Are EHR Incentive Payments Money Well Spent?

As of September 30, 2011,  more than 114,000 providers have registered for the electronic health records (EHR) incentive programs under Medicare, Medicaid or both.   Of these, 88,399 physicians and hospitals have registered for the Medicare incentive program, 24,030 for the Medicaid program and 2,215  for both programs.

To be eligible for EHR incentive payments, hospitals and practitioners must serve a minimum percentage of low-income patients and make eligible expenditures for the acquisition or upgrade, implementation and meaningful use of qualifying EHR systems or modules. The EHR system or module must be certified as compliant by an organization approved by the Office of the National Coordinator for Health Information Technology. The states administer the Medicaid incentive program, determining eligibility and making the payments. State expenditures are matched by the federal government at100 percent, and states are reimbursed for90 percent of their  expenses for administration of the program.

The EHR incentive payment program was established by the Health Information Technology for Economic and Clinical Health (HITECH) Act, part of the American Recovery and Reinvestment Act of 2009  (ARRA) (P.L. 111-5), more commonly known as the stimulus bill.  It is intended to allow practitioners to maintain and share patient information, thereby avoiding unnecessary tests and delays while records are copied and transmitted. Expansion of health information technology also was expected to create jobs in IT.

The states could begin making incentive payments in January of this year. Participants in the Medicare EHR incentive program were first allowed to attest to their meaningful use of the technology in April, and the first payments were made in May.  By the end of September, $66,996,000 in Medicare incentive payments  had been made to 1,406 eligible practitioners. Eight hospitals participating only in the Medicare program had received $8,476,845.  Medicare payments to 150 hospitals participating in both incentive programs totaled $281,926,545.  State Medicaid agencies have disbursed more $500 million to practitioners and hospitals.

There are concerns about whether the funds have been spent appropriately, however. If the purpose of the incentive payment is to subsidize acquisition by providers who could not do so otherwise, the results are mixed.  The Center for Public Integrity surveyed providers who received the first Medicare payments in May, 2011. About 1/3 of the 188 medical practices or hospital chains responded. Of those, nearly half already had been using the technology for years; one began in 1995.  These providers upgraded existing systems and attested to their compliance when they achieved meaningful use as defined by the regulations.  According to the CPI report, one doctor who received payments said, “If you’re going to do it anyway, then why not do it and have someone else pay for it?”

Lobbying may have influenced the list of specialists who may apply for Medicare incentive payments. About 12 percent of the practitioners who received the first round of Medicare incentive payments are podiatrists, although they comprise only 1.5 percent of Medicare practitioners.who meet the eligibility requirements. The American Podiatric Medical Association (APMA) reported expenditures of $45,000 to press their interests before Congress in the first calendar quarter of 2009.  Behavioral health practitioners, such as psychologists or clinical social workers, are not eligible because they are not physicians within the meaning of the law.

The HHS Office of Inspector General reviewed the states’ plans for oversight of their Medicaid incentive payments as of January 14, 2011.  Thirteen of the states also participated in structured interviews. All 13 state agencies planned to verify at lesat half of the 11 eligibility requirements before  making payment.  However, the states reported that they could not verify the percentage of a practitioner’s Medicaid patients; they do not collect data on physicians’ private or insured patients, and the payment records reflect bundled services, not necessarily the number of patients. Ten of the 13 planned not to verify this eligibility requirement in any way. Eight of the 13 planned no prepayment verification of the providers’ expenditures for qualifying  EHR systems; the other five would require receipts or vendor contracts.

The OIG plans to investigate fraud and abuse in the Medicare and Medicaid EHR incentive programs in the upcoming year.