$44,000? $64,000?
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Economic Stimulus Frequently Asked Questions

What healthcare IT incentives are included in the American Recovery and Reinvestment Act recently signed into law by President Obama?

As part of the American Recovery and Reinvestment Act, the U.S. government will invest more than $19 billion to modernize and accelerate the use of health information technology – particularly electronic health records (EHRs) – by hospitals and physicians

What role has McKesson played in the legislative process?

McKesson has been actively involved, meeting with members of President Obama’s team before and after he took office, as well as with Congressional members and their staff. In Deccember, McKesson formalized its recommendations for healthcare IT investment in a white paper that was posted on the change.gov Web site. We are also active participants in a number of industry associations to coordinate and communicate the interests of McKesson and its customers. We will continue to closely monitor the progress of this legislation and the many details that will need to be worked through in the coming weeks and months.

Who or what kinds of organizations will benefit from the healthcare IT incentives?

The incentives primarily benefit hospitals and physicians. They are designed to reduce healthcare costs by accelerating the use of IT to improve quality, safety and efficiency. Patients and caregivers will also benefit from the automation and connectivity enabled by EHRs.

What is the potential financial benefit of the healthcare IT incentives to hospitals and physicians?

Each physician who meaningfully uses a certified EHR could receive up to $44,000 (Medicare) or $64,000 (Medicaid) in government funding. Physicians practicing in rural or underserved areas would be eligible for up to $48,400 in Medicare incentives. These figures represent the maximum allowable incentives under the Medicare and Medicaid programs. Many physicians will not qualify for the maximum amounts.

When do physicians begin to receive payments?

The total package includes $19 billion to accelerate EHRs and other IT adoption by physicians and hospitals. Funds become available for:

  • Physicians on January 1, 2011 (and are eligible to apply through January 1, 2012 and still receive full benefits)

Customers should get started NOW to allow time to achieve meaningful use of certified solutions during this time period. While McKesson is focused on the applications and upgrades necessary to achieve meaningful use, qualifying for funding will require culture and process change within the physician’s practice.

Are there additional incentives to adopt in the early years of the program?

Physicians’ maximum allowable Medicare incentive for the first year of meaningful use is increased $3,000, from $15,000 to $18,000, for demonstrated EHR use in 2011 or 2012. This “early adopter” incentive raises the total amount physicians can qualify for from $41,000 to $44,000. A benefit for early adoption does not exist under the Medicaid incentive program.

What are the penalties if healthcare providers do not implement an appropriate amount of technology and report quality data by 2015?

For physicians who do not adopt such technology by 2015, Medicare payments will be reduced by the following factors in the years specified:

  • 2015: 1%
  • 2016: 2%
  • 2017 and beyond: 3%
  • 2015 and beyond: HHS Secretary may decrease one additional percent/year (max of 5%) if 75% of physicians don’t adopt technology by 2018

Who qualifies as an eligible professional?

“Eligible Professionals” under the Medicare HIT incentive program are limited to physicians as defined in the Social Secuirty Act (§1861(r)), which includes:

  • A doctor of medicine or osteopathy
  • A doctor of surgery or of dental medicine
  • A doctor of podiatric medicine
  • A doctor of optometry
  • A chiropractor

To receive Medicare incentive payments, the physician must:

  • a. Not be hospital-based;
  • b. Demonstrate meaningful use of a certified EHR; and
  • c. Submit Medicare Part B claims of at least 133% of the maximum incentive for a program year to qualify for the maximum incentive payment.

The Medicaid HIT Incentive program expands the definition of “eligible professionals” to include:

  • certified nurse mid-wife
  • nurse practitioner
  • physician assistant (under certain circumstances)

To receive Medicaid incentive payments, eligible professionals must:
Not be hospital-based;
Demonstrate meaningful use of a certified EHR; and
Treat a patient population, of which at least 30% receive medical assistance (or 20% if the physician is a pediatrician).

Although the incentives are not dependent on the eligible provider being a participating Medicare provider, the incentive amounts available to any provider is the lesser of 133% of their annual billed Medicare Part B charges or the maximum payment specified for the year in the regulations. (For example, a provider would have to bill $16,000 in Part B charges in order to qualify for a year in which the maximum allowable incentive payment is $12,000.) There are no distinctions between specialty and primary care physicians in terms of the incentives, EXCEPT hospital based physicians do not qualify for the physician incentives.

Do hospital-based physicians qualify?

The legislation specifically states that hospital-based physicians DO NOT QUALIFY for the Medicare or Medicaid EHR incentives.

Do physician Assistants, Nurse Practitioners, etc. qualify for the incentive?

Certified nurse mid-wives, nurse practitioners and physician assistants will not qualify under the Medicare provisions. These providers, however, can receive Medicaid incentives provided that at least 30% of their patients receive medical assistance.

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