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Implementation

E-Prescribing And The Medicare Modernization Act Of 2003

Abstract

 
Provisions of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 are intended to foster electronic prescribing by requiring standards for interoperability and by permitting third parties to offset implementation costs. Although physicians have been slow to embrace e-prescribing, adoption may increase in 2006, when a new tide of pharmacy messages will arrive from patients entering multi-tier drug coverage under Medicare. However, the e-prescribing systems selected may lack the advanced features needed to improve patient safety and chronic disease control. To optimize the return on Medicare drug spending, the government should consider additional incentives to spur the uptake of more advanced systems.

Electronic prescribing systems have the potential to greatly improve the accuracy and efficiency of pharmaceutical use in Medicare. In addition to transmitting orders accurately among prescribers, pharmacies, and health plans, more advanced e-prescribing systems could help physicians avoid prescribing errors, adhere to treatment guidelines, and monitor patients’ responses to treatment.² Evidence to support these hoped-for effects remains limited primarily to studies of inpatient order entry at a few academic hospitals.³ However, large effects have been observed with e-prescribing implementation, including an 86 percent decrease in serious medication errors and an increase in formulary adherence from 14 percent to 88 percent.⁴ If commercial e-prescribing systems can reproduce these effects in ambulatory settings, they could greatly improve the quality of out-patient prescribing. On the other hand, one study of an inpatient e-prescribing system identified several ways in which it could increase medication errors, largely because of human-machine interface flaws and poor systems integration.⁵

According to the eHealth Initiative, 5–18 percent of providers use e-prescribing.⁶ Thus, for e-prescribing to benefit Medicare patients, its rate of adoption will need to accelerate. MMA includes provisions to foster e-prescribing through the creation of standards that would increase systems’ interoperability and through the removal of rules that could block third-party support of e-prescribing. However, for e-prescribing to influence patients’ health outcomes and the overall costs of care, adoption should include more advanced features that would specifically contribute to these effects.⁷ In this paper we review the e-prescribing rules that are now proposed for implementation under Medicare by the Department of Health and Human Services (HHS).⁸ We then review the ways in which these policies might influence the goals of improving patients’ health outcomes and controlling health care costs. If e-prescribing policy succeeds in promoting the adoption of systems that are truly interoperable, these systems could serve as a gateway to further system redesign and improvement through the adoption of more advanced electronic health record (EHR) systems.

MMA Provisions

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MMA requires that Part D plans support an "electronic prescription program," should any of their providers and pharmacies voluntarily choose to do e-prescribing. This program is required to provide for the electronic transmittal of the following specific types of information among prescribers, dispensing pharmacies, and Part D plans: (1) prescription orders themselves; (2) plan eligibility queries and responses; (3) plan benefit information, including the formulary tier and any prior authorization requirement for a given drug; (4) information on drug interactions, other warnings or cautions, and any dosage adjustments related to the drug being prescribed or dispensed; (5) appropriate lower-cost alternatives, if any, for a drug being prescribed; and (6) the patient’s medical history related to a covered Part D drug being prescribed or dispensed.

For each requirement, HHS must promulgate uniform standards that are compatible with existing standards, especially the transactions specified in the administrative simplification provisions of the Health Insurance Portability and Accountability Act (HIPAA) of 1996. The law requires the issuance of an initial set of standards by 1 September 2005 and the involvement of the National Committee on Vital and Health Statistics (NCVHS) in developing recommendations for them. MMA also requires a pilot project during 2006 to test any standards for which there is not adequate industry experience. Final e-prescribing standards are due by April 2008, with implementation up to a year later.

MMA also protects certain arrangements under which physicians receive support for implementing e-prescribing technology. Under the Stark physician self-referral statute, certain entities that provide physicians with hardware, software, or training for e-prescribing could be viewed as having a financial arrangement that would bar them from accepting the physician’s referrals for a variety of services. MMA authorizes an exception to the Stark rules, enabling health plans, hospitals, and medical groups to provide in-kind support for e-prescribing. MMA also authorizes creation of a "safe harbor" from prosecution under the antikick-back statute, which prohibits any form of payment made for the purpose of rewarding or inducing the generation of federal health care program business. HHS is expected to propose rules that implement these MMA provisions this year.

Standards For E-Prescribing

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Following its mandate in MMA, the NCVHS is examining standards for each of the required types of information exchange, as well a number of others (Exhibit 1). MMA called for initial standards to be tested in a pilot project, but it exempted from testing any standards for which there is "adequate industry experience."

Pilot-testing. The NCVHS identified a number of additional standards that need pilot-testing (Exhibit 1). Some of these are subparts of existing, widely used standards, but their specific functions are rarely used. As a result, they do not meet the criterion of having adequate industry experience. Examples are the fill status notification feature of the NCPDP SCRIPT standard and the prior authorization feature of the ASC X12N 278. Other standards recommended for pilot-testing are new. For example, the industry has banded together to develop a standard for a structured and codified Sig. (from the Latin signatura), which is the part of a prescription containing instructions for the patient, such as "Take one tablet daily."

Another new potential standard is RxNorm, developed by the National Library of Medicine, which provides links from similar generic and brand-name drugs to their active ingredients, components, and dose forms. RxNorm codes could be used as the primary identifiers of orderable drugs in prescription messages, but pilot-testing is needed to see if RxNorm suffices for formulary representation and is interoperable with proprietary coding systems from drug knowledge bases.

Potential Benefits From Advanced E-Prescribing Features

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Most of the benefits of e-prescribing for health outcomes and health care costs will depend on advanced features, such as alerts for potentially hazardous prescriptions and reminders for important omitted medications.⁹ However, a field study conducted by RAND has shown that commercially available e-prescribing systems vary greatly in their implementation of these more advanced features.¹⁰

E-prescribing can prevent adverse drug events through patient-specific alerts that warn of potential allergies, drug interactions, and needs for dosage adjustments. However, the value of these safety alerts is undermined if they are frequently triggered for unimportant or erroneous indications. In one widely publicized case, such false-positive alerts were a major factor in the suspension of computerized provider order entry (CPOE) at a major teaching hospital.¹¹ To enable accurate alerts, systems need advanced integration features capable of constructing a complete current medication list and accessing other history information, such as allergies and lab results. RAND’s field study found that some form of safety alerting was common among commercial e-prescribing systems, but systems rarely integrated data from external sources to support this alerting. If a new NCPDP standard for exchanging medication history (based on RxHub’s proprietary format) can be accredited and vetted for industry experience in time to become a foundation standard, it could increase the value of safety alerting.

Advanced e-prescribing features would also include reminders for prescribers to consider indicated medications that might have been omitted. Serious omissions are frequent for older patients, and computer-based reminders delivered at the point of care have generally been effective for correcting them.¹² However, the RAND field study found that only one of ten systems had implemented any reminders for omitted medications. The development of a standard for exchanging medical history information should eventually help systems identify patients’ important prescribing indications, such as diabetes and heart disease.

Patient nonadherence is another problem that causes preventable illness and hospitalizations and that could be addressed by e-prescribing.¹³ The Medicare drug benefit itself should help to alleviate nonadherence resulting from patients’ out-of-pocket costs, but nonadherence rates could remain high even for patients with negligible out-of-pocket costs.¹⁴ E-prescribing systems could improve patient adherence by delivering information that helps or convinces patients to take their medications as directed. About half of e-prescribing systems in the RAND study had such features. Claims-based medication history data could also be used to help prescribers identify and negotiate with nonadherent patients, but none of the systems in the RAND study could use claims data in this way. Finally, e-prescribing could address the additional challenge to adherence that will arise from the "doughnut hole," in which patients pay 100 percent of their medication costs. Patients who have an annual drug benefit cap are known to sometimes stop taking medications or stretch doses when they reach their spending limit.¹⁵ E-prescribing systems could display patients’ current progress toward the doughnut hole, enabling prescribers to keep some patients out of this zone and to negotiate adherence more carefully for those who enter it. However, none of the systems in the RAND field study had features for dealing with annual spending caps.

Influences On E-Prescribing Adoption

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The overall effects of e-prescribing will depend on physicians’ and health plans’ decisions about whether to invest in it and, if they do invest, on the features of the systems they select. Patients might influence these decisions indirectly if they begin to choose physicians or health plans based on the type of e-prescribing available. Pharmacies—the other actors in pharmaceutical use—may have the least influence one-prescribing adoption. They are highly motivated because of potential savings in labor, and most have already adopted the systems needed to accept SCRIPT-based prescriptions electronically.¹⁶

Physicians typically expect one of the first benefits of e-prescribing to be a reduction in telephone calls from pharmacies. Industry experts estimate that almost 30 percent of prescriptions require a telephone call from the dispenser.¹⁷ These calls include renewal requests, clarifications, discussions of potential contraindications resulting from the pharmacist’s drug utilization review (DUR) process, and notifications regarding coverage problems (such as formulary status). Anecdotal evidence indicates that e-prescribing can save labor in physicians’ offices by reducing these calls.¹⁸ One practice reported that reduced pharmacy calls after the implementation of an e-prescribing system saved staff time that amounted to almost one full-time equivalent (FTE) per ten prescribers.¹⁹

Although these efficiencies have not yet compelled physicians to adopt e-prescribing, the volume of pharmacy calls will likely increase in 2006, when millions of new patients will enter Part D plans having multi-tier formularies that could change frequently. To handle this expected increase, physicians would likely need e-prescribing systems that include up-to-date formulary information or, alternatively, some method for dealing with change requests efficiently. Six of ten systems in RAND’s field study made some information about formulary status available, but only one system also gave information about the prices of nonformulary options, a feature that would help physicians to negotiate medication adherence with patients who have hit the doughnut hole.²⁰

The expansion of complex drug benefit plans will thrust physicians increasingly into the role of helping patients manage their costs. However, many physicians do not want this potentially time-consuming responsibility.²¹ SureScripts and RxHub, two intermediary networks for e-prescribing, are taking different approaches to this problem.²² RxHub links e-prescribing systems with health plans to make each patient’s specific benefit information available at the time prescriptions are created. SureScripts simply transmits prescriptions to the selected pharmacy, leaving the responsibility for checking coverage where it typically takes place today. Although the SureScripts model may entail more follow-up requests from pharmacies, and potentially more delays for patients, systems might mitigate these delays by streamlining change request messaging through the SureScripts network. Some e-prescribing vendors are joining both networks to make the advantages of each available.

Physicians are also interested in e-prescribing as a means of avoiding errors and improving the quality of their work. Even the most basic e-prescribing systems could reduce miscommunication errors such as illegible handwriting. Evidence of error reduction from commercial e-prescribing has yet to emerge, but some malpractice insurance carriers are starting to offer discounts for e-prescribing users nonetheless.²³ Furthermore, rapid changes in treatment protocols and the continuous emergence of new medications make it difficult for providers to stay current. Advanced e-prescribing promises to help providers fill their information gaps at the point of care. Finally, systems that can display integrated medication history information may help alert prescribers to potential abuses in which the same prescriptions are obtained through multiple providers and pharmacies.

The costs of implementing e-prescribing are a major barrier for physicians. Industry estimates for the hardware and software costs of a basic e-prescribing system range from $1,500 to $4,500 per physician.²⁴ Estimated costs for advanced systems, having complex alerts and reminders, are higher—$29,000 per physician in the first year and $4,000 annually thereafter.²⁵ MMA authorizes grants for e-prescribing in 2007, which may help defray some of these costs.

Another barrier to physicians’ adoption is confusion about the functionality and comparability of various vendor systems. Most physicians have little means of evaluating the array of features offered by an increasing number of vendors. This barrier could be addressed through the creation of a certification organization that evaluates existing systems in comparison with standards for functionality and interoperability. The Certification Commission on Health Information Technology—a private-sector initiative to compare functionality and develop minimum features for EHRs—may provide a template for this activity.²⁶

Health plans and payers are expected to derive most of the financial benefits that may result from e-prescribing and other forms of advanced health information technology (HIT).²⁷ Anticipating that plans will be interested in funding e-prescribing implementation, MMA addresses potential legal barriers to these arrangements. However, at least two factors might mitigate health plans’ interest in funding e-prescribing. First, plans may not benefit much from increasing formulary adherence at the point of prescribing, since they can already enforce formulary adherence at the point of sale. Second, some of the plans operating under Part D will be at risk primarily for pharmaceutical costs, and these plans might not receive the savings in decreased hospitalizations and other services that might be possible with more advanced e-prescribing.

Patients could indirectly influence decisions about e-prescribing adoption if they begin to select providers based on e-prescribing availability and features. Electronic transmission of prescriptions could save patients time at the pharmacy, and systems that provide benefits information during the patient encounter or that automate renewals could reduce the delays that patients encounter when prescriptions are not on formulary or when the pharmacy has a question that needs the physician’s attention. Further, e-prescribing could help reassure patients that they are getting the correct medications. However, patients may not view e-prescribing as entirely positive. NCVHS testimony indicated that many patients are concerned about who has access to their medication histories. Making a complete medication history available to all involved in the patient’s care could improve safety and quality of care, but for some patients these potential benefits could be outweighed by concerns about privacy or about discrimination stemming from knowledge of sensitive conditions, such as HIV/AIDS or mental health diagnoses. Balancing consumers’ privacy interests and control of their health information with the interests of patient safety, quality of care, and health care efficiency are important policy considerations.²⁸

E-Prescribing As The Entry Level For EHRs

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Many policymakers view e-prescribing as an entrée to more comprehensive information technologies, especially EHRs, that could transform health care into an efficient, information-based enterprise.²⁹ E-prescribing transactions, such as eligibility checks, formulary checks, and medication history, are among the core transactions for EHRs. Since basic e-prescribing transactions are also focused on the limited universe of medications that have been approved by the U.S. Food and Drug Administration (FDA), e-prescribing might present a more feasible entry-level system compared with implementing a full EHR.

The standards-development process initiated by MMA has begun to pave the way toward solving the technical, financial, and political issues that inhibit HIT adoption and diffusion. Perhaps as a result, multiple e-prescribing pilot projects are now emerging across the country, supported by both public- and private-sector payers and with collaboration among broad groups of vendors.³⁰ If these pilot projects succeed, they may demonstrate how to bridge the technical and inter-organizational barriers that have limited the value of EHRs so far, thus paving the way for their growth and adoption. The process that has been followed for establishing e-prescribing standards may also serve as a template for future public-private partnerships to foster interoperability for other health care information technologies.

Given the steep marginal costs for more advanced systems and providers’ likely initial motivation to decrease phone calls, the average provider might tend toward implementing simpler e-prescribing systems that focus more narrowly on office efficiency and that implement only the minimum foundation standards, without including more advanced decision support. If even simpler systems turn out to be difficult to implement, there is a risk that providers would enter a period of resistance to further changes, making the more basic e-prescribing systems an absorbing state that would inhibit further progress.³¹ On the other hand, if implementation goes smoothly and standards result in systems that are modular and interoperable across vendors, then the initial adoption of more limited e-prescribing systems could serve as a platform for adding more advanced features.

With a robust set of initial standards now available, growing interest from payers, and the impending launch of a managed drug benefit in Medicare, the stage is set for e-prescribing adoption to accelerate rapidly. Given the current incentives for providers, the first wave of adoption is likely to be greatest for systems that are more narrowly focused on improving office efficiency. Thus, the first e-prescribing systems to achieve widespread adoption may lack many of the features with the greatest potential to prevent medication errors and chronic disease complications. However, the existence of foundation standards and the well-defined plans for adding to these standards should encourage vendors and providers to add these important advanced features over time. The strong impetus for interoperability should also facilitate the addition of other EHR functionality. However, progress toward these goals should be monitored carefully, and other incentives, such as "pay-for-performance," should be targeted strategically to maximize this progress. In addition, much more needs to be learned about the design factors that would enable e-prescribing systems to actually improve patient safety and health outcomes without introducing new risks. Studies should be designed and supported—during the 2006 pilot and beyond—to create rigorous evidence that could guide the development of standards for advanced e-prescribing functionality. With careful attention to expanding the knowledge base and to fostering incremental adoption, e-prescribing could turn out to be a seed for the fundamental transformation of health care.

Editor's Notes

 
Douglas Bell (dbell{at}mednet.ucla.edu) is a senior natural scientist at RAND in Santa Monica, California, and an assistant professor in the Department of Medicine, David Geffen School of Medicine, at the University of California, Los Angeles. Maria Friedman is a senior adviser at the Centers for Medicare and Medicaid Services in Baltimore, Maryland.

The opinions expressed in this paper are solely those of the authors and do not necessarily represent the positions of their employers. Douglas Bell is supported in part by the Robert Wood Johnson Foundation’s Generalist Physician Faculty Scholars Program, by the Agency for Healthcare Research and Quality (HS 13572), and by the National Center for Research Resources (RR 03026-13). He has previously received research support from Pfizer Inc. The authors are grateful for editorial assistance from Kristin Leuschner and thank the three anonymous reviewers.

NOTES

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1. R. Mojtabai and M. Olfson, "Medication Costs, Adherence, and Health Outcomes among Medicare Beneficiaries," Health Affairs 22, no. 4 (2003): 220–229[Abstract/Free Full Text]; and U.S. Agency for Healthcare Research and Quality, Economic and Health Costs of Diabetes, 2005, www.ahrq.gov/data/hcup/highlight1/high1.htm (1 August 2005).
2. D.S. Bell et al., "A Conceptual Framework for Evaluating Outpatient Electronic Prescribing Systems Based on Their Functional Capabilities," Journal of the American Medical Informatics Association 11, no. 1 (2004): 60–70.[Abstract/Free Full Text]
3. R. Kaushal, K.G. Shojania, and D.W. Bates, "Effects of Computerized Physician Order Entry and Clinical Decision Support Systems on Medication Safety: A Systematic Review," Archives of Internal Medicine 163, no. 12 (2003): 1409–1416.[Abstract/Free Full Text]
4. D.W. Bates et al., "The Impact of Computerized Physician Order Entry on Medication Error Prevention," Journal of the American Medical Informatics Association 6, no. 4 (1999): 313–321[Abstract/Free Full Text]; and J.M. Teich et al., "Effects of Computerized Physician Order Entry on Prescribing Practices," Archives of Internal Medicine 160, no. 18 (2000): 2741–2747.[Abstract/Free Full Text]
5. R. Koppel et al., "Role of Computerized Physician Order Entry Systems in Facilitating Medication Errors," Journal of the American Medical Association 293, no. 10 (2005): 1197–1203.[Abstract/Free Full Text]
6. eHealth Initiative, Electronic Prescribing: Toward Maximum Value and Rapid Adoption, 14 April 2004, www.ehealthinitiative.org/initiatives/erx/document.aspx?Category=249&Document=269 (24 May 2005).
7. D.S. Bell et al., "Recommendations for Comparing Electronic Prescribing Systems: Results of an Expert Consensus Process," Health Affairs, 25 May 2004, content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.305 (3 March 2005).
8. Centers for Medicare and Medicaid Services, "E-Prescribing and the Prescription Drug Program; Proposed Rule," Federal Register 70, no. 23 (2005): 6256–6274.
9. Bell et al., "Recommendations for Comparing Electronic Prescribing Systems."
10. C.J. Wang et al., "Functional Characteristics of Commercial Ambulatory Electronic Prescribing Systems: A Field Study," Journal of the American Medical Informatics Association 12, no. 3 (2005): 346–356.[Abstract/Free Full Text]
11. C. Ornstein, "Hospital Heeds Doctors, Suspends Use of Software; Cedars-Sinai Physicians Entered Prescriptions and Other Orders in It, but Called It Unsafe," Los Angeles Times, 22 January 2003.
12. In the ACOVE study, older patients failed to receive important medications in 50 percent of the instances when they were indicated. See T. Higashi et al., "The Quality of Pharmacologic Care for Vulnerable Older Patients," Annals of Internal Medicine 140, no. 9 (2004): 714–720.[Abstract/Free Full Text]Computerized reminders can prevent errors of omission. See M. Weiner et al., "Using Information Technology to Improve the Health Care of Older Adults," Annals of Internal Medicine 139, no. 5, Part 2 (2003): 430–436.[Abstract/Free Full Text]
13. J.S. Olshaker et al., "Prescription Noncompliance: Contribution to Emergency Department Visits and Cost," Journal of Emergency Medicine 17, no. 5 (1999): 909–912.
14. J.S. Benner et al., "Long-Term Persistence in Use of Statin Therapy in Elderly Patients," Journal of the American Medical Association 288, no. 4 (2002): 455–461.[Abstract/Free Full Text]
15. C.W. Tseng et al., "Cost-Lowering Strategies Used by Medicare Beneficiaries Who Exceed Drug Benefit Caps and Have a Gap in Drug Coverage," Journal of the American Medical Association 292, no. 8 (2004): 952–960.[Abstract/Free Full Text]
16. CMS, "E-Prescribing; Proposed Rules," 6271.
17. J.R. Lumpkin, "Letter to Secretary Thompson—E-Prescribing Standards," 2 September 2004, www.ncvhs.hhs.gov/0409021t2.htm (3 January 2005).
18. CMS, "E-Prescribing; Proposed Rules," 6270.
19. R. Mandel and P. Boulter, "E-Rx Collaborative, E-Prescribing: A Bridge to the Twenty-first Century," July 2004, www.ncvhs.hhs.gov/040525p4.pdf (24 May 2005).
20. The system that estimated retail prices did so based on published average wholesale prices.
21. W.H. Shrank et al., "Do the Incentives in Three-Tier Pharmaceutical Benefit Plans Operate as Intended? Results from a Physician Leadership Survey," American Journal of Managed Care 11, no. 1 (2005): 16–22.[Web of Science][Medline]
22. See RxHub, "About RxHub," www.rxhub.net/faq.html#10 (5 March 2005); and SureScripts, "About SureScripts," www.surescripts.com/coBack.htm (5 March 2005).
23. Wang et al., "Functional Characteristics."
24. CMS, "E-Prescribing; Proposed Rule," 6270; and D. Johnston et al., The Value of Computerized Provider Order Entry in Ambulatory Settings (Chicago: Healthcare Information and Management Systems Society, 2003), 59–66.
25. Johnston et al., The Value of Computerized Provider Order Entry, 59–66.
26. Certification Commission for Healthcare Information Technology (CCHIT), 18 February 2005, www.cchit.org (17 July 2005).
27. Johnston et al., The Value of Computerized Provider Order Entry, 8.
28. CMS, "E-Prescribing; Proposed Rule."
29. U.S. Office of the National Coordinator for Health Information Technology, "Health IT Strategic Framework," 21 July 2004, www.hhs.gov/healthit/strategicfrmwk.html (17 July 2005); and J. Walker et al., "The Value of Health Care Information Exchange and Interoperability," Health Affairs, 19 January 2005, content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.10 (6 March 2005).
30. M.K. McGee, "Big Three Automakers Fund Electronic-Prescription Drive," InformationWeek, 9 February 2005; and M.K. McGee, "New Alliance Pushes E-Prescribing in Maryland," InformationWeek, 8 February 2005.
31. E. Romanelli and M.L. Tushman, "Qualitative Organizational Transformation as Punctuated Equilibrium: An Empirical Test," Academy of Management Journal 37, no. 5 (2004): 1141–1166.[CrossRef]

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