Jeffery Daigrepont, Senior Vice PresidentThe Coker Group

1000 Mansell Exchange West, Suite 310Alpharetta, Georgia 30022

jdaigrepont@cokergroup.com800-345-5829

Agenda

• Stimulus Overview• Payout• Cost and Contracting• Summary

Eventful Times…

“…We're taking the most meaningful step in years towards modernizing our healthcare system. It's an investment that will take the long overdue step of computerizing America's medical records, to reduce the duplication and waste that costs billions of healthcare dollars and medical errors that cost thousands of lives each year. ... We have done more in 30 days to advance the cause of healthcare reform than this country has done in an entire decade."

President Barack ObamaFebruary 17, 2009

ARRA Organization & Funding of HIT

ARRA Funding:$787 Billion

HIT Related Funding(~ $22 Billion?)

Medicare/Medicaid$17.7 Billion

(2019?)

National Coordinatorfor HIT

$2.0 Billion

Regional/State HealthExchanges

Mandated $300 Million

Infrastructure GrantsImplement/Improvements

National Institute ofStandards/Technology

$20 Million

Policy CommitteeStandards CommitteeChief Privacy Officer.

IHS: ~$85 MillionHHS: ~ $2-3 Billion

CHC: $1+ BillionAgriculture: 2.5 Billion

Medicare Providers:Enterprise: DC-Based

MDs: ~$40K

Medicaid Providers:Enterprise: DC ~ $2 M

Providers: ~$75K

Why is ARRA Important?

• It is now the Law.

• It Will be a Major Source of HIT Funding.

• THE Source of Major Funding for EHRs.

• It Will Determine Who Gets What.

• It Will Determine EHR Standards.

Meaningful use as of today…• Certified EHR technology; not specified yet but most likely

CCHIT-certified• Capacity to provide patient demographics and clinical

health information, medical history and problem lists; capacity for clinical decision support, and CPOE; ability to capture and query information relevant to healthcare quality; and to exchange health information with, and integrate such information from other sources

• Prescribe electronically• Connect to a health information exchange • Submit clinical quality measures in the reporting format

selected by Secretary of HHS

Take the Survey

Project Coordinator:Brock Slabach, Sr. Vice-President, NRHAbslabach@nrharural.org

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Survey Excerpt…

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Standards• FEDERAL

• – HITSP Board Member, 4 Co-Chairs, 5 Members

• – 2 Members in 3 committees

• – 3 NHIN Phase 1 Projects

• – 1 HISPC member

STATE

- CIO Forum Member

- Policy & Operations Committee

- Vendor Consortium

– 5 Co-Chairs, 10 Members

– 2 Co-Chairs, 14 Members

– 2 Co-Chairs, 4 Members

– Co-Chair

– 3 Members

– 3 Members

– 2 Members

INDUSTRY

– Board Member - Chair Interop & Stds

– Diamond Member

– Board Member

POLICY

– Charter Member

– Board Member

– Steering Committee

Standards & US Government Mandates

US Department of Health &

Human Services (HHS)

Standards

National Coordinator Health Information Technology (ONC)

American Health Information

Community (AHIC)

Certification

Use cases & priorities

Federal Stimulus

Influence on HIT Industry & CommunitiesInfluence on HIT Industry & Communities

Certifications:• Ambulatory EHR• Inpatient EHR• HIE

Nationwide Health Information Network (NHIN)

Trial ImplementationsExample use cases:• Consumer Empowerment• EHR Use cases• Medication Mgmt• Personalized healthcare• Referrals• Public Health Reporting• Quality• etc …

Impact of Stimulus

• How are hospitals responding…• How are physicians responding… • How are corporations responding…• How are vendors responding…

How Are Physicians Responding

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How are Physicians Responding

• Those with EHRs• Those without EHRs• Those who think they have an EHR

The Payout• First Adopters Will Benefit The Most (Sliding

Incentives)Physicians can earn between $44,000 to $64,000 over five years from Medicare / Medicaid if they are utilizing an EHR in 2011– Late adopters will receive significantly less – Providers may receive incentives under only one of the

programs– 2015: reductions in Medicare fees for non-EHR users– Those in Provider Shortage Areas can earn 10% more

• Hospitals can earn up to $2,000,000 plus discharge bonuses (total payout to them could be $10 million +)

The Physician’s PayoutYear Maximum Benefit per Provider Using

EHRTotal Medicare Payment Reduction-not using EHR

First year $18,000 0%

Second Year $12,000 0%

Third Year $8,000 0%

Fourth Year $4,000 0%

Fifth Year $2,000 2015: 1% (in some cases 2%)

Sixth Year 0 2016: 2%

2017 0 2017: 3%

Beyond 0 Beyond: 3% (up to 5% starting in 2019)

Special Stipulation for RHC Providers

An eligible professional who practices predominately in a Federally-qualified health center or rural health clinic with at least 30% of the professional’s patient volume coming from Medicaid patients.

• Year 1 No more than $25k • Year 2 No more than $10k• Year 3 No more than $10k• Year 4 No more than $10k• Year 5 No more than $10k

How are Vendors Responding

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How are Corporations Responding

• Amex• Wal-Mart • Henry Schein• Cardinal Health• PSS World Medical• Trade Associations

How are Vendors RespondingVendor Offers & Gimmicks

• GE Medical - No payment for the first 3 months, $125/physician the following 3 months ($300/ physician/month next 24 months). End of term options will be to repay outstanding balance or to refinance such balance over an additional 36 months.

– Most recently a ZERO interest promotion.

• Allscripts – No payments for the first 4 months, $250/physicians for the following 8 months, $295/physicians for the next 60 months

• eClinicalWorks / Wal-Mart - $25,000 first physicians, includes PM/EMR/Hardware/Training/Support. 10K for each additional physician.

• Conclusion– Every EMR adoption study sites cost as the TOP barrier for adoption– Vendors are offering special financing offers to ease up front financial

constraints for adoption.– In the end, vendors recoup their investment since these purchases tend to last

10+ years and in some cases indefinitely.

How Are Hospitals Responding

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How are Hospitals Responding5 Factors to Consider

• Highly competitive markets: In highly competitive markets, the “first mover” to provide EHRs to the community physicians is most likely to secure the loyalty of those physicians. Accordingly, late movers are at risk of losing referrals from physicians who join a competing hospital’s Stark program.

• Hospital – Physician Integration: A Stark EHR program needs to integrate within the larger fabric

intended to “Glue” community physicians to the hospital. This larger program can include facility joint ventures, MSO services, payor contracting, and the like, which the EHR will only serve to strengthen.

• Commitment to Quality: The hospital is committed to tangibly improving the quality of care in its

community, and recognizes that supporting a hospital – community physician EHR initiative will directly improve continuity-of-care, patient safety, and the patient experience.

• Position for the Future: The hospital recognizes that the ability to collect and report on clinical data across the community will effectively support negotiating “Value Based Reimbursement” (i.e. P4P, acuity coding, etc.) contracts, providing “Report Cards” on performance, and responding to “Episodes of Care” payments if and when they are initiated.

• Avoiding a “Mess”: With the new ARRA now in place, community physicians will be incented to move forward with an EHR in order to realize the available bonuses .Without hospital leadership, there is the risk of too many EHR products being poorly implemented which will compromise the hospitals’ ability to realize a number of advantages.

National Rural Health Association

The NRHA is a national nonprofit membership organization with

more than 18,000 members. Theassociation’s mission is to provide leadership on rural health issues.

The NRHA membership is made up of adiverse collection of

individuals and organizations, all of whom share the common bond of

an interest in ruralhealth.

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The Hospital’s Payout • Three factors are used to determine the hospital

incentives and include:– Initial amount - Base amount of $2 million + $200 for each

discharge between 1,150th and 23,000th – Medicare share

• Numerator: Sum of the estimated number of inpatient-bed-days for Part A eligible patients and Part C Medicare Advantage-enrolled individuals (as established by the Secretary of HHS)

• Denominator: Quotient of estimated total inpatient-bed-days, not including charges attributable to charity care, divided by estimated total amount of charges

• Critical access hospitals add 20 percentage points to the derived Medicare share, not to exceed 100 %.

– Annual transition factor

Special Stipulations for CAHs• Though not included in the original versions of the ARRA, the final

negotiated version of the bill did provide some incentive payments for Critical Access Hospitals (CAHs).

• CAHs will essentially be able to expense the cost of their HIT investments in a single year and not have to depreciate that out for cost reporting purposes.

• The portion of their HIT cost that may be expensed will be determined using a Medicare Share calculation (similar to the PPS calculation) PLUS an additional 20 percent (not to exceed 100 percent).

• No payments will be made beyond FY 2015 and CAHs not becoming meaningful users by FY 2015 will see reductions from 101% of cost down to 100% over three years

Penalties for CAHs

• Penalties for CAHs: Unless significant hardship is demonstrated, CAHs that have not implemented EHRs by FY 2015 are subject to payment reductions, with payment reduced to 100.66 percent of cost in FY 2015; 100.33 percent of cost in FY 2016; and 100 percent of cost in FY 2017 and beyond. CAHs may only receive a hardship exemption for a maximum of five years.

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The Case to Act Now!• Time is running out. Unless the law changes,

the Stark Act sunsets at the end of 2013 and there will no longer be an opportunity for the hospital to directly impact its community physicians using this tool. Additionally, to earn the maximum ARRA bonus, a physician must be meaningfully using the EHR by the end of 2011, and all bonus payments stop after 2016 – Penalties kick in thereafter

If You Start Now…

44K over 5 yrs. 3 to 5K per yr. 3 to 5K per yr.

Almost 100K over 5 years(estimate)

Cost, Contracting & Preparing

Modifying the Contract• a. All versions of the Software necessary to satisfy all requirements in order to be a Certified EHR (as

defined below) for use by Client to receive all of the Medicare incentives available under HITECH* beginning on October 1, 2010 and will not be subject to any reduction in reimbursement as a result of a failure to use a “certified EHR” as a “meaningful user.” Such software shall be provided (1) with respect to the initial definition of Certified EHR, at least _____ months prior to October 1, 2010 and (2) if the definition of Certified EHR is revised thereafter, an updated version of the Software that satisfies each such revised definition at least ____ months before the revised definition of Certified EHR becomes effective. Such new versions may be referred to as “Certified EHR Versions.”

• As used herein, the terms “Certified EHR” and “meaningful user” each has the respective meanings assigned to such terms in HITECH (and any subsequent amendments thereto) and in the regulations promulgated from time to time pursuant to HITECH, including whatever are then the most recent versions of HITECH and such regulations.

• b. All implementation, training, data conversion and other services that may be necessary or appropriate to reasonably assist Client in implementing the each of the Certified EHR Versions that Client may, in its discretion, elect to implement and in becoming a “meaningful user.”

Cost – What to Expect

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How to Prepare• Conduct a capacity assessment of existing installed software

•Contrast and compare systems ability to meet meaningful use

•Develop a plan for becoming eligible

• New software may be required for those who already have an EHR, but one that will not conform

• Develop a vendor vetting program to make a vendor decision• Create an RFP (To be discussed in future webinar)

•Get written compliance guarantees from your vendors

•Conduct a readiness assessment

Summary• Funding is Front Loaded

• You Need to Demonstrate Meaningful Utilization

• Funding is Time Stamped

• Incentives from Federal Government Already in Place

Additional Resources

• NRHA: http://www.ruralhealthweb.org/ • CCHIT.ORG• HIMSS.ORG• Network with other members• FREE Contract Inspection –

jdaigrepont@cokergroup.com

Thank You

Jeffery DaigrepontSenior Vice President

jdaigrepont@cokergroup.comwww.cokergroup.com

800-345-5829

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