ARRA Incentives for EHR Implementation: How Much and When?

The American Recovery and Reinvestment Act (ARRA) includes reimbursements to hospitals and physicians for electronic health record (EHR) implementation. Amounts and schedules are subject to change as the rules and regulations are finalized, but we can go over what EHR implementation reimbursement specifics look like today.

There are four possible reimbursement scenarios. Let’s take a look at EHR implementation financial incentives for each:

Hospitals and Medicare Reimbursements

Incentives begin in 2010 for meaningful users of EHRs. There are 3 components to the incentive payment calculation: a) initial or base amount, b) the Medicare share, and c) a transition factor. For more information on how to calculate this figure for your situation, click here. The initial amount can be figured like this: start with a one-time base payment of $2 million. Add $200 per Medicare patient discharge above a base level of 1,499 annual discharges. Let’s run the numbers on an example: If you have 150 Medicare discharges per week, you would be eligible for reimbursement for 6,301 discharges @ $200 each, for an additional $1,260,200. That first year, the hospital is eligible for $3,260,200 in payments (base $2,000,000 plus $1,260,200 for Medicare discharges) to cover the costs of implementing EHRs/health information technology (HIT).

These payments decrease over time. In our example, for year two, the hospital would receive 75% of the initial amount, or $1,695,150. Payments in the third year drop to 50%. The fourth — and final — year reimbursement drops to 25% of the initial payment. The 4-year cap for any single hospital is $11 million. Remember this important ARRA feature: there will be no incentive payments for hospitals that become meaningful users after 2015.

Hospitals and Medicaid Reimbursements

Calculating hospital Medicaid EHR implementation reimbursement is more complex. It’ll be calculated using a base payment plus additional payments calculated on inpatient bed days and other factors. For an acute care hospital Medicaid must comprise at least 10% of total volume. Children’s hospitals of any Medicaid volume are eligible for the incentives.

Important note: You can be reimbursed by Medicare or Medicaid, but not both.

Whether you opt for Medicare or Medicaid, to get maximum incentives, the technology you implement must be certified and you must meet meaningful use standards, which are still something of a moving target. And, like the hospital-Medicare example above, you must implement by 2015.

Individual Providers and Medicare

If you are a qualified non-hospital-based provider, you can be reimbursed for the costs of implementing HIT. You still have to meet the meaningful use test and implement approved systems. Payments are made over a five-year period.

The maximum EHR implementation reimbursement available to an individual provider under Medicare is $44,000, unless you are in a Health Professional Shortage Area, in which case payments would be increased 10 percent. Payment is equal to 75 percent of Medicare allowable charges for covered services furnished by an Eligible Provider, subject to the maximums noted below.

• Payments max out at $18,000 if you implement in 2011 or 2012
• If your first year is 2013, maximum payment will be $15,000. Only $12,000 is possible if you wait till 2014.
• In the second year, payment will be $12,000
• In the third year, payment will be $8,000
• Payments drop to $4,000 in the fourth year and $2,000 in the fifth year.

Providers and Medicaid Reimbursements

Non-hospital-based providers qualifying under ARRA’s Medicaid reimbursement provisions may get $75,000 to help with EHR implementation. First year reimbursement could be as much as $25,000 with up to $10,000 per year for the next five years.

You must meet the meaningful use test and use certified EHR products to qualify. As with hospitals, you may elect to be reimbursed by Medicare or Medicaid, but not both.

In general, the rules are set up to encourage early adoption of qualified systems. When the incentive period ends, disincentives will be phased in. Starting in 2016, Medicare and Medicaid fee schedules will begin to decrease for hospitals and providers who are not meaningfully using qualified EHR systems. Those late or non-adopters will see a cut of 1 percent per year up to a possible maximum of 5%. So, it pays to understand timelines and implementation standards as quickly as possible to avoid negative impact to your bottom line.

Article Source : http://blog.pchealthstop.com/?p=551