Note: This is the first of a three part series on the state of Meaningful Use. Check back next week for part two, which will focus on what the Stage 3 Proposed Rule would mean for providers and health IT vendors. ____ April 1st marked the official opening of comments for the Meaningful Use Stage 3 Proposed Rule. Though its purpose is often questioned, no one can doubt the Meaningful Use program’s outsized effect on medicine.

A Brief History of Meaningful Use


The short history of Meaningful Use begins in 2009 with the enactment of the American Reinvestment and Recovery Act (ARRA) and the accompanying Health Information Technology for Economic and Clinical Health (HITECH) Act. With the passage of the HITECH Act, the medical software marketplace was forever changed. Beforehand, physicians were slowly making the switch to electronic medical records, following the early efforts of the Veterans Administration’s VistA program. The HITECH Act’s authorization of roughly $36 billion worth of “incentives for the use of Health Information Technology” — ultimately up to $44,000 for Medicare-eligible or $63,750 for Medicaid-eligible providers — created a rush to adopt qualifying systems. Seemingly overnight, the marketing literature and operational focus of medical software vendors changed from increased efficiency and patient satisfaction to incentive eligibility. Numerous vendors sprung up, many with hastily-designed systems, and few with decent user experiences. Integrated clinical decision support tools were met with skepticism, and template-generated notes, ‘cut-and-paste’ medicine, and electronic checklists were lambasted as annoying at best, and potentially life-threatening to patients at worst. Many physicians questioned the need for health IT at all, let alone government-backed health IT. The carrot-and-stick combination of incentives for compliance and penalties to reimbursements for non-compliance, coupled with an increased focus on the capture and standardization of data, elicited reluctance from providers. One ENT commented, off the record, that time spent inputting information into an EHR made him feel like a “data-entry specialist” instead of the highly trained professional whose time was singularly responsible for the revenue of his business.


Incentive payments began in January 2011. According to the most recent EHR Incentive Program Summary Report, 118,819 eligible providers (EPs) and 2,320 eligible hospitals received a total of approximately $5.4 billion in incentive payments, or $18,600 and $1.37 million per participating provider and hospital, respectively. One report estimated productivity losses associated with implementation at as high as 20 percent for the first month, and first year EHR-related revenue losses of $11,200 per provider. The same report estimated additional costs “associated with getting and learning a new system” at $10,325 per physician. This put estimated first year costs for physicians at $21,525 versus the $18,600 average incentive payment — a shortfall of $2925. Using the latest numbers on total U.S. professionally active physicians (893,851) from the Kaiser Family Foundation(KFF), minus the latest numbers on active physicians employed by hospitals (roughly 244,000), that’s a first-year estimated shortfall of over $1.9billion — if assuming 100 percent participation. Of course, not all physicians participate in the program, and Meaningful Use incentives were never intended to pay directly for EHR adoption. Using only actual participants, the shortfall is closer to $347 million, but nonetheless, that’s a large cost for any industry to absorb.


Payments to providers under the Meaningful Use incentive program increased rapidly from 2011-2012. The total number of EPs receiving payments jumped from 79,642 providers to 268,461 — an increase of just over 337 percent. The number of participating hospitals rose by 987, for a total of 3307 — an increase of over 40 percent. Total payments to providers and hospitals under the program increased 45 percent to $9.8 billion — $4.2 billion to EPs and $5.6 billion to hospitals, or an average of ~$15,200 per provider and ~$1.69 million per hospital. Total incentive costs 2011-2012 were $15.2 billion — roughly 42 percent of the initial $36 billion appropriated for Meaningful Use incentives.


In the final year that providers could attest for only Stage 1 of the program, participation slowed and payments began to drop. Total incentives paid rose only 2.2 percent, to just over $10 billion. This is despite the fact that the number of EPs (320,151) and hospitals (4,215) receiving incentive payments in 2013 increased by approximately 19 and 27 percent, respectively.. The roughly $25.2 billion paid to this point represents about 70 percent of the $36 billion set aside for incentive payments.


Providers who began the Meaningful Use attestation process in 2011 began to attest for Stage 2 of the program in 2014. Whereas the focus of Stage 1 was adoption, Stage 2 focused on interoperability and health information exchange. Of particular note were new requirements centered around engaging patients through online portals. To successfully attest for Stage 2, at least five percent of patients were required to view, download, and/or transmit health information via an approved patient portal. EHR vendors however struggled to update their systems for this change. Coupled with the now-delayed release of ICD-10 in October 2014, the CMS decided to shorten the 2014 reporting period for Stage 2 from 365 days to 90 days, and allow providers using un-certified EHRs to re-attest under Stage 1 rules. Despite this restructuring, participation and payments fell precipitously from 2013 to 2014. Unique EPs receiving payments in 2014 fell nearly 70 percent to 97,049, and unique hospitals receiving payments fell almost 15 percent to 3,590. By the end of 2014, 438,332 unique providers and hospitals had received $29.58 billion in payments — around 82 percent of the initial $36 billion allocated.

2015 and beyond

As the Meaningful Use incentive program continues, the question is – will provider attrition slow, increase, or continue at its present pace? According to a 2014 Medscape survey, 22 percent of providers are abandoning or have never participated in the program. That doesn’t quite sync with the numbers outlined above — particularly the fall from 2013-2014. As 75 percent of EPs have not yet attested for Stage 1, reimbursement penalties begin this year at one percent, and reductions could rise to five percent by 2018. The recently released Meaningful Use Stage 3 proposed rule represents, in many ways, a sea of change compared to previous years. Check back next week for part two of our series, where we’ll dive deeper into the new measures, and examine how the proposed rule will affect smaller, independent providers.

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