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The 2009 American Recovery and Reinvestment Act (ARRA) authorized the Centers for Medicare & Medicaid (CMS) to offer a financial incentive to Health Care providers. The Medicare and Medicaid EHR Incentive Programs will provide incentive payments to eligible professionals, eligible hospitals, and critical access hospitals (CAHs) as they adopt, implement, upgrade, or demonstrate meaningful use of certified EHR technology. The health IT component of the Bill is the HITECH Act, which appropriates a net $19.5 billion dollars to encourage healthcare organizations to adopt and effectively utilize Electronic Health Records (EHR) and establish health information exchange networks at a regional level, all while ensuring that the systems deployed protect and safeguard the critical patient data at the core of the system. RxOffice is committed to providing ARRA-certified solutions, encouraging legislation that helps to move the healthcare industry in the right direction, and helping you understand the intricacies of it all.

: : Getting Started

The Office of the National Coordinator for Health Information Technology (ONC) and the Centers for Medicare Medicaid Services (CMS) released documents shedding light on what physicians and hospitals must do to qualify for electronic health records (EHR) incentive payments under the HITECH Act. These documents tell physicians what software features their EHR will require, what goals they should be using the software to reach, and how the government will measure the meaningful use of EHR technology.

- Stimulus 101 Criteria

  • You have to be eligible for the Medicare and Medicaid EHR Incentive Programs.
  • The Enrollment records should be available in the appropriate systems.
  • Use of a certified EHR product with ePrescribing capability that meets current HHS standards. Hospitals have to use certified EHR technology.
  • The Physicians must demonstrate Meaningful Use with an AREA-certified EHR to earn HITECH incentives.
  • Meaningful Use is based on achieving compliance with 20 of 25 metrics related to EHR use.
  • Ability to report on their use of the technology to HHS and Connectivity to other providers to improve access to the full view of a patient's health history.
  • Physicians who do not show "meaningful use" will be penalized in the form of declining Medicare payments. Hospital physicians won't be affected. Those wanting the stimulus money will also have to be using a "certified EHR."
  • The maximum a provider can receive is $41-$44k over the 5 years and paid in lump sum or payments as determined by HHS.
  • Participate early to get the maximum incentive payments!
  • Penalties will begin from 2015 onwards.

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: : EHR Program Investment Details

There are two portions of the HITECH Act - one that provided $2 billion immediately to the Department of Health & Human Services (HHS) and its sub-agency, the Office of the National Coordinator for Health IT (ONC), and directs creation of standards and policy committees, as well as supportive programs; a second that allocates billions to be paid to healthcare providers who demonstrate use of Electronic Health Records. The net cost to the Federal government is anticipated to be approximately $20 billion after savings are achieved through efficiencies, tax revenue and Medicare fee reductions for non-adopters. The $17 billion will be incentives paid as increased Medicare and Medicaid payments. Incentives will start in 2011 and be paid over 5 year for a physician who can show "meaningful use" of an EHR system.

- Incentive Payments to Physicians and Hospitals

The government is focused on two primary goals in this legislation: moving physicians who have been slow to adopt Electronic Health Records to a computerized environment, and ensuring that patient data no longer sits in silos within individual provider organizations but instead is actively and securely exchanged between healthcare professionals. Therefore, the vast majority of the funds within the HITECH Act are assigned to payments that will reward physicians and hospitals for effectively using a robust, connected EHR system.

Additionally, all of the incentives include payments for up to six years but provide the largest payments early in the program, and those that don't demonstrate Meaningful Use of an EHR under the Medicare component of the program will eventually be penalized through lower payments. The incentive payments begin in 2011 to ensure the providers have time to adopt and learn to use the EHR; penalties begin in 2015.

There are two incentive programs for physicians: Medicare and Medicaid. Physicians will choose program participation. They can only receive incentive payments from one of the programs and will need to determine where they stand to benefit most. The Medicaid program offers up to $64,000 to physicians who see more than 30% of patients paying with Medicaid, (20% for pediatricians). The Medicare program offers individual physicians up to $44,000 in incentive payments.

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- Medicaid Incentive

Eligible providers (EPs) who see more than 30% of patients paying with Medicaid (20% for pediatricians) are eligible for payments of up to $64,000 over six years. The incentives will be calculated through a formula that multiplies 85% by amounts ranging from $25,000 in the first year to $10,000 in subsequent years. Additionally, those meeting the 30% threshold can begin earning the incentive payments even as they adopt, implement and upgrade their EHR software; they can begin proving Meaningful Use of the EHR in the second year of their program participation.

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- Medicare Incentive

Eligible providers (EPs) who do not have a large Medicaid volume but do accept Medicare can earn up to $44,000 over the five years based on a calculation of submitted allowable charges multiplied by 75%, up to the cap for the year. Additionally, EPs operating in a "health provider shortage area" will be eligible for an incremental increase of 10%, and those delivering care entirely in a hospital environment, such as anesthesiologists, pathologists and ED physicians, are ineligible.

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- Eligibility and time line for payments under Medicare

The incentives would be received only upon meaningful use of certified EHR Technology and on serving Medicare patients. It is expected that the Stimulus payment will equate to 75% of the physician's total Medicare allowable capped at the amounts indicated below. Stimulus payments would commence in 2011 and continue according to the following time line.

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- Fee reductions

Providers who do not demonstrate meaningful use in 2014 will see, in their 2015 fee schedules from Medicare, a decrease of 1%. An additional decrease will be affected in 2016 and 2017 down to a total of 97% of the regular fee schedule; it can further be reduced to 95% if the Secretary determines that total adoption is below 75% in 2018.

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- Additional Incentives for Physicians Currently Available

Even before the incentive payments or grants became available to qualifying healthcare organizations through the HITECH Act, there were already programs in place to reward physicians who adopt that technology. By maximizing the e Prescribing incentives currently available through the Medicare Improvements for Patients and Providers Acts of 2008 and PQRI incentives, a qualified provider can earn between $6,000 and $8,000 prior to beginning participation in the Stimulus incentives programs.

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: : Meaningful Use

Meaningful use is a set of goals that the government wants accomplished by physicians using EHR software. The American Recovery and Reinvestment Act of 2009 specified three main components of Meaningful Use:

  • The use of a certified EHR in a meaningful manner, such as e-prescribing.
  • The use of certified EHR technology for electronic exchange of health information to improve quality of health care.
  • The use of certified EHR technology to submit clinical quality and other measures.

Using an EHR in a meaningful manner means you are working towards these high-level goals:

  • Improving quality, safety, efficiency, care coordination, and public health.
  • Reduce health disparities through public data sharing.
  • Engaging patients and their families more effectively.
  • Ensuring adequate privacy and security protections for patient's personal health information.

These goals encompass 25 more granular objectives, of which 15 are mandatory and 10 are optional. Only 5 of the optional objectives need to be fulfilled by the medical provider.
The Final Rule regarding Meaningful Use was released in a proposed form at the end of 2009 and finalized on July 13, 2010. Check attached Overview of meaningful use of Final Rule. It provides detail about what physicians and other "Eligible Providers" - EPs - will need to do to quality for the HITECH incentive payments.

The criteria for meaningful use will be staged in three steps over the course of the next five years.

  • Stage 1 (2011 and 2012) sets the baseline for electronic data capture and information sharing.
  • Stage 2 (expected to be implemented in 2013) and Stage 3 (expected to be implemented in 2015) will continue to expand on this baseline and be developed through future rule making.

To qualify for incentive payments, meaningful use requirements must be met in the following ways:

  • Medicare EHR Incentive Program - Eligible professionals, eligible hospitals, and critical access hospitals (CAHs) must successfully demonstrate meaningful use of certified electronic health record technology every year they participate in the program.
  • Medicaid EHR Incentive Program - Eligible professionals and eligible hospitals may qualify for incentive payments if they adopt, implement, upgrade, or demonstrate meaningful use in their first year of participation. They must successfully demonstrate meaningful use for subsequent participation years.
    • Adopted: Acquired and installed certified EHR technology. (For example, can show evidence of installation.)
    • Implemented: Began using certified EHR technology. (For example, provide staff training or data entry of patient demographic information into EHR.)

Upgraded: Expanded existing technology to meet certification requirements. (For example, upgrade to certified EHR technology or add new functionality to meet the definition of certified EHR technology.)

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- How to achieve meaningful use: Read PDF

- Requirements for Stage 1 of Meaningful Use (2011 and 2012)

Meaningful use includes both a core set and a menu set of objectives that are specific to eligible professionals or eligible hospitals and CAHs.

  • For eligible professionals, there are a total of 25 meaningful use objectives. To qualify for an incentive payment, 20 of these 25 objectives must be met.
    • There are 15 required core objectives.
    • The remaining 5 objectives may be chosen from the list of 10 menu set objectives.
  • For eligible hospitals and CAHs, there are a total of 24 meaningful use objectives. To qualify for an incentive payment, 19 of these 24 objectives must be met.
    • There are 14 required core objectives.
    • The remaining 5 objectives may be chosen from the list of 10 menu set objectives.

- Clinical Quality Measures

To successfully demonstrate meaningful use, eligible professionals, eligible hospitals, and CAHs are also required to report clinical quality measures that are specific to eligible professionals or eligible hospitals and CAHs.

  • Eligible professionals must report on 6 total clinical quality measures: 3 required core measures (substituting alternate core measures where necessary) and 3 additional measures (selected from a set of 38 clinical quality measures).
  • Eligible hospitals and CAHs must report on all 15 of their clinical quality measures.

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: : Certified EHR Technology

The EHR Incentive Programs require the use of certified EHR technology. Standards, implementation specifications, and certification criteria for EHR technology have been adopted by the Secretary of the Department of Health and Human Services. EHR technology must be tested and certified by an Office of the National Coordinator (ONC) Authorized Testing and Certification Body (ATCB) in order for a provider to qualify for EHR incentive payments.

Even if you are already using EHR technology, it must be tested and certified by an ONC-ATCB specifically for the Medicare and Medicaid EHR Incentive Programs. But you do not need to have your certified EHR technology in place to register for the EHR incentive programs! However, you must adopt, implement, upgrade, or successfully demonstrate meaningful use of certified EHR technology under the Medicaid EHR Incentive Program and successfully demonstrate meaningful use of certified EHR technology under the Medicare EHR Incentive Program before you can receive an EHR incentive payment.

- Certification Features:

  • EHR software certified by the government will be eligible for incentive payments.
  • Integrated software suites or combinations of EHR modules will be eligible for certification.
  • A temporary certification process will later be replaced by a permanent one.

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- Standards and Certification

With the assistance of the National Institute for Standards and Technology (NIST), the Department of Health and Human Services (HHS) developed specific testing criteria to certify software as being "ARRA Certified." The certification testing will be conducted by ACTBs - Approved Certification Testing Bodies - who are approved by HHS and managed by the Office of the National Coordinator (ONC). Once approved, these bodies conduct the certification tests, which are then reviewed by them and ONC. There is no particular deadline for bodies to become approved, and approval is issued on a "rolling" basis.

A system may be certified as a "Complete EHR" or an "EHR Module." A Complete EHR is a system which fulfills all the requirements for demonstrating Meaningful Use (and the other certification requirements) as a single unit. An EHR Module performs some subset of those functions. Vendors may certify components as "EHR Modules" and then offer them as a "bundle" which, if it covers all the requirements, will have the same status as a "Complete EHR."

As of this writing, there were three ATCBs announced: Drummond Group and InfoGard Laboratories.

- Privacy Expansion

As part of the HITECH Act, Federal privacy and security laws (HIPAA) were expanded to protect patient health information, including:

  • Defining which actions constitute a breach (including some inadvertent disclosures.)
  • Imposing restrictions on certain disclosures, sales, and marketing of protected health information.
  • Requiring an accounting of disclosures to a patient upon request.
  • Authorizing increased civil monetary penalties for HIPAA violations.
  • Granting authority to state attorneys general to enforce HIPAA.

Additionally, a mandatory HIPAA Security Risk assessment was included amongst the 15 "core" requirements to demonstrate Meaningful Use.

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: : Time Line for ARRA

  • October 1, 2010 - Reporting year begins for eligible hospitals and CAHs.
  • January 1, 2011 - Reporting year begins for eligible professionals.
  • January 3, 2011 - Registration for the Medicare EHR Incentive Program begins.
  • January 3, 2011 - For Medicaid providers, states may launch their programs if they so choose.
  • April 2011 - Attestation for the Medicare EHR Incentive Program begins.
  • May 2011 - EHR Incentive Payments expected to begin.
  • July 3, 2011 - Last day for eligible hospitals to begin their 90-day reporting period to demonstrate meaningful use for the Medicare EHR Incentive Program.
  • September 30, 2011 - Last day of the federal fiscal year. Reporting year ends for eligible hospitals and CAHs.
  • October 1, 2011 - Last day for eligible professionals to begin their 90-day reporting period for calendar year 2011 for the Medicare EHR Incentive Program.
  • November 30, 2011 - Last day for eligible hospitals and critical access hospitals to register and attest to receive an Incentive Payment for Federal fiscal year (FY) 2011.
  • December 31, 2011 - Reporting year ends for eligible professionals.
  • February 29, 2012 - Last day for eligible professionals to register and attest to receive an Incentive Payment for calendar year (CY) 2011.

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EHR Incentive Program Timeline Read PDF

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: : Frequently Asked Questions

  • What are the different incentive options?
  • There are two incentive payment programs available to Eligible Professionals (EPs) outlined under the HITECH Act - one through Medicare and another from Medicaid. Providers in an ambulatory environment can only submit for an incentive bonus from one of the programs so will need to analyze their organization's public payer mix to determine where they stand to benefit most. Both require that a provider prove "Meaningful Use" of an EHR product to qualify for the incentives.

  • How will CMS decide if a physician is "hospital-based" within the context of HITECH?
  • The determination will be made by assessing what percent of the services delivered by a physician the Government fiscal year before the current payment year were filed using a POS indicating a hospital-based status. If the percent of services delivered exceeds 90% - which CMS has said means the physician is delivering "substantially all" care in that setting - that physician will be deemed hospital-based and thus ineligible to collect the HITECH incentives for Eligible Providers.

  • Are the Medicaid & Medicare Meaningful Use requirements the same?
    • The Medicare Rule is the minimum standard for the Medicaid incentive program.
    • States may add or modify measures related to Public Health and Registries.

  • How will the physician payment be calculated under Medicare, and what "allowable charges" will count?
  • The Medicare payments will be calculated by multiplying the submitted allowable charges to Medicare by 75%, up to the capped amount for the year (or will pay less than the cap if so calculated using this method). "Allowable charges" are what Medicare pays under the Physician Fee Schedule in the Part B program. Only those services rendered by a qualified EP will count, and only "professional components," not those classified as "technical components" by Medicare.

  • How will a State determine whether a provider meets the 30% threshold for participation in the Medicaid incentive program (or 20% for a pediatrician)?
  • The Eligible Provider (EP) must have a minimum of 30% of all patient encounters attributable to Medicaid over any continuous 90-day period within the most recent calendar year prior to reporting.
  • This threshold is calculated using as the numerator the individual EP's total number of Medicaid patient encounters in any representative continuous 90-day period in the preceding calendar year and the denominator is all patient encounters for the same individual professional or hospital over the same 90-day period.
    Required to annually re-attest to patient volume thresholds to continue to qualify for Medicaid incentive payments
  • Individuals enrolled in Medicaid managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), or prepaid ambulatory health plans (PAHPs) can be included in the calculation
  • An encounter can be counted as a Medicaid encounter in the context of this program as long as all or part of the visit is paid for through Medicaid.

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  • Do I have to use an EHR 100% of the time?
  • 50% or more of your patient encounters during the EHR reporting period must be at one or more practices/locations equipped with a certified EHR.
    Allows not only for the minimal levels of down-time expected from an EHR product, but for providers to still participate who work in multiple locations with varying adoption levels

  • How will my incentive be calculated?
  • Calculated by multiplying your submitted allowable charges to Medicare by 75%, up to the capped amount for the year.
  • Part B claims for the Fee for Service program.
  • Items in the Medicare Physician's Fee Schedule.
  • Only the "professional" components, not the "technical".
  • Only those furnished by the EP.
  • There is no minimum patient volume required.

  • What types of providers are eligible for the incentives?
  • "Eligible professional" (EP) for the Medicare program, specifically, is defined as,
  • a doctor of medicine or osteopathy,
  • a doctor of dental surgery or medicine,
  • a doctor of podiatric medicine,
  • a doctor of optometry or
  • a chiropractor.

  • The Medicaid program includes more provider types than the Medicare one. Those allowed to submit for incentives include Physicians, DOs, dentists, certified nurse, midwives, nurse practitioners, and physician assistants practicing in an FQHC or RHC that is so led by a physician assistant.

  • Do all the providers in a practice need to participate at the same time, or through the same program?
  • No, one of the beauties of the HITECH legislation is that it allows physicians and other eligible healthcare professionals to participate in the incentive program at the speed they want (providers within a single organization can begin proving and attesting to Meaningful Use at different times) and as best matches their patient mix (one partner with a lot of Medicaid patients may participate under that program while the others choose Medicare).

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  • What about the penalties?
  • Must demonstrate Meaningful Use by 2014 or Penalties will begin from 2015 onwards.
    1% reduction in the Medicare Physician Fee Schedule
    If course isn't corrected, additional 1% in 2016 and again in 2017
    Secretary of HHS can reduce additional 2% if nationwide EHR adoption is below 75% in 2017

  • Does a provider need to be using an EHR all of 2010 in order to be eligible for 2011 incentive payment? How long, and when, do you have to prove Meaningful Use to earn the incentives?
  • No. The EHR Reporting Period for purposes of the Medicare and Medicaid incentive payments for the first year of demonstration will mean any continuous 90-day period within the payment year in which the EP successfully demonstrates Meaningful Use of certified EHR technology. The EHR reporting period therefore could be any continuous period beginning and ending within the relevant payment year.
  • An example of an unallowable EHR reporting period would be for an EP to begin on November 1, 2011 and finish on January 31, 2012 because it crosses into the next payment year.
  • Starting with the second payment year (and any subsequent payment years) for a given EP or eligible hospital, the EHR reporting period will mean the entire payment year.

  • When will the EHR Stimulus Funding actually come to the physicians, and in what form?
  • A single, consolidated incentive payment will be made on a rolling basis, as soon as CMS ascertains that a provider has demonstrated Meaningful Use for the applicable reporting period (that is, 90 days for the first year or a calendar year for subsequent years), and reached the threshold for maximum payment.

  • What are the measures I need to report on in order to qualify as a Meaningful User of Electronic Health Records, and what threshold would I need to meet?
  • There are 25 total objectives and measures that are part of the Eligible Provider incentive program. 15 of those metrics - the Core Set - are required of everyone who participates and span the various elements of the program that are important to realizing the returns on the program, such as improved care coordination, benchmarking for care best practices and increased patient engagement. The Menu Set is comprised of ten total metrics, but a provider only has to report on five of them in Stage 1. This allows participating providers to choose the measures that best reflect their practice's demographics, their work flow and where they're going to get the greatest value from learning more about their own clinical delivery. The five they don't select are considered deferred until Stage 1 and Stage 2.

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  • What if some of the metrics - Core or Menu - don't apply to my practice for some reason?
  • In the matrix of EHR Functional Measures, there are "Exclusions" listed in the right column. These are opportunities for a provider to opt out, through attestation that one of the exclusions applies, from reporting on some of the Core and/or Menu Set metrics. Those that do not have an exclusion listed, however, must be reported on by all providers participating in the HITECH incentives.

  • In the event that you attest that one of the Exclusion criteria applies to you, it decreases the number of metrics an EP needs to submit against. For example, if one of the 15 Core measures does not fit the demographics or workflow of your practice, you will attest to that fact and then submit only 14; similarly, attesting that a Menu Set metric is not relevant for your practice means that you have to submit on only four. Note that it does not just take one of the Menu Set metrics out of consideration but actually results in the need to submit one less report.

  • How do I qualify for the maximum payment?
  • In order to receive the maximum payment, physicians must qualify as a meaningful user in 2011. Eligible physicians will receive a first year bonus of $18,000 (up from $15,000) and will max out the payment schedule over the next five years.
  • The table below illustrates the amount of a subsidy paid each year (columns) based on the year the provider first becomes eligible (rows):
  • No payments will be offered to physicians who first become eligible after 2014.
  • Practices with multiple physicians will be eligible to receive incentive payments for each provider. Remember that payments will be based on 75% of the correlating year's Medicare and Medicaid charges. Therefore, in order to qualify for the maximum payment of $18,000 in the first year, each provider must bill Medicare or Medicaid a minimum of $24,000.

  • Should I purchase an EHR now or wait until 2010?
  • An obvious concern is whether an EHR implemented in 2009 will meet the standards set by HHS in 2010. Although a legitimate concern, waiting until 2010 to implement a system may be a mistake. Researching and selecting the right EMR can be a lengthy process, and many providers who wait may find it difficult to have a system in place in time.
  • Practices would be well-served to begin the research process now, allowing ample time to create a short-list of systems, perform demos with several vendors, check references, meet with vendors in person, negotiate terms, and complete the implementation and training process. To alleviate buyer's concerns, vendors may provide binding agreements, guaranteeing their system will comply with all emerging standards.
  • Furthermore, buyer's should consider an important Certification relative to the requirement for "qualified EHRs." While we have discussed the many opinions for and against, we expect it to play a critical role in the EHR subsidy qualification.

  • What if I choose not to purchase an EHR?
  • Unfortunately, for physicians who choose not to implement an EHR, the stimulus bill is a double-edged sword. Not only will they for ego thousands in incentive payments, but starting in 2015, they will be penalized by way of decreased Medicare and Medicaid payments. Physicians who fail to qualify as meaningful users will face decreases of 1% in 2015, 2% in 2016, and 3% in 2017, with a maximum reduction of 5% by 2020.

  • How many clinical quality measurements do I need to submit?
  • In total, EPs will need to submit six clinical quality measures - three from the Core or Alternate Core set, and three chosen from a longer list of 38 additional measures

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: : Resources

  • HITECH EHR Incentive Programs
  • HHS/ONC Meaningful Use website
  • HHS Health IT Home Page
  • Regional Extension Center (REC) Program
  • Medicare EHR Incentive Program FAQs
  • HIMSS Website
  • Read the Full ARRA Legislation
  • EHRA Position Statement on Interoperability using the CCD Standard

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