MEANINGFUL USE OF CERTIFIED ELECTRONIC HEALTH RECORDS: MEDICARE AND MEDICAID INCENTIVE PAYMENTS

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1 MEANINGFUL USE OF CERTIFIED ELECTRONIC HEALTH RECORDS: MEDICARE AND MEDICAID INCENTIVE PAYMENTS Presented to Alabama Psychiatric Association D. Brent Wills, Esq. Kaufman Gilpin McKenzie Thomas Weiss P.C. March 24,

2 1. The HITECH Act On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 ( ARRA, also known as the Stimulus Bill ) into law. Title XIII, Division A and Title IV, Division B of ARRA are referred to collectively as the Health Information Technology for Economic and Clinical Health Act (the HITECH Act ). 1 Among other things, the HITECH Act established incentive payment programs within Medicare and Medicaid (the Medicare Incentives Program and the Medicare Incentives, and the Medicaid Incentives Program and the Medicaid Incentives, respectively) to encourage physicians and other eligible professionals to make meaningful use of certified electronic health record ( EHR ) technology. Proponents of the HITECH Act believe that by making meaningful use of certified EHRs, eligible professionals will improve the quality, safety and efficiency of healthcare delivery, and reduce health disparities; engage patients and families in their healthcare; ensure adequate privacy and security protections for personal health information; improve patient care coordination; and improve population and public health. The Medicare Incentives Program commenced January 1, 2011 and will continue through The program is being administered by the federal Centers for Medicare and Medicaid Services ( CMS ), an agency of the federal Department of Health and Human Services ( HHS ), in conjunction with the Office of the National Coordinator of Health Information Technology ( ONC ). Eligible professionals are not required to treat any particular number of Medicare patients to participate in the Medicare Incentives Program; any eligible professional who submits claims for payment under the Medicare physician fee schedule, on his or her own behalf or for patients, may be eligible for Medicare Incentives. Ultimately, however, all such eligible professionals must demonstrate meaningful use; those who do not will eventually be subject to penalties. The Medicaid Incentives Program, however, is voluntary. States are not obligated to participate, 2 and eligible professionals who do not demonstrate meaningful use will not be subject to penalties. The Alabama Medicaid Incentives Program will be administered by the Alabama Medicaid Agency ( Alabama Medicaid ). As explained further below, Alabama Medicaid expects that the program will commence in April, 2011 and that it will continue through The program is built upon a framework established by CMS, but Alabama Medicaid has established its own State Medicaid Health Information Technology Plan (the Alabama SMHP ) that includes important details specific to the Alabama program. 3 Significantly, the Alabama Medicaid Incentives Program is open to a broader range of providers than the Medicare Incentives Program, including certain non-physician providers, but eligible 1 The text of the HITECH Act may be accessed online at 2 A number of State Medicaid Incentives Programs have already begun. To date, only one state (Montana) has given any indication that it will not implement its own Medicaid Incentives Program. 3 The Alabama SMHP may be accessed online at Documents_and_Links/1.5.1_Alabama/1.5.1_AL_SMHP_Version_1_1_ pdf. Note that, as required under the HITECH Act, the Alabama SMHP has been approved by CMS. 2

3 professionals who participate must maintain certain minimum Medicaid patient volumes to qualify for incentives. 2. Certified EHR Technology The HITECH Act created ONC to develop and implement standards and procedures for certifying EHR technology that will support meaningful use, for purpose of the Medicare Incentives Program and the Medicaid Incentives Program. During 2010, ONC established an initial set of standards (the EHR Certification Standards ), as well as a temporary program and procedures to select organizations ( Authorized Testing and Certification Bodies, or ONC- ATCBs ) to test and certify EHRs for compliance with the EHR Certification Standards. To date, ONC has certified six (6) ONC-ATCBs: (1) Certification Commission for Health Information Technology ( CCHIT ) 4 (2) Drummond Group 5 (3) InfoGard 6 (4) SLI Global Solutions 7 (5) ICSA Labs 8 (6) Surescripts, LLC 9 A Certified EHR may be in the form of (i) a complete EHR that itself meets all the requirements of the EHR Certification Standards; or (ii) a combination of EHR modules that collectively satisfy the requirements of the EHR Certification Standards and each individually satisfy at least one requirement of the Standards. To date, ONC-ATCBs have certified over 400 EHRs. 10 ONC established the Temporary ONC-ATCB Program to facilitate timely commencement of the Medicare Incentives Program and the Medicaid Incentives Program. ONC recently issued regulations that will establish a permanent certification program (the Permanent ONC-ACB Program ), and ONC anticipates that the Permanent ONC-ACB Program 4 For information regarding EHR certification by CCHIT, please see Importantly, no EHRs certified by CCHIT prior to the creation of the Temporary ONC-ATCB program were grandfathered for certification. 5 For additional information regarding EHR certification by Drummond Group, please see 6 For additional information regarding EHR certification by InfoGard, please see html/approved+onc-atcb+laboratory. 7 For additional information regarding EHR certification by SLI Global Solutions, please see 8 For additional information regarding EHR certification by ICSA Labs, please see https://www.icsalabs.com/technology-program/onc-ehr. 9 For additional information regarding EHR certification by Surescripts, LLC, please see 10 An updated list of all certified EHRs is available on the ONC website, accessible at 3

4 will replace the Temporary ONC-ATCB Program January 1, The Permanent ONC-ACB Program will certify EHR products that will support Stage 2 meaningful use requirements (discussed further below) Meaningful Use With one exception, 12 to qualify for the Medicare Incentives and the Medicaid Incentives, eligible professionals must demonstrate meaningful use of certified EHRs. CMS and ONC are developing meaningful use requirements in three stages, to be implemented as follows: Payment Year First Payment Year Stage 1 Stage 1 Stage 2 Stage 2 T/B/D 2012 Stage 1 Stage 1 Stage 2 T/B/D 2013 Stage 1 Stage 2 T/B/D 2014 Stage 1 T/B/D 2015 T/B/D CMS issued the Stage 1 requirements for meaningful use in As reflected in the table above, the Stage 1 requirements will apply with respect to all eligible professionals who seek to qualify for the Medicare Incentives or the Medicaid Incentive payments for the first time in 2011, 2012, 2013 or 2014 and in the second payment year for eligible professionals who qualify initially in 2011 and Beginning in 2013 and 2014, however, eligible professionals who have demonstrated meaningful use in previous years will be required to satisfy the more advanced Stage 2 requirements to qualify for Medicare Incentives and Medicaid Incentives. CMS and ONC are currently developing the Stage 2 requirements, and CMS anticipates issuing regulations to finalize these requirements later this year. CMS and ONC will develop the Stage 3 requirements in future rule making. 14 As the table indicates, CMS has not specified whether, when or to whom the Stage 1, Stage 2 or Stage 3 requirements will apply beyond ONC published a final rule to establish the Permanent ONC-ATCB Program in the Federal Register on January 7, The final rule may be accessed at 12 See discussion in Section 5(d) below, explaining that eligible professionals need only adopt, implement or upgrade certified EHRs to qualify for the Medicaid Incentives in the first payment year. 13 CMS published a final rule establishing the Stage 1 meaningful use requirements in the Federal Register July 28, The Stage 1 Final Rule may be accessed online at 14 ONC s HIT Policy Committee recently developed recommendations regarding the Stage 2 meaningful use requirements. The Committee s recommendations may be accessed at %20_ _final.pdf. The Committee published the request for public comment in the Federal Register January 18, The request may be accessed at The 4

5 (a) Prerequisites Eligible professionals must register to participate in the Medicare Incentives Program and the Medicaid Incentives Program and meet certain other prerequisites. To register, eligible professionals under both the Medicare Incentives Program and the Medicaid Incentives Program must have a National Provider Identifier ( NPI ) and an account in the National Plan and Provider Enumeration System ( NPPES ). (b) Registration During January and February, 2011, more than 21,000 individual healthcare providers registered for the Medicare Incentives Program or the Medicaid Incentives Program. An eligible professional must register for the Medicare Incentives Program or the Medicaid Incentives Program, as the case may be, only once (not annually), and he or she does not need a certified EHR to register. Moreover, an eligible professional my register for the Medicare Incentives Program or the Medicaid Incentives Program (once available) at any time, regardless of the date he or she intends to begin meaningful use. (c) Stage 1 Meaningful Use Requirements In Stage 1, eligible professionals must satisfy the same meaningful use requirements to qualify for the Medicare Incentives or the Medicaid Incentives. In either case, an eligible professional must satisfy (i) all of a list of 15 specified core meaningful use objectives and measures; and (ii) at least five 16 of a menu of 10 remaining objectives and measures. 17 For example, as core requirements, eligible professionals must transmit at least 40 percent of their prescriptions electronically, 18 enter at least one medication in an EHR for at least 30 percent of comment period ended February 25, Thus, it is not clear, for example, whether eligible professionals who have not previously demonstrated meaningful use will be required to meet Stage 2 meaningful use requirements to avoid payment penalties in Eligible professionals must satisfy, or properly exclude, one of the public health menu options. That is, unless the applicable exclusion criteria is satisfied, the eligible professional must either (i) perform one test of his or her certified EHR s ability to submit electronic immunization data to immunization registries (and follow up submission, if the test is successful); or (ii) perform one test of his or her certified EHR s ability to submit electronic syndromic surveillance data to public health agencies (and follow up submission, if the test is successful). Note that CMS allowed the States the flexibility to require that eligible professionals satisfy certain additional menu options attributable to public health, but Alabama Medicaid declined to do so for Stage A complete list of the Stage 1 meaningful use objectives and measures is included in Appendix A1 (core set) and Appendix A2 (menu set) attached hereto. Please see also the Eligible Professional Meaningful Use Table of Contents Core and Menu Set Measures produced by CMS. This item includes detailed CMS commentary and guidance regarding each meaningful use objective and measure. It is accessible online at https://www.cms.gov/ehrincentiveprograms/downloads/ep-mu-toc-core-and-menuset-objectives.pdf. 18 Note that prescriptions for controlled substances (i.e., non- permissible prescriptions) will not be taken into account in this calculation. 5

6 their patients who take medications, and record certain demographic information in an EHR for more than 50 percent of their patients. 19 In addition, the core meaningful use objectives and measures require that eligible professionals report information regarding certain clinical quality measures. Specifically, eligible professionals must report the results of three core clinical quality measures (or, if one or more of the core clinical quality measures is not applicable, one or more of three alternative core clinical quality measures), plus any three of a menu of 38 remaining measures. 20 (d) Attestation and Reporting To qualify for Medicare Incentives or Medicaid Incentives, an eligible professional must notify CMS or Alabama Medicaid, as the case may be, that he or she has met the meaningful use objectives and measures required to qualify for incentive payments. In general, this notice will be provided by attestation. With respect to certain meaningful use objectives and measures, an eligible professional must simply reply Yes or No. 21 Other measures require calculations to reflect whether the eligible professional has, for example, taken certain actions, or captured certain data, with respect to a specified percentage of patients. 22 In these instances, the eligible professional will be required to provide the numerator, denominator and the resulting percentages for the required calculations. Like the other meaningful use objectives and measures, eligible professionals will report required clinical quality measures information by attestation in Beginning in 2012, however, eligible professionals must report this information to CMS or Alabama Medicaid, as the case may be, electronically, using particular electronic specifications. 23 Note that, although an eligible professional need not have a certified EHR to register for the Medicare Incentives Program or the Medicaid Incentives Program, he or she will be required, 19 Note that eligible professionals must satisfy one or more of the public health menu items (i.e., submit electronic data to immunization registries or systems, or provide syndromic surveillance data to public health agencies). 20 Complete list of the Stage 1 clinical quality measures attached hereto as Appendix B. The core and alternative core clinical quality measures are identified in Appendix C attached hereto. 21 For example, one meaningful use measure requires an eligible professional to attest that he or she has implemented drug-drug and drug-allergy interaction checks using his or her certified EHR. 22 Certain of the measures will be reflected as a percentage of an eligible professional s total patient encounters (e.g., problem and medication lists, demographics, electronic access), while others will be reflected only as a percentage of the patients for whom an eligible professional maintains certified EHRs (e.g., CPOE, e-prescribing). 23 CMS has indicated that it will allow eligible professionals to report clinical quality measures through one of several methods. It is anticipated that most eligible professionals will report clinical quality measures information to CMS through an online portal provided or designated by CMS. CMS also anticipates receiving this information from eligible professionals through one or more health information exchanges, and through certain registries. CMS anticipates publishing the technical requirements for reporting clinical quality measures not later than July 1, Alabama Medicaid will also publish details and specifications regarding when and how eligible professionals will report clinical quality measures. 6

7 in order to attest to meaningful use, to provide the ONC certification number for his or her EHR. 24 (e) Non-Applicable Objectives and Measures Not all the Stage 1 meaningful use objectives and measures, and not all the Stage 1 clinical quality measures, will apply to every eligible professional. Eligible professionals are not required to treat patients who meet the criteria set forth in the various objectives measures in order to demonstrate meaningful use. 25 Rather, CMS has provided specific exclusion criteria with respect to certain of the meaningful use objectives and measures. 26 If an eligible professional meets the exclusion criteria, the corresponding meaningful use objective and measure will not be considered in determining whether the eligible professional has demonstrated meaningful use. 27 Similarly, although eligible professionals must report three core (or alternative core) clinical quality measures, plus three additional clinical quality measures, CMS has indicated that, in cases where a particular measure does not apply to his or her practice (i.e., he has no patients who meet the criteria for the measure), the eligible professional may report zero in the measure s denominator. 28 In the event an eligible professional does not have any patients who meet the criteria for a core clinical quality measure (e.g., a pediatrician probably would not perform adult weight screenings, or influenza immunization for patients over 50 years old), the eligible professional must (i) report zero for the inapplicable measure; and (ii) report one or more of the alternative core measures. With respect to the additional clinical quality measures, if an eligible professional does not have patients that meet the criteria for three or more measures, he or she must (i) report zero for one (or two, or all, as applicable) additional measure; and (ii) attest that he or she does not have patients that meet the criteria for the (35) remaining additional clinical quality measures. 24 Eligible professionals may obtain or confirm EHR certifications numbers online at 25 As explained further below, however, eligible professionals must maintain certain Medicaid patient volumes to qualify for Medicaid Incentives (i.e., to be an eligible professional, for purposes of the Alabama Medicaid Incentives Program). 26 Please see the exclusion criteria set forth in the right-hand column in Appendix A1 and Appendix A2 attached hereto. 27 Note that, in effect, an eligible professional will be deemed to have satisfied any meaningful use objectives and measures he or she properly excludes. That is, for example, an eligible professional who does not administer immunizations (e.g., a dentist, or a psychiatrist) would be permitted to exempt the menu meaningful use requirement that an eligible professional submit electronic data to immunization registries or information systems. In this case, CMS has indicated that the eligible professional will only be required to meet four, and not five, of the remaining nine Stage 1 menu requirements to demonstrate meaningful use. 28 See e.g., at page

8 (f) Reporting Period Eligible professionals may qualify for one Medicare Incentives payment, or one Medicaid Incentives payment, each year (i.e., each payment year ). 29 In order to qualify for Medicare Incentives or Medicaid Incentives for a particular payment year, an eligible professional must demonstrate meaningful use throughout the reporting period applicable to that year. With certain exceptions with respect to the first and second payment years (discussed further below), the applicable reporting period is the calendar year. Upon completion of an applicable reporting period, an eligible professional may attest that he or she demonstrated meaningful use throughout the reporting period to qualify for Medicare Incentives or Medicaid Incentives. (g) Incentive Payments Following a successful attestation, CMS and Alabama Medicaid will pay Medicare Incentives and Medicaid Incentives to a qualified eligible professional in a single, lump sum. CMS has stressed, however, that the Medicare Incentives and Medicaid Incentives are incentives, and not reimbursements for an eligible professional s costs associated with his or her certified EHR. The incentives under both programs are also subject to specific annual maximum amounts that, with limited exception, 30 do not vary based on an eligible professional s specialty or practice setting, or his or her costs incurred during a payment year for meaningful use. In addition, CMS has indicated that Medicare Incentives and Medicaid Incentives likely will be subject to income tax and will be to subject to offset or recoupment by program contractors. Moreover, although CMS has not published specific audit or appeals procedures for the Medicare Incentives program or the Medicaid Incentives program, CMS (and the States, in regard to Medicaid Incentives) 31 may review an eligible professional s demonstration of meaningful use and requires that eligible professionals retain documentation supporting demonstrations of meaningful use for six years Eligible professionals are permitted to switch programs once, and only once, and they may not switch programs after As indicated in Section 4(f) below, an eligible professional who practices predominantly in a HPSA (defined below) may qualify for Medicare Incentives in excess of the maximum amount applicable to other eligible professionals. 31 Indeed, the Alabama SMHP establishes certainly preliminary audit procedures with respect to Medicaid Incentives paid in Since it anticipates that most or all eligible professionals who receive Medicaid Incentives during 2011 will do so by attesting to acquiring, implementing or upgrading certified EHRs, and not meaningful use, Alabama Medicaid anticipates that its initial audit efforts will target eligibility criteria (e.g., EHR certification, patient volume, whether an eligible professional practices predominantly in an FQHC or RHC, if applicable, and whether and how an eligible professional acquired, implemented or upgraded a certified EHR). 32 For good measure, CMS has substantially limited judicial review of its determinations regarding meaningful use and most other matters relating to the Medicare Incentives Program and the Medicaid Incentives Program. As government agencies continue to ramp up enforcement efforts in regard to Medicare and Medicaid, eligible professionals must be diligent in documenting compliance with the certification and meaningful use requirements under the Medicare Incentives Program and the Alabama Medicaid Incentives Program. 8

9 4. Medicare Incentives Program Eligible professionals may participate in the Medicare Incentives Program or the Medicaid Incentives Program, but not both. 33 This section provides certain additional details regarding the Medicare Incentives Program, and highlights certain key distinctions between the Medicare Incentives Program and the Medicaid Incentives Program. (a) Eligible Professional For purposes of the Medicare Incentives Program, an individual is an eligible professional if he or she (i) is a doctor of medicine, osteopathy, dental surgery or medicine, podiatric medicine, or optometry, or a chiropractor; 34 (ii) participates in the Medicare fee-forservice reimbursement program; 35 and (iii) is not hospital based. A physician is hospital based if he or she provides substantially all (i.e., 90 percent or more) of his or her services in inpatient and emergency settings (i.e., POS 21 or 23). 36 If an eligible professional practices in multiple locations, not all of which have certified EHRs, in order to qualify for the Medicare Incentives, at least 50 percent of her patient encounters must occur at locations that have certified EHRs. 37 (b) Prerequisites To participate in the Medicare Incentives Program, an eligible professional must (i) register with CMS; (ii) have an NPI; (iii) establish a user account in NPPES; and (iv) be registered with the Provider Enrollment, Chain and Ownership System ( PECOS ). (c) Registration Eligible professionals began registering for the Medicare Incentives Program January 1, Eligible professionals may register for the program using the EHR Incentive Program 33 Eligible professionals may switch programs once (and only once), but not after The definition of eligible professional, for purposes of the Medicare Incentives Program, parallels the definition of physician set forth in at 42 U.S.C. 1395x(r). The definition includes psychiatrists, but does not include clinical psychologists and other behavioral health providers. Non-physician providers (e.g., physician assistants, nurse practitioners) also are not eligible for Medicare Incentives. 35 Note that, even if an eligible professional does not accept assignment of Medicare Part B (i.e., does not take Medicare patients ), he or she may still qualify for Medicare Incentives with respect to claims he or she submits to Medicare for Part B fee-for-service reimbursement on behalf of patients. 36 CMS intends to determine whether a physician is hospital-based annually, based on claims made during the federal fiscal year (i.e., beginning October 1), and not the calendar year, preceding the year the physician registers for the Medicare Incentives Program. CMS will notify the physician of its determination when the physician registers for the Medicare Incentives Program. 37 If this requirement is satisfied, whether the eligible professional will satisfy the relevant meaningful use objectives and measures will be determined based only on his or her patient encounters that occurred at locations that had certified EHRs, not his or her overall patient encounters. 9

10 Registration and Attestation System on the CMS website (the CMS Registration / Attestation Website ). 38 To qualify for Medicare Incentives for a payment year, an eligible professional must register for the Medicare Incentives Program within two (2) months following the end of the year. 39 Currently, eligible professionals must register themselves for the Medicare Incentives Program and personally attest to meeting the qualifications for Medicare Incentives (i.e., demonstrating meaningful use). Beginning in May, 2011, however, CMS intends to implement functionality that will permit a third party (e.g., practice administrator) to register and attest on an eligible professional s behalf. 40 (d) Reporting Period To qualify for the Medicare Incentives Program for the first payment year (whether in 2011 or in a subsequent year), an eligible professional must only demonstrate meaningful use of a certified EHR for ninety (90) consecutive days during a calendar year. 41 For subsequent payment years, the applicable reporting period is the calendar year. (e) Attestation and Payment Mechanics With respect to his or her first payment year, an eligible professional may attest that he or she has demonstrated meaningful use immediately following the required 90-day reporting period. Consequently, eligible professionals who have demonstrated meaningful use continuously since January, 2011 will begin to attest and qualify for Medicare Incentives beginning in April, CMS has indicated that it will pay Medicare Incentives to qualified eligible professionals within days after they attest that they have demonstrated meaningful use for the applicable reporting period. Thus, CMS expects to begin paying Medicare Incentives in May, 2011 to eligible professionals who attest in April. Thereafter, CMS will pay Medicare Incentives to qualified eligible professionals (i) for the first payment year (whether in 2011 or in a subsequent calendar year), on a rolling basis; 42 and (ii) in subsequent payment years, after the 38 The CMS Registration / Attestation Website may be accessed at https://www.cms.gov/ehrincentiveprograms/20 _RegistrationandAttestation.asp. Among other things, the CMS Registration/Attestation Website includes an online, step-by-step guidebook for eligible professionals registering for the Medicare Incentive Program. 39 Thus, to qualify for Medicare Incentives for 2011, for example, an eligible professional must register for the Medicare Incentives Program not later than February, CMS has not yet issued specific guidance regarding third-party registration and attestation. For additional information and updates, please see the CMS Registration and Attestation Website, at https://www.cms.gov/ehrincentiveprograms/20_registrationandattestation.asp. 41 Thus, for example, to qualify for Medicare Incentives with respect to 2011, an eligible professional must begin meaningful use not later than October 2, Thus, for example, if an eligible professional commences meaningful use March 1, 2012, and continues meaningful use through June 29, 2012, and attests to such meaningful use immediately thereafter, he or she can expect to receive her Medicare Incentives payment for 2012 sometime between mid-july and late August, In the event that the eligible professional has not accumulated sufficient allowed Medicare charges to receive the maximum Medicare Incentives ($24,000 in charges for 2012), CMS will hold payment of the incentives until the eligible professional reaches the maximum incentives amount (or until the end of the year). 10

11 end of the calendar year. CMS will pay Medicare Incentives to a qualified eligible professional through the same channels, and in the same form (e.g., electronic funds transfer or check), as it uses to make reimbursement payments to him or her under Medicare Part B. (f) Calculation of Medicare Incentive Payments If an eligible professional qualifies for Medicare Incentives, CMS will pay him or her seventy-five percent (75%) of his or her allowed Medicare Part B fee-for-service charges 43 for services he or she performs during the applicable payment year, subject to annual maximums, 44 as follows: Total $18,000 $12,000 $8,000 $4,000 $2, $44,000 $18,000 $12,000 $8,000 $4,000 $2,000 $44,000 $15,000 $12,000 $8,000 $4,000 $39,000 $12,000 $8,000 $4,000 $24,000 As reflected in the table above, eligible professionals may qualify for Medicare Incentives for up to a maximum of five (5) consecutive years 45 and maximum aggregate incentive payments of $44,000. CMS will not pay Medicare Incentives to eligible professionals after Consequently, eligible professionals who wish to receive the maximum Medicare Incentives must qualify beginning in 2011 or Moreover, eligible professionals who do not demonstrate meaningful use of certified EHRs by 2014 may not qualify for Medicare Incentives in 2015 or 2016, and those who do not demonstrate meaningful use of certified EHRs in 2015 or later years will be subject to Medicare payment penalties. Note that the maximum Medicare Incentives will be 10 percent greater (e.g., aggregate maximum of $48,400) for eligible professionals who provide more than fifty percent (50%) of their services in health professional shortage areas ( HPSAs ) The Medicare Incentives payable for a particular year will be determined based on services furnished during the year for which the eligible professional submits claims for payment to Medicare not more than two months after the end of the year. Medicare Incentives are based solely, though, on allowed Part B fee-for-service charges. Thus, for example, charges for services performed at a rural health clinic (billable under Medicare Part A, not Medicare Part B) would not be counted in determining the amount of an eligible professional s Medicare Incentives payment. 44 Note that excess Medicare fee-for-service charges (i.e., allowed charges in excess of the allowed charges that yield the annual maximum Medicare Incentives) may not be carried forward to subsequent years, or back to prior years. 45 Consequently, for example, notwithstanding that CMS will pay Medicare Incentives to eligible professionals through 2016, an eligible professional who initially demonstrates meaningful use of a certified EHR in 2011 may not qualify for Medicare Incentives in A particular area will be deemed a HPSA, for this purpose, if it was a HPSA as of December 31 of the year that preceded the applicable Medicare Incentives payment year. 11

12 (g) Penalties An eligible professional who does not establish that he or she is a meaningful user of a certified EHR in 2015 or in subsequent years will be subject to Medicare payment penalties. Specifically, CMS will reduce Medicare Part B fee-for-service payments to non-meaningful users by one percent (1%) in 2015, two percent (2%) in 2016, three percent (3%) in 2017 and up to five percent (5%) for each year thereafter. 47 These penalties apply to any eligible professional, 48 regardless of whether he or she has registered for the Medicare Incentives Program (or even implemented an EHR), and regardless of whether he or she qualified for all or any portion of available Medicare Incentives in prior years. 49 (h) Medicare Advantage If an eligible professional is affiliated with 50 a qualifying Medicare Advantage ( MA ) organization ( MAO ), 51 the MAO may qualify for Medicare Incentives (the MA Incentives ) with respect to the eligible professional. 52 (i) Other Programs Eligible professionals that participate in the Medicare Incentives Program may participate simultaneously in the Physicians Quality Reporting Initiative ( PQRI ), but they may not 47 The HITECH Act authorizes CMS to extend the Medicare penalties beyond 2017 if less than 75% of eligible professionals have demonstrated meaningful use of certified EHRs. 48 Doctors of medicine, osteopathy, and dental surgery or medicine, doctors of podiatric medicine, optometrists and chiropractors who are not hospital-based (see above) and makes claims for payment under the Medicare physician fee schedule, either on their own behalf or for their patients, are eligible professionals subject to the Medicare payment penalties. 49 CMS may, however, on a limited, case-by-case basis, exempt eligible professionals who are not meaningful EHR users from the Medicare payment penalties if it determines that demonstrating meaningful use would result in significant hardship, such as in the case of an eligible professional who practices in a rural area without sufficient internet access. The exemption is subject to annual renewal, but in no case will CMS exempt an eligible professional based on hardship for more than 5 years. CMS will further develop the requirements for this hardship exemption in future rulemaking. 50 Specifically, in order for the MAO to qualify to receive Medicare Incentives with respect to an eligible professional, the eligible professional must (i) either be employed by the MAO, or be employed by (or a partner of) an entity that furnishes at least 80 of its Medicare services to the MAO pursuant to a contract; (ii) furnish at least 80 % of her Medicare services to enrollees in the MAO; (iii)furnishes, on average, at least 20 hours per week of patient care services to enrollees of the MAO; and (iv) is not hospital-based. 51 A qualifying Medicare Advantage organization is a health maintenance organization ( HMO ). For this purpose, the Meaningful Use Final Rule provides that health maintenance organization includes a federally qualified HMO, an organization recognized as an HMO under applicable State law, or a similar organization regulated for solvency under applicable State law in the same manner and the same extent as an HMO. 52 If the eligible professional qualifies for and is paid the maximum Medicare Incentives for a particular year, the MAO may not qualify for MA Incentives. If, however, the eligible professional does not qualify for the maximum Medicare Incentives for a particular year, in lieu of paying Medicare Incentives to the eligible professional, CMS will pay MA Incentives to the MAO. Subject to the foregoing, MA Incentives will be determined in the same manner as Medicare Incentives. 12

13 simultaneously participate in the Medicare Electronic Prescribing Incentive Program ( Medicare e-prescribing ). 5. Medicaid Incentives Program This section provides certain additional details regarding the Medicaid Incentives Program, and highlights certain key distinctions between the Medicaid Incentives Program and the Medicare Incentives Program. (a) Eligible Professionals For purposes of the Medicaid Incentives Program, an individual is an eligible professional if (i) he or she is a physician, a nurse practitioner, a certified nurse midwife, a dentist, or (in certain circumstances 53 ) a physician assistant; 54 and (ii) either (A) he or she has a patient volume that consists at least 30 percent (20 percent for pediatricians) of Medicaid patients; or (B) he or she practices predominantly in a federally qualified health center ( FQHC ) or rural health clinic ( RHC), and his or her patient volume consists at least 30 percent of needy individuals. 55 The Alabama SMHP specifies the mechanics for calculating an eligible professional s Medicaid patient and needy individual populations. 56 Similarly to the Medicare Incentives Program, individual health care providers generally may not qualify for Medicaid Incentives if they are hospital based, except that individuals in the practice categories specified in (i) above, and who meet the special volume qualification above regarding FQHCs 53 A physician assistant may qualify for the Medicaid Incentives only if he or she practices in an FQHC or an RHC that is led by a physician assistant. An FQHC / RHC is led by a physician assistant if (i) a physician assistant is the primary provider in a clinic, or the clinical / medical director at a clinic practice site; or (ii) in the case of an RHC, the clinic is owned by physician assistants. 54 For purposes of the Alabama Medicaid Incentives Program, whether an individual is a physician or one of the other types of eligible professionals depends on whether he or she meets applicable qualifications under Alabama law. Consequently, for example, an individual is a physician, for purposes of the Medicaid Incentives Program, if she is a doctor of medicine or osteopathy legally authorized to practice Alabama. Alabama also has the option to treat optometrists as physicians. 55 Predominantly means that more than 50% of an eligible professional s clinical encounters over a six-month period occurred in a FQHC / RHC. Needy individuals consist of (i) individuals who receive medical assistance from Medicaid or the Children s Health Insurance Program; (ii) individuals for whom the eligible professional provides uncompensated care; and (iii) individuals for whom the eligible professional provides services at no cost or reduced cost based on the individual s ability to pay. 56 Specifically, for purposes of the Alabama Medicaid Incentives Program, an eligible professional s Medicaid patient volume will be the sum of (A) total patients assigned to a Medicaid managed care panel, with at least one encounter during the preceding calendar year and (B) all other unduplicated Medicaid patient encounters, divided by the sum of (Y) all patients assigned to the eligible professional, with at least one encounter during the preceding calendar year, plus (Z) all other Medicaid patient encounters. For this purpose, (i) encounters means services rendered to an individual on any one day where Medicaid paid some or all of the individual s premiums, copayments and cost-sharing; and (ii) the eligible professional s Medicaid patient encounters include encounters with Medicaid managed care patients and patients dually eligible for Medicare and Medicaid. The information needed to determine Medicaid patient volumes will be determined based on encounters and other data for January, February and March for the calendar year prior to the payment year. 13

14 and RHCs (i.e., practice predominantly in those settings, with the requisite needy patient population) qualify for Medicaid Incentives even if they are hospital-based. In addition, eligible professionals who practice in a clinic or group practice have the option to use clinic- or practice-level data to meet one of the patient volume thresholds. 57 This is subject to certain conditions, however, including, for example, that (i) the clinic- or practicelevel data must be appropriate for calculating an eligible professional s patient volume; 58 (ii) clinic- or practice-level volumes must be based on the patient encounters of all providers in the clinic or practice, not just eligible professionals; 59 and (iii) all eligible professionals at the clinic or practice must use (or not use) the clinic-level or practice-level data. (b) Prerequisites To participate in the Alabama Medicaid Incentives Program, an eligible professional must (i) register for the Program (see below); (ii) provide an NPI; and (iii) have an account in NPPES. Eligible professionals do not have to be registered with PECOS to qualify for Medicaid Incentives. (c) Registration Alabama Medicaid intends to allow eligible professionals to begin registering and participating in the Alabama Medicaid Incentives Program beginning April 1, Similarly to the Medicare Incentives Program, eligible professionals must register for the Alabama Medicaid Incentives Program through the CMS Registration/Attestation Website. Once they have registered with CMS, eligible professionals will be directed to the State Level Registry for Provider Incentive Payments 60 to complete registration for the Alabama Medicaid Incentives Program. Eligible professionals must register on both websites to qualify for Medicaid Incentives If an eligible professional practices in more than one setting (e.g., two different clinics or group practices, or a clinic or group and individual practice), the eligible professional may choose one (or more than one) such setting(s) to meet a Medicaid patient volume threshold; provided, however, that the eligible professional must make meaningful use of a certified EHR in at least one of the settings he or she chooses. 58 That is, for example, an eligible professional who sees only Medicare, commercial or self-pay patients may not leverage the patient volumes of other providers in his clinic or group practice to qualify for Medicaid Incentives. 59 This prevents eligible professionals with low Medicaid patient volumes from leveraging other (non-eligible professional) providers high Medicaid patient volumes to qualify for Medicaid Incentives. 60 This site may be accessed at 61 Alabama Medicaid has indicated that, similar to Medicare, it intends to implement functionality that will allow practice administrators and other third parties to register and attest on behalf of eligible professionals. Currently, however, eligible professionals must register and attest themselves, for purposes of the Alabama Medicaid Incentives Program. 14

15 (d) Reporting Period Unlike the Medicare Incentives Program, to qualify for Medicaid Incentives in the first payment year, an eligible professional need not demonstrate meaningful use; it is sufficient that he or she adopt, implement or upgrade a certified EHR. 62 In the second payment year, similar to the first payment year in the Medicare Incentives Program, the applicable reporting period is any period of ninety (90) consecutive days during the calendar year. Beginning in the third payment year, the applicable reporting period is the calendar year. (e) Attestation and Payment Mechanics In the first Medicaid Incentives payment year, an eligible professional may attest to meaningful use immediately upon acquiring, implementing or upgrading a certified EHR; there is no reporting period. Moreover, an eligible professional who has previously acquired a certified EHR (and who meets the requisite Medicaid patient volume thresholds, and is not hospital-based) may attest to having acquired, implemented or upgraded the EHR, as the case may be, immediately, beginning in April, Alabama Medicaid expects to pay Medicaid Incentives to qualified eligible professionals within 30 days after the date the eligible professional attests to acquiring, implementing or upgrading a certified EHR, or demonstrating meaningful use of a certified EHR, as the case may be. Thus, Alabama Medicaid expects to begin paying Medicaid Incentives in May, 2011 to qualified eligible professionals who attest in April (i.e., at the same time CMS begins paying Medicare Incentives). Thereafter, Alabama Medicaid will pay Medicaid Incentives to qualified eligible professionals (i) for the first and second payment years (whether in 2011 and 2010, or in later years), on a rolling basis; 63 and (ii) in subsequent payment years, after the end of the calendar year. (f) Calculating Medicaid Incentives Payments Alabama will pay qualified eligible professionals Medicaid Incentives in the following amounts: 62 The Alabama SMHP indicates that an eligible provider has (i) adopted a certified EHR, if he or she has purchased, acquired or installed a certified EHR; (ii) implemented a certified EHR, if he or she has installed a certified EHR and begun using it in his or her clinical practice, evidenced by, for example, staff training, entering patient demographic and administrative data, or establishing data exchange agreements or relationships relating to its EHR with other providers, such as laboratories, pharmacies, or health information exchanges; and (iii) upgraded a certified EHR if he or she has expanded the existing functionality of a certified EHR (e.g., added clinical decision support) to facilitate meaningful use, or upgraded an existing EHR to a certified EHR. Note that, for auditing purposes, Alabama Medicaid has indicated that it may request that an eligible professional who receives Medicaid Incentives provide, for example, a copy of a vendor contract or similar items that document acquisition, or confirmation by the eligible professional s staff regarding staff training, to verify implementation. 63 Thus, for example, if 2012 is the second payment year for an eligible professional, and the eligible professional commences meaningful use March 1, 2012, continues meaningful use through June 29, 2012, and attests to such meaningful use immediately thereafter, he or she can expect to receive her Medicaid Incentives payment for 2012 sometime between by the end of July,

16 Total $21,250 $8,500 $8,500 $8,500 $8,500 $8,500 $63,750 $21,250 $8,500 $8,500 $8,500 $8,500 $8,500 $63,750 $21,250 $8,500 $8,500 $8,500 $8,500 $8,500 $63,750 $21,250 $8,500 $8,500 $8,500 $8,500 $8,500 $63,750 $21,250 $8,500 $8,500 $8,500 $8,500 $8,500 $63,750 $21,250 $8,500 $8,500 $8,500 $8,500 $8,500 $63,750 As reflected in the table above, eligible professionals may qualify for Medicaid Incentives for up to a maximum of six (6) consecutive or non-consecutive years 64 and maximum total incentive payments of up to $63,750. The only exception is that pediatricians whose patient volume consists more than 20 percent, but less than 30 percent, of Medicaid patients may only receive two-thirds (2/3) of the allowable Medicaid Incentives ($42,500 maximum). 65 The table also reflects that eligible professionals need not begin meaningful use until 2016 to receive the maximum amount of Medicaid Incentives. Eligible professionals who do not begin meaningful use by 2016, however, may not receive Medicaid Incentives in subsequent years Thus, the progression of payments reflected in the above table is not mandatory. Rather, for example, if the applicable participating State(s) provide Medicaid Incentives beginning in 2011, an eligible professional could qualify for Medicaid Incentives with respect to the 2011, 2013, 2015, 2017, 2019 and 2021 payment years. 65 Unlike the Medicare Incentives, the amounts set forth in the table above are not based on the amount of Medicaid charges an eligible professional provides. Rather, they reflect eighty-five percent (85%) of the net average allowable costs for an eligible professional to (i) acquire, implement or upgrade to a certified EHR, in the first payment year; and (ii) demonstrate meaningful use of a certified EHR, in subsequent payment years. Note, however, that net average allowable costs are not determined based on an eligible professional s actual costs to acquire, implement or upgrade to, or make meaningful use of, a certified EHR, as the case may be. Rather, they are based on the net average costs for all eligible professionals, as determined by CMS. Specifically, CMS determined that the net average cost for an eligible professional to (i) acquire, implement or upgrade to a certified EHR would be $54,000; and (ii) demonstrate meaningful use of a certified EHR would be $20,106. Notwithstanding these determinations, for purpose of the Medicaid Incentives CMS imposed limits on the allowable net average costs, of (i) $25,000, for the first payment year; and (ii) $10,000, for subsequent payment years. The maximum Medicaid Incentives amounts set forth in the table reflect eighty-five percent (85%) of the allowable net average costs (i.e., net of the eligible professional s required fifteen percent (15%) contribution) based on the CMS imposed limits. 66 Note that the HITECH Act required (i) eligible professionals to bear a portion (i.e., at least 15 percent) of the costs associated with certified EHRs to qualify for Medicaid Incentives; and (ii) Medicaid Incentives payments to be reduced by contributions from non-government agencies. These requirements were removed by the Medicare and Medicaid Extenders Bill passed in December,

17 (g) Other Programs Eligible professionals who participate in the Medicaid Incentives Program may simultaneously participate in both PQRI and Medicare e-prescribing. 6. Stage 2 Meaningful Use Requirements ONC s HIT Policy Committee recently published recommendations regarding the Stage 2 meaningful use requirements. The recommendations would, among other things, (i) convert all Stage 1 menu objectives and measures (e.g., submit syndromic surveillance data, implement drug formularies, send patient reminders) to core objectives and measures for Stage 2; (ii) increase qualification thresholds for certain meaningful use measures (e.g., increase minimum e- prescribing threshold from 40 percent to 50 percent, minimum CPOE threshold from 30% to 60%); and (iii) add new objectives and measures that may include, for example, requirements that eligible professionals capture physician notes electronically, generate care team member lists, record longitudinal care plans and patients language and communications preferences, and offer patients the ability to download clinical encounter information and their health records. 67 A number of advocacy groups have objected to the recommendations, arguing, among other things, that the proposed upgrades to existing requirements are too aggressive, in scope and timing, that existing health information technology is not sufficient to facilitate electronic exchange of information and other Stage 2 requirements, 68 that certain Stage 2 requirements could potentially endanger individuals privacy, 69 and that certain requirements are improperly conditioned on actions to be taken by patients and other third parties Mental Health A recent study indicated that about one third (1/3) of psychiatrists nationally will not be able to qualify for the Medicare Incentives Program or the Medicaid Incentives Program. 71 Nonetheless, psychiatrists who participate in the Medicare Part B fee-for-service program, or 67 The complete recommendations may be accessed at 12_final.pdf. The Policy Committee published the request for public comment in the Federal Register January 18, The request may be accessed at The comment period ended February 25, For example, commenters have argued that the lack of a national health information exchange, and low number of established regional and local health information exchanges, and the lack of necessary technology at government and public health agencies and registries preclude eligible professionals from exchanging health information electronically with or through such entities. 69 For example, without adequate corresponding safeguards in place, requiring eligible professionals to provide electronic access to patients health information may give opportunity for thieves to obtain access to patients protected health information. 70 See, e.g., the letter to ONC dated February 25, 2011 from the American Medical Association and over thirty other medical associations, accessible online at and Karen Bell, MD, From the Chair: Meaningful Use Stages 2 and 3, March 3, 2011, accessible online at 71 See Brian K. Bruen, et al., More Than Four in Five Office-Based Physicians Could Qualify for Federal Electronic Health Record Incentives, Health Affairs, 30, no. 3 (2011):

18 who serve the required Medicaid patient volume, may have an easier path to qualifying for the Medicare Incentives or the Medicaid Incentives than some other eligible professionals, since they would likely be able to exclude most or all of the excludable meaningful use objectives and measures, and few, if any, of the Stage 1 clinical quality measures would likely apply to their practices. 72 Psychiatrists are eligible professionals, for purposes of the Medicare Incentives Program and the Medicaid Incentives Program, but clinical psychologists and other mental health providers are not. A number of legislative attempts have been made to broaden the scope of eligible professionals to include these and other providers. Most recently, Senator Sheldon Whitehouse (D-RI) re-introduced the Behavioral Health Information Technology Act of 2011 (S. 539). Senator Whitehouse had introduced the bill in 2010, but it did not make it through the legislative process before the Senate adjourned. Similarly, Representative Patrick Kennedy (D- RI) introduced the Health Information Technology Extension for Behavioral Health Services Act of 2010 (H.R. 5040), but the House of Representatives has not taken action on the bill. The American Psychiatric Association and other advocacy groups continue to lobby in favor of these and similar legislative efforts, but it is not clear whether or when they would be considered by either house of Congress, nor whether, or under what conditions, either house would pass them. 8. Commercial Insurers and Health Plans As the Medicare Incentive Program and the Medicaid Incentive Program commence, there is speculation regarding whether commercial insurers and health plans will begin to offer physicians and other health care providers incentives to use electronic health care records. 73 Such incentives could significantly impact eligible professionals (and other healthcare providers ) economic analysis with respect to electronic health records. To date, however, no commercial payers or plans in Alabama have indicated they will do so. In particular, Blue Cross and Blue Shield of Alabama does not have plans in motion to offer such incentives. These materials are provided by Kaufman Gilpin McKenzie Thomas Weiss, P.C. for educational and informational purposes only; they are not intended to constitute legal advice. If you require legal advice with respect to a particular matter, please contact appropriate legal counsel. 72 See American Psychiatric Association, Medicare and Medicaid Electronic Health Record (EHR) Incentive Payment Programs, accessible online at 73 See, e.g., Joseph Goedert, Payers Make Moves on EHR Incentives, August 9, 2010, accessible at 18

19 1 Use CPOE for medication orders directly entered by licensed health care professional who can enter orders into the medical record per state, local and professional standards 2 Implement drug-drug and drug-allergy APPENDIX A1 STAGE 1 MEANINGFUL USE OBJECTIVES AND MEASURES: CORE SET Objective Measure Exclusion Criteria More than 30% of unique patients with at least one medication in their medication list seen by the eligible professional have at least one medication ordered entered using CPOE interaction checks 3 Generate and transmit permissible prescriptions electronically (erx) 4 Record demographics preferred language gender race ethnicity date of birth 5 Maintain an up-to-date problem list of current and active diagnoses EP has enabled this functionality for the entire EHR Reporting Period More than 40% of all permissible prescriptions written by EP are transmitted electronically using certified EHR More than 50% of all unique patients seen by EP have demographics recorded as structured data More than 80% of all unique patients seen by EP have at least one entry or an indication that no problems are known for the patient recorded as structured data Eligible professionals who order less than 100 medications during the EHR Reporting Periods None EPs who order less than 100 medications during the EHR Reporting Periods None None 19

20 6 Maintain active medication list More than 80% of all unique patients seen by EP have at least one entry (or an indication that the patient is not currently prescribed any medication) recorded as structured data 7 Maintain active allergy list More than 80% of all unique patients seen by EP have at least one entry (or an indication that the patient has no known medication allergies) recorded as 8 Record and chart changes in vital signs Height Weight Blood pressure Calculate and display BMI Plot and display growth charts for children 2-20 years, including BMI 9 Record smoking status for patients 13 years old or older 10 Implement one clinical decision support rule relevant to specialty or high clinical priority along with the ability to track compliance that rule structured data For more than 50% of all unique patients age 2 and over seen by EP, height, weight and blood pressure are recorded as structured data More than 50% of all unique patients 13 years old or older seen by EP have smoking status recorded as structured data Implement one clinical decision support rule None None EPs who see no patients age 2 or over or who believe that the vital signs have no relevance on their scope of practice EP that sees no patients 13 years old or older during the EHR Reporting Period None 20

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