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HITECH Act & EMR Sales

by John Moore | February 19, 2009

Since our series of posts on the Stimulus Bill (ARRA) and in particular the HITECH Act, Chilmark Research has been receiving a lot of questions from the market as to how we see this funding affecting EMR sales.  Following is an example of our response to these inquiries.

Mike, thanks for the kind words regarding analysis of the Stimulus Bill and in particular the HITECH Act.  Now as to your ques:

As we wrote earlier this week on the reimbursement schedules, the timelines are pretty tight, esp under Medicare reimbursement.  There is a $3K bonus for those who demonstrate meaningful use in 2011 or 2012, so some upside to adopt earlier than later.  Also, zero funding, under Medicare for those who show meaningful use after 2015, and in fact penalties start kicking in.  Medicaid, which has a more complex funding schedule provides funding/reimbursement payments until 2021.

Thus, two key points:

1) If a physician is looking to Medicare for reimbursement, we do expect a more rapid run-up in EMR sales if the value to adopt exceeds the pain to adopt.  Still a lot of fugly EMR solutions in the market.  Just because they have CCHIT certification, doesn’t mean they are easy to use and the pain to adopt may not be worth the payback.

2) If Medicaid is the funding source, a more measured and slower adoption of EMR is anticipated.  The challenge under Medicaid is that reimbursement schedules are set upon what the HHS Sec. determines as fair market price for software and services.  Still unsure where that will fall and physicians may hold back till there is some clear precedent set.

Let’s not forget the big caveat:

We still do not have firm definitions for “meaningful” and “certified” leaving a lot of uncertainty in the market.  We are cautioning physicians to go ahead and entertain conversations with EMR vendors, but do not make any firm purchase decisions, if we wish to receive reimbursement through one of these mechanisms until it is absolutely clear how HHS/ONC plans to define those two critical terms.

9 responses to “HITECH Act & EMR Sales”

  1. Joe says:

    Not sure I agree with not buying now. The issue most important is what does purchasing the product do for the user now, without the stimulus. If the vendor can show proof of a solid return on investment now and cut your costs, it could pay more in the long run for you than anything you will get from the government. And remember that nothing comes from the government without strings attached that usually raise your costs.
    As to the future, I think it is clearly a crap shoot as to what the government will devise that vendors of software need to provide to the user. However, with 19B$ out there as incenctive, I suspect that all vendors will create the software needed to meet those standards. Once a standard becomes clear, it is not develop the software to those standards. What has been difficult to date is developing to no real standards.

  2. Alex Burgess says:

    Great post/comment John and Joe. I’m sensing a growing movement away from CCHIT and towards proven technologies that demonstrate improved patient care with enhanced compensation for physicians that are easy to use and inexpensive to acquire/maintain.

    The days of the legacy EMR vendors charging HUGE sums for COMPLEX systems are numbered. Remember Wang/Computer Associates/IBM/NEC/etc. dominating the early computer market…?

    Doctors are too smart and savvy to wear blue pin stripe suits when those who are making money and documenting high quality care are wearing polos or turtlenecks… The next 36 months should be very interesting and I’m grateful to be in the industry and have a chance to contribute.

  3. John Lynn says:

    I think there’s also a point to be made that those with existing EHR implementations are going to be the big winners here. I have a feeling this plan is going to line the pockets of EHR vendors and those who already have implemented an EHR will benefit as well. It’s going to do little to help increase EHR adoption and may actual harm it.

  4. John says:

    Woops, should have posted here. Has anyone determined what incentives, if any, are available for non-medicare physicians?

  5. Michael says:

    I am seeing “$17.2B Medicare/Medicaid incentives” all over the internet, but I have yet to find this number in the HR1 Bill itself. Can anyone provide an explanation or reference for this funding in the Bill?

    • John Moore says:

      Michael,
      I can not remember the specific page or line item that calls out this number. Did see the CBO report, dated Feb 13, 2009 and under Division b, Title IV stated the following (each number representing the year it was spent or accrued fro 2009-2019) Looks like total of $20.8B
      Title IV – Health Information
      Technology
      Estimated Budget Authority 438 178 4,741 6,469 6,463 14,231 3,848 -5,546 -4,990 -2,780 -2,233 20,819
      Estimated Outlays 417 178 4,741 6,469 6,463 14,231 3,848 -5,535 -4,980 -2,780 -2,233 20,819

  6. Michael:

    I’ve heard this question so many times in the last two weeks it makes my head hurt 🙂

    Please make sure that when you download the Recovery Bill, you download Div_B.

    The medicare provisions are right there starting on page 428. What you are looking for is Subtitle A of Sec. 4101 (Incentives for Eligible Professionals)

    Please note that the legalese will take some translation (is anything with the government ever simple!). We are putting together an easy to understand chart for Physicians to take a look at that outlines the incentives and provides an extremely easy to understand format.

    We will post this in the coming days on our website and I’ll leave a link after getting permission from the blog publisher.

    Hope this helps!

    Trinity web solutions.

  7. David says:

    …when I said that CCHIT is not going to be the sole certification agency,I fell under heavy attack…what I see is so many people blindly following whats popular;Those invested in CCHIT will use it to gain market share..and if I paid the ridiculously high fee , how can blame them?
    We are all waiting to see what the government will announce…cchit has certified some ehr systems that are free and sell ad space and most likely raw data….I dont care what grant money is offered..the biggest concern is litigation protection and more importantly the Patient Doctor confidentiality ..I think the cost will come down…as ehr compete and the government certification will be elementary
    and that the grant money will come with a long line of stipulations,,furthermore I believe many Physicians will pass on the grant money or get passed over for not willing to conform. In truth & spirit David

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