The Centers for Medicare and Medicaid Services released the long-awaited definition of "meaningful use" of healthcare information technology Wednesday, providing new guidance for providers and hospitals to qualify for billions of dollars in federal incentives.

The announcement, in the form of agency rulemaking, marks a critical advance in the stimulus package passed last February as part of the American Recovery and Reinvestment Act (ARRA).

The bottom line: Incentives for providers and hospitals using the technology will range from $14.1 billion on the low end to $27.3 billion on the high end over the next five years. The actual amount will depend on how many providers opt out of participating in the voluntary program, and of those who opt-in, how many will qualify for all payments.

ARRA provides federal incentives of up to $44,000 per physician over five years. Hospitals can qualify for a minimum of $2 million a year. However, the biggest benefits will come in the first years, meaning that the faster providers can show meaningful use, the more lucrative the incentive. The first incentives will be paid in 2011 based on 2010 performance. By 2015, physicians who are not using certified EHRs could be penalized by Medicare and Medicaid.

A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of “meaningful use” of EHR technology. An interim final regulation (IFR) issued by the Office of the National Coordinator of Health IT  sets initial standards, implementation specifications and certification criteria for EHR technology.  Both regulations are now open to public comment.

Phased approach

For providers, who have feared that "meaningful use" of electronic health records would be unreachable in 2010, CMS recommends phasing the criteria in three stages.

"Such a phased approach encompasses reasonable criteria for meaningful use based on currently available technology capabilities and provider practice experience, and builds up to a more robust definition of meaningful use, based on anticipated technology and capabilities development," the proposed rule says.

The Stage 1 meaningful use criteria focuses on electronically capturing health information in a coded format, using that information to track key clinical conditions and communicating that information for care coordination purposes. It also calls for implementing clinical decision support tools to facilitate disease and medication management and reporting clinical quality measures and public health information.

(A list of 25 Stage 1 criteria for eligible providers may be found here. The 23 Stage 1 criteria for eligible hospitals may be found here.)

CMS officials are recommending that  Stage 2 criteria be proposed by the end of 2011 and the Stage 3 definition be proposed by the end of 2013. "Our goals for 'Stage 3' meaningful use criteria represent overarching goals which, we believe, are attainable by the end of the EHR incentive programs," the proposed rule says.

The IFR will go into effect 30 days after publication, with an opportunity for public comment and refinement over the next 60 days. A final rule will be issued in 2010.

A proposed rule regarding the certification of EHRs is in the works and expected "soon," according to ONC officials, who declined to speculate on how the meaningful use criteria might impact products certified by the Certification Commission for Health Information Technology.

"Widespread adoption of electronic health records holds great promise for improving healthcare quality, efficiency and patient safety,” said National Coordinator for Health Information Technology David Blumenthal, MD. “The recovery act’s financial incentives demonstrate Congress’ and the administration’s commitment to help providers adopt and make meaningful use of EHR technology so they can give better care and their patients’ experience of care will improve. Over time, we believe the EHR incentive program under Medicare and Medicaid will accelerate and facilitate health information technology adoption by more individual providers and organizations throughout the health care system.”

The economic stimulus package has allotted $17.2 billion to reward Medicare and Medicaid providers who can prove they're using certified healthcare IT "in a meaningful way." 
The incentives are scheduled to take effect starting Oct. 1, 2011. Experts say providers should not waste time getting prepared because there is a shortage of change management experts available to help.

CMS and ONC officials said the regulations lay a foundation for improving quality, efficiency and safety through meaningful use of electronic health record technology.

The regulations are aimed at implementing  the EHR incentive programs enacted under the Health Information Technology for Clinical and Economic Health (HITECH) Act, which was part of ARRA, according to CMS.