Medicare HIT Incentives

More information on Medicaid EHR Incentives is available at:  http://www.fhin.net/LandingPages/MedicaidElectronicHealthRecordIncentiveProgram.shtml

EHR Incentive Program – Eligible Professionals 
E-Prescribing Incentives Program
EHR Incentive Program – Hospitals

Timeline of Provider Incentives and Penalties

*Professionals receiving EHR incentives cannot receive eRx incentive. 
** Incentives continue for 5 years or through 2016 whichever is earlier.  No incentives are started after 2014.

EHR Incentive Program - Eligible Professionals:

Medicare EHR Incentives for eligible health care professionals provide for the adoption of electronic health record (EHR) technology. Incentives will be paid to “meaningful users” of “certified” EHR technology.  

EHR incentives will be paid during 2011 through 2016 to eligible providers for allowable Medicare Part B claims with the following caps applied. Providers who practice in a health professional shortage areas will receive a 10% increase and providers who work in a rural area will receive a 25% increase.

The incentive payment is equal to 75 percent of Medicare allowable charges for covered services furnished by the EP in a year, subject to a maximum payment in the first, second, third, fourth, and fifth years of $15,000; $12,000; $8,000; $4000; and $2,000, respectively. For early adopters whose first payment year is 2011 or 2012, the maximum payment is $18,000 in the first year.

First year in which incentives are paid (the cap applied):
2011 ($18,000);
2012 ($18,000);
2013 ($15,000); or
2014 ($12,000).
Second payment year: ($12,000)
Third payment year: ($8,000)
Fourth payment year: ($4,000)
Fifth payment year: ($2,000)
Note:  No incentives will be paid during 2017 and thereafter.

In 2015, providers who claim payments for Medicare and Medicaid services and are not a “meaningful user” of a “certified” EHR will be assessed penalties against their claim payments in the following amounts:

2015 -1% of the Medicare fee schedule for the claimed service
2016 -2% of the Medicare fee schedule for the claimed service
2017 and thereafter -3% of the Medicare fee schedule for the claimed service

Providers are not allowed to claim payments for both health information technology EHR incentives and Medicare e-prescribing incentives for the same services.

Sources:  http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf and http://www.fmaonline.org/pages/practice/emr_news.html

Medicare e-Prescribing Incentives began on January 1, 2009.  The new Medicare e-Prescribing Incentive Program, as authorized under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), allows incentive payments to eligible professionals who are successful e-prescribers as defined by MIPPA.  Although the new program is separate from and in addition to the Physician Quality Reporting Initiative (PQRI), the Centers for Medicare and Medicaid Services (CMS) uses the e-prescribing measure originally developed for PQRI in the first year of the program. 

In 2009, a “successful e-prescriber” will receive an incentive payment of 2.0% of the total estimated allowed charges for professional services covered by Medicare Part B and furnished by an eligible professional during the reporting period.  In order to be a “successful e-prescriber,” a physician or other eligible professional must report on the e-prescribing quality measure in at least 50% of the cases in which the measure is reportable by the eligible professional.  Successful e-prescribers will receive a 2 percent incentive payment in 2009 and 2010; a 1 percent incentive payment in 2011 and 2012; and a one half percent incentive payment in 2013.

A qualified e-prescribing system must be used.  There are two types of e-prescribing systems: 1) a system for e-prescribing only (a “stand-alone” system), or 2) an electronic health record (EHR) system with e-prescribing functionality.  A qualified e-prescribing system must be capable of performing all of the requirements listed below.

In addition to the system functionalities mentioned above, the system or program should meet the Part D specifications for messaging that will be implemented on April 1, 2009.

Another requirement to qualify is that at least 10% of an eligible professional’s Medicare Part B charged services must be eligible cases that use CPT or HCPCS denominator codes included in the e-prescribing measure.  Only eligible providers who direct bill to Medicare may participate. 

When a case is applicable, the e-prescribing measure can be reported with two steps. The first step is to bill using one of the eligible case denominator codes.  Eligible codes are evaluation and management codes for office or other outpatient services, including consultations, psychiatric diagnostic or evaluative interview procedures, general ophthalmology services, other health assessment services, and certain diabetes or cervical cancer screening procedures.

The second step is to report one of the three e-prescribing G-codes (G8443, G8445 or G8446) on the same claim containing an eligible denominator code. 

Eligible professionals who are not “successful e-prescribers” by 2012 will be subject to a differential payment (penalty) beginning in 2012. The differential payment would result in the physician getting 99% of the total allowed charges of the eligible professional’s physician fee schedule payments in 2012, 98.5% in 2013, and 98% in 2014.

Sources:  http://www.cms.hhs.gov/partnerships/downloads/11399.pdf and http://www.fhin.net/eprescribe/ePandHIEinFL/Florida2008ePrescribeRptv5.3finalCorr030209.pdf

EHR Incentive Program – Hospitals

• Incentive payments are provided, beginning October 2010, for eligible hospitals and critical access hospitals (CAHs) that are meaningful EHR users.
• Reduced payment updates beginning in FY 2015 will apply to eligible hospitals that are not meaningful EHR users.
• An eligible hospital that is a meaningful EHR user could receive up to four years of financial incentives payments, beginning with fiscal year 2011. There will be no payments to hospitals that become meaningful EHR users after 2015. 

The incentive payment for each eligible hospital is determined on a formula basis.  The incentive payment for each eligible hospital would be calculated based on the product of (1) an initial amount, (2) the Medicare share, and (3) a transition factor. 

The Secretary has discretion to use other data if the required data to calculate the incentive payment formula does not exist.

Description of Medicare Hospital EHR Incentive Calculations

The incentive methodology begins with a $ 2 million base.  If the hospital has discharges that exceed 1149, the hospital receives $200 for each discharge up to 23,000 discharges.  The amount obtained is then multiplied the Medicare share adjusted for charity care.    The calculation steps are as follows: 

• Take total number of discharges up to 23,000, subtract 1149 and multiply by $200;
• Add $ 2 million;
• Multiply the Medicare share (Medicare patient-days percent of total hospital patient days adjusted for charity care) times the sum of steps 1 and 2.  The charity care ratio is total revenue minus charity care divided by total revenue which is multiplied by total hospital patient days.* 

Medicare payments are made over a period of four years.  The second year payment is 75% of the total formula payment amount, the third year is 50% and the fourth year is 25%. 

* Medicare patient-days include Medicare HMO days.