Stimulus Bill Creates Health IT Incentives


The newly enacted economic stimulus law will infuse tens of billions of dollars into the health care sector, providing incentives for using health information technology, increasing funds for primary care training, and launching initiatives in comparative effectiveness research.

President Obama signed the $787 billion American Recovery and Reinvestment Act of 2009 (H.R. 1) into law on Feb. 17, following weeks of congressional debate and deal-making. A final compromise package largely kept health care priorities on the table.

In terms of health information technology, the law includes about $17 billion in financial incentives through the Medicare and Medicaid programs to physicians and other health care providers to adopt and use electronic health records (EHRs), as well as another $2 billion in funding for the Office of the National Coordinator for Health Information Technology to encourage health IT adoption, aid in standard setting, and support regional efforts at health information exchange.

The bulk of the $17 billion will create a program of financial carrots and sticks aimed at encouraging EHR adoption, starting in 2011. For example, under Medicare, providers could receive incentives for EHR use over 5 years starting at a maximum of $18,000 in the first year and dropping to a maximum of $2,000 in year 5. However, physicians who do not engage in “meaningful” EHR use by 2015 could see cuts to their Medicare payments starting at 1% in 2015 and rising to 3% in 2017 and subsequent years.

Physicians who have a Medicaid patient volume of at least 30% will be eligible to receive incentive payments for EHR adoption and use.

Eligible Medicaid providers could receive incentives of up to $75,000 over 5 years. Under the law, Medicaid providers could receive up to $25,000 for the purchase and initial implementation of a certified EHR system and up to $10,000 a year for the maintenance and use of the system.

The law includes expanded eligibility for pediatricians. For example, pediatricians who have a Medicaid patient volume of between 20% and 30% will be eligible to receive up to two-thirds of the incentive payments.

The funding in the law is likely to fuel significant activity in the health information technology area, said Dr. Don Detmer, president and CEO of the American Medical Informatics Association (AMIA). The question will be how fast physicians and other health care providers adopt the technology. In the meantime, the federal government will need to clarify some of the provisions in the law through regulation, particularly how the new privacy protections will be implemented, he said.

“The payments are probably significant enough to make a real difference,” said Douglas Peddicord, Ph.D., president of Washington Health Strategies Group, which represents AMIA in the District of Columbia.

Recent surveys show that the majority of physicians would be motivated to adopt EHRs if given this level of incentives, he said. The decrease in payments starting in 2015 is also likely to be a significant driver, he said.

The financial incentives and disincentives included in the law will finally make the business case for EHRs, said Blair Childs, senior vice president for public affairs at Premier Inc., an alliance of not-for-profit hospitals and health care systems.

“I think everyone agrees that this is what is necessary.”

As the federal government moves forward with regulations spelling out how the program will be implemented, Mr. Childs said officials at Premier hope to see standards issued that would require EHRs to automate the extraction of quality measures, something that is manual in many current systems.

Also under the new law, the Health and Human Services department will provide competitive grants to states to help them develop loan programs to drive adoption of EHRs by health care providers.

Providers will be able to use the loans to purchase, upgrade, or improve the security of EHR systems or to train staff on the technology.

Providing funds for health information technology garnered the most support in the stimulus package, but billions more were promised to improve basic health care and assess which products or procedures work best.

The law also includes $87 billion to help states pay for their Medicaid programs. The money will allow states to get a higher percentage of funds for their Medicaid programs from federal dollars as opposed to state dollars. As a result, “a state with a budget shortfall won't feel as much pressure to cut Medicaid back,” said Kathleen Stoll, deputy executive director of Families USA, noting that at least 40 states have proposed cuts to their Medicaid programs. “In some states, it may free up money to spend on other health programs,” but none of the federal stimulus money is allowed to fund any expansion of Medicaid.


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