Electronic Health Records: Opportunity’s Knocking

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By Gray Tuttle, James Schafer, and Joseph P. Heider

Joseph P. Heider

Last year’s American Recovery and Reinvestment Act set aside $19 billion to advance the adoption of Electronic Health Records (EHR) among qualified providers. The plan intends to underwrite half of the nation’s qualified medical providers $44,000 each over five years to implement EHR if they qualify under the Medicare program or up to $66,000 under Medicaid.

The federal government’s goal under its Health Information Technology for Economic and Clinical Health Act (HITECH) is to jumpstart EHR adoption in medical practices. One reason is to improve patient safety and patient service. Studies point to thousands of deaths each year that can be attributed to contraindications of medication alone. Good EHR systems can help eliminate these kinds of medical errors by prompting a doctor with an alert if a medication is contraindicated for a particular patient.

Another reason to boost EHR is that full implementation can save billions of dollars each year in costs to the Medicare program.

Providers will likely have to satisfy at least two requirements to be eligible for these stimulus funds:

  1. Any electronic health record system used by a medical provider has to be certified. Right now, the predominant certification body is the Certification Commission for Healthcare Information Technology, or CCHIT. It’s almost certain, though, that other certifying bodies will be approved for use in tandem with these stimulus funds for EHR.
  2. The second step will include meeting HITECH’s “Meaningful Use Criterion.”

A Great Inducement

Once these standards are met, a private practitioner is eligible to receive $44,000 in stimulus funds for EHR but only as a function of the qualified provider’s level of participation in Medicare.

What that means is that eligibility centers on the provider’s approved Medicare charges starting in 2011, or the services provided to Medicare beneficiaries and the level that Medicare approved for payment. In other words, the reward level is equal to 75 percent of the provider’s approved charges submitted to Medicare each year of the incentive program.

Here’s how the $44,000 per provider over five years works.  To get the maximum $18,000 offered in the first year of the program, a provider would have to meet $24,000 in approved Medicare charges. After the first year, the reward dwindles to $12,000 in year two; $8,000 in year three; $4,000 in year four; and finally, $2,000 in year five.

To receive the maximum $44,000 – and this is critical – a qualified provider must enter the program either in 2011 or 2012. That means qualifying, adopting and installing an EHR system in your medical practice before the end of 2012. If you hesitate and start after that, the first year of the award ($18,000) is eliminated.

Practitioners who are already working with EHR in their offices can pursue these funds, as long as those systems are properly certified and meet the HITECH “Meaningful Use Criterion.”

More Incentive

If a practice doesn’t implement EHR by 2015, the federal government will reduce its approved charges for Medicare by one percent. In 2016, it’ll be two percent and in 2017, three percent. You can wait until 2015 and still receive a couple of year’s worth of the stimulus funds, but under the penalty provision you’ll suffer a year of reduced payments in approved Medicare charges.

If your practice doesn’t have an EHR system in place yet, it’s not too soon to begin your due diligence by considering the vendors who offer them.

Advances in technology happen at lightning speed, driving competition and lowering prices. Some physicians’ practices that put in EHR systems five years ago spent as much as $40,000 or $50,000 per doctor, up front. They borrowed the money and paid interest on that over five years. Today, an EHR system using broadband access to the Internet, where software can be acquired and data stored through cyberspace, may cost an entire five-physician group just $25,000 in implementation and training fees and $3,000 per month for the practice management and EHR access.  However, these costs do not include computer hardware.

So, there’s no better time than now to begin investigating an EHR system that would be right for your practice. Because these systems have been around for awhile and are more refined, it’s safe to say that the acquisition, training and implementation costs on a per provider basis would be less than $44,000.

A doctor’s time is the most expensive resource in any medical practice. So vendors are constantly updating their EHR products to make them as user-friendly and efficient as possible.  There are eight to 10 systems right now in Michigan that are popular, ranging from an extremely complex and sophisticated operation that does it all to a more scaled-back version that can be added to as you go forward.

Moving your practice over to EHR takes commitment from the staff in order for the system to help your practice run smoothly and most efficiently. Getting buy-in from your practice manager is important, too. At first, you may have to deal with all sorts of objections from your staff and perhaps your own colleagues (“I don’t understand computers.” “The patients aren’t going to like it.” “It’s going to slow me down.” “It’s going to cost too much.” And so on).

But aversion to technology is no way to practice medicine today. In fact, these EHR systems can actually help you make more money through better billing practices, better coding and documentation practices and better compliance.

Those family physicians who are caring for young and healthy patients will find they have a competitive edge since these patients are accustomed to using technology to stay connected. They’ll want their providers to give them access through patient portals so they can make appointments, obtain their test results, send e-mail queries, etc. They can’t do that with physicians who don’t have EHR.

As they say, do the math. If you’ve been contemplating EHR for your medical practice, there’s no better time than now. If you qualify, it’s basically a free installation under the federal HITECH program. You can choose to do it five or six years, but Uncle Sam is not going to pay you for it and will, in fact, penalize you for the delay.

Gray Tuttle, CHBC, is the Principal of Rehmann Financial in Cleveland, OH; James Schafer, MPA, is the Managing Principal; and Joseph P. Heider, JD, ChFC®, CLU® is a principal. Rehmann Financial addresses the wealth management and business consulting needs of high net worth individuals with an added emphasis on physicians. For more information, visit www.rehmann.com. This article, reprinted with permission, was originally printed in the Summer 2010 issue of BWD Magazine..