To: From: Date: Subject: Proposed Rule on Meaningful Use Requirements Stage 2 Measures, Payment Penalties, Hardship Exceptions and Appeals

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1 MEMORANDUM To: PPSV Clients and Friends From: Barbara Straub Williams Date: Subject: Proposed Rule on Meaningful Use Requirements Stage 2 Measures, Payment Penalties, Hardship Exceptions and Appeals The Centers for Medicare and Medicaid Services (CMS) has posted a proposed rule regarding the Medicare and Medicaid electronic health records (EHR) payment programs that expands on the current rule by proposing Stage 2 meaningful use criteria, payment penalties for providers that are not meaningful users, hardship exceptions, and a limited appeals process. The proposed rule will be published in the Federal Register on March 7 and comments are due 60 days after publication (or May 7). Here is a link to the proposed rule: View the NPRM. The EHR incentive programs affect acute care hospitals, critical access hospitals, physicians and other eligible professionals (EPs) and Medicare Advantage organizations. This memo focuses on provisions affecting acute care hospitals and EPs. It summarizes the significant provisions proposed by CMS and highlights issues that hospitals and EPs should consider for comments. Delay of Stage 2 Measures For providers who demonstrated meaningful use for the 2011 Medicare incentive payment, CMS is proposing a one year delay to meet Stage 2 measures, which means that these providers have to meet Stage 1 measures for three years. The delay is to October 1, 2013 for hospitals and January 1, 2014 for eligible professionals (EPs). Any provider that becomes a meaningful user in 2012 or later will have to comply with Stage 2 criteria after two years. Changes to Stage 1 Measures CMS is proposing a few changes to the Stage 1 measures. The changes generally make compliance easier, and many are optional in Table 3 at p. 33 lists the proposed changes to Stage 1 measures. One significant change, optional for 2013, is that the computerized provider order entry (CPOE) measure may be based on the number of medications ordered, rather than the number of unique patients whose records are maintained electronically. Stage 2 Measures Number of Measures Like the Stage 1 measures, the Stage 2 measures will include core measures and a set of menu measures (i.e., a list of measures from which the provider can select). With a few exceptions, CMS is proposing that the Stage 1 menu measures become Stage 2 core measures M STREET, NW SEVENTH FLOOR WASHINGTON DC PH FX

2 Page 2 For hospitals, CMS is proposing 16 core measures and 4 menu measures (from which the hospital must select 2) for Stage 2, unless exclusions apply. For EPs, CMS is proposing 17 core measures and 5 menu measures (from which the EP must select 3) for Stage 2, unless exclusions apply. New Stage 2 Measures Table 4 of the proposed rule lists the Stage 2 core measures (beginning p. 156) and menu measures (beginning p. 162) for hospitals and EPs. For some Stage 1 measures, the denominator included only those patients whose records were maintained using EHR technology. For any Stage 2 measures for which the number of patients is the denominator, CMS proposes to include all patients. The following is a summary of some of the significant new core measures: o Order Entry CMS is proposing that more than 60% of medication, laboratory and radiology orders created by the EP or hospital be recorded using computerized provider order entry (CPOE). CMS is requesting comments on whether only CPOE entered by licensed healthcare personnel can be counted (its current rule). (Stage 1 required 30% of all medication orders for all unique patients whose records were maintained electronically be entered using CPOE.) o Prescriptions For EPs, CMS is proposing that more than 65% of all permissible prescriptions (i.e., not controlled substances) are compared to at least one drug formulary and transmitted electronically. For hospitals, as a menu measure, CMS is proposing that more than 10% of all discharge prescriptions that are new or changed are compared to a drug formulary and transmitted electronically. (Stage 1 required that EPs transmit at least 40% of all permissible prescriptions electronically and hospitals were not subject to measures related to transmission of prescriptions.) o Tracking Medication Orders CMS is proposing that hospitals be required to track more than 10% of all medication orders created by authorized providers in an inpatient or emergency department using an electronic medication administration record ( emar ). (Stage 1 did not include an emar measure.) o Information Transmission For hospitals and EPs that transition or refer patients to other settings, CMS is proposing that a summary of care record be provided for more than 65% of these cases and a summary of care record be electronically submitted to a recipient with no organizational affiliation and using different EHR than the sender for more than 10% of these cases. (In Stage 1, hospitals and EPs only had to test for interoperability.) o Clinical Decision Support For hospitals and EPs, CMS is proposing that EHR incorporate at least 5 clinical support interventions related to 5 or more clinical quality measures and a drug drug, drug allergy interaction

3 Page 3 check. (For Stage 1, hospitals and EPs had to implement one clinical decision support rule and EPs had to implement a drug drug, drug allergy check.) o Clinical Summaries CMS is proposing that EPs provide online or written clinical summaries of an office visit to more than 50% of all unique patients within 24 hours. If information is not available in 24 hours (such as laboratory results), the summary would state that some information is pending. CMS is proposing some new items that have to be included in the clinical summary for Stage 2 (see page 79 80) and an EP can withhold information to avoid harm to the patient. (Stage 1 required that EPs provide clinical summaries within 3 business days for more than 50% of all visits.) o On line Access to Health Information and Patient Use of the Information For hospitals, the proposed Stage 2 criteria would require that more than 50% of all patients discharged from an inpatient or emergency department have their information available online within 36 hours and more than 10% of all discharged patients view, download or transmit their information. For EPs, the proposed Stage 2 criteria would require that more than 50% of all unique patients are provided online access to the health information within 4 business days after the information is available to the EP, subject to the EP s discretion to withhold certain information and that more than 10% of all unique patients view, download or transmit their health information. CMS states that the requirement that patients view, download or transmit their health information is to encourage providers to promote the availability and active use of EHR by their patients. (In Stage 1, hospitals were required to provide health information to at least 50% of patients requesting the information within 3 business days and provide discharge instructions. EPs were required to provide health information upon request and electronic access within 4 business days of the information being available to the EP.) o Secure Messaging CMS is proposing as a Stage 2 measure that more than 10% of unique patients seen by an EP send a secure message using the EHR technology. (Secure messaging was not a Stage 1 measure.) o Privacy Measures For both hospitals and EPs, the Stage 2 proposed measures require a security risk analysis in accordance with HIPAA requirements, including addressing encryption/security of data, implementing security updates as necessary and correction of identified security deficiencies. This requirement is not changed from Stage 1, but CMS is highlighting the need for encryption or similar measures, as required by HIPAA. CMS notes that almost 40% of large privacy breaches

4 Clinical Quality Measures PPSV Clients and Friends Page 4 involve lost or stolen devices and had the devices been encrypted, the data would have been secure. HOSPITALS AND EPs SHOULD REVIEW THE STAGE 2 MEANINGFUL USE MEASURES TO PROVIDE COMMENT ON WHETHER THE MEASURES ARE ACHIEVABLE UNDER THE TIMEFRAME ESTABLISHED BY CMS For 2013, CMS is proposing that hospitals and EPs submit data on the Stage 1 clinical quality measures applicable in 2011 and Any updates to these measures will be posted on the CMS website prior to the reporting period and Subsequent Years CMS is generally proposing measures that align with existing quality reporting programs, such as the Inpatient Quality Reporting program for hospitals and PQRS for EPs. Under the proposal, hospitals would report on at least 24 measures from a menu of 49 (listed at Table 9 beginning at p. 222) for The measures are grouped in six domains (patient and family engagement; patient safety; care coordination; population and public health; efficient use of healthcare resources; and clinical process/effectiveness), and hospitals would be required to select at least one measure from each domain. CMS is requesting comments on 4 options for the population to be included in hospital clinical measures: 1) All Medicare patients; 2) All patients (any payer); 3) Sampled Medicare patients; and 4) Sampled patients (any payer). CMS is seeking comment on 125 potential measures for EPs, but expects to finalize fewer measures. CMS is proposing that EPs report on core measures and select one measure from a menu set. Table 6 is a list of the proposed core measures for EPs (beginning at p. 181) and Table 8 is a list of all measures, which includes the core measures at Table 6 (beginning at p. 187). Practice Location To qualify for an incentive payment, an EP must have at least 50% of his or her patient encounters at a location, or combination of locations, equipped with certified EHR technology. CMS states that it defines patient encounter as any encounter where medical treatment and/or evaluation and management services are provided. CMS also states that it considers a location to be equipped with certified EHR technology if EHR technology is either installed at the location, brought to the location on a portable device, or is accessed remotely using computing devices at the location. CMS currently allows an EP to create a record of the encounter without using EHR technology at the location and later input the information at a different location, but is proposing that this method not count as a patient encounter beginning in 2013.

5 Page 5 Reporting Meaningful Use and Clinical Quality Measures Reporting Period For hospitals and EPs in their second year of meaningful use, the reporting period is a full year (federal fiscal year for hospitals and calendar year for EPs). Hospitals and EPs in their first year of meaningful use have a 90 day reporting period. Reporting Clinical Quality Measures by Group Practices Beginning January 1, 2014, CMS is proposing options for EPs to report clinical quality measures as a group, although EPs would still have to meet each of the measures individually. All three methods are available for reporting clinical quality measures for Medicare, but only the first is available for Medicaid. To use these options, all EPs in the group have to be beyond the first year of Stage 1. The options are available to: 1) two or more EPS, each with a unique NPI associated with a group practice identified under one tax identification number (TIN); 2) EPs participating in the Medicare Shared Savings Program and the testing of the Pioneer Accountable Care Organization (ACO) model who use EHR to submit ACO measures; and 3) EPs who report clinical quality measures under the Physician Quality Reporting System (PQRS) Group Reporting Option. Reporting Meaningful Use Measures by Group Practices CMS is also proposing a group reporting option for core and menu measures for groups of two or more EPs beginning January 1, Each EP would still have to meet the meaningful use measures independently, but the group could report in a batch file process. CMS is seeking comments on whether groups should be permitted to demonstrate meaningful use at the group level. Reporting Methods For Hospitals Beginning with FY 2014 CMS is proposing that hospitals continue to report on meaningful use through attestation. For submitting clinical quality measures for 2014 and subsequent years, CMS is proposing that hospitals select one of the following options: 1) a CMS designated portal through an upload process; or 2) in a manner similar to the 2012 EHR Reporting Pilot for hospitals. 1 For hospitals that are in their first year of Stage 1 beginning in FY 2014 and later years, CMS is proposing an interim submission option, and is requesting comments on that option. Payment Penalties for Hospitals Amount of Penalty The market basket increase for hospitals that are not meaningful users will be reduced as follows: 25% in 2015; 50% in 2016; and 75% in 2017 and subsequent federal fiscal years. 1 Additional information about this program is available in the 2012 Hospital Outpatient Prospective Payment System final rule. 76 Fed. Reg (Nov. 30, 2011).

6 Page 6 Determination of Whether Penalty Applies CMS is proposing to use 2013 data (90 days for first time meaningful users and full year for others) to determine whether a hospital is a meaningful user for the 2015 payment reduction, except that hospitals that qualify as first time meaningful users in 2014 will not receive a penalty. Therefore, if a hospital receives an EHR incentive payment in 2013 or a first time payment in 2014, it will not be subject to a penalty in For all subsequent years, CMS will continue to use data from two years prior to determine whether the hospital is subject to a penalty or one year prior for first time meaningful users. Table 14 on page 276 provides deadlines for hospitals to avoid a payment penalty in 2015 and subsequent years. HOSPITALS THAT MAY BE SUBJECT TO A PENALTY SHOULD SUBMIT COMMENTS ON THE USE OF DATA FROM TWO YEARS PRIOR TO DETERMINE WHETHER THE PENALTY APPLIES. Hardship Exceptions CMS is proposing the following hardship exceptions for hospitals: 1) hospitals located in areas without sufficient internet access; 2) new hospitals for at least one full cost reporting year after they accept their first patient; and 3) extreme circumstances that make it impossible to demonstrate meaningful use. Payment Penalties for EPs Amount of Penalty Beginning in 2015, an EP who is not a meaningful user of EHR will be subject to a Medicare payment penalty (referred to as a payment adjustment by CMS). For EPs, the penalties are 1% in 2015 (2% if the EP fails to meet the requirements of the e prescribing program); 2% in 2016 and 3% in 2017 and subsequent years. Pursuant to its discretionary authority, CMS is proposing to increase the penalty to 4% for 2018 and 5% for subsequent years if less than 75% of EPs are meaningful users. Determination of Whether Penalty Applies CMS is proposing that EPs would be evaluated in 2013 (90 days for first time meaningful users and full year for others) to determine whether they will be subject to the penalty in 2015, except that EPs who qualify as first time meaningful users in 2014 will not receive a penalty. Therefore, an EP who receives an EHR incentive payment for 2013 or a first time payment in 2014 would be exempt from the payment penalty in For all subsequent years, CMS will continue to use data from two years prior to determine whether the EP is subject to a penalty, or the prior year for first time meaningful users. Table 12 on page 260 is a chart showing deadlines for avoiding a payment penalty for 2015 through EPs THAT MAY BE SUBJECT TO A PENALTY SHOULD SUBMIT COMMENTS ON THE USE OF DATA FROM TWO YEARS PRIOR TO DETERMINE WHETHER THE PENALTY APPLIES. Hospital Based EPs Hospital based EPs (defined as an individual who furnishes 90% or more of his or her covered services in an inpatient area or emergency room) are not subject to the payment adjustment. CMS uses claims data from the previous

7 Page 7 federal fiscal year to determine whether an EP is hospital based for purposes of determining eligibility for an incentive payment and will continue to do so. For purposes of determining whether an EP is subject to a payment penalty, however, CMS proposes to make the determination based on claims data from two years prior to give an EP sufficient notice that he or she has to become a meaningful user to avoid the penalty. For example, the data to determine hospital based status for purposes of the 2015 payment penalty would be available on January 1, 2013 based on federal fiscal year 2012 data. CMS is also considering using the prior year s data to make the hospital based determination for purposes of the penalty, so that an EP would be exempt from the penalty if he or she was hospital based in either the prior year or two years prior. COMMENTERS SHOULD CONSIDER SUPPORTING THE USE OF DATA FROM BOTH THE PRIOR YEAR AND TWO YEARS PRIOR TO MAKE THE HOSPITAL BASED DETERMINATION FOR PENALTY PURPOSES TO GIVE MORE EPs THE POSSIBILTIY OF BEING EXEMPT FROM THE PENALTY. Hardship Exceptions CMS is proposing three hardship exceptions to the payment penalty for EPs: 1) EPs who practice in areas without sufficient internet access; 2) newly practicing EPs for the first two years after they begin practice; and 3) extreme circumstances that make it impossible to demonstrate meaningful use. Audits and Appeals States are required to establish an audit/appeal process with respect to Medicaid incentive payments, but CMS is proposing to give States the option to allow CMS to audit hospitals on whether they met the meaningful use criteria for Medicaid since it will be auditing hospitals on this issue for Medicare purposes anyway. Appeals of these determinations would be subject to the CMS appeals process rather than the State process. CMS is statutorily prohibited from establishing an appeals process with respect to many aspects of the Medicare program, but is proposing to allow appeals on the following issues: 1) whether an EP or hospital was unable to participate in the EHR program due to circumstances outside the EP s or hospital s control; 2) whether the EP or hospital was a meaningful user or used certified EHR technology based on CMS audit findings; 3) whether the claims count used to determine an incentive payment for EPs is correct. CMS notes that appeals involving incentive payment amounts for hospitals must be filed with the Provider Reimbursement Review Board. The proposed rule outlines procedural requirements (deadlines, submission of information) for the appeals process. Patient Volume Requirements for the Medicaid Program Hospitals and EPs have to meet Medicaid patient volume requirements to qualify for a Medicaid incentive payment (10% and 30%, respectively, with some exceptions). CMS is proposing to expand States options for determining Medicaid patient volume requirements to include data from the 90 day period immediately preceding a meaningful use attestation by a hospital or EP. CMS is also expanding the definition of a Medicaid encounter to include services to patients enrolled in Medicaid, even if Medicaid did not pay for the service (e.g., when a third party is liable or the services are not covered by Medicaid) and to include Title XXI Medicaid expansion populations.

8 Page 8 COMMENTERS SHOULD SUPPORT THE EXPANSIONS OF THE PATIENT VOLUME DEFINITION FOR THE MEDICAID INCENTIVE PAYMENT. ************************ Please contact Barbara Straub Williams at or the attorney at PPSV with whom you work regularly for additional information or if you would like our assistance in drafting comments Powers Pyles Sutter & Verville, PC. All rights reserved.

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