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One-on-One with Post & Schell Attorneys Steven Fox & Edward Shay, Part I

March 19, 2009
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CIOs who don’t want to miss their share of the HITECH Act have a lot to learn.

Steven Fox Edward Shay

It’s no surprise that the recently passed Economic Recovery Package contains billions for hospitals and physicians to invest in healthcare IT. But only by digging into the legislation — specifically the HITECH Act, part of the massive American Recovery and Reinvestment Act of 2009 — can those responsible for getting that money understand what will be required of them, and when. Healthcare Informatics Editor-in-Chief Anthony Guerra recently talked with Steven Fox and Edward Shay, attorneys and partners at Post & Schell, to better understand the substance of the act.

AG: Of course, our readers are incredibly interested in the stimulus package and the implications of what it means to their business. If I asked you to start by boiling it down to a brief description for our CIO readers, what could you tell me?

SF: There is so much in there. I guess the biggest thing is the money. Money for things that probably hospitals are doing already, and if they're not, it’s going to encourage them to develop or implement EHR systems. I guess that’s certainly one of the biggest — because for hospitals, especially, we’re talking about a lot of money. It’s a minimum of $2 million, and then it goes up from there based on a pretty complicated formula that involves Medicare and Medicaid discharges. So the higher the percentage of Medicare discharges is, the more money that they're going to get.

I talked to one client recently, it’s a seven-hospital system, and the CIO estimated — just sort of a back-of-the-envelope kind of computation — that it’s going to be about $41 million over the four or five years for his hospital.

ES: One way to think about it Anthony is you’ve got $17 billion devoted to the incentive payments that Steve just described to you, and you’ve got an additional $2 billion that are allocated to virtually everything else in the act, which includes all of the sort of infrastructure development and studies and work, through the states with the grant programs and things like that. So there is no mystery about what the main objective here is, it’s clearly, as Steve says, to really stimulate the adoption of electronic health records.

SF: I think that’s a good way to put it, Ed. The vast majority is for hospitals and the other part is for physicians. A lot of hospitals are interested in helping (practices). I was meeting with a hospital CIO the other day (and the CEO), and they said that even though they're not getting that money directly, the money for the physicians in private practice (a maximum of $44,000 per physician), hospitals are interested in helping them. He said that he doesn’t want to see physicians leave that money on the table, because if you don’t take advantage of it, what you're doing is just leaving it there, which is sort of silly.

AG: You said it’s a minimum of $2 million, is that for any sized hospital? Does the number of beds ever come into it, or is it just based on, as you said, the Medicare/Medicaid billing?

ES: What drives it is discharges. Discharges, of course, are directly proportional to the bed size of an institution or a system. So you're right, Anthony, beds are a factor indirectly.

SF: Indirectly, yes.

AG: So the bigger you are, the more money you will get as a hospital.

ES: I think that’s a fair characterization, yes.

AG: Let’s go through this little scenario. I’m a CIO at a 500-bed hospital and I’m sitting there and I haven't done anything yet because I’m so busy with everything else, what do I need to do? Are there time restrictions, do I have a certain deadline at which to file particular paperwork, do I need lawyers — how do I get this money and how do I not risk missing out, because if I do, my CEO may have something to say about it.

SF: There are timelines. The first year that you can take advantage of this is 2011, but for hospitals, that’s referring to the fiscal year, so that starts next year (Oct. 1 of next year).

Some of this we’re not going to know until the regulations come out. Ed put together a really good timeline yesterday (see attachment at bottom of interview) that was really very helpful, which showed all the different dates for the regulations. But in this respect, the regulations are going to come out by Dec. 31, which will help us understand better how that’s going to work as far as the incentives. So they have to be meaningful users, which is the language that the regulations use for hospitals. And meaningful EHR users by 2011, or they can also start in 2012. If they start in either of those two years, they really basically get the same amount of money. That money is the $2 million.