In recent years there has been a push to digitize medical records in order to reduce errors and costs. Despite the push, many providers have been slow to acquire electronic systems. The technology for these systems is expensive, and the systems aren’t fully utilized because not all of them yet communicate with each other.
To rectify these problems, the Health Information Technology for Economic and Clinical Health (HITECH) Act was enacted as part of the American Recovery and Reinvestment Act of 2009. HITECH commits $19.2 billion to promote the adoption of the technology. A significant part of that amount is reserved for financial incentives to providers for implementing electronic health records (EHRs) over the next five years.
To receive the incentives, providers must participate in Medicare and Medicaid and demonstrate “meaningful use” of certified EHR technology within a designated time frame. While this sounds simple, the certification process for EHR technology has not yet been determined, leaving everyone to wonder which systems will qualify for the incentives. In addition, HITECH neither defines “meaningful use” nor provides any standards for determining what constitutes meaningful use of an EHR system. The Centers for Medicare and Medicaid Services is required to establish these criteria by the end of 2009.
In spite of these lingering questions, HITECH establishes two separate incentive payment programs, one through Medicare and the other through Medicaid. The incentives offered to hospitals under each program differ from those offered to physicians.
Medicare Incentives for Hospitals
General acute care and critical access hospitals that implement an EHR system can receive up to four years of incentives beginning in October 2010. An eligible hospital starts with a base payment of $2 million. The exact amount is then adjusted according to a formula that accounts for the number of discharges and a Medicare share factor, and phases out the payments over the four-year period. The earlier a hospital implements EHR, the greater incentive it should receive. However, Medicare will pay no incentives for systems implemented after 2015. In fact, hospitals that fail to implement EHR by October 2015 will receive a net reduction in payments.
Medicare Incentives for Physicians
Beginning in January 2011, physicians can receive up to $44,000 in incentives for implementing an EHR system by December 31, 2014. The incentives are paid over the course of five years, and physicians implementing EHR earlier receive higher payments. Physicians who do not adopt EHR by 2015 will also be subject to a reduction in fees.
Medicaid Incentives
Eligible providers include hospitals with at least a 10% Medicaid patient volume and physicians with at least a 30% Medicaid patient volume (20% for pediatricians). Providers who satisfy these minimums and implement EHR system by 2015 may receive payments from Medicaid. Each State will develop its own standards for these incentives, subject to the approval of the Department of Health and Human Services, although the formula for calculating a hospital’s Medicaid incentives will be similar to that used under Medicare. Physicians may receive up to $64,000 in Medicaid incentives over five years. Unlike hospitals, though, physicians cannot receive both Medicare and Medicaid incentives, and so must determine which program will benefit them most.
HITECH will make it difficult for any provider to avoid joining the electronic age. Providers should stay aware of the ongoing efforts to develop standards for “meaningful use” and the certification of EHR systems, and implement a qualified and meaningfully-used system as quickly as possible. Otherwise, they will miss out on incentive payments, or worse will find themselves facing Medicare payment reductions.
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