Discover how the passage of the American Recovery and Reinvestment Act (ARRA) of 2009 provides incentives for critical access hospital

1. Economic Stimulus Package
Healthcare IT Incentives for Critical Access Hospitals
The passage of the American Recovery and Reinvestment Act (ARRA) of 2009 provides incentives for critical access hospitals to
tap into the power of electronic health record (EHR) systems. Hospitals, critical access hospitals, health systems and office-based
physicians may be eligible to benefit from the incentives — whether through first-time deployment of a certified EHR or completion of
existing healthcare IT projects that otherwise meet the ARRA requirements.
Snapshot of the Incentive Overview Critical Access Hospital Provision
Stimulus Package Beginning in 2011, critical access Incentives for critical access hospitals
hospitals that demonstrate meaningful are based on the accelerated
– Plan includes $19 billion to use of certified EHR systems are eligible depreciation cost of the EHR on a yearly
accelerate EHR and other to receive “prompt interim payments” basis, calculating in Medicare patient
IT adoption based on accelerated depreciated cost share plus a 20% bonus. Hospitals
– Incentives for critical access of the EHR system. The incentive could must qualify by 2012 to receive the
hospitals based on actual greatly impact a hospital’s ability to maximum incentive amount. Critical
investment and cost implement a fully integrated hospital access hospitals can receive incentives
– Funds expected to become information system and demonstrate for up to four years; however, no
available for critical access meaningful use. payments will be made after 2015.
hospitals on Oct. 1, 2010
Meaningful Use Critical access hospital incentive
– Funding and incentives are tied To qualify for the incentive funds, payments will be calculated per
to demonstrating “meaningful hospitals must prove meaningful hospital using the following formula:
use” of a certified EHR system use of certified EHR systems. While
general meaningful use criteria have Yearly x Medicare +
Current Medicare Reimbursement Cost Share Bonus
been proposed and an interim final
Methodology and Future Penalties rule is expected in December 2009, a
final rule is not expected until Spring Yearly Cost is the accelerated
Critical access hospitals are
2010. However, it is clear that hospitals depreciated cost of the EHR system.
currently reimbursed on a cost-
will have to demonstrate measurable The depreciated costs includes any
based method and receive 101%
results in quality, safety and efficiency remaining depreciation from prior
of the Medicare allowed cost.
improvements to receive funds. Required EHR systems, as well as the full cost
If the critical access hospital
product capabilities are expected to of the eligible new EHR system (100%
does not achieve meaningful
include computerized physician order depreciated in year one). Cost cannot
use of a certified EHR by 2015,
entry (CPOE), clinical quality reporting include interest expense.
then the hospital will begin
and interoperability. Qualification criteria
to accrue penalties in reduced Medicare Share is based on inpatient
may be altered and expanded on an
reimbursement rates. bed days with exclusions for charity care
annual basis.
– 2015: Reduced to 100.66% of cost (same formula as general hospitals).
– 2016: Reduced to 100.33% of cost Certified Systems The Bonus is 20% of the Yearly Costs.
System certification requirements are not
– 2017: Reduced to 100% of cost In Year One, a critical access hospital
final yet, but will be matched closely to
meaningful use criteria and will include applies with a Yearly Cost that includes
requirements for security, privacy and depreciation of previous EHR and 100%
interoperability. Until a certification of new EHR expenses. In Year Two,
process is defined, many industry experts additional incentives can be applied for
believe that the health IT market will if they have applicable EHR costs. The
continue to rely on the Certification same would apply for Year Three and
Committee for Health Information Year Four; however, no payments will
Technology (CCHIT) standards. be made after 2015.

2. Taking the Lead: Achieve HIT
At McKesson, we believe health government incentives. You should your ability to provide safe, efficient and
systems that take advantage of consider what it might take to achieve better connected care. As the leader in
technology, focus on improving clinical meaningful use, both in terms of your healthcare IT, we offer proven systems
outcomes, and position themselves target year for reaching that point and with sophisticated analytics that support
for stimulus funding stand a better possible trade-offs to other parts of your the measurement of IT use and impact.
chance of surviving current economic strategic plan. You also should take into McKesson has the resources to meet
challenges and emerging as leaders. account the IT needs that are critical to the needs of all affected providers: small
your physician alignment strategy. critical access hospitals and large health
To help providers plan and prepare systems, employed physicians, and small
to qualify for the healthcare IT (HIT) Information Exchange and large physician practices.
incentives, McKesson launched the Providing secure connectivity for your
Achieve HIT program. In addition to physician community will be critical as For More Information
educating our customers on the latest physicians adopt EHR technology and To learn more about Paragon, McKesson’s
information from Capitol Hill, the gain the ability to share healthcare hospital information system designed for
program includes clinical assessments information with your organization, critical access and community hospitals,
and other activities to help you develop physicians, labs and more. Putting that visit www.mckesson.com/paragon.
a strategy to accelerate HIT adoption infrastructure in place now positions
and qualify for the incentives. your organization to differentiate itself
in the community and lead its efforts.
Next Steps
Now is the time to evaluate your current McKesson welcomes the opportunity to
IT plan in light of your overall strategy take an active role in the planning and
and potential funding from the delivery of an IT strategy that supports
The Road Towards “Meaningful Use” Timeline for Funding:
Estimated timeline for key events to finalize regulations Incentives and Penalties
June 16, 2009 Dec 2009 (estimate)
Preliminary draft on Interim Final Rule on Estimated Net Deficit Impact
($ billions)
“Meaningful Use” from Meaningful Use
HIT Policy Committee
July 21, 2009 December 31, 2009 $15 $13.8
Incentives begin in 2010
Preliminary approach HHS to adopt initial set of October 1, 2010
February 17, 2009 to certification from interoperable standards Medicare / Medicaid $10 Penalties begin in 2015
President Obama HIT Standards and HHS certification incentive program $6.3 $6.1
signs ARRA criteria for hospitals begins
$5.0
Committee $5 $3.4
$0.7 $1.5
$0
May 8, 2009 July 31, 2009 Spring 2010 January 1, 2011
HIT Standards Formal recommendation to (estimate) Medicare / Medicaid -$5 ($3.2) ($2.6)
Committee ONC on Meaningful Use Final Rule on incentive program for ($6.0) ($5.4)
appointed from HIT Policy Committee Meaningful Use physicians begins
-$10
April 3, 2009
HIT Policy Committee appointed Scale = 1 month 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
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