Numbers Do Count

In a blog piece last month, we began to examine newly released numbers from CMS that help us measure the advances in health IT, particularly through the lens of meaningful use and other federal initiatives.  In this month’s Standard Insight, available on the HIMSS member page, we took a deeper look at progress in key federal initiatives as measured against their projections and looking toward the future.

There was much industry apprehension about the temporary certification program that ONC finalized in July 2010.  Most of it now appears wildly misplaced. 

• Certification of EHR technology for Stage 1 seems highly successful on all counts, except the actual results were much better than projected.  Right now, there are 543 ambulatory and 114 inpatient complete EHR systems certified as well as almost 700 EHR modules from more than 570 vendors. 

In the first year of the meaningful use incentive program, CMS estimated that it could pay out between a low of $1 billion and a high of $2.8 billion for both Medicare and Medicaid incentives.  CMS has already paid out almost $700 million to hospitals, more than its lower projection and about half of its higher.  Given the “backlog” of hospitals that have registered for the program and may still be attesting for the year ending in September, it is conceivable that incentives paid to hospitals could match the high-range projection.

On the other hand, eligible professionals have received about half of the low estimate incentives under both programs through September.  Unlike hospitals, they can continue to qualify until the end of the year.  However, this is the segment, particularly the 250,000 physicians in small practices with 4 or fewer physicians, providing over 60 percent of care, which is least able to afford, implement and use EHR systems. 

A solo physician practice that can potentially earn $44,000 over 5 years is in a far different position that a 10-physician practice that can earn $440,000.  But as we note later, the impending changes to reimbursement models may make incentives less important to adoption of EHR technology.

Thus, 2012 may be a more telling year for several reasons. 

• First, both the low and high projections show a doubling or more of the 2011 results.  In fact, 2012 is the highest growth year with projections for 2013 falling off as fewer new providers claim their easier and larger year 1 incentives. 
• Payouts are actually projected to decline in 2014 and on, just when the more stringent Stage 2 requirements are likely to kick in. 

This is the core problem. Not only is year 1 the biggest payout year, but it (the payout) is achieved for a 90-day performance period, not 365 days, or just for acquiring, implementing or upgrading EHR systems in the case of Medicaid. 

As discussed earlier, this is in the face of declining incentive payments.  Yes, there is the threat in the law of payment penalties starting in 2016.  But as discussed in the final rule, which was written when physicians were to see a 21 percent reduction in Medicare payments under the Sustainable Growth Rate formula, other factors can swamp both incentives and penalties. 

At a time when Medicare program is losing physicians, and the industry is nominally headed for $500 billion reductions in Medicare reimbursement over the next 10 years as part of the Affordable Care Act, applying penalties for not using an EHR seem unlikely. 

For the complete analysis plus a look at health information exchange numbers, see the November issue of Standards Insight.