Electronic Health Records:

Number and Characteristics of Providers Awarded Medicare Incentive Payments for 2011

GAO-12-778R: Published: Jul 26, 2012. Publicly Released: Jul 26, 2012.

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What GAO Found

In summary, 761 hospitals and 56,585 professionals were awarded a total of approximately $2.3 billion in Medicare EHR incentive payments for 2011. These 761 hospitals represented 16 percent of the estimated 4,855 eligible hospitals, and were awarded $1.3 billion in Medicare EHR incentive payments for 2011. While the amount of EHR incentive payments awarded to each hospital ranged from $22,300 to $4.4 million, the median payment amount was $1.7 million. About 61 percent of hospitals accounted for about 80 percent of the total amount of incentive payments awarded to hospitals. Among hospitals awarded an incentive payment for 2011, we found that

  • the largest proportion (44 percent) were located in the South, and the lowest proportion (12 percent) were located in the Northeast;

  • about two-thirds (67 percent) were in urban areas;

  • more than four-fifths (86 percent) were acute care hospitals; and

  • almost half (46 percent) were in the top third of hospitals in terms of number of beds.

Hospitals with certain characteristics were more likely to have been awarded a Medicare EHR incentive payment for 2011. For example, acute care hospitals were more than 2 times more likely than critical access hospitals to have been awarded an incentive payment. Hospitals in the top third in terms of numbers of beds were 2.4 times more likely than hospitals in the bottom third to have been awarded an incentive payment. Further, nonprofit and for-profit hospitals were 1.1 and 1.5 times more likely than government-owned hospitals, respectively, to have been awarded an incentive payment.

The 56,585 professionals who were awarded a Medicare EHR incentive payment for 2011 represented about 9 percent of the estimated 600,172 professionals eligible for the program, and were awarded a total of about $967 million in incentive payments. Among professionals awarded an incentive payment for 2011, we found that

  • the largest proportion (32 percent) were located in the South, and the lowest proportion (17 percent) were located in the West;

  • a significant majority (89 percent) were in urban areas;

  • half (50 percent) were specialty practice physicians and over one-third (38 percent) were general practice physicians;

  • nearly three-quarters (71 percent) did not previously participate in CMS’s incentive program for electronic prescribing; and

  • about half were in the top third in terms of 2010 Medicare Part B charges (46 percent) and 2010 Medicare Part B patient encounters (51 percent).

Professionals with certain characteristics were more likely to have been awarded a Medicare EHR incentive payment for 2011. For example, general practice physicians were 1.8 times more likely than specialty practice physicians to have been awarded an incentive payment. Professionals who had previously participated in CMS’s electronic prescribing program were almost 4 times more likely to have been awarded an incentive payment than those who had not participated in the electronic prescribing program, and professionals who had signed an agreement to receive technical assistance from a Regional Extension Center were more than twice as likely to have been awarded an incentive payment. Professionals in the top third in terms of 2010 Medicare Part B charges or number of 2010 Medicare Part B encounters were more than 3 times more likely to have been awarded an incentive payment compared to those in the bottom third for charges or number of encounters.

Why GAO Did This Study

Widespread use of health information technology, such as electronic health records (EHR), has the potential to improve the quality of care patients receive and reduce health care costs. However, studies have estimated that as of 2009, 78 percent of office-based physicians and 91 percent of hospitals had not adopted EHRs. Among other things, the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009 (Recovery Act) provided funding for various activities intended to promote the adoption and meaningful use of certified EHR technology. The largest of these activities, in terms of potential federal expenditures, are the Medicare and Medicaid EHR programs. Starting in 2011, these programs have provided incentive payments for certain providers, including both hospitals and health care professionals such as physicians and dentists, that demonstrate meaningful use of certified EHR technology and meet other program requirements established by the Centers for Medicare & Medicaid Services (CMS). Beginning in 2015, the Medicare EHR program is generally required to begin applying a payment adjustment—that is, a payment reduction—for Medicare providers that do not demonstrate meaningful use. The Congressional Budget Office estimated total spending for the Medicare and Medicaid EHR programs to be $30 billion from 2011 through 2019, of which spending for the Medicare EHR program accounts for more than half—$17.7 billion. This report focuses on the Medicare EHR program.

Provisions in the HITECH Act defined the types of hospitals and professionals that may be eligible to receive Medicare EHR incentive payments. Eligible hospitals include acute care hospitals and critical access hospitals. Eligible professionals include doctors of medicine, dental medicine or surgery, optometry, osteopathy, and podiatric medicine, and chiropractors. During 2011, the first year of the program, 2,802 hospitals and 141,649 professionals registered for the Medicare EHR program, which is a necessary first step to participate in the program. Hospitals can receive Medicare EHR incentive payments for up to 4 years, and professionals can receive such payments for up to 5 years.

The incentive payment amounts are determined as follows:

  • For acute care hospitals, the incentive payment amount for any given year is generally based on the hospital’s annual discharges and Medicare share, which is the percentage of the hospital’s inpatient bed days that were attributable to Medicare patients. Theoretically, $6,370,400 is the maximum possible Medicare EHR incentive payment for an acute care hospital for 2011. This assumes that all patients served were Medicare patients and that the hospital had at least 23,001 discharges, which is the highest number of discharges CMS includes in the calculation of Medicare EHR incentive payments.
  • For critical access hospitals, the incentive payment amount is generally based on the hospital’s Medicare share as well as reasonable costs incurred for the purchase of depreciable assets necessary to administer certified EHR technology, such as computers and associated hardware and software. CMS has not established a maximum incentive payment amount for these hospitals.

  • For professionals, the amount of incentive payment in any given year is generally based on the professional’s (1) Medicare Part B charges or (2) revenue for services provided to Medicare Advantage plan enrollees of a qualifying Medicare Advantage Organization (MAO), subject to an annual limit. For most professionals, the amount of the incentive payment for 2011 could not exceed $18,000. For professionals who predominately furnish services in geographic areas designated as a health professional shortage area, the amount of the incentive payment for 2011 generally could not exceed $19,800.

The HITECH Act requires us to report on, among other things, the impact of its provisions on adoption of EHRs by providers. In response to this requirement, in April 2012 we reported on CMS’s efforts to oversee the Medicare EHR program during its first year as well as challenges encountered by providers and strategies they used to participate in the program.

We recommended that CMS take steps to enhance its processes to verify that providers met the requirements to receive incentive payments. On behalf of CMS, the Department of Health and Human Services agreed with most of our recommendations.

Concerns have been raised that various factors, such as location in urban or rural areas or the size of hospitals and professional practices, may affect the extent to which different providers will respond to the provisions of the HITECH Act that aim to encourage the meaningful use of EHR technology. Identifying the number and characteristics of providers that participated during the first year of the Medicare EHR program can provide important information on whether certain types of providers were more likely than others to participate. This information could also provide an early indication of the types of providers that may be more likely to receive payment reductions in future years of the program. As discussed with the committees of jurisdiction, in this report we provide information on providers that were awarded Medicare EHR incentive payments for 2011, the first year of the program. We have ongoing work on the Medicaid EHR program and will issue a future report that will provide information on providers awarded incentive payments for the first year of that program, such as the number of award recipients and their characteristics.

For more information, contact Linda T. Kohn at (202) 512-7114 or at kohnl@gao.gov.

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