Meaningful Use of EHR Technology:

Meaningful Use of EHR Technology: What Do the New Standards and Certification Criteria Mean for Your Organization? January 20, 2010 Mitchell J. Olejko Ropes & Gray LLP mitchell.olejko@ropesgray.com 415-315-6328 Michael D. Beauvais Ropes & Gray LLP michael.beauvais@ropesgray.com 617-951-7601 Joanna L. Bergmann Ropes & Gray LLP joanna.bergmann@ropesgray.com 202-508-4836 Sarah V. Ferranti Ropes & Gray LLP sarah.ferranti@ropesgray.com 617-235-4939 ROPES & GRAY LLP This information should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your own situation and any specific legal questions you may have.

Agenda Background on American Recovery and Reinvestment Act of 2009 ( Recovery Act ) Eligibility for Incentive Payments Criteria for Certified Electronic Health Records ( EHR ) Technology Incentives and Penalties Meaningful Use Clinical Quality Measures Ambiguities and Concerns Practice Tips 2 ROPES & GRAY

Background: American Recovery and Reinvestment Act of 2009 Pre-Recovery Act EHR Landscape Federal EHR Incentives Stark Law Exception Anti-Kickback Statute Safe Harbor E-Prescribing Incentive Program (MIPPA) State Experiments HIPAA Electronic transaction X12 Version 5010 and NCPDP Version D.0 standards (March 17, 2009) Full compliance by January 1, 2012 ICD-10 Full compliance by October 1, 2013 Centers for Disease Control and Prevention Report on EHR Use by Physicians (December 2009) 43.9% report using all or partial EMR/EHR systems in their office-based practices (excluding systems solely for billing); 20.5% report having systems that meet criteria of a basic system; 6.3% report having a fully functional system 3 ROPES & GRAY

Background: American Recovery and Reinvestment Act of 2009 (Cont.) Objectives of Recovery Act The role of health information technology in improving efficiency and quality Proposition accepted by Congress General Framework for Incentive Programs Medicare Fee-for-Service, Medicare Advantage, Medicaid Not full payment for technology Eligible professionals and eligible hospitals Focus on use of EHR (not just adoption) Exception: Medicaid at outset Technology requirements Incentives and penalties 4 ROPES & GRAY

Interim and Proposed Regulations Office of the National Coordinator for Health Information Technology (ONC) Interim Final Rule Criteria for certification of EHR Technology Centers for Medicare and Medicaid Services (CMS) Notice of Proposed Rulemaking Defines meaningful use of certified EHR technology and eligibility Opportunity for comment on both rules 5 ROPES & GRAY

Eligibility: Hospitals Medicare Hospitals reimbursed under Inpatient Prospective Payment System (IPPS) (including hospitals in Maryland) Critical access hospitals (CAHs) Exclusions: Psychiatric, rehabilitation, long-term care, children s and cancer hospitals Such hospitals and hospital units are statutorily excluded from the IPPS Medicaid Acute care hospitals At least a 10% Medicaid patient volume for each year EHR incentive payment is sought Children s hospitals (or units) No patient volume threshold Payments from one state only 6 ROPES & GRAY

Eligibility: Hospitals (Cont.) A hospital is determined by its unique CMS certification number (CCN) Issue: One CCN may include multiple sites Payment cap derived from number of discharges may disadvantage integrated facilities and sites that are part of a single campus Payments under both programs permitted for those hospitals that are otherwise eligible Exclusion: Provider-based clinics 7 ROPES & GRAY

Eligibility: Professionals ( EPs ) Medicare Doctors of medicine or osteopathy, dentists, podiatrists, optometrists and licensed chiropractors Medicaid Physicians, dentists, certified nurse-midwives, nurse practitioners and certain physician assistants Patient volume requirements Have a minimum 30% patient volume attributable to individuals receiving Medicaid Have a minimum 20% patient volume attributable to individuals receiving Medicaid, and be a pediatrician Practice predominantly in a FQHC or RHC and have a minimum 30% patient volume attributable to needy individuals Needy individuals include Medicaid (both FFS and MC) and CHIP patients, patients furnished uncompensated care by the provider, and patients for whom charges are reduced based on their ability to pay 8 ROPES & GRAY

Eligibility: Professionals ( EPs ) (Cont.) Deadline No incentive payments available to otherwise eligible professionals whose meaningful use of certified EHR begins after 2015 Program Election EP must choose one program; may switch once during the incentive program if prior to 2014 Exclusion: Hospital-Based Eligible Professionals EPs who furnish 90% or more of their Medicare-covered professional services in an inpatient hospital, outpatient hospital (including provider-based clinics), or emergency room of a hospital Proposing use of HIPAA 837 place of service (POS) codes on physician claims to determine site of service 9 ROPES & GRAY

Certified EHR Technology Initial set of standards, implementation specifications and certification criteria that EHR technology will need in order to support Stage 1 meaningful use Interim rule focuses on standards for certified EHRs (the process for EHR certification is expected later this year) Standards and implementation specifications Vocabulary Standards (standardized codes to describe clinical problems and procedures, medications and allergies) Content Exchange Standards (standards used to share clinical information such as patient records, prescriptions) Transport Standards (standards to establish a common and secure communication to electronically exchange health information) Privacy and Security Standards (authentication, data protection security) 10 ROPES & GRAY

Certified EHR Technology (Cont.) Certification Criteria Designed to correspond with and enable achievement of initial meaningful use objectives through the establishment of capabilities and identification of standards that must be used by these capabilities Where meaningful use criteria for eligible professionals and eligible hospitals are identical, the EHR capabilities are also the same Example (objective same for EPs and eligible hospitals) Meaningful Use Objective. Implement drug-drug, drug-allergy, drug-formulary check Capability. Automatic and electronic real-time alerts at the point of care for drug-drug and drug-allergy contraindications Example (objective differs between EPs and eligible hospitals) Meaningful Use Objective. Use CPOE Capability (EP). Enable user to electronically record, store, retrieve and manage, at a minimum, the following order types: medications, labs, radiology/imaging and referrals Capability (EH). Same but with different order type list; does not include referrals but does include additions such as physical therapy, blood bank and dialysis Incremental approach (greater specificity and fewer alternatives over time) 11 ROPES & GRAY

Certified EHR Technology (Cont.) To be Qualified EHR Technology Technology must have been tested and certified in accordance with the certification program established by the ONC EHR certification process not established, including how certification entities will be selected All certification criteria must be met EP or hospital responsible for proper combination of EHR Modules Each module must be separately certified 12 ROPES & GRAY

Incentive Payments: Professionals - Medicare Overview Payments to begin in 2011 Amount equal to 75% of Medicare allowable charges for covered professional services furnished by the EP in the payment year, subject to maximum payment amount Maximum payment amount over five years is $44,000 Extra 10% available for providers in geographic Health Professional Shortage Areas Physician can assign payments to a single employer or entity with which the physician has a valid contractual arrangement allowing the entity to bill for the physician s services Interaction with MIPPA e-prescribing Incentive Program EPs accepting a Medicare EHR incentive payment in a given year would be excluded from being eligible for the e-prescribing incentive program payment for that year 13 ROPES & GRAY

Incentive Payments: Professionals Medicare (Cont.) Maximum Total Amount of EHR Incentive Payments for a Medicare EP who does not Predominantly Furnish Services in a Geographic Health Professional Shortage Area Calendar Year First Calendar Year in which the EP Receives an Incentive Payment 2011 2012 2013 2014 2015 subsequent years 2011 $18,000 ------ ------ ------ ------ 2012 $12,000 $18,000 ------ ------ ------ 2013 $8,000 $12,000 $15,000 ------ ------ 2014 $4,000 $8,000 $12,000 $12,000 ------ 2015 $2,000 $4,000 $8,000 $8,000 $0 2016 ----- $2,000 $4,000 $4,000 $0 TOTAL $44,000 $44,000 $39,000 $24,000 $0 14 ROPES & GRAY

Incentive Payments: Professionals - Medicaid Overview Payment to EPs under Medicaid are statutorily capped at 85% of net average allowable costs Net average allowable costs are also capped $25,000 in year 1 $10,000 in subsequent years Net average allowable costs are a function of average allowable costs and average allowable costs are determined by the Secretary of HHS For year 1, average allowable costs are associated with initial adoption of certified EHR technology For subsequent years, average allowable costs are associated with maintenance and operation of certified EHR technology Net average allowable costs = (Average allowable cost) - (Payments from other sources*) * Other than from state or local governments 15 ROPES & GRAY

Incentive Payments: Professionals Medicaid (Cont.) Overview (cont.) Year 1 Average allowable costs are $54,000 Net average allowable costs capped at $25,000 Maximum payment is $21,250 (85% of $25,000) Subsequent Payment Years Average allowable costs are $20,610 Net average allowable costs capped at $10,000 Maximum payment is (85% of $10,000) Medicaid EPs may participate for a total of 6 years May not begin receiving payments any later than CY 2016 Maximum payment amount over 6 years - $63,750 Interaction with MIPPA e-prescribing Incentive Program EPs receiving Medicaid EHR incentive payments would remain eligible for the e-prescribing incentive program payment 16 ROPES & GRAY

Incentive Payments: Professionals Medicaid (Cont.) Calendar Year Maximum Payments for Medicaid EPs who begin adoption in 2011 2012 2013 2014 2015 2016 2011 $21,250 2012 $21,250 2013 $21,250 2014 $21,250 2015 $21,250 2016 $21,250 2017 2018 2019 2020 2021 TOTAL $63,750 $63,750 $63,750 $63,750 $63,750 $63,750 17 ROPES & GRAY

Incentive Payments: Hospitals - Medicare Formula (base amount + discharge-related amount) x (transition factor) x (Medicare share) Factors Initial Amount Base amount of $2 million, plus Discharge-related amount of $200 for each hospital discharge during a payment year, beginning with a hospital s 1,150th discharge of the payment year, and ending with a hospital s 23,000th discharge of the payment year Transition Factor Phases down incentive payment over the payment years Transition factor in year 1 = 1; in year 2 = ¾; in year 3 = ½; in year 4 = ¼; subsequent years = 0 If payment year 1 is 2014, payments are as though hospital became meaningful user in 2013 (i.e., transition factor in year 1 ¾ etc.) 18 ROPES & GRAY

Incentive Payments: Hospitals Medicare (Cont.) Factors (cont.) Medicare Share Based on Medicare FFS and managed care inpatient bed days divided by total inpatient bed days (and modified by charges for charity care) Estimated # Part A inpatient bed days + Estimated # MA inpatient bed days (Total # inpatient bed days) X (Total charges - charity care charges) Total charges Estimated Range of Total Payments Over 4 Years Per hospital between $9,000 and $10.4 million with a median of $3.6 million 19 ROPES & GRAY

Incentive Payments: Hospitals Medicare (Cont.) Critical Access Hospitals CAHs normally paid on a cost basis Incentive payments based on reasonable costs incurred for purchase of certified EHR technology and Medicare share percentage Reasonable Costs. Reasonable acquisition costs incurred for the purchase of certain depreciable assets, such as computers and associated hardware and software, necessary to administer certified EHR technology excluding any associated depreciation and interest expenses Costs to be expensed over a single payment year; not depreciated over time Medicare Share. Number derived in same manner for other Medicare eligible hospitals plus 20 percentage points (not to exceed 100%) 20 ROPES & GRAY

Incentive Payments: Hospitals Medicare (Cont.) Critical Access Hospitals (cont.) Payments would not be made with respect to a reporting period beginning during a payment year after 2015 In no case would a CAH receive payment for more than 4 consecutive payment years 21 ROPES & GRAY

Incentive Payments: Hospitals - Medicaid Generally The payment is provided over a minimum of a 3-year period and a maximum of a 6-year period No hospital may begin receiving incentive payments for any year after 2016 Total incentive payment received over all payment years of the program is not greater than the aggregate EHR incentive amount (based upon a theoretical 4 years of payment the hospital would receive) 22 ROPES & GRAY

Incentive Payments: Hospitals Medicaid (Cont.) EHR Incentive Amount. The product of the (Overall EHR Amount) X (the Medicaid Share) Overall EHR Amount = (Initial Amount) x (Transition Factor) x (Medicare Share) Initial Amount: Same formula used under Medicare program Transition Factor: Same factors used under Medicare program Medicare Share: 1 Medicaid Share = A / B + C A = (# Medicaid inpatient bed days) + (# inpatient bed days attributable to individuals enrolled in a managed care organization, prepaid inpatient health plan or prepaid ambulatory health plan) B = Total # inpatient bed days for hospital Excludes inpatient bed days attributable to Medicare Part A and Part C patients C = (Total # hospital s charges excluding those attributable to charity care) / (total amount of hospital s charges) 23 ROPES & GRAY

Penalties ( Adjustments ) Medicare Eligible Professionals Physicians who are not meaningful EHR users in 2015 will face a 1% reduction to their Medicare Physician Fee Schedule payments (or 2%, if these physicians also were required, but failed, to e- prescribe) Payment penalty increases to 2% in 2016 and to 3% in 2017 In 2018 and afterward, if the proportion of eligible professionals who are meaningful EHR users is less than 75%, reductions may be increased by one percentage point each year but by not more than 5% overall 24 ROPES & GRAY

Penalties ( Adjustments ) (Cont.) Medicare (cont.) Eligible Hospitals Beginning in 2015, eligible hospitals that are not meaningful users of certified EHR technology would receive a net reduction of ¼, ½, and ¾ of the market basket update to the IPPS payment rate that would apply in 2015, 2016, 2017 and thereafter, respectively The reduction would apply to ¾ of the applicable market basket update Beginning in 2015, the IPPS applicable percentage increase may also be reduced for a hospital s failure to submit data on quality measures This reduction would equal ¼ of the applicable market basket update Example. FY 2015, market basket percentage = 2.0 Hospital reports quality data; not meaningful EHR user - update of 1.5 % (2% update minus 0.5 percentage point (33.3% of ¾ of the full update)) Hospital fails to report quality data; is meaningful EHR user - update of 1.5% (2% update minus ¼ reduction (0.5 percentage point) for failing to report quality data) 25 ROPES & GRAY

Penalties ( Adjustments ) (Cont.) Medicare (cont.) Critical Access Hospitals Medicaid For cost reporting periods beginning in 2015, eligible CAHs that are not meaningful users of certified EHR technology for a fiscal year (and that otherwise would be paid at 101% of reasonable costs) are subject to the following payment adjustments: FY2015: reimbursement for inpatient services at 100.66% of reasonable costs FY2016: reimbursement for inpatient services at 100.33% of reasonable costs FY2017: reimbursement for inpatient services at 100% of reasonable costs None 26 ROPES & GRAY

Penalties ( Adjustments ) (Cont.) Significant Hardship Exception Statutory requirement (Section 1848(a)(7)(B) of the Social Security Act) Secretary may, on a case-by-case basis, exempt an EP who is not a meaningful EHR user for the year from the application of the payment adjustment if the Secretary determines that compliance with the meaningful use requirements would result in a significant hardship Example: An EP who practices in a rural area without sufficient Internet access The exception is subject to annual renewal, but in no case may an EP be granted a hardship exemption for more than 5 years In the same manner that hospital-based physicians will not be eligible for incentive payments, they similarly will not be subject to payment penalties 27 ROPES & GRAY

Meaningful Use: Background Meaningful use is a statutory requirement with three main elements (Sections 1848(o)(2)(A) and 1886(n)(3) of the Social Security Act) Use of certified EHR in a meaningful manner Certified EHR technology is connected in a manner that provides for electronic exchange of health information to improve quality of care In using certified EHR technology, provider submits to HHS information on clinical quality measures Common definition for Medicare and Medicaid programs Incentive payments and payment penalties Generally, providers must achieve and document meaningful use of their certified EHR system 28 ROPES & GRAY

Meaningful Use: A Staged Approach Stage 1: Capture health information in coded format; track vital signs and conditions; coordinate care; and report clinical quality measures and public health information Stage 2: Expand on Stage 1 to encourage use of HIT for continuous quality improvement at the point of care and exchange of information in the most structured format possible Stage 3: Use EHR to improve quality, safety and efficiency; provide decision-support for high priority conditions; and give patients tools to manage their own care Stage 2 and 3 criteria are left for future rulemaking 29 ROPES & GRAY

Meaningful Use: Criteria Stage 1 criteria applicable in first payment year (until 2014) First payment year refers to the first year in which EP or eligible hospital receives an incentive payment Will vary by provider Organized around health outcome policy priorities and corresponding care goals, objectives and measures including HIT functionality measures Stage 2 criteria to be proposed by end of 2011 Stage 3 criteria to be proposed by end of 2013 30 ROPES & GRAY

Meaningful Use: Criteria (Cont.) Health Outcomes Policy Priority Care Goals Eligible Professionals Stage 1 Objectives Hospitals Stage 1 Measures Improving quality, safety, efficiency, and reducing health disparities SAMPLE PAGE Provide access to comprehensive patient health data for patient's health care team Use evidence-based order sets and CPOE Apply clinical decision support at the point of care Generate lists of patients who need care and use them to reach out to patients Report information for quality improvement and public reporting Use CPOE Implement drug-drug, drugallergy, drug-formulary checks Maintain an up-to-date problem list of current and active diagnoses based on ICD-9-CM or SNOMED CT Generate and transmit permissible prescriptions electronically (erx) Maintain active medication list Use of CPOE for orders (any type) directly entered by authorizing provider (for example, MD, DO, RN, PA, NP) Implement drug-drug, drugallergy, drug-formulary checks Maintain an up-to-date problem list of current and active diagnoses based on ICD-9-CM or SNOMED CT Maintain active medication list For EPs, CPOE is used for at least 80% of all orders For eligible hospitals, CPOE is used for 10% of all orders The EP/eligible hospital has enabled this functionality At least 80% of all unique patients seen by the EP or admitted to the eligible hospital have at least one entry or an indication of none recorded as structured data At least 75% of all permissible prescriptions written by the EP are transmitted electronically using certified EHR technology At least 80% of all unique patients seen by the EP or admitted to the eligible hospital have at least one entry (or an indication of none if the patient is not currently prescribed any medication) recorded as structured data Maintain active medication allergy list Maintain active medication allergy list At least 80% of all unique patients seen by the EP or admitted to the eligible hospital have at least one entry (or an indication of none if the patient has no medication allergies) recorded as structured data 31 ROPES & GRAY

Meaningful Use: Goals, Objectives & Measures Each Stage 1 meaningful use objective linked to a measure Example Care Goal: Improve quality, safety, efficiency; reduce health disparities Objective: Maintain active medication list (EPs and hospitals) Measure: At least 80% of patients have one coded entry recorded (EPs and hospitals) Example Care Goal: Engage patients and families in their health care Objective: Provide patients with an electronic copy of health information upon request (EPs and hospitals) Measure: At least 80% of all patients who request an electronic copy are provided it within 48 hours (EPs and hospitals) 32 ROPES & GRAY

Meaningful Use: Goals, Objectives & Measures (Cont.) Each Stage 1 meaningful use objective linked to a measure Example Care Goal: Improve care coordination Objective: Capability to exchange clinical information electronically among providers (EPs and hospitals) Measure: Performed at least one test of certified EHR technology s capacity to electronically exchange clinical information (EPs and hospitals) Currently an all or nothing approach 23 measures for eligible hospitals 25 measures for eligible professionals No variations by physician specialty or provider type 33 ROPES & GRAY

Meaningful Use Demonstrating Meaningful Use In 2011, all of the results for all objectives/measures (including quality measures) would be reported through attestation In 2012, direct submission of clinical quality measures proposed Variations: Medicaid Medicaid providers (hospital or EP) will qualify for 2011 incentive payment if able to demonstrate that they have engaged in efforts to adopt, implement or upgrade certified EHR technology States may adopt additional meaningful use requirements; CMS must approve 100% Federal financial participation to States for Medicaid incentive payments and 90% for associated State administrative expenses Timing; Reporting Periods 90-day reporting window in first payment year (must report for a continuous period starting and ending in the same calendar year) After first payment year, EHR reporting period is proposed to be entire year 34 ROPES & GRAY

Meaningful Use (Cont.) Additional Requirements Provide certain administrative data to fulfill ONC s requirements of online posting, avoid duplicate incentive payments and ensure accurate and timely incentive payments Overpayments According to preamble, CMS will identify (through audits) and recoup overpayments resulting from incorrect or fraudulent attestations, quality measures, cost data, patient data or any other submission required to establish eligibility or qualify for payment Differences From HIT Policy Committee Recommendations for Meaningful Use Does not include requirement to record advance directives Does not include requirement to provide access to patient-specific education resources upon request Adds additional clinical decision-support rules 35 ROPES & GRAY

Clinical Quality Measures Clinical Quality Measures Measures must be reported to achieve meaningful use Measures are of processes, experience and/or outcomes of patient care, observations or treatment that relate to one or more quality aims for health care such as effective, safe, efficient, patient-centered, equitable and timely care Measures must be reported for all patients, not just Medicare and Medicaid beneficiaries Reporting to CMS and/or the States Ambulatory quality measures reported to CMS except Medicaid EPs should report to the States Hospital quality measures reported to CMS except Medicaid eligible hospitals report to the States 36 ROPES & GRAY

Clinical Quality Measures (Cont.) Phased Reporting 2011 Attest to use of certified EHR system to capture data elements and calculate results for applicable clinical quality measures Attest to accuracy and completeness of data for each of the applicable measures 2012 and beyond (anticipated) Electronic submission using certified EHR technology assuming CMS can electronically receive submissions 37 ROPES & GRAY

Clinical Quality Measures: EPs Core measures 90 measures (nearly all endorsed by Physician Quality Reporting Initiative or National Quality Forum) Only 9 have an existing electronic standard Example: Inquiry regarding tobacco use (number of patients who use tobacco and percentage of patients aged 18 years and older who received advice to quit smoking) Specialty-specific measures Specialty Groups Include: Cardiology, Oncology, Pediatrics, OB/GYN, Surgery, Primary Care Measures Example: 6 measures for oncology specialty including certain types of cancer Example: 10 measures for cardiology specialty including CAD and heart failure For 2011 and 2012, EP must submit information on: Two core measures (tobacco use screening, blood pressure management, drugs to be avoided in the elderly) PLUS All measures for one specialty group EP selects specialty group 38 ROPES & GRAY

Clinical Quality Measures: Hospitals 34 Clinical Quality Measures Example: Acute myocardial infarction patients who are prescribed a beta-blocker at discharge Example: Emergency department throughput For Medicaid-eligible hospitals, if the first set of measures do not apply to their patient population, hospitals may select a second set of clinical quality measures to meet the clinical quality measure reporting requirement under the Medicaid program 8 clinical quality measures; geared toward children s hospitals Example: PICU Pain Assessment on Admission Example: Pneumonia care 39 ROPES & GRAY

Ambiguities and Areas of Concern Eligibility Hospital-based eligible professionals Certified EHR Technology Process for certification still open Standards for interoperabilty Technical direction for Stages 2 and 3 Vendor guarantees Meaningful Use All or nothing approach to implement EHR technology Criteria do not take into account differences between specialties 40 ROPES & GRAY

Ambiguities and Areas of Concern (Cont.) Meaningful Use (cont.) Concern regarding providers ability to achieve a number of meaningful use criteria (e.g., use of CPOE, 48 hours to compile a patient health record) CPOE requirement requires hospitals to count all physician orders, including paper orders a process that might not currently exist May require changes to workflow and technology Interaction with Other Laws E-prescribing incentive (Medicare Improvements for Patients and Providers Act of 2008) Federal anti-kickback and anti-self referral laws Safe harbor/exception for EHR includes certification criteria for interoperability 41 ROPES & GRAY

Practice Tips Achieving Meaningful Use Self-assessment Vendor negotiations Acquisition and implementation Tracking and reporting compliance Contracting with Vendors 42 ROPES & GRAY

Questions? Mitchell J. Olejko Mitchell.Olejko@ropesgray.com Michael D. Beauvais Michael.Beauvais@ropesgray.com Ropes & Gray LLP January 20, 2010 43 ROPES & GRAY