Hospital Incentives

The Centers for Medicare & Medicaid Services (CMS) announced on December 30, 2009 a proposed rule to implement the provisions of the American Recovery and Reinvestment Act of 2009 that provide incentive payments for the meaningful use of certified EHR technology. The Medicare program will provide incentive payments to eligible professionals (EP), eligible hospitals (EH), and critical access hospitals (CAHs) that are meaningful users of certified EHRs. The Medicaid programs also will provide incentive payments to EPs and hospitals for efforts to adopt, implement, upgrade, and meaningfully use certified EHR technology. After 2015 for the Medicare program, and 2016 for the Medicaid program, hospitals will no longer be allowed to register for the incentive programs, and are susceptible to a negative Medicare payment adjustment.

Medicare Eligibility

An eligible hospital for Medicare incentive payments is a "subsection (d) hospital" that is paid under the hospital inpatient prospective payment system. It also includes Critical Access Hospitals (CAHs), and Medicare Advantage (MA-Affiliated) Hospitals. Hospitals must be located in one of the 50 states or the District of Columbia.

• A qualifying hospital is an eligible hospital that demonstrates meaningful use for the EHR reporting period during a payment year. A Payment Year is a Federal Fiscal Year (FY).
• Eligible hospitals may receive incentive payments for any year from federal fiscal year 2011 to FY 2015.
• The incentive payment for each eligible hospital will be calculated based on an initial amount which is the sum of a $2 million base amount and the product of a per discharge amount and the number of discharges; the Medicare share which is the proportion of Medicare fee-for-service and managed care inpatient bed-days to the product of total inpatient days and by the hospital's total charges that are not attributed to charity care; and a transition factor which phases down the incentive payments over the four year period.
• Hospitals that do not successfully demonstrate meaningful use of certified EHR technology beginning in FY 2015 are subject to payment adjustments.

For complete information on the Medicare Incentive Program including reimbursement calculations go to:

http://www.cms.hhs.gov/apps/media/press/factsheet.asp?Counter=3563

Medicaid Eligibility

An eligible hospital for Medicare incentive payments is either an acute care hospital (including CAHs and cancer hospitals) with at least 10% Medicaid patient volume or Children's hospitals. Hospitals must be located in one of the 50 states or the District of Columbia .

• Defines an acute care hospital as a primary health care facility where the average length of patient stay is 25 days or fewer. Hospitals with an average length of stay of 25 days or fewer and with a CMS Certification Number (CCN) that has the last four digits in the series 0001 - 0879 are eligible. This specification includes short term general hospitals and the 11 cancer hospitals in the United States. Acute care hospitals also must meet patient volume threshold requirements (at least 10 percent of patient volume being Medicaid patients).
• Defines a children's hospital as a separately certified children's hospital, either freestanding or hospital-within-hospital, that has a certification number with the last 4 digits in the series 3300-3399 and predominately treats individuals under 21 years of age.
• Eligible Hospitals qualify for incentive payments if they adopt, implement, upgrade, or demonstrate meaningful use of certified EHR technology during the first participation year or successfully demonstrate meaningful use of certified EHR technology in subsequent participation years.
• Medicaid hospitals that qualify for EHR incentive payments may begin receiving incentive payments in any year from fiscal year 2011 to fiscal year 2016.

For complete information on the Medicaid Incentive Program including reimbursement calculations go to:

http://www.cms.hhs.gov/apps/media/press/factsheet.asp?Counter=3562

Registration Information:

Some Hospitals are eligible for both programs. If this is true, then the hospitals should select "Both Medicare and Medicaid" during the registration process, even if they plan to apply only for one of the incentive payments. This helps hospitals in that they first can apply only for a Medicaid EHR incentive payment by adopting, implementing, or upgrading certified EHR technology now, and will have the option to attest through CMS for their Medicare EHR incentive payment at a later date. Hospitals that register only for the Medicaid or Medicare program will not be able to manually change their registration after a payment is initiated, and may cause significant delays in receiving a Medicare EHR incentive payment. Registration for hospitals is available at the same website where EPs register, at https://www.cms.gov/EHRIncentivePrograms/20_RegistrationandAttestation.asp where one can also find guides and more information about what is needed to register.