Concepts and Definitions
Qualified Electronic Health Record: ARRA defines this as an electronic health record of health related information on an individual that has patient demographic and clinical health information, such as medical history and problem lists. The system should also have the capacity to provide clinical decision support and to support physician order entry. In addition it should be able to capture and query quality information and have the capacity to exchange and integrate electronic health information from other sources.
Health Information Technology: ARRA defines this as hardware, software, integrated technologies and related licenses, intellectual property, upgrades, and packaged solutions sold as services that are specifically designed for use by healthcare entities for the electronic creation, maintenance, or exchange of health information
Certified EHR Technology: ARRA defines this as a qualified electronic health record that is certified according to the process developed by the National Institute of Standards and Technology (NIST) and that is applicable to the type of record involved, such as an ambulatory electronic health record or an inpatient hospital electronic health record.
Meaningful EHR User: According to ARRA, providers are meaningful users if (1) they use certified EHR technology in a meaningful manner (for eligible professionals this must include e-prescribing), (2) such certified technology is connected in a manner that provides for the electronic exchange of information to improve the quality of care, such as promoting care coordination, and (3) using the certified EHR technology the provider submits information on such clinical quality measures as selected by the Secretary.
In July, 2009, the HIT Policy Committee issued recommendations for what it should mean to “use certified EHR technology in a meaningful way:” (see Meaningful Use Matrix in Resources section). CMS is expected to issue final meaningful EHR use requirements by April, 2010.
Certified EHR Cost: Critical Access Hospitals will get reimbursed based on their “certified EHR costs.” CMS is expected to issue a “certified EHR cost” definition by April, 2010.
Medicare Incentives: Eligible Professionals (Physicians)
Who is an Eligible Professional?
An Eligible Professional is a physician as defined in Section 1861 (r) of the Social Security Act: Doctor of Medicine or Osteopathy, Doctor of Dental Surgery or of Dental Medicine, Doctor of Podiatric Medicine, Doctor of Optometry, Chiropractor.
Hospital-based physicians who furnish substantially all services in a hospital setting and use the facilities and equipment of the hospital are ineligible to receive funds under this provision. CMS is expected to issue clarification on what it means to be “hospital-based” by April, 2010.
Description of Incentive Payment and Penalty Schedules
Eligible professionals that are meaningful users of certified EHR technology will receive 75% of their estimated allowed Medicare charges for all covered professional services during the year, but limited to the following maximums over a five year period:
Year1: $15,000; Year 2: $12,000; Year 3: $8,000; Year 4: $4,000; and Year 5: $2,000
The first eligible year is 2011, and no payments will be made after 2016. If the eligible professional is a meaningful user in 2011 or 2012, the first year incentive payment is increased to $18,000.
Eligible Professionals who are meaningful users by 2011 or 2012 can receive a maximum of $44,000. Those that are meaningful users in 2013 can receive a maximum of $39,000. Those that are meaningful users in 2014 can receive a maximum of $24,000.
If the eligible professional is practicing in a Health Professional Shortage Area, then he or she can receive a 10% increase in incentive payments
Eligible Professionals not implementing by 2014 are not eligible for incentives. Those not implemented in 2015 will begin to see penalties, with a 1% fee schedule reduction in 2015, 2% in 2016, and 3% in 2017.
The Secretary will decide whether to pay in a lump sum or in installments, and will establish rules for payment of professionals working in multiple practices.
Hardship exceptions will be made on a case-by-case basis as determined by the Secretary, but in no case can last for more than 5 years.
Medicare Incentives: Prospective Payment System (PPS) Hospitals
Description of Incentive Payment Formula:
PPS hospitals that are meaningful users of certified EHR technology will receive CMS incentive payments based on the following formula:
($2 Million Base Payment + Discharge Related Payment) x Medicare Share
The discharge related payment is $200 for each discharge starting with the hospital’s 1150th discharge and continuing through its 23,000th discharge.
The Medicare share is calculated as indicated below:
The # of inpatient days attributable to Part A and Part C (Medicare Advantage)
Divided by
Total # of inpatient days x the % of the hospital’s total charges that are not charity care
Description of Incentive Payment and Penalty Schedules:
PPS hospitals that are meaningful users of electronic health records will receive incentive payments that phase down over four years. PPS Hospitals that are meaningful users starting in 2011, 2012, or 2013 will receive the full amount of the payment formula the first year, 75% the second year, 50% the third year, and 25% the fourth year. Hospitals that are meaningful users starting in 2014 will get three years of payments starting at the 75% level. Hospitals that are meaningful users starting in 2015 will get two years of payments starting at the 50% level. Hospitals that are not meaningful users by 2015 will receive no payments.
PPS hospitals that are not meaningful users by 2015 will see three quarters of their market basket update reduced by 33.33 percent. This reduction will go to 66.66 percent in 2016, and 100 percent in 2017 and after.
Hardship exceptions will be made on a case-by-case basis as determined by the Secretary, but in no case can last for more than 5 years.
Medicare Incentives: Critical Access Hospitals
Description of Incentive Payment Formula:
Critical Access Hospitals (CAHs) that are Meaningful EHR Users by 2011 are eligible for 4 years of enhanced Medicare payment with immediate full depreciation of “certified EHR costs”, including undepreciated costs from previous years.
The CAH enhanced payment will be based on the following formula:
Total certified EHR Costs x (Medicare Share + 20%)
The Medicare share is calculated as indicated below:
The # of inpatient days attributable to Part A and Part C (Medicare Advantage)
Divided by
Total # of inpatient days x the % of the hospital’s total charges that are not charity care
Description of Incentive Payment and Penalty Schedules:
Critical Access Hospitals that are meaningful users of electronic health records will receive payments using this formula starting in 2011. Payments cannot be made using this formula for more than four consecutive years, and no payments will be made after 2015.
CAHs that are not meaningful users by 2015 will have their Medicare payments reduced to 100.66% of cost. The penalty will go to 100.33% of cost in 2016 and then 100% of cost in 2017 and after.
Hardship exceptions will be made on a case-by-case basis as determined by the Secretary, but in no case can last for more than 5 years.
Medicaid Incentives: Eligible Professionals (Physicians)
Who is an Eligible Professional and a Medicaid Provider?
A Medicaid eligible professional is a physician, dentist, certified nurse midwife, nurse practitioner, and physician assistant (insofar as the assistant is practicing in a rural health clinic that is led by a physician assistant or is practicing in a Federally Qualified Health Center that is so led).
Eligible professionals are eligible for either the Medicare or the Medicaid incentives but not both.
A Medicaid provider is an eligible professional who: (1) is not hospital-based and has at least 30% of the professional’s patient volume attributable to Medicaid patients, (2) is a not hospital-based pediatrician and has at least 20% of the professional’s patient volume attributable to Medicaid patients, or (3) practices predominantly in a FQHC or a rural health clinic and has at least 30% of the professional’s volume attributable to needy (Medicaid, sliding fee, uncompensated care, or Title XXI) individuals.
Description of Incentive Payments:
Payments are to Medicaid providers and cover up to 85% of net average allowable costs to adopt and operate EHR Technology.
Average allowable costs for the first year are to be the average costs expended for the implementation or upgrade of an EHR system not to exceed $25 thousand. The first year cannot occur after 2016. Subsequent years are to be calculated at 85% of $10 thousand and cannot occur after 2021 or for longer than 5 years
The term “average allowable costs,” which is what the Year 1 payment will be based on, means the average costs for the purchase and initial implementation or upgrade of such technology and support services including training that is necessary for the adoption and initial operation of such technology.
For an eligible pediatrician, the incentive will be two-thirds of what the other Medicaid providers are eligible to receive.
In order to receive payment, for the first year of payment the Medicaid provider must demonstrate that it is engaged in efforts to adopt, implement, or upgrade certified EHR technology. For years of payment after year 1, the Medicaid provider must demonstrate meaningful use of certified EHR technology through a means that is approved by the State and acceptable to the Secretary.
Medicaid Incentives: Hospitals
What is an Eligible Hospital?
Hospitals eligible for the Medicaid incentive are all Children’s Hospitals, and Acute Care Hospitals (including CAHs) with at least 10% Medicaid Patient Volume
Eligible Hospitals can receive BOTH Medicare and Medicaid incentives.
Description of Incentive Payments:
The total incentive payment, or “overall hospital EHR amount,” is defined as the sum of 4 years of incentive payments using the Medicare formula (except with Medicaid Share):
($2 Million Base Payment + Discharge Related Payment) x Medicaid Share
The payment schedule uses the following transition factor for the 4 years of payments to determine the overall hospital EHR amount:
Year 1 of adoption = 1 x ($2M Base + Discharge Payment) x Medicaid Share
Year 2 of adoption = ¾ x ($2M Base + Discharge Payment) x Medicaid Share
Year 3 of adoption = ½ x ($2M Base + Discharge Payment) x Medicaid Share
Year 4 of adoption = ¼ x ($2M Base + Discharge Payment) x Medicaid Share
Payments are made over 3-6 years depending on the state. No payment can exceed 50 percent of the overall 4 year amount in any year. No consecutive payments can exceed 90 percent of the overall amount. No payments can be made after 2016 unless the hospital received payment in the previous year.
Creation of Technology-Related Committees
ARRA creates an HIT Policy Committee to make policy recommendations to the National Coordinator relating to the implementation of a nationwide health information technology infrastructure.
ARRA creates a HIT Standards Committee to recommend to the National Coordinator standards, implementation specifications, and certification criteria for the electronic exchange and use of health information.
Creation of Research and Technical Assistance Centers
ARRA directs the Secretary to create a HIT Research Center to provide technical assistance, best practices, and accelerate efforts to adopt HIT.
ARRA creates an HIT Regional Extension Center program to assist providers in the adoption and implementation of certified EHRs.
Technology-Related Grants
ARRA indicates that the Secretary may award planning and implementation grants to States to expand electronic exchange and use of health information.
ARRA indicates that the National Coordinator may award grants to States or Indian tribes for loan programs for the purchase of certified EHR technology.
ARRA creates competitive grants designed for demonstration projects to integrate EHR technology into the clinical education of health professionals
Broadband Technology Program
ARRA establishes the Broadband Technology Opportunities Program to award $4.7 billion in grants to States and other entities to expand broadband service infrastructure, especially to underserved areas.
ARRA authorizes $2.5 Billion for broadband loans through the Distance Learning, Telemedicine, and Broadband Program.
Privacy and Security Provisions
Business Associate Expansion:
HIPAA Privacy and Security Provisions will apply to Business Associates in the same manner that they apply to a covered entity.
Breach Notification Rules:
Covered Entities must notify individuals within sixty days if unsecured PHI has been disclosed as a result of a breach.
If breaches affect more than 500 individuals, the Covered Entity must immediately notify the HHS Secretary.
Disclosure of Electronic Health Information:
Covered Entities using EHRs must account for the past three years of disclosures of PHI to anyone requesting such disclosure. The Secretary will issue regulations on what information will need to be collected about each disclosure.
Breach Notification for Vendors of Personal Health Records (PHRs):
PHR vendors must notify individuals and the Federal Trade Commission of breaches of unsecured PHR identifiable information.
Expansion of Business Associate Contracts:
Organizations that access patient health information from Covered Entities, such as Health Information Exchanges, must have written contracts with the Covered Entities and be treated like Business Associates.
Improved Enforcement:
The Secretary must investigate and can apply civil penalties if HIPAA violation is due to willful neglect.
Audits, Studies and Reports:
The Secretary shall provide for periodic audits to ensure Covered Entity and Business Associate compliance, and will report annually to Congress on compliance, complaints, resolutions, audits, etc.
