EMR and the stimulus package

Editor's note: Health care attorney Pat King outlines and explains provisions of the pending economic stimulus package that deal with electronic health records (EHR/EMR 1) use by physicians.

The American Recovery and Reinvestment Act of 2009 finally passed both houses of Congress this week.  As this article is written, a final vote is expected on Saturday, February 14.  While there are significant differences between the House2 and Senate3 version in some areas, incentives for health information technology adoption by physicians and hospitals are substantially similar in both bills.  The cost of incentives is estimated to be $17 billion in increased Medicare and Medicaid payments.

The Act uses the same "carrot and stick" approach adopted last year to encourage electronic prescribing.  The incentive portion starts in 2011: a physician who is a "meaningful user" of electronic health records (EHR) is eligible to receive additional payments under the Medicare program that can extend over five years.  The penalty portion starts in 2015, when physicians who are not meaningful EHR users will begin to see declines in their Medicare payments.  Neither the incentive nor the penalty applies to hospital-based physicians.

Incentives for EHR use

For the first year that a physician qualifies as a meaningful EHR user, the physician is eligible for an incentive payment of 75% of his/her Medicare charges for the year, up to a maximum of $15,000 (the Senate bill provides that the ceiling is $18,000, if the first payment year is 2011 or 2012).  The ceiling declines each year:  $12,000 for the second year; $8,000 in the third year; $4,000 in the fourth year; $2,000 in the fifth year; and zero for subsequent years.  Late adopters are penalized through phase down of the incentives:  if the physician does not qualify as a meaningful user until 2014, then the payment ceiling for that physician's first year is $12,000, the ceiling for the second year is $8,000, and so on.  Under the House bill, there are no extra payments for physicians who do not qualify before 2015.

The Secretary of the Department of Health and Human Services (HHS) has discretion to determine whether the incentive payment will be paid in a single lump sum, or in installments.  If the physician provides services to Medicare beneficiaries through more than one practice, HHS will determine how to allocate the incentive payment among the practices.

Penalties for not using EHR

Under the penalty provisions, physicians who are not meaningful EHR users in 2015 will see a 1% reduction in their fee schedule amount.  The reduction increases to 2% in 2016, and 3% in 2017 and each subsequent year.  If HHS finds that by 2017, the proportion of physicians who are meaningful EHR users is less than 75%, HHS may continue to ratchet down payments by 1% a year (but may not reduce payments below 95%).  Hardship exceptions may be issued on a case-by-case basis, such as exceptions for physicians who practice in rural areas without adequate Internet access.

How to be considered an EHR user 

To be a "meaningful EHR user", the physician must satisfy three criteria:

  • The physician must use "certified EHR technology" in a meaningful manner, including electronic prescribing. The law calls for creation of a health information technology (HIT) Policy Committee, and an HIT Standards Committee. The HIT Policy Committee will focus on development of a nationwide health information infrastructure, while the HIT Standards Committee will recommend standards, implementation specifications and certification criteria. The Office of the National Coordinator for Health Information Technology (ONCHIT) is to adopt an initial set of standards, implementation specifications and certification criteria before December 31, 2009.
  • The physician must demonstrate that the certified EHR technology is connected in a manner that provides for the electronic exchange of health information to improve the quality of health care, such as promoting care coordination.
  • The physician must submit information on clinical quality measures specified by HHS.

HHS will designate the way in which a physician is recognized as a meaningful user (through attestation, submission of claims with codes indicating that a patient encounter was documented using certified EHR technology, survey responses, submission of quality reports, or other means).

The Act also authorizes state Medicaid programs to provide additional payments to physicians, at least 30% of whose patient volume is services to Medicaid beneficiaries. 

In addition to the incentive program, $2 billion is available to ONCHIT for implementation of the program, including grants to states to establish loan programs for physicians seeking to acquire certified EHR systems.


  1. While the terms EMR and EHR are sometimes used interchangeably, the National Alliance for Health Information Technology defines an EMR as an electronic record of an individual's health-related information managed within one health care organization. The NAHIT defines an EHR as an electronic record of an individual's health-related information that conforms to nationally recognized interoperability standards and can be consulted by clinicians across more than one health care organization. 
  2. 111th Congress, H.R. 1.
  3. Senate Amendment 570.

Pat King

About the Author

Patricia King is a health care attorney in Illinois, and principal of the web-based business Digital Age Healthcare LLC (http://www.digitalagemd.com/).

Topics #American Recovery and Reinvestment Act of 2009 #EHR #electronic health records #electronic medical records #emr #ONCHIT #stimulus package