On August 23, the Centers for Medicare & Medicaid Services (CMS) released a final rule outlining the Stage 2 criteria for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. Eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) must meet these requirements to receive EHR incentive payments. CMS issued a fact sheet on the rule.

Under the Health Information Technology for Economic and Clinical Health (HITECH) Act, doctors, healthcare professionals, and hospitals can qualify for EHR incentive payments when they adopt and demonstrate “meaningful use” of certified EHR technology. EPs can receive up to $44,000 over five years under the Medicare EHR Incentive Program, or up to $63,750 over six years under the Medicaid EHR Incentive Program. Eligible hospitals and CAHs will receive a base amount of $2,000,000 plus a “discharge-related amount,” for a combined total of up to $6,370,400. The Stage 1 final rule, released in July 2010, generally focused on capturing and using health information. The Stage 2 criteria are intended to increase the exchange of health information between providers and encourage patient engagement by providing patients with secure access to their own health information.

Like the Stage 1 rule, the Stage 2 rule requires providers to satisfy and report on a variety of “core objectives” and “menu objectives.” Newly added core objectives include “use secure electronic messaging to communicate with patients on relevant health information” for EPs and “automatically track medications from order to administration using assistive technologies in conjunction with an electronic medication administration record” for eligible hospitals and CAHs. The Stage 2 rule also replaces Stage 1’s “exchange of key clinical information” core objective with a “transitions of care” core objective, and replaces "provide patients with an electronic copy of their health information" with a "view online, download and transmit" core objective. “Menu objectives” now include “outpatient lab reporting” for hospitals and “recording clinical notes” for both EPs and hospitals

The Stage 2 final rule delays the timeline for compliance with the Stage 2 criteria to July 1, 2014 for eligible hospitals, or October 1, 2014 for EPs (the Stage 1 final rule had required compliance by 2013). In coordination with CMS’s release of the Stage 2 final rule, the U.S. Department of Health and Human Services (HHS) Office of the National Coordinator for Health Information Technology (ONC) released its final rule on the standards EHRs must meet to achieve certification. The final rules will be published in the Federal Register on September 4, 2012.


On August 22, CMS’s Center for Medicare and Medicaid Innovation (CMMI) identified 500 primary care practices in eight states that will receive between $8 and $40 per patient per month to improve the quality of the care they deliver to Medicare beneficiaries. The practices include more than 2,000 providers and serve more than 300,000 Medicare beneficiaries. CMMI issued a fact sheet on the new program, which is known as the Comprehensive Primary Care Initiative.

Recipients of the bonuses will be required to coordinate care for patients with chronic conditions, offer around-the-clock access to doctors, emphasize preventive care and adopt electronic records. In a news release, Acting CMS Administrator Marilyn Tavenner said, “Primary care practices play a vital role in our health care system and we are looking at ways to better support them in their efforts to coordinate care for their patients.” CMMI Director Richard Gilfillan added, “This aligned approach ensures we no longer penalize doctors for spending extra time with patients.” CMMI also arranged for some state Medicaid agencies and private insurers in the eight states to pay bonuses for their beneficiaries.

The CMMI was created by the Patient Protection and Affordable Care Act (PPACA) with goals of reducing health care costs and improving care coordination. The bonus program, which will cost about $300 million over its planned four-year duration, will be operated in Arkansas, Colorado, New Jersey, Oregon, the Hudson Valley region of New York, the Cincinnati-Dayton region of Ohio and Kentucky, and the Greater Tulsa region of Oklahoma. A separate CMS initiative, the Primary Care Incentive Payment (PCIP) program, distributed about $560 million in 2011 to family physicians and general internists.


On August 24, HHS Secretary Kathleen Sebelius announced a final rule implementing a one-year delay in the compliance date for use of ICD-10 codes, which classify diseases and health problems, from October 1, 2013 to October 1, 2014. ICD-10 (formally known as International Classification of Diseases, 10th Edition) includes more than 150,000 codes for new procedures and diagnoses.

The proposal to delay the compliance date had been released by HHS on April 9, 2012, as we reported in our April 17, 2012 Healthcare Update. The delay will give providers and insurers additional time to prepare and test their systems for the transition from ICD-9 to ICD-10. The new code sets will provide much more specific patient data, which HHS expects will lead to better care.

The final rule also requires that health plans adopt a unique health plan identifier (HPID) for all electronic transactions. The HPID will help standardize and streamline electronic transactions and is projected to save the industry between $1.3 billion and $6 billion over the next 10 years. CMS issued a fact sheet about the HPID.


On August 23, HHS Secretary Sebelius announced that California, Connecticut, Hawaii, Iowa, Maryland, Nevada, New York, and Vermont have received new federal grants to help them build Affordable Insurance Exchanges as mandated by PPACA. States have requested federal funding for such purposes as hiring staff, consultants and expert resources needed to develop the exchanges; developing information technology systems to handle eligibility, enrollment, and information exchange among insureds, employers and insurance carriers; and to communicate with potential enrollees in preparation for open enrollment in October 2013, among other things.

See our July 30, 2012 Healthcare Update for more information on the Exchanges.