Meaningful use is a key term that ultimately will decide which physicians and hospitals are qualified for billions in federal EHR money made available through the ARRA Incentives approved earlier this year. The recommendations from the meaningful use workgroup include a Meaningful Use Matrix, a matrix of objectives for 2011, plus enhanced objectives for 2013 and 2015.

The American Recovery and Reinvestment Act of 2009, abbreviated ARRA is an economic stimulus package worth $787 billion to recover the U.S. economy in the wake of the economic downturn. The bill was signed into law on February 17, 2009 by President Obama at an economic forum he was hosting in Denver, Colorado.

Roughly $17 billion in the ARRA is budgeted to encourage the adoption of HIT primarily through Medicare incentive payments to hospitals (formula driven) and physicians (flat dollars amount) - up to $64,000 for physicians and as much as $11 million for hospitals. However, health care providers will face penalties if they do not implement EHRs by 2014.

There are three base requirements for “meaningful use” identified in the new law, including:

• Use of certified or qualified EHR technology.

• Electronic exchange of health information

• Use of EHR in reporting on clinical and other quality measures

Incentives for Physicians

To be eligible, Physicians must treat Medicare and/or Medicaid patients through "meaningful use" of a "qualified EHR system".  Although the incentive program starts in 2011 and extends until 2016, offices must have and use an EHR by 2014 to participate.  Further, the most beneficial incentives are available to early adopters and current users of EHR systems as the incentives are greatest for 2011 and 2012.The incentive payments may be increased by 10% if Physicians mainly deliver services in health shortage areas like Critical access Hospitals. There are penalties for Physicians who do not demonstrate meaningful use of an EHR as early as 2014.  Generally, the penalties start in 2015 and reduce payment to 99% with reductions each subsequent year but never going below 95%.  The Act also clarifies portions of HIPAA as it relates to privacy protection and enforcement. 

Incentive payments for hospitals

[[(Base amount + Discharge related amount) x Medicare share] x Transition factor]

Base Amount - $2 million

Discharge Related Payments- ($200 for each hospital discharge between 1,150 and 23,000 within 12 month period)

Medicare Share = Part A Inpatient bed days + Part C Inpatient Bed Days

Estimated total inpatient bed days * Estimated Total charges – charity care

Estimated Total Charges

Transition Factor: First payment year: 100%, Second payment year: 75%, Third payment year: 50%, Forth payment year: 25%

Critical Access Hospitals are eligible for enhanced incentives under cost-based reimbursement. Meaningful EHR users may obtain reimbursement for the undepreciated value of EHR expenditures plus 20 percentage points, provided that the Medicare share does not exceed 100%.