• Economic Stimulus Package Includes Incentives for Use of Health Information Technology
  • March 10, 2009
  • Law Firm: Hinshaw & Culbertson LLP - Rockford Office
  • The federal American Recovery and Reinvestment Act (Stimulus Bill), enacted on February 17, 2009, includes a number of provisions that affect healthcare providers. One such provision is the Health Information Technology for Economic and Clinical Health Act (HITECH Act), which aims to increase healthcare providers’ use of health information technology, such as electronic medical records, to improve quality of care and care coordination and reduce medical errors and duplicative care. The law provides for the investment of $20 billion in health information technology and Medicare and Medicaid incentives.

    Hospitals are eligible to receive up to $11 million in increased Medicare Part A payments, and physicians are eligible to receive up to $64,000 in increased Medicare Part B payments, if they are “meaningful” users of health information technology. To be considered a meaningful user, a healthcare provider must use a “certified” electronic medical records system. The United States Department of Health and Human Services will publish certification criteria in 2009, and regional centers established under the Health Information Technology Extension Program will assist healthcare providers in adopting and implementing certified systems, giving priority to public and not-for-profit hospitals, critical access hospitals, federally-qualified health centers and rural providers.

    Hospitals participating in the inpatient prospective payment system that implement a certified electronic medical records system by 2013 will receive the greatest increase in Medicare Part A payments. Hospitals that implement a certified system in 2014 or 2015 will receive a lesser increase in payments. Hospitals that are not meaningful users of health information technology before 2016 will receive no incentive payments. Just as importantly, unless it can demonstrate significant hardship, a hospital that is not a meaningful user of health information technology by 2015 will receive Medicare Part A payments that are less than the payments it would otherwise receive. The payments will be reduced in 2016 and again in 2017, and will continue at the reduced level until the hospital implements a certified electronic medical records system.

    Similarly, the law creates incentives for critical access hospitals to become meaningful users of health information technology. The cost of a certified electronic medical records system can be fully depreciated beginning in 2011. Also, critical access hospitals are eligible to receive greater cost-based Medicare payments for up to four consecutive years, until 2015. If a critical access hospital is not a meaningful user of health information technology by 2015, cost-based reimbursement will be reduced in 2015, and in each following year until 2017, at which point payments will equal 100 percent of cost until the critical access hospital adopts a certified electronic medical records system. Critical access hospitals that demonstrate significant hardship are eligible for exemptions from these penalties for up to five years.

    Physicians who implement certified electronic medical records systems are eligible for increased Medicare Part B payments beginning in 2011 for up to five years. Physicians who adopt certified systems in 2011 or 2012 will be eligible for the greatest increases. Physicians who do not become meaningful users of health information technology by 2015 will not be eligible for any increases in Part B reimbursement. Increases are greater for physicians located in health professional shortage areas, and do not apply to hospital-based physicians who furnish substantially all their services using hospital facilities and equipment. Amounts due under the physician fee schedule to physicians who do not implement certified electronic medical records systems by 2015 will be reduced in that year, and will be further reduced each following year. Importantly, if at least 75 percent of physicians do not become meaningful users of health information technology by 2018, the law permits CMS to decrease payments each year, indefinitely.

    Although healthcare providers have strong incentives under the HITECH Act to adopt and implement health information technology soon, hospitals and physicians should take care when making decisions related to electronic medical records systems. Presently, there are no published standards that define a “certified” electronic medical records system. Providers which invest in systems that do not meet the certification criteria will not be eligible for the increased reimbursement rates. Also, donation or subsidization of health information technology by hospitals to physicians implicate the Stark Law and the Anti-Kickback Statute and must comply with applicable rules. Finally, tax-exempt hospitals must take special care to comply with applicable tax rules in making electronic medical records systems available to medical staff members.