Meaningful Use: Ballpark Costs and Penalties

Kel Mohror

"The Costs of Medicare HIT Mandate Noncompliance," by Alberto Borges, MD (private practice and  assistant clinical professor of medicine at The George Washington University School of Medicine and Health Sciences in Washington, DC); HCPlive, March 3, 2009.

Three years ago, Dr. Borges analyzed the new regulations and wrote- "President Obama signed a stimulus bill that calls for eventually punishing physicians who do not “meaningfully” use a “certified” EHR system by imposing up to a 5% Medicare payment penalty—

• non-compliance penalties start at 1% in 2015, increasing to 5% in 2019, at the discretion of the Secretary of HHS, if the nationwide EHR adoption rate remains below 75%
• [He cited a Florida Medical Association PDF Stimulus_101. -km]

[The "slow-as-molasses-in-January" pace of HHS may have modified these dates and rates, but probably not in the provider's favor.-km]

Dr. Borges continues- "CMS will use these penalties as a cost-cutting measure, which may force many physicians to consider withdrawing from Medicare."

"To understand why this may happen, consider a physician who in 2019 bills $100,000 to Medicare and gets punished the full 5% for failing to meaningfully use a c-EHR [certified EHR -km]."

In the HCPlive article, Dr. Borges created a comparison showing a physician’s " situation over five years to a physician who successfully uses a c-EHR, and also to a physician whose use of a c-EHR fails to qualify as 'meaningful.'”

"The non-complying physician will lose $5,000 per year for five years, for a total loss of $25,000."

"The physician who fails to comply due to a poor c-EHR installation or who ends up de-installing the system will have a slightly higher total loss-

• $33,000 for the estimated up-front cost of a c-EHR (plus $1,500 each month for maintenance fees)
• $25,000 (penalty for non-compliance based on above math) results in a $58,000 (minimum five-year loss) ."

In a second calculation for “Noncompliance,” Dr. Borges concluded- "The physician who complies during the five years beginning in 2019 could end up incurring the highest losses: $254,000 (five-year loss)"

"The actual profit/loss calculation depends on the c-EHR that you end up buying. Some systems cost significantly less than the “average” cost stated above."

In "When and how to deploy e-health records tech- Healthcare facilities that haven't begun an EHR rollout yet might want to wait," Lucas Mearian, November 23, 2010, shed a little light on EHR "average costs."  quoting Dr. Tom Handler, a radiologist who's now a healthcare analyst at research firm Gartner Inc.-

"A good rule of thumb is an organization should not pay more than $500 per physician for a hosted EHR system. And depending on how badly a vendor wants your business, you could end up paying much less."

"The bottom line is that GE Healthcare IT charges $3,000 and $6,000 per doctor upfront and ongoing subscription fees of $300 and $600 per physician per month."

"One way to defer the cost an EHR rollout is to choose the software-as-a-service (SaaS) option, where a vendor runs the applications in its own data center while offering caregivers the EHR functionality over secure networks.

Handler said physicians and hospitals need to have a clear understanding of what they're buying if they go the SaaS route."

Just last year (April 18, 2011),  Mr. Mearian wrote (again for ComputerWorld)- "Electronic health record 'meaningful use' reporting period begins- Experts recommend waiting before starting EHR 'ticking clock.'"

"Small physician practices plan to roll out EHRs. And by 2014, the federal government wants more than half of all healthcare facilities to use EHRs. If they have not rolled out EHRs by 2015, physicians and facilities face penalties."

He quotes Dr. Mitch Morris, national leader for health IT at Deloitte Consulting, who noted that "the total five-year spend by hospitals and physician practices on capital and operating costs could be two to three times what they will receive [emphasis mine –km] in government reimbursement payments."

Dr. Morris cautioned providers- "Once you use it," [an EHR to submit attesting data- my interpretation] "you really have to be sure, because it starts the clock ticking

 -- not only for the 90-day period, but also for the whole program. You have to be thinking ahead. While you may be qualified for Stage 1 now, you have to ask yourself if you'll be qualified for Stages 2 and 3."

Over the years since these figures were reported, we have seen steady increases in costs of nearly everything, from yogurt to air travel tickets (surprisingly- and thankfully- the cost of crude oil has decreased, as have the costs of computer hardware). “Do your homework” has even more importance with CMS and Congress facing “a looming crisis in the Medicare program only they can stop.”

By mandating the purchase, installation, and use of EHRs and other HIT to replace healthcare paper documents without conducting adequate technological evaluations nor developing an effective workforce, the President and Congress are ensuring continuing increases in costs and inconveniences to patients as well as providers.

 

 

Comments

[herlyore]

Wonderful info. It is nice to see you express from the heart and your clearness on this vital topic can be simply observed.
Ross Finesmith MD