OVERVIEW OF THE STIMULUS

In February of 2009, President Obama signed The American Recovery and Reinvestment Act of 2009 (ARRA), a $787 billion economic stimulus bill.  In this bill approximately $50 billion was allocated to healthcare technology, with approximately $19 billion designated to promote health information and EHR adoption.  As part of the strategy to accomplish the latter, ARRA established programs to provide financial incentives to eligible medical providers and hospitals that implement electronic health records (EHR) and are able to demonstrate their “meaningful use.” Since then, physicians have experienced a sense of urgency to implement an electronic health record system despite the fact that the details of “how” and “when” are continuously being reviewed and updated, and that so many questions remain unanswered.

The EHR incentive is delivered through two programs: Medicare and Medicaid.  Providers must choose to qualify under only one, and therefore, must carefully evaluate their respective payer mixes in order to identify which will deliver the highest financial benefit.

Under either program, providers must meet the provider eligibility requirements, which include choosing a certified EHR and meeting the criteria for “meaningful use” – a term whose meaning is continuously being updated and amended.

THE MEDICARE PROGRAM

Under Medicare, each eligible provider who complies with all the requirements by January 2011 is entitled to a maximum subsidy of $44k.  Thereafter, reimbursements decrease based on when EHR programs are successfully implemented as well as ability to meet the “meaningful use” criteria (see table below).

Providers that practice in a recognized “physician shortage area” can qualify for an additional 10 percent subsidy.  For example, if a provider qualifies for an $18,000 subsidy, he can receive an additional $1,800 if he practices in a physician shortage area.  It should also be noted that these payments are per provider, not per practice.  Even though, cumulative subsidies are far greater, each provider must meet the EHR implementation criteria individually.  Certified nurse mid-wives, nurse practitioners and physician assistants will not qualify under the Medicare program.

Medicare payments will be based on 75% of the submitted allowable charges.  For example, a doctor’s office which has allowable Medicare charges totaling $24,000 or more will be eligible to receive the full $18,000 in allotted EHR stimulus money.  A provider with $13,350 in allowable Medicare charges would only be eligible for $10,000.   “Allowable charges” equal Medicare’s fee schedule, not the actual provider’s fee schedule (or Medicare 80% part B reimbursement).

After 2015, incentives will be replaced with penalties, and providers will see their Medicare fee schedule decrease by 1% each year.  For the year 2015, down to 99 percent of the regular fee schedule, for 2016, down to 98 percent, for 2017 and each subsequent year, down to 97 percent.
In addition, if the HHS Secretary finds that by 2018, 75 percent of eligible providers are in compliance with the EHR requirements and have demonstrated “meaningful use”, the Secretary can further reduce the fee schedule to 96 percent and then 95 percent in subsequent years but not further.

THE MEDICAID PROGRAM

The Medicaid incentive program will be monitored by the States, and differs from the Medicare program.  Eligible providers must meet minimum Medicaid patient volume percentages, and waive their rights to Medicare EHR incentive payments.  Under the Medicaid program, providers can qualify for up to 85 percent of the net average allowable costs for the purchase and initial implementation or upgrade of a certified EHR (not to exceed $25,000) including support services and training.  After acquiring an EHR and receiving the first incentive payment, eligible professionals can then subsequently receive incentive payments for up to 5 years for the net average allowable costs to operate, maintain, and use their EHR (allowable cap per year is $10K).

A Medicaid provider who has completed adopting and implementing, or upgrading to a certified EHR technology prior to 2011 must be a meaningful EHR user to receive the first payment as well as subsequent payments.

Eligible pediatricians, with at least 20 percent Medicaid patient volume, could receive up to $42,500 (which represents 2/3 of the total amount allowed), and other eligible providers, with at least 30 percent Medicaid patient volume, could receive up to $63,750 (total amount allowed), over a six-year period.   On the contrary from the Medicare program, certified nurse mid-wives, nurse practitioners and physician assistants can be recognized as eligible providers as long as they can show that 30 percent of their patients are Medicaid patients.

Medicaid must establish that eligible providers annually meet patient volume thresholds, measured by a ratio where the numerator is the total number of Medicaid patient encounters over any representative continuous 90-day period in the most recent calendar year and the denominator is all patient encounters over that same 90-day period.

PROVIDERS BEING LEFT OUT

Presently, providers that do not participate with Medicare and/or Medicaid will not be eligible for the stimulus even if they successfully implement an electronic health record.
Another requirement is that a provider must not be hospital-based.  “Hospital-based” providers are defined to include those that provide 90 percent of their Medicare or Medicaid covered services within either an inpatient hospital, outpatient hospital, or emergency room hospital. This primarily includes anesthesiologists, pathologists and emergency doctors but it may also apply to other medical specialties. 

CONCLUSION

While there is still a need for additional guidance, providers that do not satisfy the meaningful use of a certified EHR during the next several months (by the end of first quarter of next year), may miss up to $18,000 - the first year’s eligible payments for 2011.  Over the following four years (through 2015), the HIT Policy Committee is expected to increase its requirements in two year intervals.  Providers are advised to comply in early 2010 to not only qualify for the maximum stimulus funds, but also because they will likely have to meet fewer requirements than those who adopt the technology later.