EHR technology.

Consequently, if you are still trying to determine which incentive programs to participate in this year and you do not have the resources to participate in all three programs, EHR, PQRS and eRx, it would be advisable to participate in the PQRS and the eRx programs this year, while they still provide an incentive payment and in order to avoid the eRx penalty in 2012, and begin the EHR program in 2012.

year of eligibility ↓







Total Paid









































Figure 2

For the first year for which an EP applies for and receives an incentive payment (2011 or 2012), the EHR Reporting Period is 90 days for any continuous period beginning and ending within the year. For every year after the first payment year, the EHR reporting period is the entire year.

In order to earn an EHR incentive payment EPs must accomplish the following:

  • Successfully register for the Medicare EHR Incentive Program;
  • Meet meaningful use criteria using certified EHR technology; and
  • Successfully attest, through the CMS Web-based system, that they have met meaningful use criteria using certified EHR technology.

The last year during which EPs can initiate participation in the Medicare EHR Incentive Program is 2014, and in 2015, EPs who are not meaningful users will receive a 1% Medicare payment penalty. See Figure 3 for a timeline of the Medicare and Medicaid EHR Incentive Programs.

EHR Incentive Programs Timeline

EHR Incentive Program Timeline

Adapted from the CMS Medicare and Medicaid EHR Incentive Programs Milestone Timeline

EHR Meaningful Use

EPs demonstrate meaningful use by using EHR technology in ways that can be measured significantly in quality and quantity. ARRA identified the following three main components of meaningful use:

  • The use of a certified EHR in a meaningful manner, such as e-prescribing.
  • The use of certified EHR technology for electronic exchange of health information to improve quality of health care.
  • The use of certified EHR technology to submit clinical quality and other measures.

The specific criteria for meaningful use will be staged in three steps over the next five years:

  • Stage 1 (2011 and 2012) sets the baseline for electronic data capture and information sharing.
  • Stage 2 (expected to be implemented in 2013) and
  • Stage 3 (expected to be implemented in 2015) will continue to expand on this baseline and be developed through future rule making.

In stage 1, 2011 and 2012, there are a total of 25 meaningful use objectives. To qualify for an incentive payment, EPs must meet 20 of these 25 objectives, including 15 required core objectives and 5 menu set objectives that may be chosen from a list of 10. In addition, EPs must report on 6 total clinical quality measures: 3 required core measures (substituting alternate core measures where necessary) and 3 additional measures (selected from a set of 38 clinical quality measures).

CMS has developed a document with links to a Meaningful Use Specification Sheet for each meaningful use objective. Similar to the PQRS measures specification sheets, each meaningful use specification sheet includes information on meeting the measures objective, calculating the numerator and denominator for the objective, qualifying for an exclusion to the objective, definitions of terms that clarify objective requirements and the requirements for attesting to each measure.

CMS has also published a Clinical Quality Measure Overview/Description sheet for each clinical quality measure. Each measure sheet contains the measure title, description, number, measurement period, measure steward, and other relevant information to the measure. The clinical quality measure sheets can be found on the electronic specifications section of the Quality Measures Webpage.

Registering in the EHR Program

Registration for the EHR program began in January of this year and EPs wishing to receive an incentive payment for calendar year 2011 have until February 29, 2012 to register and attest. Registration for this program is a straightforward and relatively simple process, which CMS outlines in the EHR Registration User Guide. Immediately upon completing the registration process, providers may view their registration status, which will indicate if they have successfully registered in the EHR Incentive Program.

In order to complete the on-line registration process EPs will need to have their:

  • National Provider Identifier (NPI)
  • National Plan and Provider Enumeration System (NPPES) User ID and Password
  • Payee Tax Identification Number - if reassigning your benefits
  • Payee National Provider Identifier (NPI) - if reassigning your benefits

During the registration process, providers will be prompted to answer whether or not they have a certified EHR. While a certified EHR is not required to complete the registration process, an EHR Certification Number is required when you attest for payment. Therefore, providers who are in the process of choosing and implementing an EHR could choose to register now.

Attesting in the EHR Program

In stage 1, EPs will report meaningful use through the Attestation System. Through the online attestation, EPs will fill in numerators and denominators for the meaningful use objectives and clinical quality measures, indicate if they qualify for exclusions to specific objectives, and legally attest that they have successfully demonstrated meaningful use. Immediately upon Attesting in the EHR Programsubmitting their results in the online Attestation System, providers will see a summary of their attestation and whether or not it was successful. Once an EP successfully completes the attestation, they qualify for a Medicare EHR incentive payment.

Attestation for the EHR Incentive Program opened April 18, 2011, and several oncology clinics have already reported achieving successful attestation. According to CMS, incentive payments for the Medicare EHR Incentive Program will be made approximately four to eight weeks after an EP, eligible hospital or critical access hospital meets the program requirements and successfully attests to meaningful use of certified EHR technology. CMS says they expect the first payments to begin in May 2011.

Providers attesting to receive an EHR incentive payment may be subject to an audit. For this reason, CMS instructs providers attesting to receive an incentive payment to retain all relevant supporting documentation (in either paper or electronic format used in the completion of the Attestation Module responses) for six years post-attestation. Relevant supporting documentation includes electronic or paper documentation that support your attestation as well as the documentation to support your Clinical Quality Measures (CQMs).

If audited, this documentation will be used to validate that you accurately attested and submitted CQMs, as well as to verify that the incentive payment was accurate.

Published by Rise Marie Cleland. Sponsored by Lilly Oncology

2011 eRx Codes

eRx Numerator Code:

  • G8553: At least one prescription created during the encounter was generated and transmitted electronically using a qualified eRx system

Qualifying Denominator Codes:

  • 90801, 90802, 90804-90809, 90862, 92002, 92004, 92012, 92014, 96150-96152, 99201-99205, 99211-99215, 99304-99310, 99315, 99316, 99324-99328, 99334-99337, 99341-99345, 99347, 99348-99350, G0101, G0108, G0109

eRx Hardship Exemption Codes:

  • G8642: The eligible professional practices in a rural area without sufficient high speed internet access and requests a hardship exemption from the application of the payment adjustment under section 1848(a)(5)(A) of the Social Security Act
  • G8643:The eligible professional practices in an area without sufficient available pharmacies for electronic prescribing and requests a hardship exemption from the application of the payment adjustment under section 1848(a)(5)(A) of the Social Security Act

eRx Exception Code:

  • G8644: Eligible provider does not have prescribing privileges

eRx Resources

Practices that have not yet begun participation in the Medicare eRx program should first begin by carefully reviewing the program details and resources available on the CMS eRx Website. To gather all pertinent information one should work their way through each link and review all of the pertinent resources under the Downloads and Related Links on each page.

Another excellent and reliable source of eRx Incentive Program information is the AMA’s Zero-In RX ePrescribing Learning Center. On the site, the AMA makes available an interactive tool through which providers can find and compare eRx systems based on their responses to a brief on-line questionnaire, and read vendor feedback and ratings from other users. The learning center also includes calculators to estimate potential timesavings and eligibility for incentive payments along with tools to help determine and facilitate practice readiness for implementation of new technologies.

2010 Newsletter Archives

Volume 6, Issue 1
Volume 5, Issue 6
Volume 5, Issue 5
Volume 5, Issue 4
Volume 5, Issue 3
Volume 5, Issue 2
Volume 5, Issue 1

Risë Marie Cleland

Oplinc, Inc.
113 W. 7th Street
Suite 205
Vancouver, WA 98660
360.695.1608 office
360.326.1733 fax

Comments and suggestions for future issues are welcome, please forward correspondence to Risë Marie Cleland by email at: Rise@Oplinc.com

Access all of our previous newsletters.

Risë Marie Cleland is the Founder and CEO of Oplinc, Inc., a national organization of oncology professionals. Through Oplinc, Inc., Ms. Cleland publishes the weekly Oplinc Fast Facts focusing on the timely dissemination of information pertaining to billing, reimbursement and practice management in the oncology office and Oplinc’s Best Practices Review, which provides a more in-depth look at the issues and challenges facing oncology practices. Ms. Cleland also works as a consultant and advisor for physician practices, pharmaceutical companies and distributors.

Please note that this newsletter is presented for informational purposes only. It is not intended to provide coding, billing or legal advice. Regulations and policies concerning Medicare reimbursement are a rapidly changing area of the law. While we have made every effort to be current as of the issue date, the information may not be as current or comprehensive when you review it. Please consult with your legal counsel for any specific reimbursement information. For Medicare regulations visit: www.cms.gov.

CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2011 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein.

Copyright ©2011
Oplinc, Inc.
Oplinc, Inc., grants permission to distribute this newsletter without prior permission provided that it is forwarded unedited and in its entirety.

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