After several previously announced anticipated release dates were missed, on July 13, 2010, the Centers for Medicare & Medicaid Services ("CMS") and the Office of the National Coordinator for Health Information Technology ("ONC") finally released final regulations pursuant to the HITECH Act that define the "meaningful use" and certification requirements eligible hospitals and physicians must meet in order to draw down temporary electronic health record (EHR) incentive payments as early as this coming federal fiscal year (FFY), and to avoid Medicare payment penalties during 2015 (the "Final Rules").  

The Final Rules specify the initial criteria that eligible professionals, eligible hospitals, and critical access hospitals must meet in order to qualify for an incentive payment, and calculation of the incentive payment amounts. Just as important, the Final Rules specify the payment adjustments that will be imposed under Medicare for covered professional services and inpatient hospital services provided by eligible professionals, eligible hospitals and critical access hospitals failing to demonstrate meaningful use of certified EHR technology.

The Final Rules also specify the initial set of standards, implementation, specifications, and certification criteria for EHRs. The ONC also has issued a separate final rule on the establishment of certification programs for health information technology.

In a nutshell, this complex definition of meaningful use and EHR systems certification requirements will determine whether a hospital and eligible physicians can obtain any federal stimulus monies under the EHR incentive program and whether such hospital and eligible physicians will avoid Medicare payment penalties.

The Final Rule will require hospitals to meet a total of 19 EHR functionality requirements. Fourteen of the functionality requirements will be mandatory and are established by CMS as "core" requirements. CMS also established a list of ten additional functionality requirements, from which hospitals will be allowed to choose five functionalities, with some limitations. In addition, the Final Rules specify that there must be quality reporting measurements, consisting of 15 emergency department, stroke, and clinical quality measures.  

The Final Rule will also allow eligible critical access hospitals that meet the meaningful use and certification requirements to be eligible for both Medicare and Medicaid incentive payments. Critical access hospitals, like other acute care hospitals, must meet a 10 percent Medicaid volume threshold to be eligible for the Medicaid incentives.  

Physicians also will be heavily impacted by the Final Rule. Physicians who provide the majority of their services in hospital outpatient departments and clinics will be eligible to participate in the program. The Final Rules clarifies the definition of a hospital-based physician (a physician eligible to receive EHR incentives) as a physician who provides more than 90 percent of his or her services in places of service classified under two places of service codes 21 (Inpatient Hospital) or 23 (Emergency Room, Hospital).

We anticipate that the most immediate impact of the issuance of the Final Rules will be an increased emphasis on implementing EHR systems that now meet the "meaningful use" standards. Now that health care IT vendors know what will be required for certification, we believe that they will either rapidly look to implement whatever certification-required functionality is missing from their current product offerings or they will not survive over the long run.  

Buchanan Ingersoll & Rooney has significant expertise and experience in negotiating complex health care IT agreements, including EHR system agreements. We can assist you in negotiating the license, support and related agreements with the IT vendor. We can also suggest strategies to maximize your negotiation leverage with such vendors. As these are highly complex agreements, we strongly suggest that you involve legal counsel as early in the process as possible.

For further information regarding the meaningful use rules or health care IT matters in general, please contact David A. Gurwin, chair of the Technology Transactions Group at 412-562-1592 or david.gurwin@bipc.com, or your primary firm contact.