The Centers for Medicare and Medicaid Services (CMS) published proposed rules in the Federal Register on January 13 to implement Medicare and Medicaid payment incentives to providers for adoption and meaningful use of certified electronic health record (EHR) technology. Comments on the proposed rules will be due on March 15. The rules interpret and seek to clarify provisions in the American Recovery and Reinvestment Act (ARRA) of 2009. Medicaid incentive payments will be available in 2011 for acute and children's hospitals as well as non-institutionally based physicians, certified nurse midwives, dentists, nurse practitioners, physician assistants, and pediatricians meeting EHR, patient volume, and other eligibility requirements.   States must quickly design effective procedures for administering the incentive payments, determining eligibility of providers to receive the payments, and fulfilling audit responsibilities in the rules. PCG can help clients assess the impact of the proposed rules and develop appropriate methods for achieving compliance. The proposed rules show how:

• Incentive payments to eligible hospitals can include a $2,000,000 base payment plus a $200 per discharge adjustment (for each discharge from the 1,150th to the 23,000th discharge, regardless of payer, for each hospital  over a 12 month period), subject to adjustments related to the Medicaid share of patient volume, and can be spread over 3-6 years at state option;
  
• Incentive payments to non-institutionally based eligible professionals can be up to $21,250 for each professional in the first year of adoption and meaningful use and up to $8,500 in five subsequent years for a six year total not exceeding $63,750;
  
  
• Providers may initially enroll in the Medicaid incentive program before fulfilling some of the EHR meaningful use eligibility criteria (unlike the Medicare rules) but states must monitor, verify, audit, and report to CMS on providers' achievement of compliance within each Medicaid incentive payment year;
  
  
• Hospitals can claim Medicaid and Medicare payment incentives concurrently but non-institutional professionals must elect one or the other, with only one opportunity to switch the initial election, and providers may claim Medicaid incentive payments from only one state for any payment year;
  
  
• Professionals may assign incentive payments voluntarily to a state-designated entity, such as a health information exchange (HIE), promoting the adoption of EHR technology;
  
  
• Qualified providers contracting with managed care plans may receive incentive payments outside of their payments from the plans;
  
  
• Medicaid FFP is available at 100 percent of state expenditures for incentive payments and at 90 percent of state expenditures for administrative activities in support of implementing the incentive payments, subject to audit, and subject to CMS prior approval of states' Advance Planning Documents and cost allocation methods, with limited provisions for retroactivity to the February 18, 2009 ARRA enactment date.