ARRA/HITECH How to prepare? Eric Rose, M.D., F.A.A.F.P. Medical Director, McKesson Physician Practice Solutions eric.rose@mckesson.com Susan Kanvik, MPH Healthcare Knowledge Leader, Point B Inc. skanvik@pointb.com Corporate Public Affairs Intern JulyMBA 28, 2009 Candidates February 28, 2008 HCIT and the Stimulus Agenda 1 Stimulus Plan Overview 2 HITECH Act and Physician Incentive Programs 3 Hospital Entitlement Funds 4 Privacy and Security Provisions 5 Planning Checklist 2 Stimulus Plan Overview Where are we and how did we get here? f The American Recovery & Reinvestment Act of 2009 (H.R. 1) ─ One of the largest single pieces of legislation in U.S. history ─ Signed 23 days after official introduction (28 days after inauguration) January 25, 2009 February 10, 2009 February 13, 2009 H.R. 1 introduced in the House Appropriations Committee Senate votes 61 – 37 for their bill estimated at $837 B House passes 246 – 183 Senate passes 60 – 38 January 28, 2009 February 11, 2009 February 17, 2009 House votes 244 – 188 for the bill estimated at $819 B Conference Committee reaches compromise with a bill estimated at $787 B President Obama signs The American Recovery & Reinvestment Act of 2009 Scale = 1 day 3 Stimulus Plan Overview What is in the stimulus plan? f Estimated $787 billion in net impact on the federal deficit ─ $212 billion (~27%) in net revenue effects, i.e. tax cuts ─ $575 billion in net spending either discretionary or direct $308 billion in Discretionary Spending $267 billion in Direct Spending Agriculture Housing Energy State Health Nutrition Transportation Stabilization Water Labor Rural Dev. Education Commerce Environment Justice Interior Science Federal Defense Homeland Military Facilities State Security Veterans Dept. $26 $16 $5 $51 $11 $7 $71 $3 $61 $1 $54 $4 Tax Provisions $74 Unemployment Assistance $57 Medicaid Health Insurance HCIT $25 $21 $90 Health NIH Other HHS ONCHIT $10 $2 $10 Healthcare is over $157 billion (~ 27%) of the net spend Source: Congressional Budget Office Summary of Estimated Cost of the Conference Agreement for H.R. , The American Recovery and Reinvestment Act of 2009; figures are rounded 4 Stimulus Plan Overview Healthcare provisions in the Recovery Act “HITECH” Act Medicaid $90 B f f Additional funding for state Medicaid programs Prevents additional state restrictions on Medicaid coverage Health Insurance $25 B f Extension of COBRA as gap coverage for early retirees NIH $10 B f Additional funding for scientific research grants Other HHS $10 B f f Comparative effectiveness, wellness and prevention initiatives Grants, loans and training programs Health IT $21 B f f Funding for health connectivity initiatives Incentives for physicians and hospitals to adopt EHRs ONCHIT $2 B f f New entities to establish standards, HIT policy and certify New (and more restrictive) privacy provisions 5 HITECH Act Specifics Overview of key healthcare technology components Policy Development, Standards & Interoperability ─ Codifies Office of the National Coordinator (ONCHIT) ─ New advisory bodies – Health Policy and Standards ─ Establishes “Date Certain” for initial EHR standards (12/31/09) ─ New provisions and restrictions to protect privacy of PHI ─ Funds Comparative Effectiveness Research (CER) Adoption & Use of Healthcare IT ─ Significant incentives for use of certified EHRs ─ Requirements for “meaningful use” ─ 2 ways to qualify: • Medicare Provision • Medicaid Provision 6 HITECH Act Specifics What is the timeline for the HITECH funding? Estimated Net Deficit Impact ($ billions) $15 $13.8 Incentives begin in 2011 $10 $5.0 $5 $0.7 $6.3 $6.1 $3.4 Penalties begin in 2015 $1.5 $0 -$5 -$10 2009 2010 2011 2012 2013 2014 2015 ($6.0) ($5.4) 2016 2017 ($3.2) ($2.6) 2018 2019 f HITECH funding utilizes both a “carrot” and “stick” for EHR adoption ─ Incentive payments for use of healthcare IT begin in 2011 ─ Penalties for non-compliance begin in 2015 7 HCIT and the Stimulus Agenda 1 Stimulus Plan Overview 2 HITECH Act and Physician Incentive Programs 3 Hospital Entitlement Funds 4 Privacy and Security Provisions 5 Planning Checklist 8 Physician Incentive Program Overview General ─ Office-b ased providers only (employment by hospital OK) ─ Must be an “eligible professional” and prove “meaningful use” of a “certified EHR” Medicare Incentive ─ Potential incentives up to $44,000 over a 5-year period beginning 2011 ─ Capped at 75% of Part B claims ─ Must qualify before 2013 to receive maximum incentive payout ─ Must qualify before 2015 to avoid subsequent penalties Medicaid Incentive ─ Pays 85% of the “Net Average Allowable Cost” up to an annual maximum ─ Requires 30% Medicaid patient volume or 20% for pediatricians ─ Potential incentives up to $63,750 over a 6-year period beginning 2011 ─ Must qualify by 2016 to receive full incentive payout No Double Dipping ─ Providers may receive incentive payments from only one program, even if they qualify for both 9 Physician Incentive Program Eligible Professional f Medicare Provision ─ Eligible Professional is a physician as defined in the Social Security Act section 1861: • a doctor of medicine or osteopathy • a doctor of dental surgery or of dental medicine • a doctor of podiatric medicine • a doctor of optometry • a chiropractor f Medicaid Provision ─ Expands the definition of “eligible professionals” to include: • certified nurse mid-wife • nurse practitioner • physician assistant (under certain circumstances) 10 Physician Incentive Program Medicare incentive program uses a part B claims method f Pays 75% of part B claims up to max ─ $3,000 bonus to qualify by 2012 ($ Thousands) $30 f Requires “meaningful use” of certified EHR system f Up to $44k per physician over 5 years with a 10% bonus for physicians in shortage areas f Medicare Incentive Potential Must qualify by 2012 to receive max ─ Reduced incentives for 2013 – 2015 f No payments to providers after 2016 f Penalties begin in 2015 ─ 2015 – 1% cut in Medicare payment ─ 2016 – 2% cut ─ 2017 and beyond – 3% to 5% cut pending overall market adoption rate $25 $24 Up to $44k per physician $20 $3 $16 $15 $10.7 $10 $15 $5.3 $12 $5 $2.7 $8 $4 f Medicare Advantage (MA) providers qualify for the Medicare incentives using MA claims instead of part B claims $0 Year 1 Year 2 Potential Payout Year 3 Bonus Year 4 $2 Year 5 Part B Claims Req’d 11 Physician Incentive Program Medicare Reimbursement Schedule Maximum Incentive Payments Payment Year Adoption Year Now2011 2012 2013 2014 2011 $18k - - - 2012 $12k $18k - - 2013 $8k $12k $15k - 2014 $4k $8k $12k $12k 2015 $2k $4k $8k $8k 2016 - $2k $4k $4k Total $44K $44K $39K $24K $48.4K $48.4K $42.9K $26.4K Shortage Area Source: MTS Primary Research Survey Part B Annual Charges Maximum Payment $24,000 $18,000 $16,000 $12,000 $10,667 $8,000 $5,334 $4,000 $2,667 $2,000 12 Physician Incentive Program Medicaid incentive program uses a cost based method f f Pays 85% of the “net allowable costs” ─ Includes system, implementation, training, maintenance, etc. Requires “meaningful use” by Year 2 ─ Year 1 can be for adoption only Medicaid Incentive Potential $25 Up to ~$64k per physician over 6 years f Must qualify by 2016 to receive max $15 f No payments to providers after 2011 ─ $340M available until expended $10 Requires 30% Medicaid patient volume ─ 20% for pediatricians, but receive only 66% of net allowable costs $25 Up to ~$64k per physician $20 f f ($ Thousands) $30 $21.3 $5 $10 $10 $10 $10 $10 $8.5 $8.5 $8.5 $8.5 $8.5 Year 2 Year 3 Year 4 Year 5 Year 6 $0 Year 1 Potential Payout Net Allowable Costs 13 Physician Incentive Program Medicaid Reimbursement Schedule Payment Year Maximum Incentive Payments Adoption Year 30% Provider 2011 – 2016 20% Pediatrician 2011 – 2016 Allowable Costs Max Pmt Max Pmt For 30% provider (85% of allowable cost) For Pediatrician (20% to 29%) Allowable Cost*2/3*85%) Year 1 $21,250 Year 2 $8,500 $5,667 Year 3 $8,500 $5,667 $25,000 (year 1 only) $21,250 $14,167 Year 4 $8,500 $5,667 $10,000 $8,500 $5,667 Year 5 $8,500 $5,666 Year 6 $8,500 $5,666 $63,750 $42,500 (up to 2021) TOTAL Source: MTS Primary Research Survey $14,167 14 Physician Incentive Program Meaningful Use “Meaningful use”: f ARRA stipulates three areas… ─ E-prescribing ─ Data exchange to support care coordination ─ Clinical quality reporting f But leaves the details at the discretion of the Secretary of HHS and allows her to make the definition more stringent over time 15 Physician Incentive Program Meaningful Use f Proposed definition approved by HITPC 7/16/2009 f Final version will come from ONC by12/31/2009 f Final version may be very different from the 7/16 version! 16 Physician Incentive Program Meaningful Use Proposed Definition for first adoption year f Record patient data in the EHR: ─ Demographics including language, race, ethnicity, insurance type ─ Vital signs ─ Problem List, Medications, Allergies ─ Smoking status ─ Advance directives ─ Laboratory test results ─ Progress notes for each encounter f Use CPOE for all orders (!) f Electronically transmit prescriptions f Implement drug-drug, drug-allergy, drug-formulary warnings f Generate lists of patients for population management f Report quality measures to CMS 17 Physician Incentive Program Meaningful Use Proposed Definition for first adoption year f Send reminders to patients for preventive/follow-up care f Implement one “clinical decision rule” f Check patient insurance eligibility electronically f Submit claims electronically f Provide patients with: ─ Clinical summaries of each encounter ─ An electronic copy of their record on request ─ “Timely electronic access” to their health information ─ “Patient-specific education resources” f Electronic data exchange ─ “Key clinical information” among care providers ─ Submit immunization data to public registries ─ Submit syndromic surveillance data to public health agencies 18 Physician Incentive Program Certified EHR System f Certification requirements are not known yet f Likely to be tightly bound to “meaningful use” definition f ARRA requires HHS to “keep or recognize” a program of certification f Certification Commission for Health Information Technology (CCHIT) is a likely candidate and was recommended by a HITPC subcommittee on 7/16/2009. 19 HCIT and the Stimulus Agenda 1 Stimulus Plan Overview 2 HITECH Act and Physician Incentive Programs 3 Hospital Entitlement Funds 4 Privacy and Security Provisions 5 Planning Checklist 20 Hospital and Health Systems Funding Overview Type of Organization Subsection D hospitals Excludes Mental Health hospitals, Rehab Centers, Hospice, Nursing Homes and Children’s Hospitals Childrens' Hospitals Non-Hospital-Based Physician Includes dentists, PA’s in a FQHC, certified nurse midwives, and physicians with certain Medicare Advantage Organizations) Physicians will not receive both Medicare and Medicaid funding, they must choose one Medicare $$ Available for Meaningful EHR Users1 Yes. Generally Year 1: $2M + $200 for each of the 1,150th through 23,000th discharge + Medicare share. Year 2: 3/4 of Year 1 Year 3: 1/2 of Year 1 Year 4: 1/4 of Year 1 Year 5: $0 If 1st payment is after 2015, no add'l payments made If not meaninful EHR user by 2015 there will be a reduction in Medicare payments or increases No, only Subsection D hospitals are eligible Yes. Per Physician: $44K over 5 yrs if user by 2011 or 2012 $41K if user by 2013 $38K if user by 2014 $27K over 2 yrs if user by 2013 $15K for 1 yr if user by 2014 $0 if user after 2014 Can charge add'l 75% per claim for limited time Medicare payments reduced if no EHR by 2015 Loans Available from States Possibly. States need to submit grants for loan funds. If awarded, will need to develop loan guidelines Grants Available No New Privacy & Security Regs Apply Yes Yes Pediatricians: If at least 20% of patients receive Medicaid. Others: If at least 30% of patients receive Medicaid. Up to 85% of implementation cost No reduction in Medicaid payments if EHR is not adopted Includes Federally Qualified Health Centers Possibly Possibly No No Yes Yes No No No No Yes Yes, if qualified as a Covered Entity or Business Associate No Yes Medicaid $$ Available to Implement EHR Yes, If acute care hospital & 10% of patients receive Medicaid assistance. Up to 85% of implementation cost No reduction in Medicaid payments if EHR is not adopted Hospital-based Physician Payors No No No No Pharmacies, Nursing Homes, Rehab Centers, Hospice, Clearinghouses, and others considered Covered Entities or Business Associates under HIPAA Foundations and Schools of Medicine States No No No No No No No No Yes Yes, competitive grants for broadband implementation and to set up loan funds - 21 Hospital and Health Systems Preparation Considerations f Alignment with organizational goals and commitment f Medicare vs Medicaid entitlement funds f “Meaningful Use” f Technology and operational impact f Timing of participation f Understand Vendor capabilities e 22 CHITA07/28/2009 Hospital and Health Systems Preparation Considerations f Role of State in fund appropriation f HIE collaboration 23 HCIT and the Stimulus Agenda 1 Stimulus Plan Overview 2 HITECH Act and Physician Incentive Programs 3 Hospital Entitlement Funds 4 Privacy and Security Provisions 5 Planning Checklist 24 ARRA Timeline -Privacy & Security Regulations e 25 CHITA 07/28/09 HITECH Privacy and Security Provisions f Business Associates now subject to same requirements as Covered Entities. f New “breach notification” requirements. f Account of Disclosures for any PHI disclosure (including for “payment, treatment, or health care operations”). f Patient has right to electronic copy of their record if it is an EHR. f Patient has right to restrict disclosures of PHI to payors for services paid for out-of-pocket 26 Security and Privacy Regulation ChangesHow to prepare f BA agreements will need to be reviewed and may need to be modified. f Breach notification process will need to put in place. f Covered Entities must now be able to account for ALL disclosures of PHI, including those for treatment, requiring process and system changes. f Processes for providing electronic copies of E H R to patients need to be developed. 27 Security and Privacy Regulation ChangesHow to prepare- continued f Patients can now ask that the CE not disclose PHI to anyone, including for treatment, if the patient is paying for the service out of pocket. Processes for this non disclosure are required. f Certain communications will now be considered Marketing and/or require patient authorization. CE’s will need to review all their communications. f Policies and procedures for Patients to opt out of fundraising communications are needed. 28 HCIT and the Stimulus Agenda 1 Stimulus Plan Overview 2 HITECH Act and Physician Incentive Programs 3 Hospital Entitlement Funds 4 Privacy and Security Provisions 5 Planning Checklist 29 HITECH Readiness A Suggested Checklist 1. Whether to participate 2. What year to start (“on-ramp paradox”) 3. Medicare or Medicaid? 4. Privacy provisions ─ Breach notification ─ Accounting for disclosures 5. Vendor communication 6. Understand “meaningful use” 7. Don’t forget about other programs (eRx incentive, Stark) 8. Getting help 30