The Key to Meaningful Use: Incentives and Standards for Electronic Health Record Technology

On Dec. 30, 2009, while most Americans were distracted by the holidays and preparations for the New Year, the Centers for Medicare & Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) released two hefty, much-anticipated rules. CMS issued a proposed rule regarding electronic health record (EHR) incentives, including the infamous “meaningful use” definition, and ONC released an interim final rule regarding standards, implementation specifications and certification criteria for EHR technology. This advisory will help you, as a health care professional or a hospital, understand how you can become a meaningful user, obtain incentive payments and avoid penalties.

CMS is strongly encouraging public comments on the rules. Both rules will be published in the Federal Register on Jan. 13, 2010. Although the rule setting EHR technology criteria becomes effective 30 days later, both rules are available for comment for 60 days following publication. Prepare to make your voice heard!

I. MEANINGFUL USE

To receive Medicare and Medicaid incentive payments, an eligible professional or hospital must demonstrate meaningful use of certified EHR technology.

Health outcomes, not technology use

The government is focusing on: (i) improving quality, safety, efficiency and reducing health disparities; (ii) engaging patients and their families; (iii) improving care coordination; (iv) ensuring adequate privacy and security protections for personal health information; and (v) improving population and public health. Accordingly, the incentive programs do not focus on the adoption of health information technology (HIT) per se. The programs focus instead on how HIT can be used to further these goals; this focus is the critical concept behind “meaningful use.”

Meaningful use defined

An eligible professional or an eligible hospital requesting incentive payments will be considered a meaningful EHR user if it meets three requirements:

• Uses certified EHR technology in a meaningful manner, e.g., computerized physician order entry (CPOE);
• Participates in electronic exchange of health information to improve the quality of care; and
• Submits information on clinical quality measures to CMS (or to the state if a Medicaid program).

Phased approach—when you begin dictates your rate of progress

The criteria for meaningful use are designed to become increasingly more stringent over (at least) three stages. The longer a provider waits to implement EHR technology, the quicker the provider will need to move through the stages to continue receiving incentive payments.

Stage 1 primary objectives are to:

• Capture health information in a coded format;
• Use information to track key clinical conditions and communicate for care purposes;
• Implement clinical decision support tools; and
• Report clinical quality measures and public health information to relevant government officials.

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. The proposed rule only addresses the goals of Stage 1. Nonetheless, CMS welcomes comments on the objectives, goals and assumptions stated with respect to Stage 2.

Providers may receive incentives for meeting the Stage 1 criteria for meaningful use over a span of several years (as late as 2014). The proposed rule, however, mandates moving through the stages, at a defined pace, to reach Stage 3 by 2015. As a result, the later a provider first meets the Stage 1 criteria, the shorter the timeframe to advance through the stages and the more aggressive progression required to reach Stage 3.

As demonstrated by the table below, a provider reaching Stage 1 in 2012 will have two years to progress from Stage 1 to Stage 2, but will have to move to Stage 3 after just a single year at Stage 2. If Stage 1 is accomplished in 2013, the provider will have only a single year at that stage, as it must progress upward each subsequent year. A provider reaching Stage 1 in 2014 will have to skip over Stage 2 and immediately hit Stage 3 in the subsequent year.

First Payment Year	Payment Year
	2011	2012	2013	2014	2015+**
2011	Stage 1	Stage 1	Stage 2	Stage 2	Stage 3
2012		Stage 1	Stage 1	Stage 2	Stage 3
2013			Stage 1	Stage 2	Stage 3
2014				Stage 1	Stage 3
2015					Stage 3

*Avoids payment adjustments only for eligible professionals in the Medicare EHR incentive program.
**Stage 3 criteria of meaningful use or a subsequent update to the criteria if one is established through rulemaking.

Beginning in 2015, the carrot becomes a stick as the Medicare incentive payment eligibility terminates, and eligible professionals and hospitals that have not met the Stage 3 criteria then become subject to financial penalties.

Separate Medicare and Medicaid incentives

Although the Medicare and Medicaid EHR incentive programs are separate programs, CMS has tried to maintain common definitions of meaningful use for both. There are key differences, however, between the Medicare and Medicaid incentive programs with regard to eligibility, the timing of incentive payments, payment amounts and payment structures, some of which are discussed in greater detail below. Providers should review these concepts prior to applying for incentive payments.

Who is eligible for incentives?

Eligible professionals and hospitals may be eligible to apply for incentive payments from either the Medicare or Medicaid incentive payment program or both programs. Under the Medicare program, eligible professionals are individual doctors of medicine, doctors of osteopathy, dental surgeons, doctors of dental medicine, podiatrists, optometrists and chiropractors. The list of eligible professionals under the Medicaid program is a slightly different group of individuals: physicians, pediatricians, dentists, certified nurse midwives, nurse practitioners and physician assistants operating at a federally qualified health center (FQHC) or rural health clinic (RHC) led by a physician assistant.

Under the Medicare program, eligible hospitals are “subsection (d) hospitals” that are paid under the hospital inpatient prospective payment system (IPPS); the term applies to hospitals located in the 50 states or the District of Columbia, but not the territories. Hospitals and hospital units are excluded from participation if they are excluded under Section 1886(d)(1)(B) from the IPPS, including psychiatric, rehabilitation, long-term care, children’s and cancer hospitals. Under the Medicare program, an eligible hospital’s incentive payments are based on its Medicare share or volume.

By contrast, under Medicaid, only acute care hospitals and children’s hospitals are eligible hospitals. Under the Medicaid program, there also are additional requirements based on the professional’s or hospital’s Medicaid patient volume.

“Hospital-based” eligible professionals are excluded from participation under the Medicare incentive payment program. A hospital-based professional is an individual who provides at least 90 percent of his or her covered professional services in an inpatient or outpatient hospital setting. Under Medicaid, hospital-based professionals have the same definition as under Medicare, except that Medicaid professionals practicing predominantly in an RHC or FQHC are not subject to the hospital-based exclusion.

Professionals that qualify for both the Medicare and Medicaid programs face a decision:

• Eligible professionals may participate in only one program: Medicare or Medicaid. A one-time-only switch between programs is permitted.
• If eligible, hospitals may participate in both programs simultaneously.
• If a provider serves a multistate population and participates in the Medicaid incentive program, the provider can participate only in the Medicaid incentive program through a single state.

The criteria: a snapshot

The proposed rules set forth about two dozen criteria to determine whether a provider has achieved meaningful use. A professional or hospital must meet all of the applicable criteria to receive incentive payments. Such criteria include:

• Uses EHR technology in a variety of functional areas to track, record and exchange information, including:

     – Uses CPOE; 
     – Uses ePrescribing;
     – Records demographics and vital signs;
     – Maintains up-to-date problem list;
     – Checks insurance eligibility and submits claims electronically;
     – Possesses capability of exchanging key clinical information electronically; and
     – Implements specific privacy and security technical capabilities.

• Sets forth clinical quality measures that must be captured and submitted to CMS (or the State if in the Medicaid program); and
• Has the ability to provide patients with an electronic copy of their health information.

The criteria largely are applicable to both eligible professionals and hospitals, but there are some differences based on the types of care provided and their corresponding settings. For example, hospitals must record information applicable only to an inpatient setting, including patients’ discharge instructions and summaries and the date and cause of a patient’s death. An example of an outpatient activity only applicable to professionals is sending reminders for preventive or follow-up care.

Although the criteria for the specific measures largely are similar between eligible professionals and hospitals, there are some key differences. Most notably, eligible professionals are required to utilize CPOE for 80 percent of all orders, and hospitals are required to utilize CPOE for only 10 percent of all types of hospital orders.

For reporting clinical quality measures, participants in the Medicare program will report to CMS, and participants in the Medicaid program will report to the applicable state using primarily National Quality Forum (NQF) and Physician Quality Reporting Initiative (PQRI) standards.

Demonstrating meaningful use

A professional or hospital initially can establish meaningful use by meeting the criteria for any continuous 90-day period and reporting in the first payment year. For each payment year thereafter, meaningful use is measured over the entire year.

For Medicare eligible professionals, a payment year is a calendar year beginning on Jan. 1, 2011. For hospitals, however, a payment year is the federal fiscal year. Fiscal year (FY) 2011 begins on Oct. 1, 2010.

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. Providers will be required to provide information showing how they have measured compliance. For example, a provider must provide information regarding its actual percentage of CPOE for orders, including the specifics of its calculation.

II. INCENTIVES

Medicaid incentives may begin earlier than Medicare incentives

Although Medicare incentive payments may not begin until 2011, the proposed CMS rule is silent on when Medicaid payments may start. It is not surprising that in light of recent economic turmoil, many state Medicaid programs and providers are eager to access the available funds.

CMS left open the possibility that some states may begin making payments to hospitals who serve a significant Medicaid population as early as 2010. (Early payments to eligible professionals also are contemplated, but are beyond the scope of this discussion.) 

These initial payments may go only to hospitals that are getting ready to adopt and implement technology; “early adopters” will have to wait until 2011 to receive incentive payments from Medicaid.

State preparations required for Medicaid

To receive federal funds to distribute as incentives, states must prepare a State Medicaid Health Information Technology Plan (SMHP). The purpose of the document is to show CMS that the state is ready to make timely and accurate payments.

Some states will need to upgrade their own electronic systems in order to monitor the disbursement of funds for hospitals to upgrade their electronic systems. At a minimum, a state needs to keep track of:

• The legal entity that receives the money (tax identification and provider number);
• The date that the entity received the funds (which starts the evaluation clock ticking); and
• The amount of money that was given to the hospital.

CMS, in turn, will monitor activities to make certain that a hospital receives funds from only one state.

Given the amounts involved and the relative haste with which they are being dispensed, CMS is very concerned about potential fraud and abuse and creating an audit trail. Thus, there will be many attestations and certifications among those entities through which the money flows, including fiscal agents and Medicaid HMO plans.

Hospital requirements for earliest Medicaid incentives

Less technologically advanced hospitals may qualify to receive a first-year Medicaid incentive payment by “engaging in efforts to adopt or implement EHR technology.” After that, all hospitals may qualify for Medicaid incentive payments by demonstrating “meaningful use.” CMS breaks down the elements of showing sufficient efforts to adopt as follows:

• “Certified EHR Technology” as defined by the ONC.
• Actual installation prior to receiving the incentive payment, rather than simply making efforts to install. Researching technology or interviewing vendors does not satisfy the requirements.
• “Implementing” means that the hospital has begun to use the certified EHR technology. Implementation includes staff training, data entry, or establishing data exchange agreements.

A Medicaid hospital must certify that it satisfies the applicable standards, and the state must confirm. The details of both actions have yet to be defined. Hospitals may wish to work with their state Medicaid programs to speed up the implementation of the incentive programs.

Medicare incentives

Medicare incentive payments are available as early as FY 2011 for eligible hospitals and critical access hospitals (CAHs), and as early as CY 2011 for eligible professionals.

Incentives for eligible professionals based on percentage of Medicare charges

Eligible professionals who qualify can receive an annual incentive payment of up to 75 percent of their charges for Medicare-covered services furnished that year. Each year’s incentive payment is limited by a monetary cap and could be further reduced, depending on the year in which the professional first qualified for the incentive payment, and the number of years the professional has earned the incentive. Eligible professionals who furnish services in a geographic Health Professional Shortage Area (HPSA) are eligible for a 10 percent increase to their incentive payments.

As shown in the table below, the incentive payments available to eligible professionals depend on which year they initially achieve meaningful use. Notably, eligible professionals can still achieve the maximum incentive payments if they first reach Stage 1 meaningful use in 2012. The incentive payments available to later adopters are reduced.

 

Calendar Year	First Calendar Year in which Eligible Professional Receives an Incentive Payment
	2011	2012	2013	2014	2015 and subsequent years
2011	$18,000	-	-	-	-
2012	$12,000	$18,000	-	-	-
2013	$8,000	$12,000	$15,000	-	-
2014	$4,000	$8,000	$12,000	$12,000	-
2015	$2,000	$4,000	$8,000	$8,000	$0
2016	-	$2,000	$4,000	$4,000	$0
Total Potential Incentive Payment	$44,000	$44,000	$39,000	$24,000	$0

Formula for calculating hospital Medicare incentives focuses on hospital discharges

A hospital’s Medicare incentive payment is calculated using a complex formula based primarily on hospital discharges. The formula also considers the amount of charity care and the percentage of Medicare-covered inpatient days related to the hospital’s total number of inpatient days. Unlike the incentive payment for an eligible professional, the hospital incentive payment is not capped at a specific dollar amount, but the number of hospital discharges used in the calculation of the incentive payment cannot exceed $23,000 annually.

Hospitals may qualify for financial incentive payments for only four consecutive years, and after the first year, the incentive payment will be reduced each year. The first year the hospital is eligible, it will receive 100 percent of the calculated incentive payment. The hospital will receive only 75 percent in the second year, 50 percent in the third year, and 25 percent in the fourth year. Additionally, hospitals that are late implementers (after FY 2013) of EHR technology will either receive reduced payments or be ineligible for any incentives.

Medicare incentives for critical access hospitals based on technology cost

An eligible CAH will be reimbursed a percentage of the reasonable costs incurred for the purchase of certified EHR technology (less any depreciation) equal to the percentage of Medicare patients treated at the CAH, plus 20 percent, up to the total cost of the technology. For example, if the CAH incurred reasonable costs of $500,000 for the purchase of certified EHR technology, and the percentage of the CAH’s overall patient population who are Medicare beneficiaries is 70 percent, the CAH will be reimbursed ($500,000 x (70% + 20%)) = $450,000.

Financial penalty if not a meaningful user by 2015

Eligible professionals, hospitals and CAHs who are not meaningful users by 2015 face a reduction in their Medicare reimbursement in 2015 and in subsequent years. A “significant hardship exception” is available for any professional, hospital or CAH that is able to demonstrate that the implementation of EHR technology would impose a significant hardship of the person or entity.

 III. TECHNOLOGY IS THE KEY!

Essential to becoming a meaningful user of EHR technology, of course, is the technology itself. The ONC has described the initial set of standards, implementation specifications and certification criteria for EHR technology that eligible professionals and hospitals must adopt and use to become meaningful users.

These standards, specifications and criteria are requirements that an EHR will need to include in order to support the achievement of the proposed meaningful use Stage 1. Following the same phased approach, the ONC anticipates the requirements for a certified EHR also will become more stringent over time, with the objective to incrementally improve the interoperability, functionality and utility of health information technology.

Defining “certified EHR technology”

To qualify as certified EHR technology, the technology must:

• Meet the requirements for a qualified EHR, by having the following capabilities:

     – Includes patient demographic and clinical health information, (e.g., medical history & problem lists);
     – Provides clinical decision support;
     – Supports CPOE;
     – Captures and queries information relevant to health care quality; and
     – Exchanges electronic health information with, and integrates such information from other sources.

• Have been tested and certified in accordance with the certification program established by the ONC as having met all applicable certification criteria.

The criteria for certification are designed to support the various measures for meaningful use specified in the CMS rule so that the eligible professional or hospital acquiring EHR technology has the technological capabilities to become a meaningful user and to track and report its use automatically and electronically. The criteria cover:

• Twenty-one functional areas generally applicable to all EHR;
• Nine areas with specific criteria for ambulatory EHR; and
• Five areas with specific criteria for inpatient EHR.

The differences between the ambulatory and inpatient EHR-specific certification criteria are based on the nature of the settings and track the different requirements for meaningful use for eligible professionals and hospitals. The certification process and the process to become a certifying body will be the subject of a separate rule.

The ONC rule establishes specific standards in four general areas: vocabularies; content exchange; transporting information; and privacy and security. The rule does not create new technology standards but adopts existing standards, specifications and protocols promulgated by the technology industry generally (with respect to information transport) and the health care industry (with respect to vocabularies, content and privacy/security).

Complete EHR vs. collection of modules

The various criteria for certified EHR technology may be met by a single, complete EHR system that has been certified, or by a collection of various EHR modules each of which has been certified. EHR modules may include, as a few possibilities, software installed on-site, software as a service, health information exchange interface or program, a clinical decision support rules engine, or a quality measure reporting service.

Under the complete EHR approach, a provider would have the peace of mind of knowing that all criteria have been certified in a single system. If a provider elects to utilize certified EHR technology through a variety of EHR modules, then it is the responsibility of the eligible professional or hospital to ensure that the combination of EHR modules collectively satisfies all criteria specified in the rule, meaning that collectively each and every criterion is certified.

No guarantee of compliance with HIPAA or other legal requirements

The certification criteria include standards and implementation specifications with regard to technical aspects designed to protect the privacy and security of health information, but they do not guarantee compliance with the Health Insurance Portability and Accountability Act (HIPAA). The comments are explicit in this regard: The ONC rule does not change existing HIPAA privacy or security requirements, does not guarantee compliance, and does not absolve any provider from compliance with HIPAA privacy or security requirements.

The same is true of any other legal requirements. That is, certified EHR technology may assist a user in compliance, but does not waive, alter or guarantee compliance with those requirements.

As mentioned, the ONC rule will take effect 30 days after its Jan. 13, 2010, publication in the Federal Register, even though a 60-day comment period will begin on Jan. 13, 2010, as well. A final rule is anticipated in late spring 2010.