Dinetia M. Newman Balch & Bingham LLP dnewman@balch 601.965.8169

1. MEANINGFUL USE: HISTORY AND TIPS ON IMPLICATIONS FOR FORREST GENERAL HOSPITAL Presented to FORREST GENERAL HOSPITAL LEADERSHIP MEETING June 23, 2010 Dinetia M. Newman Balch & Bingham LLP dnewman@balch.com 601.965.8169

2. Overview of Presentation I. History of ARRA, HITECH Act • Basic Definition of ARRA/HITECH – How Applicable to Forrest General Hospital • Who is Eligible for Incentive Payments: Hospitals and Physicians • Short Explanation of “Meaningful Use” • Specific Issues Impacting Forrest General Hospital’s Qualification for Incentive Payments

3. History of American Recovery and Reinvestment Act of 2009 (ARRA) And Health Information Technology for Economic and Clinical Health Act (HITECH)

4. FEDERAL STRUCTURE OF HIT PROVISIONS • Health Insurance Portability and Accountability Act of 1996 - Enacted August 21, 1996 • CMS Issuance of Privacy and Security Rules –1999-2002 • President Bush issues E.O. 13335 - ONCHIT • February 17, 2009 - President Obama signs ARRA • EHR Incentive Notice of Proposed Rulemaking – 12/30/09 • Standards, Implementation Specifications and Certification Criteria for EHR – Interim Final Rule – 1/13/10

5. ARRA’s Monetary Incentives for EHR and HITECH • ARRA – Two Divisions – Division A & B • Division A - Appropriations – 16 Titles • Division A, Title XIII – HITECH Act • Subtitle C – Grants and Loans Funding • Subtitle D - Privacy • Division B – Tax, Unemployment, Health, State Fiscal Relief, and Other Provisions - 7 Titles • Division B, Title IV – Medicare and Medicaid Health Information Technology; Miscellaneous Medicare Provisions • Subtitle A – Medicare Incentives • Subtitle B – Medicaid Incentives

6. ARRA’s Monetary Incentives for EHR and HITECH • Division B - Title IV – Medicare and Medicaid Health Information Technology • $20.8B over 10 years in net direct expenditures for Medicare/Medicaid EHR incentives for hospitals and professionals

7. Medicare Incentives for Eligible Hospitals and Physicians

8. MEDICARE INCENTIVES FOR ELIGIBLE HOSPITALS AND PROFESSIONALS • WHO IS ELIGIBLE? • ELIGIBLE HOSPITALS • ELIGIBLE PHYSICIANS

9. MEDICARE INCENTIVES FOR ELIGIBLE HOSPITALS • Eligible Hospitals • Acute care hospitals • Not rehab, cancer, psychiatric, children’s or + 25 day stay hospitals • Must be "meaningful users" of "certified EHR“

10. MEDICARE INCENTIVES FOR ELIGIBLE HOSPITALS • Formula = ($2M + Discharge Related Amount) X Medicare Share X “Transition Factor” • Discharges not limited to Medicare discharges • Eligible CAHs may expense EHR costs in one cost reporting year and certain prior period costs

11. MEDICARE INCENTIVES FOR ELIGIBLE HOSPITALS • Earliest payment year - 2011: no payments after 2016 • Penalties if not EHR user by 2015

12. MEDICARE INCENTIVES FOR ELIGIBLE PROFESSIONALS • Eligible Professionals • Physicians who are "meaningful users" • Means medical doctors, doctors of osteopathy, dentists, podiatrists, optometrists, chiropractors • Means use of eRx and electronic exchange of health information • Excludes hospital-based physicians • WHAT DOES THIS MEAN?

13. MEDICARE INCENTIVES FOR ELIGIBLE PROFESSIONALS • What physicians are “hospital-based”? • Radiologists, anesthesiologists, pathologists • What about physicians in hospital-owned clinics? • How does being “hospital-based” impact Forrest General’s ability to receive EHR incentives for implementation of EHR in those physicians’ offices?

14. MEDICARE INCENTIVES FOR ELIGIBLE PROFESSIONALS • What is payment amount for EHR implementation? • Based on Physician Fee Schedule - 75% of estimated allowed charges for payment year capped based on first year of EHR • Additional 10% if in HPSA • When may physicians receive payment? • 2011 - earliest payment year • No payments after 2016

15. MEDICARE INCENTIVES FOR ELIGIBLE PROFESSIONALS • Penalties if not "meaningful EHR users" by 2015

16. Medicaid Incentives for Eligible Professionals and Hospitals

17. MEDICAID INCENTIVES FOR ELIGIBLE PROFESSIONALS • Eligible Professionals • Definition is broader than “physicians” • Must treat required percentages of Medicaid or “needy” patients

18. MEDICAID INCENTIVES FOR ELIGIBLE PROFESSIONALS • Payment to Eligible Professionals • May receive EITHER Medicare or Medicaid incentives – BUT NOT BOTH • Payments are subject to cap

19. MEDICAID INCENTIVES FOR ELIGIBLE PROFESSIONALS • NO PENALTIES if not "meaningful EHR users" by certain dates • BUT must incur costs by 2016

20. MEDICAID INCENTIVES FOR ELIGIBLE HOSPITALS • Which Hospitals are eligible? • Only acute care hospitals and children’s hospitals • How are payments calculated? • Formula for calculating incentive amount similar to that for Medicare incentive payments • When are payments made? • 6 year payment period beginning by 2016 • May hospitals receive both Medicare and Medicaid payments? • Yes

21. Summary of and Thoughts Regarding Monetary Incentives • Statute provides structure; details will come in rules • Physician incentives: begin CY 2011 • Hospital incentives: begin FY 2011 • Carrot/stick: Medicare Payments will be reduced if standards are not met • Government may make EHR available if market place does not react quickly enough

22. KEY ELEMENTS OF MEANINGFUL USE • Demonstration that is “meaningful EHR user” of a “qualified EHR”: • Demonstration that the hospital or physician is using certified EHR in a meaningful manner as defined by HHS, including professionals’ electronic prescribing by professionals; • EHR Connection in a manner providing for electronic exchange of health information to improve the quality of care • Electronic reporting on clinical quality and other measures.

23. KEY ELEMENTS OF MEANINGFUL USE Definition of Qualified EHR • An Electronic Record of health-related information on an individual that (i) includes Demographic and Clinical Health Information (such as medical history) and (b) has the Capacity to: • provide Clinical Decision Support • support Physician Order Entry • capture and query information relevant to Health Care Quality • Exchange electronic health information with and Integrate the information with other sources

24. KEY ELEMENTS OF MEANINGFUL USE • What are the stages for Meaningful Use adoption? • 3 stages • Stage 1 – Starts in 2011 – Criteria in Proposed Rule • Stage 2 – Starts in 2013 – Criteria in future rule • Stage 3 – Starts in 2015 – Criteria in future rule • Phases 2 and 3 – expect more and more stringent requirements • Many standards apply to both eligible hospitals and eligible professionals - but with differences

25. KEY ELEMENTS OF MEANINGFUL USE • Key terms: • Year: calendar year for professionals and fiscal year beginning on October 1 for hospitals • Payment Year: Depends on the year in which Stage 1 is first achieved • First Payment Year: Professionals and hospitals must achieve meaningful use for only 90 consecutive days • Later Payment Years: Professionals and hospitals must achieve meaningful use for the entire Year

26. KEY ELEMENTS OF MEANINGFUL USE • Stages of Meaningful Use

27. Timing of “Meaningful Use” for Medicare Incentives • May demonstrate “meaningful use” for only 90 days in first “payment year” • Must demonstrate “meaningful use” for entire year in following “payment years”

28. Timing of “Meaningful Use” for Medicaid Incentives • Must demonstrate “meaningful use” in second and later incentive “payment years” to Secretary and State

29. Specific Issues Impacting Forrest General Hospital’s Qualification for Incentive Payments

30. Quality Measures

31. Problem Lists

32. Medication Reconciliation

33. Interoperability

34. THANK YOUDinetia M. NewmanBalch & Bingham LLP401 E. CapitolSuite 200Jackson MS 39201(Office) 601.965.8169(Cell) 662.891.8935 dnewman@balch.com