[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





                         ELECTRONIC PRESCRIBING

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 22, 2004

                               __________

                           Serial No. 108-56

                               __________

         Printed for the use of the Committee on Ways and Means


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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana               JIM MCDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         SUBCOMMITTEE ON HEALTH

                NANCY L. JOHNSON, Connecticut, Chairman

JIM MCCRERY, Louisiana               FORTNEY PETE STARK, California
PHILIP M. CRANE, Illinois            GERALD D. KLECZKA, Wisconsin
SAM JOHNSON, Texas                   JOHN LEWIS, Georgia
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               LLOYD DOGGETT, Texas
PHIL ENGLISH, Pennsylvania
JENNIFER DUNN, Washington

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisories announcing the hearing................................     2

                               WITNESSES

Brigham and Women's Center for Applied Medical Information 
  Systems, Jonathan M. Teich.....................................    20
National Association of Chain Drug Stores, Craig L. Fuller.......    10
RxHub, David McLean..............................................     7
Women's Health Center Cardiology, Thomas E. Sullivan.............    16

                       SUBMISSIONS FOR THE RECORD

American College of Physicians, statement and attachment.........    36
America's Health Insurance Plans, statement......................    41
American Osteopathic Association, statement......................    44
Wellinx, Saint Louis, MO, Tom Doerr, statement and attachment....    45

 
                         ELECTRONIC PRESCRIBING

                              ----------                              


                        THURSDAY, JULY 22, 2004

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 1:20 p.m., in 
room B-318, Rayburn House Office Building, Hon. Nancy L. 
Johnson (Chairman of the Subcommittee) presiding.
    [The advisories of July 15, 2004 and July 16, 2004 
announcing the hearing follow:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON HEALTH

                                                CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
July 15, 2004
HL-10

                      Johnson Announces Hearing on

                         Electronic Prescribing

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Health of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on electronic prescribing. The hearing 
will take place on Thursday, July 22, 2004, in the main Committee 
hearing room, 1100 Longworth House Office Building, beginning at 1:00 
p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include representatives from private sector entities to 
discuss the adoption of electronic prescribing technology and its 
ability to reduce costs and improve patient outcomes. However, any 
individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Electronic prescribing (``e-prescribing''), like other types of 
health information technology, has the ability to reduce medication 
errors and costs, and improve health quality and outcomes.
      
    Data transaction standards are already under development in the 
private marketplace and public sector to fill the gaps in existing e-
prescribing standards and to enable the delivery of patient information 
to physicians at the point of care. In addition, technology already 
exists for e-prescribing, and some in the private sector are realizing 
its benefits. But the standards are not uniform, and widespread 
adoption of this technology has been fractured and limited.
      
    The Medicare Modernization Act (MMA) (P.L. 108-173) requires the 
Secretary of the U.S. Department of Health and Human Services to 
develop uniform e-prescribing standards for the Medicare program in 
conjunction with physicians, hospitals, pharmacies and pharmacists, 
Pharmacy Benefit Managers, and State boards of pharmacy and medicine. 
Initial standards which are due in September 2005, would be pilot-
tested in 2006. Lessons learned from the successes and failures 
associated with this testing would be incorporated into final uniform 
standards beginning in 2008.
      
    The MMA also includes grants to physicians to facilitate the 
adoption of e-prescribing for Medicare beneficiaries. A safe harbor 
under the anti-kickback statutes was created by the law to allow plans 
to purchase hardware and software and to provide technical assistance 
and education to participating physicians who adopt e-prescribing.
      
    In announcing the hearing, Chairman Johnson stated, ``E-prescribing 
can improve heath care quality, reduce medical errors, and curb costs. 
This technology is a critical first step towards the adoption of 
information technology throughout the health care profession. Medicare 
can both learn from the private sector and lead the way in this area by 
encouraging greater use of e-prescribing technology.''
      

FOCUS OF THE HEARING:

      
    The hearing will examine the experiences of the private sector in 
adopting standards and technology for e-prescribing, and the potential 
of e-prescribing to reduce costs and improve health outcomes.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
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FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
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noted above.

                                 

                 * * * NOTICE--CHANGE IN LOCATION * * *

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON HEALTH

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 16, 2004
HL-10

                   Change in Location for Hearing on

                         Electronic Prescribing

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Health of the Committee on Ways and Means, today announced that the 
Subcommittee hearing on electronic prescribing, previously scheduled 
for Thursday, July 22, 2004, at 1:00 p.m., in room 1100 Longworth House 
Office Building, will now be held in room B-318 Rayburn House Office 
Building.
      
    All other details for the hearing remain the same. (See Health 
Advisory No. HL-10, dated July 15, 2004.)

                                 

    Chairman JOHNSON. Good afternoon, and welcome to you all. 
My apologies for this hearing starting a little late. I am 
pleased to chair the second of two hearings that we have held 
on increasing the use of information technology (IT) in the 
health sector. Today we look specifically at one element of 
technology in health care: electronic prescribing (e-
prescribing). Like other health IT, e-prescribing has the 
ability to reduce medical errors, improve health outcomes, and 
reduce costs. This technology is a critical first step toward 
greater use of IT throughout the health care professions.
    The technology exists to make e-prescribing widespread, and 
pharmacists are already capable of handling electronic 
prescriptions. Some health providers are undertaking 
investments to implement e-prescribing technology, but 
widespread adoption has been slow. Our goal today at this 
hearing is to learn more about what the private sector is doing 
to advance e-prescribing and to understand how we can encourage 
more rapid implementation of this important technology.
    We took some important strides in the Medicare Prescription 
Drug, Improvement and Modernization Act of 2003 (MMA) (P.L. 
108-173) to promote widespread adoption of e-prescribing. The 
MMA requires the Secretary of the U.S. Department of Health and 
Human Services (HHS) to promulgate standards for e-prescribing 
to encourage the use of the technology in the Medicare 
prescription drug program. The Secretary must develop these 
standards in conjunction with physicians, hospitals, pharmacies 
and pharmacists, pharmacy benefit managers (PBMs), and State 
Boards of Pharmacy and Medicine. Initial standards are due in 
September of 2005 and will be pilot-tested in 2006. Lessons 
learned from the successes and failures associated with this 
testing will be incorporated into final uniform standards in 
2008.
    I am extremely pleased that HHS announced yesterday that it 
would accelerate development of these standards so that when 
prescription drugs are available for the first time for our 
seniors under Medicare, so would e-prescribing. It is very, 
very exciting to me how aggressively our HHS Secretary Tommy 
Thompson has pushed forward the information management 
technology into health care, and, indeed, he has set very 
accelerated timetables, far more aggressive than the final bill 
contained, but not as aggressive as the original House bill, 
because we do feel very, very strongly about the moral 
obligation of society to provide electronic e-prescribing at 
the same time we enable the seniors to use so many more drugs 
and to change the role of medicine in the lives of many of our 
seniors.
    Our witnesses today will provide us with an overview of the 
steps being taken by the private sector to advance the use of 
e-prescribing. First we will hear from David McLean, Chief 
Executive Officer (CEO) of RxHub. RxHub is making e-prescribing 
a reality by creating a standardized communications framework 
that links pharmacies, prescribers, PBMs, and benefit plans to 
enable electronic sharing of information. I look forward to 
hearing about how RxHub is developing this framework, making it 
accessible in doctors' offices, small pharmacies, health care 
providers throughout the country.
    Next we will hear from Craig Fuller, President and CEO of 
the National Association of Chain Drug Stores (NACDS). Through 
the founding of SureScripts, an electronic network that 
establishes two-way communications between pharmacists and 
physicians, NACDS has taken a leadership role in promoting 
greater use of e-prescribing. We will then hear from a 
physician who is actively using e-prescribing today. Dr. Thomas 
Sullivan is a solo practitioner of cardiology who currently 
processes 95 percent of his prescriptions electronically. I 
look forward to hearing his perspective on the benefits of e-
prescribing and the difference it has made in his practice, in 
part because the most difficult step in implementing e-
prescribing nationwide is going to be to get it in practices of 
the sort that you represent here today at the table.
    Finally, we will hear from Dr. Jonathan Teich of Harvard 
Medical School. Dr. Teich has written extensively on the use of 
e-prescribing, and I look forward to his testimony as he 
provides us with an overview of the benefits of e-prescribing 
and ideas as to how to promote the greater use of this 
technology.
    As I stated at our last hearing, these are exciting times 
and interesting times in IT, both in the health care sector and 
the IT sector, and particularly as they are going to come 
together in the health care sector in the next decade. I view 
e-prescribing as an important first step toward the creation of 
a more robust health IT infrastructure in this country. I look 
forward to working with all of you as we move forward to 
improve the safety and quality of our health care system while 
reducing costs for practitioners, payers, consumers, and 
taxpayers. I thank you, and Mr. Stark, I would like to invite 
you to make your opening statement.
    Mr. STARK. Madam Chairman, thank you for this hearing, the 
second one in 5 weeks where we have talked about advances in 
health care IT. I have heard that we could save $27 billion if 
we got this thing all hooked up. I am pleased to hear that we 
are going to move from 2008 to 2007, but that is an area in 
which I am not sure I would like to bet much money. I think we 
could all agree on the benefits, and we can probably all agree 
on the impediments to seeing this done.
    I can remember well over 30 years ago when Visa and 
Mastercharge were implemented, and that was pretty easy because 
you couldn't collect money if you didn't play by the rules. So, 
that was all the incentive you needed. You either follow the 
rules or you don't get paid. That was pretty easy. I am going 
to suggest that. I think what we are going to come down to is 
the basic philosophic difference between you and me, Madam 
Chair, and that is that I would do this the same way you 
changed the accounting rules the other day, by saying what we 
are going to let you deduct or expense regarding options. Now, 
I learned differently when I studied accounting, but we changed 
the rules. So, if you just dropped your gavel and said, dammit, 
next year under Medicare, under the prescription drug bill, 
under Medicaid, nobody gets paid unless they follow a protocol 
which we established, then it would get done. It won't be done 
right. We would have to come back and change it. It will be 
done just as right as waiting for six different people to 
figure out how they are going to do it voluntarily and argue 
about whose plan can talk to the other person's plan.
    I really do believe that this is an area in which a little 
government regulation would get it going. We would have to 
change it. I make no bones about that. It could get started, 
and we would have to pay something in extra costs out of the 
government. I think we would save it in the long run, and I 
hope that the witnesses and those of us who inquire today can 
suggest that as an alternative: can we just make the process 
get started by dropping the gavel and saying, ``Let's do it''? 
I really have a hunch we would save 5 years and a lot of time 
to get to the place where I know our witnesses want to be, I 
know you want to be, we want to be. I am just suggesting how to 
get there.
    Chairman JOHNSON. Well, we may not be as far apart as you 
think, Mr. Stark.
    Mr. STARK. That is great.
    Chairman JOHNSON. I think the purpose of this hearing is--
the pace of change in the private sector has accelerated 
dramatically in the last year--to learn what has happened and 
where the holes are and where we most need to work. You and I 
both recall that we encouraged the private sector to submit 
their bills electronically, and then we paid them more if they 
did and we paid them less if they didn't. So, we have some 
experience with encouraging.
    I am pleased that the Secretary has taken very seriously 
this issue of setting standards so that what we will develop is 
an interoperable system. Those standards will be out and 
available in the very near future. I have forgotten whether it 
is 2 or 3 months. That will certainly be a platform from which 
we can all assume certain actions and require certain actions. 
It is a process.
    Today we are here explicitly to understand more 
specifically how much we have accomplished, how many doctors 
are capable, how many small pharmacists are capable, what does 
it cost, what are the benefits. So, Mr. McLean, I welcome you 
start this panel, and I thank you, Mr. Stark, for your comments 
because it is of the utmost importance that we accomplish this 
goal as a national system.

   STATEMENT OF DAVID McLEAN, CHIEF EXECUTIVE OFFICER, RXHUB

    Mr. McLEAN. Good afternoon, Madam Chairman and Members of 
the Subcommittee. I am David McLean. I am the CEO of RxHub, and 
I want to thank you all for the opportunity to present to you 
today. RxHub is a health care technology company that has 
developed a nationwide electronic information exchange to 
enable the routing of prescription and benefit information 
among connecting prescribers, pharmacies, and PBM. RxHub hopes 
to connect all key groups involved with writing, dispensing, 
and paying for prescription medications and has designed its 
network as a user-neutral platform utilizing a public standard 
development process and neutral open architecture.
    We were founded in 2001 by the then three largest PBMs--
Advance Prescription Card Services (PCS), Express Scripts, and 
Medco Health Solutions. Earlier this year, Caremark Rx 
purchased Advance PCS and has now taken their seat on our 
board. RxHub's original mission--and it continues to be the 
same--was to build the electronic framework that would become a 
secure standardized communication channel throughout the 
prescription writing and delivery and payment process. For such 
a system to effectively meet its twin goals of reducing costs 
and improving patient safety, all parties in the delivery chain 
must be efficiently connected, including physicians, 
pharmacies, technology providers, PBMs, and health plans.
    RxHub has developed and implemented a technology called a 
Master Patient Index which can very accurately identify 
particular patients without the need for a national patient 
identifier or a centralized database, which was a major 
breakthrough not only for RxHub but we believe for the 
industry.
    Through an open public process, RxHub developed standards 
that did not exist to implement its cutting-edge technology to 
route what we call the front-end information, including 
eligibility, benefits, formulary, and patient medication 
history. RxHub has since become the Nation's leader in the 
electronic exchange of prescription information, and we 
continue to expand our network to enable the acceleration and 
adoption of e-prescribing and ultimately moving to electronic 
health records, which we all are envisioning. The benefits of 
such national, systemwide, interoperable communications are 
significant and are expected to have a dramatic impact on 
reducing health care costs, creating system efficiencies, and 
enabling better patient outcomes.
    As exciting as this new technology is, significant hurdles 
remain before the Nation can achieve a health care system that 
rivals our electronic banking system. I can confidently report 
to you that the single most important advancement in making the 
interoperable health systems a reality was the e-prescribing 
provision in the MMA. On behalf of RxHub and our founders, I 
would like to thank you particularly, Congresswoman Johnson, 
and the Committee and your dedicated staff on your leadership 
and commitment to this legislation.
    The MMA created a comprehensive electronic prescription 
program for Medicare beneficiaries whose providers and/or 
pharmacists participate, whether that is voluntarily or through 
contractual requirements of a chronic care program or health 
plan. The MMA expanded e-prescribing to require real-time 
electronic delivery to providers and pharmacists of certain 
patient-specific information related to eligibility, benefits, 
drug interactions, warnings, dosage adjustments, medication 
history, and the availability of generics. This information 
must be delivered in a secure format that complies with health 
privacy regulations. As technology has developed and become 
available for use, there have been several impediments to 
widespread adoption of e-prescribing systems. Some of these 
impediments were addressed specifically in the MMA, and others 
remain formidable challenges.
    By far the greatest barrier for technology developers has 
been the lack of comprehensive uniform national standards under 
which this interoperable system approach could be developed and 
instituted. Physicians, pharmacies, and others in the health 
care delivery industry have been hesitant to invest in systems 
that may not meet certain State laws or pharmacy board 
regulations or may become obsolete like the infamous Beta video 
tapes when standards evolve on a piecemeal basis. In fact, some 
States previously prohibited usage of available e-prescribing 
systems. The MMA requires HHS to promulgate standards that are 
universally interoperable and federally preemptive and 
establishes aggressive deadlines to require conformity by all 
users. Preemption is probably one of the most important 
requirements for a national electronic system of any kind. 
Trying to conform to a patchwork of State laws over an 
electronic, sometimes wireless, system results in significant 
business uncertainty and obviously diminished efficiencies and 
cost savings.
    Another major barrier to e-prescribing and other electronic 
health systems has been the lack of provider adoption. The 
standards necessary to meet the requirements under the MMA are 
not limited simply to data code sets. They must provide the 
necessary decision support tools and operational protocols that 
are essential to integrating electronic systems seamlessly into 
a physician's workflow. Along with the inclusive regulatory 
requirements, the MMA expands the anti-kickback and start safe 
harbor provisions to permit plans to provide hardware and 
software to participating providers and pharmacies to encourage 
adoption. The MMA also authorizes grant funding for physicians 
and other providers to take further advantage of available 
systems.
    Presently, the National Committee on Vital Health 
Statistics (NCVHS) has underway a series of hearings to gather 
information from key stakeholders, as required by the MMA, in 
order to develop recommendations identifying the appropriate 
standards and protocols for the entire Medicare e-prescribing 
system. Under the MMA, these standards must recognize to the 
maximum extent possible current industry-developed standards. 
Because the most current and comprehensive source of medication 
history now resides with the benefit administrator, such as a 
PBM or a health plan, RxHub's network can route such 
information in a secure, concise, and user-friendly format to 
providers at the point of care in less than 3 seconds. This is 
especially important to the health and well-being of obviously 
our senior population, who frequently visit multiple providers, 
multiple pharmacies, and obviously take multiple medications. 
RxHub's network provides similar access to formulary 
information in real time at the point of care, which is 
essential to cost savings and patient safety in the Medicare 
program and the larger health care system in general.
    RxHub has connected, through its PBM participants, over 80 
percent of the commercially insured lives in the United States. 
The same can be achieved for the Medicare population to enable 
the routing of both cost-saving and life-saving information to 
patients and their health care providers. Consequently, RxHub 
has provided information to the NCVHS and to HHS and will 
continue to work diligently to support their efforts under the 
MMA.
    The technology to implement e-prescribing exists today and 
the benefits, particularly safety, compliance, cost savings, 
can be achieved in the near term if there is a commitment of 
the key players and a deployment of resources to get the job 
done. RxHub and its PBM founders are fully supportive of the e-
prescribing effort, including formulation of appropriate 
standards. RxHub stands ready to provide the connectivity and 
information exchange among providers and payers in order to 
achieve the e-prescribing as envisioned in the MMA as soon as 
the standards are finalized. We encourage the HHS to continue 
to work diligently to meet or beat the deadlines established in 
the MMA.
    Because the system also must permit the electronic exchange 
of U.S. Food and Drug Administration (FDA) drug labeling and 
listing information and will require the future electronic 
delivery of patient medical history related to the drug on the 
same standardized system, the national e-prescribing program 
created for Medicare beneficiaries in the MMA provides the 
immediate foundation for an electronic system by which patient 
electronic medical records can be created, maintained, and 
communicated securely, efficiently, and accurately.
    We encourage this Committee to continue its oversight 
effort of the standard-setting process now underway at HHS. 
Effective and aggressive implementation by providers and payers 
of the e-prescribing provisions of the bill is the single most 
important action that can be taken to improve health care in 
America in the near term and reduce costs to the Medicare 
prescription drug program. In conjunction with the 
establishment of standards, it would be very beneficial for the 
Centers for Medicare and Medicaid Services (CMS) to clearly 
define the requirement that e-prescribing be used in the 
Medicare program in order to achieve the greatest cost savings 
and health benefits of this health safety tool. Rapid adoption 
within Medicare will lead to a new standard of care throughout 
the health system that will result in significant savings to 
consumers, providers, and payers and will improve quality 
outcomes.
    This is an incredibly dynamic and exciting time in the 
health care technology industry. It is imperative that the 
physician-patient relationship be preserved. RxHub's ability to 
enable informed prescriptions at the point of care in real time 
can have an immediate and significant impact to improve patient 
safety and reduce overall health care costs. Thank you for the 
opportunity to offer this testimony today. I would be happy to 
answer questions that you may have.
    Chairman JOHNSON. Thank you very much, Mr. McLean. Mr. 
Fuller?

  STATEMENT OF CRAIG L. FULLER, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, NATIONAL ASSOCIATION OF CHAIN DRUG STORES, ALEXANDRIA, 
                            VIRGINIA

    Mr. FULLER. Thank you, Madam Chairman. First, I am Craig 
Fuller. I am the President and CEO of the NACDS. We have 
submitted a statement for the record, but I would like to make 
just some informal comments. I am also the Co-Chairman of 
SureScripts. SureScripts was formed 3 years ago, working with 
the National Community Pharmacists Association. I Co-Chair 
SureScripts along with the head of that association. Together, 
we reach out to all 55,000 pharmacies, both chain pharmacies as 
well as independent pharmacies, with this e-prescribing 
platform. We in chain pharmacy fill about 70 percent of the 
three billion scripts. We at NACDS have been very committed to 
e-prescribing for some time, and we really do commend your 
work, Madam Chairman, and the work of the Committee, the entire 
Committee, in negotiating and inserting into the MMA the 
provisions on e-prescribing because we think it is very 
important.
    I think your comment that this is a robust first step is an 
important concept because I think as much as all of us want to 
see many of the features that I also would commend Secretary 
Thompson for discussing yesterday, you have to start somewhere. 
We are very close, as I think we can tell you today, to really 
giving you the way to jump-start electronic medical records and 
many other technological advantages that we all would like to 
see in health care.
    The challenge is great. Indecipherable, unclear scripts 
today lead to 150 million phone calls a year from pharmacists 
to doctors. It is estimated that 900 million calls were made to 
clarify the prescription from the pharmacist to the doctor, 500 
million calls on refill authorizations, and that is today where 
3.1 billion prescriptions are filled each year. We are going to 
4 billion prescriptions in 2006.
    You have heard before, I know, about how e-prescribing can 
help reduce or eliminate errors, can improve patient compliance 
with medication, create a clear record on prescriptions, and it 
also provides--and some people do not talk a lot about this, 
but a very reliable authentication of who the prescriber 
actually was so that you can get at some of the issues of drug 
abuse that we face today.
    We looked at this about 3 years ago and came to the obvious 
conclusion that if you are going to successfully increase the 
rate at which e-prescribing was adopted, you had to do the 
obvious. You had to find a way to connect physicians and 
pharmacists. Physicians write the prescriptions, and they go to 
the pharmacy to get filled. We wanted a platform--and that is 
how SureScripts was created--that would connect all 55,000 of 
those retail establishments, those stores. Mr. Stark, you are 
quite right: one of the impediments to this is getting systems 
to talk to each other. What SureScripts does is allow those 
55,000 stores with different managements and different 
companies to literally connect to one place where, on the other 
side of the equation, physician systems, different physician 
systems, can be connected.
    We have set up standards, and I will tell you right now, I 
want to associate myself with the very fine statement that Mr. 
McLean made about the important need for standards. We work 
very closely today with SureScripts on issues related to 
standards. We have physician systems that are now certified by 
SureScripts to send prescriptions from the physician through 
SureScripts to the pharmacy. Those same physician systems are 
also connected to RxHub because the information that RxHub is 
making available is very valuable in this system.
    I think one of the things that sometimes frustrates us is 
that the marketplace does not realize today the extent of 
collaboration that is going on between these two enterprises to 
make sure that patients and physicians and pharmacists and PBMs 
are all working together to deliver that script efficiently and 
effectively to the pharmacy--or, by the way, to the mail-order 
pharmacy.
    You know, we have made great progress, and I think that is 
the message I really want to bring today. We have today 65 
percent of retail pharmacies participating, certified to 
participate in SureScripts. By the end of the year, we will 
have 75 percent of the Nation's 55,000 pharmacies. We have 
physician systems that you are going to hear about in a 
minute--you are going to hear about one of them in a minute 
from a doctor who is actually using it. We have these systems 
that they themselves connect today to about 50,000 physicians, 
and by the end of the year we believe we will have more of 
these physician systems connected to SureScripts so that we can 
have 75,000 or more physicians that have the capability of 
engaging in e-prescribing.
    Madam Chairman, you identified the largest problem to the 
progress that we all hope to make, and that is the more rapid 
adoption of these systems by physicians. There is a reason why 
that adoption is slower. For nearly two--in fact, for over two 
decades, retail pharmacies, PBMs, payers have been connected 
electronically. Pharmacies have been automated for two decades. 
It does not mean they all have the e-prescribing capability, 
but they have used automation. We have worked with PBMs and 
payers to move information very effectively through the system. 
Physicians have not been similarly connected. Small practices 
have not had some of these systems in place.
    Now, there is an investment. I do not think the investment 
is larger. The physicians will address that. The systems now, 
with the pharmacy connected, with the connection with PBMs, the 
systems now are really ready at a very low price for physicians 
to connect. There is real value for the physician. The 
physician not only can move the script efficiently; they can 
get feedback from the pharmacist.
    I was visiting with an asthma doctor who said, you know, an 
asthma physician is the most shocked person around when he 
finds out he has got a patient in the emergency room. The 
patient came in, the patient was diagnosed, the patient got the 
proper medication and went on their way. Well, 30 percent of 
those patients never pick up their prescription, and today we 
just put it back on the shelf because we cannot possibly make 
millions of more calls on that issue. With e-prescribing, you 
can provide feedback to the physician. So, you really can 
improve patient care. You can lower health care costs because 
if you keep one asthma patient out of an emergency room, you 
have saved a lot of money.
    There is a lot to be done, and as I said, I think the most 
critical issue here is the setting of standards. It is 
something we are working on very carefully. We think we have 
experience to contribute and to participate in that, and we are 
certainly doing so. I think incentives are important. I think 
that physicians have seen too many different mousetraps come 
down the line, and they are skeptical in some cases. I think we 
can hit a tipping point much more quickly with incentives to 
physicians to try this, to use it, and as I say, I believe they 
will find that there are some real advantages.
    Finally, it is important to remember there are several 
hundred thousand physicians in this country, but 30 percent of 
our physicians fill 80 percent of the prescriptions. Thirty 
percent of the physicians fill 80 percent of the prescriptions. 
We are rolling out SureScripts community by community by 
community, and in every case, with community programs we are 
working with physician groups and organizations to identify 
those 30 percent of the high prescribers, and we are going 
after them first. Not only is it logical to speed 
implementation, it is logical because they and their offices 
will get the greatest benefit. I think, again, in terms of 
incentives, that is another important feature to recall. My 
time has elapsed. Why don't I stop there. I look forward to 
answering your questions, and I thank you again for holding 
this hearing.
    [The prepared statement of Mr. Fuller follows:]

 Statement of Craig L. Fuller, President and Chief Executive Officer, 
    National Association of Chain Drug Stores, Alexandria, Virginia

    Madam Chairwoman and Members of the Health Subcommittee, the 
National Association of Chain Drug Stores (NACDS) is pleased to submit 
this statement for the record regarding electronic prescribing. NACDS 
represents more than 200 chain pharmacy companies that operate nearly 
32,000 community-based retail pharmacies. Our members are the primary 
providers of outpatient prescription drugs in the United States, 
dispensing about 70 percent of the 3.1 billion prescriptions that are 
provided each year. The chain drug industry has been in the forefront 
of using technology to increase efficiency and improve patient care. 
Virtually all pharmacy payment claims are adjudicated and paid through 
an online, real time, standards-based communications system.
    NACDS recognizes and appreciates the leading role that you and the 
Subcommittee have played in encouraging the adoption of electronic 
prescription connectivity. In particular, we want to thank you for your 
efforts last year in including specific language in the Medicare 
Modernization Act (MMA) that requires the development of standards for 
an electronic prescribing program for Medicare prescriptions. These 
efforts will create efficiencies in the delivery of health care, and 
provide a safer medication delivery system.

The Benefits of Electronic Prescribing

    The current system of handwritten prescriptions and telephone 
communications between physicians and pharmacists is inefficient, and 
is ripe for technological solutions. Four years ago, the Institute for 
Safe Medication Practices (ISMP) published a white paper that urges 
health care providers to eliminate handwritten prescriptions.\1\ ISMP 
estimates that indecipherable or unclear prescriptions result in more 
than 150 million calls from pharmacists to physicians asking for 
clarification. Others estimate that pharmacists must call physicians as 
much as 900 million times each year to clarify prescriptions, citing 
reports that almost 30% of prescriptions required callbacks from 
pharmacies.\2\ In addition, each year pharmacies make approximately 500 
million phone calls to physicians for authorization to refill 
prescriptions. The system becomes even more unwieldy as prescription 
volumes continue to grow. Currently, about 3 billion outpatient 
prescriptions are written each year, and this number is expected to 
rise to 4 billion by 2006.
---------------------------------------------------------------------------
    \1\ ISMP, ``A Call to Action: Eliminate Handwritten Prescriptions 
Within 3 Years,'' available at http://www.ismp.org/msaarticles/
whitepaper.html.
    \2\ Forrester Research, 2002; Medco Health, via ePharmaceuticals 
(1/29/03).
---------------------------------------------------------------------------
    Since the ISMP white paper was issued, much progress has been made 
toward the goal of fostering the adoption of electronic prescribing 
systems that are more efficient and safer than handwritten 
prescriptions. Paperless prescribing adds new dimensions of safety and 
efficiency to current practice. Errors can occur at many points in the 
medication prescribing and delivery system; many of these potential 
points of error are due to failures in process and communication. 
Electronically created and transmitted prescriptions streamline this 
process and reduce the potential for failures in communication. ISMP 
has recognized that some of the most common medication errors occur 
when a prescription is ordered or written by a prescriber, and when a 
prescription is entered into the computer system at the pharmacy. 
Electronically created and transmitted prescriptions can reduce or 
eliminate these errors, especially when prescriptions are transmitted 
directly to a pharmacy's computer system.
    Beyond efficiency and patient safety, other benefits of electronic 
prescriptions include:

      Better patient compliance. Electronic prescribing systems 
help physicians and pharmacists track whether patients are 
appropriately utilizing their prescribed medications. For example, 
physicians will know which pharmacy filled a prescription, and whether 
the patient has picked up the medication.
      Clearer prescription documentation. Pharmacies and 
physicians will have a legible electronic record of what has been 
prescribed.
      Reliable authentication of prescribers. Because 
electronic prescriptions are received only through trusted partners or 
agents, electronic prescriptions provide pharmacists a higher level of 
confidence in the authenticity of prescriptions.

The Federal Government's Role in Fostering Electronic Prescriptions

    The federal government has taken the lead in fostering the 
development and adoption of electronic prescribing. Electronic 
prescribing has existed since the Department of Defense developed its 
groundbreaking computer prescription order entry system in the 1980s.
    The Department of Health and Human Services has also been at the 
forefront of encouraging the development of electronic prescribing 
systems. For example, at an April 2002 press conference attended by 
Secretary of Health and Human Services Tommy Thompson, Giant Food 
announced that its 154 pharmacies in the Mid-Atlantic States would be 
electronically connected to physician offices through the Internet. The 
system allows physicians to send electronic prescriptions and lets 
pharmacists send back questions. Secretary Thompson praised the 
initiative and urged more physicians and pharmacists to use electronic 
prescribing. The Secretary noted that electronic prescribing would mean 
``less paper,'' ``fewer errors,'' and ``more time for patients.''
    NACDS commends Congress for its foresight in pursuing electronic 
prescribing as a step toward establishing a national health information 
infrastructure. For example, Madam Chairwoman, you introduced the 
National Health Information Infrastructure Act of 2003, with the goals 
of decreasing costs, maximizing efficiencies, and reducing errors.
    In 2003 Congress passed the Medicare Modernization Act (MMA), P.L. 
107-183, which provides incentives for electronic prescribing. The 
MMA's incentives will help foster the continued adoption of electronic 
prescribing. NACDS commends Congress for providing physicians with 
financial incentives to adopt electronic prescribing. We also support 
the exemption from the anti-kickback law for physicians who are given 
access to electronic prescribing systems.
    Encouraging physician acceptance and adoption of electronic 
prescribing remains a central task. However, adoption of electronic 
prescribing by every physician is not a prerequisite to successful 
development of electronic prescription systems. Instead, when 
encouraging physician adoption it is important to focus our efforts on 
the appropriate physicians. It is well documented that each year less 
than 30 percent of physicians in the United States write 80% of all 
prescriptions. By focusing efforts to encourage electronic prescribing 
on this 30 percent of the physician population, we could bring the 
productivity and patient safety benefits of electronic prescribing to a 
majority of all prescriptions.

SureScripts: Filling the Connectivity Gap

    Cost and difficulty of implementation have been cited as leading 
obstacles to further development of electronic prescribing systems. 
However, the greatest hurdle may be the need for global connectivity. 
Traditionally, many physician offices have not had computerized systems 
for patient records or for prescription records. Physicians have been 
reluctant to make capital investments in this technology. Pharmacies 
have maintained computerized prescription records since the 1980s, and 
since then pharmacies have taken advantage of automation more than 
physicians. Virtually all pharmacies have computer systems that help 
perform clinical tasks such as drug utilization review, and pharmacies 
are electronically connected to almost all payors. However, these 
pharmacy systems do not necessarily interface with systems that 
physicians use.
    An effort to bridge the connectivity gap began in August 2001. 
NACDS and the National Community Pharmacists Association, which 
represents independently-owned pharmacies, launched SureScripts. The 
purpose of SureScripts is to develop an engine that will encourage 
electronic prescription connectivity between physicians, pharmacists 
and technology vendors. SureScripts was founded to improve the safety, 
efficiency and quality of the prescription process by promoting the 
adoption of electronic prescribing. SureScripts is creating an open, 
neutral, and secure system that is compatible with all major physician 
and pharmacy software systems.
    The national rollout of SureScripts' electronic prescription 
services began in early 2004 and is currently live in over 12 states 
today. SureScripts is expected to have active rollouts in local 
communities in 25 states by end of 2004. Now that the majority of 
pharmacy software certification and testing is complete, pharmacies all 
across the country are in various stages of activating their stores for 
e-prescribing connectivity. Additional markets will continue to go live 
in 2005 and 2006.
    Today, SureScripts is the nation's largest electronic prescription 
network. Pharmacies and pharmacy software vendors representing 66% of 
the retail pharmacies in the U.S. have certified, tested, and connected 
their applications to the SureScripts network. By end of summer 2004, 
that number will increase to 75% of all pharmacies in the United 
States.
    In addition, physician technology vendors currently representing 
over 50,000 physician users have signed agreements to connect to the 
SureScripts network to begin two-way communications with pharmacies for 
the purpose of electronic prescribing. We expect the physician 
representation for physician technology companies that contract with 
SureScripts to grow between 75,000 and 100,000 by end of 2004.
    In summary, both pharmacies and physicians are making great 
progress in connecting to one another. Increased electronic 
connectivity will help improve both the safety and efficiency of the 
prescribing process, as well as improve the quality of medication 
decisions.

The Need for Standards and Industry Collaboration

    Wisely, the MMA also requires the adoption of standards for 
electronic prescribing. NACDS and SureScripts are actively involved in 
the standards development processes to allow physicians and pharmacies 
to engage in electronic prescription connectivity. We are working with 
the HHS National Committee on Vital and Health Statistics (NCVHS) as it 
prepares to recommend standards to the Secretary for the electronic 
prescribing program mandated by MMA.
    The National Council for Prescription Drug Programs (NCPDP) created 
SCRIPT, the recognized technology standard for electronic 
prescriptions. Currently, SCRIPT addresses the electronic transmission 
of new prescriptions, prescription refill requests, prescription fill 
status notifications, and cancellation notifications. SCRIPT was 
developed by NCPDP through a consensus process that included community 
pharmacies, pharmacy software vendors, database providers, and other 
stakeholders. Both NACDS and SureScripts are represented on NCPDP's 
board, and both NACDS and SureScripts are actively engaged in the 
standards development process at NCPDP work group meetings. SureScripts 
uses the NCPDP SCRIPT Standard as the foundation for the software used 
to transmit prescriptions.
    The NCPDP SCRIPT standard is a robust national standard that 
addresses the vast majority of the core functionality required by the 
MMA. It currently facilitates the bidirectional transmission of 
prescription information between prescribers and dispensing pharmacies 
and pharmacists. In addition, the SCRIPT standard has the potential to 
facilitate the electronic transmittal of information regarding 
eligibility, benefits and medication history. SCRIPT will likely be 
among the standards that NCVHS recommends the Secretary should use as a 
basis for a broader electronic prescribing system.
    The standards development process requires cooperation among 
industry participants. With the shared goal of improving the health 
care delivery system, SureScripts and RxHub are in constant dialogue to 
improve electronic connectivity and to improve physician adoption of 
electronic prescribing. RxHub's systems and SureScripts' systems are 
compatible.
    To encourage adoption of electronic prescribing, SureScripts has 
created a Community Adoption Program to work with local community 
health care leaders and state Quality Improvement Organizations (QIOs). 
The QIOs will be instrumental in reaching out to health care leaders to 
make patient safety improvement a top priority in their local markets. 
Today in Colorado, the CEO of SureScripts, Kevin Hutchinson, is working 
with the Senior Medical Staff and leaders of the QIOs, working on plans 
to collaborate with one another for the benefit of patients in each 
state across the country.

Electronic Prescription Principles

    As we continue to help build an electronic prescription system, 
NACDS is guided by several important principles. The SureScripts 
certification criteria incorporate these principles, which are 
important to driving physician adoption and ensuring that electronic 
prescription systems are efficient and promote patient interests. Our 
guiding principles include:

    Protect Patient Choice of Pharmacy. An electronic prescribing 
system should not limit patients' ability to have their prescriptions 
filled by the pharmacy of their choice. Electronic prescription 
technology should not be used to steer patients to particular 
pharmacies.
    Protect Physician Choice of Medication. Likewise, an electronic 
prescription system should not be used to steer physicians to 
particular drugs. Physicians will be more likely to adopt electronic 
prescribing if they retain their ability to prescribe both ``on 
formulary'' and ``off formulary'' medications.
    Protect the Physician-Pharmacist Relationship. Prescriptions are 
communications between physicians and pharmacists regarding a specific 
course of pharmaceutical treatment. Electronic prescribing should be 
used as a tool to enhance, not displace, the pharmacist-physician 
relationship.
    Protect Prescription Integrity. Electronic prescriptions should be 
transmitted directly from physicians to pharmacies, without being 
altered by third parties. Alteration of prescribed drug, strength, 
quantity, allowed refills, or directions could adversely affect patient 
safety. Physicians and pharmacists must be able to rely on the security 
of the transmitted prescription information.
    Preserve Pharmacists' Valuable Role. Pharmacists are medication 
experts that collaborate with physicians to enhance overall 
prescription drug use, and reduce the likelihood of medical errors and 
adverse drug reactions. Electronic prescribing programs should 
encourage that collaboration. Physicians will be less likely to adopt 
an electronic prescription system that requires them to perform 
pharmacists' traditional duties, such as drug utilization review and 
checking for medication-related concerns.
    Restrict Commercial Messaging. Congress wisely limited the ability 
to send commercial messages through an electronic prescription system. 
The MMA calls for electronic prescribing standards to ``allow for the 
messaging of information only if it relates to the appropriate 
prescribing of drugs, including quality assurance measures and 
systems.'' \3\ The MMA Conference Report emphasizes that electronic 
prescribing is not intended to be used ``as a marketing platform or 
other mechanism to unduly influence the clinical decisions of 
physicians.'' \4\ Physicians will be reluctant to adopt an electronic 
prescribing system that burdens physicians with extraneous promotional 
messages.
---------------------------------------------------------------------------
    \3\ 42 U.S.C. Sec. 1395w-104(e)(3)(D).
    \4\ H.R. Conf. Rep. No. 108-391 at 456 (2003).
---------------------------------------------------------------------------
    Implement Incentives for Adoption. The MMA provides for grants to 
encourage physician adoption of electronic prescribing. The grant money 
is intended to assist physicians in computer system upgrades and staff 
training that will enable them to engage in electronic prescribing. 
There are significant costs associated with the successful 
implementation of electronic prescribing for pharmacists, too, so 
incentives should be made available to pharmacists.

Conclusion

    NACDS commends Congress and the Subcommittee for fostering the 
development of electronic prescribing systems. Enactment of the 
electronic prescribing provisions of MMA will encourage the further 
development and enhancement of electronic prescribing. We look forward 
to active engagement in the development of policies, standards and 
infrastructure to make widespread electronic prescribing a reality.

                                 

    Chairman JOHNSON. Thank you very much. Dr. Sullivan, 
welcome. We do not very often have a doctor available to 
testify, so thank you.

 STATEMENT OF THOMAS E. SULLIVAN, M.D., WOMEN'S HEALTH CENTER 
               CARDIOLOGY, DANVERS, MASSACHUSETTS

    Dr. SULLIVAN. Thank you, Madam Chairwoman. It is a real 
privilege to be invited to be a witness here today. As you 
pointed out, I am a solo practitioner. I have been doing it for 
about 9 years. I am a cardiologist, and most of my patients are 
Medicare beneficiaries so they have lots of prescriptions. 
Although I am familiar with group practice, I was the medical 
director of a staff model health maintenance organization for 
about 11 years and managed quite a few doctors along with my 
patients, so I know something about incentives to change 
physician behavior.
    I will not read verbatim from my written testimony. I think 
you can read it as well as I can. I will point out some of the 
highlights, and the first one is--it says it all right there. I 
have been taking care of patients for 35 years, and this is a 
great advance. I have been doing e-prescribing for about a 
year, so I am a real fan, although I would echo what you said 
to us yesterday at the National Health Information 
Infrastructure meeting: don't underestimate how difficult some 
of this change can be. I will point out a few of those things.
    Just to highlight some of the real advantages, I think this 
does--I have to say, too, without SureScripts and RxHub and the 
addition of an e-prescribing vendor, I could not be doing this. 
So, they all had to come together and be able to work together 
to make what I do a lot easier and more efficient. So, this 
does require a lot of collaboration.
    I have seen some administrative efficiencies in my office. 
My medical office assistant, she just thinks it has changed her 
life, the number of refills that we do, quite a few refills on 
people with hypertension and diabetes and congestive heart 
failure, those things. It is so much easier now. A refill comes 
in a screen. We open up the computer and, boom, it is right 
there, and there is no more handwriting. You do not have to 
pull a chart. There is not a lot of phone tag and fax tag with 
the pharmacist trying to call me and speak to me or me trying 
to call in something else. So, it is really great.
    In addition to that, I actually have my little hand-held 
that I carry around with me all the time. I can write a 
prescription from anywhere, including here, and do it very 
quickly. So, all these things have really increased the 
efficiency in my office. As you pointed out, about 95 percent 
of my prescriptions are electronic now.
    I do not think the costs are prohibitive, but they are 
there. I will point out an example. When I first started this, 
it was a pilot program in Massachusetts sponsored by one of the 
payers who gave me the system free, and I used that for 6 
months. Then I saw some other systems, and I saw that they were 
really a lot more efficient, a lot better. So, I asked the 
vendor if I could have the data that I have been putting in for 
6 months and move it out so I could use it in another system. 
They said no. I said, ``Are you kidding? This is my information 
on my patients.'' No, no, they would not give it to me. They 
thought I would violate some proprietary rule.
    So, that made me a little more angry, and since I was 
President of the Massachusetts Medical Society at the time--I 
just finished that about 4 weeks ago--I said, I think we are 
going to endorse an e-prescribing vendor, and we did not pick 
that one. So, there have got to be some standards of 
interoperability and, again, the risk that the physician takes. 
If I had had to pay for that system, I would have been even 
more angry that I could not switch to a better one, at least 
take my data out and put it back into a new one.
    So, there are costs there, and there do need to be 
incentives. I clearly believe that and I am not a technology 
person. I have never had a formal course in any IT, but I have 
been interested in it for a very long time. I see the 
advantages of this as well as an electronic medical record. 
Actually, one of the little problems is I do not use a full 
electronic medical record because my hospital has a pretty big 
one and all the labs and that sort of thing and x-rays are in 
there. I cannot integrate my e-prescribing and notes with the 
hospital, again, because of the lack of interoperability and 
there are some costs there also, although my medical society 
has come up with a proposed solution, a new standard called a 
continuity of care record (CCR), which I hope you will be 
hearing about.
    In addition, it really enhances patient safety. There are 
no legibility problems. I could easily pick from a medication 
list. The drug-drug interactions and the allergy checking are 
all there. Some systems are more sophisticated than others, but 
I really like that. I think it benefits the patients not just 
in terms of quality and safety, but also it reduces some of 
their hassle with perhaps going to the pharmacy and a 
prescription might not be there because a phone call was not 
made. There are a number of ways in which this benefits the 
patient, too.
    I will mention some of the challenges. Again, I already 
alluded to the fact that we do need some more national 
standards, and those are underway right now. I have to thank 
the Secretary and thank actually both sides of the aisle for 
coming together and seeing that this is a win-win for everyone.
    I think you will hear from Dr. Teich some of the technical 
things about the drug-name conventions which have to be 
improved and made a little bit more friendly to physicians 
rather than a pharmacy payment and processing system. That 
would definitely help, and I think the U.S. Department of 
Veterans Affairs and the U.S. Department of Defense are working 
on this, and I would encourage support of that.
    The issue of incentives, though, one of the things I am 
worried about in this pay for performance, I like the idea of 
paying for performance, but I do not like the idea that this 
implies that physicians have to be paid to do the right thing. 
I really resent being referred to as ``a businessman,'' and I 
do not like the fact that the practice of medicine is becoming 
more of a business than a profession. It is a real honor and 
privilege to take care of patients, and I know we have to be 
paid for it. If Medicare is going to subsidize and incentivize 
e-prescribing on the one hand, or the government does that, and 
then punish on the other hand because the sustainable growth 
rate and every couple years we have to go to Congress and plead 
for mercy or understanding or something, it is very hard for 
physicians to understand how subsidies are okay for e-
prescribing but now, by the way, we are going to cut your rate 
by 2 or 4 or 12 percent, or whatever. So, that is one of the 
concerns I think that physicians have.
    In terms of specific suggestions, again, I have alluded to 
them. We need better standards for electronic transmission and 
they are there. I am using this today. I am saying I can use 
this today, but I am not like every physician. Many physician 
practices are different. You heard that there is a target to 
the high-volume prescribers. So, my patients, unlike, let's 
say, a plastic surgeon or a thoracic surgeon, I write a lot of 
prescriptions and do a lot of refills. So, my incentives in the 
business case for me is much clearer. I can demonstrate the 
return on investment to me a lot better than perhaps a surgeon. 
So, we have to take that into account in terms of the rapidity 
with which we want this adopted. I guess I will stop there. I 
know my time is up. I am happy to answer any questions.
    [The prepared statement of Dr. Sullivan follows:]

     Statement of Thomas E. Sullivan, M.D., Women's Health Center 
                   Cardiology, Danvers, Massachusetts

Key Points:

Based on 35 years of direct patient care and over one year of 
ePrescribing, I am a great ``fan''.

Benefits/advantages of national e-prescribing system:

      Administrative efficiency to provider. My Medical Office 
Assistant loves this system. It's changed her life.

        Reduced phone calls with pharmacies and no more ``fax 
tag''
        Reduced chart pulls; and staff can easily enter 
medications for provider to sign Rx tools are always available, even 
when on call or out of town (PDA phone and or secure Internet 
connection)
        Patients pharmacy benefit information and formulary 
list also available
        Decision support
        95% of my Rx's are electronic now

      Cost savings to provider.

        All of the above--improved efficiency saves money. 
Estimated hardware/software cost $500/yr, not counting Internet access. 
The range of costs may vary by physician/practice.
        Training time and learning curve for my assistant and 
for me was 3-5 days to make it work and 1-2 months to ``make it sing.''
        Staff can be put to other use or staff size may be able 
to be reduced in some cases.

      Better safety and quality outcomes due to clear, printed 
Rx and real time point-of-care medication history.

        No more illegible handwriting--a huge patient safety 
benefit
        Med list allows drug-drug interaction and allergy 
checking before writing Rx--another safety plus
        Improved efficiency allows provider to spend more time 
listening to patient

      Better outcomes with integrated real-time decision 
support tools.

        CAQH study showed providers do change med orders based 
on decision-support alerts
        Prevent further phone calls from wasting doctors' and 
pharmacists' time.

      Cost savings to patient--discussion and ability to choose 
at the point of care/decision, between generic vs. brand and formulary 
compliance.

        Real-time information can allow doctor to give the 
formulary drug in the first place, esp. in classes where medications 
are similar. Without eRx, if patient is doing well on first (non-
formulary) prescription or samples, doctor may be hesitant to change to 
formulary drug.

      Positive impact on provider/patient communication and 
interaction.

        Patients like going to pharmacy only once, with 
medication already there
        Patients appreciate high-tech, esp. with decision 
support for savings and safety

Challenges and impediments to physician adoption:

        Many physicians are low volume prescribers and will not 
see early benefits, e.g. many surgical specialties
        Need for national standards that allow for 
technological advances for both secure electronic transmission of 
information and decision support tools.

          We're mostly there now
          For more widespread adoption we still need:

            Interoperability (ASTM Continuity of Care Record--
CCR) for easier integration with other systems and the Electronic 
Health Record
            ``Sig'' standard (Directions for use) for NCPDP 
standard (similar to CCR implementation)
            Drug-naming convention, listed the way providers 
think of medications. Current use of ``example'' NDC codes is 
inefficient. RxNorm is a better emerging standard and should be 
supported. Government can show the way here, at almost no cost.

        Integration of electronic systems into provider 
offices/workflow.

          Need a simple standard to allow data interchange 
between PMIS, EHR, HIS, and even other ePrescibing systems (CCR). Then 
the value of any electronic systems will be multiplied geometrically as 
more physicians use them. The advantage of the CCR is that there is no 
variability--if a vendor decides to use it, they use it ``out of the 
box'' without modification.

        Acquisition of hardware, software and technology 
training and support requires new thinking on reimbursement and 
aligning incentives.

          This is an area where the government could help, 
especially through ``pay-for-performance'' programs, grants, loans, 
etc. We must avoid unfunded mandates, too many, already.
          A more permanent solution to the flawed Medicare SGR 
is needed to convince physicians and practitioners that the government 
will not subsidize with one hand and punish with the other.

        There are some small studies that demonstrate evidence 
to support cost savings to physician practices/health system and 
improvements in patient safety/quality outcomes as a result of 
implementation of electronic prescribing.

        i.  CITL Report (quoted in the eHI report): http://
www.citl.org/research/ACPOE_Executive_Preview.pdf
        ii.  PocketScripts/Tufts Health Plan study in Massachusetts 
2003

Going Forward: Suggestions to Committee

        Help to create national standardized electronic 
transmission and decision support tools to alleviate patchwork of state 
requirements . . . including controlled substances (DEA)
        Incentives to physicians to accelerate adoption are 
necessary. Most physicians like other professionals, are not ``early 
adopters'' of new technology.
        The technology exists today and is capable of 
implementing the e-prescribing requirements in the Medicare 
Modernization Act, with some additional legislative support as outlined 
above.

                                 

    Chairman JOHNSON. Thank you very much, Dr. Sullivan. Dr. 
Teich?

    STATEMENT OF JONATHAN M. TEICH, M.D., PH.D., ASSISTANT 
     PROFESSOR OF MEDICINE, HARVARD UNIVERSITY, CAMBRIDGE, 
  MASSACHUSETTS AND PHYSICIAN, BRIGHAM AND WOMEN'S CENTER FOR 
              APPLIED MEDICAL INFORMATION SYSTEMS

    Dr. TEICH. Thanks very much, Madam Chairman, Mr. Stark, and 
Members of the Subcommittee on Health. In Washington and across 
the country, there has been increasing momentum, particularly 
this year, for the use of health IT and e-prescribing in 
particular to improve the quality of health care. However, it 
certainly has not yet realized its full potential, and it is 
certainly at least partly in your power to help it get there.
    My name is Jonathan Teich. My role here is as a builder, 
creator, designer, and studier of these systems. I am a 
professor at Harvard. I am a board-certified emergency 
physician at Brigham and Women's Hospital and still practice 
each week. I founded the Brigham and Women's Center for Applied 
Medical Information Systems in 1992, and my role has been as 
the primary designer of many of the Brigham's well-known 
clinical information systems, including the computerized 
physician order entry system that has been demonstrated to 
reduce medication errors by over 80 percent. I am also Chief 
Medical Officer for Healthvision, which is a health care 
information company that provides interoperability and data 
exchange across disparate systems in a region and which 
delivers secure Internet-based clinical, patient, and community 
systems to about 250 hospitals.
    I serve on a number of committees and foundation boards in 
the health information field. In particular, last year and this 
year, I was privileged to lead a panel of some 70 experts, 
including representatives of all of the gentlemen to my right, 
in producing a white paper entitled ``Electronic Prescribing: 
Toward Maximum Value and Rapid Adoption,'' published by the 
eHealth Initiative here in Washington. I recommend that report 
to you as an excellent reference, and I have drawn from it for 
some of my remarks today.
    We know--and I think you know, given your own remarks--that 
errors in ambulatory care are common and they are serious, 
perhaps even more so than the celebrated numbers we see about 
inpatient care. We have research now that shows that as many as 
18 percent of all Medicare patients have a significant adverse 
drug event (ADE) in any given year. Overall, over 8.8 million 
ADEs occur every year in ambulatory care, of which over 3 
million are preventable.
    As an emergency physician, I am also a client. I can expect 
to see the manifestations of these problems every week. I can 
expert to find at least one patient every night who is 
suffering excessive bleeding or blood clotting because of 
problems managing Coumadin, a popular blood thinner, at least 
one patient experiencing medication side effects or drug 
interactions that could have easily been prevented. I can 
almost always expect to find at least one patient who did not 
refill his medications on time and who is now showing up at my 
door in an ambulance suffering the consequences.
    With an e-prescribing system, the computer scans each 
prescription instantly as it is written, checking for dose 
problems, allergies, drug interactions, duplicate therapy, and 
many other conditions. Particularly when integrated within a 
complete electronic health record, e-prescribing can also 
promote appropriate drug therapy for chronic conditions, such 
as issuing a reminder that a patient with heart disease should 
be taking aspirin and beta-blocker drugs, therefore greatly 
increasing the compliance of use of these drugs.
    It can speed renewals, it can reduce callbacks from the 
pharmacy and help in many, many other ways. As Mr. Stark 
mentioned, overall there are studies suggesting that national 
savings from universal adoption of e-prescribing could be as 
high as $27 billion. Some of the difficulty comes with to whom 
those savings accrue.
    If there are so many benefits to safety and efficiency and 
cost, then why isn't e-prescribing simply a routine, 
universally accepted part of current medical care? Right now, 
somewhere between 10 percent and 16 percent of all U.S. 
physicians use it, which is a growing fraction, to be sure, but 
hardly what I would consider to be common practice. Many of 
them are leaders and early adopters, such as Dr. Sullivan.
    I would like to discuss four specific problem areas and 
some recommendations for specific remedies. First and foremost 
are financial issues. Right now the practice and the physician 
needs to buy and install and maintain the system and go through 
at least a short initial period of reduced productivity. Again, 
while there are substantial cost savings to e-prescribing, they 
accrue primarily over 85 percent to the health plans and 
payers, while the doctors who are at the front of the process 
and who must have these systems in place to kick the whole 
thing off must absorb additional costs currently without any 
compensation.
    To remedy this, the private sector and the government and 
CMS in particular should support practices through pay-for-
performance programs, as outlined in the MMA and which needs 
the proper specifics; through implementation grant programs; 
and also through differential reimbursement that recognizes the 
additional resource value units in a practice that uses e-
prescribing.
    The second problem area is certainly, as some other folks 
have alluded to, in standards. Currently, there are many 
inefficiencies, there are many errors, there are increased 
development costs, and certainly lack of portability of a 
patient's record due to incomplete or missing standards. 
Producers of health technologies have to build the same 
function over and over again to account for the many different 
standards, and very often when prescriptions get communicated, 
they are communicated only as free text, only as the word 
``amoxicillin,'' which is prone to many of the same kinds of 
transcription errors that we had on paper in the first place.
    Standards should be required or accelerated in five 
particular places: a single doctor-level dictionary of 
medications, such as the National Library of Medicine's RxNorm 
Project, to ensure that doctor systems and patient systems talk 
to each other; standards for the ``sig,'' or the dosing 
instructions in a prescription; standards including drug 
classes and benefit classes for formulary information so that 
these can be rapidly exchanged and used; identifiers for health 
plans so we can understand where a patient matches up against 
these formularies; and a way to reconcile the widely varying 
requirements for prescriptions in different States, all of 
which have essentially the same intent.
    The third area is the quality and usability of an e-
prescribing system. They should be easy to learn, quick to use, 
and they must handle all of the typical prescribing workflows. 
government certification programs should support an aggressive 
floor of good system features without suppressing independent 
private innovation.
    Fourth, there should be expanded appropriate safe harbor 
provisions from self-referral and anti-kickback laws. Recent 
efforts this year have certainly helped that process. Hospitals 
and health systems have the funds and have the desire, in fact, 
to purchase and support e-prescribing systems better than a 
typical small practice can do. They should be permitted to 
provide technology to physicians who already have an 
established relationship with the hospital.
    Members of Congress, we know the financial costs. We know 
the increased illness. We know the suffering that happens each 
day that could be remedied by advanced e-prescribing systems 
and electronic health records. I hope you will take advantage 
of the opportunity that you have and that you will consider 
these recommendations and that you will take the necessary 
actions so that we can improve the health of so many. Thank you 
very much for allowing me to speak, and I would be happy to 
answer questions as well.
    [The prepared statement of Dr. Teich follows:]

  Statement of Jonathan M. Teich, M.D., Ph.D., Assistant Professor of 
         Medicine, Harvard University, Cambridge, Massachusetts

    Chairman Johnson, Ranking Member Stark, members of the Health 
Subcommittee: thank you for the opportunity to appear before you today. 
I have spent much of the last fifteen years seeking out and inventing 
ways to use computer technology to make healthcare easier, better, and 
safer. In Washington and across the country, there has been increasing 
momentum for the use of health information technology, and electronic 
prescribing in particular, to improve the quality, safety and 
efficiency of healthcare. However, it has not yet realized its greatest 
value--and it is in your power to help it get there.
    My name is Jonathan Teich. I am an assistant professor of medicine 
at Harvard, and a board-certified attending physician in emergency 
medicine at Brigham and Women's Hospital. I founded the Brigham and 
Women's Center for Applied Medical Information Systems in 1992, and I 
have been the primary designer of many of the Brigham's well-known 
clinical information systems, including the computerized provider order 
entry system that has been shown to reduce medication errors by over 
80% and adverse medication-related events by 55%. In 1999 I helped 
found Healthvision, a leading healthcare information company devoted to 
realizing patient care quality improvement through Internet-based 
clinical, patient, and community systems, now in use in over 250 
hospitals and health systems. I serve Healthvision as senior vice 
president and chief medical officer.
    Organizationally, I serve as the chair of the patient safety 
steering committee for the Healthcare Information and Management 
Systems Society (HIMSS), the largest organization devoted to healthcare 
information technology advancement in this country. I am a member, and 
a recent director, of the American Medical Informatics Association, 
which represents the many engineers and scientists who work to advance 
the state of the art of healthcare information technology. I also serve 
on the board of the Foundation for the eHealth Initiative, a nonprofit 
group here in Washington that is devoted to policy advancement, and 
that has also facilitated programs to bring expert consensus and 
practical solutions to key issues in this field.
    I have spent a good deal of time on the development of electronic 
prescribing systems. Last year I was privileged to lead a panel of 70 
experts in producing a major whitepaper entitled ``Electronic 
Prescribing: Toward Maximum Value and Rapid Adoption,'' published by 
the eHealth Initiative and presented in April at a well-attended 
meeting that also featured CMS administrator Mark McClellan. That group 
of experts, from all sectors of the medical and pharmaceutical 
industry, rendered evidence and recommendations on the promise of e-
prescribing, on the barriers that keep it from being fully adopted and 
realizing its potential, and on ways to break through those barriers. I 
recommend that report to you as an excellent reference, and I have 
drawn from it for some of my remarks today.

The problem and the promise
    We know that ambulatory care errors are common and preventable, and 
that electronic prescribing can improve safety, quality, efficiency, 
and cost. In inpatient care, as I mentioned previously, electronic 
medication ordering has been shown to have a significant impact in 
reducing adverse drug events or ``ADE's''--that is, not just errors, 
but errors and other mishaps that actually cause harm to the patient. 
You are probably aware of the Institute of Medicine findings of 2000, 
which estimated that adverse drug events--ADE's--may be responsible for 
44,000 to 98,000 deaths annually. These numbers came primarily from 
inpatient data on hospitalized patients. Recent research now shows that 
ADE's are very common in ambulatory care as well, and can be very 
serious. We have research that shows that as many as 18% of all 
ambulatory patients have a significant ADE in any given year. According 
to the Center for Information Technology Leadership (CITL), more than 
8.8 million ADE's occur each year in ambulatory care, of which over 3 
million are preventable. Medication errors account for 1 out of 131 
ambulatory care deaths.
    This isn't surprising to me, because I not only work on prevention 
of medication errors, but, as an emergency physician, ``I'm also a 
client.'' In every one of my shifts in the hospital, I can expect to 
find at least one patient who is suffering excessive bleeding or blood 
clotting because of problems managing warfarin, a blood thinner. I can 
expect to find a patient who has problems because her prescribed 
medications had side effects or drug interactions, many of which could 
have been prevented. And I can almost always expect to find at least 
one patient who didn't refill his medications on time, or who doesn't 
even know what his medications are supposed to be, and who has now been 
brought to me in an ambulance, suffering the consequences.
    Electronic prescribing has presumed value in preventing these 
errors because it can apply clinical decision support: the computer can 
check each prescription as it is written, either for internal 
inconsistencies (such as excessive dosage) or for conflicts with the 
patient's known allergies, interactions with other active medications, 
duplicate therapy, and many other conditions.
    In addition, electronic prescribing can improve quality, 
efficiency, and reduce cost by several other mechanisms, including:

      actively promoting appropriate drug usage for chronic 
conditions (preventing ``errors of omission'')--for example, reminding 
the physician and the patient that a patient who has had heart disease 
should be taking aspirin and beta-blocker drugs.
      providing information about health plan formularies and 
drug coverage, so the patient can understand and make choices about the 
cost of his medications;
      speeding up the process of renewing medications, and 
helping making sure that patients and physicians don't miss needed 
renewals;
      electronically transmitting prescriptions to pharmacies, 
thus eliminating one more source of transcription error and delay;
      keeping better records of a patient's current medication 
profile, so that all of a patient's clinical caregivers can treat the 
patient with confidence.

    More than 3 billion prescriptions are written annually. Given this 
volume, even a small improvement in quality attributable to electronic 
prescribing would translate into significant healthcare cost and safety 
benefits if electronic prescribing is broadly adopted. Studies suggest 
that the national savings from universal adoption of electronic 
prescribing systems could be as high as $27 billion, some from ADE 
prevention and the majority from better utilization of drugs, guided by 
these systems.
    Much of the current information on the performance of electronic 
prescribing comes from the inpatient environment, because this has been 
studied for a longer period of time and because it is a more controlled 
environment. There are many studies that show the beneficial effect of 
electronic medication ordering. My research group published a study in 
2000 showing that, before the system went into place, about 2% of all 
orders for medications called for an excessive dose, possibly injurious 
to the patient. Immediately after putting in a computerized system, 
which simply offered recommended doses in a list, that number dropped 
dramatically down to 0.5% percent. Furthermore, with additional 
improvements to the system over the years, the number dropped to 0.2%--
10 times fewer overdoses than in the non-computerized world. There are 
numerous other examples of the dramatic impact of relatively simple 
computer interventions in that study. These are the identical 
interventions that are being applied in ambulatory-care e-prescribing 
systems, and we expect that research now in place will show similar 
impact.
    The truth is, many of the things that computerized prescribing 
systems alert about are things that physicians already learned--drugs 
to avoid in certain situations, allergies and so on. But in the heat of 
the moment, when you are trying to give your patient three new 
prescriptions, renew six other medications, order a dozen lab tests and 
a CT scan, all at the end of a ten-minute visit slot, it's easy to 
forget these vital details. Electronic prescribing with clinical 
decision support can sometimes act like a senior expert, guiding you to 
the best care plan; more often, though, it acts more like a highly 
conscientious assistant--who doesn't know as much as the doctor does, 
but who remembers absolutely everything, and makes sure the doctor 
remembers the right rule at the right time.

Levels of e-prescribing

    Electronic prescribing systems are available in a variety of 
graduated levels, which we expressed as a pyramid in our report. The 
levels are:

    1. Basic electronic reference only. Drug information, dosing 
calculators, and formulary information are available, but are not 
automatically shown while prescribing.
    2. Standalone Prescription Writer: search by drug name and create 
prescription; no long-term data about patient is accessible.
    3. Supporting patient data is included (Demographics, Allergy, 
Formulary, and/or Payer Information).
    4. Medication Management: Prior medications are available for 
renewal, interaction checks, etc.
    5. Connectivity between the doctor's office, Pharmacy, PBM and 
Intermediaries.
    6. Full integration with the electronic health record (EHR).

    At the first level are simple stand-alone prescription writers, 
which can create a prescription, and check doses, but which are not 
connected to any long-term patient information. At higher levels, 
additional data is available, electronic communication with pharmacies 
and intermediaries is established, and at the highest level there is 
full integration with a complete electronic health record.
    Some benefit to patients can be seen at all levels. However, 
systems at the higher levels of sophistication--which may be associated 
with higher start-up cost and complexity--afford much greater 
opportunities for quality improvement, reduction in errors, and 
improved workflow efficiency. A practice with limited resources can and 
should get into the game at the lower levels today--but the eventual 
goal is always to approach the highest levels, thereby to reap their 
higher benefits; thus even basic systems should have the potential for 
later upgrading.

Barriers to maximum adoption and value
    So, we can see that e-prescribing can improve safety. We can see 
that it can improve costs. We can see that it can promote quality 
through proactive interventions, improve communication, and keep better 
overall integrated records. But the fact is, adoption is relatively 
low--between 10% and 16% of all U.S. physicians, depending on the 
survey you read. Despite a few well-publicized payer-supported starter 
programs, e-prescribing hasn't taken off the way it probably deserves. 
So, why isn't e-prescribing a regular, universally adopted part of 
medical care?
    A number of barriers stand in the way of universal adoption in the 
practice. These fall into the categories of cost, time, usability, and 
standards.

Cost and time issues

      The doctor may not be able to justify the up-front cost 
of buying and installing a system, and the continuing cost of 
connections and upkeep.
      At least initially, while the doctor is learning the 
system, e-prescribing will take more time compared to paper 
prescribing; this translates to decreased productivity. A well-designed 
system should quickly close this time gap, but doctors remain to be 
convinced.
      There is time needed, and resource value expended, to 
review the warnings and alerts that the system may generate.
      None of these costs and resource expenditures are 
reimbursed at present.

Usability and value issues

      Current systems are still on a designer's learning curve: 
systems must be easy to learn, quick to use, and handle all of the 
typical prescribing workflows (the eHI report contains a number of 
recommendations to address this);
      There is a lack of imperative: until safety improvements 
are demonstrated and fully publicized, and until e-prescribing becomes 
an expected part of care, doctors do not feel any pressure to make the 
leap.

    There is clearly an issue with misaligned incentives here. I 
mentioned that e-prescribing can lead to considerable savings overall. 
However, much of these savings, whether from prevented ADE's or from 
better medication utilization, accrue to payers and health plans. 
Pharmacies also see some benefit because of reduced transcribing, 
reduced time on the phone clarifying orders, and the ability to promote 
refills; in addition, automated record-keeping is already a mainstay of 
pharmacy practice. It is the doctors, who must have the technology in 
place to start the whole process going, who don't see much of the 
improved economics. Indeed, they may have a negative financial return 
because of the cost of the technology and, if the system is not 
sufficiently usable and quick, from lost productivity. There needs to 
be a way to realign the incentives, so that the technology is desirable 
to all who need to purchase and use it.

Standards

    One more stumbling block is in the area of standards. The eHealth 
Initiative project identified four standards in particular, that need 
to be created or enhanced:

      Widely varying state board of pharmacy requirements 
increase the complexity and cost for a technology company to develop an 
e-prescribing system. In most cases, these boards all have the same 
intent; however, one state requires that the prescription must say ``no 
substitution allowed'' and must have the provider's DEA number at the 
top; another requires that the prescription must use the words ``do not 
substitute'' and the DEA number has to be at the bottom.
      There is no standard ``doctor-level'' dictionary of 
medications. There is a standard for pharmacy packages--the NDC code--
but for doctors, different systems will use different vocabularies. 
This makes it difficult to have consistent clinical decision support 
rules--for example, different systems may have somewhat different lists 
of drugs that interact with each other--and it is extremely hard to 
communicate or transfer information from one system to another, and 
further increases cost and complexity. There is a government project, 
the RxNorm project, which is making some headway in resolving this, but 
it has not been established as a recognized standard.
      The lack of a standard for the ``sig''--the basic 
instructions on a prescription, such as ``take one pill three times a 
day for ten days''--further complicates the ability of systems to 
communicate with each other, and again makes it hard to standardize and 
evaluate clinical decision support rules.
      Different health plans express their formularies in 
different ways, using widely different drug categories, different 
formulary classifications, and so on.

Potential Solutions
Incentive steps

    Combining both high impact and high feasibility as desirable 
properties, the eHI Incentives Workgroup concluded that three incentive 
areas held the highest promise:

      Differential reimbursement for utilization of electronic 
prescribing, or for the information processed (RVU's).
      Pay for Performance programs for both primary care and 
specialty practice, rewarding both use of technology and the improved 
chronic-disease management which it facilitates.

    These are the most obvious ways to re-align the incentives and get 
doctors in the game. Government action can play a huge role in these 
economic areas. If CMS, as the largest U.S. healthcare purchaser, were 
to clearly go forward with plans for a pay-for-performance or 
differential reimbursement program, it is likely that usage of e-
prescribing, and electronic health records in general, would increase 
dramatically, and the entire healthcare system would be able to reap 
the ensuing safety, quality, and cost benefits.

      Appropriate safe-harbor provisions from self-referral and 
anti-kickback laws. Hospitals and health systems have the funds, and 
the economies of scale, to acquire and support e-prescribing systems 
better than a typical small practice can do, but they are extremely shy 
about doing so lest they run afoul of these laws. The recent Notice of 
Proposed Rulemaking published in March of this year helped considerably 
by providing safe harbors for community health information networks. As 
the CMS notice itself said, it is unlikely that this extension would 
have any significant potential for abuse. We think it has great 
potential for improving care, but there is still considerable confusion 
about the scope of the new clauses. These should be clarified and 
carefully extended to ensure that those practices that already have 
demonstrated significant relationships with a health system should be 
able to band together and enjoy the economies of scale.

Standards and value steps

    Other possible courses of action for the government are in the 
areas of promoting the most-needed standards, and ensuring that high-
value e-prescribing systems are recognized and supported:

      The federal government, through the process that 
originated with the passage of the Medicare Modernization Act, should 
work to promote standards-based systems, and rapid development of 
needed standards and unifications--particularly the four key standards 
noted above.
      When deciding how to certify an e-prescribing system as 
one whose use merits incentives, it will be important to include 
criteria that show that (a) a system has sufficiently powerful clinical 
decision support features, (b) it can participate in electronic 
communication and appropriate sharing of information, and (c) it can 
function as part of a more comprehensive electronic health record. It 
behooves us to use the momentum generated over the past few years to 
promote not only electronic prescribing, but interoperable, intelligent 
electronic health records in general. A task force should be devoted to 
determining some of these criteria. Government incentives should 
support a ``floor'' of good system criteria, and should promote common 
research and dissemination of best techniques and best practices, 
without suppressing independent innovation.
      The government should support research into projects that 
can organize and collect clinical decision support rules, in a more 
practical way than has happened heretofore. This is necessary so that 
all system developers can make use of the information, so that research 
into the effectiveness of these rules can be shared and re-used, and so 
that healthcare providers no longer have to reinvent the wheel at each 
location, when determining the best approach to high-value clinical 
improvement through information technology.
      As the government has accelerated electronic prescribing 
through legislation, standards, and incentives, so should it consider 
similar tactics to support the National Health Information 
Infrastructure and the development of highly interoperable electronic 
health records.

Summary
    More intuitive systems, effective standards, and significant 
incentives to reconcile financial costs and benefits are all critical 
to the adoption of electronic prescribing systems throughout the United 
States. In turn, well-developed and practical clinical decision support 
and advanced communications functions are vital for those systems to 
provide maximum value, both clinical and financial. Steady progress has 
been made in some of these areas, particularly over the last few years. 
However, we have not yet reached the goal, the point where electronic 
prescribing is seen as a ``must-have'' part of healthcare, and as a 
result, the very large benefits in quality and cost that could be 
achieved are still some distance away.
    The need is now all too clear. Research has proven what we 
physicians all knew: that increased illness and hospital admissions and 
even deaths occur every day, due to adverse drug events that could be 
prevented by advanced electronic prescribing systems. You may have seen 
these very events happen to yourselves, your friends, or to members of 
your family. We know that large numbers of Americans do not get the 
care they need for their chronic conditions, and that electronic health 
records with e-prescribing and clinical decision support could help 
make sure that they do. I hope you will take advantage of the 
opportunity you have, that you will consider the recommendations I have 
discussed today, and that you will take the necessary actions that can 
improve the health of so many.
    Thank you for permitting me to speak with you today. I will be 
happy to entertain questions.

                                 

    Chairman JOHNSON. Thank you. I am delighted to have 
Representative Tim Murphy of Pennsylvania here with us. While 
not a Member of the Committee, he has a bill to provide 
incentives, and we are glad to welcome him here. Dr. Teich, you 
say we know the cost. What is the cost? Dr. Sullivan, you may 
want to chime in, any of you? Now, if you are just a 
practitioner, let's start first with the high-volume 
practitioner who is doing this because his payback is going to 
be faster. I was very interested to read in your testimony that 
it only took you and your staff a couple of months to get to 
where you really were making, as you put it, your relationship 
with technology sing. What does it cost?
    Dr. SULLIVAN. I got my first system free, but we like to 
say--and I am part of the partner system, too, that Dr. Teich 
is--that free is not cheap enough sometimes because it depends 
on what the workflow does. If you have to lose productivity for 
an enormous amount of time, free is not cheap enough. So, about 
$500 a year are the costs that I and other physicians are 
looking at in terms of hardware costs. Now, that can vary quite 
a bit.
    Chairman JOHNSON. That is upgrading and maintenance and 
Internet?
    Dr. SULLIVAN. That is talking about a hand-held device and 
the cost of software to make it work. That does not include an 
Internet connection, which could be $30 a month or $40 a month. 
You could do it with dialing up, but----
    Chairman JOHNSON. So, for a multispecialty practice, about 
$500 a doctor?
    Dr. SULLIVAN. Yes. Again, it varies quite a bit depending 
on your specialty. For a surgeon it would be--if they lose 
productivity and they are not doing a lot of refills, it might 
be more.
    Dr. TEICH. I would come up with similar numbers, Madam 
Chairman. We have subscription plans, for example, that people 
use sometimes where they get it on a monthly basis, and those 
costs, depending on what you are getting, tend to run between 
$25 and $50 per doctor per month. Again, that is the ongoing 
cost. As Dr. Sullivan mentioned, there are some start-up costs 
that are necessary. Probably the biggest cost that people at 
least anticipate has to do with productivity issues and has to 
do with the ability to be able to maintain these overtime.
    Dr. SULLIVAN. Can I also mention that when I first looked 
at these systems about 2 years ago, I was quoted about $100 a 
month to me, so there has been a big change. So, that cost 
figure is an estimate.
    Chairman JOHNSON. I will just ask one more question now and 
move down the aisle. How does SureScripts and RxHub interact? 
What types of collaborative efforts have you undertaken? What 
are some of the differences between the two organizations? What 
is the overall scope of your reach?
    Mr. FULLER. I certainly will start and say that, first of 
all, today in the system that exists, the prescription comes 
into a pharmacy, and the adjudication process immediately goes 
electronically and involves PBMs. So, the relationship that 
exists today between retail pharmacy and PBMs has been in place 
for some period of time. As SureScripts--and Dave will speak to 
RxHub, but as SureScripts and RxHub have evolved, we have tried 
to be very focused in areas where we think we can offer 
expertise. We have tried not to get into areas where there is a 
considerable expertise that others have. We do not have, for 
example, a specific physician system. We certify a doctor 
first. We certify several others.
    Those physician systems, because they want the kind of 
information that RxHub can provide--or some of the physicians 
do--they have a relationship with RxHub to get formulary 
information or patient information. The fact that that occurs 
is not a barrier to being certified by SureScripts. In fact, as 
I said, all of those physician systems that we have certified 
have a relationship with RxHub, and most of the 10 or 15 we 
have looked at that will be certified probably this year have 
relationships with RxHub.
    So, in one way, at one level, we are two entities that are 
serving to accelerate the adoption of e-prescribing where the 
prescription information flows to the pharmacy with a physician 
that may be provided with information from the PBM while they 
are writing the script. Certainly the pharmacy is provided with 
information from the PBM in filling the prescription because 
that is in place now.
    That is kind of a collaborative effort that is going on in 
the marketplace today. Not everybody understands that, but, in 
fact, we even have physician systems that are negotiating with 
each company worried about telling us when, in fact, we know it 
and encourage it. So, that is today.
    The other area of collaboration is we are both absolutely 
determined to work through the standard-setting process in a 
way that is going to produce standards that facilitate the 
rapid adoption by physicians. It does us no good to have a 
system that is a little more favorable to pharmacy or a little 
more favorable to the PBMs if it complicates getting physicians 
to use the system. In this area, we really are looking at how 
we can think through what RxHub knows and what SureScripts 
knows to come to the entities that are looking at standards and 
say in our best judgment, our combined best judgment, here are 
the standards we need to bring physicians online more rapidly.
    I liken it--I am sorry to go on so long. I am going to stop 
in a minute. I liken it to trying to suggest to somebody that 
they really need to use a laptop computer, but to use a laptop 
computer, you have to know the word processing program, the 
Excel spread sheet program, and what all you really want to do 
is e-mail. If we make this too complicated, physicians will not 
take that first step and begin using the system. We are 
absolutely convinced at SureScripts that the more experience 
the physician has, the more they will find features by drilling 
down to give them better information, to help--to be more 
responsive to the patient questions. If you go to a physician 
and right off the bat say, good news, now you are going to be 
able to do price comparisons, store comparisons, it is too 
complicated.
    We strongly believe, both of us, that there ought to be 
formulary information. We strongly believe we ought to be 
providing information on generic equivalents. That is a very 
important part of the process. Those first steps have to be--
they are very important. They have to be small enough so that 
we will get adoption and not scare people away.
    Mr. McLEAN. Overall, I want to absolutely underline Craig's 
statement that we are not competitive. We are complementary. 
From the RxHub point of view, we focus on, when I mentioned in 
the statement front-end information, it relates to the 
information that exists with the PBM today, which is a person's 
eligibility information about a drug benefit, the formulary 
information, in terms of what drugs are on formulary at what 
levels, and also then the medication history that is maintained 
by the payer, in terms of what is in that payment system. One 
of the analogies I use, and if you go back to 15 to 20 years 
ago, 15 years ago, I guess, when the last time we in the 
country had passed a Medicare drug bill that unfortunately had 
gotten rescinded, one of the benefits that came out of that was 
what exists today with electronic adjudication in the pharmacy.
    So, when you go to the pharmacy today, and your script is 
adjudicated as you are there, meaning eligibility is checked, 
formulary is checked, all that happens in the pharmacy today. 
What RxHub has built is the ability for all of that to be 
backed up to the physician office. So, what the physician has 
available, through the various vendors that would participate 
through RxHub, is access immediately, again, in an automated 
teller machine-like transaction basis, to the eligibility of 
that patient, the formulary of that patient and the medication 
history that that person has had. Now, it is not 100-percent 
complete. It is what is in the payment system for that 
particular payer.
    So, with that, we are able to provide to the physician 
office, through the technology vendor that they might choose 
and, again, our interest is to get the RxHub system connected 
through any and all vendors that provide services to physician 
offices, whether those are physician practice management 
systems, electronic medical record vendors, other hospital 
systems that provide support services to physicians, but that 
is our business objective is to make that happen.
    So, when I speak about front-end information, it is being 
able to provide that information to the physician and their 
office staff. We do not want to see, and the physicians clearly 
don't want to be in the role of trying to be the administrator 
on behalf of the PBM. So, that information is provided to those 
vendors to do that. Again, just to close, I could not be more 
in agreement with Craig, that between SureScripts and RxHub, we 
are very complementary in the roles that we take, and the focus 
that we have had.
    Dr. SULLIVAN. Can I mention one more thing about costs that 
I forgot? The data conversion costs, it is only a one-time 
cost, but it is substantial. Practice management systems, about 
70 percent of physicians have electronic practice management 
systems.
    I figured out a way myself, on my own, to enter the data 
into the e-prescribing. Now, the other way to do it is to just 
one-by-one enter data, but I was given a quote of $2,500, a 
one-time data conversion cost if I wanted to build an interface 
to this e-prescribing system that I have. For the physicians 
who are using electronic health records already, there is a bit 
of an impediment. Again, this data conversion is a bit of an 
impediment, and to the extent that standards can help that and 
reduce the costs, I think that will be great. Again, we are 
working on that.
    Dr. TEICH. Actually, there is technology which folks at 
this table are working on, which may provide some easier 
answers to that because the big problem is I already have a few 
thousand patient records. They have their medications on there. 
How am I going to get them into my system in the first place? 
One interesting that is possible now or is being developed now 
from folks over here is the ability to supply that information, 
to supply that fill history and, from that, to be able to 
construct a list of the patient's active medications so that 
that very, very tedious task can go away.
    Chairman JOHNSON. So, is RxHub constructing these histories 
from past purchases?
    Mr. McLEAN. That information comes directly from the PBM. 
So, what we do is we go in--the only data file that we maintain 
at RxHub is a master patient index, which are five points of 
demographic information about each individual.
    Chairman JOHNSON. So, for example, an employee working for 
a big company whose prescription drugs are managed by a PBM, 
that PBM has that whole history and can transfer it to you, and 
the doctor can call it up. That is interesting.
    Mr. McLEAN. That is correct.
    Chairman JOHNSON. Mr. Stark?
    Mr. STARK. Thank you, Madam Chair. I have a request. My 
wife noticed, Dr. Sullivan, that back in 1972 you wrote, I 
presume, an article called, ``A Clinic for Male Derelicts,'' 
and she would like a copy. I suspect you might send one to my 
colleague, Mr. Crane, from Illinois. We would find that useful 
at this point. That caught my eye. I am going to just assume 
that all of your clients have a computer somewhere in the chain 
of their drug empires. This is not moving them very far in 
getting them used to it, but for Dr. Teich's and Dr. Sullivan's 
colleagues, it is getting them to move.
    You talked about $500 a year, but I go back to converting a 
bank to computers. Unless you do the whole thing, you are only 
half--then you are in a real mess. You have got paper records, 
I would guess, and e-prescriptions, and you are probably worse 
off in a way, but it seems to me that the savings just in 
office staff in a practice such as yours would be certainly 
more than $500 a month in time just to pull up, rather than 
have to sort through a whole roomful of files. I can't----
    Dr. SULLIVAN. Are you talking about just e-prescriptions or 
the whole----
    Mr. STARK. The whole thing. It just seems to me that just 
having prescriptions for a patient is only half a loaf. You are 
running around with one shoe off and one shoe on.
    Dr. SULLIVAN. You are absolutely right.
    Mr. STARK. That what we are talking about is getting a 
paperless--getting an electronic information system in the 
various practices of medicine, however they are conducted. I 
would think the advantages, in terms of convenience and time, 
yes, the conversion and the learning process is a pain in the 
butt, but once you are done--I remember when we were talking 
about paying for laser--what do you do with your eye--
cataracts, it used to take a guy 5 days off his practice to go 
learn how to do it. Now, it takes like an hour-and-a-half to 
run down and learn how to do it, so we never got the fees 
lowered, by the way, as the learning curve went up. 
Nonetheless, isn't there an amazing savings in practice expense 
once the conversion is digested, if you will?
    Dr. SULLIVAN. The answer is generally, yes, but--yes, but--
and I am sure you hear that a lot. Again, a big difference 
between a surgical practice and a medical practice. There are a 
lot of us who are in internal medicine and my specialty, 
cardiology, who think that IT and electronic medical records is 
like the new scalpel for doctors who have what they call 
``cognitive'' practices, as opposed to ``procedure-oriented'' 
practices.
    Mr. STARK. Right.
    Dr. SULLIVAN. I know the surgeons don't like that term, but 
to the extent that you say aren't there a lot of savings, well, 
it also depends on what kind of an interest and a pediatrician 
may have, especially an internist taking care of seniors, may 
have a huge medical record, a huge record; a surgeon's real 
thin.
    Mr. STARK. Then it is less conversion.
    Dr. SULLIVAN. Yes, but----
    Mr. STARK. If the guy lived after surgery, how many records 
do you have left?
    Dr. SULLIVAN. Right. Right.
    Mr. STARK. You send a copy to you and you keep them----
    Dr. SULLIVAN. Right, but you are talking about the savings. 
When you are talking about electronic health records, the full, 
you are talking anywhere from $5,000 to $30,000 per doctor. I 
mentioned e-prescribing, $500.
    Mr. STARK. Even at that, it just seems to me, as a person 
just who has converted just financial records, the efficiency, 
and the savings, and the storage, and the ability to get this 
history quickly is just so----
    Dr. SULLIVAN. If you spend $30,000 on an electronic health 
record, as some physicians have, and you had the same 
experience I had with my first e-prescribing vendor----
    Mr. STARK. Then have to change.
    Dr. SULLIVAN. Yes. You would be really upset, and you 
wouldn't be thinking about savings at all.
    Mr. STARK. I understand, and that happens when you have to 
change from whatever you have got to Quicken, and you do not 
start with them in the first place, and you lose everything. 
That does happen. I was getting back to the requirements. There 
was a time, a long time ago, when you could fly a private plane 
and you didn't have to have a radio, and then we said you do or 
we said you have to have a transponder. I suppose everybody has 
to have them now, and you do. So, they put them on, and they 
don't argue it. You go out in the Chesapeake Bay, and you don't 
have a life vest on, the people in the boat, the Coast Guard 
will raise hell with you. So, there are times when it is 
incumbent on us to say this is the way it is going to get done 
if it saves lives, not to mention money. How many doctors do 
you two guys know who don't have a laptop somewhere in their 
families?
    Dr. SULLIVAN. Can I just say that the airline pilots and 
the boaters don't have the pleasure of knowing malpractice 
attorneys.
    Mr. STARK. Oh, I think that you will find that those 
operating private companies--companies that operate privately--
--
    Dr. SULLIVAN. Okay.
    Mr. STARK. How many doctors do you guys know that don't 
have a computer, either in their family or in their life?
    Dr. SULLIVAN. Not many.
    Mr. STARK. A cell phone? You guys--when I was a kid, it was 
the doctors in the neighborhood who owned cars. They were the 
first guys in town to get these modern inventions. So, come on.
    Dr. TEICH. There is more cost involved between having the 
laptop that I use for running Quicken and e-mail at home 
compared to what I have to do to make secure, private, 
protected transactions along this way. I certainly do want to 
amplify two things you said about the value. Here, where I 
work, in an emergency room, I am primarily a consumer of 
prescribing information. If I were to be able to hook up to a 
network where I could see what a patient is taking, as we are 
starting to do now in Massachusetts, it will increase my costs. 
I don't have a flat way of reimbursing or justifying it. I do 
have to find a way to justify that.
    At the same time, there is no question it is going to make 
care much better. There is no question that patients that come 
to me who don't know or who are unconscious are going to get a 
lot better care for that information now being available. So, 
it does cost money, but there is no question there is a care 
imperative. As for the other point you mentioned about the 
electronic health record, one of the things you will find in 
the eHealth Initiative Report is a pyramid of greater functions 
as you go up the ladder of e-prescribing. Once you have that 
connection, you can do that.
    Mr. STARK. Staff just suggested how about if we said no 
medical malpractice if you use electronic records, and you are 
only liable if you don't.
    Dr. SULLIVAN. I would love to see you have that power. I 
would love it.
    Mr. STARK. I bet you guys would convert overnight, right?
    Dr. SULLIVAN. In a flash.
    Mr. STARK. All right.
    Mr. FULLER. Mr. Stark, if I could just make one comment 
about the costs associated because I think it is important.
    Mr. STARK. I have got to explain--Mr. Fuller understands 
this--he was with me in suing the HHS Secretary to cut out 
these cockamamie drug discount cards until he found out how 
much money you could make in them, and now----
    Mr. FULLER. Now I am one.
    Mr. STARK. Now they have their own. So, he understands 
about this stuff.
    Mr. FULLER. I do want to just comment briefly on the costs 
and how this gets paid for because I think, in terms of the 
path we are on now, it is important to consider this. I don't, 
in any way, underestimate the costs that a physician would have 
to pay, and some of the systems are $30 a month and some are 
more expensive. The fact is that doesn't cover the costs.
    Retail pharmacies investing millions of dollars, tens of 
millions for some of the individual chains, hundreds of 
millions overall, we obviously have computers, but as you well 
know, converting technology to things like this costs a lot of 
money.
    In addition to that, there is a transaction cost involved, 
and a transaction cost for these scripts is being paid by the 
pharmacy. So, as we begin filling millions, and hundreds of 
millions, and eventually billions of prescriptions, while the 
cost will come down, the electronic transaction rings a little 
bell and money is being collected from the pharmacy for this.
    Now, why do they do this? They do it because of the 
hundreds of millions of calls I described. They do it because 
we have 120,000 pharmacists and chain pharmacies today. We are 
4,000 short. We need more. We do it because they are very high-
paid people. So, I am not suggesting that the investment 
doesn't have some offset of savings, but there is substantial 
investmentin this by us by the PBMs, and it is very important 
to us that the rules are written in such a way that these 
investments which are being made today don't go like water over 
the dam because the regulatory environment changes the game on 
us.
    Mr. STARK. Could I throw in my last comment, Madam Chair? 
Take a page out of physician reimbursement. Don't let us try 
and work out these details as cost-sharing between the 
pharmacies, and the doctors, and the surgeons, and the 
internists. You guys get together and come up with your shell 
plan of who is bearing what portion of the costs or gets what 
portion of the savings and come back to us business we will 
screw it up. There would be too much pressure on us from all 
sides to do it one way or the other. You guys go into the room 
and say we are not coming out until the pharmacies, and the 
physicians, and the PBMs, and the pharma, and all the guys get 
together and figure out who is going to pay for this or how 
they are going to share both in the savings and in the costs 
and then come back, and I am sure the Chair would greet you 
warmly to say, great, now we can move ahead once you guys put 
it together. That would move us along very rapidly. Thank you, 
Madam Chair.
    Chairman JOHNSON. Brilliantly spoken, and I must say, 
especially for an advocate of a national health care system. 
Mr. Johnson?
    Mr. JOHNSON. I don't have any questions.
    Chairman JOHNSON. Mr. Crane?
    Mr. CRANE. Thank you. This is a question I would like to 
direct to all of you, and that is what is a reasonable timeline 
for the implementation of e-prescribing standards and what are 
the chances that a rush to implement these new standards will 
result in unintended consequences that could impact patient 
care or limit access to health care services, especially 
patients in less-urban or rural communities?
    Dr. SULLIVAN. I would like to address that. Again, this is 
somewhat my personal opinion. I probably would not change the 
timeline now. I would change the incentives. By that I mean, if 
the incentives are there and the safeguards are there, 
physicians--and I think others--will adopt these far sooner 
than you want for the timeline, but I am afraid that the 
incentives and the things that aren't properly aligned just 
don't make this easy right now. So, I wouldn't change the 
timeline, but I think I would change the incentives, and that 
would get these adopted much faster.
    Mr. McLEAN. I would say to that the standards that we have 
established already, whether that is RxHub or SureScripts, 
particularly related to the connectivity with the payer 
industry and the pharmacy industry, is that we already are 
operating today with those standards. So, I would emphasize we 
don't need to go backward on that. Let us take what is already 
there and push forward. I think many of the things that Dr. 
Teich has talked about that still needs to be worked out, that 
is probably where the remaining effort needs to be spent, but I 
would certainly encourage CMS and HHS not to redo or take apart 
what is already there and working.
    Dr. TEICH. I would go somewhat the same way. There is an 
incremental path. You can do something with what we have. You 
could do a little more with what we could do in 12 to 18 
months, and you could do all sorts of things with what we could 
do in all sorts of time. Of the five items that I mentioned in 
my testimony, which all are things that we don't have in place 
right now, you can do adequate work right now, but you don't 
get a lot of the advantages. The ones that I mentioned could be 
developed certainly within a 12 to 18 month timeframe, 
certainly depending on how many people had to be thrown into 
the mix. Implementation, ideally, could be as soon as possible. 
Perhaps implementation takes a little longer than development, 
but these aren't really ones that would be highly controversial 
to be produced. They just need to be produced and has to have 
the first advantage out there. Just like the CCR, once 
something comes out there that is reasonably good, it can be 
reasonably used while we are waiting for the next great step.
    Mr. FULLER. I really am in agreement. I couldn't agree more 
that we have some very good standards in place now that we have 
worked on in the private sector. We collaborate with government 
all the time. We are continuing that collaboration, as they 
look at new standards. I tend to think, though, that 
acceleration is a good idea. I think that we are much closer to 
the proverbial tipping point than some may believe. I think 
that pushing us forward--and I mean that by encouraging more 
collaboration the way Mr. Stark did--is a good thing.
    We have to be cautious of making wrong moves. As I 
indicated earlier, I think we have to be cautious that we don't 
try to accomplish everything everybody wants with a set of 
standards that makes us too complex for the practitioner to 
actually use, whether it is a physician, pharmacist or PBM. I 
think we have got a lot that has been accomplished. Moving up 
on the timeline that tipping point can greatly accelerate 
physician adoption, and from there we can add new and more 
features, which is one of the beauties of this. There really 
are lots of opportunities, once we get the connectivity that we 
have been working to achieve.
    Mr. CRANE. Yes?
    Dr. TEICH. I was just going to say I was one of the ones 
who testified early in the NCVHS hearings, and certainly they 
are charged to produce standards, but it is important not to 
take that task so broadly that they don't stop until they have 
a few good ones already going.
    Dr. SULLIVAN. Also, I actually had to lobby quite a bit 
this past year to change the law in Massachusetts because we 
had this handwriting requirement for handwritten signatures. 
So, if you are going to accelerate the timeline, I think you 
better be prepared to override some of the tremendous variation 
from State to State. Now, I will say it is getting better, but 
it was a very difficult job to lobby the House, and the Senate 
and the administration in my own State. Everybody saw the win-
win for e-prescribing, and so they ultimately did it.
    One thing that you could do is help the U.S. Drug 
Enforcement Administration (DEA) get to be truly electronic. I 
know that is more on the Administration side, but they have 
been dragging their feet, in my opinion, for the last 4 years. 
I have helped the American Medical Association represent them. 
We are trying to get DEA to be more electronic, in terms of 
prescriptions for controlled substances.
    Mr. CRANE. Thank you. I yield back the balance of my time.
    Chairman JOHNSON. Thank you very much. It is impressive 
that 80 percent of the commercially insured market is connected 
into RxHub and that, Mr Fuller, you mentioned that 70 percent 
of the scripts already flow through SureScripts and RxHub. So, 
we have a lot going on. We have enormous capability. My concern 
about standards, which you have all emphasized, is that you 
have done a good job of developing standards for e-prescribing. 
I think my understanding of what the Administration is trying 
to do is make sure that those standards end up being 
appropriate for, in a sense, the building blocks of an 
interoperable system, including electronic health records. So, 
we want to be sure that we preserve what you have done, but we 
build upon it.
    This data conversion issue, while formidable for the 
Medicare population at least, through the billing process, we 
actually have an enormous amount of e-records. I have people 
show me electronic health records that are basically government 
information organized appropriately, but without the detailed 
notes.
    So, this will be a process. It will be a multi-year 
process, but I appreciate your being here today to help us get 
a better handle on how we can push it forward. This 
Administration has been more aggressive than government has 
ever been in pushing forward the development of electronic 
capability in any sector of the economy. Normally, it has come 
from that sector. In this case, the sector is so fractured by 
millions and millions of small participants that it really does 
require a public-private effort to achieve the goal that 
actually Pete was part of achieving in the world of financial 
management and banking. So, thank you very much. We appreciate 
your being with us, and we invite you to offer us your thoughts 
as we move forward and you watch things develop. Thank you very 
much.
    [Whereupon, at 2:33 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

              Statement of American College of Physicians

    The American College of Physicians (ACP), representing over 116,000 
internal medicine physicians and medical students, is pleased to 
provide written comments on Standards for e-Prescribing. Specific ACP 
recommendations on e-prescribing are provided beginning on page 8.
    E-prescribing's impact will be constrained by the degree to which 
all health care system players can communicate with each other 
electronically. Optimal impact will only be achieved when every 
physician, clinic, hospital, nursing home, laboratory, health plan, and 
payor can seamlessly transmit medical information electronically in 
uniform languages and formats. Attainment of this ideal is the very 
definition of an interoperable health information infrastructure, a 
goal ACP not only supports along with the Department of Health and 
Human Services and several legislators, but is also actively pursuing 
through participation in key demonstration programs such as the Doctors 
Office Quality--Information Technology demonstration project 
(implementing Section 649 of the Medicare Modernization Act of 2003).
    In furtherance of ACP's advocacy of bringing advanced 
communications technology to the physician's office, including e-
prescribing, the College has recently published a series of three 
papers * related to this subject. The three papers are listed at the 
end of this testimony and can be found on the ACP website at: http://
www.acponline.org/hpp/menu/med_tech.htm.
---------------------------------------------------------------------------
    * Three ACP Papers Referenced on Page 1 of Testimony:

    (Available on ACP website at: http://www.acponline.org/hpp/menu/
med_tech.htm.

    [1] Enhancing the Quality of Patient Care Through Interoperable 
Exchange of Electronic Healthcare Information (April 2004).

    [2] The Paperless Medical Office: Digital Technology's Potential 
for the Internist (March 2004).

    [3] The Changing Face of Ambulatory Care--Reimbursing Physicians 
for Computer-Based Care (March 2003).
---------------------------------------------------------------------------
    Our comments will address the areas of e-prescribing's potential 
benefits, practical and technical barriers to wide scale e-prescribing 
adoption, ways to make e-prescribing appealing to physicians without 
adding to practices' administrative burdens, and the need to assure 
that e-prescribing medication decisions are not driven by proprietary 
interests.

1. E-Prescribing's Potential Benefits

    The many benefits of using e-prescribing, in terms of reduced 
medication errors, improved quality of care, enhanced administrative 
efficiency, and lowered costs, clearly justify efforts to expand use of 
e-prescribing systems.
    In the eHealth Initiative's April 14, 2004 report: Electronic 
Prescribing: Toward Maximum Value and Rapid Adoption, there is clear 
evidence that many untoward drug events are avoided by use of 
integrated e-prescribing/electronic health record (EHR) systems, 
averting the associated costs of such drug caused morbidity and 
mortality. The report indicates that out of 8.8 million adverse drug 
events which occur each year, over 3 million of these are preventable. 
Medication errors also account for 1 out of 131 ambulatory care deaths. 
With over 3 billion prescriptions written each year, the report shows 
that e-prescribing, if universally adopted in the United States, could 
save $27 billion annually. Some of these savings would come from 
prevention of adverse drug events, while the majority of savings would 
result from better utilization of drugs, through guidance from 
formulary information included in e-prescribing systems. Any short term 
start-up costs associated with widespread adoption of e-prescribing 
technology should be quickly offset by significant cost avoidance 
related to misadministration of medications. Other potential benefits 
could be lowered physician malpractice insurance premiums and higher 
levels of patient confidence and satisfaction.

2. Practical and Technical Barriers to Wide Scale E-Prescribing Adoption

a.

Need for a Universally Accepted E-Prescribing Drug Classification and 
Coding Nomenclature

    For e-prescribing to be adopted on a wide scale, there must first 
be a universal drug classification and coding nomenclature that is 
accepted throughout the U.S. health care system.
    ACP understands that current day e-prescribing systems can range 
from the limitations of a stand-alone personal digital assistant (PDA) 
with basic formulary and prescription generating software, to 
sophisticated systems which are fully integrated with EHR and clinical 
decision support software. These advanced systems are potentially able 
to conduct two way electronic communications with pharmacies, other 
physicians and providers, laboratories, health insurers, and pharmacy 
benefit management organizations. However, at this point in time, two 
way electronic transmission of patient medication information is a 
rarity. This is why it is vital that core uniform e-prescribing 
standards, as called for by the Medicare Modernization Act, be simple 
and as easy to implement as possible. These standards also need to be 
easily adaptable from the simplest to most complex of health care 
settings and must accommodate existing e-prescribing systems without 
necessitating major software changes, staff retraining, or increased 
costs. It is also critical that use of e-prescribing systems be 
transparent to both physician and patient, and enhances rather than 
distract from the process of patient care.
    The current National Council for Prescription Drug Programs (NCPDP) 
script codes for medications has been accepted as the best available 
code set available; however, the current NCPDP script codes are not the 
final solution for bringing simplicity to the identification of 
medications. In fact, NCPDP has different proprietary codes for every 
unique product for each pharmaceutical manufacturer, meaning that 
something as simple as aspirin would have several unique codes due to 
dosage of each pill and number of pills per package. Another 
manufacturer of aspirin would have an entirely different set of codes 
for the same dosages and package sizes, so there is no easy way for a 
physician to evaluate medications using the current NCPDP script codes.
    To try to overcome this unnecessary complexity, the federal 
government has undertaken a major effort to develop a simplified, 
unified system of e-prescribing, known as RxNorm. While RxNorm does 
allow specification of a particular drug's ingredients, dosage, and 
form (pill, patch, tab, etc.), this new system does not go far enough 
in allowing a physician to specify critical details of his/her choice 
of patient medication. Specifically, this includes if a drug should be 
provided in a compliance packaging form (e.g., certain steroids have to 
be taken on a strict and reducing dosage regimen), whether certain 
allergic ingredients such as gluten must be avoided, and what flavoring 
a child's prescription must have to ensure the child complies with 
taking the medicine.
    There are other gaps in the present NCPDP and RxNorm standards that 
must be addressed. Standardization of the required data elements 
(``sig'') is necessary to create an electronic prescription. These 
elements must include the ability to give directions for specific 
medications in oral or topical form and in various dosing patterns.
    There is also a need to standardize specifications of allergy 
groups, drug interaction groups, etc., so there is consistency as one 
changes to different applications that use different commercial 
dictionaries.
    Encouragement is needed for unification of varying state 
regulations concerning the proper format of a prescription as well as 
unifying standards, terms, and structures used by formulary information 
service providers.
    The resulting standards also need to include a single set of 
messaging standards that is reconciled with developing HL7 conventions, 
and can continue to grow and develop to meet future business needs.
    In short, ACP encourages the development of a nationwide system 
expanding upon the efforts of RxNorm to meet the above needs but also 
avoiding the excessive complexity of NCPDP script codes.

b.

Overcoming Acquisition Cost Barriers and Encouraging Physician Acceptance 
of Change

    Adoption of e-prescribing technology can best be encouraged by 
providing the strong financial incentives needed to take the sting out 
of taking on this new technology's substantial acquisition and start-up 
costs. The source of these incentives should be the federal government 
and health plans which will ultimately be rewarded for this investment 
in the long run as savings are generated by e-prescribing systems. This 
will be particularly crucial in light of Medicare projections of eight 
years of physician payment cuts between 2006 and 2013, amounting to a 
40 percent pay cut relative to 2005 reimbursement rates. As such, ACP 
applauds the initiative of health plans such as WellPoint Health 
Networks, which will soon offer free e-prescribing software to its 
19,000 participating physicians.
    As more and more physicians make the move to e-prescribing, it will 
be hard for the rest of the medical universe to resist coming on board, 
as both doctors and patients clamor for the therapeutic accuracy and 
quality improvement only e-prescribing can provide.
    In addition, standards for e-prescribing must take into account the 
wide variety of clinical settings and specialties and should be 
flexible and scalable to reflect a practice's size and prescribing 
volume. Since universal e-prescribing is likely to precede achievement 
of a national interoperable health information infrastructure, e-
prescribing standards must allow for basic stand alone electronic 
prescribing platforms used by smaller practices, as well as more 
sophisticated integrated EHR/clinical decision support/practice 
management/e-prescribing systems used by larger group practices and 
health systems. Most importantly, the physician-patient relationship 
must be enhanced, not impaired by this new technology.

c.

Careful Pilot-Testing of E-Prescribing to Assure Smooth Operability in All 
Health Care Environments

    E-prescribing system prototypes should be carefully pilot-tested in 
a wide array of clinical settings, including small independent 
community-based physician practices, to ensure e-prescribing works 
smoothly in all environments. Settings should be both urban and rural, 
and include the particularly difficult situation where integrated 
information networks are essentially non-existent and must be 
developed. The process of development and testing must have the active 
input of all affected providers and insurers, with cooperative standard 
setting, and voluntary participation of physicians. Once final 
standards are decided upon, implementing regulations should provide 
ample time for those choosing voluntary e-prescribing to come into 
compliance, avoiding the implementation problems currently experienced 
with the Electronic Transactions and Code Sets rule under the Health 
Insurance Portability and Accountability Act.

d.

Compliance with Final HIPAA Security Standards and Drug Enforcement Agency 
(DEA) Requirements

    Any e-prescribing standards developed must address many issues in 
the final HIPAA Security standards, due to be implemented in 2005, 
including what physical safeguards are necessary to guard data 
integrity, personal authentication, encryption, and patient 
confidentiality. E-prescribing standards must also address how access 
to DEA-controlled drugs will be restricted, since many states currently 
only allow such prescriptions to be written through use of a triplicate 
(or other special paper) prescription order.

3.

Issues Critical to E-Prescribing Adoption by Physicians

    ACP believes that, for e-prescribing to have widespread acceptance 
and adoption amongst physicians, this new technology must prove itself 
as speedy or efficient as filling out a paper script, and hold other 
advantages not possible with a paper-based system. One absolutely vital 
component for raising the value of e-prescribing in assuring patient 
safety and quality is integration with EHR and clinical decision 
support software. Such an integrated system can help physicians choose 
the right drug and dose for a patient, based on data already contained 
in the EHR and patient medication history.
    ACP is a leader in the development and dissemination of evidence-
based electronic clinical decision support tools, with its Physician 
Information and Education Resource (PIER), which can be integrated with 
EHR/e-prescribing software. PIER offers over 300 modules focusing on 
the diagnosis and treatment of diseases including: a comprehensive, in-
depth drug database; a convenient search engine and bookmark features; 
evidence indicators and standard tables; and the latest clinical 
information culled from the medical literature. PIER is also available 
in a PDA format already integrated with some e-prescribing systems 
presently available on handheld computers. PIER is meant to be a 
helpful guide to physician decisions and, as should be the case with e-
prescribing advice, is never intended to mandate a physician's or 
patient's final choice of treatment or medications.
    ACP fully recognizes that adoption of e-prescribing technology will 
not be without its growing pains. The vast number of different e-
prescribing systems and languages presently in use make interoperable 
communication among health system components a still distant goal at 
this time. One ACP member in Maine noted that, although his 25 member 
group practice had the capability of sending prescriptions 
electronically to local pharmacies and pharmacy benefit management 
organizations, virtually no capability exists at the receiving end to 
accept e-prescriptions and e-signatures. Instead, about 75% of 
prescriptions must be electronically faxed to the receiving 
organizations, while the remaining 25% must be printed out as a paper 
prescription which patients must carry to their pharmacies. The 
practice estimates printing out prescriptions administratively adds 
about $1 to the cost of each prescription.
    ACP member physicians who previously tried e-prescribing systems 
also report difficulty with accuracy of formulary information. Many 
times the formulary information is not kept current with the rapid 
changes made at the health plan level and physicians' offices remain 
burdened with phone calls from pharmacies asking for changes because 
health plan formulary changes have not yet made it through to the e-
prescribing software. Other ACP members say they still believe writing 
out a prescription by hand is faster than doing it on a computer, so 
winning converts to the advantages of this new technology will be a 
major challenge for the medical industry in the years ahead.
    ACP believes the following key areas must be addressed to ensure e-
prescribing is widely accepted and used by physicians, and does not 
create new, counter-productive administrative burdens.

a.

Immediate Electronic Access to All Medication and Patient-Specific 
Information

    To gain the support of the physician community, the e-prescribing 
system must provide all information a physician requires for reaching a 
fully informed, optimal clinical decision for the patient, as well as 
accommodating patient insurance coverage and cost considerations. This 
means having complete and current formulary information which shows all 
available medications for a particular condition, including therapeutic 
substitutions and generic alternatives. Prices for all medications and 
whether or not a patient's insurance plan provides coverage must also 
be available online, so that a physician can choose the lowest cost 
alternative for each patient. This information must be kept up to date 
and in full agreement with the latest formulary information used by 
pharmacies and health plans.
    The e-prescribing system must also provide a patient medication 
profile that includes prescriptions from all pharmacy sources and all 
physicians in a single unified view. The system would provide a list of 
every individual prescription filled for a given patient by any 
pharmacy and any physician within a specified timeframe from most 
recent to least recent and also indicate which prescriptions have been 
discontinued. In addition the e-prescribing system must be dynamically 
updated and bi-directionally linked to the physician office medical 
management system and the most current health plan formularies to 
eliminate the need for double entry of information such as insurance 
and demographic information.

b.

Non-Interference in Physician Medication Choices

    It is critical that the e-prescribing system not include elements 
that would permit payors and pharmacy benefits managers to pressure 
physicians to prescribe a different therapy or medication than what the 
physician concludes is best for a particular patient based upon 
scientific evidence and knowledge of the patient's medical history.

c.

Real Time Online Medication Prior Authorization Adjudication

    One absolutely crucial element of an effective e-prescribing system 
is inclusion of a real time, online prior authorization adjudication 
process for physicians with insurers, health plans, and pharmacy 
benefit management organizations. Physicians will be discouraged from 
using e-prescribing systems if, every time there is a dispute over 
coverage/payment for a prescribed drug, they are forced to make a 
lengthy phone call to get approval, or fill out additional paperwork to 
override an initial denial. Such tactics intentionally frustrate 
physicians, forcing them to use the payors' lower cost choices, rather 
than make the best therapeutic choice for their patients. If the 
federal government truly wants e-prescribing to have broad acceptance 
and usage in the physician community, rapid online decisions for prior 
approval medications must be a cornerstone of all future e-prescribing 
systems.

4.

Need to Assure that E-Prescribing Medication Decisions Are Not Driven by 
Proprietary Interests

    To create a universally beneficial e-prescribing system, the drug 
classification and coding systems, as well as prescribing databases 
must be free of commercial bias. ACP is concerned that the current 
multiple drug classification, vocabulary, and database systems in use 
are often proprietary, designed to optimize profits of manufacturers, 
pharmacy benefit managers, and health plans rather than provide the 
medically best and cost-effective drug a patient needs. One major 
loophole in the Medicare Modernization Act of 2003 is that even though 
the U.S. Pharmacopoeia is charged with developing a single drug 
classification system, payors are not required to use it. Payors can 
consolidate or expand drug classification categories as they see fit, 
which will allow formulary comparisons and physician prescribing 
patterns to be inappropriately influenced. Clearly, all parties 
involved with the manufacture, sale, distribution, and prescription of 
prescription drugs should work with a consistent classification system 
free of commercial bias to permit fair, objective comparison of drug 
costs and benefits.
Summary

    The coming revolution in electronic health information technology 
is one that will benefit all, simultaneously raising health care 
quality, lowering costs, and expediting the process of care. Accruing 
evidence shows that e-prescribing has the greatest potential to improve 
patient care substantially and quickly, which is why it must be a top 
priority as the nation moves from a fragmented, multi-system, primarily 
paper-based approach to a unified electronically-based system for 
handling patient medications. As such, ACP lends its hearty support to 
this worthy endeavor and is willing to actively participate in e-
prescribing and national health information infrastructure pioneering 
efforts.
                               ----------
                   ACP e-Prescribing Recommendations

    Following is a set of ACP recommendations aimed at encouraging 
expanded adoption of e-prescribing throughout the U.S. health care 
system:

     1.  There should be a single universal vocabulary and 
classification system for prescription drug information that must be 
developed and maintained in a manner that is free of commercial bias so 
that prescription drugs can be accurately used and compared.
     2.  The health care industry should support the widespread 
adoption and further enhancement of RxNorm to provide a consistent, 
easily used, drug vocabulary that includes:

       a. 
          a specification system of drug active ingredients, dosage, 
and route of administration expanded to include inactive ingredients;
       b. 
          standardization of required data elements (``sig''), drug 
dictionaries and state regulations concerning the proper format of a 
prescription;
       c. 
          a single set of messaging standards that is reconciled with 
developing HL7 conventions that can continue to grow and develop to 
meet future business needs.

     3.  Due to substantial evidence showing e-prescribing systems have 
a major and immediate impact on averting adverse drug events and 
associated costs, first priority in developing a national health 
information infrastructure should be placed on developing uniform 
standards for e-prescribing, and providing sufficient federal support 
and financial incentives to ensure all providers adopt and utilize e-
prescribing systems.
     4.  Development of e-prescribing standards and software should be 
a voluntary, cooperative process between the federal government and 
health care industry, with the goal of ensuring buy-in of all affected 
parties to expedite implementation once universally accepted standards 
are achieved. Standards developed should be easily adaptable to 
existing e-prescribing systems, with minimal disruption and cost while 
also having the flexibility to meet future business needs.
     5.  To have maximum impact on quality of care, e-prescribing 
systems must be designed so they can be easily integrated with 
electronic health records and clinical decision support software.
     6.  To ensure that e-prescribing systems can work at the national 
level, they should first be pilot tested in a wide array of health care 
settings and environments to identify and correct any technical 
problems that would undermine widespread implementation.
     7.  In designing and pilot testing e-prescribing systems, to win 
provider support, it is vital that objective data be collected that 
clearly demonstrates such systems not only avert medication errors, but 
also save providers time and money over pre-existing systems.
     8.  Even after pilot testing has proven successful, national 
adoption of e-prescribing systems should not be rushed, giving 
voluntary providers sufficient time to acquire the necessary software 
and hardware and communications networks, as well as time to become 
familiar with and confident in using the new systems. Implementation 
timelines should allow ample time to make all necessary adjustments and 
allow sufficient time for training and system testing before going 
live.
     9.  The physician's responsibility to make patient care decisions 
and prescribe medications, based on his or her clinical expertise and 
experience, must be preserved. Electronic health record (EHR), e-
prescribing, and other e-health technology must be designed to 
facilitate access to unbiased and evidence-based decision support 
tools.
    10.  EHR and e-prescribing systems must dynamically/bi-
directionally link to the physician office medical management system, 
reducing the need for double entry of information such as insurance and 
demographic information.
    11.  Insurance companies must place clear formulary codes on 
insurance cards and e-prescribing systems so that formulary checking 
can be seamless and accurate and up to date with the most recent 
formulary requirements.
    12.  E-prescribing systems:

       a. 
          Must provide a patient medication profile that includes 
prescriptions from all pharmacy sources in a single unified view. The 
system would provide a list of every individual prescription filled for 
a given patient by any pharmacy or physician within a specified 
timeframe from most recent to least recent and indicate which 
prescriptions have been discontinued.
       b. 
          must be dynamically updated with the most current health plan 
formularies.
       c. 
          must conform to the final HIPAA Security standards, due to be 
implemented in 2005, and address issues such as what physical 
safeguards are necessary to guard data integrity, personal 
authentication, encryption, and patient confidentiality, as well as 
addressing the impact of e-prescribing on access to DEA-controlled 
drugs, which can only be provided through a triplicate (or other 
special paper) prescription order in many states.
       d. 
          must not be used as a means for payers and pharmacy benefits 
managers to pressure physicians to prescribe a different therapy or 
medication than what the physician concludes is best for a particular 
patient based upon scientific evidence and knowledge of the patient's 
medical history.
       e. 
          must have a real time online prior authorization adjudication 
process for all physicians' prescriptions.

                                 
             Statement of America's Health Insurance Plans

    America's Health Insurance Plans (AHIP) is the national trade 
association representing the private sector in health care. Our nearly 
1,300 member companies provide health, long-term care, dental, vision, 
disability, and supplemental coverage to more than 200 million 
Americans.
    AHIP and our member companies applaud Congress for enacting 
legislation encouraging the development of uniform standards for 
electronic prescribing. We believe that the electronic prescribing 
initiative authorized by the Medicare Modernization Act of 2003 (MMA) 
is an important step toward developing an overall health information 
infrastructure.
    The MMA mandated the development of standards for electronic 
prescribing for the new Medicare Part D prescription drug program. We 
believe these standards will have a significant impact on the 
application of electronic prescribing in physician offices, hospitals, 
and pharmacies. We appreciate this opportunity to provide our views and 
recommendations on electronic prescribing issues.
    According to estimates from the Centers for Medicare and Medicaid 
Services (CMS), approximately 32.2 million Medicare beneficiaries will 
be enrolled in Part D beginning in 2006. The electronic prescribing 
standards will impact the relationship between these beneficiaries and 
their treating health care providers. It is vital, therefore, that the 
standards promote the delivery of efficient, safe, and high quality 
health care. The electronic prescribing standards adopted by the 
Department of Health and Human Services (HHS) will also strongly 
influence the development of similar standards for private sector 
health care.
    This statement discusses the experience of some of AHIP's member 
companies in encouraging the use of information technology for pharmacy 
benefit activities. It also includes recommendations for electronic 
prescribing standards that we are submitting to the National Committee 
on Vital and Health Statistics (NCVHS). The NCVHS is charged with 
advising HHS on the development of requirements for electronic 
prescribing standards.
Health Insurance Plan Pharmacy Initiatives
    Health insurance plans have taken the lead in building the 
information infrastructure necessary for translating pharmacy data into 
better patient care. Many of AHIP's member companies utilize web 
portals to allow individual members access to their pharmacy-related 
personal information, including pharmacy claims, benefits information, 
up-to-date formulary listings, and online search tools to find 
participating pharmacies by zip code or geographical area. Some health 
insurance plans also allow members to fill or refill prescriptions 
online, send questions electronically to a pharmacist about their 
medications, and purchase over-the-counter medications online at 
discounted prices.
    A number of AHIP's member health insurance plans are working with 
health care providers to incorporate everything from comprehensive 
electronic medical record and electronic prescribing programs to 
handheld devices and other software and hardware prescribing 
applications for use in provider offices. Health care providers are 
able to use this technology to view a patient's medication history, 
diagnosis, formulary information, or allergies at the point of 
prescribing and can either print the prescription or send it directly 
to the pharmacy electronically.
    These efforts demonstrate our members' commitment to the 
development of electronic prescribing technologies at the point of 
patient care.
Practical Considerations for Electronic Prescribing Standards
    We have urged the NCVHS to include the following considerations 
when developing its recommendations for electronic prescribing 
standards.

Standards Must Allow for Formulary and Benefits Information to be Made 
        Available to the Prescribing Health Care Provider at the Point 
        of Service
    It is critical for health care providers and their patients to have 
all of the information needed to make decisions about health care--
including information about cost and benefits coverage for prescription 
drugs and about potential drug interactions. The MMA specifically 
requires that the standards inform the prescribing health care 
professional and the pharmacy and pharmacist regarding ``information on 
eligibility and benefits (including drugs included in the applicable 
formulary, any tiered formulary structure, and any requirements for 
prior authorization) . . .'' In addition, the standards must provide 
information about ``the availability of lower cost, therapeutically 
appropriate alternatives (if any) for the drug prescribed.''
    Consumers need to be able to access information about their covered 
benefits and financial responsibility at the time a prescription is 
written. This information must include whether a prior authorization is 
required, applicable formulary information, any reasonably estimated 
co-payment or cost-sharing amounts that will be the patient's 
responsibility, and whether less costly, therapeutic alternatives are 
available. Providing this information allows the prescribing health 
care provider and his or her patient to discuss the full range of 
prescription drug therapies available for treatment. In addition, 
electronic prescribing can improve the quality of care by giving 
providers information on potential drug interactions and other clinical 
decisionmaking support. The standards should allow for such functions.
    AHIP recommends that electronic prescribing standards provide 
access to health benefits and formulary information, as well as 
appropriate decision support, at the point of patient care. This 
information should include whether a prior authorization is required, 
applicable formulary information, any reasonably estimated co-payment 
or cost-sharing amounts that will be the patient's responsibility, and 
whether less costly, therapeutic alternatives are available. Standards 
should also allow information about drug-to-drug interactions and other 
clinical decisionmaking support.

The Standards Process Must Be Flexible
    Health care providers and health insurance plans have invested 
significant resources over the past few years in implementing standards 
for electronic health care transactions and code sets required by the 
Health Insurance Portability and Accountability Act (HIPAA). This 
process has provided a number of important ``lessons learned'' that are 
applicable to the development of electronic prescribing standards.
    One of the criticisms of the HIPAA standards process is that it 
applies formal agency rulemaking to standards that may need to be 
modified to meet a changing business environment. The HIPAA process 
requires any new standards or modifications to first be approved by a 
Designated Standards Maintenance Organization (DSMO), then submitted 
for review by all other DSMOs, then reviewed and approved by the NCVHS. 
At that point, the standard is recommended to HHS, which must publish a 
proposed rule, accept public comment, and after consideration of those 
comments, release a final rule.
    This process requires a significant amount of time before a new 
HIPAA standard can be introduced or an existing standard is modified. 
Imposing a similar process for adopting electronic prescribing 
standards could lead to a number of administrative and operational 
difficulties because the standards would not keep pace with changing 
business needs.
    AHIP believes that a flexible, streamlined process must be 
implemented for adoption and modification of the electronic prescribing 
standards.

Pilot Testing of the Standards is Critical
    Another important lesson from the HIPAA experience is the need to 
submit any standards to rigorous testing before proceeding to 
implementation. Testing standards under ``real world'' conditions will 
help determine if any changes are needed before the standards are 
implemented system-wide.
    The MMA includes a requirement that the new electronic prescribing 
standards be pilot tested under HHS direction unless there is adequate 
industry experience with such standards. We believe that pilot testing 
is critical to the success of electronic prescribing standards and 
should be required for all proposed standards, including those 
currently in use by some health insurance plans, health care providers, 
and pharmacies.
    The Medicare Part D program establishes a unique set of cost-
sharing and other requirements which are not applicable to private 
sector business. A standard that has been successfully used for the 
private sector may not satisfy the Medicare Part D requirements. Pilot-
testing is necessary to determine whether any proposed standard, 
regardless of its prior industry experience, will meet the Medicare 
Part D requirements.
    AHIP believes that any electronic prescribing standards must be 
pilot tested before final adoption of HHS.

Initial Stages: Evaluation of Standards
    Incorporating new technology into physician practices requires a 
significant amount of preparation, administrative resources, and 
training. In order to encourage adoption, electronic prescribing 
standards must be kept simple and easy to understand. When possible, 
existing standards, such as those developed by the National Council on 
Prescription Drug Progress (NCPDP) or by the American National 
Standards Institute Accredited Standards Committee X12 (ANSI ASC X12), 
should be used rather than creating an entirely new standard. In 
addition, the standards should outline minimum functionally 
requirements, instead of mandating proprietary formats.
    The NCVHS ``Work Plan'' includes a number of standards requirements 
for consideration that go beyond those set out in the MMA. While it may 
be appropriate in the future to include this additional information in 
the electronic prescribing process (for example, information about 
prescription drug-to-lab test cross checks), the initial standards 
should be limited to the MMA's specific requirements. It is more 
important to get the basic components of electronic prescribing right 
at this early stage than to impose additional information requirements.
    AHIP recommends that the initial electronic prescribing standards 
developed by the Secretary be limited to the specific information 
requirements set out in the MMA.

Standards Must be Compatible with Other E-Health Requirements
    Health insurance plans and health care providers are subject to the 
HIPAA transaction standards which set out requirements for basic health 
care transactions such as claims, enrollment, and payment. Other HIPAA 
administrative simplification rules govern the security and privacy of 
information exchanged between health care providers, health plans and 
insurers, and health care clearinghouses.
    The health care community is also engaged in a wide range of 
initiatives related to the development of electronic health records, 
interoperability standards, and increasing use of information 
technology in the delivery of health care. The electronic prescribing 
standards that the Secretary will eventually adopt should not be 
considered in a vacuum; they must fully complement these other 
regulatory requirements and health information initiatives.
    AHIP recommends that the electronic prescribing standards be 
consistent with existing regulatory requirements imposed on health care 
providers and health insurance plans by the HIPAA standards for 
electronic health care transactions, health information privacy and 
security. To the greatest extent possible, the electronic prescribing 
standards adopted by the Secretary should use, or be based on, existing 
standards that are widely accepted in the health care industry. In 
addition, we believe the Secretary must make sure that the standards 
that are adopted are compatible with ongoing efforts by the health care 
community to develop and implement electronic health records and 
interoperable health information systems.

Conclusion
    AHIP and its member health plans and insurers strongly support the 
development of a uniform set of standards for electronic prescribing 
for the Medicare Part D program. We believe these new standards will 
improve the quality and efficiency of health care provided to Medicare 
beneficiaries and will encourage the development of electronic 
prescribing processes in physician offices, hospitals, and pharmacies.

                                 
           Statement of the American Osteopathic Association

    The American Osteopathic Association (AOA), which represents the 
nation's 54,000 osteopathic physicians, would like to take this 
opportunity to thank Chairwoman Nancy L. Johnson and members of the 
Subcommittee for holding this important hearing on the adoption of 
standards and technologies for electronic prescribing. Your commitment 
to improving the health care delivery system is commendable. The AOA 
supports initiatives aimed at improving the quality and safety of care 
available to our patients. E-prescribing offers a unique opportunity to 
improve the quality of patient care and increase efficiency in the 
disbursement of prescriptions.
    While technology impacts almost all aspects of our daily lives, a 
number of barriers remain to the utilization of technology in writing 
prescriptions and ultimately the development of comprehensive 
electronic health records. Enactment of the ``Medicare Modernization 
Act'' (MMA) (P.L. 108-173) served as an important catalyst in the 
development and utilization of e-prescribing standards and 
technologies. Adverse events occur each year as a result of drug 
interactions or illegible handwriting on prescriptions resulting in a 
patient taking incorrect medication. In light of the technologies 
currently available and the continual creation of new technologies, 
there is little reason not to employ such technologies that stand to 
improve patient care.
    As a result of the MMA, the Secretary of the U.S. Department of 
Health and Human Services (HHS) must develop uniform e-prescribing 
standards. These standards require that patient and medication 
information be available at the point of care. Due to this requirement, 
a number of stakeholders actively became involved in the development of 
standards and technology. In the end, it is the patient who will 
benefit from a system that will improve the quality and efficiency of 
health care. Implementation of e-prescribing will help reduce the 
occurrence of adverse events and improve the safety and efficiency of 
medicine. A safe and efficient health care system benefits everyone.
    The AOA recently adopted guiding principles on e-prescribing. These 
principles serve as the framework for the development and adoption of 
electronic prescribing standards and technology. Specifically, the AOA 
set forth seven core provisions that we believe should be present in an 
e-prescribing system. Application of these principles will assist our 
physicians in providing the highest possible level of care to our 
patients:

      Safety: The units used to prescribe electronically should 
clearly show safety alerts. These alerts should be distinguishable from 
advertisements. In our opinion, advertisements adversely impact 
efficiency and offer no clinical benefit.
      Privacy: Privacy of the patient must be protected. 
Information on patients' medications should be current, comprehensive, 
and compliant with standards set forth in the ``Health Insurance 
Portability and Accountability Act'' (HIPAA).
      Transparency: All third party involvement in an 
electronic prescribing system must be clearly identified.
      Design: The development of any system must ensure that 
the physician-patient relationship is protected to ensure that doctors 
in conjunction with their patients dictate the care, not computer 
software. In addition, the system must be designed in a manner that 
ensures that new health care errors are not introduced into the health 
care delivery system.
      Integration: Systems should be proven and integrated into 
existing health information technology. E-prescribing can be an 
important component of a larger electronic medical record.
      Scalability: Any standards should be broad-based and 
applicable to all health care delivery systems.
      Timing: Standards should be implemented in a manner that 
allows software vendors and physicians adequate time to become 
compliant. In addition, we strongly advocate for broad testing of 
technologies and standards to ensure efficiency and effectiveness.

    This hearing furthers an important dialogue. The AOA stands ready 
to work with you and the members of the Subcommittee to ensure the 
development of e-prescribing standards and technologies that are 
designed and implemented to enhance the quality of care our patients 
receive and assist with the efficiency of delivering health care 
services. While the AOA agrees e-prescribing increases safety and 
efficiency and potentially lowers the costs of health care, we do not 
believe that this should come in the form of additional unfunded 
mandates on physicians. E-prescribing offers great potential if all 
interested parties remain part of the process.

                                 
         Statement of Tom Doerr, Wellinx, Saint Louis, Missouri
   An Electronic Prescribing System with Integrated Decision Support 
           Information Substantially Reduces Medication Costs

    Thanks for the opportunity to present information to your 
Committee. My name is Tom Doerr. I am a physician with a part-time 
Internal Medicine practice that is limited to Medicare beneficiaries. I 
am also one of the two physicians who founded Wellinx, an electronic 
prescribing company.
    Physicians direct about 70% to 90% of spending in the $1.8 trillion 
health care sector of the U.S. economy.1,2,3 As a rough 
calculation, every thousand physicians makes about $2 billion of 
spending decisions annually. Yet the information brought to these 
decisions is often profoundly inadequate. The prices of medications, 
tests and procedures are not transparent to physicians or patients, nor 
is adequate information about the relative effectiveness of the 
alternatives available at the time and point of thought where these 
decisions are made.
---------------------------------------------------------------------------
    \1\ Baker, Michael J. estimated that physicians have 70% of the 
spending authority in health care in Pharmacy Benefit Management: A 
Prescription for Controlling Health Care Costs, Raymond James & 
Associates, Raymond James Financial Center, 880 Carillon Parkway, St. 
Petersburg, FL 33716, December 29, 1999.
    \2\ Maynard D. Poland published the estimate of 80 to 90% in 1999. 
http://www.wisconsinmedicalsociety.org/uploads/wmj/poland.pdf.
    \3\ Diede, Mick L. Diede and Richard Liliedahl estimated that 
physicians direct 70% of health care spending in Managed Care, February 
2002. None of these three sources presented any data to substantiate 
their estimates.
---------------------------------------------------------------------------
    Wellinx was founded to bring context-specific, evidence-based 
information into physician decision processes. The first application 
was an electronic prescribing tool. The Wellinx system is diagnosis-
driven, meaning that the physician first enters the diagnosis he/she is 
treating and this then drives the presentation of information relevant 
to that condition. The Wellinx team of pharmacists and physicians 
summarizes clinical best practices through reviews of clinical trial 
results and published, evidence-based guidelines. They then integrate 
these best practices into the physician's workflow in a convenient, 
usable way.
    In many cases, the weight of the evidence favors selection of 
older, well-studied drugs, often available in generic form. This 
evidence-based approach drives measurable improvements in patient 
outcomes.

The Wellinx Electronic Prescribing System
    Wellinx implemented this diagnosis-driven electronic prescribing 
system at Esse Health, a 70-physician group in Missouri, several years 
ago. We measured a significant improvement in prescribing behavior in 
that group.
    Thereafter, we studied the impact of this system in a controlled 
trial that included 38 physicians practicing in an Integrated Delivery 
Network in Wisconsin. Compared to the control group, the costs for new 
prescriptions and their refills decreased by 8% ($572 per doctor per 
month) in the intervention group during the first six months that they 
used the system. During the next six months of use, the costs to the 
payer were reduced by 15% ($1,062 per doctor per month) compared to 
controls. Almost identical improvements were observed after the system 
was implemented in the control group in that IDN. Overall, the payer in 
this study measured their return on investment to be around six to one 
in the first year.
    The results of this study have been accepted for publication by the 
Annals of Family Medicine and are currently in press. It is important 
to appreciate that the full impact of the savings in pharmacy costs 
were probably not realized in the first year of that study. As the 
system is used for a longer period of time, a progressively greater 
percentage of patients in that doctor's practice get new prescriptions 
guided by this system. Refills of these new, more appropriate 
medications compound the savings. Table 1 shows the measured results 
and projected savings over a two year period. These results represent 
the experience of a commercial plan with a 40% market share.

  Table 1:  Measured and Projected Savings per Doctor per Month for a 
                     Payer with a 40% Market Share

[GRAPHIC] [TIFF OMITTED] T9675A.001


    We can perform some back of the envelope calculations to estimate 
the possible impact of this electronic prescribing system on the 
Medicare system. About 14% of Americans are currently Medicare 
beneficiaries. According to the 2003 Novartis Pharmacy Benefits Report, 
medication costs for Medicare recipients were about twice those of 
commercial populations. Thus, we might expect potential savings per 
doctor of about \2/3\ the magnitude of those measured in the Wisconsin 
study, if all of a doctor's Medicare recipients were treated with this 
prescribing system. (14% market share x-6 2 to reflect 
higher drug costs, versus 40% market share for the sponsoring payer in 
the Wisconsin study).
    The savings resulting from the use of Wellinx could be used to 
bring the costs of the Medicare Modernization Act back into line with 
the original CBO estimates. Or they could be used provide incentives to 
physicians for adopting this technology or as payments for performance. 
We suspect that it takes tools, such as this Wellinx system, and 
incentives to optimize physician performance. A detailed analysis of 
the impact of this system in a Medicare Demonstration Project that 
includes performance-based financial incentives for physicians is 
presented in Appendix A.
    The results seen in the Wisconsin study have subsequently been 
replicated over the first nine months in a study of another group of 
physicians sponsored by a payer in Maine.
    All studies of this system to date have been limited by their small 
size. And they focused on commercial populations because the sponsoring 
payer has never been CMS. Nonetheless, there is a remarkable 
consistency of results. Overall, 65% of all prescriptions that are 
written by physicians using Wellinx are for generic medications. Also 
of note, these physicians write an average of 15 new prescriptions per 
doctor per day. This high rate of utilization compares favorably to 
other systems on the market.

The Esse Health Story
    In the mid 1990's, physicians at Esse Health, a 70 doctor group in 
St. Louis, http://www.essehealth.com became involved in global risk 
contracting. As part of this effort, they recognized a need for 
clinical decision support information in their workflow. The doctors 
collaborated and created annual editions of a medication prescribing 
guide that was inspired by Consumer Reports magazine. By 1999 this was 
a 140 page book with chapters written by ten physicians and a 
pharmacist. Esse doctors carried these books around in the pockets of 
their white coats and used them as a reference source.
    In late 1999, Vic Turvey, the president of United Health Care of 
the Midwest noted that Esse was ``one of the top two performing medical 
groups in all of the U.S.'' according to UHC's measures of quality of 
care, patient satisfaction and cost-effectiveness in their Medicare HMO 
product.
    In the late 1990's most medical groups abandoned contracts that put 
them at financial risk for their decisions. They did not have the data 
infrastructure or the decision support information to manage risk 
properly.
    In contrast, the Wellinx system has helped Esse Health embrace risk 
and manage it responsibly. This group of doctors began to self-insure 
against malpractice in 2004. They also became licensed as an insurance 
company and launched their own Medicare + Choice managed care plan in 
June 2004.

                               __________
Appendix A:  Example of a CMS Incentive Program that Combines Financial 
                          and Quality Metrics

    CMS has proposed the Physician Group Practice Demonstration, a 
financial incentive program that rewards physician groups based on the 
demonstration of improved quality and decreased cost.\4\
---------------------------------------------------------------------------
    \4\ A detailed description of the Physician Group Practice 
Demonstration was published in the Federal Register, September 27, 
2002: 67:61116-29. It is available online at http://cms.hhs.gov/
healthplans/research/927FRN.pdf.
---------------------------------------------------------------------------
    The following example uses this CMS model, adapted to illustrate 
the potential value of a shared bonus program related to evidence-
based, fiscally responsible prescribing. The results of the Wisconsin 
trial noted above are used to demonstrate the value to the payer (CMS) 
and participating physicians.
    In the Physician Group Practice Demonstration, changes in medical 
costs for patients of participating physician groups are compared to 
those of other physicians in the same geographic region. Each year for 
three years, the observed growth rate in the control group is used to 
estimate the expected costs in the study group. If the study group's 
actual costs are less than their expected costs, the group shares in a 
portion of these savings. If a loss should occur, these will accrue to 
the physician group and bonuses will be reduced in subsequent years to 
cover these losses.
    Physician groups have up to three years to generate savings and 
earn a bonus. If sustained improvements are seen over a three-year 
period, physicians can earn an additional bonus. If a group leaves the 
program before the end of the three-year program, they will be required 
to reimburse the payer the full amount of any bonus payments they have 
received. Every three years, baseline expenditures are re-calibrated to 
prevent rewarding physicians for past performance.
    The Physician Group Practice Demonstration also contains other 
important attributes. For example, the intervention and control group 
costs are corrected for patient mix, high-cost outliers are excluded 
from the analysis, and there is a minimum threshold value of 2%. In 
other words, the difference in costs between the intervention and 
control group must be greater than 2% before any bonus is earned. This 
may prevent rewarding physician groups for differences that could be 
due to chance.

Calculating Bonuses and Example Savings
    EXAMPLE: In the first year of the Wisconsin trial, the average cost 
per prescription increased by 4.5% in the control group. Based on this 
growth rate, the expected cost per prescription in the intervention 
group would be $48. During the study period, patients treated by 
physicians in the intervention group filled 40,000 prescriptions but 
their average cost was only $42. The difference between the expected 
cost ($48) and the actual cost ($42) represents savings of 
approximately $240,000 or $12,630 per physician.
    Of this $240,000, the Physician Group Practice Demonstration model 
would put 60% ($144,000) into the program's bonus pool: 70% of the 
bonus pool ($101,000 or $5,300 per physician) would be paid solely for 
financial performance and 30% ($43,000 or $2,300 per physician) would 
be available for quality bonuses. The actual amount of quality bonus 
earned would be determined by the percentage of indicators on which the 
group received a satisfactory score. For example, a group that 
satisfied only four of eight quality indicators would receive 50% of 
the maximum quality bonus, and the payer would retain the other 50%.
    In addition, the remaining 40% of the total savings ($96,000) would 
be retained by CMS. Half would be kept by CMS as guaranteed savings, 
and the other half would be temporarily held to insure against 
potential losses in subsequent years. If no losses were incurred over 
the three-year period, physicians would be eligible for an additional 
20% bonus.
    In summary, we believe the Physician Group Practice Demonstration 
model is a well-designed incentive program that provides adequate 
financial incentives for physicians, while also protecting the interest 
of CMS.

                                  
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