Compelling Financial Reasons to Start your EHR Transition Now
By: Amos Brown on Tuesday, December 13, 2011

This article is specific to private medical practices, not hospitals, which have different guidelines for reimbursement.

Will you benefit from the transition to Electronic Health Records (EHR)?

We often talk about steps that are needed to transition to EHR. But, before you can even start planning your transition, there is another, most fundamental step - deciding that your practice needs Electronic Medical Records to begin with.

Making that decision in itself can be complex - involving many different groups under one medical practice roof - the board of directors, doctors or owners, IT department, practice manager or administrators, CIO, CEO, CFO - the number of stakeholders can grow large, quickly. It is not a decision made in a vacuum, as it touches all facets of a medical practice - process, workflow, billing, claims, prescribing, practice management - you name it.

So why now? Why the growing urgency and focus on Electronic Medical Records (EMR)?

In 2009, the Federal Government passed the American Recovery and Reinvestment Act. This is sometimes referred to as the 'Stimulus Bill'. One of the provisions included is the 'Health Information Technology for Economic and Clinical Health Act' or the 'HITECH Act'. HITECH focuses on the improvement and advancement of the American healthcare system through the use of Electronic Health Records (EHR) or Electronic Medical Records (EMR).

Here's the direct link to the .pdf file of the American Recovery and Reinvestment Act  (you can then search the page (CTRL+F or CMD+F) for 'HITECH'  and it will take you straight to the relevant sections.)

HITECH uses a carrot and stick approach, providing financial reimbursement for providers that adopt EHR by 2014. Conversely, they impose penalties on Medicare payments for providers that don't show meaningful use in EHR by 2015. I expect over the course of the next year, you will hear more and more about it - and mindSHIFT is here to help get you to the point when you wouldn't need to worry about it.

If you haven't acted by now, you still have roughly one calendar year left to implement EHR and demonstrate Meaningful Use where you can claim the full reimbursement amount. Be advised however that going from paper charts to government approved, measurable meaningful use takes significant time and planning.

With the right team, dedication and planning, it's very possible to complete.

There are two sides to the reimbursement coin. As a private physician's practice, you must pick one. Medicare or Medicaid.

MEDICARE
Who is eligible?

  • Doctor of medicine or osteopathy
  • Doctor of dental surgery or dental medicine
  • Doctor of podiatry
  • Doctor of optometry
  • Chiropractor

THE CARROT
Starting in 2009 through 2014, Eligible Professionals (EP) who implement EHR and show meaningful use are entitled to a government reimbursement of up to $44,000.

If you are in a "health professional shortage area," then you are entitled to 10% more ($48,400).

THE STICK
Eligible Professionals that fail to show meaningful use by 2015 will face a penalty on all Medicare payments of 1% starting in 2016. This penalty will grow up to 5% by 2020.

2012 is the LAST YEAR to get the full reimbursement of $44,000 per physician for EHR Adoption and Meaningful Use.
Demonstrate Meaningful Use in 2013 and the maximum reimbursement drops to $39,000.
In 2014, it drops again to $35,000.
Adopt in 2015 - no reimbursement.
Penalties start in 2016.

Medicare Reimbursment Schedule

Source: Chilmark Research

Example:
In a 10 doctor practice, postponing an implementation from 2012 to 2013 would reduce the reimbursement by $50,000.

Postponing another year reduces the reimbursement by $90,000.

What kinds of Federal penalties will my practice see if we don't demonstrate meaningful use by 2015?
Here's what I recommend as a quick (and VERY SIMPLE) exercise. Values are subject to change.

  1. Look at your AR for Medicare for the past 5 years.
  2. Look for growth year over year for Medicare AR. For this exercise, I will assume 5% growth per year.
  3. Go ahead and forecast for 2015 - 2020, assuming that your average % growth per year will hold constant.
  4. Add a penalty column and fill it out like this:
  • 2015, penalty = 0%
  • 2016, penalty=1%
  • 2017, penalty=2%
  • 2018, penalty=3%
  • 2019, penalty=4%
  • 2020, penalty=5%

The spreadsheet would look like this, per EP:

Medicare

Data provided by mindSHIFT Technologies

Simply put, if your yearly growth in Medicare does not outpace 5%, you will not grow in AR from Medicare until you show meaningful use on EHR.

Know this number.

If your year over year growth in Medicare is significantly higher than 5%, it may not make sense to implement right away but you shouldn't forget the $44k per eligible physician - is that a big enough carrot for your practice?

MEDICAID
Who is eligible?

  • Physician (primarily doctor of medicine and doctor of osteopathy)
  • Nurse practitioner
  • Certified nurse-midwife
  • Dentist
  • Physician's assistant in a Federally Qualified Health Center or Rural Health Clinic when led by a physician assistant.

Additionally, you must demonstrate that 30% of your patients use or are dependent on Medicaid. If you are a pediatrics practice, this number drops to 20%.

THE CARROT
Starting in 2009 through 2016, Eligible Professionals (EP) that implement EHR and show meaningful use are entitled to a government reimbursement of up to $63,750.

THE STICK
There is currently no penalty for non-compliance for MEDICAID.

Adoption of EHR in 2016 is the LAST YEAR to get the full reimbursement of $65,000 per physician. Adopt in 2017 or later - no reimbursement.

Medicaid Reimbursement Schedule

Source: cms.gov

Is it too late to act?
No, it's not too late!

There is roughly one year left to prove meaningful use to claim the full reimbursement. The criteria are not that hard to accommodate to show Phase 1 meaningful use. That year may seem like a long time, but the available time remaining must be used methodically to ensure you can claim meaningful use within Fiscal Year 2012. You will need to make some key decisions before the end of January to properly plan and schedule the remainder of the year. The sooner, the better.

Ultimately, the decision is up to each practice, informed by reviewing the financial situation, taking the reimbursements and penalties into account. The hope is that the available reimbursement will encourage providers and practices to move forward sooner rather than later to maximize the revenue per provider, and avoid penalties in the future - all while providing better, and more consistent quality service to their patients.

Next steps:
Once you have decided to move forward with an EHR project, I recommend the following next steps:

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