Medicaid Providers Rack EHR Incentive Dollars

Despite initially low participation in the Medicaid health IT incentive program, 1,964 hospitals, or 39% of the eligible facilities, were awarded a total of $1.7 billion in Medicaid EHR incentives for 2011, according to a recent Government Accountability Office (GAO) report. In addition, the report found, the 45,962 professionals who in 2011 received Medicaid EHR incentives totaling $967 million represented 33% of the professionals who were eligible for those payments.

The relatively high percentage of providers receiving these payments in the first year is remarkable in light of the fact that until October 2011, less than half of the states had made any EHR incentive payments. (By the end of the year, 43 states had). But in 2011, or in the first year for which hospitals and eligible professionals (EPs) applied for Medicaid incentive payments, they did not have to demonstrate Meaningful Use of their EHRs; they had only to meet the government's adopt/implement/upgrade requirements to get financial rewards.

The GAO report, mandated by the HITECH Act that also authorized up to $27 billion in Medicare and Medicaid EHR incentive payments, is the third the office has done on the subject this year. In April, it reported on the efforts of the Centers for Medicare and Medicaid Services (CMS) to oversee the program in 2011. And in July, the GAO published an analysis of Medicare incentive payments that year.

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In the Medicaid report, the GAO also found that among hospitals that received a Medicaid incentive payment in 2011:

-- The largest proportion (46%) were located in the South and the smallest proportion (15%) were located in the Northeast

-- Three-fifths (62%) were located in urban areas

-- Four-fifths (80%) were acute care hospitals

-- More than half (57%) were nonprofit hospitals

-- More than half (57%) were not members of a chain.

Acute care hospitals were 1.7 times more likely, and children's hospitals were 1.6 times more likely, than critical-access hospitals to receive Medicaid rewards. Facilities with the largest number of beds were twice as likely as those with the smallest number of beds to garner incentives. There was also a direct correlation between total charges and the likelihood of hospitals getting incentive payments.

Nearly all (97%) of the EPs who received incentives got the full first-year amount of $21,250. To qualify for that payment, at least 30% of their patient volume had to be covered by Medicaid. The remainder of the EPs had patient volume that was between 20% and 30% Medicaid.

The largest portion (37%) of EPs who received Medicaid incentives were located in the South and the smallest portion (20%) practiced in the Midwest. In addition, 83% of the EPs worked in urban areas. Nearly half of the incentivized EPs had participated in a regional extension center program designed to help them select and implement EHRs.

Of the EPs who won Medicaid incentives, 23% were "general practice physicians" or optometrists, 51% were specialists, 18% were certified nurse midwives or nurse practitioners, 1% were physician assistants, 5% were dentists, and 1% were other kinds of professionals.

This taxonomy masks the fact that most of the specialty practice EPs who received payments were not, in fact, non-primary-care specialists. A staggering 52% were pediatricians, and nearly 16% were ob/gyns, who provide a good deal of primary care to women. Psychiatrists and surgeons each formed 6% of the whole, and all other EPs deemed as specialists, only 20%.

While the GAO report did not speculate on the reasons for this breakdown, it has been reported that many specialists decline to take Medicaid patients. Moreover, a high percentage of Medicaid recipients are women and children.

Perhaps because the bar to participation in the program was lower, the number of hospitals that received incentive payments from Medicaid in 2011 was considerably higher than the number of hospitals that got Medicare incentives (some facilities qualified for both). But the average award to hospitals in the Medicaid incentive program was less than half as large as in the Medicare incentive program.

Through October 2012, CMS reports, 2,958 hospitals received $2.464 billion in Medicaid incentives. During the same period, 64,589 EPs were paid $1.327 billion. Most of those payments were based on meeting the adopt/implement/upgrade criteria, rather than showing Meaningful Use.

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