Detailed Analysis of Financial Incentives for Adopting EMR

The ARRA or the American Recovery and Reinvestment Act of 2009 has dedicated $19 billion for fastening the adoption of healthcare information technologies such as Electronic Health Records among physicians and healthcare facilities. ARRA (H.R.1) is commonly referred to as the Economic Stimulus Bill and it contains a significant legislation called The Health Information Technology for Economic and Clinical Health Act or the HITECH Act.

Understanding the Incentive Program — the HITECH Act tries to make the adoption of healthcare-related IT services a financially lucrative option, but only for those who decide to do so before the end of 2014. Eligible professionals who fall within the realm of meaningful use of EMR will be provided incentives in the form of cash payments. The incentives aren't provided only after implementing EHR or EMRs (Electronic Medical Records). In fact, a large part of the incentive payout is for the process of testing and procurement of a certified Electronic Health Records System.

The Early Advantage — healthcare practitioners willing to implement EMR right away, stand to gain more in the form of bonuses. Eligible medical professionals who can establish meaningful use of EMR by 2010-11 can expect to receive $44,000 as incentives. The amount dips significantly to $24,000 for those who chose to wait for another two-to-three years. Medical professionals in defined shortage areas stand to gain an additional 10% as bonuses.

Estimated Incentive Payment Received Every Year
(Decreasing Incentives for Late EMR Adopters)

Year of filing for incentives 2011 2012 2013 2014 2015 2016
2011 (or before) $18,000 $12,000 8,000 4,000 2,000 $0
2012 $0 $18,000 $12,000 $8,000 $4,000 $2,000
2013 $0 $0 $15,000 $12,000 $8,000 $4,000
2014 $0 $0 $0 12,000 8,000 $4,000
2015 (or later) $0 $0 $0 $0 $0 $0

Note: When a provider begins to receive EMR-based incentives, he is automatically barred from participating in the E-Prescribing Incentive Program. However, the eligibility for PQRI (Physician Quality Reporting Initiative) still stands.

Non-compliance with EMR to Attract Penalties — most of the incentives will be phased out, in all probability, from 2014 onwards. Providers and facilities that cannot prove using certified EMR systems by 2015 attract harsh financial penalties. Eligible medical professionals who chose not to comply with the EMR implementation would have to forego Medicare Part B payments of:
• 1% in 2015
• 2% in 2016
• 3% 2017 onwards

Note: If it is proven that by 2018, at least 75% of eligible professionals have not actively implemented EMR, the HHS Secretary can further enforce reduction of Medicare payments up to 5%.

Availing Maximum Incentives — physicians who can qualify as meaningful users of EMR in 2011 will receive the maximum incentives. They will receive $18,000 as bonus in the first year. Practices employing multiple practitioners too are eligible to receive incentives for each of the eligible providers. Since the payments are calculated by considering the correlating year’s Medicaid/Medicare charges, to receive $18,000 in the first year, a provider should have billed a minimum of Medicare or Medicaid charges of $24,000.