On October 16, the Centers for Medicare and Medicaid Services (CMS) released its Final Rule1 for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Program (also known as Meaningful Use). The Final Rule addresses two separate proposed rules: Stage 2 regulations proposed on April 15, 20152 and  Stage 3 regulations proposed on March 30, 2015.3 The Stage 3 Proposed Rule is described in our Advisory here. Stakeholders may submit comments on certain sections of the Final Rule until December 15, 2015.

In the Final Rule, CMS intends to “creat[e] consistency in the policies for the current program in 2015 through 2017 and for 2018 and subsequent years; and we have established a clear vision of how current participation will assist in meeting our long-term delivery system reform goals. We believe this sustained consistency in policy will support the planning and development for MIPS and the future use of EHR across a multitude of healthcare providers.”4

In March 2014, the Government Accountability Office (GAO) reported that while participation in Meaningful Use had increased substantially from 2011 to 2012, the agency suffered from “the lack of a comprehensive strategy” to “ensure the department can reliably use the clinical quality measures collected in certified EHRs to improve quality.”5 In November 2014, CMS announced that fewer than 17 percent of eligible hospitals had met the Stage 2 requirements for Meaningful Use, and adoption of EHRs by eligible professionals (EPs) has generally lagged behind hospitals.6 In 2015, both the House and Senate held numerous hearings on topics such as the interoperability of EHRs and the practice of “information blocking.”7 The level of specificity that should be included in federal standards for health information exchange and the cost of establishing interfaces that support interoperability are key issues of concern to many stakeholders. 

Changes to both of the proposed rules were also needed to conform the EHR Incentive Program with legislation that Congress enacted on April 14, 2015. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) revamps Medicare’s payments for physician services by: (1) ending the prior payment formula, which generated year-over-year payment cuts; (2) establishing a new payment system that includes two pathways, the Merit Based Incentive Pay System (MIPS) and Alternative Payment Models (APMs), both of which require use of EHRs; and (3) gives physicians financial incentives to join APMs as an alternative to fee-for-service.

This Advisory discusses the evolution of the Meaningful Use Program and the importance of the Final Rule for providers, hospitals, and health IT developers today and in the future. CMS’ Stage 2 requirements for 2015-2017 are important for providers seeking to avoid payment cuts and prepare for the new physician payment system. The Stage 3 requirements, which will be optional in 2017 and mandatory starting in 2018, will directly impact physician payment – comprising 25 percent of the composite score that determines payment under one of the new payment models. Attached to this Advisory are two charts highlighting the final objectives and measures for Stages 2 and 3 of the Meaningful Use Program, and changes from the proposed rules.


The Meaningful Use Program started as an incentive program, became a penalty program, and will soon be a core part of all physician payment. The Health Information Technology for Economic and Clinical Health Act (HITECH Act) was passed as part of the American Recovery and Reinvestment Act of 2009.8 The HITECH Act established the Medicare and Medicaid EHR Incentive Programs, which provided for incentive payments and downward payment adjustments for EPs, eligible hospitals, and critical access hospitals to promote the “meaningful use” (MU) of interoperable health information technology (HIT).

A.        The EHR Incentive Program

Incentive payments were available to physicians who successfully demonstrated meaningful use of certified EHR technology (CEHRT) beginning in 2011, with the last payment year being 2016. Incentive payments were capped at five consecutive years. The last year to begin participation and receive an incentive payment was 2014. The maximum incentive payment amount for five consecutive years of successful participation was US$43,480.9

B.        Adjustments for Failing to Attest Started in January 1, 2015

The Meaningful Use Program started operating as a penalty program for most providers on January 1, 2015. Providers who decided to forego incentive payments started to pay closer attention when Medicare and Medicaid payments were cut by 1 percent. Downward adjustments increase to 2 percent in 2016, and 3 percent in 2017. Eligible hospitals and critical access hospitals (CAHs) who were not meaningful users faced Medicare payment adjustments of up to 25 percent of the increase to the Inpatient Prospective Payment System (IPPS) payment rate starting on October 1, 2014.10 Although CMS provides hardship exceptions for infrastructure, newly practicing EPs, unforeseen circumstances, and a few other situations, these do not insulate most providers from being subject to payment adjustments.

C.        Stage 3 and the New Physician Payment Systems

The Stage 3 requirements, discussed in further detail below, will have a “soft-launch” in 2017. Providers may begin attesting to Stage 3 in 2017, but are not required to. CMS incents providers to begin attesting to Stage 3 in 2017 by allowing a reduced 90-day reporting period. All providers will be required to comply with Stage 3 requirements beginning in 2018 using EHR technology certified to the 2015 Edition, and must comply with Stage 3 regardless of whether they previously participated in Stage 1 or Stage 2. In 2019 and future years, Meaningful Use will be a permanent part of Medicare’s new two-track payment system for physician services.11   

1.            Merit-Based Incentive Pay System (MIPS)

MIPS combines the Physician Quality Reporting System (PQRS), the Value Modifier, and Meaningful Use programs into a single new payment system, starting January 1, 2019. The MIPS eliminates the penalties that would otherwise apply to Meaningful Use, as well as PQRS and the Value Modifier. All three incentive programs sunset at the end of 2018.

Instead, physicians' performance will be assessed using a formula for which 25 percent of the EP’s composite score is based on attaining Meaningful Use. The composite score determines a “rate adjustment factor” which is up to 4 percent in 2019, 5 percent in 2020, 7 percent in 2021, and 9 percent in 2022 and thereafter. This means that in 2019, an EP who receives a composite performance score of 100 (with 25 percent coming from Meaningful Use) gets a 4 percent adjustment, and an EP who receives a score of 0 gets a -4 percent adjustment. 

In other words, EPs must report quality measure data and use an EHR in accordance with Stage 3 requirements to avoid payment cuts that could total 4 percent in 2019 and increase to 9 percent per year by 2022 and future years.

2.            Alternative Payment Models (APMs)

The second track of Medicare’s new physician payment system provides an alternative route to higher payments starting in 2019 and ending in 2024. An APM is defined to include certain Innovation Center models, the Medicare Shared Savings Program, and certain other demonstration projects. Under the APM track, EPs who are “qualifying APM participants” receive an annual bonus equal to 5 percent of their estimated Medicare revenue for the prior year. The bonus is paid in a lump sum, and CMS must pay the bonus directly to the EP rather than through an entity that bills on behalf of many EPs. To earn the bonus, EPs must meet the standards for "qualifying" participants in APMs, which require that a significant share of a physician's revenues comes from an APM that takes on risk of financial losses, follows a quality measurement program, and uses a certified EHR.12 


The Final Rule overhauls the structure of the Meaningful Use Program, aligning Stages 2 and 3. Notably, CMS relaxes the reporting period for Stage 2 in 2015-2016 and 2017 for providers who choose to attest to Stage 3, streamlines the objectives and measures, and brings EPs, Hospitals and CAHs on an aligned calendar year reporting period.

A.        Structural Changes

In the Final Rule, CMS officially terminates Stage 1, requiring all providers to attest to “modified”13Stage 2 requirements in 2015 and 2016 regardless of prior participation. However, since the Final Rule was not published until after the start of the fourth quarter in 2015, CMS makes accommodations for providers attesting to Stage 1 in 2015 in specific Stage 2 objectives and measures.

CMS reduces the reporting period for modified Stage 2 in 2015 and 2016 to a consecutive 90-day reporting period. Furthermore, providers who choose to attest to Stage 3 in 2017 may report on a consecutive 90-day period; all other providers attesting to Stage 2 must report for a full calendar year. In 2018, all providers will be required to report on Stage 3 objectives and measures for a full calendar year. In the past, eligible hospitals and CAHs reported on a fiscal year cycle, and EPs reported on a calendar year cycle. The Final Rule brings all providers – EPs, eligible hospitals, and CAHs – on a calendar year reporting period.

CMS significantly streamlines the Meaningful Use Program by simplifying the objectives and measures providers must successfully attest to in order to be considered a meaningful user of EHR technology and avoid payment adjustments. CMS eliminates the core and menu set structure in previous Stages 1 and 2. Instead, providers must attest to a single set of required objectives and associated measures. To accomplish this, CMS removed “topped-out” objectives and measures – e.g., those measures that achieved widespread adoption at a high rate of performance and no longer represented a basis on which provider performance could be differentiated.14 For example, CMS removed objectives and measures related to recording demographics, vital signs, and smoking status.

CMS also modifies previous Stage 1 and 2 objectives and measures by removing all requirements or allowances for providers to use paper-based or non-electronic formats to meet certain measures. In modified Stage 2 and Stage 3, paper-based or non-electronic formats will not count towards meeting the requirements of any objective or measure. CMS notes that providers may still use paper-based materials in the practice setting, and “strongly recommend[s] that providers continue to provide patients with visit summaries, patient health information, and preventative care recommendations in the format that is most relevant for each individual patient and easiest for that patient to access,”15but a provider will not satisfy meaningful use measures by doing so. 

B.        Modified Stage 2 and Stage 3 Objectives and Measures

In the Final Rule, CMS reconciles the 2015-2017 objectives and associated measures to align with Stage 3 to prepare providers to report Stage 3 criteria in 2018 and under MACRA in 2019 and beyond. In the long term, CMS hopes this alignment will ease the reporting burden for providers, support interoperability, and improve patient outcomes.

CMS restructures the 2015-2017 Stage 2 objectives and associated measures to include 10 objectives for EPs and nine objectives for eligible hospitals and CAHs, down from 18 and 20 total objectives in prior stages, respectively. CMS also modifies patient action measures related to patient engagement by relaxing the thresholds for the Patient Electronic Access and Secure Electronic Messaging measures. CMS consolidates the public health reporting requirements into one objective and provides flexible options for measure selection. Clinical Quality Measures (CQM) reporting requirements for EPs and eligible hospitals/CAHs remain as previously finalized in the Stage 2 rule. For those providers already attesting to Stage 1 in 2015, CMS allows special exclusions for certain objectives/measures for those previously scheduled to participate in Stage 1 for the 2015 EHR reporting period.

For Stage 3 in 2017 and beyond, CMS requires all providers to attest to only eight objectives. The Stage 3 requirements are largely unchanged from the proposed rule, with the exception of a few minor modifications in several measures. More than 60 percent of the proposed measures require interoperability in Stage 3, up from 33 percent in Stage 2.16 These objectives focus on advanced use of health IT, increase thresholds, and overall continuous quality improvement. Similar to Stage 2, CMS provides flexibility for measure selection in the public health reporting objective. CQM reporting requirements for EPs and eligible hospitals/CAHs are aligned with the CMS quality reporting programs. Stage 3 objectives also incorporate the use of application program interfaces (APIs) to increase patient access to their own health records.

Although this is a Final Rule, CMS seeks comments on Stage 3 objectives and associated measures, and the reporting periods. Comments are due by December 15, 2015. For a detailed list of the Stage 3 final objectives, measures, exclusions, and significant revisions from the Stage 3 Proposed Rule, please refer to this chart.


In the Final Rule, CMS establishes a new definition of “certified EHR technology” in conjunction with the Office of the National Coordinator’s (ONC’s) 2015 Edition Health IT Certification Criteria Final Rule.17 In the past, ONC defined CEHRT in its EHR certification requirements, and CMS referred to the ONC definition in the Meaningful Use rules. However, ONC’s Final Rule broadens its applicability and discusses certified Health IT generally, not just certified EHR technology. ONC notes that many programs rely on its definition of certified technology, not just the EHR program. Accordingly, ONC and CMS define certified EHR technology separately in 2015 and beyond. However, CMS continues to link each objective to a CEHRT definition and to ONC-established certification criteria.18

For 2016 and 2017, providers must use technology certified to the 2014 Edition. For Stage 3, providers must utilize 2015 Edition certified EHRs. Providers may choose to use 2015 Edition EHRs prior to Stage 3 in 2017 or 2018, but are not required to do so.


CMS has significantly streamlined Stages 2 and 3 of the Meaningful Use Program in anticipation of its permanent role in physician payment under MACRA. CMS creates a single set of required objectives and measures that are aligned between modified Stage 2 and 3, introduces a consecutive 90-day reporting period for modified Stage 2 in 2015-2016, and Stage 3 in 2017. Providers should be aware that their participation in Meaningful Use today will impact their payment in a significant way starting in 2019. For EPs who choose to report payment under MIPS, participation in Meaningful Use will comprise 25 percent of the physician’s composite score, which determines whether the physician will be subject to a -4.0 percent, neutral, or +4.0 percent payment adjustment or bonus. Along with new objectives and measures, providers will also need to use 2015 Edition CEHRT to comply with Stage 3 requirements.