Final Rules Issued by CMS on Stage 3 Electronic Health Record Incentive Program

On October 6th, 2015, the Centers for Medicare and Medicaid Services (CMS) issued two final rules regarding the incentive program for eligible professionals adopting electronic health records. One rule pertained to the requirements necessary to receive a stage 3 incentive payment and the second rule pertained to the electronic health record use requirements for stage 3 participants.

Of the many specifics in the final rules, eligible professionals should note a change to the meaningful use incentive payment reporting period. Previously, eligible professionals had to report meeting the requirements for a full year, but the new rule only requires reporting that the eligible professional met the specifications for 90 days, significantly shortening the reporting period. Another important change, CMS shifted hospitals to a calendar year from a fiscal year, meaning that the attestation period has been moved as well. For hospitals looking to attest to meeting the meaningful use requirements in 2015, the hospital will have to wait until the online attestation portal opens on January 4, 2016. For non-hospital eligible professionals, this will not change the attestation timing because CMS already required the use of a calendar year for these individuals.

The attestation requirements are important for Medicare providers because these 2016 incentive payments turn into Medicare penalties, a negative payment adjustment, in 2017. The final rules for stage 3 electronic health record incentive payments will be published on October 16, with comments open until December 15, 2015. The final rules can be found at the following links:

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Meaningful Use Stage 2 Deadline Delayed

In response to mounting pressure from Congress and trade groups, CMS has announced that it will delay the Meaningful Use Stage 2 deadline by one year. As a result, Stage 2 will be extended through 2016. Eligible professionals who have completed two years of Stage 2 by 2016 can attest to Stage 3 beginning in 2017. CMS plans to release proposed Stage 3 rules in 2014.

CMS has not yet released rules that explain how the Stage 2 delay works. However, this delay presents a variety of opportunities for providers. Eligible professionals may wish to use the extended timeline to explore alternative EHR providers. Additionally, the extended timeline may give eligible professionals the chance to decide on alternate menu objectives. However, eligible professionals who are already ready to attest to Stage 2 should stay on track with their current plans. This will enable them to attest to Stage 3 as early as possible.

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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.

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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.

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“Meaningful Use” Website Launched

The Healthcare Information and Management System Society (“HIMSS”) has launched Meaningful Use OneSource, an online source containing almost 400 documents, tools, and links to other available knowledge.

HIMSS developed the site to help individuals and organizations prepare for the meaningful use and certification criteria and standards regulations.

Among other things, the site clarifies:

  • How to meet and use meaningful use certification criteria;
  • How to receive the Medicare and Medicaid incentive funding and avoid penalties;
  • How to implement meaningful use in a healthcare organization; and
  • How to access recently released updates on federal and state laws and regulations.

The site provides information in three main categories:

  1. The Basics: Meaningful Use 101;
  2. Qualifying for Meaningful Use and Funding; and
  3. Putting Meaningful Use into Practice.

Users can access specific information relevant to their situations and organizations within each area.

New information will be added to the site on a regular basis.  HIMSS reviews all research and information before it is posted, so users can be assured they are viewing accurate, credible and current knowledge.

Source: Rajecki, Ron. “New Web Site is Online Repository for Meaningful Use Information.” InfoTech Bulletin.  10 Feb. 2011.

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