HHS/ASPE. U. S. Department of Health and Human Services.Background

EHR Payment Incentives for Providers Ineligible for Payment Incentives and Other Funding Study

Michelle Dougherty and Margaret Williams
AHIMA Foundation

Michael Millenson
Health Quality Advisors LLC

Jennie Harvell
U.S. Department of Health and Human Services

June 2013

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This report was prepared under contract between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the AHIMA Foundation. For additional information about this subject, you can visit the DALTCP home page at http://aspe.hhs.gov/office_specific/daltcp.cfm or contact the ASPE Project Officer, Jennie Harvell, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201.  Her e-mail address is: Jennie.Harvell@hhs.gov.

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.



TABLE OF CONTENTS

ABSTRACT
EXECUTIVE SUMMARY
I. BACKGROUND
A. The HITECH Act, Its Goals and This Study
B. Increased Importance of This Study
C. Study Approach
D. Study Definitions
II. INELIGIBLE PROVIDERS AND THEIR PRACTICE CHARACTERISTICS
A. Identifying the Ineligible Providers
B. Ineligible Provider Characteristics
III. HEALTH IT ADOPTION AND CLINICAL IMPACT
A. EHR Adoption Rates for Eligible Providers
B. Adoption Drivers for Ineligible Providers
C. EHR Adoption Rates for Ineligible Providers
D. Ineligible Providers' EHR Use and Clinical Utility
IV. OPTIONS TO ENCOURAGE USE OF EHR TECHNOLOGY BY INELIGIBLE PROVIDERS
A. Summary of Options for Incentives, Other Funding, and Support
B. Other Options -- Guidance from Technical Advisory Group
V. GUIDANCE FOR EVALUATING OPTIONS
A. TAG Guidance for Evaluating Options to Support EHR Use by Ineligible Providers
B. Targeting Technology and Support for Ineligible Providers
VI. ECONOMIC FACTORS FOR EVALUATING BENEFITS AND COSTS OF NEW INTERVENTIONS
A. Key Principles of Cost-Benefit Analysis
B. Assessing Existing Evidence on Effectiveness of EHR and Interoperability
C. Factors for Evaluating the Costs and Benefits of a Program
D. EHR Cost-Benefit Considerations for Ineligible Providers -- An Example
E. Summary of Cost-Benefit Considerations for Making Incentives and/or Other Funding Available to Ineligible Providers
F. Cost-Benefit Considerations for Making Incentives and/or Other Funding Available to Ineligible Providers
G. Considerations to Promote Interoperability
VII. CONCLUSION
NOTES
APPENDICES (separate file)
APPENDIX A: Medicare and Medicaid EHR Incentive Programs
APPENDIX B: Definitions and Certification of EHR Technology
APPENDIX C: Public Health Service Act Section 3000(3) as Added by HITECH Section 13101 -- Provider Analysis
APPENDIX D: Ineligible Provider Characteristics
APPENDIX E: Long-Term and Post-Acute Care Provider Profiles
APPENDIX F: Behavioral Health Provider Profiles
APPENDIX G: Safety Net Provider Profiles
APPENDIX H: Other Health Care Provider Profiles
APPENDIX I: Table Summary of Patient Protection and Affordable Care Act Provisions with Relationship to Ineligible Providers and Health IT Use
APPENDIX J: Behavioral Health Provider Analysis
APPENDIX K: Grant, Demonstrations and Cooperative Agreement Programs
APPENDIX L: Loan Programs
APPENDIX M: Technical Assistance Programs
APPENDIX N: Administrative Infrastructure Building Programs
APPENDIX O: Anti-Kickback Statute EHR Safe Harbor Regulation
APPENDIX P: Private Sector Programs to Advance Certified EHR Technology
APPENDIX Q: Regulations for Medical Records
APPENDIX R: Technical Advisory Group Summary
APPENDIX S: Evaluating Benefits and Costs of New Incentives for EHR Adoption by Ineligible Providers
APPENDIX T: CIO Consortium EMR Cost Study Data
APPENDIX U: Abbreviations and Acronyms
APPENDIX V: References
LIST OF FIGURES
FIGURE 1: Providers Identified in HITECH
FIGURE 2: Number of Ineligible Provider Organizations
FIGURE 3: Number of Patients Served by Ineligible Provider Type
FIGURE 4: Total Medicare Expenditures for Services Delivered by Ineligible Provider Type
FIGURE 5: Medicaid Expenditures for Services Delivered by Ineligible Provider Type
FIGURE 6: LTPAC Provider Characteristics
FIGURE 7: Behavioral Health Provider Characteristics
FIGURE 8: Total Spending for Mental Health and Substance Abuse Treatment
FIGURE 9: Safety Net Provider Characteristics
FIGURE 10: Stages of the EHR Incentive Programs in Relationship to National Quality Strategy and Goal of Health System Transformation
FIGURE 11: EHR Adoption Rates for a Basic EHR by Physicians and Hospitals
FIGURE 12: Federal Health Information Technology Strategic Plan
FIGURE 13: Lack of Comparability of EHR Adoption Rates
FIGURE 14: Factors to Consider for Prioritizing Ineligible Providers
FIGURE 15: 2012 Study on Importance of Skilled Information Technology Workforce on EHR Costs and Benefits

FIGURE R1: TAG Priorities for Evaluation Criteria
LIST OF TABLES
TABLE 1: Ineligible Providers by Cluster in Alphabetical Order
TABLE 2: Eligible Professionals and Eligible Hospitals under the Medicare and Medicaid EHR Incentive Payment Programs
TABLE 3: Ineligible Providers by Cluster in Alphabetical Order
TABLE 4: HIT/EHR Adoption Rates for Ineligible Providers
TABLE 5: Current or Proposed Direct Support Programs
TABLE 6: Current Indirect Support Programs
TABLE 7: TAG Evaluation Approach for Ineligible Providers
TABLE 8: EMR*Care Facts and Statistics
TABLE 9: Five-Year Costs
TABLE 10: Average Medicare, Medicaid and Other Payments
TABLE 11: Annual EMR Costs

TABLE A1: Medicare and Medicaid EHR Incentive Program
TABLE A2: Stage 2 CMS MU Objectives
TABLE A3: 2014 Edition Certification Criteria for Base EHR Definition

TABLE C1: Environmental Scan of Health Care Provider Defined and Providers Eligible/Ineligible for Incentives
TABLE C2: LTPAC HITECH Provider Analysis
TABLE C3: Behavioral Health HITECH Provider Analysis
TABLE C4: Safety Net HITECH Provider Analysis
TABLE C5: Other Health Care HITECH Provider Analysis

TABLE J1: Providers Identified in HITECH and Included in This Study
TABLE J2: Providers Evaluated, but Did Not Meet Study Criteria to be Included in This Study

TABLE K1: Potential Health IT Enhancements Eligible for ONC HIE Cooperative Agreement Funding

TABLE O1: Anti-Kickback Statute EHR Safe Harbor 42 CFR Sec. 1001.952(y)

TABLE S1: EHR Adoption Rates by Ineligible Providers
TABLE S2: Hospital Adoption of Basic EHR
TABLE S3: Hospital Adoption of Advanced EHR
TABLE S4: Subacute Facility Adoption of Basic EHR
TABLE S5: Subacute Facility Adoption of Advanced EHR
TABLE S6: Ambulatory Care Provider Adoption of EHR
TABLE S7: Home Health Care Provider Adoption of EHR
TABLE S8: Hazard Regression Results -- Adoption of Advanced EHR

TABLE T1: CIO Consortium Report: Electronic Medical Records Cost Study


ABSTRACT

Background

This study was conducted in response to a requirement in the Health Information Technology for Economic and Clinical Health Act (HITECH Act) of the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L. 111-5). Title IV of Division B of ARRA directs the Secretary to conduct several studies including the study described in Section 4104(a):

The Secretary of Health and Human Services shall conduct a study to determine the extent to which and manner in which payment incentives (such as under Title XVIII or XIX of the Social Security Act) and other funding for purposes of implementing and using certified EHR technology (as defined in Section 1848(o)(4) of the Social Security Act, as added by Section 4101(a)) should be made available to health care providers who are receiving minimal or no payment incentives or other funding under this Act, under Title XIII of Division A under Title XVIII or XIX of such Act, or otherwise, for such purposes.

(B) DETAILS OF STUDY. -- Such study shall include an examination of --

  1. the adoption rates of certified EHR technology by such health care providers;
  2. the clinical utility of such technology by such health care providers;
  3. whether the services furnished by such health care providers are appropriate for or would benefit from the use of such technology;
  4. the extent to which such health care providers work in settings that might otherwise receive an incentive payment or other funding under this Act, under Title XIII of Division A, under Title XVIII or XIX of the Social Security Act, or other;
  5. the potential costs and the potential benefits of making payment incentives and other funding available to such health care providers; and
  6. any other issues the Secretary deems to be appropriate.

The Centers for Medicare and Medicaid Services (CMS) made available ARRA/HITECH funds to the Office of the Assistant Secretary for Planning and Evaluation (ASPE), in the Office of the Secretary within the U.S. Department of Health and Human Services, to conduct the study required in Section 4104(a). The study was directed and managed by ASPE. ASPE awarded a contract to the American Health Information Management Association (AHIMA) to complete the study. The study addresses the questions in Section 4104(a).

Findings and Conclusions of the Study

  1. Health care providers not eligible for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (referred to as the EHR Incentive Programs) can be organized into four clusters: Long-Term and Post-Acute Care (LTPAC); Behavioral Health; Safety Net; and Other. Generally, these health care providers provide health care services to some of the most vulnerable and costly individuals in our society, and the care they deliver would often benefit from electronic communication with other providers

  2. The funding made available under ARRA/HITECH (e.g., funding for demonstration grants, cooperative agreements, etc.) to health care providers not eligible to participate in the EHR Incentive Programs is not expected to support widespread adoption and use of EHR technologies (including certified EHR technologies) by these ineligible providers. The one exception to this finding pertains to the $1.5 billion made available under the ARRA to Health Resources Services Administration for health centers that include support for the acquisition of health information technology (health IT) systems.

  3. Implementation of provisions in the Affordable Care Act may support the use health IT by health care providers not eligible for the EHR Incentive Programs and bring new market pressures on these providers to use such technologies and electronically exchange health information.

  4. Implementation rates of EHR technologies, including implementation of certified EHR technologies, by providers not eligible to participate in the EHR Incentive Programs are lagging behind that of health care providers who may participate in the EHR Incentive Programs (i.e., eligible professionals and eligible hospitals).

  5. Nonetheless, many health care providers not eligible to participate in the EHR Incentive Programs are adopting some level of technology to meet their clinical and business needs.

  6. Providers not eligible to participate in the EHR Incentive Programs generally provide health care to some of the most vulnerable and costly individuals in our society, and the care they deliver would benefit from the use of EHR technology, including the ability to communicate electronically with other providers. The need for health information exchange is particularly important given the multiple providers often involved in caring for these patients, and the number of transitions in care experienced by patients treated by these health care providers.

  7. A minority of providers not eligible to participate in the EHR Incentive Programs may be affiliated with health care providers/organizations that are eligible to receive incentive payments under the Medicare and Medicaid EHR Incentive Programs. However, these relationships have not supported widespread use of certified EHR technology by providers not eligible to receive incentive payments, in part, because currently available certified EHR technology does not support the clinical and business needs of providers who are not eligible for EHR incentives.

  8. Activities are underway to fill gaps in health IT standards to support the interoperable exchange of documents at times of transitions in care and care plans during transitions in care as well as when care shared across multiple clinicians.

  9. Various stakeholders have suggested options that could be considered to support implementation of certified EHR technologies by health care providers who are not eligible to participate in the EHR Incentive Programs. These options include:

    1. Direct support such as making available:

      1. financial assistance (e.g., through incentives, grants (including demonstration grants) or loans) to support the acquisition and use of certified EHR technology; and/or
      2. technical assistance to support the acquisition and use of this technology.

    2. Indirect support such as:

      1. further development of the nationwide health IT infrastructure to allow for the electronic use and exchange of interoperable information needed to provide services to persons served by these health care providers; and
      2. extending various Medicare and Medicaid authorities to support implementation of health information technologies, including certified EHR technologies, by health care providers who are not eligible to participate in the EHR Incentive Programs.

  10. Strategic planning and coordination across programs is needed to identify the most promising policy options, and support successful implementation and use of certified EHR technologies by health care providers who are not eligible to participate in the EHR Incentive Programs. Some of the factors that should be considered in evaluating the costs and benefits of different options include:

    1. Built to last: Interventions should support the technology infrastructure needed for the emerging health care delivery and business models envisioned in the Affordable Care Act, the nationwide health IT infrastructure, and EHR Incentive Programs to allow for the interoperable exchange and reuse of health information.

    2. Patient-centered: Interventions should promote a patient-centered approach to care delivery and outcomes.

    3. Tailored and targeted: The need for interventions should be evaluated in terms of the clinical utility of the technology by a range of health care providers. It is likely that different technology solutions will be required to achieve policy goals.

    4. Smartly clustered: Interventions may need to be clustered to accrue the most benefit from the investment.

    5. Spend wisely: Consideration should be given to the costs of technology (which are declining) and providers' margins and ability to cover all or some of these costs.

Conclusions of the Study

Many of the health care providers not eligible for the Medicare and Medicaid EHR Incentive Programs, such as LTPAC and Behavioral Health providers, have a frequent need to exchange health information on behalf of their patients, who are among the most vulnerable and costly in our society. One of the key benefits of the use of health IT is the ability to exchange information to communicate and coordinate services on behalf of patients, and their physicians and entire care team who are often located in different geographic areas and practice settings. Advancing the adoption of certified EHR technology solutions by providers not eligible for the EHR Incentive Programs may support the realization of the goals associated with implementing a nationwide health IT infrastructure, new models of care delivery and coordination, and the Medicare and Medicaid EHR Incentive Programs.

Filling critical gaps in standards is important to support the interoperable exchange of health information on behalf of vulnerable persons who receive services across the care continuum, including (but not limited to) health care providers who are not eligible for the EHR Incentive Programs. In addition, the specification of standards to support interoperable health information exchange is necessary but may not be sufficient to support the development and implementation of certified EHR technology solutions for these providers. Other actions will likely be needed to support and accelerate the use of certified EHR technology by health care providers not eligible for the EHR Incentive Programs.


EXECUTIVE SUMMARY

The Health Information Technology for Economic and Clinical Health Act (HITECH) includes Title XIII of Division A and Title IV of Division B of the American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5) (ARRA). It is estimated that pursuant to HITECH, over $15 billion1 in incentive payments for the adoption and meaningful use of certified electronic health record technology (CEHRT) will be available between 2014 and 2019 to help certain health care providers improve the quality, safety, and coordination of care while also achieving efficiency gains to help control costs. HITECH-designated hospitals, physicians, and others as eligible for financial incentives for the adoption and meaningful use of CEHRT. Other categories of providers are ineligible. In addition, Title VIII of Division A of the ARRA made available $2 billion to the Office of the National Coordinator for Health Information Technology (ONC) to carry out activities in HITECH, including the development of a nationwide health IT infrastructure that allows for the electronic use and exchange of health information. Through these HITECH provisions, certain providers are eligible for incentive payments and other funding to support their adoption and use of electronic health record (EHR) technology as a part of the emerging nationwide health IT infrastructure.

However, Congress recognized the importance of providers not eligible for EHR incentive payments or other funding to support the implementation of the nationwide health information technology (health IT) infrastructure. Section 4104(a)2 of the HITECH Act required the Secretary of Health and Human Services (HHS) to conduct a study to determine the extent and manner in which payment incentives and other funding for implementing and using certified EHRs should be made available to those providers who received minimal or no HITECH payments. The study is required to address the following factors:

The Secretary is required to submit a report to Congress on the findings and conclusions of this study.

The use of health IT by all health care providers has become increasingly important. Although the Patient Protection and Affordable Care Act of 2010 (Pub.L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub.L. 111-152) (collectively known as the Affordable Care Act)) does not provide funds to support technology acquisition costs, implementing many of its value based purchasing and delivery model provisions as well as other provisions depends heavily upon a health IT/EHR infrastructure.3 In 2011, the National Quality Strategy Report to Congress similarly identified increased use of health IT as one of ten principles to adhere to when designing initiatives to bring about better care, healthy people and healthy communities, and affordable care. In addition, the growing sophistication of health IT applications developed by the private sector underscores the importance of the use of technology to support the health and health care of every American.4

Ineligible Providers

We identified health care providers as those listed in Section 3000(3) of the Public Health Service Act, as added by Section 13101 of HITECH. Those providers identified as ineligible for Medicare and Medicaid EHR incentives and the focus of this report were organized into four clusters: Long-Term and Post-Acute Care (LTPAC); Behavioral Health; Safety Net; and Other, as shown in Table 1 below. As described below, we also considered the extent to which these ineligible provider types received other funding to support their use of EHR technology.

This study identified over 54,000 ineligible provider organizations and 344,000 ineligible professionals delivering services to 51 million individuals across the United States. This summary statistic excludes those ineligible providers clustered in the "Other Provider" category above due to challenges with comparability. Although some of the ineligible providers have an ownership affiliation with eligible providers (and therefore potential access to EHR incentive funds), the majority do not.

TABLE 1. Ineligible Providers by Cluster in Alphabetical Order
Long-Term &
  Post-Acute Care  
(LTPAC)
  Behavioral Health  
(BH)
  Safety Net Providers  
(FQHC and RHC)
  Other  
  • Home health agency (HHA)
  • Hospice
  • Inpatient rehabilitation facility (IRF)
  • Intermediate care facility for individuals with intellectual disabilities (ICF/IID)
  • Long-term care hospital (LTCH)
  • Nursing home (SNF/NF)
  • Clinical social worker
  • Community mental health center (CMHC)
  • Psychiatric hospital/unit (including substance abuse)
  • Residential treatment centers (facilities for mental health and/or substance abuse)
  • Psychologist
  • Federally qualified health center (FQHC)
  • Rural health clinic (RHC)
  • Ambulance Service
  • Ambulatory surgical center (ASC)
  • Blood center
  • End stage renal disease (ESRD) dialysis center
  • Laboratory
  • Dietitian/nutritionist
  • Pharmacist
  • Pharmacy
  • Therapist (physical, occupational, speech)

Services delivered by these LTPAC, behavioral health, and FQHC/RHC providers account for $181 billion in combined Medicare and Medicaid expenditures -- over 20 percent of the total Medicare and Medicaid expenditures in health care.5 Safety net providers deliver care to a large number of patients as a primary care provider. Among the LTPAC, Behavioral Health, and Safety Net providers, this study found the provider types accounting for the largest share of Medicare and Medicaid expenditures were: nursing home, home health care, and community mental health providers.

We considered whether the ineligible provider types received other funding under HITECH for purposes of implementing and using EHR technology. With the exception of funds provided to certain safety net providers for their use of health IT, the other funding (e.g., demonstration grants) made available to certain ineligible provider types is not expected to support widespread adoption and use of EHR technology by these ineligible providers.

The Medicare and Medicaid EHR Incentive Programs authorized by HITECH (also referred to as the EHR Incentive Programs) have been successful in accelerating the use of EHR technology by eligible hospitals and professionals. The EHR Incentive Programs increasingly require that providers eligible for incentives engage in health information exchange (HIE). Transitions in care between providers eligible for incentives and providers who are not eligible are common. For example, in 2008, almost 40 percent of all Medicare beneficiaries discharged from acute care hospitals received post-acute care; and of these beneficiaries, more than 15 percent were readmitted to the acute care hospital within 30 days of hospital discharge.6 Instances of shared care are also common between eligible and ineligible providers. For example, Medicare requires that both the physician and HHA sign a home health plan of care. Thus, the normal course of patient care necessitates that eligible providers will exchange health information with ineligible providers. Some providers not eligible for EHR incentives are also adopting EHR technology, but those EHRs are not necessarily compliant with the EHR Incentive Programs criteria used by eligible hospitals and physicians, including requirements that would support interoperable HIE and health information reuse. Effective communication and information sharing across all providers is essential to improving the quality of care, bettering health of communities, and lowering per capita costs. Better alignment of the health IT solutions used by eligible and ineligible providers could promote better HIE and affect health care quality and the ability of eligible providers participating in the EHR Incentive Programs to engage in electronic exchange and care coordination activities with ineligible providers.

In addition to the EHR Incentive Programs, this study identified relationships between ineligible providers and provisions of the Affordable Care Act that could support the use of health IT and/or HIE by these ineligible provider types. We found 40 provisions of the Affordable Care Act that apply to providers not eligible for the EHR Incentive Programs and either require or support the use of health IT and/or HIE with or by these providers. Many of these HIE provisions will advance new care and service delivery models to improve care coordination and quality. Most of these provisions will engage one or more of the ineligible provider types who may not have the health IT infrastructure that could support the reform activity. As these provisions are implemented, new market pressures on ineligible providers to use health IT may increase.

EHR Adoption Rates for Ineligible Providers

This study identified a number of important facts about ineligible providers and their use of EHR technology. Four are particularly salient:

Collecting information on health IT adoption by the ineligible providers presented significant challenges due to the lack of comparable survey tools, inconsistent definitions and peer-reviewed studies. For ineligible providers, EHR adoption rates ranged from 4 percent to 65 percent. The adoption rates for ineligible providers cannot and should not be compared to adoption rates for eligible hospitals and eligible physicians since they do not measure adoption rates of comparable EHR technology. To illustrate the lack of comparability, the findings from the June 2012 study on health IT adoption for community behavioral health organizations reports that 21 percent of these organizations have EHRs at all of their sites, and 65 percent of survey respondents reported having adopted some form of an EHR at least at some of their sites. Only 2 percent of responding community behavioral health organizations reported adopting technology that could meet the base requirements of the EHR Incentive Program.7

Addressing this technological lag by ineligible providers could support deployment of new models of care delivery and coordination and new payment models for the vulnerable populations most likely to benefit from the service delivery system improvements.

Current and Proposed Initiatives

In this study, more than 30 actions were identified that have been proposed for or implemented in federal or state initiatives that could support (in various amounts, duration, and scope) the use of health IT/EHR technology by ineligible providers.8 The initiatives are categorized in terms of programs that provide "Direct Support" or "Indirect Support" to ineligible providers.

Direct Support Indirect Support
  • Proposals to extend the HITECH EHR Incentive Programs
  • Health IT grants to support health IT acquisition
  • Health IT loan program
  • Technical assistance programs for EHR technology implementation consulting
  • Cost report subsidy
  • Health IT grants to states for infrastructure development and outreach
  • Health IT grants to community groups and providers to demonstrate health IT solutions that support new models of care delivery and HIE
  • Technical assistance resources and toolkits for EHR implementation
  • Infrastructure development--policy and health IT standards
  • Anti-Kickback Statute EHR Safe Harbor

Evaluating Intervention Options

The 30-plus initiatives mentioned above for advancing health IT for ineligible providers could be coordinated more closely to advance common goals. Based on our analysis and consultation with the Technical Advisory Group (TAG) convened by the contractor for this study, there are some guiding principles that could be considered when evaluating whetheraction is needed for purposes of implementing and using EHR technology by the ineligible providers:

Targeting Ineligible Providers

Not all ineligible providers need CEHRT, nor are all categories of ineligible providers equally critical in achieving overall health system improvements. This study provides guidance and suggested evaluation factors that could be used to determine which providers to prioritize. The TAG considered the factors and prioritized the ineligible providers into following three groupings:

Economic Factors for Evaluating Options

The decision to implement technology by a provider or implement an incentive or funding program is dependent on understanding the benefits and costs. This section identifies economic factors for evaluating the benefits and costs of programs to accelerate adoption of interoperable EHR technology by ineligible providers. We do this by addressing:

The criteria developed for this report identify several economic factors that could:

This study considers some of these factors in assessing the potential impact of extending three incentive/funding options and applies the criteria to a private sector study that identifies hypothetical nursing home costs of EHR acquisition and use.

Overall Findings

LTPAC, Behavioral Health, Safety Net, and other providers are not eligible for EHR incentive payments under the Medicare and Medicaid EHR Incentive Programs. Ineligible providers generally provide health care to vulnerable and costly individuals in our society, and the care they deliver would often benefit from electronic communication with other providers. However, such HIE remains uncommon, and addressing this technological lag could support the realization of the goals associated with implementing a nationwide health IT infrastructure and the deployment of new models of care delivery and coordination, and support the HIE goals of the Medicare and Medicaid EHR Incentive Programs.

The ability to address this problem is hindered by data on ineligible providers' health IT use that are unreliable or unavailable, not comparable among ineligible provider types or between any or all of those provider types and the eligible providers involved in the EHR Incentive Program. Despite those barriers, this study addressed the specific questions asked by Congress. This study has:


I. BACKGROUND

A. The HITECH Act, Its Goals and This Study

There is now widespread agreement that health information technology (health IT) can help providers improve the quality of medical care while also achieving efficiency gains that help control costs. Bipartisan sponsorship for health IT was demonstrated by the inclusion of the Health Information Technology for Economic and Clinical Health Act (HITECH) within the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L. 111-5).

HITECH was designed to incentivize Medicare and Medicaid eligible hospitals, critical access hospitals (CAHs), and eligible professionals to use certified electronic health records (EHRs) to collect, store, transmit and use health care information in a meaningful, secure, and timely way. HITECH outlined a number of priorities for the "meaningful use" of EHRs, including e-prescribing, electronic health information exchange (HIE) to improve quality, such as promoting care coordination, and submitting information on clinical quality measures.

HITECH also provided funding for developing a nationwide health IT infrastructure and a framework of privacy, security and other policies and procedures needed to support the electronic use and exchange of health information. HITECH established by statute within the U.S. Department of Health and Human Services (HHS) the Office of the National Coordinator for Health Information Technology (ONC) and tasked it with performing certain duties in a manner consistent with the development of the nationwide health IT infrastructure.11 The goals of the nationwide health IT infrastructure include:

HITECH also made the Centers for Medicare and Medicaid Services (CMS) responsible for the Medicare and Medicaid EHR Incentive Programs. (For specific timelines and requirements for Medicaid and Medicare incentives, see Appendix A.)

The legislative mandate for this study also originates in HITECH.

To achieve Congress' intended goals and maximize the impact of HITECH funds, incentives focused on physicians, who drive most decisions on care, and on hospitals, where the largest share of health care dollars are spent.12 HITECH-designated specific categories of providers as eligible for incentives under certain specified conditions, while other categories of providers were ineligible, in part because of concern about whether it was possible to establish, in a timely fashion, clear and effective meaningful use standards for them.13 However, Congress recognized those providers' importance in Section 4104(a)14 of the HITECH Act, which requires the Secretary of HHS to conduct a study to determine the extent to which, and manner in which, payment incentives and other funding for implementing and using certified EHR technology (CEHRT) should be made available to those providers who received minimal or no payment incentives or other funding under HITECH. The Secretary is required to submit a report to Congress on the findings, addressing the following factors:

B. Increased Importance of This Study

The use of health IT by all providers has become increasingly important since the passage of HITECH in 2009. In particular, the Patient Protection and Affordable Care Act of 2010 (Pub.L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub.L. 111-152) (collectively known as the Affordable Care Act)) contained a long list of provisions addressing access, quality, and cost. Those Affordable Care Act15 provisions included:

Implementing some of these provisions will depend heavily upon an EHR infrastructure. Those provisions highlight the health and health care implications for the nation of the gap in EHR technology adoption between providers eligible for EHR incentives and providers who are ineligible for such incentives.

For example, health homes are a new model of care intended to link Medicaid enrollees with chronic conditions and providers in a way that enhances coordination and integration of care.16 For that model to be successful, provider types as different as physicians, group practices, rural health clinics (RHCs), community health centers, mental health and substance abuse providers, and home health need to communicate and coordinate.17 Some of these providers are eligible for incentives while some are not. Research has found that providers affiliated with providers eligible for EHR incentives under HITECH may adopt this technology more quickly.18

In a similar vein, the increasing importance of health IT is reflected in the initial National Strategy for Quality Improvement in Health Care (National Quality Strategy), an annual report to Congress mandated by the Affordable Care Act. The initial report in 2011 established three broad aims. They were:19

The National Quality Strategy identifies increased use of health IT as one of ten principles to adhere to when designing specific initiatives to achieve those three aims. The section "Promoting Effective Communication and Coordination of Care" provides specific examples of how "increased adoption of EHRs has the power to cut health care costs, reduce paperwork, improve outcomes, and give patients more control over their health care."20, 21

C. Study Approach

The questions Congress requested that this study examine can be grouped into three categories:

  1. ineligible providers and their practice characteristics;
  2. extent of ineligible provider health IT use, its current clinical impact, and the predicted impact of greater use; and
  3. incentives and other funding options for the use of health IT by these ineligible providers.

To address these questions, this study developed and applied the following approach:

D. Study Definitions

Congress requested that this study examine adoption, use and clinical utility of "certified" EHR technology (CEHRT) by ineligible providers. HITECH defines "certified" and "qualified" EHRs. The manner in which those terms were defined in the HITECH and applied in this study is set forth below. Other terms used in the course of this study are also defined and further described in Appendix B.

  FIGURE 1. Providers Identified in HITECH  
(PHSA 2000(3))
  • Hospital
  • Skilled nursing facility
  • Nursing facility
  • Home health entity
  • Long-term care facility
  • Health care clinic
  • Community mental health center
  • Renal dialysis facility
  • Blood center
  • Ambulatory surgical center
  • Emergency medical service provider
  • Federally qualified health center
  • Group practice
  • Pharmacist
  • Pharmacy
  • Laboratory
  • Physician
  • Practitioner
  • Rural health clinic
  • Ambulatory surgery center
  • Therapist
  • Indian Health Service provider
  • Others deemed by Secretary

Adoption of "EHR Technology" Versus "Certified EHR Technology"

For purposes of this study, Congress specifically requested information on ineligible providers' adoption of "certified EHR technology." The certification program in HITECH is currently implemented to support the certification of EHR technology used by hospitals and professionals eligible to participate in the Medicare and Medicaid EHR Incentive Programs. Current EHR technology certification criteria generally support the clinical workflow for eligible providers. While the EHR technology used by ineligible providers can be certified through ONC's EHR certification program, some of the certification criteria do not apply to the technology needed by ineligible providers and also do not include clinical practice and workflow requirements needed by ineligible providers. As a result, few EHR products for ineligible providers, particularly long-term and post-acute care (LTPAC) and behavioral health, are certified.

In September 2012, ONC provided the following guidance on the applicability and certification of EHRs for ineligible providers:

HHS has not yet fully assessed the EHR certification criteria needed for technology products used by ineligible providers. For that reason, we could not assess the adoption of CEHRT as defined by the HITECH Act. Instead, we evaluated the adoption of any EHR technology by ineligible providers and looked for evidence of adoption of important features that would be a part of a qualified EHR26 as specified in HITECH. (See Appendix B Definitions and Certification of EHR Technology.)

Qualified EHR Technology

HITECH defined a qualified EHR as: "an electronic record of health-related information on an individual that includes patient demographic and clinical health information, such as medical history and problem lists, has the capacity to provide clinical decision support, support physician order entry, capture and query information relevant to health care quality, and exchange electronic health information with, and integrate such information from other sources."27

Use of EHR Technology

This study requires consideration of the extent to which EHR technology is used by ineligible providers.A definition of "EHR use" was not provided in HITECH requirements for this study. For the purposes of this study, we defined EHR use as how the technology was used in the ineligible provider's practice to support clinical and business operations. To enable comparison among different types of providers, we identified a common set of EHR functionality or modules used in clinical care and operations.

Clinical Utility

A definition of "clinical utility" was not provided in HITECH.28 For the purposes of this study, we defined clinical utility as the ability for the EHR technology to support interoperability and secure information exchange among health care providers by complying with requirements of a "base EHR." To evaluate clinical utility, we considered whether the ineligible provider's EHR technology could meet the requirements of a "base EHR" (which includes transition of care criteria) that will be required, beginning in 2014,for Stage 1 and Stage 2 in the EHR Incentive Programs.29

The Medicare and Medicaid EHR Incentive Programs were intended to increase the adoption and use of CEHRT by eligible professionals and hospitals. However, both the Affordable Care Act and the National Quality Strategy contain a number of provisions and strategies that require the use of EHRs and interoperable health IT technologies across a broad array of health care providers. A new report from the Institute of Medicine, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, stresses the need for a digital infrastructure to enable providers to deliver better care and generate systems improvement and new knowledge.30 This study will evaluate the providers who are not eligible for the incentive program, yet remain important to the national effort to reform the health care system to improve care and reduce cost.


II. INELIGIBLE PROVIDERS AND THEIR PRACTICE CHARACTERISTICS

A. Identifying the Ineligible Providers

The seemingly simple task of sorting health care providers into different categories (e.g., those eligible and those not eligible for incentives, those who have and use EHR technology and those who do not, etc.) is made complex by both a convoluted system in which overlapping services are provided by different providers and a lack of standardization across provider classifications at the federal and state levels. Thus, for purposes of this study it is imperative to carefully identify who is an ineligible provider. To do that, we applied the following methodology:

TABLE 2. Eligible Professionals and Eligible Hospitals under the Medicare and Medicaid EHR Incentive Payment Programs
  Eligible Professionals (EP)   Medicare EHR
  Incentive Program  
Medicaid EHR
  Incentive Programa  
Physicians (MD/DO) X X
Dentists/Oral Surgeons (DDS/DMD) X X
Podiatrists (DPM) X  
Optometrists (OD)b X X
Chiropractors (DC) X  
Nurse Practitioners (NP)   X
Certified Nurse Midwives (CNM)   X
Physician Assistants (PA)c   X
Eligible Hospitals (EH) Medicare EHR
Incentive Program
Medicaid EHR
Incentive Programd
Acute Care Hospital X X
Critical Access Hospitals (CAHs)e   X X
Indian Health Service Hospitalsf X X
Children's Hospitalsg   X
Cancer Hospitals   X
Territory Hospitals   X
  1. Medicaid EHR Incentive Program Patient Volume Adjustment: Eligible Professionals: Have at least 30% of patient volume attributable to Medicaid patients (20% for pediatricians) or practice predominantly in an FQHC or RHC with at least 30% of patient volume attributable to "needy individuals." "Needy individuals" is defined as patients who are enrolled in the Medicaid or CHIP, receive uncompensated care, or receive care on a reduced fee scale.
  2. The CMS EHR Incentive Program final rule clarifies that optometrists are Medicaid eligible professionals in states where the State Plan explicitly says that "the term "physicians' services" includes services of the type which an optometrist is legally authorized to perform."
  3. Physician assistants are only eligible for Medicaid EHR incentive payments when practicing in a physician assistant-led FQHC or RHC.
  4. Medicaid EHR Incentive Program Patient Volume Thresholds: Eligible Hospitals: Acute care hospitals (including CAHs and cancer hospitals) with at least 10% of patient volume attributable to Medicaid patients. Children's hospitals (no Medicaid patient volume requirements).
  5. Although CAHs are eligible to receive EHR incentive payments, they are not included in the definition of "eligible hospital" under 42 C.F.R. §495.100 for purposes of the EHR incentive payments under Medicare.
  6. Indian Health Service (IHS) provides directly or under contract a variety of health such as physician, hospital, dental, and other services. IHS is the payer of last resort; primary payers include Medicare A and B and Medicaid. Some IHS providers (e.g., nursing home, HHA providers) are ineligible for EHR incentives. These ineligible provider types are integrated within the ineligible providers addressed throughout this report.
  7. CMS Medicare and Medicaid EHR Incentive Rule--Stage 2 Final Rule. "We proposed to revise the definition of a children's hospital in §495.302 to also include any separately certified hospital, either freestanding or hospital within hospital that predominately treats individuals under 21 years of age; and does not have a CMS certification number because they do not serve any Medicare beneficiaries but has been provided an alternative number by CMS for purposes of enrollment in the Medicaid EHR Incentive Program. We will provide future guidance on how to obtain these alternative numbers. The only comments we received on this proposal were favorable. We are finalizing these policies as proposed. Guidance to these hospitals and the states on enumeration and determining eligibility is also forthcoming." http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-21050.pdf.

Those providers identified as "ineligible" for EHR incentives and which are the focus of this report were organized into four clusters: LTPAC; Behavioral Health; Safety Net; and Other. The ineligible provider types in each of these clusters are listed below and presented in Table 3. See Appendix C for the health care provider types listed in PHSA §3000(3), including those identified as ineligible for the EHR Incentive Programs, and the definitions of the providers listed in Section 3000(3).

TABLE 3. Ineligible Providers by Cluster in Alphabetical Ordera
Long-Term &
  Post-Acute Care  
(LTPAC)
  Behavioral Health  
(BH)
  Safety Net Providers  
(FQHC & RHC)
  Other  
  • Home health agency (HHA)
  • Hospice
  • Inpatient rehabilitation facility (IRF)
  • Intermediate care facility for individuals with intellectual disabilities (ICF/IID)
  • Long-term care hospital (LTCH)
  • Nursing home (SNF/NF)
  • Clinical social worker
  • Community mental health center (CMHC)
  • Psychiatric hospital/unit (including substance abuse)
  • Residential treatment centers (facilities for mental health and/or substance abuse)
  • Clinical psychologist
  • Federally qualified health center (FQHC)
  • Rural health clinic (RHC)
  • Ambulatory surgical center (ASC)
  • Blood center
  • Renal dialysis facility
  • Laboratory
  • Dietitian/nutritional professional
  • Pharmacist
  • Pharmacy
  • Therapist (physical, occupational, speech)
  1. The focus of this report is on providers identified in PHSA §3000(3). We acknowledge that there are other important providers (e.g., assisted living) and programs (e.g., home and community-based services) in the LTPAC community, and similarly other important provider types/services offered in the Behavioral Health Cluster. However, the focus of this study is limited to the health care provider types listed in §3000(3) of the PHSA and who could participate in the Medicare or Medicaid programs

Extent to Which Ineligible Providers Work in Settings that Receive Incentive Funding

It is important to note that some ineligible providers do have access to CEHRT, and Congress requested that this study determine the extent to which ineligible providers work in settings that might be receiving health IT incentive funding. When data were available, we identified the percentage of the ineligible providers affiliated with eligible hospitals or eligible professionals in Appendix D (includes data and references by setting) and summarized the findings below:

Reassignment of Incentives

Eligible professionals may practice in more than one setting or exclusively in settings that are ineligible for incentives. Eligible professionals may reassign their incentive payments, in accordance with the Medicare reassignment rules, to entities that are ineligible for the incentive payments. Eligible professionals have a choice of where they reassign their incentive payments. For example, professionals working in FQHCs may reassign their incentive payment to the FQHC; however there is no guarantee that they will reassign their incentive payment if they also have their own practice and chose to use the incentive for their own EHR.

Hospital-based eligible professionals cannot receive EHR incentive payments. Data was not available on the extent to which professionals such as physicians practice exclusively in ineligible provider settings.

Eligible professionals who practice in settings like hospitals, nursing homes, FQHCs, CMHCs, etc. may practice in a diverse number of settings. It may not be a realistic way of subsidizing the EHR cost for an ineligible provider by relying on the reassignment of EHR incentive payments.

B. Ineligible Provider Characteristics

To understand the size of the ineligible provider markets, the number of patients they serve, and their impact on the Medicare and Medicaid programs, this section analyzes the key data below and then summarizes the information and additional provider characteristics for three of the ineligible provider clusters (LTPAC, Behavioral Health, and Safety Net):

The following section does not present this type of information for the "Other Provider" cluster. These "Other Providers" deliver ancillary services (e.g., pharmacy, laboratory, etc.) to the total population in contrast to the other ineligible provider clusters (in which services are provided by defined provider types or organizations). In addition, the services delivered by many of these "Other" ineligible providers are limited to a single clinical domain (e.g., laboratory work or medication orders). Thus, some of these "Other Providers" may not require the functionality of a complete EHR, but instead may use specific health IT applications. Given the variability of providers in the "Other" cluster, the following summary excludes these providers. Information about these "Other Providers" can be found in Appendix H.

The information and sources of data used to complete the analyses for the LTPAC, Behavioral Health, and Safety Net clusters described in this section are detailed in Appendix D. This appendix also contains the data and sources for the "Other Providers" cluster.

Total Number of Ineligible Providers

There are almost 55,000 ineligible LTPAC, behavioral health, and safety net provider organizations. Nursing homes (SNF/NFs) have the highest number of providers followed by HHAs. The graph presented in Figure 2 represents provider organizations. Not represented are ineligible professionals. In behavioral health there are 94,000 clinical psychologists and 250,000 clinical social workers.

FIGURE 2. Number of Ineligible Provider Organizations
(not including ineligible professionals) Total = 54,484
Bar chart, numbers below in table.
LTPAC Total: 41,021; SNF/NF: 15,716; IRF: 1,179;LTCH: 436; HHA: 12,026; Hospice: 5150; ICF/IID: 6414.
BH Total: 8,389; Inpatient Psychiatric Hospital including substance abuse: 2,497; Residential Treatment Center including substance abuse 4,492; CMHC: 1,400.
NOTE: Data does not include methadone treatment centers or other outpatient substance abuse treatment facilities.
Safety Net   Total: 5,074; FQHC: 1,124(via 9,300 service delivery sites); RHC: 3,950.

Total Number Patients Served by Ineligible Providers

FIGURE 3. Number of Patients Served by Ineligible Provider Type
Total = 51.1 million
Bar chart, numbers below in table.
LTPAC Total: 6,969,071; SNF/NF: 1,385,955; IRF: 397,256; LTCH: 118,300; HHA: 3,400,000; Hospice: 1,580,000; ICF/IID: 87,560.
BH Total: 18,152,631; Inpatient Psychiatric Hospital including substance abuse: 1,909,238; Residential Treatment Centers including subtance abuse: 314,393; Clinical Psychologist/Social Worker: 9,929,900; Community Mental Health Clinic: 6,000,000.
Safety Net   Total: 25,969,467; FQHC: 19,469,467; RHC: 6,500,000.a
  1. In 2010, FQHCs served 19.4 million in 2010 (http://bphc.hrsa.gov/uds); The estimate of 6.5 million patients seen in RHCs is the mid-point of the estimated number patients seen in RHCs per year (i.e., between 5 million and 8 million patients (George Washington University, "Quality Incentives for Federally Qualified Health Centers, Rural Health Clinics and Free Clinics: A Report To Congress" January 23, 2012 (p.8)).

There are 51.1 million patients served by ineligible providers in LTPAC, behavioral health and safety net organizations. As illustrated in Figure 3, safety net providers, who are primary care providers, treat the largest number of patients (almost 26 million). CMHCs and clinical psychologists and social workers treat the second largest number of patients (almost 16 million).

Total Medicare Expenditures by Ineligible Providers

FIGURE 4. Total Medicare Expenditures for Services Delivered by Ineligible Provider Type
Total = $83.1 billion
Bar chart, numbers below in table.
LTPAC Total: $76.2B; SNF/NF: $31.9B; IRF: $6.32B; LTCH$5.2B; HHA $19.6B; Hospice $13B.
BH Total: $6.1B; Inpatient Psychiatric Hospital including substance abuse $4.5B; Residential Treatment Facility: $0.988B; Clinical Psychologist and Social Worker: $0.387B; CMHC: $0.219B; Psychiatric Outpatient: $0.000926B; Outpatient Substance Abuse: $0.51B.
NOTE: The bulk of mental health and substance abuse treatment services are not covered by Medicare (or Medicaid), but through Substance Abuse and Mental Health Service Administration (SAMHSA) block grant funding. This report identifies ineligible provider types as those that particpate in and are funded by Medicare or Medicaid. Thus, SAMHSA expenditures are not included.
Safety Net   Total: $0.986B; FQHC : $0.674B; RHC: $0.312B.

Medicare expenditures for services delivered by ineligible providers account for approximately 15 percent of total Medicare expenditures. Using Medicare expenditure data from different sources and different years, we estimate that annual Medicare expenditures for LTPAC, behavioral health, and safety net ineligible provider types were approximately $83 billion out of $550 billion.35 As outlined in Figure 4, expenditures for services delivered by LTPAC providers account for more than 90 percent ($76 billion) of Medicare expenditures made to this subset of the ineligible providers. (Note: Medicare expenditures were not found for ICF/IID because services by these providers are not covered by Medicare.)

Total Medicaid Expenditures by Ineligible Provider

Medicaid payments made for services delivered by ineligible providers account for more than 20 percent of total Medicaid expenditures. Using Medicaid expenditure data from different sources and different years, we estimate that annual Medicaid expenditures for all ineligible provider types were approximately $98 billion out of $400 billion.36 As illustrated in Figure 5, expenditures for three providers, nursing homes, CMHCs and ICF/IIDs, account for more than 80 percent ($79 billion) of Medicaid expenditures made to LTPAC, behavioral health, and safety net ineligible providers. Medicaid expenditures were not found for long-term care and inpatient rehabilitation hospitals that provide Medicare level of care services

FIGURE 5. Medicaid Expenditures for Services Delivered by Ineligible Provider Type
Total = $98.1 billion
Bar chart, numbers below in table.
LTPAC Total: $71.3B; SNF: $50.0B; LTCH: $0.540B; HHA: $4.8B: Hospice: $2.36B; ICF/IID: $13.62B.
BH Total: $21.74B; Inpatient Psychiatric Hospital including substance abuse: $2.96B; Residential Treatment Centers including substance abuse: $2.03B; Clinical Psychologist/Social Worker: $0.951B; Community Mental Health Clinic: $15.8B.
NOTE: The bulk of mental health and substance abuse treatment services are not covered by Medicaid (or Medicare), but through SAMHSA block grant funding. This report identifies ineligible provider types as those that particpate in and are funded by Medicare or Medicaid. Thus, SAMHSA expenditures are not included.
Safety Net   Total: $5.05B; FQHC: $4.25B; RHC: $0.8B.


Long-Term and Post-Acute Care (LTPAC) Characteristics
Number of providers 41,021
Description LTPAC facilities provide care over extended periods either in-facility or in-home, to patients with a variety of conditions, including patients suffering from terminal illness. The benefits and services provided typically include: skilled nursing/nursing facility services, rehabilitation services, and assisted living services. Medicare and Medicaid are the predominant payers for several LTPAC provider types.
Number of patients 6,969,071
Medicare revenue $76.2 billion
Medicaid revenue $71.3 billion
Owned by eligible provider The affiliation of LTPAC providers with providers eligible for incentives varies by LTPAC provider type--ranging from 6.4% of skilled nursing facilities (SNFs) are hospital-based to 80% of IRFs are hospital-based.
Medicare profit margin Medicare margins range from 5.1% for Hospice to 18.5% for nursing homes.


FIGURE 6. LTPAC Provider Characteristics
Number of LTPAC Providers
Total = 41,021
Number of LTPAC Patients
by Provider Type
Total = 6,969,071
Pie chart: SNF/NF 15,716; IRF 1,179; LTCH 436; HHA 12,026; Hospice 5,150; ICF/IID 6,514. Pie chart: IRF 397,256; LTCH 118,300; HHA 3,400,000; Hospice 1,580,000; ICF/IID 87,560.
Medicare Expenditures
for LTPAC Providers
Total = $76.02 billion
Medicaid Expenditures
for LTPAC Providers
Total = $66.4 billion
Pie chart: SNF/NF 31.9; IRF 6.32; LTCH 5.2; HHA 19.6; Hospice 13. Pie chart: SNF/NF 50; LTCH 0.52; HHA 4.8; Hospice 2.36; ICF/IID 13.62.


Behavioral Health (BH) Characteristics
Number of providers 8,389 facilities
Description Behavioral Health providers treat clients for a variety of mental health and substance abuse disorders and related illnesses and conditions. Inpatient facilities typically provide a range of institutional/residential services. Partial hospitalization services are provided through hospital outpatient departments, CMHCs, or substance abuse treatment facilities. Clinics are reserved for short-term evaluation, diagnosis, and monitoring of individuals suffering from mental illness or substance abuse. These services use specially trained staff, such as advanced psychiatric practice nurses and aides, as well as psychologists, psychiatrists, clinical social workers, and licensed therapists to manage the often medically complex patients.
Number of patients 18,152,631
Medicare revenue $6 billion
Medicaid revenue $21.3 billion
Owned by eligible provider 72% of psychiatric inpatient units are hospital-based.
Medicare profit margin We were able to identify reported profit margins for; psychiatric hospitals/units have a Medicare profit margin of 5.92%.


FIGURE 7. Behavioral Health Provider Characteristics
Number of Behavioral Health
Provider Organizations
Total = 8,389 facilities
Number of
Behavioral Health Patients
Total = 18,137,393 patients
Pie chart: InPtPsychHosp 2497; RTC 4492; CMHC 1400. Pie chart: InPtPsychHosp 1,894,000; RTC 314,393; ClinPsych/SW 9,929,000; CMHC 6,000,000.
NOTE: This graph shows provider organizations.
There are 343,340 Clinical Psychologists/Clinical Social Workers.
Health Provider Organizations
Total = $6 billion
Medicaid Expenditures for
Behavioral Health Provider Organizations
Total = $21.3 billion
Pie chart: InPtPsychHosp 4.3; RTC 0.988; ClinPsych/SW 0.387; CMHC 0.2186. Pie chart: InPtPsychHosp 2.5; RTC 2.03; ClinPsych/SW 0.951; CMHC 15.8.

In terms of expenditures made for providers that deliver behavioral health services, for purposes of this study, the focus is limited to Medicare and Medicaid spending for services delivered by those provider types who could participate in the Medicare or Medicaid programs but are not eligible for EHR incentive payments. The graphic below presents total spending for all mental health and substance abuse services. As the graphic suggests, Medicare and Medicaid expenditures account for less than 40 percent of total spending for all mental health and substance abuse services (i.e., approximately 38 percent of the $171 billion in total spending for mental health and substance abuse treatment in 2009). Thus, there are other behavioral health provider types that deliver important mental health and substance abuse services that are not included in this study because they are not covered by Medicare or Medicaid.37

  FIGURE 8. Total Spending for Mental Health and Substance Abuse Treatment 2009  
Total = $171.7 billion
Pie chart: Private 66.6; Medicare 20.5; Medicaid 44.2; Other Federal 10.5; Other State & Local 29.9.


Safety Net Characteristics
Number of providers 5,074 (clinic settings)
Description FQHCs provide access to medical care for individuals living in medically underserved areas and to medically underserved populations. They offer on site, or by contract, a wide variety of medical services (e.g., approximately 9,900 physicians see patients at FQHCs). RHCs, by contrast, may be private or non-profit clinics of almost any size. They are located in non-urban medically underserved areas or health professional shortage areas.
Number of patients 25,969,467
Medicare revenue $986 million
Medicaid revenue $5.05 billion
Owned by eligible provider FQHC ownership is governed by PHSA Section 330 and is limited to entities that are generally not separately eligible for EHR incentive payments. RHCs operate under a variety of corporate structures. Health Resources and Services Administration (HRSA) reports that a majority of RHCs are owned by clinicians or hospitals that are eligible to receive EHR incentive payments.
Medicare profit margin Little information is in the public domain regarding profit margins for Safety Net Providers. RHCs typically operate at a deficit due in large part to the volume of patients without insurance.


FIGURE 9. Safety Net Provider Characteristics
Safety Net Providers, by Type
Total = 5,074
Safety Net Provider Patient Volume
Total = 25,969,467
Pie chart: FQHC 1124; RHC 3950. Pie chart: FQHC 19,469,467; RHC 6,500,000.
Medicare Expenditures by Type of
Safety Net Provider
(expenditures in millions)
Total = $986 million
Medicaid Expenditures by Type of
Safety Net Provider
(expenditures in millions)
Total = $5.05 billion
Pie chart: FQHC 674; RHC 312. Pie chart: FQHC 4,250; RHC 800.


III. HEALTH IT ADOPTION AND CLINICAL IMPACT

The EHR Incentive Programs made available incentives and other funding to eligible providers encouraging their adoption and use of CEHRT. The structure of the program for eligible providers is incremental -- spurring the use of EHRs starting in 2011, increasing access and HIE in 2014, and building towards a transformed health care system after 2016.

Adoption of CEHRT, including interoperable technologies, is lagging among ineligible providers. However, ineligible providers are beginning to adopt health IT that supports their current clinical and business needs. As eligible providers prepare for interoperable HIE in 2014, they will likely need to exchange information with ineligible providers. It is unclear at this time whether market pressures will push ineligible providers and their vendors to implement interoperable HIE needed for health care reform and successful meaningful use implementation.

A. EHR Adoption Rates for Eligible Providers

It is important to understand EHR adoption rates for ineligible providers in the context of EHR adoption rates for eligible providers.

The HITECH Act authorized incentive payments under Medicare and Medicaid for eligible professionals, eligible hospitals, and CAHs that adopt, implement, upgrade, or demonstrate meaningful use of CEHRT, and beginning in 2015, payment adjustments under Medicare for failing to demonstrate meaningful use. The EHR Incentive Programs are being implemented in stages:

Figure 10 depicts the stages of the Medicare and Medicaid EHR Incentive Programs and the relationship to the National Quality Strategy and the goal of health system transformation.

  FIGURE 10. Stages of the EHR Incentive Programs in Relationship to National Quality Strategy and Goal of Health System Transformation  
Stage 1 MU (2011): Use technology--Patient informed; Structured data capture. Stage 2 MU (2014): Access information--Care coordination; Patient engagement; Clinical decision support (CDS). Stage 3 MU (2016): Transformation--Performance and population management; Clinical quality model data enables outcome improvements; Case management & longitudinal view; Patient centered, team based care; Robust CDS. Future: Enhanced access and continuity; Improved population health.
SOURCE: National Quality Strategy--The Future of Quality Measurement. ONC, AHRQ, CMS Presentation. September 14, 2012.

The Medicare and Medicaid EHR Incentive Programs have been accelerating the use of EHR technology by eligible hospitals and professionals and increasing the requirements to achieve interoperability and exchange.38 An ONC evaluation of the rate of adoption of a basic EHR39 by office-based providers and hospitals shows that EHR incentives have increased adoption in the first year of the program jumping approximately 15 percent between 2010 and 2011. (See Figure 11.)

FIGURE 11. EHR Adoption Rates for a Basic EHR by Physicians and Hospitals
Bar chart: Office-Based Providers--2008 (17%); 2009 (21%); 2010 (25%); 2011 (39%); Non-federal Acute Care Hospitals--2008 (13%); 2009 (16%); 2010 (19%); 2011 (35%).
  1. U.S. Department of Health and Human Services, Office of the National Coordinator for Health IT. Office of Economic Analysis, Evaluation, and Modeling. http://dashboard.healthit.gov/HITAdoption/.

Another recent study considered two data sources to evaluate EHR adoption by physicians and found that rates rose steadily and doubled from 2005 to 2011, reaching 67.8 percent for family physicians in 2011.40, 41 The researchers attributed this increase to several influences:

As eligible hospitals and eligible professionals adopt CEHRT and move to meet Stage 2 requirements in the EHR Incentive Programs, they are beginning to implement more sophisticated technologies to advance data sharing and HIE in 2014. These interoperable technologies will be required to realize the improvement and cost savings goals of the EHR Incentive Programs, National Quality Strategy, and health system transformation.

B. Adoption Drivers for Ineligible Providers

Providers not eligible for EHR incentives are also adopting EHR technology, but their EHRs are not aligned with the requirements for certified EHRs in the stages outlined above for the Medicare and Medicaid Incentive Programs, particularly in the areas of interoperability and HIE (discussed in more detail in Section III.D, Ineligible Providers' EHR Use and Clinical Utility). The ONC's 2011-2014 Federal Health Information Technology Strategic Plan recognized the disconnect between eligible providers' EHRs and ineligible providers, stating that "ensuring health information availability at the point of care would require addressing this difference in health IT use by ineligible providers."43 (See Figure 12.)

FIGURE 12. Federal Health Information Technology Strategic Plan
"HHS plans to propose more rigorous health information exchange requirements which may encourage providers that are not eligible for the incentive programs (e.g., long-term and post-acute care facilities, community mental health centers or substance use disorder treatment providers) to adopt health IT and participate in health information exchange."

"For future stages of meaningful use, the plan is to propose health information exchange and interoperability requirements that are more rigorous, so that patient information follows patients to the point of care and informs critical health decisions. This will require overcoming barriers across geographies and stakeholders (i.e., providers, laboratories, hospitals, pharmacies, behavioral health clinics, and patients)."

In general, most ineligible providers are not adopting technologies to facilitate electronic communication and information sharing directly with other providers or through HIE networks. Many ineligible providers routinely exchange clinical information with other health care partners (often through paper and fax), but electronic HIE is uncommon except for specific use cases (e.g., laboratories to share results and pharmacies for e-prescribing). Uptake of interoperability and HIE has been minimal for ineligible providers for several reasons including:

  1. Vendor systems serving the ineligible provider markets generally do not have the functionality to support interoperability and HIE.

  2. There is a lack of available CEHRT.

  3. Nationally recognized standards are not yet available to support functionalities and interoperable exchange of data needed to support key care processes and contexts that are unique to the various types of ineligible providers.

As previously noted, a number of Affordable Care Act initiatives could use a health IT infrastructure to reduce care fragmentation and improve care coordination as a means of improving quality and reducing cost. In Appendix I, we identified 40 provisions of the Affordable Care Act that apply to ineligible providers within each of the four clusters that either: (i) require or could support the use of health IT; and/or (ii) require or imply the exchange of health information. Some of the HIE provisions require electronic HIE, while other provisions do not specify the method of exchange (e.g., information exchange could electronic or manual). For example:

It is possible new market pressures will be brought to bear on ineligible providers to use technology as provisions that focus on HIE are implemented. While these provisions are expected to advance the use of technology by at least some of the ineligible providers, it is still unknown how widespread this impact will be.

To understand the state of adoption and use of EHR technology, including interoperable technologies related to the EHR Incentive Programs, the next section describes what is known about each ineligible provider.

C. EHR Adoption Rates for Ineligible Providers

Collecting information on health IT/EHR adoption rates for providers ineligible for meaningful use incentive funding presented significant challenges. The lack of a common definition of an EHR and its functionality severely limits cross-provider comparisons and comparisons with EHR adoption rates by providers participating in the Medicare and Medicaid EHR Incentive Programs (Figure 13). Moreover, there are very few comprehensive, peer-reviewed, published studies on EHR adoption rates by providers not eligible for the EHR Incentive payments. The challenges are summarized in a study conducted by the University of Colorado, Denver44 which evaluated existing surveys on health IT and found:

FIGURE 13. Lack of Comparability of EHR Adoption Rates
  EHR adoption rates for ineligible providers cannot be compared to eligible providers.
  • Certified EHR technology products are not available for many ineligible providers.
  • Available EHR technology for ineligible providers generally does not support interoperability.
  • Survey tools measuring adoption have significant variability.

Table 4 summarizes what is known about ineligible providers' full or partial adoption of EHR technology based on the limited information available.

At best, these adoption rates can be used to indicate the need to adopt technology to support some clinical and business processes. However, in general, the adoption rates for ineligible providers cannot and should not be compared to the adoption rates across ineligibles or with adoption rates for eligible hospitals and eligible physicians since they do not measure comparable EHR technology. To illustrate the lack of comparability, the findings from a June 2012 study conducted by the National Council for Community Behavioral Healthcare on health IT adoption for community behavioral health organizations reports that 21 percent of organizations have EHRs at all of their sites; 65 percent of the behavioral health organizations surveyed reported having adopted some form of an EHR at some of their sites. Only 2 percent of responding community behavioral health organizations reported adopting technology that could meet the base meaningful use requirements.45

One agency is addressing the need for comparable national EHR adoption data for certain ineligible providers. The Bureau of Primary Health Care at the HRSA is leveraging the Uniform Data Systems administrative dataset to collect information on the EHR adoption rates in FQHCs. Since 2010 FQHCs have reported EHR information annually.46

TABLE 4. HIT/EHR Adoption Rates for Ineligible Providers
Ineligible Provider Use an EHR? Adoption Rates of Basic (non-certified)
EHRs for Some Clinical Processes
Long-Term & Post-Acute Care
Home Health Agencies (HHAs) Yes 43%a
Hospice Yes 43%a
Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID)   Unknown
Long-Term Care Hospitals (LTCHs) Yes 6%b
Nursing Homes (SNFs/NFs) Yes 43%c
Inpatient Rehabilitation Facilities/Units Yes 4%b
Behavioral Health
Clinical Social Workers Yes Unknown
Community Mental Health Centers (CMHCs) Yes 21% adopted some form of EHRs at all sites, 65% adopted some form of EHRs at some sites, 2% report adopting a base EHR that can meet Meaningful Used
Psychiatric Hospitals/Units Yes 2%b
Psychologists Yes Unknown
Residential Treatment Centers (Mental Health and/or Substance Abuse) Yes Unknown
Safety Net Providers
Federally Qualified Health Centers Yes 79.6%e
Rural Health Clinics Yes 42%f (limited study n=65 of 3950 providers)
Health Care Related
Ambulatory Surgical Centers Yes 18%g
End Stage Renal Dialysis Facilities Yes Unknown
Emergency Medical Service Providers (Ambulance ) No Unknown
Pharmacies No 12%h *
Laboratories No 24.2%i (can post to an EHR via interface)
Blood Centers No Unknown
Therapists (PT, OT, SLP) Yes PT- 28%j
Dieticians and/or Nutritional Professionals Yes Unknown
Pharmacists No *See Pharmacy
NOTE: Technology and thus percentages are not comparable to one another or to rates of adoption for CEHRT used by eligible hospitals and professionals.
FOOTNOTES:
  1. Resnick, H.E., Alwan, M. "Use of Health Information Technology in Home Health and Hospice Agencies: United States, 2007." Journal of the American Medical Informatics Association (JAMIA), 2010, 17: 389-395. Abstract available online at: http://jamia.bmj.com/content/17/4/389.abstract.
  2. Wolf, L., Harvell, J. and Jha, A. "Hospitals Ineligible For Federal Meaningful-Use Incentives Have Dismally Low Rates of Electronic Health Records." Health Affairs, vol. 31 no. 3 (March 2012). http://content.healthaffairs.org/content/31/3/505.
  3. Resnick, H.E., Manard, B.B., Stone, R.I., Alwan, M. "Use of Electronic Information Systems in Nursing Homes: United States, 2004." Journal of the American Medical Informatics Association (JAMIA), 2009, 16: 179-186. Abstract available online at http://jamia.bmj.com/content/16/2/179.abstract.
  4. Health IT Adoption and Readiness for Meaningful Use in Community Behavioral Health." National Council for Community Behavioral Healthcare." http://www.thenationalcouncil.org/galleries/business-practice%20files/HIT%20Survey%20Full%20Report.pdf.
  5. 2011 Uniform Data System HRSA data. Reports EHR adoption rates for some/all providers at FQHCs. http://bphc.hrsa.gov/uds.
  6. Maine Rural Research Center. RHCs At The Crossroads. 2012. http://muskie.usm.maine.edu/Publications/rural/RHCs-at-the-crossroads_Gale-NRHA-2012.pdf.
  7. Ambulatory Surgery Centers Short on IT Healthcare IT News Pizzi, Richard. http://www.healthcareitnews.com/news/ambulatory-surgery-centers-short-it?page=0,0.
  8. Fuji, K., Galt, K., Siracuse, M., Christofferson, J.S. "Electronic Health Record Adoption and Use by Nebraska Pharmacists." Perspectives in Health Information Management(Summer 2011): 1-11. http://perspectives.ahima.org/index.php?option=com_content&view=article&id=218:electronic-health-record-adoption-and-use- by-nebraska-pharmacists&catid=42:electronic-records&Itemid=88.
  9. Winsten, D., Weiner, H. "Improve Outreach Performance by Leveraging the Internet."CLMA Thinklab '10 Session 504". May 2010. http://www.clma.org/resource/resmgr/Professional_Development_-_Past_ThinkLabs/504_Dennis_Winsten___Hal_Wei.pdf? hhSearchTerms=emr.
  10. Bassett, J. "Wired for Success." Advance for Physical Therapy & Rehab Medicine. http://physical-therapy.advanceweb.com/Archives/Article-Archives/Wired-for-Success.aspx.

In general, the findings for ineligible providers reflect implementation of EHR functions that support some business and clinical needs for that particular provider type. Even though some providers are fully electronic, most have only partially implemented a system and are maintaining hybrid processes (both paper and electronic). The majority of providers have limited or no capability to electronically exchange information and generally cannot support meaningful use functions related to transition of care. One group of ineligible providers -- pharmacies, laboratories, ambulance services, and blood centers -- appear to maintain specialized health information systems that share information with EHR technology, but these health information systems do not constitute an EHR system themselves. Some of these providers use specific health IT applications rather than the complete functionality of CEHRT. Further, some of these applications may need to support interoperable exchange with certified EHR systems.

D. Ineligible Providers' EHR Use and Clinical Utility

Ineligible providers are adopting technology to support some clinical and business processes, but EHR products used by ineligible providers have generally not supported interoperability. It is not surprising given limited EHR technology to support exchange for eligible providers and almost none that supports interoperable exchange by ineligible providers. Requirements for interoperable exchange for eligible providers are just now being implemented with Stage 2 of the EHR Incentive Programs. To address questions from the ineligible providers regarding EHR certification interoperability, the Federal Government provided guidance in July 2012 recommending voluntary certification to the transitions of care module. It is unclear at this time whether market pressures will push ineligible providers and their vendors to implement interoperable HIE needed for health care reform and successful implementation of the Medicare and Medicaid EHR Incentive Programs.

To understand ineligible providers' use of an EHR, we looked at adoption rates, use in practice, clinical utility as it relates to the base EHR requirements that will apply beginning in 2014 for Stage 1 and Stage 2 of the EHR Incentive Programs, the need for HIE, and barriers to adoption. Findings for each ineligible provider cluster are summarized below with more detailed information by each ineligible provider type detailed in Appendices E-H.

Use of the EHR in Practice

To understand how the EHR was used in patient care and to support daily operations, we evaluated the following categories of EHR functionality:

Clinical Utility

To assess clinical utility and determine the ability of health IT to improve care and patient impact, we examined the base EHR functionality as described in the September 4, 2012 ONC final rule on health IT standards, implementation specifications, and certification criteria for CEHRT that must be met for the Stage 1 or Stage 2 meaningful use requirements by eligible professionals and eligible hospitals under the Medicare and Medicaid EHR Incentive Programs. We considered whether these requirements could be implemented in information systems used by ineligible providers because there was a need for similar functionality in systems used by these providers. This should not be construed as saying the ineligible provider's EHR technology meets the base EHR requirements. The following functions were evaluated:

Barriers to Adoption

To fully understand limitations to adopting EHR technology, we collected information on the barriers that limited or prevented adoption and use of EHR technology by the ineligible providers. We categorized the barriers as follows:

Long-Term and Post-Acute Care EHR Use and Clinical Utility
EHR needed Yes
Adoption rate Range from 4% to 43%
Use in practice
  • ADT
  • Appointments
  • Order entry and management
  • Clinical notes
  • Assessments
  • Care plan
  • Condition-specific documentation
  • Medication and treatment records
  • Pharmacy information system
  • Lab information system
  • Therapy information system
  • Patient portals
  • Patient eligibility determinations
  • Billing
  • Staffing, payroll, and Human Resources
Clinical utility
  • Patient demographic, health information and problem lists
  • Clinical decision support
  • Physician order entry
  • Support clinical quality measures
  • Privacy, security, and integrity features
Need for information exchange High, as patients transition from the LTPAC facility to hospitals and have frequent episodes of care coordination with primary care.
Barriers to adoption
  • Lack of capital
  • Perceived inequity regarding lack of incentives
  • Lack of awareness of the need to implement an EHR
  • Limited certified EHR products for provider type
  • EHRs available lack of alignment with meaningful use criteria
  • Workforce limitations to implement and maintain an EHR
  • Limited decision support for complex clinical condition
  • Lagging standards to support the interoperable exchange of health information and reuse of this information for clinical processes


Behavioral Health EHR Use and Clinical Utility
EHR needed Yes
Adoption rate Range from 2% for Psychiatric Units/Hospitals to 21%-65% adoption of some EHR technology by behavioral health providers
Use in practice
  • ADT
  • Appointments
  • Order entry and management
  • Clinical notes
  • Assessments
  • Care plan
  • Condition-specific documentation such as community re-integration (information from public, i.e., jails)
  • Medication and treatment records
  • Patient portals
  • Patient eligibility determinations
  • Billing
  • Staffing, payroll, and Human Resources
Clinical utility
  • Patient demographic, health information, and problem lists
  • Clinical decision support
  • Physician order entry
  • Support clinical quality measures
  • Privacy, security, and integrity features
Need for information exchange Need for exchange is high, but complicated by 42 CFR Part II. Significant efforts through SAMHSA and the National Council for Community Behavioral Healthcare have identified opportunities to advance exchange on behalf of behavioral health providers, and standards have been developed and are currently being piloted for electronic exchange of health information that is subject to these increased privacy protections.
Barriers to adoption
  • Lack of capital
  • Perceived inequity regarding lack of incentives
  • Lack of demand for an EHR
  • Limited certified EHR products for provider type or specialty
  • EHRs available lack of alignment with meaningful use criteria
  • Workforce limitations to implement and maintain an EHR
  • Limited decision support for complex clinical condition
  • Lagging standards to support the interoperable exchange of health information and reuse of this information for clinical processes
  • Lack of privacy consent management


Safety Net EHR Use and Clinical Utility
EHR needed Yes
Adoption rate 42% for RHCs to 68.5% for FQHCs
Use in practice
  • ADT
  • Appointments
  • Order entry and management
  • Clinical notes
  • Assessments
  • Care plan
  • Condition-specific documentation
  • Medication and treatment records
  • Pharmacy information system
  • Lab information system
  • Patient portals
  • Patient eligibility determinations
  • Billing
  • Staffing, payroll, and Human Resources
Clinical utility
  • Patient demographic, health information, and problem lists
  • Clinical decision support
  • Physician order entry
  • Privacy, security, and integrity features
Need for information exchange High, as Safety Net providers are typically required to contract with a wide range of other providers and specialists within their care networks, and patients will travel across this network.
Barriers to adoption
  • Lack of capital
  • Workforce limitations to implement and maintain an EHR

Other Provider EHR Use and Clinical Utility

As was the case in presenting information about the Other Providers expenditure and volume information, it is difficult to provide aggregate information about this group's EHR adoption and use. Other Health Care Providers rely on health IT; however, with the exception of ASCs, the Other Providers' need for health IT appears to be limited to a specific ancillary service. Appendix H provides information (to the extent it was available) for each provider identified.


IV. OPTIONS TO ENCOURAGE USE OF EHR TECHNOLOGY BY INELIGIBLE PROVIDERS

The previous sections described the ineligible providers, the patients they serve and their use of EHR technology. From this analysis, we identified a number of important facts about ineligible providers and their use of EHR technology. Three are particularly salient:

This technological lag by ineligible providers may have consequences. Advancing the use of EHR technology, particularly to support HIE, could support new models of care delivery and coordination and new payment models for the vulnerable populations most likely to benefit from the goals of Better Care/Healthy People/Healthy Communities and Affordable Care.

Stakeholders have identified a variety of direct and indirect actions that could be used to encourage adoption of EHR technology by ineligible providers. It should be noted that some of these options have been implemented while others have only been proposed. This summary simply lists and does not endorse any of these options. These actions include:

These actions have been advanced by a variety of stakeholders and are described below and in more detail in Appendix A and Appendices K-O.

A. Summary of Options for Incentives, Other Funding, and Support

In this study over 30 actions, plans, proposals, or initiatives were identified that make available or propose federal or state actions to support ineligible providers' use of EHR technology.47 These current or proposed actions focused on advancing the use of health IT; including by modernizing the health care infrastructure to facilitate new models of care delivery or payment, or targeting the use of technology by a particular group of ineligible providers who sometimes are limited to a particular geography. Detailed descriptions of these initiatives are available in Appendix A and Appendices K-O. The initiatives described below are summarized and categorized into two groups: initiatives that provide direct support to ineligible providers and those providing indirect support.

Direct Support Options

There are five types of initiatives that offer direct support to ineligible providers to acquire and use health IT. The initiatives include both current and proposed programs and include providing support through extending the current EHR incentive program, grants paid to providers to purchase technology, loan programs, and administrative rules. Table 5, below, summarizes the direct support options. More detailed information is provided in Appendix A and Appendices K-N.

TABLE 5. Current or Proposed Direct Support Programs
Initiative Summary
Proposals to extend EHR incentives to providers not eligible for such incentives under current law. Current law makes available EHR Incentive payments to eligible health care provider types.

Several stakeholdersa,b,c,d,e,f,g have stated that there is a need to extend the EHR Incentive Programs under HITECH to include many ineligible provider types, such as long-term and post-acute, and behavioral health providers. These stakeholders describe the lack of incentives as a barrier to achieving needed quality, continuity, and coordination of care improvements; as well as a barrier to enabling needed data analytics to measure, improve, and transforming service delivery. Some of these stakeholders propose extending the same incentive structure as is implemented in the EHR Incentive Programs. Others recommend establishing meaningful use metrics that reflect key clinical and non-clinical measures for the vulnerable populations served by ineligible provider types, and aligning the current meaningful use measures for the EHR Incentive Programs with these metrics.
Health IT grants to support health IT acquisition Grants administered by HRSA were made available to safety net providers to enhance or purchase EHRs and health IT.

Separately, the Affordable Care Act authorized grants to long-term care facilities to assist in purchasing EHR technology but funds were not appropriated.

Several stakeholder groups have stated that there is a need to extend current and/or create new grant programs to support the acquisition and use of health IT, including interoperable EHRs, by ineligible providers.c,e,g
Health IT loan program Some states, such as North Dakota, Minnesota and Maine, offer health IT loan programs to both eligible and ineligible providers. For example, North Dakota made $5 million available in a revolving loan fund to directly support eligible and ineligible providers in purchasing health IT.

Some stakeholder groups have proposed making available various loan programs to support the acquisition and use of EHR technology.a,d,e,g

In addition, Title XIII of HITECH permitted the ONC to establish a grant program to states (and Indian tribes) for a loan program for providers to support the purchase and use of certified EHRs, training of personnel, or secure HIE.
Technical assistance programs for EHR technology implementation consulting CMS is working with Quality Improvement Organizations (QIOs) to provide technical assistance to ineligible Medicare providers, particularly LTPAC providers, in three states to support HIE activities.j

In addition, QIOs are collaborating with RECs to leverage CEHRT for quality improvement purposes through their Learning and Action Networks and expanding their assistance to ineligible health care professionals. CMS anticipates continuing to promote technical assistance to advance health IT across multiple health care settings in the QIO program.

Separately, HITECH funded RECs to provide technical assistance to eligible professionals to implement CEHRT.

Several stakeholder groups have proposed making available technical assistance to support the acquisition and/or use of health IT/EHRs by ineligible provider types either by extending the RECs or through new grant programs.a,c,e,g
Other Subsidies Broadband connectivity has become increasingly vital to the effective delivery of health care, and it can be uniquely transformative in rural areas, where distance poses a substantial challenge. To increase access and use of this critical communication service, the Federal Communications Commission (FCC) provides support for broadband connectivity to certain qualifying health care providersh (such as CMHCs) in rural areas, and in some cases urban areas. The FCC's Rural Health Care (RHC) Programs include the Healthcare Connect Fund and the Skilled Nursing Facilities Pilot Program.i Through these programs, the FCC makes available broadband connectivity at highly discounted rates (see Appendix N).

One state (Minnesota) investigated modifications to the Medicare and/or Medicaid cost report structure to permit as allowable expenses costs for CEHRT acquisition for nursing homes. (Minnesota Medicaid pays cost-based reimbursement.)
FOOTNOTES:
  1. State Medicaid Directors Association.
  2. American Medical Directors Association.
  3. Leading Age.
  4. Centers for Aging Services Technology.
  5. National Association of Home Care and Homecare Technology Association of America.
  6. National Council for Community Behavioral Healthcare.
  7. LTPAC Health IT Collaborative.
  8. 47 U.S.C. § 254(h)(7)(B), available at http://www.gpo.gov/fdsys/pkg/USCODE-2011-title47/pdf/USCODE-2011-title47-chap5-subchapII-partII-sec254.pdf. "The term ‘health care provider' means (i) post-secondary educational institutions offering health care instruction, teaching hospitals, and medical schools; (ii) community health centers or health centers providing health care to migrants; (iii) local health departments or agencies; (iv) CMHCs; (v) non-profit hospitals; (vi) RHCs; and (vii) consortia of health care providers consisting of one or more entities described in clauses (i) through (vi)."
  9. FCC Rural Health Care, http://www.fcc.gov/encyclopedia/rural-health-care.
  10. CMS QIO 10th Scope of Work. http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityImprovementOrgs/Downloads/ 10thSOWSlides.pdf.

Indirect Support Options

Other initiatives do not involve directly funding providers. Instead, these options span a wide array of activities. These options:

Table 6 summarizes the options and groups them into five categories. More detailed information is provided in Appendix K and Appendices M-O.

TABLE 6. Current Indirect Support Programs
Initiative Summary
Health IT grants to states for infrastructure development and outreach Grants have been provided to state governments to build a health IT infrastructure to: (1) support HIE; (2) develop health IT plans to address vulnerable populations (behavioral health and LTPAC); (3) establish new care delivery models; (4) overcome barriers to exchanging sensitive behavioral health information; and (5) provide education and outreach.
Health IT grants to community groups and providers to demonstrate health IT solutions that support new models of care delivery and HIE As of 2012, SAMHSA had two grant programs available to approximately 100 behavioral health providers to demonstrate health IT solutions.

Separately, the Beacon Community Grants were funded by ONC to strengthen the technology infrastructure and exchange capabilities. Seventeen communities across the country were funded, some of which included a focus on certain ineligible providers. One community received additional funding to extend HIE to behavioral health.
Technical assistance resources and toolkits for EHR implementation HRSA funded development of technical assistance materials for safety net providers. It has included toolkits, EHR acquisition guides and training webinars.

The QIO Program in Minnesota, with the support of private funding, developed a web-based toolkit to support health IT adoption by nursing homes and HHAs.

SAMHSA funded the development of health IT resources for behavioral health.
Infrastructure development: policy and health IT standards The ONC Standards and Interoperability Workgroup Longitudinal Coordination of Care Workgroup and private sector partners are supporting the development and testing of health IT standards to address gaps in standards that create barriers for ineligible providers to implement interoperable EHR systems and participate in HIE. HHS currently supports programs to develop industry policies and standards for HIE and test their effective use. Efforts to date have focused on health IT standards initiatives needed to increase behavioral health and LTPAC providers in HIE activities. For example, work is underway to develop standards that could be integrated into technology solutions used by eligible and ineligible providers for the interoperable exchange of more robust of Summary Documents and Care Plans at times of transitions in care and to support instances of shared care.
Anti-Kickback Statute (AKS) EHR Safe Harbora While not a "program", a regulation established by the Office of the Inspector General created a safe harbor to the AKS for certain arrangements involving the donation of interoperable EHR software or information technology and training services.

The safe harbor permits certain individuals and entities to donate (and cover up to 85% of cost) of items and services in the form of software or information technology and training services. The arrangement between the donors and recipients must meet certain conditions in order to receive safe harbor protection. This safe harbor is scheduled to sunset at the end of 2013. (See Appendix O for additional information.)
FOOTNOTE:
  1. For example, under the AKS EHR safe harbor, a Medicare hospital could donate EHR software and training services to a nursing home and the hospital could cover up to 85% of these costs if certain conditions are met. See Appendix O for more details.

B. Other Options -- Guidance from Technical Advisory Group

In addition to the initiatives above, the TAG convened by the contractor for this study identified other administrative levers that could be used to advance the use of CEHRT by ineligible providers who participate in the Medicare and Medicaid programs. The TAG was comprised of experts on health care policy, economics, financing, and health IT. The descriptions below present suggestions identified by the TAG and is not intended to endorse any of these options, but simply to convey ideas discussed by the TAG.

Program Regulations

The ineligible providers identified in this study participate in the Medicare and/or Medicaid program in which there are program/payment rules and regulations that govern their participation. The TAG suggested that these requirements could reference the use of CEHRT by the ineligible provider. For example, current regulations include requirements for maintaining medical records and some refer to electronic records. The language could be updated to reflect contemporary use of EHR technology aligned with Meaningful Use criteria, while balancing the goal to promote widespread EHR adoption and resources needed to support such adoption. (See Appendix Q for an example of current regulatory language for medical records.)

Condition Grants on Use of Interoperable Health IT

Another option suggested by the TAG to accelerate the use of health IT/EHRs by ineligible providers would include in the use of interoperable health IT (consistent with requirements with the EHR Incentive Programs) in grant program requirements where the use of health IT and HIE is needed. This could ensure that government funds are used to support consistent health IT policy goals and that grants available to ineligible providers increase the adoption and use of CEHRT.

Program Oversight Through Health IT

There are on-going concerns about health care fraud involving both eligible and ineligible provider types. Technology can play a role in program oversight. The 2005 report to ONC on the Use of Health Information Technology to Enhance and Expand Health Care Anti Fraud Activities48 stated that "technology can play a critical role in detecting fraud and abuse and it can help to pave the way toward prevention. While technology cannot eliminate the fraud problem, it can significantly minimize fraud and abuse and ultimately reduce health care fraud losses. The use of advanced analytics software built into the nationwide health information infrastructure is critical to fraud loss reduction."


V. GUIDANCE FOR EVALUATING OPTIONS

A. TAG Guidance for Evaluating Options to Support EHR Use by Ineligible Providers

The HITECH EHR incentive program not only provided direct support to acquire CEHRT, but also a complementary set of programs to ensure eligible hospitals and professionals could be successful in using CEHRT in a meaningful way. In contrast, the more than 30 actions/plans/initiatives mentioned above to advance health IT for ineligible providers have little coordination or common strategic purpose behind them. For that reason, the TAG convened by the contractor for this study provided the following guidance for evaluating and prioritizing different initiatives to support the implementation and use of EHRs by ineligible providers:

B. Targeting Technology and Support for Ineligible Providers

In an era of limited resources, targeting and tailoring interventions takes on a particular importance. Not all ineligible providers need CEHRT, nor are all categories of ineligible providers equally important in achieving overall health system improvement. Figure 14 outlines factors that could be used to determine which providers to prioritize for implementing and using health IT/EHRs. The TAG considered the ineligible providers and suggested three priority groups. Further analysis of the individual provider types within each group is needed, but was out of scope for this study.

FIGURE 14. Factors to Consider for Prioritizing Ineligible Providers
  • Type of patients served and their need for coordination and integration across providers including their relationship to eligible providers
  • Number of patients served (volume)
  • Size of the market (number of providers, urban vs. rural, etc.)
  • Medicare and Medicaid expenditures
  • Providers' margin/profitability -- ability to invest in technology
  • Technology needed and benefits to improve care delivery, outcomes, and efficiency
  • Adoption rate of the technology by the provider (including by groups or subsets of providers)
  • Provider use of the technology
  • Costs to adopt the technology
  • Barriers/reasons why technology has not been adopted
  • Availability (amount, duration, and scope) of other funds to support acquisition and use of technology
  • Benefit to Medicare/Medicaid
    • Quality and financial oversight
    • Data for risk adjustments and pay for performance
    • Public health/population health
    • Need for health system and payment reforms

The TAG suggested several factors that could be considered to assess the need for supporting the use of health IT/EHRs and whether incentives or other funding options are needed. Table 7 identifies these key factors and suggests questions that could inform a possible course of action. Appendix R provides a summary of the TAG suggestions and includes scenarios considering two ineligible providers and their need for interventions.

TABLE 7. TAG Evaluation Approach for Ineligible Providers
Goals
  • How will needed EHR technology support national goals for quality and safety improvements, improved coordination of care, efficiency gains, and population health?
  • How will technology adoption support patients, emerging business models, and other policy priorities such as the EHR Incentive Program?
Assess
  • What is known about the provider and their ability to invest in technology acquisition?
  • What is known about the provider's use of EHR technology?
  • Is interoperable health IT currently available to the market?
  • What are the gaps and barriers that need to be overcome to support the use of EHR technology?
  • What is the provider's relationship with eligible providers? Are there frequent transitions or coordination of care needs?
Determine Action
  • Ignore: Due to the current financial status and prevalence of grants or other funding and/or availability of technical assistance to support the use of the technology, no additional incentive/funding action is needed to advance the use of the technology for the ineligible provider type.
  • Encourage: Use incentives and penalties to encourage desired action. Incentives could include: extending the EHR Incentive Programs, low-interest loan, grants, and other interventions. Penalties could include: implementing negative payment rate adjustment (similar to those in the EHR Incentive Program for Eligible Providers) or other penalties for not adopting/using interoperable EHR technology.
  • Mandate: Drive the desired action by creating an administrative requirement (e.g., Condition of Participation) for Medicare/Medicaid participation or payment.

If, based on consideration of the preceding factors and questions, a conclusion is reached to encourage the use of EHR technology by certain ineligible provider types through the use of incentives or other options, understanding the benefits and costs of implementing options may be an important factor in decision-making. The next section provides an economic framework that could be applied to conduct such an analysis.


VI. ECONOMIC FACTORS FOR EVALUATING BENEFITS AND COSTS OF NEW INTERVENTIONS

The decision to implement technology by a provider or implement an incentive program or other initiative to support the use of such technology could be informed by an understanding the benefits and costs. This section presents economic factors for estimating the benefits and costs to programs to accelerate adoption of interoperable EHR technology by ineligible providers. We do this by addressing:

Because of the very limited data available on the extent of ineligible providers' use of health IT, and the costs and impact of the use of this technology by these ineligible provider types, this section of the report often found it necessary to draw inferences from the evidence available on eligible providers.50

A. Key Principles of Cost-Benefit Analysis

Incremental Effects

CBA compares the incremental benefits accruing from a policy to its incremental costs. A policy creates incremental benefits or costs only if it causes changes in behaviors. Although the adoption of EHRs by ineligible providers is expected to grow with or without government intervention, the shape of that adoption curve is uncertain. Any program designed to increase adoption will produce benefits only if it accelerates adoption above and beyond the projected natural growth path. The benefits of a policy intervention accrue from incremental adoption above the forecast trend, but since it can be difficult to target a subsidy just towards incremental adopters (that is, those who a subsidy will influence) the cost of such programs can be high relative to the benefits.

Determining Perspective

Considering the benefits and costs of an intervention to increase EHR adoption is dependent on the stakeholder's perspective (e.g., government/payer, provider, patients, EHR vendor). For purposes of this report, we viewed the costs of the intervention as accruing to the government. Benefits may include improvements in the quality of care and reductions in health care spending, including reduced costs of health IT/EHR solutions. Some of these benefits accrue to the recipient of the intervention, and some may ultimately be realized by the government as the payer and to the patient. The following highlights the importance of considering the perspective when describing costs and benefits:

As previously described, CEHRT includes both fully certified and modularly certified EHR solutions. Incentives could support the acquisition costs of a comprehensive (fully) certified EHR or costs of certified EHR modules (e.g., a module that supports the exchange of information to support transitions in care). The costs to the government of supporting the acquisition costs of certified EHR modules would be less than the costs supporting acquisition of a fully certified EHR. At the same time, the provider, patient, and payer would be expected to realize benefits of reduced costs and improved quality through the effective use of a certified EHR module that supports the exchange of information to support transitions in care.

B. Assessing Existing Evidence on Effectiveness of EHR and Interoperability

While there have been numerous studies of the benefits and costs of EHR adoption by hospitals and physicians, there have been very few studies targeting ineligible providers. For the purpose of this report, we assume that there are parallels. Research data shows that EHR technology is expensive. Based on cost estimates reviewed by the Congressional Budget Office for physician and hospital EHR systems,51 Dranove concluded that EHR costs could account for about one percent of total provider costs if adoption costs are amortized over 10 years. (See Appendix S.I.C for a discussion on the Evidence of the Benefits and Costs of EHR Adoption.) Some research has suggested that EHR technology may not pay for itself, let alone generate significant savings. Other research, focusing on systems that target the kind of functionality included in the EHR Incentive Programs, has been more positive.52, 53 Overall, the picture of early EHR effectiveness has been ambiguous. Figure 15 highlights the findings from a recent study54 that takes a more nuanced view of EHR adoption and helps explain the inconsistent findings.

FIGURE 15. 2012 Study on Importance of Skilled Information Technology Workforce on EHR Costs and Benefitsa
A 2012 study viewed the EHR as a business process innovation whose success requires human capital skilled at working with information technology. It noted that hospitals located in more information technology-intensive communities enjoy larger cost savings after adoption of an EHR. In addition, hospitals with more experience with earlier forms of EHRs from the 1990s enjoyed large cost savings after adoption of an advanced EHR.

This is potentially important for ineligible providers, who often do not have information technology-proficient staff or information technology support. Return on investment for EHR technology and reduction in costs may be more difficult to achieve in those circumstances. Workforce initiatives and the availability of technical assistance programs for EHRs may be critically important in enabling those providers to achieve cost and quality goals.
  1. Dranove, D., Forman, C., Goldfarb, A., and Greenstein, S. 2012. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology." NBER Working Paper.

The full potential of health IT may not be unleashed until providers routinely use the technology to share clinical information. At present, however, the EHR market is fragmented and exchanging information across different vendor platforms can be difficult. The positive news is that eligible professionals and eligible hospitals will be incrementally adopting more interoperable technology as the latest rules for the Medicare and Medicaid EHR Incentive Programs go into effect.

Still, given the early stages of implementing interoperable technologies, it is difficult to predict the magnitude of the benefits of information exchange or how those benefits may vary across provider types. For that reason, this analysis does not attempt to model or quantify any benefits from information exchange. This is an important limitation of this analysis given the widespread belief, but limited empirical base, that the largest benefits of the use of EHRs will accrue as a result of HIE.55

Evaluating Evidence on Effects of Incentives on Adoption

In Appendix S, we present results of original research by Dranove on the effect of the HITECH Act incentives on hospital adoption of EHRs using data reported to the Healthcare Information and Management Systems Society (HIMSS) Analytics database. The results from the analysis of this database, which provides comparable current and historical data on acute care hospital EHR adoption,56 highlights the powerful potential for incentives to promote EHR adoption.

Our analysis shows that hospitals and affiliated ineligible providers increased adoption of EHRs after the passage of the HITECH Act. If the adoption curve continues, we predict that by 2016 70%-85% of hospitals will have adopted EHR technology.

In the Final Rule for Stage 2 of the Medicare and Medicaid EHR Incentive Programs, CMS estimates that approximately 91 percent of acute care hospitals (and 52 percent of eligible professionals) will qualify as meaningful users of CEHRT by 2018.57 Dranove's analysis shows that hospitals and affiliated ineligible providers increased adoption of EHRs after the passage of the HITECH Act. If the adoption curve continues, Dranovepredicts that by 2016 70-85 percent of hospitals will have adopted EHR technology.58

The increase in the adoption rate that occurred at the time that HITECH was enacted is predicted to lead to a 13.4 percentage point increase in the number of hospitals that adopt an EHR by 2016.59 Similarly, physician adoption rates have also been reported to increase since the introduction of the EHR Incentive Programs.60 As discussed in Section III.A of this report, a 2013 analysis of two data sources evaluated EHR adoption by physicians and found that rates doubled from 2005 to 2011 reaching 67.8 percent for family physicians in 2011 (and that family physicians had the highest rate among office-based physicians). Researchers estimated that by the end of 2013, the EHR adoption rate among family physicians will exceed 80 percent.61 The authors of this study attribute increases in EHR adoption rates, in part, due to the availability of incentive payments.

C. Factors for Evaluating the Costs and Benefits of a Program

The goal of government incentive programs is to reduce the costs and/or increase the benefits of EHR adoption. In this section we describe these program costs and benefits in more detail. An effective program needs to change the behavior of the ineligible provider. Appendix S provides a simple example to illustrate the many factors involved in predicting the extent to which providers will adopt EHR technology regardless of incentives, and, more importantly, how incentives may accelerate adoption.

Dranove suggests that the following factors should be considered in estimating EHR adoption rates, benefits, and estimating the incremental impact of incentives:

Most of these factors are supported by an empirical analysis of HITECH (Appendix S). Dranove's analysis of adoption data based on the HIMSS Analytics database shows that smaller hospitals responded more strongly to HITECH incentives, which could indicate that smaller hospitals were more likely to be fence-sitters. For-profits also responded more strongly to incentives, likely because they placed more weight on financial considerations.

The biggest unknown when forecasting incremental adoption is identifying the fence-sitters. Without reliable empirical data, a simple statistical theory about incremental adoption rates could be used to predict an adoption curve. A situation where very few providers have adopted health IT suggests that most are far away from choosing to adopt, and an incentive program may not change many minds. When most have adopted, there are few providers left who need to be influenced. The biggest impact of any incentive program will come when some, but not all, providers have adopted.62

Appendix J lists adoption rates of EHR technology by ineligible providers. There are a few classes of ineligible providers (e.g., rehabilitation hospitals, LTCHs, and psychiatric hospitals), where less than 10 percent have adopted an EHR. On the other hand, about half of providers in other categories (e.g., nursing homes and home health care) have adopted some components of an EHR. The analysis compared by Dranove suggests that in considering the need for and size of incentives to advance EHR adoption it is important to take into account the percentage of providers who have (and have not) adopted this technology.

Comparing Different Approaches to Encouraging Incremental Adoption

When evaluating a specific program to encourage EHR adoption, there are many considerations for the government including:

Program Approach Examples

D. EHR Cost-Benefit Considerations for Ineligible Providers -- An Example

The following is an example of the application of the EHR cost and benefits considerations (as described by Dranove) to a for-profit nursing home chain provider. Dranoveindicates that a health care provider would consider financial factors, such as the cost of acquiring, installing, and maintaining the EHR as well as any potential impact on efficiency. The provider may also consider the impact on quality, both because higher-quality could translate into more demand and higher revenues, and because it might directly care about quality independent of financial considerations.

Nursing Home Case Study

To construct the example, this study leverages and extends data from a cost study completed by the CIO Consortium (CIOC) entitled, "Electronic Medical Records (EMR) Cost Study -- Final Report: Implementing and Operating Electronic Medical Records in Long-Term & Post Acute Care Environment." The CIOC constructed a hypothetical LTPAC chain provider named "EMR*Care." EMR*Care was described as a for-profit, 25 facility chain provider operating in two states. Table 8 describes facts and statistics for EMR*Care.63

TABLE 8. EMR*Care Facts and Statistics
Type of Organization For-Profit
States of Operation North Carolina, Florida
Types of Facilities Skilled Care
Number of Facilities Total 25 (10 in North Carolina and 15 in Florida)  
Range in Bed Size 80-240
  North Carolina Florida Totals
Average Licensed Bed 120 120 120
Average Total Licensed Beds 1200 1800 3000
Average Total Patient Days 1044 1566 2610
Average Total Occupancy 87% 87% 87%
Average Medicare Occupancy 16% 20% 18.40%
Average Medicaid Occupancy 67% 58% 61.60%
Average Occupancy--All Other 17% 22% 20%
Number of Employees (assume 60 overhead)   1127 2270 3457
Average Medicare Rate 463.5 420 441.75
Average Medicaid Rate 203.5 166.5 185
Average Rate--All Other 197 141 169
Annual Revenue     $213,919,463

In addition, the CIOC study estimated reasonable five-year costs for the organization, EMR*Care, to acquire and implement any one of three available technology options (Table 9) using input from "leading EMR solution vendors…in October 2010."64

TABLE 9. Five-Year Costs
EMR Costsa,b 5 Year Total EMR
Costs Per Facility
5 Year EMR
Costs Per Bed
SaaS Option: EMR*Care contracts with an EMR vendor for a hosted EMR solution. EMR*Care provides its own help desk support.    
Total Costs: $259,394 $2,162
Hosted Option: EMR*Care purchases EMR software and contracts with a 3rd party for helpdesk support.    
Total Costs: $254,279 $2,119
In House Option: EMR*Care purchases EMR software with maintenance from the vendor, then provides their help desk support and hosts their data center using their own equipment.    
Total Costs: $355,616 $2,963
  1. Depending on model costs include: (I) Central Costs (Labor, Consulting, Data Center, Data Warehouse, Hosting Fees, Integration); and (II) Facility Costs (Network Expenses, Application Expenses, and Hardware Expenses).
  2. See Tables 3-6 of the CIOC report for a complete description of the estimated costs included for each of the three technology options.

The CIOC EMR cost study made some assumptions regarding the nursing facilities included in this hypothetical, for-profit, two-state chain organization that provides services in 25 nursing facilities.65 Some of these assumptions included:

The CIOC study estimated that annual costs for each EMR option not only varied by offering, but also over time, with higher costs incurred in the first year.

Example Refined

Using the CIOC data, we calculated average Medicare, Medicaid, and other payments per nursing facility per year; and average total nursing facility revenue per facility per year. Table 10 reflects these calculations.

TABLE 10. Average Medicare, Medicaid and Other Payments
EMR*Care--Facts and Statistics   Annual Revenue Per Facility   Average Annual
  Revenue Per Facility  
    North Carolina     Florida   North Carolina Florida
Average Medicare Rate 463.5 420 $2,825,941 $3,200,904  
Average Medicaid Rate 203.5 166.5 $5,195,563 $3,679,896  
Average Rate--All Other   197 141 $1,276,170 $1,182,048  
Annual Revenue     $9,297,673 $8,062,849 $8,680,261

For purposes of this example, we assumed that EMR costs were divided equally across each of the five years (in contrast to the CIOC study) and estimated average annual costs for each of the three EMR technology options (see Table 11). Annual EMR costs for each nursing facility for the three technology options range from $50,856 (for the hosted EMR option) to a high of $71,123 (for the in-house EMR option).

TABLE 11. Annual EMR Costs
EMR Costs Annual EMR
  Costs per Facility  
EMR Costs as Percent of
  Average Annual Facility Revenue  
($8,680,261)
SaaS Option    
Total Costs $51,879 0.6%
Hosted Option    
Total Costs $50,856 0.6%
In House Option      
Total Costs $71,123 0.8%
Average $57,953 0.7%

We then calculated EMR costs for each of the three technology options as a percent of average annual nursing facility revenues using the revenue data included for the CIOC hypothetical chain organization. As can be seen in Table 11, the cost of three technology options is less than one percent of average annual facility revenues.

Analysis of Economic Factors Applied to Nursing Home Case Study

Discussion -- Provider Revenues

The example presented above does not include revenues from other lines of business. For example, a review of a few annual reports submitted by organizations that deliver LTPAC services (including nursing facility services) to the Securities Exchange Commission (SEC) for the fiscal year ending in 2011 describes that some of these organizations derive revenues from other sources (i.e., sources of revenue in addition to Medicare Part A SNF payment, Medicaid nursing facility payment, and other sources of payment for nursing home services). For example, the SEC filings indicate that some chain nursing home organizations also receive Medicare Part B payments for: (i) therapy services delivered to their non-Part A covered nursing facility residents and in some cases delivered to non-institutionalized persons; and/or (ii) physician services delivered to Medicare and Medicaid-paid nursing home residents.

In considering the need for financial incentives to support the acquisition and use of health IT, including EHRs, it is important to consider all revenue sources available to the ineligible provider type(s).

Discussion -- EMR Costs

The CIOC study is based on technology solutions and costs for these solutions in 2010. Technology costs are reportedly decreasing. In addition, the range of technology options is also changing, including the introduction of lower cost solutions. For example:

Discussion -- EHR Costs Relative to Profit Margins

Assuming that Medicare margins for SNFs are 18.5 percent (as estimated by MedPAC) and that margins for Medicaid and other revenue sources are zero, annual EMR costs of less than 1 percent for any one of the three technology solutions described in the example above would seem to be affordable to providers that have a similar patient and payer mix. Further, assuming these EMR costs and provider profit margins:

Understanding the provider's profit margins (across all revenue sources) relative to the costs of needed technology solutions is one important factor when considering the need for incentive payments.

Discussion -- Cost Savings of Using an EHR

To estimate the cost savings that these hypothetical nursing homes might realize as a result of using an EHR, we used Dranove'sestimate of 3 percent cost savings (which includes costs savings of 2 percent of total revenues and 1 percent of monetized quality of care improvements).72 Thus, in our example, the annual cost savings (relative to aggregate annual revenues) for each of the hypothetical nursing homes are, on average, approximately $260,000 per year per facility.

In this example, because estimated annual savings ($260,000) exceed the estimated annual EMR costs (average annual costs -- $57,953), we would expect the nursing home to adopt an EMR. However, as Dranovenotes, "a rational decision maker might not follow this simple go/no-go adoption decision if the benefits appear to outweigh the costs but there is uncertainty about benefits or costs that will be resolved over time. The decision maker may prefer to wait for the uncertainty to be resolved before adopting."73

In circumstances where technology costs are relatively modest and/or cost savings are expected to exceed the technology costs, and health IT adoption by the ineligible providers is believed to be too low or slow, implementation of any one or more incentive/funding options (e.g., financial incentives, technical assistance, etc.) could remove/reduce uncertainty about the benefits of acquiring and using certain technology solutions.

Discussion -- Other Considerations

The above example embeds many assumptions that may not be applicable to the wide array of ineligible provider types and/or to the various types of health IT/EHR technology solutions that may be needed to improve quality and continuity of care. In addition, the example is silent with respect to certain factors that may influence decisions to invest in technology. The following discusses some of these assumptions and factors, their implications, and the applicability to other types of ineligible providers.

E. Summary of Cost/Benefit Considerations for Making Incentives and/or Other Funding Available to Ineligible Providers

There is considerable uncertainty regarding future trends of EHR adoption by ineligible providers. This uncertainty is due in part to changes in the health delivery system that are driving increasing collaborations and partnerships across the health care continuum, increasing emphasis on improving quality of care while reducing health care costs, and declining technology costs. These factors may result in ineligible providers choosing to adopt technology solutions at higher frequencies even without the use of financial incentives.

Considering the need for financial incentives and/or other funding to support the costs of acquisition and/or use of technology solutions (to support and/or accelerate adoption) is complex and should take into account the:

Technology solutions that support HIE are the types of technology that will most likely focus on the goals of health system transformation to improve the quality and continuity of care.

In addition to considering the ineligible provider's ability to afford technology solutions, the provider's access to and need for specific technology support (e.g., technical assistance) for the initial acquisition and on-going implementation will also require consideration. Making available such assistance could signal support for the use of the technology solution, reduce uncertainty about the benefits of the solution, and thus, accelerate the acquisition and use of the technology.

F. Cost/Benefit Considerations for Making Incentives and/or Other Funding Available to Ineligible Providers

If the assumptions described in the example above are accurate, the hypothetical may suggest that payment incentives are not warranted for this specific class of ineligible provider. If the policy goal is widespread adoption of EHRs, consideration could be given to designing an incentive structure that would target those ineligible providers that lack the financial capacity and/or system relationships that would support the acquisition and use of such technology.

As implied in the examples above and the discussion of additional factors, the benefits and costs of any incentive or funding option will be a function of the targeted health IT/EHR intervention, and the type, amount, duration, and scope of any incentive/funding option.

G. Considerations to Promote Interoperability

In 2005, two key studies were published providing an analysis of the potential impact and business case for advancing interoperable EHRs in health care. These studies identified the value of interoperable EHRs and predicted cost savings with widespread adoption.

These studies highlighted two reasons for policymakers to consider widespread adoption of interoperable health IT through the use of incentives and other funding: (1) providers must absorb the costs of EMR systems, but consumers and payers are the most likely to reap the savings;76 and (2) even if EMR systems were widely adopted, the market might fail to develop interoperability and robust information exchange networks.77 The RAND study estimated potential efficiency and safety savings of more than $81 billion per year with widespread adoption (90 percent) of interoperable EHR systems.78

In 2013, RAND published an update to their study noting that the projected savings and adoption rates are significantly less than what had been projected in 2005 for the following reasons:79

The "staged design" of the Medicare and Medicaid EHR Incentive Programs for eligible providers merits attention in terms of the current state of interoperable HIE. The stages of the EHR Incentive Programs envisioned a "building block" approach for implementation -- first acquiring health data, then using standards to exchange data to support care coordination, and reusing data to support health system transformation:

As described earlier in the report, many of the ineligible provider types could benefit from, but are not adopting, interoperable EHR technology solutions that support HIE on behalf of their patients, many of whom experience frequent transitions between care settings and instances where care is shared across unaffiliated care providers. The lack of standards that support interoperable exchange of health information to support the care needs of populations served by providers not eligible for incentive payments has been identified as one barrier to the adoption and use of EHR technology that supports this functionality. Work is underway to partially address this gap through the ONC-sponsored Standards and Interoperability Framework-Longitudinal Coordination of Care Workgroup. This community-led Workgroup is developing standards for the interoperable exchange of more robust of Summary Documents and Care Plans at times of transitions in care and to support instances of shared care.81 It remains to be seen whether these standards, once finalized, will be integrated into technology solutions used by eligible and ineligible providers.

While there are a number of initiatives targeting ineligible providers to advance their use of health IT, only a few programs provide direct support to ineligible providers to acquire EHRs and those programs are focused on narrow group of providers. Further, there are only a few initiatives that are advancing interoperable HIE with and by ineligible providers. As discussed by the TAG, none of the programs for ineligible providers are sufficient to promote widespread adoption of CEHRT, including technology that supports interoperability in the same manner as the EHR incentive program for eligible hospitals and professionals. This should not come as a surprise given the difference in funding for direct support -- the HITECH EHR Incentive Programs is estimated to make available over $15 billion82 in incentive payments available to help eligible hospitals and eligible professionals improve the quality, safety, and coordination of care while also achieving efficiency gains to help control costs.

Given the on-going rise in EHR adoption, policymakers may find it cost effective to focus on promoting adoption and use on interoperable technologies by ineligible providers, which would support the goals of the Affordable Care Act, the National Quality Strategy, and HITECH.

Further, the on-going changes in the provider landscape, specifically the growth of formally integrated provider systems as well as the growth of delivery models such as ACOs, create opportunities to accelerate HIE with ineligible provider types, including interoperable HIE. These new delivery systems may be able to internalize the benefits of HIE in ways that could not be accomplished by individual providers. On-going system growth is likely to further promote EHR adoption and the possibility of interoperability among eligible and ineligible providers; however, it is impossible to predict the impact of market forces.


VII. CONCLUSION

This study provided a rationale for identifying provider types not eligible for EHR incentive payments. The study identified the provider types who may participate in Medicare and Medicaid but are not eligible for the EHR Incentive Programs implemented under HITECH, and identified other funding sources directed to some of these ineligible provider types to support their implementation and use of health IT/EHRs. Providers ineligible for the Medicare and Medicaid EHR Incentive Programs were clustered into four categories: long-term/post-acute care, behavioral health, safety net, and other provider types.

The ineligible provider types described in this report have a frequent need to exchange health information on behalf of their patient populations, many of whom represent the most vulnerable and costly in our society. One of the key benefits of the use of health IT for ineligible providers is the ability to exchange information to communicate and coordinate services with a patient, their physician, and the entire care team who are often located in different geographic areas and practice settings.83 However, such HIE remains uncommon. Closing this technological gap by ineligible providers could support the realization of the goals associated with implementing a nationwide health IT infrastructure, new models of care delivery and coordination, and promote the HIE goals of the EHR Incentive Programs. Policies to address this challenge are hindered by data on ineligible providers' health IT use that are unreliable or unavailable, not comparable among ineligible provider types or between any or all of those provider types and the eligible providers involved in the EHR Incentive Programs. A critical part of enabling the secure flow of information across the system is advancing the adoption of health IT standards through voluntary certification of health IT and HIE products and services. In addition, empirical data demonstrating the business case for investing in interoperable EHRs to improve quality of care and reduce costs is lagging for ineligible providers.

This study described key characteristics of provider types identified as not eligible for EHR incentive payments, and their affiliation with eligible providers and clinical use of health IT to the extent possible.

The study identified (but did not endorse) several actions, programs and initiatives that have been leveraged or proposed to provide "direct support" or "indirect support" to ineligible providers for their acquisition and/or use of health IT/EHRs, including: extending the EHR Incentive Programs, grant and loan programs, technical assistance, developing and implementing a health IT infrastructure to support interoperable HIE with and by ineligible providers, and using other administrative tools (e.g., rulemaking) to support or require the use of health IT by ineligible provider types.

The study also identified several:

The study noted that there is a lack of strategic planning or coordination with respect to programs and activities that include a focus on the use of health IT/EHRs by some of the ineligible provider types. Such strategic planning could assist in identifying gaps in current activities to advance the use of EHR technology by ineligible providers and support investments that maximally leverage and are aligned with current policy priorities, and are efficiently targeted. This study described the importance of having good, reliable and nationally representative data regarding health IT/EHR adoption rates by ineligible providers in order to assesses the need for and effectiveness of investments that seek to advance the acquisition and/or use of health IT/EHRs by ineligible providers. This study also identified several factors that could be considered in estimating EHR adoption rates.

With the exception of the $1.5 billion in other funding directed to the use of health IT by certain safety net providers, the other funding that has been directed to some of the other ineligible provider types for purposes of implementing and using EHR technology was not considered to be sufficient in amount, duration, and scope to support widespread adoption and use of this technology by these ineligible provider types. However, this observation begs the question as to whether incentives or other funding is needed to support or accelerate the implementation and use of EHRs by the ineligible provider types. There are keyconsiderations that will help inform discussion on the need for incentives and/or other funding to support the use of EHR technology by ineligible providers. These considerations include the extent to which market forces that have emerged in response to the EHR Incentive Programs and new delivery models such as those encouraged by the Affordable Care Act will drive adoption of interoperable EHR technologies across the health care continuum, including use of such technology by ineligible providers.

Should policymakers determine the need for interventions to accelerate or advance the use of CEHRT solutions for certain ineligible provider groups, the following additional factors could be considered.

In considering the need for incentives and other funding to support EHR use by ineligible providers, policymakers may wish to consider the feasibility of designing programs targeting ineligible providers that lack the financial capacity or system relationships to support the acquisition of CEHRT. Policymakers may also wish to consider technical assistance interventions targeting those ineligible providers who do not have a health IT-proficient workforce or access to health IT support to advance the acquisition and use of EHR technology, and extend to these providers key lessons learned based on an evaluation of the adoption and use experiences of providers who were eligible for incentives.


NOTES

  1. HITECH authorized the Medicare and Medicaid EHR Incentive Programs. The Centers for Medicare and Medicaid Services (CMS) estimate that between 2014 and 2019 $15.4 billion will be made available in incentive payments. This estimate: (i) includes net payment adjustments in the amount of $2.1 billion for Medicare providers who do not achieve meaningful use in 2015 and subsequent years; and (ii) does not include estimates of the benefits of participating the Medicare and Medicaid EHR Incentive Programs. (http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-21050.pdf, p.53971, September 4, 2012.)

  2. Section §4104(a): "The Secretary of Health and Human Services shall conduct a study to determine the extent to which and manner in which payment incentives (such as under Title XVIII or XIX of the Social Security Act) and other funding for purposes of implementing and using certified EHR technology (as defined in Section 1848(o)(4) of the Social Security Act, as added by Section 4101(a)) should be made available to health care providers who are receiving minimal or no payment incentives or other funding under this Act, under Title XIII of Division A, under Title XVIII or XIX or such Act, or otherwise, for such purposes."

  3. Appendix I identifies some of the ACA provisions that: (i) pertain to some of the providers ineligible for the EHR Incentive programs; and (ii) require or support the use of health IT and/or health information exchange.

  4. Report to Congress: National Strategy for Quality Improvement in Health Care, March 2011. http://www.healthcare.gov/news/reports/quality03212011a.htm.

  5. National Health Care Expenditure Data for 2009. Centers for Medicare and Medicaid Services. http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet.html.

  6. Gage, B. et al. "Post-Acute Care Episodes Expanded Analytic File. Final Report. April 2011." Prepared for the Office of the Assistant Secretary for Planning and Evaluation. http://aspe.hhs.gov/health/reports/2011/pacexpanded/index.shtml#ch1.

  7. "HIT Adoption and Readiness for Meaningful Use in Community Behavioral Health." National Council for Community Behavioral Healthcare. http://www.thenationalcouncil.org/galleries/business-practice%20files/HIT%20Survey%20Full%20Report.pdf.

  8. The initiatives are described in Appendix A and Appendices K-N. In the course of identifying current federal and state initiatives, we identified some private sector programs and highlighted those in Appendix P.

  9. FQHC serve 19.4 million patients. (The Henry J. Kaiser Family Foundation. "Patients Served by Federally-Funded Federally Qualified Health Centers, 2010." http://www.statehealthfacts.org/comparebar.jsp?ind=426&yr=138&typ=1&sort=a&rgnhl=15.)

    Using data from 2008, the total number of patients seen in RHCs is estimated to be between 5 and 8 million. For purpose of this report we use the average of this range (i.e., 6.5 million patients per year). (The George Washington University, 2012, p.51, http://www.healthit.gov/sites/default/files/pdf/quality-incentives-final-report-1-23-12.pdf.)

  10. Total grant and contract funding for 2012 provided by SAMHSA staff. (September 12, 2012.)

  11. Section 3001 of the Public Health Service Act (PHSA), as added by Section 13101 of HITECH.

  12. Stark, P. (2010). Congressional Intent for the HITECH Act. American Journal of Managed Care, 16: SP24SP28.

  13. Ibid Stark.

  14. Section §4104(a): "The Secretary of Health and Human Services shall conduct a study to determine the extent to which and manner in which payment incentives (such as under title XVIII or XIX of the Social Security Act) and other funding for purposes of implementing and using certified EHR technology (as defined in Section 1848(o)(4) of the Social Security Act, as added by Section 4101(a)) should be made available to health care providers who are receiving minimal or no payment incentives or other funding under this Act, under title XIII of division A, under title XVIII or XIX or such Act, or otherwise, for such purposes."

  15. Patient Protection and Affordable Care Act. The law is available on the HealthCare.gov website. http://www.healthcare.gov/law/full/index.html.

  16. Medicaid's New Health Home Option. The Henry J. Kaiser Family Foundation. Publication #8136. Available at: http://www.kff.org/medicaid/upload/8136.pdf.

  17. Ibid Kaiser Family Foundation.

  18. Findings from an analysis by David Dranove of adoption and use of EHRs by ineligible providers indicate that interoperable technologies are generally not used (Appendix R).

  19. Report to Congress: A National Strategy for Quality Improvement in Health care. Report available at: http://www.healthcare.gov/law/resources/reports/quality03212011a.html#na.

  20. Ibid Section 3, "Policies and Infrastructure Needed to Support Priorities."

  21. Ibid Section 3, Principle 7, "Health Information Technology."

  22. In this report, and consistent with section 3000(3) of the PHSA, the term "provider" is intended to refer to various types or categories of health care providers, which is broader than the term "provider" for purposes of Medicare and Medicaid.

  23. In general, Section §4104(a) of HITECH requires that this study determine the extent to which and manner in which payment incentives and other funding for implementing and using certified EHR technology should be made available to health care providers who receive: minimal or no payment incentives under HITECH, Medicare, Medicaid, or otherwise for such purposes.

  24. ONC Final Rule. Health Information Technology: Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology, 2014 Edition; Revisions to the Permanent Certification Program for Health Information Technology. http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-20982.pdf.

  25. We recognize that private sector entities may establish their own EHR certification program separate from ONC. At the time of this report we are aware of one organization (Certification Commission for Health Information Technology (CCHIT)) that has established criteria applicable to LTPAC and behavioral health providers. For purposes of this study, we did not take into account certification via private sector programs because of their limited scope (range of ineligible providers) and limited uptake/use by those ineligible providers to whom the programs apply.

  26. PHSA Section 3000. http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/hitechact.pdf.

  27. PHSA Section 3000(13). http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS-111hr1enr.pdf.

  28. Smart, Andrew. A Multi-dimensional Model of Clinical Utility. International Journal for Quality in Health Care, 2006. http://intqhc.oxfordjournals.org/content/early/2006/09/02/intqhc.mzl034.full.pdf.

  29. ONC Final Rule. Health Information Technology: Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology, 2014 Edition; Revisions to the Permanent Certification Program for Health Information Technology. http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-20982.pdf.

  30. Smith, Mark et al. Best Care at Lower Cost: The Path to Continuously Learning Health Care in America. Institute of Medicine, Committee on the Learning Health System in America. Washington, DC: The National Academies Press, 2012. http://www.iom.edu/Reports/2012/Best-Care-at-Lower-Cost-The-Path-to-Continuously-Learning-Health-Care-in-America.aspx.

  31. HITECH Section 13101 amends the PHSA by adding Section 3000(3) which provides a definition of health care provider. http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS-111hr1enr.pdf.

  32. AHA data on hospital-based specialty units is from American Hospital Association, AHA Hospital Statistics, 2012 Edition.

  33. Ibid AHA.

  34. Ibid AHA.

  35. As described more completely in Appendix D, Medicare expenditure data for each ineligible provider type was identified. This data was aggregated across all ineligible provider types. Available data sources reported annual Medicare expenditures for different years spanning 2009-2011. Using this data, annual Medicare expenditures were identified for each ineligible provider type and then summed to estimate aggregate annual expenditures for all ineligible provider types (i.e., totaling approximately $83.1 billion). Total Medicare expenditure data was obtained from the 2011 CMS National Health Care Expenditure data at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf.

  36. As described more completely in Appendix D, Medicaid expenditure data for each ineligible provider type was identified. This data was aggregated across all ineligible provider types. Available data sources reported annual Medicaid expenditures for different years spanning 2008-2011. Using this data, annual Medicaid expenditures were identified for each ineligible provider type and then summed to estimate aggregate annual expenditures for all ineligible provider types (i.e., totaling approximately $98 billion). Total Medicaid expenditure data was obtained from the 2011 CMS National Health Care Expenditure data at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf.

  37. Substance Abuse and Mental Health Services Administration. National Expenditures for Mental Health Services and Substance Abuse Treatment, 1986-2009. HHS Publication No. SMA-13-4740. Rockville, MD: Substance Abuse and Mental Health Services Administration, 2013. Table A.2, p.58.

  38. ONC Federal Health Information Technology Strategic Plan (2011-2015). http://healthit.hhs.gov/portal/server.pt/gateway/PTARGS_0_0_4318_1211_15583_43/http%3B/wci-pubcontent/publish/onc/public_communities/f_j/onc_website___home/fed_health_strategic_plan/fed_health_it_strategic_plan_home_portlet/files/final_federal_health_it_strategic_plan_0911.pdf.

  39. A base EHR is defined by ONC as including: patient demographics, patient problem lists, patient medication histories (EH)/medications taken by the patient (EP), clinical notes, electronicorders for prescriptions, laboratory results viewing, and imaging results viewing. http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-20982.pdf.

  40. Family physicians had the highest rate among office-based physicians.

  41. Xierali, I. et al. "The Rise of Electronic Health Record Adoption Among Family Physicians." Annals of Family Medicine. Vol. 11, No. 1, January/February 2013.

  42. Ibid Xierali.

  43. ONC Federal Health Information Technology Strategic Plan (2011-2015), pp. 12-13. http://www.healthit.gov/sites/default/files/utility/final-federal-health-it-strategic-plan-0911.pdf.

  44. Richard, A., Kaehny, M., Kramer, A. Literature Review and Synthesis: Existing Surveys on Health Information Technology, Including Surveys on Health Information Technology in Nursing Homes and Home Health. University of Colorado, Denver. Division of Health Care Policy and Research.February 2009. http://aspe.hhs.gov/daltcp/reports/2009/hitlitrev.htm#execsum.

  45. "HIT Adoption and Readiness for Meaningful Use in Community Behavioral Health." National Council for Community Behavioral Healthcare. http://www.thenationalcouncil.org/galleries/business-practice%20files/HIT%20Survey%20Full%20Report.pdf.

  46. Uniform Data Systems Manual. Bureau of Primary Health Care, HRSA. Appendix D, Page 135. http://bphc.hrsa.gov/healthcenterdatastatistics/reporting/2011manual.pdf.

  47. The initiatives are described in Appendix A and Appendices K-P. In the course of identifying current federal and state initiatives we identified some private sector programs and highlighted those in Appendix P.

  48. ONC Health Care Anti-Fraud Project Task Order HHSP23320054100EC. September 2005.

  49. George Washington University. "Quality Incentives for Federally Qualified Health Centers, Rural Health Clinics and Free Clinics: A Report to Congress." January 23, 2012; p.9. http://www.healthit.gov/sites/default/files/pdf/quality-incentives-final-report-1-23-12.pdf. In 2010, FQHCs served 19.4 million in 2010 (http://bphc.hrsa.gov/uds). Estimates of the number of patients seen in RHCs per year are between 5 million and 8 million patients. (George Washington University report, p.8)

  50. The material below was prepared for this study by David Dranove, PhD, an economist and the Walter McNerney Professor at the Kellogg School of Management, Northwestern University. See Appendix S for the full report.

  51. Congressional Budget Office, 2008, "Evidence on the Costs and Benefits of Health Information Technology" (pp.17-18).http://www.cbo.gov/ftpdocs/91xx/doc9168/05-20-healthit.pdf.

  52. Chaudhry, B., Wang, J., Wu, S., Maglione, M., Mojica, W., Roth, E., Morton, S., Shekelle, P.. 2006. Systematic Review: Impact of Health Information Technology on Quality, Efficiency, and Costs of Medical Care. Annals of Internal Medicine 144(10): 742-752.

  53. Buntin, M., Burke, M., Hoagline, M., Blumenthal, D. 2011. The Benefits of Health Information Technology: A Review of the Recent Literature Shows Predominately Positive Results. Health Affairs 30(3): 464-471.

  54. Dranove, D., Forman, C., Goldfarb, A., Greenstein, S. 2012. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology." NBER Working Paper No. 18281.

  55. Walker, J., Pan, E., Johnston, D., Adler-Milstein, J., Bates, D.W., Middleton, B. "The Value of Health Care Information Exchange and Interoperability." Health Affairs (Project Hope) Suppl Web Exclusives (June 2005): W5-10-W5-18. http://content.healthaffairs.org/content/early/2005/01/19/hlthaff.w5.10.long.

  56. The HIMSS Analytics Database includes historic EHR information. HIMSS Analytics Database was originally derived from the Dorenfest IHDS+ Database™ in July 2004. The database is now known as the HIMSS Analytics® Database.

  57. Stage 2 Medicare and Medicaid EHR Incentive Programs Final Rule (pp. 54140 and 54142). http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-21050.pdf.

  58. The definition used in our study of what constitutes an "Electronic Medical Record (EMR)" is based on attributes collected in the HIMSS Analytics database and is not comparable to the definition of an EHR in the Incentive Programs.

  59. Over time, this gap will decrease as more hospitals would adopt EHR with or without the incentives in HITECH.

  60. U.S. Department of Health and Human Services, Office of the National Coordinator for Health IT. Office of Economic Analysis, Evaluation, and Modeling. http://dashboard.healthit.gov/HITAdoption/.

  61. Xierali, I., et al. "The Rise of Electronic Health Record Adoption Among Family Physicians." Annals of Family Medicine. Vol. 11, No. 1, January/February 2013.

  62. Based on information developed by David Dranove, PhD, an economist and the Walter McNerney Professor at Northwestern University's Kellogg School of Management. Incremental effects where any program designed to increase adoption will produce benefits only if it accelerates adoption above and beyond the projected natural growth path. The benefits of a policy intervention accrue from incremental adoption above the forecast trend.

  63. Table 8 facts and statistics are based on Table 1 (p.10) of the CIOC study "Electronic Medical Records (EMR) Cost Study -- Final Report: Implementing and Operating Electronic Medical Records in Long-Term and Post Acute Care Environment." Table 8 modifies the CIOC data to correct an error in the total "Average Total Patient Days" presented for the facilities operating in Florida and corrects the subsequent revenue calculation that is the annualized product of average per diem payment rates and occupancy rates across payers for this hypothetical chain organization. The original CIOC Table 1 is found in Appendix T. Randy Kirk, EVP & CTO Direct Supply, Inc. and Deborah Green (formerly with LaVie Care and now EVP and COO at AHIMA) assisted in modifying the table presented in this report. Both were contributing authors to the CIOC report.

  64. CIO Consortium "Electronic Medical Records (EMR) Cost Study -- Final Report: Implementing and Operating Electronic Medical Records in Long-Term and Post Acute Care Environment," p.13.

  65. CIO Consortium "Electronic Medical Records (EMR) Cost Study -- Final Report: Implementing and Operating Electronic Medical Records in Long-Term and Post Acute Care Environment," pp.12-17.

  66. Health Information Technology: Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology, 2014 Edition; Revisions to the Permanent Certification Program for Health Information Technology. http://www.gpo.gov/fdsys/pkg/FR-2012-03-07/pdf/2012-4430.pdf.

  67. The Direct Project.The Direct Project supports cases of pushed communication between providers, hospitals, laboratories, public health, and other health settings of care and permits standards-based exchange of a variety of documents such as: summary care records, referrals, discharge summaries and other clinical documents in support of continuity of care and medication reconciliation, and communication of laboratory results to providers. http://wiki.directproject.org/.

  68. Keystone Beacon Community Gobbler Transform Tool. http://transform.keyhie.org/.

  69. "LAND" is a computer that connects the Health Information Exchange Organization in the state and the LTPAC provider's EHRs or electronic documents (such as the MDSv3 and OASIS-C assessments). LAND allows electronic clinical information from the LTPAC provider to be transformed into a standard LTPAC summary or other standard electronic summary document and then send it through the HIE Organization to the next provider of care, such as an emergency department or HHA.

  70. "SEE" is software for a website that HIE Organizations can host so that LTPAC organizations that lack EHRs can still send and receive electronic health information. Similar to a Gmail or Hotmail website, clinicians in LTPAC organizations can use their computer's web browser to access their SEE mailbox, view an electronic summary document that has been sent to them, update that document with new information such as changes in medications or wound status, and then send the updated summary document electronically through the HIE to the next provider of care for the patient.

  71. Personal Communication  with: Larry Garber, M.D. Medical Director for Informatics, Reliant Medical Group Principal Investigator, IMPACT Project, 630 Plantation Street, Worcester, Massachusetts, 01605, Lawrence.Garber@ReliantMedicalGroup.org.

  72. Appendix S: Evaluating Benefits and Costs of New Incentives for EHR Adoption by Ineligible Providers EHR Payment Incentives for Providers Ineligible for Payment Incentives and Other Funding. Section III.A: A Simple Example.

  73. Ibid Appendix S.

  74. Walker, J., Pan, E., Johnston, D., Adler-Milstein, J., Bates, D., Middleton, B. The Value OfHealth Care Information Exchange And Interoperability. Health Affairs, January 2005.

  75. Hillestad, R., Bigelow, J., Bower, A., Girosi, F., Meili, R., Scoville, R., Taylor, R. Can Electronic Medical Record Systems Transform Health Care? Potential Health Benefits, Savings, AndCosts. Health Affairs, 24, no.5 (2005): 1103-1117.

  76. Ibid Walker and Hillestad.

  77. Ibid Walker and Hillestad.

  78. Ibid Hillestad.

  79. Kellermann, Aurthur, Jones, Spencer. "What It Will Take To Achieve The As-Yet-Unfulfilled Promises Of Health Information Technology." Health Affairs 32, no.1 (January 2013): 63-68. http://content.healthaffairs.org/content/32/1/63.abstract.

  80. Ibid Hillestad.

  81. See http://wiki.siframework.org/Longitudinal+Coordination+of+Care+%28LCC%29.

  82. HITECH authorized the EHR Meaningful Use incentive Programs. The Medicare and Medicaid Electronic Health Record Incentive Program -- Stage 2 Final Rule. CMS estimates that between 2014 and 2019 $15.4 billion will be made available in incentive payments. This estimate: (i) includes net payment adjustments in the amount of $2.1 billion for Medicare providers who do not achieve meaningful use in 2015 and subsequent years; and (ii) does not include estimates of the benefits of participating the Medicare and Medicaid EHR Incentive Programs. http://www.gpo.gov/fdsys/pkg/FR-2012-09-04/pdf/2012-21050.pdf, p.53971. September 4, 2012.)

  83. Kramer, A. Richard, A., Epstein, A. Winn, D. May, K. Understanding the costs and benefits of health information technology in nursing homes and home health agencies: Case Study Findings. University of Colorado, Denver, Division of Health Care Policy and Research. June 2009. http://aspe.hhs.gov/daltcp/reports/2009/HITcsf.htm#summary.


EHR Payment Incentives for Providers Ineligible for Payment Incentives and Other Funding Study

Files Available for This Report

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APPENDIX A. Medicare and Medicaid EHR Incentive Programs
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APPENDIX F. Behavioral Health Provider Profiles
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APPENDIX G. Safety Net Provider Profiles
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APPENDIX I. Table Summary of Patient Protection and Affordable Care Act Provisions with Relationship to Ineligible Providers and Health IT Use
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APPENDIX M. Technical Assistance Programs
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APPENDIX N. Administrative Infrastructure Building Programs
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APPENDIX O. Anti-Kickback Statute EHR Safe Harbor Regulations
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APPENDIX Q. Regulations for Medical Records
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APPENDIX R. Technical Advisory Group Summary
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APPENDIX T. CIO Consortium EMR Cost Study Data
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APPENDIX U. Abbreviations and Acronyms
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APPENDIX V. References
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Last Updated: 08/08/2013