Warning: Three-Fold Rise In EMR Adoption Predicted

Stimulus plan sets aside $20 billion for physicians who install certified EMRs

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CEO SUMMARY: Doctors are responding to news that up to $20 billion in federal funding is now available to help pay for their adoption of electronic medical record (EMR) systems. Demand for EMRs is expected to increase three-fold in the coming years. That means clinical labs and pathology groups must step up their EMR interface capabilities—or lose clients as physicians move their business to laboratories who do a better job of interfacing with physicians’ EMRs.

IT IS PREDICTED THAT the American Recovery and Reinvestment Act of 2009 (ARRA) may trigger a three-fold increase in the number of physicians installing electronic medical record (EMR) systems over the next 10 years. If that happens, hospital laboratory outreach programs will face an unprecedented demand from physicians to install LIS-to-EMR interfaces.

“Prior to passage of ARRA, an average of 12,000 physicians per year would transition to use of an EMR in their practices,” observed Pat Wolfram, Vice President of Marketing and Customer Services for Ignis Systems Corporation, a firm in Portland, Oregon, that integrates EMRs to laboratories. “ARRA is the game-changer because it mandates federal spending of $20 billion over the next five to six years to spur adoption of EMRs and to reimburse physicians for much of the EMR’s installation cost.

“At a recent users’ group meeting, we spent three days with 400 advanced EMR users,” he continued. “The hottest topic was ARRA’s funding for ‘meaningful use’ of EMRs. Among the other high- interest topics was EMR interoperability, including links to labs.

“ARRA calls for investing $20 billion to foster private-sector investments in healthcare information technology (HIT), and ARRA has a goal of 90% EMR adoption by 2019,” commented Wolfram. “Some interpretations show an even more aggressive goal. To meet that goal of 90% adoption, EMRs must be installed at the rate of 40,000 physicians per year over the next 10 years. That’s over three times the current rate of 12,000 physicians per year who adopt EMRs!

Economic Stimulus for HIT

“As a company that specializes in working with physicians to integrate EMRs with laboratories, we are working with our lab partners now to scale up our capacity by three times,” Wolfram added. “In fact, every EMR vendor and every lab that connects to EMRs similarly must prepare a plan to handle physician demand that may be three-fold higher than current EMR adoption rates.”

In a recent conference call conducted by the Medical Group Management Association (MGMA) in Englewood, Colorado, its President and CEO, William Jesse, M.D. explained how ARRA will stimulate HIT adoption in group practices. The carrot is that ARRA will reimburse physicians who install certified EMRs within the next five years. There is also reimbursement for physicians who have already installed certified EMRs. The stick is that, for physicians who do not install certified EMRs within the next five years, Medicare will reduce the rate it pays to treat Medicare beneficiaries.

Reimbursement for EMRs

During the conference call, Jesse stated that “The two main incentive opportunities are through the Medicare program and separately through the Medicaid program,” he added. “A physician can dip from either pocket—but cannot dip from both.

“Under the Medicare incentives, eligible physicians are defined as physicians (both M.D.s and D.O.s), dentists, podiatrists, optometrists, and chiropractors,” Jesse said. “Because there is a separate pool of money for hospital incentives, hospital-based physicians such as pathologists, anesthesiologists, emergency physicians, or hospitalists—whose sole site of practice is the hospital— are not eligible for the Medicare incentives.” In the case of pathologists and other hospital-based physicians, Jesse noted that they may receive support for EMR adoption through the hospital incentives but cannot receive funding directly through Medicare.

Five Years To Adopt EMRs

“Under ARRA, Medicare will reimburse physicians $15,000 to $18,000 in 2011 or 2012 and then less for each year after that for five years up to a maximum of $44,000,” Jesse said. “This is the carrot and stick approach. You get the carrot at the front end, and the size of the carrot gets smaller if you delay. If you decide not to do this until the fourth year, then the amount of the incentive is only $4,000 to $6,000.

“And if you haven’t implemented an electronic health record by the fifth year, which is 2015, then the stick comes out,” explained Jesse. “The stick affects your Medicare payment rate. Under ARRA, Medicare payment rates to physicians who are not using EMRs will drop by these factors: 1% less in 2015; 2% less in 2016; 3% less in 2017; and up to 5% less in 2019. Clearly, this is a system designed to get physicians to implement EMRs early on.”

During the conference call, Jesse also explained that physician reimbursement for EMR adoption is also available under the Medicaid provisions in ARRA for physicians who have 30% of their patients in the Medicaid program. “States are authorized to make payments to Medicaid providers that total no more than 85% of their net average allowable costs for certified EMR technology,” Jesse said. “So, in essence, about 85% of what a physician spends to acquire an EMR—up to a maximum of $63,750, can be paid by the state Medicaid program.

Medicaid Funds Up To 85%

“That includes the cost of purchasing hardware and software plus the cost of support services including maintenance and training,” noted Jesse. “The Medicaid provider is then responsible for paying the remaining 15% of the net allowable costs. So a physician does have to spend some money out of pocket, but in essence 85% of EMR adoption costs—up to that maximum of $63,750, will be paid by Medicaid.”

Wolfram’s observation that physician adoption of EMRs is about to jump three-fold in coming months represents a timely warning for clinical laboratories and pathology group practices. It means that many of every labs’ bread-and-butter clients will be moving to EMRs—and will want their laboratory provider to provide an electronic interface to enable lab test results to automatically populate the patient record in the EMR.

That is why lab administrators and pathologists should be developing strategies and lining up the resources needed to meet these new needs of their client physicians. Failure to act in a timely manner could result in lost client accounts.

Buy Your EMR from Wal-Mart? Don’t Laugh! Sam’s Club Teams Up with Dell, eClinicalWorks

IMAGINE BUYING AN electronic medical record (EMR) system at Wal-Mart! Don’t laugh because about 200,000 healthcare providers— mostly doctors—are already members of the Sam’s Club division of Wal-Mart Stores, which will offer Dell computers and eClinicalWorks software to physicians in small offices seeking electronic health record systems.

Recognizing that the government will spend an estimated $20 billion over the next five years to get physicians to install electronic medical record (EMR) systems, Sam’s Club, Dell, and eClinicalWorks are working to make technology more accessible and affordable for physicians in smaller practice settings. That was reported by the New York Times, which also said that Sam’s Club, Dell, and eClinicalWorks expect their prices will undercut health information technology suppliers by as much as half!

Wal-Mart will offer physicians hardware, software, installation, maintenance, and training for $25,000 for the first physician in a practice, and about $10,000 for each additional doctor in the group. Sam’s Club estimates that, after the installation and training, continuing annual costs for maintenance and support of the EMR system will run between $4,000 to $6,500 annually.

Wal-Mart/Sam’s Club is shrewd to target physicians in small-group settings. EMR penetration in this tier 3 category is estimated to be only about 3% to 4%. Because of the new federal financial incentives for EMR adoption, demand from these physicians is expected to skyrocket.

In Florida, a regional initiative is organizing to take advantage of the federal stimulus funding. It is PaperFree Tampa Bay, a public-private partnership. Last month, the group said its goal is to convert all physicians in the Tampa Bay area from paper prescriptions—known to be the cause of costly medical errors—to electronic prescribing.

Partners in the Tampa program include University of South Florida (USF) Health and Allscripts, which will work together to help 3,200 physicians in Hillsborough County to implement EMRs. Later, program officials plan to expand the effort to the entire 10-county Tampa Bay region, including the counties of DeSoto, Hardee, Hernando, Highlands, Manatee, Pasco, Pinellas, Polk, and Sarasota.

The $20 billion dollar federal honey pot for EMR funding has already upped demand for EMRS by physicians in small practice settings. Writing in For the Record (https://www.fortherecordmag.com/), John E. O’Keefe, in a story called “EMRs at the Tipping Point,” observed that:

According to a recent report by healthcare market research firm Kalorama Information, the EMR market is expected to grow by 14.1% annually through 2012. With the tier 1 market segment (large hospitals) approaching full saturation— approximately 80% already employ EMRs—and tier 2 (large medical groups) adoption slowing, much of that growth will be coming from the bottom up.

A segment of the healthcare industry that as recently as the summer of 2006 recorded only a 3% to 4% EMR adoption rate, tier 3 providers (smaller private practices) are now clamoring to implement the systems. This is no small thing. According to U.S. Census reports, of the physicians at work in the United States, some 60% are small to midsized practice providers.

In some cases, physician-initiated EMR implementation inquiries actually increased more than twentyfold in December 2008 alone compared with the previous six-month period. And 2009 looks to continue, if not significantly expand, that trend.

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