BILL ANALYSIS
AB 718
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 718 (Emmerson) - As Amended: April 13, 2009
SUBJECT : Prescription drugs: electronic transmissions.
SUMMARY : Requires, to the extent consistent with federal law,
every licensed prescriber, prescriber's authorized agent, or
pharmacy operating in California to have the ability to transmit
and receive prescriptions by electronic data transmission on or
before January 1, 2016.
EXISTING LAW :
1)Prohibits a person from furnishing any prescription drug,
except upon the prescription of a physician, dentist,
podiatrist, optometrist, or other specified health care
providers.
2)Defines a "prescription" as an oral, written, or electronic
transmission order issued by a physician, dentist,
optometrist, podiatrist, veterinarian, or other specified
health care provider, that is given individually for the
person or persons for whom ordered, and that includes
specified information, including the name of the patient, the
name and quantity of the drug prescribed and the directions
for use, the date of issue, and a legible, clear notice of the
condition for which the drug is being prescribed, if requested
by the patient or patients.
3)Defines "electronic transmission prescription" to include both
image and data prescriptions, and defines "electronic image
transmission prescription" as any prescription order for which
a facsimile of the order is received by a pharmacy from a
licensed prescriber. Defines "electronic data transmission
prescription" as any prescription order, other than an
electronic image transmission prescription, that is
electronically transmitted from a licensed prescriber to a
pharmacy.
4)Requires an electronic data transmission prescription to be
filled by, or under the direction of, the pharmacist.
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FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author asserts this bill is needed
to add new dimensions of safety and efficiency to the
practices of medicine and pharmacy in California. According
to the author, electronically created and transmitted
prescriptions would streamline the prescribing process and
enhance communication among health care professionals while
maintaining safe and high quality services. Moreover, the
author states that e-prescribing can reduce or eliminate
errors at the physician's office, at the point of prescribing,
and at the pharmacy when a written or oral prescription is
entered into a pharmacy's computer system. In addition, the
author cites numerous other benefits of electronic
prescriptions including better prescription tracking,
increased opportunities to ensure patient compliance, security
of prescription data, and improvements in health care quality
and efficiency.
2)BACKGROUND . E-prescribing is the digital generation and
transmission of a prescription between a prescriber and a
pharmacy. In 2007, California's retail pharmacies filled more
than 268 million prescriptions but, of these transactions,
only about 2.4 million were sent electronically between
physician practices and pharmacies. While this amount is a
significant improvement from the 311,097 recorded in 2005, it
represents only 1.2% of the total prescriptions written in
California each year.
A November 2008 issue brief by the California HealthCare
Foundation entitled "The Outlook for Electronic Prescribing in
California" stated that the adoption of e-prescribing in
California has been slow due to a number of possible reasons,
including difficulty marketing new technologies to small and
medium-size practices, which constitute the majority of
practicing physicians; skepticism about value; lack of
pharmacy history, eligibility, and formulary information in an
electronic format from payers; issues with pharmacy and
provider connectivity; and costs associated with purchasing
and using e-prescribing software, which range from $1,500 to
$4,500 per physician for basic e-prescribing systems, and
$29,000 per physician in the first year and $4,000 annually
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thereafter for advanced systems with complex alerts and
reminders. In addition, federal law prohibits e-prescription
use for controlled substances so providers who adopt
e-prescribing must maintain a separate paper-based system for
these substances. Consequently, only 26% of California
physicians routinely prescribe medication electronically and
the vast majority of these are associated with Kaiser
Permanente or other large practices.
3)AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 . The American
Recovery and Reinvestment Act (ARRA), which became law in
February 2009, provides substantial financial incentives ($19
billion over a specified five-year period) to help physicians
purchase and implement health information technology (HIT)
systems. Beginning in 2011, Medicare physicians who implement
and report meaningful use of electronic health records (EHR),
which may include electronic prescribing systems, will be
eligible for an initial incentive payment through the Medicare
program of up to $18,000. Meaningful use of EHRs will be
defined by the U.S. Department of Health and Human Services
(DHHS) during the rulemaking process in the coming months and
may include reporting requirements on quality measures. ARRA
also authorizes DHHS to provide competitive grants to states
to make loans available to health care providers to assist
them with HIT acquisition and implementation costs.
4)ADDITIONAL FEDERAL ACTION . In 2008, the U.S. Congress passed
the Medicare Improvements for Patients and Providers Act
(MIPPA) which contains e-prescribing incentives payments
starting in 2009 and imposes penalties for those who do not
adopt e-prescribing by 2012. Specifically, pursuant to MIPPA,
providers would receive a reimbursement bonus of 2% from
Medicare for switching to e-prescribing by 2009, an amount
that is reduced to 1% in 2011 and 0.5% in 2013. Providers who
fail to make use of the technology would begin to see their
payments decreased by 1% in 2012, 1.5% in 2013 and 2% in 2014
and beyond.
In addition, the federal Drug Enforcement Agency (DEA), which
oversees controlled substances, issued proposed regulations in
2008 that would provide physicians and other authorized
prescribers with the option of issuing electronic
prescriptions for controlled substances and allow pharmacies
to receive, dispense, and archive these electronic
prescriptions, under specified restrictions. These
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regulations would provide pharmacies, hospitals, and
practitioners with the ability to use modern technology for
controlled substance prescriptions while maintaining the
closed system of controls on controlled substances dispensing;
additionally, the proposed regulations would reduce paperwork
for practitioners who prescribe or dispense controlled
substances and help to prevent prescription forgery. The
public comment period for the proposed regulations expired on
September 25, 2008, and DEA is now in the process of
finalizing the regulations. Until the DEA's controlled
substance standards are modified, pharmacies and prescribers
in California must continue to create paper copies of these
particular prescriptions.
5)STATE PILOT PROJECT . The California Public Employees'
Retirement System, or CalPERS, reports that, in April 2009, it
plans to launch an e-prescribing pilot project involving
selected California physicians to help develop electronic
prescribing practices and strategies for its larger physician
network. According to CalPERS, the project is co-sponsored by
its health plan partners, Anthem Blue Cross, Blue Shield of
California, and Medco Health Solutions. The pilot will
involve Anthem Blue Cross and Blue Shield each working with
selected physician groups in the state to identify and reduce
barriers to e-prescribing, quantify results, and share
information from the pilot. CalPERS indicates that Medco will
be managing the project and providing technical support. The
project is expected to run through early 2010.
6)PRIOR LEGISLATION . AB1 X1 (N??ez) of 2007 would have
required, on or before January 1, 2012, every licensed
prescriber, prescriber's authorized agent, or pharmacy
operating in California to have the ability to transmit and
receive prescriptions by electronic data transmission. The
Bureau of Naturopathic Medicine, the Dental Board of
California, the Osteopathic Medical Board of California, the
Board of Registered Nursing, and the Physician Assistant
Committee would have been required, with the California State
Board of Pharmacy, to ensure compliance by the January 1,
2012, date and those boards would have been specifically
charged with the enforcement with respect to their respective
licensees. AB1 X1 would have prohibited electronic
prescribing from interfering with a patient's existing freedom
to choose a pharmacy, and from interfering with the
prescribing decision at the point of care. AB1 X1 also would
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have required every electronic prescription system to meet
specified requirements relating to standards for data
exchange, applicable state and federal confidentiality and
data security requirements, and applicable state record
retention and reporting requirements. Finally, AB1 X1 would
have required a prescriber or prescriber's authorized agent
using an electronic prescription system to offer patients a
written receipt of the information that has been transmitted
electronically to the pharmacy, and the receipt would have
been required to include the patient's name, the dosage and
drug prescribed, the name of the pharmacy where the electronic
prescription was sent, and a disclosure specifying that the
receipt cannot be used as a duplicate order for the same
medicine. AB1 X1 failed passage in the Senate Health
Committee.
7)SUPPORT . The sponsor of this bill, Reed Elsevier, Inc.,
states that this bill will help California citizens by
providing more accurate health care information and save the
state costs by preventing fraud and adverse drug interactions.
The California Retired Teachers Association writes in support
that this bill will enhance the use of electronic transmission
of prescriptions and control health care costs through the use
of technology.
8)DOUBLE REFERRAL . This bill has been double referred. Should
it pass out of this committee, it will be referred to the
Committee on Business and Professions.
9)POLICY COMMENTS .
a) Scope of bill . This bill only requires every licensed
prescriber, prescriber's authorized agent, or pharmacy
operating in California to be able to transmit and receive
prescriptions by electronic data transmission by January 1,
2016. AB1 X1, which contained a provision nearly identical
to this bill, also would have specified enforcement
responsibilities for the date-certain requirement,
prohibited electronic prescribing from interfering with a
patient's existing freedom to choose a pharmacy, required
every electronic prescription system to meet specified
requirements, and required the prescriber using an
electronic prescription system to offer patients a written
receipt of the information that has been transmitted
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electronically to the pharmacy. Should this bill be
strengthened to improve the enforcement and compliance
standards as in AB1 X1?
b) Electronic prescribing mandate . This bill requires
every licensed prescriber or pharmacy to have the ability
to transmit and receive prescriptions by electronic data
transmission but it does not require that prescriptions be
sent using this method. The author may wish to clarify the
language in this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
Reed Elsevier, Inc. (sponsor)
California Retired Teachers Association
Opposition
None on file.
Analysis Prepared by : Cassie Rafanan / HEALTH / (916)
319-2097