CMS FINALIZES REQUIREMENTS FOR THE MEDICARE ELECTRONIC HEALTH RECORDS (EHR) INCENTIVE PROGRAM

The Centers for Medicare & Medicaid Services (CMS) today announced a final rule to implement the provisions of the American Recovery and Reinvestment Act of 2009 (Recovery Act) that provide incentive payments to providers for the meaningful use of certified EHR technology.  The Medicare EHR incentive program will provide incentive payments to eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) that are meaningful users of certified EHRs. The Medicaid EHR incentive program, in the initial year, will provide incentive payments to eligible professionals and hospitals for efforts to adopt, implement, upgrade or successfully demonstrate meaningful use of certified EHR technology.

This fact sheet focuses on the Medicare EHR Incentive Program.

The Office of the National Coordinator for Health Information Technology (ONC) will be issuing a closely related final rule that completes the Secretary’s adoption of an initial set of standards, implementation specifications, and certification criteria for EHRs.  ONC also issued a final rule establishing a temporary certification program for health IT on June 24, 2010 and anticipates issuing a final rule for establishing a permanent certification program later this year.    Providers must meaningfully use such certified EHR technology to qualify as meaningful users in these incentive programs.

MEDICARE ELIGIBLE PROFESSIONALS (EPs)

A Medicare EP is a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor, who is legally authorized to practice under state law.  A qualifying EP is one who successfully demonstrates meaningful use for the EHR reporting period.

Hospital-based EPs who furnish substantially all their services in a “hospital setting” are not eligible for incentive payments.  The Continuing Extension Act of 2010 modified the definition of a hospital-based EP as performing substantially all of their services in an inpatient hospital setting or emergency room. The rule has been updated to reflect this. Hospital-based EPs are now defined as EPs who furnish 90 percent or more of their allowed services in a hospital inpatient setting, or hospital emergency department.

A qualifying EP can receive EHR incentive payments for up to five years with payments beginning as early as 2011. In general, the maximum amount of total incentive payments that an EP can receive under the Medicare program is $44,000.

·     For the first year for which an EP applies for and receives an incentive payment, the EHR Reporting Period is 90 days for any continuous period beginning and ending within the year. For every year after the first payment year, the EHR reporting period is the entire year.

·     A Payment Year equals a Calendar Year (CY). Incentive payments for this program end after 2016. 

·     A qualifying EP will receive an incentive payment equal to 75 percent of Medicare allowable charges for covered professional services furnished by the EP in a payment year, subject to maximum payments.

·     In general, a qualifying EP can receive an annual incentive payment as high as $18,000 if their first payment year is 2011 or 2012. Otherwise, the annual incentive payment limits in the first, second, third, fourth, and fifth years are $15,000, $12,000, $8,000, $4000, and $2,000 respectively.  In general, the maximum amount of total incentive payments that an EP can receive under the Medicare program is $44,000. 

·     An EP who predominantly furnishes services in a geographic Health Professional Shortage Area (HPSA) is eligible for a 10 percent increase in the maximum incentive payment amount.  The maximum amount of total incentive payments that such an EP can receive under the Medicare program is $48,400.

·     Payment calculations for EPs who first demonstrate meaningful use in 2014 will be made as if they began meaningful use in 2013. (That is, if an EP were to first demonstrate meaningful use in 2014, the EP would receive $12,000 for that year, the second year’s amount as if they had begun in 2013).  The last year for which an EP can begin receiving incentive payments in this program is 2014.  The total maximum EHR incentive payment amounts for Medicare EPs is outlined in the table below:

·     EPs who meet the eligibility requirements for both the Medicare and Medicaid EHR Incentive Programs may participate in only one program, and must designate the program in which they would like to participate. After a payment is made, EPs will be allowed to change their program selection once before 2015.

·     Payments under Medicare will be disbursed through a single payment contractor to the Tax Identification Number (TIN) provided by the qualifying EP.

·     Provided they meet certain conditions, EPs can reassign the entire amount of their incentive payment to one employer or entity.

·     Incentive payments also will be made to qualifying Medicare Advantage (MA) organizations for the adoption and meaningful use of EHR technology by their affiliated EPs.

·     MA-Affiliated EPs must furnish, on average, at least 20 hours/week of patient-care services and be employed by the qualifying MA organization; -or must be employed by, or be a partner of, an entity that through contract with the qualifying MA organization furnishes at least 80 percent of the entity’s Medicare patient care services to enrollees of the qualifying MA organization.

·     EPs who do not successfully demonstrate meaningful use of certified EHR technology will be subject to payment adjustments for their covered professional services beginning in 2015. MA organizations will also be subject to payment adjustments if their affiliated EPs do not demonstrate meaningful use of certified EHR technology beginning in 2015.

MEDICARE ELIGIBLE HOSPITALS An eligible hospital for Medicare incentive payments is a “subsection (d) hospital” that is paid under the hospital inpatient prospective payment system (IPPS). Hospitals must be located in one of the 50 states or the District of Columbia .

·     Eligible hospitals may receive incentive payments for up to four years, beginning with fiscal year beginning 2011 (October 1, 2010 – September 30, 2011), provided they successfully demonstrate meaningful use of certified EHR technology.

·     Eligible hospitals may qualify to receive payments from both the Medicare and Medicaid EHR Incentive Programs.

·     A qualifying hospital is an eligible hospital that successfully demonstrates meaningful use of certified EHR technology for the EHR reporting period during a payment year. A Payment Year is a Federal Fiscal Year (FFY).

·     For the first year an eligible hospital demonstrates meaningful use of certified EHR technology, the EHR Reporting Period equals any 90 continuous days beginning and ending within the year. For every year thereafter, the EHR reporting period is the entire year.

·     Eligible hospitals may qualify to receive incentive payments for up to four years beginning in FY 2011.  The last year for which an eligible hospital can begin receiving incentive payments for this program is 2015.

·     The incentive payment for each eligible hospital will be calculated based on

1.      An initial amount which is the sum of a $2 million base amount and the product of a per discharge amount (of $200) and the number of discharges (for discharges between 1150 and 23,000 discharges) ;

2.      the Medicare share which has as its numerator Medicare fee-for-service and managed care acute-care inpatient bed-days and as its denominator the product of total acute care inpatient days and the percentage of hospital’s total charges that are not attributed to charity care; and

            (3) a transition factor which phases down the incentive payments over the four year period.

Incentive Payment Calculation for Eligible Hospitals:

·     Incentive Payment Amount equals [Initial Amount] x [Medicare Share] x [Transition Factor]

·     o   Initial Amount equals $2,000,000 + [$200 per discharge for the 1,150^th – 23,000^th discharge]

·     o   Medicare Share equals Medicare/(Total*Charges)

Medicare equals [number of Acute Care Inpatient Bed Days for Beneficiaries Where Payment May be Made under Part A] plus [number of Acute Care Inpatient Bed Days for MA Beneficiaries]

Total equals [number of Total Acute Care Inpatient Bed Days]

Charges equals [Total Charges minus Charges for Charity Care*] divided by [Total Charges]

*If data on charity care are not available, then the Secretary will use data on uncompensated care as a proxy.  If the proxy data are also not available, then “Charges” will be equal to 1.

·     Transition Factor