The ARRA and You

Understanding the Bill

The Congressional Budget Office predicts that 90% of physicians and 70% of hospitals will be using Electronic Medical Record systems over the next few years. This transition will save billions of dollars on the provision of healthcare, and will significantly increase the quality and coordination of care provided to our citizens.

Understanding the language of the Bill is challenging; the following is a plain language summary of the health IT provisions:

Details of the Funding

• $2 billion immediately to the Department of Health & Human Services (HHS) for the creation of standards and policy committees.
• $21 billion that will be paid to healthcare providers who demonstrate meaningful use of EMRs.

$21 Billion in Incentive Payments to Physicians and Hospitals

• Moving physicians who have been slow to adopt Electronic Medical Records to a computerized environment.
• Insuring that patient data no longer sits in “silos” (i.e. paper records) within individual provider organizations but instead is actively and securely exchanged between healthcare professionals.

Most of the funds from the HITECH Act are assigned to payments to physicians and hospitals for implementing and effectively using a robust, connected (and certified) EMR system. There are two programs – one that is designed for those who see large volumes of Medicaid patients, and a second for those that accept Medicare. In order to qualify for the incentive payments, both physicians and hospitals have to show that:

• They are using a certified EMR product that meets HHS standards
• They have and are using electronic connectivity to other providers to improve access to the full view of a patient’s health history
• They must report on their use of the technology to HHS

In order to spur rapid implementation of EMR systems, all of the incentives include payments for up to five years but provide the largest payments early in the program, and those that don’t adopt will eventually be penalized through lower reimbursements. The incentive payments begin in 2011 to ensure the providers have time to adopt and learn to use the EMR; penalties begin in 2015.

Physician Incentives

Physicians will choose which incentive program (Medicaid or Medicare) works best for them:

Medicaid: Physicians who see more than 30% of patients paying with Medicaid (20% for pediatricians) are eligible for payments of up to $63,500 over five years. The incentives will be calculated through a formula that multiplies 85% by amounts ranging from $25,000 in the first year to $10,000 in subsequent years.

Medicare: Physicians who do not have a large Medicaid volume but do accept Medicare can receive up to $44,000 over five years.  The following is a table that shows the amount of incentive payments available:

(For example, if a practice first implements and uses a certified EMR in 2012, in 2014 they are eligible for a maximum reimbursement of $8,000.)

The money spent can be applied to the different components of the EMR including software, hardware, installation and training. Early adopters will be rewarded with a higher level of funding.

Fee reductions: Providers who do not demonstrate meaningful use by 2014 will see a 1% decrease in reimbursements in 2015. Additional decreases will take place in subsequent years.

Standards and Certification

The Secretary of HHS is required by the Bill to review all existing standards, determine the initial set of standards that will affect the Meaningful Use criteria related to certified products, and implementation specifications. All of this must be completed before the end of 2009 – so expect things to move quickly.

Stay Tuned

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