HITECH1 gives a great deal of discretion to the U.S. Department of Health and Human Services (HHS) when implementing the new law and most of the regulations expected under HITECH are still being drafted.2 HITECH creates incentives for providers under both the Medicare and the Medicaid programs.3 While payments will be made for the meaningful use of qualified technology under each program, the programs themselves will be very different. After a brief description of the two programs4, some of the uncertainties that remain regarding meaningful use are outlined below.

Brief Description of Funding Sources for Providers Under HITECH


For eligible hospitals5 and physicians treating Medicare patients, there will be an add-on payment to Medicare reimbursement if it is demonstrated that the provider is "a meaningful EHR user". Such incentive payments will be calculated as a percentage add-on to the fee schedule amounts paid for covered services in the case of physicians, up to a cap, and as an add-on payment to reimbursement for inpatient care by hospitals, taking into account Medicare share, charity care and number of discharges. These incentive payments from the Centers for Medicare and Medicaid Services (CMS) may start as early as 2011.

Eligible providers who do not demonstrate that they are "meaningful EHR users" by the reporting years established for 2015 and beyond will be subject to a reduction in their Medicare reimbursement, phased in over three years.


The Medicaid incentive program will be administered by states. Unlike Medicare, payments may be made for acquisition in the first year, prior to demonstration of use. The timeframes for starting incentive payments under Medicaid are longer – the first payment year may be as far out as 2016 and run up to six years.

In addition, more types of providers are eligible for the incentives. Eligible professionals include non-hospital physicians, dentists, certified nurse midwives, nurse practitioners, and physician assistants in certain Federally Qualified Health Centers (FQHCs). Eligible hospitals include acute care hospitals with at least 10 percent Medicaid patient volume and all children's hospitals. Eligibility does not appear to be limited to "subsection (d) hospitals", so this could be an option for any acute-care hospitals not currently eligible under the Medicare incentives program.

The Medicaid incentives are tied in part to cost. States will get federal funds to provide payments to eligible professionals of up to 85 percent of the provider's "net average allowable costs" of health information technology, up to a cap, if such providers demonstrate meaningful use. For hospitals, the payment calculation is more complex and involves a determination by the state and CMS of the "overall hospital EHR amount" calculated for each hospital (which can be based on submitted cost information) and the Medicaid share of the hospital's inpatient bed days.

Another difference from Medicare is that the statute does not impose a penalty for non-use. However, states are not prohibited from requiring the use of technology by Medicaid providers. In addition, it is important to note that while there is a "meaningful use" requirement in Medicaid similar to that in Medicare, states may include additional criteria as long as they are not inconsistent with Medicare. For all of these reasons there is a great deal of uncertainty for providers who want to participate in Medicaid incentives.

Outstanding Issues Being Addressed by Regulations

There are multiple goals for federal health IT funding, none of which is simply to automate existing health care practices – having an EHR or EMR in every hospital and physician office is not the primary purpose of HITECH. Instead, a review of the purposes of HITECH reveals Congress's strong desire to change (read improve) the existing health care delivery system. For health IT to have the necessary impact on health care quality and cost, the technology must be capable of certain functions and it must be employed in a manner that supports improvements in care delivery and decision-making, evidence-based medicine, chronic care management and preventive medicine.

Therefore, Congress made clear that in order to collect incentive payments providers must use (not necessarily buy) technology with certain capabilities6 and such use must be "in a meaningful manner".7 It did not want to specify particular technology and processes, however. While standards are being developed for privacy, security and interoperability, the requirements are to be technology neutral in order not to stifle innovation.


Congress wants to promote the effective use of technology with certain capabilities, but research and experience show that most current widely-available health IT systems do not generally support those capabilities. Here, the rules that HHS is writing related to implementing the technology definition in HITECH8 become important.

How should HHS deal with the obvious competing considerations? If the definition is interpreted to mean more capable technology than currently-deployed commercial electronic health record systems, the incentive programs can be a driver for the development and deployment of technology with the necessary sophistication to support real changes in health care delivery. There is widespread support for this approach among policymakers, including some in the Administration. But such an approach makes qualifying for incentives much harder, more expensive and more uncertain for providers.

On the other hand, the definition could be interpreted in a way that covers most currently used systems. Providers will more easily qualify and the technology will be less expensive. More money will move out more quickly. In that case, though, advances in technology may be delayed or never developed – and sought-after health care quality improvements and cost reductions will not be realized. This has to be a consideration for HHS, as the Administration has argued that health IT will yield great savings in the out-years as a justification for the current spending. Those industry leaders and policymakers who would like simply to get the money out fast face a strong counter-argument in this.

Even after those recommendations are made, it will still be up to the Office of the National Coordinator for Health IT (ONC) and CMS to write the definitive regulations, with timelines for bringing those capabilities online. In this process, the policy arguments set out above come into play.

Therefore, it is very hard to predict the content of regulations on the technology requirements at this time.

Use "in a Meaningful Manner"

In the last six to eight months, many pages have been written about how HHS should define "meaningful use", or use "in a meaningful manner", but little has been decided yet.

The statutory criteria for being a "meaningful EHR user" under Medicare are quite skeletal, and essentially require only the following: (1) demonstration that the provider uses a certified EHR in a "meaningful manner"; (2) demonstration that the technology is connected to provide for data exchange; and (3) submission of clinical quality measures.9 Parallel requirements will govern Medicaid programs and state grants or loans to providers to invest in health IT.

The lack of detail in the statute elevates the importance of HHS's work to implement the meaningful use requirement. The degree of discretion given to HHS in this regard is intentional. The task is enormous. The scope of proposed health care reforms remains undetermined, yet potential significant changes must be taken into account when establishing capability and use criteria. If not now, there must be the capacity to do so in the future. In addition, the health IT industry continues to evolve, and a balance must be struck among the critical need for resources, reducing barriers to adoption, driving innovation, and assuring the greatest positive impact on improved care quality and cost-effectiveness. There is a lot at stake.

The official process for making these policy decisions about meaningful use and other implementation issues is set out in HITECH. HITECH established a policy body, the Health IT Policy Committee (the Policy Committee), and a standards body, the Health IT Standards Committee. Both committees have divided work among workgroups, which have been coordinated by ONC.10 The Health IT Standards Committee and the work groups propose recommendations to the Policy Committee, which then may adopt them and make the recommendations to ONC. ONC then reports directly to the Secretary of HHS.

In July, based on recommendations from its workgroups, the Policy Committee adopted a vision and goals for "meaningful use" criteria and a nine-page matrix of recommended measures.11 It is the first specific and significant set of detailed recommendations adopted under the official process related to the meaningful use criteria under HITECH.

The matrix is extensive and has been the subject of considerable public comment. The level of detail in the proposed measures (and their related goals and objectives) is valuable in that it provides a proposal to which stakeholders can react with specificity.

For example, the issue of coordinating new requirements with other mandates, such as transition to the next version of HIPAA electronic transactions standards in 2012 and ICD-10 in 2013, still needs to be addressed. All of these changes will consume significant time and resources for providers; complying with ill-timed new meaningful use requirements could greatly exacerbate the burden.

Comments from stakeholder groups like the American Hospital Association (AHA) and the American Medical Association (AMA) in response to the overall set of recommendations reflect the complexity of this process and the scope of the issues that still need to be resolved. A great many organizations have submitted comments and the examples below from the AHA and AMA are singled out for no other reason than that they demonstrate the scope of stakeholder thinking and level of input into the process of establishing meaningful use criteria.

The depth of concerns with the proposed criteria raised by hospitals is demonstrated by some of their comments. In its letter dated June 26, 2009, the AHA wrote that the proposed sequence of adoption is overly aggressive, even unrealistic, for most hospitals and urged that initial requirements be set at an achievable level. More importantly, AHA recommended six additional functions for EHRs be added to the 2011 requirements so that they are well established by the time CPOE and high thresholds of EHR use are required. They are: nursing documentation and assessments; electronic access by pharmacists to formularies; medication bar coding; implementing drug-drug, drug-allergy, and drug-formulary checks; maintaining active medication lists; and maintaining active medication allergy lists.12 The AHA and other hospital groups also raised other very significant concerns that HHS may want to address before any regulations can be final.

Physicians also have issues with the timing and order of criteria implementation, according to the AMA. It begins with the general comment that the definition of meaningful use should be realistic and scalable to accommodate practices with varying IT adoption levels and different capabilities. In addition, criteria for specialties have not been developed, and many physicians might face clinical quality measure requirements that are not applicable to their practice, or core EHR functionality requirements (such as e-prescribing) they do not use and should not have to acquire. The AMA recommends that an outreach plan be established and that information on requirements for demonstrating meaningful use and certification be readily, regularly communicated to physicians and other health care partners well in advance of the 2011 incentive payment start date. This and technical assistance should be available before the requirements become effective.

The AMA developed an extensive list of recommended initial requirements for 2011, designed as a "pathway", which it argues should be required only if certain preliminary criteria have been met, such as initial interoperability standards being successfully developed, tested, and adopted. An additional prerequisite is that "health care partners [be] capable of exchanging the requisite data and that data [be] presented in a way that is understandable to the physician".13 It argues that a physician's ability to comply with meaningful use requirements is dependent on many factors beyond his or her control and that these factors are not taken into consideration in the recommendations.

The comments of AHA, AMA and other stakeholder groups demonstrate that the Policy Committee's recommendations should not be considered the final word on meaningful use criteria. They are strong voices, and many hope that in response HHS will moderate the requirements in the proposed rule. But many policymakers believe this is the best opportunity to promote effective health information systems to achieve health care reforms and could resist diluting the requirements. Either way, it is very likely that a number of changes will be made by the time final regulations are issued.

While there are numerous specific recommendations adopted by the Policy Committee, there are still too many outstanding issues around the definition of "meaningful use" and too many steps left in the rulemaking process to have any certainty at this point about what capabilities and processes will be sufficient to qualify for incentives. The Policy Committee recommendations are not binding on ONC or CMS.


Clearly, there are extensive and significant implementation issues that await resolution just around the meaningful use requirement of the new health IT incentive programs. In addition, CMS will have to make final decisions and prepare regulations about other major outstanding issues, such as how to establish and administer program requirements, reporting methodologies, and payments for large group practices, Medicare Advantage providers, and integrated health systems with multiple Medicare provider numbers.

The outstanding issues bear directly on most providers' business decisions about health IT. The incentive formulas in HITECH can provide a rough estimate, perhaps, of what a provider might expect from the new federal incentives program, at least under Medicare, but other decisions yet to be made will have significant implications for the costs of and benefits from participating in the incentives programs.