New regulations that support adoption of e-prescribing and electronic health records were announced today by HHS Secretary Mike Leavitt. These proposals will speed adoption of health information technologies by hospitals, physicians, and other health care providers to improve quality and safety for Medicare beneficiaries and all Americans. Taken together, they represent a major step forward in meeting President Bush’s goal of widespread adoption of electronic health records.

Electronic prescribing enables a physician to transmit a prescription electronically to a patient’s pharmacy of choice. It decreases prescription errors caused by hard-to-read handwriting and automates the process of checking for drug interactions and allergies. Not only is this easier than paper prescriptions, but it also can improve patient safety and increase efficiency.

“Computer-assisted prescriptions have been shown to cut errors by 70% over handwritten prescriptions,” Secretary Leavitt remarked as he talked with doctors, health care technicians and patients at George Washington University Medical Center. “We want to make medical clipboards and prescription pads a thing of the past.”

The Centers for Medicare and Medicaid Services (CMS) and the HHS Office of Inspector General (OIG) proposed rules announced today represent a unified effort to advance the goal of improving the health care of Medicare beneficiaries and all Americans through the use of e-prescribing and electronic health records systems.

CMS announced a new regulatory proposal that would create exceptions to the “physician self-referral” law. Currently, physicians in Medicare are prohibited from referring Medicare patients for certain health services to health care entities with which the physician has a financial relationship, unless an exception applies. Health care entities are also not allowed to bill Medicare for services that are furnished as a result of a prohibited referral.

These new proposals would allow hospitals and certain health care organizations to furnish hardware, software, and related training services to physicians for e-prescribing and electronic health records, particularly when the support involves systems that are “interoperable” and thus can exchange information effectively and securely among health care providers.

In a parallel action, the OIG announced proposed safe harbors for arrangements involving the donation of technology for e-prescribing and electronic health records. Arrangements for the provision of items and services that meet the requirements of the safe harbors would be exempt from enforcement action under the Federal anti-kickback statute.

“Restrictions on relationships between physicians and other health care entities are very important for assuring that Medicare dollars are spent appropriately, but they were never intended to stand in the way of bringing effective electronic health care to patients,” CMS Administrator Dr. Mark McClellan said. “We are bringing our rules in line with what we are working together to achieve: an interoperable electronic health care system that benefits patients by improving care, reducing complications, and unnecessary tests and procedures.”

One proposal would establish the conditions under which hospitals and certain other entities can give physicians hardware, software, or information technology, and training services for e-prescribing.

The second proposal would establish the conditions under which such entities may donate to physicians electronic health records software and related training services. This proposal would be relatively narrow until nationwide product certification criteria are established and approved by the Secretary. At that point, hospitals and certain other entities could donate a broader array of technology to physicians if the technology met the product certification criteria. CMS is considering imposing a cap on the value of the technology that may be donated by a single donor. The cap would reduce the potential for abusive arrangements designed to pay physicians for referrals.

“The CMS and OIG proposals are the most significant steps in our health information technology strategy to date,” said David Brailer, MD, PhD, National Coordinator for Health Information Technology. “The linkage of these proposals to technology certification will ensure that adoption and interoperability occur together on an urgent basis.”

CMS will soon issue a final rule containing the “foundation standards” for e-prescribing that all Medicare prescription drug plans must support. Comments submitted in response to a proposed rule showed adequate industry experience to implement standards when the Medicare drug benefit begins in January 2006.

As part of the support to establish high-quality efficient e-prescribing systems, $6 million is being awarded by CMS to fund e-prescribing pilot programs using the foundation standards and additional clinical standards, as required by the Medicare Modernization Act of 2003. This Request for Applications was developed in conjunction with the Agency for Healthcare Research and Quality.

CMS also announced that it has awarded a grant to MedCo to evaluate the impact of the Southeastern Michigan Electronic Prescribing Initiative (SEMI) – one of the nation’s largest electronic prescribing programs.

The proposed rules will be published in the October 5th edition of the Federal Register. Public comments will be accepted for 60 days.

CMS is planning to schedule an Open Door Forum early in the comment period to discuss the benefits and risks of donating e prescribing and electronic health records technology. This Open Door Forum is in addition to, and not in lieu of, the public comment process.