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State Readies Medicaid EHR Incentive Program

California has taken one large step forward in its goal to make electronic health records a ubiquitous part of health care provider practices in the state.

Under the 2009 federal economic stimulus package, health care providers who demonstrate meaningful use of certified EHRs can qualify for incentive payments under Medicare and Medicaid.

The Department of Health Care Services announced the application process for the Medicaid EHR incentive program is open for business. The state now is ready to distribute as much as $1.4 billion in federal incentive funding to hospitals and physician groups who treat beneficiaries of Medi-Cal, California’s Medicaid program.

The application process will be staggered over three months: hospital registration opened on Oct. 3; physician groups are next in line, able to apply on Nov. 15; and individual physicians can file for the federal money beginning Dec. 15.

Under the Medicaid portion of the program, payments in the first year are based on adoption, implementation or upgrade of certified EHR technology, while following annual payments are based on the meaningful use of the EHR technology.

According to DHCS officials, California is the first state to prequalify applicants — that is, to approve eligibility ahead of time, enabling physicians who qualify for federal incentive money to know they could invest in EHRs long before the actual reimbursement checks appear.

There are some details yet to be worked out — most notably the precise definition of what constitutes a “physician group,” a telling detail that could affect a significant number of providers in California.

Still, there has been a large amount of work and effort — federally and at the state level — put into the EHR incentive program and the state will reap a large benefit from it, according to Raul Ramirez, chief of the DHCS Office of Health Information Technology.

“This is the inception of a program that will improve health care in the state, both short-term and long-term,” Ramirez said. “This will mean better health outcomes throughout the state.”

This is a big moment for California, according to David Sayen, regional administrator at CMS.

“It’s a milestone, it’s the beginning,” Sayen said, “This is why we gave the states grants to work on this. This will make a huge difference.”

Hospitals First

Ramirez and officials from the California Hospital Association expect every hospital in the state — about 250 eligible facilities — to apply for the incentive money.

“I can’t think of one that won’t sign up,” Ramirez  said.

According to Pamela Lane, vice president for health informatics at the California Hospital Association, the shift to EHR systems has been a long time coming.

“We’ve all been working and planning and talking about this for so long,” Lane said. “It’s a big deal for us to have the first incentive dollars so close at hand. It’s definitely in the hospitals’ interest to do this sooner rather than later.”

Lane said it makes intuitive sense to start the process with hospitals because there are considerably fewer of them than physician groups in California. Dealing with that smaller number of applicants could help iron out bugs in the online application system. “Just like any IT system, if there are any surprises, you fix it,” she said. “So that might help the launch of the other systems.”

The eligibility requirements for hospitals, provider groups and individual providers are all different and complicated, Lane said. “The process for states to get this money is pretty involved,” she said. “But there was this overwhelming commitment that when this went live, we wanted it to be done right. So we have taken a lot of time to develop it.”

Outstanding Question

There’s one vital detail still to be worked out before the physician group section launches in November:

What exactly is a physician group?

“That’s one of the key concerns we’re hearing,” according to Andie Martinez Patterson of the California Primary Care Association. “Everyone wants to know, ‘What is the final decision about what constitutes a group?'”

Ramirez said the designation will be made well ahead of the Nov. 15 application date for physician groups and clinics.

“We convened a work group to further define what a group is,” he said. “We want to see how far we could expand that definition.” The state is ultimately responsible for distributing those federal dollars, so DHCS wants to make sure federal guidelines are followed.”

“We’re also working with CMS to get advice,” Ramirez said, adding, “We are seeking their guidance to see what the parameters might be, and what we can do. We are definitely working to get that definition.”

One of the issues, Patterson said, is that the eligibility requirement for physicians, requiring 30% of the patient load to be enrolled in Medi-Cal, is not yet clearly defined. It’s hard for every individual within a group practice to reach that level, which raises the question: If the group meets that level, should all of the providers within that group be eligible for the incentive money?”

“There isn’t one factor you can look at to say, ‘This is what clearly delineates a group,'” Patterson said. “How do you bill Medi-Cal? Do you bill as a group? Are you using a group tax ID number that includes everyone in that group?”

The problem could affect thousands of providers in California, Patterson said. “This is a ton of providers we’re talking about,” she said. “Achieving that number of Medi-Cal encounters is really a lot for individuals, but for clinics it’s not such a big deal.”

Patterson is in the working group to try to resolve this issue — she jokingly calls it the group work group.

“The situation’s complicated and still not resolved as of today, less than a month out from sending the letters [on Nov. 15], and that’s increasingly a concern to our providers,” Patterson said.

According to Ramirez, it’s likely that the larger clinics will receive that designation. “The traditional physician group, that’s going to go forward,” Ramirez said. “And the clinics as a group, that’s likely. But there are still questions about the others.”

New Paradigm

However the eligibility question is resolved, California is looking at a major shift in the way health care is practiced in the state, Ramirez said.

“If you look at the EHR program and the goals behind it, it’s to encourage providers to adopt technology, and to make positive strides in the delivery of effective health care,” Ramirez said.

“That means better care coordination, greater ability for providers to follow up with patients and allow them to participate in the process. And there’s more convenience for both the patient and the provider.”

According to Dorian Seamster — chief of health information services at the California Health Information Partnership and Services Organization, one of the country’s 62 federally designated regional extension centers — the multiple benefits of EHRs are a given at this point. The only question has been whether California providers would be able to afford to implement EHRs.

“We’ve been looking forward to this very much,” Seamster said. “This month’s application process is the reality, the realization that we truly will get the money to do this. It’s a major step forward in making this real.”

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