Cash­ing in on EHR in­cen­tive pay

De­spite rush, long-term suc­cess still ques­tion­able

Modern Healthcare - - FRONT PAGE - Joseph Conn

The two main fed­eral in­cen­tive pro­grams for health in­for­ma­tion tech­nol­ogy closed out their first year with a gush of money, but one key to the pro­grams’ long-term suc­cess will be whether their early ap­peal to tech-savvy providers is ever felt by the less-ad­vanced ma­jor­ity of hospi­tals and of­fice-based clin­i­cians still on the side­lines.

By year’s end, the CMS had paid out more than $2.5 bil­lion to slightly more than 31,000 providers that qual­i­fied for pay­ments un­der the Medi­care and Med­i­caid elec­tronic healthrecord in­cen­tive pro­grams cre­ated by the Amer­i­can Re­cov­ery and Rein­vest­ment Act of 2009, ac­cord­ing to the CMS’ De­cem­ber progress re­port, its lat­est.

Be­tween the CMS’ Oc­to­ber and De­cem­ber re­ports, to­tal pay­ments to hospi­tals more than dou­bled, top­ping $1.9 bil­lion. At year’s end, 1,658 hospi­tals had been paid un­der the Medi­care and Med­i­caid pro­grams.

Dur­ing the same pe­riod, com­bined pay­ments to physi­cians and other “el­i­gi­ble pro­fes­sion­als” jumped 99% to nearly $570.4 mil­lion. El­i­gi­ble pro­fes­sion­als are de­fined as physi­cians, nurse prac­ti­tion­ers, den­tists, cer­ti­fied nurse mid­wives and physi­cian as­sis­tants. Through De­cem­ber, 29,344 clin­i­cians had been paid. About 75% of them thus far have been physi­cians.

Fi­nal num­bers for the two IT pro­grams for their first year of op­er­a­tion are ex­pected to in­crease a bit more, but won’t be avail­able un­til later this year, said Dr. Farzad Mostashari, head of the Of­fice of the Na­tional Co­or­di­na­tor for Health In­for­ma­tion Tech­nol­ogy. “All the lead­ing in­di­ca­tors have been pos­i­tive,” he said. “I think it’s cer­tainly grat­i­fy­ing to see the trends to­ward higher and higher num­bers, which we ex­pect to con­tinue.”

Pay­ments started flow­ing in May un­der the fed­er­ally ad­min­is­tered Medi­care EHR in­cen­tive pro­gram and in Jan­uary un­der a few staterun Med­i­caid pro­grams. At year’s end, how­ever, eight states still didn’t have their Med­i­caid EHR pro­grams op­er­a­tional.

Some crit­ics have said much of the early money has gone to providers who al­ready had EHR sys­tems in place, but Mostashari bris­tled at the no­tion that might mean the two pro­grams could fiz­zle out. “Look,” he said, “the pay­ments for Med­i­caid run through 2021 and for Medi­care run through five years. We’ve seen like eight months of pay­ments. The baby is still a baby. I think it’s way too early for any­body con­clud­ing that this pro­gram has topped out.”

Ac­cord­ing to Joanne Sun­quist, the chief in­for­ma­tion of­fi­cer for 469-bed Hen­nepin County Med­i­cal Cen­ter in Min­neapo­lis, meet­ing the mean­ing­ful-use re­quire­ments un­der Medi­care was no ma­jor strain. The hospi­tal at­tested to meet­ing 90 days of mean­ing­ful use in Au­gust, well ahead of the Oct. 1 dead­line, and was paid $1.8 mil­lion by Medi­care in Oc­to­ber, she said.

Sun­quist char­ac­ter­ized the process as a “three or four” on a scale of 10, not­ing that the hospi­tal com­pleted im­ple­men­ta­tion of its Epic sys­tem in 2007. “It was still work, but frankly, we didn’t find it too dif­fi­cult.” Min­nesota is one of eight states that still doesn’t have its Med­i­caid EHR pro­gram run­ning. Sun­quist said they will ap­ply for Med­i­caid pay­ments, too, when the time comes, but both fed­eral pay­ments “won’t even touch” what Hen­nepin has spent on health IT.

“When we de­cided to im­ple­ment Epic seven years ago, we put to­gether a seven-year re­turn on in­vest­ment, which we’ve ac­tu­ally met with­out the in­cen­tive money,” Sun­quist said, which she de­scribed as “a bonus for us.”

The money made more of a dif­fer­ence for Orville (Calif.) Hospi­tal, al­though earn­ing it was more of a chal­lenge, said Dense Le­fevre, CIO, and Dr. Narinder Singh, the chief med­i­cal in­for­ma­tion of­fi­cer. The 113-bed hospi­tal in Cal­i­for­nia’s Cen­tral Val­ley re­ceived first-year EHR in­cen­tive pay­ments of $1.97 mil­lion from Medi­care and an­other $1.2 mil­lion from Med­i­Cal, the state’s Med­i­caid pro­gram. The pay­ments cov­ered not only about half the cost of Oroville’s EHR in­stal­la­tion, but also an IT in­fra­struc­ture up­grade, Le­fevre said.

Orville Hospi­tal be­gan in­stalling an open­source ver­sion of the Vet­er­ans Ad­min­is­tra­tion’s Vista EHR a cou­ple of years ago, rolling it out first to its 22 af­fil­i­ated com­mu­nity clin­ics, Singh said. Then it com­pleted enough of the in­stal­la­tion at the hospi­tal to meet the CMS’ mean­ing­ful-use re­quire­ments.

Thus far, 226 ven­dors of EHR sys­tems or mod­u­lar com­po­nents of sys­tems had at least one el­i­gi­ble pro­fes­sional cus­tomer ap­ply and re­ceive pay­ments, ac­cord­ing to a sep­a­rate data set re­leased by the CMS and ONC this month. In ad­di­tion, 52 dif­fer­ent ven­dors supplied com­plete or mod­u­lar EHR sys­tems to paid hospi­tals.

Among el­i­gi­ble pro­fes­sion­als, Epic Sys­tems led ven­dors in this mar­ket niche, ac­cord­ing to the CMS data, with 29% of clin­i­cians us­ing its EHRS. Among hospi­tals, HCA In­for­ma­tion Tech­nol­ogy & Ser­vices was the most-cited ven­dor, with 18% of that mar­ket.

This boom time for ven­dors—and fed­eral health IT pol­i­cy­mak­ers—won’t last, said John Chilmark, man­ag­ing part­ner of Cam­bridge, Mass.-based health IT mar­ket watcher Chilmark Re­search. Af­ter 2012, “this bloom comes off the rose,” he said. “I think it will come down to a 4% to 6% growth rate.” Also, for the hun­dreds of EHR ven­dors out there, reach­ing that plateau in sales growth will mark the be­gin­ning of the end for them as in­de­pen­dent busi­nesses, Chilmark said. “Once we see this mar­ket plateau, we’ll see ad­di­tional con­sol­i­da­tion oc­cur.”

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