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Centers for Medicare and Medicaid Services CMS Incentive Programs

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					       SURREX SOLUTIONS CORPORATION




           Centers for

Medicare and Medicaid Services

               (CMS)

      Incentive Programs

            Overview




                 L. Hack

                 8/6/2010
             Centers for Medicare & Medicaid (CMS) Incentive Programs




Table of Contents

Overview of the EHR Stimulus Bill Incentives for EMR/EHR Software ................................ 3
Eligible Providers EHR Incentive Program ............................................................................ 5
Eligible Hospitals EHR Incentive Program ............................................................................15
Physician Quality Reporting Initiative (PQRI) .......................................................................23
Electronic Prescribing (eRx) Incentive Program ..................................................................27
2010/2011 Tax Deduction Benefits - Additional Benefit NON-CMS Related ........................32
Frequently Asked Questions..................................................................................................33




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          Centers for Medicare & Medicaid (CMS) Incentive Programs


Overview of the EHR Stimulus Bill Incentives for EMR/EHR Software

What is Meaningful Use?

The term “meaningful use” refers to requirements associated timeframes with meeting EHR
standards. Incentives payable to providers and hospitals are directly related to the ability to
demonstrate compliance with the meaningful use requirements at applicable timeframes. The
meaningful use standards are contained in the ONC Standards and Certification regulation
announced on July 13, 2010.

EHRs cannot achieve their full potential if providers don’t use the functions that deliver the most
benefit – for example, exchanging information, and entering orders through the computer so that
the “decision support” functions and other automated processes are activated. Therefore, the
“meaningful use” approach requires that providers meet specified objectives in the use of EHRs,
in order to qualify for the incentive payments. For example: basic information needs to be
entered into the qualified EHR so that it exists in the “structured” format; information exchange
needs to begin; security checks need to be routinely made; and medical orders need to be
made using Computerized Provider Order Entry (CPOE). These requirements begin at lower
levels in the first stage of meaningful use, and are expected to be phased in over five years.
Some requirements are “core” needs, but providers are also given some choice in meeting
additional criteria from a “menu set.”
Some basic criteria constitute meaningful use of an adopted Electronic Health Record system.

The EHR system should be:
• Certified and used for documentation (record-keeping) of patient care and for e-prescribing
• Used in a format wherein it forms a part of electronic health information exchange system that can
be used when PHI needs to be shared among providers
• Capable of submitting information regarding qualitative measures needed to maintain the integrity
of EHR functions.

What does the Stimulus Bill have for Medical Practices/Practitioners?

Payment Incentives — the funds that will be distributed in the form of incentives have been
categorized under Medicare and Medicaid. Each of them defines its own criteria like eligibility and
the related amount of incentive. Healthcare professionals can receive payment under only one of
these, i.e. they should specify which of these programs they prefer.

Medicare Program — Medicare incentives are provided to physicians found eligible in providing
ambulatory medical facilities, using Electronic Health Records. The total amount of incentive is
$44,000, per physician, paid out over a period of five years. This cash incentive is paid directly to the
healthcare professional or his employer.

Medicaid Program — Eligible physicians will receive cash incentives of up to $63,750 for
purchasing and using qualified EHRs. Medicaid-listed incentives are a bit more elaborate. They also
help the practices that have yet not incorporated EHR technologies. Under the Medicaid program,
an amount of $21,250 is offered to every physician to assist in the procurement and implementation
of a qualified EHR system.

The deadline for purchasing the EMR system is 2016 to be eligible for these incentives. After the
adoption of EMR system, the Medicaid incentive program further provides $8,500 to every physician


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          Centers for Medicare & Medicaid (CMS) Incentive Programs

for persisting with a meaningful use of the EHR configuration. Payments covered under meaningful
use extend up to 5 years with no payment being made after 2021. Medicaid-eligible professionals
must pay at least 15% of the cost to purchase and maintain their EHR technology.

Hospitals – Hospital incentives start at $2 Million annually, with an additional reimbursement
amount tied to annual Medicare discharge volume, and decrease for each subsequent year during
the 5-year incentive period.



Timetable for Implementation

The HITECH Act states that payments for Medicare providers may begin no sooner than
October 2010 for eligible hospitals and January 2011 for EPs. The final rule aligns the Medicare
and Medicaid program start dates. Key steps in the implementation timeline include:
        ONC began accepting applications from entities that seek approval as an ONC-
Authorized Testing and Certification Body (ONC-ATCB) on July 1, 2010.
        ONC projects that certified EHR software will be available for purchase by hospitals and
eligible professionals by fall, 2010
        Registration by both EPs and eligible hospitals with CMS for the EHR incentive program
will begin in January 2011. Registration for both the Medicare and Medicaid incentive programs
will occur at one virtual location, managed by CMS.
        For the Medicare program, attestations may be made starting in April 2011 for both EPs
and eligible hospitals.
        Medicare EHR incentive payments will begin in mid May 2011.
        States will be initiating their incentive programs on a rolling basis, subject to CMS
approval of the State Medicaid HIT plan, which details how each State will implement and
oversee its incentive program.
        Information on registration for EHR incentive programs will be available toward the end
of 2010.Registration for the Medicare EHR Incentive Program will begin in January 2011 and
will be available online. Registration for the Medicaid EHR Incentive Program may also begin in
January 2011, but the timing will vary by State.


Is purchasing and implementing EHR an urgent need?

In many ways, it is, since the incentive programs take into consideration the fact that selection, trial
and implementation of a meaningful EHR system is time consuming. The incentives have been
designed in such a manner that they reward professionals/practices that have been pro-active to
make an early investment for gainfully employing a certified EHR system. Medical practitioners who
choose to employ the wait & watch methodology stand to lose up to 45% of bonuses that will be
distributed among the initial set of names that come forth with their eligibility and compatibility with
EHR-based requirements.

Are there financial benefits before the incentives are distributed?

The Medicare Improvement for Patients and Providers Act offers healthcare providers an
increase of 2% in their Medicare reimbursement for choosing the EHR-enabled, e-prescribing
mode in 2009-10, 1% bonus in 2011-12 and a token 0.5% bonus for those who choose to wait
until 2013. Practices that can use the tax benefit listed under Section 179 Tax write-off can
make a huge saving when buying the equipment/software for adopting EHR technologies.


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          Centers for Medicare & Medicaid (CMS) Incentive Programs

Practices covered under this clause stand to avail a 35% discount on the total cost incurred for
such purchases. The deduction made under Section 179 cannot be guaranteed in the future
years as it is subject to annual evaluation by the policymakers — another reason why
healthcare facilities should speed-up their efforts to get on the EHR bandwagon.




Eligible Providers EHR Incentive Program


Step 1: Determine Eligibility and Choose Incentive Program from a Medicare or
Medicaid perspective

Medicare: A Medicare EP is defined as a doctor of medicine or osteopathy, doctor of dental
surgery or dental medicine, doctor of podiatry, doctor of optometry or a chiropractor who is not
hospital-based. Hospital-based is defined as (PlaceholderHospital-based will be defined in the
final EHR incentive program rule expected for release in late spring/early summer 2010.)


Medicaid: A Medicaid EP is defined as a physician, nurse practitioner, certified nurse-midwife,
dentist, or physician assistant who furnish services in a Federally Qualified Health Center or
Rural Health Clinic that is led by a physician assistant. To qualify for an EHR incentive
payment, a Medicaid EP must not be hospital-based and must meet one of the following criteria:

   Have a minimum 30% Medicaid patient volume
   Have a minimum 20% Medicaid patient volume, and is a pediatrician
   Practice predominantly in a Federally Qualified Health Center or Rural Health Center and
    have a minimum 30% patient volume attributable to needy individuals

NOTE: Conditions States Must Meet to Receive 90 Percent FFP



The proposed rule:

   Specifies the prior approval conditions that must be met in order to receive FFP for
    reasonable administrative expenses
   Requires a Health Information Technology Advance Planning Document (HIT-APD) as well
    as a requirement for a State Medicaid Health Information Technology Plan (HIT Plan), and
    explains the activities that must be conducted by the state using MITA (Medicaid
    Information Technology Architecture) principles.




EPs Eligible for Both Programs



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          Centers for Medicare & Medicaid (CMS) Incentive Programs

If you are an EP that is eligible for both the Medicare and the Medicaid incentive programs, you
can only participate in one program, not both. You will need to select which program you want to
participate when you register. Here are the general differences:



Medicare EHR Incentive Program                     Medicaid EHR Incentive Program
                                               Can participate once my state offers the
Can participate as soon as the federal program
                                               program (check with your state for expected
launches
                                               launch date)
Can receive up to $44,000 in incentives, and
up to $48,400 if practicing in a Health Provider   Can receive up to $63,750 in incentives
Shortage Area
                                                   Can qualify for payment for adopting,
                                                   implementing, upgrading or demonstrating
required to demonstrate meaningful use of
                                                   meaningful use of certified EHR technology in
certified EHR technology every year to qualify
                                                   first participation year. Required to
for payment
                                                   demonstrate meaningful use in each
                                                   subsequent year to qualify for payment
Must participate by the second year to receive     Must participate by 2016 to receive the
the maximum incentive payment                      maximum incentive payment

NOTE: Before CY 2015, an eligible professional may switch between the programs one time
after the first incentive payment is initiated.


Are you a Medicare Advantage Organization Eligible Provider?

Medicare Advantage Organization Eligible Professionals:
Under the Medicare Advantage (MA) program, EHR incentive payments are made only to
Medicare Advantage organizations that are licensed as HMOs, or in the same manner as
HMOs, by a State. These Medicare Advantage organizations are potentially entitled to EHR
incentive payments by way of MA-affiliated hospitals (that is, hospitals that are under the same
ownership and control as the Medicare Advantage organization) and Medicare Advantage
eligible professionals.

Medicare Advantage eligible professionals are individuals that are either:

   Employed by the Medicare Advantage organization, or
   Employed by a partner of the Medicare Advantage organization, where they furnish at least
    80% of that entity's Medicare patient care services to enrollees of the MA organization.

Further, Medicare Advantage eligible professionals must furnish at least 80% of their Medicare-
related professional services to enrollees of the MA organization and must furnish, on average,
at least 20 hours per week of patient care services.




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What You Need to Participate in the EHR Incentive Programs


1.     Certified EHR Technology
In order to register and participate in the incentive programs, all eligible professionals and
hospitals need to have certified EHR technology for this program.


2.      NOTE: You do not have to have your certified EHR in place by the start of the program
in order to participate.

3.       NPI, NPPES Use Account and PECOS Enrollment
All eligible hospitals and Medicare eligible professionals must have a National Provider Identifier
(NPI), and be enrolled in the CMS Provider Enrollment, Chain and Ownership System (PECOS)
to participate in the EHR incentive program. Most will also need an active user account in the
National Plan and Provider Enumeration System (NPPES). CMS will use these systems'
records to register for the program and verify Medicare enrollment prior to making Medicare
EHR incentive program payments.

If you are a Medicare EP that does not have an NPI and/or an NPPES web user account, you
can apply for an NPI and/or create a NPPES user account.


NOTE: Medicaid eligible professionals who are only participating in the Medicaid EHR incentive
program are not required to enroll in PECOS.



Incentive Payments for Eligible Providers


Medicare

To qualify for Medicare incentive payments, Medicare eligible professionals must successfully
demonstrate meaningful use for each year of participation in the program. For calendar years
2011-2016, meaningful EHR users can receive up to $44,000 over 5 years under the Medicare
incentive program. Incentive payments are made based on the calendar year. To get the
maximum incentive payment, Medicare eligible professionals must begin participation by 2012.

Important! For 2015 and later, Medicare eligible professionals who do not successfully
demonstrate meaningful use will have a payment reduction in their Medicare reimbursement.
The payment reduction starts at 1% and increases up to 5% for every year that a Medicare
eligible professional does not demonstrate meaningful use. Hospital-based physicians and
Medicaid eligible professionals are not subject to possible payment reductions. However, if you
are also a Medicare Fee-for Service providers and cannot successfully demonstrate meaningful
use, you will have a payment reduction in your Medicare reimbursement starting in 2015, even if



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you never received an incentive payment or only participate in the Medicaid EHR incentive
program.

Extra incentives are available: The amount of the annual EHR incentive payment limit for
each payments year will be increased by 10% for Medicare eligible professionals who
predominantly furnish services in an area that is designated as a Health Provider Shortage Area
(HPSA.)




NOTE: HPSA bonuses are not available for eligible professionals in the Medicaid EHR
incentive program.




Medicaid
Incentive Payments
To qualify for Medicaid incentive payments, Medicaid eligible professionals must adopt,
implement, upgrade or demonstrate meaningful use of certified EHR technology in the first year
of participation. Medicaid EPs must demonstrate meaningful use in years 2-6 of participation.
For calendar years 2011-2021, participants can receive up to $63,750 over 6 years under the
Medicaid EHR incentive program. Incentive payments are made by the State based on the
calendar year.

Chart Showing Incentive Payment Amounts Based on the First Calendar Year in which
the Medicaid EP Receives an Incentive Payment
Years across the top (horizontal axis) are the first year a Medicaid EP qualifies to receive an
EHR incentive payment. The years in the first column (vertical axis) are the years in which
incentive payments are possible for the program, provided the EP participates and qualifies for
an incentive payment each year.

Payment     First Year     First Year     First Year     First Year     First Year     First Year
Amount      Medicaid EP    Medicaid EP    Medicaid EP    Medicaid EP    Medicaid EP    Medicaid EP
for Year:   Qualifies to   Qualifies to   Qualifies to   Qualifies to   Qualifies to   Qualifies to




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            Centers for Medicare & Medicaid (CMS) Incentive Programs

            Receive        Receive        Receive        Receive        Receive        Receive
            Payment 2011   Payment 2012   Payment 2013   Payment 2014   Payment 2015   Payment 2016
2011           $21,250           -              -              -              -              -
2012           $8,500         $21,250           -              -              -              -
2013           $8,500         $8,500         $21,250           -              -              -
2014           $8,500         $8,500         $8,500         $21,250           -              -
2015           $8,500         $8,500         $8,500         $8,500         $21,250           -
2016           $8,500         $8,500         $8,500         $8,500         $8,500         $21,250
2017              -           $8,500         $8,500         $8,500         $8,500         $8,500
2018              -              -           $8,500         $8,500         $8,500         $8,500
2019              -              -              -           $8,500         $8,500         $8,500
2020              -              -              -              -           $8,500         $8,500
2021              -              -              -              -              -           $8,500
TOTAL
Possible
               $63,750        $63,750        $63,750        $63,750        $63,750        $63,750
Incentive
Payments


Important ! All Medicare providers will have a payment reduction in 2015 if they are not
demonstrating meaningful use. For example, if you are a physician and accept both Medicare
and Medicaid, you must be demonstrating meaningful use by 2015 (in either the Medicare or the
Medicaid EHR incentive program) or you will have a Medicare fee-schedule reduction for all
your Medicare claims. The payment reduction for Medicare Fee-for-Service physicians starts at
1% and increases up to 5% for every year that you are not demonstrating meaningful use.
Hospital-based physicians are not subject to possible payment reductions.




Step 2: Demonstrating Meaningful Use

By focusing on the effective use of EHRs with certain capabilities, the HITECH Act makes clear
that the adoption of records is not a goal in itself: it is the use of EHRs to achieve health and
efficiency goals that matters. HITECH’s incentives and assistance programs seek to improve
the health of Americans and the performance of their health care system through “meaningful
use” of EHRs to achieve five health care goals:

       To improve the quality, safety, and efficiency of care while reducing disparities;
       To engage patients and families in their care;
       To promote public and population health;
       To improve care coordination; and
       To promote the privacy and security of EHRs.

 In the context of the EHR incentive programs, “demonstrating meaningful use” is the key to
receiving the incentive payments. It means meeting a series of objectives that make use of
EHRs’ potential and related to the improvement of quality, efficiency and patient safety in the
healthcare system through the use of certified EHR technology.

For Stage 1, which begins in 2011, the criteria for meaningful use focus on electronically
capturing health information in a coded format, using that information to track key clinical



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conditions, communicating that information for care coordination purposes, and initiating the
reporting of clinical quality measures and public health information.




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          Centers for Medicare & Medicaid (CMS) Incentive Programs

Timetable for Implementation

Registration for the Medicare and Medicaid EHR Incentive Programs opens on January 3, 2011.
We encourage providers to register for the Medicare and/or Medicaid EHR Incentive Program(s)
as soon as possible. You can register before you have a certified EHR. Register even if you do
not have an enrollment record in PECOS.

A link to Registration will be available on cms.gov

What can you do now for the Medicare and Medicaid EHR Incentive Programs?

Make sure you have enrollment records in the appropriate systems. You'll need:

      A National Provider Identifier (NPI)
          o All eligible professionals, eligible hospitals, and critical access hospitals (CAHs)
              must have a National Provider Identifier (NPI) to participate in the Medicare and
              Medicaid EHR Incentive Programs.
      An enrollment record in the Provider Enrollment, Chain and Ownership System
       (PECOS)
          o All eligible hospitals and Medicare eligible professionals must have an enrollment
              record in PECOS to participate in the EHR Incentive Programs. (Note: Eligible
              professionals who are only participating in the Medicaid EHR Incentive
              Program are not required to be enrolled in PECOS.)
          o If you do not have an enrollment record in PECOS, you should still register for
              the Medicare and Medicaid EHR Incentive Programs.

CMS Identity and Access Management (I&A) User ID and Password

      Eligible Professionals:
           o Eligible professionals can use the same User ID and Password they use for the
              National Plan and Provider Enumeration System (NPPES). This is also the same
              User ID and Password that is used to access PECOS.
           o If you do not have an active User ID and Password for NPPES or PECOS,
              request them via Identity & Access Management. You will need your type 2 NPI,
              your Taxpayer Identification Number (TIN), and your address from IRS Form CP-
              575. You will also need to mail a copy of IRS Form CP-575 as directed.
      Hospitals/Critical Access Hospitals:
           o Authorized Officials can use the same User ID and Password they use to access
              PECOS.
           o If you do not have an Authorized Official with access to PECOS, request a User
              ID and Password via Identity & Access Management. You will need your type 2
              NPI, your Taxpayer Identification Number (TIN), and your address from the IRS
              Form CP-575. You will need to mail a copy of the IRS Form CP-575 as directed.
           o Additional hospital staff will need to request access to the "EHR Incentive
              Programs" application through Identity & Access Management and be approved
              by the Hospital's Authorized Official.

What information will you need when you register?




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            Centers for Medicare & Medicaid (CMS) Incentive Programs

Registering for the Medicare and Medicaid EHR Incentive Programs is easy when you
have the following information available during the process:

Eligible Professionals

      National Provider Identifier (NPI).
      National Plan and Provider Enumeration System (NPPES) User ID and Password.
      Payee Tax Identification Number (if you are reassigning your benefits).
      Payee National Provider Identifier (NPI)(if you are reassigning your benefits).

Hospitals

      CMS Identity and Access Management (I&A) User ID and Password.
      CMS Certification Number (CCN).
      National Provider Identifier (NPI).
      Hospital Tax Identification Number.

NOTE: You do not have to provide information on the certified EHR technology you are using
when you register. However, this information is required when you attest.

What else do I need to know about registration?

Hospitals:
Hospitals that are eligible for EHR incentive payments under both Medicare and Medicaid
should select "Both Medicare and Medicaid" during the registration process, even if they plan to
apply only for a Medicaid EHR incentive payment by adopting, implementing, or upgrading
certified EHR technology. Dually-eligible hospitals can then attest through CMS for their
Medicare EHR incentive payment at a later date, if they so desire. It is important for a dually-
eligible hospital to select "Both Medicare and Medicaid" from the start of registration in order to
maintain this option.

Hospitals that register only for the Medicaid program (or only the Medicare program) will not be
able to manually change their registration (i.e., change to "Both Medicare and Medicaid" or from
one program to the other) after a payment is initiated and this may cause significant delays in
receiving a Medicare EHR incentive payment.

Eligible Professionals:
Eligible professionals eligible for both the Medicare and Medicaid EHR Incentive Programs must
choose which incentive program they wish to participate in when they register. Before 2015, an
eligible professional may switch programs only once after the first incentive payment is initiated.
Most eligible professionals will maximize their incentive payments by participating in the
Medicaid EHR Incentive Program.

The Electronic Health Record (EHR) Information Center is open to assist the EHR Provider
Community with inquiries.
Hours of operation are:

8:30 a.m. – 4:30 p.m. (Central Time) Monday through Friday (except federal holidays)
1-888-734-6433 (primary number) or 888-734-6563 (TTY number)



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The HITECH Act states that payments for Medicare providers may begin no sooner than
October 2010 for eligible hospitals and January 2011 for EPs. The final rule aligns the Medicare
and Medicaid program start dates. Key steps in the implementation timeline include:

   ONC projects that certified EHR software will be available for purchase by hospitals and
    eligible professionals by fall, 2010
   Registration by both EPs and eligible hospitals with CMS for the EHR incentive program will
    begin in January 2011. Registration for both the Medicare and Medicaid incentive programs
    will occur at one virtual location, managed by CMS.
   For the Medicare program, attestations may be made starting in April 2011 for both EPs and
    eligible hospitals.
   Medicare EHR incentive payments will begin in mid May 2011.
   States will be initiating their incentive programs on a rolling basis, subject to CMS approval
    of the State Medicaid HIT plan, which details how each State will implement and oversee its
    incentive program.




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           Centers for Medicare & Medicaid (CMS) Incentive Programs

Eligible Hospitals EHR Incentive Program


Step 1: Determine Eligibility and Choose Incentive Program from a Medicare or
Medicaid perspective

Medicare: An eligible hospital for Medicare incentive payments is a "subsection (d) hospital"
that is paid under the hospital inpatient prospective payment system. Hospitals must be located
in one of the 50 states or the District of Columbia. Critical Access Hospitals and Medicare
Advantage Hospitals are also eligible to receive Medicare EHR payments provided they
demonstrate meaningful use of certified EHR technology.

Critical Access Hospital Designation
A hospital must meet the following criteria to be designated a CAH:
Be located in a state that has established a State Flex Program (as of December 2008, only
Connecticut, Delaware, Maryland, New Jersey, and Rhode Island did not have such a program);
Be located in a rural area or be treated as rural under a special provision that allows qualified
hospital providers in urban areas to be treated as rural for purposes of becoming a CAH;
Furnish 24-hour emergency care services, using either on-site or on-call staff;
Provide no more than 25 inpatient beds that can be used for either inpatient or swing bed
services; however, a CAH may also operate a distinct part rehabilitation or psychiatric unit, each
with up to 10 beds;
Have an average annual length of stay of 96 hours or less (excluding beds that are within
distinct part units [DPU]); and

Be located either more than 35 miles from the nearest hospital or CAH or more than 15 miles in
areas with mountainous terrain or only secondary roads OR prior to January 1, 2006 were State
certified as a “necessary provider” of health care services to residents in the area.

Medicare Advantage

In the HITECH Act, Congress provided for the same EHR incentive payments that are available
to Medicare hospitals and eligible professionals. However, under the Medicare Advantage (MA)
program, EHR incentive payments are made only to Medicare Advantage organizations that are
licensed as HMOs, or in the same manner as HMOs, by a State. These Medicare Advantage
organizations are potentially entitled to EHR incentive payments by way of MA-affiliated
hospitals (that is, hospitals that are under the same ownership and control as the Medicare
Advantage organization) and Medicare Advantage eligible professionals.

Medicare Advantage eligible professionals are individuals that are either:

              Employed by the Medicare Advantage organization, or
              Employed by a partner of the Medicare Advantage organization, where they
       furnish at least 80% of that entity's Medicare patient care services to enrollees of the MA
       organization.




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           Centers for Medicare & Medicaid (CMS) Incentive Programs

Further, Medicare Advantage eligible professionals must furnish at least 80% of their Medicare-
related professional services to enrollees of the MA organization and must furnish, on average,
at least 20 hours per week of patient care services.



Medicaid: Acute care hospitals with at least 10% Medicaid patient volume, as well as children's
hospitals (no Medicaid volume requirements) may be eligible for Medicaid EHR incentive
payments.

               Defines an acute care hospital as a primary health care facility where the
       average length of patient stay is 25 days or fewer. Hospitals with an average length of
       stay of 25 days or fewer and with a CMS Certification Number (CCN) that has the last
       four digits in the series 0001 – 0879 are eligible. This specification includes short term
       general hospitals and the 11 cancer hospitals in the United States. Acute care hospitals
       also must meet patient volume threshold requirements (at least 10 percent of patient
       volume being Medicaid patients).
               Defines a children’s hospital as a separately certified children’s hospital, either
       freestanding or hospital-within-hospital, that has a certification number with the last 4
       digits in the series 3300-3399 and predominately treats individuals under 21 years of
       age.

NOTE: Some hospitals (e.g. Medicaid acute care hospitals that are also Medicare subsection
(d) hospitals) may receive incentive payments from both Medicare and Medicaid if it meets all
eligibility criteria.



What You Need to Participate in the EHR Incentive Programs

   1. Certified EHR Technology
      In order to register and participate in the incentive programs, all eligible professionals
      and hospitals need to have certified EHR technology for this program.

       NOTE: You do not have to have your certified EHR in place by the start of the program
       in order to participate.

   2. NPI, NPPES Use Account and PECOS Enrollment
      All eligible hospitals and Medicare eligible professionals must have a National Provider
      Identifier (NPI), and be enrolled in the CMS Provider Enrollment, Chain and Ownership
      System (PECOS) to participate in the EHR incentive program. Most will also need an
      active user account in the National Plan and Provider Enumeration System (NPPES).
      CMS will use these systems' records to register for the program and verify Medicare
      enrollment prior to making Medicare EHR incentive program payments.

       If you are a Medicare EP that does not have an NPI and/or an NPPES web user
       account, you can apply for an NPI and/or create a NPPES user account.

   NOTE: Medicaid eligible professionals who are only participating in the Medicaid EHR
   incentive program are not required to enroll in PECOS.


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            Centers for Medicare & Medicaid (CMS) Incentive Programs

An eligible hospital for Medicare incentive payments is a “subsection (d) hospital” that is paid
under the hospital inpatient prospective payment system. Hospitals must be located in one of
the 50 states or the District of Columbia.

1. Eligible hospitals may receive incentive payments for up to four years for fiscal year
     beginning January 2011, provided they meet the requirements for demonstrating meaningful
     use.
2.   Eligible hospitals can qualify to receive payments from both the Medicare and Medicaid
     EHR incentive programs.
3.   A qualifying hospital is an eligible hospital that demonstrates meaningful use for the EHR
     reporting period during a payment year. A Payment Year is a Federal Fiscal Year (FY).
4.   CMS proposes that, for the first year an eligible hospital demonstrates meaningful EHR use,
     an EHR Reporting Period equals any 90 continuous days beginning and ending within the
     year. For every year after the first payment year, CMS proposes that the EHR reporting
     period is the entire year.
5.   Eligible hospitals may qualify to receive incentive payments for up to four years beginning in
     FY 2011. FY 2015 is the last year for which an eligible hospital can begin receiving
     incentive payments for meaningful EHR use.
6.   The incentive payment for each eligible hospital will be calculated based on:

        an initial amount which is the sum of a $2 million base amount and the product of a per
         discharge amount and the number of discharges;
        the Medicare share which is the proportion of Medicare fee-for-service and managed
         care inpatient bed-days to the product of total inpatient days and by the hospital’s total
         charges that are not attributed to charity care; and
        a transition factor which phases down the incentive payments over the four year period.



Incentive Payment Calculation for Eligible Hospitals:



Medicare
     Incentive Payment Amount equals [Initial Amount] x [Medicare Share] x [Transition
      Factor]
                                                                           th         th
     o Initial Amount equals $2,000,000 + [$200 per discharge for the 1,150 – 23,000
         discharge]
     o Medicare Share equals Medicare/(Total*Charges)

Medicare equals [number of Inpatient Bed Days for Part A Beneficiaries] plus [number of
Inpatient Bed Days for MA Beneficiaries]

Total equals [number of Total Inpatient Bed Days]

Charges equals [Total Charges minus Charges for Charity Care*] divided by [Total Charges]




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*If data on charity care are not available, then the Secretary will use data on uncompensated
care as a proxy. If the proxy data are also not available, then “Charges” will be equal to 1.

      Transition Factor

                Consecutive Payment Year                   Transition Factor
                            1                                      1
                            2                                      ¾
                            3                                      ½
                            4                                      ¼



   For eligible hospitals that begin to be meaningful EHR users after 2013, their payment
    calculations will be made as if they began meaningful use in 2013. Their transition factor is
    modified accordingly. (For instance, if a hospital were to begin EHR meaningful use in
    2014, the transition factor used for that year would be ¾, as if 2014 were the second
    payment year for a meaningful user starting in 2013 and so on for subsequent years).



Transaction Factor for Medicare FFS (Fee for Service) Eligible Hospitals

Fiscal Year Fiscal Year that Eligible Hospital First Receives the Incentive Payment
                2011            2012          2013           2014          2015
   2011          1.00
   2012          0.75           1.00
   2013          0.50           0.75           1.00
   2014          0.25           0.50           0.75          0.75
   2015                         0.25           0.50          0.50           0.50
   2016                                        0.25          0.25           0.25

Incentive payments will be made to qualifying Medicare Advantage (MA) organizations for the
adoption and meaningful use of EHR technology by their affiliated eligible hospitals.

   A MA-affiliated hospital is an eligible hospital that is under common corporate governance
    with the MA organization and serves individuals enrolled by the MA plan.
   The annual payment update for inpatient hospital services for eligible hospitals that are not
    meaningful EHR users will be reduced beginning in FY 2015. MA organizations will be
    subject to payment reductions if their affiliated hospitals are not meaningful EHR users
    beginning in FY 2015.




CRITICAL ACCESS HOSPITALS (CAHs)



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   A qualifying CAH is a certified critical access hospital that meets the definition of a
    meaningful EHR user for an eligible “subsection (d)” hospital.
   CAHs can qualify to receive payments from the Medicare EHR incentive program.
   Qualifying CAHs may receive incentive payments for up to four payment years beginning
    with cost reporting periods that begin in FY 2011. The year with a cost reporting period
    that begins in FY 2015 is the last payment year for which a qualifying CAH can receive
    incentive payments as a meaningful EHR user.
   Incentive Payment Calculation for Qualifying CAHs
   Qualifying CAHs can receive incentive payments for the reasonable costs incurred for the
    purchase of depreciable assets like computers and associated hardware and software,
    necessary to administer certified EHR technology, excluding any depreciation and interest
    expenses associated with the acquisition.
   A qualifying CAH will receive an incentive payment amount equal to the product of its
    reasonable costs incurred for the purchase of certified EHR technology and its Medicare
    share percentage. The Medicare share percentage equals the lesser of (1) 100 percent;
    or (2) the sum of the Medicare share fraction for the CAH and 20 percentage points.
   Payment adjustments begin in FY 2015 for CAHs that are not meaningful EHR users.




Medicaid
For hospital payments, the calculation is:

(Overall EHR Amount) X (Medicaid Share)

Where: Overall EHR Amount =

{Sum over 4 year of [(Base Amount plus Discharge Related Amount Applicable for Each Year)

X (Transition Factor Applicable for Each Year]} X (Medicaid Share) =

{(Medicaid inpatient-bed-days plus Medicaid managed care inpatient-bed-days) ÷ [(total
inpatient-bed days) X (estimated total charges minus charity care charges) ÷ (estimated total
charges)]}



Step 2: Demonstrating Meaningful Use

By focusing on the effective use of EHRs with certain capabilities, the HITECH Act makes clear
that the adoption of records is not a goal in itself: it is the use of EHRs to achieve health and
efficiency goals that matters. HITECH’s incentives and assistance programs seek to improve
the health of Americans and the performance of their health care system through “meaningful
use” of EHRs to achieve five health care goals:



      To improve the quality, safety, and efficiency of care while reducing disparities;


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      To engage patients and families in their care;
      To promote public and population health;
      To improve care coordination; and
      To promote the privacy and security of EHRs.



In the context of the EHR incentive programs, “demonstrating meaningful use” is the key to
receiving the incentive payments. It means meeting a series of objectives that make use of
EHRs’ potential and related to the improvement of quality, efficiency and patient safety in the
healthcare system through the use of certified EHR technology.

For Stage 1, which begins in 2011, the criteria for meaningful use focus on electronically
capturing health information in a coded format, using that information to track key clinical
conditions, communicating that information for care coordination purposes, and initiating the
reporting of clinical quality measures and public health information.




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Timetable for Implementation

The HITECH Act states that payments for Medicare providers may begin no sooner than
October 2010 for eligible hospitals and January 2011 for EPs. The final rule aligns the Medicare
and Medicaid program start dates. Key steps in the implementation timeline include:



        ONC projects that certified EHR software will be available for purchase by hospitals and
eligible professionals by fall, 2010
        Registration by both EPs and eligible hospitals with CMS for the EHR incentive program
will begin in January 2011. Registration for both the Medicare and Medicaid incentive programs
will occur at one virtual location, managed by CMS.
        For the Medicare program, attestations may be made starting in April 2011 for both EPs
and eligible hospitals.
        Medicare EHR incentive payments will begin in mid May 2011.
        States will be initiating their incentive programs on a rolling basis, subject to CMS
approval of the State Medicaid HIT plan, which details how each State will implement and
oversee its incentive program.




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Physician Quality Reporting Initiative (PQRI)


PQRI is a voluntary reporting program, first implemented in 2007, that provides an incentive
payment to identified eligible professionals (EPs) who satisfactorily report data on quality
measures for covered professional physician fee schedule (PFS) services furnished to Medicare
Part B FFS beneficiaries during a specified reporting period.

NOTE: Physicians can participate in the Physicians Quality Reporting Initiative (PQRI) at the
same time as the Medicare and Medicaid EHR incentive programs, as long as they meet
eligibility requirements for both programs.

The PQRI incentive program generally operates on a calendar year basis. As a result of ACA,
PQRI incentive payments are authorized through calendar year 2014, with a penalty thereafter
for EPs who do not satisfactorily report.



Eligible Professionals

Under PQRI, covered professional services are those paid under or based on the Medicare
Physician Fee Schedule (PFS). To the extent that eligible professionals are providing services
which get paid under or based on the PFS, those services are eligible for PQRI.


Eligible and Able to Participate:
The following professionals are eligible to participate in PQRI:
1. Medicare physicians:
   Doctor of Medicine
   Doctor of Osteopathy
   Doctor of Podiatric Medicine
   Doctor of Optometry
   Doctor of Oral Surgery
   Doctor of Dental Medicine
   Doctor of Chiropractic

2. Practitioners:
   Physician Assistant
   Nurse Practitioner
   Clinical Nurse Specialist
   Certified Registered Nurse Anesthetist (and Anesthesiologist Assistant)
   Certified Nurse Midwife
   Clinical Social Worker
   Clinical Psychologist


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   Registered Dietician
   Nutrition Professional
   Audiologists (as of 1/1/2009)

3. Therapists:
   Physical Therapist
   Occupational Therapist
   Qualified Speech-Language Therapist (as of 7/1/2009)



Eligible But Not Able to Participate:

The following professionals are eligible to participate but are not able to participate for one or
more reasons:
1. Providers paid under the Medicare PFS billing Medicare fiscal intermediaries/MACs. The
   FI/MAC claims processing systems currently cannot accommodate billing at the individual
   physician or practitioner level:
       Critical access hospital (CAH), method II payment, where the physician or practitioner
        has reassigned his or her benefits to the CAH. In this situation, the CAH bills the regular
        FI for the professional services provided by the physician or practitioner.
       All institutional providers that bill for outpatient therapy provided by physical and
        occupational therapists and speech language pathologists (for example, hospital, skilled
        nursing facility Part B, home health agency, comprehensive outpatient rehabilitation
        facility, or outpatient rehabilitation facility). This does not apply to skilled nursing facilities
        under Part A.
2. Providers not defined as eligible professionals in the Tax Relief Health Care Act of 2006 or
   the Medicare Improvements for Patients and Providers Act of 2008 are not eligible to
   participate in PQRI and do not qualify for an incentive. Services payable under fee
   schedules or methodologies other than the PFS are not included in PQRI (for example,
   services provided in federally qualified health centers, independent diagnostic testing
   facilities, portable x-ray suppliers, independent laboratories, hospitals [including critical
   access], rural health clinics, ambulance providers, and ambulatory surgery center facilities).
   In addition, suppliers of durable medical equipment (DME) are not eligible for PQRI since
   DME is not paid under the PFS.
Eligible professionals participating in the PQRI should familiarize themselves and their office
staff with the PQRI measures that appear to apply to their patients for the relevant program
year.


Program Instructions


Individual EPs do not need to sign-up or pre-register in order to participate in the PQRI.
However, to qualify for a PQRI incentive payment an EP must meet the criteria for satisfactory
reporting specified by CMS for a particular reporting period.



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NOTE: The PQRI program requirements and measure specifications for the current program
year may be different from the PQRI program requirements and measure specifications for a
prior year. EPs are responsible for ensuring that they are using the PQRI documents for the
correct program year.

2010 PQRI. To participate in the 2010 PQRI, individual EPs may choose to report information
on individual PQRI quality measures or measures groups: (1) to CMS on their Medicare Part B
claims, (2) to a qualified PQRI registry, or (3) to CMS via a qualified electronic health record
(EHR) product. Individual EPs who meet the criteria for satisfactory submission of PQRI quality
measures data via one of the reporting mechanisms above for services furnished during a 2010
PQRI reporting period will qualify to earn a PQRI incentive payment equal to 2.0% of their total
estimated Medicare Part B Physician Fee Schedule (PFS) allowed charges for covered
professional services furnished during that same reporting period.

2010 PQRI GPRO. Beginning with the 2010 PQRI, a group practice may also potentially qualify
to earn PQRI incentive payment equal to 2% of the group practice's total estimated Medicare
Part B PFS allowed charges for covered professional services furnished during a 2010 PQRI
reporting period based on the group practice meeting the criteria for satisfactory reporting
specified by CMS. To participate in the 2010 PQRI GPRO, a group practice must comply with
certain requirements, submit a self-nomination letter to CMS, and be selected to participate in
the 2010 PQRI GPRO. Once a group practice (TIN) is selected to participate in the GPRO, this
is the only method of PQRI reporting available to the group and all individual NPIs who bill
Medicare under the group’s TIN for 2010.
In addition to participating in PQRI GPRO, group practices may choose to also participate in the
Electronic Prescribing (eRx) Incentive Program. While participation in the eRx Incentive
Program (either as an individual EP or under the eRx GPRO) is voluntary for group practices
participating in the PQRI GPRO, CMS requires group practices to participate in the PQRI GPRO
in order to be eligible to participate in the eRx GPRO. Once a group practice (TIN) is selected to
participate in the eRx GPRO, this is the only method of eRx reporting available to the group and
all individual NPIs who bill Medicare under the group’s TIN for 2010.


For 2011, ACA states that EPs may earn an incentive payment of 1.0 percent of the EP’s
estimated total allowed charges for covered professional PFS services under Medicare Part B
provided during the reporting period.

CMS proposes a number of key changes in calendar year 2011 for PQRI, including:

   Adding 20 individual PQRI measures (including new measures for reporting through
    registries and electronic health records) and one new measures group on which individual
    EPs may report;
   Making 12 additional individual PQRI measures available for reporting through electronic
    health records systems (EHRs), in addition to the 10 measures already available for EHR
    reporting
   Reducing the reporting sample requirements for claims- based reporting of individual
    measures from 80% to 50%, which could lessen the burden on EPs to qualify for incentive
    payments; and

Creating a new Group Practice Reporting Option (GPRO) that would allow group practices with
fewer than 200 EPs to participate, which could broaden the ability of EPs to qualify at the group


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level (in addition to retaining the existing GPRO model for groups with 200 or more EPs).CMS
also proposes and discusses changes to the structure and function of the PQRI program for
2011 and subsequent program years, in accordance with the PQRI changes included in ACA.
These changes include:

   Extending PQRI incentive payments for years 2012 through 2014 by providing an incentive
    payment of 0.5 percent the EPs estimated total allowed charges for covered professional
    PFS services under Medicare part B provided during the applicable reporting period;
   Implementing PQRI payment penalties beginning in 2015 for EPs (and group practices)
    that do not satisfactorily report data on quality measures by reducing the fee schedule
    payment by 1.5 percent in 2015 and 2.0 percent in 2016 and thereafter;
   Providing timely feedback reports to EPs about satisfactory PQRI reporting, including
    proposals for interim feedback reports;
   Creating an informal review process for EPs who wish to have CMS review its
    determination that an EP has not submitted data for PQRI satisfactorily;
   Allowing EPs to qualify for an additional 0.5 percent incentive if they satisfactorily report
    PQRI measures and participate in a Maintenance of Certification program required for
    board certification by a recognized physician specialty organization for at least one year
    and complete a practice assessment as part of that organization’s Maintenance of
    Certification program;
   Establishing the framework for a new Physician Compare website; and
   Describing CMS’ plans to integrate its reporting on quality measures under PQRI with the
    reporting elements required by the Electronic Health Record (her) Incentive Program
    (established under a separate regulation).




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Electronic Prescribing (eRx) Incentive Program


Section 132 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA)
authorizes a new and separate incentive program for eligible professionals (EPs) who are
successful electronic prescribers as defined by MIPPA. This new incentive program, which
began on January 1, 2009, is separate from and is in addition to the quality reporting incentive
program authorized by Division B of the Tax Relief and Health Care Act of 2006 - Medicare
Improvements and Extension Act of 2006 (MIEA-TRHCA) and known as the Physician Quality
Reporting Initiative (PQRI).

Eligible professionals do not need to participate in PQRI to participate in the Electronic
Prescribing (eRx) Incentive Program.

NOTE: If you participate as a Medicare eligible professional, you cannot receive incentive
payments from both the Medicare EHR incentive program and the e-Prescribing program in the
same year. If you participate as a Medicaid EP, you may participate in both the Medicaid EHR
incentive program and the e-Prescribing program at the same time, as long as you meet the
eligibility requirements for both programs. The e-Prescribing incentive program is based on
allowable submitted charges during the reporting period, while the EHR incentive program
provides a determined incentive payment if the requirements of the program are met. For most,
the EHR incentive program will provide the greater monetary value.

For each program year, CMS implements the eRx Incentive Program through an annual
rulemaking process published in the Federal Register.

E-Prescribing - a prescriber's ability to electronically send an accurate, error-free and
understandable prescription directly to a pharmacy from the point-of-care - is an important
element in improving the quality of patient care. Adopting the standards to facilitate e-
prescribing is one of the key action items in the governments plan to expedite the adoption of
electronic medical records and build a national electronic health information infrastructure in the
United States. The MMA (Medicare Modernization Act) created a new voluntary prescription
drug benefit under Medicare Part D. Although e-prescribing will be optional for physicians and
pharmacies, Medicare Part D will require drug plans participating in the new prescription benefit
to support electronic prescribing.




Eligible Professionals


Eligible and Able to Participate:

The following professionals are eligible to participate in E-Prescribing Incentive Program:
Eligible professionals must have prescribing authority in order to participate in this incentive
program.




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1. Medicare physicians

   Doctor of Medicine
   Doctor of Osteopathy
   Doctor of Podiatric Medicine
   Doctor of Optometry
   Doctor of Oral Surgery
   Doctor of Dental Medicine
   Doctor of Chiropractic

2. Practitioner

   Physician Assistant
   Nurse Practitioner
   Clinical Nurse Specialist
   Certified Registered Nurse Anesthetist (and Anesthesiologist Assistant)
   Certified Nurse Midwife
   Clinical Social Worker
   Clinical Psychologist
   Registered Dietician
   Nutrition Professional
   Audiologists (as of 1/1/2009)

    3.   Therapists

   Physical Therapist
   Occupational Therapist
   Qualified Speech-Language Therapist (as of 7/1/2009)



Eligible But Not Able to Participate:

The following professionals are eligible to participate but are not able to participate for one or
more reasons:

1. Providers paid under the Medicare PFS billing Medicare fiscal intermediaries/MACs. The
   FI/MAC claims processing systems currently cannot accommodate billing at the individual
   physician or practitioner level:

        Critical access hospital (CAH), method II payment, where the physician or practitioner
         has reassigned his or her benefits to the CAH. In this situation, the CAH bills the regular
         FI for the professional services provided by the physician or practitioner.
        All institutional providers that bill for outpatient therapy provided by physical and
         occupational therapists and speech language pathologists (for example, hospital, skilled
         nursing facility Part B, home health agency, comprehensive outpatient rehabilitation




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       facility, or outpatient rehabilitation facility). This does not apply to skilled nursing facilities
       under Part A.

2. Providers not defined as eligible professionals in the Tax Relief Health Care Act of 2006 or
   the Medicare Improvements for Patients and Providers Act of 2008 are not eligible to
   participate in E-Prescribing Incentive Program and do not qualify for an incentive. Services
   payable under fee schedules or methodologies other than the PFS are not included in E-
   Prescribing Incentive Program (for example, services provided in federally qualified health
   centers, independent diagnostic testing facilities, portable x-ray suppliers, independent
   laboratories, hospitals [including critical access], rural health clinics, ambulance providers,
   and ambulatory surgery center facilities). In addition, suppliers of durable medical equipment
   (DME) are not eligible for E-Prescribing Incentive Program since DME is not paid under the
   PFS.



2010 eRx Incentive Program


To be considered a successful electronic prescriber for the 2010 eRx Incentive Program and
potentially qualify to earn a 2.0% incentive payment for the 2010 eRx Incentive Program, an
individual EP must report the eRx measure for at least 25 unique electronic prescribing events
in which the measure is reportable by the EP during 2010.

Beginning with the 2010 eRx Incentive Program, a group practice may also potentially qualify to
earn an eRx incentive payment equal to 2% of the group practice's total estimated Medicare
Part B Physician Fee Schedule (PFS) allowed charges for covered professional services
furnished during the 2010 eRx reporting year based on the group practice meeting the criteria
for successful electronic prescriber specified by CMS.

To participate in the 2010 eRx Incentive program, individual EPs may choose to report on their
adoption and use of a qualified eRx system by submitting information on one eRx measure: (1)
to CMS on their Medicare part B claims, (2) to a qualified registry, or (3) to CMS via a qualified
electronic health record (EHR) product.




Group Practice Reporting Option

2010 eRx Incentive Program

CMS is introducing a new group practice reporting option (GPRO) for the eRx Incentive
Program beginning with the 2010 eRx Incentive Program. Group practices that are successful
electronic prescribers for a particular reporting period are eligible to earn an eRx incentive
payment equal to a specified percentage of the group practice's total estimated Medicare Part B
PFS allowed charges for covered professional services furnished during the reporting period.
For the 2010 eRx Incentive Program, the incentive payment is equal to 2% of the group
practice's total estimated Medicare Part B PFS allowed charges for covered professional
services furnished during the 2010 reporting period. An individual eligible professional who is a



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member of a group practice selected to participate in the eRx GPRO is not eligible to separately
earn an eRx incentive payment as an individual eligible professional under that same Tax
Identification Number (TIN) (that is, for the same TIN/National Provider Identifier, or NPI,
combination). Once a group practice (TIN) is selected to participate in the GPRO, this is the only
method of eRx reporting available to the group and all individual NPIs who bill Medicare under
the group's TIN.

GPRO Requirements for Submission of 2010 eRx Data: While participation in the eRx
Incentive Program (either as an individual eligible professional or under the eRx GPRO) is
voluntary for group practices participating in the PQRI GPRO, CMS requires that in order for a
group practice to participate in the 2010 eRx GPRO, a group practice must comply with all
requirements for participation in the PQRI GPRO and be participating in the PQRI GPRO for
2010. A group practice that wishes to participate in both the PQRI GPRO and in the eRx GPRO,
must notify CMS of its desire to do so when self-nominating for the 2010 PQRI GPRO.

2010 Criteria for Determining Whether a Group Practice is a Successful Electronic
Prescriber Under the 2010 eRx GPRO: For purposes of determining whether a group
practice is a successful electronic prescriber for 2010, each group practice selected to
participate in the 2010 eRx GPRO will be required to report the eRx measure either through
claims, a qualified registry, or a qualified EHR product.

For purposes of the 2010 eRx Incentive Program, a successful group practice electronic
prescriber, must report the eRx measure for a minimum of 2,500 unique denominator-eligible
visits per year. Attempts to report the measure for visits not associated with a denominator
eligible patient visit do not count towards the minimum of 2,500.

In addition to meeting the criteria for "successful electronic prescriber" above, at least 10% of
the group practice's Medicare Part B charges must be comprised of the codes in the
denominator of the measure in order for the group practice to be incentive eligible.

2011 eRx Incentive Program

EPs and group practices who are successful e-prescribers for 2011 may earn an incentive
payment of 1.0 percent of the EP’s (or group practice’s) estimated total allowed charges for PFS
services under Medicare Part B provided during the reporting period. Beginning in 2012, the
program will impose penalties on EPs who are not successful e-prescribers. The reporting
period for incentive payments under the eRx Incentive Program for 2011 will be the whole
calendar year, and incentives will be paid based on the covered professional services furnished
by an EP during the reporting year.

Key changes and proposals for Calendar Year 2011 under the proposed rule would:

    Clarify that EPs who participate and qualify for the Medicare Electronic Health Records
     Incentive Program (to be established under separate regulations) for calendar year 2011
     may not receive a separate, additional Medicare eRx Incentive Program payment;
    Further clarify that EPs who receive incentives under the EHR Incentive Program for
     calendar year 2011 could still be subject to a penalty applicable in 2012 for not
     participating and being a successful electronic prescribers in the eRx Incentive Program in
     2011;



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   Broaden opportunities for group practices with fewer than 200 members to participate in
    the eRx Incentive Program as group practices; and
   Establish criteria for applying the penalty applicable in 2012 or 2013 that EPs (and group
    practices) may incur if they do not participate successfully in the eRx Incentive Program in
    2011 or 2012, including a proposed process for hardship exemptions.




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2010/2011 Tax Deduction Benefits - Additional Benefit NON-CMS Related


Take advantage of this unique opportunity

New tax laws designed to stimulate economic growth have made 2010 the best time in years to
buy EMR software. Medical practices can realize huge tax savings if they purchase their EMR
software in 2010.


Tax Deduction Limits Increased to $500,000

Under the Economic Stimulus Act of 2008, the deduction limits for all qualified purchases made
in 2008 was increased from $128,000 to $500,000. The 'Hiring Incentives to Restore
Employment Act' of 2010 passed on a bipartisan Senate vote of 68-29 extending the enhanced
Section 179 deductions of 2008 / 2009 into 2010. This allows medical practices to expense the
full cost (up to $500,000) of their EMR and computer equipment that is purchased by Dec. 31st,
2010, rather than depreciating it by a set percentage over a period of years. The deduction limit
is being lowered in 2011.

In addition, you still qualify to receive the Economic Stimulus bonus of $44,000 to $63,750 per
eligible provider from Medicare or Medicaid.


EMR Software is Qualified

Only certain types of equipment qualify for the deduction, but off-the-shelf computer software,
such as EMR and PM software products are considered eligible for the tax deduction, provided
you purchase and install the software between January 1st and December 31st, 2010.


Purchased, Leased or Financed…Qualified

Section 179 applies to equipment both purchased and leased during 2010. In fact, if leased, the
money you save through these deductions can actually exceed your lease payments for the
year. With a non-tax capital lease, you can buy EMR & practice management software and write
off up to $500,000 of equipment for 2010, without actually spending $500,000 in 2010. Even if
you obtain a loan for your electronic medical records system using an Equipment Finance
Agreement (EFA), you can still take the Section 179 tax deduction.

To confirm, please consult with your tax advisor.
You can also go to:www.section179.org




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Frequently Asked Questions

1. What does it mean to be an eligible provider (EP)?

For hospitals to be eligible, they can be acute care (excluding long term care facilities), critical
access hospitals, or children's hospitals.
When it comes to defining an eligible provider for EHR incentive payment purposes, there is a
difference between the requirements for Medicare and Medicaid. Medicare defines an eligible
provider according to the definition in the Social Security Act section 1861(r):

1.   Doctor of medicine or doctor of osteopathy
2.   Doctor of dental surgery or dental medicine
3.   Doctor of podiatric medicine
4.   Doctor of optometry
5.   Chiropractor

Medicaid defines an eligible provider as follows (ARRA p. 377):

1.   Physician
2.   Dentist
3.   Certified Nurse-Midwife
4.   Nurse Practitioner
5.   Physician Assistant who is practicing in a Federally Qualified Health Center (FQHCs) or
     Rural Health Clinic (RHCs) led by a physician assistant

A bill was introduced in April that would allow behavioral, mental health, and substance abuse
treatment providers to qualify for incentives

The new Health Information Technology Extension for Behavioral Health Services Act of 2010
would extend eligibility for stimulus incentive payments to:

      Behavioral and mental health professionals and clinics
      Substance abuse professionals and treatment facilities
      Psychiatric hospitals
      Licensed psychologists and clinical social workers


2. How much money can I receive?

Eligible providers who show meaningful use of a certified EHR can receive up to $44,000
(Medicare) OR $63,750 (Medicaid) in government funding. Office-based physicians practicing in
rural or underserved areas are eligible for an additional 10% (up to $48,000) in Medicare
incentives. These figures represent the maximum allowable incentives under the Medicare and
Medicaid programs based on a percentage of actual annual revenue received from Medicare
and Medicaid. Providers must choose between applying for the Medicare or the Medicaid
funding - they may not receive incentives from both.




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Here is an outline of the maximum allowable benefits from Medicare (courtesy of CMS Fact
Sheet):

First payment year:              $18,000 if first payment year is 2011 or 2012
                                 $15,000 if first payment year is 2013
                                 $12,000 if first payment year is 2014

Second payment year:             $12,000


Third payment year:              $8,000


Fourth payment year:             $4,000


Fifth payment year:              $2,000

Eligible professionals working in health professional shortage areas (HPSAs) will receive a 10%
increase in incentive payment amounts.

For eligible Medicaid providers, the State is authorized to provide reimbursement for 85% of net
average allowable costs of EHR adoption and startup (including support and training) - up to
$63,750 over 6 years. Medicaid incentives for EHR adoption will begin in 2011.


3.   What is the definition of meaningful use? (need to be updated to Core and A La Carte
     per final rule 7/13/10)
The following chart outlines all of the Stage 1 Meaningful Use Objectives and Measures for EPs. The column to
the right identifies the reporting structure for the measures in 2011 (Y/N – Yes or no submitted as structured
data; N/D – A numerator and denominator are submitted for each measure through attestation).


              Stage 1 Proposed Objectives and Measures for Eligible Professionals (EP)
#                    Objective                                        Measure                            R
     Use Computerized Provider Order Entry      For EPs, CPOE is used for at least 80% of all
1                                                                                                        N/D
     (CPOE)                                     orders
     Implement drug-drug, drug-allergy, drug-
2                                               The EP has enabled this functionality                    Y/N
     formulary checks
     Maintain an up-to-date problem list of     At least 80% of all unique patients seen by the EP
3    current and active diagnoses based on      have at least one entry or an indication of none         N/D
     ICD-9-CM or SNOMED CT®                     recorded as structured data
                                                At least 75% of all Permissible prescriptions written
     Generate and transmit permissible
4                                               by the EP are transmitted electronically using           N/D
     prescriptions electronically (eRx)
                                                certified EHR technology
                                                At least 80% of all unique patients seen by the EP
                                                have at least one entry (or an indication of "none" if
5    Maintain active medication list                                                                     N/D
                                                the patient is not currently prescribed any
                                                medication) recorded as structured data




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             Centers for Medicare & Medicaid (CMS) Incentive Programs

#                     Objective                                           Measure                           R
                                                   At least 80% of all unique patients seen, by the EP
                                                   have at least one entry or (an indication of "none" if
6    Maintain active medication allergy list                                                              N/D
                                                   the patient has no medication allergies) recorded as
                                                   structured data
     Record demographics:
     - preferred language
     - insurance type
                                                   At least 80% of all unique patients seen by the EP
7    - gender                                                                                               N/D
                                                   have demographics recorded as structured data
     - race
     - ethnicity
     - date of birth
     Record and chart changes in vital signs:
     - height
                                                   For at least 80% of all unique patients age 2 and
     - weight
                                                   over seen by the EP record blood pressure and
8    - blood pressure                                                                                       N/D
                                                   BMI; additionally plot growth chart for children age
     - calculate and display: BMI
                                                   2-20
     - plot and display growth charts for
     children 2-20 years, including BMI
                                                   At least 80% of all unique patients 13 years old or
     Record smoking status for patients 13
9                                                  older seen by the EP have "smoking status"               N/D
     years old or older
                                                   recorded
                                                   At least 50% of all clinical lab tests ordered whose
   Incorporate clinical lab-test results into      results are in a positive/negative or numerical
10                                                                                                          N/D
   EHR as structured data                          format are incorporated in certified EHR technology
                                                   as structured data
   Generate lists of patients by specific
                                                   Generate at least one report listing patients of the
11 conditions to use for quality improvement,                                                               Y/N
                                                   EP with a specific condition
   reduction of disparities, and outreach
                                                   For 2011, provide aggregate numerator and
                                                   denominator through attestation as discussed in
     Report ambulatory quality measures to
12                                                 section II(A)(3) of the CMS NPRM. For 2012,              N/D
     CMS or the States
                                                   electronically submit the measures as discussed in
                                                   section II(A)(3) of the CMS NPRM
     Send reminders to patients per patient        Reminder sent to at least 50% of all unique patients
13                                                                                                      N/D
     preference for preventive/ follow up care     seen by the EP that are age 50 or over
   Implement 5 clinical decision support rules
                                                   Implement 5 clinical decision support rules relevant
   relevant to specialty or high clinical
                                                   to the clinical quality metrics the EP is responsible
14 priority, including diagnostic test ordering,                                                            Y/N
                                                   for as described further in section II(A)(3) of the
   along with the ability to track compliance
                                                   CMS NPRM
   with those rules
     Check insurance eligibility electronically    Insurance eligibility Checked electronically for at
15                                                                                                          N/D
     from public and private payers                least 80% of all unique patients seen by the EP
     Submit claims electronically to public and    At least 80% of all claims filed electronically by the
16                                                                                                          N/D
     private payers                                EP
   Provide patients with an electronic copy of
                                               At least 80% of all patients who request an
   their health information (including
17                                             electronic copy of their health information are              N/D
   diagnostic test results, problem list,
                                               provided it within 48 hours
   medication lists, allergies), upon request




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             Centers for Medicare & Medicaid (CMS) Incentive Programs


#    Objective                                     Measure                                               R
   Provide patients with timely electronic
   access to their health information
                                                   At least 10% of all unique patients seen by the EP
   (including lab results, problem list,
18                                                 are provided timely electronic access to their health N/D
   medication lists, allergies) within 96 hours
                                                   information
   of the information being available to the
   eligible professional
     Provide clinical summaries for patients for   Clinical summaries are provided for at least 80% of
19                                                                                                       N/D
     each office visit                             all office visits
   Capability to exchange key clinical
   information (for example problem list,          Performed at least one test of certified EHR
20 medication list, allergies, diagnostic test     technology's capacity to electronically exchange      Y/N
   results) among providers of care and            key clinical information
   patient authorized entities electronically
     Provide summary care record for each          Provide summary of care record for at least 80% of
21                                                                                                       N/D
     transition of care and referral               transitions of care and referrals
   Perform medication reconciliation at
                                              Perform medication reconciliation for at least 80%
22 relevant encounters and each transition of                                                            N/D
                                              of relevant encounters and transitions of care
   care
   Capability to submit electronic data to         Performed at least one test of certified EHR
23 immunization registries and actual              technology's capacity to submit electronic data to    Y/N
   submission where required and accepted          immunization registries
                                                   Performed at least one test of certified EHR
   Capability to provide electronic syndromic      technology's capacity to provide electronic
   surveillance data to public health agencies     Syndromic surveillance data to public health
24                                                                                                     Y/N
   and actual transmission according to            agencies (unless none of the public health agencies
   applicable law and practice                     to which an EP submits such information have the
                                                   capacity to receive the information electronically)
   Protect electronic health information
                                              Conduct or review a security risk analysis per 45
   created or maintained by the certified EHR
25                                            CFR 164.308 (a)(1) and implement security                  Y/N
   technology through the implementation of
                                              updates as necessary
   appropriate technical capabilities


Section II.A.2.d (Pages 1854 - 1870) of the CMS NPRM



4. Does it matter when I start demonstrating meaningful use?

For the Medicaid incentive, you may receive the full $63,750 over a period of 6 years as long as
you begin adoption and demonstration of meaningful use between 2011 and 2015.

For the Medicare incentive, as shown in the table above, you can receive the full $44,000
incentive over the course of 5 years if you begin demonstrating meaningful use in 2011 or 2012.
It is important to note that incentive money will equal 75% of what you receive from Medicare in
a given year. So if you anticipate that your Medicare payments will be substantially higher in
2012 than 2011, you may want to begin reporting meaningful use of a certified EHR in 2012.




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          Centers for Medicare & Medicaid (CMS) Incentive Programs

You will need to receive a minimum of $24,000 in reimbursement from Medicare in your first
year of demonstrating meaningful use in order to receive the maximum allowed federal incentive
payment.

Below is a chart for the amounts you will need to receive in Medicare reimbursements
each year in order to receive the maximum incentive payment for that year:

                                               Minimum annual Medicare
Year of demonstrating meaningful use
                                              reimbursement required for
    (if beginning in 2011 or 2012)
                                              maximum incentive payment
                First year                             $24,000
               Second year                             $18,000
                Third year                             $10,667
                Fourth year                                $5,334
                 Fifth year                                $2,667




5. Which EHRs are government certified?

At this time, no EHRs have been certified for government stimulus incentives, since the
government has yet to announce official certifying bodies; we expect the temporary certification
bodies to be named late Summer 2010 and will begin to certify EHRs Fall 2010. While CCHIT
has been the sole EMR/EHR certifying body thus far, this alone does not guarantee that it will
be among the appointed certifiers nor does it ensure that CCHIT's set of standards will match
up with the upcoming government Stimulus standards.



6. How do I get paid for meaningful use of a certified EHR?

For Medicare, during the first payment year, all an EP has to do is demonstrate "meaningful
use" of a certified EHR for a continuous 90-day period during the payment year. For hospitals,
the payment year is October 1st to September 30th and for EPs, the payment year is the
calendar year. The meaningful use must begin and end within the payment year.

If you qualify as a Medicaid eligible provider or hospital and at least 30% of your patient volume
is from Medicaid (20% for pediatricians and 10% for hospitals), you must be in the process of
implementing or upgrading your EHR in order to collect incentive money.

Although details have not yet been released for how EPs will apply for incentive funds,
attestation forms are the most likely method.

Medicare incentive payments will be disbursed through Medicare Administrative Contractors
(MAC) or carriers to the Tax Identification Number provided by the qualifying eligible provider.




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           Centers for Medicare & Medicaid (CMS) Incentive Programs

7. How will be the CMS EHR incentive program registration process work?

              Medicare: Hospitals and eligible professionals can register for the program
       starting in January 2011. Once the programs begin, a link on the Registration web page
       on http://cms.gov/EHRIncentivePrograms/ will be available. Providers can use this
       central website to get information about the program and link to the programs’ online
       registration system.



              Medicaid: The registration process will be the same for the Medicaid Incentive
       Program as for Medicare. A link on the Registration web page on
       http://cms.gov/EHrIncentivePrograms/ will be available when the program begins.
       Eligible Providers under the Medicaid Incentive Program can register at this site whether
       or not their state has initiated their program yet and CMS will pass their information on
       the state once the state initiates their program.



8. How will providers demonstrate that they have achieved the “meaningful use”
   objectives required by the regulation?

For 2011, CMS will accept provider attestations for demonstration of all the meaningful use
measures, including clinical quality measures. Starting in 2012, CMS will continue attestation for
most of the meaningful use objectives but plans to initiate the electronic submission of the
clinical quality measures. States will also support attestation initially and then subsequent
electronic submission of clinical quality measures for Medicaid providers’ demonstration of
meaningful use.



9. How and when will incentive payments be made?

CMS expects to initiate Medicare incentive payments nine months after the publication of the
final rule. For Medicaid, States are determining their own deadlines for launching their Medicaid
EHR Incentive programs but are required to make timely payments, per the CMS final rule.
CMS expects that the majority of States will have launched their programs by the summer of
2011.

10. Are there penalties for not using a certified EHR system?

Starting January 1, 2015, physicians who are not “meaningful” EHR users will see a 1%
reduction in Medicare payments. The reduction increases to 2% in 2016 and 3% in each
subsequent year. If the secretary of the Department of Health and Human Services (HHS)
Secretary finds that by the end of 2017 the proportion of physicians who are meaningful EHR
users is less than 75%, HHS may continue to decrease payments by 1% a year (not more than
5 percent overall). Hardship exceptions may be issued on a case-by-case basis, such as
exceptions for physicians who practice in rural areas without adequate Internet access.
There are no penalties under Medicaid.



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          Centers for Medicare & Medicaid (CMS) Incentive Programs

11. What are HITECH and ARRA?

The American Recovery and Reinvestment Act of 2009 (ARRA or Recovery Act) was signed
into law by President Obama on February 17, 2009. This law includes the Health Information
Technology for Economic and Clinical Health Act or HITECH, which established programs
under Medicare and Medicaid to provide incentive payments for enacting “meaningful use”
criteria of electronic health records (EHR) and their technology.

CMS (The Centers for Medicare and Medicaid Services) has several roles in the HITECH Act
~They are responsible for the implementation of EHR incentive programs including defining
“meaningful use” criteria in EHR technology.
~They also have established standards, implemented specifications, and certification criteria for
EHR technology.
~Under the HITECH act CMS also works with Privacy and Security protections

Under the HITECH act a Medicare EHR incentive plan was created. Eligible professionals,
hospitals, and critical access hospitals (CAH) that use meaningful use certified EHRs are
qualified to receive incentives. Incentive payments would be made to qualifying Medicare
Advantage (MA) organizations for the use of meaningful use certified EHRs. The incentive
program provides incentive payments to eligible professionals and hospitals for the adoptions,
implementation, and/or upgrade of a certified EHR technology meeting meaningful use in the
first year up to five years.

CMS administers the EHR incentive programs under Medicare and Medicaid. CMS proposed
rules and definitions including “meaningful use” and other requirements for qualifying for
incentive payments. CMS worked closely with the Office of National Coordinator for Health
Information Technology (ONC) in developing the proposed rules.

The HIT provisions of the Recovery Act are found primarily in Title XIII, Division A, Health
Information Technology, and Title IV of Division B, Medicare and Medicaid Health Information
Technology. These titles are cited as the Health Information Technology for Economic and
Clinical Act or the HITECH act. For a copy of the full bill go to:
www.hhs.gov/recovery/overview/index.html




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