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HITECH Act Executive Action Plan 2009 . David G. Schoolcraft Ogden Murphy Wallace, PLLC dschoolcraft@omwlaw.com. Presentation Overview. Part I – Federal Incentive Payments for Health IT Up to $36.5Billion in federal stimulus funding Unprecedented opportunity to advance “Health IT”

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hitech act executive action plan 2009

HITECH ActExecutive Action Plan 2009

David G. Schoolcraft

Ogden Murphy Wallace, PLLCdschoolcraft@omwlaw.com

presentation overview
Presentation Overview
  • Part I – Federal Incentive Payments for Health IT
    • Up to $36.5Billion in federal stimulus funding
    • Unprecedented opportunity to advance “Health IT”
    • Complex payment methodologies and some open issues
  • Part II – Significant Changes to HIPAA
    • Data Breach Notification Rules
    • Business Associate Agreements
    • Penalties & Enforcement
    • Accounting of Disclosures
  • Part III – Action Plan for 2009
scope of available funding
Scope of Available Funding
  • Eligible Hospitals
    • Medicare
      • PPS factors: discharges, “Medicare Share”
      • CAH factors: costs w/o depreciation, “Medicare Share”
    • Medicaid
      • 10% of hospital’s “patient volume” (to be defined)
      • No difference in payment methodology for PPS and CAH
  • Eligible Physicians (Medicare or Medicaid)
  • HIE Planning and Development Grants
  • EHR Adoption Loan Program
the whole picture

Washington Grace Hospital = 25 beds, Critical Access Hospital

2 Employed Physicians – Medicare ($44,000)

The Whole Picture

Estimates based on certain factual assumptions. Subject to revision under final HHS regulations.

the whole picture6

Washington Grace Hospital = 80 beds

4 Employed Physicians – Medicare ($44,000)

The Whole Picture

Estimates based on certain factual assumptions. Subject to revision under final HHS regulations.

key terms for medicare medicaid
Key Terms for Medicare/Medicaid

Incentives for Adoption and “Meaningful Use”of “Certified

EHR Technology”

meaningful use
“Meaningful Use”
  • Demonstrate to the “satisfaction of the Secretary” use of certified EHR in a meaningful manner
  • Certified EHR technology must be connected to provide for the electronic exchange of health information to improve the quality of care
  • Hospitals to submit information on clinical quality and other measures as selected by the Secretary
  • More stringent measures over time
certified ehr technology
“Certified EHR Technology”
  • “Certified EHR technology” is a qualified electronic health record meeting standards to be defined
  • Office of the National Coordinator for Health Information Technology (“ONC”) to develop certification program
  • Certification Commission for Healthcare Information Technology (“CCHIT”) may be involved along with the National Institute of Standards and Technology (“NIST”)
  • December 31, 2009 deadline for initial standards, implementation specs and certification criteria
medicare incentive payments
Medicare Incentive Payments
  • Fiscal year 2011-2015 (Oct. 2010)
    • Phased Transition Schedule After 2013
  • HHS will determine how hospitals shall demonstrate meaningful use (attestation, survey, etc.)
  • Amount

($2 MM + $200 (Discharges 1,150th - 23,000th)) * Medicare Share * Transition Factor

    • Medicare Share = Medicare portion of inpatient days adjusted upward for charity care.
    • Transition Factor - Reduction by 25% per year for 4 years
medicare incentive penalty timeline
Medicare Incentive/Penalty Timeline
  • Medicare incentives are paid on a transition schedule.
  • After FY 2015, if a hospital is not a meaningful EHR user then penalties begin
medicare incentive payments12
Medicare Incentive Payments
  • Washington Grace Hospital – 80 beds

Medicare Share




*Estimate based upon existing statute in advance of HHS rule making.

medicare incentive payments critical access hospitals calculation
Medicare Incentive PaymentsCritical Access Hospitals Calculation
  • If a meaningful EHR user by 2015, CAH may expense certain EHR costs in one year for cost reporting purposes (non-depreciated basis) and certain costs from prior periods
  • Calculation uses Medicare Share amount + 20%
  • Equation:

101% * Reasonable Cost of EHR System * (Medicare Share + 20%)

  • If CAH is not a meaningful user by 2015 or thereafter, percentage reimbursement will be reduced to 100.66% in 2015, 100.33% in 2016 and 100% in 2017
medicare incentive payments critical access hospitals

Washington Grace CAH – 25 beds

Medicare Incentive Payments Critical Access Hospitals

Medicare Share

75% + 20% = 95%

(20% increase for CAH)

Assumes costs remain the same over all four years



*Estimate based upon existing statute in advance of HHS rule making.

critical access hospital penalties
Critical Access Hospital Penalties
  • CAH’s who have not implemented EHR’s by 2015 may be subject to reductions
medicaid incentive payments
Medicaid Incentive Payments
  • 10% of “Patient Volume” on Medical Assistance
    • To be defined by Secretary of HHS
    • Inpatient vs. outpatient volumes
  • States allocate the money
  • Year 1 – Demonstrate efforts to adopt, implement or upgrade EHR system
  • Years 2-6 – Demonstrate “meaningful use”
medicaid incentive payments critical access hospital
Medicaid Incentive Payments Critical Access Hospital
  • Washington Grace CAH – 25 beds

Medicaid Share




medicare incentive payments for physicians
Medicare Incentive Payments forPhysicians
  • Physician incentive payments are 75% of Medicare allowed charges
    • Penalties – reduction in physician fee schedule
  • 10% increase in incentives if physician practices in a designated health professional shortage area
medicare incentive payments for physicians19
Medicare Incentive Payments forPhysicians
  • Hospitals may be able to collect incentive payments for certain employed physicians, but note that “hospital-based” physicians are excluded
part ii hipaa


New Compliance Obligations


More Regulations to Come

breach notification
Breach Notification
  • Requires that covered entities notify patients of any unauthorized acquisition, access, use, or disclosure of “unsecured” PHI
  • Date of discovery – first day breach was known or should have been known
  • Notice within 60 days of discovery
  • If+500, then notice to media and HHS
breach notification key issue is data unsecured
Breach NotificationKey Issue: Is data “unsecured”?
  • Recent HHS Guidance
  • Reference to NIST Publication 800-100
  • Internal review and risk analysis
  • Data encryption technologies
business associates
Business Associates
  • Currently – Business Associates not directly regulated by HIPAA
  • Application of HIPAA Security Requirements
    • Administrative Safeguards
    • Physician Safeguards
    • Technical Safeguards
    • Documentation Requirements
  • Requirement to notify Hospital if there is a breach
  • Open question regarding mandatory revisions to Business Associate Agreements
  • Expansion of criminal and civil penalties
  • Tiered penalties tied to violator’s level of intent
  • Periodic audits by HHS
  • Victims may receive percentage of civil penalties
  • State Attorney General may bring an action provided an action by HHS is not pending
accounting of disclosures
Accounting of Disclosures
  • Eliminates existing exception limiting accounting for disclosures other than treatment, payment and health care operations
  • Will require significant operational changes, but may be aided by improved IT systems
  • Staggered effective dates:
1 incentive payment analysis
1. Incentive Payment Analysis
  • Prepare estimate of health IT incentive funds available for your facility
  • Analyze Medicare and Medicaid incentive payments for hospitals (PPS/CAH) and eligible physicians
  • Monitor HHS, ONC, CCHIT, NIST for development of standards for “certified EHRs” and “meaningful use”
2 data breach prevention
2. Data Breach Prevention
  • Develop data breach prevention and response plan
  • Assess data security in light of new federal standards
  • Implement additional data security measures deemed necessary and appropriate following risk analysis
  • Develop reporting and communications plan in conjunction with IT service providers:
    • Internal reporting and incident review
    • Required external communications (patients, media, government)
    • Methods to address follow up inquiries from patients and/or media
3 technology transaction review
3. Technology Transaction Review
  • Careful review of information technology transactions– from due diligence during system selection through contracting
  • Ensure that all information technology transactions are HITECH-Ready
    • Vendor/service provider commitments regarding data security and accounting of disclosure requirements
    • Updated Business Associate Agreement
    • Functionality necessary to obtain or maintain “certified EHR” status and to facilitate “meaningful use”


David G. Schoolcraft