Sweet Rewards for HIT Vendors with Final Stimulus Package

by | Feb 13, 2009

champagnepopWe can hear the champagne bottles popping in legacy healthcare information technology (HIT) vendors offices across the country as they celebrate what is arguably the biggest windfall in their history, the HITECH Act and its $19.2B, that is tucked into the Stimulus Bill which President Obama will likely sign on Monday.

Unlike other aspects of the Stimulus package that were whittled down to get the required votes for passage, all things HIT came through relatively unscathed. What’s in store:

$17.2B in CMS incentives for physicians & hospitals to adopt a “certified EHR”. This is a boon to legacy EHR vendors as they will claim “certified” status via previous CCHIT certification.  Unfortunately, this language is likely to be a disaster for any innovative vendor.  No matter how much wiggle room the legislative language has as to what actually is a certified EHR (they leave it up to NIST & ONC to define), the bottom-line is that any certification process is cumbersome, time consuming and rarely, if ever, keeps pace with technology developments.  We’ve said it before and will say it again, this is extremely problematic.

Money distributed through CMS will be tiered, e.g., first year physician gets $15k, 2nd, $12k, etc.  If that physician gets started quickly (by 2010) they can reap some $41K. If they drag their feet and start a couple of years later, they’ll get a total of $24k.  A similar tiered model is also established for hospitals.  All of this is laid out in Division B of the Bill beginning on page 480.

To get reimbursement, a physician or hospital has to demonstrate that:

The certified EHR is “used in a meaningful manner”, they reference eRx.  They must be able to demonstrate the certified EHR “is connected n a manner that provides for electronic exchange of health information to improve quality of care such as care coordination.” Lastly, they must demonstrate that the certified EHR can also provide reporting on “clinical quality measures.”  Fine attributes to promote but see no reason why it must be done with a certified EHR.  Why not simply state that the physician/hospital must be able to demonstrate such activities?  You don’t need a “certified EHR” you need technology that can get the job done.

Flipping over to Division A, beginning on page 286 (real pain going back and forth between these two documents – do they do this on purpose?) we find the language that lays out how a certified EHR will be defined.  ONC will turn over $20M to NIST who will go forth and define the test standards ad implementation specifications and testing infrastructure for a certified EHR.  There on page 332, Division A we also find the language regarding the testing that NST will manage…

may include a program to accredit independent, non-Federal labs to perform testing

While they do not spell out CCHIT, sure sounds like that is who they are referring to.

An interesting little piece found on page 488 of Division B is the requirement that HHS do a study and produce a report on “Availability of Open Source HIT Systems.”  Odd to have such a study and can only think it is a pet project of someone in the VA looking to keep VistA alive or someone like Sun Microsystems looking to further substantiate the open source CONNECT NHIN they developed.

$2B for the Office of the National Coordinator (ONC). An absolutely huge amount of money of which 15% ($300M) is going directly to RHIOs/HIEs.  The nominal money spent to date, via grants for RHIOs, has been a waste.  Let’s hope this time that no money is distributed until a RHIO can provide a detailed business plan and revenue model that will make them self-sustaining within a given time frame, say 3yrs.

A significant portion of that $2B will go to establish a network of HIT Research Centers.  There will be one main Center, a number of regional Centers and HIT Extension Centers at the State level.  For State Centers a tiered funding model is also used with State having to provide matching funds that increase over time. These Centers will be established to gather lessons learned in best practices for adopting, deploying and using HIT in a clincal setting.  These Centers, in the short-term, may also be used for training HIT professionals.  Good idea, if they can keep these Centers focused and delivering value at the local level.  Agricultural Extension Services have been doing this for years with mixed success, hopefully they can learn from them.

It should also be noted that Congress has also given ONC the authority (Division A pg 322) to “develop and provide a qualified EHR unless determined that the needs and demands of providers are being substantially and adequately met through the marketplace”

Plenty more to look at in this Bill, but believe the above hits the high points, though we reserve the right to come back and add to it as we uncover more items of interest.

Concluding Thoughts

When we first wrote about HR 1, we were very concerned with the terminology for “certified EHR”.  That concern only increased upon reading very similar language in the Senate version.  It was pretty much a foregone conclusion that we were going to get stuck with that dreaded “certified” albatross, which has indeed occurred.  At this point, the best we can hope for is that insightful minds will take full advantage of the loose language in the HITECH Act and craft a definition and implementation program for certified EHR that promotes innovation, rather than hinders it.  Unfortunately, with the rush to do something, anything to get the economy on track, haste may make waste.  Congress has given ONC until Dec. 31, 2009 to “adopt an initial set of stnadards and implementation specifications” for certified EHRs.  Let us all pray that they use that time wisely.

While these legacy HIT vendors celebrate there will be many a small, innovative HIT vendor wondering what the heck does “qualified” or “certified” EHR mean as the legislation will only provide incentive payments to those physicians and hospitals that adopt a “certified EHR.”


  1. Tim Gee

    I’m not looking forward to the swing of the pendulum when the expected savings from HIT doesn’t materialize.

  2. Jim Tate

    My reading of the final bill implies that physician incentives will begin in 2011, not 2010.

  3. Cathy Huddle

    Legacy and CCHIT certified are not synonymous. While many of the legacy vendors are certified, there are also several new, innovative and afforable EHRs that are certified, including ours (Sevocity). In fact, over the long haul, it will be easier for the more innovative vendors to make the changes required by CCHIT. The coding, databases, etc of the legacy systems take longer to program and test and don’t even get me started on the upgrade process for the customer.

    While I believe that CCHIT has gone too far in its requirements, I believe there is value in having minimum requirements if tax revenue is going to fund the system. These minimum requirements should include things like security, interoperability and minimum functionality. I believe CCHIT started right but in the quest for new annual certification (and revenue), it has gotten out of hand.

    I would like to see CCHIT scaled back to basic requirements and then let the vendors fight for the customers the old fashioned way – their value proposition.

  4. Charlie Jarvis

    I hope that well-informed and well-intentioned healthcare information technology providers will view this opportunity sincerely and with humility. We at NextGen Healthcare Information Systems take this opportunity very seriously and will approach the medical provider community with a commitment to help professionals make the right decision on adopting healthcare automation for their practices.

    And we firmly believe that for HIT to show results, not only the proper solution needs to be selected but proper preparation and staff training are essential for the end result- giving the medical care giver another tool to provide the best patient care they can.

    Charlie Jarvis
    Assistant Vice President for Healthcare Services and Government Relations

  5. John

    If all Congress sees is some grand savings in healthcare costs as a result of HIT adoption, they are in for a rude awakening. At the end of the day HIT is just a tool and as with any tool, if it is used properly by well-seasoned professionals (skilled IT staff & clinicians) it will reap benefits. Unfortunately, such professionals are in short supply. Hopefully, Congress, and more importantly the public will see value in the HITECH Act, beyond just simple savings, e.g., consumer control of their ow records, ability to communicate electronically with their physicians, etc.

    In reviewing the Bill, I came to the section on reimbursement of physician adoption rather late in the process and found the wording confusing (or maybe it was my muddled mind at that point). At one point the Bill does say reimbursement to begin in 2011, but later on it refers to payment model with a start year of 2010. Will take a closer look next week.

    I may have painted too broad a brush in characterizing or at least inferring all CCHIT certified HIT is legacy. Yes, their are companies such as yours and others who are relatively new to the industry and are to be congratulated for insuring your products meet certification standards.

    That being said, I am not a fan of this process for several reasons:
    1) Any certification program runs at least a few years behind what technology is capable of and this hinders technology innovation, or at least the adoption of such if we based reimbursement on certified EHRs, whatever that is suppose to mean.
    2) Certification for such things as interoperability does not equate to data liquidity. For this reason alone, such certification processes/programs are simply a waste of time and effort. Would it not be better to provide incentives that promote behaviors that we would like to see physicians, practices and hospitals adopt, e.g., use of CDS, clearly demonstrate data liquidity (eg allow a consumer to export their complete files in CCR or CCD to their personal health account?
    3) Have not been impressed with CCHIT efforts to date and having closely observed their most recent efforts to create certification criteria for PHRs, find the whole make-up of CCHIT to be basically a cabal of entrenched, legacy interests. For example, it is absolutely crazy for CCHIT to firs develop criteria for PHRs, too young a market and secondly, for PHRs they continue to march down the path of legacy vendors with the CCD standard. – Absolutely crazy.

    Thank you for your excellent comment. I have nothing to add here as you hit every key point; humility, skilled personnel and that most critical aspect, TRAINING! Far too little is allocated to training employees on virtually any enterprise software install. Saw this for years in the manufacturing sector, seeing it now in the HIT sector.

    What I do hope is that companies such as yours takes the new funds heading their way to invest in even better products that are easier to use, take less training and provide even more support to clinicians and consumers not only at the point of care, but across one’s engagement with the healthcare system, regardless of location.

    Thank you everyone for taking the time to comment for comments such as yours provide all with a more complete and well-rounded view of this important legislation.

  6. John Lynn

    Your analysis of CCHIT is dead on. I wonder what more we could do to get this message across to the people at HHS that have to make the decision on certification criteria.

    I’m really glad to have found someone else who has similar thinking to me in the EMR space.

    One other point that I think you didn’t really cover was having this reimbursement as a Medicare incentive. Not to mention the total reimbursement being in the $40k range max. I’m interested to know how many people will achieve that max rate and what the actual rate of incentive most doctors will receive.

    I wonder if in a couple years, this will just push many doctors away from taking Medicare and put the viability of Medicare in question since only a few doctors will be providing Medicare services. It’s going to be an interesting next couple years.

  7. John

    Take a look at my two recent posts where I cover reimbursement schedules for Medicare and Medicaid. They are quite different, each have pluses and minuses.

  8. Calvin Jablonski

    Operating a Business in Chicago without a Business license is a Crime…

    HIT industry sponsored “Healthcare IT News and Opinion” website HisTalk has taken to the defense of CCHIT. In there defense of the defunct organization known as CCHIT , Mr HIS Talk uses the following words:

    1. “CCHIT is still a private, non-profit organization and it’s entirely irrelevant as to which state it’s incorporated in since you don’t have to incorporate in the state in which you operate (surely everyone’s heard of the huge number of Delaware and Nevada corporations out there).

    2. “someone with an axe to grind decided to air their prolific ignorance or denial of the facts publicly”

    3. secrets?

    Calvin Jablonski on behalf of the community responds to the words in the same order;

    1. Corporate registration and articles of organization in good form are required in every state. The writers’ comments suggesting a phantom registration in some unknown state is not relevant is incorrect. The 501 C election requires corporate registration in good standing within a state .(http://www.irs.gov/publications/p557/ch04.html)

    Typical stuff found on the IRS 501 election form 1020:

    Check the box for the type of organization.
    If this is a corporation or an unincorporated association that has not yet adopted bylaws, check here
    Attach a copy of the Articles of Incorporation (including amendments and restatements) showing approval by the appropriate state official; also attach a copy of the bylaws.
    Attach a copy of the Trust Indenture or Agreement, including all appropriate signatures and dates.
    Attach a copy of the Articles of Association, Constitution, or other creating document, with a declaration (see instructions) other evidence that the organization was formed by adoption of the document by more than one person. Also include a copy of the bylaws.

    2. The axe has been found, not ground… Stand by the best part is yet to come..
    3. I have already stated the facts concerning which employees work for HIMSS and CCHIT- read the previous post

    HIS Talk, a demonstration of anger, ignorance and poor cognition: The cited HIS Talk is probably repeated hearsay posted by a wannabe HIT Executive, a poorly educated schm**k who thinks the rule of law only applies to law abiding citizens.

    If you are standing by, then here it is:

    CCHIT formerly of 230 E. Ohio Street, then 233 N. Michigan Ave, and more recently 200 S. Wacker Drive ,Chicago while still generating revenues as a Chicago based business has been operating without a business license in violation of Chicago Municipal Code 4-4 , City of Chicago Business License Lookup: http://webapps.cityofchicago.org/lic/iris.jsp

    Consequences of operating a business without a license,
    1. Fines of up to $10,000.00 per day
    2. Confiscation
    3 Physical Arrest

    In the case of CCHIT the lack of a valid business license which is about $125.00 per year for a limited license requires a valid registration with the state of Illinois, a valid lease and articles of incorporation or “organization”. For the HIS TALK people it means a 2 year cycle gets paid up front so as long as they are defending them perhaps they would like to donate the $250. But this is just ITEM #1.

    ITEM #2: It is a violation to not have a valid license on display in the place of business. Yup, up to another $10,000.00 in fines to be paid.

    ITEM#3: The City Revenue agency needs to examine the books to see if there is Tax due.

    ITEM#4: The State of Illinois needs to examine the books for corporate income tax that is due on the $7.5 million in taxpayer money that was taken plus the 10’s of thousands taken from vendors.

    ITEM#5: The IRS will be paying a visit shortly too.

    Good news for Chicago Taxpayers and those who want to fund the Olympic Village in Chicago: CCHIT has been reported to the State of Illinois and the City of Chicago and they can expect a visit from the authorities tomorrow morning concerning license fees and taxes.

    Discussion: Adam Smith, the father of economic anthropology and brilliant writer described a free market economy as more productive and beneficial to society. Free market economy does not mean a lawless arrogant climate of whatever the traffic will endure, not in Smiths’ time and not in ours (invoking the hidden hand).

    The posts of this writer reflect the opinions of a diverse and educated culture, the opinions expressed are not solely the opinions of one person but that of a community.

  9. Tom Brock

    Thanks for the timely exchange of information. The passing of the economic stimulus package represents a positive step toward making healthcare safer, more cost efficient and better connected. We at RelayHealth believe this legislation will be the catalyst to drive innovative changes for physicians, pharmacies and hospitals to embrace secure online communication and information exchange. Healthcare providers can view this as an opportunity to invest in tools to enhance care delivery and connect more closely with their patients and their community to drive this transformation. While there is much work ahead, we stand fully prepared to help drive this change to support our nation’s dedicated care providers.
    Tom Brock VP Strategy & Planning, RelayHealth

  10. John

    Really do not understand your beef with CCHIT. While I may have some concerns regarding what “certified EHR” may mean to the market and in particular adoption of new, innovative approaches believing that the legislation appears to have headed down the wrong track, i.e., let’s provide incentives for behavioral change on part of providers, not the technology itself, as an entity unto itself, do believe that CCHIT operates with the best of intentions.

    Please, let’s bring the conversation back to are we headed in the right direction via language that states reimbursement for “meaningful use of certified EHR”.

    Thanks for adding your voice to the chorus of other HIT vendors looking to assist your customers and prospects in understanding the implications of the HITECH Act. It is still very much a work in progress and education of the broader market will be critical.

  11. Bob Birmingham


    Thanks for your insightful points. I generally agree with your statement that interoperability doesn’t equate to data liquidity, but worry that people may take away the wrong message about the importance of interoperability. Data liquidity (without interoperability) provides little more than ability to move “data” (with or without semantic meaning)… We’ve been doing that rather successfully for decades… Interoperability helps to assure common meaning and understanding of information.

    Both interoperability AND data liquidity are EQUALLY important foundational characteristics of a national/global standards-based electronic health information infrastructure.


    Bob Birmingham
    Johnson & Johnson

  12. Randolph Sanks

    What portion of the bill provides training opportunities for the healthcare organizations to hire training firms to come in and train the EMR concept to providers.

    Randolph Sanks

  13. Vishal

    Indeed federal government’s initiative of introducing EHR’s in the National’s healthcare system is a great step forward and of-course well complimented by the incentive packages provided to the medical practitioner.

    On the point of usability and defining the term ‘meaningful use’, I would add further that the medical practitioners are looking to avail of this federal incentive by trying to comply with the definition of meaningful use but at the same time EHR providers are looking at their own set of profits.
    This misunderstanding is mostly I believe as a result of wrong interpretation of the federal guidelines. The EHR providers need to look at these guidelines from the prospective of the practitioners who deal with different specialties.
    Each specialty EHR has its own set of challenges or requirements which I believe is overlooked by im most EHR vendors in a effort to merely follows federal guidelines. This is resulting in low usability to the practitioners, thus less ROI, finally redundancy of the EHR solution in place.
    I think ROI is very important factor that should be duly considered when look achieve a ‘meaning use’ out of a EHR solution. Though one may get vendors providing ‘meaning use’ at a lower cost, their ROI / savings through the use of their EHR might be pretty low when compared to costlier initial investment. Found a pretty useful ROI tool
    that is pretty customizable and easy to use. It also accounts for the different specialty EHR’s too.
    There are other good references on the topics of:

    Usability/meaningful use

    Certification criteria for EHR

  14. Swamy

    Nice post. Lot of useful information on ARRA incentives and ‘meaningful use’ of EHR’s.
    I think the introduction of REC [regional extension centres] through the HITECT act is a great step forward in direction of meaningful use of EHR’s.
    the REC’s are going to be point of contention looking ahead, towards a successful EMR deployment.
    On the issue of REC’s competing against each other, I feel this will result in a healthy competition, if they don’t get biased for a particular EHR vendor. I believe these REC’s should set their own unique business model, as discussed above within the guidelines set-forth in the HITECH act.
    This would result in each REC having a set of vendors with similar offering , yet maintaining their own unique selling point.
    Each EHR vendor should have their own interpretation of HITECH act, using which the REC’s can quote or compete for the jobs.

    Regarding the grants given, I believe the staggered form of funding does solve most of the confusion.

  15. Joe Heller

    Isn’t this all irrelevant, now that the ONC has made CCHIT certification equal to that of any other EHR certifying organization.

  16. ponymnphypors

    Hello all! I like this forum, i set up tons compelling people on this forum.!!!

    Great Community, consideration all!

  17. emr reviews

    I Agree with our Concluding thoughts John, Very well Said



  1. ICMCC Website - Articles » Blog Archive » Sweet Rewards for HIT Vendors with Final Stimulus Package - [...] to get the required votes for passage, all things HIT came through relatively unscathed.” Article John Moore, Chilmark Research,…
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  4. Doctor appointments at your finger tips: $19 billion Healthcare IT stimulus signed into law « DocAsap - [...] healthcare IT.  While some analysts are skeptical regarding the immediate effects of the bill, the positive effect on EMR…
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  7. HITECH Act part of stimulus package headed to President's desk: Steady, boys! - […] interoperability, is a key thing to have.  Consider, for example, John Moore's excellent summary and analysis of the HITECH…
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