Is there a minimum amount Medicaid EP’s must pay to receive incentives?
And, must they have paid the full amount in order to qualify for Adopting, Implementing and Upgrading in an initial year?
This should be a simple question, but requires quite a bit of research into the Final Rule and FAQ site to derive an answer. Here are the sources, followed by our conclusion. We derive several points en route, in the following extracts.
1. Incentive payments are not intended as direct reimbursement for purchase of technology
Source: Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations Page 44482 (Near bottom of column 2)
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.
2. Payment basis is “Net Average Allowable Cost”
Average allowable cost is determined by CMS via literature study to aid in setting their reimbursement ceilings, not the cost a provider will actually bear. (Note the word “average” throughout the regulation, implying aggregation over a population.)
Source: Federal Register /Vol. 75, No. 144 /Wednesday, July 28, 2010 /Rules and Regulations Page 44491 (Column 3)
Payment Methodology for EPs – 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.
3. Individual providers may need to adjust “Average Allowable Cost” by any payments they have received (from anyone other than state or local government) to reimburse their EHR purchase
Source: Federal Register /Vol. 75, No. 144 /Wednesday, July 28, 2010 /Rules and Regulations Pages 44492 (column 3) & 44493 (column 1)
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 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.
4. After arriving at Net Average Allowable Cost, EP’s are responsible for 15% of the balance
Source: Federal Register /Vol. 75, No. 144 /Wednesday, July 28, 2010 /Rules and Regulations Pages 44492 44493 (column 1 continuation from above)
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.
5. CMS has deferred to the States for a filing and audit process by which EP’s must verify the receipt of third party reimbursement, and verifying that EP’s have paid 15% of the statutory annual amounts
Note that this section also of the regulations identifies relevant types of reimbursement providers might receive from third parties. See columns 2 & 3 of the cited Federal register for specific examples
Source: Federal Register /Vol. 75, No. 144 /Wednesday, July 28, 2010 /Rules and Regulations Page 44493 (column 1 & 2)
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.
6. Bottom line for Year 1: EP’s should expect to be required to prove that they spent $3,750 and received no more than $29,000 from other sources to help defray these costs.
The $29,000 would need to come from sources other than the clinic in which they are employed, or state / local government. Also, CMS directs states to consider a wide range of related costs in determining this expenditure by EP’s.
Source: Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations Page 44494 (Top of Page)
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.
7. To qualify for Adopting, Implementing and Upgrading, a signed contract will be sufficient
Source: CMS FAQ # 10100 updated 3/24/11
States should make clear to providers when they attest for AIU what documentation they must maintain, and for how long, in case of audit. If States determine that certain provider types are a high risk for potential fraud/abuse for AIU, then they can ask for some verification of adopting, implementation or upgrading but CMS encourages that this be done in a targeted manner, with the most electronic and simple means possible and not in such a way that would be burdensome to providers. For AIU, a provider does not have to have installed certified EHR technology. The definition of AIU in 42 CFR 495.302 allows the provider to demonstrate AIU through any of the following: (a) acquiring, purchasing or securing access to certified EHR technology; (b) installing or commencing utilization of certified EHR technology capable of meeting meaningful use requirements; or (c) expanding 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 EHR certification criteria published by the Office of the National Coordinator of Health Information Technology (ONC). Thus, a signed contract indicating that the provider has adopted or upgraded would be sufficient.
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Long story made short, EP’s will generally qualify for the full EHR Stimulus funds, as long as they have spent $3,750 of their own money in year 1, and $1,275 in subsequent years.