1. 1 Highlights of CAQH-MedStar-DrFirst-Safeway Electronic Prescribing Pilot November 2004

2. 2 Sponsors CAQH –Not-for-profit alliance of health plans and networks that promotes collaborative initiatives to: Share knowledge to improve quality of care Make administration easier for physicians and their patients –Participating companies include 22 of America’s largest health plans and trade associations; chairman is John W. Rowe, MD, who is Chairman and CEO of Aetna MedStar Health –Not-for-profit, community-based healthcare organization that owns and operates seven major hospitals and other healthcare services in the Baltimore/Washington area; the hospitals include both teaching and community facilities

3. 3 Sponsors DrFirst –DrFirst’s Rcopia system is a leading electronic prescription management solution that was awarded “Top Honors” by the Medical Records Institute at TEPR 2004 –DrFirst’s clients include health plans, health systems, hospitals, IPA’s, EMR/POMIS vendors, and individual physician practice groups Safeway –Operates 1,815 stores with over 1,300 pharmacies across the United States and in Western Canada; eastern division operates 178 stores, including 124 pharmacies, in the metropolitan areas of Washington, Baltimore and Philadelphia

4. 4 Pilot Parameters Offered a 12-month free Rcopia subscription to MedStar providers –Participants provided their own hardware, with the software being available for either desk-top, web-based or hand-held technology –In addition to a free subscription, participants received free on-site training and on-going assistance; additional incentives were not offered –Key functionality of Rcopia e-prescribing technology included Clinical data (e.g., drug-to-drug interactions) sourced by First Data Bank Option of entering patient’s allergies and receiving warnings Option of checking patient’s formulary coverage (where available) Ability to send prescriptions electronically or via Fax to the pharmacy, and ability to print or save prescriptions (could go to any chain or independent pharmacy) Sponsors agreed to jointly review outcomes data and agree on key findings (data was analyzed in Summer 2004) –Outcomes data was generated from Rcopia system as well as through pre and post pilot participant surveys, phone interviews with providers/office managers and anecdotal feedback Rcopia staff received during participant training/assistance –All provider and patient-specific data was blinded

5. 5 Provider Interest Provider interest –200 free, one-year subscriptions to e- prescribing tools were offered to 1,000 MedStar affiliated providers with no required renewal –60% of available subscriptions were utilized by “registered participants”; of these “registered participants”, 75% were “active participants”, who were defined as participants who sent at least 100 scripts –“Registered participants” gave the following reasons for low provider participation: Time constraints Conflicting priorities Non-reimbursable/lack of incentive for a time consuming activity Existing ability to use the already tested, traditional handwritten system

6. 6 Volumes and Interactions Volume of prescriptions –Participants generated 126,758 prescriptions –“Active” participants generated an average of 1,424 prescriptions over the 12 month period; number of scripts sent were not more than in traditional system –The “active” participants became comfortable with the system over time, reverting to the handwritten method less frequently; average number of prescriptions written per “active” participant increased by 30% between the 1 st quarter and the 4 th quarter of the pilot (no increase in overall # of scripts) –Internal Medicine participants, who represented 27% of the total registered participants, generated 54% of the total pilot prescriptions Clinical interactions –2% of the pilot prescriptions had an allergy warning; 6% of these warnings were acted upon/cancelled –8% of the pilot prescriptions had a drug interaction warning; 3% were acted upon/cancelled –The pilot potentially avoided over 400 adverse reactions –The high percentage of warnings ignored is common and can be attributed to several explanations such as lack of clinical significance as determined by the prescriber

7. 7 Formulary Use Provider interest and use of formulary –75% of the registered participants opted to have formulary enabled. The key reasons participants gave for not wanting formulary enabled were: Formulary is not the responsibility of the provider Did not want the extra responsibility/activity Did not want to have to do any manual entry (manual data entry of patient drug histories was required in some cases) –22% of enabled users actually referenced formulary. The key reasons for the low usage rate were: Time needed for manual entry Gaps in payer coverage, e.g. MAMSI did not participate Time constraints /other priorities Lack of know-how Lack of interest

8. 8 Formulary Impact Impact of non-formulary warnings –22% of the formulary references generated a non-formulary warning (507 warnings in total); participants acted upon 25% of these warnings 15% of warnings resulted in a change of drug 9% of warnings resulted in a cancellation of a drug –Between 1 st and 4 th quarters there was a 20% increase in providers changing a drug vs. ignoring or canceling it after receiving a non-formulary warning

9. 9 Pharmacy Connection Pharmacy connection –62% of the prescriptions were sent to the pharmacy (9% of these were also printed), 27% were only printed and 11% were only saved Saved prescriptions were a way in which prescribers could add to a patient’s medication history –Of the 62% of the prescriptions sent to the pharmacy, 40% were sent electronically and 60% were sent by fax There was a 270% increase in electronic prescriptions when comparing 1 st to 4 th quarter data. This was largely attributable to increased market activity by SureScripts and others responsible for developing electronic connections to pharmacies; however, pharmacies reported that the existence of the pilot provided incentive for them to adopt the technology Two national chains represented the majority of pharmacies receiving electronic prescriptions while a mix of independent and national chains received the faxes

10. 10 Work Flow Impact Impact on work flow –Provider offices* Reduced calls from pharmacies for clarification of prescriptions –Increase in number of legible prescriptions –Fewer benefit coverage issues Reduced staff requests for provider assistance in locating medication lists –DrFirst’s Rcopia system can save and print out patient medication lists that are legible and easy to find –Pharmacies** Significantly reduced time needed to read prescriptions due to legibility of computer-generated faxes or electronic prescriptions Minimally reduced calls to resolve benefit coverage issues because of the availability of formulary information *Based upon qualitative survey of pilot participants **Based upon interviews of Safeway pharmacists

11. 11 Benefits Clinical –Pilot supports concept that e-prescribing positively impacts patient safety by reducing Drug errors that occur due to illegible handwriting Potential adverse reactions Administrative burdens, so providers can focus on patient care Financial – Indirect –Reduced call volume between provider offices and pharmacies to resolve issues –Pilot providers reluctant to quantify this into actual savings given size of pilot –Improved access to medication lists for provider office staff –Pilot providers reluctant to quantify this into actual savings given size of pilot

12. 12 Benefits (cont’d) Financial – Direct –Members – Copays Reduced co-pays occurred because of adherence to formulary warnings –Savings increase as adherence increases Reduction in initial prescription co-pays estimated at $2,500 –Potential of $30,400 saved annually if on-formulary drug continued to be used monthly –Health plans – Reduced hospitalization and increased formulary adherence Reduction in hospitalizations/ER visits estimated at $100,000 saved; identified savings occurred through reduction in hospitalizations/ER visits as a result of Rcopia communicating potential adverse drug reactions Evaluated impact on health plan drug costs due to formulary switches, however, numbers are very small given size of pilot and low use of formulary –One plan noted a 35% net savings in health plan drug costs when a formulary warning is given, with an average savings of $29.21 per prescription for the initial prescription –Providers (see indirect benefits) Applying the estimated benefits from the pilot to industry-wide adoption would correlate into enormous clinical and financial benefits for the US heath system

13. 13 Industry-wide Implications Comparison to other pilots –When compared to other recently published pilot findings, the total direct savings from this pilot were lower, however, the pilot sponsors believe this pilot is more representative of actual market challenges than previously conducted studies as it represents a real-world setting Sponsors consisted of organizations with no history of working together on information technology and were located in a region not known for market interest in adopting new healthcare technology Participants had no level of association to/vested interest in working with a specific health plan(s) and/or Pharmacy Benefit Manager (PBM) Providers were given the software and training free of charge, but no additional incentives were offered

14. 14 Industry-wide Implications (cont’d) Requirements to achieve industry-wide adoption –Gain a multi-stakeholder focus on the same set of goals Different participants are at different points in the e-prescribing life cycle; for success, each stakeholder needs to agree on the goals upfront, understand their unique role and the activities they will need to undertake to achieve those goals –Resolve the technical barriers Develop the required infrastructure, e.g. pharmacy connection, automated coverage information Pre-populate medical and drug histories into e-prescribing tools Agree and adopt basic standards for technical and outcome measures –Conduct large scale, multi-stakeholder studies to analyze, test and review outcomes, focusing on gaining agreement on Financial and clinical benefits Provider incentive models

15. 15 Contacts For detailed pilot findings, please contact any of the sponsors –CAQH Gwendolyn Lohse (glohse@caqh.org or 202-778-1142)glohse@caqh.org –MedStar Health Peter Basch, MD (peter.basch@medstar.net or 202-546-4504 x316)peter.basch@medstar.net –DrFirst John Bartos (jbartos@drfirst.com or 301-231-9510 x109)jbartos@drfirst.com –Safeway David King (david.king@safeway.com or 713-268-3440)david.king@safeway.com