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Tuesday, July 19, 2011

Hospitals Get Incentives for Electronic Health Records

Posted by Paul O'Grady

The Medicare and Medicaid EHR Incentive Programs provide incentive payments to eligible professionals, eligible hospitals and critical access hospitals (CAHs) as they adopt, implement, upgrade or demonstrate meaningful use of certified EHR technology. Guidelines to help assure that the right technology is in place and that critical compliance dates are on the calendar can help eligible providers understand how to more easily follow the program.

The Federal government wants to help health care providers improve the quality, safety and efficiency of patient health care through a program that promotes electronic record keeping. The incentive for Medicare providers is up to $44,000 in payments to individuals and more than $2 million for hospitals.

Electronic record-keeping has been a goal of the government for many years, as using electronic health records improves clinical care by better maintaining patients’ health information.

The government approved the Medicare and Medicaid Electronic Health Records Incentive Program under The American Recovery and Reinvestment Act of 2009. Guidelines to help assure that the right technology is in place and that critical compliance dates are on the calendar can help eligible providers understand how to more easily follow the program.

Who is Eligible and Payment Structure
Participants qualify if they are an ‘eligible professional or hospital’ and if they are engaged in ‘meaningful use’ of EHR technology.

The Medicare program is part of the Federal incentive program while a separate Medicaid program is also available when adopted by the states. For the purposes of our overview, we will limit our scope to just the Medicare requirements.

Eligible professionals are doctors of medicine and osteopathy, dentists, podiatrists, optometrists and chiropractors. Hospitals are eligible if they are “subsection (d) hospitals” in the 50 states or DC that are paid under the Inpatient Prospective Payment System (IPPS); Critical Access hospitals (CAHs); of Medicare Advantage (MA-Affiliated) hospitals.

Medical groups with several doctors can leverage their groups’ numbers because each doctor can apply for and is eligible for the incentive.

Hospital-based eligible professionals are not eligible for the incentive payments. A professional is considered hospital based if 90% of more of his or her services are performed in a hospital inpatient (Place of service code 21) or emergency room (Place of service code 23) setting.

The other important criteria for successfully participating in the program is demonstrating meaningful use and showing quality.

“Meaningful use” means providers need to show they’re using certified EHR technology in ways that can be measured for quality and quantity. Eligible professionals, eligible hospitals, and critical access hospitals (CAHs) must successfully demonstrate meaningful use every year they participate in the program. That means:

  • The use of a certified EHR in a meaningful manner, such as e-prescribing.
  • The use of certified EHR technology for electronic exchange of health information to improve quality of health care.The use of certified EHR technology to submit clinical quality and other measures.

The criteria for meaningful use will be staged in three steps over the course of the next five years.

Stage 1 (2011 and 2012) sets the baseline for electronic data capture and information sharing with a core set and a menu set of objectives. For more information, visit: or

Stage 2 (expected to be implemented in 2013) and Stage 3 (expected to be implemented in 2015) will continue to expand on this baseline and be developed through future rule making.

Finally, to demonstrate meaningful use successfully, eligible professionals and hospitals must also report clinical quality measures.

Quality translates to objectives, and those objectives are tied to reduction of errors, availability of records and data, reminders and alerts, clinical decision and e-prescribing.

  • Eligible professionals must report on 6 total clinical quality measures: 3 required core measures (substituting alternate core measures where necessary) and 3 additional measures (selected from a set of 38 clinical quality measures).
  • Eligible hospitals and CAHs must report on all 15 of their clinical quality measures. For more information, please visit:

Physician groups can help meet these two standards with the correct technology. The technology a provider chooses needs to support a system that captures and reports data that shows meaningful use and quality. In addition to correctly billing, the infrastructure should also suppose converting patient records from an old system to a new one. Physicians don’t have to build it from scratch, but should find vendors who can support a practice’s or facilities’ existing technology to complete meaningful use.

For eligible professionals, the maximum incentive amount of $44,000 can be received over five years if implemented in 2011 and 2012, but the maximum incentive will decrease steadily in 2013 and 2014. The annual limit is equal to 75 percent of an eligible party’s Medicare physician fee schedule. Incentive payments to eligible hospitals and CAHs may begin as early as 2011 and are based on a number of factors, beginning with a $2 million base payment. Hospitals can begin receiving EHR incentive payments in any year from FY 2011 to FY 2015, but payments will decrease for hospitals that start receiving payments in 2014 and later. For more on the payment schedule, visit

Physicians and hospitals also have to consider timing and deadlines. They need to be in the program for 90 days in the first year of participation and for a full year in each subsequent year in order to be considered compliant and receive the incentives.

The reporting period for eligible professionals must fall within the calendar year, while the reporting period for eligible hospitals and critical access hospitals must fall during the Federal fiscal year, which ends September 30. To be eligible to receive a payment for 2011, eligible hospitals must begin their 90 day reporting period to demonstrate meaningful use by July 3, 2011 and eligible professionals must begin their 90 day reporting period beginning October 1, 2011.

They must be aware that there are consequences to starting late and not having the right technology in place. Starting in 2015, an eligible physician who does not successfully demonstrate meaningful use of certified EHR technology will see a reduction in Medicare payments.

Find out more information on this incentive visit:

Virginia Choy is a Senior Manager in the Tax Department at Armanino McKenna and can answer any questions regarding this article. Contact Virginia at 925.790.2621 or via email at

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