With a host of new incentives, doctors are finally beginning to scrap pen and paper in favor of electronic prescriptions.

Medicare this month began paying doctors a bonus if they switch their patients over to e-prescribing. Some private health plans also have begun offering extra payments along with free equipment, such as digital handheld devices. And a coalition of technology companies is giving doctors free software to encourage them to ditch their paper prescription pads. As a result, the number of physicians prescribing medicines electronically has more than doubled in the past year to about 70,000, or about 12% of all office-based doctors.

E-prescribing allows doctors to transmit prescriptions via a secure Internet network directly to pharmacies using an office or laptop computer or a digital handheld device. The practice has been shown in studies to reduce prescription errors and to cut costs for consumers and health-care providers. It also encourages patients to get more of their prescriptions filled, because it reduces the time spent waiting at drug stores. The Obama administration’s plan to invest $50 billion over five years to encourage broader adoption of health-information technology is expected to include additional incentives for electronic prescribing.

Rx Connection

Where to learn more about electronic prescribing

• Learnabouteprescriptions.com : Sponsored by pharmacies and Sure Scripts-RxHub; lets consumers search for doctors and pharmacies that offer e-prescribing by city or ZIP Code; offers medication-safety advice and benefits of e-prescribing.
• Surescripts.com/Safe-rx : Information from SureScripts-RxHub ranking each state on e-prescribing progress, including growth in doctors and pharmacies using the technology.
• Ehealthinitiative.org : Nonprofit technology advocacy group offers downloadable consumer guide to e-prescribing benefits and questions to ask doctors and pharmacists.

But there are still barriers to full-fledged adoption of e-prescribing. Federal drug laws, which are under review, prohibit electronic prescribing of controlled medications such as narcotics, insomnia drugs and anti-depressants. Safety experts also warn that selecting prescriptions on a computer screen can cause a doctor to inadvertently enter, for instance, a quick-release version of a drug instead of a long-acting formulation because they appear in sequence on an e-prescribing program.

Michael Cohen, president of the Institute for Safe Medication Practices, which analyzes medication errors, says the group favors adoption of electronic prescribing. Still, Mr. Cohen advises patients as a backup to leave their doctor’s office with verbal instructions and a printed version of the prescription that includes the name, dose and directions for use.

E-prescribing can catch many dangerous mistakes, studies show. The software automatically checks a patient’s drug history for potential hazards such as improper dosages, medication allergies and adverse interactions with other drugs the patient is taking. More than four billion prescriptions are written in the U.S. annually, and studies show that as many as 4% contain an error with serious patient risks.

“There are more than 1.5 million people hurt every year by preventable medication errors, and the evidence is strong that patients are far better off when we e-prescribe than when we don’t,” says Janet Marchibroda, chief executive of eHealth Initiative, a nonprofit that includes public-health agencies, consumer groups, health plans and technology companies.

Cost Savings

Electronic-prescribing systems also can save patients money by allowing doctors to check, with a patient’s consent, the relative cost of co-payments for generic, formulary and nonformulary drugs in a patient’s health plan. The main software program being offered free to doctors, by Allscripts Inc. and a coalition of technology companies and health plans, displays a green smiley face next to generic and on-formulary drugs, and a red frowning face next to more expensive nonformulary drugs.

In a study published last month in the Archives of Internal Medicine, researchers at Brigham and Women’s Hospital found that e-prescribing systems that allow doctors to select generic or lower-cost medications can reduce annual costs of delivering drugs to consumers by $845,000 for every 100,000 patients.

Linda Green, an allergist in Havertown, Pa., began using electronic-prescribing software two years ago. She says e-prescribing has enabled her to see a list of medications her patients may have neglected to tell her about, “and I’ve had a few surprises that had an impact on the medication I was about to prescribe.” Moreover, she says, “when you are faced with a patient who is complaining of having trouble paying for medication it makes you think, maybe I can prescribe this cheaper one instead, and having their formulary information in real time makes that much easier to do.”

Virtually all chain pharmacies and about 45% of independent pharmacies now accept electronic prescriptions, says Rick Ratliff, co-chief executive of SureScripts-RxHub. The company, which has patient information from pharmacy-benefit managers, operates the main network over which prescriptions are transmitted electronically. The company stores data on more than 200 million insured patients and provides physicians with ready access to information on patients’ medication histories and which medicines are covered by their health plans.

Electronic Records

E-prescribing also is expected to encourage broader use of electronic medical records, which includes such features as storage of full medical histories, lab reports, and programs that let doctors send alerts and reminders to patients. The cost of the technology to maintain full electronic medical records is roughly $25,000 to $45,000 per physician. While free software and hardware programs are being offered to some doctors, generally the cost of a stand-alone e-prescribing system, including software and training, ranges from $500 to $2,500. The system can later be incorporated into a medical-records system.

The Center for Medicare and Medicaid Services, the federal agency that oversees Medicare, this month began paying doctors a bonus to e-prescribe. The bonus amounts to 2% of charges billed to Medicare for 2009 and 2010, and declines to 0.5% by 2013. Current estimates are that the bonus program could yield an additional $1,700 to $3,500 a year for a doctor.

Medicare Penalties

Medicare also plans a penalty for doctors who don’t e-prescribe. These physicians will have their Medicare reimbursements reduced by 1% beginning in 2012, and by 2% in 2014 and beyond.

Consulting firm Gorman Health Group estimates that the federal government could reduce its health-care costs over 10 years by at least $26 billion by offering bonuses and requiring that all prescriptions for drugs covered by Medicare be sent electronically. The program also could prevent 1.9 million adverse drug events, Gorman predicts.

Printed in The Wall Street Journal, page B7