Focus on the Final Rule

EHR Certification & Meaningful Use Please submit all questions via the WebEx Q&A function. Additional questions may be submitted to:

Daniel Gottlieb Partner, McDermott Will & Emery LLP Final Rule Legal Restrictions & Guidance

Agenda Who is an eligible hospital (EHs)? – Medicare Incentives – Medicaid Incentives Who is an eligible professional (EP)? – Medicare Incentives – Medicaid Incentives Exclusion of inapplicable meaningful use (MU) objectives

Agenda (cont’d) Changes to Medicare and Medicaid incentive calculations Registration and attestation process and timelines Certification of EHR Technology Stark Law EHR Donation Exception – Independent physicians on Medical Staff – Hospital-Owned Clinics

Medicare Eligible Hospitals Medicare EHs: a hospital located in one of the 50 states or D.C. that participates in the Medicare Inpatient Prospective Payment System (IPPS) and Maryland acute care hospitals CAHs are also eligible for incentives Multi-campus hospital with a single provider number is a single hospital

Medicare Eligible Hospitals Excludes IPPS-excluded hospitals and hospital units such as: – Psych hospital- Rehab hospital – Children's hospital- LTCHs Surgical and other specialty hospitals participating in IPPS are eligible for Medicare incentives

Medicare Eligible Professionals Medicare EPs include doctors of: medicine or osteopathy; dental surgery or dental medicine; podiatric medicine; optometry or chiropractry Hospital-based physicians who provide 90% or more of their covered services in a hospital inpatient or ER setting are ineligible

Medicaid Eligible Hospitals EHs include “acute care hospitals” and children’s hospitals An “acute care hospital” is a hospital where the ALOS is 25 days or fewer and a CCN that has the last four digits in the series (short- term general hospitals and 11 U.S. cancer hospitals) and now under the final rule also (CAHs)

Medicaid Eligible Hospitals Acute care hospital must have at least 10 percent Medicaid Patient Volume based on patient encounters Like other Medicaid EHs, CAHs may receive both Medicare and Medicaid EHR incentive payments If an EH meets Medicare MU requirements, it will be deemed to meet Medicaid MU requirements

Medicaid Eligible Professionals Medicaid EPs are the following professionals (other than hospital- based professionals): – Physicians and dentists – nurse practitioners – certified nurse-midwives – physician assistants practicing in FQHCs or RHCs that are led by a physician assistant

Medicaid Eligible Professionals A PA leads an FQHC or RHC under any of the following circumstances: – when a PA is the primary provider in a clinic (for example, when there is a part-time physician and full-time PA – when a PA is a clinical or medical director at a clinical site of practice – PA is an owner of the RHC

Medicaid Eligible Professionals Medicaid EP must satisfy one of three Patient Volume thresholds: – Have ≥ 30% Patient Volume attributable to Medicaid recipients – Have ≥ 20% Patient Volume attributable to Medicaid recipients and be a pediatrician – practice predominantly in a FQHC or RHC and have ≥ 30% Patient Volume attributable to Needy Individuals

Medicaid Eligible Professionals Needy Individuals are persons who: – received medical assistance from Medicaid or the Children’s Health Insurance Program – were furnished uncompensated care or – were furnished services either at no cost or reduced cost based on a sliding scale determined by individuals’ ability to pay

Inapplicable MU Objectives Some MU objectives do not apply to every provider so provider would not have any eligible patients or actions for the measure denominator In these cases, provider may exclude (i.e., not meet) the measure Exclusions do not count against the deferred measures in the menu set

Inapplicable MU Measures For example, an EH or CAH that did not have request for electronic copy of discharge instructions may exclude core MU Objective #12 and only comply with 13 of 14 objectives An EH or CAH that is excluded from a menu set objective must only meet 4 rather than 5 of 10 objectives

Medicaid Incentive Calculation CMS clarified that employer’s or FQHC’s purchase of EHR for use by employed EPs is not a payment CMS did not address whether payments from other sources could include EHR donation to independent physician practice under Stark EHR donation exception

Registration To participate in incentive programs, eligible provider must register on incentive program website at Medicaid programs will interface with program registration website Registration begins in January 2011

Registration Registration requirements include: – Name, National Provider Identifier, business address and phone number – Taxpayer identification number – Hospital’s CCN – EPs must select Medicare or Medicaid – Medicaid providers must select one state

Attestation for Medicare FFS Eligible providers demonstrate MU to CMS through attestation in 2011 and attestation and electronic reporting of clinical quality information in 2012 Providers may submit attestations as early as April 2011 to CMS Payment begins as early as May 2011 following attestation

Attestation for Medicare FFS CMS will provide a web-based tool for attestation CMS has not released attestation tool CMS is developing an audit strategy to verify attestations and prevent fraud and abuse Providers should develop compliance and document retention procedures

Attestation to States States must identify attestation and/or electronic reporting mechanism in their State Medicaid HIT Plans, subject to CMS approval States must develop audit and verification procedures

Attestation and Reporting FY 2011: EH or CAH must attest that during the EHR reporting period, it: – Used certified EHR technology and specify technology – Satisfied required MU objectives and measures – Must specify the EHR reporting period and provide the result of each applicable measure for inpatients and ER patients during the reporting period

Attestation and Reporting FY 2012 and after: EH or CAH must attest that during the EHR reporting period, it: – Used certified EHR technology and specify EHR – Satisfied required MU objectives and measures except clinical quality reporting – Must specify the EHR reporting period and provide the result of each applicable measure EH or CAH must electronically report clinical quality measures through a portal (or, if feasible HIE or registry)

EP’s Attestation and Reporting For CY 2011: EP must attest that during the EHR reporting period, EP: – Used certified EHR technology and specify technology – Satisfied required MU objectives and measures – Must specify the EHR reporting period and provide the result of each applicable measure

EP’s Attestation and Reporting For CY 2012 and after: EP must attest that during the EHR reporting period, EP: – Used certified EHR technology and specify EHR – Satisfied required MU objectives and measures except clinical quality reporting – Must specify the EHR reporting period and provide the result of each applicable measure EP must electronically report clinical quality measures through a portal (or, if feasible HIE or registry)

Medicare EH Payment Process Single payment contractor pays an EH or CAH a preliminary, estimated EHR incentive payment based on most recently filed 12-month cost report as early as May 2011 following successful MU attestation Final payment determined at time of settling cost report that begins on or after start of payment year

Medicare EP Payment Process Single payment contractor makes annual incentive payment to an EP when EP demonstrates MU and earns the maximum annual incentive payment Payments begin as early as May 2011 following successful demonstration of MU on attestation

EHR Certification ONC published the temporary EHR certification program final rule on 6/24/2010, which establishes : – selection process for testing and certification bodies (ONC-ATCBs) – parameters under which the ONC-ATCBs will test and certify that EHR meets the EHR certification requirements ONC will make a Certified EHR list available this Fall

Review of Medicare’s Timeline Fall 2011: Certified EHR technology on EHR incentive program website January 2011: Registration begins on incentive program website April 2011: Attestation of MU begins through web tool May 2011: Medicare incentive payments begin

Stark EHR Donation Exception Stark Law provides an exception for subsidies for EHR items and services Exception applies to subsidies for EHRs used in private physician practice offices Hospital may purchase inpatient or ambulatory EHR for use in hospital facilities to serve hospital patients without meeting exception

Other Resources Comprehensive McDermott White Paper regarding final EHR certification and meaningful use regulations to be issued shortly Healthcare Informatics article regarding Stark EHR donation exception

Daniel F. Gottlieb Partner, McDermott Will & Emery LLP

Ralph Llewellyn Partner, Eide Bailly Final Rule Accounting Requirements & Incentive Guidelines

Reimbursement Topics Medicare – Medicare Share – PPS Hospitals – Critical Access Hospitals – Eligible Professionals Medicaid – Same

Medicare Share Based on inpatient volume – Numerator Medicare days + Medicare Advantage patient days – IP, specialty care » Psych and Rehab included in proposed rule, but eliminated in final rule – Excludes Swing Bed

Medicare Share Based on inpatient volume – Denominator Total inpatient days TIMES – Hospital charges less charity care DIVIDED BY hospital charges » Worksheet C Part I Line 200 Column 8

Medicare Share Based on inpatient volume – Denominator Total inpatient days TIMES – Hospital charges less charity care DIVIDED BY hospital charges » Worksheet C Part I Line 200 Column 8 Charity Care – As identified on Worksheet S-10 of the Medicare cost report for PPS Hospitals – Not reported on Medicare cost report for CAH’s in the past

PPS Hospitals Initial Amount – Base payment for each PPS hospital = $2,000,000 Adjusted for discharges 1,150 to 23,000 – $200 additional per discharge in this range – Times your Medicare Share

PPS Hospitals Payment Process – Hospital data last filed 12 month cost report – Settled based on the first 12 month cost reporting period that begins after the start of the payment year

PPS Hospitals Transition Factor (FFY 2011 – 2013) – Year 1 = 1 – Year 2 = ¾ – Year 3 = ½ – Year 4 = ¼ – Subsequent Years = 0

PPS Hospitals Transition Factor (FFY 2014 – 2015) – If the facility’s first year of eligibility is after FFY 2013, the transition factor is the same as a facility with a first payment in FFY 2013 – If the first payment year is after FFY 2015, the transition factor

PPS Hospitals Fiscal Year Fiscal Year that Eligible Hospital First Receives the Incentive Payment

Critical Access Hospitals Allowed to expense their costs associated with the purchase of certified EHR technology in a single year – Versus depreciating these costs on the cost report – Current year and prior year purchases (undepreciated value) – Includes only purchases for hospital specific EHR technology

Critical Access Hospitals Continued – Reimbursement based on Medicare Share + 20 percentage points (not to exceed 100%) – Lump sum prompt payment subject to reconciliation Initial based on last filed 12 month cost report Final based on final cost report

Critical Access Hospitals Continued – Payments up to 4 consecutive years Stages Replacement equipment

Critical Access Hospitals Allowable expense – Reasonable cost – “computers and associated hardware and software necessary to administer EHR technology” Vendor implementation costs not included in this incentive calculation Communicate with MAC/FI

Critical Access Hospitals Allowable expense – Incentive payment in lieu of depreciation AND interest “Be smart about your interest” – Cost not reportable on future cost reports – Subject to reconciliation

Eligible Providers Incentive – 75% of secretary’s estimate of allowed charges for covered services furnished by eligible professional during relevant payment year Paid claims no later than 2 months after relevant year – Up to 5 years – No incentive after 2016

Eligible Providers Calendar Year First CY in which EP Receives an Incentive Payment $18, $12,000$18, $8,000$12,000$15, $4,000$8,000$12, $2,000$4,000$8,000 $ $2,000$4,000 $0 Total$44,000 $39,000$24,000$0

Eligible Providers HPSA incentive – 10% increase in incentive Provides services predominately in HPSA Defined as greater than 50% January 1 – December 31 frequency If HPSA by December 31 of prior year – No impact if HPSA lost during current year – No impact if HPSA obtained during current year

Eligible Providers Calendar Year First CY in which EP Receives an Incentive Payment $19, $13,200$19, $8,800$13,200$16, $4,400$8,800$13, $2,200$4,400$8,800 $ $2,200$4,400 $0 Total$48,400 $42,900$26,400$0

Eligible Providers Single consolidated payment – Ascertain professional has demonstrated meaningful use – Reaches maximum payment limit – If maximum payment limit is not reached payment is processed 2 months after relevant payment year Multiple employers/contractual arrangements – Assign incentive to 1 employer or entity

Medicaid PPS Hospitals and Critical Access Hospitals can participate in Medicare and Medicaid Eligible providers must elect, with option for one change

Medicaid - Hospitals PPS and CAHs reimbursed under same methodology as Medicare PPS – Medicaid Share versus Medicare Share – Payment made over 3 – 6 years

Medicaid – Eligible Providers Incentive payment to EP equals Net Average Allowable Costs for EHR NAAC is Average Allowable Costs (capped at $25K in yr 1 and $10K in yrs 2-6) net of cash payments attributable to EHR technology or support services from sources other than state and local governments, subject to 15% EP responsibility

Medicaid – Eligible Providers

Calendar Year Maximum Incentive Payment for Medicaid EPs Who Are Meaningful Users in the First Payment Year $21, $8,500$21, $8,500 $21, $8,500 $21, $8,500 $21, $8,500 $21, $8, $8, $8, $8, $8,500 Total$63,750

Ralph Llewellyn Partner, Eide Bailly LLP

Robert Forrest Healthland ARRA Task Force Healthland’s Role in Getting you to MU

Meeting Meaningful Use Eligible hospitals must 1.Implement certified EHR technology 2.Use it in a “meaningful manner” Healthland will 1.Develop EHR technology that meets meaningful use requirements 2.Obtain Certification from an ONC-ATCB

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