Electronic Health Records: Number and Characteristics of Providers Awarded Medicaid Incentive Payments for 2011

What GAO Found

In summary, 1,964 hospitals and 45,962 professionals were awarded a total of approximately $2.7 billion in Medicaid EHR incentive payments for 2011. These 1,964 hospitals, which represented 39 percent of the 5,013 eligible hospitals, were awarded a total of $1.7 billion in Medicaid EHR incentive payments for 2011. While the amount of Medicaid EHR incentive payments awarded to each hospital ranged from $7,528 to $7.2 million, the median payment amount was $613,512. Participation rates, as well as total payments, were higher for hospitals in the Medicaid EHR program when compared to the Medicare EHR program, though the median payment amount in the Medicaid EHR program was less than half as large. About 50 percent of hospitals accounted for about 80 percent of the total amount of Medicaid incentive payments awarded to hospitals. Among hospitals awarded a Medicaid EHR incentive payment for 2011, we found that

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 2009,2 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). The Congressional Budget Office estimates that from 2011 through 2019, spending for the Medicare and Medicaid EHR programs will total $30 billion, with spending for the Medicaid EHR program accounting for more than a third--$12.4 billion. This report focuses on the Medicaid EHR program.

Provisions in the HITECH Act define the types of hospitals and professionals that may be eligible to receive Medicaid EHR incentive payments. Eligible hospitals include acute care hospitals, critical access hospitals, children's hospitals, and cancer hospitals. Eligible professionals include doctors of medicine, dental medicine or surgery, and osteopathy; nurse practitioners; certified nurse midwives; and physician assistants who work for a federally qualified health center or rural health clinic that is led by a physician assistant. To participate in the Medicaid EHR program, providers must generally meet a patient volume requirement. This requirement was established to ensure that providers that receive incentive payments from the Medicaid EHR program serve a minimum volume of Medicaid patients, or, for certain professionals, a minimum volume of needy patients. Hospitals generally must have a Medicaid patient volume of at least 10 percent. Professionals must have a Medicaid patient volume of at least 30 percent unless they are pediatricians or practice predominantly in a federally qualified health center or rural health clinic; pediatricians must have a Medicaid patient volume of at least 20 percent.

To qualify for incentive payments in 2011 or during the first year they participate in the Medicaid EHR program, providers only need to adopt, implement, or upgrade to a certified EHR system, and they do not have to demonstrate meaningful use. In subsequent years, however, providers must demonstrate meaningful use of the EHR systems in order to qualify for the program's incentive payments. To demonstrate meaningful use, providers must collect and report information on various measures established by CMS.

States, the District of Columbia, and the U.S. insular areas administer and oversee the Medicaid EHR program, with CMS providing additional oversight and funding. Although states are not required to offer the Medicaid EHR program, 42 states launched a Medicaid EHR program and disbursed incentive payments for 2011. During 2011, the first year of the program, 2,700 hospitals and 66,663 professionals registered for the Medicaid EHR program, which is a necessary first step to participate in the program. Under the Medicaid EHR program, incentive payment amounts to hospitals and professionals are determined as follows. Payments are determined and awarded on a fiscal year basis for hospitals and on a calendar year basis for professionals.

• For hospitals, the amount of incentive payment in any given year is generally based on the hospital’s annual discharges and Medicaid share, which is the percentage of the hospital’s inpatient bed days that were attributable to Medicaid patients. The number of years over which incentive payments are awarded (from 3 to 6 years) is at the discretion of the state. As a result, the payment amount awarded to hospitals for a certain level of discharges and Medicaid share in any given year, including 2011, can vary across states. Theoretically, the maximum possible amount a hospital could receive in total Medicaid EHR incentive payments is $15,926,000.

For most professionals, the amount of incentive payment that a professional receives in any given year is, in general, a fixed amount, $21,250 in the first year and $8,500 each year for up to 5 subsequent years. The total amount over a 6-year period cannot exceed $63,750.

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 first year of the Medicare and Medicaid EHR programs as well as challenges encountered by providers and strategies they used to participate in these programs. We recommended, among other things, that CMS take steps to enhance its processes used to verify that providers receiving incentive payments have met program requirements. On behalf of CMS, the Department of Health and Human Services agreed with most of our recommendations. In July 2012, we reported information on providers that were awarded Medicare EHR incentive payments for 2011, including the number of award recipients and their characteristics.

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 incentives provided by the HITECH Act. Identifying the number and characteristics of providers that participated during the first year of the Medicaid EHR program can provide important information on whether certain types of providers were more likely than others to participate. As discussed with the committees of jurisdiction, in this report we provide information on providers that were awarded Medicaid EHR program incentive payments for 2011, the first year of the program.

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