You May Be At Risk For E-Prescribe Penalties in 2012 and 2013

These penalties originate from the 2011 E-Prescribe (eRx) Incentive Program, which promotes widespread adoption of electronic generation and transmission of prescriptions by offering 2011 and 2012 incentive payments to eligible professionals, and penalties for noncompliance that begin in 2012.



Eligible professionals (EPs) are defined as physicians and other clinicians for whom office visits, eye exams, psychotherapy, skilled nursing, home health, or other services listed in the CMS e-Prescribing measure specifications represent at least 10% of their total Medicare Part B PFS allowed charges. All EPs must have prescription privileges, and includes:

  • Medicare Physicians (MDs, DOs, DMDs, Podiatrists, Optometrists, Oral Surgeons, & Chiropractors),
  • Medicare Practitioners (PA, ARNP, CNS, CRNA, CNMW, CSW, Clinical Psychologists, Registered Dieticians, Nutritionists, & Audiologists), and
  • Medicare Therapists (Physical, Occupational, & Speech)


Qualified e-Prescribe System - Requirements

A qualified eRx system is capable of all of the following:

  • Generating a complete active medication list (incorporating electronic data received from applicable pharmacies and pharmacy benefit managers if available)
  • Selecting medications, printing prescriptions, electronically transmitting prescriptions and conducting all alerts
  • Providing information related to the availability of lower cost, therapeutically appropriate alternatives (if any). The ability of the system to receive tiered formulary information, if available, would suffice.
  • Providing information on formulary or tiered formulary medications, patient eligibility and authorization requirements received electronically from the patient’s drug plan
  • Incorporating the e-Prescribing standards adopted for the Medicare Part D program (i.e., formulary and benefits information, medication history, fill status notification, and the use of the National Provider Identifier, or NPI). The e-Prescribing standard can be found at


Reporting Method

  • To pursue the eRx Payment Incentive - EPs can use any qualified reporting mechanism including Claims-Based, Registry-Based, or EHR-based submissions to qualify for the eRx incentive payment.
  • To avoid the eRx Penalty – The Claims-Based Reporting mechanism is the only approved reporting mechanism EPs can use for the purpose of avoiding the 2012 eRx payment adjustment
  • All claims, for the incentive or to avoid the penalty, are due no later than one month after the reporting period ends.


Successful E-Prescribing: Incentives

The EP is not a successful e-prescriber unless he/she uses a qualified system to electronically generate and transmit a sufficient number of prescriptions during select Medicare Part B patient encounters during the reporting period, as seen below:

Reporting Period

Required # of

Incentive Will Be Received…

Incentive Amount

1/1/2011 — 12/31/2011


for 2012


1/1/2012 — 12/31/2012


for 2013


Note: eRx incentive payments end after 2013.


E-Prescribing Penalties

An eRx penalty is a reduction in your Medicare Part B allowed charges (from the Medicare Physician Fee Schedule) for services furnished during the reporting period. In order to avoid an eRx penalty, the following criteria apply:

If the EP is not a successful e-prescriber, which requires _____ prescriptions generated and transmitted electronically,

For the eRx reporting period, _____...

For year____...

Then the PFS amount for covered professional services furnished by those EPs during that year shall be less than the PFS amount that would otherwise apply over the next several years by…


January 1 – June 30, 2011




January 1- December 31, 2011







*Pending release of 2012 Medicare PFS Final Rule, which should contain updates about the 2013 eRx incentive Program and information about the 2014 Payment Adjustment.
Note: eRx penalties end after 2014.


Who is Subject to the e-Prescribe Penalty?

All eligible professionals who qualify for the incentive will be subject to penalties if they do not pursue the incentive, UNLESS they qualify for a statutory or hardship exemption.

EPs exempt by statute includes those who…

    • Are not licensed to practice medicine by June 30, 2011
    • Do not meet the 10% Medicare service threshold by June 30, 2011 (has encounters listed in the denominator that are less than 10% of total allowed Part B charges)
    • Has less than 100 Medicare claims for patient visits that fall within eRx measure specifications between January 1 and June 30, 2011 (less than 100 claims listed in the denominator)

EPs exempt due to hardship includes those who…

    • Practice in a rural area without sufficient high-speed internet access/broadband
    • Practice in an area without sufficient available pharmacies for eRx
    • Do not have prescription privileges
      • Note: hardship exemptions must be established through Medicare claims-based reporting


You may not receive an incentive payment from the Medicare EHR Incentive Program and the eRx Incentive Program in the same calendar year.

Statutory Limitation: ARRA, which authorized the Medicare EHR Incentive Program, specifies that the eRx incentive does not apply to an EP (or group practice), if for the EHR reporting period, the EP (or group practice) earns an incentive payment under the Meaningful Use EHR Incentive Program beginning in 2011.


Useful E-Prescribe Links