ARRA & Healthcare IT: Attaining Meaningful Use
The American Reinvestment and Recovery Act was signed into law by President Obama on February 17, 2009. The legislation officially established the Office of the National Coordinator for Health Information Technology (ONC) to coordinate the legislated healthcare IT programs; endorse certification and standards; supervise committees under the ONC and update the Federal Health IT strategic plan.

The landmark bill also included $22 billion, of which $19.2 billion was allocated to stimulate electronic health record (EHR) adoption by physicians and hospitals. This portion of the bill, called Health Information Technology for Economic and Clinical Health (HITECH) Act, designates $18 billion to be used as Medicare and Medicaid Health IT incentives to be paid to health organizations demonstrating meaningful use of certified electronic health records (EHRs). [The final rule for Stage 1 meaningful use incentives for 2011 and 2012 was released by CMS on July 13, 2010.]


Physicians: Medicare Incentives for Meaningful Use

The breakdown of non-hospital-based physician incentives under Medicare are listed below:

  • Medicare incentive payments would be based on an amount equal to 75% of physician-allowable Medicare Part B charges, up to $15,000 for the first payment year.
  • Incentive payments step down in subsequent years: $12,000, $8,000, $4,000, and $2000 after 2015.
  • Maximum EHR reimbursement to an individual physician is $44,000.
  • Physicians can be reimbursed by Medicare or Medicaid, but not both.


Although incentives are available during the five-year period, it pays to be an early adopter of certified EHRs and demonstrated meaningful use:

  • 2011-2012

  •    – Early adopters, whose first payment year is 2011 or 2012, would be eligible for      an initial incentive payment up to $18,000.
  • 2014

  •    – Certified EHR adoption in 2014 results in a $12,000 payment.
  • 2015

  •    – Later adopters, whose first payment year is 2015, would receive $0 payment      for 2015 and any subsequent year.

Physicians: Rural or Health Shortage Areas

Eligible physicians in a recognized medical shortage area will receive a 10% increase in Medicare incentive payments while those in a mainly rural area will receive a 25% increase.

Physicians: Non-Adoption Penalties
Physicians that have not demonstrated meaningful use of installed certified EHRs would face reductions in their Medicare fee schedules of -1% in 2015, -2% in 2016, and -3% in 2017 and beyond. [ePrescribing penalties would end after 2014.] Beginning in 2019, HHS is allowed to increase penalties to a maximum of -5%. Case-by-case exceptions for significant hardships (rural areas, etc.) are possible.

Physicians: Medicaid Incentives for Meaningful Use
Physicians can choose to qualify for ARRA incentives under the Medicaid program in lieu of Medicare. Depending on physicians' Medicaid case mix, they could qualify for incentives of up to $42,500 to $63,750. For example, over a six-year period, eligible non-hospital-based pediatricians with at least 20 percent Medicaid patient volume could qualify for up to $42,500. Non-hospital-based physicians with a minimum of 30 percent Medicaid patient volume could receive up to $ 63,750.

(There are no reductions in Medicaid reimbursements if eligible physicians do not demonstrate meaningful use compliance by 2015.)

For more guidance, please visit CMS's Website for an overview of Medicaid EHR incentives for physicians.


Hospitals & Meaningful Use
Hospitals’ ARRA incentives are calculated based upon three elements:
1) initial amount, 2) Medicare share, and 3) transition factor. Guidance on incentive calculations can be found on CMS’ site. As with the physician incentives, hospitals can pursue Medicare or Medicaid incentives, but not both.

Hospitals: Medicare Incentives for Meaningful Use
Early hospital adopters of certified EHRs could realize a four-year maximum total of Medicare incentive payments of $11 million per hospital. Hospitals that do not demonstrate meaningful use via certified EHR by 2015 will not only receive zero incentive dollars, but they will also face reductions in Medicare reimbursements.

Hospitals: Medicare Incentive Calculations

Beginning with a one-time base payment of $2 million, add $200 per Medicare patient discharge above a base level of $1,499 annual discharges. A hospital with 150 Medicare discharges per week would be eligible for reimbursement for 6,301 discharges at $200 each, equaling $1,260,200. For the first year, the hospital is eligible for $3,260,200 in payments ($2,000,000 + $1,260,200). Payments would decrease each year, with year two delivering 75% of initial incentive payment for a total of $1,695,150. In year three, the hospital would receive 50% of the original incentive payment and the fourth (and final) year, 25%.

Hospitals: Medicaid Incentive Reimbursements

Hospitals’ Medicaid reimbursements for certified EHR implementationinvolves a base payment plus additional payments calculated on inpatient bed days and other complex factors. (There are no reductions in Medicaid reimbursements if hospitals do not demonstrate meaningful use compliance by 2015.)

To be eligible for ARRA-based Medicaid incentives, acute care hospitals must show that Medicaid is a minimum of 10% of total volume. There are no minimum Medicaid volumes for children’s hospitals.

For more guidance, please visit CMS's Website for an overview of Medicaid EHR incentives for hospitals.

ONC: Certified EHR Solutions
The Certified HIT Product List (CHPL) is maintained by the ONC and lists the complete EHRs and EHR Modules that have been tested and certified by an ONC-Authorized Testing and Certification Body (ONC_ATCB) and reported to ONC. Only the product versions listed on the CHPL are certified. Visit for complete information on 4medica’s certified solutions: