Focus on the Final Rule

1. Focus on the Final Rule

2. Please submit all questions via the WebEx Q&A function. Additional questions may be submitted to: meaningfuluse@healthland.com Focus on the Final Rule EHR Certification & Meaningful Use

3. Final Rule Legal Restrictions & Guidance Daniel Gottlieb Partner, McDermott Will & Emery LLP

4. Agenda • Who is an eligible hospital (EHs)? • Medicare Incentives • Medicaid Incentives • Who is an eligible professional (EP)? • Medicare Incentives • Medicaid Incentives • Exclusion of inapplicable meaningful use (MU) objectives

5. Agenda (cont’d) • Changes to Medicare and Medicaid incentive calculations • Registration and attestation process and timelines • Certification of EHR Technology • Stark Law EHR Donation Exception • Independent physicians on Medical Staff • Hospital-Owned Clinics

6. Medicare Eligible Hospitals • Medicare EHs: a hospital located in one of the 50 states or D.C. that participates in the Medicare Inpatient Prospective Payment System (IPPS) and Maryland acute care hospitals • CAHs are also eligible for incentives • Multi-campus hospital with a single provider number is a single hospital

7. Medicare Eligible Hospitals • Excludes IPPS-excluded hospitals and hospital units such as: • Psych hospital - Rehab hospital • Children's hospital - LTCHs • Surgical and other specialty hospitals participating in IPPS are eligible for Medicare incentives

8. Medicare Eligible Professionals • Medicare EPs include doctors of: medicine or osteopathy; dental surgery or dental medicine; podiatric medicine; optometry or chiropractry • Hospital-based physicians who provide 90% or more of their covered services in a hospital inpatient or ER setting are ineligible

9. Medicaid Eligible Hospitals • EHs include “acute care hospitals” and children’s hospitals • An “acute care hospital” is a hospital where the ALOS is 25 days or fewer and a CCN that has the last four digits in the series 0001-0879 (short-term general hospitals and 11 U.S. cancer hospitals) and now under the final rule also 1300-1399 (CAHs)

10. Medicaid Eligible Hospitals • Acute care hospital must have at least 10 percent Medicaid Patient Volume based on patient encounters • Like other Medicaid EHs, CAHs may receive both Medicare and Medicaid EHR incentive payments • If an EH meets Medicare MU requirements, it will be deemed to meet Medicaid MU requirements

11. Medicaid Eligible Professionals • Medicaid EPs are the following professionals (other than hospital-based professionals): • Physicians and dentists • nurse practitioners • certified nurse-midwives • physician assistants practicing in FQHCs or RHCs that are led by a physician assistant

12. Medicaid Eligible Professionals • A PA leads an FQHC or RHC under any of the following circumstances: • when a PA is the primary provider in a clinic (for example, when there is a part-time physician and full-time PA • when a PA is a clinical or medical director at a clinical site of practice • PA is an owner of the RHC

13. Medicaid Eligible Professionals • Medicaid EP must satisfy one of three Patient Volume thresholds: • Have ≥ 30% Patient Volume attributable to Medicaid recipients • Have ≥ 20% Patient Volume attributable to Medicaid recipients and be a pediatrician • practice predominantly in a FQHC or RHC and have ≥ 30% Patient Volume attributable to Needy Individuals

14. Medicaid Eligible Professionals • Needy Individuals are persons who: • received medical assistance from Medicaid or the Children’s Health Insurance Program • were furnished uncompensated care or • were furnished services either at no cost or reduced cost based on a sliding scale determined by individuals’ ability to pay

15. Inapplicable MU Objectives • Some MU objectives do not apply to every provider so provider would not have any eligible patients or actions for the measure denominator • In these cases, provider may exclude (i.e., not meet) the measure • Exclusions do not count against the deferred measures in the menu set

16. Inapplicable MU Measures • For example, an EH or CAH that did not have request for electronic copy of discharge instructions may exclude core MU Objective #12 and only comply with 13 of 14 objectives • An EH or CAH that is excluded from a menu set objective must only meet 4 rather than 5 of 10 objectives

17. Medicaid Incentive Calculation • CMS clarified that employer’s or FQHC’s purchase of EHR for use by employed EPs is not a payment • CMS did not address whether payments from other sources could include EHR donation to independent physician practice under Stark EHR donation exception

18. Registration • To participate in incentive programs, eligible provider must register on incentive program website at http://www.cms.gov/EHrIncentivePrograms/ • Medicaid programs will interface with program registration website • Registration begins in January 2011

19. Registration • Registration requirements include: • Name, National Provider Identifier, business address and phone number • Taxpayer identification number • Hospital’s CCN • EPs must select Medicare or Medicaid • Medicaid providers must select one state

20. Attestation for Medicare FFS • Eligible providers demonstrate MU to CMS through attestation in 2011 and attestation and electronic reporting of clinical quality information in 2012 • Providers may submit attestations as early as April 2011 to CMS • Payment begins as early as May 2011 following attestation

21. Attestation for Medicare FFS • CMS will provide a web-based tool for attestation • CMS has not released attestation tool • CMS is developing an audit strategy to verify attestations and prevent fraud and abuse • Providers should develop compliance and document retention procedures

22. Attestation to States • States must identify attestation and/or electronic reporting mechanism in their State Medicaid HIT Plans, subject to CMS approval • States must develop audit and verification procedures

23. Attestation and Reporting • FY 2011: EH or CAH must attest that during the EHR reporting period, it: • Used certified EHR technology and specify technology • Satisfied required MU objectives and measures • Must specify the EHR reporting period and provide the result of each applicable measure for inpatients and ER patients during the reporting period

24. Attestation and Reporting • FY 2012 and after: EH or CAH must attest that during the EHR reporting period, it: • Used certified EHR technology and specify EHR • Satisfied required MU objectives and measures except clinical quality reporting • Must specify the EHR reporting period and provide the result of each applicable measure • EH or CAH must electronically report clinical quality measures through a portal (or, if feasible HIE or registry)

25. EP’s Attestation and Reporting • For CY 2011: EP must attest that during the EHR reporting period, EP: • Used certified EHR technology and specify technology • Satisfied required MU objectives and measures • Must specify the EHR reporting period and provide the result of each applicable measure

26. EP’s Attestation and Reporting • For CY 2012 and after: EP must attest that during the EHR reporting period, EP: • Used certified EHR technology and specify EHR • Satisfied required MU objectives and measures except clinical quality reporting • Must specify the EHR reporting period and provide the result of each applicable measure • EP must electronically report clinical quality measures through a portal (or, if feasible HIE or registry)

27. Medicare EH Payment Process • Single payment contractor pays an EH or CAH a preliminary, estimated EHR incentive payment based on most recently filed 12-month cost report as early as May 2011 following successful MU attestation • Final payment determined at time of settling cost report that begins on or after start of payment year

28. Medicare EP Payment Process • Single payment contractor makes annual incentive payment to an EP when EP demonstrates MU and earns the maximum annual incentive payment • Payments begin as early as May 2011 following successful demonstration of MU on attestation

29. EHR Certification • ONC published the temporary EHR certification program final rule on 6/24/2010, which establishes : • selection process for testing and certification bodies (ONC-ATCBs) • parameters under which the ONC-ATCBs will test and certify that EHR meets the EHR certification requirements • ONC will make a Certified EHR list available this Fall

30. Review of Medicare’s Timeline • Fall 2011: Certified EHR technology on EHR incentive program website • January 2011: Registration begins on incentive program website • April 2011: Attestation of MU begins through web tool • May 2011: Medicare incentive payments begin

31. Stark EHR Donation Exception • Stark Law provides an exception for subsidies for EHR items and services • Exception applies to subsidies for EHRs used in private physician practice offices • Hospital may purchase inpatient or ambulatory EHR for use in hospital facilities to serve hospital patients without meeting exception

32. Other Resources • Comprehensive McDermott White Paper regarding final EHR certification and meaningful use regulations to be issued shortly • Healthcare Informatics article regarding Stark EHR donation exception

33. Daniel F. Gottlieb Partner, McDermott Will & Emery LLP dgottlieb@mwe.com 312-984-6471

34. Final Rule Accounting Requirements & Incentive Guidelines Ralph Llewellyn Partner, EideBailly

35. Reimbursement Topics • Medicare • Medicare Share • PPS Hospitals • Critical Access Hospitals • Eligible Professionals • Medicaid • Same

36. Medicare Share • Based on inpatient volume • Numerator • Medicare days + Medicare Advantage patient days • IP, specialty care • Psych and Rehab included in proposed rule, but eliminated in final rule • Excludes Swing Bed

37. Medicare Share • Based on inpatient volume • Denominator • Total inpatient days TIMES • Hospital charges less charity care DIVIDED BY hospital charges • Worksheet C Part I Line 200 Column 8

38. Medicare Share • Based on inpatient volume • Denominator • Total inpatient days TIMES • Hospital charges less charity care DIVIDED BY hospital charges • Worksheet C Part I Line 200 Column 8 • Charity Care • As identified on Worksheet S-10 of the Medicare cost report for PPS Hospitals • Not reported on Medicare cost report for CAH’s in the past

39. PPS Hospitals • Initial Amount • Base payment for each PPS hospital = $2,000,000 • Adjusted for discharges 1,150 to 23,000 • $200 additional per discharge in this range • Times your Medicare Share

40. PPS Hospitals • Payment Process • Hospital data last filed 12 month cost report • Settled based on the first 12 month cost reporting period that begins after the start of the payment year

41. PPS Hospitals • Transition Factor (FFY 2011 – 2013) • Year 1 = 1 • Year 2 = ¾ • Year 3 = ½ • Year 4 = ¼ • Subsequent Years = 0

42. PPS Hospitals • Transition Factor (FFY 2014 – 2015) • If the facility’s first year of eligibility is after FFY 2013, the transition factor is the same as a facility with a first payment in FFY 2013 • If the first payment year is after FFY 2015, the transition factor

43. PPS Hospitals

44. Critical Access Hospitals • Allowed to expense their costs associated with the purchase of certified EHR technology in a single year • Versus depreciating these costs on the cost report • Current year and prior year purchases (undepreciated value) • Includes only purchases for hospital specific EHR technology

45. Critical Access Hospitals • Continued • Reimbursement based on Medicare Share + 20 percentage points (not to exceed 100%) • Lump sum prompt payment subject to reconciliation • Initial based on last filed 12 month cost report • Final based on final cost report

46. Critical Access Hospitals • Continued • Payments up to 4 consecutive years • Stages • Replacement equipment

47. Critical Access Hospitals • Allowable expense • Reasonable cost – “computers and associated hardware and software necessary to administer EHR technology” • Vendor implementation costs not included in this incentive calculation • Communicate with MAC/FI

48. Critical Access Hospitals • Allowable expense • Incentive payment in lieu of depreciation AND interest • “Be smart about your interest” • Cost not reportable on future cost reports • Subject to reconciliation

49. Eligible Providers • Incentive • 75% of secretary’s estimate of allowed charges for covered services furnished by eligible professional during relevant payment year • Paid claims no later than 2 months after relevant year • Up to 5 years • No incentive after 2016

50. Eligible Providers