Electronic Health Records

Policy & Regulation News

Meaningful use incentives get chopped under sequestration

By Jennifer Bresnick

Anyone hoping that the EHR Incentive Program would be spared the axe after sequestration took hold late last week will be disappointed.  CMS has officially announced that the 2% reduction in Medicare will extend to meaningful use payments under the program.  There was some hope that meaningful use would be spared due to the fact that the funding for the initiative was not in the general Medicare budget pool, but providers will in fact see a 2% reduction in reimbursement for all payments processed after April 1, 2013.

“There definitely was a period of uncertainty,” Chantal Worzala, Director of Policy at the American Hospital Association (AHA) told iHealthBeat. “As far as I know, today is the first time we’ve gotten an official statement from CMS.”  Worzala added that the AHA is “very disappointed” that the incentive payments will be less than promised, especially after all of the hard work – and millions of dollars – hospitals have put in to complying with meaningful use requirements.

“This isn’t going to be a material hit on the program, and I don’t think providers are going to necessarily feel it, but it is troubling that Congress would roll out a program like meaningful use with a very defined, very structured payment regime and then have this happen,” said Jeffery Smith, Assistant Director of Public Policy at the College for HIM Executives. “Generally speaking, I don’t think it’s going to be a big deal. But I do think it’s kind of a troubling trend.”

National Coordinator Dr. Farzad Mostashari is not so optimistic.  “This sequester is going to hurt,” he stated yesterday.  “Absent a furlough, it’s going to mean that we have a major cut in the contracts we have.  There will be things that the industry expects us to do and that patients and providers expect us to do.  We simply won’t be able to.”  The $60 million budget of the Office of the National Coordinator is being slashed by $3 million, the first reduction in its financial endowment since 2004.

While Medicaid and its associated programs are safe from the cuts, the $85 billion being yanked from federal initiatives is just the first phase of almost $1 trillion in governmental budget reductions due to the sequester.  President Obama signed the sequestration order on March 1after lawmakers failed to come up with an agreement that would avert the massive, indiscriminate reductions in government spending.

EHR advocates are concerned that adoption will slow significantly as providers see less benefit to investing their resources in the meaningful use program without the hope of adequate reimbursement.  With $25 million in fraud prevention being lost due to the cuts, unscrupulous EHR users have a chance to sneak over-billed claims through the system.  Funding for scientific research is also on the chopping block, and almost half a million healthcare jobs are predicted to be lost in the first year of sequester alone.

While the true effects on meaningful use and EHR adoption remain to be seen as the belt-tightening takes hold, such cuts instituted just as the industry is gaining enough momentum to truly revolutionize and modernize healthcare is troubling at best. Providers may need to reexamine their health IT budgets, their plans, and their goals to adjust to this unwelcome event.





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