Electronic Medical Records: Meaningful Use Incentives and Penalties

The American Recovery and Reinvestment Act (ARRA) provides incentives and penalties to certain healthcare providers for the adoption of electronic medical record systems. Depending on who you speak to, the benefits of Electronic Medical Records or Electronic Health Records (EMR or EHR) include:

  • Improved clinical care – When the patient’s information is immediately available electronically, including medical history, allergies, underlying conditions, tests that have already been performed, as well as treatment protocols, we will see improved quality in care delivery.
  • Increased productivity - Processes like pulling/filing and documenting in paper charts go away and various results, i.e. lab and imaging, can be placed directly into the EMR. EMRs that integrate with diagnostic devices enable information to be directly populated.
  • Increased revenue - EMRs can increase revenue through improved insurance re-imbursement as a result of better coding and billing procedures.
  • Avoidance of costs - EMRs can help reduce the many expenses associated with paper charts, copying, management and document storage. Transcription costs can also be reduced as EMRs can provide an easier means for patient documentation and report writing. EMRs can also keep malpractice premiums lower as a result of higher quality documentation and drug prescription alerts.

Are they Carrots and Sticks or part of a Cardboard Box Trap?  You’ve heard of “carrot” and “stick” used as terms to characterize incentive and penalty. What if the ARRA’s use of a carrot and stick together are seen as a trap for healthcare providers? (You can instantly visualize a kid’s rabbit trap -- a cardboard box propped up with a stick, tied to a carrot, waiting for the rabbit.)

The Carrot  The Obama administration made $1.2 billion in grants available to help the nation’s health care system transition to electronic medical records, including grants for individual doctors to help cover the costs of conversion. Increasing the adoption of health information technology should improve quality of care and save the federal government more than $12 billion over the next 10 years. For physicians, the EMR is “free”.

The Stick  However, the carrot has strings attached and those strings are tied to a big stick. The Centers for Medicare & Medicaid Services (CMS) will help subsidize (not pay for) the cost of implementing a certified system if physicians meet certain “meaningful use” criteria (Cue the groans). Too swift implementation of the wrong system could create a trap – not being able to get to “meaningful use.”

Physicians must meet several criteria:

1. Be a qualifying physician (not all physicians qualify)

2. Demonstrate meeting “meaningful use” criteria (which is currently 0% nationwide)

3. Receive a maximum of $44,000 to subsidize the cost. Note: the amount awarded is reduced each year, so the longer you wait, the less you receive.

4. “Meaningful use” requirements increase over the same time period.

5. Starting in 2015, if providers have not adopted and are not actively utilizing a certified EHR and meeting the "meaningful use" definition, they will be subject to financial penalties under Medicare.

6. State requirements vary. For example, in Massachusetts, starting in 2015, you must have an EHR to be compliant with physician licensing requirements.

For the most up-to-date definitions and requirements, visit the CMS website at www.cms.gov.

Thankfully, the ARRA recognizes the many challenges EHR adoption presents and has established Regional Extension Centers (REC) to assist with their successful rollout. The RECs are working diligently to roll out approved EHR and Implementation and Optimization Organization (IOO) vendors. The work of the Regional Extension Centers is paramount for participating providers to get the best price and quality from approved vendors as well as the successful adoption of EHR technology. Furthermore, Regional Extension Centers are critical to avoiding the Cardboard Box Trap.

The Cardboard Box Trap  What will the verdict be? Is the carrot tied to a stick which is propping up a large box waiting for us to take the bait and run? Despite time being of the essence to maximize incentives, minimize penalties, and meet the 2015 Massachusetts licensing requirement, the adoption of EHRs has been limited. Like the cautious rabbit, many healthcare providers are waiting to see what the other rabbits will do.

Regardless of the size of the carrot or the proximity of the stick, there are major considerations to adopting an EHR system. Practices have to make brutally honest evaluations in the three key areas; their people, their processes and their technology.

  • How willing are the people in the practice to accept and implement an EHR change?
  • Is the practice willing to identify and adopt new policies and procedures for realizing the efficiencies of an EHR and meet the “meaningful use” criteria for reimbursement?
  • Is the practice ready to make a significant financial investment into an EHR? The investment can include hardware, software, implementation, training, support and maintenance decisions, among other considerations.

Over the next several years, the size of subsidies will get smaller and the meaningful use requirements (demands) on practices will increase. For many practices, this could spell disaster. They may end up with EHRs that are not properly implemented, not receive the maximum subsidies, not be able to meet the ever-increasing “meaningful use” requirements, and be subject to Medicare penalties.

Healthcare providers need to adopt EHR technology and recent research supports the benefits. However, without utilizing the appropriate resources, RECs and proper planning, there could be a cardboard box trap waiting for you.

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