State Medicaid Programs Catch Up On Meaningful Use

Feds say most states have launched incentive programs, but fewer are making payments to providers.

Ken Terry, Contributor

December 19, 2011

4 Min Read

12 EHR Vendors That Stand Out

12 EHR Vendors That Stand Out

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Most state Medicaid programs have finally launched programs to provide health IT incentives to physicians and hospitals, one year after they were authorized to do so.

As recently as October, more than half of states had not paid any incentives to hospitals or eligible professionals for Meaningful Use of electronic health records (EHRs). Seventeen states had initiated their programs but not paid anything out yet, and 11 states were still in the planning stage. (Most of the laggard states were in the Northeast and the West.)

But that picture is changing rapidly, according to the Centers for Medicare and Medicaid Services (CMS). Jessica Kahn, technical director for health IT in CMS' Center for Medicaid and Children's Health Insurance Program (CHIP) Services, recently told InformationWeek Healthcare:

"Forty-one of 50 states have launched their Medicaid EHR Incentive Program in 2011. ... And of those 41 states, we expect at least 38 to be making payments in 2011. Currently active states have issued nearly $1 billion in incentives, with huge leaps in the most recent two to three months. Once California and New York fully ramp up their incentive programs (both will initiate payments to hospitals this month), the curve will go up even more dramatically.

"The majority of the remaining states are aiming for January-March for a program launch, and we expect all states to be launched and making payments by July 2012. Given the state of Medicaid budgets in most states and other health initiatives states are implementing, we are impressed and heartened by their commitment to improving health while lowering costs through the promotion of EHR adoption and meaningful use."

[ For background on e-prescribing tools, see 6 E-Prescribing Vendors To Watch. ]

In January 2011, CMS began making federal funds available to state Medicaid programs to reward Medicaid providers for Meaningful Use of EHRs. Initially, Medicaid providers received higher total payments than those that applied for incentives from Medicare, because they didn't have to attest to Meaningful Use in the first year. But recently, CMS announced that Medicare had distributed about $920 million in incentives this year, compared to $916 million for Medicaid.

Since the federal government was providing this money, why didn't most states begin distributing EHR incentives sooner? Robin Raiford, a director in the research and insights division of consulting firm The Advisory Board, explained that the states had to submit voluminous paperwork to CMS to get funding for the program. Among other things, she told InformationWeek Healthcare, they had to supply an advance-planning document that showed how they were going to manage the incentive program.

According to Raiford, the states that have not moved on the Medicaid incentive program are Colorado, Hawaii, Idaho, Kansas, Nebraska, Nevada, and New Hampshire. In addition, CMS has not yet received paperwork from Puerto Rico or the District of Columbia, she said.

To receive their maximum incentive payments, hospitals must attest to Stage 1 Meaningful Use by Oct. 1, 2013, Raiford noted. They can apply for Medicare incentives today, but not for Medicaid payments in states that aren't ready.

In those states, physicians are facing the same obstacle; but, unlike hospitals, they can't obtain incentives from both Medicaid and Medicare. They must choose one or the other. (They're eligible for Medicaid payments only if at least 30% of their patients are on Medicaid, or 20% for pediatricians.) So if the state in which a doctor practices is not ready to make incentive payments, the physician cannot get any funds right now unless he or she decides to apply to Medicare and receive less money. Eligible professionals may receive nearly $64,000 from Medicaid over six years, vs. $44,000 from Medicare over five years.

For physicians in community health centers who primarily treat Medicaid and uninsured patients, the delay could present an additional problem because the centers may not have the resources to buy EHRs.

Even if all the states are onboard by next July, as CMS predicts, some providers could experience cashflow problems in the interim as they pay for their EHRs but do not receive Medicaid incentive funds to cover some of those costs.

"What they're out is the money upfront and the interest on that money," Raiford pointed out. But that shouldn't deter many providers from making the investment, she added. If they don't, they'll be facing Medicare penalties starting in 2015.

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About the Author(s)

Ken Terry


Ken Terry is a freelance healthcare writer, specializing in health IT. A former technology editor of Medical Economics Magazine, he is also the author of the book Rx For Healthcare Reform.

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