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When will the incentive payment program begin, and how much
Medicare incentive funding will be available for hospitals?
Are psychiatric hospitals eligible for Medicare incentive
payments?
Are critical access hospitals eligible for Medicare incentive
payments?
What happens if physicians/hospitals do not demonstrate
meaningful use by 2015?
Are nursing facilities, skilled nursing centers, hospices,
rehabilitation centers, mental health facilities, and home health centers
eligible for Medicare incentive payments?
Answers
When will the incentive payment program begin and how much
Medicare incentive funding will be available for hospitals?
The Medicare HIT incentive program will begin on October 1, 2010 for Subsection
(d) hospitals under Section
1886 of the Social Security Act that demonstrate meaningful use of certified EHR technology. Medicare
hospital HIT incentive payments will be based on a calculation equal to $2
million plus the "Discharge Amount" multiplied by the "Medicare
Share" and multiplied by the "Transition Factor." The
"Discharge Amount" is equal to $200 for each discharge between 1,150
and 23,000 in a twelve month period selected by the HHS Secretary. The
"Medicare Share" is equal to "Medicare Bed Days" divided by
"Total Bed Days" multiplied by the "Charity Factor."
"Medicare Bed Days" is equal to the estimated annual number of Part A
and C inpatient bed days. "Total Bed Days" is equal to the estimated
annual total number of inpatient bed days. The "Charity Factor" is
equal to the hospital's estimated total charges less charges attributable to
charity care, divided by the hospital's estimated total charges. The
"Transition Factor" is equal to 1.0 in the first year, 0.75 in the
second year, 0.50 in the third year, and 0.25 in the fourth year. An example of
this calculation is provided below.
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Are psychiatric hospitals eligible for Medicare incentive
payments?
No, psychiatric hospitals are not included in the Medicare incentive payment
program because they are not a subsection (d) hospital under Section 1886
of the
Social Security Act. Therefore, they are not eligible for Medicare incentives.
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Are critical access hospitals eligible for Medicare incentive
payments?
Yes, but the formula is based on the Medicare share of the reasonable costs of a
hospital's EHR system plus twenty percentage points but not to exceed 100%.
These incentive payments are likely to be paid over a period not to exceed 4 years (pp. 367-370).
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What happens if hospitals do not demonstrate meaningful use
by 2015?
By 2015, hospitals under Section 4102 of the ARRA that are not meaningful EHR
users will have their Medicare reimbursement rate decreased by 1% per year up to
a potential maximum penalty of 5%. By 2018, if the HHS Secretary determines that
less than 75% of eligible health care professionals are using certified EHR
systems, the Secretary has the discretion to further reduce Medicare fee
schedule payments: first to 96% and then 95% in subsequent years, but penalties
may not be increased beyond 5%.
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Are nursing facilities, skilled nursing centers, hospices,
rehabilitation centers, mental health facilities, and home health centers
eligible for Medicare incentive payments?
No. Only hospitals identified as "Subsection (d)" according to Section
1886 of the Social Act are eligible for Medicare incentives.
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Last Revised: July 12, 2010 | 
