Federal Government Employs 'Carrot-Stick' Approach to EHR Adoption

Incentives for EHR Adoption Come With New Bundle of Regulations

April 01, 2011 04:45 pm James Arvantes

Jen Brull, M.D., of Plainville, Kan., has always operated a financially successful family medicine practice; consequently, she was able to invest in an electronic health record, or EHR, system three years ago.

"My initial investment was $50,000," says Brull, the owner of Prairie Star Family Practice, a solo physician practice. "But I have pretty much gotten the return on my investment in the first three years just from increased efficiencies in having an electronic health record."

Now Brull is preparing to apply for a Medicare incentive program that could net her as much as $44,000 during the next five years and, possibly, $18,000 in incentives this year alone for being an early adopter of EHR technology.

Like Brull, William Weisel, M.D., of Mount Pleasant, Pa., also invested in an EHR system a few years back, but he ended up losing money. "The medical record part was good, but the billing software was terrible," says Weisel, owner and operator of Weisel Family Practice. "I was going out of business. I couldn't get paid."

As a result, Weisel switched to a computerized charting system that, although a step ahead of paper records, falls short of qualifying as an actual EHR. Thus, he faces the prospect of reduced Medicare payments by 2015 because his system doesn't meet the government criteria for EHRs.

"I am 60 years old, and that affects my decisions going forward, which are different than those of younger docs," says Weisel. "I am not as threatened by the potential penalties in 2015. My computer system is not going to be compliant with what Medicare wants going forward, so I will either join another (practice) or I will get another job."

Two different stories, two different approaches. Yet each, in its own way, is tied to the federal government's increasingly large role in the health information technology, or health IT, market.

Carrot & Stick Approach

In February 2009, Congress enacted the Health Information Technology for Clinical Health, or HITECH, Act as part of the American Recovery and Reinvestment Act, or ARRA. The HITECH Act called for a $19 billion investment in health IT, as well as programs and procedures to spur health IT adoption among physicians and other health care providers.

Regional Extension Center Program Encourages EHR Adoption

One of the requirements of the Health Information Technology for Economic and Clinical Health Act, is the creation of the Health Information Technology Extension Program, which is designed to help small and medium-sized physician practices become meaningful users of electronic health records, or EHRs.

The program includes a national Health Information Technology Research Center, or HITRC, as well as health information technology regional extension centers(healthit.hhs.gov), or RECs, that are operating in all 50 states.

As the HITRC gathers information on effective practices and helps the RECs work with one another and with relevant stakeholders to identify and share best practices in EHR adoption, meaningful use and provider support, the RECs themselves support and serve physicians and other health care providers in quickly becoming adept with EHRs.

According to the Office of the National Coordinator for Health Information Technology, the RECs have three major responsibilities:

  • provide training and support services to assist physicians and other providers in adopting EHRs,
  • offer information and guidance to help with EHR implementation, and
  • give technical assistance as needed.

Jen Brull, M.D., a solo family physician in Plainville, Kan., is preparing to apply for the Medicare EHR meaningful use incentive program. She found her local REC helpful in meeting the government's meaningful use requirements for EHRs.

"The REC got me lined up to make sure I had everything in place to meet meaningful use," said Brull. "One of the most important things they did was to help me and my staff conduct a security analysis, which is a huge process. They were able to go through and analyze my current security policies, help us see the gaps, help us remedy the gaps and develop policies that needed to be put in place."

Among those programs is an incentive program that will allow physicians, hospitals and other health care professionals to qualify for Medicare and Medicaid incentive payments when they adopt certified EHR technology and use it to meet criteria -- commonly known as meaningful use(www.cms.gov) -- set in place by CMS.

The federal government is rolling out the meaningful use incentive program in a three-stage process, requiring physicians and other providers to meet core requirements for each stage at various times during the next five years.

"Stage one is really about creating a foundation and getting physicians online and just kind of getting the basics in place to start capturing information," says Jennifer Covich, CEO of eHealth Initiative. "Stage two is really about exchanging information, sharing it between different points in the health care system -- a health information exchange. Stage three is supposed to be about outcomes, using all of that to actually improve -- being able to measure that you have actually improved patient care as a result of (adopting an EHR system)."

Medicare physicians who meet the core requirements of stage one of meaningful use in 2011 and 2012 are considered early adopters and will be eligible to collect $18,000 this year and $12,000 next year. "But if you start in 2013, you will get less money the first year and less money during the next two years because the program only runs until the end of 2015," says David Kibbe, M.D., M.B.A., senior adviser to the AAFP's Center for Health IT(www.centerforhit.org).

"Physicians can get the full $44,000 in incentive payments under Medicare by starting in 2012," he says. And for physicians with Medicaid patients, the incentive payments are even higher.

The drawback of the ARRA, however, is that in addition to incentives for EHR adoption, it also lays out penalties for Medicare and Medicaid physicians who do not adopt EHRs and use them appropriately. The government will start penalizing Medicare physicians for not meeting meaningful use criteria in 2015. The penalties will be 1 percent of Medicare allowed charges in 2015, 2 percent in 2016 and 3 percent in 2017.

According to Kibbe, HHS can continue to penalize Medicare nonadopters in 2018, but their payments cannot be reduced by more than 5 percent.

Not surprisingly, the penalty phase of the program has raised concerns about solo and small physician practices, which may lack the resources to adopt health IT.

"From a personal perspective, I never like penalties," says AAFP President Roland Goertz, M.D., M.B.A., of Waco, Texas. "Incentives and growing information -- showing the benefit of technology -- is the best way to go."

The AAFP, he adds, "didn't win the argument to prevent the penalties from being put in place." Although the penalties are relatively small, he notes, they still are penalties, and FPs see them as such.

Financial Challenges

Brull, however, supports the government's "carrot and stick approach."

"Without a push, a lot of physicians would not adopt the technology," she says.

Nevertheless, she worries about practices that may not have the resources to invest in health IT. "For me, looking at this three years ago, I said, 'Yeah, I can take this risk -- I can make this leap. But I think for some of my colleagues, this is a really hard thing -- maybe they are not at that place or they don't have the resources."

David Blumenthal, M.D., M.P.P., the National Coordinator for Health Information Technology, says physicians in small practices who say they cannot afford to adopt EHR technology "need to check again about whether they can afford it."

"Every day, there are new entrants in the market and there is price competition and the prices are coming down," says Blumenthal. "There are new and less complicated and more user-friendly, cloud-based options for developing electronic health records. So all you will need is a computer and an Internet connection to connect over the Web to a record. There are all kinds of solutions."

Blumenthal acknowledges, however, that small practices have a greater financial burden when adopting the technology. But, he adds, "they have to ask themselves, 'Do I want to do this now when the federal government is willing to help pay for it, or do I want to wait for some future time when I will have to do it myself?'"

He adds that small practices cannot afford to fall behind bigger systems and practices in an increasingly competitive health care market. "This is an opportunity to bring (small practices) along and make them viable for the future."

The larger question, says Blumenthal, is whether physician practices are going to adopt EHR technology and, thus, be able to keep up in a high technology world. "Information is the common requirement for a modern health care practice and for getting value out of health care services. Irrespective of federal programs, information is the key to unlocking the value of health care."