MOST IMPORTANT FINANCIAL STEP TO TAKE FOR THE EHR INCENTIVE PROGRAMS November 3, 2010
Posted by jaxncmd in EMR "Hot Topics".Tags: cost, EHR, EHR Incentive Program, EHR purchase, financial planning, financing, provider, purchase an EHR system
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At this stage of the EHR incentive programs, most of the active work is primarily occurring at the administrative levels by CMS and ONC. There is probably not much that healthcare providers can or should be actively doing in regard to the incentive programs themselves, other than waiting for these administrative processes to be completed. There are, however, significant preparations that can be pursued during this time so that providers are ready to move forward when the time is right. Perhaps the most important of these plans is getting the practice financially prepared for EHR adaptation.
I am not a financial planner and therefore will not attempt to offer financial advice. I do feel that it is imperative, however, that any provider who is planning to either obtain a full EHR system, or needs to upgrade their current system, starts thinking about financing for this endeavor. I would therefore recommend that providers sit down with their accountant/financial planner/chief financial officer to discuss their EHR plans and evaluate the optimal way to pay for it.
The most obvious benefit from this financial discussion is an understanding of the practice’s current finances. This should allow providers to create a realistic “cost window” for the EHR expenditures and to narrow their EHR search toward systems that fit into these parameters. This will hopefully avoid wasted time and effort evaluating EHR systems that are well beyond what the practice can reasonably afford, even if the providers received all of the future incentive payments.
The second benefit from the financial discussion is that it permits a more comprehensive approach to the EHR payment. Most of the EHR vendors offer some sort of financing for their systems, and the marketing for this financing is quite impressive. While these offers may eventually be the best financing opportunity, as with any significant purchase, providers should do their homework ahead of time so that they can get the best possible deal. Just like buying a car, healthcare providers should explore multiple financing options. Early preparation for EHR simply expands the financing possibilities.
By meeting with their accountant ahead of time, rather than at the last minute after committing to the EHR purchase, providers may be able to optimize their situation. For instance, by planning ahead, providers may be able to pre-budget the EHR purchase, if this make sense for their practice, and therefore pay cash for the EHR system (perhaps this may also allow for some increased negotiating room with the EHR vendor). Other options, such as obtaining a business loan or line of credit, could also be pursued at a more relaxed pace, rather than in a last-minute frenzy, that could allow for unpressured comparisons for the best financing rates.
By meeting with their financial experts earlier in the process, before comparisons and purchases are actively pursued, providers can then approach their EHR needs from a position of strength. The current “lull” that is taking place as CMS and ONC address the administrative portions of the programs, such as the EHR certification process, provides an excellent time for providers to focus on their own preparations, with perhaps none more important than the financial planning process.
THE NEED FOR CRITICAL ANALYSIS OF THE EHR INCENTIVE PROGRAMS October 20, 2010
Posted by jaxncmd in General EMR information.Tags: EHR, EHR Incentive Program, EHR purchase, electronic health records, electronic health records system, EMR, incentive payment, physician, provider
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The CMS EHR incentive programs represent an aggressive attempt by the federal government to advance the adaptation of electronic health records and develop a networked national healthcare infrastructure. While I firmly support the effort, I remain concerned that the initiative, formulated and administered by the government bureaucracy, may not fully represent and protect the interests of the participating providers. I have therefore carefully analyzed these programs so that my fellow healthcare providers are fully informed of the nuances of these programs, can achieve the maximum benefits, and avoid costly mistakes.
The EHR incentive programs are extremely complex, with the language of the law establishing these programs filled with massive amounts of bureaucratic double speak. As the implementation of the programs has progressed, CMS and ONC have attempted to clarify the specifics. Unfortunately, these efforts still leave significant points of confusion and concern in the programs.
Ironically, while the $18 billion that Congress has earmarked for this initiative sounds impressive, it is actually the healthcare providers who are providing the most significant financing for these programs. They are also the foundation on which the entire initiative is based. Due to the legal structuring of these programs, healthcare providers must first purchase their EHR/EMR systems before they can hope to obtain any reimbursement as incentive payments. It is therefore the healthcare providers who are actually providing the full financing for the initiative, with the incentive program offering the potential for some reimbursement for these costs after-the-fact.
From a provider standpoint, the financial structuring of this initiative, and the areas of confusion/concern in the programs, may potentially lead to major issues for the health of their practice. In particular, given the cost of electronic health record systems, providers face major financial exposure with an EHR purchase.
Since the initiative has been primarily crafted by government bureaucrats and administrators, it is imperative that the end-products are critically evaluated from the provider standpoint. While it is true that there has been input from providers, the fact is that small medical/healthcare practices, which represent the majority of providers, were not significantly represented in these efforts.
Since I have been in sole private practice for fourteen years, I am acutely aware of the needs, pressures, and concerns that occur in a small medical practice. I have therefore evaluated these programs from this point of view, with special attention to the “real world” implications that these programs can have for the medical practice.
Over the years, I have experienced frustration from the ever-expanding bureaucratization that administrative healthcare has brought down on providers. I have also experienced the anger and sense of futility with the current healthcare system that appears to be a common theme for many providers.
I hope that by critically analyzing the EHR programs that I can highlight the major points to fully inform my colleagues. By exposing the faults in the programs upfront, it will hopefully allow them to avoid more significant problems later on that could have otherwise been avoided.
I realize that this post is not as fact-filled as my usual posts, but I felt that it was important for readers to understand the source of my concerns regarding the electronic health records initiative. While I philosophically believe in the initiative, I also feel that the practical implications for healthcare providers must be fully considered and their interests protected.
This will hopefully complete my “philosophical posts”, and I will now return more practical issues.
THE TOP 3 REASONS FOR PARTICIPATING IN THE EHR INCENTIVE PROGRAMS October 18, 2010
Posted by jaxncmd in EMR "Hot Topics", General EMR information.Tags: cost, EHR, EHR Incentive Program, electronic health records, electronic medical records, EMR, incentive payment, physician participation EHR incentive program, provider
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While I have been extremely critical of the Medicare and Medicaid EHR incentive programs on this blog, I continue to feel that the overall goal is worthwhile and continue with my support for these initiatives. After carefully analysis, I feel that there are three primary reasons that all healthcare providers should participate in these programs. First, electronic health records have the potential to offer significant benefits to providers for the care of their patients. Second, electronic health records will eventually become the standard for healthcare in this country and all providers will need an EHR system in order to practice. Finally, the Medicare and Medicaid EHR incentive programs offer an opportunity for providers to reduce the overall cost for an EHR system.
In regard to the first reason, it is simply the statement of a well-recognized fact. The benefits of electronic medical records for the delivery of care has been well documented over the years. These benefits include factors such as improved access to the patient record, both in locating the record and in remote access, better documentation of patient encounters and rendered services, and improved tracking and reporting of test results. Once a fully integrated and networked system is in place, these benefits should continue to increase exponentially as possibilities, such as immediate access to a new patient’s entire health history or access to previous results for comparison to current studies, become a reality. These benefits should clearly help providers provide better care for their patients.
The second reason is not well established, but I believe that it represents the direction in which healthcare is moving. I base this statement on the overall trend that the healthcare system is currently pursuing in regard to electronic health records. The Medicaid and Medicare incentive programs are part of this trend, but I believe that the “private” health insurance companies will eventually also pursue this course. I have previously discussed my rationale for this opinion in a earlier post that can be found at the following link – http://emrhelpline.wordpress.com/2010/06/02/why-do-i-need-to-buy-an-electronic-medical-records-system/.
The third, and what should be the least important, reason is that the current EHR incentive programs are an opportunity for providers to reduce some of the costs associated with the implementation of an EMR/EHR system. I feel that this should be the least important reason because providers will probably be extremely disappointed and frustrated if the incentive payment is their primary rationale for participation. The fact is that the purchase of an electronic health records system is a significant capital expenditure. As I have pointed out in many posts, the federal government’s estimate for the cost of an EHR system (as part of these programs) is $104,000 over five years. While the incentive payments are a significant amount of money, the maximized amounts will only cover 40-60% of the cost over the five years (depending on which program the provider participates in). Providers will therefore still been incurring significant financial costs for the EMR/EHR system. It would therefore make more sense for providers to consider the first two reasons as the primary motivation for obtaining an EHR system, with the third reason as a nice benefit, or perk, for pursuing the purchase while the incentive programs are in place.
I feel that these three benefits represent the best reasons for providers to participate in the CMS EHR incentive programs. They offer clear and tangible benefits that providers will be able to realize from both a practice standpoint and from a financial standpoint.
Now that I have clearly laid out my rationale for participation of the EHR incentive programs, I recognize that my critical analysis of these programs in my posts may appear to be a contradiction to my professed support. In my next post, I will take the opportunity to fully explain the motivation behind my careful analysis and criticism.
THE BIGGEST PROBLEM WITH THE MEDICAID EHR INCENTIVE PROGRAM October 13, 2010
Posted by jaxncmd in EMR "Hot Topics", General EMR information.Tags: electronic health records, incentive payment, Medicaid EHR Incentive Program, physician participation EHR incentive program
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As I discussed in my previous post, I feel that both the Medicare and Medicaid EHR incentive programs have inherent flaws in their design that could potentially compromise their success. The Medicare flaw is caused by the structuring of the incentive payment itself. The biggest problem with the Medicaid EHR incentive program, however, is caused by the criteria required for participation in the program. This qualification requirement has the potential to be the “critical error” that prevents and/or discourages providers from participating.
The specific problem with the participation criteria is that it requires a provider to have at least 30% of their patient volume from Medicaid. While this may not be a significant problem for some practices, such as pediatrics or family medicine, other medical practices, such as surgical specialties, may find that this requirement creates a significant associated financial burden. While the Medicaid EHR program offers a greater incentive payment than the Medicare program, the 30% requirement may make the greater incentive payments unaffordable from a business standpoint.
My rationale for the statement is based on the fact that Medicaid is typically one of the lowest paying insurance programs. The reimbursement from Medicaid is usually far below that of commercial insurance companies, and usually at or below Medicare rates. While there are exceptions to this rule, specifically with certain primary care specialties, in general, Medicaid is typically one of the worst payers for most healthcare providers.
This requirement for the patient volume to be almost 1/3 Medicaid patients, therefore, can potentially raise significant financial issues for the practice. First, one would have to wonder about the financial health of the practice given this payer mix, and whether the practice could even afford the significant costs of the electronic health records system (again, I point out that providers first need to purchase the system before ever hoping to receive any incentive payments). Unless the other 2/3 of patients had higher paying insurances, this practice may have underlying financial difficulties, particularly at a time when states are routinely further cutting Medicaid reimbursements due to the economic downturn.
Second, although the Medicaid program offers higher incentive payments, providers may find that they are actually losing money due to the 30% requirement. If they are able to reduce the percentage of Medicaid patients to lower levels, such as 15-20%, and open up these office visits for patients with higher paying insurances, then providers may find that they are able to receive a much higher level of reimbursement that far exceeds the Medicaid EHR incentive payments.
Third, providers may object to this requirement on philosophical terms and find it to be offensive from both a political and economic standpoint. This requirement represents the government dictating the insurance makeup of a provider’s patient volume. Given the current political climate, many providers may feel that this is another example of “the government overstepping its boundaries” and object to this “free market” interference.
These concerns leave me feeling that this qualification requirement may create a significant hurdle for providers who may otherwise wish to participate in the program. In fact, it may actually serve as a disincentive for provider participation. The requirement also makes me question the primary purpose of the program. Although the stated purpose of the EHR incentive programs is to encourage provider adaptation of electronic health records, this patient volume criteria appears to have a more government-centric purpose. This 30% requirement appears to be an effort to encourage (force?) providers to maintain or increase Medicaid access at the same time that state government’s are further cutting Medicaid reimbursement.
Given these significant concerns with the Medicare and Medicaid EHR incentive programs, it may seem surprising that I still support these initiatives. Despite the limitations, I still feel that these programs are worthwhile and in my next post I will explain both the rationale for my support and the reason for my critical analysis.
THE BIGGEST PROBLEM WITH THE MEDICARE EHR INCENTIVE PROGRAM October 12, 2010
Posted by jaxncmd in EMR "Hot Topics", General EMR information.Tags: EHR Incentive Program, electronic health records, Final Rules, meaningful use, Medicare EHR Incentive Program, physician participation EHR incentive program, provider
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While the CMS EHR incentive programs are designed to encourage providers to adopt electronic health record systems, there is a significant problem in both programs that may interfere with the achievement of this goal. The major problems are not related to certification, the “Final Rules”, or meaningful use, but are instead flaws that are inherent in the design of these programs. The Medicare and Medicaid programs each have one of these “critical errors”.
The biggest problem with the Medicare EHR incentive program is that the incentive payment is directly tied to the Medicare allowable charges. While this may not seem like a significant problem, this association has the potential to create a significant source of provider dissatisfaction with the program. This association with Medicare reimbursement means that this EHR incentive program will therefore be afflicted with the same consternation that has been associated with provider Medicare reimbursement for over a decade.
As every Medicare participating provider is fully aware, the issue of Medicare reimbursement is a political football that has been kicked all over the field on a regular basis in recent years. This year alone, there have been several “fixes” to temporize the political rhetoric on this topic, but these efforts have failed to provide a long-term solution. In fact, within the next month, this topic will again rear its ugly head as the most recent “fix” expires. I will avoid digressing into a discussion of the specifics of the Medicare reimbursement issue, such as the sustainable growth formula problem, and simply note that until a long-term solution to this continuing and recurring problem has been made, then the Medicare EHR incentive program will be pulled down by this albatross.
This association has the potential to be a major source of provider dissatisfaction with the Medicare EHR incentive program, and it could potentially be a significant cause for providers to withdraw, or not even participate, in the program. My rationale for this statement is based on the fact that the proposed future reductions in Medicare reimbursement, unless repealed, have the potential to create an associated decrease in the provider payments under the EHR program. In order to retain the same level of “promised” incentive payments, providers will have to exponentially increase their productivity in order to simply “maintain the status quo” (unless of course their Medicare allowable charges are significantly above the threshold for qualifying for the maximum incentive payment).
Healthcare providers have already been angered and frustrated by the politics of Medicare reimbursement for many years. If Congress continues in their inability/unwillingness to create a long-term solution, this level of provider dissatisfaction will continue to grow. Since it is not unusual to hear providers considering reducing or eliminating Medicare services as a business response to these issues, it would not be surprising if the repercussions of this problem on the EHR incentive program is seen as further evidence demonstrating that Medicare participation is unsustainable from a business/financial standpoint. Ironically, this may result in the CMS EHR incentive program eventually itself becoming a disincentive for providers to participate in Medicare.
I point out this problem so that providers will be aware that it exists as they consider participation in the program. Hopefully, by being aware of this association, providers will be less frustrated by these proposed repercussions if they do occur. I hope that this will also make providers more inclined to participate and put political pressure on Congress to create a long-term solution for Medicare reimbursement.
Now that I have addressed the Medicare EHR incentive program’s major problem, I will plan to review the Medicaid EHR program’s problem tomorrow, as it has a different “significant critical error”.
