February 1, 2010

Anesthesia practices have raised new questions about the availability of Recovery Act funds to incentivize providers to adopt electronic health records (EHRs) since CMS issued proposed regulations on December 30, 2009. The Cliff Notes answer is that Medicare will not pay anesthesiologists or other hospital-based physicians to deploy EHRs. For a review of the brief history and status of the EHR incentive program, please read on.

The American Recovery Reinvestment Act, aka “ARRA” or the “stimulus package,” established programs to provide some $19 billion worth of incentive payments to eligible professionals (EPs) and eligible hospitals participating in Medicare and Medicaid that adopt and make “meaningful use” of certified EHR technology. The Medicare incentive program offers up to $44,000 over five years to EPs who are “meaningful users” of a certified EHR; up to $63,750 is available per EP under the Medicaid program. The first payments may be made in January 2011 to professionals, and in October 2010 to eligible hospitals. Incentive payments to other EPs may begin in January 2011 and continue through 2015. After 2015, Medicare providers who do not use certified EHR technology in a meaningful manner will see reductions in their reimbursement rates.

It comes as no surprise that the new regulations exclude anesthesiologists from the EHR incentive program. The statute itself states that hospital-based EPs are not eligible for the Medicare incentive, defining “hospital-based eligible professional” to mean an EP, such as a pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of his or her Medicare-covered professional services during the relevant EHR reporting period in a hospital setting (whether inpatient or outpatient) through the use of the facilities and equipment of the hospital, including the hospital’s qualified EHRs.

Eligible hospitals, on the other hand, were disappointed, if not surprised, at the very expansive definition of “hospital-based” EPs. CMS has proposed to classify as “hospital-based” and therefore ineligible for the incentive payments those professionals who perform 90 percent or more of their professional services in any type of inpatient or outpatient facility. Under this definition approximately 27 percent of providers will not be able to qualify as meaningful users of EHRs.

The rationale for barring hospital-based EPs from the incentive program is the assumption “that an EP providing substantially all of their services in a hospital is providing these services in the hospital building and generally is also using its equipment, including qualified EHRs, and not bringing his or her own equipment to the hospital to provide medical services.”

The hospital, however, may receive an incentive payment if it can demonstrate meaningful use of a certified EHR. If the anesthesia group makes the investment in the certified EHR (or in adapting the hospital’s EHR to anesthesia patients), it would seem fair that the hospital return some of the Medicare incentive payment to the group. Hospitals, we should note, are eligible for both Medicare and Medicaid payments, unlike EPs, who must select one or the other program.

Hospitals are among the many “stakeholders” expressing doubts that they can qualify for the incentives because of the complexity of the regulatory requirements and the short timeframe in which to satisfy those requirements. The proposed rule would establish a progressively increasing number of “measures” attached to “objectives” that would need to be completed. For stage 1, which begins in 2011, CMS proposes 23 objectives for hospitals (and 25 objectives for physicians) to meet to be deemed meaningful EMR users. Stages 2 and 3 will expand the list in 2013 and 2015, and the added requirements will be proposed through future rulemaking.

According to the American Hospital Association’s press release, “as proposed, the current regulations may actually make it more difficult for hospitals and doctors to adopt health information technology. Unless significant changes are made and timelines reexamined, it is unlikely that the vast majority of hospitals can meet the proposed standards, making them ineligible for this important funding, and also subject to penalties for not being in compliance.”

Even if anesthesiologists were not excluded from EP status, the maximum incentive payment of $44,000 over five years might not have been adequate compensation for making sure that they would be meeting 25 objectives/measures in 2011 alone. In addition to the difficulties of meeting the technical requirements of the various computerized order entry, quality reporting and e-prescribing measures (among others), EPs seeking an incentive payment will need to make sure that any new patient information stored or transmitted, e.g., demographics, medication lists, laboratory results, complies with the HIPAA privacy and security requirements.

Perhaps the most costly potential consequence of being eligible for EHR incentive payments is the stick that follows five years of carrots: after 2015, as noted at the beginning of this article, Medicare providers who do not use certified EHR technology in a meaningful manner will see reductions in their reimbursement rates. Logically enough, the Recovery Act explicitly exempts hospital-based providers from these reductions, however. Given the likely difficulty of meeting all of the objectives and measures in the three stages of the incentive program, anesthesiologists’ exclusion from the entire program may be to their advantage.

As always, we hope that the information we have provided is useful to you.

With best wishes,

Tony Mira
President and CEO

Click here to download a PDF of this eAlert