On December 30, 2009, the Centers for Medicare and Medicaid Services (CMS) issued a notice of proposed rulemaking that outlines provisions governing the Medicare and Medicaid electronic health record incentive programs, including a proposed definition for the central concept of “meaningful use” of electronic health records (EHR) technology.   This proposed rule is scheduled for publication in the Federal Register on January 13, 2010, and public comments are due 60 days thereafter.

EHR Incentives

The American Recovery and Reinvestment Act of 2009 (ARRA), specifically Title IV of Division B, establishes incentive payments rewarding eligible professionals and hospitals that adopt and “meaningfully use” EHR technology.   ARRA also provides penalties in the form of payment reductions for professionals and hospitals that do not timely become meaningful users.

Meaningful Use Defined

To receive Medicare and Medicaid incentive payments, an eligible professional or hospital must demonstrate meaningful use of certified EHR technology. An eligible professional or hospital will be deemed to be a meaningful EHR user if the user: (i) demonstrates use of certified EHR technology in a meaningful manner (e.g., electronic prescribing); (ii) demonstrates to the satisfaction of the Secretary of the Department of Health and Human Services (HHS) that certified EHR technology is connected in a manner that provides for the electronic exchange of health information to improve the quality of health care; and (iii) submits clinical quality and other measures selected by the Secretary of HHS. 

Phased Approach

Reflecting both public and industry input, CMS has adopted a phased approach for meaningful use, referring to the initial meaningful criteria as “Stage One”. The focuses for Stage One meaningful use criteria include: (1) capturing health information electronically in a coded format; (2) using gathered information “to track key clinical conditions and communicate that information for care coordination purposes”; (3) implementing clinical decision support tools “to facilitate disease and medication management”; and (4) reporting both clinical quality measures and public health information. CMS has also proposed that when a Medicare provider qualifies as a “meaningful user,” it would also be deemed a meaningful EHR user under the Medicaid EHR incentive program.
In Stage 2, the meaningful use criteria are anticipated to heighten quality management requirements and move to the most structured format for information exchange. Stage 3 is expected to target progressively more systemic health care improvements as the measures for achieving meaningful use.

Criteria for Meaningful Use

The proposed rule distinguishes between “meaningful use” by eligible professionals and hospitals by establishing 25 objectives and measures applicable to professionals participating in Medicare fee-for-service and 23 objectives and measures applicable to hospitals and critical access hospitals. A professional or hospital must meet all of the applicable criteria to receive incentive payments.

Reporting Meaningful Use

A formal reporting process for demonstrating meaningful use will be the subject of future rulemaking. For now, we know that providers will need to attest to CMS (in the case of Medicare) or to the state (in the case of Medicaid) their compliance with the meaningful use criteria for the 2011 payment year. CMS has expressed hope that by the 2012 payment year, “we will have completed the necessary steps to have the capacity to receive electronically information on clinical quality measures from EHRs including the promulgation of technical specifications for EHR vendors to use for obtaining certification of their systems.” Therefore, for the 2012 payment year, eligible professionals and hospitals are expected to submit information electronically.

Providers and Hospital are Eligible for the Incentives  

Professionals eligible to participate in the Medicare program include (i) doctors of medicine or osteopathy, (ii) doctors of dental surgery or of dental medicine, (iii) doctors of podiatric medicine, (iv) doctors of optometry, and (v) chiropractors. The categories of eligible professionals in the Medicaid program vary somewhat in that the list includes not only physicians (M.D. and D.O.) and dentists but also certified nurse midwives, nurse practitioners, and physician assistants performing services in federally qualified health centers and rural health clinics. In general, hospital-based professionals will not be eligible for incentive payments.   
A hospital will be eligible for Medicare incentive payments if it is either a subsection (d) hospital (as defined in section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) meaning that Medicare pays the hospital for inpatient services on a prospective payment basis or a critical access hospital. Consequently, children’s, cancer, rehabilitation and long term care hospitals are ineligible. The Medicaid program, on the other hand, allows only acute care and children’s hospitals to be eligible for incentive payments and imposes Medicaid patient volume requirements on potentially eligible hospitals.
While hospitals may participate in both Medicare and Medicaid incentive programs, professionals must select either the Medicare or the Medicaid incentive program.
Judd Harwood is an associate in the firm’s Health Law and Corporate & Securities Practice Groups. Mr. Harwood’s practice focuses on healthcare regulatory compliance and the representation of hospitals and other healthcare entities in connection with mergers, acquisitions, joint ventures and other transactions matters.

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