DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Centers for Medicare & Medicaid Services 

42 CFR Parts 412, 413, 422, and 495 

CMS-0033-P 

RIN 0938-AP78 

Medicare and Medicaid Programs; Electronic Health Record Incentive Program 

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule. 

SUMMARY: This proposed rule would implement the provisions of the American 

Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) that provide incentive 

payments to eligible professionals (EPs) and eligible hospitals participating in Medicare 

and Medicaid programs that adopt and meaningfully use certified electronic health record 

(EHR) technology. The proposed rule would specify the-- initial criteria an EP and 

eligible hospital must meet in order to qualify for the incentive payment; calculation of 

the incentive payment amounts; payment adjustments under Medicare for covered 

professional services and inpatient hospital services provided by EPs and eligible 

hospitals failing to meaningfully use certified EHR technology; and other program 

participation requirements. Also, as required by ARRA the Office of the National 

Coordinator for Health Information Technology (ONC) will be issuing a closely related 

interim final rule that specifies the Secretary’s adoption of an initial set of standards, 

implementation, specifications, and certification criteria for electronic health records. 

ONC will also be issuing a notice of proposed rulemaking on the process for 

organizations to conduct the certification of EHR technology. 
CMS-0033-P 2 

DATES: To be assured consideration, comments must be received at one of the 

addresses provided below, no later than 5 p.m. on [OFR—insert date 60 days after the

date of publication.]. 

ADDRESSES: In commenting, please refer to file code CMS-0033-P. Because of staff 

and resource limitations, we cannot accept comments by facsimile (FAX) transmission. 

 You may submit comments in one of four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit electronic comments on this regulation to 

http://www.regulations.gov. Follow the instructions on the home page. 

 2. By regular mail. You may mail written comments to the following address 

ONLY: 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

Attention: CMS-0033-P, 

P.O. Box 8013, 

Baltimore, MD 21244-8013. 

Please allow sufficient time for mailed comments to be received before the close 

of the comment period. 

3. By express or overnight mail. You may send written comments to the 

following address ONLY: 

 Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Attention: CMS-0033-P, 
CMS-0033-P 3 

 Mail Stop C4-26-05, 

 7500 Security Boulevard, 

Baltimore, MD 21244-1850.

4. By hand or courier. If you prefer, you may deliver (by hand or courier) your 

written comments before the close of the comment period to either of the following 

addresses: 

a. For delivery in Washington, DC-- 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

Room 445-G, Hubert H. Humphrey Building, 

 200 Independence Avenue, SW., 

 Washington, DC 20201 

(Because access to the interior of the Hubert H. Humphrey Building is not readily 

available to persons without Federal government identification, commenters are 

encouraged to leave their comments in the CMS drop slots located in the main lobby of 

the building. A stamp-in clock is available for persons wishing to retain a proof of filing 

by stamping in and retaining an extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD-- 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

7500 Security Boulevard, 

Baltimore, MD 21244-1850. 
CMS-0033-P 4 

If you intend to deliver your comments to the Baltimore address, please call 

telephone number (410) 786-9994 in advance to schedule your arrival with one of our 

staff members. 

 Comments mailed to the addresses indicated as appropriate for hand or courier 

delivery may be delayed and received after the comment period. 

Submission of comments on paperwork requirements. You may submit 

comments on this document's paperwork requirements by following the instructions at 

the end of the “Collection of Information Requirements” section in this document. 

In the event that CMS must limit the number of employees reporting for duty 

during an emergency or for other reasons, submitting comments on CMS regulations and 

Paperwork Reduction Act (PRA) notices via www.regulations.gov will ensure that CMS 

considers the comments promptly. Comments mailed or delivered to the CMS 

headquarters may not be readily accessible for review if CMS employees are not able to 

report to work at the CMS headquarters. CMS wishes to ensure that public comments on 

its regulations and PRA notices are promptly displayed on the regulations.gov website for 

the public to review. To ensure that comments are displayed as quickly as possible, we 

request that the public use only one public comment submission option. These efforts are 

intended to ensure that CMS operations continue even during an emergency and that 

consideration of public comments and access to those comments occur timely. 

For information on viewing public comments, see the beginning of the 

“SUPPLEMENTARY INFORMATION” section. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Holland, (410) 786-1309, EHR incentive program issues. 
CMS-0033-P 5 

Edward Gendron, (410) 786-1064, Medicaid incentive payment issues. 

Jim Hart, (410) 786-9520, Medicare fee for service payment issues. 

Terry Kay, (410) 786-4493, Medicare fee for service payment issues. 

SUPPLEMENTARY INFORMATION:

Submitting Comments: We welcome comments from the public on all issues set forth in 

this proposed rule to assist us in fully considering issues and developing policies. You 

can assist us by referencing the file code (CMS-0033-P) and the specific “issue 

identifier” that precedes the section on which you choose to comment. 

Inspection of Public Comments: All comments received before the close of the comment 

period are available for viewing by the public, including any personally identifiable or 

confidential business information that is included in a comment. We post all comments 

received before the close of the comment period on the following Web site as soon as 

possible after they have been received: http://www.regulations.gov. Follow the search 

instructions on that Web site to view public comments. 

 Comments received timely will also be available for public inspection as they are 

received, generally beginning approximately 3 weeks after publication of a document, at 

the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security 

Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an appointment to view public comments, phone 

1-800-743-3951. 

Acronyms 

ARRA American Recovery and Reinvestment Act of 2009 

CAH Critical Access Hospital 
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CAHPS Consumer Assessment of Healthcare Providers and Systems 

CCN CMS Certification Numbers 

CHIP Children’s Health Insurance Program 

CHIPRA Children's Health Insurance Program Reauthorization Act of 2009 

CMS Centers for Medicare & Medicaid Services 

CY Calendar Year 

EHR Electronic Health Record 

EP Eligible Professionals 

EPO Exclusive Provider Organization 

FACA Federal Advisory Committee Act 

FFP Federal Financial Participation 

FFS Fee-For-Service 

FQHC Federally Qualified Health Center 

FTE Full-Time Equivalent 

FY Fiscal Year 

FFY Federal Fiscal Year 

HEDIS Healthcare Effectiveness Data and Information Set 

HHS Department of Health and Human Services 

HIE Health Information Exchanges 

HIT Health Information Technology 

HIPPA Health Insurance Portability and Accountability Act of 1996 

HITECH Health Information Technology for Economic and Clinical Health Act 

HMO Health Maintenance Organization 
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HOS Health Outcomes Survey 

HPSA Health Professional Shortage Area 

HRSA Health Resource Services Administration 

IAPD Implementation Advanced Planning Document 

IPA Independent Practice Association 

IHS Indian Health Services 

IT Information Technology 

MA Medicare Advantage 

MAC Medicare Administrative Contractor 

MCO Medicaid managed care organization 

MITA Medicaid Information Technology Architecture 

MMIS Medicaid Management Information Systems 

MSA Medical Savings Account 

NCQA National Committee for Quality Assurance 

NCVHS National Committee on Vital and Health Statistics 

NPI National Provider Identifier 

ONC Office of the National Coordinator for Health Information Technology 

PAHP Prepaid Ambulatory Health Plan 

PAPD Planning Advanced Planning Document 

PIHP Prepaid Inpatient Health Plan 

PFFS Private Fee-For-Service 

PHO Physician Hospital Organization 

PHS Public Health Service 
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POS Place of Service 

PPO Preferred Provider Organization 

PSO Provider Sponsored Organization 

RHC Rural Health Clinic 

RPPO Regional Preferred Provider Organization 

SMHP State Medicaid Health Information Technology Plan 

TIN Tax Identification Number 

Table of Contents 

I. Background 

 A. Overview of the HITECH Programs Created by the American Recovery and 

Reinvestment Act of 2009 

 B. Statutory Basis for the Medicare & Medicaid EHR Incentive Programs 

II. Provisions of the Proposed Regulations 

 A. Definitions Across the Medicare FFS, Medicare Advantage, and Medicaid 

Programs 

 1. Definitions 

 a. Certified Electronic Health Record (EHR) Technology 

 b. Qualified Electronic Health Record 

 c. Payment Year 

 d. First, Second, Third, Fourth, Fifth and Sixth Payment Year 

 e. EHR Reporting Period 

 f. Meaningful EHR User 

 2. Definition of Meaningful Use 
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 a. Background 

 b. Common Definition of Meaningful Use under Medicare and Medicaid 

 c. Considerations in Defining Meaningful Use 

d. Stage 1 Criteria for Meaningful Use 

 3. Sections 4101(a) and 4102(a)(1) of HITECH Act: Reporting on Clinical 

Quality Measures Using EHR by EPs and all Eligible Hospitals 

 a. General 

 b. Requirements for the Submission of Clinical Quality Measures by EPs and 

Eligible Hospitals 

 c. Statutory Requirements and Other Considerations for the Proposed Selection 

 of Clinical Quality Measures Proposed for Electronic Submission by EPs or 

Eligible Hospitals 

(1) Statutory Requirements for the Selection of Clinical Quality Measures 

Proposed for Electronic Submission by EPs and Eligible Hospitals 

(2) Other Considerations for the Proposed Selection of Clinical Quality Measures 

for Electronic Submission by EPs and Eligible Hospitals 

 d. Proposed Clinical Quality Measures for Electronic Submission Using Certified 

 EHR Technology by Eligible Professionals 

 e. Clinical Quality Measures Reporting Criteria for Eligible Professionals 

 f. Proposed Clinical Quality Measures for Electronic Submission by Eligible 

 Hospitals 

 g. Request for Public Comment on Potential Measures for Eligible Professionals 

and Eligible Hospitals in 2013 Payment Year and Subsequent Years 
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 h. Proposed Reporting Method for Clinical Quality Measures 

(1) Reporting Method for 2011 Payment Year 

(2) Reporting Method for 2012 

i. Alternative Reporting Methods for Clinical Quality Measures 

 j. Proposed Reporting Criteria for Eligible Professionals and Eligible Hospitals 

 k. Addressing Dually-Eligible Medicare/Medicaid Beneficiaries under HITECH 

 4. Demonstration of Meaningful Use 

 a. Common Methods of Demonstration in Medicare and Medicaid 

 b. Methods for Demonstration of the Stage 1 Criteria of Meaningful Use 

 5. Data Collection for Online Posting, Program Coordination and Accurate 

Payments 

 a. Online Posting 

 b. Program Election between Medicare FFS/MA and Medicaid for EPs 

 c. Data to be Collected 

 6. Hospital-based Eligible Professionals 

 7. Interaction with other Programs 

 B. Medicare Fee-for-Service Incentives 

 1. Incentive Payments for Eligible Professionals 

 a. Definitions 

 b. Incentive Payment Limits 

 c. Increase in Incentive Payment for EPs who Predominantly Furnish Services in 

a Geographic Health Professional Shortage Area 

 d. Form and Timing of Payment 
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e. Payment Adjustment Effective in CY 2015 and Subsequent Years for EPs who 

are not Meaningful Users of Certified EHR Technology 

 2. Incentive Payments for Hospitals 

 a. Definition of Eligible Hospital for Medicare 

 b. Incentive Payment Calculation for Eligible Hospitals 

 c. Medicare Share 

 d. Charity Care 

 e. Transition Factor 

 f. Duration and Timing of Incentive Payments 

g. Incentive Payment Adjustment Effective in Federal FY 2015 and Subsequent 

Years for Eligible Hospitals who are not Meaningful EHR Users 

 3. Incentive Payments for Critical Access Hospitals 

 a. Definition of CAHs for Medicare 

 b. Current Medicare Payment of Reasonable Cost for CAHs 

 c. Changes made by the HITECH Act 

 d. Incentive Payment Calculation for CAHs 

 e. Reduction of Reasonable Cost Payment in FY 2015 and Subsequent Years for 

CAHs that are not Meaningful EHR Users 

 4. Process for Making Incentive Payments Under the Medicare FFS Program 

 a. Incentive Payments to EPs 

 b. Incentive Payments to Eligible Hospitals 

 c. Incentive Payments to CAHs 

 d. Payment Accounting under Medicare 
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 C. Medicare Advantage Organization Incentive Payments 

 1. Definitions 

 a. Qualifying MA Organization 

 b. Qualifying MA Eligible Professional 

 c. Qualifying MA-Affiliated Eligible Hospital 

2. Identification of Qualifying MA Organizations, MA EPs, and MA-Affiliated 

Eligible Hospitals 

3. Computation of Incentives to Qualifying MA Organizations for MA EPs and 

Hospitals 

 4. Timeframe for Payment 

 5. Avoiding Duplicate Payment 

 6. Meaningful User Attestation 

 7. Posting on Website and Limitation on Review 

 8. Limitation on Review 

9. Conforming Changes 

10. Payment Adjustment and Future Rulemaking 

 D. Medicaid Incentives 

 1. Overview of Health Information Technology in Medicaid 

 2. General Medicaid Provisions 

 3. Identification of Qualifying Medicaid EPs and Eligible Hospitals 

a. Overview 

 b. Program Participation 

 1. Acute Care Hospitals 
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 2. Children’s Hospitals 

 c. Medicaid Professionals Program Eligibility 

 d. Calculating Patient Volume Requirements 

 e. Entities Promoting the Adoption of Certified EHR Technology 

 4. Computation of Amount Payable to Qualifying Medicaid EPs and Eligible 

Hospitals 

 (1) General Overview 

 (2) Average Allowable Costs 

 (3) Net Average Allowable Costs 

 (4) Payments for Medicaid Eligible Professionals 

 (5) Basis for Medicaid EHR incentive program first payment year and subsequent 

payment years 

 (i) Medicaid EP who begins adopting, implementing or upgrading certified EHR 

technology in the first year. 

 (ii) Medicaid EP who has Already Adopted, Implemented or Upgraded Certified 

EHR Technology and Meaningfully Uses EHR Technology 

 b. Payment Methodology for Eligible Hospitals 

 c. Alternative and Optional Early State Implementation to Make Incentive 

Payments for Adopting, Implementing or Upgrading Certified EHR Technology 

 d. Process for Making and Receiving Medicaid Incentive Payments 

 e. Avoiding Duplicate Payment 

 f. Flexibility to Alternate Between Medicare and Medicaid Incentive Payment 

Program One Time 
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 g. One State Selection 

 5. National Level Repository and State Data Collection 

 6. Collection of Information Related to the Eligible Professional's National 

Provider Identifier and the Tax Identification Number (TIN) 

 7. Activities Required to Receive Incentive Payments 

a. General Overview 

b. Definitions Related to Certified EHR Technology and Adopting, Implementing 

or Upgrading Such Technology 

 (1) Certified EHR Technology 

 (2) Adopting, implementing or upgrading 

 c. Other General Terminology 

III. Collection of Information Requirements 

 A. ICRs Regarding Demonstration of Meaningful Use Criteria (§495.8) 

 B. ICRs Regarding Participation Requirements for EPs, Eligible Hospitals, and 

Qualifying CAHs (§495.10) 

 C. ICRs Regarding Identification of Qualifying MA Organizations, MA-EPs and 

MA-affiliated Eligible Hospitals (§495.202) 

 D. ICRs Regarding Incentive Payments to Qualifying MA Organizations for MAEPs and Hospitals (§495.204) 

 E. ICRs Regarding Meaningful User Attestation (§495.210) 

 F. ICRs Regarding Incentive payments to qualifying MA organizations for MAeligible Professionals and Hospitals (§495.220) 

 G. ICRs Regarding Process for Payments (§495.312) 
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 H. ICRs Regarding Activities Required to Receive an Incentive Payment 

(§495.314) 

 I. ICRs Regarding State Monitoring and Reporting Regarding Activities 

Required to Receive an Incentive Payment (§495.316) 

 J. ICRs Regarding State Responsibilities for Receiving FFP (§495.318) 

 K. ICRs Regarding Prior Approval Conditions (§495.324) 

 L. ICRs Regarding Termination of Federal Financial Participation (FFP) for 

Failure to Provide Access to Information (§495.330) 

 M. ICRs Regarding State Medicaid Agency and Medicaid EP and Hospital 

Activities (§495.332 through §495.338) 

 N. ICRs Regarding Access to Systems and Records (§495.342) 

 O. ICRs Regarding Procurement Standards (§495.344) 

 P. ICRs Regarding State Medicaid Agency Attestations (§495.346) 

 Q. ICRs Regarding Reporting Requirements (§495.348) 

 R. ICRs Regarding Retroactive Approval of FFP with an Effective Date of 

February 18, 2009 (§495.358) 

 S. ICRs Regarding Financial Oversight and Monitoring Expenditures (§495.362) 

 T. ICRs Regarding Appeals Process for a Medicaid Provider Receiving 

Electronic Health Record Incentive Payments (§495.366) 

IV. Response to Comments 

V. Regulatory Impact Analysis 

 A. Overall Impact 

 B. Regulatory Flexibility Analysis 
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 C. Small Rural Hospitals 

 D. Unfunded Mandates Reform Act 

 E. Federalism 

 F. Anticipated Effects 

 G. HITECH Impact Analysis 

 H. Accounting Statement 

I. Background 

A. Overview of the HITECH Programs Created by the American Recovery and 

Reinvestment Act of 2009

 The American Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) 

was enacted on February 17, 2009. ARRA includes many measures to modernize our 

nation's infrastructure, enhance energy independence, expand educational opportunities, 

provide tax relief, and preserve and improve affordable health care. Title IV of Division 

B of ARRA amends Titles XVIII and XIX of the Social Security Act (the Act) by 

establishing incentive payments to eligible professionals (EPs) and eligible hospitals to 

promote the adoption and meaningful use of interoperable health information technology 

and qualified EHRs. Expanded use of health information technology (HIT) and EHRs 

will improve the quality and value of American health care. These provisions, together 

with Title XIII of Division A of ARRA, may be cited as the Health Information 

Technology for Economic and Clinical Health Act” or the “HITECH Act.” The incentive 

payments for adoption and meaningful use of HIT and qualified EHRs are part of a 

broader effort under the HITECH Act to accelerate the adoption of HIT and utilization of 

qualified EHRs. We are developing the incentive programs which are outlined in 
CMS-0033-P 17 

Division B, Title IV of the HITECH Act and these programs are the keys to inducing 

providers to actively utilize HIT. 

 EPs and eligible hospitals qualify for the EHR incentive payments if, among other 

requirements, they meaningfully use certified EHR technology. This proposed rule sets 

forth a proposed definition of “meaningful use of certified EHR technology.” Section 

13101 of the HITECH Act adds a new section 3000 to the Public Health Service Act 

(PHSA), which defines “certified EHR technology” as a qualified EHR that has been 

properly certified as meeting standards adopted under section 3004 of the PHSA. CMS 

and ONC have been working closely to ensure that the definition of meaningful use of 

certified EHR technology and the standards for certified EHR technology are 

coordinated. “Meaningful use” is a term defined by CMS and describes the use of HIT 

that furthers the goals of information exchange among health care professionals. In an 

upcoming interim final rule, ONC will identify the initial set of standards and 

implementation specifications that EHR technology must implement, as well as the 

certification criteria that will be used to certify EHR technology, and will further define 

the term “certified EHR technology.” In a related proposed rule, the Department will 

propose the development of a certification program for health IT. Specifically, we have 

sought to ensure that the definition of meaningful use of certified EHR technology does 

not require EPs and eligible hospitals to perform functionalities for which standards have 

not been recognized or established. Similarly, the functionality of certified EHR 

technology should enable and advance the definition of meaningful use. 

 We urge those interested in this proposed rule to also review the ONC interim 

final rule with comment and the related proposed rule when they are published later this 
CMS-0033-P 18 

year and to visit http://healthit.hhs.gov and 

http://www.cms.hhs.gov/Recovery/11_HealthIT.asp#TopOfPage for more information on 

the efforts at the Department of Health and Human Services (HHS) to advance HIT 

initiatives. 

B. Statutory Basis for the Medicare & Medicaid EHR Incentive Programs

Section 4101(a) of the HITECH Act adds a new subsection (o) to section 1848 of 

the Act. Section 1848(o) of the Act establishes incentive payments for the meaningful 

use of certified EHR technology by EPs participating in the original Medicare program or 

hereinafter referred to as Medicare Fee-for-Service (FFS) program beginning in calendar 

year (CY) 2011. Section 4101(b) of the HITECH Act also adds a new paragraph (7) to 

section 1848(a) of the Act. Section 1848(a)(7) of the Act provides that beginning in 

CY 2015, EPs who are not meaningful users of certified EHR technology will receive 

less than 100 percent of the fee schedule for their professional services. Section 4101(c) 

of the HITECH Act adds a new subsection (l) to section 1853 of the Act to provide 

incentive payments to Medicare Advantage (MA) organizations for their affiliated EPs 

who meaningfully use certified EHR technology and meet certain other requirements, and 

requirement to make a downward adjustment to Medicare payments to MA organizations 

for professional services provided by any of their affiliated EPs who are not meaningful 

users of certified EHR technology, beginning in 2015, and avoidance duplicate of 

payments from the MA EHR incentive program under this section and the FFS EHR 

incentive program under section 1848(o)(1)(A). 

Section 4102(a) of the HITECH Act adds a new subsection (n) to section 1886 of 

the Act. Section 1886(n) of the Act establishes incentives payments for the meaningful 
CMS-0033-P 19 

use of certified EHR technology by subsection (d) hospitals, as defined under section 

1886(d)(1)(B) of the Act, participating in Medicare FFS program beginning in Federal 

fiscal year (FY) 2011. Section 4102(b)(1) of the HITECH Act amends section 

1886(b)(3)(B) of the Act to provide that, beginning in FY 2015, subsection (d) hospitals 

that are not meaningful users of certified EHR technology will receive a reduced annual 

payment update. Section 4102(b)(2) of the HITECH Act amends section 1814(l) of the 

Act to provide an incentive payment to critical access hospitals (CAHs) who 

meaningfully use certified EHR technology based on the hospitals’ reasonable cost 

beginning in FY 2011. In addition, section 4102(a)(2) of the HITECH Act amends 

section 1814(l) of the Act to provides for a downward payment adjustment for hospital 

services provided by CAHs that are not meaningful users of certified EHR technology for 

cost reporting periods beginning in FY 2015. Section 4102(c) of the HITECH Act adds a 

new subsection (m) to section 1853 of the Act to provide incentive payments to MA 

organizations for certain affiliated hospitals that meaningfully use certified EHR 

technology, to address avoidance of duplicate payments, and to make a downward 

adjustment to payments to MA organizations for inpatient hospital services provided by 

its affiliated hospitals that are not meaningful users of certified EHR technology 

beginning in FY 2015. 

Section 4103 of the HITECH Act provides for implementation funding for the 

EHR incentives program under Medicare. 

Section 4201 of the HITECH Act amends section 1903 of the Act to provide 

100 percent Federal financial participation (FFP) to States for incentive payments to 

certain eligible providers participating in the Medicaid program to purchase, implement, 
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and operate (including support services and training for staff) certified EHR technology 

and 90 percent FFP for State administrative expenses related to the program outlined in 

1903(t) of the Act. Section 4201(a)(2) of the HITECH Act adds a new subsection (t) to 

section 1903 of the Act to establish a program with input from the States to provide 

incentives for the adoption and subsequent meaningful use of certified EHR technology 

for providers participating in the Medicaid program. 

II. Provisions of the Proposed Regulations 

 We propose to add a new part 495 to title 42 of the Code of Federal Regulations 

to implement the provisions discussed in this section of the proposed rule related to 

certified EHR technology for providers participating in either the Medicare program or 

the Medicaid program. 

 The HITECH Act creates incentives in the Medicare Fee-for-Service (FFS), 

Medicare Advantage (MA), and Medicaid programs for demonstrating meaning EHR use 

and payment adjustments in the Medicare FFS and MA programs for not demonstrating 

meaningful EHR use. The three incentive programs contain many common elements and 

certain provisions of the HITECH Act encourage avoiding duplication of payments, 

reporting, and other requirements, particularly in the area of demonstrating meaningful 

use of certified EHR technology. Eligible hospitals may participate in either one of the 

Medicare (FFS or MA) programs and the Medicaid program, assuming they meet each 

program’s eligibility requirements, which vary across programs. In certain cases, the 

HITECH Act has used nearly identical or identical language in defining terms that are 

used in the Medicare FFS, MA, and Medicaid programs, including such terms as 

“hospital-based EPs” and “certified EHR technology.” In these cases, we seek to create 
CMS-0033-P 21 

as much commonality between the three programs as possible and have structured this 

proposed rule based on that premise by beginning with those provisions that cut across 

the three programs before moving on to discuss the provisions specific to Medicare FFS, 

MA and Medicaid. 

A. Definitions Across the Medicare FFS, Medicare Advantage, and Medicaid Programs

Title IV, Division B of the HITECH Act establishes incentive payments under the 

Medicare and Medicaid programs for certain professionals and hospitals that 

meaningfully use certified EHR technology. Under Medicare, these incentive payments 

may be made to qualifying professionals, hospitals, and Medicare Advantage (MA) 

organizations on behalf of certain MA affiliated physicians and hospitals. We refer to the 

incentive payments made under the original Medicare program as the Medicare FFS EHR 

incentive program. We refer to the incentive payments made to qualifying MA 

organizations as the MA EHR incentive program, and the incentive payments made under 

Medicaid as the Medicaid EHR incentive program. When referring to Medicare EHR 

incentive program, we are referring to both the Medicare FFS EHR and the MA EHR 

incentive programs. 

1. Definitions 

Sections 4101, 4102, and 4202 of the HITECH Act use many identical or similar 

terms. In this section of the preamble, we discuss terms for which we are proposing 

uniform definitions for the Medicare FFS, Medicare Advantage, and Medicaid EHR 

incentive programs. These definitions would be included in part 495 subpart A of the 

regulations. For definitions specific to an individual program, the definition is set forth 

and discussed in the applicable EHR incentive program section. 
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a. Certified Electronic Health Record (EHR) Technology 

The incentive payments are available to EPs (non-hospital-based physicians, as 

defined in section 1861(r) of the Act , who either receive reimbursement for services 

under the Medicare FFS program or have an employment or contractual relationship with 

a qualifying MA organization meeting the criteria under section 1853(l)(2) of the Act; or 

healthcare professionals meeting the definition of “eligible professional” under section 

1903(t)(3)(B) of the Act as well as the patient-volume and non-hospital-based criteria of 

section 1903(t)(2)(A) of the Act) and eligible hospitals (subsection (d) hospitals as 

defined under subsection 1886(d)(1)(B) of the Act that either receive reimbursement for 

services under the Medicare FFS program or are affiliated with a qualifying MA 

organization as described in section 1853(m)(2) of the Act; critical access hospitals 

(CAHs); or acute care or children's hospitals described under section 1903(t)(2)(B) of the 

Act). Under all three EHR incentive programs, EPs and eligible hospitals must utilize 

“certified EHR technology” if they are to be considered eligible for the incentive 

payments. In the Medicare FFS EHR incentive program this requirement for EPs is 

found in section 1848(o)(2)(A)(i) of the Act, as added by section 4101(a) of the HITECH 

Act, and for eligible hospitals and CAHs in section 1886(3)(A)(i) of the Act, as added by 

section 4102(a) of the HITECH Act. In the MA EHR incentive program this requirement 

for EPs is found in section 1853(l)(1) of the Act, as added by section 4101(c) of the 

HITECH Act, and for eligible hospitals and CAHs, in section 1853(m)(1) of the Act, as 

added by section 4201(c) of the HITECH Act. In the Medicaid EHR incentive program 

this requirement for EPs and Medicaid eligible hospitals is found throughout section 

1903(t) of the Act, including in section 1903(t)(6)(C) of the Act, as added by section 
CMS-0033-P 23 

4201(a)(2) of the HITECH Act. While certified EHR technology is a critical component 

of the EHR incentive programs, under the authority given to her in the HITECH Act, the 

Secretary has charged ONC with developing the criteria and mechanisms for certification 

of EHR technology. Therefore, ONC will be defining certified EHR technology in its 

upcoming interim final rule and we propose to use the definition of certified EHR 

technology adopted by ONC. 

b. Qualified Electronic Health Record 

In order for an EHR technology to be eligible for certification it must first meet 

the definition of a qualified electronic health record. This term will be defined by ONC 

in its upcoming interim final rule, and we propose to use the definition of qualified 

electronic health record adopted by ONC. 

c. Payment Year 

Under section 1848(o)(1)(A)(i) of the Act, as added by section 4101(a) of the 

HITECH Act, the Medicare FFS EHR incentive payment is available to EPs for a 

“payment year.” Section 1848(o)(1)(E) of the Act defines the term “payment year” as a 

year beginning with 2011. While the HITECH Act does not use the term, “payment 

year,” for the Medicaid EHR incentive program, it does use the term “year of payment” 

throughout section 1903(t) of the Act, for example, at sections 1903(t)(3)(C), 

1903(t)(4)(A), and 1903(t)(6)(C) of the Act. For all EPs, we are proposing a common 

definition for both “payment year” and “year of payment,” as “any calendar year 

beginning with 2011” at §495.4. (The only exception to this rule, is that in certain cases, 

Medicaid EPs would be able to participate in the Medicaid EHR incentive program 

starting with CY 2010, for adopting, implementing, or upgrading certified EHR 
CMS-0033-P 24 

technology. For further discussion of this early participation in the Medicaid EHR 

incentive program, we refer readers to section II.D.3.c. of this proposed rule.) 

This definition, which is consistent with the statutory definition of “payment 

year” under Medicare FFS, will simplify the EHR incentive programs for EPs. As 

discussed later in this preamble, EPs may have the opportunity to participate in either the 

Medicare or Medicaid incentive programs, and once an EP has picked a program, they 

are permitted to make a one-time switch from one program to the other. A common 

definition will allow EPs to more easily understand both programs, and inform decisions 

regarding whether they are eligible for, and/or wish to participate in either program. 

Under section 1886(n)(1) of the Act, as added by section 4102(a) of the HITECH Act, the 

Medicare FFS EHR incentive payment is available to eligible hospitals and CAHs for a 

“payment year.” Section 1886(n)(2)(G) of the Act defines the term “payment year” as a 

fiscal year (FY) beginning in 2011. As hospitals are paid based on the 12-month Federal 

fiscal year, we believe the reference to a “fiscal year” means the fiscal year beginning on 

October 1 of the prior year and extending to September 30 of the relevant year. Again, 

for the Medicaid EHR incentive program, the HITECH Act uses the term, “year of 

payment” (see section 1903)(t)(5)(D)(ii) of the Act), rather than “payment year.” For the 

same reasons expressed above for EPs, and because hospitals will have the opportunity to 

simultaneously participate in both the Medicare and Medicaid EHR incentive programs, 

we propose a common definition of “payment year” and “year of payment” for both 

programs. For purposes of the incentive payments made to eligible hospitals under the 

Medicare FFS, MA and Medicaid EHR incentive programs, we propose to define 

payment year and year of payment at §495.4, consistent with the statutory definition, as 
CMS-0033-P 25 

“any fiscal year beginning with 2011”. (The only exception to this rule, is that in certain 

cases, Medicaid eligible hospitals would be able to participate in the Medicaid EHR 

incentive program starting with FY 2010, for adopting, implementing, or upgrading 

certified EHR technology. For further discussion of this early participation in the 

Medicaid EHR incentive program, we refer readers to section II.D.3.c of this proposed 

rule.) 

The actual timing of the incentive payment for a given payment year varies 

depending on which EHR incentive program an EP or an eligible hospital is participating 

in. Details on the timing of incentive payments for a given payment year can be found in 

section II.B.of the proposed rule for Medicare FFS, section II.C. of the proposed rule for 

MA and section II.D. of the proposed rule for Medicaid. 

d. First, Second, Third, Fourth, Fifth, and Sixth Payment Year 

For EPs and eligible hospitals that qualify for EHR incentive payments in a 

payment year, the amount of the payment will depend in part on how many previous 

payment years, if any, an EP or eligible hospital received an incentive payment. We 

propose to define the first payment year to mean the first calendar or Federal fiscal year 

for which an EP or eligible hospital receives an incentive payment. Likewise, we 

propose to define the second, third, fourth, fifth ,and sixth payment year, respectively, to 

mean the second, third, fourth, fifth, and sixth calendar or Federal fiscal year, 

respectively, for which an EP or eligible hospital receives an incentive payment. 

e. EHR Reporting Period 

In order to qualify for an incentive payment under the Medicare incentive 

payment program for a payment year, an EP or eligible hospital must meaningfully use 
CMS-0033-P 26 

certified EHR technology for the EHR reporting period of the relevant payment year. 

Similarly, a Medicaid EP or eligible hospital may in the first payment year and must in 

subsequent payment years demonstrate meaningful use of such technology, in order to 

receive a payment. A Medicaid EP or eligible hospital may receive an incentive payment 

in their first payment year for the adoption, implementation, or upgrade of certified EHR 

technology. Although the Medicaid statute does not specifically use the term, “EHR 

reporting period,” we believe that the Secretary, pursuant to sections 1903(t)(6)(C) and 

1903(t)(8) of the Act, has the authority to define the period that would be used for 

demonstrating such adoption/implementation/upgrade or meaningful use. 

In this proposed rule, we propose a definition of EHR Reporting Period for 

purposes of the Medicare and Medicaid incentive payments under sections 1848(o), 

1853(l)(3), 1886(n), 1853(m)(3), 1814(l) and 1903(t) of the Act. For these sections, the 

EHR reporting period may be any continuous 90-day period within the first payment year 

and the entire payment year for all subsequent payment years. In future rulemaking, we 

will propose a definition of EHR Reporting Period for purposes of Medicare incentive 

payment adjustments under sections 1848(a)(7), 1853(l)(4), 1886(b)(3)(B)(ix), 

1853(m)(4), and 1814(l)(4) of the Act. Unlike the former group of sections, meaningful 

EHR users that would not be subject to adjustments would have to be identified prior to 

the application of the latter group of sections. Therefore, these two groups of sections 

may have two different definitions of EHR Reporting Period. 

For the first payment year only, we propose to define the term EHR reporting 

period at §495.4 to mean any continuous 90-day period within a payment year in which 

an EP or eligible hospital successfully demonstrates meaningful use of certified EHR 
CMS-0033-P 27 

technology. The EHR reporting period therefore could be any continuous period 

beginning and ending within the relevant payment year. For example, for payment year 

2011, an EHR reporting period of March 13, 2011 to June 11, 2011 would be just as valid 

as an EHR reporting period of January 1, 2011 to April 1, 2011. An example of an 

unallowable EHR reporting period would be for an EP to begin on November 1, 2011 and 

finish on January 31, 2012. Starting with the second payment year and any subsequent 

payment years for a given EP or eligible hospital, we propose to define the term EHR 

reporting period at §495.4 to mean the entire payment year. 

In defining the EHR reporting period, we considered three of its aspects: (1) 

whether it should vary from one payment year to the next; (2) its length; and (3) starting 

point. We discuss these three aspects below. 

The first aspect of the EHR reporting period discussed is whether it should be the 

same for each payment year. We believe that there are considerations that distinguish the 

first payment year from the remaining payment years. The foremost being that once an 

EP or eligible hospital begins to meaningfully use certified EHR technology they are 

unlikely to stop. As discussed below, in the first payment year a shorter EHR reporting 

period would provide more flexibility for when an EP or eligible hospital begins to 

meaningfully use certified EHR technology and still qualify for the incentive in the same 

year. However, in subsequent years we do not see that flexibility still being required. 

Therefore, for purposes of the incentive payments under sections 1848(o), 1853(l)(3), 

1886(n), 1853(m)(3), 1814(l), and 1903(t) of the Act, we propose that the length of the 

EHR reporting period be different for the first payment year than from all other payment 
CMS-0033-P 28 

years. We invite interested parties to comment on this proposal if they believe that the 

EHR reporting period should vary from payment year to payment year. 

With respect to the length of the EHR reporting period, we note that there is an 

inherent tradeoff between robust verification and time available to achieve compliance. 

A longer EHR reporting period provides a more robust verification that an EP or eligible 

hospital successfully met the definition of meaningful use of certified EHR technology 

than a shorter period. However, it reduces the time available for an EP or eligible 

hospital to reach the point of complying with meaningful use and still receive an 

incentive for a given payment year. For example, a 90-day period would allow an EP 

until October 1, 2011 to begin meaningful use of their certified EHR technology and 

receive an incentive for payment year 2011. A 180-day period (6 months) would move 

the date upon which the EP must begin meaningful use of their certified EHR technology 

forward to July 1, 2011. We are concerned that an EHR reporting period that is shorter 

than 90 days would be insufficient time to ensure that EPs and eligible hospitals are truly 

using certified EHR technology in a meaningful manner consistent with our proposed 

criteria for meaningful use. Moreover, as discussed later in this proposed rule, we will 

require EPs and hospitals to demonstrate meaningful use by meeting certain performance 

thresholds (for example, EPs will need to use CPOE for 80 percent of all orders, and 

hospitals for 10 percent of all orders). We believe a period of fewer than 90 days would 

not be adequate to create an accurate rate for a given EP or eligible hospital. We believe 

that once an EP or hospital has implemented certified EHR technology to the point of 

being able to comply with our proposed meaningful use criteria for 90 days, it is unlikely 

that they would adjust their behavior just because the EHR reporting period has ended. 
CMS-0033-P 29 

Beginning in the second payment year, an EP or eligible hospital will already be 

meaningfully using certified EHR technology so there are no limitations on the time 

available for compliance. 

For the first payment year, therefore, we propose that the EHR reporting period 

will be any continuous 90-day period within the first payment year. However, beginning 

in the second payment year we see no compelling reason not to seek the most robust 

verification possible. Therefore for the second payment year and all subsequent payment 

years we propose the EHR reporting period be the entire payment year. As the length of 

the EHR reporting period is based on the discussed trade-off, we remain open to 

alternative lengths of time. We invite comments on the appropriate length for the EHR 

reporting period. We urge those commenting to either endorse our proposed initial 

90-day period followed by full year EHR reporting periods or to recommend a specific 

alternative. 

With respect to when the EHR reporting period for a payment year should begin, 

there are two considerations. The first is determining the earliest start date available, and 

the second is the flexibility given to EPs and eligible hospitals to choose their start date. 

This aspect is only applicable for the 90–day EHR reporting period for the first payment 

year. The length of the EHR reporting period for the second payment year and 

subsequent payment years dictate that the start date be the first day of the payment year. 

The earliest start date we considered was one which would allow an EP or eligible 

hospital to demonstrate successful meaningful use of certified EHR technology on the 

first day of the relevant payment year. For example, allowing an EHR reporting period to 

begin as early as July 3, 2010 would allow an eligible hospital to successfully 
CMS-0033-P 30 

demonstrate meaningful use on October 1, 2010, the first day of FY 2011. We have 

chosen not to propose this as the earliest start date. There are significant barriers created 

by the timeline in the HITECH Act. We anticipate that we will not publish a final rule 

until after March 2010, with the final rule effective 60 days after its publication. We do 

not believe this allows enough time for us, the vendor community, or the provider 

community to take advantage of this early start date. . In addition, as discussed at 

sections 1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) of the Act, the HITECH Act directs the 

Secretary to seek to avoid duplicative reporting of clinical quality and other measures 

under the Medicare EHR incentive program and other Medicare programs. If we were to 

allow EPs and hospitals to report these measures to CMS prior to the beginning of the 

FY, this reporting may be of questionable value in to other Medicare programs requiring 

reporting of the same measures. For example, if and when the demonstration of 

meaningful use includes the submission of quality measures this submission could 

include measures currently in the RHQDAPU program. As discussed in section II.A.3. 

of this proposed rule, we do not desire to have a hospital report the same measure twice 

for two different programs. However, if a hospital reports these measures from July 

through September 2010 for payment year 2011 for Medicare and/or Medicaid EHR 

incentive program, they would not be relevant for FY 2011 under the RHQDAPU. Due 

to the operational challenges presented and the statutory requirement to avoid duplication 

of payments to the extent possible, we are proposing that the earliest start date for EHR 

reporting period be the first day of the payment year. The second consideration for when 

the EHR reporting period should begin is whether to designate specific start dates. As we 

are not aware of any compelling reason to limit the start dates available to EPs or eligible 
CMS-0033-P 31 

hospitals within the payment year, we propose to allow EPs or eligible hospitals to begin 

their EHR reporting period on any date starting with the first day of the payment year and 

ending with the latest day in the payment year that allows for the EHR reporting period to 

be completed by the last day of the payment year. We believe that giving EPs and 

eligible hospitals flexibility as to the start date of the EHR reporting is important, as 

unforeseen circumstances, such as delays in implementation, higher than expected 

training needs and other unexpected hindrances, may cause an EP or eligible hospital to 

potentially miss a target start date. We invite comments on the proposed start dates for 

the EHR reporting period. 

We acknowledge that all three of these aspects will be affected by the need to 

determine which physicians, hospitals, critical access hospitals and managed care plans 

are meaningful users before application of the Medicare payment adjustments (provisions 

of sections 1848(a)(7), 1853(l)(4), 1886(b)(3)(B)(ix), 1853(m)(4), and 1814(l)(4) of the 

Act). We will specify the EHR reporting periods for these payment adjustment 

incentives in future rulemaking. 

f. Meaningful EHR User 

Section 1848(o)(1)(A)(i) of the Act, as added by section 4101(a) of the HITECH 

Act, limits incentive payments in the Medicare FFS EHR incentive program to an EP 

who is a “meaningful EHR user.” Section 1886(n)(1) of the Act, as added by section 

4102(a) of the HITECH Act, limits incentive payments in the Medicare FFS EHR 

incentive program to hospitals described in section 1886(d) of the Act. Section 1814(l) 

of the Act limits incentive payments in the Medicare FFS EHR incentive program to 

CAHs who are “meaningful EHR users.” Section 1903(t)(6)(C)(i)(II) of the Act, as 
CMS-0033-P 32 

added by section 4201(a)(2) of the HITECH Act, limits incentive payments for payment 

years other than the first payment year to a Medicaid provider who “demonstrates 

meaningful use of certified EHR technology.” We propose to define at §495.4 the term 

“meaningful EHR user” as an EP or eligible hospital who, for an EHR reporting period 

for a payment year, demonstrates meaningful use of certified EHR technology in the form 

and manner consistent with our standards (discussed below). These standards would 

include use of certified EHR technology in a manner that is approved by us. 

2. Definition of Meaningful Use 

a. Background 

As discussed previously, an EP or eligible hospital must be a meaningful EHR 

user in order to receive the incentive payments available under the EHR incentive 

programs, except in the first payment year for certain Medicaid EPs or eligible hospitals. 

This section (II.A.2.) of this proposed rule discusses the definition of meaningful use. 

Section II.A.3. of this proposed rule, discusses the manner for demonstrating meaningful 

use. In Sections 1848 (o)(2)(A) and 1886(n)(3) of the Act, the Congress specified three 

types of requirements for meaningful use: (1) use of certified EHR technology in a 

meaningful manner (for example, electronic prescribing); (2) that the certified EHR 

technology is connected in a manner that provides for the electronic exchange of health 

information to improve the quality of care; and (3) that, in using certified EHR 

technology, the provider submits to the Secretary information on clinical quality 

measures and such other measures selected by the Secretary. 

Over the last few months, CMS and ONC have solicited input on defining 

meaningful use from both other government agencies and the public through dialogue, 
CMS-0033-P 33 

public forums, and solicitation of written comments. Below we describe the work of the 

National Committee on Vital and Health Statistics (NCVHS), the HIT Standards 

Committee and the HIT Policy Committee, as well as the public input we have received 

on defining meaningful use. 

The NCVHS is the Department of Health and Human Services' statutory public 

advisory body on health data, statistics, and national health information policy. NCVHS 

derives its authority from 42 U.S.C. 242k, section 306(k) of the Public Health Service 

Act, which governs it along with the provisions of Pub. L. 92-463 (5 U.S.C. App.2). The 

full charter and membership of the NCVHS is available electronically at 

http://www.ncvhs.hhs.gov/. The NCVHS held a public hearing on April 28 and 29, 2009 

to learn from a broad spectrum of stakeholders their views of “meaningful use.” The 

NCVHS hearing brought together key healthcare and information technology stakeholder 

groups including: representatives of patients, and more broadly consumers; providers; the 

public health community; public and private payers; vendors; and certifying entities. The 

hearing agenda and testimony supplied is available electronically at 

http://www.ncvhs.hhs.gov/090428ag.htm. A report on the hearing was delivered 

May 15, 2009 to the ONC. The report is available electronically at 

http://www.ncvhs.hhs.gov/090518rpt.pdf. Written comments from interested 

stakeholders submitted timely to the NCVHS were also considered by the NCVHS 

Executive Sub-Committee in the drafting of the report. Subsequently, the National 

Coordinator for HIT requested NCVHS to reflect on the testimony by supplying 

observations. Those observations are available electronically at 

http://www.ncvhs.hhs.gov/090428rpt.pdf. 
CMS-0033-P 34 

In addition to the work completed by the NCVHS, the HIT Policy Committee, a 

Federal Advisory Committee to the Department of Health and Human Services (HHS) 

created by the HITECH Act, also worked to inform the definition of meaningful use. The 

full charter and membership of the HIT Policy Committee can be found at 

http://healthit.hhs.gov. The HIT Policy Committee formed a Meaningful Use workgroup. 

On June 16, 2009, the HIT Policy Committee heard and discussed the recommendations 

from their Meaningful Use workgroup, and subsequently submitted its own 

recommendations on meaningful use to the National Coordinator for Health IT. These 

recommendations are available electronically at http://healthit.hhs.gov. At the conclusion 

of the June 16 meeting, ONC announced a public comment period to solicit stakeholder 

input on the recommendations and published a notice in the Federal Register

(74 FR 28937). The public comment period lasted through June 26, 2009. Over 700 

public comments were received by the ONC. A summary, as well as the text of the 

comments, is available electronically at http://healthit.hhs.gov. The Meaningful Use 

workgroup presented its revised recommendations to the full committee based on 

comments by the full HIT Policy Committee and by the public at the July 16, 2009 

meeting. In developing its recommendations, the HIT Policy Committee considered a 

report entitled “National Priorities and Goals” 

(http://www.nationalprioritiespartnership.org/uploadedFiles/NPP/08-253-

NQF%20ReportLo%5b6%5d.pdf) generated by the National Priorities Partnership, 

convened by the National Quality Forum (NQF). Of the national health care priorities set 

forward by the NQF report, the HIT Policy Committee chose as priority areas patient 

engagement; reduction of racial disparities; improved safety; increased efficiency; 
CMS-0033-P 35 

coordination of care; and improved population health to drive their recommendations. 

Those recommendations are available electronically at http://healthit.hhs.gov. 

The HIT Standards Committee, another Federal Advisory Committee created by 

the HITECH Act, provided recommendations related to meaningful use to ONC. The 

HIT Standards Committee work focuses primarily on the standards surrounding certified 

EHR technology. Further information on the HIT Standards Committee role and 

recommendations can be found in a future rulemaking document to be provided by ONC 

for certification of EHR technology (HHS-0151-IFC) and at http://healthit.hhs.gov. 

Finally, from June 22 to June 26, 2009, the ONC and CMS hosted 21 

teleconference listening sessions with rural providers, small practices, small hospitals, 

CAHs, and urban safety net providers to hear their perspectives and obtain their input on 

the definition of meaningful use. Because of the documentation that these types of 

providers have below average adoption rates of HIT, we solicited comments directly 

from these communities. Section V. of this proposed rule discusses the current adoption 

rates of HIT. Over 200 representatives from these target audiences participated on the 

calls. The vast majority of callers were rural providers, although representatives from 

vendor organizations or provider associations also participated. One session was held to 

specifically hear from national organizations representing rural communities and 

providers. Summaries of these listening sessions are available at 

http://healthit.hhs.gov/meaningfuluse. Both CMS and the ONC have reviewed input 

from these and additional sources to help inform the definition of meaningful use. 
CMS-0033-P 36 

b. Common Definition of Meaningful Use under Medicare and Medicaid 

Under sections 1848(o)(1)(A)(i) and 1886(n)(1) of the Act, as added by sections 

4101(a) and 4102(a) of the HITECH Act, respectively, an EP or eligible hospital must be 

a meaningful EHR user for the relevant EHR reporting period in order to qualify for the 

incentive payment for a payment year. Sections 1848(o)(2)(A) and 1886(n)(3)(A) of the 

Act provide that an EP and an eligible hospital shall be considered a meaningful EHR 

user for an EHR reporting period for a payment year if they meet the following three 

requirements: (1) demonstrates use of certified EHR technology in a meaningful manner; 

(2) demonstrates to the satisfaction of the Secretary that certified EHR technology is 

connected in a manner that provides for the electronic exchange of health information to 

improve the quality of health care such as promoting care coordination, in accordance 

with all laws and standards applicable to the exchange of information; and (3) using its 

certified EHR technology, submits to the Secretary, in a form and manner specified by 

the Secretary, information on clinical quality measures and other measures specified by 

the Secretary. The HITECH Act requires that to receive a Medicaid incentive payment in 

the initial year of payment, an EP or eligible hospital may demonstrate that they have 

engaged in efforts to “adopt, implement, or upgrade certified EHR technology.” Details, 

including special timeframes, on how we define and implement “adopt, implement, and 

upgrade” are proposed in section II.D.7.b.2 of this proposed rule. For subsequent 

payment years, or the first payment year if an EP or eligible hospital chooses, section 

1903(t)(6)(C)(i)(II) of the Act, as added by section 4201(a)(2) of HITECH, prohibits 

receipt of an incentive payment, unless “the Medicaid provider demonstrates meaningful 

use of certified EHR technology through a means that is approved by the State and 
CMS-0033-P 37 

acceptable to the Secretary, and that may be based upon the methodologies applied under 

section 1848(o) or 1886(n).” (Sections 1848(o) and 1886(n) of the Act refer to the 

Medicare incentive programs for EPs and eligible hospitals respectively.) Under section 

1903(t)(8) of the Act to the maximum extent practicable, we are directed to avoid 

duplicative requirements from Federal and State governments to demonstrate meaningful 

use of certified EHR technology. Provisions included at section 1848(o)(1)(D)(iii) of the 

Act also contain a Congressional mandate to avoid duplicative requirements for 

meaningful use, to the extent practicable. Finally section 1903(t)(8) of the Act allows the 

Secretary to deem satisfaction of the requirements for meaningful use of certified EHR 

technology for a payment year under Medicare to qualify as meaningful use under 

Medicaid. 

We believe that given the strong level of interaction on meaningful use 

encouraged by the HITECH Act, there would need to be a compelling reason to create 

separate definitions for Medicare and Medicaid. We have found no such reasons for 

disparate definitions in our internal or external discussions. To the contrary, stakeholders 

have expressed strong preferences to link the Medicare and Medicaid EHR incentive 

programs wherever possible. Hospitals are entitled to participate in both programs, and 

we are proposing to offer EPs an opportunity to switch between the Medicare and 

Medicaid EHR incentive programs. Therefore, we propose to create a common definition 

of meaningful use that would serve as the definition for providers participating in the 

Medicare FFS and MA EHR incentive program, and the minimum standard for EPs and 

eligible hospitals participating in the Medicaid EHR incentive program. We clarify that 

under Medicaid this common definition would be the minimum standard. While we 
CMS-0033-P 38 

would allow States to add additional objectives to the definition of meaningful use or 

modify how the existing objectives are measured, the Secretary would not accept any 

State proposed alternative that does not further promote the use of EHRs and healthcare 

quality or that would require additional functionality beyond that of certified EHR 

technology. See section II.D.7.b.2.of this proposed rule for further details on how a State 

may propose an alternative. 

For hospitals, we propose to exercise the option granted under section 1903(t)(8) 

of the Act and deem any Medicare provider who is a meaningful EHR user under the 

Medicare EHR incentive program and is otherwise eligible for the Medicaid incentive 

payment to be classified as a meaningful EHR user under the Medicaid EHR incentive 

program. This is applicable only to eligible hospitals, as EPs cannot receive an incentive 

payment under both Medicare and Medicaid. 

We solicit comments as to whether there exist compelling reasons to give the 

states additional flexibility in creating disparate definitions beyond what is proposed. 

Also if commenting in favor of such disparate definitions, we ask that interested parties 

also comment on whether the proposal of deeming meeting Medicare as sufficient for 

meeting those of Medicaid remains appropriate under the disparate definitions. This is 

applicable only to hospitals eligible for both the Medicare and Medicaid incentive 

programs. Furthermore, if a State has CMS-approved additional meaningful use 

requirements, hospitals deemed as meaningful users by Medicare would not have to meet 

the State-specific additional meaningful use requirements in order to qualify for the 

Medicaid incentive payment. 
CMS-0033-P 39 

c. Considerations in Defining Meaningful Use 

In sections 1848(o)(2)(A) and 1886(n)(3)(A) of the Act, as added by sections 

4101(a) and 4102(a) of the HITECH Act, the Congress identifies the broad goal to be 

accomplished through the definition of meaningful use of certified EHR technology for 

expanding the use of EHRs. Certified EHR technology used in a meaningful way by 

providers is one piece of a broader HIT infrastructure needed to reform the health care 

system and improve health care quality, efficiency, and patient safety. Our goal is for 

this ultimate vision to drive the definition of meaningful use consistent with applicable 

provisions of Medicare and Medicaid law. 

In defining meaningful use through the creation of criteria, we have balanced 

competing considerations of proposing a definition that best ensures reform of health care 

and improved healthcare quality, encourages widespread EHR adoption, promotes 

innovation, and avoids imposing excessive or unnecessary burdens on healthcare 

providers, while at the same time recognizing the short time-frame available under the 

HITECH Act for providers to begin using certified EHR technology. 

Based on public and stakeholder input, we consider a phased approach to be most 

appropriate. Such a phased approach encompasses reasonable criteria for meaningful use 

based on currently available technology capabilities and provider practice experience, 

and builds up to a more robust definition of meaningful use, based on anticipated 

technology and capabilities development. The HITECH Act acknowledges the need for 

this balance by granting the Secretary the discretion to require more stringent measures of 

meaningful use over time. Ultimately, consistent with other provisions of law, 
CMS-0033-P 40 

meaningful use of certified EHR technology should result in health care that is 

patient-centered, evidence-based, prevention-oriented, efficient, and equitable. 

Under this phased approach to meaningful use, we intend to update the criteria of 

meaningful use through future rulemaking. We refer to the initial meaningful use criteria 

as “Stage 1.” We currently anticipate two additional updates, which we refer as Stage 2 

and Stage 3, respectively. We are considering updating the meaningful use criteria on a 

biennial basis, with the Stage 2 criteria proposed by the end of 2011 and the Stage 3 

definition proposed by the end of 2013. The stages represent a graduated approach to 

arriving at the ultimate goal. Thus, our goals for “Stage 3” meaningful use criteria 

represent overarching goals which, we believe, are attainable by the end of the EHR 

incentive programs. We will continue to evaluate the progression of the meaningful use 

definition for consistency with legislative intent and new statutory requirements relating 

to quality measurement. We solicit comments on this proposed pathway of meaningful 

use. 

• Stage 1: The Stage 1 meaningful use criteria focuses on electronically 

capturing health information in a coded format; using that information to track key 

clinical conditions and communicating that information for care coordination purposes 

(whether that information is structured or unstructured, but in structured format whenever 

feasible); consistent with other provisions of Medicare and Medicaid law, implementing 

clinical decision support tools to facilitate disease and medication management; and 

reporting clinical quality measures and public health information. 

• Stage 2: Our goals for the Stage 2 meaningful use criteria, consistent with 

other provisions of Medicare and Medicaid law, expand upon the Stage 1 criteria to 
CMS-0033-P 41 

encourage the use of health IT for continuous quality improvement at the point of care 

and the exchange of information in the most structured format possible, such as the 

electronic transmission of orders entered using computerized provider order entry 

(CPOE) and the electronic transmission of diagnostic test results (such as blood tests, 

microbiology, urinalysis, pathology tests, radiology, cardiac imaging, nuclear medicine 

tests, pulmonary function tests and other such data needed to diagnose and treat disease). 

Additionally we may consider applying the criteria more broadly to both the inpatient and 

outpatient hospital settings. 

• Stage 3: Our goals for the Stage 3 meaningful use criteria are, consistent with 

other provisions of Medicare and Medicaid law, to focus on promoting improvements in 

quality, safety and efficiency, focusing on decision support for national high priority 

conditions, patient access to self management tools, access to comprehensive patient data 

and improving population health. 

We will continue to evaluate the progression of the meaningful use definition for 

consistency with legislative instructions and new statutory requirements relating to 

quality measurement and administrative simplification. We are aware that the 

appropriate approach raises complex questions and we solicit comments on the proposed 

approach and alternative possibilities. A different approach might, for example, move 

aspects of Stage 2 into Stage 3 or vice versa. We seek comments on how best to balance 

the relevant goals, including promoting adoption of EHRs, avoiding excessive or 

unnecessary burdens, and improving health care. 

As the purpose of these incentives is to encourage the adoption and meaningful 

use of certified EHR technology, we believe it is desirable to account for whether an EP 
CMS-0033-P 42 

or eligible hospital is in their first, second, third, fourth, fifth, or sixth payment year when 

deciding which definition of meaningful use to apply in the beginning years of the 

program. The HIT Policy Committee in its public meeting on July 16, 2009 also voiced 

its approval of this approach. However, we do not wish to create an additional burden on 

EPs or eligible hospitals for becoming a meaningful EHR user before 2015 by creating a 

higher standard for them relative to an EP or eligible hospital who first becomes a 

meaningful EHR user in 2015. The following paragraphs describe our intended 

alignment in the beginning years that brings all EPs and eligible hospitals to the same 

level of meaningful use by 2015. As we are only proposing criteria for Stage 1 of 

meaningful use in this notice of proposed rulemaking, Stage 1 will be the criteria for 

meaningful use for all payments years until updated by future rulemaking. Medicaid 

EHR incentive program EPs and eligible hospitals have the option to earn their incentive 

for their first payment year through the adoption, implementation or upgrade of certified 

EHR technology. Those EPs and eligible hospitals doing so will not have to demonstrate 

meaningful use in their first payment year. We intend for their progression to be the 

same as those who demonstrate meaningful use in their first payment year. In other 

words, the second payment year is the second payment year regardless of how the 

incentive was earned in the first payment year. 

We intend that Medicaid EPs and eligible hospitals who qualify for an incentive 

payment for adopting, implementing, or upgrading in their first payment year would 

follow the same meaningful use progression outlined below as if their second payment 

year was their first payment year. For instance a Medicaid EP who received an incentive 

for his or her first payment year in 2010 for adopting, implementing, or upgrading would 
CMS-0033-P 43 

follow the same guidance starting in their second payment year (2011) as a Medicare EP 

who received an incentive for their first payment year in 2011 for meaningful use of 

certified EHR technology. Another example would be a Medicaid eligible hospital that 

received an incentive for its first payment year in 2012 for adopting, implementing, and 

upgrading would follow the same guidance starting in their second payment year (2013) 

as a Medicare eligible hospital who received an incentive for their first payment year in 

2013 for meaningful use of certified EHR technology. 

We propose that EPs and eligible hospitals whose first payment year is 2011 must 

satisfy the requirements of the Stage 1 criteria of meaningful use in their first and second 

payment years (2011 and 2012) to receive the incentive payments. We anticipate 

updating the criteria of meaningful use to Stage 2 in time for the 2013 payment year and 

therefore anticipate for their third and fourth payment years (2013 and 2014), an EP or 

eligible hospital whose first payment year is 2011 would have to satisfy the Stage 2 

criteria of meaningful use to receive the incentive payments. We anticipate updating the 

criteria of meaningful use to Stage 3 in time for the 2015 payment year and therefore 

anticipate for their fifth payment year (2015), if applicable, an EP or eligible hospital 

whose first payment year is 2011 would have to satisfy the Stage 3 criteria of meaningful 

use to receive the incentive payments. For their sixth payment year (2016), if applicable, 

an EP or eligible hospital whose first payment year is 2011 would have to satisfy the 

Stage 3 criteria of meaningful use or a subsequent update to the criteria if one is 

established through rulemaking to receive the incentive payments. 

We propose that EPs and eligible hospitals whose first payment year is 2012 must 

satisfy the Stage 1 criteria of meaningful use in their first and second payment years 
CMS-0033-P 44 

(2012 and 2013) to receive the incentive payments. We anticipate updating the criteria of 

meaningful use to Stage 2 in time for the 2013 payment year and anticipate for their third 

payment year (2014), an EP or eligible hospital whose first payment year is 2012 would 

have to satisfy the Stage 2 criteria of meaningful use to receive the incentive payments. 

We anticipate updating the criteria of meaningful use to Stage 3 in time for the 2015 

payment year and therefore anticipate for their fourth payment year (2015), if applicable, 

an EP or eligible hospital whose first payment year is 2012 would have to satisfy the 

Stage 3 criteria of meaningful use to receive the incentive payments. For their fifth and 

sixth payment years (2016 and 2017), if applicable, an EP or eligible hospital whose first 

payment year is 2012 would have to satisfy the Stage 3 criteria of meaningful use or a 

subsequent update to the criteria if one is established through rulemaking to receive the 

incentive payments. 

We propose that EPs and eligible hospitals whose first payment year is 2013 must 

satisfy the Stage 1 criteria of meaningful use in their first payment year (2013) to receive 

the incentive payments. We anticipate updating the criteria of meaningful use to Stage 2 

in time for the 2013 payment year and therefore anticipate for their second payment year 

(2014), an EP or eligible hospital whose first payment year is 2013 would have to satisfy 

the Stage 2 criteria of meaningful use to receive the incentive payments. We anticipate 

updating the criteria of meaningful use to Stage 3 in time for the 2015 payment year and 

therefore anticipate for their third payment year (2015), if applicable, an EP or eligible 

hospital whose first payment year is 2013 would have to satisfy the Stage 3 criteria of 

meaningful use to receive the incentive payments. For their fourth, fifth, and sixth 

payment year (2016, 2017 and 2018), if applicable, an EP or eligible hospital whose first 
CMS-0033-P 45 

payment year is 2013 would have to satisfy the Stage 3 criteria of meaningful use or a 

subsequent update to the criteria if one is established through rulemaking to receive the 

incentive payments. 

We propose that EPs and eligible hospitals whose first payment year is 2014 must 

satisfy the Stage 1 criteria of meaningful use in their first payment year (2014) to receive 

the incentive payments. We anticipate updating the criteria of meaningful use to Stage 3 

in time for the 2015 payment year and therefore anticipate for their second payment year 

(2015), if applicable, an EP or eligible hospital whose first payment year is 2014 would 

have to satisfy the Stage 3 criteria of meaningful use to receive the incentive payments. 

For their third, fourth, fifth and sixth payment year (2016, 2017, 2018, and 2019), if 

applicable, an EP or eligible hospital whose first payment year is 2014 would have to 

satisfy the Stage 3 criteria of meaningful use or a subsequent update to the criteria if one 

is established through rulemaking to receive the incentive payments. 

We anticipate updating the criteria of meaningful use to Stage 3 in time for the 

2015 payment year and therefore anticipate for all their payment years, an EP or eligible 

hospital whose first payment year is 2015 \ would have to satisfy the Stage 3 criteria of 

meaningful use for 2015. For all subsequent payment years, if applicable, an EP or 

eligible hospital whose first payment year is 2015 would have to satisfy the Stage 3 

criteria of meaningful use or a subsequent update to the criteria if one is established 

through rulemaking to receive the incentive payments. 

In addition to the equitable concerns discussed earlier in the transition from 

incentive payments to payment adjustments, the primary reasoning for developing 

different stages of meaningful use is the current lack of HIT infrastructure and 
CMS-0033-P 46 

penetration of qualified EHRs necessary to support the ambitious goals of the Stage 3 

criteria of meaningful use. Given the anticipated maturity of HIT infrastructure inherent 

in the strengthening criteria and the increased adoption of certified EHR technology 

predicted in section V. of this proposed rule, these barriers to meeting the Stage 3 criteria 

of meaningful use will be removed. 

Table 1 outlines our proposal to apply the respective criteria of meaningful use for 

each payment year (1st, 2nd, 3rd, etc.) for EPs and eligible hospitals that become 

meaningful EHR users before 2015. Please note that nothing in this discussion limits us 

to proposed changes to meaningful use beyond Stage 3 through future rulemaking. 

TABLE 1: Stage of Meaningful Use Criteria by Payment Year 

Payment Year 

First 

Payment Year 

2011 2012 2013 2014 2015 

+** 

2011 Stage 1 Stage 1 Stage 2 Stage 2 Stage 3 

2012 Stage 1 Stage 1 Stage 2 Stage 3 

2013 Stage 1 Stage 2 Stage 3 

2014 Stage 1 Stage 3 

2015+* Stage 3 

 * Avoids payment adjustments only for EPs in the Medicare EHR Incentive Program. 

 ** Stage 3 criteria of meaningful use or a subsequent update to the criteria if one is established 

through rulemaking. 

Please note that the number of payment years available and the last payment year 

that can be the first payment year for an EP or eligible hospital varies between the EHR 

incentive programs. The applicable payment years for each program are discussed in 

section II.B. of this proposed rule for the Medicare FFS EHR incentive program, in 

section II.D. for the MA EHR incentive program, and in section II.E. for the Medicaid 

EHR incentive program. 

The stages of criteria of meaningful use and how they are demonstrated are 

described further in this proposed rule and will be updated in subsequent proposed rules 
CMS-0033-P 47 

to reflect advances in HIT products and infrastructure. This could include updates to the 

Stage 1 criteria in future rulemaking. 

We invite comments on our alignment between payment year and the criteria of 

meaningful use particularly in regards to the need to create alignment across all EPs and 

eligible hospitals in all EHR incentive programs in 2015. 

d. Stage 1 Criteria for Meaningful Use 

To qualify as a meaningful EHR user for 2011, we propose that an EP or eligible 

hospital must demonstrate that they meet all of the objectives and their associated 

measures as set forth in §495.6. Except as otherwise indicated, each objective must be 

satisfied by an individual EP as determined by unique National Provider Identifiers(NPIs) 

and an individual hospital as determined by unique CMS certification numbers (CCN). 

Below we describe each objective and its associated measures in detail. While we 

welcome comments on all aspects of the Stage 1 criteria of meaningful use, we 

specifically encourage comments on the following considerations. 

While we believe that requiring satisfaction of all objectives is appropriate for the 

majority of providers, we are concerned that certain providers may have difficulty 

meeting one or more of the proposed objectives. We solicit comments on whether this 

may be the case, and invite commenters to identify the objectives and associated 

measures that may prove out of reach for certain provider types or specialties, and to 

suggest specific objective criteria we could use to determine whether an objective and 

associated measure is appropriate for different provider types or specialists. 

In discussing the objectives that constitute the stage 1 criteria of meaningful use, 

we adopted a structure derived from recommendations of the HIT Policy Committee of 
CMS-0033-P 48 

grouping the objectives under care goals, which are in turn grouped under health 

outcomes policy priorities. We believe this structural grouping provides context to the 

individual objectives; however, the grouping is not itself an aspect of meaningful use. 

The criteria for meaningful use are based on the objectives and their associated measures. 

CMS and ONC have carefully reviewed the objectives and measures proposed by the 

HIT Policy Committee. We found many objectives to be well suited to meaningful use, 

while others we found to require modification or clarification. In our discussion we will 

focus on those areas where our proposal is a modification of the recommendation of the 

HIT Policy Committee. For those areas where we elected not to propose a modification 

to the recommendation of the HIT Policy Committee, we note that there already has been 

extensive public debate and explanation of these recommendations, which can be 

accessed at http://healthit.hhs.gov/meaningfuluse. Even if we do not propose to modify a 

specific recommendation of the HIT Policy Committee, we nevertheless welcome 

comment on whether to do so in the final rule. 

(1) Objectives 

The first health outcomes policy priority specified by the HIT Policy Committee 

is improving quality, safety, efficiency and reducing health disparities. The HIT Policy 

Committee identified the following care goals to address this priority: 

● Provide access to comprehensive patient health data for patient's healthcare 

team. 

● Use evidence-based order sets and computerized provider order entry (CPOE). 

● Apply clinical decision support at the point of care. 
CMS-0033-P 49 

● Generate lists of patients who need care and use them to reach out to those 

patients. 

● Report information for quality improvement and public reporting. 

With respect to this last care goal, the HIT Policy Committee proposed a goal of “Report 

to patient registries for quality improvement, public reporting, etc.” We propose to 

modify this care goal because we believe that patient registries are too narrow a reporting 

requirement to accomplish the goals of quality improvement and public reporting. We 

note that the HIT Policy Committee's recommended objectives include the reporting of 

quality measures to CMS. We do not believe that CMS would normally be considered a 

“patient registry”. We also removed the phrase “etc.” We believe that the level of 

ambiguity created by “etc” is not appropriate for Federal regulations. 

 For EPs, we propose the following objectives in the Stage 1 criteria of meaningful 

use to further the care goal of improving quality, safety, efficiency and reducing health 

disparities. 

● Use CPOE. We believe that the term “CPOE” requires additional clarification. 

We propose to define CPOE as entailing the provider's use of computer assistance to 

directly enter medical orders (for example, medications, consultations with other 

providers, laboratory services, imaging studies, and other auxiliary services) from a 

computer or mobile device. The order is also documented or captured in a digital, 

structured, and computable format for use in improving safety and organization. For 

Stage 1 criteria, we propose that it will not include the electronic transmittal of that order 

to the pharmacy, laboratory, or diagnostic imaging center. We encourage comments on 
CMS-0033-P 50 

whether additional specificity is required on the types of orders encompassed within 

CPOE. 

● Implement drug-drug, drug-allergy, drug-formulary checks. 

● Maintain an up-to-date problem list of current and active diagnoses based on 

ICD-9-CM or SNOMED CT®. 

We believe the term “problem list” requires additional clarification. We describe a 

“problem list” as a list of current and active diagnoses as well as past diagnoses relevant 

to the current care of the patient. 

● Generate and transmit permissible prescriptions electronically (eRx). 

The concept of only permissible prescriptions refers to the current restrictions established 

by the Department of Justice on electronic prescribing for controlled substances. (The 

restrictions can be found at http://www.deadiversion.usdoj.gov/schedules/schedules.htm) 

● Maintain active medication list. 

● Maintain active medication allergy list. 

● Record the following demographics: preferred language, insurance type, 

gender, race and ethnicity, and date of birth. 

We note that race and ethnicity codes should follow current federal standards published 

by the Office of Management and Budget 

(http://www.whitehouse.gov/omb/inforeg_statpolicy/#dr). 

● We do not propose to include the objective “Record Advance directives.” 

The HIT Policy Committee recommended that EPs “record advance directives.” It is 

unclear whether by this terminology they meant that the contents of the advance directive 

be recorded or merely the fact that a patient has an advance directive be noted. 
CMS-0033-P 51 

Depending on the interpretation, this objective could interfere with current State law 

which varies significantly from state to state in this matter. We also believe that this 

objective is only relevant to a limited and undefined patient population when compared to 

the patient populations to which other objectives listed here apply. The limits could be 

based on age, health status, whether a chronic condition is present, to patients scheduled 

for certain types of procedures or a host of other factors. Similarly, many EPs would not 

record this information under current standards of practice. Dentists, pediatricians, 

optometrists, chiropractors, dermatologists, and radiologists are just a few examples of 

EPs who would only in rare circumstances require information about a patient's advance 

directive. For these reasons, we do not propose to include “Record advance directives” 

as an objective of the Stage 1 criteria of meaningful use for EPs. 

● Record and chart changes in the following vital signs: height, weight and blood 

pressure and calculate and display body mass index (BMI) for ages 2 and over; plot and 

display growth charts for children 2 - 20 years, including BMI. 

This is a modification to the HIT Policy Committee recommendation to require eligible 

professionals to record vital signs: height, weight, blood pressure and calculate BMI. We 

added “plot and display growth charts for children 2 - 20 years, including BMI” to the 

objective recommended by the HIT Policy Committee, as BMI itself does not provide 

adequate information for children. Trends in height, weight, and BMI among children 

must be interpreted and understood in the context of expected parameters of children of 

the same age and sex to determine whether the child is growing appropriately. For 

example, a BMI of 18 is normal for a 12 year-old boy, and a marker of obesity for a 5-

year old (http://www.cdc.gov/growthcharts/data/set1clinical/cj41l023.pdf). 
CMS-0033-P 52 

● Record smoking status for patients 13 years old or older. 

The HIT Policy Committee recommended the objective of recording smoking status for 

patients. We propose to add “for patients 13 years old or older,” as we do not believe this 

objective is applicable to patients of all ages and there is not consensus in the health care 

community as to what the appropriate cut off age may be. We encourage comments on 

whether this age limit should be lowered or raised. 

● Incorporate clinical lab-test results into EHR as structured data. 

Structured data are data that have specified data type and response categories within an 

electronic record or file. 

● Generate lists of patients by specific conditions to use for quality improvement, 

reduction of disparities, research, and outreach. 

● Report ambulatory quality measures to CMS (or, for EPs seeking the Medicaid 

incentive payment, the States). The HIT Policy Committee did not include “or the 

States” in its recommended objective. We propose to add the option to report directly to 

the States for EPs participating in the Medicaid EHR incentive program. Additional 

discussion of this objective can be found in section II.A.3 of this proposed rule. 

● Send reminders to patients per patient preference for preventive/follow-up care. 

Patient preference refers to the patient's choice of delivery method between internet based 

delivery or delivery not requiring internet access. 

● Implement five clinical decision support rules relevant to specialty or high 

clinical priority, including for diagnostic test ordering, along with the ability to track 

compliance with those rules. 
CMS-0033-P 53 

This is a modification to the HIT Policy Committee recommendation to require 

EPs to implement one clinical decision support rule relevant to specialty or high clinical 

priority. We made this change to align with and support eligible professionals in 

reporting their clinical quality measures proposed in section II.A.3. of this proposed rule. 

We anticipate that EPs will report on at least five clinical quality measures. 

We propose to describe clinical decision support as as health information 

technology functionality that builds upon the foundation of an EHR to to provide persons 

involved in care processes with general and person-specific information, intelligently 

filtered and organized, at appropriate times, to enhance health and health care. 

● We do not propose to include the objective “Document a progress note for each 

encounter”. Documentation of progress notes is a medical-legal requirement and a 

component of basic EHR functionality, and is not directly related to advanced processes 

of care or improvements in quality, safety, or efficiency. 

Finally, the HIT Policy Committee further recommended the following two 

objectives related to administrative simplification. Consistent with that 

recommendation—and consistent with any forthcoming statutory requirements regarding 

administrative simplifications—we propose the following objectives, with slight 

modification. 

● Check insurance eligibility electronically from public and private payers. 

Deleted “where possible” from the HIT Policy Committee recommendation. The 

checking for eligibility electronically is already a HIPAA Standard Exchange. 

● Submit claims electronically to public and private payers. 
CMS-0033-P 54 

For eligible hospitals, we propose the following objectives in the stage 1 criteria 

of meaningful use to further these care goals: 

● Use CPOE for orders (any type) directly entered by the authorizing provider 

(for example, MD, DO, RN, PA, NP). 

We believe that the term “CPOE” requires additional clarification. We propose to 

define CPOE as entailing the provider's use of computer assistance to directly enter 

medical orders (for example, medications, consultations with other providers, laboratory 

services, imaging studies, and other auxiliary services) from a computer or mobile 

device. The order is also documented or captured in a digital, structured, and computable 

format for use in improving safety and organization. It does not include the electronic 

transmittal of that order to the pharmacy, laboratory, or diagnostic imaging center in 2011 

or 2012. CPOE is the same as defined above for EPs. We welcome comment on whether 

use of CPOE varies between hospitals and EPs in ways that should be addressed. 

● Implement drug-drug, drug-allergy, drug-formulary checks. 

● Maintain an up-to-date problem list of current and active diagnoses based on 

ICD-9-CM or SNOMED CT®. 

We believe the term “problem list” requires additional clarification. We describe a 

“problem list” as a list of current and active diagnoses, as well as past diagnoses relevant 

to the current care of the patient. 

● Maintain active medication list. 

● Maintain active medication allergy list. 
CMS-0033-P 55 

● Record the following demographics: preferred language, insurance type, 

gender, race and ethnicity, date of birth, and date and cause of death in the event of 

mortality. 

We are interested in public comments on how States and hospitals could work together to 

facilitate linkage between the EHR and the full birth and death certificate information 

that States currently require hospitals to collect. We note that race and ethnicity codes 

should follow current federal standards published by the Office of Management and 

Budget (http://www.whitehouse.gov/omb/inforeg_statpolicy/#dr).. 

● We do not propose to include the objective “Record Advance directives.” 

The HIT Policy Committee recommended that eligible hospitals “record advance 

directives.” It is unclear whether by this terminology they meant that the contents of the 

advance directive be recorded or merely the fact that a patient has an advance directive be 

noted. Depending on the interpretation, this objective could interfere with current State 

law which varies significantly from state to state in this matter. We also believe that this 

objective is only relevant to a limited and undefined patient population when compared to 

the patient populations to which other objectives listed here apply. The limits could be 

based on age, health status, whether a chronic condition is present, to patients scheduled 

for certain types of procedures or a host of other factors. For these reasons, we do not 

propose to include “Record advance directives” as an objective of the Stage 1 criteria of 

meaningful use for eligible hospitals. 

● Record the following vital signs: height, weight and blood pressure and 

calculate and display body mass index (BMI) for patients 2 and over; plot and display 

growth charts for children 2 - 20 years, including BMI. 
CMS-0033-P 56 

We added “plot and display growth charts for children 2 - 20 years, including 

BMI” to the objective recommended by the HIT Policy Committee, as BMI itself does 

not provide adequate information for children. Trends in height, weight, and BMI among 

children must be interpreted and understood in the context of expected parameters of 

children of the same age and sex to determine whether the child is growing appropriately. 

For example, a BMI of 18 is normal for a 12 year-old boy, and a marker of obesity for a 

5-year old (ref. http://www.cdc.gov/growthcharts/data/set1clinical/cj41l023.pdf). 

● Record smoking status for patients 13 years old or older. 

We added “for patients 13 years old or older” as this objective is not applicable to 

patients of all ages. The discussion as to why we chose 13 can be found under the EP 

objective for “Record smoking status”. 

● Incorporate clinical lab-test results into EHR as structured data. 

Structured data are data that have specified data type and response categories within a 

record or file. 

● Generate lists of patients by specific conditions to use for quality improvement, 

reduction of disparities, and outreach. 

The HIT Policy Committee did not recommend the phrase “to use for quality 

improvement, reduction of disparities, and outreach” for eligible hospitals as they did for 

EPs. We believe this aspect of the objective is just as relevant to eligible hospitals as EPs 

and therefore includes it for both. We invite comments as to why this phrase may not be 

applicable to eligible hospitals. 

● Report ambulatory quality measures to CMS (or, for eligible hospitals seeking 

the Medicaid incentive payment, the States). The HIT Policy Committee did not include 
CMS-0033-P 57 

“or the States” in their recommended objective. We propose to add the option to report 

directly to the States for Medicaid eligible hospitals participating in the Medicaid EHR 

incentive program. Additional discussion can be found in section II.A.3. of this proposed 

rule. 

● Implement five clinical decision support rules relevant to specialty or high 

clinical priority , including for diagnostic test ordering, along with the ability to track 

compliance with those rules. 

This is a modification to the HIT Policy Committee recommendation to require 

eligible professionals to implement one clinical decision support rule relevant to specialty 

or high clinical priority. We made this change to align with and support eligible 

professionals in reporting their clinical quality measures proposed in section II.A.3. of 

this proposed rule. We anticipate that most EPs will report on at least five clinical quality 

measures from section II.A.3 of this proposed rule and eligible hospitals will all report on 

at least five. 

We believe greater clarification is required around the term clinical decision 

support. We propose to describe clinical decision support as health information 

technology functionality that builds upon the foundation of an EHR to provide persons 

involved in care processes with general and person-specific information, intelligently 

filtered and organized, at appropriate times, to enhance health and health care. 

Finally, the HIT Policy Committee further recommended the following two 

objectives related to administrative simplification. Consistent with that 

recommendation—and consistent with any forthcoming statutory requirements regarding 
CMS-0033-P 58 

administrative simplifications—we propose the following objectives, with slight 

modification. 

● Check insurance eligibility electronically from public and private payers. 

Deleted “where possible” from the HIT Policy Committee recommendation. The 

checking for eligibility electronically is already a HIPAA Standard Exchange. 

● Submit claims electronically to public and private payers. 

The second health outcomes policy priority identified by the HIT Policy 

Committee is to engage patients and families in their healthcare. The following care goal 

for meaningful use addresses this priority: 

● Provide patients and families with timely access to data, knowledge, and tools 

to make informed decisions and to manage their health. We do not propose to preempt 

any existing Federal or State law regarding the disclosure of information to minors, their 

parents, or their guardians in setting the requirements for meaningful use. For this reason 

when it comes to information provided to the family, we let existing Federal and State 

laws dictate what is appropriate for disclosure to the patient or the family. For purposes 

of all objectives of the Stage 1 criteria of meaningful use involving the disclosure of 

information to a patient, a disclosure made to a family member or a patient's guardian 

consistent with Federal and State law may substitute for a disclosure to the patient. 

For EPs, we propose the following objectives in the stage 1 criteria of meaningful 

use to further this care goal: 

● Provide patients with an electronic copy of their health information (including 

diagnostics test results, problem list, medication lists, allergies) upon request. 
CMS-0033-P 59 

Consistent with the HIT Policy Committee's recommendations, we propose the following 

additional clarification of this objective. Electronic copies may be provided through a 

number of secure electronic methods (for example, personal health record (PHR), patient 

portal, CD, USB drive). 

● Provide patients with timely electronic access to their health information 

(including lab results, problem list, medication lists, allergies) within 96 hours of the 

information being available to the EP. 

Also, consistent with the HIT Policy Committee recommendations, we propose the 

following additional clarification of this objective. Electronic access may be provided by 

a number of secure electronic methods (for example, PHR, patient portal, CD, USB 

drive). Timely is defined as within 96 hours of the information being available to the EP 

either through the receipt of final lab results or a patient interaction that updates the EP's 

knowledge of the patient's health. We judge 96 hours to be a reasonable amount of time 

to ensure that certified EHR technology is up to date. We welcome comment on if a 

shorter or longer time is advantageous. 

● We do not propose to include the objective “Provide access to patient-specific 

education resources upon request.” Providing patients with information and education 

that is relevant to their condition, actionable, culturally competent, and of the appropriate 

health literacy level is a critical component of patient engagement and empowerment. 

Unfortunately, there is currently a paucity of knowledge resources that are integrated 

within EHRs, that are widely available, and that meet these criteria, particularly in 

multiple languages. We intend to work with the policy committee, the National Library 
CMS-0033-P 60 

of Medicine (provider of Medline Plus), and experts in this area to ensure the feasibility 

of this measure in the future. 

● Provide clinical summaries for patients for each office visit. 

Changed from encounter to office visit. The HIT Policy Committee recommended the 

objective “ Provide clinical summaries for patients for each encounter.” We believe this 

objective requires further clarification in order make the distinction that it is not meant to 

apply to alternative encounters such as telephone or web visits. As a result, we propose 

to revise this objective to “Provide clinical summaries for patients for each office visit.” 

For eligible hospitals, we propose the following objectives in the stage 1 criteria 

of meaningful use to further this care goal: 

● Provide patients with an electronic copy of their health information (including 

diagnostic test results, problem list, medication lists, allergies, discharge summary, 

procedures), upon request. Consistent with the HIT Policy Committee's 

recommendations, we propose the following additional clarification of this objective. 

Electronic copies may be provided through a number of secure electronic methods (for 

example, Personal Health Record (PHR), patient portal, CD, USB drive). 

● Provide patients with an electronic copy of their discharge instructions and 

procedures at time of discharge, upon request. 

Also, consistent with the HIT Policy Committee recommendations, we propose the 

following additional clarification of this objective. Electronic access may be provided by 

a number of secure electronic methods (for example, PHR, patient portal, CD, USB 

drive). 
CMS-0033-P 61 

● We do not propose to include the objective “Provide access to patient-specific 

education resources upon request.” Providing patients with information and education 

that is relevant to their condition, actionable, culturally competent, and of the appropriate 

health literacy level is a critical component of patient engagement and empowerment. 

Unfortunately, there is currently a paucity of knowledge resources that are integrated 

within EHRs, that are widely available, and that meet these criteria, particularly in 

multiple languages. We intend to work with the policy committee, the National Library 

of Medicine (provider of Medline Plus), and experts in this area to ensure the feasibility 

of this measure in the future. 

The third health outcomes policy priority identified by the HIT Policy Committee 

is to improve care coordination. The HIT Policy Committee recommended the following 

care goals to address this priority: 

● Exchange meaningful clinical information among professional health care 

team. 

For EPs and eligible hospitals, we propose the following objectives in the stage 1 

criteria of meaningful use to further this care goal: 

● Capability to exchange key clinical information (for example, problem list, 

medication list, allergies, and diagnostic test results), among providers of care and patient 

authorized entities electronically. 

By “diagnostic test results” we mean all data needed to diagnose and treat disease, such 

as blood tests, microbiology, urinalysis, pathology tests, radiology, cardiac imaging, 

nuclear medicine tests, and pulmonary function tests. Where available in structured 

electronic format (for example, drug and clinical lab data), we expect that this 
CMS-0033-P 62 

information would be exchanged in electronic format. However, where the information 

is available only in unstructured electronic formats (for example, free text and scanned 

images), we would allow the exchange of unstructured information. Patient authorized 

entities could include any individual or organization to which the patient has granted 

access to their clinical information. Examples would include an insurance company that 

covers the patient or a personal health record vendor identified by the patient. 

● Perform medication reconciliation at relevant encounters and each transition of 

care. 

We believe greater clarification is needed around the term “medication reconciliation”. 

Public input received by the NCVHS Executive Subcommittee and the HIT Policy 

Committee and our prior experiences indicate confusion in the healthcare industry as to 

what constitutes medication reconciliation. We propose to describe medication 

reconciliation as the process of identifying the most accurate list of all medications that 

the patient is taking, including name, dosage, frequency and route, by comparing the 

medical record to an externally list of medications obtained from a patient, hospital or 

other provider. Also we would clarify transition of care as transfer of a patient from one 

clinical setting (inpatient, outpatient, physician office, home health, rehab, long-term care 

facility, etc.) to another or from one EP or eligible hospital (as defined by CCN) to 

another. A relevant encounter would be any encounter that the EP or eligible hospital 

judges performs a medication reconciliation due to new medication or long gaps in time 

between patient encounters or other reasons determined by the EP or eligible hospital. 

We encourage comments on whether our descriptions of “transition of care” and 

“relevant encounter” are sufficiently clear and medically relevant. 
CMS-0033-P 63 

● Provide summary care record for each transition of care or referral. 

This objective was not explicitly included in the HIT Policy Committee's recommended 

objectives. However, they did include a measure for the “percent of transitions in care 

for which summary care record is shared. We believe that in order for a measure to be 

relevant it must correspond to an objective in the definition of meaningful use. 

Therefore, we propose to add this objective in order to be able to include the 

recommended measure. Furthermore, we add referrals because the sharing of the patient 

care summary from one provider to another communicates important information that the 

patient may not have been able to provide, and can significantly improve the quality and 

safety of referral care, and reduce unnecessary and redundant testing. 

The fourth health outcomes policy priority identified by the HIT Policy 

Committee is improving population and public health. The HIT Policy Committee 

identified the following care goal to address this priority: 

● The patient's health care team communicates with public health agencies. The 

goal as recommended by the HIT Policy Committee is “communicate with public health 

agencies.” We found this goal to be somewhat ambiguous, as it does not specify who 

must communicate with public health agencies. We propose to specify “the patient's 

health care team” as who would communicate with public health agencies. 

For EPs, we propose the following objectives in the stage 1 criteria of meaningful 

use to further this care goal: 

● Capability to submit electronic data to immunization registries and actual 

submission where possible and accepted. 
CMS-0033-P 64 

● Capability to provide electronic syndromic surveillance data to public health 

agencies and actual transmission according to applicable law and practice. 

For eligible hospitals, we propose the following objectives in the stage 1 criteria 

of meaningful use to further this care goal: 

● Capability to submit electronic data to immunization registries and actual 

submission where required and accepted. 

● Capability to provide electronic submission of reportable (as required by state 

or local law) lab results to public health agencies and actual submission where it can be 

received. 

● Capability to provide electronic syndromic surveillance data to public health 

agencies and actual transmission according to applicable law and practice. 

The fifth health outcomes policy priority is to ensure adequate privacy and 

security protections for personal health information. The following care goals for 

meaningful use address this priority: 

● Ensure privacy and security protections for confidential information through 

operating policies, procedures, and technologies and compliance with applicable law. 

● Provide transparency of data sharing to patient. 

For EPs and eligible hospitals, we propose the following objective in the stage 1 

criteria of meaningful use to further these care goals: 

● Protect electronic health information created or maintained by the certified 

EHR technology through the implementation of appropriate technical capabilities. 

This objective is different from the two objectives recommended by the HIT Policy 

Committee. Those objectives were “Compliance with HIPAA Privacy and Security 
CMS-0033-P 65 

Rules” and “Compliance with fair data sharing practices set forth in the Nationwide 

Privacy and Security Framework”. While we presume that the HIT Policy Committee is 

referring to the certified EHR technology and its use being in compliance with the 

HIPAA Privacy and Security Rules, it is not explicit. Compliance with HIPAA privacy 

and security rules is required for all covered entities, regardless of whether they 

participate in the EHR incentive programs or not. Furthermore, compliance constitutes a 

wide range of activities, procedures, and infrastructure. We propose to rephrase the 

objective to ensure that meaningful use of the certified EHR technology supports 

compliance with the HIPAA Privacy and Security Rules and compliance with fair sharing 

data practices outlined in the Nationwide Privacy and Security Framework 

(http://healthit.hhs.gov/portal/server.pt/gateway/PTARGS_0_10731_848088_0_0_18/Nat

ionwidePS_Framework-5.pdf), but do not believe meaningful use of certified EHR 

technology is the appropriate regulatory tool to ensure such compliance with the HIPAA 

Privacy and Security Rules. 

(2) Health IT Functionality Measures 

In order for an EP or an eligible hospital to demonstrate that it meets these 

proposed objectives, we believe a measure is necessary for each objective. To provide 

structure to these measures, we group the measures into two categories: health IT 

functionality measures and clinical quality measures. The health IT functionality 

measures are discussed in this section, while the clinical quality measures are discussed 

in section II.A.3 of this proposed rule. 

Without a measure for each objective, we believe that the definition of 

meaningful use becomes too ambiguous to fulfill its purpose. The use of measures also 
CMS-0033-P 66 

creates the flexibility to account for realities of current HIT products and infrastructure 

and the ability to account for future advances. The HIT Policy Committee did 

recommend some measures; however, they did not explicitly link each measure to an 

objective. Therefore, the proposed measures set forth below are a significant departure 

from the recommendation of the HIT Policy Committee. 

For each of these measures utilizing a percentage and the reporting of clinical 

quality measures, we propose at §495.10 that EPs and eligible hospitals submit numerator 

and denominator information to CMS. We invite comment on our burden estimates 

associated with reporting these measures (see section III. of this proposed rule). 

EP Objective: Use CPOE 

EP Measure: CPOE is used for at least 80 percent of all orders

CPOE is a capability included in the certification criteria for certified EHR 

technology (to be defined by the ONC in its upcoming interim final rule). We believe it 

is important to ensure that this capability is continuously utilized. Therefore, we believe 

in order to meet this objective it is not sufficient to demonstrate use of this capability 

once, but rather, an EP must utilize this capability as part of his or her daily work process. 

We consider two methods of for measuring use of the CPOE functionality: the 

percentage of orders entered using CPOE or a count of orders entered using CPOE. To 

illustrate the difference, an example of measuring percentage use of the CPOE 

functionality would be 80 percent of all of an EP's orders were entered using the CPOE 

functionality of certified EHR technology during the EHR reporting period. An example 

of counting orders using the CPOE functionality would be requiring that the EP entered 

at least 100 orders using CPOE during the EHR reporting period. A count of orders 
CMS-0033-P 67 

entered using CPOE would be easier to document than a percentage of orders, as an EP 

would only have to count the number of times he or she entered an order using CPOE, as 

opposed to tabulating both when he or she did so and when he or she failed to do so. 

However, a count does not enable variations between EPs to be accounted for. For 

instance, a count-based measurement would not take into consideration differences in 

patient volume among EPs, which may be a concern to those EPs with a low patient 

volume. A percentage-based measurement would account for variations in volume and 

would allow for a more revealing measurement of an EP's individual performance in 

meeting the objective. Therefore, we are proposing that an EP's successful completion of 

this objective be based on a percentage. 

To calculate the percentage, CMS and ONC have worked together to define the 

following: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

The numerator for this objective is orders issued by the EP entered using the 

CPOE functionality of certified EHR technology during the EHR reporting period. The 

denominator for this objective is all orders issued by the EP during the EHR reporting 

period. These are orders issued by an EP for both their Medicare/Medicaid population 

and all other patients. We believe it is unlikely that an EP would use one record keeping 

system for one patient population and another system for another patient population at 

one location. Requiring reporting differences based on payers would actually increase 
CMS-0033-P 68 

the burden of meeting meaningful use. We are concerned about the application of this 

denominator for EPs who see patients in multiple practices or multiple locations. If an 

EP does not have certified EHR technology available at each location/practice where they 

see patients it could become impossible to reach the thresholds set for measuring the 

objectives. We do not seek to exclude EPs who meaningfully use certified EHR 

technology when it is available because they also provide care in another practice where 

certified EHR technology is not available. Therefore we are proposing all measures be 

limited to actions taken at practices/locations equipped with certified EHR technology. A 

practice is equipped if certified EHR technology is available at the beginning of the EHR 

reporting period for a given location.. Equipped does not mean the certified EHR 

technology is functioning on any given day in the EHR reporting period. Allowances for 

downtime and other technical issues with certified EHR technology are made in the 

establishment of the measure thresholds. We are concerned that seeing a patient without 

certified EHR technology available does not advance the health care policy priorities of 

the definition of meaningful use. We are also concerned about possible inequality 

between EPs receiving the same incentive, but using certified EHR technology for 

different proportions of their patient population. We believe that an EP would have the 

greatest control of whether certified EHR technology is available in the practice in which 

they see the greatest proportion of their patients. We are proposing that to be a 

meaningful EHR user an EP must have 50 percent or more of their patient encounters 

during the EHR reporting period at a practice/location or practices/locations equipped 

with certified EHR technology. An EP for who does not conduct 50 percent of their 

patient encounters in any one practice/location would have to meet the 50 percent 
CMS-0033-P 69 

threshold through a combination of practices/locations. While control is less assured in 

this situation, CMS still needs to advance the health care priorities of the definition of 

meaningful use and provide some level of equity. We invite comments as to whether this 

denominator is feasible to obtain for EPs, whether this exclusion (the denominator for 

patients seen when certified EHR technology is not available) is appropriate, whether a 

minimum threshold is necessary and whether 50 percent is an appropriate threshold. We 

note that in evaluating the 50 percent threshold, our proposal is to review all 

locations/organizations at which an EP practices. So, for example, if the EP practices at 

both an FQHC and within his or her individual practice, we would include in our review 

both of these locations. 

As this objective relies solely on a capability included as part of certified EHR 

technology and is not, for purposes of Stage 1 criteria, reliant on the electronic exchange 

of information, we believe it would be appropriate to set a high percentage threshold. We 

therefore propose to set the percentage required for successful demonstration at 80 

percent. Though full compliance (that is, 100 percent) is the ultimate goal, 80 percent 

seemed an appropriate standard for Stage 1 meaningful use as it creates a high standard, 

while still allowing room for technical hindrances and other barriers to reaching full 

compliance.
CMS-0033-P 70 

For other objectives that are reliant on the electronic exchange of information, we 

are cognizant that in most areas of the country, the infrastructure necessary to support 

such exchange is not yet currently available. We anticipate raising the threshold for these 

objectives in future definitions of meaningful use as the capabilities of HIT infrastructure 

increases. The intent and policy goal with raising this threshold is to ensure that 

meaningful use encourages patient-centric, interoperable health information exchange 

across provider organizations regardless of provider's business affiliation or EHR 

platform. 

Eligible Hospital Objective: Use of CPOE for orders (any type) directly entered 

by authorizing provider (for example, MD, DO, RN, PA, NP)

Eligible Hospital Measure: CPOE is used for at least 10 percent of all orders 

To calculate the percentage, CMS and ONC have worked together to define the 

following: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is orders entered in an inpatient 

facility/department that falls under the eligible hospital's CCN and by an authorized 

provider using CPOE functionality of certified EHR technology during the EHR 

reporting period. Inpatient facility/department is defined by the place of service code 21. 

Further discussion about POS 21 is available at section II.A.6. of this proposed rule and 

at http://www.cms.hhs.gov/PlaceofServiceCodes/. The denominator for this objective is 
CMS-0033-P 71 

all orders entered in an inpatient facility/department that falls under the eligible hospital's 

CCN and issued by the authorized providers in the hospital during the EHR reporting 

period. These are orders are those issued are for both their Medicare/Medicaid 

population and all other patients. The rationale for the establishment of this measure is 

identical to that of the EP, except in the establishment of the threshold percentage. In 

considering CPOE, the HIT Policy Committee did specify this lower percentage (10 

percent) for eligible hospitals. Public input described previously in this proposed rule 

indicated that CPOE is traditionally one of the last capabilities implemented at hospitals. 

Also, many hospitals choose to implement one department at a time. Detailed comments 

can be found at http://healthit.hhs.gov/meaningfuluse. For these reasons the HIT Policy 

Committee recommended this lower threshold. We agree with the lower threshold for the 

same reasons. 

EP/Eligible Hospital Objective: Implement drug-drug, drug-allergy, drugformulary checks 

EP/Eligible Hospital Measure: The EP/eligible hospital has enabled this 

functionality 

The capability of conducting automated drug-drug, drug-allergy, and drugformulary checks is included in the certification criteria for certified EHR technology (to 

be determined by ONC in its upcoming interim final rule). This automated check 

provides information to advise the EP or eligible hospital's decisions in prescribing drugs 

to a patient. The only action taken by the EP or eligible hospital is to consider this 

information. Many current EHR technologies have the option to disable these checks and 

the certification process does not require the removal of this option. Therefore, in order 
CMS-0033-P 72 

to meet this objective, an EP or eligible hospital would be required to enable this 

functionality. While this does not ensure that an EP or an eligible hospital is considering 

the information provided, it does ensure that the information is available. 

EP/Eligible Hospital Objective: Maintain an up-to-date problem list of current 

and active diagnoses based on ICD-9-CM or SNOMED CT® 

EP/Eligible Hospital Measure: At least 80 percent of all unique patients seen by 

the EP or admitted to the eligible hospital have at least one entry or an indication 

of none recorded as structured data.

The capability to maintain an up-to-date problem list of current and active 

diagnoses based on ICD-9-CM or SNOMED CT ® is included in the certification criteria 

for certified EHR technology (to be defined by ONC in its upcoming interim final rule). 

Meaningful use seeks to ensure that those capabilities are utilized. Therefore, we believe 

in order to meet this objective it is not sufficient to demonstrate this capability once, but 

rather to comply with the objective, an EP or an eligible hospital must utilize this 

capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients seen by an EP 

or admitted to an inpatient facility/department (POS 21) that falls under the eligible 
CMS-0033-P 73 

hospital's CCN during the EHR reporting period that have at least one ICD-9-CM or 

SNOMED CT ® -coded entry or an indication of none in the problem list. A unique 

patient means that even if a patient is seen multiple times during the EHR reporting 

period they are only counted once. The reason we propose to base the measure on unique 

patients as opposed to every patient encounter, is that a problem list would not 

necessarily have to be updated at every visit. The denominator for this objective is the 

number of unique patients seen by the EP or admitted to an inpatient facility/department 

(POS 21) that falls under the eligible hospital's CCN during the EHR reporting period. 

As this objective relies solely on a capability included as part of certified EHR 

technology and is not reliant on the electronic exchange of information, we propose to set 

the percentage required for successful demonstration at 80 percent. The reasoning for 

this is the same as under CPOE for EPs. Though full compliance (that is, 100 percent) is 

the ultimate goal, 80 percent seemed an appropriate standard for Stage 1 meaningful use 

as it creates a high standard, while still allowing room for technical hindrances and other 

barriers to reaching full compliance. 

EP Objective: Generate and transmit permissible prescriptions electronically 

(eRx). 

EP Measure: At least 75 percent of all permissible prescriptions written by the 

EP are transmitted electronically using certified EHR technology. 

The capability to generate and transmit permissible prescriptions electronically is 

included in the certification criteria for certified EHR technology (to be defined by ONC 

in its upcoming interim final rule). Meaningful use seeks to ensure that those capabilities 

are utilized. Therefore, we believe in order to meet this objective it is not sufficient to 
CMS-0033-P 74 

demonstrate this capability once, but rather to comply with the objective, an EP must 

utilize this capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of prescriptions for other than 

controlled substances generated and transmitted electronically during the EHR reporting 

period. The denominator for this objective is the number of prescriptions written for 

other than controlled substances during the EHR reporting period. While this measure 

does rely on the electronic exchange of information based on the public input previously 

discussed and our own experiences with e-Rx programs, we believe this is the most 

robust electronic exchange currently occurring and propose 75 percent as an achievable 

threshold for the Stage 1 criteria of meaningful use. Though full compliance (that is, 100 

percent) is the ultimate goal, 75 percent seemed an appropriate standard for Stage 1 

meaningful use as it creates a high standard, while still allowing room for technical 

hindrances and other barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Maintain active medication list. 

EP/Eligible Hospital Measure: At least 80 percent of all unique patients seen by 

the EP or admitted by the eligible hospital have at least one entry (or an indication 
CMS-0033-P 75 

of “none” if the patient is not currently prescribed any medication) recorded as 

structured data. 

The capability to maintain an active medication list is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Meaningful use seeks to ensure that those capabilities are utilized. Therefore, 

we believe in order to meet this objective it is not sufficient to demonstrate this capability 

once, but rather to comply with the objective, an EP or eligible hospital must utilize this 

capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients seen by the EP 

or admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period who have at least one entry (or an 

indication of “none” if the patient is not currently prescribed any medication) recorded as 

structured data in their medication list. A unique patient is discussed under the objective 

of maintaining an up-to-date problem list. The denominator for this objective is the 

number of unique patients seen by the EP or admitted to an inpatient facility/department 

(POS 21) that falls under the eligible hospital's CCN during the EHR reporting period. 

As this objective relies solely on a capability included as part of certified EHR 
CMS-0033-P 76 

technology and is not reliant on the electronic exchange of information, we propose to set 

the percentage required for successful demonstration at 80 percent. The reasoning for 

this is the same as under CPOE for EPs. Though full compliance (that is, 100 percent) is 

the ultimate goal, 80 percent seemed an appropriate standard for Stage 1 meaningful use 

as it creates a high standard, while still allowing room for technical hindrances and other 

barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Maintain active medication allergy list. 

EP/Eligible Hospital Measure: At least 80 percent of all unique patients seen by 

the EP or admitted to the eligible hospital have at least one entry (or an indication 

of “none” if the patient has no medication allergies) recorded as structured data. 

The capability to maintain an active medication allergy list using structured data 

is included in the certification standards for certified EHR technology (to be defined by 

ONC in its upcoming interim final rule). Meaningful use seeks to ensure that those 

capabilities are utilized. Therefore, we believe in order to meet this objective it is not 

sufficient to demonstrate this capability once, but rather to comply with the objective, an 

EP or eligible hospital must utilize this capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 
CMS-0033-P 77 

 The numerator for this objective is the number of unique patients seen by the EP 

or admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period who have at least one entry (or an 

indication of “none”) recorded as structured data in their medication allergy list. A 

unique patient is discussed under the objective of maintaining an up-to-date problem list. 

The denominator for this objective is the number of unique patients seen by the EP or 

admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period. As this objective relies solely on a 

capability included as part of certified EHR technology and is not reliant on the electronic 

exchange of information, we propose to set the percentage required for successful 

demonstration at 80 percent. The reasoning for this is the same as under CPOE for EPs. 

Though full compliance (that is, 100 percent) is the ultimate goal, 80 percent seemed an 

appropriate standard for Stage 1 meaningful use as it creates a high standard, while still 

allowing room for technical hindrances and other barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Record demographics. 

EP/Eligible Hospital Measure: At least 80 percent of all unique patients seen by 

the EP or admitted to the eligible hospital have demographics recorded as 

structured data 

The capability to record demographics as structured data is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Meaningful use seeks to ensure that those capabilities are utilized. Therefore, 

we believe in order to meet this objective it is not sufficient to demonstrate this capability 
CMS-0033-P 78 

once, but rather to comply with the objective, an EP or eligible hospital must utilize this 

capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients seen by the EP 

or admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period who have all required demographic 

elements (preferred language, insurance type, gender, race, and ethnicity, date of birth 

and, for hospitals, date and cause of death in the case of mortality) recorded as structured 

data in their electronic record. A unique patient is discussed under the objective of 

maintaining an up-to-date problem list. The denominator for this objective is the number 

of unique patients seen by the EP or admitted to an inpatient facility/department (POS 21) 

that falls under the eligible hospital's CCN during the EHR reporting period. As this 

objective relies solely on a capability included as part of certified EHR technology and is 

not, for purposes of Stage 1 criteria, reliant on the electronic exchange of information, we 

propose to set the percentage required for successful demonstration at 80 percent. The 

reasoning for this is the same as under CPOE for EPs. 

EP/Eligible Hospital Objective: Record and chart changes in vital signs. 
CMS-0033-P 79 

EP/Eligible Hospital Measure: For at least 80 percent of all unique patients age 

2 and over seen by the EP or admitted to the eligible hospital, record blood 

pressure and BMI; additionally, plot growth chart for children age 2 to 20. 

The capability to record vital signs is included in the certification standards for certified 

EHR technology (to be defined by ONC in its upcoming interim final rule). Meaningful 

use seeks to ensure that those capabilities are utilized. Therefore, we believe in order to 

meet this objective it is not sufficient to demonstrate this capability once, but rather to 

comply with the objective, an EP or eligible hospital must utilize this capability as part of 

the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients age 2 and over 

seen by the EP or admitted to an inpatient facility/department (POS 21) that falls under 

the eligible hospital's CCN during the EHR reporting period who have a record of their 

blood pressure, and BMI (growth chart for children 2 - 20 )in their record. A unique 

patient is discussed under the objective of maintaining an up-to-date problem list. The 

denominator for this objective is the number of unique patients age 2 or over seen by the 

EP or admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period. As this objective relies solely on a 
CMS-0033-P 80 

capability included as part of certified EHR technology and is not, for purposes of Stage 

1 criteria, reliant on the electronic exchange of information, we propose to set the 

percentage required for successful demonstration at 80 percent. The reasoning for this is 

the same as under CPOE for EPs. Though full compliance (that is, 100 percent) is the 

ultimate goal, 80 percent seemed an appropriate standard for Stage 1 meaningful use as it 

creates a high standard, while still allowing room for technical hindrances and other 

barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Record smoking status for patients 13 years old 

or older 

EP/Eligible Hospital Measure: At least 80 percent of all unique patients 

13 years old or older seen by the EP or admitted to the eligible hospital have 

“smoking status” recorded 

The capability to record smoking status is included in the certification standards for 

certified EHR technology (to be defined by ONC in its upcoming interim final rule). 

Meaningful use seeks to ensure that those capabilities are utilized. Therefore, we believe 

in order to meet this objective it is not sufficient to demonstrate this capability once, but 

rather to comply with the objective, an EP or eligible hospital must utilize this capability 

as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 
CMS-0033-P 81 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients age 13 or older 

seen by the EP or admitted to an inpatient facility/department (POS 21) that falls under 

the eligible hospital's CCN during the EHR reporting period who have a record of their 

smoking status. A unique patient is discussed under the objective of maintaining an upto-date problem list. The denominator for this objective is the number of unique patients 

age 13 or older seen by the EP or admitted to an inpatient facility/department (POS 21) 

that falls under the eligible hospital's CCN during the EHR reporting period. As this 

objective relies solely on a capability included as part of certified EHR technology and is 

not, for purposes of Stage 1 criteria, reliant on the electronic exchange of information, we 

propose to set the percentage required for successful demonstration at 80 percent. The 

reasoning for this is the same as under CPOE by the EP. Though full compliance (that is, 

100 percent) is the ultimate goal, 80 percent seemed an appropriate standard for Stage 1 

meaningful use as it creates a high standard, while still allowing room for technical 

hindrances and other barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Incorporate clinical lab-test results into EHR as 

structured data. 

EP/Eligible Hospital Measure: At least 50 percent of all clinical lab tests results 

ordered by the EP or by an authorized provider of the eligible hospital during the 

EHR reporting period whose results are in either in a positive/negative or 

numerical format are incorporated in certified EHR technology as structured data. 
CMS-0033-P 82 

The capability to incorporate lab-test results is included in the certification standards for 

certified EHR technology (to be defined by ONC in its upcoming interim final rule). 

Meaningful use seeks to ensure that those capabilities are utilized. Therefore, we believe 

in order to meet this objective it is not sufficient to demonstrate this capability once, but 

rather to comply with the objective, an EP or eligible hospital must utilize this capability 

as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of lab tests ordered during the 

EHR reporting period by the EP or authorized providers of the eligible hospital for 

patients admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN whose results are expressed in a positive or negative affirmation or as a 

number and are incorporated as structured data into certified EHR technology. The 

denominator for this objective is the number of lab tests ordered during the EHR 

reporting period by the EP or authorized providers of the eligible hospital for patients 

admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN whose results are expressed in a positive or negative affirmation or as a 

number. This objective is reliant on the electronic exchange of information. We are 

cognizant that in most areas of the country, the infrastructure necessary to support such 
CMS-0033-P 83 

exchange is still being developed. Therefore, we believe that 80 percent is too high a 

threshold for the Stage 1 criteria of meaningful use. We propose 50 percent as the 

threshold based on our discussions with EHR vendors, current EHR users, and 

laboratories. We invite comment on whether this 50 percent is feasible for the Stage 1 

criteria of meaningful use. We anticipate raising the threshold for this objective in future 

stages of the criteria of meaningful use as the capabilities of HIT infrastructure increases. 

EP/Eligible Hospital Objective: Generate lists of patients by specific conditions 

to use for quality improvement, reduction of disparities, research, and outreach. 

EP/Eligible Hospital Measure: Generate at least one report listing patients of the 

EP or eligible hospital with a specific condition. 

The capability to generate lists of patients by specific conditions is included in the 

certification criteria for certified EHR technology (to be defined by ONC in its upcoming 

interim final rule). Meaningful use seeks to ensure that those capabilities are utilized. 

Therefore, we believe in order to meet this objective an EP or eligible hospital should 

utilize this capability at least once during the EHR reporting period so this information 

would be available to them for their use. An EP or eligible hospital is best positioned to 

determine which reports are most useful to their care efforts. Therefore, we do not 

propose to direct certain reports be created, but rather to require EPs and hospitals to 

attest to the ability of the EP or eligible hospital to do so and to attest that they have 

actually done so at least once. 

EP Objective: Report ambulatory quality measures to CMS or the States.

EP Measure: For 2011, an EP would provide the aggregate numerator and 

denominator through attestation as discussed in section II.A.3 of this proposed 
CMS-0033-P 84 

rule. For 2012, an EP would electronically submit the measures are discussed in 

section II.A.3. of this proposed rule. 

Eligible Hospital Objective: Report hospital quality measures to CMS or the 

States.

Eligible Hospital Measure: For 2011, an eligible hospital would provide the 

aggregate numerator and denominator through attestation as discussed in section 

II.A.3 of this proposed rule. For 2012, an eligible hospital would electronically 

submit the measures are discussed in section II.A.3. of this proposed rule. 

EP Objective: Send reminders to patients per patient preference for preventive/ 

follow-up care 

EP Measure: Reminder sent to at least 50 percent of all unique patients seen by 

the EP or admitted to the eligible hospital that are 50 and over 

The capability to generate reminders for preventive/follow-up care is included in the 

certification standards for certified EHR technology (to be defined by ONC in its 

upcoming interim final rule). Meaningful use seeks to ensure that those capabilities are 

utilized. Therefore, we believe in order to meet this objective it is not sufficient to 

demonstrate this capability once, but rather to comply with the objective an EP must 

utilize this capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 
CMS-0033-P 85 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients age 50 or over 

seen by the EP during the EHR reporting period who are provided reminders. A unique 

patient is discussed under the objective of maintaining an up-to-date problem list. We 

propose to limit the patient population for this measure to patients age 50 or over as they 

are more likely than the norm to require additional preventive or follow-up care. The 

denominator for this objective is the number of unique patients seen by the EP during the 

EHR reporting period. We propose to set the percentage required for successful 

demonstration at 50 percent. While the objective relies on a capability included as part of 

certified EHR technology there is still the added component of determining patient 

preference. Also while we believe we greatly increase the likelihood that additional 

preventive or follow up care will be required by limiting the patient population to age 50 

or over, there may still be instances where there is not an additional preventive or follow 

up care step needed. For these reasons, we propose the lower threshold of 50 percent. 

We specifically invite comments on whether limiting the patient population by age is the 

best approach. 

EP/Eligible Hospital Objective: Implement five clinical decision support rules 

relevant to specialty or high clinical priority, including for diagnostic test 

ordering, along with the ability to track compliance with those rules 

EP/Eligible Hospital Measure: Implement five clinical decision support rules 

relevant to the clinical quality metrics the EP/Eligible Hospital is responsible for 

as described further in section II.A.3. 
CMS-0033-P 86 

The capability to provide clinical decision support is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Clinical decision support at the point of care is a critical aspect of improving 

quality, safety, and efficiency. Research has shown that decision support must be 

targeted and actionable to be effective, and that “alert fatigue” must be avoided. 

 Establishing decision supports for a small set of high priority conditions, ideally linked 

to quality measures being reported, is feasible and desirable. Meaningful use seeks to 

ensure that those capabilities are utilized. Therefore, we believe in order to meet this 

objective an EP or eligible hospital should implement five clinical decision support rules 

relevant to the clinical quality metrics described in section II.A.3 before the end of the 

EHR reporting period and attest to that implementation. 

EP/Eligible Hospital Objective: Check insurance eligibility electronically from 

public and private payers 

EP/Eligible Hospital Measure: Insurance eligibility checked electronically for 

at least 80 percent of all unique patients seen by the EP or admitted to an eligible 

hospital 

The capability to check insurance eligibility electronically is included in the 

certification criteria for certified EHR technology (to be defined by ONC in its upcoming 

interim final rule). Meaningful use seeks to ensure that those capabilities are utilized. 

Therefore, we believe in order to meet this objective it is not sufficient to demonstrate 

this capability once, but rather to comply with the objective an EP or eligible hospital 

must utilize this capability as part of the daily work process. 
CMS-0033-P 87 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients seen by the EP 

or admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period whose insurance eligibility is checked 

electronically. A unique patient is discussed under the objective of maintaining an 

up-to-date problem list. The denominator for this objective is the number of unique 

patients seen by the EP or admitted to an inpatient facility/department (POS 21) that falls 

under the eligible hospital's CCN during the EHR reporting period whose insurer allows 

for the electronic verification of eligibility. While this objective does rely on the 

electronic exchange of information this particular exchange is an established HIPAA 

standard transaction, therefore we propose to set the percentage required for successful 

demonstration at 80 percent. The additional reasoning for this is the same as under 

CPOE for EPs. Though full compliance (that is, 100 percent) is the ultimate goal, 80 

percent seemed an appropriate standard for Stage 1 meaningful use as it creates a high 

standard, while still allowing room for technical hindrances and other barriers to reaching 

full compliance. 

EP/Eligible Hospital Objective: Submit claims electronically to public and 

private payers.
CMS-0033-P 88 

EP/Eligible Hospital Measure: At least 80 percent of all claims filed 

electronically by the EP or the eligible hospital. 

The capability to submit claims electronically to public and private payers is 

included in the certification criteria for certified EHR technology (to be defined by ONC 

in its upcoming interim final rule). Meaningful use seeks to ensure that those capabilities 

are utilized. Therefore, we believe in order to meet this objective it is not sufficient to 

demonstrate this capability once, but rather to comply with the objective, an EP or 

eligible hospital must utilize this capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of claims submitted electronically 

using certified EHR technology for patients seen by the EP or admitted to an inpatient 

facility/department (POS 21) that falls under the eligible hospital's CCN during the EHR 

reporting period. The denominator for this objective is the number of claims filed seen 

by the EP or admitted to an inpatient facility/department (POS 21) that falls under the 

eligible hospital's CCN during the EHR reporting period. While this objective relies on 

the electronic exchange of information, nearly all public and private payers accept 

electronic claims. Given the advance state of this aspect of electronic exchange of 

information, we propose to set the percentage required for successful demonstration at 80 
CMS-0033-P 89 

percent. The additional reasoning for this is the same as under CPOE for EPs. Though 

full compliance (that is, 100 percent) is the ultimate goal, 80 percent seemed an 

appropriate standard for Stage 1 meaningful use as it creates a high standard, while still 

allowing room for technical hindrances and other barriers to reaching full compliance. 

EP Objective: Provide patients with an electronic copy of their health 

information (including diagnostic test results, problem list, medication lists, and 

allergies) upon request

Eligible Hospital Objective: Provide patients with an electronic copy of their 

health information (including diagnostic test results, problem list, medication lists, 

allergies, discharge summary, and procedures), upon request.

EP/Eligible Hospital Measure: At least 80 percent of all patients who request 

an electronic copy of their health information are provided it within 48 hours.

The capability to create an electronic copy of a patient's health information is 

included in the certification criteria for certified EHR technology (to be defined by ONC 

in its upcoming interim final rule). Meaningful use seeks to ensure that those capabilities 

are utilized. Therefore, we believe in order to meet this objective it is not sufficient to 

demonstrate this capability once, but rather to comply with the objective, an EP or 

eligible hospital must utilize this capability as part of the daily work process. In addition, 

all patients have a right under ARRA to an electronic copy of their health information. 

This measure seeks to ensure that this requirement is met in a timely fashion. Providing 

patients with an electronic copy of their health information demonstrates one of the many 

benefits health information technology can provide and we believe that it is an important 

part of becoming a meaningful EHR user. We also believe that certified EHR technology 
CMS-0033-P 90 

will provide EPs and eligible hospitals more efficient means of providing copies of health 

information to patients which is why have proposed that a request for an electronic copy 

be provided to the patient within 48 hours. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of patients seen by the EP or 

admitted to an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN during the EHR reporting period that request an electronic copy of their 

health information and receive it within 48 hours. The denominator for this objective is 

the number of patients seen by the EP or admitted to an inpatient facility/department 

(POS 21) that falls under the eligible hospital's CCN who request an electronic copy of 

their health information during the EHR reporting period. As this objective relies solely 

on a capability included as part of certified EHR technology and is not, for purposes of 

Stage 1 criteria, reliant on the electronic exchange of structured information between 

health care providers, we propose to set the percentage required for successful 

demonstration at 80 percent. The reasoning for this is the same as under CPOE for EPs. 

Though full compliance (that is, 100 percent) is the ultimate goal, 80 percent seemed an 

appropriate standard for Stage 1 meaningful use as it creates a high standard, while still 

allowing room for technical hindrances and other barriers to reaching full compliance. 
CMS-0033-P 91 

Eligible Hospital Objective: Provide patients with an electronic copy of their 

discharge instructions and procedures at time of discharge, upon request.

Eligible Hospital Measure: At least 80 percent of all patients who are 

discharged from an eligible hospital and who request an electronic copy of their 

discharge instructions and procedures are provided it. 

The capability to produce an electronic copy of discharge instructions and 

procedures is included in the certification criteria for certified EHR technology (to be 

defined by ONC in its upcoming interim final rule). Meaningful use seeks to ensure that 

those capabilities are utilized. Therefore, we believe in order to meet this objective it is 

not sufficient to demonstrate this capability once, but rather to comply with the objective 

an eligible hospital must utilize this capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an objective. 

 The numerator for this objective is the number of patients discharged from an 

inpatient facility/department (POS 21) that falls under the eligible hospital's CCN during 

the EHR reporting period that request an electronic copy of their discharge instructions 

and procedures and receive it. The denominator for this objective is the number of 

patients discharged from an inpatient facility/department (POS 21) that falls under the 

eligible hospital's CCN who request an electronic copy of their discharge instructions and 

procedures during the EHR reporting period. As this objective relies solely on a 
CMS-0033-P 92 

capability included as part of certified EHR technology and is not, for purposes of Stage 

1 criteria, reliant on the electronic exchange between health care providers of structured 

information, we propose to set the percentage required for successful demonstration at 80 

percent. The reasoning for this is the same as under CPOE for EPs. Though full 

compliance (that is, 100 percent) is the ultimate goal, 80 percent seemed an appropriate 

standard for Stage 1 meaningful use as it creates a high standard, while still allowing 

room for technical hindrances and other barriers to reaching full compliance. 

EP Objective: Provide patients with timely electronic access to their health 

information (including lab results, problem list, medication lists, allergies)

EP Measure: At least 10 percent of all unique patients seen by the EP are 

provided timely electronic access to their health information 

The capability to provide timely electronic access to health information is 

included in the certification criteria for certified EHR technology (to be defined by ONC 

in its upcoming interim final rule). Meaningful use seeks to ensure that those capabilities 

are utilized. Therefore, we believe in order to meet this objective it is not sufficient to 

demonstrate this capability once, but rather to comply with the objective, an EP must 

utilize this capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 
CMS-0033-P 93 

 The numerator for this objective is the number of unique patients seen during the 

EHR reporting period who have timely, electronic access to their health information (for 

example, have established a user account and password on a patient portal). A unique 

patient is discussed under the objective of maintaining an up-to-date problem list. The 

denominator for this objective is the number of unique patients seen during the EHR 

reporting period. We recognize that many patients may not have internet access, may not 

be able or interested to use a patient portal. Health systems that have actively promoted 

such technologies have been able to achieve active use by over 30 percent of their 

patients, but this may not be realistic for many practices in the short term. 

EP Objective: Provide clinical summaries to patients for each office visit.

EP Measure: Clinical summaries provided to patients for at least 80 percent of 

all office visits. 

The capability to provide a clinical summary is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Meaningful use seeks to ensure that those capabilities are utilized. Therefore, 

we believe in order to meet this objective it is not sufficient to demonstrate this capability 

once, but rather to comply with the objective, an EP must utilize this capability as part of 

the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 
CMS-0033-P 94 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of unique patients seen in the 

office during the EHR reporting period who are provided a clinical summary of their 

visit. A unique patient is discussed under the objective of maintaining an up-to-date 

problem list. The clinical summary can be provided through a PHR, patient portal on the 

web site, secure email, electronic media such as CD or USB fob, or printed copy. The 

after-visit clinical summary contains an updated medication list, laboratory and other 

diagnostic test orders, procedures and other instructions based on clinical discussions that 

took place during the office visit. The denominator for this objective is the number of 

unique patients seen in the office during the EHR reporting period. As this objective 

relies solely on a capability included as part of certified EHR technology and is not, for 

purposes of Stage 1 criteria, reliant on the electronic exchange of structured information, 

we propose to set the percentage required for successful demonstration at 80 percent. 

The reasoning for this is the same as under CPOE for EPs. Though full compliance (that 

is, 100 percent) is the ultimate goal, 80 percent seemed an appropriate standard for Stage 

1 meaningful use as it creates a high standard, while still allowing room for technical 

hindrances and other barriers to reaching full compliance. 

EP Objective: Capability to exchange key clinical information (for example, 

problem list, medication list, allergies, and diagnostic test results), among 

providers of care and patient authorized entities electronically. 

Eligible Hospital Objective: Capability to exchange key clinical information 

(for example, discharge summary, procedures, problem list, medication list, 
CMS-0033-P 95 

allergies, diagnostic test results), among providers of care and patient authorized 

entities electronically. 

EP/Eligible Hospital Measure: Performed at least one test of certified EHR 

technology's capacity to electronically exchange key clinical information. 

The capability to send key clinical information electronically is included in the 

certification criteria for certified EHR technology (to be defined by ONC in its upcoming 

interim final rule). Meaningful use seeks to ensure that those capabilities are utilized. 

However, this objective is reliant on the electronic exchange of information. We are 

cognizant that in most areas of the country, the infrastructure necessary to support such 

exchange is still being developed. Therefore, for the Stage 1 criteria of meaningful use 

we propose that EPs and eligible hospitals test their ability to send such information at 

least once prior to the end of the EHR reporting period. The testing could occur prior to 

the beginning of the EHR reporting period. If multiple EPs are using the same certified 

EHR technology in a shared physical setting, the testing would only have to occur once 

for a given certified EHR technology, as we do not see any value to running the same test 

multiple times just because multiple EPs use the same certified EHR technology. To be 

considered an “exchange” in this section alone the clinical information must be sent 

between different clinical entities with distinct certified EHR technology and not between 

organizations that share a certified EHR. 

EP/Eligible Hospital Objective: Perform medication reconciliation at relevant 

encounters and each transition of care. 

EP/Eligible Hospital Measure: Perform medication reconciliation for at least 80 

percent of relevant encounters and transitions of care. 
CMS-0033-P 96 

The capability to perform medication reconciliation is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Meaningful use seeks to ensure that those capabilities are utilized. Therefore, 

we believe in order to meet this objective it is not sufficient to demonstrate this capability 

once, but rather to comply with the objective, an EP or eligible hospital must utilize this 

capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an 

objective. 

 The numerator for this objective is the number of relevant encounters and 

transitions of care for which the EP or an inpatient facility/department (POS 21) that falls 

under the eligible hospital's CCN was a participant during the EHR reporting period 

where medication reconciliation was performed. Relevant encounter and transition of 

care are defined in the previous discussion of this objective in this proposed rule. The 

denominator for this objective is the number of relevant encounters and transitions of 

care for which the EP or an inpatient facility/department (POS 21) that falls under the 

eligible hospital's CCN was a participant during the EHR reporting period. As this 

objective relies solely on a capability included as part of certified EHR technology and is 

not, for the purposes of Stage 1 criteria, reliant on the electronic exchange of information, 

we propose to set the percentage required for successful demonstration at 80 percent. 
CMS-0033-P 97 

The reasoning for this is the same as under CPOE for EPs. Though full compliance (that 

is, 100 percent) is the ultimate goal, 80 percent seemed an appropriate standard for Stage 

1 meaningful use as it creates a high standard, while still allowing room for technical 

hindrances and other barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Provide summary care record for each 

transition of care and referral.

EP/Eligible Hospital Measure: Provide summary of care record for at least 80 

percent of transitions of care and referrals. 

The capability to provide a summary of care record is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Meaningful use seeks to ensure that those capabilities are utilized. Therefore, 

we believe in order to meet this objective it is not sufficient to demonstrate this capability 

once, but rather to comply with the objective an EP or eligible hospital must utilize this 

capability as part of the daily work process. 

As discussed under CPOE, we will use a percentage. To calculate the percentage, 

CMS and ONC have worked together to define the following for this objective: 

• The numerator. 

• The denominator. 

• The required percentage for demonstrating successful attainment of an objective. 

 The numerator for this objective is the number of transitions of care and referrals 

for which the EP or an inpatient facility/department (POS 21) that falls under the eligible 

hospital's CCN was the transferring or referring provider during the EHR reporting 

period where a summary of care record was provided. Summary of care record and 
CMS-0033-P 98 

transitions of care are defined in the discussion of this objective in this proposed rule. 

The summary of care record can be provided through an electronic exchange, accessed 

through a secure portal, secure email, electronic media such as CD or USB fob, or printed 

copy. The denominator for this objective is the number of transitions of care for which 

the EP or an inpatient facility/department (POS 21) that falls under the eligible hospital's 

CCN was a the transferring or referring provider during the EHR reporting period. As 

this objective can be completed with or without the use of electronic exchange of 

information, we propose to set the percentage required for successful demonstration at 80 

percent. The reasoning for this is the same as under CPOE for EPs. Though full 

compliance (that is, 100 percent) is the ultimate goal, 80 percent seemed an appropriate 

standard for Stage 1 meaningful use as it creates a high standard, while still allowing 

room for technical hindrances and other barriers to reaching full compliance. 

EP/Eligible Hospital Objective: Capability to submit electronic data to 

immunization registries and actual submission where required and accepted. 

EP/Eligible Hospital Measure: Performed at least one test of certified EHR 

technology's capacity to submit electronic data to immunization registries. 

The capability to send electronic data to immunization registries is included in the 

certification standards for certified EHR technology (to be defined by ONC in its 

upcoming interim final rule). Meaningful use seeks to ensure that those capabilities are 

utilized. However, this objective is reliant on the electronic exchange of information. 

We are cognizant that in many areas of the country, the infrastructure necessary to 

support such exchange is still being developed. Therefore, for the Stage 1 criteria of 

meaningful use we are propose that EPs and eligible hospitals test their ability to send 
CMS-0033-P 99 

such information at least once prior to the end of the EHR reporting period. The testing 

could occur prior to the beginning of the EHR reporting period. EPs in a group setting 

using identical certified EHR technology would only need to conduct a single test, not 

one test per EP. More stringent requirements may be established for EPs and hospitals 

under the Medicaid program in states where this capability exists. This is just one 

example of a possible State proposed modification to meaningful use in the Medicaid 

EHR incentive program. States may propose any modification or addition to CMS in 

accordance with the discussion in II.A.2.c. of this proposed rule. 

Eligible Hospital Objective: Capability to provide electronic submission of 

reportable lab results to public health agencies and actual submission where it can 

be received. 

Eligible Hospital Measure: Performed at least one test of certified EHR 

technology capacity to provide electronic submission of reportable lab results to 

public health agencies (unless none of the public health agencies to which eligible 

hospital submits such information have the capacity to receive the information 

electronically).

The capability to send reportable lab results is included in the certification 

standards for certified EHR technology (to be defined by ONC in its upcoming interim 

final rule). Meaningful use seeks to ensure that those capabilities are utilized. However, 

this objective is reliant on the electronic exchange of information. We are cognizant that 

in most areas of the country, the infrastructure necessary to support such exchange is still 

being developed. Therefore, for the Stage 1 criteria of meaningful use we are propose 

that eligible hospitals test their ability to send such information at least once prior to the 
CMS-0033-P 100 

end of the EHR reporting period. The testing could occur prior to the beginning of the 

EHR reporting period. More stringent requirements may be established for hospitals 

under the Medicaid program in States where this capability exists. This is just one 

example of a possible State proposed modification to meaningful use in the Medicaid 

EHR incentive program. States may propose any modification or addition to CMS in 

accordance with the discussion in II.A.2.c. of this proposed rule. 

EP/Eligible Hospital Objective: Capability to provide electronic syndromic 

surveillance data to public health agencies and actual transmission according to 

applicable law and practice. 

EP/Eligible Hospital Measure: Performed at least one test of certified EHR 

technology's capacity to provide electronic syndromic surveillance data to public 

health agencies (unless none of the public health agencies to which an EP or 

eligible hospital submits such information have the capacity to receive the 

information electronically). 

The capability to send electronic data to immunization registries is included in the 

certification standards for certified EHR technology (to be defined by ONC in its 

upcoming interim final rule). Meaningful use seeks to ensure that those capabilities are 

utilized. However, this objective is reliant on the electronic exchange of information. 

We are cognizant that in most areas of the country, the infrastructure necessary to support 

such exchange is still being developed. Therefore, for the Stage 1 criteria of meaningful 

use we are proposing that EPs and eligible hospitals test their ability to send such 

information at least once prior to the end of the EHR reporting period. The testing could 

occur prior to the beginning of the EHR reporting period. EPs in a group setting using 
CMS-0033-P 101 

identical certified EHR technology would only need to conduct a single test, not one test 

per EP. More stringent requirements may be established for EPs and hospitals under the 

Medicaid program in States where this capability exists. This is just one example of a 

possible State proposed modification to meaningful use in the Medicaid EHR incentive 

program. States may propose any modification or addition to CMS in accordance with 

the discussion in II.A.2.c. of this proposed rule. 

EP/Eligible Hospital Objective: Protect electronic health information 

maintained using certified EHR technology through the implementation of 

appropriate technical capabilities. 

EP/Eligible Hospital Measure: Conduct or review a security risk analysis in 

accordance with the requirements under 45 CFR 164.308 (a)(1) and implement 

security updates as necessary. 

The capability to protect electronic health information maintained using certified 

EHR technology is included in the certification standards for certified EHR technology 

(to be defined by ONC in its upcoming interim final rule). Meaningful use seeks to 

ensure that those capabilities are utilized. While certified EHR technology provides tools 

for protecting health information, it is not a full protection solution. Processes and 

possibly tools outside the scope of certified EHR technology are required. Therefore, for 

the Stage 1 criteria of meaningful use we propose that EPs and eligible hospitals conduct 

or review a security risk analysis of certified EHR technology and implement updates as 

necessary at least once prior to the end of the EHR reporting period and attest to that 

conduct or review. The testing could occur prior to the beginning of the EHR reporting 
CMS-0033-P 102 

period. This is to ensure that the certified EHR technology is playing its role in the 

overall strategy of the EP or eligible hospital in protecting health information. 
CMS-0033-P 103 

TABLE 2: Stage 1 Criteria for Meaningful Use 

Stage 1 Objectives 

Health Outcomes 

Policy Priority Care Goals 

Eligible 

Professionals Hospitals Stage 1 Measures 

Use CPOE Use of CPOE for orders 

(any type) directly 

entered by authorizing 

provider (for example, 

MD, DO, RN, PA, NP) 

For EPs, CPOE is 

used for at least 80% 

of all orders 

For eligible hospitals, 

CPOE is used for 

10% of all orders 

Implement drug-drug, 

drug-allergy, drugformulary checks 

Implement drug-drug, 

drug-allergy, drugformulary checks 

The EP/eligible 

hospital has enabled 

this functionality 

Maintain an up-todate problem list of 

current and active 

diagnoses based on 

ICD-9-CM or 

SNOMED CT ® 

Maintain an up-to-date 

problem list of current 

and active diagnoses 

based on ICD-9-CM or 

SNOMED CT ® 

At least 80% of all 

unique patients seen 

by the EP or 

admitted to the 

eligible hospital have 

at least one entry or 

an indication of none 

recorded as 

structured data 

Generate and transmit 

permissible 

prescriptions 

electronically (eRx)

At least 75% of all 

permissible 

prescriptions written 

by the EP are 

transmitted 

electronically using 

certified EHR 

technology 

Maintain active 

medication list

Maintain active 

medication list

At least 80% of all 

unique patients seen 

by the EP or 

admitted to the 

eligible hospital have 

at least one entry (or 

an indication of 

“none” if the patient 

is not currently 

prescribed any 

medication) recorded 

as structured data 

Improving quality, 

safety, efficiency, 

and reducing health 

disparities 

Provide access to 

comprehensive 

patient health data 

for patient's health 

care team 

Use evidence-based 

order sets and 

CPOE 

Apply clinical 

decision support at 

the point of care 

Generate lists of 

patients who need 

care and use them 

to reach out to 

patients 

Report information 

for quality 

improvement and 

public reporting 

Maintain active 

medication allergy list

Maintain active 

medication allergy list

At least 80% of all 

unique patients seen, 

by the EP or 

admitted to the 

eligible hospital have 

at least one entry or 

(an indication of 

“none” if the patient 

has no medication 

allergies) recorded as 

structured data 
CMS-0033-P 104 

Stage 1 Objectives 

Health Outcomes 

Policy Priority Care Goals 

Eligible 

Professionals Hospitals Stage 1 Measures 

Record demographics 

o preferred language 

o insurance type 

o gender 

o race 

o ethnicity 

o date of birth 

Record demographics 

o preferred language 

o insurance type 

o gender 

o race 

o ethnicity 

o date of birth 

o date and cause of 

death in the event of 

mortality 

At least 80% of all 

unique patients seen 

by the EP or 

admitted to the 

eligible hospital have 

demographics 

recorded as 

structured data 

Record and chart 

changes in vital signs: 

o height 

o weight 

o blood pressure 

o Calculate and 

display: BMI 

o Plot and display 

growth charts for 

children 2-20 years, 

including BMI. 

Record and chart 

changes in vital signs: 

o height 

o weight 

o blood pressure 

o Calculate and 

display: BMI 

o Plot and display 

growth charts for 

children 2-20 years, 

including BMI. 

For at least 80% of 

all unique patients 

age 2 and over seen 

by the EP or 

admitted to eligible 

hospital, record 

blood pressure and 

BMI; additionally 

plot growth chart for 

children age 2-20 

Record smoking 

status for patients 13 

years old or older

Record smoking status 

for patients 13 years old 

or older

At least 80% of all 

unique patients 13 

years old or older 

seen by the EP or 

admitted to the 

eligible hospital have 

“smoking status” 

recorded 

Incorporate clinical 

lab-test results into 

EHR as structured 

data

Incorporate clinical labtest results into EHR as 

structured data

At least 50% of all 

clinical lab tests 

ordered whose 

results are in a 

positive/negative or 

numerical format are 

incorporated in 

certified EHR 

technology as 

structured data 

Generate lists of 

patients by specific 

conditions to use for 

quality improvement, 

reduction of 

disparities, and 

outreach

Generate lists of patients 

by specific conditions to 

use for quality 

improvement, reduction 

of disparities, and 

outreach

Generate at least one 

report listing patients 

of the EP or eligible 

hospital with a 

specific condition. 
CMS-0033-P 105 

Stage 1 Objectives 

Health Outcomes 

Policy Priority Care Goals 

Eligible 

Professionals Hospitals Stage 1 Measures 

Report ambulatory 

quality measures to 

CMS or the States

Report hospital quality 

measures to CMS or the 

States

For 2011, provide 

aggregate numerator 

and denominator 

through attestation as 

discussed in section 

II(A)(3) of this 

proposed rule 

For 2012, 

electronically submit 

the measures as 

discussed in section 

II(A)(3) of this 

proposed rule 

Send reminders to 

patients per patient 

preference for 

preventive/ follow up 

care

Reminder sent to at 

least 50% of all 

unique patients seen 

by the EP that are 

age 50 or over 

Implement 5 clinical 

decision support rules 

relevant to specialty 

or high clinical 

priority, including 

diagnostic test 

ordering, along with 

the ability to track 

compliance with those 

rules 

Implement 5 clinical 

decision support rules 

related to a high priority 

hospital condition, 

including diagnostic test 

ordering, along with the 

ability to track 

compliance with those 

rules

Implement 5 clinical 

decision support 

rules relevant to the 

clinical quality 

metrics the 

EP/Eligible Hospital 

is responsible for as 

described further in 

section II(A)(3). 

 Check insurance 

eligibility 

electronically from 

public and private 

payers 

Check insurance 

eligibility electronically 

from public and private 

payers

Insurance eligibility 

checked 

electronically for at 

least 80% of all 

unique patients seen 

by the EP or 

admitted to the 

eligible hospital 

 Submit claims 

electronically to 

public and private 

payers. 

Submit claims 

electronically to public 

and private payers.

At least 80% of all 

claims filed 

electronically by the 

EP or the eligible 

hospital 

Engage patients 

and families in their 

health care

Provide patients 

and families with 

timely access to 

data, knowledge, 

and tools to make 

informed decisions 

and to manage their 

health 

Provide patients with 

an electronic copy of 

their health 

information 

(including diagnostic 

test results, problem 

list, medication lists, 

allergies), upon 

request

Provide patients with an 

electronic copy of their 

health information 

(including diagnostic 

test results, problem list, 

medication lists, 

allergies, discharge 

summary, procedures), 

upon request

At least 80% of all 

patients who request 

an electronic copy of 

their health 

information are 

provided it within 48 

hours 
CMS-0033-P 106 

Stage 1 Objectives 

Health Outcomes 

Policy Priority Care Goals 

Eligible 

Professionals Hospitals Stage 1 Measures 

 Provide patients with an 

electronic copy of their 

discharge instructions 

and procedures at time 

of discharge, upon 

request 

At least 80% of all 

patients who are 

discharged from an 

eligible hospital and 

who request an 

electronic copy of 

their discharge 

instructions and 

procedures are 

provided it 

Provide patients with 

timely electronic 

access to their health 

information 

(including lab results, 

problem list, 

medication lists, 

allergies) within 96 

hours of the 

information being 

available to the EP 

 At least 10% of all 

unique patients seen 

by the EP are 

provided timely 

electronic access to 

their health 

information

 Provide clinical 

summaries for 

patients for each 

office visit 

 Clinical summaries 

are provided for at 

least 80% of all 

office visits 

Capability to 

exchange key clinical 

information (for 

example, problem list, 

medication list, 

allergies, diagnostic 

test results), among 

providers of care and 

patient authorized 

entities electronically 

Capability to exchange 

key clinical information 

(for example, discharge 

summary, procedures, 

problem list, medication 

list, allergies, diagnostic 

test results), among 

providers of care and 

patient authorized 

entities electronically 

Performed at least 

one test of certified 

EHR technology's 

capacity to 

electronically 

exchange key clinical 

information 

Perform medication 

reconciliation at 

relevant encounters 

and each transition of 

care 

Perform medication 

reconciliation at relevant 

encounters and each 

transition of care

Perform medication 

reconciliation for at 

least 80% of relevant 

encounters and 

transitions of care 

Improve care 

coordination 

Exchange 

meaningful clinical 

information among 

professional health 

care team 

Provide summary care 

record for each 

transition of care and 

referral 

Provide summary care 

record for each transition 

of care and referral 

Provide summary of 

care record for at 

least 80% of 

transitions of care 

and referrals 
CMS-0033-P 107 

Stage 1 Objectives 

Health Outcomes 

Policy Priority Care Goals 

Eligible 

Professionals Hospitals Stage 1 Measures 

Capability to submit 

electronic data to 

immunization 

registries and actual 

submission where 

required and accepted 

Capability to submit 

electronic data to 

immunization registries 

and actual submission 

where required and 

accepted

Performed at least 

one test of certified 

EHR technology's 

capacity to submit 

electronic data to 

immunization 

registries 

 Capability to provide 

electronic submission of 

reportable lab results (as 

required by state or local 

law) to public health 

agencies and actual 

submission where it can 

be received 

Performed at least 

one test of the EHR 

system's capacity to 

provide electronic 

submission of 

reportable lab results 

to public health 

agencies (unless 

none of the public 

health agencies to 

which eligible 

hospital submits such 

information have the 

capacity to receive 

the information 

electronically) 

Improve population 

and public health 

Communicate with 

public health 

agencies 

Capability to provide 

electronic syndromic 

surveillance data to 

public health agencies 

and actual 

transmission 

according to 

applicable law and 

practice 

Capability to provide 

electronic syndromic 

surveillance data to 

public health agencies 

and actual transmission 

according to applicable 

law and practice 

Performed at least 

one test of certified 

EHR technology's 

capacity to provide 

electronic syndromic 

surveillance data to 

public health 

agencies (unless 

none of the public 

health agencies to 

which an EP or 

eligible hospital 

submits such 

information have the 

capacity to receive 

the information 

electronically) 
CMS-0033-P 108 

Stage 1 Objectives 

Health Outcomes 

Policy Priority Care Goals 

Eligible 

Professionals Hospitals Stage 1 Measures 

Ensure adequate 

privacy and 

security protections 

for personal health 

information 

Ensure privacy and 

security protections 

for confidential 

information through 

operating policies, 

procedures, and 

technologies and 

compliance with 

applicable law. 

Provide 

transparency of 

data sharing to 

patient. 

Protect electronic 

health information 

created or maintained 

by the certified EHR 

technology through 

the implementation of 

appropriate technical 

capabilities 

Protect electronic health 

information created or 

maintained by the 

certified EHR 

technology through the 

implementation of 

appropriate technical 

capabilities 

Conduct or review a 

security risk analysis 

per 45 CFR 164.308 

(a)(1) and implement 

security updates as 

necessary 

e. Request for Public Comment on Potential Health IT Functionality Measures for 

Eligible Professionals and Eligible Hospitals in 2013 Payment Year and Subsequent 

Years 

As noted previously, we are cognizant that in most areas of the country, the 

infrastructure necessary to support such the electronic exchange of structured information 

is not yet currently available. For that reason, we excluded the electronic exchange of 

structured information from many Stage 1 objectives or set relatively low performance 

thresholds for measures that do rely on the electronic exchange of structured data. For 

example, we set the threshold at 50 percent for the incorporation of lab data in structured 

format, and we excluded other types of diagnostic test data (for example, radiology 

reports, pathology reports, etc.) from that measure. We also excluded the transmission of 

orders from the definition of “CPOE use” for Stage 1 criteria. 

In future rulemaking (for example, for Stage 2 and Stage 3 criteria), however, we 

anticipate raising the threshold for these objectives as the capabilities of HIT 
CMS-0033-P 109 

infrastructure increases. We also anticipate redefining our objectives to include not only 

the capturing of data in electronic format but also the exchange (both transmission and 

receipt) of that data in increasingly structured formats. The intent and policy goal with 

raising these thresholds and expectations is to ensure that meaningful use encourages 

patient-centric, interoperable health information exchange across provider organizations 

regardless of provider's business affiliation or EHR platform. 

 We specifically intend to build up the following health IT functionality measures 

for Stage 2 meaningful use criteria: • “CPOE use” will include not only the percentage 

of orders entered directly by providers through CPOEs but also the electronic 

transmission of those orders; 

• “Incorporate clinical lab-test results into EHR as structured data” will be 

expanded to include the full array of diagnostic test data used for the treatment and 

diagnosis of disease, where feasible, including blood tests, microbiology, urinalysis, 

pathology tests, radiology, cardiac imaging, nuclear medicine tests, and pulmonary 

function tests; 

• Measures that currently allow the provision and exchange of unstructured data (for 

example, the provision of clinical care summaries on paper) will require the provision 

and exchange of electronic and structured data, where feasible; 

• Measures that currently require the performance of a capability test (for example, 

capability to provide electronic syndromic surveillance data to public health agencies) 

will be revised to require the actual submission of that data; 
CMS-0033-P 110 

We invite comment on our intent to propose the above measure for Stage 2 in future 

rulemaking and also invite comment on any other health IT functionality measures not 

included in this list. 

3. Sections 4101(a) and 4102(a)(1) of HITECH Act: Reporting on Clinical Quality 

Measures Using EHRs by EPs and Eligible Hospitals 

a. General 

As discussed in the meaningful use background section, there are three elements 

of meaningful use. In this section, we discuss the third requirement using its certified 

EHR technology, the EP or eligible hospital submits to the Secretary, in a form and 

manner specified by the Secretary, information for the EHR reporting period on clinical 

quality measures and other measures specified by the Secretary. The submission of other 

measures is discussed in section II.A.2.d.2 of this proposed rule and the other two 

requirements are discussed in section II.A.2.d.1 of this proposed rule. 

b. Requirements for the Submission of Clinical Quality Measures by EPs and Eligible 

Hospitals 

Sections 1848(o)(2)(B)(ii) and 1886(n)(3)(B)(ii) of the Act provide that the 

Secretary may not require the electronic reporting of information on clinical quality 

measures unless the Secretary has the capacity to accept the information electronically, 

which may be on a pilot basis. 

We do not anticipate that HHS will complete the necessary steps for us to have 

the capacity to electronically accept data on clinical quality measures from EHRs for the 

2011 payment year. It is unlikely that by 2011 there will be adequate testing and 

demonstration of the ability to receive the required transmitted information on a 
CMS-0033-P 111 

widespread basis. The capacity to accept information on clinical quality measures also 

depends upon the Secretary promulgating technical specifications for EHR vendors with 

respect to the transmission of information on clinical quality measures sufficiently in 

advance of the EHR reporting period for 2011, so that adequate time has been provided 

either for such specifications to be certified, or for EHR vendors to code such 

specifications into certified systems. Therefore, for 2011, we propose that EPs and 

eligible hospitals use an attestation methodology to submit summary information to CMS 

on clinical quality measures as a condition of demonstrating meaningful use of certified 

EHR technology. 

From the Medicaid perspective, delaying the onset of clinical quality measures 

reporting until 2012 addresses concerns about States having the ready infrastructure to 

receive and store clinical quality measures data before then. More importantly, we 

recognize that since Medicaid providers are eligible to receive incentive payments for 

adopting, implementing, or upgrading certified EHR technology. Medicaid EPs may not 

be focused on demonstrating meaningful use until 2012 or later. 

We anticipate that for the 2012 payment year we will have completed the 

necessary steps to have the capacity to receive electronically information on clinical 

quality measures from EHRs including the promulgation of technical specifications for 

EHR vendors to use for obtaining certification of their systems. Therefore, for the 

Medicare EHR incentive program, we propose that beginning in CY 2012 an EP using a 

certified EHR technology or beginning in FY 2012 an eligible hospital using a certified 

EHR technology, as appropriate for clinical quality measures, must submit information 

on clinical quality measures electronically in addition to submitting other measures 
CMS-0033-P 112 

described in section II.2.d.2 of this proposed rule in order for the EP or eligible hospital 

to be a meaningful EHR user, regardless of whether CY 2012 is their first or second 

payment year. However, if the Secretary does not have the capacity to accept the 

information on clinical quality measures electronically in 2012, consistent with sections 

1848(o)(2)(B)(ii) and 1886(n)(3)(B)(ii) of the Act, we will continue to rely on an 

attestation methodology for reporting of clinical quality measures as a requirement for 

demonstrating meaningful use of certified EHR technology for payment year 2012. 

Should we not have the capacity to accept information on clinical quality measures 

electronically in 2012, we will inform the public of this fact by publishing a notice in the 

Federal Register and providing instructions on how this information should be 

submitted to us. 

 For purposes of the requirements under sections 1848(o)(2)(A)(iii) and 1886 

(n)(3)(iii) of the Act, we define “clinical quality measures” to consist of measures of 

processes, experience, and/or outcomes of patient care, observations or treatment that 

relate to one or more quality aims for health care such as effective, safe, efficient, 

patient-centered, equitable, and timely care. We note that certain statutory limitations 

apply only to the reporting of clinical quality measures, such as the requirement discussed 

in the previous paragraph prohibiting the Secretary from requiring the electronic 

reporting of information on clinical quality measures unless the Secretary has the 

capacity to accept the information electronically, as well as other statutory requirements 

for clinical quality measures that are discussed below in section II.A.3.c.1 of this 

proposed rule. These limitations apply solely to the submission of clinical quality 

measures, and do not apply to other measures of meaningful EHR use. The proposed 
CMS-0033-P 113 

clinical quality measures on which EPs or eligible hospitals will be required to submit 

information using certified EHR technology, the statutory requirements and other 

considerations that were used to select these proposed measures, and the proposed 

reporting requirements are described below. 

 With respect to Medicaid EPs and eligible hospitals, we note that section 

1903(t)(6) of the Act recognizes that the demonstration of meaningful use may also 

include the reporting of clinical quality measures to the States. In the interest of 

simplifying the program and guarding against duplication of meaningful use criteria, we 

propose that the clinical quality measures adopted for the Medicare EHR incentive 

program, listed in Tables 3 and 20, will also apply to EPs and eligible hospitals in the 

Medicaid EHR incentive program. However, we are including alternative 

Medicaid-specific measures for use by eligible hospitals as shown in Table 21. 

Despite the statutory limitation prohibiting the Secretary from requiring the 

electronic submission of clinical quality measures if HHS does not have the capacity to 

accept this information electronically, as previously discussed, the Secretary has broad 

discretion to establish requirements for meaningful use of certified EHR technology and 

for the demonstration of such use by EPs and eligible hospitals. Although we propose to 

first require the electronic submission of information on clinical quality measures in 

2012, we do not desire this to delay the use of certified EHR technology by EPs and 

eligible hospitals to measure and improve clinical quality. Specifically, we believe that 

the use of those functionalities that support measurement of clinical quality is highly 

important to an overall goal of the HITECH Act, to improve health care quality. We 
CMS-0033-P 114 

believe that measurement and acting on the results of such measurement is an important 

aspect to improving quality. 

Accordingly, although we are not proposing under sections 1848(o)(2)(A)(iii) and 

1886(n)(3)(A)(iii) of the Act to require that for 2011 EPs and eligible hospitals report 

clinical quality measures to CMS or States electronically, we propose to require as an 

additional condition of demonstrating meaningful use of certified EHR technology under 

sections 1848(o)(2)(A)(i) and 1886(n)(3)(A)(ii) of the Act that EPs and eligible hospitals 

use certified EHR technology to capture the data elements and calculate the results for the 

applicable clinical quality measures discussed below. We further propose that EPs and 

eligible hospitals demonstrate that they have satisfied this requirement during the EHR 

reporting period for 2011 through attestation. We further propose to require that 

Medicare EPs and eligible hospital attest to the accuracy and completeness of the 

numerators and denominators for each of the applicable measure. Finally, in accordance 

with our authority under sections 1848(o)(C)(i)(V) and 1886(n)(3)(C)(i)(V) of the Act, 

which grants us broad discretion to specify the means through which EPs and eligible 

hospitals demonstrate compliance with the meaningful use criteria, we propose that EPs 

and eligible hospitals demonstrate their use of certified EHR technology to capture the 

data elements and calculate the results for the applicable clinical quality measures by 

reporting the results to CMS for all applicable patients. For the Medicaid incentive 

program, States may accept provider attestations in the same manner to demonstrate 

meaningful use in 2011. However, we expect that Medicaid providers will qualify for the 

incentive payment by adopting, implementing, or upgrading to certified EHR technology, 

and therefore; will not need to attest to meaningful use of EHRs in 2011, for their first 

payment year.
CMS-0033-P 115 

We recognize that considerable work needs to be done by measure owners and 

developers with respect to the clinical quality measures included in this proposed rule. 

This includes completing electronic specifications for measures, implementing such 

specifications into EHR technology to capture and calculate the results, and 

implementing the systems, themselves. We also recognize that some measures are 

further developed than others, as discussed in the proposed measures section. 

Nevertheless, we believe that overall there is sufficient time to complete work on 

measures and measures specifications to allow vendors, and EPs and eligible hospitals to 

implement such systems. Should the necessary work on measure specification not be 

completed for particular measures according to the timetable we discuss below, it is our 

intent not to finalize those specific measures. 

c. Statutory Requirements and Other Considerations for the Proposed Selection of 

Clinical Quality Measures Proposed for Electronic Submission by EPs or Eligible 

Hospitals 

(1) Statutory Requirements for the Selection of Clinical Quality Measures Proposed for 

Electronic Submission by EPs and Eligible Hospitals 

Sections 1848(o)(2)(B)(i)(II) and 1886(n)(3)(B)(i) of the Act also require that 

prior to any clinical quality measure being selected, the Secretary will publish in the 

Federal Register such measure and provide for a period of public comment on such 

measure. The proposed clinical quality measures for EPs and eligible hospitals for 2011 

and 2012 payment are listed in Tables 3 through 21. 

For purposes of selecting clinical quality measures on which EPs will be required 

to submit information using certified EHR technology, section 1848(o)(2)(B)(i)(I) of the 
CMS-0033-P 116 

Act, as added by section 4101 of the HITECH Act, states that the Secretary shall provide 

preference to clinical quality measures that have been endorsed by the entity with a 

contract with the Secretary under section1890(a) of the Act, as added by section 183 of 

the Medicare Improvement for Patients and Providers Act (MIPPA) of 2008. For 

submission of clinical quality measures by eligible hospitals, section 1886(n)(3)(B)(i)(I) 

of the Act, as added by section 4102(a) of the HITECH Act, requires the Secretary to 

provide preference to those clinical quality measures that have been endorsed by the 

entity with a contract with the Secretary under subsection 1890(a) of the Act, as added by 

section 183 of the MIPPA, or clinical quality measures that have been selected for the 

purpose of applying section 1886(b)(3)(B)(viii) of the Act (that is, measures that have 

been selected for the Reporting Hospital Quality Data for Annual Payment Update 

(RHQDAPU) program. 

On January 14, 2009, the U.S. Department of Health and Human Services 

awarded the contract required under section 1890(a) of the Act to the National Quality 

Forum (NQF). Therefore, when selecting the clinical quality measures EPs must report 

in order to demonstrate meaningful use of certified EHR technology in accordance with 

section 1848(o)(2)(B)(i)(I) of the Act, we propose to give preference to the clinical 

quality measures endorsed by the NQF, including NQF endorsed measures that have 

previously been selected for the Physician Quality Reporting Initiative (PQRI) program. 

Similarly when selecting the clinical quality measures eligible hospitals must report in 

order to demonstrate meaningful use of certified EHR technology in accordance with 

section 1886(n)(3)(B)(i)(I) of the Act, we propose to give preference to the clinical 

quality measures selected from those endorsed by the NQF or that have previously been 
CMS-0033-P 117 

selected for the RHQDAPU program. In some instances we have proposed measures for 

EPs and eligible hospitals that are not currently NQF endorsed in an effort to include a 

broader set of clinical quality measures. However, the HITECH Act does not require the 

use of NQF endorsed measures, nor limit the measures to those included in PQRI or 

RHQDAPU. If we, professional societies, or other stakeholders identify clinical quality 

measures which may be appropriate for the EHR incentive programs, we will consider 

those measures even if they are not endorsed by the NQF or have not been selected for 

the PQRI or RHQDAPU programs, subject to the requirement to publish in the Federal 

Register such measure(s) for a period of public comment. 

We propose the clinical quality measures for EPs and eligible hospitals in Tables 

3 through 21 of this proposed rule for use in the 2011 and 2012 payment years for the 

Medicare EHR incentive program will be effective 60 days after the publication of the 

final rule in the Federal Register. No changes (that is, additions or deletions of clinical 

quality measures) will be made after publication of the final rule, except through further 

rulemaking. However, we may make administrative and/or technical modifications or 

refinements, such as revisions to the clinical quality measures titles and code additions, 

corrections, or revisions to the detailed specifications for the 2011 and 2012 payment 

year measures. The 2011 specifications for user submission of clinical quality measures 

will be available on our website when they are sufficiently developed or finalized. 

Specifications for the EHR incentive programs, even if already published as a part of 

another incentive payment programs, must be obtained only from the specifications 

documents for the EHR incentive program clinical quality measures. We note also that 

the final clinical quality measure specifications for eligible hospitals for any given 
CMS-0033-P 118 

clinical quality measure may be different from specifications for the same clinical quality 

measure used for the previously described testing of EHR-based data submission. We are 

targeting finalization and publication of the detailed specifications documents for all 

2011 payment year Medicare EHR incentive program clinical quality measures for 

eligible hospitals on the CMS website on or before April 1, 2010. We intend that a 

detailed specifications document for all 2012 payment year Medicare EHR incentive 

program clinical quality measures for EPs be posted on the our web site on or before 

April 1, 2011. This would provide final specifications documents at least 9 months in 

advance of the start of the applicable payment year for clinical quality measure EHR 

reporting period. We invite comments on our proposed timelines to post specification 

documents for these clinical quality measures to the CMS website. 

(2) Other Considerations for the Proposed Selection of Clinical Quality Measures for 

Electronic Submission by EPs and Eligible Hospitals 

In addition to the requirements under sections 1848(o)(2)(B)(i)(I) and 

1886(n)(3)(B)(i)(I) of the Act and the other statutory requirements described above, other 

considerations that we applied to the selection of the proposed clinical quality measures 

for electronic submission under the Medicare and Medicaid EHR incentive programs 

include the following: 

• Clinical quality measures that are included in, facilitate alignment with, or 

allow determination of satisfactory reporting in other Medicare (for example, PQRI or the 

RHQDAPU program), Medicaid, and Children's Health Insurance Program (CHIP) 

program priorities. 
CMS-0033-P 119 

• Clinical quality measures that are widely applicable to EPs and eligible 

hospitals based on the services provided for the population of patients seen. 

• Clinical quality measures that promote CMS and HHS policy priorities related 

to improved quality and efficiency of care for the Medicare and Medicaid populations 

that would allow us to track improvement in care over time. These current and long term 

priority topics include: prevention; management of chronic conditions; high cost and 

high volume conditions; elimination of health disparities; healthcare-associated infections 

and other conditions; improved care coordination; improved efficiency; improved patient 

and family experience of care; improved end-of-life/palliative care; effective 

management of acute and chronic episodes of care; reduced unwarranted geographic 

variation in quality and efficiency; and adoption and use of interoperable HIT. 

• Clinical quality measures that address or relate to known gaps in the quality of 

care and measures that through the PQRI program, performed at low or highly variable 

rates. 

• Clinical quality measures that have been recommended to CMS for inclusion in 

the EHR incentive by FACA committees, such as the HIT Policy Committee. 

In addition, we note that the statutory requirements under sections 1848(o) and 

1886(n) of the Act discussed above do not provide guidance with respect to the 

development of the clinical quality measures which may then be submitted to the NQF 

for endorsement. The basic steps for developing clinical quality measures applicable to 

EPs may be carried out by a variety of different organizations. We do not believe there 

needs to be any special restrictions on the type or infrastructure of the organizations 

carrying out this basic development of EP or eligible hospital measures, such as 
CMS-0033-P 120 

restricting the initial development to EP or eligible hospital organizations. Any such 

restriction would unduly limit the basic development of clinical quality measures, and the 

scope and utility of such measures that may be considered for NQF endorsement as 

voluntary consensus standards. 

With respect to the Children's Health Insurance Program Reauthorization Act 

(CHIPRA) of 2009 (Pub.L. 111-3) Title IV, section 401 requires that the Secretary 

publish a core set of clinical quality measures for the pediatric population. To the extent 

possible, we will align the clinical quality measures selected under this Medicaid EHR 

incentive program with the measures selected under the CHIPRA core measure set. 

Included in the proposed definition of meaningful use are nine proposed clinical quality 

measures that pertain to pediatric providers. Four of the nine measures are also on the list 

of CHIPRA initial core measures that were recommended to the Secretary by the 

Subcommittee to AHRQ's National Advisory Committee (SNAC). Not all CHIPRA 

initial measures recommended to the Secretary are applicable to EHR technology or to 

the Medicaid EHR incentive payment program. For example, some of the measures are 

population-based, survey-derived, or not yet NQF-endorsed. New or additional measures 

for the next iteration of the CHIPRA core set will have EHR-extractability as a priority. 

The full CHIPRA core measure set will be published for comment in a forthcoming 

Federal Register notice that is expected out before the end of the year. 

However, as many providers, including primary care professionals, hospitals, 

dentists, and specialists provide care to the pediatric population in the Medicaid and 

CHIP programs. We saw consistency as paramount to avoid redundancy and duplication 

for these providers and States. 
CMS-0033-P 121 

Provider quality measure reporting under CHIPRA for this initial core measure 

set will initially be voluntary. The intent is to begin standardizing measurement data 

collection. Due to the concurrent CHIPRA and ARRA HIT implementation activities, we 

believe there is an exciting opportunity to align the two programs and strive to create 

efficiencies for States and pediatric providers, where applicable. As both programs move 

forward, we will continue to prioritize consistency in measure selection for pediatric 

providers when possible. 

We welcome comments on the inclusion or exclusion of any given clinical quality 

measure or measures proposed herein in the EHR incentive programs clinical quality 

measure set for EPs or eligible hospitals for the 2011 and 2012 payment years, and to our 

approach in selecting clinical quality measures. Our goal is for EPs and eligible hospitals 

to use EHRs to transmit clinical quality measures to the Secretary that would allow 

determination of their satisfactory reporting under the PQRI and RHQDAPU programs. 

Even if the clinical quality measures are not the same for PQRI and RHQDAPU 

satisfactory reporting and EHR meaningful use, our aim is to encourage EPs and eligible 

hospitals to use EHRs as the mechanism to report PQRI and RHQDAPU measures rather 

than reporting measures on claims and other reporting mechanisms. We plan to move to 

this approach as soon as practicable. To the extent that the same clinical quality 

measures are used in the PQRI and RHQDAPU programs and for EHR meaningful use, 

we believe that this approach would be consistent with the statutory requirement to avoid 

duplicate reporting to the extent practicable. We believe that allowing the measures 

reporting for the PQRI and RHQDAPU program to be reported via EHRs would provide 

an added incentive for EPs and eligible hospitals to adopt EHRs. 
CMS-0033-P 122 

In addition, we do not intend to use notice and comment rulemaking as a means to 

update or modify clinical quality measure specifications. A clinical quality measure that 

has completed the consensus process through NQF has a designated party (usually, the 

measure developer/owner) who has accepted responsibility for maintenance of the 

clinical quality measure. In general, it is the role of the clinical quality measure owner, 

developer, or maintainer to make basic changes to a clinical quality measure in terms of 

the numerator, denominator, and exclusions. However, the clinical quality measures 

selected for the 2011 and 2012 payment year will be supplemented by CMS technical 

specifications for EHR submission. As discussed earlier, we propose to post the 

complete clinical quality measures specifications including technical specifications on 

our website and solicit comment on our approach. 

d. Proposed Clinical Quality Measures for Electronic Submission Using Certified EHR 

Technology by EPs 

For the 2011 and 2012 EHR reporting periods, based upon the considerations for 

selecting clinical quality measures discussed above, we propose the set of clinical quality 

measures identified in Table 3. The Table 3 lists the applicable PQRI and NQF measure 

number, title, description, the owner/developer, and a link to existing electronic 

specifications where applicable. Tables 4 through 19 describes further the reporting 

requirements of the Core and Specialty measure groups.
CMS-0033-P 123 

TABLE 3: Proposed Clinical Quality Measures for Electronic Submission by Medicare or Medicaid Eligi

the 2011 and 2012 Payment Year 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 1 NQF 0059 

Title: Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus Description: Percentage of patients aged 18 through 75 years with diabetes mellitus who had most recent hemoglobin A1c greater than 9.0% 

National Committee for Quality Assurance (NCQA) Contact Information: www.ncqa.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 2 NQF 0064 

Title: Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus Description: Percentage of patients aged 18 through 75 years with diabetes mellitus who had most recent LDL-C level in control (less than 100 mg/dl) 

NCQA Contact Information: www.ncqa.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 3 NQF 0061 

Title: Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus Description: Percentage of patients aged 18 through 75 years with diabetes mellitus who had most recent blood pressure in control (less than 140/80 mmHg) 

NCQA Contact Information: www.ncqa.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 5 NQF 0081 

Title: Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) Description: Percentage of patients aged 18 years and older with a diagnosis of heart failure and LVSD who were prescribed ACE inhibitor or ARB therapy 

American Medical Associationsponsored Physician Consortium for Performance Improvement (AMA-PCPI) Contact Information:cpe@ama-assn.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 7 NQF 0070 

Title: Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI) Description: Percentage of patients aged 18 years and older with a diagnosis of CAD and prior MI who were prescribed betablocker therapy 

AMA-PCPI Contact Information: cpe@ama-assn.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 110 NQF 0041 

Title: Preventive Care and Screening: Influenza Immunization for Patients 

≥ 50 Years Old 

Description: Percentage of patients aged 50 years and older who received an influenza immunization during the flu season (September through February) 

AMA-PCPI Contact Information: 

cpe@ama-assn.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage
CMS-0033-P 124 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 111 NQF 0043 

Title: Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older Description: Percentage of patients aged 65 years and older who have ever received a pneumococcal vaccine 

NCQA Contact Information: 

www.ncqa.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 112 NQF 0031 

Title: Preventive Care and Screening: Screening Mammography Description: Percentage of women aged 40 through 69 years who had a mammogram to screen for breast cancer within 24 months 

NCQA Contact Information: 

www.ncqa.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 113 NQF 0034 

Title: Preventive Care and Screening: Colorectal Cancer Screening Description: Percentage of patients aged 50 through 80 years who received the appropriate colorectal cancer screening 

NCQA Contact Information: 

www.ncqa.org

http://www.cmsPQRI/20_AlternortingMechanismopOfPage

PQRI 6 NQF 0067 

Title: Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD Description: Percentage of patients aged 18 years and older with a diagnosis of CAD who were prescribed oral antiplatelet therapy

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 8 NQF 0083 

Title: Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) Description: Percentage of patients aged 18 years and older with a diagnosis of heart failure who also have LVSD and who were prescribed beta-blocker therapy

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 9 NQF 0105 

Title: Major Depressive Disorder (MDD): Antidepressant Medication During Acute Phase for Patients with MDD Description: Percentage of patients aged 18 years and older diagnosed with new episode of MDD and documented as treated with antidepressant medication during the entire 84-day (12-week) acute treatment phase

NCQA Contact Information: 

www.ncqa.org
CMS-0033-P 125 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 10 NQF 0246 

Title: Stroke and Stroke Rehabilitation: Computed Tomography (CT) or Magnetic Resonance Imaging (MRI) Reports Description: Percentage of final reports for CT or MRI studies of the brain performed within 24 hours of arrival to the hospital for patients aged 18 years and older with either a diagnosis of ischemic stroke or transient ischemic attack (TIA) or intracranial hemorrhage or at least one documented symptom consistent with ischemic stroke or TIA or intracranial hemorrhage that includes documentation of the presence or absence or each of the following: hemorrhage and mass lesion and acute infarction. 

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 12 NQF 0086 

Title: Primary Open Angle Glaucoma (POAG): Optic Nerve Evaluation Description: Percentage of patients aged 18 years and older with a diagnosis of POAG who have an optic nerve head evaluation during one or more office visits within 12 months

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 18 NQF 0088 

Title: Diabetic Retinopathy: Documentation of Presence or Absence of Macular Edema and Level of Severity of Retinopathy

Description: Percentage of patients aged 18 years and older with a diagnosis of diabetic retinopathy who had a dilated macular or fundus exam performed which included documentation of the level of severity of retinopathy and the presence or absence of macular edema during one or more office visits within 12 months

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 19 NQF 0089 

Title: Diabetic Retinopathy: Communication with the Physician Managing On-going Diabetes CareDescription: Percentage of patients aged 18 years and older with a diagnosis of diabetic retinopathy who had a dilated macular or fundus exam performed with documented communication to the physician who manages the on-going care of the patient with diabetes mellitus regarding the findings of the macular or fundus exam at least once within 12 months

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org
CMS-0033-P 126 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 20 NQF 0270 

Title: Perioperative Care: Timing of Antibiotic Prophylaxis – Ordering Physician Description: Percentage of surgical patients aged 18 years and older undergoing procedures with the indications for prophylactic parenteral antibiotics, who have an order for prophylactic antibiotic to be given within one hour (if fluoroquinolone or vancomycin, two hours), prior to the surgical incision (or start of procedure when no incision is required)

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 21 NQF 0268 

Title: Perioperative Care: Selection of Prophylactic Antibiotic – First OR Second Generation CephalosporinDescription: Percentage of surgical patients aged 18 years and older undergoing procedures with the indications for a first OR second generation cephalosporin prophylactic antibiotic, who had an order for cefazolin OR cefuroxime for antimicrobial prophylaxis 

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 22 NQF 0271 

Title: Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures) Description: Percentage of non-cardiac surgical patients aged 18 years and older undergoing procedures with the indications for prophylactic antibiotics AND who received a prophylactic antibiotic, who have an order for discontinuation of prophylactic antibiotics within 24 hours of surgical end time 

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 23 NQF 0239 

Title: Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis (When Indicated in ALL Patients)Description:Percentage of patients aged 18 years and older undergoing procedures for which VTE prophylaxis is indicated in all patients, who had an order for Low Molecular Weight Heparin (LMWH), Low-Dose Unfractionated Heparin (LDUH), adjusteddose warfarin, fondaparinux or mechanical prophylaxis to be given within 24 hours prior to incision time or within 24 hours after surgery end time

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 33 NQF 0241 

Title: Stroke and Stroke Rehabilitation: Anticoagulant Therapy Prescribed for Atrial Fibrillation at Discharge Description: Percentage of patients aged 18 years and older with a diagnosis of ischemic stroke or transient ischemic attack (TIA) with documented permanent, persistent, or paroxysmal atrial fibrillation who were prescribed an anticoagulant at discharge

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org
CMS-0033-P 127 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 52 NQF 0102 

Title: Chronic Obstructive Pulmonary Disease (COPD): Bronchodilator Therapy

Description: Percentage of patients aged 18 years and older with 

a diagnosis of COPD and who have an FEV1/FVC less than 70% and have symptoms who were prescribed an inhaled bronchodilator 

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 53 NQF 0047 

Title: Asthma: Pharmacologic Therapy

Description: Percentage of patients aged 5 through 40 years with a diagnosis of mild, moderate, or severe persistent asthma who were prescribed either the preferred long-term control medication (inhaled corticosteroid) or an acceptable alternative treatment

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 65 NQF 0069 

Title: Treatment for Children with Upper Respiratory Infection (URI): Avoidance of Inappropriate UseDescription: Percentage of children aged 3 months through 18 years with a diagnosis of URI who were not prescribed or 

dispensed an antibiotic prescription on or within 3 days of the 

initial date of service

NCQA Contact Information: 

www.ncqa.org

PQRI 66 NQF 0002 

Title: Appropriate Testing for Children with Pharyngitis

Description: Percentage of children aged 2 through 18 years with a diagnosis of pharyngitis, who were prescribed an antibiotic and who received a group A streptococcus (strep) test for the episode

NCQA Contact Information: 

www.ncqa.org

PQRI 71 NQF 0387 

Title: Breast Cancer: Hormonal Therapy for Stage IC-IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast CancerDescription: Percentage of female patients aged 18 years and older with Stage IC through IIIC, ER or PR positive breast cancer who were prescribed tamoxifen or aromatase inhibitor (AI) during the 12-month reporting period 

AMA-PCPI/American Society of Clinical Oncology (ASCO)-National Comprehensive Cancer Network (NCCN): Contact Information: 

cpe@ama-assn.org

http://www.asco.org/ 

PQRI 72 NQF 0385 

Title: Colon Cancer: Chemotherapy for Stage III Colon Cancer PatientsDescription: Percentage of patients aged 18 years and older with Stage IIIA through IIIC colon cancer who are referred for adjuvant, prescribed adjuvant chemotherapy, or have previously received adjuvant chemotherapy within the 12-month reporting period

AMA-PCPI/ASCO-NCCN Contact Information: 

cpe@ama-assn.org

http://www.asco.org/
CMS-0033-P 128 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 81 NQF 0323 

Title: End Stage Renal Disease (ESRD): Plan of Care for Inadequate Hemodialysis in ESRD PatientsDescription: Percentage of calendar months during the 12-month reporting period in which patients aged 18 years and older with a diagnosis of ESRD receiving hemodialysis have a Kt/V 

≥ 1.2 OR patients who have a Kt/V < 1.2 with a 

documented plan of care for inadequate hemodialysis

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 82 NQF 0321 

Title: End Stage Renal Disease (ESRD): Plan of Care for Inadequate Peritoneal DialysisDescription: Percentage of patients aged 18 years and older with a diagnosis of ESRD receiving peritoneal dialysis who have a Kt/V 

≥ 1.7 OR patients who have a Kt/V < 1.7 with a 

documented plan of care for inadequate peritoneal dialysis at least three times (every 4 months) during the 12-month reporting period

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 86 NQF 0397 

Title: Hepatitis C: Antiviral Treatment Prescribed

Description: Percentage of patients aged 18 years and older with a diagnosis of chronic hepatitis C who were prescribed peginterferon and ribavirin therapy within the 12-month reporting period 

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 89 NQF 0401 

Title: Hepatitis C: Counseling Regarding Risk of Alcohol Consumption Description: Percentage of patients aged 18 years and older with a diagnosis of hepatitis C who were counseled about the risks of alcohol use at least once within the 12-month reporting period

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 102 NQF 0389 

Title: Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Prostate Cancer PatientsDescription: Percentage of patients, regardless of age, with a diagnosis of prostate cancer at low risk of recurrence receiving interstitial prostate brachytherapy, OR external beam radiotherapy to the prostate, OR radical prostatectomy, OR cryotherapy who did not have a bone scan performed at any time 

since diagnosis of prostate cancer

AMA-PCPI Contact Information: 

cpe@ama-assn.org
CMS-0033-P 129 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 106 NQF 0103 

Title: Major Depressive Disorder (MDD): Diagnostic Evaluation Description: Percentage of patients aged 18 years and older with a new diagnosis or recurrent episode of MDD who met the DSM-IV criteria during the visit in which the new diagnosis or recurrent episode was identified during the measurement period

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 107 NQF 0104 

Title: Major Depressive Disorder (MDD): Suicide Risk AssessmentDescription: Percentage of patients aged 18 years and older with a new diagnosis or recurrent episode of MDD who had a suicide risk assessment completed at each visit during the measurement period

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 114 NQF 0028 

Title: Preventive Care and Screening: Inquiry Regarding Tobacco Use Description: Percentage of patients aged 18 years or older who were queried about tobacco use one or more times within 24 months 

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 115 NQF 0027 

Title: Preventive Care and Screening: Advising Smokers to Quit Description: Percentage of patients aged 18 years and older and are smokers who received advice to quit smoking 

NCQA Contact Information: 

www.ncqa.org

PQRI 117 NQF 0055 

Title: Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient

Description: Percentage of patients aged 18 through 75 years with a diagnosis of diabetes mellitus who had a dilated eye exam

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 118 NQF 0066 

Title: Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular Systolic Dysfunction (LVSD)Description: Percentage of patients aged 18 years and older with a diagnosis of CAD who also have diabetes mellitus and/or LVSD (LVEF < 40%) who were prescribed ACE inhibitor or ARB therapy

AMA-PCPI Contact Information: 

cpe@ama-assn.org
CMS-0033-P 130 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 119 NQF 0062 

Title: Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic PatientsDescription: Percentage of patients aged 18 through 75 years with diabetes mellitus who received urine protein screening or medical attention for nephropathy during at least one office visit within 12 months

NCQA Contact Information: 

www.ncqa.org

PQRI 121 Ambulatory Quality Alliance (AQA) adopted 

Title: Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile)Description: Percentage of patients aged 18 years and older with a diagnosis of advanced CKD (stage 4 or 5, not receiving Renal Replacement Therapy [RRT]), who had the following laboratory testing ordered within 12 months: serum levels of calcium, phosphorus and intact PTH, and lipid profile

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 122 AQA adopted 

Title: Chronic Kidney Disease (CKD): Blood Pressure ManagementDescription: Percentage of patient visits for patients aged 18 years and older with a diagnosis of advanced CKD (stage 4 or 5, not receiving Renal Replacement Therapy [RRT]), with a blood pressure < 130/80 mmHg OR blood pressure 

≥ 130/80 mmHg 

with a documented plan of care

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 123 AQA adopted 

Title: Chronic Kidney Disease (CKD): Plan of Care – Elevated Hemoglobin for Patients Receiving Erythropoiesis-Stimulating Agents (ESA)Description: Percentage of calendar months during the 12-month reporting period in which patients aged 18 years and older with a diagnosis of advanced CKD (stage 4 or 5, not receiving Renal Replacement Therapy [RRT]), receiving ESA therapy, have a hemoglobin < 13 g/dL OR patients whose hemoglobin is 

≥ 13 g/dL and have a documented plan of care

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 127 NQF 0416 

Title: Diabetes Mellitus: Diabetic Foot and Ankle Care, Ulcer Prevention 

– Evaluation of Footwear

Description: Percentage of patients aged 18 years and older with a diagnosis of diabetes mellitus who were evaluated for proper footwear and sizing

American Podiatric Medical Association (APMA) Contact Information: 

http://www.apma.org/ 
CMS-0033-P 131 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 128 NQF 0421 

Title: Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-Up Description: Percentage of patients aged 18 years and older with a calculated BMI in the past six months or during the current visit documented in the medical record AND if the most recent BMI is outside parameters, a follow-up plan is documented Parameters: Age 65 and older BMI 

≥30 or <22 Age 18 – 64 BMI 

≥25 or <18.5 

CMS/Quality Insights of Pennsylvania (QIP) Contact Information: PQRI_inquiry@cms.hhs.gov

PQRI 145 NQF 0510 

Title: Radiology: Exposure Time Reported for Procedures Using FluoroscopyDescription: Percentage of final reports for procedures using fluoroscopy that include documentation of radiation exposure or exposure time

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 146 NQF 0508 

Title: Radiology: Inappropriate Use of “Probably Benign” Assessment Category in Mammography ScreeningDescription: Percentage of final reports for screening mammograms that are classified as “probably benign”

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 147 NQF 0511 

Title: Nuclear Medicine: Correlation with Existing Imaging Studies for All Patients Undergoing Bone ScintigraphyDescription: Percentage of final reports for all patients, regardless of age, undergoing bone scintigraphy that include physician documentation of correlation with existing relevant imaging studies (e.g., x-ray, MRI, CT, etc.) that were performed

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 153 AQA adopted 

Title: Chronic Kidney Disease (CKD): Referral for Arteriovenous (AV) Fistula

Description: Percentage of patients aged 18 years and older 

with the diagnosis of advanced CKD (stage 4 or 5, not receiving Renal Replacement Therapy [RRT]), who were referred for AV fistula at least once during the 12-month reporting period

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 163 NQF 0056 

Title: Diabetes Mellitus: Foot ExamDescription: The percentage of patients aged 18 through 75 years with diabetes who had a foot examination

NCQA Contact Information: 

www.ncqa.org
CMS-0033-P 132 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 183 NQF 0399 

Title: Hepatitis C: Hepatitis A Vaccination in Patients with HCVDescription: Percentage of patients aged 18 years and older with a diagnosis of hepatitis C who received at least one injection of hepatitis A vaccine, or who have documented immunity to hepatitis A

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 184 NQF 0400 

Title: Hepatitis C: Hepatitis B Vaccination in Patients with HCV

Description: Percentage of patients aged 18 years and older with a diagnosis of hepatitis C who received at least one injection of hepatitis B vaccine, or who have documented immunity to hepatitis B

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 185 AQA adopted 

Title: Endoscopy & Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps – Avoidance of Inappropriate UseDescription: Percentage of patients aged 18 years and older receiving a surveillance colonoscopy and a history of colonic polyp(s) in a previous colonoscopy, who had a follow-up interval of 3 or more years since their last colonoscopy documented in the colonoscopy report

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 195 NQF 0507 

Title: Stenosis Measurement in Carotid Imaging Reports Description: Percentage of final reports for carotid imaging studies (neck MR angiography [MRA], neck CT angiography [CTA], neck duplex ultrasound, carotid angiogram) performed for patients aged 18 years and older with the diagnosis of ischemic stroke or transient ischemic attack (TIA) that include direct or indirect reference to measurements of distal internal 

carotid diameter as the denominator for stenosis measurement 

AMA-PCPI/NCQA Contact Information: 

cpe@ama-assn.orgwww.ncqa.org

PQRI 197 NQF 0074 

Title: Coronary Artery Disease (CAD): Drug Therapy for Lowering LDL-Cholesterol

Description: Percentage of patients aged 18 years and older with 

a diagnosis of CAD who were prescribed a lipid-lowering therapy (based on current ACC/AHA guidelines)

AMA-PCPI Contact Information: 

cpe@ama-assn.org

PQRI 200 NQF 0084 

Title: Heart Failure: Warfarin Therapy for Patients with Atrial FibrillationDescription: Percentage of all patients aged 18 and older with a diagnosis of heart failure and paroxysmal or chronic atrial fibrillation who were prescribed warfarin therapy

AMA-PCPI Contact Information: 

cpe@ama-assn.org
CMS-0033-P 133 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

PQRI 201 NQF 0073 

Title: Ischemic Vascular Disease (IVD): Blood Pressure Management Control

Description: Percentage of patients aged 18 years and older 

with Ischemic Vascular Disease (IVD) who had most recent blood pressure in control (less than 140/90 mmHg)

NCQA Contact Information: 

www.ncqa.org

PQRI 202 NQF 0075 

Title: Ischemic Vascular Disease (IVD): Complete Lipid Profile Description: Percentage of patients aged 18 years and older with Ischemic Vascular Disease (IVD) who received at least one lipid profile within 12 months

NCQA Contact Information: 

www.ncqa.org

PQRI 203 NQF 0075 

Title: Ischemic Vascular Disease (IVD): Low Density Lipoprotein (LDL–C) ControlDescription: Percentage of patients aged 18 years and older with Ischemic Vascular Disease (IVD) who had most recent LDL-C level in control (less than 100 mg/dl)

NCQA Contact Information: 

www.ncqa.org

PQRI 204 NQF 0068 

Title: Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic Description: Percentage of patients aged 18 years and older with Ischemic Vascular Disease (IVD) with documented use of aspirin or other antithrombotic

NCQA Contact Information: 

www.ncqa.org

NQF 0001 Title: Asthma assessment 

Description: Percentage of patients who were evaluated during at least one office visit for the frequency (numeric) of daytime and nocturnal asthma symptoms 

AMA-PCPI Contact Information: 

www.ama-assn.org

NQF 0004 Title: Initiation and Engagement of Alcohol and Other Drug 

Dependence Treatment: (a) Initiation, (b) Engagement Description: Percentage of adults aged 18 and over diagnosed with AOD abuse or dependence and receiving a related service who initiate treatment Assessment of the degree to which members engage in treatment with two additional AOD treatments within 30 days after initiating treatment. 

NCQA Contact Information: 

www.ncqa.org

NQF 0012 Title: Prenatal Screening for Human Immunodeficiency Virus 

(HIV) Description: Percentage of patients who gave birth during a 12-month period who were screened for HIV infection during the first or second prenatal care visit 

AMA-PCPI Contact Information: 

www.ama-assn.org
CMS-0033-P 134 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

NQF 0013 Title: Blood pressure measurement

Description: Percentage of patient visits with blood pressure measurement recorded among all patient visits for patients aged > 18 years with diagnosed hypertension.

AMA-PCPI Contact Information: 

www.ama-assn.org

NQF 0014 Title: Prenatal Anti-D Immune Globulin 

Description: Percentage of D-negative, unsensitized patients who gave birth during a 12-month period who received anti-D 

immune globulin at 26-30 weeks gestation 

AMA-PCPI Contact Information: 

www.ama-assn.org

NQF 0018 Title: Controlling High Blood Pressure 

Description: Percentage of patients with last BP < 140/80 mm Hg.

NCQA Contact Information: 

www.ncqa.org

NQF 0022 Title: Drugs to be avoided in the elderly: a. Patients 

who receive at least one drug to be avoided, b. Patients who receive at least two different drugs to be avoided. 

Description: Percentage of patients ages 65 years and older who received at least one drug to be avoided in the elderly in the measurement year. Percentage of patients 65 years of age and older who received at least two different drugs to be avoided in the elderly in the measurement year.

NCQA Contact Information: 

www.ncqa.org

NQF 0024 Title: Body Mass Index (BMI) 2 through 18 years of age 

Description: Percentage children, 2 through 18 years of age, whose weight is classified based on BMI percentile for age and gender

National Initiative for Children's Healthcare Quality Contact Information: 

http://www.nichq.org/

NQF 0026 Title: Measure pair - a. Tobacco use prevention for infants, 

children and adolescents, b. Tobacco use cessation for infants, children and adolescentsDescription: Percentage of patients' charts showing either that there is no tobacco use/exposure or (if a user) that the current use was documented at the most recent clinic visit. Percentage of patients with documented tobacco use or exposure at the latest visit who also have documentation that their cessation interest was assessed or that they received advice to quit. 

Institute for Clinical Systems Improvement (ICSI) Contact Information: 

http://www.icsi.org/
CMS-0033-P 135 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

NQF 0032 Title: Cervical Cancer Screening 

Description: Percentage of women 18-64 years of age, who received one or more Pap tests during the measurement year or the 2 years prior to the measurement year.

NCQA Contact Information: 

www.ncqa.org

NQF 0033 Title: Chlamydia screening in women

Description: Percentage of eligible women who were identified 

as sexually active who had at least one test for chlamydia during the measurement year.

NCQA Contact Information: 

www.ncqa.org

NQF 0036 Title: Use of appropriate medications for people with asthma 

Description: Percentage of patients who were identified as having persistent asthma during the measurement year and the year prior to the measurement year and who were dispensed a prescription for either an inhaled corticosteroid or acceptable alternative medication during the measurement year. 

NCQA Contact Information: 

www.ncqa.org

NQF 0038 Title: Childhood Immunization Status

Description: Percentage of children 2 years of age who had four DtaP/DT, three IPV, one MMR, three H influenza type B, three hepatitis B, one chicken pox vaccine (VZV) and four pneumococcal conjugate vaccines by their second birthday. The measure calculates a rate for each vaccine and two separate combination rates.

NCQA Contact Information: 

www.ncqa.org

NQF 0052 Title: Low back pain: use of imaging studies

Description: Percentage of patients with new low back pain who received an imaging study (plain x-ray, MRI, CT scan) conducted on the episode start date or in the 28 days following the episode start date.

NCQA Contact Information: 

www.ncqa.org

NQF 0060 Title: Hemoglobin A1c test for pediatric patients 

Description: Percentage of pediatric patients with diabetes with a HBA1c test in a 12-month measurement period. 

NCQA Contact Information: 

www.ncqa.org
CMS-0033-P 136 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

NQF 0105 Title: New Episode of Depression: (a) Optimal Practitioner 

Contacts for Medication Management, (b) Effective Acute Phase Treatment,(c)Effective Continuation Phase Treatment Description: Percentage of patients who were diagnosed with a new episode of depression and treated with antidepressant medication, and who had at least three follow-up contacts with a practitioner during the 84-day (12-week) Acute Treatment Phase b. Percentage of patients who were diagnosed with a new episode of depression, were treated with antidepressant medication and remained on an antidepressant drug during the entire 84-day Acute Treatment Phase c. Percentage of patients who were diagnosed with a new episode of depression and treated with antidepressant medication and who remained on an antidepressant drug for at least 180 days. 

NCQA Contact Information: 

www.ncqa.org

NQF 0106 Title: Diagnosis of attention deficit hyperactivity disorder 

(ADHD) in primary care for school age children and adolescents Description: Percentage of patients newly diagnosed with attention deficit hyperactivity disorder (ADHD) whose medical record contains documentation of Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM-IV) or Diagnostic and Statistical Manual for Primary Care (DSM-PC) criteria being addressed. 

 ICSI Contact Information: 

http://www.icsi.org/ 

NQF 0107 Title: Management of attention deficit hyperactivity disorder 

(ADHD) in primary care for school age children and adolescents 

Description: Percentage of patients diagnosed with attention deficit hyperactivity disorder (ADHD) and on first-line medication whose medical record contains documentation of a follow-up visit twice a year.

ICSI Contact Information: 

http://www.icsi.org/
CMS-0033-P 137 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

NQF 0108 Title: ADHD: Follow-Up Care for Children Prescribed 

Attention-Deficit/Hyperactivity Disorder (ADHD) Medication. Description: a. Initiation Phase: Percentage of children 6 – 12 years of age as of the Index Prescription Episode Start Date with an ambulatory prescription dispensed for and ADHD medication and who had one follow-up visit with a practitioner with prescribing authority during the 30-Day Initiation Phase b. Continuation and Maintenance (C&M) Phase: Percentage of children 6 – 12 years of age as of the Index Prescription Episode Start Date with an ambulatory prescription 

dispensed for ADHD medication who remained on the medication for at least 210 days and who in addition to the visit in the Initiation Phase had at least two additional follow-up visits with a practitioner within 270 days (9 months) after the Initiation Phase ends. 

NCQA Contact Information: 

www.ncqa.org

NQF 0110 Title: Bipolar Disorder and Major Depression: Appraisal for 

alcohol or chemical substance useDescription: Percentage of patients with depression or bipolar disorder with evidence of an initial assessment that includes an appraisal for alcohol or chemical substance use

Center for Quality Assessment and Improvement in Mental Health Contact Information: 

http://www.cqaimh.org/

NQF 0299 Title: Surgical Site Infection Rate 

Description: Percentage of surgical site infections occurring 

within thirty days after the operative procedure if no implant is left in place or with one year if an implant is in place in patients who had an NHSN operative procedure performed during a specified time period and the infection appears to be related to the operative procedure.

Centers for Disease Control and Prevention (CDC) Contact Information: 

http://www.cdc.gov/ 
CMS-0033-P 138 

Measure 

Number Clinical Quality Measure Title & Description 

Clinical Quality Measure 

Developer & Contact 

Information 

Electronic Me

Specificatio

Informati

NQF 0471 Title: Cesarean Rate for low-risk first birth women (aka NTSV 

CS rate) Description: Percentage of low-risk first birth women (aka NTSV CS rate: nulliparous, term, singleton, vertex) with a Cesarean rate that has the most variation among practicioners, hospitals, regions and states. Unlike other cesarean measures, it focuses attention on the proportion of cesarean births that is affected by elective medical practices such as induction and early labor admission. Furthermore, the success (or lack thereof) of management of the first labor directly impacts the remainder of the woman's reproductive life (especially given the current high rate of repeat cesarean births).

California Maternal Quality Care Collaborative (CMQCC) Contact Information: 

http://cmqcc.org/

NQF 0513 Title: Use of Contrast: Thorax CT 

Description: Thorax CT – Use of combined studies (with and without contrast)

CMS Contact Information: 

http://www.cms.hhs.gov/

NQF 0519 Title: Diabetic Foot Care and Patient Education Implemented 

Description: Percent of diabetic patients for whom physicianordered monitoring for the presence of skin lesions on the lower extremities and patient education on proper foot care were implemented during their episode of care

CMS Contact Information: 

http://www.cms.hhs.gov/

NQF EC-013-08 Title: Comprehensive Diabetes Care: HbA1c Control (<8.0%) 

Description: The percentage of members 18-75 years of age with diabetes (Type 1 and Type 2) who had HbA1c control (<8.0%). 

NCQA Contact Information: 

www.ncqa.org

Not applicable Title: Hysterectomy rates

Description: 

 

Not applicable Title: Appropriate antibiotic use for ear infections 

Description: 

 

Not applicable Title: Statin after Myocardial Infarction

Description: 

 

Not Applicable Title: 30 day Readmission Rate

Description: 

 

Not Applicable Title: 30 Readmission Rate following deliveries 

Description:

 

Not Applicable Title: Use of CT scans 

Description: Number of repeat CT scans within 60 days 

 
CMS-0033-P 139 

As previously stated, we believe that there is sufficient time to implement the 

measures in EHR systems for 2011 through 2012. However, we recognize also that there 

are measures that we propose, which are in a lower state of readiness, for implementation 

in certified EHR's and present a higher degree of risk in terms completion of the 

necessary work. We would note that the purpose of this quality reporting is to begin the 

process of quality benchmarking and iterative improvements in the ability of providers to 

benchmark themselves against their peers. As part of the public comment process, we 

welcome comment on not only the clinical utility of the measures we have proposed, but 

also their state of readiness for use in the EHR incentive programs. For those measures 

where electronic specifications do not currently exist, we solicit comment on how quickly 

electronic specifications can be developed and the period of time that might be required 

for effective implementation from the time the electronic specifications of final measures 

are posted and made available to vendors. We intend to publish electronic specifications 

for the proposed clinical quality measures on the CMS website as soon as they become 

available from the measure developer(s). Electronic specifications may be developed 

concurrently with the development of measures themselves and potentially with the NQF 

endorsement processes. 

All of the PQRI measures included in the above clinical quality measures meet 

one or more of the criteria previously discussed. These measures have been through 

notice and comment rulemaking for PQRI. Nearly all proposed PQRI clinical quality 

measures are NQF endorsed. Additionally, they have broad applicability to the range of 

Medicare designated specialties, and the services provided by EPs who render services to 

Medicare and Medicaid beneficiaries and many others. Further, 9 of the 90 clinical 
CMS-0033-P 140 

quality measures listed above (PQRI numbers 1, 2, 3, 5, 7, 110, 111, 112, and 113) have 

specifications for the electronic submission of these clinical quality measures have 

already been developed for the purpose of testing the electronic submission of clinical 

quality data extracted from an EHR for the PQRI program. The user specifications for 

the electronic submission of these 9 clinical quality measures for the most current PQRI 

program year can be found on the PQRI section of the CMS website at 

http://www.cms.hhs.gov/PQRI/20_AlternativeReportingMechanisms.asp#TopOfPage. 

In terms of CMS and HHS healthcare quality priorities, clinical quality PQRI 

measures numbered 1, 2, 3, 5, and 7 address high priority chronic conditions, namely 

diabetes, coronary artery disease, and heart disease. Clinical quality PQRI measures 

numbered 110, 111, 112, 113, 114, 115, and 128 support prevention which is a high CMS 

and HHS priority. The PQRI clinical quality measure specifications for claims-based or 

registry-based submission of these clinical quality measures for the most current PQRI 

program year can be found on the PQRI section of the CMS website at 

http://www.cms.hhs.gov/PQRI/15_MeasuresCodes.asp#TopOfPage. A description of the 

clinical quality measure, including the clinical quality measure's numerator and 

denominator, can be found in the PQRI clinical quality measure specifications. 

 The PQRI clinical quality measures that we have included largely align with the 

recommendations of the HIT Standards Committee. However, we have also included 

certain clinical quality measures not part of PQRI that we believe are of high importance 

to the overall population. These clinical quality measures are IVD: Use of Aspirin or 

another Antithrombotic; IVD: Complete Lipid Profile; IVD: Low Density Lipoprotein 
CMS-0033-P 141 

(LDL-C) Control, and Blood Pressure Management. Finally, we have included an array 

of other measures which address important aspects of clinical quality. 

In summary, we believe that this initial set of clinical quality measures is broad 

enough to allow for reporting for EPs and addresses high priority conditions. We 

recognize the importance of integrating the measures into certified EHR products for 

calculation of measures results, and that not all measures may be feasible for 2011 and 

2012. We invite comment on the advisability of including the measures proposed for 

payment years 2011 and 2012. Although we recognize many other important clinical 

quality measures of health care provided by EPs, we anticipate expanding the set of 

clinical quality measures in future years and list a number of clinical quality measures for 

future consideration in section II.A.3.g of this preamble, on which we also invite 

comment. 

We invite comments on our proposed clinical quality measures for EPs. 

e. Clinical Quality Measures Reporting Criteria for EPs 

 For the 2011 and 2012 EHR reporting periods, to satisfy the requirements for 

reporting on clinical quality measures for Medicare under section 1848(o)(2)(A)(i) and 

(iii) of the Act and for Medicaid under section 1903(t)(6)(C) of the Act for the 2012 

payment year, we propose to require each EP submit information on two measure groups, 

as shown in Table 4 and Tables 5 through 19, of this proposed rule. These are the core 

measures group in Table 4, and the subset of clinical measures most appropriate given the 

EPs specialty as described further in Tables 5 through 19 specialty group measures 

below. For the core measure group, in Table 4, we believe that the clinical quality 

measures are sufficiently general in application and of such importance to population 
CMS-0033-P 142 

health, we propose to require that all EPs treating Medicare and Medicaid patients in the 

ambulatory setting report on all of the core measures as applicable for their patients. 

TABLE 4: Measure Group: Core for All EPs, Medicare or Medicaid 

Measure Number Clinical Quality Measure Title 

PQRI 114 

NQF 0028 

Title: Preventive Care and Screening: Inquiry Regarding Tobacco Use 

NQF 0013 Title: Blood pressure measurement 

NQF 0022 Title: Drugs to be avoided in the elderly: 

 a. Patients who receive at least one drug to be avoided. 

 b. Patients who receive at least two different drugs to be avoided 

The second required measure set for each EP is to submit information on at least 

one of the sets listed in Tables 5 and 19 as specialty groups. The specialty groups are 

Cardiology, Pulmonology, Endocrinology, Oncology, Proceduralist/Surgery, Primary 

Care Physicians, Pediatrics, Obstetrics and Gynecology, Neurology, Psychiatry, 

Ophthalmology, Podiatry, Radiology, Gastroenterology, and Nephrology. 

We recognize that clinical quality measures as specified by measures developers 

and as endorsed by the NQF are not specialty specific. Rather, the denominator of 

clinical quality measures and the applicability of a measure is determined by the patient 

population to whom the measure applies and the services rendered by the particular EP. 

Nevertheless, we have grouped measures according to the types of patients 

commonly treated and services rendered by EPs of various specialties. We have done 

this for purposes similar to measures groups used in PQRI which, however, are based on 

clinical conditions, rather than specialty types. The general purpose of each type of 

measures grouping is to have standardized sets of measures all of which must be reported 

by the EP in order to meet the reporting requirements. We expect to narrow down each 
CMS-0033-P 143 

proposed set to a required subset of 3 to 5 measures based on the availability of electronic 

measure specifications and comments received. 

We propose to require for 2011 and 2012 that EP's will select a specialty 

measures group, on which to report on all applicable cases for each of the measures in the 

specialty group. The same specialty measures group selected for the first payment year 

would be required for reporting for the second payment year. We invite comment on 

whether there are EPs who believe no specialty group will be applicable to them. In 

accordance with public comments, we will specify in the final rule which EP specialties 

will be exempt from selecting and reporting on a specialty measures group. EPs that are 

so-designated will be required to attest, to CMS or the State, to the inapplicability of any 

of the specialty groups and will not be required to report information on clinical quality 

measures from a specialty group for 2011 or 2012, though the EP will still be required to 

report information on all of the clinical quality measures listed in the core measure set in, 

Table 4, as applicable for their patients. 

TABLE 5: Measure Group: Cardiology 

Measure Number Clinical Quality Measure Title 

PQRI 5 

NQF 0081 

Title: Heart Failure: Angiotensin-Converting 

Enzyme (ACE) Inhibitor or Angiotensin Receptor 

Blocker (ARB) Therapy for Left Ventricular 

Systolic Dysfunction (LVSD) 

PQRI 6 

NQF 0067 

Title: Coronary Artery Disease (CAD): Oral 

Antiplatelet Therapy Prescribed for Patients with 

CAD 

PQRI 7 

NQF 0070 

Title: Coronary Artery Disease (CAD): BetaBlocker Therapy for CAD Patients with Prior 

Myocardial Infarction (MI) 

PQRI 8 

NQF 0083 

Title: Heart Failure: Beta-Blocker Therapy for Left 

Ventricular Systolic Dysfunction (LVSD) 
CMS-0033-P 144 

Measure Number Clinical Quality Measure Title 

PQRI 118 

NQF 0066 

Title: Coronary Artery Disease (CAD): 

Angiotensin-Converting Enzyme (ACE) Inhibitor or 

Angiotensin Receptor Blocker (ARB) Therapy for 

Patients with CAD and Diabetes and/or Left 

Ventricular Systolic Dysfunction (LVSD)

PQRI 128 

NQF 0421 

Title: Preventive Care and Screening: Body Mass 

Index (BMI) Screening and Follow-Up 

PQRI 197 

NQF 0074 

Title: Coronary Artery Disease (CAD): Drug 

Therapy for Lowering LDL-Cholesterol

PQRI 200 

NQF 0084 

Title: Heart Failure: Warfarin Therapy Patients 

with Atrial Fibrillation

PQRI 204 

NQF 0068 

Title: Ischemic Vascular Disease (IVD): Use of 

Aspirin or Another Antithrombotic 

Not applicable Title: Statin after Myocardial Infarction

TABLE 6: Measure Group: Pulmonology 

Measure Number Clinical Quality Measure Title 

PQRI 52 

NQF 0102 

Title: Chronic Obstructive Pulmonary Disease (COPD): 

Bronchodilator Therapy 

PQRI 53 

NQF 0047 

Title: Asthma: Pharmacologic Therapy 

PQRI 111 

NQF 0043 

Title: Preventive Care and Screening: Pneumonia Vaccination 

for Patients 65 Years and Older 

PQRI 114 

NQF 0028 

Title: Preventive Care and Screening: Inquiry Regarding 

Tobacco Use 

PQRI 115 

NQF 0027 

Title: Preventive Care and Screening: Advising Smokers to 

Quit 

NQF 0001 Title: Asthma assessment

NQF 0036 Title: Use of appropriate medications for people with asthma

Not applicable Title: Use of CT scans

 

TABLE 7: Measure Group: Endocrinology 

Measure Number Clinical Quality Measure Title 

PQRI 1 

NQF 0059 

Title: Diabetes Mellitus: Hemoglobin A1c 

Poor Control in Diabetes Mellitus 

PQRI 2 

NQF 0064 

Title: Diabetes Mellitus: Low Density 

Lipoprotein (LDL-C) Control in Diabetes 

Mellitus 

PQRI 3 

NQF 0061 

Title: Diabetes Mellitus: High Blood 

Pressure Control in Diabetes Mellitus 
CMS-0033-P 145 

Measure Number Clinical Quality Measure Title 

PQRI 117 

NQF 0055 

Title: Diabetes Mellitus: Dilated Eye Exam 

in Diabetic Patient 

PQRI 119 

NQF 0062 

Title: Diabetes Mellitus: Urine Screening 

for Microalbumin or Medical Attention for 

Nephropathy in Diabetic Patients 

PQRI 128 

NQF 0421 

Title: Preventive Care and Screening: Body 

Mass Index (BMI) Screening and Follow-Up 

PQRI 204 

NQF 0068 

Title: Ischemic Vascular Disease (IVD): 

Use of Aspirin or Another Antithrombotic

NQF 0060 Title: Hemoglobin A1c test for pediatric 

patients 

Not applicable 

Title: Comprehensive Diabetes Care: 

HbA1c Control (<8.0 percent) 

TABLE 8: Measure Group: Oncology 

Measure Number Clinical Quality Measure Title & Description 

PQRI 71 

NQF 0387 

Title: Breast Cancer: Hormonal Therapy for Stage ICIIIC Estrogen Receptor/Progesterone Receptor (ER/PR) 

Positive Breast Cancer 

PQRI 72 

NQF 0385 

Title: Colon Cancer: Chemotherapy for Stage III Colon 

Cancer Patients 

PQRI 102 

NQF 0389 

Title: Prostate Cancer: Avoidance of Overuse of Bone 

Scan for Staging Low-Risk Prostate Cancer Patients

PQRI 112 

NQF 0031 

Title: Preventive Care and Screening: Screening 

Mammography 

PQRI 113 

NQF 0034 

Title: Preventive Care and Screening: Colorectal 

Cancer Screening 

NQF 0032 Title: Cervical Cancer Screening 

TABLE 9: Measure Group: Proceduralist/Surgery 

Measure Number Clinical Quality Measure Title & Description 

PQRI 20 

NQF 0270 

Title: Perioperative Care: Timing of Antibiotic 

Prophylaxis – Ordering Physician 

PQRI 21 

NQF 0268 

Title: Perioperative Care: Selection of 

Prophylactic Antibiotic – First OR Second 

Generation Cephalosporin 

PQRI 22 

NQF 0271 

Title: Perioperative Care: Discontinuation of 

Prophylactic Antibiotics (Non-Cardiac 

Procedures) 

PQRI 23 

NQF 0239 

Title: Perioperative Care: Venous 

Thromboembolism (VTE) Prophylaxis (When 

Indicated in ALL Patients)
CMS-0033-P 146 

Measure Number Clinical Quality Measure Title & Description 

NQF 0299 Title: Surgical Site Infection Rate 

Not Applicable Title: 30 day Readmission Rate 

TABLE 10: Measure Group: Primary Care 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 114 

NQF 0028 

Title: Preventive Care and Screening: Inquiry Regarding Tobacco Use 

PQRI 115 

NQF 0027 

Title: Preventive Care and Screening: Advising Smokers to Quit 

PQRI 202 

NQF 0075 

Title: Ischemic Vascular Disease (IVD): Complete Lipid Profile

PQRI 203 

NQF 0075 

Title: Ischemic Vascular Disease (IVD): Low Density Lipoprotein (LDL–

C) Control

PQRI 204 

NQF 0068 

Title: Ischemic Vascular Disease (IVD): Use of Aspirin or Another 

Antithrombotic

NQF 0038 Title: Childhood Immunization Status 

PQRI 112 

NQF 0031 

Title: Preventive Care and Screening: Screening Mammography 

PQRI 113 

NQF 0034 

Title: Preventive Care and Screening: Colorectal Cancer Screening 

PQRI 1 

NQF 0059 

Title: Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 

Mellitus 

NQF 0052 Title: Low back pain: use of imaging studies 

NQF 0018 Title: Controlling High Blood Pressure 

PQRI 128 

NQF 0421 

Title: Preventive Care and Screening: Body Mass Index (BMI) Screening 

and Follow-Up 

PQRI 65 

NQF 0069 

Title: Treatment for Children with Upper Respiratory Infection (URI): 

Avoidance of Inappropriate Use 

PQRI 66 

NQF 0002 

Title: Appropriate Testing for Children with Pharyngitis

PQRI 110 

NQF 0041 

Title: Preventive Care and Screening: Influenza Immunization for Patients 

≥ 50 Years Old 

PQRI 197 

NQF 0074 

Title: Coronary Artery Disease (CAD): Drug Therapy for Lowering LDLCholesterol 

NQF 0001 Title: Asthma Assessment 

NQF 0004 Title: Initiation and Engagement of Alcohol and Other Drug Dependence 

Treatment: 

 (a) Initiation, 

 (b) Engagement 

NQF 0024 Title: Body Mass Index (BMI) 2 through 18 years of age 

NQF 0032 Title: Cervical Cancer Screening 

NQF 0036 Title: Use of appropriate medications for people with asthma 
CMS-0033-P 147 

Measure 

Number Clinical Quality Measure Title & Description 

NQF 0060 Title: Hemoglobin A1c test for pediatric patients 

NQF 0105 Title: New Episode of Depression: 

 (a) Optimal Practitioner Contacts for Medication Management 

 (b) Effective Acute Phase Treatment 

 (c)Effective Continuation Phase Treatment 

NQF 0106 Title: Diagnosis of attention deficit hyperactivity disorder (ADHD) in 

primary care for school age children and adolescents 

NQF 0107 Title: Management of attention deficit hyperactivity disorder (ADHD) in 

primary care for school age children and adolescents 

NQF 0108 Title: ADHD: Follow-Up Care for Children Prescribed AttentionDeficit/Hyperactivity Disorder (ADHD) Medication. 

NQF 0110 Title: Bipolar Disorder and Major Depression: Appraisal for alcohol or 

chemical substance use 

Not applicable Title: Comprehensive Diabetes Care: HbA1c Control (<8.0 percent) 

Not applicable Title: Appropriate antibiotic use for ear infections 

TABLE 11: Measure Group: Pediatrics 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 66 

NQF 0002 

Title: Appropriate Testing for Children with Pharyngitis

NQF 0060 Title: Hemoglobin A1c test for pediatric patients 

NQF 0106 Title: Diagnosis of attention deficit hyperactivity disorder 

(ADHD) in primary care for school age children and 

adolescents 

NQF 0107 Title: Management of attention deficit hyperactivity 

disorder (ADHD) in primary care for school age children 

and adolescents 

NQF 0108 Title: ADHD: Follow-Up Care for Children Prescribed 

Attention-Deficit/Hyperactivity Disorder (ADHD) 

Medication. 

NQF 0024 Title: Body Mass Index (BMI) 2 through 18 years of age 

NQF 0026 Title: Measure pair - a. Tobacco use prevention for infants, 

children and adolescents, b. Tobacco use cessation for 

infants, children and adolescents 

NQF 0038 Title: Childhood Immunization Status 

Not applicable Title: Appropriate antibiotic use for ear infections 

TABLE 12: Measure Group: Obstetrics and Gynecology 

Measure 

Number Clinical Quality Measure Title & Description 
CMS-0033-P 148 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 112 

NQF 0031 

Title: Preventive Care and Screening: Screening Mammography 

PQRI 128 

NQF 0421 

Title: Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-Up

NQF 0032 Title: Cervical Cancer Screening 

NQF 0033 Title: Chlamydia screening in women 

NQF 0471 Title: Cesarean Rate for low-risk first birth women (aka NTSV CS rate) 

NQF 0012 Title: Prenatal Screening for Human Immunodeficiency Virus (HIV) 

NQF 0014 Title: Prenatal Anti-D Immune Globulin 

Not applicable Title: Hysterectomy rates

Not Applicable Title: 30 Readmission Rate following deliveries 

TABLE 13: Measure Group: Neurology 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 33 

NQF 0241 

Title: Stroke and Stroke Rehabilitation: Anticoagulant Therapy 

Prescribed for Atrial Fibrillation at Discharge 

PQRI 201 

NQF 0073 

Title: Ischemic Vascular Disease (IVD): Blood Pressure Management 

Control 

PQRI 202 

NQF 0075 

Title: Ischemic Vascular Disease (IVD): Complete Lipid Profile 

PQRI 203 

NQF 0075 

Title: Ischemic Vascular Disease (IVD): Low Density Lipoprotein 

(LDL–C) Control 

PQRI 204 

NQF 0068 

Title: Ischemic Vascular Disease (IVD): Use of Aspirin or Another 

Antithrombotic 
CMS-0033-P 149 

TABLE 14: Measure Group: Psychiatry 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 9 

NQF 0105 

Title: Major Depressive Disorder (MDD): Antidepressant Medication 

During Acute Phase for Patients with MDD 

PQRI 106 

NQF 0103 

Title: Major Depressive Disorder (MDD): Diagnostic Evaluation 

PQRI 107 

NQF 0104 

Title: Major Depressive Disorder (MDD): Suicide Risk Assessment 

NQF 0004 Title: Initiation and Engagement of Alcohol and Other Drug 

Dependence Treatment: (a) Initiation, (b) Engagement 

NQF 0105 Title: New Episode of Depression: (a) Optimal Practitioner Contacts for 

Medication Management, (b) Effective Acute Phase 

Treatment,(c)Effective Continuation Phase Treatment 

NQF 0110 Title: Bipolar Disorder and Major Depression: Appraisal for alcohol or 

chemical substance use 

TABLE 15: Measure Group: Ophthalmology 

TABLE 16: Measure Group: Podiatry 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 127 

NQF 0416 

Title: Diabetes Mellitus: Diabetic Foot and Ankle Care, Ulcer 

Prevention – Evaluation of Footwear 

PQRI 163 

NQF 0056 

Title: Diabetes Mellitus: Foot Exam 

NQF 0519 Title: Diabetic Foot Care and Patient Education Implemented 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 12 

NQF 0086 

Title: Primary Open Angle Glaucoma (POAG): Optic Nerve Evaluation 

PQRI 18 

NQF 0088 

Title: Diabetic Retinopathy: Documentation of Presence or Absence of 

Macular Edema and Level of Severity of Retinopathy 

PQRI 19 

NQF 0089 

Title: Diabetic Retinopathy: Communication with the Physician 

Managing On-going Diabetes Care 
CMS-0033-P 150 

TABLE 17: Measure Group: Radiology 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 10 

NQF 0246 

Title: Stroke and Stroke Rehabilitation: Computed 

Tomography (CT) or Magnetic Resonance Imaging 

(MRI) Reports 

PQRI 195 

NQF 0507 

Title: Stenosis Measurement in Carotid Imaging Studies 

PQRI 145 

NQF 0510 

Title: Radiology: Exposure Time Reported for 

Procedures Using Fluoroscopy 

PQRI 146 

NQF 0508 

Title: Radiology: Inappropriate Use of “Probably 

Benign” Assessment Category in Mammography 

Screening 

PQRI 147 

NQF 0511 

Title: Nuclear Medicine: Correlation with Existing 

Imaging Studies for All Patients Undergoing Bone 

Scintigraphy 

NQF 0052 Title: Low back pain: use of imaging studies

NQF 0513 Title: Use of Contrast: Thorax CT 

TABLE 18: Measure Group: Gastroenterology 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 86 

NQF 0397 

Title: Hepatitis C: Antiviral Treatment Prescribed 

PQRI 89 

NQF 0401 

Title: Hepatitis C: Counseling Regarding Risk of Alcohol 

Consumption

PQRI 113 

NQF 0034 

Title: Preventive Care and Screening: Colorectal Cancer Screening

PQRI 183 

NQF 0399 

Title: Hepatitis C: Hepatitis A Vaccination in Patients with HCV

PQRI 184 

NQF 0400 

Title: Hepatitis C: Hepatitis B Vaccination in Patients with HCV

PQRI 185 

AQA adopted

Title: Endoscopy & Polyp Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous Polyps – Avoidance of 

Inappropriate Use
CMS-0033-P 151 

TABLE 19: Measure Group: Nephrology 

Measure 

Number Clinical Quality Measure Title & Description 

PQRI 81 

NQF 0323 

Title: End Stage Renal Disease (ESRD): Plan of Care for Inadequate 

Hemodialysis in ESRD Patients 

PQRI 82 

NQF 0321 

Title: End Stage Renal Disease (ESRD): Plan of Care for Inadequate 

Peritoneal Dialysis 

PQRI 121 

AQA adopted 

Title: Chronic Kidney Disease (CKD): Laboratory Testing 

(Calcium, Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid 

Profile) 

PQRI 122 

AQA adopted 

Title: Chronic Kidney Disease (CKD): Blood Pressure Management 

PQRI 123 

AQA adopted 

Title: Chronic Kidney Disease (CKD): Plan of Care – Elevated 

Hemoglobin for Patients Receiving Erythropoiesis-Stimulating 

Agents (ESA)

PQRI 153 

AQA adopted 

Title: Chronic Kidney Disease (CKD): Referral for Arteriovenous 

(AV) Fistula

With the inclusion of measures applicable to targeting children and adolescents 

and the wide applicability of the measures like Blood Pressure Management, we believe 

this core set of clinical quality measures and specialty measures is broad enough to 

enable reporting by all EPs. However, if the public believes that other EPs would not 

have sufficient patients in the denominator of these core measures, we encourage 

commenters to identify the EPs in question and propose specific remedies. 

Although we do not propose to require clinical quality measure reporting 

electronically until 2012, we propose to begin clinical quality reporting through 

attestation in the 2011 payment year. We solicit comment on whether it may be more 

appropriate to defer some or all clinical quality reporting until the 2012 payment year. If 

reporting on some but not all measures in 2011 is feasible, we solicit comment on which 

key measures should be chosen for 2011 and which should be deferred until 2012 and 

why. 
CMS-0033-P 152 

We further propose that starting in payment year 2012, in addition to meeting 

requirements for measures on meaningful EHR use and other requirements, EPs would be 

required to electronically submit this quality reporting information directly to CMS and 

States using certified EHR technology. We encourage comments on these reporting 

criteria, particularly on the requirement that all EPs–would report on the set of “core 

measures.” We are also interested in comments as to whether some Medicare or 

Medicaid EPs may not be able to meet the proposed reporting requirements, why that 

might be the case, and whether commenters believe other alternative options are 

preferable. 

f. Proposed Clinical Quality Measures for Electronic Submission by Eligible Hospitals 

 Based on the considerations for clinical quality measures previously discussed in 

this proposed rule, we propose that eligible hospitals will be required to report summary 

data to CMS on the set of clinical quality measures identified in Table 20 starting in the 

2011 payment year. We further propose that for the 2012 payment year, hospitals will be 

required to submit these measures to CMS electronically using certified EHR technology 

on a set of clinical quality measures identified in Table 20, which would be sufficient to 

meet the requirements for both the Medicare and the Medicaid EHR incentive (for 

hospitals eligible for both incentive programs), with respect to the requirement to report 

clinical quality measures. For hospitals eligible for only the Medicaid EHR incentive 

program, such reporting will be to States. For eligible hospitals to which the measures in 

Table 20 do not apply to their patient population, hospitals have the option to select 

clinical quality measures identified in Table 21 to meet the requirements for the reporting 

of clinical quality measures for the Medicaid program incentive. Tables 20 and 21, 
CMS-0033-P 153 

convey the clinical quality measure's title, number, owner/developer and contact 

information, and a link to existing electronic specifications where applicable. 

TABLE 20: Proposed Clinical Quality Measures for Electronic Submission by 

Eligible Hospitals for Payment Year 2011-2012 

Measure 

Number 

Identifier Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications 

Information 

ED-1 

NQF 0495 

Title: Emergency Department Throughput – admitted patients 

Median time from ED arrival to ED departure for admitted 

patients 

Description: Median time from emergency department arrival to 

time of departure from the emergency room for patients admitted 

to the facility from the emergency department 

Measure Developer: CMS/Oklahoma Foundation for Medical 

Quality (OFMQC)

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906

ED-2 

NQF 0497 

Title: Emergency Department Throughput – admitted patients 

Admission decision time to ED departure time for admitted 

patients 

Description: Median time from admit decision time to time of 

departure from the emergency department of emergency 

department patients admitted to inpatient status 

Measure Developer: CMS/OFMQ 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

ED-3 

NQF 0496 

Title: Emergency Department Throughput – discharged patients 

Median Time from ED Arrival to ED Departure for Discharged

ED Patients 

Description: Median Time from ED arrival to time of departure 

from the ED for patients discharged from the ED 

Measure Developer: CMS/OFMQ

Stroke-2 

NQF 0435 

Title: Ischemic stroke – Discharge on anti-thrombotics 

Description: Ischemic stroke patients prescribed antithrombotic 

therapy at hospital discharge 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

Stroke-3 

NQF 0436 

Title: Ischemic stroke – Anticoagulation for A-fib/flutter 

Description: Ischemic stroke patients with atrial 

fibrillation/flutter who are prescribed anticoagulation therapy at 

hospital discharge. 

Measure Developer: The Joint Commission

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 
CMS-0033-P 154 

Measure 

Number 

Identifier Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications 

Information 

Stroke-4 

NQF 0437 

Title: Ischemic stroke – Thrombolytic therapy for patients 

arriving within 2 hours of symptom onset 

Description: Acute ischemic stroke patients who arrive at this 

hospital within 2 hours of time last known well and for whom IV 

t-PA was initiated at this hospital within 3 hours of time last 

known well. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

Stroke-5 

NQF 0438 

Title: Ischemic or hemorrhagic stroke – Antithrombotic therapy 

by day 2 

Description: Ischemic stroke patients administered 

antithrombotic therapy by the end of hospital day 2. 

Measure Developer: The Joint Commission

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

Stroke-6 

NQF 0439 

Title: Ischemic stroke – Discharge on statins 

Description: Ischemic stroke patients with LDL > 100 mg/dL, or 

LDL not measured, or, who were on a lipid-lowering medication 

prior to hospital arrival are prescribed statin medication at 

hospital discharge. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

Stroke-8 

NQF 0440 

Title: Ischemic or hemorrhagic stroke – Stroke education 

Description: Ischemic or hemorrhagic stroke patients or their 

caregivers who were given educational materials during the 

hospital stay addressing all of the following: activation of 

emergency medical system, need for follow-up after discharge, 

medications prescribed at discharge, risk factors for stroke, and 

warning signs and symptoms of stroke. 

Measure Developer: The Joint Commission

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

Stroke-10 

NQF 0441 

Title: Ischemic or hemorrhagic stroke – Rehabilitation 

assessment 

Description: Ischemic or hemorrhagic stroke patients who were 

assessed for rehabilitation services. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

VTE-1 

NQF 0371 

Title: VTE prophylaxis within 24 hours of arrival 

Description: This measure assesses the number of patients who 

received VTE prophylaxis or have documentation why no VTE 

prophylaxis was given the day of or the day after hospital 

admission or surgery end date for surgeries that start the day of or 

the day after hospital admission. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 
CMS-0033-P 155 

Measure 

Number 

Identifier Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications 

Information 

VTE-2 

NQF 0372 

Title: ICU VTE prophylaxis 

Description: This measure assesses the number of patients who 

received VTE prophylaxis or have documentation why no VTE 

prophylaxis was given the day of or the day after the initial 

admission (or transfer) to the Intensive Care Unit (ICU) or 

surgery end date for surgeries that start the day of or the day after 

ICU admission (or transfer). 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906 

VTE-3 

NQF 0373 

Title: Anticoagulation overlap therapy 

Description: This measure assesses the number of patients 

diagnosed with confirmed VTE who received an overlap of 

parenteral (intravenous [IV] or subcutaneous [subcu]) 

anticoagulation and warfarin therapy. For patients who received 

less than five days of overlap therapy, they must be discharged on 

both medications. Overlap therapy must be administered for at 

least five days with an international normalized ratio (INR) ≥ 2 

prior to discontinuation of the parenteral anticoagulation therapy 

or the patient must be discharged on both medications. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906

VTE-4 

NQF 0374 

Title: Platelet monitoring on unfractionated heparin 

Description: This measure assesses the number of patients 

diagnosed with confirmed VTE who received intravenous (IV) 

UFH therapy dosages AND had their platelet counts monitored 

using defined parameters such as a nomogram or protocol. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906

VTE-5 

NQF 0375 

Title: VTE discharge instructions 

Description: This measure assesses the number of patients 

diagnosed with confirmed VTE that are discharged to home, to 

home with home health, home hospice or discharged/transferred 

to court/law enforcement on warfarin with written discharge 

instructions that address all four criteria: compliance issues, 

dietary advice, follow-up monitoring, and information about the 

potential for adverse drug reactions/interactions. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906

VTE-6 

NQF 0376 

Title: Incidence of potentially preventable VTE 

Description: This measure assesses the number of patients 

diagnosed with confirmed VTE during hospitalization (not 

present on arrival) who did not receive VTE prophylaxis between 

hospital admission and the day before the VTE diagnostic testing 

order date. 

Measure Developer: The Joint Commission 

http://www.hitsp.org/

ConstructSet_Details.a

spx?&PrefixAlpha=5

&PrefixNumeric=906
CMS-0033-P 156 

Measure 

Number 

Identifier Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications 

Information 

RHQDAPU 

AMI-8a 

NQF 0163 

Title: Primary PCI Received Within 90 Minutes of Hospital 

Arrival 

Description: Acute myocardial infarction (AMI) patients with 

ST-segment elevation or 

LBBB on the ECG closest to arrival time receiving primary PCI 

during the hospital stay 

with a time from hospital arrival to PCI of 90 minutes or less

Measure Developer: CMS/OFMQ

RHQDAPU 

PN-3b 

NQF 0148 

Title: Blood Cultures Performed in the Emergency Department 

Prior to Initial Antibiotic Received in Hospital 

Description: Pneumonia patients whose initial emergency room 

blood culture specimen was collected prior to first hospital dose 

of antibiotics. This measure focuses on the treatment provided to 

Emergency Department patients prior to admission orders.

Measure Developer: CMS/OFMQ

RHQDAPU 

AMI-2 

NQF 0142 

Title: Aspirin Prescribed at Discharge

Description: Acute myocardial infarction (AMI) patients who 

are prescribed aspirin at hospital discharge 

Measure Developer: CMS/OFMQ

RHQDAPU 

AMI-3 

NQF 0137 

Title: Angiotensin Converting Enzyme Inhibitor(ACEI) or 

Angiotensin Receptor Blocker (ARB) for Left Ventricular 

Systolic 

Dysfunction (LVSD) 

Description: Acute myocardial infarction (AMI) patients with 

left ventricular systolic dysfunction (LVSD) who are prescribed 

an ACEI or ARB at hospital discharge. For purposes of this 

measure, LVSD is defined as chart documentation of a left 

ventricular ejection fraction (LVEF) less than 40% or a narrative 

description of left ventricular systolic (LVS) function consistent 

with moderate or severe systolic dysfunction. 

Measure Developer: CMS/OFMQ

RHQDAPU 

AMI-5 

NQF 0160 

Title: Beta-Blocker Prescribed at Discharge 

Description: Acute myocardial infarction (AMI) patients who 

are prescribed a betablocker at hospital discharge 

Measure Developer: CMS/OFMQ 

RHQDAPU 

AMI-READ 

NQF 0505 

Title &Description: Hospital Specific 30 day Risk-Standardized 

Readmission Rate following AMI admission 

Measure Developer: CMS

Not applicable Title: Hospital Specific 30 day Rate following AMI admission 
CMS-0033-P 157 

Measure 

Number 

Identifier Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications 

Information 

RHQDAPU 

HF-READ 

NQF 0330 

Title &Description: Hospital Specific 30 day Risk-Standardized 

Readmission Rate following Heart Failure admission 

Measure Developer: CMS/OFMQ

Not applicable Title: Hospital Specific 30 day Rate following Heart Failure 

admission 

RHQDAPU 

PNE-READ 

NQF 0506 

Title &Description: Hospital Specific 30 day Risk-Standardized 

Readmission Rate following Pneumonia admission 

Measure Developer: CMS

Not applicable Title: Hospital Specific 30 day Rate following Pneumonia 

admission 

NQF 0528 Title: Infection SCIP Inf-2 Prophylactic antibiotics consistent 

with current recommendations 

Description: Surgical patients who received prophylactic 

antibiotics consistent with current guidelines (specific to each 

type of surgical procedure). 

Measure Developer: CMS/OFMQ 

NQF 0302 Title: Ventilator Bundle 

Description: Percentage of intensive care unit patients on 

mechanical ventilation at time of survey for whom all four 

elements of the ventilator bundle are documented and in place. 

The ventilator bundle elements are: •Head of bed (HOB) 

elevation 30 degrees or greater (unless medically 

contraindicated); noted on 2 different shifts within a 24 hour 

period •Daily “sedation interruption” and daily assessment of 

readiness to extubate; process includes interrupting sedation until 

patient follow commands and patient is assessed for 

discontinuation of mechanical ventilation; Parameters of 

discontinuation include: resolution of reason for intubation; 

inspired oxygen content roughly 40%; assessment of patients 

ability to defend airway after extubation due to heavy sedation; 

minute ventilation less than equal to 15 liters/minute; and 

respiratory rate/tidal volume less than or equal to 

105/min/L(RR/TV< 105)•SUD (peptic ulcer disease) prophylaxis 

DVT (deep venous thrombosis) prophylaxis

Measure Developer: IHI
CMS-0033-P 158 

Measure 

Number 

Identifier Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications 

Information 

NQF 0298 Title: Central Line Bundle Compliance

Description: Percentage of intensive care patients with central 

lines for whom all elements of the central line bundle are 

documented and in place. The central line bundle elements 

include:•Hand hygiene , •Maximal barrier precautions upon 

insertion •Chlorhexidine skin antisepsis •Optimal catheter site 

selection, with subclavian vein as the preferred site for nontunneled catheters in patients 18 years and older •Daily review of 

line necessity with prompt removal of unnecessary lines 

Measure Developer: IHI

NQF 0140 Title: Ventilator-associated pneumonia for ICU and high-risk 

nursery (HRN) patients

Description: Percentage of ICU and HRN patients who over a 

certain amount of days have ventilator-associated pneumonia

Measure Developer: CDC 

NQF 0138 Title: Urinary catheter-associated urinary tract infection for 

intensive care unit (ICU) patients

Description: Percentage of intensive care unit patients with 

urinary catheter-associated urinary tract infections

Measure Developer: CDC

NQF 0139 Title: Central line catheter-associated blood stream infection rate 

for ICU and high-risk nursery (HRN) patients 

Description: Percentage of ICU and high-risk nursery patients, 

who over a certain amount of days acquired a central line 

catheter-associated blood stream infections over a specified 

amount of line-days

Measure Developer: CDC

NQF 0329 Title: All-Cause Readmission Index (risk adjusted) 

Description: Overall inpatient 30-day hospital readmission rate. 

Measure Developer: United Health Group

Not applicable Title: All-Cause Readmission Index 

Description: Overall inpatient 30-day hospital readmission rate. 
CMS-0033-P 159 

TABLE 21: Proposed Alternative Medicaid Clinical Quality Measures for 

Medicaid Eligible Hospitals 

NQF # Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications Information 

0341 Title: PICU Pain Assessment on Admission 

Description: Percentage of PICU patients receiving: 

 a. Pain assessment on admission 

 b. Periodic pain assessment. 

Measure Developer: Vermont Oxford Network

0348 Title: Iotrogenic pneumothorax in non-neonates (pediatric up to 

17 years of age) 

Description: Percent of medical and surgical discharges, age 

under 18 years, with ICD-9-CM code of iatrogenic pneumothorax 

in any secondary diagnosis field. 

Measure Developer: AHRQ

0362 Title: Foreign body left after procedure, age under 18 years 

Description: Discharges with foreign body accidentally left in 

during procedure per 1,000 discharges 

Measure Developer: AHRQ

0151 Title: Pneumonia Care PNE-5c Antibiotic 

Description: Percentage of pneumonia patients 18 years of age 

and older who receive their first dose of antibiotics within 6 hours 

after arrival at the hospital 

Measure Developer: CMS/OFMQ

0147 Title: Pneumonia Care PN-6 Antibiotic selection 

Description: Percentage of pneumonia patients 18 years of age or 

older selected for initial receipts of antibiotics for communityacquired pneumonia (CAP). 

Measure Developer: CMS/OFMQ

0356 Title: Pneumonia Care PN-3a Blood culture 

Description: Percent of pneumonia patients, age 18 years or 

older, transferred or admitted to the ICU within 24 hours of 

hospital arrival who had blood cultures performed within 24 hours 

prior to or 24 hours after arrival at the hospital. 

Measure Developer: CMS/OFMQ

0527 Title: Infection SCIP Inf-1 Prophylactic antibiotic received within 

1 hour prior to surgical incision 

Description: Surgical patients with prophylactic antibiotics 

initiated within 1 hour prior to surgical incision. Patients who 

received vancomycin or a fluoroquinolone for prophylactic 

antibiotics should have the antibiotics initiated within 2 hours 

prior to surgical incision. Due to the longer infusion time required 

for vancomycin or a fluoroquinolone, it is acceptable to start these 

antibiotics within 2 hours prior to incision time. 

Measure Developer: CMS/OFMQ
CMS-0033-P 160 

NQF # Measure Title, Description & Measure Developer 

Electronic Measure 

Specifications Information 

0529 Title: Infection SCIP Inf-3 Prophylactic antibiotics discontinued 

within 24 hours after surgery end time 

Description: Surgical patients whose prophylactic antibiotics 

were discontinued within 24 hours after Anesthesia End Time. 

Measure Developer: CMS/OFMQ

We have included in the hospital measures set several clinical quality measures 

which have undergone development of electronic specifications. These clinical quality 

measures have been developed for future RHQDAPU consideration. The electronic 

specifications were developed through an interagency agreement with ONC to develop 

interoperable standards for EHR submission of the ED throughput, stroke, and VTE 

clinical quality measures on Table 20, to be determined by a future rulemaking document 

provided by ONC. We also have planned to test the submission of these clinical quality 

measures in Medicare (see 74 FR 43893). The specifications for the RHQDAPU clinical 

quality measures for eligible hospitals that are being used for testing EHR-based 

submission of these clinical quality measures can be found at 

http://www.hitsp.org/ConstructSet_Details.aspx?&PrefixAlpha=5&PrefixNumeric=906. 

A description of the clinical quality measure, including the clinical quality measure's 

numerator and denominator, can be found here as well. Other measures are currently in 

the RHQDAPU program or are measures of importance for measuring or preventing 

adverse outcomes. In addition to Risk Standardized readmission clinical quality 

measures, we have proposed Readmission rates to be reported which are not risk 

adjusted. We have also reviewed the recommendations of the HIT Standards Committee 

that apply to hospitals which include Atrial Fibrillation Receiving Anticoagulation 

Therapy. We note that Atrial Fibrillation Receiving Anticoagulation Therapy is one of 
CMS-0033-P 161 

the clinical quality measures included on Table 20, identified in the table as Stroke-3. 

We note that we have not included the HIT Standards Committee recommended clinical 

quality measure on surgery patients who received VTE prophylaxis within 24 hours 

period to surgery to 24 hours after surgery end time because it is a current clinical quality 

measure collected in the RHQDAPU program through chart abstraction for all applicable 

patients (SCIP-VTE-2). The VTE-2 clinical quality measure in Table 20 is a parallel 

clinical quality measure to SCIP-VTE-2, includes non-surgical patients, and is a more 

feasible to implement because the electronic specifications have been completed. We 

have however added SCIP-VTE-2 for future consideration. 

 To satisfy the requirements of reporting on clinical quality measures under 

sections 1886(n)(3)(A)(iii) and 1903(t)(6)(C) of the Act for the 2011 - 2012 payment 

year, we propose to require eligible hospitals to report on all EHR incentive clinical 

quality measures for which they have applicable cases, without regard to payer. Medicare 

eligible hospitals, who are also participating in the Medicaid EHR incentive program, 

will also be required to report on all Medicaid clinical quality measures for which the 

eligible hospital has applicable cases. To demonstrate that it is an eligible meaningful 

EHR user, the eligible hospital is required to electronically submit information on each 

clinical quality measures for each patient to whom the clinical quality measure applies, 

regardless of payer, discharged from the hospital during the EHR reporting period and for 

whom the clinical quality measure is applicable. Although we do not propose to require 

clinical quality reporting electronically until 2012, we propose to begin clinical quality 

reporting though attestation in the 2011 payment year. We solicit comment on whether it 

may be more appropriate to defer some or all clinical quality reporting until the 2012 
CMS-0033-P 162 

payment year. If reporting on some but not all measures in 2011 is feasible, we solicit 

comment on which key measures should be chosen for 2011 and which should be 

deferred until 2012 and why. 

We invite comments on these proposed clinical quality measures for eligible 

hospitals and our proposed timelines to post specification documents for these clinical 

quality measures to the CMS website. 

g. Request for Public Comment on Potential Measures for EPs and Eligible Hospitals in 

2013 Payment Year and Subsequent Years 

 We expect that the number of clinical quality measures for which EPs and eligible 

hospitals will be able to electronically submit information will rapidly expand in 2013 

and beyond. 

 We plan to consider measures from the 2010 PQRI program. These clinical 

quality measures can be found at 

http://www.cms.hhs.gov/PQRI/05_StatuteRegulationsProgramInstructions.asp 

For future considerations of clinical quality measures for 2013 and beyond for eligible 

hospitals, we will also consider other clinical quality measures from the RHQDAPU 

program which are identified in the FY 2010 IPPS final rule (74 FR 43868 through 

43882). We invite comments on inclusion of clinical quality measures for the 2013 and 

beyond HITECH Act Medicare and Medicaid incentive program, based on Stage 2 and 

Stage 3 meaningful use criteria. 

 For the 2013 payment year, we are considering expanding the Medicaid EHR 

incentive programs clinical quality measure set for EPs and eligible hospitals to include 

clinical quality measures that address the following clinical areas, to address quality of 
CMS-0033-P 163 

care for additional patient populations, and facilitate alignment with Medicaid and CHIP 

programs: 

• Additional pediatrics measures (such as completed growth charts, electronic 

prescriptions with weight-based dosing support and documentation of newborn 

screening). 

• Long-term care measures. 

• Additional obstetrics measure. 

• Dental care/oral health measures. 

• Additional mental health and substance abuse measures. 

The above lists do not constitute a comprehensive list of all clinical quality measures that 

may be considered. Specific measures for payment years 2013 and beyond will be 

addressed by CMS in future notice and comment rulemaking. To assist us in identifying 

potential clinical quality measures for future consideration for years 2013 and beyond, we 

welcome comments on the potential topics and/or clinical quality measures listed above 

as well as suggestions for additional clinical quality measure topics and/or specific 

clinical quality measures. 

h. Proposed Reporting Method for Clinical Quality Measures for 2011 and 2012 

Payment Year 

(1) Reporting Method for 2011 Payment Year 

As we previously discussed, we propose to use attestation as a means for EPs and 

eligible hospitals, for purposes of the Medicare incentive program, to demonstrate the 

meaningful use requirement for the calculation and submission of clinical quality 

measure results to CMS. 
CMS-0033-P 164 

Specifically, for 2011, we propose to require that Medicare EPs and hospitals 

attest to the use of a certified EHR system to capture the data elements and calculate the 

results for the applicable clinical quality measures. 

We further propose to require that Medicare EPs and eligible hospitals attest to 

the accuracy and completeness of the numerators, denominators, and exclusions 

submitted for each of the applicable measures, and report the results to CMS for all 

applicable patients. 

Attestation will utilize the same system for other attestation for meaningful use, 

and we propose to require for Medicare EPs that they attest to the following: 

• The information submitted with respect to clinical quality measures was 

generated as output of an identified certified electronic health record. 

• The information submitted is accurate to the best of the knowledge and belief 

of the EP. 

• The information submitted includes information on all patients to whom the 

clinical quality measure applies. 

• The NPI and TIN of the EP submitting the information, and the specialty group 

of clinical quality measures that are being submitted. 

• For an EP who is exempt from reporting each of the core measures, an 

attestation that one or more of the core measures do not apply to the scope of practice of 

the EP. 

• For an EP who is exempt from reporting on a specialty group, an attestation 

that none of the specialty groups applies to the scope of practice of the EP. 
CMS-0033-P 165 

• For an EP who does report on a specialty group, but is exempt from reporting 

on each of the clinical quality measures in the group, an attestation that the clinical 

quality measures not reported do not apply to any patients treated by the EP. 

• The numerators, denominators, and exclusions for each clinical quality measure 

result reported, providing separate information for each clinical quality measure 

including the numerators, denominators, and exclusions for all patients irrespective third 

party payer or lack thereof; for Medicare FFS patients; for Medicare Advantage patients; 

and for Medicaid patients. 

• The beginning and end dates for which the numerators, denominators, and 

exclusions apply. 

For eligible hospitals, we propose to require that they attest to the following: 

• The information submitted with respect to clinical quality measures was 

generated as output from an identified certified EHR. 

• The information submitted to the knowledge and belief of the official 

submitting on behalf of the eligible hospital. 

• The information submitted includes information on all patients to whom the 

measure applies. 

• The identifying information for the eligible hospital. 

• For eligible hospitals that do not report one or more measures an attestation that 

the clinical quality measures not reported do not apply to any patients treated by the 

eligible hospital during the reporting period. 

• The numerators, denominators, and exclusions for each clinical quality measure 

result reported, providing separate information for each clinical quality measure 
CMS-0033-P 166 

including the numerators, denominators, and exclusions for all patients irrespective third 

party payer or lack thereof; for Medicare FFS patients; for Medicare Advantage patients; 

and for Medicaid patients. 

• The beginning and end dates for which the numerators, denominators, and 

exclusions apply. 

(2) Reporting Method for 2012 

In accordance with sections 1848(o)(2)(A)(iii) and 1886(n)(3)(A)(iii) of the Act, 

an EP or eligible hospital, respectively, must submit summary information (that is, 

information that is not personally identifiable) on the clinical quality measures selected 

by the Secretary using certified EHR technology in order to demonstrate their meaningful 

use of certified EHR technology. Additionally, for the 2012 payment year, we propose 

that EPs and eligible hospitals be required to electronically submit the summary 

information for a selected clinical quality measure from those listed in Tables 3 through 

21 using certified EHR technology as defined in section II.A.1.a of this proposed rule for 

the Medicare and Medicaid incentives. The required Medicare incentive information will 

be identified in the measures specifications, which we intend will be on our web site 9 

months before the start of the payment year. For Medicaid, EPs and hospitals eligible 

only for the Medicaid EHR incentive program must report their clinical quality measures 

data to States. States will propose to CMS how they plan to accept and validate Medicaid 

providers' clinical quality measures data in their State Medicaid HIT Plans, subject to 

CMS review and approval, as described in section II.D.7. of this proposed rule. 

Sections 1848(o)(A)(2)(iii) and 1886(n)(3)(A)(iii) of the Act broadly state that as 

a condition of demonstrating meaningful use of certified EHR technology, an EP, CAH 
CMS-0033-P 167 

or eligible hospital must “submit information” for the EHR reporting period on the 

clinical quality or other measures selected by the Secretary “in a form and manner 

specified by the Secretary.” This language does not limit us to collecting only that 

information pertaining to Medicare and Medicaid beneficiaries. Therefore, we believe 

that we have the authority to collect summarized clinical quality measures selected by the 

Secretary, with respect to all patients to whom the clinical quality measure applies, 

treated by the EP or eligible hospital. We believe that it is necessary for the EP or eligible 

hospital to report on all cases to which a clinical quality measures applies in order to 

accurately assess the quality of care rendered by the particular EP or eligible hospital 

generally. Otherwise it would only be possible to evaluate the care being rendered for a 

portion of patients and lessen the ability to improve quality generally. We solicit 

comments on the impact of requiring the submission of clinical quality measures data on 

all patients, not just Medicare and Medicaid beneficiaries. 

 Sections 1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) of the Act requires that in 

selecting clinical quality measures, the Secretary shall seek to avoid redundant or 

duplicative reporting otherwise required, including reporting under section 1848(k)(2)(C) 

of the Act (the PQRI program) and eligible reporting under section 1886(b)(3)(B)(viii) of 

the Act (RHQDAPU program). We interpret “redundant or duplicative reporting” to 

mean requiring the reporting of data on the same clinical quality measure separately for 

two or more quality reporting programs under Medicare. Similarly, we seek to align 

clinical quality measure reporting activities under CHIPRA with those proposed here, to 

avoid duplication of reporting and to strengthen the quality reporting infrastructure more 

broadly. Therefore, when a clinical quality measure is included in more than one quality 
CMS-0033-P 168 

reporting incentive program, we will seek to avoid requiring EPs and eligible hospitals to 

report the same clinical quality measure under separate programs. In instances in which a 

particular clinical quality measure is included in the Medicare EHR incentive program 

and another Medicare quality reporting incentive program, an EP or eligible hospital 

would only need to report the measure under the Medicare EHR incentive program, and 

the reporting of such clinical quality measure using certified EHR technology would be 

considered as the EP or eligible hospitals having satisfied the parallel reporting 

requirement under all other applicable Medicare programs. With respect to any clinical 

quality measures that may be included in the measure sets for both the Medicare EHR 

Incentive Programs for EPs and the PQRI, we note that there is no existing statutory 

authority to make PQRI incentive payments for services furnished in 2011 and 

subsequent years. 

We propose that Medicare EPs and eligible hospitals would be required to report 

the required clinical quality measures information electronically using certified EHR 

technology via one of three methods. The primary method would require the EP or 

eligible hospital to log into a CMS-designated portal. Once the EP or eligible hospital 

has logged into the portal, they would be required to submit, through an upload process, 

data payload based on specified structures, such as Clinical Data Architecture (CDA), 

and accompanying templates produced as output from their certified EHR technology. 

As an alternative to this data submission method, we propose to permit Medicare 

EPs and eligible hospitals to submit the required clinical quality measures data using 

certified EHR technology through Health Information Exchange (HIE)/Health 

Information Organization (HIO). This alternative data submission method would be 
CMS-0033-P 169 

dependent on the Secretary's ability to collect data through a HIE/HIO network and 

would require the EP or eligible hospital who chooses to submit data via an HIE/HIO 

network to be a participating member of the HIE/HIO network. Medicare EPs and 

eligible hospitals would be required to submit their data payload based on specified 

structures or profiles, such as Clinical Data Architecture (CDA), and accompanying 

templates. The EP's or eligible hospital's data payload should be an output from their 

respective certified EHR products, in the form and manner specified from their HIE/HIO 

adopted architecture into the CMS HIE/HIO adopted architecture. 

As another potential alternative, we propose to accept submission through 

registries dependent upon the development of the necessary capacity and infrastructure to 

do so using certified EHRs. 

We intend to post the technical requirements for portal submission and the 

alternative HIE/HIO submission, the HIE/HIO participating member definition, and other 

specifications for submission on our web site for Medicare EPs on or before July 1, 2011 

and for Medicare eligible hospitals on or before April 1, 2011 for EHR adoption and 

incorporation and to accommodate EHR vendors. 

We invite comments on our three proposed clinical quality measures data 

submission methodologies as they pertain to CMS for Medicare and to States for 

Medicaid. 

i. Alternative Reporting Methods for Clinical Quality Measures 

There are several alternative reporting methods we considered to create a dataset 

of provider-submitted summary data. One such alternative is the development of a 

distributed network of EHRs where health information is retained locally in individual EP 
CMS-0033-P 170 

or eligible hospital EHRs and only summary reports are submitted to CMS. Another 

alternative is the creation of databases of patient-level EHR data stored at the state or 

regional level. We invite comment on our proposed approach, as well as our two 

alternatives. We also invite comment on all other alternative reporting methods. 

j. Proposed Reporting Criteria for EPs and Eligible Hospitals 

 Sections 1848(o)(A)(2)(iii) and 1886(n)(3)(A)(iii) of the Act state that to 

demonstrate meaningful use of certified EHR technology for an EHR reporting period, an 

EP and eligible hospital must submit information “for such period” on the clinical quality 

measures and other measures selected by the Secretary. We therefore propose that for 

2011 and 2012, the reporting period for the clinical quality measures selected by the 

Secretary be the EHR reporting period as previously defined in section II.A.1.e. of this 

proposed rule 

Another alternative we considered was a fixed reporting period of four quarterly 

reporting periods, or 2, 6-month reporting periods. In terms of practice and precedent for 

other Medicare clinical quality measure reporting programs, all submit data to us at 

specific reporting intervals. 

 We invite industry and interested stakeholder comments on our proposal, 

especially those who may feel that a fixed period would be more advantageous. 

k. Addressing Dually-Eligible Medicare/Medicaid Beneficiaries under HITECH 

Since the EHR incentives are based on Medicare or Medicaid EPs choosing one 

program or the other, we are concerned that the Medicare and Medicaid incentive 

programs address the HIT needs of dually-eligible program beneficiaries. Since this 

population requires special coordination between the State and Federal government, we 
CMS-0033-P 171 

intend to engage in new efforts to promote Medicare health information exchange with 

States, as well as look for other new ways to meet the care management objectives of this 

population through HIT. As such, we are requesting comments on potential measures to 

reach our goal. 

4. Demonstration of Meaningful Use 

Section 1848(o)(3)(C) of the Act, as added by section 4101(a) of the HITECH 

Act, requires that as a condition of eligibility for the incentive payment, an EP must 

demonstrate meaningful use of certified EHR technology (other than the reporting on 

clinical quality and other measures) as discussed in section II.A.3 of this proposed rule in 

the manner specified by the Secretary, which may include the following: an attestation, 

the submission of claims with appropriate coding, a survey response, reporting of clinical 

quality or other measures, or other means. Similarly, section 1886(n)(3)(c) of the Act, as 

added by section 4102(a) of the HITECH Act, requires that hospitals seeking the 

incentive payment demonstrate meaningful use of certified EHR technology in the 

manner specified by the Secretary. Section 1903(t)(6)(C)(i)(II) of the Act, as added by 

section 4201(a)(2) under the HITECH Act, states that a Medicaid EP or eligible hospital 

must demonstrate meaningful use through a “means that is approved by the State and 

acceptable to the Secretary.” In addition, pursuant to section 1903(t)(9) of the Act, a 

State must demonstrate to the satisfaction of the Secretary that the State is conducting 

adequate oversight, including the routine tracking of meaningful use attestations and 

reporting mechanisms. 

a. Common Methods of Demonstration in Medicare and Medicaid 
CMS-0033-P 172 

We propose to create a common method for demonstrating meaningful use in both 

the Medicare and Medicaid EHR incentive programs, for the same reasons we have 

proposed a uniform definition of meaningful use. The demonstration methods we adopt 

for Medicare would automatically be available to the States for use in their Medicaid 

programs. The Medicare methods are segmented into two parts, as discussed below. 

States seeking to modify or propose alternative demonstration methods must submit the 

proposed methods for prior CMS approval. This process is discussed more fully in 

Section II.D.7.b.2.c. of this proposed rule 

b. Methods for Demonstration of the Stage 1 Criteria of Meaningful Use 

 We are proposing at §495.8 that for CY 2011 and FY 2011, EPs and eligible 

hospitals demonstrate that they satisfy each of the proposed meaningful use objectives 

specified in §495.6 through attestation. For payment years beginning in CY and FY 2012 

and subsequent years, we are proposing at §495.8 that EPs and eligible hospitals 

demonstrate that they satisfy each of the proposed meaningful use objectives other than 

“Submitting quality measures to CMS or the States” through attestation, and demonstrate 

that they satisfy the objective “Submitting quality measure to CMS or the States” through 

electronic reporting of clinical quality measures to CMS or the States, as specified in 

section II.A.3 of this proposed rule. Specifically, we propose that EPs and eligible 

hospitals provide attestation through a secure mechanism, such as through claims based 

reporting or an online portal. We propose that an EP or eligible hospital would through a 

one-time attestation following the completion of the EHR reporting period for a given 

payment year identify the certified EHR technology they are utilizing and the results of 

their performance on all the measures associated with the objectives of meaningful use. 
CMS-0033-P 173 

We chose to propose attestation through a secure mechanism because we do not believe 

that HIT will advance enough from its current state to allow for more automated and/or 

documented options of demonstrating meaningful use. As HIT matures we expect to 

base demonstration more on automated reporting by certified EHR technologies, such as 

the direct electronic reporting of measures both clinical and non clinical and documented 

participation in HIE. The first example is to the move from attestation for clinical quality 

measures to direct reporting in 2012 and subsequent years for EPs and eligible hospitals. 

As HIT advances we expect to move more of the objectives away from being 

demonstrated through attestation. However, given the current state of HIT, we believe 

that imposing such demonstration requirements for 2011 would pose significant barriers 

to participation in the EHR incentive programs. 

We believe that the means by which EPs and eligible hospitals demonstrate 

meaningful use should work for all provider types. We also believe that uniform means 

of demonstration for EPs and eligible hospitals are preferable and that a greater burden 

should not be placed on one or the other. In addition, we do not believe that 

demonstration of meaningful use should require use of certified EHR technology beyond 

the capabilities certified to be determined by a future rulemaking document provided by 

ONC. 

In addition to requiring electronic reporting of clinical quality measures in 2012 in 

Medicare and Medicaid, we also propose for CMS and/or the States to test options to 

utilize existing and emerging HIT products and infrastructure capabilities to satisfy other 

objectives of the meaningful use definition. The optional testing could involve the use of 

registries or the direct electronic reporting of some measures associated with the 
CMS-0033-P 174 

objectives of the meaningful use definition. We do not propose to require any EP or 

eligible hospital to participate in this testing in either 2011 or 2012 in order to receive an 

incentive payment. However, in order to make progress towards our goal of meaningful 

use being demonstrated through the electronic exchange of information we encourage 

States to explore the available options. The state of electronic exchange varies widely 

across the country and is dependent on numerous Federal, State, local, non-profit and forprofit initiatives. Given this high state of flux, CMS and/or the States would have to 

issue considerable updated guidance to EPs and eligible hospitals who wish to join in our 

efforts to explore the electronic exchange of information. Any testing should be based on 

the principal of electronic exchange of information from certified EHR technology either 

directly to the States or through an intermediary. For purposes of the programs in this 

proposed rule it would be counterproductive for an intermediary to collect information 

through paper abstraction. 

We will issue further instructions on the specifics for submitting attestation 

through established outreach venues. 

5. Data Collection for Online Posting, Program Coordination, and Accurate Payments 

As described below, the HITECH Act requires the Secretary to post online the 

names of Medicare EPs and eligible hospitals and CAHs who are meaningful EHR users 

for the relevant payment year. Section 1903(t)(2) of the Act also requires us to ensure 

that EPs do not receive an EHR incentive payment under both Medicare and Medicaid. 

To fulfill these mandates, we must collect several data elements from EPs and eligible 

hospitals. Beyond these two direct HITECH Act requirements, CMS and the States also 

require certain data in order to accurately calculate and distribute the incentive payments. 
CMS-0033-P 175 

a. Online Posting 

Section 1848(o)(3)(D) of the Act requires the Secretary to list in an easily 

understandable format the names, business addresses, and business phone numbers of the 

Medicare EPs and, as determined appropriate by the Secretary, of group practices 

receiving incentive payments for being meaningful EHR users under the Medicare FFS 

program on our internet web site. We do not propose to post information on group 

practices because we do not propose to base incentive payments at the group practice 

level. Section 1886(n)(4)(B) of the Act, as added by section 4102(c) of the HITECH Act, 

requires the Secretary to list in an easily understandable format the names and other 

relevant data, as she determines appropriate, of eligible hospitals and CAHs who are 

meaningful EHR users under the Medicare FFS program, on our internet web site. 

Eligible hospitals and CAHs will have the opportunity to review the list before the list is 

publicly posted. Sections 1853(m)(5) and 1853(l)(7) of the Act, as added by sections 

4101(c) and 4102(c) of the HITECH Act, require the Secretary to post the same 

information for EPs and eligible hospitals in the MA program as would be required if 

they were in the Medicare FFS program. Additionally, the Secretary must post the names 

of the MA organizations receiving the incentive payment or payments. We propose to 

collect the information necessary to post the name, business address and business phone 

numbers of all EPs, eligible hospitals and CAHs participating in the Medicare FFS and 

MA EHR incentive programs, and to post this information on our web site. 

b. Program Election Between Medicare FFS/MA and Medicaid for EPs 

Section 1903(t)(2)of the Act prohibits an EP from receiving incentive payments 

under the Medicaid program unless the EP has waived any rights to incentive payments 
CMS-0033-P 176 

under the Medicare FFS or MA programs. Furthermore, section 1903(t)(7) of the Act 

requires the Secretary to assure no duplication of funding with respect to the Medicaid 

program, and the physician and MA incentive payments under sections 1848(o) and 

1853(l) of the Act. This waiver and non-duplication requirement applies only to EPs 

meeting both the Medicare FFS/MA and Medicaid EHR incentive programs eligibility 

criteria, and does not apply to hospitals (which are eligible to receive incentive payments 

from both Medicare and Medicaid simultaneously). Proposed §495.10 would allow an 

EP meeting the eligibility criteria for both the Medicare FFS/MA and Medicaid programs 

to participate in either program. Further, the EP would be permitted to change his or her 

election once during the life of the EHR incentive programs after making the initial 

election. We believe this one-time election rule would allow an EP whose patient 

volume no longer makes him or her eligible for the Medicaid program to nevertheless 

continue to receive incentive payments that would encourage the meaningful use of 

certified EHR technology. For example, an EP who moves to a different practice or 

geographically relocates practices may reduce his or her Medicaid patient volume, and 

therefore become ineligible for the Medicaid incentive payments. Allowing this EP to 

continue to receive incentive payments under Medicare (if eligible) would continue the 

incentive for meaningfully using EHR technology, and would allow EPs a certain amount 

of flexibility in their operations. While allowing this flexibility creates administrative 

complexity, we believe a significant number of EPs could have their participation in the 

EHR incentive programs endangered due to changing circumstances unrelated to the 

EHR incentive programs. 
CMS-0033-P 177 

Under our proposal, if an EP does decide to switch programs, we propose that the 

EP would continue in the next program at whichever payment year he or she would have 

attained had the EP not chosen to switch. For example, if an EP decides to switch after 

receiving his or her Medicare FFS incentive payment for their second payment year, then 

the EP would be in its third payment year for purposes of the Medicaid incentive 

payments. Even after lining up the payment years, it is possible for an EP to exceed the 

payment cap under Medicaid by switching programs at the right time. We do not believe 

that the Congress intended for the payment caps to be exceeded under any circumstance, 

and therefore propose that no EP should receive more than the maximum incentive 

available to them under Medicaid, which is the higher of the two caps. The last year 

incentive payment would be reduced if awarding the EP the full amount would exceed 

the overall maximum available under Medicaid. This is possible if an EP receives their 

first two payment years from Medicare and then the last four from Medicaid, as the cap 

would be exceeded by $250. An EP who switches from Medicaid to Medicare could 

exceed the Medicare threshold in a number of circumstances; however, since they cannot 

exceed the Medicaid threshold under any circumstance, we propose to pay the incentive 

for which they are eligible for a given payment year in whichever program they are in for 

that payment year. Finally, we propose that the last year for making an incentive 

payment program switch would be CY 2014. In making this proposal, we considered that 

it is both the last year an EP can enroll in the Medicare EHR incentive program, and also 

the last year before the payment adjustments under Medicare can begin. We request 

comments on the necessity of the ability to switch and the allowed timing for such 

switches. 
CMS-0033-P 178 

c. Data to be Collected 

In addition to information regarding the demonstration of meaningful use, in 

§495.10 of this proposed rule we propose to collect the following administrative data for 

the Medicare and Medicaid EHR incentive programs to fulfill our requirements of online 

posting, avoidance of duplication of incentive payments, and to ensure accurate and 

timely incentive payments: 

● Name, NPI, business address, and business phone of each EP or eligible 

hospital. 

● Taxpayer Identification Number (TIN) to which the EP or eligible hospital 

wants the incentive payment made. For Medicaid EPs this must be consistent with 

assignment rules at §495.10. 

● For EPs, whether they elect to participate in the Medicare EHR incentive 

programs or the Medicaid EHR incentive program. 

● For eligible hospitals, their CCN. 

To coordinate with the States to avoid duplication of payments, we further 

propose to make available to the States through a single repository the following 

additional data: 

● Whether an EP or eligible hospital is a meaningful EHR user, and 

● The remittance date and amount of any incentive payments made to an EP or 

eligible hospital. 

CMS, our contractors, and the States will have access to these six data elements 

through a single repository maintained by CMS. The States will have to provide 

information to us on whether EPs or eligible hospitals are eligible for the Medicaid 
CMS-0033-P 179 

incentive program, whether EPs or eligible hospitals participating in the Medicaid 

program are meaningful EHR users, and when any Medicaid incentive payments are 

made and the amount of the payment. We will put in place processes for an EP or 

eligible hospital to change their information, including the one-time switch in EHR 

incentive program election by EPs. 

6. Hospital-based Eligible Professionals 

Section 1848(o)(1)(C)(i) of the Act, as added by section 4101(a) of the HITECH 

Act, states that hospital-based EPs are not eligible for the Medicare incentive payments. 

Similarly, the majority of hospital-based EPs will not be eligible for Medicaid incentive 

payments under 1903(t)(2)(A) of the Act (the only exception to this rule is for those 

practicing predominantly in an FQHC or RHC). Section 1848(o)(1)(C)(ii) of the Act 

defines the term “hospital-based eligible professional” to mean an EP, such as a 

pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of 

his or her Medicare-covered professional services during the relevant EHR reporting 

period in a hospital setting (whether inpatient or outpatient) through the use of the 

facilities and equipment of the hospital, including the hospital's qualified EHRs. This 

section indicates that the determination of whether an EP is a hospital-based EP shall be 

made on the basis of the site of service, as defined by the Secretary, and without regard to 

the type of service provided by the EP or any employment or billing arrangement 

between the EP and any other provider (for example, the hospital-based determination for 

an EP would not be affected by whether the EP is an employee of the hospital, under a 

contractual relationship with the hospital, or with respect to where he or she has made a 
CMS-0033-P 180 

reassignment to the hospital for Part B billing purposes.) Section 1903(t)(3)(D) of the 

Act defines hospital-based EP in nearly identical terms. 

In addition, as discussed below, section 1848(a)(7)(D) of the Act, as added by 

section 4101(b) of the HITECH Act, exempts hospital-based EPs from the downward 

payment adjustment applied under section 1848(a)(7)(A)(i) of the Act to covered 

professional services provided during a payment year by EPs who are not meaningful 

EHR users for the relevant payment year beginning in 2015. 

If an EP is providing “substantially all” of their services in the hospital, we 

believe it is reasonable to assume that the EP is also using the facilities and equipment of 

the hospital, including any qualified EHR implemented by the hospital. The statute uses 

“facilities and equipment” to determine whether an EP is a hospital-based EP. As 

“facilities and equipment” would generally be understood to apply to the hospital 

building and its medical and other equipment that is used in furnishing medical services, 

we believe it is reasonable to assume that an EP providing substantially all of their 

services in a hospital is providing these services in the hospital building and generally is 

also using its equipment, including qualified EHRs, and not bringing his or her own 

equipment to the hospital to provide medical services. Similarly, it seems reasonable to 

assume that the statute contemplates that an EP that uses the hospital's facilities and 

equipment would also be using the hospital's EHR system and should be ineligible for an 

incentive payment. We seek comment as to whether EPs are using qualified EHR of the 

hospital in ambulatory care settings. 

As noted previously, the statute provides that hospital-based EPs, “such as a 

pathologies, anesthesiologist, or emergency physician,” are those EPs that provide 
CMS-0033-P 181 

substantially all of their Medicare-covered professional services in a “hospital setting 

(whether inpatient or outpatient).” Because the HITECH Act does not define the term 

“hospital setting,” we looked to existing statutes and regulations that define and describe 

hospital settings for guidance in defining “hospital setting” for purposes of this proposed 

rule. We welcome comments on alternative approaches to interpreting the meaning of 

“hospital setting.” 

First, section 1861(e) of the Act defines the term a “'hospital” to mean an 

institution that “is primarily engaged in providing, by or under the supervision of 

physicians, to inpatients (A) diagnostic services and therapeutic services for medical 

diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation 

services for the rehabilitation of injured, disabled, or sick persons.” Therefore, we 

propose that EPs that practice primarily in inpatient hospital settings, as referenced in 

section 1861(e) of the Act, be considered hospital-based EPs. 

 Because that the parenthetical after the term “hospital setting” in the statutory 

definition of hospital-based EP specifically refers to both inpatient and outpatient hospital 

settings, we believe the term “hospital setting” should be defined to also include the 

outpatient setting. So although a “hospital” is an institution that primarily provides 

inpatient services, we propose to define the term “hospital setting” for purposes of the 

Medicare and Medicaid EHR incentive payment programs to also include all outpatient 

settings where hospital care is furnished to registered hospital outpatients. For purposes 

of Medicare payment and conditions of participation, it is CMS's longstanding policy to 

consider as outpatient hospital settings include those outpatient settings that are owned by 

and integrated both operationally and financially into the entity, or main provider, hat 
CMS-0033-P 182 

owns and operates the inpatient setting. For example, we consider as outpatient hospital 

settings all types of outpatient care settings in the main provider, on-campus and offcampus provider-based departments (PBDs) of the hospital, and entities having providerbased status, as these entities are defined in §413.65. 

 In accordance with our regulations at §413.65, a provider-based department or 

entity must operate under the ownership and financial and administrative control of the 

main provider. We also note that the provider-based department or entity of the hospital 

comprises both the physical facility where services are furnished and the personnel and 

equipment used to care for patients in those settings. In addition, §413.65(d) specifies 

that the financial operations of provider-based department or entities must be fully 

integrated within the financial system of the main provider. Medicare makes payment to 

the hospital under the outpatient payment system for the facility resources required for 

care that is furnished to hospital outpatients in its provider-based departments and 

entities, regardless of the specific type of hospital outpatient setting. Moreover, Medicare 

pays EPs for their professional services furnished to hospital outpatients at the facility 

rate under the Medicare Physician Fee Schedule (MPFS), also regardless of the specific 

type of hospital outpatient setting, recognizing that in all hospital outpatient settings the 

hospital bears the cost of personnel, equipment, and supplies for which payment would 

otherwise be made to the EP under the MPFS for services furnished in a non-facility 

setting. Section 413.65(d) also requires that the medical records for patients treated in the 

provider-based department or entity must be integrated into a unified retrieval system (or 

cross reference) of the main provider. Moreover, an eligible hospital will receive an 

incentive payment for its medical records system if such system is considered certified 
CMS-0033-P 183 

EHR technology and is meaningfully used by the hospital consistent with the 

requirements of the final rule to this rule. Because, by definition of the requirements for 

provider-based departments and entities, EPs who furnish substantially all of their 

covered professional services to hospital outpatients use the hospital's facility and 

equipment, including the integrated medical record system, for which payment is made 

by Medicare to the hospital, we believe these EPs should be considered hospital-based 

EPs, and thus excluded from the Medicare EP EHR incentive payments. This is fully 

consistent with the definition of hospital-based EPs in section 1848(o)(1)(C)(ii) of the 

Act. 

 In summary, we propose that EPs that provide substantially all of their 

professional services in the inpatient hospital setting, in any type of outpatient hospital 

setting, or in any combination of inpatient and outpatient hospital settings, be considered 

hospital-based EPs. 

We propose to consider the use of place of service (POS) codes on physician 

claims to determine whether an EP furnishes substantially all of their professional 

services in a hospital setting and is, therefore, hospital-based. This code set is required 

for use in the implementation guide adopted as the national standard for electronic 

transmission of professional health care claims under the provisions of the Health 

Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA directed the 

Secretary of HHS to adopt national standards for electronic transactions. These standard 

transactions require all health plans and providers to use standard code sets to populate 

data elements in each transaction. The Transaction and Code Set Rule (65 FR 50312) 

adopted the ASC X12N-837 Health Care Claim: Professional, volumes 1 and 2, version 
CMS-0033-P 184 

4010, as the standard for electronic submission of professional claims. This standard 

names the POS code set currently maintained by CMS as the code set to be used for 

describing sites of service in such claims and is available at 

http://www.cms.hhs.gov/PlaceofServiceCodes/Downloads/POS_09_10_07_Rev_2_508.p

df 

From this code set, we propose to consider the use of the following POS codes 

indicating that the EP provided the service in an inpatient or any type of outpatient 

hospital setting (including a PBD of a hospital) to determine whether an EP is a hospitalbased eligible professional: 

• 21—Inpatient Hospital – is a facility, other than psychiatric, which primarily 

provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation 

services by, or under, the supervision of physicians, to patients admitted for a variety of 

medical conditions. 

• 22 – Outpatient Hospital – is a portion of a hospital which provides diagnostic, 

therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured 

persons who do not require hospitalization or institutionalization 

• 23 – Emergency Room, Hospital – is a portion of a hospital where emergency 

diagnosis and treatment of illness or injury is provided 

Place of service codes 22 (Outpatient Hospital) and 23 (Emergency Room, 

Hospital) are commonly recognized to be outpatient departments of the hospital. An 

outpatient department of a hospital will either meet the definition of the “main provider,” 

a “department of a provider,” or of having “provider-based status” as those terms are 

used in §413.65. Place of service codes 22 and 23 are used to describe hospital outpatient 
CMS-0033-P 185 

settings that meet these definitions under §413.65 and are also subject to the conditions of 

participation under part 482. 

The statutory definition of hospital-based EP provides that to be considered a 

hospital-based EP, the EP must provide “substantially all” of his or her covered 

professional services in a hospital setting, which we propose to encompass all hospital 

inpatient and outpatient settings, including all settings that meet the definition of the main 

provider, department of a provider, or of having provider-based status. Therefore, we 

must identify the minimum percentage of an EP's covered professional services must be 

provided in a hospital setting in order for the EP to be considered as providing 

“substantially all” of his or her covered professional services in a hospital setting. We 

would define “substantially all” as furnishing at least 90 percent of services in a hospital 

setting, either inpatient or outpatient. We believe this threshold appropriately balances 

our competing goals of ensuring that professionals are encouraged to participate in the 

incentive program and avoid duplicate payments to a professional who is primarily using 

the EHR technology of the hospital in which he or she furnishes services. While we 

considered using 75 percent as a threshold for determining whether an EP is an 

hospital-based EP, we are concerned that such a standard could exclude EPs from 

receiving incentive payments that perform a minority but significant percentage of their 

services outside of inpatient or outpatient hospital settings and would have offices 

separate and independent from the hospital where they provide patient care services and 

for which they would have costs to obtain an EHR system. Based on an analysis of 2008 

Medicare claims data, if we define “substantially all” of covered services in a hospital 

setting” to mean that 75 percent or more of an EP's allowed services are associated with 
CMS-0033-P 186 

one of the place of service codes listed above, we estimate that 65 percent of EPs would 

be considered eligible to receive an EHR incentive payment. If we increase this criterion 

to 90 percent, we estimate that 68 of percent of EPs would be eligible for the EHR 

incentive payment. In other words, 3 percent fewer EPs would be ineligible for the EHR 

incentive payments if we define “substantial all” to mean at least 90 percent rather than at 

least 75 percent. 

Because EPs providing 90 percent or more of their services in one of these sites as 

described above are not likely to expend significant resources related to EHRs in other, 

non-hospital settings, we believe this proposal is most consistent with the law's intent of 

not providing incentive payments to EPs that are providing substantially all of their 

services in a hospital setting (whether inpatient or outpatient). However, we are open to 

comments on other proposals that are consistent with the law's intent of not providing 

incentive payments to hospital-based physicians as defined in HITECH. In our proposed 

approach, a hospital-based eligible professional, would be ineligible to receive an EHR 

incentive payment under either Medicare or Medicaid, regardless of the type of service 

provided, if more than 90 percent of their services are identified as being provided in 

places of service classified under place of service codes 21, 22, or 23. 

Accordingly, for both Medicare and Medicaid incentive payment purposes, we 

propose that a hospital-based eligible professional is defined as an EP who furnishes 

90 percent or more of their covered professional services in any of the above listed places 

of service. A hospital-based EP would be ineligible to receive EHR incentive payments. 

(Based on preliminary claims data from the first 9 months of 2009, CMS currently 

estimates that, under this proposed definition, about 27 percent of Medicare EPs 
CMS-0033-P 187 

(physicians) would be considered hospital-based and thus not eligible to receive any 

incentive payments. We do not have any data on Medicaid practitioners.) We propose to 

make this determination, for Medicare incentive payment purposes, as to whether or not 

an EP is hospital-based by annually analyzing an EP's claims history from the prior year. 

Therefore, for example, based on such analysis, an otherwise EP would be considered a 

hospital-based EP and be ineligible for incentive payments in 2011 if he/she provided 90 

percent or more of his/her allowed services in one of the above listed places of service 

based on their 2010 Medicare claims data. The hospital-based status of each EP would 

be reassessed each year, using claims data from the year immediately proceeding the 

payment year. For Medicaid purposes, we are proposing that State Medicaid agencies 

make the determination about whether or not an EP is hospital-based by analyzing an 

EP's Medicaid claims data, or in the case of EPs who deliver care via Medicaid managed 

care programs, by analyzing either encounter data or other equivalent data sources, at the 

State's option. There is an interest in assuring that nearly all primary care providers are 

meaningful users of EHR technology by 2014. However, this objective may not be 

reached because of several factors. 

• Some primary care EPs who provide services to Medicare and Medicaid 

beneficiaries would be ineligible for the incentive payments. For example, we currently 

estimate that under this proposal, 12-13 percent of family practitioners under Medicare 

would be considered hospital-based under our proposed definition of hospital-based EP, 

and therefore would not be eligible for the EHR incentive payments. (Note that we 

believe that these data could be applied generally to Medicaid physicians as well. 

However, Medicaid EPs include other practitioners who also must meet hospital-based 
CMS-0033-P 188 

eligibility requirements, some of whom provide primary care services such as nurse 

practitioners). Although many of these family practitioners may be serving in 

nonprimary care roles within the hospital setting (such as in emergency departments or 

functioning as hospitalists), those EPs performing primary care services in the hospital 

setting would also not be eligible to receive EP incentive payments. If these EPs were 

eligible to receive incentive payments, some might reassign them to the hospital, and the 

hospital could then use the EP's incentive payments for additional integrated outpatient 

EHR systems. 

• As will be explained in the next section of this proposed rule, the hospital's total 

incentive payment is based on total inpatient services. As result, a hospital with a large 

outpatient department will not receive a higher incentive payment as a result of their 

outpatient services. 

• Finally, as previously discussed, we are proposing that the Stage 1 meaningful 

use criteria for eligible hospitals apply only to a hospital's inpatient setting. 

Because of these factors, we are concerned that hospital investment in their 

outpatient primary care sites is likely to lag behind their investment in their inpatient 

EHR systems. To address these concerns, as part of future rulemaking, we plan to 

consider ways to realign the meaningful use objectives and criteria to include a broader 

definition of hospital care to include outpatient services. We believe this could provide 

an important incentive for hospital investment in EHRs for their outpatient primary care 

sites. We welcome comments on these issues including other ways that CMS, under the 

current statute, could help meet the objective that nearly all primary care providers are 

meaningful users of EHR technology by 2014. 
CMS-0033-P 189 

We also seek comment on the extent to which hospitals install EHRs in their 

outpatient clinics as part of their adoption of EHRs. In addition, we seek comment on the 

way that hospitals with provider-based entities meet the provider-based requirements at 

42 CFR 413.65(d) if they have EHRs in any or all parts of the hospital. 

Finally, we seek comment on whether we should use another method for defining 

hospital-based EPs than what we have proposed here. Any comments should address 

implementation based on the specific POS codes identified, and/or any complexities that 

would result from not including all outpatient settings owned and operated by and 

integrated with the hospital in the determination of whether an EP is hospital-based. 

7. Interaction with Other Programs 

 The HITECH Act addresses interactions between the Medicare EHR incentive 

program and the E-prescribing Incentive Program authorized by MIPPA. Under section 

1848(m)(2)(D) of the Act, as added by section 4101(f)(2)(B) of the HITECH Act, if a 

Medicare FFS or MA EP receives an incentive payment from the Medicare EHR 

incentive program, the EP (or group practice) is not eligible to also receive the incentive 

payment under the E-prescribing Incentive Program created by MIPPA. Given the 

payment timelines proposed in this rule for the Medicare EHR incentive program and the 

existing payment timeline for the E-prescribing Incentive Program, we will know 

whether an EP received a Medicare EHR incentive payment before the E-Prescribing 

Incentive Program payment is calculated. Thus we will exclude those EPs (or group 

practices) who accept a Medicare EHR incentive payment for a given year from being 

eligible for the E-Prescribing Incentive Program payment for that same year. EPs 
CMS-0033-P 190 

receiving a Medicaid EHR incentive payment would remain eligible for the Medicare 

MIPAA E-Prescribing Incentive Program payment. 

 As the HITECH Act does not specify any other restrictions on participation in 

other programs and participation in the Medicare and Medicaid EHR incentive programs, 

we do not propose any other restrictions. There may be opportunities to avoid 

duplication of reporting requirements among our various programs. In section II.A.3. of 

this proposed rule, we discuss how we will avoid duplication of reporting requirements 

for clinical quality measures.
CMS-0033-P 191 

B. Medicare Fee-for Service Incentives

1. Incentive Payments for Eligible Professionals (EP) 

 Section 1848(o)(1)(A) of the Act, as amended by section 4101(a) of the HITECH 

Act, provides for incentive payments to EPs who are meaningful users of certified EHR 

technology during the relevant EHR reporting periods. Section 1848(o)(1)(A)(i) of the 

Act provides that EPs who are meaningful EHR users during the relevant EHR reporting 

period are entitled to an incentive payment amount, subject to an annual limit, equal to 75 

percent of the Secretary's estimate of the Medicare allowed charges for covered 

professional services furnished by the EP during the relevant payment year. Under 

section 1848(o)(1)(B)(ii)(VI) of the Act, an EP is entitled to an incentive payment for up 

to 5 years. In addition, in accordance with section 1848(o)(1)(A)(ii) of the Act, there 

shall be no incentive payments made with respect to a year after 2016. The incentive 

payments would be disbursed from the Federal Supplementary Medical Insurance Trust 

Fund, as provided for under section 1848(o)(1)(A)(i) of the Act. As noted in section II.A. 

of this proposed rule, EPs who qualify for both the Medicare and Medicaid incentive 

payments must elect to receive payments from one program or the other. 

a. Definitions 

In accordance with section 1848(o)(5)(C) of the Act, we propose to add a 

definition of the term “eligible professional” in our regulations at §495.100 to mean a 

physician as defined under section 1861(r) of the Act. Section 1861(r) of the Act defines 

the term “physician” to mean the following five types of professionals, each of which 

must be legally authorized to practice their profession under state law: a doctor of 

medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of 
CMS-0033-P 192 

podiatric medicine, a doctor of optometry, or a chiropractor. As discussed in section 

II.B.1.a of this proposed rule, in accordance with section 1848(o)(1)(C) of the Act, 

hospital-based EPs are not eligible for an incentive payment. 

Section 1848(o)(5)(A) of the Act defines covered professional services as having 

the same meaning as in section 1848(k)(3) of the Act, that is, services furnished by an 

eligible professional for which payment is made under, or is based on, the Medicare 

physician fee schedule. 

In accordance with section 1848(a)(1) of the Act, the Medicare allowed charge for 

covered professional services is the lesser of the actual charge or the Medicare physician 

fee schedule amount established in section 1848 the Act. As specified under section 

1848(o)(1)(A)(i), the Secretary's estimate of allowed charges is based on claims 

submitted to Medicare no later than 2 months following the end of the relevant payment 

year. We propose to codify these specifications and definitions in our regulations at [cite 

proposed regulation range]. 

b. Incentive Payment Limits 

 Section 1848(o)(1)(B)(i) of the Act sets forth the annual limits on the EHR-related 

incentive payments to EPs. Specifically, section 1848(o)(1)(B) of the Act provides that 

the incentive payment for an EP for a given payment year shall not exceed the following 

amounts: 

• For the EP's first payment year, for such professional, $15,000 (or, $18,000 if 

the EP's first payment year is 2011 or 2012). 

• For the EP's second payment year, $12,000. 

• For the EP's third payment year, $8,000. 
CMS-0033-P 193 

• For the EP's fourth payment year, $4,000. 

• For the EP's fifth payment year, $2,000. 

• For any succeeding year, $0. 

Under section 1848(o)(1)(B)(iv) of the Act, for EPs who predominantly furnish 

services in a geographic HPSA (as designated by the Secretary under section 

332(a)(1)(A) of the Public Health Service (PHS) Act), the incentive payment limitation 

amounts for each payment year are increased by 10 percent. Section 1848(o)(1)(B)(iii) of 

the Act also provides for a phased reduction in payment limits for EPs who first 

demonstrate meaningful use of certified EHR technology after 2013. Specifically, if the 

EP's first payment year is after 2013, then the annual limit on the incentive payment 

equals the annual limit applicable to an EP whose first payment year is 2013. 

Accordingly, if the EP's first payment year is 2014, the EP's maximum incentive payment 

will be $12,000 in 2014, $8,000 in 2015, and $4,000 in 2016. Section 1848(o)(1)(B)(v) 

of the Act provides that if the EP's first payment year is after 2014, then the applicable 

incentive payment limit for such year and any subsequent year shall be $0. In other 

words, an EP who does not qualify to receive an EHR-related incentive payment prior to 

2015 will not receive any of these incentive payments. Table 22 shows the maximum 

incentive payment amounts available to EPs under Medicare FFS. (As noted above and 

discussed further below, these limits are increased by 10 percent for EPs who 

predominantly furnish services in a HPSA.) 
CMS-0033-P 194 

TABLE 22: Maximum Total Amount of EHR Incentive Payments for a Medicare 

EP who does not Predominantly Furnish Services in a HPSA 

First CY in which the EP Receives an Incentive 

Payment 

Calendar 

Year 

2011 2012 2013 2014 2015 - subsequent years 

2011 $18,000 ------ ------ ------ ------

2012 $12,000 $18,000 ------ ------ ------

2013 $8,000 $12,000 $15,000 ------ ------

2014 $4,000 $8,000 $12,000 $12,000 ------ 

2015 $2,000 $4,000 $8,000 $8,000 $0 

2016 ------ $2,000 $4,000 $4,000 $0 

TOTAL $44,000 $44,000 $39,000 $24,000 $0 

The following examples illustrate how the payment amount would be determined: 

• Example 1: EP that receives the maximum payment. For payment year 2011, 

the incentive payment for an EP would be, subject to a payment limit of $18,000, equal to 

75 percent of the EP's Medicare physician fee schedule allowed charges for CY 2011 (in 

this case, the maximum allowed charges recognized for the purposes of the incentive, or 

$24,000 x .75 = $18,000), estimated based on claims for covered professional services 

furnished by the EP from January 1, 2011 through December 31, 2011, and submitted to 

the appropriate Medicare administrative contractor (MAC/carrier) on or before 

February 29, 2012. 

• Example 2: EP that receives less than the maximum payment. Assume for this 

example that the EP's estimated total allowed charges for covered professional services 

are $10,000 which is less than the $24,000 maximum allowed charges that could be 

recognized for purposes of this incentive. Therefore, for payment year 2011, the 

incentive payment in this case would be, $10,000 x .75 = $7,500, based on claims for 

covered professional services furnished by the EP from January 1, 2011 through 
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December 31, 2011, and submitted to the appropriate Medicare administrative contractor 

(MAC) or carrier on or before February 29, 2012. 

We propose, for each subsequent payment year, to use the annual allowed charges 

and claims in a similar manner to calculate the Secretary's estimate of allowed charges for 

purposes of computing the incentive payment. 

• Example: For payment year 2012, the incentive payment issued to an EP 

would be, subject to a payment limit (that is, $18,000 if it is the first payment year, 

$12,000 if it is the second payment year), equal to 75 percent of the EP's Medicare 

physician fee schedule allowed charges for CY 2012, based on claims for covered 

professional services performed by the EP from January 1, 2012 through 

December 31, 2012, and submitted to the appropriate Medicare contractor (MAC/carrier) 

on or before February 28, 2013. 

c. Increase in Incentive Payment for EPs who Predominantly Furnish Services in a 

Geographic Health Professional Shortage Area (HPSA) 

Section 1848(o)(1)(B)(iv) of the Act provides that the amount of the annual 

incentive payment limit for each payment year be increased by 10 percent for EPs who 

predominantly furnish services in an area that is designated by the Secretary (under 

section 332(a)(1)(A) of the PHS Act) as a geographic health professional shortage area 

(HPSA). Section 332(a)(1)(A) of the PHS Act refers to geographic HPSAs, or areas that 

have been determined to have a shortage of health professionals, based on the populationto-provider ratio and other factors. HPSAs are located in every State, and in both rural 

and urban areas. 
CMS-0033-P 196 

Geographic HPSAs are defined in 42 CFR Part 5 and include primary medical 

care, dental, and mental health HPSAs. In accordance with the statute, we will increase 

the limits per payment year by 10 percent for EHR-related incentive payments to EPs 

who predominantly furnish covered professional services in a geographic primary 

medical care, dental, or mental health HPSA. 

We propose that an EP be considered as “predominantly” furnishing covered 

professional services in a geographic HPSA if more than 50 percent of the EP's Medicare 

covered professional services are furnished in a geographic HPSA. Using “more than 

50 percent” as the criterion to define “predominantly” is consistent with how the term is 

defined in general parlance as well as how the definition is used for purposes of other 

aspects of the Medicare program. 

To determine whether an EP has furnished more than 50 percent of his/her 

covered professional services in a geographic HPSA, we propose to utilize frequency of 

services provided over a 1-year period from January 1 to December 31, rather than basing 

it on the percentage of allowed charges. Our data indicates that most physicians either 

provide all or none of their services in a geographic HPSA, so we believe that our 

proposal to base eligibility for the 10 percent EHR HPSA payment limit increase on 

frequency, rather than allowed charges, will have little or no impact on the determination 

of whether an EP is eligible for the EHR HPSA payment limit increase. To apply the 

payment limit increase, we will first need to determine whether more than 50 percent of 

an EP's covered professional services were furnished in a geographic HPSA during a 

particular payment year. We propose to first make the generally applicable incentive 
CMS-0033-P 197 

payment to the EP based on an EP's estimated allowed charges for the relevant payment 

year. 

Once we compile a full year of data, we would determine eligibility for the EHR 

HPSA payment limit increase for the payment year based on whether the EP provided 

more than 50 percent of his/her services in a geographic HPSA during the payment year. 

The determination would be made based on claims submitted not later than 2 months 

after the end of the year. If we determine that the EP provided more than 50 percent of 

his/her services in a geographic HPSA and is therefore eligible for the EHR HPSA 

payment limit increase, we would then make an additional lump sum payment to reflect 

that increased limit amount based on the estimated allowable charges for that EP for the 

prior year. We propose that the additional amount would be paid no later than 120 days 

after the end of the prior year for which the EP was eligible for the 10 percent EHR 

HPSA payment limit increase. 

Most physicians furnishing services in a HPSA furnish 100 percent of their 

covered services in a HPSA. Based on our data, we found very few physicians provide 

even a modest percentage of their services across HPSA and non-HPSA areas. We 

estimate that about 17 percent of EPs would qualify for the 10 percent EHR HPSA 

payment limit increase, provided they satisfy the other requirements for the incentive 

payment. Section 1848(o)(1)(B)(iv) of the Act also authorizes us to apply the provisions 

of sections 1833(m) and (u) of the Act in implementing this 10 percent EHR HPSA 

payment limit increase, as the Secretary determines appropriate. Section 1833(m) of the 

Act establishes the HPSA bonus program, which provides a 10 percent bonus to 

physicians who furnish Medicare covered professional services in a geographic HPSA. 
CMS-0033-P 198 

Section 1833(u) of the Act establishes the Physician Scarcity Area bonus program, which 

provided a 5 percent bonus to physicians who furnish Medicare covered professional 

services in areas that are determined to physician scarcity areas. (Note: The authority for 

the Physician Scarcity Area program ended on June 31, 2008.) 

Section 1833(m)(1) of the Act provides that physicians who furnish covered 

professional services in a year in an area that is designated as a geographic HPSA prior 

to the beginning of the year are eligible to receive the HPSA bonus for services furnished 

during the current year. We have interpreted this to mean that bonus payments should 

continue throughout the current year, even if the area loses its designation as a 

geographic HPSA during the current year. Physicians furnishing covered professional 

services in an area that is not designated as a geographic HPSA by December 31 of the 

prior year are not eligible to receive the HPSA bonus for the current year, even if the area 

is subsequently designated as a geographic HPSA during the current year. We propose to 

apply these same rules for the 10 percent EHR HPSA payment limit increase provided 

under section 1848(o)(1)(B)(iv) of the Act. Specifically, we propose that EPs who 

predominately furnish covered professional services in an area that is designated as a 

geographic HPSA as of December 31 of the prior year would be eligible to receive the 10 

percent EHR HPSA payment limit increase during the current year, provided the EP 

qualifies for the EHR HPSA payment limit for the current year. For example, an EP 

furnishing a covered professional service in an area that was designated as a geographic 

HPSA as of December 31, 2010, and who qualifies to receive the EHR HPSA payment 

in 2011, also would receive a 10 percent EHR incentive payment limit increase for 2011. 
CMS-0033-P 199 

Section 1833(m)(2) of the Act also provides that geographic HPSAs that consist 

of an entire county be identified and the bonus paid automatically. We publish a list 

annually of the zip codes that are in these areas on our website at 

http://www.cms.hhs.gov/HPSAPSAPhysicianBonuses/01_Overview.asp#TopOfPage. 

Physicians furnishing Medicare covered professional services in a zip code that is on this 

list automatically receive the HPSA bonus payment. Physicians furnishing Medicare 

covered professional services in a zip code that is not on this list but that was designated 

as a geographic HPSA as of December 31 of the prior year must use a modifier when 

submitting a Medicare claim in order to receive the HPSA bonus. 

We note that we would only list a zip code on our website if the entire geographic 

area encompassed by the zip code is designated as a geographic HPSA. If a zip code 

encompasses both areas designated as a geographic HPSA and areas that are not a 

geographic HPSA, we will not list the zip code on our website. Our list also will not 

include zip codes for areas designated as geographic HPSAs after we create the zip code 

list (but before December 31). EPs furnishing Medicare covered professional services in 

an area eligible for the EHR HPSA payment limit increase that is not included in the list 

of zip codes for automatic payment would need to use a modifier when submitting a 

claim to identify their eligibility for the HPSA EHR payment limit increase. 

Table 23 shows the maximum total EHR HPSA payment limit for an EP who 

predominantly furnishes covered professional services in a HPSA as described previously 

above for CYs 2011 through 2016. Table 24 shows the maximum additional amount of 

incentive payments for a Medicare EP who predominantly furnishes services in a HPSA. 

(That is, Table 24 shows the difference between Tables 22 and 23). 
CMS-0033-P 200 

TABLE 23: Maximum Total Amount of Incentive Payments for a Medicare EP 

Who Predominantly Performs Services in a HPSA 

Calendar Year Year that EP Becomes EHR User in a HPSA 

 2011 2012 2013 2014 2015 and 

subsequent 

years 

2011 $19,800 ------ ------ ------ ------ 

2012 $13,200 $19,800 ------ ------ ------ 

2013 $8,800 $13,200 $16,500 ------ ------ 

2014 $4,400 $8,800 $13,200 $13,200 ------ 

2015 $2,200 $4,400 $8,800 $8,800 $0 

2016 ------ $2,200 $4,400 $4,400 $0 

TOTAL $48,400 $48,400 $42,900 $26,400 $0 

TABLE 24: Maximum Additional Amount of Incentive Payments for a Medicare 

EP Who Predominantly Performs Services in a HPSA 

Calendar Year Year that an EP First Receives the Incentive 

Payment for Medicare Covered Professional 

Services Furnished in a Geographic HPSA

 

 2011 2012 2013 2014 2015 and 

subsequent 

years

2011 $1,800 ------ ------ ------ ------ 

2012 $1,200 $1,800 ------ ------ ------ 

2013 $800 $1,200 $1,500 ------ ------ 

2014 $400 $800 $1200 $1200

2015 $200 $400 $800 $800 $0

2016 ------ $200 $400 $400 $0

TOTAL $4,400 $4,400 $3,900 $2,400 $0

d. Form and Timing of Payment 

Section 1848(o)(1)(D)(i) of the Act, as amended by section 4101(a) of the 

HITECH Act, provides that the incentive payments may be disbursed as a single 

consolidated payment or in periodic installments as the Secretary may specify. We 

propose to make a single, consolidated, annual incentive payment to EPs. We believe 

that making a single, consolidated payment would be the least administratively 

burdensome for both CMS and most EPs. We expect that many EPs who demonstrate 
CMS-0033-P 201 

meaningful use of certified EHR technology will receive the maximum incentive 

payments. We propose that payments would be made on a rolling basis, as soon as we 

ascertain that an EP has demonstrated meaningful use for the applicable reporting period 

(that is, 90 days for the first year or a calendar year for subsequent years), and reached 

the threshold for maximum payment. 

Section 1848(o)(1)(A) of the Act provides that “with respect to covered 

professional services provided by an eligible professional,” the incentive payment “shall 

be paid to the eligible professional (or to an employer or facility in the cases described in 

clause (A) of section 1842(b)(6)).” Section 1842(b)(6)(A) of the Act allows for 

reassignment to an employer or entity with which the physician has a valid contractual 

arrangement allowing the entity to bill for the physician's services. Therefore, EPs are 

allowed to reassign their incentive payment to their employer or an entity which they 

have a valid employment agreement or contract providing for such reassignment, 

consistent with all rules governing reassignments. The statute does not address the case 

where the EP has multiple employers/contractual arrangements, and it would be difficult 

operationally for CMS to allocate the incentive payment among two or more 

individuals/entities. Therefore, in §495.10(e) we are proposing to preclude an EP from 

reassigning the incentive payment to more than one employer or entity. We believe that 

the question of whether the EP has reassigned the incentive payment to the 

employer/entity under his or her contract with the employer/entity, including any preexisting contract between the parties, is a matter of contract interpretation that should be 

resolved by the parties themselves. We note that nothing in the statute or our existing 

regulations would prohibit an EP from assigning to the employer/entity only the 
CMS-0033-P 202 

allowable charges for his or her professional services, with the EP retaining any incentive 

payment, or vice versa. If an EP will reassign his or her incentive payment to an 

employer/entity with which the EP has a contractual arrangement, the parties will need to 

review their existing contract to determine whether it currently provides for reassignment 

of the incentive payment to the employer/entity or needs to be revised. 

The statute provides that the incentive payment shall be paid to the employer or 

facility in the cases described in clause (A) of section 1842(b)(6) of the Act. This clause 

provides that payment for a service provided to an individual may not be paid to anyone 

other than the individual or the practitioner who provided the service, except that the 

practitioner may reassign his or her right to payment to his or her employer or an entity 

with whom he or she has a contractual arrangement if certain conditions are met. Any 

such authorization must be in accordance with our regulations at 42 CFR 424.73 and 

42 CFR 424.80. 

Section 1848(o)(1)(D)(ii) of the Act requires the Secretary to establish rules to 

coordinate the incentive payments made among practices for an EP furnishing covered 

professional services in more than one practice, including the application of the limits on 

the amounts of the incentive payments. To implement this requirement, we propose to 

use the EP's Medicare enrollment information to determine whether an EP belongs to 

more than one practice (that is, whether the EP's National Provider Identifier (NPI) is 

associated with more than one practice). In cases where the EP is associated with more 

than one practice, we propose that EPs select one tax identification number to receive any 

applicable EHR incentive payment. 
CMS-0033-P 203 

Although it would not be impossible for Medicare contractors to make proportional EHR 

incentive payments to each TIN associated with a provider, we believe this option would 

entail the creation of highly complex and potentially unwieldy administrative systems. 

Therefore, we believe our proposal to permit the EP to select one TIN to which we will 

make any EHR incentive payment is the most efficient alternative. We have proposed 

that payments would be made on a rolling basis, as soon as we ascertain that an EP has 

demonstrated meaningful use for the applicable reporting period (that is, 90 days for the 

first year or a calendar year for subsequent years), and reached the threshold for 

maximum payment. If we were to adopt an alternative policy, permitting EHR incentive 

payments to be made to multiple TINs, we would need to calculate the percentage of 

covered professional services billed by each TIN for that EP, and the total of any 

incentive payment amount would be divided and paid accordingly. Thus, a policy 

permitting payment to multiple TINs would conflict with our proposal to make payment 

on a rolling basis as EPs meet the criteria to receive the maximum EHR incentive 

payment. An additional confounding factor is the possibility that an EP might change 

group affiliations during the year. Therefore, we believe the most judicious policy would 

be to permit the EP to designate one TIN to which payment will be made. 

e. Payment Adjustment Effective in CY 2015 and Subsequent Years for EPs who are not 

Meaningful Users of Certified EHR Technology 

Section 1848(a)(7) of the Act, as amended by section 4101(b) of the HITECH 

Act, provides for payment adjustments effective for CY 2015 and subsequent years for 

EPs who are not meaningful EHR users during the relevant EHR reporting period for the 

year. In general, beginning in 2015, if an EP is not a meaningful EHR user for any EHR 
CMS-0033-P 204 

reporting period for the year, then the Medicare physician fee schedule amount for 

covered professional services furnished by the EP during the year (including the fee 

schedule amount for purposes of determining a payment based on the fee schedule 

amount) is adjusted to equal the 'applicable percent' of the fee schedule amount (defined 

below) that would otherwise apply. The HITECH Act includes a significant hardship 

exception, discussed below, which, if applicable, could exempt certain EPs from this 

payment adjustment. The payment adjustments will not apply to hospital-based EPs, as 

defined elsewhere. 

 The term 'applicable percent' means: “(I) for 2015, 99 percent (or, in the case of 

an EP who was subject to the application of the payment adjustment if the EP is not a 

successful electronic prescriber under section 1848(a)(5) for 2014, 98 percent);” 

“(II) for 2016, 98 percent; and (III) for 2017 and each subsequent year, 97 percent.” 

 In addition, section 1848(a)(7)(iii) of the Act provides that if for 2018 and 

subsequent years the Secretary finds that the proportion of EPs who are meaningful EHR 

users is less than 75 percent, the applicable percent shall be decreased by 1 percentage 

point from the applicable percent in the preceding year, but in no case shall the applicable 

percent be less than 95 percent. 

Significant Hardship Exception—Section 1848(a)(7)(B) of the Act provides that the 

Secretary may, on a case-by-case basis, exempt an EP who is not a meaningful EHR user 

for the year from the application of the payment adjustment if the Secretary determines 

that compliance with the requirements for being a meaningful EHR user would result in a 

significant hardship, such as in the case of an EP who practices in a rural area without 
CMS-0033-P 205 

sufficient Internet access. The exemption is subject to annual renewal, but in no case 

may an EP be granted a hardship exemption for more than 5 years. 

We will include specific proposals to implement these payment adjustments for 

EPs who are not meaningful EHR users in future rulemaking prior to the 2015 effective 

date. We welcome comments on these payment adjustments and any comments received 

will be considered in developing future proposals to implement these provisions, 

including comments on the possible circumstances for which we should allow an EP to 

qualify for the significant hardship exception. 

2. Incentive Payments for Hospitals 

a. Definition of Eligible Hospital for Medicare 

Section 1886(n) of the Act, as amended by section 4102(a)(1) of the HITECH 

Act, provides for incentive payments, beginning in FY 2011 (that is, October 1, 2010 

through September 30, 2011) for eligible hospitals that are meaningful users of certified 

EHR technology during the EHR reporting period for the payment year. We are 

proposing a new §495.104 to implement this provision. For purposes of this provision, 

section 1886(n)(6)(B) of the Act defines “eligible hospitals” as “subsection (d) hospitals,” 

as that term is defined in section 1886(d)(1)(B) of the Act. Section 1886(d)(1)(B) of the 

Act generally defines a “subsection (d) hospital” as a “hospital located in one of the fifty 

States or the District of Columbia.” The term therefore does not include hospitals located 

in the territories or hospitals located in Puerto Rico. Section 1886(d)(9)(A) of the Act 

separately defines a “subsection (d) Puerto Rico hospital” as a hospital that is located in 

Puerto Rico and that “would be a subsection (d) hospital . . . if it were located in one of 

the 50 states.” Therefore, because section 4102(a)(1) of the HITECH Act does not refer 
CMS-0033-P 206 

to “subsection (d) Puerto Rico hospitals,” incentive payments for meaningful users of 

certified EHR technology are not available under this provision to hospitals located in 

Puerto Rico. The provision does apply to inpatient, acute care hospitals located in the 

State of Maryland. These hospitals are not currently paid under the IPPS in accordance 

with a special waiver provided by section 1814(b)(3) of the Act. Despite this waiver, the 

Maryland hospitals continue to meet the definition of a “subsection (d) hospital” because 

they are located in the 50 states. The statutory definition of a subsection (d) hospital also 

does not apply to hospitals and hospital units excluded under section 1886(d)(1)(B) from 

the IPPS, such as psychiatric, rehabilitation, long term care, children's, and cancer 

hospitals. For purposes of this provision, we will provide incentive payments to hospitals 

as they are distinguished by provider number in hospital cost reports. Incentive payments 

for eligible hospitals will be calculated based on the provider number used for cost 

reporting purposes, which is the CCN of the main provider (also referred to as OSCAR 

number). Payments to eligible hospitals are made to each provider of record. The 

criteria for being a meaningful EHR user, and the manner for demonstrating meaningful 

use, are discussed in section B.2. of this proposed rule. 

b. Incentive Payment Calculation for Eligible Hospitals 

Section 1886(n)(2) of the Act, as amended by 4102(a) of HITECH, describes the 

methodology for determining the incentive payment amount for eligible hospitals that are 

meaningful users of certified EHR technology during the EHR reporting period for a 

payment year. In general, that section requires the incentive payment for each payment 

year to be calculated as the product of: (1) an initial amount; (2) the Medicare share; and 

(3) a transition factor applicable to that payment year. 
CMS-0033-P 207 

As amended by section 4201(a) of the HITECH Act, section 1886(n)(2)(A)(i) of 

the Act defines the initial amount as the sum of a “base amount,” as defined in section 

1886(n)(2)(B) of the Act, and a “discharge related amount,” as defined in section 

1886(n)(2)(C) of the Act. The base amount is $2,000,000, as defined in section 

1886(n)(2)(B) of the Act. The term “discharge related amount” is defined in section 

1886(n)(2)(C) of the Act as “the sum of the amount, estimated based upon total 

discharges for the eligible hospital (regardless of any source of payment) for the period, 

for each discharge up to the 23,000th discharge as follows: 

(i) for the first through the 1,149th discharge, $0. 

(ii) for the 1,150th through the 23,000th discharge, $200. 

(iii) for any discharge greater than the 23,000th, $0. 

In addition to the base amount, the discharge related amount provides an 

additional $200 for each hospital discharge during a payment year, beginning with a 

hospital's 1,150th discharge of the payment year, and ending with a hospital's 23,000th

discharge of the payment year. No additional payment is made for discharges prior to the 

1,150th discharge, or for those discharges subsequent to the 23,000th discharge. 

Section 1886(n)(2)(C) of the Act, as amended by section 4102(a) of the HITECH 

Act, specifies that a “12-month period selected by the Secretary” may be employed for 

purposes of determining the discharge related amount. While the statute specifies that the 

payment year is determined based on a Federal fiscal year (FY), section 1886(n)(2)(C) of 

the Act provides the Secretary with authority to determine the discharge related amount 

on the basis of discharge data from a relevant hospital cost reporting period, for use in 

determining the incentive payment during a FY. FYs begin on October 1 of each 

calendar year, and end on September 30 of the subsequent calendar year. Hospital cost 
CMS-0033-P 208 

reporting periods can begin with any month of a calendar year, and end on the last day of 

the 12th subsequent month. For purposes of administrative simplicity and timeliness, we 

propose, for each eligible hospital during each incentive payment year, to use data on the 

hospital discharges from the hospital fiscal year that ends during the FY prior to the FY 

that serves as the payment year as the basis for making preliminary incentive payments. 

Final payments would be determined at the time of settling the cost report for the hospital 

fiscal year that ends during the payment year, and settled on the basis of the hospital 

discharge data from that cost reporting period. 

Example: FY 2011 begins on October 1, 2010 and ends on September 30, 2011. 

For an eligible hospital with a cost reporting period running from July 1, 2010 through 

June 30, 2011, we would employ the relevant data from the hospital's cost reporting 

period ending June 30, 2010 in order to determine the incentive payment for the hospital 

during FY 2011. This timeline would allow us to have the relevant data available for 

determining payments in a timely manner for the first and subsequent payment years. 

This timeline would also render it unnecessary to develop a cumbersome process to 

extract and employ discharge data across more than one hospital cost reporting period in 

order to determine the discharge related amount for a FY-based payment period. 

However, final payments would be based on hospital discharge data from the cost report 

ending June 30, 2011, and determined at the time of settlement for that cost reporting 

period. 

c. Medicare Share 

As previously discussed, the initial amount must be multiplied by the Medicare 

share and an applicable transition factor to determine the incentive payment to an eligible 
CMS-0033-P 209 

hospital for an incentive payment year. As added by section 4102(a) of the HITECH Act, 

section 1886(n)(2)(D) of the Act defines the Medicare share for purposes of calculating 

incentive payments as a fraction based on estimated Medicare FFS and managed care 

inpatient bed days, divided by estimated total inpatient bed-days, modified by charges for 

charity care. This section specifies that the Medicare share fraction is determined for the 

incentive payment year “for an eligible hospital for a period selected by the Secretary.” 

As in the case of the discharge data discussed above, this clause provides the Secretary 

with authority to determine the Medicare share fraction on the basis of data from a 

relevant hospital cost reporting period, for use in determining the incentive payment 

during a FY. For purposes of administrative simplicity and timeliness equivalent to those 

discussed above with regard to discharge data, we propose, for each eligible hospital 

during each incentive payment year, to employ data on the hospital's Medicare 

fee-for-service and managed care inpatient bed days, total inpatient bed-days, and 

charges for charity care from the hospital fiscal year that ends during the FY prior to the 

FY that serves as the payment year as the basis for preliminary payment. Final payment 

would be made on the basis of the data from the hospital fiscal year that ends during the 

FY that serves as the payment year at the time of the settlement of the cost report for the 

latter period. 

Section 1886(n)(2)(D) of the Act, as amended by section 4102 of the HITECH 

Act, defines the numerator and denominator of this fraction in terms of estimated 

Medicare FFS and managed care inpatient bed days, estimated total inpatient bed-days, 

and charges for charity care. Specifically, section 1886(n)(2)(D)(i) of the Act defines the 

numerator of the Medicare share fraction as the sum of-- 
CMS-0033-P 210 

• The estimated number of inpatient-bed-days (as established by the Secretary) 

which are attributable to individuals with respect to whom payment may be made under 

part A; and 

• The estimated number of inpatient-bed-days (as so established) that are 

attributable to individuals who are enrolled with a MA organization under Part C. 

We propose to determine the numbers of Medicare Part A and Part C 

inpatient-bed-days using the same data sources and methods for counting those days that 

we employ in determining Medicare's share for purposes of making payments for direct 

graduate medical education costs, as provided under section 1886(h) of the Act and 

§413.75 of our regulations. Specifically, we propose to derive “the estimated number of 

inpatient-bed-days... attributable to individuals with respect to whom payment may be 

made under part A” from lines 1, 6 through 9, 10 and 14 in column 4 on Worksheet S-3, 

Part I of the Medicare cost report. The data entered on these lines in the cost report 

include all patient days attributable to Medicare inpatients, excluding those in units not 

paid under the IPPS and excluding nursery days. Similarly, we propose to derive the 

“estimated number of inpatient-bed-days attributable... to individuals who are enrolled 

with a MA organization under Part C” from line 2 in column 4 on Worksheet S-3, Part I 

of the Medicare cost report. The methodology and data sources for making these bed day 

determinations are not only well established, but also well known and understood within 

the hospital community. We therefore see no reason to develop or propose any 

alternative approach for determining the “subsection (d) hospital” numbers of Medicare 

Part A and Part C inpatient-bed-days for purposes of calculating these incentive 

payments. 
CMS-0033-P 211 

Section 1886(n)(2)(D)(ii) of the Act defines the denominator of the Medicare 

share fraction as the product of-- 

• The estimated total number of inpatient-bed-days with respect to the eligible 

hospital during such period; and 

• The estimated total amount of the eligible hospital's charges during such period, 

not including any charges that are attributable to charity care (as such term is used for 

purposes of hospital cost reporting under Title XVIII), divided by the estimated total 

amount of the hospitals charges during such period. 

As in the case of Medicare Part A and Part C inpatient-bed days, for purposes of 

determining total inpatient-bed days in the denominator of the Medicare share fraction, 

we propose to use the same data sources, and the same methods, that we employ in 

determining Medicare's share for purposes of making payments for direct graduate 

medical education costs. Specifically, we will derive the relevant data from lines 1, 6 

through 9, 10 and 14 in column 6 on Worksheet S-3, Part I of the Medicare cost report. 

The data entered on these lines in the cost report include all patient days attributable to 

inpatients, excluding those in units not paid under the IPPS. 

d. Charity Care

In determining the denominator of the Medicare share fraction, we also must 

determine any charges that are attributable to charity care furnished by an eligible 

hospital or CAH. The exclusion of charges attributable to charity care has the effect of 

decreasing the denominator of the Medicare share fraction as the proportion of charity 

care (charity care charge ratio) provided by a hospital increases. This is because the ratio 

of estimated total hospital charges, not including charges attributable to charity care, to 
CMS-0033-P 212 

estimated total hospital charges during a period decreases, relatively speaking, as a 

hospital provides a greater proportion of charity care. The effect of this factor on the 

denominator of the Medicare share fraction is therefore to decrease the denominator (as 

the total number of inpatient-bed days is multiplied by a relatively lower charity care 

charge ratio), as a hospital provides a greater proportion of charity care. A smaller 

denominator increases the Medicare share factor, providing for higher incentive 

payments, to a hospital that provides a greater proportion of charity care. Conversely, as 

a hospital provides a lower proportion of charity care, the ratio of estimated total hospital 

charges, not including charges attributable to charity care, to estimated total hospital 

charges during a period increases. In this case, the effect of this factor on the 

denominator of the Medicare share fraction is therefore to increase the denominator (as 

the total number of inpatient-bed days is multiplied by a relatively higher charity care 

charge ratio), as a hospital provides a smaller proportion of charity care. A larger 

denominator in turn decreases the Medicare share factor, providing for lower incentive 

payments, as a hospital provides a lower proportion of charity care. 

The data and methods for determining this charity factor for purposes of the 

Medicare share fraction warrants more extensive discussion. Section 112 of the 

Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP) Balanced 

Budget Refinement Act of 1999 (Pub. L. 106-113) directs the Secretary to require 

prospective payment system hospitals to submit data on the costs incurred by the 

hospitals for providing inpatient and outpatient hospital services for which the hospitals 

are not compensated, including non-Medicare bad debt, charity care, and charges for 

medical and indigent care as part of the Medicare cost report. 
CMS-0033-P 213 

In the August 1, 2000 Federal Register (65 FR 47054), we published a final rule 

that set forth changes to the IPPS and FY 2001 rates. In that final rule we responded to 

comments on implementing section 112 of Pub. L. 106-113. We informed the public that 

the hospital Medicare cost report and instructions would be revised to collect 

uncompensated care data. As a result of meeting with, and receiving input from, various 

hospital industry groups, “Worksheet S-10; Hospital Uncompensated and Indigent Care 

Data”, was added to the Medicare cost reporting forms to implement section 112 of 

Pub. L. 106-113. The Worksheet S-10 was placed in effect for cost reporting periods 

beginning on or after April 30, 2002. 

In May 2005, the Medicare Payment Advisory Commission (MedPAC) convened 

an expert panel to address concerns on the usefulness of the Worksheet S-10 data. Based 

on the panel discussion, MedPAC issued a list of recommended changes to the 

Worksheet S-10. In addition, in its March 2007 report to Congress, MedPAC 

recommended that the Secretary should improve the form and accompanying instructions 

for collecting data on uncompensated care in the Medicare cost report; and require 

hospitals to report using the revised form as soon as possible. (Recommendation 2A-3) 

In the August 22, 2007 Federal Register (72 FR 47406), we published a final 

rule responding to the MedPAC recommendation. We stated in that final rule that we 

were undertaking a major update to the Worksheet S-10 form and accompanying 

instructions based on the panel's discussions with MedPAC. 

In the July 2, 2009 Federal Register (74 FR 31738), we accordingly published a 

proposed collection to revise the Hospital and Hospital Health Care Complex Cost 

Report, Form CMS-2552-10, which included a revised Worksheet S-10 form. This 
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worksheet may change based on public comments. The revised cost report and 

accompanying instructions that include the definition of charity care based on MedPAC's 

recommendations are currently in the Paperwork Reduction Act clearance process. We 

anticipate that the revised hospital cost report will be effective for cost reporting periods 

beginning on or after February 1, 2010. 

For the purposes of this proposed rule, we propose to define charity care as part of 

uncompensated and indigent care described for Medicare cost reporting purposes in the 

Medicare cost report instructions at section 4012 of the Provider Reimbursement Manual 

(PRM), Part 2; Worksheet S-10; Hospital Uncompensated and Indigent Care Data. 

Subsection (d) hospitals and CAHs are required to complete the Worksheet S-10.

As part of the Form CMS-2552-10 described above, the revised Worksheet S-10 

instructions define uncompensated care as follows: “. . . charity care and bad debt which 

includes non-Medicare bad debt and non-reimbursable Medicare bad debt. 

Uncompensated care does not include courtesy allowances or discounts given to 

patients.” These instructions further define charity care to include health services for 

which a hospital demonstrates that the patient is unable to pay. Charity care results from 

a hospital's policy to provide all or a portion of services free of charge to patients who 

meet certain financial criteria. For Medicare purposes, charity care is not reimbursable, 

and unpaid amounts associated with charity care are not considered as an allowable 

Medicare bad debt. Therefore, we are proposing to use the charity care charges that are 

reported on line 19 of the revised Worksheet S-10 in the computation of the Medicare 

share of the incentive payments. The revised instructions for line 19 of Worksheet S-10 

state the following: 
CMS-0033-P 215 

Enter the total initial payment obligation of patients who are given a full 

or partial discount, based on the hospital's charity care criteria (measured 

at full charges), for care delivered during this cost reporting period for the 

entire facility. For uninsured patients, including patients with coverage 

from an entity that does not have a contractual relationship with the 

provider (column 1), this is the patient's total charges. For patients 

covered by a public program or private insurer with which the provider 

has a contractual relationship (column 2), this is the deductible and 

coinsurance payments required by the payer. Include charity care for all 

services except physician and other professional services. Do not include 

charges for either uninsured patients given discounts without meeting the 

hospital's charity care criteria or patients given courtesy discounts. 

Charges for non-covered services provided to patients eligible for 

Medicaid or other indigent care program (including charges for days 

exceeding a length of stay limit) can be included, if such inclusion is 

specified in the hospital's charity care policy and the patient meets the 

hospital's charity care criteria. 

Under section 1886(n)(2)(D) of the Act, if the Secretary determines that data are not 

available on charity care necessary to calculate the portion of the formula specified in 

clause (ii)(II) of section 1886(n)(2)(D) of the Act, the Secretary shall use data on 

uncompensated care and may adjust such data so as to be an appropriate proxy for charity 

care including a downward adjustment to eliminate bad debt data from uncompensated 

care data. In the absence of the data necessary for the Secretary to compute the amount 

described in clause (ii)(II) of section 1886(n)(2)(D)of the Act, the amount under such 

clause shall be deemed to be 1. 

We believe that the charity care charges reported on line 19 of the Worksheet 

S-10 represent the most accurate measure of charity care charges as part of the hospital's 

overall reporting of uncompensated and indigent care for Medicare purposes. Therefore, 

since eligible hospitals and CAHs are required to complete the Worksheet S-10, if a 

hospital has not properly reported any charity care charges on line 19, we may question 

the accuracy of the charges used for computing the Medicare share of the incentive 
CMS-0033-P 216 

payments. With appropriate resources, we believe the charity care data can be obtained 

by the MAC. This data would be used to determine if the hospital's charity care criteria 

are appropriate, if a hospital should have reported charity care charges, and if the reported 

charges are proper. If we determine, as based on the determination of the MAC, that the 

hospital did not properly report charity care charges on the Worksheet S-10, then we 

propose to deem the denominator in section 1886(n)(2)(D)(ii)(II) of the Act to be 1. 

In this proposed rule, we are specifically soliciting public comments on the 

charity care financial criteria established by each hospital and reviewed by the MACs, the 

collection of charity care data on the Worksheet S-10, and whether proxies for charity 

care may be developed with other data available to us. 

e. Transition Factor 

As we have previously discussed, the initial amount must be multiplied not only 

by the Medicare share fraction, but also by an applicable transition factor in order to 

determine the incentive payment to an eligible hospital for an incentive payment year. 

Section 1886(n)(2)(E)(i) of the Act designates that the applicable transition factor equals 

1 for the first payment year, three-fourths for the second payment year, one-half for the 

third payment year, one-fourth for the fourth payment year, and zero thereafter. 

However, section 1886(n)(2)(E)(ii) of the Act provides that if “the first payment year for 

an eligible hospital is after 2013, then the transition factor specified in this subparagraph 

for a payment year for such hospital is the same as the amount specified in clause (i) for 

such payment year for an eligible hospital for which the first payment year is 2013.” 

Accordingly, if a hospital's first payment year is FY 2014, the applicable transition factor 

equals three-fourths for the first payment year (FY 2014), one-half for the second 
CMS-0033-P 217 

payment year (FY 2015), one-fourth for the third payment year (FY 2015, and zero 

thereafter. If a hospital's first payment year is FY 2015, the applicable transition factor 

equals one-half for the first payment year (FY 2015), one-fourth for the second payment 

year (FY 2016), and zero thereafter. As discussed in more detail below, under section 

1886(n)(2)(E)(ii) of the Act, the transition factor for a hospital for which the first 

payment year is after 2015 equals zero for all years. In other words, 2015 is the last year 

for which eligible hospitals may begin participation in the Medicare EHR Incentive 

Program. 

Figure 1--Incentive Payment Calculation for Subsection D Hospitals 

Incentive Amount = [Initial Amount] x [Medicare Share] x [Transition Factor] 

 Initial Amount = $2,000,000 + [$200 per discharge for the 1,150th – 23,000th

discharge] 

 

Medicare Share = Medicare/(Total*Charity Care) = [M/(T*C)]

M = [# of Inpatient Bed Days for Part A Beneficiaries] + [# of Inpatient Bed Days 

for MA Beneficiaries] 

T = [# of Total Inpatient Bed Days] 

C = [Total Charges – Charges for Charity Care*]/[Total Charges] 

*If data on charity care is not available, then the Secretary would use data on 

uncompensated care as a proxy. If the proxy data is not also available, then “C” would 

be equal to 1. 

 

Transition Factor 

Consecutive Payment Year Transition Factor 

1 1 

2 3⁄4 

3 1⁄2 

4 1⁄4 

f. Duration and Timing of Incentive Payments 

Section 1886(n)(2)(E)(i) of the Act establishes that an eligible hospital that is a 

meaningful user of certified EHR technology could receive up to 4 years of financial 
CMS-0033-P 218 

incentive payments. The transition factor phases down the incentive payments over the 

4-year period. Therefore, an eligible hospital that is a meaningful user of certified EHR 

technology during the relevant EHR reporting period, in payment year FY 2011, could 

receive incentive payments beginning with FY 2011 (transition factor equals 1), and for 

FY 2012 (transition factor equals three-fourths), 2013 (transition factor equals one-half), 

and 2014 (transition factor equals one-fourth) if they continue to be a meaningful user of 

certified EHR technology during the relevant EHR reporting periods. 

Section 1886(n)(2)(E)(ii) of the Act establishes the range of time during which a 

hospital may begin to receive incentive payments, and the applicable transition periods 

for hospitals that are permitted to begin receiving incentive payments after FY 2011. 

Specifically, that section provides that if the “first payment year for an eligible hospital is 

after 2015, then the transition factor . . . for such hospital and for such year and 

subsequent year shall be 0.” This clause in effect provides that no incentive payments 

will be available to a hospital that would begin to receive such payments after FY 2015. 

In other words, FY 2015 is the last FY in which a hospital can begin to receive incentive 

payments. Taken together, sections 1886(n)(2)(G)(i) and 1886(n)(2)(E)(ii) of the Act 

allow hospitals to begin receiving incentive payments during FYs 2011 through 2015. 

Section 1886(n)(2)(E)(ii) of the Act also establishes the transition periods and factors that 

will be in effect for hospitals that begin to receive transition payments during FY 2014 

and 2015. As discussed previously, that section states that if “the first payment year for 

an eligible hospital is after 2013, then the transition factor specified in this subparagraph 

for a payment year for such hospital is the same as the amount specified in clause (i) for 

such payment year for an eligible hospital for which the first payment year is 2013.” 
CMS-0033-P 219 

Section 1886(n)(2)(E)(ii) of the Act also establishes the transition periods that will be in 

effect for hospitals that begin to receive transition payments during FYs 2014 through 

2015. That section states that if “the first payment year for an eligible hospital is after 

2013, then the transition factor specified in this subparagraph for a payment year for such 

hospital is the same as the amount specified in clause (i) for such payment year for an 

eligible hospital for which the first payment year is 2013.” By implication, this clause 

establishes that, for hospitals that begin to receive incentive payments in FYs 2012 and 

2013, the transition periods are equivalent to those for hospitals that begin to receive such 

payments in FY 2011. An eligible hospital that is a meaningful user of certified EHR 

technology could receive incentive payments beginning with FY 2012 (transition factor 

equals 1), and for FY 2013 (transition factor equals three-fourths), FY 2014 (transition 

factor equals one-half), and FY 2015 (transition factor equals one-fourth). Similarly, an 

eligible hospital that is a meaningful EHR user could receive incentive payments 

beginning with FY 2013 (transition factor equals 1), and for FYs 2014 (transition factor 

equals 3⁄4), 2015 (transition factor equals 1⁄2), and 2016 (transition factor equals 1⁄4). 

However, this section also specifically provides that the transition factor is 

modified for those eligible hospitals that first become meaningful users of certified EHR 

technology beginning in 2014 or 2015. Such hospitals would receive payments as if they 

became meaningful EHR users beginning in 2013. In other words, if a hospital were to 

begin to demonstrate meaningful use of EHR certified technology in 2014, the transition 

factor used for that year (2014) would be 3⁄4 instead of 1, 1⁄2 for the second year (2015), 1⁄4 

for the third year (2016), and zero thereafter. Similarly, if a hospital were to begin 
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meaningful use of certified EHR technology in 2015, the transition factor used for that 

year would be 1⁄2 instead of 1, 1⁄4 for the second year (2016), and zero thereafter. 

Table 25 shows the possible years an eligible hospital could receive an incentive 

payment and the transition factor applicable to each year. 

TABLE 25: Transaction Factor for Medicare FFS Eligible Hospitals 

Fiscal Year Fiscal Year that Eligible Hospital First Receives the 

Incentive Payment 

 2011 2012 2013 2014 2015 

2011 1.00 ------ ------ ------ ------

2012 0.75 1.00 ------ ------ ------

2013 0.50 0.75 1.00 ------ ------

2014 0.25 0.50 0.75 0.75 ------

2015 ------ 0.25 0.50 0.50 0.50

2016 ------ ------ 0.25 0.25 0.25

We welcome comments from the public on our discussion of these statutory 

requirements regarding the computation of the incentive payment amounts, and the issues 

regarding the sources and timing of data for use in these computations. 

g. Incentive Payment Adjustment Effective in FY 2015 and Subsequent Years for 

Eligible Hospitals who are not Meaningful EHR Users 

In addition to providing for incentive payments for meaningful use of EHRs 

during a transition period, section 1886(b)(3)(B) of the Act, as amended by section 

4102(b)(1) of the HITECH Act, provides for an adjustment to the market basket update to 

the IPPS payment rate for those eligible hospitals that are not meaningful EHR users for 

the EHR reporting period for a payment year, beginning in FY 2015 . Specifically, 

section 1886(b)(3)(B) of the Act provides that, “for FY 2015 and each subsequent FY,” 

an eligible hospital that is not “a meaningful EHR user... for an EHR reporting period” 

will receive a reduced update to the IPPS standardized amount. This reduction will apply 
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to “three-quarters of the percentage increase otherwise applicable.” For FY 2015 and 

each subsequent FY, the reduction to three-quarters of the applicable update for an 

eligible hospital that is not a meaningful EHR user will be “33 1/3 percent for FY 2015, 

66 2/3 percent for FY 2016, and 100 percent for FY 2017 and each subsequent FY.” In 

other words, the Secretary is required to subject eligible hospitals who are not meaningful 

users to one-quarter, one-half, and three-quarters reductions of their market basket 

updates in FY 2015, FY 2016, and FY 2017 and subsequent years respectively. Section 

4102(b)(1)(B) of the HITECH Act also provides that such “reduction shall apply only 

with respect to the FY involved and the Secretary shall not take into account such 

reduction in computing the applicable percentage increase ... for a subsequent FY.” This 

provision establishes a continuing incentive for hospitals to become meaningful EHR 

users, because a hospital that does become a meaningful EHR user in any year after the 

effective date of the update reduction will receive the same, fully updated standardized 

amount for that year, and subsequent years, as those hospitals that were already 

meaningful EHR users at the time when the update reduction went into effect (although 

hospitals would remain subject to a separate reduction for failure to report quality data 

under RHQDAPU). In order to conform with this new update reduction, section 

4102(b)(1)(A) of the HITECH Act revises section 1886(b)(3)(B)(viii)(1) of the Act to 

provide that, beginning with FY 2015, the reduction to the IPPS applicable percentage 

increase for failure to submit data on quality measures to the Secretary shall be onequarter of the applicable market basket update. In this way, even the combined 

reductions for EHR use and quality data reporting will not produce an update of less than 
CMS-0033-P 222 

zero for a hospital in a given FY as long as the hospital market basket remains a positive 

number. 

 The following example illustrates how this payment reduction would work. 

Suppose that the market basket “percentage increase otherwise applicable” to the IPPS 

standardized amount is 2.0 percent. Of this 2.0 percent, one-quarter (0.5 percent) of the 

market basket update would be subject to a reduction for any hospital that fails to submit 

data on quality measures, and up to three-quarters (1.5 percent) would be subject to a 

reduction for any hospital that is not a meaningful EHR user. For FY 2015, hospitals 

could receive one of four different updates, depending upon their reporting of quality data 

and their use of EHRs: 

● A hospital that reports quality data and qualifies as a meaningful EHR user 

would receive the full update of 2.0 percent. 

● A hospital that fails to report quality data but is a meaningful EHR user would 

receive an update of 1.5 percent, which represents the full 2.0 percent update minus the 

reduction of one-quarter (0.5 percentage point) for failing to report quality data. 

● A hospital that reports quality data but does not qualify as a meaningful EHR 

user would receive an update of 1.5 percent, which represents the full 2.0 percent update 

minus 0.5 percentage point (33 1/3 percent of three-quarters of the full update: 1/3 times 

1.5 equals 0.5). 

● A hospital that fails to report quality data and does not qualify as a meaningful 

EHR user would receive an update of 1.0 percent, which represents the full 2.0 percent 

update minus the reduction of one-quarter (0.5 percentage point) for failing to report 
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quality data, and a further reduction of 0.5 percentage point (33 1/3 percent of threequarters of the full update: 1/3 times 1.5 equals 0.5). 

 For FY 2016, hospitals could receive one of four different updates (assuming a 

2 percent update that is otherwise applicable), depending upon their reporting of quality 

data and their use of EHRs:3 

● A hospital that reports quality data and qualifies as a meaningful EHR user 

would receive the full update of 2.0 percent. 

● A hospital that fails to report quality data, but is a meaningful EHR user would 

receive an update of 1.5 percent, which represents the full 2.0 percent update minus the 

reduction of one-quarter (0.5 percentage point) for failing to report quality data. 

● A hospital that reports quality data, but does not qualify as a meaningful EHR 

user would receive an update of 1.0 percent, which represents the full 2.0 percent update 

minus 1.0 percentage point (66 and 2/3 percent of three-quarters of the full update: 

2/3 times 1.5 equals 1.0). 

● A hospital that fails to report quality data, and does not qualify as a meaningful 

EHR user would receive an update of 0.5 percent, which represents the full 2.0 percent 

update minus the reduction of one-quarter (0.5 percentage point) for failing to report 

quality data, and a further reduction of 1.0 percentage point (66 and 2/3 percent of 

three-quarters of the full update: 2/3 times 1.5 equals 1.0). 

 For FYs 2017 and subsequent FYs, the possibilities (assuming a 2 percent update 

that is otherwise applicable) are as follows: 

● A hospital that reports quality data and qualifies as a meaningful EHR user 

would receive the full update of 2.0 percent. 
CMS-0033-P 224 

● A hospital that fails to report quality data, but is a meaningful EHR user would 

receive an update of 1.5 percent, which represents the full 2.0 percent update minus the 

reduction of one-quarter (0.5 percentage point) for failing to report quality data. 

● A hospital that reports quality data, but does not qualify as a meaningful EHR 

user would receive an update of 0.5 percent, which represents the full 2.0 percent update 

minus 1.5 percentage point (100 percent of three-quarters of the full update, which equals 

1.5) for failing to be a meaningful EHR user. 

● A hospital that fails to report quality data, and does not qualify as a meaningful 

EHR user would receive an update of 0.0 percent, which represents the full 2.0 percent 

update minus the reduction of one-quarter (0.5 percentage point) for failing to report 

quality data, and a further reduction of 1.5 percentage point (100 percent of three-quarters 

of the full update, which equals 1.5) for failing to be a meaningful EHR user. 

 These examples are illustrative of current law. Specific proposals to implement 

these payment adjustments for subsection (d) hospitals that are not meaningful EHR users 

are not being made at this time but will be subject to future rule-making prior to the 2015 

implementation date. We welcome comments on these payment adjustments and any 

comments received will be considered in developing future proposals to implement these 

provisions. 

3. Incentive Payments for Critical Access Hospitals (CAHs) 

Section 1814(l)(3)(A) of the Act, as amended by section 4102(a)(2) of the 

HITECH Act, also provides for incentive payments for CAHs that are meaningful users 

of certified EHR technology during an EHR reporting period for a cost reporting period 

beginning during a payment year after FY 2010 but before FY 2016. The criteria for 
CMS-0033-P 225 

being a meaningful EHR user, and the manner for demonstrating meaningful use, are 

discussed in section II.A.2. of this proposed rule. 

a. Definition of CAHs for Medicare 

Section 1861(mm)(1) of the Act defines a CAH as a facility that has been certified 

as a critical access hospital under section 1820(c). CAHs are reimbursed for services 

furnished to Medicare beneficiaries under section 1814(l) of the Act for inpatient services 

and section 1834(g) of the Act for outpatient services. Incentive payments for CAHs 

under section 1814(l)(3)(A) of the Act will be calculated based on the provider number 

used for cost reporting purposes, which is the CCN of the main provider. The process for 

making incentive payments to CAHs is discussed in section II.B.4.c. of this proposed 

rule. 

b. Current Medicare Payment of Reasonable Cost for CAHs 

For Medicare purposes, CAHs are paid for most inpatient and outpatient services 

to Medicare beneficiaries on the basis of reasonable cost under section 1814(l) and 

section 1834(g) of the Act, respectively. Thus, CAHs are not subject to the IPPS and 

Hospital Outpatient Prospective Payment System (OPPS). 

Section 1861(v)(1)(A) of the Act is the statutory basis for reasonable cost 

reimbursement in Medicare. Under the reasonable cost reimbursement methodology, 

payments to providers are based on the reasonable cost of furnishing Medicare-covered 

services to beneficiaries. Reasonable cost includes all necessary and proper costs in 

furnishing the services, subject to the principles of reasonable cost reimbursement 

relating to certain specific items of revenue and cost. Reasonable cost takes into account 

both direct and indirect costs of providers of services, including normal standby costs. 
CMS-0033-P 226 

The objective of the reasonable cost methodology is to ensure that the costs for 

individuals covered by the program are not borne by others not so covered, and the costs 

for individuals not so covered are not borne by the program. The reasonable costs of 

services and the items to be included are determined in accordance with the regulations at 

42 CFR part 413, manual guidance, and other CMS instructions. 

Currently, under section 1814(l)(1) of the Act and §413.70(a) of the regulations, 

effective for cost reporting periods beginning on or after January 1, 2004, payment for 

inpatient services of a CAH, other than services of a distinct part unit of a CAH, is 101 

percent of the reasonable costs of the CAH in providing CAH services to its inpatients, as 

determined in accordance with section 1861(v)(1)(A) of the Act and with the applicable 

principles of cost reimbursement in Parts 413 and 415 of the regulations. However, 

payment for inpatient CAH services is not subject to the reasonable cost principles of the 

lesser of cost or charges, the reasonable compensation equivalent limits for physician 

services to providers, the ceilings on hospital operating costs, and the payment window 

provisions for preadmission services, specified in §412.2(c)(5) and §413.40(c)(2). 

Section 1834(g) of the Act and §413.70(b) of the regulations describe the payment 

methodology for outpatient services furnished by a CAH. 

Currently, reasonable cost reimbursement for CAHs includes payment for 

depreciation of depreciable assets used in providing covered services to beneficiaries, as 

described under Part 413 subpart G of our regulations and §104 of the Medicare Provider 

Reimbursement Manual (PRM). In general, the depreciation expense of an asset, 

representing a portion of the depreciable asset's costs which is allocable to a period of 
CMS-0033-P 227 

operation, is determined by distributing the acquisition costs of the depreciable asset, less 

any salvage costs, over the estimated useful life of the asset. 

c. Changes made by the HITECH Act 

Sections 4102(a)(2) and 4102(b)(2) of the HITECH Act amended section 1814(l) 

of the Act, which governs payment for inpatient CAH services. The HITECH Act did 

not amend section 1834(g) of the Act, which governs payment for outpatient CAH 

services. 

Sections 4102(a)(2) and 4102(b)(2) of the HITECH Act amended section 1814(l) 

of the Act by adding new paragraphs (3), (4), and (5) as follows: 

Section 1814(l)(3)(A) of the Act provides the following: 

 The following rules shall apply in determining 

payment and reasonable costs . . . for a critical access 

hospital that would be a meaningful EHR user (as would be 

determined under paragraph (3) of section 1886(n)) for an 

EHR reporting period for a cost reporting period beginning 

during a payment year if such critical access hospital was 

treated as an eligible hospital under such section: 

 (i) The Secretary shall compute reasonable costs by 

expensing such costs in a single payment year and not 

depreciating these costs over a period of years (and shall 

include as costs with respect to cost reporting periods 

beginning during a payment year costs from previous cost 

reporting periods to the extent they have not been fully 

depreciated as of the period involved). 

 (ii) There shall be substituted for the Medicare 

share that would otherwise be applied [to CAHs under 

section 1814(l)(1),] a percent (not to exceed 100 percent) 

equal to the sum of— 

 (I) the Medicare share (as would be specified under 

paragraph (2)(D) of section 1886(n)) for such critical 

access hospital if such critical access hospital was treated 

as an eligible hospital under such section; and 

 (II) 20 percentage points. 
CMS-0033-P 228 

 Section 1814(l)(3)(B) of the Act provides that the incentive payment for 

CAHs will be paid “through a prompt interim payment (subject to reconciliation) 

after submission and review of such information (as specified by the Secretary) 

necessary to make such payment.” The provision also states that “[i]n no case 

may payment under this paragraph be made with respect to a cost reporting period 

beginning during a payment year after 2015 and in no case may a critical access 

hospital receive payment under this paragraph with respect to more than 

4 consecutive payment years.” 

 Section 1814(l)(3)(C) of the Act provides that the reasonable costs for which a 

CAH may receive an incentive payment are costs for the purchase of certified EHR 

technology to which purchase depreciation (excluding interest) would otherwise apply 

under section 1814(l)(1) of the Act. 

 Section 1814(l)(4)(A) of the Act provides for an adjustment, subject to the 

hardship exemption in section 1814(l)(4)(C) of the Act, to a CAH's reimbursement at 

101 percent of its reasonable costs if the CAH has not met the meaningful EHR user 

definition for an EHR reporting period that begins in FY 2015 or a subsequent fiscal year. 

Section 1814(l)(4)(B) of the Act specifies that if a CAH is not a meaningful EHR user 

during the cost reporting period beginning in FY 2015, its reimbursement will be reduced 

from 101 percent of its reasonable costs to 100.66 percent. For FY 2016, the percentage 

of reimbursement for a CAH that is not a meaningful EHR user is reduced to 

100.33 percent of its reasonable costs. For FY 2017 and each subsequent FY, the 

percentage of reimbursement is reduced to 100 percent of reasonable costs. Section 

1814(l)(4)(C) of the Act states that, as provided for eligible subsection (d) hospitals, the 
CMS-0033-P 229 

Secretary may, on a case-by-case basis, exempt a CAH from this adjustment if the 

Secretary determines, subject to annual renewal, that requiring the CAH to be a 

meaningful EHR user during a cost reporting period beginning in FY 2015 or a 

subsequent fiscal year would result in a significant hardship, such as in the case of a CAH 

in a rural area without sufficient Internet access. However, in no case may a CAH be 

granted an exemption under this provision for more than 5 years. 

 Section 1814(l)(5) provides that there shall be no administrative or judicial review 

under sections 1869 or 1878 of the Act, or otherwise, of: (1) the methodology and 

standards for determining the amount of payment under section 1813(l)(3) and payment 

adjustments under section 1814(l)(4); (2) the methodology and standards for determining 

a CAH to be a meaningful EHR user; (3) the methodology and standards for determining 

if the hardship exemption applies to a CAH; (4) the specification of EHR reporting 

periods; and (5) the identification of reasonable costs used to compute CAH incentive 

payments. 

d. Incentive Payment Calculation for CAHs 

Consistent with section 1814(l)(3)(A) of the Act, we are proposing to amend 

§413.70(a) to add a new paragraph (5) to provide for an incentive payment to a qualifying 

CAH for the reasonable costs incurred for the purchase of certified EHR technology in a 

cost reporting period beginning during a payment year after FY 2010 but before FY 

2016. We are proposing to include a cross-reference to §495.106 which defines the terms 

associated with the CAH incentive payment, including the definition of a “qualifying 

CAH” that is eligible to receive the CAH incentive payment, and the methodology for 

determining the amount of that incentive payment. In addition, we are proposing to 
CMS-0033-P 230 

amend §413.70(a) to add a new paragraph (6) to provide for the adjustment of a CAH's 

reasonable costs of providing inpatient services starting in FY 2015 if the CAH is not a 

qualifying CAH. 

In computing the CAH incentive payment and applying the adjustments to a 

CAH's payment if the CAH is not a qualifying CAH, we propose to apply the definitions 

of certified EHR technology, EHR reporting period, meaningful EHR user and qualified 

EHR in proposed §495.4 that are discussed elsewhere in this proposed rule. 

 In proposed §495.106(a), we are proposing to define a qualifying CAH as a CAH 

that meets the meaningful EHR user definition for eligible hospitals in §495.4, which is 

discussed in section II A.1. of this proposed rule. Also in proposed §495.106(a), for the 

purposes of computing the CAH incentive payment, we are proposing that the reasonable 

costs for the purchase of certified EHR technology mean the reasonable acquisition costs, 

excluding any depreciation and interest expenses associated with the acquisition, incurred 

for the purchase of depreciable assets as described at part 413 subpart G, such as 

computers and associated hardware and software, necessary to administer certified EHR 

technology as defined in §495.4 of this proposed rule. We also propose to define 

payment year for CAHs to mean a fiscal year beginning after FY 2010 but before FY 

2016. 

Under proposed §495.106(b), we specify that a qualifying CAH shall receive an 

incentive payment for its reasonable costs incurred for the purchase of certified EHR 

technology. The CAH incentive payment will be for a cost reporting period that begins 

during a payment year after FY 2010 but before FY 2016. 
CMS-0033-P 231 

Consistent with section 1814(l)(3)(A) of the Act, under proposed §495.106(c), the 

proposed payment methodology for computing the incentive payment for a qualifying 

CAH for a cost reporting period during a payment year is equal to the product of-- (1) the 

reasonable costs incurred for the purchase of certified EHR technology in that cost 

reporting period and any similarly incurred costs from previous cost reporting periods to 

the extent they have not been fully depreciated as of the cost reporting period involved 

and (2) the CAH's Medicare share which equals the Medicare share as computed for 

eligible hospitals including the adjustment for charity care (described in sections II.A.2.b. 

and A.3. of this proposed rule) plus 20 percentage points. However, in no case will the 

resulting Medicare share for a CAH exceed 100 percent. This percentage adjustment will 

be used in place of the 101 percent typically applied to a CAH's reasonable costs under 

section 1814(l)(1) of the Act and §413.70(a) of the regulations. 

For example, a CAH first requests an incentive payment for its cost reporting 

period beginning on January 1, 2012 which is in FY 2012. The CAH incurred reasonable 

costs of $500,000 for the purchase of certified EHR technology in its previous cost 

reporting period beginning on January 1, 2011. This CAH is a meaningful user of 

certified EHR technology during the relevant EHR reporting period and thus qualifies for 

an incentive payment for FY 2012. (For illustrative purposes this example assumes no 

salvage value of the assets acquired.) The CAH depreciated $100,000 of the costs of 

these items in the cost reporting period beginning on January 1, 2011. As a result, the 

amount used to compute the incentive payment will be the remaining $400,000 of 

undepreciated costs. The CAH's Medicare share is 90 percent (its Medicare share of 70 

percent using the methodology described in section II.A.2.b. of this proposed rule plus 20 
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percentage points). Therefore, the CAH's incentive payment for FY 2012 is $360,000 

($400,000 times 90 percent). This CAH's first payment year is FY 2012, and it can 

receive incentive payments through 4 consecutive payment years which, in this example, 

would be FYs 2012 through 2015. 

If, in the above example, the CAH also incurred reasonable costs of $300,000 for 

the purchase of certified EHR technology in its cost reporting period beginning in 

FY 2012 that will not be depreciated, then the incentive payment for FY 2012 is 

$630,000 ($700,000 ($400,000 in FY 2011 plus $300,000 in FY 2012) times 90 percent). 

(The preceding examples are offered for illustrative purposes only and are not 

intended to encompass all possible computations of the CAH incentive payment.) 

 Under proposed §495.106(d)(1), the amount of the incentive payment made to a 

qualifying CAH under this section represents the expensing and payment of the 

reasonable costs of certified EHR technology computed as described above in a single 

payment year and, as specified in §413.70(a)(5), such payment is made in lieu of any 

payment that would have been made under §413.70(a)(1) for the reasonable costs of the 

purchase of certified EHR technology including depreciation and interest expenses 

associated with the acquisition. The Medicare contractor will review the CAH's current 

year and each subsequent year's cost report to ensure that the assets associated with the 

acquisition of certified EHR technology are expensed in a single period and that 

depreciation and interest expenses associated with the acquisition are not allowed. 

 Under proposed §495.106(d)(2), the amount of the incentive payment made to a 

qualifying CAH under this section is paid through a prompt interim payment for the 

applicable payment year after -- (1) the CAH submits the necessary documentation, as 
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specified by CMS or its Medicare contractor, to support the computation of the incentive 

payment amount; and (2) CMS or its Medicare contractor reviews such documentation 

and determines the interim amount of the incentive payment. 

Under §495.106(d)(3), the interim incentive payment is subject to a reconciliation 

process as specified by CMS and the final incentive payment as determined by CMS or 

its Medicare contractor is considered payment in full for the reasonable costs incurred for 

the purchase of certified EHR technology in a payment year. 

Under §495.106(d)(4), we propose that an incentive payment may be made with 

respect to a cost reporting period beginning during a payment year beginning with 

FY 2011 (October 1, 2010 through September 30, 2011) through FY 2015 

(October 1, 2014 through September 30, 2015), but in no case may a CAH receive an 

incentive payment with respect to more than four consecutive payment years. Therefore, 

a CAH, that is a meaningful EHR user, may begin receiving an incentive payment for its 

cost reporting period beginning in FY 2011 for the incurred reasonable costs for the 

purchase of certified EHR technology during that cost reporting period and in previous 

cost reporting periods to the extent that the item or items have not been fully depreciated. 

These incentive payments will continue for no more than 4 consecutive payment years 

and will not be made for a cost reporting period beginning during a payment year after 

2015. As discussed in section II.B.4. of this proposed rule, the CAH must submit 

supporting documentation for its incurred costs of purchasing certified EHR technology 

to its Medicare contractor (Fiscal Intermediary (FI)/MAC). 

CAHs cannot receive an incentive payment for a cost reporting period that begins 

in a payment year after FY 2015. If the first payment year for a CAH is FY 2013 then 
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the fourth consecutive payment year would be 2016. However, the CAH cannot be paid 

an incentive payment for FYs 2016 and beyond. For FY 2016 and beyond, payment to 

CAHs for the purchase of additional EHR technology will be made under §413.70(a)(1) 

in accordance with the reasonable cost principles, as described above, which would 

include the depreciation and interest cost associated with such purchase. 

e. Reduction of Reasonable Cost Payment in FY 2015 and Subsequent Years for CAHs 

that are not Meaningful EHR Users 

Section 4102(b)(2) of the HITECH Act amends section 1814(l) to include an 

adjustment to a CAH's reimbursement at 101 percent of its reasonable costs if the CAH 

has not met the meaningful EHR user definition for an EHR reporting period that begins 

in FY 2015, FY 2016, FY 2017, and each subsequent FY thereafter. Consistent with this 

provision, under proposed §495.106(e) and §413.70(a)(6), if a CAH has not demonstrated 

meaningful use of certified EHR technology for FY 2015, its reimbursement will be 

reduced from 101 percent of its reasonable costs to 100.66 percent. For FY 2016, its 

reimbursement will be reduced to 100.33 percent of its reasonable costs. For FY 2017 

and each subsequent FY, its reimbursement will be reduced to 100 percent of reasonable 

costs. 

 However, as provided for eligible hospitals, a CAH may, on a case-by-case basis, 

be exempted from this adjustment if CMS or its Medicare contractor determines, on an 

annual basis, that requiring the CAH to be a meaningful EHR user would result in a 

significant hardship, such as in the case of a CAH in a rural area without sufficient 

Internet access. However, in no case may a CAH be granted an exemption under this 

provision for more than 5 years. 
CMS-0033-P 235 

 Section 1814(l)(5) of the Act exempts the determinations made under paragraphs 

(l)(3) and (l)(4) from administrative and judicial review. Accordingly, under proposed 

§413.70(a)(6)(iv) and §495.106(f), we are proposing that there shall be no administrative 

or judicial review under sections 1869 or 1878 of the Act, or otherwise, of the following: 

• The methodology and standards for determining the amount of payment under 

section 1814(l)(3) of the Act and payment adjustments under section 1814(l)(4) of the 

Act for CAHs, including selection of periods under section 1886(n)(2) of the Act for 

determining, and making estimates or using proxies of, inpatient-bed-days, hospital 

charges, charity charges, and the Medicare share under subparagraph (D) of section 

1886(n)(2) of the Act; 

• The methodology and standards for determining a CAH to be a meaningful 

EHR user under section 1886(n)(3) of the Act as would apply if the CAH was treated as 

an eligible hospital under section 1886(n) of the Act; 

• The methodology and standards for determining if the hardship exemption 

under section 1814(l)(4)(C) of the Act applies to a CAH; 

• The specification of EHR reporting periods under section 1886(n)(6)(B) of 

the Act as applied under section 1814(l)(3) and (4) of the Act for CAHs; and 

• The identification of reasonable costs used to compute the CAH incentive 

payment under section 1814(l)(3)(C) of the Act. 

4. Process for Making Incentive Payments Under the Medicare FFS Program 

 As previously discussed in section II.B.1. and 2. of this proposed rule and sections 

1848(o)(1) and 1886(n)(1) of the Act, the statute provides for incentive payments to 

eligible professionals, eligible hospitals, and CAHS who are meaningful users of certified 
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EHR technology as early as FY 2011 for qualifying eligible hospitals and CAHs and 

CY 2011 for qualifying EPs. The statute does not specify the process for making these 

payments to qualifying EPs and qualifying eligible hospitals and CAHs participating in 

the FFS Medicare incentive payment program, but instead leaves the payment process to 

the Secretary's discretion. 

 We propose that FIs, carriers, and MACs, as appropriate, would be responsible for 

determining the incentive payment amounts for qualifying EPs and qualifying eligible 

hospitals and CAHs in accordance with the proposed methodology set forth in section 

II.B.1.b. and B.2.b. of this proposed rule based on the previously discussed meaningful 

use criteria, disbursing the incentive payments to qualifying EPs and qualifying eligible 

hospitals and CAHs, and resolving any reconciliation issues. 

a. Incentive Payments to EPs 

 We propose that the carriers/MACs calculate incentive payment amounts for 

qualifying EPs. Incentive payments will be disbursed on a rolling basis, as soon as they 

ascertain that an EP has demonstrated meaningful use for the applicable reporting period 

(i.e., 90 days for the first year or a calendar year for subsequent years), and reached the 

threshold for maximum payment. As discussed previously in section II.A.1.b. of this 

proposed rule, once a qualifying EP's allowed charges reach the minimum threshold of 

allowed charges for the payment year, the qualifying EP is eligible to receive the 

maximum incentive payment; the carrier/MAC would be authorized to disburse the full 

incentive payment to that qualifying EP. If a qualifying EP's allowed charges do not 

reach the minimum threshold during the payment year (including subsequent claims 

submitted not later than 2 months after the end of the payment year per statute) and if the 
CMS-0033-P 237 

qualifying EP is also a qualifying MA EP, the qualifying MA organization with which 

the EP is affiliated will receive the incentive payment for the EP from the MA. If the 

qualifying EP does not also qualify as a MA EP, then the carriers/MAC will calculate the 

amount of the qualifying EP's incentive payment an amount determined by statute as 

75 percent of the accumulated allowed charges based on claims submitted not later than 2 

months after the end of the payment year), and disburse the incentive payment to the 

qualifying EP in the year following payment year. The carriers/MACs will issue 

incentive payments to qualifying EPs after ensuring payment has not already been made 

under the Medicaid program for the relevant payment year. As required by section 

1848(m)(2) of the Act as amended by section 4101(f) of the HITECH Act, qualifying EPs 

receiving incentive payments from the Medicare EHR incentive payment program may 

not also receive an e-prescribing incentive payment. The carriers/MACs will also track 

the incentive payment at the qualifying EP's TIN level, and disburse the electronic 

payment to the TIN provided by the qualifying EP indicated during the registration 

process; qualifying EPs who do not have individual TINs (that is, a qualifying EP who 

works solely in a group practice) will be paid at the group practice level's TIN. Since 

some EPs work in multiple group practices, we considered allowing these EPs to direct 

that their incentive payment be allocated among the multiple practices based on 

individual and/or group TINs. However, as discussed more fully in section II.B.1.d of this 

proposed rule, we determined that this would create a significant administrative burden 

for us and therefore are proposing that qualifying EPs select one TIN for disbursement of 

their Medicare EHR incentive payment. Of course, after the payment is disbursed to their 

designated TIN, qualifying EPs may decide to allocate their incentive payment among the 
CMS-0033-P 238 

multiple practices in which they furnish covered professional services. subject to 

applicable laws, regulations and rules, including, without limitation, those related to 

fraud, waste, and abuse. 

In addition, we recognize that financial relationships between physicians and their 

employers/entities with which they have contractual arrangements may implicate certain 

fraud, waste, and abuse laws, regulations, and rules. Therefore, we are considering 

including specific safeguards to limit the risk that the allocation/reassignment of 

incentive payments could raise under those and other applicable laws, regulations and 

rules; we appreciate public comments on this consideration. 

b. Incentive Payments to Eligible Hospitals 

The FIs/MACs will calculate incentive payments for qualifying eligible hospitals, 

and will disburse such payments on an interim basis once the hospital has demonstrated it 

is a meaningful EHR user for the EHR reporting period for the payment year. As 

discussed above in section B.2.b. of the proposed rule, the formula for calculating a 

qualifying eligible hospital's incentive payment requires the following data: (1) an initial 

amount; (2) the Medicare share; and (3) a transition factor applicable to that payment 

year. FIs/MACs will use the prior-year cost report, Provider Statistical and 

Reimbursement (PS&R) System data, and other estimates to calculate the interim 

incentive payment. As discussed in section II.B.2.c. of this proposed rule, beginning in 

2010, cost reports will capture charity care data which will be used in calculating the 

Medicare share of the payment. As discussed in section II.B.2.b. of this proposed rule, 

we are proposing to calculate a qualifying hospital's final incentive payment using data 

from the cost report for the hospital's fiscal year that ends during the FY prior to the FY 
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that serves as the payment year. We therefore are proposing that the FIs/MACs calculate 

the final incentive payment using actual cost report data report for the hospital's fiscal 

year that ends during the FY prior to the fiscal year that serves as the payment year, and 

will reconcile the incentive payment as necessary at settlement of the cost report. 

Incentive payments for qualifying eligible hospitals will be calculated based on the 

provider number used for cost reporting purposes, which is the CCN of the main 

provider. Therefore, the FIs/MACs would disburse incentive payments to qualifying 

hospitals based on the CCN rather than the TIN. 

c. Incentive Payments to CAHs 

CAHs are paid on a cost reimbursement basis; once a CAH incurs actual EHR 

costs, it can submit supporting documentation to the FI/MAC for review. The FIs/MACs 

will determine an incentive payment amount, as previously discussed in section II.A.3. of 

this proposed rule by substituting for the Medicare share amount that would otherwise be 

applied under the formula used for computing payments for eligible hospitals, a percent 

(not to exceed 100 percent) equal to the sum of-- (1) the Medicare share for such CAH, 

and (2) 20 percentage points. 

The FIs/MACs will reconcile the cost report and ensure the EHR expenses are adjusted 

on the cost report to avoid duplicate payments. Incentive payments for qualifying CAHs 

will be calculated based on the provider number used for cost reporting purposes, which 

is the CCN number of the main provider. Therefore, the FIs/MACs will disburse 

incentive payments to qualifying CAHs based on the CCN number rather than the TIN. 

d. Payment Accounting under Medicare 
CMS-0033-P 240 

 We will conduct selected compliance reviews of EPs, eligible hospitals, and 

qualified CAHs who register for the incentive programs and of recipients of incentive 

payments for the meaningful use of certified EHR technology. The reviews will validate 

provider eligibility their meaningful use attestations including verification of meaningful 

use and would also review components of the payment formulas. 

We will identify and recoup overpayments made under the incentive payment programs 

that result from incorrect or fraudulent attestations, quality measures, cost data, patient 

data, or any other submission required to establish eligibility or to qualify for a payment. 

The overpayment will be recouped by CMS or its agents from the EP, eligible hospital, 

MA organization, CAH, other entities to whom the right to payment has been 

assigned/reassigned, or, in the case of Medicaid, from the State Medicaid agencies.

Medicare FFS EPs and eligible hospitals will need to maintain evidence of qualification 

to receive incentive payments for 10 years after the date they register for the incentive 

program. 

C. Medicare Advantage (MA) Organization Incentive Payments

1. Definitions 

a. Qualifying MA Organization 

Section 1853(l)(1) of the Act, as added by section 4101(c) of the HITECH Act, 

provides for incentive payments to qualifying MA organizations for certain of their 

affiliated EPs who are meaningful users of certified EHR technology during the relevant 

EHR reporting period for a payment year. Section 1853(l)(5) of the Act defines the term 

“qualifying MA organization” as an MA organization that is organized as a health 

maintenance organization (HMO) as defined in section 2791(b)(3) of the PHS Act. 
CMS-0033-P 241 

Section 2791(b)(3) of the PHS Act in turn defines a health maintenance organization as a 

federally qualified HMO, an organization recognized as an HMO under State law, or a 

similar organization regulated for solvency under State law in the same manner and to the 

same extent as an HMO. Since there are few federally qualified HMOs, we expect MA 

organizations to primarily qualify for incentive payments as State-licensed HMOs, or as 

organizations regulated for solvency under State law in the same manner and to the same 

extent as HMOs. Therefore, in §495.200 we propose to define “qualifying MA 

organization.” 

In §495.202(a)(2), we propose to deem MA organizations offering MA HMO 

plans that are not federally-qualified HMOs to meet the definition of HMO in section 

2791(b)(3) of the PHS Act, as HMOs recognized under State law, or as entities subject to 

State solvency rules in the same manner as HMOs. We believe this is reasonable because 

under the MA application process, State regulators are required to certify that MA 

organizations operating in their State are authorized to offer the type of MA plan they 

propose to offer, and meet solvency standards that are adequate for these purposes. For 

each MA organization offering MA HMO plans, the State has thus recognized that the 

organization is able to assume risk as an HMO. Therefore, we have determined that 

absent evidence to the contrary, an MA organization offering HMO plans is recognized 

by the State as a health maintenance organization, or that it is subject to State solvency 

standards in the same manner and to the same extent as an HMO and therefore provides 

sufficient assurance that the section 2791(b)(3) of the PHS Act definition is met. 

In proposed §495.202(a)(3), for MA organizations that offer other coordinated 

care MA plans (Preferred Provider Organization (PPO) plans, Provider Sponsored 
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Organization (PSO) plans, and Regional Preferred Provider Organization (RPPO) plans) 

and for other MA organizations offering other MA plan types (private fee-for-service 

(PFFS) plans, Medical Savings Account (MSA) plans), we would require the sponsoring 

MA organization to attest that the MA organization is recognized under State law as an 

HMO, or that it is a similar organization regulated under State law for solvency in the 

same manner and to the same extent as an HMO before we would make a determination 

that the MA organization is a qualifying MA organization for purposes of incentive 

payments. 

b. Qualifying MA Eligible Professional (EP) 

A qualifying MA organization may receive an incentive payment only for those 

EPs described under section 1853(l)(2) of the Act, as added by section 4101(c) of the 

HITECH Act. Section 1853(l)(2) of the Act provides that these EPs must be “eligible 

professionals” as defined under section 1848(o) of the Act as added by section 4101(a) of 

the HITECH Act, and must either-- 

• Be employed by the qualifying MA organization; or 

• Be employed by, or be a partner of, an entity that through contract with the 

qualifying MA organization furnishes at least 80 percent of the entity's Medicare patient 

care services to enrollees of the qualifying MA organization. 

Further, the EP must furnish at least 80 percent of his or her professional services covered 

under Title XVIII (Medicare) to enrollees of the qualifying MA organization and must 

furnish, on average, at least 20 hours per week of patient care services. 

As discussed in section II.A.1. of this proposed rule, an EP is defined as a 

physician (under section 1861(r) of the Act). 
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We interpret “employed by” to mean that the EP is considered an employee of a 

qualifying MA organization or qualifying entity under the usual common law rules 

applicable in determining the employer-employee relationship under section 3121(d)(2) 

of the Internal Revenue Code of 1986. 

We interpret “to be a partner of” to mean that the qualifying MA EP has an 

ownership stake in the entity. Under this proposed interpretation, a professional that 

contracts with an entity, but has no ownership stake in the entity, would not be 

considered a qualifying MA EP. 

We interpret “furnishing at least 80 percent” of the entity's “patient care services” 

to mean at least 80 percent of the qualifying MA EP's total Medicare revenue in a year 

(that is, total revenue from Medicare FFS as well as from all MA organizations) must be 

from a single qualifying MA organization. 

We propose to interpret the requirement that a qualifying MA EP furnish at least 

80 percent of their professional services covered under Title XVIII means that at least 80 

percent of the professional's total Medicare revenue in a year (that is, total revenue from 

Medicare FFS as well as from all MA organizations) must be from a single qualifying 

MA organization. We believe that in establishing the rule that qualifying MA EPs need 

to furnish at least 80 percent of the EP's Title XVIII covered services “to enrollees of the 

organization,” the statute limits payment related to any specific qualifying MA EP to a 

single qualifying MA organization. Thus, if a qualifying MA EP provided an average of 

20 hours per week of patient care services to two distinct qualifying MA organizations, 

we would pay the qualifying MA organization for the MA EP only if such a qualifying 
CMS-0033-P 244 

EP provided at least 80 percent of his or her professional services covered under 

Title XVIII to enrollees of that organization. 

For purposes of determining whether a qualifying MA EP furnishes, on average, 

at least 20 hours per week of patient care services, we interpret the requirement to include 

both Medicare and non-Medicare patient care services. Moreover, we propose that the 

relevant time period for determining whether an MA EP furnishes at least 20 hours per 

week of patient care services should be the EHR reporting period. (We discuss the 

proposed definition of EHR reporting period in section II.A. 1. e. of this proposed rule.) 

Therefore, over the EHR reporting period, the qualifying EP must provide on average 20 

hours per week of patient care services. Finally, we interpret “patient care services” to 

mean services that would be considered “covered professional services” under sections 

1848(o)(5)(A) and (k)(3) of the Act. That is, health care services for which payment 

would be made under, or for which payment would be based on, the fee schedule 

established under Medicare Part B if they were furnished by an eligible professional. 

We considered various methods of determining when at least 20 hour per week, 

on average, of patient care services will be considered to be provided by MA EPs. We 

considered methods such as defining a dollar or service threshold, or the number of hours 

of direct patient care services actually provided. After due consideration we propose to 

require qualifying MA organizations to attest to the fact that MA EPs for whom they are 

requesting EHR incentive payments have provided, on average, 20 hours of patient care 

services during the EHR reporting period. 

As discussed in section II.B. of this proposed rule relating to Medicare FFS EPs, a 

qualifying MA EP is also defined as a physician under section 1861(r) of the Act. 
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Section 1853(l)(1) of the Act, as added by section 4101(c) of the HITECH Act, provides 

that the provisions of sections 1848(o) and 1848(a)(7) of the Act, as amended and added 

by sections 4101(a) and (b) of the HITECH Act, respectively, which establish the 

incentive payments for EPs under Medicare FFS, apply to a qualifying MA organization's 

qualifying MA EPs “in a similar manner” as they apply to EPs under Medicare FFS. As 

discussed above in section II.A.6. of this proposed rule, section 1848(o)(1)(C)(i) of the 

Act, as added by section 4101(a) of the HITECH Act, states that hospital-based EPs are 

not eligible for incentive payments. Therefore, we propose that, similar to the Medicare 

FFS incentive program, MA incentive payments would also not be available for hospitalbased EPs. We note that the hospital where a hospital-based EP provides his or her 

Medicare covered services would be potentially entitled to an incentive payment either 

through the Medicare FFS incentive program, or through the MA-affiliated hospital EHR 

incentive program. Therefore, for such a hospital-based MA EP, a qualifying MA 

organization would be no more entitled to an MA EP incentive payment under the MA 

EHR incentive program than a similarly situated EP would be entitled to an incentive 

payment under the Medicare FFS EHR incentive program. 

As discussed previously, an MA EP must either be employed by the qualifying 

MA organization, or be employed by, or be a partner of, an entity that through contract 

with the qualifying MA organization furnishes at least 80 percent of the entity's Medicare 

patient care services to enrollees of the qualifying MA organization. With respect to the 

later criteria, we do not propose to define the term “entity,” but instead recognize that 

there exist a range of entities with which MA organizations contract for patient care 

services, including a physician group, an Independent Practice Association (IPA), an 
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Exclusive Provider Organization (EPO), a Physician Hospital Organization (PHO), or 

Preferred Provider Organization (PPO). 

Moreover, we recognize that an EP may contract with more than one such entity, 

and that these entities often contract with a number of MA organizations and other health 

care insurers. An EP also may directly contract with more than one MA organization. In 

general it is only when an EP is employed by a single qualifying MA organization, or is 

employed by or in partnership with an entity that contracts with a single qualifying MA 

organization that an EP can satisfy the criteria to be an MA EP. 

Finally, the qualifying MA organization must attest to the fact that each MA EP is 

a meaningful user of certified EHR technology in accordance with proposed §495.4. If 

all of these conditions are met, such an individual is identified as an MA EP. We propose 

to define the term “MA eligible professional (EP)” at §495.200 as an EP who satisfies 

these conditions. 

Section 4101(d) of the HITECH Act directs the Secretary to study and report on 

“nearly exclusive” physicians that primarily treat MA enrollees and that would not 

otherwise qualify for incentive payments under current law. This proposed rule does not 

address such individuals, as it is limited to codifying in regulation existing statutory 

language as discussed herein. 

c. Qualifying MA-Affiliated Eligible Hospital 

We propose to define “qualifying MA-affiliated eligible hospital” in §495.200. A 

qualifying MA organization may receive an incentive payment only for a qualifying 

MA-affiliated eligible hospital described under section 1853(m)(2) of the Act, as added 

by section 4102(c) of the HITECH Act, that is a meaningful user of certified EHR 
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technology as defined in proposed §495.4 . Section 1853(m)(2) of the Act provides that 

such MA-affiliated eligible hospitals are “eligible hospitals” as defined under section 

1886(n)(6) of the Act and must be under common corporate governance with a qualifying 

MA organization that serves individuals enrolled under MA plans offered by such 

organization where more than two-thirds are Medicare individuals enrolled under MA 

plans offered by such organization. As discussed in section II.A.1. of this proposed rule, 

section 1886(n)(6) of the Act, defines an “eligible hospital” as a subsection (d) hospital 

(as defined under section 1886(d)(1)(B) of the Act). In §495.200, we also propose to 

define “under common corporate governance”, as a qualifying MA organization and a 

qualifying MA-affiliated eligible hospital that have a common parent corporation, that 

one is a subsidiary of the other, or that the organization and the hospital have a common 

board of directors. 

Section 1853(m)(3)(B)(i) of the Act, as added by section 4101(c) of the HITECH 

Act, provides that if for a payment year at least one-third (33 percent) of a MA eligible 

hospital's discharges (or bed-days) of Medicare patients are covered under Part A (rather 

than under Part C), the hospital may only receive an incentive payment under section 

1886(n) of the Act – the Medicare FFS incentive program. 

In §495.200 we propose to define “inpatient-bed-days” in the same manner as that 

term is defined for purposes of implementing section 4201(a) of the HITECH Act in the 

preamble of this proposed rule. The term will be used in the same way in computing 

incentive payments due qualifying MA organization under the qualifying MA-affiliated 

eligible hospital incentive payment program. 
CMS-0033-P 248 

We note that, as discussed in section II.B.2.b. of this proposed rule, under section 

1886(n)(2)(D)(i)(II) of the Act, the portion of the Medicare FFS hospital incentive 

payment comprising the discharge related amount, or Medicare share, is based in part on 

the estimated number of inpatient-bed-days attributable to individuals enrolled in MA 

plans under Part C. This means that hospitals that treat individuals enrolled in MA plans 

will receive a Medicare FFS hospital incentive payment partially based on the number of 

MA-enrollee bed-days. To the extent a hospital does not meet the 33 percent threshold 

requiring payment through the FFS Medicare EHR hospital incentive program, incentive 

payments can be made to a qualifying MA organization under common corporate 

governance to the extent other requirements of the MA EHR hospital incentive program 

are met. (See section II.C.3 of this proposed rule for the computation of incentive 

payments to qualifying MA organizations.) 

Therefore, we propose to make EHR incentive payments to qualifying 

MA-affiliated eligible hospitals under the FFS EHR incentive program. Finally, to the 

extent that such data necessary to estimate the inpatient-bed-days-related incentive 

payment amount are not already available to us through the normal submission of 

hospital cost reports, we propose to require that qualifying MA organizations seeking 

reimbursement for qualifying MA-affiliated eligible hospitals submit similar data. 

2. Identification of Qualifying MA Organizations, MA EPs, and MA-Affiliated Eligible 

Hospitals 

In §495.202 we propose to require MA organizations that intend to ask for 

reimbursement under the MA EHR incentive payment program to so indicate as part of 

submissions of their initial bid under section 1854(a)(1)(A) of the Act, and to attest, in 
CMS-0033-P 249 

some cases, that they meet the requirements of a qualifying MA organization. For MA 

organizations offering an MA HMO plan type, we will deem such organizations to meet 

the definition of HMO in 42 U.S.C. 300-gg(b)(3), (that is, section 2791(b)(3) of the PHS 

Act). As noted previously, for MA organizations offering plan types other than HMOs, 

we propose to require an attestation by the organization that the MA organization is 

recognized under State law as an HMO, or that it is a similar organization regulated under 

State law for solvency in the same manner and to the same extent as an HMO before we 

would make a determination that the MA organization is a qualifying MA organization 

for purposes of incentive payments. We propose to require this beginning with bids due 

in June 2010 (for plan year 2011) for MA organizations seeking reimbursement for MA 

EPs and MA-affiliated eligible hospitals. 

 We also propose requiring qualifying MA organizations, as part of their initial 

bids starting with plan year 2011, to make a preliminary identification of potentially 

qualifying MA EPs and potentially qualifying MA-affiliated eligible hospitals for which 

the organizations will seek EHR incentive payments. 

 In developing the preliminary and final lists of potentially qualifying MA EPs, 

qualifying MA organizations must exclude hospital-based MA EPs. We propose that 

qualifying MA organizations identify hospital-based MA EPs using the same criteria 

outlined in section II.A.6 of this proposed rule for identifying hospital-based EPs in the 

Medicare FFS EHR incentive program. 

 Along with both the preliminary and final lists of potentially qualifying MA EPs 

and hospitals, qualifying MA organizations must submit an attestation that these 

professionals and hospitals meet the criteria to be considered eligible. For example, for 
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hospitals, the qualifying MA organization must attest that they are under common 

corporate governance with the qualifying MA organization. For example, for EPs, the 

qualifying MA organization must attest that the list does not include any hospital-based 

EPs. 

 We propose requiring qualifying MA organizations to provide final identification 

of potentially qualifying MA EPs by the end of the MA EP payment year (December 31), 

and final identification of potentially qualifying MA-affiliated eligible hospitals by the 

end of the MA-affiliated hospital payment year (the FFY ending on September 30), for 

which MA EHR incentive payments will be sought. We also propose requiring 

qualifying MA organizations to report the name, practice address, and other identifying 

information, like NPI, for all physicians that meet the requirements of a qualifying MA 

EP for which the qualifying MA organization will be requesting payment under the MA 

EHR incentive payment program. 

 Once a qualifying MA organization identifies potential EPs, we are required to 

ensure that such EPs did not receive the maximum EHR incentive payment for the 

relevant payment year under the Medicare FFS program under section 1848(o)(1)(A) of 

the Act, as added by section 4101(a) of the HITECH Act, before releasing an incentive 

payment to a qualifying MA organization related to such EP. (See section 

1853(l)(3)(B)(i) of the Act, as added by section 4101(c) of the HITECH Act). Therefore, 

in order to allow us time to determine whether an MA EP received the maximum EHR 

incentive payment under the Medicare FFS program, we propose not to make incentive 

payments to qualifying MA organizations for the MA EPs for a payment year until after 

the final computation of EP incentive payments for that year under the Medicare FFS 
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program. Additionally, we propose to require qualifying MA organization to ensure that 

all MA EPs are enumerated through the NPI system, in order to detect and prevent 

duplicate payment for EPs under both the FFS and MA EHR incentive payment 

programs. 

 We also propose to require all qualifying MA organizations to self-report and 

identify themselves, regardless of whether they have qualifying MA EPs or MA-affiliated 

eligible hospitals for whom or which the organization plans to claim incentive payments 

at the time the initial bid is due (the first Monday of June, see section 1854(a)(1)(A) of 

the Act) beginning in 2014 for bids related to plan year 2015. We propose to require this 

reporting by all qualifying MA organizations in years beginning with 2014 in anticipation 

of the statutory requirement in sections 1853(l)(4) and 1853(m)(4) of the Act, to 

negatively adjust our capitation payments to qualifying MA organizations for MA EPs 

and MA-affiliated eligible hospitals that are not meaningful users of certified EHR 

technology for years beginning with 2015. 

3. Computation of Incentives to Qualifying MA Organizations for MA EPs and 

Hospitals 

 In §495.204, we propose a methodology under which payments to qualifying MA 

organizations for qualifying MA EPs will be computed. Section 1853(l)(3)(A) of the Act 

provides that in applying section 1848(o), instead of the additional payment amount 

specified under section 1848(o)(1)(A) of the Act, the Secretary may substitute an amount 

determined by the Secretary, to the extent feasible and practical, to be similar to the 

estimated amount in the aggregate that would be payable under, or would be based on, 
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the Medicare physician fee schedule under Part B instead of Part C. Section II.B.1. of 

this proposed rule discusses these provisions. 

 Section 1853(m)(3)(A) of the Act provides that in providing an incentive payment 

to qualifying MA organizations for MA-affiliated hospitals, we substitute for the amount 

specified under section 1886(n)(2) of the Act – the incentive payment amount under 

Medicare FFS for qualifying eligible hospitals – an amount determined by the Secretary 

to be similar to the estimated amount in the aggregate that would be payable if payment 

for services furnished by such hospitals was payable under Part A instead of Part C. (For 

more detailed information see section II.B.2. of this proposed rule.) 

Section 1848(o) of the Act permits us to make the incentive payments for a year 

in installments, although we are proposing to make a single lump sum payment under the 

Medicare FFS EHR incentive program. We read the term “aggregate” to mean the 

aggregate installment payments made by us under the FFS EHR incentive program to a 

qualifying EP over the course of the relevant payment year. 

The duplicate payment provisions in section 1853(l)(3)(B)(i)(II) of the Act direct 

us to make payment for EPs “only under” the MA EHR incentive program “and not

under” the Medicare FFS EHR incentive program to the extent any EP has earned “less 

than [the] maximum incentive payment for the same period” under the Medicare FFS 

EHR incentive program. We note that section 1853(l)(1) of the Act, provides that section 

1848(o) of the Act applies in a “similar,” but not the same, manner to qualifying MA 

organizations as it applies to EPs under Part B. The Medicare FFS incentive payment 

program under section 1848(o) does not include payment for professional services 

provided to MA enrollees, but only for services paid under Part B. In a similar manner 
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we propose to limit payment to an MA organization to only payment for their EPs' 

services to MA enrollees of plans offered by the MA organization. We do not believe it 

would be appropriate to provide an incentive payment to an MA organization for services 

provided to individuals covered under Part B. Therefore, we propose, that in calculating 

qualifying MA EP incentive payments, we will only consider covered professional 

services provided to enrollees of MA plans offered by qualifying MA organizations and 

will not include in the calculation any services reimbursed by Medicare FFS. 

 Under the Medicare FFS EHR incentive program, an EP's incentive payment may 

not exceed the annual limits specified under section 1848(o)(1)(B)(i) of the Act. We 

propose that similar payment limits apply to qualifying MA organizations for their 

qualifying MA EPs. Specifically, the incentive payment to a qualifying MA organization 

for each of its qualifying MA EPs may not exceed certain limits. Specifically, section 

1848(o)(1)(B) of the Act provides that the incentive payment for an EP for a given year 

shall not exceed the following amounts: 

• For the EP's first payment year, $15,000 (or, if the first payment year is 2011 or 

2012, $18,000). 

• For the EP's second payment year, $12,000. 

• For the EP's third payment year, $8,000. 

• For the EP's fourth payment year, $4,000. 

• For the EP's fifth payment year, $2,000. 

• For any succeeding year, $0. 

Note that, similar to the Medicare FFS EHR incentive program, there will be no incentive 

payments made with respect to a year after 2016. We propose similar restrictions related 
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to qualifying MA organizations. So, the maximum cumulative incentive payment over 5 

years to a qualifying MA organization for each of its qualifying MA EPs that 

meaningfully use certified EHRs beginning on or before 2012 would be $44,000 per 

qualifying MA EP. For qualifying MA organizations first reporting the meaningful use 

of certified EHRs by qualifying MA EPs after 2014, there is no incentive payment 

amount available. Subject to an exception discussed below, for MA organizations first 

reporting the meaningful use of certified EHRs by qualifying MA EPs in 2013 or 2014, 

the maximum potential incentive payment per qualifying EP is, respectively, $39,000 

over 4 years, and $24,000 over 3 years. 

 As we discuss in more detail in the section II.C.4. of this proposed rule, we 

propose to make MA EP incentive payments to qualifying MA organizations on the same 

payment cycle for all employed/partnering qualifying EPs of the organization. In other 

words, all MA EPs of a specific qualifying MA organization will be in the same payment 

year with respect to the amount of the incentive payment per qualifying EP that we will 

make. So, for instance, if a qualifying MA organization is in its second payment year in 

2013 and it hires a new EP for which the qualifying MA organization had not previously 

received an EHR incentive payment, we will nevertheless make a second year incentive 

payment (up to $12,000 in 2013) with respect to such an MA EP – assuming all other 

conditions are met. Thus, the limits on MA EP incentive payments discussed above are 

applied to the qualifying MA organization's entire MA EP population in any specific 

payment year relative to that MA organization, regardless of the length of 

employment/partnership of/between that specific MA EP and that specific qualifying MA 

organization. 
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 Under section 1848(o)(1)(B)(iv) of the Act, the annual incentive payment limit for 

EPs who predominantly furnish Part B services in a geographic health professional 

shortage area (HPSA) is increased by 10 percent. While we do not anticipate that MA 

EPs would generally practice in a HPSA area, to the extent that an MA EP practices in an 

area where he or she would be entitled to the 10 percent increase, that amount would 

apply to MA EPs as well. We explored various ways of computing the EP-level 

incentive payments due qualifying MA organizations whose qualifying MA EPs 

meaningfully use certified EHR technology. 

One option that we considered was using MA plan bidding and MA payment data 

to estimate average annual MA revenue for qualifying MA EPs with respect to a 

qualifying MA organization. So, for instance, a qualifying MA organization that 

estimated MA Part B service-related physician costs of $3 million/year in its bid for a 

year, and that employed 100 qualifying MA eligible physicians, would be assumed to 

have an average physician Part B charge per physician per year factor of $30,000 

($3,000,000/100). However, we did not pursue this option because the approach results 

in an average revenue amount across all potentially qualifying MA EPs with respect to a 

qualifying MA organization and, therefore, would include revenue amounts that exceed 

the annual per-professional ceiling on incentive payments under FFS for all EPs. We 

believe such a result is contrary to the legal requirement that qualifying MA 

organizations are to incentive payments only for qualifying MA EPs that actually provide 

at least 20 hours per week of patient care services. Under this method there would be 

also be no way to know if the EP provided 80 percent of his/her professional Medicare 

services to enrollees of the organization. 
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We also considered a reporting system for which qualifying MA organizations 

would be required to report eligible-professional-specific information along with MA 

patient encounters for nonhospital-based office visits. Specifically, we examined 

requiring qualifying MA organizations to report qualifying MA EP encounters with MA 

plan enrollees based on the five levels of office visit codes recognized by Medicare FFS. 

We would use such reports to estimate the amount of compensation that a 

qualifying MA EP working primarily for a qualifying MA organization would be eligible 

to receive under Medicare FFS. For example, a qualifying MA EP with a primary care 

specialty might have an average of 10 MA patient low/moderate intensity office visits 

with members of a qualifying MA organization per day. Such an EP would potentially 

qualify for the maximum Medicare FFS EP incentive payment in the first year based on a 

calculation of $63 * 10 * 52 = $32,760 – which is more than the Medicare FFS EHR 

incentive program threshold of $24,000 necessary to qualify for the maximum incentive 

payment of $18,000 if the fist payment year were 2011 or 2012. 

We estimated the national average FFS allowed amounts for the 5 levels of office 

visit codes (CPT codes 99211 – 99215) in 2009 to be: $20, $39, $63, $95, $129, 

respectively. We contemplated allowing, but not requiring, qualifying MA organizations 

to report consultation codes for specialist physicians (CPT codes 99241 – 99245) 

estimated to have national average FFS allowed amounts of $50, $94, $129, $190, and 

$234, respectively. 

However, we now believe that such a process would be administratively 

burdensome and difficult to operationalize. Therefore, we are proposing an alternative 

approach, but seek input from interested parties as to which of these approaches, or 
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perhaps others, would best address the statutory requirement to compensate qualifying 

MA organizations for qualifying MA EPs the amount that would be payable if payment 

for services furnished by such professionals were made under Part B instead of Part C. 

We propose an approach in which the revenue received by the qualifying MA EP 

for services provided to enrollees of the qualifying MA organization would serve as a 

proxy for the amount that would have been paid if the services were payable under Part 

B. Under this approach, the qualifying MA organization would report to us the 

aggregate annual amount of revenue received by each qualifying MA EP for MA plan 

enrollees of the MA organization. We would calculate the incentive payment amount due 

the qualifying MA organization for each qualifying MA EP as an amount equal to 

75 percent of the reported annual MA revenue of the qualifying MA EP, up to the 

maximum amounts specified under section 1848(o)(1)(B) of the Act. 

For qualifying MA EPs who are compensated on a salaried basis, we propose 

requiring the qualifying MA organization to develop a methodology for estimating the 

portion of the qualifying MA EP's salary attributable to providing services that would 

otherwise be covered as professional services under Part B of Medicare to MA plan 

enrollees of the MA organization. The methodology, which would require review and 

approval by us, could be based on the relative share of patient care hours spent with MA 

enrollees of the organization or another reasonable method. So, for instance, if a 

qualifying MA EP spends 30 percent of his or her time providing covered Part B 

physician office services to MA plan enrollees, then the qualifying MA organization 

would report 30 percent of the qualifying MA EP's salary as annual revenue, which 

would be used to compute the amount of the MA incentive payment due to the qualifying 
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MA organization for the qualifying MA EP. Thus, if the qualifying MA EP had a base 

salary of $150,000, 30 percent would be $45,000 – which is well over the threshold of 

$24,000 needed by the MA organization to qualify for a maximum incentive payment of 

up to $18,000 (70 percent of $24,000) for such a qualifying MA EP in any year. We also 

propose to require that salaries be prorated to ensure that the amount reported reflects the 

salary paid for the applicable year. 

Salaried physicians' compensation typically does not include an allowance for 

administrative practice costs. Given that Part B allowed amounts do include practice 

expense costs, we propose allowing qualifying MA organizations to identify, where 

appropriate, an additional amount related to overhead that would be added to the 

qualifying MA EP's estimated Part B compensation. To the extent Medicare FFS 

compensation to physicians includes an amount for office space rental, office staffing, 

and equipment, we believe that qualifying MA organizations should also be permitted to 

include an amount for overhead related to such costs not directly experienced by salaried 

qualifying MA EPs. In §495.204(b)(4)(ii), we propose requiring qualifying MA 

organizations to develop a methodology for estimating the additional amount related to 

overhead attributable to providing services that would otherwise be covered under Part B 

of Medicare. The methodology would require review and approval by us. 

For qualifying MA EPs who are not salaried, (that is, who are paid on a capitated 

or fee-for-service basis), we propose in §495.204(b)(5) to require qualifying MA 

organizations to obtain attestations from such EPs and to submit to CMS information 

from the attestations as to the amount of compensation received by the EPs for MA plan 

enrollees of the MA organization. We are proposing such attestations because many EPs 
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are not paid directly by MA organizations, but rather by intermediary contracting entities, 

such as physician groups, and as a result the qualifying MA organization may not 

otherwise know how much compensation is received by each qualifying MA EP. In 

reporting compensation, we are proposing that the EPs include only those amounts for 

professional services that would otherwise be payable under Part B and for which 

payment would be made under, or would be based on, the Medicare physician fee 

schedule. 

 As mentioned previously, in applying the instruction in section 1853(m)(3)(A) of 

the Act to substitute for the amount specified under section 1886(n)(2)of the Act an 

amount similar to the estimated amount in the aggregate that would be payable if 

payment for the hospitals' services were made under Part A instead of Part C, we read the 

term “aggregate” to mean the aggregate installment payments made by us if EHR 

incentive payments were made under Part A instead of Part C. 

Incentive payments to eligible hospitals under the Medicare FFS EHR incentive 

program are comprised of three components: (1) an initial amount composed of a base 

incentive payment of $2,000,000 and a second incentive payment amount of $200 per 

discharge for discharges 1,150 – 23,000 during a 12- month period selected by the 

Secretary; (2) the Medicare share; and (3) a transition factor. As discussed in the 

preamble related to proposed §495.104(c), for purposes of calculating incentive payments 

to eligible hospitals under the Medicare FFS EHR incentive program, we are proposing 

that the 12-month period be based on the FFY. For the purpose of calculating incentive 

payments for qualifying MA-affiliated eligible hospitals, we similarly are proposing that 

the 12-month period be based on the FFY. 
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Section II.B. of this proposed rule discusses our proposed methodology for 

calculating the incentive payment for qualifying eligible hospitals under the Medicare 

FFS EHR program. As set forth in proposed §495.204(c)(2), we propose to use the FFS 

EHR hospital incentive program for purposes of calculating and making the incentive 

payment for qualifying MA-affiliated hospitals. To the extent data are not available to 

reimburse MA-affiliated hospitals through the FFS hospital incentive program, we 

propose to require submission of such data to us and adopt the same definition of 

“inpatient-bed-days” and other terms proposed under the Medicare FFS EHR hospital 

incentive program specified in §495.104 of this proposed rule. In such a case we propose 

in §495.204(c)(1) to make payment for such MA-affiliated eligible hospitals to the 

qualifying MA organization. 

The formula for calculating the hospital incentive payment under the Medicare 

FFS hospital incentive program is an initial amount of the sum of the base amount of 

$2,000,000 per hospital plus an additional $200 per discharge for discharges 1,150 

through 23,000 for that hospital in that payment year. This initial amount is then 

multiplied by a transition factor and then again by the Medicare share. These last two 

numbers are fractions and will tend to reduce the initial amount computed in the first 

step. 

Similar to the Medicare FFS EHR hospital incentive program, we propose to use 

inpatient-bed-day data, discharges, and other components of the FFS calculation for each 

qualifying MA-affiliated eligible hospital from the hospital-specific fiscal year that ends 

during the FFY prior to the FFY that serves as the payment year. To the extent such data 

are not already available to us through the normal submission of hospital cost reporting 
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data, we propose requiring qualifying MA organizations seeking reimbursement for their 

qualifying MA-affiliated eligible hospitals to submit similar data. 

 We can only pay for qualifying MA-affiliated eligible hospitals under common 

corporate governance based on inpatient-bed-days computed on a fiscal year basis where 

less than one-third of the inpatient-bed-days of Medicare patients are covered under 

Medicare FFS - Part A. However, it does not appear that reimbursement only under the 

MA EHR incentive program is required for qualifying MA-affiliated eligible hospitals 

that are under common corporate governance. Rather, section 1853(m)(3)(B), of the Act 

only prohibits payment under the MA EHR incentive program when Medicare hospital 

inpatient-bed-days covered under Part A exceed 33 percent of all Medicare inpatient-beddays. Although eligibility under the MA EHR hospital incentive program is not available 

to qualifying MA organizations for any specific hospital when FFS inpatient-bed-days 

exceed 33 percent of the Medicare total, a qualifying MA organization could be 

reimbursed through the Medicare FFS EHR hospital incentive payment program for 

qualifying hospitals under common corporate governance even for hospitals with very 

low ratios of FFS to MA inpatient-bed days. 

 Given that the hospital incentive payment methodology and payment amount will 

be identical under the Medicare FFS EHR incentive program and the MA EHR incentive 

program, and given that there is no statutory prohibition on reimbursing a qualifying 

MA-affiliated eligible hospital through the Medicare FFS EHR incentive program, for 

purposes of administrative efficiency, and pursuant to our authority under section 1857(e) 

of the Act to add new “appropriate” contract terms (incorporated for Part D by section 

1860D-12(b)(3)(D) of the Act), we propose requiring that qualifying MA organizations 
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receive incentive payments for qualifying MA-affiliated eligible hospitals through their 

affiliated hospitals under the Medicare FFS EHR incentive program if they are eligible 

for such payments, rather than through the MA EHR incentive program. We believe this 

is the most efficient way in which to administer the MA EHR hospital incentive program 

in light of the expected low volume of MA-affiliated eligible hospitals (approximately 50 

hospitals), and in light of preliminary data which indicates that MA-affiliated eligible 

hospitals already submit Medicare cost reporting data to us from which we can compute 

hospital incentive payments due. To the extent sufficient data do not exist to make such 

payments under the Medicare FFS EHR incentive program, qualifying MA organizations 

will be required to submit additional data to us. 

 Finally, to the extent payments are made to qualifying MA organizations for 

qualifying MA EPs or qualifying MA-affiliated eligible hospitals, we propose to conduct 

selected compliance reviews to ensure that EPs and eligible hospitals for which such 

organizations received incentive payments were actually meaningful users of certified 

EHR technology, in accordance with our existing authority in section 1857 (d) of the Act 

and 42 CFR 422.504 of the regulations related to protections against fraud. The reviews 

would include validation of meaningful user attestations, the status of the organization as 

a qualifying MA organization, and verification of both meaningful use and data used to 

calculate incentive payments. We propose requiring MA organizations to maintain 

evidence of compliance with all aspects of the MA EHR incentive payment program for 

10 years after the date payment is made with respect to a given payment year. Payments 

that result from incorrect or fraudulent attestations, cost data, or any other submission 
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required to establish eligibility or to qualify for a payment, will be recouped by CMS 

from the MA organization. 

4. Timeframe for Payment 

 For payments to qualifying MA EPs, in §495.206 we propose the time frame for 

payment to be after the Medicare FFS program computes incentive payments due under 

the Medicare FFS EHR incentive program – so the first possible incentive payments 

would be made sometime in early 2012. We propose that payments for qualifying 

MA-affiliated eligible hospitals under common corporate governance occur in the same 

manner and in the same time frame as payments made under the Medicare FFS EHR 

incentive program to “subsection (d)” hospitals as discussed in section II.B.2.d. of this 

proposed rule. 

 We propose to define “payment year” with respect to qualifying MA EPs in 

§495.200. Section 1853(l)(3)(C) of the Act directs us to establish the same first payment 

year for all EPs with respect to any specific qualifying MA organization. Consistent with 

the statute, we propose to pay a qualifying MA organization on the same schedule for all

of its qualifying MA EPs. In other words, the first year during which the qualifying MA 

organization receives an incentive payment for its qualifying EPs will be considered the 

first payment year for all of its qualifying EPs. Accordingly, for purposes of determining 

the applicable incentive payment limits, the second, third, fourth, and fifth years during 

which the qualifying MA organization receives an incentive payment for its qualifying 

EPs will be considered the second, third, fourth, and fifth payments years for each of its 

qualifying EPs, regardless of whether the MA organization claimed an incentive payment 

for a particular EP for a prior payment year. Such a consistent payment cycle relative to 
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qualifying MA organizations and qualifying MA EPs obviates the need to track payment 

years and payment adjustment years based on prior payments or adjustments with respect 

to any individual qualifying MA EP. Rather, for purposes of payment years and payment 

adjustment years, any EP employed by or partnering with any specific MA organization 

will be on the same cycle with respect to that organization. 

 Similar to the Medicare FFS EHR incentive program, payment to qualifying MA 

organizations for qualifying MA EPs and payment for qualifying MA-affiliated eligible 

hospitals is available only for a finite number of years. As previously discussed in the 

section on the calculation of MA incentive payments, above, a qualifying MA 

organization can receive an incentive payment of up to $18,000 for each of its qualifying 

MA EPs for its first payment year if its first payment year is 2011 or 2012, or up to 

$15,000, if its first payment year is 2013, or up to $12,000, if its first payment year is 

2014. Note that, similar to the Medicare FFS EHR incentive program, there would be no 

incentive payments made with respect to a year after 2016. 

 We propose to define “payment year” with respect to qualifying MA-affiliated 

eligible hospitals in §495.200. For incentive payments for qualifying MA-affiliated 

eligible hospitals, the first year for which an MA organization may claim payment is FY 

2011. Similar to the Medicare FFS EHR hospital incentive program, we propose to use 

the hospital inpatient-bed-days data from the hospital fiscal year that ends during the FFY 

prior to the fiscal year that serves as the payment year. For qualifying MA-affiliated 

eligible hospitals, we propose to compute hospital EHR incentive payments due in the 

same manner as they are being computed in the Medicare FFS hospital incentive payment 

program. For qualifying MA-affiliated eligible hospitals for which the first payment year 
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is 2011 through 2013, up to 3 additional years of incentive payments are available. For 

qualifying MA-affiliated eligible hospitals for which the first payment year is after 2015, 

no EHR payment incentive can be made for that year or any subsequent year. Finally, for 

qualifying MA-affiliated eligible hospitals for which the first payment year is 2014 or 

2015, only 2 (or 1) more year(s) of hospital incentive payments will be available. 

 Unlike the fixed schedule for application of limitation on incentive payments for 

MA EPs discussed previously in this section of the proposed rule in which all 

employed/partnering MA EPs will be paid on the same schedule (first payment year, 

second payment year, etc.) with respect to any specific qualifying MA organization, we 

propose to make payments to MA organizations for MA-affiliated eligible hospitals on a 

hospital-specific basis. In other words, if a qualifying MA organization has some 

MA-affiliated eligible hospitals with a first payment year of FY 2011, it may have other 

MA-affiliated eligible hospitals with a first payment year of FYs 2012 through 2015. 

5. Avoiding Duplicate Payment 

 We propose duplicate payment avoidance provisions in §495.208. Section 

1853(l)(3)(B) of the Act, as added by the HITECH Act, is entitled “Avoiding Duplication 

of Payments.” Subclause (I) of the Act states that to the extent an MA EP is entitled to 

the maximum incentive payment under section 1848(o)(1)(A) of the Act, the Medicare 

FFS EHR incentive payment program – such incentive payment will only be made under 

the Medicare FFS EHR incentive program. Therefore, before payments can be made to 

qualifying MA organizations for MA EPs, we must first determine if a maximum 

incentive payment under the Medicare FFS program has been previously earned by 

potential MA EPs. Under the Medicare FFS incentive payment program, incentive 
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payment calculations will not be completed for the first payment year, 2011, until the 

early part of 2012. Therefore, we would not be able to make payments to qualifying MA 

organizations for MA EPs until claims submissions counted for Medicare FFS incentive 

payments for CY 2011 have been closed, and payment calculations for participating EP 

under the Medicare FFS EHR incentive program have been completed in the early part of 

CY 2012. We will follow the same practice – first computing Medicare FFS incentive 

payments for EPs and then computing and paying MA incentive payments, where 

appropriate – in all subsequent payment years. 

 Subclause (II) of section 1853(l)(3)(B)(i) of the Act further states that to the 

extent an MA EP is entitled to less than the maximum incentive payment under the 

Medicare FFS EHR incentive program, that payment is to be made solely under the MA 

provision. In other words, we will need to withhold Medicare FFS incentive payments 

from EPs of less than the maximum to the extent such professionals are also identified as 

MA EPs under section 1853(l)(2) of the Act. Again, we would need to await the 

computation of payments due EPs under the Medicare FFS EHR incentive program 

before we can determine whether the EP is entitled to less than the maximum payment 

amount under the Medicare FFS EHR program, in which case any incentive payment for 

the EP will only be made to the qualifying MA organization under the MA EHR 

program, and not to the EP under the Medicare FFS EHR program. 

 Section 1853(m)(3)(B) of the Act, states that incentive payments for qualifying 

MA-affiliated eligible hospitals are to be made under either the Medicare FFS hospital 

incentive payment program, or under the MA hospital incentive payment program. If 

more than 33 percent of discharges or bed-days of all Medicare patients for a year are 
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covered under Part A, then payment for that year is to only be made under section 

1886(n) of the Act – the Medicare FFS EHR incentive program - and no payment is to be 

made under the MA hospital incentive payment program. Otherwise, to the extent less 

than 33 percent of bed days of all Medicare patients for an incentive payment year are 

covered under Part A, then payment for that incentive payment year may be made under 

the MA EHR incentive payment program. 

 Unlike the process we propose to follow related to qualifying EPs (where we will 

wait for the Medicare FFS incentive payment program to compute eligible physician 

incentive payments due under that program before determining the amount due under the 

MA EHR incentive program), we would not need to rely on Medicare FFS EHR 

incentive payment program calculations before determining eligibility for MA-affiliated 

hospital incentive payments. We would reimburse all hospitals, including MA-affiliated 

eligible hospitals, under the Medicare FFS hospital incentive program. We believe that 

by doing so, we will prevent duplicate payments being made for the same hospitals by 

Medicare FFS and the MA incentive payment programs. To the extent that qualifying 

MA organizations are to receive incentive payments through the MA program rather than 

through their hospitals under the Medicare FFS EHR incentive program due to a lack of 

sufficient data to make payments under the FFS program, we would identify and 

reimburse only appropriate qualifying MA organizations for qualifying MA-affiliated 

eligible hospitals. Such reimbursement will be in a manner similar to the manner in 

which the Medicare FFS EHR incentive program will reimburse eligible hospitals due an 

incentive payment under the Medicare FFS EHR incentive program. 
CMS-0033-P 268 

 In order to avoid duplicate payments and in accordance with section 

1853(m)(3)(B)(ii)(II) of the Act, we will not make MA EHR hospital incentive payments 

to qualifying MA organizations for MA-affiliated eligible hospitals other than through 

the Medicare FFS EHR hospital incentive payment program without first ensuring that no 

such payments under the Medicare FFS EHR hospital incentive payments were made. 

We invite industry and public comment on our proposed process to eliminate 

duplicate payments to EPs and MA-affiliated eligible hospitals under the Medicare FFS 

and MA incentive payment programs. 

6. Meaningful User Attestation 

We propose meaningful user attestation requirements in §495.210. For each MA 

EP and MA-affiliated hospital for which a qualified MA organization seeks an incentive 

payment, the organization must attest, in a form and manner specified by us, that its MA 

EPs and MA-affiliated eligible hospitals are meaningful EHR users, as required by 

sections 1853(l)(6) and 1853(m)(1) of the Act. We further propose to adopt the 

definitions of meaningful user proposed under the Medicare FFS program related to EPs 

and hospitals in proposed §495.4. We propose to require qualifying MA organizations to 

attest each payment year whether each of its MA EPs and MA-affiliated eligible hospitals 

for which it is seeking an incentive payment was a meaningful EHR user for the EHR 

reporting period for a payment year. A qualifying MA organization must make this 

attestation for each payment year for which it is seeking an incentive payment for MA 

EPs and MA-affiliated eligible hospitals. We believe attestations should occur toward 

the end of a year with respect to that year, since qualifying MA organizations will need to 

attest to, based on our proposed rule, meaningful use for the appropriate duration and 
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during the appropriate period related to MA EPs and MA-affiliated eligible hospitals 

before claiming incentive payments for them. 

 Note that unlike the Medicare FFS EHR incentive program, where we will require 

the reporting of clinical quality measures – see §495.8 – we will not require qualifying 

MA organizations to submit clinical quality measures per section 1848(o)(2)(B) of the 

Act, with respect to EPs, and section 1886(n)(3)(B) of the Act, with respect to eligible 

hospitals. Consistent with sections 1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) of the Act, 

we note that qualifying MA organizations sponsoring coordinated care MA plans are 

already required to submit Healthcare Effectiveness Data and Information Set 

(HEDIS), Health Outcomes Survey (HOS), and Consumer Assessment of Healthcare 

Providers and Systems (CAHPS) measures per §422.152 and §422.516. Coordinated 

care MA plans include HMO, PPO and RPPO (Regional PPO) plans. Beginning with 

CY 2010, PFFS and MSA plans will also be required to begin collecting and submitting 

administrative HEDIS measures. 

 We believe that all qualifying MA organizations will be organizations offering 

MA coordinated care plans, and therefore; those MA organizations from which we 

routinely receive complete HEDIS dataset reporting. Pursuant to sections 

1848(o)(2)(B)(iii) and 1886(n)(3)(B)(iii) of the Act, for clinical quality measures which 

overlap between the existing MA quality reporting program and under the HITECH 

program, we propose to allow qualifying MA organizations to continue reporting under 

the existing MA quality reporting program. For those HITECH clinical quality measures 

that do not overlap and that are appropriate for the MA program, we are considering 

requiring that qualifying MA organizations that receive an incentive payment report those 
CMS-0033-P 270 

measures to CMS. This would ensure that clinical quality measure reporting under 

HITECH is consistent between the FFS program and MA. An alternative approach 

would be to require that qualifying MA organizations that receive an incentive payment 

report all of the HITECH clinical quality measures under section II.A.2 of this proposed 

rule that are appropriate for the MA program directly to CMS, while also reporting those 

HEDIS, HOS, and CAHPS measures under the existing MA quality program. This may 

result in duplicative reporting under the HITECH program and current MA quality 

reporting, but may provide us with more direct access to quality data under the HITECH 

program. We invite public comment on these approaches, including alternative methods 

to consistently treat MA-affiliated providers and FFS providers under the HITECH 

Medicare incentive program. 

 Therefore, we propose requiring qualifying MA organizations to submit 

attestations to us related to meaningful use by MA-affiliated hospitals within 30 days of 

the close of the FFY – which is the payment year for MA-affiliated hospitals – by 

October 30. We also propose requiring qualifying MA organization to submit 

attestations to us related to meaningful use by MA EPs within 30 days of the close of the 

MA EP payment year – which is a CY – by January 30. 

7. Posting Information on the CMS Website 

 Sections 1853(l)(7) and 1853(m)(5) of the Act, require us to post information on 

an Internet website related to the receipt of incentive payments under the MA EHR 

incentive program. Information would include the names, business addresses, and 

business phone numbers of each qualifying MA organization receiving an incentive 

payment under this section for qualifying MA EPs and hospitals. A list of the names of 
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each qualifying MA EP and qualifying MA-affiliated eligible hospital for which an 

incentive payment has been made would also be posted. Since this requirement is 

applicable to other Medicare EPs and eligible hospitals, we have included this 

requirement in proposed §495.108. 

8. Limitation on Review 

 Section 1853(l)(8) of the Act states that there shall be no administrative or judicial 

review under section 1869 of the Act, section 1878 of the Act, or otherwise of the 

methodology and standards for determining payment amounts and payment adjustments 

under the MA EHR EP incentive program. This includes provisions related to 

duplication of payment avoidance and rules developed related to the fixed schedule for 

application of limitation on incentive payments for all qualifying MA EPs related to a 

specific qualifying MA organization. This also includes the methodology and standards 

developed for determining qualifying MA EPs and the methodology and standards for 

determining a meaningful EHR user, including the means of demonstrating meaningful 

use and the selection of measures. We propose to codify these requirements in 

§495.212(b). 

 Section 1853(m)(6) of the Act, as added by the HITECH Act, states that there 

shall be no administrative or judicial review under section 1869, section 1878, or 

otherwise of the methodology and standards for determining payment amounts and 

payment adjustments under the MA EHR hospital incentive program. This includes 

provisions related to duplication of payment. This also includes the methodology and 

standards developed for determining qualifying MA hospitals and the methodology and 

standards for determining a meaningful EHR user, including the means of demonstrating 
CMS-0033-P 272 

meaningful use and the selection of measures. We propose to codify these requirements 

in §495.212(c). 

9. Conforming Changes 

 Sections 4101(e) and 4201(d)(2) and (3) of the HITECH Act provide conforming 

amendments to Part C of the Social Security Act. Therefore, we are proposing the 

following conforming changes to the regulations text: 

• Revising §422.304 by adding a new paragraph (f) to account for the 

amendment to section 1853(a)(1)(A) of the Act referencing the additional EHR incentive 

payments that may be made to qualifying MA organizations in the section of the statute 

that provides for monthly capitation payments to MA organizations. (This addition 

would also act as a cross-reference to MA EHR incentive payment rules in proposed 

subpart C of part 495 of this chapter.) 

• Revising §422.306(b)(2) by adding a new paragraph (iv) to address the 

amendments to section 1853(c)(1)(D)(i) of the Act which exclude the EHR incentive 

payments made to EPs and hospitals under the Medicare FFS program from the 

computation of FFS costs in a year for the purpose of computing MA monthly capitation 

amounts. 

• Revising §422.308 by adding a new paragraph (a)(1) to address the 

amendments to section 1853(c)(1)(D)(1) and (c)(6)(A) of the Act regarding the exclusion 

of FFS Medicare EHR incentive payments and adjustments from the calculation of the 

national per capita growth percentage. 

• Revising §422.322 by adding a new paragraph (a)(3) to account for the 

amendments to section 1853(c)(6)(A) and (f) of the Act specifying that the source of 
CMS-0033-P 273 

EHR incentive payments to qualifying MA organizations are from the Federal Hospital 

Insurance Trust Fund or the Supplementary Medical Insurance Trust Fund. 

• Revising §422.322(b) by adding a reference to §495.204 to address the 

amendment to section 1851(i)(1) of the Act that indicates that EHR incentive payments 

are instead of incentive payments that would otherwise be payable under original 

Medicare. 

10. Payment Adjustment and Future Rulemaking 

 In future rulemaking we will develop standards related to payment adjustments to 

qualifying MA organizations related to MA EPs and MA-affiliated eligible hospitals that 

are not meaningful users of certified EHR technology. We solicit comment on how we 

can most effectively and efficiently apply payment adjustments to qualifying MA 

organizations whose MA eligible EPs and hospitals have not successfully meaningfully 

used certified EHR technology. 

The statutory requirement related to imposition of payment adjustments with 

respect to MA EPs is set forth in section 1853(l) of the Act. Specifically, section 

1853(l)(4) of the Act requires that instead of applying the payment adjustment in section 

1848(a)(7) of the Act, we apply the payment adjustment to the Medicare physician 

expenditure proportion. This is our estimate of the proportion of the expenditures under 

Parts A and B paid to the qualifying MA organization in the form of capitation payments 

under section 1853 of the Act that are not attributable to the EHR incentive payment 

program, that are attributable to expenditures for physician services. In the case of a 

qualifying MA organization that attests that not all MA EPs of the organization are 

meaningful EHR users with respect to years beginning with 2015, we are directed to 
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apply the payment adjustment on the proportion of the capitation payment with respect to 

all such EPs of the organization that are not meaningful users for such year. The 

adjustment amount is 1 percent for 2015, 2 percent in 2016, and 3 percent in 2017 and 

subsequent years. 

The statutory requirement related to imposition of payment adjustments with 

respect to MA-affiliated eligible hospitals is provided in section 1853(m) of the Act. 

Specifically, section 1853(m)(4) of the Act requires us to apply the adjustment to the 

hospital expenditure proportion, which is our estimate of the proportion of the 

expenditures under Parts A and B paid to the qualifying MA organization in the form of 

capitation payments under section 1853 of the Act that are not attributable to the EHR 

incentive payment program, that are attributable to expenditures for inpatient hospital 

services. In the case of a qualifying MA organization that attests that not all 

MA-affiliated eligible hospitals of the organization are meaningful EHR users with 

respect to years beginning with 2015, we are directed to apply the payment adjustment on 

the proportion of all such MA-affiliated eligible hospitals of the organization that are not 

meaningful users for such year. The adjustment amount is of three-fourths of the market 

basket increase related to a hospital by a 33 1/3 percent reduction in 2015, by a 66 2/3 

percent reduction in 2016, and by a 100 percent reduction in 2017 and all subsequent 

years. Effectively, the reduction is of all but 25 percent of the market basket increase for 

a specific hospital in years after 2016. 

 We welcome comments on these incentive payment adjustments and on how we 

can most effectively and efficiently apply payment adjustments to qualifying MA 

organizations whose EPs and MA-affiliated hospitals have not successfully meaningfully 
CMS-0033-P 275 

used certified EHR technology. Any comments received will be considered in 

developing future rulemaking. 

D. Medicaid Incentives 

1. Overview of Health Information Technology in Medicaid 

 Under the HITECH Act, State Medicaid programs, at their option, may receive 

Federal financial participation (FFP) for expenditures for incentive payments to certain 

Medicaid providers to adopt, implement, upgrade, and meaningfully use certified EHR 

technology. Additionally, FFP is available to States for administrative expenses related 

to administration of those incentive payments as long as the State meets certain 

conditions. Section 1903(a)(3)(F)(i) of the Act, as amended by section 4201 of the 

HITECH Act, establishes 100 percent FFP to States for providing incentive payments to 

eligible Medicaid providers (described in section 1903(t)(2) of the Act) to adopt, 

implement, upgrade, and meaningfully use certified EHR technology. The incentive 

payments are not direct reimbursement for the purchase and acquisition of such 

technology, but rather are intended to serve as incentives for EPs and eligible hospitals to 

adopt and meaningfully use certified EHR technology. 

 Section 1903(a)(3)(F)(ii) of the Act, as amended by section 4201 of the HITECH 

Act, also establishes 90 percent FFP to States for administrative expenses related to 

carrying out the substantive requirements associated with the incentive payments. As 

discussed later in this proposed rule, we interpret these administrative expenses as 

including approvable expenses related to oversight activities and promotion of health 

information exchange. 
CMS-0033-P 276 

 It is important to note that we do not believe that the Medicaid incentive and 

administrative payments authorized under section 4201 of the HITECH Act should be 

viewed in isolation. Rather, we encourage States, providers, and other stakeholders to 

view these new programs in concert with the numerous other initiatives recently 

undertaken and currently being promoted by both CMS and the Department to encourage 

advancements in health care technology and health information exchange. These 

initiatives include the following: 

• The establishment of the Office of the National Coordinator (first through 

executive order in 2004 and then as legislatively mandated in the HITECH Act); 

• The Medicaid Transformation Grant program authorized by section 6081 of the 

Deficit 

Reduction Act of 2005 (Pub. L. 109-171). This program provided $150 million in grants 

in FY 2007 through FY 2008 to States to support innovative methods for transforming 

Medicaid programs. Twenty-two States focused on HIT, with initiatives ranging from 

the use of statewide EHRs for beneficiaries, to mechanized clinical decision support, to eprescribing, to electronic health information exchange. For more information on the 

program, we refer readers to: www.cms.hhs.gov/MedicaidTransGrants. 

• The Medicaid Information Technology Architecture (MITA) initiative and 

framework. 

MITA is a plan to promote improvements in the Medicaid enterprise and the systems that 

support it through collaboration between CMS and the States. The MITA framework 

consists of models, guidelines, and principles for States to use as they plan and 

implement business and technology enterprise solutions. Integral to the MITA is the 
CMS-0033-P 277 

State's Medicaid Management Information System (MMIS). The MMIS contains a great 

deal of claims data and other Medicaid programmatic information that we believe should 

be used by States in analyzing their current HIT environments. Once States establish a 

baseline assessment, they can then plan the steps necessary to transition towards 

achieving some of the objectives of the HITECH Act, such as improving both quality of 

care and health care outcomes. In addition, the MITA framework is CMS's initiative that 

will allow States to modernize and transform their MMIS to improve the administration 

of the Medicaid program, while supporting the States need for flexibility, adaptability, 

and rapid response to changes in the unique aspects of their individual Medicaid 

programs. The ultimate goal of MITA is to develop seamless and integrated systems that 

communicate effectively and that are interoperable, both within and across States as well 

as with other health care entities and payers, such as public health departments and nonMedicaid payers. For more information on MITA, we refer readers to: 

http://www.cms.hhs.gov/MedicaidInfoTechArch/ . 

 We believe that the HITECH Act incentives create a unique opportunity for States 

and Medicaid providers to build upon prior and current efforts in HIT in order to help 

achieve interoperable health information exchange in health care. We believe that States 

should build upon the lessons learned from these initiatives in order to ensure that the 

incentive and administrative payments are leveraged in a way that maximizes the role of 

HIT in enhancing quality and access, reducing costs, and improving health care 

outcomes. 

 We also plan to ensure public involvement as the HIT environment evolves, both 

as a result of the HITECH Act incentives, as well as a result of other Departmental HIT 
CMS-0033-P 278 

initiatives. We have already convened several State calls on the HITECH Act, including 

discussing the definition of meaningful use of certified EHR technology, and the impact 

the definition would have on specific provider groups. More information on the content 

of these calls can be found in section II.A.2.a of this proposed rule. We convened 

additional calls with State staffs on the Medicaid EHR incentives leading up to our 

development of this proposed rule. Issues addressed include policies such as State 

oversight of adopting, implementing, and upgrading certified EHR technology; 

alternative fiscal agents under consideration; and validating data to establish program 

eligibility. 

 We also released a State Medicaid Director's letter on September 1, 2009. This 

letter outlines steps State Medicaid agencies can take to assess the current status of their 

HIT efforts; develop a roadmap for achieving their HIT objectives in support of the 

Medicaid EHR incentive program; set Medicaid-specific performance goals and 

incentives for provider adoption of HIT; and partner with a broad range of stakeholders. 

Furthermore, we conducted a follow-up technical assistance call with State Medicaid 

Directors and their staffs to provide an overview and answer questions. 

 Finally, as required by section 1903(t)(10) of the Act, we will be reporting to 

Congress on the status, progress, and oversight of the overall EHR incentive program. 

These reports will discuss steps taken to avoid duplicate Medicare and Medicaid 

incentive payments to EPs, the extent to which Medicaid EPs and hospitals have adopted 

certified EHR technology as a result of the incentive payments, and any improvements in 

health outcomes, clinical quality, or efficiency resulting from the adoption of such 

technology. 
CMS-0033-P 279 

• 2. General Medicaid Provisions 

In the proposed §495.342 and §495.344 we provide the general rule that States, at 

their option, may receive: (1) 90 percent FFP for State expenditures related to the 

administration of an EHR incentive program for certain Medicaid providers that are 

adopting, implementing, or upgrading and meaningfully using certified EHR technology; 

and (2) 100 percent FFP for State expenditures for those incentive payments. 

• 3. Identification of Qualifying Medicaid EPs and Eligible Hospitals 

• a. Overview 

As specified in section 1903(t)(2) of the Act, only certain Medicaid providers will 

be eligible for incentive payments. This section of the preamble discusses some of these 

eligibility requirements, including requirements relating to patient volume, whether a 

provider is hospital-based, and whether an EP is practicing predominantly in a 

federally-qualified health center (FQHC) or a rural health clinic (RHC). Proposed 

regulations relating to these requirements may be found at §495.304 through §495.306. 

b. Program Participation 

 As specified under section 1903(t)(2)(A) of the Act, Medicaid participating 

providers who wish to receive a Medicaid incentive payment must meet the definition of 

a “Medicaid EP.” This definition (1903(t)(3)(B) of the Act) lists five types of Medicaid 

professionals: physicians, dentists, certified nurse-midwives, nurse practitioners, and 

physician assistants practicing in an FQHC or RHC that is so led by a physician assistant. 

 Additionally, to qualify for incentives, most Medicaid EPs cannot be “hospitalbased.” We propose to use the same definition of “hospital-based” as used in the 

Medicare EHR incentive program, as sections 1848(o)(1)(C) and 1903(t)(3)(D) of the Act 
CMS-0033-P 280 

use almost identical definitions of the term. We refer readers to section II.A. of this 

preamble for a proposed definition of “hospital-based,” and for a thorough discussion of 

our proposed methodology. 

 The only exception to this rule is that Medicaid EPs practicing predominantly in 

an FQHC or RHC are not subject to the hospital-based exclusion. 

Medicaid EPs must also meet the other criteria for Medicaid incentive payment 

eligibility, such as the patient volume thresholds or practicing predominantly in an FQHC 

or RHC, as described in this subpart. Since the statute at 1903(t)(2)(iii) of the Act does 

not define “practices predominantly,” we propose that an eligible professional practices 

predominantly at an FQHC or an RHC when the clinical location for over 50 percent of 

his or her total patient encounters over a period of 6 months occurs at an FQHC or RHC.

 Acute care and children's hospitals are listed in section 1903(t)(2) of the Act as 

the only two types of institutional providers potentially eligible for Medicaid incentive 

payments. These terms are specific to the Medicaid EHR incentive program and are not 

currently defined in the Medicaid regulations. Consequently, we propose to define these 

terms in §495.302. 

 As specified under section 1903(t)(2)(B) of the Act, to qualify for incentive 

payments acute care hospitals also must meet patient volume threshold requirements, as 

specified in proposed §495.306. Children's hospitals do not have patient volume 

requirements for Medicaid incentive program participation. 

(1) Acute Care Hospitals 
CMS-0033-P 281 

 “Acute care” is defined as the necessary treatment of a disease or injury for only a 

short period of time in which a patient is treated for a brief but severe episode of illness.1 

Many hospitals can be considered acute care facilities if they provide both inpatient and 

outpatient services with the goal of discharging the patient as soon as the patient is 

deemed stable, with appropriate discharge instructions. We are proposing that for 

purposes of Medicaid incentive payments, an “acute care hospital” is defined as: a health 

care facility where the average length of patient stay is 25 days or fewer. For purposes of 

participation in the Medicaid EHR incentive program, this proposed definition ensures 

that hospitals are designated as acute care hospitals based on the level and nature of care 

they provide. This definition also includes some specialty hospitals where the average 

length of stay is 25 days or fewer. This definition of acute care hospitals will exclude 

specialty providers and long-term care facilities where the average patients' length of stay 

exceeds 25 days. To further refine the definition, we reviewed the Medicare-issued CCN. 

CCNs are issued to categories of providers who meet Federal requirements (known as 

conditions of participation) to participate in the Medicare program. State Medicaid 

agencies look to Medicare's conditions of participation when deciding whether to issue 

provider agreements to many categories of providers. In the case of inpatient hospital 

services §440.10(a)(3)(iii) requires that for inpatient hospital services provided to 

Medicaid beneficiaries to be eligible for FFP, those services must be provided in an 

institution that meets the requirements for participation in Medicare as a hospital, and 

such hospitals receive CCNs. 

 

1

 State of Connecticut, Office of Health Care Access, “The Health of Connecticut's Hospitals,” report 

released January 16, 2001, page 17. 
CMS-0033-P 282 

 Hospital CCNs are structured such that the first two digits represent the State in 

which the hospital is located, and the next four digits identify the type of facility and are 

assigned sequentially from the appropriate block of numbers. Short-stay general 

hospitals receive CCNs whose number range is 0001-through 0879. The 11 cancer 

hospitals in the United Stated also are issued CCNs within that number range. To allow 

some flexibility for hospital participation in the Medicaid EHR incentive program, we are 

proposing to define acute care hospitals for purposes of this Medicaid EHR incentive 

program as those with an average patient length of stay of 25 days or fewer and with a 

CCN that has the last four digits in the series 0001 through 0879 (that is, short-term 

general hospitals and the 11 cancer hospitals in the United States). 

 We also recognize a category of long-term care hospitals, which we are planning 

to exclude from the definition. Long term acute care hospitals are defined for Medicare 

purposes in regulations at 42 CFR 412.23(e). Specifically §412.23(e)(2)(i) states that the 

hospital must have an average Medicare inpatient length of stay of greater than 25 days 

(which includes all covered and non-covered days of stay of Medicare patients). 

 We considered allowing both short-term and long-term acute care hospitals to 

meet the definition of acute care hospital for purposes of the Medicaid incentive 

payments. However, we are not proposing a definition that encompasses both types of 

acute care hospitals because CMS' interpretation was that long-term acute care hospitals 

did not satisfy the intent of the statute, which we believe intends to include general acute 

care hospitals. In addition, CMS knew of at least one State that does not recognize longterm acute care hospitals as a Medicaid provider type. We therefore drew the line at 25 

days, the cut-off between short-term general and specialty hospitals and long-term acute 
CMS-0033-P 283 

care hospitals. We used this cut-off in conjunction with the list of CMS CCNs (which 

also distinguish between short-term and long-term hospitals (see CMS State Operations 

Manual Section 2779A1, as revised on April 20, 2007 and effective on October 1, 2007) 

in order to be as inclusive as possible within statute. Since Congress specifically singled 

out children's hospitals in addition to acute care hospitals, we believe that if Congress 

intended to include long-term care hospitals, it would have similarly given them separate 

mention. In addition, Congress specifically did not include nursing facilities, another 

category of long-term care provider (and an important source of Medicaid care) as a 

provider type eligible for incentive payments. CMS read this as further evidence that the 

statute did not intend inclusion of long-term care facilities. 

(2) Children's Hospitals 

The statute also does not include a definition for “children's hospitals.” To assist 

with the development of a definition of “children's hospitals” for purposes of the 

Medicaid EHR incentive program, we convened teleconferences with States to gather 

input on topics that should be defined in this proposed rule. Participants noted that one 

critical issue is whether a children's wing of a general hospital could be considered a 

children's hospital for purposes of qualifying for a Medicaid incentive payment. 

As with the acute care hospital definition, we again looked to Medicare-issued 

CCNs and recognized that numbers whose last four digits are in the 3300 to 3399 series 

are assigned to children's hospitals. Currently in the United States there are 78 certified 

children's hospitals, including both freestanding and hospital-within-hospital facilities. 

For purposes of the Medicaid EHR incentive program, we propose one definition 

to include only separately certified children's hospitals, with CCNs in the 3300-3399 
CMS-0033-P 284 

series in the definition of eligible “children's hospital.” By proposing to define 

“children's hospital” in this way, CMS would (1) prevent general acute care hospitals, 

which cannot themselves qualify for the incentive because they do not meet the 10 

percent Medicaid patient volume, from using the fact that they have a pediatric wing as 

justification for requesting a Medicaid incentive payment; (2) exclude many of the 

facilities that are perceived by the public as children's hospitals, but do not meet the 

Medicare standards as either freestanding or hospital-within-hospital children's hospitals; 

and (3) exclude some pediatric specialty hospitals which have CCNs as psychiatric or 

rehabilitation hospitals. 

An alternative proposed definition of a “children's hospital” would include those 

hospitals with Medicare provider numbers in the following series: 

• 0001through 0879--Short-term (General and Specialty) Hospitals. 

• 3025 through 3099-- Rehabilitation Hospitals (Excluded from Prospective 

Payment Systems).

• 3300 through 3399-- Children's Hospitals (Excluded from Prospective Payment 

Systems). 

• 4000 through 4499-- Psychiatric Hospitals (Excluded from Prospective 

Payment Systems).

This definition, for the purposes of the Medicaid HIT Incentive payments, would 

apply only to those freestanding hospitals within the above mentioned series that 

exclusively furnish services to individuals under age 21.

This broader definition would (1) still prevent acute care hospitals that cannot 

independently qualify for the incentive because they do not meet the 10 percent Medicaid 
CMS-0033-P 285 

patient volume from using the fact that they have a pediatric wing as justification for 

requesting an HIT incentive payment; (2) allow for participation in the incentive program 

by the greatest number of children's hospitals, including rehabilitative and psychiatric 

specialty hospitals; and (3) align with Federal efforts aimed at improving healthcare 

quality for all children, including those with physical and mental diseases/disabilities. 

We are soliciting comment on the proposed definitions of “children's hospital” as 

it applies to the Medicaid EHR incentive program recognizing that there may be 

additional alternative definitions that could have a positive impact on the health care 

received by children. 

c. Medicaid Professionals Program Eligibilty 

 For Medicaid EPs, the general rule (subject to the two exceptions listed below) is 

that the EP must have at least 30 percent patient volume attributable to those who are 

receiving Medicaid. Section 1903(t)(2)(A)(i) of the Act provides authority to the 

Secretary to establish the methodology by which such patient volume will be estimated. 

We propose that to establish such patient volume, the EP must have a minimum of 30 

percent of all patient encounters attributable to Medicaid over any continuous 90-day 

period within the most recent calendar year prior to reporting. There are two exceptions 

to the general 30 percent rule discussed previously. The first exception is that a 

pediatrician may have at least 20 percent patient volume attributable to those who are 

receiving health care services under the Medicaid program, as estimated in accordance 

with a methodology established by the Secretary (section 1903(t)(2)(A)(ii) of the Act). 

Again, the method we propose to use is that the pediatrician must have a minimum 
CMS-0033-P 286 

20 percent of all patient encounters attributable to Medicaid over any continuous 90-day 

period within the most recent calendar year prior to reporting. 

 The second exception is that Medicaid EPs practicing predominantly in an FQHC 

or RHC must have a minimum of 30 percent patient volume attributable to “needy 

individuals.” Again, the method we propose to use is that 30 percent of all patient 

encounters be attributable to needy individuals over any continuous 90-day period within 

the most recent calendar year prior to reporting. 

 Section 1903(t)(3)(F) of the Act defines needy individuals as individuals meeting 

any of the following three criteria: (1) they are receiving medical assistance from 

Medicaid or the Children's Health Insurance Program (CHIP); (2) they are furnished 

uncompensated care by the provider; or (3) they are furnished services at either no cost or 

reduced cost based on a sliding scale determined by the individual's ability to pay. An 

explanation of how we propose to apply each of these criteria is described in detail in this 

section of the proposed rule. 

 We propose this flexible patient volume methodology in order to capture the 

highest number of true Medicaid practitioners potentially eligible for the EHR incentive 

program. We believe Congress set the high patient volume thresholds in order to offer 

these incentives to the practitioners whose practices are open and accessible to Medicaid 

beneficiaries. We noted that many Medicaid eligible individuals, such as children, may 

seek care at specified times of the year, such as the beginning of the school-year for 

required immunizations. Since there are five different types of providers, varying from 

specialty to primary care, we thought the flexibility would capture any seasonal 
CMS-0033-P 287 

encounter adjustments in the year, while still honoring Congress' intent to reward highervolume Medicaid practitioners. 

d. Calculating Patient Volume Requirements 

 As required by section 1903(t)(2) of the Act and discussed in the previous section, 

all EPs and the vast majority of hospitals will need to meet certain patient volume 

thresholds in order to be eligible for incentive payments. (The only exception to this rule 

is for children's hospitals, which have no patient volume threshold requirement). 

 In addition, where patient volume is a criterion, most providers will be evaluated 

according to their “Medicaid” patient volume, while some professionals (those practicing 

predominantly in an FQHC or RHC) will be evaluated according to their “needy 

individual” patient volume. 

 We propose to define “patient volume” in §495.302 to be a minimum 

participation threshold for each individual Medicaid provider (with the exception of 

children's hospitals). 

 For the Medicaid patient volume, this threshold (represented below) is calculated 

using as the numerator the individual hospital's or EP's total number of Medicaid patient 

encounters in any representative continuous 90-day period in the preceding calendar year 

and the denominator is all patient encounters for the same individual professional or 

hospital over the same 90-day period. We are not prescribing standards for what is a 

“representative” period, but we intend to apply a plain meaning test. In other words, if a 

reasonable person would not consider the selected period to be representative (for 

example, because the selected period included a short-term temporary Medicaid outreach 

program), then it would not support a threshold calculation. 
CMS-0033-P 288 

 [Total (Medicaid) patient encounters in any 90-day period in the preceding calendar 

year/Total patient encounters in that same 90-day period] * 100 

 For the needy individual patient volume, the threshold (represented below) is 

calculated in the same manner, but with the numerator equal to the EP's total number of 

needy individual patient encounters in any representative 90-day period in the preceding 

calendar year. 

[Total (Needy Individuals) patient encounters in any continuous 90-day period in the 

preceding calendar year/Total patient encounters in that same 90-day period] * 100 

 Medicaid EPs and eligible hospitals would be required to annually re-attest to 

patient volume thresholds to continue to qualify for Medicaid incentive payments. Table 

26 demonstrates the above-referenced patient volume thresholds per provider type. 

TABLE 26: Qualifying Patient Volume Threshold for Medicaid EHR Incentive 

Program 

Entity Minimum 90-day Medicaid 

Patient Volume Threshold 

Physicians 30% 

Pediatricians 20% 

Dentists 30% 

Certified nurse midwives 30% 

Physician Assistants when 

practicing at an FQHC/RHC led 

by a physician assistant 

30% 

Nurse Practitioner 30% 

Or the Medicaid EP 

practices predominantly in 

an FQHC or RHC - 

30% “needy individual” 

patient volume threshold

Acute care hospital 10% 

Children's hospital 

If a State has an alternative approach to the established timeframe for measuring 

patient volume, it may propose it to us for review through the State Medicaid HIT Plan 

(SMHP) (discussed later) and we would make a determination of whether it is an 

acceptable alternative. To be considered for approval, the alternative approach would 
CMS-0033-P 289 

require a verifiable data source and justification. In defining the way in which patient 

volume is established, we provide for a consistent methodology per the statute, but also 

allow for the possibility that States may propose acceptable alternatives that synchronize 

with existing data sources, which could decrease State data burdens. This alternative 

approach must provide an auditable record (that is, a record of how the professional 

demonstrated patient volume) for CMS to monitor the States' oversight of the Medicaid 

EHR incentive program implementation. 

 In determining the “needy individual” patient volume threshold that applies to 

EPs practicing predominantly in FQHCs or RHCs, section 1902(t)(2) of the Act 

authorizes the Secretary to make a downward adjustment to the uncompensated care 

figure to eliminate bad debt data. We interpret bad debt to be consistent with the 

Medicare definition, as specified at §413.89(b)(1). Under Medicare, bad debts are 

amounts considered to be uncollectible from accounts and notes receivable that were 

created or acquired in providing services. “Accounts receivable” and “notes receivable” 

are designations for claims arising from the furnishing of services, and are collectible in 

money in the relatively near future. Providers should be required to use cost reports (for 

FQHCs and clinics this would be the Medicare 222-92 cost report, or the most recent 

version of the 222), or other auditable records to identify bad debts. All information 

under attestation is subject to audit. Our proposed regulations on calculating the needy 

individual patient volume can be found at §495.302 and §495.306. 

 Further, in establishing the Medicaid patient volume thresholds for EPs and acute 

care hospitals, section 1902(t)(2) of the Act requires that individuals enrolled in Medicaid 

managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), or prepaid 
CMS-0033-P 290 

ambulatory health plans (PAHPs), under 42 CFR Part 438 be included in the calculation. 

Therefore, in determining patient volume, providers and States should be aware that 

individuals enrolled in such plans will be included in the patient volume calculation. 

Acute care hospitals have to meet the 10 percent Medicaid volume threshold. 

 We also note that although §438.60 of our regulations would generally prohibit a 

State from making a direct payment to a provider for services that are included under a 

contract with an MCO, PIHP, or PAHP, providers contracted with these managed care 

plans will nevertheless be eligible for Medicaid EHR incentive payments because those 

payments are not for services that are included in such a contract. The fact that Congress 

directed that individuals enrolled in managed care be included in the patient volume 

calculation demonstrates an intent to allow qualified providers to receive incentive 

payments, whether they provided their services through capitated care arrangements or 

fee-for-service. Over 70 percent of Medicaid beneficiaries receive care in a managed 

care delivery system, and we do not believe that the intent of Congress in creating the 

incentives program was to remove the providers treating these individuals from the 

incentives program. 

e. Entities Promoting the Adoption of Certified EHR Technology 

 We are proposing to define “promoting the adoption of certified EHR 

technology” in §495.302. Under section 1903(t)(6)(A)(i), incentive payments must 

generally be made directly to the EP. Section 1903(t)(6)(A)(ii) of the Act provides an 

exception to permit payment of incentive payments to “entities promoting the adoption of 

certified EHR technology,” as designated by the State, if participation in the payment 

arrangement is voluntary for the EP involved. Additionally, the entity must not retain 
CMS-0033-P 291 

more than 5 percent of the payment for costs unrelated to certified EHR technology (and 

support services including maintenance and training) that is for, or is necessary for, the 

operation of the technology. While the Act authorizes States to designate these entities, 

the Secretary nevertheless retains authority to define what it means to be “promoting the 

adoption of certified EHR technology,” as specified in section 1903(t)(6)(A)(ii) of the 

Act. Section 1102 of the Act authorizes the Secretary to “make and publish such rules 

and regulations, not inconsistent with this Act, as may be necessary to the efficient 

administration of the functions with which he or she is charged under this Act.” Since 

one of our functions is to approve Title XIX plans under sections 1902(b) and 1116 of the 

Act, and States would need to submit plans as to how they would spend section 4201 of 

the HITECH Act funds, we have the authority to determine whether a State's plan for 

allowing EPs to assign their Medicaid incentive payments to these entities is in 

compliance with our interpretation of the Act. 

 We propose to define “promoting” certified EHR adoption to mean the enabling 

and oversight of the business, operational and legal issues involved in the adoption and 

implementation of EHR and/or exchange and use of electronic health information 

between participating providers, in a secure manner, including maintaining the physical 

and organizational relationship integral to the adoption of certified EHR technology by 

EPs. For example, health information exchanges have the potential to transform the 

healthcare system by facilitating timely, accurate, and portable health information on 

each patient at the point of service. Health Information Exchanges (HIEs), are one type 

of entity that we believe would meet the definition of an entity that is promoting the 

adoption of certified EHR technology. HIEs provide the capability to move clinical 
CMS-0033-P 292 

information electronically between disparate health care information systems while 

maintaining the meaning of the information being exchanged. HIEs also provide the 

infrastructure for secondary use of clinical data for purposes such as public health, 

clinical, biomedical, and consumer health informatics research as well as institution and 

provider quality assessment and improvement, where permissible under HIPAA and 

other requirements included in the HITECH Act. In addition, use of health information 

exchange models can reduce the need for costly point-to-point interfaces between 

different EHR tools, as used in laboratories and pharmacies, thus providing a more 

scalable model of interoperable health information exchange. HIEs promote adoption of 

certified EHR technology by providing the infrastructure for providers' EHRs to reach 

outside of their clinical practice sites and connect with other points of care. Providers 

report that having a more complete picture of their patients' healthcare data from other 

providers and care settings is one of the primary appeals to using EHRs. Without health 

information exchange, electronic health records are simply digitized filing cabinets and 

will not achieve their quality of care or cost containment potential. Furthermore, given 

the proposed definition of meaningful use, HIEs can significantly help Medicaid 

providers adopt and use EHR in such a way that the goals of the incentive program are 

met. The inclusion in HITECH of HIE grants to be awarded to States or State-designated 

Entities by ONC are an additional indication of the symbiotic relationship between health 

information exchanges and optimal use of EHRs. 

 Under 1903(t)(6)(A)(ii) of the Act and as proposed in §495.354, States must 

establish verification procedures that enable Medicaid EPs to voluntarily assign payments 

to entities promoting EHR technology. States must guarantee that the assignment is 
CMS-0033-P 293 

voluntary and that the entity does not retain more than 5 percent of those assigned 

Medicaid incentive payments for costs unrelated to certified EHR technology. We 

propose requiring States to publish and make available to all Medicaid EPs the 

procedures they developed for assigning incentive payments to the third party entities 

before payments can be assigned. Such publication must also include information about 

the State's verification mechanism. The State's method must assure compliance with the 

requirement that no more than 5 percent of the Medicaid EP's annual incentive payment 

is retained by the entity for costs not related to certified EHR technology. 

 Although section 1903(t)(6)(A)(ii) of the Act allows assignment of payment to 

entities promoting the adoption of EHR technology, we wish to clarify that such 

assignment would not remove the responsibility of the Medicaid EP to individually 

demonstrate meaningful use of the EHR technology (as discussed in greater detail 

below). Therefore, entities promoting the adoption would not receive the assigned 

payments unless the Medicaid EP meets all eligibility criteria. Our proposed definition 

for promoting the adoption of certified EHR technology is in §495.302. 

4. Computation of Amount Payable to Qualifying Medicaid EPs and Eligible Hospitals 

The statute, at sections 1903(t)(1), (t)(4), and (t)(5) of the Act, creates different 

payment formulas for Medicaid EPs versus hospitals. The payment methodology for 

Medicaid hospitals shares many aspects of the methodology used for Medicare hospitals. 

 

a. Payment Methodology for EPs 

(1) General Overview 
CMS-0033-P 294 

Pursuant to section 1903(t)(1)(A) of the Act, payment for EPs equals 85 percent 

of “net average allowable costs.” While the Secretary is directed to determine “average 

allowable costs” based upon studies of the average costs of both purchasing and using 

EHR technology, the net average allowable costs that set payment are capped by statute. 

As discussed in more detail further on, generally stated, these caps equal $25,000 in the 

first year, and $10,000 for each of 5 subsequent years (there is an exception for 

pediatricians with under 30 percent Medicaid patient volume, whose caps are two-thirds 

of these amounts). Thus, the maximum incentive payment an EP could receive from 

Medicaid equals 85 percent of $75,000, or $63,750, over a period of 6 years. EPs must 

begin receiving incentive payments no later than CY 2016. 

(2) Average Allowable Costs 

Section 1903(t)(4)(C) of the Act gives the Secretary the authority to determine 

average allowable costs. Specifically, the Secretary is directed to study the average costs 

associated with the purchase, initial implementation, and upgrade of certified EHR 

technology, including support services, and integral related training. The Secretary also 

is directed to study the average costs of operating, maintaining, and using certified EHR 

technology. The statute permits the Secretary to use studies submitted by the States. 

We conducted a literature review of recent studies on EHR technology to 

determine the average allowable cost of implementing and using such technology. We 

reviewed the results from four recent, comprehensive studies. Specifically, HHS' Office 

of the Assistant Secretary for Planning and Evaluation commissioned a study by 

Moshman Associates, Inc., Booz Allen Hamilton, in September 2006 – Assessing the 

Economics of EMR Adoption and Successful Implementation in Physical Small Practice 
CMS-0033-P 295 

Settings. In this study, EHRs consisted of a core group of functions that, in various 

permutations, are often associated with an electronic medical record and frequently 

include the capacity to: capture and display clinical notes, display laboratory results, 

display diagnostic imaging results or reports, order drugs or diagnostic tests, and generate 

reports2

. 

The study found that EHR adoption is influenced by a variety of factors, including 

hardware costs, software costs, the costs of implementation and training, and costs 

associated with productivity that occur in the early stages of implementation. While there 

are challenges in making cost comparisons across different studies and across different 

functionalities (that is, EMRs versus EHRs), the costs per physician ranged between 

$33,000 and $50,0003

. 

In reviewing Market Watch, The Value of Electronic Health Records in 

Community Health Centers: Policy Implications by Robert H. Miller and Christopher E. 

West, the cost and benefits of electronic health records is reported in six community 

health centers (CHCs) that serve disadvantaged patients4

. Robert Miller and Christopher 

West report that initial EHR costs per full-time-equivalent (FTE) billing provider 

averaged almost $54,000, with much variation across CHCs and within each cost 

category, including hardware, software, installation, training, etc. and ongoing costs per 

FTE provider, per year, averaged $20,6105

. 

 

2

 Moshman Associates, Inc., Booz Allen Hamilton, in September 2006 – Assessing the Economics of EMR 

Adoption and Successful Implementation in Physical Small Practice Settings p.40. 

3

 Moshman Associates Inc., Booz, Allen, Hamilton, p. 50. 

4

 Market Watch, The Value of Electronic Health Records in Community Health Centers: Policy 

Implications by Robert H. Miller and Christopher E. West, page 206. 

5

 Market Watch, The Value of Electronic Health Records in Community Health Centers: Policy 

Implications by Robert H. Miller and Christopher E. West, page 208. 
CMS-0033-P 296 

A Congressional Budget Office (CBO) Paper: Evidence on the Costs and 

Benefits of Health Information Technology from May 2008 indicates that estimating the 

total cost of implementing HIT systems in office-based medical practices is complicated 

by differences in the types and available features of the systems now being sold, as well 

as differences in characteristics of the practices that adopt them. The CBO paper goes 

further to say that few detailed studies available report that total costs for office-based 

EHRs are about $25,000 - $45,000 per physician6 and estimates for annual costs for 

operating and maintaining the system, which include software licensing fees, technical 

support, and updating and replacing used equipment range between $3,000 to $9,000 per 

physician per year7. 

An article written by the Agency for Healthcare Research and Quality (AHRQ), 

Research Activities, September 2005, Health Information Technology, adoption rates of 

electronic health records are low among physician groups -- indicates that the average 

purchase and implementation cost of an EHR was $32,606 per FTE physician. The 

article indicates that maintenance costs were an additional $1,500 per physician, per 

month and smaller practices had the highest implementation costs per physician at 

$37,2048

. 

 In conducting a review of the data, we determined that the studies demonstrate a 

cross-sectional view of small and large practices and community health centers. There 

was adequate data to support a depiction of costs across multiple provider types. 

 

6

 A CBO Paper, Evidence on the Costs and Benefits of Health Information Technology, May 2008, page 

17. 

7

 A CBO Paper, Evidence on the Costs and Benefits of Health Information Technology, May 2008, page 

18. 

8

 Agency for Healthcare Research and Quality, Research Activities, September 2005, Health Information 

Technology, Adoption rates of electronic health records are low among physician groups. 
CMS-0033-P 297 

 To summarize, we determined that the average costs of EHRs vary greatly 

because of the size and type of provider practices, the differences in available features of 

systems, and the additional costs associated with licensing, support, training, and 

maintenance. However, based on the information reviewed, we determined that the 

average costs for initial EHR systems currently can range from $25,000 to $54,000 in the 

implementation year, per professional. Since the average costs of EHR technology in the 

first year can be as much as $54,000 and no less than $25,000, and since we believe the 

costs of such technology will be increasing we are proposing to set the average allowable 

cost at $54,000. We believe that to establish this average allowable cost at the high end 

of the range is reasonable since the data we reviewed is based on certification standards 

that may not be appropriate moving forward. Specifically, since the ONC will be 

establishing new certification standards for EHR technology in the coming months, we 

believe the average cost of certified EHR technology incorporating the new standards 

will be higher than the current costs of EHR technology . It is our assumption that 

making improvements to incorporate the new certification standards into current EHR 

technology will be costly. Thus, we believe that establishing the average allowable cost 

at $54,000 is reasonable. 

 Additionally, our analysis determined that the range for subsequent incentive 

payment year costs for most providers will fall into a large range, based on a number of 

factors. On one end of the range, costs related to maintenance could be as low as $3,000 

to $9,000 per provider, where other studies state that maintenance will be as high as 

$18,000 to $20,610 per provider. Given the expectations in the ONC interim final rule 

for system performance, interoperability, and the health measures data discussed in this 
CMS-0033-P 298 

proposed rule that CMS and the States will need to collect from professionals, we believe 

that the costs for maintaining certified EHR technology will also be on the higher end of 

the range at $20,610. 

(3) Net Average Allowable Costs. 

 As required by section 1903(t)(3)(E) of the Act, in order to determine “net” 

average allowable costs, average allowable costs for each provider must be adjusted in 

order to subtract any payment that is made to Medicaid EPs and is directly attributable to 

payment for certified EHR technology or support services of such technology. The only 

exception to this requirement is that payments from State or local governments do not 

reduce the average allowable costs. The resulting figure is the “net” average allowable 

cost, that is, average allowable cost minus payments from other sources (other than State 

or local governments). The statute indicates that EPs may receive 85 percent of a 

maximum net average allowable cost in the first year of $25,000 and a maximum net 

average allowable cost of $10,000 in subsequent years. This would mean that, as 

required by the statute, the net average allowable costs are capped at these amounts. 

 Since we have proposed that the average allowable cost is $54,000 in the first 

year, EPs could receive as much as $29,000 in funding from sources (other than from 

State or local governments) as contributions to the certified EHR technology and the 

incentive payment would still be based on 85 percent of the maximum net average 

allowable cost of $25,000 (or $21,250). This is appropriate since $54,000 (the average 

allowable cost) minus $29,000 (contributing sources of funding from other than State or 

local governments) equals $25,000. Since $25,000 is equal to the level of the maximum 
CMS-0033-P 299 

net average allowable cost or capped amount discussed above, providers could receive 85 

percent of $25,000 or $21,250 in year one as a Medicaid incentive payment. 

 The same logic would hold true for subsequent years. Specifically, if in the 

following years an eligible professional received as much as $10,610 in contributing 

funds from sources other than State or local governments, the maximum incentive 

payment of $8,500 would be unaffected in such subsequent years. This result is due to 

the fact that the average allowable costs of $20,610 for maintaining EHR technology 

minus the $10,610 received would still equal $10,000, the maximum net average 

allowable costs permitted under the statute. 

 In reviewing whether a reduction in the net average allowable cost was warranted 

based on other contributions to EHR technology, we considered the situation of EPs who 

may have been provided with the actual certified EHR technology, as well as training, 

support services, and other services that would promote the implementation and 

meaningful use of such technology. In some cases, we do not believe the contribution 

would reduce average allowable costs at all. For example, an FQHC or RHC has 

provided technology to its staff EPs to use, we do not believe that such technology 

provision would be considered a “payment” from another source that would reduce 

average allowable costs. Moreover, we believe the situations in which an EP has been 

provided with the actual technology, support service, or training from another source are 

extremely limited in light of the statutory prohibitions on “kickbacks” at Section 

1128B(b) of the Act. 

(4) Payments for Medicaid Eligible Professionals 
CMS-0033-P 300 

 One important difference we propose between the payments to Medicaid EPs and 

hospitals is that States would disburse the payments to EPs in alignment with the calendar 

year, whereas hospitals will receive payments in alignment with the fiscal year, as 

described in section II.D.4.b. of this proposed rule. There are two primary reasons for 

this. The first is to align Medicaid incentive payment disbursements with that of the 

Medicare program, in order to support consistency between the two programs, as well as 

among the States. We will undertake national outreach activities to encourage provider 

EHR adoption and to align the annual payment periods. Since meaningful use of the 

certified EHR technology is the driver of the incentives, we believe that a cooperative 

approach between CMS, ONC, and the States would be realized with more providers 

participating in the program. 

 As previously discussed in this proposed rule, based on the 85 percent threshold 

applied to the net average allowable costs, we propose that most Medicaid EPs may 

receive up to a maximum incentive payment of $21,250 in the first payment year. 

 In subsequent years of payment, Medicaid EPs' incentive payments will be 

limited to 85 percent of the $10,000 cap on net average allowable cost, or up to a 

maximum of $8,500 annually for most Medicaid EPs. 

 Since pediatricians are qualified to participate in the Medicaid EHR incentive 

program as physicians, and therefore classified as Medicaid EPs, they may qualify to 

receive the full incentive (that is, the 85 percent threshold applied to the net average 

allowable cost) if the pediatrician is not hospital-based and can demonstrate that they 

meet the minimum 30 percent Medicaid patient volume requirements discussed in this 

subpart. 
CMS-0033-P 301 

 Pediatricians who are not hospital-based, and have a minimum of 20 percent of 

their patient encounters paid by Medicaid are also encouraged to participate in the 

Medicaid EHR incentive program. The maximum payment amount for these 

pediatricians, who meet the 20 percent Medicaid patient volume, but fall short of the 30 

percent patient volume, is reduced to two-thirds of the net average allowable cost, subject 

to the 85 percent threshold. The reduction accounts for the reduced patient volume, but 

the intent is to offer an incentive to attract pediatricians to participate. This means 

pediatricians with a minimum 20 percent patient volume may qualify for up to a 

maximum of $14,167 in the first incentive payment year and to up a maximum of $5,667 

in the 5 subsequent incentive payment years, or no more than $42,500 over the maximum 

6 year period. 

 Table 27 demonstrates the various maximum incentive payment amounts for 

Medicaid professionals. 

TABLE 27: Maximum Incentive Payment Amount for Medicaid Professionals 

Cap on Net Average Allowable Costs, 

per the HITECH Act 

85 percent 

Allowed for 

Eligible 

Professionals 

Maximum 

Cumulative 

Incentive over 6-year 

Period 

$25,000 in Year 1 for most professionals $21,250 

$10,000 in Years 2-6 for most professionals $8,500 $63,750 

$16,667 in Year 1 for pediatricians with a 

minimum 20 percent patient volume, but less than 

30 percent patient volume, Medicaid patients $14,167 

$6,667 in Years 2-6 for pediatricians with a 

minimum 20 percent patient volume, but less than 

30 percent patient volume, Medicaid patients $5,667 $42,500 

(5) Basis for Medicaid EHR Incentive Program First Payment Year and Subsequent 

Payment Years 
CMS-0033-P 302 

(i) Medicaid EP Who Begins Adopting, Implementing or Upgrading Certified EHR 

Technology in the First Year 

A Medicaid EP who begins by adopting, implementing, or upgrading certified 

EHR technology in the first year will be eligible for the incentive payments not in excess 

of the maximum amount. Under section 1903(t)(4) of the Act he or she is eligible to 

receive up to the maximum first year Medicaid incentive payments discussed in the 

previous sections, plus additional incentive payments for up to 5 years for demonstrating 

meaningful use of certified EHR technology. In other words, these providers may 

participate in the Medicaid EHR incentive program for up to 6 years. 

 Table 28 demonstrates the payment scenarios available to a Medicaid EP who 

begins in their first year by adopting, implementing, or upgrading certified EHR 

technology. As can be seen from the table, the EP can begin receiving payments as late 

as 2016, and still receive up to the maximum payments under the program. 

TABLE 28: Payment Scenarios For Medicaid EPs Who Begin Adoption in the First 

Year

Medicaid EPs who begin adoption in 

Calendar Year 2011 2012 2013 2014 2015 2016

2011 $21,250 ------------

-

------------- ------------- ------------- -------------

2012 $8,500 $21,250 ------------- ------------- ------------- -------------

2013 $8,500 $8,500 $21,250 ------------- ------------- -------------

2014 $8,500 $8,500 $8,500 $21,250 ------------- -------------

2015 $8,500 $8,500 $8,500 $8,500 $21,250 -------------

2016 $8,500 $8,500 $8,500 $8,500 $8,500 $21,250 

2017 ------------- $8,500 $8,500 $8,500 $8,500 $8,500 

2018 ------------- ------------- $8,500 $8,500 $8,500 $8,500 

2019 ------------- ------------- ------------- $8,500 $8,500 $8,500 

2020 ------------- ------------- ------------- ------------- $8,500 $8,500 

2021 ------------- ------------- ------------- ------------- ------------- $8,500 

TOTAL $63,750 $63,750 $63,750 $63,750 $63,750 $63,750 
CMS-0033-P 303 

(ii) Medicaid EP who has Already Adopted, Implemented or Upgraded Certified EHR 

Technology and Meaningfully Uses EHR Technology 

 For a Medicaid EP who has already adopted, implemented, or upgraded certified 

EHR technology and can meaningfully use this technology in the first incentive payment 

year, we propose that the Medicaid EP be permitted to receive the same maximum 

payments, for the same period of time, as the Medicaid EP who merely adopted, 

implemented or upgraded certified EHR technology in the first year. Section 

1903(t)(6)(C)(ii) of the Act states that for a Medicaid EP or hospital who has completed 

“adopting, implementing, or upgrading” certified EHR technology “prior to the first year 

of payment. . . clause (i)(I) shall not apply and clause (i)(II) [discussing the 

demonstration of meaningful use] shall apply to each year of payment to the Medicaid 

provider under this subsection, including the first year of payment.” We believe this 

provision supports an interpretation that a Medicaid EP who has already adopted certified 

EHR technology, would still receive a “first year” of payment under section 1903(t)(4) of 

the Act, and like all other first years of payment, this payment could not exceed $21,250. 

Then, under section 1903(t)(4)(A)(ii) and (iii) of the Act, such Medicaid EPs could 

receive an additional 5 years of payment for subsequent years of payment, with payments 

not exceeding $8,500 in each of these 5 subsequent years. This approach allows early 

adopters of certified EHR to begin meaningfully using technology, without being at a 

competitive disadvantage, and without losing incentive payments for the previous costs 

associated with adopting, implementing, or upgrading certified EHR technology. 

 Thus, the maximum incentive payments for Medicaid EPs demonstrating that they 

are meaningful users in the first payment year, would be identical to the maximum 
CMS-0033-P 304 

payments available to those demonstrating adoption, implementation, or upgrading 

certified EHR technology in the first year, as depicted in Table 29. 

TABLE 29: Maximum Incentive Payments for Medicaid EPs Who Are Meaningful 

Users in the First Payment Year 

Medicaid EPs who begin meaningful use of certified EHR technology in--

Calendar Year 2011 2012 2013 2014 2015 2016

2011 $21,250 ------------- ------------- ------------- ------------- -------------

2012 $8,500 $21,250 ------------- ------------- ------------- -------------

2013 $8,500 $8,500 $21,250 ------------- ------------- -------------

2014 $8,500 $8,500 $8,500 $21,250 ------------- -------------

2015 $8,500 $8,500 $8,500 $8,500 $21,250 -------------

2016 $8,500 $8,500 $8,500 $8,500 $8,500 $21,250 

2017 ------------- $8,500 $8,500 $8,500 $8,500 $8,500 

2018 ------------- ------------- $8,500 $8,500 $8,500 $8,500 

2019 ------------- ------------- ------------- $8,500 $8,500 $8,500 

2020 ------------- ------------- ------------- ------------- $8,500 $8,500 

2021 ------------- ------------- ------------- ------------- -------------- $8,500

TOTAL $63,750 $63,750 $63,750 $63,750 $63,750 $63,750 

 An alternative approach we request comment on would be to limit the incentive 

payment for Medicaid EPs who have already adopted, implemented, or upgraded 

certified EHR technology to 5 years of payment, at a maximum payment of $8,500 per 

year. This approach would interpret section 1903(t)(4)(A) of the Act, which states that 

the $25,000 cap on net average allowable costs is intended to cover the costs of 

implementing or adopting certified EHR technology, as limiting the $21,250 payment 

only to those actually adopting the technology in their first year of payment. While early 

adopters would still be eligible to receive incentive payments, the payment totals would 

be lower, because such adopters would not need an incentive payment in order to actually 

implement, adopt, or upgrade certified EHR technology. This alternative approach is 

depicted in Table 30. 
CMS-0033-P 305 

TABLE 30: Alternative Incentive Payment Scenario for Medicaid EPs Who Have 

Adopted EHR Technology Before the First Year 

Calendar Medicaid EPs who begins meaningful use in 

Year 2011 2012 2013 2014 2015 2016 

2011 $8,500 

 ------------

-

 ------------- ------------- ------------- -------------

2012 $8,500 $8,500 ------------- ------------- ------------- -------------

2013 $8,500 $8,500 $8,500 ------------- ------------- -------------

2014 $8,500 $8,500 $8,500 $8,500 ------------- -------------

2015 $8,500 $8,500 $8,500 $8,500 $8,500 --------------

2016 

 ------------

- $8,500 $8,500 $8,500 $8,500 $8,500

2017 

 ------------

-

 ------------

- $8,500 $8,500 $8,500 $8,500

2018 

 ------------

-

 ------------

-

 -------------

$8,500 $8,500 $8,500

2019 

 ------------

-

 ------------

-

 ------------- -------------

$8,500 $8,500

2020 

 ------------

-

 ------------

-

 ------------- ------------- -------------

$8,500

2021 

 ------------

-

 ------------

-

 ------------- -------------

------------- --------------

TOTAL $42,500 $42,500 $42,500 $42,500 $42,500 $42,500

 Medicaid EPs are not required to participate on a consecutive annual basis. The 

tables in this section demonstrate how a Medicaid EP would maximize the aggregate 

incentive under different scenarios, considering that a Medicaid EP may initiate 

participation in 2011 through 2016. Additionally, these tables do not include the 

alternative Medicaid maximum incentive payment for pediatricians discussed in the 

previous section, which is two-thirds of the total amount listed in Tables 27 through 30. 

Finally, these tables do not represent EPs whose incentive payments may be reduced 

because net average allowable costs may actually be lower than $25,000 in the first year, 

or $10,000 in subsequent years, due to payments from other, non-State/local sources. 
CMS-0033-P 306 

b. Payment Methodology for Eligible Hospitals 

 Statutory parameters placed on Medicaid incentive payments to hospitals are 

largely based on the methodology applied to Medicare incentive payments. The 

specifications described in this section are limits to which States must adhere when 

developing aggregate EHR hospital incentive amounts for Medicaid-eligible hospitals. 

States will calculate hospitals' aggregate EHR hospital incentive amounts on the FFY to 

align with hospitals participating in the Medicare EHR incentive program. 

 States may pay children's hospitals and acute care hospitals up to 100 percent of 

an aggregate EHR hospital incentive amount provided over a minimum of a 3-year period 

and a maximum of a 6-year period. The maximum incentive amounts for these providers 

are statutorily defined by a formula at section 1903(t)(5)(B) of the Act. The statute 

requires that Medicaid refer, with some adjustments, to the calculation for the Medicare 

hospital incentive payment described at sections 1886(n)(2)(A), 1886(n)(2)(C), and 

1886(n)(2)(D) of the Act, to determine the aggregate EHR amount allowable for 

individual hospitals. The aggregate EHR hospital incentive amount is calculated using an 

overall EHR amount multiplied by the Medicaid share. The aggregate EHR hospital 

incentive amount is the total amount the hospital could receive in Medicaid payments 

over 4 years of the program. 

 States are responsible for using auditable data sources to calculate Medicaid EPs' 

aggregate EHR hospital incentive amounts, as well as determining Medicaid incentive 

payments to those providers. Auditable data sources include-- 

• Providers' Medicare cost reports; 

• State-specific Medicaid cost reports; 
CMS-0033-P 307 

• Payment and utilization information from the State's MMIS (or other automated 

claims processing systems or information retrieval systems); and 

• Hospital financial statements and hospital accounting records. 

All State Medicaid EHR incentive program calculations, payments, and limits under 

this section are subject to our review. 

For purposes of the Medicaid EHR incentive program, the overall EHR amount is 

equal to the sum over 4 years of (I)(a) the base amount (defined by statute as 

$2,000,000); plus (b) the discharge related amount defined as $200 for the 1,150th

through the 23,000th discharge for the first payment year (for subsequent payments years, 

States must assume discharges increase by the provider's average annual rate of growth 

for the most recent 3 years for which data are available per year): multiplied by (II) the 

transition factor for each year equals 1 in year 1, 3⁄4 in year 2, 1⁄2 in year 3, and 1⁄4 in year 

4. 

The statute specifies that the payment year is determined based on a Federal fiscal 

year. Section 1886(n)(2)(C) of the Act provides the Secretary with authority to determine 

the discharge related amount on the basis of discharge data from a relevant hospital cost 

reporting period, for use in determining the incentive payment during a Federal fiscal 

year. Federal fiscal years begin on October 1 of each calendar year, and end on 

September 30 of the subsequent calendar year. Hospital cost reporting periods can begin 

with any month of a calendar year, and end on the last day of the 12th subsequent month 

in the next calendar year. For purposes of administrative simplicity and timeliness, we 

propose that States, for each eligible hospital during each incentive payment year, use 
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data on the hospital discharges from the hospital fiscal year that ends during the Federal 

fiscal year prior to the fiscal year that serves as the payment year. 

Example: FY 2011 begins on October 1, 2010 and ends on September 30, 2011. For an 

eligible hospital with a cost reporting period running from July 1, 2010 through 

June 30, 2011, we would employ the relevant data from the hospital's cost reporting 

period ending June 30, 2010 in order to determine the incentive payment for the hospital 

during Federal fiscal year 2011. This timeline would allow States to have the relevant 

data available for determining the aggregate EHR hospital incentive amount in a timely 

manner for the first and subsequent payment years. 

 The discharge-related amount is $200 per discharge for discharges 1,150 through 

23,000. To determine the discharge-related amount for the 3 subsequent payment years 

that are included in determining the overall EHR amount, States should assume 

discharges for an individual hospital have increased by the average annual growth rate for 

an individual hospital over the most recent 3 years of available data from an auditable 

data source. Note that if a hospital's average annual rate of growth is negative over the 3 

year period, it should be applied as such. 

We have provided a sample calculation for review that assumes the following: 

• An individual provider had 20,000 discharges in the first FY (2011). 

• The most recent annual growth data available are as follows: 

++ FY 2005 (.028 annual growth rate) 

++ FY 2006 (.013 annual growth rate) 

++ FY 2007 (.027 annual growth rate) 

The average annual growth rate over 3 years = (.028 x .013 x .027)/3 = .0227 
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Year 1 

2011 discharge related amount equals: 

(20,000-1149) x $200 = $3,770,200 

Year 2 

2012 discharge related amount equals: 

20,000 x 1.0227 = 20,454 

(20,454-1149) x $200 = $3,861,000 

Year 3 

2013 discharge related amount equals: 

20,454 x 1.0227 = 20,918 

(20,918-1149) x $200 = $3,953,800 

Year 4 

2014 discharge related amount equals: 

20,918 x 1.0227 = 21,393 

(21,393-1149) x $200 = $4,048,800 

 The overall hospital EHR amount requires that a transition factor be applied to 

each year. This transition factor equals 1 for year 1, 3⁄4 for year 2, 1⁄2 for year 3, and 1⁄4 for 

year 4, as provided for in sections 1886(n)(2)(A) and 1886(n)(2)(E) of the Act, and as 

incorporated through section 1902(t)(5)(B) of the Act. We note that although, for 

purposes of the Medicare incentives, section 1886(n)(2)(E)(ii) of the Act requires a 

transition factor of 0, if the first payment year is after 2013, we do not believe this rule 

would apply in the context of the Medicaid incentive payments. Nothing in section 
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1903(t) of the Act specifically cross references this 0 transition factor, and, notably, 

section 1903(t) of the Act allows Medicaid incentive payments to begin as late as 2016. 

 The “Medicaid Share,” against which the overall EHR amount is multiplied, is 

essentially the percentage of a hospital's inpatient, non-charity care days that are 

attributable to Medicaid inpatients. More specifically, the Medicaid share is a fraction 

expressed as-- 

• Estimated Medicaid inpatient-bed-days plus estimated Medicaid managed care 

inpatient-bed-days; 

• Divided by; 

• Estimated total inpatient-bed days multiplied by ((estimated total charges minus 

charity care charges) divided by estimated total charges). 

 As indicated in the above formula, the Medicaid share includes both Medicaid 

inpatient-bed-days and Medicaid managed care inpatient-bed-days. This is in keeping 

with section 1903(t)(5)(C) of the Act, which provides that in computing inpatient-beddays, the Secretary shall take into account inpatient-bed-days that are paid for individuals 

enrolled in a Medicaid managed care plan under sections 1903(m) or 1932 of the Act. 

We interpret these managed care individuals to be individuals enrolled in an managed 

care organization (MCO), prepaid inpatient health plan (PIHP), or prepaid ambulatory 

health plan (PAHP) under 42 CFR part 438. 

 Some Medicaid managed care entities (that is, MCOs, PIHPs, and PAHPs with 

risk contracts) provide substitute services (or, “in-lieu-of services”) in more cost effective 

or efficient settings than the State plan services in the managed care contract. For 

example, in a hospital inpatient setting, these services could be in a different unit, such as 
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a subacute wing or skilled nursing wing, so long as States and contracting entities are in 

compliance with the actuarial soundness rules at 42 CFR 438.6(c), provision of substitute 

services is allowed. Although we understand that these substitute service days may be 

used to achieve efficiency and cost effectiveness, we do not believe such substitute 

service days should count as “inpatient-bed-days” in the hospital EHR incentive payment 

calculation. The statute requires us to calculate the Medicaid share “in the same manner” 

as the Medicare share under section 1886(n)(2)(D) of the Act and such substitute service 

days would not be considered “in the same manner.” Thus, we propose that for purposes 

of the Medicaid formula, we would count only those days that would count as inpatientbed-days for Medicare purposes under section 1886(n)(2)(D) of the Act. 

 In addition, because the formula for calculating the Medicaid share requires a 

determination of charity care charges, States should use the revised Medicare 2552-10, 

Worksheet S-10 or another auditable data source to determine the charity care portion of 

the formula. In the absence of sufficient charity care data to complete the calculation, 

section 1886(n)(2)(D) of the Act, requires the use of uncompensated care data to derive 

an appropriate estimate of charity care, including a downward adjustment for bad debts. 

We interpreted bad debt to be consistent with the Medicare definition of bad debt as 

promulgated at 42 CFR 413.89(b)(1). 

Finally, per section 1886(n)(2)(D) of the Act, to the extent there is simply not 

sufficient data that would allow the State to estimate the inpatient bed-days attributable to 

Medicaid managed care patients, the statute directs that such figure is deemed to equal 0. 

Likewise, if there is simply not sufficient data for the State to estimate the percentage of 

inpatient bed days that are not charity care (that is, [estimated total charges - charity care 
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charges]/ estimated total charges), the statute directs that such figure is deemed to equal 

1. 

 The aggregate EHR incentive calculation for Medicaid eligible hospitals is 

represented mathematically as follows: 

(Overall EHR Amount) * (Medicaid Share) 

or 

 {Sum over 4 year of [(Base Amount+ Discharge Related Amount Applicable for 

Each Year) * Transition Factor Applicable for Each Year]} * 

 {(Medicaid inpatient-bed-days + Medicaid managed care inpatient-bed-days) / [(total 

inpatient-bed days) * (estimated total charges – charity care charges)/(estimated total 

charges)]} 

 To achieve the aggregate EHR hospital incentive amount at 1903(t)(5)(a), the 

calculation must be aggregated over 4 years. For further clarification, we have provided 

a sample calculation of the aggregate EHR hospital amount. 

Assume the following as constant over 4 years except where noted: 

• 20,000 discharges (Note: This calculation assumes the same averaging data 

calculated in the average annual growth example above.) 

• 34,000 inpatient Medicaid bed-days (including fee-for-service and managed 

care days) 

• 100,000 total inpatient bed-days 

• $1,000,000,000 in total charges 

• $200,000,000 in charity care 
CMS-0033-P 313 

• Overall EHR amount = Sum (Year 1, Year 2, Year 3, Year 4) = 

$14,655,050 

Year 1: {$2,000,000 + ((20,000-1,149) x 200)} x 1 x 1 = $5,770,200 

Year 2: {$2,000,000 + ((20,454-1,149) x 200)} x 1 x .75 = $4,395,750 

Year 3: {$2,000,000 + ((20,918-1,149) x 200)} x 1 x .50 = $2,976,900 

Year 4: {$2,000,000 + ((21,393-1,149) x 200)} x 1 x .25 = $1,512,200 

Medicaid Share: 34,000 / (100,000 x (($1,000,000,000 – $200,000,000) / 

1,000,000,000) = 0.425 

Overall EHR Amount x Medicaid Share = Medicaid aggregate EHR incentive amount 

$14,655,050 x 0.425 = $6,228,396 

 Unlike Medicaid EPs, who must waive rights to duplicative Medicare incentive 

payments, hospitals may receive incentive payments from both Medicare and Medicaid, 

contingent on successful demonstration of meaningful use and other requirements under 

both programs. 

 The last year that a hospital may begin receiving Medicaid incentive payments is 

FY 2016. States must make payments over a minimum of 3 years and a maximum of 6 

years. Additionally, in any given payment year, no annual Medicaid incentive payment 

to a hospital may exceed 50 percent of the hospital's aggregate incentive payment. 

Likewise, over a 2-year period, no Medicaid payment to a hospital may exceed 90 

percent of the aggregate incentive. 

Table 31 demonstrates several scenarios for Medicaid hospitals. However, there 

are other scenarios not included here. For example, this table assumes that a hospital 
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would participate on a consecutive annual basis until the incentive is exhausted. The 

purpose of Table 31 is to illustrate the general timeline for Medicaid hospital incentives. 

TABLE 31: Hospital Incentives

States will monitor compliance of hospitals coming onto the program with different 

requirements depending on the year. Incentive determination will also be based on Y1 

versus subsequent years. This chart is an example, noting that hospitals may collect the 

incentive over 3-6 years. 

CY Demonstration of Compliance

2011 Y1 Y1 participants must demonstrate that they engaged in efforts 

to adopt, implement, or upgrade to certified EHR technology. 

However, if users already adopted, they may proceed to Y2 

requirements in Y1. 

2012 Y2 Y1 Y1, same as above. Y2 must become a meaningful 

EHR user. We expect to issue definition of 

meaningful use on a biannual basis beginning in 

2011. 

2013 Y3 Y2 Y1 Y1, same as above. Y2-3 will be the same. 

2014 Y4 Y3 Y2 Y1 Y1, same as above. Y2-4, same as 

above. 

2015 Y5 Y4 Y3 Y2 Y1 Y1, same as above. Y2-5, 

same as above. 

2016 Y6 Y5 Y4 Y3 Y2 Y1 

2017 Y6 Y5 Y4 Y3 Y2 

2018 Y6 Y5 Y4 Y3 

2019 Y6 Y5 Y4 

2020 Y6 Y5 

←←Becomes more difficult to establish meaningful use. 

2021 Y6 

Y1, same as above. 

Y2-6, same as 

above. 

c. Alternative and Optional Early State Implementation to Make Incentive Payments for 

Adopting, Implementing, or Upgrading Certified EHR Technology 

Unlike Medicare, Medicaid has no statutory implementation date for making EHR 

incentive payments. We believe that some States may be prepared to implement their 

program and make EHR incentive payments to Medicaid providers in 2010 for adopting, 

implementing, or upgrading certified EHR technology. We propose to allow States to 

initiate implementation of these payments to Medicaid EPs and hospitals after 
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promulgation of the final rule if they successfully demonstrate to CMS that they are ready 

to make timely and accurate payments through the SMHP. States should include an 

additional attestation for providers assuring that they are not accepting payment in any 

other State. 

In order for us to approve a State for early implementation, we are proposing that 

a State would have an electronic system for provider registration capable of collecting the 

relevant information identified in section II.A.5.c of this proposed rule, where we 

describe the data collection requirements. This includes the following: 

• Name, National Provider Identifier (NPI), business address and business phone 

of each EP or eligible hospital; 

• Taxpayer Identification Number to which the EP or eligible hospital wants the 

incentive payment made; 

• For eligible hospitals, their CMS Certification Number (CCN); 

• The remittance date and amount of any incentive payments made to an EP or 

eligible hospital. 

 Participating States would be responsible for transmitting this data to CMS so that 

CMS can ensure that no duplicate payments will be made to providers. We would use 

the single provider election repository described in section II.A.5.c. of this proposed rule 

to assure no duplicative payments were made between States. 

 We are not proposing that States would be able to make early payments to 

meaningful users. This opportunity is intended to offer Medicaid providers an early 

opportunity for capital so that they are more likely to have the certified EHR technology 

required to demonstrate meaningful use in successive periods. Since hospitals may 
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qualify under both programs, we hope that they will use the capital and qualify as a 

meaningful user under the Medicare program in the first year. We are requesting 

comments on this proposed approach. 

d. Process for Making and Receiving Medicaid Incentive Payments 

The process for making payments involves coordination between Medicare and 

State Medicaid agencies to avoid duplication of payments, prevent fraud and abuse, and 

create program efficiencies to encourage adoption. While we have responsibility 

regarding payments to Medicare EPs and hospitals, State Medicaid agencies (or their 

contractors) are fully responsible for administering and disbursing the incentive payments 

to Medicaid providers. 

 We will require that EPs make a selection between receiving incentive payments 

through either the Medicare or Medicaid EHR incentive programs. Medicaid EPs who 

practice in multiple states will be required to choose only one state from which to receive 

Medicaid incentive payments. The issues related to these decisions are discussed here, as 

well as in section II.A of this proposed rule. 

In this section, we describe the steps Medicaid EPs will take to receive an 

incentive payment. Due to the inter-dependencies of multiple issues, we refer the reader 

to other sections of this proposed rule. Specifically, section II.A of this proposed rule 

solicits comments for a proposed reporting period in the first payment year of any 

continuous 90-day period that starts and ends within the calendar year. In addition, such 

90-day period would apply in both the first and second payments years (that is, 2010 and 

2011) for States approved for early implementation in 2010. Section II.A. also solicits 

comments on full annual reporting periods for all payment years other than the first 
CMS-0033-P 317 

payment year (except in the case of States approved for 2010 implementation, for which 

the full annual reporting period would begin in the third year). We also discuss the 

proposed single provider election repository and other issues impacting both programs. 

 It is important to note that there is a very clear intent in the statute that there is 

coordination between the EHR incentive programs to reduce or eliminate duplicate 

payments between Medicare and Medicaid. Additionally, Medicare requirements under 

section 1848(o)(1)(B) of the Act require that payments begin no earlier than 2011. While 

the Medicaid provisions have no statutory start date, before States may begin 

implementing the Medicaid EHR incentives, CMS, and ONC need to provide guidance to 

States in the form of rulemaking and other policy guidance. To that end, Medicaid will 

not begin to provide 100 percent FFP for incentive payments any earlier than FY 2011 

for hospitals and CY 2011 for EPs, (except in the case of incentive payments for 

adopting, implementing, or upgrading which could begin in 2010. see discussion in 

section II.D.4.b.(5).(c). of this proposed rule. This also gives CMS, ONC, and States an 

opportunity to coordinate between Medicare and Medicaid, which we hope will simplify 

administrative complexity in the EHR incentive program and facilitate provider 

adoption. 

 We believe that by aligning the EHR incentive programs where possible, 

Medicaid EHR incentive program administration could be more efficient for the States, 

and provider communication about the program could be less ambiguous. This will be of 

particular benefit to the providers who serve both Medicare and Medicaid program 

beneficiaries, and will be eligible for participation in both incentive programs. Also, we 
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believe that the incidence of fraud and abuse could be curtailed, and the potential for 

duplication of payments could be decreased. 

Under this proposed rule we are proposing that Medicaid EPs, as discussed in 

section II.D.5 and II.A.5.c of this proposed rule, will enroll in the program through the 

single provider election repository. Once an EP selects the Medicaid EHR incentive 

program, we propose that States must have a system for reporting and tracking necessary 

information to qualify an EP for an incentive payment. In addition, as detailed in 

§495.316 States will be required to submit data to CMS including data for the number, 

type and practice location(s) of providers who qualified for an incentive payment on the 

basis of having adopted, implemented, or upgraded certified EHR technology or who 

qualified for an incentive payment on the basis of having meaningfully used such 

technology as well as aggregate de-identified data on meaningful use. States' systems 

and processes will be submitted by the States to CMS for prior approval, concurrent with 

the requirements described in section II.D.8 of this proposed rule for review and approval 

of the SMHP. 

 The specific timeframes for EPs and eligible hospitals to report and submit the 

required information in order to demonstrate they have adopted, implemented, or 

upgraded certified EHR technology, as well as meaningful use of such EHR technology 

are proposed for comment at section II.A.1.e of this preamble. As discussed in that 

section of this proposed rule, for the first payment year (as well as the second payment 

year for those hospitals that are able to begin receiving payments for FY 2010), the 

reporting periods for eligible hospitals' will be on a continuous 90-day basis, in the 

sense that as long as the start and end dates occur within the payment year and as long as 
CMS-0033-P 319 

the period spans the proposed 90-day consecutive period, the period can begin at any 

time during the payment year. States will then be expected to process payments, also on 

a rolling basis. In the subsequent payment years, the reporting period will be a full annual 

period (that is, a full payment period). 

 e. Avoiding Duplicate Payment 

 At section 1903(t)(7) of the Act, the statute requires that the Medicare and 

Medicaid programs coordinate payments to avoid duplication. This section further 

specifies that CMS and the States should coordinate payments through a data matching 

process, utilizing NPIs to the extent practicable. Additionally, section 1903(t)(2) of the 

Act states that Medicaid EPs must waive rights to Medicare incentive payments under 

sections 1848(o) and 1853(l) of the Act. As previously noted, hospitals may qualify for 

incentives under both programs. We also propose requirements under the review and 

approval of SMHPs in proposed part 495 subpart D for States to verify that providers 

meet these requirements. 

 As discussed in section II.A of this proposed rule, we considered what 

information will be necessary to eliminate duplicative incentive payments to providers 

between the Medicare and Medicaid programs. In order to ensure against duplicate 

incentive payments, we believe three conditions are required: (1) knowing which EHR 

incentive program a provider has selected, (2) uniquely identifying each provider 

participating in each incentive program; and (3) ensuring that each State has access to the 

information on which EPs or hospitals intend to receive incentive payments from another 

State, or from the Medicare program. 
CMS-0033-P 320 

 To achieve all three of these conditions, as discussed in section II.A.5.c of this 

proposed rule, we propose to collect this data in a single provider election repository. 

Next, in administering each State Medicaid EHR incentive program, we propose that 

States would cross-check for potential duplicative payments through the data available to 

them through the single provider election repository, which is based on the NPIs. We 

believe that this coordinates with our proposed requirements that a State must have an 

approved SMHP which will include a mechanism for cross-checking this information 

prior to payment. 

f. Flexibility to Alternate Between Medicare and Medicaid EHR Incentive Programs One 

Time 

 We refer readers to section II.A.5.b of this proposed rule, where we discuss our 

proposal to allow Medicare and Medicaid EPs to make one EHR incentive program 

election change prior to 2015, and not to permit any switching after the year 2014. Under 

such a proposal, even if an EP initially received incentive payments under the Medicare 

program, such an EP could still switch to the Medicaid program one time prior to 2015. 

Similarly, an EP who initially selected the Medicaid EHR incentive program could 

switch to the Medicare program one time prior to 2015. 

g. One State Selection 

 We propose that for EPs and hospitals with multi-state Medicaid practice 

locations, that the provider may annually pick only one State from which to receive 

incentive payments. In other words, a provider would not be able to receive incentive 

payments from more than one State in the same year. For example, a provider may be 

licensed to practice in Illinois as well as in Iowa, particularly in the area known as the 
CMS-0033-P 321 

Quad Cities because of the multiple cities in proximity to the Illinois and Iowa borders. 

There are numerous situations like this throughout the country for States sharing borders. 

Medicaid EPs and hospitals may change the State that they select annually when they reattest to the program requirements. 

 Since qualifying for the Medicaid incentive payments is not a claims accrual 

process, as it is in Medicare, allowing providers to include multiple practice sites across 

State boundaries would create enormous administrative complexity for both CMS and 

State Medicaid agencies. For example, States would have to collect and verify Medicaid 

patient volume across more than one State, then divide and administer payments based on 

a methodology suitable between the State Medicaid agencies and the providers. Given 

that the providers qualifying for the Medicaid incentive program will receive the same 

incentive payment dollar amount regardless of whether payments are made by one, or 

more than one, State, we believe it would not be worth the resulting administrative 

complexity to allow payments from multiple States. 

 We considered the possible impact of this proposed approach with respect to 

patient volume calculations on Medicaid EPs and hospitals in border State areas. While 

we addressed the administrative complexity of this issue here, we recommend that States 

consider these border State providers when developing their policies and attestation 

methodology. We afforded additional flexibility in the patient volume at proposed 

§495.306 to account for unique circumstances and data collection. 

5. Single Provider Election Repository and State Data Collection 

We refer readers to section II.A.5.c of this proposed rule for a discussion of the 

single provider election repository. As discussed in that section, the repository will 
CMS-0033-P 322 

collect a minimum amount of information on all EPs and hospitals to prevent duplicative 

payments and coordinate technical assistance. 

6. Collection of Information Related to the Eligible Professional's National Provider 

Identifier and the Tax Identification Number 

Similar to the policy proposed where Medicaid EPs and hospitals must select one 

State, for those EPs in multiple group practices or multiple types of practice locations, we 

propose to require such professionals to select one TIN for Medicaid EHR payment 

disbursement. In other words, such EPs could not require a State to divide payments 

among different practices or practice locations based upon group TINs. Requiring EPs to 

use only one TIN would reduce administrative complexity, as it would ensure that States 

are not put in the position of dividing payments in any way an EP requests (such as by 

patient encounters or amount contributed to EHR technology). We also believe that 

requiring reimbursement to be made to one TIN would reduce opportunities for fraud or 

abuse, as States will be able to cross-check EP and TIN combinations more easily to 

verify EP attestations. 

Although the State would not divide payments among the various TINs of an 

individual EP, Medicaid EPs could decide to divide payment themselves, and distribute 

funds among their respective group practices or practice locations after the initial 

disbursement from the State to their designated TIN. 

7. Activities Required to Receive Incentive Payments 

• a. General Overview 

As previously discussed, for Medicaid providers (including both EPs and eligible 

hospitals) to qualify to receive a first year Medicaid incentive payment, section 
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1903(t)(6)(C)(i) of the Act indicates that the provider must demonstrate that they are 

“engaged in efforts to adopt, implement, or upgrade certified EHR technology.” For 

providers who meet this standard in their first year of participation in the Medicaid 

incentive program, in subsequent years of participation, they must then demonstrate 

“meaningful use of certified EHR technology through a means that is approved by the 

State and acceptable to the Secretary,” and that may be based upon the methods 

employed under the Medicare incentive payments to physicians and hospitals, per 

sections 1848(o) or 1886(n) of the Act. 

• b. Definitions Related to Certified EHR Technology and Adopting, Implementing 

or Upgrading Such Technology 

(1) Certified EHR Technology 

As noted previously, in order to receive a Medicaid incentive payment the EHR 

technology must be “certified.” Section 1903(t)(3) of the Act defines “certified EHR 

technology” as a qualified electronic health record (as defined in section 3000(13) of the 

PHS Act) that is certified pursuant to section 3001(c)(5) of the PHS Act as meeting 

standards adopted under section 3004 of the PHS Act that are applicable to the type of 

record involved (as determined by the Secretary), such as an ambulatory electronic health 

record for office-based physicians or an inpatient hospital electronic health record for 

hospitals). In section I.A of this proposed rule, for both Medicare and Medicaid, we 

discussed incorporating ONC's definition of certified EHR technology. 

(2) Adopting, Implementing or Upgrading 

 Unlike the Medicare incentive programs, the Medicaid program allows eligible 

providers to receive an incentive payment even before they have begun to meaningfully 
CMS-0033-P 324 

use certified EHR technology. These providers may receive a first year of payment if 

they are engaged in efforts to “adopt, implement, or upgrade” to certified EHR 

technology. In proposed §495.302, we define adopting, implementing or upgrading 

certified EHR technology as the process by which providers have installed and 

commenced utilization of certified EHR technology capable of meeting meaningful use 

requirements; or expanded the available functionality and commenced utilization of 

certified EHR technology capable of meeting meaningful use requirements at the practice 

site, including staffing, maintenance, and training. 

For the purposes of demonstrating that providers adopted, implemented, or 

upgraded certified EHR technology, Medicaid EPs and hospitals would have to attest to 

having adopted, (that is, acquired and installed) or commenced utilization of (that is, 

implemented) certified EHR technology; or expanded (that is, upgraded) the available 

functionality of certified EHR technology and commenced utilization at their practice 

site. States would be responsible for ensuring that processes are in place to verify that 

providers have actually adopted, implemented or upgraded certified EHR technology, 

patient volume, as well as other requirements in this section, including verifying that 

attestations are consistent with methodologies to combat fraud and abuse (see proposed 

§495.366 through 370, Financial Oversight, Program Integrity, and Provider Appeals). 

The State's SMHP must detail these processes. 

 The CMS Medicaid Transformation Grants have demonstrated the many 

challenges that exist to adopting EHR technology. EHR system availability is not the 

same as EHR system utilization. It is for that reason that we propose to include staff 

training and efforts to redesign provider workflow under the definition of implementing 
CMS-0033-P 325 

certified EHR technology. Success is not simply defined by the acquisition and 

installation of new or upgraded certified EHR technology, but more importantly by 

providers demonstrating progress towards the integration of EHRs into their routine 

health care practices to improve patient safety, care, and outcomes. 

 In establishing criteria for the “adoption” portion of the “adopt, implement, or 

upgrade” requirement, we propose that there be evidence that a provider demonstrate 

actual installation prior to the incentive, rather than “efforts” to install. This evidence 

will serve to differentiate between activities that may not result in installation (for 

example, researching EHRs or interviewing EHR vendors) and actual 

purchase/acquisition or installation. It is the States' responsibility to verify this evidence 

of EHR adoption. As these Medicaid incentive payments are intended to stimulate 

meaningful use of EHR technology, they need to result in tangible adoption, 

implementation, or upgrading of certified EHR technology. 

 In establishing criteria for the “implementation” portion of “adopt, implement or 

upgrade” requirement, we are proposing that “implementation” mean that the provider 

has installed certified EHR technology and has started using the certified EHR 

technology in his or her clinical practice. Implementation activities would include staff 

training in the certified EHR technology, the data entry of their patients' demographic and 

administrative data into the EHR, or establishing data exchange agreements and 

relationships between the provider's certified EHR technology and other providers, such 

as laboratories, pharmacies, or HIEs. 

In establishing the criteria for the “upgrade” portion of “adopt, implement or 

upgrade” requirement, we propose “upgrade” to mean the expansion of the functionality 
CMS-0033-P 326 

of the certified EHR technology, such as the addition of clinical decision support, eprescribing functionality, CPOE or other enhancements that facilitate the meaningful use 

of certified EHR technology. States must describe the process that would be in place in 

the SMHP for ensuring that providers have actually adopted, upgraded or implemented 

certified EHR technology. We encourage States to consider the submission of a vendor 

contract from providers to ensure the existence of EHR technology. 

 In listening sessions with State Medicaid Agencies' staff and Governors' offices 

staffs, States suggested verifying providers' adoption, implementation, or upgrading of 

certified EHR technology through system enhancements that track and audit providers' 

written or electronic attestations, through surveys, or through new claims codes that 

would serve as attestations. Additional suggestions from State staff included using EHR 

vendor audit logs for Medicaid EPs rendering service through the FQHCs and tracking 

EHR reporting of the Health Resources and Services Administration (HRSA)-mandated 

quality indicators. More information on feedback received as a result of these listening 

sessions can be found in section II.A. of this proposed rule. These suggestions may be 

relevant to the discussion below concerning the States process for developing a SMHP, 

verifying attestations and ensuring that providers are eligible to participate in the 

incentive payments program. 

c. Other General Terminology 

 “EHR reporting period” and “payment period” relate to the requirements for 

Medicaid EPs participating in the Medicaid EHR incentive program. As discussed 

previously, the reporting period is significant for EPs and eligible hospitals because it 

will define the period during which the provider must establish efforts to adopt, 
CMS-0033-P 327 

implement, or upgrade certified EHR technology, or demonstrate meaningful use of, such 

technology. The reporting period also is significant for States, because States will refer 

to such reporting periods in assuring us that providers are eligible to participate in the 

Medicaid EHR incentive program. (Requirements relating to the components that must 

be included in the SMHP are specified in proposed §495.354). States will need to refer to 

the providers' reports of the activities that establish their efforts to adopt, implement, or 

upgrade certified EHR technology. Similarly, once meaningful use of EHR technology is 

required to include the reporting of clinical quality measures, States will need to ensure 

such measures are reported in accordance with the appropriate period. States could not 

appropriately make incentive payments in the absence of such reporting. 

 As discussed in section II.A of this proposed rule and elsewhere in this section, 

we propose that the EHR reporting period would occur on a rolling basis during the first 

payment year (and also in 2010 for States approved for early implementation). For 

subsequent payment years, the EHR reporting period will be on an annual basis (that is, 

for the entire payment year). 

States would be required to validate to us that the Medicaid EPs and hospitals 

meet all of the eligibility criteria to qualify for Medicaid incentive payments, including 

the applicable patient volume thresholds, hospital-based requirements, and all of the 

requirements described in this section. States would develop their own administration, 

payment and audit processes, and as described in §495.332, we would require that States 

include in their SMHPs how they would obtain Medicaid EPs' and hospitals' attestations 

of eligibility to qualify for the Medicaid incentive payments. Permissible means for 

ensuring patient volume and all of the requirements described in this section include 
CMS-0033-P 328 

survey, attestation, or the creation of special codes on claims, subject to our prior 

approval. 

Additionally, we may require a more robust method for ensuring compliance with 

the requirements listed in this section beyond attestation as this program matures. 

Therefore, we are soliciting comments, including the impact that an alternative method 

may have on providers and States if an alternative method that is not attestation is 

required. 

Section 1903(t)(6)(C)(ii) of the Act also indicates that in the case of an early 

adopter, that is, a Medicaid EP or eligible hospital that has already adopted certified 

EHR technology, such provider would receive payment in the first year and all 

subsequent years of the incentive program by demonstrating meaningful use. In other 

words, such a provider would not need to demonstrate that it has adopted, implemented, 

or upgraded certified EHR technology in year one of the program, if they can already 

demonstrate meaningful use of such technology. In the case of Medicaid EPs, we discuss 

our proposal approach to paying early adopters in section II.D.4.5. 

 It is expected that the bar for demonstrating meaningful use of certified EHR 

technology will rise in years to come, as discussed in section II.A. States have offered 

their suggestions to us as to how they would verify providers' meaningful use of certified 

EHR technology, including participation in the exchange of clinical and administrative 

data; National Committee for Quality Assurance (NCQA) certification as an advanced 

medical home (which includes an EHR requirement); e-prescribing, and conducting 

security and privacy audits. Many of these elements are discussed in the definition of 

“meaningful use” noted in section II.A.2. of this proposed rule. For purposes of 
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participation in the Medicaid EHR incentive program, the specific definition of 

“meaningful use” in section II.A.2. of this proposed rule is what providers must 

demonstrate to the States, and what States must track and validate. States wishing to ask 

providers to demonstrate additional objectives to the definition of “meaningful use” as 

noted in this proposed rule would need to request our prior approval of such a revised 

definition in their SMHP, as described in section II.D.8 of this proposed rule. 

 We do not wish to see the bar for demonstration of meaningful use set so high, 

especially in the early years of this program that, it becomes a deterrent for broad 

provider participation. Examples of how States may consider adding to the Federal 

definition of meaningful use include requiring providers to participate in a health 

information exchange, and requiring that providers link to immunization, lead screening, 

or newborn screening registries. These mechanisms must be readily available to 

providers, and not represent a financial burden for participation. For example, States are 

discouraged from proposing additional meaningful use measures that would require 

providers to assume additional financial costs in order to qualify to participate in the 

Medicaid EHR incentive program. 

 States should carefully consider how to build upon their existing EHR activities 

and infrastructure without deterring eligible Medicaid providers from participating by 

compelling them to use a particular system. We encourage States that were awarded 

Federal HIT/EHR grants, such as the Medicaid Transformation Grants, to work to 

connect the tools and infrastructure developed under their Federal grant funds with 

providers' efforts to adopt, implement, and upgrade certified EHR technology and to 

become meaningful users of certified EHR technology. We would be evaluating States' 
CMS-0033-P 330 

HIT Planning Advanced Planning Documents (PAPDs) and SMHP with this objective in 

mind, as described section II.D.8 of this proposed rule. 

 The requirements to which States would hold eligible Medicaid providers 

accountable would vary based upon the number of years an eligible Medicaid provider 

participates in the program. In other words, regardless of the calendar year, a provider's 

first year as a participant in the Medicaid EHR incentive program is when that provider 

must demonstrate either adoption, implementation, upgrading or meaningful use of 

certified EHR technology. States' systems must be able to track providers' year of entry 

into the Medicaid EHR incentive program to determine the correct eligibility criteria and 

generate the appropriate Medicaid incentive payments. 

 In Table 32, we depict the requirements for eligible Medicaid professionals and 

hospitals that either adopt, implement, or upgrade certified EHR technology or that move 

directly to meaningful use of such technology. Additionally, we refer readers to Table 1 

since the table references the stages of meaningful use. Readers may find this 

information helpful when considering the information in Table 32. 
CMS-0033-P 331 

TABLE 32: Requirements for EPs Over Time to Demonstrate 

 Eligibility for Incentive Payments 

States will monitor compliance of providers coming onto the program 

with different requirements depending on the year. Incentive 

determination will also be based on Y1 vs. subsequent years. 

CY Demonstration of Compliance

2011 Y1 Y1 users must demonstrate that they engaged in efforts to 

adopt, implement, or upgrade to certified EHR technology. 

However, if users already adopted, they may proceed to Y2 

requirements in Y1. 

2012 Y2 Y1 Y1, same as above. Y2 must become a meaningful 

EHR user. We expect to issue definition of 

meaningful use on a biannual basis beginning in 

2011. 

2013 Y3 Y2 Y1 Y1, same as above. Y2-3 will be the same. 

2014 Y4 Y3 Y2 Y1 Y1, same as above. Y2-4, same as 

above. 

2015 Y5 Y4 Y3 Y2 Y1 Y1, same as above. Y2-5, 

same as above. 

2016 Y6 Y5 Y4 Y3 Y2 Y1 

2017 Y6 Y5 Y4 Y3 Y2 

2018 Y6 Y5 Y4 Y3 

2019 Y6 Y5 Y4 

2020 Y6 Y5 

←←← Becomes more difficult to establish meaningful use. 

2021 Y6 

Y1, same as above. 

Y2-6, same as above. 

As previously noted, States would be required to verify providers' meaningful use 

of certified EHR technology. We also expect to test the reporting of additional clinical 

quality measures that may be used in future definitions of meaningful use. States may 

wish to participate in this testing and seek out eligible Medicaid providers to report on 

specific clinical quality measures, extractable from EHRs. States would be able to use 

this reporting to pilot-test requirements that could be included in future definitions of 

meaningful use. 
CMS-0033-P 332 

Once States are giving providers the Medicaid HIT incentive payments for being 

meaningful users of EHRs, and starting in 2012 are collecting those providers' clinical 

quality measures data, States will be required to share any such reported data with CMS 

in an aggregated, de-identified manner, on an annual basis. The timetable and format for 

sharing the clinical quality measurement data would be provided to States in future policy 

guidance issued by CMS. States' failure to submit these required reports to us could 

result in discontinued funding or disallowances. See the discussion below regarding the 

SMHP and the State reporting requirements. We would use the States' reports, including 

data on meaningful use and clinical quality measures, in order for the Secretary to fulfill 

her responsibilities to Congress under section 1903(t)(10) of the Act. This provision 

requires that the Secretary report to Congress on the improvement of health outcomes, 

clinical quality, or efficiency as a result of implementing this program. For hospitals 

eligible for both Medicare and Medicaid EHR incentive programs, where hospitals are 

reporting meaningful use measures to CMS, we will make quality data on Medicaid 

eligible hospitals available to States. 

d. Quality Measures 

We refer readers to section II.A.3 of this proposed rule for a discussion of the 

clinical quality measure reporting required for demonstrating meaningful use of certified 

EHR technology. As discussed in that section we have proposed in II.A. 3 of this 

proposed rule, additional clinical quality measures that could be used by Medicaid 

providers to meet the quality reporting aspect of meaningful use. These additional 

indicators address key Medicaid services, such as pediatrics, obstetrical/gynecologic, 

mental health and substance abuse services. Medicaid providers could report on these 
CMS-0033-P 333 

clinical quality indicators in lieu of the quality indicators that are listed in Table 3. We 

recognize that quality measures associated with the Stage 1 definition of meaningful use 

contain certain gaps for Medicaid providers, including in the areas of oral health, longterm care, newborn screening, and other areas of pediatric care. As discussed previously, 

we intend to update our definition of meaningful use biannually, and we expect that our 

updated, Stage 2 definition would include additional Medicaid clinical quality measures 

to be reported from EHRs. We intend to work with the quality measurement community 

to develop these Stage 2 quality measures (see section II.B.1.d. of this proposed rule). 

• 8. Overview of Conditions for States to Receive Federal Financial Participation 

(FFP) for Incentive Payments and Implementation Funding

 Section 1903(a)(3)(F) of the Act provides that States are eligible for 100 percent 

FFP for direct payment expenditures to certain Medicaid EPs and eligible hospitals to 

encourage the adoption and use of certified EHR technology. States are also eligible for 

90 percent FFP for reasonable administrative expenses, contingent on State compliance 

with the following requirements: (1) using the funds to administer Medicaid incentive 

payments for certified EHR technology, including tracking of meaningful use by 

Medicaid EPs and eligible hospitals; (2) conducting oversight of the Medicaid EHR 

incentive program, including routine tracking of meaningful use attestations and 

reporting mechanisms; and (3) pursuing initiatives to encourage the adoption of certified 

EHR technology for the promotion of health care quality and the exchange of health care 

information. 

 This section of the proposed rule discusses the requirements for States to request 

FFP from CMS for the Medicaid EHR incentive program. Additionally, this section is 
CMS-0033-P 334 

closely connected to the requirements outlined in Financial Oversight, Program Integrity 

and Providers Appeals for purposes of oversight and accountability. 

 In proposed §495.302, we define terms used in the Medicaid subpart of the 

regulations governing State requests for FFP. Although some of these terms have been 

defined in other portions of our regulations, for ease of reference, and in order to define 

the terms in this specific context, we have separately included definitions in part 495. 

Other terms such as “HIT PAPD,” “IAPD,” “SMHP” are new terms which would be used 

in approving State plans for FFP. 

• Acceptance Documents: The term “acceptance document” refers to written 

evidence of satisfactory completion of an approved phase or work or contract related to 

information technology projects for which approved Federal funding is utilized. The 

term is commonly used in information technology projects and is defined in this proposed 

rule to ensure that we are able to receive information from the State necessary to evaluate 

and monitor the progress of HIT projects requested or approved under this proposed rule. 

• Acquisition: The term “acquisition” is defined in this proposed rule to indicate 

a State’s intent to acquire health information technology equipment or services for the 

purpose of implementation and administration of the provisions under this proposed rule 

from commercial sources or from State or local government resources. We define and 

utilize this term in the context of HIT planning and implementation activities that will 

enable States to implement existing Federal requirements for competitive procurement of 

equipment or services. 

• Service Oriented Architecture: The term “service oriented architecture” is 

defined in this proposed rule as a means of organizing and developing information 
CMS-0033-P 335 

technology capabilities as collaborating services that interact with each other based on 

open standards. We are defining this term in the context of HIT projects authorized 

under the HITECH Act to ensure that different systems and programming languages 

provide the basis for interoperability among and between applications that may reside on 

different platforms through a communication protocol to achieve health information 

exchange required under ARRA. 

• State Self-Assessment: The term “state self assessment” uses a standard 

methodology and tools to document the way a State conducts business now and plans to 

conduct business in the future. 

• Medicaid information technology architecture (MITA) is both an initiative and 

a framework. It is a national framework to support improved systems development and 

health care management for the Medicaid enterprise. It is an initiative to establish 

national guidelines for technologies and processes that enable improved program 

administration for the Medicaid enterprise. The MITA initiative includes an architecture 

framework, models, processes, and planning guidelines for enabling State Medicaid 

enterprises to meet common objectives with the framework while supporting unique local 

needs. 

• Medicaid management information system (MMIS) means a mechanized 

claims processing and information retrieval system--referred to as Medicaid Management 

Information Systems (MMIS)--that meets specified requirements and that the Department 

has found (among other things) is compatible with the claims processing and information 

retrieval systems used in the administration of the Medicare program. The objectives of 

the MMIS are to include claims processing and retrieval of utilization and management 
CMS-0033-P 336 

information necessary for program administration and audit and must coordinate with 

other mechanized systems and subsystems that perform other functions, such as 

eligibility determination. 

We are defining the “Medicaid Management Information System” as it relates to 

the mechanized claims processing systems at 42 CFR 433, Subpart C, since this term has 

not previously been codified in regulations and we are requiring that in implementing this 

program under the authority of section 1903(t)(6)(D) of the Act, certified EHR 

technology must be compatible with the MMIS. Additionally, we expect States would 

align their Medicaid EHR initiatives with those envisioned under MITA, in order to fully 

support the meaningful use of EHR envisioned under this new program. As part of their 

SMHP, States will be required to map different IT solutions to their existing Medicaid 

enterprise business requirements using the MITA business areas and processes list when 

preparing a baseline State self-assessment. Using the MITA State self-assessment 

provides a baseline that will facilitate collaboration between the States and CMS, 

between the State and industry and among the States themselves. The MITA “State 

self-assessment” process uses a standard methodology and tools to document the way a 

State conducts business now, and plans to conduct business in the future. The purpose of 

the SMHP is to identify the “As Is” state and “To Be” (target) state of a State's Medicaid 

business enterprise and to align business areas and processes in the user community. 

Once this alignment is complete, States may then add other Medicaid business processes 

by extending the MITA model during implementation to ultimately facilitate the EHR 

program. The State self-assessment would help to identify duplicative and overlapping 

business areas and processes and to identify gaps by adopting new business areas and 
CMS-0033-P 337 

processes needed to complete the EHR enterprise. Using an incremental approach and 

setting achievable goals for the near and mid term, would help the State assess its 

progress and identify targets of opportunity critical to achieving the long -term “To Be” 

vision for HIT by 2014. 

 Further, the Medicaid enterprise is comprised of internal and external 

communities of common business areas that share an interest in seeing that the mission 

and goals of the Medicaid program and improved health outcomes are achieved. These 

communities include the EPs and hospitals that would be receiving incentive payments. 

MITA's principles and tools fosters nationally integrated business and IT transformation. 

It does this by demonstrating that planned enhancements support State and Medicaid 

strategic goals and how intra-state systems other than the MMIS have been considered in 

developing the solutions. By documenting the analysis of alternative solutions, 

particularly a review of solutions in other States or a description of data sharing 

components and the reasons to include them or exclude them at this time can then be 

considered in its solution. 

 As such, the MITA process establishes the guidelines necessary for EHRs 

implemented as a result of the Medicaid EHR incentive program to be interoperable with 

State Medicaid systems, and we believe that as States and providers implement EHRs, it 

is essential to plan technology upgrades that would facilitate health information exchange 

with Medicaid providers receiving incentive funding. 

• State Medicaid Health Information Technology Plan (SMHP) means a 

document that describes the State's current and future HIT activities in support of the 

Medicaid EHR incentive program. 
CMS-0033-P 338 

• Health Information Technology Planning Advance Planning Document (HIT 

PAPD) (and any necessary update documents) means a plan of action that requests FFP 

and approval to accomplish the planning necessary for a State agency to determine the 

need for and plan the acquisition of HIT equipment or services or both and to acquire 

information necessary to prepare a HIT implementation advanced planning document or 

request for proposal to implement the State Medicaid HIT Plan. 

• Health Information Technology Implementation Advance Planning Document 

(HIT IAPD) (and any necessary update documents) means a plan of action that requests 

FFP and approval to acquire and implement the proposed State Medicaid HIT Plan 

services or equipment or both. 

 To qualify to receive FFP for administering the incentive program, States must 

develop a SMHP, an HIT PAPD, and an HIT IAPD. These documents would lay out the 

process States will use to implement and oversee the EHR incentive program, and would 

help States to construct an HIT roadmap to develop the systems necessary to support 

providers in their adoption and meaningful use of certified EHR technology. The 

development of a SMHP (see also §495.332) provides States with the opportunity to 

analyze and plan for how EHR technology, over time, can be used to enhance quality and 

health care outcomes and reduce overall health care costs. The uses of EHR technology 

can be integrated with existing State resources to achieve these goals. 

We provided guidance in a State Medicaid Director's letter on September 1, 2009, 

on this process and the State efforts necessary to receive the 90 percent FFP. As 

previously noted, as States begin the process of developing their SMHPs, they also can 

begin to receive the 90 percent FFP funding immediately to be used to support their 
CMS-0033-P 339 

initial EHR planning activities. For example, initial planning regarding the design and 

development of the anticipated SMHP may be eligible for the 90 percent FFP as an 

expense related to the administration of the Medicaid incentive payments under section 

1903(a)(3)(F) of the Act and, more broadly, for promoting health information exchange. 

Our review process would ensure that States are complying with requirements in the Act, 

and that they demonstrate to the “satisfaction of the Secretary” that they are using the 

funds in the manner anticipated by the law; for example, because of our oversight 

responsibilities simply proposing activities does not ensure the 90 percent FFP. We 

would review and prior approve all elements of the State's SMHP, and APD documents. 

States would be required to submit these advance planning documents in order for 

us to approve receipt of the 90 percent Federal match. Specifically, prior approval would 

be required for the HIT PAPD (see also §495.336). The deliverable resulting from the 

HIT PAPD would be the SMHP. The SMHP would be reviewed and approved before it 

is included in an Implementation APD (IAPD) (see also §495.338). The IAPD also must 

be prior approved. Until approval is granted States cannot draw down funds. The APD 

process allows States to update their APD when they anticipate changes in scope, cost, 

schedule, etc. This allows States to add additional tasks to the contract which they may 

have not thought of at the time the HIT PAPD was written, as they worked through the 

original tasks on the original submission. Something as complex as this will most likely 

result in an “as needed” and “annual” update to the original scope of work. 

 For purposes of the Medicaid EHR incentive program, we envision two high-level 

phases in the process of planning and implementing the incentive program, as well as the 

promoting the adoption of EHR. Phase I would include initial planning, including an 
CMS-0033-P 340 

assessment of the State EHR environmental landscape, and development of the SMHP. 

The vehicle for informing us of Phase I activities will be the HIT PAPD. Phase II will 

involve further development and full implementation of the SMHP. Consequently, we 

would be requiring the HIT IAPD as the vehicle for reporting of Phase II activities. We 

are also proposing to require a prior approval process, and anticipate that States would 

work closely with us in developing the HIT PAPD prior to initiating EHR planning 

activities and prior to submission of the initial HIT PAPD. State collaboration with us 

prior to initiating submission of these documents would assist States in understanding all 

of the requirements and would help us understand the State's strategy and plans which 

would lead to a more effective implementation. In addition, such coordination would 

facilitate improved understanding of existing State EHR planning and implementation 

efforts in progress that should be combined with this effort (that is, health information 

exchange, EHR demonstration, and Medicaid Transformation Grants). 

 Also, States would be required to obtain prior written approval of funding, 

planning documents, proposed budgets, project schedules, and certain implementation 

activities that a State may wish to pursue in support of the Medicaid EHR incentive 

program to encourage the adoption and use of certified EHR technology in line with the 

90 percent FFP available to States. To minimize the burden on States, these prior 

approval conditions, and the prior approval process, would mirror that presently used in 

support of acquiring automated data processing equipment and services in conjunction 

with development and operation of State MMIS, or the State's automated mechanized 

claims processing and information retrieval system approved by CMS. 
CMS-0033-P 341 

 In considering the States' strategies for adoption of EHR and health information 

exchange, current efforts such as the State MMIS or automated mechanized claims 

processing and information retrieval system, contain a great deal of claims data and other 

Medicaid programmatic information. The State MMIS can be of significant value in 

analyzing the State's current position and moving the State forward to using certified 

EHR technology to promote health information exchange, enhance quality, and improve 

health care outcomes. Additionally, the MITA framework provides a conceptual model 

for building capacity in Medicaid EHR and health information exchange. 

 We are also proposing that State Medicaid programs must comply with current 

procurement standards. Specifically, we are including language in this proposed rule in 

accordance with the procurement requirements in 45 CFR 95 Subpart F to incorporate 

much of the procurement standards previously contained in 42 CFR Part 74. Inclusion of 

these procurement requirements maintains the long-standing procurement standards and 

policies for State information technology contracts, as well as incorporate procurement 

standards under the authority of section 1902(a)(4) of the Act, specifically for the 

definition of sole source justification, requiring all procurement transactions to be 

conducted in a manner to provide, to the maximum extent practical, open and free 

competition and promote the administration of the Medicaid program in a cost effective 

manner. This proposed rule also addresses grantee responsibilities, codes of conduct, 

competition, procurement procedures, and access to records that are specific to the HIT 

requirements envisioned under the ARRA. Also, under the authority of section 

1902(a)(4) of the Act, we are proposing contracting requirements, reporting 

requirements, systems of records access, software and ownership rights, and rules for 
CMS-0033-P 342 

charging equipment and cost allocation plans. All of these efforts would work to provide 

clarity for States when considering planning and implementation activities, and would 

also ensure that we are providing necessary direction for States in completing their HIT 

PAPD, HIT IAPD, and SMHP. We are proposing under the authority of 1902(a)(4) of 

the Act to establish requirements for termination of FFP in the case of States failing to 

provide access to information relating to any of the requirements of this subpart. 

Additionally, under section 1903(t)(10) of the Act, we are required to monitor and report 

on the progress of implementation of the EHR provisions. These proposed provisions 

would contribute to the overall effort in monitoring implementation efforts and provide 

relevant information to Congress and the public at large. 

 Consistent with our oversight responsibilities, we are also proposing to provide a 

framework for attestations. Specifically, in section II.D.7 of this proposed rule, we 

discuss that we would require that providers attest to their efforts to adopt, implement or 

upgrade certified EHR technology, and attest to their meaningful use of such technology. 

In this section, we discuss our proposal that State Medicaid agencies would attest, as 

outlined in section 1903(t)(6)(A)(i) of the Act, that States would make Medicaid 

incentive payments to a Medicaid EP or eligible hospital directly (or to an employer or 

facility to which such Medicaid EP or eligible hospital has assigned their Medicaid 

incentive payments) without any deduction or rebate, and that States would attest that 

payments to an entity promoting the adoption of certified EHR technology, as designated 

by the State, would only be made if participation in such a payment arrangement is 

voluntary for the Medicaid EP involved, and if such entity does not retain more than 5 

percent of such assigned Medicaid incentive payments for costs not related to such 
CMS-0033-P 343 

technology. States would be required to attest that the entire incentive payment has been 

forwarded to the eligible Medicaid provider, and that no eligible Medicaid provider is 

required to return any portion of the incentive payment to the State Medicaid agency. We 

expect States to consider utilizing all existing fiscal relationships as intermediaries for 

disbursing the incentives. Since many States never pay the provider directly, but rather 

pay a managed care plan, which then pays the provider, the State may have no existing 

relationship and decide to contract with the managed care plan to pass this incentive to 

the EP. States must establish a process to ensure that any existing fiscal relationships 

with providers to disburse the Medicaid incentive payments through Medicaid managed 

care plans does not result in payments that exceed 105 percent of the capitation rate, in 

order to comply with the Medicaid managed care incentive payment rules at 

§438.6(c)(5)(iii) and a methodology for verifying such information. 

Additionally, we are proposing that termination of funding approved under this 

proposed Part 495 subpart D or disallowance of FFP may result if the State fails to meet 

the requirements and undertakings of the approved PAPD, SMHP, and IAPD, or fails to 

provide access to the required information. 

 Since section 4201 of the HITECH Act amends section 1903(a)(3) of the Act to 

provide for 90 percent FFP for costs associated with certain administrative activities 

performed by a State, we also are proposing to allow for claiming of such reasonable 

costs incurred on or after February 18, 2009, prior to publication of the final rule. 

Specifically, if a State can show that it has begun the initial planning stages of moving 

the State in the direction of meaningful use of certified EHR technology through such 

activities as training efforts, staff support, or contracting with a vendor, we may allow for 
CMS-0033-P 344 

retroactive FFP back to the date in which these efforts began, but not before 

February 18, 2009. 

9. Financial Oversight, Program Integrity and Provider AppealsPursuant to section 

1903(t)(9) of the Act, which requires States to conduct adequate oversight of the 

incentive program, and in order to ensure that ARRA funds are expended wisely and in a 

manner that impedes waste, fraud or abuse of Federal taxpayer money, at §495.366, we 

propose requirements for States' financial oversight and monitoring of expenditures. 

Additionally, we are proposing at §495.368 to provide State requirements for combating 

fraud and abuse. 

 Specifically, States would be responsible for estimating the expenditures for the 

Medicaid EHR incentive program on the State's quarterly budget estimate reports. These 

reports are used as the basis for Medicaid quarterly grant awards that would be advanced 

to the State for the Medicaid EHR incentive program. The State submits this Form 

electronically to CMS via the Medicaid and State CHIP Budget and Expenditure System 

(MBES/CBES). At the end of the quarter, the State would be responsible for submitting 

expenditures to us via the MBES Form CMS-64. The Form CMS-64 is the accounting 

statement that the State Agency, in accordance with 42 CFR 430.30(c), submits each 

quarter under Title XIX of the Act. The form is used to reconcile the Medicaid funding 

advanced to the State for the quarter made on the basis of the CMS-37, with actual 

expenditures for the quarter. It accounts for any overpayments, underpayments, refunds 

received by the State Medicaid agency, and income earned on grant funds. States must 

assure that requests for reimbursement of FFP comply with all sections of this new part 

and that the amounts reported on the Form CMS-64 and its attachments represent actual 
CMS-0033-P 345 

expenditures for which all supporting documentation, in readily reviewable form, has 

been compiled and which is available at the time the claim for reimbursement of provider 

payment incentives and administration funding is filed. 

We would assure that State expenditures claimed for Federal matching under the 

Medicaid program are programmatically reasonable, allowable, and allocable in 

accordance with existing Federal laws, regulations, and policy guidance. CMS' Regional 

Office financial and auditing specialists will be responsible for monitoring State funding 

issues including the funding related to these Medicaid EHR payment incentives. Funding 

specialists would also review the flow of funds to determine that State funds are from 

allowable sources and to insure that Medicaid payment incentives would be paid without 

reduction or rebate. Additionally, funding specialists would ensure that no other sources 

of funding are used to make Medicaid EHR payment incentives to providers other than 

State and local government funds. States would be responsible for establishing policies, 

computer systems, edits to process Medicaid EHR incentive payments; and for 

conducting analyses of providers' patterns of practice (data-mining) and taking other 

reasonable steps to ensure that no duplicate or otherwise improper EHR incentive 

payments have been made. States will be responsible for ensuring that provider 

information, including but not limited to, attestations, survey, and any information added 

to CMS' single provider election repository indicates that any falsification of 

documentation or concealment of material facts may be prosecuted under Federal and 

State laws. States would be responsible for recovering and returning to CMS FFP for any 

HIT incentive payments that are discovered to be improper. State Agencies must have 

information processing systems, including a MMIS -- the automated mechanized claims 
CMS-0033-P 346 

processing and information retrieval system, to process Medicaid EHR incentive 

payments. MMIS systems can also help to manage information for program 

administration and audit purposes. 

 States must assure that any requests for reimbursement of the 90 percent Federal 

match for administration of the program are being requested only because the State has 

used the funds for purposes related to administering payments to qualified Medicaid 

providers for certified EHR technology, including for tracking of meaningful use of such 

technology, is conducting adequate oversight of the program including routine tracking of 

meaningful use attestations and reporting mechanisms; and is pursuing initiatives to 

encourage the adoption of certified EHR technology to promote health care quality and 

the exchange of health care information because of such technology. Any initiatives for 

health information exchange must be consistent with Federal laws and regulations 

governing the exchange. 

 We would monitor State Agency compliance through systems performance 

reviews, on-site reviews, and audits of the APD process. 

 As a result of the authority extended to the Secretary under section 1902(a)(4) of 

the Act requiring the effective and efficient administration of the State plan, as well as 

section 1903(t)(9) of the Act, requiring that a State demonstrate to the satisfaction of the 

Secretary that it is conducting adequate oversight of the program, we are also proposing 

to establish §495.370, Provider Appeals. This proposed section would specify that 

Medicaid providers who believe that they have been denied an incentive payment or have 

received an incorrect payment amount under this part because of incorrect determinations 

of eligibility, including, but not limited to, measuring patient volume; demonstrating 
CMS-0033-P 347 

meaningful use of, or the efforts to adopt, implement, or upgrade to, certified EHR 

technology; whether the professional is hospital-based; whether the professional is 

practicing predominantly in an FQHC or RHC; whether the hospital qualifies as an acute 

care or children's hospital; or whether the provider is already participating in the 

Medicare incentive program and therefore ineligible duplicate Medicaid incentive 

program payments can appeal the decision using current Federal processes established at 

42 CFR 447.253(e). 

III. Information Collection Requirements 

 Under the Paperwork Reduction Act of 1995, CMS is required to provide 60-day 

notice in the Federal Register and solicit public comment before a collection of 

information requirement is submitted to the Office of Management and Budget (OMB) 

for review and approval. In order to fairly evaluate whether an information collection 

should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 

1995 requires that CMS solicit comment on the following issues: 

● The need for the information collection and its usefulness in carrying out the 

proper functions of our agency. 

● The accuracy of our estimate of the information collection burden. 

● The quality, utility, and clarity of the information to be collected. 

● Recommendations to minimize the information collection burden on the 

affected public, including automated collection techniques. 

The following is a discussion of the requirements we believe are subject to PRA 

and collection of information requirements as a result of this proposed rule. The 

projected numbers of EPs and eligible hospitals, MA organizations, MA EPs and 
CMS-0033-P 348 

MA-affiliated hospitals are based on the numbers used in the Impact Analysis 

Assumptions as well as in Table 45 in the Regulatory Impact Analysis section. 

A. ICRs Regarding Demonstration of Meaningful Use Criteria (§495.8)

 In §495.8(a)(1), we propose that to demonstrate meaningful use for CY 2011, an 

EP must attest, through a secure mechanism in a specified manner, to the following: (1) 

during the EHR reporting period, the EP used certified EHR technology and specify the 

technology used; and (2) during the EHR reporting period, the EP satisfied each of the 

applicable objectives and associated measures under §495.6(including quality measures). 

The EP must specify the EHR reporting period and provide the result of each applicable 

measure for all patients seen during the EHR reporting period for which a selected 

measure is applicable. We estimate that the certified EHR technology adopted by the EP 

will capture many of the Meaningful Use objectives and associated measures and 

generate automated numerator and denominator information, where required, or 

automated summary reports. Therefore, for these objectives and associated measures 

(Set A) , we estimate that it would take no more than 0.5 hours for an EP to attest to them 

collectively as the EHR would be able to gather all of the information necessary for the 

provider. For objectives and associated measures requiring a numerator and denominator 

we limit to actions taken in the presence of certified EHR technology. We do not 

anticipate that an EP or eligible hospital will maintain two record keeping systems when 

certified EHR technology is present. Therefore, we assume that all patient records that 

would be in the denominator would be kept using certified EHR technology. Because 

generating this automated information requires the purchase of a certified EHR with the 
CMS-0033-P 349 

requisite technical functionality, reporting these measures will incur significant capital 

costs. 

However, there are still some Meaningful Use objectives and associated measures 

(Set B) where reporting may require EPs to manually gather the information necessary to 

report numerators and denominators or to take any other additional steps before attesting 

that the objective has been met, we have estimated that it would take 1 hour for the EP to 

gather that information and report the result. For example, the measure “At least 80 

percent of all patients who request an electronic copy of their health information are 

provided it within 48 hours” requires EPs to not only provide that information (a thirdparty disclosure) but also attest to the provision of that information for 80 percent of all 

patients who request that information. Another example is the CPOE measure. The 

numerator for the CPOE measure could be generated by the certified EHR technology 

adopted by the EP, as all orders entered through CPOE could be tracked. However, the 

denominator for this measure could require EPs to manually track the number of orders 

entered through paper-based processes. Alternatively, EPs may choose to purchase 

EHRs equipped with additional functionality to enable the tracking of all orders, whether 

entered using CPOE or otherwise, in which case reporting burden may be less than an 

hour but the capital costs will be higher. We invite comments on what the incremental 

costs of such additional functionality may be and what the reporting burden using EHRs 

equipped with this functionality might be. 

 Table 33 below lists those objectives and associated measures which we estimate 

will require 0.5 hours to fulfill (“Set A”) and those objectives and associated measures 

which we estimate will take 1 hour each (“Set B”). We welcome comments on our 
CMS-0033-P 350 

burden estimates for each particular measure, as well as what the incremental capital 

costs attributable to each measure might be. Estimates of total capital costs at the bottom 

of Table 33 are derived from the estimates used in the “Industry Costs” section in Section 

V.G.4. 

TABLE 33: Burden and Capital Costs associated with Meaningful Use Objectives 

and Associated Measures 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

Set 

A 

Implement 

drug-drug, 

drug-allergy, 

drug-formulary 

checks 

Implement 

drug-drug, 

drug-allergy, 

drug-formulary 

checks 

The EP/eligible 

hospital has 

enabled this 

functionality 

Reporting 

requirement: 

Attestation of 

implementation 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – costs 

associated with 

medication error eprescribing functions 

 Maintain an 

up-to-date 

problem list of 

current and 

active 

diagnoses 

based on ICD9-CM or 

SNOMED CT 

® 

Maintain an 

up-to-date 

problem list of 

current and 

active 

diagnoses 

based on ICD9-CM or 

SNOMED CT 

® 

At least 80% of 

all unique 

patients seen by 

the EP or 

admitted to the 

eligible hospital 

have at least one 

entry or an 

indication of 

none recorded as 

structured data 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of 

functionality that can 

incorporate diagnoses 

in coded format 
CMS-0033-P 351 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Maintain active 

medication list

Maintain active 

medication list

At least 80% of 

all unique 

patients seen by 

the EP or 

admitted to the 

eligible hospital 

have at least one 

entry (or an 

indication of 

"none" if the 

patient is not 

currently 

prescribed any 

medication) 

recorded as 

structured data 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of 

functionality that can 

incorporate 

medication 

information in coded 

format 

 Maintain active 

medication 

allergy list

Maintain active 

medication 

allergy list

At least 80% of 

all unique 

patients seen, by 

the EP or 

admitted to the 

eligible hospital 

have at least one 

entry or (an 

indication of 

"none" if the 

patient has no 

medication 

allergies) 

recorded as 

structured data 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of 

functionality that can 

incorporate 

medication allergy 

information in coded 

format 
CMS-0033-P 352 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Record 

demographics 

o preferred 

language 

o insurance 

type 

o gender 

o race 

o ethnicity 

o date of birth 

Record 

demographics 

o preferred 

language 

o insurance 

type 

o gender 

o race 

o ethnicity 

o date of birth 

o date and 

cause of 

death in the 

event of 

mortality 

At least 80% of 

all unique 

patients seen by 

the EP or 

admitted to the 

eligible hospital 

have 

demographics 

recorded as 

structured data 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of 

functionality that can 

incorporate this 

information in coded 

format 

 Record and 

chart changes 

in vital signs: 

o height 

o weight 

o blood 

pressure 

o Calculate 

and display: 

BMI 

o Plot and 

display 

growth 

charts for 

children 2-

20 years, 

including 

BMI. 

Record and 

chart changes 

in vital signs: 

o height 

o weight 

o blood 

pressure 

o Calculate 

and display: 

BMI 

o Plot and 

display 

growth 

charts for 

children 2-

20 years, 

including 

BMI. 

For at least 80% 

of all unique 

patients age 2 

and over seen 

by the EP or 

admitted to 

eligible hospital, 

record blood 

pressure and 

BMI; 

additionally plot 

growth chart for 

children age 2-

20 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of 

functionality that can 

incorporate this 

information in coded 

format 

 Record 

smoking status 

for patients 13 

years old or 

older

Record 

smoking status 

for patients 13 

years old or 

older

At least 80% of 

all unique 

patients 13 years 

old or older seen 

by the EP or 

admitted to the 

eligible hospital 

have "smoking 

status" recorded 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of 

functionality that can 

incorporate this 

information in coded 

format 
CMS-0033-P 353 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Report 

ambulatory 

quality 

measures to 

CMS or the 

States

Report hospital 

quality 

measures to 

CMS or the 

States

For 2011, 

provide 

aggregate 

numerator and 

denominator 

through 

attestation as 

discussed in 

section II(A)(3) 

of this proposed 

rule 

For 2012, 

electronically 

submit the 

measures as 

discussed in 

section II(A)(3) 

of this proposed 

rule 

For 2011, the burden 

associated with these 

measures is estimated 

to be (an additional) 

0.5 hour to select the 

measures and to attest 

to the numerator and 

denominator for each. 

For 2012, the burden 

is estimated to be (an 

additional) 0.5 hour 

to e report and send 

the electronic 

submission. 

TBD – Cost of the 

functionality to 

capture and report on 

quality measures 

 Send reminders 

to patients per 

patient 

preference for 

preventive/ 

follow up care

Reminder sent to 

at least 50% of 

all unique 

patients seen by 

the EP that are 

age 50 or over 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost of having 

functionality to send 

reminders to patients 

 Implement 

clinical 5 

decision 

support rules 

relevant to 

specialty or 

high clinical 

priority, 

including 

diagnostic test 

ordering, along 

with the ability 

to track 

compliance 

with those 

rules 

Implement 5 

clinical 

decision 

support rules 

related to a 

high priority 

hospital 

condition, 

including 

diagnostic test 

ordering, along 

with the ability 

to track 

compliance 

with those 

rules

Implement 5 

clinical decision 

support rules 

relevant to the 

clinical quality 

metrics the 

EP/Eligible 

Hospital is 

responsible for 

as described 

further in section 

II(A)(3). 

Reporting 

requirement: 

attest to the 

implementation 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – costs 

associated with 

clinical decision 

support functionality 
CMS-0033-P 354 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Check 

insurance 

eligibility 

electronically 

from public 

and private 

payers 

Check 

insurance 

eligibility 

electronically 

from public 

and private 

payers

Insurance 

eligibility 

checked 

electronically 

for at least 80% 

of all unique 

patients seen by 

the EP or 

admitted to the 

eligible hospital 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost 

administrative 

simplification 

functionality 

 Submit claims 

electronically 

to public and 

private payers. 

Submit claims 

electronically 

to public and 

private payers.

At least 80% of 

all claims filed 

electronically by 

the EP or the 

eligible hospital 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – costs 

associated with 

administrative 

simplification 

functionality 

 Provide 

clinical 

summaries for 

patients for 

each office 

visit 

 Clinical 

summaries 

provided for at 

least 80% of all 

office visits 

Reporting 

requirement: 

numerator and 

denominator 

data 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost an EHR 

system capable of 

storing this 

information and 

transmitting it to 

patients 
CMS-0033-P 355 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Capability to 

exchange key 

clinical 

information 

(for example, 

problem list, 

medication list, 

allergies, 

diagnostic test 

results), among 

providers of 

care and 

patient 

authorized 

entities 

electronically 

Capability to 

exchange key 

clinical 

information 

(for example, 

discharge 

summary, 

procedures, 

problem list, 

medication list, 

allergies, 

diagnostic test 

results), among 

providers of 

care and 

patient 

authorized 

entities 

electronically 

Performed at 

least one test of 

certified EHR 

technology’s 

capacity to 

electronically 

exchange key 

clinical 

information 

Reporting 

requirement: 

attestation that at 

least one test 

was performed 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – cost an EHR 

system capable of 

storing this 

information and 

transmitting it to 

providers and patient 

authorized entities 

 Capability to 

submit 

electronic data 

to 

immunization 

registries and 

actual 

submission 

where required 

and accepted

Capability to 

submit 

electronic data 

to 

immunization 

registries and 

actual 

submission 

where required 

and accepted

Performed at 

least one test of 

certified EHR 

technology’s 

capacity to 

submit 

electronic data 

to immunization 

registries 

Reporting 

requirement: 

attestation that at 

least one test 

was performed 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – costs 

associated with 

functionality that can 

capture immunization 

information and 

submit that 

information to 

immunization 

registries 
CMS-0033-P 356 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Capability to 

provide 

electronic 

submission of 

reportable lab 

results (as 

required by 

state or local 

law) to public 

health agencies 

and actual 

submission 

where it can be 

received 

Performed at 

least one test of 

the EHR 

system’s 

capacity to 

provide 

electronic 

submission of 

reportable lab 

results to public 

health agencies 

(unless none of 

the public health 

agencies to 

which eligible 

hospital submits 

such information 

have the 

capacity to 

receive the 

information 

electronically) 

Reporting 

requirement: 

attestation that at 

least one test 

was performed 

or that no public 

agencies have 

the capacity to 

receive 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – costs 

associated with 

functionality that can 

capture lab results 

information and 

submit that 

information to public 

health agencies 
CMS-0033-P 357 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Capability to 

provide 

electronic 

syndromic 

surveillance 

data to public 

health agencies 

and actual 

transmission 

according to 

applicable law 

and practice 

Capability to 

provide 

electronic 

syndromic 

surveillance 

data to public 

health agencies 

and actual 

transmission 

according to 

applicable law 

and practice 

Performed at 

least one test of 

certified EHR 

technology’s 

capacity to 

provide 

electronic 

syndromic 

surveillance data 

to public health 

agencies (unless 

none of the 

public health 

agencies to 

which an EP or 

eligible hospital 

submits such 

information 

have the 

capacity to 

receive the 

information 

electronically) 

Reporting 

requirement: 

attestation that at 

least one test 

was performed 

or that no public 

agencies have 

the capacity to 

receive 

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

TBD – costs 

associated with 

functionality that can 

capture syndromic 

surveillance data and 

submit that 

information to public 

health agencies 

 Protect 

electronic 

health 

information 

created or 

maintained by 

the certified 

EHR 

technology 

through the 

implementation 

of appropriate 

technical 

capabilities 

Protect 

electronic 

health 

information 

created or 

maintained by 

the certified 

EHR 

technology 

through the 

implementation 

of appropriate 

technical 

capabilities 

Conduct or 

review a security 

risk analysis per 

45 CFR 164.308 

(a)(1) and 

implement 

security updates 

as necessary 

Reporting 

requirement: 

attestation that a 

risk analysis was 

conducted or 

reviewed

The burden 

associated with this 

measures is included 

in the 0.5 hour 

attestation burden 

estimate 

N/A as conducting or 

reviewing a security 

risk analysis does not 

necessarily hinge on 

the purchase of an 

EHR or particular 

EHR functionalities 
CMS-0033-P 358 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

Total Burden and Incremental Capital Cost for Set A 

Measures 

0.5 hours + 0.5 hour 

for quality measure 

attestation/reporting 

TBD -- some 

increment of the 

total capital costs 

SET 

B 

Use CPOE Use of CPOE 

for orders (any 

type) directly 

entered by 

authorizing 

provider (for 

example, MD, 

DO, RN, PA, 

NP) 

For EPs, CPOE 

is used for at 

least 80% of all 

orders 

For eligible 

hospitals, CPOE 

is used for 10% 

of all orders 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to manually 

derive the 

denominator (unless 

EHR is equipped 

with extra 

functionality to 

generate numerator 

and denominator data 

automatically) and 

attest to the measure. 

Total: 1 hour 

TBD – cost of a 

CPOE module; 

additionally, the cost 

of extra functionality 

to generate numerator 

and denominator 

information 

automatically 

 Generate and 

transmit 

permissible 

prescriptions 

electronically 

(eRx)

At least 75% of 

all permissible 

prescriptions 

written by the 

EP are 

transmitted 

electronically 

using certified 

EHR technology 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to manually 

derive the 

denominator (unless 

EHR is equipped 

with extra 

functionality to 

generate numerator 

and denominator data 

automatically) and 

attest to the measure. 

Total: 1.0 hour 

TBD – cost of an eprescribing system; 

additionally, the cost 

of extra functionality 

to generate numerator 

and denominator 

information 

automatically 

 Generate lists 

of patients by 

specific 

conditions to 

use for quality 

improvement, 

reduction of 

disparities, and 

outreach

Generate lists 

of patients by 

specific 

conditions to 

use for quality 

improvement, 

reduction of 

disparities, and 

outreach

Generate at least 

one report listing 

patients of the 

EP or eligible 

hospital with a 

specific 

condition. 

Reporting 

requirement: 

attest that at 

least one report 

was generated 

1 hour to generate the 

report and attest to 

the measure 

Total: 1.0 hour 

TBD – cost of having 

an EHR registry 

function 
CMS-0033-P 359 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Incorporate 

clinical lab-test 

results into 

EHR as 

structured data

Incorporate 

clinical lab-test 

results into 

EHR as 

structured data

At least 50% of 

all clinical lab 

tests ordered 

whose results 

are in a 

positive/negative 

or numerical 

format are 

incorporated in 

certified EHR 

technology as 

structured data 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to manually 

derive the 

denominator (unless 

EHR is equipped 

with extra 

functionality to 

generate numerator 

and denominator data 

automatically) and 

attest to the measure. 

Total: 1.0 hour 

TBD – cost of extra 

functionality to 

generate numerator 

and denominator 

information 

automatically 

 Provide 

patients with 

an electronic 

copy of their 

health 

information 

(including 

diagnostic test 

results, 

problem list, 

medication 

lists, allergies), 

upon request

Provide 

patients with 

an electronic 

copy of their 

health 

information 

(including 

diagnostic test 

results, 

problem list, 

medication 

lists, allergies, 

discharge 

summary, 

procedures), 

upon request

At least 80% of 

all patients who 

request an 

electronic copy 

of their health 

information are 

provided it 

within 48 hours 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to account for 

the burden associated 

with determining the 

denominator and 

attest to the measure 

Total: 1.0 hour 

TBD – cost an EHR 

system capable of 

storing this 

information and 

transmitting it to 

patients 

 Provide 

patients with 

an electronic 

copy of their 

discharge 

instructions 

and procedures 

at time of 

discharge, 

upon request 

At least 80% of 

all patients who 

are discharged 

from an eligible 

hospital and who 

request an 

electronic copy 

of their 

discharge 

instructions and 

procedures are 

provided it 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to account for 

the burden associated 

with determining the 

denominator and 

attest to the measure 

Total: 1.0 hour 

TBD – cost an EHR 

system capable of 

storing this 

information and 

transmitting it to 

patients 
CMS-0033-P 360 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

 Provide 

patients with 

timely 

electronic 

access to their 

health 

information 

(including lab 

results, 

problem list, 

medication 

lists, allergies) 

within 96 hours 

of the 

information 

being available 

to the EP 

 At least 10% of 

all unique 

patients seen by 

the EP are 

provided timely 

electronic access 

to their health 

information 

Reporting 

requirement: 

numerator and 

denominator 

data

1 hour to account for 

the burden associated 

determining whether 

information is timely 

and attest to the 

measure 

Total: 1.0 hour 

TBD – cost an EHR 

system capable of 

storing this 

information and 

making it 

continuously available 

to patients 

 Perform 

medication 

reconciliation 

at relevant 

encounters and 

each transition 

of care 

Perform 

medication 

reconciliation 

at relevant 

encounters and 

each transition 

of care

Perform 

medication 

reconciliation 

for at least 80% 

of relevant 

encounters and 

transitions of 

care 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to account for 

the burden associated 

with determining the 

denominator of all 

relevant encounters 

and transitions of 

care, and attest to the 

measure 

Total: 1.0 hour 

TBD – cost an eprescribing system 

capable of medication 

reconciliation 

 Provide 

summary care 

record for each 

transition of 

care and 

referral 

Provide 

summary care 

record for each 

transition of 

care and 

referral 

Provide 

summary of 

record for at 

least 80% of 

transitions of 

care and 

referrals 

Reporting 

requirement: 

numerator and 

denominator 

data 

1 hour to account for 

the burden associated 

with determining the 

denominator of all 

relevant encounters 

and transitions of 

care and attest to the 

measure 

Total: 1.0 hour 

TBD – cost an EHR 

system capable of 

storing this 

information and 

transmitting it to 

patients 

Estimated Total Burden and Incremental Capital Cost 

per Respondent for Set B measures

7.0 hours for eligible 

hospitals 

8.0 hours for EPs 

TBD – some 

increment of the 

total capital costs
CMS-0033-P 361 

Stage 1 Objectives 

Eligible 

Professionals Hospitals 

Stage 1 

Measures and 

Reporting 

Requirements 

Burden Estimate 

per Respondent 

Capital Cost (not net 

of EHR incentive 

payments) 

Estimated Total Burden and Total Capital Cost per 

Respondent for attestation to EHR technology, Set A Set 

B measures, and attestation and reporting of quality 

measures 

8 hours for 

hospitals 

9 hours for EPs 

Hospitals: $5 million 

to install; $1 million 

annual 

maintenance/training 

costs 

EPs: $54,000 to 

install; $10,000 

annual 

maintenance/training 

costs 

*This burden estimate assumes that covered entities are already conducting and reviewing these risk 

analyses under current HIPAA regulations. Therefore, we have not accounted for additional burden 

associated with the conduct or review of such analyses. 

First, we will discuss the burden associated with EP attestation to EHR 

technology and Meaningful Use Set A objectives/measures, and ambulatory quality 

measures. We estimate that it will take no more than 0.5 hour for an EP to attest that 

during the EHR reporting period, he or she used certified EHR technology and specify 

the technology, and satisfied each of the applicable Meaningful Use Set A 

objectives/measures. We also estimate that it will take an EP an additional 0.5 hour to 

select and attest to the ambulatory quality measures for CY 2011.The total burden hours 

for an EP to attest to the above is one hour. We estimate that there are about 442,600 

non-hospital-based Medicare and Medicaid EPs (323,500 Medicare EPs, 80,900 dual 

Medicare/Medicaid EPs and 38,200 Medicaid-eligible-only EPs) who may attest to the 

above (after registration) in CY 2011 to receive an EHR incentive payment. We estimate 

the burden for the 28,000 MA EPs in the MAO burden estimate section. The total 

estimated annual attestation burden hours for EHR technology, Meaningful Use Set A 

objectives/measures, and ambulatory quality measures are 442,600 for all EPs (442,600 

EPs x 1 hour). The cost burden for an EP to attest to the above information is $79.33 (1 
CMS-0033-P 362 

hour x $79.33 (mean hourly rate for physicians based on the May 2008 Bureau of Labor 

Statistics)). The total estimated annual cost burden for all EPs to attest to EHR 

technology, Meaningful Use Set A objectives/measures, and ambulatory quality measures 

is $35,111,458 (442,600 EPs x $79.33). We invite public comments on the estimated 

percentages and the numbers of (registered) EPs that will attest to the above in CY 2011 

because such information would help us determine more accurately the burden on the 

EPs. 

Next, we discuss the burden for EPs to gather information and attest to 

Meaningful Use Set B objectives/measures. We estimate that it takes about 8 hours for 

each EP to comply with this requirement. As stated, we estimate that there are about 

442,600 non-hospital-based EPs in CY 2011. The total estimated annual attestation 

burden hours for all EPs for the Meaningful Use Set B objectives and measures included 

in Table 33 is 3,540,800 (442,600 EPs x 8 hours The cost burden for an EP to attest to the 

above information is $ 634.64 (8 hours x $79.33/hour (the mean hourly rate for 

physicians based on the May 2008 Bureau of Labor Statistics is $79.33.) and 

$ 280,891,664 for EPs as a whole (3,540.800 hours x $79.33/hour). We invite public 

comments on the estimated percentages and the numbers of (registered) EPs that will 

attest to Set B objectives and measures in CY 2011 because such information would help 

us determine more accurately the burden on the EPs. 

To estimate capital costs, we assume a certified EHR will cost roughly $54,000 as 

explained in section V.G.4 of this proposed rule. If 442,600 EPs adopt these EHRs, total 

capital costs prior to incentives would be roughly $23.9 billion. We also estimate that in 

2011, $200 million of Medicare incentive payments (the midpoint of the low and high 
CMS-0033-P 363 

estimates in Tables 36 and 37) and $900 million of Medicaid incentive payments (the 

midpoint of the low and high estimates in Tables 45 and 46) would be provided to EPs to 

help offset those costs. Therefore, we estimate that total net capital costs for EPs in 2011 

would be $22.8 billion ($23.9 billion - $200 million - $900 million). These capital costs 

would decrease over the course of the EHR incentive programs as additional incentives 

are provided. Therefore, in 2012, the total net capital costs for EPs would be $20.6 

billion (22.8 billion - $1.6 billion of Medicare incentives - $650 million of Medicaid 

incentives). Over the course of 2011 and 2012, the average net capital costs would be 

$21.7 billion. 

 We expect that there will be a steady growth in EPs. We estimate that in 2012, 

there are about 447,400 non-hospital-based Medicare, and Medicaid EPs (326,900 

Medicare EPs, 81,700 dual Medicare/Medicaid EPs and 38,800 Medicaid-eligible-only 

EPs) who are qualified to receive EHR incentive payment. In §495.8(a)(2), we propose 

that to demonstrate meaningful use for CY 2012 and subsequent years, a (registered) EP 

is required to attest , through a secure mechanism in a specified manner, to the following: 

(1) during the EHR reporting period, the EP used certified EHR technology and specify 

the technology used; and (2) during the EHR reporting period , the EP satisfied each of 

the applicable objectives and associated measures under §495.6 except §495.8(d)(3) 

“Report ambulatory quality measures to CMS or the States (in the case of Medicaid 

EPs).” 

For burden estimate purposes, we believe the burden associated with gathering the 

information necessary to provide the attestations for the measures in Table 33, as well as 

the burden associated with providing the actual attestation, will remain unchanged from 
CMS-0033-P 364 

CY2011. As detailed in Table 33, some measures (Set A) will require a total of 0.5 hours 

to report while others (Set B) will require 1 hour. 

First, we will discuss the burden for an EP to attest that during the reporting 

period, he or she used certified EHR technology, specify the EHR technology, and he or 

she satisfied each of the applicable Set A objectives measures in CY 2012. We estimate 

it will take no more than 0.5 hour for an EP to attest to the above requirements. For 

burden estimate purposes, we estimate that all 447,400 non-hospital-based Medicare, and 

Medicaid EPs (326,900 Medicare EPs, 81,700 dual Medicare/Medicaid EPs and 38,800 

Medicaid-eligible-only EPs) may attest (after registration) in 2012 to receive an EHR 

incentive payment. We estimate the burden for the 28,000 MA EPs in the MAO burden 

estimate section. We estimate it will take an EP 0.5 hour to attest. The total estimated 

annual attestation burden hours for all EPs are 223,700 (447,400 EPs x 0.5 hour). The 

cost burden for an EP to attest to the above information is $39.67 (0.5 hour x $79.33 

(mean hourly rate for physicians based on the May 2008 Bureau of Labor Statistics)). 

The total estimated annual cost burden for all EPs to attest is $17,746,121 (223,700 hours 

x $79.33). We invite public comments on the estimated percentages and the numbers of 

registered EPs that will attest to EHR technology used and Meaningful Use Set A 

objectives/measures in CY 2012 because such information would help us determine more 

accurately the burden on the EPs. 

Next, we will discuss the estimated burden for EP attestation for Meaningful Use 

Set B objectives/measures. We estimate it will take an EP 8 hours to gather information 

and attest to the Meaningful Use Set B objectives/measures. We estimated annual 

attestation burden hours in CY 2012 for all EPs for the Set B objectives and measures 
CMS-0033-P 365 

included in Table 33 is 3,579,200 (447,400 EPs x 8 hours). Therefore, the cost burden 

for an EP to attest to the above information is $ 634.64 per EP (8 hours x $79.33/hour 

(mean hourly rate for physicians based on the May 2008 Bureau of Labor Statistics) and 

$283,937,936 for EPs as a whole (3,579,200 hours x $79.33/hour (mean hourly rate for 

physicians based on the May 2008 Bureau of Labor Statistics). 

For “Report ambulatory quality measures to CMS or the States” as stated in 

§495.8(a)(2), we propose that in CY 2012, EPs must report, clinical quality information 

in the form and manner specified by CMS, electronically to CMS. We estimate that the 

reporting/submission of these data to CMS should not take more than 0.5 hour. The total 

annual burden hours for all EPs to report and submit the ambulatory quality measures are 

223,700 (447,400 EPs x 0.5 hour). We believe that an EP may assign a medical secretary 

to submit the specific ambulatory clinical quality measures to CMS or the States. 

Therefore, the cost burden for an EP to submit these clinical quality measures is $7.41 

(0.5 hour x $14.81 (mean hourly rate for medical secretaries based on the May 2008 

Bureau of Labor Statistics)). The total annual cost burden for all EPs to report the 

clinical quality measures is $3,312,997 (223,700 hours x $14.81 (mean hourly rate for 

medical secretaries based on the May 2008 Bureau of Labor Statistics)). 

 Similar to the requirements for EPs, we propose in §495.10(b)(1) that to 

demonstrate meaningful use for FY 2011 , an eligible hospital or CAH must attest, 

through a secure mechanism in a specified manner, to the following: (1) during the EHR 

reporting period, the eligible hospital or CAH used certified EHR technology and specify 

the technology used ; and (2) during the EHR reporting period specified by the eligible 

hospital or CAH, the eligible hospital or CAH satisfied each of the applicable objectives 
CMS-0033-P 366 

and associated measures under §495.6 (including quality measures). The eligible hospital 

or CAH must specify the EHR reporting period and provide the result of each applicable 

measure for all patients admitted to the eligible hospital during the EHR reporting period 

for which a selected measure is applicable. 

 We estimate that the certified EHR technology adopted by the eligible hospital or 

CAH will capture many of the objectives and associated measures. We estimate that it 

would take no more than 0.5 hour for an eligible hospital or CAH to attest that during the 

EHR reporting period, they used EHR technology , specify the technology used, and 

satisfied each of the applicable Meaningful Use objectives and associated measures listed 

in Table 33—Set A. Because generating this automated information requires the 

purchase of a certified EHR with the requisite technical functionality, reporting these 

measures will incur significant capital costs. 

Where reporting may require eligible hospitals or CAHs to manually gather the 

information necessary to report numerators and denominators or to take any other 

additional steps before attesting that the objective has been met, we have estimated that it 

would take 1 hour for an eligible hospital or CAH to gather that information and report 

the result. These measures are listed in Table 33-Set B. Alternatively, eligible hospitals 

or CAHs may choose to purchase EHRs equipped with additional functionality to enable 

more efficient reporting, in which case reporting burden may be less than an hour but the 

capital costs will be higher. We invite comments on what the incremental costs of such 

additional functionality may be and what the reporting burden using EHRs equipped with 

this functionality might be. 
CMS-0033-P 367 

First, we will discuss the burden for eligible hospitals and CAHs to attest to the 

technology used and the Meaningful Use Set A objectives/measures and hospital quality 

measures in FY 2011. We estimate that in FY 2011, there are about 5,011 Medicare and 

Medicaid eligible hospitals and CAHs that may be qualified to receive EHR incentive 

payment. We estimate that it will take no more than 1 hour for an eligible hospital or 

CAH to attest (0.5 hour to attest to the EHR technology used and Meaningful Use Set A 

objectives/measures, and 0.5 hour to attest to the hospital quality measures – a total of 1 

hour.) We estimate that there are about 5,011 Medicare and Medicaid hospitals 

(including 3,620 acute care hospitals, 1,302 critical access hospitals, 78 Medicaid 

children’s hospitals, and 11 Medicaid cancer hospitals). For burden estimate purposes, 

we estimate that 5,011 Medicare and Medicaid hospitals may attest (after registration) in 

FY 2011 to receive an EHR incentive payment. The total estimated annual attestation 

burden hours for all hospitals are 5,011 (5,011 hospitals and CAHs x 1 hour). We believe 

that an eligible hospital or CAH may assign an attorney to attest on their behalf. The cost 

burden for an eligible hospital or CAH to attest to the above information is $59.98 

(1 hour x $59.98 (mean hourly rate for attorneys based on the May 2008 Bureau of Labor 

Statistics)). The total estimated annual cost burden for all eligible hospitals and CAHs to 

attest is $300,560 (5,011 x $59.98). We invite public comments on the estimated 

percentages and the numbers of (registered) eligible hospitals and CAHs that will attest in 

FY 2011 because such information would help us determine more accurately the burden 

on the hospitals and CAHs. We also invite comments on the type of personnel or staff 

that would mostly likely attest on behalf of eligible hospitals and CAHs. 
CMS-0033-P 368 

Next, we will discuss the burden for eligible hospitals and CAHs to gather 

information and attest to Meaningful Use Set B objectives/measures for FY 2011. We 

estimate that it may take an eligible hospital and CAH 7 hours to comply with this 

requirement. As stated, we estimate there are about 5,011 eligible hospitals and CAHs 

that may attest to Meaningful Use Set B objectives/measures. Therefore, the total 

estimated annual attestation burden hours for all eligible hospitals and CAHs for the Set 

B objectives and measures included in Table 33 is 35,077 (5,011 hospitals and CAHs x 

7 hours). We estimate that the hospital or CAH may use an attorney to attest on their 

behalf. Therefore, the cost burden for an eligible hospital or CAH to attest to Meaningful 

Use Set B objectives/measures is $419.86 (7 hours x $59.98/hour (mean hourly rate for 

attorneys based on the May 2008 Bureau of Labor Statistics) and $2,103,918 for eligible 

hospitals and CAHs as a whole (35,077 hours x $59.98/hour (mean hourly rate for 

attorneys based on the May 2008 Bureau of Labor Statistics)), not including capital costs. 

To estimate capital costs, consistent with the sources cited in V.G.4, we assume 

that achieving meaningful use will require roughly a $5 million capital investment for the 

average hospital. If 5,011 hospitals adopt these EHRs, total capital costs prior to 

incentives would be roughly $25.1 billion. We also estimate that in 2011, $2.1 billion of 

Medicare incentive payments (the mid-point of the low and high estimates in Tables 39 

and 40) and $900 million of Medicaid incentive payments (the mid-point of the low and 

high estimates in Tables 45 and 46) would be provided to eligible hospitals and CAHs to 

help offset those costs. Therefore, we estimate that total net capital costs for hospitals in 

2011 would be $22.1 billion ($25.1 billion - $2.1 billion - $900 million). These capital 

costs would decrease over the course of the EHR incentive programs as additional 
CMS-0033-P 369 

incentives are provided. Therefore, in 2012, the total net capital costs for hospitals would 

be $19 billion (22.1 billion - $2.2 billion of Medicare incentives - $900 million of 

Medicaid incentives). Over the course of 2011 and 2012, the average net capital costs 

would be $20.6 billion. 

Similar to the requirements for EPs, we propose in §495.8(b)(2) that to 

demonstrate meaningful use in FY 2012 and subsequent years, an eligible hospital or 

CAH must attest, through a secure mechanism in a specified manner, to the following: 

(1) during the EHR reporting period, the eligible hospital or qualifying CAH used 

certified EHR technology and specify the technology used; and (2) during the EHR 

reporting period specified by the eligible hospital or CAH, the eligible hospital or CAH 

satisfied each of the applicable objectives and associated measures under §495.6. except 

§495.6(e)(2). The eligible hospital or CAH must specify the EHR reporting period and 

provide the result of each applicable measure for all patients admitted to the eligible 

hospital during the EHR reporting period for which a selected measure is applicable. We 

estimate that the certified EHR technology adopted by the eligible hospital or CAH will 

capture many of the objectives and associated measures. Therefore, we estimate that it 

would take no more than 0.5 hour for an eligible hospital or CAH to attest to the EHR 

technology used and objectives and associated measures listed in Table 33—Set A. 

Because generating this automated information requires the purchase of a certified EHR 

with the requisite technical functionality, reporting these measures will incur significant 

capital costs. We do not anticipate there is a significant growth in the number of 

hospitals or CAHs. We estimate that in FY 2012, the total burden attestation burden 

hours for hospitals and CAHs are 2,506 (5,011 hospitals and CAHs x 0.5 hour). We 
CMS-0033-P 370 

estimate that an eligible hospital or CAH may assign an attorney to attest on their behalf. 

The attestation burden for an eligible or CAH is $29.99 (0.5 hour x $59.98 (mean hourly 

rate for attorneys based on the May 2008 Bureau of Labor Statistics). The total cost 

burden for all hospitals and CAHs to attest to EHR technology used, and Meaningful Use 

Set A objectives/measures is $150,310 (2,506 hours x $59.98). We also invite comments 

on the type of personnel or staff that would mostly likely attest on the behalf of eligible 

hospitals and CAHs. 

Where reporting may require eligible hospitals or CAHs to manually gather the 

information necessary to report numerators and denominators or to take any other 

additional steps before attesting that the objective has been met, we have estimated that it 

would take 1 hour for the eligible hospitals or CAHs to gather that information and report 

the result for each of these measures or a total of 7 hours to comply with this requirement 

in FY 2012. These measures are listed in Table 33-Set B. Alternatively, eligible hospitals 

or CAHs may choose to purchase EHRs equipped with additional functionality to enable 

more efficient reporting, in which case reporting burden may be less than an hour but the 

capital costs will be higher. We invite comments on what the incremental costs of such 

additional functionality may be and what the reporting burden using EHRs equipped with 

this functionality might be. 

For burden estimate purposes, we estimate that there are 5,011 Medicare and 

Medicaid hospitals and CAHs that may attest to the above requirements in FY 2012. 

Therefore, the total estimated annual attestation burden hours for all eligible hospitals and 

CAHs for the Set B objectives and measures included in Table 33 are 35,077 (5,011 

hospitals and CAHs x 7 hours). We estimate that the hospital or CAH may use an 
CMS-0033-P 371 

attorney to attest on behalf of its organization. Therefore, the cost burden for an eligible 

hospital or CAH to attest to the above information is $ 419.86 (7 hours x $59.98/hour 

(mean hourly rate for attorneys based on the May 2008 Bureau of Labor Statistics)) and 

$2,103,918 for eligible hospitals and CAHs as a whole (35,077 hours x $59.98/hour 

(mean hourly rate for attorneys based on the May 2008 Bureau of Labor Statistics)), not 

including capital costs. 

We estimate the capital cost for 2012 is $20.6 billion which is the same as 2011, 

which was discussed earlier. 

Under §495.8, for “Report hospital quality measures to CMS or the States”, we 

propose that in FY 2012, eligible hospitals must report clinical quality measures through 

electronic submission from certified EHR technology. The reporting of these data to 

CMS or States should not take more than 0.5 hour. The total annual reporting burden 

hours for eligible hospitals and CAHs is 2,506 (5,011 hospitals and CAHs x 0.5 hour). 

We believe that an eligible hospital or CAH may assign a medical secretary to 

report/submit the hospital quality measures to CMS or the States. The reporting cost 

burden for an eligible hospital or CAH is $7.41 (0.5 hour x $14.81 (mean hourly rate for 

medical secretaries based on the May 2008 Bureau of Labor Statistics)). The total annual 

reporting cost burden for all eligible hospitals and CAHs is $37,113 (2,506 hours x 

$14.81(mean hourly rate for medical secretaries based on the May 2008 Bureau of Labor 

Statistics)). 
CMS-0033-P 372 

B. ICRs Regarding Participation Requirements for EPs, Eligible Hospitals, and CAHs 

(§495.10) 

Since the EHR incentive payment program is new, we do not have enough 

information to estimate the information collection requirements burden beyond the first 

payment year for an EP, eligible hospital, or CAH for this provision. Furthermore, the 

EPs, eligible hospitals, and CAHs can enroll any time during the first 5 years; therefore, it 

is difficult to predict with certainty the burden beyond the first payment year as the 

burden depends on the number of participants. Therefore, we provide a best estimate of 

what we believe the burden associated with this provision might be. 

Under §495.10 (a)(b)(c), we propose that in order for an EP, eligible hospital, or 

CAH to participate in the Medicare or Medicaid EHR incentive program, they must 

submit, in a manner specified by CMS, the following initial registration information in 

the first payment year: (1) name of the EP, eligible hospital or CAH (2) the National 

Provider Identifier (NPI); (3) business address and business phone ; (4) Taxpayer 

Identification Number (TIN) to which the EP wants the incentive payment made; and (5) 

and for an eligible hospital and CAH, their CMS Certification Number (CCN) and its 

TIN. We estimate that the initial burden associated with the above requirements would 

be the time required to submit the required registration information. 

We estimate that in FY 2011, there are 5,011 Medicare and Medicaid eligible 

hospitals, and CAHs that may be qualified to receive EHR incentive payment. Since we 

cannot predict how many eligible hospitals, and CAHs will participate in the EHR 

incentive payment program, we estimate that all 5,011 hospitals may register for the 

incentive program for burden estimate purposes. We estimate that it would take no more 
CMS-0033-P 373 

than 0.5 hour for an eligible hospital or CAH to register. We estimate the total annual 

burden hours for registration will be 2,506 (5,011 hospitals x 0.5 hour). Once the 

decision to participate in the incentive program is made, we believe eligible hospitals or 

CAHs may assign a medical secretary to submit the registration information. The cost 

burden for an eligible hospital or CAH to register is $7.41 (0.5 hour x $14.81 (mean 

hourly rate for medical secretaries based on the May 2008 Bureau of Labor Statistics)). 

We estimate that the total annual cost burden for eligible hospitals and CAHs to register 

is $37,106 (5,011 hospitals x 0.5 hour x $14.81) (mean hourly rate for medical secretaries 

based on the May 2008 Bureau of Labor Statistics)). We invite public comments on the 

estimated percentages or the number of eligible hospitals and CAHs that will register for 

the EHR incentive payment program in 2011 and subsequent years. Such information 

would help us determine more accurately the burden on the eligible hospitals and CAHs. 

We estimate that all 442,600 non-hospital-based Medicare, and Medicaid EPs 

may register in 2011 to receive an EHR incentive payment. We estimate that it would 

take no more than 0.5 hour to complete the registration. The total estimated annual 

registration burden hours for all EPs are 221,300 (442,600 EPs x 0.5 hour) in the first 

payment year. We cannot predict if an EP will register himself or herself or assign a 

medical secretary to do it on his or her behalf. Therefore, we are doing one high end 

burden estimate for an EP and one low end burden estimate for a medical secretary. The 

cost burden for an EP who chooses to register in the EHR incentive payment program 

himself or herself is $39.67 (0.5 hour x $79.33 (mean hourly rate for physicians based on 

the May 2008 Bureau of Labor Statistics)). The total estimated annual cost burden for all 

EPs who register for the EHR incentive payment program themselves is $17,555,729 
CMS-0033-P 374 

(221,300 hours x $79.33 (mean hourly rate for physicians based on the May 2008 Bureau 

of Labor Statistics)). Similarly, the cost burden for an EP who chooses to use medical 

secretary to register on their behalf is $7.41 (0.5 hour x $14.81 (mean hourly rate for 

medical secretaries based on the May 2008 Bureau of Labor Statistics)). The total 

estimated annual cost burden for all EPs who choose to use medical secretaries to register 

on their behalf is $3,277,453 (221,300 hours x $14.81 (mean hourly rate for medical 

secretaries based on the May 2008 Bureau of Labor Statistics)). We invite comments on 

whether we should use the higher cost burden estimate ($17,555,729) or the lower cost 

burden estimate ($3,277,453). We only use the average of the two estimates in the tally 

in Table 34. We invite public comments on the estimated percentages or the numbers of 

EPs that will register in 2011 and subsequent years and this information would help us 

determine more accurately the burden on EPs affected by this proposed rule. 

In §495.10(d) , we propose that if there are subsequent changes in the initial 

registration information, the EP is responsible for providing us with updated changes in 

the manner specified by us. Based on our experience with provider enrollment, we 

estimate that about 11 percent of the Medicare and Medicaid EPs may need to update 

their registration information during a one-year period. We estimate that EPs in this 

11 percent (447,400 EPs (estimated number of EPs in CY 2012) x 11 percent = 49,214 

EPs) may only have one occasion that requires updating of information in a given year. 

For each occasion, we estimate that it would take no more than 0.5 hour to notify us of 

the changes. With that, we estimate that the annual total burden hours for 49,214 EPs to 

update changes are 24,607 (49,214 EPs x 0.5 hour). However, we cannot predict if the 

EP will update the registration information himself or herself or assign a medical 
CMS-0033-P 375 

secretary to do it. Therefore, we are doing two burden estimates for an EP and his/her 

medical secretary. The cost burden for an EP who chooses to update the registration 

information himself or herself is $39.67 (0.5 hour x $79.33 (mean hourly rate for 

physicians based on the May 2008 Bureau of Labor Statistics)). The total estimated 

annual cost burden for all 49,214 EPs to update registration information themselves is 

$1,952,073 (49,214 EPs x 0.5 hour x $79.33 (mean hourly rate for physicians based on 

the May 2008 Bureau of Labor Statistics)). Similarly, the cost burden for the EP who 

chooses to use a medical secretary to update registration information on their behalf is 

$7.41 (0.5 hour x $14.81 (mean hourly rate for medical secretaries based on the May 

2008 Bureau of Labor Statistics)). The total estimated annual cost burden for 48,686 EPs 

who choose to use medical secretaries to update registration information on their behalf is 

$364,429 (49,214 EPs x 0.5 hour x $14.81 (mean hourly rate for medical secretaries 

based on the May 2008 Bureau of Labor Statistics)). We only use the average of the two 

estimates in the tally in Table 34. We invite comments on whether we should use the 

higher cost burden estimate ($1,952,073) or the lower cost burden estimate ($364,429). 

We also invite public comments on the estimated percentages and the numbers of EPs 

that will need to submit subsequent registration changes to us over the course of the EHR 

incentive payment program and such information would help us determine more 

accurately the burden on the EPs. 

Similarly, for hospitals and CAHs, we propose that if there are subsequent changes in 

the initial registration information, the eligible hospital or CAH is responsible for 

providing us with updated information in the manner specified by us. Based on our 

experience with provider enrollment, we estimate that about 8 percent of the Medicare 
CMS-0033-P 376 

and Medicaid eligible hospitals and CAH (5,011 hospitals and CAHs x 8 percent = 401 

hospitals) may need to update their registration information during a one-year period. 

We estimate that eligible hospitals in this 8 percent pool may only have 1 occasion that 

requires updating of registration information in a given year. For each occasion, we 

estimate that it would take no more than 0.5 hour to notify us of the changes. With that, 

we estimate that the total annual burden hours for eligible hospitals and CAHs to update 

CMS of registration changes are 201 (401 hospitals and CAHs x 0.5 hour). We believe 

that eligible hospitals or CAHs may assign a medical secretary to update the registration 

information. We estimate the total annual cost burden for eligible hospitals and CAHs to 

update CMS of registration changes is $2,969 (401 hospitals and CAHs x 0.5 hour x 

$14.81) (mean hourly rate for medical secretaries based on the May 2008 Bureau of 

Labor Statistics)). We invite public comments on the estimated percentages and the 

numbers of eligible hospitals and CAHs that will submit subsequent registration changes 

to us over the course of the EHR incentive payment program and this information would 

help us determine more accurately the burden on the eligible hospitals and CAHs. 

In §495.10 (e)(1), we propose that for participation in the EHR incentive payment 

programs, prior to the first payment year, an EP must notify us in a specified manner as 

to whether he or she elects to participate in the Medicare or Medicaid EHR incentive 

program. We estimate that in 2011, there are about 80,900 dual Medicare/Medicaid EPs 

who may make the initial Medicare and Medicaid program selection. The standard full 

amount of Medicaid incentive payments that an EP could receive is larger than the 

standard full amount for the Medicare EP incentive payments. Therefore, for burden 

estimate purposes, we believe that all of the 80,900 dual Medicare/Medicaid EPs may 
CMS-0033-P 377 

make the Medicaid program selection for burden estimate purposes. We estimate that it 

would take no more than 0.5 hour to submit the initial Medicare or Medicaid selection 

notification to us. We cannot predict if the EP will submit the notification to CMS 

himself or herself or assign a secretary to do it. Therefore, we are doing one high end 

estimate and one low end burden estimate for an EP and a medical secretary respectively. 

The total estimated burden hours for all the dual Medicare/Medicaid EPs to notify CMS 

of program selection are 40,450 (80,900 EPs x 0.5 hour) in the first payment year. The 

cost burden for these EPs who notify CMS of Medicare or Medicaid program selection 

himself or herself is $39.67 (0.5 hour x $79.33 (mean hourly rate for physicians based on 

the May 2008 Bureau of Labor Statistics)). The total estimated annual cost burden for all 

dual Medicare/Medicaid EPs to notify CMS of program selection themselves is 

$3,208,899 (40,450 hours x $79.33). Similarly, the cost burden for an EP who chooses to 

use medical secretary to notify CMS of program selection is $7.41 (0.5 hour x $14.81 

(mean hourly rate for medical secretaries based on the May 2008 Bureau of Labor 

Statistics)). The total estimated annual cost burden for all dual Medicare/Medicaid EPs 

who use medical secretaries to notify CMS of program selection is $599,065 (40,450 

hours x $14.81 (mean hourly rate for medical secretaries based on the May 2008 Bureau 

of Labor Statistics)). We only use the average of the two estimates in the tally in Table 

34. We invite comments on whether we should use the higher cost burden estimate 

($3,208,899) or the lower cost burden estimate ($599,065). We also invite public 

comments on the estimated percentages and the number of dual Medicare/Medicaid EPs 

that will submit initial Medicare or Medicaid program selection in 2011, 2012, 2013, or 
CMS-0033-P 378 

2014 and this information would help us determine more accurately the burden on the 

EPs affected by the proposed rule. 

Under §495.10(e)(2) , we propose that EPs may switch from Medicare to 

Medicaid EHR incentive program or vice versa one time, and only for payment year 2014 

or before . Since we have no knowledge of how many EPs will make the subsequent 

changes in program selection, we assume that all 81,700 (estimated number of dual 

Medicare/Medicaid EPs for CY 2012) dual Medicare/Medicaid EPs may make 

subsequent program selection changes for burden estimate purposes. We estimate that it 

would take no more than 0.5 hour to submit the Medicare/Medicaid selection change to 

us. We cannot predict if the EP will submit the change to CMS himself or herself or 

assign a secretary to do it. Therefore, we are doing one high end burden estimate for an 

EP and one low end estimate for a medical secretary. The total estimated burden hours 

for all dual Medicare/Medicaid EPs to notify CMS of program changes are 40,850 

(81,700 EPs x 0.5 hour) in a given year. The cost burden for the EP who choose to notify 

CMS of Medicare/Medicaid program change himself or herself is $39.67 (0.5 hour x 

$79.33 (mean hourly rate for physicians based on the May 2008 Bureau of Labor 

Statistics)). The total estimated annual cost burden for all dual Medicare/Medicaid EPs 

to notify CMS of program changes themselves is $3,240,630 (40,850 hours x $79.33 

(mean hourly rate for physicians based on the May 2008 Bureau of Labor Statistics)).). 

Similarly, the cost burden for an EP who chooses to use a medical secretary to notify 

CMS of program changes is $7.41 (0.5 hour x $14.81 (mean hourly rate for medical 

secretaries based on the May 2008 Bureau of Labor Statistics)). The total estimated 

annual cost burden for all dual Medicare/Medicaid EPs who use medical secretaries to 
CMS-0033-P 379 

notify CMS of program changes is $604,989 (40,850 hours x $14.81 (mean hourly rate 

for medical secretaries based on the May 2008 Bureau of Labor Statistics)). We invite 

comments on whether we should use the higher cost burden estimate ($3,240,630) or the 

lower cost burden estimate ($604,989). We only use the average of the two estimates in 

the tally in Table 34. We also invite public comments on the estimated percentages and 

the numbers of dual Medicare/Medicaid EPs that will submit initial Medicare or 

Medicaid program changes in 2012, 2013, or 2014 and this information would help us 

determine more accurately the burden on the EPs affected by the proposed rule. 

C. ICRs Regarding Identification of Qualifying MA Organizations, MA-EPs and MAaffiliated Eligible Hospitals (§495.202)

Proposed §495.202(a)(1) states that beginning with bids due in June 2010 (for 

plan year 2011), MA organizations seeking reimbursement for qualifying MA EPs and 

qualifying MA-affiliated eligible hospitals under the MA EHR incentive program are 

required to identify themselves to CMS in a form an manner specified by CMS, as part of 

submissions of initial bids under section 1854(a)(1)(A) of the Act. The burden associated 

with this requirement is providing a list of MA EPs and qualifying MA-affiliated eligible 

hospitals who may potentially seek for EHR incentive payments. However, for EPs, we 

believe there is no extra burden incur from this requirements as MA organizations can 

identify the same lists of names of EPs as they used to satisfy the collection requirements 

for §495.204(b)(2) and (5). In other words, when identifying amounts of compensation 

per §495.204(b)(2) and (5), qualifying MA organizations will be simultaneously 

identifying EPs under this requirement. For hospitals, we estimate that it may take no 

more than 0.25 hour for a MA organization to identify their MA-affiliated hospitals to 
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CMS. There are 29 MA-affiliated eligible hospitals and 12 MA organizations or an 

average of 2.42 eligible hospitals for each MA organization. The total burden hours for 

all MA organizations to identify their affiliated hospitals to CMS are 3 hours. We believe 

a MA organization may use a billing clerk to identify the eligible hospital to us. The cost 

burden for a MA organization is $3.86 (0.25 hour x $15.44 (mean hourly rate for billing 

clerks based on the May 2008 Bureau of Labor Statistics)). The total cost burden for all 

MA organizations to identify their eligible hospitals to us is $46.32 ($3.86 x 12 MA 

organizations). 

We proposed in §495.202(a)(3) that qualifying MA organizations offering MA 

plan types other than HMOs are required to attest to the fact that they meet the definition 

of HMO in 42 U.S.C. 300gg-91(b)(3)-section 2791(b)(3) of the PHS Act. There is 

minimal burden associated with this requirement as qualifying MA organizations 

sponsoring MA coordinated care plans, like PPOs, PSOs, and RPPOs, are not expected to 

employ physicians that meet the definition of MA EP in section 1853(1)(2) of the Act 

and therefore, we do not expect any to need to attest. Similarly, we do not expect any 

MA organizations that offer other plan types other than coordinated care plans to request 

need to attest to their status for similar reasons. 

In §495.202(a)(4), we propose requiring that, beginning with bids due in June 

2014 (for plan year 2015), all MA organizations with potentially qualifying MA EPs or 

potentially qualifying MA-affiliated eligible hospitals under the MA EHR incentive 

program to identify themselves to CMS in a form and manner specified by CMS, as part 

of submissions of initial bids under section 1854(a)(1)(A) of the Act. We cannot estimate 

the collection burden for this requirement as the timeframe goes beyond the scope of the 
CMS-0033-P 381 

effective date of the proposed information collection period (three years from the 

effective date of the final rule). 

In §495.202(b)(1), we propose that a qualifying MA organization, as part of its 

initial bid starting with plan year 2011, must make preliminary identification of 

potentially qualifying MA EPs and potentially qualifying MA-affiliated eligible hospitals 

for which the organization is seeking incentive payments. The burden for this 

requirement is already addressed in §495.202 (a)(1) and §495.204(b)(2)(5) . In 

§495.202(b)(2), we propose that MA-affiliated organizations must provide and attest to 

the following information on their MA-affiliated EPs and eligible hospitals: (A)name of 

the EP or eligible hospital; (B) address of the EP or eligible hospital; and (C) NPI. We 

believe that it is customary and business practices of an MA organization to keep the 

information in (A), (B), and (C) on file. The burden for this requirement is the time it 

takes to attest to CMS that the MA EPs or MA-affiliated eligible hospitals meet the 

eligibility criteria. We estimate it should not take more than 0.5 hour for a MA 

organization to comply with this attestation requirement. The total burden hours for all 

MA organizations to attest are 6 hours. We believe that MA organizations may use an 

attorney to attest on their behalf. The cost burden for a MA organization to attest is 

$29.99 (0.5 hour x $59.98 (mean hourly rate for attorneys based on the May 2008 Bureau 

of Labor Statistics)). The total cost burden for all MA organizations to attest is $359.88 

($29.99 x 12 MA organizations). We invite comments on the type of personnel who will 

mostly likely attest on behalf of MA organizations. 

Proposed §495.202(b)(4) states that all qualifying MA organizations, as part of 

their initial bids in June 2014 for plan year 2015, must identify potentially qualifying MA 
CMS-0033-P 382 

EPs and potentially qualifying MA-affiliated eligible hospitals. An attestation that each 

professional or hospital either meets or does not meet the eligibility criteria must be 

included as part of the identification submission. We cannot estimate the collection 

burden for this requirement as the timeframe goes beyond the scope of the effective date 

of the proposed information collection period (3 years from the effective date of the final 

rule). 

D. ICRs Regarding Incentive Payments to Qualifying MA Organizations for MA-EPs 

and Hospitals (§495.204)

 Under §495.204(b)(2), we propose that a qualifying MAO would need to report to 

CMS within 30 days of the close of the calendar year, the aggregate annual amount of 

revenue attributable to providing services that would otherwise be covered as 

professional services under Part B received by each qualifying MA EP for enrollees in 

MA plans of the MA organization in the payment year. Since the tracking of salaries or 

compensation for MA EPs constitutes usual and customary business practices, the only 

burden associated with this requirement is the time required to submit the aggregated 

annual amount of revenue received by each qualifying MA EP for enrollees in MA plans 

of the MA organization. We estimate that there are 12 MA organizations and 28,000 MA 

EPs, or an average of 2,333 (28,000 EPs /12 MA organizations) MA EPs affiliated with 

each qualifying MA organization. We believe that it will take a MA organization 40 

hours annually to report the required aggregate revenue data for all its salaried MA EPs, 

given that all the data are readily available. The total estimated annual burden hours for 

all MA organizations to comply with this requirement is 480 (12 MA organizations x 40 

hours). We believe MA organizations may involve a billing clerk to report the required 
CMS-0033-P 383 

data to CMS. We estimate the cost burden for a MA organization to report is $617.6 (40 

hours x $15.44 (mean hourly rate for billing clerk based on the May 2008 Bureau of 

Labor Statistics)). We estimate the total annual cost burden for all MA organizations to 

comply with this requirement is $7,411 (12 MA organizations x $617.6). 

 Under §495.204(b)(4), we propose that for qualifying MA EPs who are 

compensated on a salaried basis, CMS requires the qualifying MA organization to 

develop a methodology for estimating the portion of each qualifying MA EP’s salary 

attributable to providing services that would otherwise be covered under Part B to MA 

plan enrollees of the MA organization. The methodology: (i) must be approved by CMS; 

and (ii) may include an additional amount related to overhead, where appropriate, 

estimated to account for the MA-enrollee related Part B practice costs of the salaried 

qualifying MA EP. We estimate that it may take a MA organization one and a half hour 

to develop the methodology. We estimate that there are about two MA organizations that 

may have the need to develop the methodology. The total burden hours for the MA 

organizations to develop the methodology are 3 hours (1.5 hours x 2 MA organizations). 

A MA organization may use an accountant to develop the methodology. The cost burden 

for a MA organization is $47.48 (1.5 hours x $31.65 (mean hourly rate for accountants 

based on the May 2008 Bureau of Labor Statistics)). The total cost burden for the MA 

organizations to develop the methodology is $94.95 ($47.48 x 2 MA organizations). 

In §495.204(b)(5), we propose that for qualifying MA EPs who are not salaried, 

qualifying MA organizations would need to obtain, and submit to CMS, attestations from 

such qualifying MA EPs as to the amount of compensation received by such EPs for MA 

plan enrollees of the MA organization. We estimate that about 10 percent of the MA EPs 
CMS-0033-P 384 

(28,000 EPs x 10 percent = 2,800 EPs) are not salaried and that is an average of 233 

(2,800 EPs /12 MA organizations = 233 EPs) non-salaried EPs in each MA 

organization. We estimate that it may take up to 0.25 hour to electronically obtain and 

compile each attestation into a document for transmission to CMS. The total burden 

hours for a MA organization are 58.3 (0.25 hour x 233 EPs). The total estimated burden 

hours for all MA organizations are 699 (58.3 x 12 MA organizations). We believe an 

MA organization may involve a billing clerk to compile and submit the compensation 

information from such attestations. We estimate the cost burden for a MA organizations 

to comply with this requirement is approximately $899.38 (0.25 hour x 233 EPs x $15.44 

(mean hourly rate for billing clerk based on the May 2008 Bureau of Labor 

Statistics)). We estimate the total annual cost burden for all MA organizations to comply 

with this requirement is $10,792.56 (58.3 hours x 12 organizations x $15.44). 

E. ICRs Regarding Meaningful User Attestation (§495.210) 

Under §495.210(b), we propose requiring qualifying MA organizations to attest 

within 30 days after the close of a calendar year whether each qualifying MA EP is a 

meaningful EHR user. We anticipate that the adopted EHR technology will capture the 

data for determination whether each qualifying MA EP is a meaningful EHR user. The 

burden associated with this requirement is the time necessary to attest to the required 

information. We estimate that there are 12 MA organizations and 28,000 MA EPs, or an 

average of 2,333 MA EPs affiliated with each qualifying MA organization. We believe 

that it will take a MA organization about 40 hours annually to attest whether each 

qualifying MA EP is a meaningful user, given that all the data are captured in the 

certified EHR technology. The total estimated annual burden hours for all MA 
CMS-0033-P 385 

organizations to comply with this requirement is 480 (12 MA organizations x 40 hours). 

We believe MA organizations may involve an attorney to attest on their behalf. We 

estimate the cost burden for a MA organization to attest is $2,399 (40 hours x $59.98 

(mean hourly rate for attorneys based on the May 2008 Bureau of Labor Statistics)). We 

estimate the total annual cost burden for all MA organizations to comply with attestation 

for MA EPs is $28,790 (12 MA organizations x $2,399). We invite comments on the type 

of personnel, who will mostly attest on behalf of MA organizations. 

§495.204(c)(2) states that to the extent data are available, qualifying MA 

organizations must receive hospital incentive payments through their affiliated hospitals 

under the Medicare FFS EHR hospital incentive program, rather than through the MA 

EHR hospital incentive program. Under §495.210(c), we proposed that qualifying MA 

organizations be required to attest within 30 days after the close of a calendar year 

whether each qualifying MA-affiliated eligible hospital is a meaningful EHR user. As 

stated in the preamble, the EHR incentive payments for Medicare FFS and MA-affiliated 

hospitals are treated the same as all Medicare-certified MA affiliated hospitals and they 

will attest like other Medicare FFS hospitals. This means that §495.210(c) only applies 

to a MA-affiliated hospital that is not Medicare certified and such type of hospitals do not 

exist currently. We do not expect there to be any MA-affiliated hospitals that will not be 

covered under the Medicare FFS EHR hospital incentive program because section 

1852(a)(1)(A) of the Act requires MA organizations to provide Part A inpatient services 

solely through providers that meet applicable requirements of the Medicare program. We 

have already address the attestation burden on hospitals, including MA-affiliated 

hospitals under §495.10 (b)(2)(i)(ii). 
CMS-0033-P 386 

F. ICRs Regarding Establishing Patient Volume (§495.306) 

Proposed §495.306(a) states that to establish patient volume, a Medicaid provider 

must annually meet one of the requirements contained in §495.306(a)(1). Proposed 

§495.306(a)(1)(i) states that except as specified in paragraph (a)(1)(ii) of this section, a 

Medicaid professional must attest that a minimum of 30 percent of their patient 

encounters over any continuous 90-day period in the most recent calendar year was 

covered by Medicaid. Proposed §495.306(a)(1)(ii)(A) states that a pediatrician must 

attest that a minimum of 20 percent of his or her patient encounters over any continuous 

90-day period in the most recent calendar year was covered by Medicaid. Proposed 

§495.306(a)(1)(ii)(B) states that a Medicaid professional practicing predominantly in a 

FQHC or RHC must attest that a minimum of 30 percent of his or her patient encounters 

over any continuous 90-day period in the most recent calendar year was with needy 

individuals as defined in §495.302. Proposed §495.306(a)(2) states that an acute care 

hospital must attest that a minimum of 10 percent of all patient encounters over any 

continuous 90-day period in the most recent calendar year was covered by Medicaid. 

The burden associated with the requirements in this section is the time and effort 

necessary to submit the information to CMS. In each instance, we estimate that it will 

take no longer than 0.5 hour to submit the necessary information to CMS. For proposed 

§495.306(a)(1)(i) through (ii), we estimate that 119,000 entities will submit the required 

information. Similarly, we estimate the total annual burden to be 59,500 hours in 

both§495.306(a)(1)(i) and §495.306(a)(1)(ii). The total labor cost associated with the 

requirement in §495.306(a)(1)(i) is $4,720,135. The total labor cost associated with the 

requirement in §495.306(a)(1)(ii) is $4,720,135. We reached these costs estimates since 
CMS-0033-P 387 

it will be important for physicians (rather than staff assistants) to establish patient volume 

at $79.33 (mean hourly rate for physicians based on the May 2008 Bureau of Labor 

Statistics)). . 

The burden associated with the requirements in proposed §495.306(a)(1)(ii)(B) 

and §495.306(a)(2) is the is the time and effort necessary to submit the information to 

CMS. In each instance, we estimate that it will take no longer than 0.5 hour to submit the 

necessary information to CMS. For proposed §495.306(a)(1)(ii)(B) and §495.306(a)(2), 

we estimate that 3,361 entities will submit the required information. Similarly, we 

estimate the total annual burden to be 1,815.50 hours in both§495.306(a)(1)(ii)(B) and 

§495.306(a)(2). The total labor cost associated with the requirement in 

§495.306(a)(1)(ii)(B) is $144,024. This cost burden is based on the physician 

establishing patient volume at $79.33 (mean hourly rate for physicians based on the May 

2008 Bureau of Labor Statistics)). The total labor cost associated with the requirement in 

§495.306(a)(2) is $25,617. This cost burden is based on a secretary reporting patient 

volume on behalf of the acute care hospital at $14.11 (mean hourly rate for secretaries 

based on the May 2008 Bureau of Labor Statistics)). 

G. ICRs Regarding Process for Payments (§495.312)

Proposed §495.312(b) states that in order to receive a payment under this part, a 

provider must report the required data under this subpart within the EHR reporting period 

described in §495.6. The data required is the information necessary to document that the 

provider is a meaningful user or an adopter, implementer, or upgrader of certified EHR 

technology and the data reported to the single provider election repository. The burden 

associated with this requirement is the time and effort necessary to report the required 
CMS-0033-P 388 

data to States during the EHR reporting period. This burden is accounted for in our 

burden discussions for sections A and B of the information collection section, §495.10 

and §495.12, respectively. 

H. ICRs Regarding Activities Required to Receive an Incentive Payment (§495.314)

Proposed §495.314(a)(1) states that in the first payment year, to receive an 

incentive payment, the Medicaid EP or eligible hospital must meet one of the following 

criteria. The Medicaid EP or eligible hospital must demonstrate that during the EHR 

reporting period for a payment year, it has adopted, implemented, or upgraded certified 

EHR technology, as defined in §495.302; or, the Medicaid EP or eligible hospital must 

demonstrate that during the EHR reporting period for a payment year it is a meaningful 

user of certified EHR technology as defined in §495.6. 

The burden associated with the requirements in proposed §495.314(a)(1) is the 

time and effort necessary for a Medicaid EP or eligible hospital to demonstrate that it 

meets one of the criteria in §495.314(a)(1)(i) through (ii). We already accounted for this 

burden in the earlier discussion of the burden associated with §495.10. 

Proposed §495.314(a)(2) states that a provider may notify the State of its 

nonbinding intention to participate in the incentives program prior to having fulfilled all 

of the eligibility criteria. This requirement constitutes a third-party disclosure. The 

burden associated with this requirement is the time and effort necessary for a provider to 

send notification to the State. We estimate that this burden will be the same burden 

associated with §495.12 as stated above, since the information necessary to notify the 

State of the providers non-binding intention to participate in the program could be the 
CMS-0033-P 389 

same information as submitted by those providers that have committed to participating in 

the program, that is, the National Provider Identifier, the tax identification number, etc. 

Proposed §495.314(b)(1) states that in the second, third, fourth, fifth, and sixth 

payment years, to receive an incentive payment, the Medicaid EP or eligible hospital 

must demonstrate that during the EHR reporting period for the applicable payment year, 

it is a meaningful user of certified EHR technology, as defined in §495.6. The burden 

associated with this requirement is the time and effort necessary for a Medicaid EP or 

eligible hospital to demonstrate that it is a meaningful user of certified EHR technology. 

We discussed the burden associated with this requirement in our discussion of the burden 

associated with §495.10. 

I. ICRs Regarding State Monitoring and Reporting Regarding Activities Required to 

Receive an Incentive Payment (§495.316)

Proposed §495.316(a) would require States to be responsible for tracking and 

verifying the activities necessary for a Medicaid EP or eligible hospital to receive an 

incentive payment for each payment year, as described in §495.314. Burden is calculated 

for each State's process for the administration of the Medicaid incentive payments, 

including tracking of attestations and oversight, and the process for approving, 

processing, and making timely payments. 

 We estimate that there will be approximately 50 States, the District of Columbia, 

and 5 Territories per year requesting reimbursement for the administration of and paying 

of Medicaid incentive payments to providers for the meaningful use of electronic health 

record systems. For States to collect and submit the information required, we estimate it 

will take 5 hours per State. The estimated annual burden for States associated with the 
CMS-0033-P 390 

aforementioned submission requirements is 280 hours (56 States-Territories x 5.0 

hours/State-Territory). The cost burden was estimated based on an employee contracting 

with the State Agency. The burden associated with §495.316 is already in the OMB 

approval process. We announced the information collection in a Federal Register notice 

that published on September 11, 2009 (74 FR 467330). 

J. ICRs Regarding State Responsibilities for Receiving FFP (§495.318)

Proposed §495.318 states that in order to be provided FFP under section 

1903(a)(3)(F) of the Act, a State must demonstrate to the satisfaction of the Department, 

that the State is conducting the activities listed at §495.318(a) through (c). This burden is 

the same as that listed above in the burden discussion for §495.316. 

K. ICRs Regarding Prior Approval Conditions (§495.324)

Proposed §495.324(a) would require a State to obtain prior written approval from 

the Department as specified in paragraph (b) of this section, when the State plans to 

initiate planning and implementation activities in support of Medicaid provider incentive 

payments encouraging the adoption and use of certified EHR technology with proposed 

Federal financial participation (FFP). Specifically, proposed §495.324(b) states that to 

receive 90 percent match, each State must receive prior approval for all of the 

requirements listed in §495.324(b)(1) through (3). 

Proposed §495.324(c) would require a State to obtain prior written approval from 

the Department of its justification for a sole source acquisition, when it plans to acquire 

non-competitively from a nongovernmental source HIT equipment or services, with 

proposed FFP under this subpart if the total State and Federal acquisition cost is more 

than $100,000. Burden must be calculated for State Medicaid Agencies to submit the 
CMS-0033-P 391 

planning and implementation documents and the SMHP to CMS including, among other 

things, an alternative approach to the established timeframe for measuring patient 

volume, the process for verifying eligibility, annual reports specifying provider adoption, 

implementation, and/or upgrading of certified EHR technology activities and payments, 

proposed additional quality measures, and the data supporting the adoption, 

implementation, or upgrading and meaningful use of certified EHR technology. This 

burden is the same as that listed above in the burden discussion for §495.316. 

L. ICRs Regarding Termination of Federal Financial Participation (FFP) for Failure to 

Provide Access to Information (§495.330)

Proposed §495.330(a) states that the Department terminates FFP at any time if 

the Medicaid agency fails to provide State and Federal representatives with full access to 

records relating to HIT planning and implementation efforts, and the systems used to 

interoperate with electronic HIT, including on-site inspection. Proposed §495.330(b) 

states that the Department may request such access at any time to determine whether the 

conditions in this subpart are being met. The burden associated with the requirements in 

this section is the time and effort necessary to make the information available to the 

Department upon request so it can monitor compliance. The Department estimates that it 

will make 1 request per State/Territory per year for information and that it will take each 

State 5 hours to compile and furnish the information. We estimate that there will be 

approximately 50 States, the District of Columbia, and 5 Territories per year submitting 

this information. For States to collect and submit the information required, we estimate it 

will take 5 hours per State. The estimated annual burden for States associated with the 

aforementioned submission requirements is 280 hours 
CMS-0033-P 392 

(56 States-Territories x 5.0 hours/State-Territory). 

The annual cost burden for a State employee to provide the above information is 

$9,904 (280 hours x $35.37 (mean hourly rate for a management analyst based on the 

May 2008 Bureau of Labor Statistics)). We believe that it is possible that a secretary 

may compile State information and provide the information to the Department. In that 

case the annual cost burden for the secretary to provide this information is $3,951 

(280 hours x $14.11 (mean hourly rate for secretaries based on the May 2008 Bureau of 

Labor Statistics)). 

M. ICRs Regarding State Medicaid Agency and Medicaid EP and Hospital Activities 

(§495.332 through §495.344)

The burden associated with this section is the time and effort associated with 

completing the single provider election repository and each State's process for the 

administration of the Medicaid incentive payments, including tracking of attestations and 

oversight; the submission of the State Medicaid HIT Plan and the additional planning and 

implementation documents; enrollment or reenrollment of providers, and collection and 

submission of the data for adopting, implementing, or upgrading and meaningful use of 

certified EHR technology. This burden is the same as that listed above in the burden 

discussion for §495.316. 

N. ICRs Regarding Access to Systems and Records (§495.346)

Proposed §495.346 states that the State agency must allow the Department access 

to all records and systems operated by the State in support of this program, including cost 

records associated with approved administrative funding and incentive payments to 

Medicaid providers. State records related to contractors employed for the purpose of 
CMS-0033-P 393 

assisting with implementation or oversight activities or providing assistance, at such 

intervals as are deemed necessary by the Department to determine whether the conditions 

for approval are being met and to determine the efficiency, economy, and effectiveness of 

the program. 

 This section imposes both recordkeeping and reporting requirements. The burden 

associated with this requirement is the time and effort necessary for a State to both 

maintain records and to make them available to the Department upon request. The 

Department believes that the burden associated with maintaining the records is exempt 

under 5 CFR 1320.3(b)(2) as this burden is part of a usual and customary business 

practice; the time, effort, and financial resources necessary to comply with a collection of 

information that would be incurred by persons in the normal course of their activities (for 

example, in compiling and maintaining business records) will be excluded from the 

‘‘burden’’ if the agency demonstrates that the reporting, recordkeeping, or disclosure 

activities needed to comply are usual and customary. 

However, there is burden associated with making the information available to the 

Department upon request. This burden is described in the burden discussion for 

§495.330. 

O. ICRs Regarding Procurement Standards (§495.348)

 Proposed §495.348 (c) states that a grantee must maintain written standards of 

conduct governing the performance of its employees engaged in the award and 

administration of contracts. The burden associated with this requirement is the time and 

effort necessary for a grantee to develop and maintain written standards of conduct. We 

estimate that it will take each of the 56 grantees 0.5 hour to develop and maintain 
CMS-0033-P 394 

standards of conduct. The total estimated annual burden is 28 hours (56 grantees x 0.5 

hours). The annual cost burden for a grantee to develop and maintain standards of 

conduct is $990 (28 hours x $35.37 (mean hourly rate for a management analyst based on 

the May 2008 Bureau of Labor Statistics)). 

 Proposed §495.348(e) would require that all grantees establish written 

procurement procedures. At a minimum, the standards must provide for the information 

listed in §495.348(e)(1) through (13). The burden associated with this requirement is the 

time and effort necessary for a grantee to develop and maintain written procurement 

procedures. We estimate that it will take each of the 56 grantees 0.5 hour to develop and 

maintain written procurement procedures. The total estimated annual burden is 28 hours 

(56 grantees x 0.5 hours).The annual cost burden for a grantee to develop and maintain 

written procurement procedures is $990 (28 hours x $35.37 (mean hourly rate for a 

management analyst based on the May 2008 Bureau of Labor Statistics)). 

 Proposed §495.348(f) imposes a recordkeeping requirements. This section states 

that a system for contract administration must be maintained to ensure contractor 

performance with the terms, conditions and specifications of the contract and to ensure 

adequate and timely follow up on all purchases. The burden associated with this 

requirement is the time and effort necessary to develop and maintain a system for 

contract administration. We estimate that it will take each of the 56 grantees 5 hours to 

develop and maintain a system for contract administration. The total estimated annual 

burden is 280 hours (56 grantees x 5 hours). The annual cost burden for a grantee to 

develop and maintain a system for contract administration is $9904 (280 hours x $35.37 
CMS-0033-P 395 

(mean hourly rate for a management analyst based on the May 2008 Bureau of Labor 

Statistics)). 

P. ICRs Regarding State Medicaid Agency Attestations (§495.350)

Proposed §495.350 would require States to provide assurances to the Department 

that amounts received with respect to sums expended that are attributable to payments to 

a Medicaid provider for the adoption of EHR are paid directly to such provider, or to an 

employer or facility to which such provider has assigned payments, without any 

deduction or rebate. The burden associated with this requirement is the time and effort 

necessary for a State to verify that the sums expended are attributable to payments to a 

Medicaid provider for the adoption of EHR are paid directly to such provider, or to an 

employer or facility to which such provider has assigned payments, without any 

deduction or rebate. Additionally, there is burden associated with submitting an 

attestation to the Department to that effect. The estimated burden associated with these 

requirements is 0.5 hour to verify the information and 0.5 hour to submit the attestation to 

the Department, for a total of 1 hour. We estimate that there will be approximately 50 

States, the District of Columbia and 5 Territories per year verifying this information and 

submitting attestations to the Department. The estimated annual burden for States 

associated with the aforementioned submission requirements is 56 hours (56 StatesTerritories x 1 hours State-Territory). The annual cost burden for a State employee to 

provide the above information is $1,981 (56 hours x $35.37 (mean hourly rate for a 

management analyst based on the May 2008 Bureau of Labor Statistics)). We believe 

that it is possible that a secretary may compile State information and provide the 

information to the Department. In that case the annual cost burden for the secretary to 
CMS-0033-P 396 

provide this information is $790 (56 hours x $14.11 (mean hourly rate for secretaries 

based on the May 2008 Bureau of Labor Statistics)). 

Q. ICRs Regarding Reporting Requirements (§495.352)

Proposed §495.352 would require each State to submit to the Department on a 

quarterly basis a progress report documenting specific implementation and oversight 

activities performed during the quarter, including progress in implementing the State's 

approved Medicaid HIT plan. The burden associated with this requirement is the time 

and effort necessary for a State to draft and submit quarterly progress reports to the 

Department. We estimate that there will be approximately 50 States, the District of 

Columbia, and 5 Territories per year drafting and submitting the quarterly progress 

reports. For States to collect and submit the information required, we estimate it will take 

5 hours per State. The estimated annual burden for States associated with the 

aforementioned submission requirements is 280 hours (56 States-Territories x 5 

hours/State-Territory). 

The annual cost burden for a State employee to provide the above information is 

$9,904 (280 hours x $35.37 (mean hourly rate for a management analyst based on the 

May 2008 Bureau of Labor Statistics)). We believe that it is possible that a secretary 

may compile State information and provide the information to the Department. In that 

case the annual cost burden for the secretary to provide this information is $3,951 (280 

hours x $14.11 (mean hourly rate for secretaries based on the May 2008 Bureau of Labor 

Statistics)). 
CMS-0033-P 397 

R. ICRs Regarding Retroactive Approval of FFP with an Effective Date of February 18, 

2009 (§495.362)

 Proposed §495.362 states that for administrative activities performed by a State, 

without obtaining prior approval, which are in support of planning for incentive payments 

to providers, a State may request consideration of FFP by recorded request in a HIT 

implementation planning advance planning document or implementation advance 

planning document update. While this requirement is subject to the PRA, we believe the 

burden is already covered in the discussion of proposed §495.332 through §495.344. 

S. ICRs Regarding Financial Oversight and Monitoring Expenditures (§495.366)

Proposed §495.366(a)(2) would require a State to have a process in place to report 

actual expenditures for the Medicaid EHR payment incentive program using the 

Medicaid Budget Expenditure System. Since States already have to report Medicaid 

expenditures to the Medicaid Budget and Expenditure System, there is no need for States 

to develop and implement a reporting process. However, States will need to estimate and 

report the expenditures related to the provider incentive payments and the cost of the 

administration of the incentive payments. We estimate that it will take each of the 50 

States, the District of Columbia and 5 Territories 5 hours to compile and report this 

information. The estimated annual burden for States associated with the aforementioned 

requirements is 280 hours (56 States-Territories x 5 hours State-Territory). 

The annual cost burden for a State employee to provide the above information is 

$9,904 (280 hours x $35.37 (mean hourly rate for a management analyst based on the 

May 2008 Bureau of Labor Statistics)). We believe that it is possible that a secretary 

may compile State information and provide the information to the Department. In that 
CMS-0033-P 398 

case the annual cost burden for the secretary to provide this information is $3,951 (280 

hours x $14.11 (mean hourly rate for secretaries based on the May 2008 Bureau of Labor 

Statistics)). 

Proposed §495.366(a)(2) would require a State to have an automated payment and 

information retrieval mechanized system, (Medicaid Management Information System) 

to make EHR payment incentives, to ensure Medicaid provider eligibility, to ensure the 

accuracy of payment incentives, and to identify potential improper payments. Since 

States already have an automated payment and information retrieval system, there is no 

need to estimate this burden. 

Proposed §495.366(b) lists the information collection requirements associated 

with provider eligibility as a basis for making payment. States must, subject to §495.332, 

collect and verify information on Medicaid providers. This burden is the same as that 

listed above in the discussion of §495.316. 

Proposed §495.366(c) discusses information collection requirements pertaining to 

meaningful use and efforts to adopt, implement, or upgrade to certified electronic health 

record technology to make payment. Specifically, proposed §495.366(c)(1) states that 

subject to §495.332, the State must annually collect and verify information regarding the 

efforts to adopt, implement, or upgrade certified EHR technology and the meaningful use 

of said technology before making any payments to providers. This burden has already 

been discussed in our burden explanation for §495.10. 

Proposed §495.366(d)(1) states that subject to paragraph §495.332, the State must 

assure that State expenditures are claimed in accordance with, including but not limited 

to, applicable Federal laws, regulations and policy guidance. Proposed §495.366(d)(2) 
CMS-0033-P 399 

specifies that subject to §495.332, the State must have a process in place to assure that 

expenditures for administering the Medicaid EHR incentive payment program will not be 

claimed at amounts higher than 90 percent of the cost of such administration. Proposed 

§495.366(d)(3) states that subject to §495.332, the State must have a process in place to 

assure that expenditures for payment of Medicaid EHR incentive payments will not be 

claimed at amounts higher than 100 percent of the cost of such payments to Medicaid 

providers. This burden is the same as that listed above in the discussion of §495.316. 

Proposed §495.366(e) discusses the information collection requirements 

associated with improper Medicaid electronic health record payment incentives. The 

burden associated with the requirements listed in proposed §495.366(e)(1) through (7) is 

the time and effort necessary to develop processes to provide the necessary assurances 

discussed in this section. This burden is the same as that listed above in the discussion of 

§495.316. 

T. ICRs Regarding Appeals Process for a Medicaid Provider Receiving Electronic 

Health Record Incentive Payments (§495.370)

Proposed §495.370(a) would require states to have a process in place consistent 

with the requirements established in §447.253(e) of this chapter for a provider or entity to 

appeal incentive payments, incentive payment amounts, provider eligibility 

determinations, and the demonstration of adopting, implementing, or upgrading and 

meaningful use of certified EHR technology. This burden is the same as that listed above 

in the discussion of §495.316. 

 These numbers are subject to a substantial amount of uncertainty and actual 

experience may be significantly different. The range of possible experience is greater 
CMS-0033-P 400 

than under most other rules for the following reason; specifically, this rule provides the 

option for States to participate in the Medicaid certified electronic health record 

technology incentive payment program. To the extent that States participate more or less 

than assumed here (that is, the number of States, EPs and hospitals) the burden associated 

may be greater than or less than estimated. 
CMS-0033-P 401 

TABLE 34: Burden and Cost Estimates Associated with Information Collection Requirem

Reg Section 

OMB 

Control 

No. Respondents Responses 

Burden 

per 

Response 

(in hours) 

Total 

Annual 

Burden 

(in hours) 

Hourly 

Labor 

Cost of 

Reporting 

($) 

Total Cost 

of 

Reporting 

($) 

C

Ma

C

§495.8 (a)(1)– EHR Technology Used, Set A Objectives/Measures & Quality Measures (EPs) (2011) 0938-New 442,600 442,600 1 442,600 79.33 35,111,458 §495.8 (a)(1)– Set B Objectives/Measures (EPs) (2011) 0938-New 442,600 442,600 8 3,540,800 79.33 280,891,664 21,7§495.8(a)(2) - EHR Technology Used & Set A Objectives/Measures (EPs) (2012) 0938-New 447,400 447,400 0.5 223,700 79.33 17,746,121 §495.8 (a)(2)– Set B Objectives/ Measures (EPs) (2012) 0938-New 447,400 447,400 8 3,579,200 79.33 283,937,936 4,5§495.8 (a)(2)– Ambulatory Quality Measures (EPs) (2012) 0938-New 447,400 447,400 0.5 223,700 14.81 3,312,997 §495.8 (b)(1)-- EHR Technology Used, Set A Objectives/Measures & Quality Measures (hospitals/CAHs) (2011) 0938-New 5,011 5,011 1 5,011 59.98 300,560 §495.8(b)(1) – Set B Objectives/ Measures (hospitals/CAHs) (2011) 0938-New 5,011 5,011 7 35,077 59.98 2,103,918 20,6§495.8 (b)(2)-- l EHR Technology Used & Set A Objectives/Measures (hospitals/CAHs) (2012) 0938-New 5,011 5,011 0.5 2,506 59.98 150,310 §495.8 (b)(2)– Set B Objectives/ Measures (hospitals/CAHs) (2012) 0938-New 5,011 5,011 7 35,077 59.98 2,103,918 5,0§495.8 (b)(2)– Hospital Quality Measures (hospitals/CAHs) (2012) 0938-New 5,011 5,011 0.5 2,506 14.81 37,113 §495.10(a) – (c) – high (EPs) (2011) 0938-New 442,600 442,600 0.5 221,300 79.33 17,555,729 §495.10(a) – (c) -- low (EPs) (2011) 0938-New 442,600 442,600 0.5 221,300 14.81 3,277,453 §495.10(a) – (c) – average (EPs) (2011) 442,600 442,600 0.5 221,300 47.07 10,416,591 §495.10(d) -- high (EPs) (2012) 0938-New 49,214 49,214 0.5 24,607 79.33 1,952,0732 §495.10(d) – low (EPs) (2012) 0938-New 49,214 49,214 0.5 24,607 14.81 364,429 §495.10(d) – average (EPs) (2012) 49,214 49,214 0.5 24,607 47.07 1,158,251 §495.10(e)(1) – high (EPs) (2011) 0938-New 80,900 80,900 0.5 40,450 79.33 3,208,899 §495.10(e)(1) – low (EPs) (2011) 0938-New 80,900 80,900 0.5 40,450 14.81 599,065 §495.10(e)(1) – average (EPs) (2011) 80,900 80,900 0.5 40,450 47.07 1,903,982 §495.10(e)(2) – high (EPs) (2012) 0938-New 81,700 81,700 0.5 40,850 79.33 3,240,630 
CMS-0033-P 402 

Reg Section 

OMB 

Control 

No. Respondents Responses 

Burden 

per 

Response 

(in hours) 

Total 

Annual 

Burden 

(in hours) 

Hourly 

Labor 

Cost of 

Reporting 

($) 

Total Cost 

of 

Reporting 

($) 

C

Ma

C

§495.10(e)(20 – low (EPs) (2012) 0938-New 81,700 81,700 0.5 40,850 14.81 604,989 §495.10(e)(2) – average (EPs) (2012) 81,700 81,700 0.5 40,850 47.07 1,922,810 §495.10(a) – (b) (hospital) (2011) 0938-New 5,011 5,011 0.5 2,506 14.81 31,706 §495.10(d) – (hospital) (2012) 0938-New 401 401 0.5 201 14.81 2,969 §495.202(a) (2011) 0938-New 12 12 0.25 3 15.44 46 §495.202(b)(2) (2011) 0938-New 12 12 0.5 6 59.98 360 §495.204(b)(2) (2011-2012) 0938-New 12 12 40 480 15.44 7,411 §495.204(b)(4) (2011-2012) 0938-New 2 2 1.5 3 31.65 95 §495.204(b)(5) (2011-2012) 0938-New 12 12 58.3 699 15.44 10,793 §495.210(b) (2011-2012) 0938-New 12 12 40 480 59.98 28,790 §495.306(a)(1)(i) 0938-New 119,000 119,000 0.5 59,500 79.33 4,720,135 §495.306(a)(1)(ii)(A) 0938-New 119,000 119,000 0.5 59,500 79.33 4,720,135 §495.306(a)(1)(ii)(B) 0938-New 3,631 3,631 0.5 1,816 79.33 144,024 §495.306(a)(2) 0938-New 3,631 3,631 0.5 1,816 14.11 25,617 §495.316 0938-New 56 56 5 280 100 28,000 §495.330(a) - high 0938-New 56 56 5 280 35.37 9,904 §495.330(a) - low 0938-New 56 56 5 280 14.11 3,951 §495.330(a) - average 56 56 5 280 24.74 6,927 §495.348(c) 0938-New 28 56 0.5 28 35.37 990 §495.348(e) 0938-New 28 56 0.5 28 35.37 990 §495.348(f) 0938-New 28 56 5 280 35.37 9,904 §495.350--high 0938-New 56 56 1 56 35.37 1,981 §495.350--low 0938-New 56 56 1 56 14.11 790 §495.350--average 56 56 1 56 24.74 1,385 §495.352--high 0938-New 56 56 5 280 35.37 9,904 §495.352--low 0938-New 56 56 5 280 14.11 3,591 §495.352--average 56 56 5 280 24.74 6,927 §495.366--high 0938-New 56 56 5 280 35.37 9,904 §495.366--low 0938-New 56 56 5 280 14.11 3,591 §495.366--average 56 56 5 280 24.74 6,927 
CMS-0033-P 403 

Reg Section 

OMB 

Control 

No. Respondents Responses 

Burden 

per 

Response 

(in hours) 

Total 

Annual 

Burden 

(in hours) 

Hourly 

Labor 

Cost of 

Reporting 

($) 

Total Cost 

of 

Reporting 

($) 

C

Ma

C

Total 2011* 4,413,559 340,479,335 42,3Total 2012* 4,258,153 320,091,475 9,5

Note: Where there are low, high, and average estimates listed for the provisions, only the average figures are used for the purpose of burden calculation 

* Burden not otherwise designated by year, that is, 2011, 2012, or 2011-2012, is considered to be annual burden and is included in the sum total burde
CMS-0033-P 404 

If you comment on these information collection and recordkeeping requirements, please do 

either of the following: 

Submit your comments electronically as specified in the ADDRESSES section of this 

proposed rule; or submit your comments to the Office of Information and Regulatory Affairs, 

Office of Management and Budget, 

 Attention: CMS Desk Officer, [CMS-0033-P – Meaningful Use] 

 Fax: (202) 395-5806; or 

 Email: OIRA_submission@omb.eop.gov 

IV. Response to Comments 

Because of the large number of public comments we normally receive on Federal 

Register documents, we are not able to acknowledge or respond to them individually. We will 

consider all comments we receive by the date and time specified in the “DATES” section of this 

preamble, and, when we proceed with a subsequent document, we will respond to the comments 

in the preamble to that document. 

V. Regulatory Impact Analysis 

A. Overall Impact

We have examined the proposed impacts of this rule as required by Executive Order 

12866, the Regulatory Flexibility Act (RFA), section 1102(b) of the Social Security Act 

regarding rural hospital impacts, the Unfunded Mandates Reform Act, Executive Order 13132 on 

Federalism, and the Congressional Review Act. 

Executive Order 12866 directs agencies to assess all costs and benefits of available 

regulatory alternatives and, if regulation is necessary, to select regulatory approaches that 

maximize net benefits (including potential economic, environmental, public health and safety 
CMS-0033-P 405 

effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared 

for rules with economically significant effects ($100 million or more in any 1 year). This 

proposed rule is anticipated to have an annual effect on the economy of $100 million or more, 

making it an economically significant rule under the Executive Order and a major rule under the 

Congressional Review Act. Accordingly, we have prepared a RIA that to the best of our ability 

presents the costs and benefits of the proposed rule. We request comments on the analysis 

provided in this proposed rule. 

This proposed rule is one of three coordinated rulemakings undertaken to implement the 

goals and objectives of the HITECH Act related to the adoption and meaningful use of certified 

EHR technology. The other two are HHS's interim final rule establishing certification criteria, 

standards, and implementation specifications for certification of EHR systems, and the proposed 

rule on EHR certification programs. Each rule will assess the direct economic effects of the 

provisions it creates. This proposed rule on Medicare and Medicaid EHR Incentive Programs 

addresses the impacts related to the actions taken by EPs or eligible hospitals to become 

meaningful users of certified EHR technology, including purchasing or developing in-house 

certified EHR technology or EHR technology modules. 

A number of factors will affect the adoption of EHR systems and demonstration of 

meaningful use. Many of these are addressed in this analysis. Readers should understand that 

these forecasts are subject to substantial uncertainty. Demonstration of meaningful use will 

depend in part on the final provisions of these three rulemakings, which will depend in turn on 

comments we now solicit but have not yet received. These three rules deal primarily with 

standards and requirements for FYs 2011 and 2012, but overall rates of meaningful use of 

certified EHR technology will depend in part on future rulemakings issued by the HHS. 
CMS-0033-P 406 

The HITECH Act provides incentives for the meaningful use of certified EHR 

technology. Additionally, the Medicaid program also provides incentives for the adoption, 

implementation, and upgrade of certified EHR technology. Payment adjustments are 

incorporated into the Medicare program for providers unable to demonstrate meaningful use. 

The absolute and relative strength of these is unclear. For example, a provider with relatively 

small Medicare billings will be less disadvantaged by payment adjustments than one with 

relatively large Medicare billings. Another uncertainty arises because there are likely to be 

“bandwagon” effects as the number of providers using EHRs rises, thereby inducing more 

participation in the incentives program, as well as greater adoption by entities (for example, 

clinical laboratories) that are not eligible for incentives or subject to penalties, but do business 

with EHR adopters. It is impossible to predict exactly if and when such effects may take hold. 

One legislative uncertainty arises because under current law, physicians are scheduled for 

massive payment reductions under the sustainable growth rate (SGR) formula for determining 

Medicare payments. Under the current law, physician payments will be reduced by at least 21 

percent beginning in CY 2010. Such reductions would almost certainly cause major changes in 

physician behavior, enrollee care, and other Medicare provider payments, but the specific nature 

of these changes is exceptionally uncertain. Under a current law scenario, the EHR incentives or 

payment adjustments would exert only a minor influence on physician behavior relative to these 

very large payment reductions. However, the Congress has legislatively avoided physician 

payment reductions in each of the past 7 years. Behavioral changes resulting from these 

scheduled physician payment reductions are not included in our estimate and likewise we do not 

assume any additional behavioral changes from EHR incentive payments for physicians. 
CMS-0033-P 407 

All of these factors taken together make it impossible to predict with precision the timing 

or rates of adoption and ultimately meaningful use. Therefore, we present a range of estimates, 

which capture how different scenarios will impact overall costs. Our “high” scenario of 

meaningful use demonstration assumes that roughly a decade from now, nearly 100 percent of 

hospitals and 70 percent of EPs will be “meaningful users” in the Medicare EHR incentive 

program. This estimate is based on the substantial economic incentives created by the combined 

direct and indirect factors affecting providers. We appreciate that in the real world nothing is 

ever 100 percent, and can even identify factors that would certainly lead providers to forego 

implementing an EHR. For example, a physician nearing retirement with a low Medicare 

caseload might well decide to accept the relatively low adverse consequences of declining to 

demonstrate meaningful use of certified EHR technology. Alternatively, EPs and eligible 

hospitals and CAHs may choose not to adopt EHRs if the total costs of purchasing certified 

EHRs and the total costs of complying with this rule may are higher than the value of the total 

EHR incentive payments (and adjustments, if applicable). However, we have no reliable basis 

for estimating the rate of such “holdouts.” To emphasize the uncertainties involved, we have 

also created a “low” estimate for the demonstration of meaningful use each year. This might 

best be viewed as a more pessimistic view of the rate at which adoption approaches 100 percent. 

Both the high and low estimates are based on current law. That is, we assume that the 

incentive payments and potential reimbursement reductions set forth in the HITECH Act will 

remain unchanged. We also assume that the scheduled physician payment reductions will occur. 

We appreciate that this assumption reflects the standard practice used in forecasts of government 

spending (including effects on the private sector) by the Boards of Trustees for the Hospital 

Insurance and Supplementary Medical Insurance Trust Funds, the Social Security trustees, the 
CMS-0033-P 408 

Office of the Actuary in HHS, and the Congressional Budget Office. However, we note that if 

this assumption is rendered invalid by future Congressional action, the combination of positive 

and negative incentives in the HITECH Act are such that we believe adoption rates would differ 

from those estimated in this RIA. 

There are many estimates of current EHR adoption and usage rates. There are at least 

two EHR functions—e-prescribing and billing—for which adoption and usage rates for both 

physicians and hospitals may exceed 50 percent. However, high estimates are misleading 

because they focus on particular elements, not on comprehensive systems that provide a full 

range of functions, similar in scope to those established in the companion interim final rule that 

adopts standards, implementation specifications, and certification criteria for the technical 

requirements and capabilities that EHR systems will need to meet in order to be certified. Based 

on several peer-reviewed studies, only a small proportion of physicians and hospitals have 

invested in EHR technology that encompasses such a broad range of functions. For example, a 

study entitled “Electronic Health Records in Ambulatory Care—A National Survey of 

Physicians” (Catherine DesRoches et al., New England Journal of Medicine, July 3, 2008), found 

that in 2007 only “four percent of physicians reported having an extensive, fully functional 

electronic-records system, and 13 percent reported having a basic system.” (Additional results 

from the same survey can be found at the Department's Health IT Adoption Initiative Web site at 

http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&cached=true&objID=1152 ) 

Another study entitled “Use of Electronic Health Records in U.S. Hospitals” (Ashish Jha et al., 

New England Journal of Medicine, April 16, 2009) found that in 2007 “only 1.5 percent of U.S. 

hospitals have a comprehensive electronic-records system ... and an additional 7.6 percent have 
CMS-0033-P 409 

a basic system.” Computerized order entry for drugs was fully implemented in only 17 percent 

of hospitals. 

Most physicians and hospitals have not yet invested in the hardware, software, testing 

and training to implement EHRs for a number of reasons – lack of standards, lack of 

interoperability, limited physician acceptance, fear of maintenance costs, and lack of capital. 

Perhaps most importantly, adoption of EHR technology necessitates major changes in business 

processes and practices throughout a provider's office or facility. Business process reengineering 

on such a scale is not undertaken lightly. However, the availability of the HITECH Act 

incentives, grants for technical support, more consistent use of standards and specified 

certification criteria, and other factors addressed in this RIA are sure to increase the adoption of 

EHR technology very substantially over the next 10 years—perhaps approaching complete 

adoption for physicians, hospitals, and many other types of providers. 

Section II. of this proposed rule describes the categories of EPs, eligible hospitals, and 

CAHs under Medicare and Medicaid, and outlines the eligibility criteria, so those details are not 

repeated here. 

Overall, we expect spending under the EHR incentive program for transfer payments to 

Medicare and Medicaid providers to be between $14 and $27 billion over 10 years (these 

estimates include net payment adjustments for providers who do not achieve meaningful use in 

2015 and beyond in the amount of -$2.3 billion to -$5.1 billion). We have also estimated “per 

entity” costs for EPs and eligible hospitals, which aggregate to total spending. We estimate also 

that adopting entities will achieve dollar savings at least equal to their total costs, and that there 

will be additional benefits to society whose magnitude is uncertain, but will certainly be many 

billions of dollars over time. 
CMS-0033-P 410 

While implementation costs will be significant for each participating entity, we anticipate 

that the short-term costs to demonstrate meaningful use of certified EHR technology will be 

outweighed by the long-term benefits, including practice efficiencies and improvements in 

medical outcomes. Although both cost and benefit estimates are highly uncertain, we have 

prepared a RIA that to the best of our ability presents the costs and benefits of the proposed 

rulemaking. 

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act (RFA) requires agencies to prepare an Initial Regulatory 

Flexibility Analysis to describe and analyze the impact of proposed rule on small entities unless 

the Secretary can certify that the regulation will not have a significant impact on a substantial 

number of small entities. In the healthcare sector, Small Business Administration size standards 

define a small entity as one with between $7 million and $34 million in annual revenues. For the 

purposes of the RFA, essentially all non-profit organizations are considered small entities, 

regardless of size. Individuals and States are not included in the definition of a small entity. 

Since the vast majority of Medicare providers (well over 90 percent) are small entities within the 

RFA's definitions, it is the normal practice of HHS simply to assume that all affected providers 

are “small” under the RFA. In this case, most healthcare EPs, eligible hospitals, and CAHs are 

either non-profit or meet the SBA's size standard for small business. We also believe that the 

effects of the incentives program on many and probably most of these affected entities will be 

economically significant. Accordingly, this RIA section, in conjunction with the remainder of 

the preamble, constitutes the required Initial Regulatory Flexibility Analysis. We welcome 

comments on the analysis. 
CMS-0033-P 411 

We believe that the adoption of EHRs will have an impact on virtually every EP and 

eligible hospital, as well as CAHs and some physicians and hospitals affiliated with MA plans. 

While the program is voluntary, in the first 5 years it carries substantial positive incentives that 

will make it attractive to virtually all eligible entities. Furthermore, entities that do not 

demonstrate meaningful use of EHR technology will be subject to significant Medicare payment 

reductions after the fifth year. The anticipation of these Medicare payment adjustments will also 

motivate EPs, eligible hospitals, and CAHs to adopt and meaningfully use certified EHR 

technology. 

 For some EPs and eligible hospitals the EHR technology that they have in place before 

the HITECH requirements will be able to be upgraded to meet the criteria for certified EHR 

technology as defined for this program. These costs may be minimal, involving no more than a 

software upgrade. “Home-grown” EHR systems that might exist will also require an upgrade to 

meet the HITECH certification requirements. 

We believe that most EPs using EHR systems will require significant changes to achieve 

certification and/or the EPs will have to make process changes to achieve meaningful use. 

Further, given what we know about the current low levels of EHR adoption we believe that the 

majority of EPs will need to purchase certified EHR technology and implement this new 

technology and have their staff trained on its use. The costs for implementation and complying 

with the criteria of meaningful use could lead to higher operational expenses. However, we 

believe that the combination of payment incentives and long-term overall gains in efficiency will 

compensate for the initial expenditures. Additionally EPs and eligible hospitals will have to 

demonstrate meaningful use of their certified EHR technology as defined in the preamble. Since 

the definition for stage 1 meaningful use has not yet been finalized and may be altered due to 
CMS-0033-P 412 

public comment, it is difficult to determine how hard it will be for providers to achieve 

meaningful use. 

1. Number of Small Entities 

In total, we estimate that there are approximately 624,000 healthcare organizations (EPs 

or eligible hospitals) that will be affected by the incentive program. These include hospitals and 

physician practices as well as doctors of medicine or osteopathy, dental surgery or dental 

medicine, podiatric medicine, optometry or a chiropractor. Additionally, eligible non-physicians 

(such as certified nurse-midwives, etc) will be eligible to receive the Medicaid incentive 

payments. 

Of the 624,000 healthcare organizations we estimate will be affected by the incentive 

program, we estimate that 94.71 percent will be EPs, 0.8 percent will be hospitals, and 4.47 

percent will be MAO physicians or hospitals. We further estimate that EPs will spend 

approximately $54,000 to purchase a certified EHR and $10,000 annually for ongoing 

maintenance, while we estimate the hospitals will spend approximately $5 million to purchase a 

certified EHR and $1 million annually for ongoing maintenance. See the Assumptions section 

(section V.G.3 of this proposed rule) for details on our estimates for the number of entities that 

are eligible for the incentive, within each eligibility type category (EPs and eligible hospitals). 

2. Alternatives Considered 

This proposed rule implements new provisions of the Act for providing incentives for 

EPs, eligible hospitals, and CAHs that adopt and meaningfully use certified EHR technology. 

HHS has no discretion to change the incentive payments or payment reductions specified in the 

statute for providers that adopt or fail to adopt EHR and achieve meaningful use of EHR 

technology. The only substantial alternatives within the discretion of the Department revolve 
CMS-0033-P 413 

around how best to meet the requirements of the HITECH Act regarding requirements for 

meaningful use for FY 2011 and beyond. Requirements that are too stringent could have the 

adverse effect of preventing many EPs, eligible hospitals, and CAHs from achieving meaningful 

use and thus preventing them from receiving an incentive payment. Our meaningful EHR use 

requirements for 2011 are designed to encourage more widespread adoption of certified EHR 

technology and allow more EPs, eligible hospitals, and CAHs to qualify for incentives while they 

are also adjusting their practice patterns and training staff to operate the EHR technology in 

preparation for more stringent meaningful use requirements over time. We recognize that there 

may be incremental costs that result from requiring additional functionality over the base level 

defined in the ARRA. For example, ARRA does not require certified EHRs to include 

functionalities associated with administrative simplification, but we have proposed them in this 

rule. We have not been able to find research that allows us to quantify these incremental costs 

and request comments on possible estimates or further sources of information that will help us 

develop estimates. 

We note that with regard to reporting of quality measures for purposes of demonstrating 

meaningful use, we considered requiring EPs, eligible hospitals, and CAHs to report quality 

measures electronically in the initial year of the program; however, ultimately we determined 

that many providers would not be able to comply with a requirement to report all quality 

measures at the beginning of the program. The alternative approach, consistent with the 

requirements of this proposed rule, is to require reporting of quality measures in phases. In 

2011, there will be a requirement to report quality measures through attestation with a numerator 

and denominator. Electronic quality measure reporting will begin in CY 2012. Additional 

quality measure reporting will be added in later years. 
CMS-0033-P 414 

Under Medicaid, we considered numerous alternatives regarding how to demonstrate 

eligibility for the incentive payments as well as adoption and meaningful use of the certified 

EHR technology. These alternatives, including the period for demonstrating adequate patient 

volume, and the requirements and methods for demonstrating meaningful use are discussed in 

section II.D. of this proposed rule. 

3. Conclusion 

As discussed later in this analysis, we believe that the there are many positive effects of 

adopting EHR on health care providers, quite apart from the incentive payments to be provided 

under this rule. While economically significant, we do not believe that the net effect on 

individual providers will be negative over time except in very rare cases. (The statute provides 

for hardship exemption in such cases.) Accordingly, we believe that the object of the RFA to 

minimize burden on small entities are met by this rule as proposed. We invite public comments 

on the analysis and request any additional data that would help us determine more accurately the 

impact on the EPs and eligible hospitals affected by the proposed rule. 

C. Small Rural Hospitals

Section 1102(b) of the Act requires us to prepare a RIA if a rule would have a significant 

impact on the operations of a substantial number of small rural hospitals. This analysis must 

conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, 

we define a small rural hospital as a hospital that is located outside of a metropolitan statistical 

area and has fewer than 100 beds. This proposed rule would affect the operations of a substantial 

number of small rural hospitals because they are required to adopt certified EHR technology by 

2015, or face adjusted payments. As stated above, we have determined that this proposed rule 

would create a significant impact on a substantial number of small entities, and have prepared a 
CMS-0033-P 415 

Regulatory Flexibility Analysis as required by the RFA and, for small rural hospitals, section 

1102(b) of the Act. Furthermore, any impacts that would arise from the implementation of 

certified EHR technology in a rural eligible hospital would be positive, with respect to the 

streamlining of care and the ease of sharing information with other EPs to avoid delays, 

duplication, or errors. 

D. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that 

agencies assess anticipated costs and benefits before issuing any rule whose mandates would 

require spending in any 1 year $100 million in 1995 dollars, updated annually for inflation. In 

2009, that threshold is approximately $130 million. UMRA does not address the total cost of a 

rule. Rather, it focuses on certain categories of cost, mainly those “Federal mandate” costs 

resulting from--(1) imposing enforceable duties on State, local, or tribal governments, or on the 

private sector, or (2) increasing the stringency of conditions in, or decreasing the funding of, 

State, local, or tribal governments under entitlement programs.

This rule imposes no substantial mandates on States. The State role in the incentive 

program is essentially to administer the Medicaid incentive program. While this entails certain 

procedural responsibilities, these do not involve substantial State expense. In general, each State 

Medicaid Agency that participates in the incentive program will be required to invest in systems 

and technology to comply - States will have to identify and educate providers, evaluate their 

attestations and pay the incentive. However, the Federal government will fund 90 percent of the 

cost, providing controls on the total State outlay. 

The investments needed to meet the meaningful use standards and obtain incentive 

funding are voluntary, and hence not “mandates” within the meaning of the statute. However, 
CMS-0033-P 416 

the potential reductions in Medicare reimbursement after FY 2015 are effectively mandates. We 

note that we have no discretion as to those potential payment reductions. Private sector EPs that 

voluntarily choose not to participate in the program may anticipate potential costs in the 

aggregate that may exceed $130 million; however, because EPs may choose for various reasons 

not to participate in the program, we do not have firm data for the percentage of participation 

within the private sector. 

This RIA, taken together with the remainder of the preamble, constitutes the analysis 

required by UMRA. We welcome comments on any aspects of this proposed rule that mandate 

costs that could be reduced or ameliorated. 

E. Federalism

Executive Order 13132 establishes certain requirements that an agency must meet when it 

promulgates a proposed rule (and subsequent final rule) that imposes substantial direct 

requirement costs on State and local governments, preempts State law, or otherwise has 

Federalism implications. This proposed rule would not have a substantial direct effect on State 

or local governments, preempt State law, or otherwise have a Federalism implication. 

Importantly, State Medicaid agencies are receiving 100 percent match from the Federal 

government for incentives paid and a 90 percent match to administer the program. As previously 

stated, we believe that those administrative costs are minimal. We note that this proposed rule 

does add a new business requirement for States, because of the systems that will need to be 

implemented to track and report on provider attestations, applications, and payments. States will 

also expend funds on the systems that must be built to conduct the tracking and reporting 

activities. However, the Federal share of the 90 percent match will protect the States from 

burdensome financial outlays. 
CMS-0033-P 417 

F. Anticipated Effects

The objective of the remainder of this RIA is to summarize the costs and benefits of the 

HITECH incentive program for the Medicare FFS, Medicaid, and Medicare Advantage (MA) 

programs. We also provide assumptions and a narrative addressing the potential costs to the 

industry for implementation of this technology. 

G. HITECH Impact Analysis

1. Need for Regulation 

This proposed rule would implement the provisions of the American Recovery and 

Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) that provide incentive payments to eligible 

professionals (EPs) and eligible hospitals participating in Medicare and Medicaid programs that 

adopt and meaningfully use certified electronic health record (EHR) technology. The proposed 

rule would specify the-- initial criteria an EP and eligible hospital must meet in order to qualify 

for the incentive payment; calculation of the incentive payment amounts; payment adjustments 

under Medicare for covered professional services and inpatient hospital services provided by EPs 

and eligible hospitals failing to meaningfully use certified EHR technology; and other program 

participation requirements. 

2. Alternatives Considered 

As previously discussed in the alternatives section of the regulatory flexibility analysis, 

HHS has no discretion to change the incentive payments or payment reductions specified in the 

statute for providers that adopt or fail to adopt EHR and achieve meaningful use of EHR 

technology. However, the Department has discretion around how best to meet the HITECH Act 

requirements for meaningful use for FY 2011 and beyond. 
CMS-0033-P 418 

We recognize that there may be additional costs that result from various discretionary 

policy choices such as requiring additional functionality over the base level defined in the 

ARRA. For example, ARRA does not require certified EHRs to include functionalities 

associated with administrative simplification, but we have proposed them in this rule. While 

ARRA also requires that certified EHRs have the capability to support CPOE, we have used our 

discretion in developing the “CPOE use” measure discussed in section III. 

We have not been able to find research that allows us to quantify these incremental costs 

and request comments on possible estimates or further sources of information that will help us 

develop estimates (please refer to the analysis below as well as to the rightmost column in Table 

33). In addition, we welcome information on benefits of specific provisions of this rule so that 

we can conduct, for the final rule, a more robust assessment of alternatives comparing 

incremental costs and benefits of each requirement. 

3. Background and Assumptions 

The principal costs of this proposed rule are the additional expenditures that will be 

undertaken by eligible entities in order to obtain the Medicare and Medicaid incentive payments 

to adopt and demonstrate meaningful use of certified EHR technology, and to avoid the 

Medicare payment adjustments that will ensue if they fail to do so. The estimates for the 

provisions affecting Medicare and Medicaid EPs, eligible hospitals, and CAHs are somewhat 

uncertain for several reasons: (1) the program is voluntary although payment adjustments will be 

imposed on Medicare providers who are unable to demonstrate meaningful use starting in 2015; 

(2) the criteria for the demonstration of meaningful use of certified EHR technology have not 

been finalized and will change over time; (3) HHS has not yet defined certified EHR technology; 

(4) the impact of the financial incentives and payment adjustments on the rate of adoption of 
CMS-0033-P 419 

certified EHR technology by EPs, eligible hospitals, and CAHs, is difficult to predict; and (5) the 

ultimate impact of certified EHR technology on expenditures for medical treatments (for 

example, reducing errors, expedited treatment) cannot be known with certainty at this time. The 

net costs and savings shown for this program represent a range of possible scenarios, and actual 

impacts could differ. We welcome public input on all aspects of the costs and benefits of this 

proposed rule. 

As written in the preamble, this proposed rule describes the incentive payments for EPs, 

eligible hospitals, and CAHs for adopting and demonstrating meaningful use of certified EHR 

technology. This impact analysis addresses the costs and benefits to the Medicare and Medicaid 

programs, as well as general implementation costs for eligible hospitals and EPs. 

Detailed information about the incentive program, the specific payment amounts and how 

those payments will be paid, is provided in section II. of this proposed rule. Based on input from 

a number of internal and external sources, including the Government Accountability Office 

(GAO) and CBO, we calculated the numbers of EPs and eligible hospitals under Medicare, 

Medicaid, and MA and used them throughout the analysis. 

● About 553,200 original Medicare FFS EPs in 2011 (some of which will also be 

Medicaid EPs). 

● About 27 percent of the total EPs are hospital-based Medicare EPs, and are not eligible 

for the program. This leaves approximately 404,400 nonhospital-based Medicare EPs in 2011. 

● Twenty percent of the nonhospital-based Medicare EPs (approximately 80,900 

Medicare EPs in 2011) are also eligible for Medicaid (meet the 30 percent Medicaid patient 

volume criteria) but can only be paid under one program. Any EP in this situation will choose to 

receive the Medicaid incentive payment, because it is larger. 
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● About 38,200 non-Medicare eligible EPs (such as dentists, pediatricians, and eligible 

non-physicians such as certified nurse-midwives, nurse practitioners and physicians assistants) 

will be eligible to receive the Medicaid incentive payments. 

● 5,011 eligible hospitals, comprised of the following: 

++ 3,620 acute care hospitals. 

++ 1,302 CAHs (Medicare only). 

++ 78 children's hospitals (Medicaid only). 

++ 11 cancer hospitals (Medicaid only). 

● All eligible hospitals, except for children's and cancer hospitals, may qualify and apply 

for both Medicare and Medicaid incentive payments. 

● 12 MA Organizations (about 28,000 EPs, and 29 hospitals) would be eligible for 

incentive payments. 

● Payments can begin as early as FY 2011. 

4. Industry Costs and Adoption Rates 

To estimate the impact on healthcare providers we used information from four studies 

cited previously. Based on these studies, we estimate for EPs, the average 

adopt/implement/upgrade cost is $54,000 per physician FTE, while annual maintenance costs 

average $10,000 per physician FTE. For all eligible hospitals, the range is from $1 million to 

$100 million. Though reports vary widely, we anticipate that the average would be $5 million 

for installation. We estimate $1 million for maintenance, upgrades, and training each year. 

Though we cite these existing studies, we realize that these estimates vary widely, in part, 

because different providers have adopted different types of EHRs, each with their own set of 

functionalities. Because providers who would like to qualify as “meaningful users” of EHRs will 
CMS-0033-P 421 

need to purchase “certified EHRs,” we further acknowledge that “certified EHRs” may differ in 

many important respects from the types of EHRs used in these studies and the functionalities 

they contained. For that reason, we welcome industry input on the costs of implementing and 

maintaining certified EHR technology. We would be particularly interested in estimates of what 

a “qualified EHR” as defined in ARRA would cost (that is, an EHR with the capability to collect 

and store patient demographic data and support CPOE, clinical decision support, and registry 

functions) for both EPs and hospitals. To the extent that there may be additional costs that result 

from various discretionary policy choices in this rulemaking, such as requiring additional 

functionality over the base level defined in the ARRA, we would be interested to know what 

those incremental additional costs may be. 

Industry costs are important, in part, because EHR adoption rates will be a function of 

these industry costs and the extent to which the costs of “certified EHRs” are higher than the 

total value of EHR incentive payments available to EPs and eligible hospitals (as well as 

adjustments, in the case of the Medicare EHR incentive program) and any perceived benefits 

including societal benefits. Because of the uncertainties surrounding industry cost estimates, we 

have made various assumptions about adoption rates in the following analysis in order to 

estimate the budgetary impact on the Medicare and Medicaid programs. We welcome comments 

on our estimates, including costs estimates and adoption rate estimates. 

For an eligible Medicaid EP, the first year incentive is based in part on the adoption, 

implementation, and upgrade costs. Previously, we noted that section 1903(t)(4)(C) of the Act 

gives the Secretary the authority to determine average allowable costs for certified EHR 

technology. The Secretary is to study average costs associated with the purchase, initial 
CMS-0033-P 422 

implementation, and upgrade of certified EHR technology, including support services and initial 

training. 

Sections 1903(t)(1)(A) and 1903(t)(4) of the Act specify that EPs may not receive 

incentive payments in excess of 85 percent of the net average allowable costs of certified EHR 

technology, with such net average allowable costs capped at $25,000 in the first year (for the 

purchase, implementation or upgrade of certified EHR technology) and $10,000 in each of the 

subsequent years. 

a. Costs of EHR Adoption for EPs 

Previously, we described four studies used to estimate costs of implementation including 

the purchase and installation of hardware and software, training, as well as productivity losses 

associated with implementation and training. Each of these studies was conducted several years 

ago, and did not control for type of EHR, functionality, physician practice type or size. 

Furthermore, EHRs were not being built against any particular consensus standard, nor was the 

concept of “meaningful use” a factor. Thus, the cost of implementing and maintaining certified 

EHR technology which meets the requirements established in this regulation might exceed the 

estimates from these studies. 

One average estimate of the cost per physician for implementation is around $35,000. 

Therefore, in a practice with five physicians, the cost could be $175,000. A similar study of 

community health centers estimated costs to average $54,000 per physician FTE. In this study, 

the authors explained that implementation costs varied between entities for hardware, software, 

installation, and training. After implementation, there were ongoing operating costs estimated at 

$21,000 per year for a practice of four physicians. The CBO paper, Evidence on the Costs and 

Benefits of Health Information Technology, May 2008, in attempting to estimate the total cost of 
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implementing health IT systems in office-based medical practices, recognized the complicating 

factors of EHR types, available features and differences in characteristics of the practices that are 

adopting them. The CBO estimated a cost range of $25,000 to $45,000 per physician. In the 

CBO study, operating costs added $3,000 to $9,000 per physician per year. Finally, a 2005 

paper from AHRQ stated that the average purchase and implementation cost of an EHR could be 

$32,606 per FTE physician. Maintenance costs were an additional $1,500 per physician, per 

month, or $18,000 per year. Smaller practices had the highest implementation costs per 

physician at $37,204. Based on the studies cited, eligible providers will be eligible to receive the 

maximum incentive permitted under the statute, because the implementation and maintenance 

costs we have estimated exceed the caps for net average allowable costs set in the statute. 

In calculating the impact of the EHR incentive program for Medicaid EPs, we assumed 

that approximately 20 percent of the EPs eligible for the Medicare incentive payment program 

are also eligible for Medicaid EHR incentive payments (about 80,000 in 2011). Since the 

Medicaid incentive payments are higher than those for Medicare are and EPs can only receive 

payments from on program, we assume the dually eligible EPs will receive their payments 

through the Medicaid program. Medicaid also offers incentive payments for pediatricians, 

dentists, certified nurse-midwives, nurse practitioners and certain physicians' assistants. While 

minimal, we have incorporated the sum of these groups in Table 51. We have estimated a range 

of Medicaid EPs that will be meaningful users each calendar year. The last line represents the 

range of predicted meaningful EHR users each calendar year. The Medicaid penetration rate for 

EPs is consistent with the analysis that was used for the Medicare EPs, but without the 

behavioral limitations imposed by the Medicare current statute SGR payment reductions. We 
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assumed a modest behavioral response by Medicaid EPs to the Medicaid incentive payments 

resulting in an increase over baseline participation. 

b. Costs of EHR Adoption for Eligible Hospitals 

In 2006, the AHA conducted a survey to evaluate annual hospital costs: the range was 

enormous – ranging from $30,500 to $93.8 million, with a median amount of $3.8 million. In 

another article from HealthDayNews, EHR system costs were reported by experts to run as high 

as $20 million to $100 million; HHS discussions with experts led to cost ranges for adoption that 

varied by hospital size and level of EHR system sophistication. Research to date has shown that 

adoption of comprehensive EHR systems is limited. In the AHA study, nearly 3,050 U.S. 

hospitals were surveyed about the use of EHR systems. Only 1.5 percent of these organizations 

had comprehensive systems, which were defined as hospital-wide clinical documentation of 

cases, test results, prescription and test ordering, plus support for decision-making that included 

treatment guidelines. Almost eight percent of hospitals had an EHR system that includes 

physician and nursing notes, but these systems did not have decision support. Some 10.9 percent 

have a basic system that does not include physician and nursing notes, and can only be used in 

one area of the hospital. Researchers found that 17 percent of the hospitals had the capacity for 

e-prescribing, a key feature in any modern day system. According to hospital CEOs, the main 

barrier to adoption is the cost of the systems, and the lack of capital. Hospitals have been 

concerned that they will not be able to recoup their investment, and they are already operating on 

the smallest of margins. Because uptake is low, it is difficult to get a solid average estimate for 

implementation and maintenance costs that can be applied across the industry. 

Although we have provided some estimates on implementation/upgrade costs in this 

analysis, we recognize that there are additional industry costs associated with adoption and 
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implementation of EHR technology that are not captured in our estimates that eligible entities 

will incur. Because the impact of those activities, such as reduced staff productivity related to 

learning how to use the EHR technology, the need to add additional staff to work with HIT 

issues, administrative costs related to reporting, and the like are unknown at this time and 

difficult to quantify, we invite public comment and additional information to assist in our 

analysis. We also note that there may be EPs that voluntarily choose not to participate in the 

program, and that those EPs may anticipate potential costs resulting from that decision. 

Therefore, we have set a placeholder in our accounting statement at this time and request public 

comment on industry costs on those that may or may not choose to implement the program that 

could inform our analysis for the final rule. 

We did not include cost estimates on Federal hospitals in this analysis, since the Veterans 

Affairs hospitals have already implemented comprehensive electronic health record systems. 

There may be costs if those systems have to be significantly upgraded to meet the certification 

criteria, but no estimates were gathered for this analysis. 

5. Medicare Incentive Program Costs 

a. Medicare Eligible Professionals (EPs) 

To determine the estimated costs of the Medicare incentives for EPs we first needed to 

determine the EPs with Medicare claims. Then, we calculated that about 27 percent of those EPs 

are hospital-based based on the definition proposed in §495.6, and therefore, do not qualify for 

incentive payments. They are subtracted from the total number of EPs who have claims with 

Medicare. These numbers were tabulated from Medicare claims data. We have also estimated 

that about 20 percent of EPs that are not hospital-based will qualify for Medicaid incentive 

payments and will choose that program because the payments are higher. Of the remaining EPs, 
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we have estimated the percentage which will be meaningful users each calendar year. As 

discussed previously our estimates for the number of EPs that will successfully demonstrate 

meaningful use of certified EHR technology are uncertain, so we established high and low 

scenario to account for high and low rates of demonstration of meaningful use. 

The percentage of Medicare EPs who will satisfy the criteria for demonstrating 

meaningful use of certified EHR technology and will qualify for incentive payments is a key, but 

highly uncertain factor. Our Medicare EHR adoption assumptions for EPs are also affected by 

the current situation with Medicare physician fee schedule payment rates. As noted previously, 

under current law (that is, the SGR system formulas), physician payments will be reduced by at 

least 21 percent beginning in CY 2010. Such reductions would almost certainly cause major 

changes in physician behavior, enrollee care, and other Medicare provider payments, but the 

specific nature of these changes is exceptionally uncertain. Under a current law scenario, the 

EHR incentives or payment adjustments would exert only a minor influence on physician 

behavior relative to these very large payment reductions. Behavioral changes resulting from 

these scheduled payment reductions are not included in our estimate and likewise do not assume 

any additional behavioral changes from EHR incentive payments. 

Accordingly, the estimated number of nonhospital based Medicare EPs who will 

demonstrate meaningful use of certified EHR technology over the period CYs 2011 through 

2019 is as shown in Table 35. 

TABLE 35: Medicare EPs Demonstrating Meaningful Use of Certified EHR Technology, 

High and Low Scenario 

Calendar Year 

2011 2012 2013 2014 2015 2016 2017 2018 2019

EPs who have claims with 

Medicare (thousands)

553.2 558.9 564.6 570.3 576.0 581.7 587.5 593.3 599.0

Non-Hospital Based EPs 

(thousands)

404.4 408.6 412.7 416.9 421.1 425.3 429.5 433.7 437.9
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Calendar Year 

2011 2012 2013 2014 2015 2016 2017 2018 2019

EPs that are both Medicare and 

Medicaid EPs (thousands)

80.9 81.7 82.5 83.4 84.2 85.1 85.9 86.7 87.6

Low Scenario:

Percent of EPs who are 

Meaningful Users

10 13 15 18 21 24 28 32 36

Meaningful Users (thousands) 33.8 41.3 49.8 59.5 70.3 82.4 95.6 110.0 125.4

High Scenario:

Percent of EPs who are 

Meaningful Users

36 40 44 49 53 58 62 66 70

Meaningful Users (thousands) 115.8 131.0 146.8 163.1 179.7 196.4 212.9 229.0 244.6

Under the HITECH Act, EPs can receive up to 5 years of Medicare incentive payments 

for the meaningful use of certified EHR technology. These payments are the lesser of 75 percent 

of the physician's allowed charges for the year or a specified maximum amount, which declines 

from a possible $18,000 incentive payment for the first payment year to a $2,000 incentive 

payment for the fifth payment year. EPs in HPSAs receive incentives that are 10 percent higher 

than the maximum amounts. Hospital-based EPs are not eligible for the Medicare EP incentive 

payments. EPs may choose to receive incentive payments from either Medicare or Medicaid, but 

not from both. 

The standard full amount of Medicaid incentive payments that an EP could receive is 

larger than the standard full amount for the Medicare EP incentive payments: about $65,000 

versus $44,000 for Medicare. Details about the Medicaid payments are described in the section 

V.G.3 of this proposed rule. Medicare incentive payments can first be paid to EPs in CY 2011; 

and 2012 is the last year that an EP can start to receive incentives and obtain the full 5 years of 

payments. EPs who first qualify in CY 2013 would be limited to an incentive of $15,000 for the 

first year, and may be eligible to receive 4 years of incentive payments. EPs who first qualify in 

CY 2014 would be limited to an incentive of $12,000 for the first year and may be may be 

eligible to receive 3 years of incentive payments. For the Medicare program, incentives are not 
CMS-0033-P 428 

payable after CY 2016, and EPs who first demonstrate meaningful use in CY 2015 or later are 

not eligible for EHR incentive payments. 

Medicare payment adjustments will apply in CY 2015 and later to EPs who cannot 

demonstrate meaningful use of certified EHR technology, regardless of whether they received an 

EHR incentive payment or not. Specifically, the Medicare Physician Fee Schedule payments for 

an EP who cannot demonstrate meaningful use of certified EHR technology would be reduced by 

1 percentage point in CY 2015, two percentage points in CY 2016, and 3 percentage points in 

CY 2017, and between 3 and 5 percentage points in starting in CY 2018. The HITECH Act 

gives the Secretary the authority, beginning in CY 2018, to increase these reductions by 1 

percentage point each year, but not more than 5 percentage points overall, if the Secretary finds 

the proportion of EPs who are meaningful EHR users is less than 75 percent. 

Each year a transfer will be made between the general fund of the Treasury and the Part 

B account of the Supplemental Medical Insurance (SMI) trust fund to offset the incentives paid 

or payment adjustments made during the year. In this way, the Part B beneficiary premium will 

not be affected by the EP payment incentives. 

We estimate that there are 12 MA plans that might be eligible to participate in the EHR 

incentive program. Those plans have about 28,000 EPs. 

Our estimates of the incentive payment costs and payment adjustment savings reflect our 

assumptions about the proportion of EPs who will demonstrate meaningful user of certified EHR 

technology. These assumptions were developed based on a review of recent studies and 

discussions with subject matter experts. We project that a growing proportion of EPs will adopt 

certified EHR technology that meets the standards even in the absence of the legislated 

incentives. This number could be higher or lower depending on the final meaningful use 
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definition adopted, physicians' access to capital and implementation expertise, the success of the 

other HITECH programs in reaching physicians, and other factors. 

Specifically, our assumptions are based on literature estimating current rates of physician 

EHR adoption and rates of diffusion of EHRs and similar technologies. There are a number of 

studies that have attempted to measure the rate of adoption of electronic medical records (EMR) 

among physicians prior to the enactment of the HITECH Act (see, for example, Funky and 

Taylor (2005) The State and Pattern of Health Information Technology Adoption. RAND 

Monograph MG-409. Santa Monica: The RAND Corporation; Ford, E.W., Menachemi, N., 

Peterson, L.T., Huerta, T.R. (2009) “Resistance is Futile: But it is Slowing the Pace of EHR 

Adoption Nonetheless” Journal of the American Informatics Association 16(3): 274-281). We 

took the estimated rate of EHR adoption from the study with the most rigorous definition, 

assuming that meaningful use would be a standard at least as strict as that one (DesRoches, CM, 

Campbell, EG, Rao, SR et al (2008) “Electronic Health Records in Ambulatory Care-A National 

Survey of Physicians” New England Journal of Medicine 359(1): 50-60). We then inflated that 

number (4 percent) to a 2011 baseline using the numbers of physicians reporting in that survey 

that they had EHR implementation underway. We assumed that the same proportion of them 

would be implementing fully-functional EHRs as in the baseline (30 percent of those with basic 

systems.) We then trended this number forward using the trajectory mapped out by Ford et al. 

using the data from the period prior to FY 2004 since the slower rate of adoption during the FY 

2005 through 2007 period was thought to be caused by policy uncertainty which this regulation 

should resolve. 

However, actual adoption trends could be significantly different from these assumptions, 

given the elements of uncertainty we describe throughout this analysis. 
CMS-0033-P 430 

The estimated net costs for the low scenario of the Medicare EP portion of the HITECH 

Act are shown in Table 36. This provision is estimated to decrease Part B expenditures by a net 

total of $0.6 billion during FYs 2011 through 2019. 

TABLE 36: Estimated Costs (+) and Savings (–) for Medicare EPs Demonstrating 

Meaningful Use of Certified EHR Technology, Low Scenario 

(in billions) 

Fiscal Year Incentive 

Payments 

Payment 

Adjustment 

Receipts 

Benefit 

Payments Net Total 

2009 — — — — 

2010 — — — — 

2011 $0.1 — — $0.1 

2012 $0.9 — — $0.9 

2013 $0.8 — — $0.8 

2014 $0.7 — — $0.7 

2015 $0.5 –$0.4 — $0.1 

2016 $0.3 –$0.6 — –$0.3 

2017 $0.1 –$0.9 — –$0.8 

2018 — –$1.0 — –$1.0 

2019 — –$1.1 — –$1.1 

Total, 2009-2014 $2.4 — — $2.4 

Total, 2009-2019 $3.2 –$3.9 — –$0.6 

The estimated net costs for the high scenario of the Medicare EP portion of the HITECH 

Act are shown in Table 37. This provision is estimated to increase Part B expenditures by a net 

total of $5.4 billion during FYs 2011 through 2019. 

TABLE 37: Estimated Costs (+) and Savings (–) for Medicare EPs Demonstrating 

Meaningful Use of Certified EHR Technology, High Scenario 

(in billions) 

Fiscal Year Incentive 

Payments 

Payment 

Adjustment 

Receipts 

Benefit 

Payments Net Total 

2009 — — — — 

2010 — — — — 

2011 $0.3 — — $0.3 

2012 $2.2 — — $2.2 
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Fiscal Year Incentive 

Payments 

Payment 

Adjustment 

Receipts 

Benefit 

Payments Net Total 

2013 $1.8 — — $1.8 

2014 $1.5 — — $1.5 

2015 $1.0 –$0.2 — $0.8 

2016 $0.6 –$0.3 — $0.2 

2017 $0.1 –$0.5 — –$0.4 

2018 — –$0.5 — –$0.5 

2019 — –$0.5 — –$0.5 

Total, 2009-2014 $5.8 — — $5.8 

Total, 2009-2019 $7.5 –$2.1 — $5.4 

b. Medicare Eligible Hospitals 

In brief, the estimates of hospital adoption were developed by calculating projected 

incentive payments (which are driven by discharges), comparing them to projected costs of 

attaining meaningful use, and then making assumption about how rapidly hospitals would adopt 

given the fraction of their costs that were covered. 

Specifically, the first step in preparing estimates of Medicare program costs for eligible 

hospitals was to determine the amount of Medicare incentive payments that each hospital in the 

country could potentially receive under the statutory formula, based on its admission numbers 

(total patients and Medicare patients). The total incentive payments potentially payable over a 4-

year period vary significantly by hospitals' inpatient caseloads, ranging from a low of about 

$9,000 to a high of $10.4 million, with the median being $3.6 million. The potential Medicare 

incentive payments for each eligible hospital were compared with the hospital's expected cost of 

purchasing and operating certified EHR technology. Costs of adoption for each hospital were 

estimated using data from the 2007 AHA annual survey and IT supplement. Estimated costs 

varied by size of hospital and by the likely status of EHR adoption in that class of hospitals. 

Hospitals were grouped first by size (CAHs, non-CAH hospitals under 400 beds, and hospitals 
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with 400 or more beds) because EHR adoption costs do vary by size: namely, larger hospitals 

with more diverse service offerings and powerful physician staffs generally implement more 

customized systems than smaller hospitals that might purchase off-the-shelf products. We then 

calculated the proportion of hospitals within each class that were at one of three levels of EHR 

adoption: (1) hospitals which had already implemented relatively advanced systems that 

included CPOE systems for medications; (2) hospitals which had implemented more basic 

systems through which lab results could be shared, but not CPOE for medications; and (3) 

hospitals starting from a base level either neither CPOE or lab reporting. The CPOE for 

medication standard was chosen because expert input indicated that the CPOE standard in the 

proposed meaningful use definition will be the hardest one for hospitals to meet. Table 38 

provides these proportions. 

TABLE 38: Hospital IT Capabilities By Hospital Size 

Levels of Adoption 

 Any CPOE Meds Lab Results Neither Total 

Hospital Size 

Number 

of 

Hospitals Percentage 

Number 

of 

Hospitals Percentage 

Number 

of 

Hospitals Percentage 

Number 

of 

Hospitals Percentage 

CAHs 146 18% 372 47% 274 35% 792 23% 

Small/Medium 683 30% 1,268 55% 359 16% 2,310 67% 

Large (400+beds) 169 49% 162 47% 17 5% 348 10% 

 Total 998 29% 1802 52% 650 19% 3,450 100% 

We then calculated the costs of moving from these stages to meaningful use for each 

class of hospital, assuming that even for hospitals with CPOE systems they would incur 

additional costs of at least 10 percent of their IT budgets. These costs were based on 

cross-sectional data from the AHA survey and thus do not likely represent the true costs of 

implementing systems. We request public input on the costs of adoption and attaining the 

meaningful use standard and the determinants of those costs. 
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Under the HITECH Act, an eligible hospital can receive up to 4 years of Medicare 

incentive payments for the demonstration of meaningful use of certified EHR technology. These 

payments reflect the ratio of Medicare inpatient days to total inpatient days and are adjusted by 

transition factors of 100, 75, 50, and 25 percent for the first through fourth implementation years 

respectively. Medicare incentive payments can first be paid to hospitals in FY 2011, and FY 

2013 is the last year that a hospital can start to receive incentives and obtain the full 4-year 

transition rates. Eligible hospitals that first qualify in FY 2014 or FY 2015 will only receive the 

transition portions that apply to eligible hospitals who implement their EHR in FY 2013 (for 

example, 75 percent in FY 2014 and 50 percent in FY 2015). Eligible hospitals that first 

demonstrate meaningful use in FY 2016 or later are not eligible for incentive payments. 

Payment adjustments will be applied beginning in FY 2015 to eligible hospitals that cannot 

demonstrate meaningful use of certified EHR technology. Special rules apply to CAHs. 

We estimate that there are 12 MAOs that might be eligible to participate in the incentive 

program. Those plans have 29 eligible hospitals. The costs for the MA program have been 

included in the overall Medicare estimates. 

Again due to uncertainties, we are providing ranges for our estimates. Our high scenario 

estimated net costs for section 4102 of the HITECH Act are shown in Table 39: Estimated costs 

(+) and savings (–) for eligible hospitals adopting certified EHRs. This provision is estimated to 

increase Medicare hospital expenditures by a net total of $11.2 billion during FYs 2011 through 

2019. 

TABLE 39: Estimated Costs (+) and Savings (–) for Medicare Eligible Hospitals 

Demonstrating Meaningful Use of Certified EHR Technology, High Scenario 

(in billions) 
CMS-0033-P 434 

Fiscal Year Incentive 

Payments 

Payment 

Adjustment 

Receipts 

Benefit 

Payments Net Total 

2009 — — — — 

2010 — — — — 

2011 $2.4 — (1) $2.4 

2012 $2.7 — (1) $2.7 

2013 $2.4 — (1) $2.4 

2014 $2.3 — (1) $2.3 

2015 $1.3 -$0.1 (1) $1.2 

2016 $0.5 -$0.1 (1) $0.4 

2017 — — (1) (1) 

2018 — — (1) (1) 

2019 — — (1) (1) 

Total, 2009-2014 $9.8 — –$0.1 $9.7 

Total, 2009-2019 $11.6 –$0.2 –$0.2 $11.2 1

 Savings of less than $50 million. 

We are also providing the estimates for a low scenario in Table 40. 

TABLE 40: Estimated Costs (+) and Savings (–) for Medicare Eligible Hospitals 

Demonstrating Meaningful Use of Certified EHR Technology, Low Scenario 

(in billions) 

Fiscal Year Incentive 

Payments 

Payment 

Adjustment 

Receipts 

Benefit 

Payments 

Net Total 

2009 — — — — 

2010 — — — — 

2011 $1.7 — (1) $1.7 

2012 $1.6 — (1) $1.6 

2013 $1.5 — (1) $1.5 

2014 $1.8 — (1) $1.8 

2015 $1.4 –$0.4 (1) $1.0 

2016 $0.6 –$0.3 (1) $0.3 

2017 — -$0.3 (1) -$0.3 

2018 — -$0.2 (1) -$0.2 

2019 — — (1) (1) 

Total, 2009-2014 $6.6 — –$0.1 $6.5 

Total, 2009-2019 $8.6 –$1.1 –$0.2 $7.4 

1

 Savings of less than $50 million. 

Based on the comparison of Medicare incentive payments and implementation/operating 

costs for each eligible hospital, (described above), we made the assumptions shown in Table 41, 
CMS-0033-P 435 

related to the prevalence of certified EHR technology for FY 2011 through 2018. As indicated, 

eligible hospitals that could cover the full cost of an EHR system through Medicare incentive 

payments were assumed to implement them relatively rapidly, and vice-versa. In other words, 

eligible hospitals will have an incentive to purchase and implement an EHR system if they 

perceive that a large portion of the costs will be covered by the incentive payments. Table 41 

shows the high scenario estimates: 

TABLE 41: Assumed Proportion of Eligible Hospitals with Certified EHR Technology, by 

Percentage of System Cost Covered by Medicare Incentive Payments, High Scenario 

Incentive Payments as Percentage of EHR 

Technology Cost Fiscal 

Year 100+% 75-100% 50-75% 25-50% 0-25% 

2011 0.8 0.5 0.3 0.2 0.1 

2012 0.95 0.65 0.5 0.35 0.2 

2013 1.0 0.8 0.7 0.6 0.4 

2014 1.0 0.95 0.85 0.75 0.6 

2015 1.0 1.0 0.95 0.9 0.8 

2016 1.0 1.0 1.0 0.95 0.9 

2017 1.0 1.0 1.0 1.0 0.95 

2018 1.0 1.0 1.0 1.0 1.0 

For instance, under the high scenario 50 percent of eligible hospitals whose incentive 

payments would cover between 75 percent and 100 percent of the cost of a certified EHR system 

were assumed to have a certified system in FY 2011. In FY 2012, 65 percent of those hospitals 

were assumed to have a certified EHR system. All such hospitals were assumed to have a 

certified EHR system in FY 2015 and thereafter. 

High rates of EHR adoption are anticipated prior to FY 2015 due to the large payment 

adjustments that will be imposed on eligible hospitals that are unable to demonstrate meaningful 

use beginning in FY 2015. Specifically, the Medicare “market basket” payment updates would 

be reduced (on a noncumulative basis) by one-fourth, one-half, and three-fourths for FYs 2015, 
CMS-0033-P 436 

2016, and 2017 and later, respectively, for eligible hospitals that were not meaningful users of 

certified EHR technology. However, we heard from industry experts that issues surrounding the 

capacity of vendors and expert consultants to support implementation, issues of access to capital, 

and competing priorities in responding to payer demand will limit the number of hospitals that 

can adopt advanced systems in the short-term. Therefore, we cannot be certain of the adoption 

rate for hospitals due to these factors and others previously outlined in this preamble, and so we 

provide a range which reflects what we believe are reasonably anticipated low to high rates of 

adoption. 

Table 42 shows the low scenario estimates.

TABLE 42: Assumed Proportion of Eligible Hospitals with Certified EHR Technology, by 

Percentage of System Cost Covered by Medicare Incentive Payments, Low Scenario 

Incentive Payments as Percentage of EHR 

Fiscal Technology Cost 

Year 100+% 75-100% 50-75% 25-50% 0-25% 

2011 0.6 0.35 0.2 0.2 0.05 

2012 0.65 0.4 0.25 0.15 0.1 

2013 0.75 0.55 0.4 0.25 0.15 

2014 0.9 0.75 0.55 0.4 0.3 

2015 1.0 0.9 0.75 0.6 0.5 

2016 1.0 1.0 0.9 0.85 0.75 

2017 1.0 1.0 0.95 0.9 0.85 

2018 1.0 1.0 1.0 0.95 0.9 

2019 1.0 1.0 1.0 1.0 1.0 

For large, organized facilities such as hospitals, we believe that the revenue losses caused 

by these payment adjustments would be a substantial incentive to adopt certified EHR 

technology, even in instances where the Medicare incentive payments would cover only a 

portion of the costs of purchasing, installing, populating, and operating the EHR system. Based 

on the assumptions about incentive payments as percentages of EHR technology costs in Table 

42, we estimated that the great majority of eligible hospitals would qualify for at least a portion 
CMS-0033-P 437 

of the Medicare incentive payments that they could potentially receive, and only a modest 

number would incur penalties. Nearly all eligible hospitals are projected to have implemented 

certified EHR technology by FY 2019. Table 43 shows our high scenario estimated range of 

percentages of the total potential incentive payments associated with eligible hospitals that could 

demonstrate meaningful use of EHR systems. Also shown are the estimated percentages of 

potential incentives that would actually be paid each year. 

TABLE 43: Estimated Percentage of Medicare Incentives Which Could be Paid for 

Meaningful Use of Certified EHR Technology Associated with Eligible Hospitals and 

Estimated Percentage Payable in Year, High Scenario 

Fiscal 

Year 

Percent Associated 

with Eligible Hospitals

Percent Payable 

in Year 

2011 43.4% 43.4% 

2012 58.5% 58.5% 

2013 73.9% 73.9% 

2014 84.8% 84.8% 

2015 93.6% 50.2% 

2016 97.3% 35.1% 

2017 99.1% — 

2018 100.0% — 

For instance in FY 2012 under the high scenario, 58.5 percent of the total amount of 

incentive payments which could be payable in that year would be for eligible hospitals who have 

demonstrated meaningful use of certified EHR technology and therefore will be paid. In FY 

2015 under the high scenario, 93.6 percent of the total amount of incentive payments which 

could be payable will be for hospitals who have certified EHR systems, but some of those 

eligible hospitals would have already received 4 years of incentive payments, and therefore 50.2 

percent of all possible incentive payments actually paid in that year. 

Table 44 shows the low scenario estimates. 

TABLE 44: Estimated Percentage of Medicare Incentives Which could be paid for the 

Meaningful Use of Certified EHR Technology Associated with Eligible Hospitals and 
CMS-0033-P 438 

Estimated Percentage Payable in Year, Low Scenario 

Fiscal 

Year 

Percent associated 

with eligible hospitals

Percent 

payable in year

2011 30.5% 30.5% 

2012 35.5 % 35.5% 

2013 46.2% 46.2% 

2014 61.7% 61.7% 

2015 77.8 % 47.3% 

2016 90.9% 42.3% 

2017 94.5% — 

2018 97.3% — 

The estimated payments to eligible hospitals were calculated based on the hospitals' 

qualifying status and individual incentive amounts under the statutory formula. Similarly, the 

estimated penalties for nonqualifying hospitals were based on the market basket reductions and 

Medicare revenues. The estimated savings in Medicare eligible hospital benefit expenditures 

resulting from the use of hospital certified EHR systems are discussed under “general 

considerations” at the end of this section. We assumed no future growth in the total number of 

hospitals in the U.S. because growth in acute care hospitals has been minimal in recent years. 

c. Critical Access Hospitals (CAHs) 

 We estimate that there are 1,302 CAHs eligible to receive EHR incentives payments, and 

that will participate in the incentive program beginning in FY 2011. The statistics for their 

incentives are incorporated into the overall Medicare and Medicaid program costs. 

6. Medicaid Incentive Program Costs 

Under section 4201 of the HITECH Act, States can voluntarily participate in the 

Medicaid incentive payment program and we have based our Medicaid incentive program costs 

on all States participating. Eligible hospitals and EPs can also qualify for a Medicaid incentive 

payment for adopting, implementing, or upgrading and up to 5 years of incentive payments for 
CMS-0033-P 439 

demonstrating meaningful use certified EHR technology. Under Medicaid, EPs include 

physicians and pediatricians, dentists, certified nurse-midwives, nurse practitioners, and certain 

physician assistants. Initial incentive payments are available through 2016. The Medicaid 

hospital incentives are similar to those specified in section 4102 of the HITECH Act for 

Medicare, except that they are payable for up to 6 years based on the ratio of Medicaid inpatient 

days to total days, and are not phased down by the Medicare eligible hospital transition factors. 

Medicaid hospitals can begin incentive payments through 2016. There are also additional 

hospitals, such as children's and cancer hospitals that are only eligible for Medicaid incentives. 

EPs may qualify for Medicaid incentive payments if at least 30 percent of their patient 

volume is from Medicaid. (Separate rules apply for pediatricians.) As mentioned above, the 

Medicaid maximum incentive payments are larger than the corresponding Medicare payments. 

Various maximums are specified for eligible hospital and EP incentive payments. There are no 

Medicaid penalties for nonadoption of EHR systems or for failing to demonstrate meaningful 

use. The Federal costs for Medicaid incentive payments to providers who can demonstrate 

meaningful use of EHR technology were estimated similarly to the estimates for Medicare 

eligible hospital and EP. Table 45 shows our high estimates for the net Medicaid costs for 

eligible hospitals and EP. 

TABLE 45: Estimated Federal Costs (+) and Savings (–) under Medicaid, High Scenario 

(in $billions) 

Incentive Payments 

Fiscal Year Hospitals 

Eligible 

Professionals 

Benefit 

Payments Net Total 

2009 — — — — 

2010 — — — — 

2011 1.1 1.2 (1) 2.3 

2012 1.2 0.9 (1) 2.1 

2013 0.7 0.9 (1) 1.6 
CMS-0033-P 440 

Incentive Payments 

Fiscal Year Hospitals 

Eligible 

Professionals 

Benefit 

Payments Net Total 

2014 0.4 0.9 (1) 1.3 

2015 0.3 0.9 (1) 1.2 

2016 0.2 1.0 (1) 1.2 

2017 0.1 0.4 (1) 0.5 

2018 0.0 0.3 (1) 0.3 

2019 0.0 0.2 (1) 0.2 

Total, 2009-2014 3.4 3.8 0.0 7.2 

Total, 2009-2019 4.1 6.6 -0.1 10.6 1

 Savings of less than $50 million. 

Table 46 shows the low estimates for Medicaid costs and savings. 

TABLE 46: Estimated Federal Costs (+) and Savings (–) under Medicaid, Low Scenario 

(in $billions) 

Incentive Payments 

Fiscal Year Hospitals 

Eligible 

Professionals 

Benefit 

Payments Net Total 

2009 — — — — 

2010 — — — — 

2011 0.7 0.6 (1) 1.3 

2012 0.6 0.4 (1) 1.0 

2013 0.4 0.4 (1) 0.9 

2014 0.5 0.5 (1) 1.0 

2015 0.6 0.5 (1) 1.1 

2016 0.6 0.5 (1) 1.1 

2017 0.3 0.2 (1) 0.5 

2018 0.1 0.2 (1) 0.2 

2019 0.0 0.1 (1) 0.1 

Total, 2009-2014 2.3 1.9 0.0 4.2 

Total, 2009-2019 3.8 3.5 -0.1 7.3 1

 Savings of less than $50 million. 

a. Medicaid EPs 

To determine the Medicaid EP incentive payments, we first determined the number of 

qualifying EPs. As indicated above, we assumed that 20 percent of the non-hospital-based 
CMS-0033-P 441 

Medicare EPs would meet the requirements for Medicaid incentive payments (30 percent of 

patient volume from Medicaid). All of these EPs were assumed to choose the Medicaid 

incentive payments, as they are larger. In addition, the total number of Medicaid EPs was 

adjusted to include EPs who qualify for the Medicaid incentive payments but not for the 

Medicare incentive payments, such as most pediatricians, dentists, certified nurse-midwives, 

nurse practitioners and physicians assistants. As noted previously there is much uncertainty 

about the rates of demonstration of meaningful that will be achieved. Therefore, as we estimated 

for the Medicare EPs, we are providing high and low scenario estimates for Medicaid EPs. 

Our high scenario estimates are listed in the Table 47. 

TABLE 47: Assumed Number of Nonhospital Based Medicaid EPs Who Will Be 

Meaningful Users of Certified EHR Technology, High Scenario 

(All population figures are in thousands) 

 Calendar Year 

2011 2012 2013 2014 2015 2016 2017 2018 2019

EPs who have claims 

with Medicare

553.2 558.9 564.6 570.3 576.0 581.7 587.5 593.3 599.0

Non Hospital –Based 

EPs (-27%)

404.4 408.6 412.7 416.9 421.1 425.3 429.5 433.7 437.9

A EPs who meet the 

Medicaid patient 

volume threshold 

80.9 81.7 82.5 83.4 84.2 85.1 85.9 86.7 87.6

B Medicaid1 only EPs 38.2 38.8 39.4 40.1 40.7 41.3 42.0 42.6 43.3

Total Medicaid EPs 

(A + B)

119.1 120.5 122.0 123.4 124.9 126.4 127.9 129.3 130.8

Percent of EPs 

receiving incentive 

payment during year 

46.5% 61.6% 71.1% 76.8% 80.6% 84.3% 40.1% 25.0% 15.2% 

Number of EPs 

receiving incentive 

payment during year 

55.4 74.2 86.7 94.8 100.7 106.6 51.2 32.4 19.9 

Percent of EPs who 

have ever received 

incentive payment 

46.5% 61.6% 71.1% 76.8% 80.6% 84.3% 88.1% 91.9% 93.7% 

Number of EPs who 

have ever received 

incentive payment

55.4 74.2 86.7 94.8 100.7 106.6 112.7 118.9 122.6

1 \Includes non hospital-based eligible pediatricians, dentists, certified nurse-midwives, nurse practitioners and 

physicians assistants. This number is not based on the tabulated Medicare data. It was arrived at by computing a 
CMS-0033-P 442 

ratio of certified nurse-midwives to total nurse-midwives in the States of New York and New Jersey and then 

applying that ratio to the country to arrive at the total number of Medicaid certified nurse-midwives. This same 

logic was also used for nurse practitioners and physicians assistants. The number of pediatricians and dentists is 

based on Medicaid provider historical experience and available studies. It should also be noted that in computing 

the hospital-based percentages, the 27 percent used for physicians was not applied across all providers types since 

the information available indicated that individual hospital-based percentage for certified nurse-midwives is 26 

percent, nurse practitioners is 28 percent, and physicians assistants is 48 percent. We chose New York and New 

Jersey because we were able to obtain data from those States. We welcome comments with additional data sources 

to further refine the estimates. 

Under the high scenario, we assumed an increase over baseline participation of Medicaid 

EPs because of the incentive payments, with the proportion of EPs ever receiving incentive 

payments increasing from 46.5 percent in CY 2011 to 93.7 percent by CY 2019. About 55,000 

EPs are projected to qualify for incentive payments in CY 2011, resulting in a CY 2011 cost of 

about $1.2 billion. It should be noted that since the Medicaid EHR incentive payment program 

provides that a Medicaid EP can receive an incentive payment in their first year because he or 

she is a meaningful user or because he or she is engaged in efforts to adopt, implement, or 

upgrade certified EHR technology, these participation rates include not only meaningful users 

but eligible providers implementing certified EHR technology as well. Table 48 shows our low 

scenario estimates. 

TABLE 48: Assumed Number of Nonhospital Based Medicaid EPs Who Will Be 

Meaningful Users of Certified EHR Technology, Low Scenario

(All population figures are in thousands) 

 Calendar Year 

2011 2012 2013 2014 2015 2016 2017 2018 2019

EPs who have 

claims with 

Medicare

553.2 558.9 564.6 570.3 576.0 581.7 587.5 593.3 599.0

Non Hospital –

Based EPs (-27%)

404.4 408.6 412.7 416.9 421.1 425.3 429.5 433.7 437.9

A EPs who meet the 

Medicaid patient 

volume threshold 

80.9 81.7 82.5 83.4 84.2 85.1 85.9 86.7 87.6

B Medicaid1 only 

EPs

38.2 38.8 39.4 40.1 40.7 41.3 42.0 42.6 43.3
CMS-0033-P 443 

 Calendar Year 

2011 2012 2013 2014 2015 2016 2017 2018 2019

Total Medicaid 

EPs (A + B)

119.1 120.5 122.0 123.4 124.9 126.4 127.9 129.3 130.8

Percent of EPs 

receiving incentive 

payment during 

year 

25.4% 30.8% 35.1% 38.6% 41.7% 45.1% 20.9% 15.3% 10.8% 

Number of EPs 

receiving incentive 

payment during 

year 

30.2 37.1 42.9 47.6 52.1 57.0 26.7 19.8 14.1 

Percent of EPs 

who have ever 

received incentive 

payment 

25.4% 30.8% 35.1% 38.6% 41.7% 45.1% 48.8% 52.8% 56.2% 

Number of EPs 

who have received 

ever incentive 

payment

30.2 37.1 42.9 47.6 52.1 57.0 62.4 68.3 73.5

1

Includes non hospital-based eligible pediatricians, dentists, certified nurse-midwives, nurse practitioners, and physicians 

assistants. This number is not based on the tabulated Medicare data. It was arrived at by computing a ratio of certified 

nurse-midwives to total nurse-midwives in the States of New York and New Jersey and then applying that ratio to the 

country to arrive at the total number of Medicaid certified nurse-midwives. This same logic was also used for nurse 

practitioners and physicians assistants. The number of pediatricians and dentists is based on Medicaid provider historical 

experience and available studies. It should also be noted that in computing the hospital-based percentages, the 27 

percent used for physicians was not applied across all providers types since the information available indicated that 

individual hospital-based percentage for certified nurse-midwives is 26 percent, nurse practitioners is 28 percent, and 

physicians assistants is 48 percent. We chose New York and New Jersey because we were able to obtain data from those 

States. We welcome comments with additional data sources to further refine the estimates. 

b. Medicaid Hospitals 

Medicaid incentive payments to most acute-care hospitals were estimated using the same 

adoption assumptions and methodology as described previously for Medicare eligible hospitals 

and shown in Table 49. Because hospitals' Medicare and Medicaid patient loads differ, we 

separately calculated the range of percentage of total potential incentives that could be associated 

with qualifying hospitals, year by year, and the corresponding actual percentages payable each 

year. Acute care hospitals and children's hospitals can receive Medicaid incentive payments for 

no less than 3 years but no more than 6 years and may qualify to receive both the Medicare and 

Medicaid incentive payments. 
CMS-0033-P 444 

As stated previously, the estimated eligible hospital incentive payments were calculated 

based on the hospitals' qualifying status and individual incentive amounts payable under the 

statutory formula. The estimated savings in Medicaid benefit expenditures resulting from the use 

of certified EHR technology are discussed under “general considerations.” We estimated the 

Medicaid incentives payable to children's hospitals as an add-on to the base estimate, using data 

on the number of children's hospitals compared to non-children's hospitals. 

TABLE 49: Estimated Percentage of Potential Medicaid Incentives Associated with 

Eligible Hospitals and Estimated Percentage Payable Each Year, High Scenario 

Fiscal 

Year 

Percent Associated 

with Eligible Hospitals

Percent Payable 

in Year 

2011 60.7% 60.7% 

2012 75.5% 75.5% 

2013 86.0% 86.0% 

2014 91.5% 30.8% 

2015 96.3% 20.8% 

2016 98.3% 12.3% 

2017 99.5% 6.8% 

2018 100.0% 2.0% 

2019 100.0% 0.0% 

Table 50 shows our low scenario estimates. 

TABLE 50: Estimated Percentage of Potential Medicaid Incentives Associated with 

Eligible Hospitals and Estimated Percentage Payable Each Year, Low Scenario 

Fiscal 

Year 

Percent Associated with 

Eligible Hospitals 

Percent Payable 

in Year 

2011 35.6% 35.6% 

2012 40.6% 40.6% 

2013 50.9% 50.9% 

2014 66.8% 31.2% 

2015 81.6% 41.0% 

2016 92.6% 41.7% 

2017 95.5% 25.8% 

2018 97.4% 11.0% 

2019 100.0% 0.0% 
CMS-0033-P 445 

7. Benefits for all EPs and all Eligible Hospitals 

In this proposed rule we have not quantified the overall benefits to the industry, nor to 

eligible hospitals or EPs in the Medicare, Medicaid, or MA programs. We believe that the first 5 

years of the incentive program will be dedicated to implementation activities, from installation of 

the technology to training to operational and behavioral changes. . Information on the costs and 

benefits of adopting systems specifically meeting the requirements in this rule does not yet exist 

– and information on costs and benefits overall is limited (Goldzweig et al. 2009 “Costs and 

Benefits of Health Information Technology: New Trends from the Literature” Health Affairs.) 

We would welcome industry input on the impact of this proposed rule on adoption, the costs of 

adopting and meeting the meaningful use criteria, and on resulting benefits to providers. 

Nonetheless, we believe there are benefits that can be obtained by eligible hospitals and 

EPs, including: reductions in medical record-keeping costs, reductions in repeat tests, decreases 

in length of stay, and reduced errors. Furthermore, there is limited but growing evidence to 

support the cost saving benefits anticipated from wider adoption of EHRs. For example, at one 

hospital emergency room in Delaware, the ability to download and create a file with a patient's 

medical history saved the ER $545 per use, mostly on reduced waiting times. A pilot study of 

ambulatory practices found a positive ROI within 16 months and annual savings thereafter 

(Greiger et al. 2007, A Pilot Study to Document the Return on Investment for Implementing an 

Ambulatory Electronic Health Record at an Academic Medical Centers.) Some vendors have 

estimated that EHRs could result in cost savings of between $100 and $200 per patient per year. 

As adoption increases, there will be more opportunities to capture and report on cost savings and 

benefits. A number of relevant studies are required in the HITECH Act for this specific purpose, 

and the results will be made public, as they are available. 
CMS-0033-P 446 

Some vendors have estimated that EHRs could result in cost savings of between $100 and 

$200 per patient per year. As adoption increases, there will be more opportunities to capture and 

report on cost savings and benefits. A number of relevant studies are required in the HITECH 

Act for this specific purpose, and the results will be made public, as they are available. 

8. Benefits to Society 

According to the recent CBO study “Evidence on the Costs and Benefits of Health 

Information Technology” (http://www.cbo.gov/ftpdocs/91xx/doc9168/05-20-HealthIT.pdf), 

when used effectively, EHRs can enable providers to deliver health care more efficiently. For 

example, they can reduce the duplication of diagnostic tests, prompt providers to prescribe costeffective generic medications, remind patients about preventive care, reduce unnecessary office 

visits and assist in managing complex care. Further, the report points out that there is a potential 

to gain both internal and external savings from widespread adoption of health IT, noting that 

internal savings would likely be in the reductions in the cost of providing care, and that external 

savings could accrue to the health insurance plan or even the patient, such as the ability to 

exchange information more efficiently. The benefits resulting specifically from this proposed 

regulation are even harder to quantify because they represent, in many cases, adding 

functionality to existing systems and reaping the network externalities created by larger numbers 

of providers participating in information exchange. We would welcome additional data on the 

costs and benefits of specific provisions of this rule and the incentive program as a whole so that 

we can conduct, for the final rule, a more robust assessment of societal benefits to determine 

whether the benefits of the regulation justify its costs (as directed by Executive Order 12866). 

9. General Considerations 
CMS-0033-P 447 

The estimates for the HITECH Act provisions were based on the economic assumptions 

underlying the President's 2010 Budget. Under the statute, Medicare incentive payments for 

certified EHR technology are excluded from the determination of MA capitation benchmarks. 

As noted previously, there is considerable uncertainty about the rate at which eligible hospitals 

and EPs will adopt EHRs and other HIT. Nonetheless, we believe that the Medicare incentive 

payments and the prospect of significant payment penalties for nonparticipation will result in the 

great majority of hospitals implementing certified EHR technology in the early years of the 

Medicare EHR incentive program. We expect that a steadily growing proportion of practices 

will implement certified EHR technology over the next 10 years, even in the absence of the 

Medicare incentives. Actual future Medicare and Medicaid costs for eligible hospital and EP 

incentives will depend in part on the standards developed and applied for assessing meaningful 

use of certified EHR technology. We will administer the requirements in such a way as to 

encourage adoption of certified EHR technology and facilitate qualification for incentive 

payments, and will adopt progressively demanding standards each year. Certified EHR 

technology has the potential to help reduce medical costs through efficiency improvements, such 

as prompter treatments, avoidance of duplicate or otherwise unnecessary services, and reduced 

administrative costs (once systems are in place), with most of these savings being realized by the 

providers rather than by Medicare or Medicaid. To the extent that this technology will have a net 

positive effect on efficiency, then more rapid adoption of such EHR systems would achieve these 

efficiencies sooner than would otherwise occur, without the EHR incentives. 

The CBO has estimated a modest level of such savings attributable to EHRs, with much 

of the amount associated with reductions in adverse drug-to-drug interactions. We believe that 

most of such savings will result from the existing statutory requirements for e-prescribing and 
CMS-0033-P 448 

that the acceleration of other efficiency savings will be relatively modest in comparison to the 

incentive and payment adjustments. We expect a negligible impact on benefit payments to 

hospitals and EPs from Medicare and Medicaid as a result of the implementation of EHR 

technology.” 

In the process of preparing the estimates for this rule, we consulted with and/or relied on 

internal CMS sources, as well as the following sources: 

● Congressional Budget Office (staff and publications). 

● American Medical Association (staff and unpublished data). 

● American Hospital Association. 

● Actuarial Research Corporation. 

● RAND Health studies on: 

++ “The State and Pattern of Health Information Technology Adoption” (Fonkych & 

Taylor, 2005); 

++ “Extrapolating Evidence of Health Information Technology Savings and Costs” 

(Girosi, Meili, & Scoville, 2005); and 

++ “The Diffusion and Value of Healthcare Information Technology” (Bower, 2005). 

● Kaiser Permanente (staff and publications). 

● Miscellaneous other sources (Health Affairs, American Enterprise Institute, news 

articles and perspectives). 

As noted at the beginning of this analysis, it is difficult to predict the actual impacts of 

the HITECH Act with much certainty at this time. We believe the assumptions and methods 

described herein are reasonable for estimating the financial impact of the provisions on the 
CMS-0033-P 449 

Medicare and Medicaid programs, but acknowledge the wide range of possible outcomes. We 

invite comments on all of our assumptions. 

All financial analysis is calculated over a 10-year planning horizon, because though the 

incentive payments for Medicare EPs, CAHs and eligible hospitals will only be paid for 5 years, 

the Medicaid incentives will cease in CY 2021. Starting in CY 2015, payment adjustments will 

be made to the Medicare physician fee schedule. 

10. Summary 

The total cost to the Medicare and Medicaid programs is estimated to be range from 

$14.1 (low scenario) to 27.3 (high scenario) billion over a 10-year timeframe. We do not 

estimate total costs to the provider industry, but rather provide a possible per EP and per eligible 

hospital outlay for implementation and maintenance operations. 

TABLE 51: Estimated EHR Incentive Payments and Benefits Impacts on the Medicare and 

Medicaid Programs of the HITECH EHR Incentive Program. (Fiscal Year) – (in billions) 

Low Scenario 

Fiscal Medicare Eligible Medicaid Eligible 

Year Hospitals Professionals Hospitals Professionals 

Total 

2011 $1.7 $0.1 $0.7 $0.6 $3.1 

2012 $1.6 $0.9 $0.6 $0.4 $3.5 

2013 $1.5 $0.8 $0.4 $0.4 $3.1 

2014 $1.8 $0.7 $0.5 $0.5 $3.5 

2015 $1.0 $0.1 $0.6 $0.5 $2.2 

2016 $0.3 -$0.3 $0.6 $0.5 $1.1 

2017 -$0.3 -$0.8 $0.3 $0.2 -$0.6 

2018 -$0.2 -$1.0 $0.1 $0.2 -$0.9 

2019 — -$1.1 — $0.1 -$1.0 

 TOTAL $7.4 -$0.6 $3.8 $3.5 $14.1 

Table 53 shows the total costs from 2009 through 2019 for the high scenario after which 

the payment adjustments will be invoked. 
CMS-0033-P 450 

Table 52: Estimated EHR Incentive Payments and Benefits Impacts on the Medicare and 

Medicaid Programs of the HITECH EHR Incentive Program. (Fiscal Year) – (in billions) 

High Scenario 

Medicare Eligible Medicaid Eligible 

Fiscal Year Hospitals Professionals Hospitals Professionals Total 

2011 $2.4 $0.3 $1.1 $1.2 $5.0 

2012 $2.7 $2.2 $1.2 $0.9 $7.0 

2013 $2.4 $1.8 $0.7 $0.9 $5.8 

2014 $2.3 $1.5 $0.4 $0.9 $5.1 

2015 $1.2 $0.8 $0.3 $0.9 $3.2 

2016 $0.4 $0.2 $0.2 $1.0 $1.8 

2017 — -$0.4 $0.1 $0.4 $0.1 

2018 — -$0.5 — $0.3 -$0.2 

2019 — -$0.5 — $0.2 -$0.3 

 TOTAL $11.2 $5.4 $4.1 $6.6 $27.3 

11. Explanation of Benefits and Savings Calculations 

In our analysis, we assume that benefits to the program would accrue in the form of 

savings to Medicare, through the Medicare EP payment adjustments. Expected qualitative 

benefits, such as improved quality of care, better health outcomes, reduced errors and the like, 

unable to be quantified at this time. We invite public comment on the subject of benefits to the 

Medicare and Medicaid programs. 

H. Accounting Statement 

Whenever a rule is considered a significant rule under Executive Order 12866, we are 

required to develop an Accounting Statement indicating the classification of the expenditures 

associated with the provisions of this proposed rule. Monetary annualized benefits and nonbudgetary costs are presented as discounted flows using 3 percent and 7 percent factors. 

Additional expenditures that will be undertaken by eligible entities in order to obtain the 

Medicare and Medicaid incentive payments to adopt and demonstrate meaningful use of certified 

EHR technology, and to avoid the Medicare payment adjustments that will ensue if they fail to 

do so are noted by a placeholder in the accounting statement. We are not able to explicitly 
CMS-0033-P 451 

define the universe of those additional costs, nor specify what the high or low range might be. 

We invite public comments that may inform additional analysis on the subject of industry costs 

to implement EHR technology at the final rule stage. 

TABLE 53: Accounting Statement: Classification of Estimated Expenditures 

 CYs 2010 through 2019 

 Category: Transfers 

Low Estimate High Estimate 

1,710.7 million 3,228.5 million 

Annualized Monetized 

 7% 

 3% 1,536.9 million 2,960.4 million 

From Whom to Whom Federal government to eligible professionals and hospitals. 

Category: Industry Costs Associated with Reporting 

Requirements 

Low Estimate High Estimate 

626.62 million 652.35 million 

From Whom to Whom Private industry. 

 Category: Other Industry Costs 

Low Estimate High Estimate 

TBD TBD 

Annualized Monetized 

 7% 

 3% TBD TBD 

From Whom to Whom Private industry. 

In accordance with the provisions of Executive Order 12866, this proposed rule was 

reviewed by the Office of Management and Budget. 
CMS-0033-P 452 

List of Subjects 

42 CFR Part 412 

Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, 

Reporting and recordkeeping requirements. 

42 CFR Part 413 

Health facilities, Kidney diseases, Medicare, Reporting and recordkeeping requirements. 

42 CFR Part 422 

Administrative practice and procedure, Health facilities, Health maintenance 

organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping 

requirements. 

42 CFR Part 495 

Administrative practice and procedure, Electronic health records, Health facilities, Health 

professions, Health maintenance organizations (HMO), Medicaid, Medicare, Penalties, 

Privacy, Reporting and recordkeeping requirements. 

 
CMS-0033-P 453 

For the reasons set forth in the preamble, the Centers for Medicare & Medicare Services 

proposed to amend 42 CFR Chapter IV as follows: 

PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT 

HOSPITAL SERVICES 

1. The authority citation for part 412 continues to read as follows: 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart D—Basic Methodology for Determining Prospective Payment Federal 

Rates for Inpatient Operating Costs 

 2. Section 412.64 is amended by— 

 A. Revising paragraph (d)(2)(i)(B). 

 B. Adding a new paragraphs (d)(2)(i)(C) and (d)(3). 

The revision and additions read as follows: 

§412.64 Federal rates for inpatient operating costs for Federal fiscal year 2005 and 

subsequent fiscal years. 

* * * * * 

(d) * * * 

(2) * * * 

(i) * * * 

(B) For fiscal year 2007 through 2014, by 2 percentage points. 

(C) For fiscal year 2015 and subsequent fiscal years, by one-fourth. 

* * * * * 
CMS-0033-P 454 

(3) Beginning in fiscal year 2015, in the case of a “subsection (d) hospital,” as 

defined under section 1886(d)(1)(B) of the Act, that is not a meaningful electronic health 

record (EHR) user as defined in part 495 of this chapter, three-fourth of the applicable 

percentage change specified in paragraph (d)(1) of this section is reduced-- 

(i) For fiscal year 2015, by 33 1/3 percent; 

(ii) For fiscal year 2016, by 66 2/3 percent; and 

(iii) For fiscal year 2017 and subsequent fiscal years, by 100 percent. 

* * * * * 

PART 413—PRINCIPLES OF REASONABLE COST REIMBURSEMENT; 

PAYMENT FOR END–STAGE RENAL DISEASE SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

 3. The authority citation for part 413 continues to read as follows: 

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1861(v), 

1871, 1881, 1883, and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 

1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); 

and sec. 124 of Public Law 106–133 (113 Stat. 1501A–332). 

Subpart E--Payments to Providers 

 4. Section 413.70 is amended by-- 

 A. Revising paragraph (a)(1). 

 B. Adding new paragraphs (a)(5) and (a)(6). 

 The revision and additions read as follows: 
CMS-0033-P 455 

§413.70 Payment for services of a CAH. 

 (a) Payment for inpatient services furnished by a CAH (other than services of 

distinct part units). (1) Effective for cost reporting periods beginning on or after 

January 1, 2004, payment for inpatient services of a CAH, other than services of a 

distinct part unit of the CAH and other than the items included in the incentive payment 

described in paragraph (a)(5) of this section and subject to the adjustments described in 

paragraph (a)(6) of this section, is 101 percent of the reasonable costs of the CAH in 

providing CAH services to its inpatients, as determined in accordance with section 

1861(v)(1)(A)of the Act and the applicable principles of cost reimbursement in this part 

and in Part 415 of this chapter, except that the following payment principles are excluded 

when determining payment for CAH inpatient services: 

 (i) Lesser of cost or charges; 

 (ii) Ceilings on hospital operating costs; 

 (iii) Reasonable compensation equivalent (RCE) limits for physician services to 

providers; and 

 (iv) The payment window provisions for preadmission services, 

specified in §412.2(c)(5) of this subchapter and §413.40(c)(2) of this part. 

* * * * * 

 (5) A qualifying CAH receives an incentive payment for the reasonable costs of 

purchasing certified EHR technology in a cost reporting period during a payment year as 

determined under §495.106 of this chapter in lieu of payment for such reasonable costs 

under paragraph (a)(1) of this section. 
CMS-0033-P 456 

 (6)(i) For cost reporting periods beginning in or after FY 2015, if a CAH is not a 

qualifying CAH, as defined in §495.106(a) of this chapter, then notwithstanding the 

percentage applicable in paragraph (a)(1) of this section, the reasonable costs of the CAH 

in providing CAH services to its inpatients are adjusted, by the following applicable 

percentage: 

 (A) For cost reporting periods beginning in FY 2015, 100.66 percent; 

 (B) For cost reporting periods beginning in FY 2016, 100.33 percent; and 

 (C) For cost reporting periods beginning in FY 2017 and each subsequent fiscal 

year, 100 percent. 

 (ii) A CAH may, on a case-by case basis, be exempt from the application of the 

adjustments made under this paragraph, if CMS or its Medicare contractors determine, on 

an annual basis, that requiring the CAH to become a qualifying CAH under §495.106 of 

this chapter would result in a significant hardship, such as in the case of a CAH in a rural 

area without sufficient Internet access. 

 (iii) In no case may a CAH be granted an exemption under this paragraph (a)(6) 

for more than 5 years. 

 (iv) There is no administrative or judicial review under section 1869 of the Act, 

section 1878 of the Act, or otherwise of the following: 

 (A) The methodology and standards for determining the amount of payment 

under paragraph (a)(5) of this section. 

 (B) The methodology and standards for determining the amount of payment 

adjustments made under this paragraph (a)(6). 
CMS-0033-P 457 

 (C) The methodology and standards for determining a CAH to be a qualifying 

CAH under §495.106 of this chapter. 

 (D) The methodology and standards for determining if the hardship exemption 

applies to a CAH under paragraph (a)(6)(ii) of this section. 

 (E) The specification of the cost reporting periods, payment years, or fiscal years 

as applied under this paragraph. 

 (F) The calculation of reasonable costs under §495.106(c) of this chapter. 

* * * * * 

PART 422—MEDICARE ADVANTAGE PROGRAM 

5. The authority citation for part 422 continues to read as follows: 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart G--Payments to Medicare Advantage Organizations 

6. Section 422.304 is amended by adding a new paragraph (f) to read as follows: 

§422.304 Monthly payments. 

* * * * * 

(f) Separate payment for meaningful use of certified EHRs. In the case of 

qualifying MA organizations, as defined in §495.200 of this chapter, entitled to MA EHR 

incentive payments per §495.220 of this chapter, such payments are made in accordance 

with sections 1853(l) and (m) of the Act and subpart C of Part 495 of this chapter.

7. Section 422.306 is amended by: 

A. A. Removing “and” from the end of paragraph (b)(2)(ii); 
CMS-0033-P 458 

B. Removing the period at the end of paragraph (b)(2)(iii) and adding “; and” in 

its place; and 

C. Adding a new paragraph (b)(2)(iv) to read as follows: 

§422.306 Annual MA capitation rates 

* * * * * 

(b) * * * 

(2) * * * 

(iv) Adjusted to exclude costs attributable to payments under sections 1848(o) 

and 1886(n) of the Act of Medicare FFS incentive payments for meaningful use of 

electronic health records. 

* * * * * 

8. Section 422.308 is amended by-- 

A. Redesignating paragraph (a) as paragraph (a)(1). 

B. Adding a new paragraph (a)(2). 

The addition reads as follows: 

§422.308 Adjustments to capitation rates, benchmarks, bids, and payments.

* * * * * 

(a) * * * 

(2) The amount calculated in paragraph (a)(1) of this section must exclude 

expenditures attributable to sections 1848(a)(7) and (o) and sections 1886(b)(3)(B)(ix) 

and (n) of the Act. 

* * * * * 
CMS-0033-P 459 

9. Section 422.322 is amended by-- 

A. Adding paragraph (a)(3). 

B. Revising paragraph (b). 

§422.322 Source of payment and effect of MA plan election on payment. 

 (a) * * * 

 (3) Payments under subpart C of part 495 of this chapter for meaningful 

use of certified EHR technology are made from the Federal Hospital Insurance 

Trust Fund or the Supplementary Medical Insurance Trust Fund. In applying 

section 1848(o) of the Act under sections 1853(l) and 1886(n)(2)of the Act under 

section 1853(m) of the Act, CMS determines the amount to the extent feasible and 

practical to be similar to the estimated amount in the aggregate that would be 

payable for services furnished by professionals and hospitals under Parts B and A, 

respectively, under title XVIII of the Act. 

 (b) Payments to the MA organization. Subject to §412.105(g), 

§413.86(d), and §495.204 of this chapter and §§422.109, 422.316, and 422.320, 

CMS' payments under a contract with an MA organization (described in 

§422.304) with respect to an individual electing an MA plan offered by the 

organization are instead of the amounts which (in the absence of the contract) 

would otherwise be payable under original Medicare for items and services 

furnished to the individual. 

* * * * * 

SUBCHAPTER G--STANDARDS AND CERTIFICATIONS 
CMS-0033-P 460 

10. A new part 495 is added to read as follows: 

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD 

TECHNOLOGY INCENTIVE PROGRAM 

Subpart A--General Provisions 

Secs. 

495.2 Basis and purpose. 

495.4 Definitions. 

495.6 Meaningful use objectives measures for EPs, eligible hospitals, and CAHs. 

495.8 Demonstration of meaningful use criteria 

495.10 Participation requirements for EPs and eligible hospitals, and qualifying CAHs. 

Subpart B--Requirements Specific to the Medicare Program 

495.100 Definitions. 

495.102 Incentive payments to EPs. 

495.104 Incentive payments to eligible hospitals. 

495.106 Incentive payments to CAHs. 

495.108 Posting of required information. 

Subpart C--Requirements Specific to Medicare Advantage (MA) Organizations 

495.200 Definitions. 

495.202 Identification of qualifying MA organizations, MA-EPs, and MA-affiliated 

eligible hospitals. 

495.204 Incentive payments to qualifying MA organizations for MA-EPs and hospitals. 

Secs. 
CMS-0033-P 461 

495.206 Timeframe for payment to qualifying MA organizations. 

495.208 Avoiding duplicate payment. 

495.210 Meaningful user attestation. 

495.212 Limitation on review. 

Subpart D--Requirements Specific to the Medicaid Program 

495.300 Basis and purpose. 

495.302 Definitions. 

495.304 Medicaid provider scope and eligibility. 

495.306 Establishing patient volume. 

495.308 Net average allowable costs as the basis for determining the incentive payment. 

495.310 Medicaid provider incentive payments. 

495.312 Process for payments. 

495.314 Activities required to receive an incentive payment. 

495.316 State monitoring and reporting regarding activities required to receive an 

incentive payment. 

495.318 State responsibilities for receiving FFP. 

495.320 FFP for payments to Medicaid providers. 

495.322 FFP for reasonable administrative expenses. 

495.324 Prior approval conditions. 

495.326 Disallowance of Federal financial participation (FFP). 

495.328 Request for reconsideration of adverse determination. 
CMS-0033-P 462 

495.330 Termination of Federal financial participation (FFP) for failure to provide 

access to information. 

495.332 State Medicaid (HIT) plan requirements. 

495.334 State self-assessment requirements. 

495.336 Health information technology planning advance planning document 

requirements (HIT PAPD). 

495.338 Health information technology implementation advance planning document 

requirements (HIT IAPD). 

495.340 As-needed HIT PAPD update and as-needed HIT IAPD update requirements. 

495.342 Annual HIT IAPD requirements. 

495.344 Approval of the State Medicaid HIT plan, the HIT PAPD and update, the HIT 

IAPD and update, and the annual HIT IAPD. 

495.346 Access to systems and records. 

495.348 Procurement standards. 

495.350 State Medicaid agency attestations. 

495.352 Reporting requirements. 

495.354 Rules for charging equipment. 

495.356 Nondiscrimination requirements. 

495.358 Cost allocation plans. 

495.360 Software and ownership rights. 

495.362 Retroactive approval of FFP with an effective date of February 18, 2009. 

Secs. 
CMS-0033-P 463 

495.364 Review and assessment of administrative activities and expenses of Medicaid 

provider health information technology adoption and operation. 

495.366 Financial oversight and monitoring of expenditures. 

495.368 Combating fraud and abuse. 

495.370 Appeals process for a Medicaid provider receiving electronic health record 

incentive payments. 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart A--General Provisions 

§495.2 Basis and purpose. 

This part implements the following: 

(a) Section 1848(o) of the Act by establishing payment incentives under 

Medicare Part B for physicians and other professionals who adopt and meaningfully use 

certified electronic health record technology. 

(b) Section 1853(1) of the Act to provide incentive payments to Medicare 

Advantage organizations for their affiliated professionals who meaningfully use certified 

EHR technology and meet certain other requirements. 

(c) Section 1886(n) of the Act by establishing incentives payments for the 

meaningful use of certified EHR technology by subsection (d) hospitals, as defined under 

section 1886(d)(1)(B) of the Act, participating in Medicare FFS program. 
CMS-0033-P 464 

(d) Section 1814(l) of the Act to provide an incentive payment to critical access 

hospitals who meaningfully use certified EHR technology based on the hospitals' 

reasonable costs. 

(e) Section 1853(m) of the Act to provide incentive payments to MA 

organizations for certain affiliated hospitals that meaningfully use certified EHR 

technology. 

(f) Sections 1903(a)(3)(F) and 1903(t) of the Act to provide 100 percent Federal 

financial participation (FFP) to States for incentive payments to certain eligible providers 

participating in the Medicaid program to purchase, implement, and operate (including 

support services and training for staff) certified EHR technology and 90 percent FFP for 

State administrative expenses related to such incentive payments. 

(g) Sections 1848(a)(7), 1853(l)(4), 1886(b)(3)(ix)(1), and 1853(m)(4) of the Act, 

providing for payment reductions for inpatient services furnished on or after 

October 1, 2014 to Medicare beneficiaries by hospitals that are not meaningful users of 

certified electronic health record technology, and for covered professional services 

furnished on or after January 1, 2015 to Medicare beneficiaries by physicians and other 

professionals who are not meaningful users of certified electronic health record 

technology. 

§495. 4 Definitions. 

In this part, unless otherwise indicated-- 

Certified electronic health record technology means a qualified EHR that meets 

the certification requirements specified in 45 CFR 170.102. 
CMS-0033-P 465 

Critical access hospital (CAH) means a facility that has been certified as a critical 

access hospital under section 1820(e) of the Act and for which Medicare payment is 

made under section 1814(l) of the Act for inpatient services and under section 1834(g) of 

the Act for outpatient services. 

EHR reporting period means either of the following: 

(1) For an EP-- 

 (i) For the first payment year, any continuous 90-day period within a calendar 

year; 

 (ii) For the second, third, fourth, fifth or sixth payment year, the calendar year. 

 (2) For an eligible hospital or a CAH-- 

 (i) For the first payment year, any continuous 90-day period within a fiscal year; 

and 

(ii) For the second, third, fourth, fifth or sixth payment year, the fiscal year. 

Eligible hospital means an eligible hospital as defined under §495.100 or 

Medicaid eligible hospital under subpart D of this part.

Eligible professional (EP) means an eligible professional as defined under 

§495.100 or a Medicaid eligible professional under subpart D of this part.

Fifth payment year means the fifth payment year that the EP, eligible hospital or 

CAH receives an incentive payment under this part. 

First payment year means the first payment year that the EP, eligible hospital or 

CAH receives an incentive payment under this part. 
CMS-0033-P 466 

Fourth payment year means the fourth payment year that the EP, eligible hospital 

or CAH receives an incentive payment under this part. 

Hospital-based EP is an EP (as defined under this section) who furnishes 90 

percent or more of his or her covered professional services in the CY preceding the 

payment year in a hospital setting. A setting is considered a hospital setting if it is 

identified by the codes used in the HIPAA standard transactions that identifies the site of 

service as an inpatient hospital, outpatient hospital, or emergency room. 

Meaningful EHR user means -- 

(1) An EP, eligible hospital or CAH that, for an EHR reporting period for a 

payment year, demonstrates in accordance with §495.8 meaningful use of certified 

EHR technology by meeting the applicable objectives and associated measures under 

§495.6; and 

(2) A Medicaid EP or Medicaid eligible hospital, that meets paragraph (1) of this 

definition and any additional criteria for meaningful use imposed by the State and 

approved by CMS under §495.316 and §495.332. 

Payment year means-- 

(1) For an EP other than a Medicaid EP, a calendar year beginning with 

CY 2011; and 

(2) For a CAH or an eligible hospital other than a Medicaid eligible hospital, a 

Federal fiscal year beginning with FY 2011. 

(3) For a Medicaid EP, 

(i) The timeframe specified in paragraph (1) of this definition; or 
CMS-0033-P 467 

(ii) In accordance with subpart D of this part and with CMS approval, CY 2010. 

(4) For a Medicaid eligible hospital, 

(i) The timeframe specified in paragraph (2) of this definition; or 

(ii) In accordance with subpart D of the part and with CMS approval, FY2010. 

Qualified EHR means an electronic record of health related information on an 

individual that includes patient demographic and clinical health information, such as 

medical history and problem lists; and has the capacity to meet all of the following: 

(1) Provide clinical decision support. 

(2) Support physician order entry. 

(3) Capture and query information relevant to health care quality. 

(4) To exchange electronic health information with, and integrate such 

information from other sources. 

Second payment year means the second payment year that the EP, eligible 

hospital or CAH receives an incentive payment under this part. 

Sixth payment year means the sixth payment year that the EP, eligible hospital or 

CAH receives an incentive payment under this part. 

Third payment year means the third payment year that the EP, eligible hospital or 

CAH receives an incentive payment under this part. 

§495.6 Meaningful use objectives and measures for EPs, eligible hospitals, and 

CAHs. 

(a) Stage 1 criteria for EPs. (1) General rule regarding Stage 1 criteria for 

meaningful use for EPs. Except as specified in paragraph (a)(2) of this section, EPs must 
CMS-0033-P 468 

meet all objectives and associated measures of the Stage 1 criteria specified in paragraphs 

(c) and (d) of this section to receive an incentive payment. 

(2) Exceptions for Medicaid EPs. (i) Exception for Medicaid EPs receiving 

payment in CY 2010. If CMS has approved a State's request to begin providing incentive 

payments to EPs in CY 2010 for adopting, implementing or upgrading certified EHR 

technology, the objectives and associated measures of the Stage 1 criteria specified in 

paragraphs (c) and (d) are applicable to an EP whose second payment year is CY 2011. 

(ii) Exception for Medicaid EPs who adopt, implement or upgrade in their first 

payment year. For Medicaid EPs who adopt, implement, or upgrade certified EHR 

technology in their first payment year, the meaningful use objectives and associated 

measures of the Stage 1 criteria specified in paragraphs (c) and (d) apply beginning with 

the second payment year, and do not apply to the first payment year. 

(b) Stage 1 criteria for eligible hospitals and CAHs. (1) General rule regarding 

Stage 1 criteria for meaningful use for eligible hospitals or CAHs. Except as specified in 

paragraph (b)(2) of this section, eligible hospitals and CAHs must meet all objectives and 

associated measures of the Stage 1 criteria specified in paragraphs (c) and (e) of this 

section to receive an incentive payment. 

(2) Exception for Medicaid eligible hospitals. For Medicaid eligible hospitals 

who adopt, implement, or upgrade certified EHR technology in their first payment year, 

the meaningful use objectives and associated measures of the Stage 1 criteria specified in 

paragraphs (c) and (e) apply beginning with the second payment year. 
CMS-0033-P 469 

(c) Stage 1 criteria for EPs and eligible hospitals or CAHs. An EP, eligible 

hospital or CAH must satisfy the following objectives and associated measures:

 (1)(i) Objective. Implement drug-drug, drug-allergy, drug-formulary checks. 

 (ii) Measure. The EP, eligible hospital or CAH has enabled this functionality. 

 (2)(i) Objective. Maintain an up-to-date problem list of current and active 

diagnoses based on ICD-9-CM or SNOMED CT ®. 

 (ii) Measure. At least 80 percent of all unique patients seen by the EP or 

admitted to an eligible hospital or CAH have at least one entry or an indication 

of none recorded as structured data. 

 (3)(i) Objective. Maintain active medication list. 

 (ii) Measure. At least 80 percent of all unique patients seen by the EP or 

admitted by the eligible hospital or CAH have at least one entry (or an indication of 

“none” if the patient is not currently prescribed any medication) recorded as structured 

data. 

 (4)(i) Objective. Maintain active medication allergy list. 

 (ii) Measure. At least 80 percent of all unique patients seen by the EP or 

admitted to the eligible hospital or CAH have at least one entry (or an indication of 

“none” if the patient has no medication allergies) recorded as structured data. 

 (5)(i) Objective. Record the following demographics: 

 (A) Preferred language. 

 (B) Insurance type. 

 (C) Gender. 
CMS-0033-P 470 

 (D) Race. 

 (E) Ethnicity. 

 (F) Date of birth. 

 (G) For eligible hospitals or CAHs, the date and cause of death in the event of 

mortality. 

 (ii) Measure. At least 80 percent of all unique patients seen by the EP or 

admitted to the eligible hospital or CAH have the demographics specified in paragraphs 

(c)(5)(i)(A) through (G) of this section recorded as structured data. 

 (6)(i) Objective. (A) Record and chart changes in the following vital signs: 

 (1) Height. 

 (2) Weight. 

 (3) Blood pressure. 

 (B) Calculate and display the body mass index (BMI) for patients 2 years and 

older. 

 (C) Plot and display growth charts for children 2 to 20 years including body mass 

index. 

 (ii) Measure. For at least 80 percent of all unique patients age 2 years or older 

seen by the EP or admitted to the eligible hospital, record blood pressure and BMI and 

plot the growth chart for children age 2 to 20 years old. 

 (7)(i) Objective. Record smoking status for patients 13 years old or older. 

 (ii) Measure. At least 80 percent of all unique patients 13 years old or older seen 

by the EP or admitted to the eligible hospital or CAH have “smoking status” recorded. 
CMS-0033-P 471 

 (8)(i) Objective. Incorporate clinical lab-test results into EHR as structured data. 

 (ii) Measure. At least 50 percent of all clinical lab tests results ordered by the EP 

or authorized provider of the hospital during the EHR reporting period whose results are 

either in a positive/negative or numerical format are incorporated in certified EHR 

technology as structured data. 

 (9)(i) Objective. Generate lists of patients by specific conditions to use for 

quality improvement, reduction of disparities, research and outreach. 

 (ii) Measure. Generate at least one report listing patients of the EP, eligible 

hospital or CAH with a specific condition. 

 (10)(i) Objective. Implement five clinical decision support rules relevant to 

specialty or high clinical priority, including for diagnostic test ordering, along with the 

ability to track compliance with those rules. 

 (i) Measure. Implement five clinical decision support rules relevant to the 

clinical quality metrics reported under this subpart. 

 (11)(i) Objective. Check insurance eligibility electronically from public and 

private payers. 

 (ii) Measure. Insurance eligibility is checked electronically for at least 80 percent 

of all unique patients seen by the EP or admitted to the eligible hospital or CAH. 

 (12)(i) Objective. Submit claims electronically to public and private payers. 

 (ii) Measure. At least 80 percent of all claims filed electronically by the EP or 

the eligible hospital or CAH. 
CMS-0033-P 472 

 (13)(i) Objective. Perform medication reconciliation at relevant encounters and 

each transition of care. 

 (ii) Measure. Perform medication reconciliation for at least 80 percent of 

relevant encounters and transitions of care. 

 (14)(i) Objective. Provide summary care record for each transition of care and 

referral. 

 (ii) Measure. Provide summary of care record for at least 80 percent of 

transitions of care and referrals. 

 (15)(i) Objective: Capability to submit electronic data to immunization registries 

and actual submission where required and accepted. 

 (ii) Measure: Performed at least one test of certified EHR technology's capability 

to submit electronic data to immunization registries. 

 (16)(i) Objective. Capability to provide electronic syndromic surveillance data to 

public health agencies and actual transmission according to applicable law and practice. 

 (ii) Measure. Performed at least one test of certified EHR technology's capacity 

to provide electronic syndromic surveillance data to public health agencies (unless none 

of the public health agencies to which the EP, eligible hospital or CAH submits such 

information have the capacity to receive the information electronically). 

 (17)(i) Objective. Protect electronic health information created or maintained by 

certified EHR technology through the implementation of appropriate technical 

capabilities. 
CMS-0033-P 473 

 (ii) Measure. Conduct or review a security risk analysis in accordance with the 

requirements under 45 CFR 164.308(a)(1) and implement security updates as necessary. 

 (d) Additional Stage 1 criteria for EPs. An EP must meet the following 

objectives and associated measures:

 (1)(i) Objective. Use computerized provider order entry (CPOE). 

 (ii) Measure. CPOE is used for at least 80 percent of all orders. 

 (2)(i) Objective. Generate and transmit permissible prescriptions electronically 

(eRx). 

 (ii) Measure. At least 75 percent of all permissible prescriptions written by the 

EP are transmitted electronically using certified EHR technology. 

 (3)(i) Objective. Report ambulatory quality measures to CMS or, in the case of 

Medicaid EPs, the States. 

 (ii) Measure. Successfully report to CMS (or, in the case of Medicaid EPs, the 

States) clinical quality measures in the form and manner specified by CMS. 

 (4)(i) Objective. Send reminders to patients per patient preference for 

preventive/follow-up care. 

 (ii) Measure. Reminder sent to at least 50 percent of all unique patients seen by 

the EP that are 50 years of age and over. 

 (5)(i) Objective. Provide patients with an electronic copy of their health 

information (including diagnostic test results, problem list, medication lists, and allergies) 

upon request. 
CMS-0033-P 474 

 (ii) Measure. At least 80 percent of all patient requests for an electronic copy of 

their health information are provided it within 48 hours. 

 (6)(i) Objective. Provide patients with timely electronic access to their health 

information (including diagnostic test results, problem list, medication lists, and allergies) 

within 96 hours of the information being available to the EP. 

 (ii) Measure. At least 10 percent of all unique patients seen by the EP are 

provided timely electronic access to their health information. 

 (7)(i) Objective. Provide clinical summaries to patients for each office visit. 

 (ii) Measure. Clinical summaries provided to patients for at least 80 percent of 

all office visits. 

 (8)(i) Objective. Capability to exchange key clinical information among 

providers of care and patient authorized entities electronically. 

 (ii) Measure. Perform at least one test of certified EHR technology's capacity to 

electronically exchange key clinical information. 

 (e) Additional Stage 1 criteria for eligible hospitals or CAHs. Eligible hospitals 

or CAHs must meet the following objectives and associated measures:

 (1)(i) Objective. Use computerized provider order entry (CPOE) for orders (any 

type) directly entered by authorizing provider (for example, MD, DO, RN, PA, NP). 

 (ii) Measure. CPOE is used for at least 10 percent of all orders. 

 (2)(i) Objective. Report hospital quality measures to CMS or, in the case of 

Medicaid eligible hospitals, the States. 
CMS-0033-P 475 

 (ii) Measure. Successfully report to CMS (or, in the case of Medicaid eligible 

hospitals, the States) clinical quality measures in the form and manner specified by CMS. 

 (3)(i) Objective. Provide patients with an electronic copy of their health 

information (including diagnostic test results, problem list, medication lists, allergies, 

discharge summary, and procedures), upon request. 

 (ii) Measure. At least 80 percent of all patient requests for an electronic copy of 

their health information are provided it within 48 hours 

 (4)(i) Objective. Provide patients with an electronic copy of their discharge 

instructions and procedures at time of discharge, upon request. 

 (ii) Measure. At least 80 percent of all patients who are discharged from an 

eligible hospital or CAH and who request an electronic copy of their discharge 

instructions and procedures are provided it. 

 (5)(i) Objective. Capability to exchange key clinical information (for example, 

discharge summary, procedures, problem list, medication list, allergies, and diagnostic 

test results) among providers of care and patient-authorized entities electronically. 

 (ii) Measure. Performed at least one test of certified EHR technology's capacity 

to electronically exchange key clinical information. 

 (6)(i) Objective. Capability to provide electronic submission of reportable lab 

results (as required by State or local law) to public health agencies and actual submission 

where it can be received. 

 (ii) Measure. Performed at least one test of certified EHR technology capacity to 

provide electronic submission of reportable lab results to public health agencies (unless 
CMS-0033-P 476 

none of the public health agencies to which the eligible hospital submits such information 

have the capacity to receive the information electronically). 

§495.8 Demonstration of meaningful use criteria.

 (a) Demonstration by EPs. An EP must demonstrate that he or she satisfies each 

of the applicable objectives and associated measures under §495.6 of this subpart as 

follows: 

 (1) For CY 2011, 

 (i) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid EP, in a manner specified by the State), that during the EHR reporting period, 

the EP used certified EHR technology, and specify the technology used. 

 (ii) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid EP, in a manner specified by the State), that during the EHR reporting period, 

the EP satisfied each of the applicable objectives and associated measures under §495.6 

of this part. The EP must specify the EHR reporting period and provide the result of each 

applicable measure for all patients seen during the EHR reporting period for which a 

selected measure is applicable. 

 (iii) For Medicaid EPs, if, in accordance with §495.316 and §495.332, CMS has 

approved a State's additional criteria for meaningful use, demonstrate meeting such 

criteria using the method approved by CMS. 

 (iv) Exception for Medicaid EPs. If a Medicaid EP has adopted, implemented or 

upgraded certified EHR technology described in §495.4 of this subpart, the provider must 
CMS-0033-P 477 

demonstrate meaningful use in the second payment year as described in §495.6 and 

§495.8 of this subpart. 

 (2) For CY 2012 and subsequent years-- 

 (i) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid EP, in a manner specified by the State) that during the EHR reporting period, 

the EP used certified EHR technology and specify the technology used. 

 (ii) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid EP, in a manner specified by the State), that during the EHR reporting period, 

the EP satisfied each of the applicable objectives and associated measures under §495.6, 

except §495.6(d)(3) “Report ambulatory quality measures to CMS or, in the case of 

Medicaid EPs, the states.” 

 (iii) For §495.6(d)(3), “Report ambulatory quality measures to CMS or, in the 

case of Medicaid EPs, the States”, report electronically to CMS (or in the case of 

Medicaid EPs, the States) clinical quality information in the form and manner specified 

by CMS. 

 (iv) For Medicaid EPs, if, in accordance with §495.316 and §495.332, CMS has 

approved a State's additional criteria for meaningful use, demonstrate meeting such 

criteria using the method approved by CMS. 

 (b) Demonstration by eligible hospitals and CAHs. To successfully demonstrate 

meaningful use an eligible hospital or CAH must the following requirements: 

 (1) For FY 2011-- 
CMS-0033-P 478 

 (i) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid eligible hospital, in a manner specified by the State), that during the EHR 

reporting period, the eligible hospital or CAH used certified EHR and specify the 

technology used. 

 (ii) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid eligible hospital, in a manner specified by the State), that during the EHR 

reporting period, the eligible hospital or CAH satisfied each of the applicable objectives 

and associated measures under §495.6. The eligible hospital or CAH must specify the 

EHR reporting period and provide the result of each applicable measure for all patients 

admitted to the eligible hospital during the EHR reporting period for which a selected 

measure is applicable. 

 (iii) Exception for Medicaid eligible hospitals. If a Medicaid eligible hospital has 

adopted, implemented or upgraded certified EHR technology for the first payment year, 

the eligible hospital must demonstrate meaningful use in the second payment year, see 

§495.6 and §495.8. 

 (iv) For hospitals participating in the Medicaid EHR incentive program, if, in 

accordance with §495.316 and §495.332, CMS has approved a State's additional criteria 

for meaningful use, demonstrate meeting such criteria using the method approved by 

CMS. 

 (2) For FY 2012 and subsequent years must-- 

 (i) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid eligible hospital, in a manner specified by the State), that during the EHR 
CMS-0033-P 479 

reporting period, the eligible hospital or CAH used certified EHR and specify the 

technology used. 

 (ii) Attest, through a secure mechanism, in a manner specified by CMS (or for a 

Medicaid eligible hospital, in a manner specified by the State), that during the EHR 

reporting period, the eligible hospital or CAH satisfied each of the applicable objectives 

and associated measures under §495.6 except §495.6(e)(2). The eligible hospital or CAH 

must specify the EHR reporting period and provide the result of each applicable measure, 

except for §495.6(e)(2) “Report hospital quality measures to CMS or, in the case of 

Medicaid eligible hospitals, the States:' 

 (iii) For §495.6(e)(2) “Report hospital clinical quality measures to CMS or, in the 

case of Medicaid eligible hospitals, the States,” report electronically to CMS (or in the 

case of Medicaid eligible hospitals, the States), clinical quality measures in the form and 

manner specified by CMS. 

 (iv) For Medicaid hospitals if, in accordance with §495.316 and §495.332, CMS 

has approved a State's additional criteria for meaningful use, demonstrate meeting such 

criteria using the method approved by CMS. 

 (c) Review of meaningful use. (1) CMS may review an EP, eligible hospital or 

CAH's demonstration of meaningful use. 

 (2) EPs, eligible hospitals, and CAHs must keep documentation supporting their 

demonstration of meaningful use for 10 years. 

§495.10 Participation requirements for EPs, eligible hospitals, and CAHs. 
CMS-0033-P 480 

(a) An eligible hospital, CAH or EP must submit in a manner specified by CMS 

the following information in the first payment year: 

(1) Name of the EP, eligible hospital or CAH. 

(2) National Provider Identifier (NPI). 

(3) Business address and phone number. 

(b) In addition to the information submitted under paragraph (a) of this section, 

an eligible hospital or CAH, must, in the first payment year, submit in a manner specified 

by CMS its CMS Certification Number (CCN) and its Taxpayer Identification Number 

(TIN). 

(c) Subject to paragraph (f) of this section, in addition to the information 

submitted under paragraph (a) of this section, an EP must submit in a manner specified 

by CMS, the Taxpayer Identification Number (TIN) to which the EP's incentive payment 

should be made. 

(d) In the event the information specified in paragraphs (a) through (c) of this 

section as previously submitted to CMS is no longer accurate, the EP or eligible hospital 

must provide updated information to CMS or the State on a timely basis in the manner 

specified by CMS or the State.

(e) An EP that qualifies as both a Medicaid EP and Medicare EP-- 

(1) Must notify CMS in the manner specified by CMS as to whether he or she 

elects to participate in the Medicare or the Medicaid EHR incentive program. 

(2) Is limited to switching between programs one time, and only for payment 

years 2014 and before; 
CMS-0033-P 481 

(3) Must, for each payment year, meet all of the Medicare or Medicaid applicable 

requirements, including applicable patient volume requirements, for the program he or 

she chooses to participate in; 

(4) Is limited to receiving, in total, the maximum payments the EP would receive 

under the Medicaid EHR program, as described in subpart D of this part; 

(5) Is placed in the payment year the EP would have been in, had the EP not 

switched programs. For example, an EP that begins receiving Medicaid incentive 

payments in 2011, and then switches to the Medicare program for 2012, is in his or her 

second payment year in 2012. 

(f) Limitations on incentive payment reassignments. Section 1842(b)(6)(A) of 

the Act allows for the reassignment of payments under Medicare to an employer or entity 

with which the EP has a contractual arrangement allowing the employer or entity to bill 

and receive payment for the EP's covered professional services. 

(1) EPs are permitted to reassign their incentive payments to their employer or to 

an entity with which they have a contractual arrangement, consistent with all rules 

governing reassignments including part 424, subpart F of this chapter. 

(2) Each EP may only reassign the entire amount of the incentive payment to one 

employer or entity. 

Subpart B--Requirements Specific to the Medicare Program 

§ 495.100 Definitions. 

In this subpart unless otherwise indicated-- 
CMS-0033-P 482 

Covered professional services means services furnished by an eligible 

professional for which payment is made under, or is based on, the Medicare physician fee 

schedule as provided in section 1848(k)(3) of the Act. 

Eligible hospital means a hospital subject to the prospective payment system 

specified in §412.1(a)(1) of this chapter, excluding those hospitals specified in §412.23 of 

this chapter. 

Eligible professional (EP) means a physician as defined in section 1861(r) of the 

Act, which includes all of the following types of professionals: 

(1) A doctor of medicine or osteopathy. 

(2) A doctor of dental surgery or medicine. 

(3) A doctor of podiatric medicine. 

(4) A doctor of optometry. 

(5) A chiropractor. 

Geographic health professional shortage area (HPSA) means an area that is 

designated by the Secretary under section 332(a)(1)(A) of the PHS Act as of December 

31 of the year prior to the payment year as having a shortage of health professionals. 

Qualifying CAH means a CAH that is a meaningful EHR user for the EHR 

reporting period for a cost reporting period beginning during a payment year. 

Qualifying eligible professional (EP) means an EP who is a meaningful EHR user 

for the EHR reporting period for a payment year and who is not a hospital-based EP. 

 Qualifying hospital means an eligible hospital that is a meaningful EHR user for 

the EHR reporting period for a payment year. 
CMS-0033-P 483 

§ 495.102 Incentive payments to EPs. 

(a) General rules. (1) Subject to paragraph (b) of this section, in addition to the 

amount otherwise paid under section 1848 of the Act, there shall be paid to a qualifying 

eligible professional (or to an employer or entity in the cases described in section 

1842(b)(6)(A) of the Act) for a payment year an amount equal 75 percent of the 

estimated allowed charges under the physician fee schedule (established under section 

1848 of the Act) for the covered professional services furnished by the EP during the 

payment year. 

(2) For purposes of this paragraph (a), the estimated allowed charges for the 

qualifying EP’s covered professional services during the payment year are determined 

based on claims submitted no later than 2 months after the end of the payment year, and, 

in the case of a qualifying EP who furnishes covered professional services in more than 

one practice, are determined based on claims submitted for the EP's covered professional 

services across all such practices. 

 (b) Limitations on amounts of incentive payments. 

(1) Except as otherwise provided in paragraph (b)(2) and paragraph (c) of this 

section, the amount of the incentive payment that a qualifying EP can receive for each 

payment year is limited to the following amounts: 

(i) For the first payment year, $15,000 (or, if the first payment year for such 

qualifying eligible professional is 2011 or 2012, $18,000). 

(ii) For the second payment year, $12,000. 

(iii) For the third payment year, $8,000. 
CMS-0033-P 484 

(iv) For the fourth payment year, $4,000. 

(v) For the fifth payment year, $2,000. 

(vi) For any succeeding payment year for such professional, $0. 

(2)(i) If the first payment year for a qualifying eligible professional is 2014, then 

the amount for a payment year for a qualifying EP is the same as the amount specified for 

such payment year for a qualifying EP whose first payment year is 2013. 

(ii) If the first payment year for a qualifying EP is after 2014, then the applicable 

amount specified in this paragraph for such professional for such year and any 

subsequent year must be $0. 

 (c) Increase in incentive payment limit for EPs who predominantly furnish 

services in a geographic HPSA. In the case of a qualifying eligible professional who in 

the year prior to the payment year furnishes more than 50 percent of his or her covered 

professional services in a geographic HPSA, the annual incentive payment limit 

determined under paragraph (b) of this section is to be increased by 10 percent. 

(d) Payment adjustment effective in CY 2015 and subsequent years for 

nonqualifying EPs. 

(1) Subject to paragraph (d)(3) of this section, beginning in 2015, for covered 

professional services furnished by an EP who is not a qualifying EP or a hospital-based 

EP for the year, the payment amount for such services is equal the product of the 

applicable percent specified in paragraph (d)(2) and the Medicare physician fee schedule 

amount for such services. 

(2) Applicable percent. Applicable percent is as follows: 
CMS-0033-P 485 

(i) For 2015, 99 percent if the eligible professional is not subject to the payment 

adjustment for an eligible professional who is not a successful electronic prescriber under 

section 1848(a)(5) of the Act, or 98 percent if the eligible professional is subject to the 

payment adjustment for an eligible professional who is not a successful electronic 

prescriber under section 1848(a)(5) of the Act). 

(ii) For 2016, 98 percent. 

(iii) For 2017 and each subsequent year, 97 percent. 

(3) Significant hardship exception. The Secretary may, on a case-by-case basis, 

exempt an EP who is not a qualifying EP from the application of the payment adjustment 

under paragraph (d)(1) of this section, if the Secretary determines that compliance with 

the requirement for being a meaningful EHR user would result in a significant hardship 

for the EP. The Secretary's determination to grant an EP an exemption under this 

paragraph (d)(3) may be renewed on an annual basis, provided that in no case may an EP 

be granted an exemption under this paragraph (d)(3) for more than 5 years. 

§ 495.104 Incentive payments to eligible hospitals. 

(a) General rule. A qualifying hospital (as defined in this subpart) shall receive 

the special incentive payment as determined under the formulas described in paragraph 

(c) of this section for the period specified in paragraph (b) of this section. 

(b) Transition periods. Subject to the payment formula specified in paragraph (e) 

of this section, qualifying hospitals may receive incentive payments during transition 

periods which comprise the following fiscal years: 
CMS-0033-P 486 

(1) Hospitals whose first payment year is FY 2011 may receive such payments 

for FYs 2011 through 2014. 

(2) Hospitals whose first payment year is FY 2012 may receive such payments 

for FYs 2012 through 2015. 

(3) Hospitals whose first payment year is FY 2013 may receive such payments 

for FYs 2013 through 2016. 

(4) Hospitals whose first payment year is FY 2014 may receive such payments 

for FY 2014 through 2016. 

(5) Hospitals whose first payment year is FY 2015 may receive such payments 

for FY 2015 through 2017. 

(c) Payment methodology. (1) The incentive payment for each payment year is 

calculated as the product of the following: 

(i) The initial amount determined under paragraph (c)(3) of this section; 

(ii) The Medicare share fraction determined under paragraph (c)(4) of this 

section; and 

(iii) The transition factor determined under paragraph (c)(5) of this section. 

(2) Interim and final payments. CMS uses data on hospital discharges (as that 

term is defined in §412.4(a) of this chapter), Medicare Part A inpatient-bed-days, 

Medicare Part C inpatient-bed-days, and total inpatient-bed-days, from the hospital cost 

report for the hospital fiscal year that ends during the Federal fiscal year prior to the fiscal 

year that serves as the payment year as the basis for making preliminary incentive 

payments. Final payments are determined at the time of settling the hospital cost report 
CMS-0033-P 487 

for the hospital fiscal year that ends during the payment year, and settled on the basis of 

data from that cost reporting period. 

(3) Initial amount. The initial amount is equal to one of the following: 

(i) For each hospital with 1,149 discharges or fewer during the fiscal year prior to 

the payment year, $2,000,000. 

(ii) For each hospital with at least 1,150 but no more 23,000 discharges during 

the payment year, $2,000,000 + [$200 x (n – 1,149)], where n is the number of discharges 

for the hospital during the fiscal year prior to the payment year. 

(iii) For each hospital with more than 23,000 discharges for the fiscal year prior to 

the payment year, $6,370,400. 

(4) Medicare share fraction. (i) General. (A) CMS determines the Medicare 

share fraction by using the number of Medicare Part A, Medicare Part C, and total 

inpatient-bed-days using data from the Medicare cost report as specified by CMS. 

(B) CMS computes the denominator of the Medicare share fraction using the 

charity care charges reported on the hospital's Medicare cost report. 

(ii) The Medicare share fraction is the ratio of-- 

(A) A numerator which is the sum of-- 

(1) The number of inpatient-bed-days during the period which are attributable to 

individuals with respect to whom payment may be made under Part A; and 

(2) The number of inpatient-bed-days during the period which are attributable to 

individuals who are enrolled with a Medicare Advantage organization (as defined in 

§422.2 of this chapter). 
CMS-0033-P 488 

(iii) A denominator which is the product of-- 

(A) The total number of inpatient-bed-days during the period; and 

(B) The total amount of the eligible hospital's charges during the period, not 

including any charges that are attributable to charity care divided by the estimated total 

amount of the hospitals charges during the period. 

(5) Transition factor. For purposes of the payment formula, the transition factor 

is as follows: 

(i) For hospitals whose first payment year is FY 2011-- 

(A) 1 for FY 2011; 

(B) 3⁄4 for FY 2012; 

(C) 1⁄2 for FY 2013; and 

(D) 1⁄4 for FY 2014. 

(ii) Hospitals whose first payment year is FY 2012-- 

(A) 1 for FY 2012; 

(B) 3⁄4 for FY 2013; 

(C) 1⁄2 for FY 2014; and 

(D) 1⁄4 for FY 2015; 

(iii) Hospitals whose first payment year is FY 2013-- 

(A) 1 for FY 2013; 

(B) 3⁄4 for FY 2014; 

(C) 1⁄2 for FY 2015; and 

(D) 1⁄4 for FY 2016. 
CMS-0033-P 489 

(iv) Hospitals whose first payment year is FY 2014-- 

(A) 3⁄4 for FY 2014; 

(B) 1⁄2 for FY 2015; and 

(C) 1⁄4 for FY 2016. 

(v) Hospitals whose first payment year is FY 2015-- 

(A) 1⁄2 for FY 2015; and 

(B) 1⁄4 for FY 2016. 

§495.106 Incentive payments to CAHs. 

(a) Definitions. In this section, unless otherwise indicated-- 

Payment year means a Federal fiscal year beginning after FY 2010 but before 

FY 2016. 

Qualifying CAH means a CAH that would meet the definition of a meaningful 

EHR user at §495.4, if it were an eligible hospital. 

Reasonable costs incurred for the purchase of certified EHR technology for a 

qualifying CAH means the reasonable acquisition costs incurred for the purchase of 

depreciable assets as described in part 413 subpart G of this chapter, such as computers 

and associated hardware and software, necessary to administer certified EHR technology 

as defined in §495.4, excluding any depreciation and interest expenses associated with 

the acquisition. 

(b) General rule. A qualifying CAH receives an incentive payment for its 

reasonable costs incurred for the purchase of certified EHR technology, as defined in 

paragraph (a) of this section, in the manner described in paragraph (c) of this section for a 
CMS-0033-P 490 

cost reporting period beginning during a payment year as defined in paragraph (a) of this 

section. 

(c) Payment methodology. (1) Payment amount. A qualifying CAH receives an 

incentive payment amount equal to the product of its reasonable costs incurred for the 

purchase of certified EHR technology and the Medicare share percentage. 

(2) Calculation of reasonable costs. CMS or its Medicare contractor computes a 

qualifying CAH's reasonable costs incurred for the purchase of certified EHR technology, 

as defined in paragraph (a) of this section, as the sum of-- 

(i) The reasonable costs incurred for the purchase of certified EHR technology 

during the cost reporting period that begins in a payment year; and 

(ii) Any reasonable costs incurred for the purchase of certified EHR technology 

in cost reporting periods beginning in years prior to the payment year which have not 

been fully depreciated as of the cost reporting period beginning in the payment year. 

(3) Medicare share percentage. Notwithstanding the percentage applicable under 

§413.70(a)(1) of this chapter, the Medicare share percentage equals the lesser of— 

(i) 100 percent; or 

(ii) The sum of the Medicare share fraction for the CAH as calculated under 

§495.104(c)(3) of this subpart and 20 percentage points. 

(d) Incentive payments made to CAHs. (1) The amount of the incentive 

payment made to a qualifying CAH under this section represents the expensing and 

payment of the reasonable costs computed in paragraph (c) of this section in a single 

payment year and, as specified in §413.70(a)(5) of this chapter, such payment is made in 
CMS-0033-P 491 

lieu of payment that would have been made under §413.70(a)(1) of this chapter for the 

reasonable costs of the purchase of certified EHR technology including depreciation and 

interest expenses associated with the acquisition. 

(2) The amount of the incentive payment made to a qualifying CAH under this 

section is paid through a prompt interim payment for the applicable payment year after-- 

(i) The CAH submits the necessary documentation, as specified by CMS or its 

Medicare contractors, to support the computation of the incentive payment amount under 

this section; and 

(ii) CMS or its Medicare contractor reviews such documentation and determines 

the interim amount of the incentive payment. 

(3) The interim incentive payment made under this paragraph is subject to a 

reconciliation process as specified by CMS and the final incentive payment as determined 

by CMS or its Medicare contractor is considered payment in full for the reasonable costs 

incurred for the purchase of certified EHR technology in a single payment year. 

(4) In no case may an incentive payment be made with respect to a cost reporting 

period beginning during a payment year before FY 2011 or after FY 2015 and in no case 

may a CAH receive an incentive payment under this section with respect to more than 4 

consecutive payment years. 

(e) Reductions in payment to CAHs. For cost reporting periods beginning 

in FY 2015, if a CAH is not a qualifying CAH for a payment year, then the 

payment for inpatient services furnished by a CAH under §413.70(a) of this 
CMS-0033-P 492 

chapter is adjusted by the applicable percentage described in §413.70(a)(6) of this 

chapter unless otherwise exempt from such adjustment. 

 (f) Administrative or judicial review. There is no administrative or judicial 

review under sections 1869 or 1878 of the Act, or otherwise, of the -- 

(1) Methodology and standards for determining the amount of payment, the 

reasonable cost, and adjustments described in this section including selection of periods 

for determining, and making estimates or using proxies of, inpatient-bed-days, hospital 

charges, charity charges, and the Medicare share percentage as described in this section; 

(2) Methodology and standards for determining if a CAH is a qualified CAH 

under this section; 

(3) Specification of EHR reporting periods, cost reporting periods, payment years, 

and fiscal years used to compute the CAH incentive payment as specified in this section; 

and 

(4) Identification of the reasonable costs used to compute the CAH incentive 

payment under paragraph (c) of this section including any reconciliation of the CAH 

incentive payment amount made under paragraph (d) of this section. 

§495.108 Posting of required information 

 (a) CMS posts, on its Internet website, the following information regarding 

EPs, eligible hospitals, and CAHs receiving an incentive payment under subparts B and C 

of this part: 

 (1) Name 

 (2) Business addresses. 
CMS-0033-P 493 

 (3) Business phone number. 

 (b) CMS posts, on its Internet website, the following information for qualifying 

MA organizations that receive an incentive payment under subpart C of this part-- 

 (1) The information specified in paragraph (a) of this section for each of the 

qualifying MA organization's MA plan information; and 

 (2) The information specified in paragraph (a) of this section for each of the 

qualifying MA organization's MA EPs and MA-affiliated eligible hospitals. 

Subpart C--Requirements Specific to Medicare Advantage (MA) Organizations 

§ 495.200 Definitions. 

As used in this subpart: 

 First payment year means with respect to-- 

 (1) Covered professional services furnished by a qualifying MA EP, the first 

calendar year for which an incentive payment is made for such services under this 

subsection to a qualifying MA organization. 

 (2) Qualifying MA-affiliated eligible hospitals, the first fiscal year for which an 

incentive payment is made for qualifying MA-affiliated eligible hospitals under this 

subsection to a qualifying MA organization. 

 Inpatient-bed-days is defined in the same manner and is used in the same manner 

as that term is defined and used for purposes of implementing section 4201(a) of the 

American Recovery and Reinvestment Act of 2009 with respect to the Medicare FFS 

hospital EHR incentive program in §495.104 of this part. 
CMS-0033-P 494 

 Patient care services means health care services for which payment would be 

made under, or for which payment would be based on, the fee schedule established under 

Medicare Part B if they were furnished by an EP. 

 Payment year means – 

 (1) For a qualifying MA EP, a calendar year beginning with CY 2011 and ending 

with CY 2016; and 

 (2) For an eligible hospital, a Federal fiscal year beginning with FY 2011 and 

ending with FY 2016. 

 Qualifying MA-affiliated eligible hospital means an eligible hospital under 

section 1886(n)(6) of the Act that is under common corporate governance with a 

qualifying MA organization and that of the Medicare beneficiaries it serves, more than 

two-thirds are Medicare individuals enrolled under MA plans, and that is a meaningful 

user of certified EHR technology as defined by §495.4 of this part. In the case of a 

hospital for which at least one-third of whose Medicare bed-days for the year are covered 

under Part A rather than Part C, payment for that payment year is only be made under 

section 1886(n) of the Act and not under this section. 

 Qualifying MA EP means all of the following:

 (1) A physician (as described in section 1861(r) of the Act), including a doctor of 

medicine or osteopathy who is either of the following: 

 (i) Employed by A qualifying MA organization. 
CMS-0033-P 495 

 (ii) Employed by, or is a partner of, an entity that through a contract with a 

qualifying MA organization furnishes at least 80 percent of the entity's Medicare patient 

care services to enrollees of such organization. 

 (2) Furnishes at least 80 percent of his or her professional services covered under 

Title XVIII to enrollees of the qualifying MA organization. 

 (3) Furnishes, on average, at least 20 hours per week of patient care services to 

enrollees of the qualifying MA organization during the EHR reporting period. 

 (4) Is a meaningful user of certified EHR technology in accordance with §495.4 

of this part. 

 Qualifying MA organization means a MA organization that is organized as a 

health maintenance organization (HMO) as defined in section 2791(b)(3) of the Public 

Health Service (PHS) Act which includes a federally qualified HMO, an organization 

recognized as an HMO under State law, or a similar organization regulated for solvency 

under State law in the same manner and to the same extent as an HMO. 

 Second, third, fourth, and fifth payment year means with respect to incentive 

payments for qualifying-- 

 (1) MA EPs to a qualifying MA organization, each successive calendar year 

immediately following the first payment year for the qualifying MA organization. The 

first payment year and each successive year immediately following the first payment 

year, for the qualifying MA organizations, through 2016, is the same for all qualifying 

MA EPs with respect to any specific qualifying MA organization. 
CMS-0033-P 496 

 (2) MA-affiliated eligible hospitals to a qualifying MA organization, each 

successive fiscal year immediately following the first payment year for the qualifying 

MA organization. 

 Under common corporate governance means that a qualifying MA organization 

and a qualifying MA-affiliated eligible hospital have a common parent corporation, that 

one is a subsidiary of the other, or that the organization and the hospital have a common 

board of directors. 

§ 495.202 Identification of qualifying MA organizations, MA-EPs and MA-affiliated 

eligible hospitals. 

 (a) Identification of qualifying MA organizations. (1) Beginning with bids due 

in June 2010 (for plan year 2011), MA organizations seeking reimbursement for 

qualifying MA EPs and qualifying MA-affiliated eligible hospitals under the MA EHR 

incentive program are required to identify themselves to CMS in a form and manner 

specified by CMS, as part of submissions of initial bids under section 1854(a)(1)(A) of 

the Act. 

 (2) Qualifying MA organizations offering MA HMO plans, absent evidence to 

the contrary, are deemed to meet the definition of HMO in 42 U.S.C. 300gg-91(b)(3) - 

section 2791(b)(3) of the PHS Act. 

 (3) Qualifying MA organizations offering MA plan types other than HMOs, must 

attest to the fact that they meet the definition of HMO in 42 U.S.C. 300gg-91(b)(3) - 

section 2791(b)(3) of the PHS Act. 
CMS-0033-P 497 

 (4) Beginning with bids due in June 2014 (for plan year 2015), all MA 

organizations with potentially qualifying MA EPs or potentially qualifying MA-affiliated 

eligible hospitals under the MA EHR incentive program must identify themselves to 

CMS in a form and manner specified by CMS, as part of submissions of initial bids under 

section 1854(a)(1)(A) of the Act. 

 (b) Identification of qualifying MA EPs and qualifying MA-affiliated eligible 

hospitals. 

 (1) A qualifying MA organization, as part of its initial bid starting with plan 

year 2011, must make a preliminary identification of potentially qualifying MA EPs and 

potentially qualifying MA-affiliated eligible hospitals for which the organization is 

seeking incentive payments. 

 (2) A qualifying MA organization must provide CMS with the following for each 

MA EP or eligible hospital: 

 (i) The MA EP's or MA-affiliated eligible hospital's name. 

 (ii) The address of the MA EP's practice or MA-affiliated eligible hospital's 

location. 

 (iii) NPI. 

 (iv) An attestation by MA organization specifying that the MA EP or 

MA-affiliated eligible hospital meets the eligibility criteria. 
CMS-0033-P 498 

 (3) Final identification of potentially qualifying MA EP or MA-affiliated eligible 

hospital must be made by the end of the payment year as defined in §495.200 for which 

MA EHR incentive payments are being sought. 

 (4) Beginning plan year 2015 and for subsequent plan years, all qualifying MA 

organizations, as part of their initial bids in June for the following plan year must-- 

 (i) Identify potentially qualifying MA EPs and potentially qualifying 

MA-affiliated eligible hospitals; 

 (ii) Include information specified in paragraph (b)(2)(i)(A) through (C) of this 

section for each professional and hospital. 

 (iii) Include an attestation that each professional and hospital either meets or does 

not meet the EHR incentive payment eligibility criteria. 

§ 495.204 Incentive payments to qualifying MA organizations for MA-EPs and 

hospitals. 

 (a) General rule. A qualifying MA organization receives an incentive payment 

for its qualifying MA-EPs and its qualifying MA-eligible hospitals. The incentive 

payment amount paid to a qualifying MA organization for a-- 

 (1) Qualifying MA-EP is the amount determined under paragraph (b) of this 

section; and 

 (2) Qualifying MA-eligible hospital is the amount determined under paragraph 

(c) of this section. 

(b) Amount payable to qualifying MA organization for qualifying MA EPs. 
CMS-0033-P 499 

(1) CMS substitutes an amount determined to be equivalent to the amount 

computed under §495.102 of this part. 

(2) The qualifying MA organization must report to CMS within 30 days of the 

close of the calendar year, the aggregate annual amount of revenue attributable to 

providing services that would otherwise be covered as professional services under Part B 

received by each qualifying MA EP for enrollees in MA plans of the MA organization in 

the payment year. 

(3) CMS calculates the incentive amount for the MA organization for each 

qualifying MA EP as an amount equal to 75 percent of the reported annual revenue 

specified in paragraph (b)(2) of this section, up to the maximum amounts specified under 

1848 (o)(1)(B) of the Act. 

(4) For qualifying MA EPs who are compensated on a salaried basis, CMS 

requires the qualifying MA organization to develop a methodology for estimating the 

portion of each qualifying MA EP's salary attributable to providing services that would 

otherwise be covered as professional services under Part B to MA plan enrollees of the 

MA organization in the payment year. The methodology-- 

(i) Must be approved by CMS; and 

(ii) May include an additional amount related to overhead, where appropriate, 

estimated to account for the MA-enrollee related Part B practice costs of the salaried 

qualifying MA EP. 

(5) For qualifying MA EPs who are not salaried, qualifying MA organizations 

must obtain attestations from such qualifying MA EPs as to the amount of compensation 
CMS-0033-P 500 

received by such EPs for MA plan enrollees of the MA organization. The organizations 

must submit to CMS compensation information for each such MA EP based on such 

attestations. 

 (c) Amount payable to qualifying MA organization for qualifying MA-affiliated 

eligible hospitals. 

 (1) CMS substitutes an amount determined to be equivalent to the amount 

computed under §495.104, to the extent data are not available to compute payments for 

qualifying MA-affiliated eligible hospitals under the Medicare FFS EHR hospital 

incentive program. CMS uses the same methodology and defines “inpatient-bed-days” 

and other terms as used under the Medicare FFS EHR hospital incentive program in 

§495.104 of this part in computing amounts due qualifying MA organizations for 

MA-affiliated eligible hospitals. 

 (2) To the extent data are available, qualifying MA organizations must receive 

hospital incentive payments through their affiliated hospitals under the Medicare FFS 

EHR hospital incentive program, rather than through the MA EHR hospital incentive 

program. 

 (d) Payment to qualifying MA organizations. CMS makes payment to qualifying 

MA organizations for qualifying MA EPs only under the MA EHR incentive program 

and not under the Medicare FFS EHR incentive program to the extent an EP has earned 

less than the maximum incentive payment for the same period under the Medicare FFS 

EHR incentive program. 
CMS-0033-P 501 

(e) Payment review under MA. To ensure the accuracy of the incentive 

payments, CMS conducts selected compliance reviews of qualifying MA organizations to 

ensure that EPs and eligible hospitals for which such qualifying organizations received 

incentive payments were meaningful users of certified EHR technology in accordance 

with §422.504 of this chapter. 

(1) The reviews include validation of the status of the organization as a 

qualifying MA organization, verification of meaningful use and review of data used to 

calculate incentive payments. 

(2) MA organizations are required to maintain evidence of their qualification to 

receive incentive payments and the data necessary to accurately calculate incentive 

payments. 

(3) Documents and records must be maintained for 10 years from the date such 

payments are made with respect to a given payment year. 

(4) Payments that result from incorrect or fraudulent attestations, cost data, or 

any other submission required to establish eligibility or to qualify for such payment, will 

be recouped by CMS from the MA organization. 

§ 495.206 Timeframe for payment to qualifying MA organizations. 

 (a) CMS makes payment to qualifying MA organizations for qualifying MA EPs 

under the MA EHR incentive program after computing incentive payments due under the 

Medicare FFS EHR incentive program according to §495.102. 

 (b) Payments to qualifying MA organizations for qualifying MA-affiliated 

eligible hospitals under common corporate governance are made under the Medicare FFS 
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EHR incentive program, following the timeline in specified in §495.104 of this part. To 

the extent sufficient data do not exist to pay qualifying MA-affiliated eligible hospitals 

under common corporate governance under the Medicare FFS EHR incentive program, 

payment is made under the MA EHR incentive program, following the same timeline in 

§495.104 of this part.

§ 495.208 Avoiding duplicate payment. 

 (a) Unless a qualifying MA EP is entitled to a maximum payment for a year 

under the Medicare FFS EHR incentive program, payment for such an individual is only 

be made under the MA EHR incentive program to a qualifying MA organization. 

 (b) Payment to qualifying MA organizations for a qualifying MA-affiliated 

eligible hospital under common governance only occurs under the MA EHR incentive 

program to the extent that sufficient data does not exist to pay such hospital under the 

Medicare FFS hospital incentive program under §495.104 of this part. In no event are 

EHR incentive payments made for a hospital for a payment year under this section to the 

extent they have been made for the same hospital for the same payment year under 

§495.104 of this part. 

 (c) Each qualifying MA organization must ensure that all potentially qualifying 

MA EPs are enumerated through the NPI system and that other identifying information 

required under §495.210(b) is provided to CMS.

§ 495.210 Meaningful user attestation. 
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 (a) Qualifying MA organizations are required to attest, in a form and manner 

specified by CMS, that each qualifying MA EP and qualifying MA-affiliated eligible 

hospitals is a meaningful EHR user. 

 (b) Qualifying MA organizations are required to attest within 30 days after the 

close of a calendar year whether each qualifying MA EP is a meaningful EHR user. 

 (c) Qualifying MA organizations are required to attest within 30 days after close 

of the FY whether each qualifying MA-affiliated eligible hospital is a meaningful user.

§ 495.212 Limitation on review. 

 (a) There is no administrative or judicial review under section 1869 or 1878 of 

the Act, or otherwise of the methodology and standards for determining payment 

amounts and payment adjustments under the MA EHR EP incentive program. This 

includes provisions related to duplication of payment avoidance and rules developed 

related to the fixed schedule for application of limitation on incentive payments for all 

qualifying MA EPs related to a specific qualifying MA organization. It also includes the 

methodology and standards developed for determining qualifying MA EPs and the 

methodology and standards for determining a meaningful EHR user, including the means 

of demonstrating meaningful use and the selection of measures. 

 (b) There is no administrative or judicial review under sections 1869 or 1878 of 

the Act, or otherwise, of the methodology and standards for determining payment 

amounts and payment adjustments under the MA EHR hospital incentive program. This 

includes provisions related to duplication of payment avoidance. It also includes the 

methodology and standards developed for determining qualifying MA-affiliated eligible 
CMS-0033-P 504 

hospitals and the methodology and standards for determining a meaningful EHR user, 

including the means of demonstrating meaningful use and the selection of measures. 

Subpart D--Requirements Specific to the Medicaid Program 

§495.300 Basis and purpose.

This subpart implements section 4201 of the American Reinvestment and 

Recovery Act of 2009 and sections 1903(a)(3)(F) and 1903(t) of the Act which 

authorizes States, at their option, to provide for incentive payments to Medicaid providers 

for adopting, implementing, or upgrading certified electronic health record technology or 

for meaningful use of such technology. This subpart also provides enhanced Federal 

financial participation (FFP) to States to administer these incentive payments. 

§495.302 Definitions. 

As used in this subpart-- 

Acceptance documents mean written evidence of satisfactory completion of an 

approved phase of work or contract and acceptance thereof by the State agency. 

Acquisition means to acquire health information technology (HIT) equipment or 

services for the purpose of implementation and administration under this Part from 

commercial sources or from State or local government resources. 

Acute care hospital means a health care facility-- 

(1) Where the average length of patient stay is 25 days or fewer; and 

(2) With a CMS certification number (previously known as the Medicare 

provider number) that has the last four digits in the series 0001 – 0879 

Adopt, implement or upgrade means-- 
CMS-0033-P 505 

(1) Install or commence utilization of certified EHR technology capable of 

meeting meaningful use requirements; or 

(2) Expand the available functionality of certified EHR technology capable of 

meeting meaningful use requirements at the practice site, including staffing, maintenance, 

and training. 

 Children's hospital means a separately certified children's hospital, either 

freestanding or hospital-within-hospital that--

(1) Has a CMS certification number, (previously known as the Medicare provider 

number), that has the last 4 digits in the series 3300-3399; and

(2) Predominantly treats individuals under 21 years of age. 

Entities promoting the adoption of certified electronic health record technology 

means the State-designated entities that are promoting the adoption of certified EHR 

technology by enabling oversight of the business, operational and legal issues involved in 

the adoption and implementation of EHR or by enabling the exchange and use of 

electronic clinical and administrative data between participating providers, in a secure 

manner, including maintaining the physical and organizational relationship integral to the 

adoption of certified EHR technology by EPs. 

Health information technology planning advance planning document (HIT PAPD)

means a plan of action that requests FFP and approval to accomplish the planning 

necessary for a State agency to determine the need for and plan the acquisition of HIT 

equipment or services or both and to acquire information necessary to prepare a HIT 
CMS-0033-P 506 

implementation advanced planning document or request for proposal to implement the 

State Medicaid HIT plan. 

HIT implementation advance planning document (HIT IAPD) means a plan of 

action that requests FFP and approval to acquire and implement the proposed State 

Medicaid HIT plan services or equipment or both. 

Medicaid information technology architecture (MITA) is both an initiative and a 

framework. It is a national framework to support improved systems development and 

health care management for the Medicaid enterprise. It is an initiative to establish 

national guidelines for technologies and processes that enable improved program 

administration for the Medicaid enterprise. The MITA initiative includes an architecture 

framework, models, processes, and planning guidelines for enabling State Medicaid 

enterprises to meet common objectives with the framework while supporting unique local 

needs. 

Medicaid management information system (MMIS) means a mechanized claims 

processing and information retrieval system--referred to as Medicaid Management 

Information Systems (MMIS)--that meets specified requirements and that the Department 

has found (among other things) is compatible with the claims processing and information 

retrieval systems used in the administration of the Medicare program. The objectives of 

the MMIS are to include claims processing and retrieval of utilization and management 

information necessary for program administration and audit and must coordinate with 

other mechanized systems and subsystems that perform other functions, such as 

eligibility determination. 
CMS-0033-P 507 

Needy individuals mean individuals that meet one of following: 

(1) Received medical assistance from Medicaid or the Children's Health 

Insurance Program. 

(2) Were furnished uncompensated care by the provider. 

(3) Were furnished services at either no cost or reduced cost based on a sliding 

scale determined by the individuals' ability to pay. 

Patient volume means the minimum participation threshold where the numerator 

is the total number of Medicaid patients or needy individuals treated in any 90-day period 

in the most recent calendar year preceding the reporting and the denominator is all patient 

encounters in the same 90-day period. Represented as follows: 

[Total (Medicaid) treated in any 90-day period in the most recent calendar year preceding 

the reporting/ Total patients in same 90-day period] * 100; or 

[Total (Needy Individuals) treated in any 90-day period in the most recent calendar year 

preceding the reporting/ Total patients in same 90-day period] * 100. 

Practices predominantly means an EP for whom the clinical location for over 50 

percent of his or her total patient encounters over a period of 6 months in the most recent 

calendar year occurs at a federally qualified health center or rural health clinic. 

Service oriented architecture or service component based architecture means 

organizing and developing information technology capabilities as collaborating services 

that interact with each other based on open standards. 

State Medicaid health information technology plan (SMHP) means a document 

that describes the State's current and future HIT activities. 
CMS-0033-P 508 

State self-assessment means a process that a State uses to review its strategic 

goals and objectives, measure its current business processes and capabilities against the 

(MITA) business capabilities and ultimately develops target capabilities to transform its 

Medicaid enterprise to be consistent with the MITA principles. 

§495.304 Medicaid provider scope and eligibility. 

(a) General rule. The following Medicaid providers are eligible to participate in 

the HIT incentives program: 

(1) Medicaid EPs. 

(2) Acute care hospitals. 

(3) Children's hospitals. 

(b) Medicaid EP. The Medicaid professional eligible for a EHR incentive 

payment is limited to the following: 

(1) A physician. 

(2) A dentist. 

(3) A certified nurse-midwife. 

(4) A nurse practitioner. 

(5) A physician assistant practicing in a Federally Qualified Health Center or 

Rural Health Clinic, which is so led by a physician assistant. 

(c) Additional requirements for the Medicaid EP. To qualify for an EHR 

incentive payment, a Medicaid EP must not be hospital-based as defined §495.4 of this 

subpart and meet one of the following criteria for each year for which the EP seeks an 

EHR incentive payment: 
CMS-0033-P 509 

(1) Have a minimum 30 percent patient volume attributable to individuals 

receiving Medicaid. 

(2) Have a minimum 20 percent patient volume attributable to individuals 

receiving Medicaid, and be a pediatrician. 

(3) Practice predominantly in a FQHC or RHC and have a minimum 30 percent 

patient volume attributable to needy individuals, as defined at §495.302. 

(d) Exception. The hospital-based exclusion in paragraph (c) does not apply to 

the Medicaid-EP qualifying based on practicing predominantly at a FQHC or RHC. 

(e) Additional requirement for the eligible hospital. To be eligible for an EHR 

incentive payment for each year for which the eligible hospital seeks an EHR incentive 

payment the eligible hospital must meet the following criteria: 

(1) An acute care hospital must have at least a 10 percent Medicaid patient 

volume for each year for which the hospital seeks an EHR incentive payment. 

(2) A children's hospital is exempt from meeting a patient volume threshold. 

§ 495.306 Establishing patient volume. 

(a) A Medicaid provider must annually meet one of the following to establish 

patient volume: 

(1)(i) General rule for a professional. Except as specified in paragraph (a)(1)(ii) 

of this section, a Medicaid EP must attest that a minimum of 30 percent of his or her 

patient encounters over any continuous 90-day period in the most recent calendar year 

was covered by Medicaid. 
CMS-0033-P 510 

(ii) Optional exception. (A) A pediatrician must attest that a minimum of 20 

percent of his or her patient encounters over any continuous 90-day period in the most 

recent calendar year was covered by Medicaid. 

(B) A Medicaid EP practicing predominantly in a Federally Qualified Health 

Center or Rural Health Clinic must attest that a minimum of 30 percent of his or her 

patient encounters over any continuous 90-day period in the most recent calendar year 

was with needy individuals as defined in §495.302 of this subpart. 

(2) General rule for an acute care hospital. An acute care hospital must attest that 

a minimum of 10 percent of all patient encounters over any continuous 90-day period in 

the most recent calendar year was covered by Medicaid. 

(b) If a State has an alternative approach to the established timeframe for 

measuring patient volume, the State must submit the approach to CMS for review and 

prior approval. CMS determines if it is an acceptable alternative. 

(1) To be considered for approval, the alternative approach must be justified and 

have a verifiable data source. 

(2) If CMS approves the State's alternative approach to the established timeframe 

for measuring patient volume, such timeframe would apply to Medicaid EPs and eligible 

hospitals, instead of the 90-day timeframe described in paragraph (a) of this section. 

(c) To establish patient volume for an EP who practices predominantly in a 

Federally Qualified Health Center or Rural Health Clinic by use of uncompensated care 

data, an adjustment to the uncompensated care data must be completed so that it is an 
CMS-0033-P 511 

appropriate proxy for charity care, including a downward adjustment to eliminate bad 

debt data from uncompensated care. 

(d) An individual enrolled in a managed care organization, pre-paid inpatient 

health plan, or pre-paid ambulatory health plan under part 438 of this chapter must be 

included in the calculation to establish patient volume. 

§ 495.308 Net average allowable costs as the basis for determining the incentive 

payment. 

(a) The first year of payment. (1) The incentive is intended to offset the costs 

associated with the initial adoption of certified electronic health records technology. 

(2) The maximum net average allowable costs for the first year are $25,000. 

(b) Subsequent payment years. (1) The incentive is intended to offset 

maintenance and operation of certified EHR technology. 

(2) The maximum net average allowable costs for each subsequent year are 

$10,000. 

§495.310 Medicaid provider incentive payments. 

(a) General rule for a Medicaid EP. The Medicaid EP's incentive payments are 

subject to the following limitations: 

(1) First payment year. A first year payment may not exceed 85 percent of the 

maximum threshold of $25,000, which equals $21,250. 

(2) Subsequent annual payment years. A subsequent annual payment may not 

exceed 85 percent of the maximum threshold of $10,000, which equals $8,500. 

(i) Payments after the first year may continue for a maximum of 5 years. 
CMS-0033-P 512 

(ii) Medicaid EPs may participate for a total of 6 years and may not begin 

receiving payments any later than CY 2016. 

(3) Maximum incentives. In no case will the maximum incentive over a 6-year 

period exceed $63,750. 

(4) Limitation. For a Medicaid EP who is a pediatrician described in paragraph 

(b) of this section is as follows: 

(i) The maximum payment in the first year is further reduced to two-thirds, which 

equals $14,167. 

(ii) The maximum payment in subsequent years is further reduced to two-thirds, 

which equals $5,667. 

(iii) In no case will the maximum incentive payment to a pediatrician under this 

limitation exceed $42,500 over a 6-year period. 

(b) Optional exception for pediatricians. A pediatrician described in this 

paragraph is an Medicaid EP who does not meet the 30 percent patient volume 

requirements described in §495.304 and §495.306, but who meets the 20 percent patient 

volume requirements described in such sections. 

(c) General rule for EPs. An EP may only receive an incentive payment from 

either Medicare or Medicaid but not both. 

(d) Optional exception for EPs. An EP may change his or her EHR incentive 

payment program election once, consistent with §495.10 of this part but such change in 

election must occur for payments by occurring before CY 2015. 
CMS-0033-P 513 

(e) General rule for Medicaid EPs and hospitals. An Medicaid EP or hospital 

may receive an incentive payment from only one State in a payment year. 

(f) Incentive payments to hospitals. Incentive payments to an eligible hospital 

under this subpart are subject to all of the following conditions: 

(1) The payment is provided over a minimum of a 3-year period and maximum of 

a 6-year period. 

(2) The total incentive payment received over all payment years of the program is 

not greater than the aggregate EHR incentive amount, as calculated under paragraph (g) 

of this section. 

(3) No single incentive payment for a payment year may exceed 50 percent of the 

aggregate EHR hospital incentive amount calculated under paragraph (g) of this section 

for an individual hospital. 

(4) No incentive payments over a 2-year period may exceed 90 percent of the 

aggregate EHR hospital incentive amount calculated under paragraph (g) of this section 

for an individual hospital. 

(5) No hospital may begin receiving incentive payments for any year after 2016. 

(6) A multi-site hospital with one CMS Certification Number is considered one 

hospital for purposes of calculating payment. 

(g) Calculation of the aggregate EHR hospital incentive amount. The aggregate 

EHR hospital incentive amount is calculated as the product of the (overall EHR amount) 

times (the Medicaid Share). 
CMS-0033-P 514 

(1) Overall EHR amount. The overall EHR amount for an eligible hospital is 

based upon a theoretical 4 years of payment the hospital would receive based, for each of 

such 4 years, upon the product of the following: 

(i) Initial amount. The initial amount is equal to the sum of-- 

(A) The base amount which is set at $2,000,000 for each of the theoretical 4 

years; plus 

(B) The discharge related amount for a 12-month period selected by the State but 

with the Federal fiscal year before the hospital's fiscal year that serves as the payment 

year. The discharge related amount is the sum of the following, with discharges over the 

12-month period and based upon the total discharges for the eligible hospital (regardless 

of any source of payment): 

(1) For the first through 1,149th discharge, $0. 

(2) For the 1,150th through the 23,000th discharge, $200. 

(3) For any discharge greater than the 23,000th, $0. 

(C) For purposes of calculating the discharge-related amount under paragraph 

(g)(1)(i)(B) of this section, for the last 3 of the theoretical 4 years of payment, discharges 

are assumed to increase by the provider's average annual rate of growth for the most 

recent 3 years for which data are available per year. Negative rates of growth must be 

applied as such. 

(ii) Medicare share. The Medicare share, which equals 1. 

(iii) Transition factor. The transition factor which equals as follows: 

(A) For the first of the theoretical 4 years, 1. 
CMS-0033-P 515 

(B) For the second of the theoretical 4 years, 3/4. 

(C) For the third of the theoretical 4 years, 1/2. 

(D) For the fourth of the theoretical 4 years, 1/4. 

(2) Medicaid share. The Medicaid share specified under this paragraph for an 

eligible hospital is equal to a fraction-- 

(i) The numerator of which is the sum (for the 12 month period selected by the 

State and with respect to the eligible hospital) of-- 

(A) The estimated number of inpatient-bed-days which are attributable to 

Medicaid individuals; and 

(B) The estimated number of inpatient-bed-days which are attributable to 

individuals who are enrolled in a managed care organization, a pre-paid inpatient health 

plan, or a pre-paid ambulatory health plan under part 438 of this chapter; and 

(ii) The denominator of which is the product of-- 

(A) The estimated total number of inpatient-bed-days with respect to the eligible 

hospital during such period; and 

(B) The estimated total amount of the eligible hospital's charges during such 

period, not including any charges that are attributable to charity care, divided by the 

estimated total amount of the hospital's charges during such period. 

(iii) In computing inpatient-bed-days under the previous sentence, a State may not 

include estimated inpatient-bed-days attributable to individuals with respect to whom 

payment may be made under Medicare Part A, or inpatient-bed-days attributable to 
CMS-0033-P 516 

individuals who are enrolled with a Medicare Advantage organization under Medicare 

Part C. 

(h) Approximate proxy for charity care. If the State determines that an eligible 

hospital's data are not available on charity care necessary to calculate the portion of the 

formula specified in paragraph (g)(2)(ii)(B) of this section, the State may use that 

provider's data on uncompensated care to determine an appropriate proxy for charity care, 

but must include a downward adjustment to eliminate bad debt from uncompensated care 

data. The State must use auditable data sources. 

(i) Deeming. In the absence of the data necessary, with respect to an eligible 

hospital the amount described in paragraph (g)(2)(ii)(B) must be deemed to be 1. In the 

absence of data, with respect to an eligible hospital, necessary to compute the amount 

described in paragraph (g)(2)(i)(B) of this section, the amount under such clause must be 

deemed to be 0. 

(j) Dual eligibility for incentives payments. A hospital may receive incentive 

payments from both Medicare and Medicaid if it meets all eligibility criteria. 

(k) Payments to State-designated entities. Payments to entities promoting the 

adoption of certified EHR technology as designated by the State must meet the following 

requirements: 

(1) A Medicaid EP may designate his or her incentive payment to an entity 

promoting the adoption of certified EHR technology, as defined in §495.302, and as 

designated by the State, only under the following conditions: 
CMS-0033-P 517 

(i) The State has established a method to designate entities promoting the 

adoption of EHR technology that comports with the Federal definition in §495.302. 

(ii) The State publishes and makes available to all EPs a voluntary mechanism for 

designating annual payments and includes information about the verification mechanism 

the State will use to ensure that the assignment is voluntary and that no more than 5 

percent of the annual payment is retained by the entity for costs not related to certified 

EHR technology. 

(2) [Reserved] 

§ 495.312 Process for payments. 

(a) General rule. States must have a process for making payments consistent 

with the requirements in subparts A and D of this part. 

(b) Reporting data consistent with this subpart. In order to receive a payment 

under this part, a provider must report the required data under subpart A and this subpart 

within the EHR reporting period described in §495.4. 

(c) State role. The State determines the provider's eligibility for the EHR 

incentive payment under subpart A and this subpart and approves, processes, and makes 

timely payments using a process approved by CMS. 

(d) State disbursement. The State disburses an incentive payment to the provider 

based on the criteria described in subpart A and this subpart. 

(e) Timeframes. Payments are disbursed consistent with the following 

timeframes for each type of Medicaid eligible provider: 
CMS-0033-P 518 

(1) Medicaid EPs. States disburse payments consistent with the calendar year on 

a rolling basis following the end of the EHR reporting period for the payment year. 

(2) Medicaid eligible hospitals. States disburse payments consistent with the 

Federal fiscal year on a rolling basis following the end of the EHR reporting period for 

the payment year. 

§495.314 Activities required to receive an incentive payment. 

(a) First payment year. (1) In the first payment year, to receive an incentive 

payment, the Medicaid EP or eligible hospital must meet one of the following: 

(i) Demonstrate that during the EHR reporting period for a payment year, it has 

adopted, implemented, or upgraded certified EHR technology, as defined in §495.302; or 

(ii) Demonstrate that during the EHR reporting period for a payment year, it is a 

meaningful EHR user as defined in §495.4. 

(2) A provider may notify the State of its non-binding intention to participate in 

the incentives program prior to having fulfilled all of the eligibility criteria. 

(b) Subsequent payment years. (1) In the second, third, fourth, fifth, and sixth 

payment years, to receive an incentive payment, the Medicaid EP or eligible hospital 

must demonstrate that during the EHR reporting period for the applicable payment year, 

it is a meaningful EHR user, as defined in §495.4. 

(2) The automated reporting of the clinical quality measures will be 

accomplished using certified EHR technology interoperable with the system designated 

by the State to receive the data. 
CMS-0033-P 519 

§495.316 State monitoring and reporting regarding activities required to receive an 

incentive payment. 

(a) Subject to §495.332 the State is responsible for tracking and verifying the 

activities necessary for a Medicaid EP or eligible hospital to receive an incentive 

payment for each payment year, as described in §495.314. 

(b) Subject to §495.332, the State must submit a State Medicaid HIT Plan to 

CMS that includes: 

(1) A detailed plan for monitoring, verifying and periodic auditing of the 

requirements for receiving incentive payments, as described in §495.314; and 

(2) A description of the how the State will collect and report on provider 

meaningful use of certified EHR technology. 

(c) Subject to §495.332 and §495.350, the State is required to submit to CMS 

annual reports on the following: 

(1) Provider adoption, implementation, or upgrade of certified EHR technology 

activities and payments; and 

(2) Aggregated, de-identified meaningful use data. 

(d)(1) The annual report described in paragraph (c) of this section must include, 

but is not limited to the following: 

(i) The number, type, and practice location(s) of providers who qualified for an 

incentive payment on the basis of having adopted, implemented, or upgraded certified 

EHR technology. 
CMS-0033-P 520 

(ii) Aggregated data tables representing the provider adoption, implementation, 

and upgrade of certified EHR technology. 

(iii) The number, type, and practice location(s) of providers who qualified for an 

incentive payment on the basis of meaningful use of certified EHR technology; 

(iv) Aggregated data tables representing the provider's clinical quality measures 

data; and 

(v) A description and quantitative data on how its incentive payment program 

addressed individuals with unique needs such as children. 

(2) The State may propose additional, not substitute, measures for meaningful use 

of certified EHR technology, subject to CMS prior approval. 

(e) State failure to submit the required reports to CMS may result in discontinued 

or disallowed funding. 

§495.318 State responsibilities for receiving FFP. 

In order to be provided FFP under section 1903(a)(3)(F) of the Act, a State must 

demonstrate to the satisfaction of the Department, that the State is-- 

(a) Using the funds provided for the purposes of administering incentive 

payments to providers under this program, including tracking of meaningful use by 

Medicaid providers of EHR technology; 

(b) Conducting adequate oversight of the program, including routine tracking of 

meaningful use attestations and reporting mechanisms; and 
CMS-0033-P 521 

(c) Is pursuing initiatives to encourage the adoption of certified EHR technology 

to promote health care quality and the exchange of health care information, subject to 

applicable laws and regulations governing such exchange. 

§495.320 FFP for payments to Medicaid providers. 

Subject to the requirements outlined in this Subpart, FFP is available at 100 

percent of State expenditures for payments to Medicaid eligible providers to encourage 

the adoption and meaningful use of certified EHR technology. 

§495.322 FFP for reasonable administrative expenses. 

Subject to prior approval conditions at §495.324 of this subpart, FFP is available 

at 90 percent in State expenditures for administrative activities in support of 

implementing incentive payments to Medicaid eligible providers. 

§495.324 Prior approval conditions. 

(a) A State must obtain prior written approval as specified in paragraph (b) of this 

section, when the State plans to initiate planning and implementation activities in support 

of Medicaid provider incentive payments encouraging the adoption and use of certified 

EHR technology with proposed Federal financial participation. 

(b) To receive 90 percent match, each State must receive prior approval for all of 

the following: 

(1) The HIT planning advance planning document and the implementation 

advance planning document. 
CMS-0033-P 522 

(2) A request for proposal and any contract that a State may utilize to complete 

activities under this subpart, unless specifically exempted by the Department, prior to 

release of the request for proposal or prior to execution of a contract. 

(3) For contract amendments, unless specifically exempted by the Department, 

before execution of the contract amendment, involving contract cost increases exceeding 

$100,000 or contract time extensions of more than 60 days. 

(c) Failure to submit any of the information specified in paragraph (b) of this 

section to the satisfaction of the Department may result in disapproval or suspension of 

project funding. 

(d) A State must obtain prior written approval from the Department of its 

justification for a sole source acquisition, when it plans to acquire non-competitively 

from a nongovernmental source HIT equipment or services, with proposed FFP under 

this subpart if the total State and Federal acquisition cost is more than $100,000. 

§495.326 Disallowance of Federal financial participation (FFP). 

If the Department finds that any acquisition approved or modified under the 

provisions of this subpart fails to comply with the criteria, requirements, and other 

undertakings described in the approved HIT planning advance planning document and 

HIT implementation advance planning document to the detriment of the proper and 

efficient operation of the Medicaid program, payment of FFP may be disallowed. In the 

case of a suspension of approval of a HIT planning advance planning document and HIT 

implementation advance planning document, see 45 CFR 205.37(c) and 307.40(a). 

§495.328 Request for reconsideration of adverse determination. 
CMS-0033-P 523 

If CMS disapproves a State request for any elements of a State's advance planning 

document or State Medicaid HIT Plan under this subpart, or determines that requirements 

are met for approval on a date later than the date requested, the decision notice includes 

the following: 

(a) The finding of fact upon which the determination was made. 

(b) The procedures for appeal of the determination in the form of a request for 

reconsideration. 

§495.330 Termination of Federal financial participation (FFP) for failure to provide 

access to information. 

(a) The Department terminates FFP at any time if the Medicaid agency fails to 

provide State and Federal representatives with full access to records relating to HIT 

planning and implementation efforts, and the systems used to interoperate with electronic 

HIT, including on-site inspection. 

(b) The Department may request such access at any time to determine whether 

the conditions in this subpart are being met. 

§495.332 State Medicaid (HIT) plan requirements. 

Each State Medicaid HIT plan must include all of the following elements: 

(a) State systems. For State systems, interoperability, and the current and future 

visions: 

(1) A baseline assessment of the current HIT landscape environment in the State 

including the inventory of existing HIT in the State. The assessment must include a 

comprehensive-- 
CMS-0033-P 524 

(i) Description of the HIT “as-is” landscape; 

(ii) Description of the HIT “to-be” landscape; and 

(iii) HIT roadmap and strategic plan for the next 5 years. 

(2) A description of how the State Medicaid HIT plan will be planned, designed, 

developed and implemented, including how it will be implemented in accordance with 

the Medicaid Information Technology Architecture (MITA) principles as described in the 

Medicaid Information Technology Framework 2.0. The MITA initiative-- 

(i) Establishes national guidelines for technologies and processes that enable 

improved program administration for the Medicaid enterprise; 

(ii) Includes business, information and technology architectures that provide an 

overall framework for interoperability, as well as processes and planning guidelines for 

enabling State Medicaid enterprises to meet common objectives within the framework 

while supporting unique local needs; and 

(iii) Is important to the design and development of State EHR incentive payment 

systems. 

(3) A description of how intrastate systems, including the Medicaid Management 

Information System (MMIS) and other automated mechanized claims processing and 

information retrieval systems-- 

(i) Have been considered in developing a HIT solution; and 

(ii) A plan that incorporates the design, development, and implementation phases 

for interoperability of such State systems with a description of how any planned systems 

enhancements support overall State and Medicaid goals. 
CMS-0033-P 525 

(4) A description of data-sharing components of HIT solutions. 

(5) A description of how each State will promote secure data exchange, where 

permissible under the Health Insurance Portability and Accountability Act (HIPAA). 

HIPAA and other requirements included in the Recovery Act. 

(6) A description of how each State will promote the use of data and technical 

standards to enhance data consistency and data sharing through common data-access 

mechanisms. 

(7) A description of how each State will support integration of clinical and 

administrative data. 

(8) A description of the process in place for ensuring improvements in health 

outcomes, clinical quality, or efficiency resulting from the adoption of certified EHR 

technology by recipients of Medicaid incentive payments and a methodology for 

verifying such information. 

(9) A description of the process in place for ensuring that any certified EHR 

technology used as the basis for a payment incentive to Medicaid providers is compatible 

with State or Federal administrative management systems, including the MMIS or other 

automated claims processing system or information retrieval system and a methodology 

for verifying such information. 

(10) A description of how each State will adopt national data standards for health 

and data exchange and open standards for technical solutions as they become available. 

(11) A description of how the State intends to address the needs of underserved 

and vulnerable populations such as children, individuals with chronic conditions, Title 
CMS-0033-P 526 

IV-E foster care children, individuals in long-term care settings and the aged, blind, and 

disabled. This description must address the following: 

(i) Person centered goals and objectives and shared decision-making. 

(ii) Coordination of care across multiple service providers, funding sources, 

settings, and patient conditions. 

(iii) Universal design to ensure access by people with disabilities and older 

Americans. 

(iv) Self-direction including budget development and expenditure tracking. 

(v) Institutional discharge planning and diversion activities that are tied to 

community based service availability. 

(b) Eligibility. For eligibility, a description of the process in place for all of the 

following: 

(1) For ensuring that each EP and eligible hospital meets all provider enrollment 

eligibility criteria upon enrollment and re-enrollment to the Medicaid EHR payment 

incentive program. 

(2) For ensuring patient volume consistent with the criteria in §495.304 and 

§495.306 for each EP who practices predominantly in a FQHC or RHC and for each 

Medicaid EP who is a physician, pediatrician, nurse practitioner, certified nurse midwife 

or dentist and a methodology in place used to verify such information. 

(3) For ensuring that the EP is a provider who meets patient volume consistent 

with the criteria in §495.304 and a methodology in place used to verify such 

information. 
CMS-0033-P 527 

(4) For ensuring that each Medicaid EP is not hospital-based and a methodology 

in place used to verify such information. 

(5) To ensure that a hospital eligible for incentive payments has demonstrated an 

average length of stay of 25 days or less and that a methodology for verifying such 

information is available. 

(c) Monitoring and validation. For monitoring and validation of information, 

States must include the following: 

(1) A description of the process in place for ensuring that, because of CMS' and 

the States' oversight responsibilities, all provider information for attestations and any 

information added to the CMS Single Provider Repository including all information 

related to patient volume, NPI, Tax identification number (TIN), meaningful use, efforts 

to adopt, implement, or upgrade are all true and accurate and that any concealment or 

falsification of a material fact related to the attestation may result in prosecution under 

Federal and State laws and a methodology in place used to verify such information. 

(2) A description of the process in place for ensuring that the EP or eligible 

hospital is eligible to receive an incentive payment consistent with the criteria outlined in 

§495.314 and a methodology in place used to verify such information. 

(3) A description of the process in place for capturing attestations from each EP 

or eligible hospital that they have meaningfully used certified EHR technology during the 

reporting period, and that they have adopted, implemented, or upgraded certified EHR 

technology during the reporting period and a description of the methodology in place 

used to verify such information. 
CMS-0033-P 528 

(4) A description of the process in place for capturing clinical quality data from 

each EP or eligible hospital and a description of the methodology in place used to verify 

such information. 

(5) A description of the process in place for monitoring the compliance of 

providers coming onto the program with different requirements depending upon the year 

and a methodology for verifying such information. 

(6) A list of the specific actions planned to implement the HIT EHR incentive 

program, including a description and organizational charts for workgroups within State 

government including external partners. 

(7) A description of the process in place to ensure that no amounts higher than 

100 percent of FFP will be claimed for reimbursement of expenditures for State payments 

to Medicaid eligible providers for the certified EHR technology incentive payment 

program and a methodology for verifying such information is available. 

(8) A description of the process in place to ensure that no amounts higher than 90 

percent of FFP will be claimed for administrative expenses in administering the certified 

EHR technology incentive payment program and a methodology for verifying such 

information is available. 

(9) A description of the process and methodology for ensuring and verifying such 

information that includes the following: 

(i) Amounts received under section 1903 (a)(3)(F) of the Act with respect to 

payments to a Medicaid EP or eligible hospital are paid directly to such provider (or to an 
CMS-0033-P 529 

employer or facility to which such provider has assigned payments) without any 

deduction or rebate. 

(ii) All assignments to an entity promoting the adoption of certified EHR 

technology, as designated by the State, are voluntary for the Medicaid EP involved. 

(iii) Entities promoting the adoption of certified EHR technology do not retain 

more than 5 percent of such payments for costs not related to certified EHR technology 

(and support services including maintenance and training) that is for, or is necessary for 

the operation of, such technology. 

(10) A description of the process in place for ensuring that each Medicaid EP or 

eligible hospital that collects an EHR payment incentive has collected a payment 

incentive from only one State even if the provider is licensed to practice in multiple 

States and a methodology for verifying such information. 

(11)(i) A description of the process in place for ensuring that each EEP or 

eligible hospital that wishes to participate in the EHR incentive payment program will 

receive a NPI; and 

(ii) A description of how the NPI will be used to coordinate with the CMS so that 

the EP will choose only one program from which to receive the incentive payment and 

the hospital payments are tracked accordingly. 

(12) A description of the process in place for ensuring that each EP or eligible 

hospital who wishes to participate in the EHR incentive payment program will provide a 

TIN to the State for purposes of the incentive payment. 
CMS-0033-P 530 

(d) Payments. For payments must provide descriptions of the following 

processes that are in place: 

(1) The process in place for ensuring that there is no duplication of Medicare and 

Medicaid incentive payments to EPs and a methodology for verifying such information. 

(2) The process in place to ensure that any existing fiscal relationships with 

providers to disburse the incentive payments through Medicaid managed care plans does 

not result in payments that exceed 105 percent of the capitation rate, in order to comply 

with the Medicaid managed care incentive payment rules at §438.6(v)(5)(iii) of this 

chapter and a methodology for verifying such information. 

(3) The process in place to ensure that only appropriate funding sources are used 

to make Medicaid EHR incentive payments and that a methodology for verifying such 

information is available. 

(4) The process in place to ensure that Medicaid EHR incentive payments are 

made for no more than 6 years and that no EP or eligible hospital begins receiving 

payments after 2016 and that a methodology for verifying such Information is available. 

(5) The process in place to ensure that Medicaid EHR incentive payments are not 

paid at amounts higher than 85 percent of the net average allowable cost of certified EHR 

technology and the yearly maximum allowable payment thresholds and a methodology 

for verifying such information is available. 

(6) The process in place to ensure that all hospital calculations and hospital 

payment incentives are made consistent with the requirements of this part and a 

methodology for verifying such information is available. 
CMS-0033-P 531 

(7) The process in place to provide for the timely and accurate payment of 

incentive payments to EPs and eligible hospitals, including the time frame specified by 

the State to meet the timely payment requirement. 

(8) The process in place and a methodology for verifying such information to 

provide that any monies that have been paid inappropriately as an improper payment or 

otherwise not in compliance with this subpart will be recouped and FFP will be repaid. 

(e) For combating fraud and abuse and for provider appeals. (1) A description of 

the process in place for a provider to appeal consistent with the criteria described in 

§495.370 and a methodology for verifying the following related to the EHR incentives 

payment program: 

(i) Incentive payments. 

(ii) Provider eligibility determinations. 

(iii) Demonstration of efforts to adopt, implement or upgrade and meaningful use 

eligibility for incentive payments under this part. 

(2) A description of the process in place, and a methodology for verifying such 

information, to address Federal laws and regulations designed to prevent fraud, waste, 

and abuse, including, but not limited to applicable provisions of Federal criminal law, the 

False Claims Act (32 U.S.C. 3729 et seq.), and the anti-kickback statute (section 

1128B(b) of the Act). 

(f) Optional--proposed alternatives. A State may choose to propose any of the 

following, but they must be included as an element in the State Medicaid HIT Plan for 

review and approval: 
CMS-0033-P 532 

(1) An alternative methodology for measuring patient volume, consistent with 

§495.306(b). 

(2) (i) Additional requirements for qualifying a Medicaid provider as a 

meaningful user of certified EHR technology consistent with §495.4 and §495.316(e) of 

this part. 

(ii) A State may propose additional meaningful use objectives beyond the Federal 

standards at §495.6, if they do not require additional functionality beyond that of certified 

electronic health record technology. See also §495.316(e).

(3) A plan for early implementation of incentive payments for a provider who 

adopts, implements, or upgrades certified EHR technology consistent with the §495.302 

and §495.314. 

(i) An approvable plan must include mechanisms for making timely and accurate 

payments. 

(ii) A State will require a provider to attest that they are not receiving a payment 

in any other State. 

§ 495.334 State self-assessment requirements. 

Each State must prepare a State self-assessment that meets the following 

requirements: 

(a) List and prioritize the State's goals and objectives for HIT. 

(b) Define the State's current business model and map to the Medicaid 

information technology architecture business process model. 

(c) Assess the State's current capabilities. 
CMS-0033-P 533 

(d) Determine the State's target capabilities. 

§ 495.336 Health information technology planning advance planning document 

requirements (HIT PAPD). 

Each State's HIT PAPD must contain the following: 

(a) A statement of need and objective which clearly state the purpose and 

objectives of the project to be accomplished and the necessity for the project. 

(b) A project management plan which addresses the following: 

(1) The planning project organization. 

(2) Planning activities and deliverables. 

(3) State and contractor resource needs. 

(4) Planning project procurement activities and schedule. 

(c) A specific budget for the planning of the project. 

(d) An estimated total project cost and a prospective State and Federal cost 

distribution, including planning and implementation. 

(e) A commitment to submit a HIT implementation advance planning document. 

(f) A commitment to conduct and complete activities which will result in the 

production of the State Medicaid HIT plan that includes conduct of the following 

activities: 

(1) A statewide HIT environmental baseline self-assessment. 

(2) An assessment of desired HIT future environment. 

(3) Development of benchmarks and transition strategies to move from the 

current environment to the desired future environment. 
CMS-0033-P 534 

(g) A commitment to submit the plan to CMS for approval. 

§495.338 Health information technology implementation advance planning 

document requirements (HIT IAPD). 

Each State's HIT IAPD must contain the following: 

(a) The results of the activities conducted as a result of the HIT planning advance 

planning document, including the approved state Medicaid HIT plan. 

(b) A statement of needs and objectives. 

(c) A statement of alternative considerations. 

(d) A personnel resource statement indicating availability of qualified and 

adequate staff, including a project director to accomplish the project objectives. 

(e) A detailed description of the nature and scope of the activities to be 

undertaken and the methods to be used to accomplish the project. 

(f) The proposed activity schedule for the project. 

(g) A proposed budget including a consideration of all HIT implementation 

advance planning document activity costs, including but not limited to the following: 

(1) The cost to implement and administer incentive payments. 

(2) Procurement or acquisition. 

(3) State personnel. 

(4) Contractor services. 

(5) Hardware, software, and licensing. 

(6) Equipment and supplies. 

(7) Training and outreach. 
CMS-0033-P 535 

(8) Travel. 

(9) Administrative operations. 

(10) Miscellaneous expenses for the project. 

(h) An estimate of prospective cost distribution to the various State and Federal 

funding sources and the proposed procedures for distributing costs. 

(i) A detailed payment listing file that-- 

(1) Is in an electronic format that may be a field delimited ASCII text file, a 

commonly used spreadsheet file, or a commonly used database file; and 

(2) Shows each EP and eligible hospital for which the State will provide for the 

payment of incentive payments, including the-- 

(i) Name of the provider; 

(ii) National provider identifier of the provider; 

(iii) Type of provider as specified in §495.304; 

(iv) Planned annual payment amounts; 

(v) Total of planned payment amounts; and 

(vi) Calendar year of each planned annual payment amount. 

(j) A statement setting forth the security and interface requirements to be 

employed for all State HIT systems, and related systems, and the system failure and 

disaster recovery procedures available. 

§495.340 As-needed HIT PAPD update and as-needed HIT IAPD update 

requirements. 
CMS-0033-P 536 

Each State must submit a HIT PAPD update or a HIT IAPD no later than 60 days 

after the occurrence of project changes including but not limited to any of the following: 

(a) A projected cost increase of $100,000 or more. 

(b) A schedule extension of more than 60 days for major milestones. 

(c) A significant change in planning approach or implementation approach, or 

scope of activities beyond that approved in the HIT planning advance planning document 

or the HIT implementation advance planning document. 

(d) A change in implementation concept or a change to the scope of the project. 

(e) A change to the approved cost allocation methodology. 

§495.342 Annual HIT IAPD requirements. 

Each State's annual HIT IAPD is due 60 days from the HIT IAPD approved 

anniversary date and must contain the following: 

(a) A reference to the approved HIT PAPD/IAPD and all approved changes. 

(b) A project activity status which reports the status of the past year's major 

project tasks and milestones, addressing the degree of completion and tasks/milestones 

remaining to be completed and discusses past and anticipated problems or delays in 

meeting target dates in the approved HIT technology PAPD/IAPD and approved changes 

to it. 

(c) A report of all project deliverables completed in the past year and degree of 

completion for unfinished products. 

(d) A project activity schedule for the remainder of the project. 
CMS-0033-P 537 

(e) A project expenditure status which consists of a detailed accounting of all 

expenditures for project development over the past year and an explanation of the 

differences between projected expenses in the approved HIT PAPD/IAPD and actual 

expenditures for the past year. 

(f) A report of any approved or anticipated changes to the allocation basis in the 

advance planning document's approved cost methodology. 

(g) An updated detailed payment listing file in an electronic format. 

§495.344 Approval of the State Medicaid HIT plan, the HIT PAPD and update, the 

HIT IAPD and update, and the annual HIT IAPD. 

The Department does not approve any of these documents that do not include all 

information required under this subpart. 

§495.346 Access to systems and records. 

The State agency must allow the Department access to all records and systems 

operated by the State in support of this program, including cost records associated with 

approved administrative funding and incentive payments to Medicaid providers. State 

records related to contractors employed for the purpose of assisting with implementation 

or oversight activities or providing assistance, at such intervals as are deemed necessary 

by the Department to determine whether the conditions for approval are being met and to 

determine the efficiency, economy, and effectiveness of the program. 

§495.348 Procurement standards. 
CMS-0033-P 538 

(a) General rule. Procurements of HIT equipment and services are subject to the 

following procurement standards in paragraphs (b), through (f) of this section regardless 

of any conditions for prior approval. These standards-- 

(1) Include a requirement for maximum practical open and free competition 

regardless of whether the procurement is formally advertised or negotiated. 

(2) Are established to ensure that such materials and services are obtained in a 

cost effective manner and in compliance with the provisions of applicable Federal 

statutes and executive orders. 

(3) Apply when the cost of the procurement is treated as a direct cost of an 

award. 

(b) Grantee responsibilities. The standards contained in this section do not 

relieve the Grantee of the contractual responsibilities arising under its contract(s). 

(1) The grantee is the responsible authority, without recourse to the Departmental 

awarding agency, regarding the settlement and satisfaction of all contractual and 

administrative issues arising out of procurements entered into in support of an award or 

other agreement. This includes disputes, claims, and protests of award, source evaluation 

or other matters of a contractual nature. 

(2) Matters concerning violation of statute are to be referred to such Federal, 

State or local authority as may have proper jurisdiction. 

(c) Codes of conduct. The grantee must maintain written standards of conduct 

governing the performance of its employees engaged in the award and administration of 

contracts. 
CMS-0033-P 539 

(1) No employee, officer, or agent must participate in the selection, award, or 

administration of a contract supported by Federal funds if a real or apparent conflict of 

interest would be involved. 

(2) Such a conflict would arise when the employee, officer, or agent, or any 

member of his or her immediate family, his or her partner, or an organization which 

employs or is about to employ any of the parties indicated herein, has a financial or other 

interest in the firm selected for an award. 

(3) The officers, employees, and agents of the grantee must neither solicit nor 

accept gratuities, favors, or anything of monetary value from contractors, or parties to sub 

agreements. 

(4) Grantees may set standards for situations in which the financial interest is not 

substantial or the gift is an unsolicited item of nominal value. 

(5) The standards of conduct provide for disciplinary actions to be applied for 

violations of such standards by officers, employers, or agents of the grantees. 

(d) Competition. All procurement transactions must be conducted in a manner to 

provide, to the maximum extent practical, open and free competition. 

(1) The grantee must be alert to organizational conflicts of interest as well as 

noncompetitive practices among contractors that may restrict or eliminate competition or 

otherwise restrain trade. 

(2) In order to ensure objective contractor performance and eliminate unfair 

competitive advantage, contractors that develop or draft grant applications, or contract 
CMS-0033-P 540 

specifications, requirements, statements of work, invitations for bids and requests for 

proposals must be excluded from competing for such procurements. 

(3) Awards must be made to the bidder or offer or whose bid or offer is 

responsive to the solicitation and is most advantageous to the grantee, price, quality, and 

other factors considered. 

(4) Solicitations must clearly set forth all requirements that the bidder or offer or 

must fulfill in order for the bid or offer to be evaluated by the grantee. 

(5) Any and all bids or offers may be rejected when it is in the grantee's interest 

to do so. 

(e) Procurement procedures. All grantees must establish written procurement 

procedures. These procedures must provide, at a minimum, the following: 

(1) Grantees avoid purchasing unnecessary items. 

(2) When appropriate, an analysis is made of lease and purchase alternatives to 

determine which would be the most economical and practical procurement for the grantee 

and the Federal government. 

(3) Solicitations for goods and services provide for all of the following: 

(i) A clear and accurate description of the technical requirements for the material, 

product or service to be procured. In competitive procurements, such a description must 

not contain features which unduly restrict competition. 

(ii) Requirements which the bidder or offer must fulfill and all other factors to be 

used in evaluating bids or proposals. 
CMS-0033-P 541 

(iii) A description, whenever practicable, of technical requirements in terms of 

functions to be performed or performance required, including the range of acceptable 

characteristics or minimum acceptable standards. 

(iv) The specific features of brand name or equal descriptions that bidders are 

required to meet when such items are included in the solicitation. 

(v) The acceptance, to the extent practicable and economically feasible, of 

products and services dimensioned in the metric system of measurement. 

(vi) Preference, to the extent practicable and economically feasible, for products 

and services that conserve natural resources and protect the environment and are energy 

efficient. 

(4) Positive efforts must be made by grantees to utilize small businesses, 

minority-owned firms, and women's business enterprises, whenever possible. Grantees 

of Departmental awards must take all of the following steps to further this goal: 

(i) Ensure that small businesses, minority-owned firms, and women's business 

enterprises are used to the fullest extent practicable. 

(ii) Make information on forthcoming opportunities available and arrange time 

frames for purchases and contracts to encourage and facilitate participation by small 

businesses, minority-owned firms, and women's business enterprises. 

(iii) Consider in the contract process whether firms competing for larger contracts 

intend to subcontract with small businesses, minority-owned firms, and women's business 

enterprises. 
CMS-0033-P 542 

(iv) Encourage contracting with consortia of small businesses, minority-owned 

firms and women's business enterprises when a contract is too large for one of these firms 

to handle individually. 

(v) Use the services and assistance, as appropriate, of such organizations as the 

Small Business Administration and the Department of Commerce's Minority Business 

Development Agency in the solicitation and utilization of small businesses, 

minority-owned firms and women's business enterprises. 

(5) The type of procuring instruments used (for example, fixed price contracts, 

cost reimbursable contracts, purchase orders, and incentive contracts) must be determined 

by the grantee but must be appropriate for the particular procurement and for promoting 

the best interest of the program or project involved. 

(6) The “cost-plus-a-percentage-of-cost” or “percentage of construction cost” 

methods of contracting must not be used. 

(7) Contracts must be made only with responsible contractors who possess the 

potential ability to perform successfully under the terms and conditions of the proposed 

procurement. 

(8) Consideration must be given to such matters as contractor integrity, record of 

past performance, financial and technical resources or accessibility to other necessary 

resources. 

(9) In certain circumstances, contracts with certain parties are restricted by 

agencies' implementation of Executive Orders 12549 and 12689, “Debarment and 

Suspension” as described in 45 CFR part 76. 
CMS-0033-P 543 

(10) Some form of cost or price analysis must be made and documented in the 

procurement files in connection with every procurement action. 

(11) Price analysis may be accomplished in various ways, including the 

comparison of price quotations submitted, market prices, and similar indicia, together 

with discounts. 

(12) Cost analysis is the review and evaluation of each element of cost to 

determine reasonableness, allocability, and allowability. 

(13) Procurement records and files for purchases in excess of the simplified 

acquisition threshold must include the following at a minimum: 

(i) Basis for contractor selection. 

(ii) Justification for lack of competition when competitive bids or offers are not 

obtained. 

(iii) Basis for award cost or price. 

(f) Contract administration. A system for contract administration must be 

maintained to ensure contractor conformance with the terms, conditions and 

specifications of the contract and to ensure adequate and timely follow up of all 

purchases. Grantees must evaluate contractor performance and document, as appropriate, 

whether contractors have met the terms, conditions, and specifications of the contract. 

(g) Additional contract requirements. The grantee must include, in addition to 

provisions to define a sound and complete agreement, the following provisions in all 

contracts, which must also be applied to subcontracts: 
CMS-0033-P 544 

(1) Contracts in excess of the simplified acquisition threshold must contain 

contractual provisions or conditions that allow for administrative, contractual, or legal 

remedies in instances in which a contractor violates or breaches the contract terms, and 

provide for such remedial actions as may be appropriate. 

(2) All contracts in excess of the simplified acquisition threshold (currently 

$100,000) must contain suitable provisions for termination by the grantee, including the 

manner by which termination must be effected and the basis for settlement. 

(h) Conditions for default or termination. Such contracts must describe 

conditions under which the contract may be terminated for default as well as conditions 

where the contract may be terminated because of circumstances beyond the control of the 

contractor. 

(i) Access to contract materials and staff. All negotiated contracts (except those 

for less than the simplified acquisition threshold) awarded by grantees must include a 

provision to the effect that the grantee, the Departmental awarding agency, the U.S. 

Comptroller General, or any of their duly authorized representatives, must have access to 

any books, documents, papers and records and staff of the contractor which are directly 

pertinent to a specific program for the purpose of making audits, examinations, excerpts 

and transcriptions. 

§495.350 State Medicaid agency attestations. 

(a) The State must provide assurances to the Department that amounts received 

with respect to sums expended that are attributable to payments to a Medicaid provider 
CMS-0033-P 545 

for the adoption of EHR are paid directly to such provider, or to an employer or facility to 

which such provider has assigned payments, without any deduction or rebate. 

(b) State Medicaid agency attestations must be provided in accordance with 

§433.74 of this chapter. 

§495.352 Reporting requirements. 

Each State must submit to the Department on a quarterly basis a progress report 

documenting specific implementation and oversight activities performed during the 

quarter, including progress in implementing the State's approved Medicaid HIT plan. 

§495.354 Rules for charging equipment. 

Equipment acquired under this subpart is subject to the public assistance program 

requirements concerning the computation of claims for Federal financial participation in 

accordance with the provisions of 45 CFR part 95, subpart G. 

§495.356 Nondiscrimination requirements. 

State agencies and any other recipients or subrecipients of Federal financial 

assistance provided under this subpart are subject to the nondiscrimination requirements 

in 45 CFR parts 80, 84, and 91. 

(a) These regulations in 45 CFR parts 80, 84, and 91 prohibit individuals from 

being excluded from participation in, being denied the benefits of, or being otherwise 

subjected to discrimination under any program or activity which received Federal 

financial assistance. 
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(b) Specifically, 45 Part 80 prohibits discrimination on the basis of race, color, or 

national origin; 45 CFR Part 84 prohibits discrimination on the basis of disability; and 45 

CFR Part 91 prohibits discrimination on the basis of age. 

§495.358 Cost allocation plans. 

State agencies that acquire HIT equipment and services under this subpart are 

subject to cost allocation plan requirements in 45 CFR part 95. 

§495.360 Software and ownership rights. 

(a) General rule. The State or local government must include a clause in all 

procurement instruments that provides that the State or local government will have all 

ownership rights in software or modifications thereof and associated documentation 

designed, developed or installed with FFP under this Subpart. 

(b) Federal license. The Department reserves a royalty-free, nonexclusive, and 

irrevocable license to reproduce, publish, or otherwise use and to authorize others to use 

for Federal government purposes, such software, modifications, and documentation. 

(c) Proprietary software. Proprietary operating/vendor software packages such as 

software that is owned and licensed for use by third parties, which are provided at 

established catalog or market prices and sold or leased to the general public must not be 

subject to the ownership provisions in paragraphs (a) and (b) of this section. 

(d) Limitation. Federal financial participation is not available for proprietary 

applications software developed specifically for the public assistance programs covered 

under this subpart. 

§495.362 Retroactive approval of FFP with an effective date of February 18, 2009. 
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For administrative activities performed by a State, without obtaining prior 

approval, which are in support of planning for incentive payments to providers, a State 

may request consideration of FFP by recorded request in a HIT advance planning 

document or implementation advance planning document update. In such a 

consideration, the agency takes into consideration overall Federal interests which may 

include any of the following: 

(a) The acquisition must not be before February 18, 2009. 

(b) The acquisition must be reasonable, useful, and necessary. 

(c) The acquisition must be attributable to payments for reasonable 

administrative expenses under section 1903(a)(3)(F)(ii) of the Act. 

§495.364 Review and assessment of administrative activities and expenses of 

Medicaid provider health information technology adoption and operation. 

(a) CMS conducts periodic reviews on an as needed basis to assess the State's 

progress described in its approved HIT planning advance planning document and health 

information technology implementation advance planning document. 

(b) During planning, development, and implementation, these reviews will 

generally be limited to the overall progress, work performance, expenditure reports, 

project deliverables and supporting documentation. 

(c) CMS assesses the State's overall compliance with the approved advance 

planning document and provide technical assistance and information sharing from other 

State projects. 
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(d) CMS will, on a continuing basis, review, assess and inspect the planning, 

design, development, implementation, and operation of activities and payments for 

reasonable administrative expenses related to the administration of payment for Medicaid 

provider HIT adoption and operation payments to determine the extent to which such 

activities meet the following: 

(1) All requirements of this subpart. 

(2) The goals and objectives stated in the approved HIT implementation advance 

planning document and State Medicaid HIT plan. 

(3) The schedule, budget, and other conditions of the approved HIT 

implementation advance planning document and State Medicaid HIT plan. 

§495.366 Financial oversight and monitoring of expenditures. 

(a) General rule. (1) The State must have a process in place to estimate 

expenditures for the Medicaid EHR payment incentive program using the Medicaid 

Budget Expenditure System. 

(2) The State must have a process in place to report actual expenditures for the 

Medicaid EHR payment incentive program using the Medicaid Budget Expenditure 

System. 

(3) The State must have an automated payment and information retrieval 

mechanized system, (Medicaid Management Information System) to make EHR payment 

incentives, to ensure Medicaid provider eligibility, to ensure the accuracy of payment 

incentives, and to identify potential improper payments. 
CMS-0033-P 549 

(b) Provider eligibility as basis for making payment. Subject to §495.332, the 

State must do all of the following: 

(1) Collect and verify basic information on Medicaid providers to assure provider 

enrollment eligibility upon enrollment or re-enrollment to the Medicaid EHR payment 

incentive program. 

(2) Collect and verify basic information on Medicaid providers to assure patient 

volume. 

(3) Collect and verify basic information on Medicaid providers to assure that EPs 

are not hospital-based including the determination that substantially all health care 

services are not furnished in a hospital setting, either inpatient or outpatient. 

(4) Collect and verify basic information on Medicaid providers to assure that EPs 

are practicing predominantly in a Federally-qualified health center or rural health clinic. 

(5) Have a process in place to assure that Medicaid providers who wish to 

participate in the EHR incentive payment program has or will have a NPI and will choose 

only one program from which to receive the incentive payment using the NPI, a TIN, and 

CMS' national provider election database. 

(c) Meaningful use and efforts to adopt, implement, or upgrade to certified 

electronic health record technology to make payment. Subject to §§495.354 and 495.374, 

the State must annually collect and verify information regarding the efforts to adopt, 

implement, or upgrade certified EHR technology and the meaningful use of said 

technology before making any payments to providers. 
CMS-0033-P 550 

(d) Claiming Federal reimbursement for State expenditures. Subject to §495.332, 

the State must do the following: 

(1) Assure that State expenditures are claimed in accordance with, including but 

not limited to, applicable Federal laws, regulations, and policy guidance. 

(2) Have a process in place to assure that expenditures for administering the 

Medicaid EHR incentive payment program will not be claimed at amounts higher than 90 

percent of the cost of such administration. 

(3) Have a process in place to assure that expenditures for payment of Medicaid 

EHR incentive payments will not be claimed at amounts higher than 100 percent of the 

cost of such payments to Medicaid providers. 

(e) Improper Medicaid electronic health record payment incentives. 

(1) Subject to §495.332, the State must have a process in place to assure that no 

duplicate Medicaid EHR payment incentives are paid between the Medicare and 

Medicaid programs, or paid by more than one State even if the provider is licensed to 

practice in multiple States, or paid within more than one area of a State. 

(2) Subject to §495.332, the State must have a process in place to assure that 

Medicaid EHR incentive payments are made without reduction or rebate, have been paid 

directly to an eligible provider or to an employer, a facility, or an eligible third-party 

entity to which the Medicaid eligible provider has assigned payments. 

(3) Subject to §495.332, the State must have a process in place to assure that 

Medicaid EHR incentive payments are made for no more than 6 years or for any year 
CMS-0033-P 551 

starting after the year of 2015 unless the provider has been provided payment under 

paragraph (b)(1) of this section for the previous year. 

(4) Subject to §495.332, the State must have a process in place to assure that only 

appropriate funding sources are used to make Medicaid EHR incentive payments. 

(5) Subject to §495.332, the State must have a process in place to assure that 

Medicaid EHR incentive payments are not paid at amounts higher than 85 percent of the 

net average allowable cost of certified EHR technology and the yearly maximum 

allowable payment thresholds. 

(6) Subject to §495.332, the State must have a process in place to assure that for 

those entities promoting the adoption of EHR technology, the Medicaid EHR incentive 

payments are paid on a voluntary basis and that these entities do not retain more than 5 

percent of such payments for costs not related to certified EHR technology. 

(7) Subject to §495.332, the State must have a process in place to assure that any 

existing fiscal relationships with providers to disburse the incentive through Medicaid 

managed care plans does not exceed 105 percent of the capitation rate, in order to comply 

with the Medicaid managed care incentive payment rules at §438.6(c)(5)(iii) of this 

chapter and a methodology for verifying such information. 

(8) The State must not request reimbursement for Federal financial participation 

unless all requirements of this subpart have been satisfied. 

§495.368 Combating fraud and abuse. 

(a) General rule. (1) The State must comply with Federal requirements to-- 
CMS-0033-P 552 

(i) Ensure the qualifications of the providers who request Medicaid EHR 

incentive payments; 

(ii) Detect improper payments; and 

(iii) In accordance with 42 CFR §455.15 and §455.21, refer suspected cases of 

fraud and abuse to the Medicaid Fraud Control Unit. 

(2) The State must take corrective action in the case of improper EHR payment 

incentives to Medicaid providers. 

(b) Providers' statements regarding submission of documentation containing 

falsification or concealment of a material fact on EHR incentive payment documentation. 

On any forms on which a provider submits information necessary to the determination of 

eligibility to receive EHR incentive payments, the State must obtain the statement that 

meet the following: 

(1) Is signed by the provider and contains the following statement: ”This is to 

certify that the foregoing information is true, accurate, and complete. I understand that 

Medicaid EHR incentive payments submitted under this provider number will be from 

Federal funds, and that any falsification, or concealment of a material fact may be 

prosecuted under Federal and State laws.” 

(2) Appears directly above the claimant's signature, or if it is printed on the 

reverse of the form, a reference to the statements must appear immediately preceding the 

provider's signature. 

(3) Is resubmitted upon a change in provider representative. 

(4) Is updated as needed. 
CMS-0033-P 553 

(c) Overpayments. States must repay to CMS all Federal financial participation 

received by providers identified as an overpayment regardless or recoupment from such 

providers, within 60 days of discovery of the overpayment, in accordance with sections 

1903(a)(1), (d)(2), and (d)(3) of the Act and part 433 Subpart F of the regulations. 

(d) Complying with Federal laws and regulations. States must comply with all 

Federal laws and regulations designed to prevent fraud, waste, and abuse, including, but 

not limited to applicable provisions of Federal criminal law, the False Claims Act (32 

U.S.C. 3729 et seq.), and the anti kickback statute (section 1128B(b) of the Act). 

§495.370 Appeals process for a Medicaid provider receiving electronic health 

record incentive payments. 

(a) The State must have a process in place consistent with the requirements 

established in §447.253(e) of this chapter for a provider or entity to appeal the following 

issues related to the HIT incentives payment program: 

(1) Incentive payments. 

(2) Incentive payment amounts. 

(3) Provider eligibility determinations. 

(4) Demonstration of adopting, implementing, and upgrading, and meaningful 

use eligibility for incentives under this subpart. 

(b) Subject to paragraph (a) of this section, the State's process must ensure the 

following: 
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(1) That the provider (whether an individual or an entity) has an opportunity to 

challenge the State's determination under this Part by submitting documents or data or 

both to support the provider's claim. 

(2) That such process employs methods for conducting an appeal that are 

consistent with the State's Administrative Procedure law(s). 

(c) The State must provide that the provider (whether individual or entity) is also 

given any additional appeals rights that would otherwise be available under procedures 

established by the State.
CMS-0033-P 

Authority: Catalog of Federal Domestic Assistance Program No. 93.773, Medicare--Hospital 

Insurance; and Program No. 93.774, Medicare--Supplementary Medical Insurance Program, 

Program No. 93.778, Medical Assistance Program. 

Dated: ___November 13, 2009________________ 

 __________________________________ 

Charlene Frizzera, 

Acting Administrator,

 Centers for Medicare & Medicaid Services.

Approved: _December 28, 2009___________________________ 

 _________________________________ 

Kathleen Sebelius, 

Secretary. 

BILLING CODE 4120-01-P 
CMS-0033-P 

[FR Doc. 2009-31217 Filed 12/30/2009 at 4:15 pm; Publication Date: 01/13/2010]