The Paradox of Meaningful Use Incentives

The federal government is, justifiably, trumpeting the success of the Medicare and Medicaid EHR Incentive programs in creating a rapid and dramatic increase in the use of electronic health records.  Yet, even as the statistics show we’ve reached a “tipping point” of more than 50% use of EHR’s, the agenda of the Incentive Programs and Meaningful Use are about to face their greatest challenge.  And the irony of that challenge is that it is a product of the Incentive programs themselves.

It’s widely acknowledged that meeting the Meaningful Use Stage 2 requirements will be challenging, as is reflected by the delay in Stage 2 Meaningful Use itself.   Determining the criteria for Meaningful Use took longer than expected, and even with the current delay to 2014, there are voices which are calling for further delays, or even “rebooting” the program overall.  And, as for Meaningful Use Stage 3, those criteria are still not in final form.  The MU Stage 3 criteria, which have a goal of improved health outcomes, will also be ambitious and challenging, whatever final form they take.

The problem with this, of course, is that the EHR products will need to be upgraded or adapted to meet the new Stage 2 Meaningful Use, and all of the providers will need to upgrade to those compliant versions before they can achieve MU Stage 2 in 2014.  Upgrading an EHR is not a trivial thing, for either the software vendor or for the individual practice.  And when all of a vendor’s customers are seeking to upgrade to meet a relatively tight deadline, there are challenges not only with having the software ready but also with being able to support customers doing the upgrade.

Many in the HIT community got very familiar with these challenges via not only MU Stage 1, but also through the 5010 billing format transition at the end of 2011.  For the EHR software I was using at the time, the 5010-compliant version proved to be much more of an upgrade than we’d anticipated, causing us to not only do a major software upgrade, but also to replace some server infrastructure a  year earlier than its normal end-of-life.  And given that all the software vendor’s customers were essentially upgrading at the same time to beat an end-of-the-year transition, getting vendor assistance was in itself a challenge.

The upcoming MU Stage 2 requirements will overlap with another transition, the shift to ICD-10.  ICD-10 itself is a major upgrade, increasing the format, number and complexity of codes from the current ICD-9.  Because of this, there isn’t a straight-forward 1-to-1 mapping between old codes and new codes — there’s a lot for individual practices to work out around the necessary software transition, the coding itself, and its impact on practice revenues.  This is a very major transition, and one that recent reports indicate a lot of providers are not progressing toward as rapidly as they might.

As if that wasn’t enough of a challenge, as the thresholds and complexity increase with MU Stage 2 and Stage 3, the reimbursements themselves fall off.  This is by design, since the thought was that the big expense to providers would be to purchase and implement their EHR as a part of Stage 1.   The maximum amounts differ between the Medicare ($44,000 over 5 years) and Medicaid ($63,750 over 6 years), but in both cases the incentives fall off dramatically through the course of the programs.  Consider these figures for the Medicare program for a provider who met Meaningful Use Stage 1 in 2012:

  • 2012: $18,000 (Stage 1)
  • 2013: $12,000 (Stage 1)
  • 2014: $8,000 (Stage 2)
  • 2015: $4,000 (Stage 2)
  • 2016: $2,000 (Stage 3)

As you can see, the incentive amount decrease continuously, while each MU Stage sets a progressively higher bar for functionality and reporting.   The Medicare program has additional lock in for providers, since there are progressive payment adjustments beginning in 2015 to reduce payments to those eligible who don’t participate in MU.  But will avoiding these payment reductions actually inspire providers to remain on the MU track?  A recent article suggests that the adjustments may be regarded as relatively trivial, or that providers don’t believe the adjustments will ultimately be imposed.  And,  unlike the Medicaid incentives, the Medicare program doesn’t allow providers to skip a year: you are locked into 5 consecutive years of participation: once you’re out, you’re out for good.

Of course, the EHR incentives shouldn’t be the only value for providers in pursuing Meaningful Use.  But as the complexity of the requirements increase while the payments themselves diminish, it will be interesting to see whether providers drop out of the program and their failure to meet the advanced stages of MU undermine its success.  That will be one of the more interesting HIT stories of 2014.


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