Medicaid Is a Better Payer Than Medicare for Health IT


While Medicare is almost always a better payer than Medicaid, one notable exception is the health information technology funding contained in the Recovery Act.

For physicians applying for incentive money to purchase electronic health record (EHR) systems, “Medicaid is a little better than Medicare because there's more upfront money,” Dr. William Jessee, president and CEO of the Medical Group Management Association (MGMA), said during a teleconference on the stimulus bill.

The Recovery Act—formally known as the American Recovery and Reinvestment Act of 2009—includes about $19 billion for spending on health IT, said Dr. Jessee. Physicians can apply for money through either Medicare or through Medicaid, but not both. Other clinicians eligible for the Medicare incentive include dentists, podiatrists, optometrists, and chiropractors.

To qualify for the incentive, physicians must be “meaningful electronic health records users” and use electronic prescribing. In addition, the EHR must have the capability of exchanging information with other users, and physicians must report clinical quality measures to the Health and Human Services department, presumably through the Physician Quality Reporting Initiative, Dr. Jessee said.

To be eligible for the Medicaid incentive, at least 30% of a provider's practice base must be Medicaid recipients. Pediatricians have a lower threshold—just 20%, he said.

The states administering the Medicaid portion of the incentive can make payments to Medicaid providers for up to 85% of net average allowable costs, to a maximum of $63,750 over 6 years for a certified EHR. The maximum incentive starts at $25,000 in the first year and then gradually decreases each year.

Under the Medicare incentive, physicians who are using an EHR in 2011 or 2012 can receive an incentive equal to as much as 75% of their Medicare allowable charges per year for the cost of their hardware and software, up to a maximum of $44,000 over a 5-year period. (The maximum allowable benefit per provider is $15,000 in the first year and gradually decreases over the next 4 years.) Physicians practicing in health professional shortage areas can receive a 10% additional payment, he noted.

Many provisions—such as who is a “meaningful” user—haven't yet been made clear. “What's [also] still fuzzy is, do you report in 2010 and get your first payment in 2011, or report in 2011 for a first payment in 2012?” Dr. Jessee said. The incentive also comes with a “stick” attached: Physicians who are not using an EHR by 2015 will see a decrease in their Medicare payments.

Also still to be determined is what constitutes a certified EHR. Still, Dr. Jessee said, “you need to be very careful to make sure that the product you use or are contemplating investing in will be a certified product that qualifies for an incentive. We suggest putting a [clause] in your contract saying that the vendor will make sure the product you're using will qualify for the incentive.”

In addition to the federal EHR incentives, Congress allocated another $2 billion for indirect grants to support HIT, primarily at state and regional levels, he said. “It's an HIT extension service modeled on the agricultural extension service, with the idea that people will need assistance implementing HIT. No one knows who's going to be performing that function, or whether it will be national, state, or local, but a substantial sum of money has been devoted to supporting that extension service.”

Although there has been speculation about whether the government was going to come out with a free EHR for providers, “my guess is, don't hold your breath,” he said. “Remember when HHS said it was going to create a 'freeware' version of [the EHR used by the Veterans Affairs department]? They found that it wasn't exactly free, and it didn't lend itself to being transferred from a large mainframe environment to a disseminated environment.”

The interim regulation spelling out all the EHR requirements is due to be published no later than July of this year. Practices that already have EHRs will have until Jan. 1, 2014, to comply with the new rules; those who buy EHRs from now on will have to comply either by the day they purchase the system or by Jan. 1, 2011, whichever is later, he said.

The teleconference was sponsored by MGMA, MedFusion, Athena health, and MicroMD.

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