Making Meaning of “Meaningful Use”- EHR, Medicare and Texas Medicaid Funding Presented by Pamela McNutt Sr. VP & CIO Methodist Health System 1

 Acute care and critical access hospitals Includes children’s hospitals Includes children’s hospitals Excludes Psychiatric, Rehab, Long Term Care and Cancer hospitals Excludes Psychiatric, Rehab, Long Term Care and Cancer hospitals Must have at least 10% Medicaid volume Must have at least 10% Medicaid volume May seek both Medicare or Medicaid incentives May seek both Medicare or Medicaid incentives  Eligible Providers Physicians, pediatricians, dentists, certified nurse midwives nurse practitioners, physician assistants in special rural programs Physicians, pediatricians, dentists, certified nurse midwives nurse practitioners, physician assistants in special rural programs Cannot be hospital based (ie. radiology, lab, ED) Cannot be hospital based (ie. radiology, lab, ED) Must have at least 30% Medicaid volume (20% for Pediatricians) Must have at least 30% Medicaid volume (20% for Pediatricians) Must choose either Medicare or Medicaid but can switch once Must choose either Medicare or Medicaid but can switch once Medicaid EHR Incentives – Eligibility 2

Medicaid EHR Incentives – How to Qualify   Possess a Certified Complete EHR system   Report quality metrics   Meet Meaningful Use by demonstrating functionality in your EHR systems split into three increasingly difficult stages First Fiscal Year Payment Year ** 2011Stage 1 Stage 2 Stage Stage 1 Stage 2Stage Stage 1Stage 2Stage Stage 1Stage *Stage 3 * Avoids payment adjustments only for EPs in the Medicare EHR Incentive Program. ** Stage 3 criteria of meaningful use or a subsequent update to the criteria if one is established through rulemaking. Progression of Meaningful Use Stages by Payment Year 3

Texas Medicaid EHR Incentives – How it is paid  Incentive payments for use of electronic health records scaled over a three-year period starting in CMS FY %, 40%, 10% respectively 50%, 40%, 10% respectively  Year 1 payment is for adoption, implementation, upgrade or adoption of Certified EHR technology and does not require achievement of Meaningful Use  Year 2 – 3 requires demonstration of meaningful use of certified EHR technology and reporting of quality metrics Will be the same as the Medicare in Texas Will be the same as the Medicare in Texas 4

A 500 bed hospital with significant Medicaid and charity care volume showing timing of payments based on achievement of Meaningful Use (AIU = adopting, implementing or upgrading Certified EHRs) Texas Medicaid EHR Incentives – Example of Payments Calendar Year Start in 2011 MUStage Start in 2012 MU Stage Start in 2013 MUStage Start in 2014MUStage 2015 MU Stage Start in 2016MUStage 2011$2,400,000AIU 2012$1,920,0001$2,400,000AIU 2013 $ 480,000 2 $ 1,920,000 1$2,400,000AIU $ 480,000 2 $ 1,920,000 2$2,400,000AIU $ 490,000 3$1,920,0003$2,400,000AIU $1,920,0003$2,400,000AIU $490,0003$1,920, $490,0003 Total$4,800,000 $ 4,800,000 $4,800,000$4,800,000$4,800,000 5

Texas Medicaid EHR Incentives – Physician Payments “Allowable Costs” has been recently re-defined to be a flat rate rather than an accounting of actual expenses spent on EHR technology. The EHR product’s Certification # will be required for the attestation. 6

Texas Medicaid EHR Incentives – Important Dates  CMS registration for the stimulus programs - January 3, 2011 Must register for both Medicare and Medicare on CMS site Must register for both Medicare and Medicare on CMS site Registration does not mean you have to attest to meaningful use this year Registration does not mean you have to attest to meaningful use this year  Texas registration and application for Year 1 funds – opens February 14  Year 1 payments start in May 2011  Year 2 and 3 will required demonstration of Meaningful Use 90 contiguous days Year 2 90 contiguous days Year 2 Full year in Year 3 Full year in Year 3  You can “sit out” a year between payment years then get back in if needed for compliance to MU 7

Medicare Stimulus Funding Presented by David S. Muntz Sr. VP & CIO Baylor Health Care System Attribution: Much of the material presented is available at 8

Medicare EHR Incentives – Eligibility  Eligible Hospitals "Subsection (d) hospitals" in the 50 states or DC that are paid under the Inpatient Prospective Payment System (IPPS) "Subsection (d) hospitals" in the 50 states or DC that are paid under the Inpatient Prospective Payment System (IPPS) Critical Access Hospitals (CAHs) Critical Access Hospitals (CAHs) Qualifying CAHs may receive incentive payments for up to four payment years beginning with cost reporting periods that begin in FY The year with a cost reporting period that begins in FY 2015 is the last payment year for which a qualifying CAH can receive incentive payments as a meaningful EHR user.Qualifying CAHs may receive incentive payments for up to four payment years beginning with cost reporting periods that begin in FY The year with a cost reporting period that begins in FY 2015 is the last payment year for which a qualifying CAH can receive incentive payments as a meaningful EHR user. CAHs can qualify to receive payments from both the Medicare and Medicaid EHR Incentive Programs.CAHs can qualify to receive payments from both the Medicare and Medicaid EHR Incentive Programs. Medicare Advantage (MA-Affiliated) Hospitals Medicare Advantage (MA-Affiliated) Hospitals A payment year is the federal fiscal year (October 1 - September 30) starting in fiscal year 2011 (i.e. October 1, 2010) A payment year is the federal fiscal year (October 1 - September 30) starting in fiscal year 2011 (i.e. October 1, 2010)  Eligible Providers Doctor of Medicine, Doctor of Osteopathy, Dental surgeon, Doctor of Dental Medicine, Podiatrist, Optometrist, Chiropractor Doctor of Medicine, Doctor of Osteopathy, Dental surgeon, Doctor of Dental Medicine, Podiatrist, Optometrist, Chiropractor Cannot be hospital based (e.g. radiology, lab, ED) Cannot be hospital based (e.g. radiology, lab, ED) Must choose either Medicare or Medicaid but can switch once Must choose either Medicare or Medicaid but can switch once A payment year is a calendar year starting in 2011 A payment year is a calendar year starting in 2011 Additional incentive for eligible professionals who provide services in a Health Professional Shortage Area (HSPA) Additional incentive for eligible professionals who provide services in a Health Professional Shortage Area (HSPA)  Both For the first payment year, any continuous 90-day period within a calendar year For the first payment year, any continuous 90-day period within a calendar year For the second, third, and fourth payment year, the calendar year For the second, third, and fourth payment year, the calendar year If you skip a year, you cannot make it up If you skip a year, you cannot make it up To get the maximum payment, you must begin activities in 2012 To get the maximum payment, you must begin activities in

Medicare EHR Incentives – How to Qualify  Possess a Certified Complete EHR system.  Report quality metrics.  Meet Meaningful Use by demonstrating functionality in your EHR systems split into three increasingly difficult stages.  Important! For 2015 and later, Medicare eligible professionals, eligible hospitals, and CAHs that do not successfully demonstrate meaningful use will have a payment adjustment in their Medicare reimbursement. 10

Progression of Meaningful Use Stages by Payment Year 11 First Fiscal Year Payment Year ** 2011Stage 1 Stage 2 Stage Stage 1 Stage 2Stage Stage 1Stage 2Stage Stage 1Stage *Stage 3 * Avoids payment adjustments only for EPs in the Medicare EHR Incentive Program. ** Stage 3 criteria of meaningful use or a subsequent update to the criteria if one is established through rulemaking.

Medicare EHR Incentives For Eligible Hospitals – How it is paid 12 The payment formula for a hospital (payment year) is equal to the product of the following (get your CFO involved): The payment formula for a hospital (payment year) is equal to the product of the following (get your CFO involved): 1) Initial amount – The sum of the base amount* specified plus the discharge related** amount for a 12 month period selected by the Secretary with respect to such payment year 2) The Medicare share*** for the hospital for a period selected by the Secretary with respect to such payment year 3) The transition factor**** for the hospital for the payment year *The base amount specified in the subparagraph is $2 million ** The discharge related amount is as follows: 1 - 1,149 th discharge, $0; 1,150 th through the 23,000 th discharge, $200; any discharge greater than the 23,000 th, $0. *** The Medicare share specified is equal to a fraction determined by the number of Medicare inpatient bed days and other specific factors **** The transition factor is determined by multiplying first payment year by: 1 for year 1;.75 for year 2;.5 for year 3;.25 for year 4; and 0 for any following payment year

Medicare EHR Incentives For Eligible Hospitals – How it is paid 13

CRITICAL ACCESS HOSPITALS (CAHs) – How it is paid  Qualifying CAHs may receive incentive payments for up to four payment years beginning with cost reporting periods that begin in FY The year with a cost reporting period that begins in FY 2015 is the last payment year for which a qualifying CAH can receive incentive payments as a meaningful EHR user.  Qualifying CAHs may receive incentive payments for up to four payment years beginning with cost reporting periods that begin in FY The year with a cost reporting period that begins in FY 2015 is the last payment year for which a qualifying CAH can receive incentive payments as a meaningful EHR user.  Qualifying CAHs can receive incentive payments for the reasonable costs incurred for the purchase of depreciable assets like computers and associated hardware and software, necessary to administer certified EHR technology, excluding any depreciation and interest expenses associated with the acquisition.  A qualifying CAH will receive an incentive payment amount equal to the product of its reasonable costs incurred for the purchase of certified EHR technology and its Medicare share percentage. The Medicare share percentage equals the lesser of (1) 100 percent; or (2) the sum of the Medicare share fraction for the CAH and 20 percentage points. 14

Medicare EHR Incentives For Eligible Providers – How it is paid 15

Limiting Factors  A qualifying EP will receive an incentive payment equal to 75 percent of Medicare allowable charges for covered professional services furnished by the EP in a payment year, subject to maximum payments.  Physicians who report using an EHR that is also capable of e- prescribing would be eligible for EHR incentives only, and will no longer be eligible for the e-prescribing bonuses.  Hospital-based EPs who furnish substantially all their services in a “hospital setting” are not eligible for incentive payments. Hospital-based EPs are now defined as EPs who furnish 90 percent or more of their allowed services in a hospital inpatient setting, or hospital emergency department. 16

Penalties Based on Medicare Reimbursement 17 YEAR PENALTY - REDUCTION 20151% 20162% 2017 & beyond3%

Useful Information For All in Pursuit of Meaning Use Incentive$ 18

Caveat Based on Re-Estimation of Participation and Budget for Incentive Program  The government may distribute less money than anticipated CBO estimated that total federal incentive payouts could reach $34 billion CBO estimated that total federal incentive payouts could reach $34 billion Officials have now stated that outlays are likely to range from $14.1 to $27.3 billion Officials have now stated that outlays are likely to range from $14.1 to $27.3 billion  Budget revisions may be reviewed after evaluating the popularity of the incentive payment program. Source: Congressional Budget Office year-by-year estimate of the economic effects of the American Recovery and Reinvestment Act of 2009, dated March 2, 2009 Link: Macro_Effects_of_ARRA.pdfhttp:// Macro_Effects_of_ARRA.pdf 19

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EHR Incentives – Important Dates  October 1, 2010 – Reporting year begins for eligible hospitals and CAHs.  January 1, 2011 – Reporting year begins for eligible professionals.  January 3, 2011 – Registration for the Medicare EHR Incentive Program begins.  January 3, 2011 – For Medicaid providers, states may launch their programs if they so choose.  April 2011 – Attestation for the Medicare EHR Incentive Program begins.  May 2011 – EHR Incentive Payments expected to begin.  July 3, 2011 – Last day for eligible hospitals to begin their 90-day reporting period to demonstrate meaningful use for the Medicare EHR Incentive Program.  September 30, 2011 – Last day of the federal fiscal year. Reporting year ends for eligible hospitals and CAHs.  October 1, 2011 – Last day for eligible professionals to begin their 90-day reporting period for calendar year 2011 for the Medicare EHR Incentive Program.  November 30, 2011 – Last day for eligible hospitals and critical access hospitals to register and attest to receive an Incentive Payment for Federal fiscal year (FY)  December 31, 2011 – Reporting year ends for eligible professionals.  February 29, 2012 – Last day for eligible professionals to register and attest to receive an Incentive Payment for calendar year (CY)

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Regional Extension Centers Overarching objective:  The RECs will support and serve health care providers to help them quickly become adept and meaningful users of electronic health records (EHRs). RECs are designed to make sure that primary care clinicians get the help they need to use EHRs.  The RECs will support and serve health care providers to help them quickly become adept and meaningful users of electronic health records (EHRs). RECs are designed to make sure that primary care clinicians get the help they need to use EHRs. RECs will:  Provide training and support services to assist doctors and other providers in adopting EHRs  Offer information and guidance to help with EHR implementation  Give technical assistance as needed  The goal of the program is to provide outreach and support services to at least 100,000 priority primary care providers within two years. Under HITECH, $677 million is allocated to support a nationwide system of RECs that cover every geographic region of the United States to ensure plenty of support to health care providers in communities across the country. There are 4 RECs in Texas. 26

Certification Complications Presented by Pamela McNutt Sr. VP & CIO Methodist Health System 27

 An eligible hospital or provider must possess a Certified EHR through: A Certified Complete EHR or A Certified Complete EHR or A combination of Certified Modules or A combination of Certified Modules or Self certification of home grown or non-certified modules Self certification of home grown or non-certified modules  You must own all the modules even if not using them for “meaningful use”  There are complications with mixing and matching systems since most major vendors certified as a Complete EHR Modules do not inherit the certification of a Complete EHR Modules do not inherit the certification of a Complete EHR Issues that have arisen with Certification 28

Quality Reporting and Data Repository Clinical Documentation Emergency Dept Portal Public Health Reporting Quality MetricsCPOE Primary Vendor A – Certified Complete EHR Data exchange CCD record Clinical Documentation Emergency Dept Portal Public Health Reporting Quality MetricsCPOE Vendor B – Certified Complete EHR Data exchange CCD record Emergency Dept X X X X XXX Vendor D – Certified Module X Vendor C – Certified Module The organization would have to “possess” every component listed on this diagram regardless of whether they are used Illustration of Certification Issues 29

ONC’s proposed solution to certification issues  Put market pressure on your vendors to go back and get permutations of the Complete EHRs certified as modules  Leverage the “loop hole” that you don’t have to implement all modules of a Certified Complete EHR Get vendors to agree to let you load the software but not pay until you begin using it Get vendors to agree to let you load the software but not pay until you begin using it Contract with vendors for the right to use, at any time and at one’s discretion, all the software but not pay until it is used Contract with vendors for the right to use, at any time and at one’s discretion, all the software but not pay until it is used  If “mixing and matching” assure yourself that the combination: Has not adversely impacted the calculation of any meaningful use measures Has not adversely impacted the calculation of any meaningful use measures Includes all meaningful use measures Includes all meaningful use measures 30