MAY, 2009: The American Recovery and Reinvestment Act (HITECH) and physician incentives to purchase an EHR
The American Recovery and Reinvestment Act of 2009 (Known as the Recovery Act, ARRA, HITECH, or the Federal Stimulus Package), touches almost every aspect of the U.S Health care system. The most profound impact on doctors and patients will result from the $19 billion program to promote the adoption and use of health information technology (HIT) and especially electronic health records (EHRs). HITECH is a far-reaching, complex piece of legislation, and key details of how the money will be distributed remain undecided. The Office of the National Coordinator for Health Information Technology (ONCHIT), working with the Secretary of HHS Kathleen Sebelius, is tasked with establishing the required standards and the overall development and nationwide implementation of a health information technology infrastructure. The ONCHIT has two goals – patient focused healthcare and population health – the foundation of which is supported by four objectives: Interoperability, Adoption, Privacy and Security, and Collaborative Governance.
Overview of HITECH
- HITECH will require doctors to demonstrate "meaningful use" of a “certified” EHR which uses e-prescription, electronically exchanges information (is interoperable), and submits clinical quality measures.
- Medicare is offering physicians up to $44,000 in incentives: Starting in 2011, physicians can receive extra Medicare payments. These payments can total as much as $18,000 in the first year in the case of physicians who adopt in 2011 or 2012, with at least $15,000 for physicians who adopt in 2013 and a slightly lower amount for those who do so in 2014; incentives are gradually reduced and then ended in 2016. Thus, physicians demonstrating meaningful use starting in 2011 could collect $44,000 over 5 years. Waiting until 2013 would result in a maximum bonus of $27,000 over 3 years. Experts estimate that the present cost of purchasing, installing, and implementing an electronic-records system in a medical office at about $40,000.
- Medicaid is offering physicians up to $65,000 in incentives: The law provides subsidies through the Medicaid program for eligible physicians with high volumes of Medicaid patients (30% of their patients and 20% for pediatricians). Doctors must choose whether to participate in the Medicaid or Medicare bonus program — they cannot receive awards from both. For the Medicaid program physicians may be able to receive up to $25,000 in year-one Medicaid incentive payments to help offset some of the cost of acquiring the technology. After receiving the start-up funding, physicians will be eligible to receive up to $10,000 annually (a total of $65,000 from Medicaid) for four additional years to support the "meaningful use" of a “certified” EHR.
- Medicare and Hospitals: Hospitals participating in Medicare also stand to benefit. Meaningful use of EHRs in 2011 will earn hospitals a one-time bonus payment of $2 million plus an add-on to the Medicare fee based on the diagnosis-related group (DRG). The add-on, which would phase out over a 4-year period, would apply to every admission up to a (yet-to-be-designated) maximum amount. Children's hospitals and other hospitals with a high volume of Medicaid patients can participate in a Medicaid incentive program instead.
- Penalties: HITECH also threatens financial penalties to spur adoption. Physicians who are not using EHRs meaningfully by 2015 will lose 1% of their Medicare fees, then 2% in 2016, and 3% in 2017. Hospitals, too, face penalties for non-adoption as of 2015 — in their case, taking the form of cuts in their annual updates under the DRG system.
KEY POINTS:
- The Federal Government will provide $44k-$65k in incentive payments to providers that adopt an EHR.
- Providers must demonstrate “Meaningful Use” of a certified system.
- After the incentive period there will be penalties for not using a system.
KEY ISSUES TO THINK ABOUT:
- What existing incentive programs are in place now while we wait for the Stimulus package funds?
- How will ONCHIT and the Secretary of HHS define “Meaningful Use” which is the main requirement to receive Stimulus payments?
- What certification will they use? CCHIT?
- What will satisfy the requirement of Interoperability, the exchange of health information?