Go Paperless, or Pay the Price

Christin Melton
Published: Thursday, Apr 30, 2009
Even if you did not support the American Recovery and Reinvestment Act, commonly known as the stimulus package, you should be aware that one of its provisions—the HITECH Act—could help or hinder your future income. The law authorizes approximately $20 billion to encourage widespread adoption of health-information technology (HIT), described as EHRs, PHRs, health information exchange, CPOE, clinical decision support systems, and e-prescribing.



The Carrot

The HITECH Act allocates the bulk of the $20 billion for incentive payments to physicians who treat Medicare/Medicaid enrollees, a boon for practices eager to go electronic. Medicare/Medicaid will pay generous bonuses to physicians who demonstrate “meaningful use” of a health IT system, as defined by the HHS. Physicians using an approved HIT system by 2011 or 2012 qualify for annual bonuses over 5 years totaling as much as $44,000 (see sidebar on page 28). Waiting until 2013 to adopt a system nets you a maximum of $39,000 over 4 years, and procrastinating until 2014 cuts the total to a cumulative $24,000 over 3 years. Physicians serving in a “provider shortage area” are eligible for a 10% increase to their incentive payments. If you collect the Medicare HIT bonus, you will no longer be able to receive the current incentive payments for e-prescribing.

Medicaid has a separate bonus schedule from Medicare. If at least 30% of your patients (20% for pediatricians) are covered under Medicaid, you are eligible to collect up to $64,000 over 5 years, provided you have not received Medicare bonus payments. Nurse practitioners and nurse midwives can also apply for the Medicaid incentives.

The Stick

Did you know that if your practice treats Medicare patients but does not transition to a paperless system by 2015, money will come out of your pocket instead of going in? Starting in 2015, physicians not using an HHS-approved HIT system will see cuts in their Medicare reimbursement fees of 1%. The penalty increases to 3% by 2017 and persists, unless the practitioner receives a hardship exemption. If 85% of the nation’s physicians and hospitals have not gone electronic by 2018, HSS can cut fees for noncompliance another 2%.

Further, if you fail to adopt an EHR system that uses e-prescribing, you will be penalized twice: once under the HITECH Act and once under the Medicare Improvements for Patients and Providers Act, at least until 2014 when Medicare phases out e-prescribing penalties. Medicaid does not penalize physicians for noncompliance with the HITECH Act.

What is meaningful use?

Simply setting up an HIT system is not enough. Physicians must be able to show HHS that they are using the system “in a meaningful way.” HHS has until the end of 2009 to issue specific guidelines on what “meaningful” means, but current law specifies the following:

• An EHR with e-prescribing capability per current HHS standards;

• Connectivity to other providers to improve access to a patient’s entire health history;

• Ability to report on use of the technology to HHS.

Some physicians may have already shelled out a small fortune on a system that will not meet HHS specifications. If they cannot upgrade the system to meet the guidelines, they might have to start from scratch with a new vendor.

Costs/benefits of going digital

In May 2008, the Congressional Budget Office (CBO) estimated that adopting a standard health IT system would cost the average physician $25,000 to $45,000, with annual outlays of $3,000 to $9,000 to maintain the system. In an effort to reduce the financial burden of implementing an HIT system, Congress designated some of the stimulus money to institute a national HIT coordinator at HHS. The IT coordinator is tasked with securing a government-sponsored EHR system that physicians and other healthcare providers can purchase for a nominal fee, which has yet to be determined.

Physicians will still have the option of buying an HHS-approved system from a private vendor, but they run the risk of having an obsolete system on their hands if the vendor should go bust. A number of startup companies are likely to emerge in the next few years to take advantage of the demand for HIT, making this is a very real danger for physicians.

In an analysis of the HITECH Act, CBO projected that, by 2019, 70% of hospitals and 90% of physicians will have an EHR system in place. CBO also predicted “its adoption on a nationwide basis would reduce total spending on health care” in several ways: reducing inappropriate tests and procedures, decreasing medical errors, cutting the administrative overhead, and improving diagnosing and care. CBO concluded the HITECH Act would reduce federal spending on Medicare, Medicaid, and the Federal Employee Health Benefits programs by $12 billion from 2011 to 2019. CBO said that because the measure would lower healthcare costs overall, private insurers, employers who provide health insurance, and people without insurance, would also benefit.


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