Getting money from the EHR Incentive Program

The federal government's EHR Incentive Program offers health care providers more money the sooner they adopt electronic health records. How much more? Find out in this tutorial.

The meaningful use regulations spelled out in the HITECH Act and subsequent federal government rules explain what

hospitals and eligible providers (EPs) must do to receive their share of more than $19 billion through the Electronic Health Record (EHR) Incentive Programs.

There are, of course, the meaningful use criteria themselves, as well as reporting, which consists of different hospital quality measures and clinical quality measures.

All providers must demonstrate meaningful use for a continuous 90-day period within their first payment year. This period consists of the 2011 federal fiscal year for hospitals (which began on Oct. 1, 2010), and the 2011 calendar year for EPs. Organizations that are not ready for the current payment year can choose a later first payment year, though in doing so they run the risk of receiving reduced incentives.

After that first year, meaningful use must be demonstrated for the entire payment year -- the presumption being that health care organization will not abandon meaningful use having already achieved it. To receive any HITECH Act money at all, that first payment year must be no later than 2014. To avoid penalties, that first payment year must be no later than 2015.

Here's a breakdown of what health care organizations can expect to receive. (A separate SearchHealthIT.com tutorial will help providers determine how to qualify for the EHR Incentive Program.) This page has been updated as of July 25, 2011 and includes new information about the meaningful use attestation process.

Medicare EHR Incentive Program

Registration for the Medicare EHR Incentive Program officially opened April 18. One of the first physicians to undergo meaningful use attestation recommended that providers keep all the necessary reporting data near at hand in order to make the process occur smoothly. Meanwhile, with reporting data in front of him, the CIO of MedCentral Health System was able to complete meaningful use attestation in 30 minutes.

The Centers for Medicare & Medicaid Services (CMS), which administers the EHR Incentive Programs, has published a document that offers a preview of the attestation system.

The payment amount for Medicare eligible professionals, according to CMS, "is equal to 75% of an EP’s Medicare physician fee schedule allowed charges submitted not later than 2 months after the end of the calendar year," subject to an annual limit (see chart).

To get the most money -- $44,000 -- Medicare EPs must participate in the EHR Incentive Program no later than 2012. Here's what each year's payments look like.

Payment amount for
First payment year, 2011
First payment year, 2012
First payment year, 2013
First payment year, 2014
2011 $18,000 NA NA NA
2012 $12,000 $18,000 NA NA
2013 $8,000 $12,000 $15,000 NA
2014 $4,000 $8,000 $12,000 $12,000
2015 $2,000 $4,000 $8,000 $8,000
2016 $0 $2,000 $4,000 $4,000
Total $44,000 $44,000 $39,000 $24,000

(Note: Those who provide the bulk of their services in a designated Health Professional Shortage Area receive a 10% bonus on all payments, thereby making their maximum incentive $48,400.)

Meanwhile, payment amounts for Medicare hospitals are based on a formula that takes into account the number of patients they see and their share of Medicare patients. There are three parts to this formula.

First, there's the initial amount. This starts at $2 million. From there, hospitals will also receive $200 for the 1,150th to the 23,000th discharge during the payment year. This amount can range from $200 to $4,370,400.

Second, there's the Medicare share. This involves a numerator and denominator. The numerator adds the number of acute care inpatient-bed-days for Medicare Part A beneficiaries and Medicare Advantage (Part C) beneficiaries. The denominator multiplies the number of acute care inpatient-bed-days to an estimate of the hospital’s charges during such period (not including any charges attributable to charity care) divided by an estimate of the hospitals charges.

Third, there's the transition factor, which is best explained in a chart.

Transition factor for... First payment year of 2011 First payment year of 2012 First payment year of 2013  First payment year of 2014
 First payment year of 2015
2011 1 n/a n/a n/a n/a
2012 0.75 1 n/a n/a n/a
2013 0.5 0.75 1 n/a n/a
2014 0.25 0.5 0.75 0.75 n/a
2015 n/a 0.25 0.5 0.5 0.5
2016 n/a n/a 0.25 0.25 0.25

These three figures are multiplied to determine a Medicare hospital's reimbursement. As the chart suggests, hospitals cannot receive EHR Incentive Program payments for more than four years.

Additional information is available in the EHR Incentive Program tip sheet for Medicare hospitals from CMS.

Medicaid EHR Incentive Program

It should be noted that the Medicaid EHR Incentive Program is administered by individual states as opposed to the federal government. States have been slow to bring Medicaid meaningful use online; only one in four were ready when meaningful use attestation began in January 2011;as of July 4, only 21 states are ready for Medicaid meaningful use. Check with CMS to find out if registration is open in your state.

All Medicaid eligible professionals who meet meaningful use regulations by 2016 will receive $63,750. However, to remain consistent with the HITECH Act, Medicaid EPs who cannot demonstrate meaningful use by 2015 will still be penalized.

Here's what each year's payments will look like for Medicaid EPs. (Penalties as described above will vary from one provider to the next and therefore do not factor into the figures provided here.)

Payment amount for
First payment year, 2011
First payment year, 2012
First payment year, 2013
First payment year, 2014
First payment year, 2015
First payment year, 2016
2011 $21,250 NA NA NA NA NA
2012 $8,500 $21,500 NA NA NA NA
2013 $8,500 $8,500 $21,500 NA NA NA
2014 $8,500 $8,500 $8,500 $21,500 NA NA
2015 $8,500 $8,500 $8,500 $8,500 $21,500 NA
2016 $8,500 $8,500 $8,500 $8,500 $8,500 $21,500
2017 $0 $8,500 $8,500 $8,500 $8,500 $8,500
2018 $0 $0 $8,500 $8,500 $8,500 $8,500
2019 $0 $0 $0 $8,500 $8,500 $8,500
2020 $0 $0 $0 $0 $8,500 $8,500
2021 $0 $0 $0 $0 $0 $8,500
Total $63,750 $63,750 $63,750 $63,750 $63,750 $63,750

In order to qualify for the Medicaid EHR Incentive Program, at least 30% of an EP's patients must be insured under Medicaid. (The figure is 20% for pediatricians.)

Meanwhile, payment amounts for Medicaid hospitals are likewise based on a formula that takes into account the number of patients they see and their share of Medicaid patients. There are two parts to this formula.

First, there's the overall EHR amount, which itself is the product of the initial amount (calculated as above), the Medicare share (which, under the meaningful use final rule is set at 1), and the transition factor, which reduces every year: 1 for the first payment year, 0.75 for the second year, 0.5 for the third year and 0.25 for the fourth year.

Second, there's the Medicaid share, which also includes a numerator and denominator. The numerator adds the number of Medicaid inpatient-bed-days and the number of Medicaid managed care inpatient-bed-days. The denominator multiplies the number of inpatient-bed-days to an estimate of the hospital’s charges during such period (not including any charges attributable to charity care) divided by an estimate of the hospitals charges.

These two figures are multiplied to determine a Medicaid hospital's reimbursement. Again, payments cannot be received for more than four years.

More information can be found in the EHR Incentive Program tip sheet for Medicaid hospitals from CMS.

EHR Incentive program for critical access hospitals

For critical access hospitals, the reimbursement formula is based on two factors.

First, there's the reasonable cost incurred for the purchase of a certified EHR system before or during the reporting period. These costs can include the acquisition of hardware and software needed to administer the certified EHR system.

Second, there's the Medicare share, which also includes a numerator and denominator.  The numerator adds the number of acute care inpatient-bed-days for Medicare Part A beneficiaries and Medicare Advantage (Part C) beneficiaries. The denominator multiplies the number of inpatient-bed-days to an estimate of the hospital’s charges during such period (not including any charges attributable to charity care) divided by an estimate of the hospitals charges. Once this quotient is calculated, add 20 percentage points.

These two figures are multiplied to determine a critical access hospital's reimbursement. Again, payments cannot be received for more than four years.

The CMS' EHR Incentive Program tip sheet for critical access hospitals provides some additional information.

Let us know what you think about the story; email Brian Eastwood, Site Editor.

 

This was first published in July 2011

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