Like many physicians, you may have put off purchasing an EHR system because of the cost. Now you’ve heard the government is offering a chunk of money to physicians who have EHRs. What should you do?

The first step is to understand what the government is and isn’t offering. Under the health IT provisions of the American Recovery and Reinvestment Act of 2009, you won’t get any cash if you simply buy an EHR; you have to show that you’re using it in a “meaningful” way. And, except for a small loan program, the feds aren’t providing any money upfront. You still have to go out and purchase or lease a system yourself. But, starting in 2011, Medicare or Medicaid will reimburse you for part of the cost if you can demonstrate “meaningful” use of a qualified EHR.

Here’s how the program works: Non-hospital-based physicians who participate in Medicare or derive 30 percent or more of their business from Medicaid (20 percent for pediatricians) are eligible to receive subsidies. The maximum amounts for which you may be eligible range from Medicare payments of $44,000 to nearly $64,000 from Medicaid over a five-year period. You can apply for either of these programs, but not both, and physicians practicing in underserved areas are eligible for an extra 10 percent from Medicare.

Under the Medicare provisions, if you apply in 2011 or 2012, you can receive $18,000 in reimbursements that year, followed by annual payments of $12,000, $8,000, $4,000, and $2,000. Those who apply in 2013 receive $15,000 in the initial year, followed by three years of diminishing payments. The first-year payment in 2014 is $12,000, with lower incentives the following two years. No incentives are available to anyone who applies after that, and no payouts will occur after 2016.

Physicians who are not using qualified EHRs meaningfully by 2015 will lose 1 percent of their Medicare reimbursement; in 2016, they will forfeit 2 percent, and in 2017 and each year thereafter, 3 percent. If less than 75 percent of physicians have met the EHR requirements by 2018, the Secretary of Health and Human Services is empowered to cut Medicare payments to the laggards by up to 5 percent.

Of the $19.2 billion allocated for the health IT program (including subsidies to hospitals), $2 billion has been placed in a discretionary pool that’s controlled by the Office of the National Coordinator for Health Information Technology (ONC). About $300 million of that must be spent on health-information exchanges, and another $25 million is earmarked for standards development. Amounts for meeting ONC’s other legislated goals have not been specified yet, but a significant percentage will be invested in regional extension centers that will, among other things, help small practices implement EHRs.

Some observers have interpreted “meaningful use” as including the use of electronic prescribing, the exchange of clinical information with other providers, and the reporting of quality data to CMS. But a Senate aide who asked not to be identified said the only thing written in stone is that you have to show you’re exchanging data. The HHS Secretary will have to flesh out the details, he says.

What “qualified” means

The Secretary also must define what constitutes a “qualified EHR” that practices must use to qualify for subsidies. Because of the short timeline and other factors, observers believe that certification by the Certification Commission on Health Information Technology (CCHIT), an existing private-sector body, may be required. Dr. Mark Leavitt, chairman of CCHIT, said in a recent webinar that he’s “confident” that CCHIT will be recognized as a certifying body for purposes of the financial incentives. He added that it’s a “good bet” that either 2008 or 2009 certification (perhaps with some additions to or deletions of CCHIT criteria) will be required. That would mean products that were certified only in 2006 or 2007 wouldn’t pass muster.

At press time, only 30 EHRs had been certified under 2008 CCHIT criteria, and of those, 12 are well-established ambulatory-care products. In contrast, about 150 EHRs were certified in 2006 and 2007. The increased requirements for certification are largely responsible for the drop in the number of certified products. Leavitt said that, since the stimulus law’s enactment, there had been a “surge” of applications for 2008 certification. The 2009 certification period begins in July.

The government health IT initiative will put a lot of pressure on software vendors to upgrade their programs to meet federal requirements, predicts Robert Doherty, vice president of governmental affairs and public policy for the American College of Physicians. Justin Barnes, chairman of the EHR Vendors Association and vice president of marketing and government affairs for Greenway Medical Technologies, agrees that more vendors will seek certification, but he doubts that many will be able to clear CCHIT’s rising bar, which includes the interoperability functions that the government wants. “I think a handful of companies — perhaps 15 or 16 — can come close to satisfying that requirement today,” he says.

The mad rush?

Despite the limited number of choices, Barnes believes that the subsidy program will have a huge impact on EHR sales to physicians. In the next six to nine months, he predicts, between 50,000 and 100,000 physicians will acquire EHRs. In addition, he expects many physicians who now have low-end systems to upgrade to certified products in order to get government cash.

Bruce Merlin Fried, a Washington, DC, healthcare attorney who specializes in health IT, agrees that the stimulus will greatly accelerate EHR adoption. For doctors who are reluctant to invest upfront, he believes that the back-end penalties will be a strong incentive. As for the current lack of interoperability standards, he says that’s why the incentives don’t start until 2011. “The plan is that in the ensuing period, the necessary standards will be met, and the vendors will be required to certify that those standards are employed.”

But Mark Anderson, a health IT consultant in Montgomery, Texas, notes that few EHRs today have even a basic ability to exchange information. And he views the requirement that practices buy systems before they can qualify for government subsidies as “a deal breaker” for many physicians.

Even if physicians are willing to pay upfront — and they’d have to buy soon to qualify for maximum Medicare subsidies — some observers point out that the government incentives will cover only a third to a half of the five-year cost of an EHR system. A recent study by Avalere Health concluded that many physicians in small practices may decide they’d be better off taking the hit on Medicare payments after 2014 than investing in an EHR now.

Where physicians stand

Some physicians agree. For example, Will Sawyer, a solo family physician in Cincinnati, hasn’t bought an EHR system “because none of them has been effective enough to integrate into a busy family practice. Also, they cost a fortune.” Although the government incentives would lower the cost barrier, Sawyer doubts that an EHR would help him significantly improve the quality of his care, especially in the absence of interoperability among systems.