EHR Stimulus Incentives

American Recovery and Reinvestment Act 2009—“Stimulus Package”

The American Recovery and Reinvestment Act (ARRA) of 2009, commonly known as the “Stimulus Package,” was signed into law by President Obama on February 17, 2009. The stimulus package of $787 billion was announced by President Obama in order to improve the economic growth of the United States.

The proposed allocation for health care IT was initially $30 billion, however Congress later reduced the amount to $19.2 billion. This amount is intended to encourage the adoption of EHRs by providers and hospitals. This part of the bill is called the “Health Information Technology for Economic and Clinical Health Act”—the HITECH Act.

President Obama promised to spend $50 billion over five years to improve the American health care sector. At the same time, he planned to offer incentives of $17 billion through Medicare and Medicaid to encourage providers and physicians to adopt certified EHRs.

The Main Objectives of President Obama’s Stimulus Package

  • To lower health care costs.
  • To reduce medical errors.
  • To improve point-of-contact care.
  • To improve access to data, such as health care IT, that enhances heath care intelligence programs.
  • To improve quality of care.

Incentives for Physicians

Physician incentives are allocated in two different payment forms of Medicare and Medicaid reimbursements in addition to grant programs. Physicians can start earning incentives in 2011 by demonstrating Meaningful Use of EHR. Physicians can earn from $2,000 to $18,000 in a given year. The Department of Health and Human Services (HHS) will be defining the clear definition of “meaningful use” in the coming year.

This Meaningful Use emphasizes using technology to exchange electronic health data to improve care quality and it emphasizes submittal of care quality measures to HHS. In addition, hospitals and doctors will need to meet these requirements within a specified time frame.

In order to provide information about receiving incentive payments, Healthcare Information and Management Systems Society (HIMSS) has a few suggestions:

  • Rely on CCHIT as the certifying body for EHRs.
  • Adopt metrics that can demonstrate Meaningful Use, and make them increasingly more stringent over the next two or so years.
  • Work with Healthcare Information Technology Standards Panel (HITSP) and Integrating the Healthcare Enterprise (IHE) to make sure systems are interoperable.
  • Close the existing gap between “certified EHR technologies,” “best of breed,” and “open source” technologies.

As per law, eligible providers will be treated as a Meaningful User of EHR technology if they meet the following three criteria:

  • Use a certified EHR in a meaningful manner, which includes the use of electronic prescribing (e-prescribing).
  • Use a certified EHR that can accommodate the electronic exchange of health information to improve quality of health care.
  • Submit information on clinical quality measures, as chosen by the HHS Secretary, for the reporting period.

Medicare Incentives

Those providers who are not adopting EHR by 2015 will see reductions in their Medicare reimbursements of 1 percent in 2015, 2 percent in 2016 and 3 percent in 2017. The possible incentive offered will be a maximum of $44,000 per physician, depending on when providers implement EHR. In order to receive the full amount, physicians must be implementing EHR by 2012. No payment will be made available after 2015.

Year that EHR use is first demonstrated Yearly Provider Incentives ($ thousand)
2011 2012 2013 2014 2015 2016 Total
2011 18 12 8 4 2 0 44
2012 0 18 12 8 4 2 44
2013 0 0 15 12 8 4 39
2014 0 0 0 12 8 4 24

Source: American Recovery and Reinvestment Act 2009

No EHR adopted by the year Providers will see reductions in their Medicare reimbursements  (%)
2015 1
2016 2
2017 3

Providers will receive incentives either from Medicare or from Medicaid under the stimulus package, but not from both.

Medicaid Incentives

Under the ARRA, providers will earn from $21,250 to $25,000 for the first year of payments, which may not be after 2016.

Provider Eligibility

Physicians, nurses, and midwife nurses who are not hospital-based and whose patient volume is at least 30 percent attributable to Medicaid are eligible for a maximum of 85 percent of their net allowable technology costs, subject to specific annual limits.

  • Medicaid incentives will be available only to non–hospital-based clinicians, encompassing dentists, certified nurse midwives, and physician assistants practicing in Rural Health Clinics.
  • Medicaid incentives range up to $65,000 over a five-year period.
  • Acute care hospitals with Medicaid patient volume of 10 percent or more, and children’s hospitals with any Medicaid volumes, are also eligible.
  • Medicaid has not mentioned any penalties for a lack of adoption of EHR.
  • After obtaining start-up funds, providers who prove Meaningful Use can be eligible to receive up to $10,000 in annual payments for an additional four years.
Year that EHR use is first demonstrated Annual Provider Incentives ($ thousand)
2011 2012 2013 2014 2015 2016 2017 2018 Total
2011 25 10 10 10 10 0 0 0 65
2012 0 25 10 10 10 10 0 0 65
2013 0 0 25 10 10 10 10 0 65
2014 0 0 0 25 10 10 10 10 65
2015 0 0 0 0 25 10 10 10 55
2016 0 0 0 0 0 25 10 10 45

The Congressional Budget Office estimates that approximately 90 percent of doctors and 70 percent of hospitals will be using EHR within the next decade as a result of the American Recovery and Reinvestment Act of 2009.