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Stimulus Includes Money for Physicians
Kathleen Quiroz and Jerry B. Cohen
M.D. News San Antonio (May 2009)
On February 27, 2009, President Obama signed the American Recovery and Reinvestment Act (“ARRA”), or stimulus package, into law. Included within ARRA is the Health Information Technology for Economic and Clinical Health Act, or HITECH, which is intended to play a transformative role in the use of technology in healthcare. Currently, it is estimated that approximately 14 percent of American physicians use some form of electronic health records (“EHR”). HITECH is designed to provide an infrastructure and financial incentives and disincentives to have EHR systems in use by more than 90 percent of American physicians by 2014, with the belief that savings will be achieved through the reduction of adverse events and the elimination of errors and duplication.
Meaningful Use of Certified EHR
To be eligible for the Medicare incentives provided in HITECH, a physician must be able to demonstrate his or her “meaningful use” of a “certified EHR” system. HITECH provides that “meaningful use” must be demonstrated to the satisfaction of the Secretary of the Department of Health and Human Services. While meaningful use will require the use of a system that includes the electronic prescribing of drugs, the remaining detail of what will constitute “meaningful use” will be clarified in regulations that are anticipated by the end of this year.
HITECH further defines “certified EHR technology” as a qualified electronic health record that is certified as meeting standards to be adopted by the HIT Policy Committee and the HIT Standards Committee, both of which are created and granted authority by HITECH. At this time, HITECH requires that a certified EHR be connected in a manner that provides for the electronic exchange of health information to improve the quality of health care, such as promoting the coordination of care. The initial standards also will address privacy and security issues, the nationwide health information technology infrastructure, the use of EHR to improve quality and technologies to collect patient demographic data and to address the needs of vulnerable populations. The precise standards and other requirements for certified EHR will be clarified in regulations that again are anticipated by the end of this year.
The Carrot – Medicare Incentives
HITECH creates a series of financial incentives through the Medicare program for physicians (other than hospital based physicians) to promote the adoption and meaningful use of certified EHR technology. The amount of the financial incentive available will equal 75 percent of a physician’s “estimated allowed charges” for the payment year in question, subject to the following caps:
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First payment year - $15,000 (or $18,000 if the first payment year is 2011 or 2012)
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Second payment year - $12,000
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Third payment year - $8,000
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Fourth payment year - $4,000
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Fifth payment year - $2,000
While the details of what will be included in “allowed charges” will follow in regulations, physicians demonstrating meaningful use of a certified EHR system will be eligible for incentive payments through the Medicare program beginning as early as 2011. From the schedule above, it is clear that there is more money available to physicians the earlier they become meaningful users of certified EHR. However, no incentives will be available at all if the first payment year is after 2014 and, regardless of when the first payment year occurs, no payments will be made at all in years after 2016.
The Stick – Medicare Fee Schedule Reductions
HITECH imposes financial penalties on eligible physicians who are not meaningful users of a certified EHR system in 2015 or thereafter. Specifically, if an eligible physician is not a meaningful EHR user by 2015, the Medicare fee schedule amount for that eligible physician will be reduced as follows:
Also, if fewer than 75 percent of all eligible physicians are meaningful EHR users by 2018, the fee schedule may be reduced by an additional 1 percent per year, up to a 5 percent reduction. Finally, HITECH anticipates that hardship exceptions may be adopted by regulation, such as for physicians in rural areas.
Alternative Incentives Through Medicaid Program
HITECH also includes alternative incentives for professionals with specific percentages of patients receiving medical assistance or meeting a definition of “needy.” These incentives may not exceed 85 percent of the net allowable costs for certified EHR technology and associated support and training. These incentives are capped at $25,000 in the first year and $10,000 per year in the second and subsequent years, with no payments to be made for more than 5 years or after 2021. In addition to these later compliance dates, the incentives through the Medicaid program also are available to a broader group of providers, including dentists, certified nurse midwives, nurse practitioners and certain physician assistants. However, professionals seeking incentives through the Medicaid program must waive their right to receive the Medicare incentives and must demonstrate that a certain patient volume is receiving medical assistance.
What Do We Do For Now??
While awaiting the regulatory detail for these incentive programs, physicians should assess their EHR needs and begin budgeting for the EHR adoption process. Physicians with existing EHR systems should contact their vendors to determine how the vendors plan to provide upgrades or patches that might be required to comply with the requirements of a “certified” system and should budget the costs associated with future upgrades and training.
Physicians planning to purchase an EHR system in the short term should either include in their contracts with vendors provisions requiring the vendor to provide necessary upgrades and patches or should consider deferring their purchases until the requirements for “certified” EHR systems are finalized. Ultimately, all physicians and physician groups will need to begin budgeting not only for the financial costs of acquiring or upgrading an EHR system but for the personnel time and expense for EHR conversion and training. Again, the sooner this process begins, the more likely a physician will be able to satisfy the 2011 timeline to receive the maximum available incentive payments under HITECH.
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Jerry B. Cohen and Kathleen Quiroz are Shareholders with Oppenheimer, Blend, Harrison and Tate, Inc. - a top ranked Health Care law firm in San Antonio and Kerrville. Collectively, they have served Corporate and Health Care clients for 38 years and have been recognized by their peers in the legal industry as leading attorneys at both the local and national level. You can reach the Health Care Practice of Oppenheimer, Blend, Harrison and Tate, Inc. at 210.224.2000.
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