On December 30, the U.S. Department of Health and Human Services (HHS) released the long-awaited proposed rule establishing the Electronic Health Record (EHR) Incentive Program, which lays out a set of standards, implementation specifications, and certification criteria for EHR technology. This program has been developed in response to the “American Recovery and Reinvestment Act” (ARRA), which authorizes the Centers for Medicare & Medicaid Services to provide a reimbursement incentive for physician and hospital providers who become “meaningful users” of an EHR.
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Through this program, the government is working toward two primary goals: incentivizing physicians and hospitals that have been slow to adopt EHRs and facilitating active exchange of patient data between nonaffiliated providers to ensure informed and nonduplicative care. Most of the funds are designated for direct payments that reward physicians and hospitals for adopting and using robust, connected EHR systems.
One incentive program targets providers who see large volumes of Medicaid patients and another focuses on physicians seeing Medicare patients.
Medicaid and Medicare
Physicians who have a patient mix that includes at least 30% Medicaid patients (20% for pediatricians) are eligible for incentive payments of up to $64,000 over five years. The incentives are calculated through a formula that factors in the Medicaid mix seen by the provider as well as EHR adoption incentives ranging from $25,000 in the first year to $10,000 in subsequent years.
Medicaid incentive payments will be determined by the same calculation as the Medicare algorithm—weighted for the first four years, based on the Medicaid patient load. No reductions in Medicaid payments will be made if a provider does not adopt certified EHR technology, although incentives are available only through 2021, and providers must start receiving payments by 2016.
Physicians who accept Medicare patients can receive up to $44,000 over the five years. These incentive payments begin in 2011 and gradually phase down. Starting in 2015, providers are expected to have adopted and be actively utilizing an EHR in compliance with the “meaningful use” definition, or they will be subject to financial penalties under Medicare. Medicare incentive payments are capped at 75% of allowable Medicare charges—up to $18,000 for the first payment year. Incentive payments are reduced in subsequent years: $15,000, $12,000, $8,000, $4,000, and $2,000.
What does 75% of allowable Medicare charges really mean? A provider’s office that has allowable Medicare charges totaling $24,000 or more can receive the full $18,000 in ARRA stimulus money. A provider with $13,300 in allowable Medicare charges is eligible for only $9,975 in ARRA stimulus money. For eligible professionals in rural health professional shortage areas, the incentive payment amounts are increased by 10%.