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Number of providers facing Stage 2 EHR hurdle puts billions at stake


By Joseph Conn
Posted: August 15, 2014 - 3:00 pm ET
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Billions of dollars in federal electronic health-record incentive payments appear to be in jeopardy as hospitals, physicians and other eligible professionals who got an early start on the payment program face a more stringent set of criteria this year, according to a Modern Healthcare analysis of new CMS data. So far, only a tiny fraction of participants have met the benchmarks.

Healthcare industry observers have fretted in recent months that the number of providers meeting the criteria seemed distressingly low based on anecdotal and preliminary reports.

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What had been missing from the picture were the specific numbers of hospitals, physicians and other professionals that were nominally on track to meet Stage 2 criteria this year to avoid losing incentive payments and incurring penalizing Medicare reimbursement cuts in 2016.

An approximation of those figures is now possible, thanks to a CMS data release on the numbers of providers that qualified for EHR payments in 2011 and 2012, the first two years of the program. There are approximately 2,500 eligible hospitals and 168,000 physicians and other eligible professionals that met Stage 1 requirements in 2011 or 2012, and remain eligible for program participation this year.

But few of those providers have cleared the Stage 2 threshold—about 3.1% of hospitals and 1.1% of physicians and other professionals. That means roughly 2,400 hospitals and 165,000 eligible healthcare professionals remain at risk for losing additional EHR incentive payments this year, not to mention incurring Medicare reimbursement penalties in 2015 and beyond.

The estimates do not reflect any 2014 dropouts from the program, nor any providers that might apply for hardship waivers, either of which might represent significant numbers of participants.

Physicians and other professionals that started the payment program in 2011 will see their Medicare EHR incentive payments for 2014 drop to $4,000. That total has yielded anecdotal reports of physicians deciding the money is no longer worth the trouble.

Meanwhile, a federal rule potentially expanding the range of hardship waivers to include late deliveries of software—a widespread problem this year—is under review by the Office of Management and Budget. The rule revisions were first proposed by the CMS and HHS' Office of the National Coordinator for Health Information Technology in May.

But for now, time is running out for both groups to achieve 90 consecutive days of meaningful use at Stage 2. The payment year for the EHR incentive program for hospitals ends Sept. 30 and for physicians and other EPs, it ends Dec. 31.

Nearly 4,600 hospitals and more than 403,000 physicians and other eligible professionals have split $24.7 billion in incentive payments since 2011.

Physicians and other professionals stand to lose about a $1.15 billion in Stage 2 incentive payments in 2014. Determining how much hospitals could lose is more difficult, because their payment formula is more complex and includes a factor for patient volume. Given that hospitals have received 60% of the total incentive payments so far, the numbers are sure to be substantial.

“We're not surprised, but we're certainly concerned,” said Chantal Worzala, director, policy, and frequent health information technology point person for the American Hospital Association.

“This is not hospitals waiting for the last minute to turn in their homework,” Worzala said. Hospitals faced “significant problems” getting Stage 2-usable software delivered and installed. As the result, many hospitals report having trouble finding partners with systems capable of exchanging summary of care records, a Stage 2 requirement. Patient portals are “a good thing,” Worzala said, but getting patients to use them, another Stage 2 requirement, is proving difficult, particularly for some rural hospitals. “This is a bar raised too high in Stage 2 being played out in the real world,” she said.

The proposed rule, even with its added wiggle room for hardship exemptions, could be problematic for some hospitals, whose leaders had been counting on the incentive payment this year to offset the high cost of buying and installing their IT systems.

“Many of those I know that have applied for the hardship exemption haven't heard back yet” whether their applications were approved, said Russell Branzell, CEO of the College of Healthcare Information Management Executives, a professional association of hospital chief information officers.

Robert Tennant, senior policy advisor at the Medical Group Management Association, said the low attestation rates among physicians highlight “what is clearly a major issue with the meaningful-use program” caused by lags in software upgrades and the difficulty of meeting the criteria. The MGMA is pushing for “significant modifications” to the program, he said.

Branzell said he thinks “CMS has finally had the epiphany now that all these people out in the field haven't been crying wolf.”

He added, “For your average community health system, it could mean the difference between being in the black or in the red.” That raises a public policy question that ought to concern the feds, Branzell said. “If they don't get the money this year, will they continue to reinvest in the program?”

Follow Joseph Conn on Twitter: @MHJConn


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