Jeffery Daigrepont, Senior Vice President The Coker Group 1000 Mansell Exchange West, Suite 310

1. American Recovery and Reinvestment Act – How to Leverage Stimulus Payouts Jeffery Daigrepont, Senior Vice President The Coker Group 1000 Mansell Exchange West, Suite 310 Alpharetta, Georgia 30022 jdaigrepont@cokergroup.com 800-345-5829

2. Agenda • Stimulus Overview • Payout • Cost and Contracting • Summary

6. Eventful Times… “…We're taking the most meaningful step in years towards modernizing our healthcare system. It's an investment that will take the long overdue step of computerizing America's medical records, to reduce the duplication and waste that costs billions of healthcare dollars and medical errors that cost thousands of lives each year. ... We have done more in 30 days to advance the cause of healthcare reform than this country has done in an entire decade." President Barack Obama February 17, 2009

7. ARRA Organization & Funding of HIT

8. Why is ARRA Important? • It is now the Law. • It Will be a Major Source of HIT Funding. • THE Source of Major Funding for EHRs. • It Will Determine Who Gets What. • It Will Determine EHR Standards.

9. Meaningful use as of today… • Certified EHR technology; not specified yet but most likely CCHIT-certified • Capacity to provide patient demographics and clinical health information, medical history and problem lists; capacity for clinical decision support, and CPOE; ability to capture and query information relevant to healthcare quality; and to exchange health information with, and integrate such information from other sources • Prescribe electronically • Connect to a health information exchange • Submit clinical quality measures in the reporting format selected by Secretary of HHS

10. Take the Survey Project Coordinator: Brock Slabach, Sr. Vice-President, NRHA bslabach@nrharural.org

11. Survey Excerpt…

12. Standards FEDERAL – HITSP Board Member, 4 Co-Chairs, 5 Members – 2 Members in 3 committees – 3 NHIN Phase 1 Projects – 1 HISPC member STATE - CIO Forum Member - Policy & Operations Committee - Vendor Consortium – 5 Co-Chairs, 10 Members – 2 Co-Chairs, 14 Members – 2 Co-Chairs, 4 Members – Co-Chair – 3 Members – 3 Members – 2 Members INDUSTRY – Board Member - Chair Interop & Stds – Diamond Member – Board Member POLICY – Charter Member – Board Member – Steering Committee

13. Standards & US Government Mandates Federal Stimulus Trial Implementations Nationwide Health Information Network (NHIN) US Department of Health & Human Services (HHS) National Coordinator Health Information Technology (ONC) American Health Information Community (AHIC) • Example use cases: • Consumer Empowerment • EHR Use cases • Medication Mgmt • Personalized healthcare • Referrals • Public Health Reporting • Quality • etc … Use cases & priorities Certification Standards • Certifications: • Ambulatory EHR • Inpatient EHR • HIE Influence on HIT Industry & Communities

14. Impact of Stimulus • How are hospitals responding… • How are physicians responding… • How are corporations responding… • How are vendors responding…

15. How Are Physicians Responding

16. How are Physicians Responding • Those with EHRs • Those without EHRs • Those who think they have an EHR

17. The Payout • First Adopters Will Benefit The Most (Sliding Incentives)Physicians can earn between $44,000 to $64,000 over five years from Medicare / Medicaid if they are utilizing an EHR in 2011 • Late adopters will receive significantly less • Providers may receive incentives under only one of the programs • 2015: reductions in Medicare fees for non-EHR users • Those in Provider Shortage Areas can earn 10% more • Hospitals can earn up to $2,000,000 plus discharge bonuses (total payout to them could be $10 million +)

18. The Physician’s Payout

19. Special Stipulation for RHC Providers An eligible professional who practices predominately in a Federally-qualified health center or rural health clinic with at least 30% of the professional’s patient volume coming from Medicaid patients. • Year 1 No more than $25k • Year 2 No more than $10k • Year 3 No more than $10k • Year 4 No more than $10k • Year 5 No more than $10k

20. How are Vendors Responding

21. How are Corporations Responding • Amex • Wal-Mart • Henry Schein • Cardinal Health • PSS World Medical • Trade Associations

22. How are Vendors RespondingVendor Offers & Gimmicks • GE Medical - No payment for the first 3 months, $125/physician the following 3 months ($300/ physician/month next 24 months). End of term options will be to repay outstanding balance or to refinance such balance over an additional 36 months. • Most recently a ZERO interest promotion. • Allscripts – No payments for the first 4 months, $250/physicians for the following 8 months, $295/physicians for the next 60 months • eClinicalWorks / Wal-Mart - $25,000 first physicians, includes PM/EMR/Hardware/Training/Support. 10K for each additional physician. • Conclusion • Every EMR adoption study sites cost as the TOP barrier for adoption • Vendors are offering special financing offers to ease up front financial constraints for adoption. • In the end, vendors recoup their investment since these purchases tend to last 10+ years and in some cases indefinitely.

25. How Are Hospitals Responding

26. How are Hospitals Responding5 Factors to Consider • Highly competitive markets: In highly competitive markets, the “first mover” to provide EHRs to the community physicians is most likely to secure the loyalty of those physicians. Accordingly, late movers are at risk of losing referrals from physicians who join a competing hospital’s Stark program. • Hospital – Physician Integration: A Stark EHR program needs to integrate within the larger fabric intended to “Glue” community physicians to the hospital. This larger program can include facility joint ventures, MSO services, payor contracting, and the like, which the EHR will only serve to strengthen. • Commitment to Quality: The hospital is committed to tangibly improving the quality of care in its community, and recognizes that supporting a hospital – community physician EHR initiative will directly improve continuity-of-care, patient safety, and the patient experience. • Position for the Future: The hospital recognizes that the ability to collect and report on clinical data across the community will effectively support negotiating “Value Based Reimbursement” (i.e. P4P, acuity coding, etc.) contracts, providing “Report Cards” on performance, and responding to “Episodes of Care” payments if and when they are initiated. • Avoiding a “Mess”: With the new ARRA now in place, community physicians will be incented to move forward with an EHR in order to realize the available bonuses .Without hospital leadership, there is the risk of too many EHR products being poorly implemented which will compromise the hospitals’ ability to realize a number of advantages.

27. National Rural Health AssociationThe NRHA is a national nonprofit membership organization with more than 18,000 members. Theassociation’s mission is to provide leadership on rural health issues. The NRHA membership is made up of adiverse collection of individuals and organizations, all of whom share the common bond of an interest in ruralhealth.

28. The Hospital’s Payout • Three factors are used to determine the hospital incentives and include: • Initial amount - Base amount of $2 million + $200 for each discharge between 1,150th and 23,000th • Medicare share • Numerator: Sum of the estimated number of inpatient-bed-days for Part A eligible patients and Part C Medicare Advantage-enrolled individuals (as established by the Secretary of HHS) • Denominator: Quotient of estimated total inpatient-bed-days, not including charges attributable to charity care, divided by estimated total amount of charges • Critical access hospitals add 20 percentage points to the derived Medicare share, not to exceed 100 %. • Annual transition factor

29. Special Stipulations for CAHs • Though not included in the original versions of the ARRA, the final negotiated version of the bill did provide some incentive payments for Critical Access Hospitals (CAHs). • CAHs will essentially be able to expense the cost of their HIT investments in a single year and not have to depreciate that out for cost reporting purposes. • The portion of their HIT cost that may be expensed will be determined using a Medicare Share calculation (similar to the PPS calculation) PLUS an additional 20 percent (not to exceed 100 percent). • No payments will be made beyond FY 2015 and CAHs not becoming meaningful users by FY 2015 will see reductions from 101% of cost down to 100% over three years

30. Penalties for CAHs • Penalties for CAHs: Unless significant hardship is demonstrated, CAHs that have not implemented EHRs by FY 2015 are subject to payment reductions, with payment reduced to 100.66 percent of cost in FY 2015; 100.33 percent of cost in FY 2016; and 100 percent of cost in FY 2017 and beyond. CAHs may only receive a hardship exemption for a maximum of five years.

31. The Case to Act Now! • Time is running out. Unless the law changes, the Stark Act sunsets at the end of 2013 and there will no longer be an opportunity for the hospital to directly impact its community physicians using this tool. Additionally, to earn the maximum ARRA bonus, a physician must be meaningfully using the EHR by the end of 2011, and all bonus payments stop after 2016 – Penalties kick in thereafter

32. If You Start Now… 44K over 5 yrs. 3 to 5K per yr. 3 to 5K per yr. Almost 100K over 5 years (estimate)

33. Cost, Contracting & Preparing

34. Modifying the Contract • a. All versions of the Software necessary to satisfy all requirements in order to be a Certified EHR (as defined below) for use by Client to receive all of the Medicare incentives available under HITECH* beginning on October 1, 2010 and will not be subject to any reduction in reimbursement as a result of a failure to use a “certified EHR” as a “meaningful user.” Such software shall be provided (1) with respect to the initial definition of Certified EHR, at least _____ months prior to October 1, 2010 and (2) if the definition of Certified EHR is revised thereafter, an updated version of the Software that satisfies each such revised definition at least ____ months before the revised definition of Certified EHR becomes effective. Such new versions may be referred to as “Certified EHR Versions.” • As used herein, the terms “Certified EHR” and “meaningful user” each has the respective meanings assigned to such terms in HITECH (and any subsequent amendments thereto) and in the regulations promulgated from time to time pursuant to HITECH, including whatever are then the most recent versions of HITECH and such regulations. • b. All implementation, training, data conversion and other services that may be necessary or appropriate to reasonably assist Client in implementing the each of the Certified EHR Versions that Client may, in its discretion, elect to implement and in becoming a “meaningful user.”

35. Cost – What to Expect

36. How to Prepare Conduct a capacity assessment of existing installed software Contrast and compare systems ability to meet meaningful use Develop a plan for becoming eligible • New software may be required for those who already have an EHR, but one that will not conform • Develop a vendor vetting program to make a vendor decision • Create an RFP (To be discussed in future webinar) Get written compliance guarantees from your vendors Conduct a readiness assessment

37. Summary • Funding is Front Loaded • You Need to Demonstrate Meaningful Utilization • Funding is Time Stamped • Incentives from Federal Government Already in Place

38. Additional Resources • NRHA: http://www.ruralhealthweb.org/ • CCHIT.ORG • HIMSS.ORG • Network with other members • FREE Contract Inspection – jdaigrepont@cokergroup.com

39. Thank You Jeffery Daigrepont Senior Vice President jdaigrepont@cokergroup.com www.cokergroup.com 800-345-5829