For health care providers, technology developers, and medical insurers, the standards under which Health Information Technology (Health IT) will function will spell cost recovery, profit, or unreimbursed expense. In Washington, it is often obvious that the devil is in the details. Entities faced with the challenge of implementing Electronic Health Records (EHRs) now have the opportunity to affect those details.

As Wiley Rein previously has explained, the American Recovery and Reinvestment Act (ARRA) allocates some $17.2 billion in Medicare/Medicaid incentive payments to physicians and hospitals to encourage the timely adoption of Health IT. Under ARRA, the Department of Health and Human Services (HHS) must issue regulations this year to determine whether eligible physicians and hospitals are “meaningful users” of Health IT to qualify for these incentive payments beginning in October 2010.

HHS Director of the Office of National Coordinator (ONC), David Blumenthal, who is charged with developing the regulations, is aiming to give healthcare providers the best possible chance to cash in on the incentive payments. Within the next several weeks, ONC is expected to provide preliminary guidance and specifications on the “meaningful use” of EHRs. Companies looking to offer compliant Health IT systems to healthcare providers should give serious consideration to participating in the Health IT regulatory process.

ARRA’s Process for Defining Meaningful Use

Under ARRA, HHS must adopt criteria for determining whether a provider is a “meaningful user” of EHRs by December 31, 2009. ARRA sets out three broad requirements: First, the physician or hospital must engage in “meaningful use” of certified EHR technology, which shall include electronic prescribing. Second, an eligible healthcare provider must use an electronic information exchange to improve the quality of healthcare. Third, “meaningful users” must use EHRs to report on patient treatment plans, long-term health outcomes, and other measures defined by the HHS Secretary.

The ARRA establishes two committees to advise ONC on the development of Health IT regulations. The Health IT Policy Committee, which held its first meeting on May 11, 2009, is charged with formulating a policy framework for developing a Health IT infrastructure. The Policy Committee also is tasked with identifying and prioritizing areas in which standards are necessary for the use and exchange of health information. One of the three working groups that the Committee formed will work on defining “meaningful use.”

The second committee, the Health IT Standards Committee, which first met on May 18, 2009, is charged with making recommendations to ONC regarding Health IT standards as well as implementation and certification criteria for the use and exchange of electronic health information. The Health IT Standards Committee will formulate a “meaningful use” standard based upon recommendations from the Policy Committee.

How Will “Meaningful Use” Be Defined?

A couple of themes regarding “meaningful use” emerged from the initial Health IT Standards Committee meeting. First, the Committee recognized the need to strike a balance between allowing technology providers to innovate while still enabling a useful level of interoperability through EHR standardization. Second, while HHS recognizes that a standard is needed to enhance Health IT implementation, HHS should make the initial “meaningful use” criteria achievable for a significant number of providers. In this regard, committee members commented that “meaningful use” criteria should be built upon current successful programs and standards. ONC Director Blumenthal has recognized that setting the bar too high may lead providers to forego incentives and petition for legislative change.

The Health IT Standards Committee expects that a definition for “meaningful use” will include four key components: clinical care summaries, electronic prescribing, laboratory reporting, and quality data reporting. A clinical care summary may include a medication list, an allergy list, and other reports to enable the coordination of care. Electronic prescribing may go beyond computerizing new prescriptions and refills to include drug history tracking, interaction information, and routing information. Farther reaching proposals include advanced medication management, compliance with prescribed doses, and monitoring for signs of abuse. Laboratory reporting likely would include the capacity to view images, including X-rays and CAT scans. Finally, quality data reporting applies to all aspects of care. Given the goal of including substantial numbers of providers under initial regulations, all of these elements may not be included in detail in the initial “meaningful use” standard.

The Health IT Policy Committee members agreed that criteria ought to be achievable both for providers and for companies providing Health IT. Committee members also suggested that the criteria need to incorporate privacy and security protections.

ONC Director Blumenthal has stated his intention to release some direction on “meaningful use” in June 2009. ONC currently plans to solicit comment on draft rules in August 2009 in order to meet the December 31, 2009 deadline. Thus, the time has come to prepare to participate in the standards debate.

Incentives in the Form of Increased Medicaid and Medicare Payments

Physicians and hospitals that qualify as “meaningful users” of EHRs by FY 2011 will have access to substantial incentive payments through the Medicare and Medicaid systems. Because providers may not obtain incentive payments under both systems, ONC along with the Centers for Medicare & Medicaid Services, will be educating providers on selecting the appropriate program for their practices. Available Medicaid and Medicare incentives are discussed below.

Medicaid. Medicaid incentives are covered in Section 4201 of ARRA. Under the Medicaid system, states may give incentives to providers that purchase and operate certified EHR technology. Eligible physicians may receive reimbursement for up to 85% of federally determined “net average allowable costs” of EHR technology. In addition, hospitals that are “meaningful users” of EHR systems are eligible for payments through a statutorily-defined formula.

Physicians may obtain a first year of payment by demonstrating efforts to adopt, implement, or upgrade certified EHR technology. However, in order to receive incentives in subsequent years, physicians must show “meaningful use” of certified EHR technology in a manner approved by the state and acceptable to the Secretary of HHS. “Meaningful use” for purposes of Medicaid reimbursement may include the electronic reporting of clinical quality measures to states. Because states have a role in defining “meaningful use” under the Medicaid system, the definition could differ from the “meaningful use” definition under the Medicare system. Different definitions could introduce challenges for companies seeking to provide compliant EHR technology.

Incentive payments under the Medicaid program will begin FY 2011. The maximum incentive for eligible physicians is $21,250 in the first year. Physicians also may receive up to $42,500 over five years to cover costs relating to the operation of Health IT.

Medicare. Physicians eligible under the Medicare system will receive payments during each year from FY 2011 through FY 2015 in which they are “meaningful users” of EHRs, up to a maximum total of $44,000. Incentive payments decrease annually until 2015. In addition, physicians who furnish services in an area designated as a “health professional shortage area” will receive a 10% bonus payment. Hospital that are “meaningful users” of EHRs also may earn incentive payments of up to $16 million over a period of four years. Because the ARRA requires the HHS Secretary to issue increasingly stringent standards of “meaningful use” over time, providers likely will need to upgrade continually their systems to maintain compliant EHR systems. In contrast to the Medicaid program, eligible healthcare providers that are not “meaningful users” of certified EHRs by FY 2015 will be penalized under the Medicare system via lower payments.