The US health care system is undergoing
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1 By Catherine M. DesRoches, Chantal Worzala, and Scott Bates Some Hospitals Are Falling Behind In Meeting Meaningful Use Criteria And Could Be Vulnerable To Penalties In 2015 meet federal meaningful use requirements, thus qualifying for incentives, and what percentage will fail to meet those requirements and be subject to financial penalties as a result. Monitoring the pace at which different types of hospitals meet meaningful-use criteria and receive incentive payments is critical to policy makers understanding of whether this major public investment is leading to widespread adoption of EHR systems. To encourage the widespread adoption of the systems, HITECH authorized the Centers for Medicare and Medicaid Services (CMS) to provide Medicare incentive payments beginning in 2011 to hospitals and physicians meeting meandoi: /hlthaff HEALTH AFFAIRS 32, NO. 8 (2013): Project HOPE The People-to-People Health Foundation, Inc. ABSTRACT With nearly $30 billion in incentives available, it is critical to know to what extent US hospitals have been able to respond to those incentives by adopting electronic health record (EHR) systems that meet Medicare s criteria for their meaningful use. Medicare has provided aggregate incentive payment data, but still missing is an understanding of how these payments are distributed across hospital types and years. Our analysis of Medicare data found a substantial increase in the percentage of hospitals receiving EHR incentive payments between 2011 (17.4 percent) and 2012 (36.8 percent). However, this increase was not uniform across all hospitals, and the overall proportion of hospitals receiving a payment for meaningful use was low. Critical-access, smaller, and publicly owned or nonprofit hospitals appeared to be at particular risk for failing to meet Medicare s meaningful-use criteria, and the overall proportion of hospitals receiving a payment for meaningful use was low. Starting in 2015, hospitals that fail to meet the criteria will be subject to financial penalties. To address the needs of institutions in danger of incurring these penalties, policy makers could implement targeted grant programs and provide additional information technology workforce support. In addition, the capacity of EHR system vendors should be carefully monitored to ensure that these institutions have access to the technology they need. Catherine M. DesRoches (cdesroches@ mathematica-mpr.com) is a senior scientist at Mathematica Policy Research, in Cambridge, Massachusetts. Chantal Worzala is a director of policy at the American Hospital Association, in Chicago, Illinois. Scott Bates is a senior analyst at the American Hospital Association. The US health care system is undergoing an enormous change, as hospitals and health care providers work to digitize their patients medical records. In 2009, with the passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act, the nation began an ambitious effort to ensure that all Americans have access to health care facilitated by an electronic health record (EHR) system. HITECH provides nearly $30 billion to encourage the adoption of these systems. The actual amount of funding to be released depends on what percentage of providers will August :8 Health Affairs 1355
2 ingful-use criteria; in 2015 CMS will start penalizing those that fail to meet the requirements. 1 To receive an incentive payment, hospitals must attest to meeting the criteria through the CMS website. The Medicare incentive payments are available to acute care and critical-access hospitals. To be designated a critical-access hospital, the institution must be located in a rural area, provide twenty-four-hour emergency services, have an average length-of-stay for its patients of ninety-six hours or less, and be located more than thirty-five miles (or more than fifteen miles in areas with mountainous terrain) from the nearest hospital or be designated by its state as a necessary provider. Critical-access hospitals must also have no more than twenty-five beds. Medicare pays critical-access hospitals and larger acute care hospitals differently, and their meaningful-use incentive payments are also calculated differently. However, both types of hospitals must meet the same meaningful-use criteria. The Medicare meaningful-use requirements are being implemented in stages. To achieve stage 1 meaningful use, hospitals must electronically capture health information in a standardized format, use this information to track key clinical conditions, communicate the information to coordinate care and engage patients and their families, and initiate the reporting of clinical quality measures and public health information. 2 Stage 2, which becomes effective on October 1, 2013, will require a greater focus on advanced clinical processes and information exchange. 1 Recent data from a national survey of hospitals suggest that US hospitals have made substantial progress in terms of achieving meaningful use; however, challenges remain. 3,4 Fewer than half of all US hospitals had a basic EHR system, smaller and rural hospitals appear to be less likely than other hospitals to have met the stage 1 criteria, and very few hospitals had all of the computerized systems necessary to achieve stage 2 meaningful use. 5 However, very few data have been available on the hospitals that attest to meeting the meaningful-use criteria and receive payments for doing so, or on how these hospitals may differ from those institutions that have not met the criteria. CMS has provided data on aggregate payments, but still lacking is an understanding of how payments are distributed across hospital types and years. Estimates of the proportion of hospitals achieving meaningful use have been derived from survey data. 6 However, incentive payment data that could be linked to individual hospital characteristics would provide the most accurate estimate thus far of the number of hospitals meeting the program s criteria. In fiscal years 2011 and 2012 Medicare required hospitals to achieve meaningful use to qualify for an incentive payment. Hospitals with at least 10 percent of their patients covered by Medicaid were also eligible for Medicaid incentive payments. To receive payments through Medicaid, however, hospitals do not have to meet the criteria in their first year of participation; instead, they must make a commitment to adopt, implement, or upgrade a current EHR system. The program was structured in this way to provide up-front capital to support initial adoption of the systems by providers serving low-income and disadvantaged patients and thus mitigate the digital divide that is, reduce the chance that hospitals with fewer financial resources would be less likely to adopt an EHR system because of the up-front costs of purchasing and implementing it. The data previously released by CMS on meaningful-use incentive payments through Medicare and Medicaid did not clearly identify the share of hospitals receiving payments that actually met the meaningful-use criteria, as opposed to having received an incentive payment for the adoption, implementation, or upgrade of an EHR system. In addition, the aggregate data did not break hospitals down by size, location, or other factors. Therefore, the data released in spring 2013 by CMS on individual hospitals that received Medicare incentive payments the data used in our analysis constitute the most accurate portrayal of hospitals that have met the meaningful-use requirements. We used the latest CMS data on Medicare meaningful-use payments for successful attestation and hospital characteristics to answer two questions for which only best guess answers were previously available. First, what proportion of US hospitals received payments for meaningful-use attestation in 2011 and 2012? Second, are there differences across hospital types in the likelihood of receiving a payment for attestation of meaningful use? Study Data And Methods The data available on the CMS website include information on individual hospitals that attested to achieving meaningful use and received Medicare incentive payments through December 31, We matched the payment data to two other data files that provided additional information about the hospitals (such as their size and location): the annual CMS data file listing the hospitals that were paid under the Medicare inpatient prospective payment system, 1356 Health Affairs August :8
3 and the quarterly data file from TRICARE the Department of Defense s health care program listing critical access hospitals. Only hospitals paid under the inpatient prospective payment system and critical-access hospitals are eligible for Medicare meaningful-use incentive payments. All hospitals receiving payments were successfully matched and were included in our analysis. Because the data files contained the universe of all hospitals paid under the inpatient prospective payment system and all critical-access hospitals, we do not present statistical tests of difference in proportions. Such tests are done to account for sampling and measurement error. Neither of those sources of error was present in this study. Analysis We calculated the share of eligible hospitals that received payments for fiscal years 2011 and 2012 overall and the share of hospitals categorized by the following attributes: size, region of the country, urban versus rural location, teaching status, ownership, and quartile in the disproportionate-share hospital index. Each hospital is assigned a disproportionateshare patient percentage by CMS based on a combination of the fraction of its Medicare patient population that is eligible for Supplemental Security Income and the fraction of its total patient population that is eligible for Medicaid. CMS uses this statistic to identify hospitals eligible for additional Medicare payments for caring for the poor. We used the disproportionateshare patient percentage as a proxy for patient characteristics. Finally, we calculated the share of critical-access hospitals that received payments. Limitations The fiscal year ends on September 30, and the data from CMS used in our analysis included payments for the calendar year that is, those made through December 31, Therefore, some payments for fiscal year 2012 may have been made after December 31, 2012, and were not reflected in the data. Such omissions could produce an underestimate of the proportion of hospitals receiving a payment. In addition, for critical-access hospitals, determining payment requires an assessment of allowable costs that might delay payment. However, we expect the number of omissions resulting from this timing issue to be small. Finally, our data did not include hospitals receiving payments for meaningful use through Medicaid only. The Medicaid program is run by the states, and in 2011 no state made an incentive payment to a hospital based on achieving meaningful use. By the end of 2012 the states had made Medicaid incentive payments to 828 hospitals for having achieved meaningful use. Ninety-nine percent of those institutions were acute care hospitals that were also eligible to receive payments through Medicare and therefore were likely to be included in our data. Thus, although Medicaid data are not currently available at the level of the individual hospital, we expect that our estimates would not change if we were able to identify these hospitals in our analysis. Study Results There was a significant increase in the percentage of hospitals receiving payments for achieving meaningful use between 2011 and 2012, from 17.4 percent to 36.8 percent (Exhibit 1). However, this increase was not uniform across all hospitals. In 2011 there were relatively small differences in the proportion of hospitals in each region of the country that received payments. In 2012 hospitals in the Northeast were more likely than those in other regions to have received a payment, followed by those in the South. Larger hospitals appeared to make greater gains than smaller hospitals. Between 2011 and 2012 the percentage of hospitals with at least 200 beds that received meaningful-use payments more than doubled (Exhibit 1). In contrast, the percentage of hospitals with fewer than 100 beds that received payments had a slower rate of growth and was a smaller share of the total. Teaching hospitals were more likely than nonteaching hospitals to have received an incentive payment for meaningful use in both years. CMS payment data suggest uneven progress on achieving meaningful use by hospitals according to characteristics typically associated with the digital divide. The percentage of hospitals receiving a payment increased at a relatively even rate across disproportionate-share payment quartiles (Exhibit 1) and rural versus urban location (Exhibit 2), but the percentage of critical-access hospitals that received a payment declined slightly from 2011 to Furthermore, smaller proportions of government-owned and nonprofit hospitals received payments, compared to the proportion of for-profit institutions. Discussion Findings from this and previous studies suggest that the Medicare EHR incentive program has led to the increased adoption of EHR systems.we saw an increasing number of hospitals successfully attesting to the achievement of meaningful use and receiving payments for doing so. Although this progress is encouraging, the findings also indicate that much work remains to be August :8 Health Affairs 1357
4 Exhibit 1 Hospitals Receiving Medicare Payments For Achieving Meaningful Use Of Electronic Health Record Systems, By Selected Hospital Characteristics, Federal Fiscal Years 2011 And 2012 Federal fiscal year 2011 Federal fiscal year 2012 Hospitals receiving incentive payments Hospitals receiving incentive payments Characteristic Hospitals Number Percent Hospitals Number Percent Total 4, ,746 1, Number of beds Fewer than 100 2, , or more 1, , Teaching status Teaching 1, , Nonteaching 3, ,710 1, Region Northeast Midwest 1, , South 1, , West Disproportionate-share patient percentage quartile 1st (lowest) nd rd th (highest) SOURCE Authors analysis of Medicare meaningful-use payment data. NOTES For fiscal year 2011, total hospital counts were based on the final fiscal year 2012 Centers for Medicare and Medicaid Services (CMS) data file for hospitals paid under the Medicare inpatient prospective payment system and the list of critical-access hospitals as of March 31, For fiscal year 2012, total hospital counts were based on the final fiscal year 2013 CMS data file for hospitals paid under the Medicare inpatient prospective payment system and the list of critical-access hospitals as of April All critical-access hospitals were included in the categories of fewer than 100 beds and nonteaching hospitals. Disproportionate-share patient percentages were from the inpatient prospective payment system data files for fiscal years 2012 and Quartiles were based only on the prospective payment system hospitals because criticalaccess hospitals do not receive disproportionate-share payments. Thus, critical-access hospitals were not included in the counts or percentages by quartile. The analysis included hospitals in Maryland (which differs from most other states in having an all-payer system statewide) but excluded those in Puerto Rico. done. The majority of eligible hospitals did not achieve meaningful use in the first two years of the program. Furthermore, certain types of hospitals particularly smaller institutions were less likely than others to have received incentive payments. These findings suggest that at least as of the conclusion of the program s first two years, the digital divide persists. Critical-access and smaller hospitals appear to be at particular risk for failing to achieve Medicare meaningful use and incurring penalties as a result. These hospitals face a unique set of challenges related to their small size. First, the low patient volume at these institutions complicates long-range planning and limits their ability to maintain an adequate cash flow. That limitation in turn affects their ability to commit to large, capital-intensive projects such as the adoption of an EHR system. Low patient volume can also be a barrier to participation in the program because these hospitals may not have the operating resources needed to meet specific meaningful-use criteria. Second, small and critical-access hospitals may not be able to offer competitive salaries and thus may have difficulty recruiting and retaining skilled information technology (IT) personnel. Furthermore, the IT staff members at these institutions may be asked to take on all tasks related to health IT, becoming expert in hardware, software, networking, and security rather than specializing in one area, as they might at a larger hospital. Finally, such small institutions may have difficulty finding a suitable health IT vendor. One of the likely effects of the meaningful-use program is that a large number of institutions entered the market for EHR systems at the same time, potentially causing the demand for such products to outstrip the supply. In such situations, vendors may be inclined to focus on larger institutions, whose budgets for adoption and implementation are also larger Health Affairs August :8
5 Exhibit 2 Hospitals Receiving Medicare Payments For Achieving Meaningful Use Of Electronic Health Record Systems, By Urbanicity, Access, And Ownership, Federal Fiscal Years 2011 And 2012 Percent of hospitals receiving payments Urban location Rural location Critical-access hospital Government owned SOURCE Authors analysis of Medicare meaningful-use payment data. NOTES For fiscal year 2011, total hospital counts were based on the final fiscal year 2012 Centers for Medicare and Medicaid Services (CMS) data file for hospitals paid under the Medicare inpatient prospective payment system and the list of critical-access hospitals as of April For fiscal year 2012, total hospital counts were based on the final fiscal year 2013 CMS data file for hospitals paid under the Medicare inpatient prospective payment system and the April 2013 release of the TRICARE list of critical-access hospitals. Policy Implications The challenges to achieving meaningful use for small and critical access hospitals are multifaceted and suggest several areas for policy makers to address. Grant programs that provide additional funds for the adoption and implementation of an EHR system could be targeted at smaller hospitals to meet their particular financing needs. In addition, a portion of the resources of the health IT Workforce Development Program, funded by the Office of the National Coordinator for Health Information Technology, could be used to develop a rural IT workforce to help mitigate the challenges to recruitment and retention faced by these institutions. 8 Finally, policy makers should carefully monitor vendor capacity to ensure that even hospitals with relatively small budgets can have their needs met. Conclusion Our findings reinforce concerns previously expressed about the pace of implementation of the Medicare incentive program across all hospitals. 9 Fewer than half of eligible hospitals received a payment under stage 1 meaningfuluse criteria for fiscal year Stage 2 criteria will begin to be applied in fiscal year 2014 that is, starting in October 2013 and penalties for failure to successfully attest to the achievement of meaningful use will begin in fiscal year By design, each consecutive stage of meaningful use will be increasingly difficult to achieve and builds on earlier progress. Thus, it is not clear how many hospitals that achieved stage 1 meaningful use will be able to attest to future levels of achievement. Any hospitals unable to meet stage 1 meaningful-use criteria by July 2014 will face penalties in the form of reduced Medicare payments; so will those that met the criteria for stage 1 but are unable to meet those for stage 2. These penalties are likely to account for 1 3 percent of all Medicare payments for inpatient services and remain in place until the meaningful-use criteria are met. For hospitals with fewer resources, this could be a substantial financial burden. Our findings suggest that as stage 2 criteria are implemented, policy makers should pay particular attention to smaller and critical-access hospitals to ensure that they are able to meet the meaningful-use standards. Without the full participation of these hospitals, the nation will not be able to achieve the larger policy goal of sharing data across providers and ensuring that clinical information follows patients wherever they receive care. August :8 Health Affairs 1359
6 NOTES 1 Centers for Medicare and Medicaid Services. Medicare and Medicaid programs: electronic health record incentive program stage 2. Final rule. Fed Regist. 2012;77(171): Blumenthal DM. Implementation of the federal health information technology initiative. N Engl J Med. 2011;365(25): According to the Office of the National Coordinator for Health Information Technology s analysis of data from the Medicare and Medicaid electronic health record incentive program. 4 Charles D, King J, Patel V, Furukawa MF. Adoption of electronic health record systems among U.S. nonfederal acute care hospitals: [Internet]. Washington (DC): Office of the National Coordinator for Health Information Technology; 2013 Mar [cited 2013 Jul 1]. (ONC Data Brief No. 9). Available from: default/files/oncdatabrief9final.pdf 5 DesRoches CM, Charles D, Furukawa MF, Joshi MS, Kralovec P, Mostashari F, et al. Adoption of electronic health records grows rapidly, but fewer than half of US hospitals had at least a basic system in Health Aff (Millwood). 2013;32(8): Centers for Medicare and Medicaid Services. EHR incentive program: active registrations [Internet]. Baltimore (MD): CMS; 2012 Apr [cited 2013 Jul 1]. Available from: Programs/Downloads/Monthly_ Payment_Registration_Report_ Updated.pdf 7 Hospitals must attest to meeting the meaningful-use criteria for at least ninety days during the fiscal year in order to receive a payment for meaningful use. Therefore, even though our data contained all payments made through the end of calendar year 2012, we did not have data on payments for achieving meaningful use in fiscal year Health IT.gov. Health IT adoption programs: Workforce Development Program [Internet]. Washington (DC): Department of Health and Human Services; [cited 2013 Jul 1]. Available from: 9 Wright A, Henkin S, Feblowitz J, McCoy AB, Bates DW, Sittig DF. Early results of the meaningful use program for electronic health records. N Engl J Med. 2013;368(8): Health Affairs August :8
Web First. 2 Health Affairs MAY 2012 31:5
By Catherine M. DesRoches, Chantal Worzala, Maulik S. Joshi, Peter D. Kralovec, and Ashish K. Jha Small, Nonteaching, And Rural Hospitals Continue To Be Slow In Adopting Electronic Health Record Systems
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