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Entering the EHR technology rush through Medicare, Medicaid grants

The ARRA has triggered an EHR technology rush, as hospitals, private practitioners and other medical professionals weigh mandates and reimbursements.

The advent of the American Recovery and Reinvestment Act of 2009 (ARRA) has launched a gold rush in electronic health record technology, as hospitals, private practitioners and other medical professionals grapple with the new mandates, reimbursement programs and penalties surrounding the adoption of EHRs.

When President Barack Obama signed ARRA in February 2009, the law designated $19 billion for the U.S. Department of Health and Human Services, partner agencies and all 50 states. These funds are to be used for health care IT, EHRs and health care information exchanges (HIE). HHS projections show that such technology will save the Medicare and Medicaid programs $77 billion annually.

Health care professionals can choose from a wide array of providers and software applications, but to qualify for reimbursement, a "certificated" EHR must meet meaningful use mandates.

The Centers for Medicare & Medicaid Services is expected to publish a rule by the end of 2009 that will define the meaningful use of a certified EHR technology. CMS is working with the Office of the National Coordinator for Health Information Technology to identify the proposed criteria, as well as the organization or organizations that will certify vendors' EHR systems. CMS and the ONC have not yet commented on EHR systems certified by the Certification Commission for Healthcare Information Technology.

Reimbursements for meaningful use of EHR technology

Eligible professionals (EP) in a variety of medical roles (physician, dentist, chiropractor, certified nurse-midwife, nurse practitioner or physician assistant) will receive an annual bonus for the meaningful use of a certificated EHR through Medicare Part B. Medical professionals billing their services through a hospital are not eligible.

Financial incentives are slated to start in January 2011 for EPs who were meaningful users of certificated EHR technology in 2010. An incentive payment is equal to 75% of Medicare-allowable charges for covered services in a year, according to CMS. The maximum Medicare financial incentive in the first through the fifth year are $15,000, $12,000, $8,000, $4000, and $2,000, respectively. For early adopters whose first payment year is 2011 or 2012, the maximum payment is $18,000 in the first year, according to CMS. EPs who work in a health professional shortage area (HPSA), as designated by the Health Resources and Services Administration, will see their incentive payments increase by 10%, the agency stated. The chart below spells out how reimbursements will be dispersed.

Electronic Health Records Implemented
Maximum Medicare Financial Incentive
HPSA EP (Serving in Shortage Area) 10% Increase
Early Adopters EHR Implemented 2011/2012
Early Adopters HPSA EP (Serving in Shortage Area) 10% Increase
1st Year $15,000 $16,500 $18,000 $19,800
2nd Year $12,000 $13,200 $12,000 $13,200
3rd Year $8,000 $8,800 $8,000 $8,800
4th Year $4,000 $4,400 $4,000 $4,400
5th Year $2,000 $2,200 $2,000 $2,200
Total $41,000 $45,100 $44,000 $48,400

Doctors who delay their EHR implementation will see a smaller financial incentive. For example, those doctors implementing certificated EHR technology in 2013 will receive a Medicare incentive of only $4,000 in 2014 and $2,000 in 2015. Doctors who have not implemented certificated EHR technology by 2015 will have their Medicare Part B rate reduced by as much as 4%, according to published reports.

As in other ARRA programs, after designated funds are exhausted, EPs will not receive incentives; moreover, EPs cannot not receive an incentive under both Medicare and Medicaid in a given year.

Doctors who delay their EHR implementation will see a reduced financial incentive.

EHR technology and HIEs: A state responsibility

ARRA places the responsibility for HIEs on states, and the legislation designates funds for states to provide incentive payments to Medicaid providers for EHR systems. They can pay as much as 85% of the average allowable costs for certified EHR technology, including support and training. States will set their own maximums for financial incentives, and payments can extend for a six-year period. EPs must waive their right to duplicate Medicare Part B EHR incentive payments.

A few states already have created the legislation and infrastructure to support the ARRA-funded Medicaid financial incentive program. In July, for example, Maryland Gov. Martin O'Malley signed a law requiring private, state-regulated insurers to build EHR incentives and penalties into their payment structures; and Maryland designated an oversight agency to implement an HIE. In October, Sen. Patrick Leahy, D-Vt., secured a $1 million ARRA federal grant to support physicians who use electronic prescribing. The state of Vermont also has selected a nonprofit organization -- Vermont Information Technology Leaders -- to coordinate the adoption of statewide health IT.

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