The passage of the American Recovery and Reinvestment Act of 2009 (ARRA, Public Law 111-5) activated the provisions of the Health Information Technology Economic and Clinical Health Act, or HITECH Act. The HITECH Act codified into law the position of National Coordinator for Health Information Technology as part of the Office of the National Coordinator (ONC). The National Coordinator now, by law, reports directly to the HHS Secretary.   

The provisions of HITECH also gave rise to two new powerful committees: The Health Information Technology (HIT) Policy Committee and the HIT Standards Committees. Both of these committees directly advise the ONC concerning how best to significantly increase the adoption of electronic health records (EHRs) and to use them to improve the quality, safety and efficiency of healthcare delivery.

Federal stimulus funds for hospitals and physicians

To stimulate the widespread use of EHRs, ARRA has authorized federal incentive payments in the total amount of $34 billion to roughly 5700 nonfederal hospitals and 700,000 practicing physicians who qualify. This money is the total outlay of federal funds authorized for incentive payments for physicians and hospitals to implement electronic records (since the final figure in ARRA assumed that approximately half of that $34 billion amount would result in savings for a net cost to the federal government for this investment of $17 billion).

These federal funds in the total amount of $34 billion will be distributed to physicians and hospitals qualifying for them over a five-year period, which will begin for hospitals on October 1, 2010 and for physicians on January 1, 2011.

Physicians may qualify for up to $44,000 over five years (2011 - 2015) through additional Medicare payments.  Physicians not qualifying for these Medicare payments depending on the number of their qualifying Medicaid patients, may receive up to a total payment of $63,750, also over a five-year period from 2011 - 2015. 

Physicians may only qualify for these payments from either the Medicare or Medicaid programs, not both.  If physicians only see Medicaid patients (not Medicare patients which would be the case with pediatricians); they may only qualify for the extra payments under the Medicaid program.  If they see both Medicare and Medicaid patients, however, (as most physicians do), they would still only be able to qualify for extra incentive payments under the Medicare program.  

Qualifying under either program (Medicare or Medicaid), these payments are front-loaded so that it literally does pay physicians more to have qualified EHRs in place as soon as possible and to be able to demonstrate that they are using them in a “meaningful way.”

The largest single annual payment (approximately 41% of the total possible) will be distributed to physicians in either calendar year 2011 or 2012 who are able to demonstrate “meaningful use” of a “qualified EHR” some time during either 2011 or 2012.  This 2011 or 2012 payment will amount to $18,000 for those qualifying for additional Medicare payments and $26,080 for those qualifying for increased (maximum possible) Medicaid payments. Accomplishing this in 2011 or 2012 will qualify physicians for the total amount of possible incentive payments ($44,000 in extra Medicare payments and up to $63,750 in extra Medicaid payments for those otherwise meeting requirements for maximum payments) as authorized by ARRA over the course of a five-year period.

If physicians do not qualify for federal incentive payments during the 2011 and 2012 time periods, they may still qualify for incentive payments by meeting the 2011 requirements for meaningful use of qualified EHRs during 2013 or 2014. Qualifying under these 2011 definitions of “meaningful use of a qualified EHR” in 2013 will get physicians approximately 38.5% ($15,000 for Medicare and up to $21,733 from Medicaid) of a total five-year award which has been reduced by 11.4% ($39,000 for Medicare and a maximum of $56,506 in extra Medicaid payments) during calendar year 2013, with the rest payable in 2014 and 2015. Qualifying under 2011 definitions some time in 2014 will get physicians half ($12,000 in extra Medicare payments and up to $17,386 in extra Medicaid payments) of a total award that has been reduced by 45.5% ($24,000 total extra Medicare payments and $34,773 in total extra Medicaid payments) payable in 2014, with the remainder payable in 2015.

After qualifying for payments in the first two years under 2011 definitions of “meaningful use of an EHR” to obtain the third and fourth year payments, physicians must meet more advanced 2013 definitions of these terms. The physicians first qualifying for incentive payments in the 2011-12 window who may be eligible for the final fifth year payment, must meet the 2015 definitions. Those physicians not initially qualifying for federal incentive payments until the 2011-12 time period will not be eligible for this final fifth annual payment under 2015 definitions.

Physicians not meaningfully using qualified EHRs by 2015 (by any definition) will begin to see decreases in their base (market basket) Medicare and Medicaid payments by 1% in that year and by 2% in 2016.  The decrease to such non-qualifying physicians will increase to 3% by 2017. In subsequent years, this decrease will remain at 3%, but could go up to as much as a 5% decrease if certain overall EHR adoption percentage thresholds are not met.