June 2008
In this issue
HHS, CMS Begin Incentivized-EHR Demonstration Project

A 5-year Medicare demonstration project designed to determine the effectiveness of financial incentives for electronic health records (EHR) adoption is underway at small and medium-sized practices in 12 states and several cities. Individual physicians could receive as much as $58,000 over the course of the project, while participating physician practices could see as much as $290,000 for purchase, implementation and training for the healthcare IT technology. In all, the project will cost the Centers for Medicare & Medicaid Services (CMS) $150 million, assuming the maximum amount of incentives is distributed.

The Department of Health and Human Services (HHS) Secretary Michael Leavitt said in a press conference that the 12 participating areas of the country were chosen from among 30 applicants based on their levels of demonstrated collaboration with stakeholders (physicians, insurers, employers, government and consumers), related healthcare IT efforts and their identified recruiting potentials of physician volunteers. In an HHS news release Leavitt said he was hopeful communities not selected will consider initiating their own incentive programs.

In each selected area, up to 200 small to medium-sized primary care physician practices will be recruited. Half will be given the incentives for their use of EHRs in treating patients, while the other half will act as a control group being given no incentives. During the first year of the project, participants will receive increased Medicare reimbursements for selecting and implementing an EHR. Only those certified by the Certification Commission for Healthcare Information Technology (CCHIT) are eligible. CCHIT was contracted by HHS in September, 2005, to certify the quality of EHR products. To date, more than 40 of the products have received its seal of approval.

Doctors will receive additional incentives corresponding with how much they utilize the functions and capabilities of the EHRs. In the second year, they'll be required to use the EHR to report their compliance with national quality standards in order to qualify for higher reimbursements. In the remaining years of the demonstration project, CMS will judge physicians on how well they used EHRs to improve quality of care and how closely they adhered to a set of 26 basic standards developed by the Ambulatory Quality Alliance.

HHS will start signing up physicians for the program this fall in Louisiana, Maryland and Washington, the Pittsburgh metropolitan area, and parts of South Dakota, North Dakota, Iowa and Minnesota. The remaining cities and states participating (Jacksonville, Fla., Madison, Wis., Alabama, Delaware, Georgia, Maine, Oklahoma and Virginia) will begin next year. Leavitt says HHS considers the project "budget neutral" because the use of EHRs is expected to generate sufficient care-cost savings.

The demonstration project is an additional government tactic to spur rapid, widespread adoption of healthcare IT and another HHS initiative to meet President Bush's goal of an EHR for every American by 2014.

Congress is making progress as well with legislation that, until recently, had been stalled. A group of senators announced last month that they had reached agreement on revisions to bill S 1693 (sponsored by Edward Kennedy, D-Mass., and Michael Enzi, R-Wyo.) that is supposed to strengthen privacy protections for patients with electronic records. The bill's sponsors are still debating whether to add further privacy protections to the legislation, while industry groups and privacy advocates battle over how much control patients should have over their own records.

The House Energy and Commerce Committee is revising its own draft legislation for health IT promotion in response to similar privacy concerns raised during a June 4th hearing. The committee is expected to vote on the bill sometime this month.

Leavitt has expressed concerns that the legislation moving through Congress could require HHS to abort efforts that it is currently developing. "There's high interest in the Congress in doing something to assist us, and we're anxious to have their help," says Leavitt. "The concern we've expressed to them is that we'd like to make sure the progress we have made is incorporated into the next steps forward."


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