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Electronic Health Records Incentive Program: What's in it for the Docs?

84074530By Chris DeMeo

While most of the country’s attention recently was focused on the fate of the hotly disputed healthcare reform legislation, another, less controversial set of laws affecting healthcare crossed a significant milestone.  On March 15, the comment period ended for the Center for Medicare and Medicaid Services’ (“CMS”) Electronic Health Records Incentive Program Proposed Rule (“EHR Incentive Rule”)[i] and the Office of National Coordinator’s (“ONC”) Initial Set of Standards, Implementation Specifications and Certification Criteria for Electronic Health Record Technology Interim Final Rule (“EHR Technology Rule”)[ii].  CMS and the ONC will now analyze these comments and likely incorporate a fair share of them into the final regulations.  This article focuses on the regulations from the physician’s perspective by setting out briefly the background of the rules, discussing the EHR incentive program as currently formulated, highlighting some of the significant provisions in the regulations, identifying potential areas of change based on the recently concluded comment period and identifying critical areas for EHR vendor contracts.

EHR Legislation-Background. The EHR Incentive Rule and EHR Technology Rule have their genesis in the American Recovery and Reinvestment Act of 2009 (“ARRA”) which, among other things, targets health information technology generally and EHR specifically as a cornerstone of healthcare reform.  ARRA through the Health Information Technology for Economic and Clinical Health Act (“HITECH”) authorizes monetary incentives for the adoption, implementation and use of EHR.  Two parallel tracks of regulations have developed to guide physicians on how to use EHR so as to qualify for incentives and to establish criteria for what type of technology is needed to assist physicians in this process.  The first track is the EHR Incentive Rule, which sets out who is eligible for monetary incentives, what needs to be done to earn those incentives and how much money physicians can receive for the use of certified EHR technology.  The second track is the EHR Technology Rule which provides criteria for how EHR technology becomes certified.

EHR Incentive Program. The EHR incentive program offers monetary incentives for achieving “meaningful use” (as defined in the EHR Incentive Rule) of “certified EHR technology” (as defined in the EHR Technology Rule) in the years 2011-2015 and monetary penalties for failing to achieve such meaningful use after 2015.  Meaningful use generally requires that physicians use the technology in a way that impacts patient care; allows them to communicate with other healthcare providers; and allows them to report clinical quality measures to the Department of Health and Human Services (“HHS”). What constitutes meaningful use will be phased in over three stages: Stage 1 begins in 2011; Stage 2 begins in 2013; and Stage 3 begins in 2015.  The stages are designed such that physicians who wait until 2015 to achieve meaningful use will have more difficulty than had they gotten with the program in 2011.

The Medicare EHR incentive program is open to medical doctors, osteopaths, dentists, podiatrists, optometrists and chiropractors.  The Medicaid EHR incentive program is open to physicians who have 30% of all their patient encounters attributable to Medicaid (for pediatricians, the threshold is 20%).  Alternatively, physicians who practice predominantly in a Federally Qualified Health Center or a Rural Health Clinic can qualify for the Medicaid EHR incentive program if 30% of their patient encounters are with “needy individuals” who include Medicaid or CHIP enrollees, patients furnished uncompensated care and patients furnished services at either no cost or on a sliding scale.  Hospital-based physicians are not eligible for either the Medicare or Medicaid program.  “Hospital-based physicians” are physicians who furnish 90% or more of their services in a hospital setting (inpatient, outpatient or emergency room).

Incentive payments under Medicare amount to 75% of the estimated Medicare allowed charges up to a maximum of $44,000.00 over five years.  Beginning in 2015, physicians in the Medicare program who are not meaningful users will suffer an adjustment to their Medicare reimbursement of 1% in 2015, 2% in 2016 and 3% in 2017 and beyond.  The program does have a hardship exception to these adjustments.  The hardship exception must be renewed annually, but cannot be used for more than five years.  Incentive payments under Medicaid are based on the “net average allowable costs” for purchase, implementation, operation, maintenance, and use of EHR technology up can reach up to $63,750.00 over six years.

The schedule of incentives for the Medicare program is front-loaded and provides diminishing returns over time so as to encourage early entry into the program.  The maximum incentive payment for achieving meaningful use in 2011 is $18,000.00 for 2011; $12,000.00 for 2012; $8,000.00 for 2013; $4,000.00 for 2014; and $2,000.00 for 2015 for a total of  $44,000.00. By contrast, a physician who waits until 2014 to achieve meaningful use may receive up to $12,000.00 in 2014; $8,000.00 in 2015; and $4,000.00 in 2016 for a total of $24,000.  A physician who waits until 2015 to achieve meaningful use receives no incentive payments. Under Medicaid, the incentive payments are front-loaded with $21,250.00 available for year one and $8,500.00 available thereafter totaling $63,750.00, but do not diminish over time such that a physician who achieves Medicaid meaningful use in 2015 receives the same amount of payments as one who reaches that status in 2011.

EHR Incentive Rule. The EHR Incentive Rule sets out guidelines for achieving meaningful use for Stage 1 of the program.  It provides 25 objectives and measures that eligible physicians (“EPs”) must satisfy during the applicable reporting period in order to receive incentive payments.  For the first year during which an EP attempts meaningful use, the reporting period is 90 days.  For each following year, the EP must show compliance for the entire year.  Some objectives and measures are based on a percentage of total patients that the EP sees.  For example, Stage 1 meaningful use requires that the EP use Computerized Physician Order Entry (“CPOE”) for 80% of patients.  Other objectives and measures, such as  implementing drug-drug, drug-allergy and drug formulary checks, simply require the EP to have instituted the process.  Table 1 lists the 25 objectives and measures and the compliance thresholds.


Use CPOE CPOE is used for at least 80% of all orders.
Implement drug-drug, drug-allergy, drug-formulary checks. The EP has enabled this functionality.
Maintain an up-to-date problem list of current and active diagnoses based on ICD-9-CM or SNOMED CT®. At least 80% of all unique patients seen by the EP have at least one entry or an indication of none recorded as structured data.
Generate and transmit permissible prescriptions electronically (eRx). At least 75% of all permissible prescriptions written by the EP are transmitted electronically using certified EHR technology.
Maintain active medication list. At least 80% of all unique patients seen by the EP have at least one entry (or an indication of “none” if the patient is not currently prescribed any medication) recorded as structured data.
Maintain active medication allergy list. At least 80% of all unique patients seen, by the EP have at least one entry or (an indication of “none” if the patient has no medication allergies) recorded as structured data.
Record demographics

o preferred language

o insurance type

o gender

o race

o ethnicity

o date of birth

At least 80% of all unique patients seen by the EP have demographics recorded as structured data.
Record and chart changes in vital signs:

o height

o weight

o blood pressure

o Calculate and display: BMI.

o Plot and display growth charts for children 2-20 years, including BMI.

For at least 80% of all unique patients age 2 and over seen by the EP, record blood pressure and BMI; additionally plot growth chart for children age 2-20.
Record smoking status for patients 13 years old or older. At least 80% of all unique patients 13 years old or older seen by the EP ‘have “smoking status” recorded.
Incorporate clinical lab-test results into EHR as structured data. At least 50% of all clinical lab tests ordered whose results are in a positive/negative or numerical format are incorporated in certified EHR technology as structured data.
Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, and outreach. Generate at least one report listing patients of the EP with a specific condition
Report ambulatory quality measures to CMS or the States. For 2011, provide aggregate numerator and denominator through attestation as discussed in the rule.

For 2012, electronically submit the measures as discussed in the rule.

Send reminders to patients per patient preference for preventive/follow up care. Reminder sent to at least 50% of all unique patients seen by the EP that are age 50 or over.
Implement 5 clinical decision support rules relevant to specialty or high clinical priority, including diagnostic test ordering, along with the ability to track compliance with those rules. Implement 5 clinical decision support rules relevant to the clinical quality metrics the EP is responsible for as described further in the rule.
Check insurance eligibility electronically from public and private payers. Insurance eligibility checked electronically for at least 80% of all unique patients seen by the EP.
Submit claims electronically to public and private payers. At least 80% of all claims filed electronically by the EP.
Provide patients with an electronic copy of their health information (including diagnostic test results, problem list, medication lists, allergies), upon request. At least 80% of all patients who request an electronic copy of their health information are provided it within 48 hours.
Provide patients with timely electronic access to their health information (including lab results, problem list, medication lists, allergies) within 96 hours of the information being available to the EP. At least 10% of all unique patients seen by the EP are provided timely electronic access to their health information.
Provide clinical summaries for patients for each office visit. Clinical summaries are provided for at least 80% of all office visits.
Capability to exchange key clinical information (for example, problem list, medication list, allergies, diagnostic test results), among providers of care and patient authorized entities electronically. Performed at least one test of certified EHR technology’s capacity to electronically exchange key clinical information.
Perform medication reconciliation at relevant encounters and each transition of care. Perform medication reconciliation for at least 80% of relevant encounters and transitions of care.
Provide summary care record for each transition of care and referral. Provide summary of care record for at least 80% of transitions of care and referrals.
Capability to submit electronic data to immunization registries and actual submission where required and accepted. Performed at least one test of certified EHR technology’s capacity to submit electronic data to immunization registries.
Capability to provide electronic syndromic surveillance data to public health agencies and actual transmission according to applicable law and practice. Performed at least one test of certified EHR technology’s capacity to provide electronic syndromic surveillance data to public health agencies (unless none of the public health agencies to which an EP submits such information have the capacity to receive the information electronically)
Protect electronic health information created or maintained by the certified EHR technology  through the implementation of appropriate technical capabilities. Conduct or review a security risk analysis per 45 CFR 164.308(a)(1) and implement  security updates as necessary.

The EHR Incentive Rule requires that EPs provide HHS with data on several clinical quality measures in order to achieve meaningful use.  Every physician must report on three measures as applicable:

(1) Inquiry regarding tobacco use. The percentage of patients 18 and older who were asked if they used tobacco within 24 months.

(2) Blood pressure management. The percentage of patients 18 and older with diagnosed hypertension who had their blood pressure recorded.

(3) Drugs to be avoided by the elderly. The percentage of patients 65 and older who received at least one drug to be avoided and the percentage of patients 65 and older who received at least two different drugs to be avoided.

In addition, physicians will have to report on additional quality measures depending on their specialty. For example, cardiologists will be required to provide data on coronary artery disease patients with a history of myocardial infarction who received beta-blocker therapy.  A list of examples of clinical quality measure by specialty is provided in Table 2.

The EHR Incentive Rule also addresses the requirements for achieving meaningful use for Medicaid.  One important difference in the Medicaid program is that for the first year of incentives, the EP need only adopt, implement or upgrade to certified EHR technology as opposed to demonstrating meaningful use.  Following year one, the EP must show meaningful use.  Medicaid meaningful use standards will track Medicare standards, but states may propose limited additional criteria.  The states can also decline participation in the incentive program.  EPs who qualify for both Medicare and Medicaid, can choose which program to follow. In this context, the EP can change election one time and cannot receive more than the maximum Medicaid payment.  Table 3 identifies key differences between the Medicare and Medicaid programs as they relate to physicians.



CMS will implement

Fee schedule reductions begin in 2015

Must be a meaningful user in Year 1

Maximum incentive is $44,000 for EPs

Meaningful use definition will be common for Medicare

Last year an EP may initiate program is 2014; last payment in program is 2016; payment adjustments begin in 2015

Voluntary for States to implement

No Medicaid fee schedule reductions

Adopt, implement or upgrade option for Year 1

Maximum incentive is $63,750 for EPs

States can adopt a more rigorous meaningful use definition

Last year an EP may initiate program is 2016; last payment in program is 2021

EHR Technology Rule. The EHR Technology Rule establishes what it means to be “certified EHR technology” which an EP must use meaningfully in order to receive incentive payments. The rule provides criteria for EHR capabilities which describe what the technology needs to be able to do and implementation standards which describe how the technology is supposed to be able to do it. The program is designed to allow an EP to achieve meaningful use through adoption of an all-in-one system or by adopting individual modules and linking them together to become compliant.  For this latter option, the EP need only ensure that each individual module meets the requirements of certified EHR technology.  In this manner, EPs who already have an EHR system which they like can keep those modules that already meet the requirements for certified EHR technology and simply add modules as needed to achieve full meaningful use.  Similarly, EPs can mix and match certified EHR technology modules with which they feel more comfortable as long as all are compatible.

Potential Changes to the Rules. Even before the comment periods on the rules expired, stakeholders clamored for change to the “hospital-based physician” exclusion.  Physicians should expect a narrowing of this exclusion to allow more participation. Such changes could mean that physicians working in hospital-affiliated group practices and hospital-owned ambulatory clinics could be eligible for incentive payments.  In addition, there is concern that certain EPs may have difficulty meeting one or more of the proposed meaningful use objectives and the final rule may therefore modify or eliminate objectives and associated measures that prove to be out of reach for certain providers.  There may also be changes to the clinical quality measures proposed in the EHR Incentive Rule which could result in some being deleted and/or new ones being added.

Final Word. With the need to implement certified EHR technology comes the new and perhaps foreign challenge of negotiating EHR vendor contracts.  These contracts should be reviewed carefully and be tailored to the physician’s specific needs rather than simply being an iteration of a standard form.  While the contract should address the individual physician’s practice, all vendor contracts should have provisions covering three major areas:  (1) warranting compliance with the EHR regulations; (2) technical support; and (3) what happens when the system fails to perform to specifications.

[i] Federal Register, vol. 75, no. 8, p. 1844 (January 13, 2010).

[ii] Federal Register, vol. 75, no. 8, p. 2014 (January 13, 2010).

Chris DeMeo is a member of McGlinchey Stafford’s healthcare section and practices in Houston, Texas. Chris handles healthcare, commercial litigation, ERISA and employee benefits matters, in state and federal courts throughout the state of Texas. Chris has extensive experience representing national health care companies and health care professionals in complex, multi-party litigation and regulatory compliance matters including counseling providers and professionals on licensure, transactional, compensation, medical staff relations, contract disputes, and employee relations as they impact federal and state anti-kickback, self-referral (Stark), information privacy and security (HIPAA) and false claim laws in Texas and other states.


  1. Marissa Hernandez

    I would like to know if you would ever think of trying to simplify the information that is given. It would be easer if it was broken down for every profession. For example I work for an EP and i have to read through material that pertains to hospitals. That would help out a lot.

  2. Douglas S. Rabin

    how do you apply for the $44,000 and what if you do not take medicare. I am a feritlity specialist

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