Federal Register, Volume 75 Issue 144 (Wednesday, July 28, 2010)

[Federal Register Volume 75, Number 144 (Wednesday, July 28, 2010)]
[Rules and Regulations]
[Pages 44314-44588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17207]

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Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 412, 413, 422 et al.

Medicare and Medicaid Programs; Electronic Health Record Incentive
Program; Final Rule

Federal Register / Vol. 75 , No. 144 / Wednesday, July 28, 2010 /
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 422, and 495

[CMS-0033-F]
RIN 0938-AP78

Medicare and Medicaid Programs; Electronic Health Record
Incentive Program

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule implements the provisions of the American
Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) that
provide incentive payments to eligible professionals (EPs), eligible
hospitals and critical access hospitals (CAHs) participating in
Medicare and Medicaid programs that adopt and successfully demonstrate
meaningful use of certified electronic health record (EHR) technology.
This final rule specifies--the initial criteria EPs, eligible
hospitals, and CAHs must meet in order to qualify for an incentive
payment; calculation of the incentive payment amounts; payment
adjustments under Medicare for covered professional services and
inpatient hospital services provided by EPs, eligible hospitals and
CAHs failing to demonstrate meaningful use of certified EHR technology;
and other program participation requirements. Also, the Office of the
National Coordinator for Health Information Technology (ONC) will be
issuing a closely related final rule that specifies the Secretary's
adoption of an initial set of standards, implementation,
specifications, and certification criteria for electronic health
records. ONC has also issued a separate final rule on the establishment
of certification programs for health information technology.

DATES: Effective Date: These regulations are effective on September 27,
2010.

FOR FURTHER INFORMATION CONTACT:
Elizabeth Holland, (410) 786-1309, EHR incentive program issues.
Edward Gendron, (410) 786-1064, Medicaid incentive payment issues.
Jim Hart, (410) 786-9520, Medicare fee for service payment issues.
Bob Kuhl or Susan Burris, (410) 786-5594, Medicare CAH payment and
charity care issues.
Frank Szeflinski, (303) 844-7119, Medicare Advantage issues.

SUPPLEMENTARY INFORMATION:

Acronyms

ARRA American Recovery and Reinvestment Act of 2009
AAC Average Allowable Cost (of certified EHR technology)
AIU Adopt, Implement, Upgrade (certified EHR technology)
CAH Critical Access Hospital
CAHPS Consumer Assessment of Healthcare Providers and Systems
CCN CMS Certification Number
CFR Code of Federal Regulations
CHIP Children's Health Insurance Program
CHIPRA Children's Health Insurance Program Reauthorization Act of
2009
CMS Centers for Medicare & Medicaid Services
CPOE Computerized Physician Order Entry
CY Calendar Year
EHR Electronic Health Record
EP Eligible Professional
EPO Exclusive Provider Organization
FACA Federal Advisory Committee Act
FFP Federal Financial Participation
FFY Federal Fiscal Year
FFS Fee-For-Service
FQHC Federally Qualified Health Center
FTE Full-Time Equivalent
FY Fiscal Year
HEDIS Healthcare Effectiveness Data and Information Set
HHS Department of Health and Human Services
HIE Health Information Exchange
HIT Health Information Technology
HIPAA Health Insurance Portability and Accountability Act of 1996
HITECH Health Information Technology for Economic and Clinical
Health Act
HMO Health Maintenance Organization
HOS Health Outcomes Survey
HPSA Health Professional Shortage Area
HRSA Health Resource and Services Administration
IAPD Implementation Advance Planning Document
ICR Information Collection Requirement
IHS Indian Health Service
IPA Independent Practice Association
IT Information Technology
MA Medicare Advantage
MAC Medicare Administrative Contractor
MAO Medicare Advantage Organization
MCO Managed Care Organization
MITA Medicaid Information Technology Architecture
MMIS Medicaid Management Information Systems
MSA Medical Savings Account
NAAC Net Average Allowable Cost (of certified EHR technology)
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NPI National Provider Identifier
NPRM Notice of Proposed Rulemaking
ONC Office of the National Coordinator for Health Information
Technology
PAHP Prepaid Ambulatory Health Plan
PAPD Planning Advance Planning Document
PFFS Private Fee-For-Service
PHO Physician Hospital Organization
PHS Public Health Service
PHSA Public Health Service Act
PIHP Prepaid Inpatient Health Plan
POS Place of Service
PPO Preferred Provider Organization
PQRI Physician Quality Reporting Initiative
PSO Provider Sponsored Organization
RHC Rural Health Clinic
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RPPO Regional Preferred Provider Organization
SMHP State Medicaid Health Information Technology Plan
TIN Tax Identification Number

Table of Contents

I. Background
A. Overview of the HITECH Programs Created by the American
Recovery and Reinvestment Act of 2009
B. Statutory Basis for the Medicare & Medicaid EHR Incentive
Programs
II. Provisions of the Proposed Regulations and Response and Analysis
of Comments
A. Definitions Across the Medicare FFS, Medicare Advantage, and
Medicaid Programs
1. Definitions
a. Certified Electronic Health Record (EHR) Technology
b. Qualified Electronic Health Record
c. Payment Year
d. First, Second, Third, Fourth, Fifth and Sixth Payment Year
e. EHR Reporting Period
f. Meaningful EHR User
2. Definition of Meaningful Use
a. Considerations in Defining Meaningful Use
b. Common Definition of Meaningful Use Under Medicare and
Medicaid
c. Stage 1 Criteria for Meaningful Use
3. Sections 4101(a) and 4102(a)(1) of HITECH Act: Reporting on
Clinical Quality Measures Using EHR by EPs, Eligible Hospitals and
CAHs
a. General
b. Requirements for the Submission of Clinical Quality Measures
by EPs, Eligible Hospitals and CAHs
c. Statutory Requirements and Other Considerations for the
Selection of Clinical Quality Measures for Electronic Submission by
EPs, Eligible Hospitals and CAHs
(1) Statutory Requirements for the Selection of Clinical Quality
Measures for Electronic Submission by EPs, Eligible Hospitals and
CAHs
(2) Other Considerations for the Selection of Clinical Quality
Measures for Electronic Submission by EPs, Eligible Hospitals and
CAHs
d. Clinical Quality Measures for EPs
e. Clinical Quality Measures Reporting Criteria for EPs
f. Clinical Quality Measures for Electronic Submission by
Eligible Hospitals
g. Potential Measures for EPs, Eligible Hospitals and CAHs in
Stage 2 and Subsequent Years
h. Reporting Method for Clinical Quality Measures for 2011 and
Beginning With the 2012 Payment Years
(1) Reporting Method for 2011 Payment Year
(2) Reporting Method Beginning in 2012

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i. Alternative Reporting Methods for Clinical Quality Measures
j. Reporting Period for Reporting Clinical Quality Measures
4. Demonstration of Meaningful Use
a. Common Methods of Demonstration in Medicare and Medicaid
b. Methods for Demonstration of the Stage 1 Criteria of
Meaningful Use
5. Data Collection for Online Posting, Program Coordination, and
Accurate Payments
a. Online Posting
b. Program Election Between Medicare FFS/MA and Medicaid for EPs
c. Data To Be Collected
6. Hospital-Based Eligible Professionals
7. Interaction With Other Programs
B. Medicare Fee-for-Service Incentives
1. Incentive Payments for Eligible Professionals
a. Definitions
b. Incentive Payment Limits
c. Increase in Incentive Payment for EPs Who Predominantly
Furnish Services in a Geographic Health Professional Shortage Area
d. Form and Timing of Payment
e. Payment Adjustment Effective in CY 2015 and Subsequent Years
for EPs Who Are Not Meaningful Users of Certified EHR Technology
2. Incentive Payments for Hospitals
a. Definition of Eligible Hospital for Medicare
b. Incentive Payment Calculation for Eligible Hospitals
c. Medicare Share
d. Charity Care
e. Transition Factor
f. Duration and Timing of Incentive Payments
g. Incentive Payment Adjustment Effective in Federal FY 2015 and
Subsequent Years for Eligible Hospitals Who Are Not Meaningful EHR
Users
3. Incentive Payments for Critical Access Hospitals
a. Definition of CAHs for Medicare
b. Current Medicare Payment of Reasonable Cost for CAHs
c. Changes Made by the HITECH Act
d. Incentive Payment Calculation for CAHs
e. Reduction of Reasonable Cost Payment in FY 2015 and
Subsequent Years for CAHs That Are Not Meaningful EHR Users
4. Process for Making Incentive Payments Under the Medicare FFS
Program
a. Incentive Payments to EPs
b. Incentive Payments to Eligible Hospitals
c. Incentive Payments to CAHs
d. Payment Accounting Under Medicare
C. Medicare Advantage Organization Incentive Payments
1. Definitions
a. Qualifying MA Organization
b. Qualifying MA Eligible Professional
c. Qualifying MA-Affiliated Eligible Hospital
2. Identification of Qualifying MA Organizations, MA EPs, and
MA-Affiliated Eligible Hospitals
3. Computation of Incentives to Qualifying MA Organizations for
MA EPs and Hospitals
4. Timeframe for Payment
5. Avoiding Duplicate Payment
6. Meaningful User Attestation
7. Posting Information on the CMS Web site
8. Limitation on Review
9. Conforming Changes
10. Payment Adjustment and Future Rulemaking
D. Medicaid Incentives
1. Overview of Health Information Technology in Medicaid
2. General Medicaid Provisions
3. Identification of Qualifying Medicaid EPs and Eligible
Hospitals
a. Overview
b. Program Participation
1. Acute Care Hospitals
2. Children's Hospitals
c. Medicaid Professionals Program Eligibility
d. Calculating Patient Volume Requirements
e. Entities Promoting the Adoption of Certified EHR Technology
4. Computation of Amount Payable to Qualifying Medicaid EPs and
Eligible Hospitals
a. Payment Methodology for EPs
(1) General Overview
(2) Average Allowable Costs
(3) Net Average Allowable Costs
(4) Payments for Medicaid Eligible Professionals
(5) Basis for Medicaid EHR Incentive Program First Payment Year
and Subsequent Payment Years
(i) Medicaid EP Who Begins Adopting, Implementing or Upgrading
Certified EHR Technology in the First Year
(ii) Medicaid EP Who Has Already Adopted, Implemented or
Upgraded Certified EHR Technology and Meaningfully Uses EHR
Technology
b. Payment Methodology for Eligible Hospitals
c. Alternative and Optional Early State Implementation To Make
Incentive Payments for Adopting, Implementing or Upgrading Certified
EHR Technology
d. Process for Making and Receiving Medicaid Incentive Payments
e. Avoiding Duplicate Payment
f. Flexibility To Alternate Between Medicare and Medicaid EHR
Incentive Programs One Time
g. One State Selection
5. Single Provider Election Repository and State Data Collection
6. Collection of Information Related to the Eligible
Professional's National Provider Identifier (NPI) and the Tax
Identification Number (TIN)
7. Activities Required To Receive Incentive Payments
a. General Overview
b. Definitions Related to Certified EHR Technology and Adopting,
Implementing or Upgrading Such Technology
(1) Certified EHR Technology
(2) Adopting, Implementing or Upgrading
c. Other General Terminology
d. Quality Measures
8. Overview of Conditions for States To Receive Federal
Financial Participation (FFP) for Incentive Payments and
Implementation Funding
9. Financial Oversight, Program Integrity and Provider Appeals
III. Collection of Information Requirements
A. ICRs Regarding Demonstration of Meaningful Use Criteria
(Sec. 495.8)
B. ICRs Regarding Participation Requirements for EPs, Eligible
Hospitals, and Qualifying CAHs (Sec. 495.10)
C. ICRs Regarding Identification of Qualifying MA Organizations,
MA-EPs and MA-Affiliated Eligible Hospitals (Sec. 495.202)
D. ICRs Regarding Incentive Payments to Qualifying MA
Organizations for MA-EPs and Hospitals (Sec. 495.204)
E. ICRs Regarding Meaningful User Attestation (Sec. 495.210)
F. ICRs Regarding Incentive Payments to Qualifying MA
Organizations for MA-Eligible Professionals and Hospitals (Sec.
495.220)
G. ICRs Regarding Process for Payments (Sec. 495.312)
H. ICRs Regarding Activities Required To Receive an Incentive
Payment (Sec. 495.314)
I. ICRs Regarding State Monitoring and Reporting Regarding
Activities Required To Receive an Incentive Payment (Sec. 495.316)
J. ICRs Regarding State Responsibilities for Receiving FFP
(Sec. 495.318)
K. ICRs Regarding Prior Approval Conditions (Sec. 495.324)
L. ICRs Regarding Termination of Federal Financial Participation
(FFP) for Failure To Provide Access to Information (Sec. 495.330)
M. ICRs Regarding State Medicaid Agency and Medicaid EP and
Hospital Activities (Sec. 495.332 Through Sec. 495.338)
N. ICRs Regarding Access to Systems and Records (Sec. 495.342)
O. ICRs Regarding Procurement Standards (Sec. 495.344)
P. ICRs Regarding State Medicaid Agency Attestations (Sec.
495.346)
Q. ICRs Regarding Reporting Requirements (Sec. 495.348)
R. ICRs Regarding Retroactive Approval of FFP With an Effective
Date of February 18, 2009 (Sec. 495.358)
S. ICRs Regarding Financial Oversight and Monitoring
Expenditures (Sec. 495.362)
T. ICRs Regarding Appeals Process for a Medicaid Provider
Receiving Electronic Health Record Incentive Payments (Sec.
495.366)
IV. Regulatory Impact Analysis
A. Overall Impact
B. Regulatory Flexibility Analysis
C. Small Rural Hospitals
D. Unfunded Mandates Reform Act
E. Federalism
F. Anticipated Effects
G. HITECH Impact Analysis
H. Accounting Statement

I. Background

A. Overview of the HITECH Programs Created by the American Recovery and
Reinvestment Act of 2009

The American Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L.
111-5) was enacted on February 17,

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2009. Title IV of Division B of ARRA amends Titles XVIII and XIX of the
Social Security Act (the Act) by establishing incentive payments to
eligible professionals (EPs), eligible hospitals, and critical access
hospitals (CAHs), and Medicare Advantage Organizations to promote the
adoption and meaningful use of interoperable health information
technology (HIT) and qualified electronic health records (EHRs). These
provisions, together with Title XIII of Division A of ARRA, may be
cited as the ``Health Information Technology for Economic and Clinical
Health Act'' or the ``HITECH Act.'' These incentive payments are part
of a broader effort under the HITECH Act to accelerate the adoption of
HIT and utilization of qualified EHRs.
On January 13, 2010 we published a proposed rule (75 FR 1844),
entitled ``Medicare and Medicaid Programs; Electronic Health Record
Incentive Program'' to implement the provisions of ARRA that provide
incentive payments to EPs, eligible hospitals, and CAHs participating
in Medicare and Medicaid programs that adopt and successfully
demonstrate meaningful use of ``certified EHR technology,'' and
incentive payments to certain Medicare Advantage Organizations for
their affiliated EPs and eligible hospitals that meaningfully use
certified EHR technology. Through this final rule, we are developing
the incentive programs which are outlined in Division B, Title IV of
the HITECH Act. This final rule sets forth the definition of
``meaningful use of certified EHR technology.''
Section 13101 of the HITECH Act adds a new section 3000 to the
Public Health Service Act (PHSA), which defines ``certified EHR
technology'' as a qualified EHR that has been properly certified as
meeting standards adopted under section 3004 of the PHSA. CMS and ONC
have been working closely to ensure that the definition of meaningful
use of certified EHR technology and the standards for certified EHR
technology are coordinated. In the interim final rule published on
January 13, 2010 (75 FR 2014) entitled ``Health Information Technology:
Initial Set of Standards, Implementation Specifications, and
Certification Criteria for Electronic Health Record Technology,'' ONC
defined the term ``certified EHR technology,'' identified the initial
set of standards and implementation specifications that such EHR
technology would need to support the achievement of the proposed
meaningful use Stage 1, as well as the certification criteria that will
be used to certify EHR technology. ONC is also issuing a final rule on
the standards, implementation specifications, and certification
criteria elsewhere in this issue of the Federal Register.
In a related proposed rule published on March 10, 2010, (75 FR
11328) entitled ``Proposed Establishment of Certification Programs for
Health Information Technology'' ONC proposed the establishment of two
certification programs for purpose of testing and certifying health
information technology. In the June 24, 2010 Federal Register (75 FR
36157), ONC published a final rule to establish a temporary
certification program whereby the National Coordinator would authorize
organizations to test and certify complete EHRs and EHR Modules, and
plans to issue a separate final rule to establish a permanent
certification program to replace the temporary certification program.
Specifically, this final rule will ensure that the definition of
meaningful use of certified EHR technology does not require EPs,
eligible hospitals, and CAHs to perform functions for which standards
have not been recognized or established. Similarly, the functionality
of certified EHR technology should enable and advance the definition of
meaningful use.
We urge those interested in this final rule to also review the ONC
interim final rule on standards and implementation specifications for
certified EHR technology and the related final rule as well as the
final rule on the establishment of a temporary certification program.
Readers may also visit http://healthit.hhs.gov and http://www.cms.hhs.gov/Recovery/11_HealthIT.asp#TopOfPage for more
information on the efforts at the Department of Health and Human
Services (HHS) to advance HIT initiatives.

B. Statutory Basis for the Medicare & Medicaid EHR Incentive Programs

Section 4101(a) of the HITECH Act adds a new subsection (o) to
section 1848 of the Act. Section 1848(o) of the Act establishes
incentive payments for demonstration of meaningful use of certified EHR
technology by EPs participating in the original Medicare program
(hereinafter referred to as the Medicare Fee-for-Service (FFS) program)
beginning in calendar year (CY) 2011. Section 4101(b) of the HITECH Act
also adds a new paragraph (7) to section 1848(a) of the Act. Section
1848(a)(7) of the Act provides that beginning in CY 2015, EPs who do
not demonstrate that they are meaningful users of certified EHR
technology will receive an adjustment to their fee schedule for their
professional services of 99 percent for 2015 (or, in the case of an
eligible professional who was subject to the application of the payment
adjustment under section 1848(a)(5) of the Act, 98 percent for 2014),
98 percent for 2016, and 97 percent for 2017 and each subsequent year.
Section 4101(c) of the HITECH Act adds a new subsection (l) to section
1853 of the Act to provide incentive payments to certain Medicare
Advantage (MA) organizations for their affiliated EPs who meaningfully
use certified EHR technology and meet certain other requirements, and
requires a downward adjustment to Medicare payments to certain MA
organizations for professional services provided by any of their
affiliated EPs who are not meaningful users of certified EHR
technology, beginning in 2015. Section 1853(l) of the Act also requires
us to establish a process that ensures that there are no duplicate
payments made to MA organizations under section 1853(l) of the Act and
to their affiliated EPs under the FFS EHR incentive program established
under section 1848(o)(1)(A) of the Act.
Section 4102(a) of the HITECH Act adds a new subsection (n) to
section 1886 of the Act. Section 1886(n) of the Act establishes
incentives payments for demonstration of meaningful use of certified
EHR technology by subsection (d) hospitals, as defined under section
1886(d)(1)(B) of the Act, participating in the Medicare FFS program
beginning in Federal fiscal year (FFY) 2011. Section 4102(b)(1) of the
HITECH Act amends section 1886(b)(3)(B) of the Act to provide that,
beginning in FY 2015, subsection (d) hospitals that are not meaningful
users of certified EHR technology will receive a reduced annual payment
update for their inpatient hospital services. Section 4102(a)(2) of the
HITECH Act amends section 1814(l) of the Act to provide an incentive
payment to critical access hospitals (CAHs) who meaningfully use
certified EHR technology based on the hospitals' reasonable costs for
the purchase of certified EHR technology beginning in FY 2011. In
addition, section 4102(b)(2) of the HITECH Act amends section 1814(l)
of the Act to provide for a downward payment adjustment for hospital
services provided by CAHs that are not meaningful users of certified
EHR technology for cost reporting periods beginning in FY 2015. Section
4102(c) of the HITECH Act adds a new subsection (m) to section 1853 of
the Act to provide incentive payments to qualifying MA organizations
for certain affiliated hospitals that meaningfully

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use certified EHR technology to make a downward adjustment to payments
to certain MA organizations for inpatient hospital services provided by
its affiliated hospitals that are not meaningful users of certified EHR
technology beginning in FY 2015. Section 1853(m) of the Act also
requires us to establish a process that ensures that there are no
duplicate payments made to MA organizations under section 1853(m) of
the Act and to their affiliated hospitals under the FFS EHR incentive
program established under section 1886(n) of the Act.
Section 4103 of the HITECH Act provides for implementation funding
for the EHR incentives program under Medicare.
Section 4201 of the HITECH Act amends section 1903 of the Act to
provide 100 percent Federal financial participation (FFP) to States for
incentive payments to certain eligible providers participating in the
Medicaid program to purchase, implement, operate (including support
services and training for staff) and meaningfully use certified EHR
technology and 90 percent FFP for State administrative expenses related
to the program outlined in 1903(t) of the Act. Section 4201(a)(2) of
the HITECH Act adds a new subsection (t) to section 1903 of the Act to
establish a program with input from the States to provide incentives
for the adoption and subsequent meaningful use of certified EHR
technology for providers participating in the Medicaid program.

II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments

We proposed to add a new part 495 to title 42 of the Code of
Federal Regulations to implement the provisions of Title IV of Division
B of ARRA providing for incentive payments to EPs, eligible hospitals,
CAHs and certain Medicare Advantage organizations for the adoption and
demonstration of meaningful use of certified EHR technology under the
Medicare program or the Medicaid program.
The HITECH Act creates incentives under the Medicare Fee-for-
Service (FFS), Medicare Advantage (MA), and Medicaid programs for EPs,
eligible hospitals and CAHs to adopt and demonstrate meaningful use of
certified EHR technology, and payment adjustments under the Medicare
FFS and MA programs for EPs, eligible hospitals, and CAHs who fail to
adopt and demonstrate meaningful use of certified EHR technology. The
three incentive programs contain many common elements and certain
provisions of the HITECH Act encourage avoiding duplication of
payments, reporting, and other requirements, particularly in the area
of demonstration of meaningful use of certified EHR technology.
Eligible hospitals and CAHs may participate in both the Medicare
program and the Medicaid program, assuming they meet each program's
eligibility requirements, which vary across the two programs. In
certain cases, the HITECH Act has used nearly identical or identical
language in defining terms that are used in the Medicare FFS, MA, and
Medicaid programs, including such terms as ``hospital-based EPs'' and
``certified EHR technology.'' For these reasons, we seek to create as
much commonality between the three programs as possible and have
structured this final rule, as we did the proposed rule, based on the
premise by beginning with those provisions that cut across the three
programs before moving on to discuss the provisions specific to
Medicare FFS, MA and Medicaid.

A. Definitions Across the Medicare FFS, MA, and Medicaid Programs

Title IV, Division B of ARRA establishes incentive payments under
the Medicare and Medicaid programs for certain professionals and
hospitals that meaningfully use certified EHR technology, and for
certain MA organizations whose affiliated EPs and hospitals
meaningfully use certified EHR technology. We refer to the incentive
payments made under the original Medicare program to EPs, eligible
hospitals, and CAHs as the Medicare FFS EHR incentive program, the
incentive payments made to qualifying MA organizations as the MA EHR
incentive program, and the incentive payments made under Medicaid to
eligible professionals and eligible hospitals as the Medicaid EHR
incentive program. When referring to the Medicare EHR incentive
program, we are generally referring to both the Medicare FFS EHR and
the MA EHR incentive programs.
1. Definitions
Sections 4101, 4102, and 4201 of the HITECH Act use many identical
or similar terms. In this section of the preamble, we discuss terms for
which we are finalizing uniform definitions for the Medicare FFS, MA,
and Medicaid EHR incentive programs. These definitions are set forth in
part 495 subpart A of the regulations. For definitions specific to an
individual program, the definition is set forth and discussed in the
applicable EHR incentive program section.
The incentive payments are available to EPs which are non-hospital-
based physicians, as defined in section 1861(r) of the Act, who either
receive reimbursement for services under the Medicare FFS program or
have an employment or contractual relationship with a qualifying MA
organization meeting the criteria under section 1853(l)(2) of the Act;
or healthcare professionals meeting the definition of ``eligible
professional'' under section 1903(t)(3)(B) of the Act as well as the
patient-volume and non-hospital-based criteria of section 1903(t)(2)(A)
of the Act and eligible hospitals which are subsection (d) hospitals as
defined under subsection 1886(d)(1)(B) of the Act that either receive
reimbursement for services under the Medicare FFS program or are
affiliated with a qualifying MA organization as described in section
1853(m)(2) of the Act; critical access hospitals (CAHs); or acute care
or children's hospitals described under section 1903(t)(2)(B) of the
Act.
a. Certified Electronic Health Record (EHR) Technology
Under all three EHR incentive programs, EPs, eligible hospitals,
and CAHs must utilize ``certified EHR technology'' if they are to be
considered eligible for the incentive payments. In the Medicare FFS EHR
incentive program this requirement for EPs is found in section
1848(o)(2)(A)(i) of the Act, and for eligible hospitals and CAHs in
section 1886(n)(3)(A)(i) of the Act. In the MA EHR incentive program
this requirement for EPs is found in section 1853(l)(1) of the Act, and
for eligible hospitals and CAHs, in section 1853(m)(1) of the Act. In
the Medicaid EHR incentive program this requirement for EPs and
Medicaid eligible hospitals is found throughout section 1903(t) of the
Act, including in section 1903(t)(6)(C) of the Act. Certified EHR
technology is a critical component of the EHR incentive programs, and
the Secretary has charged ONC, under the authority given to her in the
HITECH Act, with developing the criteria and mechanisms for
certification of EHR technology. Therefore, we finalize our proposal to
use the definition of certified EHR technology adopted by ONC. ONC
issued an interim final rule with comment for the standards and
certification criteria for certified EHR technology at the same time
our proposed rule was issued. After reviewing the comments they
received and to address changes made in this final rule, ONC will be
issuing a final rule in conjunction with this final rule. When we refer
to the ONC final rule, we are referring to this final rule titled

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``Health Information Technology: Initial Set of Standards,
Implementation Specifications, and Certification Criteria for
Electronic Health Record Technology. When we refer to the ONC IFR, we
are referring to the interim final rule with comment period published
in the Federal Register on January 13, 2010.
Comment: Several commenters asked for clarification on the
definition of certified EHR technology. Currently, hospitals utilize
multiple systems to operate electronically. For example, some
electronic operating systems feed EHR data and some systems pull EHR
data. Data from the two systems are then extracted and manipulated to
create a quality measure calculation. The commenters' inquired as to
how these systems can continue to be utilized even though,
independently, these systems will not meet all certification standards.
Some commenters expressed concern the ONC IFR did not include
generation of the data needed to demonstrate meaningful use as a
certification requirement and that certified EHR technology
requirements should also include compliance with HIPAA standards as
well as all relevant state statutes for the state or states where it is
installed. Commenters recommended various approaches to defining
certified technology especially in the early stages of the program.
Some suggestions included, grandfathering existing systems for a period
of three years as long as the provider could meet specific meaningful
use objectives while requiring all upgrades to existing systems to be
certified, allowing all EHR products certified by the Certification
Commission for Health Information Technology (CCHIT) at the criteria
established for 2008 or later be deemed as meeting Stage 1
certification requirements or alternatively CMS provide a process that
can verify compliance of required features at no cost to providers or
vendors as is done now with Enterprise Data Interchange (EDI) claims
processing. Some commenters also offered other thoughts on potential
unintended consequences of defining the EHR certification software
process to include certifying agencies that charge for the process. The
commenters believed this could result in continued new and revised
requirements to justify the certifying entities' existence and increase
its revenue.
Response: We have referred those comments to ONC who addresses them
in their final rule.
We are adopting the ONC definition of certified EHR technology at
45 CFR 170.102 in this final rule.
b. Qualified Electronic Health Record
In order for an EHR technology to be eligible for certification, it
must first meet the definition of a Qualified Electronic Health Record.
This term was defined by ONC in its in its IFR and finalized by ONC in
their final rule, and we are finalizing our proposal to use the
definition of qualified electronic health record adopted by ONC in
their final rule to be published concurrently with this rule.
Comment: We received a few comments on the definition of qualified
EHR technology. Commenters expressed concerns regarding perceived gaps
in defining an EHR as qualified such as a lack of the requirement for a
narrative text for physicians (also known as progress note). Another
comment requested further clarification regarding the requirement for a
qualified EHR to ``capture and query information relevant to health
care quality'' and ``exchange electronic health information with and
integrate such information from other sources.'' For example, some
might believe that these requirements apply strictly to information
contained within the EHR or closed proprietary hospital systems and not
to information that would have to be obtained from outside the four
walls of the practice or the extended (but closed) system.
Response: We have referred those comments to ONC who addresses them
in their final rule.
We are adopting the ONC definition of Qualified Electronic Health
Record at 45 CFR 170.102.
c. Payment Year
As discussed in the proposed rule, under section 1848(o)(1)(A)(i)
of the Act the Medicare FFS EHR incentive payment is available to EPs
for a ``payment year.'' Section 1848(o)(1)(E) of the Act defines the
term ``payment year'' as a year beginning with 2011. While the Act does
not use the term, ``payment year,'' for the Medicaid EHR incentive
program, it does use the term ``year of payment'' throughout section
1903(t) of the Act, for example, at sections 1903(t)(3)(C),
1903(t)(4)(A), and 1903(t)(6)(C) of the Act. For all EPs in the
Medicare and Medicaid EHR incentive programs, we are proposing a common
definition for both ``payment year'' and ``year of payment,'' as ``any
calendar year beginning with 2011'' at Sec. 495.4. In the proposed
rule, we explained that this definition, which is consistent with the
statutory definition of ``payment year'' under Medicare FFS, would
simplify the EHR incentive programs for EPs. As discussed later in this
preamble, EPs will have the opportunity to participate in either the
Medicare or Medicaid incentive programs, and once an EP has selected a
program, they are permitted to make a one-time switch from one program
to the other. A common definition will allow EPs to more easily
understand both incentive programs, and inform their decisions
regarding participation in either program.
Under section 1886(n)(1) of the Act, the Medicare FFS EHR incentive
payment is available to eligible hospitals and CAHs for a ``payment
year.'' Section 1886(n)(2)(G) of the Act defines the term ``payment
year'' as a fiscal year beginning in 2011. As hospitals are paid based
on the 12-month Federal fiscal year, we interpret the reference to a
``fiscal year'' means the fiscal year beginning on October 1 of the
prior calendar year and extending to September 30 of the relevant year.
Again, for the Medicaid EHR incentive program, the HITECH Act uses the
term, ``year of payment'' (see section 1903(t)(5)(D)(ii) of the Act),
rather than ``payment year.'' For the same reasons expressed in the
proposed rule and summarized above for proposing a common definition of
``payment year'' for EPs, and because hospitals will have the
opportunity to simultaneously participate in both the Medicare and
Medicaid EHR incentive programs, we propose a common definition of
``payment year'' and ``year of payment'' for both programs.
For purposes of the incentive payments made to eligible hospitals
and CAHs under the Medicare FFS, MA and Medicaid EHR incentive
programs, we proposed to define payment year and year of payment at
Sec. 495.4, consistent with the statutory definition, as ``any fiscal
year beginning with 2011.''
Comment: A commenter asked CMS to identify the first possible
payment year for EPs, and hospitals and CAHs.
Response: The first payment year for EPs is any calendar year (CY)
beginning with CY 2011 and for eligible hospitals and CAHs is any
fiscal year (FY) beginning with 2011.
Comment: The majority of commenters favored our definition of
``payment year'' based on the different existing fiscal periods for
eligible professionals and hospitals. Additional support was received
from some commenters whom explained that they participated in
performance-based initiatives, which define a payment year the same as
the proposed rule.
Response: After consideration of the public comments received, we
are adopting our proposed definition of ``payment year'' in the
Medicare and

[[Page 44319]]

Medicaid EHR incentive programs as described above.
Comment: The majority of comments received regarding the definition
of a payment year asked whether payment years must be consecutive for
an EP or eligible hospital to receive all years of incentive payments.
Response: In the proposed rule, we defined the second, third,
fourth, fifth, and sixth payment year, respectively, to mean ``the
second, third, fourth, fifth, and sixth calendar or Federal fiscal
year, respectively, for which an EP or eligible hospital receives an
incentive payment.'' However, section 1848(o)(1)(E) of Act defines the
second through fifth payment years for an EP as each successive year
immediately following the first payment year for such professional for
the Medicare FFS and MA EHR incentive programs. Similarly, section
1886(n)(2)(G)(ii) of the Act defines the second through fourth payment
years for an eligible hospital or CAH as requiring the years to be
``successive'' and ``immediately following'' the prior year. This
requirement, that each payment year ``immediately follow'' the prior
year, means that every year subsequent to the first payment year is a
payment year regardless of whether an incentive payment is received by
the EP, eligible hospital or CAH. For example, if a Medicare EP
receives an incentive in CY 2011, but does not successfully demonstrate
meaningful use or otherwise fails to qualify for the incentive in CY
2012, CY 2012 still counts as one of the EP's five payment years and
they would only be able to receive an incentive under the Medicare EHR
incentive program for three more years as CY 2013 would be there third
payment year. In this example, the maximum incentive payment that would
apply for this Medicare EP not practicing predominately in a health
professional shortage area (HPSA) would be $18,000 in 2011, and $8,000
in 2013 as outlined in section 1848(o)(1)(B) of the Act. The EP would
have qualified for a maximum incentive payment of $12,000 in 2012, but
did not qualify as a meaningful user for this year. No incentives may
be made under the Medicare EHR incentive program after 2016.
The same rule, however, does not apply to the Medicaid EHR
incentive program. For that program, payments may generally be non-
consecutive. If an EP or eligible hospital does not receive an
incentive payment for a given CY or FY then that year would not
constitute a payment year. For example, if a Medicaid EP receives
incentives in CY 2011 and CY 2012, but fails to qualify for an
incentive in CY 2013, they would still be eligible to receive
incentives for an additional four payment years. For hospitals,
however, starting with FY 2017 payments must be consecutive. This rule
is required by section 1903(t)(5)(D) of the Act, which states that
after 2016, no Medicaid incentive payment may be made to an eligible
hospital unless ``the provider has been provided payment * * * for the
previous year.'' As a result, Medicaid eligible hospitals must receive
an incentive in FY 2016 to receive an incentive in FY 2017 and later
years. Starting in FY 2016, incentive payments must be made every year
in order to continue participation in the program. In no case may any
Medicaid EP or eligible hospital receive an incentive after 2021. We
have revised our regulations at Sec. 495.4 to incorporate these
statutory requirements.
Comment: Some commenters requested that CMS clarify the impact on
EPs when they change practices in the middle of the incentive payment
program; in other words, if an EP leaves a practice in year two of the
incentive payment program and goes to another practice, does that EP
forfeit the ability to continue collecting incentive payments for years
3 through 5?
Response: A qualifying EP that leaves one practice for another may
still be eligible to receive subsequent incentive payments if the EP is
a meaningful EHR user in the new practice. The incentive payment is
tied to the individual EP, and not to his or her place of practice.
d. First, Second, Third, Fourth, Fifth, and Sixth Payment Year
In accordance with sections 1848(o)(1)(A)(ii), 1886(n)(2)(E),
1814(l)(3)(A), 1903(t)(4)(B), and 1903(t)(5)(A) of the Act, for EPs,
eligible hospitals, and CAHs that qualify for EHR incentive payments in
a payment year, the amount of the payment will depend in part on
whether the EP or hospital previously received an incentive payment
and, if so (for the Medicare EHR incentive program) when the EP or
hospital received his or her first payment. We proposed to define the
first payment year to mean the first CY or Federal fiscal year (FY) for
which an EP, eligible hospital, or CAH receives an incentive payment.
Likewise, we proposed to define the second, third, fourth, fifth, and
sixth payment year, respectively, to mean the second, third, fourth,
fifth, and sixth CY or FY, respectively, for which an EP, eligible
hospital, or CAH receives an incentive payment.
Comment: As stated above, many commenters requested clarification
on non-consecutive payment.
Response: This comment is addressed above.
Comment: A commenter requested CMS to clarify the consequences for
a hospital that originally qualified and received incentive payments
the first year, but in a subsequent year failed to qualify as a
meaningful user of certified EHR technology.
Response: Meaningful use will be assessed on a year-by-year basis
as we establish different Stages of meaningful use criteria for
different years. If an EP or an eligible hospital including a CAH has
failed to demonstrate meaningful use of certified EHR technology for a
certain payment year, the EP, eligible hospital, or CAH will not be
qualified for incentive payments for that payment year. However, upon
successful demonstration as a meaningful EHR user in subsequent years,
an EP, eligible hospital or CAH may be eligible to receive an incentive
payment. As discussed above, however, for the Medicare program, the
failure of the eligible hospital or CAH to demonstrate meaningful use
in the subsequent year, will affect the total payments that hospital is
eligible to receive, as, pursuant to the statute, the hospital is
treated as skipping a payment year. Payment adjustments apply to
Medicare providers who are unable to demonstrate meaningful use
starting in 2015.
Comment: One commenter asked if CMS could apply the same Medicaid
EP's first year incentive eligibility requirements of adopting,
implementing or upgrading to certified EHR technology to Medicare
physicians instead of demonstration of meaningful use.
Response: The HITECH Act allows Medicaid EPs and eligible hospitals
to receive an incentive for the adoption, implementation, or upgrade of
certified EHR technology in their first participation year. In
subsequent years, these EPs and eligible hospitals must demonstrate
that they are meaningful users. There are no parallel provisions under
the Medicare EHR incentive program that would authorize us to make
payments to Medicare EPs, eligible hospitals, and CAHs for the
adoption, implementation or upgrade of certified EHR technology.
Rather, in accordance with sections 1848(o)(2), 1886(n)(3)(A), and
1814(l)(3)(A) of the Act, Medicare incentive payments are only made to
EPs, eligible hospitals, and CAHs for the demonstration of meaningful
use of certified EHR technology.

[[Page 44320]]

After consideration of the public comments received, we are
finalizing the definitions of First payment year as proposed. For the
Medicare EHR incentive programs, we are modifying the definitions of
second, third, fourth, fifth payment year to make clear that these
years are ``each successive year following the first payment year.''
For the Medicaid EHR incentive program, we included definitions of
first, second, third, fourth, fifth and sixth payment year that make
clear that these are the years for which payment is received. The
regulations can now be found at Sec. 495.4 of our regulations.
e. EHR Reporting Period
In the proposed rule, we proposed a definition of EHR Reporting
Period for purposes of the Medicare and Medicaid incentive payments
under sections 1848(o), 1853(l)(3), 1886(n), 1853(m)(3), 1814(l) and
1903(t) of the Act. For these sections, we proposed that the EHR
reporting period would be any continuous 90-day period within the first
payment year and the entire payment year for all subsequent payment
years. In our proposed rule, we did not make any proposals regarding
the reporting period that will be used for purposes of the payment
adjustments that begin in 2015. We intend to address this issue in
future rulemaking, for purposes of Medicare incentive payment
adjustments under sections 1848(a)(7), 1853(l)(4), 1886(b)(3)(B)(ix),
1853(m)(4), and 1814(l)(4) of the Act.
For the first payment year only, we proposed to define the term EHR
reporting period at Sec. 495.4 of our regulations to mean any
continuous 90-day period within a payment year in which an EP, eligible
hospital or CAH successfully demonstrates meaningful use of certified
EHR technology. The EHR reporting period therefore could be any
continuous period beginning and ending within the relevant payment
year. Starting with the second payment year and any subsequent payment
years for a given EP, eligible hospital or CAH, we proposed to define
the term EHR reporting period at Sec. 495.4 to mean the entire payment
year. In our discussion of considerations in defining meaningful use
later in this section we discuss how this policy may be affected by
subsequent revisions to the definition of meaningful use.
For the first payment year, we stated in the proposed rule our
belief that giving EPs, eligible hospitals and CAHs flexibility as to
the start date of the EHR reporting period is important, as unforeseen
circumstances, such as delays in implementation, higher than expected
training needs and other unexpected hindrances, may cause an EP,
eligible hospital, or CAH to potentially miss a target start date.
Comment: Some commenters supported the 90-day reporting period
proposed for the first payment year. One commenter requested that
exceptions, per the provider request, be considered individually in
cases of compliance for less than the 90 days (for example, 85 days).
Commenters preferred the 90-day reporting period overall and many
suggested it be used for subsequent years as well. We also received
comments questioning why Medicaid providers would need to conform to
the 90-day reporting period in order to adopt, implement or upgrade
certified EHR technology.
Response: We do believe that for program integrity it is crucial to
maintain a consistent reporting period. Basing the incentive payments
on meaningful use implies a minimum level of use in order to receive
the incentive payment. The timeframe is part of the determination of
whether use is meaningful and therefore requires a minimum as well.
Given the short time period as compared to the entire year, we do not
believe an exception process is needed. However, we agree with
commenters that an EHR reporting period for demonstrating adoption,
implementation or upgrading certified EHR technology by Medicaid EPs
and eligible hospitals is unnecessary and are removing it for the final
rule in this instance. Similarly, Medicaid EPs and eligible hospitals
who are demonstrating meaningful use for the first time in their second
payment year, will have a 90-day reporting period to maintain parity
with Medicare providers' first meaningful use payment year. We do not
believe that after successfully demonstrating meaningful use, a 90-day
period is appropriate for subsequent years. The reasons for using the
90-day period instead of the full year are based on potential delays in
implementing certifying EHR technology. Once certified EHR technology
is implemented these are no longer applicable.
After consideration of the public comments received and with the
clarification described above for adopting, implementing or upgrading,
we are finalizing the 90-day reporting period for the first payment
year based on meaningful use as proposed for Medicare EPs, eligible
hospitals and CAHs and full year EHR reporting periods for subsequent
payment years. For Medicaid EPs and eligible hospitals, the EHR
reporting period will be a 90-day period for the first year a Medicaid
EP or eligible hospital demonstrates meaningful use and full year EHR
reporting periods for subsequent payment years.
f. Meaningful EHR User
Section 1848(o)(1)(A)(i) of the Act, limits incentive payments
under the Medicare FFS EHR incentive program to an EP who is a
``meaningful EHR user.'' Similarly, section 1886(n)(1) and 1814(l) of
the Act, limits incentive payments under the Medicare FFS EHR incentive
program to an eligible hospital or CAH, respectively, who is a
``meaningful EHR user.'' Section 1903(t)(6)(C)(i)(II) of the Act limits
incentive payments for payment years other than the first payment year
to a Medicaid EP or eligible hospital who ``demonstrates meaningful use
of certified EHR technology.'' We proposed to define at Sec. 495.4 the
term ``meaningful EHR user'' as an EP, eligible hospital, or CAH who,
for an EHR reporting period for a payment year, demonstrates meaningful
use of certified EHR technology in the form and manner consistent with
our standards (discussed below).
Comment: Several commenters indicated there is a need to align
measures and programs, to avoid having to report similar measure
standards to different Federal, State and other entities.
Response: We concur with the goal of alignment to avoid redundant
and duplicative reporting and seek to accomplish this to the extent
possible now and in future rulemaking.
Comment: Several commenters suggested that CMS considers EPs,
eligible hospitals, and CAHs who are participating in certain existing
programs as meaningful EHR users. The commenters contended that the
standards followed by participants in these programs are equivalent to
those we proposed to adopt for purposes of demonstrating meaningful
use. The programs recommended by commenters are--
Qualified Health Information Exchange Networks; and
Medicare Electronic Health Record Demonstration Program.
Response: We do not agree that participation in these programs
would be the equivalent to demonstrating meaningful use in accordance
with the criteria under the EHR incentive programs. Most of these
programs place a heavy focus on one of the five priorities of
meaningful use discussed in the next section such as reporting clinical
quality measures or the exchange of health information, tailored to the
individual program's goals. For example, the goal of the Medicare

[[Page 44321]]

Electronic Health Record Demonstration Program, for example, which was
started in 2009 and pre-dates passage of the HITECH Act, is to reward
delivery of high-quality care supported by the adoption and use of
electronic health records in physician small to medium-size primary
care practices. The purpose of this program is to encourage adoption
and increasingly sophisticated use of EHRs by small to medium-sized
primary care practices. While this goal is similar to the overall
objective of the HITECH Act, the requirements for the demonstration are
not as broad-based as that of the HITECH Act, and payment incentives
are based on the level of use over the duration of the program, which
will vary by practice. Therefore, it is not appropriate to deem
practices participating in the EHR Demonstration as meaningful users
for purposes of the HITECH Act. The HITECH Act also requires use
certified EHR technology as defined by ONC to qualify for incentive
payments. While CCHIT has certified EHR technology in the past, the ONC
regulation ``Establishment of the Temporary Certification Program for
Health Information Technology; Final Rule'' (see 75 FR 36157) which
establishes a temporary certifying body has yet to be established.
Where possible, we have aligned the criteria required to demonstrate
meaningful use with existing programs like PQRI and RHQDAPU as
discussed in section II.A.3 of this final rule. After consideration of
the public comments received, we are finalizing our definition of a
meaningful EHR user as proposed.
2. Definition of Meaningful Use
a. Considerations in Defining Meaningful Use
In sections 1848(o)(2)(A) and 1886(n)(3)(A) of the Act, the
Congress identified the broad goal of expanding the use of EHRs through
the term meaningful use. In section 1903(t)(6)(C) of the Act, Congress
applies the definition of meaningful use to Medicaid eligible
professionals and eligible hospitals as well. Certified EHR technology
used in a meaningful way is one piece of a broader HIT infrastructure
needed to reform the health care system and improve health care
quality, efficiency, and patient safety. HHS believes this ultimate
vision of reforming the health care system and improving health care
quality, efficiency and patient safety should drive the definition of
meaningful use consistent with the applicable provisions of Medicare
and Medicaid law.
In the proposed rule we explained that in defining meaningful use
we sought to balance the sometimes competing considerations of
improving health care quality, encouraging widespread EHR adoption,
promoting innovation, and avoiding imposing excessive or unnecessary
burdens on health care providers, while at the same time recognizing
the short timeframe available under the HITECH Act for providers to
begin using certified EHR technology.
Based on public and stakeholder input received prior to publishing
the proposed rule, we consider a phased approach to be most
appropriate. Such a phased approach encompasses reasonable criteria for
meaningful use based on currently available technology capabilities and
provider practice experience, and builds up to a more robust definition
of meaningful use, based on anticipated technology and capabilities
development. The HITECH Act acknowledges the need for this balance by
granting the Secretary the discretion to require more stringent
measures of meaningful use over time. Ultimately, consistent with other
provisions of law, meaningful use of certified EHR technology should
result in health care that is patient centered, evidence-based,
prevention-oriented, efficient, and equitable.
Under this phased approach to meaningful use, we intend to update
the criteria of meaningful use through future rulemaking. We refer to
the initial meaningful use criteria as ``Stage 1.'' We currently
anticipate two additional updates, which we refer to as Stage 2 and
Stage 3, respectively. We expect to update the meaningful use criteria
on a biennial basis, with the Stage 2 criteria by the end of 2011 and
the Stage 3 criteria by the end of 2013. The stages represent an
initial graduated approach to arriving at the ultimate goal.
Stage 1: The Stage 1 meaningful use criteria, consistent
with other provisions of Medicare and Medicaid law, focuses on
electronically capturing health information in a structured format;
using that information to track key clinical conditions and
communicating that information for care coordination purposes (whether
that information is structured or unstructured, but in structured
format whenever feasible); implementing clinical decision support tools
to facilitate disease and medication management; using EHRs to engage
patients and families and reporting clinical quality measures and
public health information. Stage 1 focuses heavily on establishing the
functionalities in certified EHR technology that will allow for
continuous quality improvement and ease of information exchange. By
having these functionalities in certified EHR technology at the onset
of the program and requiring that the EP, eligible hospital or CAH
become familiar with them through the varying levels of engagement
required by Stage 1, we believe we will create a strong foundation to
build on in later years. Though some functionalities are optional in
Stage 1, as outlined in discussions later in this rule, all of the
functionalities are considered crucial to maximize the value to the
health care system provided by certified EHR technology. We encourage
all EPs, eligible hospitals and CAHs to be proactive in implementing
all of the functionalities of Stage 1 in order to prepare for later
stages of meaningful use, particularly functionalities that improve
patient care, the efficiency of the health care system and public and
population health. The specific criteria for Stage 1 of meaningful use
are discussed at section II.2.c of this final rule.
Stage 2: Our goals for the Stage 2 meaningful use
criteria, consistent with other provisions of Medicare and Medicaid
law, expand upon the Stage 1 criteria to encourage the use of health IT
for continuous quality improvement at the point of care and the
exchange of information in the most structured format possible, such as
the electronic transmission of orders entered using computerized
provider order entry (CPOE) and the electronic transmission of
diagnostic test results (such as blood tests, microbiology, urinalysis,
pathology tests, radiology, cardiac imaging, nuclear medicine tests,
pulmonary function tests, genetic tests, genomic tests and other such
data needed to diagnose and treat disease). For the final rule, we
elaborate on our plans for Stage 2. We expect that stage two meaningful
use requirements will include rigorous expectations for health
information exchange, including more demanding requirements for e-
prescribing and incorporating structured laboratory results and the
expectation that providers will electronically transmit patient care
summaries to support transitions in care across unaffiliated providers,
settings and EHR systems. Increasingly robust expectations for health
information exchange in stage two and stage three will support and make
real the goal that information follows the patient. We expect that
Stage 2 will build upon Stage 1 by both altering the expectations of
the functionalities in Stage 1 and likely adding new functionalities
which

[[Page 44322]]

are not yet ready for inclusion in Stage 1, but whose provision is
necessary to maximize the potential of EHR technology. As discussed
later in this final rule, we are making some objectives of the Stage 1
of meaningful use optional and other required. We will consider every
objective that is optional for Stage 1 to be required in Stage 2 as
well as revaluate the thresholds and exclusions of all the measures
both percentage based and those currently a yes/no attestation.
Additionally, we may consider applying the criteria more broadly to all
outpatient hospital settings (not just the emergency department).
Stage 3: Our goals for the Stage 3 meaningful use criteria
are, consistent with other provisions of Medicare and Medicaid law, to
focus on promoting improvements in quality, safety and efficiency
leading to improved health outcomes, focusing on decision support for
national high priority conditions, patient access to self management
tools, access to comprehensive patient data through robust, patient-
centered health information exchange and improving population health.
We did not include regulatory provisions for Stage 2 or Stage 3 in
our proposal and with one exception discussed under the CPOE objective,
we are not finalizing Stage 2 or Stage 3 requirements at this time.
However, we plan to build upon Stage 1 by increasing the expectations
of the functionalities in Stage 1 and adding new objectives for Stage
2. In our next rulemaking, we currently intend to propose that every
objective in the menu set for Stage 1 (as described later in this
section) be included in Stage 2 as part of the core set. While allowing
providers flexibility in setting priorities for EHR implementation
takes into account their unique circumstances, we maintain that all the
objectives are crucial to building a strong foundation for health IT
and to meeting the statutory objectives of the Act. In addition, as
indicated in our proposed rule, we anticipate raising the threshold for
these objectives in both Stage 2 and 3 as the capabilities of HIT
infrastructure increases. For Stage 2, we intend to review the
thresholds and measures associated with all Stage 1 objectives
considering advances in technology, changes in standard practice, and
changes in the marketplace (for example, wider adoption of information
technology by pharmacies) and propose, as appropriate, increases in
these requirements.
We recognize that the thresholds included in the final regulation
are ambitious for the current state of technology and standards of
care. However, we expect the delivery of health care to evolve through
the inception of the HITECH incentive programs and implementation of
the Affordable Care Act prior to finalizing Stage 2. Furthermore, data
collected from the initial attestations of meaningful use will be used
to ensure that the thresholds of the measures that accompany the
objectives in Stage 2 are continue to aggressively advance the use of
certified EHR technology. Finally, we continue to anticipate redefining
our objectives to include not only the capturing of data in electronic
format but also the exchange (both transmission and receipt) of that
data in increasingly structured formats. As appropriate, we intend to
propose the addition of new objectives to capture new functions that
are necessary to maximize the potential of EHR technology, but were not
ready for Stage 1. For instance, we would consider adding measures
related to CPOE orders for services beyond medication orders. The
intent and policy goal for raising these thresholds and expectations is
to ensure that meaningful use encourages patient-centric, interoperable
health information exchange across provider organizations.
We will continue to evaluate the progression of the meaningful use
definition for consistency with the HITECH ACT and any future statutory
requirements relating to quality measurement and administrative
simplification. As the purpose of these incentives is to encourage the
adoption and meaningful use of certified EHR technology, we believe it
is desirable to account for whether an EP, eligible hospital or CAH is
in their first, second, third, fourth, fifth, or sixth payment year
when deciding which definition of meaningful use to apply in the
beginning years of the program. The HIT Policy Committee in its public
meeting on July 16, 2009 also voiced its approval of this approach.
However, such considerations are dependent on future rulemaking, so for
this final rule Stage 1 criteria for meaningful use are valid for all
payments years until updated by future rulemaking.
We proposed that Medicare EPs, eligible hospitals, and CAHs whose
first payment year is 2011 must satisfy the requirements of the Stage 1
criteria of meaningful use in their first and second payment years
(2011 and 2012) to receive the incentive payments. We anticipate
updating the criteria of meaningful use to Stage 2 in time for the 2013
payment year and therefore anticipate for their third and fourth
payment years (2013 and 2014), an EP, eligible hospital, or CAH whose
first payment year is 2011 would have to satisfy the Stage 2 criteria
of meaningful use to receive the incentive payments. We proposed that
Medicare EPs, eligible hospitals, and CAHs whose first payment year is
2012 must satisfy the Stage 1 criteria of meaningful use in their first
and second payment years (2012 and 2013) to receive the incentive
payments. We anticipate updating the criteria of meaningful use to
Stage 2 in time for the 2013 payment year and anticipate for their
third payment year (2014), an EP, eligible hospital, or CAH whose first
payment year is 2012 would have to satisfy the Stage 2 criteria of
meaningful use to receive the incentive payments. We discussed in the
proposed rule that Medicare EPs, eligible hospitals, and CAHs whose
first payment year is 2013 must satisfy the Stage 1 criteria of
meaningful use in their first payment year (2013) to receive the
incentive payments. We anticipate updating the criteria of meaningful
use to Stage 2 in time for the 2013 payment year and therefore
anticipate for their second payment year (2014), an EP, eligible
hospital, or CAH whose first payment year is 2013 would have to satisfy
the Stage 2 criteria of meaningful use to receive the incentive
payments. We discussed in the proposed rule that Medicare EPs, eligible
hospitals, and CAHs whose first payment year is 2014 must satisfy the
Stage 1 criteria of meaningful use in their first payment year (2014)
to receive the incentive payments. In the proposed rule, we discussed
the idea that alignment of stage of meaningful use and payment year
should synchronize for all providers in 2015, and requested comment on
the need to create such alignment. After reviewing public comment on
this issue, our goal remains to align the stages of meaningful use
across all providers in 2015. However, we acknowledge the concerns
regarding the different Medicare and Medicaid incentive timelines, as
well as concerns about whether Stage 3 would be appropriate for an
EP's, eligible hospital's or CAH's first payment year at any point in
the future and believe the issue needs additional review and discussion
before we lay out a clear path forward for 2015 and beyond. Therefore,
we have decided to remove language in the final rule discussing our
possible directions for any year beyond 2014. We will address the years
beyond 2014 in later rulemaking. Table 1 outlines how we anticipate
applying the respective criteria of meaningful use in the first years
of the program, and how we anticipate applying such criteria for

[[Page 44323]]

subsequent payment years, through 2014. Please note that nothing in
this discussion restricts us from requiring additional stages of
meaningful use (beyond stage 3) through future rulemaking. In addition,
as we expect to engage in rulemaking to adopt the criteria that will
accompany Stages 2 and 3 of meaningful use, stakeholders should wait
for those rulemakings to determine what will be required for those
Stages and should not view the discussions in this preamble or final
rule as binding the agency to any specific definition for those future
stages.
[GRAPHIC] [TIFF OMITTED] TR28JY10.000

Please note that each of the EHR incentive programs has different
rules regarding the number of payment years available, the last year
for which incentives may be received, and the last payment year that
can be the first payment year for an EP, eligible hospital, or CAH. The
applicable payment years and the incentive payments available for each
program are also discussed in section II.C. of this final rule for the
Medicare FFS EHR incentive program, in section II.D. of this final rule
for the MA EHR incentive program, and in section II.E. of this final
rule for the Medicaid EHR incentive program.
Comment: Numerous commenters noted that it is inappropriate to
align the Medicaid EHR incentive payment program with the Medicare
program due to the lack of penalties in the Medicaid program and due to
the option for Medicaid providers to participate in their first year by
adopting, implementing, or upgrading certified EHR technology.
Response: This was not the only reason for having all EPs, eligible
hospitals, and CAHs align by 2015. However, as we are not addressing
stages of meaningful use beyond 2014 in this final rule, potential
alignment is not discussed. We will reconsider this comment in future
rulemaking.
The stages of criteria of meaningful use and how they are
demonstrated are described further in this final rule and will be
updated in subsequent rulemaking to reflect advances in HIT products
and infrastructure. We note that such future rulemaking might also
include updates to the Stage 1 criteria.
We invited comment on our alignment between payment year and the
criteria of meaningful use particularly in regards to the need to
create alignment across all EPs, eligible hospitals, and CAHs in all
EHR incentive programs in 2015.
Comment: Many commenters requested that if there continued to be a
year where all EPs, eligible hospitals and CAHs must meet the same
stage of meaningful use that that year be 2017, rather than 2015 as we
had discussed in the proposed rule. These commenters asserted that EPs,
eligible hospitals, and CAHs whose first payment year is after 2011
might not have sufficient time to reach the Stage 3 of meaningful use
criteria by 2015. Some commenters pointed out that while the HITECH Act
states that 2015 is the first year of payment adjustments, it provides
for escalation of the payment adjustments so that they do not reach
their full levels until 2017.
Response: As we explained in the proposed rule, equity in the level
of meaningful use across all EPs, eligible hospitals, and CAHs subject
to the payment adjustment was not the only reason for our plan that all
EPs, eligible hospitals, and CAHs satisfy the Stage 3 criteria for
either the Medicare or Medicaid EHR incentive programs. The achievement
of many of the ultimate goals of meaningful use of certified EHR
technology are dependent on a critical mass of EPs, eligible hospitals,
and CAHs all being meaningful EHR users. Exchange of health information
is most valuable when it is so robust that it can be relied upon to
provide a complete or nearly complete picture of a patient's health.
For example, robust Stage 3 meaningful use by an EP does not assist
that EP in avoiding ordering a duplicative test, if the EP with
information on the original test is only a Stage 1 meaningful EHR user
and is not yet exchanging that information. This dependency is key to
the need to get to Stage 3 for all providers. Another reason for
alignment at Stage 3 in 2015 is that many of the barriers to
functionalities of EHRs that exist today as may no longer exist in
2015. The existence of these barriers today is one of the primary
reasons for having a staged approach as opposed to requiring more
robust meaningful use at the beginning of the program. Providers,
developers of EHRs, government and non-governmental organizations are
all working to remove these barriers. We believe it is likely there
will be success in removing many of these barriers, which would make
many of the compromises made in Stage 1 no longer necessary by 2015.
However, due to the many comments on alignment starting in 2015 and our
plan to engage in additional more rounds of rulemaking, we are removing
discussion of actual alignment between the first payment year of an EP,
eligible hospital, or CAH and the Stage of meaningful use they will be
expected to meet for all years after 2014. Our policies for 2015 and
subsequent years will be determined through future rulemaking.
Comment: Several commenters requested that CMS base the payment
adjustments on Stage 1 of meaningful use regardless of the EP, eligible
hospital, or CAH's prior participation in the incentive program.
Response: We thank commenters for the thoughtful comments received,
and will take their input into consideration when in future rulemaking
when we consider whether to require that EPs, eligible hospitals, and
CAHs satisfy the stage 3 definition of meaningful use in order to avoid
reduced payments under Medicare for their professional services and
inpatient hospital services beginning 2015. We reiterate, however, that
in this final rule we are only adopting criteria that we expect will

[[Page 44324]]

apply in 2011 and 2012. We have also outlined the expected progression
of stages of meaningful use criteria until 2014. However, we are not in
this rule finalizing regulations that address the meaningful use
standards that apply in 2015 and thereafter.
Comment: Numerous commenters requested that we specifically propose
objectives and measures for Stage 2 and 3. We also received
recommendations on what those objectives and, in rare cases, measures
should be. We discussed some of these objectives in the proposed rule
and discuss them again in this final rule in section II.d. Others are
highly related to existing objectives, while still others were not
discussed in any way in the proposed rule. The suggested objectives and
measures for Stages 2 and 3 include the following:
Use of evidence-based order sets.
Electronic medication administration record (eMAR).
Bedside medication administration support (barcode/RFID).
Record nursing assessment in EHR.
Record nursing plan of care in EHR.
Record physician assessment in EHR.
Record physician notes in EHR.
Multimedia/Imaging integration.
Generate permissible discharge prescriptions
electronically.
Contribute data to a PHR.
Record patient preferences (language, etc).
Provide electronic access to patient-specific educational
resources.
Asking patients about their experience of care.
Response: With one exception discussed under the CPOE objective, we
continue to believe that finalizing specific objectives and measures
for later stages is inappropriate. One of the greatest benefits of the
phased stage approach is the ability to consider the impact and lessons
of the prior stage when formulating a new stage. Many commenters
supported our discussion of later stages for this very reason. In
addition, we do not believe it is appropriate to finalize objectives
for any stage of meaningful use that were not specifically discussed in
the proposed rule, as doing so would deprive the public the opportunity
to comment on the objective in question. Nevertheless, we thank
commenters for the thoughtful comments received, and expect to take
their input into consideration when in future rulemaking we consider
additional or revised criteria and measures to adopt for the stage 2
and stage 3 definitions of meaningful use.
Comment: A commenter indicated that attestation is an insufficient
means to hold providers accountable for the expenditure of public funds
and to protect against fraud and abuse.
Response: We likewise are concerned with the potential fraud and
abuse. However, Congress for the HITECH Act specifically authorized
submission of information as to meaningful use through attestation. CMS
is developing an audit strategy to ameliorate and address the risk of
fraud and abuse.
b. Common Definition of Meaningful Use Under Medicare and Medicaid
Under sections 1848(o)(1)(A)(i), 1814(l)(3)(A), and 1886(n)(1) of
the Act, an EP, eligible hospital or CAH must be a meaningful EHR user
for the relevant EHR reporting period in order to qualify for the
incentive payment for a payment year in the Medicare FFS EHR incentive
program. Sections 1848(o)(2)(A) and 1886(n)(3)(A) of the Act provide
that an EP and an eligible hospital shall be considered a meaningful
EHR user for an EHR reporting period for a payment year if they meet
the following three requirements: (1) Demonstrates use of certified EHR
technology in a meaningful manner; (2) demonstrates to the satisfaction
of the Secretary that certified EHR technology is connected in a manner
that provides for the electronic exchange of health information to
improve the quality of health care such as promoting care coordination,
in accordance with all laws and standards applicable to the exchange of
information; and (3) using its certified EHR technology, submits to the
Secretary, in a form and manner specified by the Secretary, information
on clinical quality measures and other measures specified by the
Secretary. The HITECH Act requires that to receive a Medicaid incentive
payment in the initial year of payment, an EP or eligible hospital may
demonstrate that they have engaged in efforts to ``adopt, implement, or
upgrade certified EHR technology.'' Details, including special
timeframes, on how we define and implement ``adopt, implement, and
upgrade'' are in section II.D.7.b.2 of this final rule. For subsequent
payment years, or the first payment year if an EP or eligible hospital
chooses, section 1903(t)(6)(C)(i)(II) of the Act, prohibits receipt of
an incentive payment, unless ``the Medicaid provider demonstrates
meaningful use of certified EHR technology through a means that is
approved by the State and acceptable to the Secretary, and that may be
based upon the methodologies applied under section 1848(o) or
1886(n).'' (Sections 1848(o) and 1886(n) of the Act refer to the
Medicare EHR incentive programs for EPs and eligible hospitals/CAHs
respectively.) Under section 1903(t)(8) of the Act to the maximum
extent practicable, we are directed to avoid duplicative requirements
from Federal and State governments to demonstrate meaningful use of
certified EHR technology. Provisions included at section
1848(o)(1)(D)(iii) of the Act also contain a Congressional mandate to
avoid duplicative requirements for meaningful use, to the extent
practicable. Finally, section 1903(t)(8) of the Act allows the
Secretary to deem satisfaction of the requirements for meaningful use
of certified EHR technology for a payment year under Medicare to
qualify as meaningful use under Medicaid.
We stated in the proposed rule that we believe that given the
strong level of interaction on meaningful use encouraged by the HITECH
Act, there would need to be a compelling reason to create separate
definitions for Medicare and Medicaid. We declared in the proposed rule
that we had found no such reasons for disparate definitions in our
internal or external discussions. To the contrary, stakeholders have
expressed strong preferences to link the Medicare and Medicaid EHR
incentive programs wherever possible. Hospitals are entitled to
participate in both programs, and we proposed to offer EPs an
opportunity to switch between the Medicare and Medicaid EHR incentive
programs. Therefore, we proposed to create a common definition of
meaningful use that would serve as the definition for EPs, eligible
hospitals and CAHs participating in the Medicare FFS and MA EHR
incentive program, and the minimum standard for EPs and eligible
hospitals participating in the Medicaid EHR incentive program. We
clarified that under Medicaid this proposed common definition would be
the minimum standard. We proposed to allow States to add additional
objectives to the definition of meaningful use or modify how the
existing objectives are measured; the Secretary would not accept any
State alternative that does not further promote the use of EHRs and
healthcare quality or that would require additional functionality
beyond that of certified EHR technology. See section II.D.8. of this
final rule for further details.
For hospitals, we proposed to exercise the option granted under
section 1903(t)(8) of the Act and deem any Medicare eligible hospital
or CAH who is a meaningful EHR user under the Medicare EHR incentive
program and is otherwise eligible for the Medicaid incentive payment to
be classified as a meaningful EHR user under the Medicaid EHR incentive
program. This

[[Page 44325]]

is applicable only to eligible hospitals and CAHs, as EPs cannot
simultaneously receive an incentive payment under both Medicare and
Medicaid.
We solicited comments as to whether there are compelling reasons to
give the States additional flexibility in creating disparate
definitions beyond what was proposed. In addition, if commenting in
favor of such disparate definitions, we also asked interested parties
to comment on whether the proposal of deeming meeting the Medicare
definition as sufficient for meeting the Medicaid definition remains
appropriate under the disparate definitions. This is applicable only to
hospitals eligible for both the Medicare and Medicaid incentive
programs. Furthermore, if a State has CMS-approved additional
meaningful use requirements, hospitals deemed as meaningful users by
Medicare would not have to meet the State-specific additional
meaningful use requirements in order to qualify for the Medicaid
incentive payment.
Comment: Most commenters believe that States should not be allowed
the option to add to or change the meaningful use requirements for the
Medicaid EHR incentive program. The commenters' main reason for
standardizing the meaningful use requirements for both Medicare and
Medicaid is to eliminate administrative burden on both providers and
EHR vendors to accommodate programming and reporting using different
technical specifications for the same or similar measures.
Response: After consideration of the comments received, we are
finalizing the provisions regarding possible differences in the
definition of meaningful use between Medicare and Medicaid with the
following revisions. We believe that over time the option to add to or
change the floor definition of meaningful use might represent an
important policy tool for States and therefore CMS plans to review and
adjudicate these requests over the duration of the program. For Stage 1
of meaningful use, we have revised the definition of meaningful use in
response to the many comments and are requiring an overall lower bar
and an approach that is more flexible. On the other hand, we wish to
support the ability for States to reinforce their public health
priorities and goals based upon their existing public health
infrastructure and maturity. For that reason, we, for Stage 1, will
only entertain States' requests to tailor the Stage 1 meaningful use
definition as it pertains specifically to public health objectives and
data registries. For purposes of the Medicaid EHR incentive program
during Stage 1 of meaningful use, these are limited to:
Objective: Generate lists of patients by specific conditions to use
for quality improvement, reduction of disparities, research, or
outreach.
Measure: Generate at least one report listing patients of the EP or
eligible hospital with a specific condition.
Example: Generate lists of patients with the following conditions:
depression, diabetes, obesity, etc. This would not be for reporting to
the State but to draw EPs' or eligible hospitals' attention in order to
better manage their patient population. States would also be permitted
to request CMS approval to include this in the core set for all EPs
and/or eligible hospitals.
Objective: Capability to submit electronic data to immunization
registries of Immunization Information Systems and actual submission in
accordance with applicable law and practice.
Measure: Performed at least one test of certified EHR technology's
capacity to submit electronic data to immunization registries and
follow up submission if the test is successful (unless none of the
immunization registries to which the EP or eligible hospital submits
such information have the capacity to received the information
electronically).
Example: State could point to a specific immunization registry that
supports standards-based transmission of data and dictate how that
information is transmitted. States would also be permitted to request
CMS approval to include this objective in the core list for all EPs and
eligible hospitals. The justification for this request in their State
Medicaid HIT Plan, should address any potential barriers for providers
in achieving this objective.
Objective: Capability to submit electronic data on reportable (as
required by state or local law) lab results to public health agencies
and actual submission in accordance with applicable law and practice.
Measure: Performed at least one test of certified EHR technology's
capacity to submit electronic data on reportable lab results to public
health agencies and follow-up submission if the test is successful
(unless none of the public health agencies to which an eligible
hospital submits such information have the capacity to receive the
information electronically).
Example: State could specify the standards-based means of
transmission and/or the destination of this data. States would also be
permitted to request CMS approval to include this objective in the core
list for all and eligible hospitals. The justification for this request
in their State Medicaid HIT Plan, should address any potential barriers
for providers in achieving this objective.
Objective: Capability to submit electronic syndromic surveillance
data to public health agencies and actual transmission according to
applicable law and practice.
Measure: Performed at least one test of certified EHR technology's
capacity to submit electronic syndromic surveillance data to public
health agencies and follow-up submission if the test is successful
(unless none of the public health agencies to which an EP or eligible
hospital submits such information have the capacity to receive the
information electronically).
Example: State could specify the standards-based means of
transmission and/or the destination of this data. States would also be
permitted to request CMS approval to include this objective in the core
list for all EPs and eligible hospitals. The justification for this
request in their State Medicaid HIT Plan, should address any potential
barriers for providers in achieving this objective.
We reiterate that we will not approve any requests that would
require EHR functionality above and beyond that included in the ONC EHR
certification criteria as finalized for Stage 1 of meaningful use.
Comment: Several commenters requested that CMS affirm the ability
of States to require additional meaningful use criteria for all
eligible professionals and hospitals (pursuant to Sec. Sec.
495.316(a), 495.316(d)(2)), regardless of whether those entities were
deemed eligible through Medicare.
Response: Section 1903(t)(8) provides authority for the Secretary
to ``deem satisfaction of requirements for * * * meaningful use for a
payment year under title XVIII to be sufficient to qualify as
meaningful use under [1903(t)].'' We continue to believe that allowing
deeming ensures that hospitals eligible for both programs are able to
focus on only one set of measures, without requiring duplication of
effort or confusion regarding meaningful use standards. Thus, hospitals
eligible for both Medicare and Medicaid incentive payments will be
deemed for Medicaid if they have met the meaningful use definition
through Medicare, even if a State has an approved State-specific
definition of meaningful use. States cannot withhold a Medicaid EHR
incentive payment from dually eligible hospitals if they have met all
the eligibility criteria for Medicaid, and have met the Medicare
definition for meaningful use.

[[Page 44326]]

Because of this comment, we are revising section Sec. 495.4 of our
regulations to indicate that eligible hospitals who are meaningful
users under the Medicare EHR incentive payment program are deemed as
meaningful users under the Medicaid EHR incentive payment program, and
need not meet additional criteria imposed by the State. While this is
not a new requirement, it was not previously listed in regulations.
Comment: A commenter asked that CMS adopt and affirm the deeming
approach in its final rule and ensure that the regulatory language
reflects this approach.
Response: We agree and have included in the final rule regulation
language that hospitals that are meaningful users under the Medicare
EHR Incentive Program are deemed meaningful users under the Medicaid
EHR Program.
Comment: Several commenters requested that CMS not deem hospitals
having met the meaningful use requirements for the Medicare EHR
Incentive Payment, as having fulfilled the meaningful use requirements
for the State's Medicaid EHR Incentive Payment. The commenters noted
that if a State sought for acute care hospitals to participate in their
statewide health information exchange and yet those hospitals did not
have to do so in order to qualify for both the Medicare and Medicaid
EHR Incentive Payments, then they would have no motivation to do so.
The commenters would like acute care hospitals eligible for both the
Medicare and Medicaid EHR Incentive Program to have to comply with any
State-specific meaningful use requirements, in addition to the Medicare
floor definition.
Response: In consideration of the comments received, CMS adopts its
proposed preamble language about deeming hospitals and adds the
corresponding regulation text. This is necessary for Stage 1 of
meaningful use in particular, where we believe it is crucial to prevent
additional burden on providers and foster eligible hospitals' path to
successful EHR adoption and meaningful use. In addition, as already
noted, for Stage 1, we will not entertain States' requests to alter the
floor definition of meaningful use as codified in this final rule
except for specific public health objectives. That thereby reduces the
possible differences between the Medicare and Medicaid definitions of
meaningful use. As part of Stage 2 of meaningful use, CMS might
consider States requests to tailor meaningful use as it pertains to
health information exchange, for example. Further details about this
policy option will be included in future rulemaking and subject to
public comment.
c. Stage 1 Criteria for Meaningful Use
In the proposed rule we proposed that to qualify as a meaningful
EHR user for 2011, EPs, eligible hospitals or CAHs must demonstrate
that they meet all of the objectives and their associated measures as
set forth in proposed Sec. 495.6. We further proposed and finalize in
this final rule that except where otherwise indicated, each objective
and its associated measure must be satisfied by an individual EP as
determined by unique National Provider Identifiers (NPIs) and an
individual hospital as determined by unique CMS certification numbers
(CCN).
Discussion of Whether an EP, Eligible Hospital or CAH Must Meet All
Stage 1 Meaningful Use Objectives and Their Associated Measures
Comment: Commenters almost unanimously said that requiring an EP,
eligible hospital or CAH to meet all of the objectives and their
associated measures in order to qualify as a meaningful EHR user was
too ambitious given the current state of EHR technology, adoption
levels, the timeline for certification of EHR technologies, the
realities of implementing EHR technology and the timeline proposed for
Stage 1 of meaningful use in our proposed rule.
Most of the commenters suggested alternatives that they believed
would support the health care policy priorities of Stage 1. Several
different alternatives were proposed. The first alternative would be to
require a specified percentage of the Stage 1 meaningful use objectives
and associated measures, with an EP, eligible hospital or CAH free to
select which of the objectives and associated measures it would
satisfy. For example under our proposed objectives and associated
measures, if an EP were required to meet 20 percent, then an EP would
be considered a meaningful EHR user if he or she satisfied any five of
the proposed twenty-five objectives and associated measures. Most
commenters suggesting this alternative envisioned that later stages of
meaningful use would require that EPs, eligible hospitals, and CAHs
satisfy a higher of the percentage of the objectives and associated
measures. For example if 20 percent of the objectives and associated
measures were required for Stage 1, then 50 percent might be required
in Stage 2.
After a fixed percentage, the suggestion next favored by
commenters, including the HIT Policy Committee and MedPAC, was to
divide the meaningful use objectives into two categories, a ``core
set'' of objectives and ``menu set'' of objectives. To be a considered
a meaningful user under this approach, an EP, eligible hospital, or CAH
would be required to satisfy (1) all core set of objectives, and (2) a
specified percentage of the menu set of objectives, with the EP,
eligible hospital, or CAH free to select which of the menu set of
objectives it would satisfy. For example, if five objectives were in
the core set all EPs, eligible hospitals, and CAHs would have to meet
those objectives. If twenty objectives were in the menu set, then EPs,
eligible hospitals, and CAHs would not have to meet one or more of
those objectives. Commenters varied widely as to which objectives
should be included in the core set of objectives, as well as the
percentage of menu set objectives an EP, eligible hospital, or CAH must
satisfy.
Some commenters suggested that we simply reduce the number of
objectives required for Stage 1 of meaningful use. Recommendations in
this regard varied from reducing the required objectives to only just a
few (the lowest number being three), limiting the required objectives
to only to those objectives that affect health outcomes of individual
patients, to targeted elimination of a few objectives.
Finally, some commenters suggested that we eliminate all of the
measures associated with the Stage 1 meaningful use objectives and only
require that EPs, eligible hospitals, and CAHs attest that they have
attempted to meet each of the objectives.
Response: After reviewing the comments, we agree that requiring
that EPs, eligible hospitals, and CAHs satisfy all of the objectives
and their associated measures in order to be considered a meaningful
EHR user would impose too great a burden and would result in an
unacceptably low number of EPs, eligible hospitals, and CAHs being able
to qualify as meaningful EHR users in the first two years of the
program. In considering an alternative approach, we have sought to
develop an alternative that is responsive to some degree to all the
concerns raised by the commenters. We have tried to reduce the
requirements both in number required and in the thresholds of the
associated measures and provide some flexibility as well. At the same
time, however, we must be mindful of the relevant statutory
requirements. Sections 1848 (o)(2)(A) and 1886(n)(3) of the Act,
specify three requirements for meaningful use: (1) Use of certified EHR
technology in a meaningful manner (for example, electronic
prescribing); (2) that

[[Page 44327]]

the certified EHR technology is connected in a manner that provides for
the electronic exchange of health information to improve the quality of
care; and (3) that, in using certified EHR technology, the provider
submits to the Secretary information on clinical quality measures and
such other measures selected by the Secretary. We believe that each EP,
eligible hospital, and CAH must meet at least one objective within each
of the three requirements for meaningful use. We are concerned that if
we were to give EPs, eligible hospitals, and CAHs full discretion to
select which meaningful use objectives they will satisfy, some
providers would not choose one or more objectives within each of the
three statutory requirements for meaningful use. Furthermore, we are
concerned that affording EPs, eligible hospitals, and CAHs such
flexibility as to which meaningful use objectives to meet would delay
many of the goals outlined for meaningful use in section II.a.2. of
this final rule. If in choosing what objectives to defer, one provider
chooses to focus on improving processes to improve healthcare quality,
another chooses to focus on being able to exchange health information
and yet another on engaging patients and families it is possible that
we would fail to accomplish any of these goals at a population level.
For these reasons, we do not believe it would be appropriate to afford
providers the unlimited flexibility to select which of the meaningful
use objectives they will meet. Rather, as explained below, we believe
providers at a minimum should have to satisfy a core set of objectives
in order to qualify as meaningful EHR users.
Similarly, while we agree that merely reducing the number of
objectives would make meaningful use easier to achieve for most
providers, we believe that this reduction does not afford the same
flexibility to all providers to account for their individual
difficulties in meeting meaningful use that some of the other
alternatives do as allowing a provider to choose certain objectives to
defer. Due to any number of circumstances such as EHR adoption level,
availability of health information exchange network, size of practice
or hospital, etc., an objective that is easy for one EP to achieve
might be very difficult for another EP. Under this alternative, no
allowance is made for those differences. Finally, we disagree that
meaningful use should be limited to improving the health outcomes of
individual patients. There are significant gains that meaningful use
can achieve in the areas of public health, privacy and security,
engagement of patients and their families and efficiency of care that
may not improve health outcomes, but have significant other benefits
such as engaging patients more fully in decisions affecting their
health and reducing costs through increased efficiency of care. We
believe that all of these have a significant impact on health outcome
priorities. Therefore, we do not categorically reduce the number of
objectives for Stage 1 definition of meaningful use. We consider
requests to defer an objective to later stages of the meaningful use
criteria or eliminate a specific objective below in our discussion of
each objective.
Comment: Another alternative that was recommended by a significant
number of commenters was that we base the incentive payment amount on
the number of stage 1 meaningful use objectives satisfied by an EP or
eligible hospital, with those satisfying more objectives eligible for a
higher incentive payment amount. While some commenters varied in the
specifics or did not provide specifics, generally we take this to mean
that if an EP, eligible hospital, or CAH met half of the objectives
then they would receive half of the incentive payment they would have
received had they met all the objectives.
Response: The HITECH Act does not give us the authority to award
partial payments. As discussed elsewhere in this final rule, sections
1848(o)(1)(A) of the Act specifies the payment incentive amount to
which an EP who is a meaningful EHR user is entitled. Similarly,
section 1886(n)(2) of the Act sets forth a formula for calculation of
incentive payment amount to which an eligible hospital that is a
meaningful EHR user is entitled. Similarly, section 1814(l)(3)(A) of
the Act sets forth a formula for calculation of incentive payment
amount to which an eligible hospital that is a meaningful EHR user is
entitled. Similarly, section 1903(t)(4)(B) of the Act sets parameters
for determining the Medicaid EHR incentive for Medicaid EP. None of
these parameters are related to meaningful use. Similarly, section
1903(t)(5)(A) of the Act sets forth a formula for calculation of the
incentive payment amount to which a Medicaid eligible hospital is
entitled. As we do not have the authority to alter these statutory
formulas for calculating the incentive payment amounts under Medicare
and Medicaid, we cannot pro rate the incentive payment amount based on
the number of meaningful use objectives satisfied by an EP, eligible
hospital, or CAH.
After consideration of the public comments received, we are
establishing a core set of objectives with associated measures and a
menu set of objectives with associated measures. In order to qualify as
a meaningful EHR user, an EP, eligible hospital, or CAH must
successfully meet the measure for each objective in the core set and
all but five of the objectives in the menu set. With one limitation, an
EP, eligible hospital, or CAH may select any five objectives from the
menu set to be removed from consideration for the determination of
qualifying as a meaningful EHR user. Further discussion of the
objectives, including additional details about their inclusion in the
core set, can be found at each objective.
We believe that establishing both a core and a menu set adds
flexibility and allows the minimum statutory set to be met. In
determining the objectives to include in the core set, we looked at all
comments, especially those of the HIT Policy Committee and other
commenters who recommended some required and optional elements. The
HITECH Act requires the use of health information technology in
improving the quality of health care, reducing medical errors, reducing
health disparities, increasing prevention and improving the continuity
of care among health care settings. In defining the core set of
meaningful use objective, we believe the most crucial aspect to
consider is meeting the three statutory guidelines provided in the
HITECH Act and discussed in section II.A.2.a of this final rule. Second
is to identify those objectives that are most crucial to laying the
foundation for obtaining value from meaningful use of certified EHR
technology. Third, we believe that meaningful use should be patient-
centered so we focus on getting the most value to the patient. We
believe the recommendation of the HIT Policy Committee accomplishes
third criteria, but falls short of the first and second. To accomplish
the first criteria, we add the objective of submitting clinical quality
measures to CMS or the States and the objective of exchanging key
clinical information among providers of care and patient authorized
entities. To accomplish the second, we add several additional
objectives to the core set of measures as critical elements pertinent
to the management of patients. We have received a number of comments in
support of these particular measures as critical to the management of
patients (maintaining an up-to-date problem list, active medication
list, active allergy list, smoking history and incorporate clinical

[[Page 44328]]

lab tests into EHR as structured data) in comparison to other
requirements. The addition of two other functional objectives (drug-
drug and drug-allergy features) as core measures are for improved
patient-safety. All of the listed elements are integral to the initial
or on-going management of a patient's current or future healthcare.
While each element is important in the management of patients in and of
itself, the aggregate of the elements elevates the importance of
clinical information to not only the primary provider but for all
members of the interdisciplinary team involved in the patient's care.
The HITECH Act statutorily requires the use of health information
technology in improving the quality of health care, reducing medical
errors, reducing health disparities, increasing prevention, and
improving the continuity of care among health care settings. These core
set of measures are also foundational and aligned with each other. For
example, electronic copies of health information given to patient will
be useless if it does not contain basic information such as a problem
list, medication list or allergy list. Exchange of information to other
members of the health care team across settings will depend on having
structured data of these elements. Therefore, in support of the HITECH
Act in meeting the statutory requirements, we have expanded the core
set of measures to include these fundamental elements to improve
patient care. Below we list the objectives included in the core set of
meaningful use objectives.

--Use CPOE
--Implement drug to drug and drug allergy interaction checks
--E-Prescribing (EP only)
--Record demographics
--Maintain an up-to-date problem list
--Maintain active medication list
--Maintain active medication allergy list
--Record and chart changes in vital signs
--Record smoking status
--Implement one clinical decision support rule
--Report CQM as specified by the Secretary
--Electronically exchange key clinical information
--Provide patients with an electronic copy of their health information
--Provide patients with an electronic copy of their discharge
instructions (Eligible Hospital/CAH Only)
--Provide clinical summaries for patients for each office visit (EP
Only)
--Protect electronic health information created or maintained by
certified EHR

In addition, achieving Stage 1 meaningful use means demonstration
of progress in each of the five healthcare outcome priorities outlined
in the proposed rule and discussed again later in this section. Only
one of these priorities is not represented in the core set, population
and public health. As we have discussed in this section we do not want
any priority to be overlooked due to the flexibility we have added to
Stage 1 of meaningful use; therefore, all EPs and hospitals must choose
at least one of the population and public health measures to
demonstrate as part of the menu set. This is the only limitation placed
on which five objectives can be deferred from the menu set.

Discussion on Whether Certain EP, Eligible Hospital or CAH Can Meet all
Stage 1 Meaningful Use Objectives Given Established Scopes of Practice

In the proposed rule, we specifically encouraged comments on
whether certain providers may have difficulty meeting one or more of
the objectives due to their provider type or chosen specialties
Comment: We received many comments, both general and specific, that
certain providers or specialists may not be able to comply with certain
objectives because they are beyond the scope of their licensing
authority or because they are outside the scope of their standard of
practice. For example, chiropractors do not have prescribing authority
and thus may not make use of an EHR technology's e-prescribing function
and rheumatologists may not require information on vital signs. While
comments on this potential non-applicability primarily focused on EPs,
we did receive comments that some objectives may not be relevant to
smaller or specialized eligible hospitals as well.
Response: We believe the division of the meaningful use objectives
into a core set and a menu set may minimize the impact of including
among the meaningful use objectives one or more objectives that certain
providers or specialists may be unable to satisfy as the EP, eligible
hospital, or CAH can defer five objectives from the menu set. However,
if the EP, eligible hospital or CAH has an insurmountable barrier to
meeting an objective in the core set or a significant number in the
menu set then the problem remains. For example, without any
consideration on an EP, eligible hospital or CAH's capability to meet
the measure associated with a core objective any EP that could not
order medications requiring a prescription would not be able to become
a meaningful EHR user as e-prescribing is a core set objective.
Similarly, any eligible hospital or CAH that did not have any requests
for electronic copy of discharge instructions would not be able to
become a meaningful EHR user. In addition, if this were to occur for a
significant number of menu set objectives, the flexibility for the EP,
eligible hospital, or CAH to use the five objectives to account for
other concerns such as implementation struggles or workflow process
redesign would be curtailed. To account for this possibility, we have
modified each objective and measure to indicate when there is an option
for an EP, eligible hospital, or CAH to report that the objective/
measure is inapplicable to them, because they have no patients or no or
insufficient number of actions that would allow calculation of the
meaningful use measure. This will allow an EP, eligible hospital, or
CAH to qualify as a meaningful EHR user without being required to meet
objectives we have specified as potentially inapplicable. We note that
the exclusions to meaningful use objectives/measures are specific to
each objective/measure. In our discussion of each specific objective/
measure (which occurs later in this preamble), we have identified
specific exclusions where they exist. Providers wishing to claim that
an objective/measure is inapplicable to them would need to meet the
criteria of such an exception.
After consideration of the public comments received, we have
identified, for each meaningful use objective, whether the EP, eligible
hospital, or CAH may attest that they did not have any patients or
insufficient actions on which to base a measurement of a meaningful use
for the EHR reporting period. For objectives in the core set, such an
attestation would remove the objective from consideration when
determining whether an EP, eligible hospital, or CAH is a meaningful
EHR user. In other words, the EP, eligible hospital, or CAH could
satisfy the core set objectives by satisfying all remaining objectives
included in the core set. For objectives in the menu set, such an
attestation would also remove the objective from consideration when
determining whether an EP, eligible hospital, or CAH is a meaningful
EHR user. For example, if for one objective included in the menu set an
EP attests that he or she did not have any patients or insufficient
actions during the EHR reporting period on which to base a measurement
of a meaningful use objective, rather than satisfy 5 of the 10
meaningful use objectives included in the menu set for EPs, the EP need
only

[[Page 44329]]

satisfy 4 of the 9 remaining meaningful use objectives included in the
menu set for EPs

EPs Practicing in Multiple Practices

Another situation where flexibility may be needed in order for an
EP to become a meaningful EHR user is the situation where an EP may
provide care in multiple practices or multiple locations. We proposed a
policy to account for EPs practicing in multiple practices and
settings. We discussed in the proposed rule that we believe it is
unlikely for an EP to use one record keeping system for one patient
population and another system for another patient population at one
location. We are concerned about the application of the measures
associated with the meaningful use objectives for EPs who see patients
in multiple practices or multiple locations. If an EP does not have
certified EHR technology available at each location/practice where they
see patients it could become impossible for the EP to successfully
become a meaningful EHR user based on the measures associated with the
meaningful use objectives. We do not seek to exclude EPs who
meaningfully use certified EHR technology when it is available because
they also provide care in another practice where certified EHR
technology is not available. Therefore, we proposed that all measures
be limited to actions taken at practices/locations equipped with
certified EHR technology. A practice is equipped if certified EHR
technology is available at the beginning of the EHR reporting period
for a given geographic location. Equipped does not mean the certified
EHR technology is functioning on any given day during the EHR reporting
period. Allowances for downtime and other technical issues with
certified EHR technology are made on an objective-by-objective basis as
discussed later in this section. We are concerned that seeing a patient
without certified EHR technology available does not advance the health
care policy priorities of the definition of meaningful use. We are also
concerned about possible inequality of different EPs receiving the same
incentive, but using certified EHR technology for different proportions
of their patient population. We believe that an EP would have the
greatest control of whether certified EHR technology is available in
the practice in which they see the greatest proportion of their
patients. We proposed that to be a meaningful EHR user an EP must have
50 percent or more of their patient encounters during the EHR reporting
period at a practice/location or practices/locations equipped with
certified EHR technology. An EP for who does not conduct 50 percent of
their patient encounters in any one practice/location would have to
meet the 50 percent threshold through a combination of practices/
locations equipped with certified EHR technology. For example, if the
EP practices at both a Federally Qualified Health Center (FQHC) and
within his or her individual practice, we would include in our review
both of these locations and certified EHR technology would have to be
available at the location where the EP has at least 50 percent of their
patient encounters.
Comment: Some commenters recommended that 50 percent or more of the
patient encounters must occur at the practice location that receives
the incentive payment.
Response: As discussed in section II.A.4 of this final rule, an EP
may assign their incentive payment to other practices. We do not
believe that limiting practices and EPs to only considering the
location that receives an incentive payment provides advantages to the
program. The requirement suggested by commenters would potentially
cause some EPs not to meet the 50 percent threshold even if through a
combination of practices they may use certified EHR technology for far
more than 50 percent of their patient encounters.
Comment: Some commenters requested clarification of our proposed
statement ``Therefore, we proposed that all measures be limited to
actions taken at practices/locations equipped with certified EHR
technology''
Response: We mean this statement to be that as long as an EP has
certified EHR technology available for 50 percent or more of their
patient encounters during the EHR reporting period they only have to
include those encounters where certified EHR technology is available at
the start of the EHR reporting period. We discuss the measures later in
this section of the final rule, but an illustrative example would be
the objective of maintain an up-to-date problem list. The measure
associated with this objective is ``More than 80% of all unique
patients seen by the EP or admitted to the eligible hospital's or CAH's
inpatient or emergency department (POS 21 or 23) have at least one
entry or an indication that no problems are known for the patient
recorded as structured data.'' Therefore, if an EP only practices at
one location or has certified EHR technology available at all practice
locations then the denominator would be all unique patients seen during
the EHR reporting period. However, if an EP practices at multiple
locations and only has certified EHR technology for 80 percent of their
patient encounters, then the denominator is only those unique patients
seen at locations where certified EHR technology is available. We
reiterate that this is not to account for certified EHR technology
downtime, Certified EHR technology is available at a location if it is
available at the start of the EHR reporting period regardless of its
actual availability for any given day during the EHR reporting period.
After consideration of the comments received, we are finalizing
this requirement as proposed.

Discussion of the Burden Created by the Measures Associated With the
Stage 1 Meaningful Use Objectives

Comment: Many commenters expressed concerns about the difficulties
of capturing the denominators for the measures that are expressed as
percentages. They pointed out that the formulas in the proposed rule
would require providers to conduct labor-intensive counts of paper
documents such as prescriptions or laboratory results in order to
compute the denominators of the percentage based measures. Some
commenters suggested that we adopt alternative measurement mechanisms,
for example establishing simple counts of electronic occurrences, while
others proposed that denominators be computed utilizing only data
collected in the certified EHR technology.
Response: We acknowledge that the percentage-based measures, as
expressed in the proposed rule, would create a reporting burden for
EPs, eligible hospitals, and CAHs, and we examined a number of
alternatives that potentially reduce the burden of reporting.
In the proposed rule, we discussed the option of counts instead of
percentages and due to comments received have reassessed this option in
the final rule. This approach clearly has the advantage of simplifying
the process. For example, rather than counting the number of
prescriptions transmitted electronically and then dividing by the total
number of prescriptions, the EP would simply need to count the number
of electronically transmitted prescriptions until a benchmark number is
passed. If the benchmark number is exceeded, then the provider meets
the measure. However, there are several shortcomings to this approach.
First, we received little input from commenters as to where the
benchmark numbers for the various objectives should be set and any
benchmark set now would not benefit

[[Page 44330]]

from public comment without significantly delaying the Medicare and
Medicaid EHR incentive programs. (One exception was that a number of
commenters suggested using the PQRI measure for e-prescribing, which is
the generation of at least one eRx associated with a patient visit on
25 or more unique events during the reporting period.) Setting the
limit too high would disadvantage small providers, since they would
have smaller patient populations, while setting the limit too low would
create requirements for larger providers that would be so limited as to
be meaningless. A larger provider could implement the functionality for
a much shorter period than the EHR reporting period and meet the count.
In either case, it would be difficult to establish a trajectory in
later stages that would result in meaningful progress being made by
both small and large providers.
We then assessed the option of limiting the occurrences counted in
the denominator to those included in the provider's certified EHR
technology. As an example, if an EP captures 1,000 prescriptions as
structured data in certified EHR technology, and electronically
transmits 500 of these prescriptions, the EP's certified EHR technology
generated score would be 50 percent. This approach does simplify the
computation process, since this approach does not have to take into
account whether some prescriptions were not included or included as
unstructured data in the certified EHR technology. However, it does not
demonstrate the extent to which the provider has used the certified EHR
technology. For example, a provider that has captured only 10
prescriptions in the certified EHR technology as structured data, but
writes 1,000 prescriptions because the provider achieved only a limited
use of their certified EHR technology would also score 50 percent by
electronically transmitting only 5 prescriptions according to an
automatic report from the certified EHR technology. Again, this
methodology does not lead providers toward an upward trajectory of both
certified EHR technology deployment and accomplishment of meaningful
use.
We selected a third option, which we believe addresses the
shortcomings of the second option while still preserving much of the
simplicity of that approach. In our approach, we focus on those
measures whose denominator is not based on all patients, but rather a
subset of patients or actions such as the ordering of a lab test or the
recording of a patient's request for an electronic copy of their
discharge instructions. We believe that it is reasonable to require an
EP, eligible hospital, or CAH to know how many unique patients they
care for in the EHR reporting period and therefore maintain that
denominator where it applies. The maintenance of measures using the
patient as the denominator as encompassing all patients ensures a
certain level of utilization of certified EHR technology by the EP,
eligible hospital, or CAH. If a measure encompassing all patients has a
threshold of 80 percent, then at least 80 percent of the patients'
records must be maintained using certified EHR technology otherwise the
EP, eligible hospital or CAH could not possibly meet the threshold. We
note a number of measures included in the core set (such as ``Record
Demographics'' and ``Maintain an Up-to-Date Problem List'') require an
analysis of all unique patients, and not just patients whose records
are maintained in certified EHR technology As discussed later the
thresholds for maintaining an up-to-date problem list, medication list
and medication allergy list are set at 80 percent. We believe these
thresholds will create a baseline that ensures that EPs, eligible
hospitals and CAHS are maintain a minimum percentage of patient records
in certified EHR technology, and allows the provider community to
advance toward the longer-term objective of capturing all patient data
in certified EHR technology. For those measures that focus on the
recording of actions or subset of patients to generate the denominator,
we limit the measures to the information for patients whose records are
maintained in certified EHR technology. We offer the following examples
that relate to the e-prescribing and the provision of electronic copy
of a patient's health information:
E-Prescribing Example: An EP orders 1,000 prescriptions for
patients whose records are maintained in their certified EHR technology
and 500 of those are transmitted electronically. The EP's denominator
is 1,000 prescriptions, the numerator is 500 prescriptions, and their
score is 50 percent. If the EP captures all 1,000 prescriptions as
structured data the calculation could be automated by the certified EHR
technology. If the EP does not capture all 1,000 prescriptions as
structured data than more manual review may be required. We would
define ``records maintained in the certified EHR technology'' to
include any patient for which sufficient data was entered in the
certified EHR technology to allow the record to be saved, and not
rejected due to incomplete data. This may be a more limited set of
data, but an EP, eligible hospital, or CAH would still have to have
sufficient information in certified EHR technology to meet the measures
associated with Stage 1 of meaningful use. For example, an EP might be
able to save a record with just a patient's name, but as the record
would lack any information this patient would count in the denominator,
but not the numerator for many objectives. Electronic Copy of a
Patient's Health Information Provided upon Request Example: An EP
maintains 1,000 patient records in their certified EHR technology. Of
those patients, fifty make requests for electronic copies of their
health information. The EP provides all of the electronic copies within
three business days. The denominator is 50, the numerator is 50, and
the EP's percentage is 100 percent. If the EP captures requests for
information as structured data, the calculation could be automated by
the certified EHR technology. If the EP does not capture all the
requests as structured data then more manual review may be required. We
will likely revisit the methodology in Stage 2, where we would expect
that at least basic EHR functionality has been implemented throughout
the provider enterprise.
After consideration of public comments, we are limiting the
following objectives and their associated measures to patients whose
records are maintained using certified EHR technology. Specific
information on how to determine inclusion in the denominator and
numerator is discussed in the full discussion of each objective later
in this final rule.
Use CPOE
Generate and transmit permissible prescriptions
electronically (eRx)
Record and chart changes in vital signs
Record smoking status for patients 13 years old or older
Record advance directives for patients 65 years old or
older
Incorporate clinical lab-test results into certified EHR
technology as structured data
Provide patients with an electronic copy of their health
information (including diagnostic test results, problem list,
medication lists, medication allergies), upon request
Provide patients with an electronic copy of their
discharge instructions at time of discharge, upon request
Provide clinical summaries for patients for each office
visit
Send reminders to patients per patient preference for
preventive/follow-up care

[[Page 44331]]

Perform medication reconciliation at relevant encounters
and each transition of care
Provide summary care record for each transition of care
and referral

Discussion on Meaningful Use Relationship to Certified EHR Technology

Comment: We received several comments requesting more specific
information of how certified EHR technology will accomplish meaningful
use. Some commenters expressed concern that patient clinical outcome
measurement and improvement was not addressed explicitly in the
requirements of certified EHR technology, but rather the requirements
focused data entry and provision of data electronically.
Response: One of the main purposes of certifying EHR technology is
to provide the EP, eligible hospital, or CAH with confidence that the
technology will not be the limiting factor in the achievement of
meaningful use. As such, all questions of how or will certified EHR
technology be able to accomplish meaningful use broadly or at a
specific objective level are best answered by ONC. CMS and ONC have
worked closely since the enactment of the HITECH Act to ensure
certification fully supports meaningful use. We explicitly link each
meaningful use objective to certification criteria for certified EHR
technology. The capabilities and standards that are certified are those
that are used to meet the Stage 1 objectives of meaningful use. This
way we ensure that certified EHR technology can accomplish meaningful
use and meaningful use has the intended consequences of improving the
healthcare priorities that make up meaningful use.

Discussion on the Relationship Between a Stage 1 Meaningful Use
Objective and Its Associated Measure

Comment: Many commenters pointed out gaps between what they
believed were the anticipated results from an objective and the results
that are measured by the associated measure. A particular concern of
some of these commenters is cases where the certification criteria
supports the measure, but in their view fell short of supporting the
objective.
Response: In the proposed rule, we attempted to draw a clear
distinction between the objective and the associated measure. The
objectives represent a wide range of activities some of which are
commonplace for EPs, eligible hospitals, and CAHs using EHRs today,
while others are ambitious goals even for the most sophisticated EHR
user of today. For some objectives, all aspects of the objective are
within the control of the EP, eligible hospital, or CAH. Other
objectives rely on electronic exchange with partners or external
infrastructure over which EPs, eligible hospitals and CAHs may have
little influence and no control. We have attempted to accommodate these
differences when we select the Stage 1 measure for a given objective.
The measure more accurately reflects our view of what is feasible for
Stage 1 than the objective itself. The certification criteria
necessarily reflect more on the measure than the objective, as full
compliance with an objective is beyond the scope of what can be
accomplished for a significant number of EPs, eligible hospitals or
CAHs in our timeframe for Stage 1. This rationale was our assertion in
the proposed rule as the justification for measures that represent less
than full achievement of their objective. This is further supported by
some of the comments received although for any given objective the
comments addressing that objective were a small fraction of the total
number of comments received and views on how much a measure should
allow for less than full achievement varied widely among those
commenting. Although we received over 2,000 public comments, the number
of specific comments addressing an individual objective were relatively
small ranging from 40 to 200. We reviewed those comments and made
specific changes to measures in the discussion of each objective. We
reiterate that achievement of the measure always equates to achievement
of the objective for Stage 1 of meaningful use. We also reiterate that
certified EHR technology will always be able to support achievement of
the measure by including the necessary functionalities. However, as
with any technology, certified EHR technology is only as good as the
information it contains and getting information into certified EHR
technology is heavily dependent on processes developed by the EP,
eligible hospital, or CAH. It is for this reason that all measures,
even those for objective whose aspects are fully under the control of
the EP, eligible hospital, or CAH, represent less than full fulfillment
of the objective to varying degrees. As stated, for demonstrating
meaningful use and any follow up review by CMS or the States,
successfully meeting the associated measure always equates to
successfully meeting the objective. Updated information on the
associated measures including the numerator, denominator, thresholds
and exclusions are as discussed in the following section. More detailed
specifications and guidance on calculating the measures will be issued
soon after the publication of this final rule.
As we described in the proposed rule, in discussing the objectives
that constitute the Stage 1 criteria of meaningful use, we adopted a
structure derived from recommendations of the HIT Policy Committee of
grouping the objectives under care goals, which are in turn grouped
under health outcomes policy priorities. We believe this structural
grouping provides context to the individual objectives; however, the
grouping is not itself an aspect of meaningful use. The criteria for
meaningful use are based on the objectives and their associated
measures.
We will now review the comments for each objective and measure and
make changes to our original proposal or finalize as proposed.
(1) Objectives and Their Associated Measures
The HIT Policy Committee identified as its first health outcomes
policy priority improving quality, safety, efficiency and reducing
health disparities. The HIT Policy Committee also identified the
following care goals to address this priority:
Provide access to comprehensive patient health data for
patient's healthcare team.
Use evidence-based order sets and CPOE.
Apply clinical decision support at the point of care.
Generate lists of patients who need care and use them to
reach out to those patients.
Report information for quality improvement and public
reporting.

As we explained in the proposed rule, for the last care goal, the HIT
Policy Committee proposed the goal as ``Report to patient registries
for quality improvement, public reporting, etc.'' We have modified this
care goal, because we believe that patient registries are too narrow a
reporting requirement to accomplish the goals of quality improvement
and public reporting. We note that the HIT Policy Committee's
recommended objectives include the reporting of quality measures to
CMS. We do not believe that CMS would normally be considered a
``patient registry''. We also removed the phrase ``etc.'' We believe
that the level of ambiguity created by ``etc'' is not appropriate for
Federal regulations.
NPRM EP Objective: Use CPOE.
NPRM Eligible Hospital Objective: Use CPOE for orders (any type)
directly

[[Page 44332]]

entered by the authorizing provider (for example, MD, DO, RN, PA, NP).
In the proposed rule, we described CPOE as entailing the provider's
use of computer assistance to directly enter medical orders (for
example, medications, consultations with other providers, laboratory
services, imaging studies, and other auxiliary services) from a
computer or mobile device. The order is also documented or captured in
a digital, structured, and computable format for use in improving
safety and organization. We said that for Stage 1 criteria, it will not
include the electronic transmittal of that order to the pharmacy,
laboratory, or diagnostic imaging center.
Comment: A majority of commenters recommended that EPs, eligible
hospitals, and CAHs be allowed to defer CPOE for varying lengths of
time ranging from 2012 to 2017. The commenters cited various reasons
for deferment including that CPOE is an advanced clinical function that
typically is the last process to be implemented due to the need to
build the entire infrastructure to support the CPOE process. Other
commenters noted an increased burden as if the orders cannot be
transmitted, then duplicate paper orders will have to be produced which
can lead to patient safety risks. Commenters also noted that CPOE
appears in the latter stages of the Certification Commission for
Healthcare Information Technology (CCHIT) EHR implementation process. A
minority, but significant number of comments encouraged CMS to maintain
CPOE for 2011. Those commenters in favor of retaining CPOE in 2011
believed that CPOE is a basic EHR feature that should be a standard
offering of a certified EHR technology and is critical to improving
quality of care through audit trails and alerting of delinquent order
and/or delinquent deferred orders.
Response: We have determined that CPOE should be included in the
core set of measures for Stage 1 in order to advance meaningful use.
CPOE is a foundational element to many of the other objectives of
meaningful use including exchange of information and clinical decision
support. Many commenters, including several physician associations, the
HIT Policy Committee and members of Congress through their endorsement
of the HIT Policy Committee's recommendation, recommended that CPOE be
required in Stage 1. CPOE has been a major initiative of US hospitals
for over a decade and is a foundational functionality to many of the
activities that further the health care policy priorities of meaningful
use. For example, entering a medication order using CPOE allows the EHR
to provide feedback on whether the medication may have adverse
reactions with other medications the patient is taking. Another benefit
of CPOE is that greatly simplifies the workflow process of inputting
information into certified EHR technology in a structured way to
populate the patient record.
Comment: Several commenters asked that we further specify who could
enter the order using CPOE. Some commenters stated that only the
ordering provider should be permitted to enter the order. These
commenters stated that the ordering professional needs to be presented
with clinical decision support at the time of entry and that the relay
of an order to another individual is a source of potential error. Other
commenters recommended that any licensed healthcare professional or
indeed any individual (licensed or not) who receives the order from the
ordering provider be permitted to perform the CPOE. The most common
argument presented by these commenters is that this is currently how
CPOE is handled in practice and a shift to entry by only the ordering
provider would be too disruptive to workflow.
Response: We agree with those commenters who recommend allowing any
licensed healthcare professional to enter orders using CPOE. We further
refine this recommendation to be that any licensed healthcare
professional can enter orders into the medical record per state, local
and professional guidelines. While we understand that this policy may
decrease opportunities for clinical decision support and adverse
interaction, we believe it balances the potential workflow implications
of requiring the ordering provider to enter every order directly,
especially in the hospital setting. We disagree with commenters that
anyone should be allowed to enter orders using CPOE. This potentially
removes the possibility of clinical decision support and advance
interaction alerts being presented to someone with clinical judgment,
which negates many of the benefits of CPOE.
Comment: We received requests for clarification of this objective
and what types of orders would meet this requirement.
Response: Our intent in the proposed rule was to capture orders for
medications, laboratory or diagnostic imaging.
However, after careful consideration of the comments, we are
adopting an incremental approach by only requiring medication orders
for Stage 1. First, this supports the objectives of e-prescribing,
drug-drug and drug-allergy checks. Second, this requirement will
improve patient-safety because of the alignment of ordering medications
in a structured data format will enable providers to create registries
of patients for potential medical recalls, participate in surveillance
for potential sentinel events and life-threatening side effects of new
medications. Third, other measures involving transitions of care
documents and summary of care document will require the entry of an
active medication list. After consideration of the public comments
received, we are finalizing the meaningful use objective for EPs at
495.6(d)(1)(i) and for eligible hospitals, and CAHs at 495.6(f)(1)(i)
as ``Use CPOE for medication orders directly entered by any licensed
healthcare professional who can enter orders into the medical record
per state, local and professional guidelines''.
NPRM EP Measure: CPOE is used for at least 80 percent of all
orders.
NPRM Eligible Hospital or CAH Measure: For eligible hospitals, CPOE
is used for 10 percent of all orders.
In the proposed rule under CPOE, we discussed several concepts
related to any associated measure of any objective that relies on a
percentage calculation. These are the use of a percentage versus a
count; setting a threshold for measures not requiring the electronic
exchange of information; EPs practicing in multiple locations, some of
which may not have certified EHR technology available, and the patient
population to which the measure would apply. All except the last of
these received extensive comments and are addressed in comment and
response sections earlier in this section. In the proposed rule, we
said that we would base the measures associated with the objectives on
both the Medicare/Medicaid patient population and all other patients as
well. We said that we believe it is unlikely that an EP would use one
record keeping system for one patient population and another system for
another patient population at one location and that requiring reporting
differences based on payers would actually increase the burden of
meeting meaningful use. We received very few comments on this aspect of
our proposed rule and those that were received were generally
supportive of this proposal. Therefore, we are finalizing the policy
that all meaningful use measures be calculated based on the eligible
provider's entire patient population (except where otherwise noted).
Comment: Nearly every commenter who commented on CPOE objected to
our proposal to limit this measure to the

[[Page 44333]]

inpatient department (Place of Service Code 21) for the eligible
hospital or CAH. Commenters stated that this limitation was
inappropriate given the manner in which hospitals use EHR technology.
To account for current practice, the commenters recommended the
measures be expanded to include the emergency department (ED) (POS 23).
Other reasons cited by commenters were that orders begin in the ED and
remain open as the patient transitions to inpatient (for example,
infusions), transitioning from paper documentation in the ED to
electronic for subsequent care is unsafe as it can result in missed
information, and/or transcription errors as the initial allergies and
medications are entered into the system, significant data collection
occurs in the ED that would not be included in the system, the
exclusion of the ED creates disincentives to adoption and that the ED
is a hybrid of temporal and functional services that are neither purely
ambulatory nor inpatient.
Response: We agree with the commenters, and therefore are expanding
this objective and its associated measure to the emergency room (POS
23). More information on place of service codes is available at http://www.cms.gov/PlaceofServiceCodes/. Furthermore, given the revision to
the HITECH Act that changed hospital based eligible professionals to
include only the setting of inpatient and emergency departments and all
of the benefits of integration of these two departments spelled out by
commenters we will adopt both departments when considering the measure
of eligible hospitals or CAHs unless we find there are unique
circumstances of an objective and its associated measure that would
preclude the inclusion of the emergency department for meaningful use.
This change does not affect the incentive payment calculation described
in section II.B. of this final rule
Comment: We received several recommendations from commenters that
the requirement of a percentage measurement for determining whether an
EP, eligible hospital or CAH meets this objective should be replaced
with a numerical count for CPOE and many other measures associated with
percentage thresholds. The two main reasons given for switching to
numerical counts are the burden of calculating the percentage if it
cannot be done automatically using certified EHR technology and the
assertion that if an EP, eligible hospital, or CAH does something a
specific number of times it can be assumed that it is done often enough
to constitute meeting the objective for Stage 1 of meaningful use.
Response: We have previously discussed the merits of a percentage
based measure over a count based measure earlier in this section under
the discussion of the burden created by the measures associated with
the Stage 1 meaningful use objectives. However, we do try to seek a
balance reducing the burden on providers while still ensuring the
progression of meaningful use of certified EHR technology. In the next
comment/response, we discuss changes to this measure that respond to
concerns regarding burden.
Comment: Many commenters representing EPs as well as other
commenters recommended lowering the CPOE threshold for EPs. Those
commenters representing EPs generally recommended parity with eligible
hospitals at 10 percent, while other commenters recommending a
reduction generally recommended 50 percent.
Response: With CPOE, we had a unique situation of disparate
thresholds between EPs and hospitals. This was due to recommendations
prior to the proposed rule by the HIT Policy Committee. Eligible
hospitals were granted an even lower threshold for this particular
requirement. The reason given for this recommendation was that CPOE is
one of the last functionalities to be implemented in the hospital
setting. Commenters point out that holds true for EPs as well. As
discussed above, given the limitations we are placing on the numerator
and denominator for calculating the CPOE percentage, we no longer see a
compelling reason to maintain disparate thresholds for the EPs and the
eligible hospital/CAH.
Comment: Commenters have suggested that our proposal to count an
action per unique patients could be applied to the measure for CPOE as
well through a revised measure of ``[a]t least 10% of unique patients
seen by the EP or admitted to the eligible hospital or CAH have at
least one order entered using CPOE.'' Commenters also pointed to CPOE
as an example of a case where adequate lead time is necessary to
implement certified EHR technology.
Response: At the heart of this new basis for this measure is the
assumption that every patient would have at least one order that could
be entered using CPOE. We believe this is a reasonable assumption for
EPs, eligible hospitals and CAHs. According to analysis of 25,665
office-based visits in the 2005 National Ambulatory Medical Care
Survey, 31 percent of visits included a new medication order, and 44
percent included at least one refill; 66 percent had any type of
medication order. However, whether a medication order is appropriate
for every practice could vary significantly by scope of practice;
therefore, for the final rule, we are further limiting the denominator
to patients with at least one medication listed in their medication
list. We believe that this limitation will reduce providers' burden as
compared to accounting for all orders. To further reduce the burden on
providers, we also will limit the numerator to unique patients with at
least one medication order entered using CPOE. Because we have reduced
provider burden by limiting the denominator and numerator as discussed
above, we believe that a corresponding increase in the CPOE threshold
is appropriate for hospitals and CAHs. For stage 1, we are finalizing a
threshold for CPOE of 30 percent for EPs, eligible hospitals, and CAHS.
We believe this relatively low threshold, in combination with the
limitation to only medication orders, will allow hospitals and EPs to
gain experience with CPOE. However, as providers gain greater
experience with CPOE, we believe it is reasonable to expect greater use
of the function. As explained above, we also believe CPOE is
foundational to many other objectives of meaningful use. For these
reasons, we believe it is reasonable to expect providers to move to a
60 percent threshold at Stage 2 of meaningful use. Thus, for this
measure, we are finalizing, for Stage 2 of meaningful use, that EPs,
eligible hospitals and CAHs must meet a 60 percent threshold for CPOE.
Therefore, we are finalizing a Stage 2 measure for CPOE at Sec.
495.6(h) for EPs and Sec. 495.6(i) for eligible hospitals and CAHs as
``More than 60 percent of all unique patients with at least one
medication in their medication list seen by the EP or admitted to the
eligible hospital's or CAH's inpatient or emergency department (POS 21
or 23) during the EHR reporting period have at least medication one
order entered using CPOE''.
Comment: We received several comments asking for clarification of
the term unique patient in response to various objectives.
Response: In the proposed rule, we state, ``the reason we propose
to base the measure on unique patients as opposed to every patient
encounter, is that a problem list would not necessarily have to be
updated at every visit.'' To further describe the concept of ``unique
patient'' we mean that if a patient is seen by an EP or admitted to an
eligible hospital's or CAH's inpatient or emergency department (POS 21
or 23) more than once during the EHR reporting period

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then for purposes of measurement they only count once in the
denominator for the measure. All the measures relying on the term
``unique patient'' relate to what is contained in the patient's medical
record. Not all of this information will need to be updated or even be
needed by the provider at every patient encounter. This is especially
true for patients whose encounter frequency is such that they would see
the same provider multiple times in the same EHR reporting period.
Measuring by every patient encounter places an undue burden on the EPs,
eligible hospitals and CAHs and may have unintended consequences of
affecting the provision of care to patients merely to comply with
meaningful use. Given the emphasis placed on the reporting burden by
commenters as described in the beginning of this section, we believe
that our concerns about the burden of measurement were well founded. We
also continue to believe that the use of patient encounters could have
unintended consequences on the provision of care by providers.
Comment: Some commenters asked whether the CPOE objective and
associated measure require transmission of the order. Most of these
commenters were opposed to such transmission in Stage 1 for various
reasons such as the cost of developing interfaces between EHRs and
laboratory and radiology service providers, the volume of transmissions
would outpace the capacity to connect, HIE infrastructure is not yet
mature enough and the lack of the requirement for non-eligible entities
to participate (for example, laboratory vendors, pharmacies). Some
commenters supported the inclusion of the transmission of the order as
they believed this would provide better outcomes than if the
transmission was not required.
Response: In the proposed rule, we stated, ``For Stage 1 criteria,
we propose that it will not include the electronic transmittal of that
order to the pharmacy, laboratory, or diagnostic imaging center.''
While a few commenters recommended that this objective be changed to
require transmission, given the large opposition to the objective and
measure as proposed and the reasons commenters presented against
transmission, it would not be responsive to the vast majority of
commenters to expand this objective beyond our proposal. We agree with
the commenters that said the HIE infrastructure is still being
developed in most parts of the country. Furthermore, we note that in
the hospital setting, most medication orders would not require
transmission outside of the certified EHR technology of the hospital.
For EPs, we already address transmission of the medication order in a
separate objective for e-prescribing. Therefore, we finalize the
proposal that the transmission of the order is not included in the
objective or the associated measure for Stage 1.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at 495.6(d)(1)(ii) of our
regulations and for eligible hospitals, and CAHs at Sec.
495.6(f)(1)(ii) of our regulations to ``More than 30 percent of all
unique patients with at least one medication in their medication list
seen by the EP or admitted to the eligible hospital's or CAH's
inpatient or emergency department (POS 21 or 23) during the EHR
reporting period have at least medication one order entered using
CPOE''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(a) for EPs and 45 CFR 170.306(a) for eligible hospitals and
CAHs. The ability to calculate the measure is included in certified EHR
technology. Thus, for example, an EP, eligible hospital or CAH must use
a certified functionality in entering the medication order, and could
not use a functionality that has been added by the EHR vendor, but that
is outside the scope of the certification. We believe this rule is
necessary to ensure that the EP, eligible hospital, or CAH is actually
making meaningful use of ``certified'' EHR technology, and is not using
non-certified technology. In addition, requiring providers to use
functionalities that are certified will ensure the interoperability of
information maintained in the EHR as providers will be able to operate
according to consistent standards. We believe this standardization and
consistency is key to realizing the goal of using EHR technology to
improve health care.
As noted previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, the only patients that are included in the denominator
are those patients whose records are maintained using certified EHR
technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients with at least one
medication in their medication list seen by the EP or admitted to an
eligible hospital's or CAH's inpatient or emergency department (POS 21
or 23) during the EHR reporting period
Numerator: The number of patients in the denominator that
have at least one medication order entered using CPOE.
Threshold: The resulting percentage must be more than 30
percent in order for an EP, eligible hospital or CAH to meet this
measure.
Exclusion: If an EP's writes fewer than one hundred prescriptions
during the EHR reporting period they would be excluded from this
requirement as described previously in this section in our discussion
whether certain EP, eligible hospital or CAH can meet all Stage 1
meaningful use objectives given established scopes of practices. We do
not believe that any eligible hospital or CAH would have less than one
hundred prescriptions written for patients admitted to their inpatient
and emergency departments during the EHR reporting period.
NPRM EP/Eligible Hospital Objective: Implement drug-drug, drug-
allergy, drug-formulary checks
In the proposed rule, we did not elaborate on this objective.
Comment: Many commenters requested clarification as to what
formulary the checks would be conducted against.
Response: Ideally, this check would be performed against any
formulary that may affect the patient's welfare, inform the provider as
to the best drug to prescribe or provide the patient and provider
information on the drug's cost to both the patient and any third party
payer. We recognize, however, that not every available third party
payer, pharmacy benefit management, preferred drug list is standardized
and made available for query through certified EHR technology. As we
cannot through this regulation impose such a requirement on every
developer of a formulary, we do not require that an EP/eligible
hospital/CAH would have to accommodate every formulary in their
implementation. However, at a minimum an EP/eligible hospital/CAH must
have at least one formulary that can be queried. This may be an
internally developed formulary or an external formulary. The
formularies should be relevant for patient care during the prescribing
process. To further address this, we expect that this measure will be
expanded to be counted on a transactional basis for future stages.
Comment: Commenters suggested separating the objective into one
objective for the clinical checks (drug-drug and drug-allergy) and a
second objective for the administrative check

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(drug-formulary). The rationale stated for the division was that
clinical measures are focused on preventing medication errors versus
encouraging consideration of cost when prescribing medications. In
addition, the two types involve connections to different kinds of
resources (drug safety information versus formulary information).
Response: We agree that these should be separate objectives for the
reasons stated by the commenters and split them accordingly.
Comment: We received comments that these functions were really part
of CPOE and electronic prescribing. Commenters most commonly noted that
the drug formulary is part of electronic prescribing, as is currently
the case under the Medicare e-Prescribing program.
Response: While we agree that the drug-drug, drug-allergy, drug-
formulary checks, CPOE, e-prescribing meaningful use objectives all
serve the same broader goal of ensuring accurate ordering and
prescribing that takes into account all available information about the
patient the functions and their readiness for Stage 1 of meaningful use
are distinct. In terms of functions, CPOE and e-prescribing could be
performed without the drug to drug, drug-allergy or drug-formulary
checks. Similarly, it is not necessary for CPOE or e-Prescribing to
take place in order for a drug to drug allergy check to occur. In terms
of readiness and ability to measure progress for Stage 1 of meaningful
use, CPOE and e-prescribing both are percentage based measures of a
distinct activity that creates a record even in today's EHR's and paper
patient records. The viewing and consideration of information presented
to the provider on possible drug interactions is not a similarly
distinct activity and does not currently create a record. So while the
goal of these functionalities is similar, we believe drug-drug, drug-
allergy, drug-formulary checks create unique concerns for
implementation and demonstration of meaningful use, and therefore we
maintain them as separate objectives.
Comments: Several commenters expressed concern of ``alert fatigue''
occurring with drug-drug interaction checks. Alert fatigue or otherwise
known as ``pop-up'' fatigue is a commonly perceived occurrence with
electronic medical records and clinical decision support tools in which
alerts are presented to the user when a potential safety issue is
identified by the system (for example, drug to drug interaction). The
alerts, while beneficial in some cases, can result in a type of
``fatigue'' whereby the provider, after receiving too many alerts,
begins to ignore and/or override the alerts. Receiving too many alerts
can result in slowing the provider down rendering the alert useless.
Commenters recommended some changes to the objective and associated
measure to mitigate the risk of ``alert fatigue'' such as limiting the
checks for interactions to only the most critical medications or
allowing for adjustment of risk levels rather than an on/off
functionality.
Response: We recognize ``alert fatigue'' is a potential occurrence
with drug-drug and drug-allergy checks. However, meaningful use seeks
to utilize the capabilities of certified EHR technology and any means
to address alert fatigue requires a critical evaluation of each alert.
We believe this is beyond the scope of the definition of meaningful
use. We believe these checks are valuable and improve patient care and
therefore do not remove them to address alert fatigue.
Comment: Commenters recommended food allergies be included in the
drug-allergy check as some drugs contain ingredients that are
contraindicated in individuals with certain allergies.
Response: We certainly agree that some allergies other than drug
can interact with drugs; however, as we stated under our discussion of
the objective ``Medication Allergy List'', the ability to identify
other types of allergies in a useful way are not yet available to the
extent necessary to require them in Stage 1 of meaningful use. This
certainly does not preclude any EP, eligible hospital, or CAH from
working with the designers of their certified EHR technology to include
this functionality.
Comment: A commenter requested clarification as to whether the
drug-drug, drug-allergy and drug-formulary checks are required for
contrast media and imaging agents used by radiologists.
Response: We do not link the checks to specific drugs or agents.
However, we note that is common practice in radiology to identify a
patient's past drug and food allergies and take appropriate
interventions if necessary. Therefore, the drug-drug, drug-allergy and
drug-formulary checks would be appropriate prior to administration of
contrast media and imaging agents to patients.
After consideration of the public comments received, we are
finalizing the meaningful use objective for EPs at Sec. 495.6(d)(2)(i)
and for eligible hospitals and CAHs at Sec. 495.6(f)(2)(i) as
``Implement drug-drug and drug-allergy checks.'' We include this
objective in the core set as it is integral to the initial or on-going
management of a patient's current or future healthcare and would give
providers the necessary information to make informed clinical decisions
for improved delivery of patient care.
In addition, we are finalizing the meaningful use objective at for
EPs at Sec. 495.6(e)(1)(i) and for eligible hospitals and CAHs at
Sec. 495.6(g)(1)(i) of our regulations as ``Implement drug-formulary
checks.''
NPRM EP/Eligible Hospital Measure: The EP/eligible hospital/CAH has
enabled the drug-drug, drug-allergy, and drug-formulary check
functionality
In the proposed rule we discussed that the capability of conducting
automated drug-drug, drug-allergy, and drug-formulary checks is
included in the certification criteria for certified EHR technology.
This automated check provides information to advise the EP, eligible
hospital, or CAH's decisions in prescribing drugs to a patient. The
only action taken by the EP, eligible hospital, or CAH is to consider
this information. Many current EHR technologies have the option to
disable these checks and the certification process does not require the
removal of this option. Therefore, in order to meet this objective, an
EP, eligible hospital, or CAH would be required to enable this
functionality and ensure they have access to at least one drug
formulary. While this does not ensure that an EP, eligible hospital or
CAH is considering the information provided by the check, it does
ensure that the information is available.
After consideration of the public comments received on the
objective, we believe the measure as proposed requires more clarity on
the length of time for which the functionality must be enabled, which
we clarify to be the entire EHR reporting period. Therefore, we are
modifying the meaningful use measure for ``Implement drug-drug and
drug-allergy checks for the entire EHR reporting period'' for EPs at
Sec. 495.6(d)(2)(ii) and for eligible hospitals and CAHs at Sec.
495.6(f)(2)(ii) of our regulations to ``The EP/eligible hospital/CAH
has enabled this functionality for the entire EHR reporting period.''
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(a). The ability to calculate the measure is included in
certified EHR technology.
As this objective only requires that functionalities of certified
EHR technology be enabled, we do not believe that any EP, eligible
hospital or

[[Page 44336]]

CAH would need an exclusion for this objective and its associated
measure.
After consideration of the public comments received on the
objective, we are modifying the meaningful use measure for ``Implement
drug-formulary checks'' for EPs at Sec. 495.6(e)(1)(ii) and for
eligible hospitals and CAHs at Sec. 495.6(g)(1)(ii) of our regulations
to ``The EP/eligible hospital/CAH has enabled this functionality and
has access to at least one internal or external formulary for the
entire EHR reporting period.''
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(b). The ability to calculate the measure is included in
certified EHR technology.
The consideration of whether a drug is in a formulary or not only
applies when considering what drug to prescribe. Therefore, we believe
that any EP who writes fewer than one hundred prescriptions during the
EHR reporting period should be excluded from this objective and
associated measure as described previously in our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices.
NPRM EP/Eligible Hospital Objective: Maintain an up-to-date problem
list of current and active diagnoses based on ICD-9-CM-CM or SNOMED
CT[supreg]
In the proposed rule, we described the term ``problem list'' as a
list of current and active diagnoses as well as past diagnoses relevant
to the current care of the patient.
Comment: Several commenters noted that the coding of problem lists
at the point of care is outside the normal workflow process and would
be disruptive.
Response: We did not and do not intend that coding of the diagnosis
be done at the point of care. This coding could be done later and by
individuals other than the diagnosing provider.
Comment: Commenters suggested including ICD-10-CM, the Diagnostic
and Statistical Manual of Mental Disorders and explicitly allowing
subsets of SNOMED CT[supreg].
Response: We have removed the references to specific standards, as
we believe specifying the relevant standards falls within the purview
of ONC. For ONC's discussion of this functionality and the relevant
standards including response to the above comment, we refer readers to
ONC's final rule.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(d)(3)(i)
and for eligible hospitals at Sec. 495.6(f)(3)(i) of our regulations
to ``Maintain an up-to-date problem list of current and active
diagnoses''.
We include this objective in the core set as it is integral to the
initial or on-going management of a patient's current or future
healthcare and would give providers the necessary information to make
informed clinical decisions for improved delivery of patient care.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
unique patients seen by the EP or admitted to the eligible hospital or
CAH have at least one entry or an indication of none recorded as
structured data.
In the proposed rule, we introduced the concept of ``unique
patients'' in the discussion of this objective. We received many
comments requesting clarification of this term and address those in the
comment and response section under our discussion of the CPOE measure.
Comment: A few commenters stated that ``None'' is not a clinically
relevant term and should be replaced with no known problem or no
problem.
Response: Our intent is not to dictate the exact wording of the
specific value. Rather we are focused on the overall goal of making a
distinction between a blank list because a patient does not have known
problems and a blank list because either no inquiry of the patient has
been made, or problems have been recorded through other means. As long
as the indication accomplishes this goal and is structured data, we do
not believe it is necessary to prescribe the exact terminology, thus
leaving that level of detail to the designers and users of certified
EHR technology.
Comment: Commenters requested clarification of the term ``up-to-
date''.
Response: The term ``up-to-date'' means the list is populated with
the most recent diagnosis known by the EP, eligible hospital, or CAH.
This knowledge could be ascertained from previous records, transfer of
information from other providers, or querying the patient. However, not
every EP has direct contact with the patient and therefore has the
opportunity to update the list. Nor do we believe that an EP, eligible
hospital, or CAH should be required through meaningful use to update
the list at every contact with the patient. There is also the
consideration of the burden that reporting places on the EP, eligible
hospital, or CAH. The measure, as finalized, ensures the EP, eligible
hospital, or CAH has a problem list for patients seen during the EHR
reporting period, and that at least one piece of information is
presented to the EP, eligible hospital, or CAH. The EP, eligible
hospital, or CAH can then use their judgment in deciding what further
probing or updating may be required given the clinical circumstances.
Comment: Commenters stated that this measure should be replaced
with either a simple attestation of yes, the problem list exists or the
percentage of the measure should be replaced with a count.
Alternatively, that the percentage should be maintained, but that the
threshold should be lowered. Commenters generally supported this
lowering of the threshold for one or all of the following reasons: It
may require a change in traditional workflow; implementation and
rollout of certified EHR technology creates unforeseeable system
downtimes, complications, and the required clinical classification
systems are not geared toward clinical information.
Response: For reasons discussed earlier in this section under our
discussion of the burden created by the measures associated with the
Stage 1 meaningful use objectives, we believe a percentage is a more
appropriate measure than those suggested by comments. As this objective
relies solely on a capability included as part of certified EHR
technology and is not, for purposes of Stage 1 criteria, reliant on the
electronic exchange of information, we believe it is appropriate to set
a high percentage threshold. In the proposed rule, we set the
percentage required for successful demonstration at 80 percent. Though
full compliance (that is, 100 percent) is the ultimate goal, 80 percent
seemed an appropriate standard for Stage 1 meaningful use as it creates
a high standard, while still allowing room for technical hindrances and
other barriers to reaching full compliance. We proposed 80 percent for
every measure with a percentage that met the criteria of relying solely
on a capability included as part of certified EHR technology and are
not, for purposes of Stage 1 meaningful use criteria, reliant on the
electronic exchange of information. Commenters generally agreed with
this alignment; however, they disagreed that 80 percent sufficiently
allows for ``technical hindrances and other barriers''. Commenters have
highlighted numerous barriers towards successfully meeting an 80
percent threshold including technical barriers, barriers to
implementation, applicability to all patients and all provider types
eligible for the EHR incentives, patient requested exclusions and
others. We address some of these with specific exclusions from the
measure as

[[Page 44337]]

discussed previously in this section under our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices. Although some
technical issues exist, recording an up-to-date problem list remains
largely within the individual provider's control and does not rely to a
large degree on some external sender or receiver of structured
electronic health data. In addition, there is a standard of practice
for collecting the elements required for an up-to-date problem list.
Although the commenters may be right that some clinical workflow needs
to change, that is an integral part of meaningful use of EHRs. Although
we do not expect all clinical workflow to adapt in Stage 1, there is an
expectation that the clinical workflow necessary to support the Stage 1
priority of data capture and sharing will be in place in order to
effectively advance meaningful use of EHRs. In addition, given the wide
range of activities that must occur for meaningful use, we believe that
most EPs, eligible hospitals and CAHs will have fully rolled out the
capabilities required by this objective and the others with an 80
percent threshold prior to the start of the EHR reporting period
thereby reducing the likelihood of unexpected system downtime and other
implementation complications.
For situations in which there is an existing standard of practice
and complying is fundamentally within the provider's control and where
the objective relies solely on a capability included as part of
certified EHR technology and is not, for purposes of Stage 1 criteria,
reliant on the electronic exchange of information, for the final rule,
we adopt, the reasonably high threshold of 80 percent. We believe
existing infrastructure and expectations support this relatively high
target. This foundational step of structured data capture is a
prerequisite for many of the more advanced functionalities (for
example, clinical decision support, clinical quality measurement, etc.)
for which a solid evidence base exists for improved quality, safety and
efficiency of care. Without having most of a provider's up-to-date
problem lists in structured, electronic data, that provider will have
major challenges in building more advanced clinical processes going
forward.
For other situations, where the objective may not be fundamentally
within the provider's control and is not an existing standard of
practice, but where objective continues to rely solely on a capability
that is included as part of certified EHR technology and is not reliant
on electronic exchange of information, we are setting the percentage at
50 percent. This was the most commonly recommended percentage for these
objectives that rely solely on a capability included as part of
certified EHR technology and do not rely on the electronic exchange of
information.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(3)(i)
and for eligible hospitals at Sec. 495.6(f)(3)(i) of our regulations
to ``More than 80 percent of all unique patients seen by the EP or
admitted to the eligible hospital's or CAH's inpatient or emergency
departments (POS 21 or 23) have at least one entry or an indication
that no problems are known for the patient recorded as structured
data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(c). The ability to calculate the measure is included in
certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP or
admitted to an eligible hospital's or CAH's inpatient or emergency
department (POS 21 or 23) during the EHR reporting period.
Numerator: The number of patients in the denominator who
have at least one entry or an indication that no problems are known for
the patient recorded as structured data in their problem list.
Threshold: The resulting percentage must be more than 80
percent in order for an EP, eligible hospital, or CAH to meet this
measure.
We do not believe that any EP, eligible hospital, or CAH would be
in a situation where they would not need to know at least one active
diagnosis for a patient they are seeing or admitting to their hospital.
Therefore, there are no exclusions for this objective and its
associated measure.
NPRM EP Objective: Generate and transmit permissible prescriptions
electronically (eRx).
Comment: Some commenters requested clarification of the term
``permissible prescription.''
Response: As discussed in the proposed rule, the concept of only
permissible prescriptions refers to the current restrictions
established by the Department of Justice on electronic prescribing for
controlled substances in Schedule II. (The substances in Schedule II
can be found at http://www.deadiversion.usdoj.gov/schedules/orangebook/e_cs_sched.pdf). Any prescription not subject to these restrictions
would be permissible. We note that the Department of Justice recently
released a notice of proposed rulemaking that would allow the
electronic prescribing of these substances; however, given the already
tight timeframe for Stage 1 of meaningful use we are unable to
incorporate any final changes that may result from that proposed rule.
Therefore, the determination of whether a prescription is a
``permissible prescription'' for purposes of the eRx meaningful use
objective should be made based on the guidelines for prescribing
Schedule II controlled substances in effect when the notice of proposed
rulemaking was published on January 13, 2010. We define a prescription
as the authorization by an EP to a pharmacist to dispense a drug that
the pharmacist would not dispense to the patient without such
authorization. We do not include authorizations for items such as
durable medical equipment or other items and services that may require
EP authorization before the patient could receive them. These are
excluded from the numerator and the denominator of the measure.
Comment: Some commenters recommended combining this objective and
measure with other meaningful use objectives such as CPOE or the drug-
drug, drug-allergy, drug-formulary checks
Response: We addressed these comments under our discussion of the
CPOE objective.
After consideration of the public comments received, we are
finalizing the meaningful use objective at 495.6(d)(4)(i) as proposed.
We have also included this objective in the core set. Section
1848(o)(2)(A)(i) of the Act specifically includes electronic
prescribing in meaningful use for eligible professionals. This function
is the most widely adopted form of electronic exchange occurring and
has been proven to reduce medication errors. We included this objective
in the core set based on the combination of the maturity of this
objective, the proven benefits and its specific mention as the only
example provided in the HITECH Act for what is meaningfully using
certified EHR technology.
NPRM EP Measure: At least 75 percent of all permissible
prescriptions written by the EP are transmitted electronically using
certified EHR technology.

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In the proposed rule, we said that while this measure does rely on
the electronic exchange of information based on the public input
previously discussed and our own experiences with e-prescribing
programs, we believe this is the most robust electronic exchange
currently occurring and proposed 75 percent as an achievable threshold
for the Stage 1 criteria of meaningful use. Though full compliance
(that is, 100 percent) is the ultimate goal, 75 percent seemed an
appropriate standard for Stage 1 meaningful use as it creates a high
standard, while still allowing room for technical hindrances and other
barriers to reaching full compliance.
Comment: A majority of commenters commenting on this measure
believe the 75 percent threshold is too high. Several issues were
raised to explain why the commenters believe the threshold is too high.
The first is that barriers to e-prescribing exist at the pharmacies and
they must be brought into the process to ensure compliance on the
receiving end. The second represents the most common barrier cited by
commenters and that is patient preference for a paper prescription over
e-prescribing. A patient could have this preference for any number of
reasons cited by commenters such as the desire to shop for the best
price (especially for patients in the Part D ``donut hole''), the
ability to obtain medications through the VA, lack of finances,
indecision to have the prescription filled locally or by mail order and
desire to use a manufacturer coupon to obtain a discount. Other
barriers mentioned by individual commenters were the limited
functionality of current e-prescribing systems such as the inability to
distinguish refills from new orders. Suggestions for addressing these
difficulties were either to lower the threshold (alternatives
recommended ranged from ten to fifty percent) or replacing the
percentage with a numerical count of 25 to align with the 2010 Medicare
e-Prescribing program. Of the comments received that requested a
specific lower threshold, about half of them suggested a 50 percent
threshold, and about half suggested a threshold of 25 percent to 30
percent.
Response: We are finalizing the use of a percentage threshold for
the reasons discussed previously in this section under our discussion
of the burden created by the measures associated with the Stage 1
meaningful use objectives. In the proposed rule, we pointed out that we
``believe this is the most robust electronic exchange currently
occurring'' to justify a high threshold of 75 percent given that this
objective relies on electronic exchange. While we continue to believe
this is the case, two particular issues raised by commenters caused us
to reconsider our threshold. The first is the argument to include
pharmacies in the Medicare and Medicaid EHR incentive programs to
ensure compliance on the receiving end. Non-participation by pharmacies
was presented by commenters as a major barrier to e-Prescribing. The
second is patient preference for a paper prescription. In regards to
the first argument, we do not have the ability to impose requirements
on pharmacies through the HITECH legislation. However, prescriptions
transmitted electronically have been growing at an exponential rate.
The number of prescriptions sent electronically increased by 181
percent from 2007 to 2008 according to comments received. The number of
pharmacies is also increasing rapidly. Yet this growth is uneven across
the country and we wish to accommodate all EPs and do lower the
threshold based on this argument. In regards to the second argument, we
also have neither the ability nor the desire to limit patient
preference. We considered allowing an EP to exclude from the
denominator those instances where a patient requested a paper
prescription. However, the burden of tracking when this occurs, the
disincentive it would create for EPs to work with patients on
establishing a relationship with a pharmacy and the hindrance to moving
forward with e-prescribing lead us to address this through further
reduction of the threshold as opposed to an exclusion. To address these
concerns we are lowering the threshold for the e-prescribing measure to
40 percent. As pointed out by commenters, e-prescribing it is not yet
standard of practice and there may be important external barriers
beyond the provider's control. In particular, for e-prescribing,
providers are dependent upon an external receiver of electronic health
data, and there are significant variations depending on where the
provider practices.
After consideration of the public comments received, we are
modifying the meaningful use measure at Sec. 495.6(d)(4)(ii) of our
regulations to ``More than 40 percent of all permissible prescriptions
written by the EP are transmitted electronically using certified EHR
technology''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(b). The ability to calculate the measure is included in
certified EHR technology.
As noted previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, the prescriptions in the denominator are only those for
patients whose records are maintained using certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of prescriptions written for drugs
requiring a prescription in order to be dispensed other than controlled
substances during the EHR reporting period.
Numerator: The number of prescriptions in the denominator
generated and transmitted electronically.
Threshold: The resulting percentage must be more than 40
percent in order for an EP, eligible hospital, or CAH to meet this
measure.
As addressed in other objectives and in comment response, this
objective and associated measure do not apply to any EP who writes
fewer than one hundred prescriptions during the EHR reporting period,
as described previously in this section under our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices.
NPRM EP/Eligible Hospital Objective: Maintain active medication
list.
Comment: Commenters requested clarification of the term ``active
medication list.''
Response: We define an active medication list as a list of
medications that a given patient is currently taking.
After consideration of the public comments received, we are
finalizing this objective for EPs at Sec. 495.6(d)(5)(i) and for
eligible hospitals and CAHs at Sec. 495.6(f)(4)(i) of our regulations
as proposed.
We include this objective in the core set as it is integral to the
initial or on-going management of a patient's current or future
healthcare and would give providers the necessary information to make
informed clinical decisions for improved delivery of patient care.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
unique patients seen by the EP or admitted by the eligible hospital
have at least one entry (or an indication of ``none'' if the patient is
not currently prescribed any medication) recorded as structured data.
As with the objective of maintaining a problem list, we clarify
that the indication of ``none'' should distinguish between a blank list
that is blank

[[Page 44339]]

because a patient is not on any known medications and a blank list
because no inquiry of the patient has been made. As long as the
indication accomplishes this goal and is structured data, we do not
believe it is necessary to prescribe the exact terminology, preferring
to leave that level of detail to the designers and users of certified
EHR technology.
Comment: Commenters stated that the measure should be replaced with
a numerical count or attestation and that the threshold was too high
for reasons including the lack of current electronic exchange of
information, difficulty capturing information as structured data and
lack of readiness of HIE infrastructure.
Response: We are finalizing the use of a percentage for the reasons
discussed previously in this section under our discussion of the burden
created by the measures associated with the Stage 1 meaningful use
objectives. For the same reasons we explained under the discussion of
up-to-date problem list, medication list is a functionality for which
there is an existing standard of practice, it is foundational data
capture function to make more advanced clinical processes possible, and
complying is fundamentally within the provider's control. Therefore, we
maintain the reasonably high threshold of 80 percent because the
existing infrastructure and expectations support this target.
Comment: Commenters requested clarification as to whether the
measure is limited to patients seen during the EHR reporting period.
Response: Yes, the measure applies to all unique patients seen by
the EP or admitted to the eligible hospital's or CAH's inpatient or
emergency departments (POS 21 or 23) during the EHR reporting period.
Comment: A few commenters expressed concern regarding the
requirement that the entry must be recorded as ``structured data.'' The
commenters state that there may not be a code for over the counter,
homeopathic or herbal products and that would penalize the provider
even though the data is collected and recorded.
Response: The distinction between structured data and unstructured
data applies to all types of information. Structured data is not fully
dependent on an established standard. Established standards facilitate
the exchange of the information across providers by ensuring data is
structured in the same way. However, structured data within certified
EHR technology merely requires the system to be able to identify the
data as providing specific information. This is commonly accomplished
by creating fixed fields within a record or file, but not solely
accomplished in this manner. For example, in this case for it to be
structured, if the patient is on aspirin, then that information should
be in the system so that it can be automatically identified as a
medication and not as an order, note, or anything else. An example of
unstructured data would be the word aspirin, but no ability of the
system to identify it as a medication.
Comment: A few commenters pointed out their current health
information system vendor does not utilize RxNorm as its standard.
Response: This is a certification issue best addressed in the ONC
final rule. We therefore have referred these comments to ONC for their
consideration.
Comment: We received comments suggesting that this requirement
could create additional privacy/security concerns for patients who do
not want all physicians and their clinical staff to have access to
their entire medication history. Examples provided included
antidepressant, antipsychotic or erectile dysfunction medications.
Response: We are only concerned with medications that are known to
the provider through querying the patient, their own records and the
transfer of records from other providers. Meaningful use cannot address
situations where the information is withheld from the EP, eligible
hospital, or CAH by the patient or by other providers. We understand
that some patients would prefer not to have their entire medical
history available to all physicians and clinical staff. We also
understand that laws in some states restrict the use and disclosure of
information (including that related to medication) that may reveal that
a patient has a specific health condition (for example, HIV). Recording
data in a structured manner will facilitate the implementation of these
preferences and policies in an electronic environment. It is easier to
identify and potentially withhold specific data elements that have been
recorded in a structured format than information recorded as free text.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(5)(ii)
and for eligible hospitals at Sec. 495.6(f)(4)(ii) of our regulations
to ``More than 80 percent of all unique patients seen by the EP or
admitted to the eligible hospital's or CAH's inpatient or emergency
departments (POS 21 or 23) have at least one entry (or an indication
that the patient is not currently prescribed any medication) recorded
as structured data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(d). The ability to calculate the measure is included in
certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP or
admitted to an eligible hospital's or CAH's inpatient or emergency
departments (POS 21 or 23) during the EHR reporting period. A
definition of unique patient is discussed under the objective of CPOE.
Numerator: The number of patients in the denominator who
have a medication (or an indication that the patient is not currently
prescribed any medication) recorded as structured data.
Threshold: The resulting percentage must be more than 80
percent in order for an EP, eligible hospital, or CAH to meet this
measure. Detailed discussion of the more than 80 percent threshold can
be found under the objective of maintaining an up-to-date problem list.
We do not believe that any EP, eligible hospital or CAH would be in a
situation where they would not need to know whether their patients are
taking any medications. Therefore, there are no exclusions for this
objective and its associated measure.
NPRM EP/Eligible Hospital Objective: Maintain active medication
allergy list.
Comment: We received comments that limiting this list to medication
allergies instead of all allergies was not consistent with efficient
workflow and that all allergies should be housed in the same location
within the EHR. Commenters also highlighted that lack of knowledge of
other allergies such as latex and food allergies could lead to
significant harm to the patient.
Response: We agree that information on all allergies, including
non-medication allergies, provide relevant clinical quality data.
However, while we agree that collecting all allergies would be an
improvement, current medication allergy standards exists in a
structured data format that may be implemented in Stage 1. We hope to
expand this measurement to include all allergies as the standards
evolve and expand to include non-medication allergies. We believe EP/
eligible hospitals/CAHs should continue to document all allergies,
regardless of origin, consistent with standard of care practice for
that EP/eligible hospital/CAH. We encourage

[[Page 44340]]

them to work with the designers of their certified EHR technology to
make this documentation as efficient and structured as possible.
Comment: A commenter inquired why the Substance Registration System
Unique Ingredient Identifier (UNII) was not indicated for use until
2013 yet the measure requires the information to be recorded as
structured data.
Response: Any standards for the structured vocabulary for
medication allergies or other aspects of meaningful use are included in
ONC final rule. Structured data does not require an established
standard as discussed under the objective of maintaining a medication
list.
Comment: We received a few comments requesting a definition of
``allergy.''
Response: We adopt the commonly held definition of an allergy as an
exaggerated immune response or reaction to substances that are
generally not harmful. The definition is derived from Medline Plus, a
service of the U.S. National Library of Medicine and the National
Institutes of Health.
After consideration of the public comments received, we are
finalizing the meaningful use objective for EPs at 495.6(d)(6)(i) and
for eligible hospitals and CAHs at 495.6(f)(5)(i) as proposed.
We include this objective in the core set as it is integral to the
initial or on-going management of a patient's current or future
healthcare and would give providers the necessary information to make
informed clinical decisions for improved delivery of patient care.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
unique patients seen by the EP or admitted to the eligible hospital
have at least one entry (or an indication of ``none'' if the patient
has no medication allergies) recorded as structured data.
Comment: Multiple commenters noted that ``none'' is not a typical
value to describe the absence of allergies in medical documentation and
should be replaced with ``no known allergies (NKA),'' ``no known drug
allergies (NKDA)'' or ``no known medication allergies (NKMA).''
Response: Our intent is not to dictate the exact wording of the
specific value. Rather we are focused on the overall goal of making a
distinction between a blank list that is blank because a patient does
not have known allergies and a blank list because no inquiry of the
patient has been made or no information is available from other
sources. As long as the indication accomplishes this goal and is
structured data, we do not believe it is necessary to prescribe the
exact terminology, preferring to leave that level of detail to the
designers and users of certified EHR technology.
Comment: Given that the measure is only a one time check for a
single entry, one commenter questioned whether this measure truly
constitutes maintenance of an ``active'' list.
Response: We agree that this measure does not ensure that every
patient under the care of every EP, eligible hospital, or CAH has an
active or up-to-date medication list. However, not every EP comes in
contact with the patient, and therefore has the opportunity to update
the list. Nor do we believe that an EP, eligible hospital, or CAH
should be required through meaningful use to update the list at every
contact with the patient. There is also the consideration of the burden
that reporting places on the EP, eligible hospital, or CAH. The measure
as finalized ensures that the EP, eligible hospital, or CAH has not
ignored having a medication allergy list for patients seen during the
EHR reporting period and that at least one piece of information on
medication allergies is presented to the EP, eligible hospital, or CAH.
The EP, eligible hospital, or CAH can then use their judgment in
deciding what further probing or updating may be required given the
clinical circumstances at hand. Therefore, we are maintaining the
measure of a one-time check for a single entry.
Comment: Several commenters recommended eliminating the percentage
measurement and allowing the provider to attest that active medication
lists are maintained in the certified EHR technology.
Response: We are retaining a percentage for the reasons discussed
previously in this section under our discussion of the burden created
by the measures associated with the Stage 1 meaningful use objectives.
For the same reasons we explained under the discussion of up-to-date
problem list, medication-allergy list is a functionality for which
there is an existing standard of practice, it is foundational data
capture function to make more advanced clinical processes possible, and
complying is fundamentally within the provider's control. Therefore, we
maintain the reasonably high threshold of 80 percent because the
existing infrastructure and expectations support this target.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(6)(ii)
and for eligible hospitals at Sec. 495.6(f)(5)(ii) of our regulations
to ``More than 80 percent of all unique patients seen by the EP or
admitted to the eligible hospital's or CAH's inpatient or emergency
departments (POS 21 or 23) have at least one entry (or an indication
that the patient has no known medication allergies) recorded as
structured data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(e). The ability to calculate the measure is included in
certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP or
admitted to an eligible hospital's or CAH's inpatient or emergency
departments (POS 21 or 23) during the EHR reporting period. The
definition of ``a unique patient'' is provided under the objective of
CPOE.
Numerator: The number of unique patients in the
denominator who have at least one entry (or an indication that the
patient has no known medication allergies) recorded as structured data
in their medication allergy list.
Threshold: The percentage must be more than 80 percent in
order for an EP, eligible hospital, or CAH to meet this measure.
Detailed discussion of the rationale more than 80 percent threshold can
be found at under the objective of maintain an up-to-date problem list.
We do not believe that any EP, eligible hospital or CAH would be in
a situation where they would not need to know whether their patients
have medication allergies and therefore do not establish an exclusion
for this measure.
NPRM EP Objective: Record the following demographics: Preferred
language, insurance type, gender, race and ethnicity, and date of
birth.
NPRM Eligible Hospital Objective: Record the following
demographics: Preferred language, insurance type, gender, race and
ethnicity, date of birth, and date and cause of death in the event of
mortality.
In the proposed rule, we noted that race and ethnicity codes should
follow current federal standards published by the Office of Management
and Budget (http://www.whitehouse.gov/omb/inforeg_statpolicy/#dr). We
maintain that proposal for the final rule.
Comment: Some commenters requested clarification of whether all of
the demographics are required and under what circumstances no
indication might be acceptable. Examples of acceptable circumstances
from commenters include patient unwillingness to report, language

[[Page 44341]]

barriers, and requirement to report ethnicity and/or race contrary to
some state laws.
Response: In general, we do require that all demographic elements
that are listed in the objective be included in a patient's record in
certified EHR technology. However, we do not desire, nor could we
require, that a patient provide this information if they are otherwise
unwilling to do so. Similarly, we do not seek to preempt any state laws
prohibiting EPs, eligible hospitals, or CAHs from collecting
information on a patient's ethnicity and race. Therefore if a patient
declines to provide the information or if capturing a patient's
ethnicity or race is prohibited by state law, such a notation entered
as structured data would count as an entry for purposes of meeting the
measure.
Comment: Several commenters asked for clarity on the definition of
preferred language. Commenters also indicated that standards are in
development (ISO 639 and ANSIX12N Claim/Reporting Transaction). Some
commenters also requested that we include the requirement that the EP,
eligible hospital or CAH also communicate with the patient in their
preferred language.
Response: Preferred language is the language by which the patient
prefers to communicate. This is just a record of the preference. We do
not have the authority under the HITECH Act to require providers to
actually communicate with the patient in his or her preferred language,
and thus do not require EPs, eligible hospitals, and CAHs to do so in
order to qualify as a meaningful EHR user as suggested by some
commenters. In regards to standards, those would be adopted under the
ONC final rule.
Comment: Some commenters also requested clarity on the definition
of race and ethnicity. Some commenters noted an Institute of Medicine
report entitled ``Race, Ethnicity and Language Data: Standardization
for Health Care Quality Improvement'', which makes recommendations for
how to ask questions to collect information and builds on the OMB
Standards for language, race and ethnicity. Some commenters were also
concerned about situations where the available choices were not
granular enough, did not properly account for mixed race and ethnicity,
and when the patient did not know their ethnicity.
Response: In the proposed rule, we said that EPs, eligible
hospitals and CAHs, should use the race and ethnicity codes that follow
current federal standards published by the Office of Management and
Budget (http://www.whitehouse.gov/omb/inforeg_statpolicy/#dr). We
continue to believe that these standards should be applied for purposes
of implementing the Stage 1 meaningful use objectives, but will
consider whether alternative standards or additional clarification
would be appropriate for future stages of meaningful use criteria. We
believe it is beyond the scope of the definition of meaningful use to
provide additional definitions for race and ethnicity beyond what is
established by OMB. In regards to patients who do not know their
ethnicity, EPs, eligible hospitals, and CAHs should treat these
patients the same way as patients who decline to provide the race or
ethnicity, that is, they should identify in the patient record that the
patient declined to provide this information.
Comment: Some commenters requested additional clarity on insurance
type and others recommended the elimination of insurance type due to
the complexity of insurance coverage, the function of the EHR as a
medical tool and not a financial one, the volatility of this
information due to patients frequently changing plans and concerns that
information on a patient's insurance status will have a possible
behavioral influence on the providers if this information were
presented.
Response: Classifying insurance involves two distinctions--the
source of coverage and insurance design. Source of coverage refers to
the type of funding, such as public, private or self-pay. The design of
the insurance program, such as health maintenance program (HMO),
preferred provider organization (PPO), high-deductible consumer
directed plan, fee-for-service, etc. Although not specified in the
proposed rule, by insurance type we were referring to the first
distinction--the source of funding for the insurance. We found two
initiatives that could provide clarity on type. The first is the
``Source of Payment Typology'' developed by the Public Health Data
Standards Consortium (http://www.phdsc.org/standards/payer-typology.asp). The consortium is currently in the process of working
with States to implement this typology. The other initiative is
established in the Uniform Data Set (UDS) collected by HRSA (http://www.hrsa.gov/data-statistics/health-center-data/index.html). The
information in the UDS contains several caveats, however, that make it
difficult to be used by all EPs, eligible hospitals and CAHs, and it
does not accommodate patients with multiple types of insurance such as
those dually eligible for Medicare and Medicaid or for those with both
Medicare and MediGap coverage. Many EHRs that currently report on HRSA
UDS Insurance Type standards account for multiple types of insurance by
maintaining separate Reporting Insurance Groups and deriving the
Insurance Type data from the primary insurance company on the encounter
and mappings to that Insurance Type Reporting Group. This information
is documented at the patient demographic level or the patient
encounter/progress note. Given the complexity of defining insurance
type and attributing it to patients in an agreed upon way, we are
eliminating ``insurance type'' from this meaningful use objective.
Comment: A minority of commenters commenting on this objective
recommended that CMS remove cause of death from the objective for
eligible hospitals. The most common rationale is that the coroner or
medical examiner officially determines cause of death when the case is
referred to them. By law, the hospital cannot declare a cause of death
in these cases.
Response: When a patient expires, in the routine hospital workflow,
a clinician evaluates the patient to pronounce the patient's death. The
clinician typically documents in the patient's chart, the sequence of
events leading to the patient's death, conducts the physical exam and
makes a preliminary assessment of the cause of death. We are requiring
that eligible hospitals record in the patient's EHR the clinical
impression and preliminary assessment of the cause of death, and not
the cause of death as stated in any death certificate issued by the
Department of Health or the coroner's office.
Comment: A few commenters requested inclusion of Advanced
Directives under this objective as recommended by the HIT Policy
Committee.
Response: We discuss advance directives separately in this final
rule under its own objective.
Comment: Several commenters recommended requiring the submission of
the demographic data to CMS.
Response: Stage 1 of meaningful use seeks to ensure certified EHR
technology has the capability to record demographic information and
that those capabilities are utilized. We believe the information
recorded for this measure is for provider use in the treatment and care
of their patients and therefore should not be submitted to CMS at this
time.
Comment: Commenters suggested requiring the use of the demographic
data from this measure to stratify clinical quality measure reporting
and

[[Page 44342]]

the generation of reports for patient outreach and quality initiatives.
Response: While we encourage all providers and EHR developers to
work together to develop reporting from the EHR system for use in the
improvement of population and public health, for purposes of becoming a
meaningful EHR user in Stage 1, we only require the recording of the
specified demographics.
After consideration of the public comments received, we are
modifying meaningful use objective at Sec. 495.6(d)(7)(i) of our
regulations for EPs to ``Record the following demographics: Preferred
language, gender, race and ethnicity, and date of birth''.
After consideration of the public comments received, we are
modifying meaningful use objective at Sec. 495.6(f)(6)(i) of our
regulations for eligible hospitals and CAHs to ``Record the following
demographics: Preferred language, gender, race and ethnicity, date of
birth, and date and preliminary cause of death in the event of
mortality in the eligible hospital or CAH''.
We include this objective in the core set as it is integral to the
initial or on-going management of a patient's current or future
healthcare, recommended by the HIT Policy Committee and would give
providers the necessary information to make informed clinical decisions
for improved delivery of patient care.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
unique patients seen by the EP or admitted to the eligible hospital
have demographics recorded as structured data.
Comment: Commenters said that this should be replaced with a count
or attestation or alternatively that the threshold was too high.
Response: We are maintaining a percentage for the reasons discussed
previously in this section under our discussion of the burden created
by the measures associated with the Stage 1 meaningful use objectives.
However, we do reduce the threshold to over 50 percent as this
objective meets the criteria of relying solely on a capability included
as part of certified EHR technology and is not, for purposes of Stage 1
criteria, reliant on the electronic exchange of information. In
contrast to our discussion of maintaining an up-to-date problem list/
medication list/medication allergy list, we believe that some
demographic elements (especially race, ethnicity and language) are not
as straightforward to collect as objective data elements and therefore
the standard of practice for demographic data is still evolving. As we
believe this measure may not be within current standard of practice, we
are adopting the lower threshold of 50 percent (rather than 80
percent).
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(7)(ii)
and for eligible hospitals at Sec. 495.6(f)(6)(ii) of our regulations
to ``More than 50 percent of all unique patients seen by the EP or
admitted to the eligible hospital's or CAH's inpatient or emergency
department (POS 21 or 23) have demographics recorded as structured
data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(c) for EPs and 45 CFR 170.304(b) for eligible hospitals and
CAHs. The ability to calculate the measure is included in certified EHR
technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP or
admitted to an eligible hospital's or CAH's inpatient or emergency
departments (POS 21 or 23) during the EHR reporting period. A unique
patient is discussed under the objective of CPOE.
Numerator: The number of patients in the denominator who
have all the elements of demographics (or a specific exclusion if the
patient declined to provide one or more elements or if recording an
element is contrary to state law) recorded as structured data.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital or CAH to meet this
measure. Most EPs and all eligible hospitals and CAHs would have access
to this information through direct patient access. Some EPs without
direct patient access would have this information communicated as part
of the referral from the EP who identified the service as needed by the
patient. Therefore, we did not include an exclusion for this objective
and associated measure.
NPRM EP/Eligible Hospital Objective: Record and chart changes in
the following vital signs: height, weight and blood pressure and
calculate and display body mass index (BMI) for ages 2 and over; plot
and display growth charts for children 2-20 years, including BMI.
In the proposed rule, we described why we included growth charts in
this objective. The reason given was that BMI was not a sufficient
marker for younger children.
Comment: Over two thirds of the commenters commenting on this
objective expressed concern about the applicability of the listed vital
signs to all provider types and care settings.
Response: While this objective could be met by receiving this
information from other providers or non-provider data sources, we
recognize that the only guaranteed way for a provider to obtain this
information is through direct patient interaction and that this
information is not always routinely provided from the EP ordering a
service because of a direct patient interaction. EPs who do not see
patients 2 years or older would be excluded from this requirement as
described previously in this section under our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices. We would also
allow an EP who believes that measuring and recording height, weight
and blood pressure of their patients has no relevance to their scope of
practice to so attest and be excluded.
Comment: Several commenters stated this objective should be removed
in favor of clinical quality measures addressing BMI and blood pressure
as these measures serve the same purpose and to require both is to
require duplicative reporting.
Response: We disagree that these two measures serve the same
purpose and therefore that the measure should be eliminated in favor of
clinical quality measures addressing BMI and blood pressure. The
objective included here seeks to ensure that information on height,
weight and blood pressure and the extractions based on them are
included in the patient's record. Furthermore, the objective seeks to
ensure that the data is stored in a structured format so that it can be
automatically identified by certified EHR technology for possible
reporting or exchanging. We also note that the clinical quality measure
focuses on a smaller subset of the patient population.
After consideration of the public comments received, we are
finalizing the objective for EPs at 495.6(d)(8)(i) and for eligible
hospitals and CAHs at 495.6(f)(7)(i) as proposed.
We include this objective in the core set as it is integral to the
initial or on-going management of a patient's current or future
healthcare and would give providers the necessary information to make
informed clinical decisions for improved delivery of patient care.
NPRM EP/Eligible Hospital Measure: For at least 80 percent of all
unique patients age 2 and over seen by the EP or admitted to the
eligible hospital,

[[Page 44343]]

record blood pressure and BMI; additionally, plot growth chart for
children age 2 to 20.
Comment: Commenters suggested replacement of the percentage
measurement with a count or attestation or alternatively that that the
threshold was too high.
Response: We are retaining a percentage for the reasons discussed
previously in this section under our discussion of the burden created
by the measures associated with the Stage 1 meaningful use objectives.
However, we did reduce the threshold from 80 percent to greater than 50
percent as this objective meets the criteria of relying solely on a
capability included as part of certified EHR technology and is not, for
purposes of Stage 1 criteria, reliant on the electronic exchange of
information. In addition, in contrast to the measures associated with
maintaining an up-to-date problem list, an active medication list, and
an active medication-allergy list, we believe that for many
specialties, the current practice on vital signs may not be as well-
established. We believe there may not be the same level of consensus
regarding the relevance to patient care of vital signs for many
specialties and the frequency with which such vital signs should be
collected. Thus, for this measure, we adopt a percentage of 50 percent,
rather than 80 percent.
Comment: Commenters requested clarification of the frequency and
methods of recording the vital signs included in the measure.
Response: As discussed in the objective, the EP/eligible hospital/
CAH is responsible for height, weight and blood pressure so we will
focus our discussion on those items. First, we do not believe that all
three must be updated by a provider at every patient encounter nor even
once per patient seen during the EHR reporting period. For this
objective we are primarily concerned that some information is available
to the EP/eligible hospital/CAH, who can then make the determination
based on the patient's individual circumstances as to whether height,
weight and blood pressure needs to be updated. The information can get
into the patient's medical record as structured data in a number of
ways. Some examples include entry by the EP/eligible hospital/CAH,
entry by someone on the EP/eligible hospital/CAH's staff, transfer of
the information electronically or otherwise from another provider or
entered directly by the patient through a portal or other means. The
measure hinges on access of the information. Therefore, any EP/eligible
hospital/CAH that sees/admits the patient and has access to height,
weight and blood pressure information on the patient can put that
patient in the numerator.
Comment: Some commenters requested clarification regarding the role
of both the EP/eligible hospital/CAH and the certified EHR technology
for the calculation of BMI and the plotting and displaying of growth
charts. Other commenters recommended the exclusion of growth charts for
certain patients and care settings. Another commenter also expressed
the desire for the exclusion of growth charts for patients over the age
of 18, inpatient care settings and more specifically, non-pediatric
inpatient care settings.
Response: We believe a clarification is in order about which of the
listed vital signs are data inputs to be collected by the EP/eligible
hospital/CAH and which are calculations made by the certified EHR
technology. The only information required to be inputted by the
provider is the height, weight and blood pressure of the patient. The
certified EHR technology will calculate BMI and the growth chart if
applicable to patient based on age. As this requirement imposes no duty
or action on the provider, we see no reason to limit its availability
to any EP, eligible hospital, or CAH based on setting or other
consideration. Concerns on presentation and interface are best left to
designers of certified EHR technology and users. Finally, as certified
EHR technology is able to automatically generate BMI and the growth
chart if height and weight are entered as structured data we see no
reason to include BMI and growth chart in the measure. We therefore
will limit the final measure to data requiring provider data entry
points.
Comment: A few commenters suggested that ``reported height'' by the
patient should be acceptable when measurement is not appropriate such
as in the case of severe illness.
Response: We agree and would allow height self-reported by the
patient to be used.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at 495.6(d)(8)(ii) and for
eligible hospitals Sec. 495.6(f)(7)(ii) of our regulations to ``For
more than 50 percent of all unique patients age 2 and over seen by the
EP or admitted to eligible hospital's or CAH's inpatient or emergency
department (POS 21 or 23), height, weight and blood pressure are
recorded as structured data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(f). The ability to calculate the measure is included in
certified EHR technology.
As noted previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, the percentage is based on patient records that are
maintained using certified EHR technology. To calculate the percentage,
CMS and ONC have worked together to define the following for this
objective:
Denominator: Number of unique patients age 2 or over seen
by the EP or admitted to an eligible hospital's or CAH's inpatient or
emergency department (POS 21 or 23) during the EHR reporting period. A
unique patient is discussed under the objective of CPOE.
Numerator: The number of patients in the denominator who
have at least one entry of their height, weight and blood pressure are
recorded as structure data.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital, or CAH to meet this
measure. As addressed in other objectives and in comment response, an
EP who sees no patients 2 years old or younger would be excluded from
this requirement as described previously in this section under our
discussion of whether certain EP, eligible hospital or CAH can meet all
Stage 1 meaningful use objectives given established scopes of
practices. We would also allow an EP who believes that all three vital
signs of height, weight and blood pressure have no relevance to their
scope of practice to so attest and be excluded. However, we believe
this attestation and exclusion from recording height, weight, and blood
pressure does not hold for other patient specific information
collection objectives, like maintaining an active medication allergy
list. We do not believe that any EP would encounter a situation where
the patient's active medication and allergy list is not pertinent to
care and therefore would be outside of the scope of work for an EP. We
believe the exclusion based on EP determination of their scope of
practice for the record vital signs objective, as written in Stage 1,
should be studied for relevance in further stages. We do not believe
eligible hospitals or CAHs would ever only have a patient population
for patients 2 years old or younger or that these vital signs would
have no relevance to their scope of practice. Therefore, we do not
include an exclusion for eligible hospitals or CAHs.

[[Page 44344]]

NPRM EP/Eligible Hospital Objective: Record smoking status for
patients 13 years old or older
In the proposed rule, we explained that we believe it is necessary
to add an age restriction to this objective as we do not believe this
objective is applicable to patients of all ages and there is no
consensus in the health care community as to what the appropriate cut
off age may be. We encouraged comments on whether this age limit should
be lowered or raised. We received many comments on the age limit and
address them below.
Comment: Several commenters requested a different age limitation.
Commenters suggested ages anywhere between 5 years old up to 18 years
old.
Response: For the purposes of this objective and for meaningful
use, our interest is focused on when a record of smoking status should
be in every patient's medical record. Recording smoking status for
younger patients is certainly not precluded. We do believe there would
be situations where an EP/eligible hospital/CAH's knowledge about other
risk factors would indicate that they should inquire about smoking
status if it is unknown for patients under 13 years old. However, in
order to accurately measure and thereby assure meaningful use, for this
objective we believe that the age limit needs to be high enough so that
the inquiry is appropriate for all patients. Therefore, we are
maintaining the age limitation at 13 years old or older.
Comment: Some commenters suggested expanding smoking status to any
type of tobacco use.
Response: While we agree that an extended list covering other types
of tobacco use may provide valuable insight for clinical care for
certified EHR technology ONC has adopted the CDC's NHIS standard
recodes for smoking status. This will provide a standard set of
questions across providers and standardize the data. The extended list
does not make the collection of multiple survey questions clear. For
example, a patient may be a current tobacco user as well as a smoker.
For these reason in Stage 1 we will use the standards adopted by ONC
for certified EHR technology at 45 CFR 170.302(g). For future stages,
we will review this measure for possible inclusion of other questions.
This is a minimum set. We do not intend to limit developers of EHR
technology from creating more specific fields or to limit EPs/eligible
hospitals/CAHs from recording more specific information.
Comment: We also received comments requesting that second-hand
smoking be included in the objective for children and adolescents.
Response: Including second-hand smoking introduces much more
variability into the objective as to what constitutes a level of
exposure and difficulty in measuring it successfully with different age
limits to different aspects. For instance, how much exposure is
acceptable for a given age and how is such exposure determined? How
would these differing requirements be accounted for by certified EHR
technology? As with the change from smoking status to tobacco use, we
believe this introduces an unacceptable level of complexity for Stage 1
of meaningful use. For Stage 1 of meaningful use we are not adding
second hand smoke exposure to this objective. However, we remind EPs,
eligible hospitals and CAHs that nothing about the criteria for
meaningful use prevents them from working with their EHR developer to
ensure that their EHR system meets their needs and the needs of their
patient population. We encourage all EPs, eligible hospitals and CAHs
to critically review their implementation in light of their current and
future needs both to maximize their own value and to prepare for future
stages of meaningful use.
Comment: We received comments asking at what frequency the
information must be recorded and whether the information can be
collected by support staff.
Response: We clarify that this is a check of the medical record for
patients 13 years old or older. If this information is already in the
medical record available through certified EHR technology, we do not
intend that an inquiry be made every time a provider sees a patient 13
years old or older. The frequency of updating this information is left
to the provider and guidance is provided already from several sources
in the medical community. The information could be collected by any
member of the medical staff.
Comment: We received a number of comments recommending either
removing this objective to record smoking status from the HIT
functionality objectives or removing the smoking measure from the core
clinical quality measures as these measures serve the same purpose and
to require both is to require duplicative reporting.
Response: We disagree that these two measures serve the same
purpose and therefore only one should be included. The objective
included here seeks to ensure that information on smoking status is
included in the patient's record. Furthermore, that the information is
stored in a structured format so that it can automatically be
identified by certified EHR technology as smoking status for possible
reporting or exchanging. We also note that the clinical quality measure
only focuses on patients 18 years or older, while the objective focuses
on patients 13 years or older. In addition, many quality measures
related to smoking are coupled with follow-up actions by the provider
such as counseling. We consider those follow-up actions to be beyond
the scope of what we hope to achieve for this objective for Stage 1 of
meaningful use.
After consideration of the public comments received, we are
finalizing the meaningful use objective for EPs at Sec. 495.6(d)(9)(i)
and for eligible hospitals at Sec. 495.6(f)(8)(i) of our regulations
as proposed.
We include this objective in the core set as it is integral to the
initial or on-going management of a patient's current or future
healthcare and would give providers the necessary information to make
informed clinical decisions for improved delivery of patient care.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
unique patients 13 years old or older seen by the EP or admitted to the
eligible hospital have ``smoking status'' recorded.
In the proposed rule, discussion of this measure referenced other
sections exclusively.
Comment: We received comments recommending alternative thresholds
for this measure. Commenters provided thresholds ranging from anything
greater than zero to 60 percent in stage 1.
Response: In the proposed rule, we established a consistent
threshold for measures not requiring the exchange of information. For
the final rule, (other than up-to-date problem list, active medication
list and active medication-allergy list), we have lowered the threshold
associated with these measures to 50 percent. In our discussion of the
objective, we noted many concerns by commenters over the appropriate
age at which to inquire about smoking status. There were also
considerable differences among commenters as to what the appropriate
inquiry is and what it should include. Due to these concerns, we do not
believe this objective and measure fit into the threshold category
described under up-to-date problem lists and therefore we adopt a 50
percent (rather than an 80 percent) threshold for this measure. After
consideration of the public comments received, we are modifying the
meaningful use measure for EPs at Sec. 495.6(d)(9)(ii) and for
eligible hospitals at Sec. 495.6(f)(8)(ii) of

[[Page 44345]]

our regulations to ``More than 50 percent of all unique patients 13
years old or older seen by the EP or admitted to the eligible
hospital's or CAH's inpatient or emergency departments (POS 21 or 23)
have smoking status recorded as structured data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(g). The ability to calculate the measure is included in
certified EHR technology.
As noted previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, the percentage is based on patient records that are
maintained using certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients age 13 or older
seen by the EP or admitted to an eligible hospital's or CAH's inpatient
or emergency departments (POS 21 or 23) during the EHR reporting
period. A unique patient is discussed under the objective of
maintaining an up-to-date problem list.
Numerator: The number of patients in the denominator with
smoking status recorded as structured data.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital, or CAH to meet this
measure. As addressed in other objectives, EPs, eligible hospitals or
CAHs who see no patients 13 years or older would be excluded from this
requirement as described previously in this section under our
discussion of whether certain EP, eligible hospital or CAH can meet all
Stage 1 meaningful use objectives given established scopes of
practices. Most EPs and all eligible hospitals and CAHs would have
access to this information through direct patient access. Some EPs
without direct patient access would have this information communicated
as part of the referral from the EP who identified the service as
needed by the patient. Therefore, we did not include an exclusion based
on applicability to scope of practice or access to the information for
this objective and associated measure.
NPRM EP/Eligible Hospital Objective: Record advance directives.
In the proposed rule, we discussed this objective, but did not
propose it as a requirement for demonstrating meaningful use, for a
number of reasons, including: (1) It was unclear whether the objective
would be met by indicating that an advance directive exists or by
including the contents of the advance directive; (2) the objective
seems relevant only to a limited and undefined patient population when
compared to the patient populations to which other objectives of Stage
1 of meaningful use apply; and (3) we believe that many EPs would not
record this information under current standards of practice. Dentists,
pediatricians, optometrists, chiropractors, dermatologists, and
radiologists are just a few examples of EPs who would require
information about a patient's advance directive only in rare
circumstances.
Comment: We received several comments including a comment from the
HIT Policy Committee that we should include advance directives in the
final rule. The HIT Policy Committee clarified that this would be an
indication of whether a patient has an advanced directive. Furthermore,
they recommend limiting this measure to patients 65 and older. We
received other comments that said this should be a requirement for
eligible hospitals. Other commenters reported that having this
information available for the patient would allow eligible hospitals to
make decisions that were better aligned with the patient's expressed
wishes.
Response: In the proposed rule, we said that confusion as to
whether this objective would require an indication of the existence of
an advanced directive or the contents of the advance directive itself
would be included in certified EHR technology was one of the reasons
for not including the objective in Stage 1 of meaningful use. We
expressed concerns that the latter would not be permissible in some
states under existing state law. As commenters have clarified that
advance directives should be just an indication of existence of an
advance directive and recommended a population to apply the measure to,
we reinstate this objective for eligible hospitals and CAHs. We believe
that the concern over potential conflicts with state law are alleviated
by limiting this to just an indication. We also believe that a
restriction to a more at risk population is appropriate for this
measure. By restricting the population to those 65 years old and older,
we believe we focus this objective appropriately on a population likely
to most benefit from compliance with this objective and its measure.
This objective is in the menu set so if an eligible hospital or CAH
finds they are unable to meet it then can defer it. However, we believe
many EPs would not record this information under current standards of
practice. Dentists, pediatricians, optometrists, chiropractors,
dermatologists, and radiologists are just a few examples of EPs who
would only require information about a patient's advance directive in
rare circumstances. For other meaningful use objectives, we have
focused our exclusions on rare situations, which would not be the case
for this objective. Therefore, we do not include this objective for
EPs.
After consideration of the public comments received, we are
including this meaningful use objective for eligible hospitals and CAHs
at Sec. 495.6(g)(2)(i) of our regulations as ``Record whether a
patient 65 years old or older has an advanced directive as structured
data ''.
NPRM EP/Eligible Hospital Measure: N/A.
While we did not receive specific percentage recommendations from
commenters, this objective is the recording of a specific data element
as structured data in the patient record. This is identical to other
objectives with established measures such as, recording vital signs,
recording demographics and recording smoking status. Therefore, we
adopt the measure format and the lower threshold (50 percent) from
those objectives. We also believe that this information is a level of
detail that is not practical to collect on every patient admitted to
the eligible hospital's or CAH's emergency department, and therefore,
have limited this measure only to the inpatient department of the
hospital.
In the final rule, this meaningful use measure for eligible
hospitals at Sec. 495.6(g)(2)(ii) of our regulations: ``More than 50
percent of all unique patients 65 years old or older admitted to the
eligible hospital's or CAH's inpatient department (POS 21) have an
indication of an advance directive status recorded as structured
data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.306(h). The ability to calculate the measure is included in
certified EHR technology.
As noted previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, the percentage is based on patient records that are
maintained using certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients age 65 or older
admitted to an eligible hospital's or CAH's inpatient department (POS
21) during the EHR

[[Page 44346]]

reporting period. A unique patient is discussed under the objective of
CPOE.
Numerator: The number of patients in the denominator with
an indication of an advanced directive entered using structured data.
Threshold: The resulting percentage must be more than 50
percent in order for eligible hospital or CAH to meet this measure. An
exclusion, as described previously in this section under our discussion
of whether certain EP, eligible hospital or CAH can meet all Stage 1
meaningful use objectives given established scopes of practices, would
apply to an eligible hospital or CAH who admits no patients 65 years
old or older during the EHR reporting period.
NPRM EP/Eligible Hospital Objective: Incorporate clinical lab-test
results into EHR as structured data.
In the proposed rule, we defined structured data as data that has a
specified data type and response categories within an electronic record
or file. We have revised that definition for the final rule as
discussed below.
Comment: Some commenters requested clarification on what
constitutes structured data.
Response: The distinction between structured data and unstructured
data applies to all types of information. Structured data is not fully
dependent on an established standard. Established standards facilitate
the exchange of the information across providers by ensuring data is
structured in the same way. However, structured data within certified
EHR technology merely requires the system to be able to identify the
data as providing specific information. This is commonly accomplished
by creating fixed fields within a record or file, but not solely
accomplished in this manner.
After consideration of the public comments received, we finalize
the meaningful use objective or EPs at Sec. 495.6(e)(2)(i) and
eligible hospitals and CAHs at Sec. 495.6(g)(3)(i) as proposed.
NPRM EP/Eligible Hospital Measure: At least 50 percent of all
clinical lab tests results ordered by the EP or by an authorized
provider of the eligible hospital during the EHR reporting period whose
results are either in a positive/negative or numerical format are
incorporated in certified EHR technology as structured data.
In the proposed rule, we identified this objective and associated
measure as dependent on electronic exchange and therefore requiring
special consideration in establishing the threshold. We said that we
are cognizant that in most areas of the country, the infrastructure
necessary to support such exchange is still being developed. Therefore,
we stated our belief that 80 percent is too high a threshold for the
Stage 1 criteria of meaningful use. As an alternative, we proposed 50
percent as the threshold based on our discussions with EHR vendors,
current EHR users, and laboratories. We then invited comment on whether
50 percent is feasible for the Stage 1 criteria of meaningful use.
Finally, we indicated that we anticipate raising the threshold in
future stages of meaningful use as the capabilities of HIT
infrastructure increase. We received several comments on the
appropriateness of this 50 percent threshold and discuss them in the
comment and response section below.
Comment: Commenters requested clarification as to whether the
measure includes only electronic exchange of information with a
laboratory or if it also includes manual entry.
Response: We encourage every EP, eligible hospital and CAH to
utilize electronic exchange of the results with the laboratory based on
the certification and standards criteria in the 45 CFR 170.302(h). If
results are not received in this manner, then they are presumably
received in another form such as fax, telephone call, mail, etc. These
results then must be incorporated into the patient's medical record in
some way. We encourage that this way use structured data; however, that
raises the concerns about the possibility of recording the data twice;
for example scanning the results and then entering the results as
structured data. Telephoned results could be entered directly. We also
recognize the risk of entry error, which is why we highly encourage the
electronic exchange of the results with the laboratory, instead of
manual entry through typing, option selecting, scanning or other means.
Reducing the risk of entry error is one of the primary reasons we
lowered the measure threshold for Stage 1 during which providers are
changing their workflow processes to accurately incorporate information
into EHRs through either electronic exchange or manual entry. However,
for this measure, we do not limit the EP, eligible hospital or CAH to
only counting structured data received via electronic exchange, but
count in the numerator all structured data. By entering these results
into the patient's medical record as structured data, the EP, eligible
hospital or CAH is accomplishing a task that must be performed
regardless of whether the provider is attempting to demonstrate
meaningful use or not. We believe that entering the data as structured
data encourages future exchange of information.
Comment: A majority of commenters commenting on this measure
believe the proposed 50 percent threshold is too high. Suggestions for
alternative thresholds ranged from more than zero to eighty percent.
Some commenters suggested that the percentage calculation be replaced
with a numeric count.
Response: We are finalizing a percentage calculation for the
reasons discussed previously in this section under our discussion of
the burden created by the measures associated with the Stage 1
meaningful use objectives. We based the 50 percent threshold in the
proposed rule on our discussions with EHR vendors, current EHR users,
and laboratories and specifically requested comment on whether the 50
percent threshold was feasible. While only a small number of commenters
commented on this objective, those that did were overwhelming in favor
of either a count or a lower threshold. EPs especially were concerned
with our inability to impose any requirements on laboratory vendors.
Based on the comments received, we have modified our assessment of the
current environment for incorporating lab results into certified EHR
technology, and believe that a threshold lower than fifty percent is
warranted. We want to create a threshold that encourages, but does not
require, the electronic exchange of this information and commenters
indicated that 50 percent was too high given the current state of
electronic exchange of lab results. Therefore, we lower the threshold
to 40 percent.
Comment: Commenters requested clarification on what types of
laboratories could generate the lab results.
Response: The focus of this objective is to get as many lab results
as possible into a patient's electronic health record as structured
data. Limiting the objective to a specific type of laboratory would not
further this objective so therefore we leave it open to all lab tests
and laboratories.
Comment: Several commenters expressed concern regarding the
financial burden of establishing lab interfaces, especially for smaller
hospitals and practices.
Response: The ability to exchange information is a critical
capability of certified EHR technology. Exchange between lab and
provider and provider to provider of laboratory results reduces errors
in recording results and prevents the duplication of testing.
Therefore, we continue to include this objective within Stage 1 of
meaningful use although as noted above the measure

[[Page 44347]]

does not rely on the electronic exchange of information between the lab
and the provider.
Comment: We received comments requesting a listing of laboratory
tests with results that are in a numerical or positive/negative format.
Response: We consider it impractical to develop an exhaustive list
of such tests. Moreover, we believe further description of these tests
is unnecessary. It should be self-evident to providers when a test
returns a positive or negative result or a result expressed in numeric
characters. In these case, the results should be incorporated into a
patient's EHR as structured data.
Comment: Several commenters pointed out that many current EHR
vendors do not support the use of LOINC[supreg] codes and there is no
federal regulatory requirement for labs to transmit using this code set
or for that matter, any structured code set.
Response: Standards such as LOINC[supreg] codes are included in the
ONC final rule. However, this measure requires incorporation of lab
test results as structured data, but does not include a requirement for
transmission or electronic receipt of the results using certified EHR
technology.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(e)(2)(ii)
and eligible hospitals at Sec. 495.6(g)(3)(ii) of our regulations to
``More than 40 percent of all clinical lab tests results ordered by the
EP or by an authorized provider of the eligible hospital or CAH for
patients admitted to its inpatient or emergency department (POS 21 or
23) during the EHR reporting period whose results are in either in a
positive/negative or numerical format are incorporated in certified EHR
technology as structured data''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(h). The ability to calculate the measure is included in
certified EHR technology.
As noted previously in this section under our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices, the percentage is
based on labs ordered for patients whose records are maintained using
certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of lab tests ordered during the EHR
reporting period by the EP or authorized providers of the eligible
hospital or CAH for patients admitted to an eligible hospital's or
CAH's inpatient or emergency department (POS 21 & 23) whose results are
expressed in a positive or negative affirmation or as a number.
Numerator: The number of lab test results whose results
are expressed in a positive or negative affirmation or as a number
which are incorporated as structured data.
Threshold: The resulting percentage must be more than 40
percent in order for an EP, eligible hospital, or CAH to meet this
measure.
If an EP orders no lab tests whose results are either in a
positive/negative or numeric format during the EHR reporting period
they would be excluded from this requirement as described previously in
this section under our discussion of whether certain EP, eligible
hospital or CAH can meet all Stage 1 meaningful use objectives given
established scopes of practices. We do not believe any eligible
hospital or CAH would order no lab tests whose results are either in a
positive/negative or numeric format during the EHR reporting period.
NPRM EP/Eligible Hospital Objective: Generate lists of patients by
specific conditions to use for quality improvement, reduction of
disparities, research, and outreach.
Comment: A few commenters recommended eliminating this requirement
because they believe it is redundant of clinical quality reporting.
Response: We disagree that this is redundant of clinical quality
reporting. Clinical quality reporting does not guarantee usability for
all the purposes in the objective. One example of such a use is a
provider could not only generate list of patients with specific
conditions, but could stratify the output using other data elements in
the certified EHR technology that are entered as structured data. The
lists could also be utilized at an aggregate level for purposes of
research into disparities, which could result in targeted outreach
efforts.
Comment: Some commenters requested that if we finalize our proposal
to only require one report that we change the ``and'' in the objective
to ``or''.
Response: We are finalizing our measurement of only requiring one
report for Stage 1 of meaningful use and will change ``and'' to ``or''.
However, we note that all measures will be reconsidered in later stages
of meaningful use and multiple reports could be required in those
stages.
Comment: We received a few comments requesting the removal of the
terms ``reduction of disparities'' and ``outreach'' as there are no
actionable items or measures associated with the term. We also received
comments that the measurement should include the requirement that the
lists be stratified by race, ethnicity, preferred language, and gender
for initiatives targeted at reducing disparities.
Response: We disagree that actions to reduce disparities or conduct
outreach could not be guided by this report, especially if stratified
and aggregated reports of many providers are combined within large
organizations or among organizations. While we do not require such
stratification or aggregation or specify specific uses, that does not
preclude them.
Comment: Some commenters requested clarification of the term
specific condition.
Response: Specific conditions are those conditions listed in the
active patient problem list.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(e)(3)(i)
and for eligible hospitals at Sec. 495.6(g)(4)(i) of our regulations
to ``Generate lists of patients by specific conditions to use for
quality improvement, reduction of disparities, research, or outreach''.
NPRM EP/Eligible Hospital Measure: Generate at least one report
listing patients of the EP or eligible hospital with a specific
condition.
In the proposed rule, we said that an EP or eligible hospital is
best positioned to determine which reports are most useful to their
care efforts. Therefore, we do not propose to direct certain reports be
created. However, in order to ensure the capability can be utilized we
proposed to require EPs and hospitals to attest to the ability of the
EP or eligible hospital to create a report listing patients by specific
condition and to attest that they have actually done so at least once.
We received comments on this and address them and any revisions to the
proposed rule in the comment and response section below.
Comment: Commenters requested clarification that only one report
per EHR reporting period is required to meet the measure.
Response: Yes, only one report in required for any given EHR
reporting period. The report could cover every patient whose records
are maintained using certified EHR technology or a subset of those
patients at the discretion of the EP, eligible hospital or CAH.
Comment: A few commenters suggested the measure should be

[[Page 44348]]

expanded to require submission of the report to CMS or the States or to
the local health department.
Response: Submission raises many questions about what types of
information can be sent to different entities, how the information is
used, patient consent for sending the information, and many of the
issues, which add considerable complexity to this meaningful use
objective. Therefore, we are not requiring submission of the report to
CMS, the States or local health departments for Stage 1 of meaningful
use. We do note that this is one of the objectives for which a State
can submit modifications to CMS for approval.
Comment: Several commenters requested a list of condition
categories, a model report or the core data elements required to
satisfy the measure.
Response: As stated in the rule, we believe an EP, eligible
hospital, or CAH is best positioned to determine which reports are most
useful to their care efforts. Therefore, we do not propose to direct
certain reports be created.
Comment: For eligible hospitals, commenters stated that the
analysis of patient data is derived from post-discharge coding of
diagnosis and procedures and not problem lists.
Response: We do not specify that the list is limited to being
generated from the data problem list; rather, for the definition of
conditions we refer providers to those conditions contained in the
problem list.
Comment: One commenter stated that for privacy and confidentiality
reasons, patients should be allowed to opt out of any provider outreach
initiatives.
Response: Stage 1 of meaningful use does not require the submission
of these reports to other entities; rather, we require that the
provider generate these reports for their own use. We therefore do not
believe the generation of such reports raises privacy and
confidentiality concerns. We understand, however, that some patients
may have concerns about such lists being exchanged with others and will
consider such concerns should future meaningful use requirements focus
on exchange of these reports.
After consideration of the public comments received, we are
finalizing the meaningful use measure for EPs at Sec. 495.6(e)(3)(ii)
and for eligible hospitals and CAHs at Sec. 495.6(g)(4)(ii) of our
regulations as proposed.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(i). The ability to calculate the measure is included in
certified EHR technology.
As this measure relies on data contained in certified EHR
technology the list would only be required to include patients whose
records are maintained using certified EHR technology as discussed
previously in this section under our discussion of the burden created
by the measures associated with the Stage 1 meaningful use objectives.
We do not believe anything included in this objective or measure
limit any EP, eligible hospital or CAH from completing the measure
associated with this objective, therefore, we do not include an
exclusion.
NPRM EP Objective: Report ambulatory quality measures to CMS (or,
for EPs seeking the Medicaid incentive payment, the States).
Specific comments on the quality measures are discussed in section
II.A.3 of this final rule.
We are finalizing this meaningful use objective at Sec.
495.6(d)(10)(i) of our regulations ``Report ambulatory clinical quality
measures to CMS (or, for EPs seeking the Medicaid incentive payment,
the States)'' to better align with the descriptions in section II.A.3.
In response to our revised requirements for meeting meaningful use,
we are including this objective in the core set. Section 1848
(o)(2)(A)(iii) of the Act specifically includes submitting clinical
quality measures in meaningful use for EPs. Section 1903(t)(6)(D) of
the Act also anticipates that the demonstration of meaningful use may
include quality reporting to the States for the Medicaid program.
NPRM Eligible Hospital Objective: Report ambulatory quality
measures to CMS (or, for eligible hospitals seeking the Medicaid
incentive payment, the States).
We make a technical correction to this objective from the proposed
rule to ensure that it is clear to the public that we were referring to
hospital quality measures.
Specific comments on the quality measures are discussed in section
II.A.3 of this final rule.
After consideration of the public comments received, we are
finalizing this meaningful use objective at Sec. 495.6(d)(9)(i) to
account for our technical correction and to better align with the
descriptions in section II.A.3 as ``Report hospital clinical quality
measures to CMS (or, for eligible hospitals seeking the Medicaid
incentive payment, the States)''.
In response to our revised requirements for meeting meaningful use,
we are including this objective in the core set. Section 1886
(n)(3)(A)(iii) of the Act specifically includes submitting clinical
quality measures in meaningful use for eligible hospitals and CAHs.
Section 1903(t)(6)(D) of the Act also anticipates that the
demonstration of meaningful use may include quality reporting to the
States for the Medicaid program.
NPRM EP Measure: For 2011, an EP would provide the aggregate level
data for the numerator, denominator, and exclusions through attestation
as discussed in section II.A.3 of this final rule. For 2012, an EP
would electronically submit the measures that are discussed in section
II.A.3. of this final rule.
Specific comments on the quality measures themselves are discussed
in section II.A.3 of this final rule.
After consideration of the public comments received, we are
finalizing this meaningful use objective at Sec. 495.6(d)(10)(ii) as
proposed.
NPRM Eligible Hospital Measure: For 2011, an eligible hospital or
CAH would provide the aggregate level data for the numerator,
denominator, and exclusions through attestation as discussed in section
II.A.3 of this final rule. For 2012, an eligible hospital or CAH would
electronically submit the measures as discussed in section II.A.3. of
this final rule. Specific comments on the quality measures are
discussed in section II.A.3 of this final rule. After consideration of
the public comments received, we are finalizing this meaningful use
objective at 495.6(f)(9)(ii) as proposed.
NPRM EP Objective: Send reminders to patients per patient
preference for preventive/follow-up care.
In the proposed rule, we described patient preference as the
patient's choice between internet based delivery or delivery not
requiring internet access. We are revising that description based on
comments as discussed below.
Comment: Commenters have pointed out that requirements to
accommodate reasonable requests by individuals to receive
communications by means other than the means preferred by the provider
already exist under HIPAA at 45 CFR 164.522(b).
Response: As we stated in the proposed rule, patient preference
refers to the patient's preferred means of transmission of the reminder
from the provider to the patient, and not inquiries by the provider as
to whether the patient would like to receive reminders. In the proposed
rule, we had proposed that patient preference be limited to the choice
between internet based or non-internet based. In order to avoid
unnecessary confusion and duplication of requirements, EPs meet

[[Page 44349]]

the aspect of ``per patient preference'' of this objective if they are
accommodating reasonable requests as outlined in 45 CFR 164.522(b),
which are the guidance established under HIPAA for accommodating
patient requests.
After consideration of the public comments received, we are
finalizing the meaningful use objective at Sec. 495.6(e)(4)(i) of our
regulations as proposed.
NPRM EP Measure: Reminder sent to at least 50 percent of all unique
patients seen by the EP or admitted to the eligible hospital that are
50 and over.
For the final rule, we are changing the measure to recognize that
this is an EP only objective. Therefore, we make the technical
correction of striking ``or admitted to the eligible hospital''.
Comment: Commenters indicated that ``practice management systems''
or ``patient management systems'' are commonly used for this function
and that integrating them into certified EHR technology would be
expensive and time consuming for little value in return.
Response: While we disagree with commenters who suggest there is
little to no value in having information about reminders sent to
patients available across all the systems used by the provider, we do
not assert that such integration of systems must be in place to meet
this measure. ONC provides for a modular approach that would allow
these systems to be certified as part of certified EHR technology.
Comment: Some commenters pointed out that many patients seen during
an EHR reporting period will not be sent a reminder during that same
period. Commenters said this is especially true for the 90-day EHR
reporting period, but for some services could be true of the full year
EHR reporting period as well. Other commenters also pointed out that
reminders are not limited to the older population and that children
especially may require many reminders on immunizations.
Response: We agree with commenters that many patients not seen
during the EHR reporting period would benefit from reminders. As the
action in this objective is the sending of reminders, we base the
revised measure on that action. This focus is supported by numerous
public comments, including those by the HIT Policy Committee.
Therefore, we are changing the requirement to account for all patients
whose records are maintained using certified EHR technology regardless
of whether they were seen by the EP during the EHR reporting period.
This greatly expanded denominator caused us to reconsider both our
threshold and the age limit. In order to increase the probability that
a patient whose records are maintained in certified EHR technology will
be eligible for a reminder we change the age limit of the population to
65 years old or older or 5 years old or under. We believe that older
patient populations are more likely to have health statuses that will
indicate the need for reminders to be sent and this segment of the
population is have higher rates of chronic diseases which will require
coordination in preventive care such as vaccine reminders. Likewise,
the 5 years old and under population will require a multitude of
childhood vaccinations such as influenza and will benefit from
reminders. However, we do not believe that changing the age limit of
the affected population will result in 50 percent of every patient
whose records maintained in certified EHR technology requiring a
reminder during the EHR reporting period. This is especially true for
the first payment year when the EHR reporting period is only 90 days.
We are also concerned about the variability among specialists' scopes
of practice that may affect the number of patients in the denominator
for which a reminder is appropriate. Therefore, we lower the threshold
to 20 percent. The EP has the discretion to determine the frequency,
means of transmission and form of the reminder limited only by the
requirements of 45 CFR 164.522(b) and any other applicable federal,
state or local regulations that apply to them. After consideration of
the public comments received, we are modifying the meaningful use
measure at Sec. 495.6(e)(4)(ii) to ``More than 20 percent of all
patients 65 years or older or 5 years old or younger were sent an
appropriate reminder during the EHR reporting period''.
We further specify that in order to meet this objective and
measure, an EP must use the capabilities Certified EHR Technology
includes as specified and standards at 45 CFR 170.304(d). The ability
to calculate the measure is included in certified EHR technology.
As noted previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, the denominator is based on patients whose records are
maintained using certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients 65 years old or
older or 5 years older or younger.
Numerator: The number of patients in the denominator who
were sent the appropriate reminder.
Threshold: The resulting percentage must be more than 20
percent in order for an EP to meet this measure.
As addressed in other objectives and in comment responses, if an EP
has no patients 65 years old or older or 5 years old or younger with
records maintained using certified EHR technology that EP is excluded
from this requirement as described previously in this section under our
discussion of whether certain EP, eligible hospital or CAH can meet all
Stage 1 meaningful use objectives given established scopes of
practices.
NPRM EP/Eligible Hospital Objective: Document a progress note for
each encounter. In the proposed rule, we discussed this objective, but
did not propose it for Stage 1 of meaningful use. We noted our belief
that documentation of progress notes is a medical-legal requirement and
a component of basic EHR functionality, and is not directly related to
advanced processes of care or improvements in quality, safety, or
efficiency.
Comment: We received a limited number of comments regarding our
decision not to include documentation of progress notes as an
objective. The commenters generally fell into three categories: Those
who supported inclusion of this objective in the final rule, those who
supported its inclusion only if certain caveats are met and those who
supported our proposal not to include it as an objective for Stage 1 of
meaningful use. Concerns raised by those supporting the inclusion of
this objective included the possibility that an EP may keep paper
progress notes in conjunction with use of certified EHR technology as
prescribed by Stage 1 of meaningful use and that such a choice by EPs
would create the possibility of handwriting illegibility, loss of
information and reduced access to health information by both patients
and other providers. Another concern raised is that if the objective is
not included in the criteria for the definition of meaningful use
designers of EHR technology will not include the function in their
products. The advocates in the second category agree with the above,
but only support inclusion with certain caveats. Some of these caveats
include preserving the option of transcription, voice recognition
software, and direct entry by an EP or any combination of these.
Another caveat is that progress notes not be required to be entered as
structured data. The third category supports exclusion of progress
notes as an objective for two fundamentally different reasons. Some
commenters

[[Page 44350]]

supported exclusion because they believe that the volume of objectives
was already too high for Stage 1 of meaningful use and therefore
opposed anything that would increase the volume.
Other commenters agree with our proposal that progress notes is
already a fundamental part of current EHR products and did not
represent a move that advances the use of EHRs.
Response: We predicated our discussion in the proposed rule on the
assumption that progress notes are a component of basic EHR
functionality. We still believe this is the case and have not received
evidence to the contrary. However, we failed to clearly articulate the
ramifications of our belief. Our view continues to be that an EP who
incorporates the use of EHRs into a practice and complies with
meaningful use criteria is unlikely to maintain separate paper progress
notes outside of the EHR system. We believe that the potential
disruption in workflow of the efforts to merge paper progress notes
with the other records in certified EHR technology in order to have a
complete medical record far outweighs the burden of electronically
capturing progress notes. Moreover, we continue to believe this is a
highly unlikely scenario. As with any meaningful use objective, it is
important to have clear, definitive definitions. However, our
observations of discussions held in public forums by the medical
community and review of literature have led us to conclude that it not
possible to provide a clear, definitive definition of a progress note
at this time. We note that commenters recommending the documentation of
a progress note be included as an objective did not attempt to define
the term. Nor did commenters suggest an associated measure. We continue
to believe that there is insufficient need and upon review believe
there is insufficient consensus regarding the term progress note to
include this objective for Stage 1 of meaningful use.
After consideration of the public comments received, we do not
include this meaningful use objective in the final rule.
NPRM EP/Eligible Hospital Measure: N/A.
NPRM EP Objective: Implement five clinical decision support rules
relevant to specialty or high clinical priority, including for
diagnostic test ordering, along with the ability to track compliance
with those rules.
NPRM Eligible Hospital Objective: Implement 5 clinical decision
support rules related to a high priority hospital condition, including
diagnostic test ordering, along with the ability to track compliance
with those rules.
First, we make a technical correction. On page 1856 of the proposed
rule, we described this objective for eligible hospitals as ``Implement
five clinical decision support rules relevant to specialty or high
clinical priority, including for diagnostic test ordering, along with
the ability to track compliance with those rules.'' The underlined
language was inappropriately carried over from the EP objective in this
instance and in the regulation text. The table contained our intended
language of ``Implement 5 clinical decision support rules related to a
high priority hospital condition, including diagnostic test ordering,
along with the ability to track compliance with those rules.'' Many
commenters pointed this discrepancy out to us and we appreciate their
diligence.
Comment: Nearly half of the commenters mentioning clinical decision
support suggested that the term needed additional clarification. Some
commenters said that the term was too vague and open to interpretation
while others said it was too specific. Other commenters provided
recommendations on what a clinical decision support rule should mean or
which elements it should include. These were evidence-based medicine
templates, decision trees, reminders, linked online resources,
scientific evidence, and consensus.
Response: In the proposed rule, we described clinical decision
support as HIT functionality that builds upon the foundation of an EHR
to provide persons involved in care processes with general and person-
specific information, intelligently filtered and organized, at
appropriate times, to enhance health and health care. We purposefully
used a description that would allow a provider significant leeway in
determining the clinical decision support rules that are more relevant
to their scope of practice and benefit their patients in the greatest
way. In the proposed rule, we asked providers to relate the rules they
select to clinical priorities and diagnostic test ordering. We do not
believe that adding a more limiting description to the term clinical
decision support would increase the value of this objective. We believe
that this determination is best left to the provider taking into
account their workflow and patient population.
Comment: Several commenters objected to the requirement of five
clinical decision support rules when the HIT Policy Committee only
recommended one. Others disagreed with our proposed assertion that most
EPs would report on at least five clinical quality measures from
section II.A.3 of the proposed rule and eligible hospitals will all
report on at least five.
Response: We accept the argument that there is value in focusing
initial CDS efforts on a single CDS rule in order to get it right the
first time and lay the foundation for future, broader CDS
implementation. This will help to prevent the unintended negative
consequences associated with poorly implemented CDS systems when
providers have attempted to do too much too soon.
We agree that the appropriate balance is to require some degree of
meaningful use of CDS in Stage 1 without overburdening providers with
too many areas to focus on at once. Since CDS is one area of health IT
in which significant evidence exists that it can have a substantial
positive impact on the quality, safety and efficiency of care delivery,
it is important that it be included as a core objective with this more
limited expectation. That requirement will assure that all meaningful
users have taken the first steps in CDS implementation but allow them
to focus as necessary on a single high-priority area at the outset in
order to ensure that they can devote the appropriate level of attention
to their first CDS priority. We anticipate that this will set the
foundation for much more expansive CDS support in the near future.
Comment: A commenter inquired if modification of the clinical
decision support tool negates the EHR's certification status.
Response: We believe this is a question on certification status and
is outside of the scope of this rule. ONC discusses what would affect
Certified EHR Technology's certified status in their final rule (75 FR
36157) entitled ``Establishment of the Temporary Certification Program
for Health Information Technology''.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at 495.6(d)(11)(i) to
``Implement one clinical decision support rule relevant to specialty or
high clinical priority along with the ability to track compliance with
that rule.''
After consideration of public comments received, we are modifying
the meaningful use objective for eligible hospitals and CAHs at Sec.
495.6(f)(10)(i) of our regulations as ``Implement one clinical decision
support rule related to a high priority hospital condition along with
the ability to track compliance with that rule.''

[[Page 44351]]

We believe that clinical decision support is one of the most common
tools that uses the information collected as structured data included
in the core set and therefore also include clinical decision support in
the core as the information needed to support it are already included
in the core set.
NPRM EP/Eligible Hospital Measure: Implement five clinical decision
support rules relevant to the clinical quality metrics the EP/Eligible
Hospital is responsible for as described further in section II.A.3. of
this final rule.
In the proposed rule, we said that clinical decision support at the
point of care is a critical aspect of improving quality, safety, and
efficiency. Research has shown that decision support must be targeted
and actionable to be effective, and that ``alert fatigue'' must be
avoided. Establishing decision supports for a small set of high
priority conditions, ideally linked to quality measures being reported,
is feasible and desirable. Meaningful use seeks to ensure that those
capabilities are utilized.
Comment: Commenters, both in the requests for clarification of the
term clinical decision support and explicitly in response to this
measure, expressed concern about the linkage to a particular quality
measure.
Response: We agree that such linkage puts constraints on the
provider and eliminates many types of clinical decision support rules
that may be beneficial. Therefore, we revise this measure to require
that at least one of the five rules be related to a clinical quality
measure, assuming the EP, eligible hospital or CAH has at least one
clinical quality measure relevant to their scope of practice. However,
we strongly encourage EPs, eligible hospitals and CAHs to consider the
clinical quality measures as described in section II.A.3 when deciding
which additional rules to implement for this measure.
Comment: Several commenters, including the HIT Policy Committee,
recommended that we focus at least one clinical decision support rule
on efficiency of care.
Response: In light of decision to limit the objective to one
clinical decision support rule, we do not believe that it is
appropriate to further to link that rule to specific requirements and
therefore give the EP, eligible hospital or CAH discretion on what to
focus the clinical decision support rule used to satisfy this measure.
Comment: A few commenters asked for clarification of how the ``* *
* with the ability to track compliance with those rules'' language of
the proposed objective for clinical decision support rules relates to
the associated measures.
Response: While an integral part of the objective and certified EHR
technology, we did not include this aspect of the objective in the
measure for Stage 1 of meaningful use. An EP, eligible hospital, or CAH
is not required to demonstrate to CMS or the States its compliance
efforts with the CDS recommendations or results for Stage 1 either at
initial attestation or during an subsequent review of that attestation.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(e)(11)(ii)
and for eligible hospitals and CAHs at Sec. 495.6(g)(10)(ii) to
``Implement one clinical decision support rule.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(e) for EPs and 45 CFR 170.306(c). The ability to calculate the
measure is included in certified EHR technology.
Given the added flexibility added to this measure in the final
rule, we do not believe that any EP, eligible hospital, or CAH would be
in a situation where they could not implement one clinical decision
support rules as described in the measure. Therefore, there are no
exclusions for this objective and its associated measure.
NPRM EP/Eligible Hospital Objective: Submit claims electronically
to public and private payers.
Comment: Over three quarters of those commenting on this objective
recommended that it be eliminated for various reasons. The majority of
the other commenters requested a modification. Reasons given are:

--Electronic claims submission is already covered under HIPAA;
--Electronic claims submission is not part of traditional EHR
technology;
--Billing systems would have to be certified adding to cost and burden
of compliance with meaningful use even though when electronic claims
submission for Medicare is already in place for all by the very
smallest of providers;
--Electronic claims submission falls outside of the scope of the
statutory mandate given by Congress to implement the HITECH legislation
to improve care delivery through broad scale adoption and utilization
of Electronic Health Record technologies. This function does not impact
the quality of care delivered and relies on product components that are
traditionally part of practice management systems;
--Private payers may customize the HIPAA-recognized standard
transactions, which limits the ability of practices to obtain accurate
information prior to receiving an Explanation of Benefits based on the
actual services provided and negates many of the benefits of having
standardized transactions;
--Workers' compensation and auto insurers do not accept electronic
claims; and
--Many providers use clearinghouses and they requested that the burden
of electronic submission be shifted to the clearinghouse.

Response: In our proposed rule, we specifically cite that the
existence of standard transactions available under HIPAA for submitting
claims as a reason for including this objective as a meaningful use
objective for Stage 1. We also disagree that this objective is outside
the scope of meaningful use as defined by the HITECH legislation. The
HITECH legislation states the Secretary shall seek to improve not only
health care quality, but also the use of electronic health records. In
addition, we note that sections 1848(o)(2)(A) and 1886(n)(3)(A) of the
Act provide that to be considered a meaningful EHR user, an EP,
eligible hospital, or CAH must demonstrate use of certified EHR
technology in a meaningful manner as defined by the Secretary. In the
Medicaid context, any demonstration of meaningful use must be
``acceptable to the Secretary'' under 1903(t)(6). We believe this
language gives us broad discretion to require the use of certified EHR
technology in a manner that not only improves health care quality, but
results in gains in efficiency, patient engagement and enhances privacy
and security. Under the broad definition of electronic health record
established by ONC in their final rule, electronic exchange of
eligibility information and claims submission could certainly improve
the use of electronic health records.
We believe that inclusion of administrative simplification in
meaningful use is an important long-term policy goal for several
reasons. First, administrative simplification can improve the
efficiency and reduce unnecessary costs in the health care system as a
whole; the small percentage of paper claims submitted represent a
disproportionate administrative cost for health plans; the
reconciliation of billing charges for services not eligible for payment
creates a significant burden for providers, health plans, and most

[[Page 44352]]

significantly, for patients. Second, the integration of administrative
and clinical information systems is necessary to support effective
management and coordinated care in physician practices. The ability to
leverage clinical documentation in support of appropriate charge
capture (for example, for preventive counseling, or immunizations
provided), the ability to link lists of patients needing clinical
reminders with patient contact information, the ability to stratify
quality measures by patient demographic factors (for example, race/
ethnicity) and insurer status (for example, Medicare beneficiaries),
are examples.
In addition, there are important benefits to the inclusion of
administrative transactions in criteria and standards for the
certification of EHR technologies. The option of modular certification
provides an opportunity for eligible professionals and hospitals to use
practice management systems or clearinghouses that provide these
functions as components of their certified EHR technologies. However,
we recognize there is not current agreement as to which systems
constitute an EHR and that many entities may view their billing system
to be outside their EHR and that the vendors of some practice
management systems that provide these functionalities in doctors'
offices today may not be prepared to seek certification for these
legacy products in 2010/2011. We also recognize that the introduction
of the X12 5010 standards in January 2012 would further complicate the
certification process for stage 1. We also acknowledge that we do not
have the ability to impose additional requirements on third-party
payers or clearinghouses to participate in this exchange beyond what is
required by HIPAA. Based on these considerations, we are not including
this objective in the final rule for Stage 1 of meaningful use.
However, the introduction of these new X12 5010 standards, and the
coming introduction of ICD-10 in 2013 provides an opportunity for
change in Stage 2 of meaningful use. In order to meet these and other
administrative simplification provisions, most providers will have to
upgrade their practice management systems or implement new ones. This
provides an important opportunity to achieve alignment of capabilities
and standards for administrative transactions in EHR technologies with
the administrative simplification provisions that the Affordable Care
Act provides for health plans and health plan clearinghouses. We
therefore intend to include administrative transactions as a part of
Stage 2 of meaningful use, and expect providers and vendors to take
this into consideration in their decisions leading up to 2013.
Comment: Commenters focusing on how meaningful use would translate
into the Medicare Advantage program said that the measure of checking
eligibility electronically and submitting claims electronically for 80
percent of patients seen would not be possible. They explained that for
most of their visits, there is no insurance company with which to
check, and there is no insurance company to whom to submit claims. They
described themselves as a capitated system and for most of the patient
visits, the concept of checking eligibility and submitting claims in
not relevant.
Response: This comment illustrates the difficulties in adopting FFS
Medicare meaningful use measures for qualifying MA organizations, MA-
affiliated hospitals and MA EPs. For purposes of determining meaningful
use in a Medicare Advantage environment, we agree that submitting
claims electronically is not a useful standard in a capitated
environment where virtually all patients are members of the same
insurance plan.
After consideration of the public comments received, we are not
finalizing the objective ``Submit claims electronically to public and
private payers''.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
claims filed electronically by the EP or the eligible hospital.
We received many comments on the difficulty in calculating this
measure. However, as all measures are tied to objectives and we do not
finalize this objective we also do not finalize the measure.
NPRM EP/Eligible Hospital Objective: Check insurance eligibility
electronically from public and private payers.
Comment: Over three quarters of those commenting on this objective
recommended that it be eliminated for various reasons. Some of the most
common reasons for elimination are:

--Electronic eligibility checks are already covered under HIPAA;
--Electronic eligibility checks are not part of traditional EHR
technology;
--Billing and practice management systems that are used for electronic
eligibility checks would have to be certified as certified EHR
technology adding to cost and burden;
--Electronic eligibility checks is outside of the scope of the mandate
given by Congress to implement the HITECH legislation in such a way as
to improve care delivery through broad scale adoption and utilization
of Electronic Health Record technologies. This function does not impact
the quality of care delivered and relies on product components that are
traditionally part of practice management systems;
--Information returned on typical electronic eligibility checks is of
little use to providers--as responses are usually a yes/no answer on
coverage, but not the specificity of coverage;
--The current poor adoption rate of the use of electronic eligibility
verification is indicative of the deficiencies in current methods;
--Once eligibility checking becomes easy to use and reliable, no
incentive will be required as providers will adopt the process readily;
--Payers do not guarantee their eligibility results;
--Many payers are still not in compliance with the HIPAA 270/271
electronic eligibility standard. Therefore the objective should only be
required if compliance with the standard by health plans can be
guaranteed; and
--Private payers may customize the HIPAA-recognized standard
transactions, which limits the ability of practices to obtain accurate
information prior to receiving an Explanation of Benefits based on the
actual services provided and negates many of the benefits of having
standardized transactions.

Response: In our proposed rule, we specifically cite the existence
of the standard transaction for eligibility checks available under
HIPAA as an enabling factor for the inclusion this objective. As with
the electronic claims submission objective discussed above, we disagree
that this objective is outside the scope of meaningful use as defined
by the HITECH legislation. The HITECH legislation requires the
Secretary to seek to improve not only health care quality, but also the
use of electronic health records. Under the broad definition of
electronic health record established by ONC in their final rule,
electronic exchange of eligibility information could certainly improve
the use of electronic health records. However, we recognize there is
not current agreement as to which systems constitute an EHR and that
many entities may view their practice management system to be outside
their EHR. We also acknowledge that we do not have the ability to
impose additional requirements on third-party payers to participate in
this

[[Page 44353]]

exchange beyond what is required by HIPAA. Third-party payers can
provide simple yes/no responses, modify the standard transactions and
do not have to guarantee their results. We agree with commenters that
this significantly devalues the results of this objective. However, we
do believe that as electronic records and exchange based on this and
considerations that commenters nearly universally considered this to
not be a function of EHR, we are not including this objective in the
final rule for Stage 1 of meaningful use. However, we do believe that
inclusion of a robust system to check insurance eligibility
electronically is an important long term policy goal for meaningful use
of certified EHR technology and we intend to include this objective as
well as electronic claims submission Stage 2.
After consideration of the public comments received, we are not
finalizing the objective to ``Check insurance eligibility
electronically from public and private payers'' or any modification
thereof. Given that we are not finalizing the objective, we also are
not finalizing the associated EP and eligible hospital/CAH measures.
The second health outcomes policy priority identified by the HIT
Policy Committee is to engage patients and families in their
healthcare. The following care goal for meaningful use addresses this
priority:
Provide patients and families with timely access to data,
knowledge, and tools to make informed decisions and to manage their
health.
As explained in the proposed rule, we do not intend to preempt any
existing Federal or State law regarding the disclosure of information
to minors, their parents, or their guardians in setting the
requirements for meaningful use. For this reason, we defer to existing
Federal and State laws as to what is appropriate for disclosure to the
patient or their family. For purposes of all objectives of the Stage 1
criteria of meaningful use involving the disclosure of information to a
patient, a disclosure made to a family member or a patient's guardian
consistent with Federal and State law may substitute for a disclosure
to the patient.
Comment: Several commenters requested that all objectives under the
health care policy priority be combined, as they are redundant.
Response: We disagree that they are redundant and believe each
serves a unique purpose. We will more fully describe those purposes in
the discussion of each objective.
NPRM EP Objective: Provide patients with an electronic copy of
their health information (including diagnostics test results, problem
list, medication lists, allergies) upon request.
NPRM Eligible Hospital Objective: Provide patients with an
electronic copy of their health information (including diagnostic test
results, problem list, medication lists, allergies, discharge summary,
procedures), upon request
The purpose of this objective is to provide a patient's health
information to them electronically and in a human readable format and
in accordance with the standards specified in the ONC final rule
subject to its availability to the provider electronically and any
withholding under regulations related to the HIPAA Privacy Act at 45
CFR 164.524, Access of individuals to protected health information.
In the proposed rule, we indicated that electronic copies may be
provided through a number of secure electronic methods (for example,
personal health record (PHR), patient portal, CD, USB drive). We have
changed this description in response to comments to that when
responding to patient requests for information, the EP, eligible
hospital, or CAH should accommodate patient requests in accordance with
45 CFR 164.524, Access of individuals to protected health information.
The objective provides additional criteria for meeting meaningful use
concerning the electronic copy or provision of information that the EP,
eligible hospital or CAH maintains in or can access from the certified
EHR technology and is maintained by or on behalf of the EP, eligible
hospital or CAH.
Comment: We received requests for clarification that only
information that the EP, eligible hospital, or CAH has available
electronically must be provided to the patient.
Response: Yes, we limit the information that must be provided
electronically to that information that exists electronically in or
accessible from the certified EHR technology and is maintained by or on
behalf of the EP, eligible hospital or CAH. We believe it is
impractical to require information maintained on paper to be
transmitted electronically. Furthermore, given the other criteria of
Stage 1 of meaningful use, we believe sufficient information will be
available through certified EHR technology, especially given the
inclusion of many of the foundational objectives that were included in
the core set.
Comment: Commenters pointed out that the HIPAA Privacy Rule permits
licensed healthcare professionals to withhold certain information if
its disclosure would cause substantial harm to the patient or another
individual.
Response: As previously discussed for patient preference, we do not
seek to conflict with or override HIPAA through meaningful use
requirements. Therefore, an EP, eligible hospital, or CAH may withhold
information from the electronic copy of a patient's health information
in accordance with the regulations at 45 CFR 164.524, Access of
individuals to protected health information.
Comment: Commenters requested clarification of the term ``health
information'' or alternatively a list of elements required to satisfy
the objective.
Response: Subject to the withholding described above, an EP,
eligible hospital, or CAH should provide a patient with all of the
health information they have available electronically. At a minimum,
this would include the elements listed in the ONC final rule at 45 CFR
170.304(f) for EPs and 45 CFR 170.306(d) for eligible hospitals and
CAHs as required for EHR technology to become certified.
Comment: Several commenters indicated that a provider should be
allowed to charge a fee for providing an electronic copy of a patient's
health information.
Response: We do not have the authority under the HITECH Act to
regulate fees in this manner. Rather, the charging of fees for this
information is governed by the HIPAA Privacy Rule at 45 CFR
164.524(c)(4) (which only permits HIPAA covered entities to charge an
individual a reasonable, cost-based fee for a copy of the individual's
health information). We would expect these costs to be very minimal
considering that the ability to generate the copy is included in
certified EHR technology. Additional clarification on the fee that a
HIPAA covered entity may impose on an individual for an electronic copy
of the individual's health information will be addressed in upcoming
rulemaking.
Comment: Commenters pointed out that the general term ``allergies''
is inconsistent with other objectives of Stage 1 and with the
capabilities mandated by certification under the ONC IFR, which address
only medication allergies.
Response: As we have stated on several other objectives, we
encourage all EPs, eligible hospitals, and CAHs to work with their EHR
technology designers to make capabilities most relevant to their
individual practices of care. However, we have maintained that at a
minimum the capabilities that are part of certification should be
included

[[Page 44354]]

and those should be the basis for meaningful use so we do modify this
objective to medication allergies to align it with other objectives and
certification.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(d)(12)(i)
of our regulations to ``Provide patients with an electronic copy of
their health information (including diagnostics test results, problem
list, medication lists, medication allergies) upon request'' and for
eligible hospitals and CAHs at Sec. 495.6(f)(11)(i) of our regulations
to ``Provide patients with an electronic copy of their health
information (including diagnostic test results, problem list,
medication lists, medication allergies, discharge summary, procedures),
upon request''.
We include this objective in the core set as it is integral to
involving patients and their families in their provision of care and
was recommended by the HIT Policy Committee for inclusion in the core
set.
NPRM EP/Eligible Hospital Measure: At least 80 percent of all
patients who request an electronic copy of their health information are
provided it within 48 hours.
In the proposed rule, we pointed out that all patients have a right
under ARRA to an electronic copy of their health information. We said
that our purpose for including it in meaningful use was to ensure that
this requirement in met in a timely fashion. We also said that
providing patients with an electronic copy of their health information
demonstrates one of the many benefits health information technology can
provide and we believe that it is an important part of becoming a
meaningful EHR user. We received requests for clarifications on what
must be provided and in what timeframe. We address those requests in
the comment and response section below. We note here that participation
in the Medicare and Medicaid EHR incentive programs is voluntary.
Nothing in the Stage 1 criteria of meaningful use supersedes or exempts
an EP, eligible hospital or CAH from complying with otherwise
applicable requirements to provide patients with their health
information.
Comment: An overwhelming majority of commenters commenting on this
objective indicated that the 48-hour time frame is too short and
inconsistent with the HIPAA Privacy Rule.
Response: We discuss the reasoning for the time frame in the
proposed rule. We state that this measure seeks to ensure that a
patient's request is met in a timely fashion. Providing patients with
an electronic copy of their health information demonstrates one of the
many benefits health information technology can provide. We also
believe that certified EHR technology will provide EPs, eligible
hospitals, and CAHs more efficient means of providing copies of health
information to patients, which is why we proposed that a request for an
electronic copy be provided to the patient within 48 hours.
In the final rule, we further point out that this objective is
limited to health information maintained and provided electronically
while HIPAA can require the retrieval, copying and mailing of paper
documents. For this reason, we do not believe the timeframes under this
meaningful use objective and the HIPAA Privacy Rule must be aligned.
However, we appreciate that the 48-hour timeframe may be burdensome for
some providers, particularly for those providers who do not operate 24/
7. We therefore are lengthening the timeframe to three business days.
Business days are defined as Monday through Friday excluding federal or
state holidays on which the EP, eligible hospital, or CAH or their
respective administrative staffs are unavailable. As an example if a
patient made a request for an electronic copy of their health
information on Monday then the EP, eligible hospital, or CAH would have
until the same time on Thursday to provide the information assuming
there were no intervening holidays. If provision of the copy involves
the mailing of physical electronic media, then it would need to be
mailed on the Thursday.
Comment: Some commenters believed the 80 percent threshold was too
high or introduced examples of extraordinary circumstances such as
natural disasters or system crashes that would indicate a lower
threshold is needed to accommodate them.
Response: We reduce the threshold to over 50 percent as this
objective meets the criteria of relying solely on a capability included
as part of certified EHR technology and is not, for purposes of Stage 1
criteria, reliant on the electronic exchange of information, as
explained under our discussion of the objective of maintain an up-to-
date problem list. As this is a relatively new capability that was not
available to either providers or patients before the introduction of
EHRs, we do not believe it meets the same standard of practice as
maintaining an up-to-date problem list and therefore adopt a threshold
of 50 percent (rather than 80 percent).
Comment: We received comments that were concerned about the
reporting burden of this requirement.
Response: We believe that as long as the request by the patient is
accurately recorded in the certified EHR technology then the certified
EHR technology should be able to calculate the measure. Recording
patient requests for certain actions should be part of the expectations
of meaningful use of certified EHR technology. If the EP, eligible
hospital, or CAH records the requests using certified EHR technology,
certified EHR technology will be able to assist in calculating both the
numerator and denominator. If the requests are recorded by another
means at the choice of the provider, the provider would be responsible
for determining the denominator.
Comment: Commenters inquired if third-party requests for
information are included in the denominator.
Response: Only specific third party requests for information are
included in the denominator. As we stated in the opening discussion for
this health care priority, providing the copy to a family member or
patient's authorized representative consistent with federal and state
law may substitute for a disclosure of the information to the patient
and count in the numerator. A request from the same would count in the
denominator. All other third party requests are not included in the
numerator or the denominator.
Comment: Commenters inquired if asking the patient to register for
their own personal health record (PHR) satisfies the intent of the
objective.
Response: EPs, eligible hospitals and CAHs are to provide the
information pursuant to the reasonable accommodations for patient
preference under 45 CFR164.522(b). To be included in this measure, the
patient has already requested an electronic method. While having a
third party PHR certainly would be one method, assuming the provider
could populate the PHR with all the information required to meet this
objective. The provider should provide the same level of assistance to
the patient that would be provided as if they maintained their own
patient portal.
Comments: Comments were received requesting the format and media
for the provision of the health information.
Response: As this is for use by the patient, the form and format
should be human readable and comply with the HIPAA Privacy Rule, as
specified at 45 CFR 164.524(c). In addition, efforts should be made to
make it easily understandable to the patient. The media could be any
electronic form such as patient portal, PHR, CD, USB fob, etc. As
stated in the previous response, EPs, eligible hospitals and CAHs are
expected to make reasonable

[[Page 44355]]

accommodations for patient preference as outlined in 45 CFR 164.522(b).
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(12)(i)
and for eligible hospitals at Sec. 495.6(f)(11)(i) of our regulations
to ``More than 50 percent of all patients of the EP or the inpatient or
emergency departments of the eligible hospital or CAH (POS 21 or 23)
who request an electronic copy of their health information are provided
it within 3 business days.''
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(f) for EPs and 45 CFR 170.306(d) for eligible hospitals and
CAHs. The ability to calculate the measure is included in certified EHR
technology.
As the provision of the electronic copy is limited to the
information contained within certified EHR technology, this measure is
by definition limited to patients whose records are maintained using
certified EHR technology as described previously in this section under
our discussion of the burden created by the measures associated with
the Stage 1 meaningful use objectives.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: The number of patients of the EP or eligible
hospital's or CAH's inpatient or emergency departments (POS 21 or 23)
who request an electronic copy of their electronic health information
four business days prior to the end of the EHR reporting period.
Numerator: The number of patients in the denominator who
receive an electronic copy of their electronic health information
within three business days.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital, or CAH to meet this
measure. As addressed in other objectives and in comment response, if
the EP, eligible hospital, or CAH has no requests from patients or
their agents for an electronic copy of patient health information
during the EHR reporting period they would be excluded from this
requirement as described previously in this section under our
discussion of whether certain EP, eligible hospital or CAH can meet all
Stage 1 meaningful use objectives given established scopes of
practices.
NPRM Eligible Hospital Objective: Provide patients with an
electronic copy of their discharge instructions and procedures at time
of discharge, upon request.
The purpose of this objective is to provide the option to patients
to receive their discharge instructions electronically. Discharge
instructions would not necessarily be included in a copy of health
information and it is unlikely that a patient would request a copy of
their health information at every discharge. This objective is unique
to eligible hospitals and CAHs.
Comment: We received several comments suggesting that we eliminate
or clarify the term ``procedures.''
Response: As we believe the terms ``instructions'' and
``procedures'' are interchangeable as used in this objective, we are
removing the term ``procedures'' from the objective. We left this term
in the provision of electronic copy of health information as the term
``instructions'' is not in that objective. We clarify that the term
``instructions'' means any directions that the patient must follow
after discharge to attend to any residual conditions that need to be
addressed personally by the patient, home care attendants, and other
clinicians on an outpatient basis.
Comment: Commenters pointed out that the HIPAA Privacy Rule permits
licensed healthcare professionals to withhold certain information if
its disclosure would cause substantial harm to the patient or another
individual.
Response: We reiterate that it is not our intent for the meaningful
use objectives to conflict or override the HIPAA Privacy Rule through
meaningful use requirements. Therefore an EP, eligible hospital, or CAH
may withhold information from the electronic copy to the extent they
are permitted or required to do so in accordance with the regulations
at 45 CFR 164.524.
Comment: Some commenters recommended that hospitals should be
required to either provide every patient an electronic copy of their
discharge instructions or at least inform them of the option to receive
it electronically.
Response: We believe it would be too burdensome to provide every
patient an electronic copy of his or her discharge instructions.
Furthermore, we anticipate that many, if not most, patients will prefer
a paper copy during the years of Stage 1. While we certainly encourage
eligible hospitals to inform their patients of the option to receive
their discharge instructions electronically, we do not see requiring
this as within the scope of meaningful use of certified EHR technology
for Stage 1.
Comment: Comments were received requesting a clarification of the
data that should be included in the discharge instructions.
Response: This objective simply refers to the option of the
electronic provision of instructions that would be provided to the
patient. We believe eligible hospitals are the appropriate entity to
determine the information that should be included in the discharge
instructions.
Comment: Comments were received requesting the format and media for
the discharge instructions.
Response: As this is for use by the patient, the form and format
should be human readable and comply with the HIPAA Privacy Rule, as
specified at 45 CFR 164.524(c). In addition, efforts should be made to
make it easily understandable to the patient. The media could be any
electronic form such as patient portal, PHR, CD, USB fob, etc. EPs,
eligible hospitals and CAHs are expected to make reasonable
accommodations for patient preference as outlined in 45 CFR 164.522(b).
After consideration of the public comments received, we are
finalizing the objective at 495.6(f)(12)(i) of our regulations as
proposed.
We include this objective in the core set as it is integral to
involving patients and their families in their provision of care and
was recommended by the HIT Policy Committee for inclusion in the core
set.
NPRM Eligible Hospital Measure: At least 80 percent of all patients
who are discharged from an eligible hospital and who request an
electronic copy of their discharge instructions and procedures are
provided it.
Comment: Some commenters believed the 80 percent threshold was too
high or introduced examples of extraordinary circumstances that would
indicate that a lower threshold is needed to accommodate them.
Response: We reduce the threshold to over 50 percent as this
objective meets the criteria of relying solely on a capability included
as part of certified EHR technology and is not, for purposes of Stage 1
criteria, reliant on the electronic exchange of information. However,
as this is a relatively new capability that was not available to either
providers or patients before the introduction of EHRs we do not believe
it meets the same standard of practice as maintaining an up-to-date
problem list and therefore adopt a threshold of 50 percent (rather than
80 percent).
Comment: Some commenters expressed concern about the reporting
burden imposed by this requirement.
Response: We believe that as long as the request by the patient is
accurately recorded in the certified EHR

[[Page 44356]]

technology then the certified EHR technology should be able to
calculate the measure. We believe that recording patient requests for
certain actions that involve the use of certified EHR technology should
be part of EPs, eligible hospitals and CAHs standard practice. If the
eligible hospital or CAH records the requests using certified EHR
technology, certified EHR technology will be able to assist in
calculating both the numerator and denominator. If the requests are
recorded by another means at the choice of the provider, the provider
would be responsible for determining the denominator.
Comment: Several of the comments requested clarification of the
timeframe in which the discharge instructions should be provided to the
patient.
Response: As discussed previously, this objective simply refers to
the option of the electronic provision of instructions that would be
provided to the patient at the time of discharge. Therefore, we believe
for the information to be useful to the patient, the instructions
themselves or instructions on how to access them electronically should
be furnished at the time of discharge from the eligible hospital or
CAH.
Comment: Some comments expressed concern that providing an
electronic copy of discharge instructions to the patient at the time of
discharge would disrupt workflows and lengthen the discharge process
resulting in reduced bed turnover in emergency departments.
Response: As discussed previously, this objective simply refers to
the option of the electronic provision of instructions that would be
provided to the patient at the time of discharge. We do not believe the
provision of an electronic copy of the discharge instructions, upon
request, at the time of discharge alters current workflow or lengthens
the discharge process. A patient could be provided instructions on how
to access an Internet Web site where they can get the instructions or
asked to provide an e-mail address or simply be handed electronic media
instead of or in addition to a paper copy.
After consideration of the public comments received, we are
modifying the meaningful use measure at Sec. 495.6(f)(12)(ii) of our
regulations to ``More than 50 percent of all patients who are
discharged \1\ from an eligible hospital's or CAH's inpatient or
emergency department (POS 21 or 23) and who request an electronic copy
of their discharge instructions are provided it.''
---------------------------------------------------------------------------

\1\ Please note that although the final rule meaningful use
measures refer to patients discharged from an emergency department,
such emergency room releases are not eligible hospital discharges
for purpose of determining hospital payment incentives under section
1886(n) of the Act. Section 1886(n) payments are only with respect
to ``inpatient'' hospital services pursuant to section 1886(n)(1)(A)
of the Act.
---------------------------------------------------------------------------

We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.306(e). The ability to calculate the measure is included in
certified EHR technology.
As with the previous objective, the provision of the electronic
copy of the discharge summary is limited to the information contained
within certified EHR technology; therefore this measure is by
definition limited to patients whose records are maintained using
certified EHR technology as described previously in this section under
our discussion of the burden created by the measures associated with
the Stage 1 meaningful use objectives.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of patients discharged from an
eligible hospital's or CAH's inpatient or emergency department (POS 21
or 23) who request an electronic copy of their discharge instructions
and procedures during the EHR reporting period.
Numerator: The number of patients in the denominator who
are provided an electronic copy of discharge instructions.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital, or CAH to meet this
measure.
As addressed in other objectives and in comment response, if the
eligible hospital or CAH has no requests from patients or their agents
for an electronic copy during the EHR reporting period they would be
excluded from this requirement as described previously in this section
under our discussion of whether certain EP, eligible hospital or CAH
can meet all Stage 1 meaningful use objectives given established scopes
of practices.
NPRM EP Objective: Provide patients with timely electronic access
to their health information (including lab results, problem list,
medication lists, and allergies) within 96 hours of the information
being available to the EP.
In the proposed rule, we described timely as within 96 hours of the
information being available to the EP through either the receipt of
final lab results or a patient interaction that updates the EP's
knowledge of the patient's health. We said we judged 96 hours to be a
reasonable amount of time to ensure that certified EHR technology is up
to date and welcomed comment on if a shorter or longer time is
advantageous. We did receive comments on the time frame and have
revised it as discussed below in the comment and response section.
Comment: We received comments recommending that ``access'' be
clarified to determine whether this is online access as indicated in
the ONC certification criteria for certified EHR technology or just
electronic access.
Response: We believe we inadvertently created confusion by listing
the examples of electronic media (CD or USB drive) in which this access
could be provided. As many commenters inferred, it was our intention
that this be information that the patient could access on demand such
as through a patient portal or PHR. We did not intend for this to be
another objective for providing an electronic copy of health
information upon request.
Comment: Several commenters requested that all objectives included
in the health care policy priority ``engage patients and their
families'' be combined, as they are redundant.
Response: We disagree that they are redundant and believe each
serves a unique purpose. We regret any confusion created by the
inclusion of CD or USB drive as examples of electronic media caused in
the intent of this measure. The difference between electronic access
and an electronic copy is that a patient with electronic access can
access the information on demand at anytime while a patient must
affirmatively request an electronic copy from the EP, eligible hospital
or CAH at a specific time and the information in the copy is current
only as of the time that the copy is transferred from the provider to
the patient.
Comment: Some commenters asserted that some results and other
sensitive information are best communicated at a face-to-face
encounter.
Response: We agree that there may be situations where a provider
may decide that electronic access of a portal or Personal Health Record
is not the best forum to communicate results. Within the confines of
laws governing patient access to their medical records, we would defer
to EP's, eligible hospital or CAH's judgment as to whether to hold
information back in anticipation of an actual encounter between the
provider and the patient. Furthermore just as in the provision of
electronic copy, an EP may withhold information from being

[[Page 44357]]

accessible electronically by the patient in accordance with regulations
at 45 CFR 164.524. Any such withholding would not affect the EP's,
eligible hospital's or CAH's ability to meet this objective as that
information would not be included. We do not believe there would be a
circumstance where all information about an encounter would be withheld
from the patient and therefore no information would be eligible for
uploading for electronic access. If nothing else, the information that
the encounter occurred can be provided. Please note that providers must
comply with all applicable requirements under the HIPAA Privacy Rule,
including 45 CFR 164.524.
Comment: We received several comments stating that the time frame
of 96 hours is too burdensome for EPs.
Response: While we believe that 96 hours is sufficient, most EPs do
not operate 24/7. Therefore, we will limit the timeframe to business
days, in effect changing the timeframe from 96 hours in the proposed
rule to four business days. Business days are defined as Monday through
Friday excluding federal or state holidays on which the EP, eligible
hospital or CAH or their respective administrative staffs are
unavailable.
Comment: Commenters pointed out that allergies is inconsistent with
other objectives of Stage 1 and with the capabilities mandated by
certification under the ONC final rule.
Response: As we have stated on several other objectives, we
encourage all EPs, eligible hospitals, and CAHs to work with their EHR
technology designers to make capabilities as relevant to their
individual practices of care as possible. However, we maintain that at
a minimum the capabilities that are part of certification should be
included in certified EHR technology so we do modify this objective to
medication allergies to align it with other objectives and
certification.
After consideration of the public comments received, we are
modifying the objective for EPs at Sec. 495.6(d)(6)(i) of our
regulations to ``Provide patients with timely electronic access to
their health information (including lab results, problem list,
medication lists, medication allergies) within four business days of
the information being available to the EP''.
NPRM EP Measure: At least 10 percent of all unique patients seen by
the EP are provided timely electronic access to their health
information.
In the proposed rule, we said that we recognize that many patients
may not have internet access, may not be able or interested to use a
patient portal. Health systems that have actively promoted such
technologies have been able to achieve active use by over 30 percent of
their patients, but this may not be realistic for many practices in the
short term. We received comments on this justification for the
threshold and requests for clarification, which are addressed in the
comment and response section below.
Comment: Some commenters expressed concern about the calculation of
the percentage and expressed the preference to use an absolute count
instead of a percentage.
Response: We acknowledge there are unique concerns about
calculating this percentage as it involves determining the timeliness
of the information. Certified EHR technology would be able to ascertain
the time from when the information was entered into its system to when
the information was available for electronic access. As certified EHR
technology can provide the access, any perceivable delay or requirement
for affirmative action would be built in by the user to allow for
review of the information before posting. Certified EHR technology
could not be distinguish the difference in time when the information
was available to the provider and when it was entered into certified
EHR technology. However, we see no reasonable way to track this time
frame that does not impose a heavy burden on the EP. Therefore, for the
measure, we define the four business days time frame as the time frame
when the information is updated in the certified EHR technology to when
it is available electronically to the patient, unless the provider
indicates that the information should be withheld. It is acceptable for
a provider to set an automated withhold on certain information at their
discretion. As we have discussed previously in this section, we do not
believe absolute counts are an adequate substitute for percentage
calculations.
Comment: We received comments requesting clarification on what data
must be made available.
Response: Certified EHR technology must be able to make certain
data available according to the ONC final rule. At a minimum, the data
specified in the ONC final rule at 45 CFR 170.304(g) must be available
subject to the ability of the provider to withhold it discussed
previously.
Comment: Commenters suggested that some EPs might not have 10
percent of their patient population who desire or could utilize such
access.
Response: We agree that this is a possibility. We stated in the
proposed rule that ``we recognize that many patients may not have
internet access, may not be able or interested in the use of a patient
portal.'' Health systems that have actively promoted such technologies
have been able to achieve active use by over 30 percent of their
patients. However, this 30 percent threshold may not be realistic for
many practices in the short term and therefore serves justification for
the 10 percent threshold. However, the objective and measure focus on
the availability of the access and the timeliness of the data in it,
not its utilization. Therefore, we focus on the fact that more than 10
percent of unique patients seen during the EHR reporting period could
access it and that the information is timely. The EP is not responsible
for ensuring that 10 percent request access or have the means to
access. However, we encourage EPs to make the availability of
electronic access known to their patients.
Comment: A commenter inquired about the provider's liability versus
the EHR technology vendor for a security breach of the system.
Response: Depending on the facts surround the security breach, the
provider may be liable for a violation under the HIPAA Privacy and
Security Rules, as well as under any other applicable federal or state
laws. Additionally, there may be circumstances where the EHR technology
vendor acted as a business associate and may potentially have liability
under the HIPAA Privacy and Security Rules. The issue of business
associate liability under the HIPAA Privacy and Security Rules will be
addressed in upcoming rulemaking.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(6)(ii)
of our regulations to ``At least 10 percent of all unique patients seen
by the EP are provided timely (available to the patient within four
business days of being updated in the certified EHR technology)
electronic access to their health information subject to the EP's
discretion to withhold certain information''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(g). The ability to calculate the measure is included in
certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP
during the EHR

[[Page 44358]]

reporting period. A unique patient is discussed under the objective of
CPOE.
Numerator: The number of patients in the denominator who
have timely (available to the patient within four business days of
being updated in the certified EHR technology) electronic access to
their health information online.
Threshold: The resulting percentage must be at least 10
percent in order for an EP to meet this measure.
As addressed in other objectives and in comment response, if an EP
neither orders nor creates any of the information listed in the ONC
final rule 45 CFR 170.304(g) and therefore included in the minimum data
for this objective during the EHR reporting period they would be
excluded from this requirement as described previously in this section
under our discussion of whether certain EP, eligible hospital or CAH
can meet all Stage 1 meaningful use objectives given established scopes
of practices.
NPRM EP Objective: Provide clinical summaries for patients for each
office visit.
In the proposed rule, we discussed why we were basing the objective
on office visits rather than encounters. We said that we did want
encounter to be construed to mean every time a provider interacts with
the patient. We received comments requesting that we further define
office visit and address those in the comment and response section
below. In discussing the measure in the proposed rule, we also said
that the clinical summary can be provided through a PHR, patient portal
on the web site, secure email, electronic media such as CD or USB fob,
or printed copy. The after-visit clinical summary contains an updated
medication list, laboratory and other diagnostic test orders,
procedures and other instructions based on clinical discussions that
took place during the office visit.
Comment: We received requests for clarification as to what
constitutes an ``office visit''.
Response: An office visit is defined as any billable visit that
includes: (1) Concurrent care or transfer of care visits, (2)
Consultant visits and (3) Prolonged Physician Service without Direct
(Face-To-Face) Patient Contact (tele-health). A consultant visit occurs
when a provider is asked to render an expert opinion/service for a
specific condition or problem by a referring provider.
Comment: Some commenters believed the requirement for the provision
of a clinical summary at an office visit should be linked to the type
or purpose of the office visit. Samples of the suggested visits are--

--Level 4 or level 5 evaluation and management services;
--Visits conducted at the conclusion of an episode of care;
--Visits conducted at each transition of care;
--Visits relevant to specific conditions such as asthma; and
--Provider to patient face-to-face visits.

Response: We believe that a clinical summary should be provided at
all office visits included in the definition of office visit as defined
in this final rule. We believe all of the office visits described in
our definition result in the EP rendering a clinical judgment that
should be communicated to the patient.
Comment: Commenters requested CMS define ``clinical summary'' and
offered several specific data elements that should be included in the
definition such as patient name, provider name, date of visit, location
of visit, reason for visit, updated medication list, laboratory orders,
diagnostic orders, patient instructions based on discussions with the
provider and a nutrition care management plan.
Response: After reviewing the comments we define clinical summary
as an after-visit summary that provides a patient with relevant and
actionable information and instructions containing, but not limited to,
the patient name, provider's office contact information, date and
location of visit, an updated medication list and summary of current
medications, updated vitals, reason(s) for visit, procedures and other
instructions based on clinical discussions that took place during the
office visit, any updates to a problem list, immunizations or
medications administered during visit, summary of topics covered/
considered during visit, time and location of next appointment/testing
if scheduled, or a recommended appointment time if not scheduled, list
of other appointments and testing patient needs to schedule with
contact information, recommended patient decision aids, laboratory and
other diagnostic test orders, test/laboratory results (if received
before 24 hours after visit), and symptoms.
Comment: Commenters pointed out that the HIPAA Privacy Rule permits
licensed healthcare professionals to withhold certain information if
its disclosure would cause substantial harm to the patient or another
individual.
Response: As the EP is proactively providing this information to
the patient, 45 CFR 164.524 of the HIPAA Privacy rule does not apply to
this situation. However, we still believe that an EP should be able to
withhold information if its disclosure would cause substantial harm to
the patient or another individual. Therefore, if in their judgment
substantial harm may arise from the disclosure of particular
information, an EP may choose to withhold that particular information
from the clinical summary
Comment: Most commenters noted that other than ``at the time of the
visit'', there was no specific time period given in which to comply
with this objective. If CMS intended ``at the time of the visit'' to
mean before the patient leaves the building or upon the patient's
request, neither are possible due to workflow and review processes.
Most commenters assumed we would associate the 48 hours related to the
`copy' requirement or the 96 hours related to the `access' requirement
to address this comment and stated that both were too short a period
for a clinical visit summary. Others recommended the 30-day timeframe
for the provision information set forth under the HIPAA Privacy Rule.
Response: We agree that our proposed objective lacked specificity
about the time to comply. To provide such specificity, we adopt the
timeframe of three business days from our objective of providing
electronic health information to the patient. That is three business
days following the day of the visit excluding holidays as described in
the providing electronic health information to the patient objective.
Comment: Several commenters requested changes to the media through
which this information could be provided. Differing commenters
recommended eliminating the paper option, while others recommended only
the paper option.
Response: We believe that more options give the EP needed
flexibility. The EP could choose any of the listed means from the
proposed rule of PHR, patient portal on a Web site, secure email,
electronic media such as CD or USB fob, or printed copy. If the EP
chooses an electronic media, they would be required to provide the
patient a paper copy upon request. Both forms can be and should be
produced by certified EHR technology.
Comment: Several commenters indicated that a provider should be
allowed to charge a fee for providing the copy.
Response: As this is a proactive requirement on the part of the EP
and not a response to a request from the patient, we do not believe it
is appropriate to charge the patient a fee for this copy. We note that
we give the EP considerable flexibility in the

[[Page 44359]]

manner in which the copy is provided including the provision of a paper
copy. The only accommodation an EP is required to make is the provision
of a paper copy that can be automatically generated certified EHR
technology. We therefore believe that costs of this will be negligible.
Comment: A number of commenters expressed concern regarding whether
the current available technology could produce a summary of the
required information in a standardized format, the use of clinical
nomenclature rather than lay terms and the fact that some providers use
multiple modules to document the care of the patient.
Response: We believe it is appropriate to leave the design of EHR
technology systems and their outputs to the system developers and the
EHR technology users. However, we note that the capability to meet this
objective is included in the ONC final rule at 45 CFR 170.304(h) as a
criteria for certified EHR technology and we are confident that vendors
will be able to produce certified EHR technologies.
After consideration of the public comments received, we are
finalizing the objective for EPs at Sec. 495.6(d)(13)(i) of our
regulations as proposed.
We include this objective in the core set as it is integral to
involving patients and their families in their provision of care and
was recommended by the HIT Policy Committee for inclusion in the core
set.
NPRM EP Measure: Clinical summaries provided to patients for at
least 80 percent of all office visits.
Comment: Some commenters believed the threshold was too high or
should be replaced with a numerical count or attestation.
Response: We reduce the threshold to over 50 percent as this
objective meets the criteria of relying solely on a capability included
as part of certified EHR technology and is not, for purposes of Stage 1
criteria, reliant on the electronic exchange of information. Also, as
this is a relatively new capability that was not available to either
providers or patients before the introduction of EHRs, we do not
believe it meets the same standard of practice as maintaining an up-to-
date problem list and therefore adopt a threshold of 50 percent (rather
than 80 percent).
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(13)(ii)
of our regulation to ``Clinical summaries provided to patients for more
than 50 percent of all office visits within 3 business days''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(h). The ability to calculate the measure is included in
certified EHR technology.
As with the previous objective, the provision of the clinical
summary is limited to the information contained within certified EHR
technology; therefore this measure is by definition limited to patients
whose records are maintained using certified EHR technology as
described previously in this section under our discussion of the burden
created by the measures associated with the Stage 1 meaningful use
objectives.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP for
an office during the EHR reporting period. A unique patient is
discussed under the objective of using CPOE.
Numerator: Number of patients in the denominator who are
provided a clinical summary of their visit within three business days.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital, or CAH to meet this
measure.
As addressed in other objectives, EPs who have no office visits
during the EHR reporting period would be excluded from this requirement
as described previously in this section under our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices.
NPRM EP/Eligible Hospital Objective: ``Provide access to patient-
specific education resources upon request.''
In the proposed rule, we discussed this objective, but did not
propose it. We stated that there was a paucity of knowledge resources
that are integrated with EHR, and that also are widely available. We
also noted that the ability to provide education resources in multiple
languages might be limited. We stated our intent to further explore the
objective in subsequent stages of meaningful use.
Comment: We received many comments, including comments from both
the HIT Policy Committee and MedPAC, to include this measure in the
final rule. These commenters disagreed with our assertion in the
proposed rule that ``there is currently a paucity of knowledge
resources that are integrated within EHRs, that are widely available,
and that meet these criteria, particularly in multiple languages.''
Specific examples of the availability of knowledge resources integrated
with current EHRs were provided. The HIT Policy Committee amended their
recommendation in their comments on the proposed rule to:

--EPs and hospitals should report on the percentage of patients for
whom they use the EHR to suggest patient-specific education resources.

Other recommended language for the objective includes:

--Provide patients educational information that is specific to their
health needs as identified by information contained in their EHR
technology such as diagnoses and demographic data, and
--The original HIT Policy Committee objective of ``Provide access to
patient-specific education resources upon request.''

Response: We are convinced by commenters that the availability of
education resources linked to EHRs is more widely available than we had
indicated in the proposed rule. Therefore, for the final rule we will
include this objective for the Stage 1 of meaningful use. We note that
the new recommendation of the HIT Policy Committee is a hybrid of a
measure and an objective, whereas in developing the meaningful use
criteria we consistently identify both an objective and associated
measure. However, we agree with the HIT Policy Committee and others
that the objective and associated measure should make clear that the
EP, eligible hospital or CAH should utilize certified EHR technology in
a manner where the technology suggests patient-specific educational
resources based on the information stored in the certified EHR
technology. Therefore, we are including a revised version of this
objective in the final rule for Stage 1 of meaningful use.
We also believe it is necessary to state what level of EP, eligible
hospital and CAH discretion is available when deciding whether to
provide education resources identified by certified EHR technology to
the patient. Therefore, we include the phrase ``if appropriate'', which
allows the EP or the authorized provider in the eligible hospital or
CAH final decision on whether the education resource is useful and
relevant to a specific patient.
After consideration of the public comments received, we are
including this meaningful use objective for EPs at Sec. 495.6(e)(6)(i)
and eligible hospitals and CAHs at Sec. 495.6(g)(5)(i) of our
regulations as ``Use certified EHR technology to identify patient-
specific education resources and provide those resources to the patient
if appropriate''.

[[Page 44360]]

NPRM EP/Eligible Hospital Measure: Not applicable.
Comment: CMS received a comment requesting an 80 percent threshold
of appropriate patients and/or caregivers receiving patient-specific
educational materials. In addition, the HIT Policy Committee's revised
objective suggests a patient based percentage.
Response: As with the addition of the recording of advance
directives, we are able to relate this measure to one that is based on
patients and can be accomplished solely using certified EHR technology.
As this objective requires more than just the recording of information
in certified EHR technology, we adopt a lower threshold of 10 percent.
After consideration of the public comments received, we are
including this meaningful use measure for EPs at Sec. 495.6(e)(6)(ii)
and eligible hospitals at Sec. 495.6(g)(5)(ii) of our regulations as
``More than 10 percent of all unique patients seen by the EP or
admitted to the eligible hospital's or CAH's inpatient or emergency
department (POS 21 or 23) are provided patient-specific education
resources''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(m). The ability to calculate the measure is included in
certified EHR technology.
To calculate the percentage, CMS and ONC have worked together to
define the following for this objective:
Denominator: Number of unique patients seen by the EP or
admitted to the eligible hospital's or CAH's inpatient or emergency
department (POS 21 or 23) during the EHR reporting period. A unique
patient is discussed under the CPOE objective.
Numerator: Number of patients in the denominator who are
provided patient education specific resources.
Threshold: The resulting percentage must be more than 10
percent in order for an EP, eligible hospital, or CAH to meet this
measure.

We do not believe that any EP, eligible hospital, or CAH will not have
more than 10 percent of their patients eligible to receive patient
specific education resources and therefore do not believe an exclusion
is necessary for this objective.
The third health outcomes policy priority identified by the HIT
Policy Committee is to improve care coordination. The HIT Policy
Committee recommended the following care goals to address this
priority:
Exchange meaningful clinical information among
professional health care team.
NPRM EP Objective: Capability to exchange key clinical information
(for example, problem list, medication list, allergies, and diagnostic
test results), among providers of care and patient authorized entities
electronically.
NPRM Eligible Hospital Objective: Capability to exchange key
clinical information (for example, discharge summary, procedures,
problem list, medication list, allergies, diagnostic test results),
among providers of care and patient authorized entities electronically.
In the proposed rule, we defined the term ``diagnostic test results
'' as all data needed to diagnose and treat disease, such as blood
tests, microbiology, urinalysis, pathology tests, radiology, cardiac
imaging, nuclear medicine tests, and pulmonary function tests. We
maintain this description for the final rule. We said that when the
information was available in a structured format we expected that it be
transferred in a structured format. However, if it was unavailable in a
structured format, that the transmission of unstructured data was
permissible. We provide additional information on structured data in
the comment and response section, but maintain for the final rule the
concept that the exchange can be of structured or unstructured data.
Comment: Commenters requested clarification of the term ``key
clinical information.''
Response: By ``clinical information'', we mean all data needed to
diagnose and treat disease, such as blood tests, microbiology,
urinalysis, pathology tests, radiology, cardiac imaging, nuclear
medicine tests, and pulmonary function tests. We leave it to the
provider's clinical judgment as to identifying what clinical
information is considered key clinical information for purposes of
exchanging clinical information about a patient at a particular time
with other providers of care. The examples we provided in the proposed
rule and the final rule below are not intended to be exhaustive. ONC in
their final rule provides a minimum set of information that certified
EHR technology must be able to exchange in order to be certified. A
provider's determination of key clinical information could include some
or all of this information as well as information not included in the
ONC final rule at 45 CFR 170.304(i) for EPs and 45 CFR 170.306(f) for
eligible hospitals and CAHs.
Comment: Commenters requested clarification of the term ``patient
authorized entities.''
Response: By ``patient authorized entities'', we mean any
individual or organization to which the patient has granted access to
their clinical information. Examples would include an insurance company
that covers the patient, an entity facilitating health information
exchange among providers or a personal health record vendor identified
by the patient. A patient would have to affirmatively grant access to
these entities.
Comment: Commenters requested clarification of the term
``exchange.''
Response: We expect that this information, when exchanged
electronically, would be exchanged in structured electronic format when
available (for example, drug and clinical lab data). However, where the
information is available only in unstructured electronic formats (for
example, free text and scanned images), we would allow the exchange of
unstructured information. We believe that the electronic exchange of
information is most efficient when it is exchanged from a provider's
certified EHR technology to another certified EHR technology either
directly or through an entity facilitating health information exchange
using structured data that can be automatically identified by the
receiving system and integrated into the receiver's records. However,
we know that much information cannot currently be, and may never be,
transmitted in the way we just described.
Comment: Commenters requested clarification of the term
``structured data.''
Response: This distinction between structured data and unstructured
data applies to all types of information. We have previously defined
structured data in this section. To ensure that certified EHR
technology has a certain level of functionality, ONC at 45 CFR
170.304(i) for EPs and 45 CFR 170.306(f) for eligible hospitals and
CAHs specified certain types of information that a certified EHR
technology must be able to exchange to become certified. ONC also
provided standards to support this exchange. These standards do not
preclude a vendor of EHR technology from enabling its product to
exchange additional types of information nor limit the provider's
discretion (either in exchanging more or less) in deciding what
information is key and should be exchanged about a given patient at a
given time.
Comment: Commenters expressed concern that the exchange of key

[[Page 44361]]

clinical information via certified EHR systems requires a unique or
national patient identifier to ensure accurate exchange.
Response: While such an identifier could facilitate an exchange, it
need only be unique to the parties involved in the exchange and need
not be national in scope, nor is a specific unique identifier necessary
for successful exchanges. Many current health information exchanges
have had success identifying patients by a combination of several
elements of information without a separate independent identifier.
Comment: Commenters pointed out that the general term ``allergies''
is inconsistent with other objectives of Stage 1 and with the
capabilities mandated by certification under the ONC final rule, which
uses the term ``medication allergies''.
Response: As we have stated on several other objectives, we
encourage all EPs, eligible hospitals, and CAHs to work with their
certified EHR technology designers to make capabilities most relevant
to their individual practices of care. However, we have maintained that
at a minimum the capabilities that are part of certification should be
included so we modify the example to change allergies to medication
allergies to align it with other objectives and certification.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(d)(14)(i)
of our regulations to ``Capability to exchange key clinical information
(for example, problem list, medication list, medication allergies, and
diagnostic test results), among providers of care and patient
authorized entities electronically'' and for eligible hospitals and
CAHs at Sec. 495.6(f)(13)(i) to ``Capability to exchange key clinical
information (for example, discharge summary, procedures, problem list,
medication list, medication allergies, diagnostic test results), among
providers of care and patient authorized entities electronically''.
In response to our revised requirements for meeting meaningful use,
we included this objective in the core set. Section 1848 (o)(2)(A)(ii)
of the Act specifically includes electronic exchange of health
information in meaningful use for eligible professionals.
NPRM EP/Eligible Hospital Measure: Performed at least one test of
certified EHR technology's capacity to electronically exchange key
clinical information.
In the proposed rule, we identified this objective as reliant on
the electronic exchange of information. We said that we are aware that
in most areas of the country, the infrastructure necessary to support
such exchange is still being developed. Therefore, for the Stage 1
criteria of meaningful use we proposed that EPs and eligible hospitals
test their ability to send such information at least once prior to the
end of the EHR reporting period. We proposed that the testing could
occur prior to the beginning of the EHR reporting period. We also said
that if multiple EPs are using the same certified EHR technology in a
shared physical setting, the testing would only have to occur once for
a given certified EHR technology, as we do not see any value to running
the same test multiple times just because multiple EPs use the same
certified EHR technology. Finally, we attempted to define an
``exchange'' as the clinical information must be sent between different
clinical entities with distinct certified EHR technology and not
between organizations that share a certified EHR. We received many
comments requesting further clarification on these concepts and we
attempt to provide additional information in the comment and response
section below.
Comment: Commenters expressed concern that the receiving entities
are not required to have the same capabilities as meaningful users of
certified EHR technology.
Response: The HITECH Act does not provide us the authority to
require any entity (medical provider or otherwise) to conform to
certain standards and criteria unless they seek to become a meaningful
EHR user. The Act also limits the entities that are eligible to become
meaningful EHR users. In developing the associated measure for this
objective, we have ensured that eligible providers will be able to meet
this objective as long as there is one other entity with which they can
test their capability. As electronic exchange is not constrained by
distance, we are confident that every provider seeking to test their
system will be able to find another entity with which to conduct such
test.
Comment: Commenters asked whether the test needs to be ``live'' or
if it could be a ``simulation.''
Response: As specified in the proposed rule, this test must involve
the actual submission of information to another provider of care with
distinct certified EHR technology or other system capable of receiving
the information.
Comment: Commenters asked whether the use of ``test'' or ``dummy''
data is permissible.
Response: While the use of test patient information may increase
the risk that the system will not be testing to its full capability,
given the privacy and security concerns surrounding the transmission of
actual patient information we do not require it for the purposes of a
test. Therefore, the use of test information about a fictional patient
that would be identical in form to what would be sent about an actual
patient would satisfy this objective.
Comment: Commenters suggested deferring the measure to a later
stage due to the lack of a mature HIE infrastructure and/or to emulate
the Health Information and Management System Society (HIMSS) EMR
Adoption Model.
Response: We agree that many areas of the country currently lack
the infrastructure to support the electronic exchange of information.
As the goal of this meaningful use objective is to ensure that
certified EHR technology has the capability to electronically exchange
key clinical information, we only require a single test.
After consideration of the public comments received, we are
finalizing the meaningful use measure at Sec. 495.6(d)(14)(ii) and
Sec. 495.6(f)(13)(ii) of our regulations as proposed.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.304(i) for EPs and 45 CFR 170.306(f) for eligible hospitals and
CAHs. The ability to calculate the measure is included in certified EHR
technology. EPs, eligible hospitals, and CAHs should attempt to
identify one other entity with whom to conduct a test of the submission
of electronic data. This test must include the transfer of either
actual or ``dummy'' data to the chosen other entity. The testing could
occur prior to the beginning of the EHR reporting period, but must
occur prior to the end of the EHR reporting period and every payment
year would require its own, unique test as infrastructure for health
information exchange is expected to mature over time. Therefore, if an
eligible hospital or CAH were to become a meaningful EHR user in 2011
for their first payment year, they would have to conduct another,
unique test to become a meaningful EHR user in 2012 for their second
payment year. If multiple EPs are using the same certified EHR
technology in a shared physical setting, the testing would only have to
occur once for a given certified EHR technology, as we do not see any
value to running the same test multiple times just because multiple EPs
use the same

[[Page 44362]]

certified EHR technology. To be considered an ``exchange'' for this
objective and measure the clinical information must be sent between
different legal entities with distinct certified EHR technology or
other system that can accept the information and not between
organizations that share certified EHR technology. CMS will accept a
yes/no attestation to verify all of the above for EPs, eligible
hospitals, and CAHs.
As the measure already accounts for the possibility of a failed
test and we are confident that everyone will be identify an entity with
which to conduct a test, we do not believe an exception is required for
EPs, eligible hospitals or CAHs.
NPRM EP/Eligible Hospital Objective: Perform medication
reconciliation at relevant encounters and each transition of care.
In the proposed rule, we described ``medication reconciliation'' as
the process of identifying the most accurate list of all medications
that the patient is taking, including name, dosage, frequency and
route, by comparing the medical record to an external list of
medications obtained from a patient, hospital or other provider. We
maintain this description for the final rule. We also described
``relevant encounter'' and ``transition of care''; however, as we
received comments requested additional clarification of these terms we
address them in the comment and response section below.
Comment: Several commenters requested that this objective be
deferred until it can be conducted using the exchange of electronic
information between certified EHR technology. Other commenters believed
that the process is not one for avoiding medication errors, but a human
workflow process supported by the EHR, and not an automated EHR
process.
Response: We certainly look forward to a time when most medication
reconciliation occurs as an automated process within the EHR
reconciling information that has been exchanged. However, it is
unlikely that an automated process within the EHR will fully supplant
the medication reconciliation conducted between the provider and the
patient. In order for this automated reconciliation process to occur
and be useful, the relevant structured data exchanged needs to be as
accurate as possible. Requiring medication reconciliation as part of
meaningful use in Stage 1 lays the groundwork for future reliable
electronic exchange. We therefore do not believe this objective should
be deferred to a later stage.
Comment: Commenters requested additional clarity of the term
``relevant encounter.'' Only a few suggestions on such clarity were
provided by commenters. Two examples of commenters' recommendations are
``when a prescription is generated'' and ``a significant change in the
patient's condition that resulted in change in medication regimen which
could include significant change in dosing of more than 1 medication,
identification of a new medical condition, decline in functional status
or change in advanced directive.''
Response: We finalize our proposal by defining ``relevant
encounter'' as an encounter during which the EP, eligible hospital or
CAH performs a medication reconciliation due to new medication or long
gaps in time between patient encounters or for other reasons determined
appropriate by the EP, eligible hospital or CAH. Essentially an
encounter is relevant if the EP, eligible hospital, or CAH judges it to
be so. This flexibility has implications for the measure that were not
fully considered in the proposed rule. We will discuss those below in
connection with our discussion of the associated measure.
Comment: Commenters requested additional clarity of the term
``transition of care.'' A few suggestions were provided by commenters
including expanding the description to include all transfers to
different settings within a hospital or revising the definition to
``the movement of a patient from one setting of care (hospital,
ambulatory primary care practice, ambulatory specialty care practice,
long-term care, home health, rehabilitation facility) to another''.
Response: In the proposed rule we clarified ``transition of care''
as the transfer of a patient from one clinical setting (inpatient,
outpatient, physician office, home health, rehab, long-term care
facility, etc.) to another or from one EP, eligible hospital, or CAH
(as defined by CCN) to another. We believe that different settings
within one hospital using certified EHR technology would have access to
the same information so reconciliation would not be necessary. We
modify our clarification to account for some of the revisions provided.
We clarify ``transition of care'' as the movement of a patient from one
setting of care (hospital, ambulatory primary care practice, ambulatory
specialty care practice, long-term care, home health, rehabilitation
facility) to another. We also clarify that the receiving eligible
hospital or EP would conduct the medication reconciliation.
Comment: Some commenters requested clarification on which EP,
eligible hospital or CAH would conduct the medication reconciliation.
The one to whom the patient is transferred or the one who transfers the
patient.
Response: When conducting medication reconciliation during a
transfer of care, we believe that it is the EP, eligible hospital or
CAH that receives the patient into their care that should conduct the
medication reconciliation. It is for this provider that the information
is most crucial, as they will be making the future clinical judgments
regarding the patient. Therefore, we revise this objective and its
associated measure to reflect this clarification.
Comment: Commenters requested a standard list be defined for the
process including prescription and non prescription medications, herbal
products, dietary supplements, prescriber, drug name, regimen and
allergies.
Response: We believe the information included in the process of
medication reconciliation is appropriately determined by the provider
and patient.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(e)(7)(i)
and for eligible hospitals and CAHs at Sec. 495.6(g)(6)(i) of our
regulations to ``The EP, eligible hospital or CAH who receives a
patient from another setting of care or provider of care or believes an
encounter is relevant should perform medication reconciliation''.
NPRM EP/Eligible Hospital Measure: Perform medication
reconciliation for at least 80 percent of relevant encounters and
transitions of care.
Comment: Commenters believed it was an unjustifiable burden to
record which encounters were relevant and which were not given our
flexible definition of ``relevant encounter''.
Response: We agree that the inclusion of relevant encounters
creates a burden that one commenter described as ``non-value-added
work''. We also believe that when the EP, eligible hospital, or CAH
identifies the encounter as relevant, it is unlikely that the EP,
eligible hospital, or CAH would then not carry out the medication
reconciliation. For these reasons, we are removing relevant encounters
from the measure for this objective.
Comment: Commenters said the percent measurements should be
replaced with a numerical count or an attestation the objective has
been met or the demonstration of the capability by performing one test
of certified EHR technology's capacity to present

[[Page 44363]]

providers with patient medication information that supports the
reconciliation of medications at time of admission and discharge. Other
commenters stated the proposed 80 percent threshold was too high.
Response: We are maintaining a percentage for the reasons discussed
previously in this section. However, we do reduce the threshold to over
50 percent as this objective meets the criteria of relying solely on a
capability included as part of certified EHR technology and while not
absolutely reliant on electronic exchange of information, it does
involve the exchange of information between providers and therefore we
adopt a threshold of 50 percent (rather than 8 percent).
Comment: Commenters requested we align this objective with The
Joint Commission National Patient Safety Goal on medication
reconciliation (Goal 8) in order to decrease confusion, prevent the
slowing of adoption of best practices and match current hospital
reconciliation processes.
Response: CMS understands the commenters' concerns regarding
possible confusion if the meaningful use medication reconciliation
requirement differs from The Joint Commission's requirement for those
facilities accredited by that organization. However, currently there is
no finalized Joint Commission standard as the Commission is currently
in the process of re-evaluating their National Patient Safety Goal 8
(Accurately and completely reconcile medications across the continuum
of care) given the difficulties that many organizations are having in
meeting the complex requirements. In the absence of a definitive Joint
Commission standard to take into consideration, this is not possible.
Comment: Some commenters expressed the desire to expand the scope
of the measure to include the clinical decision making and patient
counseling and education by a pharmacist.
Response: We believe that is both beyond the scope of meaningful
use as pharmacists are not eligible professionals for the EHR incentive
programs and that the provision of patient counseling is more aligned
with the objectives of clinical quality measures. Information from the
medication reconciliation could be used for the basis of clinical
decision support rules, but is not in and of itself a clinical
decision.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(e)(7)(ii)
and for eligible hospitals and CAHs at Sec. 495.6(g)(6)(ii) of our
regulations to ``The EP, eligible hospital or CAH performs medication
reconciliation for more than 50 percent of transitions of care in which
the patient is transitioned into the care of the EP or admitted to the
eligible hospital's or CAH's inpatient or emergency department (POS 21
or 23)''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(j). The ability to calculate the measure is included in
certified EHR technology.
As discussed previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, we only include in the denominator transitions of care
related to patients whose records are maintained using certified EHR
technology. To calculate the percentage, CMS and ONC have worked
together to define the following for this objective:
Denominator: Number of transitions of care during the EHR
reporting period for which the EP or eligible hospital's or CAH's
inpatient or emergency department (POS 21 to 23) was the receiving
party of the transition.
Numerator: The number of transitions of care in the
denominator where medication reconciliation was performed.
Threshold: The resulting percentage must be more than 50
percent in order for an EP, eligible hospital, or CAH to meet this
measure. If an EP was not on the receiving end of any transition of
care during the EHR reporting period they would be excluded as
previously discussed in this section under our discussion of whether
certain EP, eligible hospital or CAH can meet all Stage 1 meaningful
use objectives given established scopes of practices. We do not believe
that any eligible hospital or CAH would be in a situation where they
would not need to know the precise medications their patients are
taking.
NPRM EP/Eligible Hospital Objective: Provide summary care record
for each transition of care or referral.
In the proposed rule, we pointed out that this objective was not
explicitly included in the HIT Policy Committee's recommended
objectives, but that they did include a measure for the ``percent of
transitions in care for which summary care record is shared.'' We said
that we believe that in order for a measure to be relevant it must
correspond to an objective in the definition of meaningful use.
Therefore, we proposed to add this objective in order to be able to
include the recommended measure. Furthermore, we add referrals because
the sharing of the patient care summary from one provider to another
communicates important information that the patient may not have been
able to provide, and can significantly improve the quality and safety
of referral care, and reduce unnecessary and redundant testing. We
received support for this inclusion from commenters and include this
objective in the final rule for the reasons outlined in the proposed
rule. We did receive comments requesting clarifications around this
objective and address them in the comment and response section below.
Comment: We received several comments that requested clarification
as to the purpose of this objective.
Response: The purpose of this objective is to ensure a summary of
care record is provided to the receiving provider when a patient is
transitioning to a new provider or has been referred to another
provider while still remaining under the care of the referring
provider. If the provider to whom the referral is made or to whom the
patient is transitioned to has access to the medical record maintained
by the referring provider then the summary of care record would not
need to be provided. The most common example cited by commenters was a
referral during which patient remains an inpatient of the hospital.
Finally, unlike with medication reconciliation, where the receiving
party of the transfer conducts the action, the transferring party would
provide the summary care record to the receiving party.
Comment: Commenters requested additional clarity of the term
``transition of care''. A few suggestions were provided by the
commenters including expanding the description to include all transfers
to different settings within a hospital or revising the definition to
``the movement of a patient from one setting of care (hospital,
ambulatory primary care practice, ambulatory, specialty care practice,
long-term care, home health, rehabilitation facility) to another''.
Response: In the proposed rule we clarified that the term
transition of care means a transfer of a patient from one clinical
setting (inpatient, outpatient, physician office, home health, rehab,
long-term care facility, etc.) to another or from one EP, eligible
hospital, or CAH (as defined by CMS Certification Number (CCN) to
another. We believe that different settings within a hospital using
certified EHR technology would have access to the same information so

[[Page 44364]]

providing a clinical care summary would not be necessary. We further
clarify transition of care as the movement of a patient from one
setting of care (hospital, ambulatory primary care practice,
ambulatory, specialty care practice, long-term care, home health,
rehabilitation facility) to another.
Comment: Some commenters requested clarification on which EP,
eligible hospital or CAH should provide the summary of care document;
the one to whom the patient is transferred or referred or the one who
transfers or refers the patient.
Response: We believe that it is the EP, eligible hospital or CAH
that transfers or refers the patient to another setting of care or
provider that should provide the summary of care document. It is for
this provider that has the most recent information on the patient that
may be crucial to the provider to whom the patient is transferred or
referred. Therefore, we revise this objective and its associated
measure to reflect this clarification.
Comment: Commenters asked for clarification on how the summary of
care record should be transferred.
Response: The goal is to get the summary care record into the next
provider's possession. While we highly encourage all EPs, eligible
hospitals, and CAHs to explore ways to accomplish the transfer using
electronic exchange, we realize that this capability is still in the
development stages. Therefore, an EP, eligible hospital, or CAH could
send an electronic or paper copy of the summary care record directly to
the next provider or could provide it to the patient to deliver to the
next provider, if the patient can reasonably expected to do so.
Certified EHR technology would be used to generate the summary of care
record and to document that it was provided to the patient or receiving
provider.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(e)(8)(i)
and for eligible hospitals and CAHs at Sec. 495.6(g)(7)(i) of our
regulations to ``The EP, eligible hospital or CAH who transitions their
patient to another setting of care or provider of care or refers their
patient to another provider of care should provide summary care record
for each transition of care or referral''.
NPRM EP/Eligible Hospital Measure: Provide summary of care record
for at least 80 percent of transitions of care and referrals.
Comment: Commenters said that this should be replaced with a count
and that the threshold was too high.
Response: We are maintaining a percentage for the reasons discussed
previously in this section. However, we do reduce the threshold to over
50 percent as this objective meets the criteria of relying solely on a
capability included as part of certified EHR technology and while not
absolutely reliant on electronic exchange of information, it does
involve the exchange of information between providers and therefore we
adopt a threshold of 50 percent (rather than 80 percent).
Comment: There were concerns about the ability of certified EHR
technology to calculate this measure. As long as an EP, eligible
hospital, or CAH records the order for a referral or transfer as
structured data and a record is made that the summary care record was
provided then certified EHR technology will be able to calculate this
measure.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(e)(8)(ii)
and for eligible hospitals and CAHs at Sec. 495.6(g)(7)(ii) of our
regulations to ``The EP, eligible hospital or CAH who transitions or
refers their patient to another setting of care or provider of care
provides a summary of care record for more than 50 percent of
transitions of care and referrals''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology included as specified and standards at 45 CFR
170.304(i) for EPs and 45 CFR 170.306(f) for eligible hospitals and
CAHs. The ability to calculate the measure is included in certified EHR
technology.
As discussed previously in this section under our discussion of the
burden created by the measures associated with the Stage 1 meaningful
use objectives, we only include in the denominator transitions of care
and referrals related to patients whose records that are maintained
using certified EHR technology. To calculate the percentage, CMS and
ONC have worked together to define the following for this objective:
Denominator: Number of transitions of care and referrals
during the EHR reporting period for which the EP or eligible hospital's
or CAH's inpatient or emergency department (POS 21 to 23) was the
transferring or referring provider.
Numerator: The number of transitions of care and referrals
in the denominator where a summary of care record was provided.
Threshold: The percentage must be more than 50 percent in
order for an EP, eligible hospital, or CAH to meet this measure.
As addressed in other objectives and in comment response, if an EP
does not transfer a patient to another setting or refer a patient to
another provider during the EHR reporting period then they would have a
situation of a null denominator as described would be excluded from
this requirement as described previously in this section under our
discussion of whether certain EP, eligible hospital or CAH can meet all
Stage 1 meaningful use objectives given established scopes of
practices. We do not believe that any eligible hospital or CAH would be
in a situation where they would never transfer a patient to another
care setting or make a referral to another provider.
The fourth health outcomes policy priority identified by the HIT
Policy Committee is improving population and public health. The HIT
Policy Committee identified the following care goal to address this
priority:
The patient's health care team communicates with public
health agencies.
The goal as recommended by the HIT Policy Committee is
``communicate with public health agencies.'' In the proposed rule, we
explained that we found this goal to be somewhat ambiguous, as it does
not specify who must communicate with public health agencies. We
propose to specify ``the patient's health care team'' as the
individuals who would communicate with public health agencies.
NPRM EP/Eligible Hospital Objective: Capability to submit
electronic data to immunization registries and actual submission where
required and accepted.
In the proposed rule, we did not elaborate on this objective.
Comment: Some commenters suggested out that not every EP, eligible
hospital, or CAH administers immunization. Therefore, as proposed, this
objective and its associated measure would require an EP, eligible
hospital, or CAH to implement and test a capability that they would not
use.
Response: We acknowledge that this objective is not relevant to all
EPs, eligible hospitals or CAHs. Therefore, in this final rule, we
clarify that this objective and its associated measure apply only to
EPs, eligible hospitals or CAHs that administer one or more
immunizations during the EHR reporting period.
Comment: Some commenters recommended revising the language of the
immunization objective to be consistent with the language of the
syndromic surveillance objective by

[[Page 44365]]

replacing ``where required and accepted'' with ``according to
applicable law and practice.''
Response: First, we make a technical correction. The objective
listed for EPs on page 1858 of the proposed rule listed this objective
as ``Capability to submit electronic data to immunization registries
and actual submission where possible and accepted.'' The objective was
intended to be ``Capability to submit electronic data to immunization
registries and actual submission where required and accepted'' for EPs,
eligible hospitals, and CAHs. It is written as such in every other
instance in the proposed rule including the regulation text. Second, in
response to the comment that ``where required and accepted'' be
replaced with ``according to applicable law and practice'', we see
little distinction between the two in terms of requirement as
applicable law and practice would be the things imposing a requirement.
Therefore, we adopt the proposed language, but modify the language
slightly to ``in accordance with applicable law and practice''. We do
note however, that applicable law and practice do not guarantee every
receiving entity will be able to accept it electronically. Our measure
for meeting this objective is one test of electronic data submission
and if the test is successful follow up submission to that one entity.
We do not seek to enforce through meaningful use every law and practice
that may require submission of immunization data. We also make another
consistency change to the objectives under the health care policy goal
of improving population and public health. In this objective, we
describe the capability as submitting electronic data. In the other
objectives under this goal we describe the capability as providing
electronic data. We believe that functionally these terms are
interchangeable, but to avoid any confusion we adopt the same term of
``submit'' electronic data across all three objectives.
Comment: Some commenters suggested that the term ``Immunization
Information Systems (IIS)'' has replaced the term ``registry'' and is
referred to as such by the Centers for Disease Control (CDC).
Response: We modified the objective to account for both terms.
After consideration of the public comments received, we are modifying
the meaningful use objective for EPs at Sec. 495.6(e)(9)(i) and for
eligible hospitals and CAHs at Sec. 495.6(g)(8)(i) of our regulations
to Capability to submit electronic data to immunization registries or
Immunization Information Systems and actual submission in accordance
with to applicable law and practice.
NPRM EP/Eligible Hospital Measure: Performed at least one test of
certified EHR technology's capacity to submit electronic data to
immunization registries (unless none of the immunization registries to
which the EP, eligible hospital, or CAH submits such information have
the capacity to receive the information electronically).
In the proposed rule, we identified this as an objective where more
stringent requirements may be established for EPs and hospitals under
the Medicaid program in states where this capability exists. This is
just one example of a possible State proposed modification to
meaningful use in the Medicaid EHR incentive program. This ability for
the States is also included in our final rule.
Comment: As with the objective of exchanging key clinical
information, some commenters asked whether the test needs to be
``live'' or if it could be a ``simulation''. Some commenters suggested
that a simulation where the ability was tested without being
transmitted to another party should be sufficient. Others suggested
that the test needs to include transmission or difficulties in actual
sending information might not be uncovered.
Response: As specified in the proposed rule, this test must involve
the actual submission of information to a registry or immunization
information system, if one exists that will accept the information.
Comment: Commenters asked whether the use of ``test'' or ``dummy''
data is permissible.
Response: While the use of test patient information may increase
the risk that the system will not be testing to its full capability,
given the privacy and security concerns surrounding the transmission of
actual patient information we do not require it for the purposes of a
test. Therefore, the use of test information about a fictional patient
that would be identical in form to what would be sent about an actual
patient would satisfy this objective. However, we note that this is one
of the objectives that a State may modify in accordance with the
discussion in II.A.2.c. of the proposed rule. Therefore, more stringent
requirements may be established for EPs and eligible hospitals under
the Medicaid program in states where this capability exists.
Comment: Commenters expressed concern about the burden of multiple
requirements for submission from Federal, State, and local government
agencies or non-governmental registries. They also raised the issue of
lack of standardization of means and form of submission.
Response: Standards for content exchange and vocabulary are
established in the ONC final rule at 45 CFR 170.302(k). As meaningful
use seeks to utilize certified EHR technology for purposes of the test
and subsequent submission (if test was successful) these are the
standards that should be utilized. While we encourage all providers and
registries to work together to develop efficient, electronic submission
of immunization information to all registries where it can be used to
improve population and public health, for purposes of becoming a
meaningful EHR user, we only require a single test and follow up
submission if that test is successful.
Comment: Commenters suggested deferring the measure to a later
stage due to the lack of a mature HIE infrastructure.
Response: We agree that many areas of the country currently lack
the infrastructure to support the electronic exchange of information.
As meaningful use seeks to ensure certified EHR technology has the
capability to submit electronic data to registries, we only require a
single test if a receiving entity is available and follow up submission
only if that test is successful. If none of the immunization registries
to which the EP, eligible hospital or CAH submits information has the
capacity to receive the information electronically, then this objective
would not apply.
Comment: Commenters requested clarification whether on a failed
attempted test satisfies the criteria of this measure and whether EPs
in a group setting using identical certified EHR technology would only
need to conduct a single test, not one test per EP.
Response: A failed attempt would meet the measure. We highly
encourage EPs, eligible hospitals, and CAHs to work with their vendor
and the receiving entity with whom they tested to identify the source
of the failure and develop remedies, but for Stage 1 of meaningful use
a failed attempt would meet the requirements. We had indicated in the
proposed rule that only one test is required for EPs practicing in a
group setting that shares the same certified EHR technology. We
maintain that proposal for the final rule.
Comment: Commenters recommended the inclusion of electronically
reporting to other types of registries in addition to immunization
registries such as disease-specific registries such as the Cystic
Fibrosis Registry.
Response: While we encourage all providers and registries to work
together

[[Page 44366]]

to develop efficient, electronic submission of information to all
registries where it can be used to improve population and public
health, for purposes of becoming a meaningful EHR user, we only require
a single test utilizing immunization data and follow up submission if
that test is successful.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(e)(9)(ii)
and for eligible hospitals and CAHs at Sec. 495.6(g)(8)(ii) of our
regulations to ``Performed at least one test of certified EHR
technology's capacity to submit electronic data to immunization
registries and follow up submission if the test is successful (unless
none of the immunization registries to which the EP, eligible hospital,
or CAH submits such information have the capacity to receive the
information electronically)''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(k). The ability to calculate the measure is included in
certified EHR technology. We require that an EP, eligible hospital, or
CAH determine if they have given any immunizations during the EHR
reporting period. Those that have not given any immunizations during
the EHR reporting period are excluded from this measure according to
the discussion of whether certain EP, eligible hospital or CAH can meet
all Stage 1 meaningful use objectives given established scopes of
practices. If they have given immunizations during the reporting
period, they should then attempt to locate a registry or IIS with whom
to conduct a test of the submission of electronic data. This test must
include the transfer of either actual or ``dummy'' data to the chosen
registry or IIS. The testing could occur prior to the beginning of the
EHR reporting period, but must occur prior to the end of the EHR
reporting period. EPs in a group setting using identical certified EHR
technology would only need to conduct a single test, not one test per
EP. If the test is successful, then the EP, eligible hospital, or CAH
should institute regular reporting to that entity in accordance with
applicable law and practice. CMS will accept a yes/no attestation to
verify all of the above for EPs, eligible hospitals or CAHs that have
administered immunizations during the EHR reporting period.
NPRM Eligible Hospital Objective: Capability to provide electronic
submission of reportable (as required by state or local law) lab
results to public health agencies and actual submission where it can be
received.
In the proposed rule, we did not elaborate on this objective.
Comment: A few commenters requested this objective be applied to
EPs as long as the EHR Certification requirements are met. A commenter
remarked that electronic submission of reportable lab results should
not put an additional burden on the providers as the EHR would be able
to automate this process.
Response: We based the limitation on the recommendation of the HIT
Policy Committee who in turn went through a considerable public
development process. We do not believe that burden of reporting was the
only limiting factor in keeping this objective from being applied to
EPs; therefore, we maintain our proposal to limit this objective to
eligible hospitals and CAHs. EPs usually send out lab test to other
organizations on which reporting burdens may fall.
Comment: Commenters requested that the actual transmission of the
information be required.
Response: In the discussion of the reporting immunization data
objective, we discussed at length the need to align the language for
the three objectives included under the health care policy priority of
improve population and public health, which is one of the five
priorities of the Stage 1 definition of meaningful use. Our
interpretation is that the three phrases result in the same outcome,
but introduce confusion due to the varied wordings. As commenters
strongly preferred the phrase ``according to applicable law and
practice'', we will so modify this objective. We do note however that
applicable law and practice does not guarantee every receiving entity
will be able to accept it electronically. Our measure for meeting this
objective is one test of electronic data submission and if the test is
successful, a follow up submission to that one entity. We do not seek
to enforce through meaningful use every law and practice that may
require submission of lab results.
After consideration of the public comments received, we are
modifying the meaningful use objective for eligible hospitals and CAHs
at Sec. 495.6(g)(9)(i) of our regulations to ``Capability to submit
electronic data on reportable (as required by state or local law) lab
results to public health agencies and actual submission in accordance
with applicable law and practice''.
NPRM Eligible Hospital Measure: Performed at least one test of
certified EHR technology capacity to provide electronic submission of
reportable lab results to public health agencies (unless none of the
public health agencies to which eligible hospital submits such
information have the capacity to receive the information
electronically).
In the proposed rule, we identified this as an objective where more
stringent requirements may be established for eligible hospitals under
the Medicaid program in states where this capability exists. This is
just one example of a possible State proposed modification to
Comment: Commenters asked whether the test needs to be ``live'' or
if it could be a ``simulation''.
Response: As specified in the proposed rule, this test must involve
the actual submission of information to a public health agency, if one
exists that will accept the information.
Comment: Commenters asked whether the use of ``test'' or ``dummy''
data is permissible.
Response: While the use of test patient information may increase
the risk that the system will not be testing to its full capability,
given the privacy and security concerns surrounding the transmission of
actual patient information we do not require it for the purposes of a
test. Therefore, the use of test information about a fictional patient
that would be identical in form to what would be sent about an actual
patient would satisfy this objective. However, we note that this is one
of the objectives that a State may modify as discussed previously in
this section. Therefore, more stringent requirements may be established
for EPs and eligible hospitals under the Medicaid program in states
where this capability exists.
Comment: Commenters requested that one national standard be
established for reporting lab results to public health agencies.
Response: Standards for content exchange and vocabulary are
established in the ONC final rule at 45 CFR 170.306(g). While we
encourage all providers and public health agencies to work together to
develop efficient, electronic submission of reportable lab results to
all public health agencies, for purposes of becoming a meaningful EHR
user, we only require a single test and follow up submission if that
test is successful.
Comment: Commenters suggested deferring the measure to a later
stage due to the lack of a mature HIE infrastructure and lack of a
clear standard for exchanging bio-surveillance data.
Response: We agree that many areas of the country currently lack
the infrastructure to support the electronic exchange of information.
As meaningful use seeks to ensure certified EHR

[[Page 44367]]

technology has the capability to submit electronic data to public
health agencies, we only require a single test if a receiving entity is
available and follow up submission only if that test is successful.
After consideration of the public comments received, we are
modifying the meaningful use measure for eligible hospitals and CAHs at
Sec. 495.6(g)(9)(ii) of our regulations to ``Performed at least one
test of certified EHR technology's capacity to provide electronic
submission of reportable lab results to public health agencies and
follow-up submission if the test is successful (unless none of the
public health agencies to which eligible hospital or CAH submits such
information have the capacity to receive the information
electronically)''.
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.306(g). The ability to calculate the measure is included in
certified EHR technology. Eligible hospitals and CAHs should attempt to
identify one public health agency with whom to conduct a test of the
submission of electronic data. This test must include the transfer of
either actual or ``dummy'' data to the chosen public health agency. The
testing could occur prior to the beginning of the EHR reporting period,
but must occur prior to the end of the EHR reporting period. If the
test is successful, then the eligible hospital or CAH should institute
regular reporting to that entity according to applicable law and
practice. CMS will accept a yes/no attestation to verify all of the
above for eligible hospitals and CAHs.
NPRM EP/Eligible Hospital Objective: Capability to provide
electronic syndromic surveillance data to public health agencies and
actual transmission according to applicable law and practice.
In the proposed rule, we did not elaborate on this objective.
Comment: Half of the commenters commenting on this objective
recommended that the objective be deferred to Stage 2 or 3 as the
objective is considered expensive, complex and imposes significant
administrative burdens on EPs, eligible hospitals and CAHs unless the
certified EHR technologies support the automate, electronic capture of
the requisite data.
Response: The measure for this objective accounts for the
possibility that such electronic exchange of syndromic data is not
possible. Standards and certification for certified EHR technologies
are covered under the ONC final rule and do support the automatic
identification of the requisite data and its electronic capture. This
greatly limits the cost, complexity and burden of this objective.
Comment: Commenters requested that an actual transmission be
required.
Response: In discussing the reporting immunization data objective,
we focused on the need to align the language for the three objectives
contained in under the health care policy priority of improving
population and public health. Our interpretation is that the three
phrases result in the same outcome, but introduce confusion with the
current language. We adopted the language from this objective for the
others. We do note however that applicable law and practice does not
guarantee every receiving entity will be able to accept it
electronically. Our measure for meeting this objective is one test of
electronic data submission and if the test is successful, then follow
up submission to that one entity based on the reporting requirements of
that entity. We do not seek to enforce through meaningful use every law
and practice that may require submission of lab results.
Comment: Some commenters requested a clarification of the term
``public health agencies.''
Response: A public health agency is an entity under the
jurisdiction of the U.S. Department of Health and Human Services,
tribal organization, State level and/or city/county level
administration that serves a public health function.
Comment: Some commenters recommended that providers be required to
satisfy either electronic submission to immunization registries or
electronic submission of syndromic surveillance data to a public health
agency, but not both.
Response: We disagree. We believe these are fundamentally different
types of information. Each may impose unique requirements in terms of
ability to exchange information on both the EP, eligible hospital, or
CAH and the receiving entity. Therefore, a test for one does not prove
or disprove the ability to exchange information for the other.
After consideration of the public comments received, we are
modifying the meaningful use objective for EPs at Sec. 495.6(e)(10)(i)
and eligible hospitals and CAHs at Sec. 495.6(g)(10(i) of our
regulations to ``Capability to submit electronic syndromic surveillance
data to public health agencies and actual submission in accordance with
applicable law and practice.''
NPRM EP/Eligible Hospital Measure: Performed at least one test of
certified EHR technology's capacity to provide electronic syndromic
surveillance data to public health agencies (unless none of the public
health agencies to which an EP, eligible hospital, or CAH submits such
information have the capacity to receive the information
electronically).
In the proposed rule, we identified this as an objective where more
stringent requirements may be established for EPs and hospitals under
the Medicaid program in states where this capability exists. This is
just one example of a possible State proposed modification to
meaningful use.
First, a technical correction, in the proposed rule we incorrectly
stated that the capability to send electronic data to immunization
registries was included in the certification standards for certified
EHR technology. We intended for this data to be sent to public health
agencies and ONC in their final rule at 45 CFR 170.304(l) correctly
stated this capability as such.
Comment: Commenters asked whether the test needs to be ``live'' or
if it could be a ``simulation''.
Response: As specified in the proposed rule, this test must involve
the actual submission of information to a public health agency, if one
exists that will accept the information.
Comment: Commenters asked whether the use of ``test'' or ``dummy''
data is permissible.
Response: While the use of test patient information may increase
the risk that the system will not be testing to its full capability,
given the privacy and security concerns surrounding the transmission of
actual patient information we do not require it for the purposes of a
test. Therefore, the use of test information about a fictional patient
that would be identical in form to what would be sent about an actual
patient would satisfy this objective. However, we note that this is one
of the objectives that a State may modify in accordance with the
discussion in II.A.2.c. of the proposed rule. Therefore, more stringent
requirements may be established for EPs and eligible hospitals under
the Medicaid program in states where this capability exists.
Comment: A few commenters expressed confusion as to the required
ferquency of the test.
Response: As stated in the proposed rule, the required frequency of
a test in Stage 1 for EPs, eligible hospitals, and CAHs is at least
once prior to the end of the EHR reporting period. We further clarify
that each payment year would require it own unique test.
Comment: Commenters requested that one national standard be
established for

[[Page 44368]]

reporting syndromic surveillance data to public health agencies.
Response: Standards for content exchange and vocabulary are
established in the ONC final rule. While we encourage all providers and
public health agencies to work together to develop efficient,
electronic submission of syndromic surveillance data to all public
health agencies, for purposes of becoming a meaningful EHR user, we
only require a single test and follow up submission if that test is
successful.
Comment: Commenters suggested deferring the measure to a later
stage due to the lack of a mature HIE infrastructure.
Response: We agree that many areas of the country currently lack
the infrastructure to support the electronic exchange of information.
As meaningful use seeks to ensure certified EHR technology has the
capability to submit electronic data to public entities, we only
require a single test if a receiving entity is available and follow up
submission only if that test is successful. We note that this measure
only applies if there is a public health agency with the capacity to
receive this information.
Comment: Commenters requested clarification on whether a failed
attempted test satisfies the measure and whether EPs in a group setting
using identical certified EHR technology would only need to conduct a
single test, not one test per EP.
Response: A failed attempt would meet the measure. We highly
encourage EPs, eligible hospitals, and CAHs to work with their vendor
and the receiving entity with whom they tested to identify the source
of the failure and develop remedies, but for Stage 1 of meaningful use
a failed attempt would meet the requirements. We had indicated in the
proposed rule that only on test is required for EPs practicing in a
group setting that shares the same certified EHR technology. We
maintain that proposal for the final rule.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(e)(10)(ii)
and eligible hospitals and CAHs at Sec. 495.6(g)(10)(ii) of our
regulations to ``Performed at least one test of certified EHR
technology's capacity to provide electronic syndromic surveillance data
to public health agencies and follow-up submission if the test is
successful (unless none of the public health agencies to which an EP,
eligible hospital, or CAH submits such information have the capacity to
receive the information electronically.)''
We further specify that in order to meet this objective and
measure, an EP, eligible hospital, or CAH must use the capabilities
Certified EHR Technology includes as specified and standards at 45 CFR
170.302(l). The ability to calculate the measure is included in
certified EHR technology. EPs, eligible hospitals, and CAHs should
attempt to identify one public health agency with whom to conduct a
test of the submission of electronic data. This test must include the
transfer of either actual or ``dummy'' data to the chosen public health
agency. The testing could occur prior to the beginning of the EHR
reporting period, but must occur prior to the end of the EHR reporting
period. If the test is successful, then the EP, eligible hospital, or
CAH should institute regular reporting to that entity according to
applicable law and practice. CMS will accept a yes/no attestation to
verify all of the above for eligible hospitals and CAHs.
If an EP does not collect any reportable syndromic information on
their patients during the EHR reporting period, then they are excluded
from this measure according to the discussion of whether certain EP,
eligible hospital or CAH can meet all Stage 1 meaningful use objectives
given established scopes of practices.
The fifth health outcomes policy priority is to ensure adequate
privacy and security protections for personal health information. The
following care goals for meaningful use address this priority:
Ensure privacy and security protections for confidential
information through operating policies, procedures, and technologies
and compliance with applicable law.
Provide transparency of data sharing to patient.
NPRM EP/Eligible Hospital Objective: Protect electronic health
information created or maintained by the certified EHR technology
through the implementation of appropriate technical capabilities.
In the proposed rule, we discussed how we were relating the
objectives presented by the HIT Policy committee more tightly to the
meaningful use of certified EHR technology as opposed to the broader
success of the EP, eligible hospital or CAH in ensuring privacy and
security. The primary reason we gave was that the proper vehicle for
ensuring privacy and security is the HIPAA Privacy and Security Act and
that we sought with this objective to ensure that certified EHR
technology does not impede an EP's, eligible hospital's or CAH's
ability to comply with HIPAA.
Comment: We received considerable support from many commenters who
supported this objective and measure as proposed.
Response: We appreciate the support of these commenters for our
proposed objective and measure.
Comment: Commenters requested clarification of appropriate
technical capabilities.
Response: The ONC final rule specifies certain capabilities that
must be in certified EHR technology. For the objective we simply mean
that a technical capability would be appropriate if it protected the
electronic health information created or maintained by the certified
EHR technology. All of these capabilities could be part of the
certified EHR technology or outside systems and programs that support
the privacy and security of certified EHR technology. We could not
develop an exhaustive list. Furthermore as we state in the proposed
rule compliance with HIPAA privacy and security rules is required for
all covered entities, regardless of whether or not they participate in
the EHR incentive programs. Furthermore, compliance with the HIPAA
Privacy and Security Rules constitutes a wide range of activities,
procedures and infrastructure. We rephrased the objective to ensure
that meaningful use of the certified EHR technology supports compliance
with the HIPAA Privacy and Security Rules and compliance with fair
sharing data practices outlined in the Nationwide Privacy and Security
Framework (http://healthit.hhs.gov/portal/server.pt/gateway/PTARGS_0_10731_848088_0_0_18/NationwidePS_Framework-5.pdf), but do not
believe meaningful use of certified EHR technology is the appropriate
regulatory tool to ensure such compliance with the HIPAA Privacy and
Security Rules.
Comment: Several commenters urged CMS not to finalized requirements
for the fair data sharing practices set forth in the Nationwide Privacy
and Security Framework and to clarify the policies to which CMS is
referring.
Response: While we stated in the proposed rule we rephrased the
objective to ensure ``compliance with fair sharing data practices
outline in the Nationwide Privacy and Security Framework,'' we did not
propose any practices or policies related to the Nationwide Privacy and
Security Framework and do not finalize any in this final rule.
Comment: Several commenters requested the elimination of this
objective as redundant to HIPAA.

[[Page 44369]]

Response: We do not see meaningful use as an appropriate regulatory
tool to impose different, additional, and/or inconsistent privacy and
security policy requirements from those policies already required by
HIPAA. With that said, we do feel it is crucial that EPs, eligible
hospitals, and CAHs evaluate the impact certified EHR technology has on
their compliance with HIPAA and the protection of health information in
general. Therefore, we retain this objective and measure for meaningful
use in the final rule.
Comment: We received hundreds of comments that requested the
cancelation of the EHR incentive payment program due to the privacy and
security risks imposed by the implementation and use of certified EHR
technology.
Response: We are required by the ARRA to implement the EHR
incentive programs and cannot cancel them. We seek to mitigate the
risks to the security and privacy of patient information by requiring
EPs, eligible hospitals, and CAHs to conduct or review a security risk
analysis in accordance with the requirements under 45 CFR 164.308
(a)(1) and implement security updates as necessary.
After consideration of the public comments received, we are
finalizing the meaningful use objective for EPs at Sec.
495.6(d)(15)(i) and eligible hospitals and CAHs at Sec.
495.6(f)(14)(i) of our regulations as proposed.
We include this objective in the core set. We believe maintaining
privacy and security is crucial for every EP, eligible hospital or CAH
that uses certified EHR technology and was recommended by the HIT
Policy Committee for inclusion in the core set.
NPRM EP/Eligible Hospital Measure: Conduct or review a security
risk analysis in accordance with the requirements under 45 CFR 164.308
(a)(1) and implement security updates as necessary.
In the proposed rule, we discussed the role of certified EHR
technology in privacy and security. We said that while certified EHR
technology provides tools for protecting health information, it is not
a full protection solution. Processes and possibly tools outside the
scope of certified EHR technology are required. Therefore, for the
Stage 1 criteria of meaningful use we propose that EPs and eligible
hospitals conduct or review a security risk analysis of certified EHR
technology and implement updates as necessary at least once prior to
the end of the EHR reporting period and attest to that conduct or
review. The testing could occur prior to the beginning of the EHR
reporting period. This is to ensure that the certified EHR technology
is playing its role in the overall strategy of the EP or eligible
hospital in protecting health information. We have maintained this
discussion for the final rule, but modified the measure to account for
requests discussed in the comment and response section below.
Comment: Some commenters requested clarification of the phrase
``implement security updates as necessary''.
Response: A security update would be required if any security
deficiencies were identified during the risk analysis. A security
update could be updated software for certified EHR technology to be
implemented as soon as available, to changes in workflow processes, or
storage methods or any other necessary corrective action that needs to
take place in order to eliminate the security deficiency or
deficiencies identified in the risk analysis. To provide better clarity
on this requirement, we are modifying the measure.
After consideration of the public comments received, we are
modifying the meaningful use measure for EPs at Sec. 495.6(d)(15)(ii)
and eligible hospitals and CAHs at Sec. 495.6(f)(14)(ii) of our
regulations ``Conduct or review a security risk analysis per 45 CFR
164.308(a)(1) of the certified EHR technology, and implement security
updates and correct identified security deficiencies as part of its
risk management process.''
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BILLING CODE 4120-01-C
3. Sections 4101(a) and 4102(a)(1) of the HITECH Act: Reporting on
Clinical Quality Measures Using EHRs by EPs, Eligible Hospitals, and
CAHs \3\
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\3\ For purposes of this final rule, the term ``eligible
hospital'' for the Medicaid EHR incentive program is inclusive of
Critical Access Hospitals (CAHs) as defined in this final rule.
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a. General
As discussed in the meaningful use background in section II.A.2.a.
there are three elements of meaningful use. In this section, we discuss
the third requirement: using certified EHR technology, the EP, eligible
hospital, or CAH submits to the Secretary, in a form and manner
specified by the Secretary, information for the EHR reporting period on
clinical quality measures and other measures specified by the
Secretary. The submission of other measures is discussed in section
II.A.2.c of this final rule. The two other elements of meaningful use
are discussed in section II.A.2.d.1 of this final rule.
b. Requirements for the Submission of Clinical Quality Measures by EPs,
Eligible Hospitals, and CAHs
Sections 1848(o)(2)(B)(ii) and 1886(n)(3)(B)(ii) of the Act provide
that the Secretary may not require the electronic reporting of
information on clinical quality measures unless the Secretary has the
capacity to accept the information electronically, which may be on a
pilot basis.
In the proposed rule, we stated that we do not anticipate that HHS
will complete the necessary steps for us to have the capacity to
electronically accept data on clinical quality measures from EHRs for
the 2011 payment year. We believe that it is unlikely that by 2011
there will be adequate testing and demonstration of the ability to
receive the required transmitted information on a widespread basis. The
capacity to accept information on clinical quality measures also would
depend upon the Secretary promulgating technical specifications for EHR
vendors with respect to the transmission of information on clinical
quality measures sufficiently in advance of the EHR reporting period
for 2011, so that adequate time has been provided either for such
specifications to be certified, or for EHR vendors to code such
specifications into certified systems. Therefore, for 2011, we proposed
that Medicare EPs, eligible hospitals, and CAHs use an attestation
methodology to submit summary information to us on clinical quality
measures as a condition of demonstrating meaningful use of certified
EHR technology, rather than electronic submission.
We proposed that from the Medicaid perspective, delaying the onset
of clinical quality measures electronic reporting until 2012 addresses
concerns about States having the ready infrastructure to receive and
store clinical quality measures data before then. More importantly, we
recognized that since Medicaid providers are eligible to receive
incentive payments for adopting, implementing, or upgrading certified
EHR technology, Medicaid providers may not be focused on demonstrating
meaningful use until 2012 or later.
We stated that we anticipate that for the 2012 payment year we will
have completed the necessary steps to have the capacity to receive
electronically information on clinical quality measures from EHRs,
including the promulgation of technical specifications for EHR vendors
to use for obtaining certification of their systems. Therefore, for the
Medicare EHR incentive program beginning in CY 2012 we proposed that an
EP using a certified EHR technology or beginning in FY 2012 an eligible
hospital or CAH using a certified EHR technology, as appropriate for
clinical quality measures, must submit information on clinical quality
measures electronically, in addition to submitting the other measures
described in section II.2.d.2, in order for the EP, eligible hospital,
or CAH to be a meaningful EHR user, regardless of whether CY 2012 is
their first or second payment year. However, if the Secretary does not
have the capacity to accept the information on clinical quality
measures electronically in 2012, consistent with sections
1848(o)(2)(B)(ii) and 1886(n)(3)(B)(ii) of the Act, we will continue to
rely on an attestation methodology for reporting of clinical quality
measures as a requirement for demonstrating meaningful use of certified
EHR technology for payment year 2012. We stated in the proposed rule
that should we not have the capacity to accept information on clinical
quality measures electronically in 2012, we would inform the public of
this fact by publishing a notice in the Federal Register and providing
instructions on how this information should be submitted to us.
We also are finalizing in this final rule that States must identify
for us in their State Medicaid HIT Plans how they plan to accept data
from Medicaid providers who seek to demonstrate meaningful use by
reporting on clinical quality measures, either via attestation or via
electronic reporting, subject to our prior approval. If they initiate
their program by accepting attestations for clinical quality measures,
they must also describe how they will inform providers of their
timeframe to accept submission of clinical quality measures
electronically. We expect that States will have the capacity to accept
electronic reporting of clinical quality measures by their second year
implementing their Medicaid EHR incentive program.
For purposes of the requirements under sections 1848(o)(2)(A)(iii)
and 1886(n)(3)(iii) of the Act, we defined ``clinical quality
measures'' to consist of measures of processes, experience, and/or
outcomes of patient care, observations or treatment that relate to one
or more quality aims for health care such as effective, safe,
efficient, patient-centered, equitable, and timely care. We noted that
certain statutory limitations apply only to the reporting of clinical
quality measures, such as the requirement discussed in the previous
paragraph prohibiting the Secretary from requiring the electronic
reporting of information on clinical quality measures unless the
Secretary has the capacity to accept the information electronically, as
well as other statutory requirements for clinical quality measures that
are discussed below in

[[Page 44381]]

section II.A.3.c.1 of this final rule. These limitations apply solely
to the submission of clinical quality measures, and do not apply to
other measures of meaningful EHR use. The clinical quality measures on
which EPs, eligible hospitals, or CAHs will be required to submit
information using certified EHR technology, the statutory requirements
and other considerations that were used to select these measures, and
the reporting requirements are described below.
With respect to Medicaid EPs and eligible hospitals, we noted that
section 1903(t)(6) of the Act recognizes that the demonstration of
meaningful use may also include the reporting of clinical quality
measures to the States. We proposed that in the interest of simplifying
the program and guarding against duplication of meaningful use
criteria, the clinical quality measures adopted for the Medicare EHR
incentive program, would also apply to EPs and eligible hospitals in
the Medicaid EHR incentive program.
Despite the statutory limitation prohibiting the Secretary from
requiring the electronic submission of clinical quality measures in the
Medicare EHR incentive program, if HHS does not have the capacity to
accept this information electronically, as previously discussed, the
Secretary has broad discretion to establish requirements for meaningful
use of certified EHR technology and for the demonstration of such use
by EPs, eligible hospitals, and CAHs. Although we proposed to require
the electronic submission of information on clinical quality measures
in 2012, we stated that we do not desire this to delay the use of
certified EHR technology by EPs, eligible hospitals, and CAHs to
measure and improve clinical quality. Specifically, we stated that
using EHR functionalities that support measurement of clinical quality
is critical to a central goal of the HITECH Act, improving health care
quality. Measuring quality is a fundamental aspect of improving such
quality, because it allows EPs, eligible hospitals, and CAHs to receive
quantitative information upon which they can then act in order to
improve quality.
Accordingly, although we did not propose under sections
1848(o)(2)(A)(iii) and 1886(n)(3)(A)(iii) of the Act to require that
for 2011 EPs, eligible hospitals, and CAHs report clinical quality
measures to us or States electronically, we proposed to require as an
additional condition of demonstrating meaningful use of certified EHR
technology under sections 1848(o)(2)(A)(i), 1886(n)(3)(A)(ii), and
1903(t)(6) of the Act that EPs and eligible hospitals use certified EHR
technology to capture the data elements and calculate the results for
certain clinical quality measures. Further, we proposed that EPs,
eligible hospitals, and CAHs demonstrate that they have satisfied this
requirement during the EHR reporting period for 2011 through
attestation. We also proposed to require that Medicare EPs, eligible
hospitals, and CAHs attest to the accuracy and completeness of the
numerators and denominators for each of the applicable measures.
Finally, in accordance with our authority under sections
1848(o)(C)(i)(V) and 1886(n)(3)(C)(i)(V) of the Act, which grants us
broad discretion to specify the means through which EPs, eligible
hospitals, and CAHs demonstrate compliance with the meaningful use
criteria, we proposed that EPs, eligible hospitals, and CAHs
demonstrate their use of certified EHR technology to capture the data
elements and calculate the results for the applicable clinical quality
measures by reporting the results to us for all applicable patients.
For the Medicaid incentive program, we proposed that States may accept
provider attestations in the same manner to demonstrate meaningful use
in 2011. However, we indicated that we expect that most Medicaid
providers will qualify for the incentive payment by adopting,
implementing, or upgrading to certified EHR technology, and therefore
will not need to attest to meaningful use of certified EHR technology
in 2011, for their first payment year.
We stated that we recognize that considerable work needs to be done
by measure owners and developers with respect to the clinical quality
measures that we proposed. This includes completing electronic
specifications for measures, implementing such specifications into EHR
technology to capture and calculate the results, and implementing the
systems, themselves. We also recognized that some measures are further
developed than others, as discussed in the measures section (see 75 FR
1871) of the proposed rule. Nevertheless we stated our belief that
overall there is sufficient time to complete work on measures and
measures specifications so as to allow vendors and EPs, eligible
hospitals, and CAHs to implement such systems. We stated that it was
our intention not to finalize those specific measures should the
necessary work on measure specifications not be completed for
particular measures according to the timetable we discuss below. As we
discuss below, we finalize in this final rule only those clinical
quality measures for which clearly defined electronic specifications
have been finalized by the date of display of this final rule.
Finalized clinical quality measures are listed in Table 6 for EPs and
Table 7 for eligible hospitals and CAHs. We also clarify that while
States may not have the capacity to accept electronic reporting of
clinical quality measures in 2011 or their first year implementing
their Medicaid EHR incentive program, we expect that they will have
such capacity by their second implementation year. However, if they do
not, as with the Federal government, the State would continue to rely
on an attestation methodology for reporting clinical quality measures
as a requirement for demonstrating meaningful use of certified EHR
technology, subject to CMS prior approval via an updated State Medicaid
HIT plan.
Comment: A few commenters requested that the definition of
``clinical quality measures'' be expanded to include ``appropriate
clinical prevention.''
Response: We agree that appropriate clinical prevention is a
pertinent topic for clinical quality measures, but we do not believe
the definition of clinical quality measures needs to delineate every
aspect of quality care included in the definition.
Comment: Several commenters said it will be difficult to develop
the EHR capability to capture, integrate and train staff regarding
measure specifications if the clinical quality measures are not posted
with sufficient time to allow these activities. Other commenters said
there is insufficient time allowed for vendors to retool their products
and complete development of the reports and/or systems. Several
commenters indicated that the clinical quality measures have not been
tested, and reliability and validity testing should be performed. Other
commenters indicated that standard, clearly defined electronic
specifications do not exist and new specifications should be pilot
tested and published for stakeholder/public comment. A commenter
requested that CMS establish an explicit process for development and
testing of evidence based electronically specified measures (eMeasure),
and ensure adequate time for field testing.
Response: In general we agree with the desirability of having
electronic specifications available, pilot tested, and published for
stakeholder viewing sufficiently in advance so as to allow adequate
time for modifications if necessary and vendors to incorporate them
into certified EHR technology, and for EPs, eligible hospitals, and
CAHs to

[[Page 44382]]

integrate the measures into their operations and train staff on the
measures. In this case, however, there is a process for certification
of certified EHR technology which includes testing of the capability of
the certified EHR. The final rule issued by ONC (found elsewhere in
this issue of the Federal Register) provides that certified EHR
technology must have the ability to calculate clinical quality measures
as specified by us. We interpret this requirement to mean that
certified EHR technology must have the capability to calculate those
clinical quality measures selected in this final rule based on the
specifications we select and post on the CMS Web site. In order to
provide sufficient time for vendors to retool their products and
complete development of the necessary reports and/or systems for
calculation of the results for the required clinical quality measures,
and for certifying bodies to test and certify that EHR technologies
adequately do so, we are adopting only those electronic specifications
that are posted on the CMS Web site as of the date of display of this
final rule. We believe testing that is part of the process for
certification of EHR technology will substitute for testing that might
otherwise occur. Additionally, some of the selected measures have
undergone various amounts of testing already. For example, the
Emergency Department Throughput, Stroke and Venous Thromboembolism
(VTE) measures mentioned by the commenter were tested during the
January 2010 Connectathon and demonstrated at the Health Information
and Management Systems Society (HIMSS) 2010 Interoperability Showcase
which demonstrated the use of the measures by participating vendors.
However, we expect the EHR certification process to carry out the
necessary testing to assure that applicable certified EHR technology
can calculate sufficient number of EP, eligible hospital and CAH
clinical quality measures required to qualify for the meaningful use
incentive program. In order to permit greater participation by EHR
vendors, including specialty EHRs, the certification program (see ONC
final rule found elsewhere in this issue of the Federal Register) will
permit EHRs to be certified if they are able to calculate at a minimum
three clinical quality measures in addition to the six core and
alternative core measures. In addition, the fact that EPs, eligible
hospitals, and CAHs can adopt an EHR reporting period toward the end of
FY/CY 2011, we believe, will provide additional time for providers to
implement and train staff on the measures we adopt in this final rule.
c. Statutory Requirements and Other Considerations for the Selection of
Clinical Quality Measures for Electronic Submission by EPs, Eligible
Hospitals, and CAHs
(1) Statutory Requirements for the Selection of Clinical Quality
Measures for Electronic Submission by EPs, Eligible Hospitals, and CAHs
Sections 1848(o)(2)(B)(i)(II) and 1886(n)(3)(B)(i) of the Act
require that prior to any clinical quality measure being selected, the
Secretary will publish in the Federal Register such measure and provide
for a period of public comment on such measure. The proposed clinical
quality measures for EPs, eligible hospitals, and CAHs for 2011 and
2012 payment were listed in Tables 3 through 21 of the proposed rule
(see 75 FR 1874 through 1900).
In the proposed rule, we noted that for purposes of selecting
clinical quality measures on which EPs will be required to submit
information using certified EHR technology, section 1848(o)(2)(B)(i)(I)
of the Act, as added by section 4101 of the HITECH Act, states that the
Secretary shall provide preference to clinical quality measures that
have been endorsed by the entity with a contract with the Secretary
under section 1890(a) of the Act, as added by section 183 of the
Medicare Improvement for Patients and Providers Act (MIPPA) of 2008.
For submission of clinical quality measures by eligible hospitals and
CAHs, section 1886(n)(3)(B)(i)(I) of the Act, as added by section
4102(a) of the HITECH Act, requires the Secretary to provide preference
to those clinical quality measures that have been endorsed by the
entity with a contract with the Secretary under section 1890(a) of the
Act, as added by section 183 of the MIPPA, or clinical quality measures
that have been selected for the purpose of applying section
1886(b)(3)(B)(viii) of the Act (that is, measures that have been
selected for the Reporting Hospital Quality Data for Annual Payment
Update (RHQDAPU) program).
On January 14, 2009, the U.S. Department of Health and Human
Services awarded the contract required under section 1890(a) of the Act
to the National Quality Forum (NQF). Therefore, we explained in the
proposed rule that when selecting the clinical quality measures EPs
must report in order to demonstrate meaningful use of certified EHR
technology in accordance with section 1848(o)(2)(B)(i)(I) of the Act,
we will give preference to the clinical quality measures endorsed by
the NQF, including NQF endorsed measures that have previously been
selected for the Physician Quality Reporting Initiative (PQRI) program.
Similarly, we stated that when selecting the clinical quality measures
eligible hospitals and CAHs must report in order to demonstrate
meaningful use of certified EHR technology in accordance with section
1886(n)(3)(B)(i)(I) of the Act, we will give preference to the clinical
quality measures selected from those endorsed by the NQF or that have
previously been selected for the RHQDAPU program. In some instances we
proposed measures for EPs, eligible hospitals, and CAHs that are not
currently NQF endorsed in an effort to include a broader set of
clinical quality measures. In the proposed rule, we noted that the
HITECH Act does not require the use of NQF endorsed measures, nor limit
the measures to those included in PQRI or RHQDAPU. We stated that if
we, professional societies, or other stakeholders identify clinical
quality measures which may be appropriate for the EHR incentive
programs, we will consider those measures even if they are not endorsed
by the NQF or have not been selected for the PQRI or RHQDAPU programs,
subject to the requirement to publish in the Federal Register such
measure(s) for a period of public comment.
We proposed certain clinical quality measures for EPs, eligible
hospitals, and CAHs, and listed these measures in Tables 3 through 21
of the proposed rule (see 75 FR 1874-1900) for use in the 2011 and 2012
payment years. We stated that no changes (that is, additions of
clinical quality measures) would be made after publication of the final
rule, except through further rulemaking. However, we stated that we may
make administrative and/or technical modifications or refinements, such
as revisions to the clinical quality measures titles and code
additions, corrections, or revisions to the detailed specifications for
the 2011 and 2012 payment year measures. We stated that the 2011
specifications for user submission of clinical quality measures would
be available on our Web site when they are sufficiently developed or
finalized. Specifications for the EHR incentive programs must be
obtained only from the specifications documents for the EHR incentive
program clinical quality measures.
Comment: Numerous comments were received regarding the criteria for
selection of clinical quality measures. Some commenters noted the
importance of scientific and medical evidence supporting the measure,
as well as

[[Page 44383]]

concerns regarding how the clinical quality measures are maintained.
Many other commenters indicated that all clinical quality measures
should be evidence-based and up-to-date with current medical standards.
Several commenters communicated support for using NQF; Hospital Quality
Alliance (HQA); Ambulatory care Quality Alliance (AQA); and the
American Medical Association-Physician Consortium for Performance
Improvement (AMA-PCPI) clinical quality measures. Another commenter
suggested that measures that have a related U.S. Preventative Services
Task Force (USPSTF) recommendation should follow the USPSTF guidelines
and the regulations should allow for clinical quality measures to be
updated as the evidence base changes. Another commenter indicated CMS
should ensure that all clinical quality measures are endorsed through a
stakeholder consensus process. Commenters also questioned why some
clinical quality measures in the proposed rule do not have identifiers
for example, NQF number and another commenter indicated some of the
clinical quality measures titles were different in the clinical quality
measure tables. Some commenters also stated that clinical quality
measures should be phased in, implementing the clinical quality
measures by clinically related sets, and that all CMS proposed clinical
quality measures should be NQF endorsed.
Some commenters suggested that CMS should consult with other
quality measure stakeholders, such as, NQF, the Hospital Quality
Alliance (HQA), and the National Committee for Quality Assurance
(NCQA), The Joint Commission (TJC), and Regional Health Improvement
Collaboratives to verify the validity, reliability, and appropriateness
of proposed clinical measures. In addition when developing, validating
and recommending clinical quality measures for the pediatric
population, a commenter suggested CMS include consultation with the
Child Healthcare Corporation of America (CHCA) or the National
Association of Children's Hospitals (NACHRI).
Response: The HITECH Act requires that we give preference to
clinical quality measures that are NQF endorsed. NQF is the only
organization that we are aware of which is in compliance with the
requirements of National Technology Transfer and Advancement Act
(NTTAA), to endorse quality measures through voluntary consensus
standards. However, the HITECH Act does not require the exclusive use
of NQF endorsed measures, nor limit the measures to those produced by
any particular developer or adopted or supported by any particular
organization, such as those suggested by the commenters. We gave
preference to NQF endorsed clinical quality measures in this final
rule. However, we do not adopt a policy that would restrict the
Secretary's discretion of beyond what is required by the statute.
Measures listed in the proposed rule that did not have an NQF
identifying number were not NQF endorsed.
With respect to specific organizations, we have received broad
input regarding clinical quality measures including from many
organizations mentioned by commenters and have considered their
comments in determining which clinical quality measures to finalize in
this final rule. We also note that, for NQF endorsed measures, the NQF
provides a venue for public and member input as a part of the
endorsement process. With respect to commenters urging consideration of
whether the scientific and medical evidence support the measure,
whether the clinical quality measures are evidence-based and consistent
with current medical standards, and how the clinical quality measures
are maintained, we note that these factors are part of the NQF process,
as well as standard measure development processes. We are committed to
working with national, State and local associations to identify or
develop additional electronically specified clinical quality measures,
particularly for pediatric populations, for later stages of meaningful
use.
In selecting clinical quality measures for the Medicare EHR
incentive program, the Secretary is required to provide for notice in
the Federal Register with public comment. This provides broad public
input which we fully consider. However, as we stated in the proposed
rule, we are finalizing the policy that technical specifications for
clinical quality measures are developed and finalized through the sub-
regulatory process. Further, this requirement does not pertain to the
Medicaid EHR incentive program. We expect to develop a process in the
future to solicit public input on Medicaid-specific clinical quality
measures for future stages of meaningful use, if needed. However,
because there are no such Medicaid-specific measures in this final
rule, and all measures apply uniformly across both the Medicare and
Medicaid EHR incentive program, we have not developed such a process in
this final rule.
After consideration of the public comments received, the HITECH Act
requires that we give preference to clinical quality measures that are
NQF endorsed. However, it does not require the exclusive use of NQF
endorsed measures, nor limit the measures to those produced by any
particular developer nor be adopted by any particular organization. In
this case, all clinical quality measures we are finalizing are NQF
endorsed and have current electronic specifications as of the date of
display of this final rule. Effective with the publication of this
final rule, these specifications are final for clinical quality measure
reporting under the HITECH Act beginning with 2011 and 2012. The
detailed electronic specifications of the clinical quality measures for
EPs, eligible hospitals, and CAHs are displayed on the CMS Web site at
http://www.cms.gov/QualityMeasures/03_ElectronicSpecifications.asp#TopOfPage.
Sections 1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) of the Act
requires that in selecting clinical quality measures, the Secretary
shall seek to avoid redundant or duplicative reporting otherwise
required, including reporting under section 1848(k)(2)(C) of the Act
(the PQRI program) and eligible reporting under section
1886(b)(3)(B)(viii) of the Act (RHQDAPU program). For EPs, when the
proposed rule was issued there was no statutory authority to provide
PQRI incentive payments for services furnished for 2011 or subsequent
years. Since then, the PQRI incentive payment for 2011 has been
authorized. We acknowledge there is overlap within the clinical quality
measure reporting for EPs in the EHR incentive program with the PQRI
incentive program. However, the reporting periods in these two
incentive programs are different. Currently, the PQRI has a six and a
twelve month reporting period. The reporting period for the HITECH EHR
incentive program for the first payment year is 90 days, which does not
meet the PQRI reporting requirement of six or twelve month reporting
period, as currently provided. However, in the second payment year of
the HITECH EHR incentive program the reporting period is one year, and
the PQRI reporting period, would be synchronous. The requirement for
qualification for PQRI is subject to a separate regulation. Although
there may be additional issues beyond the reporting periods, we
anticipate efforts to avoid redundant and duplicative reporting in PQRI
of the same clinical quality measures as required in the EHR incentive
program. We envision a single reporting infrastructure for electronic

[[Page 44384]]

submission in the future, and will strive to align the EHR incentive
program and PQRI as we develop the reporting framework for clinical
quality measures to avoid redundant or duplicative reporting. Further,
we also note that the Affordable Care Act (Pub. L. 111-148) requires
that the Secretary develop a plan to integrate the EHR incentive
program and PQRI by January 1, 2012. In doing so we expect to further
address the issue of redundant and duplicative reporting. For eligible
hospitals and CAHs, for the EHR incentive program, we are finalizing
one set of 15 clinical quality measures for both Medicare and Medicaid.
For Stage 1 (for clinical quality measures Stage 1 is 2011 and
beginning in 2012), none of the finalized 15 clinical quality measures
for eligible hospitals and CAHs are currently included in the RHQDAPU
program, and therefore there is no issue of redundant and duplicative
reporting based upon the HITECH Act. Nevertheless, clinical quality
measures in the EHR incentive program for eligible hospitals and CAHs
were electronically specified for use in the RHQDAPU program with the
anticipation to place these measures in RHQDAPU once we have completed
and implemented the mechanism to accept quality measures through
electronic submission. For the future, we do not anticipate having one
set of clinical quality measures for the EHR incentive program and
another set for RHQDAPU. Rather, we anticipate a single set of hospital
clinical quality measures, most of which we anticipate can be
electronically specified. We note some of the RHQDAPU quality measures,
for example HCAHPS experience of care measures, do not lend themselves
to EHR reporting. Similarly, certain outcome quality measures, such as
the current RQHDAPU readmission measures, are based on claims rather
than clinical data. In the future, we anticipate hospitals that report
RHQDAPU measures electronically would receive incentives from both the
RHQDAPU and EHR incentive program, in addition to properly reporting
any required quality measures that are not able to be derived from
EHRs; this is however subject to future rulemaking. Further, in the
future, for hospitals that do not report electronically we anticipate
that they may only qualify for an incentive through the RHQDAPU
program, and not through the EHR incentive program. Again this is
subject to future rulemaking. We envision a single reporting
infrastructure for electronic submission in the future, and will strive
to align the hospital quality initiative programs to seek to avoid
redundant and duplicative reporting of quality measures for eligible
hospitals and CAHs.
Comment: Many commenters also suggested aligning clinical quality
measure reporting across federal agencies (for example, HRSA, CMS) as
well as across programs, (for example, PQRI, CHIP, Medicare and
Medicaid) to avoid duplicative and redundant quality performance
reporting. Additionally, several commenters suggested that similar
clinical quality measures and/or quality data efforts included in the
proposed rule are included in other clinical quality recognition
programs and EPs who successfully report in these programs via a
certified EHR should be deemed to have successfully reported in the EHR
incentive program. Other commenters suggested using the PQRI reporting
process to satisfy the meaningful use requirement under the EHR
incentive program for EPs. Another commenter indicated that clinical
quality measures employed by this program and others will be valuable
if EPs using EHRs have an in-depth understanding of how to leverage the
technology and the data they produce to improve care. A number of
commenters requested that only clinical quality measures chosen for use
in the RHQDAPU program should be considered for implementation in the
EHR incentive program for eligible hospitals and CAHs that qualify for
both incentives. Additionally, the commenters stated they would like
the process for avoiding duplicative reporting clearly defined.
Response: The HITECH Act requires that the Secretary seek to avoid
redundant and duplicative reporting, with specific reference to PQRI
for EPs and RHQDAPU for eligible hospitals and CAHs. We have sought to
avoid duplicative and redundant reporting in the implementation of the
HITECH Act as discussed elsewhere in our responses to comments in this
final rule. We will seek to align quality initiative programs in future
rulemaking.
(2) Other Considerations for the Selection of Clinical Quality Measures
for Electronic Submission by EPs, Eligible Hospitals, and CAHs
In addition to the requirements under sections 1848(o)(2)(B)(i)(I)
and 1886(n)(3)(B)(i)(I) of the Act and the other statutory requirements
described above, we also proposed applying the following considerations
to the selection of the clinical quality measures for electronic
submission under the Medicare and Medicaid EHR incentive programs:
Clinical quality measures that are included in, facilitate
alignment with, or allow determination of satisfactory reporting in
other Medicare (for example, PQRI or the RHQDAPU program), Medicaid,
and Children's Health Insurance Program (CHIP) program priorities.
Clinical quality measures that are widely applicable to
EPs and eligible hospitals based on the services provided for the
population of patients seen.
Clinical quality measures that promote CMS and HHS policy
priorities related to improved quality and efficiency of care for the
Medicare and Medicaid populations that would allow us to track
improvement in care over time. These current and long term priority
topics include: prevention; management of chronic conditions; high cost
and high volume conditions; elimination of health disparities;
healthcare-associated infections and other conditions; improved care
coordination; improved efficiency; improved patient and family
experience of care; improved end-of-life/palliative care; effective
management of acute and chronic episodes of care; reduced unwarranted
geographic variation in quality and efficiency; and adoption and use of
interoperable HIT.
Clinical quality measures that address or relate to known
gaps in the quality of care and measures that through the PQRI program,
performed at low or highly variable rates.
Clinical quality measures that have been recommended for
inclusion in the EHR incentive by the HIT Policy Committee.
We noted in the proposed rule that the Children's Health Insurance
Program Reauthorization Act (CHIPRA) of 2009 (Pub. L. 111-3) Title IV,
section 401 requires the Secretary to publish a core set of clinical
quality measures for the pediatric population. We stated that, to the
extent possible, we would align the clinical quality measures selected
under the EHR incentive program with the measures selected under the
CHIPRA core measure set. Included in the proposed clinical quality
measures were nine clinical quality measures pertaining to pediatric
providers. Four of these nine measures were on the list of CHIPRA
initial core measures that were recommended to the Secretary by the
Subcommittee to AHRQ's National Advisory Committee (SNAC). In our
proposed rule, we noted that not all CHIPRA initial measures
recommended to the Secretary were applicable to EHR technology or to
the EHR incentive payment program. For example, some of

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the measures are population-based, survey-derived, or not yet NQF
endorsed. We stated that new or additional measures for the next
iteration of the CHIPRA core set would have EHR extractability as a
priority.
Since the publication of the proposed rule, the CHIPRA core measure
set has been published in a final rule (see 74 FR 68846 through 68849).
In this EHR incentive program final rule, there are four clinical
quality measures that are also in the published CHIPRA initial core
measure set. These clinical quality measures are shown below in Table
4:
[GRAPHIC] [TIFF OMITTED] TR28JY10.012

Due to the concurrent CHIPRA and ARRA HIT implementation
activities, we believe there is an exciting opportunity to align the
two programs and strive to create efficiencies for States and pediatric
providers, where applicable. Similarly, the adult quality measures
requirements enacted in the ACA will provide another opportunity for
CMS to align its quality measures programs for consistency and to
maximize use of electronic reporting. As these programs move forward,
we will continue to prioritize consistency in clinical quality measure
selection for providers when possible.
We solicited comments on the inclusion or exclusion of any clinical
quality measure or measures proposed for the 2011 and 2012 payment
years, and to our approach in selecting clinical quality measures.
We stated in the proposed rule that we do not intend to use notice
and comment rulemaking as a means to update or modify clinical quality
measure specifications. A clinical quality measure that has completed
the consensus process through NQF has a designated party (usually, the
measure developer/owner) who has accepted responsibility for
maintenance of the clinical quality measure. In general, it is the role
of the clinical quality measure owner, developer, or maintainer/steward
to make basic changes to a clinical quality measure in terms of the
numerator, denominator, and exclusions. We proposed that the clinical
quality measures selected for the 2011 and 2012 payment year be
supplemented by our technical specifications for EHR submission. We
proposed to post the complete clinical quality measures specifications
including technical specifications to our Web site and solicited
comments on our approach.
We received various comments as to our proposed considerations for
selection of clinical quality measures for submission by EPs, eligible
hospitals, and CAHs.
Comment: One commenter said that there needs to be longer than nine
months for the look back for capturing clinical quality measures data.
Several commenters indicated that baseline measurements that have used
the clinical quality measure in the past have not been performed.
Commenters also recommended the linkage of clinical decision support to
clinical quality measures to strengthen quality improvement efforts. A
commenter supported our inclusion of measures that address both quality
and resource use efficiency. Another commenter indicated support for
the clinical quality measures as represented in the proposed rule.
Response: The look back for capturing clinical quality measures is
the period of time for which data would be considered as applying to
the measure calculation. The look back period for a clinical quality
measure and the method of documentation of prior information is defined
by the clinical quality measure specification. The clinical quality
measures require reporting and not achievement on particular
performance thresholds. We agree with the commenters regarding the
benefits of linking clinical decision support tools to the clinical
quality measures, and anticipate that as EHR technology evolves, many
of the clinical quality measures will be supported by clinical decision
support tools. We also agree with the benefits of efficiency measures
and we expect that in future program years the scope and variety of
measures that address these factors will expand.
Comment: Commenters requested a definition for ``Eligible Provider
and Non-Qualifying Eligible Provider'' with respect to the provider's
ability to meet meaningful use if there are no appropriate clinical
quality measures to report, the application of financial penalties
beginning in 2015, and the handling of exclusions. Another commenter
stressed the need for detailed information regarding what is included
and excluded in the numerator and denominator for each measure so as to
ensure that certified EHR technology's programmed analytics capture all
patients who meet the relevant criteria and to ensure that clinical
quality measures are properly evaluated. Others indicated that
reporting measures electronically will reduce administrative reporting
costs. Other commenters supported the ability to report ``N/A'' for
clinical quality measures where an insufficient denominator exists.
Other commenters urged that CMS not include any clinical quality
measures in Stage 1 of Meaningful Use because they believe Stage 1
should focus on the initial implementation of certified EHR systems and
its use for patient care, and that EPs must gain experience with their
certified EHR technology before attesting to the accuracy and
completeness of numerators, denominators and quality calculations
generated from these systems.
Response: While some commenters recommended we not include any
clinical quality measures in Stage 1 (2011 and beginning in 2012), as
previously described for Stage 1 EPs are required to attest to the
clinical quality measures calculated results (numerator,

[[Page 44386]]

denominator, and exclusions) as automatically calculated by the
certified EHR technology. Given that the statutory requirement for
clinical quality measures is an element of meaningful use, we believe
that providing this information on clinical quality measures is
appropriate for Stage 1 (2011 and beginning in 2012). We would expect
that the patient for whom a clinical quality measure does not apply
will not be included in the denominator of the clinical quality
measure. If not appropriate for a particular EP we would expect that
either patients would not appear in the denominator of the measure (a
zero value) or an exclusion would apply. Therefore reporting ``N/A'' is
not necessary. Exclusion parameters--that is, information on what is
included and excluded in the numerator and denominator for a clinical
quality measure-are included in the measure specifications. We agree
that reporting measures electronically will reduce administrative
reporting costs, however as discussed in this final rule we will not
require electronic submission of clinical quality measures until 2012.
Also discussed earlier in this final rule, we believe collecting
clinical quality measure data is an important part of meaningful use.
Comment: A commenter indicated that CMS should take ownership of
each of the EP clinical quality measures so that CMS can then
adjudicate issues related to the clinical quality measures, instead of
referring the EP to the measure owner. One commenter believes that EPs
and their specialty societies should be the only owners of EP clinical
quality measures.
Response: We are the owner/developer for certain clinical quality
measures. More commonly, we use the clinical quality measures developed
and owned by others, who are then responsible for the clinical quality
measure specifications as endorsed by NQF. Numerous measures have been
developed over the years by various organizations and CMS, and
therefore we do not believe that specialty societies should be the only
owners of EP clinical quality measures. The HITECH Act does not suggest
or require that we should be the sole owner/developer of clinical
quality measures.
Comment: A commenter questioned whether clinical quality measures
would be updated during the bi-annual review process and how much lead
time will be given.
Response: The measures for Stage 1 (2011 and beginning in 2012) of
meaningful use are finalized in this final rule and will not change
during that stage. Additionally, the electronic specifications, as
posted on the CMS Web site at the time of publication of this final
rule, are final. We intend to expand the clinical quality measures
again for Stage 2 of meaningful use, which we anticipate will first be
effective for the 2013 payment year. As required by the HITECH Act for
the Medicare EHR incentive program, prior to selecting any new clinical
quality measure(s) for Stage 2 of meaningful use, we will publish
notice of the proposed measure(s) and request and consider public
comments on the proposed measures. We note that the Medicaid EHR
incentive program does not have the same statutory requirement. If
future stages of meaningful use include clinical quality measures
specific for Medicaid providers, we will consider a process to receive
public input on such measures.
Comment: One commenter suggested that only measures chosen for use
in the pay-for-reporting program should be considered for
implementation in the EHR incentive program.
Response: We selected clinical quality measures that are broadly
applicable for the 2011 and 2012 EHR incentive program. Many clinical
quality measures used in other Medicare pay-for-reporting programs are
not applicable to all Medicaid eligible providers, such as
pediatricians, certified nurse-midwives, and children's hospitals.
Comment: Commenters suggested alignment between measures with
vocabulary standards, in order to promote interoperability of clinical
data. Stage 1 allows alternative vocabularies for problems, drugs, and
procedures; and measures should only be included if alternative
specifications using all Stage 1 vocabularies are provided. Commenters
recommended incorporating HL7, LOINC, SNOMED, ICD-9, and ICD-10 for
data exchange.
Response: Standards for certified EHRs, including vocabulary
standards, are included in ONC's final rule (found elsewhere in this
issue of the Federal Register).
Comment: Commenter recommended that in the beginning stages of
implementation of the EHR incentive programs, CMS should base its
reporting initiatives on existing industry models to prevent delays,
consumer mistrust, and potential legal issues.
Response: We have conducted extensive reviews of industry
standards, employed the comments of industry experts and solicited
public comments on all proposed processes.
Comment: Many commenters are concerned that there will not be
adequate time to communicate and implement the electronic specification
for 2011 clinical quality measure requirements. Additionally, one
commenter expressed concern that the additional clinical quality
measures required for 2011 reporting will not be posted by CMS in time
for careful review and assessment, since currently there are only 15
measures electronically specified and posted. Commenters requested
clinical quality measures to be posted with implementation guides for
each quality reporting metric to ensure successful reporting.
Response: We have limited the requirements for clinical quality
measure reporting for eligible hospitals and CAHs to the 15 measures
that were electronically specified and posted at the time of publishing
the proposed rule. All measures specifications for clinical quality
measures selected are final effective upon publication of the EHR
incentive program final rule.
d. Clinical Quality Measures for EPs
For the 2011 and 2012 EHR reporting periods, based upon the
considerations for selecting clinical quality measures discussed above,
we proposed certain clinical quality measures that were identified in
the proposed rule (see 75 FR 1874-1889) for EPs. Tables 4 though 19 of
the proposed rule divided the clinical quality measures identified in
Table 3 into core measures and specialty group measures (see 75 FR 1890
through 1895). The concept of core measures and specialty group
measures is discussed below.
We also stated that some measures were in a higher state of
readiness than others, and requested comment on each measure's state of
readiness for use in the EHR incentive programs. For those measures
where electronic specifications did not, at the time of the proposed
rule, exist, we solicited comment on how quickly electronic
specifications could be developed, and the period of time required from
final posting of the electronic specifications for final measures to
ensure the effective implementation of the measures. We stated our
intention to publish electronic specifications for the proposed
clinical quality measures on the CMS Web site as soon as they become
available from the measure developer(s). Electronic specifications may
be developed concurrently with the development of measures themselves
and potentially with the NQF endorsement processes. We stated that all
of the proposed clinical quality measures included in Table 3 (see 75
FR 1874-1889) meet one or more of the

[[Page 44387]]

criteria for the selection of clinical quality measures, discussed in
the proposed rule. A large portion of these measures had been through
notice and comment rulemaking for PQRI, and nearly all PQRI clinical
quality measures are NQF endorsed. Additionally, they have broad
applicability to the range of Medicare designated specialties, and the
services provided by EPs who render services to Medicare and Medicaid
beneficiaries and many others. Further, nine of the proposed 90
clinical quality measures listed in Table 3 (see 75 FR 1874-1889) (PQRI
numbers 1, 2, 3, 5, 7, 110, 111, 112, and 113) had preliminary
specifications for electronic submission that had already been
developed for the purpose of testing the submission of clinical quality
data extracted from an EHR for the PQRI program. The link to the
preliminary electronic specifications for nine PQRI clinical quality
measures was provided: http://www.cms.hhs.gov/pqri.
We stated that in terms of CMS and HHS healthcare quality
priorities, clinical quality PQRI measures numbered 1, 2, 3, 5, and 7
address high priority chronic conditions, namely diabetes, coronary
artery disease, and heart disease. Clinical quality PQRI measures
numbered 110, 111, 112, 113, 114, 115, and 128 support prevention which
is a high CMS and HHS priority. The PQRI clinical quality measure
specifications for claims-based or registry-based submission of these
clinical quality measures for the most current PQRI program year can be
found on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/15_MeasuresCodes.asp#TopOfPage. A description of
the clinical quality measure, including the clinical quality measure's
numerator and denominator, can be found in the PQRI clinical quality
measure specifications.
We pointed out that the PQRI clinical quality measures that were
proposed largely align with the recommendations of the HIT Standards
Committee. However, in addition to proposed clinical quality measures
that are currently included in PQRI, we also proposed certain other
clinical quality measures that we stated are of high importance to the
overall population. Those clinical quality measures are Ischemic
Vascular Disease (IVD): Use of Aspirin or another Antithrombotic; IVD:
Complete Lipid Profile; IVD: Low Density Lipoprotein (LDL-C) Control,
and Blood Pressure Management. Finally, we proposed an array of other
measures which address important aspects of clinical quality.
We stated our belief that the proposed clinical quality measures
were broad enough to allow for reporting for EPs and addressed high
priority conditions. We recognized the importance of integrating the
measures into certified EHR technologies for calculation of measures
results, and that not all measures would be feasible for 2011 and 2012.
We invited comment on the advisability of including the measures for
payment years 2011 and 2012. Although we recognized that there are many
other important clinical quality measures of health care provided by
EPs, we anticipated expanding the set of clinical quality measures in
future years and listed a number of clinical quality measures for
future consideration in section II.A.3.g of the proposed rule preamble,
on which we also invited comment.
Comment: Many of the proposed clinical quality measures received
favorable comments and support for inclusion in the final clinical
quality measure set. A few examples of measures that were supported for
inclusion were measures related to prevention and screening, and
diabetes. It was stated by a commenter that the proposed rule includes
some similar clinical quality measures. For example, the commenter
indicated NQF 0059 and NQF 0575 both deal with hemoglobin A1c control.
Others commented that some measures should be eliminated and not
utilized in the final set of clinical quality measures for EPs. For
example, a few commented that the following two measures should be
eliminated, NQF 0052 and NQF 0513 were intended to be implemented at
the administrator site level using outpatient hospital claims and not
at the individual practitioner level. A number of commenters stated
that the specifications for certain clinical quality measures, for
example, NQF 0022, NQF 0031, NQF 0032, NQF 0033, NQF 0034, and NQF 0061
were not consistent with current clinical practice guidelines. Another
commenter requested clarification for the specifications for NQF 0013
because blood pressures are not routinely monitored for 2-month-old
patients. Many commenters provided suggestions for other clinical
quality measures not included in the proposed rule.
Response: We appreciate all of the suggestions from the commenters.
We are unable to add any clinical quality measures that were not
identified in the proposed rule due to language in sections
1848(o)(2)(B)(i)(II) and 1886(n)(3)(B)(i) of the Act requiring a period
of public comment for any finalized measures. This requirement does not
pertain to the Medicaid EHR incentive program; we expect to develop a
process in the future to solicit public input on Medicaid-specific
clinical quality measures for future stages of meaningful use, if
needed. However, we will consider those additional clinical quality
measures recommended by commenters for future inclusion in the clinical
quality measure sets.
In regard to suggested changes/revisions and/or elimination of the
proposed clinical quality measures, we considered these suggestions
when finalizing clinical quality measures in this final rule. In regard
to this, we considered these suggestions when evaluating the clinical
quality measures for selection in this final rule. Of the clinical
quality measures in the proposed rule that we are not finalizing, we
removed the measures that do not have electronic specifications by the
date of display of this final rule. Additionally, some of the proposed
clinical quality measures were recommended for deletion or
modification, and therefore were recommended to not be used in the
final rule; this is delineated in other comments and responses in this
final rule. Further, we are only finalizing clinical quality measures
that are electronically specified the date of display of the final
rule. The electronic specifications included in the final set of
clinical quality measures for EPs are posted to the CMS Web site at:
http://www.cms.gov/QualityMeasures/03_ElectronicSpecifications.asp#TopOfPage.
Comment: Numerous commenters were concerned about the burden
(economic and other) of reporting on the large number of clinical
quality measures and the overall quality reporting burden this will add
to EPs. Some commenters stated that the use of numerators and
denominators for some measures will require manual calculation on the
part of the EPs since there are no automated reports that can capture
all of the information that must be tabulated. One commenter stated
that there are insufficient resources to calculate the denominators of
the required measures. Other commenters suggested using the PQRI
requirements of reporting only three measures, and others suggested
reporting on significantly smaller number of measures.
Response: In response to the many comments received regarding the
undue burden associated with reporting on a large number of clinical
quality measures, or measures that involve a manual process, we have
finalized only those clinical quality measures that can

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be automatically calculated by a certified EHR technology. We further
limited the measures to those for which electronic specifications are
currently available, which we posted as final by the date of display of
this final rule. This limitation significantly reduces the number of
measures EPs are required to report in 2011 and 2012, thus reducing the
EPs' reporting burden as well as addressing commenters' concerns about
readiness. Although for 2011, Medicare EPs, eligible hospitals, and
CAHs will still need to manually report (attest) to the results
automatically calculated by their certified EHR technology, we believe
that with the reduction in the number of measures that the burden is
reasonable. Additionally, this provides for the reporting of clinical
quality measures beyond simply the core clinical quality measures that
EPs identify as suitable to report.
Table 5, below, shows the proposed clinical quality measures for
submission by Medicare and Medicaid EPs for the 2011 and 2012 payment
year as stated in the proposed rule (see 75 FR 1874-1889) for EPs, but
that are not being finalized. Table 5 conveys the NQF measure number
and PQRI implementation number (that is, the number used in the PQRI
program to identify the measure as implemented in PQRI (for the 2010
PQRI measures list see https://www.cms.gov/PQRI/Downloads/2010_PQRI_MeasuresList_111309.pdf)), clinical quality measure title and
description, and clinical quality measure steward and contact
information. The measures listed below in Table 5 do not have
electronic specifications finished before the date of display of this
final rule, thus we have eliminated these measures for this final rule
and will consider the addition of these measures in future rulemaking.
Also several measures listed below were only concepts at the time of
publication of the proposed rule (that is, Hysterectomy rates,
Appropriate antibiotic use for ear infections, Statin after Myocardial
Infarction, 30 day Readmission Rate, 30 Readmission Rate following
deliveries, and Use of CT Scans). These concept measures were not
developed or electronically specified clinical quality measures, nor
NQF endorsed; and there was not adequate time to consider these
concepts for development for this final rule. Therefore, the concepts
listed below will be considered in future rulemaking. Lastly, NQF 0026
has since been retired since publication of the proposed rule.
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Comment: Some commenters requested that CMS implement feedback
reports early in the process that document whether EPs are successfully
participating in the PQRI Program, the EHR incentive program, and the
e-prescribing program, and that the report communicate whether the
information received by CMS for these programs was successfully
submitted and received.
Response: As the PQRI and e-prescribing programs are beyond the
scope of this rule, we do not address suggestions that we implement
feedback reports related to these programs. The criteria to qualify for
the EHR incentive payments are based on results automatically
calculated by EPs' certified EHR technology, as attested by the EPs. As
such, we believe that the EP will be able to determine whether they
have reported the required clinical quality measures to CMS or the
State, rendering it unnecessary that CMS or the State provide the EP
with a feedback report. We expect the system through which EPs, must
submit information would indicate successful receipt beginning the
first year of Stage 1.
Comment: A commenter indicated that the clinical quality measure
that addresses tobacco use and the measure that addresses smoking
status apply to different age groups, and stated that they should be
consistent. A number of commenters recommended removing smoking status
as an objective from meaningful use section of this final rule, and
only including it in the clinical quality measures in order to avoid
confusion.
Response: We are in agreement that the meaningful use objective and
the clinical quality measure address the same topic of smoking. The
clinical quality measure requires measurement of a clinical action
performed by the EP to address the negative consequences of smoking,
whereas the meaningful use objective seeks to make sure smokers are
identified. Additionally, the age for recording smoking status for
meaningful use is 13 years and older, and the population addressed by
the clinical quality measure is 18 years and older, thus they are
different with respect to intent of the objective/measure and the age
population. For the clinical quality measure, we are keeping the age
range at 18 years and older because the measure is currently NQF
endorsed with these specifications. We will consider merging these in
the future to reconcile the age range.
Comment: Some commenters stated that reporting of ambulatory
quality measures should remain voluntary for EPs, based on the view
that many process measures do not correlate with outcomes and are not
evidence based. A process measure focuses on a process which leads to a
certain outcome, meaning that a scientific basis exists for believing
that the process, when executed well, will increase the probability of
achieving a desired outcome. A commenter stated that EPs serving needy
patients, minorities, and populations with lower socioeconomic levels
will experience lower performance on many clinical quality measures,
and therefore will be deterred from participating in the EHR incentive
program.
Response: The EHR incentive program is voluntary. Similar to other
Medicare quality measure reporting programs, EPs are not required to
satisfy minimum clinical quality performance levels in order to qualify
for the EHR payment incentive, but rather merely report on their
ambulatory quality measure results. Thus, as currently structured, we
do not believe the requirement that EPs report clinical quality
measures would deter EPs who serve minority patients or patients of
lower socioeconomic status or otherwise disadvantaged from
participating in the program.
After consideration of the public comments received, we are
finalizing the basic requirement that EPs submit results for clinical
quality measures.

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This requirement applies to both the 2011 and 2012 reporting periods
(and will potentially continue to apply, until CMS issues a subsequent
final rule that supplants this final rule). We are limiting the
clinical quality measures to those for which electronic specifications
are available (posted by CMS on the Web site at the time of display of
this final rule.) These measures are listed in Table 6 of this final
rule for EPs. They constitute the clinical quality measures ``specified
by CMS'' for the purposes of the ONC final rule (found elsewhere in
this issue of the Federal Register) and are the measures that certified
EHRs are required to be able to calculate. Of these, nine EP measures
have preliminary electronic specifications for which we provided links
for in the proposed rule. The remaining 35 clinical quality measures
for EPs were electronically specified more recently and posted on the
CMS Web site by the date of display of this final rule. We are
finalizing only those measures for which there are available electronic
specifications as of the date of display of this final rule. Although
we are not finalizing all of 90 proposed clinical quality measures that
were proposed for EPs in Table 3 (see 75 FR 1874-1889) of the proposed
rule, because of lack of electronic specifications, our intent is to
include all of them in our proposed Stage 2 requirements, or to propose
alternative measures following a transparent process that includes
appropriate consultation with stakeholders and other interested
parties. In addition, we plan to add new measures to fill gaps where
measures were not previously proposed, such as in behavior and mental
health (e.g., depression and alcoholism). Certified EHR technology must
be able to calculate each measure numerators, denominators and
exclusions for each of the clinical quality measures finalized for the
EHR incentive program. Table 6 conveys the applicable NQF measure
number and PQRI implementation number (that is, the number used in the
PQRI program to identify the measure as implemented in PQRI (for the
2010 PQRI measures list see https://www.cms.gov/PQRI/Downloads/2010_PQRI_MeasuresList_111309.pdf)), title, description, the owner/
steward, and a link to existing electronic specifications. The NQF
number is an identifying number that is associated with the NQF
endorsed measure number. All of the clinical quality measures in Table
6 are NQF endorsed and have broad applicability to the range of
Medicare designated specialties, and the services provided by EPs who
render services to Medicare and Medicaid beneficiaries and many others.
In terms of CMS and HHS healthcare quality priorities, clinical quality
PQRI measures numbered 1, 2, 3, 5, and 7 address high priority chronic
conditions, namely diabetes, coronary artery disease, and heart
disease. Clinical quality PQRI measures numbered 66, 110, 111, 112,
113, 114, 115, and 128 support screening and prevention all of which is
a high CMS and HHS priority.
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e. Clinical Quality Measures Reporting Criteria for EPs
For the 2011 and 2012 EHR reporting periods, to satisfy the
requirements for reporting on clinical quality measures for Medicare
under section 1848(o)(2)(A)(i) and (iii) of the Act and for Medicaid
under section 1903(t)(6)(C) of the Act, we proposed to require that
each EP submit information on two measure groups: a core measures group
(Table 4 of the proposed rule see 75 FR 1890), and the subset of
clinical measures most appropriate given the EP's specialty (Tables 5
through 19 specialty group measures see 75 FR 1891 through 1895). For
the core measure group, we stated our belief that the clinical quality
measures were sufficiently general in application and of such
importance to population health; we would require that all EPs treating
Medicare and Medicaid patients in the ambulatory setting report on all
of the core measures as applicable for their patients.
We proposed that with the inclusion of measures applicable to
targeting children and adolescents and the wide applicability of the
measures like Blood Pressure Management, we believed the proposed core
set of clinical quality measures and specialty measures was broad
enough to enable reporting by all EPs. However, we encouraged
commenters to identify the EPs in question and propose specific
remedies if the public believed that other EPs would not have
sufficient patients in the denominator of these core measures.
Comment: Several commenters requested clarification about the core
measures group. Many comments were received regarding the inclusion of
a core measure set for EPs. Some commenters favored the inclusion of
one or more core measures (for example, preventive care) and others
indicated core measures were essential for improving the quality of
care. Conversely, numerous commenters suggested eliminating the core
measure set for EPs. The primary reason offered by commenters for
excluding core measures was that these clinical quality measures were
outside their scope of practice and/or not relevant to their specific
patient population. A commenter requested that the core set of clinical
quality measures be better defined and/or increased for each reporting
period. Many commenters indicated the clinical quality measures
included in the core measure set are not appropriate to all EPs and
specialists (for example, EPs that do not have direct physical access
to the patients such as teleradioloists, EPs that do not routinely
report blood pressure in patients with diagnosed hypertension, such as
dermatologists) and they would not be able to report on these clinical
quality measures. Many commenters supported reporting exclusions. A
commenter recommended the use of PQRI 128/NQF 0421 Preventive Care and
Screening: BMI Screening and Follow-up as a core clinical quality
measure. Other commenters indicated these clinical quality measures
were important for improving care and the core measure set should be
expanded.
Response: After considering the comments, we agree there may be
circumstances such that the core clinical quality measures are not
applicable for specific patient populations and/or a specific EP's
scope of practice. In such circumstances we anticipate that the
patients will not appear in the denominator at all or will be excluded.
We have defined the core measure set for EPs in Table 7 of this final
rule, and these core measures will be required for Stage 1. We expanded
the core measures set to include three alternate measures, as well as
added PQRI 128/NQF0421 as a required core measure, based on commenters
feedback. Although we require all EPs to report the core measures,
there is no requirement that the EP have any particular number of
patients in the denominator, which could be zero as calculated by the
EHR. Therefore we have changed the reporting criteria to require EPs to
report on all three core measures (as shown in Table 7, below), and
three additional clinical quality measures selected from Table 6 (other
than the core or alternate core measures listed in Table 6). The
clinical quality measures included in this final rule reflect a subset
of measures that were included in the proposed rule (see 75 FR 1874
through 1889). The clinical quality measures included in Table 6 of
this final rule were selected from the Tables included in the proposed
rule, based on having electronic specifications fully developed by the
date of display of this final rule.
Comment: Many commenters indicated that NQF 0022 Drugs to be
avoided in the elderly is an inappropriate clinical quality measure and
should be removed. The rationale given for removal is that the
numerator (at least one prescription for any drug to be avoided in the
elderly in the measurement year or at least two different drugs to be
avoided in the elderly in the measurement year) tends to be very small.
Others considered poly-pharmacy a more significant problem in the
elderly than avoidance of specific drugs. A number of commenters
indicated this clinical quality measure should include a list of the
drugs to be avoided.
Response: We agree with the concerns expressed by the commenters
and have removed the measure NQF 0022. Additionally, electronic
specifications are not available for this measure by the date of
display of this final rule making this measure impractical to use for
Stage 1. We will consider this measure in future rulemaking.
After consideration of the public comments received, we are
finalizing the requirement that all EPs must submit calculated results
for three core measures using the certified EHR technology. However, we
are finalizing only two of the clinical quality measures that were
proposed as ``core measures'' in the proposed rule. The other core
measures presented in Table 6 of this final rule were selected because
they have broad applicability, support prevention, were recommended by
commenters, and have electronic specifications by the date of display
of this final rule. Insofar as a measure does not apply to patients
treated by the EP, this will be reflected in the calculation of the
clinical quality measure either by the patient not being included in
the denominator for the measure or the patient being excluded.
Therefore, it is not necessary for CMS to delineate for a particular
specialty which measures may or not apply. We note that to qualify as a
meaningful EHR user, EPs need only report the required clinical quality
measures; they need not satisfy a minimum value for any of the
numerator, denominator, or exclusions fields for clinical quality
measures. The value for any or all of those fields, as reported to CMS
or the States, may be zero if these are the results as displayed by the
certified EHR technology. Thus, the clinical quality measure
requirement for 2011 and beginning in 2012 is a reporting requirement
and not a requirement to meet any particular performance standard for
the clinical quality measure, or to in all cases have patients that
fall within the denominator of the measure.
The three core measures that EPs will be required to report are:
[NQF 0013: Hypertension: Blood Pressure Management; NQF 0028:
Preventative Care and Screening Measure Pair: a. Tobacco Use Assessment
b. Tobacco Cessation Intervention; and NQF0421/PQRI 128: Adult Weight
Screening and Follow-up]. Insofar as the denominator for one or more of
the core measures is zero, EPs will be required to report results for
up to three alternate core measures [NQF 0041/PQRI 110: Preventative
Care and Screening:

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Influenza Immunization for Patients >=50 Years Old; NQF 0024: Weight
Assessment and Counseling for Children and Adolescents; and NQF 0038:
Childhood Immunization Status]. We believe this final set of core
clinical quality measures provides EPs a greater opportunity for
successful reporting. The EP will not be excluded from reporting any
core or alternate clinical quality measure because the measure does not
apply to the EPs scope of practice or patient population. The
expectation is that the EHR will automatically report on each core
clinical quality measure, and when one or more of the core measures has
a denominator of zero then the alternate core measure(s) will be
reported. If all six of the clinical quality measures in Table 7 have
zeros for the denominators (this would imply that the EPs patient
population is not addressed by these measures), then the EP is still
required to report on three additional clinical measures of their
choosing from Table 6 in this final rule. In regard to the three
additional clinical quality measures, if the EP reports zero values,
then for the remaining clinical quality measures in Table 6 (other than
the core and alternate core measures) the EP will have to attest that
all of the other clinical quality measures calculated by the certified
EHR technology have a value of zero in the denominator, if the EP is to
be exempt from reporting any of the additional clinical quality
measures (other than the core and alternate core measures) in Table 6.
Thus, EPs are not penalized in the Stage 1 reporting years as long as
they have adopted a certified EHR and that EHR calculates and the EP
submits the required information on the required clinical quality
measures, and other meaningful use requirements as defined in this
final rule in section II.A.2.d.1 of this final rule.
Table 7, below, shows the core measure groups for all EPs for
Medicare and Medicaid to report.
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We proposed that EPs were to submit calculated results on at least
one of the sets listed in Tables 5 and 19 as specialty groups (see 75
FR 1891-1895). The specialty groups were Cardiology, Pulmonary
Diseases, Endocrinology, Oncology, Proceduralist/Surgery, Primary Care
Physicians, Pediatrics, Obstetrics and Gynecology, Neurology,
Psychiatry, Ophthalmology, Podiatry, Radiology, Gastroenterology, and
Nephrology.
We recognized that clinical quality measures as specified by
measures developers and as endorsed by the NQF were not specific to
particular specialties. Rather, the denominator of clinical quality
measures and the applicability of a measure is determined by the
patient population to whom the measure applies and the services
rendered by the particular EP.
Nevertheless, we grouped the proposed measures according to the
types of patients commonly treated and services rendered by EPs of
various specialties. We did this for purposes similar to measures
groups used in PQRI which, however, are based on clinical conditions,
rather than specialty types. We proposed that the general purpose of
each specialty measures grouping was to have standardized sets of
measures, all of which must be reported by the EP for the self-selected
specialty measures groups in order to meet the reporting requirements.
We expected to narrow down each set to a required subset of three-five
measures based on the availability of electronic measure specifications
and comments received.
We also proposed to require for 2011 and 2012 that EPs would select
a specialty measures group, on which to report on all applicable cases
for each of the measures in the specialty group. We also proposed that
the same specialty measures group selected for the first payment year
would be required for reporting for the second payment year. We invited
comment on whether there were EPs who believed no specialty group would
apply to them. In accordance with public comments, we noted that we
would specify in the final rule which EP specialties would be exempt
from selecting and reporting on a specialty measures group. As stated,
we proposed, EPs that are so-designated would be required to attest, to
CMS or the States, to the inapplicability of any of the specialty
groups and would not

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be required to report information on clinical quality measures from a
specialty group for 2011 or 2012, though the EP would still be required
to report information on all of the clinical quality measures listed in
the proposed core measure set (see 75 FR 1890).
Comment: Several commenters asked if certain specialties, such as
chiropractors, audiologists, allergist and immunology,
otolaryngologists, etc., could be exempt from having to report all
specific clinical quality specialty measures. Many of these EPs
indicated the clinical quality measures included in Table 3 were not
relevant to their specific practice and/or patient population. Other
commenters requested that specialty groups be created for specialties
not included in the proposed rule measure groups, (for example,
chiropractors, dentists, dermatologists, infectious disease, pediatric
oncology, neurosurgery, interventional radiology, plastic &
reconstructive surgery, physical therapists, occupational therapists,
eye care specialists, family planning, genetics, ear/nose/throat, and
nutritionists providers, etc.). Other commenters indicated that
specialty clinical quality measures were specific to a subset of
patients, but were not broadly applicable to their specialty for
treating other conditions within their specialty area. Other commenters
asked that CMS reconsider allowing EPs to attest only and be exempt
from reporting if no applicable clinical quality measures specialty
group exists for them. Another commenter indicated support of specific
measure sets for different clinical specialties. Many commenters
supported the elimination of specialty groups altogether as a mandatory
set and instead supported the reporting of a fixed number of relevant
clinically quality measures regardless of the specialty group. A
commenter asked for a definition of ``specialist'' which is not
included in the proposed rule. Several commenters expressed concern
about the large number of clinical quality measures in certain measure
groups versus other measure groups (for example, the primary care,
pediatric and ob/gyn measure groups) as well as the applicability of
clinical quality measures assigned to primary care EPs when they do not
manage conditions that are typically referred to a specialist for
example, ischemic vascular disease. A commenter requested clarification
and suggestions on how to select a clinical quality measure group.
Several commenters wanted clarification on the proposed EP Specialty
Measures Tables (see 75 FR 1874), and whether the EPs are accountable
for only the clinical quality measures for their specialty. One comment
indicated agreement with CMS regarding requiring EPs to report on the
same specialty measure groups for 2011 and 2012 and another commenter
indicated that CMS should not delay reporting of clinical quality
measures as early adopters of EHRs will be ready to report. A few
commenters suggested adding NQF 0033 Chlamydia screening in women to
all other appropriate specialty clinical quality measure groups. A
commenter indicated that PQRI 112, 113, and NQF 0032 should be
removed from the oncology clinical quality specialty measure group as
oncologists do not perform routine cancer screenings.
Response: We are appreciative of the detail provided by commenters
to the potential inapplicability of the proposed specialty measures
groups to various practitioner types or to the inapplicability of
certain measures within groups to the specialties designated. Our
primary purpose, similar to the core measures, was to encourage a
certain consistency in reporting of clinical quality measures by EPs.
However, after consideration of the comments we do not believe that the
proposed specialty measures groups are sufficient to have a robust set
of specialty measures groups. Further, given the lack of electronic
specifications or final development of many of these measures,
requiring specialty measures groups becomes even more impractical. We
expect that electronic specifications will be developed for measures
which would allow for a broadly applicable set of specialty measures
groups in the future.
After consideration of the public comments received, we removed the
requirement for EPs to report on specialty measures groups as proposed.
We intend to reintroduce the proposed rule's specialty group reporting
requirement in Stage 2 with at least as many clinical quality measures
by specialty as we proposed for Stage 1 in the proposed rule. We expect
to use a transparent process for clinical quality measure development
that includes appropriate consultation with specialty groups and other
interested parties, and we expect that electronic specifications will
be developed for all of the measures that we originally proposed for
Stage 1 or alternative related measures, which would allow for a
broadly applicable set of specialty measures groups and promote
consistency in reporting of clinical quality measures by EPs. Also, in
consideration of public comments received, we are finalizing the
requirement (in addition to the core measure requirement) that EPs must
report on three measures to be selected by the EP from the set of 38
measures as shown in Table 6, above. As stated previously, in regard to
the three additional clinical quality measures, if the EP reports zero
values, then for the remaining clinical quality measures in Table 6
(other than the core and alternate core measures) the EP will have to
attest that all of the other clinical quality measures calculated by
the certified EHR technology have a value of zero in the denominator.
In sum, EPs must report on six total measures, three core measures
(substituting alternate core measures where necessary) and three
additional measures (other than the core and alternate core measures)
selected from Table 6.
We also proposed that although we do not require clinical quality
measure reporting electronically until 2012, we would require clinical
quality reporting through attestation in the 2011 payment year. We
solicited comment on whether it may be more appropriate to defer some
or all clinical quality reporting until the 2012 payment year. If
reporting on some but not all measures in 2011 was feasible, we
solicited comment on which key measures should be chosen for 2011 and
which should be deferred until 2012 and why. We discuss comments
received regarding the reporting method for clinical quality measures
in section II.A.3.h. of this final rule.
f. Clinical Quality Measures for Electronic Submission by Eligible
Hospitals and CAHs
Our proposed rule would have required eligible hospitals and CAHs
to report summary data to CMS on the set of clinical quality measures
identified in Table 20 and 21 of the proposed rule (see 75 FR 1896-
1899), with eligible hospitals attesting to the measures in 2011 and
electronically submitting these measures to CMS using certified EHR
technology beginning in 2012. For hospitals eligible for only the
Medicaid EHR incentive program, we proposed that reporting would be to
the States. In the proposed rule, for eligible hospitals under both
programs, we proposed that they would have to also report on the
clinical quality measures identified in Table 21 of the proposed rule
to meet the requirements for the reporting of clinical quality measures
for the Medicaid program incentive (see 75 FR 1896 through 1900).
Tables 20 and 21 of the proposed rule (see 75 FR 1896 through 1900)
conveyed the clinical quality measure's title, number, owner/

[[Page 44412]]

developer and contact information, and a link to existing electronic
specifications where applicable.
We included in the proposed hospital measures set several clinical
quality measures which have undergone development of electronic
specifications. These clinical quality measures have been developed for
future RHQDAPU consideration. The electronic specifications were
developed through an interagency agreement between CMS and ONC to
develop interoperable standards for EHR electronic submission of the
Emergency Department Throughput, Stroke, and Venous Thromboembolism
clinical quality measures on Table 20 of the proposed rule (see 75 FR
1896 through 1899). We also proposed to test the submission of these
clinical quality measures in Medicare (see 75 FR 43893). The
specifications for the RHQDAPU clinical quality measures for eligible
hospitals and CAHs that are being used for testing EHR-based submission
of these clinical quality measures can be found at http://www.hitsp.org/ConstructSet_Details.aspx?&PrefixAlpha=5&PrefixNumeric=906 (A description of the
clinical quality measure, including the clinical quality measure's
numerator and denominator, can be found here as well.) Other measures
we proposed derived from the RHQDAPU program or were measures we
considered important for measuring or preventing adverse outcomes. In
addition to risk standardized readmission clinical quality measures, we
proposed that non-risk-adjusted readmission rates also be reported. For
the proposed rule, we also considered HIT Standards Committee
recommendations, including the Committee's recommendation to include a
measure on Atrial Fibrillation Receiving Anticoagulation Therapy which
was included on Table 20 of the proposed rule Our proposed rule noted
that we did not propose one measure recommended by the HIT Standards
Committee: Surgery patients who received Venous Thromboembolism
prophylaxis within 24 hours period to surgery to 24 hours after surgery
end time. We noted that the measure is a current clinical quality
measure collected in the RHQDAPU program through chart abstraction for
all applicable patients (SCIP-VTE-2), and that the VTE-2 clinical
quality measure in Table 20 of the proposed rule (see 75 FR 1896
through 1899) was a parallel clinical quality measure to SCIP-VTE-2.
SCIP-VTE-2 includes surgical and non-surgical patients, and can be more
easily implemented for the EHR incentive program because electronic
specifications had been completed. We added SCIP-VTE-2 for future
consideration.
Comment: Many commenters recommended reducing the number of
eligible hospital clinical quality measures and indicated that such a
large number of measures would pose a significant financial and
administrative burden on hospitals. Commenters suggested a variety of
solutions which include: Eliminating duplication between clinical
quality measures and meaningful use objectives and associated measures,
reducing the number of clinical quality measures for reporting and
allowing organizations to select a limited number of clinical quality
measures on which they would like to report.
We received comments supporting many of the measures in the
proposed rule including Venous Thromboembolism, Emergency Department,
Stroke, RHQDAPU, and measures that are evidence-based that could
improve the quality of care. Others recommended additional clinical
quality measures, changes to the specifications for clinical quality
measures or the elimination of certain clinical quality measures such
as risk adjusted re-admission measures or measures not applicable to
CAHs. Many commenters supported the process through which the
electronic specifications were developed for the Emergency Department
Throughput, Stroke and Venous Thromboembolism measures while also
pointing out the length of time necessary to adequately develop
electronic specifications and test the clinical quality measures. Many
commented that the remaining measures had not been electronically
specified or had otherwise not completed development and would not be
ready in time for the 2011-2012 implementation. Others stated their
concerns about duplicate reporting systems and the belief that the
HITECH Act reporting requirements should be based on the RHQDAPU
program, similar to the conceptual framework of hospitals value-based
purchasing plan. Others pointed to measures that are already currently
reported in RHQDAPU and the statutory provision that clinical quality
measure reporting required for the HITECH Act should seek to avoid
duplicative and redundant reporting of measures reported under RHQDAPU.
Response: We are appreciative of the comments supporting many of
the clinical quality measure sets and the process utilized for
electronically specifying the Emergency Department Throughput, Stroke,
and Venous Thromboembolism sets. As we have discussed for the EP
measures, we agree that we should limit the required clinical quality
measures to those measures for where there are electronic
specifications as of the date of display of this final rule. This will
allow EHR vendors sufficient time to ensure that certified EHR
technology will be able to electronically calculate the measures.
Therefore, we are not finalizing those clinical quality measures that
either have not been fully developed, are currently only specified for
claims based calculation, or for which there are not fully developed
electronic specifications as of the date of display of this final rule.
Accordingly, we are only finalizing the 15 measures listed in Table 10
of this final rule. We note that none of these measures are duplicate
measures which are currently required for reporting in the RHQDAPU
program. We therefore do not need to address the issue of duplicate or
redundant reporting. We will consider adding, changing, developing, and
eliminating duplicative clinical quality measures and meaningful use
objectives/associated measures in future rulemaking.
Table 8, shows the proposed clinical quality measures for
submission by Medicare and Medicaid Eligible Hospitals for the 2011 and
2012 payment year as stated in the proposed rule (see 75 FR 1896-1899)
for EPs, but that are not being finalized. Table 9, shows the proposed
alternative Medicaid clinical quality measures for Medicaid eligible
hospitals in the proposed rule (see 75 FR 1899-1900). Tables 8 and 9
convey the NQF measure number, clinical quality measure title and
description, and clinical quality measure steward and contact
information. The measures listed below in Tables 8 and 9 do not have
electronic specifications finished before the date of display of this
final rule, thus we have eliminated these measures for this final rule
and will consider the addition of these measures in future rulemaking.
Also several measures listed below were only concepts at the time of
publication of the proposed rule (that is, Hospital Specific 30 day
Rate following AMI admission, Hospital Specific 30 day Rate following
Heart Failure admission, Hospital Specific 30 day Rate following
Pneumonia admission, and All-Cause Readmission Index). These concept
measures were not developed or electronically specified clinical
quality measures, nor NQF endorsed; and there was not adequate time to
consider these concepts for development for this final rule. Therefore,
the concepts listed

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below will be considered in future rulemaking.
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Comment: Commenters stated that current health information
technology is not capable of electronically collecting or reporting on
clinical quality measures. Commenters also stated we should not require
reporting on clinical quality measures that cannot easily be derived
from EHRs. Other commenters believed the timeline was unreasonable to
obtain the functionality required in the EHR system to report on these
clinical quality measures and were concerned that there were no
vocabulary standards.
Response: We agree with the comment that eligible hospitals should
only be required to submit information that can be automatically
obtained from certified EHR technology. As we discussed elsewhere,
ONC's final rule (found elsewhere in this issue of the Federal
Register) requires that certified EHR technology must be able to
calculate clinical quality measures specified by us in this final rule.
Standards for certified EHRs, including vocabulary standards, are
included in ONC's final rule (found elsewhere in this issue of the
Federal Register).
Comment: Commenters recommended that CMS conduct a pilot test of
the NQF endorsed HITSP electronic specifications of measures in the
proposed rule for Stage 1 prior to their adoption. Commenters requested
CMS publish results of the pilot and use this information to inform the
setting of Stage 2 and 3 objectives and clinical quality measures.
Commenters also requested allowing adequate time for implementation
after the pilot test before such measures are considered for
certification, and 24 months before requiring them for meaningful use.
One commenter stated that the Emergency Department Throughput, Stroke,
and Venous Thromboembolism have not yet been thoroughly tested for
automated reporting and data element capture. Additional commenters
recommended that the measures selected for the eligible hospitals
incentive program should be comprehensively standardized and tested in
the field to ensure that they are thoroughly specified, clinically
valid when the data are collected through the eligible hospitals
system, feasible to collect, and are regularly updated and maintained
with a well established process.
Response: We agree with the commenters that it is important to
allow adequate time for pilot testing and implementation before
clinical quality measures should be considered for certification, as
well as requiring these measures for meaningful use. Emergency
Department 1, Emergency Department 2, and Stroke 3, clinical quality
measures for eligible hospitals and CAHs that are included in this
final rule, were tested during the January 2010 Connectathon and
demonstrated at the HIMSS 2010 Interoperability Showcase. Additionally,
as part of the process of certification of EHR technology it is
expected that certifying bodies will test the ability of EHR technology
to calculate the clinical quality measures finalized in this final
rule.
After consideration of the public comments received, eligible
hospitals and CAHs will be required to report on each of the 15
clinical quality measures, as shown in Table 10. Requiring eligible
hospitals and CAHs to report on each of the 15 clinical quality
measures in the EHR incentive program is consistent with the RHQDAPU
program, which requires reporting on all applicable quality measures.
Eligible hospitals and CAHs will report numerators, denominators, and
exclusions, even if one or more values as displayed by their certified
EHR is zero. We note that to qualify as a meaningful EHR user, eligible
hospitals and CAHs need only report the required clinical quality
measures; they need not satisfy a minimum value for any of the
numerator, denominator, or exclusions fields for clinical quality
measures. The value for any or all of those fields, as reported to CMS
or the States, may be zero if these are the results as displayed by the
certified EHR technology. Thus, the clinical quality measure
requirement for 2011 and beginning with 2012 is a reporting requirement
and not a requirement to meet any particular performance standard for
the clinical quality measure, or to in all cases have patients that
fall within the denominator of the measure. Further, the criteria to
qualify for the EHR incentive payments are based on results
automatically calculated by eligible hospitals or CAHs certified EHR
technology, as attested by the eligible hospital or CAH. As such, we
believe that the eligible hospitals or CAHs will be able to determine
whether they have reported the required clinical quality measures to
CMS or the State, rendering it unnecessary that CMS or the State
provide the eligible hospital or CAH with a feedback report, which
provides information to eligible hospitals and CAHs as to whether they
have reported their required clinical quality measures. We expect
successful receipt of Medicare eligible hospitals and CAHs'
information, beginning the first year of Stage 1.
We are finalizing Table 10, which conveys the clinical quality
measure's title, number, owner/steward and contact information, and a
link to existing electronic specifications.
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We proposed that to satisfy the requirements of reporting on
clinical quality measures under sections 1886(n)(3)(A)(iii) and
1903(t)(6)(C) of the Act for the 2011-2012 payment year, we would
require eligible hospitals and CAHs to report on all EHR incentive
clinical quality measures for which they have applicable cases, without
regard to payer. We proposed that Medicare eligible hospitals and CAHs,
who are also participating in the Medicaid EHR incentive program, will
also be required to report on all Medicaid clinical quality measures
for which the eligible hospital has applicable cases. We also proposed
that to demonstrate an eligible hospital or CAH is a meaningful EHR
user, the eligible hospital or CAH would be required to electronically
submit information on each clinical quality measures for each patient
to whom the clinical quality measure applies, regardless of payer,
discharged from the hospital during the EHR reporting period and for
whom the clinical quality measure is applicable. Although as proposed,
we did not require clinical quality reporting electronically until
2012, we would begin clinical quality reporting though attestation in
the 2011 payment year. We solicited comment on whether it may be more
appropriate to defer some or all clinical quality reporting until the
2012 payment year. If reporting on some but not all measures in 2011
was feasible, we solicited comment on which key measures should be
chosen for 2011 and which should be deferred until 2012 and why.
Comment: We received numerous comments strongly opposed to
requiring the reporting of clinical quality measures by eligible
hospitals prior to 2013, although some comments favored the reporting
in 2011 and 2012. Comments in favor pointed to the importance of
quality measurement to achieving improvement in healthcare quality.
Those opposed to the reporting of clinical quality measures in 2011 and
2012 cited concerns as to the readiness of EHR technology for automated
calculation and reporting of clinical quality measures as well as
financial and administrative burden. Many commenters stated that
measures should be fully automated and tested prior to implementation,
and recommended the process for Emergency Department Throughput,
Stroke, and Venous Thromboembolism measures where CMS developed the
specifications and has in place a plan to test the submission of such
measures for RHQDAPU. Commenters stated their expectation that the
testing process would reveal important insights as to potential
challenges of electronic submission. Numerous commenters opposed
measures already in RHQDAPU and not able to be calculated by the EHR
technology. Many commenters stated that electronic data submission
should be developed through the RHQDAPU program rather than have a
separate quality measure reporting program, such as the EHR incentive
program. Further, commenters stated that RHQDAPU should provide the
foundation for migration to electronic reporting. Numerous commenters
were opposed to having a temporary data collection and reporting
process through attestation that would need to be updated or replaced
once CMS has the appropriate infrastructure in place. Many commenters
stated that requiring hospitals to report summary data through
attestation, without the ability for CMS to receive the summary data
electronically, creates a dual reporting burden for measures currently
in RHQDAPU. Many commenters stated concerns as to the timing of the
certification process for EHRs since having a certified EHR is an
essential element for quality incentives. Numerous commenters pointed
out that only 15 of the proposed measures have electronic
specifications currently available.
Response: We are sensitive to and appreciate the many comments
urging us not to require the submission of clinical quality measures,
through attestation or electronic submission, prior to 2013, based on
lack of readiness of many of the proposed measures, fully automating
and testing prior to implementation, burden, and the potential
duplication of quality measures reporting requirements under the
RHQDAPU and the EHR incentive payment programs. Having carefully
considered these comments, we have sought to address them while still
retaining the important goal of beginning the process of using the
capacity of EHRs to promote improved quality of care in hospitals by
providing calculated results of clinical quality measures. In terms of
readiness, we are limiting the clinical quality measures to those
measures having existing electronic specifications as of the date of
display of this final rule. Additionally, as recommended by commenters,
we will only require hospitals to submit that information that can be
automatically calculated by their certified EHR technology. Thus we
will require no separate data collection by the hospital, but require
submission solely of that information that can be generated
automatically by the certified EHR technology; that is, we only adopt
those clinical quality measures where the certified EHR technology can
calculate the results. Further, we are not adopting any measures which
are already being collected and submitted in the RHQDAPU program.
Therefore, we are imposing no duplicate reporting requirement on
hospitals who participate in RHQDAPU. Through future rulemaking we will
seek to align the EHR incentive program with RHQDAPU.
Comment: Some commenters stated that CMS contradicts itself, where
the proposed rule states that Medicare eligible hospitals who are also
participating in Medicaid EHR incentive program will need to report on
all of the Medicaid clinical quality measures and where it says that
Table 21 is an alternative set of clinical quality measures if the
hospital does not have any patients in the denominators of the measures
in Table 20. Many commenters requested clarification of the Medicare
and Medicaid reporting.
Response: We agree that the description of the eligible hospital
and CAH reporting requirements was unclear. To clarify, our proposal
was that if a hospital could submit information on clinical quality
measures sufficient to meet the requirements for Medicare that would
also be sufficient for Medicaid. However, hospitals for which the
Medicare measures did not reflect their patient populations could
satisfy the Medicaid requirements by reporting the alternate Medicaid
clinical quality measures. Reporting the alternate Medicaid measures
would only qualify for the Medicaid program and would not qualify
eligible hospitals as to the Medicare incentive program. In this final
rule, this clarification is moot, however, because we removed the
alternate Medicaid list of clinical quality measures listed in Table 21
(see 75 FR 1896 through 1900) of the proposed rule for eligible
hospitals. This was based on the lack of electronic specifications for
these measures available at the time of display of this final rule.
Hospitals that report information on all 15 of the clinical quality
measures, as applicable to their patient population, will qualify for
both the Medicare and the Medicaid submission requirements for clinical
quality measures. We recognize that many of the measures in the
Medicare list would likely not apply to certain hospitals, such as
children's hospitals. However, an eligible hospital would meet the
clinical quality measure requirement by reporting values for the 15
clinical quality measures, including,

[[Page 44422]]

values of zero for the denominator, if accurate. Some value is required
for each of the 15 clinical quality measures for eligible hospitals and
CAHs. Therefore, for example, a children's hospital would enter zero
for the denominator for any of the 15 measures for which they do not
have any patients as described in the measure.
After consideration of public comments received, we are finalizing
15 clinical quality measures that eligible hospitals and CAHs will be
required to report for Stage 1 (2011 and beginning 2012), as applicable
to their patient population. Those 15 clinical quality measures for
eligible hospitals and CAHs can be found in Table 10 of this final
rule.
g. Potential Measures for EPs, Eligible Hospitals, and CAHs in Stage 2
and Subsequent Years
We stated our expectation that the number of clinical quality
measures for which EPs, eligible hospitals, and CAHs would be able to
electronically submit information would rapidly expand in 2013 and
beyond.
We plan to consider measures from the 2010 PQRI program. These
clinical quality measures can be found at http://www.cms.hhs.gov/PQRI/05_StatuteRegulationsProgramInstructions.asp. For future
considerations of clinical quality measures for Stage 2 of meaningful
use and beyond for eligible hospitals and CAHs, we also plan to
consider other clinical quality measures from the RHQDAPU program which
are identified in the FY 2010 IPPS final rule (75 FR 43868-43882). We
invited comments on inclusion of clinical quality measures for the 2013
and beyond for the HITECH Act Medicare and Medicaid incentive program.
We note that as with the other meaningful use objectives and measures,
in the event that we have not promulgated clinical quality measures for
the 2013 payment year, the measures for Stage 1 (beginning in 2011)
would continue in effect.
For the Stage 2 of meaningful use, we indicated in the proposed
rule that we are considering expanding the Medicaid EHR incentive
program's clinical quality measure set for EPs and eligible hospitals
to include clinical quality measures that address the following
clinical areas, to address quality of care for additional patient
populations, and facilitate alignment with Medicaid and CHIP programs:
Additional pediatrics measures (such as completed growth
charts, electronic prescriptions with weight-based dosing support and
documentation of newborn screening).
Long-term care measures.
Additional obstetrics measures.
Dental care/oral health measures.
Additional behavioral/mental health and substance abuse
measures.
The above list does not constitute a comprehensive list of all clinical
quality measures that may be considered. We stated that specific
measures for Stage 2 of meaningful use and beyond may be addressed by
CMS in future notice and comment rulemaking. To assist us in
identifying potential clinical quality measures for future
consideration for Stage 2 of meaningful use and beyond, we solicited
comments on the potential topics and/or clinical quality measures
listed above as well as suggestions for additional clinical quality
measure topics and/or specific clinical quality measures.
The following is a summary of comments received regarding the
request for public comment on potential measures for EPs, eligible
hospitals, and CAHs for Stage 2 of meaningful use and subsequent
stages, and our responses.
Comment: A commenter suggested using newly adopted NQF Level 3
measures that incorporate common electronic administrative and clinical
data that represent a better measure of the patient's condition. A
commenter suggested adding long term care and post acute care measures
in the next stage of meaningful use. A few commenters suggested future
clinical quality measures be coordinated with Healthy People 2020.
Another comment regarding measures included a request for medication
measures that evaluate provider intervention. Other commenters
indicated CMS should provide a more structured process for the adoption
of clinical quality measures such that specialty EPs would have greater
input into and ownership of the process. A commenter requested
consideration that future clinical quality measures address both
quality and resource use efficiency (for example potentially
preventable Emergency Department visits and hospitalizations and
inappropriate use of imaging MRI for acute low back pain). A commenter
requested future clinical quality measures for the following areas:
reduce hospital readmissions and to improve medication management,
specifically safe and efficient management of heart disease, diabetes,
asthma, mental health conditions and hospital procedures. A commenter
requested clinical quality measures that will aid in increasing
improved patient safety and reduce disparities. A commenter also
recommended developing new clinical quality outcomes measures to
address overuse and efficiency, care coordination, and patient safety.
Some commenters requested the inclusion of HIV testing and reporting
for preventive service quality measures. Some commenters stated that
this would help to facilitate continued efforts to promote and
implement the 2006 CDC Revised Recommendation on HIV testing,
especially to non-HIV medical specialties. Some commenters recommended
measure development in the areas of community mental health, home
health, renal dialysis centers, long term care, post acute care, and
nursing homes. A commenter recommended including 3 month treatment of
pulmonary emboli (NQF 0593) and deep vein thrombosis (NQF 0434) for the
next stage of meaningful use and beyond. A commenter requested
including health disparity data in all clinical quality measure
analyses. Some commenters also recommended future clinical quality
measure development in the following areas: Diabetes, heart disease,
asthma, disease screening, chronic disease management, patient safety,
nursing sensitive measures, atrial fibrillation, and ethnic
disparities. Commenters requested expanding pediatric measures to
provide expanded focus on childhood diseases that require
hospitalization such as asthma, developmental issues and weight-based
medication dosage safety issues. Additional commenters requested
measures for blood test for lead levels for children up to 1 year of
age and between 1 and 2 years of age, co-morbid conditions and dental
utilization. A commenter recommended that only one EP should be
accountable for the quality intervention and clinical quality measure
such as NQF 0323 Title: End Stage Renal Disease (ESRD): Plan of Care
for Inadequate Hemodialysis in ESRD Patient. The commenter indicated
that this type of measure could involve more than one provider, for
example, nephrologist and a dialysis facility. Because provider
clinical practices may vary, practice variations may independently
influence patient outcomes. Some commenters suggested future
development of measures foster greater use of the clinical information
available in EHRs to improve clinical processes and evaluate patient
outcomes and suggested use of outcomes measures instead of process
measures. Furthermore, commenters support the inclusion of outcomes
measures rather than process measures and composite versus individual
measures. Several commenters indicated support for the preventive care
measures included in

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the proposed rule and suggested expanding the set of preventive care
measures to include HIV and STD screening and eye care specialty
measures. A commenter requested CMS provide information about their
strategic plan for future Medicare clinical quality measurement
selection, how they will improve care delivery, proposed stages of
reporting, goals and metrics.
Response: We are appreciative of the many suggestions and
acknowledge the breadth of interest in certified EHR technology being
the vehicle for clinical quality measures reporting. We expect to
consider these suggestions for future measure selection in the Medicare
and Medicaid EHR incentive payment programs.
Comment: We received various comments pertaining to future clinical
quality measures applicable principally to the Medicaid population. One
commenter urged CMS to include clinical quality measures specific to
newborn screening in Stage 1 of meaningful use for pediatric providers.
Response: We agree that newborn screening, both as a clinical
quality measure, and from a data standards perspective, is a prime
candidate for inclusion in the Stage 2 definition of meaningful use. We
affirm our proposed statement about our commitment to work with the
measure development community to fill noted gaps. We are appreciative
of the many suggestions. We expect to consider these suggestions for
immunizations, prenatal screening, infectious disease, etc. in measure
selection in future rulemaking.
Comment: A commenter indicated CMS should make explicit the health
goals and targets for the HITECH Act investments that are already
implied by the proposed clinical measures. Making them explicit allows
CMS to set national targets.
Response: In general, the goal with respect to clinical quality
measures is to improve healthcare quality as measured by the clinical
quality measures. We believe that specific quantitative targets are
impractical at this stage given lack of established base level notes
and no prior clinical quality measure reporting via certified EHR
technology.
Comment: Several commenters asked how CMS plans to develop further
measure specifications for clinical quality measures. Another commenter
asked for an electronic source for ICD-9 and CPT codes defining the
specific conditions or diagnoses or treatments in order to maintain an
up-to-date capability.
Response: For many clinical quality measures, clearly defined
electronic specifications are not yet available. In general, CMS relies
on the measures' stewards to both develop measures and to provide the
specifications. Nevertheless, we recognize that many existing measures,
some of which are owned and maintained by us or its contractors, do not
currently have electronic specifications. We are aware of work
currently taking place to fill this gap. We expect to actively work in
a collaborative way with measures developers and stewards to help
assure the development of electronic specifications for clinical
quality measures, but we also expect to engage a contractor to perform
work developing electronic specifications which may or may not involve
measure developers and stewards. As for CPT codes, these are
copyrighted by and are available from the American Medical Association.
The National Center for Health Statistics (NCHS) and CMS are the U.S.
governmental agencies responsible for overseeing all changes and
modifications to the ICD-9 codes.
Comment: Some commenters suggested specific new clinical quality
measures which are listed below in Table 11. Several commenters
suggested new or revised clinical quality measures or the use of
existing measures from other programs.
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Response: Many of the proposed clinical quality measures are in the
existing PQRI program or are NQF endorsed. Others are not. We are
appreciative of these many specific suggestions and will retain the
comments for future consideration. Prior to including measures in the
Medicare EHR incentive payment program, as required by the HITECH Act,
we will publish the measures in the Federal Register and provide an
opportunity for public comment. We will examine all options for
soliciting public comment on future Medicaid-specific clinical quality
measures, as the Federal Register notice requirement does not apply to
the Medicaid EHR incentive program.
Comment: Some commenters suggested the following new topics for
clinical quality measure development for our program:

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Response: We appreciate the suggested measure topics submitted by
commenters for potential new clinical quality measures. Any future
clinical quality measures developed will be in consideration of the
clinical practices particular to EPs and eligible hospitals. We have
captured these recommendations and will have them available for
consideration in future years.
h. Reporting Method for Clinical Quality Measures for 2011 and
Beginning With the 2012 Payment Year
(1) Reporting Method for 2011 Payment Year
As we previously discussed, we proposed to use attestation as a
means for EPs, eligible hospitals and CAHs, for purposes of the
Medicare incentive program, to demonstrate the meaningful use
requirement for the calculation and submission of clinical quality
measure results to CMS.
Specifically, for 2011, we proposed to require that Medicare EPs
and hospitals attest to the use of certified EHR technology to capture
the data elements and calculate the results for the applicable clinical
quality measures. State Medicaid HIT Plans submitted to CMS will
address how States will verify use of certified EHR technology to
capture and calculate clinical quality measures by Medicaid EPs and
eligible hospitals.
Further, we proposed to require that Medicare EPs, eligible
hospitals, and CAHs attest to the accuracy and completeness of the
numerators, denominators, and exclusions submitted for each of the
applicable measures, and report the results to CMS for all applicable
patients. We expect that States will follow a similar strategy as
Medicare for the Medicaid EHR incentive program.
We proposed that attestation will utilize the same system for other
attestation for meaningful use objectives, and proposed we would
require for Medicare EPs that they attest to the following:
The information submitted with respect to clinical quality
measures was generated as output of an identified certified EHR
technology.
The information submitted is accurate to the best of the
knowledge and belief of the EP.
The information submitted includes information on all
patients to whom the clinical quality measure applies.
The NPI and TIN of the EP submitting the information, and
the specialty group of clinical quality measures that are being
submitted.
For an EP who is exempt from reporting each of the core
measures, an attestation that one or more of the core measures do not
apply to the scope of practice of the EP.
For an EP who is exempt from reporting on a specialty
group, an attestation that none of the specialty groups applies to the
scope of practice of the EP.
For an EP who does report on a specialty group, but is
exempt from reporting on each of the clinical quality measures in the
group, an attestation that the clinical quality measures not reported
do not apply to any patients treated by the EP.
The numerators, denominators, and exclusions for each
clinical quality measure result reported, providing separate
information for each clinical quality measure including the numerators,
denominators, and exclusions for all patients irrespective of third
party payer or lack thereof; for Medicare FFS patients; for Medicare
Advantage patients; and for Medicaid patients.
The beginning and end dates for which the numerators,
denominators, and exclusions apply.
Again, State Medicaid Agencies will determine the required elements
for provider attestations for clinical quality measure reporting,
subject to CMS prior approval via the State Medicaid HIT Plan.
For eligible hospitals, we proposed to require that they attest to
the following:
The information submitted with respect to clinical quality
measures was generated as output from an identified certified EHR
technology.
The information submitted to the knowledge and belief of
the official submitting on behalf of the eligible hospital.
The information submitted includes information on all
patients to whom the measure applies.
The identifying information for the eligible hospital.
For eligible hospitals that do not report one or more
measures an attestation that the clinical quality measures not reported
do not apply to any patients treated by the eligible hospital during
the reporting period.
The numerators, denominators, and exclusions for each
clinical quality measure result reported, providing separate
information for each clinical quality measure including the numerators,
denominators, and exclusions for all patients irrespective of third
party payer or lack thereof; for Medicare FFS patients; for Medicare
Advantage patients; and for Medicaid patients.
The beginning and end dates for which the numerators,
denominators, and exclusions apply.
The following is a summary of comments received regarding the
proposed reporting method for clinical quality measures for the 2011
payment year, and our responses.
Comment: The majority of commenters were against requiring
attestation for 2011, rather than suggesting modification of the
specific attestation requirements. Others commented that reporting
should not be delayed to realize quality improvements

[[Page 44431]]

and better health outcomes for patients as soon as possible. Many
commenters suggested deferral of clinical quality measures submission
until CMS can electronically accept data. Commenters indicated that
this is consistent with allowing delayed reporting by Medicaid
providers until 2012 or beyond. A number of commenters suggested that
attestation should be confined to attesting that the EP's had reviewed
or selected relevant clinical quality measures.
Response: While we received many comments to delay attestation past
2011, we are finalizing our proposed requirement for EPs and eligible
hospitals to attest to the numerators, denominators, and exclusions in
their first payment year for the required clinical quality measures as
described in section II.A.3.d through f of this final rule. Medicaid
providers do not have ``delayed reporting of clinical quality
measures.'' The statute and this final rule allow Medicaid providers
the option of receiving the EHR Incentive Payment for having adopted,
implemented or upgraded to certified EHR technology, in lieu of meeting
the meaningful use bar in their first participation year. We expect
that most Medicaid providers would choose to adopt, implement or
upgrade to certified EHR technology, rather than demonstrating they are
meaningful EHR users in their first participation year.
Comment: Some commenters also suggested EPs should only have to
attest that the EP is entering the required data elements for clinical
quality measure reporting where those fields exist in the certified EHR
technology and provide feedback to the vendor where structured data
fields are not available. Other commenters indicated the burden of
adding numerous new data elements is high and labor intensive.
Response: We considered the suggestion of only requiring
attestation of documentation of clinical encounters. While we agree
that this could be considered ``information on clinical quality
measures,'' however, we do not believe that such information is needed
when including the submission of information on clinical quality
measures, which is a required element of meaningful use. We also
believe that submission of such information would be of limited value.
We believe that by limiting the clinical quality measure submission
requirement to those results calculated by certified EHR technology, we
have limited the potential burden.
After consideration of the public comments received, we are
requiring EPs, eligible hospitals, and CAHs to attest to the numerator,
denominator, and exclusions for the payment year 2011 at Sec. 495.8.
We are finalizing the following requirements for EPs in this final rule
for reporting clinical quality measures:
The information submitted with respect to clinical quality
measures was generated as output of an identified certified electronic
health record.
The information submitted is accurate to the best of the
knowledge and belief of the EP.
The information submitted includes information on all
patients to whom the clinical quality measure applies for all patients
included in the certified EHR technology.
The NPI and TIN of the EP submitting the information at
Sec. 495.10.
The numerators, denominators, and exclusions for each
clinical quality measure result reported, providing separate
information for each clinical quality measure including the numerators,
denominators, and exclusions for all applicable patients contained in
the certified EHR technology irrespective of third party payer or lack
thereof.
The beginning and end dates for which the numerators,
denominators, and exclusions apply (the Medicare EHR reporting period
in payment year 1 is 90 days as stated at Sec. 495.4, and for payment
year 2 is the beginning and end date of the reporting period as stated
at Sec. 495.4. For Medicaid providers, as there is no EHR reporting
period for adopting, implementing or upgrading for their first payment
year, it is in their second payment year/first year of demonstrating
meaningful use that they have a 90-day EHR reporting period. Therefore,
it is their 2nd year of demonstrating meaningful use that has a 12
month EHR reporting period. For eligible hospitals and CAHs, we are
finalizing the following requirements in this final rule:
The information submitted with respect to clinical quality
measures was generated as output from an identified certified EHR
technology.
The information submitted is accurate to the best of the
knowledge and belief of the official submitting on behalf of the
eligible hospital or CAHs.
The information submitted includes information on all
patients to whom the measure applies for all patients included in the
certified EHR technology.
The identifying information for the eligible hospital and
CAH at Sec. 495.10.
The numerators, denominators, and exclusions for each
clinical quality measure result reported, providing separate
information for each clinical quality measure including the numerators,
denominators, and exclusions for all applicable patients contained in
the certified EHR technology irrespective of third party payer or lack
thereof.
The beginning and end dates for which the numerators,
denominators, and exclusions apply (the Medicare EHR reporting period
in payment year 1 is 90 days as stated at Sec. 495.4, and for payment
year 2 is the beginning and end date of the reporting period as stated
at Sec. 495.4. For Medicaid providers, as there is no EHR reporting
period for adopting, implementing or upgrading for their first payment
year, it is in their second payment year/first year of demonstrating
meaningful use that they have a 90-day EHR reporting period. Therefore,
it is their 2nd year of demonstrating meaningful use that has a 12
month EHR reporting period.
States must implement the same meaningful use requirements,
including clinical quality measures, with the exceptions described in
section II.A. of this final rule. Therefore, Medicaid EPs and eligible
hospitals must submit the same required information described above for
clinical quality measures. States will propose in their State Medicaid
HIT Plans how they will accept provider attestations in the first year
they implement their Medicaid EHR incentive program, and how they will
accept electronic reporting of clinical quality measures from
providers' certified EHR technology in their second and subsequent
implementation years.
(2) Reporting Method Beginning in 2012
In our proposed rule, we proposed that for the 2012 payment year,
the reporting method for clinical quality measures would be the
electronic submission to CMS of summary information, (that is,
information that is not personally identifiable) on the clinical
quality measures selected by the Secretary using certified EHR
technology. For Medicaid, we proposed that EPs and hospitals eligible
only for the Medicaid EHR incentive program must report their clinical
quality measures data to States. We proposed that States would propose
to CMS how they plan to accept and validate Medicaid providers'
clinical quality measures data in their State Medicaid HIT Plans,
subject to CMS review and approval.
As we did for payment year 2011, for 2012, we also proposed
reporting on all cases to which a clinical quality measures applies in
order to accurately assess the quality of care rendered by the
particular EP, eligible hospital, or CAH generally. Otherwise it would
only

[[Page 44432]]

be possible to evaluate the care being rendered for a portion of
patients and lessen the ability to improve quality generally. We
solicited comments on the impact of requiring the submission of
clinical quality measures data on all patients, not just Medicare and
Medicaid beneficiaries.
The following is a summary of comments received regarding the
proposed reporting method beginning in 2012 in regard to the collection
of aggregate level data on all patients.
Comment: Several commenters noted that it appears that EPs are
supposed to submit clinical quality measures electronically to the
States in 2012. The commenters noted that several States have aging
Medicaid Management Information Systems that may not be capable of
accepting this data/information. The commenters requested clarification
about whether CMS expects the States to utilize and report this data
immediately.
Response: To clarify, States may propose to CMS in their State
Medicaid HIT Plans (See Section 495.332) the means by which they want
to receive providers' clinical quality measures, starting with States'
second implementation year of their Medicaid EHR incentive program.
States are not obliged to receive this data using their MMIS but can
consider other options such as but not limited to: An external data
warehouse, registries or health information exchanges that include data
repositories.
Comment: A commenter asked that we state the authority which
provides us the ability to require EPs and hospitals to report on non-
Medicare and Medicaid patients.
Response: Sections 1848(o)(A)(2)(iii) and 1886(n)(3)(A)(iii) of the
Act broadly state that as a condition of demonstrating meaningful use
of certified EHR technology, an EP, CAH or eligible hospital must
``submit information'' for the EHR reporting period on the clinical
quality or other measures selected by the Secretary ``in a form and
manner specified by the Secretary.'' Likewise, section 1903(t)(6) of
the Act states that demonstrating meaningful use may include clinical
quality reporting to the States, and may be based upon the
methodologies that are used in sections 1848(o) and 1886(n). This
language does not limit us to collecting only that information
pertaining to Medicare and Medicaid beneficiaries. Therefore, we
believe that we have the authority to collect summarized clinical
quality measures selected by the Secretary, with respect to all
patients to whom the clinical quality measure applies, treated by the
EP, eligible hospital, or CAH. We believe that the quality of care of
our EP, eligible hospitals, and CAHs, as well as the ability to
demonstrate the meaningful use of certified EHR technology, is best
reflected by the care rendered to all patients, not just Medicare or
Medicaid beneficiaries.
Comment: Some commenters recommended patient level data for
clinical quality measure reporting while others supported CMS'
requirement to submit summary level data for EPs and hospitals. There
were several commenters that indicated support for reporting clinical
quality measure data on all patients rather than just on Medicare and
Medicaid patients. Another commenter stated that CMS should not require
hospitals to submit patient level data and that the data should be at
the aggregated level for all payment years. Another commenter stated
that it is well proven in other disciplines that aggregated clinical
data on quality measures can drive improvements in outcomes. Another
commenter recommended patient level data that would be useful to State
health programs and link information to managed care organizations.
Response: We agree with the commenters that stated that reporting
clinical quality measure data for all patients provides a more
comprehensive measure of quality. We acknowledge that there are
potential advantages to patient level data in measuring quality such as
those stated by the commenter. However, for Stage 1 we have elected to
require aggregate level data since the EHR standards as adopted by
ONC's final rule (found elsewhere in this issue of the Federal
Register) do not provide standards for the submission of patient level
data.
Comment: The commenter requested that CMS should have a process in
place to support end-users with on-going help desk support.
Response: We agree with the suggestion for the implementation of a
help desk to respond to questions related to the various CMS related
questions after implementation of the proposed rule. Information about
how we will provide assistance to providers will occur outside this
final rule.
Comment: A few commenters asked for clarification regarding the
Stage 1 audit process to ensure accuracy for the reporting of clinical
quality measures (for example, numerator, denominator, and exception
data).
Response: EPs, eligible hospitals, and CAHs are required for 2011
to attest to results as automatically calculated by certified EHR
technology. Beginning with 2012, such information will be submitted
electronically with respect to these requirements; we expect our audit
strategy would be based on verifying that the results submitted accord
with how they were calculated by the certified EHR technology.
Comment: We received comments requesting that CMS require that
eligible providers report their clinical quality measures data to not
only States and CMS, but also to Regional Health Improvement
Collaboratives, where such programs exist. The commenters believed that
this represents an alternative means for data submission rather than
attestation and would allow States and CMS to test this alternative in
2011 or 2012. A commenter requested that CMS interpret the statutory
requirement (Sections 1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii)) to
avoid redundant or duplicative reporting of quality measures to include
not just other CMS reporting efforts but also to avoid duplicative and
redundant reporting with State and/or regional quality measurement and
reporting efforts. They therefore requested that for Medicaid, CMS
require EPs and hospitals report their clinical quality measures to not
only States/CMS but also to Regional Health Improvement Collaboratives,
where such programs exist.
Response: Clinical quality measures need to be reported to CMS for
the Medicare program. For 2011, we intend to provide a web based tool
for attestation. Beginning with 2012 for Medicare, we will provide one
or more alternative options for electronic submission which may include
intermediaries. For Medicaid, information will go to the States as
directed by the States. We believe it would go well beyond the purview
of this provision to require additional reporting other than to CMS or
the States. To clarify the issue raised by the commenter, sections
1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) are tied to the Secretary and
Federally-required quality measures reporting programs. However, CMS
agrees that State and regional redundancies could be very problematic.
We therefore clarify our proposed policy. States must include in their
State Medicaid HIT Plans an environmental scan of existing HIT and
quality measure reporting activities related to Medicaid. We expect
States to include details in their SMHP about how these other on-going
efforts can be leveraged and supported under HITECH; and how HITECH
will not result in duplicative and/or burdensome reporting requirements
on the same providers or organizations.

[[Page 44433]]

In the proposed rule, we proposed that Medicare EPs, eligible
hospitals, and CAHs would be required to report the required clinical
quality measures information electronically using certified EHR
technology via one of three methods. The primary method we proposed
would require the EP, eligible hospital, or CAH to log into a CMS-
designated portal. Once the EP, eligible hospital, or CAH has logged
into the portal, they would be required to submit, through an upload
process, data payload based on specified structures, such as Clinical
Data Architecture (CDA), and accompanying templates produced as output
from their certified EHR technology.
As an alternative to this data submission method, we proposed to
permit Medicare EPs, eligible hospitals, and CAHs to submit the
required clinical quality measures data using certified EHR technology
through Health Information Exchange (HIE)/Health Information
Organization (HIO). This alternative data submission method would be
dependent on the Secretary's ability to collect data through a HIE/HIO
network and would require the EP, eligible hospital, or CAH who chooses
to submit data via an HIE/HIO network to be a participating member of
the HIE/HIO network. Medicare EPs, eligible hospitals, and CAHs would
be required to submit their data payload based on specified structures
or profiles, such as Clinical Data Architecture (CDA), and accompanying
templates. The EPs, eligible hospitals, or CAHs data payload would be
an output from their respective certified EHR technologies, in the form
and manner specified from their HIE/HIO adopted architecture into the
CMS HIE/HIO adopted architecture.
As another potential alternative, we proposed to accept submission
through registries dependent upon the development of the necessary
capacity and infrastructure to do so using certified EHRs.
We stated in the proposed rule that we intended to post the
technical requirements for portal submission and the alternative HIE/
HIO submission, the HIE/HIO participating member definition, and other
specifications for submission on our Web site for Medicare EPs on or
before July 1, 2011 and for Medicare eligible hospitals and CAHs on or
before April 1, 2011 for EHR adoption and incorporation and to
accommodate EHR vendors.
The following is a summary of comments received regarding the
proposed reporting method for clinical quality measures beginning with
the 2012 payment year, and our responses.
Comment: A commenter recommended that CMS test a range of reporting
options for clinical quality measures to establish uniform and reliable
rates of data transmission. Several commenters supported the three data
submission methodologies listed in the proposed rule to allow
flexibility in the quality reporting mechanisms. Many commenters
requested reporting via registries.
Response: We agree with the desirability of considering the three
transmission methodologies listed in the proposed rule. The submission
through a portal is the only mechanism that is feasible and practical
for 2012 electronic clinical quality measure submission. We plan to
test HIE/HIO and registry submission for future possible implementation
through HITECH.
Comment: A commenter requested clarification as to when CMS would
no longer accept data for 2012 for Medicare EPs.
Response: The specific technical mechanism for attestation and
electronic submission will be posted on the CMS Web site, and through
various educational products in development. We anticipate that the
last date for attestation or electronic submission will be two-three
months after the close of the applicable EHR reporting period for EPs,
eligible hospitals, and CAHs respectively.
Comment: Several commenters requested that CMS continue programs
that incentivize advanced patient care for providers who are not
eligible for the EHR incentive program and/or who do not become
meaningful users of certified EHR technology.
Response: CMS clarifies, based upon the comments, that our efforts
to avoid duplicative quality reporting requirements do not necessarily
mean the discontinuation of other quality reporting programs. CMS and
State Medicaid agencies support several quality reporting programs that
are legislatively mandated or approach quality measurement in ways that
are not exclusively tied to HIT, or that, are voluntary and/or address
emerging or developing quality measure focus areas. We are committed to
determining where the EHR incentive program's quality measure reporting
can support other quality objectives, where it cannot and how to best
align our overall quality measurement efforts across programs.
Comment: Many commenters requested deferring quality measure
reporting until 2012 and/or 2013, at which time all measures will be
electronically specified and tested. Commenters believed that this was
especially important for new clinical quality measures such as
Emergency Department Throughput and Stroke, and recommended gradually
phasing in or gradually increasing the number of reportable measures
and measure sets over time to allow for sufficient testing and
harmonization between programs. Some commenters suggested that for
Stage 1, eligible hospitals should be required to report only on the 15
measures that have been electronically specified and those that are
appropriate for that organization. One commenter requested clinical
quality measure reporting should be optional. Also, commenters
requested for 2011 and 2012 that hospitals continue to report clinical
quality measures through the current pay-for-reporting (RHQDAPU and HOP
QDRP) programs or on clinical quality measures that coincide with HEDIS
reporting measures including HOS and CAHPS, using the existing
approaches, while quality measurement specialists and vendors create
valid, reliable, and field-tested e-measures for deployment in the
eligible hospitals for 2013. Finally, commenters stated that the
proposed timeline may negatively impact credibility of data produced
and have potentially negative impact on patient safety.
Response: With respect to comments received regarding the timeline
for implementation of the EHR incentive program, we are only finalizing
clinical quality measures that are electronically specified by the date
of display of this final rule. For eligible hospitals and CAHs, we are
finalizing 15 clinical quality measures as listed in Table 10 of this
final rule that will be required to report for 2011 and 2012, as
applicable to their patient population. Although we understand the
suggestion that reporting through RHQDAPU should suffice for the HITECH
Act, the difficulty is that HITECH specifically requires that EPs,
eligible hospitals, and CAHs use ``certified EHR technology'' in
connection with the submission of clinical quality measures. Thus the
HITECH Act introduces a requirement that at least some clinical quality
measures be submitted in connection with the use of certified EHR
technology, whereas RHQDAPU has no such requirement. We have limited
the measures to those that have been electronically specified and that
are able to be automatically calculated by the certified EHR
technology. These results will be reported by EPs, eligible hospitals,
and CAHs. We will seek to align the EHR incentive program and quality
reporting programs in future rulemaking.
Comment: A number of commenters urged CMS not to require submission
of

[[Page 44434]]

clinical quality measures data beyond what a certified EHR can produce.
Specifically, commenters stated that no clinical quality measures
required for submission in Stage 1 should require a manual chart
review. Some commenters also requested allowing submission of clinical
quality measures through other EHRs that are not certified.
Response: We have adopted the suggested approach for 2011 and 2012
that limits the required information on clinical quality measures
results to that which can be automatically calculated by the certified
EHR technology. As to non-certified EHR technology, the HITECH Act
incentive program specifically requires the meaningful use of certified
EHR technology.
Comment: Several commenters stated that currently the data required
to be used in the calculation of clinical quality measures are obtained
from EHR discrete fields, free text and paper records. Commenters
recommended a uniform reporting structure. Commenters questioned if
they would be submitting raw data, numerators and denominators only, if
there will be an intermediary file that will allow manual edits to the
file prior to submission, and if not will validity be based entirely on
discrete electronic data. Commenters asked if sampling will be
permitted or if hospitals will be required to report on entire
populations. Commenters supported the value of reporting clinical
quality measures for all patients, not just Medicare and Medicaid
patients, in order to see the whole picture of the patient population
which will enhance quality improvement.
Response: As discussed elsewhere, the submission requirement is
limited to calculated results of clinical quality measures from
certified EHR technology, as specified in this final rule, and as is
consistent with the ONC final rule (see 75 FR 2014) which requires
certified EHR technology to be able to calculate clinical quality
measures as specified by CMS.
Comment: Several commenters suggested the clinical quality measures
requiring medication administration data be delayed for reporting
because they require advanced features of EHR systems with
implementation of the features, in particular Electronic Medication
Administration Record (eMAR).
Response: The Department has adopted certification criteria for EHR
Modules and Complete EHRs, as identified in the Health Information
Technology: Initial Set of Standards, Implementation Specifications,
and Certification Criteria for Electronic Health Record Technology;
Interim Final Rule (75 FR 2014). It has also proposed temporary and
permanent certification programs for testing and certifying health
information technology in a March 10, 2010 proposed rule (75 FR 11328).
The certification of EHRs will assure functionality of the information
system to obtain clinical quality data from the EHR.
After consideration of the public comments received, starting in
payment year 2012, in addition to meeting requirements for measures on
meaningful EHR use and other requirements, Medicare EPs, eligible
hospitals, and CAHs will be required to electronically submit clinical
quality measures results (numerators, denominators, exclusions) as
calculated by certified EHR technology at Sec. 495.8. Medicaid EPs
will be required to do so in the State's second implementation year for
their Medicaid EHR incentive program. The clinical quality measures
will be for all patients, regardless of payer, and will be for the
period of the EHR reporting period. Medicare EPs, eligible hospitals,
and CAHs will be required to report the required clinical quality
measures information electronically using certified EHR technology via
one of three methods. The primary method will require the EP, eligible
hospital, or CAH to log into a CMS-designated portal. Once the EP,
eligible hospital, or CAH has logged into the portal, they will be
required to submit, through an upload process, data payload based on
specified structures, such as Clinical Data Architecture (CDA), and
accompanying templates produced as output from their certified EHR
technology.
As an alternative to this data submission method, contingent on
feasibility, we will permit Medicare EPs, eligible hospitals, and CAHs
to submit the required clinical quality measures data using certified
EHR technology through a Health Information Exchange (HIE)/Health
Information Organization (HIO). This alternative data submission method
will be dependent on the Secretary's ability to collect data through a
HIE/HIO network and would require the EP, eligible hospital, or CAH who
chooses to submit data via an HIE/HIO network to be a participating
member of the HIE/HIO network. Medicare EPs, eligible hospitals, and
CAHs would be required to submit their data payload based on specified
structures or profiles. The EPs, eligible hospitals, or CAHs data
payload should be an output from their respective certified EHR
technologies, in the form and manner specified from their HIE/HIO
adopted architecture into the CMS HIE/HIO adopted architecture.
As another alternative, we will also accept submission through
registries dependent upon the development of the necessary capacity and
infrastructure to do so using certified EHRs. Finally, qualifying
Medicare Advantage organizations for their eligible Medicare Advantage
EPs, as well as, Medicare Advantage-affiliated eligible hospitals and
CAHs will continue to submit HEDIS, HOS and CAHPS data instead of the
clinical quality measures results under this final rule in section
II.C.6.
We will post the technical requirements for portal submission and
the alternative HIE/HIO submission, the HIE/HIO participating member
definition, and other specifications for submission on our Web site for
Medicare EPs on or before July 1, 2011 and for Medicare eligible
hospitals and CAHs on or before April 1, 2011 for EHR adoption and to
accommodate EHR vendors.
State Medicaid Agencies must follow the same requirements for
meaningful use, including clinical quality measures, for example,
across all payers and for the entire EHR reporting period for EPs and
eligible hospitals. We expect that States will be able to accept the
electronic reporting of clinical quality measures by their second year
of implementing the EHR incentive program. States will include in their
State Medicaid HIT Plan a description of how Medicaid providers will be
able to electronically report clinical quality measures, subject to CMS
prior approval.
i. Alternative Reporting Methods for Clinical Quality Measures
We proposed several alternative reporting methods to create a
dataset of provider-submitted summary data. One such alternative we
proposed is the development of a distributed network of EHRs where
health information is retained locally in individual EP, eligible
hospital, and CAH EHRs and only summary reports are submitted to CMS.
Another alternative we proposed is the creation of databases of
patient-level EHR data stored at the state or regional level.
The following is a summary of comments received regarding the
proposed alternative reporting methods for clinical quality measures
and our responses.
Comment: A commenter recommends aggregate reporting necessary for
clinical quality measures to be able to be completed in secondary
systems such as data warehouses.
Response: For Medicare, we require that the data source be from
certified EHR technology. EPs, eligible hospitals

[[Page 44435]]

and CAHs may use intermediaries (data warehouses) to submit the EHR-
generated clinical quality measure if available, assuming all
requirements are met. States may seek CMS prior approval via their
State Medicaid HIT Plans for how they expect Medicaid providers to
report the required meaningful use data, including clinical quality
measures. For example, States may propose that the data, while it
originates in the providers' certified EHR technology, may be reported
using a health information exchange organization or registry as an
intermediary.
Comment: A few commenters communicated that the calculation and
submission of quality measures may depend on the use of health
information technology systems beyond those used by the EP such as data
warehouses or registries that have to manipulate the data received.
They indicated the final rule should not exclude the use of additional
non-certified EHR technology to assist EPs in satisfying the quality
reporting requirements provided the EP uses certified EHR technology to
capture the data and to calculate the results.
Response: Certified EHR technology will be required to calculate
the clinical quality measure results for the CMS specified measures we
finalize in this final rule and transmit under the PQRI Registry XML
specification, as provided in the ONC final rule (found elsewhere in
this issue of the Federal Register).
Comment: Several commenters recommended inclusion of QRDA with PQRI
XML for reporting, thus allowing vendors the ability to bypass PQRI XML
if they plan to ultimately implement QRDA. There is also concern that
switching to QRDA from XML will require duplicative investments. They
recommended attestation for 2011 and 2012 as well as allowing use of
QRDA in 2012.
Response: Electronic specifications will need to utilize standards
that the certified EHR can support. ONC's final rule (found elsewhere
in this issue of the Federal Register) limits this to PQRI Registry XML
specifications. There is no current requirement that a certified EHR be
able to produce QRDA.
j. Reporting Period for Reporting of Clinical Quality Measures
Sections 1848(o)(A)(2)(iii) and 1886(n)(3)(A)(iii) of the Act state
that to demonstrate meaningful use of certified EHR technology for an
EHR reporting period, an EP, eligible hospital, and CAH must submit
information ``for such period'' on the clinical quality measures and
other measures selected by the Secretary. Therefore we proposed that
the reporting period for the clinical quality measures selected by the
Secretary be the EHR reporting period.
Another alternative we proposed was a fixed reporting period of
four quarterly reporting periods, or two six-month reporting periods.
In terms of practice and precedent for other Medicare clinical quality
measure reporting programs, all of these programs submit data to us at
specific reporting intervals.
The following is a summary of comments received regarding the
proposed EHR reporting period for EPs, eligible hospitals, and CAHs.
Comment: Some commenters asked for clarification on whether the EP
must continuously report during the ``entire payment year'' or whether
the reporting period for clinical quality measures covers a 12-month
period. Other commenters questioned the timing of the requirements
associated with the measures--whether the specifications for Stage 1
payment year 1 apply to EPs regardless of when the EPs become first
eligible or whether the clinical quality measure specifications follow
the calendar year.
Response: The EP only needs to report clinical quality measures
once a year, as described at Sec. 495.4. For Medicare EPs, eligible
hospitals and CAHs, the EHR reporting period is 90 days for their first
payment year. For Medicaid eligible providers, their first payment year
in which they demonstrate meaningful use (which may be their second
payment year, if they adopted, implemented or upgraded in their first
payment year) also has a 90-day EHR reporting period. For Medicare EPs,
eligible hospitals and CAHs, in their second payment year, the
reporting period is 12 months. For Medicaid EPs and eligible hospitals,
in their second payment year of demonstrating meaningful use, they also
have a 12-month EHR reporting period. Related to the timing of the
requirements, the final clinical quality measure specifications for
2011 and 2012 will be posted at the time of display of this final rule.
Comment: Some commenters requested clarification of the process for
reporting in the entire payment year. A commenter requested
clarification regarding whether the EP must continuously report during
the entire payment year or whether the reporting period for clinical
quality measures covers an entire 12-month period. Some commenters
pointed out that reporting capability may not be available every day of
the year due to information system availability.
Response: Technical requirements for electronic reporting will be
posted on the CMS Web site prior to the reporting period. The reporting
period refers to parameters of the data captured in the EHR or the
services documented in the EHR, not the time when the submission of
information regarding clinical quality measures is made. States will
dictate for Medicaid EPs and eligible hospitals the timing of
submission of their clinical quality measures data via electronic
reporting. Submission could be as infrequent as once a year after the
close of the reporting period. The reporting period beyond 2011 and
2012 for clinical quality measures will be determined in future
rulemaking.
4. Demonstration of Meaningful Use
Section 1848(o)(3)(C) of the Act, as added by section 4101(a) of
the HITECH Act, requires that as a condition of eligibility for the
incentive payment, an EP must demonstrate meaningful use of certified
EHR technology (other than the reporting on clinical quality and other
measures) as discussed in section II.A.3 of this final rule in the
manner specified by the Secretary, which may include the following: An
attestation, the submission of claims with appropriate coding, a survey
response, reporting of clinical quality or other measures, or other
means. Similarly, section 1886(n)(3)(c) of the Act, as added by section
4102(a) of the HITECH Act, requires that hospitals seeking the
incentive payment demonstrate meaningful use of certified EHR
technology in the manner specified by the Secretary. Section
1903(t)(6)(C)(i)(II) of the Act, as added by section 4201(a)(2) under
the HITECH Act, states that a Medicaid EP or eligible hospital must
demonstrate meaningful use through a ``means that is approved by the
State and acceptable to the Secretary.'' In addition, pursuant to
section 1903(t)(9) of the Act, a State must demonstrate to the
satisfaction of the Secretary that the State is conducting adequate
oversight, including the routine tracking of meaningful use
attestations and reporting mechanisms.
a. Common Methods of Demonstration in Medicare and Medicaid
As proposed, in the final rule, we are adopting a common method for
demonstrating meaningful use in both the Medicare and Medicaid EHR
incentive programs, for the same reasons we have a uniform definition
of meaningful use. The demonstration methods we adopt for Medicare
would automatically be available to the States for use in their
Medicaid programs. The Medicare methods are segmented into two parts,
as discussed in section II.4.b of this final rule. States seeking to

[[Page 44436]]

modify or propose alternative demonstration methods must submit the
proposed methods for prior CMS approval. This process is discussed more
fully in section II.D.7.b.2.c. of this final rule.
b. Methods for Demonstration of the Stage 1 Criteria of Meaningful Use
Our final regulations, at Sec. 495.8, will require that for CY
2011, EPs demonstrate that they satisfy each of the fifteen objectives
and their associated measures of the core set listed at Sec. 495.6(d)
and five of the objectives and their associated measures from the menu
set listed at Sec. 495.6(e) unless excluded as described in Sec.
495.6(a)(2). (An exclusion will reduce the number of objectives/
measures the EP must satisfy by the number that is equal to the EP's
exclusions. For example, an EP that can exclude two menu objectives/
measures is required to satisfy only three of the objectives and
associated measures from the menu set. Similarly, an exclusion will
reduce the number of core objectives/measures that apply). We permit
only those exclusions that are specifically indicated in the
description of each objective and its associated measure (Sec.
495.6(d) for the core set and Sec. 495.6(e) for the menu set). If an
exclusion exists and the EP meets the criteria for it, the EP would
report to CMS or the States that fact rather than demonstrating that
they satisfy the objective and associated measure. At Sec. 495.8, we
will require that for FY 2011, eligible hospitals and CAHs demonstrate
that they satisfy each of the fourteen objectives and their associated
measures of the core set listed at Sec. 495.6(f) and five of
objectives and their associated measures from the menu set listed at
Sec. 495.6(g) unless excluded as described in Sec. 495.6(b)(2). As
with EPs, all exclusions are specifically indicated, in the description
of the objective and associated measures (Sec. 495.6(f) for the core
set and Sec. 495.6(g) for the menu set) and an exclusion will reduce
the number of objectives and associated measures an eligible hospital
or CAH must satisfy (see above example for EPs). If an exclusion exists
and the hospital meets the criteria for it, the eligible hospital or
CAH would report to CMS or the States that fact rather than
demonstrating that they satisfy the objective and associated measure.
Finally, as specified in 495.316(d), for those participating in the
Medicaid EHR incentive program, the State may alter the requirements
for demonstrating that an EP or eligible hospital is a meaningful user,
with regard to four specific objectives and measures. For these
objectives and measures, the State may also choose to make a menu-set
objective a core objective. Such State additions could increase the
core or menu set objectives and measures that must be satisfied.
For payment years beginning in CY 2012 and subsequent years, our
final regulations, at Sec. 495.8, will require that for Stage 1 of
meaningful use, EPs demonstrate that they satisfy each of the 15
objectives and their associated measures of the core set listed at
Sec. 495.6(d), except Sec. 495.6(d)(4) ``Report ambulatory quality
measures to CMS or, in the case of Medicaid EPs, the states'' and 5 of
the objectives and their associated measures from the menu set listed
at Sec. 495.6(e) unless excluded as described in Sec. 495.6(a)(2).
The form and mechanism for excluding an objective and its associated
measure is the same for CY2012 and subsequent years as it is for
CY2011. The ability for States to add certain requirements is the same
for CY 2012 and subsequent years as it is for CY 2011. The EP must
demonstrate that they satisfy the objective ``Submitting quality
measure to CMS or the States'' through electronic reporting of clinical
quality measures to CMS or the States, as specified in section II.A.3
of this final rule. For payment years beginning in FY2012 and
subsequent years, our final regulations, at Sec. 495.8, will require
that eligible hospitals and CAHs demonstrate that they satisfy each of
the fourteen objectives and their associated measures of the core set
listed at Sec. 495.6(f), except Sec. 495.6(f)(3) ``Report hospital
quality measures to CMS or, in the case of Medicaid EPs, the states''
and five of the objectives and associated measures from the menu set
listed at Sec. 495.6(g) unless excluded as described in Sec.
495.6(b)(2). The form and mechanism for excluding an objective and its
associated measure is the same for FY2012 and subsequent years as it is
for FY2011. The ability for States to add certain requirements also is
the same for FY 2012 and subsequent years as it is for FY 2011. The
eligible hospital or CAH must demonstrate that they satisfy the
objective ``Submitting quality measure to CMS or the States'' through
electronic reporting of clinical quality measures to CMS or the States,
as specified in section II.A.3 of this final rule.
Except for the clinical quality measures (for which we require
electronic reporting in CY or FY 2012 and subsequent years as discussed
above), satisfaction of meaningful use objectives and associated
measures may be demonstrated through attestation. Specifically, we will
require that EPs, eligible hospitals and CAHs attest through a secure
mechanism, such as through claims based reporting or an online portal.
For the Medicare FFS and MA EHR incentive programs, CMS will issue
additional guidance on this mechanism. For the Medicaid EHR incentive
program, the States will include additional information in the State
Medicaid HIT plans they submit to CMS to implement the program. We will
require that an EP, eligible hospital or CAH would, through a one-time
attestation following the completion of the EHR reporting period for a
given payment year, identify the certified EHR technology they are
utilizing and the results of their performance on all the measures
associated with the reported objectives of meaningful use. We would
require attestation through a secure mechanism because we do not
believe that HIT will advance enough from its current state to allow
for more automated and/or documented options of demonstrating
meaningful use. As HIT matures we expect to base demonstration more on
automated reporting by certified EHR technologies, such as the direct
electronic reporting of measures both clinical and non clinical and
documented participation in HIE. The first example is to the move from
attestation for clinical quality measures to direct reporting in 2012
and subsequent years for EPs, eligible hospitals and CAHs. As HIT
advances we expect to move more of the objectives away from being
demonstrated through attestation. However, given the current state of
HIT, we believe that imposing such demonstration requirements for 2011
would pose significant barriers to participation in the EHR incentive
programs.
We believe that the means by which EPs, eligible hospitals and CAHs
demonstrate meaningful use should work for all provider types. We also
believe that uniform means of demonstration for EPs, eligible hospitals
and CAHs are preferred and that a greater burden should not be placed
on one or the other. In addition, we do not believe that demonstration
of meaningful use could require use of certified EHR technology beyond
the capabilities certified according to the ONC FR.
In addition to requiring electronic reporting of clinical quality
measures beginning in 2012 in Medicare and Medicaid, we also leave open
the possibility for CMS and/or the States to test options to utilize
existing and emerging HIT products and infrastructure capabilities to
satisfy other objectives of the meaningful use definition. The optional
testing could involve the use of registries or the direct

[[Page 44437]]

electronic reporting of some measures associated with the objectives of
the meaningful use definition. We do not require any EP, eligible
hospital or CAH to participate in this testing in either 2011 or 2012
in order to receive an incentive payment. The state of electronic
exchange varies widely across the country and is dependent on numerous
Federal, State, local, non-profit and for-profit initiatives. Given
this high state of flux, CMS and/or the States would have to issue
considerable updated guidance to EPs, eligible hospitals and CAHs who
wish to join in our efforts to explore the electronic exchange of
information. Any testing should be based on the principle of electronic
exchange of information from certified EHR technology either directly
to the States or through an intermediary. For purposes of the programs
in this final rule it would be counterproductive for an intermediary to
collect information through paper abstraction.
We will issue further instructions on the specifics for submitting
attestation through established outreach venues.
Comment: Several commenters submitted comments regarding the
methods of demonstration for clinical quality measures.
Response: We summarize and respond to those comments in section
II.A.3 of this final rule.
Comment: A few commenters submitted comments regarding section
1848(o)(2)(A) of the Act, which provides discretion to the Secretary to
provide for the use of alternative means for meeting the requirements
of meaningful use in the case of an eligible professional furnishing
covered professional services in a group practice. Some of these
commenters suggested that CMS provide such an alternative means in the
final rule, while others suggested we consider doing so in future
rulemaking.
Response: We did not propose any alternative means in the proposed
rule. Given the per EP basis for most of the objectives and their
associated measures, we did not believe group reporting would provide
an accurate reflection of meaningful use. In addition, as the
incentives payments are calculated on a per EP basis it is unclear to
us how variance of meaningful use among EPs within the group should be
treated. We believe the possible reduction in burden of attesting once
per group versus once per EP is outweighed by the less accurate
reporting, increased possibility of duplicate payments and decreased
transparency. We note that many of the measures rely on data which
could easily be stored at a group level such as a patient's
demographics or medication lists and any EP with access to that
information about a patient in their certified EHR technology and who
sees that same patient in the EHR reporting period would receive credit
for that patient in their numerator and denominator. Other aspects such
as the enabling of drug-drug, drug-allergy checks, using CPOE and eRx
could vary widely from EP to EP within the same group. We would also be
concerned with EPs in multi-specialty group practices some of whom
might be eligible for an exclusion, while others would not be. As
requested by commenters we will continue to review this option in
future rulemaking, but for this final rule we do not include the option
to demonstrate meaningful use at a group level.
While we did not make changes to the demonstration of meaningful
use requirements based on the comments above, we did make modifications
to other aspects of the Stage 1 definition of meaningful use that
required the descriptions of how many and which objectives and their
associated measure EPs, eligible hospitals and CAHs to be altered
accordingly. These changes are to the first paragraph of this section
(II.4.b).
5. Data Collection for Online Posting, Program Coordination, and
Accurate Payments
As described below, the HITECH Act requires the Secretary to post
online the names of Medicare EPs and eligible hospitals and CAHs who
are meaningful EHR users for the relevant payment year. Section
1903(t)(2) of the Act also requires us to ensure that EPs do not
receive an EHR incentive payment under both Medicare and Medicaid. To
fulfill these mandates, we must collect several data elements from EPs
and eligible hospitals. Beyond these two direct HITECH Act
requirements, CMS and the States also require certain data in order to
accurately calculate and distribute the incentive payments.
a. Online Posting
In the proposed rule, we said that section 1848(o)(3)(D) of the Act
requires the Secretary to list in an easily understandable format the
names, business addresses, and business phone numbers of the Medicare
EPs and, as determined appropriate by the Secretary, of group practices
receiving incentive payments for being meaningful EHR users under the
Medicare FFS program on our Internet Web site. We will not post
information on group practices because we will not base incentive
payments at the group practice level. Section 1886(n)(4)(B) of the Act,
as added by section 4102(c) of the HITECH Act, requires the Secretary
to list in an easily understandable format the names and other relevant
data, as she determines appropriate, of eligible hospitals and CAHs who
are meaningful EHR users under the Medicare FFS program, on our
Internet Web site. Eligible hospitals and CAHs will have the
opportunity to review the list before the list is publicly posted.
Sections 1853(m)(5) and 1853(l)(7) of the Act, as added by sections
4101(c) and 4102(c) of the HITECH Act, require the Secretary to post
the same information for EPs and eligible hospitals in the MA program
as would be required if they were in the Medicare FFS program.
Additionally, the Secretary must post the names of the qualifying MA
organizations receiving the incentive payment or payments. We would
collect the information necessary to post the name, business address
and business phone numbers of all EPs, eligible hospitals and CAHs
participating in the Medicare FFS and MA EHR incentive programs, and to
post this information on our Web site. The HITECH Act did not require
Medicaid EPs and eligible hospitals to be identified online so we will
not do so.
We did not receive any comments and we are finalizing these
provisions as proposed.
b. Program Election Between Medicare FFS/MA and Medicaid for EPs
In the proposed rule, we said section 1903(t)(2) of the Act
prohibits an EP from receiving incentive payments under the Medicaid
program unless the EP has waived any rights to incentive payments under
the Medicare FFS or MA programs. Furthermore, section 1903(t)(7) of the
Act requires the Secretary to assure no duplication of funding with
respect to the Medicaid program, and the physician and MA incentive
payments under sections 1848(o) and 1853(l) of the Act. This waiver and
non-duplication requirement applies only to EPs meeting both the
Medicare FFS/MA and Medicaid EHR incentive programs eligibility
criteria, and does not apply to hospitals (which, if eligible, could
receive incentive payments from both Medicare and Medicaid
simultaneously). Section 495.10 allows an EP meeting the eligibility
criteria for both the Medicare FFS/MA and Medicaid programs to
participate in either program. We would also allow an EP to change his
or her election once during the life of the EHR incentive programs
after making the initial election, for payment years 2014 and

[[Page 44438]]

before. We believe this one-time election rule allows an EP whose
patient volume no longer makes him or her eligible for the Medicaid
program to nevertheless continue to receive incentive payments that
would encourage the meaningful use of certified EHR technology. For
example, an EP who moves to a different practice or geographically
relocates practices may reduce his or her Medicaid patient volume, and
therefore become ineligible for the Medicaid incentive payments.
Allowing this EP to continue to receive incentive payments under
Medicare (if eligible) continues the availability to the EP of the
incentive for meaningfully using EHR technology, and would allow EPs a
certain amount of flexibility in their operations. While allowing this
flexibility creates administrative complexity, we believe a significant
number of EPs could have their participation in the EHR incentive
programs endangered due to changing circumstances unrelated to the EHR
incentive programs.
In the proposed rule, we proposed at 495.10(e)(5), that an EP
switching program is ``placed in the payment year the EP would have
been in, had the EP not switched programs.'' For example, if an EP
decides to switch after receiving his or her Medicare FFS incentive
payment for their second payment year, then the EP would be in its
third payment year for purposes of the Medicaid incentive payments. For
the final rule, we are clarifying that the EP is ``placed in the
payment year the EP would have been in had the EP begun in and remained
in the program to which he or she has switched.'' We have modified
495.10(e)(5) accordingly.
We believe this clarification is necessary in order to address
comments we received on non-consecutive payments. As outlined in
II.A.1.c and d of this final rule, the definition of first, second,
third, fourth, fifth, and sixth payment year differs across the
Medicare and Medicaid programs. Section 1848(o)(1)(E)(ii) of the Act
requires that the second Medicare payment year be successive to the
first payment year and immediately follow it. Similarly, the third
payment year must immediately follow the second, and so on. Thus, as
explained in II.A.1.c., ``if a Medicare EP receives an incentive in
CY2011, but does not successfully demonstrate meaningful use or
otherwise fails to qualify for the incentive in CY2012, CY2012 still
counts as one of the EP's five payment years and they would only be
able to receive an incentive under the Medicare EHR incentive program
for three more years.'' The same rule, however, does not apply to the
Medicaid EHR incentive program. For that program, EP payments may
generally be non-consecutive. If an EP does not receive an incentive
payment for a given CY or FY then that year would not constitute a
payment year. For example, if a Medicaid EP receives incentives in
CY2011 and CY2012, but fails to qualify for an incentive in CY 2013,
they would still be potentially eligible to receive incentives for an
additional four payment years.
The rules on consecutive payment, discussed above, govern how an EP
should be treated after switching from the Medicaid to the Medicare EHR
incentive program, or vice versa. As stated above, we believe that an
EP that switches from the Medicaid to the Medicare program should be
treated in the same manner as if such EP had started in the Medicare
program. Payment years that are skipped in the Medicaid EHR incentive
program thus become payment years that count against the EP's five
years of payment in Medicare. For example, an EP that receives
nonconsecutive payment under Medicaid for CYs 2011 and 2013 (but skips
CY 2012), and then switches to the Medicare program in CY 2014, is in
the fourth payment year in 2014, and is limited to that payment year's
limit on incentive payments. Such an EP may receive only one more year
of incentive payments under the Medicare EHR incentive program. We
believe this rule is equitable, given that, had the EP started in the
Medicare program, the EP would not have been able to benefit from non-
consecutive payments available under the Medicaid EHR incentive
program. We see no reason why EPs that switch from the Medicaid to the
Medicare program should be treated differently from those who initially
began in the Medicare program, and believe that any other rule might
encourage gaming on the part of eligible professionals.
By the same token, an EP that switches from the Medicare to the
Medicaid EHR incentive program will not be penalized for non-
consecutive payment years accrued while in the Medicare program. For
example, an EP that receives nonconsecutive payment under Medicare for
CYs 2011 and 2013 (but skips CY 2012), and then switches to the
Medicaid program in CY 2014, is in the third year of payment in 2014,
and is potentially eligible to receive three additional years of
payment under Medicaid (after 2014), for a total of six years of
payment. Similar to our rationale described in the paragraph above, we
do not believe an EP that switches to the Medicaid program should be
treated differently from the EP that initially begins in the Medicaid
program, as once the EP switches to the Medicaid program, there is no
statutory requirement that the payment year ordering be consecutive.
We believe it is self-evident that an EP switching to a new program
is subject to the requirements of such new program. Thus, for example,
an EP switching from Medicaid to Medicare might be subject to a higher
stage of meaningful use upon moving to the Medicare program. The EP
also would be subject to fewer years of payment and to the requirement
that no incentive payments may be made after 2016.
Finally, even after lining up the payment years, it is possible for
an EP to exceed the payment cap under Medicaid by switching programs at
the right time. We do not believe that the Congress intended for the
payment caps to be exceeded under any circumstance, and therefore
proposed that no EP should receive more than the maximum incentive
available to them under Medicaid, which is the higher of the two caps.
The last year incentive payment would be reduced if awarding the EP the
full amount would exceed the overall maximum available under Medicaid.
This is possible if an EP receives their first two payment years from
Medicare and then the last four from Medicaid, as the cap would be
exceeded by $250. If the EP receives the HPSA bonus available under the
Medicare FFS EHR incentive program, this amount could be as much as
$4,450. An EP who switches from Medicaid to Medicare could potentially
exceed the Medicare threshold in a number of circumstances; however,
since they will not be allowed to exceed the Medicaid threshold under
any circumstance, we would pay the incentive for which they are
eligible for a given payment year in whichever program they are in for
that payment year until they exceed the Medicaid threshold. No
incentive payments will be made to any EP that would allow the EP to
exceed the Medicaid threshold. We anticipate that this would result in
a prorated final year incentive payment. Finally, we proposed that the
last year for making an incentive payment program switch would be CY
2014. In making this proposal, we considered that it is both the last
year an EP can enroll in the Medicare EHR incentive program, and also
the last year before the payment adjustments under Medicare can begin.
Comment: We received comments requesting clarification on when an
EP could make their one switch.
Response: As described in our example, the EP could make their one

[[Page 44439]]

switch anytime after the receipt of an incentive payment under either
the Medicare or Medicaid program. Since this policy would also apply to
other program changes (for example, changing from one State to another,
or updating registration data elements), we want to clarify when
program registration changes can take place. An EP, eligible hospital
or CAH sets into motion receipt of the incentive payment when they
attempt to demonstrate meaningful use or demonstrate to the State
efforts to adopt, implement, or upgrade to certified EHR technology.
Therefore, prior to their first successful attempt to demonstrate
meaningful use or demonstrate to the State efforts to adopt, implement,
or upgrade to certified EHR technology, the EP could change their
registration in either the Medicare or Medicaid EHR incentive program
as many times as they wish. Furthermore, EPs and hospitals selecting
the Medicaid incentive program may also switch freely prior to payment
as described here. However, there may only be one payment from one
State in any one payment year.
After consideration of the public comment received, we are
modifying the provision at Sec. 495.10(e)(2) to ``(2) After receiving
at least one EHR incentive payment, may switch between the two EHR
incentive programs only one time, and only for a payment year before
2015''. This modification better reflects our clarification in response
to the comment received on the ability to switch between programs. For
the final rule, we have made a few other technical changes to Sec.
495.10, in addition to the changes made to Sec. 495.10(e)(2) and
(e)(5).
c. Data To Be Collected
In addition to information regarding the demonstration of
meaningful use, in Sec. 495.10 of this final rule we would collect the
following administrative data for the Medicare and Medicaid EHR
incentive programs to fulfill our requirements of online posting,
avoidance of duplication of incentive payments, and to ensure accurate
and timely incentive payments:
Name, NPI, business address, and business phone of each EP
or eligible hospital.
Taxpayer Identification Number (TIN) to which the EP or
eligible hospital wants the incentive payment made. For Medicaid EPs
this must be consistent with assignment rules at Sec. 495.10.
For EPs, whether they elect to participate in the Medicare
EHR incentive programs or the Medicaid EHR incentive program.
For eligible hospitals and CAHs, their CCN.
To coordinate with the States to avoid duplication of payments, we
would make available to the States through a single National Level
Repository (NLR) the following additional data:
Whether an EP or eligible hospital is a meaningful EHR
user, and
The remittance date and amount of any incentive payments
made to an EP or eligible hospital.
Other information as specified by CMS.
CMS, our contractors, and the States will have access to these data
elements through the NLR maintained by CMS. The States will have to
provide information to us on whether EPs or eligible hospitals are
eligible for the Medicaid incentive program, whether EPs or eligible
hospitals participating in the Medicaid program are meaningful EHR
users, and when any Medicaid incentive payments are made and the amount
of the payment. We will put in place processes for an EP or eligible
hospital to change their information, including the one-time switch in
EHR incentive program election by EPs.
Comment: We received comments that some EPs do not use TINs, but
rather the EP's Social Security Number (SSN).
Response: In these cases the EP would submit a TIN, which is their
SSN. An incorporated EP would have a TIN for the corporation that would
be an EIN. The EP's own TIN remains his/her SSN.
Comment: Some commenters requested clarification on whether the
business address is the physical location or the mailing address.
Response: We believe that the HITECH Act required reporting of this
information to assist the public in identifying meaningful EHR users.
We believe the practice location address serves this purpose better
than the mailing address. However we will allow EPs to enter an
alternate address for posting purposes but will not allow that address
to be a post office box.
Comment: Commenters suggested that States would be allowed to
determine the requirements associated with Medicaid provider TIN
assignments.
Response: We discuss the requirements associated with TIN
assignment in 495.10(f) and in the requirements associated with SMHPs
in this preamble at section 495.332 SMHPs. States are responsible for
making sure the providers are providing an acceptable TIN, consistent
with the regulations at 495.10(f), which states that providers may only
assign to certain TINs.
We clarified 495.10(f), to reflect this and other changes.
Comment: CMS received numerous comments about the schedule for and
State's role in the national single repository where CMS will collect
data elements on all registrants.
Response: The technological requirements and systems interfaces are
outside this regulation and we look forward to providing additional
guidance.
Comment: Some commenters recommended a shorter record retention
period that the ten years proposed. Commenters recommended periods
ranging from three to eight years. The reasons given for a shorter time
period were the cost of record retention, no perceived need for a
retention period longer than the incentive period, rapid changes in EHR
technology and consistency with other unspecified retention
requirements.
Response: After reviewing the comments, we agree with commenters
that ten years is longer than necessary to ensure the integrity of the
program. In considering a shorter retention period, we believe that
there may be cause to look over the entire incentive period. As a
Medicaid EP would be eligible for incentives over a six-year period if
they successfully receive an incentive each year and that is the
longest such period available to any participant in the Medicare and
Medicaid EHR incentive programs, we adopt a new retention period of six
years for this final rule.
Comment: We received a comment suggesting that Medicare adopt an
appeals process similar to the one proposed for Medicaid.
Response: We expect to address Medicare appeals in future guidance.
6. Hospital-Based Eligible Professionals
Section 1848(o)(1)(C)(i) of the Act, as added by section 4101(a) of
the HITECH Act, states that hospital-based EPs are not eligible for the
Medicare incentive payments. Similarly, the majority of hospital-based
EPs will not be eligible for Medicaid incentive payments under
1903(t)(2)(A) of the Act (the only exception to this rule is for those
practicing predominantly in an FQHC or RHC). Sections 4101(a) and
4201(a) of the HITECH Act originally defined the term ``hospital-based
eligible professional'' to mean an EP, such as a pathologist,
anesthesiologist, or emergency physician, who furnishes substantially
all of his or her Medicare-covered professional services during the
relevant EHR reporting period in a hospital setting (whether inpatient
or outpatient) through the use of the

[[Page 44440]]

facilities and equipment of the hospital, including the hospital's
qualified EHRs. Following publication of our proposed rule, Congress
modified the definition of hospital-based EPs. More specifically, on
April 15, 2010, President Obama signed into law the Continuing
Extension Act of 2010 (Pub. L. 111-157) which, in Section 5, made the
following changes to the Social Security Act as it applies to both the
Medicare and Medicare EHR incentives for EPs:
(1) Medicare--Section 1848(o)(1)(C)(ii) of the Social Security Act
(42 U.S.C. 1395w-4(o)(1)(C)(ii)) is amended by striking `setting
(whether inpatient or outpatient)' and inserting `inpatient or
emergency room setting'.
(2) Medicaid--Section 1903(t)(3)(D) of the Social Security Act (42
U.S.C. 1396b(t)(3)(D)) is amended by striking `setting (whether
inpatient or outpatient)' and inserting `inpatient or emergency room
setting'.
These amendments were effective as if included in the enactment of
the HITECH Act.
The above sections indicate that the determination of whether an EP
is a hospital-based EP shall be made on the basis of the site of
service, as defined by the Secretary, and without regard to any
employment or billing arrangement between the EP and any other
provider. For example, the hospital-based determination for an EP would
not be affected by whether the EP is an employee of the hospital, under
a contractual relationship with the hospital, or with respect to
whether he or she has made a reassignment to the hospital for Part B
billing purposes.
In addition, as discussed below, section 1848(a)(7)(D) of the Act,
as added by section 4101(b) of the HITECH Act, exempts hospital-based
EPs from the downward payment adjustment applied under section
1848(a)(7)(A)(i) of the Act to covered professional services provided
during a payment year by EPs who are not meaningful EHR users for the
relevant payment year beginning in 2015.
Based on section 4101(a) of the HITECH Act (and prior to the
amendments in the Continuing Extension Act of 2010), we proposed that
an EP would be a hospital-based EP and therefore ineligible to receive
a Medicare or Medicaid EHR incentive payment if more than 90 percent of
their services are provided in the following place of service (POS)
codes for HIPAA standard transactions: 21--Inpatient Hospital, 22--
Outpatient Hospital, 23--Emergency Room.
In addition, because of concerns that some primary care EPs who
provide services to Medicare and Medicaid beneficiaries would be
ineligible for the incentive payments under this proposed definition,
in the proposed rule, we asked for comments on whether we should use
another method for defining hospital-based EPs. We estimated that under
this proposal, 12-13 percent of family practitioners under Medicare
would be considered hospital-based. We did not have corresponding data
for Medicaid EPs.
Comment: Many congressional representatives, hospital associations,
individual providers and other commenters indicated that they believed
that the proposal would inappropriately exclude from receiving EHR
incentive payments EPs practicing in ambulatory settings such as those
that practice in hospital provider-based departments (referred to by
most commenters as ``outpatient centers and clinics''). They indicated
these centers and clinics provide services similar to services
furnished by EPs in private offices. Many suggested that this
definition may inhibit hospital investments in their outpatient primary
care sites. Commenters believe the absence of any EP incentive payment
in these settings may discourage hospitals from adopting EHR in
ambulatory settings, particularly if doing so requires the purchase of
an ambulatory-based EHR system (or an ambulatory component to be added
to the hospital's EHR system). This is because the hospital's total
incentive payment is based on total inpatient services. A hospital with
a large outpatient department will not receive a higher incentive
payment as a result of their outpatient services. These commenters
indicated that ambulatory care EHRs are very different from inpatient
EHRs because of the inherent differences between the types of care
provided in each setting. Commenters differed somewhat to the extent
that they provided specific alternatives. Some commenters went so far
as to suggest that all EPs should be eligible to receive EHR incentive
payments, regardless of where they practice.
Response: The changes to the hospital-based definition that are
included in the Continuing Extension Act of 2010 (Pub. L. 111-157)
discussed above address commenters concerns about ambulatory settings.
These changes have been incorporated into the final rule. An EP will be
a hospital-based EP and therefore ineligible to receive a Medicare (or
Medicaid) EHR incentive payment if more than 90 percent of their
Medicare (or Medicaid) services are provided in the following two place
of service (POS) codes for HIPAA standard transactions: 21--Inpatient
Hospital, 23--Emergency Room.
Comment: Some commenters argued that the proposed rule failed to
make a critical distinction between hospital-based EPs who primarily
use an EHR paid for and maintained by the hospital and those that did
not. Some commenters suggested that an EP should be eligible for an EHR
incentive payment if he or she had contributed 15 percent or more
toward the cost of acquiring or maintaining the certified EHR. Some
commenters requested that CMS change the definition of a hospital-based
EP to read: ``An EP who furnishes 90 percent or more of his or her
covered professional services in the CY preceding the payment year in a
hospital setting and primarily through the use of the qualified
electronic health records of the hospital.'' The commenters believed
that Congress's intent was to exclude only those EPs using qualified
EHRs of the hospital, and that their approach would allow separate EHR
incentive payments for EPs who have developed cutting-edge, patient
centered EHR modules, thereby allowing for a clinical specificity not
currently available in more generalized, hospital-wide EHR systems.
Commenters stated that these EHR technologies are currently used in
hospital settings and interoperate with hospital systems, but are paid
for and primarily maintained by physician groups who see patients in
hospital settings. The commenters indicate that these physician groups
continue to invest in their EHRs through improvements, ongoing
maintenance, and support staff employed to ensure optimal use of such
technology. The commenters indicated that many early health IT
champions, including hospital-based anesthesiologists, radiologists,
pathologists, hospitalists, emergency medicine physicians, and neonatal
physicians would be negatively affected by the proposal. These comments
would apply to EP services provided in all hospital settings, including
inpatient, outpatient, and emergency rooms.
Response: The statute, as now amended, indicates that hospital-
based EPs are those who furnish substantially all their services in an
inpatient or emergency room setting, such as a pathologist,
anesthesiologist, or emergency physician, and who do so using the
facility and equipment, including qualified electronic health care
records, of the hospital. While commenters focused on the statutory
language: ``* * * including qualified electronic health care records of
the hospital'', they did not address the

[[Page 44441]]

broader meaning of the section which also includes the requirement that
hospital-based EPs are those who furnish services ``using the facility
and equipment'', including qualified electronic health care records of
the hospital. We believe both phrases together are intended to provide
an explanation of why hospital-based EPs are to be excluded from
receiving EHR incentive payments (that is, that they would typically
use the facilities and equipment, including the EHR, of the hospital
and that therefore it would represent double payment if both hospitals
and hospital-based EPs were to be paid incentives). We do not believe
that the intent of this language was to require CMS to evaluate each EP
as to whether they are using the EHR of the hospital. Further, the
commenters did not address the significance of the next sentence of the
statute, which clearly indicates that: ``The determination of whether
an eligible professional is a hospital-based eligible professional
shall be made on the basis of the site of service * * *''. Since
Congress directed that site of service must be the determinant of
whether an EP is hospital-based, we could not use individualized
determinations of whether an EP is using the EHR of the hospital to
deliver his or her services. Also, the subsequent legislation in the
Continuing Extension Act of 2010 is consistent with the interpretation
that the determination of whether an EP is hospital-based is based on
the place where the EP furnishes services, as that subsequent
legislation further limited hospital-based to those EPs providing
substantially all services in the emergency room or inpatient hospital
settings. Furthermore, our final policy is that eligible hospitals must
demonstrate meaningful use based upon all applicable cases in the
inpatient (21) and emergency department (23) site of service codes.
Therefore, there would be duplication in measuring meaningful use for
the purposes of making EHR incentive payments in the scenario proposed
by these commenters.
The HITECH Act does not define the term ``hospital'' for purposes
of establishing a definition of hospital-based EPs for Medicare and
Medicaid. However, section 1861(e) of the Act defines the term a
``hospital'' to mean an institution that ``is primarily engaged in
providing, by or under the supervision of physicians, to inpatients (A)
diagnostic services and therapeutic services for medical diagnosis,
treatment, and care of injured, disabled, or sick persons, or (B)
rehabilitation services for the rehabilitation of injured, disabled, or
sick persons.'' Therefore, clearly EPs that practice primarily in
inpatient hospital settings, as referenced in section 1861(e) of the
Act, would be considered hospital-based EPs.
We will consider the use of place of service (POS) codes on
physician claims to determine whether an EP furnishes substantially all
of their professional services in a hospital setting and is, therefore,
hospital-based. This code set is required for use in the implementation
guide adopted as the national standard for electronic transmission of
professional health care claims under the provisions of the Health
Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA
directed the Secretary of HHS to adopt national standards for
electronic transactions. These standard transactions require all health
plans and providers to use standard code sets to populate data elements
in each transaction. The Transaction and Code Set Rule (65 FR 50312)
adopted the ASC X12N-837 Health Care Claim: Professional, volumes 1 and
2, version 4010, as the standard for electronic submission of
professional claims. This standard names the POS code set currently
maintained by CMS as the code set to be used for describing sites of
service in such claims and is available at http://www4.cms.gov/PlaceofServiceCodes/Downloads/posdatabase110509.pdf.
From this code set, we would consider the use of the following POS
codes to determine whether an EP is a hospital-based eligible
professional for Medicare:
21--Inpatient Hospital--is a facility, other than
psychiatric, which primarily provides diagnostic, therapeutic (both
surgical and nonsurgical), and rehabilitation services by, or under,
the supervision of physicians, to patients admitted for a variety of
medical conditions.
23--Emergency Room, Hospital--is a portion of a hospital
where emergency diagnosis and treatment of illness or injury is
provided.
Comment: Most commenters were supportive of the proposal to define
``substantially all'' of his or her covered professional services in a
hospital setting as EPs who furnish at least 90 percent of his/her
services in a hospital setting. However, some commenters expressed
concerns that this threshold will be too high starting in 2015 when the
time comes to determine which EPs should be subject to penalties for
failure to become meaningful users of certified EHR technology. A few
commenters misunderstood the proposal and requested that a hospital-
based EP be defined as one who provides at least 90 percent of his or
her services, defined as encounters and not as charges.
Response: The statutory definition of hospital-based EP provides
that to be considered a hospital-based EP, the EP must provide
``substantially all'' of his or her covered professional services in a
hospital setting. Therefore, we must identify the minimum percentage of
an EP's covered professional services that must be provided in a
hospital setting in order for the EP to be considered as providing
``substantially all'' of his or her covered professional services in a
hospital setting. Consistent with the statute, we proposed to make this
determination on the basis of services performed by each EP, not the
charges for each EP. We are finalizing the proposed definition of
``substantially all'' as furnishing at least 90 percent of services in
a hospital setting. We believe a 90 percent threshold certainly would
qualify as ``substantial.''
Comment: Representatives of surgeons asked that CMS make an
accommodation to the hospital-based definition to account for services
paid under a global fee.
Response: The determination of whether or not an EP is hospital-
based is determined individually for each EP. A global fee is a single
payment for a bundle of services, some of which could be performed in a
hospital such as major surgery or hospital visits, whereas some could
be performed in an office such as follow-up visits, CMS does not have
data, for the place of service for services performed by individual EPs
when the services are paid as part of a global fee. We considered
possibilities for using national level estimates for individual
services typically performed under global fees as proxies for services
provided by individual EPs. However, this would add significant
additional operational complexity to the determination of hospital-
based status and we have not pursued this approach.
Comment: Some commenters requested that CMS establish a process by
which EPs could know in advance of a payment year whether CMS
considered them as being hospital-based and therefore ineligible for an
incentive payment.
Response: To the extent practical, we intend on establishing a
process whereby the EP would know his/her hospital-based status during
the registration period. We plan to provide information to EPs
regarding their hospital-based status as early as possible (that is, no
later than early in each payment year). As indicated in the proposed
rule, we will make a determination for Medicare incentive

[[Page 44442]]

payment purposes, as to whether or not an EP is hospital-based by
annually analyzing an EP's claims history from the prior year. In the
proposed rule we indicated that we would use claims data from the prior
calendar year to make hospital-based determinations for EPs. However,
in order to provide information regarding the hospital-based status of
each EP at the beginning of each payment year, we will need to use
claims data from an earlier period. Therefore, we will use claims data
from the prior fiscal year (October through September). Under this
approach, the hospital-based status of each EP would be reassessed each
year, using claims data from the fiscal year preceding the payment
year. The hospital-based status will be available for viewing beginning
in January of each payment year. For Medicaid purposes, State Medicaid
agencies will make the determination about whether or not an EP is
hospital-based by analyzing an EP's Medicaid claims data, or in the
case of EPs who deliver care via Medicaid managed care programs, by
analyzing either encounter data or other equivalent data sources, at
the State's option. For purposes of making this determination, States
would be permitted to use data either from the prior fiscal or calendar
year.
After consideration of the public comments received, we are
revising the definition of hospital based EPs in this final rule. An EP
will be defined as being hospital-based and therefore ineligible to
receive an EHR incentive payment under either Medicare or Medicaid,
regardless of the type of service provided, if more than 90 percent of
their services are identified as being provided in places of service
classified under two place of service codes 21 (Inpatient Hospital) or
23 Emergency Room, Hospital. We plan to reassess the hospital-based
status of each EP for Medicare purposes each year, using claims data
from the fiscal year immediately preceding the payment year. Based on
preliminary claims data from the first 9 months of 2009, CMS currently
estimates that, under this final definition of hospital-based EPs,
about 14 percent of Medicare EPs (physicians) would be considered
hospital-based and thus not eligible to receive any incentive payments.
We do not have any data on Medicaid practitioners.
7. Interaction With Other Programs
In the proposed rule, we described how the HITECH Act addresses
interactions between the Medicare EHR incentive program and the E-
prescribing Incentive Program authorized by MIPPA. Under section
1848(m)(2)(D) of the Act, as added by section 4101(f)(2)(B) of the
HITECH Act, if a Medicare FFS or MA EP receives an incentive payment
from the Medicare EHR incentive program, the EP (or group practice) is
not eligible to also receive the incentive payment under the E-
prescribing Incentive Program created by MIPPA. Given the payment
timelines in this final rule for the Medicare EHR incentive program and
the existing payment timeline for the E-prescribing Incentive Program,
we will know whether an EP received a Medicare EHR incentive payment
before the e-prescribing Incentive Program payment is calculated. Thus
we will exclude those EPs (or group practices) who accept a Medicare
EHR incentive payment for a given year from being eligible for the e-
prescribing Incentive Program payment for that same year. EPs receiving
a Medicaid EHR incentive payment would remain eligible for the Medicare
MIPAA E-Prescribing Incentive Program payment.
As the HITECH Act does not specify any other restrictions on
participation in other programs and participation in the Medicare and
Medicaid EHR incentive programs, we do not propose any other
restrictions. There may be opportunities to avoid duplication of
reporting requirements among our various programs. In section II.A.3.
of this final rule, we discuss how we will avoid duplication of
reporting requirements for clinical quality measures.
Comment: Some commenters requested more information on efforts to
avoid duplication of requirements and highly encouraged CMS to do
everything it could in this regard.
Response: We address comments on the avoidance of duplication of
requirements in several other areas of this rule where more specifics
can be provided.
Comment: Commenters generally supported our proposal to only apply
the limitation of participation in multiple programs to the limitation
outlined in the HITECH Act.
Response: We continue to believe that providers should be able to
participate in every program for which they are statutorily eligible
and therefore are maintaining our proposal to only limit Medicare EPs
from receiving either the Medicare EHR incentive payment or the
Medicare E-Prescribing incentive payment.

B. Medicare Fee for Service Incentives

1. Incentive Payments for Eligible Professionals (EP)
Section 1848(o)(1)(A) of the Act, as amended by section 4101(a) of
the HITECH Act, provides for incentive payments to EPs who are
meaningful users of certified EHR technology during the relevant EHR
reporting periods. Section 1848(o)(1)(A)(i) of the Act provides that
EPs who are meaningful EHR users during the relevant EHR reporting
period are entitled to an incentive payment amount, subject to an
annual limit, equal to 75 percent of the Secretary's estimate of the
Medicare allowed charges for covered professional services furnished by
the EP during the relevant payment year. Under section
1848(o)(1)(B)(ii)(VI) of the Act, an EP is entitled to an incentive
payment for up to 5 years. In addition, in accordance with section
1848(o)(1)(A)(ii) of the Act, there shall be no incentive payments made
with respect to a year after 2016. The incentive payments would be
disbursed from the Federal Supplementary Medical Insurance Trust Fund,
as provided for under section 1848(o)(1)(A)(i) of the Act. As noted in
section II.A. of this final rule, EPs who qualify for both the Medicare
and Medicaid incentive payments must elect to receive payments from one
program or the other.
a. Definitions
In accordance with section 1848(o)(5)(C) of the Act, we will add a
definition of the term ``eligible professional'' in our regulations at
Sec. 495.100 to mean a physician as defined under section 1861(r) of
the Act. Section 1861(r) of the Act defines the term ``physician'' to
mean the following five types of professionals, each of which must be
legally authorized to practice their profession under state law: a
doctor of medicine or osteopathy, a doctor of dental surgery or dental
medicine, a doctor of podiatric medicine, a doctor of optometry, or a
chiropractor. As discussed in section II.B.1.a of this final rule, in
accordance with section 1848(o)(1)(C) of the Act, hospital-based EPs
are not eligible for an incentive payment.
Section 1848(o)(5)(A) of the Act defines covered professional
services as having the same meaning as in section 1848(k)(3) of the
Act, that is, services furnished by an eligible professional for which
payment is made under, or is based on, the Medicare physician fee
schedule.
In accordance with section 1848(a)(1) of the Act, the Medicare
allowed charge for covered professional services is the lesser of the
actual charge or the Medicare physician fee schedule amount established
in section 1848 the Act. As specified under section 1848(o)(1)(A)(i) of
the Act, the

[[Page 44443]]

Secretary's estimate of allowed charges is based on claims submitted to
Medicare no later than 2 months following the end of the relevant
payment year. We proposed to codify these specifications and
definitions in our regulations at 495.102.
Comment: The commenters who expressed concerns about the EP
definition under the Medicare program had one overall theme. It is that
the definition is too narrow and that it should be more inclusive of
other health professionals in order to serve the goals of the HITECH
Act. The commenters stated that they believe that the intent of the
electronic health records (EHR) legislation is to encompass a wide
range of health professionals to incorporate efficient and effective
EHR technology. Specifically, these commenters stated that the Medicare
EP definition should be expanded to include nonphysician practitioners
and health professionals such as physician assistants (PAs), nurse
practitioners (NPs), clinical nurse specialists (CNSs), certified
nurse- midwives (CNMs), clinical psychologists (CPs), clinical social
workers (CSWs), certified registered nurse anesthetists (CRNAs),
registered nurses (RNs), occupational therapists (OTs), and
credentialed pedorthists who make shoes for diabetic patients.
Additionally, we received a comment that the Medicare EP definition
should recognize health professionals who provide health support
services as members of an interdisciplinary health care team such as a
team consisting of diabetes nurse educators, NPs, pharmacists, PAs,
dieticians, and case managers.
Representatives of rural health clinics (RHCs), Federally qualified
health centers (FQHCs), ambulatory surgical centers (ASCs), outpatient
clinics and dialysis facilities commented that their providers should
also be included under the Medicare EP definition to qualify for
Medicare incentive payments. These providers believe that they are a
key set of contributors that will implement and meaningfully utilize
electronic health care record program modules that directly benefit
their patient populations. Alternatively, one of these commenters
recommended that provider eligibility should be determined by type of
service provided rather than by location of service and should include
non-physician clinicians and providers.
The sub-theme of the comments that we received on the Medicare EP
definition is that the definition of an ``eligible provider'' that
qualifies for EHR incentive payments should be a common definition for
the Medicare and Medicaid programs. The commenters believe that a
uniform definition of an EP would be more administratively efficacious
for the Medicare and Medicaid programs considering that EPs are
permitted to switch participation between the Medicare and Medicaid
incentive programs one-time after the initial payment year.
An organization representing pathologists expressed concern that
the Medicare EP definition, as currently drafted would subject certain
pathologists to payment incentive penalties for not being meaningful
EHR users if the pathologists performed less than 90 percent of their
professional services in any inpatient or outpatient setting in the
prior year. All EPs have to report on all Core Measures and a subset of
clinical measures that pathologists could not meet in their day-to-day
practice given the nature of pathology's scope of practice.
Accordingly, this organization recommended that CMS ensure that
pathologists who are currently defined as Medicare EPs be considered as
``non-qualifying'' EPs, that are exempt from future meaningful user
penalties.
Response: While we appreciate the comments that we received on the
Medicare EP definition, we are unable to expand or alter this statutory
definition or consolidate it with the Medicaid program EP definition as
suggested by the commenters. Under the EHR incentive payment program,
the law provided a separate Medicare EP definition rather than giving
the Secretary authority or discretion to determine who is a Medicare EP
or, who is an EP for both the Medicare and Medicaid programs.
Comment: A commenter requested clarification of the method used for
determining Medicare incentives for EPs practicing in a rural health
clinic.
Response: The amount of the EHR incentive payment is based on the
estimated allowed charges for all covered professional services
furnished by an EP during the payment year, subject to the maximum
payment amount for the payment year for the EP. For EPs that practice
in an RHC, EHR incentive payments are based on the amount of covered
professional services that are not part of the RHC package of services
and are billed by the EP through the physician fee schedule.
Comment: A commenter suggested that the definition of allowable
charges be amended to include the RHC schedule of services, or allow
providers who use UB92 and HCFA 1500 forms to be eligible for the EHR
incentive payment.
Response: The allowed charge is the amount that Medicare determines
to be reasonable payment for a provider or service under Part B,
including coinsurance and deductibles. RHC services furnished by an EP
are not considered covered professional services for purposes of the
Medicare EHR because they are not billed or paid under the physician
fee schedule.
After consideration of the public comments received on the term,
``eligible professional'' for the Medicare program, we are adopting the
Medicare EP definition in our regulations at Sec. 495.100 that state
that a Medicare EP is a physician as defined under Sec. 1861(r) of the
Social Security Act. That is, a Medicare EP is a doctor of medicine or
osteopathy, a doctor of dental surgery or dental medicine, a doctor of
podiatric medicine, a doctor of optometry, or a chiropractor and a
doctor who is legally authorized to practice their profession under
State law.
b. Incentive Payment Limits
Section 1848(o)(1)(B)(i) of the Act sets forth the annual limits on
the EHR-related incentive payments to EPs. Specifically, section
1848(o)(1)(B) of the Act provides that the incentive payment for an EP
for a given payment year shall not exceed the following amounts:
For the EP's first payment year, for such professional,
$15,000 (or, $18,000 if the EP's first payment year is 2011 or 2012).
For the EP's second payment year, $12,000.
For the EP's third payment year, $8,000.
For the EP's fourth payment year, $4,000.
For the EP's fifth payment year, $2,000.
For any succeeding year, $0.

Under section 1848(o)(1)(B)(iv) of the Act, for EPs who predominantly
furnish services in a geographic HPSA (as designated by the Secretary
under section 332(a)(1)(A) of the Public Health Service (PHS) Act), the
incentive payment limitation amounts for each payment year are
increased by 10 percent. Section 1848(o)(1)(B)(iii) of the Act also
provides for a phased reduction in payment limits for EPs who first
demonstrate meaningful use of certified EHR technology after 2013.
Specifically, if the EP's first payment year is after 2013, then the
annual limit on the incentive payment equals the annual limit
applicable to an EP whose first payment year is 2013. Accordingly, if
the EP's first payment year is 2014, the EP's maximum incentive payment
will be $12,000 in 2014, $8,000 in 2015, and $4,000 in 2016. Section
1848(o)(1)(B)(v)

[[Page 44444]]

of the Act provides that if the EP's first payment year is after 2014,
then the applicable incentive payment limit for such year and any
subsequent year shall be $0. In other words, an EP who does not qualify
to receive an EHR-related incentive payment prior to 2015 will not
receive any of these incentive payments.
Comment: One commenter believes that the methodology for
determining the incentive payments under the incentive program does not
offer each EP an equal incentive, despite being held to the same
standards of adoption and implementation.
Response: We are uncertain why the commenter believes that the
methodology for determining the incentive payments under the incentive
program does not offer each EP an equal incentive to adopt EHR
technology. However, the payment methodology in the statute for EPs (as
well as the methodologies for hospitals and CAHs) is quite
prescriptive, and offers no discretion for us to adopt revisions
designed to enhance incentives for adoption. For EPs, the HITECH Act
defines the incentive payment amount as, ``an amount equal to 75
percent of the Secretary's estimate * * * of the allowed charges under
this part of all such covered professional services furnished by the
eligible professional during such year.''
c. Increase in Incentive Payment for EPs Who Predominantly Furnish
Services in a Geographic Health Professional Shortage Area (HPSA)
Section 1848(o)(1)(B)(iv) of the Act provides that the amount of
the annual incentive payment limit for each payment year be increased
by 10 percent for EPs who predominantly furnish services in an area
that is designated by the Secretary (under section 332(a)(1)(A) of the
PHS Act) as a geographic health professional shortage area (HPSA). This
section of the PHS Act refers to geographic HPSAs, which are areas that
have been designated by the Secretary as having a shortage of health
professionals, based on the population-to-provider ratio and other
factors. HPSAs are located in every State, and in both rural and urban
areas.
Geographic HPSAs are defined in 42 CFR Part 5 and include primary
medical care, dental, and mental health HPSAs. In accordance with the
statute, we will increase the limits per payment year by 10 percent for
EHR-related incentive payments to EPs who predominantly furnish covered
professional services in a geographic primary medical care, dental, or
mental health HPSA.
We proposed that for an EP to be considered as ``predominantly''
furnishing covered professional services in a geographic HPSA, more
than 50 percent of the EP's covered professional services must be
furnished in a geographic HPSA. We stated that using ``more than 50
percent'' as the criterion to define ``predominantly'' is consistent
with how the term is defined in general parlance as well as how the
definition is used for purposes of other aspects of the Medicare
program. Our data indicates that most physicians furnishing services in
a HPSA furnish 100 percent of their covered services in a HPSA, and
only very few furnish services in both HPSA and non-HPSA areas.
To determine whether an EP has furnished more than 50 percent of
his/her covered professional services in a geographic HPSA, we proposed
to utilize frequency of services provided over a 1-year period from
January 1 to December 31, rather than basing it on the percentage of
allowed charges. We proposed to make the incentive payment to the EP
based on an EP's estimated allowed charges for the relevant payment
year.
We proposed that once we compile a full year of data, we would
determine eligibility for the EHR HPSA payment limit increase for the
payment year based on whether the EP provided more than 50 percent of
his/her services in a geographic HPSA during the payment year. The
determination would be made based on claims submitted not later than 2
months after the end of the year. If we determine that the EP provided
more than 50 percent of his/her services in a geographic HPSA and is
therefore eligible for the EHR HPSA payment limit increase, we would
then make an additional lump sum payment to reflect that increased
limit amount based on the estimated allowable charges for that EP for
the prior year. The additional amount would be paid no later than 120
days after the end of the prior year for which the EP was eligible for
the 10 percent EHR HPSA payment limit increase.
Most physicians furnishing services in a HPSA furnish 100 percent
of their covered services in a HPSA. Section 1848(o)(1)(B)(iv) of the
Act also authorizes us to apply the provisions of sections 1833(m) and
(u) of the Act in implementing this 10 percent EHR HPSA payment limit
increase, as the Secretary determines appropriate. Section 1833(m) of
the Act establishes the HPSA bonus program, which provides a 10 percent
bonus to physicians who furnish Medicare covered professional services
in a geographic HPSA.
Section 1833(m)(1) of the Act provides that physicians who furnish
covered professional services in a year in an area that is designated
as a geographic HPSA prior to the beginning of the year are eligible to
receive the HPSA bonus for services furnished during the current year.
We have interpreted this to mean that bonus payments should continue
throughout the current year, even if the area loses its designation as
a geographic HPSA during the current year. Physicians furnishing
Medicare-covered professional services in an area that is not
designated as a geographic HPSA by December 31 of the prior year are
not eligible to receive the HPSA bonus for the current year, even if
the area is subsequently designated as a geographic HPSA during the
current year. We will apply these same rules for the 10 percent EHR
HPSA payment limit increase provided under section 1848(o)(1)(B)(iv) of
the Act.
Section 1833(m)(2) of the Act also provides that geographic HPSAs
that consist of an entire county be identified and the bonus paid
automatically. We publish a list annually of the zip codes that are in
these areas on our Web site at http://www.cms.hhs.gov/HPSAPSAPhysicianBonuses/01_Overview.asp#TopOfPage.
Physicians furnishing Medicare-covered professional services in a
zip code that is on this list automatically receive the HPSA bonus
payment. Physicians furnishing Medicare covered professional services
in a zip code that is not on this list but that was designated as a
geographic HPSA as of December 31 of the prior year must use a modifier
when submitting a Medicare claim in order to receive the HPSA bonus.
Comment: We received a comment stating that many EPs who work in a
HPSA do so only on a part-time basis and that most would not qualify
for the 10 percent increase in the payment limit based on the proposed
threshold of furnishing more than 50 percent of his/her covered
professional services in a geographic HPSA. The commenter suggested
that an EP should be able to qualify for the ten percent increase in
the payment limit if at least 25 percent of his/her covered services
during an EHR reporting period are furnished in a HPSA.
Response: The statute states that the annual payment limit be
increased by ten percent for EPs who predominantly furnish services in
a geographic HPSA. We continue to believe that ``more than fifty
percent'' correctly reflects the

[[Page 44445]]

meaning of the word ``predominantly'' as used in this statute. As noted
above, our data also indicate that most physicians furnish all of their
services either in a HPSA or outside of a HPSA, and only very few
furnish services in both HPSA and non-HPSA areas.
Comment: Several commenters requested that Federally Qualified
Health Centers (FQHCs) be eligible to receive the ten percent increase
in the payment limit for EPs who predominantly furnish services in a
HPSA since the FQHC is a legal entity that bills Medicare and receives
payment for services provided by physicians.
Response: The 10 percent increase in the payment limit applies to
EPs who predominantly furnish services in a geographic HPSA. FQHCs and
RHCs are not eligible for the ten percent increase in the payment limit
because they do not meet the definition of EP as specified in section
1848(o)(5)(C) of the Act. Please see others sections of the regulation
that discuss the criteria to be considered an EP. Additionally, we wish
to restate that FQHCs are not entitled to any Medicare or Medicaid
incentive payments under this program.
Comment: A commenter suggested that ``predominantly'' be defined as
the location where the EP provides the most services, so that an EP who
sees patients in more than two locations could receive the increase in
the payment limit if he/she provided more care in the HPSA location
than any other location. The commenter also suggested that if this is
too difficult to administer, we should accept an attestation from the
EP.
Response: We are aware that many physicians, especially in rural
areas, furnish services in more than one location, and appreciate the
commenter's interest in making the HPSA payment limit increase
available to these EPs. If we were to accept this recommendation, then
an EP who worked in three locations at forty percent, thirty percent,
and thirty percent time respectively, would be eligible for the HPSA
payment limit increase if the first location was in a geographic HPSA.
If the EP worked in four locations at thirty percent, twenty-five
percent, twenty five percent, and twenty percent time respectively, he/
she would be eligible for the HPSA payment limit increase if the first
location was in a geographic HPSA. We considered this suggestion and
concluded that lowering the threshold for services furnished in a HPSA
would be inconsistent with the intent of the HPSA payment limit
increase, which is to provide an incentive to promote the use of EHR by
EPs who practice predominantly in HPSAs. Also, if an EP who worked in
more than two locations and furnished services in a HPSA only thirty or
forty percent of his/her time was eligible for the HPSA payment limit
increase, this would be unfair to an EP who worked in two locations and
spent forty-five percent of his/her time in a HPSA and fifty-five
percent time in a non-HPSA, because this EP would not be eligible for
the HPSA payment limit increase even though he/she spent more total
time in a HPSA.
Comment: A commenter stated that the proposed HPSA payment limit
increase was being applied inconsistently because an EP would still get
the payment limit increase if the designation was removed mid-year, and
would not get the payment limit increase if the designation was added
mid-year.
Response: Section 1848(o)(1)(B)(iv) of the Act authorizes us to
apply the provisions of the HPSA bonus program to the implementation of
the EHR HPSA payment limit increase. The HPSA bonus is paid to
physicians who furnish Medicare-covered professional services in an
area that is designated as a geographic HPSA as of December 31 of the
prior year. They are authorized to receive the HPSA bonus throughout
the current year, even if the area loses its designation as a
geographic HPSA during the current year. Physicians furnishing
Medicare-covered professional services in an area that is not
designated as a geographic HPSA as of December 31 of the prior year are
not eligible to receive the HPSA bonus for the current year, even if
the area is subsequently designated as a geographic HPSA during the
current year. We proposed to use the same methodology for the HPSA EHR
program, and believe that this is consistent with the statute.
After consideration of the public comments received, we are
finalizing these provisions as proposed.
d. Form and Timing of Payment
Section 1848(o)(1)(D)(i) of the Act, as amended by section 4101(a)
of the HITECH Act, provides that the incentive payments may be
disbursed as a single consolidated payment or in periodic installments
as the Secretary may specify. We proposed to make a single,
consolidated, annual incentive payment to EPs. Payments would be made
on a rolling basis, as soon as we ascertained that an EP had
demonstrated meaningful use for the applicable reporting period (that
is, 90 days for the first year or a calendar year for subsequent
years), and reached the threshold for maximum payment.
Section 1848(o)(1)(A) of the Act provides that ``with respect to
covered professional services provided by an eligible professional,''
the incentive payment ``shall be paid to the eligible professional (or
to an employer or facility in the cases described in clause (A) of
section 1842(b)(6)).'' Section 1842(b)(6)(A) of the Act allows for
reassignment to an employer or entity with which the physician has a
valid contractual arrangement allowing the entity to bill for the
physician's services. Therefore, we proposed that EPs would be allowed
to reassign their incentive payment to their employer or an entity
which they have a valid employment agreement or contract providing for
such reassignment, consistent with all rules governing reassignments.
We proposed to preclude an EP from reassigning the incentive payment to
more than one employer or entity. To implement this requirement, we
proposed to use the EP's Medicare enrollment information to determine
whether an EP belongs to more than one practice (that is, whether the
EP's National Provider Identifier (NPI) is associated with more than
one practice). In cases where the EP was associated with more than one
practice, we proposed that EPs would select one tax identification
number to receive any applicable EHR incentive payment.
As mentioned above, we proposed that payments would be made on a
rolling basis, as soon as we ascertain that an EP has demonstrated
meaningful use for the applicable reporting period (that is, 90 days
for the first year or a calendar year for subsequent years), and
reached the threshold for maximum payment. We proposed to add a new
part 495.10(e) and (f) to permit reassignment of the incentive payment
with certain limitations. The following is a summary of the comments we
received and our responses.
Comment: Several commenters, including one representing Rural
Health Clinics, requested clarification of the statement in the
proposed rule (75 FR 1910) that an eligible professional (EP) is
allowed to reassign his/her EHR incentive payment to an employer or
other entity to which the EP has reassigned his/her payments for
Medicare covered services. The commenters believe that the HITECH Act
requires in such cases that any Medicare EHR incentive for which the EP
qualifies must be paid to such employer or other entity. The commenters
reference the phrases from the HITECH Act, ``shall be paid'' to an
eligible professional (or to an employer or facility in cases described
in the reassignment provisions of the Social

[[Page 44446]]

Security Act). In addition, the commenters referenced the phrase
regarding the transfer of an EP's Medicaid EHR incentive which states
that ``such incentives are paid directly to such provider (or to an
employer or facility to which such provider has assigned payments)''.
The commenters interpret these phrases to mean that an EP's EHR
incentive payments (both Medicare and Medicaid) must be paid to an
employer or other entity to which the EP has reassigned payments for
his/her services.
Response: We do not agree with the commenters' conclusions
regarding to whom the payments must be made. As we stated in the
proposed rule, Section 1842(b)(6) of the Act allows, but does not
require reassignment to an employer or entity with which the physician
has a valid contractual arrangement allowing the employer or entity to
bill for the physician's services. The HITECH Act provisions cited by
the commenter similarly do not require that the EHR incentive payment
be made pursuant to a reassignment, but provide that the payment may be
made directly to the EP or to the employer or other entity. A physician
reassigns payment based on the scope of his or her employment or
contractual arrangement. Based upon our interpretation of the
applicable provisions, we are finalizing our proposal at Sec.
495.10(f) to permit EPs to reassign their incentive payments to their
employer or to an entity with which they have a contractual
arrangement, consistent with all rules governing reassignments
including part 424, subpart F.
We are taking this opportunity to remind the public that if the EP
wishes to reassign his or her incentive payment to the employer or
entity with which the EP has a contractual arrangement, the parties
should review their existing contract(s) to determine whether the
contract(s) currently provides for reassignment of the incentive
payment or if the contract(s) needs to be revised. Reassignment of the
incentive payment must be consistent with applicable Medicare laws,
rules, and regulations, including, without limitation, those related to
fraud, waste, and abuse. For Medicaid, a discussion of reassignment of
the incentive payment is found in section II.D.3.e of this final rule
``Entities Promoting the Adoption of Certified EHR technology.''
Comment: Several commenters stated that the rationale and
objectives of the HITECH Act provisions regarding transfer of the EP's
EHR incentives are merely to align EHR incentives and EHR costs.
Therefore, they believe that the HITECH Act provisions support their
view that Congressional intent was to prevent windfall EHR incentives
to EPs who incur no EHR-related costs. The commenters also asserted
that CMS's failure to address this issue will require entities that
employ or contract with EPs to enter into negotiations and a separate
agreement transferring the EP's EHR incentive payments to the employer
or other entity.
Response: We do not agree with the commenters' statement that the
Congress intended to prevent windfall EHR incentives to EPs who incur
no EHR-related costs. Title IV, Division B of the HITECH Act
establishes incentive payments under the Medicare and Medicaid programs
for certain professionals and hospitals that meaningfully use certified
EHR technology. The provisions are not focused solely upon the costs
associated with the EHR technology. Rather, as we stated in the
proposed rule (75 FR 1849), it focuses upon the adoption,
implementation, upgrade, or meaningful use of the technology.
However, we do agree that some entities may have to review and/or
negotiate current contractual arrangements to address the transfer of
the incentive payments. The first payment year for the incentive
payment is CY 2011, which we believe should afford parties sufficient
time to reach a new agreement. For Medicaid, a discussion of
reassignment of the incentive payment is found in section II.D.3.e of
this final rule ``Entities Promoting the Adoption of Certified EHR
technology.''
Comment: Several commenters supported our proposal that if an EP
has reassigned his or her payments for services to more than one
employer or entity, that only one of those employers or entities should
receive the EP's EHR incentive payments for a particular EHR Reporting
Period (75 FR 1910). The commenters do not believe that EPs should
decide which employer or entity should receive his or her EHR incentive
payment. Rather, the commenters stated that such payments should
automatically be paid to the employer or entity that has received for
the reporting period the largest percentage of the EP's Medicare or
Medicaid payments for services.
Response: We are not persuaded to adopt the commenters' suggestion.
We believe that the suggestion by the commenters would create
administrative complexities for both CMS and EPs with little benefit.
Many of these obstacles would be similar to those described in the
proposed rule when discussing the possibility of making proportional
EHR incentive payments (75 FR 1911). Therefore, we are finalizing our
proposal to revise Sec. 495.10(e) to preclude an EP from reassigning
the incentive payment to more than one employer or entity. In cases
where the EP is associated with more than one practice, EPs must select
one TIN to receive any applicable EHR incentive payment.
Comment: The commenters also state that if an EP has incurred out-
of-pocket costs in connection with an EHR provided by an employer or
other entity to which the EP has reassigned payments for his or her
services, the EP should be permitted to keep an amount of his or her
EHR incentives equal to the amount of such costs incurred.
Response: The statute does not address this issue. It simply
provides that the incentive payments are to be made directly to the EP
or to an employer or other entity to which the EP has reassigned the
incentive payment. Reassignment of the incentive payment must be
consistent with applicable Medicare laws, rules, and regulations,
including, without limitation, those related to fraud, waste, and
abuse. We believe that any cost-sharing or subsequent distribution of
the incentive payment, such as in the manner described by the
commenter, should be resolved between the parties.
Comment: Several commenters urged CMS to clarify that any
reassignment of the EP's EHR incentive payment should not constitute a
financial arrangement within the meaning of the physician self-referral
law, or remuneration within the meaning of the federal anti-kickback
statute.
Response: The physician self-referral law prohibits a physician
from making a referral for designated health services to an entity with
which the physician or a member of the physician's immediate family has
a financial relationship, unless an exception applies. For purposes of
the physician self-referral law, a financial arrangement includes
ownership or investment interests and compensation arrangements. The
statute defines a ``compensation arrangement'' to mean any arrangement
involving remuneration, direct or indirect, overt or covert, in cash or
in kind. A reassignment of an EP's EHR payment would constitute
remuneration, and we note that reassignment generally occurs in the
context of an existing compensation arrangement (for example,
employment). There are many potentially applicable exceptions for
compensation arrangements that involve a physician's reassignment of
Medicare payments.

[[Page 44447]]

Similarly, with respect to the anti-kickback statute, absent
compliance with a safe harbor, a determination of whether a
reassignment constitutes prohibited remuneration would be made on a
case-by-case basis and we therefore decline to issue any statement
regarding the application of the anti-kickback statute to a
reassignment. For additional information regarding the anti-kickback
statute, please refer to the OIG's Web site at http://oig.hhs.gov.
Comment: One commenter representing American Indian and Alaska
Native health providers urged CMS to require that the HITECH/EHR
Meaningful Use provider incentive payments be reassigned to the Tribal
outpatient clinics, because the Tribal clinics developed the
infrastructure not the EPs themselves, and purchased electronic medical
record systems to complement the current Registration Patient
Management Systems (RPMS) of the Indian Health Service. In addition,
the commenter noted that many tribal outpatient clinics have employment
contracts with their EPs. Thus, the commenters urged CMS to require
that incentive EHR payments should be included in employment contracts
to help protect the EP as employee and the Tribe as the employer.
Response: As stated above, section 1848(o)(1)(A) of the Act
provides that the EP's incentive payment shall be paid to the eligible
professional (or to an employer or other entity with which the
physician has a valid contractual arrangement allowing the employer or
other entity to bill for the physician's services). We recognize that
some tribes purchased EHR systems based upon criteria established by
the Indian Health Service. However, after careful consideration, we
believe that the same standards concerning the incentive payments
should apply. The EP and the Tribal outpatient clinic should jointly
resolve whether the EP's EHR incentive payment will be reassigned to
the Tribal outpatient clinic or made directly to the EP. Similarly, any
decision by the Tribal outpatient clinic concerning whether to include
language in its employment contract (or in the alternative, whether any
pre-existing contract already requires reassignment of the payment), is
a matter of contract interpretation that should be resolved by the
parties themselves. This discussion is also addressed in the Medicaid
section of this rule at II.D.4.a.3.
Comment: One commenter expressed concern about the potential tax
consequences associated with an EP's reassignment of the EHR incentive
payment by an independent contractor to a larger organization. The
commenter recommended that a 1099 independent contractor should consult
with his/her tax advisor before agreeing to reassign incentive payments
and to ensure that the election to reassign is made before payment is
sent from CMS or the State Medicaid Agency.
Response: The commenter's recommendation falls outside the scope of
our authority. This is a matter for the 1099 independent contractor EP
to consider.
Comment: Many national and state medical associations expressed
concern regarding the proposed requirement that the EP must identify a
Tax Identification Number (TIN) to which the EP's incentive payment
should be made. They assert that this will not work for physicians who
do not have a TIN, and are enrolled in Medicare or Medicaid through
their Social Security Number (SSN). Therefore, the commenters recommend
that CMS accept the SSN in lieu of the TIN, so that all eligible
physicians are able to participate in the Medicare and Medicaid EHR
incentive programs.
Response: We recognize that many physicians are enrolled in
Medicare or Medicaid through their Social Security Number (SSN).
Therefore, we are revising our proposal at Sec. 495.10 that an EP must
submit, in a manner specified by CMS, the Taxpayer Identification
Number (TIN) to which the EP's incentive payment should be made. In
finalized Sec. 495.10(c), we provide that the TIN may be the EP's
Social Security Number (SSN) to which the EP's incentive payment should
be made. We note that if the physician is part of a group with more
than one owner or organization that is incorporated, they would have a
TIN for the corporation that is not the EP's SSN.
Comment: Some commenters recommended that the employer or entity to
which an EP reassigns payment for covered services, should be deemed
authorized to provide, on the EP's behalf, any documentation necessary
for the EP to qualify for EHR incentive payments.
Response: We believe that this should be resolved by the parties
themselves. There is nothing in the statute that requires an EP's
employer or other entity to which an EP reassigns payment to provide
any necessary documentation for an EP to qualify for EHR incentive
payments. Rather, the finalized regulatory provision at Sec. 495.8
provides that an EP must demonstrate that he or she satisfies each of
the applicable objectives and associated measures under Sec. 495.6. If
the parties wish to have the necessary documentation furnished by the
employer or entity, they should resolve this pursuant to an employment
or contractual agreement. We are finalizing our proposal because we
believe that making a single, consolidated payment would be the least
administratively burdensome for both CMS and EPs. In addition, we
believe a single, consolidated payment would reduce the possibility of
fraud and duplicate payments. Several of these issues related to
reassignment of payment are also addressed in the Medicaid section. See
II.D.3.e.
e. Payment Adjustment Effective in CY 2015 and Subsequent Years for EPs
Who Are Not Meaningful Users of Certified EHR Technology
Section 1848(a)(7) of the Act, as amended by section 4101(b) of the
HITECH Act, provides for payment adjustments effective for CY 2015 and
subsequent years for EPs who are not meaningful EHR users during the
relevant EHR reporting period for the year. In general, beginning in
2015, if an EP is not a meaningful EHR user for any EHR reporting
period for the year, then the Medicare physician fee schedule amount
for covered professional services furnished by the EP during the year
(including the fee schedule amount for purposes of determining a
payment based on the fee schedule amount) is adjusted to equal the
``applicable percent'' of the fee schedule amount (defined below) that
would otherwise apply. The HITECH Act includes a significant hardship
exception, discussed below, which, if applicable, could exempt certain
EPs from this payment adjustment. The payment adjustments do not apply
to hospital-based EPs.
The term ``applicable percent'' means: ``(I) for 2015, 99 percent
(or, in the case of an EP who was subject to the application of the
payment adjustment if the EP is not a successful electronic prescriber
under section 1848(a)(5) for 2014, 98 percent); (II) for 2016, 98
percent; and (III) for 2017 and each subsequent year, 97 percent.''
In addition, section 1848(a)(7)(iii) of the Act provides that if
for 2018 and subsequent years the Secretary finds that the proportion
of EPs who are meaningful EHR users is less than 75 percent, the
applicable percent shall be decreased by 1 percentage point from the
applicable percent in the preceding year, but in no case shall the
applicable percent be less than 95 percent.
Significant Hardship Exception--section 1848(a)(7)(B) of the Act
provides that the Secretary may, on a case-by-case basis, exempt an EP
who is not a meaningful EHR user for the year from the application of
the payment

[[Page 44448]]

adjustment if the Secretary determines that compliance with the
requirements for being a meaningful EHR user would result in a
significant hardship, such as in the case of an EP who practices in a
rural area without sufficient Internet access. The exemption is subject
to annual renewal, but in no case may an EP be granted a hardship
exemption for more than 5 years.
Comment: Some commenters believed that when an EP's performance
leads to a negative financial impact under Medicare payment policy, it
would be unfair and overly punitive for them to face a separate and
potentially more significant financial impact--whether through a denial
of funding and/or ARRA's penalties. Further, some commenters indicated
that they interpreted these requirements to mean that Medicaid
participants would or would not experience fee-schedule adjustments if
they are not meaningful users by the end of 2014.
Response: We will reduce payments as specified under the statute.
Under sections 4101(b) and (c) of the HITECH Act, we are required to
pay EPs less than 100 percent of the fee schedule and to make downward
adjustments to MA-affiliated EPs for their professional services if
they are not meaningful users of certified EHR beginning in CY 2015.
Under sections 4102(a), (a)(2), and (c) of the HITECH Act, we are
authorized to pay eligible hospitals a reduced annual payment update,
provide downward payment adjustment to CAHs for cost reporting periods,
and provide downward payment adjustment to MA-affiliated hospitals
respectively, if they are not meaningful users of certified EHR
technology beginning in FY 2015. The Medicare fee schedule adjustments
will impact any EP or subsection(d) hospital that is not a meaningful
user by the end of 2014. The adjustments are not authorized under
Medicaid, but the adjustments will still apply to Medicaid EPs who are
also Medicare EPs and also to Medicaid acute care hospitals that are
also subsection(d) hospitals. We are finalizing these provisions as
proposed.
2. Incentive Payments for Hospitals
a. Definition of Eligible Hospital for Medicare
Section 1886(n) of the Act, as amended by section 4102(a)(1) of the
HITECH Act, provides for incentive payments, beginning in FY 2011 (that
is, October 1, 2010 through September 30, 2011) for eligible hospitals
that are meaningful users of certified EHR technology during the EHR
reporting period for the payment year. In the proposed rule, we
proposed a new Sec. 495.104 to implement this provision. As we noted
in the proposed rule, section 1886(n)(6)(B) of the Act defines
``eligible hospitals'' for purposes of the incentive payments
provision, as ``subsection (d) hospitals,'' referring to the definition
of that term in section 1886(d)(1)(B) of the Act. Section 1886(d)(1)(B)
of the Act generally defines a ``subsection (d) hospital'' as a
``hospital located in one of the fifty States or the District of
Columbia.'' The term therefore does not include hospitals located in
the territories or hospitals located in Puerto Rico. Section
1886(d)(9)(A) of the Act separately defines a ``subsection (d) Puerto
Rico hospital'' as a hospital that is located in Puerto Rico and that
``would be a subsection (d) hospital if it were located in one of the
50 states.'' Therefore, because section 4102(a)(1) of the HITECH Act
does not refer to ``subsection (d) Puerto Rico hospitals,'' we proposed
that incentive payments for meaningful users of certified EHR
technology would not available under this provision to hospitals
located in Puerto Rico. The provision does apply to inpatient, acute
care hospitals located in the State of Maryland. These hospitals are
not currently paid under the IPPS in accordance with a special waiver
provided by section 1814(b)(3) of the Act. Despite this waiver, the
Maryland hospitals continue to meet the definition of a ``subsection
(d) hospital'' because they are hospitals located in the 50 states.
Therefore we proposed that incentive payments for meaningful users of
certified EHR technology would be available under this provision to
acute care hospitals located in the State of Maryland. The statutory
definition of a subsection (d) hospital also does not apply to
hospitals and hospital units excluded from the IPPS under section
1886(d)(1)(B) of the Act, such as psychiatric, rehabilitation, long
term care, children's, and cancer hospitals. We also proposed that, for
purposes of this provision, we would provide incentive payments to
hospitals as they are distinguished by provider number in hospital cost
reports. We proposed that incentive payments for eligible hospitals
would be calculated based on the provider number used for cost
reporting purposes, which is the CMS Certification Number (CCN) of the
main provider (also referred to as OSCAR number). Payments to eligible
hospitals are made to each provider of record. The criteria for being a
meaningful EHR user, and the manner for demonstrating meaningful use,
are discussed in section B.2. of this final rule.
Comment: We received numerous comments on our proposal to identify
all individual hospitals eligible for incentive payments based on the
provider number used for cost reporting purposes (the CCN of the main
provider). These commenters, including national and regional hospital
associations, hospital systems, and hospitals with multiple campuses,
objected to the proposed policy on various grounds. Many of these
commenters pointed out that there is no standard policy that defines
the specific types of facilities to which a single CCN applies. As a
result, a single CCN could encompass multiple hospitals within a
hospital system in some cases, while in other cases multiple hospitals
within a system could have separate CCNs. These commenters therefore
maintained that our proposed policy would unjustifiably lead to
disparate treatment of hospital systems based solely on whether the
system had one or more provider numbers. Commenters also maintained
that, because the Medicare and Medicaid payment incentives are
calculated using a per-hospital base amount, plus a capped per-
discharge amount per hospital, identifying individual hospitals solely
by CCN would result in distributing payments in a manner that does not
foster widespread EHR adoption and use. The for this argument regarding
limited EHR adoption and use is that multi-campus systems with a single
CCN would receive only one base payment, and would be more likely to
reach the discharge cap. Some commenters also argued that linking
incentive payments only to a single CCN would not accurately reflect
the pattern of costs required for deploying EHR systems across all
sites in a hospital system. For example, even hospital sites that are
part of the same system often require significant variations in their
EHR systems, accommodating local policies and processes, as well as
different legacy systems, physician preferences, clinical protocols,
and other variables. Some commenters cited as a precedent our policy
with regard to hospitals with one CCN, but multiple sites spanning more
than one wage index region. CMS has instructed such hospitals to report
wage data for each site separately on the cost report, and pays for
discharges under the wage index that applies where the service is
provided, that is, under a different wage index for each site.
These commenters recommended various approaches to recognizing and
verifying the status of separate hospitals under one CCN number. Many
of them

[[Page 44449]]

recommended that we adopt a ``multi-pronged approach that allows a
``hospital'' to be defined in ways that acknowledge the varied
organizational structures of multi-hospital systems, including by a
distinct CCN, a distinct emergency department, or a distinct hospital
license.'' Commenters recommended that we indentify and verify the
distinct hospitals within hospital systems either by revising the cost
report or by developing an attestation process similar to the process
employed under Sec. 413.65 of the regulations to verify provider-based
status. Commenters also recommended that we either collect the data
necessary for determining payment amounts (for example, discharge
counts) directly from each hospital within a system with a single
provider number, or develop a method of allocating discharges, bed
days, and other relevant data among the hospital campuses represented
in a hospital cost report under a single CCN.
Finally, a number of the commenters advocating a different approach
contended that our proposed policy ran counter to the intent of the EHR
incentive provision, which is to promote broader adoption of EHR
systems. These commenters argued in various ways that recognizing each
campus of a multi-campus hospital for separate payment was most
consistent with the statute because it would provide a greater overall
level of funding for EHR efforts, especially to hospital systems that
have elected to enroll multiple campuses under a single Medicare
provider agreement, and thus support diffusion of EHR systems more
broadly. One of these commenters did, however, acknowledge that ``in
most circumstances the term `subsection(d) hospital' under the Medicare
Program includes all of a hospital system's inpatient facilities that
operate under a single provider number,'' before going on to argue that
CMS has both the authority and the obligation under the HITECH Act to
diffuse EHR incentive payment more broadly by treating each facility
under a hospital system as a separate hospital, regardless of whether
any of the facilities share a single provider number.
Response: We appreciate the commenters' concerns, but we continue
to believe that our proposal represents the best policy approach in
determining what constitutes an ``eligible hospital.'' In the absence
of clear direction from the statute to the contrary, we believe that
the most appropriate policy is to interpret the terms in subsection (d)
``acute care hospital'' and ``children's hospital'' in the light of
existing Medicare and Medicaid program policies and precedents. It is
quite true, as a number of the commenters noted, that hospital systems
have considerable latitude (although not unlimited) in choosing whether
to obtain one CCN for all their facilities, or to obtain separate CCNs
for some or all of their facilities. However, once a hospital has
sought and obtained a single CCN for two or more facilities, that
hospital has chosen to represent itself to CMS as a single hospital,
including for purposes of payment, cost reporting, and satisfying the
conditions of participation. Such systems submit unified cost reports
integrating data (including charges, discharges, bed days, and other
relevant data) from every facility under the single CCN. For purposes
of DSH and IME payments under the IPPS, both eligibility for payment
and the applicable payment amounts are determined on the basis of this
integrated data. Most significantly, the Medicare conditions of
participation require that a system with a single CCN establish and
maintain a single governing structure, medical staff, nursing staff,
and record services. Section 482.2 states that a ``hospital must have
an organized medical staff that operates under by-laws approved by the
governing body.'' Section 482.21(e) states that the governing body must
ensure, among other matters, that ``the hospital-wide quality
assessment and performance improvement efforts address priorities for
improved quality of care.'' In addition, Sec. 482.24 states that the
hospital must have ``a medical record service that has administrative
for medical records.''. For these reasons, we believe that recognition
of the decision made by each hospital or hospital to represent and
organize itself as a single entity under one CCN, or as two or more
distinct entities under separate CCNs is a strength, rather than a
weakness, of our proposed policy. Each institution that has exercised
available latitude to obtain one CCN for all their facilities not only
represents itself as a single hospital, but also agrees to conduct
itself in significant ways as a single hospital.
We also do not agree with those commenters who argue that our
policy of applying different wage indexes to the campuses comprising a
hospital system operating under a single CCN warrants our treating each
campus as a separate eligible hospital for purposes of the EHR
incentive payment program. Our policy for these few cases when a multi-
campus hospital spans two or more wage index areas does not amount to
recognizing that each campus is a separate hospital for payment
purposes, but rather to accounting for the fact that, in these few
cases, one hospital is located in two wage index areas. In these cases,
it is appropriate to pay, and to account for wages, on the basis of
where each discharge occurs rather than on the basis of where, for
example, the main campus of a hospital may be located.
With regard to the disparate treatment argument advanced by a
number of commenters, we acknowledge that, under our proposed policy, a
single hospital system with two campuses will receive (all other things
being equal) lower incentive payments than the combined incentive
payments of two-single-campus hospitals with the same number of
discharges. However, an equivalent disparate treatment situation would
arise under the policy advocated by these commenters. Under the policy
of recognizing each campus of a multi-campus system as a separate
hospital, a single-campus hospital would received lower incentive
payments than a multi-campus hospital with the same number of
discharges, despite the fact that both hospitals have a single CCN and
are recognized for administrative and financial purposes, and for
purposes of the conditions of participation, as a single hospital.
Example: Hospital A is a multicampus hospital with 30,000
discharges and a Medicare share of 50 percent. Hospital A's discharges
are evenly split between its two campuses. Hospital B is a single
campus hospital with 30,000 discharges and a Medicare share of 50
percent. During the first year of the transition, each campus of
Hospital A would receive a separate incentive payment determined on the
following manner:

($2,000,000 base amount + [(15,000 - 1,149) x $200] discharge-related
amount) x .5 Medicare share x 1.0 transition factor = ($2,000,000 +
$2,770,200) x .5 x 1.0 = $2,385,100

Hospital A's total payment would therefore be $4,770,200. In contrast,
Hospital B would receive a single payment determined in the following
manner:

($2,000,000 base amount + [(23,000 - 1,149) x $200] discharge-related
amount) x .5 Medicare share x 1.0 transition factor = ($2,000,000 +
$4,370,200) x .5 x 1.0 = $3,185,100

Hospital B would thus receive a payment that is $1,585,100 smaller than
Hospital A's total payment for the same number of discharges.
The change in policy recommended by these commenters will therefore
replace one equity issue with another. We see no reason to privilege
one of these arguments over the other, and

[[Page 44450]]

therefore we believe that the decision on a final policy ought to turn
on the other considerations that we discuss.
Finally, we cannot agree with the commenters that determining the
appropriate policy on this question should turn on which alternative
produces the greatest overall level of spending on EHR systems. Many
decisions could result in lower potential payments to some or all
potential meaningful users of EHR payments. Congress deliberately chose
to limit incentive payments based on the statutory formula (using the
current statutory and regulatory definition of ``subsection (d)
hospital''), and further limited the amount of incentive payments
available to large hospitals by not increasing incentive payments above
23,000 discharges.
After consideration of the public comments received, we are
finalizing our policy as proposed. For purposes of this provision, we
will provide incentive payments to hospitals as they are distinguished
by provider number in hospital cost reports. Incentive payments for
eligible hospitals will be calculated based on the provider number used
for cost reporting purposes, which is the CMS Certification Number
(CCN) of the main provider (also referred to as OSCAR number). Payments
to eligible hospitals will be made to each provider of record.
b. Incentive Payment Calculation for Eligible Hospitals: Initial Amount
Section 1886(n)(2) of the Act, as amended by 4102(a) of the HITECH
Act, describes the methodology for determining the incentive payment
amount for eligible hospitals that are meaningful users of certified
EHR technology during the EHR reporting period for a payment year. In
general, that section requires the incentive payment for each payment
year to be calculated as the product of: (1) An initial amount; (2) the
Medicare share; and (3) a transition factor applicable to that payment
year.
As amended by section 4201(a) of the HITECH Act, section
1886(n)(2)(A)(i) of the Act defines the initial amount as the sum of a
``base amount,'' as defined in section 1886(n)(2)(B) of the Act, and a
``discharge related amount,'' as defined in section 1886(n)(2)(C) of
the Act. The base amount is $2,000,000, as defined in section
1886(n)(2)(B) of the Act. The term ``discharge related amount'' is
defined in section 1886(n)(2)(C) of the Act as ``the sum of the amount,
estimated based upon total discharges for the eligible hospital
(regardless of any source of payment) for the period, for each
discharge up to the 23,000th discharge as follows:

(i) for the first through the 1,149th discharge, $0.
(ii) for the 1,150th through the 23,000th discharge, $200.
(iii) for any discharge greater than the 23,000th, $0.''

In addition to the base amount, the discharge related amount
provides an additional $200 for each hospital discharge during a
payment year, beginning with a hospital's 1,150th discharge of the
payment year, and ending with a hospital's 23,000th discharge of the
payment year. No additional payment is made for discharges prior to the
1,150th discharge, or for those discharges subsequent to the 23,000th
discharge. We proposed to implement the ``initial amount'' within the
formula as that term is defined in the statute.
Comment: Several commenters requested that we identify the sources
of the discharge data we plan to employ for purposes of determining the
discharge related amount. These commenters also requested confirmation
of their understanding that no type of discharge, regardless of source
of payment, would be excluded from the discharge count for this
purpose. Commenters specifically cited nursery discharges and
discharges from non-PPS areas of a hospital as examples of discharges
that should not be excluded under the statutory language, which they
believe requires the inclusion of all patient discharges regardless of
type of patient within the inpatient areas of the hospital.
Response: We cannot agree with the commenters that the statutory
language includes all patient discharges within the inpatient areas of
the hospital. Rather, the statutory language clearly restricts the
discharges to be counted for purposes of determining the discharge-
related amount to discharges from the acute care portion of the
hospital. As we discussed in the proposed rule, the term ``discharge
related amount'' is defined in section 1886(n)(2)(C) of the Act as
``the sum of the amount, estimated based upon total discharges for the
eligible hospital (regardless of any source of payment) for the period,
for each discharge up to the 23,000th discharge as follows:

(i) for the first through the 1,149th discharge, $0.
(ii) for the 1,150th through the 23,000th discharge, $200.
(iii) for any discharge greater than the 23,000th, $0.''

The phrase ``total discharges for the eligible hospital (regardless
of any source of payment)'' limits the count of discharges to the acute
care inpatient discharges. This is because of the reference to
``eligible hospital.'' ``Eligible hospital'' is defined in section
1886(n)(6)(B) of the Act for purposes of the incentive payments
provision, as ``a subsection (d) hospital,'' referring in turn to the
definition of that term in section 1886(d)(1)(B) of the Act. Section
1886(d)(1)(B) of the Act generally defines a ``subsection (d)
hospital'' as a ``hospital located in one of the fifty States or the
District of Columbia,'' excluding hospitals that are not paid under the
IPPS in accordance with section 1886(d)(1)(B) of the Act, such as
psychiatric, rehabilitation, long term care, children's, and cancer
hospitals. However, 1886(d)(1)(B) also specifies that the ``term
`subsection (d) hospital * * * does not include a psychiatric or
rehabilitation unit of the hospital which is a distinct part of the
hospital (as defined by the Secretary).'' Therefore, the term
``eligible hospital'' for purposes of the incentive payments provision
does not extend to the excluded units of the hospital. The term does,
of course, include the inpatient portion of the hospital that receives
payment for Medicare purposes under the inpatient PPS. The phrase
``regardless of any source of payment,'' however, indicates that the
count of ``total discharges'' for this purpose should include not only
patients for whom Medicare is the source of payment, but also patients
for whom payment is received from Medicaid or any other source of
payment. Accordingly, in the revised cost report form that is currently
pending and which will be finalized in time for the 2011 payment year,
CMS Form 2552-10, Hospital and Hospital Health Care Complex Cost
Report, we have included a cell for entry of ``Total hospital
discharges as defined in section 4102 of AARA,'' in the new Worksheet
E-1, Part II, ``Calculation of Reimbursement for Settlement for HIT.''
This new cell is derived from line 14, from ``Worksheet S-3, Part I
column 15.'' In turn, this cell from Worksheet S-3, Part I, column 15
incorporate all discharges from the inpatient, acute care portion of
the hospital, regardless of payment source. In this final rule, we have
also revised the definition of ``eligible hospital'' in Sec. 495.100
of the regulations, as well as the specification of ``initial amount''
in Sec. 495.104(c)(3) of the regulations, in order to clarify this
point.
Section 1886(n)(2)(C) of the Act, as amended by section 4102(a) of
the HITECH Act, specifies that a ``12-month period selected by the
Secretary'' may be

[[Page 44451]]

employed for purposes of determining the discharge related amount.
While the statute specifies that the payment year is determined based
on a Federal fiscal year (FY), section 1886(n)(2)(C) of the Act
provides the Secretary with authority to determine the discharge
related amount on the basis of discharge data from a relevant hospital
cost reporting period, for use in determining the incentive payment
during a FY. FYs begin on October 1 of each calendar year, and end on
September 30 of the subsequent calendar year. Hospital cost reporting
periods can begin with any month of a calendar year, and end on the
last day of the 12th subsequent month. We proposed, for purposes of
administrative simplicity and timeliness, for each eligible hospital
during each incentive payment year, to use data on the hospital
discharges from the hospital fiscal year that ends during the FY that
is prior to the FY that serves as the payment year as the basis for
making preliminary incentive payments. Similarly, we proposed that
final payments would be determined at the time of settling the cost
report for the hospital fiscal year that ends during the payment year,
and settled on the basis of the hospital discharge data from that cost
reporting period.
Example of proposal: FY 2011 begins on October 1, 2010 and ends on
September 30, 2011. For an eligible hospital with a cost reporting
period running from July 1, 2009 through June 30, 2010, we would employ
the relevant data from the hospital's cost reporting period ending June
30, 2010 in order to determine the incentive payment for the hospital
during FY 2011. This timeline would allow us to have the relevant data
available for determining payments in a timely manner for the first and
subsequent payment years. This timeline would also render it
unnecessary to develop a cumbersome process to extract and employ
discharge data across more than one hospital cost reporting period in
order to determine the discharge related amount for a FY-based payment
period. However, final payments would be based on hospital discharge
data from the cost report ending June 30, 2011, and determined at the
time of settlement for that cost reporting period.
Commenters raised several issues with regard to our proposals
regarding the timing of the cost reports to be used for purposes of
determining preliminary and final incentive payments. Each of these
issues embraces the use of several data elements, including discharge
counts, bed days, and other factors employed in the payment
calculations. For purposes of simplicity, we will address these issues
in general terms in this section. As we will note at several junctures
below, this discussions of these issues, however, are applicable to the
cost report data for other elements of the computation.
Comment: Several commenters called our attention to timing issues
with regard to the cost reporting periods that we proposed to use for
purposes of determining preliminary and final incentive payments. These
commenters noted that, if we finalize our proposal to use data from the
hospital fiscal year that ends during the FY prior to the FY that
serves as the payment year as the basis for making preliminary
incentive payments, hospitals with cost reporting periods on the
October-to-September cycle would face a delay of two months or longer
after potentially qualifying as a meaningful user before receiving a
preliminary incentive payment. Specifically, for hospitals on this
cycle, the cost report that would be used for determining interim
payments for the first payment year (the October 1, 2009 through
September 30, 2010 cost report) would not be due until February 28,
2011, two months after the hospital may have been able to qualify as a
meaningful user (January 1, 2011). For hospitals on the September-to-
August cycle, the delay could be one month. The commenters pointed out
that over one-fifth of subsection (d) hospitals have cost reporting
periods beginning on September 1 or October 1. The commenters therefore
recommended that we employ discharge and other data from a hospital's
most recently filed cost report as the basis for determining the
hospital's preliminary incentive payment once the hospital has
qualified as a meaningful user.
Response: We agree with these commenters, and in this final rule we
are therefore adopting the policy that we employ discharge and other
data from a hospital's most recently filed 12-month (see discussion
below) cost report as the basis for determining the hospital's
preliminary incentive payment once the hospital has qualified as a
meaningful user. However, the precise timing of payments, especially
during the first payment year, may be affected by other factors such as
the timeline for implementing the requisite systems to calculate and
disburse the payments. We are adopting the policy recommended by the
commenters in order to avoid any unnecessary delays in making interim
payments due merely to the timing of cost reporting periods.
Example: FY 2011 begins on October 1, 2010 and ends on September
30, 2011. For an eligible hospital with a cost reporting period on the
October-to-September cycle, we would employ the relevant data from the
hospital's most recently submitted cost reporting period in order to
determine the incentive payment for the hospital during FY 2011. If the
hospital qualifies for incentive payments on January 1, 2011, this
would probably be the cost report for the period running from October
1, 2008 through September 30, 2009. However, we would also employ the
October 1, 2009 through September 30, 2010 cost report, if that cost
report is submitted before the point when preliminary incentive
payments can be calculated.
Comment: A number of commenters also raised concerns about our
proposal to determine final incentive payments at the time of settling
the cost report for the hospital fiscal year that ends during the
payment year, and to be settled on the basis of the hospital discharge
and other data from that cost reporting period. These commenters
pointed out that the pending CMS Form 2552-10 will not be effective in
time for all hospitals and CAHs to complete the new S-10 worksheet,
Hospital Uncompensated Care and Indigent Care Data, reporting charity
care for their cost reporting period ending during the payment year.
The effective date of the new cost report will be for cost reporting
periods beginning on or after May 1, 2010 (as opposed to February 1,
2010 date anticipated in the proposed rule). For purposes of our
proposal for determining final incentive payments, including the
Medicare share/charity calculation, the first cost reporting period for
which the new cost report will be available is the period running from
May 1, 2010 through April 30, 2011. This means that, for cost reporting
periods ending in FY 2011 before April 30, hospitals will not be able
to complete the new S-10 worksheet to report charity care charges.
Therefore, these commenters recommended that we revise our proposed
policy, so that final incentive payments will be determined at the time
of settlement for the cost reporting period beginning in the payment
year. In this way all hospitals, regardless of their cost reporting
cycle, will have adequate time to submit the revised cost reports in
time for determining final incentive payments.
Response: We agree with these commenters, and in this final rule we
are therefore adopting the policy that we determine final incentive
payments at the time of settling the 12-month (see discussion below)
cost report for the hospital fiscal year that begins after the
beginning of the payment year, and to be settled on the basis of the
hospital

[[Page 44452]]

discharge and other data from that cost reporting period.
Example: FY 2011 begins on October 1, 2010 and ends on September
30, 2011. For an eligible hospital with a cost reporting period running
from July 1 through June 30, we would employ the relevant data from the
hospital's cost reporting period ending June 30, 2009 in order to
determine the preliminary incentive payment for the hospital during FY
2011 (or June 30, 2010, if that cost report was filed prior to the
calculation). However, final payments would be based on hospital
discharge data from the cost report beginning on July 1, 2011 and
ending June 30, 2012, and determined at the time of settlement for that
cost reporting period.
Comment: Several commenters requested that we explain how the
occurrence of non-standard cost reporting periods will be taken into
account in determining the appropriate cost reporting periods to employ
for determining preliminary and final EHR incentive payments. Non-
standard cost reporting periods run for periods shorter than the
standard 12-month cost reporting periods (for example, 3 months, 6
months), and are typically employed to accommodate the circumstances of
hospitals in several distinct situations, such as newly constructed
hospitals, changes of ownership, and reorganization of a single
multicampus hospital into multiple separate providers. In these cases,
one non-standard cost reporting period may be employed before the
hospital resumes (or begins) cost reporting on a 12-month cycle. One
commenter recommended that we account for these situations by adopting
three changes to our proposed regulations:
For purposes of determining preliminary incentive
payments, employ the most recently submitted 12-month cost reporting
period that ends in the year prior to the payment year, in order to
account for those situations in which the most recent cost reporting
period ending prior to the payment year is a non-standard period.
For purposes of determining final incentive payments,
employ the first 12-month cost reporting period that begins after the
start of the payment year, in order to account for those situations in
which the cost reporting period ending during the payment year is a
non-standard period.
Provide that a hospital may address the CMS regional
office responsible for its payment area for determination of the
appropriate cost reporting period to employ for calculating preliminary
or final incentive payment in cases that are not anticipated by the
rules adopted in the final regulation.
Response: We acknowledge that we failed to address the
circumstances of non-standard cost reporting periods in the proposed
rule, and we agree with the commenters that it is only appropriate to
do so. Non-standard cost reporting periods are not likely to be truly
representative of a hospital's experience, even if methods were to be
adopted for extrapolating data over a normal 12-month cost reporting
period. This is because these periods are often quite short (for
example, 3 months), which makes it questionable to extrapolate the data
over a full cost reporting period. In addition, these abbreviated
periods often capture the experience of a hospital during a period of
transition (for example, change of ownership), which often renders the
data highly unrepresentative. We also agree with the logic of the
policy revisions proposed by the commenter cited above, subject only to
the necessity of adapting the recommendations slightly to the
revisions, as discussed above, we are also adopting to our proposals
for identifying the cost reporting periods to be employed in
determining preliminary and final EHR incentive payments.
After consideration of the public comments we receive with regard
to the use of cost reporting periods for preliminary and final
incentive payment determinations, we are adopting the following
policies in this final rule.
For purposes of determining preliminary incentive
payments, we will employ discharge and other relevant data from a
hospital's most recently submitted 12-month cost report once the
hospital has qualified as a meaningful user.
For purposes of determining final incentive payments, we
will employ the first 12-month cost reporting period that begins after
the start of the payment year, in order to settle payments on the basis
of the hospital discharge and other data from that cost reporting
period. In this final rule, we are revising section 495.104(c)(2) of
the regulations accordingly. We are not adopting the recommendation to
allow the CMS regional offices to make a determination about the
appropriate cost reporting period in situations not anticipated by
these rules because we believe that these two rules cover all possible
situations. For example, even in complicated cases involving non-
standard cost reporting periods, the cost reporting period for a
hospital adjusts to a standard 12-month cycle within a brief period.
c. Incentive Payment Calculation for Eligible Hospitals: Medicare Share
As previously discussed, the initial amount must be multiplied by
the eligible hospital's Medicare share and an applicable transition
factor to determine the incentive payment to an eligible hospital for a
payment year. As added by section 4102(a) of the HITECH Act, section
1886(n)(2)(D) of the Act defines the Medicare share for purposes of
calculating incentive payments as a fraction based on estimated
Medicare FFS and managed care inpatient bed days, divided by estimated
total inpatient bed-days, modified by charges for charity care. This
section specifies that the Medicare share fraction is determined for
the incentive payment year ``for an eligible hospital for a period
selected by the Secretary.'' As in the case of the discharge data
discussed above, this clause provides the Secretary with authority to
determine the eligible hospital's Medicare share fraction on the basis
of data from a relevant hospital cost reporting period, for use in
determining the incentive payment during a FY. For purposes of
administrative simplicity and timeliness equivalent to those discussed
above with regard to discharge data, we proposed, for each eligible
hospital during each payment year, to employ data on the hospital's
Medicare fee-for-service and managed care inpatient bed days, total
inpatient bed-days, and charges for charity care from the hospital FY
that ends during the FY prior to the FY that serves as the payment year
as the basis for preliminary payment. We also proposed that final
payment would be made on the basis of the data from the hospital fiscal
year that ends during the FY that serves as the payment year at the
time of the settlement of the cost report for the latter period.
As a result of the changes we are making to these proposed policies
in response to the comments discussed in the previous section, in this
final rule we are adopting the following policies for employing data on
the eligible hospital's Medicare fee-for-service and managed care
inpatient bed days, total inpatient bed-days, and charges for charity
care from the hospital in making preliminary and final EHR incentive
payment determinations:
For purposes of determining preliminary incentive
payments, we will employ data on the hospital's Medicare fee-for-
service and managed care inpatient bed days, total inpatient bed-days,
and charges for charity care from a hospital's most recently submitted
12-month cost report once the

[[Page 44453]]

hospital has qualified as a meaningful user.
For purposes of determining final incentive payments, we
will employ the first 12-month cost reporting period that begins after
the start of the payment year, in order to settle payments on the basis
of the hospital's Medicare fee-for-service and managed care inpatient
bed days, total inpatient bed-days, and charges for charity care data
from that cost reporting period.
Section 1886(n)(2)(D) of the Act, as amended by section 4102 of the
HITECH Act, defines the numerator and denominator of the Medicare share
fraction for an eligible hospital in terms of estimated Medicare FFS
and managed care inpatient bed-days, estimated total inpatient bed-
days, and charges for charity care. Specifically, section
1886(n)(2)(D)(i) of the Act defines the numerator of the Medicare share
fraction as the sum of--
The estimated number of inpatient-bed-days (as established
by the Secretary) which are attributable to individuals with respect to
whom payment may be made under part A; and
The estimated number of inpatient-bed-days (as so
established) that are attributable to individuals who are enrolled with
a MA organization under Part C.
We proposed to determine the numbers of Medicare Part A and Part C
inpatient-bed-days using the same data sources and methods for counting
those days that we employ in determining Medicare's share for purposes
of making payments for direct graduate medical education costs, as
provided under section 1886(h) of the Act and Sec. 413.75 of our
regulations. Specifically, we proposed to derive ``the estimated number
of inpatient-bed-days * * * attributable to individuals with respect to
whom payment may be made under part A'' from lines 1, 6 through 9, 10,
and 14 in column 4 on Worksheet S-3, Part I of CMS Form 2552-96,
Hospital and Hospital Health Care Complex Cost Report. We stated that
the data entered on these lines in the cost report include all patient
days attributable to Medicare inpatients, excluding those in units not
paid under the IPPS and excluding nursery days.
Comment: A number of commenters pointed out an apparent
contradiction between the cost report sources from which we proposed to
derive the ``the estimated number of inpatient-bed-days * * *
attributable to individuals with respect to whom payment may be made
under part A'' (lines 1, 6 through 9, 10, and 14 in column 4 on
Worksheet S-3, Part I of CMS Form 2552-96,), and our statement that
``the data entered on these lines in the cost report include all
patient days attributable to Medicare inpatients, excluding those in
units not paid under the IPPS and excluding nursery days.'' These
commenters supported our proposal to employ the data from those lines
of the cost report, on the grounds that these cost report lines
``adequately capture the necessary data.'' However, as the commenters
pointed out, the data on the identified lines do include patient days
in units not paid under the inpatient PPS. These commenters also
contended that the relevant statutory language (``inpatient-bed-days *
* * attributable to individuals with respect to whom payment may be
made under part A''; emphasis supplied) would seem to include patient
days in units not paid under the inpatient PPS.
Response: We agree with the commenters that our citation of the
specific cost report sources from which we proposed to derive ``the
estimated number of inpatient-bed-days * * * attributable to
individuals with respect to whom payment may be made under part A'' was
not consistent with our statement the data entered on these lines in
the cost report include ``all patient days attributable to Medicare
inpatients, excluding those in units not paid under the IPPS and
excluding nursery days.'' In this case, our error was in the specific
cost report lines that we cited, rather than in our statement that the
relevant statutory language (``inpatient-bed-days * * * attributable to
individuals with respect to whom payment may be made under part A'')
includes ``all patient days attributable to Medicare inpatients,
excluding those in units not paid under the IPPS and excluding nursery
days.'' As in the case which we discussed above with regard to counting
``total discharges,'' the relevant statutory language directs that the
numerator and denominator of the Medicare share fraction incorporate
inpatient bed-day counts for the eligible hospital, and, as discussed
in our section on total discharges, ``eligible hospital'' is defined
with reference to section 1886(d)(1)(B) of the Act, which specifically
excludes from the definition psychiatric or rehabilitation units that
are a distinct part of the hospital. Specifically, the ``Medicare
share'' is to be ``specified * * * for an eligible hospital.'' The
numerator of the Medicare share fraction is further defined as ``the
sum (* * * with respect to the eligible hospital) of--
``(I) the estimated number of inpatient-bed-days (as established by
the Secretary) which are attributable to individuals with respect to
whom payment may be made under part A; and
``(II) the estimated number of inpatient-bed-days (as so
established) which are attributable to individuals who are enrolled
with a Medicare Advantage organization under part C.''
Finally, the denominator of the Medicare share fraction includes
``the estimated total number of inpatient-bed-days with respect to the
eligible hospital.'' Therefore, the inpatient-bed-day counts included
in the Medicare share fraction for purposes of the incentive payments
provision do not extend to inpatient-bed-days in excluded units of the
hospital, but only to inpatient-bed-days in the acute care portion of
the hospital that receives Medicare payment under the inpatient PPS. In
this final rule, we are revising section 495.104(c)(4) of the
regulations in order to clarify this point.
Since the publication of the proposed rule, we have adopted various
changes to the Medicare cost report, including changes designed to
accommodate the appropriate computation and final settlement of EHR
incentive payments for qualifying hospitals. These changes are included
in the pending cost report form, CMS Form 2552-10. In this revised
form, the relevant Medicare inpatient days are entered in line 2 of the
new Worksheet E-1, Part II, ``Calculation of Reimbursement for
Settlement for HIT.'' This new line is defined as the sum of lines 1
and 8 through 12, from Worksheet S-3, Part I, column 6 of CMS Form
2552-10. These lines include all patient days attributable to Medicare
inpatients, excluding those in units not paid under the IPPS, and
excluding nursery days.
Comment: Several commenters also contended that our proposed
exclusion of nursery days from the determination of ``inpatient-bed-
days * * * attributable to individuals with respect to whom payment may
be made under part A'' is inappropriate. These commenters maintained
that the statutory language is broad enough to include all inpatient
days associated with Medicare eligible individuals without restriction
based on the type of Part A patient.
Response: In excluding nursery days from the count of Medicare
inpatient bed days, we are following the precedent of not counting such
days for purposes of the direct medical education, indirect medical
education, and disproportionate share adjustments under the Medicare
IPPS. As in the case of the term ``subsection (d)'' hospital, we
believe that, in the absence of clear direction from the statute to the
contrary, the most appropriate policy is

[[Page 44454]]

to interpret terms such as ``inpatient bed-days'' in the light of
existing Medicare program policies and precedents. Under our policies
for the direct medical education, indirect medical education and
disproportionate share adjustments, a bed must be permanently
maintained for lodging inpatients in order to be included in available
inpatient bed and inpatient bed day counts. We exclude the days
provided to newborns (except for those in intensive care units of the
hospital) because healthy newborn infants are not provided with an
acute level of hospital care. (This is not the case with newborns
assigned to intensive care units, who are included in the counts for
those units.) For these reasons, nursery days are explicitly excluded
from:
The counts of Medicare inpatient hospital days and total
inpatient hospital days for purposes of direct graduate medical
education payments under section 413.75(b) of the regulations, where
the definition of Medicare patient load reads: ``Inpatient days in any
distinct part of the hospital are included and nursery days are
excluded.''
The counts of bed days for purposes of the Medicare
indirect graduate medical education adjustment under section
412.105(b): the ``count of available bed days excludes bed days
associated with * * * (5) Beds or bassinets in the healthy newborn
nursery * * *.''
The count of beds for purposes of the Medicare DSH
adjustment under section 412.106(a)(i) of the regulations: ``The number
of beds in a hospital is determined in accordance with Sec.
412.105(b).''
We note that, in addition to excluding nursery days from the
numerator of the Medicare share fraction, these days are excluded for
the same reasons from the count of total inpatient bed days in the
denominator of the Medicare share fraction. We therefore do not believe
that excluding these days would result in disadvantage to hospitals in
determining their Medicare share fractions for purposes of calculating
EHR incentive payments. (See our discussion of the cost report data
employed to determine total inpatient bed days in the denominator of
the Medicare share fraction, below.)
Comment: Other commenters maintained that swing bed days should
also be included in the determination of ``inpatient bed-days * * *
attributable to individuals with respect to whom payment may be made
under part A.''
Response: Once again, as in the case of the term ``subsection(d)''
hospital, we believe that, in the absence of clear direction from the
statute to the contrary, the most appropriate policy is to interpret
terms such as ``inpatient bed-days'' in the light of existing Medicare
program policies and precedents. We are therefore also following the
precedent of Medicare payment adjustments in excluding certain swing
bed days from the count of Medicare inpatient days. As in these cases,
swing bed days are excluded when the swing bed is used to furnish SNF
care, because only the days used for inpatient hospital care will be
included in the count of ``inpatient bed-days * * * attributable to
individuals with respect to whom payment may be made under part A.''
Otherwise, we would be including non-inpatient bed-days in the count.
Comment: One commenter objected that, for purposes of the Medicare
inpatient day count in the Medicare share, we appeared to be proposing
to use only paid Medicare days. This commenter argued that all eligible
Medicare days should be counted in order to reflect a hospital's true
Medicare utilization. The commenter also maintained that the statute's
reference to days ``attributable to individuals with respect to whom
payment may be made under part A'' requires inclusion of all days when
a beneficiary was eligible for Medicare, on the grounds that this
language ``does not require actual payment by Medicare.'' The commenter
further noted that the other factor in the numerator of the Medicare
share fraction requires inclusion of all patient days associated with
individuals enrolled in a Part C Medicare Advantage plan, and
maintained that there ``would be no rational basis for Congress to
include all enrolled Part C days, quite clearly regardless of whether
they are paid, but to limit part A days to those paid by Medicare.''
Response: We assume that, by the term ``unpaid'' Medicare days, the
commenter is referring to days provided to Medicare entitled
beneficiaries for which the services are non-covered, such as the cases
in which a beneficiary has exhausted coverage of inpatient hospital
services, or in which the services are not covered under a national or
local coverage determination. We do not agree with the commenter that
these days ought to be included in the count of ``inpatient-bed-days *
* * attributable to individuals with respect to whom payment may be
made under part A.'' Indeed, we believe that the best reading of this
statutory language suggests the opposite of what the commenter
maintains: In cases of non-covered days, payment may not be made under
Part A, and therefore these days should not be included in a count of
days ``attributable to individuals with respect to whom payment may be
made under part A.'' We agree with the commenter that the language for
the other factor in the numerator of the Medicare share fraction
(``inpatient-bed-days attributable * * * to individuals who are
enrolled with a MA organization under Part C'') is more inclusive.
However, we must assume that the difference in the statutory language
is meaningful. Therefore, we are finalizing our proposal not to include
days provided to Medicare entitled beneficiaries for which the services
are non-covered in the count of Medicare inpatient days. It is
important to note that we do include such ``non-paid'' days for
purposes of other Medicare payment provisions, where it is appropriate
to do so under the governing statutory provisions. For example, for
purposes of the Medicare DSH adjustment the relevant statutory language
requires inclusion of days associated with individuals who are
``entitled'' to benefits under Medicare Part A, rather than days for
which ``payment may be made under part A.''
After consideration of these comments, we are finalizing our
proposals with regard to the data to be used to determine the
``inpatient bed-days * * * attributable to individuals with respect to
whom payment may be made under part A'' in the numerator of the
Medicare share fraction. Accordingly, we will derive this information
from Worksheet E-1, Part II, line 2 of the pending Medicare cost
report, Form CMS-2552-10, which is defined as the sum of lines 1 and 8
through 12 in column 6, Worksheet S-3, Part I of the pending cost
report. As we have just discussed, we are revising the cost report data
sources from which we are deriving this information in order to be
consistent with the statutory requirement. We are also revising Sec.
495.104(c)(4)(ii)(A)(2) of the regulations to clarify this point.
Comment: One commenter inquired about the status of inpatient-bed-
days attributable to individuals enrolled in the 1876 Medicare cost
plan operating under ``billing option 2,'' under which the section 1876
cost contractor pays hospitals for Part A benefits, and then claims
reimbursement from CMS. The cost-contractor pays Part A benefits for
its 36,000 enrolled Medicare beneficiaries to contracted hospitals in
one State. The commenter maintained that a reasonable interpretation of
the statutory language suggests that the inpatient bed days for these

[[Page 44455]]

beneficiaries should be counted in the numerator of the Medicare share
fraction. The commenter requested clarification concerning the
inclusion of these days in the data sources we proposed to employ, or
the development of an appropriate remedy in order to ensure that they
are counted. Another commenter noted that Worksheet S-3, Part I, column
4, line 2 in the Medicare cost report, CMS 2552-96, has historically
been completed primarily by teaching hospitals, based on patient days
reported on Provider Statistical and Reimbursement (PS&R) Report Type
118. The commenter further stated that there have been many situations
in which non-teaching hospitals reporting days on this cost report line
have the days removed by the Medicare fiscal intermediary or Medicare
administrative contractor (MAC), as PS&R Report Type 118 contains no
patient day data for non-teaching hospitals. The commenter recommended
that we clarify our plans with regard to PS&R Report Type 118 and allow
the form to populate with accurate data for all hospitals submitting
no-pay bills for Medicare beneficiaries who are enrolled in Medicare
Advantage (MA) plans and who receive Medicare-covered hospital
services. The commenter further noted that, at this time, CAHs and IPPS
hospitals that do not receive the DSH adjustment are not required to
submit no-pay bills for Medicare Advantage patients.
Response: We agree with the commenters that all these days should
be counted in the numerator of the Medicare share fraction. With
respect to MA plan enrollees, these patients are already included in
the ``estimated number of inpatient-bed-days attributable * * * to
individuals who are enrolled with a MA organization under Part C.'' In
order for the data on the inpatient days attributable to individuals
enrolled in MA plans to be included on the Medicare cost report, the
hospital must submit a ``no-pay'' bill to the Medicare contractor. We
have issued instructions clarifying that hospitals must submit no-pay
bills for inpatient days attributable to individuals enrolled in MA
plans. Specifically, CR 5647, dated July 20, 2007, required all
hospitals paid under the inpatient prospective payment system (IPPS),
inpatient rehabilitation facility prospective payment system (IRF PPS),
and long term care hospital prospective payment system (LTCH PPS) to
submit informational only Medicare Advantage claims. Furthermore, CR
6821, dated May 5, 2010, provided that applicable IPPS, IRF PPS and LTC
hospitals will be given one final opportunity to comply with the
requirement to submit FY 2007 informational only claims. In addition,
these hospitals are required to attest in writing to their Medicare
contractor that they have either submitted all of their Medicare
Advantage claims for FY 2007 or that they have no Medicare Advantage
claims for that fiscal year. After consideration of the comments, we
are finalizing our proposals for determining the ``inpatient bed-days *
* * attributable to individuals with respect to whom payment may be
made under part A'' and the ``estimated number of inpatient-bed-days
attributable * * * to individuals who are enrolled with a MA
organization under Part C.'' However, we are modifying the language of
Sec. 495.104(c)(4)(ii)(A)(1) regarding the counting of inpatient bed-
days attributable to individuals with respect to whom payment may be
under part A to clarify that this count includes days attributable to
enrollees under section 1876 cost contracts where payments for Part A
benefits are made by the section 1876 contractor. We intend to derive
this information from Worksheet E-1, Part II, line 3 of the pending
Medicare cost report, Form CMS-2552-10, which is derived from line 2 in
column 6, Worksheet S-3, Part I of the pending cost report. This data
source on the revised Medicare cost report is the equivalent of the
source we cited in the proposed rule.
Section 1886(n)(2)(D)(ii) of the Act defines the denominator of the
Medicare share fraction as the product of--
The estimated total number of inpatient-bed-days with
respect to the eligible hospital during such period; and
The estimated total amount of the eligible hospital's
charges during such period, not including any charges that are
attributable to charity care (as such term is used for purposes of
hospital cost reporting under Title XVIII), divided by the estimated
total amount of the hospital's charges during such period.
As in the case of Medicare Part A and Part C inpatient-bed days,
for purposes of determining total inpatient-bed days in the denominator
of the Medicare share fraction, we proposed to use the same data
sources, and the same methods, that we employ in determining Medicare's
share for purposes of making payments for direct graduate medical
education costs. Specifically, we proposed to derive the relevant data
from lines 1, 6 through 9, 10, and 14 in column 6 on Worksheet S-3,
Part I of the Medicare cost report. We noted that the data entered on
these lines in the cost report include all patient days attributable to
inpatients, excluding those in units not paid under the IPPS.
Comment: Several commenters noted, regarding our proposal
concerning Medicare inpatient days in the denominator of the Medicare
share fraction, an apparent contradiction between the cost report
sources from which we proposed to derive ``estimated total number of
inpatient-bed-days with respect to the eligible hospital during such
period'' (lines 1, 6 through 9, 10, and 14 in column 6 on Worksheet S-
3, Part I), and our statement that ``the data entered on these lines in
the cost report include all patient days attributable to inpatients,
excluding those in units not paid under the IPPS .'' These commenters
supported our proposal to employ the data from those lines of the cost
report, on the grounds that these cost report lines adequately capture
the necessary data. However, as the commenters pointed out, the data on
the identified lines do include patient days in units not paid under
the inpatient PPS. And these commenters contended that the relevant
statutory language (``the estimated total number of inpatient-bed-days
with respect to the eligible hospital during such period'') would seem
to include patient days in units excluded from the inpatient PPS.
Response: As in the case of the equivalent issue with regard to
Medicare inpatient bed days, we agree with the commenters that our
citation of the specific cost report sources from which we proposed to
derive the ``the estimated total number of inpatient-bed-days with
respect to the eligible hospital during such period'' was not
consistent with our statement that the data entered on these lines in
the cost ``include all patient days attributable to inpatients,
excluding those in units not paid under the IPPS.'' And as in the case
of Medicare inpatient-bed-days, our error was in the specific cost
report lines that we cited, rather than in our statement that the
relevant statutory language (``the estimated total number of inpatient-
bed-days with respect to the eligible hospital'') includes ``all
patient days attributable to inpatients, excluding those in units not
paid under the IPPS.''. As we have discussed in connection with
counting discharges and Medicare inpatient-bed-days, the relevant
statutory language directs that the denominator of the Medicare share
fraction incorporate inpatient bed-day counts for the eligible
hospital. Therefore, the inpatient-bed-day counts included in the
Medicare share fraction for purposes of the incentive payments

[[Page 44456]]

provision do not extend to inpatient-bed-days in excluded units of the
hospital, but only to inpatient-bed-days in the acute care portion of
the hospital that receives payment for Medicare purposes under the
inpatient PPS.
We are finalizing our proposal for determining the count of total
inpatient-bed days in the denominator of the Medicare share fraction as
including all patient days attributable to inpatients, excluding those
in units not paid under the IPPS. Accordingly, we will derive this
information from Worksheet E-1, Part II, line 4 of the pending Medicare
cost report, Form CMS-2552-10, which is defined as the sum of lines
1and 8 through 12, in column 8, Worksheet S-3, Part I of the pending
cost report. As we have just discussed, we are revising the cost report
data sources from which we are deriving this information in order to be
consistent with the statutory requirement. In this final rule, we are
also revising Sec. 495.104(c)(4)(ii)(B)(1) to clarify this point.
As we noted above, the denominator of the Medicare share fraction
also includes the ``estimated total amount of the eligible hospital's
charges during such period, not including any charges that are
attributable to charity care (as such term is used for purposes of
hospital cost reporting under Title XVIII), divided by the estimated
total amount of the hospital's charges during such period.'' We discuss
the data sources and methods for calculating the charges and charity
care portions of this formula in the next section.
d. Incentive Payment Calculation for Eligible Hospitals: Charity Care
and Charges
In determining the denominator of the Medicare share fraction, we
also must determine any charges that are attributable to charity care
furnished by an eligible hospital or CAH. The exclusion of charges
attributable to charity care has the effect of decreasing the
denominator of the Medicare share fraction as the proportion of charity
care (charity care charge ratio) provided by a hospital increases. This
is because the ratio of estimated total hospital charges, not including
charges attributable to charity care, to estimated total hospital
charges during a period decreases, relatively speaking, as a hospital
provides a greater proportion of charity care. The effect of a greater
charity care factor on the denominator of the Medicare share fraction
is therefore to decrease the denominator (as the total number of
inpatient-bed days is multiplied by a relatively lower charity care
charge ratio), as a hospital provides a greater proportion of charity
care. A smaller denominator increases the Medicare share factor,
providing for higher incentive payments, to a hospital that provides a
greater proportion of charity care. Conversely, as a hospital provides
a lower proportion of charity care, the ratio of estimated total
hospital charges, not including charges attributable to charity care,
to estimated total hospital charges during a period increases.
For the purposes of this final rule, we define charity care as part
of uncompensated and indigent care described for Medicare cost
reporting purposes in the Medicare cost report instructions at section
4012 of the Provider Reimbursement Manual (PRM), Part 2; Worksheet S-
10; Hospital Uncompensated and Indigent Care Data. Subsection (d)
hospitals and CAHs are required to complete the Worksheet S-10.
As part of the Form CMS-2552-10 described above, the revised
Worksheet S-10 instructions define uncompensated care as follows: ``* *
* charity care and bad debt which includes non-Medicare bad debt and
non-reimbursable Medicare bad debt. Uncompensated care does not include
courtesy allowances or discounts given to patients.'' These
instructions further define charity care to include health services for
which a hospital demonstrates that the patient is unable to pay.
Charity care results from a hospital's policy to provide all or a
portion of services free of charge to patients who meet certain
financial criteria. For Medicare purposes, charity care is not
reimbursable, and unpaid amounts associated with charity care are not
considered as an allowable Medicare bad debt. Therefore, we proposed to
use the charity care charges that are reported on line 19 of the
revised Worksheet S-10 in the computation of the Medicare share of the
incentive payments. Line number 19 of the revised Worksheet S-10, as
proposed, has changed to line number 20 based on the pending OMB
approved final Form CMS-2552-10. Only the line number has changed as
the instructions are the same for line 19 as proposed and for line 20
in the pending final OMB approved Worksheet S-10. Thus, the charity
care charges used to calculate the final Medicare share is reported on
line 20 of the pending final OMB approved Worksheet S-10.
Under section 1886(n)(2)(D) of the Act, if the Secretary determines
that data are not available on charity care necessary to calculate the
portion of the formula specified in clause (ii)(II) of section
1886(n)(2)(D) of the Act, the Secretary shall use data on uncompensated
care and may adjust such data so as to be an appropriate proxy for
charity care including a downward adjustment to eliminate bad debt data
from uncompensated care data. In the absence of the data necessary for
the Secretary to compute the amount described in clause (ii)(II) of
section 1886(n)(2)(D) of the Act, the amount under such clause shall be
deemed to be 1.
We believe that the charity care charges reported on line 20 of the
pending final OMB approved Worksheet S-10 represent the most accurate
measure of charity care charges as part of the hospital's overall
reporting of uncompensated and indigent care for Medicare purposes.
Therefore, since eligible hospitals and CAHs are required to complete
the Worksheet S-10, if a hospital has not properly reported any charity
care charges on line 20, we may question the accuracy of the charges
used for computing the final Medicare share of the incentive payments.
With appropriate resources, we believe the charity care data can be
obtained by the MAC. This data would be used to determine if the
hospital's charity care criteria are appropriate, if a hospital should
have reported charity care charges, and if the reported charges are
proper. If we determine, as based on the determination of the MAC, that
the hospital did not properly report charity care charges on line 20 of
the pending final OMB approved Worksheet S-10, then we proposed to deem
the portion of the denominator described in section
1886(n)(2)(D)(ii)(II) of the Act to be 1.
In the proposed rule, we specifically solicited public comments on
the charity care financial criteria established by each hospital and
reviewed by the MACs, the collection of charity care data on the
Worksheet S-10, and whether proxies for charity care may be developed
with other data available to us.
Comment: Some commenters requested that CMS clarify the definition
of charity care. One commenter believed the CMS incorrectly indicated
that Medicare does not reimburse for charity care. The commenter
believed this statement is inconsistent with section 312 of the
Provider reimbursement Manual (PRM).
Response: Section 1886(n)(2)(D)(ii)(II) of the Act defines charity
care charges to compute the Medicare share as such term is used for
purposes of hospital cost reporting under Medicare. Thus, we are
adopting our proposed definition of charity care as part of
uncompensated and indigent care described for Medicare cost reporting
purposes in the

[[Page 44457]]

Medicare cost report instructions as described above.
In addition, we believe that our statement is correct in that
Medicare does not pay for charity care in accordance with the
regulations and manual instructions. Specifically, section 413.89(b)(1)
of the Medicare regulations defines bad debts as amounts considered to
be uncollectible from accounts and notes receivable that were created
or acquired in providing services. ``Accounts receivable'' and ``notes
receivable'' are designations for claims arising from the furnishing of
services, and are collectible in money in the relatively near future.
Section 413.89(b)(2) of the Medicare regulations defines charity
allowances as reductions in charges made by the provider of services
because of the indigence or medical indigence of the patient. Cost of
free care (uncompensated services) furnished under a Hill-Burton
obligation are considered as charity allowances. Furthermore, section
413.89(g) states that charity allowances have no relationship to
beneficiaries of the Medicare program and are not allowable costs.
These charity allowances include the costs of uncompensated services
furnished under a Hill-Burton obligation.
Also, section 312 of the PRM states that, for Medicare bad debt
purposes, a non-Medicaid beneficiary may be considered indigent or
medically indigent and that once indigence is determined and the
provider concludes that no improvements in the beneficiary's financial
condition exist, the debt may be deemed uncollectible without applying
the collection requirements of section 310 of the PRM. We believe that
the instructions at section 312 of the PRM specify bad debt amounts
that may be allowable under section 413.89 of the regulations and,
thus, these instructions are not related to charity care amounts that
are not allowable for Medicare.
After consideration of the public comments received, we are
finalizing the definition of charity care these provisions as proposed.
Comment: We received some comments asking if CMS will adopt
standards to determine if a hospital's charity care policy is
sufficient to qualify for the inclusion of charges in the formula for
EHR and whether that same policy would suffice to meet the criteria to
determine the eligibility for Medicare bad debt.
Response: Currently for bad debt purposes, section 312 of the PRM
requires the provider to perform asset/income tests of patient
resources for non-Medicaid beneficiaries. These tests will be used to
determine if the beneficiary meets the provider's indigent policy to
qualify an unpaid deductible and/or coinsurance amount as a Medicare
bad debt. The provider is responsible for developing its indigent
policy. Currently, the Medicare contractor will determine if the
indigent policies are appropriate for determining allowable Medicare
bad debt under section 312 of the PRM and Sec. 413.89 of the
regulations. We believe that the Medicare contractor will continue to
determine if the provider's indigent policy for bad debt purposes is
appropriate and can determine if the same policy would be sufficient to
use for charity care purposes.
Comment: We received many comments on the use of charity care
charge data from line 19 of the revised worksheet S-10, as proposed.
Commenters urge CMS to calculate charity care costs by starting with
the amount of charges a hospital has written off. Commenters noted that
this modification would help streamline and unify charity care
reporting across the Federal government (based on the way Internal
Revenue Service (IRS)) requires charity care to be reported) ensure
consistency of reporting, and avoid significantly increasing hospitals'
administrative burden.
Response: As described above, we use charity care charges from line
20 of the pending final OMB approved worksheet S-10 that captures
``total initial payment obligations of the patients who are given full
or partial discounts, based on the hospital's charity care criteria
(measured a full charge), for care delivered during the cost reporting
period for the entire facility.'' Similar comments received on our
proposed rule were also received on the Agency Information Collection
Activities: Proposed Collection: Comment Request published in the July
2, 2009 Federal Register (74 FR 31738). CMS issued a revised package,
Agency Information Collection Activities: Submission for OMB Review:
Comment Request, in the April 30, 2010 Federal Register (75 FR 22810).
The comment period for the submission for OMB review ended June 1,
2010. OMB will review the comments received and issue an approved Form
CMS 2552 10. The OMB approved Form CMS-2552-10 will be effective for
cost reporting periods beginning on or after May 1, 2010.
Comment: Some commenters noted that the Hospital Uncompensated Care
and Indigent Care Worksheet S-10 that CMS proposed to revise in the
July 2, 2009 Federal Register (74 FR 31738) would not be timely (based
on the anticipated effective date for cost reporting periods beginning
on or after February 1, 2010 as stated in the proposed rule), and
therefore, hospitals with cost reporting periods beginning on November
1, 2009, December 1, 2009 or January 1, 2010 would not have the
opportunity to report charity care data for the first year of the
incentive payment. Commenters further highlighted their concern for
available data necessary to be included in interim payments and for
final payments for periods that end December 31, 2010. Commenters urged
CMS to develop an interim mechanism for hospitals to report the
necessary information so that no hospital receives a charity care
adjustment of ``1'' merely because of its cost reporting cycle. Some
commenters suggested that CMS use other charity care data. Some
commenters suggested that CMS use the current version of the Medicare
cost report, Form CMS-2552-96, to determine interim incentive payments.
Response: To calculate the Medicare share, which includes the
charges for charity care, we proposed in the proposed rule to employ
data from the hospitals fiscal year that ends during the FY prior to
the FY that serves as the payment year as the basis for preliminary
payment. We further stated that final payment would be made on the
basis of the data from the hospital fiscal year that ends during the FY
that serves as the payment year. After consideration of the public
comments received, we are revising the provision that for purposes of
determining preliminary incentive payments, we will employ data on the
hospital's/CAH's Medicare fee-for-service and managed care inpatient
bed days, total inpatient bed-days, and charges for charity care from a
hospital's/CAH's most recently submitted 12-month cost report once the
hospital has qualified as a meaningful user. For purposes of
determining final incentive payments, we will employ the first 12-month
cost reporting period that begins after the start of the payment year,
in order to settle payments on the basis of the hospital's/CAH's
Medicare fee-for-service and managed care inpatient bed days, total
inpatient bed-days, and charges for charity care data from that cost
reporting period.
In addition, as described in the proposed rule, hospitals have been
required to fill out the worksheet S-10 of the Form CMS 2552-96 since
the BBRA of 1999 was enacted. We recognize that the charity care data
from the 2552-96 worksheet S-10 may have some limitations because, in
some cases, providers failed to complete the worksheet either partially
or in its

[[Page 44458]]

entirety. Furthermore, in the past CMS did not review the worksheet S-
10 because the data had no Medicare payment implications. Thus, in the
absence of availability of charity care data from the OMB approved Form
CMS 2552-10, a hospital for the purposes of calculating the charity
care charges in the interim may use the information from the 2552-96
worksheet S-10; line 22 until the revised worksheet is available. We
believe that the Medicare contractor can make a determination if the
charity care charges from the 2552-96 are appropriate, and if so, use
such charges in determining the preliminary incentive payment amount
for hospitals, as described above. Since CAHs were not required to fill
out the 2552-96 worksheet S-10, charity care charges may not be
available to determine preliminary incentive payments until the revised
worksheet is available. However, using data from the first 12-month
cost reporting period that begins after the start of the payment year,
as described above, hospitals and CAHs will calculate the final
incentive payment amount with data from the pending Form CMS-2552-10
Medicare cost report that is effective for cost reporting periods
beginning on or after May 1, 2010.
Comment: Several commenters pointed out that we had failed to
identify the source of the data for ``estimated total amount of the
eligible hospital's charges'' in the proposed rule. Some of these
commenters recommended that we employ Worksheet C, Column 8, line 103
for this purpose.
Response: We did neglect to identify the source of the data for
``estimated total amount of the eligible hospital's charges'' in the
proposed rule. In the final rule, we are providing that, for this
purpose, we will employ the data from Worksheet E-1, Part II, line 5 of
the revised Medicare cost report, Form CMS-2552-10, which in turn
derives this information from line 200 in column 8, Worksheet C, Part I
of the pending cost report. We note that line 200 in column 8,
Worksheet C, Part I of the revised cost report is the equivalent of
101, Column 8, Worksheet C of the current cost report. We are employing
the equivalent of line 101, rather than the equivalent of line 103, as
recommended by the commenters, because line 101 (current line 200)
includes the charges for observation, and accordingly reflects the
``total amount of the eligible hospital's charges'' more truly than
line 103, which excludes those charges.
e. Incentive Payment Calculation for Eligible Hospitals: Transition
Factor
As we have previously discussed, the initial amount must be
multiplied not only by the Medicare share fraction, but also by an
applicable transition factor in order to determine the incentive
payment to an eligible hospital for an incentive payment year. Section
1886(n)(2)(E)(i) of the Act designates that the applicable transition
factor equals one (1) For the first payment year, three-fourths for the
second payment year, one-half for the third payment year, one-fourth
for the fourth payment year, and zero thereafter. However, section
1886(n)(2)(E)(ii) of the Act provides that if ``the first payment year
for an eligible hospital is after 2013, then the transition factor
specified in this subparagraph for a payment year for such hospital is
the same as the amount specified in clause (i) for such payment year
for an eligible hospital for which the first payment year is 2013.''
Accordingly, if a hospital's first payment year is FY 2014, then the
applicable transition factor equals three-fourths (\3/4\) for the first
payment year (FY 2014), one-half (\1/2\) for the second payment year
(FY 2015), one-fourth (\1/4\) for the third payment year (FY 2015), and
zero thereafter. If a hospital's first payment year is FY 2015, then
the applicable transition factor equals (\1/2\) for the first payment
year (FY 2015), (\1/4\) for the second payment year (FY 2016), and zero
thereafter. As discussed in more detail below, under section
1886(n)(2)(E)(ii) of the Act, the transition factor for a hospital for
which the first payment year is after 2015 equals zero for all years.
In other words, 2015 is the last year for which eligible hospitals may
begin participation in the Medicare EHR Incentive Program.

[[Page 44459]]

[GRAPHIC] [TIFF OMITTED] TR28JY10.048

f. Duration and Timing of Incentive Payments
Section 1886(n)(2)(E)(i) of the Act establishes that an eligible
hospital that is a meaningful user of certified EHR technology could
receive up to 4 years of financial incentive payments. The transition
factor phases down the incentive payments over the 4-year period.
Therefore, an eligible hospital that is a meaningful user of certified
EHR technology during the relevant EHR reporting period, in payment
year FY 2011, could receive incentive payments beginning with FY 2011
(transition factor equals 1), and for FY 2012 (transition factor equals
\3/4\), 2013 (transition factor equals \1/2\), and 2014 (transition
factor equals \1/4\) if they continue to be a meaningful user of
certified EHR technology during the relevant EHR reporting periods.
Section 1886(n)(2)(E)(ii) of the Act establishes the range of time
during which a hospital may begin to receive incentive payments, and
the applicable transition periods for hospitals that are permitted to
begin receiving incentive payments after FY 2011. Specifically, that
section provides that if the ``first payment year for an eligible
hospital is after 2015, the transition factor * * * for such hospital
and for such year and subsequent year shall be 0.'' This clause in
effect provides that no incentive payments will be available to a
hospital that would begin to receive such payments after FY 2015. In
other words, FY 2015 is the last FY in which a hospital can begin to
receive incentive payments. Taken together, sections 1886(n)(2)(G)(i)
and 1886(n)(2)(E)(ii) of the Act allow hospitals to begin receiving
incentive payments during FYs 2011 through 2015. Section
1886(n)(2)(E)(ii) of the Act also establishes the transition periods
and factors that will be in effect for hospitals that begin to receive
transition payments during FY 2014 and 2015. As discussed previously,
that section states that if ``the first payment year for an eligible
hospital is after 2013, then the transition factor specified in this
subparagraph for a payment year for such hospital is the same as the
amount specified in clause (i) for such payment year for an eligible
hospital for which the first payment year is 2013.'' Section
1886(n)(2)(E)(ii) of the Act also establishes the transition periods
that will be in effect for hospitals that begin to receive transition
payments during FYs 2014 through 2015. That section states that if
``the first payment year for an eligible hospital is after 2013, then
the transition factor specified in this subparagraph for a payment year
for such hospital is the same as the amount specified in clause (i) for
such payment year for an eligible hospital for which the first payment
year is 2013.'' By implication, this clause establishes that, for
hospitals that begin to receive incentive payments in FYs 2012 and
2013, the transition periods are equivalent to those for hospitals that
begin to receive such payments in FY 2011. An eligible hospital that is
a meaningful user of certified EHR technology could receive incentive
payments beginning with FY 2012 (transition factor equals 1), and for
FY 2013 (transition factor equals \3/4\), FY 2014 (transition factor
equals \1/2\), and FY 2015 (transition factor equals \1/4\). Similarly,
an eligible hospital that is a meaningful EHR user could receive
incentive payments beginning with FY 2013 (transition factor equals 1),
and for FYs 2014 (transition factor equals \3/4\), 2015 (transition
factor equals \1/2\), and 2016 (transition factor equals \1/4\).
However, this section also specifically provides that the
transition factor is modified for those eligible hospitals that first
become meaningful users of certified EHR technology beginning in 2014
or 2015. Such hospitals would receive payments as if they became
meaningful EHR users beginning in 2013. In other words, if a hospital
were to begin to demonstrate meaningful use of EHR certified technology
in 2014, the transition factor used for that year (2014) would be \3/4\
instead of 1, \1/2\ for the second year (2015), \1/4\ for the third
year (2016), and zero thereafter. Similarly, if a hospital were to
begin

[[Page 44460]]

meaningful use of certified EHR technology in 2015, the transition
factor used for that year would be \1/2\ instead of 1, \1/4\ for the
second year (2016), and zero thereafter.
Table 25 shows the possible years an eligible hospital could
receive an incentive payment and the transition factor applicable to
each year.
[GRAPHIC] [TIFF OMITTED] TR28JY10.049

Comment: Several commenters pointed out an apparent inconsistency
in the regulation text that we proposed to implement the transition
period and applicable transition factors for EHR incentive payments.
Specifically, the commenters noted that proposed section 495.104(b)(5)
states that hospitals ``whose first payment year is FY 2015 may receive
such payments for FY 2015 through 2017'' (emphasis supplied), while
proposed section 495.104(c)(5) states that the transition factors for
hospitals ``whose first payment year is FY 2015'' are:
(A) \1/2\ for FY 2015; and
(B) \1/4\ for FY 2016. (Emphasis supplied.)
Response: These commenters are correct. Our proposed section
495.104(b)(5) contained a typographical error. In order to be
consistent with the clear requirements of the statute, section
495.104(b)(5) should have stated that hospitals ``whose first payment
year is FY 2015 may receive such payments for FY 2015 through 2016.''
In this final rule, we are revising section 495.104(b)(5) of the final
regulations accordingly.
g. Incentive Payment Adjustment Effective in FY 2015 and Subsequent
Years for Eligible Hospitals Who Are Not Meaningful EHR Users
In addition to providing for incentive payments for meaningful use
of EHRs during a transition period, section 1886(b)(3)(B) of the Act,
as amended by section 4102(b)(1) of the HITECH Act, provides for an
adjustment to the market basket update to the IPPS payment rate for
those eligible hospitals that are not meaningful EHR users for the EHR
reporting period for a payment year, beginning in FY 2015.
Specifically, section 1886(b)(3)(B) of the Act provides that, ``for FY
2015 and each subsequent FY,'' an eligible hospital that is not ``a
meaningful EHR user * * * for an EHR reporting period'' will receive a
reduced update to the IPPS standardized amount. This reduction will
apply to ``three-quarters of the percentage increase otherwise
applicable.'' For FY 2015 and each subsequent FY, the reduction to
three-quarters of the applicable update for an eligible hospital that
is not a meaningful EHR user will be ``33\1/3\ percent for FY 2015,
66\2/3\ percent for FY 2016, and 100 percent for FY 2017 and each
subsequent FY.'' In other words, the Secretary is required to subject
eligible hospitals who are not meaningful users to \1/4\, \1/2\, and
\3/4\ reductions of their market basket updates in FY 2015, FY 2016,
and FY 2017 and subsequent years respectively. Section 4102(b)(1)(B) of
the HITECH Act also provides that such ``reduction shall apply only
with respect to the FY involved and the Secretary shall not take into
account such reduction in computing the applicable percentage increase
* * * for a subsequent FY.'' This provision establishes a continuing
incentive for hospitals to become meaningful EHR users, because a
hospital that does become a meaningful EHR user in any year after the
effective date of the update reduction will receive the same, fully
updated standardized amount for that year, and subsequent years, as
those hospitals that were already meaningful EHR users at the time when
the update reduction went into effect (although hospitals would remain
subject to a separate reduction for failure to report quality data
under RHQDAPU). In order to conform with this new update reduction,
section 4102(b)(1)(A) of the HITECH Act revises section
1886(b)(3)(B)(viii)(1) of the Act to provide that, beginning with FY
2015, the reduction to the IPPS applicable percentage increase for
failure to submit data on quality measures to the Secretary shall be
one-quarter of the applicable market basket update. In this way, even
the combined reductions for EHR use and quality data reporting will not
produce an update of less than zero for a hospital in a given FY as
long as the hospital market basket remains a positive number.
In the proposed rule, we noted that specific proposals to implement
these payment adjustments for subsection (d) hospitals that are not
meaningful EHR users were not being made at that time, but would be
subject to future rulemaking prior to the 2015 implementation date. We
invited comments on these payment adjustments, and stated any comments
received would be considered in developing future proposals to
implement these provisions.
We received a few comments on this provision.
3. Incentive Payments for Critical Access Hospitals (CAHs)
Section 1814(l)(3)(A) of the Act, as amended by section 4102(a)(2)
of the HITECH Act, also provides for incentive payments for CAHs that
are meaningful users of certified EHR technology during an EHR
reporting period for a cost reporting period beginning during a payment
year after FY 2010 but before FY 2016. The criteria for being a
meaningful EHR user, and the manner for demonstrating meaningful use,
are discussed in section II.A.2. of this final rule.

[[Page 44461]]

a. Definition of CAHs for Medicare
Section 1861(mm)(1) of the Act defines a CAH as a facility that has
been certified as a critical access hospital under section 1820(c).
CAHs are reimbursed for services furnished to Medicare beneficiaries
under section 1814(l) of the Act for inpatient services and section
1834(g) of the Act for outpatient services. Incentive payments for CAHs
under section 1814(l)(3)(A) of the Act will be calculated based on the
provider number used for cost reporting purposes, which is the CCN of
the main provider. The process for making incentive payments to CAHs is
discussed in section II.B.4.c. of this final rule.
Comment: We received many comments on the use of the CCN to
identify CAHs. Most comments were similar to those received on the use
of the CCN for determining incentive payments to eligible hospitals.
Response: We responded to the comments for eligible hospitals
elsewhere in this final rule. Our responses to comments received on
using the CCN to identify CAHs are the same as the responses for
eligible hospital.
After consideration of the public comments received, we are
finalizing our policy as proposed. For purposes of this provision, we
will provide incentive payments to qualifying CAHs as they are
distinguished by the provider number in the CAH's cost reports.
Incentive payments for qualifying CAHs will be calculated based on the
provider number used for cost reporting purposes, which is the CCN of
the main provider (also referred to as OSCAR number). Payments to
qualifying CAHs will be made to each provider of record.
b. Current Medicare Payment of Reasonable Cost for CAHs
For Medicare purposes, CAHs are paid for most inpatient and
outpatient services to Medicare beneficiaries on the basis of
reasonable cost under section 1814(l) and section 1834(g) of the Act,
respectively. Thus, CAHs are not subject to the IPPS and Hospital
Outpatient Prospective Payment System (OPPS).
Section 1861(v)(1)(A) of the Act is the statutory basis for
reasonable cost reimbursement in Medicare. Under the reasonable cost
reimbursement methodology, payments to providers are based on the
reasonable cost of furnishing Medicare-covered services to
beneficiaries. Reasonable cost includes all necessary and proper costs
in furnishing the services, subject to the principles of reasonable
cost reimbursement relating to certain specific items of revenue and
cost. Reasonable cost takes into account both direct and indirect costs
of providers of services, including normal standby costs. The objective
of the reasonable cost methodology is to ensure that the costs for
individuals covered by the program are not borne by others not so
covered, and the costs for individuals not so covered are not borne by
the program. The reasonable costs of services and the items to be
included are determined in accordance with the regulations at 42 CFR
part 413, manual guidance, and other CMS instructions.
Currently, under section 1814(l)(1) of the Act and Sec. 413.70(a)
of the regulations, effective for cost reporting periods beginning on
or after January 1, 2004, payment for inpatient services of a CAH,
other than services of a distinct part unit of a CAH, is 101 percent of
the reasonable costs of the CAH in providing CAH services to its
inpatients, as determined in accordance with section 1861(v)(1)(A) of
the Act and with the applicable principles of cost reimbursement in
Parts 413 and 415 of the regulations. However, payment for inpatient
CAH services is not subject to the reasonable cost principles of the
lesser of cost or charges, the reasonable compensation equivalent
limits for physician services to providers, the ceilings on hospital
operating costs, or the payment window provisions for preadmission
services, specified in Sec. 412.2(c)(5) and Sec. 413.40(c)(2).
Section 1834(g) of the Act and Sec. 413.70(b) of the regulations
describe the payment methodology for outpatient services furnished by a
CAH.
Currently, reasonable cost reimbursement for CAHs includes payment
for depreciation of depreciable assets used in providing covered
services to beneficiaries, as described under Part 413 subpart G of our
regulations and Sec. 104 of the Medicare Provider Reimbursement Manual
(PRM). In general, the depreciation expense of an asset, representing a
portion of the depreciable asset's costs which is allocable to a period
of operation, is determined by distributing the acquisition costs of
the depreciable asset, less any salvage costs, over the estimated
useful life of the asset.
c. Changes Made by the HITECH Act
Sections 4102(a)(2) and 4102(b)(2) of the HITECH Act amended
section 1814(l) of the Act, which governs payment for inpatient CAH
services. The HITECH Act did not amend section 1834(g) of the Act,
which governs payment for outpatient CAH services.
Sections 4102(a)(2) and 4102(b)(2) of the HITECH Act amended
section 1814(l) of the Act by adding new paragraphs (3), (4), and (5)
as follows:
Section 1814(l)(3)(A) of the Act provides the following:

The following rules shall apply in determining payment and
reasonable costs * * * for a critical access hospital that would be
a meaningful EHR user (as would be determined under paragraph (3) of
section 1886(n)) for an EHR reporting period for a cost reporting
period beginning during a payment year if such critical access
hospital was treated as an eligible hospital under such section:
(i) The Secretary shall compute reasonable costs by expensing
such costs in a single payment year and not depreciating these costs
over a period of years (and shall include as costs with respect to
cost reporting periods beginning during a payment year costs from
previous cost reporting periods to the extent they have not been
fully depreciated as of the period involved).
(ii) There shall be substituted for the Medicare share that
would otherwise be applied [to CAHs under section 1814(l)(1),] a
percent (not to exceed 100 percent) equal to the sum of--
(I) The Medicare share (as would be specified under paragraph
(2)(D) of section 1886(n)) for such critical access hospital if such
critical access hospital was treated as an eligible hospital under
such section; and
(II) 20 percentage points.

Section 1814(l)(3)(B) of the Act provides that the incentive
payment for CAHs will be paid ``through a prompt interim payment
(subject to reconciliation) after submission and review of such
information (as specified by the Secretary) necessary to make such
payment.'' The provision also states that ``[i]n no case may payment
under this paragraph be made with respect to a cost reporting period
beginning during a payment year after 2015 and in no case may a
critical access hospital receive payment under this paragraph with
respect to more than 4 consecutive payment years.''
Section 1814(l)(3)(C) of the Act provides that the reasonable costs
for which a CAH may receive an incentive payment are costs for the
purchase of certified EHR technology to which purchase depreciation
(excluding interest) would otherwise apply under section 1814(l)(1) of
the Act.
Section 1814(l)(4)(A) of the Act provides for an adjustment,
subject to the hardship exemption in section 1814(l)(4)(C) of the Act,
to a CAH's reimbursement at 101 percent of its reasonable costs if the
CAH has not met the meaningful EHR user definition for an EHR reporting
period that begins in FY 2015 or a subsequent fiscal year. Section
1814(l)(4)(B) of the Act specifies that if a CAH is not a meaningful
EHR

[[Page 44462]]

user during the cost reporting period beginning in FY 2015, its
reimbursement will be reduced from 101 percent of its reasonable costs
to 100.66 percent. For FY 2016, the percentage of reimbursement for a
CAH that is not a meaningful EHR user is reduced to 100.33 percent of
its reasonable costs. For FY 2017 and each subsequent FY, the
percentage of reimbursement is reduced to 100 percent of reasonable
costs. Section 1814(l)(4)(C) of the Act states that, as provided for
eligible subsection (d) hospitals, the Secretary may, on a case-by-case
basis, exempt a CAH from this adjustment if the Secretary determines,
subject to annual renewal, that requiring the CAH to be a meaningful
EHR user during a cost reporting period beginning in FY 2015 or a
subsequent fiscal year would result in a significant hardship, such as
in the case of a CAH in a rural area without sufficient Internet
access. However, in no case may a CAH be granted an exemption under
this provision for more than 5 years.
Section 1814(l)(5) provides that there shall be no administrative
or judicial review under sections 1869 or 1878 of the Act, or
otherwise, of: (1) The methodology and standards for determining the
amount of payment under section 1814(l)(3) of the Act and payment
adjustments under section 1814(l)(4) of the Act; (2) the methodology
and standards for determining a CAH to be a meaningful EHR user; (3)
the methodology and standards for determining if the hardship exemption
applies to a CAH; (4) the specification of EHR reporting periods; and
(5) the identification of reasonable costs used to compute CAH
incentive payments.
d. Incentive Payment Calculation for CAHs
Consistent with section 1814(l)(3)(A) of the Act, we proposed to
amend Sec. 413.70(a) to add a new paragraph (5) to provide for an
incentive payment to a qualifying CAH for the reasonable costs incurred
for the purchase of certified EHR technology in a cost reporting period
beginning during a payment year after FY 2010 but before FY 2016. We
proposed to include a cross-reference to Sec. 495.106 which defines
the terms associated with the CAH incentive payment, including the
definition of a ``qualifying CAH'' that is eligible to receive the CAH
incentive payment, and the methodology for determining the amount of
that incentive payment. In addition, we proposed to amend Sec.
413.70(a) to add a new paragraph (6) to provide for the adjustment of a
CAH's reasonable costs of providing inpatient services starting in FY
2015 if the CAH is not a qualifying CAH.
In computing the CAH incentive payment and applying the adjustments
to a CAH's payment if the CAH is not a qualifying CAH, we proposed to
apply the definitions of certified EHR technology, EHR reporting
period, meaningful EHR user and qualified EHR in Sec. 495.4 that are
discussed elsewhere in this final rule.
In Sec. 495.106(a), we proposed to define a qualifying CAH as a
CAH that would meet the meaningful EHR user definition for eligible
hospitals in Sec. 495.4, which is discussed in section II A.1. of this
final rule if it were an eligible hospital. Also in Sec. 495.106(a),
for the purposes of computing the CAH incentive payment, we proposed
that the reasonable costs for the purchase of certified EHR technology
mean the reasonable acquisition costs, excluding any depreciation and
interest expenses associated with the acquisition, incurred for the
purchase of depreciable assets as described at part 413 subpart G, such
as computers and associated hardware and software, necessary to
administer certified EHR technology as defined in Sec. 495.4 of this
final rule. We also proposed to define payment year for CAHs to mean a
fiscal year beginning after FY 2010 but before FY 2016.
Under proposed Sec. 495.106(b), we specified that a qualifying CAH
must receive an incentive payment for its reasonable costs incurred for
the purchase of certified EHR technology. The CAH incentive payment
will be for a cost reporting period that begins during a payment year
after FY 2010 but before FY 2016.
Consistent with section 1814(l)(3)(A) of the Act, we proposed under
Sec. 495.106(c) that the payment methodology for computing the
incentive payment for a qualifying CAH for a cost reporting period
during a payment year would be equal to the product of--(1) the
reasonable costs incurred for the purchase of certified EHR technology
in that cost reporting period and any similarly incurred costs from
previous cost reporting periods to the extent they have not been fully
depreciated as of the cost reporting period involved and (2) the CAH's
Medicare share which equals the Medicare share as computed for eligible
hospitals including the adjustment for charity care (described in
sections II.A.2.b. and A.3. of this final rule) plus 20 percentage
points. However, in no case will the resulting Medicare share for a CAH
exceed 100 percent. This payment methodology will be used in place of
payment at 101 percent of reasonable costs typically applied under
section 1814(l)(1) of the Act and Sec. 413.70(a)(1) of the
regulations.
For example, a CAH first requests an incentive payment for its cost
reporting period beginning on January 1, 2012 which is in FY 2012. The
CAH incurred reasonable costs of $500,000 for the purchase of certified
EHR technology in its previous cost reporting period beginning on
January 1, 2011. This CAH is a meaningful user of certified EHR
technology during the relevant EHR reporting period and thus qualifies
for an incentive payment for FY 2012. (For illustrative purposes this
example assumes no salvage value of the assets acquired.) The CAH
depreciated $100,000 of the costs of these items in the cost reporting
period beginning on January 1, 2011. As a result, the amount used to
compute the incentive payment will be the remaining $400,000 of
undepreciated costs. The CAH's Medicare share is 90 percent (its
Medicare share of 70 percent using the methodology described in section
II.A.2.b. of this final rule plus 20 percentage points). Therefore, the
CAH's incentive payment for FY 2012 is $360,000 ($400,000 times 90
percent). This CAH's first payment year is FY 2012, and it can receive
incentive payments through 4 consecutive payment years which, in this
example, would be FYs 2012 through 2015.
If, in the above example, the CAH also incurred reasonable costs of
$300,000 for the purchase of certified EHR technology in its cost
reporting period beginning in FY 2012 that will not be depreciated,
then the incentive payment for FY 2012 is $630,000 ($700,000 ($400,000
in FY 2011 plus $300,000 in FY 2012) times 90 percent).

(The preceding examples are offered for illustrative purposes only and
are not intended to encompass all possible computations of the CAH
incentive payment.)
Under proposed Sec. 495.106(d)(1), the amount of the incentive
payment made to a qualifying CAH under this section represents the
expensing and payment of the reasonable costs of certified EHR
technology computed as described above in a single payment year and, as
specified in Sec. 413.70(a)(5), such payment is made in lieu of any
payment that would have been made under Sec. 413.70(a)(1) for the
reasonable costs of the purchase of certified EHR technology including
depreciation and interest expenses associated with the acquisition. The
Medicare contractor will review the CAH's current year and each
subsequent year's cost report to

[[Page 44463]]

ensure that the assets associated with the acquisition of certified EHR
technology are expensed in a single period and that depreciation and
interest expenses associated with the acquisition are not allowed.
Under proposed Sec. 495.106(d)(2), the amount of the incentive
payment made to a qualifying CAH under this section would be paid
through a prompt interim payment for the applicable payment year
after--(1) the CAH submits the necessary documentation, as specified by
CMS or its Medicare contractor, to support the computation of the
incentive payment amount; and (2) CMS or its Medicare contractor
reviews such documentation and determines the interim amount of the
incentive payment.
Under proposed Sec. 495.106(d)(3), the interim incentive payment
would be subject to a reconciliation process as specified by CMS and
the final incentive payment as determined by CMS or its Medicare
contractor would be considered payment in full for the reasonable costs
incurred for the purchase of certified EHR technology in a payment
year.
Under Sec. 495.106(d)(4), we proposed that an incentive payment
may be made with respect to a cost reporting period beginning during a
payment year beginning with FY 2011 (October 1, 2010 through September
30, 2011) through FY 2015 (October 1, 2014 through September 30, 2015),
but in no case may a CAH receive an incentive payment with respect to
more than four consecutive payment years. Therefore, a CAH, that is a
meaningful EHR user, may begin receiving an incentive payment for its
cost reporting period beginning in FY 2011 for the incurred reasonable
costs for the purchase of certified EHR technology during that cost
reporting period and in previous cost reporting periods to the extent
that the item or items have not been fully depreciated. These incentive
payments will continue for no more than 4 consecutive payment years and
will not be made for a cost reporting period beginning during a payment
year after 2015. As discussed above and in section II.B.4. of this
final rule, the CAH must submit supporting documentation for its
incurred costs of purchasing certified EHR technology to its Medicare
contractor (Fiscal Intermediary (FI)/MAC).
CAHs cannot receive an incentive payment for a cost reporting
period that begins in a payment year after FY 2015. If the first
payment year for a CAH is FY 2013 then the fourth consecutive payment
year would be 2016. However, the CAH cannot be paid an incentive
payment for FYs 2016 and beyond. For FY 2016 and beyond, payment to
CAHs for the purchase of additional EHR technology will be made under
Sec. 413.70(a)(1) in accordance with the reasonable cost principles,
as described above, which would include the depreciation and interest
cost associated with such purchase.
Comment: We received many comments requesting CMS to provide a list
of those depreciable items that would be used to determine the CAH
incentive payment under this provision. The commenters were concerned
that certain expenses, such as staff training, associated with an EHR
system may not be included in the CAH's incentive payment. We also
received comments requesting a further explanation of what
documentation will be required to support the reasonable costs incurred
by the CAH.
Response: Section 1814(l)(3)(C) of the Act, as amended by the
HITECH Act, provides that the costs for which a CAH may receive an
incentive payment are reasonable costs for the purchase of certified
EHR technology to which purchase depreciation (excluding interest)
would otherwise apply under section 1814(l)(1) of the Act. Furthermore,
section 1814(l)(3)(A) of the Act, as amended by the HITECH Act,
mandates that the Secretary shall compute reasonable costs for the
purchase of certified EHR technology by expensing such costs in a
single payment year and not depreciating these costs over a period of
years (and shall include as costs with respect to cost reporting
periods beginning during a payment year costs from previous cost
reporting periods to the extent they have not been fully depreciated as
of the period involved). As described in the proposed rule, for the
purposes of computing the CAH incentive payment, we proposed that the
reasonable costs for the purchase of certified EHR technology mean the
reasonable acquisition costs, excluding any depreciation and interest
expenses associated with the acquisition, incurred for the purchase of
depreciable assets as described at part 413 subpart G, such as
computers and associated hardware and software, necessary to administer
certified EHR technology as defined in Sec. 495.4 of this final rule.
CAHs will incur both depreciable and non-depreciable reasonable
costs in a payment year that are associated with implementing and
maintaining certified EHR technology. According to the statute, only
the reasonable costs for the purchase of certified EHR technology to
which purchase depreciation (excluding interest) would otherwise apply
are to be included in the CAH incentive payment. Thus, CAHs will not
have to depreciate these reasonable costs over the useful life of the
EHR asset purchased as such costs will be expensed in a single payment
year. Any non-depreciable reasonable costs incurred in that same single
payment year that are associated with an EHR system may be paid for
under the current Medicare reasonable cost payment system at 101
percent.
Currently, the CAH's Medicare contractor determines if an item
purchased is a depreciable asset under Medicare principles or other
accounting standards. The Medicare contractor also determines the CAH's
reasonable cost for acquiring depreciable assets. For the purposes of
computing the CAH incentive payment, we are not changing the Medicare
contractor's current responsibilities described above. We, therefore,
suggest that CAHs communicate with their Medicare contractors to
determine the necessary documentation to support their reasonable costs
incurred for the purchase of certified EHR technology and to determine
if the items that they purchase are depreciable assets under Medicare
principles or other accounting standards.
Comment: We received some comments requesting clarification of how
the incentive payments will be computed if an eligible CAH converts to
or from an eligible ``subsection d'' hospital.
Response: If during a payment year an eligible CAH is converted to
or from a ``subsection d'' hospital, the CAH may receive an incentive
payment as long as it incurred the reasonable costs of purchasing
certified EHR technology in a payment year (or in a previous cost
reporting period) when it was a CAH and as long as the affected
providers meet the meaningful use criteria described elsewhere in this
final rule. When a conversion takes place, the affected CAH and
``subsection d'' hospital are each required to file a Medicare cost
report under section 413.24 of the regulations. For instance, if in
month 6 of a cost reporting period that begins January 1, 2011 and ends
December 31, 2011, a ``subsection d'' hospital converts to a CAH, the
``subsection d'' hospital will file a terminating 6-month cost report
(January 1, 2011 to June 30, 2011). If the CAH retains the same year
end of December 31, 2011, the CAH will file a 6-month cost report from
July 1, 2011 to December 31, 2011. In this instance, the CAH's 6-month
cost report would be used to determine if it incurred reasonable costs
for the purchase of

[[Page 44464]]

certified EHR technology that may qualify for a CAH incentive payment
during that period. The ``subsection d'' hospital's 6 month terminating
cost report would be used to determine the possible amount of any
incentive payment for that eligible hospital.
After consideration of the public comments received, with the
exception of a few minor, technical and conforming changes, we are
finalizing the applicable provisions as proposed.
Comment: We received many comments regarding the use of data from
the revised Medicare cost report (Form CMS-2552-10) described in the
proposed rule to compute the Medicare share portion of the CAH
incentive payment. Commenters were also concerned that certain cost
report data may not be available at the time of computing a CAH's
incentive payment.
Response: As discussed elsewhere in this final rule, we are
addressing concerns with data from the revised cost report in a final
collection that is currently in the Paperwork Reduction Act clearance
process. In addition, we address the timing issues with the revised
cost report data elsewhere in this final rule.
e. Reduction of Reasonable Cost Payment in FY 2015 and Subsequent Years
for CAHs That Are Not Meaningful EHR Users
Section 4102(b)(2) of the HITECH Act amends section 1814(l) to
include an adjustment to a CAH's reimbursement at 101 percent of its
reasonable costs if the CAH has not met the meaningful EHR user
definition for an EHR reporting period that begins in FY 2015, FY 2016,
FY 2017, and each subsequent FY thereafter. Consistent with this
provision, we proposed that under Sec. 495.106(e) and Sec.
413.70(a)(6), if a CAH has not demonstrated meaningful use of certified
EHR technology for FY 2015, its reimbursement would be reduced from 101
percent of its reasonable costs to 100.66 percent. For FY 2016, its
reimbursement would be reduced to 100.33 percent of its reasonable
costs. For FY 2017 and each subsequent FY, its reimbursement would be
reduced to 100 percent of reasonable costs.
However, as provided for eligible hospitals, a CAH may, on a case-
by-case basis, be exempted from this adjustment if CMS or its Medicare
contractor determines, on an annual basis, that requiring the CAH to be
a meaningful EHR user would result in a significant hardship, such as
in the case of a CAH in a rural area without sufficient Internet
access. However, in no case may a CAH be granted an exemption under
this provision for more than 5 years.
Comment: We received some comments requesting further clarification
of how CMS will be determining whether a significant hardship exists to
warrant an exemption.
Response: We received a few comments on this provision which is not
effective until FY 2015. We will take these comments into account when
we develop proposals for implementing this provision at a later date.
After consideration of the public comments received, we are
finalizing sections 495.106(e) as proposed. We have renumbered proposed
section 413.70(a)(6)(iv) as 413.70(a)(7), but are otherwise finalizing
section 413.70(a)(6) as proposed.
Section 1814(l)(5) of the Act exempts the determinations made under
paragraphs (l)(3) and (l)(4) from administrative and judicial review.
Accordingly, under Sec. 413.70(a)(6)(iv) and Sec. 495.106(f), we
proposed that there shall be no administrative or judicial review under
sections 1869 or 1878 of the Act, or otherwise, of the following:
The methodology and standards for determining the amount
of payment under section 1814(l)(3) of the Act and payment adjustments
under section 1814(l)(4) of the Act for CAHs, including selection of
periods under section 1886(n)(2) of the Act for determining, and making
estimates or using proxies of, inpatient-bed-days, hospital charges,
charity charges, and the Medicare share under subparagraph (D) of
section 1886(n)(2) of the Act;
The methodology and standards for determining a CAH to be
a meaningful EHR user under section 1886(n)(3) of the Act as would
apply if the CAH was treated as an eligible hospital under section
1886(n) of the Act;
The methodology and standards for determining if the
hardship exemption under section 1814(l)(4)(C) of the Act applies to a
CAH;
The specification of EHR reporting periods under section
1886(n)(6)(B) of the Act as applied under section 1814(l)(3) and (4) of
the Act for CAHs; and
The identification of reasonable costs used to compute the
CAH incentive payment under section 1814(l)(3)(C) of the Act.
Comment: We received some comments requesting clarification of
whether CAHs will be able to appeal their incentive payment amounts.
Response: We believe that the limitation of administrative and
judicial review does not apply to the amount of the CAH incentive
payment. The CAH may appeal the statistical and financial amounts from
the Medicare cost report used to determine the CAH incentive payment.
The CAH would utilize the current provider appeal process pursuant to
section 1878 of the Act.
Accordingly, after consideration of the public comments received,
we are finalizing Sec. 495.106(f) as proposed. We have renumbered
proposed Sec. 413.70(a)(6)(iv) as Sec. 413.70(a)(7), but are
otherwise finalizing the provision as proposed.
4. Process for Making Incentive Payments Under the Medicare FFS Program
As previously discussed in section II.B.1. and 2. of this final
rule and sections 1848(o)(1) and 1886(n)(1) of the Act, the statute
provides for incentive payments to eligible professionals, eligible
hospitals, and CAHS who are meaningful users of certified EHR
technology as early as FY 2011 for qualifying eligible hospitals and
CAHs and CY 2011 for qualifying EPs. The statute does not specify the
process for making these payments to qualifying EPs and qualifying
eligible hospitals and CAHs participating in the FFS Medicare incentive
payment program, but instead leaves the payment process to the
Secretary's discretion.
We proposed that FIs, carriers, and MACs, as appropriate, would be
responsible for determining the incentive payment amounts for
qualifying EPs and qualifying eligible hospitals and CAHs in accordance
with the methodology set forth in section II.B.1.b. and B.2.b. of this
final rule based on the previously discussed meaningful use criteria,
disbursing the incentive payments to qualifying EPs and qualifying
eligible hospitals and CAHs, and resolving any reconciliation issues.
a. Incentive Payments to EPs
We proposed that the carriers/MACs calculate incentive payment
amounts for qualifying EPs, where incentive payments would be disbursed
on a rolling basis, as soon as they ascertained that an EP demonstrated
meaningful use for the applicable reporting period (that is, 90 days
for the first year or a calendar year for subsequent years), and
reached the threshold for maximum payment. In accordance with section
1848(l)(3)(B) of the Act, we proposed that if a qualifying EP is not
eligible for the maximum incentive payment amount for the payment year
and if the qualifying EP was also a qualifying MA EP, the qualifying MA
organization with which the EP is affiliated would receive the
incentive payment for the EP through

[[Page 44465]]

the MA EHR incentive program. If the qualifying EP either does not also
qualify as a MA EP or he or she qualifies as a MA EP but is not
eligible for the maximum incentive payment for the payment year, we
proposed that the carriers/MAC would calculate the amount of the
qualifying EP's incentive payment and disburse the incentive payment to
the qualifying EP in the year following the payment year. The proposed
rule also outlined that incentive payments would not be issued to
qualifying EPs if an incentive payment was already made under the
Medicaid program for the relevant payment year, and as required by
section 1848(m)(2) of the Act as amended by section 4101(f) of the
HITECH Act, qualifying EPs who received incentive payments from the
Medicare EHR incentive payment program would not be eligible to receive
an e-prescribing incentive payment. Additionally, we proposed that the
incentive payments would be tracked at the qualifying EP's TIN level,
and disbursed to the TIN that the qualifying EP indicated during the
registration process; qualifying EPs who do not have individual TINs
(that is, a qualifying EP who works solely in a group practice) would
be paid at the group practice level's TIN. We proposed that qualifying
EPs select one TIN for disbursement of their Medicare EHR incentive
payment. Of course, after the payment is disbursed to their designated
TIN, qualifying EPs may decide to allocate their incentive payment
among the multiple practices in which they furnish covered professional
services subject to applicable laws, regulations and rules, including,
without limitation, those related to fraud, waste, and abuse.
To be clear, we note that financial relationships, including those
arising from the reallocation/reassignment of incentive payments,
between physicians and their employers/other entities may implicate
certain fraud, waste, and abuse laws, regulations, and rules.
Therefore, we proposed to include specific safeguards to limit the risk
that the allocation/reassignment of incentive payments could raise
under those and other applicable laws, regulations and rules. Section
II.B.1.d. above finalizes our proposal at Sec. 495.10(f) to permit EPs
to reassign their incentive payments to their employer or to an entity
with which they have a contractual arrangement, consistent with all
rules governing reassignments including part 424, subpart F.
Comment: Several commenters expressed concern that the proposed
rule contained limited information on how the incentive program for
Medicare EPs will be operationalized. They requested additional
information on the expected timeframe and process for payments.
Response: The HITECH Act requires that EHR incentive program
payments be separately tracked and monitored because these funds cannot
be commingled with other Medicare funds. Therefore, to facilitate funds
control, payments will be made through a single payment contractor
rather than through the carriers/MACs as was originally proposed.
Additionally, the Integrated Data Repository (IDR), rather than the
carriers/MACs, will be accumulating the allowed charges for each
qualified EP's NPI. Payments would be made on a rolling basis, as soon
as we ascertain that an EP has successfully demonstrated meaningful use
for the applicable reporting period (that is, 90 days for the first
year or a calendar year for subsequent years) and the EP's allowed
charges has reached the threshold that qualifies an EP for maximum
incentive payment, for the relevant payment year. Once this
determination has been made, the National Level Repository (NLR) will
calculate the EP's incentive payment. The payment will then be made by
the single payment contractor. We anticipate that it will take anywhere
from 15 to 46 days from the time an EP successfully attests to being a
meaningful user to the time an incentive payment is made, and that for
FY 2011, incentive payments will be made to EPs who successfully
demonstrate that they were meaningful EHR users for the EHR reporting
period (that is, 90 days) as early as May 2011. As proposed, we will
pay a qualifying EP a single consolidated incentive payment for a
payment year, rather than make periodic installment payments. In order
to accommodate different attestation dates throughout the first year
for EPs, our payment cycle is on a monthly basis as previously
described; however, qualifying EPs will receive one single payment per
year. In other words, CMS will issue payments as soon as possible after
a qualifying EP attested to meaningfully using a certified EHR system,
hence the monthly payment cycle; however, an EP will only receive one
incentive payment for each year he/she qualifies. For qualifying EPs
whose allowed charges for the payment year do not reach the maximum
thresholds, the single payment contractor will disburse an incentive
payment in the following year.
Comment: One commenter recommended CMS make semi-annual incentive
payments for the second and subsequent payment years to ensure
physician practices have cash flow to deploy certified EHR systems and
train employees how to use the systems.
Response: When the EHR reporting period is a full year, no EPs will
have successfully demonstrated that they are meaningful users at the
mid-year mark. Therefore, as previously described, qualifying Medicare
EPs will receive a single payment per year, issued on a monthly payment
cycle. We intend to finalize this provision as proposed; there will be
a single successful attestation per year and a single payment following
the attestation for qualifying EPs.
Comment: One commenter questioned whether the scopes of work for
the MACs/Medicare Carriers would be revised to reflect the additional
work that this program will entail.
Response: As previously discussed in the first comment and
response, the IDR, rather than the MACs/Medicare Carriers, will
accumulate the EPs allowed charges. The MAC/Carrier work related the
Medicare EHR incentive program will be within their current scope of
work and will be handled through the normal change request process.
Comment: One commenter believes an EP's program selection (Medicare
or Medicaid) is tied to the TIN where the EP assigns incentive
payments. The commenter recommended CMS permit additional changes in
program selection if EPs change their TIN. The commenter believes
allowing only one program change in the life of the program is too
restricting given that patient mix might change due to a practice being
purchased by another TIN or an EP becoming a part-time employee of
another TIN.
Response: Section II.A.5.b. of this final rule outlines our policy
decision around changing program selections.
After consideration of the public comments received, we are
finalizing our policy as proposed. For purposes of this provision,
payments will be made through a single payment contractor with the IDR
accumulating the allowed charges for each qualified EP's NPI. Payments
will be made on a rolling basis, as soon as we ascertain that an EP has
successfully demonstrated meaningful use for the applicable reporting
period (that is, 90 days for the first year or a calendar year for
subsequent years), and reached the threshold for maximum payment then
the NLR will calculate the incentive payment. We estimate it will take
anywhere from 15 to 46 days from the time an EP successfully attests to
being a meaningful user to the time an incentive payment is made.

[[Page 44466]]

b. Incentive Payments to Eligible Hospitals
We proposed that the FIs/MACs would calculate incentive payments
for qualifying eligible hospitals, and would disburse such payments on
an interim basis once the hospital has demonstrated it is a meaningful
EHR user for the EHR reporting period for the payment year. As
discussed above in section B.2.b. of the final rule, the formula for
calculating a qualifying eligible hospital's incentive payment requires
the following data: (1) An initial amount; (2) the Medicare share; and
(3) a transition factor applicable to that payment year. We proposed
that FIs/MACs would use the prior-year cost report, Provider
Statistical and Reimbursement (PS&R) System data, and other estimates
to calculate the interim incentive payment. As discussed in section
II.B.2.c. of this final rule, beginning in 2010, cost reports will
capture charity care data which will be used in calculating the
Medicare share of the payment. We proposed that the MACs/FIs calculate
a qualifying hospital's final incentive payment using data from the
cost report for the hospital's fiscal year that ends during the FY
prior to the FY that serves as the payment year. We also proposed that
the FIs/MACs calculate the final incentive payment using actual cost
report data report for the hospital's fiscal year that ends during the
FY prior to the fiscal year that serves as the payment year, and would
reconcile the incentive payment as necessary at settlement of the cost
report. Additionally, incentive payments for qualifying eligible
hospitals would be calculated based on the provider number used for
cost reporting purposes, which is the CCN of the main provider.
Therefore, incentive payments for qualifying hospitals would be
disbursed to the CCN rather than the TIN.
Comment: Several commenters expressed concern that the proposed
rule contained limited information on how the incentive program for
hospitals will be operationalized. They requested additional
information on the expected timeframe and process for payments as well
as requesting clarification that the incentive payments would be
distributed as a ``lump sum payment.'' One commenter requested CMS
disburse one lump sum payment at the start of each eligible year for
those hospitals that meet all of the meaningful use requirements.
Response: Hospital EHR incentive payments will be calculated by the
FIs/MACs; however, to facilitate funds control, payments will be made
through a single payment contractor. We will direct the payment
contractor to issue to qualifying hospitals, that is those hospitals
who successfully demonstrate that they are meaningful EHR users, a
single initial payment for the year. We anticipate that payments will
be made to qualifying Medicare hospitals beginning in May 2011. No
payment will be made prior to an eligible Medicare hospital
successfully demonstrating that it was a meaningful EHR user during the
EHR period for the relevant payment year. For purposes of determining
interim incentive payments, we will employ data on the hospital's
Medicare fee-for-service and managed care inpatient bed days, total
inpatient bed-days, and charges for charity care from a hospital's most
recently submitted 12-month cost report once the hospital has qualified
as a meaningful user. For purposes of determining final incentive
payments, we will employ the first 12-month cost reporting period that
begins after the start of the payment year, in order to settle payments
on the basis of the hospital's Medicare fee-for-service and managed
care inpatient bed days, total inpatient bed-days, and charges for
charity care data from that cost reporting period.
Comment: One commenter requested that CMS allow hospitals to make
an interim attestation 90 days after the start of the second and
subsequent payment years. They suggested the interim attestation would
note that they are in compliance with the meaningful use rules and
intend to remain in compliance. They requested that CMS instruct the
contractor to issue interim EHR payments after receipt of such
attestation. The commenter believes this would cut down on the time
frame of 21 months between their first and second hospital interim
payments.
Response: The reporting period requirements for a hospital's second
and subsequent years are 365 days. Due to the year-long reporting
period, we do not believe we can allow for an interim attestation that
the provider is a meaningful EHR user. Under our definitions at Sec.
495.4, a provider is not a meaningful EHR user unless it has ``for an
EHR reporting period for a payment year,'' demonstrated meaningful use
``in accordance with Sec. 495.8 by meeting the applicable objectives
and associated measures under Sec. 495.6.'' Thus, we could not
determine that the provider is a meaningful user at an interim point in
time, and there would be no basis for providing the interim payment.
Comment: One commenter expressed confusion over the term
``demonstration period'' and questioned if a hospital had to complete
the full demonstration period before payments would be made.
Response: We assume the commenter means EHR ``reporting period''
when using the phrase, ``demonstration period.'' A hospital must
demonstrate that it met the requirements for meaningful use for the
full EHR reporting period for the relevant payment year before we will
direct the payment contractor to issue an incentive payment to the
hospital for the payment year. A hospital therefore must complete the
full EHR reporting period before demonstrating that it was a meaningful
EHR user and before any payments would be made.
Comment: Several commenters recommended that CMS' payment process
for eligible hospitals be consistent with its payment process for EPs,
and that hospital's initial incentive payment thus be distributed no
later than two months after the hospital successfully demonstrates
meaningful use. The same commenters requested CMS specify that the
final incentive payment be issued no later than two months after the
hospital submits its cost report from the FY that ends during the
payment year.
Response: We anticipate that for FY 2011, interim incentive
payments will be made to eligible hospitals that successfully
demonstrate that they were meaningful EHR users for the EHR reporting
period for FY 2011 (that is, 90 days) as early as May 2011. The exact
timing of when a qualifying eligible hospital receives its interim
incentive payment will depend on when the hospital successfully
demonstrates that it was a meaningful EHR user; the sooner a hospital
successfully demonstrate that is was a meaningful EHR user during the
EHR reporting period for the payment year, the sooner it will receive
its interim incentive payment. For a Medicare hospital's second and
subsequent participation years, after a hospital successfully
demonstrates that it was a meaningful EHR user during the EHR reporting
period (that is, the federal fiscal year) for the payment year, the
hospital will receive the interim incentive payment in the following
year; the initial incentive payments will be made on a monthly payment
cycle beginning shortly after the hospital is determined to be a
meaningful user. To the commenters' point of requesting that we be
consistent with the approach to paying EPs, there seems to be confusion
around what was proposed as to the timing and distribution of the EP's
incentive payment. The proposal for the EP's incentive payment was that
EP's

[[Page 44467]]

accumulated allowed charges would be based on claims submitted not
later than two months after the end of the payment year. The incentive
payment for a qualifying EP's second and subsequent payment years was
always to be disbursed in the year following the payment year. We did
not propose paying an EP within two months of being deemed a meaningful
user.
Comment: Several commenters questioned how CMS would treat a
hospital that qualified for an incentive payment one year, but did not
qualify the next or subsequent years; what is the impact on the stream
of incentive payments to the hospital?
Response: An eligible hospital's first payment year is the first
year they successfully demonstrate that they were a meaningful EHR user
for the EHR reporting period for the payment year. Section
1886(n)(2)(G) of the Act defines the second through fifth payment years
for a hospital as each successive year immediately following the first
payment year for such hospital. An eligible hospital's second payment
year, then, is the year following its first payment year, regardless of
whether the eligible hospital qualifies for an incentive payment in the
year following its first payment year. Similarly, an eligible
hospital's third, fourth, and fifth payment year are the third, fourth,
and fifth years, respectively, following the hospital's first payment
year, even if the hospital does not receive an incentive payment for
one or more of those years.
Comment: Several commenters requested that CMS clarify that EHR
incentive payments for which a hospital qualifies or receives under the
EHR incentive program (whether directly or pursuant to an assignment,
reassignment or other transfer) shall not affect or be taken into
account in the calculation or other payments made to the eligible
hospital under Medicare, Medicaid, or any other state or federal
healthcare program, such as disproportionate share payments, graduate
medical education and indirect medical education payments, and payments
for un-compensated care payments.
Response: EHR incentive payments will have no bearing on the
hospital's Medicare disproportionate share, indirect medical education
or direct graduate medical education payments. This discussion is also
addressed in the Medicaid section at II.D.4.b.
After consideration of the public comments received, we are
finalizing our policy as proposed. For purposes of this provision,
Hospital incentive payments will be calculated by the FIs/MACs;
however, to facilitate funds control, payments will be made through a
single payment contractor. We will direct the payment contractor to
issue to qualifying hospitals a single initial payment per year, and
expect initial payment may begin as early as May 2011, for those who
demonstrate they are meaningful EHR users at the earliest date
possible. We estimate it will take anywhere from 15 to 46 days from the
time a hospital successfully attests to being a meaningful user to the
time an incentive payment is made.
c. Incentive Payments to CAHs
In the proposed rule, CMS proposed that because CAHs are paid on a
cost reimbursement basis once a CAH incurs actual EHR costs, it could
submit supporting documentation to the FI/MAC for review. The FIs/MACs
would determine an incentive payment amount, as discussed in section
II.A.3 of the proposed rule by substituting for the Medicare share
amount that would otherwise be applied under the formula used for
computing payments for eligible hospitals, a percent (not to exceed 100
percent) equal to the sum of--(1) the Medicare share for such CAH, and
(2) 20 percentage points.
As discussed in the proposed rule, the FIs/MACs would reconcile the
cost report and ensure the EHR expenses are adjusted on the cost report
to avoid duplicate payments. Incentive payments for qualifying CAHs
would be calculated based on the provider number used for cost
reporting purposes, which is the CCN number of the main provider.
Therefore, incentive payments for qualifying CAHs would be based on the
CCN rather than the TIN.
Comment: Several commenters expressed concern that the proposed
rule contained limited information on how the incentive program would
be operationalized for CAHs. They requested additional information on
the expected timeframe and process for payments to CAHs.
Response: To facilitate funds control, payments will be made
through a single payment contractor. In order to receive a HITECH
incentive payment, a CAH will have to attest that it is a meaningful
user, and submit documentation to its FI/MAC to support the costs
incurred for its HIT system. Once the FI/MAC reviews the documentation
and the allowable amount is determined, we will direct the payment
contractor to release to the CAH a single incentive payment in the next
HITECH payment cycle. Payment cycles will begin in May 2011.
Comment: Several commenters requested more information on the
timing of the distribution of payments to CAHs once the necessary
documentation has been submitted and that recommended CMS be consistent
with its proposal on incentive payments for EPs and specify that the
CAH's initial incentive payment will be distributed no later than two
months after it submits the necessary documentation. The same
commenters requested that CMS specify that the final incentive payment
be issued no later than two months after the CAH submits its cost
report.
Response: CAHs will receive a single initial incentive payment per
year with the initial payments beginning in May 2011. Once the FIs/MACs
review the documentation and the allowable amount is determined, we
will direct the payment contractor to release a single incentive
payment in the next incentive payment cycle to qualifying CAHs. We
anticipate the initial payments will generally be made within two
months of the determination of the allowable amount. The final payment
will be calculated on the cost report, and the process to settle the
cost report will not be modified for these incentive payments. It will
continue to follow the normal final settlement process. For the CAHs'
second and subsequent participation years, CAHs will also receive a
single initial incentive payment per year and a final incentive payment
as described above. With respect to the commenters' request that we be
consistent with the proposed approach to paying EPs, there seems to be
confusion around what was proposed as to the timing and distribution of
incentive payments to EPs. The proposal for EP incentive payments was
that an EP's accumulated allowed charges would be based on claims
submitted not later than two months after the end of the payment year.
The incentive payment for a qualifying EP's second and subsequent
payment years was always to be disbursed in the year following the
payment year. We did not propose to make incentive payments to an EP
within two months of the EP being deemed a meaningful user.
Comment: Several commenters questioned what is considered
``necessary documentation'' for CAHs to submit in order to receive
Medicare CAH incentive payments. The same commenters requested CMS
propose and obtain comments on ``necessary documentation'' and finalize
a rule before FY 2011.
Response: The documentation submitted should include information
reflecting what was purchased, and support the costs incurred. Such
documentation may include invoices, receipts, or other comparable
materials.

[[Page 44468]]

Comment: One commenter recommended CMS (not the MACs/FIs) should
make all determinations regarding CAHs.
Response: The documentation review process for Medicare CAH
incentive payments is similar to processes currently performed by FIs/
MACs. Also, the data needed to calculate the Medicare Share is on the
cost reports, which are submitted to the FIs/MACs. Accordingly, we
believe it would be most appropriate for the payment determinations be
made by the FIs/MACs, and not by CMS.
After consideration of the public comments received, we are
finalizing our policy as proposed. For purposes of this provision, CAH
payments will be calculated by the FIs/MACs; however, as discussed
above, to facilitate funds control, payments will be made through a
single payment contractor. Once the FIs/MACs review the documentation
and the allowable amount is determined, we will direct the payment
contractor to release to the CAH a single incentive payment in the next
HITECH payment cycle. Payment cycles will begin in May 2011.
d. Payment Accounting Under Medicare
We will conduct selected compliance reviews of EPs, eligible
hospitals, and qualified CAHs who register for the incentive programs
and of recipients of incentive payments for the meaningful use of
certified EHR technology. The reviews will validate provider
eligibility through their meaningful use attestations including
verification of meaningful use and would also review components of the
payment formulas.
We will identify and recoup overpayments made under the incentive
payment programs that result from incorrect or fraudulent attestations,
quality measures, cost data, patient data, or any other submission
required to establish eligibility or to qualify for a payment. The
overpayment will be recouped by CMS or its agents from the EP, eligible
hospital, MA organization, CAH, other entities to whom the right to
payment has been assigned/reassigned, or, in the case of Medicaid, from
the State Medicaid agencies. Medicare FFS EPs and eligible hospitals
will need to maintain evidence of qualification to receive incentive
payments for 10 years after the date they register for the incentive
program.
5. Preclusion of Administrative and Judicial Review
We did not discuss preclusion of administrative and judicial review
in our proposed rule. We are now including a discussion, in order to
make the public aware of the preclusion. Also, the sections of this
final rule discussing payments to Medicare Advantage (MA) organizations
and CAHs both include a description of the preclusion, as well as
accompanying regulation text. Therefore, while we believe statutory
provisions on preclusion of review are self-implementing, below, we
include a discussion of the preclusion of review that applies to EPs
and eligible hospitals. We have also added regulation text to maintain
consistency with the CAH and MA organization provisions.
For EPs, section 1848(o)(3)(C) of the Act prohibits administrative
or judicial review under section 1869, section 1878, or otherwise, of
all of the following:
The methodology and standards for determining EP incentive
payment amounts.
The methodology and standards for determining the payment
adjustments that apply to EPs beginning with 2015.
The methodology and standards for determining whether an
EP is a meaningful EHR user, including: (1) The selection of clinical
quality measures; and (2) the means of demonstrating meaningful EHR
use.
The methodology and standards for determining the hardship
exception to the payment adjustments.
The methodology and standards for determining whether an
EP is hospital-based.
The specification of the EHR reporting period, as well as
whether payment will be made only once, in a single consolidated
payment, or in periodic installments.
For eligible hospitals, section 1886(n)(4)(A) of the Act similarly
prohibits administrative or judicial review under section 1869, section
1878, or otherwise, of the following:
The methodology and standards for determining the
incentive payment amounts made to eligible hospitals, including: (1)
The estimates or proxies for determining discharges, inpatient-bed-
days, hospital charges, charity charges, and Medicare share; and (2)
the period used to determine such estimate or proxy.
The methodology and standards for determining the payment
adjustments that apply to eligible hospitals beginning with FY 2015.
The methodology and standards for determining whether an
eligible hospital is a meaningful EHR user, including: (1) The
selection of clinical quality measures; and (2) the means of
demonstrating meaningful EHR use.
The methodology and standards for determining the hardship
exception to the payment adjustments.
The specification of the EHR reporting period, as well as
whether payment will be made only once, in a single consolidated
payment, or in periodic installments.

We note that the above listing may summarize or abbreviate portions of
the statute. For precise language on the preclusion of judicial review,
readers should always refer to the statute.

C. Medicare Advantage (MA) Organization Incentive Payments

1. Definitions
a. Qualifying MA Organization
Section 1853(l)(1) of the Act, as added by section 4101(c) of the
HITECH Act, provides for incentive payments to qualifying MA
organizations for certain of their affiliated EPs who are meaningful
users of certified EHR technology during the relevant EHR reporting
period for a payment year. Section 1853(l)(5) of the Act defines the
term ``qualifying MA organization'' as an MA organization that is
organized as a health maintenance organization (HMO) as defined in
section 2791(b)(3) of the PHS Act. Section 2791(b)(3) of the PHS Act in
turn defines a health maintenance organization as a federally qualified
HMO, an organization recognized as an HMO under State law, or a similar
organization regulated for solvency under State law in the same manner
and to the same extent as an HMO. Since there are few federally
qualified HMOs, we expect MA organizations to primarily qualify for
incentive payments as State-licensed HMOs, or as organizations
regulated for solvency under State law in the same manner and to the
same extent as HMOs.
In Sec. 495.200 we proposed to define ``qualifying MA
organization.'' Specifically, in Sec. 495.202(a)(2), we proposed to
deem MA organizations offering MA HMO plans that are not federally-
qualified HMOs to meet the definition of HMO in section 2791(b)(3) of
the PHS Act, as HMOs recognized under State law, or as entities subject
to State solvency rules in the same manner as HMOs. We believe this is
reasonable because under the MA application process, State regulators
are required to certify that MA organizations operating in their State
are authorized to offer the type of MA plan they proposed to offer, and
meet solvency standards that are adequate for these purposes. For each
MA organization offering MA HMO plans, the State has thus recognized
that the organization is able to assume risk

[[Page 44469]]

as an HMO. Therefore, we have determined that absent evidence to the
contrary, an MA organization offering HMO plans is recognized by the
State as a health maintenance organization, or that it is subject to
State solvency standards in the same manner and to the same extent as
an HMO and therefore provides sufficient assurance that the section
2791(b)(3) of the PHS Act definition is met.
In Sec. 495.202(a)(3), for MA organizations that offer other
coordinated care MA plans (Preferred Provider Organization (PPO) plans,
Provider Sponsored Organization (PSO) plans, and Regional Preferred
Provider Organization (RPPO) plans) and for other MA organizations
offering other MA plan types (private fee-for-service (PFFS) plans,
Medical Savings Account (MSA) plans), we proposed that the sponsoring
MA organization would be required to attest that the MA organization is
recognized under State law as an HMO, or that it is a similar
organization regulated under State law for solvency in the same manner
and to the same extent as an HMO before we would make a determination
that the MA organization is a qualifying MA organization for purposes
of incentive payments.
Although we did not receive any comments on these provisions and
are finalizing them as proposed, there is one exception. In order to
bring 422.202(a) into conformance with the change we are making to
422.202(b)(1), we are changing the date by which MAOs are required to
identify themselves to us from the bidding deadline in June 2010 (for
plan year 2011) to the bidding deadline in June 2011 (for plan year
2012).
b. Qualifying MA Eligible Professional (EP)
A qualifying MA organization may receive an incentive payment only
for those EPs described under section 1853(l)(2) of the Act, as added
by section 4101(c) of the HITECH Act. Section 1853(l)(2) of the Act
provides that MA EPs must be ``eligible professionals'' as defined
under section 1848(o) of the Act as added by section 4101(a) of the
HITECH Act, and must either--
Be employed by the qualifying MA organization; or
Be employed by, or be a partner of, an entity that through
contract with the qualifying MA organization furnishes at least 80
percent of the entity's Medicare patient care services to enrollees of
the qualifying MA organization.

Further, the EP must furnish at least 80 percent of his or her
professional services covered under Title XVIII (Medicare) to enrollees
of the qualifying MA organization and must furnish, on average, at
least 20 hours per week of patient care services.
As discussed in section II.A.1. of this final rule, an EP is
defined as a physician (under section 1861(r) of the Act).
We said we interpreted ``employed by'' to mean that the EP is
considered an employee of a qualifying MA organization or qualifying
entity under the usual common law rules applicable in determining the
employer-employee relationship under section 3121(d)(2) of the Internal
Revenue Code of 1986.
We said we interpreted ``to be a partner of'' to mean that the
qualifying MA EP has an ownership stake in the entity. Under this
interpretation, a professional that contracts with an entity, but who
has no ownership stake in the entity, would not be considered a
qualifying MA EP.
We said we interpreted ``furnishing at least 80 percent'' of the
entity's ``patient care services'' to enrollees of the organization to
mean at least 80 percent of the qualifying entity's total Medicare
revenue in a year (that is, total revenue from Medicare FFS as well as
from all MA organizations) must be from a single qualifying MA
organization.
We proposed to interpret the requirement that a qualifying MA EP
furnish at least 80 percent of their professional services covered
under Title XVIII to enrollees of the organization to mean that at
least 80 percent of the professional's total Medicare revenue in a year
(that is, total revenue from Medicare FFS as well as from all MA
organizations) must be from a single qualifying MA organization. We
said we believed that in establishing the rule that qualifying MA EPs
need to furnish at least 80 percent of their Title XVIII covered
services ``to enrollees of the organization,'' the statute limits
payment related to any specific qualifying MA EP to a single qualifying
MA organization. Thus, if a qualifying MA EP provided an average of 20
hours per week of patient care services to two distinct qualifying MA
organizations, we said we would pay the qualifying MA organization for
the MA EP only if such a qualifying EP provided at least 80 percent of
his or her professional services covered under Title XVIII to enrollees
of that organization.
For purposes of determining whether a qualifying MA EP furnishes,
on average, at least 20 hours per week of patient care services, we
interpreted the requirement to include both Medicare and non-Medicare
patient care services. Moreover, we proposed that the relevant time
period for determining whether an MA EP furnishes at least 20 hours per
week of patient care services should be the EHR reporting period. (We
discuss the definition of EHR reporting period in section II.A.1.e. of
this final rule.) Therefore, we said that over the EHR reporting
period, the qualifying MA EP must provide on average 20 hours per week
of patient care services. Finally, we interpreted ``patient care
services'' to mean services that would be considered ``covered
professional services'' under sections 1848(o)(5)(A) and (k)(3) of the
Act. That is, health care services for which payment would be made
under, or for which payment would be based on, the fee schedule
established under Medicare Part B if they were furnished by an eligible
professional to a Medicare beneficiary.
We considered various methods of determining when at least 20 hour
per week, on average, of patient care services would be considered to
be provided by MA EPs. We considered methods such as defining a dollar
or service threshold, or the number of hours of direct patient care
services actually provided. After due consideration we proposed to
require qualifying MA organizations to attest to the fact that MA EPs
for whom they are requesting EHR incentive payments have provided, on
average, 20 hours of patient care services during the EHR reporting
period.
Comment: A few commenters referenced the Report to Congress
required by section 4101(d) of the HITECH Act. The commenters suggested
ways in which we could combine original FFS Medicare claims-payment
data and MA services provided by EPs in order to arrive at a single,
combined EHR payment. One commenter asked whether payments to a
provider from a Medicare Advantage plan can contribute to the volume of
Allowed Charges for the purpose of calculating maximum Meaningful Use
rewards, saying that he believed that they should. Another commenter
said that a substantial percentage of senior citizens receive their
care from EPs providing services by way of Medicare Advantage plans.
The commenter continued that current proposed rules provide incentive
payment only to EPs in whose practices 80 percent or more of total
services are to Medicare Advantage patients. The commenter concluded
that this would exclude many EPs treating our most vulnerable citizens
from the opportunity to meaningfully adopt EHRs in their practices and
that the 80 percent [MA] practice requirement should be eliminated.
Other commenters argued

[[Page 44470]]

that the regulation was unclear regarding an exclusion of covered
professional services of an EP not employed by an MAO when determining
their participation or level of payment because those services are
provided to MA beneficiaries. The commenter believed that the Secretary
should provide a mechanism, whereby EPs can supplement their record to
the appropriate carrier/MAC with their MA charges.
Response: We do not have statutory authority to combine payments
across the FFS and MA EHR incentive payment programs. The statutory
provision at section 1853(l)(3)(B) of the Act, as added by section 4101
of the HITECH, entitled ``Avoiding Duplication of Payments,''
specifically prohibits us from making payments to EPs for both FFS and
MA services. Additionally, had Congress wanted CMS to combine FFS and
MA charges it could have included a provision similar to the provision
in section 1886(n)(2)(D)(i) of the Act, as added by section 4102(a) of
the HITECH Act, where FFS and MA inpatient-bed-days are added together
to derive the numerator of the Medicare share fraction. We do not have
the authority to eliminate the requirement that an EP provide 80
percent of Medicare services to enrollees of an MA organization, as
that requirement is set forth in section 1853(l)(2)(A)(i)(II) of the
Act, as added by the HITECH Act, which is clear in requiring that an MA
EP provide ``80 percent of * * * professional services * * * covered
under this title to enrollees of the [MA] organization.''
Comment: One commenter recommended that CMS retain its proposal
regarding how the 80 percent and the 20 hours per week criteria will be
met by MA EPs. Another commenter said that many EPs in Puerto Rico
would not qualify for incentives under this test. The commenter said
that the single MA organization requirement of 80 percent revenue and
20 hours per week for MA EPs would not be met due to the competition
and market changes from year to year. The commenter suggested
eliminating the single MA organization requirement. Instead, the
commenter said we should change the standards to consider all enrollees
of all MA organizations to which an EP furnishes services. The
commenter continued by saying that if the requirements are not modified
to accept multiple MA organizations, the commenter anticipated several
unintended consequences in the Puerto Rico market. First, the commenter
said, it would be impossible for providers to meet the single MA
organization requirement of 80 percent revenue and 20 hours per week,
and therefore, the standard would create disinterest in adopting EHRs
in their practice. Second, the commenter said, the single MA
organization requirement standard would stymie competition. An
unanticipated consequence of the requirement would be providers
dropping out of MA plans to consolidate revenue in order to meet the
standard from a single MA organization. Third, the commenter concluded,
patients would have fewer options to select among MA plans, and to a
lesser degree, MA enrollees might be forced to discontinue care with
long time MA providers in light of the providers' determination to
consolidate revenue under a single MA organization.
Response: As noted above, the 80 percent of Medicare revenue
standard is set forth in the statute, and may not be changed by
regulation. The 20 hour per week rule is also statutory and based on
section 1853(l)(2)(B) of the Act, as added by the HITECH Act. We note,
however, that it is not the case that all 20 hours of patient care
services per week be provided by an EP to MA enrollees of a single MA
organization. Rather, the 20 hours of patient care services to
enrollees of a single MA organization can include both Medicare and
non-Medicare services and patients.
Comment: One commenter asked CMS to continue to work with Congress
to develop an equitable mechanism by which to provide incentives to
physicians that provide health care services through participation with
more than one MAO.
Response: As previously mentioned in the preamble to this final
rule, the statute clearly limits payment related to any specific MA EP
to a single qualifying MA organization. Potential changes in the
statute are outside the scope of this rulemaking.
After consideration of the public comments received, we are
implementing the foregoing provisions as proposed.
As discussed in section II.B. of this final rule relating to
Medicare FFS EPs, a qualifying MA EP is also defined as a physician
under section 1861(r) of the Act. Section 1853(l)(1) of the Act, as
added by section 4101(c) of the HITECH Act, provides that the
provisions of sections 1848(o) and 1848(a)(7) of the Act, as amended
and added by sections 4101(a) and (b) of the HITECH Act, respectively,
which establish the incentive payments for EPs under Medicare FFS,
apply to a qualifying MA organization's qualifying MA EPs ``in a
similar manner'' as they apply to EPs under Medicare FFS. As discussed
above in section II.A.6. of this final rule, section 1848(o)(1)(C)(i)
of the Act, as added by section 4101(a) of the HITECH Act, states that
hospital-based EPs are not eligible for incentive payments. Therefore,
we proposed that, similar to the Medicare FFS incentive program, MA
incentive payments would also not be available for hospital-based EPs.
We note that the hospital where a hospital-based EP provides his or her
Medicare covered services would be potentially entitled to an incentive
payment either through the Medicare FFS incentive program, or through
the MA-affiliated hospital EHR incentive program. Therefore, we
proposed that for such a hospital-based MA EP, a qualifying MA
organization would be no more entitled to an MA EP incentive payment
under the MA EHR incentive program than a similarly situated EP would
be entitled to an incentive payment under the Medicare FFS EHR
incentive program.
Comment: We received one comment related to hospital-based MA EPs,
and specifically to our proposal in the proposed rule that ``similar to
the Medicare FFS incentive program, MA incentive payments would also
not be available for hospital-based EPs.'' The commenter noted,
however, that unlike the proposed regulatory definition of ``Qualifying
Eligible Professional (EP)'' under the Medicare FFS incentive program,
the proposed regulatory definition of ``Qualifying MA EP'' under the MA
EHR incentive program did not expressly exclude hospital-based EPs. The
commenter went on to say that if hospital-based MA EPs are excluded
from the MA EHR incentive program (for example, because they provide
90% or more of their covered services in the CY preceding the payment
year in an outpatient hospital setting), unless there is an exception
for MA EPs who are hospital-based in qualifying MA-Affiliated Eligible
Hospitals that would not qualify for an incentive payment under the MA
Affiliated hospital EHR incentive program payment criteria, Qualifying
MA Organizations with MA EPs who are hospital-based in such qualifying
MA-Affiliated Hospitals would not qualify for an incentive, with regard
to those MA EPs, under any HITECH Act Medicare incentive program. The
commenter concluded that this outcome would not be consistent with the
objective of the HITECH Act to promote widespread adoption of HIT
through the payment of monetary incentives for meaningful use of EHRs.
The commenter recommended that if hospital-based MA EPs are excluded
from the MA EHR incentive program, then we should include an exception
for MA EPs who are hospital-

[[Page 44471]]

based in Qualifying MA-Affiliated Eligible Hospitals that would not
qualify for an incentive payment (or would only qualify for a very
minimal incentive payment) under the MA-Affiliated hospital EHR
incentive program payment criteria.
Response: We thank the commenter for pointing out our oversight in
not including the hospital-based physician exclusion in the proposed
regulation text related to the MA EP EHR incentive program. We will
include in regulation text the fact that an MA EP is not a ``hospital-
based EP,'' as that term is defined in Sec. 495.4 of this final rule.
As to a possible exception for hospital-based EPs who are practicing in
MA-affiliated hospitals that do not qualify for incentive payments (or
that qualify for very minimal incentive payments), we cannot provide
such an exception. MA-affiliated eligible hospitals will receive EHR
incentive payments based on the same statutory formula used to make EHR
incentive payments to other ``subsection (d)'' hospitals--see section
II.C.3. of this final rule, below. There is no statutory authority nor
is there a valid reason to treat MA EPs, in this respect, any
differently that other EPs that are hospital-based.
After consideration of the public comment received, we are
modifying the regulation text related to the definition of MA EP by the
additional of an item 5) to the definition of ``Qualifying MA EP'' at
Sec. 495.200 to add a specific hospital-based MA EP exclusion.
As discussed in the proposed rule, an MA EP must either be employed
by the qualifying MA organization, or be employed by, or be a partner
of, an entity that through contract with the qualifying MA organization
furnishes at least 80 percent of the entity's Medicare patient care
services to enrollees of the qualifying MA organization. With respect
to the later criteria, we did not propose to define the term
``entity,'' but instead recognized that there exist a range of entities
with which MA organizations contract for patient care services,
including physician groups, Independent Practice Associations (IPAs),
Exclusive Provider Organizations (EPOs), Physician Hospital
Organizations (PHOs), and Preferred Provider Organizations (PPOs).
Moreover, we recognized that an EP may contract with more than one
such entity, and that these entities often contract with a number of MA
organizations and other health care insurers. An EP also may directly
contract with more than one MA organization. In general, we said, it is
only when an EP is employed by a single qualifying MA organization, or
is employed by or in partnership with an entity that contracts with a
single qualifying MA organization, that an EP can satisfy the criteria
to be an MA EP.
We said that the qualifying MA organization must attest to the fact
that each MA EP is a meaningful user of certified EHR technology in
accordance with Sec. 495.4. If all of these conditions are met, such
an individual is identified as an MA EP. We proposed to define the term
``MA eligible professional (EP)'' at Sec. 495.200 as an EP who
satisfies all of these conditions.
Finally, we discussed section 4101(d) of the HITECH Act which
directed the Secretary to study and report on ``nearly exclusive''
physicians that primarily treat MA enrollees and that would not
otherwise qualify for incentive payments under current law. We
explained that this rule does not address such individuals, as it is
limited to codifying in regulation existing statutory language as
discussed herein.
We did not receive any comments on these provisions and are
finalizing them as proposed.
c. Qualifying MA-Affiliated Eligible Hospital
We proposed to define ``qualifying MA-affiliated eligible
hospital'' in Sec. 495.200. A qualifying MA organization may receive
an incentive payment only for a qualifying MA-affiliated eligible
hospital described under section 1853(m)(2) of the Act, as added by
section 4102(c) of the HITECH Act, that is a meaningful user of
certified EHR technology as defined in Sec. 495.4. Section 1853(m)(2)
of the Act provides that such MA-affiliated eligible hospitals are
``eligible hospitals'' as defined under section 1886(n)(6) of the Act
and must be under common corporate governance with a qualifying MA
organization that serves individuals enrolled under MA plans offered by
such organization where more than two-thirds of the Medicare hospitals
discharges (or bed-days) are Medicare individuals enrolled under MA
plans offered by such organization. As discussed in section II.A.1. of
this final rule, section 1886(n)(6) of the Act defines an ``eligible
hospital'' as a subsection (d) hospital (as defined under section
1886(d)(1)(B) of the Act). In Sec. 495.200, we also proposed to define
``under common corporate governance'', as a qualifying MA organization
and a qualifying MA-affiliated eligible hospital that have a common
parent corporation, where one is a subsidiary of the other, or where
the organization and the hospital have a common board of directors.
Section 1853(m)(3)(B)(i) of the Act, as added by section 4101(c) of
the HITECH Act, provides that if for a payment year at least one-third
(33 percent) of an MA eligible hospital's discharges (or bed-days) of
Medicare patients are covered under Part A (rather than under Part C),
the hospital may only receive an incentive payment under section
1886(n) of the Act--the Medicare FFS incentive program.
In Sec. 495.200 we proposed to define ``inpatient-bed-days'' in
the same manner as that term is defined for purposes of implementing
section 4201(a) of the HITECH Act in the preamble of this final rule.
The term will be used in the same way in computing incentive payments
due qualifying MA organizations under the qualifying MA-affiliated
eligible hospital incentive payment program.
We note that, as discussed in section II.B.2.b. of this final rule,
under section 1886(n)(2)(D)(i)(II) of the Act, the portion of the
Medicare FFS hospital incentive payment comprising the discharge
related amount, or Medicare share, is based in part on the estimated
number of inpatient-bed-days attributable to individuals enrolled in MA
plans under Part C. This means that hospitals that treat individuals
enrolled in MA plans will receive a Medicare FFS hospital incentive
payment partially based on the number of MA-enrollee bed-days. To the
extent a hospital does not meet the 33 percent threshold requiring
payment through the FFS Medicare EHR hospital incentive program,
incentive payments can be made to a qualifying MA organization under
common corporate governance to the extent other requirements of the MA
EHR hospital incentive program are met. (See section II.C.3 of this
final rule for the computation of incentive payments to qualifying MA
organizations.)
Therefore, we proposed to make EHR incentive payments to qualifying
MA-affiliated eligible hospitals under the FFS EHR incentive program.
Finally, we said that to the extent such data necessary to estimate the
inpatient-bed-days-related incentive payment amount are not already
available to us through the normal submission of hospital cost reports;
we proposed to require that qualifying MA organizations seeking
reimbursement for qualifying MA-affiliated eligible hospitals submit
similar data.
We did not receive any comments on these provisions and are
finalizing them as proposed.

[[Page 44472]]

2. Identification of Qualifying MA Organizations, MA EPs, and MA-
Affiliated Eligible Hospitals
In Sec. 495.202 we proposed to require an MA organization that
intended to ask for reimbursement under the MA EHR incentive payment
program to so indicate as part of submissions of their initial bid
under section 1854(a)(1)(A) of the Act, and to attest, in some cases,
that they meet the requirements of a qualifying MA organization. For MA
organizations offering an MA HMO plan type, we proposed to deem such
organizations to meet the definition of HMO in 42 U.S.C. 300-gg(b)(3),
(that is, section 2791(b)(3) of the PHS Act). As noted previously, for
MA organizations offering plan types other than HMOs, we proposed to
require an attestation by the organization that the MA organization is
recognized under State law as an HMO, or that it is a similar
organization regulated under State law for solvency in the same manner
and to the same extent as an HMO before we would make a determination
that the MA organization is a qualifying MA organization for purposes
of incentive payments. We proposed to require this beginning with bids
due in June 2010 (for plan year 2011) for MA organizations seeking
reimbursement for MA EPs and MA-affiliated eligible hospitals.
We also proposed requiring qualifying MA organizations, as part of
their initial bids starting with plan year 2011, to make a preliminary
identification of potentially qualifying MA EPs and potentially
qualifying MA-affiliated eligible hospitals for which the organizations
would seek EHR incentive payments.
In developing the preliminary and final lists of potentially
qualifying MA EPs, qualifying MA organizations, we said that qualifying
MA organizations must exclude hospital-based MA EPs. We proposed that
qualifying MA organizations identify hospital-based MA EPs using the
same criteria outlined in section II.A.6 of this final rule for
identifying hospital-based EPs in the Medicare FFS EHR incentive
program.
Along with both the preliminary and final lists of potentially
qualifying MA EPs and MA-affiliated hospitals, we said that qualifying
MA organizations would be required to submit an attestation that these
professionals and hospitals meet the criteria to be considered
eligible. For example, for hospitals, the qualifying MA organization
would need to attest that they are under common corporate governance
with the qualifying MA organization and for EPs, the qualifying MA
organization would need to attest that the list does not include any
hospital-based EPs.
We proposed requiring qualifying MA organizations to provide final
identification of potentially qualifying MA EPs by the end of the MA EP
payment year (December 31), and final identification of potentially
qualifying MA-affiliated eligible hospitals by the end of the MA-
affiliated hospital payment year (the FFY ending on September 30), for
which MA EHR incentive payments were sought. We also proposed requiring
qualifying MA organizations to report the name, practice address, and
other identifying information, like NPI, for all physicians that meet
the requirements of a qualifying MA EP for which the qualifying MA
organization would be requesting payment under the MA EHR incentive
payment program.
We said that once a qualifying MA organization identifies potential
EPs, we are required to ensure that such EPs did not receive the
maximum EHR incentive payment for the relevant payment year under the
Medicare FFS program under section 1848(o)(1)(A) of the Act, as added
by section 4101(a) of the HITECH Act, before releasing an incentive
payment to a qualifying MA organization related to such EP. (See
section 1853(l)(3)(B)(i) of the Act, as added by section 4101(c) of the
HITECH Act). Therefore, in order to allow us time to determine whether
an MA EP received the maximum EHR incentive payment under the Medicare
FFS program, we proposed not to make incentive payments to qualifying
MA organizations for the MA EPs for a payment year until after the
final computation of EP incentive payments for that year under the
Medicare FFS program. Additionally, we proposed to require qualifying
MA organizations to ensure that all MA EPs are enumerated through the
NPI system, in order to detect and prevent duplicate payment for EPs
under both the FFS and MA EHR incentive payment programs.
Comment: Two commenters contended that requiring MA organizations
to provide even a preliminary list of MA EPs by June 2010 (for payment
year 2011) would be unrealistic and burdensome, especially when
publication of a Final Rule seems unlikely before May 2010 at the
earliest. For 2011, any preliminary list will be inaccurate, despite
good faith efforts and reasonable due diligence. Moreover, CMS has not
stated any justifiable purpose for requiring such a preliminary list.
Response: We agree with the commenters that it would be
unnecessarily burdensome and unrealistic to require MA organizations to
provide preliminary lists as early as June of 2010 of potential MA EPs
for incentive payment year 2011. We will change the timing of this
requirement in Sec. 495.202(b)(1) to say that as part of initial bids
for plan year 2012 MA organizations will be required to submit
preliminary lists in June of 2011 (when bids are due for 2012) of
potential MA EPs for incentive payment year 2011. Thus, we will delay
the requirement for a full year. The purpose of such preliminary lists
is to identify potential MA EPs that have, for instance, registered as
FFS Medicare or Medicaid EPs on the National Level Repository. The
intent of getting these lists before payment is due, or before a final
determination of eligibility can be made, is to help qualifying MA
organizations know of any potential conflicts in time to ``cure'' them
before final payment determinations are made.
Comment: One commenter objected to CMS' proposal that MA
organizations be required to submit final lists of MA EPs and MA
hospitals by the last day of the payment year, including the
attestations of meaningful use and accurate payment calculation. The
commenter argued that this timing would not allow sufficient time to
ensure that data are complete and accurate, especially considering that
MA organizations bear the additional burden of having to develop and
support internal administrative systems to determine eligibility and to
calculate payment (we will calculate FFS EP payments based on claims
submitted). The commenter recommended that we extend the deadlines to
produce both preliminary and final lists of MA EPs and hospitals. The
commenter suggested that MA organizations be given until 90 to 120 days
after the close of the payment year to identify and list eligible EPs
and hospitals (for example, after 31 December 2011 for plan year 2011).
Response: We agree with the commenter that additional time should
be permitted and we are therefore adding a due date in Sec.
495.202(b)(3) for final identification of potentially qualifying MA EPs
and MA-affiliated eligible hospitals of 60 days after the close of the
payment year. We believe 60 days is reasonable, since it is the same as
the time in which FFS EPs have to submit claims for consideration under
the Medicare FFS EHR incentive payment program.
After consideration of the public comments received, we are
modifying the regulation text related to the timing of both preliminary
and final identification of MA EPs and MA-affiliated eligible
hospitals. Preliminary

[[Page 44473]]

identification of MA EPs and MA-affiliated hospitals for payment year
2011 will need to occur by the bidding deadline in June 2011, and final
identification will need to occur within 60 days of the close of the
payment year. Accordingly, we are respectively modifying the regulation
text at Sec. 495.202(b)(1) and Sec. 495.202(b)(3). We are also
modifying the regulation text at Sec. 495.204(b)(2) to be consistent
with the change to Sec. 495.202(b)(3), since final identification in
Sec. 495.202(b)(3) should occur at the same time as final revenue
reporting under Sec. 495.204(b)(2), so calculations of payments due
under the MA EP incentive payment program can be finalized. We are also
modifying the regulation text at Sec. 495.210(b) and (c) to be
consistent with the changes to Sec. 495.204(b)(2) and Sec.
495.202(b)(3), since the deadline for attestations of meaningful use
should be consistent with deadlines for revenue reporting for MA EPs,
and final identification of MA EPs and MA-affiliated hospitals.
Finally, as noted (above) in our discussion of the definition of
qualifying MA organizations, we are modifying the date in Sec.
495.202(a)(1) by which MAOs are required to identify themselves to us
from the bidding deadline in June 2010 (for plan year 2011) to the
bidding deadline in June 2011 (for plan year 2012).
We also proposed to require all qualifying MA organizations to
self-report and identify themselves, regardless of whether they have
qualifying MA EPs or MA-affiliated eligible hospitals for whom or which
the organization plans to claim incentive payments at the time the
initial bid is due (the first Monday of June, see section 1854(a)(1)(A)
of the Act) beginning in 2014 for bids related to plan year 2015. We
proposed to require this reporting by all qualifying MA organizations
in years beginning with 2014 in anticipation of the statutory
requirement in sections 1853(l)(4) and 1853(m)(4) of the Act, to
negatively adjust our capitation payments to qualifying MA
organizations for MA EPs and MA-affiliated eligible hospitals that are
not meaningful users of certified EHR technology for years beginning
with 2015.
We did not receive any comments on these provisions and are
finalizing them as proposed.
3. Computation of Incentives to Qualifying MA Organizations for MA EPs
and Hospitals
In Sec. 495.204, we proposed a methodology under which payments to
qualifying MA organizations for qualifying MA EPs will be computed.
Section 1853(l)(3)(A) of the Act provides that in applying section
1848(o), instead of the additional payment amount specified under
section 1848(o)(1)(A) of the Act, the Secretary may substitute an
amount determined by the Secretary, to the extent feasible and
practical, to be similar to the estimated amount in the aggregate that
would be payable under, or would be based on, the Medicare physician
fee schedule under Part B instead of Part C. Section II.B.1. of this
final rule discusses these provisions.
Section 1853(m)(3)(A) of the Act provides that, in providing an
incentive payment to qualifying MA organizations for MA-affiliated
hospitals, we substitute for the amount specified under section
1886(n)(2) of the Act--the incentive payment amount under Medicare FFS
for qualifying eligible hospitals--an amount determined by the
Secretary to be similar to the estimated amount in the aggregate that
would be payable if payment for services furnished by such hospitals
was payable under Part A instead of Part C. (For more detailed
information see section II.B.2. of this final rule.)
Sections 1848(o)(1)(D)(i) and 1886(n)(2)(F) of the Act permit us to
make incentive payments for a year in installments, although we
proposed to make a single lump sum payment with respect to MA EPs. With
respect to MA EP incentive payments, we said we read the term
``aggregate'' to mean the aggregate installment payments made by us
under the FFS EHR incentive program to a qualifying EP over the course
of the relevant payment year.
The duplicate payment provisions in section 1853(l)(3)(B)(i)(II) of
the Act direct us to make payment for EPs ``only under'' the MA EHR
incentive program ``and not under'' the Medicare FFS EHR incentive
program to the extent any EP earned ``less than [the] maximum incentive
payment for the same period'' under the Medicare FFS EHR incentive
program. We noted in the proposed rule that section 1853(l)(1) of the
Act provides that section 1848(o) of the Act applies in a ``similar,''
but not the same, manner to qualifying MA organizations as it applies
to EPs under Part B. The Medicare FFS incentive payment program under
section 1848(o) does not include payment for professional services
provided to MA enrollees, but rather only for services paid under Part
B. In a similar manner we proposed to limit payment to an MA
organization to only payment for their EPs' services to MA enrollees of
plans offered by the MA organization. We said we did not believe it
would be appropriate to provide an incentive payment to an MA
organization for services provided to individuals covered under Part B.
Therefore, we proposed, that in calculating qualifying MA EP incentive
payments, we would only consider covered professional services provided
to enrollees of MA plans offered by qualifying MA organizations and
would not include in the calculation any services reimbursed by
Medicare FFS.
Comment: Many commenters asked if MA plan beneficiaries and
services would be counted in the calculation of FFS EHR incentives and,
if so, if it would require separate submissions to each MA plan in the
local market.
Response: As we explained in the preamble of the proposed rule, we
cannot make MA EP incentive payments for Part B services covered and
paid for on a fee-for-service basis under the original Medicare
program. We also cannot make MA EP incentive payments to entities other
than qualifying MAOs. In short, the Medicare Advantage services
provided by EPs that are not qualifying MA EPs--defined in statute and
in this rule at Sec. 495.200--are not reimbursable under the EHR
incentive payment program.
Comment: Two commenters contended that the proposed Medicare
Advantage incentive computation was inconsistent. They said that
sections II.C.3. through 5. of this final rule discuss compensation,
but the preamble says that the Secretary may substitute a different
amount. This discrepancy should be clarified.
Response: We disagree. The statute says that we can substitute an
amount ``that is similar to the estimated amount that would be payable
or based on the fee schedule.'' It does not say that we can substitute
a different amount.
After consideration of the public comments received, we are
implementing these provisions as proposed.
We also said that under the Medicare FFS EHR incentive program, an
EP's incentive payment could not exceed the annual limits specified
under section 1848(o)(1)(B)(i) of the Act. We proposed that similar
payment limits apply to qualifying MA organizations for their
qualifying MA EPs. Specifically, section 1848(o)(1)(B) of the Act
provides that the incentive payment for an EP for a given year shall
not exceed the following amounts:
For the EP's first payment year, $15,000 (or, if the first
payment year is 2011 or 2012, $18,000).
For the EP's second payment year, $12,000.
For the EP's third payment year, $8,000.
For the EP's fourth payment year, $4,000.

[[Page 44474]]

For the EP's fifth payment year, $2,000.
For any succeeding year, $0.
Note that, similar to the Medicare FFS EHR incentive program, there
will be no incentive payments made with respect to a year after 2016.
We proposed similar restrictions related to qualifying MA
organizations. So, the maximum cumulative incentive payment over 5
years to a qualifying MA organization for each of its qualifying MA EPs
that meaningfully use certified EHRs beginning on or before 2012 would
be $44,000 per qualifying MA EP. For qualifying MA organizations first
reporting the meaningful use of certified EHRs by qualifying MA EPs
after 2014, there is no incentive payment amount available. Subject to
an exception discussed below, for MA organizations first reporting the
meaningful use of certified EHRs by qualifying MA EPs in 2013 or 2014,
the maximum potential incentive payment per qualifying EP is,
respectively, $39,000 over 4 years, and $24,000 over 3 years.
We did not receive any comments on these provisions and are
finalizing them as proposed.
We proposed to make MA EP incentive payments to qualifying MA
organizations on the same payment cycle for all employed/partnering
qualifying EPs of the organization. In other words, all MA EPs of a
specific qualifying MA organization will be in the same payment year
with respect to the amount of the incentive payment per qualifying EP
that we will make. So, for instance, if a qualifying MA organization is
in its second payment year in 2013 and it hires a new EP for which the
qualifying MA organization had not previously received an EHR incentive
payment, we will nevertheless make a second year incentive payment (up
to $12,000 in 2013) with respect to such an MA EP--assuming all other
conditions are met. Thus, the limits on MA EP incentive payments
discussed above are applied to the qualifying MA organization's entire
MA EP population in any specific payment year relative to that MA
organization, regardless of the length of employment/partnership of/
between that specific MA EP and that specific qualifying MA
organization.
Under section 1848(o)(1)(B)(iv) of the Act, the annual incentive
payment limit for EPs who predominantly furnish Part B services in a
geographic health professional shortage area (HPSA) is increased by 10
percent. While we do not anticipate that MA EPs would generally
practice in a HPSA area, to the extent that an MA EP practices in an
area where he or she would be entitled to the 10 percent increase, that
amount would apply to MA EPs as well.
We did not receive any comments on these provisions and are
finalizing them as proposed.
We explored various ways of computing the EP-level incentive
payments due qualifying MA organizations whose qualifying MA EPs
meaningfully use certified EHR technology. One option that we
considered was using MA plan bidding and payment data to estimate
average annual MA revenue for qualifying MA EPs with respect to a
qualifying MA organization. However, we did not pursue this option
because the approach results in an average revenue amount across all
potentially qualifying MA EPs with respect to a qualifying MA
organization and, therefore, would include revenue amounts that exceed
the annual per-professional ceiling on incentive payments under FFS for
all EPs. We said we believed such a result is contrary to the legal
requirement that qualifying MA organizations are to receive incentive
payments only for qualifying MA EPs that actually provide at least 20
hours per week of patient care services. Under this method there would
be also no way to know if the EP provided 80 percent of his/her
professional Medicare services to enrollees of the organization.
We also considered a reporting system for which qualifying MA
organizations would be required to report eligible-professional-
specific information along with MA patient encounters for nonhospital-
based office visits. Specifically, we examined requiring qualifying MA
organizations reporting qualifying MA EP encounters with MA plan
enrollees based on the five levels of office visit codes recognized by
Medicare FFS.
We said we believed that such a process would be administratively
burdensome and difficult to operationalize. Therefore, we proposed an
alternative approach, but sought input from interested parties as to
which of the approaches, or perhaps others, would best address the
statutory requirement to compensate qualifying MA organizations for
qualifying MA EPs the amount that would be payable if payment for
services furnished by such professionals were made under Part B instead
of Part C.
Therefore, in Sec. 495.204(b)(1) through (3) we proposed an
approach in which the revenue received by the qualifying MA EP for
services provided to enrollees of the qualifying MA organization would
serve as a proxy for the amount that would have been paid if the
services were payable under Part B. Under our proposed approach, the
qualifying MA organization would report to us the aggregate annual
amount of revenue received by each qualifying MA EP for MA plan
enrollees of the MA organization. We said we would calculate the
incentive payment amount due the qualifying MA organization for each
qualifying MA EP as an amount equal to 75 percent of the reported
annual MA revenue of the qualifying MA EP, up to the maximum amounts
specified under section 1848(o)(1)(B) of the Act.
For qualifying MA EPs who were compensated on a salaried basis, we
proposed in Sec. 495.204(b)(4) requiring the qualifying MA
organization to develop a methodology for estimating the portion of the
qualifying MA EP's salary attributable to providing services that would
otherwise be covered as professional services under Part B of Medicare
to MA plan enrollees of the MA organization. The methodology, which
would require review and approval by us, could be based on the relative
share of patient care hours spent with MA enrollees of the organization
or another reasonable method. So, for instance, if a qualifying MA EP
spends 30 percent of his or her time providing covered Part B physician
office services to MA plan enrollees, then the qualifying MA
organization would report 30 percent of the qualifying MA EP's salary
as annual revenue, which would be used to compute the amount of the MA
incentive payment due to the qualifying MA organization for the
qualifying MA EP. Thus, if the qualifying MA EP had a base salary of
$150,000, 30 percent would be $45,000--which is well over the threshold
of $24,000 needed by the MA organization to qualify for a maximum
incentive payment of up to $18,000 (70 percent of $24,000) for such a
qualifying MA EP in any year. We also proposed to require that salaries
be prorated to ensure that the amount reported reflects the salary paid
for the applicable year, where necessary.
We also said that salaried physicians' compensation typically does
not include an allowance for administrative practice costs. Given that
Part B allowed amounts do include practice expense costs, we proposed
allowing qualifying MA organizations to identify, where appropriate, an
additional amount related to overhead that would be added to the
qualifying MA EP's estimated Part B compensation. To the extent
Medicare FFS compensation to physicians includes an amount for office
space rental, office staffing, and equipment, we believe that
qualifying MA organizations should also be permitted

[[Page 44475]]

to include an amount for overhead related to such costs not directly
experienced by salaried qualifying MA EPs. In Sec. 495.204(b)(4)(ii),
we proposed requiring qualifying MA organizations to develop a
methodology for estimating the additional amount related to overhead
attributable to providing services that would otherwise be covered
under Part B of Medicare. We said the methodology would require review
and approval by us.
For qualifying MA EPs who are not salaried (that is, who are paid
on a capitated or fee-for-service basis), we proposed in Sec.
495.204(b)(5) to require qualifying MA organizations to obtain
attestations from such EPs and to submit to us information from the
attestations as to the amount of compensation received by the EPs for
MA plan enrollees of the MA organization. We are proposing such
attestations because many EPs are not paid directly by MA
organizations, but rather by intermediary contracting entities, such as
physician groups, and as a result the qualifying MA organization may
not otherwise know how much compensation is received by each qualifying
MA EP. In reporting compensation, we are proposing that the EPs include
only those amounts for professional services that would otherwise be
payable under Part B and for which payment would be made under, or
would be based on, the Medicare physician fee schedule.
Comment: One commenter recommended that final CMS regulations
retain the exact requirements outlined in Sec. Sec. 495.204(b)(4) and
(5). Two commenters said that CMS should allow flexibility in methods
MA organizations propose for computing incentive payments so long as
the organization's approach is reasonable, straightforward, and fairly
equates to the Medicare fee-for-service approach without imposing undue
burdens on MA organization systems or compromising EP privacy. The
proposed rule describes how incentive payment amounts will be
calculated for eligible hospitals and EPs. The proposed rule presents
options for a MA payment methodology, but expressly solicits comments
from MA organizations about how such a methodology could be designed to
fairly approximate the FFS payment calculation. The commenters included
recommendations about how MA organizations could be reimbursed and what
methodology would be a reasonable proxy for the Part B-based payment
applied to FFS physicians, based on the amount of individual physician
care provided to MA members. The commenters said that MA EPs who are
employed by their organizations are independent physician group
practices that contract exclusively with their organizations to meet
the health needs of their members, including MA enrollees. Their
organizations do not pay the salaries of MA EPs who provide patient
care services to their members and patients. They said that CMS has
proposed that the organization that directly pays the EP salaries would
perform a calculation and attest to the MA organization about the
amount of payment. They said that while this would mitigate some of the
confidentiality concerns related to sharing salary information with the
health plans, salary information would still be potentially exposed to
CMS. They said that another disadvantage of using actual salary as a
basis for calculating the incentive payment is that this approach
potentially introduces unacceptable variability into the estimation of
proxy amounts for Medicare services. For example, two MA EPs, whose
salaries vary significantly but provide the same Medicare services in a
reporting period, would have different proxy amounts. Further, they
said, if such EPs were billing under Part B, the amount of Medicare
services each billed would be the same, regardless of whether their
incomes were the same. These commenters went on to propose an
alternative method of computing a proxy Part B amount. They said that
as a first step, the MA organization would calculate the percentage of
clinic time each physician spends caring for MA members. This MA
Practice percentage could be derived by either: (1) Capturing the total
scheduled appointment time for MA members for each MA EP and dividing
that amount by the total scheduled time for that MA EP (for all
appointments); or (2) capturing the number of MA member visits/
procedures for each MA EP and dividing that amount by the total number
of visits/procedures for that MA EP (for all members). The organization
would then calculate the average practice cost by specialty for all
specialties identified in the annual American Medical Group
Association's (``AMGA'') salary survey. The commenters explained that
AMGA survey provides the median compensation per physician in most
specialties as well as the non-compensation related clinic costs per
physician (staffing, supplies, overhead, etc.) in most specialties.
Adding specialty specific compensation data (for groups > 100
physicians) to the combined average non-compensation related clinic
costs for that specialty (for all sized groups) would provide a
surrogate amount for each specialty's total operating costs. This would
produce the Average Operating Costs by Specialty. Multiplying each MA
EP's MA Practice percentage and the Average Operating Costs by
Specialty for that MA EP's practice specialty would produce a surrogate
Medicare Part B amount. For each MA EP, the MA organization would be
paid an incentive equal to 75 percent of the surrogate Medicare billing
amount for that physician, such incentive not to exceed the maximum
incentive for each payment year of the program (for example, $18,000 if
the first year of participation is 2011).
Response: While we appreciate the thought and effort that went into
this proposed alternative method of calculating MA EP incentive
payments, we are reluctant to adopt it for the simple reason that where
salaries, practice costs, or actual MA EP compensation can be known, we
believe it is a better read of statutory requirements to work from that
actual compensation and cost data than it would be to allow estimation
of both. In many respects the proposed alternative method is similar to
the method discussed and disposed of in the proposed rule related to
estimating physician compensation based on MA bidding and payment data.
Although the commenters' alternative version factors in actual practice
time, we believe using AMGA salary survey data would be inferior to
using actual physician compensation practice cost information. To the
extent actual salary information is unknown or unavailable to the MA
organization, we believe it could be provided to us in a manner that
would protect the privacy of individual MA EPs and physician groups.
Furthermore, the proposal also estimates ``non-compensation related
clinic costs'' based on AMGA data, which is, again, inappropriate, when
actual overhead costs might be quite different in a specific MA
organization. However, based on the commenters concerns regarding
provider privacy and the need to develop a consistent and verifiable
method of computing the amount payable to qualifying MA organizations
for MA EPs we are modifying the regulation text at Sec. 495.204(b)(5)
to say that qualifying MA organizations ``may'' obtain attestations
from qualifying MA EPs and ``may'' submit such information to us--
rather than ``must.'' And, we add a new subparagraph (6) that allows
the physician group or other payer to

[[Page 44476]]

provide EP reimbursement information directly to us. We also provide
assurances that we will use the EP reimbursement data for no other
purpose than to compute the MA EP incentive payment due the qualifying
MA organization.
Comment: One commenter said that in the proposed rule the
methodology for estimating the portion of the qualifying MA EP's salary
attributable to providing services that would otherwise be covered as
professional services under Part B of Medicare to MA plan enrollees of
the MA organization would require review and approval by CMS; and that
such methodology ``could be based on the relative share of patient care
hours spent with MA enrollees of the organization or another reasonable
method.'' However, the commenter opined, the proposed rule offers no
details about how the review and approval process would be conducted,
including dates and timelines for the process. Thus, the commenter
recommended that CMS permit flexibility in allowing MA organizations to
develop methodologies that will be reasonable in light of organization
structure and systems, it is important to provide some guidance about
how CMS will review and approve such proposals. CMS should permit, the
commenter said, any reasonable payment methodology method that is fair,
relatively easy to administer, subject to audit and that provides a
reliable approximation of Medicare Part B billing. In addition, the
commenter concluded, CMS should provide a simple process for submission
and approval of MA payment methodologies.
Response: In the proposed rule at Sec. 495.204(b)(4) we offered
flexibility related to the ``methodology for estimating the portion of
each qualifying MA EP's salary attributable to providing services that
would otherwise be covered as professional services under Part B,''
said that the methodology had to be ``approved by CMS,'' and that the
amount could include an ``additional amount related to overhead.''
Based on this comment we are adding a new clause (iii) that says that
such methodological proposals must be submitted to CMS by June of the
payment year, must be auditable by an independent third-party, and that
CMS will review and approve or disapprove such proposals in a timely
manner.
Comment: One commenter wanted to know what percentage of the
incentive payments will go to eligible professionals under Medicare
Advantage.
Response: No known percentage of incentive payment will go to
eligible professionals under Medicare Advantage, since MA EP payments
are made solely to qualifying MA organizations.
In the proposed rule we said that in applying the instruction in
section 1853(m)(3)(A) of the Act to substitute for the amount specified
under section 1886(n)(2) of the Act an amount similar to the estimated
amount in the aggregate that would be payable if payment for the
hospitals' services were made under Part A instead of Part C, we read
the term ``aggregate'' to mean the aggregate installment payments made
by us if EHR incentive payments were made under Part A instead of Part
C.
Incentive payments to eligible hospitals under the Medicare FFS EHR
incentive program are comprised of three components: (1) An initial
amount composed of a base incentive payment of $2,000,000 and a second
incentive payment amount of $200 per discharge for discharges 1,150--
23,000 during a 12-month period selected by the Secretary; (2) the
Medicare share; and (3) a transition factor. As discussed in the
preamble related to Sec. 495.104(c), for purposes of calculating
incentive payments to eligible hospitals under the Medicare FFS EHR
incentive program, we are proposing that the 12-month period be based
on the FFY. For the purpose of calculating incentive payments for
qualifying MA-affiliated eligible hospitals, we similarly are proposing
that the 12-month period be based on the FFY.
Section II.B. of this final rule discusses our methodology for
calculating the incentive payment for qualifying eligible hospitals
under the Medicare FFS EHR program. As set forth in Sec.
495.204(c)(2), we proposed to use the FFS EHR hospital incentive
program for purposes of calculating and making the incentive payment
for qualifying MA-affiliated hospitals. To the extent data are not
available to reimburse MA-affiliated hospitals through the FFS hospital
incentive program, we proposed to require submission of such data to us
and adopt the same definition of ``inpatient-bed-days'' and other terms
under the Medicare FFS EHR hospital incentive program specified in
Sec. 495.104 of this final rule. In such a case we proposed in Sec.
495.204(c)(1) to make payment for such MA-affiliated eligible hospitals
to the qualifying MA organization.
The formula for calculating the hospital incentive payment under
the Medicare FFS hospital incentive program is an initial amount of the
sum of the base amount of $2,000,000 per hospital plus an additional
$200 per discharge for discharges 1,150 through 23,000 for that
hospital in that payment year. This initial amount is then multiplied
by a transition factor and then again by the Medicare share. These last
two numbers are fractions and will tend to reduce the initial amount
computed in the first step.
Similar to the Medicare FFS EHR hospital incentive program, we
proposed to use inpatient-bed-day data, discharges, and other
components of the FFS calculation for each qualifying MA-affiliated
eligible hospital from the hospital-specific fiscal year that ends
during the FFY prior to the FFY that serves as the payment year. To the
extent such data are not already available to us through the normal
submission of hospital cost reporting data; we proposed requiring
qualifying MA organizations seeking reimbursement for their qualifying
MA-affiliated eligible hospitals to submit similar data.
We said we can only pay for qualifying MA-affiliated eligible
hospitals under common corporate governance based on inpatient-bed-days
computed on a fiscal year basis where less than one third of the
inpatient-bed-days of Medicare patients are covered under Medicare
FFS--Part A. However, it does not appear that reimbursement only under
the MA EHR incentive program is required for qualifying MA-affiliated
eligible hospitals that are under common corporate governance. Rather,
section 1853(m)(3)(B), of the Act only prohibits payment under the MA
EHR incentive program when Medicare hospital inpatient-bed-days covered
under Part A exceed 33 percent of all Medicare inpatient-bed-days.
Although eligibility under the MA EHR hospital incentive program is not
available to qualifying MA organizations for any specific hospital when
FFS inpatient-bed-days exceed 33 percent of the Medicare total, a
qualifying MA organization could be reimbursed through the Medicare FFS
EHR hospital incentive payment program for qualifying hospitals under
common corporate governance even for hospitals with very low ratios of
FFS to MA inpatient-bed days.
Given that the hospital incentive payment methodology and payment
amount will be identical under the Medicare FFS EHR incentive program
and the MA EHR incentive program, and given that there is no statutory
prohibition on reimbursing a qualifying MA-affiliated eligible hospital
through the Medicare FFS EHR incentive program, for purposes of
administrative efficiency, and pursuant to our authority

[[Page 44477]]

under section 1857(e) of the Act to add new ``appropriate'' contract
terms (incorporated for Part D by section 1860D-12(b)(3)(D) of the
Act), we proposed requiring that qualifying MA organizations receive
incentive payments for qualifying MA-affiliated eligible hospitals
through their affiliated hospitals under the Medicare FFS EHR incentive
program if they are eligible for such payments, rather than through the
MA EHR incentive program. We believe this is the most efficient way in
which to administer the MA EHR hospital incentive program in light of
the expected low volume of MA-affiliated eligible hospitals
(approximately 50 hospitals), and in light of preliminary data which
indicates that MA-affiliated eligible hospitals already submit Medicare
cost reporting data to us from which we can compute hospital incentive
payments due. To the extent sufficient data do not exist to make such
payments under the Medicare FFS EHR incentive program, qualifying MA
organizations will be required to submit additional data to us.
We did not receive any comments on these provisions and are
finalizing them as proposed.
To the extent payments are made to qualifying MA organizations for
qualifying MA EPs or qualifying MA-affiliated eligible hospitals, we
proposed to conduct selected compliance reviews to ensure that EPs and
eligible hospitals for which such organizations received incentive
payments were actually meaningful users of certified EHR technology, in
accordance with our existing authority in section 1857(d) of the Act
and 42 CFR 422.504 of the regulations related to protections against
fraud. The reviews would include validation of meaningful user
attestations, the status of the organization as a qualifying MA
organization, and verification of both meaningful use and data used to
calculate incentive payments. We proposed requiring MA organizations to
maintain evidence of compliance with all aspects of the MA EHR
incentive payment program for 10 years after the date payment is made
with respect to a given payment year. Payments that result from
incorrect or fraudulent attestations, cost data, or any other
submission required to establish eligibility or to qualify for a
payment, will be recouped by CMS from the MA organization.
We did not receive any comments on these provisions and are
finalizing them as proposed.
Finally, as we indicated above in section II.C.2. of this final
rule, we are modifying the regulation text at Sec. 495.204(b)(2) to be
consistent with the change to Sec. 495.202(b)(3), since final
identification in Sec. 495.202(b)(3) should occur at the same time as
final revenue reporting under Sec. 495.204(b)(2), in order to ensure
that calculations of payments due under the MA EP incentive payment
program can be finalized.
4. Timeframe for Payment
For payments to qualifying MA EPs, in Sec. 495.206 we proposed the
timeframe for payment to be after the Medicare FFS program computes
incentive payments due under the Medicare FFS EHR incentive program--so
the first possible incentive payments would be made sometime in early
2012. We proposed that payments for qualifying MA-affiliated eligible
hospitals under common corporate governance occur in the same manner
and in the same time frame as payments made under the Medicare FFS EHR
incentive program to ``subsection (d)'' hospitals as discussed in
section II.B.2.d. of this final rule.
We proposed to define ``payment year'' with respect to qualifying
MA EPs in Sec. 495.200. Section 1853(l)(3)(C) of the Act directs us to
establish the same first payment year for all EPs with respect to any
specific qualifying MA organization. Consistent with the statute, we
proposed to pay a qualifying MA organization on the same schedule for
all of its qualifying MA EPs. In other words, the first year during
which the qualifying MA organization receives an incentive payment for
its qualifying EPs will be considered the first payment year for all of
its qualifying EPs. Accordingly, for purposes of determining the
applicable incentive payment limits, the second, third, fourth, and
fifth years during which the qualifying MA organization receives an
incentive payment for its qualifying EPs will be considered the second,
third, fourth, and fifth payments years for each of its qualifying EPs,
regardless of whether the MA organization claimed an incentive payment
for a particular EP for a prior payment year. Such a consistent payment
cycle relative to qualifying MA organizations and qualifying MA EPs
obviates the need to track payment years and payment adjustment years
based on prior payments or adjustments with respect to any individual
qualifying MA EP. Rather, for purposes of payment years and payment
adjustment years, any EP employed by or partnering with any specific MA
organization will be on the same cycle with respect to that
organization.
We said that similar to the Medicare FFS EHR incentive program,
payment to qualifying MA organizations for qualifying MA EPs and
payment for qualifying MA-affiliated eligible hospitals is available
only for a finite number of years. As previously discussed in the
section on the calculation of MA incentive payments, above, a
qualifying MA organization can receive an incentive payment of up to
$18,000 for each of its qualifying MA EPs for its first payment year if
its first payment year is 2011 or 2012, or up to $15,000, if its first
payment year is 2013, or up to $12,000, if its first payment year is
2014. Note that, similar to the Medicare FFS EHR incentive program,
there would be no incentive payments made with respect to a year after
2016.
We proposed to define ``payment year'' with respect to qualifying
MA-affiliated eligible hospitals in Sec. 495.200. For incentive
payments for qualifying MA-affiliated eligible hospitals, the first
year for which an MA organization may claim payment is FY 2011. Similar
to the Medicare FFS EHR hospital incentive program, we proposed to use
the hospital inpatient bed-days data from the hospital FY that ends
during the FFY prior to the FY that serves as the payment year. For
qualifying MA-affiliated eligible hospitals, we proposed to compute
hospital EHR incentive payments due in the same manner as they are
being computed in the Medicare FFS hospital incentive payment program.
For qualifying MA-affiliated eligible hospitals for which the first
payment year is 2011 through 2013, up to 3 additional years of
incentive payments are available. For qualifying MA-affiliated eligible
hospitals for which the first payment year is after 2015, no EHR
payment incentive can be made for that year or any subsequent year.
Finally, for qualifying MA-affiliated eligible hospitals for which the
first payment year is 2014 or 2015, only 2 (or 1) additional year(s) of
hospital incentive payments will be available.
Unlike the fixed schedule for application of limitation on
incentive payments for MA EPs discussed previously in this section of
the final rule in which all employed/partnering MA EPs will be paid on
the same schedule (first payment year, second payment year, etc.) with
respect to any specific qualifying MA organization, we proposed to make
payments to MA organizations for MA-affiliated eligible hospitals on a
hospital specific basis. In other words, if a qualifying MA
organization has some MA-affiliated eligible hospitals with a first
payment year of FY 2011, it may have other MA-affiliated eligible
hospitals with a first payment year of FYs 2012 through 2015.
Comment: Two commenters said that payments to MA organizations will
be

[[Page 44478]]

delayed every year by an unspecified amount of time. The commenters
said that it was understood that CMS is charged by statute to avoid
making duplicate payments, however MA organizations should be paid
without unspecified delay. A suggested alternative by the commenters
was to permit MA organizations to attest that their MA EPs will not
seek any payment under the Medicare FFS Incentive Program.
Alternatively, the commenters suggested, CMS could use an installment
payment system (permitted under statute as stated) for MA
organizations. The commenters said that this would permit partial
payment until the resolution of the duplicate payment issue and would
avoid long delays in paying MA incentives.
Response: We do not agree that MA organization EHR incentive
payments are subject to ``unspecified delay.'' Rather, since MA
organizations will be paid for MA EPs only if such EPs were not paid
the maximum incentive payment under the FFS EHR incentive payment
program, and since final claims data will not be available until two
months after the close of the payment year--see Sec. 495.102(a)(2)--
CMS will not be able to compute MA EP payments until the FFS EHR
incentive payment program has completed its calculations. This will
occur in the early spring of the year after the close of a payment
year. Moreover, MA-affiliated eligible hospitals will receive EHR
incentive payments on the same schedule as other ``subpart (d)''
hospitals. Finally, note that MA EPs are free to leave qualifying MA
organizations at any time, and since EPs are also free to register for
eligibility under FFS Medicare or Medicaid EHR incentive payments, an
attestation by a qualifying MA organization would have little merit.
For these reasons we cannot accept the suggestion that qualifying MA
organizations receive interim or partial mid-year payments for MA EPs.
After consideration of the public comment received, we are
implementing these provisions as proposed.
5. Avoiding Duplicate Payment
We proposed duplicate payment avoidance provisions in Sec.
495.208. Section 1853(l)(3)(B) of the Act, as added by the HITECH Act,
is entitled ``Avoiding Duplication of Payments.'' Subclause (I) of
clause (i) of this paragraph of the Act states that to the extent an MA
EP is entitled to the maximum incentive payment under section
1848(o)(1)(A) of the Act, the Medicare FFS EHR incentive payment
program, such incentive payment will only be made under the Medicare
FFS EHR incentive program. Therefore, before payments can be made to
qualifying MA organizations for MA EPs, we must first determine if a
maximum incentive payment under the Medicare FFS program has been
previously earned by potential MA EPs. Under the Medicare FFS incentive
payment program, incentive payment calculations will not be completed
for the first payment year, 2011, until the early part of 2012.
Therefore, we said we would not be able to make payments to qualifying
MA organizations for MA EPs until claims submissions counted for
Medicare FFS incentive payments for CY 2011 have been closed, and
payment calculations for participating EP under the Medicare FFS EHR
incentive program have been completed. This will occur in the early
part of CY 2012. In the MA EHR incentive payment program we proposed to
follow the FFS EHR incentive payment program schedule--first computing
Medicare FFS incentive payments for EPs and then computing and paying
MA EP incentive payments, where appropriate--in all subsequent payment
years.
We went on to explain that subclause (II) of section
1853(l)(3)(B)(i) of the Act further states that to the extent an MA EP
is entitled to less than the maximum incentive payment under the
Medicare FFS EHR incentive program, that payment is to be made solely
under the MA provision. In other words, we will need to withhold
Medicare FFS incentive payments from EPs of less than the maximum to
the extent such professionals are also identified as MA EPs under
section 1853(l)(2) of the Act. Again, we would need to await the
computation of payments due EPs under the Medicare FFS EHR incentive
program before we can determine whether the EP is entitled to less than
the maximum payment amount under the Medicare FFS EHR program, in which
case any incentive payment for the EP will only be made to the
qualifying MA organization under the MA EHR program, and not to the EP
under the Medicare FFS EHR program.
We also said that section 1853(m)(3)(B) of the Act states that
incentive payments for qualifying MA-affiliated eligible hospitals are
to be made under either the Medicare FFS hospital incentive payment
program, or under the MA hospital incentive payment program. If more
than 33 percent of discharges or bed-days of all Medicare patients for
a year are covered under Part A, then payment for that year is to only
be made under section 1886(n) of the Act--the Medicare FFS EHR
incentive program--and no payment is to be made under the MA hospital
incentive payment program. Otherwise, to the extent less than 33
percent of bed days of all Medicare patients for an incentive payment
year are covered under Part A, then payment for that incentive payment
year may be made under the MA EHR incentive payment program.
Unlike the process we proposed to follow related to qualifying EPs
(where we will wait for the Medicare FFS incentive payment program to
compute eligible physician incentive payments due under that program
before determining the amount due under the MA EHR incentive program),
we would not need to rely on Medicare FFS EHR incentive payment program
calculations before determining eligibility for MA-affiliated hospital
incentive payments. We said we would reimburse all hospitals, including
MA-affiliated eligible hospitals, under the Medicare FFS hospital
incentive program. We believe that by doing so, we will prevent
duplicate payments being made for the same hospitals by Medicare FFS
and the MA incentive payment programs. To the extent that qualifying MA
organizations are to receive incentive payments through the MA program
rather than through their hospitals under the Medicare FFS EHR
incentive program due to a lack of sufficient data to make payments
under the FFS program, we would identify and reimburse only appropriate
qualifying MA organizations for qualifying MA-affiliated eligible
hospitals. Such reimbursement will be in a manner similar to the manner
in which the Medicare FFS EHR incentive program will reimburse eligible
hospitals due an incentive payment under the Medicare FFS EHR incentive
program.
Finally, we said that in order to avoid duplicate payments and in
accordance with section 1853(m)(3)(B)(ii)(II) of the Act, we will not
make MA EHR hospital incentive payments to qualifying MA organizations
for MA-affiliated eligible hospitals other than through the Medicare
FFS EHR hospital incentive payment program without first ensuring that
no such payments under the Medicare FFS EHR hospital incentive payments
were made.
We did not receive any comments on these provisions and are
finalizing them as proposed.
6. Meaningful User Attestation
We proposed meaningful user attestation requirements in Sec.
495.210. For each MA EP and MA-affiliated hospital for which a
qualified MA organization seeks an incentive

[[Page 44479]]

payment, the organization must attest, in a form and manner specified
by us, that its MA EPs and MA-affiliated eligible hospitals are
meaningful EHR users, as required by sections 1853(l)(6) and 1853(m)(1)
of the Act. We further proposed to adopt the definitions of meaningful
user under the Medicare FFS program related to EPs and eligible
hospitals in Sec. 495.4. We are requiring qualifying MA organizations
to attest each payment year whether each of its MA EPs and MA-
affiliated eligible hospitals for which it is seeking an incentive
payment was a meaningful EHR user for the EHR reporting period for a
payment year. A qualifying MA organization must make this attestation
for each payment year for which it is seeking an incentive payment for
MA EPs and MA-affiliated eligible hospitals. We believe attestations
should occur toward the end of a year with respect to that year, since
qualifying MA organizations will need to attest to, based on our
proposed rule, meaningful use for the appropriate duration and during
the appropriate period related to MA EPs and MA-affiliated eligible
hospitals before claiming incentive payments for them.
In the proposed rule we said that unlike the Medicare FFS EHR
incentive program, where we will require the reporting of clinical
quality measures--see Sec. 495.8--we will not require qualifying MA
organizations to submit clinical quality measures per section
1848(o)(2)(B) of the Act, with respect to EPs, and section
1886(n)(3)(B) of the Act, with respect to eligible hospitals.
Consistent with sections 1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) of
the Act, we note that qualifying MA organizations sponsoring
coordinated care MA plans are already required to submit Healthcare
Effectiveness Data and Information Set (HEDIS), Health Outcomes Survey
(HOS), and Consumer Assessment of Healthcare Providers and Systems
(CAHPS) measures per Sec. 422.152 and Sec. 422.516. Coordinated care
MA plans include HMO, PPO and RPPO (Regional PPO) plans. Beginning with
CY 2010, PFFS and MSA plans will also be required to begin collecting
and submitting administrative HEDIS measures.
We believe that all qualifying MA organizations will be
organizations offering MA coordinated care plans, and therefore; those
MA organizations from which we routinely receive complete HEDIS dataset
reporting. Pursuant to sections 1848(o)(2)(B)(iii) and
1886(n)(3)(B)(iii) of the Act, for clinical quality measures which
overlap between the existing MA quality reporting program and under the
EHR incentive program, we proposed to allow qualifying MA organizations
to continue reporting under the existing MA quality reporting program.
For those HITECH clinical quality measures that do not overlap and that
are appropriate for the MA program, we are considering requiring that
qualifying MA organizations that receive an incentive payment report
those measures to CMS. This would ensure that clinical quality measure
reporting under HITECH is consistent between the FFS program and MA. An
alternative approach would be to require that qualifying MA
organizations that receive an incentive payment report all of the
HITECH clinical quality measures under section II.A.2 of this final
rule that are appropriate for the MA program directly to CMS, while
also reporting those HEDIS, HOS, and CAHPS measures under the existing
MA quality program. This may result in duplicative reporting under the
HITECH program and current MA quality reporting, but may provide us
with more direct access to quality data under the HITECH program. We
invite public comment on these approaches, including alternative
methods to consistently treat MA-affiliated providers and FFS providers
under the HITECH Medicare incentive program.
Comment: The meaningful use criteria make reference to checking
eligibility electronically and submitting claims electronically for 80
percent of patients seen. This would not be possible for us because,
for most of our visits, there is no insurance company with which to
check, and there is no eligibility to submit claims to. We are a
capitated system and for most of the patient visits, the concept of
checking eligibility and submitting claims in not relevant.
Response: This comment points out the difficulty in adopting FFS
Medicare meaningful use measures for qualifying MA organizations, MA-
affiliated hospitals and MA EPs. For purposes of determining meaningful
use in a Medicare Advantage environment, we agree that submitting
claims electronically is not a useful standard in a capitated
environment where virtually all patients are members of the same
insurance plan.
Comment: One commenter said that given the sensitivity of the data,
and the RHQDAPU program specifications, the commenter believes CMS
should never request that hospitals submit patient-level data to CMS,
but that the data submitted should always be at the aggregated, summary
level. The commenter encouraged us to state specifically that this is
its intention in FY 2012 and all future years of EHR incentive program
reporting. Some other commenters said that their health care delivery
systems were based on an integrated care delivery model, where
coordination of care is supported through program-wide EHR
implementation that enables a patient's medical record to be shared
among the members of the patient's care team. The commenters said they
believed patient-centric electronic medical record models that
integrate clinical information across providers align with goals of
ONC's Strategic Plan and reform efforts that seek to enable more
patient-centric integration of care. The commenters said that during
any given reporting period under the EHR incentive payment program,
patients may receive health care services from various providers (for
example, the primary care physician, one or more specialists, nurse
practitioners, etc.). The commenters said they had adopted program-wide
policies and procedures for using their EHR system to promote
coordinated delivery of care. Thus, the commenters said they intended
to use their EHR system to support the functionality and care delivery
criteria of meaningful use for all providers across their
organizations. Within their organizations, they said, a single provider
is never solely responsible for all the information in a given
patient's electronic medical record. In fact, they said, many providers
may access the patient's electronic record to view or add information,
order tests or medications, review results, etc. They said the shared
record makes it extremely difficult to reliably track all the
meaningful use criteria to each EP in their organizations without
adding additional administrative functionality to their systems that
would do nothing to improve patient care. It would be inappropriate and
not the intent of the EHR incentive payment program, they said they
believed, to add unnecessary redundancy in care delivery (that is,
providers re-entering correct demographic information to get ``credit''
for that measure). They said they intended to participate in the EHR
incentive payment program under provisions for Medicare Advantage
organizations. They went on to say that since the proposed rule states,
``the qualifying MA organization must attest to the fact that each MA
EP is a meaningful user of certified EHR technology * * *, '' they
believed such attestation can be based on measuring criteria at a MA
organizational level. While they acknowledged that meeting basic
eligibility criteria is appropriate on an individual provider level
(that is,

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the MA EP must meet the same definition for EP under FFS, satisfy
minimum hours per week delivering patient care services, not be
hospital-based, etc.), they said they should be able to meet meaningful
use criteria as a MA organization on behalf of all of their individual
EPs, so long as they are able to demonstrate that their EHR system
itself meets the criteria and its use is pervasive and consistent
throughout their healthcare delivery sites. They recommended that where
a patient's electronic medical record is shared among a team of
providers within a MA organization, the meaningful use criteria be
measured on an organizational versus an individual provider level. As
an alternative they proposed that for any provider who treats a given
patient, if the criterion is met in that patient's electronic record,
all EPs who are members of the patient's care delivery team would
receive ``credit'' for meeting that measure.
Response: We agree with the commenters in large part. We believe
that continued reporting by qualifying MA organizations under the HEDIS
program is the most appropriate way to protect personally identifiable
patient information. We also believe that in integrated care delivery
systems, it does not make sense to require specific individuals to
enter specific data in order to obtain meaningful user status--
especially in a Medicare Advantage environment where we will require
only continued HEDIS reporting as a demonstration of meaningful use.
Finally, we believe that reporting of clinical quality measures at the
MA organization level is the most effective and appropriate means of
attaining the ultimate goal of EHR adoption--improved patient outcomes
and reduced healthcare costs.
Comment: Some commenters said that the proposed rule states that,
``unlike the Medicare FFS EHR Incentive Program, where we will require
the reporting of clinical quality measures * * * we will not require
qualifying MA organizations to submit clinical quality measures * * *
with respect to EPs * * * and with respect to eligible hospitals * * *.
[W]e note that qualifying MA organizations sponsoring coordinated care
plans are already required to submit Healthcare Effectiveness Data and
Information Set (``HEDIS''), Health Outcomes Survey (``HOS''), and
Consumer Assessment of Healthcare Providers and Systems (``CAHPS'')
measures.'' The proposed rule suggests allowing MA organizations to
continue reporting these measures, but also considers requiring that MA
organizations report those HITECH clinical quality measures that do not
overlap with these currently reported measures ``and are appropriate
for the MA program.'' We believe this current reporting is both
appropriate and sufficient to measure the clinical quality of MA
programs and should be deemed to satisfy the clinical quality reporting
requirements under the EHR incentive payment program. HEDIS, HOS and
CAHPS reporting are well-established and subject to audit. The measures
are specifically chosen to capture quality within MA organizations, in
particular to measure the clinical quality of the team approach we use
to deliver care. While we support consistency across the EHR incentive
payment program, we are concerned that requiring MA organizations to
create new mechanisms for this additional reporting would be unduly
burdensome, especially if these additional measures would have to be
reported at the individual provider or patient level. Another commenter
said that their considerable experience with developing responses for
new measures demonstrated how resource and labor intensive clinical
quality measurement can be. For example, the commenter continued,
during a recent effort to automate ten TJC (The Joint Commission)
measures, we identified 87 data elements, only 37 of which are captured
as discrete data. Of the remaining 50 measures, some are captured using
discrete data in different places in the EHR, and some are captured
using free text (for example, clinical trials and other irregular
exclusion criteria) and will require the creation of new documentation
tools. We estimate it will take one to two years of work for these ten
measures to be fully automated, despite our relatively sophisticated
use of data warehousing tools and our high level of automation in the
data management process. The burden is especially heavy when
measurement elements are ill-defined. Under meaningful use clinical
quality reporting, over 120 measures have been proposed. Of these, 94
would be measures not currently calculated or reported on a routine
basis. We anticipate a considerable increase in workload to create and
maintain these measures. Adding new and duplicate--possibly less
reliable--measures and reporting systems will be costly, time-consuming
and may not have an incrementally significant impact on improving
patient care. While we are not opposed to new metrics (those without
similar known specifications), such measures should be field tested
prior to becoming requirements; in particular, subject to rigorous
testing of the electronic specifications. Such measures should also be
supported by robust clinical evidence to show they will impact clinical
outcomes. MA organizations should be deemed to have satisfied all
clinical quality reporting required in the EHR incentive payment
program by meeting their current reporting requirements. If additional
measures are required, we recommend staged adoption, beginning with
those measures that MA organizations already report or can report in
the near future. We recommend eliminating measures that have little or
no evidence to link them to improved outcomes. Overall, we strongly
recommend that CMS significantly reduce the overall number of clinical
quality measures that would be required for meaningful use.
Response: We agree with the commenters and believe that HEDIS, HOS
and CAHPS are the appropriate means of reporting measures for both MA
EPs and MA-affiliated hospitals. Where appropriate we will consider
adding elements to these already existing quality reporting programs.
We will consider adding HEDIS elements over time, as experience and
clinical data warrant.
Comment: One commenter said one of the five priorities specified by
CMS is to improve care coordination. However, the siloed nature of the
incentive payments, lack of a robust set of care coordination measures,
and the narrow definition of eligible professionals do not fully
support this priority. The commenter also said that the current
structure of the proposed incentive program, as required by statute,
maintains the current siloed structure of Medicare and Medicaid
payments. The selected functionality and quality measures in large part
do the same. However, this siloed structure does not support or
encourage integrated coordinated care across providers and settings. As
greater attention is paid to improving care coordination and the
quality of care through integrated care models (for example,
accountable care organizations, patient-centered medical homes),
greater attention should be given to selecting measures that focus on
patient-centered episodes of care. Furthermore, consideration should be
given to refining the incentive payment structure to foster integration
and accountability among and across providers and settings.
Response: We believe that HEDIS reporting and other existing
quality reporting programs (that is, HOS and CAHPS) go a long way
toward assuring that coordination and integration of care will continue
to occur in the Medicare Advantage environment. One of the

[[Page 44481]]

purposes of EHR adoption is to facilitate the coordination of care in
health care environments where care coordination is not currently
perceived to occur. We are asking providers to pick a program through
which they are most likely to be eligible for EHR incentive payments.
For MA organizations that treat Medicare, Medicaid and dually-eligible
patients, EHR incentive payments will be made only under one program
(Medicare or Medicaid) with respect to any specific EP. However care
coordination should occur regardless of health insurance or EHR
incentive payer. After consideration of the public comments received we
are not changing our proposed policy to allow qualifying MA
organizations to establish meaningful use through attestation and to
demonstrate meaningful use through continued HEDIS reporting.
Finally, we proposed requiring qualifying MA organizations to
submit attestations to us related to meaningful use by MA-affiliated
hospitals within 30 days of the close of the FFY--which is the payment
year for MA-affiliated hospitals--by October 30. We also proposed
requiring qualifying MA organization to submit attestations to us
related to meaningful use by MA EPs within 30 days of the close of the
MA EP payment year--which is a CY--by January 30. In this final rule we
are modifying the regulation text at Sec. 495.210(b) and (c) to be
consistent with the changes to Sec. 495.204(b)(2) and Sec.
495.202(b)(3), since the deadline for attestations of meaningful use
should be consistent with deadlines for revenue reporting for MA EPs,
and final identification of MA EPs and MA-affiliated hospitals. We are
extending the timeframe for reporting meaningful use to 60 days after
the close of the payment year.
7. Posting Information on the CMS Web Site
In the proposed rule we said that sections 1853(l)(7) and
1853(m)(5) of the Act require us to post information on an Internet Web
site related to the receipt of incentive payments under the MA EHR
incentive program. We said posted information would include the names,
business addresses, and business phone numbers of each qualifying MA
organization receiving an incentive payment under this section for
qualifying MA EPs and hospitals. A list of the names of each qualifying
MA EP and qualifying MA-affiliated eligible hospital for which an
incentive payment has been made would also be posted. Since this
requirement is applicable to other Medicare EPs and eligible hospitals,
we have included this requirement in Sec. 495.108.
We did not receive any comments on these provisions and are
finalizing them as proposed.
8. Limitation on Review
In the proposed rule we said that section 1853(l)(8) of the Act
states that there shall be no administrative or judicial review under
section 1869 of the Act, section 1878 of the Act, or otherwise of the
methodology and standards for determining payment amounts and payment
adjustments under the MA EHR EP incentive program. We said this
includes provisions related to duplication of payment avoidance and
rules developed related to the fixed schedule for application of
limitation on incentive payments for all qualifying MA EPs related to a
specific qualifying MA organization. This also includes the methodology
and standards developed for determining qualifying MA EPs and the
methodology and standards for determining a meaningful EHR user,
including the means of demonstrating meaningful use and the selection
of measures. We proposed to codify these requirements in Sec.
495.212(b).
Section 1853(m)(6) of the Act, as added by the HITECH Act, states
that there shall be no administrative or judicial review under section
1869, section 1878, or otherwise of the methodology and standards for
determining payment amounts and payment adjustments under the MA EHR
hospital incentive program. This includes provisions related to
duplication of payment. This also includes the methodology and
standards developed for determining qualifying MA hospitals and the
methodology and standards for determining a meaningful EHR user,
including the means of demonstrating meaningful use and the selection
of measures. We proposed to codify these requirements in Sec.
495.212(c).
We did not receive any comments on these provisions and are
finalizing them as proposed.
9. Conforming Changes
In the proposed rule we said that sections 4101(e) and 4201(d)(2)
and (3) of the HITECH Act provide conforming amendments to Part C of
the Social Security Act. Therefore, we proposed the following
conforming changes to the regulations text:
Revising Sec. 422.304 by adding a new paragraph (f) to
account for the amendment to section 1853(a)(1)(A) of the Act
referencing the additional EHR incentive payments that may be made to
qualifying MA organizations in the section of the statute that provides
for monthly capitation payments to MA organizations. (This addition
would also act as a cross-reference to MA EHR incentive payment rules
in subpart C of part 495 of this chapter.)
Revising Sec. 422.306(b)(2) by adding a new paragraph
(iv) to address the amendments to section 1853(c)(1)(D)(i) of the Act
which exclude the EHR incentive payments made to EPs and hospitals
under the Medicare FFS program from the computation of FFS costs in a
year for the purpose of computing MA monthly capitation amounts.
Revising Sec. 422.308 by adding a new paragraph (a)(1) to
address the amendments to section 1853(c)(1)(D)(1) and (c)(6)(A) of the
Act regarding the exclusion of FFS Medicare EHR incentive payments and
adjustments from the calculation of the national per capita growth
percentage.
Revising Sec. 422.322 by adding a new paragraph (a)(3) to
account for the amendments to section 1853(c)(6)(A) and (f) of the Act
specifying that the source of EHR incentive payments to qualifying MA
organizations are from the Federal Hospital Insurance Trust Fund or the
Supplementary Medical Insurance Trust Fund.
Revising Sec. 422.322(b) by adding a reference to Sec.
495.204 to address the amendment to section 1851(i)(1) of the Act that
indicates that EHR incentive payments are instead of incentive payments
that would otherwise be payable under original Medicare.
We did not receive any comments on these provisions and are
finalizing them as proposed.
10. Payment Adjustment and Future Rulemaking
In the proposed rule we said that in future rulemaking we will
develop standards related to payment adjustments to qualifying MA
organizations related to MA EPs and MA-affiliated eligible hospitals
that are not meaningful users of certified EHR technology. We solicited
comment on how we can most effectively and efficiently apply payment
adjustments to qualifying MA organizations whose MA eligible EPs and
hospitals have not successfully meaningfully used certified EHR
technology.
The statutory requirement related to imposition of payment
adjustments with respect to MA EPs is set forth in section 1853(l) of
the Act. Specifically, section 1853(l)(4) of the Act requires that
instead of applying the payment adjustment in section 1848(a)(7) of the
Act, we apply the payment adjustment

[[Page 44482]]

to the Medicare physician expenditure proportion. This is our estimate
of the proportion of the expenditures under Parts A and B paid to the
qualifying MA organization in the form of capitation payments under
section 1853 of the Act that are not attributable to the EHR incentive
payment program, that are attributable to expenditures for physician
services. In the case of a qualifying MA organization that attests that
not all MA EPs of the organization are meaningful EHR users with
respect to years beginning with 2015, we are directed to apply the
payment adjustment on the proportion of the capitation payment with
respect to all such EPs of the organization that are not meaningful
users for such year. The adjustment amount is 1 percent for 2015, 2
percent in 2016, and 3 percent in 2017 and subsequent years.
Comment: Two commenters said that the EHR Incentive Program (the
Medicare component) is limited to providers who bill for Part B covered
services under traditional FFS Medicare or for MA organizations that
provide equivalent services to MA beneficiaries. In addition to
incentive payments, the program will impose penalties on providers who
do not adopt technology and meet criteria for meaningful use of
electronic health records; those penalties will be in the form of
percentage reductions in Medicare reimbursements, beginning in 2016.
Medicare section 1876 (of the Act) cost contract programs by statute
are not eligible for the EHR Incentive Program. The proposed rule does
not expressly state whether physicians paid under a cost plan will be
required to meet meaningful use criteria to avoid the payment
adjustments that will take effect after 2015. CMS should clearly state
that those providers who are not eligible to participate in the EHR
Incentive Program will not be subject to reductions in payment for not
achieving meaningful use, for instance any providers reimbursed under
Medicare cost contract arrangements.
Response: While it is true that current statute applies payment
adjustments beginning in 2015 only to FFS and MA providers, it is also
true that cost plan providers might provide either FFS or MA services
to which adjustments would apply. So, while it is true that cost plan
payments are unaffected, a blanket statement that cost plan providers
are unaffected is not possible.
The statutory requirement related to imposition of payment
adjustments with respect to MA-affiliated eligible hospitals is
provided in section 1853(m) of the Act. Specifically, section
1853(m)(4) of the Act requires us to apply the adjustment to the
hospital expenditure proportion, which is our estimate of the
proportion of the expenditures under Parts A and B paid to the
qualifying MA organization in the form of capitation payments under
section 1853 of the Act that are not attributable to the EHR incentive
payment program, that are attributable to expenditures for inpatient
hospital services. In the case of a qualifying MA organization that
attests that not all MA-affiliated eligible hospitals of the
organization are meaningful EHR users with respect to years beginning
with 2015, we are directed to apply the payment adjustment on the
proportion of all such MA-affiliated eligible hospitals of the
organization that are not meaningful users for such year. The
adjustment amount is of three-fourths of the market basket increase
related to a hospital by a 33\1/3\ percent reduction in 2015, by a
66\2/3\ percent reduction in 2016, and by a 100 percent reduction in
2017 and all subsequent years. Effectively, the reduction is of all but
25 percent of the market basket increase for a specific hospital in
years after 2016.
We received no additional comments.

D. Medicaid Incentives

1. Overview of Health Information Technology in Medicaid
Under the HITECH Act, State Medicaid programs, at their option, may
receive Federal financial participation (FFP) for expenditures for
incentive payments to certain Medicaid providers to adopt, implement,
upgrade, and meaningfully use certified EHR technology. Additionally,
FFP is available to States for reasonable administrative expenses
related to administration of those incentive payments as long as the
State meets certain conditions. Section 1903(a)(3)(F)(i) of the Act, as
amended by section 4201 of the HITECH Act, establishes 100 percent FFP
to States for providing incentive payments to eligible Medicaid
providers (described in section 1903(t)(2) of the Act) to adopt,
implement, upgrade, and meaningfully use certified EHR technology. The
incentive payments are not direct reimbursement for the purchase and
acquisition of such technology, but rather are intended to serve as
incentives for EPs and eligible hospitals to adopt and meaningfully use
certified EHR technology.
Section 1903(a)(3)(F)(ii) of the Act, as amended by section 4201 of
the HITECH Act, also establishes 90 percent FFP to States for
administrative expenses related to carrying out the substantive
requirements associated with the incentive payments.
Finally, as required by section 1903(t)(10) of the Act, CMS will be
reporting to Congress on the status, progress, and oversight of the
overall EHR incentive program. These reports will discuss steps taken
to avoid duplicate Medicare and Medicaid incentive payments to EPs, the
extent to which Medicaid EPs and hospitals have adopted certified EHR
technology as a result of the incentive payments, and any improvements
in health outcomes, clinical quality, or efficiency resulting from the
adoption of such technology.
Comment: A commenter requested additional discussion in the final
rule of the many challenges that exist to adopting electronic health
record technology experienced by the Medicaid Transformation Grantees.
Response: The primary challenges faced by the Medicaid
Transformation Grantees involved assisting providers to adopt the EHRs
and to successfully integrate utilization of the EHRs into their
practice workflow. Workflow redesign is unique to each practice based
upon practice size, clinical specialty area, practice operation (for
example, medical home teams or specialty care) and the providers'
hardware and software. In addition, Grantees reported that providers
value the EHRs only in so far as the patient data in the EHR is timely
and complete. Therefore lagging data feeds or gaps in data from certain
sources, such as labs or Part D claims for dual eligibles, were
observed to discourage providers from investing their time and effort
into learning how to use the EHRs. Many Grantees noted that early
negative experiences with workflow or with timely and accurate access
to relevant data discouraged providers from using the system. They
reported needing to dedicate significant time and resources to provider
outreach, technical assistance and training. Some Grantees focused on
identifying or developing the right EHR product only to conclude
afterwards that their focus needed to be equally, if not more, on
supporting their providers' use of the EHR, including fostering health
information exchange through interface development. In summary, the
Medicaid Transformation Grantees affirmed that the barriers faced by
Medicaid providers to EHR adoption and use were not unique to Medicaid.
There were several challenges to HIT/EHR implementation that were
specific to Medicaid programs that may be useful for States in light of
HITECH. These include, integration of HIT into the State Medicaid
Management Information System (MMIS); churning

[[Page 44483]]

of Medicaid patients on/off Medicaid eligibility; issues of consent
with patients with diminished capacity, children and their parents and
caregivers, and foster children/wards of the State; costs associated
with transaction fees for pharmacy hubs on a statewide scale; and how
to calculate return on investment and quality outcomes as a result of
HIT programs that are running concurrent with other quality initiatives
with the same goals, such as the medical home model, disease
management/care coordination and provider pay-for-performance.
While this information is valuable in terms of understanding and
addressing the challenges to EHR adoption, we continue to believe that
the benefits of meaningful use of EHRs far outweigh the implementation
challenges.
2. General Medicaid Provisions
In Sec. 495.320 and Sec. 495.322 we provide the general rule that
States, at their option, may receive: (1) 90 percent FFP for State
expenditures related to the administration of an EHR incentive program
for certain Medicaid providers that are adopting, implementing, or
upgrading and meaningfully using certified EHR technology; and (2) 100
percent FFP for State expenditures for those incentive payments.
We did not receive any comments and we are finalizing these
provisions as proposed.
3. Identification of Qualifying Medicaid EPs and Eligible Hospitals
a. Overview
As specified in section 1903(t)(2) of the Act, only certain
Medicaid providers will be eligible for incentive payments. This
section discusses some of these eligibility requirements, including
requirements relating to patient volume, whether a provider is
hospital-based, and whether an EP is practicing predominantly in a
federally-qualified health center (FQHC) or a rural health clinic
(RHC). Regulations relating to these requirements may be found at Sec.
495.304 through Sec. 495.306.
b. Program Participation
As specified under section 1903(t)(2)(A) of the Act, Medicaid
participating providers who wish to receive a Medicaid incentive
payment must meet the definition of a ``Medicaid EP.'' This definition
(1903(t)(3)(B) of the Act) lists five types of Medicaid professionals:
Physicians, dentists, certified nurse-midwives, nurse practitioners,
and physician assistants practicing in an FQHC or RHC that is so led by
a physician assistant.
Additionally, to qualify for incentives, most Medicaid EPs cannot
be ``hospital-based.'' We will use the same definition of ``hospital-
based'' as used in the Medicare EHR incentive program, as sections
1848(o)(1)(C) and 1903(t)(3)(D) of the Act use almost identical
definitions of the term. We refer readers to section II.A. for a
definition of ``hospital-based,'' and for a thorough discussion of our
methodology.
The only exception to this rule is that Medicaid EPs practicing
predominantly in an FQHC or RHC are not subject to the hospital-based
exclusion.
Medicaid EPs must also meet the other criteria for Medicaid
incentive payment eligibility, such as the patient volume thresholds or
practicing predominantly in an FQHC or RHC, as described in this
subpart. Since the statute at 1903(t)(2)(A)(iii) of the Act does not
define ``practices predominantly,'' we specify that an EP practices
predominantly at an FQHC or an RHC when the clinical location for over
50 percent of his or her total patient encounters over a period of 6
months occurs at an FQHC or RHC.
Acute care and children's hospitals are listed in section
1903(t)(2) of the Act as the only two types of institutional providers
potentially eligible for Medicaid incentive payments. These terms are
specific to the Medicaid EHR incentive program and are not currently
defined in the Medicaid regulations. Consequently, we define these
terms in Sec. 495.302.
As specified under section 1903(t)(2)(B) of the Act, to qualify for
incentive payments acute care hospitals also must meet patient volume
threshold requirements, as specified in Sec. 495.306. Children's
hospitals do not have patient volume requirements for Medicaid
incentive program participation.
Comment: Commenters expressed confusion about the restrictions on
physician assistants' (PAs) participation. Numerous commenters
suggested that PAs should be eligible without conditions, particularly
the condition that they are practicing in an FQHC or RHC that is ``so
led by a physician assistant'' and/or CMS should exercise flexibility
in defining ``so led,'' in order to capture the highest number of PAs.
We received specific comments on how to define ``so led'' to provide
the greatest flexibility to PAs. Suggestions included allowing clinics
under a larger FQHC to be led by a PA, but not necessarily the entire
FQHC. Also, commenters asked that we consider ``led'' to mean the
dominant clinical provider, which is the case for PAs in many RHCs.
Response: As stated in the statute at 1903(t)(3)(B)(v), regarding
the program eligibility for PAs, PAs are eligible when they are a
``physician assistant insofar as the assistant is practicing in a rural
health clinic that is led by a physician assistant or is practicing in
a Federally qualified health center that is so led.'' These conditions
on PAs' eligibility apply whether the PA is qualifying because they
meet Medicaid patient volume requirements or if they are qualifying
because they practice predominantly in an FQHC or RHC. Since this
language requiring that a PA must be leading the FQHC or RHC is derived
from statute, we have no flexibility to change or remove it.
However, we agree that we have the authority to interpret what it
means for a PA to lead an FQHC or RHC, and we believe a PA would be
leading an FQHC or RHC under any of the following circumstances:
(1) When a PA is the primary provider in a clinic (for example,
when there is a part-time physician and full-time PA, we would consider
the PA as the primary provider);
(2) When a PA is a clinical or medical director at a clinical site
of practice; or
(3) When a PA is an owner of an RHC.
We agree that FQHCs and RHCs that have PAs in these leadership
roles can be considered ``PA-led.'' Furthermore, since RHCs can be
practitioner owned (FQHCs cannot), we will allow ownership to be
considered ``PA-led.''
With the exception of this clarification of PA-led, we are adopting
this language as proposed. We have not changed our regulatory language,
as we consider this clarification to be an interpretation of our
regulations as to what it means to be a PA to be leading an FQHC or
RHC.
Comment: We received questions about eligibility related to FQHC
look-alikes, tribal clinics, and other similar facilities.
Response: As previously mentioned, in accordance with section
1903(t)(2)(B), the only two facilities eligible for incentives are
acute care and children's hospitals. However, EPs at facilities such as
FQHCs, RHCs, and tribal clinics may be eligible for participation when
they practice predominantly at an FQHC or RHC or meet the other patient
volume requirements. The statute defines FQHCs at 1905(l)(2)(B) and
defines RHCs at 1905(l)(1) by essentially incorporating the definition
in 1861(aa).
Comment: Numerous commenters opposed the proposed definition for
``hospital-based.''
Response: This is a consideration for Medicare and Medicaid and is
addressed in II.A.

[[Page 44484]]

After consideration of the public comments received, we are making
changes under II.A.
(1) Acute Care Hospitals
For purposes of Medicaid incentive payments, we proposed to define
an ``acute care hospital'' as a health care facility where the average
length of patient stay is 25 days or fewer and with a CCN that has the
last four digits in the series 0001 through 0879 (that is, short-term
general hospitals and the 11 cancer hospitals in the United States).
We excluded from this proposed definition a category of long-term
care hospitals, which are defined for Medicare purposes in regulations
at Sec. 412.23(e). Specifically Sec. 412.23(e)(2)(i) states that the
hospital must have an average Medicare inpatient length of stay of
greater than 25 days (which includes all covered and non-covered days
of stay of Medicare patients).
Comment: We received numerous comments recommending that CAHs be
included in the definition of acute care hospitals for purposes of the
Medicaid EHR incentive payment program. Commenters pointed out that the
CAHs would qualify on all criteria except for the requirement to have a
CCN in the range 0001-0879. CAHs have CCNs in the range 1300-1399.
Moreover, many commenters pointed out that, because of their rural
location and distance from other hospitals to which they frequently
transfer patients, the CAHs would benefit from having electronic
records that could be shared with the subsequent provider of care to
the patient. Commenters also asked what reimbursement methodology CMS
would use if it decided to include CAHs in the Medicaid incentive
payment program.
Response: We agree with the commenters that CAHs conform to our
definitional criteria for acute care hospital except for the CCN range.
Moreover, we recognize the positive impact on quality that may ensue
from the CAH's being able to electronically communicate with the
hospitals to which it transfers patients. Therefore, in the final rule,
we are amending the definition of acute care hospital for purposes of
the Medicaid EHR incentive payment program as ``those hospitals with an
average patient length of stay of 25 days or fewer, and with a CCN that
falls in the range 0001-0879 or 1300-1399.'' This definition will now
encompass general short-term hospitals, cancer hospitals, and critical
access hospitals that meet the Medicaid patient volume criteria. Since
we are including CAHs under the category of ``acute care hospital,'' we
are not developing a separate Medicaid incentive payment calculation
for CAHs. States will pay the incentive payment to qualifying CAHs
using the acute care methodology described at section 495.310(g). In
summary, CAHs will be eligible for the Medicaid hospital incentive
insofar as they meet the requirements under an acute care hospital
described here. While the statute issued specific calculation
requirements for CAHs under Medicare, there is no special Medicaid
calculation. Like other acute care hospitals, some CAHs may be eligible
for Medicare and Medicaid incentives.
We will reflect this definitional change in the final regulation at
section 495.302.
Comment: Further guidance was requested on the determination of
average length of stay. Commenters questioned whether the average
length of stay should be calculated relative to the fiscal year prior
to the payment year or relative to the calendar year prior to the
payment year. Commenters also questioned whether outliers in terms of
extremely long length of stay could be left out of the calculation, and
if so, could CMS provide detail on this and any similar exclusions; for
example, other exclusions with respect to observation stays.
Response: After consideration of these comments, we believe the
best policy is to allow the States to decide whether they will use a
fiscal year or calendar year for calculating length of stay, as the
State will be in the best position to determine what documentation
exists in order to support any length of stay calculation. With respect
to outliers, we point readers to the State Operations Manual, page 303,
Revision 57, dated January 29, 2010 and we note that these long (and
short) stay outliers are included in average length of stay
calculations for other purposes, such as reporting statistics to
States, Medicare, and other payers. We do not find a basis for
excluding outliers from the average length of stay for purposes of the
incentive payment. In fact, since acute care hospitals have CCNs in
either the 0001-0879 or the 1300-1399 range, and length of stay is one
of the definitional criteria for CCNs in these ranges, all of the acute
care hospitals are very likely to meet length of stay criteria.
Observation stays are considered to be outpatient services and,
therefore, cannot be included in average length of stay calculations.
This is consistent with the treatment of observation days under
Medicare.
In summary we are making no revisions to the regulation as a result
of this comment.
(2) Children's Hospitals
For purposes of the Medicaid EHR incentive program, in the proposed
rule, we proposed one definition to include only separately certified
children's hospitals, with CCNs in the 3300-3399 series in the
definition of eligible ``children's hospital.'' By defining
``children's hospital'' in this way, we: (1) Prevented general acute
care hospitals, which could not themselves qualify for the incentive
because they did not meet the 10 percent Medicaid patient volume, from
using the fact that they have a pediatric wing as justification for
requesting a Medicaid incentive payment; (2) excluded many of the
facilities that are perceived by the public as children's hospitals,
but do not meet the Medicare standards as either freestanding or
hospital-within-hospital children's hospitals; and (3) excluded some
pediatric specialty hospitals which have CCNs as psychiatric or
rehabilitation hospitals.
An alternative definition of a ``children's hospital'' was also
proposed to include those hospitals with Medicare provider numbers in
the following series:
0001 through 0879--Short-term (General and Specialty)
Hospitals.
3025 through 3099--Rehabilitation Hospitals (Excluded from
Prospective Payment Systems).
3300 through 3399--Children's Hospitals (Excluded from
Prospective Payment Systems).
4000 through 4499--Psychiatric Hospitals (Excluded from
Prospective Payment Systems).
This definition, for the purposes of the Medicaid HIT incentive
payments, applied only to those freestanding hospitals within the above
mentioned series that exclusively furnish services to individuals under
age 21.
This broader definition still: (1) Prevented acute care hospitals
that cannot independently qualify for the incentive because they do not
meet the 10 percent Medicaid patient volume from using the fact that
they have a pediatric wing as justification for requesting an HIT
incentive payment; (2) allowed for participation in the incentive
program by the greatest number of children's hospitals, including
rehabilitative and psychiatric specialty hospitals; and (3) aligned
with Federal efforts aimed at improving healthcare quality for all
children, including those with physical and mental diseases/
disabilities.
Comment: CMS received several comments on this issue. Specifically,
the commenters stated that the proposed rule limited the definition of
children's

[[Page 44485]]

hospitals to those that provide care to individuals under the age of
21; the commenters stated that children's hospitals actually may
provide care to older individuals who have conditions such as
congenital cardiac problems, sickle cell disease and cystic fibrosis.
Response: We agree with the commenters that children's hospitals do
on occasion treat patients who are over the age of 21, especially if
the patient is on a continued course of treatment for a condition that
began in childhood, such as those conditions mentioned. Accordingly, in
the proposed rule published on January 13, 2010 at section 495.302, we
defined a children's hospital for purposes of the HIT incentive payment
program as a hospital that is separately certified as a children's
hospital, with a CCN in the 3300-3399 series and predominantly treats
individuals under the age of 21. We used the term ``predominantly'' to
recognize that not all patients of the children's hospital are in fact
under age 21.
This definition addresses the commenters' concerns and we are not
revising it in the final rule. The commenter's may have been responding
to the alternate definition in which we requested comments. While that
alternate definition mentioned specialty hospitals that exclusively
treat individuals under the age of 21, we are not adopting that
definition in this final rule, as noted in the response to the comment
below.
Comment: CMS also received a few comments that supported our
proposed definition of children's hospital as those that are separately
certified and predominantly treating individuals under 21 years of age.
The commenters urged us to adopt this definition rather than the
alternate definition discussed in the proposed rule and on which we
requested comments.
Response: We agree with the commenters and are adopting the
definition that we originally proposed at section 495.302. See the
response to the comment below.
Comment: CMS received one comment that recommended use of the
alternative definition as providing more opportunity for hospital
participation.
Response: We considered the merits of both definitions and we have
decided to maintain the definition originally proposed in section
495.302 as representing the clearest definition of a children's
hospital. As previously stated, we only intend to include children's
hospitals with CCNs within a specific range; this will not include
pediatric wings of larger hospitals.
In summary, after considering the comments, we are adopting the
definition of children's hospital as originally proposed.
c. Medicaid Professionals Program Eligibility
For Medicaid EPs, the general rule (subject to the two exceptions
listed below) is that the EP must have at least 30 percent patient
volume attributable to those who are receiving Medicaid. Section
1903(t)(2)(A)(i) of the Act provides authority to the Secretary to
establish the methodology by which such patient volume will be
estimated; our proposed methodologies which follow, are based on this
discretion. To establish such patient volume, we proposed that the EP
have a minimum of 30 percent of all patient encounters attributable to
Medicaid over any continuous, representative 90-day period within the
most recent calendar year prior to reporting. There are two statutory
exceptions to the general 30 percent rule discussed previously. The
first exception is that a pediatrician may have at least 20 percent
patient volume attributable to those who are receiving medical
assistance under the Medicaid program, as estimated in accordance with
a methodology established by the Secretary (section 1903(t)(2)(A)(ii)
of the Act). Again, the method we proposed to use was that the
pediatrician have a minimum 20 percent of all patient encounters
attributable to Medicaid over any continuous, representative 90-day
period within the most recent calendar year prior to reporting.
The second exception is that Medicaid EPs practicing predominantly
in an FQHC or RHC must have a minimum of 30 percent patient volume
attributable to ``needy individuals.'' Again, the method we would use
is that 30 percent of all patient encounters be attributable to needy
individuals over any continuous 90-day period within the most recent
calendar year prior to reporting.
Section 1903(t)(3)(F) of the Act defines needy individuals as
individuals meeting any of the following three criteria: (1) They are
receiving medical assistance from Medicaid or the Children's Health
Insurance Program (CHIP); (2) they are furnished uncompensated care by
the provider; or (3) they are furnished services at either no cost or
reduced cost based on a sliding scale determined by the individual's
ability to pay.
Comment: Many commenters requested that CMS consider groups outside
of the statute eligible for incentive payments. These facilities and
practitioners included: Community mental health centers and other
behavioral health providers (including psychiatric clinics); nursing
homes, nursing facilities, and skilled nursing facilities; long-term
care providers (community and institutional), including home health
care providers; pharmacists and pharmacies; social workers; blood
centers; provider based departments; professional societies; Medicaid-
participating health plans; speech-language pathologists and
audiologists; FQHCs, RHCs, tribal providers, and other community
clinics; health aides; and podiatrists. The commenters included
numerous testimonials, research, and statements to note that these
providers are critical partners in improving the quality and
coordination of care for the Medicaid population. Some of the
commenters acknowledged that this is a statutory issue but assert that
exclusion of such providers impacts Medicaid's ability to improve the
quality and efficiency of care. Furthermore, some of these commenters
based several additional comments upon presumed eligibility. For
example, some commenters said that social workers could not afford EHRs
and should not be required to participate.
Another group of comments came from health care professionals that
sought eligibility for incentives by virtue of early adoption of EHRs
but who do not participate in either Medicaid or Medicare. They
suggested a third incentive option available for providers that either
do not participate with Medicaid/Medicare or would not reach the
threshold of patient visits to receive Medicaid incentive payments.
Response: We note that the commenters are correct to recognize that
this is a statutory issue. The definition of a ``Medicaid EP,'' at
1903(t)(3)(B) of the Act, lists five types of professionals that are
eligible for Medicaid incentive payments: physicians, dentists,
certified nurse-midwives, nurse practitioners, and physician assistants
practicing in an FQHC that is led by a physician assistant or RHC that
is so led. Additionally, the statute at 1903(t)(2)(B) designates acute
care hospitals and children's hospitals as the only two types of
facilities eligible for the Medicaid incentives. These providers must
also meet all other program requirements, including Medicaid patient
volume thresholds.
Since the commenters recommend including providers that are not
among those explicitly mentioned in the statute, these providers cannot
be eligible for the incentive payments.
Additionally, professionals who do not participate in either
Medicaid or

[[Page 44486]]

Medicare are also not eligible for incentives due to the statutory
requirements associated with each program. Specifically, the Medicaid
incentives program requires providers to meet Medicaid patient volume
thresholds or practice predominantly in an FQHC or RHC, where they must
serve needy individuals (as defined at section 495.10). Additionally,
the hospital calculations for Medicare and Medicaid are based, in part,
on Medicare or Medicaid inpatient bed-days. For Medicare EPs, the
incentive is based on the associated Medicare claims. Hence, these
professionals cannot meet the statutory requirements for eligibility.
After consideration of these comments, we are maintaining the list
of providers eligible for the Medicaid incentive payment program as
originally proposed and as identified by statute.
It is worth noting that while the facilities recommended for
inclusion by the commenters will not be considered eligible to
participate in these incentives, some of the EPs at these facilities
may be eligible. One example is that a psychiatrist (physician) or NP
is likely to treat individuals at a behavioral health facility. Per our
rules at section 495.10, the EP must identify a TIN to which the
incentive payment should be made. We believe that, in accordance with
1903(t)(6)(A) of the Act, an EP could reassign payment to a TIN
associated with his or her employer or the facility in which she or he
works. This facility could be one of those recommended for inclusion by
the commenters. Any reassignment of payment must be voluntary and we
believe the decision as to whether an EP does reassign incentive
payments to a specific TIN is an issue which EPs and these other
parties should resolve. Any reassignment of payment must be consistent
with applicable laws, rules, and regulations, including, without
limitation, those related to fraud, waste and abuse.
We have provided clarifying language at section 495.10(f) to
further clarify the reassignment of incentive payments by EPs to
specific TINs.
d. Calculating Patient Volume Requirements
As required by section 1903(t)(2) of the Act and discussed in the
previous section, all EPs and the vast majority of hospitals will need
to meet certain patient volume thresholds in order to be eligible for
incentive payments. (The only exception to this rule is for children's
hospitals, which have no patient volume threshold requirement).
In addition, where patient volume is a criterion, most providers
will be evaluated according to their ``Medicaid'' patient volume, while
some professionals (those practicing predominantly in an FQHC or RHC)
will be evaluated according to their ``needy individual'' patient
volume.
We define ``patient volume'' in Sec. 495.302 to be a minimum
participation threshold for each individual Medicaid provider (with the
exception of children's hospitals). In the proposed rule, we proposed
methodologies for estimating the patient volume thresholds and listed
them by entity type.
Further, we proposed that States could submit alternative
approaches to the established timeframe for estimating patient volume,
through their State Medicaid HIT Plans (SMHP) and we would make a
determination of whether it was an acceptable alternative.
In determining the ``needy individual'' patient volume threshold
that applies to EPs practicing predominantly in FQHCs or RHCs, section
1902(t)(2) of the Act authorizes the Secretary to require the downward
adjustment to the uncompensated care figure to eliminate bad debt data.
We interpret bad debt to be consistent with the Medicare definition, as
specified at Sec. 413.89(b)(1). In order to remain as consistent as
possible between the Medicare and Medicaid EHR incentive programs,
States will be required to downward adjust the uncompensated care
figure. Under Medicare, bad debts are amounts considered to be
uncollectible from accounts and notes receivable that were created or
acquired in providing services. ``Accounts receivable'' and ``notes
receivable'' are designations for claims arising from the furnishing of
services, and are collectible in money in the relatively near future.
Providers should be required to use cost reports (for FQHCs and clinics
this would be the Medicare 222-92 cost report, or the most recent
version of the 222), or other auditable records to identify bad debts.
All information under attestation is subject to audit. Our proposed
regulations on calculating the needy individual patient volume can be
found at Sec. 495.302 and Sec. 495.306.
Further, in establishing the Medicaid patient volume thresholds for
EPs and acute care hospitals, section 1902(t)(2) of the Act requires
that individuals enrolled in a Medicaid managed care plan be included.
We interpret this to mean that individuals enrolled in MCOs, prepaid
inpatient health plans (PIHPs), or prepaid ambulatory health plans
(PAHPs), under 42 CFR Part 438 be included in the calculation.
Therefore, in determining patient volume, providers and States should
be aware that individuals enrolled in such plans will be included in
the patient volume calculation. Acute care hospitals have to meet the
10 percent Medicaid volume threshold.
Comment: Commenters recommended that CMS provide flexibility in the
specific volume thresholds required for program participation (for
example, 30 percent for most EPs, 20 percent for pediatricians) and
apply a lower percentage or a minimum number of encounters. Some
commenters referenced research stating that practices with a 30 percent
patient volume may not be financially viable.
Response: The patient volume thresholds of 30 percent and 20
percent are required by statute and cannot be changed in the rulemaking
process.
After consideration of the public comments received, we are not
making any changes to these statutory requirements.
Comment: Commenters suggested that CMS define ``encounter'' and
take a menu approach to patient volume to allow States several options,
based on their data sources. Some commenters provided specific
suggestions for patient volume ``menu'' items. Some commenters further
noted that there were inconsistencies in how we applied ``encounter''
data. Finally, one commenter noted that we should consider how
``encounter'' data is applied to EPs that bill services through another
provider (for example, PAs that bill through MDs). Other commenters
asked for a clarification of how ``encounters'' would apply to the
dually-eligible Medicare/Medicaid beneficiaries. Additionally, several
commenters provided specific suggestions for alternative methods making
an approximate determination of providers' patient volume by [not using
patient volume] and extending the look-back period to two years.
Response: We agree with the approach of offering at least some
options to States regarding patient volume. This approach allows States
to audit their programs using the data sources available to them, while
also including the largest number of providers that may treat Medicaid
patients. We believe our new approach will correct the inconsistencies
in how we applied ``encounter.'' Furthermore, our new definition of
encounter will capture the dually-eligible beneficiaries, as well as
individuals who are in a Title XIX-funded 1115 demonstration project.
Specifically, the statute at 1903(t)(2) states that Medicaid patient
volume will be ``attributable to individuals who are

[[Page 44487]]

receiving medical assistance under [Title XIX],'' and also states that
the patient volume calculation for those practicing predominantly in an
FQHC or RHC will be ``attributable to needy individuals.'' Needy
individual is defined at 1903(t)(3)(F) as ``an individual--(i) who is
receiving assistance under Title XIX; (ii) who is receiving assistance
under Title XXI; (iii) who is furnished uncompensated care by the
provider; or (iv) for whom charges are reduced by the provider on a
sliding scale basis based on the individual's ability to pay.'' We
believe our final rule definition of ``encounter'' captures care to all
of these individuals.
Additionally, consistent with the statute, we expect providers and
States to make estimation in accordance with the methodologies we
established here. This estimation would need to be made with reasonable
effort, using verifiable data sources by the provider and the State.
Finally, we do not agree with any of the suggestions from
commenters that involve using a benchmark number of Medicaid patients
or other suggestions that involve a deviation from the statutory
language. The statute is clear that Medicaid patient volume must be
considered and explicitly specified percentages of caseload mix
compositions attributable to either Medicaid and/or ``needy''
individuals that must be achieved for participation in the incentive
program. We also do not agree with allowing the provider to consider a
period longer than a year prior to registering because that is not a
current, accurate portrayal of the provider's participation in
Medicaid.
After consideration of the public comments received, we are
revising the patient volume approach to the following two options. The
State may choose one of the two options listed below (or both options),
or a State-proposed alternative, if approved by CMS. The State's
strategy must be submitted for review and approval through the SMHP, in
accordance with all requirements at section 495.332.
A Medicaid provider may demonstrate patient volume by:
(1) Having patient encounters within the 90-day period by using the
same methodology we proposed in the proposed rule.
This first option preserves the methodology we proposed in the
proposed rule, however we clarify ``encounter'' below. For the Medicaid
patient volume, the methodology for estimating patient volume would
require calculation of a threshold (represented below) using as the
numerator the individual hospital's or EP's total number of Medicaid
patient encounters in any representative continuous 90-day period in
the preceding calendar year and the denominator is all patient
encounters for the same individual professional or hospital over the
same 90-day period. We are not prescribing standards for what is a
``representative'' period, but we intend to apply a plain meaning test.
In other words, if a reasonable person would not consider the selected
period to be representative (for example, because the selected period
included a short-term temporary Medicaid outreach program), then it
would not support a threshold calculation.

[Total (Medicaid) patient encounters in any representative
continuous 90-day period in the preceding calendar year/Total patient
encounters in that same 90-day period] * 100

For the needy individual patient volume, the methodology for
estimating patient volume would require the same calculation, but with
the numerator equal to the EP's total number of needy individual
patient encounters in any representative 90-day period in the preceding
calendar year.

[Total (Needy Individual) patient encounters in any representative
continuous 90-day period in the preceding calendar year/Total patient
encounters in that same 90-day period] * 100

Table 15, below, demonstrates the above-referenced patient volume
thresholds. (This same Table appeared in the proposed rule, with a few
minor clarifications included in this Table).
[GRAPHIC] [TIFF OMITTED] TR28JY10.050

(2) Having a Medicaid enrollee on the panel assigned to the EP (for
example, managed care or medical homes) within that representative 90-
day period.
With more than 70 percent of Medicaid and CHIP enrollees receiving
care in a managed care delivery system, and additional enrollees in
medical homes, we determined that it was necessary to look for
flexibility in how we applied these requirements. Under this option, we
wanted to capture the EP's panel assignments, as well as any additional
unduplicated Medicaid encounters. In other words, we do not intend for
the EP to count an assigned patient who was also an encounter more than
once.
The methodology for estimating the Medicaid patient volume
threshold (represented above) would use as the numerator the individual
hospital's or EP's total number of Medicaid patients assigned through a
Medicaid managed

[[Page 44488]]

care panel, medical or health home program panel, or similar provider
structure with capitation and/or case assignment, plus all other
Medicaid encounters for that EP. The assignment must be current within
the 90-day period and we will consider as a proxy for this an encounter
with any patient on the panel within the previous calendar year prior
to the representative 90-day period when the patient was on the panel.
Note that, as stated above, while the EP may add in encounters with
other, non-panel Medicaid patients to the numerator, these encounters
must be patients who are not assigned to a panel and would be
encounters that occurred during the representative 90-day period. The
denominator is all patients assigned to the EP or hospital for the same
90-day period, also with whom the provider had at least one encounter
in the prior calendar year as a proxy, as well as any other
unduplicated Medicaid encounters during the representative 90-day
period.

{[Total (Medicaid) patients assigned to the provider in any
representative continuous 90-day period in the preceding calendar year,
with at least one encounter taking place during the calendar year
preceding the start of the 90-day period] + [Unduplicated (Medicaid)
encounters in the same 90-day period]/[Total patients assigned to the
provider in that same 90-day period, with at least one encounter taking
place during the calendar year preceding the start of the 90-day
period] + [All unduplicated encounters in that same 90-day
period]{time} * 100

For the needy individual patient volume for EPs enrolled in managed
care and medical homes, the threshold (represented below) would be
calculated in the same manner, but with the numerator equal to the EP's
total number of needy individuals assigned to the patient panel in any
representative 90-day period in the preceding calendar year with at
least one encounter within that year.

{[Total (Needy Individual) patients assigned to the provider in any
representative continuous 90-day period in the preceding calendar year,
with at least one encounter taking place during the year preceding the
90-day period] + [Unduplicated (Needy Individual) encounters in the
same 90-day period]/[Total patients assigned to the provider in that
same 90-day period, with at least one encounter taking place during the
year preceding the 90-day period] + [All unduplicated encounters in
that same 90-day period]{time} * 100

Table 15 demonstrates the above-referenced patient volume
thresholds per provider type.
In order to resolve any inconsistencies with the definitions of
``encounter,'' for purposes of EP patient volume, we have allowed the
following to be considered Medicaid encounters:
(1) Services rendered on any one day to an individual where
Medicaid or a Medicaid demonstration project under section 1115 of the
Act paid for part or all of the service; or
(2) Services rendered on any one day to an individual for where
Medicaid or a Medicaid demonstration project under section 1115 of the
Act paid all or part of their premiums, co-payments, and/or cost-
sharing.
For purposes of calculating hospital patient volume, we have
allowed the following to be considered Medicaid encounters:
(1) Services rendered to an individual per inpatient discharges
where Medicaid or a Medicaid demonstration project under section 1115
paid for part or all of the service;
(2) Services rendered to an individual per inpatient discharge
where Medicaid or a Medicaid demonstration project under section 1115
of the Act paid all or part of their premiums, co-payments, and/or
cost-sharing;
(3) Services rendered to an individual in an emergency department
on any one day where Medicaid or a Medicaid demonstration project under
section 1115 of the Act either paid for part or all of the service; or
(4) Services rendered to an individual in an emergency department
on any one day where Medicaid or a Medicaid demonstration project under
section 1115 of the Act paid all or part of their premiums, co-
payments, and/or cost-sharing.
We wanted to adequately reflect what an encounter looked like for a
hospital and apply these concepts consistently across the numerous
areas of this final rule. We used inpatient discharges and emergency
department services for the hospitals because this is consistent with
how we will make hospital-based determinations for EPs and how we
collect meaningful use information for hospitals. We decided that
services rendered on one day would be an encounter. An emergency
department must be part of the hospital under the qualifying CCN.
For purposes of calculating needy individuals patient volume, we
have allowed the following to be considered needy patient encounters:
(1) Services rendered on any one day to an individual where
Medicaid or CHIP or a Medicaid or CHIP demonstration project under
section 1115 of the Act paid for part or all of the service;
(2) Services rendered on any one day to an individual where
Medicaid or CHIP or a Medicaid or CHIP demonstration project under
section 1115 of the Act paid all or part of their premiums, co-
payments, and/or cost-sharing; or
(3) Services rendered to an individual on any one day on a sliding
scale or that were uncompensated.
We understand that multiple providers may submit an encounter for
the same individual. For example, it may be common for a PA or NP to
provide care to a patient, then a physician to also see that patient.
It is acceptable in circumstances like this to include the same
encounter for multiple providers when it is within the scope of
practice.
We considered whether Medicaid providers or States should pick from
the two options provided above. Since States are responsible for
auditing the program and must have reliable sources of data, we agree
with commenters that it must be States that make a determination as to
whether either option will be permitted (or both).
In the proposed rule, we also proposed that if States had an
alternative approach for the timeframe in accounting for the
methodology, they would be allowed to submit it in the SMHP for review
and approval. For the final rule, we are modifying this option. As
stakeholders' understanding of the program matures and new technologies
become available, there may be new solutions that we did not consider
here, but would be a better option for one or several States. To that
end, in this final rule we are providing flexibility to consider
States' alternative methodologies for measuring not just the timeframe
that is used in establishing patient volume, but all of the elements
included in the patient volume calculation (except the thresholds
established by statute). Therefore, we have revised our final
regulations to allow States to offer alternatives regarding the
methodology used to establish patient volume, and for the Secretary to
adopt these options, so that they may be used by other States as well.
An alternative would need a verifiable data source. A State also would
need to provide us with an analysis to demonstrate that the methodology
being proposed by the State did not result, in the aggregate, in fewer
providers becoming eligible than under the two options presented in
this final rule. Finally, if a State is reviewed and approved for an
alternative

[[Page 44489]]

methodology, we will post this alternative methodology on the CMS
internet Web site, and allow other States to adopt the methodology as
well, thereby ensuring that the alternative is a methodology that is
``established by the Secretary.'' While we believe that States will not
submit alternative methodologies until after the first year of the
program, allowing for such alternatives will permit the patient volume
calculation to evolve along with State and provider experience of the
program.
We believe that these solutions will help address issues for
providers practicing across State lines, who may have their Medicaid
patient volume derived from more than one State. We encourage States to
build partnerships, particularly through data sharing agreements.
Medicaid providers must still annually re-attest to meeting the patient
volume thresholds.
After consideration of the comments, we are revising Sec. 495.302,
Sec. 495.306, and Sec. 495.332 regarding patient volume, patient
encounters and the associated revisions to the SMHP requirements.
Comment: Commenters asked CMS to include all individuals receiving
services through section 1115 demonstrations as eligible encounters.
Response: Although the commenter did not elaborate, we believe the
commenter is referring to section 1115 demonstrations under the
authority of section 1115(a)(2) of the Act. Our final regulations allow
two alternate methods for States to estimate Medicaid patient volume.
Under both methods, however, the State must review whether a Medicaid
``patient encounter'' occurred. Our regulations, at 495.306(e) state
that a Medicaid encounter will exist where Medicaid (or a Medicaid
demonstration project approved under section 1115) paid for part or all
of the service; or where Medicaid (or a Medicaid demonstration project
approved under section 1115) paid all or part of the individual's
premiums, co-payments and/or cost-sharing. Because our methodology is
based upon Medicaid payment for an encounter, and because we believe it
will be difficult or impossible for EPs and eligible hospitals to
distinguish between payment that is due to patients receiving medical
assistance under Title XIX and payment that is due to expansion
populations (who are not receiving Title XIX medical assistance), we
will allow providers to include in the patient volume calculation
individuals who are part of expansion populations under section
1115(a)(2) of the Act. The statute confers broad authority on the
Secretary to establish the methodology that is used to estimate the
patient volume percentage. Thus, although individuals in section
1115(a)(2) demonstrations are not receiving Title XIX medical
assistance, we use our broad authority to allow a methodology that
considers these individuals in the estimate that is used. (Limited to
Medicaid patient volume determinations, the same reasoning would not
apply to CHIP demonstrations or to State-only programs, because no
Title XIX funding is received for these projects. However, in
calculating Needy Individual patient volume, it is permissible to
consider Medicaid or CHIP demonstration projects approved under section
1115.) Our above discussion noting what will be considered a patient
encounter includes encounters which were paid for with Title XIX funds
under a section 1115 Medicaid demonstration.
Comment: Several commenters asked that CMS allow CHIP patients to
be considered in the Medicaid patient volume requirements, particularly
for pediatricians.
Response: The requirement that the methodology for estimating
Medicaid patient volume is based on Medicaid and not CHIP is related to
the statutory language at section 1903(t)(2)(A)(i)-(ii)). Such language
requires that the Secretary establish a methodology that can be used to
estimate ``Medicaid'' patient volume for those individuals receiving
medical assistance under Title XIX. However, the statute at
1903(t)(2)(A)(iii) allows for an EP practicing predominantly in an FQHC
or RHC to consider CHIP patients under the needy individual patient
volume requirements.
After consideration of these public comments, we are making no
further revisions to this section of the rule.
Comment: Many commenters urged CMS to allow practice- or clinic-
level patient volume data to apply to practitioners as a proxy to
establish patient volume. This would apply for both Medicaid and needy
individual patient volume calculations. The commenters stated that many
clinics and group practices do not necessarily track the pay or data
per EP and it would be very disruptive to their current practice to
begin collecting data like this.
Response: We agree with commenters and acknowledge that it is not
our intent to disrupt the practice with new additional burdens, but
rather to leverage efficiencies. We will allow clinics and group
practices to use the practice or clinic Medicaid patient volume (or
needy individual patient volume, insofar as it applies) and apply it to
all EPs in their practice under three conditions: (1) The clinic or
group practice's patient volume is appropriate as a patient volume
methodology calculation for the EP (for example, if an EP only sees
Medicare, commercial, or self-pay patients, this is not an appropriate
calculation); (2) there is an auditable data source to support the
clinic's patient volume determination; and (3) so long as the practice
and EPs decide to use one methodology in each year (in other words,
clinics could not have some of the EPs using their individual patient
volume for patients seen at the clinic, while others use the clinic-
level data). The clinic or practice must use the entire practice's
patient volume and not limit it in any way. EPs may attest to patient
volume under the individual calculation or the group/clinic proxy in
any participation year. Furthermore, if the EP works in both the clinic
and outside the clinic (or with and outside a group practice), then the
clinic/practice level determination includes only those encounters
associated with the clinic/practice.
We have revised our regulations to make clear that when patient
volume is calculated on a group-practice/clinic level, the above rules
will apply.
Comment: Similar to the last comment, we received comments
requesting clarification on how the patient volume requirements will
apply in States with seamless eligibility determinations and payments
for their program. For example, some States have streamlined their
programs so that the potential beneficiary is applying for any public
health care program for which they might be eligible (for example,
Medicaid, CHIP, State-only) in one application. Often these States have
one enrollment card as well. In other words, it is likely that both the
beneficiary and the health care provider might have no indication as to
whether the beneficiary is receiving assistance under Title XIX, Title
XXI, or State-only funds. This becomes a problem when attempting to
determine if the provider meets the patient volume requirements.
Response: If there is a combined program like the one in the
example, this does not mean that all the encounters are being paid for
with Title XIX funds (or the individual's premium or cost-sharing is
funded through Title XIX), which is how we explained we would determine
Medicaid patient encounters. We do not believe it would be reasonable
to allow an encounter that is paid for with Title XXI or State-only
funds to be considered a ``Medicaid encounter.'' Thus, States with
combined programs (for example, Medicaid/CHIP expansion programs), may
indeed have difficulty determining who is eligible

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for participation in this incentive program.
Considering these States have made enormous strides to reduce the
confusion and burden associated with eligibility and payment for these
programs, and also to reduce the stigma sometimes associated with
Medicaid, we want to support the work they have done.
After consideration of the public comments received, we believe
that the best course of action is to work with these States on a case-
by-case basis through providing guidance as they develop the SMHP. We
believe that each State will have different data and information
available to them. The States should make sure that the health IT
coordinators are working closely with the Medicaid (and CHIP, as it
pertains to this program) policy staff on all aspects of the program.
The goal will be to find a solution that leverages the State's existing
and/or future data sources, as well as looking for flexible
alternatives, while still honoring Congress' intent for the patient
volume requirements, as established in the statute.
Comment: Some commenters pointed out that not all Medicaid
providers use an EHR or submit electronic claims, making it tedious to
capture a numerator and denominator for patient volume until the
providers have adopted an EHR. Additionally, some commenters expressed
concern about how providers would determine the denominator for patient
volume and how States would audit the resulting percentage.
Response: While the commenters may be correct about the assertion
that not all providers use an EHR or submit electronic claims, we do
not believe it will prevent EPs and eligible hospitals from
participating. These providers are businesses and there is an
expectation that they are tracking their receivables from all entities
(including Medicaid) associated with specific patients. In other words,
we do not see a connection between electronic claims and current EHR
use and calculation of the patient volume. Furthermore, when EHRs are
used with practice management systems, we believe that in most cases,
this data should be derived from the electronic systems.
When States consider their audit strategies, they should leverage
existing data sources to the extent possible, but also consider future
data sources. Part of the Medicaid Information Technology Architecture
(MITA) principles associated with the SMHP development includes
consideration of the ``as is'' world, as well as the ``to be'' world.
While States may not have the systems in place today for a complete
picture, we expect a longer-term strategy leveraging better data
systems.
After consideration of the public comments received, we are not
making any change on the basis of this comment. We provided additional
flexibility in the patient volume requirements, which may help
providers more easily calculate their patient volume and provide for
flexibility when States begin to audit providers.
Comment: Commenters requested clarification on how to determine
eligibility for the five types of Medicaid EPs. Commenters also noted
that there was a potential difference between Medicare and Medicaid for
the definition of ``physician.'' Finally, other commenters were
confused if, as a specialty practitioner, they qualified as one of the
EP types.
Response: We agree with the commenters that there is a distinction
between the Medicare and Medicaid definitions of physician. The
Medicare statute at section 1848(o)(5)(C) defines an eligible
professional as including all the professionals listed in section
1861(r) of the Act (which, generally stated, includes podiatrists,
chiropractors and optometrists), the Medicaid statute does not
incorporate all of 1861(r). Rather, the Medicaid statute defines what
are physician services for purposes of qualifying as medical assistance
under section 1905(a)(5)(A) of the Act, and states that physician
services constitutes services furnished by a physician as defined in
section 1861(r)(1) (which includes only doctors of medicine or
osteopathy legally authorized to practice medicine and surgery by their
State). In addition, section 1905(e) permits States the option to
consider optometrist services as physician services. In this case, the
State plan must specifically provide that the term ``physicians'
services'' includes services of the type which an optometrist is
legally authorized to perform.
Thus, in keeping with the statute, a physician would be limited to
doctors of medicine or osteopathy legally authorized to practice in
their State, and, in cases where States have specifically adopted the
option of 1905(e) in their State plans, optometrists.
In addition, States would need to refer to their own scope of
practice rules to determine whether an individual qualifies as
providing dental, nurse practitioner, physician assistant, or certified
nurse midwife services. Also, States and EPs would need to refer to CMS
regulations. These regulations, at 42 CFR 440.60 require that
practitioners be licensed and that they are within the scope of
practice defined under State law (see also 1905(a)(6)). 42 CFR
440.100(b), defines a dentist as an individual licensed to practice
dentistry or dental surgery in his or her State. 42 CFR 440.165 defines
a nurse midwife as a registered professional nurse who meets the
following requirements: (1) Is currently licensed to practice in the
State as a registered professional nurse; (2) is legally authorized
under State law or regulations to practice as a nurse-midwife, (3) has
completed a program of study and clinical experience for nurse-midwives
as specified in the State, unless the State does not specify such a
program. (4) In the case where the State has not specified a particular
program of study and clinical experience, the regulation provides
alternative means for demonstrating this training. See also section
1905(a)(17), defining certified nurse midwife with reference to section
1861(g). 42 CFR 440.166 contains a definition of what qualifies as
nurse practitioner services and requires a nurse practitioner to be a
registered professional nurse who meets the State's advanced
educational and clinical practice requirements, if any, beyond the 2 to
4 years of basic nursing education required of all registered nurse.
States will have a Medicaid State Plan (and often State regulations)
that designates how each provider is eligible to participate in the
Medicaid program by practice type. All of these practitioners must meet
all other eligibility requirements (including Medicaid patient volume)
in order to participate.
Regarding the confusion by some specialty providers (for example,
advanced practice nurses, pediatricians, physician sub-specialties,
etc.), so long as an EP qualifies as a practitioner within the State's
scope of practice rules for each of the five EP types, they are
eligible for this program. In other words, since pediatricians are
physicians, they must meet the physician scope of practice rules and
then they may be eligible for an incentive when they meet all other
requirements. Advanced practice nurses who meet their State's criteria
for qualifying as a nurse practitioner would qualify as nurse
practitioners. We believe most States would recognize APNs as NPs
within their scope of practice rules. Eligible provider types must be
specified in a State's SMHP.
After consideration of the public comments received, we are
revising the definition of these EPs under section

[[Page 44491]]

495.304 to clarify additional scope of practice requirements.
Comment: Commenters requested clarification on how full- or part-
time status impacts an EP's eligibility for incentives.
Response: Full or part-time status does not affect patient volume
calculations or whether an EP's practice is predominantly in an FQHC or
RHC. There is no mention of requisite number of hours in the statute or
this final rule as a pre-condition for eligibility.
After consideration of the public comments received, we are not
making any revisions to this section of the final rule.
e. Entities Promoting the Adoption of Certified EHR Technology
We define ``promoting the adoption of certified EHR technology'' in
Sec. 495.302. Under section 1903(t)(6)(A)(i), incentive payments must
generally be made directly to the EP. Section 1903(t)(6)(A)(ii) of the
Act provides an exception to permit payment of incentive payments to
``entities promoting the adoption of certified EHR technology,'' as
designated by the State, if participation in the payment arrangement is
voluntary for the EP involved. Additionally, the entity must not retain
more than 5 percent of the payment for costs unrelated to certified EHR
technology (and support services including maintenance and training)
that is for, or is necessary for, the operation of the technology.
While the Act authorizes States to designate these entities, the
Secretary nevertheless retains authority to define what it means to be
``promoting the adoption of certified EHR technology,'' as specified in
section 1903(t)(6)(A)(ii) of the Act. Section 1102 of the Act
authorizes the Secretary to ``make and publish such rules and
regulations, not inconsistent with this Act, as may be necessary to the
efficient administration of the functions with which he or she is
charged under this Act.'' Since one of our functions is to approve
Title XIX plans under sections 1902(b) and 1116 of the Act, and States
would need to submit plans as to how they would spend section 4201 of
the HITECH Act funds, we have the authority to determine whether a
State's plan for allowing EPs to assign their Medicaid incentive
payments to these entities is in compliance with our interpretation of
the Act.
We define ``promoting'' certified EHR adoption to mean the enabling
and oversight of the business, operational and legal issues involved in
the adoption and implementation of EHR and/or exchange and use of
electronic health information between participating providers, in a
secure manner, including maintaining the physical and organizational
relationship integral to the adoption of certified EHR technology by
EPs. Under 1903(t)(6)(A)(ii) of the Act and as proposed in Sec.
495.332, States must establish verification procedures that enable
Medicaid EPs to voluntarily assign payments to entities promoting EHR
technology. States must guarantee that the assignment is voluntary and
that the entity does not retain more than 5 percent of those assigned
Medicaid incentive payments for costs unrelated to certified EHR
technology. We proposed requiring States to publish and make available
to all Medicaid EPs the procedures they developed for assigning
incentive payments to the third party entities before payments can be
assigned. Such publication must also include information about the
State's verification mechanism. The State's method must assure
compliance with the requirement that no more than 5 percent of the
Medicaid EP's annual incentive payment is retained by the entity for
costs not related to certified EHR technology.
Although section 1903(t)(6)(A)(ii) of the Act allows assignment of
payment to entities promoting the adoption of EHR technology, we wish
to clarify that such assignment would not remove the responsibility of
the Medicaid EP to individually demonstrate meaningful use of the EHR
technology (as discussed in greater detail below). Therefore, entities
promoting the adoption would not receive the assigned payments unless
the Medicaid EP meets all eligibility criteria. Our definition for
promoting the adoption of certified EHR technology is in Sec. 495.302.
Comment: A commenter recommended that CMS require that entities
designated by States that promote the adoption of EHR technology must
use qualified EHR technology and be able to capture, query and/or
exchange data from beyond a practice or closed system in order to
foster interoperability, and to promote competition among EHR vendors
with vendor-neutral and provider-neutral solutions. The commenter
recommended that entities that promote the adoption of certified EHR
technology be certified to an electronic hub that permits the exchange
of electronic structured data on a provider-neutral basis.
Commenters also requested that the Regional Extension Centers
funded by ONC be permissible as entities designated by the State to be
eligible to receive EPs assigned incentive payments.
Response: States will have the discretion to identify entities that
promote the adoption of certified EHR technology in accordance with our
definition in regulation. We do not agree that the definition of
``promotion of the adoption of EHR technology'' requires the designated
entity itself to utilize certified EHR technology. A variety of
entities might offer services that meet the language included in this
final rule defining promoting EHR adoption. We wish to point out that
there is also a discussion of reassignment of payments in Section
II.B.1.d. of this rule.
After consideration of the comments, we are adopting the language
as written with the additional clarification that we encourage States
to consider how they will verify on an ongoing basis that the entities
that they designate are in fact promoting EHR adoption, per the
requirements. Their responsibility to audit this element might be a
factor in identifying which entities they wish to designate, in terms
of tangible EHR promotion activities.
We agree that our definition of ``promoting EHR adoption'' does not
preclude the ONC-funded Regional Extension Centers from being
designated by States for this role.
4. Computation of Amount Payable to Qualifying Medicaid EPs and
Eligible Hospitals
The statute, at sections 1903(t)(1), (t)(4), and (t)(5) of the Act,
creates different payment formulas for Medicaid EPs versus hospitals.
The payment methodology for Medicaid hospitals shares many aspects of
the methodology used for Medicare hospitals.
a. Payment Methodology for EPs
(1) General Overview
Pursuant to section 1903(t)(1)(A) of the Act, payment for EPs
equals 85 percent of ``net average allowable costs.'' While the
Secretary is directed to determine ``average allowable costs'' based
upon studies of the average costs of both purchasing and using EHR
technology, the net average allowable costs that set payment are capped
by statute. As discussed in more detail further on, generally stated,
these caps equal $25,000 in the first year, and $10,000 for each of 5
subsequent years (there is an exception for pediatricians with under 30
percent Medicaid patient volume, whose caps are two-thirds of these
amounts). Thus, the maximum incentive payment an EP could receive from
Medicaid equals 85 percent of $75,000, or $63,750, over a period of 6
years. EPs must begin receiving

[[Page 44492]]

incentive payments no later than CY 2016.
(2) Average Allowable Costs
Section 1903(t)(4)(C) of the Act gives the Secretary the authority
to determine average allowable costs. Specifically, the Secretary is
directed to study the average costs associated with the purchase,
initial implementation, and upgrade of certified EHR technology,
including support services, and integral related training. The
Secretary also is directed to study the average costs of operating,
maintaining, and using certified EHR technology. The statute permits
the Secretary to use studies submitted by the States.
We conducted a literature review of recent studies on EHR
technology to determine the average allowable cost of implementing and
using such technology. We reviewed the results from four recent,
comprehensive studies.
In conducting a review of the data, we determined that the studies
demonstrate a cross-sectional view of small and large practices and
community health centers. There was adequate data to support a
depiction of costs across multiple provider types.
To summarize, we determined that the average costs of EHRs vary
greatly because of the size and type of provider practices, the
differences in available features of systems, and the additional costs
associated with licensing, support, training, and maintenance. However,
based on the information reviewed, we determined that the average costs
for initial EHR systems currently can range from $25,000 to $54,000 in
the implementation year, per professional. Since the average costs of
EHR technology in the first year can be as much as $54,000 and no less
than $25,000, and since we believe the costs of such technology will be
increasing, we set the average allowable cost at $54,000. We
established this average allowable cost at the high end of the range
since the data we reviewed is based on certification criteria that may
not be appropriate moving forward. Specifically, since the ONC is
establishing new certification criteria for EHR technology, we believe
the average cost of certified EHR technology incorporating the new
criteria will be higher than the current costs of EHR technology. It is
our assumption that making improvements to incorporate the new
certification standards into current EHR technology will be costly.
Thus, we believe that establishing the average allowable cost at
$54,000 is reasonable.
Additionally, our analysis determined that the range for subsequent
incentive payment year costs for most providers will fall into a large
range, based on a number of factors. On one end of the range, costs
related to maintenance could be as low as $3,000 to $9,000 per
provider, where other studies state that maintenance will be as high as
$18,000 to $20,610 per provider. Given the requirements in the ONC
interim final rule for the adoption of an initial set of standards,
implementation specifications, and certification criteria for EHRs and
the health measures data discussed in this final rule that CMS and the
States will need to collect from professionals, we believe that the
costs for maintaining certified EHR technology will also be on the
higher end of the range at $20,610.
(3) Net Average Allowable Costs.
As originally required by section 1903(t)(3)(E) of the Act, in
order to determine ``net'' average allowable costs, average allowable
costs for each provider must be adjusted in order to subtract any
payment that is made to Medicaid EPs and is directly attributable to
payment for certified EHR technology or support services of such
technology. The only exception to this requirement is that payments
from State or local governments do not reduce the average allowable
costs. The resulting figure is the ``net'' average allowable cost, that
is, average allowable cost minus payments from other sources (other
than State or local governments). The statute indicates that EPs may
receive 85 percent of a maximum net average allowable cost in the first
year of $25,000 and a maximum net average allowable cost of $10,000 in
subsequent years. This would mean that, as required by the statute, the
net average allowable costs are capped at these amounts.
Since we set the average allowable cost at $54,000 in the first
year, EPs could receive as much as $29,000 in funding from sources
(other than from State or local governments) as contributions to the
certified EHR technology and the incentive payment would still be based
on 85 percent of the maximum net average allowable cost of $25,000 (or
$21,250). This is appropriate since $54,000 (the average allowable
cost) minus $29,000 (contributing sources of funding from other than
State or local governments) equals $25,000. Since $25,000 is equal to
the level of the maximum net average allowable cost or capped amount
discussed above, providers could receive 85 percent of $25,000 or
$21,250 in year one as a Medicaid incentive payment.
The same logic would hold true for subsequent years. Specifically,
if in the following years an eligible professional received as much as
$10,610 in contributing funds from sources other than State or local
governments, the maximum incentive payment of $8,500 would be
unaffected in such subsequent years. This result is due to the fact
that the average allowable costs of $20,610 for maintaining EHR
technology minus the $10,610 received would still equal $10,000, the
maximum net average allowable costs permitted under the statute.
In reviewing whether a reduction in the net average allowable cost
was warranted based on other contributions to EHR technology, we
considered the situation of EPs who may have been provided with the
actual certified EHR technology, as well as training, support services,
and other services that would promote the implementation and meaningful
use of such technology. In some cases, we do not believe the
contribution would reduce average allowable costs at all. For example,
if an FQHC or RHC has provided technology to its staff EPs to use, we
do not believe that such technology provision would be considered a
``payment'' from another source that would reduce average allowable
costs. Moreover, we believe the situations in which an EP has been
provided with the actual technology, support service, or training from
another source are extremely limited in light of the statutory
prohibitions on ``kickbacks'' at Section 1128B(b) of the Act.
Comment: Several commenters are concerned that States are required
to develop a method to determine the payment amount for each provider.
Commenters believed that incentive payments should be based on the
maximum amount and that individual calculations are cumbersome and a
difficult process for both States and eligible professionals.
Response: We would like to clarify the requirements in the statute
and the process by which incentive payments will be established.
Specifically, the Secretary is directed to study the average costs
associated with the purchase, initial implementation, and upgrade of
certified EHR technology, including support services, and integral
related training. The Secretary is also directed to study the average
costs of operating, maintaining, and using certified EHR technology.
The statute permits the Secretary to use studies submitted by the
States. CMS conducted a literature review of recent studies on EHR
technology to determine the average allowable cost of implementing

[[Page 44493]]

and using such technology. CMS reviewed the results from four recent,
comprehensive studies and determined that these costs are $54,000 per
professional. We recognize that this cost is variable and since the ONC
is establishing certification criteria for EHR technology, we believe
this cost is reasonable since we expect that current EHR technology
will need to be upgraded in order to meet the new certification
criteria.
Next, in accordance with the statute, in order to determine the net
average allowable costs for each provider, average allowable costs for
each provider must be adjusted in order to subtract any payment that is
made to Medicaid eligible professionals and is directly attributable to
payment for certified EHR technology or support services of such
technology. The only exception to this requirement, as discussed above,
is that payments from State, or local governments do not reduce the
average allowable costs. The resulting figure is the net average
allowable costs. The statute further indicates that Medicaid eligible
professionals can receive up to 85 percent of a maximum of the net
average allowable cost. In year one the maximum net average allowable
cost is $25,000 and in subsequent years is $10,000. Additionally, the
statute indicates that Medicaid eligible professionals are responsible
for the remaining 15 percent of the net average allowable cost
(1903(t)(6)(B)). We believe the commenters are concerned with the 85
percent of net average allowable cost maximum incentive payment amount
and the responsibility of the Medicaid professional for the remaining
15 percent of the net average allowable cost.
Since the statute is clear that to get to the net average allowable
cost, payments made to the EP that are directly attributable to the
payment for certified EHR technology or support services for such
technology for each provider have to be subtracted from the average
allowable cost, this must be an individual provider calculation. We do
not believe we have discretion to change this netting process directed
by the Congress. We have provided an example calculation so that in
using the average allowable cost established by the Secretary of
$54,000 professionals could receive as much as $29,000 in payments from
outside sources and still receive 85 percent of the maximum capped net
average allowable cost of $25,000. We have also required that States
must have a process in place and a methodology for verifying that
payment incentives are not paid at amounts higher than 85 percent of
the net average allowable cost and a process in place and a methodology
for verifying that professionals pay 15 percent of the net average
allowable cost of the certified EHR technology.
States may wish to establish a process whereby individuals attest
to having completed their forms correctly and risk the circumstance of
audit in the event the State has reason to believe individuals did not
complete the forms appropriately. States could develop a process for
providers to attest to having received no other sources of funding from
other than State and local governments as payment that is directly
attributable to the cost of the technology. States could select a
random sample of providers to audit after the incentive payment has
been paid. Additionally, States could determine that certain types of
providers should be selected for a more extensive review since it may
be true that this particular provider group was most likely to have
received payment for certified EHR technology from sources other than
State, or local governments. This process could eliminate some of the
burden.
Comment: Commenters also asked that we provide some examples of the
costs that must be subtracted to get to the net average allowable cost
and therefore the incentive payment amount. Commenters do not want to
be penalized because they did not have a fair chance at understanding
the rule before participating in the program. Commenters further argued
that reducing incentive payments due to other non-State/local resources
could immobilize innovation and temper research activities.
Response: When States begin to think through the payments that are
not considered acceptable and that must be subtracted from the average
allowable cost to get to the net average allowable costs and
consequently, the incentive payment, we believe that States should
consider the situation in which professionals may have been provided
with the certified EHR technology through, for example, an employer/
employee relationship. We do not believe in this case that there could
be any payments directly attributable to the professional for the
certified EHR technology; therefore, there are no payments that must be
subtracted. This situation would apply in the case of clinics like
FQHCs/RHCs or IHS facilities. Additionally, States should consider that
any in-kind contributions such as EHR technology or free software
provided by vendors are not cash payments and therefore are also not
costs that must be subtracted. Further, in the case of grants like the
HRSA Capital Improvement Program grants that are used to finance many
projects within an organization; for example, research projects,
infrastructure, construction or repair and renovation of health
centers, health care services, etc., we do not believe these grants are
directly attributable as payments for the certified technology but
rather are payments for several projects of the organization. Again, we
do not believe that these costs are directly attributable to payment
costs for the certified technology and therefore must be subtracted.
These are just some examples but the clarifying point is that any costs
that are subtracted from the average allowable cost to get to the net
average allowable cost have to be cash payment that is ``directly
attributable to the professional for the certified EHR technology.''
Aside from specific costs related to computer hardware, software, staff
training, and/or upgrades of the technology, we believe there are
limited situations that exist in which cash payment has been made that
is directly attributable to the professional solely for the purpose of
certified EHR technology.
In any case, we are requiring that States submit to CMS for review
and approval a description of their process and methodology for
verifying payment incentives in State Medicaid HIT plans. CMS has the
flexibility to approve State Medicaid HIT plans that require provider
attestation initially with subsequent auditing of either a random
sample, or a sample of payment incentive recipients most likely to have
received funding from other sources.
We also would like to provide clarifying information concerning the
responsibility of the professional for 15 percent of the net average
allowable cost. Section 1903(t)(6)(B) of the Act dictates that EPs are
responsible for payment of the remaining 15 percent of the net average
allowable cost and States are responsible for ensuring that the
Secretary pays no more than 85 percent of the net average allowable
cost as incentive payments. In ensuring EPs' responsibility for the
remaining 15 percent, we believe States may consider funding that the
EP receives from other sources as essentially meeting the EPs
responsibility. For example, as stated earlier, States should consider
the previous examples of employer/employee relationship, certain
grants, and in-kind contributions. Specifically, if a professional is
an employee at an FQHC/RHC or IHS facility, since the employer has
provided the technology to the employee it is assumed that the employer
has contributed the 15 percent

[[Page 44494]]

to the net average allowable cost on behalf of the employee.
Additionally, in the case of in-kind contributions, the professional's
15 percent responsibility to the net average allowable cost is of no
consequence since the entity has assumed that responsibility for the
professional. It should be noted that in the case of a vendor supplying
the 15 percent on behalf of the EP because the technology, training,
support services, etc. was either in-kind contributions or free,
conflict of interest safeguards apply and the parties should be mindful
of the requirement to comply with applicable fraud, waste, and abuse
laws, rules, and regulations.
In those cases in which the professional himself must satisfy the
responsibility for the 15 percent net average allowable costs, we
believe in determining the calculation, States should consider costs
related to the providers' efforts to address workflow redesign and
training to facilitate meaningful use of EHRs as contributing to the
providers' 15 percent share.
Considering the costs of training, preparing for, and installing or
upgrading EHR technology, we believe the vast majority of EPs will
spend, or receive funding from other sources in the amount of 15
percent of the maximum net average allowable cost (or $3,750 in the
first year and $1,500 in subsequent years). We also believe that for
providers' first payment for having adopted, implemented or upgraded
certified EHR technology, States should take into consideration
providers' verifiable contributions up through the date of attestation.
For example, if a provider adopted EHR technology for $100 in January
2010 and then paid for the upgrade to the newly certified version for
an additional $100 in December of 2010, the sum of both investments;
that is, $200, should be applicable to their 15 percent of the net
average allowable cost.
In summary, in response to these comments, we are clarifying in the
final rule that State Medicaid HIT plans must explain the process and
methodology States will put in place to ensure that Medicaid eligible
professionals comply with this responsibility (see section 495.332).
Additionally, we have clarified the rules at section 495.310 that
providers are responsible for 15 percent of the net average allowable
costs of the certified EHR technology.
The following chart is useful in depicting the effect of this
calculation.
[GRAPHIC] [TIFF OMITTED] TR28JY10.051

Comment: Several commenters have raised questions about the cost of
the certified EHR technology for hospitals. Specifically, commenters
believed that $54,000 is identified as the initial costs for providers
with 20 percent per year thereafter for ongoing costs; and $5 million
for initial costs for hospitals with 20 percent per year thereafter for
ongoing costs. The commenters believed that the $54,000 assumption for
providers may be accurate; however, the $5 million assumption for
hospitals could be off by a factor of 4 or 5. Other commenters believed
that even the $54,000 assumption seriously underestimates the total
cost of ownership for EHR systems and their ongoing expenses and argued
that this assumption does not account for the training and labor costs
associated with implementation of an EHR system, nor does it account
for the lost revenues resulting from the decreases in productivity
during the initial implementation phase. One commenter questioned
whether the $54,000 average allowable cost for certified EHR technology
takes into account leasing of an ASP (applicable service provider web
based) model as an allowable cost.
Response: As explained above, we conducted a literature review of
recent studies on EHR technology and determined that these costs are
$54,000 per professional. We are not establishing an average allowable
cost for hospitals. The reference to the costs of EHRs for hospitals
was only to make the point that the costs of EHRs vary greatly because
of the size and type of provider practices, differences in available
features of systems, and the additional costs associated with
licensing, support, training and maintenance. Additionally, there is no
reason to establish the average allowable costs of EHR technology for
hospitals since the hospital incentive payments are based on a formula
that is defined in the statute and that does not rely on the

[[Page 44495]]

average allowable cost. In terms of the $54,000 average allowable cost
figure, we indicated that we believe this is a reasonable figure but
recognize that there are many variables to determining the average
allowable cost of certified EHR technology because of practice size,
the differences in available features of systems, and the additional
costs associated with licensing, support, training and maintenance. The
$54,000 average allowable cost figure does take into account web based
models since the Secretary is tasked to study the average costs
associated with the purchase, initial implementation, and upgrade of
certified EHR technology, including support services, and integral
related training.
We are making no additional revisions to this section of the final
rule as a result of this comment.
Comment: One commenter requested that CMS make clear that any
funding an FQHC receives because the Medicaid eligible professional
voluntarily chooses to reassign his/her incentive payment or any funds
the center may have received through HRSA Capital Improvement Funds
cannot be the basis for a State reducing its per visit payment to FQHCs
required under Section 1902(bb).
Response: We agree with the commenter with respect to the incentive
payments authorized under section 1903(t); however, we are not
addressing the HRSA Capital Improvement funds, as this funding is
outside the scope of this rulemaking. Since FQHCs are not eligible
providers, incentive payments will not be made to FQHCs. It is true,
however, that an eligible professional could choose to reassign his/her
incentive payment to the FQHC. Any reassignment of payments must be
consistent with applicable laws, rules, and regulations, including,
without limitation, those related to fraud, waste, and abuse. Incentive
payments are payments designed to promote the adoption and meaningful
use of certified EHR technology and are not payments for medical
assistance provided in the FQHC. We do not have the authority under
this program to provide that these funds be the basis for the State to
reduce its per visit payment to the FQHC.
After consideration of this comment, we are making no further
additions to this section of the final rule.
(4) Payments for Medicaid Eligible Professionals
One important difference we proposed between the payments to
Medicaid EPs and hospitals is that States would disburse the payments
to EPs in alignment with the calendar year, whereas hospitals will
receive payments in alignment with the fiscal year, as described in
section II.D.4.b. of this final rule. There are two primary reasons for
this. The first is to align Medicaid incentive payment disbursements
with that of the Medicare program, in order to support consistency
between the two programs, as well as among the States. We will
undertake national outreach activities to encourage provider EHR
adoption and to align the annual payment periods.
As previously discussed in this final rule, based on the 85 percent
threshold applied to the net average allowable costs, we proposed that
most Medicaid EPs may receive up to a maximum incentive payment of
$21,250 in the first payment year.
In subsequent years of payment, Medicaid EPs' incentive payments
will be limited to 85 percent of the $10,000 cap on net average
allowable cost, or up to a maximum of $8,500 annually for most Medicaid
EPs.
Since pediatricians are qualified to participate in the Medicaid
EHR incentive program as physicians, and therefore classified as
Medicaid EPs, they may qualify to receive the full incentive (that is,
the 85 percent threshold applied to the net average allowable cost) if
the pediatrician is not hospital-based and can demonstrate that they
meet the minimum 30 percent Medicaid patient volume requirements
discussed in this subpart.
Pediatricians who are not hospital-based, and have a minimum of 20
percent of their patient encounters paid by Medicaid are also
encouraged to participate in the Medicaid EHR incentive program. The
maximum payment amount for these pediatricians, who meet the 20 percent
Medicaid patient volume, but fall short of the 30 percent patient
volume, is reduced to two-thirds of the net average allowable cost,
subject to the 85 percent threshold. The reduction accounts for the
reduced patient volume, but the intent is to offer an incentive to
attract pediatricians to participate. This means pediatricians with a
minimum 20 percent patient volume may qualify for up to a maximum of
$14,167 in the first incentive payment year and to up a maximum of
$5,667 in the 5 subsequent incentive payment years, or no more than
$42,500 over the maximum 6 year period.
[GRAPHIC] [TIFF OMITTED] TR28JY10.052

[[Page 44496]]

All State Medicaid EHR incentive program calculations, payments,
and limits under this section are subject to our review.
Comment: Commenters suggested that CMS apply the health
professional shortage area (HPSA) bonus offered under Medicare to
Medicaid providers.
Response: There is no statutory authority for HPSA bonuses in the
Medicaid incentive program. However, it is worth noting that in
comparing the maximum participation period for EPs in Medicare and
Medicaid, EPs can earn higher total incentive payments under Medicaid,
even when compared to the Medicare payments with the HPSA bonus.
We are not making any changes to this rule as a result of this
comment.
Comment: Commenters requested clarification on how the Medicare
payment adjustments apply to Medicaid providers. Commenters suggested
that if these apply to Medicaid providers, it could be a reason not to
participate. One commenter asked about a provider who began in the
Medicare incentive program and then switched to Medicaid, but then
stopped meaningfully using the certified EHR.
Response: The Medicaid program does not have the payment
adjustments that apply, beginning in 2015, in the Medicare program.
However, all Medicare providers will have a payment reduction in 2015
if they are not demonstrating meaningful use, regardless of whether
they participate in the Medicare or Medicaid EHR incentive program.
Whether an EP, hospital or CAH is a meaningful user of certified EHR
technology will continue to be determined on a year-by-year basis. A
provider who stops meaningfully using certified EHR cannot receive an
incentive payment. This is discussed in greater detail in II.A.
We are not making any changes to this rule as a result of this
comment.
(5) Basis for Medicaid EHR Incentive Program First Payment Year and
Subsequent Payment Years
(i) Medicaid EP Who Begins Adopting, Implementing or Upgrading
Certified EHR Technology in the First Year
A Medicaid EP who begins by adopting, implementing, or upgrading
certified EHR technology in the first year will be eligible for the
incentive payments not in excess of the maximum amount. Under section
1903(t)(4) of the Act he or she is eligible to receive up to the
maximum first year Medicaid incentive payments discussed in the
previous sections, plus additional incentive payments for up to 5 years
for demonstrating meaningful use of certified EHR technology. In other
words, these providers may participate in the Medicaid EHR incentive
program for up to 6 years.
Table 17 demonstrates the payment scenarios available to a Medicaid
EP who begins in their first year by adopting, implementing, or
upgrading certified EHR technology, and receives all six years of
payments consecutively. As can be seen from the table, the EP can begin
receiving payments as late as 2016, and still receive up to the maximum
payments under the program.
[GRAPHIC] [TIFF OMITTED] TR28JY10.053

(ii) Medicaid EP who has Already Adopted, Implemented or Upgraded
Certified EHR Technology and Meaningfully Uses EHR Technology
For a Medicaid EP who has already adopted, implemented, or upgraded
certified EHR technology and can meaningfully use this technology in
the first incentive payment year, we proposed that the Medicaid EP be
permitted to receive the same maximum payments, for the same period of
time, as the Medicaid EP who merely adopted, implemented or upgraded
certified EHR technology in the first year. Section 1903(t)(6)(C)(ii)
of the Act states that for a Medicaid EP or hospital who has completed
``adopting, implementing, or upgrading'' certified EHR technology
``prior to the first year of payment * * * clause (i)(I) shall not
apply and clause (i)(II) [discussing the demonstration of meaningful
use] shall apply to each year of payment to the Medicaid provider under
this subsection, including the first year of payment.'' We believe this
provision supports an interpretation that a Medicaid EP who has already
adopted certified EHR technology, would still receive a ``first year''
of payment under section 1903(t)(4) of the Act, and like all other
first years of payment, this payment could not exceed $21,250. Then,
under section 1903(t)(4)(A)(ii) and (iii) of the Act, such Medicaid EPs
could receive an additional 5 years of payment for subsequent years of
payment, with payments not exceeding $8,500 in each of these 5
subsequent years. This approach allows early adopters of certified EHR
to begin

[[Page 44497]]

meaningfully using technology, without being at a competitive
disadvantage, and without losing incentive payments for the previous
costs associated with adopting, implementing, or upgrading certified
EHR technology.
Thus, the maximum incentive payments for Medicaid EPs demonstrating
that they are meaningful users in the first payment year, would be
identical to the maximum payments available to those demonstrating
adoption, implementation, or upgrading certified EHR technology in the
first year, as depicted in Table 18.
[GRAPHIC] [TIFF OMITTED] TR28JY10.054

We also requested comment on an alternative approach that would
limit the incentive payment for Medicaid EPs who have already adopted,
implemented, or upgraded certified EHR technology to 5 years of
payment, at a maximum payment of $8,500 per year. We refer readers to
our proposed rule (75 FR 1937) for a discussion of this approach.
Medicaid EPs are not required to participate on a consecutive
annual basis, however, the last year an EP may begin receiving payments
is 2016, and the last year the EP can receive payments is 2021. See our
discussion on consecutive versus non-consecutive payments in section
II.A. of this final rule. We wish to point out to readers that this is
one area where the Medicare and Medicaid incentive payment programs
differ. That is, Medicare EPs do not have the same flexibility afforded
to Medicaid EPs, who are permitted to participate in a non-consecutive
annual basis, or to skip years, in other words, without the omitted
years necessarily reducing the total number of years for which they may
receive payment. The tables in this section demonstrate how a Medicaid
EP would maximize the aggregate incentive under different scenarios,
considering that a Medicaid EP may initiate participation in 2011
through 2016. Additionally, these tables do not include the alternative
Medicaid maximum incentive payment for pediatricians discussed in the
previous section, which is two-thirds of the total amount listed in
Tables 27 through 30. Finally, these tables do not represent EPs whose
incentive payments may be reduced because net average allowable costs
may actually be lower than $25,000 in the first year, or $10,000 in
subsequent years, due to payments from other, non-State/local sources.
Comment: Some commenters rejected the alternative scenario
(including 5 years of payment instead of 6), as it would effectively
result in a penalty for early adopters, and reward those who delayed
adoption.
Response: We agree that early adopters should not be penalized.
Further, we agree that Medicaid EPs that have adopted EHR technology
before the first year should have an opportunity for the same maximum
incentive payments as EPs that are meaningful users in the first year.
Accordingly, the alternative scenario we presented in Table 30 of the
proposed rule will not be used for incentive payments.
As we are adopting our proposed policy as final, we are not making
any changes to the regulations as a result of this comment.
b. Payment Methodology for Eligible Hospitals
Statutory parameters placed on Medicaid incentive payments to
hospitals are largely based on the methodology applied to Medicare
incentive payments. The specifications described in this section are
limits to which States must adhere when developing aggregate EHR
hospital incentive amounts for Medicaid-eligible hospitals. States will
calculate hospitals' aggregate EHR hospital incentive amounts on the
FFY to align with hospitals participating in the Medicare EHR incentive
program.
States may pay children's hospitals and acute care hospitals up to
100 percent of an aggregate EHR hospital incentive amount provided over
a minimum of a 3-year period and a maximum of a 6-year period. Section
1905(t)(5)(D) requires that no payments can be made to hospitals after
2016 unless the provider have been paid a payment in the previous year;
thus, while Medicaid EPs are afforded flexibility to receive six years
of payments on a non-consecutive, annual basis, hospitals receiving a
Medicaid

[[Page 44498]]

incentive payment must receive payments on a consecutive, annual basis
after the year 2016. Prior to 2016, Medicaid incentive payments to
hospitals can be made on a non-consecutive, annual basis. The maximum
incentive amounts for these providers are statutorily defined by a
formula at section 1903(t)(5)(B) of the Act. The statute requires that
Medicaid refer, with some adjustments, to the calculation for the
Medicare hospital incentive payment described at sections
1886(n)(2)(A), 1886(n)(2)(C), and 1886(n)(2)(D) of the Act, to
determine the aggregate EHR amount allowable for individual hospitals.
The aggregate EHR hospital incentive amount is calculated using an
overall EHR amount multiplied by the Medicaid share.
States are responsible for using auditable data sources to
calculate Medicaid aggregate EHR hospital incentive amounts, as well as
determining Medicaid incentive payments to those providers. Auditable
data sources include--
Providers' Medicare cost reports;
State-specific Medicaid cost reports;
Payment and utilization information from the State's MMIS
(or other automated claims processing systems or information retrieval
systems); and
Hospital financial statements and hospital accounting
records.
All State Medicaid EHR incentive program calculations, payments,
and limits under this section are subject to our review.
For purposes of the Medicaid EHR hospital incentive program, the
overall EHR amount is equal to the sum over 4 years of (I)(a) the base
amount (defined by statute as $2,000,000); plus (b) the discharge
related amount defined as $200 for the 1,150th through the 23,000th
discharge for the first year (for subsequent years, States must assume
discharges increase by the provider's average annual rate of growth for
the most recent 3 years for which data are available per year):
multiplied by (II) the transition factor for each year equals 1 in year
1, \3/4\ in year 2, \1/2\ in year 3, and \1/4\ in year 4.
The statute specifies that the payment year is determined based on
a Federal fiscal year. Section 1886(n)(2)(C) of the Act provides the
Secretary with authority to determine the discharge related amount on
the basis of discharge data from a relevant hospital cost reporting
period, for use in determining the incentive payment during a Federal
fiscal year. Federal fiscal years begin on October 1 of each calendar
year, and end on September 30 of the subsequent calendar year. Hospital
cost reporting periods can begin with any month of a calendar year, and
end on the last day of the 12th subsequent month in the next calendar
year. For purposes of administrative simplicity and timeliness, we
require that States use data on the hospital discharges from the
hospital fiscal year that ends during the Federal fiscal year prior to
the fiscal year that serves as the first payment year.
The discharge-related amount is $200 per discharge for discharges
1,150 through 23,000. To determine the discharge-related amount for the
3 subsequent years that are included in determining the overall EHR
amount, States should assume discharges for an individual hospital have
increased by the average annual growth rate for an individual hospital
over the most recent 3 years of available data from an auditable data
source. Note that if a hospital's average annual rate of growth is
negative over the 3 year period, it should be applied as such.
The overall hospital EHR amount requires that a transition factor
be applied to each year. This transition factor equals 1 for year 1,
[frac34] for year 2, [frac12] for year 3, and [frac14] for year 4, as
provided for in sections 1886(n)(2)(A) and 1886(n)(2)(E) of the Act,
and as incorporated through section 1902(t)(5)(B) of the Act. We note
that although, for purposes of the Medicare incentives, section
1886(n)(2)(E)(ii) of the Act requires a transition factor of 0, if the
first payment year is after 2013, we do not believe this rule would
apply in the context of the Medicaid incentive payments. Nothing in
section 1903(t) of the Act specifically cross references this 0
transition factor, and, notably, section 1903(t) of the Act allows
Medicaid incentive payments to begin as late as 2016.
The ``Medicaid Share,'' against which the overall EHR amount is
multiplied, is essentially the percentage of a hospital's inpatient,
non-charity care days that are attributable to Medicaid inpatients.
More specifically, the Medicaid share is a fraction expressed as--
Estimated Medicaid inpatient-bed-days plus estimated
Medicaid managed care inpatient-bed-days;
Divided by;
Estimated total inpatient-bed days multiplied by
((estimated total charges minus charity care charges) divided by
estimated total charges).
As indicated in the above formula, the Medicaid share includes both
Medicaid inpatient-bed-days and Medicaid managed care inpatient-bed-
days. This is in keeping with section 1903(t)(5)(C) of the Act, which
provides that in computing inpatient-bed-days, the Secretary shall take
into account inpatient-bed-days that are paid for individuals enrolled
in a Medicaid managed care plan under sections 1903(m) or 1932 of the
Act. We interpreted these managed care individuals to be individuals
enrolled in an managed care organization (MCO), prepaid inpatient
health plan (PIHP), or prepaid ambulatory health plan (PAHP) under 42
CFR part 438.
Some Medicaid managed care entities (that is, MCOs, PIHPs, and
PAHPs with risk contracts) provide substitute services (or, ``in-lieu-
of services'') in more cost effective or efficient settings than the
State plan services in the managed care contract. For example, in a
hospital inpatient setting, these services could be in a different
unit, such as a sub-acute wing or skilled nursing wing, so long as
States and contracting entities are in compliance with the actuarial
soundness rules in Sec. 438.6(c), provision of substitute services is
allowed. Although we understand that these substitute service days may
be used to achieve efficiency and cost effectiveness, we do not believe
such substitute service days should count as ``inpatient-bed-days'' in
the hospital EHR incentive payment calculation. The statute requires us
to calculate the Medicaid share ``in the same manner'' as the Medicare
share under section 1886(n)(2)(D) of the Act and such substitute
service days would not be considered ``in the same manner.'' Thus, we
proposed that for purposes of the Medicaid formula, we would count only
those days that would count as inpatient-bed-days for Medicare purposes
under section 1886(n)(2)(D) of the Act.
In addition, because the formula for calculating the Medicaid share
requires a determination of charity care charges, States should use the
revised Medicare 2552-10, Worksheet S-10 or another auditable data
source to determine the charity care portion of the formula. In the
absence of sufficient charity care data to complete the calculation,
section 1886(n)(2)(D) of the Act, requires the use of uncompensated
care data to derive an appropriate estimate of charity care, including
a downward adjustment for bad debts. We interpreted bad debt to be
consistent with the Medicare definition of bad debt as promulgated at
Sec. 413.89(b)(1).
Finally, per section 1886(n)(2)(D) of the Act, to the extent there
is simply not sufficient data that would allow the State to estimate
the inpatient bed-days attributable to Medicaid managed care patients,
the statute directs that such figure is deemed to equal 0. Likewise, if
there is simply not sufficient data for

[[Page 44499]]

the State to estimate the percentage of inpatient bed days that are not
charity care (that is, [estimated total charges--charity care charges]/
estimated total charges), the statute directs that such figure is
deemed to equal 1.
Unlike Medicaid EPs, who must waive rights to duplicative Medicare
incentive payments, hospitals may receive incentive payments from both
Medicare and Medicaid, contingent on successful demonstration of
meaningful use and other requirements under both programs.
The last year that a hospital may begin receiving Medicaid
incentive payments is FY 2016. States must make payments over a minimum
of 3 years and a maximum of 6 years. Additionally, in any given payment
year, no annual Medicaid incentive payment to a hospital may exceed 50
percent of the hospital's aggregate incentive payment. Likewise, over a
2-year period, no Medicaid payment to a hospital may exceed 90 percent
of the aggregate incentive.
Table 19 demonstrates several scenarios for Medicaid hospitals.
However, there are other scenarios not included here. For example, this
table assumes that a hospital would participate on a consecutive annual
basis until the incentive is exhausted. The purpose of Table 19 is to
illustrate the general timeline for Medicaid hospital incentives.
[GRAPHIC] [TIFF OMITTED] TR28JY10.055

Comment: Many commenters recommended that CMS instruct States to
provide hospitals the maximum incentive payments possible in their
first two payment years. Commenters provided many examples of how CMS
should instruct States to make payments. For instance, commenters
suggested that CMS require States to pay 50 percent of hospitals'
aggregate incentive payment in the first year and another 40 percent in
the second year--as a limited source of capital for adoption,
implementation, and upgrades. Many commenters stated that it is
critical that EHR incentive payments be made in a timely manner and not
delayed or affected by State budgetary problems or changes.
Response: After consideration of the public comments received, we
are finalizing these provisions as originally proposed, with one
clarification to ensure the statutory requirement that eligible
hospitals, after 2016, may not receive an incentive payment, unless a
payment was received in the prior year. The statute is imposing
maximums on what the State is authorized to pay eligible hospitals. At
section 1903(t)(5)(A) the statute requires that a State can make no
more than 50 percent of the hospital's aggregate incentive payment in
any one year. Likewise, over a 2-year period, the State cannot pay more
than 90 percent of the aggregate incentive. Finally, under
1903(t)(5)(D) no more than six years of payment may be made, and
payment may not be paid

[[Page 44500]]

for any year beginning after 2016, unless the hospital was provided an
incentive payment for the preceding year. However, these are limits on
State payments, not required minimums. We believe that States should
work with their provider communities to determine the best timeframes
for implementing their EHR programs and making payments to providers.
Comment: Some commenters indicated that incentive payments should
not be included in any calculation of total Medicaid payments for the
purpose of determining Medicaid shortfalls, disproportionate share
payments, upper payment limits, or any general Medicaid program
service.
Response: According to the statute, Medicaid HIT incentive payments
are made to encourage the adoption and use of certified EHR technology
defined by the statute, as well as support services including
maintenance and training that is for, or is necessary for the adoption
and operation of, such technology. Payments to providers under this
rule are not being made for the provision of services or the cost of
the provision of services to Medicaid beneficiaries or the uninsured.
Therefore, we are clarifying that EHR incentive payments made to
providers in accordance with the statute and final regulation are not
subject to the same limits as payments for items and services provided
to Medicaid beneficiaries and the uninsured including Medicaid upper
payment limits and disproportionate share hospital limits. This comment
is also addressed in the Medicare section at II.B.4.b.
Comment: One commenter noted a technical error in the proposed rule
at 495.310 (g) (2) Medicaid Share. The commenter questioned whether
(2)(iii) meant to qualify (2)(ii) or (2)(i), noting that the latter
would result in dual eligibles being removed from Medicaid days (the
numerator) and would not conform to the Act which would require that
they be removed from the denominator.
Response: We agree that the regulation includes a technical error,
and we read the statute as requiring that dually eligible individuals
be excluded from the denominator. Section 1903(t)(5)(C) states that the
Medicaid share should be calculated using a numerator that does not
include individuals ``described in section 1886(n)(2)(D)(i).''
Individuals described in that section are individuals for whom payment
may be made under Medicare Part A as well as individuals enrolled with
a Medicare Advantage Organization under Part C. Thus, dually eligible
individuals are excluded from the numerator in determining the Medicaid
share.
We are therefore revising section 495.310(g)(2)(iii) to ensure that
it refers to clause (i), rather than clause (ii), of Sec.
495.310(g)(2).
Comment: One commenter highlighted a technical error in the
proposed rule at Sec. 495.310(g)(1)(i)(B) when he requested
clarification for that section which reads: ``The discharge related
amount for a 12-month period selected by the State but with the Federal
fiscal year before the hospital's fiscal year that serves as the
payment year.'' He interpreted the language to mean that if the payment
year begins in 2011, the Federal fiscal year would be 2010; and the
discharge related amount would be for 2009.
Response: Section 495.310(g)(1)(i)(B) is improperly worded in the
proposed rule and should read, ``The discharge related amount for a 12-
month period selected by the State, but ending in the Federal fiscal
year before the hospital's fiscal year that serves as the first payment
year.'' For example: FY 2011 begins on October 1, 2010 and ends on
September 30, 2011. For an eligible hospital with a cost reporting
period running from July 1, 2010 through June 30, 2011, the State would
employ the relevant data from the hospital's cost reporting period
ending June 30, 2010 in order to determine the EHR incentive payment
amount for the hospital.
We are revising this language in the final rule at section
495.310(g)(1)(i)(B) to be clear.
Comment: Some commenters indicated that CMS should specify an
alternative source of charity care data that States may use so that
Medicare and Medicaid incentive payments can be determined
appropriately. Others commented that while CMS has proposed the
Medicare cost report, Medicaid cost report data, MMIS data, hospital
financial statements, and accounting records to determine Medicaid EHR
incentives, there is no absence of State-level usable data to implement
this definition.
Response: We agree that there are a number of data sources
available at the State and hospital levels that would allow States to
accurately capture charity care data for the purposes of calculating
hospital EHR amounts. However, we have no vehicle for identifying which
of these tools exist in individual States or across the country.
Medicare cost reports, Medicaid cost report data, MMIS data, hospital
financial statements, and accounting records are all items that we feel
confident are accessible to all States and providers. Additionally, we
believe that States and their provider communities are better versed at
determining the tools that will be most beneficial for their individual
programs. As such, we included the standard items listed as auditable
data sources, but did not prohibit the use of other appropriate
auditable data sources. States must describe their auditable data
sources in their SMHP and submit to CMS for review and approval.
After consideration of this comment, we are making no further
additions to this section of the final rule.
Comment: One commenter asked whether the criteria for determining
Medicaid eligible days and Medicaid managed care days in the Medicaid
share portion of the hospital incentive payment calculation is the same
criteria for determining Medicare DSH payments.
Response: The criteria for determining Medicaid eligible days and
Medicaid managed care days for Medicare DSH and Medicaid managed care
days for EHR incentive payments are not the same. Medicare DSH includes
unpaid days, while the EHR incentive payment calculation requires the
inclusion of only paid inpatient-bed days.
After consideration of this comment, we are making no further
additions to this section of the final rule.
Comment: One commenter asked for clarification of the term
``estimated'' Medicaid inpatient bed days.
Response: We are unclear about the commenter's question.
Specifically, the statute permits the use of ``estimated'' days in the
Medicaid share portion of the EHR hospital incentive payment
calculation. Therefore, we refer the reader to the hospital calculation
at section 1903(t)(5) and section 495.310 of this rule.
After consideration of this comment, we are making no further
additions to this section of the final rule.
Comment: One commenter requested that for purposes of accurately
calculating and auditing the Medicaid Share, CMS should eliminate data
provisions at 2080.18 of the State Medicaid Manual.
Response: We disagree. The provisions at 2080.18 of the State
Medicaid Manual do not adversely impact the calculation or auditing of
the Medicaid Share.
We have not made any changes to the regulation related to this
comment.
Comment: On commenter requested that we include as an auditable
data sources, data acquired through authorized trading partners, such
as clearing houses, eligibility systems maintained by CMS, state
Medicaid programs, and/or their agents.

[[Page 44501]]

Response: We agree that there are a number of data sources
available that would allow States to accurately data for the purposes
of calculating the Medicaid Share. However, we have no vehicle for
identifying which of these tools exist in individual States or across
the country. Medicare cost reports, Medicaid cost report data, MMIS
data, hospital financial statements, and accounting records are all
items that we feel confident are accessible to all States and
providers. Additionally, we believe that States and their provider
communities are better versed at determining the tools that will be
most beneficial for their individual programs. As such, we included the
standard items listed as auditable data sources, but did not prohibit
the use of other appropriate auditable data sources.
After consideration of this comment, we are making no further
additions to this section of the final rule.
Comment: One commenter asked whether the Medicaid payment is based
on an annually-calculated Medicaid Share, or is the Medicaid Share
established in the base year only and to be applied to the duration of
payments.
Response: For purposes of calculating the Medicaid hospital
incentive, the Medicaid Share is established in the base year.
After consideration of this comment, we are making no further
additions to this section of the final rule.
c. Alternative and Optional Early State Implementation to Make
Incentive Payments for Adopting, Implementing, or Upgrading Certified
EHR Technology
Unlike Medicare, Medicaid has no statutory implementation date for
making EHR incentive payments. In our proposed rule we discussed the
fact that some States might be prepared to implement their programs and
make EHR incentive payments to Medicaid providers in 2010 for adopting,
implementing, or upgrading certified EHR technology. We proposed to
allow States to initiate implementation of these payments to Medicaid
EPs and hospitals after the effective date of the final rule if they
could successfully demonstrate to CMS that they are ready to make
timely and accurate payments through the SMHP. States would include an
additional attestation for providers assuring that they are not
accepting payment in any other State.
We also proposed that to be approved for early implementation, a
State would be required to have an electronic system for provider
registration capable of collecting the relevant information (this
information is identified in section II.A.5.c of this final rule, where
we describe the data collection requirements).
Participating States would be responsible for transmitting the
required data to CMS so that CMS could ensure that no duplicate
payments were made to providers. We proposed to use the single provider
election repository described in section II.A.5.c. of this final rule
to assure no duplicative payments were made between States.
We did not propose that States would be able to make early payments
to meaningful users. Rather, our proposal was intended to offer
Medicaid providers an early opportunity for capital so that they would
be more likely to have the certified EHR technology required to
demonstrate meaningful use in successive periods. We stated that since
hospitals may qualify under both programs, we hoped that they would use
the early capital to qualify as meaningful users under the Medicare
program in the first year.
Comment: We received comments suggesting that our proposal on early
State implementation creates unreasonable pressure on States,
particularly given the status and timeline of the ONC rule on
certification criteria.
Response: We agree with commenters. We proposed this option in
order for States with very mature programs to proceed with early
incentive payments for adoption, implementation, and upgrading
certified EHR technology. However, in considering the complexity
associated with States establishing an electronic registration system
(which would only be temporary), as well as the fact that very few
providers (if any) will have certified EHR technology early enough for
this option, we believe that this may not be an efficient, cost-
effective option for many States.
Consequently, as a result of these comments, we are removing this
option. States will not be permitted to make payments until January
2011. Additionally, we wish to reiterate that States must have a SMHP
approved by CMS before making any payments to EPs and eligible
hospitals.
d. Process for Making and Receiving Medicaid Incentive Payments
The process for making payments involves coordination between
Medicare and State Medicaid agencies to avoid duplication of payments,
prevent fraud and abuse, and create program efficiencies to encourage
adoption. While we have responsibility regarding payments to Medicare
EPs and eligible hospitals, State Medicaid agencies (or their
contractors) are fully responsible for administering and disbursing the
incentive payments to Medicaid eligible providers.
We proposed to require that EPs make a selection between receiving
incentive payments through either the Medicare or Medicaid EHR
incentive programs. Medicaid EPs who practice in multiple States would
be required to choose only one State from which to receive Medicaid
incentive payments in each payment year. (We note that readers should
also refer to section section II.A of this final rule for additional
information regarding the EHR reporting period and the single provider
election repository).
As we noted in the proposed rule, the statute anticipates
coordination between the Medicare and Medicaid EHR incentive programs
to ensure no duplicate payments are made to EPs (see 1903(t) and
1848(o)(1)(D)(iii). Additionally, section 1848(o)(1)(B) of the Act
requires that Medicare incentive payments for eligible professionals
begin no earlier than 2011. While the Medicaid provisions have no
statutory start date, before States may begin implementing the Medicaid
EHR incentives, CMS, and ONC need to provide further direction to
States in the form of rulemaking and other policy guidance. To that
end, Medicaid will not begin to provide 100 percent FFP for incentive
payments any earlier than January 1, 2011. This also gives CMS, ONC,
and States an opportunity to coordinate between Medicare and Medicaid,
which will simplify administrative complexity in the EHR incentive
program and facilitate provider adoption.
Under this final rule Medicaid EPs, as discussed in section II.D.5
and II.A.5.c, will enroll in the program through the single provider
election repository. Once an EP selects the Medicaid EHR incentive
program, States must have a system for reporting and tracking necessary
information to qualify an EP for an incentive payment. In addition, as
detailed in Sec. 495.316 States are required to submit to CMS data on
the number, type and practice location(s) of providers who qualified
for an incentive payment on the basis of having adopted, implemented,
or upgraded certified EHR technology or who qualified for an incentive
payment on the basis of having meaningfully used such technology as
well as aggregate de-identified data on meaningful use. States' systems
and processes must receive prior approval, concurrent with the
requirements described in section II.D.8 of this final rule for review
and approval of the SMHP.
The specific timeframes for EPs and eligible hospitals to report
and submit

[[Page 44502]]

the required information in order to demonstrate they have adopted,
implemented, or upgraded certified EHR technology, as well as
meaningful use of such EHR technology are discussed in section
II.A.1.e. of this final rule. As discussed in that section, for the
first payment year based on meaningful use, the reporting period for
eligible hospitals and EPs will be a continuous 90-day period that both
starts and ends within the payment year. As long as the period spans
the 90-day continuous period and ends within the payment year (fiscal
year for hospitals, calendar year for EPs), the reporting period can
begin at any time during such payment year. States also are expected to
process payments on a rolling basis. We will issue further guidance
regarding the timing expectations needed for State systems to
coordinate with CMS and make timely payments
Comment: Several commenters were concerned that Medicaid EPs and
eligible hospitals that qualify for incentive payments in their first
year by adopting, implementing or upgrading certified EHR technology
are not afforded the same flexibility as Medicare EPs and eligible
hospitals in their second payment year. The commenters wrote that they
would be required to demonstrate meaningful use for the full year,
rather than 90 days in their second payment year, (even though it will
be their first year demonstrating meaningful use). The commenters
recommended that Medicaid EPs and eligible hospitals be subject to a
90-day reporting period in their second payment year when it is the
first year they are demonstrating meaningful use.
Response: We agree with the commenters and as discussed in section
II.A., we clarify that there is no EHR reporting period for adopting,
implementing, or upgrading certified EHR technology for Medicaid
provider's first payment year. In order to offer parity with Medicare
providers who must achieve meaningful use in the first year over a 90-
day period and over 12 months in subsequent years, the same policy will
apply to Medicaid providers. In other words, Medicaid providers in
their second participation year (or in their first payment year if they
are qualifying based on meaningful use) shall demonstrate meaningful
use over a 90-day reporting period and over 12-months for their third
and subsequent years.
e. Avoiding Duplicate Payment
In our proposed rule, we discussed the statutory requirement at
section 1903(t)(7) of the Act that the Medicare and Medicaid programs
coordinate payments to avoid duplication, and that CMS and the States
coordinate payments through a data matching process, utilizing NPIs to
the extent practicable. We also discussed section 1903(t)(2) of the
Act, which states that Medicaid EPs must waive rights to Medicare
incentive payments under sections 1848(o) and 1853(l) of the Act;
hospitals, however, may qualify for incentives under both programs. We
also proposed requirements under the review and approval of SMHPs in
part 495 subpart D for States to verify that providers meet these
requirements.
In section II.A of this final rule, we discuss the final
requirements we are adopting in order to avoid duplicate payments in
the Medicare and Medicaid incentive programs. We also respond to
comments in that section (see section II.A.5.c. of this final rule). As
discussed in that section of the final rule, to ensure against
duplicate incentive payments, we believe three conditions are required:
(1) Knowing which EHR incentive program a provider has selected, (2)
uniquely identifying each provider participating in each incentive
program; and (3) ensuring that each State has access to the information
on which EPs or hospitals intend to receive incentive payments from
another State, or from the Medicare program.
To achieve all three of these conditions, we will collect this data
in a single provider election repository. Next, in administering each
State Medicaid EHR incentive program, States will cross-check for
potential duplicative payments through the data available to them
through the single provider election repository, which is based on the
NPIs. We believe that this coordinates with our requirements that a
State must have an approved SMHP that will include a mechanism for
cross-checking this information prior to payment.
f. Flexibility for EPs To Alternate Between Medicare and Medicaid EHR
Incentive Programs One Time
We refer readers to section II.A.5.b of this final rule, which
discusses rules that would allow Medicare and Medicaid EPs to make one
EHR incentive program election change prior to the 2015 payment year,
and not to permit any switching after the 2014 payment year. Under such
a proposal, even if an EP initially received incentive payments under
the Medicare program, such an EP could still switch to the Medicaid
program one time prior to 2015 (assuming the professional meets all
eligibility criteria for the Medicaid incentives program). Similarly,
an EP who initially selected the Medicaid EHR incentive program could
switch to the Medicare program one time prior to 2015. (In other words,
the last payment year an EP could switch would be the 2014 payment
year.)
Comments received on these policies are addressed in section
II.A.5.b. of this final rule.
g. One State Selection
In the proposed rule, we proposed that EPs and hospitals with
multi-State Medicaid practice locations annually pick only one State
from which to receive incentive payments. In other words, a provider
would not be able to receive incentive payments from more than one
State in the same year. Medicaid EPs and hospitals could annually
change the State they select when they re-attest to program
requirements.
We considered the possible impact of this proposed approach with
respect to patient volume calculations on Medicaid EPs and hospitals in
border State areas, stating that because the Medicaid incentive payment
for EPs will remain the same--regardless of whether they receive
payment from one State or from multiple States--we did not think the
administrative complexity associated with dividing and administering
payments between or among more than one State could be justified. We
recommended, however, that States consider border State providers when
developing their policies on patient volume and the attestation
methodology. We afforded additional flexibility in the patient volume
at proposed Sec. 495.306 to account for unique circumstances and data
collection.
Comment: Providers inquired whether it is permissible for an EP who
practices in more than one State to aggregate patient encounters in
order to achieve the 30 percent Medicaid patient volume criteria.
Response: First, it is not clear that aggregating patient volume
across States will be an issue once EPs actually begin tallying up
patient volume. Patient volume is calculated as a percentage, and not
an absolute number. Thus, it does not appear that, but for aggregating
patient volume across multiple States, an EP would not be able to
qualify for incentive payments in any State. For example, if an EP has
10 percent patient volume in one State (10 of 100 encounters are
Medicaid) and 20 percent patient volume in a second State (20 of 100
encounters are Medicaid), this does not add up to 30 percent patient
volume (but, rather, results in a 15 percent patient volume

[[Page 44503]]

as a result of dividing 30 by 200). To restate, we do not believe that
an EP will need to sum patient encounters across multiple States in
order to reach the 30 percent patient volume--as in order to reach this
patient volume threshold, the EP would likely meet the 30 percent in at
least one State. Indeed, it appears that the only benefit of
aggregating patient volume across States would be to permit an EP who
has more than a 30 percent patient volume in one State to receive
incentive payments from another State in which s/he does not meet the
30 percent threshold.
Nevertheless, we recommend that States consider the circumstances
of border State providers when developing their policies and
attestation methodologies. To afford States maximum flexibility to
develop such policies, we will not be prescriptive about whether a
State may allow a Medicaid EP to aggregate his/her patients across
practice sites, if the State has a way to verify the patient volume
attestation when necessary. States will propose their policies and
attestation methodologies to CMS for approval in their State Medicaid
HIT plans.
We are making no additional revisions to this section of the rule
as a result of this comment.
5. Single Provider Election Repository and State Data Collection
We refer readers to section II.A.5.c of this final rule for a
discussion of the single provider election repository and the comments
received on this policy. As discussed in that section, the repository
will collect a minimum amount of information on all EPs and hospitals
to prevent duplicative payments and coordinate technical assistance.
6. Collection of Information Related to the Eligible Professional's
National Provider Identifier and the Tax Identification Number
In our proposed rule, we proposed that EPs in multiple group
practices or multiple types of practice locations would be required to
select one TIN for Medicaid EHR payment disbursement. In other words,
such EPs would not be permitted to require a State to divide payments
among different practices or practice locations based upon group TINs.
We explained that requiring EPs to use only one TIN would reduce
administrative complexity, as it would ensure that States are not put
in the position of dividing payments in any way an EP requests (such as
by patient encounters or amount contributed to EHR technology). We also
stated that requiring reimbursement to be made to one TIN would reduce
opportunities for fraud or abuse, as States would be able to cross-
check EP and TIN combinations more easily to verify EP attestations.
We also stated that although the State would not divide payments
among the various TINs of an individual EP, Medicaid EPs could,
themselves, decide to divide payment. These EPs could independently
distribute funds among their respective group practices or practice
locations after the initial disbursement from the State to their
designated TIN.
Comment: We received comments suggesting that EPs should be allowed
to proportion their payments and give multiple TINs.
Response: For these reasons advanced in the proposed rule, we
believe that permitting an EP to divide the incentive payment among
multiple TINs would introduce an unnecessary level of administrative
complexity into this temporary program. It also could increase the
opportunities for fraud and abuse as it would be more administratively
cumbersome for States to track multiple payments (to ensure correct
payments) and to track and verify multiple eligibility-related EP
attestations. Once a payment is disbursed from the State, nothing
precludes the EP from further disbursing the incentive payment, subject
to the applicable fraud, waste, and abuse laws, regulations, and rules.
After consideration of the public comments received, we are
finalizing these provisions as proposed.
7. Activities Required To Receive Incentive Payments
a. General Overview
As we discussed in our proposed rule, to qualify to receive a first
year Medicaid incentive payment, section 1903(t)(6)(C)(i) of the Act
indicates that EPs and eligible hospitals must demonstrate that they
are ``engaged in efforts to adopt, implement, or upgrade certified EHR
technology.'' For providers who meet this standard in their first year
of participation in the Medicaid incentive program, in subsequent years
of participation, they must then demonstrate ``meaningful use of
certified EHR technology through a means that is approved by the State
and acceptable to the Secretary,'' and that may be based upon the
methods employed under the Medicare incentive payments to physicians
and hospitals, per sections 1848(o) or 1886(n) of the Act.
b. Definitions Related to Certified EHR Technology and Adopting,
Implementing or Upgrading Such Technology
(1) Certified EHR Technology
As noted previously, in order to receive a Medicaid incentive
payment the EHR technology must be ``certified.'' Section 1903(t)(3) of
the Act defines ``certified EHR technology'' as ``a qualified
electronic health record (as defined in section 3000(13) of the Public
Health Service Act) that is certified pursuant to section 3001(c)(5) of
such Act as meeting standards adopted under section 3004 of such Act
that are applicable to the type of record involved (as determined by
the Secretary), such as an ambulatory electronic health record for
office-based physicians or an inpatient hospital electronic health
record for hospitals).'' In section II.A of this final rule, for both
Medicare and Medicaid, we discussed incorporating ONC's definition of
certified EHR technology.
(2) Adopting, Implementing or Upgrading
Unlike the Medicare incentive programs, the Medicaid program allows
eligible providers to receive an incentive payment even before they
have begun to meaningfully use certified EHR technology. These
providers may receive a first year of payment if they are engaged in
efforts to ``adopt, implement, or upgrade'' certified EHR technology.
In proposed Sec. 495.302, we define adopting, implementing or
upgrading certified EHR technology as the process by which providers
have installed and commenced utilization of certified EHR technology
capable of meeting meaningful use requirements; or expanded the
available functionality and commenced utilization of certified EHR
technology capable of meeting meaningful use requirements at the
practice site, including staffing, maintenance, and training.
For the purposes of demonstrating that providers adopted,
implemented, or upgraded certified EHR technology, we proposed that
Medicaid EPs and hospitals would have to attest to having adopted,
(that is, acquired and installed) or commenced utilization of (that is,
implemented) certified EHR technology; or expanded (that is, upgraded)
the available functionality of certified EHR technology and commenced
utilization at their practice site. We proposed that States would be
responsible for ensuring that processes are in place to verify that
providers have actually adopted, implemented or upgraded certified EHR
technology, patient volume, as well as

[[Page 44504]]

other requirements in this section, including verifying that
attestations are consistent with methodologies to combat fraud and
abuse (see proposed Sec. 495.366 through 370, Financial Oversight,
Program Integrity, and Provider Appeals). We proposed that the State's
SMHP would detail these processes.
The CMS Medicaid Transformation Grants demonstrated the many
challenges that exist to adopting EHR technology. EHR system
availability is not the same as EHR system utilization. It is for that
reason that we proposed to include staff training and efforts to
redesign provider workflow under the definition of implementing
certified EHR technology. We explained that success is not simply
defined by the acquisition and installation of new or upgraded
certified EHR technology, but more importantly by providers
demonstrating progress towards the integration of EHRs into their
routine health care practices to improve patient safety, care, and
outcomes.
In establishing criteria for the ``adoption'' portion of the
``adopt, implement, or upgrade'' requirement, we proposed that there be
evidence that a provider demonstrated actual installation prior to the
incentive, rather than ``efforts'' to install. We stated that this
evidence would serve to differentiate between activities that may not
result in installation (for example, researching EHRs or interviewing
EHR vendors) and actual purchase/acquisition or installation. As
Medicaid incentive payments are intended to stimulate meaningful use of
EHR technology, we stated our belief that the payments need to result
in tangible adoption, implementation, or upgrading of certified EHR
technology. We stated that States would be responsible for verifying
this evidence of EHR adoption.
In establishing criteria for the ``implementation'' portion of
``adopt, implement or upgrade'' requirement, we proposed that
``implementation'' mean that the provider has installed certified EHR
technology and has started using the certified EHR technology in his or
her clinical practice. Implementation activities would include staff
training in the certified EHR technology, the data entry of their
patients' demographic and administrative data into the EHR, or
establishing data exchange agreements and relationships between the
provider's certified EHR technology and other providers, such as
laboratories, pharmacies, or HIEs.
In establishing the criteria for the ``upgrade'' portion of
``adopt, implement or upgrade'' requirement, we proposed ``upgrade'' to
mean the expansion of the functionality of the certified EHR
technology, such as the addition of clinical decision support, e-
prescribing functionality, CPOE or other enhancements that facilitate
the meaningful use of certified EHR technology. We proposed that States
describe in their SMHPs the process that would be in place for ensuring
that providers have actually adopted, upgraded or implemented certified
EHR technology. We encourage States to consider the submission of a
vendor contract from providers to ensure the existence of EHR
technology.
Comment: Several commenters recommended that CMS clarify if
``upgrade'' does or does not apply to an already certified EHR. They
recommended that CMS confirm that an upgrade is intended to enable a
provider to expand existing functionality of an EHR so that it meets
the new certification criteria.
Response: To clarify this question, an example of upgrading that
would qualify for the EHR incentive payment would be upgrading from an
existing EHR to a newer version that is certified per the EHR
certification criteria promulgated by ONC related to meaningful use.
Upgrading may also mean expanding the functionality of an EHR in order
to render it certifiable per the ONC EHR certification criteria.
We are making no additional revisions to this section of the final
rule as a result of this comment.
Comment: Commenters wrote that given that adopt/implement/upgrade
(AIU) involves significant practice workflow redesign and that the
States' overarching goal is to increase the level of provider
participation, the commenters recommended that CMS require only AIU for
participation Year 1 and Year 2. They further recommended that CMS
allow AIU compliance to be further defined as the provider developing,
submitting, and following a customized plan for the necessary workflow
changes with timelines (whose development can be assisted by the
Regional Extension Centers); the provider would have to meet their
timelines for each year in Stage 1 to qualify for the incentive
payment; and the AIU plan timelines would have to be structured so
submission of HIT and clinical quality measures would begin in Stage 2.
Response: The statute at section 1903(t)(6)(C) permits Medicaid
providers to receive the EHR incentives for adopting, implementing or
upgrading to certified EHR technology in their first participation
year. A provider's first participation year may be any year between
2011 through 2016. In their State Medicaid HIT Plans, States will
propose to CMS how they will audit and oversee Medicaid providers'
adoption, implementation or upgrading to certified EHR technology.
States should propose further details to CMS about how they will verify
that providers have met this requirement.
After consideration of the comments received, we do not believe
that just the development and submission of an implementation plan for
EHR adoption is a significant enough commitment to warrant the AIU
incentive payment. There is nothing binding, nor is there any financial
contribution towards such a plan.
We are making no additional revisions to this section of the final
rule as a result of this comment.
Comment: Many commenters suggested that they believe the goal of
this incentive is to help defray some of the costs of adopting,
implementing, and upgrading to certified EHR technology. As such, the
commenters believe ``proof'' of AIU should not require completion of
AIU but demonstrated commitment to AIU. For example, a proof of
purchase, a schedule for training and implementation, and periodic
reporting from practices on progress on the schedule could suffice. The
commenters requested that States have flexibility to define what is
sufficient to trigger payment.
Response: States should provide details to CMS on how they will
audit and oversee Medicaid providers' adoption, implementation or
upgrading to certified EHR technology in their SMHP. States' SMHP
should include further details about how they will verify that
providers have met this requirement. However, while States may propose
how they will determine what AIU activities are sufficient for the EHR
incentive payment; CMS must approve their proposals via the SMHP. The
definitions included in this final regulation by CMS for adopt,
implement or upgrade do imply completion of at least one of the three
tasks. A proof of purchase or signed contract would likely be an
acceptable indicator of EHR adoption per the States. Implementation is
on-going, therefore working actively with Regional Health IT Extension
Centers on implementation, completion of specific benchmarks or other
activities towards implementation would be acceptable.
We are making no additional revisions to this section of the final
rule as a result of this comment.
Comment: A commenter recommended that State Medicaid agencies
provide eligible hospitals with

[[Page 44505]]

the maximum incentive payments for their first two payment years as a
limited source of capital for AIU.
Response: The Medicaid hospital calculation was part of the HITECH
statute and not defined by CMS. Eligible Medicaid hospitals can receive
their first year's payment for AIU and not meaningful use, but must
meet the meaningful use requirement in their second and subsequent
participation years.
We are making no additional revisions to this section of the final
rule as a result of this comment.
Comment: A commenter recommended that a Medicaid provider be
permitted to qualify for their first year Medicaid EHR incentive even
if they have not actually installed certified EHR technology but have
spent or are committed to spend an amount equal to at least the lesser
of $50,000 or 5 percent of the Medicaid EHR incentive amount.
Response: In consideration of the comments, we are clarifying that
the final definition of adopt, implement or upgrade is inclusive of
providers' acquisition, such as a purchase, of a certified EHR.
Providers will be responsible for providing documentation which
substantiates AIU as required by the State Medicaid Agency.
We are revising the definition of adopt, implement, and upgrade as
a result of these comments, see section 495.302.
c. Other General Terminology
In our proposed rule, we proposed definitions for ``EHR reporting
period'' and ``payment period,'' stating that these definitions relate
to the requirements for Medicaid EPs participating in the Medicaid EHR
incentive program. As discussed previously, the reporting period is
significant for EPs and eligible hospitals because it will define the
period during which the provider must demonstrate meaningful use of
certified EHR technology. The reporting period also is significant for
States, because States will refer to such reporting periods in assuring
us that providers are eligible to participate in the Medicaid EHR
incentive program. (Requirements relating to the components that must
be included in the SMHP were specified in proposed Sec. 495.332). In
the proposed rule, we specified that States would need to refer to the
providers' reports of the activities that establish their efforts to
adopt, implement, or upgrade certified EHR technology. Similarly, once
meaningful use of EHR technology is required, States would need to
refer to providers' reports on meaningful use, including reporting of
clinical quality measures (see section II.A. of this final rule for
requirements for clinical quality measures), in accordance with the
appropriate EHR reporting period. States could not appropriately make
incentive payments in the absence of such reporting.
We proposed that States would be required to validate to us that
the Medicaid EPs and hospitals meet all of the eligibility criteria to
qualify for Medicaid incentive payments, including the applicable
patient volume thresholds, hospital-based requirements, and all other
requirements. States would develop their own administration, payment
and audit processes, and as described in Sec. 495.332, we would
require that States include in their SMHPs how they would obtain
Medicaid EPs' and hospitals' attestations of eligibility to qualify for
the Medicaid incentive payments. We proposed that permissible means for
ensuring patient volume and all of the requirements described in this
section would include survey, attestation, or the creation of special
codes on claims, subject to our prior approval.
Section 1903(t)(6)(C)(ii) of the Act also indicates that in the
case of an early adopter, that is, a Medicaid EP or eligible hospital
that has already adopted certified EHR technology, such provider would
receive payment in the first year and all subsequent years of the
incentive program by demonstrating meaningful use.
In our proposed rule, we discussed our expectation that the bar for
demonstrating meaningful use of certified EHR technology will rise in
years to come. In this final rule, meaningful use and its evolving
criteria are discussed in section II.A. In order to receive Medicaid
incentive payments, providers will be required to demonstrate (and
States will be required to track and validate) meaningful use, as
described in section II.A.2. of this final rule. In section II.D.8 of
this final rule, we also discuss our policies regarding States' ability
to require additional objectives in the demonstration of ``meaningful
use,'' or otherwise add to the Federal definition of meaningful use. We
also discuss the requirement that States receive prior approval of any
such additions.
As we discussed in the proposed rule, we believe that States should
carefully consider how to build upon their existing EHR activities and
infrastructure without deterring eligible Medicaid providers from
participating by compelling them to use a particular system. We
encourage States that were awarded Federal HIT/EHR grants, such as the
Medicaid Transformation Grants, to the extent practicable, to connect
the tools and infrastructure developed under their Federal grant funds
with providers' efforts to adopt, implement, and upgrade certified EHR
technology and to become meaningful users of certified EHR technology.
We will be evaluating States' HIT Planning Advanced Planning Documents
(PAPDs) and SMHPs with this objective in mind, as described section
II.D.8 of this final rule.
As we discussed in the proposed rule, States' system requirements
for monitoring meaningful use must include the capacity to determine
the appropriate stage of meaningful use and the appropriate incentive
payment amount, depending upon the providers' payment year. In other
words, regardless of the calendar year, a provider's first year as a
participant in the Medicaid EHR incentive program is when that provider
must demonstrate either adoption, implementation, upgrading or
meaningful use of certified EHR technology. States' systems must be
able to track a provider's year of entry into the Medicaid EHR
incentive program to determine the correct eligibility criteria and
generate the appropriate Medicaid incentive payments.
Once States are giving providers the Medicaid EHR incentive
payments for being meaningful users of EHRs, and in 2012 begin
receiving clinical quality measures data from those providers, we
proposed that States would be required to share any such reported data
with CMS in an aggregated, de-identified manner, on an annual basis.
The timetable and format for sharing the clinical quality measurement
data would be provided to States in future policy guidance issued by
CMS. States' failure to submit these required reports to us could
result in discontinued funding or disallowances. See the discussion
below regarding the SMHP and the State reporting requirements. We would
use the States' reports, including data on meaningful use and clinical
quality measures, in order for the Secretary to fulfill her
responsibilities to Congress under section 1903(t)(10) of the Act. This
provision requires that the Secretary report to Congress on the
improvement of health outcomes, clinical quality, or efficiency as a
result of implementing this program. For hospitals eligible for both
the Medicare and Medicaid EHR incentive programs, we proposed that we
would use the meaningful use measures hospitals report to us to make
quality data on Medicaid eligible hospitals available to States.
Comment: Commenters requested clarification on the reporting period
for

[[Page 44506]]

adopting, implementing, and upgrading, and whether this period is
similar to the 90-day period for demonstrating meaningful use in the
first year.
Response: As discussed earlier, we are clarifying that there is a
no reporting period for AIU for the providers' first participation
year. However, there is a 90-day reporting period for the first
participation year in which Medicaid providers qualify by demonstrating
meaningful use. The rationale is that we understand that not all AIU
activities require 90 days, such as EHR acquisition. States will
determine how they plan to implement this requirement.
As a result of this comment and a similar comment above, we are
revising section 495.4 to indicate that there is no EHR reporting
period for adopting, implementing, or upgrading in Medicaid providers'
first participation year, if they qualify based on AIU, and there is a
90-day reporting period for both the first year that a Medicaid
provider demonstrates MU (regardless of whether they demonstrated AIU
in their first participation year or are qualifying based on MU in
their first participation year).
Comment: Several commenters requested that CMS clarify the process
that will assure Medicaid access to Medicare meaningful use data, at a
minimum for (1) hospitals who receive both Medicaid and Medicare
payments and (2) eligible providers that may switch once between the
Medicaid and Medicare incentive programs. Commenters requested that CMS
provide States with Medicare quality reporting/data in a timely fashion
(for example, within 30 days of receipt of such information).
Alternatively, commenters suggested that the providers could be
required to report separately to both Medicare and Medicaid.
Response: We are finalizing our policy as proposed. We believe that
it would represent an undue burden on hospitals eligible for both EHR
incentive payments to report their data to both CMS and the States. We
will issue further guidance about how States will be able to access the
meaningful use data submitted to CMS by hospitals eligible for both
Medicare and Medicaid EHR incentive payments in order for the State to
meet its audit and oversight requirements. It is not clear to CMS why a
State would require access from CMS to an eligible professional's
meaningful use data if they were a Medicare EHR Incentive Program
participant in the prior year. States can only base a Medicaid
provider's EHR incentive payment, as it pertains to meaningful use, on
the current participation year's EHR reporting period.
We are making no additional revisions to our regulations as a
result of this comment.
Other than the changes explained above, we are finalizing the
remainder of our proposed policies as they were proposed.
d. Quality Measures
We refer readers to section II.A.3 of this final rule-for a
discussion of the clinical quality measure reporting required for
demonstrating meaningful use of certified EHR technology. As discussed
previously, we intend to update our definition of meaningful use
biennially, and we expect that our updated, Stage 2 definition would
include additional Medicaid clinical quality measures to be reported
from EHRs. We intend to work with the quality measurement community to
develop these Stage 2 quality measures (see section II.B.1.d. of this
final rule).
Comment: Several commenters believe that the current clinical
measures do not reflect key clinical services and issues for the
Medicaid population, including behavioral health, dental, long-term
care, and care coordination (particularly across physical and
behavioral health care).
The commenters recommend that CMS work with the Medicaid Medical
Directors and ONC and consider the development and inclusion of
clinical and non-clinical quality measures that are more representative
of the Medicaid population. Alternatively they wrote that CMS and ONC
should have a ``placeholder'' to accommodate data and interoperability
for these measures. Commenters wrote that the areas with gaps are
behavioral health, dental care, long-term care, special needs
populations and care coordination, particularly across physical and
behavioral health. The commenters recommended that new clinical quality
measures be added as ``placeholders'' for care provided by non-
eligible, but critical Medicaid providers, such as Community Mental
Health Centers, Home Health, and Renal Dialysis Centers.
Many commenters noted that with regard to pediatric clinical
quality measures, they recommend that first-year measures focus on
immunizations, diabetes, asthma, autism, and lead screening. They also
recommend measures to introduce in 2012 and beyond to include smoking,
obesity, disease- or condition-specific measures, and measures aimed at
reducing disparities. They further recommended measures to introduce in
2013 and beyond include the development of clinical quality measures on
psychology, child abuse, developmental delays, and efficiency measures.
Response: We agree that these measures (listed directly above) have
clinical relevance for providers. However we are aligning with the
Medicare Stage 1 meaningful use provisions regarding publication and
opportunity for public comment on quality measures before they are
finalized. We are not including additional meaningful use objectives
and measures that were not discussed in the proposed rule.
Comment: Several commenters believed that the quality measures
proposed in the interim rule do not match the quality measures that
HRSA currently requires FQHCs to report. The commenters would like to
work with CMS and HRSA to move forward and harmonize the quality
measures by 2013 but requested that until quality measures are
harmonized across the federal government system, FQHCs and the EPs who
qualify and assign their Medicaid incentive payments to the FQHC should
be allowed to report on the current HRSA measures.
Response: Meaningful use applies to each individual EP. Therefore
the HRSA quality measures, which are facility-based, not necessarily
NQF-endorsed, or reportable from EHRs are not an acceptable alternative
for EPs who practice at an FQHC. Furthermore, as explained in section
II.A. of this final rule, we are not including in the final rule
quality measures that were not included in the proposed rule. To ensure
uniformity across both programs, we have adopted this same policy for
Medicaid. We believe it is important to offer Medicaid providers and
stakeholders the same opportunity for public comment on quality
measures.
We agree with the goal of harmonizing quality measure reporting
across Federal programs and will engage with stakeholders and experts
to address this priority as part of the development of the Stage 2
definition of meaningful use.
We are finalizing these provisions as proposed and we will continue
to work to identify, and develop electronic specifications for
additional clinical quality measures that address current gaps, such as
long-term care, behavioral health, pediatrics and oral health for Stage
2 of meaningful use. In particular, we recognize the lack of endorsed
oral health clinical quality measures, with identified and tested
electronic specifications. This poses a challenge for dentists, who are
eligible professionals for the Medicaid EHR

[[Page 44507]]

incentives, to demonstrate meaningful use, other than with the general,
profession-neutral measures.
While an eligible professional can report ``zero'' for the
denominator of any measure for which s/he does not have any relevant
patients, we will work to include in Stage 2 of meaningful use,
clinical quality measures that would provide useful data to CMS and
States on oral health care as reported by EHRs.
In addition, in order to minimize provider burden, and to maximize
measure reporting efforts and resources, we seek to align the quality
measures for the Stage 2 definition of meaningful use with other
quality measures development and reporting related to health care
reform and other CMS quality measures programs, as appropriate and
feasible. Stage 1 of meaningful use is limited to objectives and
measures that are already in existence, not those still under
development. Measures will be included that have operational relevance
to the care provided to Medicaid and CHIP beneficiaries by eligible
professionals and hospitals defined in the HITECH Act.
8. Overview of Conditions for States To Receive Federal Financial
Participation (FFP) for Incentive Payments and Implementation Funding
Section 1903(a)(3)(F) of the Act provides that States are eligible
for 100 percent FFP for direct payment expenditures to certain Medicaid
EPs and eligible hospitals to encourage the adoption and use of
certified EHR technology. States are also eligible for 90 percent FFP
for reasonable administrative expenses, contingent on State compliance
with the following requirements: (1) Using the funds to administer
Medicaid incentive payments for certified EHR technology, including
tracking of meaningful use by Medicaid EPs and eligible hospitals; (2)
conducting oversight of the Medicaid EHR incentive program, including
routine tracking of meaningful use attestations and reporting
mechanisms; and (3) pursuing initiatives to encourage the adoption of
certified EHR technology for the promotion of health care quality and
the exchange of health care information. (See 1903(t)(9) of the Act.)
This section of the final rule discusses the requirements for
States to request FFP from CMS for the Medicaid EHR incentive program.
Additionally, this section is closely connected to the requirements
outlined in Financial Oversight, Program Integrity and Providers
Appeals for purposes of oversight and accountability.
In proposed Sec. 495.302, we defined terms used in the Medicaid
subpart of the regulations governing State requests for FFP. Although
some of these terms have been defined in other portions of our
regulations, for ease of reference, and in order to define the terms in
this specific context, we proposed to separately include definitions in
part 495.
We proposed to include in our regulations the requirements that in
order to qualify to receive FFP for administering the incentive
program, States must develop a SMHP, an HIT Planning APD (PAPD), and an
HIT Implementation APD (IAPD). These documents lay out the process used
by States to implement and oversee the EHR incentive program, and will
help States to construct an HIT roadmap to develop the systems
necessary to support eligible providers in their adoption and
meaningful use of certified EHR technology. The development of a SMHP
(see also Sec. 495.332) provides States with the opportunity to
analyze and plan for how EHR technology, over time, can be used to
enhance quality and health care outcomes, while reducing overall health
care costs. The uses of EHR technology can be integrated with existing
State resources to achieve these goals.
We provided guidance in a State Medicaid Director's (SMD) letter on
September 1, 2009, on this process and the State efforts necessary to
receive the 90 percent FFP for planning-related expenditures. As stated
in that letter, and as further required through this rulemaking, our
review process ensures that States are complying with requirements of
the HITECH Act, and that they demonstrate to the ``satisfaction of the
Secretary'' that they are using the funds in the manner anticipated by
the law. For example, because of our oversight responsibilities, simply
proposing activities would not ensure the 90 percent FFP. As explained
in the letter, and as further reflected in this rulemaking, we must
review and prior approve all elements of the State's SMHP, and APD
documents, and work with States to determine the appropriate level and
type of FFP.
States are required to submit these advance planning documents in
order for us to approve receipt of the 90 percent Federal match.
Specifically, prior approval is required for the HIT PAPD (see also
Sec. 495.336). The deliverable resulting from the HIT PAPD is the
SMHP. The SMHP must be reviewed and approved before it is included in
an IAPD (see also Sec. 495.338). The IAPD also must be prior approved.
Until approval is granted States cannot draw down funds.
For purposes of the Medicaid EHR incentive program, we believe
there are two high-level phases in the process of planning and
implementing the incentive program, as well as the promoting the
adoption of EHR. Phase I includes initial planning, including an
assessment of the State EHR environmental landscape, and development of
the SMHP. As explained in our September 1, 2009 letter, the vehicle for
informing us of Phase I activities is the HIT PAPD, and indeed, over 40
States have already submitted their PAPDs and have received funding to
begin Phase I activities. Phase II then involves further development
and full implementation of the SMHP. Consequently, the HIT IAPD is the
vehicle for reporting of Phase II activities. As discussed in the SMD
letter, and as further reflected in this final rule, States need to
receive prior approval of their planning documents. In fact, we have
already worked closely with the majority of States in developing their
HIT PAPDs, prior to them initiating their EHR planning activities, and
we expect this close coordination to continue between the States and
CMS.
Also, as proposed, in this final rule we will require States to
obtain prior written approval of funding, planning documents, proposed
budgets, project schedules, and certain implementation activities that
a State may wish to pursue in support of the Medicaid EHR incentive
program to encourage the adoption and use of certified EHR technology
in line with the 90 percent FFP available to States. To minimize the
burden on States, we designed the prior approval conditions, and the
prior approval process, to mirror what is presently used in support of
acquiring automated data processing equipment and services in
conjunction with development and operation of State MMIS (the State's
automated mechanized claims processing and information retrieval system
approved by CMS).
As proposed, this final rule (at 495.348) will require State
Medicaid programs to comply with current procurement standards.
Specifically, at 495.348 we have included language that accords with
the procurement requirements in 45 CFR part 95 subpart F and
incorporates many of the procurement standards previously contained in
42 CFR part 74. Inclusion of these procurement requirements maintains
the long-standing procurement standards and policies for State
information technology contracts.

[[Page 44508]]

Under these standards the State must ensure that when procuring HIT
equipment and/or services, there is maximum practical open and free
competition, and that any procured materials or services are obtained
in a cost-effective manner. The regulations also make clear that the
State, as the grantee, is responsible for meeting its contractual
responsibilities under any of its procurements, and will not have
recourse to the Federal government to settle or satisfy its contractual
and administrative issues. Further, States must have written standards
of conduct regarding the performance of its employees that are engaged
in the award and administration of the HIT equipment/services contracts
(including conflict of interest rules contained in 495.348(c)). States
must have written procurement procedures that accord with 495.348(e)
and a system for administering contracts in accordance with 495.348(f).
Procurement contracts must meet the additional requirements contained
in 495.348(g) as well as describe the conditions under which the
contract may be terminated for default or because of circumstances
beyond the control of the contractor (see 495.348(h)). Procurement
contracts must include provisions allowing State and Federal access to
the materials and staff of the contractor, in accordance with
495.348(i).
As was proposed, our final regulations at 495.346 also will require
the State agency to allow the Department access to all records and
systems operated by the State in support of the program. Final
regulations at 495.352 impose reporting requirements on States to
submit to the Department, on a quarterly basis, a progress report
documenting specific implementation and oversight activities performed
during the quarter. Regulations at 495.354 through 495.360 contain
rules for charging equipment, non-discrimination requirements,
requirements for cost allocation plans, and requirements for ownership
rights in software. Our rules would require termination of FFP in the
case of States failing to provide access to information relating to any
of the requirements we have included in this subpart. We believe the
procurement and other rules discussed above are authorized under
section 1902(a)(4) of the Act, as well as under section 1903(t)(9) of
the Act requiring a State to conduct adequate oversight of its program,
and use its funds to administer the incentive payments. In addition,
any reporting and other requirements will assist us in submitting the
reports that are required under section 1903(t)(10) of the Act, which
requires us to monitor and report on the progress of implementation of
the EHR provisions.
As proposed, State Medicaid agencies will be required to attest, as
required by section 1903(t)(6)(A)(i) of the Act, that States make
Medicaid incentive payments to a Medicaid EP or eligible hospital
directly (or to an employer or facility to which such Medicaid EP or
eligible hospital has assigned their Medicaid incentive payments)
without any deduction or rebate. States must also attest that payments
to an entity promoting the adoption of certified EHR technology, as
designated by the State, will only be made if participation in such a
payment arrangement is voluntary for the Medicaid EP involved, and if
such entity does not retain more than 5 percent of such assigned
Medicaid incentive payments for costs not related to such technology.
(See 495.332 of our final rules). States are required to attest that
the entire incentive payment has been forwarded to the eligible
Medicaid provider, and that no Medicaid eligible professional or
hospital is required to return any portion of the incentive payment to
the State Medicaid agency. States must establish a process to ensure
that any existing fiscal relationships with eligible professionals or
hospitals to disburse the Medicaid incentive payments through Medicaid
managed care plans does not result in payments that exceed 105 percent
of the capitation rate, in order to comply with the Medicaid managed
care incentive payment rules at Sec. 438.6(c)(5)(iii) and a
methodology for verifying such information.
Additionally, we are requiring that termination of funding approved
under this proposed Part 495 subpart D or disallowance of FFP may
result if the State fails to meet the requirements and undertakings of
the approved PAPD, SMHP, and IAPD, or fails to provide access to the
required information.
Since section 4201 of the HITECH Act amends section 1903(a)(3) of
the Act to provide for 90 percent FFP for costs associated with certain
administrative activities performed by a State, we have allowed for
claiming of such reasonable costs incurred on or after February 18,
2009, prior to publication of the final rule. Specifically, a State
that can show that initial planning stages of moving the State in the
direction of meaningful use of certified EHR technology through such
activities as training efforts, staff support, or contracting with a
vendor may potentially receive retroactive FFP back to the date in
which these efforts began, with CMS approval, but not before February
18, 2009.
Comment: Several commenters expressed concerns about the timing of
planning and implementation and request flexibility in this area.
Commenters indicated that there will be a need for ongoing planning
while rules and guidelines are being promulgated. Commenters indicated
that they envision a phased approach to implementation, and request
that CMS permit simultaneous expenditure of both planning and
implementation funds.
Response: We proposed specific requirements for States to request
FFP from CMS for the Medicaid EHR incentive program modeled on the
process States use to request FFP from CMS for Medicaid Management
Information Systems technology projects. CMS proposed to utilize
information and documentation that will result from the process
described in this section to evaluate approaches proposed by States,
track and monitor progress of implementation, and perform the statutory
program and financial oversight required for this new program.
In establishing the requirements we believe States will have
flexibility to request FFP for planning and implementation activities
to implement the provisions of the EHR incentive program in a manner
that is similar to and consistent with current approaches to receive
enhanced FFP for MMIS systems under the Medicaid program. This will
enable States to modify or adapt as changes occur during the planning
and implementation phases envisioned under this proposed rule. Further,
we believe that the information required is consistent with section
1903(t)(9) of the Act that States must demonstrate to the satisfaction
of the Secretary that the State is conducting adequate oversight.
We agree with the need for flexibility in planning for the Medicaid
incentive program, and the conduct of implementation activities to
ensure the program is successful in the long-term. We have added
additional clarifying information in the sections regarding the HIT
PAPD, HIT IAPD, As-needed HIT PAPD update and as-needed HIT IAPD
update, Annual HIT IAPD requirements, and SMHP requirements. These
clarifications are consistent with guidance issued in our State
Medicaid Director's letter on September 1, 2009, which indicated that
CMS anticipates a phased approach to planning and implementation
activities.
Finally, for the final rule we are making numerous changes in order
to be more specific and provide additional clarity regarding certain
terms and

[[Page 44509]]

requirements. These revisions are reflected here; however, regulations
text is not updated since the concepts of these terms remain the same.
Clarifications are as follows:
We have further defined the terms ``service oriented architecture
(SOA)'', or ``service component based architecture'' to indicate that
they are a means of organizing and developing information technology
capabilities as collaborating services that interact with each other
based on open standards. We are defining this term in the context of
health IT projects authorized under the Act to ensure that different
systems and programming languages provide a basis for interoperability
among and between applications that may reside on different platforms
through a communication protocol to achieve health information exchange
required under the Act. CMS anticipates that States will describe
proposed HIT projects in the context of SOA principles, and intends to
evaluate plans for health information exchange, and interoperable
health IT based on these commonly used information technology
principles.
We have also further defined the term ``State self-assessment (SS-
A),'' a component of MITA, as a process that a State will use to review
its Medicaid information technology strategic goals and objectives,
measure its current baseline business processes and capabilities
against defined MITA business capabilities, and develop targeted future
capabilities to transform the Medicaid enterprise to be consistent with
the MITA principles of interoperability and exchange of health
information. Although we are including a definition of State self
assessment in this final rule, we are deleting the requirement that a
State provide the MITA SS-A, as we believe the as-is assessment
supercedes the need for a separate MITA SS-A. However, we believe it is
important to keep a definition of SS-A, because there is an inter-
connection between activities accomplished under the Medicaid EHR
Incentive Program and States' MMIS enhancements. For example, data
exchanges between various State systems that comprise the Medicaid
enterprise of the State might also support the State's administration
of the EHR Incentive Program.
We are further defining MITA, because we expect that States will
describe proposed health IT projects as well as their ``as is''
landscapes using MITA concepts and principles. We intend to evaluate
States' proposed strategies and plans for development of Medicaid
health information exchange and interoperable health IT using these
MITA principles, as applicable. These strategies and plans must be
included in the State Medicaid Health Information Technology Plan
(SMHP), a term discussed below. We have previously published a document
entitled ``MITA Framework 2.0'' on the CMS Web site at http://www.cms.hhs.gov/MedicaidInfoTechArch. The MITA Framework 2.0 was
developed by CMS in collaboration with State Medicaid agencies and
information technology vendors to facilitate the adoption of
information technology principles and practices that will lead to
increased deployment of state-of-the-art technologies and improved
management of the Medicaid program. States presently are utilizing MITA
and the SS-A for Medicaid IT projects approved by CMS, and application
of these principles for activities required under this proposed rule
will not add additional burden to State efforts to adopt HIT as
envisioned under the Section 1903(a)(3)(F) of the Act.
The MITA principles and tools foster integrated business processes
and IT transformation for all States. It achieves this in part by
demonstrating that planned enhancements to Medicaid systems, including
MMIS, support State and Medicaid strategic goals and how intra-state
systems other than the MMIS have been considered in developing the
solutions. We believe that as States and providers implement EHRs, it
will be necessary and essential to plan technology upgrades that will
facilitate health information exchange with Medicaid providers
receiving incentive funding.
We are further clarifying that we are defining the Medicaid
Management Information System (MMIS) as it relates to specific
requirements for Medicaid claims processing and information retrieval
contained in current regulations at 42 CFR part 433, subpart C. We
proposed a definition of the term MMIS because it is the common term
that CMS, State Medicaid agencies, and industry use to refer to the
Mechanized Claims Processing and Information Retrieval Systems
specified in section 1903(a)(3) of the Social Security Act. MMIS means
the system of software and hardware used to process Medicaid claims
from providers of medical care and services for the medical care and
services furnished to recipients under the medical assistance program
and to retrieve and produce service utilization and management
information required by the Medicaid single State agency and Federal
Government for program administration and audit purposes. The
objectives of the MMIS include claims processing and retrieval of
utilization and management information necessary for program
administration and audit and must coordinate with other mechanized
systems and subsystems that perform other functions, such as
eligibility determination. The MMIS is also compatible with the claims
processing and information retrieval systems used in the administration
of the Medicare program.
We believe that States will utilize their MMIS extensively in
administering the provisions of this proposed rule, including but not
limited to payment and tracking of Medicaid incentive payments, access
to data and information necessary to establish the vision for Medicaid
health IT, and achieving interoperability and health information
exchange envisioned in the Act.
In the proposed regulation at Sec. 495.332 we proposed a
definition of the term State Medicaid Health Information Technology
Plan (SMHP) as an integral part of planning and implementation of the
EHR incentive program. The SMHP is a comprehensive document that
describes the State's current and future health IT activities in
support of the Medicaid EHR incentive program. We further clarify that
we require that the SMHP will be developed by the State Medicaid
agency, after consulting with other stakeholders across the State. The
SMHP will be reviewed and approved by CMS prior to any activities
described in the SMHP being funded and implemented. We anticipate State
agencies will engage a wide range of stakeholders within and outside of
State and Federal government to develop a vision of how the Medicaid
EHR incentive program will operate in concert with the larger health
system and statewide efforts. The SMHP is required to participate in
the Medicaid incentive program because we believe that States must
develop a strategic vision and plan that includes clear targets and
measurable outcomes to be consistent with the intent of section
1903(a)(3)(F) of the Act to encourage the adoption and meaningful use
of certified EHR technology.
The SMHP is intended to serve as the vision for developing the
desired future state for the Medicaid IT environment that furthers the
goals of health information exchange and meaningful use envisioned
under the Act. The SMHP should be coordinated and integrated with the
Statewide plan for health IT developed under section 3013 of the Public
Health Service Act, which is developed by the designated statewide
entity. To ensure that the SMHP is coordinated and integrated

[[Page 44510]]

with the Statewide plan, we will develop criteria and processes for the
evaluation of the SMHP consistent with ONC's review of the Statewide
plans. The SMHP must contain: (a) A current health IT landscape
assessment; (b) a vision of the State's HIT future landscape, and (c)
the specific actions necessary to implement the incentive payments
program, including a health IT roadmap to achieve those actions. This
deliverable will be the ``plan'' to determine how the incentive
payments will be administered; however, it is not the implementation of
such plan. The SMHP must include all of the elements listed in 495.332;
however, we realize that States may not have all of the answers
initially. States will not be permitted to make incentive payments to
providers unless they have a comprehensive EHR incentive payment
program established. However, if States are not completely clear, for
example, about their ``to be'' world at the time of the submission of
their SMHP, States can present the components that are finalized and
revise the SMHP to further discuss their ``to be'' world at a later
time. Additionally, as stated previously in this final rule, we have
revised the rule to include a requirement that the SMHP must describe
the process in place and the methodology for verifying that eligible
professionals meet their responsibility for 15 percent of the net
average allowable cost for certified EHR technology and that the SMHP
include information about how States will validate the patient volume
consistent with the menu of options listed in Sec. 495.306.
For this final rule, we are also explaining our understanding that
the elements of the SMHP, as listed in Sec. 495.332, may be separated
into four categories, as follows:
(1) Assessment and Planning. This category of SMHP elements
addresses requirements in the Act relating to increasing the use of
health IT, including EHR, ensuring interoperability, and meaningful use
of certified EHRs. As proposed, States will perform comprehensive
assessments of the current health IT landscape environment in the
State, including the inventory of existing health IT in the State,
including ``as is'' and ``to be'' landscape assessments. Also, as
proposed, States will develop a 5-year strategic plan, and a
description of how the State Medicaid HIT plan will be planned,
designed, developed and implemented, including how it will be
implemented, and a description of how intrastate systems, including the
MMIS, and other claims systems, have been considered in developing a
health IT solution. The SMHP will include a description of data-sharing
components of proposed health IT solutions, including security
provisions, and description of how the State will support integration
of clinical and administrative data.
(2) Ensuring improvements in health outcomes, clinical quality, and
efficiency. This category of SMHP elements will address requirements in
the Act relating to improving healthcare quality and lowering costs. As
proposed, States will include components that describe a process for
ensuring improvements in health outcomes, clinical quality, or
efficiency resulting from the adoption of certified EHR technology by
recipients of Medicaid EHR incentive payments and a methodology for
verifying such information. As proposed, we are requiring a description
of how the State will address, in the long-term, the needs of
underserved and vulnerable populations such as children, individuals
with chronic conditions, Title IV-E foster care children, individuals
in long-term care settings and the aged, blind, and disabled. We
proposed that in order to obtain approval for their SMHP and
implementation funding, a State would have to detail how their EHR
Incentive Program addressed the concepts of self-direction including
budget development and expenditure tracking for persons with
disabilities. After additional consideration, CMS decided that these
concepts are not directly applicable to electronic health records or
meaningful use, per se, and while important, are more associated with
other e-Health tools, such as personal health records. Furthermore, the
provider types to whom this is most directly relevant, such as home,
institutional and community-based providers and facilities, are not
eligible for EHR incentives so including planning for this issue was
not perceived as rising to the level of a requirement. It is
anticipated that Stage 2 of meaningful use will include greater levels
of patient engagement, including via personal health records. However,
we think it is premature to require that States fully address this
issue in their SMHPs order to initiate their EHR Incentive Programs for
Stage 1.
As proposed, we will also require a description of the process in
place for ensuring that any certified EHR technology used as the basis
for incentive payments to Medicaid providers is compatible with State
or Federal administrative management systems, including the MMIS, or
other automated claims processing system or information retrieval
system, and a methodology for verifying such information.
(3) Interoperability and Health Information Exchange. This category
of SMHP elements will address requirements in the Act relating to
ensuring interoperability and increasing health information exchange.
We proposed a series of elements that explain how the State will adopt
national data standards for health and data exchange and open standards
for technical solutions as they become available. These elements of the
SMHP also are included in our final rule.
(4) Administration and Oversight. This category of SMHP elements
address the requirements in the Act relating to implementation and
financial oversight of the program. For provider eligibility, we
proposed that States provide a description of the process they will use
for ensuring that each EP and eligible hospital meets provider
enrollment eligibility criteria upon enrollment and re-enrollment to
the Medicaid EHR payment incentive program, and the process for
ensuring patient volume consistent with the criteria in Sec. 495.304
and Sec. 495.306, and for ensuring that each Medicaid EP is not
hospital-based and that there is a methodology in place used to verify
such information. We are finalizing most of these requirements, as
proposed. However, in response to comments suggesting that CMS define
the term ``encounter'' and take a menu approach to patient volume to
allow States several options, based on their data sources, CMS has
included changes to the SMHP requirements for the patient volume
requirement in Sec. 495.302, Sec. 495.306, and Sec. 495.332. These
changes are discussed under the patient volume section of this final
rule. We note that States that wish to offer an alternative for
estimating patient volume would be required to involve key stakeholders
in the determination of such alternative. We also proposed, and are
finalizing, specific elements in the SMHP relating to monitoring and
validation of information, including a method of ensuring all
information from provider attestations is captured, stored, and
verified, and any information added to the CMS Single Provider
Repository is all true and accurate. We also proposed, and are
finalizing, that States include a list of the specific actions planned
to implement the EHR incentive program, including a description and
organizational charts for workgroups within State government and
external partners. As proposed, States will need to describe the
process they have in place to ensure that no

[[Page 44511]]

amounts higher than 100 percent of FFP will be claimed for
reimbursement of expenditures for State payments to Medicaid eligible
providers for the certified EHR incentive payment program, and a
methodology for verifying such information is available and the process
to ensure that no amounts higher than 90 percent of FFP will be claimed
for CMS-approved administrative expenses in administering the certified
EHR technology incentive payment program, including a methodology for
verifying such information. As proposed, States will need to include
mechanisms for making timely and accurate payments and a requirement
that providers attest that they are not receiving a payment in any
other State under the Medicaid EHR incentive program. This category
also includes elements relating to financial management and auditing
necessary to ensure the proper and efficient management and oversight
of the program and FFP.
Finally, we proposed that the States may propose in the SMHP
alternatives to measuring patient volume or achieving meaningful use.
The rules for proposing alternatives are discussed elsewhere in this
final rule.
We are further clarifying the definition of Health Information
Technology Planning Advance Planning Document (HIT PAPD) (and any
necessary update documents) to mean a plan of action that requests FFP
and approval to initiate and accomplish planning activities necessary
for a State agency to determine the need for and plan the acquisition
of HIT equipment and services, and to acquire information necessary to
prepare a HIT Implementation Advanced Planning Document (HIT IAPD),
described below, or common procurement instruments, such as requests
for proposals, or requests for qualifications and quotations, necessary
to implement the SMHP. CMS is including a definition of the HIT PAPD so
that States may submit proposed resources and planning activities,
which are described in further detail in our State Medicaid Director's
letter on September 1, 2009, to receive the 90 percent FFP match for
initial planning activities related to the Medicaid EHR incentive
payment program. In order to qualify for the 90 percent FFP
administrative match, section 1903(t)(9) of the Act requires a State to
demonstrate, to the satisfaction of the Secretary, compliance with
three specific criteria:
(A) The State uses the funds for purposes of administering the
incentive payments, including the tracking of meaningful use of
certified EHR technology by Medicaid providers;
(B) The State conducts adequate oversight of the incentive program,
including routine tracking of meaningful use attestations and reporting
mechanisms; and
(C) The State pursues initiatives to encourage adoption of
certified EHR technology to promote health care quality and the
exchange of health care information under Medicaid, subject to
applicable laws and regulations governing such exchange, while ensuring
privacy and security of data provided to its data exchange partners.
We are further clarifying the definition of Health Information
Technology Implementation Advance Planning Document (HIT IAPD) (and any
necessary update documents) to mean a plan of action that requests
approval of FFP to acquire necessary resources to implement and
administer the activities and objectives of the State's proposed SMHP,
once the SMHP is approved by CMS, including the allocation or
acquisition of human resources, services and equipment. To qualify to
receive FFP for administering the incentive program, States must
develop an HIT PAPD, SMHP, and an HIT IAPD. These documents would lay
out the process States will use to implement and oversee the EHR
incentive program, and would help States to construct and maintain a
health IT roadmap to develop the systems necessary to support providers
in their adoption and meaningful use of certified EHR technology.
With respect to FFP under the Medicaid incentive program, we are
clarifying that the incentive payments to providers are matched at 100
percent FFP as described above, and therefore there is no non-Federal
share for these payments. However, there is a non-Federal share
necessary for the administration of the payment incentives. That is,
CMS is reimbursing States at 90 percent FFP for reasonable expenses
related to the administration of the payment incentives. States must
fund the 10 percent non-Federal share of Medicaid health information
technology (health IT) administrative payments consistent with existing
rules and regulations regarding funding of the non-Federal share. We
review non-Federal share funding sources to ensure compliance with
existing statute and regulations. Consistent with current practice, we
will review non-Federal share funding sources on an individual basis
using information provided by the State and gathered by CMS staff.
Existing rules permit States to provide the non-Federal share of
administrative claims through various sources, including
appropriations, intergovernmental transfers, certified public
expenditures, bona fide donations, and permissible health care related
taxes. CMS' regional financial management staff will review funding
sources and will review the Medicaid Budget and Expenditure System to
ensure that all claims for reimbursement are appropriate. Additionally,
States are required to submit SMHPs outlining their process for making
payments and ensuring that all claims for reimbursement are appropriate
to CMS for review and approval.
At Sec. 495.324 we proposed to review and prior approve all
elements of the State's APD documents and SMHP described in this rule
to ensure that all of the intended objectives of the program are
addressed. We are finalizing this proposal. States are required to
submit these APD documents and the SMHP in order for us to approve FFP.
Specifically, prior approval is required for the HIT PAPD (see also
Sec. 495.336). The deliverable resulting from the HIT PAPD is the
SMHP. The SMHP will be reviewed and approved before it is included in
an HIT Implementation APD (HIT IAPD) (see also Sec. 495.338). The HIT
IAPD also must be prior approved. After a HIT PAPD is approved for
planning activities, and these planning activities are complete, we
anticipate that in certain cases, States may decide to submit the SMHP
and HIT IAPD together in one submission for CMS review and approval. In
all cases, until approval is granted, States cannot draw down Federal
funds. We envision that the prior approval process described at Sec.
495.324 will permit States to work closely with CMS in developing the
HIT PAPD prior to initiating EHR planning activities and prior to
submission of the initial HIT PAPD.
We are defining ``as needed'' and ``annual'' updates to the HIT
PAPD and HIT IAPD at Sec. 495.340 and Sec. 495.342. In consultation
with States and other key stakeholders, CMS has determined that
planning and implementing the Medicaid EHR incentive payment program
will be a complex process that will result in a need for ``as needed''
and ``annual'' updates to the original scope of work. Therefore, we
proposed that the APD process would allow States to update their APD
documents when they anticipate changes in the amount of FFP, duration
of the project, or scope of work or activities under the APD. We are
finalizing this proposal, as it allows States flexibility to add
additional tasks and milestones as the project evolves, as determined
since the date the APD was

[[Page 44512]]

initially approved or since the most recently updated and approved APD.
We initially proposed that we envision two phases in the process of
planning and implementing the incentive program, as well as the
promotion of adoption and meaningful use of EHR. We are further
clarifying that based on submission of HIT PAPDs in response to
guidance provided in our State Medicaid Director's letter of September
1, 2009, initial planning timelines are ranging from 6 months to 18
months to develop the SMHP. CMS envisions that States will begin to
administer the EHR incentive program on January 1, 2011, once the SMHP
and IAPD are approved. As proposed, we will issue additional written
guidance, similar to our earlier SMD letter, concerning timelines for
implementation of the EHR incentive program as States develop the SMHP.
We require the HIT IAPD as the vehicle for informing us of Phase II
activities. We anticipate that States will also have ongoing planning
needs as implementation activities, once approved under the IAPD, are
under way. We further envision that the IAPD ``annual'' or ``as
needed'' updates may also include requests for approval of FFP for
other Phase II that are necessary to continue planning and development
for the ongoing implementation phases of the program. In section
495.388, we proposed to require that States submit information in the
IAPD regarding an estimate of prospective cost allocation (OMB Circular
A-87, Cost Principles for State, Local, and Indian Tribal Governments)
to the various State and Federal funding sources and the proposed
procedures for distributing costs including a detailed payment list
file to include NPI, name, and type of provider for which the State
will provide incentive payments. For the final rule, we are continuing
to require the estimate of prospective cost distribution and the
procedures for distributing costs; however, we are eliminating the
requirement that States have to submit NPI, name and provider type as
part of the estimates for cost distribution since we realize that in
continuing to require this information States will not be able to
submit approvable IAPDs to CMS because States will not have this
information at the time of submittal; hence, States will not be
successful in implementing this program.
We wish to further clarify that in proposing termination of funding
if the State fails to meet the requirements and undertakings of the
approved HIT PAPD, SMHP, and HIT IAPD, or fails to provide access to
the required information, this requirement is necessary to ensure the
proper and efficient use of FFP and is consistent with present
authority under the Act and existing regulations that are promulgated
by CMS, including at 45 CFR Part 95, Subpart F.
Comment: One commenter questioned whether the EHR incentive
payments will be required to be processed through the Medicaid
Management Information System (MMIS).
Response: Payments under the Medicaid EHR incentive program are
authorized under Title XIX of the Social Security Act as part of the
Medicaid program. We require that States have an automated claims
processing and information and retrieval system, known as MMIS to
manage health care provider payments for health care services, and
provide information for program management, administration, and
auditing. As such, we believe that most States will choose to process,
monitor, and report Medicaid incentive payments to eligible
professionals and hospitals participating in the Medicaid EHR incentive
program using the MMIS. States may propose alternative methods to
process, monitor, and report Medicaid incentive payments in their SMHP.
Any proposed method to process, monitor, and report Medicaid incentive
payments, including utilization of the State's MMIS, must be approved
by CMS. Through guidance issued in a State Medicaid Directors Letter
and via case by case analysis of APDs, CMS will collaborate with States
to approve system development and enhancement expenditures under the
most appropriate funding source, HITECH or MMIS.
Comment: One commenter provided comments on Sec. 495.348(d),
Procurement standards; Competition, and Sec. 495.360(a). The commenter
agrees that procurement transactions are conducted to provide, to the
maximum extent practicable, open and free competition and recommends
that procurement transactions require that bidders bid specifically for
the EHR portion of any project (to ensure that the discrete costs are
clearly identified), (2) no certified EHR technology may be excluded
from bidding, and (3) all projects must be both EHR-neutral and
provider-neutral. They further comment that CMS could consider having
either a cap or percentage limits on the amount of administrative costs
or consulting fees to ensure that the bulk of the award is used for the
hard costs of the project: equipment, connectivity, and training.
Response: The requirement in Sec. 495.348(d) is limited to States
and other grantees of Federal funds authorized under Title XIX of the
Social Security Act and does not apply to procurement standards for
vendors bidding on EHR technology for eligible providers. However, CMS
will encourage States to include adoption of interoperable solutions
that align with the MITA principles that address IT architectural and
platform neutrality.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter recommended that CMS reconsider the general
rule set forth in Sec. 495.360 that ``the State or local government
must include a clause in all procurement instruments that provides that
the State or local government will have all ownership rights in
software or modifications thereof and associated documentation
designed, developed or installed with FFP under this Subpart.'' The
commenter states that it is typical for the vendor to own the
underlying software, and State or local governments are provided a
license to use the software, and this is contrary to the proposed
general rule.
Response: We disagree with the recommendation to exclude a clause
in all State procurement instruments that provides that the State or
local government will have all ownership rights in software developed
or modified using Federal funding. This is a long-standing principal
for use of FFP associated with the development of information
technology solutions that may be licensed for use by other State or
Federal government agencies to benefit the Medicaid program, at no
additional cost for the license. CMS clarifies that costs of the
license agreements for proprietary software may be reimbursable under
the provisions of 1903(a)(3)(F)(ii) of the Act that provides for 90
percent FFP for costs associated with certain administrative activities
performed by a State. However, costs associated with developing or
modifying software may not be funded with Federal funds unless the
State has ownership rights to that software. This provision does not
apply to eligible providers or hospitals purchasing software for which
Federal funding has been provided by States through the Medicaid EHR
incentive program. Proposed costs may be submitted for review and
consideration for approval by CMS as part of the HIT PAPD and HIT IAPD
requirements described in this proposed rule under Sec. 495.336 and
Sec. 495.338.
We are making no additional revisions to this section of the rule
as a result of this comment.

[[Page 44513]]

Comment: One commenter indicated that the process for State
Medicaid plans seems to be lengthy, with no timeframes specified for
initial submission from the State to the Department, nor is there a
timeline for the approval process from CMS back to the State. There is
also no timeline for the implementation of the health IT programs after
a State receives approval. The commenter also notes that with the
burden for administration on the States, there may not be adequate time
to get all of the activities completed to have infrastructure and
processes in place to accept data or attestations from the Eligible
Providers and Eligible Hospitals.
Response: We provided specific guidance on timelines and process
prior to the initial planning period regarding State planning
activities and administrative expenses for provider incentive payments
in our State Medicaid Director's letter on September 1, 2009. We also
indicated in our letter that CMS will work with States to determine
when each State is ready to begin making payments. We have provided
additional rationale about the process for submitting documents and
required content in the final rule. In the near future, CMS will issue
more guidance on specific implementation activities and timelines,
prior to States submission of their SMHP and IAPD.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter requested that CMS require that States pass
through the matching funds to providers.
Response: The regulation at section 495.366 requires that States
have a process in place to assure that Medicaid EHR incentive payments
are made without reduction or rebate, have been paid directly to an
eligible provider or to an employer, a facility, or an eligible third
party entity to which the Medicaid eligible provider has assigned
payments. This language is consistent with the statutory language at
1903(t)(6). We will require that this process be established in the
SMHP.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter requested that CMS clarify that use of
certified public expenditures (CPE) or intergovernmental transfers in
the context of the Medicaid EHR incentive payments would be
inappropriate, since these payments do not have a non-federal share. If
CMS does permit use of CPEs in the Medicaid EHR incentive program
context, CMS must require that States pass through the matching funds
to providers.
Response: We believe the commenter is not clear. As explained above
incentive payments to providers are matched at 100 percent; thus, there
is no non-Federal share for these payments. However, there is a non-
Federal share necessary for the administration of the payment
incentives. CMS is reimbursing States at 90 percent for reasonable
expenses related to the administration of the payment incentives and
States must fund the 10 percent non-Federal share of Medicaid health
information technology administrative payments consistent with existing
rules and regulations regarding funding of the non-Federal share.
Please see our above discussion of this issue for further detail.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter questioned why Medicaid is allowed to
determine its own requirements and the impact this may have on other
stakeholders.
Response: We are clarifying that we have provided specific guidance
for State planning activities that must be addressed in order to
qualify to receive FFP for administering the incentive program. We
provided guidance in a State Medicaid Director's letter published on
September 1, 2009, on this process. CMS intends to require submission
of documentation that will enable the agency to evaluate whether the
activities for which FFP was, or may be approved for, are being
completed according to Federal requirements, including any terms and
conditions of FFP approval. States must develop a HIT PAPD, a SMHP, and
a HIT IAPD. These documents would describe the processes and resources
States will use to implement and oversee the EHR incentive program, and
would help States to construct an health IT roadmap to develop the
systems necessary to support providers in their adoption and meaningful
use of certified EHR technology. The development of a SMHP (see also
Sec. 495.332) also provides States with the opportunity to analyze and
plan for how EHR technology, over time, can be used to enhance quality
and health care outcomes and reduce overall health care costs. Our
review process ensures that States are complying with requirements in
the Act, and that they demonstrate to the ``satisfaction of the
Secretary'' that they are using the funds in the manner anticipated by
the law. For example, because CMS is responsible for overseeing States
in their administration of the Medicaid program, as well as ensuring
the overall financial integrity of the program, States cannot simply
propose activities in order to secure the 90 percent FFP. We propose to
review and prior approve all elements of the State's SMHP, and APD
documents described in this rule to ensure that all of the intended
objectives of the program are addressed. One of the key components of
the SMHP is stakeholder collaboration and coordination to ensure that
an integrated strategy is developed addressing stakeholder needs.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter recommended that all the source materials
needed to create the quality measure registry, is submitted to the MITA
Information Architecture Review Board (IARB) for approval as a MITA
standard and all the source materials be added to the MITA artifact
repository. Doing this will prevent duplicative efforts and associated
expense both by CMS and the participating States.
Response: We agree with the commenter. We support the concept that
States should apply MITA principles to any IT development work
performed for the EHR incentive program, where applicable. If a State
chooses to integrate a clinical data warehouse into its MMIS system,
all recommended steps, and required approvals, for MMIS development,
including application of MITA guidelines, should apply. The goal of
MITA is not to focus on creating new standards so much as utilizing
data standards developed by other national organizations, such as those
responsible for implementation of HITECH and also defining information
requirements for new business processes. If a State is going to develop
its own clinical data repository to store Medicaid providers' submitted
clinical quality measures data (one of the MU objectives), then use of
the MITA Governance boards would be a recommended approach. States
whose SMHPs successfully apply MITA to their EHR incentive program
systems are encouraged to store approved artifacts in the Clemson
University MITA repository so that other States may benefit: http://mita.clemson.edu.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter, as a large pediatric provider with five
physicians and four nurses in a relatively rural area, is concerned
that States have not yet sent, or had approved by CMS, the State's
Medicaid requirements.

[[Page 44514]]

Response: States are in the process of developing their SMHPs.
States could not be approved to start offering incentives prior to a
final rule becoming effective.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: Some commenters asked for clarification on how managed
care entities would be involved in this program besides potentially
being used to disburse incentive payments, as mentioned in the proposed
rule. Examples included things like monitoring providers in the health
plans to ensure compliance. The commenters suggested that any work done
by the managed care entity should be reflected in the capitation rate.
Response: Service agreements between States and their managed care
contractors are not governed by this regulation, but must be in
compliance with 42 CFR part 438. We agree there are many opportunities
to leverage the efficiencies of the managed care entities' activities
and role with the larger goals and State responsibilities for
administering the payments. We suggest that activities like
distributing informational materials about the incentive program and
health IT to health plan providers and enrollees would fall under most
current contracts and would be considered part of the cost of doing
business, which may be reflected in the administrative portion of the
capitation rate.
If more significant activities are expected, such as monitoring and
reporting information on the providers, health plans may exceed the
normal costs of doing business and what would be adequately reflected
in the administrative portion of the capitation rate. An alternative
option would be for the State and managed care organization to have
contractual requirements and deliverables separate from the capitation
rate, including the administrative component. In the latter scenario,
it would be acceptable to develop a contract amendment specifying the
terms.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: A commenter asked whether or not a State would need to
file a State Plan Amendment that incorporates the SMHP into their State
Plan, or if the SMHP can stand alone. The commenter further asked that
if the SMHP can stand alone, then would the state need to file a State
Plan Amendment that references the SMHP in their plan.
Response: CMS clarifies that the State does not need to file a
State Plan Amendment or reference the SMHP in their State Plan. As part
of the Advance Planning Document process, the SMHP is a deliverable
that is submitted to CMS for review and approval prior to expending
funds for the incentive program implementation activities.
We are making no additional revisions to this section of the rule
as a result of this comment.
9. Financial Oversight, Program Integrity and Provider Appeals
Pursuant to section 1903(t)(9) of the Act, which requires States to
conduct adequate oversight of the incentive program, and in order to
ensure that ARRA funds are expended wisely and in a manner that impedes
waste, fraud or abuse of Federal taxpayer money, at Sec. 495.366, we
proposed requirements for States' financial oversight and monitoring of
expenditures. Additionally, we proposed at Sec. 495.368 to provide
State requirements for combating fraud and abuse.
Specifically, States would be responsible for estimating the
expenditures for the Medicaid EHR incentive program on the State's
quarterly budget estimate reports. These reports are used as the basis
for Medicaid quarterly grant awards that would be advanced to the State
for the Medicaid EHR incentive program. The State submits this Form
electronically to CMS via the Medicaid and State CHIP Budget and
Expenditure System (MBES/CBES). States must assure that requests for
reimbursement of FFP comply with all sections of this new part and that
the amounts reported on the Form CMS-64 and its attachments represent
actual expenditures for which all supporting documentation, in readily
reviewable form, has been compiled and which is available at the time
the claim for reimbursement of provider payment incentives and
administration funding is filed.
We would assure that State expenditures claimed for Federal
matching under the Medicaid program are programmatically reasonable,
allowable, and allocable in accordance with existing Federal laws,
regulations, and policy guidance. States would be responsible for
establishing policies, computer systems, edits to process Medicaid EHR
incentive payments; and for conducting analyses of providers' patterns
of practice (data-mining) and taking other reasonable steps to ensure
that no duplicate or otherwise improper EHR incentive payments have
been made. States will be responsible for ensuring that provider
information, including but not limited to, attestations, survey, and
any information added to CMS' single provider election repository
indicates that any falsification of documentation or concealment of
material facts may be prosecuted under Federal and State laws. States
would be responsible for recovering and returning to CMS FFP for any
HIT incentive payments that are discovered to be improper. State
Agencies must have information processing systems, which may include an
MMIS--the automated mechanized claims processing and information
retrieval system, to process Medicaid EHR incentive payments. MMIS
systems can also help to manage information for program administration
and audit purposes.
States must assure that any requests for reimbursement of the 90
percent Federal match for administration of the program are being
requested only because the State has used the funds for purposes
related to administering payments to qualified Medicaid providers for
certified EHR technology, including for tracking of meaningful use of
such technology, is conducting adequate oversight of the program
including routine tracking of meaningful use attestations and reporting
mechanisms; and is pursuing initiatives to encourage the adoption of
certified EHR technology to promote health care quality and the
exchange of health care information because of such technology. Any
initiatives for health information exchange must be consistent with
Federal laws and regulations governing the exchange.
We would monitor State Agency compliance through systems
performance reviews, on-site reviews, and audits of the APD process.
Additionally, we would monitor provider demonstration of meaningful
use.
As a result of the authority extended to the Secretary under
section 1902(a)(4) of the Act requiring the effective and efficient
administration of the State plan, as well as section 1903(t)(9) of the
Act, requiring that a State demonstrate to the satisfaction of the
Secretary that it is conducting adequate oversight of the program, we
also are requiring States to establish Sec. 495.370, Provider Appeals.
This section specifies that Medicaid providers who believe that they
have been denied an incentive payment or have received an incorrect
payment amount under this part because of incorrect determinations of
eligibility, including, but not limited to, measuring patient volume;
demonstrating meaningful use of, or the efforts to adopt, implement, or
upgrade

[[Page 44515]]

to, certified EHR technology; whether the professional is hospital-
based; whether the professional is practicing predominantly in an FQHC
or RHC; whether the hospital qualifies as an acute care or children's
hospital; or whether the provider is already participating in the
Medicare incentive program and therefore ineligible duplicate Medicaid
incentive program payments can appeal the decision using current
Federal processes established at Sec. 447.253(e).
Comment: One individual commented on potential fraud and abuse
opportunities if large amounts of medical data can be mined, as a
result of electronic health records.
Response: First, it is important to note that as part of
demonstrating meaningful use providers will be submitting only
aggregated, not individually identifiable data, to States. Second, we
wish to clarify that providers will be required to comply with the
Health Insurance Portability and Accountability Act of 1996 (HIPAA) to
the extent that they are covered entities. States must provide CMS with
details about how their implementation of the EHR incentive program
will address Federal and State privacy laws and how all data will be
secured in the SMHP.
Additionally, the act of preventing fraud should be paramount in
implementing this program. In accordance with Section 1903(t)(9) of the
Social Security Act, States must demonstrate to the satisfaction of the
Secretary that they are conducting adequate oversight of this program
and that they are complying with Federal requirements to: (a) Ensure
the qualifications of providers who request Medicaid EHR incentive
payments, (b) detect improper payments and (c) refer suspected cases of
fraud and abuse to the Medicaid fraud control unit. In conducting
required oversight responsibilities, States can receive 90 percent
matching funds for allowable expenditures. States are required to
assure CMS through the State's Medicaid HIT plan that they have
processes in place to prevent against fraud and abuse. CMS will review
and approve each State's Medicaid HIT plan.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter noted that use of electronic health records
may provide claims adjudication auditors with documentation to verify
that items or services provided are reasonable and necessary,
supporting an upfront clean claims process and the opportunity to
conduct pre- and post-pay audits without the need to request
documentation in retrospect. Another commenter wanted an assurance that
CMS will perform audits of a random sample of attestation surveys and
that any providers that are found to be making false claims would be
penalized and listed in a public report posted on CMS' Web site.
Response: We thank the commenter for the comments, but point out
that meaningful use currently would not include using EHRs to provide
electronic documentation in support of claims adjudication. We do,
however, want to address the issue of pre- and post-audits. While one
commenter is concerned with the process for adjudicating claims, the
other commenter is concerned that there are other areas of this program
that will necessitate pre- and post-pay audits. For Medicaid, States
are required to provide information to CMS in the State Medicaid HIT
plan outlining the processes and methodologies they will use to ensure
that payments are being made to the right person, at the right time,
for the right reason. Specifically, in year one in order to receive an
incentive payment, providers will be attesting to, among other things,
whether they are using a certified EHR, demonstrating meaningful use,
demonstrating adopting, implementing or upgrading certified EHR
technology, etc. States will be required to ``look behind'' provider
attestations. We believe that this will require audits both pre- and
post-pay. CMS believes a combination of approaches is in order which
should result in accurate payments. CMS wishes to point out that States
must provide assurances to CMS that they are conducting adequate
oversight in order to receive the 90 percent FFP for administration of
the incentive payments. Additionally, it should be noted that this
program is consistent with other programs under Title XIX. States must
properly administer the program or risk FFP. All costs claimed under
the program are subject to review or audit. Furthermore, CMS' approval
of the State Medicaid HIT plan does not relieve the State of its
responsibility to comply with changes in Federal laws and regulations
and to ensure that claims for Federal funding are consistent with all
applicable requirements. We should point out that for Medicaid there is
no statutory requirement to post individual provider's name and/or
incentive payment program information to the CMS Web site.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter is concerned about the circumstances under
which Medicaid is required to recoup incentive payments from providers.
Specifically, the commenter requests clarification on the scenario in
which a provider receives a payment for demonstrating adoption,
implementation, or upgrading EHR technology in year one, demonstrating
meaningful use in years two and three, but receives no payment in year
four because the provider could not demonstrate meaningful use. The
commenter is concerned that Medicaid will be responsible for recouping
payments made in years one, two, and three.
Response: First, it should be noted that it is possible for a
provider to be able to demonstrate meaningful use in one year, but not
others. Thus, the failure of the provider to demonstrate meaningful use
in year four would not necessarily mean that the provider failed to
demonstrate meaningful use in prior years, although it could possibly
alert the State to more closely review a specific provider's prior year
attestations or demonstrations of meaningful use. For hospitals
demonstrating meaningful use in both the Medicare and Medicaid
incentive payment programs, CMS will issue further guidance about how
States will be able to access the meaningful use data submitted to CMS
in order for the State to meet its audit and oversight requirements.
States will be required to outline in the SMHP the process for
``looking behind'' provider attestations and the demonstration of
meaningful use including any record retention requirements.
In accordance with section 1903(t)(9) of the Social Security Act
and Sec. 495.332(c) and (e) of the regulations as well as Sec.
495.368, States are required to include in their State's Medicaid HIT
plan processes for detecting improper payments and for combating fraud
and abuse. This would mean that States will be responsible for
conducting audits of providers and ensuring that any requests for
reimbursement for FFP meet all requirements of this subpart. When
States conduct audits and determine that improper payments have been
made, States are responsible for recovering and returning to CMS FFP
for any incentive payments that are discovered to be improper.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: Another commenter is concerned with a similar issue. That
is, the commenter requested that CMS identify and develop ``safe
harbor''

[[Page 44516]]

processes and methods for administering the incentive program that
would assure States that if these processes/methods are used, States
would not be at risk if the processes/methods are less successful than
anticipated. An example would include a process for auditing the
adoption, implementation, and upgrading process. If an audit approach
was agreed to but ended up being less than effective when applied, the
State should not be responsible for re-auditing providers for previous
years, nor would it be denied participation in the incentive program
and lose the FFP. Another commenter is similarly concerned that this is
a new program and they requested that CMS explicitly recognize the
States' ability to revise and redirect the program without penalty from
CMS.
Response: Our focus is on ensuring that EHR incentive payments are
made to the eligible provider, and are for the correct amount in the
appropriate payment year (or payment cycle). CMS will ensure that State
expenditures claimed for Federal matching under the Medicaid program
are programmatically reasonable, allowable, and allocable in accordance
with existing Federal laws, regulations, and policy guidance.
States can receive FFP if they are conducting adequate oversight
and States must provide their plans for financial oversight and the
processes and methodologies they will use to verify provider
information to CMS for review and approval as part of its State's
Medicaid HIT plan. We believe States may want to consider multiple ways
in which to audit their providers; for example, to ensure that a
provider is not excluded from the program, the State should review on a
prepay basis the Office of the Inspector General's List of Excluded
Individuals and Entities to determine if providers are excluded.
Additionally, States may wish to consider attestation in year one for
demonstrating adopting, implementing, or upgrading or meaningfully
using certified EHR technology. States will have to ``look behind''
these attestations and we assume this will be done on a post-pay basis.
One size does not fit all and we believe several audit options should
be used by States to ensure ``adequate oversight.'' However, if it is
determined that the State's audit methodologies are proving to be less
than effective we will require that the State update its State Medicaid
HIT plan and present more effective audit strategies that will work to
accomplish conducting adequate oversight of the program. States must
ensure due diligence in conducting adequate oversight and all
requirements of this subpart must be met or FFP could be at risk.
We are making no additional revisions to this section of the rule
as a result of this comment.
Comment: One commenter requested information regarding the appeals
process.
Response: For Medicaid, CMS has specified the appeals process for a
Medicaid provider receiving electronic health record incentive payments
in Sec. 495.370. Specifically, the State must have a process in place
consistent with the requirements established at Sec. 447.253(e) to
allow for providers to appeal incentive payments, incentive payment
amounts, provider eligibility determinations, and the demonstration of
adopting, implementing or upgrading and meaningful use of certified EHR
technology. CMS is requiring that the State Medicaid HIT plan describe
the process in place for provider appeals. We believe the States, not
the Federal government, are in the best position to determine the
administrative process that would best meet their needs and we believe
States are in a position to design an effective appeal procedure; thus,
we are providing for a great deal of State flexibility. Within the
parameters of the regulation, States are free to establish reasonable
criteria for appeals, to limit the issues on appeal that may be
appropriate, or to adopt other procedures to prevent frivolous appeals.
However, State appeal processes should be consistent with the
requirement in Sec. 447.253(e) for prompt administrative review.
(States define what would constitute a prompt review, and we have not
specified a time period for conducting or concluding a provider
appeal.) This requirement is in keeping with providing States
flexibility while retaining for providers an opportunity to avail
themselves of an exception process when they believe an exception is
warranted. Additionally, Sec. 447.253(e) provides that the Medicaid
agency must allow providers an opportunity to submit additional
evidence. Our regulations at Sec. 495.370 also require that the
appeals processes established by the States comply with the State's own
administrative procedure laws and that the State provide any additional
appeal rights that would otherwise be available under the procedures
established by the State.
We are making no additional revisions to this section of the rule
as a result of this comment.

III. Information Collection Requirements

Under the Paperwork Reduction Act of 1995, CMS is required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that CMS solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
The following is a discussion of the requirements we believe are
subject to PRA and collection of information requirements as a result
of this final rule. This analysis finalizes our projections which were
proposed in the January 13, 2010 Federal Register (75 FR 1844 through
2011). The projected numbers of EPs and eligible hospitals, MA
organizations, MA EPs and MA-affiliated hospitals are based on the
numbers used in the impact analysis assumptions as well as in Table 32
in section IV of this final rule.

A. ICRs Regarding Demonstration of Meaningful Use Criteria (Sec.
495.8)

Section 495.8(a)(1) of the proposed rule contained requirements for
EPs, in CY 2011, to attest, through a secure mechanism, to meeting
meaningful use criteria. As described in the proposed rule (75 FR
1949), we divided meaningful use objectives/measures into Sets A and B.
We estimated that the total burden for an EP to attest to Sec.
495.8(a)(1)(i) and (ii) for Set A meaningful use objectives/measures
and ambulatory quality measures would be one hour. For all 442,600 non-
hospital-based Medicare and Medicaid EPs (323,500 Medicare EPs, 80,900
dual Medicare/Medicaid EPs, and 38,200 Medicaid-eligible-only EPs), the
burden therefore equaled 442,600 hours. We estimated that the
associated cost burden was $79.33 for an EP to attest to Sec.
495.8(a)(1)(i) and (ii) for Set A meaningful use objectives/measures
and ambulatory quality measures, and the total associated annual cost
burden for all EPs to attest was $35,111,458. We invited comments on
the estimated percentages and the numbers of (registered) EPs that will
attest to the above including Set A meaningful use

[[Page 44517]]

objectives/measures in CY 2011, but did not receive any on this issue.
In the proposed rule, we also estimated that it would take 8 hours
for an EP to attest to meeting the Set B meaningful use objectives/
measures. We estimated that the total annual burden for all 442,600
non-hospital-based EPs to attest to Set B meaningful use objectives and
measures was 3,540,800 hours. We estimated the associated cost burden
for an EP to attest was $634.64 and the total cost burden for all non-
hospital-based EPs to attest was $280,891,664. We solicited comments on
the estimated percentages and the numbers of (registered) EPs that will
attest to Set B objectives and measures in CY 2011, but did not receive
any on this issue.
Although, as we proposed, we continue to have an attestation
requirement in Sec. 495.8(a)(1), we are revising the burden estimates
for two reasons. First, as described elsewhere in this final rule, the
definition of hospital-based EP has changed, resulting in about 73,000
outpatient hospital EPs becoming potentially eligible to participate in
the EHR incentive program. Therefore, we are increasing the number of
EPs in our burden estimates. We estimate that in CY 2011, there will be
521,600 non-hospital-based Medicare and Medicaid EPs (382,000 Medicare
EPs, 95,500 dual Medicare/Medicaid EPs, and 44,100 Medicaid-eligible-
only EPs) participating in the EHR incentive program. Second, in
response to public comments, we have made significant changes in Sec.
495.6 meaningful use objectives and measures for EPs, eligible
hospitals and CAHs, which has changed the burden estimates.
In section II.A.2.d. of this final rule, Stage 1 Criteria for
Meaningful Use in this final rule, we have re-categorized meaningful
use objectives/measures as core criteria and menu criteria. Unless an
exception applies, Sec. 495.6(a) requires that an EP must meet all 15
Stage 1 meaningful use core criteria under Sec. 495.6(d) and 5 out of
10 meaningful use menu criteria under Sec. 495.6(e). The burden
associated with the requirements in Sec. 495.8 and Sec. 495.6 is the
time and effort required to attest to the required elements.
To comply with Sec. 495.8(a)(1), we estimate that it would take an
EP 8 hours 52 minutes to prepare and attest that during the EHR
reporting period, the EP used certified technology, specify the
technology, and satisfied all 15 mandatory Stage 1 meaningful use core
criteria. We estimate that it would take an EP an additional 0.5 hours
to select and attest to the clinical quality measures, in the format
and manner specified by CMS. We estimate the total burden associated
with this requirement for an EP is 9 hours 22 minute (8 hours 52
minutes + 0.5 hours) and the total burden for all the EPs to attest to
these requirements is 4,855,827 hours (521,600 EPs x 9 hours 22
minutes). We estimate the associated cost burden for an EP to attest to
these requirements is $743.08 (9 hours 22 minutes x $79.33 (mean hourly
rate for physicians based on the May 2008 Bureau of Labor Statistics)),
and the total cost burden for all EPs to attest to these requirements
is $387,592,672 (4,855,827 hours x $79.33).
We recognize that some Stage 1 meaningful use menu set measures are
easier to accomplish than others. We cannot predict which of the
measures in the menu set an EP will select. Therefore, our burden
estimates are based on two scenarios to illustrate how different
scenarios would impact the burden incurred. Our ``least burdensome'' or
``low'' scenario of meaningful use demonstration assumes that an EP
defers the five most burdensome objectives/measures while our ``most
burdensome'' or ``high'' scenario of meaningful use demonstration
assumes that an EP defers the five least burdensome meaningful use menu
set measures. We recognize that in reality, nothing is absolute, and we
have no basis for estimating the ``all low'' or ``all high'' scenario
and have therefore created estimates for both. To compensate for the
uncertainties of selection of meaningful use criteria by an EP, we use
the averages of the ``high'' and ``low'' scenario estimates in Table
33. Section 495.6(a) requires that an EP must meet five out of 10 Stage
1 meaningful use menu set measures (unless exceptions apply). The
burden involved is the time and effort to select and attest to the
meaningful use menu set measures. In the ``low'' scenario, we estimate
that an EP may defer the five most burdensome meaningful use measures.
We estimate it will take an EP 42 minutes to comply with the remaining
five Stage 1 meaningful use menu set measures. We estimate the total
burden for all 521,600 EPs to comply with the meaningful use menu set
criteria is 365,120 hours (521,600 EPs x 42 minutes). In the high
scenario, we estimate that an EP may defer the five least burdensome
meaningful use criteria. We estimate that it will take an EP 2 hours 40
minutes to comply with the remaining five Stage 1 meaning use menu
measures. We estimate that the total burden for all 521,600 EPs to
comply with the meaningful use menu set criteria is 1,390,586 hours
(521,600 EPs x 2 hours 40 minutes). Based on the two scenarios, the
average burden for an EP to comply with meaningful use menu set
criteria is 1 hour 41 minutes ((42 minutes + 2 hours 40 minutes)/2).
Based on the two scenarios, the average burden for all EPs to comply
with meaningful use menu set criteria is 877,853 hours ((365,120 hours
+ 1,390,586 hours)/2). We estimate the cost burden for an EP to comply
with the ``low'' scenario Stage 1 meaningful use menu criteria is
$55.53 (42 minutes x $79.33 (mean hourly rate for physicians based on
the May 2008 Bureau of Labor Statistics)), and the total cost burden
for all 521,600 EPs to comply is $28,964,970 (521,600 EPs x $55.53). We
estimate that the cost burden for an EP to comply with the ``high''
scenario Stage 1 meaningful use menu criteria is $211.49 (2 hours 40
minutes x $79.33), and the total cost burden for all EPs is
$110,315.156 (521,600 EPs x $211.49). The average cost burden estimate
for an EP to comply with the meaningful use menu set criteria is
$133.51 (($55.53 + $211.49)/2). The average cost burden estimate for
all 521,600 EPs to comply with meaningful use menu set criteria is
$69,640,063 (($28,964,970 + $110,315.156)/2).
In the proposed rule, we expected that there would be steady growth
in the number of participating EPs. We estimated that in 2012, there
would be 447,400 non-hospital-based Medicare, and Medicaid EPs (326,900
Medicare EPs, 81,700 dual Medicare/Medicaid EPs and 38,800 Medicaid-
eligible-only EPs) qualified to receive EHR incentive payment. We
estimated that the burden for meeting Sec. 495.8(a)(2), which required
attestation for most meaningful use measures, and electronic reporting
of clinical quality measures in CY 2012, would be 0.5 hours for an EP
to attest to the Set A objectives and measures and 8 hours to gather
information and attest to the Meaningful Use Set B objectives/measures.
For burden estimate purposes, we estimated that all 447,400 non-
hospital-based Medicare, and Medicaid EPs might attest. We estimated
that the total annual attestation burden for all EPs was 223,700 hours
for the Set A objectives/measures and 3,579,200 hours for Set B
objectives/measures. We estimated that the associated cost burden was
$39.67 for the Set A meaningful use objectives/measures and $634.64 for
the Set B meaningful use objectives/measures. The total cost burden for
all EPs was $17,746,121 for Set A and $283,937,936

[[Page 44518]]

for Set B. We invited comments on the estimated percentages and the
numbers of registered EPs that would attest to EHR technology used and
Meaningful Use Set A and Set B objectives/measures in CY 2012, but we
did not receive any comments on this issue.
We expect steady growth in EPs in CY 2012. In the final rule, based
on legislation altering the definition of ``hospital-based,'' we are
increasing our estimates of participating EPs, and estimate that in CY
2012, there will be about 527,254 non-hospital-based Medicare and
Medicaid EPs (385,954 Medicare EPs, 96,500 dual Medicare/Medicaid EPs
and 44,800 Medicaid-eligible-only EPs) who are qualified to receive EHR
incentive payments. The Stage 1 meaningful use criteria (core and menu
sets) are the same for CY 2011 and CY 2012. We estimate that it would
take 8 hours 52 minutes for an EP to attest that during the EHR
reporting period, the EP used certified technology, specify the
technology, and satisfied all 15 mandatory Stage 1 meaningful use core
criteria. We estimate the total burden associated with this requirement
for all EPs is -4,675,161 hours (527,254 EPs x 8 hours 52 minutes). The
associated cost burden for an EP to comply with this requirement is
$703.42 (8 hours 52 minute x $79.33) and the associated cost burden for
all EPs is $370,880.589 (44,675,161 hours x $79.33 (mean hourly rate of
physicians based on the May 2008 Bureau of Labor Statistics)).
The Stage 1 meaningful use objectives and measures are the same for
CY 2011 and CY 2012. Therefore, in CY 2012, the burden associated with
attesting to Stage 1 meaningful use core and menu criteria for an EP is
the same as CY 2011. Again, we cannot predict which of the measures in
the menu set will be selected by an EP. Therefore, as explained above,
we use a ``low'' and ``high'' scenario to estimate burden. For the
``low'' scenario, we estimate it will take an EP 42 minutes to attest
to five Stage 1 meaningful use menu-set measures. The total burden for
all 527,254 EPs, therefore, would be estimated at 369,078 hours
(527,254 EPs x 42 minutes). Under the ``high'' scenario, we estimate it
will take 2 hours 40 minutes for an EP to attest to five Stage 1
meaningful use menu-set criteria. The total burden for all 527,254 EPs,
therefore, is estimated to be 1,405,659 hours (527,254 EPs x 2 hours 40
minutes). Based on the two scenarios, the average burden hours for an
EP to attest to meaningful use menu set measures is 1 hour 41 minutes
((42 minutes + 2 hours 40 minutes)/2), and the total average burden for
all EPs is 887,369 hours ((369,078 hours + 1,405,659 hours)/2). Under
the ``low scenario,'' we estimate that the cost burden for an EP is
$55.53 (42 minutes x $79.33 (mean hourly rate for physicians based on
the May 2008 Bureau of Labor Statistics)), and the total cost burden
for all 527,254 EPs to comply with is $29,278,942 (527,254 EPs x
$55.53). For the ``high scenario,'' we estimate that the cost burden is
$211.49 (2 hours 40 minutes x $79.33), and the total cost burden for
all EPs is $111,510,942 (527,254 EPs x $211.49). The average cost
burden is $133.51 (($55.53 + $211.49)/2). The average cost burden for
all 527,254 EPs is $70,394,942 (($29,278,942 + 111,510,942)/2).
Section 495.8(a)(2)(iii) requires that for CY 2012, EPs must report
electronically to CMS, or, in the case of Medicaid EPs, the States,
clinical quality information in the form and manner specified by CMS.
We have limited the required measures only to those that can be
automatically calculated by a certified EHR, and to those for which we
have electronic specifications currently available and we are able to
post as final by the date of display of this final rule. The burden
associated with this requirement is the time and efforts to report the
required clinical quality measures. We estimate the burden for an EP to
comply with this requirement is 0.5 hours and the total burden for all
EPs to comply with this requirement is 263,627 hours (527,254 EPs x 0.5
hours). We believed that an EP may assign a medical secretary to submit
the specific clinical quality measures to CMS or the States. We
estimate the cost burden for an EP to comply with this requirement is
$7.40 (0.5 hours x $14.81 (mean hourly rate of medical secretaries
based on the May 2008 Bureau of Labor Statistics)) and the cost burden
for all EPs to comply with this requirement is $3,904,316 (263,627
hours x $14.81).
To estimate capital costs for EPs, we assume a certified EHR system
will cost roughly $54,000. If 521,600 EPs adopt these EHRs, total
capital costs prior to incentives would be roughly $23.9 billion. We
also estimate that in 2011, $0.2 billion of Medicare incentive payments
and $0.2 billion of Medicaid incentive payments would be provided to
EPs under a low scenario, and $0.6 billion Medicare incentive payments
and $0.9 billion of Medicaid incentive payments would be provided to
EPs under a high scenario to help offset those costs. Therefore, we
estimate that total net capital costs for EPs in 2011 would be $23.5
billion ($23.9 billion-$0.2 billion-$0.2 billion) under a low scenario
and $22.4 billion ($23.9 billion-$0.6 billion-$0.9 billion). These
capital costs would decrease over the course of the EHR incentive
programs as additional incentives are provided. Therefore, in 2012, the
total net capital costs for EPs would be $22.1 billion ($23.5 billion-
$1.0 billion of Medicare incentives-$0.4 billion of Medicaid
incentives) under the low scenario and 419.0 billion ($22.4 billion-
$2.3 billion-$1.1 billion) under the high scenario.
As with EPs, for eligible hospitals and CAHs, we proposed, at
section 495.8(b) of the proposed rule, that hospitals demonstrate they
are meaningful EHR users through an attestation mechanism. As with EPs,
we divided meaningful use criteria into Sets A and B. We estimated that
it would take an eligible hospital or CAH 0.5 hours to attest to the
requirements in Sec. 495.8(b)(1)(i) and (ii) including the Set A
meaningful use objectives/measures, .0.5 hours to select and attest to
the hospital quality measures, and 7 hours to comply with gathering the
information, attesting and reporting Set B objectives/measures.
Therefore, the estimated the total burden for all 5,011 Medicare and
Medicaid eligible hospitals and CAHs (3,620 acute care hospitals, 1,302
critical access hospitals, 78 Medicaid children's hospitals, and 11
Medicaid cancer hospitals) equaled 5,011 hours. For Set B objectives
and measures, we estimated the total burden at 35,077 hours.
We believed that an eligible hospital or CAH might assign an
attorney to attest on their behalf. We estimated the cost burden for an
eligible hospital or CAH to attest to the Set A and hospital quality
requirements was $59.98 and the total estimated annual cost burden for
all eligible hospitals and CAHs to attest was $300,560. For Set B
objectives/measures, we estimated a per-hospital cost burden of
$419.86, and a total cost burden of $2,103,918, not including capital
costs. We solicited public comments on the estimated percentages and
the numbers of (registered) eligible hospitals and CAHs that would
attest in FY 2011, but we did not receive any comments on this issue.
We also invited comments on the type of personnel or staff that would
mostly likely attest on behalf of eligible hospitals and CAHs, but we
did not receive any comments on this issue.
For the final rule, as proposed, Sec. 495.8(b) will require
demonstration of meaningful use through an attestation mechanism.
However, as with EPs, we have revised the burden estimates due to the
changes in meaningful use

[[Page 44519]]

objectives and measures, in response to comments. Unless an exception
applies, Sec. 495.6(b) requires that an eligible hospital or CAH must
meet all 14 Stage 1 meaningful use core criteria under Sec. 495.6(f)
and five out of 10 meaningful use menu criteria under Sec. 495.6(g).
The burden associated with the requirements in Sec. 495.8 and Sec.
495.6 is the time and effort required to attest to the required
elements.
To comply with Sec. 495.8(b)(1), we estimate that it would take an
eligible hospital or CAH 8 hours 42 minutes to prepare and attest that
during the EHR reporting period, the hospital or CAH used certified
technology, specify the technology, and satisfied all 14 mandatory
Stage 1 meaningful use core criteria. We estimate that it will take an
eligible hospital or CAH an extra 0.5 hours to select and attest to the
hospital quality measure, in the format and manner specified by CMS. We
estimate the total burden associated with this requirement for an
eligible hospital or CAH is 9 hours 12 minutes (8 hours 42 minutes +
0.5 hours) and the total burden all eligible hospitals and CAHs to
attest to these requirements is 46,101 hours (9 hours 12 minutes x
5,011 hospitals). We believe an eligible hospital or CAH may use an
attorney to attest on their behalf. We estimate the associated cost
burden for an eligible hospital or CAH to attest to these requirements
is $551.82 (9 hours 12 minutes x $59.98 (mean hourly rate for attorneys
based on the May 2008 Bureau of Labor Statistics)) and the total cost
burden for all eligible hospitals and CAHs to attest to these
requirements is $2,765,150 ($551.82 x 5,011 hospitals and CAHs)).
We recognize that some Stage 1 meaningful use menu criteria are
easier to accomplish than others. Therefore, as with the EPs, our
burden estimates are based on a ``low'' and ``high'' scenario. Unless
an exception applies, Sec. 495.6(b) requires that an eligible hospital
or CAH must meet five out of 10 Stage 1 meaningful use menu criteria.
The burden involved is the time and effort to select and attest to the
meaningful use menu-set measures. Under the ``low'' scenario, we
estimate it will take an eligible hospital or CAH 42 minutes to attest
to five Stage 1 meaningful use menu-set measures, resulting in a total
burden for all 5,011 eligible hospitals and CAHs of 3,508 hours (5,011
hospitals x 42 minutes). Under the high scenario, we estimate it will
take an eligible hospital or CAH 3 hours 30 minutes to attest to five
Stage 1 meaningful use menu-set measures, resulting in a total burden
for all 5,011 eligible hospitals and CAHs of 17,539 hours (5,011
hospitals x 3 hours 30 minutes). Based on the two scenarios, the
average burden is 2 hours 6 minutes (42 minutes + 3 hours 30 minutes)/
2), and the average burden for all eligible hospitals and CAHs is
10,523 hours (3,508 hours + 17,539 hours)/2).
We believe an eligible hospital or CAH may use an attorney to
attest on their behalf. For menu-set meaningful use criteria, low
scenario, we estimate the associated cost burden for an eligible
hospital or CAH is $41.99 (42 minutes x $59.98 (mean hourly rate for
attorneys based on the May 2008 Bureau of Labor Statistics)) and the
total cost burden for all eligible hospitals and CAHs is $210,392
($41.99 x 5,011 hospitals and CAHs). For menu-set meaningful use
criteria, high scenario, we estimate the associated cost burden for an
eligible hospital or CAH is $209.93 (3 hours 30 minutes x $59.98) and
the total cost burden for all eligible hospitals and CAHs is $1,051,959
($209.93 x 5,011 hospitals and CAHs). Based on the two scenarios, the
average cost burden for an eligible hospital or CAH to attest to
meaningful use menu set criteria is $125.96 (($41.99 + $209.93)/2). The
average burden for all eligible hospitals and CAHs to attest to
meaningful use menu set criteria is $631,176 (($210,392 + $1,051,959)/
2).
As with EPs, our proposed regulations (at Sec. 495.8(b)(2))
required that for FY 2012 and subsequent years, eligible hospitals and
CAHs demonstrate meeting most meaningful use criteria through
attestation, and electronically report hospital quality measures. As
with EPs, we divided meaningful use objectives and measures into Sets A
and B. For Set A, we estimated that it would take an eligible hospital
or CAH 0.5 hours to attest to the requirements in Sec. 495.8(b)(2).
For Set B, we estimated it would take an eligible hospital or CAH 7
hours to gather information and attest. Assuming that 5,011 hospitals
might attest, we estimated that the total annual attestation burden for
all eligible hospitals and CAHs was 2,506 hours (Set A) and 35,077
hours (Set B). We estimated the total annual cost burden for all
eligible hospitals and CAHs to attest was $150,310 (Set A) and
$2,103,918 (Set B). We invited public comments on the estimated
percentages and the numbers of registered EPs that would attest to EHR
technology used in CY 2012, but we did not receive any comments on this
issue.
In the final rule, we also require that for FY 2012, eligible
hospitals and CAHs demonstrate meeting meaningful use criteria through
attestation, except for clinical quality measures, which must be
electronically reported to CMS or the States. We do not expect growth
in the number of eligible hospitals or CAHs. The meaningful use
criteria (core and menu sets) are the same for FY 2011 and FY 2012. To
comply with Sec. 495.8(b)(1), we estimate that it would take an
eligible hospital or CAH 8 hours 41 minutes to prepare and attest that
during the EHR reporting period, the eligible hospital or CAH used
certified technology, specify the technology, and satisfied all 14
mandatory Stage 1 meaningful use core criteria. We estimate the total
burden associated with this requirement for all eligible hospitals and
CAHs to attest to these requirements is 43,596 hours (8 hours 42
minutes x 5,011 hospitals). We believe an eligible hospital or CAH may
use an attorney to attest on their behalf. We estimate the associated
cost burden for an eligible hospital or CAH to attest to these
requirements is $521.83 (8 hours 42 minutes x $59.98 (mean hourly rate
for attorneys based on the May 2008 Bureau of Labor Statistics)) and
the total cost burden for all eligible hospitals and CAHs to attest to
these requirements is $2,614,870 ($521.83 x 5,011 hospitals and CAHs).
We recognize that some Stage 1 meaningful use menu criteria are
easier to accomplish than others. We cannot predict which of the
measures in the menu criteria will be selected by an eligible hospital
or CAH. Therefore, as with EPs, our burden estimates are based on a
``low'' and ``high'' scenario. Unless an exception applies, Sec.
495.6(b) requires that an eligible hospital or CAH must meet five out
of 10 Stage 1 meaningful use menu criteria. The burden involved is the
time and effort to select and attest to the meaningful use menu
criteria. Under the ``low'' scenario, we estimate it will take an
eligible hospital or CAH 42 minutes to attest to five Stage 1
meaningful use menu-set measures, resulting in a total burden of 3,508
hours (5,011 hospitals x 42 minutes). Under the high scenario, we
estimate it will take an eligible hospital or CAH 3 hours 30 minutes to
attest to five Stage 1 meaningful use menu-set measures, resulting in a
total burden of 17,539 hours (5,011 hospitals x 3 hours 30 minutes).
Based on the two scenarios, the average burden for an eligible hospital
or CAH to attest to meaningful use menu set criteria is 2 hours 6
minutes ((42 minutes + 3 hours 30 minutes)/2), and the average burden
hours for all eligible hospitals and CAHs is 10,523 hours ((3,508 hours
+ 17,539 hours)/2).
We believe an eligible hospital or CAH may use an attorney to
attest on their behalf. For menu-set meaningful use criteria, low
scenario, we estimate

[[Page 44520]]

the associated cost burden for an eligible hospital or CAH is $41.99
(42 minutes x $59.98) and the total cost burden for all eligible
hospitals and CAHs is $210,392 ($41.99 x 5,011 hospitals and CAHs). For
menu-set meaningful use criteria, high scenario, we estimate the
associated cost burden for an eligible hospital or CAH is $209.93 (3
hours 30 minutes x $59.98) and the total cost burden for all eligible
hospitals and CAHs is $1,051,959 ($209.93 x 5,011 hospitals and CAHs).
Based on the two scenarios, the average cost burden for an eligible
hospital or CAH to attest to meaningful use menu set criteria is
$125.96 (($41.99 + $209.93)/2). The average burden for all eligible
hospitals and CAHs to attest to meaningful use menu set criteria is
$631,175 (($210,392 + $1,051,959)/2).
Section 495.8(b)(2)(iii) requires that for FY 2012, eligible
hospitals or CAHs must report electronically to CMS, or, in the case of
Medicaid hospitals, the States, clinical quality information in the
format and manner specified by CMS. Given that we limit the required
measures only to those that can be automatically calculated by a
certified EHR and to those for which we have electronic specifications
currently available that we are able to post as final by date of
display of this final rule. The burden associated with this requirement
is the time and effort to report the required hospital quality
measures. We estimate the burden for an eligible hospital or CAH to
comply with this requirement is 0.5 hours and the total burden for all
eligible hospitals or CAHs to comply with this requirement is 2,506
hours (5,011 hospitals and CAHs x 0.5 hours). We believe that an
eligible hospital or CAH may assign a medical secretary to submit the
specific hospital clinical quality measures to CMS or the States. We
estimated the cost burden for an eligible hospital or CAH to comply
with this requirement is $7.40 (0.5 hours x $14.81 (mean hourly rate of
medical secretary based on May 2008 Bureau of Labor Statistics)) and
the cost burden for all eligible hospitals or CAHs to comply with this
requirement is $37,107 (2,506 hours x $14.81).
To estimate capital costs for eligible hospitals and CAHs,
consistent with the sources cited in section V.G.4 of this final rule,
we assume that achieving meaningful use will require roughly a $5
million capital investment for the average hospital. If 5,011 hospitals
adopt these EHRs, total capital costs prior to incentives would be
roughly $25.1 billion. We also estimate that in 2011, $0.2 billion of
Medicare incentive payments and $0.4 billion of Medicaid incentive
payments would be provided to eligible hospitals and CAHs under the low
scenario, and $0.5 billion of Medicare incentive payments and $0.8
billion of Medicaid incentive payments would be provided to eligible
hospitals and CAHs under the high scenario to help offset those costs.
Therefore, we estimate that total net capital costs for hospitals in
2011 would be $24.5 billion ($25.1 billion-$0.2 billion-$0.4 billion)
under the low scenario and $23.8 billion ($25.1 billion-$0.5 billion-
$0.8 billion) under the high scenario. These capital costs would
decrease over the course of the EHR incentive programs as additional
incentives are provided. Therefore, in 2012, the total net capital
costs for hospitals would be $23.5 billion ($24.5 billion-$0.9 billion
of Medicare incentives-$0.1 billion of Medicaid incentives) under the
low scenario, and $21.4 billion ($23.8 billion-$2.1 billion of Medicare
incentives-$0.3 billion of Medicaid incentives) under the high
scenario.
Comment: Some commenters believed that CMS grossly underestimated
the cost and hour burden for EPs, eligible hospitals and CAHs to comply
with meaningful use Set A and Set B measures. Some commenters stated
that we should take into consideration all the time required to prepare
all attestation of meaningful use measures, including the manual
counting of numerators and denominators in our burden estimates.
Response: Prior to and after the publication of the proposed rule,
we have worked with ONC to ensure that our meaningful use objectives/
measures are well aligned with certified EHR technology. In the final
rule, we only require meaningful use measures that can be achieved by
the functionality and capability of certified EHR technology.
Furthermore, based on comments, we have explained in section II.A.2.d.
of this final rule that we are including a substantial amount of
flexibility in the final rule to lower the burden for EPs, eligible
hospitals and CAHs in meeting the attestation and demonstration of
meaningful use criteria. Some examples of such flexibility are the
categorization of Stage 1 meaningful use core and menu (optional)
criteria, reducing the number of meaningful use objectives/measures for
2011 and 2012, limiting the denominators, in certain cases, only to
patients whose records are maintained using certified EHR technology,
and lowering thresholds for many of the meaningful use measures. We
believe these changes reduce burden without compromising the intent of
the Congress, and the ability of EHR technology to begin to improve
health care quality, efficiency, and outcomes. We have considered the
comments and we have made some revisions on our previous burden
estimates. While this requirement is subject to PRA, we have no way of
accurately quantifying the burden. We will continue to monitor the
burden associated with the implementation of EHR technology as our
experience continues to grow and as EHR technology continues to evolve.
Comment: CMS received numerous comments regarding the burden
(economic and other) of reporting on the large number of measures and
the overall quality reporting burden this will add to EPs and other
healthcare providers. Others suggested reporting on significantly
smaller set of measures.
Response: As we have explained in section II.A.3.(d) of this final
rule, we have reduced the reporting burden by decreasing the number of
required clinical quality measures and limiting measures to those that
can be automatically calculated by a certified EHR. We believe that the
proposed burden estimate, which was estimated to be an additional 0.5
hours in 2011 and 2012, is reasonable and we are finalizing it.
Table 20 below lists the objectives and associated measures in
which we estimate the burden to fulfill ``core set,'' ``menu set'', and
clinical quality measures requirements. Estimates of total capital
costs at the bottom of Table 20 are derived from the estimates used in
the ``Industry Costs'' section in Section V.G.4. of this final rule.
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B. ICRs Regarding Participation Requirements for EPs, Eligible
Hospitals, and CAHs (Sec. 495.10)

Since the EHR incentive payment program is new, we do not have
enough information to estimate the information collection requirements
burden beyond the first payment year for an EP, eligible hospital, or
CAH for this provision. Furthermore, the EPs, eligible hospitals, and
CAHs can enroll any time during the first 5 years; therefore, it is
difficult to predict with certainty the burden beyond the first payment
year as the burden depends on the number of participants. Therefore, we
provide a best estimate of what we believe the burden associated with
this provision might be.
For the proposed rule, Sec. 495.10(a) through (c), we estimated
that all 442,600 non-hospital-based Medicare, and Medicaid EPs would
register in 2011 to receive an EHR incentive payment, and that it would
take no more than 0.5 hours to complete the registration, resulting in
a total estimated annual registration burden for all EPs of 221,300
hours (442,600 EPs x 0.5 hours). As we could not predict whether an EP
or a medical secretary (on the EP's behalf) would register, we did one
high-end and one low-end burden estimate. The cost burden for an EP who
chose to register in the EHR incentive payment program himself or
herself was $39.67 (0.5 hours x $79.33 (mean hourly rate for physicians
based on the May 2008 Bureau of Labor Statistics)), with a total
estimated annual cost burden for all EPs of $17,555,729 (221,300 hours
x $79.33). Similarly, the cost burden for an EP who chose to use a
medical secretary to register on their behalf was $7.41 (0.5 hours x
$14.81), with a total estimated annual cost burden for all EPs of
$3,277,453 (221,300 hours x $14.81). We used the average of the two
estimates in the tally in Table 34 of the proposed rule. We invited
comments on whether we should use the higher cost burden estimate
($17,555,729) or the lower cost burden estimate ($3,277,453), but we
did not receive any comments on this issue. We invited public comments
on the estimated percentages or the numbers of EPs that will register
in CY 2011 and subsequent years, but we did not receive any comments on
this issue.
We are finalizing both the lower cost estimate using the medical
secretary as the personnel registering for the EP and the high cost
estimate of the EP registering him or herself. Due to the revised
estimates of non-hospital-based EPs eligible for the EHR incentive
program, we are revising our burden estimates to reflect this change.
In the final rule, we estimate that 521,600 non-hospital-based
Medicare, and Medicaid EPs may register in CY 2011 to receive an EHR
incentive payment. We believe that an EP may use a medical secretary to
register on his/her behalf (low burden) or the EP may register him or
herself (high burden). We estimate that it would take no more than 0.5
hours to complete the registration. The low cost burden for a medical
secretary to register an EP is $7.41 (0.5 hours x $14.81 (mean hourly
rate of medical secretaries based on the May 2008 Bureau of Labor
statistics)). The total estimated annual registration burden hours for
the low cost estimate is 260,800 (521,600 EPs x 0.5 hours) in the first
payment year. The total estimated low cost burden for all EPs to
register in CY 2011 is $3,862,448 (260,800 hours x $14.81). The high
cost burden for an EP to register him or herself is $39.67 (0.5 hours x
$79.33 (mean hourly rate for physicians based on the May 2008 Bureau of
Labor Statistics)). In the first payment year, the total estimated
annual registration burden hours for the high cost estimate is 260,800
(521,600 EPs x 0.5 hours). The total estimated high cost burden for all
EPs to register in CY 2011 is $20,689,264 (260,800 hours x $79.33). We
only use the average of the two estimates in the tally in Table 34.
Section 495.10(d) proposed that if there were subsequent changes in
the initial registration information, the EP was responsible for
providing us with updated changes in the manner specified by us. Based
on our experience with provider enrollment, we estimated that about 11
percent of the Medicare and Medicaid EPs might need to update their
registration information during a 1-year period. We estimated that
49,214 EPs (11 percent) might only have one occasion that required
updating of information in a given year. For each occasion, we
estimated that it would take no more than 0.5 hours to notify us of the
changes. With that, we estimated that the annual total burden hours for
49,214 EPs to update changes were 24,607. However, we could not predict
if the EP would update the registration information himself or herself
or assign a medical secretary to do it. Therefore, we did two burden
estimates for an EP and his/her medical secretary. The cost burden for
an EP who chose to update the registration information himself or
herself was $39.67. The total estimated annual cost burden for all
49,214 EPs to update registration information themselves was
$1,952,073. Similarly, the cost burden for the EP who chose to use a
medical secretary to update registration information on his/her behalf
was $7.41. The total estimated annual cost burden for 49,214 EPs who
chose to use medical secretaries to update registration information on
their behalf was $364,429. We used the average of the two estimates in
the tally in Table 34. We invited comments on whether we should use the
higher cost burden estimate ($1,952,073) or the lower cost burden
estimate ($364,429) but we did not receive any comments on this issue.
We also invited public comments on the estimated percentages and the
numbers of EPs that will need to submit subsequent registration changes
to us over the course of the EHR incentive payment program but we did
not receive any comments on this issue.
We are finalizing both the lower cost estimate using the medical
secretary as the personnel to update registration information for the
EP and the high cost estimate of the EP updating their registration
information. Due to the revised estimates of non-hospital-based EPs
eligible for the EHR incentive program pursuant to legislative
inclusion of EPs who practice in outpatient hospital setting, we are
revising our burden estimate for this requirement to reflect this
change. In the final rule, we estimate that about 11 percent of the
Medicare and Medicaid EPs may need to update their registration
information during a 1-year period. We estimate that 57,998 EPs
(527,254 (revised estimated number of EPs for CY 2012) x 11 percent)
may only have one occasion that requires them to update their
information in a given year. For each occasion, we estimate that it
will take no more than 0.5 hours to notify us of the changes. With
that, we estimate that the annual total burden hours for 57,998 EPs to
update registration changes are 28,999. The lower cost burden estimate
for a medical secretary to update an EP's registration is $7.41 ($14.81
(mean hourly rate for medical secretary based on the May 2008 Bureau of
Labor Statistics) x 0.5 hours). The total lower cost burden for all EPs
to update registration information is $429,475 (28,999 hours x $14.81).
The high cost burden for an EP to update their own registration
information is $39.67 (0.5 hours x $79.33 (mean hourly rate for
physicians based on May 2008 Bureau of Labor Statistics)). The total
estimated annual high cost burden to update registration information is
$2,300,491 (28,999 hours x $79.33). We only use the average of the two
estimates in the tally in Table 34.

[[Page 44533]]

In Sec. 495.10(a) and (b), we estimate that in FY 2011, there are
5,011 Medicare and Medicaid eligible hospitals, and CAHs that may be
qualified to receive EHR incentive payment. Since we cannot predict how
many eligible hospitals, and CAHs will participate in the EHR incentive
payment program, we estimate that all 5,011 hospitals may register for
the incentive program for burden estimate purposes. We estimate that it
would take no more than 0.5 hours for an eligible hospital or CAH to
register. We estimate the total annual burden hours for registration
will be 2,506 (5,011 hospitals x 0.5 hours). Once the decision to
participate in the incentive program is made, we believe eligible
hospitals or CAHs may assign a medical secretary to submit the
registration information. The cost burden for an eligible hospital or
CAH to register is $7.41 (0.5 hours x $14.81 (mean hourly rate for
medical secretaries based on the May 2008 Bureau of Labor Statistics)).
We estimate that the total annual cost burden for eligible hospitals
and CAHs to register is $37,106 (5,011 hospitals x 0.5 hours x $14.81)
(mean hourly rate for medical secretaries based on the May 2008 Bureau
of Labor Statistics)). We invited public comments on the estimated
percentages or the number of eligible hospitals and CAHs that will
register for the EHR incentive payment program in 2011 and subsequent
years but we did not receive any comments on this issue. We are
finalizing the burden estimates as proposed.
In Sec. 495.10(d), we proposed that if there were subsequent
changes in the initial registration information, the eligible hospital
or CAH was responsible for providing us with updated information in the
manner specified by us. Based on our experience with provider
enrollment, we estimated that about 8 percent of the Medicare and
Medicaid eligible hospitals and CAHs (5,011 hospitals and CAHs x 8
percent = 401 hospitals) might need to update their registration
information during a 1-year period. We estimated that eligible
hospitals in this 8 percent pool might only have 1 occasion that
required updating of registration information in a given year. For each
occasion, we estimated that it would take no more than 0.5 hours to
notify us of the changes. With that, we estimated that the total annual
burden hours for eligible hospitals and CAHs to update CMS of
registration changes were 201 (401 hospitals and CAHs x 0.5 hours). We
believe that eligible hospitals or CAHs might assign a medical
secretary to update the registration information. We estimated the
total annual cost burden for eligible hospitals and CAHs to update CMS
of registration changes is $2,969 (401 hospitals and CAHs x 0.5 hours x
$14.81) (mean hourly rate for medical secretaries based on the May 2008
Bureau of Labor Statistics)). We invited public comments on the
estimated percentages and the numbers of eligible hospitals and CAHs
that will submit subsequent registration changes to us over the course
of the EHR incentive payment program but we did not receive any
comments on this issue. We are finalizing the estimated burden for
hospitals and CAHs that will be making subsequent registration changes
for FY 2012 as proposed.
In Sec. 495.10(e)(1), we proposed that for participation in the
EHR incentive payment programs, prior to the first payment year, an EP
must notify us in a specified manner as to whether he or she elects to
participate in the Medicare or Medicaid EHR incentive program. We
estimated that in 2011, there would be about 80,900 dual Medicare/
Medicaid EPs who might make the initial Medicare and Medicaid program
selection. The standard full amount of Medicaid incentive payments that
an EP could receive is larger than the standard full amount for the
Medicare EP incentive payments. Therefore, for burden estimate
purposes, we believed that all of the 80,900 dual Medicare/Medicaid EPs
might make the Medicaid program selection. We estimated that it would
take no more than 0.5 hours to submit the initial Medicare or Medicaid
selection notification to us. We could not predict if the EP would
submit the notification to CMS himself or herself or assign a secretary
to do it. Therefore, we did one high end estimate and one low end
burden estimate for an EP and a medical secretary respectively. The
total estimated burden hours for all the dual Medicare/Medicaid EPs to
notify CMS of program selection were 40,450 in the first payment year.
The cost burden for these EPs who notify CMS of Medicare or Medicaid
program selection himself or herself was $39.67. The total estimated
annual cost burden for all dual Medicare/Medicaid EPs to notify CMS of
program selection themselves was $3,208,899. Similarly, the cost burden
for an EP who chose to use a medical secretary to notify CMS of program
selection was $7.41. The total estimated annual cost burden for all
dual Medicare/Medicaid EPs who use medical secretaries to notify CMS of
program selection was $599,065. We used the average of the two
estimates in the tally in Table 34. We invited comments on whether we
should use the higher cost burden estimate ($3,208,899) or the lower
cost burden estimate ($599,065), but we did not receive any comments on
this issue. We also invited public comments on the estimated
percentages and the number of dual Medicare/Medicaid EPs that would
submit initial Medicare or Medicaid program selection in 2011, 2012,
2013, or 2014 but we did not receive any comments.
In the final rule, we are finalizing both the low burden cost
estimate using a medical secretary for dual-Medicare/Medicaid EPs to
notify CMS of program selection and the high burden cost estimate of an
EP who may do this him or herself. We have revised the total number of
dual-Medicare/Medicaid EPs and the associated burden estimates pursuant
to the legislative inclusion of EPs, who practice in outpatient
hospital, in the incentive program. We estimate that in CY 2011, there
will be 95,500 dual Medicare/Medicaid EPs who may use a medical
secretary to notify CMS of the initial Medicare and Medicaid program
selection. We estimate that it would take no more than 0.5 hours to
submit the initial Medicare or Medicaid selection notification to us.
The estimated burden for all the dual-Medicare/Medicaid EPs to comply
with this requirement is 47,750 hours (95,500 EPs x 0.5 hours). The
associated low cost burden for a dual-Medicare/Medicaid EP is $7.41
(0.5 hours x $14.81 (mean hourly rate for medical secretaries based on
May 2008 Bureau of Labor Statistics) and the total low cost burden for
all the dual-Medicare/Medicaid EPs is $707,178 (47,750 hours x $14.81).
The associated high cost burden for a dual-Medicare/Medicaid EP is
$39.67 (0.5 hours x $79.33 (mean hourly rate for physicians based on
the May 2008 Bureau of Labor Statistics)) and the total high cost
burden estimate for all dual-Medicare/Medicaid EPs is $3,788,008
(47,750 hours x $79.33). We only use the average of the two estimates
in the tally in Table 34.
In Sec. 495.10(e)(2) we proposed that EPs might switch from
Medicare to Medicaid EHR incentive program or vice versa one time, and
only for payment year 2014 or earlier. The burden associated with this
requirement was the time required for the EP to make the Medicare/
Medicaid program selection. Since we had no knowledge of how many EPs
will make the subsequent changes in program selection, we assumed that
all 81,700 (estimated number of dual-Medicare/Medicaid EPs for CY 2012)
dual Medicare/Medicaid EPs might make subsequent program selection
changes

[[Page 44534]]

for burden estimate purposes. We estimated that it would take no more
than 0.5 hours to submit the Medicare/Medicaid selection change to us.
We could not predict if the EP would submit the change to CMS himself
or herself or assign a secretary to do it. Therefore, we did one high
end burden estimate for an EP and one low end estimate for a medical
secretary. We used the average of the two estimates in the tally in
Table 34. The total estimated burden hours for all dual-Medicare/
Medicaid EPs to notify CMS of program changes were 40,850 in a given
year. The higher cost burden for the EP who chose to notify CMS of
Medicare/Medicaid program change him or herself was $39.67. The total
estimated annual cost burden for all dual Medicare/Medicaid EPs to
notify CMS of program changes themselves was $3,240,630. Similarly, the
lower cost burden for an EP who chose to use a medical secretary to
notify CMS of program changes was $7.41. The total estimated annual
cost burden for all dual-Medicare/Medicaid EPs who use medical
secretaries to notify CMS of program changes was $604,989. We invited
comments on whether we should use the higher cost burden estimate
($3,240,630) or the lower cost burden estimate ($604,989) but we did
not received any comments on this issue. We also invited comments on
the estimated percentages and the number of dual-Medicare/Medicaid EPs
that would submit initial Medicare or Medicaid program changes in 2012,
2013, or 2014 but we did not receive any comments on this issue.
We are finalizing both the lower cost burden for EPs for may assign
medical secretaries as the personnel to submit Medicare/Medicaid
program selection changes to CMS and the high cost burden for EPs who
may do this him or herself. We revised our burden estimates and the
number of dual-Medicare/Medicaid EPs, pursuant to legislative inclusion
of EPs who practice at outpatient hospital setting in the incentive
program. For CY 2012, we estimate that there will be 96,500 dual-
Medicare/Medicaid EPs. The notification will take 0.5 hours and the
total burden for all dual-Medicare/Medicaid EPs will be 48,250 hours
(96,500 EPs x 0.5 hours). The lower cost burden for each EP is $7.41
(0.5 hours x $14.81 (mean hourly rate for medical secretaries based on
the May 2008 Bureau of Labor Statistics) and the total lower cost
burden for all the dual-Medicare/Medicaid EPs will be $714,583 (48,250
hours x $14.81). The high cost burden for each EP is $39.67 (0.5 hours
x $79.33 (mean hourly rate for physicians based on the May 2008 Bureau
of Labor Statistics)) and the total high cost burden for all dual-
Medicare/Medicaid EPs is $3,827,673 (48,250 hours x $79.33). We only
use the average of the two estimates in the tally in Table 34.

C. ICRs Regarding Identification of Qualifying MA Organizations, MA-EPs
and MA-Affiliated Eligible Hospitals (Sec. 495.202)

Section 495.202(a)(1) states that beginning with bids due in June
2011 (for plan year 2012), MA organizations seeking reimbursement for
qualifying MA EPs and qualifying MA-affiliated eligible hospitals under
the MA EHR incentive program are required to identify themselves to CMS
in a form an manner specified by CMS, as part of submissions of initial
bids under section 1854(a)(1)(A) of the Act. There is no burden
associated with this requirement for qualifying MA organizations
offering MA HMO plans, since they are deemed to meet the definition of
HMO in 42 U.S.C. 300gg-91(b)(3) of the PHS Act in accordance with Sec.
495.202(a)(2). However, per Sec. 495.202(a)(3), for MA organizations
offering types of MA plans other than HMOs, the burden is the amount of
time it will take them to attest to the fact that they meet the
definition of HMO in 42 U.S.C. 300gg-91(b)(3). We believe the burden
associated with this requirement for MA organizations not offering HMO
type plans would be approximately 1 hour per MA organization. We do not
believe that there are any MA organizations that are not offering MA
HMO type plans that will request reimbursement for qualifying MA EPs or
MA-affiliated eligible hospitals under the MA EHR incentive payment
program. Although the timeframe goes beyond the effective date of the
proposed information collection period (3 years from the effective date
of the final rule), we do not believe there are any MA organizations
with potentially qualifying MA EPs or potentially qualifying MA-
affiliated eligible hospitals that will need to report to us beginning
in 2014 (for plan year 2015) per Sec. 495.202(a)(4). Therefore, we
believe there will be no burden associated with identification of
qualifying MA organizations per Sec. 495.202(a)(1) through (4).
Section 495.202(b)(1) and (2) require a qualifying MA organization,
as part of its initial bid starting with its bid for plan year 2012, to
make preliminary identification of potentially qualifying MA EPs and
potentially qualifying MA-affiliated eligible hospitals for which the
organization is seeking incentive payments for the current plan year
(2011). The burden associated with this requirement would be the time
required for a MA organization to identify their MA-affiliated
hospitals to CMS. In the proposed rule, we explained that when MAOs
identify amounts of compensation per Sec. 422.204(b)(2) and (5) they
will also be identifying MA EPs per this requirement, and therefore
there is will be no additional burden related to this requirement with
respect to MA EPs. There are approximately 29 MA-affiliated eligible
hospitals and approximately 12 MA organizations, or an average of 2.42
eligible hospitals for each MA organization. In the proposed rule, we
estimated that the total burden hours for all MA organizations to
identify their affiliated hospitals to CMS would be 3 hours. We believe
a MA organization may use a billing clerk to identify the eligible
hospital to us. The total cost burden for all MA organizations to
identify their eligible hospitals to us would be $46.32.
Sections 495.202(b)(1) and (2), state that a MA organization, as
part of its initial bid starting with plan year 2012, must make a
preliminary identification of potentially qualifying MA EPs and
potentially qualifying MA-affiliated eligible hospitals for which the
organization is seeking incentive payments for the current plan year. A
qualifying MA organization must provide the following information on
their MA-affiliated EPs and eligible hospitals: (A) name of the EP or
eligible hospital; (B) address of the EP's practice or eligible
hospital's location; and (C) NPI. We believe that it is within the
customary business practices of an MA organization to keep the
information in (A), (B), and (C) on file. The burden associated with
this requirement would be the time required to provide this information
to CMS along with an attestation that the MA EPs or MA-affiliated
eligible hospitals meet the eligibility criteria. In the proposed rule,
we estimated that it would take 0.5 hours for a MA organization to
comply with this attestation requirement. We estimated that the total
burden for all MA organizations to attest would be 6 hours. We believe
that MA organizations may use an attorney to attest on their behalf. In
the proposed rule, we estimated that the cost burden for a MA
organization to attest is $29.99 and the total estimated cost burden
for all MA organizations to attest would be $359.88.
Section 495.202(b)(4) states that all qualifying MA organizations,
as part of their initial bids in June 2015 for plan year 2016, must
identify potentially qualifying MA EPs and potentially

[[Page 44535]]

qualifying MA-affiliated eligible hospitals. An attestation that each
professional or hospital either meets or does not meet the eligibility
criteria must be included as part of the identification submission. We
cannot estimate the collection burden for this requirement as the
timeframe goes beyond the scope of the effective date of the proposed
information collection period (3 years from the effective date of the
final rule).

D. ICRs Regarding Incentive Payments to Qualifying MA Organizations for
MA-EPs and Hospitals (Sec. 495.204)

Section 495.204(b)(2) requires a qualifying MA organization to
report to CMS within 60 days of the close of the calendar year, the
aggregate annual amount of revenue attributable to providing services
that would otherwise be covered as professional services under Part B
received by each qualifying MA EP for enrollees in MA plans of the MA
organization in the payment year. Since the tracking of salaries or
compensation for MA EPs constitutes usual and customary business
practices, the only burden associated with this requirement would be
the time required to submit the aggregated annual amount of revenue
received by each qualifying MA EP for enrollees in MA plans of the MA
organization. In the proposed rule, we estimated that there were 12 MA
organizations and 28,000 MA EPs. We believe that it will take a MA
organization 40 hours annually to report the required aggregate revenue
data for all its salaried MA EPs, given that all the data are readily
available. The total estimated annual burden hours for all MA
organizations to comply with this requirement would be 480. We believe
MA organizations may involve a billing clerk to report the required
data to CMS. We estimated that the cost burden for a MA organization to
report was $617.6 (40 hours x $15.44 (mean hourly rate of billing clerk
based on the May 2008 Bureau of Labor Statistics)) and we estimated the
total annual cost burden for all MA organizations to comply with this
requirement would be $7,411.
Section 495.204(b)(4) states that for qualifying MA EPs who are
compensated on a salaried basis, CMS requires the qualifying MA
organization to develop a methodology for estimating the portion of
each qualifying MA EP's salary attributable to providing services that
would otherwise be covered under Part B to MA plan enrollees of the MA
organization. The methodology: (i) Must be approved by CMS; (ii) may
include an additional amount related to overhead, where appropriate,
estimated to account for the MA-enrollee related Part B practice costs
of the salaried qualifying MA EP; and (iii) methodological proposals
must be submitted to CMS by June of the payment year and must be
auditable by an independent third party. CMS will review and approve or
disapprove such proposals in a timely manner. In the proposed rule, we
estimated that it might take a MA organization one and a half hour to
develop the methodology. We estimated that there are about two MA
organizations that may have the need to develop the methodology. We
estimated the total burden hours for the two MA organizations to
develop the methodology would be 3 hours. We believed that a MA
organization may use an accountant to develop the methodology. We
estimated the cost burden for a MA organization was $47.48 (1.5 hours x
$31.65 (mean hourly rate for accountants based on the May 2008 Bureau
of Labor Statistics)), and the total cost burden for the two MA
organizations to develop the methodology would be $94.95 (47.48 x 2 MA
organizations).
Section 495.204(b)(5) states that for qualifying MA EPs who are not
salaried, qualifying MA organizations may obtain and submit to CMS,
attestations from such qualifying MA EPs as to the amount of
compensation received by such EPs for MA plan enrollees of the MA
organization. We estimate that about 10 percent of the MA EPs were not
salaried and that was an average of 233 non-salaried EPs in each MA
organization. Further, we estimate that it might take 0.25 hour to
electronically obtain and compile each attestation into a document for
transmission to CMS. We estimate the total burden hours for a MA
organization would be 58.3, and the total estimated burden hours for
all MA organizations would be 699.6 (58.3 hours x 12 MA organizations).
We believe an MA organization may involve a billing clerk to compile
and submit the compensation information from such attestations. We
estimate the cost burden for a MA organizations to comply with this
requirement would be $900.15 (58.3 hours x $15.44 (mean salary of a
billing clerk based on the May 2008 Bureau of Labor Statistics)). We
estimate the total annual cost burden for all MA organizations to
comply with this requirement would be $10,801.82 ($900.15 x 12 MA
organizations).
Section 495.204(b)(6) states that for qualifying MA EPs who are not
salaried, qualified MA organizations may also have qualifying MA EPs
send MA organization compensation information directly to CMS. We
estimated the burden associated with this requirement is the time it
would take the MA EP to send the information directly to CMS. However,
we believe that the non-salaried MA EPS are employed by a third-party
physician group which will be responsible for sending the required
information to CMS. Again, we estimate that about 10 percent of the MA
EPs are not salaried and that there is an average of 233 non-salaried
EPs in each of the third-party physician groups. Further, we estimate
that it might take 0.25 hour to electronically obtain and compile the
information into a document for transmission to CMS. We estimate the
total burden hours for a third-party physician group will be 58.3, and
the total estimated burden hours for all third-party physician groups
will be 699.6 (58.3 hours x 12 third-party physician group). We believe
a third-party physician group may involve a billing clerk to compile
and submit the compensation information. We estimate the cost burden
for a third-party physician group to comply with this requirement will
be $900.15 (58.3 hours x $15.44 (mean salary of a billing clerk based
on the May 2008 Bureau of Labor Statistics)). We estimate the total
annual cost burden for all third-party physician groups to comply with
this requirement will be $10,801.82 ($900.15 x 12 third-party physician
groups). Note that this is the same burden we estimate with respect to
Sec. 422.204(b)(5). Further, an MAO will either submit non-salary
information directly to CMS, or it will have someone else do it on
behalf of the MA EPs with respect to that MAO. We believe the burden
related to Sec. 422.204(b)(6) is counted in the burden we already
projected with respect to Sec. 422.204(b)(5). We do not believe any
MAO will submit under both Sec. 422.204(b)(5) and (6).

E. ICRs Regarding Meaningful User Attestation (Sec. 495.210)

Section 495.210(b) requires qualifying MA organizations to attest
within 60 days after the close of a calendar year whether each
qualifying MA EP is a meaningful EHR user. We anticipate that the
adopted EHR technology will capture the data for determination whether
each qualifying MA EP is a meaningful EHR user. We estimate the burden
associated with this requirement would be the time necessary to attest
to the required information. We estimated that there were approximately
12 MA organizations and approximately 28,000 MA EPs, or an average of
approximately 2,333 MA EPs affiliated with each qualifying MA
organization. We believe that it would take a MA organization about 40
hours annually to attest whether each qualifying MA EP is a

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meaningful user, given that all the data are captured in the certified
EHR technology and that meaningful use will be demonstrated through the
continued reporting of HEDIS data. We estimate the total estimated
annual burden hours for all MA organizations to comply with this
requirement will be 480. We believe MA organizations might involve an
attorney to attest on their behalf. We estimate the cost burden for a
MA organization to attest will be $2,399 (40 hours x $59.98 (mean
hourly rate of attorney based on the May 2008 Bureau of Labor
Statistics)). We estimate the total annual cost burden for all MA
organizations to comply with attestation for MA EPs will be $28,790.
Section 495.204(c)(2) states that to the extent data are available,
qualifying MA organizations must receive hospital incentive payments
through their affiliated hospitals under the Medicare FFS EHR hospital
incentive program, rather than through the MA EHR hospital incentive
program. Under Sec. 495.210(c), we proposed that qualifying MA
organizations be required to attest within 60 days after the close of a
calendar year whether each qualifying MA-affiliated eligible hospital
is a meaningful EHR user. While the EHR incentive payments for Medicare
FFS and MA-affiliated hospitals are treated the same as all Medicare-
certified MA affiliated hospitals they will demonstrate clinical
quality measures through the continued reporting of HEDIS data. This
means that Sec. 495.210(c) generally applies to a MA-affiliated
hospital that is not Medicare certified, and such a type of hospitals
does not exist currently. We do not expect there to be any MA-
affiliated hospitals that will not be covered under the Medicare FFS
EHR hospital incentive program because section 1852(a)(1)(A) of the Act
requires MA organizations to provide Part A inpatient services solely
through providers that meet applicable requirements of the Medicare
program. We have already addressed the attestation burden on hospitals,
including MA-affiliated hospitals under Sec. 495.10(b)(2)(i)(ii) and
through our existing PRA package related to HEDIS reporting by MA
organizations--OMB control number 0938-NEW.

F. ICRs Regarding Establishing Patient Volume (Sec. 495.306)

This section of the final rule contains patient volume
requirements, and requires EPs and certain hospitals to attest to
meeting such requirement using representative periods in order to
qualify for a Medicaid EHR incentive. The minimum patient volume
requirements are as follows: 30 percent Medicaid patient volume for
most EPs, 20 percent Medicaid patient volume for pediatricians, 30
percent needy individual patient volume for EPs practicing
predominantly in an FQHC or RHC, and 10 percent Medicaid patient volume
for acute-care hospitals. The burden associated with the requirements
in this section is the time and effort necessary to submit the
information to CMS. In the proposed rule, in each instance, we
estimated it would take no longer than 0.5 hours to submit the
necessary information to CMS. We estimated that 119,000 entities would
submit the required information to meet 30 percent (or 20 percent
pediatrician) requirements for most EPs. We estimated the total annual
burden to be 59,500 hours, with total labor cost amounting to
$4,720,135 (assuming that physicians (rather than staff assistants)
establish patient volume ($79.33 mean hourly rate for physicians based
on May 2008 Bureau of Labor Statistics).
For hospitals to attest to patient volume, we estimated that 3,631
entities would submit required information, and estimated a total
burden of 1,815.50 hours (3,631 entities x .5 hours). The total labor
cost associated with this requirement is $25,617. This cost burden was
based on a secretary reporting patient volume on behalf of the acute
care hospital at $14.11 (mean hourly rate for secretaries based on May
2008 Bureau of Labor Statistics).
We received no comments on this section; however, since we have
revised our definition of hospital-based EP, the burden is revised to
account for the additional number of Medicaid EPs that could now be
eligible to receive Medicaid incentive payments. We currently estimate
that there are an additional Medicare/Medicaid 75,700 EPs that could be
eligible for an incentive payment because of the new definition of
hospital-based EP. We believe there are 553,200 Medicare EPs of which
86 percent are non-hospital based or 477,500. We believe 20 percent or
95,500 will meet patient volume requirements, and therefore,
potentially qualify for Medicaid EHR incentive payments. Additionally,
there are 44,100 Medicaid-only EPs (nurse practitioners, certified
nurse-midwives, dentists, and physician assistants) that we believe
will meet patient volume. Specifically, we believe that 139,600 EPs
(95,500 + 44,100) could be reporting patient volume information. Thus,
the updated annual burden associated with the requirements in Sec.
495.306 at 0.5 hours for EPs is 69,800.
The total labor cost associated with the requirement is (69,800 x
79.33) $5,537,234. The total labor cost associated with each
requirement is $5,537,234.
For hospitals reporting patient volume, we have updated the burden
to account for the additional CAHs that meet the definition of acute
care hospital. Specifically, there are 3,620 acute care hospitals, 11
cancer hospitals, and 1,302 CAHs that must report 10 percent Medicaid
patient volume, or 4,933 entities. The updated annual burden associated
with the requirement, at 0.5 hours is 2,466.5 (4,933 x .05). The total
labor cost is $34,803.30.

G. ICRs Regarding Process for Payments (Sec. 495.312)

Section 495.312(b) states that in order to receive a Medicaid EHR
incentive payment, a provider must report all necessary data (including
data required by subpart A of the regulations, such as meaningful use
data) within the EHR reporting period. We believe the information
collections associated with this requirement are discussed in the
relevant sections discussing each particular requirement that would
necessitate data reporting (for example, the burden for demonstrating
meaningful use is discussed in the information collection section on
meaningful use). Therefore, we have not calculated a separate
information collection burden for this requirement.

H. ICRs Regarding Activities Required To Receive an Incentive Payment
(Sec. 495.314)

Section 495.314(a)(1) states that in the first payment year, to
receive an incentive payment, the Medicaid EP or eligible hospital must
meet one of the following criteria. The Medicaid EP or eligible
hospital must demonstrate that during the EHR reporting period for a
payment year, it has adopted, implemented, or upgraded certified EHR
technology, as defined in Sec. 495.302; or, the Medicaid EP or
eligible hospital must demonstrate that during the EHR reporting period
for a payment year it is a meaningful user of certified EHR technology
as defined in Sec. 495.4.
The burden associated with the requirements in proposed Sec.
495.314(a)(1) is the time and effort necessary for a Medicaid EP or
eligible hospital to demonstrate that it meets one of the criteria in
Sec. 495.314(a)(1)(i) through (ii). We believe we already accounted
for this burden in the earlier discussion of the burden associated with
Sec. 495.8.
Section 495.314(a)(2) states that a provider may notify the State
of its nonbinding intention to participate in

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the incentives program prior to having fulfilled all of the eligibility
criteria. This requirement constitutes a third-party disclosure. The
burden associated with this requirement is the time and effort
necessary for a provider to send notification to the State. We
estimated that this burden will be the same burden associated with
Sec. 495.10 since the information necessary to notify the State of the
providers non-binding intention to participate in the program could be
the same information as submitted by those providers that have
committed to participating in the program, that is, the National
Provider Identifier, the tax identification number, etc.
Section 495.314(b)(1) states that in the second, third, fourth,
fifth, and sixth payment years, to receive an incentive payment, the
Medicaid EP or eligible hospital must demonstrate that during the EHR
reporting period for the applicable payment year, it is a meaningful
user of certified EHR technology, as defined in Sec. 495.4. The burden
associated with this requirement is the time and effort necessary for a
Medicaid EP or eligible hospital to demonstrate that it is a meaningful
user of certified EHR technology. We discussed the burden associated
with this requirement in our discussion of the burden associated with
Sec. 495.6 and 495.8.
We did not receive any comments on the information collection
burdens we estimated for the proposed rule.

I. ICRs Regarding State Monitoring and Reporting Regarding Activities
Required To Receive an Incentive Payment (Sec. 495.316)

Section 495.316(a) requires States to be responsible for tracking
and verifying the activities necessary for a Medicaid EP or eligible
hospital to receive an incentive payment for each payment year, as
described in Sec. 495.314. Burden is calculated for each State's
process for the administration of the Medicaid incentive payments,
including tracking of attestations and oversight, and the process for
approving, processing, and making timely payments.
For the proposed rule, we estimated that it would take 5 hours per
State to accomplish this. The estimated annual burden for States
associated with the aforementioned submission requirements is 280 hours
(56 States-Territories x 5.0 hours/State-Territory). The cost burden
was estimated based on an employee contracting with the State Agency.
The burden associated with Sec. 495.316 is already in the OMB approval
process. We announced the information collection in a Federal Register
notice that published on September 11, 2009 (74 FR 467330).
Comment: Some commenters asked CMS to clarify if States are
responsible for collecting the MU measure data or if providers will
report data directly to CMS. If the collection and reporting of MU data
are States' responsibility, this would create tremendous burden on
States. The commenters also asked CMS to clarify if States are
responsible for validating attestations by eligible providers.
Response: For EPs and some hospitals, States are responsible for
collecting the MU measure data; for hospitals that are eligible for
both the Medicare and Medicaid incentives, hospitals that meet the
Medicare MU objectives are deemed to have met MU for Medicaid; thus,
since hospitals are required to report MU data to CMS for the Medicare
EHR incentives program, these hospitals do not, in addition, have to
report MU data to States. States are required to submit a State
Medicaid HIT plan to CMS for review and approval outlining their
methodology for collecting MU measure data and other required
information outlined in this final rule. States are also responsible
for validating attestations by providers. We do not believe collecting
data or validating attestations is a tremendous burden on States as
noted by our estimates. States can receive 90 percent FFP for
administering the incentive payments to providers and for conducting
adequate monitoring and oversight. In addition, it should be noted that
States voluntarily participate in the Medicaid EHR incentive program.

J. ICRs Regarding State Responsibilities for Receiving FFP (Sec.
495.318)

Section 495.318 states that in order to be provided FFP under
section 1903(a)(3)(F) of the Act, a State must demonstrate to the
satisfaction of the Department, that the State is conducting the
activities listed at Sec. 495.318(a) through (c). This burden is the
same as that listed above in the burden discussion for Sec. 495.316.

K. ICRs Regarding Prior Approval Conditions (Sec. 495.324)

Section 495.324(a) requires a State to obtain prior written
approval from the Department as specified in paragraph (b) of this
section, when the State plans to initiate planning and implementation
activities in support of Medicaid provider incentive payments
encouraging the adoption and use of certified EHR technology with
proposed Federal financial participation (FFP). Specifically, Sec.
495.324(b) states that to receive 90 percent match, each State must
receive prior approval for all of the requirements listed in Sec.
495.324(b)(1) through (3).
Section 495.324(c) requires a State to obtain prior written
approval from the Department of its justification for a sole source
acquisition, when it plans to acquire non-competitively from a
nongovernmental source HIT equipment or services, with proposed FFP
under subpart D of Part 495 in the regulations, if the total State and
Federal acquisition cost is more than $100,000. Burden must be
calculated for State Medicaid Agencies to submit the planning and
implementation documents and the SMHP to CMS. This burden is the same
as that listed above in the burden discussion for Sec. 495.316.

L. ICRs Regarding Termination of Federal Financial Participation (FFP)
for Failure To Provide Access to Information (Sec. 495.330)

Section 495.330(a) states that the Department can terminate FFP at
any time if the Medicaid agency fails to provide State and Federal
representatives with full access to records relating to HIT planning
and implementation efforts, and the systems used to interoperate with
electronic HIT, including on-site inspection. Section 495.330(b) states
that the Department may request such access at any time to determine
whether the conditions in this subpart are being met. The burden
associated with the requirements in this section is the time and effort
necessary to make the information available to the Department upon
request so it can monitor compliance. The Department estimated that it
will make 1 request per State/Territory per year for information and
that it will take each State 5 hours to compile and furnish the
information. For States to collect and submit the information required,
we estimated it would take 5 hours per State. The estimated annual
burden for States associated with the aforementioned submission
requirements is 280 hours (56 States-Territories x 5.0 hours/State-
Territory).
The annual cost burden for a State employee to provide the above
information is $9,904 (280 hours x $35.37 (mean hourly rate for a
management analyst based on the May 2008 Bureau of Labor Statistics)).
We believe that a secretary may compile State information and provide
the information to the Department. In that case the annual cost burden
for the secretary to provide this information is $3,951 (280 hours x
$14.11 (mean hourly rate for secretaries based on the May 2008 Bureau
of Labor Statistics)).

[[Page 44538]]

M. ICRs Regarding State Medicaid Agency and Medicaid EP and Hospital
Activities (Sec. 495.332 Through Sec. 495.344)

The burden associated with this section is the time and effort
associated with completing the single provider election repository and
each State's process for the administration of the Medicaid incentive
payments, including tracking of attestations and oversight; the
submission of the State Medicaid HIT Plan and the additional planning
and implementation documents; enrollment or reenrollment of providers,
and collection and submission of the data for providers to demonstrate
that they have adopted, implemented, or upgraded certified EHR
technology or that they are meaningful users of such technology. We
believe much of the burden associated with these requirements has
already been accounted for in our discussion of the burden for Sec.
495.316.

N. ICRs Regarding Access to Systems and Records (Sec. 495.346)

Section 495.346 states that the State agency must allow the
Department access to all records and systems operated by the State in
support of this program, including cost records associated with
approved administrative funding and incentive payments to Medicaid
providers. State records related to contractors employed for the
purpose of assisting with implementation or oversight activities or
providing assistance, at such intervals as are deemed necessary by the
Department to determine whether the conditions for approval are being
met and to determine the efficiency, economy, and effectiveness of the
program.
The Department believes that the burden associated with maintaining
the records is exempt under 5 CFR 1320.3(b)(2) as this burden is part
of a usual and customary business practice; the time, effort, and
financial resources necessary to comply with a collection of
information that would be incurred by persons in the normal course of
their activities (for example, in compiling and maintaining business
records) will be excluded from the ``burden'' if the agency
demonstrates that the reporting, recordkeeping, or disclosure
activities needed to comply are usual and customary.
However, there is burden associated with making the information
available to the Department upon request. This burden is described in
the burden discussion for Sec. 495.330.

O. ICRs Regarding Procurement Standards (Sec. 495.348)

Section 495.348(c) states that a grantee must maintain written
standards of conduct governing the performance of its employees engaged
in the award and administration of contracts. Although most States may
already have these written standards of conduct, we have estimated the
burden associated with this requirement as the time and effort
necessary for a grantee to develop and maintain written standards of
conduct. We estimate it will take each of the 56 grantees 0.5 hours to
develop and maintain standards of conduct. The total estimated annual
burden is 28 hours (56 grantees x 0.5 hours). The annual cost burden
for a grantee to develop and maintain standards of conduct is $990 (28
hours x $35.37 (mean hourly rate for a management analyst based on the
May 2008 Bureau of Labor Statistics)).
Section 495.348(e) requires that all grantees establish written
procurement procedures. At a minimum, the standards must provide for
the information listed in Sec. 495.348(e)(1) through (13). The burden
associated with this requirement is the time and effort necessary for a
grantee to develop and maintain written procurement procedures.
Although most States probably have these procedures already, we
estimate that it will take each of the 56 grantees 0.5 hours to develop
and maintain written procurement procedures. The total estimated annual
burden is 28 hours (56 grantees x 0.5 hours). The annual cost burden
for a grantee to develop and maintain written procurement procedures is
$990 (28 hours x $35.37 (mean hourly rate for a management analyst
based on the May 2008 Bureau of Labor Statistics)).
Section 495.348(f) imposes recordkeeping requirements. This section
states that a system for contract administration must be maintained to
ensure contractor performance with the terms, conditions and
specifications of the contract and to ensure adequate and timely follow
up on all purchases. The burden associated with this requirement is the
time and effort necessary to develop and maintain a system for contract
administration. We estimate that it will take each of the 56 grantees 5
hours to develop and maintain a system for contract administration. The
total estimated annual burden is 280 hours (56 grantees x 5 hours). The
annual cost burden for a grantee to develop and maintain a system for
contract administration is $9,904 (280 hours x $35.37 (mean hourly rate
for a management analyst based on the May 2008 Bureau of Labor
Statistics)).

P. ICRs Regarding State Medicaid Agency Attestations (Sec. 495.350)

Section 495.350 requires States to provide assurances to the
Department that amounts received with respect to sums expended that are
attributable to payments to a Medicaid provider for the adoption of EHR
are paid directly to such provider, or to an employer or facility to
which such provider has assigned payments, without any deduction or
rebate. The burden associated with this requirement is the time and
effort necessary for a State to verify that the sums expended are
attributable to payments to a Medicaid provider for the adoption of EHR
are paid directly to such provider, or to an employer or facility to
which such provider has assigned payments, without any deduction or
rebate. Additionally, there is burden associated with submitting an
attestation to the Department to that effect. The estimated burden
associated with these requirements is 0.5 hours to verify the
information and 0.5 hours to submit the attestation to the Department,
for a total of 1 hour. The estimated annual burden for States
associated with the aforementioned submission requirements is 56 hours
(56 States-Territories x 1 hour State-Territory). The annual cost
burden for a State employee to provide the above information is $1,981
(56 hours x $35.37 (mean hourly rate for a management analyst based on
the May 2008 Bureau of Labor Statistics)). We believe that that a
secretary may compile State information and provide the information to
the Department. In that case the annual cost burden for the secretary
to provide this information is $790 (56 hours x $14.11 (mean hourly
rate for secretaries based on the May 2008 Bureau of Labor
Statistics)).

Q. ICRs Regarding Reporting Requirements (Sec. 495.352)

Section 495.352 requires each State to submit to the Department on
a quarterly basis a progress report documenting specific implementation
and oversight activities performed during the quarter, including
progress in implementing the State's approved Medicaid HIT plan. The
burden associated with this requirement is the time and effort
necessary for a State to draft and submit quarterly progress reports to
the Department. For States to collect and submit the information
required, we estimate it will take 5 hours per State. The estimated
annual burden for States associated with the aforementioned submission
requirements is 280 hours

[[Page 44539]]

(56 States-Territories x 5 hours/State-Territory).
The annual cost burden for a State employee to provide the above
information is $9,904 (280 hours x $35.37 (mean hourly rate for a
management analyst based on the May 2008 Bureau of Labor Statistics)).
We believe that a secretary may compile State information and provide
the information to the Department. In that case the annual cost burden
for the secretary to provide this information is $3,951 (280 hours x
$14.11 (mean hourly rate for secretaries based on the May 2008 Bureau
of Labor Statistics)).

R. ICRs Regarding Retroactive Approval of FFP With an Effective Date of
February 18, 2009 (Sec. 495.362)

Section 495.362 states that for administrative activities performed
by a State, without obtaining prior approval, which are in support of
planning for incentive payments to providers, a State may request
consideration of FFP by recorded request in a HIT planning advance
planning document or implementation advance planning document update.
While this requirement is subject to the PRA, we believe the burden is
already covered in the discussion of proposed Sec. 495.332 through
Sec. 495.344.

S. ICRs Regarding Financial Oversight and Monitoring Expenditures
(Sec. 495.366)

Section 495.366(a)(2) requires a State to have a process in place
to report actual expenditures for the Medicaid EHR incentive program
using the Medicaid Budget Expenditure System. Since States already have
to report Medicaid expenditures to the Medicaid Budget and Expenditure
System, there is no need for States to develop and implement a
reporting process. However, States will need to estimate and report the
expenditures related to the provider incentive payments and the cost of
the administration of the incentive payments. The estimated annual
burden for States associated with the aforementioned requirements is
280 hours (56 States-Territories x 5 hours State-Territory).
The annual cost burden for a State employee to provide the above
information is $9,904 (280 hours x $35.37 (mean hourly rate for a
management analyst based on the May 2008 Bureau of Labor Statistics)).
We believe that a secretary may compile State information and provide
the information to the Department. In that case the annual cost burden
for the secretary to provide this information is $3,951 (280 hours x
$14.11 (mean hourly rate for secretaries based on the May 2008 Bureau
of Labor Statistics)).
Section 495.366(a)(3) requires a State to have an automated payment
and information retrieval mechanized system, (Medicaid Management
Information System) to make EHR payment incentives, to ensure Medicaid
provider eligibility, to ensure the accuracy of payment incentives, and
to identify potential improper payments. Since States already have an
automated payment and information retrieval system, there is no need to
estimate this burden.
Section 495.366(b) lists the information collection requirements
associated with provider eligibility as a basis for making payment.
States must, subject to Sec. 495.332, collect and verify information
on Medicaid providers. This burden is the same as that listed above in
the discussion of Sec. 495.316.
Section Sec. 495.366(c)(1) states that subject to Sec. 495.332,
the State must annually collect and verify information regarding the
efforts to adopt, implement, or upgrade certified EHR technology and
the meaningful use of said technology before making any payments to
providers. This burden has already been discussed in our burden
explanation for Sec. 495.8.
Section 495.366(d)(1) states that subject to paragraph Sec.
495.332, the State must assure that State expenditures are claimed in
accordance with, including but not limited to, applicable Federal laws,
regulations and policy guidance. Section 495.366(d)(2) specifies that
subject to Sec. 495.332, the State must have a process in place to
assure that expenditures for administering the Medicaid EHR incentive
payment program will not be claimed at amounts higher than 90 percent
of the cost of such administration. Section 495.366(d)(3) states that
subject to Sec. 495.332, the State must have a process in place to
assure that expenditures for payment of Medicaid EHR incentive payments
will not be claimed at amounts higher than 100 percent of the cost of
such payments to Medicaid providers. This burden is the same as that
listed above in the discussion of Sec. 495.316.
Section 495.366(e) discusses the information collection
requirements associated with improper Medicaid electronic health record
payment incentives. The burden associated with the requirements listed
in proposed Sec. 495.366(e)(1) through (7) is the time and effort
necessary to develop processes to provide the necessary assurances
discussed in this section. This burden is the same as that listed above
in the discussion of Sec. 495.316.

T. ICRs Regarding Appeals Process for a Medicaid Provider Receiving
Electronic Health Record Incentive Payments (Sec. 495.370)

Section 495.370(a) requires states to have a process in place
consistent with the requirements established in Sec. 447.253(e) for a
provider or entity to appeal incentive payments, incentive payment
amounts, provider eligibility determinations, and the demonstration of
adopting, implementing, or upgrading and meaningful use of certified
EHR technology. This burden is the same as that listed above in the
discussion of Sec. 495.316.
We continue to believe that these numbers are subject to a
substantial amount of uncertainty and actual experience may be
significantly different. The range of possible experience is greater
than under most other rules for the following reason; specifically,
this rule provides the option for States to participate in the Medicaid
certified electronic health record technology incentive payment
program. To the extent that States participate more or less than
assumed here (that is, the number of States, EPs and hospitals) the
burden associated may be greater than or less than estimated.

U. General Comments Regarding the Information Collection Requirements

Comment: Some commenters recommended that EPs and eligible
hospitals should start tracking time and resources estimates on their
overall cost for complying with all the required data collection to
achieve meaningful use during the reporting period. They believed the
information is beneficial for CMS in developing and assessing future
meaningful use objectives and measures.
Response: We welcome provider input on the required resources to
comply with the meaningful use requirements. We believe the information
would help us to fine-tune burden estimates for future rulemaking for
subsequent stages of meaningful use demonstration.
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We will accept comments on the aforementioned information
collection requirements for 60 days from the date of display for this
final rule. At the conclusion of the 60-day comment period, we will
publish an additional notice announcing the submission of the
information collection request associated with this final rule for OMB
approval. At that time, the public will have an additional 30 days to
submit public comments to OMB for consideration.
To obtain copies of the supporting statement associated with the
information collection requirements contained herein, access CMS' Web
site at http://www.cms.hhs.gov/PaperworkReductionActof1995, or E-mail
your request, including your address, phone number, OMB number, and CMS
document identifier, to [email protected], or call the Reports
Clearance Office on (410) 786-1326.
In commenting on the information collection requirements, please
reference the information collection request identifier (CMS-10336). To
be assured consideration, comments and recommendations must be
submitted in one of the following ways by September 13, 2010:
1. Electronically. You may submit your comments electronically to
http://www.regulations.gov. Follow the instructions for ``Comment or
Submission'' or ``More Search Options'' to find the information
collection document(s) accepting comments.
2. By regular mail. You may mail written comments to the following
address: CMS, Office of Strategic Operations and Regulatory Affairs,
Division of Regulations Development, Attention: Document Identifier/OMB
Control Number, Room C4-26-05, 7500 Security Boulevard, Baltimore,
Maryland 21244-1850.

IV. Regulatory Impact Analysis

A. Overall Impact

We have examined the final impacts of this rule as required by
Executive Order 12866, the Regulatory Flexibility Act, section 1102(b)
of the Social Security Act regarding rural hospital impacts, the
Unfunded Mandates Reform Act, Executive Order 13132 on Federalism, and
the Congressional Review Act.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for rules with economically significant
effects ($100 million or more in any 1 year). This final rule is
anticipated to have an annual effect on the economy of $100 million or
more, making it an economically significant rule under the Executive
Order and a major rule under the Congressional Review Act. Accordingly,
we have prepared a RIA that to the best of our ability presents the
costs and benefits of the final rule.
This final rule is one of three coordinated rulemakings undertaken
to implement the goals and objectives of the HITECH Act related to the
adoption and meaningful use of certified EHR technology. The other two
are HHS's interim final rule establishing certification criteria,
standards, and implementation specifications for certification of EHR
systems, and HHS' final rule on EHR certification programs. Each rule
assessed the direct economic effects of its provisions. This final rule
on Medicare and Medicaid EHR Incentive Programs addresses the impacts
related to the actions taken by EPs or eligible hospitals, or CAHs to
demonstrate meaningful use of certified EHR technology, including
purchasing or developing in-house certified EHR technology or EHR
technology modules.
A number of factors will affect the adoption of EHR systems and
demonstration of meaningful use. Many of these are addressed in this
final analysis, but also the final provisions of the other rules.
Readers should understand that these forecasts are also subject to
substantial uncertainty since demonstration of meaningful use will
depend not only on the standards and requirements for FYs 2011 and 2012
for eligible hospitals and CYs 2011 and 2012 for EPs, but on future
rulemakings issued by the HHS.
The HITECH Act provides Medicare and Medicaid incentive payments
for the meaningful use of certified EHR technology. Additionally, the
Medicaid program also provides incentives for the adoption,
implementation, and upgrade of certified EHR technology. Payment
adjustments are incorporated into the Medicare program for providers
unable to demonstrate meaningful use. The absolute and relative
strength of these is unclear. For example, a provider with relatively
small Medicare billings will be less disadvantaged by payment
adjustments than one with relatively large Medicare billings. Another
uncertainty arises because there are likely to be ``bandwagon'' effects
as the number of providers using EHRs rises, thereby inducing more
participation in the incentives program, as well as greater adoption by
entities (for example, clinical laboratories) that are not eligible for
incentives or subject to penalties, but do business with EHR adopters.
It is impossible to predict exactly if and when such effects may take
hold.
One legislative uncertainty arises because under current law,
physicians are scheduled for payment reductions under the sustainable
growth rate (SGR) formula for determining Medicare payments. Under the
current law, physician payments were reduced by 23 percent beginning
December 1, 2010, and are scheduled for further reductions in CY 2011.
Such reductions could cause major changes in physician behavior,
enrollee care, and other Medicare provider payments, but the specific
nature of these changes is exceptionally uncertain. Under a current law
scenario, the EHR incentives or payment adjustments would exert only a
minor influence on physician behavior relative to these very large
payment reductions. However, the Congress has legislatively avoided
physician payment reductions in each of the past 7 years. Behavioral
changes resulting from these scheduled Medicare physician payment
reductions are not included in our estimate and likewise we do not
assume any additional behavioral changes from EHR incentive payments
for Medicare physicians.
All of these factors taken together make it impossible to predict
with precision the timing or rates of adoption and ultimately
meaningful use. Therefore, we show two scenarios, which illustrate how
different scenarios would impact overall costs. Our ``high'' scenario
of meaningful use demonstration assumes that roughly a decade from now,
nearly 100 percent of hospitals and 70 percent of EPs will be
``meaningful users.'' This estimate is based on the substantial
economic incentives created by the combined direct and indirect factors
affecting providers. We appreciate that in the real world nothing is
ever 100 percent, and can even identify factors that would certainly
lead providers to forego implementing an EHR. For example, a physician
nearing retirement with a low Medicare caseload might well decide to
accept the relatively low adverse consequences of declining to
demonstrate meaningful use of certified EHR technology. Alternatively,
EPs, eligible hospitals and CAHs may choose not to adopt and
meaningfully use EHRs if the total costs of purchasing certified EHRs
and the total costs of complying with this rule are higher than the
value

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of the total EHR incentive payments (and adjustments, if applicable).
However, we have no reliable basis for estimating the rate of such
``holdouts.'' To emphasize the uncertainties involved, we have also
created a ``low'' scenario estimate for the demonstration of meaningful
use each year, which assumes less robust adoption and meaningful use.
Our ``low'' scenario of meaningful use demonstration assumes that
roughly a decade from now, nearly 95.6 percent of hospitals and 36
percent of EPs will be ``meaningful users.''
Both the high and low scenario estimates are based on current law,
which includes a scheduled physician payment cut of 23 percent on
December 1, 2010. Such a reduction could cause major changes in
physician behavior, enrollee care, and other Medicare provider
payments, but the specific nature of these changes is exceptionally
uncertain. In our estimates, we did not assume changes in physician
behavior as a result of these payment cuts, as this reflects the
standard practice used in forecasts of government spending (including
effects on the private sector) by the Boards of Trustees for the
Hospital Insurance and Supplementary Medical Insurance Trust Funds, and
the Office of the Actuary in HHS.
Since this RIA was published in the proposed rule, legislation has
been enacted that increases the number of EPs that may be eligible to
receive an incentive payment by changing the determination of hospital-
based. A complete discussion of the issue, including comments and
responses are available in section 2 of this rule stated. The
determination of whether an EP is hospital-based will be based upon
whether substantially all of the EP's services are furnished in places
of service classified under place of service codes 21 (Inpatient
Hospital) or 23 (Emergency Room, Hospital). Previously under the old
definition, CMS estimated that 27 percent of EPs would meet the
definition of hospital-based, however, now, under this final definition
of hospital-based EPs, about 14 percent of Medicare EPs would be
considered hospital-based and thus not eligible to receive any
incentive payments.
There are many estimates of current EHR adoption and usage rates.
There is one EHR function--e-prescribing--for which adoption and usage
rates for both physicians and hospitals may exceed 50 percent. However,
high estimates are misleading because they focus on particular
elements, not on comprehensive systems that provide a full range of
functions, similar in scope to those established in ONC's final rule
that adopts standards, implementation specifications, and certification
criteria for the technical requirements and capabilities that EHR
systems will need to meet in order to be certified. Based on several
peer-reviewed studies, only a small proportion of physicians and
hospitals have invested in EHR technology that encompasses such a broad
range of functions. For example, a study entitled ``Electronic Health
Records in Ambulatory Care--A National Survey of Physicians''
(Catherine DesRoches et al., New England Journal of Medicine, July 3,
2008), found that in 2007 only ``four percent of physicians reported
having an extensive, fully functional electronic-records system, and 13
percent reported having a basic system.'' (Additional results from the
same survey can be found at the Department's Health IT Adoption
Initiative Web site at http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&cached=true&objID=1152.) Another study
entitled ``Use of Electronic Health Records in U.S. Hospitals'' (Ashish
Jha et al., New England Journal of Medicine, April 16, 2009) found that
in 2007 ``only 1.5 percent of U.S. hospitals have a comprehensive
electronic-records system * * * and an additional 7.6 percent have a
basic system.'' Computerized order entry (CPOE) for drugs was fully
implemented in only 17 percent of hospitals.
Most physicians and hospitals have not yet invested in the
hardware, software, testing and training to implement advanced EHRs for
a number of reasons--lack of standards, lack of interoperability,
limited physician acceptance, fear of maintenance costs, and lack of
capital. Perhaps most importantly, adoption of EHR technology
necessitates major changes in business processes and practices
throughout a provider's office or facility. Business process
reengineering on such a scale is not undertaken lightly. However, the
availability of the HITECH Act incentives, grants for technical
support, more consistent use of standards and specified certification
criteria, and other factors addressed in this RIA are likely to
increase the adoption of EHR technology very substantially over the
next 10 years--perhaps approaching complete adoption for physicians,
hospitals, and many other types of providers, despite, as those
providers have commented, not being included in this final rule.
Overall, we expect spending under the EHR incentive program for
transfer payments to Medicare and Medicaid providers over 10 years to
be $9.7 billion under the low scenario, and $27.4 billion under the
high scenario (these estimates include net payment adjustments for
Medicare providers who do not achieve meaningful use in 2015 and beyond
in the amount of $3.9 billion under the high scenario and $8.1 billion
under the low scenario). We have also estimated ``per entity'' costs
for EPs, eligible hospitals, and CAHs. We estimate also that adopting
entities will achieve dollar savings at least equal to their total
costs, and that there will be additional benefits to society. We remain
persuaded after consideration of the public comments that
implementation costs will be significant for each participating entity
because providers who would like to qualify as meaningful users of EHRs
will need to purchase certified EHR technology. We further acknowledge
that certified EHRs may differ in many important respects from the
types of EHRs noted in these comments and the functionalities they
contain may differ. However, we still anticipate that the short-term
costs to demonstrate meaningful use of certified EHR technology will be
outweighed by the long-term benefits, including practice efficiencies
and improvements in medical outcomes. Thus it remains that although
both cost and benefit estimates are highly uncertain, the RIA that we
have prepared to the best of our ability presents the costs and
benefits of the final rulemaking.

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act requires agencies to prepare an
Initial Regulatory Flexibility Analysis to describe and analyze the
impact of the final rule on small entities unless the Secretary can
certify that the regulation will not have a significant impact on a
substantial number of small entities. In the healthcare sector, Small
Business Administration size standards define a small entity as one
with between $7 million and $34 million in annual revenues. For the
purposes of the Regulatory Flexibility Act, essentially all non-profit
organizations are considered small entities, regardless of size.
Individuals and States are not included in the definition of a small
entity. Since the vast majority of Medicare providers (well over 90
percent) are small entities within the Regulatory Flexibility Act's
definitions, it is the normal practice of HHS simply to assume that all
affected providers are ``small'' under the Regulatory Flexibility Act.
In this case, most EPs, eligible hospitals, and CAHs are either non-
profit or meet the SBA's size standard for small business. We also
believe that the effects of the incentives program on many and probably
most of these affected entities will be economically

[[Page 44546]]

significant. Accordingly, this RIA section, in conjunction with the
remainder of the preamble, constitutes the required Initial Regulatory
Flexibility Analysis. We believe that the adoption and meaningful use
of EHRs will have an impact on virtually every EP and eligible
hospital, as well as CAHs and some EPs and hospitals affiliated with MA
organizations. While the program is voluntary, in the first 5 years it
carries substantial positive incentives that will make it attractive to
virtually all eligible entities. Furthermore, entities that do not
demonstrate meaningful use of EHR technology will be subject to
significant Medicare payment reductions after the fifth year. The
anticipation of these Medicare payment adjustments will also motivate
EPs, eligible hospitals, and CAHs to adopt and meaningfully use
certified EHR technology.
For some EPs, CAHs and eligible hospitals the EHR technology that
they have in place before the HITECH requirements will be able to be
upgraded to meet the criteria for certified EHR technology as defined
for this program. These costs may be minimal, involving no more than a
software upgrade. ``Home-grown'' EHR systems that might exist may also
require an upgrade to meet the HITECH certification requirements.
We believe that most EPs using EHR systems will require significant
changes to achieve certification and that EPs, CAHs and eligible
hospitals will have to make process changes to achieve meaningful use.
Further, given what we know about the current low levels of EHR
adoption we believe that the majority of EPs will need to purchase
certified EHR technology, implement this new technology, and train
their staff on its use. The costs for implementation and complying with
the criteria of meaningful use could lead to higher operational
expenses. However, we believe that the combination of payment
incentives and long-term overall gains in efficiency will compensate
for the initial expenditures.
1. Number of Small Entities
In total, we estimate that there are approximately 624,000
healthcare organizations (EPs, eligible hospitals, or CAHs that will be
affected by the incentive program. These include hospitals and
physician practices as well as doctors of medicine or osteopathy,
dental surgery or dental medicine, podiatric medicine, optometry or a
chiropractor. Additionally, eligible nonphysicians (such as certified
nurse-midwives, etc.) will be eligible to receive the Medicaid
incentive payments.
Of the 624,000 healthcare organizations we estimate will be
affected by the incentive program, we estimate that 94.71 percent will
be EPs, 0.8 percent will be hospitals, and 4.47 percent will be MAO
physicians or hospitals. We further estimate that EPs will spend
approximately $54,000 to purchase and implement a certified EHR and
$10,000 annually for ongoing maintenance according to the CBO. In that
paper, Evidence on the Costs and Benefits of Health Information
Technology, May 2008, in attempting to estimate the total cost of
implementing health IT systems in office-based medical practices,
recognized the complicating factors of EHR types, available features
and differences in characteristics of the practices that are adopting
them. The CBO estimated a cost range of $25,000 to $45,000 per
physician. For all eligible hospitals, the range is from $1 million to
$100 million. Though reports vary widely, we anticipate that the
average would be $5 million to achieve meaningful use. We estimate $1
million for maintenance, upgrades, and training each year. See the
Costs of EHR adoption in section a under Background and Assumptions
portion of this analysis for a discussion regarding the costs of
adoption and variation by size and details on our estimates for the
number of entities that are eligible for the incentive within each
eligibility type category.
Comment: One commenter suggested that the Regulatory Flexibility
Act analysis did not include an assessment of the cost to implement the
rule at state and local health departments. State and local health
departments do operate clinics and provide care to the public. Some
state and local health departments would be considered small businesses
under the Regulatory Flexibility Act and an assessment of the
implementation costs for these entities would allow us to work together
to identify possible funding sources and cost savings strategies.
Response: Under Medicaid, clinics such as rural health clinics or
FQHCs are not eligible providers that can receive incentive payments.
However, EPs within these clinics can receive incentive payments if
they meet all other eligibility requirements. The Federal costs and
payments associated with EHR implementation for EPs are captured on in
Tables 32 and 33.
2. Alternatives Considered
This final rule implements new provisions of the Act for providing
incentives for EPs, eligible hospitals, and CAHs that adopt and
demonstrate meaningful use of certified EHR technology. HHS has no
discretion to change the incentive payments or Medicare payment
reductions specified in the statute for providers that adopt or fail to
adopt EHR and achieve meaningful use of EHR technology. The only
substantial alternatives within the discretion of the Department
revolve around how best to meet the requirements of the HITECH Act
through the definition of meaningful use for FY 2011 and beyond.
Requirements that are too stringent could have the adverse effect of
preventing many EPs, eligible hospitals, and CAHs from achieving
meaningful use and thus preventing them from receiving an incentive
payment. Our meaningful use requirements for 2011 are designed to
encourage more widespread adoption of certified EHR technology and
allow more EPs, eligible hospitals, and CAHs to qualify for incentives
while they are also adjusting their practice patterns and training
staff to operate the EHR technology in preparation for more stringent
meaningful use requirements over time. We recognize that there may be
incremental costs that result from requiring additional functionality
over the base level defined in the HITECH Act. We note that with regard
to reporting of clinical quality measures for purposes of demonstrating
meaningful use, we initially considered requiring EPs, eligible
hospitals, and CAHs to report quality measures electronically in the
initial year of the program; however, ultimately we determined that
many providers would not be able to comply with a requirement to report
all quality measures at the beginning of the program. The alternative
approach, consistent with the requirements of this final rule, is to
require reporting of quality measures in phases. In 2011, there will be
a requirement to report clinical quality measures through attestation
with a numerator, denominator, and exclusions. Electronic clinical
quality measure reporting will begin in FY 2012 for hospitals and CY
2012 for EPs. We expect that additional clinical quality measure
reporting will be added in later years.
Under Medicaid, we considered numerous alternatives regarding how
to demonstrate eligibility for the incentive payments as well as
adoption and meaningful use of the certified EHR technology. These
alternatives, including the time period for demonstrating adequate
patient volume, and the requirements and methods for demonstrating
meaningful use are

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discussed in section II.D. of this final rule.
3. Conclusion
As discussed later in this analysis, we believe that there are many
positive effects of adopting EHR on health care providers, quite apart
from the incentive payments to be provided under this rule. While
economically significant, we do not believe that the net effect on
individual providers will be negative over time except in very rare
cases. (The statute provides for hardship exemption in such cases.)
Accordingly, we believe that the object of the Regulatory Flexibility
Act to minimize burden on small entities are met by this rule as final.
Comment: Commenters cited the variation in the costs of EHR
adoption across EP settings. For example, smaller practices believe
their costs of EHR adoption to be higher per physician than larger
counterparts. They believe they cannot realize the staff reductions and
related cost savings from EHR adoption due to greater cross-
functionality for their staff.
Response: We acknowledge the different experiences EPs have with
EHR adoption and implementation. Two additional studies relating to the
costs of adoption among small practices (Miller et al. (2005) ``The
Value Of Electronic Health Records In Solo Or Small Group Practices''
Health Affairs 24(5): 1127-1137, and Zaroukian and Sierra (2006)
``Benefiting from Ambulatory EHR Implementation: Solidarity, Six Sigma,
and Willingness to Strive'' The Journal of Healthcare Information
Management 20(1): 53-60) estimate the cost per physician to be $44,000
per year with roughly $8,500 to $13,000 in ongoing maintenance.
However, even among these studies there was still variation in
experience. The per provider design of meaningful use incentive
payments and orientation of other government health IT grant programs
is to facilitate adoption and positive return on investment across
health care settings. Thus we continue to hold that our cost estimates
are reasonable estimations of provider experience while acknowledging
that variations in experiences will be inevitable.

C. Small Rural Hospitals

Section 1102(b) of the Act requires us to prepare a RIA if a rule
would have a significant impact on the operations of a substantial
number of small rural hospitals. This analysis must conform to the
provisions of section 604 of the Regulatory Flexibility Act. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This final rule would
affect the operations of a substantial number of small rural hospitals
because they are required to adopt certified EHR technology by 2015, or
face adjusted Medicare payments. As stated above, we have determined
that this final rule would create a significant impact on a substantial
number of small entities, and have prepared a Regulatory Flexibility
Analysis as required by the Regulatory Flexibility Act and, for small
rural hospitals, section 1102(b) of the Act. Furthermore, any impacts
that would arise from the implementation of certified EHR technology in
a rural eligible hospital would be positive, with respect to the
streamlining of care and the ease of sharing information with other EPs
to avoid delays, duplication, or errors.
Comment: Several commenters have disagreed with our assessment,
noting that the unique circumstances of small rural hospitals will not
lead to efficiency and lower costs as it might with urban hospitals,
but would lead to increased costs related to loss of productivity among
the staff for implementing and learning an EHR system, and in later
years, Medicare payment adjustments because of the lack of broadband
access in these areas among other reasons.
Response: Although we agree that small rural hospitals will have
challenges inherent in their location, size and staffing complexity, we
also acknowledge that smaller, more rural hospitals could experience
added burden in achieving meaningful use. Supplemental funding to
Regional Extension Centers to assist CAHs will work to lessen disparity
between urban and rural hospitals. We also believe that the presence of
incentive payments, market demands and rewards for data exchange, and
future cost savings resulting from meaningful use will increase
hospital adoption and meaningful use of EHRs.

D. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates would require spending in any 1 year
$100 million in 1995 dollars, updated annually for inflation. In 2010,
that threshold is approximately $135 million. UMRA does not address the
total cost of a rule. Rather, it focuses on certain categories of cost,
mainly those ``Federal mandate'' costs resulting from--(1) imposing
enforceable duties on State, local, or tribal governments, or on the
private sector, or (2) increasing the stringency of conditions in, or
decreasing the funding of, State, local, or tribal governments under
entitlement programs.
This rule imposes no substantial mandates on States. This program
is voluntary for States and States offer the incentives at their
option. The State role in the incentive program is essentially to
administer the Medicaid incentive program. While this entails certain
procedural responsibilities, these do not involve substantial State
expense. In general, each State Medicaid Agency that participates in
the incentive program will be required to invest in systems and
technology to comply--States will have to identify and educate
providers, evaluate their attestations and pay the incentive. However,
the Federal government will fund 90 percent of the State's related
administrative costs, providing controls on the total State outlay.
The investments needed to meet the meaningful use standards and
obtain incentive funding are voluntary, and hence not
``mandates''within the meaning of the statute. However, the potential
reductions in Medicare reimbursement after FY 2015 are effectively
mandates. We note that we have no discretion as to those potential
payment reductions. Private sector EPs that voluntarily choose not to
participate in the program may anticipate potential costs in the
aggregate that may exceed $135 million; however, because EPs may choose
for various reasons not to participate in the program, we do not have
firm data for the percentage of participation within the private
sector.
This RIA, taken together with the remainder of the preamble,
constitutes the analysis required by UMRA.

E. Federalism

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has Federalism implications. This
final rule would not have a substantial direct effect on State or local
governments, preempt State law, or otherwise have a Federalism
implication. Importantly, State Medicaid agencies are receiving 100
percent match from the Federal government for incentives paid and a 90
percent match for expenses associated with administering the program.
As previously stated, we believe that State administrative costs are
minimal. We note that this final rule does add a new

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business requirement for States, because of the systems that will need
to be implemented to track and report on provider attestations,
applications, and payments. States will also expend funds on the
systems that must be built to conduct the tracking and reporting
activities. States will interface with the NLR since registration of
providers will be stored in the NLR. For tracking and making payments,
we believe that most States will use their current MMIS system to make
payments. States must inform us of their plans for payments, systems,
etc, via the SMHP, PAPD and IAPD; additionally, States will indicate
the costs associated with these activities in their PAPD and IAPD. CMS
is providing 90 percent FFP to States for building the interface and/or
for updates to the MMIS related to EHR incentive payment
administration. We believe the Federal share of the 90 percent match
will protect the States from burdensome financial outlays and, as noted
above, States offer the Medicaid EHR incentive program at their option.

F. Anticipated Effects

The objective of the remainder of this RIA is to summarize the
costs and benefits of the HITECH incentive program for the Medicare
FFS, Medicaid, and Medicare Advantage (MA) programs. We also provide
assumptions and a narrative addressing the potential costs to the
industry for implementation of this technology.

G. HITECH Impact Analysis

1. Need for Regulation
This final rule would implement the provisions of the American
Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) that
provide incentive payments to EPs, eligible hospitals, and CAHs
participating in Medicare and Medicaid programs that adopt and
meaningfully use certified EHR technology. The final rule specifies the
initial criteria that an EP, eligible hospital, or CAH must meet in
order to qualify for the incentive payment; calculation of the
incentive payment amounts; payment adjustments under Medicare for
covered professional services and inpatient hospital services provided
by EPs, and eligible hospitals failing to meaningfully use certified
EHR technology; and other program participation requirements. As noted
earlier in this RIA, changes both in legislation and policy based on
comments from the public have been taken into account for the
preparation of this final impact analysis.
2. Alternatives Considered
As previously discussed in the alternatives section of the
regulatory flexibility analysis, HHS has no discretion to change the
incentive payments or payment reductions specified in the statute for
providers that adopt or fail to adopt EHR and demonstrate meaningful
use of certified EHR technology. However, we have discretion around how
best to meet the HITECH Act requirements for meaningful use for FY 2011
and beyond, which we have exercised in this final rule. Additionally,
we have used our discretion to appropriately time the registration,
attestation and payment requirements to allow EPs and eligible
organizations as much time as possible in coordination with the
anticipated certification of EHR technology to obtain and meaningfully
use certified EHRs. We recognize that there may be additional costs
that result from various discretionary policy choices such as requiring
additional functionality over the base level defined in the HITECH Act,
however, those costs cannot be estimated and are not captured in this
analysis.
3. Background and Assumptions
The principal costs of this final rule are the additional
expenditures that will be undertaken by eligible entities in order to
obtain the Medicare and Medicaid incentive payments to adopt, implement
or upgrade and/or demonstrate meaningful use of certified EHR
technology, and to avoid the Medicare payment adjustments that will
ensue if they fail to do so. The estimates for the provisions affecting
Medicare and Medicaid EPs, eligible hospitals, and CAHs are somewhat
uncertain for several reasons: (1) The program is voluntary although
payment adjustments will be imposed on Medicare providers who are
unable to demonstrate meaningful use starting in 2015; (2) the criteria
for the demonstration of meaningful use of certified EHR technology has
been finalized for stage one but will change over time; (3) the HHS
certification process although defined, has yet to be implemented;,
and, (4) the impact of the financial incentives and payment adjustments
on the rate of adoption of certified EHR technology by EPs, eligible
hospitals, and CAHs is difficult to predict. The net costs and savings
shown for this program represent two possible scenarios and actual
impacts could differ substantially.
As written in the preamble, this final rule describes the incentive
payments for EPs, eligible hospitals, and CAHs for adopting and
demonstrating meaningful use of certified EHR technology. This impact
analysis addresses the costs and benefits to the Medicare and Medicaid
programs, as well as general implementation costs for eligible
hospitals, CAHs and EPs.
Detailed information about the incentive program, the specific
payment amounts and how those payments will be paid, is provided in
section II of this final rule. Based on input from a number of internal
and external sources, including the Government Accountability Office
(GAO) and CBO, we calculated the numbers of EPs and eligible hospitals,
including CAHs under Medicare, Medicaid, and MA and used them
throughout the analysis.
About 553,200 Medicare FFS EPs in 2011 (some of which will
also be Medicaid EPs).
About 14 percent of the total EPs are hospital-based
Medicare EPs, and are not eligible for the program. This leaves
approximately 477,500 nonhospital-based Medicare EPs in 2011.
Twenty percent of the nonhospital-based Medicare EPs
(approximately 95,500 Medicare EPs in 2011) are also eligible for
Medicaid (meet the 30 percent Medicaid patient volume criteria), but
can only be paid under one program. We assume that any EP in this
situation will choose to receive the Medicaid incentive payment,
because it is larger.
About 44,100 non-Medicare eligible EPs (such as dentists,
pediatricians, and eligible non-physicians such as certified nurse-
midwives, nurse practitioners and physicians assistants) will be
eligible to receive the Medicaid incentive payments.
5,011 eligible hospitals comprised of the following:
++ 3,620 acute care hospitals.
++ 1,302 CAHs
++ 78 children's hospitals (Medicaid only).
++ 11 cancer hospitals (Medicaid only).
All eligible hospitals, except for children's and cancer
hospitals, may qualify and apply for both Medicare and Medicaid
incentive payments.
12 MA Organizations (about 28,000 EPs, and 29 hospitals)
would be eligible for incentive payments.
Payments can begin as early as third quarter FY 2011.
4. Industry Costs and Adoption Rates
To estimate the impact on healthcare providers we used information
from four studies cited previously. Based on these studies, we continue
to estimate for EPs, the average adopt/implement/

[[Page 44549]]

upgrade cost is $54,000 per physician FTE, while annual maintenance
costs average $10,000 per physician FTE.
For all eligible hospitals, the range is from $1 million to $100
million. Although reports vary widely, we anticipate that the average
would be $5 million to achieve meaningful use, because providers who
would like to qualify as meaningful users of EHRs will need to purchase
certified EHRs. We further acknowledge that ``certified EHRs'' may
differ in many important respects from the EHRs currently in use and
may differ in the functionalities they contain. We estimate $1 million
for maintenance, upgrades, and training each year. Industry costs are
important, in part, because EHR adoption rates will be a function of
these industry costs and the extent to which the costs of ``certified
EHRs'' are higher than the total value of EHR incentive payments
available to EPs and eligible hospitals (as well as adjustments, in the
case of the Medicare EHR incentive program) and any perceived benefits
including societal benefits. Because of the uncertainties surrounding
industry cost estimates, we have made various assumptions about
adoption rates in the following analysis in order to estimate the
budgetary impact on the Medicare and Medicaid programs.
For an eligible Medicaid EP, the first year incentive can be based
on adoption, implementation, and upgrade costs. Previously, we noted
that section 1903(t)(4)(C) of the Act gives the Secretary the authority
to determine average allowable costs for certified EHR technology. The
Secretary studied average costs associated with the purchase, initial
implementation, and upgrade of certified EHR technology, including
support services and initial training.
Sections 1903(t)(1)(A) and 1903(t)(4) of the Act specify that EPs
may not receive incentive payments in excess of 85 percent of the net
average allowable costs of certified EHR technology, with such net
average allowable costs capped at $25,000 in the first year (and
$10,000 in each of the subsequent years).
a. Costs of EHR Adoption for EPs
Previously, we described four studies used to estimate costs of
implementation including the purchase and installation of hardware and
software, training, as well as productivity losses associated with
implementation and training. Each of these studies was conducted
several years ago, and did not control for type of EHR, functionality,
physician practice type or size. Furthermore, EHRs were not being built
against any particular consensus standard, nor was the concept of
``meaningful use'' a factor. Thus, the cost of implementing and
maintaining certified EHR technology which meets the requirements
established in this regulation might exceed the estimates from these
studies.
One average estimate of the cost per physician for implementation
is around $35,000. A similar study of community health centers
estimated costs to average $54,000 per physician FTE. In this study,
the authors explained that implementation costs varied between entities
for hardware, software, installation, and training. After
implementation, there were ongoing operating costs estimated at $21,000
per year for a practice of four physicians. The CBO paper, Evidence on
the Costs and Benefits of Health Information Technology, May 2008, in
attempting to estimate the total cost of implementing health IT systems
in office-based medical practices, recognized the complicating factors
of EHR types, available features and differences in characteristics of
the practices that are adopting them. The CBO estimated a cost range of
$25,000 to $45,000 per physician. In the CBO study, operating costs
added $3,000 to $9,000 per physician per year. Finally, a 2005 paper
from AHRQ stated that the average purchase and implementation cost of
an EHR could be $32,606 per FTE physician. Maintenance costs were an
additional $1,500 per physician, per month, or $18,000 per year.
Smaller practices had the highest implementation costs per physician at
$37,204. Based on the studies cited, eligible providers will be
eligible to receive the maximum incentive permitted under the statute,
because the implementation and maintenance costs we have estimated
exceed the caps for net average allowable costs set in the statute.
In calculating the impact of the EHR incentive program for Medicaid
EPs, we assumed that approximately 20 percent of the EPs eligible for
the Medicare incentive payment program are also eligible for Medicaid
EHR incentive payments (about 95,500 in 2011). Since the Medicaid
incentive payments are higher than those for Medicare and EPs can only
receive payments from one program, we assume the dually eligible EPs
will receive their payments through the Medicaid program. It is also
important to note that just as there is overall variation in state
Medicaid programs, we anticipate there will be variation in the design
and timing of state Medicaid EHR incentive programs. New data on the
pace of state planning for meaningful use was used to adjust Medicaid
adoption scenarios. Thus, how and when providers apply for meaningful
use through Medicaid will likely differ by state. Medicaid also offers
incentive payments for dentists, certified nurse-midwives, nurse
practitioners and certain physicians' assistants. While minimal, we
have incorporated the sum of these groups in Table 51. We have
estimated a range of Medicaid EPs that will be meaningful users each
calendar year. The last line represents the range of predicted
meaningful EHR users each calendar year. The Medicaid penetration rate
for EPs is consistent with the analysis that was used for the Medicare
EPs, but without the behavioral limitations imposed by the Medicare
current statute SGR payment reductions. We assumed a modest behavioral
response by Medicaid EPs to the Medicaid incentive payments resulting
in an increase over baseline participation.
b. Costs of EHR Adoption for Eligible Hospitals
The American Hospital Association (AHA) conducts annual surveys
that among other measures, track hospital spending. We have updated
these data to reflect the latest figures from the 2008 AHA Survey.
Costs at these levels of adoption were significantly higher in 2008
than 2007. This may better reflect the costs of implementing additional
functionalities. We have also updated the number of discharges using
the most recent cost report data available. The range in yearly
information technology spending among hospitals is large--from $36,000
to over $32 million based on 2007 and 2008 AHA data. EHR system costs
specifically were reported by experts to run as high as $20 million to
$100 million; HHS discussions with experts led to cost ranges for
adoption that varied by hospital size and level of EHR system
sophistication. Research to date has shown that adoption of
comprehensive EHR systems is limited. In the aforementioned AHA study,
1.5 percent of these organizations had comprehensive systems, which
were defined as hospital-wide clinical documentation of cases, test
results, prescription and test ordering, plus support for decision-
making that included treatment guidelines. Some 10.9 percent have a
basic system that does not include physician and nursing notes, and can
only be used in one area of the hospital. Applying a similar standard
to the 2008 AHA data results in roughly 3-4 percent of hospitals having
comprehensive systems and 12 to 13 percent having basic systems.
According to hospital CEOs, the main barrier to adoption is the cost of
the

[[Page 44550]]

systems, and the lack of capital. Hospitals have been concerned that
they will not be able to recoup their investment, and they are already
operating on the smallest of margins. Because uptake of advanced
systems is low, it is difficult to get a solid average estimate for
implementation and maintenance costs that can be applied across the
industry. In addition, we recognize that there are additional industry
costs associated with adoption and implementation of EHR technology
that are not captured in our estimates that eligible entities will
incur. Because the impact of those activities, such as reduced staff
productivity related to learning how to use the EHR technology, the
need to add additional staff to work with HIT issues, administrative
costs related to reporting, and the like are unknown at this time and
difficult to quantify.
5. Medicare Incentive Program Costs
a. Medicare Eligible Professionals (EPs)
In the proposed rule, CMS said that an EP would be a hospital-based
EP and therefore ineligible to receive a Medicare or Medicaid EHR
incentive payment if more than 90 percent of their services are
provided in the following place of service (POS) codes for HIPAA
standard transactions: 21--Inpatient Hospital, 22--Outpatient Hospital,
23--Emergency Room.
However, as previously noted here and discussed elsewhere in this
final rule, Congress amended the law to include only POS codes 21
(inpatient) and 23 (emergency room), excluding 22 (outpatient
hospital), thereby permitting some hospital-based EPs to qualify for
the incentive payment. Accordingly we have updated our tables to
reflect the increased number of EPs that may now qualify for the
incentive payments, and those revisions to the numbers flow throughout
these updated tables.
To determine the estimated costs of the Medicare incentives for EPs
we first needed to determine the EPs with Medicare claims. Then, we
calculated that about 14 percent of those EPs are hospital-based, based
on the definition final in Sec. 495.4, and therefore, do not qualify
for incentive payments. This percentage of EPs were subtracted from the
total number of EPs who have claims with Medicare. These numbers were
tabulated from Medicare claims data.
We have also estimated that about 20 percent of EPs that are not
hospital-based will qualify for Medicaid incentive payments and will
choose that program because the payments are higher. Of the remaining
EPs, we have estimated the percentage which will be meaningful users
each calendar year. As discussed previously our estimates for the
number of EPs that will successfully demonstrate meaningful use of
certified EHR technology is uncertain, so we established high and low
scenarios to account for high and low rates of demonstration of
meaningful use.
The percentage of Medicare EPs who will satisfy the criteria for
demonstrating meaningful use of certified EHR technology and will
qualify for incentive payments is a key, but a highly uncertain factor.
Our Medicare EHR adoption assumptions for EPs are also affected by the
current situation with Medicare physician fee schedule payment rates.
As noted previously, under current law (that is, the SGR system
formulas), physician payments will be reduced by 21.3 percent beginning
June 1, 2010, and are scheduled to be further reduced beginning in CY
2011. Such reductions would almost certainly cause major changes in
physician behavior, enrollee care, and other Medicare provider
payments, but the specific nature of these changes is exceptionally
uncertain. Under a current law scenario, the EHR incentives or Medicare
payment adjustments would exert only a minor influence on physician
behavior relative to these very large payment reductions. Behavioral
changes resulting from these scheduled payment reductions are not
included in our estimate and likewise do not assume any additional
behavioral changes from EHR incentive payments. Accordingly, the
estimated number of non-hospital based Medicare EPs, (including those
additional EPs who may now qualify under the revised definition), who
will demonstrate meaningful use of certified EHR technology over the
period CYs 2011 through 2019 is as shown in Table 22.
[GRAPHIC] [TIFF OMITTED] TR28JY10.071

[[Page 44551]]

Under the HITECH Act, EPs can receive up to 5 years of Medicare
incentive payments for the demonstration of meaningful use of certified
EHR technology. These payments are the lesser of 75 percent of the
physician's allowed charges for the year or a specified maximum amount,
which declines from a possible $18,000 incentive payment for the first
payment year (2011 or 2012) to a $2,000 incentive payment for the fifth
payment year. EPs in HPSAs receive incentives that are 10 percent
higher than the maximum amounts. Hospital-based EPs are not eligible
for the Medicare EP incentive payments. EPs may choose to receive
incentive payments from either Medicare or Medicaid, (with some
limitations on switching programs) but not from both.
The standard full amount of Medicaid incentive payments that an EP
could receive is larger than the standard full amount for the Medicare
EP incentive payments: of $63,750 versus $44,000 for Medicare. Medicare
incentive payments can first be paid to EPs in CY 2011; and 2012 is the
last year that an EP can start to receive incentives and obtain the
full 5 years of payments. EPs who first qualify in CY 2013 would be
limited to an incentive of $15,000 for the first year, and may be
eligible to receive 4 years of incentive payments. EPs who first
qualify in CY 2014 would be limited to an incentive of $12,000 for the
first year and may be eligible to receive 3 years of incentive
payments. For the Medicare program, incentives are not payable after CY
2016, and EPs who first demonstrate meaningful use in CY 2015 or later
are not eligible for EHR incentive payments.
Medicare payment adjustments will apply in CY 2015 and later to EPs
who cannot demonstrate meaningful use of certified EHR technology,
regardless of whether they received an EHR incentive payment or not.
Specifically, the Medicare Physician Fee Schedule payments for an EP
who cannot demonstrate meaningful use of certified EHR technology would
be reduced by 1 percentage point in CY 2015, two percentage points in
CY 2016, and 3 percentage points in CY 2017, and between 3 and 5
percentage points starting in CY 2018. The HITECH Act gives the
Secretary the authority, beginning in CY 2018, to increase these
reductions by 1 percentage point each year, but not more than 5
percentage points overall, if the Secretary finds the proportion of EPs
who are meaningful EHR users is less than 75 percent.
Each year a transfer will be made between the general fund of the
Treasury and the Part B account of the Supplemental Medical Insurance
(SMI) trust fund to offset the incentives paid or payment adjustments
made during the year. In this way, the Part B beneficiary premium will
not be affected by the EP payment incentives.
We estimate that there are 12 MA organizations that might be
eligible to participate in the EHR incentive program. Those plans have
about 28,000 EPs.
Our estimates of the incentive payment costs and payment adjustment
savings reflect our assumptions about the proportion of EPs who will
demonstrate meaningful use of certified EHR technology. These
assumptions were developed based on a review of recent studies and
discussions with subject matter experts. We project that a growing
proportion of EPs will adopt certified EHR technology that meets the
standards even in the absence of the legislated incentives. This number
could be higher or lower depending on the final meaningful use
definition adopted, physicians' access to capital and implementation
expertise, the success of the other HITECH programs in reaching
physicians, and other factors.
Specifically, our assumptions are based on literature estimating
current rates of physician EHR adoption and rates of diffusion of EHRs
and similar technologies. There are a number of studies that have
attempted to measure the rate of adoption of electronic medical records
(EMR) among physicians prior to the enactment of the HITECH Act (see,
for example, Funky and Taylor (2005) The State and Pattern of Health
Information Technology Adoption. RAND Monograph MG-409. Santa Monica:
The RAND Corporation; Ford, E.W., Menachemi, N., Peterson, L.T.,
Huerta, T.R. (2009) ``Resistance is Futile: But it is Slowing the Pace
of EHR Adoption Nonetheless'' Journal of the American Informatics
Association 16(3): 274-281). We started with the estimated rate of EHR
adoption from the study with the most rigorous definition, but note
that the meaningful criteria are not equivalent to a fully functional
system as defined in this study. (DesRoches, CM, Campbell, EG, Rao, SR
et al. (2008) ``Electronic Health Records in Ambulatory Care--A
National Survey of Physicians'' New England Journal of Medicine 359(1):
50-60). For the low scenario, we then inflated that number (4 percent)
to a 2011 baseline using the numbers of physicians reporting in that
survey that they had EHR implementation underway. We assumed that the
same proportion of them would be implementing fully-functional EHRs as
in the baseline (30 percent of those with basic systems.) We then
trended this number forward using the trajectory mapped out by Ford et
al. using the data from the period prior to FY 2004 since the slower
rate of adoption during the FY 2005 through 2007 period was thought to
be caused by policy uncertainty which this regulation should resolve.
Given the revisions to the meaningful use criteria in this final
rule and the nationwide implementation of the Regional Extension Center
Program, the likelihood of reaching the high scenario has increased.
However, actual adoption trends could be significantly different from
these assumptions, given the elements of uncertainty we describe
throughout this analysis.
Net costs for the low scenario of the Medicare EP portion of the
HITECH Act are shown in Table 23.

[[Page 44552]]

[GRAPHIC] [TIFF OMITTED] TR28JY10.072

The estimated net costs for the high scenario of the Medicare EP
portion of the HITECH Act are shown in Table 24.
[GRAPHIC] [TIFF OMITTED] TR28JY10.073

[[Page 44553]]

b. Medicare Eligible Hospitals and CAHs
In brief, the estimates of hospital adoption were developed by
calculating projected incentive payments (which are driven by
discharges), comparing them to projected costs of attaining meaningful
use, and then making assumptions about how rapidly hospitals would
adopt given the fraction of their costs that were covered. In addition,
our estimates have been updated to reflect that the additional
challenges likely to be experienced in the adoption of EHRs among CAHs
will be partially ameliorated by supplements to Regional Extension
Center funding to assist CAHs with EHR adoption.
Specifically, the first step in preparing estimates of Medicare
program costs for eligible hospitals was to determine the amount of
Medicare incentive payments that each hospital in the country could
potentially receive under the statutory formula, based on its admission
numbers (total patients and Medicare patients). The total incentive
payments potentially payable over a 4-year period vary significantly by
hospitals' inpatient caseloads, ranging from a low of about $11,000 to
a high of $12.9 million, with the median being $3.8 million. The
potential Medicare incentive payments for each eligible hospital were
compared with the hospital's expected cost of purchasing and operating
certified EHR technology. Costs of adoption for each hospital were
estimated using data from the 2008 AHA annual survey and IT supplement.
Estimated costs varied by size of hospital and by the likely status of
EHR adoption in that class of hospitals. Hospitals were grouped first
by size (CAHs, non-CAH hospitals under 400 beds, and hospitals with 400
or more beds) because EHR adoption costs do vary by size: namely,
larger hospitals with more diverse service offerings and powerful
physician staffs generally implement more customized systems than
smaller hospitals that might purchase off-the-shelf products. We then
calculated the proportion of hospitals within each class that were at
one of three levels of EHR adoption: (1) Hospitals which had already
implemented relatively advanced systems that included CPOE systems for
medications; (2) hospitals which had implemented more basic systems
through which lab results could be shared, but not CPOE for
medications; and (3) hospitals starting from a base level either
neither CPOE or lab reporting. The CPOE for medication standard was
chosen because expert input indicated that the CPOE standard in the
final meaningful use definition will be the hardest one for hospitals
to meet. Table 25 provides these proportions.
[GRAPHIC] [TIFF OMITTED] TR28JY10.074

We then calculated the costs of moving from these stages to
meaningful use for each class of hospital, assuming that even for
hospitals with CPOE systems they would incur additional costs of at
least 10 percent of their IT budgets. These costs were based on cross-
sectional data from the AHA survey and thus do not likely represent the
true costs of implementing systems. We have updated these data to
reflect the latest figures from the 2008 AHA Survey. Costs at these
levels of adoption were significantly higher in 2008 than 2007. This
may better reflect the costs of implementing additional
functionalities. We have also updated the number of discharges using
the most recent cost report data available. Under the HITECH Act, an
eligible hospital can receive up to 4 years of Medicare incentive
payments for the demonstration of meaningful use of certified EHR
technology. These payments reflect the ratio of Medicare inpatient days
to total inpatient days and are adjusted by transition factors of 100,
75, 50, and 25 percent for the first through fourth implementation
years respectively. [Medicare incentive payments can first be paid to
hospitals in FY 2011, and FY 2013 is the last year that a hospital can
start to receive incentives and obtain the full 4-year transition
rates.] Eligible hospitals that first qualify in FY 2014 or FY 2015
will only receive the transition portions that apply to eligible
hospitals who implement their EHR in FY 2013 (for example, 75 percent
in FY 2014 and 50 percent in FY 2015). Eligible hospitals first
demonstrating meaningful use in FY 2016 or later are not eligible for
incentive payments. Medicare payment adjustments will be applied
beginning in FY 2015 to eligible hospitals that cannot demonstrate
meaningful use of certified EHR technology. Special rules apply to
CAHs.
We estimate that there are 12 MAOs that might be eligible to
participate in the incentive program. Those plans have 29 eligible
hospitals. The costs for the MA program have been included in the
overall Medicare estimates.
Again to illustrate the uncertainty, we are providing two scenarios
for our estimates. Our high scenario estimated net costs for section
4102 of the HITECH Act are shown in Table 26: Estimated costs (+) and
savings (-) for eligible hospitals adopting certified EHRs. This
provision is estimated to increase Medicare hospital expenditures by a
net total of $10.1 billion during FYs -2011 through 2019.

[[Page 44554]]

[GRAPHIC] [TIFF OMITTED] TR28JY10.075

We are also providing the estimates for a low scenario in Table 27.
[GRAPHIC] [TIFF OMITTED] TR28JY10.076

[[Page 44555]]

Based on the comparison of Medicare incentive payments and
implementation/operating costs for each eligible hospital, (described
above), we made the assumptions shown in Table 28, related to the
prevalence of certified EHR technology for FY 2011 through 2018. As
indicated, eligible hospitals that could cover the full cost of an EHR
system through Medicare incentive payments were assumed to implement
them relatively rapidly, and vice-versa. In other words, eligible
hospitals will have an incentive to purchase and implement an EHR
system if they perceive that a large portion of the costs will be
covered by the incentive payments. Table 28 shows the high scenario
estimates:
[GRAPHIC] [TIFF OMITTED] TR28JY10.077

For instance, under the high scenario 50 percent of eligible
hospitals whose incentive payments would cover between 75 percent and
100 percent of the cost of a certified EHR system were assumed to have
a certified system in FY 2011. In FY 2012, 65 percent of those
hospitals were assumed to have a certified EHR system. All such
hospitals were assumed to have a certified EHR system in FY 2015 and
thereafter.
High rates of EHR adoption are anticipated prior to FY 2015 due to
the large payment adjustments that will be imposed on eligible
hospitals that are unable to demonstrate meaningful use beginning in FY
2015. Specifically, the Medicare ``market basket'' payment updates
would be reduced (on a noncumulative basis) by one-fourth, one-half,
and three-fourths for FYs 2015, 2016, and 2017 and later, respectively,
for eligible hospitals that were not meaningful users of certified EHR
technology. However, we heard from industry experts that issues
surrounding the capacity of vendors and expert consultants to support
implementation, issues of access to capital, and competing priorities
in responding to payer demand will limit the number of hospitals that
can adopt advanced systems in the short-term. Therefore, we cannot be
certain of the adoption rate for hospitals due to these factors and
others previously outlined in this preamble, and so we provide two
scenarios which are examples of what we believe are possible low rates
and high rates of adoption.
Table 29 shows the low scenario estimates.
[GRAPHIC] [TIFF OMITTED] TR28JY10.078

[[Page 44556]]

For large, organized facilities such as hospitals, we believe that
the revenue losses caused by these payment adjustments would be a
substantial incentive to adopt certified EHR technology, even in
instances where the Medicare incentive payments would cover only a
portion of the costs of purchasing, installing, populating, and
operating the EHR system. Based on the assumptions about incentive
payments as percentages of EHR technology costs in Table 29, we
estimated that the great majority of eligible hospitals would qualify
for at least a portion of the Medicare incentive payments that they
could potentially receive, and only a modest number would incur
penalties. Nearly all eligible hospitals are projected to have
implemented certified EHR technology by FY 2019. Table 30 shows our
high scenario estimated percentages of the total potential incentive
payments associated with eligible hospitals that could demonstrate
meaningful use of EHR systems. Also shown are the estimated percentages
of potential incentives that would actually be paid each year.
[GRAPHIC] [TIFF OMITTED] TR28JY10.079

For instance in FY 2012 under the high scenario, 53.5 percent of
the total amount of incentive payments which could be payable in that
year would be for eligible hospitals who have demonstrated meaningful
use of certified EHR technology and therefore will be paid. In FY 2015
under the high scenario, 92.6 percent of the total amount of incentive
payments which could be payable will be for hospitals who have
certified EHR systems, but some of those eligible hospitals would have
already received 4 years of incentive payments, and therefore 54.2
percent of all possible incentive payments actually paid in that year.
Table 31 shows the low scenario estimates.
[GRAPHIC] [TIFF OMITTED] TR28JY10.080

The estimated payments to eligible hospitals were calculated based
on the hospitals' qualifying status and individual incentive amounts
under the statutory formula. Similarly, the estimated penalties for
nonqualifying hospitals were based on the market basket reductions and
Medicare revenues. The estimated savings in Medicare eligible hospital
benefit expenditures resulting from the use of hospital certified EHR
systems are

[[Page 44557]]

discussed under ``general considerations'' at the end of this section.
We assumed no future growth in the total number of hospitals in the
U.S. because growth in acute care hospitals has been minimal in recent
years.
Comment: The AHA surveyed 795 hospitals in January 2010 asking
whether their EHR systems could meet each of the meaningful use
objectives now and in coming years: 45 percent reported they could meet
all Stage 1 objectives by 2015 meaning that the remainder might be
subject to penalties.
Response: Their survey was based on our proposed definition of
meaningful use. The definition of meaningful use in this final rule
offers more flexibility and lower thresholds which we believe will make
it easier for eligible hospitals to qualify for incentives. However we
do acknowledge that the meaningful use criteria described in this final
rule may still challenge hospitals to use their IT in ways that improve
patient care and outcomes. We also acknowledge that smaller, more rural
hospitals could experience added burden in achieving meaningful use
related to timing and costs of implementation. Supplemental funding to
Regional Extension Centers to assist CAHs will work to lessen disparity
between urban and rural hospitals. We also believe that the presence of
incentive payments, market demands and rewards for data exchange, and
future cost savings resulting from meaningful use will increase
hospital adoption and meaningful use of EHRs.
c. Critical Access Hospitals (CAHs)
We estimate that there are 1,302 CAHs eligible to receive EHR
incentive payments. Given the financial assistance available under
HITECH for Regional Extension Centers, whose priorities include
assisting CAHs in EHR adoption, we estimate that the 19 percent of CAHs
with relatively advanced EHR systems will achieve meaningful use before
2016. We also estimate that most of the remaining CAHs that have
already adopted some kind of EHR system (48 percent of CAHs) will also
achieve meaningful use by 2016. Our estimates regarding the incentives
that will be paid to CAHs are incorporated into the overall Medicare
and Medicaid program costs.
We note that in response to comments this final rule amends the
definition of acute care hospital for purposes of the Medicaid EHR
incentive payment program to generally include critical access
hospitals that meet the Medicaid patient volume criteria. Thus, the
change in the definition has required that we update our tables to
reflect the increased number of hospitals that now may qualify for the
Medicaid EHR incentive payment program under this new definition. The
numbers and percentages from the revised tables are reflected
throughout this final impact analysis. Additionally, EHR adoption rates
have been adjusted now that CAHs will be eligible for both Medicare and
Medicaid EHR incentive payments.
6. Medicaid Incentive Program Costs
Under section 4201 of the HITECH Act, States can voluntarily
participate in the Medicaid incentive payment program and we have based
our Medicaid incentive program costs on all States participating.
Eligible hospitals and EPs can qualify for a Medicaid incentive payment
for adopting, implementing, or upgrading in their first participation
year, or for meaningful use, and up to an additional 5 years of
incentive payments for demonstrating meaningful use of certified EHR
technology. Under Medicaid, EPs include physicians (including
pediatricians), dentists, certified nurse-midwives, nurse
practitioners, and certain physician assistants. Initial incentive
payments are available through 2016, and incentive payments cannot be
made after 2021. The Medicaid hospital incentives are similar to those
specified in section 4102 of the HITECH Act for Medicare, except that
they must be paid out over at least 3 years and are spread out over a
maximum of 6 years, are based on the ratio of Medicaid inpatient days
to total days, and are not phased down as quickly as the Medicare
payments based on the first year of payment. Medicaid hospitals can
begin incentive payments through 2016, and incentive payments cannot be
made after 2021. There are also additional hospitals, such as
children's and cancer hospitals that are only eligible for Medicaid
incentives.
EPs may qualify for Medicaid incentive payments if at least 30
percent of their patient volume is from Medicaid. (Separate rules apply
for pediatricians.) As mentioned above, the Medicaid maximum incentive
payments are larger than the corresponding Medicare payments. Various
maximums are specified for eligible hospital and EP incentive payments.
There are no Medicaid penalties for non-adoption of EHR systems or for
failing to demonstrate meaningful use. The Federal costs for Medicaid
incentive payments to providers who can demonstrate meaningful use of
EHR technology were estimated similarly to the estimates for Medicare
eligible hospital and EP. Table 32 shows our high estimates for the net
Medicaid costs for eligible hospitals and EP.

[[Page 44558]]

[GRAPHIC] [TIFF OMITTED] TR28JY10.081

Table 33 shows the low estimates for Medicaid costs and savings.
[GRAPHIC] [TIFF OMITTED] TR28JY10.082

a. Medicaid EPs
To determine the Medicaid EP incentive payments, we first
determined the number of qualifying EPs. As indicated above, we assumed
that 20 percent of the non-hospital-based Medicare EPs would meet the
requirements for Medicaid incentive payments (30 percent of patient
volume from Medicaid). All of these EPs were assumed to choose the
Medicaid incentive payments, as they are larger.

[[Page 44559]]

In addition, the total number of Medicaid EPs was adjusted to include
EPs who qualify for the Medicaid incentive payments but not for the
Medicare incentive payments, such as most pediatricians, dentists,
certified nurse-midwives, nurse practitioners and physicians
assistants. As noted previously there is much uncertainty about the
rates of demonstration of meaningful use that will be achieved.
Therefore, as we estimated for the Medicare EPs, we are providing high
and low scenario estimates for Medicaid EPs.
Our high scenario estimates are listed in the Table 34.
[GRAPHIC] [TIFF OMITTED] TR28JY10.083

It should be noted that since the Medicaid EHR incentive payment
program provides that a Medicaid EP can receive an incentive payment in
their first year because he or she has demonstrated a meaningful use or
because he or she has adopted, implemented, or upgraded certified EHR
technology, these participation rates include not only meaningful users
but eligible providers implementing certified EHR technology as well.
Table 35 shows our low scenario estimates.
[GRAPHIC] [TIFF OMITTED] TR28JY10.084

[[Page 44560]]

b. Medicaid Hospitals
Medicaid incentive payments to most acute-care hospitals were
estimated using the same adoption assumptions and methodology as
described previously for Medicare eligible hospitals and shown in Table
36. Because hospitals' Medicare and Medicaid patient loads differ, we
separately calculated the range of percentage of total potential
incentives that could be associated with qualifying hospitals, year by
year, and the corresponding actual percentages payable each year. Acute
care hospitals and children's hospitals can spread aggregate Medicaid
incentive payments over no less than 3 years, but no more than 6 years
of payments, and acute care hospitals may qualify to receive both the
Medicare and Medicaid incentive payments.
As stated previously, the estimated eligible hospital incentive
payments were calculated based on the hospitals' qualifying status and
individual incentive amounts payable under the statutory formula. The
estimated savings in Medicaid benefit expenditures resulting from the
use of certified EHR technology are discussed under ``general
considerations.'' We estimated the Medicaid incentives payable to
children's hospitals as an add-on to the base estimate, using data on
the number of children's hospitals compared to non-children's
hospitals.
[GRAPHIC] [TIFF OMITTED] TR28JY10.085

Table 37 shows our low scenario estimates.
[GRAPHIC] [TIFF OMITTED] TR28JY10.086

7. Benefits for All EPs and All Eligible Hospitals
In this final rule we have not quantified the overall benefits to
the industry, nor to eligible hospitals, or EPs in the Medicare,
Medicaid, or MA programs. We believe that the first 5 years of the
incentive program will be dedicated to implementation activities, from
installation of the technology to training to operational and
behavioral changes. Information on the costs and benefits of adopting
systems specifically meeting the requirements in this rule does not yet
exist--and information on costs and benefits overall is limited
(Goldzweig et al. 2009 ``Costs and Benefits of Health Information

[[Page 44561]]

Technology: New Trends from the Literature'' Health Affairs.)
Nonetheless, we believe there are benefits that can be obtained by
eligible hospitals and EPs, including: reductions in medical record-
keeping costs, reductions in repeat tests, decreases in length of stay,
and reduced errors. Furthermore, there is limited but growing evidence
to support the cost-saving benefits anticipated from wider adoption of
EHRs. For example, at one hospital emergency room in Delaware, the
ability to download and create a file with a patient's medical history
saved the ER $545 per use, mostly on reduced waiting times. A pilot
study of ambulatory practices found a positive ROI within 16 months and
annual savings thereafter (Greiger et al. 2007, A Pilot Study to
Document the Return on Investment for Implementing an Ambulatory
Electronic Health Record at an Academic Medical Center http://www.journalacs.org/article/S1072-7515%2807%2900390-0/abstract-article-footnote-1s.) Some vendors have estimated that EHRs could result in
cost savings of between $100 and $200 per patient per year. As adoption
increases, there will be more opportunities to capture and report on
cost savings and benefits. A number of relevant studies are required in
the HITECH Act for this specific purpose, and the results will be made
public, as they are available.
8. Benefits to Society
According to the recent CBO study ``Evidence on the Costs and
Benefits of Health Information Technology'' http://www.cbo.gov/ftpdocs/91xx/doc9168/05-20-HealthIT.pdf when used effectively, EHRs can enable
providers to deliver health care more efficiently. For example, the
study states that EHRs can reduce the duplication of diagnostic tests,
prompt providers to prescribe cost-effective generic medications,
remind patients about preventive care reduce unnecessary office visits
and assist in managing complex care. Further, the report claims that
there is a potential to gain both internal and external savings from
widespread adoption of health IT, noting that internal savings would
likely be in the reductions in the cost of providing care, and that
external savings could accrue to the health insurance plan or even the
patient, such as the ability to exchange information more efficiently.
The benefits resulting specifically from this final regulation are even
harder to quantify because they represent, in many cases, adding
functionality to existing systems and reaping the network externalities
created by larger numbers of providers participating in information
exchange.
Since the CBO study, additional research has emerged documenting
the association of EHRs with improved outcomes among diabetics (Hunt,
JS et al. (2009) ``The impact of a physician-directed health
information technology system on diabetes outcomes in primary care: a
pre- and post-implementation study'' Informatics in Primary Care
17(3):165-74; Pollard, C et al. (2009) ``Electronic patient registries
improve diabetes care and clinical outcomes in rural community health
centers'' Journal of Rural Health 25(1):77-84) and trauma patients
(Deckelbaum, D. et al. (2009) ``Electronic medical records and
mortality in trauma patients ``The Journal of Trauma: Injury,
Infection, and Critical Care 67(3): 634-636), enhanced efficiencies in
ambulatory care settings (Chen, C et al. (2009) ``The Kaiser Permanente
Electronic Health Record: Transforming and Streamlining Modalities Of
Care.''Health Affairs 28(2):323-333), and improved outcomes and lower
costs in hospitals (Amarasingham, R. et al. (2009) ``Clinical
information technologies and inpatient outcomes: a multiple hospital
study'' Archives of Internal Medicine 169(2):108-14).
9. General Considerations
The estimates for the HITECH Act provisions were based on the
economic assumptions underlying the President's 2011 Budget. Under the
statute, Medicare incentive payments for certified EHR technology are
excluded from the determination of MA capitation benchmarks. As noted
previously, there is considerable uncertainty about the rate at which
eligible hospitals, CAHs and EPs will adopt EHRs and other HIT.
Nonetheless, we believe that the Medicare incentive payments and the
prospect of significant payment penalties for not demonstrating
meaningful use will result in the great majority of hospitals
implementing certified EHR technology in the early years of the
Medicare EHR incentive program. We expect that a steadily growing
proportion of practices will implement certified EHR technology over
the next 10 years, even in the absence of the Medicare incentives.
Actual future Medicare and Medicaid costs for eligible hospital and EP
incentives will depend in part on the standards developed and applied
for assessing meaningful use of certified EHR technology. We expect to
administer the requirements in such a way as to encourage adoption of
certified EHR technology and facilitate qualification for incentive
payments, and expect to adopt progressively demanding standards at each
stage year. Certified EHR technology has the potential to help reduce
medical costs through efficiency improvements, such as prompter
treatments, avoidance of duplicate or otherwise unnecessary services,
and reduced administrative costs (once systems are in place), with most
of these savings being realized by the providers rather than by
Medicare or Medicaid. To the extent that this technology will have a
net positive effect on efficiency, then more rapid adoption of such EHR
systems would achieve these efficiencies sooner than would otherwise
occur, without the EHR incentives.
The CBO has estimated a modest level of such savings attributable
to EHRs, with much of the amount associated with reductions in adverse
drug-to-drug interactions. We expect a negligible impact on benefit
payments to hospitals and EPs from Medicare and Medicaid as a result of
the implementation of EHR technology.
In the process of preparing the estimates for this rule, we
consulted with and/or relied on internal CMS sources, as well as the
following sources:
Congressional Budget Office (staff and publications).
American Medical Association (staff and unpublished data).
American Hospital Association.
Actuarial Research Corporation.
RAND Health studies on:

++ ``The State and Pattern of Health Information Technology Adoption''
(Fonkych & Taylor, 2005);
++ ``Extrapolating Evidence of Health Information Technology Savings
and Costs'' (Girosi, Meili, & Scoville, 2005); and
++ ``The Diffusion and Value of Healthcare Information Technology''
(Bower, 2005).

Kaiser Permanente (staff and publications).
Miscellaneous other sources (Health Affairs, American
Enterprise Institute, news articles and perspectives).
As noted at the beginning of this analysis, it is difficult to
predict the actual impacts of the HITECH Act with much certainty at
this time. We believe the assumptions and methods described herein are
reasonable for estimating the financial impact of the provisions on the
Medicare and Medicaid programs, but acknowledge the wide range of
possible outcomes.
All financial analysis is calculated over a 10-year planning
horizon, because though the incentive payments for Medicare EPs, CAHs
and eligible

[[Page 44562]]

hospitals will only be paid for 5 years, the Medicaid incentives will
cease in CY 2021. Starting in CY 2015, Medicare payment adjustments
will begin.
10. Summary
The total cost to the Medicare and Medicaid programs is estimated
to be $9.7 billion in transfers under the low scenario, and $27.4
billion under the high scenario, over a 10-year timeframe. The main
reasons for the changes from the proposed rule are revised definitions
of hospital-based eligible professional and Medicaid acute care
hospitals, and updated data on discharges and costs of adoption among
hospitals. We do not estimate total costs to the provider industry, but
rather provide a possible per EP and per eligible hospital outlay for
implementation and maintenance operations.
[GRAPHIC] [TIFF OMITTED] TR28JY10.087

Table 39 shows the total costs from 2011 through 2019 for the high
scenario after which the payment adjustments will be invoked.
[GRAPHIC] [TIFF OMITTED] TR28JY10.088

11. Explanation of Benefits and Savings Calculations
In our analysis, we assume that benefits to the program would
accrue in the form of savings to Medicare, through the Medicare EP
payment adjustments. Expected qualitative benefits, such as improved
quality of care, better health outcomes, and the like, are still unable
to be quantified at this time.

H. Accounting Statement

Whenever a rule is considered a significant rule under Executive
Order 12866, we are required to develop an Accounting Statement
indicating the

[[Page 44563]]

classification of the expenditures associated with the provisions of
this final rule. Monetary annualized benefits and nonbudgetary costs
are presented as discounted flows using 3 percent and 7 percent
factors. Additional expenditures that will be undertaken by eligible
entities in order to obtain the Medicare and Medicaid incentive
payments to adopt and demonstrate meaningful use of certified EHR
technology, and to avoid the Medicare payment adjustments that will
ensue if they fail to do so are noted by a placeholder in the
accounting statement. We are not able to explicitly define the universe
of those additional costs, nor specify what the high or low range might
be to implement EHR technology in this final rule.
Expected qualitative benefits include improved quality of care,
better health outcomes, reduced errors and the like. Private industry
costs would include the impact of EHR activities such as temporary
reduced staff productivity related to learning how to use the EHR, the
need for additional staff to work with HIT issues, and administrative
costs related to reporting.
[GRAPHIC] [TIFF OMITTED] TR28JY10.089

In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 412

Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 422

Administrative practice and procedure, Health facilities, Health
maintenance organizations (HMO), Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.

42 CFR Part 495

Administrative practice and procedure, Electronic health records,
Health facilities, Health professions, Health maintenance organizations
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and
recordkeeping requirements.

0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicare Services amends 42 CFR Chapter IV as follows:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

0
1. The authority citation for part 412 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart D--Basic Methodology for Determining Prospective Payment
Federal Rates for Inpatient Operating Costs

0
2. Section 412.64 is amended as follows:
0
A. Revising paragraph (d)(2)(i)(B).
0
B. Adding new paragraphs (d)(2)(i)(C) and (d)(3).
The revision and additions read as follows:

Sec. 412.64 Federal rates for inpatient operating costs for Federal
fiscal year 2005 and subsequent fiscal years.

* * * * *
(d) * * *
(2) * * *
(i) * * *
(B) For fiscal year 2007 through 2014, by 2 percentage points.
(C) For fiscal year 2015 and subsequent fiscal years, by one-
fourth.
* * * * *
(3) Beginning in fiscal year 2015, in the case of a ``subsection
(d) hospital,'' as defined under section 1886(d)(1)(B) of the Act, that
is not a meaningful electronic health record (EHR) user as defined in
part 495 of this chapter, three-fourths of the applicable percentage
change specified in paragraph (d)(1) of this section is reduced--
(i) For fiscal year 2015, by 33\1/3\ percent;
(ii) For fiscal year 2016, by 66\2/3\ percent; and
(iii) For fiscal year 2017 and subsequent fiscal years, by 100
percent.
* * * * *

[[Page 44564]]

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES

0
3. The authority citation for part 413 continues to read as follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Public Law 106-133 (113 Stat. 1501A-332).

Subpart E--Payments to Providers

0
4. Section 413.70 is amended as follows:
0
A. Revising paragraph (a)(1).
0
B. Adding new paragraphs (a)(5), (a)(6) and (a)(7).
The revision and additions read as follows:

Sec. 413.70 Payment for services of a CAH.

(a) Payment for inpatient services furnished by a CAH (other than
services of distinct part units). (1) Effective for cost reporting
periods beginning on or after January 1, 2004, payment for inpatient
services of a CAH, other than services of a distinct part unit of the
CAH and other than the items included in the incentive payment
described in paragraph (a)(5) of this section and subject to the
adjustments described in paragraph (a)(6) of this section, is 101
percent of the reasonable costs of the CAH in providing CAH services to
its inpatients, as determined in accordance with section 1861(v)(1)(A)
of the Act and the applicable principles of cost reimbursement in this
part and in part 415 of this chapter, except that the following payment
principles are excluded when determining payment for CAH inpatient
services:
(i) Lesser of cost or charges;
(ii) Ceilings on hospital operating costs;
(iii) Reasonable compensation equivalent (RCE) limits for physician
services to providers; and
(iv) The payment window provisions for preadmission services,
specified in Sec. 412.2(c)(5) of this subchapter and Sec.
413.40(c)(2) of this part.
* * * * *
(5) A qualifying CAH receives an incentive payment for the
reasonable costs of purchasing certified EHR technology in a cost
reporting period during a payment year as determined under Sec.
495.106 of this chapter in lieu of payment for such reasonable costs
under paragraph (a)(1) of this section.
(6)(i) For cost reporting periods beginning in or after FY 2015, if
a CAH is not a qualifying CAH, as defined in Sec. 495.106(a) of this
chapter, then notwithstanding the percentage applicable in paragraph
(a)(1) of this section, the reasonable costs of the CAH in providing
CAH services to its inpatients are adjusted, by the following
applicable percentage:
(A) For cost reporting periods beginning in FY 2015, 100.66
percent.
(B) For cost reporting periods beginning in FY 2016, 100.33
percent.
(C) For cost reporting periods beginning in FY 2017 and each
subsequent fiscal year, 100 percent.
(ii) A CAH may, on a case-by case basis, be exempt from the
application of the adjustments made under this paragraph, if CMS or its
Medicare contractors determine, on an annual basis, that requiring the
CAH to become a qualifying CAH under Sec. 495.106 of this chapter
would result in a significant hardship, such as in the case of a CAH in
a rural area without sufficient Internet access.
(iii) In no case may a CAH be granted an exemption under this
paragraph (a)(6) for more than 5 years.
(7) There is no administrative or judicial review under section
s1869 and 1878 of the Actor otherwise of the following:
(i) The methodology and standards for determining the amount of
payment under paragraph (a)(5) of this section, including the
calculation of reasonable costs under Sec. 495.106(c) of this chapter.
(ii) The methodology and standards for determining the amount of
payment adjustments made under paragraph (a)(6).
(iii) The methodology and standards for determining a CAH to be a
qualifying CAH under Sec. 495.106 of this chapter.
(iv) The methodology and standards for determining if the hardship
exemption applies to a CAH under paragraph (a)(6)(ii) of this section.
(v) The specification of the cost reporting periods, payment years,
or fiscal years as applied under this paragraph.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

0
5. The authority citation for part 422 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart G--Payments to Medicare Advantage Organizations

0
6. Section 422.304 is amended by adding a new paragraph (f) to read as
follows:

Sec. 422.304 Monthly payments.

* * * * *
(f) Separate payment for meaningful use of certified EHRs. In the
case of qualifying MA organizations, as defined in Sec. 495.200 of
this chapter, entitled to MA EHR incentive payments per Sec. 495.220
of this chapter, such payments are made in accordance with sections
1853(l) and (m) of the Act and subpart C of Part 495 of this chapter.

0
7. Section 422.306 is amended as follows:
0
A. Removing ``and'' from the end of paragraph (b)(2)(ii).
0
B. Removing the period at the end of paragraph (b)(2)(iii) and adding
``; and'' in its place.
0
C. Adding a new paragraph (b)(2)(iv).
The addition reads as follows:

Sec. 422.306 Annual MA capitation rates.

* * * * *
(b) * * *
(2) * * *
(iv) Adjusted to exclude costs attributable to payments under
sections 1848(o) and 1886(n) of the Act of Medicare FFS incentive
payments for meaningful use of electronic health records.
* * * * *

0
8. Section 422.308 is amended as follows:
0
A. Redesignating paragraph (a) as paragraph (a)(1).
0
B. Adding a new paragraph (a)(2).
The addition reads as follows:

Sec. 422.308 Adjustments to capitation rates, benchmarks, bids, and
payments.

* * * * *
(a) * * *
(2) The amount calculated in paragraph (a)(1) of this section must
exclude expenditures attributable to sections 1848(a)(7) and (o) and
sections 1886(b)(3)(B)(ix) and (n) of the Act.
* * * * *

0
9. Section 422.322 is amended as follows:
0
A. Adding paragraph (a)(3).
0
B. Revising paragraph (b).
The addition and revision read as follows:

Sec. 422.322 Source of payment and effect of MA plan election on
payment.

(a) * * *
(3) Payments under subpart C of part 495 of this chapter for
meaningful use of certified EHR technology are made

[[Page 44565]]

from the Federal Hospital Insurance Trust Fund or the Supplementary
Medical Insurance Trust Fund. In applying section 1848(o) of the Act
under sections 1853(l) and 1886(n)(2)of the Act under section 1853(m)
of the Act, CMS determines the amount to the extent feasible and
practical to be similar to the estimated amount in the aggregate that
would be payable for services furnished by professionals and hospitals
under Parts B and A, respectively, under title XVIII of the Act.
(b) Payments to the MA organization. Subject to Sec. 412.105(g),
Sec. 413.86(d), and Sec. 495.204 of this chapter and Sec. Sec.
422.109, 422.316, and 422.320, CMS' payments under a contract with an
MA organization (described in Sec. 422.304) with respect to an
individual electing an MA plan offered by the organization are instead
of the amounts which (in the absence of the contract) would otherwise
be payable under original Medicare for items and services furnished to
the individual.
* * * * *

SUBCHAPTER G--STANDARDS AND CERTIFICATIONS

0
10. A new part 495 is added to read as follows:

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY
INCENTIVE PROGRAM

Subpart A--General Provisions
Sec.
495.2 Basis and purpose.
495.4 Definitions.
495.6 Meaningful use objectives measures for EPs, eligible
hospitals, and CAHs.
495.8 Demonstration of meaningful use criteria.
495.10 Participation requirements for EPs, eligible hospitals, and
CAHs.
Subpart B--Requirements Specific to the Medicare Program
495.100 Definitions.
495.102 Incentive payments to EPs.
495.104 Incentive payments to eligible hospitals.
495.106 Incentive payments to CAHs.
495.108 Posting of required information.
495.110 Preclusion on administrative and judicial review.
Subpart C--Requirements Specific to Medicare Advantage (MA)
Organizations
495.200 Definitions.
495.202 Identification of qualifying MA organizations, MA-EPs, and
MA-affiliated eligible hospitals.
495.204 Incentive payments to qualifying MA organizations for MA-EPs
and MA-affiliated eligible hospitals.
495.206 Timeframe for payment to qualifying MA organizations.
495.208 Avoiding duplicate payment.
495.210 Meaningful EHR user attestation.
495.212 Limitation on review.
Subpart D--Requirements Specific to the Medicaid Program
495.300 Basis and purpose.
495.302 Definitions.
495.304 Medicaid provider scope and eligibility.
495.306 Establishing patient volume.
495.308 Net average allowable costs as the basis for determining the
incentive payment.
495.310 Medicaid provider incentive payments.
495.312 Process for payments.
495.314 Activities required to receive an incentive payment.
495.316 State monitoring and reporting regarding activities required
to receive an incentive payment.
495.318 State responsibilities for receiving FFP.
495.320 FFP for payments to Medicaid providers.
495.322 FFP for reasonable administrative expenses.
495.324 Prior approval conditions.
495.326 Disallowance of FFP.
495.328 Request for reconsideration of adverse determination.
495.330 Termination of FFP for failure to provide access to
information.
495.332 State Medicaid health information technology (HIT) plan
requirements.
495.334 Reserved.
495.336 Health information technology planning advance planning
document requirements (HIT PAPD).
495.338 Health information technology implementation advance
planning document requirements (HIT IAPD).
495.340 As-needed HIT PAPD update and as-needed HIT IAPD update
requirements.
495.342 Annual HIT IAPD requirements.
495.344 Approval of the State Medicaid HIT plan, the HIT PAPD and
update, the HIT IAPD and update, and the annual HIT IAPD.
495.346 Access to systems and records.
495.348 Procurement standards.
495.350 State Medicaid agency attestations.
495.352 Reporting requirements.
495.354 Rules for charging equipment.
495.356 Nondiscrimination requirements.
495.358 Cost allocation plans.
495.360 Software and ownership rights.
495.362 Retroactive approval of FFP with an effective date of
February 18, 2009.
495.364 Review and assessment of administrative activities and
expenses of Medicaid provider health information technology adoption
and operation.
495.366 Financial oversight and monitoring of expenditures.
495.368 Combating fraud and abuse.
495.370 Appeals process for a Medicaid provider receiving electronic
health record incentive payments.

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart A--General Provisions

Sec. 495.2 Basis and purpose.

This part implements the following:
(a) Section 1848(o) of the Act by establishing payment incentives
under Medicare Part B for eligible professionals who adopt and
meaningfully use certified electronic health record (EHR) technology.
(b) Section 1853(1) of the Act to provide incentive payments to
Medicare Advantage organizations for certain affiliated professionals
who meaningfully use certified EHR technology and meet certain other
requirements.
(c) Section 1886(n) of the Act by establishing incentives payments
for the meaningful use of certified EHR technology by subsection (d)
hospitals, as defined under section 1886(d)(1)(B) of the Act,
participating in the Medicare FFS program.
(d) Section 1814(l) of the Act to provide an incentive payment to
critical access hospitals that meaningfully use certified EHR
technology based on the hospitals' reasonable costs.
(e) Section 1853(m) of the Act to provide incentive payments to MA
organizations for certain affiliated hospitals that meaningfully use
certified EHR technology.
(f) Sections 1903(a)(3)(F) and 1903(t) of the Act to provide 100
percent Federal financial participation (FFP) to States for incentive
payments to certain eligible providers participating in the Medicaid
program to purchase, implement, and operate (including support services
and training for staff) certified EHR technology and 90 percent FFP for
State administrative expenses related to such incentive payments.
(g) Sections 1848(a)(7), 1853(l)(4), 1886(b)(3)(B)(ix)(I), and
1853(m)(4) of the Act, providing for payment reductions for inpatient
services furnished on or after October 1, 2014 to Medicare
beneficiaries by hospitals that are not meaningful users of certified
EHR technology, and for covered professional services furnished on or
after January 1, 2015 to Medicare beneficiaries by certain
professionals who are not meaningful users of certified EHR technology.

Sec. 495.4 Definitions.

In this part, unless otherwise indicated--
Certified electronic health record technology has the same
definition as this term is defined at 45 CFR 170.102.
Critical access hospital (CAH) means a facility that has been
certified as a critical access hospital under section 1820(e) of the
Act and for which

[[Page 44566]]

Medicare payment is made under section 1814(l) of the Act for inpatient
services and under section 1834(g) of the Act for outpatient services.
EHR reporting period means either of the following:
(1) For an eligible professional (EP)--
(i) For the first payment year, any continuous 90-day period within
a calendar year;
(ii)(A) Except as specified in paragraph (1)(ii)(B) of this
definition, for the second, third, fourth, fifth, or sixth payment
year, the calendar year.
(B) For Medicaid providers who are demonstrating they are
meaningful EHR users for the first time in their second payment year,
the EHR reporting period during such second payment year is any
continuous 90-day period within the calendar year.
(2) For an eligible hospital or a CAH--
(i) For the first payment year, any continuous 90-day period within
a federal fiscal year; and
(ii)(A) Except as specified in paragraph (2)(ii)(B) of this
definition, for the second, third, fourth, fifth, or sixth payment
year, the Federal fiscal year.
(B) For Medicaid providers who are demonstrating they are
meaningful EHR users for the first time in their second payment year,
the EHR reporting period during such second payment year is any
continuous 90-day period within the Federal fiscal year.
Eligible hospital means an eligible hospital as defined under Sec.
495.100 or Medicaid eligible hospital under subpart D of this part.
Eligible professional (EP) means an eligible professional as
defined under Sec. 495.100 or a Medicaid eligible professional under
subpart D of this part.
Hospital-based EP is an EP (as defined under this section) who
furnishes 90 percent or more of his or her covered professional
services in a hospital setting in the year preceding the payment year.
For Medicare, this will be calculated based on the Federal FY prior to
the payment year. For Medicaid, it is at the State's discretion if the
data is gathered on the Federal FY or CY prior to the payment year. A
setting is considered a hospital setting if it is a site of service
that would be identified by the codes used in the HIPAA standard
transactions as an inpatient hospital, or emergency room setting.
Meaningful EHR user means:
(1) Subject to paragraph (3) of this definition, an EP, eligible
hospital or CAH that, for an EHR reporting period for a payment year,
demonstrates in accordance with Sec. 495.8 meaningful use of certified
EHR technology by meeting the applicable objectives and associated
measures under Sec. 495.6; and
(2)(i) Except as specified in paragraph (2)(ii) of this definition,
a Medicaid EP or Medicaid eligible hospital, that meets the
requirements of paragraph (1) of this definition and any additional
criteria for meaningful use imposed by the State and approved by CMS
under Sec. 495.316 and Sec. 495.332.
(ii) An eligible hospital or CAH is deemed to be a meaningful EHR
user for purposes of receiving an incentive payment under subpart D of
this Part, if the hospital participates in both the Medicare and
Medicaid EHR incentive programs, and the hospital meets the
requirements of paragraph (1) of this definition.
(3) To be considered a meaningful EHR user, at least 50 percent of
an EP's patient encounters during the EHR reporting period during the
payment year must occur at a practice/location or practices/locations
equipped with certified EHR technology.
Payment year means:
(1) For an EP, a calendar year beginning with CY 2011; and
(2) For a CAH or an eligible hospital, a Federal fiscal year
beginning with FY 2011.
Qualified EHR has the same definition as this term is defined at 45
CFR 170.102.
First, second, third, fourth, fifth, or sixth payment years mean as
follows:
(1) The first payment year is: with respect to an EP, the first
calendar year for which the EP receives an incentive payment under this
part; and with respect to an eligible hospital or CAH, the first FY for
which the hospital receives an incentive payment under this part.
(2) The second, third, fourth, fifth, or sixth payment year is:
(i) With respect to a Medicare EP, the second, third, fourth or
fifth successive CY immediately following the first payment year; and
with respect to a Medicare eligible hospital or CAH, the second, third,
or fourth successive Federal FY immediately following the first payment
year. (Note: Medicare EPs are not eligible for a sixth payment year and
Medicare eligible hospitals are not eligible for a fifth or sixth
payment year.)
(ii)(A) With respect to a Medicaid EP, the second, third, fourth,
fifth, or sixth CY for which the EP receives an incentive payment under
subpart D, regardless of whether the year immediately follows the prior
payment year; and
(B) With respect to a Medicaid eligible hospital, for years prior
to FY 2017, the second, third, fourth, fifth, or sixth Federal FY for
which the hospital receives an incentive payment under subpart D of
this part, regardless of whether the year immediately follows the prior
payment year. Beginning with FY 2017, payments to Medicaid eligible
hospitals must be consecutive, and the hospital is not eligible for an
incentive payment under subpart D of this part unless it received such
incentive payment for the prior fiscal year.

Sec. 495.6 Meaningful use objectives and measures for EPs, eligible
hospitals, and CAHs.

(a) Stage 1 criteria for EPs--(1) General rule regarding Stage 1
criteria for meaningful use for EPs. Except as specified in paragraphs
(a)(2) and (a)(3) of this section, EPs must meet all objectives and
associated measures of the Stage 1 criteria specified in paragraph (d)
of this section and five objectives of the EP's choice from paragraph
(e) of this section to meet the definition of a meaningful EHR user.
(2) Exclusion for non-applicable objectives. (i) An EP may exclude
a particular objective contained in paragraphs (d) or (e) of this
section, if the EP meets all of the following requirements:
(A) Must ensure that the objective in paragraph (d) or (e) of this
section includes an option for the EP to attest that the objective is
not applicable.
(B) Meets the criteria in the applicable objective that would
permit the attestation.
(C) Attests.
(ii) An exclusion will reduce (by the number of exclusions
applicable) the number of objectives that would otherwise apply. For
example, an EP that has an exclusion from one of the objectives in
paragraph (e) of this section must meet four (and not five) objectives
of the EP's choice from such paragraph to meet the definition of a
meaningful EHR user.
(3) Exception for Medicaid EPs who adopt, implement or upgrade in
their first payment year. For Medicaid EPs who adopt, implement, or
upgrade certified EHR technology in their first payment year, the
meaningful use objectives and associated measures of the Stage 1
criteria specified in paragraphs (d) and (e) apply beginning with the
second payment year, and do not apply to the first payment year.
(b) Stage 1 criteria for eligible hospitals and CAHs--(1) General
rule regarding Stage 1 criteria for meaningful use for eligible
hospitals or CAHs. Except as specified in paragraphs (b)(2) and (b)(3)
of this section, eligible hospitals and CAHs must meet all objectives
and associated measures of

[[Page 44567]]

the Stage 1 criteria specified in paragraph (f) of this section and
five objectives of the eligible hospital's or CAH's choice from
paragraph (g) of this section to meet the definition of a meaningful
EHR user.
(2) Exclusions for nonapplicable objectives. (i) An eligible
hospital or CAH may exclude a particular objective that includes an
option for exclusion contained in paragraphs (f) or (g) of this
section, if the hospital meets all of the following requirements:
(A) The hospital meets the criteria in the applicable objective
that would permit an exclusion.
(B) The hospital so attests.
(ii) An exclusion will reduce (by the number of exclusions
received) the number of objectives that would otherwise apply. For
example, an eligible hospital that is excluded from one of the
objectives in paragraph (g) of this section must meet four (and not
five) objectives of the hospital's choice from such paragraph to meet
the definition of a meaningful EHR user.
(3) Exception for Medicaid eligible hospitals that adopt, implement
or upgrade in their first payment year. For Medicaid eligible hospitals
that adopt, implement, or upgrade certified EHR technology in their
first payment year, the meaningful use objectives and associated
measures of the Stage 1 criteria specified in paragraphs (f) and (g) of
this section apply beginning with the second payment year, and do not
apply to the first payment year.
(c) Many of the objective and associated measures in paragraphs (d)
through (g) of this section rely on measures that count unique patients
or actions.
(1) If a measure (or associated objective) in paragraphs (d)
through (g) of this section references paragraph (c) of this section,
then the measure may be calculated by reviewing only the actions for
patients whose records are maintained using certified EHR technology. A
patient's record is maintained using certified EHR technology if
sufficient data was entered in the certified EHR technology to allow
the record to be saved, and not rejected due to incomplete data.
(2) If the objective and associated measure does not reference this
paragraph (c) of this section, then the measure must be calculated by
reviewing all patient records, not just those maintained using
certified EHR technology.
(d) Stage 1 core criteria for EPs. An EP must satisfy the following
objectives and associated measures, except those objectives and
associated measures for which an EP qualifies for an exclusion under
paragraph (a)(2) of this section specified in this paragraph:
(1)(i) Objective. Use computerized provider order entry (CPOE) for
medication orders directly entered by any licensed healthcare
professional who can enter orders into the medical record per state,
local and professional guidelines.
(ii) Measure. Subject to paragraph (c) of this section, more than
30 percent of all unique patients with at least one medication in their
medication list seen by the EP have at least one medication order
entered using CPOE.
(iii) Exclusion in accordance with paragraph (a)(2) of this section
Any EP who writes fewer than 100 prescriptions during the EHR reporting
period.
(2)(i) Objective. Implement drug-drug and drug-allergy interaction
checks.
(ii) Measure. The EP has enabled this functionality for the entire
EHR reporting period.
(3)(i) Objective. Maintain an up-to-date problem list of current
and active diagnoses.
(ii) Measure. More than 80 percent of all unique patients seen by
the EP have at least one entry or an indication that no problems are
known for the patient recorded as structured data.
(4)(i) Objective. Generate and transmit permissible prescriptions
electronically (eRx).
(ii) Measure. Subject to paragraph (c) of this section, more than
40 percent of all permissible prescriptions written by the EP are
transmitted electronically using certified EHR technology.
(iii) Exclusion in accordance with paragraph (a)(2) of this section
Any EP who writes fewer than 100 prescriptions during the EHR reporting
period.
(5)(i) Objective. Maintain active medication list.
(ii) Measure. More than 80 percent of all unique patients seen by
the EP have at least one entry (or an indication that the patient is
not currently prescribed any medication) recorded as structured data.
(6)(i) Objective. Maintain active medication allergy list.
(ii) Measure. More than 80 percent of all unique patients seen by
the EP have at least one entry (or an indication that the patient has
no known medication allergies) recorded as structured data.
(7)(i) Objective. Record all of the following demographics:
(A) Preferred language.
(B) Gender.
(C) Race.
(D) Ethnicity.
(E) Date of birth.
(ii) Measure. More than 50 percent of all unique patients seen by
the EP have demographics recorded as structured data.
(8)(i) Objective. Record and chart changes in the following vital
signs:
(A) Height.
(B) Weight.
(C) Blood pressure.
(D) Calculate and display body mass index (BMI).
(E) Plot and display growth charts for children 2-20 years,
including BMI.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all unique patients age 2 and over seen by the EP,
height, weight and blood pressure are recorded as structured data.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. Any EP who either see no patients 2 years or older, or who
believes that all three vital signs of height, weight, and blood
pressure of their patients have no relevance to their scope of
practice.
(9)(i) Objective. Record smoking status for patients 13 years old
or older.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all unique patients 13 years old or older seen by the EP
have smoking status recorded as structured data.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. Any EP who sees no patients 13 years or older.
(10)(i) Objective. Report ambulatory clinical quality measures to
CMS or, in the case of Medicaid EPs, the States.
(ii) Measure. Subject to paragraph (c) of this section,
successfully report to CMS (or, in the case of Medicaid EPs, the
States) ambulatory clinical quality measures selected by CMS in the
manner specified by CMS (or in the case of Medicaid EPs, the States).
(11)(i) Objective. Implement one clinical decision support rules
relevant to specialty or high clinical priority along with the ability
to track compliance with that rule.
(ii) Measure. Implement one clinical decision support rule.
(12)(i) Objective. Provide patients with an electronic copy of
their health information (including diagnostics test results, problem
list, medication lists, medication allergies) upon request.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all patients who request an electronic copy of their
health information are provided it within 3 business days.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. Any EP that has no requests from patients or their agents for
an electronic copy of patient health information during the EHR
reporting period.
(13)(i) Objective. Provide clinical summaries for patients for each
office visit.
(ii) Measure. Subject to paragraph (c) of this section, clinical
summaries

[[Page 44568]]

provided to patients for more than 50 percent of all office visits
within 3 business days.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. Any EP who has no office visits during the EHR reporting
period.
(14)(i) Objective. Capability to exchange key clinical information
(for example, problem list, medication list, allergies, and diagnostic
test results), among providers of care and patient authorized entities
electronically.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to electronically exchange key clinical
information.
(15)(i) Objective. Protect electronic health information created or
maintained by the certified EHR technology through the implementation
of appropriate technical capabilities.
(ii) Measure. Conduct or review a security risk analysis in
accordance with the requirements under 45 CFR 164.308(a)(1) and
implement security updates as necessary and correct identified security
deficiencies as part of its risk management process.
(e) Stage 1 menu set criteria for EPs. An EP must meet five of the
following objectives and associated measures, one of which must be
either paragraph (e)(9) or (e)(10) of this section, except that the
required number of objectives and associated measures is reduced by an
EP's paragraph (a)(2) of this section exclusions specified in this
paragraph:
(1)(i) Objective. Implement drug-formulary checks.
(ii) Measure. The EP has enabled this functionality and has access
to at least one internal or external formulary for the entire EHR
reporting period.
(2)(i) Objective. Incorporate clinical lab-test results into EHR as
structured data.
(ii) Measure. Subject to paragraph (c) of this section, more than
40 percent of all clinical lab tests results ordered by the EP during
the EHR reporting period whose results are either in a positive/
negative or numerical format are incorporated in certified EHR
technology as structured data.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. An EP who orders no lab tests whose results are either in a
positive/negative or numeric format during the EHR reporting period.
(3)(i) Objective. Generate lists of patients by specific conditions
to use for quality improvement, reduction of disparities, research, or
outreach.
(ii) Measure. Subject to paragraph (c) of this section, generate at
least one report listing patients of the EP with a specific condition.
(4)(i) Objective. Send reminders to patients per patient preference
for preventive/follow-up care.
(ii) Measure. Subject to paragraph (c) of this section, more than
20 percent of all patients 65 years or older or 5 years old or younger
were sent an appropriate reminder during the EHR reporting period.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. An EP who has no patients 65 years old or older or 5 years old
or younger with records maintained using certified EHR technology.
(5)(i) Objective. Provide patients with timely electronic access to
their health information (including lab results, problem list,
medication lists, and allergies) within 4 business days of the
information being available to the EP.
(ii) Measure. At least 10 percent of all unique patients seen by
the EP are provided timely (available to the patient within four
business days of being updated in the certified EHR technology)
electronic access to their health information subject to the EP's
discretion to withhold certain information.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. Any EP that neither orders nor creates any of the information
listed at 45 CFR 170.304(g) during the EHR reporting period.
(6)(i) Objective. Use certified EHR technology to identify patient-
specific education resources and provide those resources to the patient
if appropriate.
(ii) Measure. More than 10 percent of all unique patients seen by
the EP are provided patient-specific education resources.
(7)(i) Objective. The EP who receives a patient from another
setting of care or provider of care or believes an encounter is
relevant should perform medication reconciliation.
(ii) Measure. Subject to paragraph (c) of this section, the EP
performs medication reconciliation for more than 50 percent of
transitions of care in which the patient is transitioned into the care
of the EP.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. An EP who was not the recipient of any transitions of care
during the EHR reporting period.
(8)(i) Objective. The EP who transitions their patient to another
setting of care or provider of care or refers their patient to another
provider of care should provide summary care record for each transition
of care or referral.
(ii) Measure. Subject to paragraph (c) of this section, the EP who
transitions or refers their patient to another setting of care or
provider of care provides a summary of care record for more than 50
percent of transitions of care and referrals.
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. An EP who neither transfers a patient to another setting nor
refers a patient to another provider during the EHR reporting period.
(9)(i) Objective. Capability to submit electronic data to
immunization registries or immunization information systems and actual
submission according to applicable law and practice.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to submit electronic data to immunization
registries and follow up submission if the test is successful (unless
none of the immunization registries to which the EP submits such
information has the capacity to receive the information
electronically).
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. An EP who administers no immunizations during the EHR
reporting period or where no immunization registry has the capacity to
receive the information electronically.
(10)(i) Objective. Capability to submit electronic syndromic
surveillance data to public health agencies and actual submission
according to applicable law and practice.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to provide electronic syndromic surveillance data
to public health agencies and follow-up submission if the test is
successful (unless none of the public health agencies to which an EP
submits such information has the capacity to receive the information
electronically).
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. An EP who does not collect any reportable syndromic
information on their patients during the EHR reporting period or does
not submit such information to any public health agency that has the
capacity to receive the information electronically.
(f) Stage 1 core criteria for eligible hospitals or CAHs. An
eligible hospital or CAH must meet the following objectives and
associated measures except those objectives and associated measures for
which an eligible hospital or CAH qualifies for a paragraph (b)(2) of
this section exclusion specified in this paragraph:
(1)(i) Objective. Use CPOE for medication orders directly entered
by any licensed healthcare professional who can enter orders into the
medical

[[Page 44569]]

record per State, local, and professional guidelines.
(ii) Measure. Subject to paragraph (c) of this section, more than
30 percent of all unique patients with at least one medication in their
medication list admitted to the eligible hospital's or CAH's inpatient
or emergency department (POS 21 or 23) have at least one medication
order entered using CPOE.
(2)(i) Objective. Implement drug-drug and drug-allergy interaction
checks.
(ii) Measure. The eligible hospital or CAH has enabled this
functionality for the entire EHR reporting period.
(3)(i) Objective. Maintain an up-to-date problem list of current
and active diagnoses.
(ii) Measure. More than 80 percent of all unique patients admitted
to the eligible hospital's or CAH's inpatient or emergency department
(POS 21 or 23) have at least one entry or an indication that no
problems are known for the patient recorded as structured data.
(4)(i) Objective. Maintain active medication list.
(ii) Measure. More than 80 percent of all unique patients admitted
to the eligible hospital's or CAH's inpatient or emergency department
(POS 21 or 23) have at least one entry (or an indication that the
patient is not currently prescribed any medication) recorded as
structured data.
(5)(i) Objective. Maintain active medication allergy list.
(ii) Measure. More than 80 percent of all unique patients admitted
to the eligible hospital's or CAH's inpatient or emergency department
(POS 21 or 23) have at least one entry (or an indication that the
patient has no known medication allergies) recorded as structured data.
(6)(i) Objective. Record all of the following demographics;
(A) Preferred language.
(B) Gender.
(C) Race.
(D) Ethnicity.
(E) Date of birth.
(F) Date and preliminary cause of death in the event of mortality
in the eligible hospital or CAH.
(ii) Measure. More than 50 percent of all unique patients admitted
to the eligible hospital's or CAH's inpatient or emergency department
(POS 21 or 23) have demographics recorded as structured data.
(7)(i) Objective. Record and chart changes in the following vital
signs:
(A) Height.
(B) Weight.
(C) Blood pressure.
(D) Calculate and display body mass index (BMI).
(E) Plot and display growth charts for children 2-20 years,
including BMI.
(ii) Measure. Subject to paragraph (c) of this section, for more
than 50 percent of all unique patients age 2 and over admitted to the
eligible hospital's or CAH's inpatient or emergency department (POS 21
or 23), height, weight, and blood pressure are recorded as structured
data.
(8)(i) Objective. Record smoking for patients 13 years old or
older.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all unique patients 13 years old or older or admitted to
the eligible hospital's inpatient or emergency department (POS 21 or
23) have smoking status recorded as structured data.
(iii) Exclusion in accordance with paragraph (b)(2) of this
section. Any eligible hospital or CAH that admits no patients 13 years
or older to their inpatient or emergency department (POS 21 or 23).
(9)(i) Objective. Report hospital clinical quality measures to CMS
or, in the case of Medicaid eligible hospitals, the States.
(ii) Measure. Subject to paragraph (c) of this section,
successfully report to CMS (or, in the case of Medicaid eligible
hospitals or CAHs, the States) hospital clinical quality measures
selected by CMS in the manner specified by CMS (or, in the case of
Medicaid eligible hospitals or CAHs, the States).
(10)(i) Objective. Implement one clinical decision support rule
related to a high priority hospital condition along with the ability to
track compliance with that rule.
(ii) Measure. Implement one clinical decision support rule.
(11)(i) Objective. Provide patients with an electronic copy of
their health information (including diagnostic test results, problem
list, medication lists, medication allergies, discharge summary,
procedures), upon request.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all patients of the inpatient or emergency departments of
the eligible hospital or CAH (POS 21 or 23) who request an electronic
copy of their health information are provided it within 3 business
days.
(iii) Exclusion in accordance with paragraph (b)(2) of this
section. Any eligible hospital or CAH that has no requests from
patients or their agents for an electronic copy of patient health
information during the EHR reporting period.
(12)(i) Objective. Provide patients with an electronic copy of
their discharge instructions at time of discharge, upon request.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all patients who are discharged from an eligible hospital
or CAH's inpatient or emergency department (POS 21 or 23) and who
request an electronic copy of their discharge instructions are provided
it.
(iii) Exclusion in accordance with paragraph (b)(2) of this
section. Any eligible hospital or CAH that has no requests from
patients or their agents for an electronic copy of the discharge
instructions during the EHR reporting period.
(13)(i) Objective. Capability to exchange key clinical information
(for example, problem list, medication list, medication allergies, and
diagnostic test results), among providers of care and patient
authorized entities electronically.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to electronically exchange key clinical
information.
(14)(i) Objective. Protect electronic health information created or
maintained by the certified EHR technology through the implementation
of appropriate technical capabilities.
(ii) Measure. Conduct or review a security risk analysis in
accordance with the requirements under 45 CFR 164.308(a)(1) and
implement security updates as necessary and correct identified security
deficiencies as part of its risk management process.
(g) Stage 1 menu set criteria for eligible hospitals or CAHs.
Eligible hospitals or CAHs must meet five of the following objectives
and associated measures, one which must be specified in paragraph
(g)(8), (g)(9), or (g)(10) of this section, except that the required
number of objectives and associated measures is reduced by a hospital's
paragraph (b)(2) of this section exclusions specified in this
paragraph:
(1)(i) Objective. Implement drug-formulary checks.
(ii) Measure. The eligible hospital or CAH has enabled this
functionality and has access to at least one internal or external
formulary for the entire EHR reporting period.
(2)(i) Objective. Record advance directives for patient 65 years
old or older.
(ii) Measure. Subject to paragraph (c) of this section, more than
50 percent of all unique patients 65 years old or older admitted to the
eligible hospital's or CAH's inpatient (POS 21) have an indication of
an advance directive status recorded as structured data.
(iii) Exclusion in accordance with paragraph (b)(2) of this
section. An eligible hospital or CAH that admits no

[[Page 44570]]

patients age 65 years old or older during the EHR reporting period.
(3)(i) Objective. Incorporate clinical lab-test results into EHR as
structured data.
(ii) Measure. Subject to paragraph (c) of this section, more than
40 percent of all clinical lab test results ordered by an authorized
provider of the eligible hospital or CAH for patients admitted to its
inpatient or emergency department (POS 21 and 23) during the EHR
reporting period whose results are either in a positive/negative or
numerical format are incorporated in certified EHR technology as
structured data.
(4)(i) Objective. Generate lists of patients by specific conditions
to use for quality improvement, reduction of disparities, research, or
outreach.
(ii) Measure. Subject to paragraph (c) of this section, generate at
least one report listing patients of the eligible hospital or CAH with
a specific condition.
(5)(i) Objective. Use certified EHR technology to identify patient-
specific education resources and provide those resources to the patient
if appropriate.
(ii) Measure. More than 10 percent of all unique patients admitted
to the eligible hospital's or CAH's inpatient or emergency department
(POS 21 or 23) are provided patient-specific education resources.
(6)(i) Objective. The eligible hospital or CAH who receives a
patient from another setting of care or provider of care or believes an
encounter is relevant should perform medication reconciliation.
(ii) Measure. Subject to paragraph (c) of this section, the
eligible hospital or CAH performs medication reconciliation for more
than 50 percent of transitions of care in which the patient is admitted
to the eligible hospital's or CAH's inpatient or emergency department
(POS 21 or 23).
(7)(i) Objective. The eligible hospital or CAH that transitions
their patient to another setting of care or provider of care or refers
their patient to another provider of care should provide summary care
record for each transition of care or referral.
(ii) Measure. Subject to paragraph (c) of this section, the
eligible hospital or CAH that transitions or refers their patient to
another setting of care or provider of care provides a summary of care
record for more than 50 percent of transitions of care and referrals.
(8)(i) Objective. Capability to submit electronic data to
immunization registries or immunization information systems and actual
submission according to applicable law and practice.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to submit electronic data to immunization
registries and follow up submission if the test is successful (unless
none of the immunization registries to which the eligible hospital or
CAH submits such information has the capacity to receive the
information electronically).
(iii) Exclusion in accordance with paragraph (b)(2) of this
section. An eligible hospital or CAH that administers no immunizations
during the EHR reporting period or where no immunization registry has
the capacity to receive the information electronically.
(9)(i) Objective. Capability to submit electronic data on
reportable (as required by State or local law) lab results to public
health agencies and actual submission according to applicable law and
practice.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to provide electronic submission of reportable
lab results to public health agencies and follow-up submission if the
test is successful (unless none of the public health agencies to which
an eligible hospital or CAH submits such information has the capacity
to receive the information electronically).
(iii) Exclusion in accordance with paragraph (b)(2) of this
section. No public health agency to which the eligible hospital or CAH
submits such information has the capacity to receive the information
electronically.
(10)(i) Objective. Capability to submit electronic syndromic
surveillance data to public health agencies and actual submission
according to applicable law and practice.
(ii) Measure. Performed at least one test of certified EHR
technology's capacity to provide electronic syndromic surveillance data
to public health agencies and follow-up submission if the test is
successful (unless none of the public health agencies to which an
eligible hospital or CAH submits information has the capacity to
receive the information electronically).
(iii) Exclusion in accordance with paragraph (a)(2) of this
section. No public health agency to which the eligible hospital or CAH
submits information has the capacity to receive the information
electronically.
(h) Stage 2 criteria for EPs. Beginning when final regulations for
Stage 2 are effective, an EP must satisfy the following objectives and
associated measures:
(1)(i) Objective. Use computerized provider order entry (CPOE) for
medication orders directly entered by any licensed healthcare
professional who can enter orders into the medical record per state,
local and professional guidelines.
(ii) Measure. More than 60 percent of all unique patients with at
least one medication in their medication list seen by the EP have at
least one medication order entered using CPOE.
(iii) Exclusion. Any EP who writes fewer than 100 prescriptions
during the EHR reporting period.
(2) [Reserved].
(i) Stage 2 criteria for eligible hospitals or CAHs. Beginning when
final regulations for Stage 2 are effective, an eligible hospital or
CAH must satisfy the following objectives and associated measures:
(1)(i) Objective. Use computerized provider order entry (CPOE) for
medication orders directly entered by any licensed healthcare
professional who can enter orders into the medical record per state,
local and professional guidelines.
(ii) Measure. More than 60 percent of all unique patients with at
least one medication in their medication list admitted to the eligible
hospital's or CAH's inpatient or emergency department (POS 21 or 23)
have at least one medication order entered using CPOE.
(2) [Reserved].

Sec. 495.8 Demonstration of meaningful use criteria.

(a) Demonstration by EPs. An EP must demonstrate that he or she
satisfies each of the applicable objectives and associated measures
under Sec. 495.6 of this subpart as follows:
(1) For CY 2011--(i) Attestation. Attest, through a secure
mechanism, in a manner specified by CMS (or for a Medicaid EP, in a
manner specified by the State), that during the EHR reporting period,
the EP--
(A) Used certified EHR technology, and specify the technology used;
(B) Satisfied the required objectives and associated measures under
Sec. 495.6(d) and Sec. 495.6(e) of this subpart;
(C) Must specify the EHR reporting period and provide the result of
each applicable measure for all patients seen during the EHR reporting
period for which a selected measure is applicable;
(ii) Additional requirements for Medicaid EPs. For Medicaid EPs,
if, in accordance with Sec. 495.316 and Sec. 495.332, CMS has
approved a State's revised definition for meaningful use, in addition
to meeting paragraphs (a)(1)(i) through (ii) of this section, the EP
must

[[Page 44571]]

also demonstrate meeting the State revised definition using the method
approved by CMS; and
(iii) Exception for Medicaid EPs. If a Medicaid EP has adopted,
implemented or upgraded certified EHR technology in the first payment
year, the EP need not demonstrate meaningful use until the second
payment year, as described in Sec. 495.6 and Sec. 495.8 of this
subpart.
(2) For CY 2012 and subsequent years--
(i) Attestation. Attest, through a secure mechanism, in a manner
specified by CMS (or for a Medicaid EP, in a manner specified by the
State) that during the EHR reporting period, the EP--
(A) Used certified EHR technology and specify the technology used.
(B) Satisfied the required objectives and associated measures under
Sec. 495.6(d) and Sec. 495.6(e), except Sec. 495.6(d)(10) ``Report
ambulatory clinical quality measures to CMS or, in the case of Medicaid
EPs, the States.''
(C) Must specify the EHR reporting period and provide the result of
each applicable measure for all patients seen during the EHR reporting
period for which a selected measure is applicable.
(ii) Reporting of clinical quality information. For Sec.
495.6(d)(10), ``Report ambulatory clinical quality measures to CMS or,
in the case of Medicaid EPs, the States,'' report the ambulatory
clinical quality measures selected by CMS electronically to CMS (or in
the case of Medicaid EPs, the States) in the manner specified by CMS
(or in the case of Medicaid EPs, the States).
(iii) Additional requirements for Medicaid EPs. For Medicaid EPs,
if, in accordance with Sec. 495.316 and Sec. 495.332, CMS has
approved a State's additional criteria for meaningful use, in addition
to meeting paragraphs (a)(2)(i) through (iii), the EP must also
demonstrate meeting such additional criteria using the method approved
by CMS.
(iv) Exception for Medicaid EPs. If a Medicaid EP has adopted,
implemented, or upgrade certified EHR technology in the first payment
year, the EP need not demonstrate that it is a meaningful EHR user
until the second payment year, as described in Sec. 495.6 and Sec.
495.8 of this subpart.
(3) For all CYs, an EP who practices in multiple physical
locations, not all of which have certified EHR technology available,
will demonstrate meaningful use using only the locations where the EP
has certified EHR technology available. (See also Sec. 495.4 regarding
the definition of meaningful EHR user).
(b) Demonstration by eligible hospitals and CAHs. To successfully
demonstrate that it is a meaningful EHR user, an eligible hospital or
CAH must the following requirements:
(1) For FY 2011--
(i) Attestation. Attest, through a secure mechanism, in a manner
specified by CMS (or for a Medicaid eligible hospital, in a manner
specified by the State), that during the EHR reporting period, the
eligible hospital or CAH--
(A) Used certified EHR and specify the technology used.
(B) Satisfied the required objectives and associated measures under
Sec. 495.6(f) and Sec. 495.6(g).
(C) Must specify the EHR reporting period and provide the result of
each applicable measure for all patients admitted to the inpatient or
emergency department (POS 21 or 23) of the hospital during the EHR
reporting period for which a selected measure is applicable.
(ii) Additional requirements for Medicaid eligible hospitals. For
Medicaid eligible hospitals, if, in accordance with Sec. 495.316 and
Sec. 495.332, CMS has approved a State's revised definition for
meaningful use, in addition to meeting paragraphs (b)(1)(i) through
(ii) of this section, the eligible hospital must also demonstrate
meeting the State's revised definition using the method approved by
CMS.
(iv) Exception for Medicaid eligible hospitals. If a Medicaid
eligible hospital has adopted, implemented or upgraded certified EHR
technology in the first payment year, the eligible hospital need not
demonstrate meaningful use until the second payment year, as described
in Sec. 495.6 and Sec. 495.8 of this subpart.
(2) For FY 2012 and subsequent years--
(i) Attestation. Attest, through a secure mechanism, in a manner
specified by CMS (or for a Medicaid eligible hospital, in a manner
specified by the State), that during the EHR reporting period, the
eligible hospital or CAH--
(A) Used certified EHR and specify the technology used;
(B) Satisfied the required objectives and associated measures under
Sec. 495.6(f) and Sec. 495.6(g), except Sec. 495.6(f)(9) ``Report
hospital clinical quality measures to CMS or, in the case of Medicaid
eligible hospitals, the States;''
(C) Must specify the EHR reporting period and provide the result of
each applicable measure for all patients admitted to the inpatient or
emergency department (POS 21 or 23) of the hospital during the EHR
reporting period for which a selected measure is applicable.
(ii) Reporting clinical quality information. For Sec. 495.6(f)(9)
``Report hospital clinical quality measures to CMS or, in the case of
Medicaid eligible hospitals, the States,'' report the hospital quality
measures selected by CMS electronically to CMS (or in the case of
Medicaid eligible hospitals, the States), in the manner specified by
CMS (or in the case of Medicaid eligible hospitals, the States).
(iv) Additional requirements for Medicaid eligible hospitals. For
Medicaid eligible hospitals if, in accordance with Sec. 495.316 and
Sec. 495.332, CMS has approved a State's revised definition for
meaningful use, in addition to meeting paragraphs (b)(2)(i) through
(iii) of this section, the eligible hospital must also demonstrate
meeting the State's revised definition using the method approved by
CMS.
(v) Exception for Medicaid eligible hospitals. If a Medicaid
eligible hospital has adopted, implemented, or upgraded certified EHR
technology in the first payment year, the eligible hospital need not
demonstrate that it is a meaningful EHR user until the second payment
year, as described in Sec. 495.6 and Sec. 495.8 of this subpart.
(c) Review of meaningful use. (1) CMS (and in the case of Medicaid
EPs and eligible hospitals, States) may review an EP, eligible hospital
or CAH's demonstration of meaningful use.
(2) All EPs, eligible hospitals, and CAHs must keep documentation
supporting their demonstration of meaningful use for 6 years.

Sec. 495.10 Participation requirements for EPs, eligible hospitals,
and CAHs.

(a) An eligible hospital, CAH or EP must submit in a manner
specified by CMS the following information in the first payment year:
(1) Name of the EP, eligible hospital or CAH.
(2) National Provider Identifier (NPI).
(3) Business address and phone number.
(4) Such other information as specified by CMS.
(b) In addition to the information submitted under paragraph (a) of
this section, an eligible hospital or CAH, must, in the first payment
year, submit in a manner specified by CMS its CMS Certification Number
(CCN) and its Taxpayer Identification Number (TIN).
(c) Subject to paragraph (f) of this section, in addition to the
information submitted under paragraph (a) of this section, an EP must
submit in a manner specified by CMS, the Taxpayer Identification Number
(TIN) which may be the EP's Social Security Number

[[Page 44572]]

(SSN) to which the EP's incentive payment should be made.
(d) In the event the information specified in paragraphs (a)
through (c) of this section as previously submitted to CMS is no longer
accurate, the EP, eligible hospital or CAH must provide updated
information to CMS or the State on a timely basis in the manner
specified by CMS or the State.
(e) An EP that qualifies as both a Medicaid EP and Medicare EP--
(1) Must notify CMS in the manner specified by CMS as to whether he
or she elects to participate in the Medicare or the Medicaid EHR
incentive program;
(2) After receiving at least one EHR incentive payment, may switch
between the two EHR incentive programs only one time, and only for a
payment year before 2015;
(3) Must, for each payment year, meet all of the applicable
requirements, including applicable patient volume requirements, for the
program in which he or she chooses to participate (Medicare or
Medicaid);
(4) Is limited to receiving, in total, the maximum payments the EP
would receive under the Medicaid EHR program, as described in subpart D
of this part; and
(5) Is placed in the payment year the EP would have been in had the
EP begun in and remained in the program to which he or she has
switched. For example, an EP that begins receiving Medicaid incentive
payments in 2011, and then switches to the Medicare program for 2012,
is in his or her second payment year in 2012.
(f) Limitations on incentive payment reassignments. (1) EPs are
permitted to reassign their incentive payments to their employer or to
an entity with which they have a contractual arrangement allowing the
employer or entity to bill and receive payment for the EP's covered
professional services.
(2)(i) Assignments in Medicare must be consistent with Section
1842(b)(6)(A) of the Act and 42 CFR part 424 subpart F.
(ii) Medicaid EPs may also assign their incentive payments to a TIN
for an entity promoting the adoption of EHR technology, consistent with
subpart D of this part.
(3) Each EP may reassign the entire amount of the incentive payment
to only one employer or entity.

Subpart B--Requirements Specific to the Medicare Program

Sec. 495.100 Definitions.

In this subpart unless otherwise indicated--
Covered professional services means (as specified in section
1848(k)(3) of the Act) services furnished by an EP for which payment is
made under, or is based on, the Medicare physician fee schedule.
Eligible hospital means a hospital subject to the prospective
payment system specified in Sec. 412.1(a)(1) of this chapter,
excluding those hospitals specified in Sec. 412.23 of this chapter,
and excluding those hospital units specified in Sec. 412.25 of this
chapter.
Eligible professional (EP) means a physician as defined in section
1861(r) of the Act, which includes, with certain limitations, all of
the following types of professionals:
(1) A doctor of medicine or osteopathy.
(2) A doctor of dental surgery or medicine.
(3) A doctor of podiatric medicine.
(4) A doctor of optometry.
(5) A chiropractor.
Geographic health professional shortage area (HPSA) means a
geographic area that is designated by the Secretary under section
332(a)(1)(A) of the PHS Act as of December 31 of the year prior to the
payment year as having a shortage of health professionals.
Qualifying CAH means a CAH that is a meaningful EHR user for the
EHR reporting period for a cost reporting period beginning during a
payment year.
Qualifying eligible professional (qualifying EP) means an EP who is
a meaningful EHR user for the EHR reporting period for a payment year
and who is not a hospital-based EP, as determined for that payment
year.
Qualifying hospital means an eligible hospital that is a meaningful
EHR user for the EHR reporting period for a payment year.

Sec. 495.102 Incentive payments to EPs.

(a) General rules. (1) Subject to paragraph (b) of this section, in
addition to the amount otherwise paid under section 1848 of the Act,
there must be paid to a qualifying EP (or to an employer or entity in
the cases described in section 1842(b)(6)(A) of the Act) for a payment
year an amount equal to 75 percent of the estimated allowed charges for
covered professional services furnished by the EP during the payment
year.
(2) For purposes of this paragraph (a) of this section, the
estimated allowed charges for the qualifying EP's covered professional
services during the payment year are determined based on claims
submitted no later than 2 months after the end of the payment year,
and, in the case of a qualifying EP who furnishes covered professional
services in more than one practice, are determined based on claims
submitted for the EP's covered professional services across all such
practices.
(b) Limitations on amounts of incentive payments.
(1) Except as otherwise provided in paragraphs (b)(2) and (c) of
this section, the amount of the incentive payment under paragraph (a)
of this section for each payment year is limited to the following
amounts:
(i) For the first payment year, $15,000 (or, if the first payment
year for such qualifying EP is 2011 or 2012, $18,000).
(ii) For the second payment year, $12,000.
(iii) For the third payment year, $8,000.
(iv) For the fourth payment year, $4,000.
(v) For the fifth payment year, $2,000.
(vi) For any succeeding payment year for such professional, $0.
(2)(i) If the first payment year for a qualifying EP is 2014, then
the payment limit for a payment year for the qualifying EP is the same
as the amount specified in paragraph (b)(1) of this section for such
payment year for a qualifying EP whose first payment year is 2013.
(ii) If the first payment year for a qualifying EP is after 2014,
then the payment limit specified in this paragraph for such EP for such
year and any subsequent year is $0.
(c) Increase in incentive payment limit for EPs who predominantly
furnish services in a geographic HPSA. In the case of a qualifying EP
who in the year prior to the payment year furnishes more than 50
percent of his or her covered professional services in a geographic
HPSA that is designated as of December 31 of such year, the incentive
payment limit determined under paragraph (b) of this section is to be
increased by 10 percent.
(d) Payment adjustment effective in CY 2015 and subsequent years
for nonqualifying EPs.
(1) Subject to paragraph (d)(3) of this section, beginning in 2015,
for covered professional services furnished by an EP who is not a
qualifying EP or a hospital-based EP for the year, the payment amount
for such services is equal the product of the applicable percent
specified in paragraph (d)(2) of this section and the Medicare
physician fee schedule amount for such services.
(2) Applicable percent. Applicable percent is as follows:
(i) For 2015, 99 percent if the EP is not subject to the payment
adjustment for an EP who is not a successful electronic prescriber
under section 1848(a)(5) of the Act, or 98 percent if the EP is subject
to the payment adjustment

[[Page 44573]]

for an EP who is not a successful electronic prescriber under section
1848(a)(5) of the Act).
(ii) For 2016, 98 percent.
(iii) For 2017 and each subsequent year, 97 percent.
(3) Significant hardship exception. (i) The Secretary may, on a
case-by-case basis, exempt an EP who is not a qualifying EP from the
application of the payment adjustment under paragraph (d)(1) of this
section if the Secretary determines that compliance with the
requirement for being a meaningful EHR user would result in a
significant hardship for the EP.
(ii) The Secretary's determination to grant an EP an exemption
under paragraph (d)(3)(i) of this section may be renewed on an annual
basis, provided that in no case may an EP be granted an exemption under
paragraph (d)(3)(i) of this section for more than 5 years.

Sec. 495.104 Incentive payments to eligible hospitals.

(a) General rule. A qualifying hospital (as defined in this
subpart) must receive the special incentive payment as determined under
the formulas described in paragraph (c) of this section for the period
specified in paragraph (b) of this section.
(b) Transition periods. Subject to paragraph (d) of this section
and the payment formula specified in paragraph (c) of this section,
qualifying hospitals may receive incentive payments during transition
periods which comprise the following fiscal years:
(1) Hospitals whose first payment year is FY 2011 may receive such
payments for FYs 2011 through 2014.
(2) Hospitals whose first payment year is FY 2012 may receive such
payments for FYs 2012 through 2015.
(3) Hospitals whose first payment year is FY 2013 may receive such
payments for FYs 2013 through 2016.
(4) Hospitals whose first payment year is FY 2014 may receive such
payments for FY 2014 through 2016.
(5) Hospitals whose first payment year is FY 2015 may receive such
payments for FY 2015 through 2016.
(c) Payment methodology. (1) The incentive payment for each payment
year is calculated as the product of the following:
(i) The initial amount determined under paragraph (c)(3) of this
section.
(ii) The Medicare share fraction determined under paragraph (c)(4)
of this section.
(iii) The transition factor determined under paragraph (c)(5) of
this section.
(2) Interim and final payments. CMS uses data on hospital acute
care inpatient discharges, Medicare Part A acute care inpatient-bed-
days, Medicare Part C acute care inpatient-bed-days, and total acute
care inpatient-bed-days, from the latest submitted 12-month hospital
cost report as the basis for making preliminary incentive payments.
Final payments are determined at the time of settling the first 12-
month hospital cost report for the hospital fiscal year that begins on
or after the first day of the payment year, and settled on the basis of
data from that cost reporting period.
(3) Initial amount. The initial amount is equal to one of the
following:
(i) For each hospital with 1,149 acute care inpatient discharges or
fewer, $2,000,000.
(ii) For each hospital with at least 1,150 but no more than 23,000
acute care inpatient discharges, $2,000,000 + [$200 x (n - 1,149)],
where n is the number of discharges for the hospital.
(iii) For each hospital with more than 23,000 acute care inpatient
discharges, $6,370,200.
(4) Medicare share fraction--(i) General. (A) CMS determines the
Medicare share fraction for an eligible hospital by using the number of
Medicare Part A, Medicare Part C, and total acute care inpatient-bed-
days using data from the Medicare cost report as specified by CMS.
(B) CMS computes the denominator of the Medicare share fraction
using the charity care charges reported on the hospital's Medicare cost
report.
(ii) The Medicare share fraction is the ratio of--
(A) A numerator which is the sum of--
(1) The number of inpatient-bed-days which are attributable to
individuals with respect to whom payment may be made under Part A,
including individuals enrolled in section 1876 Medicare cost plans; and
(2) The number of inpatient-bed-days which are attributable to
individuals who are enrolled with a Medicare Advantage organization (as
defined in Sec. 422.2 of this chapter).
(B) A denominator which is the product of--
(1) The total number of acute care inpatient-bed-days; and
(2) The total amount of the eligible hospital's charges, not
including any charges that are attributable to charity care, divided by
the estimated total amount of the hospitals charges.
(5) Transition factor. For purposes of the payment formula, the
transition factor is as follows:
(i) For hospitals whose first payment year is FY 2011--
(A) 1 for FY 2011;
(B) \3/4\ for FY 2012;
(C) \1/2\ for FY 2013; and
(D) \1/4\ for FY 2014.
(ii) For hospitals whose first payment year is FY 2012--
(A) 1 for FY 2012;
(B) \3/4\ for FY 2013;
(C) \1/2\ for FY 2014; and
(D) \1/4\ for FY 2015;
(iii) For hospitals whose first payment year is FY 2013--
(A) 1 for FY 2013;
(B) \3/4\ for FY 2014;
(C) \1/2\ for FY 2015; and
(D) \1/4\ for FY 2016.
(iv) For hospitals whose first payment year is FY 2014--
(A) \3/4\ for FY 2014;
(B) \1/2\ for FY 2015; and
(C) \1/4\ for FY 2016.
(v) For hospitals whose first payment year is FY 2015--
(A) \1/2\ for FY 2015; and
(B) \1/4\ for FY 2016.
(d) No incentive payment for nonqualifying hospitals. After the
first payment year, an eligible hospital will not receive an incentive
payment for any payment year during which it is not a qualifying
hospital.

Sec. 495.106 Incentive payments to CAHs.

(a) Definitions. In this section, unless otherwise indicated--
Payment year means a Federal fiscal year beginning after FY 2010
but before FY 2016.
Qualifying CAH means a CAH that would meet the definition of a
meaningful EHR user at Sec. 495.4, if it were an eligible hospital.
Reasonable costs incurred for the purchase of certified EHR
technology for a qualifying CAH means the reasonable acquisition costs
incurred for the purchase of depreciable assets as described in part
413 subpart G of this chapter, such as computers and associated
hardware and software, necessary to administer certified EHR technology
as defined in Sec. 495.4, excluding any depreciation and interest
expenses associated with the acquisition.
(b) General rule. A qualifying CAH receives an incentive payment
for its reasonable costs incurred for the purchase of certified EHR
technology, as defined in paragraph (a) of this section, in the manner
described in paragraph (c) of this section for a cost reporting period
beginning during a payment year as defined in paragraph (a) of this
section.
(c) Payment methodology. (1) Payment amount. A qualifying CAH
receives an incentive payment amount equal to the product of its
reasonable costs incurred for the purchase of certified EHR technology
and the Medicare share percentage.

[[Page 44574]]

(2) Calculation of reasonable costs. CMS or its Medicare contractor
computes a qualifying CAH's reasonable costs incurred for the purchase
of certified EHR technology, as defined in paragraph (a) of this
section, as the sum of--
(i) The reasonable costs incurred for the purchase of certified EHR
technology during the cost reporting period that begins in a payment
year; and
(ii) Any reasonable costs incurred for the purchase of certified
EHR technology in cost reporting periods beginning in years prior to
the payment year which have not been fully depreciated as of the cost
reporting period beginning in the payment year.
(3) Medicare share percentage. Notwithstanding the percentage
applicable under Sec. 413.70(a)(1) of this chapter, the Medicare share
percentage equals the lesser of--
(i) 100 percent; or
(ii) The sum of the Medicare share fraction for the CAH as
calculated under Sec. 495.104(c)(4) of this subpart and 20 percentage
points.
(d) Incentive payments made to CAHs. (1) The amount of the
incentive payment made to a qualifying CAH under this section
represents the expensing and payment of the reasonable costs computed
in paragraph (c) of this section in a single payment year and, as
specified in Sec. 413.70(a)(5) of this chapter, such payment is made
in lieu of payment that would have been made under Sec. 413.70(a)(1)
of this chapter for the reasonable costs of the purchase of certified
EHR technology including depreciation and interest expenses associated
with the acquisition.
(2) The amount of the incentive payment made to a qualifying CAH
under this section is paid through a prompt interim payment for the
applicable payment year after--
(i) The CAH submits the necessary documentation, as specified by
CMS or its Medicare contractors, to support the computation of the
incentive payment amount under this section; and
(ii) CMS or its Medicare contractor reviews such documentation and
determines the interim amount of the incentive payment.
(3) The interim incentive payment made under this paragraph is
subject to a reconciliation process as specified by CMS and the final
incentive payment as determined by CMS or its Medicare contractor is
considered payment in full for the reasonable costs incurred for the
purchase of certified EHR technology in a single payment year.
(4) In no case may an incentive payment be made with respect to a
cost reporting period beginning during a payment year before FY 2011 or
after FY 2015 and in no case may a CAH receive an incentive payment
under this section with respect to more than 4 consecutive payment
years.
(e) Reductions in payment to CAHs. For cost reporting periods
beginning in FY 2015, if a CAH is not a qualifying CAH for a payment
year, then the payment for inpatient services furnished by a CAH under
Sec. 413.70(a) of this chapter is adjusted by the applicable
percentage described in Sec. 413.70(a)(6) of this chapter unless
otherwise exempt from such adjustment.
(f) Administrative or judicial review. There is no administrative
or judicial review under sections 1869 or 1878 of the Act, or
otherwise, of the--
(1) Methodology and standards for determining the amount of
payment, the reasonable cost, and adjustments described in this section
including selection of periods for determining, and making estimates or
using proxies of, inpatient-bed-days, hospital charges, charity
charges, and the Medicare share percentage as described in this
section;
(2) Methodology and standards for determining if a CAH is a
qualifying CAH under this section;
(3) Specification of EHR reporting periods, cost reporting periods,
payment years, and fiscal years used to compute the CAH incentive
payment as specified in this section; and
(4) Identification of the reasonable costs used to compute the CAH
incentive payment under paragraph (c) of this section including any
reconciliation of the CAH incentive payment amount made under paragraph
(d) of this section.

Sec. 495.108 Posting of required information.

(a) CMS posts, on its Internet Web site, the following information
regarding EPs, eligible hospitals, and CAHs receiving an incentive
payment under subparts B and C of this part:
(1) Name.
(2) Business addressee.
(3) Business phone number.
(4) Such other information as specified by CMS.
(b) CMS posts, on its Internet Web site, the following information
for qualifying MA organizations that receive an incentive payment under
subpart C of this part--
(1) The information specified in paragraph (a) of this section for
each of the qualifying MA organization's MA plan information; and
(2) The information specified in paragraph (a) of this section for
each of the qualifying MA organization's MA EPs and MA-affiliated
eligible hospitals.

Sec. 495.110 Preclusion on administrative and judicial review.

There is no administrative or judicial review under sections 1869
or 1878 of the Act, or otherwise, of the following:
(a) For EPs--
(1) The methodology and standards for determining EP incentive
payment amounts;
(2) The methodology and standards for determining the payment
adjustments that apply to EPs beginning with 2015;
(3) The methodology and standards for determining whether an EP is
a meaningful EHR user, including--
(i) The selection of clinical quality measures; and
(ii) The means of demonstrating meaningful EHR use.
(4) The methodology and standards for determining the hardship
exception to the payment adjustments;
(5) The methodology and standards for determining whether an EP is
hospital-based; and
(6) The specification of the EHR reporting period, as well as
whether payment will be made only once, in a single consolidated
payment, or in periodic installments.
(b) For eligible hospitals--
(1) The methodology and standards for determining the incentive
payment amounts made to eligible hospitals, including--
(i) The estimates or proxies for determining discharges, inpatient-
bed-days, hospital charges, charity charges, and Medicare share; and
(ii) The period used to determine such estimate or proxy;
(2) The methodology and standards for determining the payment
adjustments that apply to eligible hospitals beginning with FY 2015;
(3) The methodology and standards for determining whether an
eligible hospital is a meaningful EHR user, including--
(i) The selection of clinical quality measures; and
(ii) The means of demonstrating meaningful EHR use.
(4) The methodology and standards for determining the hardship
exception to the payment adjustments; and
(5) The specification of the EHR reporting period, as well as
whether payment will be made only once, in a single consolidated
payment, or in periodic installments.

[[Page 44575]]

Subpart C--Requirements Specific to Medicare Advantage (MA)
Organizations

Sec. 495.200 Definitions.

As used in this subpart:
First payment year means with respect to--
(1) Covered professional services furnished by a qualifying MA EP,
the first calendar year for which an incentive payment is made for such
services under this subsection to a qualifying MA organization.
(2) Qualifying MA-affiliated eligible hospitals, the first fiscal
year for which an incentive payment is made for qualifying MA-
affiliated eligible hospitals under this section to a qualifying MA
organization.
Inpatient-bed-days is defined in the same manner and is used in the
same manner as that term is defined and used for purposes of
implementing section 4201(a) of the American Recovery and Reinvestment
Act of 2009 with respect to the Medicare FFS hospital EHR incentive
program in Sec. 495.104 of this part.
Patient care services means health care services for which payment
would be made under, or for which payment would be based on, the fee
schedule established under Medicare Part B if they were furnished by an
EP to a Medicare beneficiary.
Payment year means--
(1) For a qualifying MA EP, a calendar year (CY) beginning with CY
2011 and ending with CY 2016; and
(2) For an eligible hospital, a Federal fiscal year (FY) beginning
with FY 2011 and ending with FY 2016.
Qualifying MA-affiliated eligible hospital means an eligible
hospital under section 1886(n)(6) of the Act that is under common
corporate governance with a qualifying MA organization, for which at
least two thirds of the Medicare hospital discharges (or bed-days) are
of (or for) Medicare individuals enrolled under MA plans, and that is a
meaningful user of certified EHR technology as defined by Sec. 495.4
of this part. In the case of a hospital for which at least one-third of
whose Medicare bed-days for the year are covered under Part A rather
than Part C, payment for that payment year must only be made under
section 1886(n) of the Act and not under this section.
Qualifying MA EP means all of the following:
(1) A physician (as described in section 1861(r) of the Act),
including a doctor of medicine or osteopathy who is either of the
following:
(i) Employed by a qualifying MA organization.
(ii) Employed by, or is a partner of, an entity that through a
contract with a qualifying MA organization furnishes at least 80
percent of the entity's Medicare patient care services to enrollees of
such organization.
(2) Furnishes at least 80 percent of his or her professional
services covered under Title XVIII to enrollees of the qualifying MA
organization.
(3) Furnishes, on average, at least 20 hours per week of patient
care services to enrollees of the qualifying MA organization during the
EHR reporting period.
(4) Is a meaningful user of certified EHR technology in accordance
with Sec. 495.4 of this part.
(5) Is not a ``hospital-based EP'' as that term is defined in Sec.
495.4 of this Part.
Qualifying MA organization means a MA organization that is
organized as a health maintenance organization (HMO) as defined in
section 2791(b)(3) of the Public Health Service (PHS) Act which
includes a Federally qualified HMO, an organization recognized as an
HMO under State law, or a similar organization regulated for solvency
under State law in the same manner and to the same extent as an HMO.
Second, third, fourth, and fifth payment year means with respect to
incentive payments for qualifying--
(1) MA EPs to a qualifying MA organization, each successive
calendar year immediately following the first payment year for the
qualifying MA organization. The first payment year and each successive
year immediately following the first payment year, for the qualifying
MA organizations, through 2016, is the same for all qualifying MA EPs
with respect to any specific qualifying MA organization.
(2) MA-affiliated eligible hospitals to a qualifying MA
organization, each successive fiscal year immediately following the
first payment year for the qualifying MA organization.
Under common corporate governance means that a qualifying MA
organization and a qualifying MA-affiliated eligible hospital have a
common parent corporation, that one is a subsidiary of the other, or
that the organization and the hospital have a common board of
directors.

Sec. 495.202 Identification of qualifying MA organizations, MA-EPs
and MA-affiliated eligible hospitals.

(a) Identification of qualifying MA organizations. (1) Beginning
with bids due in June 2011 (for plan year 2012), MA organizations
seeking reimbursement for qualifying MA EPs and qualifying MA-
affiliated eligible hospitals under the MA EHR incentive program are
required to identify themselves to CMS in a form and manner specified
by CMS, as part of submissions of initial bids under section
1854(a)(1)(A) of the Act.
(2) Qualifying MA organizations offering MA HMO plans, absent
evidence to the contrary, are deemed to meet the definition of HMO in
42 U.S.C. 300gg-91(b)(3)--section 2791(b)(3) of the PHS Act.
(3) Qualifying MA organizations offering MA plan types other than
HMOs, must attest to the fact that they meet the definition of HMO in
42 U.S.C. 300gg-91(b)(3)--section 2791(b)(3) of the PHS Act.
(4) Beginning with bids due in June 2014 (for plan year 2015), all
MA organizations with potentially qualifying MA EPs or potentially
qualifying MA-affiliated eligible hospitals under the MA EHR incentive
program must identify themselves to CMS in a form and manner specified
by CMS, as part of submissions of initial bids under section
1854(a)(1)(A) of the Act. ``Potentially qualifying MA EPs'' and
``potentially qualifying MA-affiliated eligible hospitals'' are those
EPs and hospitals that meet the respective definitions of ``qualifying
MA EP'' and ``qualifying MA-affiliated eligible hospital'' in Sec.
495.200 but who (or which) are not meaningful users of certified EHR
technology.
(b) Identification of qualifying MA EPs and qualifying MA-
affiliated eligible hospitals.
(1) A qualifying MA organization, as part of its initial bid
starting with plan year 2012, must make a preliminary identification of
potentially qualifying MA EPs and potentially qualifying MA-affiliated
eligible hospitals for which the organization is seeking incentive
payments for the current plan year.
(2) A qualifying MA organization must provide CMS with the
following for each MA EP or eligible hospital when reporting under
either paragraph (b)(1) or (b)(3) of this section:
(i) The MA EP's or MA-affiliated eligible hospital's name.
(ii) The address of the MA EP's practice or MA-affiliated eligible
hospital's location.
(iii) NPI.
(iv) An attestation by MA organization specifying that the MA EP or
MA-affiliated eligible hospital meets the eligibility criteria.
(3) Final identification of potentially qualifying MA EP or MA-
affiliated eligible hospital must be made within 60 days of the close
of the payment year as defined in Sec. 495.200 for which MA EHR
incentive payments are being sought.

[[Page 44576]]

(4) Beginning plan year 2015 and for subsequent plan years, all
qualifying MA organizations, as part of their initial bids in June for
the following plan year must--
(i) Identify potentially qualifying MA EPs and potentially
qualifying MA-affiliated eligible hospitals;
(ii) Include information specified in paragraph (b)(2)(i)(A)
through (C) of this section for each professional and hospital.
(iii) Include an attestation that each professional and hospital
either meets or does not meet the EHR incentive payment eligibility
criteria.

Sec. 495.204 Incentive payments to qualifying MA organizations for
MA-EPs and MA-affiliated eligible hospitals.

(a) General rule. A qualifying MA organization receives an
incentive payment for its qualifying MA-EPs and its qualifying MA-
eligible hospitals. The incentive payment amount paid to a qualifying
MA organization for a--
(1) Qualifying MA-EP is the amount determined under paragraph (b)
of this section; and
(2) Qualifying MA-eligible hospital is the amount determined under
paragraph (c) of this section.
(b) Amount payable to qualifying MA organization for qualifying MA
EPs.
(1) CMS substitutes an amount determined to be equivalent to the
amount computed under Sec. 495.102 of this part.
(2) The qualifying MA organization must report to CMS within 60
days of the close of the calendar year, the aggregate annual amount of
revenue attributable to providing services that would otherwise be
covered as professional services under Part B received by each
qualifying MA EP for enrollees in MA plans of the MA organization in
the payment year.
(3) CMS calculates the incentive amount for the MA organization for
each qualifying MA EP as an amount equal to 75 percent of the reported
annual revenue specified in paragraph (b)(2) of this section, up to the
maximum amounts specified under section 1848(o)(1)(B) of the Act.
(4) For qualifying MA EPs who are compensated on a salaried basis,
CMS requires the qualifying MA organization to develop a methodology
for estimating the portion of each qualifying MA EP's salary
attributable to providing services that would otherwise be covered as
professional services under Part B to MA plan enrollees of the MA
organization in the payment year. The methodology--
(i) Must be approved by CMS; and
(ii) May include an additional amount related to overhead, where
appropriate, estimated to account for the MA-enrollee related Part B
practice costs of the salaried qualifying MA EP.
(iii) Methodological proposals must be submitted to CMS by June of
the payment year and must be auditable by an independent third-party.
CMS will review and approve or disapprove such proposals in a timely
manner.
(5) For qualifying MA EPs who are not salaried, qualifying MA
organizations may obtain attestations from such qualifying MA EPs (or
from entities that the MA EPs are employed by or with which they have a
partnership interest) as to the amount of compensation received by such
EPs for MA plan enrollees of the MA organization. The organizations may
submit to CMS compensation information for each such MA EP based on
such attestations.
(6) For qualifying MA EPs who are not salaried, qualified MA
organizations may have qualifying MA EPs (or from entities that the MA
EPs are employed by or with which they have a partnership interest)
send MA organization compensation information directly to CMS. CMS will
use the information provided in this subparagraph or paragraph (b)(5)
of this section for no other purpose than to compute the amount of EHR
incentive payment due the MA organization.
(c) Amount payable to qualifying MA organization for qualifying MA-
affiliated eligible hospitals. (1)(i) CMS substitutes an amount
determined to be equivalent to the amount computed under Sec. 495.104,
to the extent data are not available to compute payments for qualifying
MA-affiliated eligible hospitals under the Medicare FFS EHR hospital
incentive program.
(ii) CMS uses the same methodology and defines ``inpatient-bed-
days''and other terms as used under the Medicare FFS EHR hospital
incentive program in Sec. 495.104 of this part in computing amounts
due qualifying MA organizations for MA-affiliated eligible hospitals.
(2) To the extent data are available, qualifying MA organizations
must receive hospital incentive payments through their affiliated
hospitals under the Medicare FFS EHR hospital incentive program, rather
than through the MA EHR hospital incentive program.
(d) Payment to qualifying MA organizations. CMS makes payment to
qualifying MA organizations for qualifying MA EPs only under the MA EHR
incentive program and not under the Medicare FFS EHR incentive program
to the extent an EP has earned less than the maximum incentive payment
for the same period under the Medicare FFS EHR incentive program.
(e) Payment review under MA. To ensure the accuracy of the
incentive payments, CMS conducts selected compliance reviews of
qualifying MA organizations to ensure that EPs and eligible hospitals
for which such qualifying organizations received incentive payments
were meaningful EHR users in accordance with Sec. 422.504 of this
chapter.
(1) The reviews include validation of the status of the
organization as a qualifying MA organization, verification of
meaningful use and review of data used to calculate incentive payments.
(2) MA organizations are required to maintain evidence of their
qualification to receive incentive payments and the data necessary to
accurately calculate incentive payments.
(3) Documents and records must be maintained for 6 years from the
date such payments are made with respect to a given payment year.
(4) Payments that result from incorrect or fraudulent attestations,
cost data, or any other submission required to establish eligibility or
to qualify for such payment, will be recouped by CMS from the MA
organization.

Sec. 495.206 Timeframe for payment to qualifying MA organizations.

(a) CMS makes payment to qualifying MA organizations for qualifying
MA EPs under the MA EHR incentive program after computing incentive
payments due under the Medicare FFS EHR incentive program according to
Sec. 495.102.
(b) Payments to qualifying MA organizations for qualifying MA-
affiliated eligible hospitals under common corporate governance are
made under the Medicare FFS EHR incentive program, following the
timeline in specified in Sec. 495.104 of this part. To the extent
sufficient data do not exist to pay qualifying MA-affiliated eligible
hospitals under common corporate governance under the Medicare FFS EHR
incentive program, payment is made under the MA EHR incentive program,
following the same timeline in Sec. 495.104 of this part.

Sec. 495.208 Avoiding duplicate payment.

(a) Unless a qualifying MA EP is entitled to a maximum payment for
a year under the Medicare FFS EHR incentive program, payment for such
an individual is only made under the MA EHR incentive program to a
qualifying MA organization.
(b) Payment to qualifying MA organizations for a qualifying MA-
affiliated eligible hospital under common governance only occurs under

[[Page 44577]]

the MA EHR incentive program to the extent that sufficient data does
not exist to pay such hospital under the Medicare FFS hospital
incentive program under Sec. 495.104 of this part. In no event are EHR
incentive payments made for a hospital for a payment year under this
section to the extent they have been made for the same hospital for the
same payment year under Sec. 495.104 of this part.
(c) Each qualifying MA organization must ensure that all
potentially qualifying MA EPs are enumerated through the NPI system and
that other identifying information required under Sec. 495.202(b) is
provided to CMS.

Sec. 495.210 Meaningful EHR user attestation.

(a) Qualifying MA organizations are required to attest, in a form
and manner specified by CMS, that each qualifying MA EP and qualifying
MA-affiliated eligible hospitals is a meaningful EHR user.
(b) Qualifying MA organizations are required to attest within 60
days after the close of a calendar year whether each qualifying MA EP
is a meaningful EHR user.
(c) Qualifying MA organizations are required to attest within 60
days after close of the FY whether each qualifying MA-affiliated
eligible hospital is a meaningful EHR user.

Sec. 495.212 Limitation on review.

(a) There is no administrative or judicial review under section
1869 or 1878 of the Act, or otherwise of the methodology and standards
for determining payment amounts and payment adjustments under the MA
EHR EP incentive program. This includes provisions related to
duplication of payment avoidance and rules developed related to the
fixed schedule for application of limitation on incentive payments for
all qualifying MA EPs related to a specific qualifying MA organization.
It also includes the methodology and standards developed for
determining qualifying MA EPs and the methodology and standards for
determining a meaningful EHR user, including the means of demonstrating
meaningful use and the selection of measures.
(b) There is no administrative or judicial review under sections
1869 or 1878 of the Act, or otherwise, of the methodology and standards
for determining payment amounts and payment adjustments under the MA
EHR hospital incentive program. This includes provisions related to
duplication of payment avoidance. It also includes the methodology and
standards developed for determining qualifying MA-affiliated eligible
hospitals and the methodology and standards for determining a
meaningful EHR user, including the means of demonstrating meaningful
use and the selection of measures.

Subpart D--Requirements Specific to the Medicaid Program

Sec. 495.300 Basis and purpose.

This subpart implements section 4201 of the American Reinvestment
and Recovery Act of 2009 and sections 1903(a)(3)(F) and 1903(t) of the
Act, which authorize States, at their option, to provide for incentive
payments to Medicaid providers for adopting, implementing, or upgrading
certified EHR technology or for meaningful use of such technology. This
subpart also provides enhanced Federal financial participation (FFP) to
States to administer these incentive payments.

Sec. 495.302 Definitions.

As used in this subpart--
Acceptance documents mean written evidence of satisfactory
completion of an approved phase of work or contract and acceptance
thereof by the State agency.
Acquisition means to acquire health information technology (HIT)
equipment or services for the purpose of implementation and
administration under this part from commercial sources or from State or
local government resources.
Acute care hospital means a health care facility--
(1) Where the average length of patient stay is 25 days or fewer;
and
(2) With a CMS certification number (previously known as the
Medicare provider number) that has the last four digits in the series
0001-0879 or 1300-1399
Adopt, implement or upgrade means--
(1) Acquire, purchase, or secure access to certified EHR
technology;
(2) Install or commence utilization of certified EHR technology
capable of meeting meaningful use requirements; or
(3) Expand the available functionality of certified EHR technology
capable of meeting meaningful use requirements at the practice site,
including staffing, maintenance, and training, or upgrade from existing
EHR technology to certified EHR technology per the ONC EHR
certification criteria.
Children's hospital means a separately certified children's
hospital, either freestanding or hospital-within-hospital that--
(1) Has a CMS certification number, (previously known as the
Medicare provider number), that has the last 4 digits in the series
3300-3399; and
(2) Predominantly treats individuals under 21 years of age.
Entities promoting the adoption of certified electronic health
record technology means the State-designated entities that are
promoting the adoption of certified EHR technology by enabling
oversight of the business, operational and legal issues involved in the
adoption and implementation of certified EHR technology or by enabling
the exchange and use of electronic clinical and administrative data
between participating providers, in a secure manner, including
maintaining the physical and organizational relationship integral to
the adoption of certified EHR technology by eligible providers.
Health information technology planning advance planning document
(HIT PAPD) means a plan of action that requests FFP and approval to
accomplish the planning necessary for a State agency to determine the
need for and plan the acquisition of HIT equipment or services or both
and to acquire information necessary to prepare a HIT implementation
advanced planning document or request for proposal to implement the
State Medicaid HIT plan.
HIT implementation advance planning document (HIT IAPD) means a
plan of action that requests FFP and approval to acquire and implement
the proposed State Medicaid HIT plan services or equipment or both.
Medicaid information technology architecture (MITA) is both an
initiative and a framework. It is a national framework to support
improved systems development and health care management for the
Medicaid enterprise. It is an initiative to establish national
guidelines for technologies and processes that enable improved program
administration for the Medicaid enterprise. The MITA initiative
includes an architecture framework, models, processes, and planning
guidelines for enabling State Medicaid enterprises to meet common
objectives with the framework while supporting unique local needs.
Medicaid management information system (MMIS) means a mechanized
claims processing and information retrieval system--referred to as
Medicaid Management Information Systems (MMIS)--that meets specified
requirements and that the Department has found (among other things) is
compatible with the claims processing and information retrieval systems
used in the administration of the Medicare program. The objectives of
the MMIS are

[[Page 44578]]

to include claims processing and retrieval of utilization and
management information necessary for program administration and audit
and must coordinate with other mechanized systems and subsystems that
perform other functions, such as eligibility determination.
Needy individuals mean individuals that meet one of following:
(1) Received medical assistance from Medicaid or the Children's
Health Insurance Program. (or a Medicaid or CHIP demonstration project
approved under section 1115 of the Act).
(2) Were furnished uncompensated care by the provider.
(3) Were furnished services at either no cost or reduced cost based
on a sliding scale determined by the individuals' ability to pay.
Patient volume means the minimum participation threshold (as
described at Sec. 495.304(c) through (e)) that is estimated through a
numerator and denominator, consistent with the SMHP, and that meets the
requirements of Sec. 495.306.
Practices predominantly means an EP for whom the clinical location
for over 50 percent of his or her total patient encounters over a
period of 6 months in the most recent calendar year occurs at a
federally qualified health center or rural health clinic.
Service oriented architecture or service component based
architecture means organizing and developing information technology
capabilities as collaborating services that interact with each other
based on open standards.
State Medicaid health information technology plan (SMHP) means a
document that describes the State's current and future HIT activities.
State self-assessment means a process that a State uses to review
its strategic goals and objectives, measure its current business
processes and capabilities against the (MITA) business capabilities and
ultimately develops target capabilities to transform its Medicaid
enterprise to be consistent with the MITA principles.

Sec. 495.304 Medicaid provider scope and eligibility.

(a) General rule. The following Medicaid providers are eligible to
participate in the HIT incentives program:
(1) Medicaid EPs.
(2) Acute care hospitals.
(3) Children's hospitals.
(b) Medicaid EP. The Medicaid professional eligible for an EHR
incentive payment is limited to the following when consistent with the
scope of practice regulations, as applicable for each professional
(Sec. 440.50, Sec. 440.60, Sec. 440.100; Sec. 440.165, and Sec.
440.166):
(1) A physician.
(2) A dentist.
(3) A certified nurse-midwife.
(4) A nurse practitioner.
(5) A physician assistant practicing in a Federally qualified
health center (FQHC) led by a physician assistant or a rural health
clinic (RHC), that is so led by a physician assistant.
(c) Additional requirements for the Medicaid EP. To qualify for an
EHR incentive payment, a Medicaid EP must, for each year for which the
EP seeks an EHR incentive payment, not be hospital-based as defined at
Sec. 495.4 of this subpart, and meet one of the following criteria:
(1) Have a minimum 30 percent patient volume attributable to
individuals receiving Medicaid.
(2) Have a minimum 20 percent patient volume attributable to
individuals receiving Medicaid, and be a pediatrician.
(3) Practice predominantly in a FQHC or RHC and have a minimum 30
percent patient volume attributable to needy individuals, as defined at
Sec. 495.302.
(d) Exception. The hospital-based exclusion in paragraph (c) of
this section does not apply to the Medicaid-EP qualifying based on
practicing predominantly at a FQHC or RHC.
(e) Additional requirement for the eligible hospital. To be
eligible for an EHR incentive payment for each year for which the
eligible hospital seeks an EHR incentive payment, the eligible hospital
must meet the following criteria:
(1) An acute care hospital must have at least a 10 percent Medicaid
patient volume for each year for which the hospital seeks an EHR
incentive payment.
(2) A children's hospital is exempt from meeting a patient volume
threshold.

Sec. 495.306 Establishing patient volume.

(a) General rule. A Medicaid provider must annually meet patient
volume requirements of Sec. 495.304, as these requirements are
established through the State's SMHP in accordance with the remainder
of this section.
(b) State option(s) through SMHP. A State must submit through the
SMHP the option or options it has selected for measuring patient
volume. A State must select the methodology described in either
paragraph (c) or paragraph (d) of section (or both methodologies). In
addition, or as an alternative, a State may select the methodology
described in paragraph (g) of this section.
(c) Methodology, patient encounter.
(1) EPs. To calculate Medicaid patient volume, an EP must divide:
(i) The total Medicaid patient encounters in any representative,
continuous 90-day period in the preceding calendar year; by
(ii) The total patient encounters in the same 90-day period.
(2) Eligible hospitals. To calculate Medicaid patient volume, an
eligible hospital must divide--
(i) The total Medicaid encounters in any representative, continuous
90-day period in the preceding fiscal year; by
(ii) The total encounters in the same 90-day period.
(3) Needy individual patient volume. To calculate needy individual
patient volume, an EP must divide--
(i) The total needy individual patient encounters in any
representative, continuous 90-day period in the preceding calendar
year; by
(ii) The total patient encounters in the same 90-day period.
(d) Methodology, patient panel.
(1) EPs. To calculate Medicaid patient volume, an EP must divide:
(i) (A) The total Medicaid patients assigned to the EP's panel in
any representative, continuous 90-day period in the preceding calendar
year when at least one Medicaid encounter took place with the Medicaid
patient in the year prior to the 90-day period; plus
(B) Unduplicated Medicaid encounters in the same 90-day period; by
(ii)(A) The total patients assigned to the provider in that same
90-day period with at least one encounter taking place with the patient
during the year prior to the 90-day period; plus
(B) All unduplicated patient encounters in the same 90-day period.
(2) Needy individual patient volume. To calculate needy individual
patient volume an EP must divide--
(i)(A) The total Needy Individual patients assigned to the EP's
panel in any representative, continuous 90-day period in the preceding
calendar year when at least one Needy Individual encounter took place
with the Medicaid patient in the year prior to the 90-day period; plus
(B) Unduplicated Needy Individual encounters in the same 90-day
period, by
(ii)(A) The total patients assigned to the provider in that same
90-day period with at least one encounter taking place with the patient
during the year prior to the 90-day period, plus
(B) All unduplicated patient encounters in the same 90-day period.
(e) For purposes of this section, the following rules apply:

[[Page 44579]]

(1) For purposes of calculating EP patient volume, a Medicaid
encounter means services rendered to an individual on any one day
where--
(i) Medicaid (or a Medicaid demonstration project approved under
section 1115 of the Act) paid for part or all of the service; or
(ii) Medicaid (or a Medicaid demonstration project approved under
section 1115 of the Act) paid all or part of the individual's premiums,
co-payments, and cost-sharing.
(2) For purposes of calculating hospital patient volume, both of
the following definitions in paragraphs (e)(2)(i) and (e)(2)(ii) of
this section may apply:
(i) A Medicaid encounter means services rendered to an individual
per inpatient discharge where--
(A) Medicaid (or a Medicaid demonstration project approved under
section 1115 of the Act) paid for part or all of the service; or
(B) Medicaid (or a Medicaid demonstration project approved under
section 1115 of the Act) paid all or part of the individual's premiums,
co-payments, and/or cost-sharing.
(ii) A Medicaid encounter means services rendered in an emergency
department on any one day where--
(A) Medicaid (or a Medicaid demonstration project approved under
section 1115 of the Act) paid for part or all of the service; or
(B) Medicaid (or a Medicaid demonstration project approved under
section 1115 of the Act) paid all or part of the individual's premiums,
co-payments, and cost-sharing.
(3) For purposes of calculating needy individual patient volume, a
needy patient encounter means services rendered to an individual on any
one day where--
(i) Medicaid or CHIP (or a Medicaid or CHIP demonstration project
approved under section 1115 of the Act) paid for part or all of the
service;
(ii) Medicaid or CHIP (or a Medicaid or CHIP demonstration project
approved under section 1115 of the Act) paid all or part of the
individual's premiums, co-payments, or cost-sharing;
(iii) The services were furnished at no cost; and calculated
consistent with Sec. 495.310(h); or
(iv) The services were paid for at a reduced cost based on a
sliding scale determined by the individual's ability to pay.
(f) Exception. A children's hospital is not required to meet
Medicaid patient volume requirements.
(g) Establishing an alternative methodology. A State may submit to
CMS for review and approval through the SMHP an alternative from the
options included in paragraphs (c) and (d) of this section, so long as
it meets the following requirements:
(1) It is submitted consistent with all rules governing the SMHP at
Sec. 495.332.
(2) Has an auditable data source.
(3) Has received input from the relevant stakeholder group.
(4) It does not result, in the aggregate, in fewer providers
becoming eligible than the methodologies in either paragraphs (c) and
(d) of this section.
(h) Group practices. Clinics or group practices will be permitted
to calculate patient volume at the group practice/clinic level, but
only in accordance with all of the following limitations:
(1) The clinic or group practice's patient volume is appropriate as
a patient volume methodology calculation for the EP.
(2) There is an auditable data source to support the clinic's or
group practice's patient volume determination.
(3) All EPs in the group practice or clinic must use the same
methodology for the payment year.
(4) The clinic or group practice uses the entire practice or
clinic's patient volume and does not limit patient volume in any way.
(5) If an EP works inside and outside of the clinic or practice,
then the patient volume calculation includes only those encounters
associated with the clinic or group practice, and not the EP's outside
encounters.

Sec. 495.308 Net average allowable costs as the basis for determining
the incentive payment.

(a) The first year of payment. (1) The incentive is intended to
offset the costs associated with the initial adoption, implementation
or upgrade of certified electronic health records technology.
(2) The maximum net average allowable costs for the first year are
$25,000.
(b) Subsequent payment years. (1) The incentive is intended to
offset maintenance and operation of certified EHR technology.
(2) The maximum net average allowable costs for each subsequent
year are $10,000.

Sec. 495.310 Medicaid provider incentive payments.

(a) Rules for Medicaid EPs. The Medicaid EP's incentive payments
are subject to all of the following limitations:
(1) First payment year. (i) For the first payment year, payment
under this subpart may not exceed 85 percent of the maximum threshold
of $25,000, which equals $21,250.
(ii) Medicaid EPs are responsible for payment for the remaining 15
percent of the net average allowable cost of certified EHR technology,
or $3,750 for the first payment year.
(iii) An EP may not begin receiving payments any later than CY
2016.
(2) Subsequent annual payment years.
(i) For subsequent payment years, payment may not exceed 85 percent
of the maximum threshold of $10,000, which equals $8,500.
(ii) Medicaid EPs are responsible for payment for the remaining 15
percent of the net average allowable cost of certified EHR technology,
or $1,500 per payment year.
(iii) Payments after the first payment year may continue for a
maximum of 5 years.
(iv) Medicaid EPs may receive payments on a non-consecutive, annual
basis.
(v) No payments may be made after CY 2021.
(3) Maximum incentives. In no case may a Medicaid EP participate
for more than a total of 6 years, and in no case will the maximum
incentive over a 6-year period exceed $63,750.
(4) Limitation. For a Medicaid EP who is a pediatrician described
in paragraph (b) of this section payment is limited as follows:
(i) The maximum payment in the first payment year is further
reduced by two-thirds, which equals $14,167.
(ii) The maximum payment in subsequent payment years is further
reduced by two-thirds, which equals $5,667.
(iii) In no case will the maximum incentive payment to a
pediatrician under this limitation exceed $42,500 over a 6-year period.
(b) Optional exception for pediatricians. A pediatrician described
in this paragraph is a Medicaid EP who does not meet the 30 percent
patient volume requirements described in Sec. 495.304 and Sec.
495.306, but who meets the 20 percent patient volume requirements
described in such sections.
(c) Limitation to only one EHR incentive program. An EP may only
receive an incentive payment from either Medicare or Medicaid in a
payment year, but not both.
(d) Exception for EPs to switch programs. An EP may change his or
her EHR incentive payment program election once, consistent with Sec.
495.10 of this part.
(e) Limitation to one State only. A Medicaid EP or eligible
hospital may receive an incentive payment from only one State in a
payment year.
(f) Incentive payments to hospitals. Incentive payments to an
eligible

[[Page 44580]]

hospital under this subpart are subject to all of the following
conditions:
(1) The payment is provided over a minimum of a 3-year period and
maximum of a 6-year period.
(2) The total incentive payment received over all payment years of
the program is not greater than the aggregate EHR incentive amount, as
calculated under paragraph (g) of this section.
(3) No single incentive payment for a payment year may exceed 50
percent of the aggregate EHR hospital incentive amount calculated under
paragraph (g) of this section for an individual hospital.
(4) No incentive payments over a 2-year period may exceed 90
percent of the aggregate EHR hospital incentive amount calculated under
paragraph (g) of this section for an individual hospital.
(5) No hospital may begin receiving incentive payments for any year
after FY 2016, and after FY 2016, a hospital may not receive an
incentive payment unless it received an incentive payment in the prior
fiscal year.
(6) Prior to FY 2016, payments can be made to an eligible hospital
on a non-consecutive, annual basis for the fiscal year.
(7) A multi-site hospital with one CMS Certification Number is
considered one hospital for purposes of calculating payment.
(g) Calculation of the aggregate EHR hospital incentive amount. The
aggregate EHR hospital incentive amount is calculated as the product of
the (overall EHR amount) times (the Medicaid Share).
(1) Overall EHR amount. The overall EHR amount for an eligible
hospital is based upon a theoretical 4 years of payment the hospital
would receive based, for each of such 4 years, upon the product of the
following:
(i) Initial amount. The initial amount is equal to the sum of--
(A) The base amount which is set at $2,000,000 for each of the
theoretical 4 years; plus
(B) The discharge-related amount for a 12-month period selected by
the State, but ending in the Federal fiscal year before the hospital's
fiscal year that serves as the first payment year. The discharge-
related amount is the sum of the following, with discharges over the
12-month period and based upon the total discharges for the eligible
hospital (regardless of any source of payment):
(1) For the first through 1,149th discharge, $0.
(2) For the 1,150th through the 23,000th discharge, $200.
(3) For any discharge greater than the 23,000th, $0.
(C) For purposes of calculating the discharge-related amount under
paragraph (g)(1)(i)(B) of this section, for the last 3 of the
theoretical 4 years of payment, discharges are assumed to increase by
the provider's average annual rate of growth for the most recent 3
years for which data are available per year. Negative rates of growth
must be applied as such.
(ii) Medicare share. The Medicare share, which equals 1.
(iii) Transition factor. The transition factor which equals as
follows:
(A) For the first of the theoretical 4 years, 1.
(B) For the second of the theoretical 4 years, \3/4\.
(C) For the third of the theoretical 4 years, \1/2\.
(D) For the fourth of the theoretical 4 years, \1/4\.
(2) Medicaid share. The Medicaid share specified under this
paragraph for an eligible hospital is equal to a fraction--
(i) The numerator of which is the sum (for the 12-month period
selected by the State and with respect to the eligible hospital) of--
(A) The estimated number of inpatient-bed-days which are
attributable to Medicaid individuals; and
(B) The estimated number of inpatient-bed-days which are
attributable to individuals who are enrolled in a managed care
organization, a pre-paid inpatient health plan, or a pre-paid
ambulatory health plan under part 438 of this chapter; and
(ii) The denominator of which is the product of--
(A) The estimated total number of inpatient-bed-days with respect
to the eligible hospital during such period; and
(B) The estimated total amount of the eligible hospital's charges
during such period, not including any charges that are attributable to
charity care, divided by the estimated total amount of the hospital's
charges during such period.
(iii) In computing inpatient-bed-days under paragraph (g)(2)(i) of
this section, a State may not include estimated inpatient-bed-days
attributable to individuals with respect to whom payment may be made
under Medicare Part A, or inpatient-bed-days attributable to
individuals who are enrolled with a Medicare Advantage organization
under Medicare Part C.
(h) Approximate proxy for charity care. If the State determines
that an eligible provider's data are not available on charity care
necessary to calculate the portion of the formula specified in
paragraph (g)(2)(ii)(B) of this section, the State may use that
provider's data on uncompensated care to determine an appropriate proxy
for charity care, but must include a downward adjustment to eliminate
bad debt from uncompensated care data. The State must use auditable
data sources.
(i) Deeming. In the absence of the data necessary, with respect to
an eligible hospital the amount described in paragraph (g)(2)(ii)(B) of
this section must be deemed to be 1. In the absence of data, with
respect to an eligible hospital, necessary to compute the amount
described in paragraph (g)(2)(i)(B) of this section, the amount under
such clause must be deemed to be 0.
(j) Dual eligibility for incentives payments. A hospital may
receive incentive payments from both Medicare and Medicaid if it meets
all eligibility criteria in the payment year.
(k) Payments to State-designated entities. Payments to entities
promoting the adoption of certified EHR technology as designated by the
State must meet the following requirements:
(1) A Medicaid EP may reassign his or her incentive payment to an
entity promoting the adoption of certified EHR technology, as defined
in Sec. 495.302, and as designated by the State, only under the
following conditions:
(i) The State has established a method to designate entities
promoting the adoption of EHR technology that comports with the Federal
definition in Sec. 495.302.
(ii) The State publishes and makes available to all EPs a voluntary
mechanism for reassigning annual payments and includes information
about the verification mechanism the State will use to ensure that the
reassignment is voluntary and that no more than 5 percent of the annual
payment is retained by the entity for costs not related to certified
EHR technology.
(2) [Reserved].

Sec. 495.312 Process for payments.

(a) General rule. States must have a process for making payments
consistent with the requirements in subparts A and D of this part.
(b) Reporting data consistent with this subpart. In order to
receive a payment under this part, a provider must report the required
data under subpart A and this subpart within the EHR reporting period
described in Sec. 495.4.
(c) State role. The State determines the provider's eligibility for
the EHR incentive payment under subpart A and this subpart and
approves, processes, and makes timely payments using a process approved
by CMS.

[[Page 44581]]

(d) State disbursement. The State disburses an incentive payment to
the provider based on the criteria described in subpart A and this
subpart.
(e) Timeframes. Payments are disbursed consistent with the
following timeframes for each type of Medicaid eligible provider:
(1) Medicaid EPs. States disburse payments consistent with the
calendar year on a rolling basis following verification of eligibility
for the payment year.
(2) Medicaid eligible hospitals. States disburse payments
consistent with the Federal fiscal year on a rolling basis following
verification of eligibility for the payment year.

Sec. 495.314 Activities required to receive an incentive payment.

(a) First payment year. (1) In the first payment year, to receive
an incentive payment, the Medicaid EP or eligible hospital must meet
one of the following:
(i) Demonstrate that during the payment year, it has adopted,
implemented, or upgraded certified EHR technology, as defined in Sec.
495.302.
(ii) Demonstrate that during the EHR reporting period for a payment
year, it is a meaningful EHR user as defined in Sec. 495.4.
(2) A provider may notify the State of its non-binding intention to
participate in the incentives program prior to having fulfilled all of
the eligibility criteria.
(b) Subsequent payment years. (1) In the second, third, fourth,
fifth, and sixth payment years, to receive an incentive payment, the
Medicaid EP or eligible hospital must demonstrate that during the EHR
reporting period for the applicable payment year, it is a meaningful
EHR user, as defined in Sec. 495.4.
(2) The automated reporting of the clinical quality measures will
be accomplished using certified EHR technology interoperable with the
system designated by the State to receive the data.

Sec. 495.316 State monitoring and reporting regarding activities
required to receive an incentive payment.

(a) Subject to Sec. 495.332 the State is responsible for tracking
and verifying the activities necessary for a Medicaid EP or eligible
hospital to receive an incentive payment for each payment year, as
described in Sec. 495.314.
(b) Subject to Sec. 495.332, the State must submit a State
Medicaid HIT Plan to CMS that includes--
(1) A detailed plan for monitoring, verifying and periodic auditing
of the requirements for receiving incentive payments, as described in
Sec. 495.314; and
(2) A description of the how the State will collect and report on
provider meaningful use of certified EHR technology.
(c) Subject to Sec. 495.332 and Sec. 495.352 the State is
required to submit to CMS annual reports on the following:
(1) Provider adoption, implementation, or upgrade of certified EHR
technology activities and payments; and
(2) Aggregated, de-identified meaningful use data.
(d)(1) The annual report described in paragraph (c) of this section
must include, but is not limited to the following:
(i) The number, type, and practice location(s) of providers who
qualified for an incentive payment on the basis of having adopted,
implemented, or upgraded certified EHR technology.
(ii) Aggregated data tables representing the provider adoption,
implementation, or upgrade of certified EHR technology.
(iii) The number, type, and practice location(s) of providers who
qualified for an incentive payment on the basis of demonstrating that
they are meaningful users of certified EHR technology;
(iv) Aggregated data tables representing the provider's clinical
quality measures data; and
(v) A description and quantitative data on how its incentive
payment program addressed individuals with unique needs such as
children.
(2) Subject to Sec. 495.332, the State may propose a revised
definition of meaningful use of certified EHR technology, subject to
CMS prior approval, but only with respect to the following objectives:
(i) Generate lists of patients by specific conditions to use for
quality improvement, reduction of disparities, research or outreach.
(ii) Capability to submit electronic data to immunization
registries or immunization information systems and actual submission in
accordance with applicable law and practice.
(iii) Capability to provide electronic submission of reportable (as
required by State or local law) lab results to public health agencies
and actual submission in accordance with applicable law and practice;
and
(iv) Capability to provide electronic syndromic surveillance data
to public health agencies and actual transmission in accordance with
applicable law and practice.
(e) State failure to submit the required reports to CMS may result
in discontinued or disallowed funding.

Sec. 495.318 State responsibilities for receiving FFP.

In order to be provided FFP under section 1903(a)(3)(F) of the Act,
a State must demonstrate to the satisfaction of HHS, that the State
is--
(a) Using the funds provided for the purposes of administering
incentive payments to providers under this program, including tracking
of meaningful use by Medicaid providers of EHR technology;
(b) Conducting adequate oversight of the program, including routine
tracking of meaningful use attestations and reporting mechanisms; and
(c) Is pursuing initiatives to encourage the adoption of certified
EHR technology to promote health care quality and the exchange of
health care information, subject to applicable laws and regulations
governing such exchange.

Sec. 495.320 FFP for payments to Medicaid providers.

Subject to the requirements outlined in this subpart, FFP is
available at 100 percent of State expenditures for payments to Medicaid
eligible providers to encourage the adoption and meaningful use of
certified EHR technology.

Sec. 495.322 FFP for reasonable administrative expenses.

Subject to prior approval conditions at Sec. 495.324 of this
subpart, FFP is available at 90 percent in State expenditures for
administrative activities in support of implementing incentive payments
to Medicaid eligible providers.

Sec. 495.324 Prior approval conditions.

(a) A State must obtain prior written approval as specified in
paragraph (b) of this section, when the State plans to initiate
planning and implementation activities in support of Medicaid provider
incentive payments encouraging the adoption and meaningful use of
certified EHR technology with proposed Federal financial participation.
(b) To receive 90 percent match, each State must receive prior
approval for all of the following:
(1) The HIT advance planning document and the implementation
advance planning document.
(2) A request for proposal and any contract that a State may
utilize to complete activities under this subpart, unless specifically
exempted by the Department of Health and Human Services, prior to
release of the request for proposal or prior to execution of a
contract.

[[Page 44582]]

(3) For contract amendments, unless specifically exempted by HHS,
before execution of the contract amendment, involving contract cost
increases exceeding $100,000 or contract time extensions of more than
60 days.
(4) The State Medicaid HIT plan.
(c) Failure to submit any of the information specified in paragraph
(b) of this section to the satisfaction of HHS may result in
disapproval or suspension of project funding.
(d) A State must obtain prior written approval from HHS of its
justification for a sole source acquisition, when it plans to acquire
non-competitively from a nongovernmental source HIT equipment or
services, with proposed FFP under this subpart if the total State and
Federal acquisition cost is more than $100,000.

Sec. 495.326 Disallowance of FFP.

If the HHS finds that any acquisition approved or modified under
the provisions of this subpart fails to comply with the criteria,
requirements, and other undertakings described in the approved HIT
planning advance planning document and HIT implementation advance
planning document to the detriment of the proper and efficient
operation of the Medicaid program, payment of FFP may be disallowed. In
the case of a suspension of approval of a HIT planning advance planning
document and HIT implementation advance planning document, suspension
would occur in the same manner as 45 CFR 205.37(c) and 307.40(a).

Sec. 495.328 Request for reconsideration of adverse determination.

If CMS disapproves a State request for any elements of a State's
advance planning document or State Medicaid HIT Plan under this
subpart, or determines that requirements are met for approval on a date
later than the date requested, the decision notice includes the
following:
(a) The finding of fact upon which the determination was made.
(b) The procedures for appeal of the determination in the form of a
request for reconsideration.

Sec. 495.330 Termination of FFP for failure to provide access to
information.

(a) HHS terminates FFP at any time if the Medicaid agency fails to
provide State and Federal representatives with full access to records
relating to HIT planning and implementation efforts, and the systems
used to interoperate with electronic HIT, including on-site inspection.
(b) The Department may request such access at any time to determine
whether the conditions in this subpart are being met.

Sec. 495.332 State Medicaid health information technology (HIT) plan
requirements.

Each State Medicaid HIT plan must include all of the following
elements:
(a) State systems. For State systems, interoperability, and the
current and future visions:
(1) A baseline assessment of the current HIT landscape environment
in the State including the inventory of existing HIT in the State. The
assessment must include a comprehensive--
(i) Description of the HIT ``as-is'' landscape;
(ii) Description of the HIT ``to-be'' landscape; and
(iii) HIT roadmap and strategic plan for the next 5 years.
(2) A description of how the State Medicaid HIT plan will be
planned, designed, developed and implemented, including how it will be
implemented in accordance with the Medicaid Information Technology
Architecture (MITA) principles as described in the Medicaid Information
Technology Framework 2.0. The MITA initiative--
(i) Establishes national guidelines for technologies and processes
that enable improved program administration for the Medicaid
enterprise;
(ii) Includes business, information and technology architectures
that provide an overall framework for interoperability, as well as
processes and planning guidelines for enabling State Medicaid
enterprises to meet common objectives within the framework while
supporting unique local needs; and
(iii) Is important to the design and development of State EHR
incentive payment systems.
(3) A description of how intrastate systems, including the Medicaid
Management Information System (MMIS) and other automated mechanized
claims processing and information retrieval systems--
(i) Have been considered in developing a HIT solution; and
(ii) A plan that incorporates the design, development, and
implementation phases for interoperability of such State systems with a
description of how any planned systems enhancements support overall
State and Medicaid goals.
(4) A description of data-sharing components of HIT solutions.
(5) A description of how each State will promote secure data
exchange, where permissible under the Health Insurance Portability and
Accountability Act (HIPAA) and other requirements included in ARRA.
(6) A description of how each State will promote the use of data
and technical standards to enhance data consistency and data sharing
through common data-access mechanisms.
(7) A description of how each State will support integration of
clinical and administrative data.
(8) A description of the process in place for ensuring improvements
in health outcomes, clinical quality, or efficiency resulting from the
adoption of certified EHR technology by recipients of Medicaid
incentive payments and a methodology for verifying such information.
(9) A description of the process in place for ensuring that any
certified EHR technology used as the basis for a payment incentive to
Medicaid providers is compatible with State or Federal administrative
management systems, including the MMIS or other automated claims
processing system or information retrieval system and a methodology for
verifying such information.
(10) A description of how each State will adopt national data
standards for health and data exchange and open standards for technical
solutions as they become available.
(11) A description of how the State intends to address the needs of
underserved and vulnerable populations such as children, individuals
with chronic conditions, Title IV-E foster care children, individuals
in long-term care settings and the aged, blind, and disabled. This
description must address the following:
(i) Person centered goals and objectives and shared decision-
making;
(ii) Coordination of care across multiple service providers,
funding sources, settings, and patient conditions--
(iii) Universal design to ensure access by people with disabilities
and older Americans; and
(iv) Institutional discharge planning and diversion activities that
are tied to community based service availability.
(b) Eligibility. For eligibility, a description of the process in
place for all of the following:
(1) For ensuring that each EP and eligible hospital meets all
provider enrollment eligibility criteria upon enrollment and re-
enrollment to the Medicaid EHR payment incentive program.
(2) For ensuring patient volume consistent with the criteria in
Sec. 495.304 and Sec. 495.306 for each EP who practices predominantly
in a FQHC or RHC and for each Medicaid EP who is a

[[Page 44583]]

physician, pediatrician, nurse practitioner, certified nurse midwife or
dentist and a methodology in place used to verify such information.
(3) For ensuring that the EP or eligible hospital is a provider who
meets patient volume consistent with the criteria in Sec. 495.304 and
Sec. 495.306 and a methodology in place used to verify such
information.
(4) For ensuring that each Medicaid EP is not hospital-based and a
methodology in place used to verify such information.
(5) To ensure that a hospital eligible for incentive payments has
demonstrated an average length of stay of 25 days or less and a
methodology for verifying such information.
(c) Monitoring and validation. For monitoring and validation of
information, States must include the following:
(1) A description of the process in place for ensuring that,
because of CMS' and the States' oversight responsibilities, all
provider information for attestations including meaningful use, efforts
to adopt, implement, or upgrade and any information added to the CMS
Single Provider Repository including all information related to patient
volume, NPI, Tax identification number (TIN), are all true and accurate
and that any concealment or falsification of a material fact related to
the attestation may result in prosecution under Federal and State laws
and a methodology in place used to verify such information.
(2) A description of the process in place for ensuring that the EP
or eligible hospital is eligible to receive an incentive payment
consistent with the criteria outlined in Sec. 495.314 and a
methodology in place used to verify such information.
(3) A description of the process in place for capturing
attestations from each EP or eligible hospital that they have
meaningfully used certified EHR technology during the EHR reporting
period, and that they have adopted, implemented, or upgraded certified
EHR technology and a description of the methodology in place used to
verify such information.
(4) A description of the process in place for capturing clinical
quality data from each EP or eligible hospital and a description of the
methodology in place used to verify such information.
(5) A description of the process in place for monitoring the
compliance of providers coming onto the program with different
requirements depending upon their participation year and a methodology
for verifying such information.
(6) A list of the specific actions planned to implement the EHR
incentive program, including a description and organizational charts
for workgroups within State government including external partners.
(7) A description of the process in place to ensure that no amounts
higher than 100 percent of FFP will be claimed by the State for
reimbursement of expenditures for State payments to Medicaid eligible
providers for the certified EHR technology incentive payment program
and a methodology for verifying such information.
(8) A description of the process in place to ensure that no amounts
higher than 90 percent of FFP will be claimed by the State for
administrative expenses in administering the certified EHR technology
incentive payment program and a methodology for verifying such
information.
(9) A description of the process and methodology for ensuring and
verifying the following:
(i) Amounts received under section 1903(a)(3)(F) of the Act with
respect to payments to a Medicaid EP or eligible hospital are paid
directly to such provider (or to an employer or facility to which such
provider has assigned payments) without any deduction or rebate.
(ii) All incentive payment reassignments to an entity promoting the
adoption of certified EHR technology, as designated by the State, are
voluntary for the Medicaid EP involved.
(iii) Entities promoting the adoption of certified EHR technology
do not retain more than 5 percent of such payments for costs not
related to certified EHR technology (and support services including
maintenance and training) that is for, or is necessary for the
operation of, such technology.
(10) A description of the process in place for ensuring that each
Medicaid EP or eligible hospital that collects an EHR payment incentive
has collected a payment incentive from only one State even if the
provider is licensed to practice in multiple States and a methodology
for verifying such information.
(11)(i) A description of the process in place for ensuring that
each EP or eligible hospital that wishes to participate in the EHR
incentive payment program will receive a NPI; and
(ii) A description of how the NPI will be used to coordinate with
the CMS so that the EP will choose only one program from which to
receive the incentive payment and the hospital payments are tracked
accordingly.
(12) A description of the process in place for ensuring that each
EP or eligible hospital who wishes to participate in the EHR incentive
payment program will provide a TIN to the State for purposes of the
incentive payment.
(d) Payments. For payments, States must provide descriptions of the
following processes that are in place:
(1) The process in place for ensuring that there is no duplication
of Medicare and Medicaid incentive payments to EPs and a methodology
for verifying such information.
(2) The process in place to ensure that any existing fiscal
relationships with providers to disburse the incentive payments through
Medicaid managed care plans does not result in payments that exceed 105
percent of the capitation rate, in order to comply with the Medicaid
managed care incentive payment rules at Sec. 438.6(v)(5)(iii) of this
chapter and a methodology for verifying such information.
(3) The process in place to ensure that only appropriate funding
sources are used to make Medicaid EHR incentive payments and the
methodology for verifying such information.
(4) The process in place and the methodology for verifying that
information is available in order to ensure that Medicaid EHR incentive
payments are made for no more than a total of 6 years; that no EP or
eligible hospital begins receiving payments after 2016; that incentive
payments cease after 2021; and that an eligible hospital does not
receive incentive payments after FY 2016 unless the hospital received
an incentive payment in the prior fiscal year.
(5) The process in place to ensure that Medicaid EHR incentive
payments are not paid at amounts higher than 85 percent of the net
average allowable cost of certified EHR technology and the yearly
maximum allowable payment thresholds and a methodology for verifying
such information.
(6) The process in place to ensure that all hospital calculations
and hospital payment incentives are made consistent with the
requirements of this part and a methodology for verifying such
information.
(7) The process in place to provide for the timely and accurate
payment of incentive payments to EPs and eligible hospitals, including
the timeframe specified by the State to meet the timely payment
requirement.
(8) The process in place and a methodology for verifying such
information to provide that any monies that have been paid
inappropriately as an improper payment or otherwise not

[[Page 44584]]

in compliance with this subpart will be recouped and FFP will be
repaid.
(9) The process in place and the methodology for verifying that EPs
meet their responsibility for 15 percent of the net average allowable
cost for certified EHR technology.
(e) For combating fraud and abuse and for provider appeals. (1) A
description of the process in place for a provider to appeal consistent
with the criteria described in Sec. 495.370 and a methodology for
verifying the following related to the EHR incentives payment program:
(i) Incentive payments.
(ii) Provider eligibility determinations.
(iii) Demonstration of efforts to adopt, implement or upgrade and
meaningful use eligibility for incentive payments under this part.
(2) A description of the process in place, and a methodology for
verifying such information, to address Federal laws and regulations
designed to prevent fraud, waste, and abuse, including, but not limited
to applicable provisions of Federal criminal law, the False Claims Act
(32 U.S.C. 3729 et seq.), and the anti-kickback statute (section
1128B(b) of the Act).
(f) Optional--proposed alternatives. A State may choose to propose
any of the following, but they must be included as an element in the
State Medicaid HIT Plan for review and approval:
(1) An alternative methodology for measuring patient volume,
consistent with Sec. 495.306(g).
(2)(i) A revised definition of meaningful use of certified EHR
technology consistent with Sec. 495.4 and Sec. 495.316(d)(2) of this
part.
(ii) Any revised definition of meaningful use may not require
additional functionality beyond that of certified EHR technology and
conform with CMS guidance on Stage 1. See also Sec. 495.316(d)(2).

Sec. 495.334 [Reserved]

Sec. 495.336 Health information technology planning advance planning
document requirements (HIT PAPD).

Each State's HIT PAPD must contain the following:
(a) A statement of need and objective which clearly state the
purpose and objectives of the project to be accomplished and the
necessity for the project.
(b) A project management plan which addresses the following:
(1) The planning project organization.
(2) Planning activities and deliverables.
(3) State and contractor resource needs.
(4) Planning project procurement activities and schedule.
(c) A specific budget for the planning of the project.
(d) An estimated total project cost and a prospective State and
Federal cost distribution, including planning and implementation.
(e) A commitment to submit a HIT implementation advance planning
document.
(f) A commitment to conduct and complete activities which will
result in the production of the State Medicaid HIT plan that includes
conduct of the following activities:
(1) A statewide HIT environmental baseline self-assessment.
(2) An assessment of desired HIT future environment.
(3) Development of benchmarks and transition strategies to move
from the current environment to the desired future environment.
(g) A commitment to submit the plan to CMS for approval.

Sec. 495.338 Health information technology implementation advance
planning document requirements (HIT IAPD).

Each State's HIT IAPD must contain the following:
(a) The results of the activities conducted as a result of the HIT
planning advance planning document, including the approved state
Medicaid HIT plan.
(b) A statement of needs and objectives.
(c) A statement of alternative considerations.
(d) A personnel resource statement indicating availability of
qualified and adequate staff, including a project director to
accomplish the project objectives.
(e) A detailed description of the nature and scope of the
activities to be undertaken and the methods to be used to accomplish
the project.
(f) The proposed activity schedule for the project.
(g) A proposed budget including a consideration of all HIT
implementation advance planning document activity costs, including but
not limited to the following:
(1) The cost to implement and administer incentive payments.
(2) Procurement or acquisition.
(3) State personnel.
(4) Contractor services.
(5) Hardware, software, and licensing.
(6) Equipment and supplies.
(7) Training and outreach.
(8) Travel.
(9) Administrative operations.
(10) Miscellaneous expenses for the project.
(h) An estimate of prospective cost distribution to the various
State and Federal funding sources and the proposed procedures for
distributing costs including:
(1) Planned annual payment amounts;
(2) Total of planned payment amounts; and
(3) Calendar year of each planned annual payment amount.
(4) A statement setting forth the security and interface
requirements to be employed for all State HIT systems, and related
systems, and the system failure and disaster recovery procedures
available.

Sec. 495.340 As-needed HIT PAPD update and as-needed HIT IAPD update
requirements.

Each State must submit a HIT PAPD update or a HIT IAPD no later
than 60 days after the occurrence of project changes including but not
limited to any of the following:
(a) A projected cost increase of $100,000 or more.
(b) A schedule extension of more than 60 days for major milestones.
(c) A significant change in planning approach or implementation
approach, or scope of activities beyond that approved in the HIT
planning advance planning document or the HIT implementation advance
planning document.
(d) A change in implementation concept or a change to the scope of
the project.
(e) A change to the approved cost allocation methodology.

Sec. 495.342 Annual HIT IAPD requirements.

Each State's annual HIT IAPD is due 60 days from the HIT IAPD
approved anniversary date and must contain the following:
(a) A reference to the approved HIT PAPD/IAPD and all approved
changes.
(b) A project activity status which reports the status of the past
year's major project tasks and milestones, addressing the degree of
completion and tasks/milestones remaining to be completed and discusses
past and anticipated problems or delays in meeting target dates in the
approved HIT technology PAPD/IAPD and approved changes to it.
(c) A report of all project deliverables completed in the past year
and degree of completion for unfinished products.
(d) A project activity schedule for the remainder of the project.
(e) A project expenditure status which consists of a detailed
accounting of all expenditures for project development over the past
year and an explanation of the differences between projected expenses
in the approved HIT PAPD/

[[Page 44585]]

IAPD and actual expenditures for the past year.
(f) A report of any approved or anticipated changes to the
allocation basis in the advance planning document's approved cost
methodology.

Sec. 495.344 Approval of the State Medicaid HIT plan, the HIT PAPD
and update, the HIT IAPD and update, and the annual HIT IAPD.

HHS will not approve the State Medicaid HIT plan, HIT PAPD and
update, HIT-IAPD and update, or annual IAPD if any of these documents
do not include all of the information required under this subpart.

Sec. 495.346 Access to systems and records.

The State agency must allow HHS access to all records and systems
operated by the State in support of this program, including cost
records associated with approved administrative funding and incentive
payments to Medicaid providers. State records related to contractors
employed for the purpose of assisting with implementation or oversight
activities or providing assistance, at such intervals as are deemed
necessary by the Department to determine whether the conditions for
approval are being met and to determine the efficiency, economy, and
effectiveness of the program.

Sec. 495.348 Procurement standards.

(a) General rule. Procurements of HIT equipment and services are
subject to the following procurement standards in paragraphs (b)
through (f) of this section regardless of any conditions for prior
approval. These standards--
(1) Include a requirement for maximum practical open and free
competition regardless of whether the procurement is formally
advertised or negotiated.
(2) Are established to ensure that such materials and services are
obtained in a cost effective manner and in compliance with the
provisions of applicable Federal statutes and executive orders.
(3) Apply when the cost of the procurement is treated as a direct
cost of an award.
(b) Grantee responsibilities. The standards contained in this
section do not relieve the Grantee of the contractual responsibilities
arising under its contract(s).
(1) The grantee is the responsible authority, without recourse to
the Departmental awarding agency, regarding the settlement and
satisfaction of all contractual and administrative issues arising out
of procurements entered into in support of an award or other agreement.
This includes disputes, claims, and protests of award, source
evaluation or other matters of a contractual nature.
(2) Matters concerning violation of statute are to be referred to
such Federal, State or local authority as may have proper jurisdiction.
(c) Codes of conduct. The grantee must maintain written standards
of conduct governing the performance of its employees engaged in the
award and administration of contracts.
(1) No employee, officer, or agent must participate in the
selection, award, or administration of a contract supported by Federal
funds if a real or apparent conflict of interest would be involved.
(2) Such a conflict would arise when the employee, officer, or
agent, or any member of his or her immediate family, his or her
partner, or an organization which employs or is about to employ any of
the parties indicated herein, has a financial or other interest in the
firm selected for an award.
(3) The officers, employees, and agents of the grantee must neither
solicit nor accept gratuities, favors, or anything of monetary value
from contractors, or parties to sub agreements.
(4) Grantees may set standards for situations in which the
financial interest is not substantial or the gift is an unsolicited
item of nominal value.
(5) The standards of conduct provide for disciplinary actions to be
applied for violations of such standards by officers, employers, or
agents of the grantees.
(d) Competition. All procurement transactions must be conducted in
a manner to provide, to the maximum extent practical, open and free
competition.
(1) The grantee must be alert to organizational conflicts of
interest as well as noncompetitive practices among contractors that may
restrict or eliminate competition or otherwise restrain trade.
(2) In order to ensure objective contractor performance and
eliminate unfair competitive advantage, contractors that develop or
draft grant applications, or contract specifications, requirements,
statements of work, invitations for bids and requests for proposals
must be excluded from competing for such procurements.
(3) Awards must be made to the bidder or offer or whose bid or
offer is responsive to the solicitation and is most advantageous to the
grantee, price, quality, and other factors considered.
(4) Solicitations must clearly set forth all requirements that the
bidder or offer or must fulfill in order for the bid or offer to be
evaluated by the grantee.
(5) Any and all bids or offers may be rejected when it is in the
grantee's interest to do so.
(e) Procurement procedures. All grantees must establish written
procurement procedures. These procedures must provide, at a minimum,
the following:
(1) Grantees avoid purchasing unnecessary items.
(2) When appropriate, an analysis is made of lease and purchase
alternatives to determine which would be the most economical and
practical procurement for the grantee and the Federal government.
(3) Solicitations for goods and services provide for all of the
following:
(i) A clear and accurate description of the technical requirements
for the material, product or service to be procured. In competitive
procurements, such a description must not contain features which unduly
restrict competition.
(ii) Requirements which the bidder or offer must fulfill and all
other factors to be used in evaluating bids or proposals.
(iii) A description, whenever practicable, of technical
requirements in terms of functions to be performed or performance
required, including the range of acceptable characteristics or minimum
acceptable standards.
(iv) The specific features of brand name or equal descriptions that
bidders are required to meet when such items are included in the
solicitation.
(v) The acceptance, to the extent practicable and economically
feasible, of products and services dimensioned in the metric system of
measurement.
(vi) Preference, to the extent practicable and economically
feasible, for products and services that conserve natural resources and
protect the environment and are energy efficient.
(4) Positive efforts must be made by grantees to utilize small
businesses, minority-owned firms, and women's business enterprises,
whenever possible. Grantees of Departmental awards must take all of the
following steps to further this goal:
(i) Ensure that small businesses, minority-owned firms, and women's
business enterprises are used to the fullest extent practicable.
(ii) Make information on forthcoming opportunities available and
arrange time frames for purchases and contracts to encourage and
facilitate participation by small businesses, minority-owned firms, and
women's business enterprises.
(iii) Consider in the contract process whether firms competing for
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.

[[Page 44586]]

(iv) Encourage contracting with consortia of small businesses,
minority-owned firms and women's business enterprises when a contract
is too large for one of these firms to handle individually.
(v) Use the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Department
of Commerce's Minority Business Development Agency in the solicitation
and utilization of small businesses, minority-owned firms and women's
business enterprises.
(5) The type of procuring instruments used (for example, fixed
price contracts, cost reimbursable contracts, purchase orders, and
incentive contracts) must be determined by the grantee but must be
appropriate for the particular procurement and for promoting the best
interest of the program or project involved.
(6) The ``cost-plus-a-percentage-of-cost'' or ``percentage of
construction cost'' methods of contracting must not be used.
(7) Contracts must be made only with responsible contractors who
possess the potential ability to perform successfully under the terms
and conditions of the proposed procurement.
(8) Consideration must be given to such matters as contractor
integrity, record of past performance, financial and technical
resources or accessibility to other necessary resources.
(9) In certain circumstances, contracts with certain parties are
restricted by agencies' implementation of Executive Orders 12549 and
12689, ``Debarment and Suspension'' as described in 2 CFR part 376.
(10) Some form of cost or price analysis must be made and
documented in the procurement files in connection with every
procurement action.
(11) Price analysis may be accomplished in various ways, including
the comparison of price quotations submitted, market prices, and
similar indicia, together with discounts.
(12) Cost analysis is the review and evaluation of each element of
cost to determine reasonableness, allocability, and allowability.
(13) Procurement records and files for purchases in excess of the
simplified acquisition threshold must include the following at a
minimum:
(i) Basis for contractor selection.
(ii) Justification for lack of competition when competitive bids or
offers are not obtained.
(iii) Basis for award cost or price.
(f) Contract administration. A system for contract administration
must be maintained to ensure contractor conformance with the terms,
conditions and specifications of the contract and to ensure adequate
and timely follow up of all purchases. Grantees must evaluate
contractor performance and document, as appropriate, whether
contractors have met the terms, conditions, and specifications of the
contract.
(g) Additional contract requirements. The grantee must include, in
addition to provisions to define a sound and complete agreement, the
following provisions in all contracts, which must also be applied to
subcontracts:
(1) Contracts in excess of the simplified acquisition threshold
must contain contractual provisions or conditions that allow for
administrative, contractual, or legal remedies in instances in which a
contractor violates or breaches the contract terms, and provide for
such remedial actions as may be appropriate.
(2) All contracts in excess of the simplified acquisition threshold
(currently $100,000) must contain suitable provisions for termination
by the grantee, including the manner by which termination must be
effected and the basis for settlement.
(h) Conditions for default or termination. Such contracts must
describe conditions under which the contract may be terminated for
default as well as conditions where the contract may be terminated
because of circumstances beyond the control of the contractor.
(i) Access to contract materials and staff. All negotiated
contracts (except those for less than the simplified acquisition
threshold) awarded by grantees must include a provision to the effect
that the grantee, the Departmental awarding agency, the U.S.
Comptroller General, or any of their duly authorized representatives,
must have access to any books, documents, papers and records and staff
of the contractor which are directly pertinent to a specific program
for the purpose of making audits, examinations, excerpts and
transcriptions.

Sec. 495.350 State Medicaid agency attestations.

(a) The State must provide assurances to HHS that amounts received
with respect to sums expended that are attributable to payments to a
Medicaid provider for the adoption of EHR are paid directly to such
provider, or to an employer or facility to which such provider has
assigned payments, without any deduction or rebate.

Sec. 495.352 Reporting requirements.

Each State must submit to HHS on a quarterly basis a progress
report documenting specific implementation and oversight activities
performed during the quarter, including progress in implementing the
State's approved Medicaid HIT plan.

Sec. 495.354 Rules for charging equipment.

Equipment acquired under this subpart is subject to the public
assistance program requirements concerning the computation of claims
for Federal financial participation in accordance with the provisions
of 45 CFR part 95, subpart G.

Sec. 495.356 Nondiscrimination requirements.

State agencies and any other recipients or subrecipients of Federal
financial assistance provided under this subpart are subject to the
nondiscrimination requirements in 45 CFR parts 80, 84, and 91.
(a) These regulations in 45 CFR parts 80, 84, and 91 prohibit
individuals from being excluded from participation in, being denied the
benefits of, or being otherwise subjected to discrimination under any
program or activity which received Federal financial assistance.
(b) Specifically, 45 CFR part 80 prohibits discrimination on the
basis of race, color, or national origin; 45 CFR part 84 prohibits
discrimination on the basis of disability; and 45 CFR part 91 prohibits
discrimination on the basis of age.

Sec. 495.358 Cost allocation plans.

State agencies that acquire HIT equipment and services under this
subpart are subject to cost allocation plan requirements in 45 CFR part
95.

Sec. 495.360 Software and ownership rights.

(a) General rule. The State or local government must include a
clause in all procurement instruments that provides that the State or
local government will have all ownership rights in software or
modifications thereof and associated documentation designed, developed
or installed with FFP under this Subpart.
(b) Federal license. HHS reserves a royalty-free, non-exclusive,
and irrevocable license to reproduce, publish or otherwise use and to
authorize others to use for Federal government purposes, the software,
modifications, and documentation designed, developed or installed with
FFP under this Subpart.
(c) Proprietary software. Proprietary operating/vendor software
packages such as software that is owned and licensed for use by third
parties, which are provided at established catalog or market prices and
sold or leased to the general public must not be subject to the

[[Page 44587]]

ownership provisions in paragraphs (a) and (b) of this section.
(d) Limitation. Federal financial participation is not available
for proprietary applications software developed specifically for the
public assistance programs covered under this subpart.

Sec. 495.362 Retroactive approval of FFP with an effective date of
February 18, 2009.

For administrative activities performed by a State, without
obtaining prior approval, which are in support of planning for
incentive payments to providers, a State may request consideration of
FFP by recorded request in a HIT advance planning document or
implementation advance planning document update. In such a
consideration, the agency takes into consideration overall Federal
interests which may include any of the following:
(a) The acquisition must not be before February 18, 2009.
(b) The acquisition must be reasonable, useful, and necessary.
(c) The acquisition must be attributable to payments for reasonable
administrative expenses under section 1903(a)(3)(F)(ii) of the Act.

Sec. 495.364 Review and assessment of administrative activities and
expenses of Medicaid provider health information technology adoption
and operation.

(a) CMS conducts periodic reviews on an as needed basis to assess
the State's progress described in its approved HIT planning advance
planning document and health information technology implementation
advance planning document.
(b) During planning, development, and implementation, these reviews
will generally be limited to the overall progress, work performance,
expenditure reports, project deliverables, and supporting
documentation.
(c) CMS assesses the State's overall compliance with the approved
advance planning document and provide technical assistance and
information sharing from other State projects.
(d) CMS will, on a continuing basis, review, assess and inspect the
planning, design, development, implementation, and operation of
activities and payments for reasonable administrative expenses related
to the administration of payment for Medicaid provider HIT adoption and
operation payments to determine the extent to which such activities
meet the following:
(1) All requirements of this subpart.
(2) The goals and objectives stated in the approved HIT
implementation advance planning document and State Medicaid HIT plan.
(3) The schedule, budget, and other conditions of the approved HIT
implementation advance planning document and State Medicaid HIT plan.

Sec. 495.366 Financial oversight and monitoring of expenditures.

(a) General rule. (1) The State must have a process in place to
estimate expenditures for the Medicaid EHR payment incentive program
using the Medicaid Budget Expenditure System.
(2) The State must have a process in place to report actual
expenditures for the Medicaid EHR payment incentive program using the
Medicaid Budget Expenditure System.
(3) The State must have an automated payment and information
retrieval mechanized system, (Medicaid Management Information System)
to make EHR payment incentives, to ensure Medicaid provider
eligibility, to ensure the accuracy of payment incentives, and to
identify potential improper payments.
(b) Provider eligibility as basis for making payment. Subject to
Sec. 495.332, the State must do all of the following:
(1) Collect and verify basic information on Medicaid providers to
assure provider enrollment eligibility upon enrollment or re-enrollment
to the Medicaid EHR payment incentive program.
(2) Collect and verify basic information on Medicaid providers to
assure patient volume.
(3) Collect and verify basic information on Medicaid providers to
assure that EPs are not hospital-based including the determination that
substantially all health care services are not furnished in a hospital
setting, either inpatient or outpatient.
(4) Collect and verify basic information on Medicaid providers to
assure that EPs are practicing predominantly in a Federally-qualified
health center or rural health clinic.
(5) Have a process in place to assure that Medicaid providers who
wish to participate in the EHR incentive payment program has or will
have a NPI and will choose only one program from which to receive the
incentive payment using the NPI, a TIN, and CMS' national provider
election database.
(c) Meaningful use and efforts to adopt, implement, or upgrade to
certified electronic health record technology to make payment. Subject
to Sec. 495.312, 495.314, and Sec. 495.332, the State must annually
collect and verify information regarding the efforts to adopt,
implement, or upgrade certified EHR technology and the meaningful use
of said technology before making any payments to providers.
(d) Claiming Federal reimbursement for State expenditures. Subject
to Sec. 495.332, the State must do the following:
(1) Assure that State expenditures are claimed in accordance with,
including but not limited to, applicable Federal laws, regulations, and
policy guidance.
(2) Have a process in place to assure that expenditures for
administering the Medicaid EHR incentive payment program will not be
claimed at amounts higher than 90 percent of the cost of such
administration.
(3) Have a process in place to assure that expenditures for payment
of Medicaid EHR incentive payments will not be claimed at amounts
higher than 100 percent of the cost of such payments to Medicaid
providers.
(e) Improper Medicaid electronic health record payment incentives.
(1) Subject to Sec. 495.332, the State must have a process in
place to assure that no duplicate Medicaid EHR payment incentives are
paid between the Medicare and Medicaid programs, or paid by more than
one State even if the provider is licensed to practice in multiple
States, or paid within more than one area of a State.
(2) Subject to Sec. 495.332, the State must have a process in
place to assure that Medicaid EHR incentive payments are made without
reduction or rebate, have been paid directly to an eligible provider or
to an employer, a facility, or an eligible third-party entity to which
the Medicaid eligible provider has assigned payments.
(3) Subject to Sec. 495.332, the State must have a process in
place to assure that that Medicaid EHR incentive payments are made for
no more than 6 years; that no EP or eligible hospital begins receiving
payments after 2016; that incentive payments cease after 2021; and that
an eligible hospital does not receive incentive payments after FY 2016
unless the hospital received an incentive payment in the prior fiscal
year.
(4) Subject to Sec. 495.332, the State must have a process in
place to assure that only appropriate funding sources are used to make
Medicaid EHR incentive payments.
(5) Subject to Sec. 495.332, the State must have a process in
place to assure that Medicaid EHR incentive payments are not paid at
amounts higher than 85 percent of the net average allowable cost of
certified EHR technology and the yearly maximum allowable payment
thresholds.
(6) Subject to Sec. 495.332, the State must have a process in
place to assure that for those entities promoting the adoption of EHR
technology, the

[[Page 44588]]

Medicaid EHR incentive payments are paid on a voluntary basis and that
these entities do not retain more than 5 percent of such payments for
costs not related to certified EHR technology.
(7) Subject to Sec. 495.332, the State must have a process in
place to assure that any existing fiscal relationships with providers
to disburse the incentive through Medicaid managed care plans does not
exceed 105 percent of the capitation rate, in order to comply with the
Medicaid managed care incentive payment rules at Sec. 438.6(c)(5)(iii)
of this chapter and a methodology for verifying such information.
(8) The State must not request reimbursement for Federal financial
participation unless all requirements of this subpart have been
satisfied.

Sec. 495.368 Combating fraud and abuse.

(a) General rule. (1) The State must comply with Federal
requirements to--
(i) Ensure the qualifications of the providers who request Medicaid
EHR incentive payments;
(ii) Detect improper payments; and
(iii) In accordance with Sec. 455.15 and Sec. 455.21 of this
chapter, refer suspected cases of fraud and abuse to the Medicaid Fraud
Control Unit.
(2) The State must take corrective action in the case of improper
EHR payment incentives to Medicaid providers.
(b) Providers' statements regarding submission of documentation
containing falsification or concealment of a material fact on EHR
incentive payment documentation. For any forms on which a provider
submits information necessary to the determination of eligibility to
receive EHR payments, the State must obtain a statement that meets the
following requirements:
(1) Is signed by the provider and contains the following statement:
``This is to certify that the foregoing information is true, accurate,
and complete. I understand that Medicaid EHR incentive payments
submitted under this provider number will be from Federal funds, and
that any falsification, or concealment of a material fact may be
prosecuted under Federal and State laws.''
(2) Appears directly above the claimant's signature, or if it is
printed on the reverse of the form, a reference to the statements must
appear immediately preceding the provider's signature.
(3) Is resubmitted upon a change in provider representative.
(4) Is updated as needed.
(c) Overpayments. States must repay to CMS all Federal financial
participation received by providers identified as an overpayment
regardless of recoupment from such providers, within 60 days of
discovery of the overpayment, in accordance with sections 1903(a)(1),
(d)(2), and (d)(3) of the Act and part 433 subpart F of the
regulations.
(d) Complying with Federal laws and regulations. States must comply
with all Federal laws and regulations designed to prevent fraud, waste,
and abuse, including, but not limited to applicable provisions of
Federal criminal law, the False Claims Act (32 U.S.C. 3729 et seq.),
and the anti-kickback statute (section 1128B(b) of the Act).

Sec. 495.370 Appeals process for a Medicaid provider receiving
electronic health record incentive payments.

(a) The State must have a process in place consistent with the
requirements established in Sec. 447.253(e) of this chapter for a
provider or entity to appeal the following issues related to the HIT
incentives payment program:
(1) Incentive payments.
(2) Incentive payment amounts.
(3) Provider eligibility determinations.
(4) Demonstration of adopting, implementing, and upgrading, and
meaningful use eligibility for incentives under this subpart.
(b) Subject to paragraph (a) of this section, the State's process
must ensure the following:
(1) That the provider (whether an individual or an entity) has an
opportunity to challenge the State's determination under this Part by
submitting documents or data or both to support the provider's claim.
(2) That such process employs methods for conducting an appeal that
are consistent with the State's Administrative Procedure law(s).
(c) The State must provide that the provider (whether individual or
entity) is also given any additional appeals rights that would
otherwise be available under procedures established by the State.

Authority: Catalog of Federal Domestic Assistance Program No.
93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program, Program No.
93.778, Medical Assistance Program.

Dated: June 16, 2010.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: July 9, 2010.
Kathleen Sebelius,
Secretary.
[FR Doc. 2010-17207 Filed 7-13-10; 8:45 am]
BILLING CODE 4120-01-P