Report: EHR adoption will be spurred by penalties, not incentives
With a $36 billion injection into health IT through the stimulus fund, the federal government hopes to create a digital healthcare infrastructure that reduces costs and improves quality. While many have their eyes on the carrot, the big stick of penalty payments are actually much more of a incentive for hospitals and physicians to comply, according to an analysis from PriceWaterhouseCoopers' Healthcare Research Institute.
"The stimulus incentives to comply with the new requirements for purchasing, deploying and maintaining interoperable EHRs do not come near to compensating for overall costs. However, when considering future penalties form reduced Medicare reimbursement, the implementation becomes more fiscally compelling," the report stated.
The report includes five key highlights for hospitals to calculate potential funding they would receive through the incentives included in the American Recovery and Reinvestment Act (ARRA) of 2009, as well as frequently asked questions with responses.
Hospitals that fail to comply would be hit by penalties starting in 2015. "By the time penalties are fully phased in 2017, the average 500-bed hospital could lose as much as $3.2 million annually in Medicare funding. However, the amount could be much greater for hospitals with high Medicare volumes."
Physicians would be "prudent" to evaluate the ongoing maintenance and upgrade costs for the systems beyond the five-year planned funding to make sure they can sustain the EHR, the report noted.
Physicians who are ineligible include radiologists, emergency physicians, anesthesiologists, hospitalists and intensivists who are employed or under contract with hospitals. "That said, there could be exception to this based on where the majority of their services are provided independent of any employment or billing arrangement between the eligible professional and the hospital," according to the report.
Other report highlights include:
• Health IT is moving from a voluntary initiative over the past decade to a highly regulated one with new rule-making government committees, stricter privacy laws and more onerous fines.
• The stimulus funding for health IT won't begin flowing to hospitals and physicians until late 2010, but providers should immediately begin to determine whether their current systems will be in compliance and how they can capitalize on incentives. Payments will be higher for hospitals with higher Medicare inpatient and charity care volumes.
• With billions in new funding and government regulations, the health IT market will balloon far beyond the provider segment, providing new opportunities for health plans, pharma companies and other vendors.
• The Office of the National Coordinator will have broad new powers and $2 billion in funding. Nearly all of the funds will flow to those that are already using systems in a strategic and government-certified way.
"The stimulus incentives to comply with the new requirements for purchasing, deploying and maintaining interoperable EHRs do not come near to compensating for overall costs. However, when considering future penalties form reduced Medicare reimbursement, the implementation becomes more fiscally compelling," the report stated.
The report includes five key highlights for hospitals to calculate potential funding they would receive through the incentives included in the American Recovery and Reinvestment Act (ARRA) of 2009, as well as frequently asked questions with responses.
Hospitals that fail to comply would be hit by penalties starting in 2015. "By the time penalties are fully phased in 2017, the average 500-bed hospital could lose as much as $3.2 million annually in Medicare funding. However, the amount could be much greater for hospitals with high Medicare volumes."
Physicians would be "prudent" to evaluate the ongoing maintenance and upgrade costs for the systems beyond the five-year planned funding to make sure they can sustain the EHR, the report noted.
Physicians who are ineligible include radiologists, emergency physicians, anesthesiologists, hospitalists and intensivists who are employed or under contract with hospitals. "That said, there could be exception to this based on where the majority of their services are provided independent of any employment or billing arrangement between the eligible professional and the hospital," according to the report.
Other report highlights include:
• Health IT is moving from a voluntary initiative over the past decade to a highly regulated one with new rule-making government committees, stricter privacy laws and more onerous fines.
• The stimulus funding for health IT won't begin flowing to hospitals and physicians until late 2010, but providers should immediately begin to determine whether their current systems will be in compliance and how they can capitalize on incentives. Payments will be higher for hospitals with higher Medicare inpatient and charity care volumes.
• With billions in new funding and government regulations, the health IT market will balloon far beyond the provider segment, providing new opportunities for health plans, pharma companies and other vendors.
• The Office of the National Coordinator will have broad new powers and $2 billion in funding. Nearly all of the funds will flow to those that are already using systems in a strategic and government-certified way.