Incentives in Stimulus Bill for Adopting EHRs

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  • February 18, 2009
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The AAPC is learning more about how the American Recovery and Reinvestment Act signed by President Barak Obama Tuesday will affect your workplace and your job. Under the $787 billion economic stimulus bill, health care providers will receive financial incentives beginning 2011 for implementing qualified electronic health records systems (EHRs).
Physicians, facilities, and other providers will receive money through Medicare or Medicaid programs for their “meaningful use” of EHRs. Payments are structured to encourage early adoption and penalties discourage procrastination.
“Meaningful use” is not specifically defined in the bill, but it gives the Secretary of Health and Human Services (HHS) — still to be named — advisory guidance regarding how to determine this. HHS is required to develop and publish universal standards for EHR systems by the end of 2010. EHR vendors will seek certification for meeting these standards, and any provider using a certified EHR system will be eligible for incentive payments.

Medicare Payments and Penalties for Physicians

Non-hospital-based physicians will be eligible for a bonus payment built upon estimates of the allowed charges. The maximum amount, which would be paid either as a lump sum or all at once, are listed by year:

  • 2011 – $18,000
  • 2012 – $18,000 if this is the first year for adoption and use or $12,000 if this is the second year of use
  • 2013 – $12,000 if this is the second year of use or $8,000 is this is the third year of use
  • 2014 – $8,000 if this is the third year of use or $4,000 if this is the fourth year of use
  • 2015 – $4,000 if this is the fourth year of use or $2,000 if this is the fifth year of use

Payments will be reduced for failing to adopt by 2015:

  • 2015 – 99 percent of Medicare payment the provider would have otherwise been entitled
  • 2016 – 98 percent of Medicare payment the provider would have otherwise been entitled
  • 2017 – 97 percent of Medicare payment the provider would have otherwise been entitled
  • 2018*-96 percent of Medicare payment the provider would have otherwise been entitled

Reductions in 2018 depend upon a determination by HHS that fewer than 75 percent of all physicians have adopted and use certified EHRs. HHS is authorized to continue payment reductions if the 75 percent threshold is not achieved, but in no case will the payment reductions go below 95 percent of the Medicare payment to which the provider would have otherwise been entitled.
HHS will assume emergency physicians, anesthesiologists, and pathologists are hospital-based, and may add other specialties to this list.

Medicare Payments and Penalties for Facilities

Hospital payments beginning 2011 will be based on a $2 million base amount. Added to the base amount is an additional discharge-related payment multiplied by the hospital’s Medicare share. Critical access hospitals (CAHs) will use a different, unavailable calculation.
Before receiving the payments below, hospitals will also be required to submit quality data on measures identified by HHS. Facilities will get a chance to publically comment before they are adopted.
Hospitals will also be penalized for not meaningfully adopting certified EHR systems and the quality measures. They will see their amounts reduced by the applicable percentage for the year in which they first adopt.

  • 2011 – 100 percent of the amount the incentive payment for which the hospital is eligible
  • 2012 – 75 percent of the amount for which the hospital would otherwise be eligible
  • 2013 – 50 percent of the amount for which the hospital would otherwise be eligible
  • 2014 – 25 percent of the amount for which the hospital would otherwise be eligible
  • 2015 – No incentive payments

Medicaid Payments to Assure No Double Dipping

Providers and facilities demonstrating they care for needy patients will have the option of obtaining payments through either the Medicaid or Medicare formulas, but not both. Medicaid incentives will be available for nurse practitioners, nurse midwives, rural health clinics, and federally qualified health centers in addition to physicians and hospitals.
For physicians, nurse practitioners, and nurse midwives in private practice, the Medicaid threshold is 30 percent of patients. Pediatricians seeing more than 20 percent Medicaid patients but less than the 30 percent of the threshold could receive a reduced incentive payment.
For physicians, nurse practitioners, nurse midwives, and physician assistants working in either rural health clinics or federally qualified health centers, the threshold is also 30 percent; however, they can include SCHIP enrollees, patients for whom no payment is made to the clinic for their care, or patients to whom a sliding fee scale is applied. Incentive payments are per provider.
Under Medicaid, providers would be eligible for reimbursement of 85 percent of allowable EHR costs, not to exceed a maximum per provider total over the four years of $63,750. Hospitals with at least 10 percent Medicaid patient volume would be eligible for an incentive payment. Payment formulas are similar to those available under Medicare.
The economic incentive bill is huge and complicated. The AAPC will continue to review the bill and subsequent actions and communicate with you as soon as we know more.

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No Responses to “Incentives in Stimulus Bill for Adopting EHRs”

  1. Jean Acevedo says:

    First, thank you AAPC for your speed in getting the HIT portion of the stimulus bill to us, your members. I’m thrilled that this administration is actually going ahead with meaningful financial assistance to physicians to help them impement EMRs. The health care industry will finally enter the 21st century even if some physicians go kicking and screaming.

  2. Marlene Wright says:

    I am the owner of a large medical billing corporation in Memphis Tennessee. I am about to invest in a new practice management system that also has a state of the art EMR program.
    My problem is that the money involve to purchase and implement this EMR is quite large and I was wondering if the new stimulus bill allowed for billing companies to be a part of the incentive program either by way of a no interest loan or some other deal. My clients are all for moving forward on this but hesitate to even pay the low fee for the license they need to have it available to them.
    Can you give me any further information on this.

  3. Kelly Randell says:

    I’m interested in knowing about this as well. Seems everyone is hesitant about which way to go when it comes to whether or not a provider looks to EMR, EHR, etc. software either from the software manufacturer or through their biller. As I understand it, each provider will receive the $$$ to obtain EHR if they so install it where they are. As I understand it, from several well known members of my blog community, President Obama exercised along with Congress the desire to have all providers in the EHR business and sooner rather than later. I agree, we need to do something, but for all those who COULD benefit have been overlooked by the naive and ill-informed representatives we have in office. I take back the naive part. There’s cake under the icing somewhere.

  4. Diane says:

    In my opinion, EMR is Big Brother sticking his nose in my business. I want the right to determine, for myself who has access to my medical records and who doesn’t. The thougth of all my medical history being accessible to anyone in the health care profession who cares to look, including my co-workers, is scary!

  5. Kris says:

    You need to be a little more positive here. HIPPA protects your rights. If you have co-workers who would look at your records, then I would change jobs. Having an universal EMR may save your life someday!

  6. Mary Ellen says:

    Use of EMR is essential in streamlining patient care and controlling healthcare costs. They provide access to patient history, test results and office notes from multiple providers/specialists in one easy to share resource. It helps physicians share the information imperative for continiuty of care, patient safety and control of costs from duplication of effort. Physician collaboration of treatment options is timely and patients are the ones who benefit from their use. Access to EMR information helps coders by providing access to supporting documentation, insurance information, authorizations & referrals. Think of the time wasted calling and faxing for records, not to mention mailing appeals to insurance and waiting weeks/months for a response or payment. Think of all the resources wasted with paper records – printing, copying, faxing, mailing, filing, shredding – time, office supplies, electricity & staff! Healthcare IT has made all our jobs easier, faster and less expensive. Privacy concerns are also addressed and no more prevalent than paper record abuse – in fact, your financial records are in the “hands” of less people since more information is processed without a”actual person” reviewing every word. EMRs save time, money, lives and create new jobs – and those are the best reasons to adopt this technology.

  7. Molly says:

    I thought I heard a while ago that Medicare is eventually going to require providers (contracted w/Medicare) to implement EMRs. Is this right?

  8. Merri says:

    Has anyone heard, is there going to be an incentive/stimulus offerd to practices that have already purchased and are using EHR/EMR?
    It seems only fair to re-imburse those who have helped to pave the way and have been strong influences in the implementation and fine tuning of the software.
    I will let you all know that the technical support contract alone for the EHR software that our practice uses is $26,000.00 per year and the Practice Management management software that interfaces with the EHR support is $16,000.00 per year. Total $40,000.00 per year in support and this does not include any hardware or initial costs of the software.
    With each bell and whistle that you add to your sofware there is an increase of the support costs that go along with the software.
    The practice I work for has 5 private practice physicians and 28 employees.
    So any incentive the physician could re-coup would be appreciated.

  9. Judy says:

    Diane, there are filters on who can and cannot look at your medical records. Where I work at you must log-in and give verification as to why you need to look at anybody’s records! Get with it Diane, there are checks and balances!

  10. Merritt says:

    We have had EMR since 2003, and it does help.
    EMR will never be universal as there are many different vendors and EMR products whose software is not compatible. The stimulus package writers are in love with the idea of EMR, but paying physicians to institute one of a variety of different EMR’s that do not communicate with each other is a great example of the futility of government trying to influence just a small part of healthcare.
    The more government interference, the less efficient we will be. If you are unsure this is true, get a job at a V.A. hospital.

  11. Lynda says:

    What about the small practices where it is only one doctor and 3 employees. The cost of EMR is way too expensive for the small practices. I don’t think I like the fact that someday the govt will decide this and that we will not have a choice.

  12. Joanie says:

    Your medical treatments can also be tracked electronically by the federal system according to what was in this stimulus bill on Feb. 9. Tom Daschle who was originally chosen by Obama to head HHS wrote a book in 2008 called “Critical: What We Can Do About the Health-Care Crisis.” In Daschle’s book, he praises Europeans for being more willing to accept “hopeless diagnosis” and “forgo experimental treatments” and he chastises Americans for expecting too much from the healthcare system. Daschle states healthcare reform will not be pain free. Seniors should be more willing to accept conditions that come with age instead of treating them. Treatments are approved using a formula that divides the cost of the treatment by the # of yrs the patient is likely to benefit.
    There is too much to write about this. You can look this up for yourself and see that there may be hidden agendas by this govt. to get medical records in electronic format & punish those who don’t. This is only the beginning.

  13. Mary Ellen says:

    Wow Joanie … First, all your medical care and treatments are already electronically tracked – by billing systems, insurances, medical records, pharmacies and every other medical care supplier in the world – not just the US government. You don’t have to have Medicare or Medicaid to be electroncially
    tracked – you are already being counted in a million ways whether you know it or not. If you have any doubt, request your medical record from your local provider – I bet you get a computer printout. There are very few providers still using paper records and ledgers and mailing paper claims to insurances. The Stimulus Bill did not do this – it has been happening for decades.
    Second, Daschle is not in Obama’s cabinet but his evaluation of situation is dead on accurate. There is a big difference between having realistic hope of recovery and giving unrealistic expectations of hope for recovery at any expense. Medical ethics is not a new concept. Remember we all die someday, but most Americans get to chose how to live. Other peoples of the world are more pragmatic about their healthcare and the role of their government in life decisions. We are still land of the free and home of the brave… we can have as many children as we want, see any type of provider we want and seek nearly any medical treatment we want -far more treatment options than are available in other parts of the world – even our closest neighbors in Canada or Mexico. Government may not pay for every treatment but they are not denying us hope either.

  14. Joanne says:

    This is in response to Merritt’s 2/19 post. She believes EMR will never be universal. If you read the stimulus package, yes it will be. The Dept of Health and Human Svcs has been ordered to develop and publish universal standards for EMR as part of the stimulus package by the end of 2010. This is why I believe the government is not helping providers out with the cost until 2011. They aren’t going to help providers implement EMR that is not government approved. Going by what’s in the Edgeblast, only providers who initially implement EMR in either 2011 or 2012 will get monetary help from the government. Those who adopt EMR before 2011 or after 2012 will be on their own.

  15. Michael Brophy says:

    I’ve been told by Lytec reseller that their are lists of approved EMR systems and computes. This was a little tough for me as I just bought some new PowerSpec computers to run the new Lyted on; runs fine but I understand Dell is the one on the list (as well as HP..) but not PowerSpec from Micro Center. Anyone one know of approved vendors. We do Medicare and medicaid but it would be nice to know if there are lower cutoff billings or percentages so that we can feel comfortable that we aren’t going to make an unreimbursed investment which we otherwise wouldn’t go to.

  16. Bill says:

    To Diane on Feb 19th: I’m a software developer working on a new EHR for hospitals. For what it’s worth, the specifications we must meet to be certified include providing for many controls over use and access of a patient’s information by that patient. You should be able, through electronic consents, to limit access (or not) to your records. As another person commented, however, I can also agree, if this huge new technological advance works, your records can be available during an emergency away from home, and in any case will significantly reduce the chance of errors during your treatment in a hospital.
    To other commenters, even single physician practices (as long as they accept Medicare/Medicaid payments) will receive substantial assistance, to the tune of over $40,000 per physician for the EMR.