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99–675 2005

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

(

ii

COMMITTEE ON WAYS AND MEANS

BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

AMO HOUGHTON, New York 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

JENNIFER DUNN, Washington 

MAC COLLINS, Georgia 

ROB PORTMAN, Ohio 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

SCOTT MCINNIS, Colorado 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

ROBERT T. MATSUI, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MAX SANDLIN, Texas 

STEPHANIE TUBBS JONES, Ohio 

Allison H. Giles, Chief of Staff 

Janice Mays, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH

NANCY L. JOHNSON, Connecticut, Chairman

JIM MCCRERY, Louisiana 

PHILIP M. CRANE, Illinois 

SAM JOHNSON, Texas 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

PHIL ENGLISH, Pennsylvania 

JENNIFER DUNN, Washington 

FORTNEY PETE STARK, California 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

JIM MCDERMOTT, Washington 

LLOYD DOGGETT, Texas

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. 

iii

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

(1)

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:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON HEALTH

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3943

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 eprescribing. 

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.’’

3

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 page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘108th Congress’’ from the menu entitled, 

‘‘Hearing Archives’’ (http://waysandmeans.house.gov/Hearings.asp?congress=16). Select the hearing for which you would like to submit, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business Thursday, August 5, 2004. Finally, please note that due to the change in House mail policy, the 

U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225–

1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226–

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

f

4

* * * NOTICE—CHANGE IN LOCATION * * *

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON HEALTH

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721

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.)

My apologies for this hearing starting a little late. I am pleased to 

Chairman JOHNSON. Good afternoon, and welcome to you all. 

f 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 

5

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 eprescribing. 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 

6

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 

7

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 

8

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, 

9

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 wellbeing 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 immeVerDate jul 14 2003 21:51 Aug 19, 2005 Jkt 099675 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A675.XXX A675
10

diate 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 

11

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 

12

1 ISMP, ‘‘A Call to Action: Eliminate Handwritten Prescriptions Within 3 Years,’’ available at 

http://www.ismp.org/msaarticles/whitepaper.html. 

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, standardsbased 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 

13

2Forrester Research, 2002; Medco Health, via ePharmaceuticals (1/29/03). 

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. 

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, 

14

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 independentlyowned 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 

15

3 42 U.S.C. § 1395w–104(e)(3)(D). 

4 H.R. Conf. Rep. No. 108–391 at 456 (2003). 

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. 

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.

16

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.

come. We do not very often have a doctor available to testify, so 

Chairman JOHNSON. Thank you very much. Dr. Sullivan, welf 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. 

17

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 physiVerDate jul 14 2003 21:51 Aug 19, 2005 Jkt 099675 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 E:\HR\OC\A675.XXX A675
18

cians 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 pointof-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 

19

• 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 ‘‘payfor-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/

ACPOElExecutivelPreview.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. 

20

• The technology exists today and is capable of implementing the e-prescribing 

requirements in the Medicare Modernization Act, with some additional legisTeich? 

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

lative support as outlined above.

f 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 

21

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. 

22

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 

23

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 betablocker 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. 

24

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 eprescribing 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. 

25

• 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 

26

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 ‘‘musthave’’ 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 

27

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.

resentative Tim Murphy of Pennsylvania here with us. While not 

Chairman JOHNSON. Thank you. I am delighted to have Repf 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? 

28

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 

29

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. 

30

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. 

31

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 

32

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 

33

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 

34

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? 

35

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:]

36

* 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). 

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. 

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 eprescribing 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 

37

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 eprescribing 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, eVerDate jul 14 2003 21:51 Aug 19, 2005 Jkt 099675 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 E:\HR\OC\A675.XXX A675
38

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 esignatures. 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 

39

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 bidirectionally 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.

40

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 eprescribing 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-preVerDate jul 14 2003 21:51 Aug 19, 2005 Jkt 099675 PO 00000 Frm 00044 Fmt 6633 Sfmt 6621 E:\HR\OC\A675.XXX A675
41

scribing, 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 

America’s Health Insurance Plans (AHIP) is the national trade association repprocess for all physicians’ prescriptions.

Statement of America’s Health Insurance Plans 

f resenting 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. 

42

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 

43

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 wideVerDate jul 14 2003 21:51 Aug 19, 2005 Jkt 099675 PO 00000 Frm 00047 Fmt 6633 Sfmt 6621 E:\HR\OC\A675.XXX A675
44

ly 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.

The American Osteopathic Association (AOA), which represents the nation’s 

Statement of the American Osteopathic Association 

f 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. 

45

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. 2Maynard D. Poland published the estimate of 80 to 90% in 1999. http://

www.wisconsinmedicalsociety.org/uploads/wmj/poland.pdf. 3Diede, 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. 

• 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 

f 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. 

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. 

46

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

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 J 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. 


Insert 99675A.001
47

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 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 costeffectiveness 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

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 

48

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.

Æ