Maximize your EHR incentives

The HITECH provisions built into last year's American Recovery and Reinvestment Act (ARRA) promise billions in incentives for healthcare providers who would upgrade to electronic health records (EHRs) as part of a long-term strategy to improve healthcare quality and reduce costs. Now, with the implementation of parity for mental health and substance use disorders plus the major reforms promised in the Patient Protection and Affordable Care Act, behavioral health providers and organizations are confronted with a huge agenda for change: more payers, more consumers, more collaboration with other caregivers, and the prospect of full integration with the medical community.

With the help of research into public documents and timely guidance from industry experts-including members of SATVA-Behavioral Healthcare dove into the EHR incentive provisions of the HITECH Act, looking at the implications specific to behavioral health providers.

Where is the EHR money, and when is it available?

The government, through the HITECH provisions of ARRA, is offering financial incentives to eligible professionals (EPs) and hospitals that participate in the Medicare and Medicaid programs. The incentives are intended to help them pay for EHR systems that are needed as a part of ongoing quality improvement and payment reforms.

For hospitals, the HITECH Medicare and Medicaid EHR incentives will become available as early as October 2010. Note that for hospitals, meaningful use reporting requirements and incentive payment years are tied to federal fiscal years, which start October 1 and end on September 30. Thus, hospital incentives under both programs become available in federal fiscal year 2011, which begins on October 1, 2010.

EHR incentives for EPs under both the Medicare and Medicaid EHR incentive programs are tied to calendar years. Incentives for EPs become available in January 2011. (Because states administer Medicaid-funded programs, all states were asked by CMS to submit plans under which they would qualify and administer Medicaid EHR incentive funds. These plans are subject to CMS approval, which could cause some delay in the start dates in some states.)

Are behavioral healthcare professionals and facilities now eligible for this money?

At present, many behavioral health professionals are not yet eligible and most facilities are excluded. Yet, passage of a new bill could change that soon.

Here's what happened: The original ARRA legislation specifically identified physicians and nurse practitioners as eligible professionals, but excluded other licensed behavioral health providers as well as psychiatric hospitals from the definitions of those who would qualify for EHR incentives. A bill to “fix” these disparities, The Health Information Technology Extension for Behavioral Health Services Act of 2010 (HR 5040), was introduced in the U.S. House of Representatives by Congressmen Patrick J. Kennedy and Tim Murphy in April 2010. This bill specifically includes typical behavioral health professionals including clinical psychologists and clinical social workers in the EP definition used for incentives, and specifically includes psychiatric hospitals and behavioral health/addiction treatment centers in its “hospital/organizational” definition.

What's a “certified” EHR system or EHR system upgrade?

To qualify for the initial year of incentives, an EP or hospital must use an EHR that is “ARRA Certified.” The certification means that the EHR incorporates the features required to support current, or Stage 1, “meaningful use” requirements released by the Office of the National Coordinator (ONC). A “temporary” EHR certification rule became effective on June 24, 2010. Temporary certification is intended to fill the gap until organizations who apply to be Authorized Testing and Certification Bodies (ATCBs) are approved to participate in the permanent certification process. According to the ONC, the goal is to have the ATCBs operational in summer 2010 and certifying EHRs sometime in the fall according to Stage 1 (2011) meaningful use requirements. (It is expected that the “temporary” certification program will sunset at the end of 2010.)

In 2013 and 2015, respectively, EHRs certified under the Stage 1 requirements must be recertified in a similar manner to demonstrate that they offer the functionality needed by users to meet Stage 2 (2013) and Stage 3 (2015) meaningful use requirements.

If I buy a certified EHR system or upgrade, will I (or my hospital/organization) meet meaningful use requirements?

No. The idea that “certified” software alone is sufficient to demonstrate meaningful use is a misconception, explains Michael Morris, president of Anasazi Software. “People sometimes think that if they buy a certified EHR, then [meaningful use] is on the vendor. That's not the case. Certification is on the vendor, but meaningful use is on the EP or hospital.” In other words, after the vendor installs the EHR software, users must do the hard work of adapting people and processes to the EHR so that they are meaningfully using the EHR as a part of their routine business activity. That will take planning, process analysis, process redesign, software training, and a lot of adjustment.

What are meaningful use criteria?

Generally, “meaningful use” criteria are performance criteria that HHS and ONC have decided will demonstrate that an EHR system is capable of meeting the data, security, networking, interchange, and other requirements needed to support national healthcare reforms that strive to improve quality, ensure safety, and reduce costs. There are actually three sets, or stages, of meaningful use (MU) criteria envisioned by the ONC:

• Stage 1 MU criteria focus on data capture and sharing and are available today.

• Stage 2 MU criteria will focus on advanced clinical processes and are still being developed.

• Stage 3 MU criteria will focus on improving outcomes, but are not yet in development.

We'll cover the evolving stages of meaningful use criteria in upcoming issues of Behavioral Healthcare.

How do EPs and hospitals qualify to start the incentive payments?

EPs or hospitals become eligible for the first and largest EHR incentive payment in one of three ways:

• Declaring a “non-binding intention to participate in the incentives program.” This enables receipt of the first year's incentive even before the EHR purchase or implementation takes place.

• Purchasing or starting implementation of a “certified” EHR system. For those who already own an EHR, a “certified” EHR system upgrade also qualifies for funding.

• Demonstrating meaningful use requirements for that payment year. While Medicare EPs and hospitals must demonstrate meaningful use for a 90-day period of the first year in which they receive payment, it does not appear that there is a similar requirement for Medicaid EPs and hospitals in the first year. However, it is clear that all EPs and hospitals must demonstrate meaningful use throughout the year following their first payment year.

The goal of the regulations is to put all EPs and hospitals on track to achieve Stages 1, 2, and 3 of meaningful use by January 1, 2016, with the stages scheduled as shown in figure 1. This figure makes clear that EPs and hospitals who adopt early can qualify for up to two years of funding for both Stage 1 and Stage 2 meaningful use requirements. Later adopters will face a shorter implementation timeline and a steeper adoption curve.

What happens if an EP or hospital/organization fails to meet meaningful use requirements?

Medicaid EPs and hospitals can keep the first year's incentive-there's no penalty involved. What happens to Medicare EPs and hospitals who take the first year's incentive up front, yet fail to meet the 90-day meaningful use demonstration required in their first payment year is not entirely clear. (Possibly a claw-back mechanism could be used, since their incentive would have, if received in advance, been paid out as a percentage of their Medicare billings.)

Beyond the first payment year, the rules are clear: Any EP or hospital that fails to meet meaningful use requirements will lose the chance for subsequent EHR incentive payments in all years that the requirements are not met.

How do the Medicaid and Medicare EHR incentive programs compare to each other?

As seen in figures 2A and 2B, the programs have similar requirements for meaningful use and EP/hospital participation. But they differ in other areas, including program duration, available incentives, administration and payment, and penalties for non-participation.

How long are the Medicaid EHR incentives available? How are they calculated?

The Medicaid EHR incentive program offers EPs and hospitals up to six years of payments over a 10-year period.

Medicaid incentives for EPs: EPs may take advantage of the program for six years in the period starting in calendar year 2011 through the end of calendar year 2021. EPs must qualify to receive their first payment by or before calendar year 2016, then meet meaningful use requirements to receive the maximum incentive payment of $63,750 by the end of the program, as shown in figure 3.

Medicaid incentives for hospitals/organizations: Hospitals can participate in the program for six years from the start of fiscal year 2011 (October 1, 2010) through the end of fiscal year 2021. (For states still awaiting CMS approval of their Medicaid EHR incentive administration plans, the start date could be later.)

Medicaid EHR incentives for hospitals/organizations are calculated as shown in figure 4. Hospitals may participate in both Medicare and Medicaid EHR incentives, provided they meet the patient population and timing requirements.

How are the Medicare EHR incentives calculated?

Medicare incentives for EPs: The Medicare EHR incentive program for EPs begins in calendar year 2011 and extends through the end of calendar year 2016. Within that period, Medicare EPs may qualify for up to five years of payments to a maximum of $44,000.

To qualify for the maximum level of payments, Medicare EPs must receive their first year's incentive payment during or before calendar year 2012, and then qualify for additional payments by meeting meaningful use requirements for subsequent years.

Medicare EHR incentive payments for EPs equal 75 percent of Medicare allowable charges for services provided by the EP in the qualifying year, up to the maximum annual level shown in figure 5. Incentive payments are increased for EPs who serve in “health professional shortage areas” (an additional 10 percent payment).

Incentives are reduced for Medicare EPs who are “late adopters” or who fail to achieve meaningful use before or during 2012 by reducing the size/number of payments available in 2013 and 2014.

The Medicare incentive program also penalizes Medicare EPs who do not adopt EHRs or do not meet meaningful use requirements by the end of 2015. They will face “payment adjustments” as soon as 2015 or 2016, which will appear as deductions by Medicare from the payment allowed for their services.

Medicare incentives for hospitals/organizations: Medicare hospitals can qualify for up to four consecutive years of EHR incentive payments under the incentive program, which starts in fiscal year 2011 (October 1, 2010) and concludes on September 30, 2016.

The formula used to calculate Medicare EHR incentives for hospitals is very similar to the one used for Medicaid incentives, which is shown in figure 4. The differences are: 1) Medicare program information is used in step two of the formula shown in figure 4, and 2) transition factors for Medicare hospital payments are reduced for those who participate after 2013.

If Medicare hospitals do not adopt EHRs, or fail to meet meaningful use requirements by the end of fiscal year 2015, Medicare may begin making “payment adjustments” of one percent or more from the payment allowed for their services.

What are the advantages of going forward right away?

EPs and hospitals that are able to proceed with EHR implementation and upgrade programs in the near term will have a longer timeframe in which to successfully demonstrate the three successive stages of meaningful use, which are due by 2016. Those who start by 2011 will have five years, while those who wait until 2013 will have just three. Those who begin in 2014 and 2015 will lose not only implementation time, but also funds, since a reduced transition factor applies to their incentive payment.

How much will accomplishing meaningful use cost?

No one can predict exactly what an EHR implementation will cost or exactly what it will require to succeed as planned, but a good program manager and a reputable vendor are important to the process. EHRs are being offered because achieving the nation's vision of a reformed health system won't be easy, and it won't be cheap. Morris suggests a rough rule of thumb for costing a system implementation:

• If, within a five-year period, external costs for an EHR implementation (software, license, development, services, support paid to consultants/vendors) costs X,

• Then internal costs for the system will equal 2X for the same five-year period (planning, project management, staff/clinician training, process changes, administration, etc.).

• A rough estimate of total system cost is 3X.

So, while the available HITECH incentives are substantial, they probably won't do the job. “The fact is, even the maximum level of EHR incentive funding is unlikely to cover a provider's cost of procuring, installing, administering, training, and achieving Stage 1 of meaningful use with an EHR system,” says Morris.

There's also likely to be a time crunch if you apply for the first year's incentive before you've made substantial progress in implementing the EHR, because meaningful use has to be demonstrated by Medicare EPs and hospitals for 90 days in the same calendar year the first payment is received. For payment year two and all subsequent years, all EPs and hospitals must demonstrate meaningful use throughout the year to qualify for incentives.

Morris says that the challenge isn't so much about knowing what the meaningful use requirements are, but rather in implementing the process changes, training, measurement, and follow-through needed to accomplish, measure, and demonstrate them-while maintaining other daily work activities. He expects that small providers will have the best chance to implement quickly, while medium-sized and large providers will likely take more time. Timeframes for implementation may range from less than one year to several years, again depending largely on the size of the organization.

Behavioral Healthcare 2010 July-August;30(7):10-15