CMS Proposed Rules to Receive Health IT Incentive Payments Too Inflexible, Says 53 Health Care Organizations

It is widely believed that health information technology, and electronic health records (EHRs) in particular, will help bend the cost curb on health care, in part, by preventing duplicate tests and improper administering of medication.

Health information technology is one of the few health care reform initiatives that earned bipartisan support among lawmakers. Congress set aside $17 billion of stimulus money in the American Recovery and Reinvestment Act of 2009 to encourage adoption and use of electronic health records. Experts say EHRs will play a role in determining if providers are meeting quality initiatives tied to Medicare and Medicaid reimbursements. Physicians, dentists, certified nurse-midwives, nurse practitioners, and physician assistants who are practicing in Federally Qualified Health Centers or Rural Health Clinics led by a physician assistant could receive up to 85 percent of the net average allowable costs for certified EHR technology.

Some objectives of EHRs, such as recording patient demographic information, maintaining medication lists and up-to-date problem lists as well as providing patients with electronic copies of their health information are expected to benefit medical debt buyers and debt collectors as well. Industry experts say EHRs would help providers determine which patient is responsible for a specific debt. Patients, meanwhile, would have more information about their medical history, allowing them to question duplicate services or recognize debt them may owe.

The Stimulus Act requires the Centers of Medicare & Medicaid Services (CMS) to set standards providers must meet to qualify for incentive payment. CMS announced in December 2009 the proposed rules based on “meaningful use” of certified EHR technology. Members of the medical community, however, say CMS’ definition and timeline of EHRS with “meaningful use” are unrealistic and will keep many providers, even some leading the health information technology initiative, from qualifying for the payments.

The American Hospital Association, backed by 52 other medical organizations launched an advertising campaign last week urging CMS to adopt a more flexible policy that promotes continued expansion and use of EHRs. The print ads appeared in Washington-D.C. area publications, including CQ Today, Congress Daily, Politico and Roll Call.

The group is running the ad campaign because CMS will issue a final rule in the coming weeks, said Matt Fenwick, an AHA spokesman. The proposed rule requires eligible providers to use a certified EHR system and meet at least 23 standards to qualify for the incentive payments. They also must report on health information technology functionality measures, and report up to 35 top quality measures using EHRs.

“Failure to meet any one of the requirements means the provider will not receive an incentive payment,” the group said in a letter to Kathleen Sebelius, Health and Human Services Secretary. “This approach does not acknowledge that providers have made enormous progress in creating and maintaining EHRs to improve patient care and safety.”

AHA’s impact analysis, which takes into account both incentives and cuts, estimates a net pay out of $2.2 billion in Medicare payments from 2011-2019, Fenwick said. But a January 2010 AHA survey suggests that, without significant changes to the requirements, 55 percent of hospitals could miss out on the incentives entirely and experience penalties in 2015. Fenwick said the same survey suggests that small and critical access hospitals are more likely to miss out on incentives and experience cuts.

At least one EHRs advocate supports CMS’s position, however. Larry McNeely, a health care advocate for U.S. PIRG, said EHRs can “live up to its hype” as a source of major cost savings and quality improvements, but only if rigorous standards are set regarding the comprehensiveness of any major health information technology investment.

“Fundamentally, your local doctor or hospital doesn’t have the right to taxpayer funds just to buy a few new computers. (The incentive payment) is to transform how they deliver care and to bring down cost and improve care for all of it,” McNeely said.

McNeely said some important features of electronic health records include its ability to assist and support providers’ decision making by alerting them to negative interactions of newly prescribed medications with existing medications and reminding physicians of all the processes and data that much be completed for a diagnosis and recommended treatment.

“You can’t achieve that system-wide savings from decision support if you waste your health information technology dollars on systems that are not compatible or providing adequate information,” McNeely said.

Many healthcare providers need the funds to help establish any type of electronic health records system. The recession caused many to cut operating budgets, and few had the means to properly invest in technology.

Under the proposed rule, a qualifying provider 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. Providers can receive up to $63,750 over the six year period from Medicaid if there is no duplication with Medicare. An eligible provider who predominantly serves in an area with a shortage of health care professionals is eligible for a 10 percent increase.

Most for-profit hospital systems have been investing heavily in health information for years. So have all of the not-for-profit hospitals rated by Fitch Ratings, said Jeff Schaub, a senior director in the company’s public finance health care group.

“The (hospitals) we talked with are reasonably confident that they’d be able to draw down stimulus money” Schaub said. “On the other hand…the absence of those funds won’t serious affect their ability to invest in their technology.”

That’s not likely the case for many non-rated hospitals, especially those with limited resources.

“The bulk of the hospitals that we don’t rate, 80 percent or so that don’t have a bond rating, haven’t had the resources to invest in information technology,” Schaub said. He added that for some hospitals, the incentives payments would allow them to purchase “the bar bones” of health information technology systems.

CMS is hosting a webinar May 27, 2010 at 1:00 pm: on Lessons learned and best practices for Medicaid health information technology promotion. Registration is required for attendance.