In February 2009, Congress passed and the President signed the American Recovery and Reinvestment Act of 2009. Portions of this Act relating to health information technology, referred to as the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”), establish incentive payments to eligible professionals (“EPs”) and eligible hospitals participating in the Medicare and Medicaid programs that adopt and meaningfully use certified electronic health record (“EHR”) technology. On January 13, 2010, the Centers for Medicare and Medicaid Services (“CMS”) published a proposed rule addressing the requirements under which EPs and eligible hospitals may establish eligibility for incentive payments through meaningful use of EHR technology. On July 13, 2010, CMS published the final rule setting forth meaningful use regulations and other EHR incentive program requirements. Simultaneously, the Office of the National Coordinator for Health Information Technology (“ONC”) published a final rule establishing “standards and implementation specifications that certified [EHR] technology will need to include to, at a minimum, support the achievement of meaningful use.” While this Alert addresses only the significant contents of the CMS final rule, links to both the CMS and ONC final rules are provided below.

Demonstrating Meaningful Use

The HITECH Act provides that meaningful use of EHR technology will be fully defined in three stages over the course of five years. The proposed rule outlined stage one, and would have required EPs to meet 25 objectives, and eligible hospitals to meet 23 objectives, in order to demonstrate meaningful use of EHR and qualify for incentives. Comments received by CMS on its proposed rule indicated that providers were very interested in whether CMS intended to follow through on its proposed all-or-nothing approach to meaningful use demonstration. CMS considered these comments and stated in the preamble to the final rule, “requiring that EPs, eligible hospitals and [critical access hospitals] satisfy all of the objectives and their associated measures in order to be considered a meaningful EHR user would impose too great a burden and would result in an unacceptably low number of EPs, eligible hospitals and [critical access hospitals] being able to qualify as meaningful EHR users in the first two years of the program.”

Accordingly, CMS, in the final rule, gives providers some flexibility and divides the meaningful use objectives into a “core” group of required objectives and a “menu set” from which providers may choose five to meet the definition of a meaningful user of certified EHR technology in stage one of the program. There are 14 core objectives for eligible hospitals: (1) use computerized provider order entry; (2) implement drug-drug and drug-allergy interaction checks; (3) maintain an up-to-date problem list of current and active diagnoses; (4) maintain an active medication list; (5) maintain an active medication allergy list; (6) record certain demographics; (7) record certain vital signs; (8) record smoking status for certain patients; (9) report clinical quality measures to CMS/States; (10) implement one clinical decision support rule; (11) provide patients with an electronic copy of their health information upon request; (12) provide clinical summaries/discharge instructions for patients for each office visit; (13) have the capability to exchange key clinical information among providers and patient authorized entities; and (14) protect electronic health information created or maintained by certified EHR technology through implementation of appropriate technical capabilities. EPs are subject to 15 core objectives, which include the hospital objectives listed above. In addition, EPs must also generate and transmit permissible prescriptions electronically.

CMS has also revised some of the standards for demonstrating compliance with these objectives. For example, in its proposed rule, CMS would have required EPs to use computerized provider order entry (“CPOE”) for at least 80 percent of all orders. Eligible hospitals would have been required to use CPOE for only 10 percent of all orders entered directly by an authorizing provider. In the proposed rule, CMS described CPOE as entailing the provider’s use of computer assistance to directly enter all medical orders (for example, medications, consultations with other providers, laboratory services, imaging studies, and other auxiliary services) from a computer or mobile device. CMS said that for stage one criteria, it would not include the electronic transmittal of that order to the pharmacy, laboratory, or diagnostic imaging center. Ultimately, however, CMS adopted an incremental approach, requiring use of CPOE in stage one only for medication orders, reasoning that this change supports the objectives of e-prescribing and drug-drug and drug-allergy checks. To meet the final rule objective on CPOE, both eligible providers and eligible hospitals will need to demonstrate that more than 30 percent of all unique patients with at least one medication on their medication list have at least one medication order entered using CPOE.

Hospital-Based Eligible Professionals

The HITECH Act generally establishes that hospital-based EPs are not eligible for either Medicare or Medicaid incentive payments associated with the meaningful use of EHR technology. The original definition of hospital-based EPs, as set forth in the HITECH Act, included pathologists, anesthesiologists and emergency physicians who furnish substantially all Medicare-covered professional services during the relevant EHR reporting period “in a hospital setting (whether inpatient or outpatient) through the use of the facilities and equipment of the hospital, including the hospital’s qualified EHRs.”

In the Continuing Extension Act of 2010, however, Congress made certain modifications to the HITECH Act requirements pertaining to hospital-based EPs. For each of the statutory provisions relating to Medicare and Medicaid incentive payments, the Continuing Extension Act removed the phrase “setting (whether inpatient or outpatient)” and replaced that language with the phrase “inpatient or emergency room setting.”

CMS had always intended the “determination of whether an EP is a hospital-based EP [to] be made on the basis of the site of service, as defined by the Secretary [of the U.S. Department of Health and Human Services], and without regard to any employment or billing arrangement between the EP and any other provider.” [emphasis added] To that end, in the proposed rule setting forth the meaningful use requirements, CMS stated that “an EP would be a hospital based EP and therefore ineligible to receive a Medicare or Medicaid EHR incentive payment if more than 90 percent of their services are provided in the following place of service (POS) codes for HIPAA standard transactions: 21—Inpatient Hospital, 22 – Outpatient Hospital, 23 – Emergency Room.” However, “commenters indicated that they believed that the proposal would inappropriately exclude from receiving EHR incentive payments EPs practicing in ambulatory settings such as those that practice in hospital provider-based departments (referred to by most commenters as 'outpatient centers and clinics').”

In response to statutory changes implemented by the Continuing Extension Act since the publication of the proposed rule, as well as to public comments to the proposed rule, in the final rule, CMS has removed physicians practicing in outpatient settings from consideration as hospital-based EPs. “An EP will be a hospital based EP and therefore ineligible to receive a Medicare (or Medicaid) EHR incentive payment if more than 90 percent of their Medicare (or Medicaid) services are provided in the following two place of service (POS) codes for HIPAA standard transactions: 21—Inpatient Hospital, 23 – Emergency Room.” [emphasis added]

Timeline for Implementation

Under the HITECH Act, payments for Medicare providers may be made no sooner than October 2010 for eligible hospitals and no sooner than January 2011 for EPs. CMS anticipates that significant dates for implementation of the EHR incentive payment program include January, 2011, at which time registration for both the Medicare and the Medicaid incentive programs will begin. Medicare attestations may be submitted beginning in April, 2011, and incentive payments will be first issued in May, 2011.

The full text of CMS’s final rule may be found here; the ONC final rule may be found here.

This article was prepared by Lara E. Parkin (lparkin@fulbright.com or 202 662 4733) and Mark Faccenda (mfaccenda@fulbright.com or 202 662 0306) from Fulbright’s Health Care Practice Group.