Healthcare Reform and Electronic Health Records: What Does It All Mean?
By Kaye Eisele
In February 2009, President Obama gained the support of Congress and launched his $787 billion federal stimulus package. The package included $36.5 billion for imperative national healthcare reform which offers incentive payments to providers of Medicaid and Medicare when purchasing systems for electronic health record systems. Furthermore, financial incentives will be available in the coming years to qualified providers based on their usage of electronic health records. The emergence of electronic health records not only offers drastic reductions in the cost of healthcare, but it has the potential to expedite medical information, and, in turn, optimize and expedite the quality of care providers furnish to their patients. President Obama recognizes this and he wants all healthcare providers, hospitals and other institutions to implement electronic health records in the very near future.
The urgency of electronic healthcare record conversion was evident when President Obama addressed the American Medical Association (AMA) in June of 2009 when he said, “First, we need to upgrade our medical records by switching from a paper to an electronic system of record keeping. And we have already begun to do this with an investment we made as part of our Recovery Act.” Furthermore, President Obama offered the advantages of electronic health records as part of the Stimulus Plan. Clearly, electronic health records have the potential to play a very solid and integral role in healthcare reform.
While he was running for president, Barack Obama said in a radio broadcast, "We will make sure that every doctor's office and hospital in this country is using cutting-edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes and help save billions of dollars each year." Once he was elected president, he said, “As Newt Gingrich has rightly pointed out, we do a better job tracking a FedEx package in this country than we do tracking a patient's health records. You shouldn't have to tell every new doctor you see about your medical history, or what prescriptions you're taking. You should not have to repeat costly tests. All of that information should be stored securely in a private medical record so that your information can be tracked from one doctor to another – even if you change jobs, even if you move, and even if you have to see a number of different specialists.”
Once elected, President Obama did not waste time by putting into play the Health Information Technology for Economic and Clinical Health (HITECH) Act. This act promotes electronic health records by offering Medicare and Medicaid healthcare providers a maximum of five years of monetary incentives paid per individual physician. These incentives will total as much as $44,000 paid to Medicare providers who meet “meaningful use” standards when implementing and utilizing electronic health records. In the HITECH Act, “meaningful use” and “meaningful manners” are defined and these standards must be met in order to qualify. For Medicare providers, the standards dictate, among other things, that providers supply detailed information in patient records including past and current medical problems or diagnoses of their patients, and a demonstrated ability of their health records systems to successfully render electronic medical prescriptions.
Another meaningful usage requirement is the ability for providers’ electronic health records to combine pertinent medical information from outside sources into current electronic records. As well, providers must demonstrate appropriate usage of electronic health records that reflect the ability to exchange pertinent medical information in a confidential manner which is known as Health Information Exchange (HIE), and a high level of records quality with sufficient medical personnel who record and enter medical data into the electronic records.
The quality of the electronic health records is also of the utmost importance and cannot be compromised. Some governing bodies over the electronic records and eligibility of providers (physicians) are yet to be formed, although many are already in place, but they will and do largely consist of commissions and panels whose charge it will be to set continuing medical records standards and who will certify electronic healthcare record providers. The electronic records must list detailed diagnoses, histories and physicals, labs and pathologies, among many other pertinent medical data. Funding from the stimulus package will help pay for these integral committees as they implement important standards of checks and balances for the electronic health records.
According to the HITECH Act, incentives are paid out per physician with the greatest of the five-year financial incentives for electronic health record implementation being awarded to those providers who become eligible in the years 2011 and 2012. If a physician becomes eligible in the years 2011 or 2012, they will receive $18,000 the first year and $12,000 the second year. Should a physician become eligible in the year 2013, their first-year incentive will total $15,000. First-time qualifiers in 2014 - which is the last year to receive any initial financial incentives for conversion to electronic health records - will receive $12,000 that year and an additional sum the next. In order to receive the full five-year incentive pay, providers must qualify either by the year 2011 or 2012. Providers qualifying later will only receive three to four years’ worth of incentive pay. For all providers who qualify for the financial incentives, their pay will gradually decline each year following the initial payment, ranging from $4,000 to $2,000, with less of a decline the sooner the provider becomes qualified.
The highest total incentive pay will be $44,000 for those deemed eligible by the years 2011 or 2012, and the lowest total incentive pay for those deemed eligible no later than 2014 will be $24,000. Conversely, beginning in the year 2015, those providers who have not become eligible for incentives or those not following “meaningful use” electronic health records standards will be penalized. The amount of a penalty will be the provider’s allowables for that year times four.
While the Medicare Incentive Program totals five years, the Medicaid Incentive Program totals six years. The latter program is designed for providers who see large volumes of Medicaid patients. Physicians cannot participate in both programs and they have an extra year, or until 2016, to receive financial incentives than do qualified Medicare providers. When a physician either begins using electronic health records or can demonstrate that such a system has been in place, the financial incentive received can be up to $21,250 the first year (. If the provider meets “meaningful use” guidelines in the five years following, the physician can be eligible for up to $8,500 annually. The total financial incentive for a physician choosing the Medicaid Incentive Program as outlined by the HITECH Act may total up to $63,750.
In order to qualify for these incentives, physicians choosing the Medicaid Incentive Program options must not provide care in hospitals, and their volume of Medicaid patients must be 30%. Other qualifying providers include physicians working in rural clinics for which 30% of their patient volume is considered “needy.” These clinics must be considered Federally Qualified Health Clinics. Finally, providers who are pediatricians and have 30% Medicaid patients can also qualify. However, they are only eligible for up to $42,500 total financial incentive.
Under the Stimulus Act, hospitals do not have to choose between receipt of Medicare and Medicaid financial incentives, and their total incentives can reach $2 million per year, and sometimes more. As long as hospitals are eligible for “meaningful use” guidelines of electronic health records within the years 2011-2013, they can receive nearly full financial incentives. As with the above-mentioned incentive pay schedules, those becoming eligible later than 2013 will receive less financial incentives. This computation is based on a formula whereby the Medicare total volume is less than 100% based on the volume of discharges. The hospital incentive formula is more complicated than what is mentioned above (for Medicare and Medicaid individual providers) with anticipated incentive amounts likely not exceeding a total of $11 million.
In addition to the financial benefits for those providers implementing and/or continuing to utilize electronic health records in a “meaningful use” manner, other advantages are vast. As President Obama noted, a decrease in medical errors will be an advantage of utilizing electronic health records. Quality assurance measures can easily be put into place with most systems such that computers will catch data discrepancies thereby allowing error reconciliation at a much faster pace than would the paper records. Certainly this will prevent medical errors in the most proactive manner thus affording patients the highest quality of care possible. Moreover, clinical trials could yield more timely outcomes, many of which promise cure rates or treatments for some of the most challenging diseases. As well, the efficacy of drugs in pharmaceutical clinical trials may accelerate at rates that weren’t possible before the widespread implementation and usage of electronic health records required for national healthcare reform.
The benefits of electronic records is far reaching when also considering the likelihood of taxpayers who may benefit once electronic health records are fully implemented. But they are not the only ones who may experience healthcare cost savings: The federal government stands to save as well. A recent study conducted by the Congressional Budget Office anticipates that, over the next decade, the federal government will be saving close to $12 billion by converting to electronic healthcare records. So, as President Obama said when addressing the American Medical Association, electronic health records also translate into “less paper pushing and lower administrative costs, saving taxpayers billions of dollars. It will also make it easier for physicians to do their jobs.” As is evident, with the conversion to electronic health records, physicians will find it easier to work with each other and this can only serve to heighten cooperation amidst the medical field.
Perhaps Lawrence L. Weed, who offered the first proposal of electronic medical records in the 1960s, was thinking along the right lines. He suggested that medical records be computerized - or electronic - for the sole purpose of more thorough and organized records in which to increase the quality of patient care. Electronic health records also have the potential to offer huge cost savings to healthcare which is clearly a primary role in healthcare reform. As noted by President Obama, and caregivers and providers nationwide already benefitting from their usage, electronic health records can, and do, offer multiple benefits to patients and care providers.