A HITECH Headache

ADVANCE looks at the complex rules governing EHR incentive payments–and the questions still unanswered.

By Cheryl McEvoy

As early as Oct. 2010, the government will begin distributing stimulus funds to providers for meaningful use of EHRs. But dicing up the $20 billion carrot won’t be as clear cut as it seems. From caseload to specialty to EHR launch date, a number of factors will play into how much a provider gets and how they get it, and other questions have yet to be addressed. Amid the uncertainty, providers are wondering if upfront costs will be too much to stomach for a risky return.

The Skinny on Incentives
Before they rake in rewards, providers must decide which payments to pursue: Medicare or Medicaid. Depending on calculations, hospitals can snag payments from both programs, but physicians can’t “double dip,” according to Harry Greenspun, MD, chief medical officer, Perot Systems Healthcare Group.

Payments will be based on caseload, so most providers will aim for Medicare payments, according to John Hazewinkel, project manager, Michigan Health Information Network. Medicaid incentives are available to a wider range of providers, including nurse practitioners, physicians assistants and midwives (Medicare is primarily open to physicians and hospitals), but providers must meet minimum caseload requirements-10 percent for acute care hospitals, 20 percent for pediatricians and 30 percent for other caregivers. Children’s hospitals have no minimum.

“Medicaid is pretty limited,” Hazewinkel said. “It’s still going to be helpful to those who qualify, but they have to meet higher thresholds.”

Medicare requires no minimum caseload, but payments will be based on billing for services. Most providers will be able to earn the maximum incentive, Hazewinkel said.

No matter the payment path, providers must meet the all-important criterion: meaningful use. “Buying a system will not get you a check,” said Jeffery Daigrepont, senior vice president, the Coker Group. “You really have to buy a) the right system [and] b) use the system in the right way.”

Providers must use a certified EHR system to qualify for incentives, Hazewinkel noted. While a certifying body hasn’t been formally named, many providers are looking to the Certification Commission for HIT for the green light.

For those applying for Medicare incentives, the guidelines are “pretty clear,” Hazewinkel said. Because Medicare is a federal program, it’s standardized across the country.

Physicians who meet Medicare eligibility can earn 5 years of payments. The amount will be 75 percent of their Medicare allowables, up to $18,000 the first year and diminishing each year. All in all, a physician can rake in up to $44,000 in payments–$48,400 in underserved areas, which get an extra 10 percent boost from the government.

Hospital payments will be “a little more obtuse,” Hazewinkel said. The exact amount will vary, as it’s based on a formula. Starting with the base sum of $2 million plus an additional amount for the number of discharges, the calculation also includes inpatient bed stays, charity care and a “transition factor,” which basically reduces the payment over time.

Medicaid payments have less defined parameters; each state will decide how reimbursement is made. In general, providers can earn up to 100 percent of their implementation costs, plus additional, smaller payments over time for maintenance and support, Hazewinkel said. The payments aren’t straight 1-for-1 reimbursements; they’re intended to be a pat on the back and a boost of momentum for continued use of EHRs.

Physicians who choose the Medicaid path can earn a maximum of somewhere around $65,000, Hazewinkel said, but a number of details still need hammering out.

Questions Remain
The HITECH guidelines leave much to ponder; in many cases, the only answer is “wait and see.”

Caseload verification: As noted, providers must report a minimum caseload to earn Medicaid incentives, but many states have no means to confirm the numbers. “In [Michigan], and I imagine every other state, they’re going to have difficulty in determining how people meet those thresholds,” Hazewinkel said. States can identify heavy Medicaid billers, but they don’t know what percentage that is compared to a provider’s overall business, he explained.

Caseload reports could fall vulnerable to fraud, Dr. Greenspun noted. Providers may doctor their practice percentage or target specific populations to earn more incentives, so states will need to stay alert.

CBO estimations: The oft-quoted $20 billion isn’t set in stone; it’s the difference between the $36 billion the government expects to spend in reimbursements and the $16 billion it expects to collect from penalties, according to Congressional Budget Office estimations. If adoption takes a difference course than anticipated, the government may be left scrambling.

“If the numbers start coming in different, where are the areas where they can fix it?” Dr. Greenspun asked. The government could alter the definition of meaningful use, he hypothesized, or change the Medicare charity care requirement for hospitals, meaning less money in providers’ pockets.

Medicaid cash flow: States will decide how to dole out Medicaid payments, which could lead to variation. The federal definition of meaningful use will most likely serve as a baseline, but states may add unique requirements, like participating in a state immunization registry, Daigrepont said.

There’s also no guarantee payment will come in the form of a check. “If you look at the budget shortfalls in so many states that have large Medicaid populations, they may be hard-pressed to freely pass on these incentive payments to providers and hospitals,” Dr. Greespun said.

Instead of going straight to physicians, payments may fund programs related to HIT goals, he explained.

Provider Progress: The experts agreed, the sooner a provider adopts an EHR and qualifies for incentives, the better. But it’s unclear what will happen to providers who don’t keep the pace.

A doctor may start on track, but hit a wall 3 years (and $38,000) into the incentive program, Dr. Greenspun said. Would the physician be required to continue the program, or could they walk away with the money?

Is It Worth It?
With so many details in the air, providers are wondering whether EHR adoption is worth the effort. Starting in 2015, providers who don’t use EHRs will face increasing payment cuts, up to 5 percent. It’s enough to convince most hospitals to adopt the technology, Hazewinkel projected, but physicians may need more convincing.

“The cost of EHR implementation exceeds the total cost of these incentives,” he said, so physicians are less than thrilled to shell out the dough. Michigan has a high volume of physicians planning to retire in 5-10 years, he added, so there’s even less motivation to make the big switch.

Dr. Greenspun also noted that, in some cases, it’s less expensive to pay the penalties than purchase an EHR system, but “it’s a very short-sighted view,” he said.

As the health care sector turns to technology, those who refuse to adopt won’t just face penalties, but will eventually be shut out of the system. “You will have to be fully digitized, fully electronic, fully transparent in your quality and cost to participate,” Dr. Greenspun said.

What it comes down to is having the right perspective. Dr. Greenspun encouraged providers to remove the financial lens and look at incentives as a “catalyst” for improved care. “[Providers] should be focusing on how they can really use these to benefit their organization.as opposed to putting in a system to get these payments,” he said, “because that’s not an equation that makes sense.”

Cheryl McEvoy is an editorial assistant with ADVANCE.

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