The Department of Health and Human Services has released the outlines of the program to offer Medicare and Medicaid incentive payments for meaningful use of electronic health records systems.

The payments are authorized under the economic stimulus law. Medicare incentives to eligible hospitals will start in October 2010, HHS has clarified. Medicare incentives to physicians, as well as Medicaid incentives to physicians and hospitals, will start in January 2011.

By the end of 2009, HHS expects to:

1. coordinate with the Office of the National Coordinator for Health Information Technology to develop related policies for the incentive programs, such as the definition of meaningful use;
2. develop proposed rules to allow public input to the incentive program policies;
3. plan systems and other requirements to support the incentive programs; and
4. plan a national outreach program.
5. By the end of 2010, HHS expects to:
6. conduct outreach to eligible professionals and providers and to state Medicaid agencies;
7. develop systems to support the payment of incentives;
8. develop final rules to establish policies to pay incentives; and
9. develop systems to monitor and evaluate incentive payments.

The Centers for Medicare and Medicaid Services has been appropriated $145 million a year for FY 2009 through 2015, and $65 million for 2016, for administration of the incentive programs.

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Scott N. Wolfe

A major focus of the American Recovery and Reinvestment Act (Stimulus Act) that President Obama signed in February is to improve the quality and expand the scope of health information technology in the United States. One of the central goals is to develop a nationwide health IT infrastructure and transfer all Americans’ health records to electronic format by the year 2014.

Under the Stimulus Act, the Office of the National Coordinator for Health Information Technology (ONCHIT) received a $2 billion appropriation to achieve these goals. The funds will remain available until expended; however, the law requires that certain portions of the funds must be allocated to specified groups. ONCHIT will be advised by two policy committees comprised of members from the various sectors of the health-care industry. ONCHIT is charged with a number of oversight activities, including the development of uniform health IT standards to allow interoperability among diverse health IT systems. “Making the electronic health records dream a reality will depend upon the successful development of uniform HIT standards,” said Andrew Gantt, a partner in the Health Care and Life Sciences Group at the Washington D.C. office of Latham & Watkins. “This is critical to ensuring that multiple electronic health records technologies are able to communicate effectively with each other.”

One of the named recipients under the Stimulus Act is the National Institute of Standards and Technology (NIST). NIST will receive $20 million of the budget allocation to continue advancing the use of health IT. The law also earmarks $300 million to support sub-national and regional efforts in their advancement toward health information exchange.

The Stimulus Act also contains various financial incentives to specified groups who adopt and increase their use of electronic health records and health IT. Medicare providers, for example, are entitled to receive up to $44,000 ($48,400 for providers in a professional shortage area) of funding if they adopt and engage in a “meaningful use” of certified electronic health records technology. The standards that providers must meet to satisfy the “meaningful use” requirement in order to receive incentive payments include, among other things, the ability to connect in a way that provides for the electronic exchange of health information and a willingness to report information on clinical quality measures to the Department of Health and Human Services.

The law also incentivizes Medicare providers by penalizing them if they do not become electronic health users by 2015 through a one to five percent reduction in payment the providers would otherwise receive. Similar financial incentives, which can total $63,750, are available for Medicaid providers who implement electronic health records technology. Providers eligible for both Medicare and Medicaid incentives may only receive incentives from one or the other.

Hospitals are also entitled to receive funding under the Stimulus Act if they can demonstrate that they are “meaningful users” of electronic health records technology. A formula determines the amount that hospitals can receive, with the amount starting at $2 million. Grants will also be available to universities that develop centers designed to generate innovative approaches to the use of health IT.

State or state-designated entities are also eligible to receive grants if they submit a plan describing activities to be carried out to facilitate the exchange of health IT. In addition, regional centers that assist in the promotion and advancement of health IT may receive grants for the continued development of technological approaches. To secure their grants, however, these groups must contribute matching funds up to a certain percentage of the federal funds they intend to receive.

Universities and clinical health education programs that expand educational programs focusing on medical information are eligible to receive grants, if they contribute matching funds of at least 50 percent of the cost of the program. In addition, the Stimulus Act authorizes the establishment of loan programs, administered by states and Indian tribes, to health care providers who facilitate the adoption of certified electronic health records technology. Like many other incentives, however, the entity receiving the grant must match the federal funds received with a percentage of the amount received.

Advancing and expanding the use of electronic health records across the United States is a top priority under the Stimulus Act. With financial incentives being provided to various groups to facilitate the shift to electronic records, and a renewed drive to develop uniform health IT standards, the goal of having all Americans’ health records in electronic format is more likely to be attained.

Scott N. Wolfe is the Chair of the Corporate Department and partner-in-charge of the San Diego North County office of Latham & Watkins LLP

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a-brief-guide-to-stimulus-act-funding-for-health-information-technologies/

By now you’ve heard about the $850 billion American Recovery and Reinvestment act of 2009 - the stimulus bill recently passed by Congress. The bill is aimed at spurring economic growth across multiple industries by way of government spending.

What’s in it for you?

Well if you are a healthcare provider, you can take advantage of the $51 billion that has been allocated to the health care industry, $19 billion of which will be used to incentivize medical practices to adopt and implement Electronic Health Records (EHRs), also known as Electronic Medical Records (EMRs).

How does the subsidy work?
Starting in 2011, providers deemed to be “meaningful users” of EHR systems will be eligible to receive $40,000 - $60,000 in incentive payments paid out over five years in the form of increased Medicare and Medicaid premiums.

For the first year a physician is deemed to be a meaningful user, he or she will be eligible for payments of 75% of that year’s Medicare and Medicaid charges, up to a maximum of $15,000. The maximum payment is increased to $18,000 if the first year is 2011 or 2012. The incentive payments decline for each subsequent year within the five year period; $12,000 will be paid in year two, $8,000 in year three, $4,000 in year four, and $2,000 in year five.

No incentive payments will be available after 2015, and no payments will be offered to physicians who first become eligible after 2014. This creates a decreasing incentive for late adopters.

What is a “meaningful user”?
To qualify as a “meaningful user,” eligible providers must demonstrate use of a “qualified EHR” in a “meaningful manner.” The bill defers to the secretary of Health and Human Services (HSS) to set specific guidelines for determining what constitutes a “qualified EHR”; however, it does specify that e-prescribing, electronic exchange of medical records, and interoperability of systems will be determining criteria.

HSS will be working throughout 2009 to set the necessary criteria for certifying systems, and is expected to have a final report by January of 2010. Many expect CCHIT certification to play a major role in setting standards of interoperability. (See “Should CCHIT Influence Your EHR Selection” for more information). After all, HHS funded the creation of CCHIT to start certifying EHRs a few years ago.

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 buyers’ concerns, vendors may provide binding agreements, guaranteeing their system will comply with all emerging standards.

Furthermore, buyers’ should consider CCHIT an important Certification relative to the requirement for “qualified EHRs.” While we have discussed the many opinions for and against CCHIT, 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 forego 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.

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the-stimulus-bill-and-meaningful-use-of-qualified-emrs-1031209/

Stimulus funds would help replace paper medical files.

By Kristi E. Swartz

The Atlanta Journal-Constitution

Hurricane Katrina illustrated what can happen when medical records are on paper instead of stored on a computer.

They washed away, rendering thousands of people unable to get prescriptions, notify doctors about allergies or receive medical help.

“We have to bring our best technology to bear in the health care system,” said Dr. David Satcher, former U.S. surgeon general and director of the Satcher Health Leadership Institute at Morehouse School of Medicine.

Federal stimulus money is available for health care providers in Georgia to convert paper medical records to electronic ones, Satcher and others said Thursday at Georgia State University. Though such technology has been available for years, fewer than 4 percent of doctors have made their medical records completely electronic, said Janet Marchibroda, chief health care officer for IBM, who said the stimulus dollars will help with some of the conversion challenges.

Stimulus money will be funneled through Medicare and Medicaid programs as well as through the National Coordinator for Health Information Technology. Marchibroda cautioned that it be spent wisely.

“We could really mess this up by just pushing a lot of money out there but not focusing on improving health information technology,” she said.

Georgia’s Department of Community Health has received $339.6 million in the first batch of stimulus money. Rhonda Medows, the state’s health officer and commissioner of the community health department, said the agency is waiting for federal guidance on how it can use that money to reimburse health care providers who buy an electronic health record system.

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The law offers bonuses for health IT adoption but will penalize physicians who don’t have adequate systems by 2015.

By Doug Trapp, AMNews staff.

Washington – President Obama on Feb. 17 signed a $787 billion stimulus bill that directs about $150 billion toward speeding adoption of health information technology and maintaining health care coverage, among other provisions.

The sweeping measure — the American Recovery and Reinvestment Act of 2009 — provides nearly $90 billion in temporary increased federal Medicaid funding, delays four cost-cutting Medicaid regulations and spends a net of about $19 billion to encourage physicians and others to adopt health IT.

Obama said the enactment of the stimulus package and the Feb. 4 enactment of the Children’s Health Insurance Program reauthorization are big steps in health care. “We have done more in 30 days to advance the cause of health care reform than this country has in a decade.”

The American Medical Association applauds the investments in health IT and coverage for the poor and newly unemployed, wrote AMA Executive Vice President and Chief Executive Officer Michael D. Maves, MD, MBA, in a Feb. 11 letter to Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee.

The stimulus also provides $500 million to help train physicians through the National Health Service Corps, a provision widely supported by physician organizations. “This program is integral to rebuilding the primary care physician pipeline,” said Ted Epperly, MD, president of the American Academy of Family Physicians.

$19 billion of the stimulus bill is for incentives to encourage health IT adoption.

But few Republicans backed the stimulus measure. The House adopted the bill Feb. 13 with no Republican support. The Senate approved it the same day with votes from only three moderate Republicans: Sens. Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania. The final bill is a compromise between earlier versions adopted by the House and Senate.

Many Republicans, including Senate Minority Leader Mitch McConnell (R, Ky.), lambasted spending in the measure that they said would not stimulate the economy quickly. McConnell also criticized Democrats for not accepting more GOP input on such a massive spending bill.

Some Republican lawmakers, such as Phil Gingrey, MD (R, Ga.), also worried that the stimulus is not offset by new revenues and therefore will increase the national debt. “I don’t know how our children and grandchildren are going to pay for this,” Dr. Gingrey said.

“Significant” health IT support

Under the stimulus law, physicians and other health professionals are eligible for tens of thousands in health IT incentive payments via Medicare or Medicaid through 2016. But in 2015, penalties for non-adopters begin.

Medicare-participating physicians who adopt a certified electronic health record system by 2011 or 2012 and use it in a way that the government deems “meaningful” — a term to be defined later — could receive up to $44,000 over a period of up to five years. The incentives will be limited to 75% of the physician’s Medicare charges in any one year.

Health IT grants and loans from the federal government won’t become available until 2010.

Physicians who have caseloads of at least 30% Medicaid patients and who also meet the health IT adoption standards are eligible for nearly $64,000 in support during the same time frame. Medicaid incentive payments are limited to 85% of physicians’ Medicaid charges. Pediatricians can qualify if their patient mix is 20% Medicaid, but they would be eligible for only two-thirds of the incentive payments available to physicians meeting the 30% standard.

This health IT funding is “very significant,” said Robert Doherty, the American College of Physicians’ senior vice president for governmental affairs and public policy. “Our sense is for a lot of physician practices, that may be the tipping point where it begins to make business sense to consider plunging into that pool and buying a certified EHR.”

Physicians cannot apply for incentives in both Medicare and Medicaid, but hospitals can, said Erica Drazen, ScD, managing partner for emerging practices at health IT consultant CSC’s Global Healthcare Sector.

Also, while physicians must use an EHR system to qualify for the stimulus incentive payments, they need not own one. The measure provides $2 billion to the Office of the National Coordinator for Health Information Technology for health IT grants and loans, but those won’t become available until 2010, Drazen said. She expected private firms to offer new financing options for the EHR systems or to offer them through leases.

But the stimulus measure will penalize physicians, beginning in 2015, if they have not become meaningful EHR users. These doctors face a 1% reduction in Medicare fees that year. The yearly cut would phase up to 3% in 2017 and beyond.

The ACP would prefer that the penalties not apply if, for example, a shortage prevents EHRs from being available to physicians or if another factor not in physicians’ control prevents them from meeting the health IT standards, Doherty said.

Drazen said existing EHR vendors and consultants will be strained by the demand created by the health IT stimulus. “We’re going to have a real short supply of people who know how to do this well.”

Sustaining Medicaid

The $87 billion in stimulus going to state Medicaid programs should help avoid health coverage cuts to low-income people. But states still may need to trim other parts of their Medicaid programs, because many have budget shortfalls exceeding their stimulus funding, said Ann Kohler, director of the National Assn. of State Medicaid Directors.

The enactment could be significant for physicians in California. State lawmakers and Gov. Arnold Schwarzenegger have been struggling to close a roughly $42 billion budget deficit.

California’s Medicaid program would receive more than $11 billion in stimulus funding over 27 months, according to the California Medical Assn. But to qualify for the additional funds, states first must maintain or restore Medicaid eligibility and renewal procedures to their status on July 1, 2008. California lawmakers would need to reverse legislation enacted late in 2008 requiring people on Medicaid to re-enroll twice a year instead of once.

“This is another great opportunity for state lawmakers to maximize federal assistance,” said CMA President Dev A. GnanaDev, MD.

The stimulus offers another boost to states by extending moratoriums on three Medicaid rules through July 1, 2009. Those regulations, issued by the Centers for Medicare & Medicaid Services, would have reduced federal Medicaid spending by billions. The new law also delays until July a CMS rule that reduces some states’ Medicaid rates by aligning the program’s hospital outpatient services definition with that of Medicare.

This content was published online only.

Above article published on http://www.ama-assn.org/amednews/2009/02/23/gvl20223.htm

Physicians can earn tens of thousands in IT incentives, but they must act quickly to achieve the biggest benefit and avoid penalties.

By Chris Silva, AMNews staff.

Washington – The recent economic stimulus package provides a significant investment in health information technology that could benefit many physicians. But the government is expecting doctors to do their part to implement health IT and is prepared to penalize those who don’t.

Over the next decade, the federal government is projected to spend more than $35 billion on Medicare and Medicaid bonuses to physicians, hospitals and others that adopt certified electronic health records. Because of the Medicare penalties that eventually will apply to nonadopters, however, the net spending level will be only about $20 billion over 10 years.

Physicians with approved EHRs in place before 2011 or 2012 will be eligible for the maximum Medicare incentive payments allowed by the stimulus. They will receive bonuses equal to 75% of their allowed Medicare Part B charges — up to a sliding cap — in each of the five years after adoption. The maximum of $18,000 in the first year phases down to $2,000 in the fifth year for a total five-year bonus of up to $44,000 for early adopters.

Doctors who wait until 2013 or 2014 to have EHRs in place will be eligible for smaller bonuses. The 2013 adopters can capture a maximum of $39,000 over four years, while the 2014 adopters can claim up to $24,000 over three years. Medicaid will have its own five-year bonus schedule that will offer as much as $64,000 to eligible physicians who don’t claim Medicare bonus money.

Once the chance for bonuses ends, Medicare starts penalizing physicians who have not responded to the incentives. Doctors who have not adopted an EHR before 2015 and who fail to obtain a hardship exemption will see a 1% cut to their Medicare pay, a reduction that phases up to 3% for 2017 and remains each year after that.

Simply setting up any paperless system is not enough to earn bonuses and avoid penalties. The stimulus package stipulates that physicians must adopt a qualifying EHR and use it in a “meaningful way.” Meaningful users are defined as physicians who demonstrate to the Health and Human Services Dept. that they are using electronic prescribing; that their technology is connected in a manner that provides for electronic exchange of health data to improve quality of care; and that they submit information to HHS on clinical quality measures.

No longer a question of “if”

Some physicians already have begun to move away from paper, and they would rather act sooner than later to avoid penalties down the road. “The question now isn’t if, but how and when, because physicians are feeling a sense of inevitability,” said Todd Rowland, MD, executive director of HealthLINC.org in Bloomington, Ind., a regional health information exchange that covers a multicounty area. “We need to figure out how to implement it in an economical, management-oriented approach that requires as few work-flow sacrifices as possible.”

Dr. Rowland added that he doesn’t expect physicians to like the implementation process — or the possibility of penalties if they don’t do it right — but that it makes sense for physicians younger than 55 in particular to get on board. He estimates that more than 50% of physicians in Bloomington’s metro area and more than 75% in the rural area have adopted EHR systems.

Early EHR adopters can get up to $44,000 in a Medicare bonus or $64,000 in a Medicaid bonus.

While the stimulus also provides Medicaid incentives, physicians can’t have it both ways — they must choose either Medicare or Medicaid bonuses, said Heidi Echols, a partner at the law firm McDermott, Will & Emery in Chicago.

In an effort to prevent additional “double-dipping,” physicians who report using an EHR system that is also capable of e-prescribing no longer will be eligible for the e-prescribing bonuses that went into effect this year under the Medicare Improvements for Patients and Providers Act. On the other hand, Medicare penalties for those not e-prescribing by 2012 will sunset after 2014, so that no physician will be subject to double penalties for failing to e-prescribe and failing to use an EHR.

Now that Congress has set up the incentive structure for adoption, President Obama and his administration also must promote interoperability of EHR data so the records don’t become information “islands,” said David J. Brailer, MD, in an article published online as part of a series on health IT in Health Affairs’ March/April issue.

Dr. Brailer was the first National Coordinator for Health Information Technology at HHS from 2004 to 2007 and is now chair of Health Evolution Partners, a health care investment firm based in San Francisco. He said physicians particularly need to be wary of vendors from which they purchase IT services, as systems that become obsolete could set back progress.

“What it boils down to is, are you buying EHRs that you can use and keep for a long time, or is it a system that in two or three years goes kaput?” he asked. “We’re trying to avoid doctors having to start over again with electronic records during their career.”

The next steps

The stimulus act requires HHS by Dec. 31 to develop an initial set of standards, implementation specifications and certification criteria for EHR system adoption. It also authorizes the department to provide competitive grants to states for implementation loans to health care entities.

The national health IT coordinator also will be authorized to make available a qualifying EHR system to physicians and others for a nominal fee. Doctors who do not purchase the government’s system can purchase a qualifying system from a vendor of their choice as long as it meets certain standards, including interoperability requirements.

The American Medical Association will seek clarification from HHS on the cost of the government system and when it will be available. The department must determine more details on how it will spend the stimulus dollars and how doctors can access them.

Once those details are available, physicians must examine the cost-benefit breakdown. According to a May 2008 report from the Congressional Budget Office, estimated total costs for implementing a typical office-based EHR are about $25,000 to $45,000 per physician. Each physician would then need to spend about $3,000 to $9,000 per year to maintain the system.

Above article published on http://www.ama-assn.org/amednews/2009/03/16/gvsa0316.htm