eRx: An Overview of Electronic Prescription

Incentives, Penalties, and Exemption

The deadline for qualifying for the e-prescription (eRx) incentive monies arrives at the end of June! Is your practice ready? And if not, what can you do about it?

Beginning on January 1, 2009, section 132 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) authorized a separate incentive program for professionals who meet MIPPA standards for successful electronic prescribing. The Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Sciences determines who qualifies for these incentives—and who faces penalties for not complying (CMS “Overview”).

Eligible professionals can begin reporting for the eRx measure at any time throughout 2011 (through December 31) to be incentive eligible. However, in order to avoid penalties, they must report prior to the June 30, 2011 deadline (CMS “How to Get Started”).


In order to participate in the eRx incentive program a doctor doesn’t need to sign up or pre-register. To be eligible a practice/doctor needs only to have and use a qualified eRx system and report on its adoption and use of it. A professional must also meet the CMS criteria for a successful electronic prescriber for a specific reporting period. As the eRx Incentive program requirements and measurement criteria may differ from year to year, a practice must make sure they are using the eRx incentive documents for the correct program year (CMS “Overview”). To determine if a professional is eligible, the CMS will analyze claims data from January 1, 2011 through June 30, 2011; the professional has to have submitted at least ten electronic prescriptions during this first half of 2011 (CMS “2011 eRx Incentive Program Update”). If a practice satisfactorily fulfills the CMS requirements within the allotted time frame, the practice will receive an extra 1% in receivables from their Medicare Part B Physician Fee Schedule (PFS).

To qualify for the incentives, a practice must have an eRx or an EMR with eRx functionality, and that system must possess the following capabilities to:

  • Generate a complete active medication list that incorporates electronic data from applicable pharmacies and pharmacy benefit managers (PBMs) if available.
  • Select medications, print prescriptions, electronically transmit submissions, and conduct alerts.
  • Provide information to facilitate lowering patient cost by offering therapeutically proper alternatives.
  • Provide information on formulary or tiered formulary medications, patient eligibility, and if available, authorization requirements to be sent electronically from the patient’s prescription plan (CMS “How to Get Started”).


The CMS will apply penalizing “payment adjustments” to a doctor whether or not s/he plans to participate in the eRx incentive program. (Medicare Learning Network [MLN] 2). From 2012 through 2014 the eRx penalty will increase each calendar year. To impose these penalties, Medicare will withhold a certain percentage of a practice’s receivables from their PFS. In 2012, 2013, and 2014 practices will face 1%, 1.5%, and 2% penalties respectively.


If a professional wants to seek exemption from the eRx incentive program, and the penalties, s/he must report at least one of two “hardship codes” via claims. Code G8642 is for practices in rural areas without access to sufficient high speed internet, and code G8643 is for practices in areas without sufficient available pharmacies for e-prescribing. If professionals do not have prescribing privileges, they can report another exemption code, G8644. All exemption codes must be submitted prior to June 30, 2011 to avoid penalties in 2012 (CMS “2011 eRx Incentive Program Update”). CMS requires group practices participating in the eRx Group Practice Reporting Option (GPRO) I or II during 2011 to become successful electronic prescribers and complete the stipulated reporting (MLN 2).

The 2012 penalties will not apply if, for the first six months of 2011, either 10% of the practice’s allowed charges are “comprised of codes in the denominator of the 2011 eRx measure, or, if the practice has less than 100 cases containing an encounter code in the measure’s denominator (MLN 2). Two more ways practices or professionals can avoid penalties are if the professional is not a physician, nurse practitioner, or physician assistant as of June 30, 2011, or if the practice becomes a successful electronic prescriber by submitting the required number of eRxs via claims and reports this to CMS before June 30, 2011 (MLN 3).


A physician or practice can report their eRx data three ways:

  1. Claims-based: The professional reports only one G-code (G8553).
  2. Registry-based: The professional uses a CMS-selected registry to submit 2011 data to CMS during the first quarter of 2012.
  3. EMR-based: The professional uses a CMS-selected EMR product to submit 2011 data to CMS during the first quarter of 2012.

It’s important to note that for the latter two methods, only registries and EMR vendors that have been thoroughly investigated and officially listed on an official list of registries/EMR vendors by CMS (based on the 2011 Physician Quality Reporting System/eRx Incentive Program) are considered qualified for reporting purposes for the eRx incentive program. This list of qualified vendors will be available on the CMS website later this year (CMS “How to Get Started”).

2011 eRx Proposed Rule

The Federal Register finally posted the published version of the 2011 eRx proposed rule on June 1, 2011 (CMS “2011…Update”). This proposed rule would add additional significant exemption categories and extend the deadline for submitting requests for the two extant hardship categories. You can find it linked as a downloadable pdf on the CMS eRx website under “Related Links Outside CMS” on the “Statute Regulations” page. The deadline for submitting comments to the proposed rule is July 25, 2011. You can submit comments electronically at, by regular, express, or overnight mail, or by hand/courier. See the Federal Register Vol. 76, No. 105 pdf June 1, 2011 for the proposed rule and details on how to comment (CMS “2011…Update”).

eRx and the Big Picture: Meaningful Use

The government imposed eRx regulations in order to help facilitate the improvement of U.S. healthcare, outlined and imposed in the Health Information Technology for Economic and Clinical Health (HITECH) provision of the American Recovery and Reinvestment Act (ARRA) of 2009. HITECH focuses on improving the affordability of healthcare, outlining diverse programs and funding grants, loans, and incentives (Clinic Service 1). The two biggest courses on the healthcare industry’s plate right now are the eRx and EMR incentives and deadlines.

Most electronic medical record (EMR) vendors also offer eRx as an integrating add-on through either their own software or a partnered vendor’s. eRx allows physicians to select drug formularies based on a patient’s insurance coverage; access to insurance information allows doctors to work around their patient’s out-of-pocket cost for prescriptions before they’re filled (Clinic Service 4). If you are interested in learning more about EMR types, costs, and incentives, please visit Clinic Service’s “Articles” page to access our new extensive but succinct article “Electronic Medical Records.”


Centers for Medicare & Medicaid Services (CMS). “Medicare Program; Proposed Changes to the Electronic Prescribing (eRx) Incentive Program.” Federal Register 76.105 (2011): 31547-31556. Web. 21 June, 2011.

CMS. “E-Prescribing Incentive Program: Spotlight.” U.S. Department of Health and Human Services. Web. 21 June 2011.

CMS. “2011 Electronic Prescribing (eRx) Incentive Program Update—Future Payment Adjustments.” MLN Matters, SE1107 (2010). Web. 21 June, 2011.

CMS. “E-Prescribing Incentive Program: Overview.” U.S. Department of Health and Human Services. Web. 21 June, 2011.

CMS. “2011 Electronic Prescribing (eRx) Incentive Program Update.” U.S. Department of Health and Human Services. Web, pdf. 21 June 2011.

CMS. “E-Prescribing Incentive Program: How To Get Started.” U.S. Department of Health and Human Services. Web. 22 June 2011.