Overview Selected Health IT Provisions in The American Recovery and Reinvestment Act of 2009 (ARRA)

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1 Overview Selected Health IT Provisions in The American Recovery and Reinvestment Act of 2009 (ARRA) Susan M. Christensen Senior Public Policy Advisor Washington, DC (c) BAKER DONELSON This overview was prepared for the general informational use of the clients and attorneys/advisors of Baker Donelson and reflects our understanding of the ARRA as of the date on the front cover. Any views on the topics presented may change as our experience with ARRA deepens. Therefore, this overview is not intended as legal advice and is not intended or written to be used, and cannot be used, for the purposes of promoting, marketing, or recommending to another party any transaction or matter described or addressed herein. (c) BAKER DONELSON

2 Overview Definition of qualified technology Mandatory programs Medicare Eligible professionals Hospitals Medicaid Eligible professionals Hospitals Discretionary programs Office of the National Coordinator R&D Grants and Loans Privacy (c) BAKER DONELSON Qualified technology (c) BAKER DONELSON

3 Certified EHR technology ( 3000) `(1) CERTIFIED EHR TECHNOLOGY.--The term `certified EHR technology' means a qualified electronic health record that is certified pursuant to section 3001(c)(5) as meeting standards adopted under section 3004 that are applicable to the type of record involved (as determined by the Secretary, such as an ambulatory electronic health record for office-based physicians or an inpatient hospital electronic health record for hospitals). ``(13) QUALIFIED ELECTRONIC HEALTH RECORD.--The term `qualified electronic health record' means an electronic record of health-related information on an individual that-- ``(A) includes patient demographic and clinical health information, such as medical history and problem lists; and ``(B) has the capacity-- ``(i) to provide clinical decision support; ``(ii) to support physician order entry; ``(iii) to capture and query information relevant to health care quality; and ``(iv) to exchange electronic health information with, and integrate such information from other sources. (c) BAKER DONELSON On Eligible Technology Certification is anticipated to be done by CCHIT; see cchit.org Entities are not required to purchase an on-site institutional electronic record system in order to qualify Web-based technologies are acceptable ASP models and other third-party arrangements permitted Patient-centered records preferred Under Medicare and Medicaid, incentives are for meaningful use of an electronic record containing certain demographic and clinical data and with specific capabilities Such technology must be certified References to type of technology are in the examples of category of certification: such as an ambulatory electronic health record for officebased physicians or an inpatient hospital electronic health record for hospitals These are clinical systems, not administrative Similarly, grants and loans, and technical assistance are provided for providers to adopt, implement and effectively use certified EHR technology ; purchase, lease, license, contract for all seem to be permissible (c) BAKER DONELSON

4 Medicare (c) BAKER DONELSON Medicare: Eligible Professionals and Health IT Incentive payment to certain eligible professionals for the adoption and meaningful use of a certified EHR; first year available 2011 eligible professional as defined in SSA 1861(r) physicians Not available to hospital professionals ( substantially all services provided in hospital modified to reflect setting) Available to MA-affiliated professionals (provides 80% of services to enrollees) as determined by HHS Incentive amount is 75% of allowed Medicare charges for all covered professional services up to the cap amount, in addition to amounts otherwise paid for those services Add-on 10% for rural providers in a HPSA Incentives available until 2015 Use starting in 2011 or 12 reporting year; capped: first year 18K, then 12K, 8K, 4K, 2K Use starting in 2013 reporting year; capped 1st year 15K, then 12K, 8K, 4K, 2K Use starting after 2013 reporting year, treated as if started in 2013 (c) BAKER DONELSON

5 Eligible Professionals Meaningful use criteria: Demonstrates use of certified EHR in a meaningful manner Technology is connected for data exchange, and Submission of clinical quality measures (electronic not required unless CMS can accept) Secretary to determine criteria for group practices and MA-affiliated professionals Satisfied with attestation, coding, survey response, reporting quality measures electronically, or as otherwise provided by HHS clinical quality measures established thru publication and comment Penalties begin 2015 if no EHR used in reporting year, generally decreasing by 1%/year until payments are at 97% of the fee schedule Secretary to determine form of payment: lump-sum or periodic No administrative or judicial review (c) BAKER DONELSON Medicare: Hospitals and Health IT ( 4102) Incentives under the IPPS for eligible hospitals that are meaningful EHR users; first year available FY2011 Amount: sum of a base amount ($2M) added to its discharge related payment, multiplied by its Medicare share Discharge related amount: $200 for each discharge under the IPPS, for 1,150th through 23,000th discharges Medicare share: Medicare portion of inpatient bed days, adjusted upward for charity care (may not include bad debt) Form (lump sum or periodic) to be determined by the Secretary Incentive amounts diminish over 4-year period (100%, 75%, 50%, 25% for hospitals starting in 2011, 12, and 13 reporting years); hospitals starting 2014 or 2015 reporting years are treated as if they started in 2013 (e.g., for starts in 2014 reporting year, first-year incentive is at 75%); no incentive for starts after 2015 reporting year (c) BAKER DONELSON

6 Hospitals Meaningful use Criteria: Demonstrates use of certified EHR in a meaningful manner Provides for data exchange to improve quality Quality measure reporting Satisfied with attestation, coding, survey response, reporting quality measures electronically, or as provided by HHS Clinical quality measures established thru publication and comment; preference for already-required measures Penalties for non-use begin FY2015 reporting year, applied to MB, phased in over 3 years: Failure to report quality data reduction of 25% in MB update EHR non-user for reporting year reduction of 25% (FY15), 50% (FY16), 75% (FY17) of MB update Special incentive rules for CAHs Hardship exemption HHS to establish process for MA-affiliated hospitals No administrative or judicial review (c) BAKER DONELSON Medicaid Health IT (c) BAKER DONELSON

7 Medicaid Health IT ( 4201) Did not amend FMAP provisions to clarify issue with using MMIS/state administrative systems for clinical data and participation in health information exchange activities Amends Medicaid law to provide 100% FMAP for payments to providers to encourage HIT adoption 90% FMAP for reasonable administrative expenses for the incentives, if state demonstrates: Expenses are related to administering payments and tracking meaningful use Oversight, including routine tracking of use attestations and reporting; and Pursuit of initiatives to promote adoption and exchange of data for quality improvement (c) BAKER DONELSON Medicaid Health IT Eligible providers Non-hospital professionals (doctors, dentists, certified nurse midwives, certain PAs and NPs) Acute care hospitals 10% Medicaid volume capped similarly to Medicare provisions Children s hospitals any Medicaid volume capped similarly to Medicare provisions Rural health clinics and FQHCs with 30% Medicaid patients capped as determined by HHS (can count some charity care) Year 1: provider must demonstrate efforts to adopt, implement or upgrade qualified technology Year 2-6 (or year 1 for those who have already adopted): provider must demonstrate meaningful use of certified EHR technology (c) BAKER DONELSON

8 Medicaid Health IT States Must assure payments are made directly to providers (or designee) without deduction or rebate May allow payments to entities promoting adoption up to 5% of certified EHR and support services costs Certified EHRs must be compatible with federal and state administrative systems [meaning unclear because of where this provision is located in the legislation] Establish meaningful use criteria; can use Medicare methodology; must ensure that populations with unique needs, such as children, are appropriately addressed (c) BAKER DONELSON Medicaid Health IT and Eligible Professionals Non-hospital professionals with 30% Medicaid volume (includes HMO patients) Physicians, certified nurse midwives, dentists, physicians assistants in a rural health clinic or FQHCs, nurse practitioners, pediatricians (20% volume) Payment is for 85% of provider s net average allowable costs Up to $63,750 (pediatricians with 20-30%: $42,500) in federal contributions toward adoption, implementation, upgrade, maintenance, and operation of certified EHR technology Up to $21,250 (85% of 25K) for adopting, implementing or upgrading (1 year) Up to $8500 (85% of 10K) for operation and maintenance each year up to 5 years Provider must pay remaining 15% (c) BAKER DONELSON

9 Eligible Professionals Average allowable costs First year: average costs of purchase and initial implementation or upgrade (including support services) as determined by HHS (states may submit data) Following years: average costs relating to maintenance and use as determined by HHS net reduced by any amounts provider receives from other sources When eligible for both Medicare and Medicaid, must choose one Coordination of states with CMS to assure no duplicate payments under Medicare incentive program; data matching between states and CMS (c) BAKER DONELSON Medicaid Health IT and Hospitals Eligible: acute care hospitals with 10% Medicaid or children s hospitals with any percentage Medicaid May qualify for both Medicare and Medicaid incentives Amount: Overall hospital EHR amount x Medicaid share Overall hospital EHR amount : sum of a base amount ($2M) added to its discharge related payment Discharge related amount: $200 for each discharge, for 1,150th through its 23,000th discharges For years 2-6, add growth factor average annual growth rate in discharges from previous 3 years Medicaid share: Medicaid portion of inpatient bed days, including Medicaid HMO patients, adjusted upward for charity care (may not include bad debt) Secretary shall establish, in consultation with the State, the overall hospital amount for each hospital (c) BAKER DONELSON

10 Hospitals States may not pay more than 50% of an aggregate amount to a hospital in any year, and must spread payments to hospitals out over at least 3 years (showing meaningful use) Phased out over 4 years like Medicare First year payments must start by 2016 (c) BAKER DONELSON Financing Models? If funding comes after meaningful use (or acquisition/upgrade activities in year one of Medicaid), where do providers get the upfront financing? How are we going to be certain with so much discretion given that payments from Medicare or Medicaid will be available to pay off financing? (c) BAKER DONELSON

11 Other Questions How are incentive payments to be treated in hospital cost reports? Can states start their Medicaid programs now? How do the incentive payments flow when states use third-party contractors or managed care organizations? Can states have a hardship policy? How will the structure of the documentation of meaningful use accommodate ASP and third-party models? Will it be possible to certify electronic records models that are not institution- or office-based? (c) BAKER DONELSON New Public Health Service Act Title XXX The HITECH Act (c) BAKER DONELSON

12 General Authority to Fund Health IT (ARRA 13301) ``SEC ``IMMEDIATE FUNDING TO STRENGTHEN THE HEALTH INFORMATION TECHNOLOGY INFRASTRUCTURE. ``(a) In General.--The Secretary shall, using amounts appropriated under section 3018, invest in the infrastructure necessary to allow for and promote the electronic exchange and use of health information for each individual in the United States consistent with the goals outlined in the strategic plan developed by the National Coordinator (and as available) under section (c) Additional Use of Funds.--In addition to using funds as provided in subsection (a), the Secretary may use amounts appropriated under section 3018 to carry out health information technology activities that are provided for under laws in effect on the date of the enactment of this title. ``SEC DEFINITIONS. ``(5) HEALTH INFORMATION TECHNOLOGY.--The term `health information technology' means hardware, software, integrated technologies or related licenses, intellectual property, upgrades, or packaged solutions sold as services that are designed for or support the use by health care entities or patients for the electronic creation, maintenance, access, or exchange of health information (c) BAKER DONELSON PHSA Provisions ( et seq.) Definitions Establishes ONC in law Technical assistance AMCs IT and clinical education Section 3015 demonstration of competitive grants for medical, dental and nursing schools to integrate IT into clinical education Financial assistance to establish or expand medical informatics programs Section 3016 Section NIST research grants for enterprise integration Grants and loans to states for health data exchanges and providers Privacy generally expands to additional entities and provides more rights to individuals (c) BAKER DONELSON

13 Discretionary Programs HHS $2B to the Office of the National Coordinator for Health IT $20M to NIST for R&D program $300M for health information exchange support (grants, loans, and technical assistance) Funds available only after HHS submits operating plan (required within 90 days of enactment), based on the Federal Health Information Technology Strategic Plan, and a description re how funds will be allocated across the Department (c) BAKER DONELSON Office of the National Coordinator Appointed by the Secretary and reports to Secretary Responsible for federal health IT policy and program coordination Directed to update federal health IT strategic plan Shall keep or recognize a program for voluntary certification of technology Shall establish a governance mechanism for the nationwide network Secretary shall also appoint a Chief Privacy Officer (c) BAKER DONELSON

14 Other Agency Changes HIT Policy Committee recommend areas needing standards, implementation specifications, and certification criteria and recommend order of priority ONC takes lead to organize Membership specified in statute FACA HIT Standards Committee Shall recommend standards, implementation specifications, and certification criteria Pilot testing of standards FACA Process for adoption of recommended standards by federal programs (c) BAKER DONELSON Testing of Health IT R&D Programs NIST to award grants to universities (or consortia) to establish multidisciplinary Centers for Health Care Information Enterprise Integration $20M to continue work on advancing health information enterprise integration through technical standards analysis and conformance testing infrastructure (c) BAKER DONELSON

15 Technical Assistance New extension program through ONC to provide assistance to health care providers to adopt, implement and effectively use certified EHR technology Health information technology research center to provide technical assistance and develop best practices [loosely based on AHRQ national resource center] Health information technology regional extension centers to provide technical assistance and disseminate best practices and knowledge from the research center Applicants can be non-profits Priority assistance to Public or non-profit hospitals or CAHs FQHCs, rural or underserved area providers Small practices (c) BAKER DONELSON State Planning and Implementation Grants ONC to make grants to states or their designees for planning or implementation grants to facilitate and expand the electronic movement and use of health information among organizations according to nationally recognized standards Planning to be specified by the Secretary Implementation activities broad and varied participation in exchange; identify state and local resources available toward the nationwide effort; complement other federal efforts; technical assistance; promote strategies for adoption; assisting patient use of records; encouraging providers to work with regional centers; support public health participation; and promoting quality improvement with health IT Must be consistent with ONC strategic plan (c) BAKER DONELSON

16 Planning and Implementation Grants State-Designated Entity Designated by the state Non-profit with broad stakeholder representation Demonstrate one of principal goals to use health IT to promote quality Adopt conflict of interest and non-discrimination policies Must consult with specified list of stakeholders State match (non-federal contribution) Pre-FY2011 as Secretary determines 2011: 1: : 1:7 2013: 1:3 (c) BAKER DONELSON Tax Treatment of Health Information Exchanges If a nonprofit organization otherwise organized and operated exclusively for exempt purposes described in IRC sec. 501(c)(3) engages in activities to facilitate the electronic use or exchange of health-related information to advance the purposes of the bill, consistent with standards adopted by HHS, such activities will be considered activities that substantially further an exempt purpose under IRC sec. 501(c)(3), specifically the purpose of lessening the burdens of government. Private benefit attributable to cost savings realized from the conduct of such activities will be viewed as incidental to the accomplishment of the nonprofit organization's exempt purpose. Conference Report on HR 1, American Recovery and Reinvestment Act, Congressional Record 155:29 (Feb. 12, 2009) p. H1433. (c) BAKER DONELSON

17 State Grants for Loan Programs Competitive grants to states, through ONC, to establish loan programs for providers Purposes: purchase certified EHR technology, train personnel in use, and improve the secure electronic exchange of health information States/tribes must: Establish qualified HIT loan fund Submit a strategic plan Provide matching funds: 1:5 Assure providers will submit reports on quality measures and use qualified technology 10-year loan terms (c) BAKER DONELSON Other Technology Funding Broadband -- $4.7B IHS Health IT $85M CHCs -- $1.5B (capital costs) In CHIP bill: quality/health IT demonstration -- $10M (c) BAKER DONELSON

18 Privacy ARRA significantly expanded the reach of the HIPAA Privacy Rule and Security Standards Breach unauthorized acquisition, access, use, or disclosure of protected health information which compromises the security or privacy of such information, except where an unauthorized person to whom such information is disclosed would not reasonably have been able to retain such information. Exceptions unintentional by an employee or individual acting under authority in good faith in scope of employment or relationship, or inadvertent disclosure by individuals with authority; and such information received is not further disclosed EHR record created, gathered, managed, and consulted by authorized health care clinicians and staff (c) BAKER DONELSON Opportunities for Input During Implementation Examples Medicare Timing of payments Eligible technology Criteria for web-based technologies; third-party arrangements Small provider and physician group arrangements Special circumstances, accounting for charity care Definition and demonstration of meaningful use Quality measures Hardship criteria Medicaid Implementation criteria for children s hospitals Overall hospital EHR amount determination Coordination with Medicare average allowable cost determinations State start date before CMS regulations treatment Grants and Loans Criteria for planning and implementation grants Loan fund operation/accountability Privacy/Security rulemaking (c) BAKER DONELSON

19 Contact Information Susan M. Christensen, Esq (c) BAKER DONELSON