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The Costs of Medicare HIT Mandate Noncompliance

Alberto Borges, MD
Published: Friday, Mar 20, 2009
President Obama has signed a stimulus bill that calls for eventually punishing physicians who do not “meaningfully” use a “certified” EHR system by imposing up to a 5% Medicare payment penalty—non-compliance penalties start at 1% in 2015, increasing to 5% in 2019, at the discretion of the Secretary of HHS, if the nationwide EHR adoption rate remains below 75% (www.fmaonline.org/pages/practice/files/Stimulus_101.pdf). CMS will use these penalties as a cost-cutting measure, which may force many physicians to consider withdrawing from Medicare.



To understand why this may happen, consider a physician who in 2019 bills $100,000 to Medicare and gets punished the full 5% for failing to meaningfully use a c-EHR, and compare her situation over five years to a physician who successfully uses a c-EHR, and also to a physician whose use of a c-EHR fails to qualify as “meaningful”:

The non-complying physician will lose $5,000 per year for five years, for a total loss of $25,000.

The physician who fails to comply due to a poor c-EHR installation or who ends up de-installing the system will have a slightly higher total loss:


$33,000 for the estimated up-front cost of a c-EHR (plus $1,500 each month for maintenance fees; see http://tinyurl.com/5veuol)
$25,000 (penalty for non-compliance based on above math)
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$58,000 (minimum five-year loss)

The physician who complies during the five years beginning in 2019 could end up incurring the highest losses:


$123,000 (cost of purchasing an EHR system, plus $1,500 per month for maintenance, multiplied by 60 months)
$50,000   (one-third of a full-time employee for reporting and documentation at an estimated $10,000/year for five years).
$125,000 in estimated workflow losses (say it takes an extra five minutes per encounter to capture required data. An office grossing $100,000/year in Medicare funds, at $100 per encounter, comes out to 1,000 encounters x 5 min/encounter = 5,000 minutes. That adds up to 250 “lost” 20-minute encounters, or another $25,000/year for five years.)
-$44,000 Medicare reimbursement (if physician “meaningfully uses” c-EHR successfully)
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$254,000 (five-year loss)


The actual profit/loss calculation depends on the c-EHR that you end up buying. Some systems cost significantly less than the “average” cost stated above. Most vendors will promise a positive return on investment (ROI) due to perceived “efficiencies” gained by using their c-EHR systems. A minority of physicians on several discussion threads at Sermo, emrupdate, and other sites concur and state that they love their c-EHR software systems.


Only 17% of 2,758 physicians recently surveyed use the kind of EHR systems that Obama envisions for the whole nation, and just 4% use their EHR in a “meaningful way” (http://tinyurl.com/67tngr). The reasons that the majority of physicians continue to dislike c-EHR systems include:


1) Poor ROI; c-EHR systems are expensive, increase overall costs, and disrupt work flow.
2) c-EHR systems have not been shown to decrease errors. On the contrary, they have been shown to increase them, introducing 22 new errors in one study (http://tinyurl.com/dyypfj). According to the US Pharmacopeia’s 5th annual study of medication errors, in 2003, computer entry errors were the 4th leading cause of errors, accounting for 13% of total medication errors; handwriting errors were the 15th leading cause, accounting for only 2.9% of reported medication errors (http://tinyurl.com/4fam6).
3) Purchasing a CCHIT-certified EHR is associated with a 50% installation failure rate (http://tinyurl.com/cds6uh) and an 8% deinstallation rate thereafter (http://tinyurl.com/cqo3sd).
4) c-EHR systems increase quality only slightly, if at all, and secondarily lead to increased spending (http://tinyurl.com/cdh9k3; http://tinyurl.com/cwn322).
5) Doctors generally dislike e-prescribing and CPOE (http://tinyurl.com/dmroe6).
 
These are turbulent times indeed for US physicians. Their ability to practice medicine is being encroached upon by government mandates based on unproven technology. I hope that physicians can make the right choices that have the least impact on their practices’ ability to survive financially.


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