CAH “EHR Eligible Expense” Definition Still Lacks Clarity
By: Alan Morgan | 1/04/10
by Louis Wenzlow, Rural Wisconsin Health Cooperative
CMS Proposed Rule: What Is A Certified EHR Expense?
On December 30
th, CMS released its proposed rule and ONC released its interim final rule for the ARRA electronic health record incentive program. Among the issues that will impact rural providers is what qualifies as an EHR expense. This issue will specifically impact critical access hospitals (CAHs), which will receive Medicare incentives based on their “costs incurred for the purchase of certified EHR technology.”
CAHs have been waiting for a detailed definition of what qualifies as an eligible expense in order to make strategic EHR implementation decisions. While the CMS and ONC rules provide some clarification, many ambiguities remain.
Summary
- CMS’s definition of reasonable cost (“…costs incurred for the purchase of depreciable assets … such as computers and associated hardware and software, necessary to administer certified EHR technology”) can be interpreted to cover many aspects of EHR implementation. It’s arguable (and my hope is) that reasonable costs include computers, network equipment, wireless and security systems and other depreciable costs, since they are necessary for the administration of certified EHR technology.
- CMS’s definition of certified EHR technology and qualified EHR (“electronic record of health related information on an individual that includes patient demographic and clinical health information and has the capacity to (1) provide clinical decision support, (2) support physician order entry, (3) capture and query information relevant to health care quality and (4) to exchange electronic health information with, and integrate such information from other sources”) can be interpreted to cover a broad range of EHR modules.
- Implementation, conversion, and education costs are not mentioned, but may also be covered to the extent that they are depreciable assets necessary to administer certified EHR technology.
However:
- ONC’s interim final certification rule indicates that EHR modules must “meet the requirements of at least one [meaningful use] certification criterion adopted by the Secretary.” This may restrict CAHs (though not PPS hospitals) that seek to implement EHR applications other than (and/or more advanced than) those associated with Stage 1 meaningful use criteria.
- EHRs (whether complete or modular) must “be tested and certified in accordance with the certification program established by the National Coordinator as having met all applicable certification criteria adopted by the Secretary.” Many types of EHR systems do not currently have associated certification programs, and if such certification programs are not rapidly developed, there’s significant danger that numerous EHR application types will not qualify for the CAH incentives.
Background
The American Recovery and Reinvestment Act (ARRA) created two distinctive Medicare incentive programs for hospitals: one for “subsection d” (PPS) hospitals and another for “critical access hospitals” (CAHs).
PPS hospitals that are meaningful users of certified EHR technology receive a lump sum incentive based on a specific formula. CAHs that are meaningful users receive increased Medicare reimbursement for their “costs incurred for the purchase of certified EHR technology.”
This puts CAHs at a disadvantage for four primary reasons:
(1) Even as numerous studies have indicated that CAHs have significantly lower EHR adoption rates and greater EHR adoption barriers than general hospitals, most CAHs will likely receive a fraction of the value of PPS incentives.
(2) Even as CAHs are more likely to benefit from the use of ASP models, their incentive requires they “purchase” rather than “lease” (which is how ASP models usually operate) certified EHRs, so CAHs have less flexibility than PPS hospitals to pursue appropriate HIT implementation strategies.
(3) In developing their ARRA compliance strategies, CAHs (unlike PPS hospitals) depend on rule-makers to appropriately articulate exactly what costs are eligible. By inadequately defining what constitutes an eligible EHR expense, rule-makers place CAHs in the situation of not having the information they need to make appropriate strategic decisions. This confusion will inevitably lead to fewer CAHs becoming eligible for incentives.
(4) CAHs are extraordinarily dependent on the speed with which the certification process takes place, as there are many applications types (PACS and medication dispensing systems, for example) that arguably meet the definition of “Qualified EHR” but simply do not (will not?) have certification programs.
The result of 3 and 4 is that CAHs must rely on CMS and ONC to issue instructions/rules that are sensitive to the realities of (1) community hospital EHR vendor models, (2) the numerous systems that generally fall outside of certified EHR vendor offerings but are still necessary to achieve a complete EHR, (3) certification organization capabilities, and (4) how all of the above impact the facilities (CAHs) being incentivized based on “costs incurred.”
While the CMS and ONC rules provide some clarification, many ambiguities remain.
Relevant Language in CMS Proposed Rule
CMS’s proposed rule states: “
Reasonable costs incurred for the purchase of certified EHR technology for a qualifying CAH means the reasonable acquisition costs incurred for the purchase of depreciable assets as described in part 413 subpart G of this chapter, such as computers and associated hardware and software, necessary to administer
certified EHR technology as defined in §495.4, excluding any depreciation and interest expenses associated with the acquisition.
“Certified EHR technology (as defined in §495.4) means a
qualified EHR that meets the
certification requirements specified in 45 CFR 170.102.”
“Qualified EHR means an electronic record of health related information on an individual that includes patient demographic and clinical health information, such as medical history and problem lists; and has the capacity to meet all of the following:
(1) provide clinical decision support, (2) support physician order entry, (3) capture and query information relevant to health care quality, and (4) exchange electronic health information with, and integrate such information from other sources.”
My Analysis of CMS Language (Subjective Interpretation/Seek Legal Advice)
Keeping in mind that we’ll still need to consider the ONC interim final rule language for “
certification requirements specified in 45 CFR 170.102,” the CMS language can be interpreted to cover the following EHR-related expenses.
(1) The language “reasonable acquisition costs incurred for the purchase of depreciable assets … such as computers and associated hardware and software, necessary to administer certified EHR technology
” indicates that there’s a category of costs not just “
for” certified EHR technology, but “
necessary for the administration” of certified EHR technology. I would argue that computers and printers, network, wireless, security, and other systems are all necessary for the administration of an EHR environment of the kind being proposed.
If this interpretation is correct, it’s good news for CAHs.
(2) If Qualified EHR is “an electronic record of health related information on an individual that includes patient demographic and clinical health information” then I would argue that this would include registration, ancillary, scheduling, PACS, medication verification, all of the many advanced clinical systems, and any other applications through which patient demographic and clinical information are entered.
But it’s important to remember that the Qualified EHR must meet additional requirements (specified in 45 CFR 170.102), including certification as identified in ONC’s final interim rule (see below)
(3) There are various costs in addition to hardware and software that are incurred for the purchase of certified EHR technology, such as implementation, conversion, and education costs. The CMS language makes no mention of such costs, but if these costs are depreciable assets and necessary for the administration of certified EHR technology, my expectation is they would be covered.
Relevant Language in ONC Interim Final Rule
ONC’s expanded definition of
Certified EHR Technology: “We have defined Certified EHR Technology to mean: A
Complete EHR or a combination of
EHR Modules, each of which: 1) meets the requirements included in the definition of a Qualified EHR; and 2) has been tested and certified in accordance with the certification program established by the National Coordinator as having met all applicable certification criteria adopted by the Secretary.”
ONC’s definition of
Complete EHR: “The term Complete EHR is used to mean EHR technology that has been developed to meet all applicable certification criteria adopted by the Secretary.”
ONC’s definition of
EHR Module: “We have defined the term EHR Module to mean any service, component, or combination thereof that can meet the requirements of at least one certification criterion adopted by the Secretary. Examples of EHR Modules include, but are not limited to, the following:
- an interface or other software program that provides the capability to exchange electronic health information;
- an open source software program that enables individuals online access to certain health information maintained by EHR technology;
- a clinical decision support rules engine;
- a software program used to submit public health information to public health authorities; and
- a quality measure reporting service or software program.”
“While the use of EHR Modules may enable an eligible professional or eligible hospital to create a combination of products and services that, taken together, meets the definition of Certified EHR Technology, this approach carries with it a responsibility on the part of the eligible professional or eligible hospital to perform additional diligence to ensure that the certified EHR Modules selected are capable of working together to support the achievement of meaningful use.”
“To clarify, we are not requiring the certification of combinations of certified EHR Modules, just that the individual EHR Modules combined have each been certified to all applicable certification criteria in order for such a “combination” to meet the definition of Certified EHR Technology.”
My Analysis of ONC Language (Subjective Interpretation/Seek Legal Advice)
There are a number of issues here relevant to CAHs seeking to determine what constitutes a
“reasonable costs incurred for the purchase of certified EHR technology.”
(1) There is potential for confusion with the phrasing “Certified EHR Technology … means a Complete EHR or a combination of EHR Modules,
each of which meet the requirements in the definition of Qualified EHR…” My interpretation is that the “each” refers to the two concepts “Complete EHR” and “Combination of modules” rather than referring to each module. This is supported by the ONC clarification that the modules “combined have been certified to all
applicable certification criteria in order for such a combination to meet the definition of Certified EHR Technology.”
(2) ONC’s definition of EHR module has the potential to restrict the modules that would qualify as certified technology since the module is required to “meet the requirements of at least one [meaningful use] certification criterion adopted by the Secretary.” There are many clinical systems that clearly meet the definition of “Qualified EHR” but may not be a requirement until stage 2, 3 or later. What does this mean for critical access hospitals that are ready to implement beyond Stage 1 of the meaningful use requirements? Forcing CAHs (but not PPS hospitals) to wait for each stage to be finalized before they can be assured of reimbursement for a specific module would restrict CAHs from reaching advanced stages of EHR adoption even if they are ready to do so.
(3) There is a significant danger that numerous categories of modules that fit the definition of “Qualified EHR” will not be eligible simply because there are no certification programs that cover them. Is there time to establish certification programs for scheduling, lab, radiology, discharge instruction, PACS, medication dispensing (as far as I know, none of these modules currently has certification programs) and various other systems that meet the definition of “Qualified EHR” in time for CAHs to implement? If not, then CAHs will be structurally prevented from taking reasonable advantage of their incentive program.
