IRS: EHR Incentive Payments Are Taxable

The IRS has taken the position that EHR incentive payments are taxable. Because the IRS has a long history of defining what is subject to tax broadly, this is not surprising. However, some of the consequences of this position could be problematic for physicians. Many physicians turn over their payments to a group practice. Physicians doing this could be in for an unpleasant surprise.

Under tax law, taxpayers cannot avoid tax merely by turning income over to somebody else. Thus, suppose a physician earns an EHR incentive payment and turns it over to her practice. Depending on how the plan is structured, she might still have to include the EHR payment on her personal tax return. The IRS allows an important exception. If the physician receives the payment as an agent of the group practice, she does not have to report it on her personal tax return. Because of this issue, physicians who have received or will receive EHR incentive payments should plan to deal with the tax consequences of those payments.

© 2013 Parsonage Vandenack Williams LLC

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CMS Issues Final Rule on Physician Fees for 2013

On November 1, the Center for Medicare & Medicaid Services released a final rule for 2013 on the payments that Medicare will issue for physicians’ fees. Several items in the rule are notable. First, the rule includes a required 26.5 percent reduction to Medicare payments. At this point, it is unclear whether Congress will accept the reduction in light of increased calls for fiscal restraint or whether it will continue to deny the reduction. Assuming that Congress does reject the reduction, payment to primary care practitioners may increase by anywhere from three to seven percent.

The rule also finalizes several changes made to the Meaningful Use and PQRS incentive programs, and will make a series of additional incentives available over the next several years. In addition, it includes new policies allowing for reimbursement for care coordination services provided for up to 30 days following certain kinds of treatment in a hospital or skilled nursing facility. Finally, certified registered nurse anesthetists will now be included in the group of professionals that may be reimbursed by Medicare, to the extent of any service they may provide under state law. These changes are the primary causes of the projected increase in payment to practitioners; however, this increase is contingent on Congress’s action with regard to the final rule.

© 2012 Parsonage Vandenack Williams LLC

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Meaningful Use Stage 2 – Electronic Health Records and HIPAA

To satisfy the new Meaningful Use Stage 2 requirements, providers must furnish patients with electronic copies of their health information upon request.  Providers should ensure that their systems are able to timely meet these requests and to satisfy the requirements of the HIPAA Privacy Rule.  The Meaningful Use Stage 2 standard requires that more than 50 percent of patients who request electronic copies of their health information must be provided that information within three business days.

When providing electronic copies of health information, providers should keep in mind that electronic data may be furnished in any format.  For example, information could be provided via a patient portal, CD, USB drive, or the like.  Providers should update their HIPAA compliance plans to include provisions relating to electronic media accordingly.  As under the HIPAA Privacy Rule, providers may only charge a reasonable, cost-based fee for a copy of the information.  It is important to remember that providers may withhold certain types of information from a patient’s electronic copies of health information.  Since the types of health information that can be withheld from patients or third parties is subject to a higher confidentiality standard, providers also need to review their HIPAA compliance plans to ensure that appropriate protocols for electronic disclosure are in place.

© 2012 Parsonage Vandenack Williams LLC

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Meaningful Use Stage 2—New Core Objectives

Now that the Stage 2 meaningful use standards are available, health care providers should start planning to implement attestation requirements.  Providers cannot begin to attest until 2014.  However, providers should consider two factors that indicate the need to plan.  First, the requirements for both stages of attestation are now more rigorous than before, and providers will no longer be able to count exclusions toward their non-core objectives.  Second, the number of core objectives that providers must meet has significantly increased.

In particular, providers should plan to meet one of two new Stage 2 core objectives.  Eligible physicians must use secure electronic messaging to communicate with patients on relevant health information.  Eligible hospitals and critical access hospitals must use automatic medication tracking from order to administration using assistive technologies and an electronic medication administration record.  Providers should also keep in mind that many of the objectives that carry over from Stage 1 to Stage 2 have significantly higher thresholds.  To meet these thresholds, providers should consider the use of external audits and implementation planning to meet Stage 2 requirements in 2014.

© 2012 Parsonage Vandenack Williams LLC

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Meaningful Use Stage 2 Rule Released

CMS released the final requirements for Stage 2 of the meaningful use program on August 23, 2012. The meaningful use program’s goal is to promote health care providers’ implementation of electronic health records.

The rules released by CMS indicate that Stage 2 will begin as early as 2014. No providers will be required to comply with Stage 2 requirements prior to 2014. The rules also set forth the criteria for the certification of EHR technology, which will allow eligible professionals and hospitals to ensure that the systems they implement and/or use will work, help them to meaningfully use health information technology, and enable them to earn federal incentive payments.

CMS also stated that it will allow the current “2011 Edition Certified EHR Technology” to be used until 2014.

To view the final rule in rule, click here:

© 2012 Parsonage Vandenack Williams LLC

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Mobile Access to Health Documents Guide Published for Comment

Earlier this month, the Technical Committee of Integrating the Healthcare Enterprise released a guide to implementing access to health records via mobile devices.  IHE is a group of healthcare professionals with more than 500 member organizations worldwide focused on technological issues in healthcare practice.  The goal of the guide, titled Mobile Access to Health Documents, is to provide developers with an application programming interface designed to ensure secure access to health records on mobile platforms.  IHE is currently soliciting public comment on the guide.

Mobile Access to Health Documents may be a valuable tool for healthcare professionals in ensuring compliance with federal law.  The Security Rule of the Health Insurance Portability and Accountability Act requires healthcare providers to meet a number of criteria to evaluate and implement safeguards on access to electronic protected health information.  Since the risk of security breaches for mobile technology which is used to access health documents is rapidly increasing, it is important for healthcare professionals to keep these developments in mind.  Healthcare professionals should also review their technical safeguards to ensure compliance with HIPAA.

© 2012 Parsonage Vandenack Williams LLC

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Reviewing Procedures for Breach of PHI

Despite clear compliance plans, annual training, and limiting access, there is still a chance your practice could experience a breach of protected health information (“PHI”).  A “breach” means the use or disclosure of unprotected information that is not permitted by HIPAA and compromises the security and/or privacy of the PHI.  Most practices allocate considerable resources towards preventing breaches, but it is a good idea to review procedures in case a PHI breach should occurs.

  •  When a breach occurs, first gather information.  Determine what type of PHI was disclosed, who accessed it without authorization, and the number of patients exposed.
  •  Next, make every attempt to mitigate the damage.  Can you ensure that the breached PHI has been destroyed or will be returned?
  •  Third, provide the necessary notifications.  Patients must be notified no later than 60 days from when your practice knew or reasonably should have known of the breach.  To help expedite the notification process, make sure that your patient contact information remains current.
  •  Finally, review your practice’s compliance plan, training schedules, and access to PHI to help prevent a similar breach from occurring again.

© 2012 Parsonage Vandenack Williams LLC

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Stage 2 Proposed Rules Published

CMS has published a proposed rule providing standards and guidance for Stage 2 of the Medicare and Medicaid EHR Incentive Program (the “Program”).  The CMS proposed rule explains the requirements that eligible professionals and hospitals must meet to qualify for meaningful use incentive payments under the Program.

The Office of the National Coordinator for Health Information Technology (“ONC”) has also issued Stage 2 certification standards.  The ONC standards establish the technical requirements that electronic health records (“EHR”) must meet to become certified as supporting Stage 2 meaningful use criteria.

Basically, the CMS proposed rule governs the requirements that providers must meet in order to qualify for meaningful use and successfully obtain EHR incentive payments.  The ONC certification standards govern the requirements that EHR must meet so that such EHR can be used by providers to qualify for meaningful use.

Stage 2 of the Program is set to begin no earlier than 2014 (for participants who met the Stage 1 requirements in 2011 or 2012).  Comments on both proposed rules are due by 5:00 p.m. on May 7, 2012.

© 2012 Parsonage Vandenack Williams LLC

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4 Meaningful Use Tips for Physicians

The concept of meaningful use is key to earning federal electronic health records (“EHR”) incentives.  The following are four tips to keep in mind when working towards meeting meaningful use criteria:

  1. Track Progress.  Many meaningful use measures establish a threshold that must be reached.  Use “to do” lists and progress charts to track progress as needed.  Make sure that all applicable criteria are addressed with respect to each objective.  Test and re-test any changes made.  Note such changes and results of testing in your progress charts.
  2. Adapt Workflow.  Workflow changes may be necessary and desirable in order to obtain, report and share certain patient information.  Try out different workflow scenarios and determine what works best for your organization. Clinical-care summaries and transition-of-care summaries should be routine.
  3. Welcome Changes.  Develop an environment that is fully supportive of efforts to meet meaningful use criteria.  Encourage behavior that works to reach your organization’s meaningful use objectives and to obtain incentive payments.  Reward behaviors that improve patient care and advance meaningful use goals.
  4. Know Your Vendors.  Ask specific questions about what your organization needs to meet meaningful use requirements.  Do not assume that the software a vendor is trying to sell is certified by the Office of the National Coordinator – Authorized Testing and Certification Body.  Obtain independent verification

© 2012 Parsonage Vandenack Williams LLC

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Reminder to Physicians: Meaningful Use Checks are Arriving

On May 19, the Centers for Medicare and Medicaid Services (“CMS”) mailed the first checks for the Medicare incentive program to physicians who had attested that they had achieved meaningful use of their electronic health records (EHRs).

EHR incentive payments are also available to eligible professionals from state Medicaid programs.  However, the Medicaid program has different incentive requirements.

The actual arrival of checks from Medicare should encourage more doctors to acquire EHRs and demonstrate meaningful use. The checks show that meaningful use and successful EHR implementation is certainly achievable.

Given EHR is going to be the standard of practice and physicians will eventually need to implement EHR systems, there is no better time than the present to get started.

We do not have our EHR incentive program outline on the PVWLaw website because we were only providing to clients.  I could do the same thing we did with some of the health care bill articles and state “PVWLaw has prepared a comprehensive outline on the EHR incentive programs called “EHR Incentive Program Outline”.  If you would like to receive a copy of the outline, please email the following information to and we will reply promptly including a pdf attachment of the document requested:

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© 2011 Parsonage Vandenack Williams LLC

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