The registration process and reporting period for the meaningful use incentive program officially commenced on Jan. 3. More than 21,000 health care providers have registered to date and many more are ramping up efforts to meet meaningful use criteria and collect federal incentives in fiscal year 2011. However, rushing out the gates in FY 2011 is extremely risky and not advisable. In fact, the Advisory Board Company strongly recommends waiting until FY 2012 to first demonstrate meaningful use.
Three key reasons hospitals should wait until FY 2012 are outlined below.
Compressed, unreasonable timeline for achieving Stage 2: The final rule states hospitals that first demonstrate meaningful use in FY 2011 will need to achieve Stage 2 by FY 2013 (i.e. Oct. 1, 2012). Furthermore, hospitals must demonstrate meaningful use requirements for the entire year in Stage 2 as opposed to the 90-day reporting period for the first year that a hospital is a meaningful user. Unfortunately, the final rule defining Stage 2 requirements will not be finalized until mid-2012, leaving hospitals that first demonstrate meaningful use in 2011 with less than six months to meet Stage 2 by Oct. 1, 2012. This will be an unattainable leap for health care providers, especially because Stage 2 is being positioned as a step down from Stage 3, not a step up from Stage 1. Stage 2 comprises enhancements to Stage 1 requirements in addition to a host of new, more complex criteria and clinical quality measures. Furthermore, hospitals will be dependent on their vendors' ability to rapidly develop, test and seek certification for the Stage 2 EHR capabilities, adding another barrier to provider Stage 2 meaningful use achievement in the short time frame available. In contrast, waiting until FY 2012 to first demonstrate meaningful use will afford hospitals nearly 18 months to migrate from Stage 1 to Stage 2 -- a more adequate time frame to acquire, implement and adopt the required capabilities for Stage 2.
No incentives lost for starting in FY 2012: In order to maximize the incentive collection across all four payment years (Medicare incentives for hospitals end in 2016), hospitals must demonstrate Stage 1 of meaningful use no later than July 2013 and continue to successfully demonstrate subsequent meaningful use stages. This means that hospitals have no early mover financial advantage for achieving meaningful use in FY 2011 (other than the net present value of the incentives). However, while there is no financial upside for achieving meaningful use in FY 2011, hospitals run the risk of forfeiting their Medicare incentives in FY 2013 and beyond if they fail to successfully demonstrate future stages. Therefore, hospitals are better off delaying reporting on meaningful use until FY 2012 (i.e. Oct. 1, 2011, to Sept. 30, 2012) so that they have adequate time to prepare for Stage 2 (by Oct. 1, 2014 for hospitals first achieving meaningful use in FY 2012), thereby safeguarding their ability to maximize their incentive collection.
Building with a more complete information set: CMS and the Office of the National Coordinator for Health IT already have released several FAQs and clarifications on demonstrating various meaningful use requirements. Undoubtedly, more are on the way based on the challenges and pitfalls faced by health care providers who attempt to achieve meaningful use in FY 2011. Some of these clarifications could significantly impact hospitals' meaningful use plans and strategies. Furthermore, across the coming months, the Health IT Policy Committee will evaluate the initial results of the meaningful use program and provide recommendations for Stage 2 and some Stage 3 requirements. Herein lies the late mover advantage for hospitals -- those providers that wait to demonstrate meaningful use until FY 2012 will not only benefit from lessons learned by the early movers but also will have greater visibility into future requirements, enabling appropriate planning in a timely manner.
Recommendations Hold True for Physician Practices
In fact, the same rationale and recommendations hold true for hospitals aiming to collect Medicare incentives for their physician practices. Similar to hospitals, physicians also have to achieve Stage 2 of meaningful use by Jan. 1, 2013 (physician meaningful use schedules are based on the calendar year) if they first demonstrate meaningful use in CY 2011. Making the leap to Stage 2 in six to nine months after the release of the final Stage 2 rule will be impossible for most practices for the reasons discussed above. Furthermore, Medicare-eligible physicians do not lose any incentives for reporting on meaningful use in CY 2012 instead of CY 2011. Thus, waiting to report on meaningful use until CY 2012 for physician practices -- owned or supported by affiliation -- is strongly recommended.
The Advisory Board Company's News Division produces iHealthBeat for the California HealthCare Foundation.