Inside the Economic Stimulus Package: What's In It for Imaging & IT?

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This year, one trend dominates the health imaging market and the entire economy. The lingering and deepening recession stands at the top of the list of items that keep CIOs, hospital and clinical department administrators, and radiologists awake at night.

There is at least a spark of hope in the $787 billion U.S. economic stimulus package. So what’s in it for imaging, radiology, cardiology and IT? Health Imaging & IT untangles the package, interpreting its implications for the health imaging world.

The basics

The American Recovery and Reinvestment Act includes more than $19 billion in funds for healthcare IT. Specifically, the Health Information Technology for Economic and Clinical Health Act (HITECH) is designed to spur adoption of electronic health records (EHRs). It incorporates $17.2 million in pay-for-use funding for “meaningful use” of the certified EHRs. Meaningful use is defined as a connected EHR that provides electronic exchange of health information to improve quality and promote coordinated care. The stimulus package also includes another $2.1 billion in grants and loans designed to jump-start IT adoption, which will be determined by Office of the National Coordinator of Health Information Technology (ONCHIT).

The Carrot
Projected Minimum Incentives for Physician Practices that Convert to EHRs
  • Year 1 – $15,000
  • Year 2 – $12,000
  • Year 3 – $8,000
  • Year 4 – $4,000
  • Year 5 – $2,000
  • Penalties for non-adoption start in 2014

The funding could provide a much-needed boost for the sagging health IT market. Prior to the act’s passage, research giant Gartner projected healthcare IT spending would grow a mere 2.6 percent to $28.4 million in 2009, following a healthy growth rate of 6.6 percent in 2008. Indeed, most hospitals have planned for the pinch. Seventy-one percent expect smaller IT budgets in 2009, and another 26 percent will hold steady.

Budgets likely will be tweaked and spending could increase, however, with the financial incentives for healthcare providers that convert to an electronic medical record.

Early adopters gain big

HITECH offers incentives for everyone from small practices to large hospitals, with most eligible for funds to upgrade to EHRs. Early adopters in both realms qualify for the largest incentives.

Physician practices that deploy an EHR by 2011 qualify for additional per-physician Medicare payments range from $44,000 to $64,000 over the five-year incentive period. Later adopters not only miss out on incentive payments, but also may incur penalties. That’s because the package incorporates both carrots and sticks; hospitals and physicians that do not convert to EHRs by 2014 face Medicare payment penalties. Plus, other payors could follow Medicare’s lead and implement staggered payments.

The Stick
Beginning in 2015, physicians not demonstrating “meaningful use” of EMRs will be reimbursed according to a reduced Medicare fee schedule. The reductions will be:
  • 2015: 99% of the regular fee schedule
  • 2016: 98% of the regular fee schedule
  • 2017 and each subsequent year: 97% of the regular fee schedule
  • If fewer than 75% of eligible healthcare professionals are utilizing EHRs beginning in 2018, the fee schedule may be reduced to 96% and then 95% in subsequent years but not further.

Hospitals with more than 500-beds stand to receive up to $11 million each to modernize their medical records, while smaller hospitals are eligible for financial incentives up to $3 million each. Calculating the actual hospital incentive is quite complicated. The bonus begins with a $2 million base payment and factors in a formula that accounts for discharge volume and inpatient Medicare bed days.

There is a downside to the push to accelerate EHR adoption. It’s difficult for hospitals and physician practices to shift gears. Those that have not yet investigated the operational, IT and workflow implications of an electronic record are at a disadvantage. Unfortunately, physician practices and hospitals that attempt to convert to electronic systems with appropriate planning may not achieve the same level of success as sites that develop a comprehensive deployment plan.

A sound accelerated IT adoption plan

There may never be a better time to hop on the healthcare IT bandwagon. Facilities that had previously planned for a converting to an EHR, but delayed adoption, are well-situated to reap maximum gain from HITECH. They need to review and update their plans, making sure to visit with