Among the highest-profile efforts before last year's passage of the Patient Protection and Affordable Care Act was the $20 billion EHR initiative included that's part of the 2009 American Recovery and Reinvestment Act. Like most penalty programs in healthcare, that digital record program initially offers several years of bonus payments to providers who buy, install and use qualifying technology.
However, those incentive payments give way to penalties for healthcare providers participating in Medicare who are not compliant by statutory deadlines. Although as-yet unreleased regulations will determine the exact penalty start dates, a CMS official said they may begin for hospitals and other qualifying healthcare facilities by Oct. 1, 2014, and Jan. 1, 2015, for physicians and other clinicians. Specifically, hospitals that fail to the meet the EHR program's requirements will face a 25% reduction in their annual marketbasket update.
“To me, the penalty or a bonus is probably no different than a change in the provider rates,” says Paul Ginsburg, president of the Center for Studying Health System Change. “The motivation of the penalties is to get you to change.”
But what if the penalties did not have that intended effect?
That might happen in the case of the EHR incentives, according to an American Hospital Association survey released in April. It found that more than half of hospitals surveyed this year say they will fail to meet the program's requirements before the penalty phase begins. Hospitals blamed the program's time requirements, required resources and strict definitions for preventing their successful participation.
Another precursor to last year's healthcare law that also included penalties is the 2008 Medicare Improvements for Patients and Providers Act, which instituted a Medicare e-prescribing program. That initiative began with small bonus payments for several years before switching to deductions for noncompliance starting at 1% of the provider's total Medicare reimbursements in 2012 and climbing to 2% in 2014.
The presence of the penalties in e-prescribing apparently also has failed to drive overwhelming provider participation. The 2010 American Academy of Family Physicians practice profile survey found that on the cusp of the program's penalty phase, their members' compliance with the various requirements of the e-prescribing program ranged from 30% to 70%.
Part of that low compliance with e-prescribing likely stemmed from the lack of coordination between that program and the EHR initiative, which has its own but different e-prescribing requirement. The practical effect was that practices adopting EHR systems still faced Medicare penalties if they didn't add a separate e-prescribing program to comply with that program, says Anders Gilberg, vice president for public and private economic affairs at the Medical Group Management Association.
Regulators may have realized the widespread penalties that the program was about to impose on providers when they issued a proposed rule change in the e-prescribing program June 1. The proposed rule would allow penalty exemptions for providers who are obtaining EHR certification.
But the last-minute proposed rule has a public comment period that continues after the June 30 deadline for e-prescribing compliance, which could leave many providers wondering if they will face penalties even if they follow the proposed rules, according to provider representatives.
“The requirements of these various programs are already confusing for practicing physicians,” says Dr. Glen Stream, president-elect of the American Academy of Family Physicians. “Add to that the fact that these programs just don't seem very well-coordinated and it becomes more difficult.”
Many group practices did not participate in the incentive portion of the e-prescribing program because they believed they would not qualify, Gilberg says. However, many of those practices belatedly realized their prescribing patterns might subject them to the penalty phase so they rushed to add temporary programs to avoid the e-prescribing penalty before the proposed rule change was announced.
“In the meantime, in the group practice world everyone was spending money just to avoid this penalty,” Gilberg says. Implementing such short-term e-prescribing programs, which would not be necessary under the last-minute proposed rule, also took time and energy that practices could have used to improve workflow and patient care, he says.