Despite a sluggish start, federal incentive payments to hospitals have been rising significantly in recent months.
Data from CMS show that the nation's hospitals received nearly $741 million in incentive payments during October and November 2011 for implementing electronic health records. That figure for those two months is about $70 million more than what hospitals received during the first full fiscal year of the program, from its launch in October 2010 through September 2011.
But aggregate data on the incentive program obscure wide variations in how individual states are performing under the incentive program. Closer analysis of the CMS data shows that some states' hospitals have done well in accessing incentive payments, while hospitals in other states have received little or no funding. The analysis of the EHR incentive program payments to hospitals was prompted by results from quarterly surveys on meaningful use conducted by the College of Healthcare Information Management Executives.
Such variations are to be expected because of the complexity of the program and because of the requirement that states must file health IT plans and gain CMS approval before their Medicaid programs can distribute funds to hospitals.
As of Dec. 28, 2011, 41 states had such plans approved by CMS; that is up from 26 states as of Oct. 1, 2011. This is important because Oct. 1, 2011, was the official end of the first year for eligible hospitals. Meaningful use incentive funding also is available through Medicare, but qualifying for Medicare EHR incentives is much more difficult.
Such disparities pose a disadvantage for hospitals in states that are new to the incentive program, compared with hospitals in states that have had greater success in accessing incentive funding.
CMS' data show that hospitals in the top five states -- Texas, Florida, Michigan, Ohio and Louisiana -- have received a total of $613.4 million in incentive funding, or 43.4% of all Medicaid and Medicare incentive payments awarded to hospitals through November.
The top 10 states -- which also include Illinois, Pennsylvania, Kentucky, Oklahoma and Wisconsin -- have received 64% of all incentive funding payments to hospitals. And the top 15 states -- which include Virginia, Alabama, New York, Georgia and Missouri -- have received 78.1% of all incentive funding through November.
However, CMS data from September through November 2011 actually show improvement in the number of states getting funding and a lessening of the extreme disparities in incentive funding found in the early months of the program. For example, hospitals in the top five states had received 62.4% of the funding through September 2011, compared with the 43.4% through November 2011. Through September 2011, hospitals in the top 15 states had received 96.7% of the funding, compared with 78.1% through November 2011.
The Have-Not States
By contrast, data through November 2011 indicate that hospitals in seven states and the District of Columbia have not received any meaningful use incentive funding through either Medicare or Medicaid. Five states have only one hospital that's received incentive funding, and eight other states reportedly have from two to five hospitals that have received funding.
Even so, the recent data represent a significant improvement from data reported after the first year of the program. Through September 2011, hospitals in 17 states, Puerto Rico and the District of Columbia had not received any incentive funding, and there were 34 states and the two territories in which fewer than five hospitals had received incentive funding.
Having access to incentive funding through states' Medicaid programs is important because hospitals face fewer hurdles qualifying for Medicaid incentive payments than they do under the Medicare program. The Medicare meaningful use program stipulates that hospitals must meet a minimum of 14 "meaningful use" objectives, while the Medicaid program requires only that hospitals implement the technology, with the burden of proving meaningful use delayed for at least a year.
To a great extent, states in which few or no hospitals have received meaningful use incentive funding are those that have delayed filing a health IT plan or have yet to have their plan approved by CMS. A state's plan must describe the current health IT landscape, the end goals for the state, its roadmap for achieving end goals and the activities needed to administer and oversee the state's Medicaid incentive program.
CMS notes that the Medicaid portion of the program is offered at the discretion of individual states and territories, and it has increased the resources available to states to help them through the process, including providing information to states and regular conference calls on program requirements and activities. These efforts are beginning to pay dividends, with seven states' plans being approved in early October 2011, another six in early November 2011 and two more in December 2011.
Some CIOs see the delays in approvals of state plans as giving hospitals needed time to make wise decisions on buying and implementing EHR systems.
"New Jersey only recently opened up the registration for Medicaid stimulus program, with the first opportunity to attest coming in December and initial payments expected in January or February," said Indranil Ganguly -- a CHIME member, and vice president and CIO of CentraState Healthcare System in Freehold, N.J. He added, "I don't feel that the delay has had a negative impact, and, in fact, it may have given some hospitals a little time to get systems in place."
The amount of EHR incentive funding distributed in a state is not always directly related to the number of hospitals. While Texas tops the nation in both number of hospitals (428) and the amount of incentive payments distributed ($250.2 million), Kentucky, with only 104 hospitals, ranked fourth overall in incentive payment distribution at the end of October 2011 as 67 hospitals in the state received a total of $53.7 million.
Planning and Coordination Help
States in which hospitals have had greater success in accessing incentive funding generally have coordinated efforts among stakeholder organizations and state agencies to maximize performance with the program.
For example, Kentucky had a collaborative effort already in place before the EHR Incentive Funding program was developed. Branded as "Kentucky Unbridled Spirit," it includes the state's Cabinet for Health & Family Services, the Kentucky Department of Medicaid Services, the Kentucky Hospital Association and other entities, according to Randy McCleese, a CHIME member, and vice president of information services and CIO at St. Claire Regional Medical Center in Morehead, Ky.
"The CHFS was ready to implement the Kentucky incentive payment program on Jan. 3, 2011, by using in-house IT resources to develop the system," McCleese said, adding, "The team efforts of the different groups in the state have been able to put the provider first, which has allowed for some unprecedented momentum. Hospitals receiving Medicaid incentive funds early in the distribution process allows them the opportunity to begin their meaningful use strategy earlier. They have the ability to invest in the EHR technology that they need."
Similarly, in Texas, a public-private partnership called the Texas Health Service Authority provides a coordinating touchpoint for health care organizations, state agencies and the state Legislature.
"The state has been very organized in implementing a system in place to distribute the Medicaid incentive payments," said Cameron Krier of the Texas Hospital Association. For example, state programs have discretion in how many years Medicaid payouts can occur, and Texas' Legislature was successfully urged to adopt a three-year payout, with 50% of the total received in the first year of the program, Krier said.
"There is strong collaboration with the state Legislature, with everyone here working together toward a common vision," said Edward Marx, CIO at Arlington-based Texas Health Resources. "From talking to my peers in CHIME, I know that hasn't happened in every state."
"Clear and consistent communication has been a key," Krier added. "Many of our providers felt overwhelmed with the Stage 1 meaningful use measures. It took very consistent communication with them to get them to at least apply for Medicaid incentive payments, because the threshold [to qualify] is so low."
"We've hit the tipping point," Marx concluded. "We expect our health information exchanges to be helpful with this, and between incentives and peer pressure, that will help continue the momentum."
CMS is optimistic about the future of the meaningful use incentive program. The agency announced that the $2 billion mark in incentive payments was reached in December 2011, and it noted that high percentages of providers have registered for the program, a precursor to providers' attesting to qualifying for incentive funding.