New Stimulus Bill Sets Incentives for Electronic Health Records (EHR)

On February 17, 2009, President Barack H. Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA).
ARRA provides over $20 billion for the development and adoption of health information technology and establishes an agency that will be known as the Office of the National Coordinator for Health Information Technology (ONCHIT) which will be responsible in setting policy, standards, specifications, and criteria for health information technology and electronic health records (EHR), and EHR systems. ONCHIT will be headed by a national coordinator to be appointed by the Secretary of the Health and Human Services.

Incentives Payments
Of important note to health care providers and hospitals are the specifications within the ARRA which provide incentives for the adoption and utilization of health information technology.

The ARRA will provide incentive payments through the Medicare and Medicaid reimbursement systems to encourage providers and hospitals to implement EHR systems and technology. These incentive payments are triggered when a provider or hospital demonstrates that it has become a “meaningful EHR user.” Payments are tiered over a number of years with larger payments being made for those who become a meaningful EHR user in the early years and lower payments made to those who are later adopters. Eligible professionals (i.e. physicians, dental surgeons, dentists, podiatrists and chiropractors who participate in Medicare) can obtain as much as $48,400 and up to $11 million for hospitals for becoming an early adopter. Likewise, hospitals and eligible professionals suffer penalties through reduced Medicare reimbursement payments if they do not become meaningful users of EHR by 2015.

Time Limits on Adoption of Certified EHR Technology
In essence the ARRA sets forth a five (5) year time limit on becoming a meaningful EHR user. Which means providers and hospitals have until the end of 2014 to meet the ARRA’s time limits. Providers and hospitals that fail to meet this time limit will not be eligible for incentive payments and will be subject to penalties in the form of reduced Medicare reimbursement payments.

Eligible professionals that do comply, can receive incentive payments for the first five years if they can demonstrate a meaningful use of EHR technology for each year of use and demonstrated performance during the reporting period for each payment year.

Payments for Eligible Professionals
Incentive payments for eligible professionals are based on the amount of Medicare-covered professional services furnished during the year in question. The total possible amount of the incentive payment will decrease over time. The law provides a rolling period for implementation and associated payments with the “first payment year” beginning in 2011. Therefore, incentives that begin in 2011 will continue for five (5) years through 2015, while those that begin in 2012 run through 2016. However, the maximum incentive amount for the first payment year is $18,000 provided all of the eligibility criteria are met in 2011 or 2012 and is reduced to $15,000 if implemented later in 2013 or 2014. Maximum payments for subsequent years decreases each payment year to $12,000, $8,000, $4,000, and $2,000, with no payments being made after 2016.

How To Achieve Maximum Incentive Payments?
Just how does an eligible professional achieve the maximum incentive payment amount? The simple answer is to adopt the meaningful use of EHR technology in 2011 or 2012, thereby qualifying for five annual payments for an aggregate maximum payment of $44,000.

So, should an eligible professional wait until to adopt EHR technology? According to the ARRA, if a professional first adopts EHR technology in 2014, the maximum annual payments are $15,000, $12,000 and $8,000, for an aggregate maximum payment of $35,000. Those that do not adopt meaningful EHR technology in 2015 and beyond will face penalties.

What is the “Meaningful Use of EHR Technology?"
An eligible professional will be treated as a meaningful user of EHR technology if he/she meets the following three criteria:

• The eligible professional demonstrates to the satisfaction of the Secretary (i.e. ONCHIT) that, during the period, the professional is using a certified EHR technology in a meaningful manner, which will include the use of electronic prescribing as determined to be appropriate by the Secretary
• The eligible professional demonstrates to the satisfaction of the Secretary that, during such period, such certified EHR technology is connected in a manner that provides, in accordance with law and standards applicable to the exchange of information, for the electronic exchange of health information to improve the quality of health care such as promoting cure coordination
• The eligible professional submits information on clinical quality measures (which shall be selected by the Secretary and who will provide preference to measures that have been endorsed by the consensus-based entity regarding performance measurement with which the Secretary has a contract under Section 1890(a) of the Social Security Act).

Other Stimulus Items
In addition to the incentives for eligible professionals and hospitals, The ARRA adopts additional stimulus spending measures such as:

• Grants for EHR and health information technology research and development programs
• Investment in the nationwide health information technology infrastructure
• Funding for extension programs and regional centers to provide technical assistance with respect to adoption and use of health information technology
• Grants to states and Native American tribes to provide funding to facilitate and expand the exchange of electronic health information
• Competitive grants to establish loan programs for health care providers to acquire and use EHR technology
• Grants for integrating information technology into clinical education
• Financial assistance to universities to establish or expand medical informatics programs

Medicaid Incentives
The ARRA also provides Medicaid incentives toward the use of certified EHR technology based on a provider's involvement in the Medicaid program. The law also provides for expanded funding to pediatricians, federally qualified health clinics (FQHCs), rural health clinics (RHCs), and physician assistants in physician assistant-led RHCs.

Eligible professionals cannot take advantage of the incentive payment programs under both the Medicare and Medicaid programs.  Eligible pediatricians (non-hospital based), with at least 20 percent Medicaid patient volume, could receive up to $42,500, and other physicians (non-hospital based), with at least 30 percent Medicaid patient volume, could receive up to $63,750, over a six-year period

The era of the electronic medical records has been around for many years, but with the passage of the ARRA, there are now strict time limits for the adoption and use of EHR technology and a program for providing incentive payments for those eligible professionals who participate in Medicare and Medicaid.

For the full text of the American Recovery and Reinvestment Act of 2009 (ARRA), click here: Stimulus Bill