Medicaid and Meaningful Use – The “Other” EHR Incentive Program: What Hospital Leaders Should Know About the Medicaid

1. Medicaid and Meaningful Use – The “Other” EHR Incentive Program:  What Hospital Leaders Should Know About the Medicaid EHR Incentive Program Wisconsin Hospital Association Matthew Stanford, Associate Counsel mstanford@wha.org September 21, 2010

2. Background and Overview

3. HITECH Act HITECH Act created the Medicare and Medicaid EHR Incentive Programs • HITECH Act was a section of the 2009 Federal Stimulus Bill – the American Reinvestment and Recovery Act (ARRA). • HITECH Act directs the Centers for Medicare and Medicaid (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) to promulgate regulations implementing the EHR Incentive Programs. Meaningful use and EHR certification rules • Health care providers must be “meaningful users” of “certified” electronic health records in order to receive the full Medicaid HIT incentive payments. 3

4. Rulemaking Proposed Meaningful Use and EHR Certification rules • Released in December 2009. • WHA and a number of Wisconsin hospitals submitted comments. Final Meaningful use and EHR certification rules • Published in July 2010. • No comment period. 4

5. Medicaid Incentive Program Highlights Program administered by the States • Feds pay 100% of incentive payment. • Feds pay 90% of state’s program administrative costs. Hospitals eligible for the Medicaid incentive program: • All children’s hospitals • Acute care PPS hospitals and CAHs that have 10% Medicaid volume (more on that later) Hospitals can get both Medicare and Medicaid incentives • Eligible professionals must choose either Medicare or Medicaid. Unlike the Medicare incentive program, there are no penalties in the Medicaid incentive program The Medicaid incentive program has a different payment scheme DHS planning to begin program January 2011, with first payments in May 2011

6. Medicaid Meaningful Use States are permitted, if approved by CMS, to create Medicaid meaningful use requirements that are different from Medicare meaningful use requirements. • DHS has not indicated an intent to create own Medicaid MU criteria. • Also, hospitals that meet Medicare meaningful use requirements are DEEMED to meet Medicaid meaningful use requirements, without having to meet additional criteria imposed by the states.

7. Medicaid Meaningful Use Key Difference with Medicare: MU not required in first payment year • In the first fiscal year that a provider applies and is eligible for the Medicaid incentive program, that provider can receive payment merely by showing adoption, implementation, or upgrade of certified EHR. • Adoption = Acquired and installed • Implement = Commenced utilization • Upgrade = Expanded EHR to meet meaningful use (including certification) • In subsequent payment years, the provider must meet meaningful use.

8. Medicaid Incentive Program Eligibility Hospitals eligible for the Medicaid incentive program: • All children’s hospitals • Acute care PPS hospitals and CAHs that have 10% Title XIX Medicaid volume Not all BadgerCare volume counts as Medicaid volume • Per HITECH Act, only Title XIX Medicaid and demonstration programs under Title XIX can be counted. • For example, BadgerCare patients funded through CHIP programs and BadgerCare Basic cannot be included. • DHS recognizes that providers cannot differentiate whether a BadgerCare patient is funded through Title XIX. • WHA, DHS and others are working together to provide hospitals with information that can help them identify whether they could meet the 10% Medicaid volume requirement.

9. Medicaid Incentive Program Eligibility What period is used to calculate a hospital’s Medicaid volume? • A hospital applying for Medicaid Incentive Payments must show that it had a 10% Medicaid volume during the course of a three-month period representing normal payment circumstances in the hospital’s previous fiscal year. • Thus, in order to receive a FY2011 payment, a hospital would have to show that they had a 10% Medicaid volume during a three month period in the hospital’s 2010 fiscal year.

10. Medicaid Payment Scheme Incentive payment formula similar to Medicare PPS formula design  • Built on a base amount of $2 million per hospital, per year. • Adjusted: • Upward by hospital’s all-payer discharges (same as Medicare formula, but includes the hospital’s projected average annual rate of growth for years 2 through 4); then • Downward by hospital’s Medicaid percent of total patient days (rather than Medicare percent) with an adjustment to account for charity care (same as Medicare formula). • CAHs use same formula as PPS hospitals.

11. Medicaid Payment Scheme Payments for the Medicaid incentive program are different than the Medicare incentive program.  • Each hospital has a formula driven maximum Medicaid incentive that can be received. • States have the option to split payment that incentive over as few as 3 years or as many as 6 years. Cannot start after 2016. • The payments do not have to be in equal amounts, however, states are limited in the amount of “front-loading” of payments. • Unlike Medicare, a provider does not lose a year of payment if it fails to qualify for payment after an initial payment. WHA has convinced DHS to modify its MA HIT Plan to front-load its MA incentive payments to the extent permitted by CMS.  • Year 1: 50% of total incentive payment (MU not required) • Year 2: 40% of total incentive payment (MU required) • Year 3: 10% of total incentive payment (MU required)

12. Resources WHA Toolkit • http://www.wha.org/toolKit/default.aspx WHA Education • http://www.wha.org/education/default.aspx EHR Consulting Database (coming soon) • HHS website • http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=3006&PageID=20401 12

13. Questions?