Wednesday, 

July 28, 2010 

Part II 

Department of 

Health and Human 

Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 412, 413, 422 et al. 

Medicare and Medicaid Programs; 

Electronic Health Record Incentive 

Program; Final Rule 


srobinson on DSKHWCL6B1PROD with RULES2
44314 Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 412, 413, 422, and 495 

[CMS–0033–F] 

RIN 0938–AP78 

Medicare and Medicaid Programs; 

Electronic Health Record Incentive 

Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule implements 

the provisions of the American 

Recovery and Reinvestment Act of 2009 

(ARRA) (Pub. L. 111–5) that provide 

incentive payments to eligible 

professionals (EPs), eligible hospitals 

and critical access hospitals (CAHs) 

participating in Medicare and Medicaid 

programs that adopt and successfully 

demonstrate meaningful use of certified 

electronic health record (EHR) 

technology. This final rule specifies— 

the initial criteria EPs, eligible hospitals, 

and CAHs must meet in order to qualify 

for an incentive payment; calculation of 

the incentive payment amounts; 

payment adjustments under Medicare 

for covered professional services and 

inpatient hospital services provided by 

EPs, eligible hospitals and CAHs failing 

to demonstrate meaningful use of 

certified EHR technology; and other 

program participation requirements. 

Also, the Office of the National 

Coordinator for Health Information 

Technology (ONC) will be issuing a 

closely related final rule that specifies 

the Secretary’s adoption of an initial set 

of standards, implementation, 

specifications, and certification criteria 

for electronic health records. ONC has 

also issued a separate final rule on the 

establishment of certification programs 

for health information technology. 

DATES: Effective Date: These regulations 

are effective on September 27, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Holland, (410) 786–1309, EHR 

incentive program issues. 

Edward Gendron, (410) 786–1064, 

Medicaid incentive payment issues. 

Jim Hart, (410) 786–9520, Medicare fee 

for service payment issues. 

Bob Kuhl or Susan Burris, (410) 786– 

5594, Medicare CAH payment and 

charity care issues. 

Frank Szeflinski, (303) 844–7119, 

Medicare Advantage issues. 

SUPPLEMENTARY INFORMATION: 

Acronyms 

ARRA American Recovery and 

Reinvestment Act of 2009 

AAC Average Allowable Cost (of certified 

EHR technology) 

AIU Adopt, Implement, Upgrade (certified 

EHR technology) 

CAH Critical Access Hospital 

CAHPS Consumer Assessment of 

Healthcare Providers and Systems 

CCN CMS Certification Number 

CFR Code of Federal Regulations 

CHIP Children’s Health Insurance Program 

CHIPRA Children’s Health Insurance 

Program Reauthorization Act of 2009 

CMS Centers for Medicare & Medicaid 

Services 

CPOE Computerized Physician Order Entry 

CY Calendar Year 

EHR Electronic Health Record 

EP Eligible Professional 

EPO Exclusive Provider Organization 

FACA Federal Advisory Committee Act 

FFP Federal Financial Participation 

FFY Federal Fiscal Year 

FFS Fee-For-Service 

FQHC Federally Qualified Health Center 

FTE Full-Time Equivalent 

FY Fiscal Year 

HEDIS Healthcare Effectiveness Data and 

Information Set 

HHS Department of Health and Human 

Services 

HIE Health Information Exchange 

HIT Health Information Technology 

HIPAA Health Insurance Portability and 

Accountability Act of 1996 

HITECH Health Information Technology for 

Economic and Clinical Health Act 

HMO Health Maintenance Organization 

HOS Health Outcomes Survey 

HPSA Health Professional Shortage Area 

HRSA Health Resource and Services 

Administration 

IAPD Implementation Advance Planning 

Document 

ICR Information Collection Requirement 

IHS Indian Health Service 

IPA Independent Practice Association 

IT Information Technology 

MA Medicare Advantage 

MAC Medicare Administrative Contractor 

MAO Medicare Advantage Organization 

MCO Managed Care Organization 

MITA Medicaid Information Technology 

Architecture 

MMIS Medicaid Management Information 

Systems 

MSA Medical Savings Account 

NAAC Net Average Allowable Cost (of 

certified EHR technology) 

NCQA National Committee for Quality 

Assurance 

NCVHS National Committee on Vital and 

Health Statistics 

NPI National Provider Identifier 

NPRM Notice of Proposed Rulemaking 

ONC Office of the National Coordinator for 

Health Information Technology 

PAHP Prepaid Ambulatory Health Plan 

PAPD Planning Advance Planning 

Document 

PFFS Private Fee-For-Service 

PHO Physician Hospital Organization 

PHS Public Health Service 

PHSA Public Health Service Act 

PIHP Prepaid Inpatient Health Plan 

POS Place of Service 

PPO Preferred Provider Organization 

PQRI Physician Quality Reporting Initiative 

PSO Provider Sponsored Organization 

RHC Rural Health Clinic 

RHQDAPU Reporting Hospital Quality Data 

for Annual Payment Update 

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 

and Response and Analysis of Comments 

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 

a. Considerations in Defining Meaningful 

Use 

b. Common Definition of Meaningful Use 

Under Medicare and Medicaid 

c. 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, 

Eligible Hospitals and CAHs 

a. General 

b. Requirements for the Submission of 

Clinical Quality Measures by EPs, 

Eligible Hospitals and CAHs 

c. Statutory Requirements and Other 

Considerations for the Selection of 

Clinical Quality Measures for Electronic 

Submission by EPs, Eligible Hospitals 

and CAHs 

(1) Statutory Requirements for the 

Selection of Clinical Quality Measures 

for Electronic Submission by EPs, 

Eligible Hospitals and CAHs 

(2) Other Considerations for the Selection 

of Clinical Quality Measures for 

Electronic Submission by EPs, Eligible 

Hospitals and CAHs 

d. Clinical Quality Measures for EPs 

e. Clinical Quality Measures Reporting 

Criteria for EPs 

f. Clinical Quality Measures for Electronic 

Submission by Eligible Hospitals 

g. Potential Measures for EPs, Eligible 

Hospitals and CAHs in Stage 2 and 

Subsequent Years 

h. Reporting Method for Clinical Quality 

Measures for 2011 and Beginning With 

the 2012 Payment Years 

(1) Reporting Method for 2011 Payment 

Year 

(2) Reporting Method Beginning in 2012 


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Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 44315 

i. Alternative Reporting Methods for 

Clinical Quality Measures 

j. Reporting Period for Reporting Clinical 

Quality Measures 

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 

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 

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 MAAffiliated 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 Information on the CMS Web 

site 

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 

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 

a. Payment Methodology for EPs 

(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 EHR Incentive 

Programs One Time 

g. One State Selection 

5. Single Provider Election Repository and 

State Data Collection 

6. Collection of Information Related to the 

Eligible Professional’s National Provider 

Identifier (NPI) 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 

d. Quality Measures 

8. Overview of Conditions for States To 

Receive Federal Financial Participation 

(FFP) for Incentive Payments and 

Implementation Funding 

9. Financial Oversight, Program Integrity 

and Provider Appeals 

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 MA– 

EPs 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) 

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. Regulatory Impact Analysis 

A. Overall Impact 

B. Regulatory Flexibility Analysis 

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, 


srobinson on DSKHWCL6B1PROD with RULES2
44316 Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 

2009. 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), eligible 

hospitals, and critical access hospitals 

(CAHs), and Medicare Advantage 

Organizations to promote the adoption 

and meaningful use of interoperable 

health information technology (HIT) and 

qualified electronic health records 

(EHRs). 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.’’ These 

incentive payments are part of a broader 

effort under the HITECH Act to 

accelerate the adoption of HIT and 

utilization of qualified EHRs. 

On January 13, 2010 we published a 

proposed rule (75 FR 1844), entitled 

‘‘Medicare and Medicaid Programs; 

Electronic Health Record Incentive 

Program’’ to implement the provisions of 

ARRA that provide incentive payments 

to EPs, eligible hospitals, and CAHs 

participating in Medicare and Medicaid 

programs that adopt and successfully 

demonstrate meaningful use of ‘‘certified 

EHR technology,’’ and incentive 

payments to certain Medicare 

Advantage Organizations for their 

affiliated EPs and eligible hospitals that 

meaningfully use certified EHR 

technology. Through this final rule, we 

are developing the incentive programs 

which are outlined in Division B, Title 

IV of the HITECH Act. This final rule 

sets forth the 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. In the interim final rule 

published on January 13, 2010 (75 FR 

2014) entitled ‘‘Health Information 

Technology: Initial Set of Standards, 

Implementation Specifications, and 

Certification Criteria for Electronic 

Health Record Technology,’’ ONC 

defined the term ‘‘certified EHR 

technology,’’ identified the initial set of 

standards and implementation 

specifications that such EHR technology 

would need to support the achievement 

of the proposed meaningful use Stage 1, 

as well as the certification criteria that 

will be used to certify EHR technology. 

ONC is also issuing a final rule on the 

standards, implementation 

specifications, and certification criteria 

elsewhere in this issue of the Federal 

Register. 

In a related proposed rule published 

on March 10, 2010, (75 FR 11328) 

entitled ‘‘Proposed Establishment of 

Certification Programs for Health 

Information Technology’’ ONC proposed 

the establishment of two certification 

programs for purpose of testing and 

certifying health information 

technology. In the June 24, 2010 Federal 

Register (75 FR 36157), ONC published 

a final rule to establish a temporary 

certification program whereby the 

National Coordinator would authorize 

organizations to test and certify 

complete EHRs and EHR Modules, and 

plans to issue a separate final rule to 

establish a permanent certification 

program to replace the temporary 

certification program. Specifically, this 

final rule will ensure that the definition 

of meaningful use of certified EHR 

technology does not require EPs, eligible 

hospitals, and CAHs to perform 

functions 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 final 

rule to also review the ONC interim 

final rule on standards and 

implementation specifications for 

certified EHR technology and the related 

final rule as well as the final rule on the 

establishment of a temporary 

certification program. Readers may also 

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 

demonstration of meaningful use of 

certified EHR technology by EPs 

participating in the original Medicare 

program (hereinafter referred to as the 

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 do not 

demonstrate that they are meaningful 

users of certified EHR technology will 

receive an adjustment to their fee 

schedule for their professional services 

of 99 percent for 2015 (or, in the case 

of an eligible professional who was 

subject to the application of the 

payment adjustment under section 

1848(a)(5) of the Act, 98 percent for 

2014), 98 percent for 2016, and 97 

percent for 2017 and each subsequent 

year. Section 4101(c) of the HITECH Act 

adds a new subsection (l) to section 

1853 of the Act to provide incentive 

payments to certain Medicare 

Advantage (MA) organizations for their 

affiliated EPs who meaningfully use 

certified EHR technology and meet 

certain other requirements, and requires 

a downward adjustment to Medicare 

payments to certain MA organizations 

for professional services provided by 

any of their affiliated EPs who are not 

meaningful users of certified EHR 

technology, beginning in 2015. Section 

1853(l) of the Act also requires us to 

establish a process that ensures that 

there are no duplicate payments made 

to MA organizations under section 

1853(l) of the Act and to their affiliated 

EPs under the FFS EHR incentive 

program established under section 

1848(o)(1)(A) of the Act. 

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 

demonstration of meaningful use of 

certified EHR technology by subsection 

(d) hospitals, as defined under section 

1886(d)(1)(B) of the Act, participating in 

the Medicare FFS program beginning in 

Federal fiscal year (FFY) 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 for their 

inpatient hospital services. Section 

4102(a)(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 costs for the 

purchase of certified EHR technology 

beginning in FY 2011. In addition, 

section 4102(b)(2) of the HITECH Act 

amends section 1814(l) of the Act to 

provide 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 

qualifying MA organizations for certain 

affiliated hospitals that meaningfully 


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Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 44317 

use certified EHR technology to make a 

downward adjustment to payments to 

certain 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 1853(m) of the Act also requires 

us to establish a process that ensures 

that there are no duplicate payments 

made to MA organizations under section 

1853(m) of the Act and to their affiliated 

hospitals under the FFS EHR incentive 

program established under section 

1886(n) of the Act. 

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, 

operate (including support services and 

training for staff) and meaningfully use 

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 Rule and 

Analysis of and Responses to Public 

Comments 

We proposed to add a new part 495 

to title 42 of the Code of Federal 

Regulations to implement the provisions 

of Title IV of Division B of ARRA 

providing for incentive payments to 

EPs, eligible hospitals, CAHs and 

certain Medicare Advantage 

organizations for the adoption and 

demonstration of meaningful use of 

certified EHR technology under the 

Medicare program or the Medicaid 

program. 

The HITECH Act creates incentives 

under the Medicare Fee-for-Service 

(FFS), Medicare Advantage (MA), and 

Medicaid programs for EPs, eligible 

hospitals and CAHs to adopt and 

demonstrate meaningful use of certified 

EHR technology, and payment 

adjustments under the Medicare FFS 

and MA programs for EPs, eligible 

hospitals, and CAHs who fail to adopt 

and demonstrate meaningful use of 

certified EHR technology. 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 demonstration 

of meaningful use of certified EHR 

technology. Eligible hospitals and CAHs 

may participate in both the Medicare 

program and the Medicaid program, 

assuming they meet each program’s 

eligibility requirements, which vary 

across the two 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.’’ For these reasons, we seek 

to create as much commonality between 

the three programs as possible and have 

structured this final rule, as we did the 

proposed rule, based on the 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, 

MA, and Medicaid Programs 

Title IV, Division B of ARRA 

establishes incentive payments under 

the Medicare and Medicaid programs 

for certain professionals and hospitals 

that meaningfully use certified EHR 

technology, and for certain MA 

organizations whose affiliated EPs and 

hospitals meaningfully use certified 

EHR technology. We refer to the 

incentive payments made under the 

original Medicare program to EPs, 

eligible hospitals, and CAHs as the 

Medicare FFS EHR incentive program, 

the incentive payments made to 

qualifying MA organizations as the MA 

EHR incentive program, and the 

incentive payments made under 

Medicaid to eligible professionals and 

eligible hospitals as the Medicaid EHR 

incentive program. When referring to 

the Medicare EHR incentive program, 

we are generally referring to both the 

Medicare FFS EHR and the MA EHR 

incentive programs. 

1. Definitions 

Sections 4101, 4102, and 4201 of the 

HITECH Act use many identical or 

similar terms. In this section of the 

preamble, we discuss terms for which 

we are finalizing uniform definitions for 

the Medicare FFS, MA, and Medicaid 

EHR incentive programs. These 

definitions are set forth 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. 

The incentive payments are available 

to EPs which are 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 which are 

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. 

a. Certified Electronic Health Record 

(EHR) Technology 

Under all three EHR incentive 

programs, EPs, eligible hospitals, and 

CAHs 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, and for eligible hospitals and CAHs 

in section 1886(n)(3)(A)(i) of the Act. In 

the MA EHR incentive program this 

requirement for EPs is found in section 

1853(l)(1) of the Act, and for eligible 

hospitals and CAHs, in section 

1853(m)(1) of the 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. Certified EHR 

technology is a critical component of 

the EHR incentive programs, and the 

Secretary has charged ONC, under the 

authority given to her in the HITECH 

Act, with developing the criteria and 

mechanisms for certification of EHR 

technology. Therefore, we finalize our 

proposal to use the definition of 

certified EHR technology adopted by 

ONC. ONC issued an interim final rule 

with comment for the standards and 

certification criteria for certified EHR 

technology at the same time our 

proposed rule was issued. After 

reviewing the comments they received 

and to address changes made in this 

final rule, ONC will be issuing a final 

rule in conjunction with this final rule. 

When we refer to the ONC final rule, we 

are referring to this final rule titled 


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‘‘Health Information Technology: Initial 

Set of Standards, Implementation 

Specifications, and Certification Criteria 

for Electronic Health Record 

Technology. When we refer to the ONC 

IFR, we are referring to the interim final 

rule with comment period published in 

the Federal Register on January 13, 

2010. 

Comment: Several commenters asked 

for clarification on the definition of 

certified EHR technology. Currently, 

hospitals utilize multiple systems to 

operate electronically. For example, 

some electronic operating systems feed 

EHR data and some systems pull EHR 

data. Data from the two systems are then 

extracted and manipulated to create a 

quality measure calculation. The 

commenters’ inquired as to how these 

systems can continue to be utilized even 

though, independently, these systems 

will not meet all certification standards. 

Some commenters expressed concern 

the ONC IFR did not include generation 

of the data needed to demonstrate 

meaningful use as a certification 

requirement and that certified EHR 

technology requirements should also 

include compliance with HIPAA 

standards as well as all relevant state 

statutes for the state or states where it 

is installed. Commenters recommended 

various approaches to defining certified 

technology especially in the early stages 

of the program. Some suggestions 

included, grandfathering existing 

systems for a period of three years as 

long as the provider could meet specific 

meaningful use objectives while 

requiring all upgrades to existing 

systems to be certified, allowing all EHR 

products certified by the Certification 

Commission for Health Information 

Technology (CCHIT) at the criteria 

established for 2008 or later be deemed 

as meeting Stage 1 certification 

requirements or alternatively CMS 

provide a process that can verify 

compliance of required features at no 

cost to providers or vendors as is done 

now with Enterprise Data Interchange 

(EDI) claims processing. Some 

commenters also offered other thoughts 

on potential unintended consequences 

of defining the EHR certification 

software process to include certifying 

agencies that charge for the process. The 

commenters believed this could result 

in continued new and revised 

requirements to justify the certifying 

entities’ existence and increase its 

revenue. 

Response: We have referred those 

comments to ONC who addresses them 

in their final rule. 

We are adopting the ONC definition 

of certified EHR technology at 45 CFR 

170.102 in this final rule. 

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 was 

defined by ONC in its in its IFR and 

finalized by ONC in their final rule, and 

we are finalizing our proposal to use the 

definition of qualified electronic health 

record adopted by ONC in their final 

rule to be published concurrently with 

this rule. 

Comment: We received a few 

comments on the definition of qualified 

EHR technology. Commenters expressed 

concerns regarding perceived gaps in 

defining an EHR as qualified such as a 

lack of the requirement for a narrative 

text for physicians (also known as 

progress note). Another comment 

requested further clarification regarding 

the requirement for a qualified EHR to 

‘‘capture and query information relevant 

to health care quality’’ and ‘‘exchange 

electronic health information with and 

integrate such information from other 

sources.’’ For example, some might 

believe that these requirements apply 

strictly to information contained within 

the EHR or closed proprietary hospital 

systems and not to information that 

would have to be obtained from outside 

the four walls of the practice or the 

extended (but closed) system. 

Response: We have referred those 

comments to ONC who addresses them 

in their final rule. 

We are adopting the ONC definition 

of Qualified Electronic Health Record at 

45 CFR 170.102. 

c. Payment Year 

As discussed in the proposed rule, 

under section 1848(o)(1)(A)(i) of the 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 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 in 

the Medicare and Medicaid EHR 

incentive programs, we are proposing a 

common definition for both ‘‘payment 

year’’ and ‘‘year of payment,’’ as ‘‘any 

calendar year beginning with 2011’’ at 

§ 495.4. In the proposed rule, we 

explained that this definition, which is 

consistent with the statutory definition 

of ‘‘payment year’’ under Medicare FFS, 

would simplify the EHR incentive 

programs for EPs. As discussed later in 

this preamble, EPs will have the 

opportunity to participate in either the 

Medicare or Medicaid incentive 

programs, and once an EP has selected 

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 incentive programs, and inform 

their decisions regarding participation 

in either program. 

Under section 1886(n)(1) of the 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 beginning in 2011. As 

hospitals are paid based on the 12- 

month Federal fiscal year, we interpret 

the reference to a ‘‘fiscal year’’ means the 

fiscal year beginning on October 1 of the 

prior calendar 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 in the proposed rule and 

summarized above for proposing a 

common definition of ‘‘payment year’’ 

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 and 

CAHs under the Medicare FFS, MA and 

Medicaid EHR incentive programs, we 

proposed to define payment year and 

year of payment at § 495.4, consistent 

with the statutory definition, as ‘‘any 

fiscal year beginning with 2011.’’ 

Comment: A commenter asked CMS 

to identify the first possible payment 

year for EPs, and hospitals and CAHs. 

Response: The first payment year for 

EPs is any calendar year (CY) beginning 

with CY 2011 and for eligible hospitals 

and CAHs is any fiscal year (FY) 

beginning with 2011. 

Comment: The majority of 

commenters favored our definition of 

‘‘payment year’’ based on the different 

existing fiscal periods for eligible 

professionals and hospitals. Additional 

support was received from some 

commenters whom explained that they 

participated in performance-based 

initiatives, which define a payment year 

the same as the proposed rule. 

Response: After consideration of the 

public comments received, we are 

adopting our proposed definition of 

‘‘payment year’’ in the Medicare and 


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Medicaid EHR incentive programs as 

described above. 

Comment: The majority of comments 

received regarding the definition of a 

payment year asked whether payment 

years must be consecutive for an EP or 

eligible hospital to receive all years of 

incentive payments. 

Response: In the proposed rule, we 

defined 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.’’ 

However, section 1848(o)(1)(E) of Act 

defines the second through fifth 

payment years for an EP as each 

successive year immediately following 

the first payment year for such 

professional for the Medicare FFS and 

MA EHR incentive programs. Similarly, 

section 1886(n)(2)(G)(ii) of the Act 

defines the second through fourth 

payment years for an eligible hospital or 

CAH as requiring the years to be 

‘‘successive’’ and ‘‘immediately 

following’’ the prior year. This 

requirement, that each payment year 

‘‘immediately follow’’ the prior year, 

means that every year subsequent to the 

first payment year is a payment year 

regardless of whether an incentive 

payment is received by the EP, eligible 

hospital or CAH. For example, if a 

Medicare EP receives an incentive in CY 

2011, but does not successfully 

demonstrate meaningful use or 

otherwise fails to qualify for the 

incentive in CY 2012, CY 2012 still 

counts as one of the EP’s five payment 

years and they would only be able to 

receive an incentive under the Medicare 

EHR incentive program for three more 

years as CY 2013 would be there third 

payment year. In this example, the 

maximum incentive payment that 

would apply for this Medicare EP not 

practicing predominately in a health 

professional shortage area (HPSA) 

would be $18,000 in 2011, and $8,000 

in 2013 as outlined in section 

1848(o)(1)(B) of the Act. The EP would 

have qualified for a maximum incentive 

payment of $12,000 in 2012, but did not 

qualify as a meaningful user for this 

year. No incentives may be made under 

the Medicare EHR incentive program 

after 2016. 

The same rule, however, does not 

apply to the Medicaid EHR incentive 

program. For that program, payments 

may generally be non-consecutive. If an 

EP or eligible hospital does not receive 

an incentive payment for a given CY or 

FY then that year would not constitute 

a payment year. For example, if a 

Medicaid EP receives incentives in CY 

2011 and CY 2012, but fails to qualify 

for an incentive in CY 2013, they would 

still be eligible to receive incentives for 

an additional four payment years. For 

hospitals, however, starting with FY 

2017 payments must be consecutive. 

This rule is required by section 

1903(t)(5)(D) of the Act, which states 

that after 2016, no Medicaid incentive 

payment may be made to an eligible 

hospital unless ‘‘the provider has been 

provided payment * * * for the 

previous year.’’ As a result, Medicaid 

eligible hospitals must receive an 

incentive in FY 2016 to receive an 

incentive in FY 2017 and later years. 

Starting in FY 2016, incentive payments 

must be made every year in order to 

continue participation in the program. 

In no case may any Medicaid EP or 

eligible hospital receive an incentive 

after 2021. We have revised our 

regulations at § 495.4 to incorporate 

these statutory requirements. 

Comment: Some commenters 

requested that CMS clarify the impact 

on EPs when they change practices in 

the middle of the incentive payment 

program; in other words, if an EP leaves 

a practice in year two of the incentive 

payment program and goes to another 

practice, does that EP forfeit the ability 

to continue collecting incentive 

payments for years 3 through 5? 

Response: A qualifying EP that leaves 

one practice for another may still be 

eligible to receive subsequent incentive 

payments if the EP is a meaningful EHR 

user in the new practice. The incentive 

payment is tied to the individual EP, 

and not to his or her place of practice. 

d. First, Second, Third, Fourth, Fifth, 

and Sixth Payment Year 

In accordance with sections 

1848(o)(1)(A)(ii), 1886(n)(2)(E), 

1814(l)(3)(A), 1903(t)(4)(B), and 

1903(t)(5)(A) of the Act, for EPs, eligible 

hospitals, and CAHs that qualify for 

EHR incentive payments in a payment 

year, the amount of the payment will 

depend in part on whether the EP or 

hospital previously received an 

incentive payment and, if so (for the 

Medicare EHR incentive program) when 

the EP or hospital received his or her 

first payment. We proposed to define 

the first payment year to mean the first 

CY or Federal fiscal year (FY) for which 

an EP, eligible hospital, or CAH receives 

an incentive payment. Likewise, we 

proposed to define the second, third, 

fourth, fifth, and sixth payment year, 

respectively, to mean the second, third, 

fourth, fifth, and sixth CY or FY, 

respectively, for which an EP, eligible 

hospital, or CAH receives an incentive 

payment. 

Comment: As stated above, many 

commenters requested clarification on 

non-consecutive payment. 

Response: This comment is addressed 

above. 

Comment: A commenter requested 

CMS to clarify the consequences for a 

hospital that originally qualified and 

received incentive payments the first 

year, but in a subsequent year failed to 

qualify as a meaningful user of certified 

EHR technology. 

Response: Meaningful use will be 

assessed on a year-by-year basis as we 

establish different Stages of meaningful 

use criteria for different years. If an EP 

or an eligible hospital including a CAH 

has failed to demonstrate meaningful 

use of certified EHR technology for a 

certain payment year, the EP, eligible 

hospital, or CAH will not be qualified 

for incentive payments for that payment 

year. However, upon successful 

demonstration as a meaningful EHR 

user in subsequent years, an EP, eligible 

hospital or CAH may be eligible to 

receive an incentive payment. As 

discussed above, however, for the 

Medicare program, the failure of the 

eligible hospital or CAH to demonstrate 

meaningful use in the subsequent year, 

will affect the total payments that 

hospital is eligible to receive, as, 

pursuant to the statute, the hospital is 

treated as skipping a payment year. 

Payment adjustments apply to Medicare 

providers who are unable to 

demonstrate meaningful use starting in 

2015. 

Comment: One commenter asked if 

CMS could apply the same Medicaid 

EP’s first year incentive eligibility 

requirements of adopting, implementing 

or upgrading to certified EHR 

technology to Medicare physicians 

instead of demonstration of meaningful 

use. 

Response: The HITECH Act allows 

Medicaid EPs and eligible hospitals to 

receive an incentive for the adoption, 

implementation, or upgrade of certified 

EHR technology in their first 

participation year. In subsequent years, 

these EPs and eligible hospitals must 

demonstrate that they are meaningful 

users. There are no parallel provisions 

under the Medicare EHR incentive 

program that would authorize us to 

make payments to Medicare EPs, 

eligible hospitals, and CAHs for the 

adoption, implementation or upgrade of 

certified EHR technology. Rather, in 

accordance with sections 1848(o)(2), 

1886(n)(3)(A), and 1814(l)(3)(A) of the 

Act, Medicare incentive payments are 

only made to EPs, eligible hospitals, and 

CAHs for the demonstration of 

meaningful use of certified EHR 

technology. 


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After consideration of the public 

comments received, we are finalizing 

the definitions of First payment year as 

proposed. For the Medicare EHR 

incentive programs, we are modifying 

the definitions of second, third, fourth, 

fifth payment year to make clear that 

these years are ‘‘each successive year 

following the first payment year.’’ For 

the Medicaid EHR incentive program, 

we included definitions of first, second, 

third, fourth, fifth and sixth payment 

year that make clear that these are the 

years for which payment is received. 

The regulations can now be found at 

§ 495.4 of our regulations. 

e. EHR Reporting Period 

In the proposed rule, we proposed 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, we proposed that the EHR 

reporting period would be any 

continuous 90-day period within the 

first payment year and the entire 

payment year for all subsequent 

payment years. In our proposed rule, we 

did not make any proposals regarding 

the reporting period that will be used 

for purposes of the payment 

adjustments that begin in 2015. We 

intend to address this issue in future 

rulemaking, 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. 

For the first payment year only, we 

proposed to define the term EHR 

reporting period at § 495.4 of our 

regulations to mean any continuous 90- 

day period within a payment year in 

which an EP, eligible hospital or CAH 

successfully demonstrates meaningful 

use of certified EHR technology. The 

EHR reporting period therefore could be 

any continuous period beginning and 

ending within the relevant payment 

year. Starting with the second payment 

year and any subsequent payment years 

for a given EP, eligible hospital or CAH, 

we proposed to define the term EHR 

reporting period at § 495.4 to mean the 

entire payment year. In our discussion 

of considerations in defining 

meaningful use later in this section we 

discuss how this policy may be affected 

by subsequent revisions to the 

definition of meaningful use. 

For the first payment year, we stated 

in the proposed rule our belief that 

giving EPs, eligible hospitals and CAHs 

flexibility as to the start date of the EHR 

reporting period is important, as 

unforeseen circumstances, such as 

delays in implementation, higher than 

expected training needs and other 

unexpected hindrances, may cause an 

EP, eligible hospital, or CAH to 

potentially miss a target start date. 

Comment: Some commenters 

supported the 90-day reporting period 

proposed for the first payment year. One 

commenter requested that exceptions, 

per the provider request, be considered 

individually in cases of compliance for 

less than the 90 days (for example, 85 

days). Commenters preferred the 90-day 

reporting period overall and many 

suggested it be used for subsequent 

years as well. We also received 

comments questioning why Medicaid 

providers would need to conform to the 

90-day reporting period in order to 

adopt, implement or upgrade certified 

EHR technology. 

Response: We do believe that for 

program integrity it is crucial to 

maintain a consistent reporting period. 

Basing the incentive payments on 

meaningful use implies a minimum 

level of use in order to receive the 

incentive payment. The timeframe is 

part of the determination of whether use 

is meaningful and therefore requires a 

minimum as well. Given the short time 

period as compared to the entire year, 

we do not believe an exception process 

is needed. However, we agree with 

commenters that an EHR reporting 

period for demonstrating adoption, 

implementation or upgrading certified 

EHR technology by Medicaid EPs and 

eligible hospitals is unnecessary and are 

removing it for the final rule in this 

instance. Similarly, Medicaid EPs and 

eligible hospitals who are demonstrating 

meaningful use for the first time in their 

second payment year, will have a 90- 

day reporting period to maintain parity 

with Medicare providers’ first 

meaningful use payment year. We do 

not believe that after successfully 

demonstrating meaningful use, a 90-day 

period is appropriate for subsequent 

years. The reasons for using the 90-day 

period instead of the full year are based 

on potential delays in implementing 

certifying EHR technology. Once 

certified EHR technology is 

implemented these are no longer 

applicable. 

After consideration of the public 

comments received and with the 

clarification described above for 

adopting, implementing or upgrading, 

we are finalizing the 90-day reporting 

period for the first payment year based 

on meaningful use as proposed for 

Medicare EPs, eligible hospitals and 

CAHs and full year EHR reporting 

periods for subsequent payment years. 

For Medicaid EPs and eligible hospitals, 

the EHR reporting period will be a 90- 

day period for the first year a Medicaid 

EP or eligible hospital demonstrates 

meaningful use and full year EHR 

reporting periods for subsequent 

payment years. 

f. Meaningful EHR User 

Section 1848(o)(1)(A)(i) of the Act, 

limits incentive payments under the 

Medicare FFS EHR incentive program to 

an EP who is a ‘‘meaningful EHR user.’’ 

Similarly, section 1886(n)(1) and 1814(l) 

of the Act, limits incentive payments 

under the Medicare FFS EHR incentive 

program to an eligible hospital or CAH, 

respectively, who is a ‘‘meaningful EHR 

user.’’ Section 1903(t)(6)(C)(i)(II) of the 

Act limits incentive payments for 

payment years other than the first 

payment year to a Medicaid EP or 

eligible hospital who ‘‘demonstrates 

meaningful use of certified EHR 

technology.’’ We proposed to define at 

§ 495.4 the term ‘‘meaningful EHR user’’ 

as an EP, eligible hospital, or CAH 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). 

Comment: Several commenters 

indicated there is a need to align 

measures and programs, to avoid having 

to report similar measure standards to 

different Federal, State and other 

entities. 

Response: We concur with the goal of 

alignment to avoid redundant and 

duplicative reporting and seek to 

accomplish this to the extent possible 

now and in future rulemaking. 

Comment: Several commenters 

suggested that CMS considers EPs, 

eligible hospitals, and CAHs who are 

participating in certain existing 

programs as meaningful EHR users. The 

commenters contended that the 

standards followed by participants in 

these programs are equivalent to those 

we proposed to adopt for purposes of 

demonstrating meaningful use. The 

programs recommended by commenters 

are— 

• Qualified Health Information 

Exchange Networks; and 

• Medicare Electronic Health Record 

Demonstration Program. 

Response: We do not agree that 

participation in these programs would 

be the equivalent to demonstrating 

meaningful use in accordance with the 

criteria under the EHR incentive 

programs. Most of these programs place 

a heavy focus on one of the five 

priorities of meaningful use discussed 

in the next section such as reporting 

clinical quality measures or the 

exchange of health information, tailored 

to the individual program’s goals. For 

example, the goal of the Medicare 


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Electronic Health Record Demonstration 

Program, for example, which was 

started in 2009 and pre-dates passage of 

the HITECH Act, is to reward delivery 

of high-quality care supported by the 

adoption and use of electronic health 

records in physician small to mediumsize primary care practices. The purpose 

of this program is to encourage adoption 

and increasingly sophisticated use of 

EHRs by small to medium-sized primary 

care practices. While this goal is similar 

to the overall objective of the HITECH 

Act, the requirements for the 

demonstration are not as broad-based as 

that of the HITECH Act, and payment 

incentives are based on the level of use 

over the duration of the program, which 

will vary by practice. Therefore, it is not 

appropriate to deem practices 

participating in the EHR Demonstration 

as meaningful users for purposes of the 

HITECH Act. The HITECH Act also 

requires use certified EHR technology as 

defined by ONC to qualify for incentive 

payments. While CCHIT has certified 

EHR technology in the past, the ONC 

regulation ‘‘Establishment of the 

Temporary Certification Program for 

Health Information Technology; Final 

Rule’’ (see 75 FR 36157) which 

establishes a temporary certifying body 

has yet to be established. Where 

possible, we have aligned the criteria 

required to demonstrate meaningful use 

with existing programs like PQRI and 

RHQDAPU as discussed in section 

II.A.3 of this final rule. After 

consideration of the public comments 

received, we are finalizing our 

definition of a meaningful EHR user as 

proposed. 

2. Definition of Meaningful Use 

a. Considerations in Defining 

Meaningful Use 

In sections 1848(o)(2)(A) and 

1886(n)(3)(A) of the Act, the Congress 

identified the broad goal of expanding 

the use of EHRs through the term 

meaningful use. In section 1903(t)(6)(C) 

of the Act, Congress applies the 

definition of meaningful use to 

Medicaid eligible professionals and 

eligible hospitals as well. Certified EHR 

technology used in a meaningful way is 

one piece of a broader HIT 

infrastructure needed to reform the 

health care system and improve health 

care quality, efficiency, and patient 

safety. HHS believes this ultimate vision 

of reforming the health care system and 

improving health care quality, efficiency 

and patient safety should drive the 

definition of meaningful use consistent 

with the applicable provisions of 

Medicare and Medicaid law. 

In the proposed rule we explained 

that in defining meaningful use we 

sought to balance the sometimes 

competing considerations of improving 

health care quality, encouraging 

widespread EHR adoption, promoting 

innovation, and avoiding imposing 

excessive or unnecessary burdens on 

health care providers, while at the same 

time recognizing the short timeframe 

available under the HITECH Act for 

providers to begin using certified EHR 

technology. 

Based on public and stakeholder 

input received prior to publishing the 

proposed rule, 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, 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 to as Stage 2 

and Stage 3, respectively. We expect to 

update the meaningful use criteria on a 

biennial basis, with the Stage 2 criteria 

by the end of 2011 and the Stage 3 

criteria by the end of 2013. The stages 

represent an initial graduated approach 

to arriving at the ultimate goal. 

• Stage 1: The Stage 1 meaningful use 

criteria, consistent with other provisions 

of Medicare and Medicaid law, focuses 

on electronically capturing health 

information in a structured 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); 

implementing clinical decision support 

tools to facilitate disease and 

medication management; using EHRs to 

engage patients and families and 

reporting clinical quality measures and 

public health information. Stage 1 

focuses heavily on establishing the 

functionalities in certified EHR 

technology that will allow for 

continuous quality improvement and 

ease of information exchange. By having 

these functionalities in certified EHR 

technology at the onset of the program 

and requiring that the EP, eligible 

hospital or CAH become familiar with 

them through the varying levels of 

engagement required by Stage 1, we 

believe we will create a strong 

foundation to build on in later years. 

Though some functionalities are 

optional in Stage 1, as outlined in 

discussions later in this rule, all of the 

functionalities are considered crucial to 

maximize the value to the health care 

system provided by certified EHR 

technology. We encourage all EPs, 

eligible hospitals and CAHs to be 

proactive in implementing all of the 

functionalities of Stage 1 in order to 

prepare for later stages of meaningful 

use, particularly functionalities that 

improve patient care, the efficiency of 

the health care system and public and 

population health. The specific criteria 

for Stage 1 of meaningful use are 

discussed at section II.2.c of this final 

rule. 

• 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 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, genetic tests, 

genomic tests and other such data 

needed to diagnose and treat disease). 

For the final rule, we elaborate on our 

plans for Stage 2. We expect that stage 

two meaningful use requirements will 

include rigorous expectations for health 

information exchange, including more 

demanding requirements for eprescribing and incorporating structured 

laboratory results and the expectation 

that providers will electronically 

transmit patient care summaries to 

support transitions in care across 

unaffiliated providers, settings and EHR 

systems. Increasingly robust 

expectations for health information 

exchange in stage two and stage three 

will support and make real the goal that 

information follows the patient. We 

expect that Stage 2 will build upon 

Stage 1 by both altering the expectations 

of the functionalities in Stage 1 and 

likely adding new functionalities which 


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are not yet ready for inclusion in Stage 

1, but whose provision is necessary to 

maximize the potential of EHR 

technology. As discussed later in this 

final rule, we are making some 

objectives of the Stage 1 of meaningful 

use optional and other required. We will 

consider every objective that is optional 

for Stage 1 to be required in Stage 2 as 

well as revaluate the thresholds and 

exclusions of all the measures both 

percentage based and those currently a 

yes/no attestation. Additionally, we may 

consider applying the criteria more 

broadly to all outpatient hospital 

settings (not just the emergency 

department). 

• 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 leading to improved health 

outcomes, focusing on decision support 

for national high priority conditions, 

patient access to self management tools, 

access to comprehensive patient data 

through robust, patient-centered health 

information exchange and improving 

population health. 

We did not include regulatory 

provisions for Stage 2 or Stage 3 in our 

proposal and with one exception 

discussed under the CPOE objective, we 

are not finalizing Stage 2 or Stage 3 

requirements at this time. However, we 

plan to build upon Stage 1 by increasing 

the expectations of the functionalities in 

Stage 1 and adding new objectives for 

Stage 2. In our next rulemaking, we 

currently intend to propose that every 

objective in the menu set for Stage 1 (as 

described later in this section) be 

included in Stage 2 as part of the core 

set. While allowing providers flexibility 

in setting priorities for EHR 

implementation takes into account their 

unique circumstances, we maintain that 

all the objectives are crucial to building 

a strong foundation for health IT and to 

meeting the statutory objectives of the 

Act. In addition, as indicated in our 

proposed rule, we anticipate raising the 

threshold for these objectives in both 

Stage 2 and 3 as the capabilities of HIT 

infrastructure increases. For Stage 2, we 

intend to review the thresholds and 

measures associated with all Stage 1 

objectives considering advances in 

technology, changes in standard 

practice, and changes in the 

marketplace (for example, wider 

adoption of information technology by 

pharmacies) and propose, as 

appropriate, increases in these 

requirements. 

We recognize that the thresholds 

included in the final regulation are 

ambitious for the current state of 

technology and standards of care. 

However, we expect the delivery of 

health care to evolve through the 

inception of the HITECH incentive 

programs and implementation of the 

Affordable Care Act prior to finalizing 

Stage 2. Furthermore, data collected 

from the initial attestations of 

meaningful use will be used to ensure 

that the thresholds of the measures that 

accompany the objectives in Stage 2 are 

continue to aggressively advance the use 

of certified EHR technology. Finally, we 

continue to 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. As 

appropriate, we intend to propose the 

addition of new objectives to capture 

new functions that are necessary to 

maximize the potential of EHR 

technology, but were not ready for Stage 

1. For instance, we would consider 

adding measures related to CPOE orders 

for services beyond medication orders. 

The intent and policy goal for raising 

these thresholds and expectations is to 

ensure that meaningful use encourages 

patient-centric, interoperable health 

information exchange across provider 

organizations. 

We will continue to evaluate the 

progression of the meaningful use 

definition for consistency with the 

HITECH ACT and any future statutory 

requirements relating to quality 

measurement and administrative 

simplification. 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, eligible 

hospital or CAH 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, such 

considerations are dependent on future 

rulemaking, so for this final rule Stage 

1 criteria for meaningful use are valid 

for all payments years until updated by 

future rulemaking. 

We proposed that Medicare EPs, 

eligible hospitals, and CAHs 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, 

eligible hospital, or CAH whose first 

payment year is 2011 would have to 

satisfy the Stage 2 criteria of meaningful 

use to receive the incentive payments. 

We proposed that Medicare EPs, eligible 

hospitals, and CAHs whose first 

payment year is 2012 must satisfy the 

Stage 1 criteria of meaningful use in 

their first and second payment years 

(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, eligible hospital, or CAH 

whose first payment year is 2012 would 

have to satisfy the Stage 2 criteria of 

meaningful use to receive the incentive 

payments. We discussed in the 

proposed rule that Medicare EPs, 

eligible hospitals, and CAHs 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, 

eligible hospital, or CAH whose first 

payment year is 2013 would have to 

satisfy the Stage 2 criteria of meaningful 

use to receive the incentive payments. 

We discussed in the proposed rule that 

Medicare EPs, eligible hospitals, and 

CAHs 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. In the proposed rule, we 

discussed the idea that alignment of 

stage of meaningful use and payment 

year should synchronize for all 

providers in 2015, and requested 

comment on the need to create such 

alignment. After reviewing public 

comment on this issue, our goal remains 

to align the stages of meaningful use 

across all providers in 2015. However, 

we acknowledge the concerns regarding 

the different Medicare and Medicaid 

incentive timelines, as well as concerns 

about whether Stage 3 would be 

appropriate for an EP’s, eligible 

hospital’s or CAH’s first payment year at 

any point in the future and believe the 

issue needs additional review and 

discussion before we lay out a clear path 

forward for 2015 and beyond. Therefore, 

we have decided to remove language in 

the final rule discussing our possible 

directions for any year beyond 2014. We 

will address the years beyond 2014 in 

later rulemaking. Table 1 outlines how 

we anticipate applying the respective 

criteria of meaningful use in the first 

years of the program, and how we 

anticipate applying such criteria for 


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subsequent payment years, through 

2014. Please note that nothing in this 

discussion restricts us from requiring 

additional stages of meaningful use 

(beyond stage 3) through future 

rulemaking. In addition, as we expect to 

engage in rulemaking to adopt the 

criteria that will accompany Stages 2 

and 3 of meaningful use, stakeholders 

should wait for those rulemakings to 

determine what will be required for 

those Stages and should not view the 

discussions in this preamble or final 

rule as binding the agency to any 

specific definition for those future 

stages. 

Please note that each of the EHR 

incentive programs has different rules 

regarding the number of payment years 

available, the last year for which 

incentives may be received, and the last 

payment year that can be the first 

payment year for an EP, eligible 

hospital, or CAH. The applicable 

payment years and the incentive 

payments available for each program are 

also discussed in section II.C. of this 

final rule for the Medicare FFS EHR 

incentive program, in section II.D. of 

this final rule for the MA EHR incentive 

program, and in section II.E. of this final 

rule for the Medicaid EHR incentive 

program. 

Comment: Numerous commenters 

noted that it is inappropriate to align the 

Medicaid EHR incentive payment 

program with the Medicare program due 

to the lack of penalties in the Medicaid 

program and due to the option for 

Medicaid providers to participate in 

their first year by adopting, 

implementing, or upgrading certified 

EHR technology. 

Response: This was not the only 

reason for having all EPs, eligible 

hospitals, and CAHs align by 2015. 

However, as we are not addressing 

stages of meaningful use beyond 2014 in 

this final rule, potential alignment is not 

discussed. We will reconsider this 

comment in future rulemaking. 

The stages of criteria of meaningful 

use and how they are demonstrated are 

described further in this final rule and 

will be updated in subsequent 

rulemaking to reflect advances in HIT 

products and infrastructure. We note 

that such future rulemaking might also 

include updates to the Stage 1 criteria. 

We invited comment on our 

alignment between payment year and 

the criteria of meaningful use 

particularly in regards to the need to 

create alignment across all EPs, eligible 

hospitals, and CAHs in all EHR 

incentive programs in 2015. 

Comment: Many commenters 

requested that if there continued to be 

a year where all EPs, eligible hospitals 

and CAHs must meet the same stage of 

meaningful use that that year be 2017, 

rather than 2015 as we had discussed in 

the proposed rule. These commenters 

asserted that EPs, eligible hospitals, and 

CAHs whose first payment year is after 

2011 might not have sufficient time to 

reach the Stage 3 of meaningful use 

criteria by 2015. Some commenters 

pointed out that while the HITECH Act 

states that 2015 is the first year of 

payment adjustments, it provides for 

escalation of the payment adjustments 

so that they do not reach their full levels 

until 2017. 

Response: As we explained in the 

proposed rule, equity in the level of 

meaningful use across all EPs, eligible 

hospitals, and CAHs subject to the 

payment adjustment was not the only 

reason for our plan that all EPs, eligible 

hospitals, and CAHs satisfy the Stage 3 

criteria for either the Medicare or 

Medicaid EHR incentive programs. The 

achievement of many of the ultimate 

goals of meaningful use of certified EHR 

technology are dependent on a critical 

mass of EPs, eligible hospitals, and 

CAHs all being meaningful EHR users. 

Exchange of health information is most 

valuable when it is so robust that it can 

be relied upon to provide a complete or 

nearly complete picture of a patient’s 

health. For example, robust Stage 3 

meaningful use by an EP does not assist 

that EP in avoiding ordering a 

duplicative test, if the EP with 

information on the original test is only 

a Stage 1 meaningful EHR user and is 

not yet exchanging that information. 

This dependency is key to the need to 

get to Stage 3 for all providers. Another 

reason for alignment at Stage 3 in 2015 

is that many of the barriers to 

functionalities of EHRs that exist today 

as may no longer exist in 2015. The 

existence of these barriers today is one 

of the primary reasons for having a 

staged approach as opposed to requiring 

more robust meaningful use at the 

beginning of the program. Providers, 

developers of EHRs, government and 

non-governmental organizations are all 

working to remove these barriers. We 

believe it is likely there will be success 

in removing many of these barriers, 

which would make many of the 

compromises made in Stage 1 no longer 

necessary by 2015. However, due to the 

many comments on alignment starting 

in 2015 and our plan to engage in 

additional more rounds of rulemaking, 

we are removing discussion of actual 

alignment between the first payment 

year of an EP, eligible hospital, or CAH 

and the Stage of meaningful use they 

will be expected to meet for all years 

after 2014. Our policies for 2015 and 

subsequent years will be determined 

through future rulemaking. 

Comment: Several commenters 

requested that CMS base the payment 

adjustments on Stage 1 of meaningful 

use regardless of the EP, eligible 

hospital, or CAH’s prior participation in 

the incentive program. 

Response: We thank commenters for 

the thoughtful comments received, and 

will take their input into consideration 

when in future rulemaking when we 

consider whether to require that EPs, 

eligible hospitals, and CAHs satisfy the 

stage 3 definition of meaningful use in 

order to avoid reduced payments under 

Medicare for their professional services 

and inpatient hospital services 

beginning 2015. We reiterate, however, 

that in this final rule we are only 

adopting criteria that we expect will 


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apply in 2011 and 2012. We have also 

outlined the expected progression of 

stages of meaningful use criteria until 

2014. However, we are not in this rule 

finalizing regulations that address the 

meaningful use standards that apply in 

2015 and thereafter. 

Comment: Numerous commenters 

requested that we specifically propose 

objectives and measures for Stage 2 and 

3. We also received recommendations 

on what those objectives and, in rare 

cases, measures should be. We 

discussed some of these objectives in 

the proposed rule and discuss them 

again in this final rule in section II.d. 

Others are highly related to existing 

objectives, while still others were not 

discussed in any way in the proposed 

rule. The suggested objectives and 

measures for Stages 2 and 3 include the 

following: 

• Use of evidence-based order sets. 

• Electronic medication 

administration record (eMAR). 

• Bedside medication administration 

support (barcode/RFID). 

• Record nursing assessment in EHR. 

• Record nursing plan of care in EHR. 

• Record physician assessment in 

EHR. 

• Record physician notes in EHR. 

• Multimedia/Imaging integration. 

• Generate permissible discharge 

prescriptions electronically. 

• Contribute data to a PHR. 

• Record patient preferences 

(language, etc). 

• Provide electronic access to patientspecific educational resources. 

• Asking patients about their 

experience of care. 

Response: With one exception 

discussed under the CPOE objective, we 

continue to believe that finalizing 

specific objectives and measures for 

later stages is inappropriate. One of the 

greatest benefits of the phased stage 

approach is the ability to consider the 

impact and lessons of the prior stage 

when formulating a new stage. Many 

commenters supported our discussion 

of later stages for this very reason. In 

addition, we do not believe it is 

appropriate to finalize objectives for any 

stage of meaningful use that were not 

specifically discussed in the proposed 

rule, as doing so would deprive the 

public the opportunity to comment on 

the objective in question. Nevertheless, 

we thank commenters for the thoughtful 

comments received, and expect to take 

their input into consideration when in 

future rulemaking we consider 

additional or revised criteria and 

measures to adopt for the stage 2 and 

stage 3 definitions of meaningful use. 

Comment: A commenter indicated 

that attestation is an insufficient means 

to hold providers accountable for the 

expenditure of public funds and to 

protect against fraud and abuse. 

Response: We likewise are concerned 

with the potential fraud and abuse. 

However, Congress for the HITECH Act 

specifically authorized submission of 

information as to meaningful use 

through attestation. CMS is developing 

an audit strategy to ameliorate and 

address the risk of fraud and abuse. 

b. Common Definition of Meaningful 

Use Under Medicare and Medicaid 

Under sections 1848(o)(1)(A)(i), 

1814(l)(3)(A), and 1886(n)(1) of the Act, 

an EP, eligible hospital or CAH must be 

a meaningful EHR user for the relevant 

EHR reporting period in order to qualify 

for the incentive payment for a payment 

year in the Medicare FFS EHR incentive 

program. 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 in 

section II.D.7.b.2 of this final 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, 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 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 EHR incentive programs 

for EPs and eligible hospitals/CAHs 

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 stated in the proposed rule that 

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 declared in 

the proposed rule that we had 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 proposed to offer EPs 

an opportunity to switch between the 

Medicare and Medicaid EHR incentive 

programs. Therefore, we proposed to 

create a common definition of 

meaningful use that would serve as the 

definition for EPs, eligible hospitals and 

CAHs 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 

clarified that under Medicaid this 

proposed common definition would be 

the minimum standard. We proposed to 

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 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.8. of this final rule for further 

details. 

For hospitals, we proposed to exercise 

the option granted under section 

1903(t)(8) of the Act and deem any 

Medicare eligible hospital or CAH 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 


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is applicable only to eligible hospitals 

and CAHs, as EPs cannot 

simultaneously receive an incentive 

payment under both Medicare and 

Medicaid. 

We solicited comments as to whether 

there are compelling reasons to give the 

States additional flexibility in creating 

disparate definitions beyond what was 

proposed. In addition, if commenting in 

favor of such disparate definitions, we 

also asked interested parties to comment 

on whether the proposal of deeming 

meeting the Medicare definition as 

sufficient for meeting the Medicaid 

definition 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. 

Comment: Most commenters believe 

that States should not be allowed the 

option to add to or change the 

meaningful use requirements for the 

Medicaid EHR incentive program. The 

commenters’ main reason for 

standardizing the meaningful use 

requirements for both Medicare and 

Medicaid is to eliminate administrative 

burden on both providers and EHR 

vendors to accommodate programming 

and reporting using different technical 

specifications for the same or similar 

measures. 

Response: After consideration of the 

comments received, we are finalizing 

the provisions regarding possible 

differences in the definition of 

meaningful use between Medicare and 

Medicaid with the following revisions. 

We believe that over time the option to 

add to or change the floor definition of 

meaningful use might represent an 

important policy tool for States and 

therefore CMS plans to review and 

adjudicate these requests over the 

duration of the program. For Stage 1 of 

meaningful use, we have revised the 

definition of meaningful use in response 

to the many comments and are requiring 

an overall lower bar and an approach 

that is more flexible. On the other hand, 

we wish to support the ability for States 

to reinforce their public health priorities 

and goals based upon their existing 

public health infrastructure and 

maturity. For that reason, we, for Stage 

1, will only entertain States’ requests to 

tailor the Stage 1 meaningful use 

definition as it pertains specifically to 

public health objectives and data 

registries. For purposes of the Medicaid 

EHR incentive program during Stage 1 

of meaningful use, these are limited to: 

Objective: Generate lists of patients by 

specific conditions to use for quality 

improvement, reduction of disparities, 

research, or outreach. 

Measure: Generate at least one report 

listing patients of the EP or eligible 

hospital with a specific condition. 

Example: Generate lists of patients 

with the following conditions: 

depression, diabetes, obesity, etc. This 

would not be for reporting to the State 

but to draw EPs’ or eligible hospitals’ 

attention in order to better manage their 

patient population. States would also be 

permitted to request CMS approval to 

include this in the core set for all EPs 

and/or eligible hospitals. 

Objective: Capability to submit 

electronic data to immunization 

registries of Immunization Information 

Systems and actual submission in 

accordance with applicable law and 

practice. 

Measure: Performed at least one test 

of certified EHR technology’s capacity to 

submit electronic data to immunization 

registries and follow up submission if 

the test is successful (unless none of the 

immunization registries to which the EP 

or eligible hospital submits such 

information have the capacity to 

received the information electronically). 

Example: State could point to a 

specific immunization registry that 

supports standards-based transmission 

of data and dictate how that information 

is transmitted. States would also be 

permitted to request CMS approval to 

include this objective in the core list for 

all EPs and eligible hospitals. The 

justification for this request in their 

State Medicaid HIT Plan, should 

address any potential barriers for 

providers in achieving this objective. 

Objective: Capability to submit 

electronic data on reportable (as 

required by state or local law) lab results 

to public health agencies and actual 

submission in accordance with 

applicable law and practice. 

Measure: Performed at least one test 

of certified EHR technology’s capacity to 

submit electronic data on reportable lab 

results to public health agencies and 

follow-up submission if the test is 

successful (unless none of the public 

health agencies to which an eligible 

hospital submits such information have 

the capacity to receive the information 

electronically). 

Example: State could specify the 

standards-based means of transmission 

and/or the destination of this data. 

States would also be permitted to 

request CMS approval to include this 

objective in the core list for all and 

eligible hospitals. The justification for 

this request in their State Medicaid HIT 

Plan, should address any potential 

barriers for providers in achieving this 

objective. 

Objective: Capability to submit 

electronic syndromic surveillance data 

to public health agencies and actual 

transmission according to applicable 

law and practice. 

Measure: Performed at least one test 

of certified EHR technology’s capacity to 

submit electronic syndromic 

surveillance data to public health 

agencies and follow-up submission if 

the test is successful (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). 

Example: State could specify the 

standards-based means of transmission 

and/or the destination of this data. 

States would also be permitted to 

request CMS approval to include this 

objective in the core list for all EPs and 

eligible hospitals. The justification for 

this request in their State Medicaid HIT 

Plan, should address any potential 

barriers for providers in achieving this 

objective. 

We reiterate that we will not approve 

any requests that would require EHR 

functionality above and beyond that 

included in the ONC EHR certification 

criteria as finalized for Stage 1 of 

meaningful use. 

Comment: Several commenters 

requested that CMS affirm the ability of 

States to require additional meaningful 

use criteria for all eligible professionals 

and hospitals (pursuant to §§ 495.316(a), 

495.316(d)(2)), regardless of whether 

those entities were deemed eligible 

through Medicare. 

Response: Section 1903(t)(8) provides 

authority for the Secretary to ‘‘deem 

satisfaction of requirements for * * * 

meaningful use for a payment year 

under title XVIII to be sufficient to 

qualify as meaningful use under 

[1903(t)].’’ We continue to believe that 

allowing deeming ensures that hospitals 

eligible for both programs are able to 

focus on only one set of measures, 

without requiring duplication of effort 

or confusion regarding meaningful use 

standards. Thus, hospitals eligible for 

both Medicare and Medicaid incentive 

payments will be deemed for Medicaid 

if they have met the meaningful use 

definition through Medicare, even if a 

State has an approved State-specific 

definition of meaningful use. States 

cannot withhold a Medicaid EHR 

incentive payment from dually eligible 

hospitals if they have met all the 

eligibility criteria for Medicaid, and 

have met the Medicare definition for 

meaningful use. 


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Because of this comment, we are 

revising section § 495.4 of our 

regulations to indicate that eligible 

hospitals who are meaningful users 

under the Medicare EHR incentive 

payment program are deemed as 

meaningful users under the Medicaid 

EHR incentive payment program, and 

need not meet additional criteria 

imposed by the State. While this is not 

a new requirement, it was not 

previously listed in regulations. 

Comment: A commenter asked that 

CMS adopt and affirm the deeming 

approach in its final rule and ensure 

that the regulatory language reflects this 

approach. 

Response: We agree and have 

included in the final rule regulation 

language that hospitals that are 

meaningful users under the Medicare 

EHR Incentive Program are deemed 

meaningful users under the Medicaid 

EHR Program. 

Comment: Several commenters 

requested that CMS not deem hospitals 

having met the meaningful use 

requirements for the Medicare EHR 

Incentive Payment, as having fulfilled 

the meaningful use requirements for the 

State’s Medicaid EHR Incentive 

Payment. The commenters noted that if 

a State sought for acute care hospitals to 

participate in their statewide health 

information exchange and yet those 

hospitals did not have to do so in order 

to qualify for both the Medicare and 

Medicaid EHR Incentive Payments, then 

they would have no motivation to do so. 

The commenters would like acute care 

hospitals eligible for both the Medicare 

and Medicaid EHR Incentive Program to 

have to comply with any State-specific 

meaningful use requirements, in 

addition to the Medicare floor 

definition. 

Response: In consideration of the 

comments received, CMS adopts its 

proposed preamble language about 

deeming hospitals and adds the 

corresponding regulation text. This is 

necessary for Stage 1 of meaningful use 

in particular, where we believe it is 

crucial to prevent additional burden on 

providers and foster eligible hospitals’ 

path to successful EHR adoption and 

meaningful use. In addition, as already 

noted, for Stage 1, we will not entertain 

States’ requests to alter the floor 

definition of meaningful use as codified 

in this final rule except for specific 

public health objectives. That thereby 

reduces the possible differences 

between the Medicare and Medicaid 

definitions of meaningful use. As part of 

Stage 2 of meaningful use, CMS might 

consider States requests to tailor 

meaningful use as it pertains to health 

information exchange, for example. 

Further details about this policy option 

will be included in future rulemaking 

and subject to public comment. 

c. Stage 1 Criteria for Meaningful Use 

In the proposed rule we proposed that 

to qualify as a meaningful EHR user for 

2011, EPs, eligible hospitals or CAHs 

must demonstrate that they meet all of 

the objectives and their associated 

measures as set forth in proposed 

§ 495.6. We further proposed and 

finalize in this final rule that except 

where otherwise indicated, each 

objective and its associated measure 

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). 

Discussion of Whether an EP, Eligible 

Hospital or CAH Must Meet All Stage 1 

Meaningful Use Objectives and Their 

Associated Measures 

Comment: Commenters almost 

unanimously said that requiring an EP, 

eligible hospital or CAH to meet all of 

the objectives and their associated 

measures in order to qualify as a 

meaningful EHR user was too ambitious 

given the current state of EHR 

technology, adoption levels, the 

timeline for certification of EHR 

technologies, the realities of 

implementing EHR technology and the 

timeline proposed for Stage 1 of 

meaningful use in our proposed rule. 

Most of the commenters suggested 

alternatives that they believed would 

support the health care policy priorities 

of Stage 1. Several different alternatives 

were proposed. The first alternative 

would be to require a specified 

percentage of the Stage 1 meaningful 

use objectives and associated measures, 

with an EP, eligible hospital or CAH free 

to select which of the objectives and 

associated measures it would satisfy. 

For example under our proposed 

objectives and associated measures, if 

an EP were required to meet 20 percent, 

then an EP would be considered a 

meaningful EHR user if he or she 

satisfied any five of the proposed 

twenty–five objectives and associated 

measures. Most commenters suggesting 

this alternative envisioned that later 

stages of meaningful use would require 

that EPs, eligible hospitals, and CAHs 

satisfy a higher of the percentage of the 

objectives and associated measures. For 

example if 20 percent of the objectives 

and associated measures were required 

for Stage 1, then 50 percent might be 

required in Stage 2. 

After a fixed percentage, the 

suggestion next favored by commenters, 

including the HIT Policy Committee and 

MedPAC, was to divide the meaningful 

use objectives into two categories, a 

‘‘core set’’ of objectives and ‘‘menu set’’ 

of objectives. To be a considered a 

meaningful user under this approach, an 

EP, eligible hospital, or CAH would be 

required to satisfy (1) all core set of 

objectives, and (2) a specified 

percentage of the menu set of objectives, 

with the EP, eligible hospital, or CAH 

free to select which of the menu set of 

objectives it would satisfy. For example, 

if five objectives were in the core set all 

EPs, eligible hospitals, and CAHs would 

have to meet those objectives. If twenty 

objectives were in the menu set, then 

EPs, eligible hospitals, and CAHs would 

not have to meet one or more of those 

objectives. Commenters varied widely 

as to which objectives should be 

included in the core set of objectives, as 

well as the percentage of menu set 

objectives an EP, eligible hospital, or 

CAH must satisfy. 

Some commenters suggested that we 

simply reduce the number of objectives 

required for Stage 1 of meaningful use. 

Recommendations in this regard varied 

from reducing the required objectives to 

only just a few (the lowest number being 

three), limiting the required objectives 

to only to those objectives that affect 

health outcomes of individual patients, 

to targeted elimination of a few 

objectives. 

Finally, some commenters suggested 

that we eliminate all of the measures 

associated with the Stage 1 meaningful 

use objectives and only require that EPs, 

eligible hospitals, and CAHs attest that 

they have attempted to meet each of the 

objectives. 

Response: After reviewing the 

comments, we agree that requiring that 

EPs, eligible hospitals, and CAHs satisfy 

all of the objectives and their associated 

measures in order to be considered a 

meaningful EHR user would impose too 

great a burden and would result in an 

unacceptably low number of EPs, 

eligible hospitals, and CAHs being able 

to qualify as meaningful EHR users in 

the first two years of the program. In 

considering an alternative approach, we 

have sought to develop an alternative 

that is responsive to some degree to all 

the concerns raised by the commenters. 

We have tried to reduce the 

requirements both in number required 

and in the thresholds of the associated 

measures and provide some flexibility 

as well. At the same time, however, we 

must be mindful of the relevant 

statutory requirements. Sections 1848 

(o)(2)(A) and 1886(n)(3) of the Act, 

specify three requirements for 

meaningful use: (1) Use of certified EHR 

technology in a meaningful manner (for 

example, electronic prescribing); (2) that 


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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. We believe 

that each EP, eligible hospital, and CAH 

must meet at least one objective within 

each of the three requirements for 

meaningful use. We are concerned that 

if we were to give EPs, eligible 

hospitals, and CAHs full discretion to 

select which meaningful use objectives 

they will satisfy, some providers would 

not choose one or more objectives 

within each of the three statutory 

requirements for meaningful use. 

Furthermore, we are concerned that 

affording EPs, eligible hospitals, and 

CAHs such flexibility as to which 

meaningful use objectives to meet 

would delay many of the goals outlined 

for meaningful use in section II.a.2. of 

this final rule. If in choosing what 

objectives to defer, one provider chooses 

to focus on improving processes to 

improve healthcare quality, another 

chooses to focus on being able to 

exchange health information and yet 

another on engaging patients and 

families it is possible that we would fail 

to accomplish any of these goals at a 

population level. For these reasons, we 

do not believe it would be appropriate 

to afford providers the unlimited 

flexibility to select which of the 

meaningful use objectives they will 

meet. Rather, as explained below, we 

believe providers at a minimum should 

have to satisfy a core set of objectives in 

order to qualify as meaningful EHR 

users. 

Similarly, while we agree that merely 

reducing the number of objectives 

would make meaningful use easier to 

achieve for most providers, we believe 

that this reduction does not afford the 

same flexibility to all providers to 

account for their individual difficulties 

in meeting meaningful use that some of 

the other alternatives do as allowing a 

provider to choose certain objectives to 

defer. Due to any number of 

circumstances such as EHR adoption 

level, availability of health information 

exchange network, size of practice or 

hospital, etc., an objective that is easy 

for one EP to achieve might be very 

difficult for another EP. Under this 

alternative, no allowance is made for 

those differences. Finally, we disagree 

that meaningful use should be limited to 

improving the health outcomes of 

individual patients. There are 

significant gains that meaningful use 

can achieve in the areas of public 

health, privacy and security, 

engagement of patients and their 

families and efficiency of care that may 

not improve health outcomes, but have 

significant other benefits such as 

engaging patients more fully in 

decisions affecting their health and 

reducing costs through increased 

efficiency of care. We believe that all of 

these have a significant impact on 

health outcome priorities. Therefore, we 

do not categorically reduce the number 

of objectives for Stage 1 definition of 

meaningful use. We consider requests to 

defer an objective to later stages of the 

meaningful use criteria or eliminate a 

specific objective below in our 

discussion of each objective. 

Comment: Another alternative that 

was recommended by a significant 

number of commenters was that we base 

the incentive payment amount on the 

number of stage 1 meaningful use 

objectives satisfied by an EP or eligible 

hospital, with those satisfying more 

objectives eligible for a higher incentive 

payment amount. While some 

commenters varied in the specifics or 

did not provide specifics, generally we 

take this to mean that if an EP, eligible 

hospital, or CAH met half of the 

objectives then they would receive half 

of the incentive payment they would 

have received had they met all the 

objectives. 

Response: The HITECH Act does not 

give us the authority to award partial 

payments. As discussed elsewhere in 

this final rule, sections 1848(o)(1)(A) of 

the Act specifies the payment incentive 

amount to which an EP who is a 

meaningful EHR user is entitled. 

Similarly, section 1886(n)(2) of the Act 

sets forth a formula for calculation of 

incentive payment amount to which an 

eligible hospital that is a meaningful 

EHR user is entitled. Similarly, section 

1814(l)(3)(A) of the Act sets forth a 

formula for calculation of incentive 

payment amount to which an eligible 

hospital that is a meaningful EHR user 

is entitled. Similarly, section 

1903(t)(4)(B) of the Act sets parameters 

for determining the Medicaid EHR 

incentive for Medicaid EP. None of 

these parameters are related to 

meaningful use. Similarly, section 

1903(t)(5)(A) of the Act sets forth a 

formula for calculation of the incentive 

payment amount to which a Medicaid 

eligible hospital is entitled. As we do 

not have the authority to alter these 

statutory formulas for calculating the 

incentive payment amounts under 

Medicare and Medicaid, we cannot pro 

rate the incentive payment amount 

based on the number of meaningful use 

objectives satisfied by an EP, eligible 

hospital, or CAH. 

After consideration of the public 

comments received, we are establishing 

a core set of objectives with associated 

measures and a menu set of objectives 

with associated measures. In order to 

qualify as a meaningful EHR user, an 

EP, eligible hospital, or CAH must 

successfully meet the measure for each 

objective in the core set and all but five 

of the objectives in the menu set. With 

one limitation, an EP, eligible hospital, 

or CAH may select any five objectives 

from the menu set to be removed from 

consideration for the determination of 

qualifying as a meaningful EHR user. 

Further discussion of the objectives, 

including additional details about their 

inclusion in the core set, can be found 

at each objective. 

We believe that establishing both a 

core and a menu set adds flexibility and 

allows the minimum statutory set to be 

met. In determining the objectives to 

include in the core set, we looked at all 

comments, especially those of the HIT 

Policy Committee and other 

commenters who recommended some 

required and optional elements. The 

HITECH Act requires the use of health 

information technology in improving 

the quality of health care, reducing 

medical errors, reducing health 

disparities, increasing prevention and 

improving the continuity of care among 

health care settings. In defining the core 

set of meaningful use objective, we 

believe the most crucial aspect to 

consider is meeting the three statutory 

guidelines provided in the HITECH Act 

and discussed in section II.A.2.a of this 

final rule. Second is to identify those 

objectives that are most crucial to laying 

the foundation for obtaining value from 

meaningful use of certified EHR 

technology. Third, we believe that 

meaningful use should be patientcentered so we focus on getting the most 

value to the patient. We believe the 

recommendation of the HIT Policy 

Committee accomplishes third criteria, 

but falls short of the first and second. To 

accomplish the first criteria, we add the 

objective of submitting clinical quality 

measures to CMS or the States and the 

objective of exchanging key clinical 

information among providers of care 

and patient authorized entities. To 

accomplish the second, we add several 

additional objectives to the core set of 

measures as critical elements pertinent 

to the management of patients. We have 

received a number of comments in 

support of these particular measures as 

critical to the management of patients 

(maintaining an up-to-date problem list, 

active medication list, active allergy list, 

smoking history and incorporate clinical 


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lab tests into EHR as structured data) in 

comparison to other requirements. The 

addition of two other functional 

objectives (drug-drug and drug-allergy 

features) as core measures are for 

improved patient-safety. All of the listed 

elements are integral to the initial or ongoing management of a patient’s current 

or future healthcare. While each 

element is important in the management 

of patients in and of itself, the aggregate 

of the elements elevates the importance 

of clinical information to not only the 

primary provider but for all members of 

the interdisciplinary team involved in 

the patient’s care. The HITECH Act 

statutorily requires the use of health 

information technology in improving 

the quality of health care, reducing 

medical errors, reducing health 

disparities, increasing prevention, and 

improving the continuity of care among 

health care settings. These core set of 

measures are also foundational and 

aligned with each other. For example, 

electronic copies of health information 

given to patient will be useless if it does 

not contain basic information such as a 

problem list, medication list or allergy 

list. Exchange of information to other 

members of the health care team across 

settings will depend on having 

structured data of these elements. 

Therefore, in support of the HITECH Act 

in meeting the statutory requirements, 

we have expanded the core set of 

measures to include these fundamental 

elements to improve patient care. Below 

we list the objectives included in the 

core set of meaningful use objectives. 

—Use CPOE 

—Implement drug to drug and drug 

allergy interaction checks 

—E-Prescribing (EP only) 

—Record demographics 

—Maintain an up-to-date problem list 

—Maintain active medication list 

—Maintain active medication allergy 

list 

—Record and chart changes in vital 

signs 

—Record smoking status 

—Implement one clinical decision 

support rule 

—Report CQM as specified by the 

Secretary 

—Electronically exchange key clinical 

information 

—Provide patients with an electronic 

copy of their health information 

—Provide patients with an electronic 

copy of their discharge instructions 

(Eligible Hospital/CAH Only) 

—Provide clinical summaries for 

patients for each office visit (EP Only) 

—Protect electronic health information 

created or maintained by certified 

EHR 

In addition, achieving Stage 1 

meaningful use means demonstration of 

progress in each of the five healthcare 

outcome priorities outlined in the 

proposed rule and discussed again later 

in this section. Only one of these 

priorities is not represented in the core 

set, population and public health. As we 

have discussed in this section we do not 

want any priority to be overlooked due 

to the flexibility we have added to Stage 

1 of meaningful use; therefore, all EPs 

and hospitals must choose at least one 

of the population and public health 

measures to demonstrate as part of the 

menu set. This is the only limitation 

placed on which five objectives can be 

deferred from the menu set. 

Discussion on Whether Certain EP, 

Eligible Hospital or CAH Can Meet all 

Stage 1 Meaningful Use Objectives 

Given Established Scopes of Practice 

In the proposed rule, we specifically 

encouraged comments on whether 

certain providers may have difficulty 

meeting one or more of the objectives 

due to their provider type or chosen 

specialties 

Comment: We received many 

comments, both general and specific, 

that certain providers or specialists may 

not be able to comply with certain 

objectives because they are beyond the 

scope of their licensing authority or 

because they are outside the scope of 

their standard of practice. For example, 

chiropractors do not have prescribing 

authority and thus may not make use of 

an EHR technology’s e-prescribing 

function and rheumatologists may not 

require information on vital signs. 

While comments on this potential nonapplicability primarily focused on EPs, 

we did receive comments that some 

objectives may not be relevant to 

smaller or specialized eligible hospitals 

as well. 

Response: We believe the division of 

the meaningful use objectives into a 

core set and a menu set may minimize 

the impact of including among the 

meaningful use objectives one or more 

objectives that certain providers or 

specialists may be unable to satisfy as 

the EP, eligible hospital, or CAH can 

defer five objectives from the menu set. 

However, if the EP, eligible hospital or 

CAH has an insurmountable barrier to 

meeting an objective in the core set or 

a significant number in the menu set 

then the problem remains. For example, 

without any consideration on an EP, 

eligible hospital or CAH’s capability to 

meet the measure associated with a core 

objective any EP that could not order 

medications requiring a prescription 

would not be able to become a 

meaningful EHR user as e-prescribing is 

a core set objective. Similarly, any 

eligible hospital or CAH that did not 

have any requests for electronic copy of 

discharge instructions would not be able 

to become a meaningful EHR user. In 

addition, if this were to occur for a 

significant number of menu set 

objectives, the flexibility for the EP, 

eligible hospital, or CAH to use the five 

objectives to account for other concerns 

such as implementation struggles or 

workflow process redesign would be 

curtailed. To account for this 

possibility, we have modified each 

objective and measure to indicate when 

there is an option for an EP, eligible 

hospital, or CAH to report that the 

objective/measure is inapplicable to 

them, because they have no patients or 

no or insufficient number of actions that 

would allow calculation of the 

meaningful use measure. This will 

allow an EP, eligible hospital, or CAH 

to qualify as a meaningful EHR user 

without being required to meet 

objectives we have specified as 

potentially inapplicable. We note that 

the exclusions to meaningful use 

objectives/measures are specific to each 

objective/measure. In our discussion of 

each specific objective/measure (which 

occurs later in this preamble), we have 

identified specific exclusions where 

they exist. Providers wishing to claim 

that an objective/measure is 

inapplicable to them would need to 

meet the criteria of such an exception. 

After consideration of the public 

comments received, we have identified, 

for each meaningful use objective, 

whether the EP, eligible hospital, or 

CAH may attest that they did not have 

any patients or insufficient actions on 

which to base a measurement of a 

meaningful use for the EHR reporting 

period. For objectives in the core set, 

such an attestation would remove the 

objective from consideration when 

determining whether an EP, eligible 

hospital, or CAH is a meaningful EHR 

user. In other words, the EP, eligible 

hospital, or CAH could satisfy the core 

set objectives by satisfying all remaining 

objectives included in the core set. For 

objectives in the menu set, such an 

attestation would also remove the 

objective from consideration when 

determining whether an EP, eligible 

hospital, or CAH is a meaningful EHR 

user. For example, if for one objective 

included in the menu set an EP attests 

that he or she did not have any patients 

or insufficient actions during the EHR 

reporting period on which to base a 

measurement of a meaningful use 

objective, rather than satisfy 5 of the 10 

meaningful use objectives included in 

the menu set for EPs, the EP need only 


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satisfy 4 of the 9 remaining meaningful 

use objectives included in the menu set 

for EPs 

EPs Practicing in Multiple Practices 

Another situation where flexibility 

may be needed in order for an EP to 

become a meaningful EHR user is the 

situation where an EP may provide care 

in multiple practices or multiple 

locations. We proposed a policy to 

account for EPs practicing in multiple 

practices and settings. We discussed in 

the proposed rule that we believe it is 

unlikely for an EP to use one record 

keeping system for one patient 

population and another system for 

another patient population at one 

location. We are concerned about the 

application of the measures associated 

with the meaningful use objectives 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 for the EP to successfully 

become a meaningful EHR user based on 

the measures associated with the 

meaningful use 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 proposed that 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 geographic location. 

Equipped does not mean the certified 

EHR technology is functioning on any 

given day during the EHR reporting 

period. Allowances for downtime and 

other technical issues with certified 

EHR technology are made on an 

objective-by-objective basis as discussed 

later in this section. 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 of different 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 proposed 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 threshold through a 

combination of practices/locations 

equipped with certified EHR 

technology. For example, if the EP 

practices at both a Federally Qualified 

Health Center (FQHC) and within his or 

her individual practice, we would 

include in our review both of these 

locations and certified EHR technology 

would have to be available at the 

location where the EP has at least 50 

percent of their patient encounters. 

Comment: Some commenters 

recommended that 50 percent or more 

of the patient encounters must occur at 

the practice location that receives the 

incentive payment. 

Response: As discussed in section 

II.A.4 of this final rule, an EP may 

assign their incentive payment to other 

practices. We do not believe that 

limiting practices and EPs to only 

considering the location that receives an 

incentive payment provides advantages 

to the program. The requirement 

suggested by commenters would 

potentially cause some EPs not to meet 

the 50 percent threshold even if through 

a combination of practices they may use 

certified EHR technology for far more 

than 50 percent of their patient 

encounters. 

Comment: Some commenters 

requested clarification of our proposed 

statement ‘‘Therefore, we proposed that 

all measures be limited to actions taken 

at practices/locations equipped with 

certified EHR technology’’ 

Response: We mean this statement to 

be that as long as an EP has certified 

EHR technology available for 50 percent 

or more of their patient encounters 

during the EHR reporting period they 

only have to include those encounters 

where certified EHR technology is 

available at the start of the EHR 

reporting period. We discuss the 

measures later in this section of the final 

rule, but an illustrative example would 

be the objective of maintain an up-todate problem list. The measure 

associated with this objective is ‘‘More 

than 80% of all unique patients seen by 

the EP or admitted to the eligible 

hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

have at least one entry or an indication 

that no problems are known for the 

patient recorded as structured data.’’ 

Therefore, if an EP only practices at one 

location or has certified EHR technology 

available at all practice locations then 

the denominator would be all unique 

patients seen during the EHR reporting 

period. However, if an EP practices at 

multiple locations and only has certified 

EHR technology for 80 percent of their 

patient encounters, then the 

denominator is only those unique 

patients seen at locations where 

certified EHR technology is available. 

We reiterate that this is not to account 

for certified EHR technology downtime, 

Certified EHR technology is available at 

a location if it is available at the start of 

the EHR reporting period regardless of 

its actual availability for any given day 

during the EHR reporting period. 

After consideration of the comments 

received, we are finalizing this 

requirement as proposed. 

Discussion of the Burden Created by the 

Measures Associated With the Stage 1 

Meaningful Use Objectives 

Comment: Many commenters 

expressed concerns about the 

difficulties of capturing the 

denominators for the measures that are 

expressed as percentages. They pointed 

out that the formulas in the proposed 

rule would require providers to conduct 

labor-intensive counts of paper 

documents such as prescriptions or 

laboratory results in order to compute 

the denominators of the percentage 

based measures. Some commenters 

suggested that we adopt alternative 

measurement mechanisms, for example 

establishing simple counts of electronic 

occurrences, while others proposed that 

denominators be computed utilizing 

only data collected in the certified EHR 

technology. 

Response: We acknowledge that the 

percentage-based measures, as 

expressed in the proposed rule, would 

create a reporting burden for EPs, 

eligible hospitals, and CAHs, and we 

examined a number of alternatives that 

potentially reduce the burden of 

reporting. 

In the proposed rule, we discussed 

the option of counts instead of 

percentages and due to comments 

received have reassessed this option in 

the final rule. This approach clearly has 

the advantage of simplifying the 

process. For example, rather than 

counting the number of prescriptions 

transmitted electronically and then 

dividing by the total number of 

prescriptions, the EP would simply 

need to count the number of 

electronically transmitted prescriptions 

until a benchmark number is passed. If 

the benchmark number is exceeded, 

then the provider meets the measure. 

However, there are several shortcomings 

to this approach. First, we received little 

input from commenters as to where the 

benchmark numbers for the various 

objectives should be set and any 

benchmark set now would not benefit 


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from public comment without 

significantly delaying the Medicare and 

Medicaid EHR incentive programs. (One 

exception was that a number of 

commenters suggested using the PQRI 

measure for e-prescribing, which is the 

generation of at least one eRx associated 

with a patient visit on 25 or more 

unique events during the reporting 

period.) Setting the limit too high would 

disadvantage small providers, since they 

would have smaller patient populations, 

while setting the limit too low would 

create requirements for larger providers 

that would be so limited as to be 

meaningless. A larger provider could 

implement the functionality for a much 

shorter period than the EHR reporting 

period and meet the count. In either 

case, it would be difficult to establish a 

trajectory in later stages that would 

result in meaningful progress being 

made by both small and large providers. 

We then assessed the option of 

limiting the occurrences counted in the 

denominator to those included in the 

provider’s certified EHR technology. As 

an example, if an EP captures 1,000 

prescriptions as structured data in 

certified EHR technology, and 

electronically transmits 500 of these 

prescriptions, the EP’s certified EHR 

technology generated score would be 50 

percent. This approach does simplify 

the computation process, since this 

approach does not have to take into 

account whether some prescriptions 

were not included or included as 

unstructured data in the certified EHR 

technology. However, it does not 

demonstrate the extent to which the 

provider has used the certified EHR 

technology. For example, a provider that 

has captured only 10 prescriptions in 

the certified EHR technology as 

structured data, but writes 1,000 

prescriptions because the provider 

achieved only a limited use of their 

certified EHR technology would also 

score 50 percent by electronically 

transmitting only 5 prescriptions 

according to an automatic report from 

the certified EHR technology. Again, 

this methodology does not lead 

providers toward an upward trajectory 

of both certified EHR technology 

deployment and accomplishment of 

meaningful use. 

We selected a third option, which we 

believe addresses the shortcomings of 

the second option while still preserving 

much of the simplicity of that approach. 

In our approach, we focus on those 

measures whose denominator is not 

based on all patients, but rather a subset 

of patients or actions such as the 

ordering of a lab test or the recording of 

a patient’s request for an electronic copy 

of their discharge instructions. We 

believe that it is reasonable to require an 

EP, eligible hospital, or CAH to know 

how many unique patients they care for 

in the EHR reporting period and 

therefore maintain that denominator 

where it applies. The maintenance of 

measures using the patient as the 

denominator as encompassing all 

patients ensures a certain level of 

utilization of certified EHR technology 

by the EP, eligible hospital, or CAH. If 

a measure encompassing all patients has 

a threshold of 80 percent, then at least 

80 percent of the patients’ records must 

be maintained using certified EHR 

technology otherwise the EP, eligible 

hospital or CAH could not possibly 

meet the threshold. We note a number 

of measures included in the core set 

(such as ‘‘Record Demographics’’ and 

‘‘Maintain an Up-to-Date Problem List’’) 

require an analysis of all unique 

patients, and not just patients whose 

records are maintained in certified EHR 

technology As discussed later the 

thresholds for maintaining an up-to-date 

problem list, medication list and 

medication allergy list are set at 80 

percent. We believe these thresholds 

will create a baseline that ensures that 

EPs, eligible hospitals and CAHS are 

maintain a minimum percentage of 

patient records in certified EHR 

technology, and allows the provider 

community to advance toward the 

longer-term objective of capturing all 

patient data in certified EHR 

technology. For those measures that 

focus on the recording of actions or 

subset of patients to generate the 

denominator, we limit the measures to 

the information for patients whose 

records are maintained in certified EHR 

technology. We offer the following 

examples that relate to the e-prescribing 

and the provision of electronic copy of 

a patient’s health information: 

E-Prescribing Example: An EP orders 

1,000 prescriptions for patients whose 

records are maintained in their certified 

EHR technology and 500 of those are 

transmitted electronically. The EP’s 

denominator is 1,000 prescriptions, the 

numerator is 500 prescriptions, and 

their score is 50 percent. If the EP 

captures all 1,000 prescriptions as 

structured data the calculation could be 

automated by the certified EHR 

technology. If the EP does not capture 

all 1,000 prescriptions as structured 

data than more manual review may be 

required. We would define ‘‘records 

maintained in the certified EHR 

technology’’ to include any patient for 

which sufficient data was entered in the 

certified EHR technology to allow the 

record to be saved, and not rejected due 

to incomplete data. This may be a more 

limited set of data, but an EP, eligible 

hospital, or CAH would still have to 

have sufficient information in certified 

EHR technology to meet the measures 

associated with Stage 1 of meaningful 

use. For example, an EP might be able 

to save a record with just a patient’s 

name, but as the record would lack any 

information this patient would count in 

the denominator, but not the numerator 

for many objectives. Electronic Copy of 

a Patient’s Health Information Provided 

upon Request Example: An EP 

maintains 1,000 patient records in their 

certified EHR technology. Of those 

patients, fifty make requests for 

electronic copies of their health 

information. The EP provides all of the 

electronic copies within three business 

days. The denominator is 50, the 

numerator is 50, and the EP’s percentage 

is 100 percent. If the EP captures 

requests for information as structured 

data, the calculation could be automated 

by the certified EHR technology. If the 

EP does not capture all the requests as 

structured data then more manual 

review may be required. We will likely 

revisit the methodology in Stage 2, 

where we would expect that at least 

basic EHR functionality has been 

implemented throughout the provider 

enterprise. 

After consideration of public 

comments, we are limiting the following 

objectives and their associated measures 

to patients whose records are 

maintained using certified EHR 

technology. Specific information on 

how to determine inclusion in the 

denominator and numerator is 

discussed in the full discussion of each 

objective later in this final rule. 

• Use CPOE 

• Generate and transmit permissible 

prescriptions electronically (eRx) 

• Record and chart changes in vital 

signs 

• Record smoking status for patients 

13 years old or older 

• Record advance directives for 

patients 65 years old or older 

• Incorporate clinical lab-test results 

into certified EHR technology as 

structured data 

• Provide patients with an electronic 

copy of their health information 

(including diagnostic test results, 

problem list, medication lists, 

medication allergies), upon request 

• Provide patients with an electronic 

copy of their discharge instructions at 

time of discharge, upon request 

• Provide clinical summaries for 

patients for each office visit 

• Send reminders to patients per 

patient preference for preventive/ 

follow-up care 


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• Perform medication reconciliation 

at relevant encounters and each 

transition of care 

• Provide summary care record for 

each transition of care and referral 

Discussion on Meaningful Use 

Relationship to Certified EHR 

Technology 

Comment: We received several 

comments requesting more specific 

information of how certified EHR 

technology will accomplish meaningful 

use. Some commenters expressed 

concern that patient clinical outcome 

measurement and improvement was not 

addressed explicitly in the requirements 

of certified EHR technology, but rather 

the requirements focused data entry and 

provision of data electronically. 

Response: One of the main purposes 

of certifying EHR technology is to 

provide the EP, eligible hospital, or 

CAH with confidence that the 

technology will not be the limiting 

factor in the achievement of meaningful 

use. As such, all questions of how or 

will certified EHR technology be able to 

accomplish meaningful use broadly or 

at a specific objective level are best 

answered by ONC. CMS and ONC have 

worked closely since the enactment of 

the HITECH Act to ensure certification 

fully supports meaningful use. We 

explicitly link each meaningful use 

objective to certification criteria for 

certified EHR technology. The 

capabilities and standards that are 

certified are those that are used to meet 

the Stage 1 objectives of meaningful use. 

This way we ensure that certified EHR 

technology can accomplish meaningful 

use and meaningful use has the 

intended consequences of improving the 

healthcare priorities that make up 

meaningful use. 

Discussion on the Relationship Between 

a Stage 1 Meaningful Use Objective and 

Its Associated Measure 

Comment: Many commenters pointed 

out gaps between what they believed 

were the anticipated results from an 

objective and the results that are 

measured by the associated measure. A 

particular concern of some of these 

commenters is cases where the 

certification criteria supports the 

measure, but in their view fell short of 

supporting the objective. 

Response: In the proposed rule, we 

attempted to draw a clear distinction 

between the objective and the associated 

measure. The objectives represent a 

wide range of activities some of which 

are commonplace for EPs, eligible 

hospitals, and CAHs using EHRs today, 

while others are ambitious goals even 

for the most sophisticated EHR user of 

today. For some objectives, all aspects of 

the objective are within the control of 

the EP, eligible hospital, or CAH. Other 

objectives rely on electronic exchange 

with partners or external infrastructure 

over which EPs, eligible hospitals and 

CAHs may have little influence and no 

control. We have attempted to 

accommodate these differences when 

we select the Stage 1 measure for a 

given objective. The measure more 

accurately reflects our view of what is 

feasible for Stage 1 than the objective 

itself. The certification criteria 

necessarily reflect more on the measure 

than the objective, as full compliance 

with an objective is beyond the scope of 

what can be accomplished for a 

significant number of EPs, eligible 

hospitals or CAHs in our timeframe for 

Stage 1. This rationale was our assertion 

in the proposed rule as the justification 

for measures that represent less than full 

achievement of their objective. This is 

further supported by some of the 

comments received although for any 

given objective the comments 

addressing that objective were a small 

fraction of the total number of 

comments received and views on how 

much a measure should allow for less 

than full achievement varied widely 

among those commenting. Although we 

received over 2,000 public comments, 

the number of specific comments 

addressing an individual objective were 

relatively small ranging from 40 to 200. 

We reviewed those comments and made 

specific changes to measures in the 

discussion of each objective. We 

reiterate that achievement of the 

measure always equates to achievement 

of the objective for Stage 1 of 

meaningful use. We also reiterate that 

certified EHR technology will always be 

able to support achievement of the 

measure by including the necessary 

functionalities. However, as with any 

technology, certified EHR technology is 

only as good as the information it 

contains and getting information into 

certified EHR technology is heavily 

dependent on processes developed by 

the EP, eligible hospital, or CAH. It is 

for this reason that all measures, even 

those for objective whose aspects are 

fully under the control of the EP, 

eligible hospital, or CAH, represent less 

than full fulfillment of the objective to 

varying degrees. As stated, for 

demonstrating meaningful use and any 

follow up review by CMS or the States, 

successfully meeting the associated 

measure always equates to successfully 

meeting the objective. Updated 

information on the associated measures 

including the numerator, denominator, 

thresholds and exclusions are as 

discussed in the following section. More 

detailed specifications and guidance on 

calculating the measures will be issued 

soon after the publication of this final 

rule. 

As we described in the proposed rule, 

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 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. 

We will now review the comments for 

each objective and measure and make 

changes to our original proposal or 

finalize as proposed. 

(1) Objectives and Their Associated 

Measures 

The HIT Policy Committee identified 

as its first health outcomes policy 

priority improving quality, safety, 

efficiency and reducing health 

disparities. The HIT Policy Committee 

also 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 

CPOE. 

• Apply clinical decision support at 

the point of care. 

• Generate lists of patients who need 

care and use them to reach out to those 

patients. 

• Report information for quality 

improvement and public reporting. 

As we explained in the proposed rule, 

for the last care goal, the HIT Policy 

Committee proposed the goal as ‘‘Report 

to patient registries for quality 

improvement, public reporting, etc.’’ We 

have modified 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. 

NPRM EP Objective: Use CPOE. 

NPRM Eligible Hospital Objective: Use 

CPOE for orders (any type) directly 


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entered by the authorizing provider (for 

example, MD, DO, RN, PA, NP). 

In the proposed rule, we described 

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. We said that for Stage 1 

criteria, it will not include the 

electronic transmittal of that order to the 

pharmacy, laboratory, or diagnostic 

imaging center. 

Comment: A majority of commenters 

recommended that EPs, eligible 

hospitals, and CAHs be allowed to defer 

CPOE for varying lengths of time 

ranging from 2012 to 2017. The 

commenters cited various reasons for 

deferment including that CPOE is an 

advanced clinical function that typically 

is the last process to be implemented 

due to the need to build the entire 

infrastructure to support the CPOE 

process. Other commenters noted an 

increased burden as if the orders cannot 

be transmitted, then duplicate paper 

orders will have to be produced which 

can lead to patient safety risks. 

Commenters also noted that CPOE 

appears in the latter stages of the 

Certification Commission for Healthcare 

Information Technology (CCHIT) EHR 

implementation process. A minority, 

but significant number of comments 

encouraged CMS to maintain CPOE for 

2011. Those commenters in favor of 

retaining CPOE in 2011 believed that 

CPOE is a basic EHR feature that should 

be a standard offering of a certified EHR 

technology and is critical to improving 

quality of care through audit trails and 

alerting of delinquent order and/or 

delinquent deferred orders. 

Response: We have determined that 

CPOE should be included in the core set 

of measures for Stage 1 in order to 

advance meaningful use. CPOE is a 

foundational element to many of the 

other objectives of meaningful use 

including exchange of information and 

clinical decision support. Many 

commenters, including several 

physician associations, the HIT Policy 

Committee and members of Congress 

through their endorsement of the HIT 

Policy Committee’s recommendation, 

recommended that CPOE be required in 

Stage 1. CPOE has been a major 

initiative of US hospitals for over a 

decade and is a foundational 

functionality to many of the activities 

that further the health care policy 

priorities of meaningful use. For 

example, entering a medication order 

using CPOE allows the EHR to provide 

feedback on whether the medication 

may have adverse reactions with other 

medications the patient is taking. 

Another benefit of CPOE is that greatly 

simplifies the workflow process of 

inputting information into certified EHR 

technology in a structured way to 

populate the patient record. 

Comment: Several commenters asked 

that we further specify who could enter 

the order using CPOE. Some 

commenters stated that only the 

ordering provider should be permitted 

to enter the order. These commenters 

stated that the ordering professional 

needs to be presented with clinical 

decision support at the time of entry 

and that the relay of an order to another 

individual is a source of potential error. 

Other commenters recommended that 

any licensed healthcare professional or 

indeed any individual (licensed or not) 

who receives the order from the 

ordering provider be permitted to 

perform the CPOE. The most common 

argument presented by these 

commenters is that this is currently how 

CPOE is handled in practice and a shift 

to entry by only the ordering provider 

would be too disruptive to workflow. 

Response: We agree with those 

commenters who recommend allowing 

any licensed healthcare professional to 

enter orders using CPOE. We further 

refine this recommendation to be that 

any licensed healthcare professional can 

enter orders into the medical record per 

state, local and professional guidelines. 

While we understand that this policy 

may decrease opportunities for clinical 

decision support and adverse 

interaction, we believe it balances the 

potential workflow implications of 

requiring the ordering provider to enter 

every order directly, especially in the 

hospital setting. We disagree with 

commenters that anyone should be 

allowed to enter orders using CPOE. 

This potentially removes the possibility 

of clinical decision support and advance 

interaction alerts being presented to 

someone with clinical judgment, which 

negates many of the benefits of CPOE. 

Comment: We received requests for 

clarification of this objective and what 

types of orders would meet this 

requirement. 

Response: Our intent in the proposed 

rule was to capture orders for 

medications, laboratory or diagnostic 

imaging. 

However, after careful consideration 

of the comments, we are adopting an 

incremental approach by only requiring 

medication orders for Stage 1. First, this 

supports the objectives of e-prescribing, 

drug-drug and drug-allergy checks. 

Second, this requirement will improve 

patient-safety because of the alignment 

of ordering medications in a structured 

data format will enable providers to 

create registries of patients for potential 

medical recalls, participate in 

surveillance for potential sentinel 

events and life-threatening side effects 

of new medications. Third, other 

measures involving transitions of care 

documents and summary of care 

document will require the entry of an 

active medication list. After 

consideration of the public comments 

received, we are finalizing the 

meaningful use objective for EPs at 

495.6(d)(1)(i) and for eligible hospitals, 

and CAHs at 495.6(f)(1)(i) as ‘‘Use CPOE 

for medication orders directly entered 

by any licensed healthcare professional 

who can enter orders into the medical 

record per state, local and professional 

guidelines’’. 

NPRM EP Measure: CPOE is used for 

at least 80 percent of all orders. 

NPRM Eligible Hospital or CAH 

Measure: For eligible hospitals, CPOE is 

used for 10 percent of all orders. 

In the proposed rule under CPOE, we 

discussed several concepts related to 

any associated measure of any objective 

that relies on a percentage calculation. 

These are the use of a percentage versus 

a count; setting a threshold for measures 

not requiring the electronic exchange of 

information; EPs practicing in multiple 

locations, some of which may not have 

certified EHR technology available, and 

the patient population to which the 

measure would apply. All except the 

last of these received extensive 

comments and are addressed in 

comment and response sections earlier 

in this section. In the proposed rule, we 

said that we would base the measures 

associated with the objectives on both 

the Medicare/Medicaid patient 

population and all other patients as 

well. We said that 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 and that requiring reporting 

differences based on payers would 

actually increase the burden of meeting 

meaningful use. We received very few 

comments on this aspect of our 

proposed rule and those that were 

received were generally supportive of 

this proposal. Therefore, we are 

finalizing the policy that all meaningful 

use measures be calculated based on the 

eligible provider’s entire patient 

population (except where otherwise 

noted). 

Comment: Nearly every commenter 

who commented on CPOE objected to 

our proposal to limit this measure to the 


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inpatient department (Place of Service 

Code 21) for the eligible hospital or 

CAH. Commenters stated that this 

limitation was inappropriate given the 

manner in which hospitals use EHR 

technology. To account for current 

practice, the commenters recommended 

the measures be expanded to include 

the emergency department (ED) (POS 

23). Other reasons cited by commenters 

were that orders begin in the ED and 

remain open as the patient transitions to 

inpatient (for example, infusions), 

transitioning from paper documentation 

in the ED to electronic for subsequent 

care is unsafe as it can result in missed 

information, and/or transcription errors 

as the initial allergies and medications 

are entered into the system, significant 

data collection occurs in the ED that 

would not be included in the system, 

the exclusion of the ED creates 

disincentives to adoption and that the 

ED is a hybrid of temporal and 

functional services that are neither 

purely ambulatory nor inpatient. 

Response: We agree with the 

commenters, and therefore are 

expanding this objective and its 

associated measure to the emergency 

room (POS 23). More information on 

place of service codes is available at 

http://www.cms.gov/

PlaceofServiceCodes/. Furthermore, 

given the revision to the HITECH Act 

that changed hospital based eligible 

professionals to include only the setting 

of inpatient and emergency departments 

and all of the benefits of integration of 

these two departments spelled out by 

commenters we will adopt both 

departments when considering the 

measure of eligible hospitals or CAHs 

unless we find there are unique 

circumstances of an objective and its 

associated measure that would preclude 

the inclusion of the emergency 

department for meaningful use. This 

change does not affect the incentive 

payment calculation described in 

section II.B. of this final rule 

Comment: We received several 

recommendations from commenters that 

the requirement of a percentage 

measurement for determining whether 

an EP, eligible hospital or CAH meets 

this objective should be replaced with a 

numerical count for CPOE and many 

other measures associated with 

percentage thresholds. The two main 

reasons given for switching to numerical 

counts are the burden of calculating the 

percentage if it cannot be done 

automatically using certified EHR 

technology and the assertion that if an 

EP, eligible hospital, or CAH does 

something a specific number of times it 

can be assumed that it is done often 

enough to constitute meeting the 

objective for Stage 1 of meaningful use. 

Response: We have previously 

discussed the merits of a percentage 

based measure over a count based 

measure earlier in this section under the 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives. However, we 

do try to seek a balance reducing the 

burden on providers while still ensuring 

the progression of meaningful use of 

certified EHR technology. In the next 

comment/response, we discuss changes 

to this measure that respond to concerns 

regarding burden. 

Comment: Many commenters 

representing EPs as well as other 

commenters recommended lowering the 

CPOE threshold for EPs. Those 

commenters representing EPs generally 

recommended parity with eligible 

hospitals at 10 percent, while other 

commenters recommending a reduction 

generally recommended 50 percent. 

Response: With CPOE, we had a 

unique situation of disparate thresholds 

between EPs and hospitals. This was 

due to recommendations prior to the 

proposed rule by the HIT Policy 

Committee. Eligible hospitals were 

granted an even lower threshold for this 

particular requirement. The reason 

given for this recommendation was that 

CPOE is one of the last functionalities 

to be implemented in the hospital 

setting. Commenters point out that 

holds true for EPs as well. As discussed 

above, given the limitations we are 

placing on the numerator and 

denominator for calculating the CPOE 

percentage, we no longer see a 

compelling reason to maintain disparate 

thresholds for the EPs and the eligible 

hospital/CAH. 

Comment: Commenters have 

suggested that our proposal to count an 

action per unique patients could be 

applied to the measure for CPOE as well 

through a revised measure of ‘‘[a]t least 

10% of unique patients seen by the EP 

or admitted to the eligible hospital or 

CAH have at least one order entered 

using CPOE.’’ Commenters also pointed 

to CPOE as an example of a case where 

adequate lead time is necessary to 

implement certified EHR technology. 

Response: At the heart of this new 

basis for this measure is the assumption 

that every patient would have at least 

one order that could be entered using 

CPOE. We believe this is a reasonable 

assumption for EPs, eligible hospitals 

and CAHs. According to analysis of 

25,665 office-based visits in the 2005 

National Ambulatory Medical Care 

Survey, 31 percent of visits included a 

new medication order, and 44 percent 

included at least one refill; 66 percent 

had any type of medication order. 

However, whether a medication order is 

appropriate for every practice could 

vary significantly by scope of practice; 

therefore, for the final rule, we are 

further limiting the denominator to 

patients with at least one medication 

listed in their medication list. We 

believe that this limitation will reduce 

providers’ burden as compared to 

accounting for all orders. To further 

reduce the burden on providers, we also 

will limit the numerator to unique 

patients with at least one medication 

order entered using CPOE. Because we 

have reduced provider burden by 

limiting the denominator and numerator 

as discussed above, we believe that a 

corresponding increase in the CPOE 

threshold is appropriate for hospitals 

and CAHs. For stage 1, we are finalizing 

a threshold for CPOE of 30 percent for 

EPs, eligible hospitals, and CAHS. We 

believe this relatively low threshold, in 

combination with the limitation to only 

medication orders, will allow hospitals 

and EPs to gain experience with CPOE. 

However, as providers gain greater 

experience with CPOE, we believe it is 

reasonable to expect greater use of the 

function. As explained above, we also 

believe CPOE is foundational to many 

other objectives of meaningful use. For 

these reasons, we believe it is 

reasonable to expect providers to move 

to a 60 percent threshold at Stage 2 of 

meaningful use. Thus, for this measure, 

we are finalizing, for Stage 2 of 

meaningful use, that EPs, eligible 

hospitals and CAHs must meet a 60 

percent threshold for CPOE. Therefore, 

we are finalizing a Stage 2 measure for 

CPOE at § 495.6(h) for EPs and § 495.6(i) 

for eligible hospitals and CAHs as ‘‘More 

than 60 percent of all unique patients 

with at least one medication in their 

medication list seen by the EP or 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) during the 

EHR reporting period have at least 

medication one order entered using 

CPOE’’. 

Comment: We received several 

comments asking for clarification of the 

term unique patient in response to 

various objectives. 

Response: In the proposed rule, we 

state, ‘‘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.’’ To further 

describe the concept of ‘‘unique patient’’ 

we mean that if a patient is seen by an 

EP or admitted to an eligible hospital’s 

or CAH’s inpatient or emergency 

department (POS 21 or 23) more than 

once during the EHR reporting period 


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then for purposes of measurement they 

only count once in the denominator for 

the measure. All the measures relying 

on the term ‘‘unique patient’’ relate to 

what is contained in the patient’s 

medical record. Not all of this 

information will need to be updated or 

even be needed by the provider at every 

patient encounter. This is especially 

true for patients whose encounter 

frequency is such that they would see 

the same provider multiple times in the 

same EHR reporting period. Measuring 

by every patient encounter places an 

undue burden on the EPs, eligible 

hospitals and CAHs and may have 

unintended consequences of affecting 

the provision of care to patients merely 

to comply with meaningful use. Given 

the emphasis placed on the reporting 

burden by commenters as described in 

the beginning of this section, we believe 

that our concerns about the burden of 

measurement were well founded. We 

also continue to believe that the use of 

patient encounters could have 

unintended consequences on the 

provision of care by providers. 

Comment: Some commenters asked 

whether the CPOE objective and 

associated measure require transmission 

of the order. Most of these commenters 

were opposed to such transmission in 

Stage 1 for various reasons such as the 

cost of developing interfaces between 

EHRs and laboratory and radiology 

service providers, the volume of 

transmissions would outpace the 

capacity to connect, HIE infrastructure 

is not yet mature enough and the lack 

of the requirement for non-eligible 

entities to participate (for example, 

laboratory vendors, pharmacies). Some 

commenters supported the inclusion of 

the transmission of the order as they 

believed this would provide better 

outcomes than if the transmission was 

not required. 

Response: In the proposed rule, we 

stated, ‘‘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.’’ While a few 

commenters recommended that this 

objective be changed to require 

transmission, given the large opposition 

to the objective and measure as 

proposed and the reasons commenters 

presented against transmission, it would 

not be responsive to the vast majority of 

commenters to expand this objective 

beyond our proposal. We agree with the 

commenters that said the HIE 

infrastructure is still being developed in 

most parts of the country. Furthermore, 

we note that in the hospital setting, 

most medication orders would not 

require transmission outside of the 

certified EHR technology of the hospital. 

For EPs, we already address 

transmission of the medication order in 

a separate objective for e-prescribing. 

Therefore, we finalize the proposal that 

the transmission of the order is not 

included in the objective or the 

associated measure for Stage 1. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

495.6(d)(1)(ii) of our regulations and for 

eligible hospitals, and CAHs at 

§ 495.6(f)(1)(ii) of our regulations to 

‘‘More than 30 percent of all unique 

patients with at least one medication in 

their medication list seen by the EP or 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) during the 

EHR reporting period have at least 

medication one order entered using 

CPOE’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(a) for EPs and 45 CFR 

170.306(a) for eligible hospitals and 

CAHs. The ability to calculate the 

measure is included in certified EHR 

technology. Thus, for example, an EP, 

eligible hospital or CAH must use a 

certified functionality in entering the 

medication order, and could not use a 

functionality that has been added by the 

EHR vendor, but that is outside the 

scope of the certification. We believe 

this rule is necessary to ensure that the 

EP, eligible hospital, or CAH is actually 

making meaningful use of ‘‘certified’’ 

EHR technology, and is not using noncertified technology. In addition, 

requiring providers to use 

functionalities that are certified will 

ensure the interoperability of 

information maintained in the EHR as 

providers will be able to operate 

according to consistent standards. We 

believe this standardization and 

consistency is key to realizing the goal 

of using EHR technology to improve 

health care. 

As noted previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives, 

the only patients that are included in 

the denominator are those patients 

whose records are maintained using 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients with at least one medication in 

their medication list seen by the EP or 

admitted to an eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) during the 

EHR reporting period 

• Numerator: The number of patients 

in the denominator that have at least 

one medication order entered using 

CPOE. 

• Threshold: The resulting percentage 

must be more than 30 percent in order 

for an EP, eligible hospital or CAH to 

meet this measure. 

Exclusion: If an EP’s writes fewer than 

one hundred prescriptions during the 

EHR reporting period they would be 

excluded from this requirement as 

described previously in this section in 

our discussion whether certain EP, 

eligible hospital or CAH can meet all 

Stage 1 meaningful use objectives given 

established scopes of practices. We do 

not believe that any eligible hospital or 

CAH would have less than one hundred 

prescriptions written for patients 

admitted to their inpatient and 

emergency departments during the EHR 

reporting period. 

NPRM EP/Eligible Hospital Objective: 

Implement drug-drug, drug-allergy, 

drug-formulary checks 

In the proposed rule, we did not 

elaborate on this objective. 

Comment: Many commenters 

requested clarification as to what 

formulary the checks would be 

conducted against. 

Response: Ideally, this check would 

be performed against any formulary that 

may affect the patient’s welfare, inform 

the provider as to the best drug to 

prescribe or provide the patient and 

provider information on the drug’s cost 

to both the patient and any third party 

payer. We recognize, however, that not 

every available third party payer, 

pharmacy benefit management, 

preferred drug list is standardized and 

made available for query through 

certified EHR technology. As we cannot 

through this regulation impose such a 

requirement on every developer of a 

formulary, we do not require that an EP/ 

eligible hospital/CAH would have to 

accommodate every formulary in their 

implementation. However, at a 

minimum an EP/eligible hospital/CAH 

must have at least one formulary that 

can be queried. This may be an 

internally developed formulary or an 

external formulary. The formularies 

should be relevant for patient care 

during the prescribing process. To 

further address this, we expect that this 

measure will be expanded to be counted 

on a transactional basis for future stages. 

Comment: Commenters suggested 

separating the objective into one 

objective for the clinical checks (drugdrug and drug-allergy) and a second 

objective for the administrative check 


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(drug-formulary). The rationale stated 

for the division was that clinical 

measures are focused on preventing 

medication errors versus encouraging 

consideration of cost when prescribing 

medications. In addition, the two types 

involve connections to different kinds of 

resources (drug safety information 

versus formulary information). 

Response: We agree that these should 

be separate objectives for the reasons 

stated by the commenters and split them 

accordingly. 

Comment: We received comments 

that these functions were really part of 

CPOE and electronic prescribing. 

Commenters most commonly noted that 

the drug formulary is part of electronic 

prescribing, as is currently the case 

under the Medicare e-Prescribing 

program. 

Response: While we agree that the 

drug-drug, drug-allergy, drug-formulary 

checks, CPOE, e-prescribing meaningful 

use objectives all serve the same broader 

goal of ensuring accurate ordering and 

prescribing that takes into account all 

available information about the patient 

the functions and their readiness for 

Stage 1 of meaningful use are distinct. 

In terms of functions, CPOE and eprescribing could be performed without 

the drug to drug, drug-allergy or drugformulary checks. Similarly, it is not 

necessary for CPOE or e-Prescribing to 

take place in order for a drug to drug 

allergy check to occur. In terms of 

readiness and ability to measure 

progress for Stage 1 of meaningful use, 

CPOE and e-prescribing both are 

percentage based measures of a distinct 

activity that creates a record even in 

today’s EHR’s and paper patient records. 

The viewing and consideration of 

information presented to the provider 

on possible drug interactions is not a 

similarly distinct activity and does not 

currently create a record. So while the 

goal of these functionalities is similar, 

we believe drug-drug, drug-allergy, 

drug-formulary checks create unique 

concerns for implementation and 

demonstration of meaningful use, and 

therefore we maintain them as separate 

objectives. 

Comments: Several commenters 

expressed concern of ‘‘alert fatigue’’ 

occurring with drug-drug interaction 

checks. Alert fatigue or otherwise 

known as ‘‘pop-up’’ fatigue is a 

commonly perceived occurrence with 

electronic medical records and clinical 

decision support tools in which alerts 

are presented to the user when a 

potential safety issue is identified by the 

system (for example, drug to drug 

interaction). The alerts, while beneficial 

in some cases, can result in a type of 

‘‘fatigue’’ whereby the provider, after 

receiving too many alerts, begins to 

ignore and/or override the alerts. 

Receiving too many alerts can result in 

slowing the provider down rendering 

the alert useless. Commenters 

recommended some changes to the 

objective and associated measure to 

mitigate the risk of ‘‘alert fatigue’’ such 

as limiting the checks for interactions to 

only the most critical medications or 

allowing for adjustment of risk levels 

rather than an on/off functionality. 

Response: We recognize ‘‘alert fatigue’’ 

is a potential occurrence with drug-drug 

and drug-allergy checks. However, 

meaningful use seeks to utilize the 

capabilities of certified EHR technology 

and any means to address alert fatigue 

requires a critical evaluation of each 

alert. We believe this is beyond the 

scope of the definition of meaningful 

use. We believe these checks are 

valuable and improve patient care and 

therefore do not remove them to address 

alert fatigue. 

Comment: Commenters recommended 

food allergies be included in the drugallergy check as some drugs contain 

ingredients that are contraindicated in 

individuals with certain allergies. 

Response: We certainly agree that 

some allergies other than drug can 

interact with drugs; however, as we 

stated under our discussion of the 

objective ‘‘Medication Allergy List’’, the 

ability to identify other types of allergies 

in a useful way are not yet available to 

the extent necessary to require them in 

Stage 1 of meaningful use. This 

certainly does not preclude any EP, 

eligible hospital, or CAH from working 

with the designers of their certified EHR 

technology to include this functionality. 

Comment: A commenter requested 

clarification as to whether the drugdrug, drug-allergy and drug-formulary 

checks are required for contrast media 

and imaging agents used by radiologists. 

Response: We do not link the checks 

to specific drugs or agents. However, we 

note that is common practice in 

radiology to identify a patient’s past 

drug and food allergies and take 

appropriate interventions if necessary. 

Therefore, the drug-drug, drug-allergy 

and drug-formulary checks would be 

appropriate prior to administration of 

contrast media and imaging agents to 

patients. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use objective for EPs at 

§ 495.6(d)(2)(i) and for eligible hospitals 

and CAHs at § 495.6(f)(2)(i) as 

‘‘Implement drug-drug and drug-allergy 

checks.’’ We include this objective in the 

core set as it is integral to the initial or 

on-going management of a patient’s 

current or future healthcare and would 

give providers the necessary 

information to make informed clinical 

decisions for improved delivery of 

patient care. 

In addition, we are finalizing the 

meaningful use objective at for EPs at 

§ 495.6(e)(1)(i) and for eligible hospitals 

and CAHs at § 495.6(g)(1)(i) of our 

regulations as ‘‘Implement drugformulary checks.’’ 

NPRM EP/Eligible Hospital Measure: 

The EP/eligible hospital/CAH has 

enabled the drug-drug, drug-allergy, and 

drug-formulary check functionality 

In the proposed rule we discussed 

that the capability of conducting 

automated drug-drug, drug-allergy, and 

drug-formulary checks is included in 

the certification criteria for certified 

EHR technology. This automated check 

provides information to advise the EP, 

eligible hospital, or CAH’s decisions in 

prescribing drugs to a patient. The only 

action taken by the EP, eligible hospital, 

or CAH 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 to meet this 

objective, an EP, eligible hospital, or 

CAH would be required to enable this 

functionality and ensure they have 

access to at least one drug formulary. 

While this does not ensure that an EP, 

eligible hospital or CAH is considering 

the information provided by the check, 

it does ensure that the information is 

available. 

After consideration of the public 

comments received on the objective, we 

believe the measure as proposed 

requires more clarity on the length of 

time for which the functionality must be 

enabled, which we clarify to be the 

entire EHR reporting period. Therefore, 

we are modifying the meaningful use 

measure for ‘‘Implement drug-drug and 

drug-allergy checks for the entire EHR 

reporting period’’ for EPs at 

§ 495.6(d)(2)(ii) and for eligible 

hospitals and CAHs at § 495.6(f)(2)(ii) of 

our regulations to ‘‘The EP/eligible 

hospital/CAH has enabled this 

functionality for the entire EHR 

reporting period.’’ 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(a). The ability to 

calculate the measure is included in 

certified EHR technology. 

As this objective only requires that 

functionalities of certified EHR 

technology be enabled, we do not 

believe that any EP, eligible hospital or 


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CAH would need an exclusion for this 

objective and its associated measure. 

After consideration of the public 

comments received on the objective, we 

are modifying the meaningful use 

measure for ‘‘Implement drug-formulary 

checks’’ for EPs at § 495.6(e)(1)(ii) and 

for eligible hospitals and CAHs at 

§ 495.6(g)(1)(ii) of our regulations to 

‘‘The EP/eligible hospital/CAH has 

enabled this functionality and has 

access to at least one internal or external 

formulary for the entire EHR reporting 

period.’’ 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(b). The ability to 

calculate the measure is included in 

certified EHR technology. 

The consideration of whether a drug 

is in a formulary or not only applies 

when considering what drug to 

prescribe. Therefore, we believe that any 

EP who writes fewer than one hundred 

prescriptions during the EHR reporting 

period should be excluded from this 

objective and associated measure as 

described previously in our discussion 

of whether certain EP, eligible hospital 

or CAH can meet all Stage 1 meaningful 

use objectives given established scopes 

of practices. 

NPRM EP/Eligible Hospital Objective: 

Maintain an up-to-date problem list of 

current and active diagnoses based on 

ICD–9–CM–CM or SNOMED CT®

In the proposed rule, we described the 

term ‘‘problem list’’ as a list of current 

and active diagnoses as well as past 

diagnoses relevant to the current care of 

the patient. 

Comment: Several commenters noted 

that the coding of problem lists at the 

point of care is outside the normal 

workflow process and would be 

disruptive. 

Response: We did not and do not 

intend that coding of the diagnosis be 

done at the point of care. This coding 

could be done later and by individuals 

other than the diagnosing provider. 

Comment: Commenters suggested 

including ICD–10–CM, the Diagnostic 

and Statistical Manual of Mental 

Disorders and explicitly allowing 

subsets of SNOMED CT®. 

Response: We have removed the 

references to specific standards, as we 

believe specifying the relevant 

standards falls within the purview of 

ONC. For ONC’s discussion of this 

functionality and the relevant standards 

including response to the above 

comment, we refer readers to ONC’s 

final rule. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(d)(3)(i) and for eligible hospitals 

at § 495.6(f)(3)(i) of our regulations to 

‘‘Maintain an up-to-date problem list of 

current and active diagnoses’’. 

We include this objective in the core 

set as it is integral to the initial or ongoing management of a patient’s current 

or future healthcare and would give 

providers the necessary information to 

make informed clinical decisions for 

improved delivery of patient care. 

NPRM EP/Eligible Hospital 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 

recorded as structured data. 

In the proposed rule, we introduced 

the concept of ‘‘unique patients’’ in the 

discussion of this objective. We received 

many comments requesting clarification 

of this term and address those in the 

comment and response section under 

our discussion of the CPOE measure. 

Comment: A few commenters stated 

that ‘‘None’’ is not a clinically relevant 

term and should be replaced with no 

known problem or no problem. 

Response: Our intent is not to dictate 

the exact wording of the specific value. 

Rather we are focused on the overall 

goal of making a distinction between a 

blank list because a patient does not 

have known problems and a blank list 

because either no inquiry of the patient 

has been made, or problems have been 

recorded through other means. As long 

as the indication accomplishes this goal 

and is structured data, we do not believe 

it is necessary to prescribe the exact 

terminology, thus leaving that level of 

detail to the designers and users of 

certified EHR technology. 

Comment: Commenters requested 

clarification of the term ‘‘up-to-date’’. 

Response: The term ‘‘up-to-date’’ 

means the list is populated with the 

most recent diagnosis known by the EP, 

eligible hospital, or CAH. This 

knowledge could be ascertained from 

previous records, transfer of information 

from other providers, or querying the 

patient. However, not every EP has 

direct contact with the patient and 

therefore has the opportunity to update 

the list. Nor do we believe that an EP, 

eligible hospital, or CAH should be 

required through meaningful use to 

update the list at every contact with the 

patient. There is also the consideration 

of the burden that reporting places on 

the EP, eligible hospital, or CAH. The 

measure, as finalized, ensures the EP, 

eligible hospital, or CAH has a problem 

list for patients seen during the EHR 

reporting period, and that at least one 

piece of information is presented to the 

EP, eligible hospital, or CAH. The EP, 

eligible hospital, or CAH can then use 

their judgment in deciding what further 

probing or updating may be required 

given the clinical circumstances. 

Comment: Commenters stated that 

this measure should be replaced with 

either a simple attestation of yes, the 

problem list exists or the percentage of 

the measure should be replaced with a 

count. Alternatively, that the percentage 

should be maintained, but that the 

threshold should be lowered. 

Commenters generally supported this 

lowering of the threshold for one or all 

of the following reasons: It may require 

a change in traditional workflow; 

implementation and rollout of certified 

EHR technology creates unforeseeable 

system downtimes, complications, and 

the required clinical classification 

systems are not geared toward clinical 

information. 

Response: For reasons discussed 

earlier in this section under our 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives, we believe a 

percentage is a more appropriate 

measure than those suggested by 

comments. 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 is appropriate to set a high 

percentage threshold. In the proposed 

rule, we 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. We 

proposed 80 percent for every measure 

with a percentage that met the criteria 

of relying solely on a capability 

included as part of certified EHR 

technology and are not, for purposes of 

Stage 1 meaningful use criteria, reliant 

on the electronic exchange of 

information. Commenters generally 

agreed with this alignment; however, 

they disagreed that 80 percent 

sufficiently allows for ‘‘technical 

hindrances and other barriers’’. 

Commenters have highlighted numerous 

barriers towards successfully meeting an 

80 percent threshold including 

technical barriers, barriers to 

implementation, applicability to all 

patients and all provider types eligible 

for the EHR incentives, patient 

requested exclusions and others. We 

address some of these with specific 

exclusions from the measure as 


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discussed previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices. 

Although some technical issues exist, 

recording an up-to-date problem list 

remains largely within the individual 

provider’s control and does not rely to 

a large degree on some external sender 

or receiver of structured electronic 

health data. In addition, there is a 

standard of practice for collecting the 

elements required for an up-to-date 

problem list. Although the commenters 

may be right that some clinical 

workflow needs to change, that is an 

integral part of meaningful use of EHRs. 

Although we do not expect all clinical 

workflow to adapt in Stage 1, there is an 

expectation that the clinical workflow 

necessary to support the Stage 1 priority 

of data capture and sharing will be in 

place in order to effectively advance 

meaningful use of EHRs. In addition, 

given the wide range of activities that 

must occur for meaningful use, we 

believe that most EPs, eligible hospitals 

and CAHs will have fully rolled out the 

capabilities required by this objective 

and the others with an 80 percent 

threshold prior to the start of the EHR 

reporting period thereby reducing the 

likelihood of unexpected system 

downtime and other implementation 

complications. 

For situations in which there is an 

existing standard of practice and 

complying is fundamentally within the 

provider’s control and where the 

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, for the final 

rule, we adopt, the reasonably high 

threshold of 80 percent. We believe 

existing infrastructure and expectations 

support this relatively high target. This 

foundational step of structured data 

capture is a prerequisite for many of the 

more advanced functionalities (for 

example, clinical decision support, 

clinical quality measurement, etc.) for 

which a solid evidence base exists for 

improved quality, safety and efficiency 

of care. Without having most of a 

provider’s up-to-date problem lists in 

structured, electronic data, that provider 

will have major challenges in building 

more advanced clinical processes going 

forward. 

For other situations, where the 

objective may not be fundamentally 

within the provider’s control and is not 

an existing standard of practice, but 

where objective continues to rely solely 

on a capability that is included as part 

of certified EHR technology and is not 

reliant on electronic exchange of 

information, we are setting the 

percentage at 50 percent. This was the 

most commonly recommended 

percentage for these objectives that rely 

solely on a capability included as part 

of certified EHR technology and do not 

rely on the electronic exchange of 

information. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(3)(i) and for eligible hospitals 

at § 495.6(f)(3)(i) of our regulations to 

‘‘More than 80 percent of all unique 

patients seen by the EP or admitted to 

the eligible hospital’s or CAH’s 

inpatient or emergency departments 

(POS 21 or 23) have at least one entry 

or an indication that no problems are 

known for the patient recorded as 

structured data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(c). The ability to 

calculate the measure is included in 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP or admitted to 

an eligible hospital’s or CAH’s inpatient 

or emergency department (POS 21 or 23) 

during the EHR reporting period. 

• Numerator: The number of patients 

in the denominator who have at least 

one entry or an indication that no 

problems are known for the patient 

recorded as structured data in their 

problem list. 

• Threshold: The resulting percentage 

must be more than 80 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. 

We do not believe that any EP, 

eligible hospital, or CAH would be in a 

situation where they would not need to 

know at least one active diagnosis for a 

patient they are seeing or admitting to 

their hospital. Therefore, there are no 

exclusions for this objective and its 

associated measure. 

NPRM EP Objective: Generate and 

transmit permissible prescriptions 

electronically (eRx). 

Comment: Some commenters 

requested clarification of the term 

‘‘permissible prescription.’’ 

Response: As discussed in the 

proposed rule, the concept of only 

permissible prescriptions refers to the 

current restrictions established by the 

Department of Justice on electronic 

prescribing for controlled substances in 

Schedule II. (The substances in 

Schedule II can be found at http:// 

www.deadiversion.usdoj.gov/schedules/

orangebook/e_cs_sched.pdf). Any 

prescription not subject to these 

restrictions would be permissible. We 

note that the Department of Justice 

recently released a notice of proposed 

rulemaking that would allow the 

electronic prescribing of these 

substances; however, given the already 

tight timeframe for Stage 1 of 

meaningful use we are unable to 

incorporate any final changes that may 

result from that proposed rule. 

Therefore, the determination of whether 

a prescription is a ‘‘permissible 

prescription’’ for purposes of the eRx 

meaningful use objective should be 

made based on the guidelines for 

prescribing Schedule II controlled 

substances in effect when the notice of 

proposed rulemaking was published on 

January 13, 2010. We define a 

prescription as the authorization by an 

EP to a pharmacist to dispense a drug 

that the pharmacist would not dispense 

to the patient without such 

authorization. We do not include 

authorizations for items such as durable 

medical equipment or other items and 

services that may require EP 

authorization before the patient could 

receive them. These are excluded from 

the numerator and the denominator of 

the measure. 

Comment: Some commenters 

recommended combining this objective 

and measure with other meaningful use 

objectives such as CPOE or the drugdrug, drug-allergy, drug-formulary 

checks 

Response: We addressed these 

comments under our discussion of the 

CPOE objective. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use objective at 

495.6(d)(4)(i) as proposed. 

We have also included this objective 

in the core set. Section 1848(o)(2)(A)(i) 

of the Act specifically includes 

electronic prescribing in meaningful use 

for eligible professionals. This function 

is the most widely adopted form of 

electronic exchange occurring and has 

been proven to reduce medication 

errors. We included this objective in the 

core set based on the combination of the 

maturity of this objective, the proven 

benefits and its specific mention as the 

only example provided in the HITECH 

Act for what is meaningfully using 

certified EHR technology. 

NPRM EP Measure: At least 75 

percent of all permissible prescriptions 

written by the EP are transmitted 

electronically using certified EHR 

technology. 


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In the proposed rule, we said that 

while this measure does rely on the 

electronic exchange of information 

based on the public input previously 

discussed and our own experiences 

with e-prescribing programs, we believe 

this is the most robust electronic 

exchange currently occurring and 

proposed 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. 

Comment: A majority of commenters 

commenting on this measure believe the 

75 percent threshold is too high. Several 

issues were raised to explain why the 

commenters believe the threshold is too 

high. The first is that barriers to eprescribing exist at the pharmacies and 

they must be brought into the process to 

ensure compliance on the receiving end. 

The second represents the most 

common barrier cited by commenters 

and that is patient preference for a paper 

prescription over e-prescribing. A 

patient could have this preference for 

any number of reasons cited by 

commenters such as the desire to shop 

for the best price (especially for patients 

in the Part D ‘‘donut hole’’), the ability 

to obtain medications through the VA, 

lack of finances, indecision to have the 

prescription filled locally or by mail 

order and desire to use a manufacturer 

coupon to obtain a discount. Other 

barriers mentioned by individual 

commenters were the limited 

functionality of current e-prescribing 

systems such as the inability to 

distinguish refills from new orders. 

Suggestions for addressing these 

difficulties were either to lower the 

threshold (alternatives recommended 

ranged from ten to fifty percent) or 

replacing the percentage with a 

numerical count of 25 to align with the 

2010 Medicare e-Prescribing program. 

Of the comments received that 

requested a specific lower threshold, 

about half of them suggested a 50 

percent threshold, and about half 

suggested a threshold of 25 percent to 

30 percent. 

Response: We are finalizing the use of 

a percentage threshold for the reasons 

discussed previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives. In 

the proposed rule, we pointed out that 

we ‘‘believe this is the most robust 

electronic exchange currently occurring’’ 

to justify a high threshold of 75 percent 

given that this objective relies on 

electronic exchange. While we continue 

to believe this is the case, two particular 

issues raised by commenters caused us 

to reconsider our threshold. The first is 

the argument to include pharmacies in 

the Medicare and Medicaid EHR 

incentive programs to ensure 

compliance on the receiving end. Nonparticipation by pharmacies was 

presented by commenters as a major 

barrier to e-Prescribing. The second is 

patient preference for a paper 

prescription. In regards to the first 

argument, we do not have the ability to 

impose requirements on pharmacies 

through the HITECH legislation. 

However, prescriptions transmitted 

electronically have been growing at an 

exponential rate. The number of 

prescriptions sent electronically 

increased by 181 percent from 2007 to 

2008 according to comments received. 

The number of pharmacies is also 

increasing rapidly. Yet this growth is 

uneven across the country and we wish 

to accommodate all EPs and do lower 

the threshold based on this argument. In 

regards to the second argument, we also 

have neither the ability nor the desire to 

limit patient preference. We considered 

allowing an EP to exclude from the 

denominator those instances where a 

patient requested a paper prescription. 

However, the burden of tracking when 

this occurs, the disincentive it would 

create for EPs to work with patients on 

establishing a relationship with a 

pharmacy and the hindrance to moving 

forward with e-prescribing lead us to 

address this through further reduction 

of the threshold as opposed to an 

exclusion. To address these concerns we 

are lowering the threshold for the eprescribing measure to 40 percent. As 

pointed out by commenters, 

e-prescribing it is not yet standard of 

practice and there may be important 

external barriers beyond the provider’s 

control. In particular, for e-prescribing, 

providers are dependent upon an 

external receiver of electronic health 

data, and there are significant variations 

depending on where the provider 

practices. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure at 

§ 495.6(d)(4)(ii) of our regulations to 

‘‘More than 40 percent of all permissible 

prescriptions written by the EP are 

transmitted electronically using 

certified EHR technology’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(b). The ability to 

calculate the measure is included in 

certified EHR technology. 

As noted previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives, 

the prescriptions in the denominator are 

only those for patients whose records 

are maintained using certified EHR 

technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of 

prescriptions written for drugs requiring 

a prescription in order to be dispensed 

other than controlled substances during 

the EHR reporting period. 

• Numerator: The number of 

prescriptions in the denominator 

generated and transmitted 

electronically. 

• Threshold: The resulting percentage 

must be more than 40 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. 

As addressed in other objectives and 

in comment response, this objective and 

associated measure do not apply to any 

EP who writes fewer than one hundred 

prescriptions during the EHR reporting 

period, as described previously in this 

section under our discussion of whether 

certain EP, eligible hospital or CAH can 

meet all Stage 1 meaningful use 

objectives given established scopes of 

practices. 

NPRM EP/Eligible Hospital Objective: 

Maintain active medication list. 

Comment: Commenters requested 

clarification of the term ‘‘active 

medication list.’’ 

Response: We define an active 

medication list as a list of medications 

that a given patient is currently taking. 

After consideration of the public 

comments received, we are finalizing 

this objective for EPs at § 495.6(d)(5)(i) 

and for eligible hospitals and CAHs at 

§ 495.6(f)(4)(i) of our regulations as 

proposed. 

We include this objective in the core 

set as it is integral to the initial or ongoing management of a patient’s current 

or future healthcare and would give 

providers the necessary information to 

make informed clinical decisions for 

improved delivery of patient care. 

NPRM 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 of ‘‘none’’ if the patient 

is not currently prescribed any 

medication) recorded as structured data. 

As with the objective of maintaining 

a problem list, we clarify that the 

indication of ‘‘none’’ should distinguish 

between a blank list that is blank 


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because a patient is not on any known 

medications and a blank list because no 

inquiry of the patient has been made. As 

long as the indication accomplishes this 

goal and is structured data, we do not 

believe it is necessary to prescribe the 

exact terminology, preferring to leave 

that level of detail to the designers and 

users of certified EHR technology. 

Comment: Commenters stated that the 

measure should be replaced with a 

numerical count or attestation and that 

the threshold was too high for reasons 

including the lack of current electronic 

exchange of information, difficulty 

capturing information as structured data 

and lack of readiness of HIE 

infrastructure. 

Response: We are finalizing the use of 

a percentage for the reasons discussed 

previously in this section under our 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives. For the same 

reasons we explained under the 

discussion of up-to-date problem list, 

medication list is a functionality for 

which there is an existing standard of 

practice, it is foundational data capture 

function to make more advanced 

clinical processes possible, and 

complying is fundamentally within the 

provider’s control. Therefore, we 

maintain the reasonably high threshold 

of 80 percent because the existing 

infrastructure and expectations support 

this target. 

Comment: Commenters requested 

clarification as to whether the measure 

is limited to patients seen during the 

EHR reporting period. 

Response: Yes, the measure applies to 

all unique patients seen by the EP or 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

departments (POS 21 or 23) during the 

EHR reporting period. 

Comment: A few commenters 

expressed concern regarding the 

requirement that the entry must be 

recorded as ‘‘structured data.’’ The 

commenters state that there may not be 

a code for over the counter, 

homeopathic or herbal products and 

that would penalize the provider even 

though the data is collected and 

recorded. 

Response: The distinction between 

structured data and unstructured data 

applies to all types of information. 

Structured data is not fully dependent 

on an established standard. Established 

standards facilitate the exchange of the 

information across providers by 

ensuring data is structured in the same 

way. However, structured data within 

certified EHR technology merely 

requires the system to be able to identify 

the data as providing specific 

information. This is commonly 

accomplished by creating fixed fields 

within a record or file, but not solely 

accomplished in this manner. For 

example, in this case for it to be 

structured, if the patient is on aspirin, 

then that information should be in the 

system so that it can be automatically 

identified as a medication and not as an 

order, note, or anything else. An 

example of unstructured data would be 

the word aspirin, but no ability of the 

system to identify it as a medication. 

Comment: A few commenters pointed 

out their current health information 

system vendor does not utilize RxNorm 

as its standard. 

Response: This is a certification issue 

best addressed in the ONC final rule. 

We therefore have referred these 

comments to ONC for their 

consideration. 

Comment: We received comments 

suggesting that this requirement could 

create additional privacy/security 

concerns for patients who do not want 

all physicians and their clinical staff to 

have access to their entire medication 

history. Examples provided included 

antidepressant, antipsychotic or erectile 

dysfunction medications. 

Response: We are only concerned 

with medications that are known to the 

provider through querying the patient, 

their own records and the transfer of 

records from other providers. 

Meaningful use cannot address 

situations where the information is 

withheld from the EP, eligible hospital, 

or CAH by the patient or by other 

providers. We understand that some 

patients would prefer not to have their 

entire medical history available to all 

physicians and clinical staff. We also 

understand that laws in some states 

restrict the use and disclosure of 

information (including that related to 

medication) that may reveal that a 

patient has a specific health condition 

(for example, HIV). Recording data in a 

structured manner will facilitate the 

implementation of these preferences 

and policies in an electronic 

environment. It is easier to identify and 

potentially withhold specific data 

elements that have been recorded in a 

structured format than information 

recorded as free text. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(5)(ii) and for eligible 

hospitals at § 495.6(f)(4)(ii) of our 

regulations to ‘‘More than 80 percent of 

all unique patients seen by the EP or 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

departments (POS 21 or 23) have at least 

one entry (or an indication that the 

patient is not currently prescribed any 

medication) recorded as structured 

data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(d). The ability to 

calculate the measure is included in 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP or admitted to 

an eligible hospital’s or CAH’s inpatient 

or emergency departments (POS 21 or 

23) during the EHR reporting period. A 

definition of unique patient is discussed 

under the objective of CPOE. 

• Numerator: The number of patients 

in the denominator who have a 

medication (or an indication that the 

patient is not currently prescribed any 

medication) recorded as structured data. 

• Threshold: The resulting percentage 

must be more than 80 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. Detailed discussion 

of the more than 80 percent threshold 

can be found under the objective of 

maintaining an up-to-date problem list. 

We do not believe that any EP, eligible 

hospital or CAH would be in a situation 

where they would not need to know 

whether their patients are taking any 

medications. Therefore, there are no 

exclusions for this objective and its 

associated measure. 

NPRM EP/Eligible Hospital Objective: 

Maintain active medication allergy list. 

Comment: We received comments 

that limiting this list to medication 

allergies instead of all allergies was not 

consistent with efficient workflow and 

that all allergies should be housed in the 

same location within the EHR. 

Commenters also highlighted that lack 

of knowledge of other allergies such as 

latex and food allergies could lead to 

significant harm to the patient. 

Response: We agree that information 

on all allergies, including nonmedication allergies, provide relevant 

clinical quality data. However, while we 

agree that collecting all allergies would 

be an improvement, current medication 

allergy standards exists in a structured 

data format that may be implemented in 

Stage 1. We hope to expand this 

measurement to include all allergies as 

the standards evolve and expand to 

include non-medication allergies. We 

believe EP/eligible hospitals/CAHs 

should continue to document all 

allergies, regardless of origin, consistent 

with standard of care practice for that 

EP/eligible hospital/CAH. We encourage 


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them to work with the designers of their 

certified EHR technology to make this 

documentation as efficient and 

structured as possible. 

Comment: A commenter inquired 

why the Substance Registration System 

Unique Ingredient Identifier (UNII) was 

not indicated for use until 2013 yet the 

measure requires the information to be 

recorded as structured data. 

Response: Any standards for the 

structured vocabulary for medication 

allergies or other aspects of meaningful 

use are included in ONC final rule. 

Structured data does not require an 

established standard as discussed under 

the objective of maintaining a 

medication list. 

Comment: We received a few 

comments requesting a definition of 

‘‘allergy.’’ 

Response: We adopt the commonly 

held definition of an allergy as an 

exaggerated immune response or 

reaction to substances that are generally 

not harmful. The definition is derived 

from Medline Plus, a service of the U.S. 

National Library of Medicine and the 

National Institutes of Health. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use objective for EPs at 

495.6(d)(6)(i) and for eligible hospitals 

and CAHs at 495.6(f)(5)(i) as proposed. 

We include this objective in the core 

set as it is integral to the initial or ongoing management of a patient’s current 

or future healthcare and would give 

providers the necessary information to 

make informed clinical decisions for 

improved delivery of patient care. 

NPRM 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. 

Comment: Multiple commenters 

noted that ‘‘none’’ is not a typical value 

to describe the absence of allergies in 

medical documentation and should be 

replaced with ‘‘no known allergies 

(NKA),’’ ‘‘no known drug allergies 

(NKDA)’’ or ‘‘no known medication 

allergies (NKMA).’’ 

Response: Our intent is not to dictate 

the exact wording of the specific value. 

Rather we are focused on the overall 

goal of making a distinction between a 

blank list that is blank because a patient 

does not have known allergies and a 

blank list because no inquiry of the 

patient has been made or no information 

is available from other sources. As long 

as the indication accomplishes this goal 

and is structured data, we do not believe 

it is necessary to prescribe the exact 

terminology, preferring to leave that 

level of detail to the designers and users 

of certified EHR technology. 

Comment: Given that the measure is 

only a one time check for a single entry, 

one commenter questioned whether this 

measure truly constitutes maintenance 

of an ‘‘active’’ list. 

Response: We agree that this measure 

does not ensure that every patient under 

the care of every EP, eligible hospital, or 

CAH has an active or up-to-date 

medication list. However, not every EP 

comes in contact with the patient, and 

therefore has the opportunity to update 

the list. Nor do we believe that an EP, 

eligible hospital, or CAH should be 

required through meaningful use to 

update the list at every contact with the 

patient. There is also the consideration 

of the burden that reporting places on 

the EP, eligible hospital, or CAH. The 

measure as finalized ensures that the 

EP, eligible hospital, or CAH has not 

ignored having a medication allergy list 

for patients seen during the EHR 

reporting period and that at least one 

piece of information on medication 

allergies is presented to the EP, eligible 

hospital, or CAH. The EP, eligible 

hospital, or CAH can then use their 

judgment in deciding what further 

probing or updating may be required 

given the clinical circumstances at 

hand. Therefore, we are maintaining the 

measure of a one-time check for a single 

entry. 

Comment: Several commenters 

recommended eliminating the 

percentage measurement and allowing 

the provider to attest that active 

medication lists are maintained in the 

certified EHR technology. 

Response: We are retaining a 

percentage for the reasons discussed 

previously in this section under our 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives. For the same 

reasons we explained under the 

discussion of up-to-date problem list, 

medication-allergy list is a functionality 

for which there is an existing standard 

of practice, it is foundational data 

capture function to make more 

advanced clinical processes possible, 

and complying is fundamentally within 

the provider’s control. Therefore, we 

maintain the reasonably high threshold 

of 80 percent because the existing 

infrastructure and expectations support 

this target. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(6)(ii) and for eligible 

hospitals at § 495.6(f)(5)(ii) of our 

regulations to ‘‘More than 80 percent of 

all unique patients seen by the EP or 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

departments (POS 21 or 23) have at least 

one entry (or an indication that the 

patient has no known medication 

allergies) recorded as structured data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(e). The ability to 

calculate the measure is included in 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP or admitted to 

an eligible hospital’s or CAH’s inpatient 

or emergency departments (POS 21 or 

23) during the EHR reporting period. 

The definition of ‘‘a unique patient’’ is 

provided under the objective of CPOE. 

• Numerator: The number of unique 

patients in the denominator who have at 

least one entry (or an indication that the 

patient has no known medication 

allergies) recorded as structured data in 

their medication allergy list. 

• Threshold: The percentage must be 

more than 80 percent in order for an EP, 

eligible hospital, or CAH to meet this 

measure. Detailed discussion of the 

rationale more than 80 percent 

threshold can be found at under the 

objective of maintain an up-to-date 

problem list. 

We do not believe that any EP, 

eligible hospital or CAH would be in a 

situation where they would not need to 

know whether their patients have 

medication allergies and therefore do 

not establish an exclusion for this 

measure. 

NPRM EP Objective: Record the 

following demographics: Preferred 

language, insurance type, gender, race 

and ethnicity, and date of birth. 

NPRM Eligible Hospital Objective: 

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. 

In the proposed rule, we noted 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 maintain 

that proposal for the final rule. 

Comment: Some commenters 

requested clarification of whether all of 

the demographics are required and 

under what circumstances no indication 

might be acceptable. Examples of 

acceptable circumstances from 

commenters include patient 

unwillingness to report, language 


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barriers, and requirement to report 

ethnicity and/or race contrary to some 

state laws. 

Response: In general, we do require 

that all demographic elements that are 

listed in the objective be included in a 

patient’s record in certified EHR 

technology. However, we do not desire, 

nor could we require, that a patient 

provide this information if they are 

otherwise unwilling to do so. Similarly, 

we do not seek to preempt any state 

laws prohibiting EPs, eligible hospitals, 

or CAHs from collecting information on 

a patient’s ethnicity and race. Therefore 

if a patient declines to provide the 

information or if capturing a patient’s 

ethnicity or race is prohibited by state 

law, such a notation entered as 

structured data would count as an entry 

for purposes of meeting the measure. 

Comment: Several commenters asked 

for clarity on the definition of preferred 

language. Commenters also indicated 

that standards are in development (ISO 

639 and ANSIX12N Claim/Reporting 

Transaction). Some commenters also 

requested that we include the 

requirement that the EP, eligible 

hospital or CAH also communicate with 

the patient in their preferred language. 

Response: Preferred language is the 

language by which the patient prefers to 

communicate. This is just a record of 

the preference. We do not have the 

authority under the HITECH Act to 

require providers to actually 

communicate with the patient in his or 

her preferred language, and thus do not 

require EPs, eligible hospitals, and 

CAHs to do so in order to qualify as a 

meaningful EHR user as suggested by 

some commenters. In regards to 

standards, those would be adopted 

under the ONC final rule. 

Comment: Some commenters also 

requested clarity on the definition of 

race and ethnicity. Some commenters 

noted an Institute of Medicine report 

entitled ‘‘Race, Ethnicity and Language 

Data: Standardization for Health Care 

Quality Improvement’’, which makes 

recommendations for how to ask 

questions to collect information and 

builds on the OMB Standards for 

language, race and ethnicity. Some 

commenters were also concerned about 

situations where the available choices 

were not granular enough, did not 

properly account for mixed race and 

ethnicity, and when the patient did not 

know their ethnicity. 

Response: In the proposed rule, we 

said that EPs, eligible hospitals and 

CAHs, should use the race and ethnicity 

codes that follow current federal 

standards published by the Office of 

Management and Budget (http:// 

www.whitehouse.gov/omb/inforeg

_statpolicy/#dr). We continue to believe 

that these standards should be applied 

for purposes of implementing the Stage 

1 meaningful use objectives, but will 

consider whether alternative standards 

or additional clarification would be 

appropriate for future stages of 

meaningful use criteria. We believe it is 

beyond the scope of the definition of 

meaningful use to provide additional 

definitions for race and ethnicity 

beyond what is established by OMB. In 

regards to patients who do not know 

their ethnicity, EPs, eligible hospitals, 

and CAHs should treat these patients 

the same way as patients who decline to 

provide the race or ethnicity, that is, 

they should identify in the patient 

record that the patient declined to 

provide this information. 

Comment: Some commenters 

requested additional clarity on 

insurance type and others 

recommended the elimination of 

insurance type due to the complexity of 

insurance coverage, the function of the 

EHR as a medical tool and not a 

financial one, the volatility of this 

information due to patients frequently 

changing plans and concerns that 

information on a patient’s insurance 

status will have a possible behavioral 

influence on the providers if this 

information were presented. 

Response: Classifying insurance 

involves two distinctions—the source of 

coverage and insurance design. Source 

of coverage refers to the type of funding, 

such as public, private or self-pay. The 

design of the insurance program, such 

as health maintenance program (HMO), 

preferred provider organization (PPO), 

high-deductible consumer directed 

plan, fee-for-service, etc. Although not 

specified in the proposed rule, by 

insurance type we were referring to the 

first distinction—the source of funding 

for the insurance. We found two 

initiatives that could provide clarity on 

type. The first is the ‘‘Source of Payment 

Typology’’ developed by the Public 

Health Data Standards Consortium 

(http://www.phdsc.org/standards/payertypology.asp). The consortium is 

currently in the process of working with 

States to implement this typology. The 

other initiative is established in the 

Uniform Data Set (UDS) collected by 

HRSA (http://www.hrsa.gov/datastatistics/health-center-data/ 

index.html). The information in the 

UDS contains several caveats, however, 

that make it difficult to be used by all 

EPs, eligible hospitals and CAHs, and it 

does not accommodate patients with 

multiple types of insurance such as 

those dually eligible for Medicare and 

Medicaid or for those with both 

Medicare and MediGap coverage. Many 

EHRs that currently report on HRSA 

UDS Insurance Type standards account 

for multiple types of insurance by 

maintaining separate Reporting 

Insurance Groups and deriving the 

Insurance Type data from the primary 

insurance company on the encounter 

and mappings to that Insurance Type 

Reporting Group. This information is 

documented at the patient demographic 

level or the patient encounter/progress 

note. Given the complexity of defining 

insurance type and attributing it to 

patients in an agreed upon way, we are 

eliminating ‘‘insurance type’’ from this 

meaningful use objective. 

Comment: A minority of commenters 

commenting on this objective 

recommended that CMS remove cause 

of death from the objective for eligible 

hospitals. The most common rationale is 

that the coroner or medical examiner 

officially determines cause of death 

when the case is referred to them. By 

law, the hospital cannot declare a cause 

of death in these cases. 

Response: When a patient expires, in 

the routine hospital workflow, a 

clinician evaluates the patient to 

pronounce the patient’s death. The 

clinician typically documents in the 

patient’s chart, the sequence of events 

leading to the patient’s death, conducts 

the physical exam and makes a 

preliminary assessment of the cause of 

death. We are requiring that eligible 

hospitals record in the patient’s EHR the 

clinical impression and preliminary 

assessment of the cause of death, and 

not the cause of death as stated in any 

death certificate issued by the 

Department of Health or the coroner’s 

office. 

Comment: A few commenters 

requested inclusion of Advanced 

Directives under this objective as 

recommended by the HIT Policy 

Committee. 

Response: We discuss advance 

directives separately in this final rule 

under its own objective. 

Comment: Several commenters 

recommended requiring the submission 

of the demographic data to CMS. 

Response: Stage 1 of meaningful use 

seeks to ensure certified EHR 

technology has the capability to record 

demographic information and that those 

capabilities are utilized. We believe the 

information recorded for this measure is 

for provider use in the treatment and 

care of their patients and therefore 

should not be submitted to CMS at this 

time. 

Comment: Commenters suggested 

requiring the use of the demographic 

data from this measure to stratify 

clinical quality measure reporting and 


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the generation of reports for patient 

outreach and quality initiatives. 

Response: While we encourage all 

providers and EHR developers to work 

together to develop reporting from the 

EHR system for use in the improvement 

of population and public health, for 

purposes of becoming a meaningful EHR 

user in Stage 1, we only require the 

recording of the specified 

demographics. 

After consideration of the public 

comments received, we are modifying 

meaningful use objective at 

§ 495.6(d)(7)(i) of our regulations for EPs 

to ‘‘Record the following demographics: 

Preferred language, gender, race and 

ethnicity, and date of birth’’. 

After consideration of the public 

comments received, we are modifying 

meaningful use objective at 

§ 495.6(f)(6)(i) of our regulations for 

eligible hospitals and CAHs to ‘‘Record 

the following demographics: Preferred 

language, gender, race and ethnicity, 

date of birth, and date and preliminary 

cause of death in the event of mortality 

in the eligible hospital or CAH’’. 

We include this objective in the core 

set as it is integral to the initial or ongoing management of a patient’s current 

or future healthcare, recommended by 

the HIT Policy Committee and would 

give providers the necessary 

information to make informed clinical 

decisions for improved delivery of 

patient care. 

NPRM 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. 

Comment: Commenters said that this 

should be replaced with a count or 

attestation or alternatively that the 

threshold was too high. 

Response: We are maintaining a 

percentage for the reasons discussed 

previously in this section under our 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives. However, we 

do reduce the threshold to over 50 

percent as this objective meets the 

criteria of relying 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. In contrast to 

our discussion of maintaining an up-todate problem list/medication list/ 

medication allergy list, we believe that 

some demographic elements (especially 

race, ethnicity and language) are not as 

straightforward to collect as objective 

data elements and therefore the 

standard of practice for demographic 

data is still evolving. As we believe this 

measure may not be within current 

standard of practice, we are adopting 

the lower threshold of 50 percent (rather 

than 80 percent). 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(7)(ii) and for eligible 

hospitals at § 495.6(f)(6)(ii) of our 

regulations to ‘‘More than 50 percent of 

all unique patients seen by the EP or 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) have 

demographics recorded as structured 

data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(c) for EPs and 45 CFR 

170.304(b) for eligible hospitals and 

CAHs. The ability to calculate the 

measure is included in certified EHR 

technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP or admitted to 

an eligible hospital’s or CAH’s inpatient 

or emergency departments (POS 21 or 

23) during the EHR reporting period. A 

unique patient is discussed under the 

objective of CPOE. 

• Numerator: The number of patients 

in the denominator who have all the 

elements of demographics (or a specific 

exclusion if the patient declined to 

provide one or more elements or if 

recording an element is contrary to state 

law) recorded as structured data. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital or CAH to 

meet this measure. Most EPs and all 

eligible hospitals and CAHs would have 

access to this information through direct 

patient access. Some EPs without direct 

patient access would have this 

information communicated as part of 

the referral from the EP who identified 

the service as needed by the patient. 

Therefore, we did not include an 

exclusion for this objective and 

associated measure. 

NPRM EP/Eligible Hospital Objective: 

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. 

In the proposed rule, we described 

why we included growth charts in this 

objective. The reason given was that 

BMI was not a sufficient marker for 

younger children. 

Comment: Over two thirds of the 

commenters commenting on this 

objective expressed concern about the 

applicability of the listed vital signs to 

all provider types and care settings. 

Response: While this objective could 

be met by receiving this information 

from other providers or non-provider 

data sources, we recognize that the only 

guaranteed way for a provider to obtain 

this information is through direct 

patient interaction and that this 

information is not always routinely 

provided from the EP ordering a service 

because of a direct patient interaction. 

EPs who do not see patients 2 years or 

older would be excluded from this 

requirement as described previously in 

this section under our discussion of 

whether certain EP, eligible hospital or 

CAH can meet all Stage 1 meaningful 

use objectives given established scopes 

of practices. We would also allow an EP 

who believes that measuring and 

recording height, weight and blood 

pressure of their patients has no 

relevance to their scope of practice to so 

attest and be excluded. 

Comment: Several commenters stated 

this objective should be removed in 

favor of clinical quality measures 

addressing BMI and blood pressure as 

these measures serve the same purpose 

and to require both is to require 

duplicative reporting. 

Response: We disagree that these two 

measures serve the same purpose and 

therefore that the measure should be 

eliminated in favor of clinical quality 

measures addressing BMI and blood 

pressure. The objective included here 

seeks to ensure that information on 

height, weight and blood pressure and 

the extractions based on them are 

included in the patient’s record. 

Furthermore, the objective seeks to 

ensure that the data is stored in a 

structured format so that it can be 

automatically identified by certified 

EHR technology for possible reporting 

or exchanging. We also note that the 

clinical quality measure focuses on a 

smaller subset of the patient population. 

After consideration of the public 

comments received, we are finalizing 

the objective for EPs at 495.6(d)(8)(i) 

and for eligible hospitals and CAHs at 

495.6(f)(7)(i) as proposed. 

We include this objective in the core 

set as it is integral to the initial or ongoing management of a patient’s current 

or future healthcare and would give 

providers the necessary information to 

make informed clinical decisions for 

improved delivery of patient care. 

NPRM 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, 


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record blood pressure and BMI; 

additionally, plot growth chart for 

children age 2 to 20. 

Comment: Commenters suggested 

replacement of the percentage 

measurement with a count or attestation 

or alternatively that that the threshold 

was too high. 

Response: We are retaining a 

percentage for the reasons discussed 

previously in this section under our 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives. However, we 

did reduce the threshold from 80 

percent to greater than 50 percent as this 

objective meets the criteria of relying 

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. In addition, in contrast to 

the measures associated with 

maintaining an up-to-date problem list, 

an active medication list, and an active 

medication-allergy list, we believe that 

for many specialties, the current 

practice on vital signs may not be as 

well-established. We believe there may 

not be the same level of consensus 

regarding the relevance to patient care 

of vital signs for many specialties and 

the frequency with which such vital 

signs should be collected. Thus, for this 

measure, we adopt a percentage of 50 

percent, rather than 80 percent. 

Comment: Commenters requested 

clarification of the frequency and 

methods of recording the vital signs 

included in the measure. 

Response: As discussed in the 

objective, the EP/eligible hospital/CAH 

is responsible for height, weight and 

blood pressure so we will focus our 

discussion on those items. First, we do 

not believe that all three must be 

updated by a provider at every patient 

encounter nor even once per patient 

seen during the EHR reporting period. 

For this objective we are primarily 

concerned that some information is 

available to the EP/eligible hospital/ 

CAH, who can then make the 

determination based on the patient’s 

individual circumstances as to whether 

height, weight and blood pressure needs 

to be updated. The information can get 

into the patient’s medical record as 

structured data in a number of ways. 

Some examples include entry by the EP/ 

eligible hospital/CAH, entry by someone 

on the EP/eligible hospital/CAH’s staff, 

transfer of the information electronically 

or otherwise from another provider or 

entered directly by the patient through 

a portal or other means. The measure 

hinges on access of the information. 

Therefore, any EP/eligible hospital/CAH 

that sees/admits the patient and has 

access to height, weight and blood 

pressure information on the patient can 

put that patient in the numerator. 

Comment: Some commenters 

requested clarification regarding the role 

of both the EP/eligible hospital/CAH 

and the certified EHR technology for the 

calculation of BMI and the plotting and 

displaying of growth charts. Other 

commenters recommended the 

exclusion of growth charts for certain 

patients and care settings. Another 

commenter also expressed the desire for 

the exclusion of growth charts for 

patients over the age of 18, inpatient 

care settings and more specifically, nonpediatric inpatient care settings. 

Response: We believe a clarification is 

in order about which of the listed vital 

signs are data inputs to be collected by 

the EP/eligible hospital/CAH and which 

are calculations made by the certified 

EHR technology. The only information 

required to be inputted by the provider 

is the height, weight and blood pressure 

of the patient. The certified EHR 

technology will calculate BMI and the 

growth chart if applicable to patient 

based on age. As this requirement 

imposes no duty or action on the 

provider, we see no reason to limit its 

availability to any EP, eligible hospital, 

or CAH based on setting or other 

consideration. Concerns on presentation 

and interface are best left to designers of 

certified EHR technology and users. 

Finally, as certified EHR technology is 

able to automatically generate BMI and 

the growth chart if height and weight 

are entered as structured data we see no 

reason to include BMI and growth chart 

in the measure. We therefore will limit 

the final measure to data requiring 

provider data entry points. 

Comment: A few commenters 

suggested that ‘‘reported height’’ by the 

patient should be acceptable when 

measurement is not appropriate such as 

in the case of severe illness. 

Response: We agree and would allow 

height self-reported by the patient to be 

used. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

495.6(d)(8)(ii) and for eligible hospitals 

§ 495.6(f)(7)(ii) of our regulations to ‘‘For 

more than 50 percent of all unique 

patients age 2 and over seen by the EP 

or admitted to eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23), height, 

weight and blood pressure are recorded 

as structured data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(f). The ability to 

calculate the measure is included in 

certified EHR technology. 

As noted previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives, 

the percentage is based on patient 

records that are maintained using 

certified EHR technology. To calculate 

the percentage, CMS and ONC have 

worked together to define the following 

for this objective: 

• Denominator: Number of unique 

patients age 2 or over seen by the EP or 

admitted to an eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) during the 

EHR reporting period. A unique patient 

is discussed under the objective of 

CPOE. 

• Numerator: The number of patients 

in the denominator who have at least 

one entry of their height, weight and 

blood pressure are recorded as structure 

data. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. As addressed in 

other objectives and in comment 

response, an EP who sees no patients 2 

years old or younger would be excluded 

from this requirement as described 

previously in this section under our 

discussion of whether certain EP, 

eligible hospital or CAH can meet all 

Stage 1 meaningful use objectives given 

established scopes of practices. We 

would also allow an EP who believes 

that all three vital signs of height, 

weight and blood pressure have no 

relevance to their scope of practice to so 

attest and be excluded. However, we 

believe this attestation and exclusion 

from recording height, weight, and 

blood pressure does not hold for other 

patient specific information collection 

objectives, like maintaining an active 

medication allergy list. We do not 

believe that any EP would encounter a 

situation where the patient’s active 

medication and allergy list is not 

pertinent to care and therefore would be 

outside of the scope of work for an EP. 

We believe the exclusion based on EP 

determination of their scope of practice 

for the record vital signs objective, as 

written in Stage 1, should be studied for 

relevance in further stages. We do not 

believe eligible hospitals or CAHs 

would ever only have a patient 

population for patients 2 years old or 

younger or that these vital signs would 

have no relevance to their scope of 

practice. Therefore, we do not include 

an exclusion for eligible hospitals or 

CAHs. 


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NPRM EP/Eligible Hospital Objective: 

Record smoking status for patients 13 

years old or older 

In the proposed rule, we explained 

that we believe it is necessary to add an 

age restriction to this objective as we do 

not believe this objective is applicable 

to patients of all ages and there is no 

consensus in the health care community 

as to what the appropriate cut off age 

may be. We encouraged comments on 

whether this age limit should be 

lowered or raised. We received many 

comments on the age limit and address 

them below. 

Comment: Several commenters 

requested a different age limitation. 

Commenters suggested ages anywhere 

between 5 years old up to 18 years old. 

Response: For the purposes of this 

objective and for meaningful use, our 

interest is focused on when a record of 

smoking status should be in every 

patient’s medical record. Recording 

smoking status for younger patients is 

certainly not precluded. We do believe 

there would be situations where an EP/ 

eligible hospital/CAH’s knowledge 

about other risk factors would indicate 

that they should inquire about smoking 

status if it is unknown for patients 

under 13 years old. However, in order 

to accurately measure and thereby 

assure meaningful use, for this objective 

we believe that the age limit needs to be 

high enough so that the inquiry is 

appropriate for all patients. Therefore, 

we are maintaining the age limitation at 

13 years old or older. 

Comment: Some commenters 

suggested expanding smoking status to 

any type of tobacco use. 

Response: While we agree that an 

extended list covering other types of 

tobacco use may provide valuable 

insight for clinical care for certified EHR 

technology ONC has adopted the CDC’s 

NHIS standard recodes for smoking 

status. This will provide a standard set 

of questions across providers and 

standardize the data. The extended list 

does not make the collection of multiple 

survey questions clear. For example, a 

patient may be a current tobacco user as 

well as a smoker. For these reason in 

Stage 1 we will use the standards 

adopted by ONC for certified EHR 

technology at 45 CFR 170.302(g). For 

future stages, we will review this 

measure for possible inclusion of other 

questions. This is a minimum set. We 

do not intend to limit developers of EHR 

technology from creating more specific 

fields or to limit EPs/eligible hospitals/ 

CAHs from recording more specific 

information. 

Comment: We also received 

comments requesting that second-hand 

smoking be included in the objective for 

children and adolescents. 

Response: Including second-hand 

smoking introduces much more 

variability into the objective as to what 

constitutes a level of exposure and 

difficulty in measuring it successfully 

with different age limits to different 

aspects. For instance, how much 

exposure is acceptable for a given age 

and how is such exposure determined? 

How would these differing requirements 

be accounted for by certified EHR 

technology? As with the change from 

smoking status to tobacco use, we 

believe this introduces an unacceptable 

level of complexity for Stage 1 of 

meaningful use. For Stage 1 of 

meaningful use we are not adding 

second hand smoke exposure to this 

objective. However, we remind EPs, 

eligible hospitals and CAHs that nothing 

about the criteria for meaningful use 

prevents them from working with their 

EHR developer to ensure that their EHR 

system meets their needs and the needs 

of their patient population. We 

encourage all EPs, eligible hospitals and 

CAHs to critically review their 

implementation in light of their current 

and future needs both to maximize their 

own value and to prepare for future 

stages of meaningful use. 

Comment: We received comments 

asking at what frequency the 

information must be recorded and 

whether the information can be 

collected by support staff. 

Response: We clarify that this is a 

check of the medical record for patients 

13 years old or older. If this information 

is already in the medical record 

available through certified EHR 

technology, we do not intend that an 

inquiry be made every time a provider 

sees a patient 13 years old or older. The 

frequency of updating this information 

is left to the provider and guidance is 

provided already from several sources 

in the medical community. The 

information could be collected by any 

member of the medical staff. 

Comment: We received a number of 

comments recommending either 

removing this objective to record 

smoking status from the HIT 

functionality objectives or removing the 

smoking measure from the core clinical 

quality measures as these measures 

serve the same purpose and to require 

both is to require duplicative reporting. 

Response: We disagree that these two 

measures serve the same purpose and 

therefore only one should be included. 

The objective included here seeks to 

ensure that information on smoking 

status is included in the patient’s 

record. Furthermore, that the 

information is stored in a structured 

format so that it can automatically be 

identified by certified EHR technology 

as smoking status for possible reporting 

or exchanging. We also note that the 

clinical quality measure only focuses on 

patients 18 years or older, while the 

objective focuses on patients 13 years or 

older. In addition, many quality 

measures related to smoking are 

coupled with follow-up actions by the 

provider such as counseling. We 

consider those follow-up actions to be 

beyond the scope of what we hope to 

achieve for this objective for Stage 1 of 

meaningful use. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use objective for EPs at 

§ 495.6(d)(9)(i) and for eligible hospitals 

at § 495.6(f)(8)(i) of our regulations as 

proposed. 

We include this objective in the core 

set as it is integral to the initial or ongoing management of a patient’s current 

or future healthcare and would give 

providers the necessary information to 

make informed clinical decisions for 

improved delivery of patient care. 

NPRM 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. 

In the proposed rule, discussion of 

this measure referenced other sections 

exclusively. 

Comment: We received comments 

recommending alternative thresholds 

for this measure. Commenters provided 

thresholds ranging from anything 

greater than zero to 60 percent in stage 

1. 

Response: In the proposed rule, we 

established a consistent threshold for 

measures not requiring the exchange of 

information. For the final rule, (other 

than up-to-date problem list, active 

medication list and active medicationallergy list), we have lowered the 

threshold associated with these 

measures to 50 percent. In our 

discussion of the objective, we noted 

many concerns by commenters over the 

appropriate age at which to inquire 

about smoking status. There were also 

considerable differences among 

commenters as to what the appropriate 

inquiry is and what it should include. 

Due to these concerns, we do not 

believe this objective and measure fit 

into the threshold category described 

under up-to-date problem lists and 

therefore we adopt a 50 percent (rather 

than an 80 percent) threshold for this 

measure. After consideration of the 

public comments received, we are 

modifying the meaningful use measure 

for EPs at § 495.6(d)(9)(ii) and for 

eligible hospitals at § 495.6(f)(8)(ii) of 


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our regulations to ‘‘More than 50 percent 

of all unique patients 13 years old or 

older seen by the EP or admitted to the 

eligible hospital’s or CAH’s inpatient or 

emergency departments (POS 21 or 23) 

have smoking status recorded as 

structured data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(g). The ability to 

calculate the measure is included in 

certified EHR technology. 

As noted previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives, 

the percentage is based on patient 

records that are maintained using 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients age 13 or older seen by the EP 

or admitted to an eligible hospital’s or 

CAH’s inpatient or emergency 

departments (POS 21 or 23) during the 

EHR reporting period. A unique patient 

is discussed under the objective of 

maintaining an up-to-date problem list. 

• Numerator: The number of patients 

in the denominator with smoking status 

recorded as structured data. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. As addressed in 

other objectives, EPs, eligible hospitals 

or CAHs who see no patients 13 years 

or older would be excluded from this 

requirement as described previously in 

this section under our discussion of 

whether certain EP, eligible hospital or 

CAH can meet all Stage 1 meaningful 

use objectives given established scopes 

of practices. Most EPs and all eligible 

hospitals and CAHs would have access 

to this information through direct 

patient access. Some EPs without direct 

patient access would have this 

information communicated as part of 

the referral from the EP who identified 

the service as needed by the patient. 

Therefore, we did not include an 

exclusion based on applicability to 

scope of practice or access to the 

information for this objective and 

associated measure. 

NPRM EP/Eligible Hospital Objective: 

Record advance directives. 

In the proposed rule, we discussed 

this objective, but did not propose it as 

a requirement for demonstrating 

meaningful use, for a number of reasons, 

including: (1) It was unclear whether 

the objective would be met by 

indicating that an advance directive 

exists or by including the contents of 

the advance directive; (2) the objective 

seems relevant only to a limited and 

undefined patient population when 

compared to the patient populations to 

which other objectives of Stage 1 of 

meaningful use apply; and (3) we 

believe that 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 require information 

about a patient’s advance directive only 

in rare circumstances. 

Comment: We received several 

comments including a comment from 

the HIT Policy Committee that we 

should include advance directives in 

the final rule. The HIT Policy 

Committee clarified that this would be 

an indication of whether a patient has 

an advanced directive. Furthermore, 

they recommend limiting this measure 

to patients 65 and older. We received 

other comments that said this should be 

a requirement for eligible hospitals. 

Other commenters reported that having 

this information available for the patient 

would allow eligible hospitals to make 

decisions that were better aligned with 

the patient’s expressed wishes. 

Response: In the proposed rule, we 

said that confusion as to whether this 

objective would require an indication of 

the existence of an advanced directive 

or the contents of the advance directive 

itself would be included in certified 

EHR technology was one of the reasons 

for not including the objective in Stage 

1 of meaningful use. We expressed 

concerns that the latter would not be 

permissible in some states under 

existing state law. As commenters have 

clarified that advance directives should 

be just an indication of existence of an 

advance directive and recommended a 

population to apply the measure to, we 

reinstate this objective for eligible 

hospitals and CAHs. We believe that the 

concern over potential conflicts with 

state law are alleviated by limiting this 

to just an indication. We also believe 

that a restriction to a more at risk 

population is appropriate for this 

measure. By restricting the population 

to those 65 years old and older, we 

believe we focus this objective 

appropriately on a population likely to 

most benefit from compliance with this 

objective and its measure. This objective 

is in the menu set so if an eligible 

hospital or CAH finds they are unable 

to meet it then can defer it. However, we 

believe 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 

require information about a patient’s 

advance directive in rare circumstances. 

For other meaningful use objectives, we 

have focused our exclusions on rare 

situations, which would not be the case 

for this objective. Therefore, we do not 

include this objective for EPs. 

After consideration of the public 

comments received, we are including 

this meaningful use objective for eligible 

hospitals and CAHs at § 495.6(g)(2)(i) of 

our regulations as ‘‘Record whether a 

patient 65 years old or older has an 

advanced directive as structured data ’’. 

NPRM EP/Eligible Hospital Measure: 

N/A. 

While we did not receive specific 

percentage recommendations from 

commenters, this objective is the 

recording of a specific data element as 

structured data in the patient record. 

This is identical to other objectives with 

established measures such as, recording 

vital signs, recording demographics and 

recording smoking status. Therefore, we 

adopt the measure format and the lower 

threshold (50 percent) from those 

objectives. We also believe that this 

information is a level of detail that is 

not practical to collect on every patient 

admitted to the eligible hospital’s or 

CAH’s emergency department, and 

therefore, have limited this measure 

only to the inpatient department of the 

hospital. 

In the final rule, this meaningful use 

measure for eligible hospitals at 

§ 495.6(g)(2)(ii) of our regulations: ‘‘More 

than 50 percent of all unique patients 65 

years old or older admitted to the 

eligible hospital’s or CAH’s inpatient 

department (POS 21) have an indication 

of an advance directive status recorded 

as structured data’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.306(h). The ability to 

calculate the measure is included in 

certified EHR technology. 

As noted previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives, 

the percentage is based on patient 

records that are maintained using 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients age 65 or older admitted to an 

eligible hospital’s or CAH’s inpatient 

department (POS 21) during the EHR 


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reporting period. A unique patient is 

discussed under the objective of CPOE. 

• Numerator: The number of patients 

in the denominator with an indication 

of an advanced directive entered using 

structured data. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for eligible hospital or CAH to meet this 

measure. An exclusion, as described 

previously in this section under our 

discussion of whether certain EP, 

eligible hospital or CAH can meet all 

Stage 1 meaningful use objectives given 

established scopes of practices, would 

apply to an eligible hospital or CAH 

who admits no patients 65 years old or 

older during the EHR reporting period. 

NPRM EP/Eligible Hospital Objective: 

Incorporate clinical lab-test results into 

EHR as structured data. 

In the proposed rule, we defined 

structured data as data that has a 

specified data type and response 

categories within an electronic record or 

file. We have revised that definition for 

the final rule as discussed below. 

Comment: Some commenters 

requested clarification on what 

constitutes structured data. 

Response: The distinction between 

structured data and unstructured data 

applies to all types of information. 

Structured data is not fully dependent 

on an established standard. Established 

standards facilitate the exchange of the 

information across providers by 

ensuring data is structured in the same 

way. However, structured data within 

certified EHR technology merely 

requires the system to be able to identify 

the data as providing specific 

information. This is commonly 

accomplished by creating fixed fields 

within a record or file, but not solely 

accomplished in this manner. 

After consideration of the public 

comments received, we finalize the 

meaningful use objective or EPs at 

§ 495.6(e)(2)(i) and eligible hospitals 

and CAHs at § 495.6(g)(3)(i) as 

proposed. 

NPRM 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 either in a 

positive/negative or numerical format 

are incorporated in certified EHR 

technology as structured data. 

In the proposed rule, we identified 

this objective and associated measure as 

dependent on electronic exchange and 

therefore requiring special consideration 

in establishing the threshold. We said 

that we are cognizant that in most areas 

of the country, the infrastructure 

necessary to support such exchange is 

still being developed. Therefore, we 

stated our belief that 80 percent is too 

high a threshold for the Stage 1 criteria 

of meaningful use. As an alternative, we 

proposed 50 percent as the threshold 

based on our discussions with EHR 

vendors, current EHR users, and 

laboratories. We then invited comment 

on whether 50 percent is feasible for the 

Stage 1 criteria of meaningful use. 

Finally, we indicated that we anticipate 

raising the threshold in future stages of 

meaningful use as the capabilities of 

HIT infrastructure increase. We received 

several comments on the 

appropriateness of this 50 percent 

threshold and discuss them in the 

comment and response section below. 

Comment: Commenters requested 

clarification as to whether the measure 

includes only electronic exchange of 

information with a laboratory or if it 

also includes manual entry. 

Response: We encourage every EP, 

eligible hospital and CAH to utilize 

electronic exchange of the results with 

the laboratory based on the certification 

and standards criteria in the 45 CFR 

170.302(h). If results are not received in 

this manner, then they are presumably 

received in another form such as fax, 

telephone call, mail, etc. These results 

then must be incorporated into the 

patient’s medical record in some way. 

We encourage that this way use 

structured data; however, that raises the 

concerns about the possibility of 

recording the data twice; for example 

scanning the results and then entering 

the results as structured data. 

Telephoned results could be entered 

directly. We also recognize the risk of 

entry error, which is why we highly 

encourage the electronic exchange of the 

results with the laboratory, instead of 

manual entry through typing, option 

selecting, scanning or other means. 

Reducing the risk of entry error is one 

of the primary reasons we lowered the 

measure threshold for Stage 1 during 

which providers are changing their 

workflow processes to accurately 

incorporate information into EHRs 

through either electronic exchange or 

manual entry. However, for this 

measure, we do not limit the EP, eligible 

hospital or CAH to only counting 

structured data received via electronic 

exchange, but count in the numerator all 

structured data. By entering these 

results into the patient’s medical record 

as structured data, the EP, eligible 

hospital or CAH is accomplishing a task 

that must be performed regardless of 

whether the provider is attempting to 

demonstrate meaningful use or not. We 

believe that entering the data as 

structured data encourages future 

exchange of information. 

Comment: A majority of commenters 

commenting on this measure believe the 

proposed 50 percent threshold is too 

high. Suggestions for alternative 

thresholds ranged from more than zero 

to eighty percent. Some commenters 

suggested that the percentage 

calculation be replaced with a numeric 

count. 

Response: We are finalizing a 

percentage calculation for the reasons 

discussed previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives. 

We based the 50 percent threshold in 

the proposed rule on our discussions 

with EHR vendors, current EHR users, 

and laboratories and specifically 

requested comment on whether the 50 

percent threshold was feasible. While 

only a small number of commenters 

commented on this objective, those that 

did were overwhelming in favor of 

either a count or a lower threshold. EPs 

especially were concerned with our 

inability to impose any requirements on 

laboratory vendors. Based on the 

comments received, we have modified 

our assessment of the current 

environment for incorporating lab 

results into certified EHR technology, 

and believe that a threshold lower than 

fifty percent is warranted. We want to 

create a threshold that encourages, but 

does not require, the electronic 

exchange of this information and 

commenters indicated that 50 percent 

was too high given the current state of 

electronic exchange of lab results. 

Therefore, we lower the threshold to 40 

percent. 

Comment: Commenters requested 

clarification on what types of 

laboratories could generate the lab 

results. 

Response: The focus of this objective 

is to get as many lab results as possible 

into a patient’s electronic health record 

as structured data. Limiting the 

objective to a specific type of laboratory 

would not further this objective so 

therefore we leave it open to all lab tests 

and laboratories. 

Comment: Several commenters 

expressed concern regarding the 

financial burden of establishing lab 

interfaces, especially for smaller 

hospitals and practices. 

Response: The ability to exchange 

information is a critical capability of 

certified EHR technology. Exchange 

between lab and provider and provider 

to provider of laboratory results reduces 

errors in recording results and prevents 

the duplication of testing. Therefore, we 

continue to include this objective 

within Stage 1 of meaningful use 

although as noted above the measure 


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does not rely on the electronic exchange 

of information between the lab and the 

provider. 

Comment: We received comments 

requesting a listing of laboratory tests 

with results that are in a numerical or 

positive/negative format. 

Response: We consider it impractical 

to develop an exhaustive list of such 

tests. Moreover, we believe further 

description of these tests is unnecessary. 

It should be self-evident to providers 

when a test returns a positive or 

negative result or a result expressed in 

numeric characters. In these case, the 

results should be incorporated into a 

patient’s EHR as structured data. 

Comment: Several commenters 

pointed out that many current EHR 

vendors do not support the use of 

LOINC® codes and there is no federal 

regulatory requirement for labs to 

transmit using this code set or for that 

matter, any structured code set. 

Response: Standards such as LOINC®

codes are included in the ONC final 

rule. However, this measure requires 

incorporation of lab test results as 

structured data, but does not include a 

requirement for transmission or 

electronic receipt of the results using 

certified EHR technology. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(e)(2)(ii) and eligible hospitals at 

§ 495.6(g)(3)(ii) of our regulations to 

‘‘More than 40 percent of all clinical lab 

tests results ordered by the EP or by an 

authorized provider of the eligible 

hospital or CAH for patients admitted to 

its inpatient or emergency department 

(POS 21 or 23) 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’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(h). The ability to 

calculate the measure is included in 

certified EHR technology. 

As noted previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices, 

the percentage is based on labs ordered 

for patients whose records are 

maintained using certified EHR 

technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of lab tests 

ordered during the EHR reporting 

period by the EP or authorized 

providers of the eligible hospital or CAH 

for patients admitted to an eligible 

hospital’s or CAH’s inpatient or 

emergency department (POS 21 & 23) 

whose results are expressed in a 

positive or negative affirmation or as a 

number. 

• Numerator: The number of lab test 

results whose results are expressed in a 

positive or negative affirmation or as a 

number which are incorporated as 

structured data. 

• Threshold: The resulting percentage 

must be more than 40 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. 

If an EP orders no lab tests whose 

results are either in a positive/negative 

or numeric format during the EHR 

reporting period they would be 

excluded from this requirement as 

described previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices. 

We do not believe any eligible hospital 

or CAH would order no lab tests whose 

results are either in a positive/negative 

or numeric format during the EHR 

reporting period. 

NPRM EP/Eligible Hospital Objective: 

Generate lists of patients by specific 

conditions to use for quality 

improvement, reduction of disparities, 

research, and outreach. 

Comment: A few commenters 

recommended eliminating this 

requirement because they believe it is 

redundant of clinical quality reporting. 

Response: We disagree that this is 

redundant of clinical quality reporting. 

Clinical quality reporting does not 

guarantee usability for all the purposes 

in the objective. One example of such a 

use is a provider could not only 

generate list of patients with specific 

conditions, but could stratify the output 

using other data elements in the 

certified EHR technology that are 

entered as structured data. The lists 

could also be utilized at an aggregate 

level for purposes of research into 

disparities, which could result in 

targeted outreach efforts. 

Comment: Some commenters 

requested that if we finalize our 

proposal to only require one report that 

we change the ‘‘and’’ in the objective to 

‘‘or’’. 

Response: We are finalizing our 

measurement of only requiring one 

report for Stage 1 of meaningful use and 

will change ‘‘and’’ to ‘‘or’’. However, we 

note that all measures will be 

reconsidered in later stages of 

meaningful use and multiple reports 

could be required in those stages. 

Comment: We received a few 

comments requesting the removal of the 

terms ‘‘reduction of disparities’’ and 

‘‘outreach’’ as there are no actionable 

items or measures associated with the 

term. We also received comments that 

the measurement should include the 

requirement that the lists be stratified by 

race, ethnicity, preferred language, and 

gender for initiatives targeted at 

reducing disparities. 

Response: We disagree that actions to 

reduce disparities or conduct outreach 

could not be guided by this report, 

especially if stratified and aggregated 

reports of many providers are combined 

within large organizations or among 

organizations. While we do not require 

such stratification or aggregation or 

specify specific uses, that does not 

preclude them. 

Comment: Some commenters 

requested clarification of the term 

specific condition. 

Response: Specific conditions are 

those conditions listed in the active 

patient problem list. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(e)(3)(i) and for eligible hospitals 

at § 495.6(g)(4)(i) of our regulations to 

‘‘Generate lists of patients by specific 

conditions to use for quality 

improvement, reduction of disparities, 

research, or outreach’’. 

NPRM EP/Eligible Hospital Measure: 

Generate at least one report listing 

patients of the EP or eligible hospital 

with a specific condition. 

In the proposed rule, we said that 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. However, in order to ensure 

the capability can be utilized we 

proposed to require EPs and hospitals to 

attest to the ability of the EP or eligible 

hospital to create a report listing 

patients by specific condition and to 

attest that they have actually done so at 

least once. We received comments on 

this and address them and any revisions 

to the proposed rule in the comment 

and response section below. 

Comment: Commenters requested 

clarification that only one report per 

EHR reporting period is required to 

meet the measure. 

Response: Yes, only one report in 

required for any given EHR reporting 

period. The report could cover every 

patient whose records are maintained 

using certified EHR technology or a 

subset of those patients at the discretion 

of the EP, eligible hospital or CAH. 

Comment: A few commenters 

suggested the measure should be 


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expanded to require submission of the 

report to CMS or the States or to the 

local health department. 

Response: Submission raises many 

questions about what types of 

information can be sent to different 

entities, how the information is used, 

patient consent for sending the 

information, and many of the issues, 

which add considerable complexity to 

this meaningful use objective. 

Therefore, we are not requiring 

submission of the report to CMS, the 

States or local health departments for 

Stage 1 of meaningful use. We do note 

that this is one of the objectives for 

which a State can submit modifications 

to CMS for approval. 

Comment: Several commenters 

requested a list of condition categories, 

a model report or the core data elements 

required to satisfy the measure. 

Response: As stated in the rule, we 

believe an EP, eligible hospital, or CAH 

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. 

Comment: For eligible hospitals, 

commenters stated that the analysis of 

patient data is derived from postdischarge coding of diagnosis and 

procedures and not problem lists. 

Response: We do not specify that the 

list is limited to being generated from 

the data problem list; rather, for the 

definition of conditions we refer 

providers to those conditions contained 

in the problem list. 

Comment: One commenter stated that 

for privacy and confidentiality reasons, 

patients should be allowed to opt out of 

any provider outreach initiatives. 

Response: Stage 1 of meaningful use 

does not require the submission of these 

reports to other entities; rather, we 

require that the provider generate these 

reports for their own use. We therefore 

do not believe the generation of such 

reports raises privacy and 

confidentiality concerns. We 

understand, however, that some patients 

may have concerns about such lists 

being exchanged with others and will 

consider such concerns should future 

meaningful use requirements focus on 

exchange of these reports. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use measure for EPs at 

§ 495.6(e)(3)(ii) and for eligible hospitals 

and CAHs at § 495.6(g)(4)(ii) of our 

regulations as proposed. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(i). The ability to 

calculate the measure is included in 

certified EHR technology. 

As this measure relies on data 

contained in certified EHR technology 

the list would only be required to 

include patients whose records are 

maintained using certified EHR 

technology as discussed previously in 

this section under our discussion of the 

burden created by the measures 

associated with the Stage 1 meaningful 

use objectives. 

We do not believe anything included 

in this objective or measure limit any 

EP, eligible hospital or CAH from 

completing the measure associated with 

this objective, therefore, we do not 

include an exclusion. 

NPRM EP Objective: Report 

ambulatory quality measures to CMS 

(or, for EPs seeking the Medicaid 

incentive payment, the States). 

Specific comments on the quality 

measures are discussed in section II.A.3 

of this final rule. 

We are finalizing this meaningful use 

objective at § 495.6(d)(10)(i) of our 

regulations ‘‘Report ambulatory clinical 

quality measures to CMS (or, for EPs 

seeking the Medicaid incentive 

payment, the States)’’ to better align 

with the descriptions in section II.A.3. 

In response to our revised 

requirements for meeting meaningful 

use, we are including this objective in 

the core set. Section 1848 (o)(2)(A)(iii) 

of the Act specifically includes 

submitting clinical quality measures in 

meaningful use for EPs. Section 

1903(t)(6)(D) of the Act also anticipates 

that the demonstration of meaningful 

use may include quality reporting to the 

States for the Medicaid program. 

NPRM Eligible Hospital Objective: 

Report ambulatory quality measures to 

CMS (or, for eligible hospitals seeking 

the Medicaid incentive payment, the 

States). 

We make a technical correction to this 

objective from the proposed rule to 

ensure that it is clear to the public that 

we were referring to hospital quality 

measures. 

Specific comments on the quality 

measures are discussed in section II.A.3 

of this final rule. 

After consideration of the public 

comments received, we are finalizing 

this meaningful use objective at 

§ 495.6(d)(9)(i) to account for our 

technical correction and to better align 

with the descriptions in section II.A.3 as 

‘‘Report hospital clinical quality 

measures to CMS (or, for eligible 

hospitals seeking the Medicaid 

incentive payment, the States)’’. 

In response to our revised 

requirements for meeting meaningful 

use, we are including this objective in 

the core set. Section 1886 (n)(3)(A)(iii) 

of the Act specifically includes 

submitting clinical quality measures in 

meaningful use for eligible hospitals 

and CAHs. Section 1903(t)(6)(D) of the 

Act also anticipates that the 

demonstration of meaningful use may 

include quality reporting to the States 

for the Medicaid program. 

NPRM EP Measure: For 2011, an EP 

would provide the aggregate level data 

for the numerator, denominator, and 

exclusions through attestation as 

discussed in section II.A.3 of this final 

rule. For 2012, an EP would 

electronically submit the measures that 

are discussed in section II.A.3. of this 

final rule. 

Specific comments on the quality 

measures themselves are discussed in 

section II.A.3 of this final rule. 

After consideration of the public 

comments received, we are finalizing 

this meaningful use objective at 

§ 495.6(d)(10)(ii) as proposed. 

NPRM Eligible Hospital Measure: For 

2011, an eligible hospital or CAH would 

provide the aggregate level data for the 

numerator, denominator, and exclusions 

through attestation as discussed in 

section II.A.3 of this final rule. For 2012, 

an eligible hospital or CAH would 

electronically submit the measures as 

discussed in section II.A.3. of this final 

rule. Specific comments on the quality 

measures are discussed in section II.A.3 

of this final rule. After consideration of 

the public comments received, we are 

finalizing this meaningful use objective 

at 495.6(f)(9)(ii) as proposed. 

NPRM EP Objective: Send reminders 

to patients per patient preference for 

preventive/follow-up care. 

In the proposed rule, we described 

patient preference as the patient’s 

choice between internet based delivery 

or delivery not requiring internet access. 

We are revising that description based 

on comments as discussed below. 

Comment: Commenters have pointed 

out that requirements to accommodate 

reasonable requests by individuals to 

receive communications by means other 

than the means preferred by the 

provider already exist under HIPAA at 

45 CFR 164.522(b). 

Response: As we stated in the 

proposed rule, patient preference refers 

to the patient’s preferred means of 

transmission of the reminder from the 

provider to the patient, and not 

inquiries by the provider as to whether 

the patient would like to receive 

reminders. In the proposed rule, we had 

proposed that patient preference be 

limited to the choice between internet 

based or non-internet based. In order to 

avoid unnecessary confusion and 

duplication of requirements, EPs meet 


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the aspect of ‘‘per patient preference’’ of 

this objective if they are accommodating 

reasonable requests as outlined in 45 

CFR 164.522(b), which are the guidance 

established under HIPAA for 

accommodating patient requests. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use objective at 

§ 495.6(e)(4)(i) of our regulations as 

proposed. 

NPRM 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. 

For the final rule, we are changing the 

measure to recognize that this is an EP 

only objective. Therefore, we make the 

technical correction of striking ‘‘or 

admitted to the eligible hospital’’. 

Comment: Commenters indicated that 

‘‘practice management systems’’ or 

‘‘patient management systems’’ are 

commonly used for this function and 

that integrating them into certified EHR 

technology would be expensive and 

time consuming for little value in 

return. 

Response: While we disagree with 

commenters who suggest there is little 

to no value in having information about 

reminders sent to patients available 

across all the systems used by the 

provider, we do not assert that such 

integration of systems must be in place 

to meet this measure. ONC provides for 

a modular approach that would allow 

these systems to be certified as part of 

certified EHR technology. 

Comment: Some commenters pointed 

out that many patients seen during an 

EHR reporting period will not be sent a 

reminder during that same period. 

Commenters said this is especially true 

for the 90-day EHR reporting period, but 

for some services could be true of the 

full year EHR reporting period as well. 

Other commenters also pointed out that 

reminders are not limited to the older 

population and that children especially 

may require many reminders on 

immunizations. 

Response: We agree with commenters 

that many patients not seen during the 

EHR reporting period would benefit 

from reminders. As the action in this 

objective is the sending of reminders, 

we base the revised measure on that 

action. This focus is supported by 

numerous public comments, including 

those by the HIT Policy Committee. 

Therefore, we are changing the 

requirement to account for all patients 

whose records are maintained using 

certified EHR technology regardless of 

whether they were seen by the EP 

during the EHR reporting period. This 

greatly expanded denominator caused 

us to reconsider both our threshold and 

the age limit. In order to increase the 

probability that a patient whose records 

are maintained in certified EHR 

technology will be eligible for a 

reminder we change the age limit of the 

population to 65 years old or older or 

5 years old or under. We believe that 

older patient populations are more 

likely to have health statuses that will 

indicate the need for reminders to be 

sent and this segment of the population 

is have higher rates of chronic diseases 

which will require coordination in 

preventive care such as vaccine 

reminders. Likewise, the 5 years old and 

under population will require a 

multitude of childhood vaccinations 

such as influenza and will benefit from 

reminders. However, we do not believe 

that changing the age limit of the 

affected population will result in 50 

percent of every patient whose records 

maintained in certified EHR technology 

requiring a reminder during the EHR 

reporting period. This is especially true 

for the first payment year when the EHR 

reporting period is only 90 days. We are 

also concerned about the variability 

among specialists’ scopes of practice 

that may affect the number of patients 

in the denominator for which a 

reminder is appropriate. Therefore, we 

lower the threshold to 20 percent. The 

EP has the discretion to determine the 

frequency, means of transmission and 

form of the reminder limited only by the 

requirements of 45 CFR 164.522(b) and 

any other applicable federal, state or 

local regulations that apply to them. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure at 

§ 495.6(e)(4)(ii) to ‘‘More than 20 percent 

of all patients 65 years or older or 5 

years old or younger were sent an 

appropriate reminder during the EHR 

reporting period’’. 

We further specify that in order to 

meet this objective and measure, an EP 

must use the capabilities Certified EHR 

Technology includes as specified and 

standards at 45 CFR 170.304(d). The 

ability to calculate the measure is 

included in certified EHR technology. 

As noted previously in this section 

under our discussion of the burden 

created by the measures associated with 

the Stage 1 meaningful use objectives, 

the denominator is based on patients 

whose records are maintained using 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients 65 years old or older or 5 years 

older or younger. 

• Numerator: The number of patients 

in the denominator who were sent the 

appropriate reminder. 

• Threshold: The resulting percentage 

must be more than 20 percent in order 

for an EP to meet this measure. 

As addressed in other objectives and 

in comment responses, if an EP has no 

patients 65 years old or older or 5 years 

old or younger with records maintained 

using certified EHR technology that EP 

is excluded from this requirement as 

described previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices. 

NPRM EP/Eligible Hospital Objective: 

Document a progress note for each 

encounter. In the proposed rule, we 

discussed this objective, but did not 

propose it for Stage 1 of meaningful use. 

We noted our belief that 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. 

Comment: We received a limited 

number of comments regarding our 

decision not to include documentation 

of progress notes as an objective. The 

commenters generally fell into three 

categories: Those who supported 

inclusion of this objective in the final 

rule, those who supported its inclusion 

only if certain caveats are met and those 

who supported our proposal not to 

include it as an objective for Stage 1 of 

meaningful use. Concerns raised by 

those supporting the inclusion of this 

objective included the possibility that 

an EP may keep paper progress notes in 

conjunction with use of certified EHR 

technology as prescribed by Stage 1 of 

meaningful use and that such a choice 

by EPs would create the possibility of 

handwriting illegibility, loss of 

information and reduced access to 

health information by both patients and 

other providers. Another concern raised 

is that if the objective is not included in 

the criteria for the definition of 

meaningful use designers of EHR 

technology will not include the function 

in their products. The advocates in the 

second category agree with the above, 

but only support inclusion with certain 

caveats. Some of these caveats include 

preserving the option of transcription, 

voice recognition software, and direct 

entry by an EP or any combination of 

these. Another caveat is that progress 

notes not be required to be entered as 

structured data. The third category 

supports exclusion of progress notes as 

an objective for two fundamentally 

different reasons. Some commenters 


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supported exclusion because they 

believe that the volume of objectives 

was already too high for Stage 1 of 

meaningful use and therefore opposed 

anything that would increase the 

volume. 

Other commenters agree with our 

proposal that progress notes is already 

a fundamental part of current EHR 

products and did not represent a move 

that advances the use of EHRs. 

Response: We predicated our 

discussion in the proposed rule on the 

assumption that progress notes are a 

component of basic EHR functionality. 

We still believe this is the case and have 

not received evidence to the contrary. 

However, we failed to clearly articulate 

the ramifications of our belief. Our view 

continues to be that an EP who 

incorporates the use of EHRs into a 

practice and complies with meaningful 

use criteria is unlikely to maintain 

separate paper progress notes outside of 

the EHR system. We believe that the 

potential disruption in workflow of the 

efforts to merge paper progress notes 

with the other records in certified EHR 

technology in order to have a complete 

medical record far outweighs the burden 

of electronically capturing progress 

notes. Moreover, we continue to believe 

this is a highly unlikely scenario. As 

with any meaningful use objective, it is 

important to have clear, definitive 

definitions. However, our observations 

of discussions held in public forums by 

the medical community and review of 

literature have led us to conclude that 

it not possible to provide a clear, 

definitive definition of a progress note 

at this time. We note that commenters 

recommending the documentation of a 

progress note be included as an 

objective did not attempt to define the 

term. Nor did commenters suggest an 

associated measure. We continue to 

believe that there is insufficient need 

and upon review believe there is 

insufficient consensus regarding the 

term progress note to include this 

objective for Stage 1 of meaningful use. 

After consideration of the public 

comments received, we do not include 

this meaningful use objective in the 

final rule. 

NPRM EP/Eligible Hospital Measure: 

N/A. 

NPRM EP 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. 

NPRM Eligible Hospital Objective: 

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. 

First, we make a technical correction. 

On page 1856 of the proposed rule, we 

described this objective for eligible 

hospitals as ‘‘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.’’ The 

underlined language was 

inappropriately carried over from the EP 

objective in this instance and in the 

regulation text. The table contained our 

intended language of ‘‘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.’’ Many commenters 

pointed this discrepancy out to us and 

we appreciate their diligence. 

Comment: Nearly half of the 

commenters mentioning clinical 

decision support suggested that the term 

needed additional clarification. Some 

commenters said that the term was too 

vague and open to interpretation while 

others said it was too specific. Other 

commenters provided recommendations 

on what a clinical decision support rule 

should mean or which elements it 

should include. These were evidencebased medicine templates, decision 

trees, reminders, linked online 

resources, scientific evidence, and 

consensus. 

Response: In the proposed rule, we 

described clinical decision support as 

HIT 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. We purposefully used 

a description that would allow a 

provider significant leeway in 

determining the clinical decision 

support rules that are more relevant to 

their scope of practice and benefit their 

patients in the greatest way. In the 

proposed rule, we asked providers to 

relate the rules they select to clinical 

priorities and diagnostic test ordering. 

We do not believe that adding a more 

limiting description to the term clinical 

decision support would increase the 

value of this objective. We believe that 

this determination is best left to the 

provider taking into account their 

workflow and patient population. 

Comment: Several commenters 

objected to the requirement of five 

clinical decision support rules when the 

HIT Policy Committee only 

recommended one. Others disagreed 

with our proposed assertion that most 

EPs would report on at least five clinical 

quality measures from section II.A.3 of 

the proposed rule and eligible hospitals 

will all report on at least five. 

Response: We accept the argument 

that there is value in focusing initial 

CDS efforts on a single CDS rule in 

order to get it right the first time and lay 

the foundation for future, broader CDS 

implementation. This will help to 

prevent the unintended negative 

consequences associated with poorly 

implemented CDS systems when 

providers have attempted to do too 

much too soon. 

We agree that the appropriate balance 

is to require some degree of meaningful 

use of CDS in Stage 1 without 

overburdening providers with too many 

areas to focus on at once. Since CDS is 

one area of health IT in which 

significant evidence exists that it can 

have a substantial positive impact on 

the quality, safety and efficiency of care 

delivery, it is important that it be 

included as a core objective with this 

more limited expectation. That 

requirement will assure that all 

meaningful users have taken the first 

steps in CDS implementation but allow 

them to focus as necessary on a single 

high-priority area at the outset in order 

to ensure that they can devote the 

appropriate level of attention to their 

first CDS priority. We anticipate that 

this will set the foundation for much 

more expansive CDS support in the near 

future. 

Comment: A commenter inquired if 

modification of the clinical decision 

support tool negates the EHR’s 

certification status. 

Response: We believe this is a 

question on certification status and is 

outside of the scope of this rule. ONC 

discusses what would affect Certified 

EHR Technology’s certified status in 

their final rule (75 FR 36157) entitled 

‘‘Establishment of the Temporary 

Certification Program for Health 

Information Technology’’. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

495.6(d)(11)(i) to ‘‘Implement one 

clinical decision support rule relevant 

to specialty or high clinical priority 

along with the ability to track 

compliance with that rule.’’ 

After consideration of public 

comments received, we are modifying 

the meaningful use objective for eligible 

hospitals and CAHs at § 495.6(f)(10)(i) of 

our regulations as ‘‘Implement one 

clinical decision support rule related to 

a high priority hospital condition along 

with the ability to track compliance 

with that rule.’’ 


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We believe that clinical decision 

support is one of the most common 

tools that uses the information collected 

as structured data included in the core 

set and therefore also include clinical 

decision support in the core as the 

information needed to support it are 

already included in the core set. 

NPRM 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. of this final rule. 

In the proposed rule, we said that 

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. 

Comment: Commenters, both in the 

requests for clarification of the term 

clinical decision support and explicitly 

in response to this measure, expressed 

concern about the linkage to a particular 

quality measure. 

Response: We agree that such linkage 

puts constraints on the provider and 

eliminates many types of clinical 

decision support rules that may be 

beneficial. Therefore, we revise this 

measure to require that at least one of 

the five rules be related to a clinical 

quality measure, assuming the EP, 

eligible hospital or CAH has at least one 

clinical quality measure relevant to their 

scope of practice. However, we strongly 

encourage EPs, eligible hospitals and 

CAHs to consider the clinical quality 

measures as described in section II.A.3 

when deciding which additional rules 

to implement for this measure. 

Comment: Several commenters, 

including the HIT Policy Committee, 

recommended that we focus at least one 

clinical decision support rule on 

efficiency of care. 

Response: In light of decision to limit 

the objective to one clinical decision 

support rule, we do not believe that it 

is appropriate to further to link that rule 

to specific requirements and therefore 

give the EP, eligible hospital or CAH 

discretion on what to focus the clinical 

decision support rule used to satisfy this 

measure. 

Comment: A few commenters asked 

for clarification of how the ‘‘* * * with 

the ability to track compliance with 

those rules’’ language of the proposed 

objective for clinical decision support 

rules relates to the associated measures. 

Response: While an integral part of 

the objective and certified EHR 

technology, we did not include this 

aspect of the objective in the measure 

for Stage 1 of meaningful use. An EP, 

eligible hospital, or CAH is not required 

to demonstrate to CMS or the States its 

compliance efforts with the CDS 

recommendations or results for Stage 1 

either at initial attestation or during an 

subsequent review of that attestation. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(e)(11)(ii) and for eligible 

hospitals and CAHs at § 495.6(g)(10)(ii) 

to ‘‘Implement one clinical decision 

support rule. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(e) for EPs and 45 CFR 

170.306(c). The ability to calculate the 

measure is included in certified EHR 

technology. 

Given the added flexibility added to 

this measure in the final rule, we do not 

believe that any EP, eligible hospital, or 

CAH would be in a situation where they 

could not implement one clinical 

decision support rules as described in 

the measure. Therefore, there are no 

exclusions for this objective and its 

associated measure. 

NPRM EP/Eligible Hospital Objective: 

Submit claims electronically to public 

and private payers. 

Comment: Over three quarters of 

those commenting on this objective 

recommended that it be eliminated for 

various reasons. The majority of the 

other commenters requested a 

modification. Reasons given are: 

—Electronic claims submission is 

already covered under HIPAA; 

—Electronic claims submission is not 

part of traditional EHR technology; 

—Billing systems would have to be 

certified adding to cost and burden of 

compliance with meaningful use even 

though when electronic claims 

submission for Medicare is already in 

place for all by the very smallest of 

providers; 

—Electronic claims submission falls 

outside of the scope of the statutory 

mandate given by Congress to 

implement the HITECH legislation to 

improve care delivery through broad 

scale adoption and utilization of 

Electronic Health Record 

technologies. This function does not 

impact the quality of care delivered 

and relies on product components 

that are traditionally part of practice 

management systems; 

—Private payers may customize the 

HIPAA-recognized standard 

transactions, which limits the ability 

of practices to obtain accurate 

information prior to receiving an 

Explanation of Benefits based on the 

actual services provided and negates 

many of the benefits of having 

standardized transactions; 

—Workers’ compensation and auto 

insurers do not accept electronic 

claims; and 

—Many providers use clearinghouses 

and they requested that the burden of 

electronic submission be shifted to 

the clearinghouse. 

Response: In our proposed rule, we 

specifically cite that the existence of 

standard transactions available under 

HIPAA for submitting claims as a reason 

for including this objective as a 

meaningful use objective for Stage 1. We 

also disagree that this objective is 

outside the scope of meaningful use as 

defined by the HITECH legislation. The 

HITECH legislation states the Secretary 

shall seek to improve not only health 

care quality, but also the use of 

electronic health records. In addition, 

we note that sections 1848(o)(2)(A) and 

1886(n)(3)(A) of the Act provide that to 

be considered a meaningful EHR user, 

an EP, eligible hospital, or CAH must 

demonstrate use of certified EHR 

technology in a meaningful manner as 

defined by the Secretary. In the 

Medicaid context, any demonstration of 

meaningful use must be ‘‘acceptable to 

the Secretary’’ under 1903(t)(6). We 

believe this language gives us broad 

discretion to require the use of certified 

EHR technology in a manner that not 

only improves health care quality, but 

results in gains in efficiency, patient 

engagement and enhances privacy and 

security. Under the broad definition of 

electronic health record established by 

ONC in their final rule, electronic 

exchange of eligibility information and 

claims submission could certainly 

improve the use of electronic health 

records. 

We believe that inclusion of 

administrative simplification in 

meaningful use is an important longterm policy goal for several reasons. 

First, administrative simplification can 

improve the efficiency and reduce 

unnecessary costs in the health care 

system as a whole; the small percentage 

of paper claims submitted represent a 

disproportionate administrative cost for 

health plans; the reconciliation of 

billing charges for services not eligible 

for payment creates a significant burden 

for providers, health plans, and most 


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significantly, for patients. Second, the 

integration of administrative and 

clinical information systems is 

necessary to support effective 

management and coordinated care in 

physician practices. The ability to 

leverage clinical documentation in 

support of appropriate charge capture 

(for example, for preventive counseling, 

or immunizations provided), the ability 

to link lists of patients needing clinical 

reminders with patient contact 

information, the ability to stratify 

quality measures by patient 

demographic factors (for example, race/ 

ethnicity) and insurer status (for 

example, Medicare beneficiaries), are 

examples. 

In addition, there are important 

benefits to the inclusion of 

administrative transactions in criteria 

and standards for the certification of 

EHR technologies. The option of 

modular certification provides an 

opportunity for eligible professionals 

and hospitals to use practice 

management systems or clearinghouses 

that provide these functions as 

components of their certified EHR 

technologies. However, we recognize 

there is not current agreement as to 

which systems constitute an EHR and 

that many entities may view their 

billing system to be outside their EHR 

and that the vendors of some practice 

management systems that provide these 

functionalities in doctors’ offices today 

may not be prepared to seek 

certification for these legacy products in 

2010/2011. We also recognize that the 

introduction of the X12 5010 standards 

in January 2012 would further 

complicate the certification process for 

stage 1. We also acknowledge that we do 

not have the ability to impose additional 

requirements on third-party payers or 

clearinghouses to participate in this 

exchange beyond what is required by 

HIPAA. Based on these considerations, 

we are not including this objective in 

the final rule for Stage 1 of meaningful 

use. 

However, the introduction of these 

new X12 5010 standards, and the 

coming introduction of ICD–10 in 2013 

provides an opportunity for change in 

Stage 2 of meaningful use. In order to 

meet these and other administrative 

simplification provisions, most 

providers will have to upgrade their 

practice management systems or 

implement new ones. This provides an 

important opportunity to achieve 

alignment of capabilities and standards 

for administrative transactions in EHR 

technologies with the administrative 

simplification provisions that the 

Affordable Care Act provides for health 

plans and health plan clearinghouses. 

We therefore intend to include 

administrative transactions as a part of 

Stage 2 of meaningful use, and expect 

providers and vendors to take this into 

consideration in their decisions leading 

up to 2013. 

Comment: Commenters focusing on 

how meaningful use would translate 

into the Medicare Advantage program 

said that the measure of checking 

eligibility electronically and submitting 

claims electronically for 80 percent of 

patients seen would not be possible. 

They explained that for most of their 

visits, there is no insurance company 

with which to check, and there is no 

insurance company to whom to submit 

claims. They described themselves as a 

capitated system and for most of the 

patient visits, the concept of checking 

eligibility and submitting claims in not 

relevant. 

Response: This comment illustrates 

the difficulties in adopting FFS 

Medicare meaningful use measures for 

qualifying MA organizations, MAaffiliated hospitals and MA EPs. For 

purposes of determining meaningful use 

in a Medicare Advantage environment, 

we agree that submitting claims 

electronically is not a useful standard in 

a capitated environment where virtually 

all patients are members of the same 

insurance plan. 

After consideration of the public 

comments received, we are not 

finalizing the objective ‘‘Submit claims 

electronically to public and private 

payers’’. 

NPRM EP/Eligible Hospital Measure: 

At least 80 percent of all claims filed 

electronically by the EP or the eligible 

hospital. 

We received many comments on the 

difficulty in calculating this measure. 

However, as all measures are tied to 

objectives and we do not finalize this 

objective we also do not finalize the 

measure. 

NPRM EP/Eligible Hospital Objective: 

Check insurance eligibility 

electronically from public and private 

payers. 

Comment: Over three quarters of 

those commenting on this objective 

recommended that it be eliminated for 

various reasons. Some of the most 

common reasons for elimination are: 

—Electronic eligibility checks are 

already covered under HIPAA; 

—Electronic eligibility checks are not 

part of traditional EHR technology; 

—Billing and practice management 

systems that are used for electronic 

eligibility checks would have to be 

certified as certified EHR technology 

adding to cost and burden; 

—Electronic eligibility checks is outside 

of the scope of the mandate given by 

Congress to implement the HITECH 

legislation in such a way as to 

improve care delivery through broad 

scale adoption and utilization of 

Electronic Health Record 

technologies. This function does not 

impact the quality of care delivered 

and relies on product components 

that are traditionally part of practice 

management systems; 

—Information returned on typical 

electronic eligibility checks is of little 

use to providers—as responses are 

usually a yes/no answer on coverage, 

but not the specificity of coverage; 

—The current poor adoption rate of the 

use of electronic eligibility 

verification is indicative of the 

deficiencies in current methods; 

—Once eligibility checking becomes 

easy to use and reliable, no incentive 

will be required as providers will 

adopt the process readily; 

—Payers do not guarantee their 

eligibility results; 

—Many payers are still not in 

compliance with the HIPAA 270/271 

electronic eligibility standard. 

Therefore the objective should only be 

required if compliance with the 

standard by health plans can be 

guaranteed; and 

—Private payers may customize the 

HIPAA-recognized standard 

transactions, which limits the ability 

of practices to obtain accurate 

information prior to receiving an 

Explanation of Benefits based on the 

actual services provided and negates 

many of the benefits of having 

standardized transactions. 

Response: In our proposed rule, we 

specifically cite the existence of the 

standard transaction for eligibility 

checks available under HIPAA as an 

enabling factor for the inclusion this 

objective. As with the electronic claims 

submission objective discussed above, 

we disagree that this objective is outside 

the scope of meaningful use as defined 

by the HITECH legislation. The HITECH 

legislation requires the Secretary to seek 

to improve not only health care quality, 

but also the use of electronic health 

records. Under the broad definition of 

electronic health record established by 

ONC in their final rule, electronic 

exchange of eligibility information 

could certainly improve the use of 

electronic health records. However, we 

recognize there is not current agreement 

as to which systems constitute an EHR 

and that many entities may view their 

practice management system to be 

outside their EHR. We also acknowledge 

that we do not have the ability to 

impose additional requirements on 

third-party payers to participate in this 


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exchange beyond what is required by 

HIPAA. Third-party payers can provide 

simple yes/no responses, modify the 

standard transactions and do not have to 

guarantee their results. We agree with 

commenters that this significantly 

devalues the results of this objective. 

However, we do believe that as 

electronic records and exchange based 

on this and considerations that 

commenters nearly universally 

considered this to not be a function of 

EHR, we are not including this objective 

in the final rule for Stage 1 of 

meaningful use. However, we do believe 

that inclusion of a robust system to 

check insurance eligibility 

electronically is an important long term 

policy goal for meaningful use of 

certified EHR technology and we intend 

to include this objective as well as 

electronic claims submission Stage 2. 

After consideration of the public 

comments received, we are not 

finalizing the objective to ‘‘Check 

insurance eligibility electronically from 

public and private payers’’ or any 

modification thereof. Given that we are 

not finalizing the objective, we also are 

not finalizing the associated EP and 

eligible hospital/CAH measures. 

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. 

As explained in the proposed rule, we 

do not intend 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, we defer to existing 

Federal and State laws as to what is 

appropriate for disclosure to the patient 

or their 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. 

Comment: Several commenters 

requested that all objectives under the 

health care policy priority be combined, 

as they are redundant. 

Response: We disagree that they are 

redundant and believe each serves a 

unique purpose. We will more fully 

describe those purposes in the 

discussion of each objective. 

NPRM EP Objective: Provide patients 

with an electronic copy of their health 

information (including diagnostics test 

results, problem list, medication lists, 

allergies) upon request. 

NPRM Eligible Hospital Objective: 

Provide patients with an electronic copy 

of their health information (including 

diagnostic test results, problem list, 

medication lists, allergies, discharge 

summary, procedures), upon request 

The purpose of this objective is to 

provide a patient’s health information to 

them electronically and in a human 

readable format and in accordance with 

the standards specified in the ONC final 

rule subject to its availability to the 

provider electronically and any 

withholding under regulations related to 

the HIPAA Privacy Act at 45 CFR 

164.524, Access of individuals to 

protected health information. 

In the proposed rule, we indicated 

that electronic copies may be provided 

through a number of secure electronic 

methods (for example, personal health 

record (PHR), patient portal, CD, USB 

drive). We have changed this 

description in response to comments to 

that when responding to patient 

requests for information, the EP, eligible 

hospital, or CAH should accommodate 

patient requests in accordance with 45 

CFR 164.524, Access of individuals to 

protected health information. The 

objective provides additional criteria for 

meeting meaningful use concerning the 

electronic copy or provision of 

information that the EP, eligible hospital 

or CAH maintains in or can access from 

the certified EHR technology and is 

maintained by or on behalf of the EP, 

eligible hospital or CAH. 

Comment: We received requests for 

clarification that only information that 

the EP, eligible hospital, or CAH has 

available electronically must be 

provided to the patient. 

Response: Yes, we limit the 

information that must be provided 

electronically to that information that 

exists electronically in or accessible 

from the certified EHR technology and 

is maintained by or on behalf of the EP, 

eligible hospital or CAH. We believe it 

is impractical to require information 

maintained on paper to be transmitted 

electronically. Furthermore, given the 

other criteria of Stage 1 of meaningful 

use, we believe sufficient information 

will be available through certified EHR 

technology, especially given the 

inclusion of many of the foundational 

objectives that were included in the core 

set. 

Comment: Commenters pointed out 

that the HIPAA Privacy Rule permits 

licensed healthcare professionals to 

withhold certain information if its 

disclosure would cause substantial 

harm to the patient or another 

individual. 

Response: As previously discussed for 

patient preference, we do not seek to 

conflict with or override HIPAA through 

meaningful use requirements. Therefore, 

an EP, eligible hospital, or CAH may 

withhold information from the 

electronic copy of a patient’s health 

information in accordance with the 

regulations at 45 CFR 164.524, Access of 

individuals to protected health 

information. 

Comment: Commenters requested 

clarification of the term ‘‘health 

information’’ or alternatively a list of 

elements required to satisfy the 

objective. 

Response: Subject to the withholding 

described above, an EP, eligible 

hospital, or CAH should provide a 

patient with all of the health 

information they have available 

electronically. At a minimum, this 

would include the elements listed in the 

ONC final rule at 45 CFR 170.304(f) for 

EPs and 45 CFR 170.306(d) for eligible 

hospitals and CAHs as required for EHR 

technology to become certified. 

Comment: Several commenters 

indicated that a provider should be 

allowed to charge a fee for providing an 

electronic copy of a patient’s health 

information. 

Response: We do not have the 

authority under the HITECH Act to 

regulate fees in this manner. Rather, the 

charging of fees for this information is 

governed by the HIPAA Privacy Rule at 

45 CFR 164.524(c)(4) (which only 

permits HIPAA covered entities to 

charge an individual a reasonable, costbased fee for a copy of the individual’s 

health information). We would expect 

these costs to be very minimal 

considering that the ability to generate 

the copy is included in certified EHR 

technology. Additional clarification on 

the fee that a HIPAA covered entity may 

impose on an individual for an 

electronic copy of the individual’s 

health information will be addressed in 

upcoming rulemaking. 

Comment: Commenters pointed out 

that the general term ‘‘allergies’’ is 

inconsistent with other objectives of 

Stage 1 and with the capabilities 

mandated by certification under the 

ONC IFR, which address only 

medication allergies. 

Response: As we have stated on 

several other objectives, we encourage 

all EPs, eligible hospitals, and CAHs to 

work with their EHR technology 

designers to make capabilities most 

relevant to their individual practices of 

care. However, we have maintained that 

at a minimum the capabilities that are 

part of certification should be included 


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and those should be the basis for 

meaningful use so we do modify this 

objective to medication allergies to align 

it with other objectives and certification. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(d)(12)(i) of our regulations to 

‘‘Provide patients with an electronic 

copy of their health information 

(including diagnostics test results, 

problem list, medication lists, 

medication allergies) upon request’’ and 

for eligible hospitals and CAHs at 

§ 495.6(f)(11)(i) of our regulations to 

‘‘Provide patients with an electronic 

copy of their health information 

(including diagnostic test results, 

problem list, medication lists, 

medication allergies, discharge 

summary, procedures), upon request’’. 

We include this objective in the core 

set as it is integral to involving patients 

and their families in their provision of 

care and was recommended by the HIT 

Policy Committee for inclusion in the 

core set. 

NPRM 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. 

In the proposed rule, we pointed out 

that all patients have a right under 

ARRA to an electronic copy of their 

health information. We said that our 

purpose for including it in meaningful 

use was to ensure that this requirement 

in met in a timely fashion. We also said 

that 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 received 

requests for clarifications on what must 

be provided and in what timeframe. We 

address those requests in the comment 

and response section below. We note 

here that participation in the Medicare 

and Medicaid EHR incentive programs 

is voluntary. Nothing in the Stage 1 

criteria of meaningful use supersedes or 

exempts an EP, eligible hospital or CAH 

from complying with otherwise 

applicable requirements to provide 

patients with their health information. 

Comment: An overwhelming majority 

of commenters commenting on this 

objective indicated that the 48-hour 

time frame is too short and inconsistent 

with the HIPAA Privacy Rule. 

Response: We discuss the reasoning 

for the time frame in the proposed rule. 

We state that this measure seeks to 

ensure that a patient’s request 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. We also believe 

that certified EHR technology will 

provide EPs, eligible hospitals, and 

CAHs more efficient means of providing 

copies of health information to patients, 

which is why we proposed that a 

request for an electronic copy be 

provided to the patient within 48 hours. 

In the final rule, we further point out 

that this objective is limited to health 

information maintained and provided 

electronically while HIPAA can require 

the retrieval, copying and mailing of 

paper documents. For this reason, we do 

not believe the timeframes under this 

meaningful use objective and the 

HIPAA Privacy Rule must be aligned. 

However, we appreciate that the 48- 

hour timeframe may be burdensome for 

some providers, particularly for those 

providers who do not operate 24/7. We 

therefore are lengthening the timeframe 

to three business days. Business days 

are defined as Monday through Friday 

excluding federal or state holidays on 

which the EP, eligible hospital, or CAH 

or their respective administrative staffs 

are unavailable. As an example if a 

patient made a request for an electronic 

copy of their health information on 

Monday then the EP, eligible hospital, 

or CAH would have until the same time 

on Thursday to provide the information 

assuming there were no intervening 

holidays. If provision of the copy 

involves the mailing of physical 

electronic media, then it would need to 

be mailed on the Thursday. 

Comment: Some commenters believed 

the 80 percent threshold was too high or 

introduced examples of extraordinary 

circumstances such as natural disasters 

or system crashes that would indicate a 

lower threshold is needed to 

accommodate them. 

Response: We reduce the threshold to 

over 50 percent as this objective meets 

the criteria of relying 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, as 

explained under our discussion of the 

objective of maintain an up-to-date 

problem list. As this is a relatively new 

capability that was not available to 

either providers or patients before the 

introduction of EHRs, we do not believe 

it meets the same standard of practice as 

maintaining an up-to-date problem list 

and therefore adopt a threshold of 50 

percent (rather than 80 percent). 

Comment: We received comments 

that were concerned about the reporting 

burden of this requirement. 

Response: We believe that as long as 

the request by the patient is accurately 

recorded in the certified EHR 

technology then the certified EHR 

technology should be able to calculate 

the measure. Recording patient requests 

for certain actions should be part of the 

expectations of meaningful use of 

certified EHR technology. If the EP, 

eligible hospital, or CAH records the 

requests using certified EHR technology, 

certified EHR technology will be able to 

assist in calculating both the numerator 

and denominator. If the requests are 

recorded by another means at the choice 

of the provider, the provider would be 

responsible for determining the 

denominator. 

Comment: Commenters inquired if 

third-party requests for information are 

included in the denominator. 

Response: Only specific third party 

requests for information are included in 

the denominator. As we stated in the 

opening discussion for this health care 

priority, providing the copy to a family 

member or patient’s authorized 

representative consistent with federal 

and state law may substitute for a 

disclosure of the information to the 

patient and count in the numerator. A 

request from the same would count in 

the denominator. All other third party 

requests are not included in the 

numerator or the denominator. 

Comment: Commenters inquired if 

asking the patient to register for their 

own personal health record (PHR) 

satisfies the intent of the objective. 

Response: EPs, eligible hospitals and 

CAHs are to provide the information 

pursuant to the reasonable 

accommodations for patient preference 

under 45 CFR164.522(b). To be included 

in this measure, the patient has already 

requested an electronic method. While 

having a third party PHR certainly 

would be one method, assuming the 

provider could populate the PHR with 

all the information required to meet this 

objective. The provider should provide 

the same level of assistance to the 

patient that would be provided as if 

they maintained their own patient 

portal. 

Comments: Comments were received 

requesting the format and media for the 

provision of the health information. 

Response: As this is for use by the 

patient, the form and format should be 

human readable and comply with the 

HIPAA Privacy Rule, as specified at 45 

CFR 164.524(c). In addition, efforts 

should be made to make it easily 

understandable to the patient. The 

media could be any electronic form 

such as patient portal, PHR, CD, USB 

fob, etc. As stated in the previous 

response, EPs, eligible hospitals and 

CAHs are expected to make reasonable 


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accommodations for patient preference 

as outlined in 45 CFR 164.522(b). 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(12)(i) and for eligible 

hospitals at § 495.6(f)(11)(i) of our 

regulations to ‘‘More than 50 percent of 

all patients of the EP or the inpatient or 

emergency departments of the eligible 

hospital or CAH (POS 21 or 23) who 

request an electronic copy of their 

health information are provided it 

within 3 business days.’’ 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(f) for EPs and 45 CFR 

170.306(d) for eligible hospitals and 

CAHs. The ability to calculate the 

measure is included in certified EHR 

technology. 

As the provision of the electronic 

copy is limited to the information 

contained within certified EHR 

technology, this measure is by 

definition limited to patients whose 

records are maintained using certified 

EHR technology as described previously 

in this section under our discussion of 

the burden created by the measures 

associated with the Stage 1 meaningful 

use objectives. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: The number of 

patients of the EP or eligible hospital’s 

or CAH’s inpatient or emergency 

departments (POS 21 or 23) who request 

an electronic copy of their electronic 

health information four business days 

prior to the end of the EHR reporting 

period. 

• Numerator: The number of patients 

in the denominator who receive an 

electronic copy of their electronic health 

information within three business days. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. As addressed in 

other objectives and in comment 

response, if the EP, eligible hospital, or 

CAH has no requests from patients or 

their agents for an electronic copy of 

patient health information during the 

EHR reporting period they would be 

excluded from this requirement as 

described previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices. 

NPRM Eligible Hospital Objective: 

Provide patients with an electronic copy 

of their discharge instructions and 

procedures at time of discharge, upon 

request. 

The purpose of this objective is to 

provide the option to patients to receive 

their discharge instructions 

electronically. Discharge instructions 

would not necessarily be included in a 

copy of health information and it is 

unlikely that a patient would request a 

copy of their health information at every 

discharge. This objective is unique to 

eligible hospitals and CAHs. 

Comment: We received several 

comments suggesting that we eliminate 

or clarify the term ‘‘procedures.’’ 

Response: As we believe the terms 

‘‘instructions’’ and ‘‘procedures’’ are 

interchangeable as used in this 

objective, we are removing the term 

‘‘procedures’’ from the objective. We left 

this term in the provision of electronic 

copy of health information as the term 

‘‘instructions’’ is not in that objective. 

We clarify that the term ‘‘instructions’’ 

means any directions that the patient 

must follow after discharge to attend to 

any residual conditions that need to be 

addressed personally by the patient, 

home care attendants, and other 

clinicians on an outpatient basis. 

Comment: Commenters pointed out 

that the HIPAA Privacy Rule permits 

licensed healthcare professionals to 

withhold certain information if its 

disclosure would cause substantial 

harm to the patient or another 

individual. 

Response: We reiterate that it is not 

our intent for the meaningful use 

objectives to conflict or override the 

HIPAA Privacy Rule through 

meaningful use requirements. Therefore 

an EP, eligible hospital, or CAH may 

withhold information from the 

electronic copy to the extent they are 

permitted or required to do so in 

accordance with the regulations at 45 

CFR 164.524. 

Comment: Some commenters 

recommended that hospitals should be 

required to either provide every patient 

an electronic copy of their discharge 

instructions or at least inform them of 

the option to receive it electronically. 

Response: We believe it would be too 

burdensome to provide every patient an 

electronic copy of his or her discharge 

instructions. Furthermore, we anticipate 

that many, if not most, patients will 

prefer a paper copy during the years of 

Stage 1. While we certainly encourage 

eligible hospitals to inform their 

patients of the option to receive their 

discharge instructions electronically, we 

do not see requiring this as within the 

scope of meaningful use of certified 

EHR technology for Stage 1. 

Comment: Comments were received 

requesting a clarification of the data that 

should be included in the discharge 

instructions. 

Response: This objective simply refers 

to the option of the electronic provision 

of instructions that would be provided 

to the patient. We believe eligible 

hospitals are the appropriate entity to 

determine the information that should 

be included in the discharge 

instructions. 

Comment: Comments were received 

requesting the format and media for the 

discharge instructions. 

Response: As this is for use by the 

patient, the form and format should be 

human readable and comply with the 

HIPAA Privacy Rule, as specified at 45 

CFR 164.524(c). In addition, efforts 

should be made to make it easily 

understandable to the patient. The 

media could be any electronic form 

such as patient portal, PHR, CD, USB 

fob, etc. EPs, eligible hospitals and 

CAHs are expected to make reasonable 

accommodations for patient preference 

as outlined in 45 CFR 164.522(b). 

After consideration of the public 

comments received, we are finalizing 

the objective at 495.6(f)(12)(i) of our 

regulations as proposed. 

We include this objective in the core 

set as it is integral to involving patients 

and their families in their provision of 

care and was recommended by the HIT 

Policy Committee for inclusion in the 

core set. 

NPRM 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. 

Comment: Some commenters believed 

the 80 percent threshold was too high or 

introduced examples of extraordinary 

circumstances that would indicate that 

a lower threshold is needed to 

accommodate them. 

Response: We reduce the threshold to 

over 50 percent as this objective meets 

the criteria of relying 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. 

However, as this is a relatively new 

capability that was not available to 

either providers or patients before the 

introduction of EHRs we do not believe 

it meets the same standard of practice as 

maintaining an up-to-date problem list 

and therefore adopt a threshold of 50 

percent (rather than 80 percent). 

Comment: Some commenters 

expressed concern about the reporting 

burden imposed by this requirement. 

Response: We believe that as long as 

the request by the patient is accurately 

recorded in the certified EHR 


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1Please note that although the final rule 

meaningful use measures refer to patients 

discharged from an emergency department, such 

emergency room releases are not eligible hospital 

discharges for purpose of determining hospital 

payment incentives under section 1886(n) of the 

Act. Section 1886(n) payments are only with 

respect to ‘‘inpatient’’ hospital services pursuant to 

section 1886(n)(1)(A) of the Act. 

technology then the certified EHR 

technology should be able to calculate 

the measure. We believe that recording 

patient requests for certain actions that 

involve the use of certified EHR 

technology should be part of EPs, 

eligible hospitals and CAHs standard 

practice. If the eligible hospital or CAH 

records the requests using certified EHR 

technology, certified EHR technology 

will be able to assist in calculating both 

the numerator and denominator. If the 

requests are recorded by another means 

at the choice of the provider, the 

provider would be responsible for 

determining the denominator. 

Comment: Several of the comments 

requested clarification of the timeframe 

in which the discharge instructions 

should be provided to the patient. 

Response: As discussed previously, 

this objective simply refers to the option 

of the electronic provision of 

instructions that would be provided to 

the patient at the time of discharge. 

Therefore, we believe for the 

information to be useful to the patient, 

the instructions themselves or 

instructions on how to access them 

electronically should be furnished at the 

time of discharge from the eligible 

hospital or CAH. 

Comment: Some comments expressed 

concern that providing an electronic 

copy of discharge instructions to the 

patient at the time of discharge would 

disrupt workflows and lengthen the 

discharge process resulting in reduced 

bed turnover in emergency departments. 

Response: As discussed previously, 

this objective simply refers to the option 

of the electronic provision of 

instructions that would be provided to 

the patient at the time of discharge. We 

do not believe the provision of an 

electronic copy of the discharge 

instructions, upon request, at the time of 

discharge alters current workflow or 

lengthens the discharge process. A 

patient could be provided instructions 

on how to access an Internet Web site 

where they can get the instructions or 

asked to provide an e-mail address or 

simply be handed electronic media 

instead of or in addition to a paper 

copy. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure at 

§ 495.6(f)(12)(ii) of our regulations to 

‘‘More than 50 percent of all patients 

who are discharged 1 from an eligible 

hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

and who request an electronic copy of 

their discharge instructions are 

provided it.’’ 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.306(e). The ability to 

calculate the measure is included in 

certified EHR technology. 

As with the previous objective, the 

provision of the electronic copy of the 

discharge summary is limited to the 

information contained within certified 

EHR technology; therefore this measure 

is by definition limited to patients 

whose records are maintained using 

certified EHR technology as described 

previously in this section under our 

discussion of the burden created by the 

measures associated with the Stage 1 

meaningful use objectives. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of patients 

discharged from an eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) who request 

an electronic copy of their discharge 

instructions and procedures during the 

EHR reporting period. 

• Numerator: The number of patients 

in the denominator who are provided an 

electronic copy of discharge 

instructions. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. 

As addressed in other objectives and 

in comment response, if the eligible 

hospital or CAH has no requests from 

patients or their agents for an electronic 

copy during the EHR reporting period 

they would be excluded from this 

requirement as described previously in 

this section under our discussion of 

whether certain EP, eligible hospital or 

CAH can meet all Stage 1 meaningful 

use objectives given established scopes 

of practices. 

NPRM EP Objective: Provide patients 

with timely electronic access to their 

health information (including lab 

results, problem list, medication lists, 

and allergies) within 96 hours of the 

information being available to the EP. 

In the proposed rule, we described 

timely as within 96 hours of the 

information being available to the EP 

through either the receipt of final lab 

results or a patient interaction that 

updates the EP’s knowledge of the 

patient’s health. We said we judged 96 

hours to be a reasonable amount of time 

to ensure that certified EHR technology 

is up to date and welcomed comment on 

if a shorter or longer time is 

advantageous. We did receive comments 

on the time frame and have revised it as 

discussed below in the comment and 

response section. 

Comment: We received comments 

recommending that ‘‘access’’ be clarified 

to determine whether this is online 

access as indicated in the ONC 

certification criteria for certified EHR 

technology or just electronic access. 

Response: We believe we 

inadvertently created confusion by 

listing the examples of electronic media 

(CD or USB drive) in which this access 

could be provided. As many 

commenters inferred, it was our 

intention that this be information that 

the patient could access on demand 

such as through a patient portal or PHR. 

We did not intend for this to be another 

objective for providing an electronic 

copy of health information upon 

request. 

Comment: Several commenters 

requested that all objectives included in 

the health care policy priority ‘‘engage 

patients and their families’’ be 

combined, as they are redundant. 

Response: We disagree that they are 

redundant and believe each serves a 

unique purpose. We regret any 

confusion created by the inclusion of 

CD or USB drive as examples of 

electronic media caused in the intent of 

this measure. The difference between 

electronic access and an electronic copy 

is that a patient with electronic access 

can access the information on demand 

at anytime while a patient must 

affirmatively request an electronic copy 

from the EP, eligible hospital or CAH at 

a specific time and the information in 

the copy is current only as of the time 

that the copy is transferred from the 

provider to the patient. 

Comment: Some commenters asserted 

that some results and other sensitive 

information are best communicated at a 

face-to-face encounter. 

Response: We agree that there may be 

situations where a provider may decide 

that electronic access of a portal or 

Personal Health Record is not the best 

forum to communicate results. Within 

the confines of laws governing patient 

access to their medical records, we 

would defer to EP’s, eligible hospital or 

CAH’s judgment as to whether to hold 

information back in anticipation of an 

actual encounter between the provider 

and the patient. Furthermore just as in 

the provision of electronic copy, an EP 

may withhold information from being 


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accessible electronically by the patient 

in accordance with regulations at 45 

CFR 164.524. Any such withholding 

would not affect the EP’s, eligible 

hospital’s or CAH’s ability to meet this 

objective as that information would not 

be included. We do not believe there 

would be a circumstance where all 

information about an encounter would 

be withheld from the patient and 

therefore no information would be 

eligible for uploading for electronic 

access. If nothing else, the information 

that the encounter occurred can be 

provided. Please note that providers 

must comply with all applicable 

requirements under the HIPAA Privacy 

Rule, including 45 CFR 164.524. 

Comment: We received several 

comments stating that the time frame of 

96 hours is too burdensome for EPs. 

Response: While we believe that 96 

hours is sufficient, most EPs do not 

operate 24/7. Therefore, we will limit 

the timeframe to business days, in effect 

changing the timeframe from 96 hours 

in the proposed rule to four business 

days. Business days are defined as 

Monday through Friday excluding 

federal or state holidays on which the 

EP, eligible hospital or CAH or their 

respective administrative staffs are 

unavailable. 

Comment: Commenters pointed out 

that allergies is inconsistent with other 

objectives of Stage 1 and with the 

capabilities mandated by certification 

under the ONC final rule. 

Response: As we have stated on 

several other objectives, we encourage 

all EPs, eligible hospitals, and CAHs to 

work with their EHR technology 

designers to make capabilities as 

relevant to their individual practices of 

care as possible. However, we maintain 

that at a minimum the capabilities that 

are part of certification should be 

included in certified EHR technology so 

we do modify this objective to 

medication allergies to align it with 

other objectives and certification. 

After consideration of the public 

comments received, we are modifying 

the objective for EPs at § 495.6(d)(6)(i) of 

our regulations to ‘‘Provide patients with 

timely electronic access to their health 

information (including lab results, 

problem list, medication lists, 

medication allergies) within four 

business days of the information being 

available to the EP’’. 

NPRM EP Measure: At least 10 

percent of all unique patients seen by 

the EP are provided timely electronic 

access to their health information. 

In the proposed rule, we said that 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. We received comments on this 

justification for the threshold and 

requests for clarification, which are 

addressed in the comment and response 

section below. 

Comment: Some commenters 

expressed concern about the calculation 

of the percentage and expressed the 

preference to use an absolute count 

instead of a percentage. 

Response: We acknowledge there are 

unique concerns about calculating this 

percentage as it involves determining 

the timeliness of the information. 

Certified EHR technology would be able 

to ascertain the time from when the 

information was entered into its system 

to when the information was available 

for electronic access. As certified EHR 

technology can provide the access, any 

perceivable delay or requirement for 

affirmative action would be built in by 

the user to allow for review of the 

information before posting. Certified 

EHR technology could not be 

distinguish the difference in time when 

the information was available to the 

provider and when it was entered into 

certified EHR technology. However, we 

see no reasonable way to track this time 

frame that does not impose a heavy 

burden on the EP. Therefore, for the 

measure, we define the four business 

days time frame as the time frame when 

the information is updated in the 

certified EHR technology to when it is 

available electronically to the patient, 

unless the provider indicates that the 

information should be withheld. It is 

acceptable for a provider to set an 

automated withhold on certain 

information at their discretion. As we 

have discussed previously in this 

section, we do not believe absolute 

counts are an adequate substitute for 

percentage calculations. 

Comment: We received comments 

requesting clarification on what data 

must be made available. 

Response: Certified EHR technology 

must be able to make certain data 

available according to the ONC final 

rule. At a minimum, the data specified 

in the ONC final rule at 45 CFR 

170.304(g) must be available subject to 

the ability of the provider to withhold 

it discussed previously. 

Comment: Commenters suggested that 

some EPs might not have 10 percent of 

their patient population who desire or 

could utilize such access. 

Response: We agree that this is a 

possibility. We stated in the proposed 

rule that ‘‘we recognize that many 

patients may not have internet access, 

may not be able or interested in the use 

of 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. However, this 30 percent 

threshold may not be realistic for many 

practices in the short term and therefore 

serves justification for the 10 percent 

threshold. However, the objective and 

measure focus on the availability of the 

access and the timeliness of the data in 

it, not its utilization. Therefore, we 

focus on the fact that more than 10 

percent of unique patients seen during 

the EHR reporting period could access 

it and that the information is timely. 

The EP is not responsible for ensuring 

that 10 percent request access or have 

the means to access. However, we 

encourage EPs to make the availability 

of electronic access known to their 

patients. 

Comment: A commenter inquired 

about the provider’s liability versus the 

EHR technology vendor for a security 

breach of the system. 

Response: Depending on the facts 

surround the security breach, the 

provider may be liable for a violation 

under the HIPAA Privacy and Security 

Rules, as well as under any other 

applicable federal or state laws. 

Additionally, there may be 

circumstances where the EHR 

technology vendor acted as a business 

associate and may potentially have 

liability under the HIPAA Privacy and 

Security Rules. The issue of business 

associate liability under the HIPAA 

Privacy and Security Rules will be 

addressed in upcoming rulemaking. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(6)(ii) of our regulations to ‘‘At 

least 10 percent of all unique patients 

seen by the EP are provided timely 

(available to the patient within four 

business days of being updated in the 

certified EHR technology) electronic 

access to their health information 

subject to the EP’s discretion to 

withhold certain information’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(g). The ability to 

calculate the measure is included in 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP during the EHR 


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reporting period. A unique patient is 

discussed under the objective of CPOE. 

• Numerator: The number of patients 

in the denominator who have timely 

(available to the patient within four 

business days of being updated in the 

certified EHR technology) electronic 

access to their health information 

online. 

• Threshold: The resulting percentage 

must be at least 10 percent in order for 

an EP to meet this measure. 

As addressed in other objectives and 

in comment response, if an EP neither 

orders nor creates any of the 

information listed in the ONC final rule 

45 CFR 170.304(g) and therefore 

included in the minimum data for this 

objective during the EHR reporting 

period they would be excluded from 

this requirement as described 

previously in this section under our 

discussion of whether certain EP, 

eligible hospital or CAH can meet all 

Stage 1 meaningful use objectives given 

established scopes of practices. 

NPRM EP Objective: Provide clinical 

summaries for patients for each office 

visit. 

In the proposed rule, we discussed 

why we were basing the objective on 

office visits rather than encounters. We 

said that we did want encounter to be 

construed to mean every time a provider 

interacts with the patient. We received 

comments requesting that we further 

define office visit and address those in 

the comment and response section 

below. In discussing the measure in the 

proposed rule, we also said that 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. 

Comment: We received requests for 

clarification as to what constitutes an 

‘‘office visit’’. 

Response: An office visit is defined as 

any billable visit that includes: (1) 

Concurrent care or transfer of care visits, 

(2) Consultant visits and (3) Prolonged 

Physician Service without Direct (FaceTo-Face) Patient Contact (tele-health). A 

consultant visit occurs when a provider 

is asked to render an expert opinion/ 

service for a specific condition or 

problem by a referring provider. 

Comment: Some commenters believed 

the requirement for the provision of a 

clinical summary at an office visit 

should be linked to the type or purpose 

of the office visit. Samples of the 

suggested visits are— 

—Level 4 or level 5 evaluation and 

management services; 

—Visits conducted at the conclusion of 

an episode of care; 

—Visits conducted at each transition of 

care; 

—Visits relevant to specific conditions 

such as asthma; and 

—Provider to patient face-to-face visits. 

Response: We believe that a clinical 

summary should be provided at all 

office visits included in the definition of 

office visit as defined in this final rule. 

We believe all of the office visits 

described in our definition result in the 

EP rendering a clinical judgment that 

should be communicated to the patient. 

Comment: Commenters requested 

CMS define ‘‘clinical summary’’ and 

offered several specific data elements 

that should be included in the 

definition such as patient name, 

provider name, date of visit, location of 

visit, reason for visit, updated 

medication list, laboratory orders, 

diagnostic orders, patient instructions 

based on discussions with the provider 

and a nutrition care management plan. 

Response: After reviewing the 

comments we define clinical summary 

as an after-visit summary that provides 

a patient with relevant and actionable 

information and instructions containing, 

but not limited to, the patient name, 

provider’s office contact information, 

date and location of visit, an updated 

medication list and summary of current 

medications, updated vitals, reason(s) 

for visit, procedures and other 

instructions based on clinical 

discussions that took place during the 

office visit, any updates to a problem 

list, immunizations or medications 

administered during visit, summary of 

topics covered/considered during visit, 

time and location of next appointment/ 

testing if scheduled, or a recommended 

appointment time if not scheduled, list 

of other appointments and testing 

patient needs to schedule with contact 

information, recommended patient 

decision aids, laboratory and other 

diagnostic test orders, test/laboratory 

results (if received before 24 hours after 

visit), and symptoms. 

Comment: Commenters pointed out 

that the HIPAA Privacy Rule permits 

licensed healthcare professionals to 

withhold certain information if its 

disclosure would cause substantial 

harm to the patient or another 

individual. 

Response: As the EP is proactively 

providing this information to the 

patient, 45 CFR 164.524 of the HIPAA 

Privacy rule does not apply to this 

situation. However, we still believe that 

an EP should be able to withhold 

information if its disclosure would 

cause substantial harm to the patient or 

another individual. Therefore, if in their 

judgment substantial harm may arise 

from the disclosure of particular 

information, an EP may choose to 

withhold that particular information 

from the clinical summary 

Comment: Most commenters noted 

that other than ‘‘at the time of the visit’’, 

there was no specific time period given 

in which to comply with this objective. 

If CMS intended ‘‘at the time of the visit’’ 

to mean before the patient leaves the 

building or upon the patient’s request, 

neither are possible due to workflow 

and review processes. Most commenters 

assumed we would associate the 48 

hours related to the ‘copy’ requirement 

or the 96 hours related to the ‘access’ 

requirement to address this comment 

and stated that both were too short a 

period for a clinical visit summary. 

Others recommended the 30-day 

timeframe for the provision information 

set forth under the HIPAA Privacy Rule. 

Response: We agree that our proposed 

objective lacked specificity about the 

time to comply. To provide such 

specificity, we adopt the timeframe of 

three business days from our objective 

of providing electronic health 

information to the patient. That is three 

business days following the day of the 

visit excluding holidays as described in 

the providing electronic health 

information to the patient objective. 

Comment: Several commenters 

requested changes to the media through 

which this information could be 

provided. Differing commenters 

recommended eliminating the paper 

option, while others recommended only 

the paper option. 

Response: We believe that more 

options give the EP needed flexibility. 

The EP could choose any of the listed 

means from the proposed rule of PHR, 

patient portal on a Web site, secure 

email, electronic media such as CD or 

USB fob, or printed copy. If the EP 

chooses an electronic media, they 

would be required to provide the patient 

a paper copy upon request. Both forms 

can be and should be produced by 

certified EHR technology. 

Comment: Several commenters 

indicated that a provider should be 

allowed to charge a fee for providing the 

copy. 

Response: As this is a proactive 

requirement on the part of the EP and 

not a response to a request from the 

patient, we do not believe it is 

appropriate to charge the patient a fee 

for this copy. We note that we give the 

EP considerable flexibility in the 


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manner in which the copy is provided 

including the provision of a paper copy. 

The only accommodation an EP is 

required to make is the provision of a 

paper copy that can be automatically 

generated certified EHR technology. We 

therefore believe that costs of this will 

be negligible. 

Comment: A number of commenters 

expressed concern regarding whether 

the current available technology could 

produce a summary of the required 

information in a standardized format, 

the use of clinical nomenclature rather 

than lay terms and the fact that some 

providers use multiple modules to 

document the care of the patient. 

Response: We believe it is appropriate 

to leave the design of EHR technology 

systems and their outputs to the system 

developers and the EHR technology 

users. However, we note that the 

capability to meet this objective is 

included in the ONC final rule at 45 

CFR 170.304(h) as a criteria for certified 

EHR technology and we are confident 

that vendors will be able to produce 

certified EHR technologies. 

After consideration of the public 

comments received, we are finalizing 

the objective for EPs at § 495.6(d)(13)(i) 

of our regulations as proposed. 

We include this objective in the core 

set as it is integral to involving patients 

and their families in their provision of 

care and was recommended by the HIT 

Policy Committee for inclusion in the 

core set. 

NPRM EP Measure: Clinical 

summaries provided to patients for at 

least 80 percent of all office visits. 

Comment: Some commenters believed 

the threshold was too high or should be 

replaced with a numerical count or 

attestation. 

Response: We reduce the threshold to 

over 50 percent as this objective meets 

the criteria of relying 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. 

Also, as this is a relatively new 

capability that was not available to 

either providers or patients before the 

introduction of EHRs, we do not believe 

it meets the same standard of practice as 

maintaining an up-to-date problem list 

and therefore adopt a threshold of 50 

percent (rather than 80 percent). 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(13)(ii) of our regulation to 

‘‘Clinical summaries provided to 

patients for more than 50 percent of all 

office visits within 3 business days’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(h). The ability to 

calculate the measure is included in 

certified EHR technology. 

As with the previous objective, the 

provision of the clinical summary is 

limited to the information contained 

within certified EHR technology; 

therefore this measure is by definition 

limited to patients whose records are 

maintained using certified EHR 

technology as described previously in 

this section under our discussion of the 

burden created by the measures 

associated with the Stage 1 meaningful 

use objectives. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP for an office 

during the EHR reporting period. A 

unique patient is discussed under the 

objective of using CPOE. 

• Numerator: Number of patients in 

the denominator who are provided a 

clinical summary of their visit within 

three business days. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. 

As addressed in other objectives, EPs 

who have no office visits during the 

EHR reporting period would be 

excluded from this requirement as 

described previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices. 

NPRM EP/Eligible Hospital Objective: 

‘‘Provide access to patient-specific 

education resources upon request.’’ 

In the proposed rule, we discussed 

this objective, but did not propose it. 

We stated that there was a paucity of 

knowledge resources that are integrated 

with EHR, and that also are widely 

available. We also noted that the ability 

to provide education resources in 

multiple languages might be limited. We 

stated our intent to further explore the 

objective in subsequent stages of 

meaningful use. 

Comment: We received many 

comments, including comments from 

both the HIT Policy Committee and 

MedPAC, to include this measure in the 

final rule. These commenters disagreed 

with our assertion in the proposed rule 

that ‘‘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.’’ Specific 

examples of the availability of 

knowledge resources integrated with 

current EHRs were provided. The HIT 

Policy Committee amended their 

recommendation in their comments on 

the proposed rule to: 

—EPs and hospitals should report on 

the percentage of patients for whom 

they use the EHR to suggest patientspecific education resources. 

Other recommended language for the 

objective includes: 

—Provide patients educational 

information that is specific to their 

health needs as identified by 

information contained in their EHR 

technology such as diagnoses and 

demographic data, and 

—The original HIT Policy Committee 

objective of ‘‘Provide access to patientspecific education resources upon 

request.’’ 

Response: We are convinced by 

commenters that the availability of 

education resources linked to EHRs is 

more widely available than we had 

indicated in the proposed rule. 

Therefore, for the final rule we will 

include this objective for the Stage 1 of 

meaningful use. We note that the new 

recommendation of the HIT Policy 

Committee is a hybrid of a measure and 

an objective, whereas in developing the 

meaningful use criteria we consistently 

identify both an objective and 

associated measure. However, we agree 

with the HIT Policy Committee and 

others that the objective and associated 

measure should make clear that the EP, 

eligible hospital or CAH should utilize 

certified EHR technology in a manner 

where the technology suggests patientspecific educational resources based on 

the information stored in the certified 

EHR technology. Therefore, we are 

including a revised version of this 

objective in the final rule for Stage 1 of 

meaningful use. 

We also believe it is necessary to state 

what level of EP, eligible hospital and 

CAH discretion is available when 

deciding whether to provide education 

resources identified by certified EHR 

technology to the patient. Therefore, we 

include the phrase ‘‘if appropriate’’, 

which allows the EP or the authorized 

provider in the eligible hospital or CAH 

final decision on whether the education 

resource is useful and relevant to a 

specific patient. 

After consideration of the public 

comments received, we are including 

this meaningful use objective for EPs at 

§ 495.6(e)(6)(i) and eligible hospitals 

and CAHs at § 495.6(g)(5)(i) of our 

regulations as ‘‘Use certified EHR 

technology to identify patient-specific 

education resources and provide those 

resources to the patient if appropriate’’. 


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NPRM EP/Eligible Hospital Measure: 

Not applicable. 

Comment: CMS received a comment 

requesting an 80 percent threshold of 

appropriate patients and/or caregivers 

receiving patient-specific educational 

materials. In addition, the HIT Policy 

Committee’s revised objective suggests a 

patient based percentage. 

Response: As with the addition of the 

recording of advance directives, we are 

able to relate this measure to one that 

is based on patients and can be 

accomplished solely using certified EHR 

technology. As this objective requires 

more than just the recording of 

information in certified EHR 

technology, we adopt a lower threshold 

of 10 percent. 

After consideration of the public 

comments received, we are including 

this meaningful use measure for EPs at 

§ 495.6(e)(6)(ii) and eligible hospitals at 

§ 495.6(g)(5)(ii) of our regulations as 

‘‘More than 10 percent of all unique 

patients seen by the EP or admitted to 

the eligible hospital’s or CAH’s 

inpatient or emergency department 

(POS 21 or 23) are provided patientspecific education resources’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(m). The ability to 

calculate the measure is included in 

certified EHR technology. 

To calculate the percentage, CMS and 

ONC have worked together to define the 

following for this objective: 

• Denominator: Number of unique 

patients seen by the EP or admitted to 

the eligible hospital’s or CAH’s 

inpatient or emergency department 

(POS 21 or 23) during the EHR reporting 

period. A unique patient is discussed 

under the CPOE objective. 

• Numerator: Number of patients in 

the denominator who are provided 

patient education specific resources. 

• Threshold: The resulting percentage 

must be more than 10 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. 

We do not believe that any EP, eligible 

hospital, or CAH will not have more 

than 10 percent of their patients eligible 

to receive patient specific education 

resources and therefore do not believe 

an exclusion is necessary for this 

objective. 

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. 

NPRM 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. 

NPRM Eligible Hospital Objective: 

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. 

In the proposed rule, we defined the 

term ‘‘diagnostic test results ’’ as 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. We 

maintain this description for the final 

rule. We said that when the information 

was available in a structured format we 

expected that it be transferred in a 

structured format. However, if it was 

unavailable in a structured format, that 

the transmission of unstructured data 

was permissible. We provide additional 

information on structured data in the 

comment and response section, but 

maintain for the final rule the concept 

that the exchange can be of structured 

or unstructured data. 

Comment: Commenters requested 

clarification of the term ‘‘key clinical 

information.’’ 

Response: By ‘‘clinical information’’, 

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. We leave it to the 

provider’s clinical judgment as to 

identifying what clinical information is 

considered key clinical information for 

purposes of exchanging clinical 

information about a patient at a 

particular time with other providers of 

care. The examples we provided in the 

proposed rule and the final rule below 

are not intended to be exhaustive. ONC 

in their final rule provides a minimum 

set of information that certified EHR 

technology must be able to exchange in 

order to be certified. A provider’s 

determination of key clinical 

information could include some or all of 

this information as well as information 

not included in the ONC final rule at 45 

CFR 170.304(i) for EPs and 45 CFR 

170.306(f) for eligible hospitals and 

CAHs. 

Comment: Commenters requested 

clarification of the term ‘‘patient 

authorized entities.’’ 

Response: By ‘‘patient authorized 

entities’’, we mean 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, an entity facilitating health 

information exchange among providers 

or a personal health record vendor 

identified by the patient. A patient 

would have to affirmatively grant access 

to these entities. 

Comment: Commenters requested 

clarification of the term ‘‘exchange.’’ 

Response: We expect that this 

information, when exchanged 

electronically, would be exchanged in 

structured electronic format when 

available (for example, drug and clinical 

lab data). 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. We believe 

that the electronic exchange of 

information is most efficient when it is 

exchanged from a provider’s certified 

EHR technology to another certified 

EHR technology either directly or 

through an entity facilitating health 

information exchange using structured 

data that can be automatically identified 

by the receiving system and integrated 

into the receiver’s records. However, we 

know that much information cannot 

currently be, and may never be, 

transmitted in the way we just 

described. 

Comment: Commenters requested 

clarification of the term ‘‘structured 

data.’’ 

Response: This distinction between 

structured data and unstructured data 

applies to all types of information. We 

have previously defined structured data 

in this section. To ensure that certified 

EHR technology has a certain level of 

functionality, ONC at 45 CFR 170.304(i) 

for EPs and 45 CFR 170.306(f) for 

eligible hospitals and CAHs specified 

certain types of information that a 

certified EHR technology must be able 

to exchange to become certified. ONC 

also provided standards to support this 

exchange. These standards do not 

preclude a vendor of EHR technology 

from enabling its product to exchange 

additional types of information nor limit 

the provider’s discretion (either in 

exchanging more or less) in deciding 

what information is key and should be 

exchanged about a given patient at a 

given time. 

Comment: Commenters expressed 

concern that the exchange of key 


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clinical information via certified EHR 

systems requires a unique or national 

patient identifier to ensure accurate 

exchange. 

Response: While such an identifier 

could facilitate an exchange, it need 

only be unique to the parties involved 

in the exchange and need not be 

national in scope, nor is a specific 

unique identifier necessary for 

successful exchanges. Many current 

health information exchanges have had 

success identifying patients by a 

combination of several elements of 

information without a separate 

independent identifier. 

Comment: Commenters pointed out 

that the general term ‘‘allergies’’ is 

inconsistent with other objectives of 

Stage 1 and with the capabilities 

mandated by certification under the 

ONC final rule, which uses the term 

‘‘medication allergies’’. 

Response: As we have stated on 

several other objectives, we encourage 

all EPs, eligible hospitals, and CAHs to 

work with their certified EHR 

technology designers to make 

capabilities most relevant to their 

individual practices of care. However, 

we have maintained that at a minimum 

the capabilities that are part of 

certification should be included so we 

modify the example to change allergies 

to medication allergies to align it with 

other objectives and certification. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(d)(14)(i) of our regulations to 

‘‘Capability to exchange key clinical 

information (for example, problem list, 

medication list, medication allergies, 

and diagnostic test results), among 

providers of care and patient authorized 

entities electronically’’ and for eligible 

hospitals and CAHs at § 495.6(f)(13)(i) to 

‘‘Capability to exchange key clinical 

information (for example, discharge 

summary, procedures, problem list, 

medication list, medication allergies, 

diagnostic test results), among providers 

of care and patient authorized entities 

electronically’’. 

In response to our revised 

requirements for meeting meaningful 

use, we included this objective in the 

core set. Section 1848 (o)(2)(A)(ii) of the 

Act specifically includes electronic 

exchange of health information in 

meaningful use for eligible 

professionals. 

NPRM EP/Eligible Hospital Measure: 

Performed at least one test of certified 

EHR technology’s capacity to 

electronically exchange key clinical 

information. 

In the proposed rule, we identified 

this objective as reliant on the electronic 

exchange of information. We said that 

we are aware 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 proposed 

that EPs and eligible hospitals test their 

ability to send such information at least 

once prior to the end of the EHR 

reporting period. We proposed that the 

testing could occur prior to the 

beginning of the EHR reporting period. 

We also said that 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. Finally, we attempted to 

define an ‘‘exchange’’ as the clinical 

information must be sent between 

different clinical entities with distinct 

certified EHR technology and not 

between organizations that share a 

certified EHR. We received many 

comments requesting further 

clarification on these concepts and we 

attempt to provide additional 

information in the comment and 

response section below. 

Comment: Commenters expressed 

concern that the receiving entities are 

not required to have the same 

capabilities as meaningful users of 

certified EHR technology. 

Response: The HITECH Act does not 

provide us the authority to require any 

entity (medical provider or otherwise) to 

conform to certain standards and 

criteria unless they seek to become a 

meaningful EHR user. The Act also 

limits the entities that are eligible to 

become meaningful EHR users. In 

developing the associated measure for 

this objective, we have ensured that 

eligible providers will be able to meet 

this objective as long as there is one 

other entity with which they can test 

their capability. As electronic exchange 

is not constrained by distance, we are 

confident that every provider seeking to 

test their system will be able to find 

another entity with which to conduct 

such test. 

Comment: Commenters asked 

whether the test needs to be ‘‘live’’ or if 

it could be a ‘‘simulation.’’ 

Response: As specified in the 

proposed rule, this test must involve the 

actual submission of information to 

another provider of care with distinct 

certified EHR technology or other 

system capable of receiving the 

information. 

Comment: Commenters asked 

whether the use of ‘‘test’’ or ‘‘dummy’’ 

data is permissible. 

Response: While the use of test 

patient information may increase the 

risk that the system will not be testing 

to its full capability, given the privacy 

and security concerns surrounding the 

transmission of actual patient 

information we do not require it for the 

purposes of a test. Therefore, the use of 

test information about a fictional patient 

that would be identical in form to what 

would be sent about an actual patient 

would satisfy this objective. 

Comment: Commenters suggested 

deferring the measure to a later stage 

due to the lack of a mature HIE 

infrastructure and/or to emulate the 

Health Information and Management 

System Society (HIMSS) EMR Adoption 

Model. 

Response: We agree that many areas 

of the country currently lack the 

infrastructure to support the electronic 

exchange of information. As the goal of 

this meaningful use objective is to 

ensure that certified EHR technology 

has the capability to electronically 

exchange key clinical information, we 

only require a single test. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use measure at 

§ 495.6(d)(14)(ii) and § 495.6(f)(13)(ii) of 

our regulations as proposed. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.304(i) for EPs and 45 CFR 

170.306(f) for eligible hospitals and 

CAHs. The ability to calculate the 

measure is included in certified EHR 

technology. EPs, eligible hospitals, and 

CAHs should attempt to identify one 

other entity with whom to conduct a 

test of the submission of electronic data. 

This test must include the transfer of 

either actual or ‘‘dummy’’ data to the 

chosen other entity. The testing could 

occur prior to the beginning of the EHR 

reporting period, but must occur prior to 

the end of the EHR reporting period and 

every payment year would require its 

own, unique test as infrastructure for 

health information exchange is expected 

to mature over time. Therefore, if an 

eligible hospital or CAH were to become 

a meaningful EHR user in 2011 for their 

first payment year, they would have to 

conduct another, unique test to become 

a meaningful EHR user in 2012 for their 

second payment year. 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 


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certified EHR technology. To be 

considered an ‘‘exchange’’ for this 

objective and measure the clinical 

information must be sent between 

different legal entities with distinct 

certified EHR technology or other 

system that can accept the information 

and not between organizations that 

share certified EHR technology. CMS 

will accept a yes/no attestation to verify 

all of the above for EPs, eligible 

hospitals, and CAHs. 

As the measure already accounts for 

the possibility of a failed test and we are 

confident that everyone will be identify 

an entity with which to conduct a test, 

we do not believe an exception is 

required for EPs, eligible hospitals or 

CAHs. 

NPRM EP/Eligible Hospital Objective: 

Perform medication reconciliation at 

relevant encounters and each transition 

of care. 

In the proposed rule, we described 

‘‘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 external list of 

medications obtained from a patient, 

hospital or other provider. We maintain 

this description for the final rule. We 

also described ‘‘relevant encounter’’ and 

‘‘transition of care’’; however, as we 

received comments requested additional 

clarification of these terms we address 

them in the comment and response 

section below. 

Comment: Several commenters 

requested that this objective be deferred 

until it can be conducted using the 

exchange of electronic information 

between certified EHR technology. 

Other commenters believed that the 

process is not one for avoiding 

medication errors, but a human 

workflow process supported by the 

EHR, and not an automated EHR 

process. 

Response: We certainly look forward 

to a time when most medication 

reconciliation occurs as an automated 

process within the EHR reconciling 

information that has been exchanged. 

However, it is unlikely that an 

automated process within the EHR will 

fully supplant the medication 

reconciliation conducted between the 

provider and the patient. In order for 

this automated reconciliation process to 

occur and be useful, the relevant 

structured data exchanged needs to be 

as accurate as possible. Requiring 

medication reconciliation as part of 

meaningful use in Stage 1 lays the 

groundwork for future reliable 

electronic exchange. We therefore do 

not believe this objective should be 

deferred to a later stage. 

Comment: Commenters requested 

additional clarity of the term ‘‘relevant 

encounter.’’ Only a few suggestions on 

such clarity were provided by 

commenters. Two examples of 

commenters’ recommendations are 

‘‘when a prescription is generated’’ and 

‘‘a significant change in the patient’s 

condition that resulted in change in 

medication regimen which could 

include significant change in dosing of 

more than 1 medication, identification 

of a new medical condition, decline in 

functional status or change in advanced 

directive.’’ 

Response: We finalize our proposal by 

defining ‘‘relevant encounter’’ as an 

encounter during which the EP, eligible 

hospital or CAH performs a medication 

reconciliation due to new medication or 

long gaps in time between patient 

encounters or for other reasons 

determined appropriate by the EP, 

eligible hospital or CAH. Essentially an 

encounter is relevant if the EP, eligible 

hospital, or CAH judges it to be so. This 

flexibility has implications for the 

measure that were not fully considered 

in the proposed rule. We will discuss 

those below in connection with our 

discussion of the associated measure. 

Comment: Commenters requested 

additional clarity of the term ‘‘transition 

of care.’’ A few suggestions were 

provided by commenters including 

expanding the description to include all 

transfers to different settings within a 

hospital or revising the definition to 

‘‘the movement of a patient from one 

setting of care (hospital, ambulatory 

primary care practice, ambulatory 

specialty care practice, long-term care, 

home health, rehabilitation facility) to 

another’’. 

Response: In the proposed rule we 

clarified ‘‘transition of care’’ as the 

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, eligible hospital, or CAH (as defined 

by CCN) to another. We believe that 

different settings within one hospital 

using certified EHR technology would 

have access to the same information so 

reconciliation would not be necessary. 

We modify our clarification to account 

for some of the revisions provided. We 

clarify ‘‘transition of care’’ as the 

movement of a patient from one setting 

of care (hospital, ambulatory primary 

care practice, ambulatory specialty care 

practice, long-term care, home health, 

rehabilitation facility) to another. We 

also clarify that the receiving eligible 

hospital or EP would conduct the 

medication reconciliation. 

Comment: Some commenters 

requested clarification on which EP, 

eligible hospital or CAH would conduct 

the medication reconciliation. The one 

to whom the patient is transferred or the 

one who transfers the patient. 

Response: When conducting 

medication reconciliation during a 

transfer of care, we believe that it is the 

EP, eligible hospital or CAH that 

receives the patient into their care that 

should conduct the medication 

reconciliation. It is for this provider that 

the information is most crucial, as they 

will be making the future clinical 

judgments regarding the patient. 

Therefore, we revise this objective and 

its associated measure to reflect this 

clarification. 

Comment: Commenters requested a 

standard list be defined for the process 

including prescription and non 

prescription medications, herbal 

products, dietary supplements, 

prescriber, drug name, regimen and 

allergies. 

Response: We believe the information 

included in the process of medication 

reconciliation is appropriately 

determined by the provider and patient. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(e)(7)(i) and for eligible hospitals 

and CAHs at § 495.6(g)(6)(i) of our 

regulations to ‘‘The EP, eligible hospital 

or CAH who receives a patient from 

another setting of care or provider of 

care or believes an encounter is relevant 

should perform medication 

reconciliation’’. 

NPRM EP/Eligible Hospital Measure: 

Perform medication reconciliation for at 

least 80 percent of relevant encounters 

and transitions of care. 

Comment: Commenters believed it 

was an unjustifiable burden to record 

which encounters were relevant and 

which were not given our flexible 

definition of ‘‘relevant encounter’’. 

Response: We agree that the inclusion 

of relevant encounters creates a burden 

that one commenter described as ‘‘nonvalue-added work’’. We also believe that 

when the EP, eligible hospital, or CAH 

identifies the encounter as relevant, it is 

unlikely that the EP, eligible hospital, or 

CAH would then not carry out the 

medication reconciliation. For these 

reasons, we are removing relevant 

encounters from the measure for this 

objective. 

Comment: Commenters said the 

percent measurements should be 

replaced with a numerical count or an 

attestation the objective has been met or 

the demonstration of the capability by 

performing one test of certified EHR 

technology’s capacity to present 


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providers with patient medication 

information that supports the 

reconciliation of medications at time of 

admission and discharge. Other 

commenters stated the proposed 80 

percent threshold was too high. 

Response: We are maintaining a 

percentage for the reasons discussed 

previously in this section. However, we 

do reduce the threshold to over 50 

percent as this objective meets the 

criteria of relying solely on a capability 

included as part of certified EHR 

technology and while not absolutely 

reliant on electronic exchange of 

information, it does involve the 

exchange of information between 

providers and therefore we adopt a 

threshold of 50 percent (rather than 8 

percent). 

Comment: Commenters requested we 

align this objective with The Joint 

Commission National Patient Safety 

Goal on medication reconciliation (Goal 

8) in order to decrease confusion, 

prevent the slowing of adoption of best 

practices and match current hospital 

reconciliation processes. 

Response: CMS understands the 

commenters’ concerns regarding 

possible confusion if the meaningful use 

medication reconciliation requirement 

differs from The Joint Commission’s 

requirement for those facilities 

accredited by that organization. 

However, currently there is no finalized 

Joint Commission standard as the 

Commission is currently in the process 

of re-evaluating their National Patient 

Safety Goal 8 (Accurately and 

completely reconcile medications across 

the continuum of care) given the 

difficulties that many organizations are 

having in meeting the complex 

requirements. In the absence of a 

definitive Joint Commission standard to 

take into consideration, this is not 

possible. 

Comment: Some commenters 

expressed the desire to expand the 

scope of the measure to include the 

clinical decision making and patient 

counseling and education by a 

pharmacist. 

Response: We believe that is both 

beyond the scope of meaningful use as 

pharmacists are not eligible 

professionals for the EHR incentive 

programs and that the provision of 

patient counseling is more aligned with 

the objectives of clinical quality 

measures. Information from the 

medication reconciliation could be used 

for the basis of clinical decision support 

rules, but is not in and of itself a clinical 

decision. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(e)(7)(ii) and for eligible hospitals 

and CAHs at § 495.6(g)(6)(ii) of our 

regulations to ‘‘The EP, eligible hospital 

or CAH performs medication 

reconciliation for more than 50 percent 

of transitions of care in which the 

patient is transitioned into the care of 

the EP or admitted to the eligible 

hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23)’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(j). The ability to 

calculate the measure is included in 

certified EHR technology. 

As discussed previously in this 

section under our discussion of the 

burden created by the measures 

associated with the Stage 1 meaningful 

use objectives, we only include in the 

denominator transitions of care related 

to patients whose records are 

maintained using certified EHR 

technology. To calculate the percentage, 

CMS and ONC have worked together to 

define the following for this objective: 

• Denominator: Number of transitions 

of care during the EHR reporting period 

for which the EP or eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 to 23) was the 

receiving party of the transition. 

• Numerator: The number of 

transitions of care in the denominator 

where medication reconciliation was 

performed. 

• Threshold: The resulting percentage 

must be more than 50 percent in order 

for an EP, eligible hospital, or CAH to 

meet this measure. If an EP was not on 

the receiving end of any transition of 

care during the EHR reporting period 

they would be excluded as previously 

discussed in this section under our 

discussion of whether certain EP, 

eligible hospital or CAH can meet all 

Stage 1 meaningful use objectives given 

established scopes of practices. We do 

not believe that any eligible hospital or 

CAH would be in a situation where they 

would not need to know the precise 

medications their patients are taking. 

NPRM EP/Eligible Hospital Objective: 

Provide summary care record for each 

transition of care or referral. 

In the proposed rule, we pointed out 

that this objective was not explicitly 

included in the HIT Policy Committee’s 

recommended objectives, but that they 

did include a measure for the ‘‘percent 

of transitions in care for which 

summary care record is shared.’’ We said 

that 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 proposed 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. We 

received support for this inclusion from 

commenters and include this objective 

in the final rule for the reasons outlined 

in the proposed rule. We did receive 

comments requesting clarifications 

around this objective and address them 

in the comment and response section 

below. 

Comment: We received several 

comments that requested clarification as 

to the purpose of this objective. 

Response: The purpose of this 

objective is to ensure a summary of care 

record is provided to the receiving 

provider when a patient is transitioning 

to a new provider or has been referred 

to another provider while still 

remaining under the care of the referring 

provider. If the provider to whom the 

referral is made or to whom the patient 

is transitioned to has access to the 

medical record maintained by the 

referring provider then the summary of 

care record would not need to be 

provided. The most common example 

cited by commenters was a referral 

during which patient remains an 

inpatient of the hospital. Finally, unlike 

with medication reconciliation, where 

the receiving party of the transfer 

conducts the action, the transferring 

party would provide the summary care 

record to the receiving party. 

Comment: Commenters requested 

additional clarity of the term ‘‘transition 

of care’’. A few suggestions were 

provided by the commenters including 

expanding the description to include all 

transfers to different settings within a 

hospital or revising the definition to 

‘‘the movement of a patient from one 

setting of care (hospital, ambulatory 

primary care practice, ambulatory, 

specialty care practice, long-term care, 

home health, rehabilitation facility) to 

another’’. 

Response: In the proposed rule we 

clarified that the term transition of care 

means a 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, eligible hospital, or 

CAH (as defined by CMS Certification 

Number (CCN) to another. We believe 

that different settings within a hospital 

using certified EHR technology would 

have access to the same information so 


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providing a clinical care summary 

would not be necessary. We further 

clarify transition of care as the 

movement of a patient from one setting 

of care (hospital, ambulatory primary 

care practice, ambulatory, specialty care 

practice, long-term care, home health, 

rehabilitation facility) to another. 

Comment: Some commenters 

requested clarification on which EP, 

eligible hospital or CAH should provide 

the summary of care document; the one 

to whom the patient is transferred or 

referred or the one who transfers or 

refers the patient. 

Response: We believe that it is the EP, 

eligible hospital or CAH that transfers or 

refers the patient to another setting of 

care or provider that should provide the 

summary of care document. It is for this 

provider that has the most recent 

information on the patient that may be 

crucial to the provider to whom the 

patient is transferred or referred. 

Therefore, we revise this objective and 

its associated measure to reflect this 

clarification. 

Comment: Commenters asked for 

clarification on how the summary of 

care record should be transferred. 

Response: The goal is to get the 

summary care record into the next 

provider’s possession. While we highly 

encourage all EPs, eligible hospitals, 

and CAHs to explore ways to 

accomplish the transfer using electronic 

exchange, we realize that this capability 

is still in the development stages. 

Therefore, an EP, eligible hospital, or 

CAH could send an electronic or paper 

copy of the summary care record 

directly to the next provider or could 

provide it to the patient to deliver to the 

next provider, if the patient can 

reasonably expected to do so. Certified 

EHR technology would be used to 

generate the summary of care record and 

to document that it was provided to the 

patient or receiving provider. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(e)(8)(i) and for eligible hospitals 

and CAHs at § 495.6(g)(7)(i) of our 

regulations to ‘‘The EP, eligible hospital 

or CAH who transitions their patient to 

another setting of care or provider of 

care or refers their patient to another 

provider of care should provide 

summary care record for each transition 

of care or referral’’. 

NPRM EP/Eligible Hospital Measure: 

Provide summary of care record for at 

least 80 percent of transitions of care 

and referrals. 

Comment: Commenters said that this 

should be replaced with a count and 

that the threshold was too high. 

Response: We are maintaining a 

percentage for the reasons discussed 

previously in this section. However, we 

do reduce the threshold to over 50 

percent as this objective meets the 

criteria of relying solely on a capability 

included as part of certified EHR 

technology and while not absolutely 

reliant on electronic exchange of 

information, it does involve the 

exchange of information between 

providers and therefore we adopt a 

threshold of 50 percent (rather than 80 

percent). 

Comment: There were concerns about 

the ability of certified EHR technology 

to calculate this measure. As long as an 

EP, eligible hospital, or CAH records the 

order for a referral or transfer as 

structured data and a record is made 

that the summary care record was 

provided then certified EHR technology 

will be able to calculate this measure. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(e)(8)(ii) and for eligible hospitals 

and CAHs at § 495.6(g)(7)(ii) of our 

regulations to ‘‘The EP, eligible hospital 

or CAH who transitions or refers their 

patient to another setting of care or 

provider of care provides a summary of 

care record for more than 50 percent of 

transitions of care and referrals’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

included as specified and standards at 

45 CFR 170.304(i) for EPs and 45 CFR 

170.306(f) for eligible hospitals and 

CAHs. The ability to calculate the 

measure is included in certified EHR 

technology. 

As discussed previously in this 

section under our discussion of the 

burden created by the measures 

associated with the Stage 1 meaningful 

use objectives, we only include in the 

denominator transitions of care and 

referrals related to patients whose 

records that are maintained using 

certified EHR technology. To calculate 

the percentage, CMS and ONC have 

worked together to define the following 

for this objective: 

• Denominator: Number of transitions 

of care and referrals during the EHR 

reporting period for which the EP or 

eligible hospital’s or CAH’s inpatient or 

emergency department (POS 21 to 23) 

was the transferring or referring 

provider. 

• Numerator: The number of 

transitions of care and referrals in the 

denominator where a summary of care 

record was provided. 

• Threshold: The percentage must be 

more than 50 percent in order for an EP, 

eligible hospital, or CAH to meet this 

measure. 

As addressed in other objectives and 

in comment response, if an EP does not 

transfer a patient to another setting or 

refer a patient to another provider 

during the EHR reporting period then 

they would have a situation of a null 

denominator as described would be 

excluded from this requirement as 

described previously in this section 

under our discussion of whether certain 

EP, eligible hospital or CAH can meet 

all Stage 1 meaningful use objectives 

given established scopes of practices. 

We do not believe that any eligible 

hospital or CAH would be in a situation 

where they would never transfer a 

patient to another care setting or make 

a referral to another provider. 

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.’’ In the proposed 

rule, we explained that 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 the 

individuals who would communicate 

with public health agencies. 

NPRM EP/Eligible Hospital Objective: 

Capability to submit electronic data to 

immunization registries and actual 

submission where required and 

accepted. 

In the proposed rule, we did not 

elaborate on this objective. 

Comment: Some commenters 

suggested out that not every EP, eligible 

hospital, or CAH administers 

immunization. Therefore, as proposed, 

this objective and its associated measure 

would require an EP, eligible hospital, 

or CAH to implement and test a 

capability that they would not use. 

Response: We acknowledge that this 

objective is not relevant to all EPs, 

eligible hospitals or CAHs. Therefore, in 

this final rule, we clarify that this 

objective and its associated measure 

apply only to EPs, eligible hospitals or 

CAHs that administer one or more 

immunizations during the EHR 

reporting period. 

Comment: Some commenters 

recommended revising the language of 

the immunization objective to be 

consistent with the language of the 

syndromic surveillance objective by 


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replacing ‘‘where required and 

accepted’’ with ‘‘according to applicable 

law and practice.’’ 

Response: First, we make a technical 

correction. The objective listed for EPs 

on page 1858 of the proposed rule listed 

this objective as ‘‘Capability to submit 

electronic data to immunization 

registries and actual submission where 

possible and accepted.’’ The objective 

was intended to be ‘‘Capability to submit 

electronic data to immunization 

registries and actual submission where 

required and accepted’’ for EPs, eligible 

hospitals, and CAHs. It is written as 

such in every other instance in the 

proposed rule including the regulation 

text. Second, in response to the 

comment that ‘‘where required and 

accepted’’ be replaced with ‘‘according 

to applicable law and practice’’, we see 

little distinction between the two in 

terms of requirement as applicable law 

and practice would be the things 

imposing a requirement. Therefore, we 

adopt the proposed language, but 

modify the language slightly to ‘‘in 

accordance with applicable law and 

practice’’. We do note however, that 

applicable law and practice do not 

guarantee every receiving entity will be 

able to accept it electronically. Our 

measure for meeting this objective is 

one test of electronic data submission 

and if the test is successful follow up 

submission to that one entity. We do not 

seek to enforce through meaningful use 

every law and practice that may require 

submission of immunization data. We 

also make another consistency change to 

the objectives under the health care 

policy goal of improving population and 

public health. In this objective, we 

describe the capability as submitting 

electronic data. In the other objectives 

under this goal we describe the 

capability as providing electronic data. 

We believe that functionally these terms 

are interchangeable, but to avoid any 

confusion we adopt the same term of 

‘‘submit’’ electronic data across all three 

objectives. 

Comment: Some commenters 

suggested that the term ‘‘Immunization 

Information Systems (IIS)’’ has replaced 

the term ‘‘registry’’ and is referred to as 

such by the Centers for Disease Control 

(CDC). 

Response: We modified the objective 

to account for both terms. After 

consideration of the public comments 

received, we are modifying the 

meaningful use objective for EPs at 

§ 495.6(e)(9)(i) and for eligible hospitals 

and CAHs at § 495.6(g)(8)(i) of our 

regulations to Capability to submit 

electronic data to immunization 

registries or Immunization Information 

Systems and actual submission in 

accordance with to applicable law and 

practice. 

NPRM EP/Eligible Hospital Measure: 

Performed at least one test of certified 

EHR technology’s capacity to submit 

electronic data to immunization 

registries (unless none of the 

immunization registries to which the 

EP, eligible hospital, or CAH submits 

such information have the capacity to 

receive the information electronically). 

In the proposed rule, we identified 

this as an objective where 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. This 

ability for the States is also included in 

our final rule. 

Comment: As with the objective of 

exchanging key clinical information, 

some commenters asked whether the 

test needs to be ‘‘live’’ or if it could be 

a ‘‘simulation’’. Some commenters 

suggested that a simulation where the 

ability was tested without being 

transmitted to another party should be 

sufficient. Others suggested that the test 

needs to include transmission or 

difficulties in actual sending 

information might not be uncovered. 

Response: As specified in the 

proposed rule, this test must involve the 

actual submission of information to a 

registry or immunization information 

system, if one exists that will accept the 

information. 

Comment: Commenters asked 

whether the use of ‘‘test’’ or ‘‘dummy’’ 

data is permissible. 

Response: While the use of test 

patient information may increase the 

risk that the system will not be testing 

to its full capability, given the privacy 

and security concerns surrounding the 

transmission of actual patient 

information we do not require it for the 

purposes of a test. Therefore, the use of 

test information about a fictional patient 

that would be identical in form to what 

would be sent about an actual patient 

would satisfy this objective. However, 

we note that this is one of the objectives 

that a State may modify in accordance 

with the discussion in II.A.2.c. of the 

proposed rule. Therefore, more stringent 

requirements may be established for EPs 

and eligible hospitals under the 

Medicaid program in states where this 

capability exists. 

Comment: Commenters expressed 

concern about the burden of multiple 

requirements for submission from 

Federal, State, and local government 

agencies or non-governmental registries. 

They also raised the issue of lack of 

standardization of means and form of 

submission. 

Response: Standards for content 

exchange and vocabulary are 

established in the ONC final rule at 45 

CFR 170.302(k). As meaningful use 

seeks to utilize certified EHR technology 

for purposes of the test and subsequent 

submission (if test was successful) these 

are the standards that should be 

utilized. While we encourage all 

providers and registries to work together 

to develop efficient, electronic 

submission of immunization 

information to all registries where it can 

be used to improve population and 

public health, for purposes of becoming 

a meaningful EHR user, we only require 

a single test and follow up submission 

if that test is successful. 

Comment: Commenters suggested 

deferring the measure to a later stage 

due to the lack of a mature HIE 

infrastructure. 

Response: We agree that many areas 

of the country currently lack the 

infrastructure to support the electronic 

exchange of information. As meaningful 

use seeks to ensure certified EHR 

technology has the capability to submit 

electronic data to registries, we only 

require a single test if a receiving entity 

is available and follow up submission 

only if that test is successful. If none of 

the immunization registries to which 

the EP, eligible hospital or CAH submits 

information has the capacity to receive 

the information electronically, then this 

objective would not apply. 

Comment: Commenters requested 

clarification whether on a failed 

attempted test satisfies the criteria of 

this measure and whether EPs in a 

group setting using identical certified 

EHR technology would only need to 

conduct a single test, not one test per 

EP. 

Response: A failed attempt would 

meet the measure. We highly encourage 

EPs, eligible hospitals, and CAHs to 

work with their vendor and the 

receiving entity with whom they tested 

to identify the source of the failure and 

develop remedies, but for Stage 1 of 

meaningful use a failed attempt would 

meet the requirements. We had 

indicated in the proposed rule that only 

one test is required for EPs practicing in 

a group setting that shares the same 

certified EHR technology. We maintain 

that proposal for the final rule. 

Comment: Commenters recommended 

the inclusion of electronically reporting 

to other types of registries in addition to 

immunization registries such as diseasespecific registries such as the Cystic 

Fibrosis Registry. 

Response: While we encourage all 

providers and registries to work together 


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44366 Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 

to develop efficient, electronic 

submission of information to all 

registries where it can be used to 

improve population and public health, 

for purposes of becoming a meaningful 

EHR user, we only require a single test 

utilizing immunization data and follow 

up submission if that test is successful. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(e)(9)(ii) and for eligible hospitals 

and CAHs at § 495.6(g)(8)(ii) of our 

regulations to ‘‘Performed at least one 

test of certified EHR technology’s 

capacity to submit electronic data to 

immunization registries and follow up 

submission if the test is successful 

(unless none of the immunization 

registries to which the EP, eligible 

hospital, or CAH submits such 

information have the capacity to receive 

the information electronically)’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(k). The ability to 

calculate the measure is included in 

certified EHR technology. We require 

that an EP, eligible hospital, or CAH 

determine if they have given any 

immunizations during the EHR 

reporting period. Those that have not 

given any immunizations during the 

EHR reporting period are excluded from 

this measure according to the discussion 

of whether certain EP, eligible hospital 

or CAH can meet all Stage 1 meaningful 

use objectives given established scopes 

of practices. If they have given 

immunizations during the reporting 

period, they should then attempt to 

locate a registry or IIS with whom to 

conduct a test of the submission of 

electronic data. This test must include 

the transfer of either actual or ‘‘dummy’’ 

data to the chosen registry or IIS. The 

testing could occur prior to the 

beginning of the EHR reporting period, 

but must occur prior to the end 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. If the 

test is successful, then the EP, eligible 

hospital, or CAH should institute 

regular reporting to that entity in 

accordance with applicable law and 

practice. CMS will accept a yes/no 

attestation to verify all of the above for 

EPs, eligible hospitals or CAHs that 

have administered immunizations 

during the EHR reporting period. 

NPRM Eligible Hospital Objective: 

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. 

In the proposed rule, we did not 

elaborate on this objective. 

Comment: A few commenters 

requested this objective be applied to 

EPs as long as the EHR Certification 

requirements are met. A commenter 

remarked that electronic submission of 

reportable lab results should not put an 

additional burden on the providers as 

the EHR would be able to automate this 

process. 

Response: We based the limitation on 

the recommendation of the HIT Policy 

Committee who in turn went through a 

considerable public development 

process. We do not believe that burden 

of reporting was the only limiting factor 

in keeping this objective from being 

applied to EPs; therefore, we maintain 

our proposal to limit this objective to 

eligible hospitals and CAHs. EPs usually 

send out lab test to other organizations 

on which reporting burdens may fall. 

Comment: Commenters requested that 

the actual transmission of the 

information be required. 

Response: In the discussion of the 

reporting immunization data objective, 

we discussed at length the need to align 

the language for the three objectives 

included under the health care policy 

priority of improve population and 

public health, which is one of the five 

priorities of the Stage 1 definition of 

meaningful use. Our interpretation is 

that the three phrases result in the same 

outcome, but introduce confusion due 

to the varied wordings. As commenters 

strongly preferred the phrase ‘‘according 

to applicable law and practice’’, we will 

so modify this objective. We do note 

however that applicable law and 

practice does not guarantee every 

receiving entity will be able to accept it 

electronically. Our measure for meeting 

this objective is one test of electronic 

data submission and if the test is 

successful, a follow up submission to 

that one entity. We do not seek to 

enforce through meaningful use every 

law and practice that may require 

submission of lab results. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for eligible 

hospitals and CAHs at § 495.6(g)(9)(i) of 

our regulations to ‘‘Capability to submit 

electronic data on reportable (as 

required by state or local law) lab results 

to public health agencies and actual 

submission in accordance with 

applicable law and practice’’. 

NPRM 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). 

In the proposed rule, we identified 

this as an objective where more 

stringent requirements may be 

established for eligible hospitals under 

the Medicaid program in states where 

this capability exists. This is just one 

example of a possible State proposed 

modification to 

Comment: Commenters asked 

whether the test needs to be ‘‘live’’ or if 

it could be a ‘‘simulation’’. 

Response: As specified in the 

proposed rule, this test must involve the 

actual submission of information to a 

public health agency, if one exists that 

will accept the information. 

Comment: Commenters asked 

whether the use of ‘‘test’’ or ‘‘dummy’’ 

data is permissible. 

Response: While the use of test 

patient information may increase the 

risk that the system will not be testing 

to its full capability, given the privacy 

and security concerns surrounding the 

transmission of actual patient 

information we do not require it for the 

purposes of a test. Therefore, the use of 

test information about a fictional patient 

that would be identical in form to what 

would be sent about an actual patient 

would satisfy this objective. However, 

we note that this is one of the objectives 

that a State may modify as discussed 

previously in this section. Therefore, 

more stringent requirements may be 

established for EPs and eligible 

hospitals under the Medicaid program 

in states where this capability exists. 

Comment: Commenters requested that 

one national standard be established for 

reporting lab results to public health 

agencies. 

Response: Standards for content 

exchange and vocabulary are 

established in the ONC final rule at 45 

CFR 170.306(g). While we encourage all 

providers and public health agencies to 

work together to develop efficient, 

electronic submission of reportable lab 

results to all public health agencies, for 

purposes of becoming a meaningful EHR 

user, we only require a single test and 

follow up submission if that test is 

successful. 

Comment: Commenters suggested 

deferring the measure to a later stage 

due to the lack of a mature HIE 

infrastructure and lack of a clear 

standard for exchanging biosurveillance data. 

Response: We agree that many areas 

of the country currently lack the 

infrastructure to support the electronic 

exchange of information. As meaningful 

use seeks to ensure certified EHR 


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Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 44367 

technology has the capability to submit 

electronic data to public health 

agencies, we only require a single test if 

a receiving entity is available and follow 

up submission only if that test is 

successful. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for eligible 

hospitals and CAHs at § 495.6(g)(9)(ii) of 

our regulations to ‘‘Performed at least 

one test of certified EHR technology’s 

capacity to provide electronic 

submission of reportable lab results to 

public health agencies and follow-up 

submission if the test is successful 

(unless none of the public health 

agencies to which eligible hospital or 

CAH submits such information have the 

capacity to receive the information 

electronically)’’. 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.306(g). The ability to 

calculate the measure is included in 

certified EHR technology. Eligible 

hospitals and CAHs should attempt to 

identify one public health agency with 

whom to conduct a test of the 

submission of electronic data. This test 

must include the transfer of either 

actual or ‘‘dummy’’ data to the chosen 

public health agency. The testing could 

occur prior to the beginning of the EHR 

reporting period, but must occur prior to 

the end of the EHR reporting period. If 

the test is successful, then the eligible 

hospital or CAH should institute regular 

reporting to that entity according to 

applicable law and practice. CMS will 

accept a yes/no attestation to verify all 

of the above for eligible hospitals and 

CAHs. 

NPRM EP/Eligible Hospital Objective: 

Capability to provide electronic 

syndromic surveillance data to public 

health agencies and actual transmission 

according to applicable law and 

practice. 

In the proposed rule, we did not 

elaborate on this objective. 

Comment: Half of the commenters 

commenting on this objective 

recommended that the objective be 

deferred to Stage 2 or 3 as the objective 

is considered expensive, complex and 

imposes significant administrative 

burdens on EPs, eligible hospitals and 

CAHs unless the certified EHR 

technologies support the automate, 

electronic capture of the requisite data. 

Response: The measure for this 

objective accounts for the possibility 

that such electronic exchange of 

syndromic data is not possible. 

Standards and certification for certified 

EHR technologies are covered under the 

ONC final rule and do support the 

automatic identification of the requisite 

data and its electronic capture. This 

greatly limits the cost, complexity and 

burden of this objective. 

Comment: Commenters requested that 

an actual transmission be required. 

Response: In discussing the reporting 

immunization data objective, we 

focused on the need to align the 

language for the three objectives 

contained in under the health care 

policy priority of improving population 

and public health. Our interpretation is 

that the three phrases result in the same 

outcome, but introduce confusion with 

the current language. We adopted the 

language from this objective for the 

others. We do note however that 

applicable law and practice does not 

guarantee every receiving entity will be 

able to accept it electronically. Our 

measure for meeting this objective is 

one test of electronic data submission 

and if the test is successful, then follow 

up submission to that one entity based 

on the reporting requirements of that 

entity. We do not seek to enforce 

through meaningful use every law and 

practice that may require submission of 

lab results. 

Comment: Some commenters 

requested a clarification of the term 

‘‘public health agencies.’’ 

Response: A public health agency is 

an entity under the jurisdiction of the 

U.S. Department of Health and Human 

Services, tribal organization, State level 

and/or city/county level administration 

that serves a public health function. 

Comment: Some commenters 

recommended that providers be 

required to satisfy either electronic 

submission to immunization registries 

or electronic submission of syndromic 

surveillance data to a public health 

agency, but not both. 

Response: We disagree. We believe 

these are fundamentally different types 

of information. Each may impose 

unique requirements in terms of ability 

to exchange information on both the EP, 

eligible hospital, or CAH and the 

receiving entity. Therefore, a test for one 

does not prove or disprove the ability to 

exchange information for the other. 

After consideration of the public 

comments received, we are modifying 

the meaningful use objective for EPs at 

§ 495.6(e)(10)(i) and eligible hospitals 

and CAHs at § 495.6(g)(10(i) of our 

regulations to ‘‘Capability to submit 

electronic syndromic surveillance data 

to public health agencies and actual 

submission in accordance with 

applicable law and practice.’’ 

NPRM 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, eligible hospital, or CAH submits 

such information have the capacity to 

receive the information electronically). 

In the proposed rule, we identified 

this as an objective where 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. 

First, a technical correction, in the 

proposed rule we incorrectly stated that 

the capability to send electronic data to 

immunization registries was included in 

the certification standards for certified 

EHR technology. We intended for this 

data to be sent to public health agencies 

and ONC in their final rule at 45 CFR 

170.304(l) correctly stated this 

capability as such. 

Comment: Commenters asked 

whether the test needs to be ‘‘live’’ or if 

it could be a ‘‘simulation’’. 

Response: As specified in the 

proposed rule, this test must involve the 

actual submission of information to a 

public health agency, if one exists that 

will accept the information. 

Comment: Commenters asked 

whether the use of ‘‘test’’ or ‘‘dummy’’ 

data is permissible. 

Response: While the use of test 

patient information may increase the 

risk that the system will not be testing 

to its full capability, given the privacy 

and security concerns surrounding the 

transmission of actual patient 

information we do not require it for the 

purposes of a test. Therefore, the use of 

test information about a fictional patient 

that would be identical in form to what 

would be sent about an actual patient 

would satisfy this objective. However, 

we note that this is one of the objectives 

that a State may modify in accordance 

with the discussion in II.A.2.c. of the 

proposed rule. Therefore, more stringent 

requirements may be established for EPs 

and eligible hospitals under the 

Medicaid program in states where this 

capability exists. 

Comment: A few commenters 

expressed confusion as to the required 

ferquency of the test. 

Response: As stated in the proposed 

rule, the required frequency of a test in 

Stage 1 for EPs, eligible hospitals, and 

CAHs is at least once prior to the end 

of the EHR reporting period. We further 

clarify that each payment year would 

require it own unique test. 

Comment: Commenters requested that 

one national standard be established for 


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44368 Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 

reporting syndromic surveillance data to 

public health agencies. 

Response: Standards for content 

exchange and vocabulary are 

established in the ONC final rule. While 

we encourage all providers and public 

health agencies to work together to 

develop efficient, electronic submission 

of syndromic surveillance data to all 

public health agencies, for purposes of 

becoming a meaningful EHR user, we 

only require a single test and follow up 

submission if that test is successful. 

Comment: Commenters suggested 

deferring the measure to a later stage 

due to the lack of a mature HIE 

infrastructure. 

Response: We agree that many areas 

of the country currently lack the 

infrastructure to support the electronic 

exchange of information. As meaningful 

use seeks to ensure certified EHR 

technology has the capability to submit 

electronic data to public entities, we 

only require a single test if a receiving 

entity is available and follow up 

submission only if that test is 

successful. We note that this measure 

only applies if there is a public health 

agency with the capacity to receive this 

information. 

Comment: Commenters requested 

clarification on whether a failed 

attempted test satisfies the measure and 

whether EPs in a group setting using 

identical certified EHR technology 

would only need to conduct a single 

test, not one test per EP. 

Response: A failed attempt would 

meet the measure. We highly encourage 

EPs, eligible hospitals, and CAHs to 

work with their vendor and the 

receiving entity with whom they tested 

to identify the source of the failure and 

develop remedies, but for Stage 1 of 

meaningful use a failed attempt would 

meet the requirements. We had 

indicated in the proposed rule that only 

on test is required for EPs practicing in 

a group setting that shares the same 

certified EHR technology. We maintain 

that proposal for the final rule. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(e)(10)(ii) and eligible hospitals 

and CAHs at § 495.6(g)(10)(ii) of our 

regulations to ‘‘Performed at least one 

test of certified EHR technology’s 

capacity to provide electronic 

syndromic surveillance data to public 

health agencies and follow-up 

submission if the test is successful 

(unless none of the public health 

agencies to which an EP, eligible 

hospital, or CAH submits such 

information have the capacity to receive 

the information electronically.)’’ 

We further specify that in order to 

meet this objective and measure, an EP, 

eligible hospital, or CAH must use the 

capabilities Certified EHR Technology 

includes as specified and standards at 

45 CFR 170.302(l). The ability to 

calculate the measure is included in 

certified EHR technology. EPs, eligible 

hospitals, and CAHs should attempt to 

identify one public health agency with 

whom to conduct a test of the 

submission of electronic data. This test 

must include the transfer of either 

actual or ‘‘dummy’’ data to the chosen 

public health agency. The testing could 

occur prior to the beginning of the EHR 

reporting period, but must occur prior to 

the end of the EHR reporting period. If 

the test is successful, then the EP, 

eligible hospital, or CAH should 

institute regular reporting to that entity 

according to applicable law and 

practice. CMS will accept a yes/no 

attestation to verify all of the above for 

eligible hospitals and CAHs. 

If an EP does not collect any 

reportable syndromic information on 

their patients during the EHR reporting 

period, then they are excluded from this 

measure according to the discussion of 

whether certain EP, eligible hospital or 

CAH can meet all Stage 1 meaningful 

use objectives given established scopes 

of practices. 

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. 

NPRM EP/Eligible Hospital Objective: 

Protect electronic health information 

created or maintained by the certified 

EHR technology through the 

implementation of appropriate technical 

capabilities. 

In the proposed rule, we discussed 

how we were relating the objectives 

presented by the HIT Policy committee 

more tightly to the meaningful use of 

certified EHR technology as opposed to 

the broader success of the EP, eligible 

hospital or CAH in ensuring privacy and 

security. The primary reason we gave 

was that the proper vehicle for ensuring 

privacy and security is the HIPAA 

Privacy and Security Act and that we 

sought with this objective to ensure that 

certified EHR technology does not 

impede an EP’s, eligible hospital’s or 

CAH’s ability to comply with HIPAA. 

Comment: We received considerable 

support from many commenters who 

supported this objective and measure as 

proposed. 

Response: We appreciate the support 

of these commenters for our proposed 

objective and measure. 

Comment: Commenters requested 

clarification of appropriate technical 

capabilities. 

Response: The ONC final rule 

specifies certain capabilities that must 

be in certified EHR technology. For the 

objective we simply mean that a 

technical capability would be 

appropriate if it protected the electronic 

health information created or 

maintained by the certified EHR 

technology. All of these capabilities 

could be part of the certified EHR 

technology or outside systems and 

programs that support the privacy and 

security of certified EHR technology. We 

could not develop an exhaustive list. 

Furthermore as we state in the proposed 

rule compliance with HIPAA privacy 

and security rules is required for all 

covered entities, regardless of whether 

or not they participate in the EHR 

incentive programs. Furthermore, 

compliance with the HIPAA Privacy 

and Security Rules constitutes a wide 

range of activities, procedures and 

infrastructure. We rephrased 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/PTARGSl0l

10731l848088l0l0l18/ 

NationwidePSlFramework-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. 

Comment: Several commenters urged 

CMS not to finalized requirements for 

the fair data sharing practices set forth 

in the Nationwide Privacy and Security 

Framework and to clarify the policies to 

which CMS is referring. 

Response: While we stated in the 

proposed rule we rephrased the 

objective to ensure ‘‘compliance with 

fair sharing data practices outline in the 

Nationwide Privacy and Security 

Framework,’’ we did not propose any 

practices or policies related to the 

Nationwide Privacy and Security 

Framework and do not finalize any in 

this final rule. 

Comment: Several commenters 

requested the elimination of this 

objective as redundant to HIPAA. 


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Response: We do not see meaningful 

use as an appropriate regulatory tool to 

impose different, additional, and/or 

inconsistent privacy and security policy 

requirements from those policies 

already required by HIPAA. With that 

said, we do feel it is crucial that EPs, 

eligible hospitals, and CAHs evaluate 

the impact certified EHR technology has 

on their compliance with HIPAA and 

the protection of health information in 

general. Therefore, we retain this 

objective and measure for meaningful 

use in the final rule. 

Comment: We received hundreds of 

comments that requested the 

cancelation of the EHR incentive 

payment program due to the privacy 

and security risks imposed by the 

implementation and use of certified 

EHR technology. 

Response: We are required by the 

ARRA to implement the EHR incentive 

programs and cannot cancel them. We 

seek to mitigate the risks to the security 

and privacy of patient information by 

requiring EPs, eligible hospitals, and 

CAHs to 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. 

After consideration of the public 

comments received, we are finalizing 

the meaningful use objective for EPs at 

§ 495.6(d)(15)(i) and eligible hospitals 

and CAHs at § 495.6(f)(14)(i) of our 

regulations as proposed. 

We include this objective in the core 

set. We believe maintaining privacy and 

security is crucial for every EP, eligible 

hospital or CAH that uses certified EHR 

technology and was recommended by 

the HIT Policy Committee for inclusion 

in the core set. 

NPRM 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. 

In the proposed rule, we discussed 

the role of certified EHR technology in 

privacy and security. We said that 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 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. We have maintained 

this discussion for the final rule, but 

modified the measure to account for 

requests discussed in the comment and 

response section below. 

Comment: Some commenters 

requested clarification of the phrase 

‘‘implement security updates as 

necessary’’. 

Response: A security update would be 

required if any security deficiencies 

were identified during the risk analysis. 

A security update could be updated 

software for certified EHR technology to 

be implemented as soon as available, to 

changes in workflow processes, or 

storage methods or any other necessary 

corrective action that needs to take 

place in order to eliminate the security 

deficiency or deficiencies identified in 

the risk analysis. To provide better 

clarity on this requirement, we are 

modifying the measure. 

After consideration of the public 

comments received, we are modifying 

the meaningful use measure for EPs at 

§ 495.6(d)(15)(ii) and eligible hospitals 

and CAHs at § 495.6(f)(14)(ii) of our 

regulations ‘‘Conduct or review a 

security risk analysis per 45 CFR 

164.308(a)(1) of the certified EHR 

technology, and implement security 

updates and correct identified security 

deficiencies as part of its risk 

management process.’’ 

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3For purposes of this final rule, the term ‘‘eligible 

hospital’’ for the Medicaid EHR incentive program 

is inclusive of Critical Access Hospitals (CAHs) as 

defined in this final rule. 

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3. Sections 4101(a) and 4102(a)(1) of the 

HITECH Act: Reporting on Clinical 

Quality Measures Using EHRs by EPs, 

Eligible Hospitals, and CAHs 3

a. General 

As discussed in the meaningful use 

background in section II.A.2.a. there are 

three elements of meaningful use. In 

this section, we discuss the third 

requirement: using certified EHR 

technology, the EP, eligible hospital, or 

CAH 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.c 

of this final rule. The two other 

elements of meaningful use are 

discussed in section II.A.2.d.1 of this 

final rule. 

b. Requirements for the Submission of 

Clinical Quality Measures by EPs, 

Eligible Hospitals, and CAHs 

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. 

In the proposed rule, we stated that 

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. 

We believe that it is unlikely that by 

2011 there will be adequate testing and 

demonstration of the ability to receive 

the required transmitted information on 

a widespread basis. The capacity to 

accept information on clinical quality 

measures also would depend 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 proposed that 

Medicare EPs, eligible hospitals, and 

CAHs use an attestation methodology to 

submit summary information to us on 

clinical quality measures as a condition 

of demonstrating meaningful use of 

certified EHR technology, rather than 

electronic submission. 

We proposed that from the Medicaid 

perspective, delaying the onset of 

clinical quality measures electronic 

reporting until 2012 addresses concerns 

about States having the ready 

infrastructure to receive and store 

clinical quality measures data before 

then. More importantly, we recognized 

that since Medicaid providers are 

eligible to receive incentive payments 

for adopting, implementing, or 

upgrading certified EHR technology, 

Medicaid providers may not be focused 

on demonstrating meaningful use until 

2012 or later. 

We stated that 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 

beginning in CY 2012 we proposed that 

an EP using a certified EHR technology 

or beginning in FY 2012 an eligible 

hospital or CAH using a certified EHR 

technology, as appropriate for clinical 

quality measures, must submit 

information on clinical quality measures 

electronically, in addition to submitting 

the other measures described in section 

II.2.d.2, in order for the EP, eligible 

hospital, or CAH 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. We stated in the proposed 

rule that should we not have the 

capacity to accept information on 

clinical quality measures electronically 

in 2012, we would 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. 

We also are finalizing in this final rule 

that States must identify for us in their 

State Medicaid HIT Plans how they plan 

to accept data from Medicaid providers 

who seek to demonstrate meaningful 

use by reporting on clinical quality 

measures, either via attestation or via 

electronic reporting, subject to our prior 

approval. If they initiate their program 

by accepting attestations for clinical 

quality measures, they must also 

describe how they will inform providers 

of their timeframe to accept submission 

of clinical quality measures 

electronically. We expect that States 

will have the capacity to accept 

electronic reporting of clinical quality 

measures by their second year 

implementing their Medicaid EHR 

incentive program. 

For purposes of the requirements 

under sections 1848(o)(2)(A)(iii) and 

1886(n)(3)(iii) of the Act, we defined 

‘‘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, patientcentered, equitable, and timely care. We 

noted 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 


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section II.A.3.c.1 of this final rule. These 

limitations apply solely to the 

submission of clinical quality measures, 

and do not apply to other measures of 

meaningful EHR use. The clinical 

quality measures on which EPs, eligible 

hospitals, or CAHs will be required to 

submit information using certified EHR 

technology, the statutory requirements 

and other considerations that were used 

to select these measures, and the 

reporting requirements are described 

below. 

With respect to Medicaid EPs and 

eligible hospitals, we noted 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. We 

proposed that in the interest of 

simplifying the program and guarding 

against duplication of meaningful use 

criteria, the clinical quality measures 

adopted for the Medicare EHR incentive 

program, would also apply to EPs and 

eligible hospitals in the Medicaid EHR 

incentive program. 

Despite the statutory limitation 

prohibiting the Secretary from requiring 

the electronic submission of clinical 

quality measures in the Medicare EHR 

incentive program, 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, 

eligible hospitals, and CAHs. Although 

we proposed to require the electronic 

submission of information on clinical 

quality measures in 2012, we stated that 

we do not desire this to delay the use 

of certified EHR technology by EPs, 

eligible hospitals, and CAHs to measure 

and improve clinical quality. 

Specifically, we stated that using EHR 

functionalities that support 

measurement of clinical quality is 

critical to a central goal of the HITECH 

Act, improving health care quality. 

Measuring quality is a fundamental 

aspect of improving such quality, 

because it allows EPs, eligible hospitals, 

and CAHs to receive quantitative 

information upon which they can then 

act in order to improve quality. 

Accordingly, although we did not 

propose under sections 

1848(o)(2)(A)(iii) and 1886(n)(3)(A)(iii) 

of the Act to require that for 2011 EPs, 

eligible hospitals, and CAHs report 

clinical quality measures to us or States 

electronically, we proposed to require as 

an additional condition of 

demonstrating meaningful use of 

certified EHR technology under sections 

1848(o)(2)(A)(i), 1886(n)(3)(A)(ii), and 

1903(t)(6) of the Act that EPs and 

eligible hospitals use certified EHR 

technology to capture the data elements 

and calculate the results for certain 

clinical quality measures. Further, we 

proposed that EPs, eligible hospitals, 

and CAHs demonstrate that they have 

satisfied this requirement during the 

EHR reporting period for 2011 through 

attestation. We also proposed to require 

that Medicare EPs, eligible hospitals, 

and CAHs attest to the accuracy and 

completeness of the numerators and 

denominators for each of the applicable 

measures. 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, eligible hospitals, and CAHs 

demonstrate compliance with the 

meaningful use criteria, we proposed 

that EPs, eligible hospitals, and CAHs 

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 us for all 

applicable patients. For the Medicaid 

incentive program, we proposed that 

States may accept provider attestations 

in the same manner to demonstrate 

meaningful use in 2011. However, we 

indicated that we expect that most 

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 

certified EHR technology in 2011, for 

their first payment year. 

We stated that we recognize that 

considerable work needs to be done by 

measure owners and developers with 

respect to the clinical quality measures 

that we proposed. 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 recognized that some measures 

are further developed than others, as 

discussed in the measures section (see 

75 FR 1871) of the proposed rule. 

Nevertheless we stated our belief that 

overall there is sufficient time to 

complete work on measures and 

measures specifications so as to allow 

vendors and EPs, eligible hospitals, and 

CAHs to implement such systems. We 

stated that it was our intention not to 

finalize those specific measures should 

the necessary work on measure 

specifications not be completed for 

particular measures according to the 

timetable we discuss below. As we 

discuss below, we finalize in this final 

rule only those clinical quality measures 

for which clearly defined electronic 

specifications have been finalized by the 

date of display of this final rule. 

Finalized clinical quality measures are 

listed in Table 6 for EPs and Table 7 for 

eligible hospitals and CAHs. We also 

clarify that while States may not have 

the capacity to accept electronic 

reporting of clinical quality measures in 

2011 or their first year implementing 

their Medicaid EHR incentive program, 

we expect that they will have such 

capacity by their second 

implementation year. However, if they 

do not, as with the Federal government, 

the State would continue to rely on an 

attestation methodology for reporting 

clinical quality measures as a 

requirement for demonstrating 

meaningful use of certified EHR 

technology, subject to CMS prior 

approval via an updated State Medicaid 

HIT plan. 

Comment: A few commenters 

requested that the definition of ‘‘clinical 

quality measures’’ be expanded to 

include ‘‘appropriate clinical 

prevention.’’ 

Response: We agree that appropriate 

clinical prevention is a pertinent topic 

for clinical quality measures, but we do 

not believe the definition of clinical 

quality measures needs to delineate 

every aspect of quality care included in 

the definition. 

Comment: Several commenters said it 

will be difficult to develop the EHR 

capability to capture, integrate and train 

staff regarding measure specifications if 

the clinical quality measures are not 

posted with sufficient time to allow 

these activities. Other commenters said 

there is insufficient time allowed for 

vendors to retool their products and 

complete development of the reports 

and/or systems. Several commenters 

indicated that the clinical quality 

measures have not been tested, and 

reliability and validity testing should be 

performed. Other commenters indicated 

that standard, clearly defined electronic 

specifications do not exist and new 

specifications should be pilot tested and 

published for stakeholder/public 

comment. A commenter requested that 

CMS establish an explicit process for 

development and testing of evidence 

based electronically specified measures 

(eMeasure), and ensure adequate time 

for field testing. 

Response: In general we agree with 

the desirability of having electronic 

specifications available, pilot tested, 

and published for stakeholder viewing 

sufficiently in advance so as to allow 

adequate time for modifications if 

necessary and vendors to incorporate 

them into certified EHR technology, and 

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integrate the measures into their 

operations and train staff on the 

measures. In this case, however, there is 

a process for certification of certified 

EHR technology which includes testing 

of the capability of the certified EHR. 

The final rule issued by ONC (found 

elsewhere in this issue of the Federal 

Register) provides that certified EHR 

technology must have the ability to 

calculate clinical quality measures as 

specified by us. We interpret this 

requirement to mean that certified EHR 

technology must have the capability to 

calculate those clinical quality measures 

selected in this final rule based on the 

specifications we select and post on the 

CMS Web site. In order to provide 

sufficient time for vendors to retool 

their products and complete 

development of the necessary reports 

and/or systems for calculation of the 

results for the required clinical quality 

measures, and for certifying bodies to 

test and certify that EHR technologies 

adequately do so, we are adopting only 

those electronic specifications that are 

posted on the CMS Web site as of the 

date of display of this final rule. We 

believe testing that is part of the process 

for certification of EHR technology will 

substitute for testing that might 

otherwise occur. Additionally, some of 

the selected measures have undergone 

various amounts of testing already. For 

example, the Emergency Department 

Throughput, Stroke and Venous 

Thromboembolism (VTE) measures 

mentioned by the commenter were 

tested during the January 2010 

Connectathon and demonstrated at the 

Health Information and Management 

Systems Society (HIMSS) 2010 

Interoperability Showcase which 

demonstrated the use of the measures by 

participating vendors. However, we 

expect the EHR certification process to 

carry out the necessary testing to assure 

that applicable certified EHR technology 

can calculate sufficient number of EP, 

eligible hospital and CAH clinical 

quality measures required to qualify for 

the meaningful use incentive program. 

In order to permit greater participation 

by EHR vendors, including specialty 

EHRs, the certification program (see 

ONC final rule found elsewhere in this 

issue of the Federal Register) will 

permit EHRs to be certified if they are 

able to calculate at a minimum three 

clinical quality measures in addition to 

the six core and alternative core 

measures. In addition, the fact that EPs, 

eligible hospitals, and CAHs can adopt 

an EHR reporting period toward the end 

of FY/CY 2011, we believe, will provide 

additional time for providers to 

implement and train staff on the 

measures we adopt in this final rule. 

c. Statutory Requirements and Other 

Considerations for the Selection of 

Clinical Quality Measures for Electronic 

Submission by EPs, Eligible Hospitals, 

and CAHs 

(1) Statutory Requirements for the 

Selection of Clinical Quality Measures 

for Electronic Submission by EPs, 

Eligible Hospitals, and CAHs 

Sections 1848(o)(2)(B)(i)(II) and 

1886(n)(3)(B)(i) of the Act 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, eligible hospitals, and CAHs for 

2011 and 2012 payment were listed in 

Tables 3 through 21 of the proposed rule 

(see 75 FR 1874 through 1900). 

In the proposed rule, we noted that 

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 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 

section 1890(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 and CAHs, 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 section 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, we explained in the proposed 

rule that 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 will 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, we stated that when selecting 

the clinical quality measures eligible 

hospitals and CAHs 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 will give preference to the 

clinical quality measures selected from 

those endorsed by the NQF or that have 

previously been selected for the 

RHQDAPU program. In some instances 

we proposed measures for EPs, eligible 

hospitals, and CAHs that are not 

currently NQF endorsed in an effort to 

include a broader set of clinical quality 

measures. In the proposed rule, we 

noted that the HITECH Act does not 

require the use of NQF endorsed 

measures, nor limit the measures to 

those included in PQRI or RHQDAPU. 

We stated that 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 proposed certain clinical quality 

measures for EPs, eligible hospitals, and 

CAHs, and listed these measures in 

Tables 3 through 21 of the proposed rule 

(see 75 FR 1874–1900) for use in the 

2011 and 2012 payment years. We 

stated that no changes (that is, additions 

of clinical quality measures) would be 

made after publication of the final rule, 

except through further rulemaking. 

However, we stated that 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. We stated that 

the 2011 specifications for user 

submission of clinical quality measures 

would be available on our Web site 

when they are sufficiently developed or 

finalized. Specifications for the EHR 

incentive programs must be obtained 

only from the specifications documents 

for the EHR incentive program clinical 

quality measures. 

Comment: Numerous comments were 

received regarding the criteria for 

selection of clinical quality measures. 

Some commenters noted the importance 

of scientific and medical evidence 

supporting the measure, as well as 


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concerns regarding how the clinical 

quality measures are maintained. Many 

other commenters indicated that all 

clinical quality measures should be 

evidence-based and up-to-date with 

current medical standards. Several 

commenters communicated support for 

using NQF; Hospital Quality Alliance 

(HQA); Ambulatory care Quality 

Alliance (AQA); and the American 

Medical Association-Physician 

Consortium for Performance 

Improvement (AMA–PCPI) clinical 

quality measures. Another commenter 

suggested that measures that have a 

related U.S. Preventative Services Task 

Force (USPSTF) recommendation 

should follow the USPSTF guidelines 

and the regulations should allow for 

clinical quality measures to be updated 

as the evidence base changes. Another 

commenter indicated CMS should 

ensure that all clinical quality measures 

are endorsed through a stakeholder 

consensus process. Commenters also 

questioned why some clinical quality 

measures in the proposed rule do not 

have identifiers for example, NQF 

number and another commenter 

indicated some of the clinical quality 

measures titles were different in the 

clinical quality measure tables. Some 

commenters also stated that clinical 

quality measures should be phased in, 

implementing the clinical quality 

measures by clinically related sets, and 

that all CMS proposed clinical quality 

measures should be NQF endorsed. 

Some commenters suggested that 

CMS should consult with other quality 

measure stakeholders, such as, NQF, the 

Hospital Quality Alliance (HQA), and 

the National Committee for Quality 

Assurance (NCQA), The Joint 

Commission (TJC), and Regional Health 

Improvement Collaboratives to verify 

the validity, reliability, and 

appropriateness of proposed clinical 

measures. In addition when developing, 

validating and recommending clinical 

quality measures for the pediatric 

population, a commenter suggested 

CMS include consultation with the 

Child Healthcare Corporation of 

America (CHCA) or the National 

Association of Children’s Hospitals 

(NACHRI). 

Response: The HITECH Act requires 

that we give preference to clinical 

quality measures that are NQF 

endorsed. NQF is the only organization 

that we are aware of which is in 

compliance with the requirements of 

National Technology Transfer and 

Advancement Act (NTTAA), to endorse 

quality measures through voluntary 

consensus standards. However, the 

HITECH Act does not require the 

exclusive use of NQF endorsed 

measures, nor limit the measures to 

those produced by any particular 

developer or adopted or supported by 

any particular organization, such as 

those suggested by the commenters. We 

gave preference to NQF endorsed 

clinical quality measures in this final 

rule. However, we do not adopt a policy 

that would restrict the Secretary’s 

discretion of beyond what is required by 

the statute. Measures listed in the 

proposed rule that did not have an NQF 

identifying number were not NQF 

endorsed. 

With respect to specific organizations, 

we have received broad input regarding 

clinical quality measures including from 

many organizations mentioned by 

commenters and have considered their 

comments in determining which 

clinical quality measures to finalize in 

this final rule. We also note that, for 

NQF endorsed measures, the NQF 

provides a venue for public and member 

input as a part of the endorsement 

process. With respect to commenters 

urging consideration of whether the 

scientific and medical evidence support 

the measure, whether the clinical 

quality measures are evidence-based 

and consistent with current medical 

standards, and how the clinical quality 

measures are maintained, we note that 

these factors are part of the NQF 

process, as well as standard measure 

development processes. We are 

committed to working with national, 

State and local associations to identify 

or develop additional electronically 

specified clinical quality measures, 

particularly for pediatric populations, 

for later stages of meaningful use. 

In selecting clinical quality measures 

for the Medicare EHR incentive 

program, the Secretary is required to 

provide for notice in the Federal 

Register with public comment. This 

provides broad public input which we 

fully consider. However, as we stated in 

the proposed rule, we are finalizing the 

policy that technical specifications for 

clinical quality measures are developed 

and finalized through the sub-regulatory 

process. Further, this requirement does 

not pertain to the Medicaid EHR 

incentive program. We expect to 

develop a process in the future to solicit 

public input on Medicaid-specific 

clinical quality measures for future 

stages of meaningful use, if needed. 

However, because there are no such 

Medicaid-specific measures in this final 

rule, and all measures apply uniformly 

across both the Medicare and Medicaid 

EHR incentive program, we have not 

developed such a process in this final 

rule. 

After consideration of the public 

comments received, the HITECH Act 

requires that we give preference to 

clinical quality measures that are NQF 

endorsed. However, it does not require 

the exclusive use of NQF endorsed 

measures, nor limit the measures to 

those produced by any particular 

developer nor be adopted by any 

particular organization. In this case, all 

clinical quality measures we are 

finalizing are NQF endorsed and have 

current electronic specifications as of 

the date of display of this final rule. 

Effective with the publication of this 

final rule, these specifications are final 

for clinical quality measure reporting 

under the HITECH Act beginning with 

2011 and 2012. The detailed electronic 

specifications of the clinical quality 

measures for EPs, eligible hospitals, and 

CAHs are displayed on the CMS Web 

site at http://www.cms.gov/

QualityMeasures/03_Electronic

Specifications.asp#TopOfPage. 

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). For EPs, when 

the proposed rule was issued there was 

no statutory authority to provide PQRI 

incentive payments for services 

furnished for 2011 or subsequent years. 

Since then, the PQRI incentive payment 

for 2011 has been authorized. We 

acknowledge there is overlap within the 

clinical quality measure reporting for 

EPs in the EHR incentive program with 

the PQRI incentive program. However, 

the reporting periods in these two 

incentive programs are different. 

Currently, the PQRI has a six and a 

twelve month reporting period. The 

reporting period for the HITECH EHR 

incentive program for the first payment 

year is 90 days, which does not meet the 

PQRI reporting requirement of six or 

twelve month reporting period, as 

currently provided. However, in the 

second payment year of the HITECH 

EHR incentive program the reporting 

period is one year, and the PQRI 

reporting period, would be 

synchronous. The requirement for 

qualification for PQRI is subject to a 

separate regulation. Although there may 

be additional issues beyond the 

reporting periods, we anticipate efforts 

to avoid redundant and duplicative 

reporting in PQRI of the same clinical 

quality measures as required in the EHR 

incentive program. We envision a single 

reporting infrastructure for electronic 


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submission in the future, and will strive 

to align the EHR incentive program and 

PQRI as we develop the reporting 

framework for clinical quality measures 

to avoid redundant or duplicative 

reporting. Further, we also note that the 

Affordable Care Act (Pub. L. 111–148) 

requires that the Secretary develop a 

plan to integrate the EHR incentive 

program and PQRI by January 1, 2012. 

In doing so we expect to further address 

the issue of redundant and duplicative 

reporting. For eligible hospitals and 

CAHs, for the EHR incentive program, 

we are finalizing one set of 15 clinical 

quality measures for both Medicare and 

Medicaid. For Stage 1 (for clinical 

quality measures Stage 1 is 2011 and 

beginning in 2012), none of the finalized 

15 clinical quality measures for eligible 

hospitals and CAHs are currently 

included in the RHQDAPU program, 

and therefore there is no issue of 

redundant and duplicative reporting 

based upon the HITECH Act. 

Nevertheless, clinical quality measures 

in the EHR incentive program for 

eligible hospitals and CAHs were 

electronically specified for use in the 

RHQDAPU program with the 

anticipation to place these measures in 

RHQDAPU once we have completed 

and implemented the mechanism to 

accept quality measures through 

electronic submission. For the future, 

we do not anticipate having one set of 

clinical quality measures for the EHR 

incentive program and another set for 

RHQDAPU. Rather, we anticipate a 

single set of hospital clinical quality 

measures, most of which we anticipate 

can be electronically specified. We note 

some of the RHQDAPU quality 

measures, for example HCAHPS 

experience of care measures, do not 

lend themselves to EHR reporting. 

Similarly, certain outcome quality 

measures, such as the current 

RQHDAPU readmission measures, are 

based on claims rather than clinical 

data. In the future, we anticipate 

hospitals that report RHQDAPU 

measures electronically would receive 

incentives from both the RHQDAPU and 

EHR incentive program, in addition to 

properly reporting any required quality 

measures that are not able to be derived 

from EHRs; this is however subject to 

future rulemaking. Further, in the 

future, for hospitals that do not report 

electronically we anticipate that they 

may only qualify for an incentive 

through the RHQDAPU program, and 

not through the EHR incentive program. 

Again this is subject to future 

rulemaking. We envision a single 

reporting infrastructure for electronic 

submission in the future, and will strive 

to align the hospital quality initiative 

programs to seek to avoid redundant 

and duplicative reporting of quality 

measures for eligible hospitals and 

CAHs. 

Comment: Many commenters also 

suggested aligning clinical quality 

measure reporting across federal 

agencies (for example, HRSA, CMS) as 

well as across programs, (for example, 

PQRI, CHIP, Medicare and Medicaid) to 

avoid duplicative and redundant quality 

performance reporting. Additionally, 

several commenters suggested that 

similar clinical quality measures and/or 

quality data efforts included in the 

proposed rule are included in other 

clinical quality recognition programs 

and EPs who successfully report in 

these programs via a certified EHR 

should be deemed to have successfully 

reported in the EHR incentive program. 

Other commenters suggested using the 

PQRI reporting process to satisfy the 

meaningful use requirement under the 

EHR incentive program for EPs. Another 

commenter indicated that clinical 

quality measures employed by this 

program and others will be valuable if 

EPs using EHRs have an in-depth 

understanding of how to leverage the 

technology and the data they produce to 

improve care. A number of commenters 

requested that only clinical quality 

measures chosen for use in the 

RHQDAPU program should be 

considered for implementation in the 

EHR incentive program for eligible 

hospitals and CAHs that qualify for both 

incentives. Additionally, the 

commenters stated they would like the 

process for avoiding duplicative 

reporting clearly defined. 

Response: The HITECH Act requires 

that the Secretary seek to avoid 

redundant and duplicative reporting, 

with specific reference to PQRI for EPs 

and RHQDAPU for eligible hospitals 

and CAHs. We have sought to avoid 

duplicative and redundant reporting in 

the implementation of the HITECH Act 

as discussed elsewhere in our responses 

to comments in this final rule. We will 

seek to align quality initiative programs 

in future rulemaking. 

(2) Other Considerations for the 

Selection of Clinical Quality Measures 

for Electronic Submission by EPs, 

Eligible Hospitals, and CAHs 

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, we also proposed applying the 

following considerations to the selection 

of the clinical quality measures for 

electronic submission under the 

Medicare and Medicaid EHR incentive 

programs: 

• 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. 

• 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 for inclusion in the 

EHR incentive by the HIT Policy 

Committee. 

We noted in the proposed rule that 

the Children’s Health Insurance 

Program Reauthorization Act (CHIPRA) 

of 2009 (Pub. L. 111–3) Title IV, section 

401 requires the Secretary to publish a 

core set of clinical quality measures for 

the pediatric population. We stated that, 

to the extent possible, we would align 

the clinical quality measures selected 

under the EHR incentive program with 

the measures selected under the 

CHIPRA core measure set. Included in 

the proposed clinical quality measures 

were nine clinical quality measures 

pertaining to pediatric providers. Four 

of these nine measures were on the list 

of CHIPRA initial core measures that 

were recommended to the Secretary by 

the Subcommittee to AHRQ’s National 

Advisory Committee (SNAC). In our 

proposed rule, we noted that not all 

CHIPRA initial measures recommended 

to the Secretary were applicable to EHR 

technology or to the EHR incentive 

payment program. For example, some of 


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the measures are population-based, 

survey-derived, or not yet NQF 

endorsed. We stated that new or 

additional measures for the next 

iteration of the CHIPRA core set would 

have EHR extractability as a priority. 

Since the publication of the proposed 

rule, the CHIPRA core measure set has 

been published in a final rule (see 74 FR 

68846 through 68849). In this EHR 

incentive program final rule, there are 

four clinical quality measures that are 

also in the published CHIPRA initial 

core measure set. These clinical quality 

measures are shown below in Table 4: 

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. Similarly, the adult quality 

measures requirements enacted in the 

ACA will provide another opportunity 

for CMS to align its quality measures 

programs for consistency and to 

maximize use of electronic reporting. As 

these programs move forward, we will 

continue to prioritize consistency in 

clinical quality measure selection for 

providers when possible. 

We solicited comments on the 

inclusion or exclusion of any clinical 

quality measure or measures proposed 

for the 2011 and 2012 payment years, 

and to our approach in selecting clinical 

quality measures. 

We stated in the proposed rule that 

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/ 

steward to make basic changes to a 

clinical quality measure in terms of the 

numerator, denominator, and 

exclusions. We proposed that the 

clinical quality measures selected for 

the 2011 and 2012 payment year be 

supplemented by our technical 

specifications for EHR submission. We 

proposed to post the complete clinical 

quality measures specifications 

including technical specifications to our 

Web site and solicited comments on our 

approach. 

We received various comments as to 

our proposed considerations for 

selection of clinical quality measures for 

submission by EPs, eligible hospitals, 

and CAHs. 

Comment: One commenter said that 

there needs to be longer than nine 

months for the look back for capturing 

clinical quality measures data. Several 

commenters indicated that baseline 

measurements that have used the 

clinical quality measure in the past have 

not been performed. Commenters also 

recommended the linkage of clinical 

decision support to clinical quality 

measures to strengthen quality 

improvement efforts. A commenter 

supported our inclusion of measures 

that address both quality and resource 

use efficiency. Another commenter 

indicated support for the clinical quality 

measures as represented in the proposed 

rule. 

Response: The look back for capturing 

clinical quality measures is the period 

of time for which data would be 

considered as applying to the measure 

calculation. The look back period for a 

clinical quality measure and the method 

of documentation of prior information is 

defined by the clinical quality measure 

specification. The clinical quality 

measures require reporting and not 

achievement on particular performance 

thresholds. We agree with the 

commenters regarding the benefits of 

linking clinical decision support tools to 

the clinical quality measures, and 

anticipate that as EHR technology 

evolves, many of the clinical quality 

measures will be supported by clinical 

decision support tools. We also agree 

with the benefits of efficiency measures 

and we expect that in future program 

years the scope and variety of measures 

that address these factors will expand. 

Comment: Commenters requested a 

definition for ‘‘Eligible Provider and 

Non-Qualifying Eligible Provider’’ with 

respect to the provider’s ability to meet 

meaningful use if there are no 

appropriate clinical quality measures to 

report, the application of financial 

penalties beginning in 2015, and the 

handling of exclusions. Another 

commenter stressed the need for 

detailed information regarding what is 

included and excluded in the numerator 

and denominator for each measure so as 

to ensure that certified EHR 

technology’s programmed analytics 

capture all patients who meet the 

relevant criteria and to ensure that 

clinical quality measures are properly 

evaluated. Others indicated that 

reporting measures electronically will 

reduce administrative reporting costs. 

Other commenters supported the ability 

to report ‘‘N/A’’ for clinical quality 

measures where an insufficient 

denominator exists. Other commenters 

urged that CMS not include any clinical 

quality measures in Stage 1 of 

Meaningful Use because they believe 

Stage 1 should focus on the initial 

implementation of certified EHR 

systems and its use for patient care, and 

that EPs must gain experience with their 

certified EHR technology before 

attesting to the accuracy and 

completeness of numerators, 

denominators and quality calculations 

generated from these systems. 

Response: While some commenters 

recommended we not include any 

clinical quality measures in Stage 1 

(2011 and beginning in 2012), as 

previously described for Stage 1 EPs are 

required to attest to the clinical quality 

measures calculated results (numerator, 


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denominator, and exclusions) as 

automatically calculated by the certified 

EHR technology. Given that the 

statutory requirement for clinical 

quality measures is an element of 

meaningful use, we believe that 

providing this information on clinical 

quality measures is appropriate for 

Stage 1 (2011 and beginning in 2012). 

We would expect that the patient for 

whom a clinical quality measure does 

not apply will not be included in the 

denominator of the clinical quality 

measure. If not appropriate for a 

particular EP we would expect that 

either patients would not appear in the 

denominator of the measure (a zero 

value) or an exclusion would apply. 

Therefore reporting ‘‘N/A’’ is not 

necessary. Exclusion parameters—that 

is, information on what is included and 

excluded in the numerator and 

denominator for a clinical quality 

measure–are included in the measure 

specifications. We agree that reporting 

measures electronically will reduce 

administrative reporting costs, however 

as discussed in this final rule we will 

not require electronic submission of 

clinical quality measures until 2012. 

Also discussed earlier in this final rule, 

we believe collecting clinical quality 

measure data is an important part of 

meaningful use. 

Comment: A commenter indicated 

that CMS should take ownership of each 

of the EP clinical quality measures so 

that CMS can then adjudicate issues 

related to the clinical quality measures, 

instead of referring the EP to the 

measure owner. One commenter 

believes that EPs and their specialty 

societies should be the only owners of 

EP clinical quality measures. 

Response: We are the owner/ 

developer for certain clinical quality 

measures. More commonly, we use the 

clinical quality measures developed and 

owned by others, who are then 

responsible for the clinical quality 

measure specifications as endorsed by 

NQF. Numerous measures have been 

developed over the years by various 

organizations and CMS, and therefore 

we do not believe that specialty 

societies should be the only owners of 

EP clinical quality measures. The 

HITECH Act does not suggest or require 

that we should be the sole owner/ 

developer of clinical quality measures. 

Comment: A commenter questioned 

whether clinical quality measures 

would be updated during the bi-annual 

review process and how much lead time 

will be given. 

Response: The measures for Stage 1 

(2011 and beginning in 2012) of 

meaningful use are finalized in this final 

rule and will not change during that 

stage. Additionally, the electronic 

specifications, as posted on the CMS 

Web site at the time of publication of 

this final rule, are final. We intend to 

expand the clinical quality measures 

again for Stage 2 of meaningful use, 

which we anticipate will first be 

effective for the 2013 payment year. As 

required by the HITECH Act for the 

Medicare EHR incentive program, prior 

to selecting any new clinical quality 

measure(s) for Stage 2 of meaningful 

use, we will publish notice of the 

proposed measure(s) and request and 

consider public comments on the 

proposed measures. We note that the 

Medicaid EHR incentive program does 

not have the same statutory 

requirement. If future stages of 

meaningful use include clinical quality 

measures specific for Medicaid 

providers, we will consider a process to 

receive public input on such measures. 

Comment: One commenter suggested 

that only measures chosen for use in the 

pay-for-reporting program should be 

considered for implementation in the 

EHR incentive program. 

Response: We selected clinical quality 

measures that are broadly applicable for 

the 2011 and 2012 EHR incentive 

program. Many clinical quality 

measures used in other Medicare payfor-reporting programs are not 

applicable to all Medicaid eligible 

providers, such as pediatricians, 

certified nurse-midwives, and children’s 

hospitals. 

Comment: Commenters suggested 

alignment between measures with 

vocabulary standards, in order to 

promote interoperability of clinical data. 

Stage 1 allows alternative vocabularies 

for problems, drugs, and procedures; 

and measures should only be included 

if alternative specifications using all 

Stage 1 vocabularies are provided. 

Commenters recommended 

incorporating HL7, LOINC, SNOMED, 

ICD–9, and ICD–10 for data exchange. 

Response: Standards for certified 

EHRs, including vocabulary standards, 

are included in ONC’s final rule (found 

elsewhere in this issue of the Federal 

Register). 

Comment: Commenter recommended 

that in the beginning stages of 

implementation of the EHR incentive 

programs, CMS should base its reporting 

initiatives on existing industry models 

to prevent delays, consumer mistrust, 

and potential legal issues. 

Response: We have conducted 

extensive reviews of industry standards, 

employed the comments of industry 

experts and solicited public comments 

on all proposed processes. 

Comment: Many commenters are 

concerned that there will not be 

adequate time to communicate and 

implement the electronic specification 

for 2011 clinical quality measure 

requirements. Additionally, one 

commenter expressed concern that the 

additional clinical quality measures 

required for 2011 reporting will not be 

posted by CMS in time for careful 

review and assessment, since currently 

there are only 15 measures 

electronically specified and posted. 

Commenters requested clinical quality 

measures to be posted with 

implementation guides for each quality 

reporting metric to ensure successful 

reporting. 

Response: We have limited the 

requirements for clinical quality 

measure reporting for eligible hospitals 

and CAHs to the 15 measures that were 

electronically specified and posted at 

the time of publishing the proposed 

rule. All measures specifications for 

clinical quality measures selected are 

final effective upon publication of the 

EHR incentive program final rule. 

d. Clinical Quality Measures for EPs 

For the 2011 and 2012 EHR reporting 

periods, based upon the considerations 

for selecting clinical quality measures 

discussed above, we proposed certain 

clinical quality measures that were 

identified in the proposed rule (see 75 

FR 1874–1889) for EPs. Tables 4 though 

19 of the proposed rule divided the 

clinical quality measures identified in 

Table 3 into core measures and specialty 

group measures (see 75 FR 1890 through 

1895). The concept of core measures 

and specialty group measures is 

discussed below. 

We also stated that some measures 

were in a higher state of readiness than 

others, and requested comment on each 

measure’s state of readiness for use in 

the EHR incentive programs. For those 

measures where electronic 

specifications did not, at the time of the 

proposed rule, exist, we solicited 

comment on how quickly electronic 

specifications could be developed, and 

the period of time required from final 

posting of the electronic specifications 

for final measures to ensure the effective 

implementation of the measures. We 

stated our intention to publish 

electronic specifications for the 

proposed clinical quality measures on 

the CMS Web site 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. We stated that 

all of the proposed clinical quality 

measures included in Table 3 (see 75 FR 

1874–1889) meet one or more of the 


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criteria for the selection of clinical 

quality measures, discussed in the 

proposed rule. A large portion of these 

measures had been through notice and 

comment rulemaking for PQRI, and 

nearly all 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, nine of the 

proposed 90 clinical quality measures 

listed in Table 3 (see 75 FR 1874–1889) 

(PQRI numbers 1, 2, 3, 5, 7, 110, 111, 

112, and 113) had preliminary 

specifications for electronic submission 

that had already been developed for the 

purpose of testing the submission of 

clinical quality data extracted from an 

EHR for the PQRI program. The link to 

the preliminary electronic specifications 

for nine PQRI clinical quality measures 

was provided: http://www.cms.hhs.gov/ 

pqri. 

We stated that 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 Web 

site 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. 

We pointed out that the PQRI clinical 

quality measures that were proposed 

largely align with the recommendations 

of the HIT Standards Committee. 

However, in addition to proposed 

clinical quality measures that are 

currently included in PQRI, we also 

proposed certain other clinical quality 

measures that we stated are of high 

importance to the overall population. 

Those clinical quality measures are 

Ischemic Vascular Disease (IVD): Use of 

Aspirin or another Antithrombotic; IVD: 

Complete Lipid Profile; IVD: Low 

Density Lipoprotein (LDL–C) Control, 

and Blood Pressure Management. 

Finally, we proposed an array of other 

measures which address important 

aspects of clinical quality. 

We stated our belief that the proposed 

clinical quality measures were broad 

enough to allow for reporting for EPs 

and addressed high priority conditions. 

We recognized the importance of 

integrating the measures into certified 

EHR technologies for calculation of 

measures results, and that not all 

measures would be feasible for 2011 and 

2012. We invited comment on the 

advisability of including the measures 

for payment years 2011 and 2012. 

Although we recognized that there are 

many other important clinical quality 

measures of health care provided by 

EPs, we anticipated expanding the set of 

clinical quality measures in future years 

and listed a number of clinical quality 

measures for future consideration in 

section II.A.3.g of the proposed rule 

preamble, on which we also invited 

comment. 

Comment: Many of the proposed 

clinical quality measures received 

favorable comments and support for 

inclusion in the final clinical quality 

measure set. A few examples of 

measures that were supported for 

inclusion were measures related to 

prevention and screening, and diabetes. 

It was stated by a commenter that the 

proposed rule includes some similar 

clinical quality measures. For example, 

the commenter indicated NQF 0059 and 

NQF 0575 both deal with hemoglobin 

A1c control. Others commented that 

some measures should be eliminated 

and not utilized in the final set of 

clinical quality measures for EPs. For 

example, a few commented that the 

following two measures should be 

eliminated, NQF 0052 and NQF 0513 

were intended to be implemented at the 

administrator site level using outpatient 

hospital claims and not at the 

individual practitioner level. A number 

of commenters stated that the 

specifications for certain clinical quality 

measures, for example, NQF 0022, NQF 

0031, NQF 0032, NQF 0033, NQF 0034, 

and NQF 0061 were not consistent with 

current clinical practice guidelines. 

Another commenter requested 

clarification for the specifications for 

NQF 0013 because blood pressures are 

not routinely monitored for 2-month-old 

patients. Many commenters provided 

suggestions for other clinical quality 

measures not included in the proposed 

rule. 

Response: We appreciate all of the 

suggestions from the commenters. We 

are unable to add any clinical quality 

measures that were not identified in the 

proposed rule due to language in 

sections 1848(o)(2)(B)(i)(II) and 

1886(n)(3)(B)(i) of the Act requiring a 

period of public comment for any 

finalized measures. This requirement 

does not pertain to the Medicaid EHR 

incentive program; we expect to develop 

a process in the future to solicit public 

input on Medicaid-specific clinical 

quality measures for future stages of 

meaningful use, if needed. However, we 

will consider those additional clinical 

quality measures recommended by 

commenters for future inclusion in the 

clinical quality measure sets. 

In regard to suggested changes/ 

revisions and/or elimination of the 

proposed clinical quality measures, we 

considered these suggestions when 

finalizing clinical quality measures in 

this final rule. In regard to this, we 

considered these suggestions when 

evaluating the clinical quality measures 

for selection in this final rule. Of the 

clinical quality measures in the 

proposed rule that we are not finalizing, 

we removed the measures that do not 

have electronic specifications by the 

date of display of this final rule. 

Additionally, some of the proposed 

clinical quality measures were 

recommended for deletion or 

modification, and therefore were 

recommended to not be used in the final 

rule; this is delineated in other 

comments and responses in this final 

rule. Further, we are only finalizing 

clinical quality measures that are 

electronically specified the date of 

display of the final rule. The electronic 

specifications included in the final set 

of clinical quality measures for EPs are 

posted to the CMS Web site at: http:// 

www.cms.gov/QualityMeasures/03_

ElectronicSpecifications.asp#

TopOfPage. 

Comment: Numerous commenters 

were concerned about the burden 

(economic and other) of reporting on the 

large number of clinical quality 

measures and the overall quality 

reporting burden this will add to EPs. 

Some commenters stated that the use of 

numerators and denominators for some 

measures will require manual 

calculation on the part of the EPs since 

there are no automated reports that can 

capture all of the information that must 

be tabulated. One commenter stated that 

there are insufficient resources to 

calculate the denominators of the 

required measures. Other commenters 

suggested using the PQRI requirements 

of reporting only three measures, and 

others suggested reporting on 

significantly smaller number of 

measures. 

Response: In response to the many 

comments received regarding the undue 

burden associated with reporting on a 

large number of clinical quality 

measures, or measures that involve a 

manual process, we have finalized only 

those clinical quality measures that can 


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be automatically calculated by a 

certified EHR technology. We further 

limited the measures to those for which 

electronic specifications are currently 

available, which we posted as final by 

the date of display of this final rule. 

This limitation significantly reduces the 

number of measures EPs are required to 

report in 2011 and 2012, thus reducing 

the EPs’ reporting burden as well as 

addressing commenters’ concerns about 

readiness. Although for 2011, Medicare 

EPs, eligible hospitals, and CAHs will 

still need to manually report (attest) to 

the results automatically calculated by 

their certified EHR technology, we 

believe that with the reduction in the 

number of measures that the burden is 

reasonable. Additionally, this provides 

for the reporting of clinical quality 

measures beyond simply the core 

clinical quality measures that EPs 

identify as suitable to report. 

Table 5, below, shows the proposed 

clinical quality measures for submission 

by Medicare and Medicaid EPs for the 

2011 and 2012 payment year as stated 

in the proposed rule (see 75 FR 1874– 

1889) for EPs, but that are not being 

finalized. Table 5 conveys the NQF 

measure number and PQRI 

implementation number (that is, the 

number used in the PQRI program to 

identify the measure as implemented in 

PQRI (for the 2010 PQRI measures list 

see https://www.cms.gov/PQRI/

Downloads/2010_

PQRI_MeasuresList_111309.pdf)), 

clinical quality measure title and 

description, and clinical quality 

measure steward and contact 

information. The measures listed below 

in Table 5 do not have electronic 

specifications finished before the date of 

display of this final rule, thus we have 

eliminated these measures for this final 

rule and will consider the addition of 

these measures in future rulemaking. 

Also several measures listed below were 

only concepts at the time of publication 

of the proposed rule (that is, 

Hysterectomy rates, Appropriate 

antibiotic use for ear infections, Statin 

after Myocardial Infarction, 30 day 

Readmission Rate, 30 Readmission Rate 

following deliveries, and Use of CT 

Scans). These concept measures were 

not developed or electronically 

specified clinical quality measures, nor 

NQF endorsed; and there was not 

adequate time to consider these 

concepts for development for this final 

rule. Therefore, the concepts listed 

below will be considered in future 

rulemaking. Lastly, NQF 0026 has since 

been retired since publication of the 

proposed rule. 

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Comment: Some commenters 

requested that CMS implement feedback 

reports early in the process that 

document whether EPs are successfully 

participating in the PQRI Program, the 

EHR incentive program, and the eprescribing program, and that the report 

communicate whether the information 

received by CMS for these programs was 

successfully submitted and received. 

Response: As the PQRI and eprescribing programs are beyond the 

scope of this rule, we do not address 

suggestions that we implement feedback 

reports related to these programs. The 

criteria to qualify for the EHR incentive 

payments are based on results 

automatically calculated by EPs’ 

certified EHR technology, as attested by 

the EPs. As such, we believe that the EP 

will be able to determine whether they 

have reported the required clinical 

quality measures to CMS or the State, 

rendering it unnecessary that CMS or 

the State provide the EP with a feedback 

report. We expect the system through 

which EPs, must submit information 

would indicate successful receipt 

beginning the first year of Stage 1. 

Comment: A commenter indicated 

that the clinical quality measure that 

addresses tobacco use and the measure 

that addresses smoking status apply to 

different age groups, and stated that 

they should be consistent. A number of 

commenters recommended removing 

smoking status as an objective from 

meaningful use section of this final rule, 

and only including it in the clinical 

quality measures in order to avoid 

confusion. 

Response: We are in agreement that 

the meaningful use objective and the 

clinical quality measure address the 

same topic of smoking. The clinical 

quality measure requires measurement 

of a clinical action performed by the EP 

to address the negative consequences of 

smoking, whereas the meaningful use 

objective seeks to make sure smokers are 

identified. Additionally, the age for 

recording smoking status for meaningful 

use is 13 years and older, and the 

population addressed by the clinical 

quality measure is 18 years and older, 

thus they are different with respect to 

intent of the objective/measure and the 

age population. For the clinical quality 

measure, we are keeping the age range 

at 18 years and older because the 

measure is currently NQF endorsed 

with these specifications. We will 

consider merging these in the future to 

reconcile the age range. 

Comment: Some commenters stated 

that reporting of ambulatory quality 

measures should remain voluntary for 

EPs, based on the view that many 

process measures do not correlate with 

outcomes and are not evidence based. A 

process measure focuses on a process 

which leads to a certain outcome, 

meaning that a scientific basis exists for 

believing that the process, when 

executed well, will increase the 

probability of achieving a desired 

outcome. A commenter stated that EPs 

serving needy patients, minorities, and 

populations with lower socioeconomic 

levels will experience lower 

performance on many clinical quality 

measures, and therefore will be deterred 

from participating in the EHR incentive 

program. 

Response: The EHR incentive program 

is voluntary. Similar to other Medicare 

quality measure reporting programs, EPs 

are not required to satisfy minimum 

clinical quality performance levels in 

order to qualify for the EHR payment 

incentive, but rather merely report on 

their ambulatory quality measure 

results. Thus, as currently structured, 

we do not believe the requirement that 

EPs report clinical quality measures 

would deter EPs who serve minority 

patients or patients of lower 

socioeconomic status or otherwise 

disadvantaged from participating in the 

program. 

After consideration of the public 

comments received, we are finalizing 

the basic requirement that EPs submit 

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This requirement applies to both the 

2011 and 2012 reporting periods (and 

will potentially continue to apply, until 

CMS issues a subsequent final rule that 

supplants this final rule). We are 

limiting the clinical quality measures to 

those for which electronic specifications 

are available (posted by CMS on the 

Web site at the time of display of this 

final rule.) These measures are listed in 

Table 6 of this final rule for EPs. They 

constitute the clinical quality measures 

‘‘specified by CMS’’ for the purposes of 

the ONC final rule (found elsewhere in 

this issue of the Federal Register) and 

are the measures that certified EHRs are 

required to be able to calculate. Of 

these, nine EP measures have 

preliminary electronic specifications for 

which we provided links for in the 

proposed rule. The remaining 35 

clinical quality measures for EPs were 

electronically specified more recently 

and posted on the CMS Web site by the 

date of display of this final rule. We are 

finalizing only those measures for 

which there are available electronic 

specifications as of the date of display 

of this final rule. Although we are not 

finalizing all of 90 proposed clinical 

quality measures that were proposed for 

EPs in Table 3 (see 75 FR 1874–1889) 

of the proposed rule, because of lack of 

electronic specifications, our intent is to 

include all of them in our proposed 

Stage 2 requirements, or to propose 

alternative measures following a 

transparent process that includes 

appropriate consultation with 

stakeholders and other interested 

parties. In addition, we plan to add new 

measures to fill gaps where measures 

were not previously proposed, such as 

in behavior and mental health (e.g., 

depression and alcoholism). Certified 

EHR technology must be able to 

calculate each measure numerators, 

denominators and exclusions for each of 

the clinical quality measures finalized 

for the EHR incentive program. Table 6 

conveys the applicable NQF measure 

number and PQRI implementation 

number (that is, the number used in the 

PQRI program to identify the measure as 

implemented in PQRI (for the 2010 

PQRI measures list see https:// 

www.cms.gov/PQRI/Downloads/2010_

PQRI_MeasuresList_111309.pdf)), title, 

description, the owner/steward, and a 

link to existing electronic specifications. 

The NQF number is an identifying 

number that is associated with the NQF 

endorsed measure number. All of the 

clinical quality measures in Table 6 are 

NQF endorsed and 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. 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 66, 110, 111, 112, 

113, 114, 115, and 128 support 

screening and prevention all of which is 

a high CMS and HHS priority. 

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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, we proposed to require that 

each EP submit information on two 

measure groups: a core measures group 

(Table 4 of the proposed rule see 75 FR 

1890), and the subset of clinical 

measures most appropriate given the 

EP’s specialty (Tables 5 through 19 

specialty group measures see 75 FR 

1891 through 1895). For the core 

measure group, we stated our belief that 

the clinical quality measures were 

sufficiently general in application and 

of such importance to population 

health; we would 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. 

We proposed that with the inclusion 

of measures applicable to targeting 

children and adolescents and the wide 

applicability of the measures like Blood 

Pressure Management, we believed the 

proposed core set of clinical quality 

measures and specialty measures was 

broad enough to enable reporting by all 

EPs. However, we encouraged 

commenters to identify the EPs in 

question and propose specific remedies 

if the public believed that other EPs 

would not have sufficient patients in the 

denominator of these core measures. 

Comment: Several commenters 

requested clarification about the core 

measures group. Many comments were 

received regarding the inclusion of a 

core measure set for EPs. Some 

commenters favored the inclusion of 

one or more core measures (for example, 

preventive care) and others indicated 

core measures were essential for 

improving the quality of care. 

Conversely, numerous commenters 

suggested eliminating the core measure 

set for EPs. The primary reason offered 

by commenters for excluding core 

measures was that these clinical quality 

measures were outside their scope of 

practice and/or not relevant to their 

specific patient population. A 

commenter requested that the core set of 

clinical quality measures be better 

defined and/or increased for each 

reporting period. Many commenters 

indicated the clinical quality measures 

included in the core measure set are not 

appropriate to all EPs and specialists 

(for example, EPs that do not have direct 

physical access to the patients such as 

teleradioloists, EPs that do not routinely 

report blood pressure in patients with 

diagnosed hypertension, such as 

dermatologists) and they would not be 

able to report on these clinical quality 

measures. Many commenters supported 

reporting exclusions. A commenter 

recommended the use of PQRI 128/NQF 

0421 Preventive Care and Screening: 

BMI Screening and Follow-up as a core 

clinical quality measure. Other 

commenters indicated these clinical 

quality measures were important for 

improving care and the core measure set 

should be expanded. 

Response: After considering the 

comments, we agree there may be 

circumstances such that the core 

clinical quality measures are not 

applicable for specific patient 

populations and/or a specific EP’s scope 

of practice. In such circumstances we 

anticipate that the patients will not 

appear in the denominator at all or will 

be excluded. We have defined the core 

measure set for EPs in Table 7 of this 

final rule, and these core measures will 

be required for Stage 1. We expanded 

the core measures set to include three 

alternate measures, as well as added 

PQRI 128/NQF0421 as a required core 

measure, based on commenters 

feedback. Although we require all EPs to 

report the core measures, there is no 

requirement that the EP have any 

particular number of patients in the 

denominator, which could be zero as 

calculated by the EHR. Therefore we 

have changed the reporting criteria to 

require EPs to report on all three core 

measures (as shown in Table 7, below), 

and three additional clinical quality 

measures selected from Table 6 (other 

than the core or alternate core measures 

listed in Table 6). The clinical quality 

measures included in this final rule 

reflect a subset of measures that were 

included in the proposed rule (see 75 

FR 1874 through 1889). The clinical 

quality measures included in Table 6 of 

this final rule were selected from the 

Tables included in the proposed rule, 

based on having electronic 

specifications fully developed by the 

date of display of this final rule. 

Comment: Many commenters 

indicated that NQF 0022 Drugs to be 

avoided in the elderly is an 

inappropriate clinical quality measure 

and should be removed. The rationale 

given for removal is that the numerator 

(at least one prescription for any drug to 

be avoided in the elderly in the 

measurement year or at least two 

different drugs to be avoided in the 

elderly in the measurement year) tends 

to be very small. Others considered 

poly-pharmacy a more significant 

problem in the elderly than avoidance 

of specific drugs. A number of 

commenters indicated this clinical 

quality measure should include a list of 

the drugs to be avoided. 

Response: We agree with the concerns 

expressed by the commenters and have 

removed the measure NQF 0022. 

Additionally, electronic specifications 

are not available for this measure by the 

date of display of this final rule making 

this measure impractical to use for Stage 

1. We will consider this measure in 

future rulemaking. 

After consideration of the public 

comments received, we are finalizing 

the requirement that all EPs must 

submit calculated results for three core 

measures using the certified EHR 

technology. However, we are finalizing 

only two of the clinical quality 

measures that were proposed as ‘‘core 

measures’’ in the proposed rule. The 

other core measures presented in Table 

6 of this final rule were selected because 

they have broad applicability, support 

prevention, were recommended by 

commenters, and have electronic 

specifications by the date of display of 

this final rule. Insofar as a measure does 

not apply to patients treated by the EP, 

this will be reflected in the calculation 

of the clinical quality measure either by 

the patient not being included in the 

denominator for the measure or the 

patient being excluded. Therefore, it is 

not necessary for CMS to delineate for 

a particular specialty which measures 

may or not apply. We note that to 

qualify as a meaningful EHR user, EPs 

need only report the required clinical 

quality measures; they need not satisfy 

a minimum value for any of the 

numerator, denominator, or exclusions 

fields for clinical quality measures. The 

value for any or all of those fields, as 

reported to CMS or the States, may be 

zero if these are the results as displayed 

by the certified EHR technology. Thus, 

the clinical quality measure requirement 

for 2011 and beginning in 2012 is a 

reporting requirement and not a 

requirement to meet any particular 

performance standard for the clinical 

quality measure, or to in all cases have 

patients that fall within the 

denominator of the measure. 

The three core measures that EPs will 

be required to report are: [NQF 0013: 

Hypertension: Blood Pressure 

Management; NQF 0028: Preventative 

Care and Screening Measure Pair: a. 

Tobacco Use Assessment b. Tobacco 

Cessation Intervention; and NQF0421/ 

PQRI 128: Adult Weight Screening and 

Follow-up]. Insofar as the denominator 

for one or more of the core measures is 

zero, EPs will be required to report 

results for up to three alternate core 

measures [NQF 0041/PQRI 110: 

Preventative Care and Screening: 


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Influenza Immunization for Patients ≥50 

Years Old; NQF 0024: Weight 

Assessment and Counseling for 

Children and Adolescents; and NQF 

0038: Childhood Immunization Status]. 

We believe this final set of core clinical 

quality measures provides EPs a greater 

opportunity for successful reporting. 

The EP will not be excluded from 

reporting any core or alternate clinical 

quality measure because the measure 

does not apply to the EPs scope of 

practice or patient population. The 

expectation is that the EHR will 

automatically report on each core 

clinical quality measure, and when one 

or more of the core measures has a 

denominator of zero then the alternate 

core measure(s) will be reported. If all 

six of the clinical quality measures in 

Table 7 have zeros for the denominators 

(this would imply that the EPs patient 

population is not addressed by these 

measures), then the EP is still required 

to report on three additional clinical 

measures of their choosing from Table 6 

in this final rule. In regard to the three 

additional clinical quality measures, if 

the EP reports zero values, then for the 

remaining clinical quality measures in 

Table 6 (other than the core and 

alternate core measures) the EP will 

have to attest that all of the other 

clinical quality measures calculated by 

the certified EHR technology have a 

value of zero in the denominator, if the 

EP is to be exempt from reporting any 

of the additional clinical quality 

measures (other than the core and 

alternate core measures) in Table 6. 

Thus, EPs are not penalized in the Stage 

1 reporting years as long as they have 

adopted a certified EHR and that EHR 

calculates and the EP submits the 

required information on the required 

clinical quality measures, and other 

meaningful use requirements as defined 

in this final rule in section II.A.2.d.1 of 

this final rule. 

Table 7, below, shows the core 

measure groups for all EPs for Medicare 

and Medicaid to report. 

We proposed that EPs were to submit 

calculated results on at least one of the 

sets listed in Tables 5 and 19 as 

specialty groups (see 75 FR 1891–1895). 

The specialty groups were Cardiology, 

Pulmonary Diseases, Endocrinology, 

Oncology, Proceduralist/Surgery, 

Primary Care Physicians, Pediatrics, 

Obstetrics and Gynecology, Neurology, 

Psychiatry, Ophthalmology, Podiatry, 

Radiology, Gastroenterology, and 

Nephrology. 

We recognized that clinical quality 

measures as specified by measures 

developers and as endorsed by the NQF 

were not specific to particular 

specialties. 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 grouped the 

proposed measures according to the 

types of patients commonly treated and 

services rendered by EPs of various 

specialties. We did this for purposes 

similar to measures groups used in PQRI 

which, however, are based on clinical 

conditions, rather than specialty types. 

We proposed that the general purpose of 

each specialty measures grouping was to 

have standardized sets of measures, all 

of which must be reported by the EP for 

the self-selected specialty measures 

groups in order to meet the reporting 

requirements. We expected to narrow 

down each set to a required subset of 

three-five measures based on the 

availability of electronic measure 

specifications and comments received. 

We also proposed to require for 2011 

and 2012 that EPs would select a 

specialty measures group, on which to 

report on all applicable cases for each of 

the measures in the specialty group. We 

also proposed that the same specialty 

measures group selected for the first 

payment year would be required for 

reporting for the second payment year. 

We invited comment on whether there 

were EPs who believed no specialty 

group would apply to them. In 

accordance with public comments, we 

noted that we would specify in the final 

rule which EP specialties would be 

exempt from selecting and reporting on 

a specialty measures group. As stated, 

we proposed, EPs that are so-designated 

would be required to attest, to CMS or 

the States, to the inapplicability of any 

of the specialty groups and would not 


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be required to report information on 

clinical quality measures from a 

specialty group for 2011 or 2012, though 

the EP would still be required to report 

information on all of the clinical quality 

measures listed in the proposed core 

measure set (see 75 FR 1890). 

Comment: Several commenters asked 

if certain specialties, such as 

chiropractors, audiologists, allergist and 

immunology, otolaryngologists, etc., 

could be exempt from having to report 

all specific clinical quality specialty 

measures. Many of these EPs indicated 

the clinical quality measures included 

in Table 3 were not relevant to their 

specific practice and/or patient 

population. Other commenters 

requested that specialty groups be 

created for specialties not included in 

the proposed rule measure groups, (for 

example, chiropractors, dentists, 

dermatologists, infectious disease, 

pediatric oncology, neurosurgery, 

interventional radiology, plastic & 

reconstructive surgery, physical 

therapists, occupational therapists, eye 

care specialists, family planning, 

genetics, ear/nose/throat, and 

nutritionists providers, etc.). Other 

commenters indicated that specialty 

clinical quality measures were specific 

to a subset of patients, but were not 

broadly applicable to their specialty for 

treating other conditions within their 

specialty area. Other commenters asked 

that CMS reconsider allowing EPs to 

attest only and be exempt from 

reporting if no applicable clinical 

quality measures specialty group exists 

for them. Another commenter indicated 

support of specific measure sets for 

different clinical specialties. Many 

commenters supported the elimination 

of specialty groups altogether as a 

mandatory set and instead supported 

the reporting of a fixed number of 

relevant clinically quality measures 

regardless of the specialty group. A 

commenter asked for a definition of 

‘‘specialist’’ which is not included in the 

proposed rule. Several commenters 

expressed concern about the large 

number of clinical quality measures in 

certain measure groups versus other 

measure groups (for example, the 

primary care, pediatric and ob/gyn 

measure groups) as well as the 

applicability of clinical quality 

measures assigned to primary care EPs 

when they do not manage conditions 

that are typically referred to a specialist 

for example, ischemic vascular disease. 

A commenter requested clarification 

and suggestions on how to select a 

clinical quality measure group. Several 

commenters wanted clarification on the 

proposed EP Specialty Measures Tables 

(see 75 FR 1874), and whether the EPs 

are accountable for only the clinical 

quality measures for their specialty. One 

comment indicated agreement with 

CMS regarding requiring EPs to report 

on the same specialty measure groups 

for 2011 and 2012 and another 

commenter indicated that CMS should 

not delay reporting of clinical quality 

measures as early adopters of EHRs will 

be ready to report. A few commenters 

suggested adding NQF 0033 Chlamydia 

screening in women to all other 

appropriate specialty clinical quality 

measure groups. A commenter indicated 

that PQRI #112, 113, and NQF 0032 

should be removed from the oncology 

clinical quality specialty measure group 

as oncologists do not perform routine 

cancer screenings. 

Response: We are appreciative of the 

detail provided by commenters to the 

potential inapplicability of the proposed 

specialty measures groups to various 

practitioner types or to the 

inapplicability of certain measures 

within groups to the specialties 

designated. Our primary purpose, 

similar to the core measures, was to 

encourage a certain consistency in 

reporting of clinical quality measures by 

EPs. However, after consideration of the 

comments we do not believe that the 

proposed specialty measures groups are 

sufficient to have a robust set of 

specialty measures groups. Further, 

given the lack of electronic 

specifications or final development of 

many of these measures, requiring 

specialty measures groups becomes 

even more impractical. We expect that 

electronic specifications will be 

developed for measures which would 

allow for a broadly applicable set of 

specialty measures groups in the future. 

After consideration of the public 

comments received, we removed the 

requirement for EPs to report on 

specialty measures groups as proposed. 

We intend to reintroduce the proposed 

rule’s specialty group reporting 

requirement in Stage 2 with at least as 

many clinical quality measures by 

specialty as we proposed for Stage 1 in 

the proposed rule. We expect to use a 

transparent process for clinical quality 

measure development that includes 

appropriate consultation with specialty 

groups and other interested parties, and 

we expect that electronic specifications 

will be developed for all of the measures 

that we originally proposed for Stage 1 

or alternative related measures, which 

would allow for a broadly applicable set 

of specialty measures groups and 

promote consistency in reporting of 

clinical quality measures by EPs. Also, 

in consideration of public comments 

received, we are finalizing the 

requirement (in addition to the core 

measure requirement) that EPs must 

report on three measures to be selected 

by the EP from the set of 38 measures 

as shown in Table 6, above. As stated 

previously, in regard to the three 

additional clinical quality measures, if 

the EP reports zero values, then for the 

remaining clinical quality measures in 

Table 6 (other than the core and 

alternate core measures) the EP will 

have to attest that all of the other 

clinical quality measures calculated by 

the certified EHR technology have a 

value of zero in the denominator. In 

sum, EPs must report on six total 

measures, three core measures 

(substituting alternate core measures 

where necessary) and three additional 

measures (other than the core and 

alternate core measures) selected from 

Table 6. 

We also proposed that although we do 

not require clinical quality measure 

reporting electronically until 2012, we 

would require clinical quality reporting 

through attestation in the 2011 payment 

year. We solicited 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 

was feasible, we solicited comment on 

which key measures should be chosen 

for 2011 and which should be deferred 

until 2012 and why. We discuss 

comments received regarding the 

reporting method for clinical quality 

measures in section II.A.3.h. of this final 

rule. 

f. Clinical Quality Measures for 

Electronic Submission by Eligible 

Hospitals and CAHs 

Our proposed rule would have 

required eligible hospitals and CAHs to 

report summary data to CMS on the set 

of clinical quality measures identified in 

Table 20 and 21 of the proposed rule 

(see 75 FR 1896–1899), with eligible 

hospitals attesting to the measures in 

2011 and electronically submitting these 

measures to CMS using certified EHR 

technology beginning in 2012. For 

hospitals eligible for only the Medicaid 

EHR incentive program, we proposed 

that reporting would be to the States. In 

the proposed rule, for eligible hospitals 

under both programs, we proposed that 

they would have to also report on the 

clinical quality measures identified in 

Table 21 of the proposed rule to meet 

the requirements for the reporting of 

clinical quality measures for the 

Medicaid program incentive (see 75 FR 

1896 through 1900). Tables 20 and 21 of 

the proposed rule (see 75 FR 1896 

through 1900) conveyed the clinical 

quality measure’s title, number, owner/ 


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developer and contact information, and 

a link to existing electronic 

specifications where applicable. 

We included in the proposed 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 between CMS and ONC to 

develop interoperable standards for EHR 

electronic submission of the Emergency 

Department Throughput, Stroke, and 

Venous Thromboembolism clinical 

quality measures on Table 20 of the 

proposed rule (see 75 FR 1896 through 

1899). We also proposed to test the 

submission of these clinical quality 

measures in Medicare (see 75 FR 

43893). The specifications for the 

RHQDAPU clinical quality measures for 

eligible hospitals and CAHs 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 we proposed 

derived from the RHQDAPU program or 

were measures we considered important 

for measuring or preventing adverse 

outcomes. In addition to risk 

standardized readmission clinical 

quality measures, we proposed that nonrisk-adjusted readmission rates also be 

reported. For the proposed rule, we also 

considered HIT Standards Committee 

recommendations, including the 

Committee’s recommendation to 

include a measure on Atrial Fibrillation 

Receiving Anticoagulation Therapy 

which was included on Table 20 of the 

proposed rule Our proposed rule noted 

that we did not propose one measure 

recommended by the HIT Standards 

Committee: Surgery patients who 

received Venous Thromboembolism 

prophylaxis within 24 hours period to 

surgery to 24 hours after surgery end 

time. We noted that the measure is a 

current clinical quality measure 

collected in the RHQDAPU program 

through chart abstraction for all 

applicable patients (SCIP–VTE–2), and 

that the VTE–2 clinical quality measure 

in Table 20 of the proposed rule (see 75 

FR 1896 through 1899) was a parallel 

clinical quality measure to SCIP–VTE– 

2. SCIP–VTE–2 includes surgical and 

non-surgical patients, and can be more 

easily implemented for the EHR 

incentive program because electronic 

specifications had been completed. We 

added SCIP–VTE–2 for future 

consideration. 

Comment: Many commenters 

recommended reducing the number of 

eligible hospital clinical quality 

measures and indicated that such a large 

number of measures would pose a 

significant financial and administrative 

burden on hospitals. Commenters 

suggested a variety of solutions which 

include: Eliminating duplication 

between clinical quality measures and 

meaningful use objectives and 

associated measures, reducing the 

number of clinical quality measures for 

reporting and allowing organizations to 

select a limited number of clinical 

quality measures on which they would 

like to report. 

We received comments supporting 

many of the measures in the proposed 

rule including Venous 

Thromboembolism, Emergency 

Department, Stroke, RHQDAPU, and 

measures that are evidence-based that 

could improve the quality of care. 

Others recommended additional clinical 

quality measures, changes to the 

specifications for clinical quality 

measures or the elimination of certain 

clinical quality measures such as risk 

adjusted re-admission measures or 

measures not applicable to CAHs. Many 

commenters supported the process 

through which the electronic 

specifications were developed for the 

Emergency Department Throughput, 

Stroke and Venous Thromboembolism 

measures while also pointing out the 

length of time necessary to adequately 

develop electronic specifications and 

test the clinical quality measures. Many 

commented that the remaining measures 

had not been electronically specified or 

had otherwise not completed 

development and would not be ready in 

time for the 2011–2012 implementation. 

Others stated their concerns about 

duplicate reporting systems and the 

belief that the HITECH Act reporting 

requirements should be based on the 

RHQDAPU program, similar to the 

conceptual framework of hospitals 

value-based purchasing plan. Others 

pointed to measures that are already 

currently reported in RHQDAPU and 

the statutory provision that clinical 

quality measure reporting required for 

the HITECH Act should seek to avoid 

duplicative and redundant reporting of 

measures reported under RHQDAPU. 

Response: We are appreciative of the 

comments supporting many of the 

clinical quality measure sets and the 

process utilized for electronically 

specifying the Emergency Department 

Throughput, Stroke, and Venous 

Thromboembolism sets. As we have 

discussed for the EP measures, we agree 

that we should limit the required 

clinical quality measures to those 

measures for where there are electronic 

specifications as of the date of display 

of this final rule. This will allow EHR 

vendors sufficient time to ensure that 

certified EHR technology will be able to 

electronically calculate the measures. 

Therefore, we are not finalizing those 

clinical quality measures that either 

have not been fully developed, are 

currently only specified for claims 

based calculation, or for which there are 

not fully developed electronic 

specifications as of the date of display 

of this final rule. Accordingly, we are 

only finalizing the 15 measures listed in 

Table 10 of this final rule. We note that 

none of these measures are duplicate 

measures which are currently required 

for reporting in the RHQDAPU program. 

We therefore do not need to address the 

issue of duplicate or redundant 

reporting. We will consider adding, 

changing, developing, and eliminating 

duplicative clinical quality measures 

and meaningful use objectives/ 

associated measures in future 

rulemaking. 

Table 8, shows the proposed clinical 

quality measures for submission by 

Medicare and Medicaid Eligible 

Hospitals for the 2011 and 2012 

payment year as stated in the proposed 

rule (see 75 FR 1896–1899) for EPs, but 

that are not being finalized. Table 9, 

shows the proposed alternative 

Medicaid clinical quality measures for 

Medicaid eligible hospitals in the 

proposed rule (see 75 FR 1899–1900). 

Tables 8 and 9 convey the NQF measure 

number, clinical quality measure title 

and description, and clinical quality 

measure steward and contact 

information. The measures listed below 

in Tables 8 and 9 do not have electronic 

specifications finished before the date of 

display of this final rule, thus we have 

eliminated these measures for this final 

rule and will consider the addition of 

these measures in future rulemaking. 

Also several measures listed below were 

only concepts at the time of publication 

of the proposed rule (that is, Hospital 

Specific 30 day Rate following AMI 

admission, Hospital Specific 30 day 

Rate following Heart Failure admission, 

Hospital Specific 30 day Rate following 

Pneumonia admission, and All-Cause 

Readmission Index). These concept 

measures were not developed or 

electronically specified clinical quality 

measures, nor NQF endorsed; and there 

was not adequate time to consider these 

concepts for development for this final 

rule. Therefore, the concepts listed 


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below will be considered in future 

rulemaking. 

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Comment: Commenters stated that 

current health information technology is 

not capable of electronically collecting 

or reporting on clinical quality 

measures. Commenters also stated we 

should not require reporting on clinical 

quality measures that cannot easily be 

derived from EHRs. Other commenters 

believed the timeline was unreasonable 

to obtain the functionality required in 

the EHR system to report on these 

clinical quality measures and were 

concerned that there were no 

vocabulary standards. 

Response: We agree with the 

comment that eligible hospitals should 

only be required to submit information 

that can be automatically obtained from 

certified EHR technology. As we 

discussed elsewhere, ONC’s final rule 

(found elsewhere in this issue of the 

Federal Register) requires that certified 

EHR technology must be able to 

calculate clinical quality measures 

specified by us in this final rule. 

Standards for certified EHRs, including 

vocabulary standards, are included in 

ONC’s final rule (found elsewhere in 

this issue of the Federal Register). 

Comment: Commenters recommended 

that CMS conduct a pilot test of the 

NQF endorsed HITSP electronic 

specifications of measures in the 

proposed rule for Stage 1 prior to their 

adoption. Commenters requested CMS 

publish results of the pilot and use this 

information to inform the setting of 

Stage 2 and 3 objectives and clinical 

quality measures. Commenters also 

requested allowing adequate time for 

implementation after the pilot test 

before such measures are considered for 

certification, and 24 months before 

requiring them for meaningful use. One 

commenter stated that the Emergency 

Department Throughput, Stroke, and 

Venous Thromboembolism have not yet 

been thoroughly tested for automated 

reporting and data element capture. 

Additional commenters recommended 

that the measures selected for the 

eligible hospitals incentive program 

should be comprehensively 

standardized and tested in the field to 

ensure that they are thoroughly 

specified, clinically valid when the data 

are collected through the eligible 

hospitals system, feasible to collect, and 

are regularly updated and maintained 

with a well established process. 

Response: We agree with the 

commenters that it is important to allow 

adequate time for pilot testing and 

implementation before clinical quality 

measures should be considered for 

certification, as well as requiring these 

measures for meaningful use. 

Emergency Department 1, Emergency 

Department 2, and Stroke 3, clinical 

quality measures for eligible hospitals 

and CAHs that are included in this final 

rule, were tested during the January 

2010 Connectathon and demonstrated at 

the HIMSS 2010 Interoperability 

Showcase. Additionally, as part of the 

process of certification of EHR 

technology it is expected that certifying 

bodies will test the ability of EHR 

technology to calculate the clinical 

quality measures finalized in this final 

rule. 

After consideration of the public 

comments received, eligible hospitals 

and CAHs will be required to report on 

each of the 15 clinical quality measures, 

as shown in Table 10. Requiring eligible 

hospitals and CAHs to report on each of 

the 15 clinical quality measures in the 

EHR incentive program is consistent 

with the RHQDAPU program, which 

requires reporting on all applicable 

quality measures. Eligible hospitals and 

CAHs will report numerators, 

denominators, and exclusions, even if 

one or more values as displayed by their 

certified EHR is zero. We note that to 

qualify as a meaningful EHR user, 

eligible hospitals and CAHs need only 

report the required clinical quality 

measures; they need not satisfy a 

minimum value for any of the 

numerator, denominator, or exclusions 

fields for clinical quality measures. The 

value for any or all of those fields, as 

reported to CMS or the States, may be 

zero if these are the results as displayed 

by the certified EHR technology. Thus, 

the clinical quality measure requirement 

for 2011 and beginning with 2012 is a 

reporting requirement and not a 

requirement to meet any particular 

performance standard for the clinical 

quality measure, or to in all cases have 

patients that fall within the 

denominator of the measure. Further, 

the criteria to qualify for the EHR 

incentive payments are based on results 

automatically calculated by eligible 

hospitals or CAHs certified EHR 

technology, as attested by the eligible 

hospital or CAH. As such, we believe 

that the eligible hospitals or CAHs will 

be able to determine whether they have 

reported the required clinical quality 

measures to CMS or the State, rendering 

it unnecessary that CMS or the State 

provide the eligible hospital or CAH 

with a feedback report, which provides 

information to eligible hospitals and 

CAHs as to whether they have reported 

their required clinical quality measures. 

We expect successful receipt of 

Medicare eligible hospitals and CAHs’ 

information, beginning the first year of 

Stage 1. 

We are finalizing Table 10, which 

conveys the clinical quality measure’s 

title, number, owner/steward and 

contact information, and a link to 

existing electronic specifications. 

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We proposed that 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 would require eligible hospitals and 

CAHs to report on all EHR incentive 

clinical quality measures for which they 

have applicable cases, without regard to 

payer. We proposed that Medicare 

eligible hospitals and CAHs, 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. We also proposed 

that to demonstrate an eligible hospital 

or CAH is a meaningful EHR user, the 

eligible hospital or CAH would be 

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 as 

proposed, we did not require clinical 

quality reporting electronically until 

2012, we would begin clinical quality 

reporting though attestation in the 2011 

payment year. We solicited 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 was feasible, we 

solicited comment on which key 

measures should be chosen for 2011 and 

which should be deferred until 2012 

and why. 

Comment: We received numerous 

comments strongly opposed to requiring 

the reporting of clinical quality 

measures by eligible hospitals prior to 

2013, although some comments favored 

the reporting in 2011 and 2012. 

Comments in favor pointed to the 

importance of quality measurement to 

achieving improvement in healthcare 

quality. Those opposed to the reporting 

of clinical quality measures in 2011 and 

2012 cited concerns as to the readiness 

of EHR technology for automated 

calculation and reporting of clinical 

quality measures as well as financial 

and administrative burden. Many 

commenters stated that measures should 

be fully automated and tested prior to 

implementation, and recommended the 

process for Emergency Department 

Throughput, Stroke, and Venous 

Thromboembolism measures where 

CMS developed the specifications and 

has in place a plan to test the 

submission of such measures for 

RHQDAPU. Commenters stated their 

expectation that the testing process 

would reveal important insights as to 

potential challenges of electronic 

submission. Numerous commenters 

opposed measures already in 

RHQDAPU and not able to be calculated 

by the EHR technology. Many 

commenters stated that electronic data 

submission should be developed 

through the RHQDAPU program rather 

than have a separate quality measure 

reporting program, such as the EHR 

incentive program. Further, commenters 

stated that RHQDAPU should provide 

the foundation for migration to 

electronic reporting. Numerous 

commenters were opposed to having a 

temporary data collection and reporting 

process through attestation that would 

need to be updated or replaced once 

CMS has the appropriate infrastructure 

in place. Many commenters stated that 

requiring hospitals to report summary 

data through attestation, without the 

ability for CMS to receive the summary 

data electronically, creates a dual 

reporting burden for measures currently 

in RHQDAPU. Many commenters stated 

concerns as to the timing of the 

certification process for EHRs since 

having a certified EHR is an essential 

element for quality incentives. 

Numerous commenters pointed out that 

only 15 of the proposed measures have 

electronic specifications currently 

available. 

Response: We are sensitive to and 

appreciate the many comments urging 

us not to require the submission of 

clinical quality measures, through 

attestation or electronic submission, 

prior to 2013, based on lack of readiness 

of many of the proposed measures, fully 

automating and testing prior to 

implementation, burden, and the 

potential duplication of quality 

measures reporting requirements under 

the RHQDAPU and the EHR incentive 

payment programs. Having carefully 

considered these comments, we have 

sought to address them while still 

retaining the important goal of 

beginning the process of using the 

capacity of EHRs to promote improved 

quality of care in hospitals by providing 

calculated results of clinical quality 

measures. In terms of readiness, we are 

limiting the clinical quality measures to 

those measures having existing 

electronic specifications as of the date of 

display of this final rule. Additionally, 

as recommended by commenters, we 

will only require hospitals to submit 

that information that can be 

automatically calculated by their 

certified EHR technology. Thus we will 

require no separate data collection by 

the hospital, but require submission 

solely of that information that can be 

generated automatically by the certified 

EHR technology; that is, we only adopt 

those clinical quality measures where 

the certified EHR technology can 

calculate the results. Further, we are not 

adopting any measures which are 

already being collected and submitted 

in the RHQDAPU program. Therefore, 

we are imposing no duplicate reporting 

requirement on hospitals who 

participate in RHQDAPU. Through 

future rulemaking we will seek to align 

the EHR incentive program with 

RHQDAPU. 

Comment: Some commenters stated 

that CMS contradicts itself, where the 

proposed rule states that Medicare 

eligible hospitals who are also 

participating in Medicaid EHR incentive 

program will need to report on all of the 

Medicaid clinical quality measures and 

where it says that Table 21 is an 

alternative set of clinical quality 

measures if the hospital does not have 

any patients in the denominators of the 

measures in Table 20. Many 

commenters requested clarification of 

the Medicare and Medicaid reporting. 

Response: We agree that the 

description of the eligible hospital and 

CAH reporting requirements was 

unclear. To clarify, our proposal was 

that if a hospital could submit 

information on clinical quality measures 

sufficient to meet the requirements for 

Medicare that would also be sufficient 

for Medicaid. However, hospitals for 

which the Medicare measures did not 

reflect their patient populations could 

satisfy the Medicaid requirements by 

reporting the alternate Medicaid clinical 

quality measures. Reporting the 

alternate Medicaid measures would 

only qualify for the Medicaid program 

and would not qualify eligible hospitals 

as to the Medicare incentive program. In 

this final rule, this clarification is moot, 

however, because we removed the 

alternate Medicaid list of clinical 

quality measures listed in Table 21 (see 

75 FR 1896 through 1900) of the 

proposed rule for eligible hospitals. This 

was based on the lack of electronic 

specifications for these measures 

available at the time of display of this 

final rule. Hospitals that report 

information on all 15 of the clinical 

quality measures, as applicable to their 

patient population, will qualify for both 

the Medicare and the Medicaid 

submission requirements for clinical 

quality measures. We recognize that 

many of the measures in the Medicare 

list would likely not apply to certain 

hospitals, such as children’s hospitals. 

However, an eligible hospital would 

meet the clinical quality measure 

requirement by reporting values for the 

15 clinical quality measures, including, 


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values of zero for the denominator, if 

accurate. Some value is required for 

each of the 15 clinical quality measures 

for eligible hospitals and CAHs. 

Therefore, for example, a children’s 

hospital would enter zero for the 

denominator for any of the 15 measures 

for which they do not have any patients 

as described in the measure. 

After consideration of public 

comments received, we are finalizing 15 

clinical quality measures that eligible 

hospitals and CAHs will be required to 

report for Stage 1 (2011 and beginning 

2012), as applicable to their patient 

population. Those 15 clinical quality 

measures for eligible hospitals and 

CAHs can be found in Table 10 of this 

final rule. 

g. Potential Measures for EPs, Eligible 

Hospitals, and CAHs in Stage 2 and 

Subsequent Years 

We stated our expectation that the 

number of clinical quality measures for 

which EPs, eligible hospitals, and CAHs 

would be able to electronically submit 

information would 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_

StatuteRegulations

ProgramInstructions.asp. For future 

considerations of clinical quality 

measures for Stage 2 of meaningful use 

and beyond for eligible hospitals and 

CAHs, we also plan to consider other 

clinical quality measures from the 

RHQDAPU program which are 

identified in the FY 2010 IPPS final rule 

(75 FR 43868–43882). We invited 

comments on inclusion of clinical 

quality measures for the 2013 and 

beyond for the HITECH Act Medicare 

and Medicaid incentive program. We 

note that as with the other meaningful 

use objectives and measures, in the 

event that we have not promulgated 

clinical quality measures for the 2013 

payment year, the measures for Stage 1 

(beginning in 2011) would continue in 

effect. 

For the Stage 2 of meaningful use, we 

indicated in the proposed rule that we 

are considering expanding the Medicaid 

EHR incentive program’s clinical quality 

measure set for EPs and eligible 

hospitals to include clinical quality 

measures that address the following 

clinical areas, to address quality of care 

for additional patient populations, and 

facilitate alignment with Medicaid and 

CHIP programs: 

• Additional pediatrics measures 

(such as completed growth charts, 

electronic prescriptions with weightbased dosing support and 

documentation of newborn screening). 

• Long-term care measures. 

• Additional obstetrics measures. 

• Dental care/oral health measures. 

• Additional behavioral/mental 

health and substance abuse measures. 

The above list does not constitute a 

comprehensive list of all clinical quality 

measures that may be considered. We 

stated that specific measures for Stage 2 

of meaningful use and beyond may be 

addressed by CMS in future notice and 

comment rulemaking. To assist us in 

identifying potential clinical quality 

measures for future consideration for 

Stage 2 of meaningful use and beyond, 

we solicited 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. 

The following is a summary of 

comments received regarding the 

request for public comment on potential 

measures for EPs, eligible hospitals, and 

CAHs for Stage 2 of meaningful use and 

subsequent stages, and our responses. 

Comment: A commenter suggested 

using newly adopted NQF Level 3 

measures that incorporate common 

electronic administrative and clinical 

data that represent a better measure of 

the patient’s condition. A commenter 

suggested adding long term care and 

post acute care measures in the next 

stage of meaningful use. A few 

commenters suggested future clinical 

quality measures be coordinated with 

Healthy People 2020. Another comment 

regarding measures included a request 

for medication measures that evaluate 

provider intervention. Other 

commenters indicated CMS should 

provide a more structured process for 

the adoption of clinical quality 

measures such that specialty EPs would 

have greater input into and ownership 

of the process. A commenter requested 

consideration that future clinical quality 

measures address both quality and 

resource use efficiency (for example 

potentially preventable Emergency 

Department visits and hospitalizations 

and inappropriate use of imaging MRI 

for acute low back pain). A commenter 

requested future clinical quality 

measures for the following areas: reduce 

hospital readmissions and to improve 

medication management, specifically 

safe and efficient management of heart 

disease, diabetes, asthma, mental health 

conditions and hospital procedures. A 

commenter requested clinical quality 

measures that will aid in increasing 

improved patient safety and reduce 

disparities. A commenter also 

recommended developing new clinical 

quality outcomes measures to address 

overuse and efficiency, care 

coordination, and patient safety. Some 

commenters requested the inclusion of 

HIV testing and reporting for preventive 

service quality measures. Some 

commenters stated that this would help 

to facilitate continued efforts to promote 

and implement the 2006 CDC Revised 

Recommendation on HIV testing, 

especially to non-HIV medical 

specialties. Some commenters 

recommended measure development in 

the areas of community mental health, 

home health, renal dialysis centers, long 

term care, post acute care, and nursing 

homes. A commenter recommended 

including 3 month treatment of 

pulmonary emboli (NQF 0593) and deep 

vein thrombosis (NQF 0434) for the next 

stage of meaningful use and beyond. A 

commenter requested including health 

disparity data in all clinical quality 

measure analyses. Some commenters 

also recommended future clinical 

quality measure development in the 

following areas: Diabetes, heart disease, 

asthma, disease screening, chronic 

disease management, patient safety, 

nursing sensitive measures, atrial 

fibrillation, and ethnic disparities. 

Commenters requested expanding 

pediatric measures to provide expanded 

focus on childhood diseases that require 

hospitalization such as asthma, 

developmental issues and weight-based 

medication dosage safety issues. 

Additional commenters requested 

measures for blood test for lead levels 

for children up to 1 year of age and 

between 1 and 2 years of age, co-morbid 

conditions and dental utilization. A 

commenter recommended that only one 

EP should be accountable for the quality 

intervention and clinical quality 

measure such as NQF 0323 Title: End 

Stage Renal Disease (ESRD): Plan of 

Care for Inadequate Hemodialysis in 

ESRD Patient. The commenter indicated 

that this type of measure could involve 

more than one provider, for example, 

nephrologist and a dialysis facility. 

Because provider clinical practices may 

vary, practice variations may 

independently influence patient 

outcomes. Some commenters suggested 

future development of measures foster 

greater use of the clinical information 

available in EHRs to improve clinical 

processes and evaluate patient outcomes 

and suggested use of outcomes measures 

instead of process measures. 

Furthermore, commenters support the 

inclusion of outcomes measures rather 

than process measures and composite 

versus individual measures. Several 

commenters indicated support for the 

preventive care measures included in 


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the proposed rule and suggested 

expanding the set of preventive care 

measures to include HIV and STD 

screening and eye care specialty 

measures. A commenter requested CMS 

provide information about their strategic 

plan for future Medicare clinical quality 

measurement selection, how they will 

improve care delivery, proposed stages 

of reporting, goals and metrics. 

Response: We are appreciative of the 

many suggestions and acknowledge the 

breadth of interest in certified EHR 

technology being the vehicle for clinical 

quality measures reporting. We expect 

to consider these suggestions for future 

measure selection in the Medicare and 

Medicaid EHR incentive payment 

programs. 

Comment: We received various 

comments pertaining to future clinical 

quality measures applicable principally 

to the Medicaid population. One 

commenter urged CMS to include 

clinical quality measures specific to 

newborn screening in Stage 1 of 

meaningful use for pediatric providers. 

Response: We agree that newborn 

screening, both as a clinical quality 

measure, and from a data standards 

perspective, is a prime candidate for 

inclusion in the Stage 2 definition of 

meaningful use. We affirm our proposed 

statement about our commitment to 

work with the measure development 

community to fill noted gaps. We are 

appreciative of the many suggestions. 

We expect to consider these suggestions 

for immunizations, prenatal screening, 

infectious disease, etc. in measure 

selection in future rulemaking. 

Comment: A commenter indicated 

CMS should make explicit the health 

goals and targets for the HITECH Act 

investments that are already implied by 

the proposed clinical measures. Making 

them explicit allows CMS to set national 

targets. 

Response: In general, the goal with 

respect to clinical quality measures is to 

improve healthcare quality as measured 

by the clinical quality measures. We 

believe that specific quantitative targets 

are impractical at this stage given lack 

of established base level notes and no 

prior clinical quality measure reporting 

via certified EHR technology. 

Comment: Several commenters asked 

how CMS plans to develop further 

measure specifications for clinical 

quality measures. Another commenter 

asked for an electronic source for ICD– 

9 and CPT codes defining the specific 

conditions or diagnoses or treatments in 

order to maintain an up-to-date 

capability. 

Response: For many clinical quality 

measures, clearly defined electronic 

specifications are not yet available. In 

general, CMS relies on the measures’ 

stewards to both develop measures and 

to provide the specifications. 

Nevertheless, we recognize that many 

existing measures, some of which are 

owned and maintained by us or its 

contractors, do not currently have 

electronic specifications. We are aware 

of work currently taking place to fill this 

gap. We expect to actively work in a 

collaborative way with measures 

developers and stewards to help assure 

the development of electronic 

specifications for clinical quality 

measures, but we also expect to engage 

a contractor to perform work developing 

electronic specifications which may or 

may not involve measure developers 

and stewards. As for CPT codes, these 

are copyrighted by and are available 

from the American Medical Association. 

The National Center for Health Statistics 

(NCHS) and CMS are the U.S. 

governmental agencies responsible for 

overseeing all changes and 

modifications to the ICD–9 codes. 

Comment: Some commenters 

suggested specific new clinical quality 

measures which are listed below in 

Table 11. Several commenters suggested 

new or revised clinical quality measures 

or the use of existing measures from 

other programs. 

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Response: Many of the proposed 

clinical quality measures are in the 

existing PQRI program or are NQF 

endorsed. Others are not. We are 

appreciative of these many specific 

suggestions and will retain the 

comments for future consideration. 

Prior to including measures in the 

Medicare EHR incentive payment 

program, as required by the HITECH 

Act, we will publish the measures in the 

Federal Register and provide an 

opportunity for public comment. We 

will examine all options for soliciting 

public comment on future Medicaidspecific clinical quality measures, as the 

Federal Register notice requirement 

does not apply to the Medicaid EHR 

incentive program. 

Comment: Some commenters 

suggested the following new topics for 

clinical quality measure development 

for our program: 


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BILLING CODE 4120–01–C 

Response: We appreciate the 

suggested measure topics submitted by 

commenters for potential new clinical 

quality measures. Any future clinical 

quality measures developed will be in 

consideration of the clinical practices 

particular to EPs and eligible hospitals. 

We have captured these 

recommendations and will have them 

available for consideration in future 

years. 

h. Reporting Method for Clinical Quality 

Measures for 2011 and Beginning With 

the 2012 Payment Year 

(1) Reporting Method for 2011 Payment 

Year 

As we previously discussed, we 

proposed to use attestation as a means 

for EPs, eligible hospitals and CAHs, 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. 

Specifically, for 2011, we proposed to 

require that Medicare EPs and hospitals 

attest to the use of certified EHR 

technology to capture the data elements 

and calculate the results for the 

applicable clinical quality measures. 

State Medicaid HIT Plans submitted to 

CMS will address how States will verify 

use of certified EHR technology to 

capture and calculate clinical quality 

measures by Medicaid EPs and eligible 

hospitals. 

Further, we proposed to require that 

Medicare EPs, eligible hospitals, and 

CAHs 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. We expect that 

States will follow a similar strategy as 

Medicare for the Medicaid EHR 

incentive program. 

We proposed that attestation will 

utilize the same system for other 

attestation for meaningful use 

objectives, and proposed we would 

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 EHR technology. 

• 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. 

• 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 of 

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. 

Again, State Medicaid Agencies will 

determine the required elements for 

provider attestations for clinical quality 

measure reporting, subject to CMS prior 

approval via the State Medicaid HIT 

Plan. 

For eligible hospitals, we proposed 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 technology. 

• 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 including the 

numerators, denominators, and 

exclusions for all patients irrespective of 

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. 

The following is a summary of 

comments received regarding the 

proposed reporting method for clinical 

quality measures for the 2011 payment 

year, and our responses. 

Comment: The majority of 

commenters were against requiring 

attestation for 2011, rather than 

suggesting modification of the specific 

attestation requirements. Others 

commented that reporting should not be 

delayed to realize quality improvements 


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and better health outcomes for patients 

as soon as possible. Many commenters 

suggested deferral of clinical quality 

measures submission until CMS can 

electronically accept data. Commenters 

indicated that this is consistent with 

allowing delayed reporting by Medicaid 

providers until 2012 or beyond. A 

number of commenters suggested that 

attestation should be confined to 

attesting that the EP’s had reviewed or 

selected relevant clinical quality 

measures. 

Response: While we received many 

comments to delay attestation past 2011, 

we are finalizing our proposed 

requirement for EPs and eligible 

hospitals to attest to the numerators, 

denominators, and exclusions in their 

first payment year for the required 

clinical quality measures as described in 

section II.A.3.d through f of this final 

rule. Medicaid providers do not have 

‘‘delayed reporting of clinical quality 

measures.’’ The statute and this final 

rule allow Medicaid providers the 

option of receiving the EHR Incentive 

Payment for having adopted, 

implemented or upgraded to certified 

EHR technology, in lieu of meeting the 

meaningful use bar in their first 

participation year. We expect that most 

Medicaid providers would choose to 

adopt, implement or upgrade to certified 

EHR technology, rather than 

demonstrating they are meaningful EHR 

users in their first participation year. 

Comment: Some commenters also 

suggested EPs should only have to attest 

that the EP is entering the required data 

elements for clinical quality measure 

reporting where those fields exist in the 

certified EHR technology and provide 

feedback to the vendor where structured 

data fields are not available. Other 

commenters indicated the burden of 

adding numerous new data elements is 

high and labor intensive. 

Response: We considered the 

suggestion of only requiring attestation 

of documentation of clinical encounters. 

While we agree that this could be 

considered ‘‘information on clinical 

quality measures,’’ however, we do not 

believe that such information is needed 

when including the submission of 

information on clinical quality 

measures, which is a required element 

of meaningful use. We also believe that 

submission of such information would 

be of limited value. We believe that by 

limiting the clinical quality measure 

submission requirement to those results 

calculated by certified EHR technology, 

we have limited the potential burden. 

After consideration of the public 

comments received, we are requiring 

EPs, eligible hospitals, and CAHs to 

attest to the numerator, denominator, 

and exclusions for the payment year 

2011 at § 495.8. We are finalizing the 

following requirements for EPs in this 

final rule for reporting clinical quality 

measures: 

• 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 for all 

patients included in the certified EHR 

technology. 

• The NPI and TIN of the EP 

submitting the information at § 495.10. 

• 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 applicable patients 

contained in the certified EHR 

technology irrespective of third party 

payer or lack thereof. 

• The beginning and end dates for 

which the numerators, denominators, 

and exclusions apply (the Medicare 

EHR reporting period in payment year 1 

is 90 days as stated at § 495.4, and for 

payment year 2 is the beginning and end 

date of the reporting period as stated at 

§ 495.4. For Medicaid providers, as 

there is no EHR reporting period for 

adopting, implementing or upgrading 

for their first payment year, it is in their 

second payment year/first year of 

demonstrating meaningful use that they 

have a 90-day EHR reporting period. 

Therefore, it is their 2nd year of 

demonstrating meaningful use that has 

a 12 month EHR reporting period. For 

eligible hospitals and CAHs, we are 

finalizing the following requirements in 

this final rule: 

• The information submitted with 

respect to clinical quality measures was 

generated as output from an identified 

certified EHR technology. 

• The information submitted is 

accurate to the best of the knowledge 

and belief of the official submitting on 

behalf of the eligible hospital or CAHs. 

• The information submitted includes 

information on all patients to whom the 

measure applies for all patients 

included in the certified EHR 

technology. 

• The identifying information for the 

eligible hospital and CAH at § 495.10. 

• 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 applicable patients 

contained in the certified EHR 

technology irrespective of third party 

payer or lack thereof. 

• The beginning and end dates for 

which the numerators, denominators, 

and exclusions apply (the Medicare 

EHR reporting period in payment year 1 

is 90 days as stated at § 495.4, and for 

payment year 2 is the beginning and end 

date of the reporting period as stated at 

§ 495.4. For Medicaid providers, as 

there is no EHR reporting period for 

adopting, implementing or upgrading 

for their first payment year, it is in their 

second payment year/first year of 

demonstrating meaningful use that they 

have a 90-day EHR reporting period. 

Therefore, it is their 2nd year of 

demonstrating meaningful use that has 

a 12 month EHR reporting period. 

States must implement the same 

meaningful use requirements, including 

clinical quality measures, with the 

exceptions described in section II.A. of 

this final rule. Therefore, Medicaid EPs 

and eligible hospitals must submit the 

same required information described 

above for clinical quality measures. 

States will propose in their State 

Medicaid HIT Plans how they will 

accept provider attestations in the first 

year they implement their Medicaid 

EHR incentive program, and how they 

will accept electronic reporting of 

clinical quality measures from 

providers’ certified EHR technology in 

their second and subsequent 

implementation years. 

(2) Reporting Method Beginning in 2012 

In our proposed rule, we proposed 

that for the 2012 payment year, the 

reporting method for clinical quality 

measures would be the electronic 

submission to CMS of summary 

information, (that is, information that is 

not personally identifiable) on the 

clinical quality measures selected by the 

Secretary using certified EHR 

technology. For Medicaid, we proposed 

that EPs and hospitals eligible only for 

the Medicaid EHR incentive program 

must report their clinical quality 

measures data to States. We proposed 

that States would 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 we did for payment year 2011, for 

2012, we also proposed reporting on all 

cases to which a clinical quality 

measures applies in order to accurately 

assess the quality of care rendered by 

the particular EP, eligible hospital, or 

CAH generally. Otherwise it would only 


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be possible to evaluate the care being 

rendered for a portion of patients and 

lessen the ability to improve quality 

generally. We solicited comments on the 

impact of requiring the submission of 

clinical quality measures data on all 

patients, not just Medicare and 

Medicaid beneficiaries. 

The following is a summary of 

comments received regarding the 

proposed reporting method beginning in 

2012 in regard to the collection of 

aggregate level data on all patients. 

Comment: Several commenters noted 

that it appears that EPs are supposed to 

submit clinical quality measures 

electronically to the States in 2012. The 

commenters noted that several States 

have aging Medicaid Management 

Information Systems that may not be 

capable of accepting this data/ 

information. The commenters requested 

clarification about whether CMS expects 

the States to utilize and report this data 

immediately. 

Response: To clarify, States may 

propose to CMS in their State Medicaid 

HIT Plans (See Section 495.332) the 

means by which they want to receive 

providers’ clinical quality measures, 

starting with States’ second 

implementation year of their Medicaid 

EHR incentive program. States are not 

obliged to receive this data using their 

MMIS but can consider other options 

such as but not limited to: An external 

data warehouse, registries or health 

information exchanges that include data 

repositories. 

Comment: A commenter asked that 

we state the authority which provides 

us the ability to require EPs and 

hospitals to report on non-Medicare and 

Medicaid patients. 

Response: 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 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.’’ Likewise, section 1903(t)(6) 

of the Act states that demonstrating 

meaningful use may include clinical 

quality reporting to the States, and may 

be based upon the methodologies that 

are used in sections 1848(o) and 

1886(n). 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, eligible hospital, or CAH. We 

believe that the quality of care of our EP, 

eligible hospitals, and CAHs, as well as 

the ability to demonstrate the 

meaningful use of certified EHR 

technology, is best reflected by the care 

rendered to all patients, not just 

Medicare or Medicaid beneficiaries. 

Comment: Some commenters 

recommended patient level data for 

clinical quality measure reporting while 

others supported CMS’ requirement to 

submit summary level data for EPs and 

hospitals. There were several 

commenters that indicated support for 

reporting clinical quality measure data 

on all patients rather than just on 

Medicare and Medicaid patients. 

Another commenter stated that CMS 

should not require hospitals to submit 

patient level data and that the data 

should be at the aggregated level for all 

payment years. Another commenter 

stated that it is well proven in other 

disciplines that aggregated clinical data 

on quality measures can drive 

improvements in outcomes. Another 

commenter recommended patient level 

data that would be useful to State health 

programs and link information to 

managed care organizations. 

Response: We agree with the 

commenters that stated that reporting 

clinical quality measure data for all 

patients provides a more comprehensive 

measure of quality. We acknowledge 

that there are potential advantages to 

patient level data in measuring quality 

such as those stated by the commenter. 

However, for Stage 1 we have elected to 

require aggregate level data since the 

EHR standards as adopted by ONC’s 

final rule (found elsewhere in this issue 

of the Federal Register) do not provide 

standards for the submission of patient 

level data. 

Comment: The commenter requested 

that CMS should have a process in place 

to support end-users with on-going help 

desk support. 

Response: We agree with the 

suggestion for the implementation of a 

help desk to respond to questions 

related to the various CMS related 

questions after implementation of the 

proposed rule. Information about how 

we will provide assistance to providers 

will occur outside this final rule. 

Comment: A few commenters asked 

for clarification regarding the Stage 1 

audit process to ensure accuracy for the 

reporting of clinical quality measures 

(for example, numerator, denominator, 

and exception data). 

Response: EPs, eligible hospitals, and 

CAHs are required for 2011 to attest to 

results as automatically calculated by 

certified EHR technology. Beginning 

with 2012, such information will be 

submitted electronically with respect to 

these requirements; we expect our audit 

strategy would be based on verifying 

that the results submitted accord with 

how they were calculated by the 

certified EHR technology. 

Comment: We received comments 

requesting that CMS require that eligible 

providers report their clinical quality 

measures data to not only States and 

CMS, but also to Regional Health 

Improvement Collaboratives, where 

such programs exist. The commenters 

believed that this represents an 

alternative means for data submission 

rather than attestation and would allow 

States and CMS to test this alternative 

in 2011 or 2012. A commenter requested 

that CMS interpret the statutory 

requirement (Sections 1848(o)(2)(B)(iii) 

and 1886(n)(3)(B)(iii)) to avoid 

redundant or duplicative reporting of 

quality measures to include not just 

other CMS reporting efforts but also to 

avoid duplicative and redundant 

reporting with State and/or regional 

quality measurement and reporting 

efforts. They therefore requested that for 

Medicaid, CMS require EPs and 

hospitals report their clinical quality 

measures to not only States/CMS but 

also to Regional Health Improvement 

Collaboratives, where such programs 

exist. 

Response: Clinical quality measures 

need to be reported to CMS for the 

Medicare program. For 2011, we intend 

to provide a web based tool for 

attestation. Beginning with 2012 for 

Medicare, we will provide one or more 

alternative options for electronic 

submission which may include 

intermediaries. For Medicaid, 

information will go to the States as 

directed by the States. We believe it 

would go well beyond the purview of 

this provision to require additional 

reporting other than to CMS or the 

States. To clarify the issue raised by the 

commenter, sections 1848(o)(2)(B)(iii) 

and 1886(n)(3)(B)(iii) are tied to the 

Secretary and Federally-required quality 

measures reporting programs. However, 

CMS agrees that State and regional 

redundancies could be very 

problematic. We therefore clarify our 

proposed policy. States must include in 

their State Medicaid HIT Plans an 

environmental scan of existing HIT and 

quality measure reporting activities 

related to Medicaid. We expect States to 

include details in their SMHP about 

how these other on-going efforts can be 

leveraged and supported under 

HITECH; and how HITECH will not 

result in duplicative and/or burdensome 

reporting requirements on the same 

providers or organizations. 


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In the proposed rule, we proposed 

that Medicare EPs, eligible hospitals, 

and CAHs would be required to report 

the required clinical quality measures 

information electronically using 

certified EHR technology via one of 

three methods. The primary method we 

proposed would require the EP, eligible 

hospital, or CAH to log into a CMSdesignated portal. Once the EP, eligible 

hospital, or CAH 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 proposed to 

permit Medicare EPs, eligible hospitals, 

and CAHs 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 dependent on the 

Secretary’s ability to collect data 

through a HIE/HIO network and would 

require the EP, eligible hospital, or CAH 

who chooses to submit data via an HIE/ 

HIO network to be a participating 

member of the HIE/HIO network. 

Medicare EPs, eligible hospitals, and 

CAHs would be required to submit their 

data payload based on specified 

structures or profiles, such as Clinical 

Data Architecture (CDA), and 

accompanying templates. The EPs, 

eligible hospitals, or CAHs data payload 

would be an output from their 

respective certified EHR technologies, in 

the form and manner specified from 

their HIE/HIO adopted architecture into 

the CMS HIE/HIO adopted architecture. 

As another potential alternative, we 

proposed to accept submission through 

registries dependent upon the 

development of the necessary capacity 

and infrastructure to do so using 

certified EHRs. 

We stated in the proposed rule that 

we intended 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 and 

CAHs on or before April 1, 2011 for EHR 

adoption and incorporation and to 

accommodate EHR vendors. 

The following is a summary of 

comments received regarding the 

proposed reporting method for clinical 

quality measures beginning with the 

2012 payment year, and our responses. 

Comment: A commenter 

recommended that CMS test a range of 

reporting options for clinical quality 

measures to establish uniform and 

reliable rates of data transmission. 

Several commenters supported the three 

data submission methodologies listed in 

the proposed rule to allow flexibility in 

the quality reporting mechanisms. Many 

commenters requested reporting via 

registries. 

Response: We agree with the 

desirability of considering the three 

transmission methodologies listed in the 

proposed rule. The submission through 

a portal is the only mechanism that is 

feasible and practical for 2012 electronic 

clinical quality measure submission. We 

plan to test HIE/HIO and registry 

submission for future possible 

implementation through HITECH. 

Comment: A commenter requested 

clarification as to when CMS would no 

longer accept data for 2012 for Medicare 

EPs. 

Response: The specific technical 

mechanism for attestation and 

electronic submission will be posted on 

the CMS Web site, and through various 

educational products in development. 

We anticipate that the last date for 

attestation or electronic submission will 

be two-three months after the close of 

the applicable EHR reporting period for 

EPs, eligible hospitals, and CAHs 

respectively. 

Comment: Several commenters 

requested that CMS continue programs 

that incentivize advanced patient care 

for providers who are not eligible for the 

EHR incentive program and/or who do 

not become meaningful users of 

certified EHR technology. 

Response: CMS clarifies, based upon 

the comments, that our efforts to avoid 

duplicative quality reporting 

requirements do not necessarily mean 

the discontinuation of other quality 

reporting programs. CMS and State 

Medicaid agencies support several 

quality reporting programs that are 

legislatively mandated or approach 

quality measurement in ways that are 

not exclusively tied to HIT, or that, are 

voluntary and/or address emerging or 

developing quality measure focus areas. 

We are committed to determining where 

the EHR incentive program’s quality 

measure reporting can support other 

quality objectives, where it cannot and 

how to best align our overall quality 

measurement efforts across programs. 

Comment: Many commenters 

requested deferring quality measure 

reporting until 2012 and/or 2013, at 

which time all measures will be 

electronically specified and tested. 

Commenters believed that this was 

especially important for new clinical 

quality measures such as Emergency 

Department Throughput and Stroke, and 

recommended gradually phasing in or 

gradually increasing the number of 

reportable measures and measure sets 

over time to allow for sufficient testing 

and harmonization between programs. 

Some commenters suggested that for 

Stage 1, eligible hospitals should be 

required to report only on the 15 

measures that have been electronically 

specified and those that are appropriate 

for that organization. One commenter 

requested clinical quality measure 

reporting should be optional. Also, 

commenters requested for 2011 and 

2012 that hospitals continue to report 

clinical quality measures through the 

current pay-for-reporting (RHQDAPU 

and HOP QDRP) programs or on clinical 

quality measures that coincide with 

HEDIS reporting measures including 

HOS and CAHPS, using the existing 

approaches, while quality measurement 

specialists and vendors create valid, 

reliable, and field-tested e-measures for 

deployment in the eligible hospitals for 

2013. Finally, commenters stated that 

the proposed timeline may negatively 

impact credibility of data produced and 

have potentially negative impact on 

patient safety. 

Response: With respect to comments 

received regarding the timeline for 

implementation of the EHR incentive 

program, we are only finalizing clinical 

quality measures that are electronically 

specified by the date of display of this 

final rule. For eligible hospitals and 

CAHs, we are finalizing 15 clinical 

quality measures as listed in Table 10 of 

this final rule that will be required to 

report for 2011 and 2012, as applicable 

to their patient population. Although we 

understand the suggestion that reporting 

through RHQDAPU should suffice for 

the HITECH Act, the difficulty is that 

HITECH specifically requires that EPs, 

eligible hospitals, and CAHs use 

‘‘certified EHR technology’’ in 

connection with the submission of 

clinical quality measures. Thus the 

HITECH Act introduces a requirement 

that at least some clinical quality 

measures be submitted in connection 

with the use of certified EHR 

technology, whereas RHQDAPU has no 

such requirement. We have limited the 

measures to those that have been 

electronically specified and that are able 

to be automatically calculated by the 

certified EHR technology. These results 

will be reported by EPs, eligible 

hospitals, and CAHs. We will seek to 

align the EHR incentive program and 

quality reporting programs in future 

rulemaking. 

Comment: A number of commenters 

urged CMS not to require submission of 


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clinical quality measures data beyond 

what a certified EHR can produce. 

Specifically, commenters stated that no 

clinical quality measures required for 

submission in Stage 1 should require a 

manual chart review. Some commenters 

also requested allowing submission of 

clinical quality measures through other 

EHRs that are not certified. 

Response: We have adopted the 

suggested approach for 2011 and 2012 

that limits the required information on 

clinical quality measures results to that 

which can be automatically calculated 

by the certified EHR technology. As to 

non-certified EHR technology, the 

HITECH Act incentive program 

specifically requires the meaningful use 

of certified EHR technology. 

Comment: Several commenters stated 

that currently the data required to be 

used in the calculation of clinical 

quality measures are obtained from EHR 

discrete fields, free text and paper 

records. Commenters recommended a 

uniform reporting structure. 

Commenters questioned if they would 

be submitting raw data, numerators and 

denominators only, if there will be an 

intermediary file that will allow manual 

edits to the file prior to submission, and 

if not will validity be based entirely on 

discrete electronic data. Commenters 

asked if sampling will be permitted or 

if hospitals will be required to report on 

entire populations. Commenters 

supported the value of reporting clinical 

quality measures for all patients, not 

just Medicare and Medicaid patients, in 

order to see the whole picture of the 

patient population which will enhance 

quality improvement. 

Response: As discussed elsewhere, 

the submission requirement is limited to 

calculated results of clinical quality 

measures from certified EHR 

technology, as specified in this final 

rule, and as is consistent with the ONC 

final rule (see 75 FR 2014) which 

requires certified EHR technology to be 

able to calculate clinical quality 

measures as specified by CMS. 

Comment: Several commenters 

suggested the clinical quality measures 

requiring medication administration 

data be delayed for reporting because 

they require advanced features of EHR 

systems with implementation of the 

features, in particular Electronic 

Medication Administration Record 

(eMAR). 

Response: The Department has 

adopted certification criteria for EHR 

Modules and Complete EHRs, as 

identified in the Health Information 

Technology: Initial Set of Standards, 

Implementation Specifications, and 

Certification Criteria for Electronic 

Health Record Technology; Interim 

Final Rule (75 FR 2014). It has also 

proposed temporary and permanent 

certification programs for testing and 

certifying health information technology 

in a March 10, 2010 proposed rule (75 

FR 11328). The certification of EHRs 

will assure functionality of the 

information system to obtain clinical 

quality data from the EHR. 

After consideration of the public 

comments received, starting in payment 

year 2012, in addition to meeting 

requirements for measures on 

meaningful EHR use and other 

requirements, Medicare EPs, eligible 

hospitals, and CAHs will be required to 

electronically submit clinical quality 

measures results (numerators, 

denominators, exclusions) as calculated 

by certified EHR technology at § 495.8. 

Medicaid EPs will be required to do so 

in the State’s second implementation 

year for their Medicaid EHR incentive 

program. The clinical quality measures 

will be for all patients, regardless of 

payer, and will be for the period of the 

EHR reporting period. Medicare EPs, 

eligible hospitals, and CAHs will be 

required to report the required clinical 

quality measures information 

electronically using certified EHR 

technology via one of three methods. 

The primary method will require the EP, 

eligible hospital, or CAH to log into a 

CMS-designated portal. Once the EP, 

eligible hospital, or CAH has logged into 

the portal, they will 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, contingent on 

feasibility, we will permit Medicare EPs, 

eligible hospitals, and CAHs to submit 

the required clinical quality measures 

data using certified EHR technology 

through a Health Information Exchange 

(HIE)/Health Information Organization 

(HIO). This alternative data submission 

method will be dependent on the 

Secretary’s ability to collect data 

through a HIE/HIO network and would 

require the EP, eligible hospital, or CAH 

who chooses to submit data via an HIE/ 

HIO network to be a participating 

member of the HIE/HIO network. 

Medicare EPs, eligible hospitals, and 

CAHs would be required to submit their 

data payload based on specified 

structures or profiles. The EPs, eligible 

hospitals, or CAHs data payload should 

be an output from their respective 

certified EHR technologies, in the form 

and manner specified from their HIE/ 

HIO adopted architecture into the CMS 

HIE/HIO adopted architecture. 

As another alternative, we will also 

accept submission through registries 

dependent upon the development of the 

necessary capacity and infrastructure to 

do so using certified EHRs. Finally, 

qualifying Medicare Advantage 

organizations for their eligible Medicare 

Advantage EPs, as well as, Medicare 

Advantage-affiliated eligible hospitals 

and CAHs will continue to submit 

HEDIS, HOS and CAHPS data instead of 

the clinical quality measures results 

under this final rule in section II.C.6. 

We will 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 and 

CAHs on or before April 1, 2011 for EHR 

adoption and to accommodate EHR 

vendors. 

State Medicaid Agencies must follow 

the same requirements for meaningful 

use, including clinical quality measures, 

for example, across all payers and for 

the entire EHR reporting period for EPs 

and eligible hospitals. We expect that 

States will be able to accept the 

electronic reporting of clinical quality 

measures by their second year of 

implementing the EHR incentive 

program. States will include in their 

State Medicaid HIT Plan a description 

of how Medicaid providers will be able 

to electronically report clinical quality 

measures, subject to CMS prior 

approval. 

i. Alternative Reporting Methods for 

Clinical Quality Measures 

We proposed several alternative 

reporting methods to create a dataset of 

provider-submitted summary data. One 

such alternative we proposed is the 

development of a distributed network of 

EHRs where health information is 

retained locally in individual EP, 

eligible hospital, and CAH EHRs and 

only summary reports are submitted to 

CMS. Another alternative we proposed 

is the creation of databases of patientlevel EHR data stored at the state or 

regional level. 

The following is a summary of 

comments received regarding the 

proposed alternative reporting methods 

for clinical quality measures and our 

responses. 

Comment: A commenter recommends 

aggregate reporting necessary for 

clinical quality measures to be able to be 

completed in secondary systems such as 

data warehouses. 

Response: For Medicare, we require 

that the data source be from certified 

EHR technology. EPs, eligible hospitals 


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and CAHs may use intermediaries (data 

warehouses) to submit the EHRgenerated clinical quality measure if 

available, assuming all requirements are 

met. States may seek CMS prior 

approval via their State Medicaid HIT 

Plans for how they expect Medicaid 

providers to report the required 

meaningful use data, including clinical 

quality measures. For example, States 

may propose that the data, while it 

originates in the providers’ certified 

EHR technology, may be reported using 

a health information exchange 

organization or registry as an 

intermediary. 

Comment: A few commenters 

communicated that the calculation and 

submission of quality measures may 

depend on the use of health information 

technology systems beyond those used 

by the EP such as data warehouses or 

registries that have to manipulate the 

data received. They indicated the final 

rule should not exclude the use of 

additional non-certified EHR technology 

to assist EPs in satisfying the quality 

reporting requirements provided the EP 

uses certified EHR technology to capture 

the data and to calculate the results. 

Response: Certified EHR technology 

will be required to calculate the clinical 

quality measure results for the CMS 

specified measures we finalize in this 

final rule and transmit under the PQRI 

Registry XML specification, as provided 

in the ONC final rule (found elsewhere 

in this issue of the Federal Register). 

Comment: Several commenters 

recommended inclusion of QRDA with 

PQRI XML for reporting, thus allowing 

vendors the ability to bypass PQRI XML 

if they plan to ultimately implement 

QRDA. There is also concern that 

switching to QRDA from XML will 

require duplicative investments. They 

recommended attestation for 2011 and 

2012 as well as allowing use of QRDA 

in 2012. 

Response: Electronic specifications 

will need to utilize standards that the 

certified EHR can support. ONC’s final 

rule (found elsewhere in this issue of 

the Federal Register) limits this to PQRI 

Registry XML specifications. There is no 

current requirement that a certified EHR 

be able to produce QRDA. 

j. Reporting Period for Reporting of 

Clinical Quality Measures 

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, eligible hospital, and 

CAH must submit information ‘‘for such 

period’’ on the clinical quality measures 

and other measures selected by the 

Secretary. Therefore we proposed that 

the reporting period for the clinical 

quality measures selected by the 

Secretary be the EHR reporting period. 

Another alternative we proposed was 

a fixed reporting period of four quarterly 

reporting periods, or two six-month 

reporting periods. In terms of practice 

and precedent for other Medicare 

clinical quality measure reporting 

programs, all of these programs submit 

data to us at specific reporting intervals. 

The following is a summary of 

comments received regarding the 

proposed EHR reporting period for EPs, 

eligible hospitals, and CAHs. 

Comment: Some commenters asked 

for clarification on whether the EP must 

continuously report during the ‘‘entire 

payment year’’ or whether the reporting 

period for clinical quality measures 

covers a 12-month period. Other 

commenters questioned the timing of 

the requirements associated with the 

measures—whether the specifications 

for Stage 1 payment year 1 apply to EPs 

regardless of when the EPs become first 

eligible or whether the clinical quality 

measure specifications follow the 

calendar year. 

Response: The EP only needs to report 

clinical quality measures once a year, as 

described at § 495.4. For Medicare EPs, 

eligible hospitals and CAHs, the EHR 

reporting period is 90 days for their first 

payment year. For Medicaid eligible 

providers, their first payment year in 

which they demonstrate meaningful use 

(which may be their second payment 

year, if they adopted, implemented or 

upgraded in their first payment year) 

also has a 90-day EHR reporting period. 

For Medicare EPs, eligible hospitals and 

CAHs, in their second payment year, the 

reporting period is 12 months. For 

Medicaid EPs and eligible hospitals, in 

their second payment year of 

demonstrating meaningful use, they also 

have a 12-month EHR reporting period. 

Related to the timing of the 

requirements, the final clinical quality 

measure specifications for 2011 and 

2012 will be posted at the time of 

display of this final rule. 

Comment: Some commenters 

requested clarification of the process for 

reporting in the entire payment year. A 

commenter requested clarification 

regarding whether the EP must 

continuously report during the entire 

payment year or whether the reporting 

period for clinical quality measures 

covers an entire 12-month period. Some 

commenters pointed out that reporting 

capability may not be available every 

day of the year due to information 

system availability. 

Response: Technical requirements for 

electronic reporting will be posted on 

the CMS Web site prior to the reporting 

period. The reporting period refers to 

parameters of the data captured in the 

EHR or the services documented in the 

EHR, not the time when the submission 

of information regarding clinical quality 

measures is made. States will dictate for 

Medicaid EPs and eligible hospitals the 

timing of submission of their clinical 

quality measures data via electronic 

reporting. Submission could be as 

infrequent as once a year after the close 

of the reporting period. The reporting 

period beyond 2011 and 2012 for 

clinical quality measures will be 

determined in future rulemaking. 

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 final 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 

As proposed, in the final rule, we are 

adopting a common method for 

demonstrating meaningful use in both 

the Medicare and Medicaid EHR 

incentive programs, for the same 

reasons we have 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 in section II.4.b 

of this final rule. States seeking to 


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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 

final rule. 

b. Methods for Demonstration of the 

Stage 1 Criteria of Meaningful Use 

Our final regulations, at § 495.8, will 

require that for CY 2011, EPs 

demonstrate that they satisfy each of the 

fifteen objectives and their associated 

measures of the core set listed at 

§ 495.6(d) and five of the objectives and 

their associated measures from the 

menu set listed at § 495.6(e) unless 

excluded as described in § 495.6(a)(2). 

(An exclusion will reduce the number of 

objectives/measures the EP must satisfy 

by the number that is equal to the EP’s 

exclusions. For example, an EP that can 

exclude two menu objectives/measures 

is required to satisfy only three of the 

objectives and associated measures from 

the menu set. Similarly, an exclusion 

will reduce the number of core 

objectives/measures that apply). We 

permit only those exclusions that are 

specifically indicated in the description 

of each objective and its associated 

measure (§ 495.6(d) for the core set and 

§ 495.6(e) for the menu set). If an 

exclusion exists and the EP meets the 

criteria for it, the EP would report to 

CMS or the States that fact rather than 

demonstrating that they satisfy the 

objective and associated measure. At 

§ 495.8, we will require that for FY 

2011, eligible hospitals and CAHs 

demonstrate that they satisfy each of the 

fourteen objectives and their associated 

measures of the core set listed at 

§ 495.6(f) and five of objectives and their 

associated measures from the menu set 

listed at § 495.6(g) unless excluded as 

described in § 495.6(b)(2). As with EPs, 

all exclusions are specifically indicated, 

in the description of the objective and 

associated measures (§ 495.6(f) for the 

core set and § 495.6(g) for the menu set) 

and an exclusion will reduce the 

number of objectives and associated 

measures an eligible hospital or CAH 

must satisfy (see above example for 

EPs). If an exclusion exists and the 

hospital meets the criteria for it, the 

eligible hospital or CAH would report to 

CMS or the States that fact rather than 

demonstrating that they satisfy the 

objective and associated measure. 

Finally, as specified in 495.316(d), for 

those participating in the Medicaid EHR 

incentive program, the State may alter 

the requirements for demonstrating that 

an EP or eligible hospital is a 

meaningful user, with regard to four 

specific objectives and measures. For 

these objectives and measures, the State 

may also choose to make a menu-set 

objective a core objective. Such State 

additions could increase the core or 

menu set objectives and measures that 

must be satisfied. 

For payment years beginning in CY 

2012 and subsequent years, our final 

regulations, at § 495.8, will require that 

for Stage 1 of meaningful use, EPs 

demonstrate that they satisfy each of the 

15 objectives and their associated 

measures of the core set listed at 

§ 495.6(d), except § 495.6(d)(4) ‘‘Report 

ambulatory quality measures to CMS or, 

in the case of Medicaid EPs, the states’’ 

and 5 of the objectives and their 

associated measures from the menu set 

listed at § 495.6(e) unless excluded as 

described in § 495.6(a)(2). The form and 

mechanism for excluding an objective 

and its associated measure is the same 

for CY2012 and subsequent years as it 

is for CY2011. The ability for States to 

add certain requirements is the same for 

CY 2012 and subsequent years as it is 

for CY 2011. The EP must 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 final rule. For payment years 

beginning in FY2012 and subsequent 

years, our final regulations, at § 495.8, 

will require that eligible hospitals and 

CAHs demonstrate that they satisfy each 

of the fourteen objectives and their 

associated measures of the core set 

listed at § 495.6(f), except § 495.6(f)(3) 

‘‘Report hospital quality measures to 

CMS or, in the case of Medicaid EPs, the 

states’’ and five of the objectives and 

associated measures from the menu set 

listed at § 495.6(g) unless excluded as 

described in § 495.6(b)(2). The form and 

mechanism for excluding an objective 

and its associated measure is the same 

for FY2012 and subsequent years as it 

is for FY2011. The ability for States to 

add certain requirements also is the 

same for FY 2012 and subsequent years 

as it is for FY 2011. The eligible hospital 

or CAH must 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 final 

rule. 

Except for the clinical quality 

measures (for which we require 

electronic reporting in CY or FY 2012 

and subsequent years as discussed 

above), satisfaction of meaningful use 

objectives and associated measures may 

be demonstrated through attestation. 

Specifically, we will require that EPs, 

eligible hospitals and CAHs attest 

through a secure mechanism, such as 

through claims based reporting or an 

online portal. For the Medicare FFS and 

MA EHR incentive programs, CMS will 

issue additional guidance on this 

mechanism. For the Medicaid EHR 

incentive program, the States will 

include additional information in the 

State Medicaid HIT plans they submit to 

CMS to implement the program. We will 

require that an EP, eligible hospital or 

CAH 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 reported 

objectives of meaningful use. We would 

require 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, eligible 

hospitals and CAHs. 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, eligible hospitals and CAHs 

demonstrate meaningful use should 

work for all provider types. We also 

believe that uniform means of 

demonstration for EPs, eligible hospitals 

and CAHs are preferred 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 could require use of 

certified EHR technology beyond the 

capabilities certified according to the 

ONC FR. 

In addition to requiring electronic 

reporting of clinical quality measures 

beginning in 2012 in Medicare and 

Medicaid, we also leave open the 

possibility 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 


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electronic reporting of some measures 

associated with the objectives of the 

meaningful use definition. We do not 

require any EP, eligible hospital or CAH 

to participate in this testing in either 

2011 or 2012 in order to receive an 

incentive payment. The state of 

electronic exchange varies widely across 

the country and is dependent on 

numerous Federal, State, local, nonprofit and for-profit initiatives. Given 

this high state of flux, CMS and/or the 

States would have to issue considerable 

updated guidance to EPs, eligible 

hospitals and CAHs who wish to join in 

our efforts to explore the electronic 

exchange of information. Any testing 

should be based on the principle 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 

final 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. 

Comment: Several commenters 

submitted comments regarding the 

methods of demonstration for clinical 

quality measures. 

Response: We summarize and 

respond to those comments in section 

II.A.3 of this final rule. 

Comment: A few commenters 

submitted comments regarding section 

1848(o)(2)(A) of the Act, which provides 

discretion to the Secretary to provide for 

the use of alternative means for meeting 

the requirements of meaningful use in 

the case of an eligible professional 

furnishing covered professional services 

in a group practice. Some of these 

commenters suggested that CMS 

provide such an alternative means in 

the final rule, while others suggested we 

consider doing so in future rulemaking. 

Response: We did not propose any 

alternative means in the proposed rule. 

Given the per EP basis for most of the 

objectives and their associated 

measures, we did not believe group 

reporting would provide an accurate 

reflection of meaningful use. In 

addition, as the incentives payments are 

calculated on a per EP basis it is unclear 

to us how variance of meaningful use 

among EPs within the group should be 

treated. We believe the possible 

reduction in burden of attesting once 

per group versus once per EP is 

outweighed by the less accurate 

reporting, increased possibility of 

duplicate payments and decreased 

transparency. We note that many of the 

measures rely on data which could 

easily be stored at a group level such as 

a patient’s demographics or medication 

lists and any EP with access to that 

information about a patient in their 

certified EHR technology and who sees 

that same patient in the EHR reporting 

period would receive credit for that 

patient in their numerator and 

denominator. Other aspects such as the 

enabling of drug-drug, drug-allergy 

checks, using CPOE and eRx could vary 

widely from EP to EP within the same 

group. We would also be concerned 

with EPs in multi-specialty group 

practices some of whom might be 

eligible for an exclusion, while others 

would not be. As requested by 

commenters we will continue to review 

this option in future rulemaking, but for 

this final rule we do not include the 

option to demonstrate meaningful use at 

a group level. 

While we did not make changes to the 

demonstration of meaningful use 

requirements based on the comments 

above, we did make modifications to 

other aspects of the Stage 1 definition of 

meaningful use that required the 

descriptions of how many and which 

objectives and their associated measure 

EPs, eligible hospitals and CAHs to be 

altered accordingly. These changes are 

to the first paragraph of this section 

(II.4.b). 

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. 

a. Online Posting 

In the proposed rule, we said that 

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 will not post information 

on group practices because we will not 

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 

qualifying MA organizations receiving 

the incentive payment or payments. We 

would 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. 

The HITECH Act did not require 

Medicaid EPs and eligible hospitals to 

be identified online so we will not do 

so. 

We did not receive any comments and 

we are finalizing these provisions as 

proposed. 

b. Program Election Between Medicare 

FFS/MA and Medicaid for EPs 

In the proposed rule, we said 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 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, if eligible, could 

receive incentive payments from both 

Medicare and Medicaid 

simultaneously). Section 495.10 allows 

an EP meeting the eligibility criteria for 

both the Medicare FFS/MA and 

Medicaid programs to participate in 

either program. We would also allow an 

EP to change his or her election once 

during the life of the EHR incentive 

programs after making the initial 

election, for payment years 2014 and 


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before. We believe this one-time 

election rule allows 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) continues the availability to the 

EP of 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. 

In the proposed rule, we proposed at 

495.10(e)(5), that an EP switching 

program is ‘‘placed in the payment year 

the EP would have been in, had the EP 

not switched programs.’’ 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. For the 

final rule, we are clarifying that the EP 

is ‘‘placed in the payment year the EP 

would have been in had the EP begun 

in and remained in the program to 

which he or she has switched.’’ We have 

modified 495.10(e)(5) accordingly. 

We believe this clarification is 

necessary in order to address comments 

we received on non-consecutive 

payments. As outlined in II.A.1.c and d 

of this final rule, the definition of first, 

second, third, fourth, fifth, and sixth 

payment year differs across the 

Medicare and Medicaid programs. 

Section 1848(o)(1)(E)(ii) of the Act 

requires that the second Medicare 

payment year be successive to the first 

payment year and immediately follow 

it. Similarly, the third payment year 

must immediately follow the second, 

and so on. Thus, as explained in 

II.A.1.c., ‘‘if a Medicare EP receives an 

incentive in CY2011, but does not 

successfully demonstrate meaningful 

use or otherwise fails to qualify for the 

incentive in CY2012, CY2012 still 

counts as one of the EP’s five payment 

years and they would only be able to 

receive an incentive under the Medicare 

EHR incentive program for three more 

years.’’ The same rule, however, does 

not apply to the Medicaid EHR 

incentive program. For that program, EP 

payments may generally be nonconsecutive. If an EP does not receive an 

incentive payment for a given CY or FY 

then that year would not constitute a 

payment year. For example, if a 

Medicaid EP receives incentives in 

CY2011 and CY2012, but fails to qualify 

for an incentive in CY 2013, they would 

still be potentially eligible to receive 

incentives for an additional four 

payment years. 

The rules on consecutive payment, 

discussed above, govern how an EP 

should be treated after switching from 

the Medicaid to the Medicare EHR 

incentive program, or vice versa. As 

stated above, we believe that an EP that 

switches from the Medicaid to the 

Medicare program should be treated in 

the same manner as if such EP had 

started in the Medicare program. 

Payment years that are skipped in the 

Medicaid EHR incentive program thus 

become payment years that count 

against the EP’s five years of payment in 

Medicare. For example, an EP that 

receives nonconsecutive payment under 

Medicaid for CYs 2011 and 2013 (but 

skips CY 2012), and then switches to the 

Medicare program in CY 2014, is in the 

fourth payment year in 2014, and is 

limited to that payment year’s limit on 

incentive payments. Such an EP may 

receive only one more year of incentive 

payments under the Medicare EHR 

incentive program. We believe this rule 

is equitable, given that, had the EP 

started in the Medicare program, the EP 

would not have been able to benefit 

from non-consecutive payments 

available under the Medicaid EHR 

incentive program. We see no reason 

why EPs that switch from the Medicaid 

to the Medicare program should be 

treated differently from those who 

initially began in the Medicare program, 

and believe that any other rule might 

encourage gaming on the part of eligible 

professionals. 

By the same token, an EP that 

switches from the Medicare to the 

Medicaid EHR incentive program will 

not be penalized for non-consecutive 

payment years accrued while in the 

Medicare program. For example, an EP 

that receives nonconsecutive payment 

under Medicare for CYs 2011 and 2013 

(but skips CY 2012), and then switches 

to the Medicaid program in CY 2014, is 

in the third year of payment in 2014, 

and is potentially eligible to receive 

three additional years of payment under 

Medicaid (after 2014), for a total of six 

years of payment. Similar to our 

rationale described in the paragraph 

above, we do not believe an EP that 

switches to the Medicaid program 

should be treated differently from the 

EP that initially begins in the Medicaid 

program, as once the EP switches to the 

Medicaid program, there is no statutory 

requirement that the payment year 

ordering be consecutive. 

We believe it is self-evident that an EP 

switching to a new program is subject to 

the requirements of such new program. 

Thus, for example, an EP switching 

from Medicaid to Medicare might be 

subject to a higher stage of meaningful 

use upon moving to the Medicare 

program. The EP also would be subject 

to fewer years of payment and to the 

requirement that no incentive payments 

may be made after 2016. 

Finally, 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 proposed 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. If the EP receives the 

HPSA bonus available under the 

Medicare FFS EHR incentive program, 

this amount could be as much as $4,450. 

An EP who switches from Medicaid to 

Medicare could potentially exceed the 

Medicare threshold in a number of 

circumstances; however, since they will 

not be allowed to exceed the Medicaid 

threshold under any circumstance, we 

would pay the incentive for which they 

are eligible for a given payment year in 

whichever program they are in for that 

payment year until they exceed the 

Medicaid threshold. No incentive 

payments will be made to any EP that 

would allow the EP to exceed the 

Medicaid threshold. We anticipate that 

this would result in a prorated final year 

incentive payment. Finally, we 

proposed 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. 

Comment: We received comments 

requesting clarification on when an EP 

could make their one switch. 

Response: As described in our 

example, the EP could make their one 


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switch anytime after the receipt of an 

incentive payment under either the 

Medicare or Medicaid program. Since 

this policy would also apply to other 

program changes (for example, changing 

from one State to another, or updating 

registration data elements), we want to 

clarify when program registration 

changes can take place. An EP, eligible 

hospital or CAH sets into motion receipt 

of the incentive payment when they 

attempt to demonstrate meaningful use 

or demonstrate to the State efforts to 

adopt, implement, or upgrade to 

certified EHR technology. Therefore, 

prior to their first successful attempt to 

demonstrate meaningful use or 

demonstrate to the State efforts to adopt, 

implement, or upgrade to certified EHR 

technology, the EP could change their 

registration in either the Medicare or 

Medicaid EHR incentive program as 

many times as they wish. Furthermore, 

EPs and hospitals selecting the 

Medicaid incentive program may also 

switch freely prior to payment as 

described here. However, there may 

only be one payment from one State in 

any one payment year. 

After consideration of the public 

comment received, we are modifying 

the provision at § 495.10(e)(2) to ‘‘(2) 

After receiving at least one EHR 

incentive payment, may switch between 

the two EHR incentive programs only 

one time, and only for a payment year 

before 2015’’. This modification better 

reflects our clarification in response to 

the comment received on the ability to 

switch between programs. For the final 

rule, we have made a few other 

technical changes to § 495.10, in 

addition to the changes made to 

§ 495.10(e)(2) and (e)(5). 

c. Data To Be Collected 

In addition to information regarding 

the demonstration of meaningful use, in 

§ 495.10 of this final rule we would 

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 and CAHs, 

their CCN. 

To coordinate with the States to avoid 

duplication of payments, we would 

make available to the States through a 

single National Level Repository (NLR) 

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. 

• Other information as specified by 

CMS. 

CMS, our contractors, and the States 

will have access to these data elements 

through the NLR maintained by CMS. 

The States will have to provide 

information to us on whether EPs or 

eligible hospitals are eligible for the 

Medicaid 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. 

Comment: We received comments 

that some EPs do not use TINs, but 

rather the EP’s Social Security Number 

(SSN). 

Response: In these cases the EP would 

submit a TIN, which is their SSN. An 

incorporated EP would have a TIN for 

the corporation that would be an EIN. 

The EP’s own TIN remains his/her SSN. 

Comment: Some commenters 

requested clarification on whether the 

business address is the physical location 

or the mailing address. 

Response: We believe that the 

HITECH Act required reporting of this 

information to assist the public in 

identifying meaningful EHR users. We 

believe the practice location address 

serves this purpose better than the 

mailing address. However we will allow 

EPs to enter an alternate address for 

posting purposes but will not allow that 

address to be a post office box. 

Comment: Commenters suggested that 

States would be allowed to determine 

the requirements associated with 

Medicaid provider TIN assignments. 

Response: We discuss the 

requirements associated with TIN 

assignment in 495.10(f) and in the 

requirements associated with SMHPs in 

this preamble at section 495.332 

SMHPs. States are responsible for 

making sure the providers are providing 

an acceptable TIN, consistent with the 

regulations at 495.10(f), which states 

that providers may only assign to 

certain TINs. 

We clarified 495.10(f), to reflect this 

and other changes. 

Comment: CMS received numerous 

comments about the schedule for and 

State’s role in the national single 

repository where CMS will collect data 

elements on all registrants. 

Response: The technological 

requirements and systems interfaces are 

outside this regulation and we look 

forward to providing additional 

guidance. 

Comment: Some commenters 

recommended a shorter record retention 

period that the ten years proposed. 

Commenters recommended periods 

ranging from three to eight years. The 

reasons given for a shorter time period 

were the cost of record retention, no 

perceived need for a retention period 

longer than the incentive period, rapid 

changes in EHR technology and 

consistency with other unspecified 

retention requirements. 

Response: After reviewing the 

comments, we agree with commenters 

that ten years is longer than necessary 

to ensure the integrity of the program. 

In considering a shorter retention 

period, we believe that there may be 

cause to look over the entire incentive 

period. As a Medicaid EP would be 

eligible for incentives over a six-year 

period if they successfully receive an 

incentive each year and that is the 

longest such period available to any 

participant in the Medicare and 

Medicaid EHR incentive programs, we 

adopt a new retention period of six 

years for this final rule. 

Comment: We received a comment 

suggesting that Medicare adopt an 

appeals process similar to the one 

proposed for Medicaid. 

Response: We expect to address 

Medicare appeals in future guidance. 

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). Sections 4101(a) and 4201(a) of 

the HITECH Act originally defined 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 Medicarecovered professional services during the 

relevant EHR reporting period in a 

hospital setting (whether inpatient or 

outpatient) through the use of the 


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facilities and equipment of the hospital, 

including the hospital’s qualified EHRs. 

Following publication of our proposed 

rule, Congress modified the definition of 

hospital-based EPs. More specifically, 

on April 15, 2010, President Obama 

signed into law the Continuing 

Extension Act of 2010 (Pub. L. 111–157) 

which, in Section 5, made the following 

changes to the Social Security Act as it 

applies to both the Medicare and 

Medicare EHR incentives for EPs: 

(1) Medicare—Section 

1848(o)(1)(C)(ii) of the Social Security 

Act (42 U.S.C. 1395w–4(o)(1)(C)(ii)) is 

amended by striking ‘setting (whether 

inpatient or outpatient)’ and inserting 

‘inpatient or emergency room setting’. 

(2) Medicaid—Section 1903(t)(3)(D) of 

the Social Security Act (42 U.S.C. 

1396b(t)(3)(D)) is amended by striking 

‘setting (whether inpatient or 

outpatient)’ and inserting ‘inpatient or 

emergency room setting’. 

These amendments were effective as 

if included in the enactment of the 

HITECH Act. 

The above sections indicate 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 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 whether he 

or she has made a reassignment to the 

hospital for Part B billing purposes. 

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. 

Based on section 4101(a) of the 

HITECH Act (and prior to the 

amendments in the Continuing 

Extension Act of 2010), we proposed 

that an EP would be a hospital-based EP 

and therefore ineligible to receive a 

Medicare or Medicaid EHR incentive 

payment if more than 90 percent of their 

services are provided in the following 

place of service (POS) codes for HIPAA 

standard transactions: 21—Inpatient 

Hospital, 22—Outpatient Hospital, 23— 

Emergency Room. 

In addition, because of concerns that 

some primary care EPs who provide 

services to Medicare and Medicaid 

beneficiaries would be ineligible for the 

incentive payments under this proposed 

definition, in the proposed rule, we 

asked for comments on whether we 

should use another method for defining 

hospital-based EPs. We estimated that 

under this proposal, 12–13 percent of 

family practitioners under Medicare 

would be considered hospital-based. We 

did not have corresponding data for 

Medicaid EPs. 

Comment: Many congressional 

representatives, hospital associations, 

individual providers and other 

commenters indicated that they 

believed that the proposal would 

inappropriately exclude from receiving 

EHR incentive payments EPs practicing 

in ambulatory settings such as those that 

practice in hospital provider-based 

departments (referred to by most 

commenters as ‘‘outpatient centers and 

clinics’’). They indicated these centers 

and clinics provide services similar to 

services furnished by EPs in private 

offices. Many suggested that this 

definition may inhibit hospital 

investments in their outpatient primary 

care sites. Commenters believe the 

absence of any EP incentive payment in 

these settings may discourage hospitals 

from adopting EHR in ambulatory 

settings, particularly if doing so requires 

the purchase of an ambulatory-based 

EHR system (or an ambulatory 

component to be added to the hospital’s 

EHR system). This is because the 

hospital’s total incentive payment is 

based on total inpatient services. A 

hospital with a large outpatient 

department will not receive a higher 

incentive payment as a result of their 

outpatient services. These commenters 

indicated that ambulatory care EHRs are 

very different from inpatient EHRs 

because of the inherent differences 

between the types of care provided in 

each setting. Commenters differed 

somewhat to the extent that they 

provided specific alternatives. Some 

commenters went so far as to suggest 

that all EPs should be eligible to receive 

EHR incentive payments, regardless of 

where they practice. 

Response: The changes to the 

hospital-based definition that are 

included in the Continuing Extension 

Act of 2010 (Pub. L. 111–157) discussed 

above address commenters concerns 

about ambulatory settings. These 

changes have been incorporated into the 

final rule. An EP will be a hospitalbased EP and therefore ineligible to 

receive a Medicare (or Medicaid) EHR 

incentive payment if more than 90 

percent of their Medicare (or Medicaid) 

services are provided in the following 

two place of service (POS) codes for 

HIPAA standard transactions: 21— 

Inpatient Hospital, 23—Emergency 

Room. 

Comment: Some commenters argued 

that the proposed rule failed to make a 

critical distinction between hospitalbased EPs who primarily use an EHR 

paid for and maintained by the hospital 

and those that did not. Some 

commenters suggested that an EP 

should be eligible for an EHR incentive 

payment if he or she had contributed 15 

percent or more toward the cost of 

acquiring or maintaining the certified 

EHR. Some commenters requested that 

CMS change the definition of a hospitalbased EP to read: ‘‘An EP who furnishes 

90 percent or more of his or her covered 

professional services in the CY 

preceding the payment year in a 

hospital setting and primarily through 

the use of the qualified electronic health 

records of the hospital.’’ The 

commenters believed that Congress’s 

intent was to exclude only those EPs 

using qualified EHRs of the hospital, 

and that their approach would allow 

separate EHR incentive payments for 

EPs who have developed cutting-edge, 

patient centered EHR modules, thereby 

allowing for a clinical specificity not 

currently available in more generalized, 

hospital-wide EHR systems. 

Commenters stated that these EHR 

technologies are currently used in 

hospital settings and interoperate with 

hospital systems, but are paid for and 

primarily maintained by physician 

groups who see patients in hospital 

settings. The commenters indicate that 

these physician groups continue to 

invest in their EHRs through 

improvements, ongoing maintenance, 

and support staff employed to ensure 

optimal use of such technology. The 

commenters indicated that many early 

health IT champions, including 

hospital-based anesthesiologists, 

radiologists, pathologists, hospitalists, 

emergency medicine physicians, and 

neonatal physicians would be 

negatively affected by the proposal. 

These comments would apply to EP 

services provided in all hospital 

settings, including inpatient, outpatient, 

and emergency rooms. 

Response: The statute, as now 

amended, indicates that hospital-based 

EPs are those who furnish substantially 

all their services in an inpatient or 

emergency room setting, such as a 

pathologist, anesthesiologist, or 

emergency physician, and who do so 

using the facility and equipment, 

including qualified electronic health 

care records, of the hospital. While 

commenters focused on the statutory 

language: ‘‘* * * including qualified 

electronic health care records of the 

hospital’’, they did not address the 


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broader meaning of the section which 

also includes the requirement that 

hospital-based EPs are those who 

furnish services ‘‘using the facility and 

equipment’’, including qualified 

electronic health care records of the 

hospital. We believe both phrases 

together are intended to provide an 

explanation of why hospital-based EPs 

are to be excluded from receiving EHR 

incentive payments (that is, that they 

would typically use the facilities and 

equipment, including the EHR, of the 

hospital and that therefore it would 

represent double payment if both 

hospitals and hospital-based EPs were 

to be paid incentives). We do not 

believe that the intent of this language 

was to require CMS to evaluate each EP 

as to whether they are using the EHR of 

the hospital. Further, the commenters 

did not address the significance of the 

next sentence of the statute, which 

clearly indicates that: ‘‘The 

determination of whether an eligible 

professional is a hospital-based eligible 

professional shall be made on the basis 

of the site of service * * *’’. Since 

Congress directed that site of service 

must be the determinant of whether an 

EP is hospital-based, we could not use 

individualized determinations of 

whether an EP is using the EHR of the 

hospital to deliver his or her services. 

Also, the subsequent legislation in the 

Continuing Extension Act of 2010 is 

consistent with the interpretation that 

the determination of whether an EP is 

hospital-based is based on the place 

where the EP furnishes services, as that 

subsequent legislation further limited 

hospital-based to those EPs providing 

substantially all services in the 

emergency room or inpatient hospital 

settings. Furthermore, our final policy is 

that eligible hospitals must demonstrate 

meaningful use based upon all 

applicable cases in the inpatient (21) 

and emergency department (23) site of 

service codes. Therefore, there would be 

duplication in measuring meaningful 

use for the purposes of making EHR 

incentive payments in the scenario 

proposed by these commenters. 

The HITECH Act does not define the 

term ‘‘hospital’’ for purposes of 

establishing a definition of hospitalbased EPs for Medicare and Medicaid. 

However, 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, 

clearly EPs that practice primarily in 

inpatient hospital settings, as referenced 

in section 1861(e) of the Act, would be 

considered hospital-based EPs. 

We will 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 

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://www4.cms.gov/

PlaceofServiceCodes/Downloads/

posdatabase110509.pdf. 

From this code set, we would 

consider the use of the following POS 

codes to determine whether an EP is a 

hospital-based eligible professional for 

Medicare: 

• 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. 

• 23—Emergency Room, Hospital—is 

a portion of a hospital where emergency 

diagnosis and treatment of illness or 

injury is provided. 

Comment: Most commenters were 

supportive of the proposal to define 

‘‘substantially all’’ of his or her covered 

professional services in a hospital 

setting as EPs who furnish at least 90 

percent of his/her services in a hospital 

setting. However, some commenters 

expressed concerns that this threshold 

will be too high starting in 2015 when 

the time comes to determine which EPs 

should be subject to penalties for failure 

to become meaningful users of certified 

EHR technology. A few commenters 

misunderstood the proposal and 

requested that a hospital-based EP be 

defined as one who provides at least 90 

percent of his or her services, defined as 

encounters and not as charges. 

Response: 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. Therefore, we must 

identify the minimum percentage of an 

EP’s covered professional services that 

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. Consistent with the 

statute, we proposed to make this 

determination on the basis of services 

performed by each EP, not the charges 

for each EP. We are finalizing the 

proposed definition of ‘‘substantially 

all’’ as furnishing at least 90 percent of 

services in a hospital setting. We believe 

a 90 percent threshold certainly would 

qualify as ‘‘substantial.’’ 

Comment: Representatives of 

surgeons asked that CMS make an 

accommodation to the hospital-based 

definition to account for services paid 

under a global fee. 

Response: The determination of 

whether or not an EP is hospital-based 

is determined individually for each EP. 

A global fee is a single payment for a 

bundle of services, some of which could 

be performed in a hospital such as major 

surgery or hospital visits, whereas some 

could be performed in an office such as 

follow-up visits, CMS does not have 

data, for the place of service for services 

performed by individual EPs when the 

services are paid as part of a global fee. 

We considered possibilities for using 

national level estimates for individual 

services typically performed under 

global fees as proxies for services 

provided by individual EPs. However, 

this would add significant additional 

operational complexity to the 

determination of hospital-based status 

and we have not pursued this approach. 

Comment: Some commenters 

requested that CMS establish a process 

by which EPs could know in advance of 

a payment year whether CMS 

considered them as being hospital-based 

and therefore ineligible for an incentive 

payment. 

Response: To the extent practical, we 

intend on establishing a process 

whereby the EP would know his/her 

hospital-based status during the 

registration period. We plan to provide 

information to EPs regarding their 

hospital-based status as early as possible 

(that is, no later than early in each 

payment year). As indicated in the 

proposed rule, we will make a 

determination for Medicare incentive 


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payment purposes, as to whether or not 

an EP is hospital-based by annually 

analyzing an EP’s claims history from 

the prior year. In the proposed rule we 

indicated that we would use claims data 

from the prior calendar year to make 

hospital-based determinations for EPs. 

However, in order to provide 

information regarding the hospitalbased status of each EP at the beginning 

of each payment year, we will need to 

use claims data from an earlier period. 

Therefore, we will use claims data from 

the prior fiscal year (October through 

September). Under this approach, the 

hospital-based status of each EP would 

be reassessed each year, using claims 

data from the fiscal year preceding the 

payment year. The hospital-based status 

will be available for viewing beginning 

in January of each payment year. For 

Medicaid purposes, State Medicaid 

agencies will make the determination 

about whether or not an EP is hospitalbased 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. For purposes of 

making this determination, States would 

be permitted to use data either from the 

prior fiscal or calendar year. 

After consideration of the public 

comments received, we are revising the 

definition of hospital based EPs in this 

final rule. An EP will be defined as 

being hospital-based and therefore 

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 two place of service 

codes 21 (Inpatient Hospital) or 23 

Emergency Room, Hospital. We plan to 

reassess the hospital-based status of 

each EP for Medicare purposes each 

year, using claims data from the fiscal 

year immediately preceding the 

payment year. Based on preliminary 

claims data from the first 9 months of 

2009, CMS currently estimates that, 

under this final definition of hospitalbased EPs, about 14 percent of Medicare 

EPs (physicians) would be considered 

hospital-based and thus not eligible to 

receive any incentive payments. We do 

not have any data on Medicaid 

practitioners. 

7. Interaction With Other Programs 

In the proposed rule, we described 

how 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 

in this final 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 eprescribing 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 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 final 

rule, we discuss how we will avoid 

duplication of reporting requirements 

for clinical quality measures. 

Comment: Some commenters 

requested more information on efforts to 

avoid duplication of requirements and 

highly encouraged CMS to do 

everything it could in this regard. 

Response: We address comments on 

the avoidance of duplication of 

requirements in several other areas of 

this rule where more specifics can be 

provided. 

Comment: Commenters generally 

supported our proposal to only apply 

the limitation of participation in 

multiple programs to the limitation 

outlined in the HITECH Act. 

Response: We continue to believe that 

providers should be able to participate 

in every program for which they are 

statutorily eligible and therefore are 

maintaining our proposal to only limit 

Medicare EPs from receiving either the 

Medicare EHR incentive payment or the 

Medicare E–Prescribing incentive 

payment. 

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 final 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 will 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 podiatric 

medicine, a doctor of optometry, or a 

chiropractor. As discussed in section 

II.B.1.a of this final 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) of the Act, the 


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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 proposed to codify 

these specifications and definitions in 

our regulations at 495.102. 

Comment: The commenters who 

expressed concerns about the EP 

definition under the Medicare program 

had one overall theme. It is that the 

definition is too narrow and that it 

should be more inclusive of other health 

professionals in order to serve the goals 

of the HITECH Act. The commenters 

stated that they believe that the intent 

of the electronic health records (EHR) 

legislation is to encompass a wide range 

of health professionals to incorporate 

efficient and effective EHR technology. 

Specifically, these commenters stated 

that the Medicare EP definition should 

be expanded to include nonphysician 

practitioners and health professionals 

such as physician assistants (PAs), 

nurse practitioners (NPs), clinical nurse 

specialists (CNSs), certified nursemidwives (CNMs), clinical 

psychologists (CPs), clinical social 

workers (CSWs), certified registered 

nurse anesthetists (CRNAs), registered 

nurses (RNs), occupational therapists 

(OTs), and credentialed pedorthists who 

make shoes for diabetic patients. 

Additionally, we received a comment 

that the Medicare EP definition should 

recognize health professionals who 

provide health support services as 

members of an interdisciplinary health 

care team such as a team consisting of 

diabetes nurse educators, NPs, 

pharmacists, PAs, dieticians, and case 

managers. 

Representatives of rural health clinics 

(RHCs), Federally qualified health 

centers (FQHCs), ambulatory surgical 

centers (ASCs), outpatient clinics and 

dialysis facilities commented that their 

providers should also be included under 

the Medicare EP definition to qualify for 

Medicare incentive payments. These 

providers believe that they are a key set 

of contributors that will implement and 

meaningfully utilize electronic health 

care record program modules that 

directly benefit their patient 

populations. Alternatively, one of these 

commenters recommended that 

provider eligibility should be 

determined by type of service provided 

rather than by location of service and 

should include non-physician clinicians 

and providers. 

The sub-theme of the comments that 

we received on the Medicare EP 

definition is that the definition of an 

‘‘eligible provider’’ that qualifies for EHR 

incentive payments should be a 

common definition for the Medicare and 

Medicaid programs. The commenters 

believe that a uniform definition of an 

EP would be more administratively 

efficacious for the Medicare and 

Medicaid programs considering that EPs 

are permitted to switch participation 

between the Medicare and Medicaid 

incentive programs one-time after the 

initial payment year. 

An organization representing 

pathologists expressed concern that the 

Medicare EP definition, as currently 

drafted would subject certain 

pathologists to payment incentive 

penalties for not being meaningful EHR 

users if the pathologists performed less 

than 90 percent of their professional 

services in any inpatient or outpatient 

setting in the prior year. All EPs have to 

report on all Core Measures and a subset 

of clinical measures that pathologists 

could not meet in their day-to-day 

practice given the nature of pathology’s 

scope of practice. Accordingly, this 

organization recommended that CMS 

ensure that pathologists who are 

currently defined as Medicare EPs be 

considered as ‘‘non-qualifying’’ EPs, that 

are exempt from future meaningful user 

penalties. 

Response: While we appreciate the 

comments that we received on the 

Medicare EP definition, we are unable 

to expand or alter this statutory 

definition or consolidate it with the 

Medicaid program EP definition as 

suggested by the commenters. Under the 

EHR incentive payment program, the 

law provided a separate Medicare EP 

definition rather than giving the 

Secretary authority or discretion to 

determine who is a Medicare EP or, who 

is an EP for both the Medicare and 

Medicaid programs. 

Comment: A commenter requested 

clarification of the method used for 

determining Medicare incentives for EPs 

practicing in a rural health clinic. 

Response: The amount of the EHR 

incentive payment is based on the 

estimated allowed charges for all 

covered professional services furnished 

by an EP during the payment year, 

subject to the maximum payment 

amount for the payment year for the EP. 

For EPs that practice in an RHC, EHR 

incentive payments are based on the 

amount of covered professional services 

that are not part of the RHC package of 

services and are billed by the EP 

through the physician fee schedule. 

Comment: A commenter suggested 

that the definition of allowable charges 

be amended to include the RHC 

schedule of services, or allow providers 

who use UB92 and HCFA 1500 forms to 

be eligible for the EHR incentive 

payment. 

Response: The allowed charge is the 

amount that Medicare determines to be 

reasonable payment for a provider or 

service under Part B, including 

coinsurance and deductibles. RHC 

services furnished by an EP are not 

considered covered professional 

services for purposes of the Medicare 

EHR because they are not billed or paid 

under the physician fee schedule. 

After consideration of the public 

comments received on the term, 

‘‘eligible professional’’ for the Medicare 

program, we are adopting the Medicare 

EP definition in our regulations at 

§ 495.100 that state that a Medicare EP 

is a physician as defined under § 1861(r) 

of the Social Security Act. That is, a 

Medicare EP is a doctor of medicine or 

osteopathy, a doctor of dental surgery or 

dental medicine, a doctor of podiatric 

medicine, a doctor of optometry, or a 

chiropractor and a doctor who is legally 

authorized to practice their profession 

under State law. 

b. Incentive Payment Limits 

Section 1848(o)(1)(B)(i) of the Act sets 

forth the annual limits on the EHRrelated 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. 

• 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) 


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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. 

Comment: One commenter believes 

that the methodology for determining 

the incentive payments under the 

incentive program does not offer each 

EP an equal incentive, despite being 

held to the same standards of adoption 

and implementation. 

Response: We are uncertain why the 

commenter believes that the 

methodology for determining the 

incentive payments under the incentive 

program does not offer each EP an equal 

incentive to adopt EHR technology. 

However, the payment methodology in 

the statute for EPs (as well as the 

methodologies for hospitals and CAHs) 

is quite prescriptive, and offers no 

discretion for us to adopt revisions 

designed to enhance incentives for 

adoption. For EPs, the HITECH Act 

defines the incentive payment amount 

as, ‘‘an amount equal to 75 percent of 

the Secretary’s estimate * * * of the 

allowed charges under this part of all 

such covered professional services 

furnished by the eligible professional 

during such year.’’ 

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). This section of 

the PHS Act refers to geographic HPSAs, 

which are areas that have been 

designated by the Secretary as having a 

shortage of health professionals, based 

on the population-to-provider ratio and 

other factors. HPSAs are located in 

every State, and in both rural and urban 

areas. 

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 proposed that for an EP to be 

considered as ‘‘predominantly’’ 

furnishing covered professional services 

in a geographic HPSA, more than 50 

percent of the EP’s covered professional 

services must be furnished in a 

geographic HPSA. We stated that 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. Our data 

indicates that most physicians 

furnishing services in a HPSA furnish 

100 percent of their covered services in 

a HPSA, and only very few furnish 

services in both HPSA and non-HPSA 

areas. 

To determine whether an EP has 

furnished more than 50 percent of his/ 

her covered professional services in a 

geographic HPSA, we proposed 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. We 

proposed to make the incentive 

payment to the EP based on an EP’s 

estimated allowed charges for the 

relevant payment year. 

We proposed that 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. 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. 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. 

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 Medicare-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 will 

apply these same rules for the 10 

percent EHR HPSA payment limit 

increase provided under section 

1848(o)(1)(B)(iv) of the Act. 

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 Web site 

at http://www.cms.hhs.gov/

HPSAPSAPhysicianBonuses/

01_Overview.asp#TopOfPage. 

Physicians furnishing Medicarecovered 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. 

Comment: We received a comment 

stating that many EPs who work in a 

HPSA do so only on a part-time basis 

and that most would not qualify for the 

10 percent increase in the payment limit 

based on the proposed threshold of 

furnishing more than 50 percent of his/ 

her covered professional services in a 

geographic HPSA. The commenter 

suggested that an EP should be able to 

qualify for the ten percent increase in 

the payment limit if at least 25 percent 

of his/her covered services during an 

EHR reporting period are furnished in a 

HPSA. 

Response: The statute states that the 

annual payment limit be increased by 

ten percent for EPs who predominantly 

furnish services in a geographic HPSA. 

We continue to believe that ‘‘more than 

fifty percent’’ correctly reflects the 


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meaning of the word ‘‘predominantly’’ as 

used in this statute. As noted above, our 

data also indicate that most physicians 

furnish all of their services either in a 

HPSA or outside of a HPSA, and only 

very few furnish services in both HPSA 

and non-HPSA areas. 

Comment: Several commenters 

requested that Federally Qualified 

Health Centers (FQHCs) be eligible to 

receive the ten percent increase in the 

payment limit for EPs who 

predominantly furnish services in a 

HPSA since the FQHC is a legal entity 

that bills Medicare and receives 

payment for services provided by 

physicians. 

Response: The 10 percent increase in 

the payment limit applies to EPs who 

predominantly furnish services in a 

geographic HPSA. FQHCs and RHCs are 

not eligible for the ten percent increase 

in the payment limit because they do 

not meet the definition of EP as 

specified in section 1848(o)(5)(C) of the 

Act. Please see others sections of the 

regulation that discuss the criteria to be 

considered an EP. Additionally, we 

wish to restate that FQHCs are not 

entitled to any Medicare or Medicaid 

incentive payments under this program. 

Comment: A commenter suggested 

that ‘‘predominantly’’ be defined as the 

location where the EP provides the most 

services, so that an EP who sees patients 

in more than two locations could 

receive the increase in the payment 

limit if he/she provided more care in the 

HPSA location than any other location. 

The commenter also suggested that if 

this is too difficult to administer, we 

should accept an attestation from the 

EP. 

Response: We are aware that many 

physicians, especially in rural areas, 

furnish services in more than one 

location, and appreciate the 

commenter’s interest in making the 

HPSA payment limit increase available 

to these EPs. If we were to accept this 

recommendation, then an EP who 

worked in three locations at forty 

percent, thirty percent, and thirty 

percent time respectively, would be 

eligible for the HPSA payment limit 

increase if the first location was in a 

geographic HPSA. If the EP worked in 

four locations at thirty percent, twentyfive percent, twenty five percent, and 

twenty percent time respectively, he/she 

would be eligible for the HPSA payment 

limit increase if the first location was in 

a geographic HPSA. We considered this 

suggestion and concluded that lowering 

the threshold for services furnished in a 

HPSA would be inconsistent with the 

intent of the HPSA payment limit 

increase, which is to provide an 

incentive to promote the use of EHR by 

EPs who practice predominantly in 

HPSAs. Also, if an EP who worked in 

more than two locations and furnished 

services in a HPSA only thirty or forty 

percent of his/her time was eligible for 

the HPSA payment limit increase, this 

would be unfair to an EP who worked 

in two locations and spent forty-five 

percent of his/her time in a HPSA and 

fifty-five percent time in a non-HPSA, 

because this EP would not be eligible for 

the HPSA payment limit increase even 

though he/she spent more total time in 

a HPSA. 

Comment: A commenter stated that 

the proposed HPSA payment limit 

increase was being applied 

inconsistently because an EP would still 

get the payment limit increase if the 

designation was removed mid-year, and 

would not get the payment limit 

increase if the designation was added 

mid-year. 

Response: Section 1848(o)(1)(B)(iv) of 

the Act authorizes us to apply the 

provisions of the HPSA bonus program 

to the implementation of the EHR HPSA 

payment limit increase. The HPSA 

bonus is paid to physicians who furnish 

Medicare-covered professional services 

in an area that is designated as a 

geographic HPSA as of December 31 of 

the prior year. They are authorized to 

receive the HPSA bonus throughout the 

current year, even if the area loses its 

designation as a geographic HPSA 

during the current year. Physicians 

furnishing Medicare-covered 

professional services in an area that is 

not designated as a geographic HPSA as 

of 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 

proposed to use the same methodology 

for the HPSA EHR program, and believe 

that this is consistent with the statute. 

After consideration of the public 

comments received, we are finalizing 

these provisions as proposed. 

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 proposed to make a single, 

consolidated, annual incentive payment 

to EPs. Payments would be made on a 

rolling basis, as soon as we ascertained 

that an EP had 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, we proposed that EPs would 

be 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. We 

proposed to preclude an EP from 

reassigning the incentive payment to 

more than one employer or entity. To 

implement this requirement, we 

proposed 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 was associated 

with more than one practice, we 

proposed that EPs would select one tax 

identification number to receive any 

applicable EHR incentive payment. 

As mentioned above, we 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. We proposed to add a new 

part 495.10(e) and (f) to permit 

reassignment of the incentive payment 

with certain limitations. The following 

is a summary of the comments we 

received and our responses. 

Comment: Several commenters, 

including one representing Rural Health 

Clinics, requested clarification of the 

statement in the proposed rule (75 FR 

1910) that an eligible professional (EP) 

is allowed to reassign his/her EHR 

incentive payment to an employer or 

other entity to which the EP has 

reassigned his/her payments for 

Medicare covered services. The 

commenters believe that the HITECH 

Act requires in such cases that any 

Medicare EHR incentive for which the 

EP qualifies must be paid to such 

employer or other entity. The 

commenters reference the phrases from 

the HITECH Act, ‘‘shall be paid’’ to an 

eligible professional (or to an employer 

or facility in cases described in the 

reassignment provisions of the Social 


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Security Act). In addition, the 

commenters referenced the phrase 

regarding the transfer of an EP’s 

Medicaid EHR incentive which states 

that ‘‘such incentives are paid directly to 

such provider (or to an employer or 

facility to which such provider has 

assigned payments)’’. The commenters 

interpret these phrases to mean that an 

EP’s EHR incentive payments (both 

Medicare and Medicaid) must be paid to 

an employer or other entity to which the 

EP has reassigned payments for his/her 

services. 

Response: We do not agree with the 

commenters’ conclusions regarding to 

whom the payments must be made. As 

we stated in the proposed rule, Section 

1842(b)(6) of the Act allows, but does 

not require reassignment to an employer 

or entity with which the physician has 

a valid contractual arrangement 

allowing the employer or entity to bill 

for the physician’s services. The 

HITECH Act provisions cited by the 

commenter similarly do not require that 

the EHR incentive payment be made 

pursuant to a reassignment, but provide 

that the payment may be made directly 

to the EP or to the employer or other 

entity. A physician reassigns payment 

based on the scope of his or her 

employment or contractual 

arrangement. Based upon our 

interpretation of the applicable 

provisions, we are finalizing our 

proposal at § 495.10(f) to permit EPs 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. 

We are taking this opportunity to 

remind the public that if the EP wishes 

to reassign his or her incentive payment 

to the employer or entity with which the 

EP has a contractual arrangement, the 

parties should review their existing 

contract(s) to determine whether the 

contract(s) currently provides for 

reassignment of the incentive payment 

or if the contract(s) needs to be revised. 

Reassignment of the incentive payment 

must be consistent with applicable 

Medicare laws, rules, and regulations, 

including, without limitation, those 

related to fraud, waste, and abuse. For 

Medicaid, a discussion of reassignment 

of the incentive payment is found in 

section II.D.3.e of this final rule ‘‘Entities 

Promoting the Adoption of Certified 

EHR technology.’’ 

Comment: Several commenters stated 

that the rationale and objectives of the 

HITECH Act provisions regarding 

transfer of the EP’s EHR incentives are 

merely to align EHR incentives and EHR 

costs. Therefore, they believe that the 

HITECH Act provisions support their 

view that Congressional intent was to 

prevent windfall EHR incentives to EPs 

who incur no EHR-related costs. The 

commenters also asserted that CMS’s 

failure to address this issue will require 

entities that employ or contract with 

EPs to enter into negotiations and a 

separate agreement transferring the EP’s 

EHR incentive payments to the 

employer or other entity. 

Response: We do not agree with the 

commenters’ statement that the 

Congress intended to prevent windfall 

EHR incentives to EPs who incur no 

EHR-related costs. 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. The provisions are not 

focused solely upon the costs associated 

with the EHR technology. Rather, as we 

stated in the proposed rule (75 FR 

1849), it focuses upon the adoption, 

implementation, upgrade, or meaningful 

use of the technology. 

However, we do agree that some 

entities may have to review and/or 

negotiate current contractual 

arrangements to address the transfer of 

the incentive payments. The first 

payment year for the incentive payment 

is CY 2011, which we believe should 

afford parties sufficient time to reach a 

new agreement. For Medicaid, a 

discussion of reassignment of the 

incentive payment is found in section 

II.D.3.e of this final rule ‘‘Entities 

Promoting the Adoption of Certified 

EHR technology.’’ 

Comment: Several commenters 

supported our proposal that if an EP has 

reassigned his or her payments for 

services to more than one employer or 

entity, that only one of those employers 

or entities should receive the EP’s EHR 

incentive payments for a particular EHR 

Reporting Period (75 FR 1910). The 

commenters do not believe that EPs 

should decide which employer or entity 

should receive his or her EHR incentive 

payment. Rather, the commenters stated 

that such payments should 

automatically be paid to the employer or 

entity that has received for the reporting 

period the largest percentage of the EP’s 

Medicare or Medicaid payments for 

services. 

Response: We are not persuaded to 

adopt the commenters’ suggestion. We 

believe that the suggestion by the 

commenters would create 

administrative complexities for both 

CMS and EPs with little benefit. Many 

of these obstacles would be similar to 

those described in the proposed rule 

when discussing the possibility of 

making proportional EHR incentive 

payments (75 FR 1911). Therefore, we 

are finalizing our proposal to revise 

§ 495.10(e) to preclude an EP from 

reassigning the incentive payment to 

more than one employer or entity. In 

cases where the EP is associated with 

more than one practice, EPs must select 

one TIN to receive any applicable EHR 

incentive payment. 

Comment: The commenters also state 

that if an EP has incurred out-of-pocket 

costs in connection with an EHR 

provided by an employer or other entity 

to which the EP has reassigned 

payments for his or her services, the EP 

should be permitted to keep an amount 

of his or her EHR incentives equal to the 

amount of such costs incurred. 

Response: The statute does not 

address this issue. It simply provides 

that the incentive payments are to be 

made directly to the EP or to an 

employer or other entity to which the 

EP has reassigned the incentive 

payment. Reassignment of the incentive 

payment must be consistent with 

applicable Medicare laws, rules, and 

regulations, including, without 

limitation, those related to fraud, waste, 

and abuse. We believe that any costsharing or subsequent distribution of the 

incentive payment, such as in the 

manner described by the commenter, 

should be resolved between the parties. 

Comment: Several commenters urged 

CMS to clarify that any reassignment of 

the EP’s EHR incentive payment should 

not constitute a financial arrangement 

within the meaning of the physician 

self-referral law, or remuneration within 

the meaning of the federal anti-kickback 

statute. 

Response: The physician self-referral 

law prohibits a physician from making 

a referral for designated health services 

to an entity with which the physician or 

a member of the physician’s immediate 

family has a financial relationship, 

unless an exception applies. For 

purposes of the physician self-referral 

law, a financial arrangement includes 

ownership or investment interests and 

compensation arrangements. The statute 

defines a ‘‘compensation arrangement’’ 

to mean any arrangement involving 

remuneration, direct or indirect, overt or 

covert, in cash or in kind. A 

reassignment of an EP’s EHR payment 

would constitute remuneration, and we 

note that reassignment generally occurs 

in the context of an existing 

compensation arrangement (for 

example, employment). There are many 

potentially applicable exceptions for 

compensation arrangements that involve 

a physician’s reassignment of Medicare 

payments. 


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Similarly, with respect to the antikickback statute, absent compliance 

with a safe harbor, a determination of 

whether a reassignment constitutes 

prohibited remuneration would be made 

on a case-by-case basis and we therefore 

decline to issue any statement regarding 

the application of the anti-kickback 

statute to a reassignment. For additional 

information regarding the anti-kickback 

statute, please refer to the OIG’s Web 

site at http://oig.hhs.gov. 

Comment: One commenter 

representing American Indian and 

Alaska Native health providers urged 

CMS to require that the HITECH/EHR 

Meaningful Use provider incentive 

payments be reassigned to the Tribal 

outpatient clinics, because the Tribal 

clinics developed the infrastructure not 

the EPs themselves, and purchased 

electronic medical record systems to 

complement the current Registration 

Patient Management Systems (RPMS) of 

the Indian Health Service. In addition, 

the commenter noted that many tribal 

outpatient clinics have employment 

contracts with their EPs. Thus, the 

commenters urged CMS to require that 

incentive EHR payments should be 

included in employment contracts to 

help protect the EP as employee and the 

Tribe as the employer. 

Response: As stated above, section 

1848(o)(1)(A) of the Act provides that 

the EP’s incentive payment shall be paid 

to the eligible professional (or to an 

employer or other entity with which the 

physician has a valid contractual 

arrangement allowing the employer or 

other entity to bill for the physician’s 

services). We recognize that some tribes 

purchased EHR systems based upon 

criteria established by the Indian Health 

Service. However, after careful 

consideration, we believe that the same 

standards concerning the incentive 

payments should apply. The EP and the 

Tribal outpatient clinic should jointly 

resolve whether the EP’s EHR incentive 

payment will be reassigned to the Tribal 

outpatient clinic or made directly to the 

EP. Similarly, any decision by the Tribal 

outpatient clinic concerning whether to 

include language in its employment 

contract (or in the alternative, whether 

any pre-existing contract already 

requires reassignment of the payment), 

is a matter of contract interpretation that 

should be resolved by the parties 

themselves. This discussion is also 

addressed in the Medicaid section of 

this rule at II.D.4.a.3. 

Comment: One commenter expressed 

concern about the potential tax 

consequences associated with an EP’s 

reassignment of the EHR incentive 

payment by an independent contractor 

to a larger organization. The commenter 

recommended that a 1099 independent 

contractor should consult with his/her 

tax advisor before agreeing to reassign 

incentive payments and to ensure that 

the election to reassign is made before 

payment is sent from CMS or the State 

Medicaid Agency. 

Response: The commenter’s 

recommendation falls outside the scope 

of our authority. This is a matter for the 

1099 independent contractor EP to 

consider. 

Comment: Many national and state 

medical associations expressed concern 

regarding the proposed requirement that 

the EP must identify a Tax Identification 

Number (TIN) to which the EP’s 

incentive payment should be made. 

They assert that this will not work for 

physicians who do not have a TIN, and 

are enrolled in Medicare or Medicaid 

through their Social Security Number 

(SSN). Therefore, the commenters 

recommend that CMS accept the SSN in 

lieu of the TIN, so that all eligible 

physicians are able to participate in the 

Medicare and Medicaid EHR incentive 

programs. 

Response: We recognize that many 

physicians are enrolled in Medicare or 

Medicaid through their Social Security 

Number (SSN). Therefore, we are 

revising our proposal at § 495.10 that 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. In 

finalized § 495.10(c), we provide that 

the TIN may be the EP’s Social Security 

Number (SSN) to which the EP’s 

incentive payment should be made. We 

note that if the physician is part of a 

group with more than one owner or 

organization that is incorporated, they 

would have a TIN for the corporation 

that is not the EP’s SSN. 

Comment: Some commenters 

recommended that the employer or 

entity to which an EP reassigns payment 

for covered services, should be deemed 

authorized to provide, on the EP’s 

behalf, any documentation necessary for 

the EP to qualify for EHR incentive 

payments. 

Response: We believe that this should 

be resolved by the parties themselves. 

There is nothing in the statute that 

requires an EP’s employer or other 

entity to which an EP reassigns payment 

to provide any necessary documentation 

for an EP to qualify for EHR incentive 

payments. Rather, the finalized 

regulatory provision at § 495.8 provides 

that an EP must demonstrate that he or 

she satisfies each of the applicable 

objectives and associated measures 

under § 495.6. If the parties wish to have 

the necessary documentation furnished 

by the employer or entity, they should 

resolve this pursuant to an employment 

or contractual agreement. We are 

finalizing our proposal because we 

believe that making a single, 

consolidated payment would be the 

least administratively burdensome for 

both CMS and EPs. In addition, we 

believe a single, consolidated payment 

would reduce the possibility of fraud 

and duplicate payments. Several of 

these issues related to reassignment of 

payment are also addressed in the 

Medicaid section. See II.D.3.e. 

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 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 do not apply to hospitalbased EPs. 

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-bycase basis, exempt an EP who is not a 

meaningful EHR user for the year from 

the application of the payment 


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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 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. 

Comment: Some commenters believed 

that when an EP’s performance leads to 

a negative financial impact under 

Medicare payment policy, it would be 

unfair and overly punitive for them to 

face a separate and potentially more 

significant financial impact—whether 

through a denial of funding and/or 

ARRA’s penalties. Further, some 

commenters indicated that they 

interpreted these requirements to mean 

that Medicaid participants would or 

would not experience fee-schedule 

adjustments if they are not meaningful 

users by the end of 2014. 

Response: We will reduce payments 

as specified under the statute. Under 

sections 4101(b) and (c) of the HITECH 

Act, we are required to pay EPs less 

than 100 percent of the fee schedule and 

to make downward adjustments to MAaffiliated EPs for their professional 

services if they are not meaningful users 

of certified EHR beginning in CY 2015. 

Under sections 4102(a), (a)(2), and (c) of 

the HITECH Act, we are authorized to 

pay eligible hospitals a reduced annual 

payment update, provide downward 

payment adjustment to CAHs for cost 

reporting periods, and provide 

downward payment adjustment to MAaffiliated hospitals respectively, if they 

are not meaningful users of certified 

EHR technology beginning in FY 2015. 

The Medicare fee schedule adjustments 

will impact any EP or subsection(d) 

hospital that is not a meaningful user by 

the end of 2014. The adjustments are 

not authorized under Medicaid, but the 

adjustments will still apply to Medicaid 

EPs who are also Medicare EPs and also 

to Medicaid acute care hospitals that are 

also subsection(d) hospitals. We are 

finalizing these provisions as proposed. 

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. In the 

proposed rule, we proposed a new 

§ 495.104 to implement this provision. 

As we noted in the proposed rule, 

section 1886(n)(6)(B) of the Act defines 

‘‘eligible hospitals’’ for purposes of the 

incentive payments provision, as 

‘‘subsection (d) hospitals,’’ referring to 

the definition of that term 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 to 

‘‘subsection (d) Puerto Rico hospitals,’’ 

we proposed that incentive payments 

for meaningful users of certified EHR 

technology would 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 hospitals located in the 

50 states. Therefore we proposed that 

incentive payments for meaningful 

users of certified EHR technology would 

be available under this provision to 

acute care hospitals located in the State 

of Maryland. The statutory definition of 

a subsection (d) hospital also does not 

apply to hospitals and hospital units 

excluded from the IPPS under section 

1886(d)(1)(B) of the Act, such as 

psychiatric, rehabilitation, long term 

care, children’s, and cancer hospitals. 

We also proposed that, for purposes of 

this provision, we would provide 

incentive payments to hospitals as they 

are distinguished by provider number in 

hospital cost reports. We proposed that 

incentive payments for eligible hospitals 

would be calculated based on the 

provider number used for cost reporting 

purposes, which is the CMS 

Certification Number (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 final rule. 

Comment: We received numerous 

comments on our proposal to identify 

all individual hospitals eligible for 

incentive payments based on the 

provider number used for cost reporting 

purposes (the CCN of the main 

provider). These commenters, including 

national and regional hospital 

associations, hospital systems, and 

hospitals with multiple campuses, 

objected to the proposed policy on 

various grounds. Many of these 

commenters pointed out that there is no 

standard policy that defines the specific 

types of facilities to which a single CCN 

applies. As a result, a single CCN could 

encompass multiple hospitals within a 

hospital system in some cases, while in 

other cases multiple hospitals within a 

system could have separate CCNs. These 

commenters therefore maintained that 

our proposed policy would unjustifiably 

lead to disparate treatment of hospital 

systems based solely on whether the 

system had one or more provider 

numbers. Commenters also maintained 

that, because the Medicare and 

Medicaid payment incentives are 

calculated using a per-hospital base 

amount, plus a capped per-discharge 

amount per hospital, identifying 

individual hospitals solely by CCN 

would result in distributing payments in 

a manner that does not foster 

widespread EHR adoption and use. The 

for this argument regarding limited EHR 

adoption and use is that multi-campus 

systems with a single CCN would 

receive only one base payment, and 

would be more likely to reach the 

discharge cap. Some commenters also 

argued that linking incentive payments 

only to a single CCN would not 

accurately reflect the pattern of costs 

required for deploying EHR systems 

across all sites in a hospital system. For 

example, even hospital sites that are 

part of the same system often require 

significant variations in their EHR 

systems, accommodating local policies 

and processes, as well as different 

legacy systems, physician preferences, 

clinical protocols, and other variables. 

Some commenters cited as a precedent 

our policy with regard to hospitals with 

one CCN, but multiple sites spanning 

more than one wage index region. CMS 

has instructed such hospitals to report 

wage data for each site separately on the 

cost report, and pays for discharges 

under the wage index that applies 

where the service is provided, that is, 

under a different wage index for each 

site. 

These commenters recommended 

various approaches to recognizing and 

verifying the status of separate hospitals 

under one CCN number. Many of them 


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recommended that we adopt a ‘‘multipronged approach that allows a 

‘‘hospital’’ to be defined in ways that 

acknowledge the varied organizational 

structures of multi-hospital systems, 

including by a distinct CCN, a distinct 

emergency department, or a distinct 

hospital license.’’ Commenters 

recommended that we indentify and 

verify the distinct hospitals within 

hospital systems either by revising the 

cost report or by developing an 

attestation process similar to the process 

employed under § 413.65 of the 

regulations to verify provider-based 

status. Commenters also recommended 

that we either collect the data necessary 

for determining payment amounts (for 

example, discharge counts) directly 

from each hospital within a system with 

a single provider number, or develop a 

method of allocating discharges, bed 

days, and other relevant data among the 

hospital campuses represented in a 

hospital cost report under a single CCN. 

Finally, a number of the commenters 

advocating a different approach 

contended that our proposed policy ran 

counter to the intent of the EHR 

incentive provision, which is to 

promote broader adoption of EHR 

systems. These commenters argued in 

various ways that recognizing each 

campus of a multi-campus hospital for 

separate payment was most consistent 

with the statute because it would 

provide a greater overall level of 

funding for EHR efforts, especially to 

hospital systems that have elected to 

enroll multiple campuses under a single 

Medicare provider agreement, and thus 

support diffusion of EHR systems more 

broadly. One of these commenters did, 

however, acknowledge that ‘‘in most 

circumstances the term ‘subsection(d) 

hospital’ under the Medicare Program 

includes all of a hospital system’s 

inpatient facilities that operate under a 

single provider number,’’ before going 

on to argue that CMS has both the 

authority and the obligation under the 

HITECH Act to diffuse EHR incentive 

payment more broadly by treating each 

facility under a hospital system as a 

separate hospital, regardless of whether 

any of the facilities share a single 

provider number. 

Response: We appreciate the 

commenters’ concerns, but we continue 

to believe that our proposal represents 

the best policy approach in determining 

what constitutes an ‘‘eligible hospital.’’ 

In the absence of clear direction from 

the statute to the contrary, we believe 

that the most appropriate policy is to 

interpret the terms in subsection (d) 

‘‘acute care hospital’’ and ‘‘children’s 

hospital’’ in the light of existing 

Medicare and Medicaid program 

policies and precedents. It is quite true, 

as a number of the commenters noted, 

that hospital systems have considerable 

latitude (although not unlimited) in 

choosing whether to obtain one CCN for 

all their facilities, or to obtain separate 

CCNs for some or all of their facilities. 

However, once a hospital has sought 

and obtained a single CCN for two or 

more facilities, that hospital has chosen 

to represent itself to CMS as a single 

hospital, including for purposes of 

payment, cost reporting, and satisfying 

the conditions of participation. Such 

systems submit unified cost reports 

integrating data (including charges, 

discharges, bed days, and other relevant 

data) from every facility under the 

single CCN. For purposes of DSH and 

IME payments under the IPPS, both 

eligibility for payment and the 

applicable payment amounts are 

determined on the basis of this 

integrated data. Most significantly, the 

Medicare conditions of participation 

require that a system with a single CCN 

establish and maintain a single 

governing structure, medical staff, 

nursing staff, and record services. 

Section 482.2 states that a ‘‘hospital 

must have an organized medical staff 

that operates under by-laws approved 

by the governing body.’’ Section 

482.21(e) states that the governing body 

must ensure, among other matters, that 

‘‘the hospital-wide quality assessment 

and performance improvement efforts 

address priorities for improved quality 

of care.’’ In addition, § 482.24 states that 

the hospital must have ‘‘a medical 

record service that has administrative 

for medical records.’’. For these reasons, 

we believe that recognition of the 

decision made by each hospital or 

hospital to represent and organize itself 

as a single entity under one CCN, or as 

two or more distinct entities under 

separate CCNs is a strength, rather than 

a weakness, of our proposed policy. 

Each institution that has exercised 

available latitude to obtain one CCN for 

all their facilities not only represents 

itself as a single hospital, but also agrees 

to conduct itself in significant ways as 

a single hospital. 

We also do not agree with those 

commenters who argue that our policy 

of applying different wage indexes to 

the campuses comprising a hospital 

system operating under a single CCN 

warrants our treating each campus as a 

separate eligible hospital for purposes of 

the EHR incentive payment program. 

Our policy for these few cases when a 

multi-campus hospital spans two or 

more wage index areas does not amount 

to recognizing that each campus is a 

separate hospital for payment purposes, 

but rather to accounting for the fact that, 

in these few cases, one hospital is 

located in two wage index areas. In 

these cases, it is appropriate to pay, and 

to account for wages, on the basis of 

where each discharge occurs rather than 

on the basis of where, for example, the 

main campus of a hospital may be 

located. 

With regard to the disparate treatment 

argument advanced by a number of 

commenters, we acknowledge that, 

under our proposed policy, a single 

hospital system with two campuses will 

receive (all other things being equal) 

lower incentive payments than the 

combined incentive payments of twosingle-campus hospitals with the same 

number of discharges. However, an 

equivalent disparate treatment situation 

would arise under the policy advocated 

by these commenters. Under the policy 

of recognizing each campus of a multicampus system as a separate hospital, a 

single-campus hospital would received 

lower incentive payments than a multicampus hospital with the same number 

of discharges, despite the fact that both 

hospitals have a single CCN and are 

recognized for administrative and 

financial purposes, and for purposes of 

the conditions of participation, as a 

single hospital. 

Example: Hospital A is a multicampus 

hospital with 30,000 discharges and a 

Medicare share of 50 percent. Hospital 

A’s discharges are evenly split between 

its two campuses. Hospital B is a single 

campus hospital with 30,000 discharges 

and a Medicare share of 50 percent. 

During the first year of the transition, 

each campus of Hospital A would 

receive a separate incentive payment 

determined on the following manner: 

($2,000,000 base amount + [(15,000 ¥ 

1,149) × $200] discharge-related 

amount) × .5 Medicare share × 1.0 

transition factor = ($2,000,000 + 

$2,770,200) × .5 × 1.0 = $2,385,100 

Hospital A’s total payment would 

therefore be $4,770,200. In contrast, 

Hospital B would receive a single 

payment determined in the following 

manner: 

($2,000,000 base amount + [(23,000 ¥ 

1,149) × $200] discharge-related 

amount) × .5 Medicare share × 1.0 

transition factor = ($2,000,000 + 

$4,370,200) × .5 × 1.0 = $3,185,100 

Hospital B would thus receive a 

payment that is $1,585,100 smaller than 

Hospital A’s total payment for the same 

number of discharges. 

The change in policy recommended 

by these commenters will therefore 

replace one equity issue with another. 

We see no reason to privilege one of 

these arguments over the other, and 


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therefore we believe that the decision on 

a final policy ought to turn on the other 

considerations that we discuss. 

Finally, we cannot agree with the 

commenters that determining the 

appropriate policy on this question 

should turn on which alternative 

produces the greatest overall level of 

spending on EHR systems. Many 

decisions could result in lower potential 

payments to some or all potential 

meaningful users of EHR payments. 

Congress deliberately chose to limit 

incentive payments based on the 

statutory formula (using the current 

statutory and regulatory definition of 

‘‘subsection (d) hospital’’), and further 

limited the amount of incentive 

payments available to large hospitals by 

not increasing incentive payments 

above 23,000 discharges. 

After consideration of the public 

comments received, we are finalizing 

our policy as proposed. 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 CMS 

Certification Number (CCN) of the main 

provider (also referred to as OSCAR 

number). Payments to eligible hospitals 

will be made to each provider of record. 

b. Incentive Payment Calculation for 

Eligible Hospitals: Initial Amount 

Section 1886(n)(2) of the Act, as 

amended by 4102(a) of the HITECH Act, 

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. 

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. 

We proposed to implement the ‘‘initial 

amount’’ within the formula as that term 

is defined in the statute. 

Comment: Several commenters 

requested that we identify the sources of 

the discharge data we plan to employ 

for purposes of determining the 

discharge related amount. These 

commenters also requested confirmation 

of their understanding that no type of 

discharge, regardless of source of 

payment, would be excluded from the 

discharge count for this purpose. 

Commenters specifically cited nursery 

discharges and discharges from non-PPS 

areas of a hospital as examples of 

discharges that should not be excluded 

under the statutory language, which 

they believe requires the inclusion of all 

patient discharges regardless of type of 

patient within the inpatient areas of the 

hospital. 

Response: We cannot agree with the 

commenters that the statutory language 

includes all patient discharges within 

the inpatient areas of the hospital. 

Rather, the statutory language clearly 

restricts the discharges to be counted for 

purposes of determining the dischargerelated amount to discharges from the 

acute care portion of the hospital. As we 

discussed in the proposed rule, 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.’’ 

The phrase ‘‘total discharges for the 

eligible hospital (regardless of any 

source of payment)’’ limits the count of 

discharges to the acute care inpatient 

discharges. This is because of the 

reference to ‘‘eligible hospital.’’ ‘‘Eligible 

hospital’’ is defined in section 

1886(n)(6)(B) of the Act for purposes of 

the incentive payments provision, as ‘‘a 

subsection (d) hospital,’’ referring in 

turn to the definition of that term 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,’’ 

excluding hospitals that are not paid 

under the IPPS in accordance with 

section 1886(d)(1)(B) of the Act, such as 

psychiatric, rehabilitation, long term 

care, children’s, and cancer hospitals. 

However, 1886(d)(1)(B) also specifies 

that the ‘‘term ‘subsection (d) hospital 

* * * does not include a psychiatric or 

rehabilitation unit of the hospital which 

is a distinct part of the hospital (as 

defined by the Secretary).’’ Therefore, 

the term ‘‘eligible hospital’’ for purposes 

of the incentive payments provision 

does not extend to the excluded units of 

the hospital. The term does, of course, 

include the inpatient portion of the 

hospital that receives payment for 

Medicare purposes under the inpatient 

PPS. The phrase ‘‘regardless of any 

source of payment,’’ however, indicates 

that the count of ‘‘total discharges’’ for 

this purpose should include not only 

patients for whom Medicare is the 

source of payment, but also patients for 

whom payment is received from 

Medicaid or any other source of 

payment. Accordingly, in the revised 

cost report form that is currently 

pending and which will be finalized in 

time for the 2011 payment year, CMS 

Form 2552–10, Hospital and Hospital 

Health Care Complex Cost Report, we 

have included a cell for entry of ‘‘Total 

hospital discharges as defined in section 

4102 of AARA,’’ in the new Worksheet 

E–1, Part II, ‘‘Calculation of 

Reimbursement for Settlement for HIT.’’ 

This new cell is derived from line 14, 

from ‘‘Worksheet S–3, Part I column 15.’’ 

In turn, this cell from Worksheet 

S–3, Part I, column 15 incorporate all 

discharges from the inpatient, acute care 

portion of the hospital, regardless of 

payment source. In this final rule, we 

have also revised the definition of 

‘‘eligible hospital’’ in § 495.100 of the 

regulations, as well as the specification 

of ‘‘initial amount’’ in § 495.104(c)(3) of 

the regulations, in order to clarify this 

point. 

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 


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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 

reporting periods can begin with any 

month of a calendar year, and end on 

the last day of the 12th subsequent 

month. We proposed, for purposes of 

administrative simplicity and 

timeliness, 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 that is prior to the FY that serves 

as the payment year as the basis for 

making preliminary incentive payments. 

Similarly, we proposed that 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 of proposal: 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, 2009 through June 

30, 2010, 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 FYbased 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. 

Commenters raised several issues 

with regard to our proposals regarding 

the timing of the cost reports to be used 

for purposes of determining preliminary 

and final incentive payments. Each of 

these issues embraces the use of several 

data elements, including discharge 

counts, bed days, and other factors 

employed in the payment calculations. 

For purposes of simplicity, we will 

address these issues in general terms in 

this section. As we will note at several 

junctures below, this discussions of 

these issues, however, are applicable to 

the cost report data for other elements 

of the computation. 

Comment: Several commenters called 

our attention to timing issues with 

regard to the cost reporting periods that 

we proposed to use for purposes of 

determining preliminary and final 

incentive payments. These commenters 

noted that, if we finalize our proposal to 

use data 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, hospitals with cost reporting 

periods on the October-to-September 

cycle would face a delay of two months 

or longer after potentially qualifying as 

a meaningful user before receiving a 

preliminary incentive payment. 

Specifically, for hospitals on this cycle, 

the cost report that would be used for 

determining interim payments for the 

first payment year (the October 1, 2009 

through September 30, 2010 cost report) 

would not be due until February 28, 

2011, two months after the hospital may 

have been able to qualify as a 

meaningful user (January 1, 2011). For 

hospitals on the September-to-August 

cycle, the delay could be one month. 

The commenters pointed out that over 

one-fifth of subsection (d) hospitals 

have cost reporting periods beginning 

on September 1 or October 1. The 

commenters therefore recommended 

that we employ discharge and other data 

from a hospital’s most recently filed cost 

report as the basis for determining the 

hospital’s preliminary incentive 

payment once the hospital has qualified 

as a meaningful user. 

Response: We agree with these 

commenters, and in this final rule we 

are therefore adopting the policy that we 

employ discharge and other data from a 

hospital’s most recently filed 12-month 

(see discussion below) cost report as the 

basis for determining the hospital’s 

preliminary incentive payment once the 

hospital has qualified as a meaningful 

user. However, the precise timing of 

payments, especially during the first 

payment year, may be affected by other 

factors such as the timeline for 

implementing the requisite systems to 

calculate and disburse the payments. 

We are adopting the policy 

recommended by the commenters in 

order to avoid any unnecessary delays 

in making interim payments due merely 

to the timing of cost reporting periods. 

Example: FY 2011 begins on October 

1, 2010 and ends on September 30, 

2011. For an eligible hospital with a cost 

reporting period on the October-toSeptember cycle, we would employ the 

relevant data from the hospital’s most 

recently submitted cost reporting period 

in order to determine the incentive 

payment for the hospital during FY 

2011. If the hospital qualifies for 

incentive payments on January 1, 2011, 

this would probably be the cost report 

for the period running from October 1, 

2008 through September 30, 2009. 

However, we would also employ the 

October 1, 2009 through September 30, 

2010 cost report, if that cost report is 

submitted before the point when 

preliminary incentive payments can be 

calculated. 

Comment: A number of commenters 

also raised concerns about our proposal 

to determine final incentive payments at 

the time of settling the cost report for 

the hospital fiscal year that ends during 

the payment year, and to be settled on 

the basis of the hospital discharge and 

other data from that cost reporting 

period. These commenters pointed out 

that the pending CMS Form 2552–10 

will not be effective in time for all 

hospitals and CAHs to complete the 

new S–10 worksheet, Hospital 

Uncompensated Care and Indigent Care 

Data, reporting charity care for their cost 

reporting period ending during the 

payment year. The effective date of the 

new cost report will be for cost 

reporting periods beginning on or after 

May 1, 2010 (as opposed to February 1, 

2010 date anticipated in the proposed 

rule). For purposes of our proposal for 

determining final incentive payments, 

including the Medicare share/charity 

calculation, the first cost reporting 

period for which the new cost report 

will be available is the period running 

from May 1, 2010 through April 30, 

2011. This means that, for cost reporting 

periods ending in FY 2011 before April 

30, hospitals will not be able to 

complete the new S–10 worksheet to 

report charity care charges. Therefore, 

these commenters recommended that 

we revise our proposed policy, so that 

final incentive payments will be 

determined at the time of settlement for 

the cost reporting period beginning in 

the payment year. In this way all 

hospitals, regardless of their cost 

reporting cycle, will have adequate time 

to submit the revised cost reports in 

time for determining final incentive 

payments. 

Response: We agree with these 

commenters, and in this final rule we 

are therefore adopting the policy that we 

determine final incentive payments at 

the time of settling the 12-month (see 

discussion below) cost report for the 

hospital fiscal year that begins after the 

beginning of the payment year, and to 

be settled on the basis of the hospital 


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discharge and other 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 

through June 30, we would employ the 

relevant data from the hospital’s cost 

reporting period ending June 30, 2009 in 

order to determine the preliminary 

incentive payment for the hospital 

during FY 2011 (or June 30, 2010, if that 

cost report was filed prior to the 

calculation). However, final payments 

would be based on hospital discharge 

data from the cost report beginning on 

July 1, 2011 and ending June 30, 2012, 

and determined at the time of settlement 

for that cost reporting period. 

Comment: Several commenters 

requested that we explain how the 

occurrence of non-standard cost 

reporting periods will be taken into 

account in determining the appropriate 

cost reporting periods to employ for 

determining preliminary and final EHR 

incentive payments. Non-standard cost 

reporting periods run for periods shorter 

than the standard 12-month cost 

reporting periods (for example, 3 

months, 6 months), and are typically 

employed to accommodate the 

circumstances of hospitals in several 

distinct situations, such as newly 

constructed hospitals, changes of 

ownership, and reorganization of a 

single multicampus hospital into 

multiple separate providers. In these 

cases, one non-standard cost reporting 

period may be employed before the 

hospital resumes (or begins) cost 

reporting on a 12-month cycle. One 

commenter recommended that we 

account for these situations by adopting 

three changes to our proposed 

regulations: 

• For purposes of determining 

preliminary incentive payments, 

employ the most recently submitted 12- 

month cost reporting period that ends in 

the year prior to the payment year, in 

order to account for those situations in 

which the most recent cost reporting 

period ending prior to the payment year 

is a non-standard period. 

• For purposes of determining final 

incentive payments, employ the first 12- 

month cost reporting period that begins 

after the start of the payment year, in 

order to account for those situations in 

which the cost reporting period ending 

during the payment year is a nonstandard period. 

• Provide that a hospital may address 

the CMS regional office responsible for 

its payment area for determination of 

the appropriate cost reporting period to 

employ for calculating preliminary or 

final incentive payment in cases that are 

not anticipated by the rules adopted in 

the final regulation. 

Response: We acknowledge that we 

failed to address the circumstances of 

non-standard cost reporting periods in 

the proposed rule, and we agree with 

the commenters that it is only 

appropriate to do so. Non-standard cost 

reporting periods are not likely to be 

truly representative of a hospital’s 

experience, even if methods were to be 

adopted for extrapolating data over a 

normal 12-month cost reporting period. 

This is because these periods are often 

quite short (for example, 3 months), 

which makes it questionable to 

extrapolate the data over a full cost 

reporting period. In addition, these 

abbreviated periods often capture the 

experience of a hospital during a period 

of transition (for example, change of 

ownership), which often renders the 

data highly unrepresentative. We also 

agree with the logic of the policy 

revisions proposed by the commenter 

cited above, subject only to the 

necessity of adapting the 

recommendations slightly to the 

revisions, as discussed above, we are 

also adopting to our proposals for 

identifying the cost reporting periods to 

be employed in determining 

preliminary and final EHR incentive 

payments. 

After consideration of the public 

comments we receive with regard to the 

use of cost reporting periods for 

preliminary and final incentive payment 

determinations, we are adopting the 

following policies in this final rule. 

• For purposes of determining 

preliminary incentive payments, we 

will employ discharge and other 

relevant data from a hospital’s most 

recently submitted 12-month cost report 

once the hospital has qualified as a 

meaningful user. 

• For purposes of determining final 

incentive payments, we will employ the 

first 12-month cost reporting period that 

begins after the start of the payment 

year, in order to settle payments on the 

basis of the hospital discharge and other 

data from that cost reporting period. In 

this final rule, we are revising section 

495.104(c)(2) of the regulations 

accordingly. We are not adopting the 

recommendation to allow the CMS 

regional offices to make a determination 

about the appropriate cost reporting 

period in situations not anticipated by 

these rules because we believe that 

these two rules cover all possible 

situations. For example, even in 

complicated cases involving nonstandard cost reporting periods, the cost 

reporting period for a hospital adjusts to 

a standard 12-month cycle within a brief 

period. 

c. Incentive Payment Calculation for 

Eligible Hospitals: Medicare Share 

As previously discussed, the initial 

amount must be multiplied by the 

eligible hospital’s Medicare share and 

an applicable transition factor to 

determine the incentive payment to an 

eligible hospital for a 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 eligible 

hospital’s 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 

proposed, for each eligible hospital 

during each payment year, to employ 

data on the hospital’s Medicare fee-forservice and managed care inpatient bed 

days, total inpatient bed-days, and 

charges for charity care from the 

hospital FY that ends during the FY 

prior to the FY that serves as the 

payment year as the basis for 

preliminary payment. We also proposed 

that 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. 

As a result of the changes we are 

making to these proposed policies in 

response to the comments discussed in 

the previous section, in this final rule 

we are adopting the following policies 

for employing data on the eligible 

hospital’s Medicare fee-for-service and 

managed care inpatient bed days, total 

inpatient bed-days, and charges for 

charity care from the hospital in making 

preliminary and final EHR incentive 

payment determinations: 

• For purposes of determining 

preliminary incentive payments, we 

will 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 a hospital’s most recently 

submitted 12-month cost report once the 


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hospital has qualified as a meaningful 

user. 

• For purposes of determining final 

incentive payments, we will employ the 

first 12-month cost reporting period that 

begins after the start of the payment 

year, in order to settle payments on the 

basis of the hospital’s Medicare fee-forservice and managed care inpatient bed 

days, total inpatient bed-days, and 

charges for charity care data from that 

cost reporting period. 

Section 1886(n)(2)(D) of the Act, as 

amended by section 4102 of the HITECH 

Act, defines the numerator and 

denominator of the Medicare share 

fraction for an eligible hospital 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— 

• The estimated number of inpatientbed-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 inpatientbed-days (as so established) that are 

attributable to individuals who are 

enrolled with a MA organization under 

Part C. 

We proposed 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 

proposed 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 CMS Form 2552–96, Hospital 

and Hospital Health Care Complex Cost 

Report. We stated that 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. 

Comment: A number of commenters 

pointed out an apparent contradiction 

between the cost report sources from 

which we proposed to derive the ‘‘the 

estimated number of inpatient-bed-days 

* * * attributable to individuals with 

respect to whom payment may be made 

under part A’’ (lines 1, 6 through 9, 10, 

and 14 in column 4 on Worksheet S–3, 

Part I of CMS Form 2552–96,), and our 

statement that ‘‘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.’’ These commenters 

supported our proposal to employ the 

data from those lines of the cost report, 

on the grounds that these cost report 

lines ‘‘adequately capture the necessary 

data.’’ However, as the commenters 

pointed out, the data on the identified 

lines do include patient days in units 

not paid under the inpatient PPS. These 

commenters also contended that the 

relevant statutory language (‘‘inpatientbed-days * * * attributable to 

individuals with respect to whom 

payment may be made under part A’’; 

emphasis supplied) would seem to 

include patient days in units not paid 

under the inpatient PPS. 

Response: We agree with the 

commenters that our citation of the 

specific cost report sources from which 

we proposed to derive ‘‘the estimated 

number of inpatient-bed-days * * * 

attributable to individuals with respect 

to whom payment may be made under 

part A’’ was not consistent with our 

statement 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.’’ In this case, our error was 

in the specific cost report lines that we 

cited, rather than in our statement that 

the relevant statutory language 

(‘‘inpatient-bed-days * * * attributable 

to individuals with respect to whom 

payment may be made under part A’’) 

includes ‘‘all patient days attributable to 

Medicare inpatients, excluding those in 

units not paid under the IPPS and 

excluding nursery days.’’ As in the case 

which we discussed above with regard 

to counting ‘‘total discharges,’’ the 

relevant statutory language directs that 

the numerator and denominator of the 

Medicare share fraction incorporate 

inpatient bed-day counts for the eligible 

hospital, and, as discussed in our 

section on total discharges, ‘‘eligible 

hospital’’ is defined with reference to 

section 1886(d)(1)(B) of the Act, which 

specifically excludes from the definition 

psychiatric or rehabilitation units that 

are a distinct part of the hospital. 

Specifically, the ‘‘Medicare share’’ is to 

be ‘‘specified * * * for an eligible 

hospital.’’ The numerator of the 

Medicare share fraction is further 

defined as ‘‘the sum (* * * with respect 

to the eligible hospital) of— 

‘‘(I) the estimated number of inpatientbed-days (as established by the 

Secretary) which are attributable to 

individuals with respect to whom 

payment may be made under part A; 

and 

‘‘(II) the estimated number of 

inpatient-bed-days (as so established) 

which are attributable to individuals 

who are enrolled with a Medicare 

Advantage organization under part C.’’ 

Finally, the denominator of the 

Medicare share fraction includes ‘‘the 

estimated total number of inpatient-beddays with respect to the eligible 

hospital.’’ Therefore, the inpatient-bedday counts included in the Medicare 

share fraction for purposes of the 

incentive payments provision do not 

extend to inpatient-bed-days in 

excluded units of the hospital, but only 

to inpatient-bed-days in the acute care 

portion of the hospital that receives 

Medicare payment under the inpatient 

PPS. In this final rule, we are revising 

section 495.104(c)(4) of the regulations 

in order to clarify this point. 

Since the publication of the proposed 

rule, we have adopted various changes 

to the Medicare cost report, including 

changes designed to accommodate the 

appropriate computation and final 

settlement of EHR incentive payments 

for qualifying hospitals. These changes 

are included in the pending cost report 

form, CMS Form 2552–10. In this 

revised form, the relevant Medicare 

inpatient days are entered in line 2 of 

the new Worksheet E–1, Part II, 

‘‘Calculation of Reimbursement for 

Settlement for HIT.’’ This new line is 

defined as the sum of lines 1 and 8 

through 12, from Worksheet S–3, Part I, 

column 6 of CMS Form 2552–10. These 

lines include all patient days 

attributable to Medicare inpatients, 

excluding those in units not paid under 

the IPPS, and excluding nursery days. 

Comment: Several commenters also 

contended that our proposed exclusion 

of nursery days from the determination 

of ‘‘inpatient-bed-days * * * 

attributable to individuals with respect 

to whom payment may be made under 

part A’’ is inappropriate. These 

commenters maintained that the 

statutory language is broad enough to 

include all inpatient days associated 

with Medicare eligible individuals 

without restriction based on the type of 

Part A patient. 

Response: In excluding nursery days 

from the count of Medicare inpatient 

bed days, we are following the 

precedent of not counting such days for 

purposes of the direct medical 

education, indirect medical education, 

and disproportionate share adjustments 

under the Medicare IPPS. As in the case 

of the term ‘‘subsection (d)’’ hospital, we 

believe that, in the absence of clear 

direction from the statute to the 

contrary, the most appropriate policy is 


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to interpret terms such as ‘‘inpatient 

bed-days’’ in the light of existing 

Medicare program policies and 

precedents. Under our policies for the 

direct medical education, indirect 

medical education and disproportionate 

share adjustments, a bed must be 

permanently maintained for lodging 

inpatients in order to be included in 

available inpatient bed and inpatient 

bed day counts. We exclude the days 

provided to newborns (except for those 

in intensive care units of the hospital) 

because healthy newborn infants are not 

provided with an acute level of hospital 

care. (This is not the case with 

newborns assigned to intensive care 

units, who are included in the counts 

for those units.) For these reasons, 

nursery days are explicitly excluded 

from: 

• The counts of Medicare inpatient 

hospital days and total inpatient 

hospital days for purposes of direct 

graduate medical education payments 

under section 413.75(b) of the 

regulations, where the definition of 

Medicare patient load reads: ‘‘Inpatient 

days in any distinct part of the hospital 

are included and nursery days are 

excluded.’’ 

• The counts of bed days for purposes 

of the Medicare indirect graduate 

medical education adjustment under 

section 412.105(b): the ‘‘count of 

available bed days excludes bed days 

associated with * * * (5) Beds or 

bassinets in the healthy newborn 

nursery * * *.’’ 

• The count of beds for purposes of 

the Medicare DSH adjustment under 

section 412.106(a)(i) of the regulations: 

‘‘The number of beds in a hospital is 

determined in accordance with 

§ 412.105(b).’’ 

We note that, in addition to excluding 

nursery days from the numerator of the 

Medicare share fraction, these days are 

excluded for the same reasons from the 

count of total inpatient bed days in the 

denominator of the Medicare share 

fraction. We therefore do not believe 

that excluding these days would result 

in disadvantage to hospitals in 

determining their Medicare share 

fractions for purposes of calculating 

EHR incentive payments. (See our 

discussion of the cost report data 

employed to determine total inpatient 

bed days in the denominator of the 

Medicare share fraction, below.) 

Comment: Other commenters 

maintained that swing bed days should 

also be included in the determination of 

‘‘inpatient bed-days * * * attributable 

to individuals with respect to whom 

payment may be made under part A.’’ 

Response: Once again, as in the case 

of the term ‘‘subsection(d)’’ hospital, we 

believe that, in the absence of clear 

direction from the statute to the 

contrary, the most appropriate policy is 

to interpret terms such as ‘‘inpatient 

bed-days’’ in the light of existing 

Medicare program policies and 

precedents. We are therefore also 

following the precedent of Medicare 

payment adjustments in excluding 

certain swing bed days from the count 

of Medicare inpatient days. As in these 

cases, swing bed days are excluded 

when the swing bed is used to furnish 

SNF care, because only the days used 

for inpatient hospital care will be 

included in the count of ‘‘inpatient beddays * * * attributable to individuals 

with respect to whom payment may be 

made under part A.’’ Otherwise, we 

would be including non-inpatient beddays in the count. 

Comment: One commenter objected 

that, for purposes of the Medicare 

inpatient day count in the Medicare 

share, we appeared to be proposing to 

use only paid Medicare days. This 

commenter argued that all eligible 

Medicare days should be counted in 

order to reflect a hospital’s true 

Medicare utilization. The commenter 

also maintained that the statute’s 

reference to days ‘‘attributable to 

individuals with respect to whom 

payment may be made under part A’’ 

requires inclusion of all days when a 

beneficiary was eligible for Medicare, on 

the grounds that this language ‘‘does not 

require actual payment by Medicare.’’ 

The commenter further noted that the 

other factor in the numerator of the 

Medicare share fraction requires 

inclusion of all patient days associated 

with individuals enrolled in a Part C 

Medicare Advantage plan, and 

maintained that there ‘‘would be no 

rational basis for Congress to include all 

enrolled Part C days, quite clearly 

regardless of whether they are paid, but 

to limit part A days to those paid by 

Medicare.’’ 

Response: We assume that, by the 

term ‘‘unpaid’’ Medicare days, the 

commenter is referring to days provided 

to Medicare entitled beneficiaries for 

which the services are non-covered, 

such as the cases in which a beneficiary 

has exhausted coverage of inpatient 

hospital services, or in which the 

services are not covered under a 

national or local coverage 

determination. We do not agree with the 

commenter that these days ought to be 

included in the count of ‘‘inpatient-beddays * * * attributable to individuals 

with respect to whom payment may be 

made under part A.’’ Indeed, we believe 

that the best reading of this statutory 

language suggests the opposite of what 

the commenter maintains: In cases of 

non-covered days, payment may not be 

made under Part A, and therefore these 

days should not be included in a count 

of days ‘‘attributable to individuals with 

respect to whom payment may be made 

under part A.’’ We agree with the 

commenter that the language for the 

other factor in the numerator of the 

Medicare share fraction (‘‘inpatient-beddays attributable * * * to individuals 

who are enrolled with a MA 

organization under Part C’’) is more 

inclusive. However, we must assume 

that the difference in the statutory 

language is meaningful. Therefore, we 

are finalizing our proposal not to 

include days provided to Medicare 

entitled beneficiaries for which the 

services are non-covered in the count of 

Medicare inpatient days. It is important 

to note that we do include such ‘‘nonpaid’’ days for purposes of other 

Medicare payment provisions, where it 

is appropriate to do so under the 

governing statutory provisions. For 

example, for purposes of the Medicare 

DSH adjustment the relevant statutory 

language requires inclusion of days 

associated with individuals who are 

‘‘entitled’’ to benefits under Medicare 

Part A, rather than days for which 

‘‘payment may be made under part A.’’ 

After consideration of these 

comments, we are finalizing our 

proposals with regard to the data to be 

used to determine the ‘‘inpatient beddays * * * attributable to individuals 

with respect to whom payment may be 

made under part A’’ in the numerator of 

the Medicare share fraction. 

Accordingly, we will derive this 

information from Worksheet E–1, Part II, 

line 2 of the pending Medicare cost 

report, Form CMS–2552–10, which is 

defined as the sum of lines 1 and 8 

through 12 in column 6, Worksheet S– 

3, Part I of the pending cost report. As 

we have just discussed, we are revising 

the cost report data sources from which 

we are deriving this information in 

order to be consistent with the statutory 

requirement. We are also revising 

§ 495.104(c)(4)(ii)(A)(2) of the 

regulations to clarify this point. 

Comment: One commenter inquired 

about the status of inpatient-bed-days 

attributable to individuals enrolled in 

the 1876 Medicare cost plan operating 

under ‘‘billing option 2,’’ under which 

the section 1876 cost contractor pays 

hospitals for Part A benefits, and then 

claims reimbursement from CMS. The 

cost-contractor pays Part A benefits for 

its 36,000 enrolled Medicare 

beneficiaries to contracted hospitals in 

one State. The commenter maintained 

that a reasonable interpretation of the 

statutory language suggests that the 

inpatient bed days for these 


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beneficiaries should be counted in the 

numerator of the Medicare share 

fraction. The commenter requested 

clarification concerning the inclusion of 

these days in the data sources we 

proposed to employ, or the development 

of an appropriate remedy in order to 

ensure that they are counted. Another 

commenter noted that Worksheet S–3, 

Part I, column 4, line 2 in the Medicare 

cost report, CMS 2552–96, has 

historically been completed primarily 

by teaching hospitals, based on patient 

days reported on Provider Statistical 

and Reimbursement (PS&R) Report Type 

118. The commenter further stated that 

there have been many situations in 

which non-teaching hospitals reporting 

days on this cost report line have the 

days removed by the Medicare fiscal 

intermediary or Medicare administrative 

contractor (MAC), as PS&R Report Type 

118 contains no patient day data for 

non-teaching hospitals. The commenter 

recommended that we clarify our plans 

with regard to PS&R Report Type 118 

and allow the form to populate with 

accurate data for all hospitals 

submitting no-pay bills for Medicare 

beneficiaries who are enrolled in 

Medicare Advantage (MA) plans and 

who receive Medicare-covered hospital 

services. The commenter further noted 

that, at this time, CAHs and IPPS 

hospitals that do not receive the DSH 

adjustment are not required to submit 

no-pay bills for Medicare Advantage 

patients. 

Response: We agree with the 

commenters that all these days should 

be counted in the numerator of the 

Medicare share fraction. With respect to 

MA plan enrollees, these patients are 

already included in the ‘‘estimated 

number of inpatient-bed-days 

attributable * * * to individuals who 

are enrolled with a MA organization 

under Part C.’’ In order for the data on 

the inpatient days attributable to 

individuals enrolled in MA plans to be 

included on the Medicare cost report, 

the hospital must submit a ‘‘no-pay’’ bill 

to the Medicare contractor. We have 

issued instructions clarifying that 

hospitals must submit no-pay bills for 

inpatient days attributable to 

individuals enrolled in MA plans. 

Specifically, CR 5647, dated July 20, 

2007, required all hospitals paid under 

the inpatient prospective payment 

system (IPPS), inpatient rehabilitation 

facility prospective payment system 

(IRF PPS), and long term care hospital 

prospective payment system (LTCH 

PPS) to submit informational only 

Medicare Advantage claims. 

Furthermore, CR 6821, dated May 5, 

2010, provided that applicable IPPS, IRF 

PPS and LTC hospitals will be given one 

final opportunity to comply with the 

requirement to submit FY 2007 

informational only claims. In addition, 

these hospitals are required to attest in 

writing to their Medicare contractor that 

they have either submitted all of their 

Medicare Advantage claims for FY 2007 

or that they have no Medicare 

Advantage claims for that fiscal year. 

After consideration of the comments, we 

are finalizing our proposals for 

determining the ‘‘inpatient bed-days 

* * * attributable to individuals with 

respect to whom payment may be made 

under part A’’ and the ‘‘estimated 

number of inpatient-bed-days 

attributable * * * to individuals who 

are enrolled with a MA organization 

under Part C.’’ However, we are 

modifying the language of 

§ 495.104(c)(4)(ii)(A)(1) regarding the 

counting of inpatient bed-days 

attributable to individuals with respect 

to whom payment may be under part A 

to clarify that this count includes days 

attributable to enrollees under section 

1876 cost contracts where payments for 

Part A benefits are made by the section 

1876 contractor. We intend to derive 

this information from Worksheet E–1, 

Part II, line 3 of the pending Medicare 

cost report, Form CMS–2552–10, which 

is derived from line 2 in column 6, 

Worksheet S–3, Part I of the pending 

cost report. This data source on the 

revised Medicare cost report is the 

equivalent of the source we cited in the 

proposed rule. 

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 hospital’s 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 proposed 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 proposed to 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. 

We noted that 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. 

Comment: Several commenters noted, 

regarding our proposal concerning 

Medicare inpatient days in the 

denominator of the Medicare share 

fraction, an apparent contradiction 

between the cost report sources from 

which we proposed to derive ‘‘estimated 

total number of inpatient-bed-days with 

respect to the eligible hospital during 

such period’’ (lines 1, 6 through 9, 10, 

and 14 in column 6 on Worksheet S–3, 

Part I), and our statement that ‘‘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 .’’ These 

commenters supported our proposal to 

employ the data from those lines of the 

cost report, on the grounds that these 

cost report lines adequately capture the 

necessary data. However, as the 

commenters pointed out, the data on the 

identified lines do include patient days 

in units not paid under the inpatient 

PPS. And these commenters contended 

that the relevant statutory language (‘‘the 

estimated total number of inpatient-beddays with respect to the eligible hospital 

during such period’’) would seem to 

include patient days in units excluded 

from the inpatient PPS. 

Response: As in the case of the 

equivalent issue with regard to 

Medicare inpatient bed days, we agree 

with the commenters that our citation of 

the specific cost report sources from 

which we proposed to derive the ‘‘the 

estimated total number of inpatient-beddays with respect to the eligible hospital 

during such period’’ was not consistent 

with our statement that the data entered 

on these lines in the cost ‘‘include all 

patient days attributable to inpatients, 

excluding those in units not paid under 

the IPPS.’’ And as in the case of 

Medicare inpatient-bed-days, our error 

was in the specific cost report lines that 

we cited, rather than in our statement 

that the relevant statutory language (‘‘the 

estimated total number of inpatient-beddays with respect to the eligible 

hospital’’) includes ‘‘all patient days 

attributable to inpatients, excluding 

those in units not paid under the IPPS.’’. 

As we have discussed in connection 

with counting discharges and Medicare 

inpatient-bed-days, the relevant 

statutory language directs that the 

denominator of the Medicare share 

fraction incorporate inpatient bed-day 

counts for the eligible hospital. 

Therefore, the inpatient-bed-day counts 

included in the Medicare share fraction 

for purposes of the incentive payments 


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provision do not extend to inpatientbed-days in excluded units of the 

hospital, but only to inpatient-bed-days 

in the acute care portion of the hospital 

that receives payment for Medicare 

purposes under the inpatient PPS. 

We are finalizing our proposal for 

determining the count of total inpatientbed days in the denominator of the 

Medicare share fraction as including all 

patient days attributable to inpatients, 

excluding those in units not paid under 

the IPPS. Accordingly, we will derive 

this information from Worksheet E–1, 

Part II, line 4 of the pending Medicare 

cost report, Form CMS–2552–10, which 

is defined as the sum of lines 1and 8 

through 12, in column 8, Worksheet S– 

3, Part I of the pending cost report. As 

we have just discussed, we are revising 

the cost report data sources from which 

we are deriving this information in 

order to be consistent with the statutory 

requirement. In this final rule, we are 

also revising § 495.104(c)(4)(ii)(B)(1) to 

clarify this point. 

As we noted above, the denominator 

of the Medicare share fraction also 

includes 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 hospital’s charges during 

such period.’’ We discuss the data 

sources and methods for calculating the 

charges and charity care portions of this 

formula in the next section. 

d. Incentive Payment Calculation for 

Eligible Hospitals: Charity Care and 

Charges 

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 estimated total hospital 

charges during a period decreases, 

relatively speaking, as a hospital 

provides a greater proportion of charity 

care. The effect of a greater charity care 

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. 

For the purposes of this final rule, we 

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 

proposed 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. Line number 19 

of the revised Worksheet S–10, as 

proposed, has changed to line number 

20 based on the pending OMB approved 

final Form CMS–2552–10. Only the line 

number has changed as the instructions 

are the same for line 19 as proposed and 

for line 20 in the pending final OMB 

approved Worksheet S–10. Thus, the 

charity care charges used to calculate 

the final Medicare share is reported on 

line 20 of the pending final OMB 

approved Worksheet S–10. 

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 20 of the 

pending final OMB approved 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 20, we may 

question the accuracy of the charges 

used for computing the final Medicare 

share of the incentive 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 line 20 of the pending 

final OMB approved Worksheet S–10, 

then we proposed to deem the portion 

of the denominator described in section 

1886(n)(2)(D)(ii)(II) of the Act to be 1. 

In the proposed rule, we specifically 

solicited 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. 

Comment: Some commenters 

requested that CMS clarify the 

definition of charity care. One 

commenter believed the CMS 

incorrectly indicated that Medicare does 

not reimburse for charity care. The 

commenter believed this statement is 

inconsistent with section 312 of the 

Provider reimbursement Manual (PRM). 

Response: Section 1886(n)(2)(D)(ii)(II) 

of the Act defines charity care charges 

to compute the Medicare share as such 

term is used for purposes of hospital 

cost reporting under Medicare. Thus, we 

are adopting our proposed definition of 

charity care as part of uncompensated 

and indigent care described for 

Medicare cost reporting purposes in the 


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Medicare cost report instructions as 

described above. 

In addition, we believe that our 

statement is correct in that Medicare 

does not pay for charity care in 

accordance with the regulations and 

manual instructions. Specifically, 

section 413.89(b)(1) of the Medicare 

regulations defines bad debts as 

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. Section 

413.89(b)(2) of the Medicare regulations 

defines charity allowances as reductions 

in charges made by the provider of 

services because of the indigence or 

medical indigence of the patient. Cost of 

free care (uncompensated services) 

furnished under a Hill-Burton obligation 

are considered as charity allowances. 

Furthermore, section 413.89(g) states 

that charity allowances have no 

relationship to beneficiaries of the 

Medicare program and are not allowable 

costs. These charity allowances include 

the costs of uncompensated services 

furnished under a Hill-Burton 

obligation. 

Also, section 312 of the PRM states 

that, for Medicare bad debt purposes, a 

non-Medicaid beneficiary may be 

considered indigent or medically 

indigent and that once indigence is 

determined and the provider concludes 

that no improvements in the 

beneficiary’s financial condition exist, 

the debt may be deemed uncollectible 

without applying the collection 

requirements of section 310 of the PRM. 

We believe that the instructions at 

section 312 of the PRM specify bad debt 

amounts that may be allowable under 

section 413.89 of the regulations and, 

thus, these instructions are not related 

to charity care amounts that are not 

allowable for Medicare. 

After consideration of the public 

comments received, we are finalizing 

the definition of charity care these 

provisions as proposed. 

Comment: We received some 

comments asking if CMS will adopt 

standards to determine if a hospital’s 

charity care policy is sufficient to 

qualify for the inclusion of charges in 

the formula for EHR and whether that 

same policy would suffice to meet the 

criteria to determine the eligibility for 

Medicare bad debt. 

Response: Currently for bad debt 

purposes, section 312 of the PRM 

requires the provider to perform asset/ 

income tests of patient resources for 

non-Medicaid beneficiaries. These tests 

will be used to determine if the 

beneficiary meets the provider’s 

indigent policy to qualify an unpaid 

deductible and/or coinsurance amount 

as a Medicare bad debt. The provider is 

responsible for developing its indigent 

policy. Currently, the Medicare 

contractor will determine if the indigent 

policies are appropriate for determining 

allowable Medicare bad debt under 

section 312 of the PRM and § 413.89 of 

the regulations. We believe that the 

Medicare contractor will continue to 

determine if the provider’s indigent 

policy for bad debt purposes is 

appropriate and can determine if the 

same policy would be sufficient to use 

for charity care purposes. 

Comment: We received many 

comments on the use of charity care 

charge data from line 19 of the revised 

worksheet S–10, as proposed. 

Commenters urge CMS to calculate 

charity care costs by starting with the 

amount of charges a hospital has written 

off. Commenters noted that this 

modification would help streamline and 

unify charity care reporting across the 

Federal government (based on the way 

Internal Revenue Service (IRS)) requires 

charity care to be reported) ensure 

consistency of reporting, and avoid 

significantly increasing hospitals’ 

administrative burden. 

Response: As described above, we use 

charity care charges from line 20 of the 

pending final OMB approved worksheet 

S–10 that captures ‘‘total initial payment 

obligations of the patients who are given 

full or partial discounts, based on the 

hospital’s charity care criteria 

(measured a full charge), for care 

delivered during the cost reporting 

period for the entire facility.’’ Similar 

comments received on our proposed 

rule were also received on the Agency 

Information Collection Activities: 

Proposed Collection: Comment Request 

published in the July 2, 2009 Federal 

Register (74 FR 31738). CMS issued a 

revised package, Agency Information 

Collection Activities: Submission for 

OMB Review: Comment Request, in the 

April 30, 2010 Federal Register (75 FR 

22810). The comment period for the 

submission for OMB review ended June 

1, 2010. OMB will review the comments 

received and issue an approved Form 

CMS 2552 10. The OMB approved Form 

CMS–2552–10 will be effective for cost 

reporting periods beginning on or after 

May 1, 2010. 

Comment: Some commenters noted 

that the Hospital Uncompensated Care 

and Indigent Care Worksheet S–10 that 

CMS proposed to revise in the July 2, 

2009 Federal Register (74 FR 31738) 

would not be timely (based on the 

anticipated effective date for cost 

reporting periods beginning on or after 

February 1, 2010 as stated in the 

proposed rule), and therefore, hospitals 

with cost reporting periods beginning 

on November 1, 2009, December 1, 2009 

or January 1, 2010 would not have the 

opportunity to report charity care data 

for the first year of the incentive 

payment. Commenters further 

highlighted their concern for available 

data necessary to be included in interim 

payments and for final payments for 

periods that end December 31, 2010. 

Commenters urged CMS to develop an 

interim mechanism for hospitals to 

report the necessary information so that 

no hospital receives a charity care 

adjustment of ‘‘1’’ merely because of its 

cost reporting cycle. Some commenters 

suggested that CMS use other charity 

care data. Some commenters suggested 

that CMS use the current version of the 

Medicare cost report, Form CMS–2552– 

96, to determine interim incentive 

payments. 

Response: To calculate the Medicare 

share, which includes the charges for 

charity care, we proposed in the 

proposed rule to employ data from the 

hospitals fiscal year that ends during the 

FY prior to the FY that serves as the 

payment year as the basis for 

preliminary payment. We further stated 

that 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. After 

consideration of the public comments 

received, we are revising the provision 

that for purposes of determining 

preliminary incentive payments, we 

will employ data on the hospital’s/ 

CAH’s Medicare fee-for-service and 

managed care inpatient bed days, total 

inpatient bed-days, and charges for 

charity care from a hospital’s/CAH’s 

most recently submitted 12-month cost 

report once the hospital has qualified as 

a meaningful user. For purposes of 

determining final incentive payments, 

we will employ the first 12-month cost 

reporting period that begins after the 

start of the payment year, in order to 

settle payments on the basis of the 

hospital’s/CAH’s Medicare fee-forservice and managed care inpatient bed 

days, total inpatient bed-days, and 

charges for charity care data from that 

cost reporting period. 

In addition, as described in the 

proposed rule, hospitals have been 

required to fill out the worksheet S–10 

of the Form CMS 2552–96 since the 

BBRA of 1999 was enacted. We 

recognize that the charity care data from 

the 2552–96 worksheet S–10 may have 

some limitations because, in some cases, 

providers failed to complete the 

worksheet either partially or in its 


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entirety. Furthermore, in the past CMS 

did not review the worksheet S–10 

because the data had no Medicare 

payment implications. Thus, in the 

absence of availability of charity care 

data from the OMB approved Form CMS 

2552–10, a hospital for the purposes of 

calculating the charity care charges in 

the interim may use the information 

from the 2552–96 worksheet S–10; line 

22 until the revised worksheet is 

available. We believe that the Medicare 

contractor can make a determination if 

the charity care charges from the 2552– 

96 are appropriate, and if so, use such 

charges in determining the preliminary 

incentive payment amount for hospitals, 

as described above. Since CAHs were 

not required to fill out the 2552–96 

worksheet S–10, charity care charges 

may not be available to determine 

preliminary incentive payments until 

the revised worksheet is available. 

However, using data from the first 12- 

month cost reporting period that begins 

after the start of the payment year, as 

described above, hospitals and CAHs 

will calculate the final incentive 

payment amount with data from the 

pending Form CMS–2552–10 Medicare 

cost report that is effective for cost 

reporting periods beginning on or after 

May 1, 2010. 

Comment: Several commenters 

pointed out that we had failed to 

identify the source of the data for 

‘‘estimated total amount of the eligible 

hospital’s charges’’ in the proposed rule. 

Some of these commenters 

recommended that we employ 

Worksheet C, Column 8, line 103 for 

this purpose. 

Response: We did neglect to identify 

the source of the data for ‘‘estimated 

total amount of the eligible hospital’s 

charges’’ in the proposed rule. In the 

final rule, we are providing that, for this 

purpose, we will employ the data from 

Worksheet E–1, Part II, line 5 of the 

revised Medicare cost report, Form 

CMS–2552–10, which in turn derives 

this information from line 200 in 

column 8, Worksheet C, Part I of the 

pending cost report. We note that line 

200 in column 8, Worksheet C, Part I of 

the revised cost report is the equivalent 

of 101, Column 8, Worksheet C of the 

current cost report. We are employing 

the equivalent of line 101, rather than 

the equivalent of line 103, as 

recommended by the commenters, 

because line 101 (current line 200) 

includes the charges for observation, 

and accordingly reflects the ‘‘total 

amount of the eligible hospital’s 

charges’’ more truly than line 103, 

which excludes those charges. 

e. Incentive Payment Calculation for 

Eligible Hospitals: 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 one (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, then the 

applicable transition factor equals threefourths (3⁄4) for the first payment year 

(FY 2014), one-half (1⁄2) for the second 

payment year (FY 2015), one-fourth (1⁄4) 

for the third payment year (FY 2015), 

and zero thereafter. If a hospital’s first 

payment year is FY 2015, then the 

applicable transition factor equals (1⁄2) 

for the first payment year (FY 2015), (1⁄4) 

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. 


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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 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 3⁄4), 2013 

(transition factor equals 1⁄2), and 2014 

(transition factor equals 1⁄4) 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, 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.’’ 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 3⁄4), FY 

2014 (transition factor equals 1⁄2), and 

FY 2015 (transition factor equals 1⁄4). 

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. 

Comment: Several commenters 

pointed out an apparent inconsistency 

in the regulation text that we proposed 

to implement the transition period and 

applicable transition factors for EHR 

incentive payments. Specifically, the 

commenters noted that proposed section 

495.104(b)(5) states that hospitals 

‘‘whose first payment year is FY 2015 

may receive such payments for FY 2015 

through 2017’’ (emphasis supplied), 

while proposed section 495.104(c)(5) 

states that the transition factors for 

hospitals ‘‘whose first payment year is 

FY 2015’’ are: 

(A) 1⁄2 for FY 2015; and 

(B) 1⁄4 for FY 2016. (Emphasis 

supplied.) 

Response: These commenters are 

correct. Our proposed section 

495.104(b)(5) contained a typographical 

error. In order to be consistent with the 

clear requirements of the statute, section 

495.104(b)(5) should have stated that 

hospitals ‘‘whose first payment year is 

FY 2015 may receive such payments for 

FY 2015 through 2016.’’ In this final 

rule, we are revising section 

495.104(b)(5) of the final regulations 

accordingly. 

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 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 ‘‘331⁄3 percent for FY 2015, 

662⁄3 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 1⁄4, 1⁄2, and 3⁄4 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 one-quarter 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 zero 

for a hospital in a given FY as long as 

the hospital market basket remains a 

positive number. 

In the proposed rule, we noted that 

specific proposals to implement these 

payment adjustments for subsection (d) 

hospitals that are not meaningful EHR 

users were not being made at that time, 

but would be subject to future 

rulemaking prior to the 2015 

implementation date. We invited 

comments on these payment 

adjustments, and stated any comments 

received would be considered in 

developing future proposals to 

implement these provisions. 

We received a few comments on this 

provision. 

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 being a 

meaningful EHR user, and the manner 

for demonstrating meaningful use, are 

discussed in section II.A.2. of this final 

rule. 


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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 final 

rule. 

Comment: We received many 

comments on the use of the CCN to 

identify CAHs. Most comments were 

similar to those received on the use of 

the CCN for determining incentive 

payments to eligible hospitals. 

Response: We responded to the 

comments for eligible hospitals 

elsewhere in this final rule. Our 

responses to comments received on 

using the CCN to identify CAHs are the 

same as the responses for eligible 

hospital. 

After consideration of the public 

comments received, we are finalizing 

our policy as proposed. For purposes of 

this provision, we will provide 

incentive payments to qualifying CAHs 

as they are distinguished by the 

provider number in the CAH’s cost 

reports. Incentive payments for 

qualifying CAHs 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 

qualifying CAHs will be made to each 

provider of record. 

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. 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, or 

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 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. 

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 


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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 Secretary may, on a caseby-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 1814(l)(3) of the Act and 

payment adjustments under section 

1814(l)(4) of the Act; (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 proposed 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 proposed 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 

proposed to 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 proposed to apply 

the definitions of certified EHR 

technology, EHR reporting period, 

meaningful EHR user and qualified EHR 

in § 495.4 that are discussed elsewhere 

in this final rule. 

In § 495.106(a), we proposed to define 

a qualifying CAH as a CAH that would 

meet the meaningful EHR user 

definition for eligible hospitals in 

§ 495.4, which is discussed in section II 

A.1. of this final rule if it were an 

eligible hospital. Also in § 495.106(a), 

for the purposes of computing the CAH 

incentive payment, we proposed 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 final rule. We 

also proposed 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 

specified that a qualifying CAH must 

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. 

Consistent with section 1814(l)(3)(A) 

of the Act, we proposed under 

§ 495.106(c) that the payment 

methodology for computing the 

incentive payment for a qualifying CAH 

for a cost reporting period during a 

payment year would be 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 final rule) plus 

20 percentage points. However, in no 

case will the resulting Medicare share 

for a CAH exceed 100 percent. This 

payment methodology will be used in 

place of payment at 101 percent of 

reasonable costs typically applied under 

section 1814(l)(1) of the Act and 

§ 413.70(a)(1) 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 final rule plus 20 

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 


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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 

would be paid through a prompt interim 

payment for the applicable payment 

year after—(1) the CAH submits the 

necessary documentation, as 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 proposed § 495.106(d)(3), the 

interim incentive payment would be 

subject to a reconciliation process as 

specified by CMS and the final 

incentive payment as determined by 

CMS or its Medicare contractor would 

be 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 proposed 

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 above and in section 

II.B.4. of this final 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 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. 

Comment: We received many 

comments requesting CMS to provide a 

list of those depreciable items that 

would be used to determine the CAH 

incentive payment under this provision. 

The commenters were concerned that 

certain expenses, such as staff training, 

associated with an EHR system may not 

be included in the CAH’s incentive 

payment. We also received comments 

requesting a further explanation of what 

documentation will be required to 

support the reasonable costs incurred by 

the CAH. 

Response: Section 1814(l)(3)(C) of the 

Act, as amended by the HITECH Act, 

provides that the costs for which a CAH 

may receive an incentive payment are 

reasonable 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. 

Furthermore, section 1814(l)(3)(A) of the 

Act, as amended by the HITECH Act, 

mandates that the Secretary shall 

compute reasonable costs for the 

purchase of certified EHR technology 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). As described in the 

proposed rule, for the purposes of 

computing the CAH incentive payment, 

we proposed 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 final rule. 

CAHs will incur both depreciable and 

non-depreciable reasonable costs in a 

payment year that are associated with 

implementing and maintaining certified 

EHR technology. According to the 

statute, only the reasonable costs for the 

purchase of certified EHR technology to 

which purchase depreciation (excluding 

interest) would otherwise apply are to 

be included in the CAH incentive 

payment. Thus, CAHs will not have to 

depreciate these reasonable costs over 

the useful life of the EHR asset 

purchased as such costs will be 

expensed in a single payment year. Any 

non-depreciable reasonable costs 

incurred in that same single payment 

year that are associated with an EHR 

system may be paid for under the 

current Medicare reasonable cost 

payment system at 101 percent. 

Currently, the CAH’s Medicare 

contractor determines if an item 

purchased is a depreciable asset under 

Medicare principles or other accounting 

standards. The Medicare contractor also 

determines the CAH’s reasonable cost 

for acquiring depreciable assets. For the 

purposes of computing the CAH 

incentive payment, we are not changing 

the Medicare contractor’s current 

responsibilities described above. We, 

therefore, suggest that CAHs 

communicate with their Medicare 

contractors to determine the necessary 

documentation to support their 

reasonable costs incurred for the 

purchase of certified EHR technology 

and to determine if the items that they 

purchase are depreciable assets under 

Medicare principles or other accounting 

standards. 

Comment: We received some 

comments requesting clarification of 

how the incentive payments will be 

computed if an eligible CAH converts to 

or from an eligible ‘‘subsection d’’ 

hospital. 

Response: If during a payment year an 

eligible CAH is converted to or from a 

‘‘subsection d’’ hospital, the CAH may 

receive an incentive payment as long as 

it incurred the reasonable costs of 

purchasing certified EHR technology in 

a payment year (or in a previous cost 

reporting period) when it was a CAH 

and as long as the affected providers 

meet the meaningful use criteria 

described elsewhere in this final rule. 

When a conversion takes place, the 

affected CAH and ‘‘subsection d’’ 

hospital are each required to file a 

Medicare cost report under section 

413.24 of the regulations. For instance, 

if in month 6 of a cost reporting period 

that begins January 1, 2011 and ends 

December 31, 2011, a ‘‘subsection d’’ 

hospital converts to a CAH, the 

‘‘subsection d’’ hospital will file a 

terminating 6-month cost report 

(January 1, 2011 to June 30, 2011). If the 

CAH retains the same year end of 

December 31, 2011, the CAH will file a 

6-month cost report from July 1, 2011 to 

December 31, 2011. In this instance, the 

CAH’s 6-month cost report would be 

used to determine if it incurred 

reasonable costs for the purchase of 


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certified EHR technology that may 

qualify for a CAH incentive payment 

during that period. The ‘‘subsection d’’ 

hospital’s 6 month terminating cost 

report would be used to determine the 

possible amount of any incentive 

payment for that eligible hospital. 

After consideration of the public 

comments received, with the exception 

of a few minor, technical and 

conforming changes, we are finalizing 

the applicable provisions as proposed. 

Comment: We received many 

comments regarding the use of data 

from the revised Medicare cost report 

(Form CMS–2552–10) described in the 

proposed rule to compute the Medicare 

share portion of the CAH incentive 

payment. Commenters were also 

concerned that certain cost report data 

may not be available at the time of 

computing a CAH’s incentive payment. 

Response: As discussed elsewhere in 

this final rule, we are addressing 

concerns with data from the revised cost 

report in a final collection that is 

currently in the Paperwork Reduction 

Act clearance process. In addition, we 

address the timing issues with the 

revised cost report data elsewhere in 

this final rule. 

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, we proposed that under 

§ 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 would be reduced 

from 101 percent of its reasonable costs 

to 100.66 percent. For FY 2016, its 

reimbursement would be reduced to 

100.33 percent of its reasonable costs. 

For FY 2017 and each subsequent FY, 

its reimbursement would 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. 

Comment: We received some 

comments requesting further 

clarification of how CMS will be 

determining whether a significant 

hardship exists to warrant an 

exemption. 

Response: We received a few 

comments on this provision which is 

not effective until FY 2015. We will take 

these comments into account when we 

develop proposals for implementing this 

provision at a later date. 

After consideration of the public 

comments received, we are finalizing 

sections 495.106(e) as proposed. We 

have renumbered proposed section 

413.70(a)(6)(iv) as 413.70(a)(7), but are 

otherwise finalizing section 413.70(a)(6) 

as proposed. 

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 § 413.70(a)(6)(iv) 

and § 495.106(f), we proposed 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. 

Comment: We received some 

comments requesting clarification of 

whether CAHs will be able to appeal 

their incentive payment amounts. 

Response: We believe that the 

limitation of administrative and judicial 

review does not apply to the amount of 

the CAH incentive payment. The CAH 

may appeal the statistical and financial 

amounts from the Medicare cost report 

used to determine the CAH incentive 

payment. The CAH would utilize the 

current provider appeal process 

pursuant to section 1878 of the Act. 

Accordingly, after consideration of 

the public comments received, we are 

finalizing § 495.106(f) as proposed. We 

have renumbered proposed 

§ 413.70(a)(6)(iv) as § 413.70(a)(7), but 

are otherwise finalizing the provision as 

proposed. 

4. Process for Making Incentive 

Payments Under the Medicare FFS 

Program 

As previously discussed in section 

II.B.1. and 2. of this final 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 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 proposed 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 methodology set forth in section 

II.B.1.b. and B.2.b. of this final 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 proposed that the carriers/MACs 

calculate incentive payment amounts 

for qualifying EPs, where incentive 

payments would be disbursed on a 

rolling basis, as soon as they ascertained 

that an EP 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. In 

accordance with section 1848(l)(3)(B) of 

the Act, we proposed that if a qualifying 

EP is not eligible for the maximum 

incentive payment amount for the 

payment year and if the qualifying EP 

was also a qualifying MA EP, the 

qualifying MA organization with which 

the EP is affiliated would receive the 

incentive payment for the EP through 


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the MA EHR incentive program. If the 

qualifying EP either does not also 

qualify as a MA EP or he or she qualifies 

as a MA EP but is not eligible for the 

maximum incentive payment for the 

payment year, we proposed that the 

carriers/MAC would calculate the 

amount of the qualifying EP’s incentive 

payment and disburse the incentive 

payment to the qualifying EP in the year 

following the payment year. The 

proposed rule also outlined that 

incentive payments would not be issued 

to qualifying EPs if an incentive 

payment was already made under the 

Medicaid program for the relevant 

payment year, and as required by 

section 1848(m)(2) of the Act as 

amended by section 4101(f) of the 

HITECH Act, qualifying EPs who 

received incentive payments from the 

Medicare EHR incentive payment 

program would not be eligible to receive 

an e-prescribing incentive payment. 

Additionally, we proposed that the 

incentive payments would be tracked at 

the qualifying EP’s TIN level, and 

disbursed to the TIN that 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) 

would be paid at the group practice 

level’s TIN. We proposed 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 

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. 

To be clear, we note that financial 

relationships, including those arising 

from the reallocation/reassignment of 

incentive payments, between physicians 

and their employers/other entities may 

implicate certain fraud, waste, and 

abuse laws, regulations, and rules. 

Therefore, we proposed to include 

specific safeguards to limit the risk that 

the allocation/reassignment of incentive 

payments could raise under those and 

other applicable laws, regulations and 

rules. Section II.B.1.d. above finalizes 

our proposal at § 495.10(f) to permit EPs 

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. 

Comment: Several commenters 

expressed concern that the proposed 

rule contained limited information on 

how the incentive program for Medicare 

EPs will be operationalized. They 

requested additional information on the 

expected timeframe and process for 

payments. 

Response: The HITECH Act requires 

that EHR incentive program payments 

be separately tracked and monitored 

because these funds cannot be 

commingled with other Medicare funds. 

Therefore, to facilitate funds control, 

payments will be made through a single 

payment contractor rather than through 

the carriers/MACs as was originally 

proposed. Additionally, the Integrated 

Data Repository (IDR), rather than the 

carriers/MACs, will be accumulating the 

allowed charges for each qualified EP’s 

NPI. Payments would be made on a 

rolling basis, as soon as we ascertain 

that an EP has successfully 

demonstrated meaningful use for the 

applicable reporting period (that is, 90 

days for the first year or a calendar year 

for subsequent years) and the EP’s 

allowed charges has reached the 

threshold that qualifies an EP for 

maximum incentive payment, for the 

relevant payment year. Once this 

determination has been made, the 

National Level Repository (NLR) will 

calculate the EP’s incentive payment. 

The payment will then be made by the 

single payment contractor. We 

anticipate that it will take anywhere 

from 15 to 46 days from the time an EP 

successfully attests to being a 

meaningful user to the time an incentive 

payment is made, and that for FY 2011, 

incentive payments will be made to EPs 

who successfully demonstrate that they 

were meaningful EHR users for the EHR 

reporting period (that is, 90 days) as 

early as May 2011. As proposed, we will 

pay a qualifying EP a single 

consolidated incentive payment for a 

payment year, rather than make periodic 

installment payments. In order to 

accommodate different attestation dates 

throughout the first year for EPs, our 

payment cycle is on a monthly basis as 

previously described; however, 

qualifying EPs will receive one single 

payment per year. In other words, CMS 

will issue payments as soon as possible 

after a qualifying EP attested to 

meaningfully using a certified EHR 

system, hence the monthly payment 

cycle; however, an EP will only receive 

one incentive payment for each year 

he/she qualifies. For qualifying EPs 

whose allowed charges for the payment 

year do not reach the maximum 

thresholds, the single payment 

contractor will disburse an incentive 

payment in the following year. 

Comment: One commenter 

recommended CMS make semi-annual 

incentive payments for the second and 

subsequent payment years to ensure 

physician practices have cash flow to 

deploy certified EHR systems and train 

employees how to use the systems. 

Response: When the EHR reporting 

period is a full year, no EPs will have 

successfully demonstrated that they are 

meaningful users at the mid-year mark. 

Therefore, as previously described, 

qualifying Medicare EPs will receive a 

single payment per year, issued on a 

monthly payment cycle. We intend to 

finalize this provision as proposed; 

there will be a single successful 

attestation per year and a single 

payment following the attestation for 

qualifying EPs. 

Comment: One commenter questioned 

whether the scopes of work for the 

MACs/Medicare Carriers would be 

revised to reflect the additional work 

that this program will entail. 

Response: As previously discussed in 

the first comment and response, the 

IDR, rather than the MACs/Medicare 

Carriers, will accumulate the EPs 

allowed charges. The MAC/Carrier work 

related the Medicare EHR incentive 

program will be within their current 

scope of work and will be handled 

through the normal change request 

process. 

Comment: One commenter believes 

an EP’s program selection (Medicare or 

Medicaid) is tied to the TIN where the 

EP assigns incentive payments. The 

commenter recommended CMS permit 

additional changes in program selection 

if EPs change their TIN. The commenter 

believes allowing only one program 

change in the life of the program is too 

restricting given that patient mix might 

change due to a practice being 

purchased by another TIN or an EP 

becoming a part-time employee of 

another TIN. 

Response: Section II.A.5.b. of this 

final rule outlines our policy decision 

around changing program selections. 

After consideration of the public 

comments received, we are finalizing 

our policy as proposed. For purposes of 

this provision, payments will be made 

through a single payment contractor 

with the IDR accumulating the allowed 

charges for each qualified EP’s NPI. 

Payments will be made on a rolling 

basis, as soon as we ascertain that an EP 

has successfully 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 then 

the NLR will calculate the incentive 

payment. We estimate it will take 

anywhere from 15 to 46 days from the 

time an EP successfully attests to being 

a meaningful user to the time an 

incentive payment is made. 


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b. Incentive Payments to Eligible 

Hospitals 

We proposed that the FIs/MACs 

would calculate incentive payments for 

qualifying eligible hospitals, and would 

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 final 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. We proposed that 

FIs/MACs would 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 final 

rule, beginning in 2010, cost reports will 

capture charity care data which will be 

used in calculating the Medicare share 

of the payment. We proposed that the 

MACs/FIs 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 that serves as the 

payment year. We also proposed 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 would reconcile the 

incentive payment as necessary at 

settlement of the cost report. 

Additionally, incentive payments for 

qualifying eligible hospitals would be 

calculated based on the provider 

number used for cost reporting 

purposes, which is the CCN of the main 

provider. Therefore, incentive payments 

for qualifying hospitals would be 

disbursed to the CCN rather than the 

TIN. 

Comment: Several commenters 

expressed concern that the proposed 

rule contained limited information on 

how the incentive program for hospitals 

will be operationalized. They requested 

additional information on the expected 

timeframe and process for payments as 

well as requesting clarification that the 

incentive payments would be 

distributed as a ‘‘lump sum payment.’’ 

One commenter requested CMS 

disburse one lump sum payment at the 

start of each eligible year for those 

hospitals that meet all of the meaningful 

use requirements. 

Response: Hospital EHR incentive 

payments will be calculated by the FIs/ 

MACs; however, to facilitate funds 

control, payments will be made through 

a single payment contractor. We will 

direct the payment contractor to issue to 

qualifying hospitals, that is those 

hospitals who successfully demonstrate 

that they are meaningful EHR users, a 

single initial payment for the year. We 

anticipate that payments will be made 

to qualifying Medicare hospitals 

beginning in May 2011. No payment 

will be made prior to an eligible 

Medicare hospital successfully 

demonstrating that it was a meaningful 

EHR user during the EHR period for the 

relevant payment year. For purposes of 

determining interim incentive 

payments, we will 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 a hospital’s most 

recently submitted 12-month cost report 

once the hospital has qualified as a 

meaningful user. For purposes of 

determining final incentive payments, 

we will employ the first 12-month cost 

reporting period that begins after the 

start of the payment year, in order to 

settle payments on the basis of the 

hospital’s Medicare fee-for-service and 

managed care inpatient bed days, total 

inpatient bed-days, and charges for 

charity care data from that cost 

reporting period. 

Comment: One commenter requested 

that CMS allow hospitals to make an 

interim attestation 90 days after the start 

of the second and subsequent payment 

years. They suggested the interim 

attestation would note that they are in 

compliance with the meaningful use 

rules and intend to remain in 

compliance. They requested that CMS 

instruct the contractor to issue interim 

EHR payments after receipt of such 

attestation. The commenter believes this 

would cut down on the time frame of 21 

months between their first and second 

hospital interim payments. 

Response: The reporting period 

requirements for a hospital’s second and 

subsequent years are 365 days. Due to 

the year-long reporting period, we do 

not believe we can allow for an interim 

attestation that the provider is a 

meaningful EHR user. Under our 

definitions at § 495.4, a provider is not 

a meaningful EHR user unless it has ‘‘for 

an EHR reporting period for a payment 

year,’’ demonstrated meaningful use ‘‘in 

accordance with § 495.8 by meeting the 

applicable objectives and associated 

measures under § 495.6.’’ Thus, we 

could not determine that the provider is 

a meaningful user at an interim point in 

time, and there would be no basis for 

providing the interim payment. 

Comment: One commenter expressed 

confusion over the term ‘‘demonstration 

period’’ and questioned if a hospital had 

to complete the full demonstration 

period before payments would be made. 

Response: We assume the commenter 

means EHR ‘‘reporting period’’ when 

using the phrase, ‘‘demonstration 

period.’’ A hospital must demonstrate 

that it met the requirements for 

meaningful use for the full EHR 

reporting period for the relevant 

payment year before we will direct the 

payment contractor to issue an incentive 

payment to the hospital for the payment 

year. A hospital therefore must 

complete the full EHR reporting period 

before demonstrating that it was a 

meaningful EHR user and before any 

payments would be made. 

Comment: Several commenters 

recommended that CMS’ payment 

process for eligible hospitals be 

consistent with its payment process for 

EPs, and that hospital’s initial incentive 

payment thus be distributed no later 

than two months after the hospital 

successfully demonstrates meaningful 

use. The same commenters requested 

CMS specify that the final incentive 

payment be issued no later than two 

months after the hospital submits its 

cost report from the FY that ends during 

the payment year. 

Response: We anticipate that for FY 

2011, interim incentive payments will 

be made to eligible hospitals that 

successfully demonstrate that they were 

meaningful EHR users for the EHR 

reporting period for FY 2011 (that is, 90 

days) as early as May 2011. The exact 

timing of when a qualifying eligible 

hospital receives its interim incentive 

payment will depend on when the 

hospital successfully demonstrates that 

it was a meaningful EHR user; the 

sooner a hospital successfully 

demonstrate that is was a meaningful 

EHR user during the EHR reporting 

period for the payment year, the sooner 

it will receive its interim incentive 

payment. For a Medicare hospital’s 

second and subsequent participation 

years, after a hospital successfully 

demonstrates that it was a meaningful 

EHR user during the EHR reporting 

period (that is, the federal fiscal year) 

for the payment year, the hospital will 

receive the interim incentive payment 

in the following year; the initial 

incentive payments will be made on a 

monthly payment cycle beginning 

shortly after the hospital is determined 

to be a meaningful user. To the 

commenters’ point of requesting that we 

be consistent with the approach to 

paying EPs, there seems to be confusion 

around what was proposed as to the 

timing and distribution of the EP’s 

incentive payment. The proposal for the 

EP’s incentive payment was that EP’s 


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accumulated allowed charges would be 

based on claims submitted not later than 

two months after the end of the payment 

year. The incentive payment for a 

qualifying EP’s second and subsequent 

payment years was always to be 

disbursed in the year following the 

payment year. We did not propose 

paying an EP within two months of 

being deemed a meaningful user. 

Comment: Several commenters 

questioned how CMS would treat a 

hospital that qualified for an incentive 

payment one year, but did not qualify 

the next or subsequent years; what is the 

impact on the stream of incentive 

payments to the hospital? 

Response: An eligible hospital’s first 

payment year is the first year they 

successfully demonstrate that they were 

a meaningful EHR user for the EHR 

reporting period for the payment year. 

Section 1886(n)(2)(G) of the Act defines 

the second through fifth payment years 

for a hospital as each successive year 

immediately following the first payment 

year for such hospital. An eligible 

hospital’s second payment year, then, is 

the year following its first payment year, 

regardless of whether the eligible 

hospital qualifies for an incentive 

payment in the year following its first 

payment year. Similarly, an eligible 

hospital’s third, fourth, and fifth 

payment year are the third, fourth, and 

fifth years, respectively, following the 

hospital’s first payment year, even if the 

hospital does not receive an incentive 

payment for one or more of those years. 

Comment: Several commenters 

requested that CMS clarify that EHR 

incentive payments for which a hospital 

qualifies or receives under the EHR 

incentive program (whether directly or 

pursuant to an assignment, 

reassignment or other transfer) shall not 

affect or be taken into account in the 

calculation or other payments made to 

the eligible hospital under Medicare, 

Medicaid, or any other state or federal 

healthcare program, such as 

disproportionate share payments, 

graduate medical education and indirect 

medical education payments, and 

payments for un-compensated care 

payments. 

Response: EHR incentive payments 

will have no bearing on the hospital’s 

Medicare disproportionate share, 

indirect medical education or direct 

graduate medical education payments. 

This discussion is also addressed in the 

Medicaid section at II.D.4.b. 

After consideration of the public 

comments received, we are finalizing 

our policy as proposed. For purposes of 

this provision, Hospital incentive 

payments will be calculated by the FIs/ 

MACs; however, to facilitate funds 

control, payments will be made through 

a single payment contractor. We will 

direct the payment contractor to issue to 

qualifying hospitals a single initial 

payment per year, and expect initial 

payment may begin as early as May 

2011, for those who demonstrate they 

are meaningful EHR users at the earliest 

date possible. We estimate it will take 

anywhere from 15 to 46 days from the 

time a hospital successfully attests to 

being a meaningful user to the time an 

incentive payment is made. 

c. Incentive Payments to CAHs 

In the proposed rule, CMS proposed 

that because CAHs are paid on a cost 

reimbursement basis once a CAH incurs 

actual EHR costs, it could submit 

supporting documentation to the FI/ 

MAC for review. The FIs/MACs would 

determine an incentive payment 

amount, as discussed in section II.A.3 of 

the 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. 

As discussed in the proposed rule, the 

FIs/MACs would reconcile the cost 

report and ensure the EHR expenses are 

adjusted on the cost report to avoid 

duplicate payments. Incentive payments 

for qualifying CAHs would be 

calculated based on the provider 

number used for cost reporting 

purposes, which is the CCN number of 

the main provider. Therefore, incentive 

payments for qualifying CAHs would be 

based on the CCN rather than the TIN. 

Comment: Several commenters 

expressed concern that the proposed 

rule contained limited information on 

how the incentive program would be 

operationalized for CAHs. They 

requested additional information on the 

expected timeframe and process for 

payments to CAHs. 

Response: To facilitate funds control, 

payments will be made through a single 

payment contractor. In order to receive 

a HITECH incentive payment, a CAH 

will have to attest that it is a meaningful 

user, and submit documentation to its 

FI/MAC to support the costs incurred 

for its HIT system. Once the FI/MAC 

reviews the documentation and the 

allowable amount is determined, we 

will direct the payment contractor to 

release to the CAH a single incentive 

payment in the next HITECH payment 

cycle. Payment cycles will begin in May 

2011. 

Comment: Several commenters 

requested more information on the 

timing of the distribution of payments to 

CAHs once the necessary 

documentation has been submitted and 

that recommended CMS be consistent 

with its proposal on incentive payments 

for EPs and specify that the CAH’s 

initial incentive payment will be 

distributed no later than two months 

after it submits the necessary 

documentation. The same commenters 

requested that CMS specify that the 

final incentive payment be issued no 

later than two months after the CAH 

submits its cost report. 

Response: CAHs will receive a single 

initial incentive payment per year with 

the initial payments beginning in May 

2011. Once the FIs/MACs review the 

documentation and the allowable 

amount is determined, we will direct 

the payment contractor to release a 

single incentive payment in the next 

incentive payment cycle to qualifying 

CAHs. We anticipate the initial 

payments will generally be made within 

two months of the determination of the 

allowable amount. The final payment 

will be calculated on the cost report, 

and the process to settle the cost report 

will not be modified for these incentive 

payments. It will continue to follow the 

normal final settlement process. For the 

CAHs’ second and subsequent 

participation years, CAHs will also 

receive a single initial incentive 

payment per year and a final incentive 

payment as described above. With 

respect to the commenters’ request that 

we be consistent with the proposed 

approach to paying EPs, there seems to 

be confusion around what was proposed 

as to the timing and distribution of 

incentive payments to EPs. The 

proposal for EP incentive payments was 

that an EP’s accumulated allowed 

charges would be based on claims 

submitted not later than two months 

after the end of the payment year. The 

incentive payment for a qualifying EP’s 

second and subsequent payment years 

was always to be disbursed in the year 

following the payment year. We did not 

propose to make incentive payments to 

an EP within two months of the EP 

being deemed a meaningful user. 

Comment: Several commenters 

questioned what is considered 

‘‘necessary documentation’’ for CAHs to 

submit in order to receive Medicare 

CAH incentive payments. The same 

commenters requested CMS propose 

and obtain comments on ‘‘necessary 

documentation’’ and finalize a rule 

before FY 2011. 

Response: The documentation 

submitted should include information 

reflecting what was purchased, and 

support the costs incurred. Such 

documentation may include invoices, 

receipts, or other comparable materials. 


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Comment: One commenter 

recommended CMS (not the MACs/FIs) 

should make all determinations 

regarding CAHs. 

Response: The documentation review 

process for Medicare CAH incentive 

payments is similar to processes 

currently performed by FIs/MACs. Also, 

the data needed to calculate the 

Medicare Share is on the cost reports, 

which are submitted to the FIs/MACs. 

Accordingly, we believe it would be 

most appropriate for the payment 

determinations be made by the FIs/ 

MACs, and not by CMS. 

After consideration of the public 

comments received, we are finalizing 

our policy as proposed. For purposes of 

this provision, CAH payments will be 

calculated by the FIs/MACs; however, 

as discussed above, to facilitate funds 

control, payments will be made through 

a single payment contractor. Once the 

FIs/MACs review the documentation 

and the allowable amount is 

determined, we will direct the payment 

contractor to release to the CAH a single 

incentive payment in the next HITECH 

payment cycle. Payment cycles will 

begin in May 2011. 

d. Payment Accounting Under Medicare 

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 

through 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. 

5. Preclusion of Administrative and 

Judicial Review 

We did not discuss preclusion of 

administrative and judicial review in 

our proposed rule. We are now 

including a discussion, in order to make 

the public aware of the preclusion. Also, 

the sections of this final rule discussing 

payments to Medicare Advantage (MA) 

organizations and CAHs both include a 

description of the preclusion, as well as 

accompanying regulation text. 

Therefore, while we believe statutory 

provisions on preclusion of review are 

self-implementing, below, we include a 

discussion of the preclusion of review 

that applies to EPs and eligible 

hospitals. We have also added 

regulation text to maintain consistency 

with the CAH and MA organization 

provisions. 

For EPs, section 1848(o)(3)(C) of the 

Act prohibits administrative or judicial 

review under section 1869, section 

1878, or otherwise, of all of the 

following: 

• The methodology and standards for 

determining EP incentive payment 

amounts. 

• The methodology and standards for 

determining the payment adjustments 

that apply to EPs beginning with 2015. 

• The methodology and standards for 

determining whether an EP is a 

meaningful EHR user, including: (1) The 

selection of clinical quality measures; 

and (2) the means of demonstrating 

meaningful EHR use. 

• The methodology and standards for 

determining the hardship exception to 

the payment adjustments. 

• The methodology and standards for 

determining whether an EP is hospitalbased. 

• The specification of the EHR 

reporting period, as well as whether 

payment will be made only once, in a 

single consolidated payment, or in 

periodic installments. 

For eligible hospitals, section 

1886(n)(4)(A) of the Act similarly 

prohibits administrative or judicial 

review under section 1869, section 

1878, or otherwise, of the following: 

• The methodology and standards for 

determining the incentive payment 

amounts made to eligible hospitals, 

including: (1) The estimates or proxies 

for determining discharges, inpatientbed-days, hospital charges, charity 

charges, and Medicare share; and (2) the 

period used to determine such estimate 

or proxy. 

• The methodology and standards for 

determining the payment adjustments 

that apply to eligible hospitals 

beginning with FY 2015. 

• The methodology and standards for 

determining whether an eligible 

hospital is a meaningful EHR user, 

including: (1) The selection of clinical 

quality measures; and (2) the means of 

demonstrating meaningful EHR use. 

• The methodology and standards for 

determining the hardship exception to 

the payment adjustments. 

• The specification of the EHR 

reporting period, as well as whether 

payment will be made only once, in a 

single consolidated payment, or in 

periodic installments. 

We note that the above listing may 

summarize or abbreviate portions of the 

statute. For precise language on the 

preclusion of judicial review, readers 

should always refer to the statute. 

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. 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. 

In § 495.200 we proposed to define 

‘‘qualifying MA organization.’’ 

Specifically, in § 495.202(a)(2), we 

proposed 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 proposed 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 


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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 § 495.202(a)(3), for MA 

organizations that offer other 

coordinated care MA plans (Preferred 

Provider Organization (PPO) plans, 

Provider Sponsored 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 proposed that the 

sponsoring MA organization would be 

required 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. 

Although we did not receive any 

comments on these provisions and are 

finalizing them as proposed, there is one 

exception. In order to bring 422.202(a) 

into conformance with the change we 

are making to 422.202(b)(1), we are 

changing the date by which MAOs are 

required to identify themselves to us 

from the bidding deadline in June 2010 

(for plan year 2011) to the bidding 

deadline in June 2011 (for plan year 

2012). 

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 MA 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 

final rule, an EP is defined as a 

physician (under section 1861(r) of the 

Act). 

We said we interpreted ‘‘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 said we interpreted ‘‘to be a 

partner of’’ to mean that the qualifying 

MA EP has an ownership stake in the 

entity. Under this interpretation, a 

professional that contracts with an 

entity, but who has no ownership stake 

in the entity, would not be considered 

a qualifying MA EP. 

We said we interpreted ‘‘furnishing at 

least 80 percent’’ of the entity’s ‘‘patient 

care services’’ to enrollees of the 

organization to mean at least 80 percent 

of the qualifying entity’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 proposed to interpret the 

requirement that a qualifying MA EP 

furnish at least 80 percent of their 

professional services covered under 

Title XVIII to enrollees of the 

organization to mean 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 said we believed that 

in establishing the rule that qualifying 

MA EPs need to furnish at least 80 

percent of their 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 said we would 

pay the qualifying MA organization for 

the MA EP only if such a qualifying 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 interpreted the 

requirement to include both Medicare 

and non-Medicare patient care services. 

Moreover, we proposed 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 definition of EHR reporting period 

in section II.A.1.e. of this final rule.) 

Therefore, we said that over the EHR 

reporting period, the qualifying MA EP 

must provide on average 20 hours per 

week of patient care services. Finally, 

we interpreted ‘‘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 to a Medicare 

beneficiary. 

We considered various methods of 

determining when at least 20 hour per 

week, on average, of patient care 

services would 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 proposed 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. 

Comment: A few commenters 

referenced the Report to Congress 

required by section 4101(d) of the 

HITECH Act. The commenters suggested 

ways in which we could combine 

original FFS Medicare claims-payment 

data and MA services provided by EPs 

in order to arrive at a single, combined 

EHR payment. One commenter asked 

whether payments to a provider from a 

Medicare Advantage plan can contribute 

to the volume of Allowed Charges for 

the purpose of calculating maximum 

Meaningful Use rewards, saying that he 

believed that they should. Another 

commenter said that a substantial 

percentage of senior citizens receive 

their care from EPs providing services 

by way of Medicare Advantage plans. 

The commenter continued that current 

proposed rules provide incentive 

payment only to EPs in whose practices 

80 percent or more of total services are 

to Medicare Advantage patients. The 

commenter concluded that this would 

exclude many EPs treating our most 

vulnerable citizens from the opportunity 

to meaningfully adopt EHRs in their 

practices and that the 80 percent [MA] 

practice requirement should be 

eliminated. Other commenters argued 


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that the regulation was unclear 

regarding an exclusion of covered 

professional services of an EP not 

employed by an MAO when 

determining their participation or level 

of payment because those services are 

provided to MA beneficiaries. The 

commenter believed that the Secretary 

should provide a mechanism, whereby 

EPs can supplement their record to the 

appropriate carrier/MAC with their MA 

charges. 

Response: We do not have statutory 

authority to combine payments across 

the FFS and MA EHR incentive 

payment programs. The statutory 

provision at section 1853(l)(3)(B) of the 

Act, as added by section 4101 of the 

HITECH, entitled ‘‘Avoiding Duplication 

of Payments,’’ specifically prohibits us 

from making payments to EPs for both 

FFS and MA services. Additionally, had 

Congress wanted CMS to combine FFS 

and MA charges it could have included 

a provision similar to the provision in 

section 1886(n)(2)(D)(i) of the Act, as 

added by section 4102(a) of the HITECH 

Act, where FFS and MA inpatient-beddays are added together to derive the 

numerator of the Medicare share 

fraction. We do not have the authority 

to eliminate the requirement that an EP 

provide 80 percent of Medicare services 

to enrollees of an MA organization, as 

that requirement is set forth in section 

1853(l)(2)(A)(i)(II) of the Act, as added 

by the HITECH Act, which is clear in 

requiring that an MA EP provide ‘‘80 

percent of * * * professional services 

* * * covered under this title to 

enrollees of the [MA] organization.’’ 

Comment: One commenter 

recommended that CMS retain its 

proposal regarding how the 80 percent 

and the 20 hours per week criteria will 

be met by MA EPs. Another commenter 

said that many EPs in Puerto Rico 

would not qualify for incentives under 

this test. The commenter said that the 

single MA organization requirement of 

80 percent revenue and 20 hours per 

week for MA EPs would not be met due 

to the competition and market changes 

from year to year. The commenter 

suggested eliminating the single MA 

organization requirement. Instead, the 

commenter said we should change the 

standards to consider all enrollees of all 

MA organizations to which an EP 

furnishes services. The commenter 

continued by saying that if the 

requirements are not modified to accept 

multiple MA organizations, the 

commenter anticipated several 

unintended consequences in the Puerto 

Rico market. First, the commenter said, 

it would be impossible for providers to 

meet the single MA organization 

requirement of 80 percent revenue and 

20 hours per week, and therefore, the 

standard would create disinterest in 

adopting EHRs in their practice. Second, 

the commenter said, the single MA 

organization requirement standard 

would stymie competition. An 

unanticipated consequence of the 

requirement would be providers 

dropping out of MA plans to consolidate 

revenue in order to meet the standard 

from a single MA organization. Third, 

the commenter concluded, patients 

would have fewer options to select 

among MA plans, and to a lesser degree, 

MA enrollees might be forced to 

discontinue care with long time MA 

providers in light of the providers’ 

determination to consolidate revenue 

under a single MA organization. 

Response: As noted above, the 80 

percent of Medicare revenue standard is 

set forth in the statute, and may not be 

changed by regulation. The 20 hour per 

week rule is also statutory and based on 

section 1853(l)(2)(B) of the Act, as 

added by the HITECH Act. We note, 

however, that it is not the case that all 

20 hours of patient care services per 

week be provided by an EP to MA 

enrollees of a single MA organization. 

Rather, the 20 hours of patient care 

services to enrollees of a single MA 

organization can include both Medicare 

and non-Medicare services and patients. 

Comment: One commenter asked 

CMS to continue to work with Congress 

to develop an equitable mechanism by 

which to provide incentives to 

physicians that provide health care 

services through participation with 

more than one MAO. 

Response: As previously mentioned 

in the preamble to this final rule, the 

statute clearly limits payment related to 

any specific MA EP to a single 

qualifying MA organization. Potential 

changes in the statute are outside the 

scope of this rulemaking. 

After consideration of the public 

comments received, we are 

implementing the foregoing provisions 

as proposed. 

As discussed in section II.B. of this 

final rule relating to Medicare FFS EPs, 

a qualifying MA EP is also defined as a 

physician under section 1861(r) of the 

Act. 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 final 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 proposed that, similar to 

the Medicare FFS incentive program, 

MA incentive payments would also not 

be available for hospital-based EPs. We 

note that the hospital where a hospitalbased 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, we proposed that 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. 

Comment: We received one comment 

related to hospital-based MA EPs, and 

specifically to our proposal in the 

proposed rule that ‘‘similar to the 

Medicare FFS incentive program, MA 

incentive payments would also not be 

available for hospital-based EPs.’’ The 

commenter noted, however, that unlike 

the proposed regulatory definition of 

‘‘Qualifying Eligible Professional (EP)’’ 

under the Medicare FFS incentive 

program, the proposed regulatory 

definition of ‘‘Qualifying MA EP’’ under 

the MA EHR incentive program did not 

expressly exclude hospital-based EPs. 

The commenter went on to say that if 

hospital-based MA EPs are excluded 

from the MA EHR incentive program 

(for example, because they provide 90% 

or more of their covered services in the 

CY preceding the payment year in an 

outpatient hospital setting), unless there 

is an exception for MA EPs who are 

hospital-based in qualifying MAAffiliated Eligible Hospitals that would 

not qualify for an incentive payment 

under the MA Affiliated hospital EHR 

incentive program payment criteria, 

Qualifying MA Organizations with MA 

EPs who are hospital-based in such 

qualifying MA-Affiliated Hospitals 

would not qualify for an incentive, with 

regard to those MA EPs, under any 

HITECH Act Medicare incentive 

program. The commenter concluded 

that this outcome would not be 

consistent with the objective of the 

HITECH Act to promote widespread 

adoption of HIT through the payment of 

monetary incentives for meaningful use 

of EHRs. The commenter recommended 

that if hospital-based MA EPs are 

excluded from the MA EHR incentive 

program, then we should include an 

exception for MA EPs who are hospitalVerDate Mar<15>2010 18:10 Jul 27, 2010 Jkt 220001 PO 00000 Frm 00158 Fmt 4701 Sfmt 4700 E:\FR\FM\28JYR2.SGM 28JYR2

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based in Qualifying MA-Affiliated 

Eligible Hospitals that would not qualify 

for an incentive payment (or would only 

qualify for a very minimal incentive 

payment) under the MA-Affiliated 

hospital EHR incentive program 

payment criteria. 

Response: We thank the commenter 

for pointing out our oversight in not 

including the hospital-based physician 

exclusion in the proposed regulation 

text related to the MA EP EHR incentive 

program. We will include in regulation 

text the fact that an MA EP is not a 

‘‘hospital-based EP,’’ as that term is 

defined in § 495.4 of this final rule. As 

to a possible exception for hospitalbased EPs who are practicing in MAaffiliated hospitals that do not qualify 

for incentive payments (or that qualify 

for very minimal incentive payments), 

we cannot provide such an exception. 

MA-affiliated eligible hospitals will 

receive EHR incentive payments based 

on the same statutory formula used to 

make EHR incentive payments to other 

‘‘subsection (d)’’ hospitals—see section 

II.C.3. of this final rule, below. There is 

no statutory authority nor is there a 

valid reason to treat MA EPs, in this 

respect, any differently that other EPs 

that are hospital-based. 

After consideration of the public 

comment received, we are modifying 

the regulation text related to the 

definition of MA EP by the additional of 

an item 5) to the definition of 

‘‘Qualifying MA EP’’ at § 495.200 to add 

a specific hospital-based MA EP 

exclusion. 

As discussed in the proposed rule, 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 did not 

propose to define the term ‘‘entity,’’ but 

instead recognized that there exist a 

range of entities with which MA 

organizations contract for patient care 

services, including physician groups, 

Independent Practice Associations 

(IPAs), Exclusive Provider 

Organizations (EPOs), Physician 

Hospital Organizations (PHOs), and 

Preferred Provider Organizations 

(PPOs). 

Moreover, we recognized 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, we said, 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. 

We said that the qualifying MA 

organization must attest to the fact that 

each MA EP is a meaningful user of 

certified EHR technology in accordance 

with § 495.4. If all of these conditions 

are met, such an individual is identified 

as an MA EP. We proposed to define the 

term ‘‘MA eligible professional (EP)’’ at 

§ 495.200 as an EP who satisfies all of 

these conditions. 

Finally, we discussed section 4101(d) 

of the HITECH Act which directed 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. We 

explained that this rule does not address 

such individuals, as it is limited to 

codifying in regulation existing 

statutory language as discussed herein. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

c. Qualifying MA-Affiliated Eligible 

Hospital 

We proposed 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 

technology as defined in § 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 twothirds of the Medicare hospitals 

discharges (or bed-days) are Medicare 

individuals enrolled under MA plans 

offered by such organization. As 

discussed in section II.A.1. of this final 

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 proposed to define 

‘‘under common corporate governance’’, 

as a qualifying MA organization and a 

qualifying MA-affiliated eligible 

hospital that have a common parent 

corporation, where one is a subsidiary 

of the other, or where 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 an MA 

eligible hospital’s discharges (or beddays) 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 proposed 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 final rule. The term 

will be used in the same way in 

computing incentive payments due 

qualifying MA organizations under the 

qualifying MA-affiliated eligible 

hospital incentive payment program. 

We note that, as discussed in section 

II.B.2.b. of this final 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 MAenrollee 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 final rule for the 

computation of incentive payments to 

qualifying MA organizations.) 

Therefore, we proposed to make EHR 

incentive payments to qualifying MAaffiliated eligible hospitals under the 

FFS EHR incentive program. Finally, we 

said that to the extent such data 

necessary to estimate the inpatient-beddays-related incentive payment amount 

are not already available to us through 

the normal submission of hospital cost 

reports; we proposed to require that 

qualifying MA organizations seeking 

reimbursement for qualifying MAaffiliated eligible hospitals submit 

similar data. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 


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44472 Federal Register / Vol. 75, No. 144 / Wednesday, July 28, 2010 / Rules and Regulations 

2. Identification of Qualifying MA 

Organizations, MA EPs, and MAAffiliated Eligible Hospitals 

In § 495.202 we proposed to require 

an MA organization that intended 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 some cases, that 

they meet the requirements of a 

qualifying MA organization. For MA 

organizations offering an MA HMO plan 

type, we proposed to 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 proposed 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 proposed 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 proposed 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 would seek EHR incentive 

payments. 

In developing the preliminary and 

final lists of potentially qualifying MA 

EPs, qualifying MA organizations, we 

said that qualifying MA organizations 

must exclude hospital-based MA EPs. 

We proposed that qualifying MA 

organizations identify hospital-based 

MA EPs using the same criteria outlined 

in section II.A.6 of this final 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 MA-affiliated hospitals, we said 

that qualifying MA organizations would 

be required to submit an attestation that 

these professionals and hospitals meet 

the criteria to be considered eligible. For 

example, for hospitals, the qualifying 

MA organization would need to attest 

that they are under common corporate 

governance with the qualifying MA 

organization and for EPs, the qualifying 

MA organization would need to attest 

that the list does not include any 

hospital-based EPs. 

We proposed 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 were sought. We 

also proposed 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 would be 

requesting payment under the MA EHR 

incentive payment program. 

We said that 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 proposed 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 

program. Additionally, we proposed to 

require qualifying MA organizations 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. 

Comment: Two commenters 

contended that requiring MA 

organizations to provide even a 

preliminary list of MA EPs by June 2010 

(for payment year 2011) would be 

unrealistic and burdensome, especially 

when publication of a Final Rule seems 

unlikely before May 2010 at the earliest. 

For 2011, any preliminary list will be 

inaccurate, despite good faith efforts 

and reasonable due diligence. Moreover, 

CMS has not stated any justifiable 

purpose for requiring such a 

preliminary list. 

Response: We agree with the 

commenters that it would be 

unnecessarily burdensome and 

unrealistic to require MA organizations 

to provide preliminary lists as early as 

June of 2010 of potential MA EPs for 

incentive payment year 2011. We will 

change the timing of this requirement in 

§ 495.202(b)(1) to say that as part of 

initial bids for plan year 2012 MA 

organizations will be required to submit 

preliminary lists in June of 2011 (when 

bids are due for 2012) of potential MA 

EPs for incentive payment year 2011. 

Thus, we will delay the requirement for 

a full year. The purpose of such 

preliminary lists is to identify potential 

MA EPs that have, for instance, 

registered as FFS Medicare or Medicaid 

EPs on the National Level Repository. 

The intent of getting these lists before 

payment is due, or before a final 

determination of eligibility can be made, 

is to help qualifying MA organizations 

know of any potential conflicts in time 

to ‘‘cure’’ them before final payment 

determinations are made. 

Comment: One commenter objected to 

CMS’ proposal that MA organizations be 

required to submit final lists of MA EPs 

and MA hospitals by the last day of the 

payment year, including the attestations 

of meaningful use and accurate payment 

calculation. The commenter argued that 

this timing would not allow sufficient 

time to ensure that data are complete 

and accurate, especially considering 

that MA organizations bear the 

additional burden of having to develop 

and support internal administrative 

systems to determine eligibility and to 

calculate payment (we will calculate 

FFS EP payments based on claims 

submitted). The commenter 

recommended that we extend the 

deadlines to produce both preliminary 

and final lists of MA EPs and hospitals. 

The commenter suggested that MA 

organizations be given until 90 to 120 

days after the close of the payment year 

to identify and list eligible EPs and 

hospitals (for example, after 31 

December 2011 for plan year 2011). 

Response: We agree with the 

commenter that additional time should 

be permitted and we are therefore 

adding a due date in § 495.202(b)(3) for 

final identification of potentially 

qualifying MA EPs and MA-affiliated 

eligible hospitals of 60 days after the 

close of the payment year. We believe 

60 days is reasonable, since it is the 

same as the time in which FFS EPs have 

to submit claims for consideration 

under the Medicare FFS EHR incentive 

payment program. 

After consideration of the public 

comments received, we are modifying 

the regulation text related to the timing 

of both preliminary and final 

identification of MA EPs and MAaffiliated eligible hospitals. Preliminary 


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identification of MA EPs and MAaffiliated hospitals for payment year 

2011 will need to occur by the bidding 

deadline in June 2011, and final 

identification will need to occur within 

60 days of the close of the payment year. 

Accordingly, we are respectively 

modifying the regulation text at 

§ 495.202(b)(1) and § 495.202(b)(3). We 

are also modifying the regulation text at 

§ 495.204(b)(2) to be consistent with the 

change to § 495.202(b)(3), since final 

identification in § 495.202(b)(3) should 

occur at the same time as final revenue 

reporting under § 495.204(b)(2), so 

calculations of payments due under the 

MA EP incentive payment program can 

be finalized. We are also modifying the 

regulation text at § 495.210(b) and (c) to 

be consistent with the changes to 

§ 495.204(b)(2) and § 495.202(b)(3), 

since the deadline for attestations of 

meaningful use should be consistent 

with deadlines for revenue reporting for 

MA EPs, and final identification of MA 

EPs and MA-affiliated hospitals. Finally, 

as noted (above) in our discussion of the 

definition of qualifying MA 

organizations, we are modifying the date 

in § 495.202(a)(1) by which MAOs are 

required to identify themselves to us 

from the bidding deadline in June 2010 

(for plan year 2011) to the bidding 

deadline in June 2011 (for plan year 

2012). 

We also proposed to require all 

qualifying MA organizations to selfreport 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 proposed 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. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

3. Computation of Incentives to 

Qualifying MA Organizations for MA 

EPs and Hospitals 

In § 495.204, we proposed 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, the Medicare 

physician fee schedule under Part B 

instead of Part C. Section II.B.1. of this 

final 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 final rule.) 

Sections 1848(o)(1)(D)(i) and 

1886(n)(2)(F) of the Act permit us to 

make incentive payments for a year in 

installments, although we proposed to 

make a single lump sum payment with 

respect to MA EPs. With respect to MA 

EP incentive payments, we said 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 

earned ‘‘less than [the] maximum 

incentive payment for the same period’’ 

under the Medicare FFS EHR incentive 

program. We noted in the proposed rule 

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 

rather only for services paid under Part 

B. In a similar manner we proposed 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 said we did 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 proposed, that in 

calculating qualifying MA EP incentive 

payments, we would only consider 

covered professional services provided 

to enrollees of MA plans offered by 

qualifying MA organizations and would 

not include in the calculation any 

services reimbursed by Medicare FFS. 

Comment: Many commenters asked if 

MA plan beneficiaries and services 

would be counted in the calculation of 

FFS EHR incentives and, if so, if it 

would require separate submissions to 

each MA plan in the local market. 

Response: As we explained in the 

preamble of the proposed rule, we 

cannot make MA EP incentive payments 

for Part B services covered and paid for 

on a fee-for-service basis under the 

original Medicare program. We also 

cannot make MA EP incentive payments 

to entities other than qualifying MAOs. 

In short, the Medicare Advantage 

services provided by EPs that are not 

qualifying MA EPs—defined in statute 

and in this rule at § 495.200—are not 

reimbursable under the EHR incentive 

payment program. 

Comment: Two commenters 

contended that the proposed Medicare 

Advantage incentive computation was 

inconsistent. They said that sections 

II.C.3. through 5. of this final rule 

discuss compensation, but the preamble 

says that the Secretary may substitute a 

different amount. This discrepancy 

should be clarified. 

Response: We disagree. The statute 

says that we can substitute an amount 

‘‘that is similar to the estimated amount 

that would be payable or based on the 

fee schedule.’’ It does not say that we 

can substitute a different amount. 

After consideration of the public 

comments received, we are 

implementing these provisions as 

proposed. 

We also said that under the Medicare 

FFS EHR incentive program, an EP’s 

incentive payment could not exceed the 

annual limits specified under section 

1848(o)(1)(B)(i) of the Act. We proposed 

that similar payment limits apply to 

qualifying MA organizations for their 

qualifying MA EPs. 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. 


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• 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 proposed 

similar restrictions related 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. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

We proposed 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. 

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 did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

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 payment data to estimate average 

annual MA revenue for qualifying MA 

EPs with respect to a qualifying MA 

organization. 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 said we believed such a result 

is contrary to the legal requirement that 

qualifying MA organizations are to 

receive 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 no way to know if the EP 

provided 80 percent of his/her 

professional Medicare services to 

enrollees of the organization. 

We also considered a reporting system 

for which qualifying MA organizations 

would be required to report eligibleprofessional-specific information along 

with MA patient encounters for 

nonhospital-based office visits. 

Specifically, we examined requiring 

qualifying MA organizations reporting 

qualifying MA EP encounters with MA 

plan enrollees based on the five levels 

of office visit codes recognized by 

Medicare FFS. 

We said we believed that such a 

process would be administratively 

burdensome and difficult to 

operationalize. Therefore, we proposed 

an alternative approach, but sought 

input from interested parties as to 

which of the approaches, or 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. 

Therefore, in § 495.204(b)(1) through 

(3) we proposed 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 our proposed 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 said 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 were 

compensated on a salaried basis, we 

proposed in § 495.204(b)(4) 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 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 proposed 

to require that salaries be prorated to 

ensure that the amount reported reflects 

the salary paid for the applicable year, 

where necessary. 

We also said that 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 proposed 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 


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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 proposed 

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. We 

said 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 

proposed in § 495.204(b)(5) to require 

qualifying MA organizations to obtain 

attestations from such EPs and to submit 

to us 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 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. 

Comment: One commenter 

recommended that final CMS 

regulations retain the exact 

requirements outlined in 

§§ 495.204(b)(4) and (5). Two 

commenters said that CMS should allow 

flexibility in methods MA organizations 

propose for computing incentive 

payments so long as the organization’s 

approach is reasonable, straightforward, 

and fairly equates to the Medicare feefor-service approach without imposing 

undue burdens on MA organization 

systems or compromising EP privacy. 

The proposed rule describes how 

incentive payment amounts will be 

calculated for eligible hospitals and EPs. 

The proposed rule presents options for 

a MA payment methodology, but 

expressly solicits comments from MA 

organizations about how such a 

methodology could be designed to fairly 

approximate the FFS payment 

calculation. The commenters included 

recommendations about how MA 

organizations could be reimbursed and 

what methodology would be a 

reasonable proxy for the Part B-based 

payment applied to FFS physicians, 

based on the amount of individual 

physician care provided to MA 

members. The commenters said that MA 

EPs who are employed by their 

organizations are independent 

physician group practices that contract 

exclusively with their organizations to 

meet the health needs of their members, 

including MA enrollees. Their 

organizations do not pay the salaries of 

MA EPs who provide patient care 

services to their members and patients. 

They said that CMS has proposed that 

the organization that directly pays the 

EP salaries would perform a calculation 

and attest to the MA organization about 

the amount of payment. They said that 

while this would mitigate some of the 

confidentiality concerns related to 

sharing salary information with the 

health plans, salary information would 

still be potentially exposed to CMS. 

They said that another disadvantage of 

using actual salary as a basis for 

calculating the incentive payment is 

that this approach potentially 

introduces unacceptable variability into 

the estimation of proxy amounts for 

Medicare services. For example, two 

MA EPs, whose salaries vary 

significantly but provide the same 

Medicare services in a reporting period, 

would have different proxy amounts. 

Further, they said, if such EPs were 

billing under Part B, the amount of 

Medicare services each billed would be 

the same, regardless of whether their 

incomes were the same. These 

commenters went on to propose an 

alternative method of computing a 

proxy Part B amount. They said that as 

a first step, the MA organization would 

calculate the percentage of clinic time 

each physician spends caring for MA 

members. This MA Practice percentage 

could be derived by either: (1) Capturing 

the total scheduled appointment time 

for MA members for each MA EP and 

dividing that amount by the total 

scheduled time for that MA EP (for all 

appointments); or (2) capturing the 

number of MA member visits/ 

procedures for each MA EP and 

dividing that amount by the total 

number of visits/procedures for that MA 

EP (for all members). The organization 

would then calculate the average 

practice cost by specialty for all 

specialties identified in the annual 

American Medical Group Association’s 

(‘‘AMGA’’) salary survey. The 

commenters explained that AMGA 

survey provides the median 

compensation per physician in most 

specialties as well as the noncompensation related clinic costs per 

physician (staffing, supplies, overhead, 

etc.) in most specialties. Adding 

specialty specific compensation data 

(for groups > 100 physicians) to the 

combined average non-compensation 

related clinic costs for that specialty (for 

all sized groups) would provide a 

surrogate amount for each specialty’s 

total operating costs. This would 

produce the Average Operating Costs by 

Specialty. Multiplying each MA EP’s 

MA Practice percentage and the Average 

Operating Costs by Specialty for that 

MA EP’s practice specialty would 

produce a surrogate Medicare Part B 

amount. For each MA EP, the MA 

organization would be paid an incentive 

equal to 75 percent of the surrogate 

Medicare billing amount for that 

physician, such incentive not to exceed 

the maximum incentive for each 

payment year of the program (for 

example, $18,000 if the first year of 

participation is 2011). 

Response: While we appreciate the 

thought and effort that went into this 

proposed alternative method of 

calculating MA EP incentive payments, 

we are reluctant to adopt it for the 

simple reason that where salaries, 

practice costs, or actual MA EP 

compensation can be known, we believe 

it is a better read of statutory 

requirements to work from that actual 

compensation and cost data than it 

would be to allow estimation of both. In 

many respects the proposed alternative 

method is similar to the method 

discussed and disposed of in the 

proposed rule related to estimating 

physician compensation based on MA 

bidding and payment data. Although the 

commenters’ alternative version factors 

in actual practice time, we believe using 

AMGA salary survey data would be 

inferior to using actual physician 

compensation practice cost information. 

To the extent actual salary information 

is unknown or unavailable to the MA 

organization, we believe it could be 

provided to us in a manner that would 

protect the privacy of individual MA 

EPs and physician groups. Furthermore, 

the proposal also estimates ‘‘noncompensation related clinic costs’’ based 

on AMGA data, which is, again, 

inappropriate, when actual overhead 

costs might be quite different in a 

specific MA organization. However, 

based on the commenters concerns 

regarding provider privacy and the need 

to develop a consistent and verifiable 

method of computing the amount 

payable to qualifying MA organizations 

for MA EPs we are modifying the 

regulation text at § 495.204(b)(5) to say 

that qualifying MA organizations ‘‘may’’ 

obtain attestations from qualifying MA 

EPs and ‘‘may’’ submit such information 

to us—rather than ‘‘must.’’ And, we add 

a new subparagraph (6) that allows the 

physician group or other payer to 


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provide EP reimbursement information 

directly to us. We also provide 

assurances that we will use the EP 

reimbursement data for no other 

purpose than to compute the MA EP 

incentive payment due the qualifying 

MA organization. 

Comment: One commenter said that 

in the proposed rule the 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 would 

require review and approval by CMS; 

and that such methodology ‘‘could be 

based on the relative share of patient 

care hours spent with MA enrollees of 

the organization or another reasonable 

method.’’ However, the commenter 

opined, the proposed rule offers no 

details about how the review and 

approval process would be conducted, 

including dates and timelines for the 

process. Thus, the commenter 

recommended that CMS permit 

flexibility in allowing MA organizations 

to develop methodologies that will be 

reasonable in light of organization 

structure and systems, it is important to 

provide some guidance about how CMS 

will review and approve such proposals. 

CMS should permit, the commenter 

said, any reasonable payment 

methodology method that is fair, 

relatively easy to administer, subject to 

audit and that provides a reliable 

approximation of Medicare Part B 

billing. In addition, the commenter 

concluded, CMS should provide a 

simple process for submission and 

approval of MA payment 

methodologies. 

Response: In the proposed rule at 

§ 495.204(b)(4) we offered flexibility 

related to the ‘‘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,’’ said that the methodology had 

to be ‘‘approved by CMS,’’ and that the 

amount could include an ‘‘additional 

amount related to overhead.’’ Based on 

this comment we are adding a new 

clause (iii) that says that such 

methodological proposals must be 

submitted to CMS by June of the 

payment year, must be auditable by an 

independent third-party, and that CMS 

will review and approve or disapprove 

such proposals in a timely manner. 

Comment: One commenter wanted to 

know what percentage of the incentive 

payments will go to eligible 

professionals under Medicare 

Advantage. 

Response: No known percentage of 

incentive payment will go to eligible 

professionals under Medicare 

Advantage, since MA EP payments are 

made solely to qualifying MA 

organizations. 

In the proposed rule we said that 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 § 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. 

Section II.B. of this final rule 

discusses our methodology for 

calculating the incentive payment for 

qualifying eligible hospitals under the 

Medicare FFS EHR program. As set forth 

in § 495.204(c)(2), we proposed 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 MAaffiliated hospitals through the FFS 

hospital incentive program, we 

proposed to require submission of such 

data to us and adopt the same definition 

of ‘‘inpatient-bed-days’’ and other terms 

under the Medicare FFS EHR hospital 

incentive program specified in § 495.104 

of this final rule. In such a case we 

proposed 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 

proposed to use inpatient-bed-day data, 

discharges, and other components of the 

FFS calculation for each qualifying MAaffiliated 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 

data; we proposed requiring qualifying 

MA organizations seeking 

reimbursement for their qualifying MAaffiliated eligible hospitals to submit 

similar data. 

We said 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-beddays 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 MAaffiliated 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-bed-days. Although 

eligibility under the MA EHR hospital 

incentive program is not available to 

qualifying MA organizations for any 

specific hospital when FFS inpatientbed-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 


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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 

proposed requiring that qualifying MA 

organizations 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. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

To the extent payments are made to 

qualifying MA organizations for 

qualifying MA EPs or qualifying MAaffiliated eligible hospitals, we proposed 

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 

proposed 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 required to establish 

eligibility or to qualify for a payment, 

will be recouped by CMS from the MA 

organization. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

Finally, as we indicated above in 

section II.C.2. of this final rule, we are 

modifying the regulation text at 

§ 495.204(b)(2) to be consistent with the 

change to § 495.202(b)(3), since final 

identification in § 495.202(b)(3) should 

occur at the same time as final revenue 

reporting under § 495.204(b)(2), in order 

to ensure that calculations of payments 

due under the MA EP incentive 

payment program can be finalized. 

4. Timeframe for Payment 

For payments to qualifying MA EPs, 

in § 495.206 we proposed the timeframe 

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 

proposed 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 final rule. 

We proposed 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 proposed 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 

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. 

We said that 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 proposed to define ‘‘payment 

year’’ with respect to qualifying MAaffiliated 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 proposed to use 

the hospital inpatient bed-days data 

from the hospital FY that ends during 

the FFY prior to the FY that serves as 

the payment year. For qualifying MAaffiliated eligible hospitals, we proposed 

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 MAaffiliated eligible hospitals for which the 

first payment year 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 MAaffiliated eligible hospitals for which the 

first payment year is 2014 or 2015, only 

2 (or 1) additional 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 final 

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 

proposed 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 MAaffiliated eligible hospitals with a first 

payment year of FYs 2012 through 2015. 

Comment: Two commenters said that 

payments to MA organizations will be 


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delayed every year by an unspecified 

amount of time. The commenters said 

that it was understood that CMS is 

charged by statute to avoid making 

duplicate payments, however MA 

organizations should be paid without 

unspecified delay. A suggested 

alternative by the commenters was to 

permit MA organizations to attest that 

their MA EPs will not seek any payment 

under the Medicare FFS Incentive 

Program. Alternatively, the commenters 

suggested, CMS could use an 

installment payment system (permitted 

under statute as stated) for MA 

organizations. The commenters said that 

this would permit partial payment until 

the resolution of the duplicate payment 

issue and would avoid long delays in 

paying MA incentives. 

Response: We do not agree that MA 

organization EHR incentive payments 

are subject to ‘‘unspecified delay.’’ 

Rather, since MA organizations will be 

paid for MA EPs only if such EPs were 

not paid the maximum incentive 

payment under the FFS EHR incentive 

payment program, and since final 

claims data will not be available until 

two months after the close of the 

payment year—see § 495.102(a)(2)— 

CMS will not be able to compute MA EP 

payments until the FFS EHR incentive 

payment program has completed its 

calculations. This will occur in the early 

spring of the year after the close of a 

payment year. Moreover, MA-affiliated 

eligible hospitals will receive EHR 

incentive payments on the same 

schedule as other ‘‘subpart (d)’’ 

hospitals. Finally, note that MA EPs are 

free to leave qualifying MA 

organizations at any time, and since EPs 

are also free to register for eligibility 

under FFS Medicare or Medicaid EHR 

incentive payments, an attestation by a 

qualifying MA organization would have 

little merit. For these reasons we cannot 

accept the suggestion that qualifying 

MA organizations receive interim or 

partial mid-year payments for MA EPs. 

After consideration of the public 

comment received, we are 

implementing these provisions as 

proposed. 

5. Avoiding Duplicate Payment 

We proposed 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 clause (i) of this 

paragraph 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 payment 

calculations will not be completed for 

the first payment year, 2011, until the 

early part of 2012. Therefore, we said 

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. 

This will occur in the early part of CY 

2012. In the MA EHR incentive payment 

program we proposed to follow the FFS 

EHR incentive payment program 

schedule—first computing Medicare 

FFS incentive payments for EPs and 

then computing and paying MA EP 

incentive payments, where 

appropriate—in all subsequent payment 

years. 

We went on to explain that 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. 

We also said that section 

1853(m)(3)(B) of the Act states that 

incentive payments for qualifying MAaffiliated 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 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 proposed 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 MAaffiliated hospital incentive payments. 

We said 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 MAaffiliated 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. 

Finally, we said that 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 did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

6. Meaningful User Attestation 

We proposed meaningful user 

attestation requirements in § 495.210. 

For each MA EP and MA-affiliated 

hospital for which a qualified MA 

organization seeks an incentive 


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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 

proposed to adopt the definitions of 

meaningful user under the Medicare 

FFS program related to EPs and eligible 

hospitals in § 495.4. We are requiring 

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 

during the appropriate period related to 

MA EPs and MA-affiliated eligible 

hospitals before claiming incentive 

payments for them. 

In the proposed rule we said 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 EHR 

incentive program, we proposed 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 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 final 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 MAaffiliated providers and FFS providers 

under the HITECH Medicare incentive 

program. 

Comment: The meaningful use criteria 

make reference to checking eligibility 

electronically and submitting claims 

electronically for 80 percent of patients 

seen. This would not be possible for us 

because, for most of our visits, there is 

no insurance company with which to 

check, and there is no eligibility to 

submit claims to. We are a capitated 

system and for most of the patient visits, 

the concept of checking eligibility and 

submitting claims in not relevant. 

Response: This comment points out 

the difficulty in adopting FFS Medicare 

meaningful use measures for qualifying 

MA organizations, MA-affiliated 

hospitals and MA EPs. For purposes of 

determining meaningful use in a 

Medicare Advantage environment, we 

agree that submitting claims 

electronically is not a useful standard in 

a capitated environment where virtually 

all patients are members of the same 

insurance plan. 

Comment: One commenter said that 

given the sensitivity of the data, and the 

RHQDAPU program specifications, the 

commenter believes CMS should never 

request that hospitals submit patientlevel data to CMS, but that the data 

submitted should always be at the 

aggregated, summary level. The 

commenter encouraged us to state 

specifically that this is its intention in 

FY 2012 and all future years of EHR 

incentive program reporting. Some other 

commenters said that their health care 

delivery systems were based on an 

integrated care delivery model, where 

coordination of care is supported 

through program-wide EHR 

implementation that enables a patient’s 

medical record to be shared among the 

members of the patient’s care team. The 

commenters said they believed patientcentric electronic medical record 

models that integrate clinical 

information across providers align with 

goals of ONC’s Strategic Plan and reform 

efforts that seek to enable more patientcentric integration of care. The 

commenters said that during any given 

reporting period under the EHR 

incentive payment program, patients 

may receive health care services from 

various providers (for example, the 

primary care physician, one or more 

specialists, nurse practitioners, etc.). 

The commenters said they had adopted 

program-wide policies and procedures 

for using their EHR system to promote 

coordinated delivery of care. Thus, the 

commenters said they intended to use 

their EHR system to support the 

functionality and care delivery criteria 

of meaningful use for all providers 

across their organizations. Within their 

organizations, they said, a single 

provider is never solely responsible for 

all the information in a given patient’s 

electronic medical record. In fact, they 

said, many providers may access the 

patient’s electronic record to view or 

add information, order tests or 

medications, review results, etc. They 

said the shared record makes it 

extremely difficult to reliably track all 

the meaningful use criteria to each EP 

in their organizations without adding 

additional administrative functionality 

to their systems that would do nothing 

to improve patient care. It would be 

inappropriate and not the intent of the 

EHR incentive payment program, they 

said they believed, to add unnecessary 

redundancy in care delivery (that is, 

providers re-entering correct 

demographic information to get ‘‘credit’’ 

for that measure). They said they 

intended to participate in the EHR 

incentive payment program under 

provisions for Medicare Advantage 

organizations. They went on to say that 

since the proposed rule states, ‘‘the 

qualifying MA organization must attest 

to the fact that each MA EP is a 

meaningful user of certified EHR 

technology * * *, ’’ they believed such 

attestation can be based on measuring 

criteria at a MA organizational level. 

While they acknowledged that meeting 

basic eligibility criteria is appropriate 

on an individual provider level (that is, 


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the MA EP must meet the same 

definition for EP under FFS, satisfy 

minimum hours per week delivering 

patient care services, not be hospitalbased, etc.), they said they should be 

able to meet meaningful use criteria as 

a MA organization on behalf of all of 

their individual EPs, so long as they are 

able to demonstrate that their EHR 

system itself meets the criteria and its 

use is pervasive and consistent 

throughout their healthcare delivery 

sites. They recommended that where a 

patient’s electronic medical record is 

shared among a team of providers 

within a MA organization, the 

meaningful use criteria be measured on 

an organizational versus an individual 

provider level. As an alternative they 

proposed that for any provider who 

treats a given patient, if the criterion is 

met in that patient’s electronic record, 

all EPs who are members of the patient’s 

care delivery team would receive 

‘‘credit’’ for meeting that measure. 

Response: We agree with the 

commenters in large part. We believe 

that continued reporting by qualifying 

MA organizations under the HEDIS 

program is the most appropriate way to 

protect personally identifiable patient 

information. We also believe that in 

integrated care delivery systems, it does 

not make sense to require specific 

individuals to enter specific data in 

order to obtain meaningful user status— 

especially in a Medicare Advantage 

environment where we will require only 

continued HEDIS reporting as a 

demonstration of meaningful use. 

Finally, we believe that reporting of 

clinical quality measures at the MA 

organization level is the most effective 

and appropriate means of attaining the 

ultimate goal of EHR adoption— 

improved patient outcomes and reduced 

healthcare costs. 

Comment: Some commenters said that 

the proposed rule states that, ‘‘unlike the 

Medicare FFS EHR Incentive Program, 

where we will require the reporting of 

clinical quality measures * * * we will 

not require qualifying MA organizations 

to submit clinical quality measures 

* * * with respect to EPs * * * and 

with respect to eligible hospitals * * *. 

[W]e note that qualifying MA 

organizations sponsoring coordinated 

care 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.’’ The proposed rule suggests 

allowing MA organizations to continue 

reporting these measures, but also 

considers requiring that MA 

organizations report those HITECH 

clinical quality measures that do not 

overlap with these currently reported 

measures ‘‘and are appropriate for the 

MA program.’’ We believe this current 

reporting is both appropriate and 

sufficient to measure the clinical quality 

of MA programs and should be deemed 

to satisfy the clinical quality reporting 

requirements under the EHR incentive 

payment program. HEDIS, HOS and 

CAHPS reporting are well-established 

and subject to audit. The measures are 

specifically chosen to capture quality 

within MA organizations, in particular 

to measure the clinical quality of the 

team approach we use to deliver care. 

While we support consistency across 

the EHR incentive payment program, we 

are concerned that requiring MA 

organizations to create new mechanisms 

for this additional reporting would be 

unduly burdensome, especially if these 

additional measures would have to be 

reported at the individual provider or 

patient level. Another commenter said 

that their considerable experience with 

developing responses for new measures 

demonstrated how resource and labor 

intensive clinical quality measurement 

can be. For example, the commenter 

continued, during a recent effort to 

automate ten TJC (The Joint 

Commission) measures, we identified 87 

data elements, only 37 of which are 

captured as discrete data. Of the 

remaining 50 measures, some are 

captured using discrete data in different 

places in the EHR, and some are 

captured using free text (for example, 

clinical trials and other irregular 

exclusion criteria) and will require the 

creation of new documentation tools. 

We estimate it will take one to two years 

of work for these ten measures to be 

fully automated, despite our relatively 

sophisticated use of data warehousing 

tools and our high level of automation 

in the data management process. The 

burden is especially heavy when 

measurement elements are ill-defined. 

Under meaningful use clinical quality 

reporting, over 120 measures have been 

proposed. Of these, 94 would be 

measures not currently calculated or 

reported on a routine basis. We 

anticipate a considerable increase in 

workload to create and maintain these 

measures. Adding new and duplicate— 

possibly less reliable—measures and 

reporting systems will be costly, timeconsuming and may not have an 

incrementally significant impact on 

improving patient care. While we are 

not opposed to new metrics (those 

without similar known specifications), 

such measures should be field tested 

prior to becoming requirements; in 

particular, subject to rigorous testing of 

the electronic specifications. Such 

measures should also be supported by 

robust clinical evidence to show they 

will impact clinical outcomes. MA 

organizations should be deemed to have 

satisfied all clinical quality reporting 

required in the EHR incentive payment 

program by meeting their current 

reporting requirements. If additional 

measures are required, we recommend 

staged adoption, beginning with those 

measures that MA organizations already 

report or can report in the near future. 

We recommend eliminating measures 

that have little or no evidence to link 

them to improved outcomes. Overall, 

we strongly recommend that CMS 

significantly reduce the overall number 

of clinical quality measures that would 

be required for meaningful use. 

Response: We agree with the 

commenters and believe that HEDIS, 

HOS and CAHPS are the appropriate 

means of reporting measures for both 

MA EPs and MA-affiliated hospitals. 

Where appropriate we will consider 

adding elements to these already 

existing quality reporting programs. We 

will consider adding HEDIS elements 

over time, as experience and clinical 

data warrant. 

Comment: One commenter said one of 

the five priorities specified by CMS is to 

improve care coordination. However, 

the siloed nature of the incentive 

payments, lack of a robust set of care 

coordination measures, and the narrow 

definition of eligible professionals do 

not fully support this priority. The 

commenter also said that the current 

structure of the proposed incentive 

program, as required by statute, 

maintains the current siloed structure of 

Medicare and Medicaid payments. The 

selected functionality and quality 

measures in large part do the same. 

However, this siloed structure does not 

support or encourage integrated 

coordinated care across providers and 

settings. As greater attention is paid to 

improving care coordination and the 

quality of care through integrated care 

models (for example, accountable care 

organizations, patient-centered medical 

homes), greater attention should be 

given to selecting measures that focus 

on patient-centered episodes of care. 

Furthermore, consideration should be 

given to refining the incentive payment 

structure to foster integration and 

accountability among and across 

providers and settings. 

Response: We believe that HEDIS 

reporting and other existing quality 

reporting programs (that is, HOS and 

CAHPS) go a long way toward assuring 

that coordination and integration of care 

will continue to occur in the Medicare 

Advantage environment. One of the 


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purposes of EHR adoption is to facilitate 

the coordination of care in health care 

environments where care coordination 

is not currently perceived to occur. We 

are asking providers to pick a program 

through which they are most likely to be 

eligible for EHR incentive payments. For 

MA organizations that treat Medicare, 

Medicaid and dually-eligible patients, 

EHR incentive payments will be made 

only under one program (Medicare or 

Medicaid) with respect to any specific 

EP. However care coordination should 

occur regardless of health insurance or 

EHR incentive payer. After 

consideration of the public comments 

received we are not changing our 

proposed policy to allow qualifying MA 

organizations to establish meaningful 

use through attestation and to 

demonstrate meaningful use through 

continued HEDIS reporting. 

Finally, we proposed 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 

proposed 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. In this final rule we are 

modifying the regulation text at 

§ 495.210(b) and (c) to be consistent 

with the changes to § 495.204(b)(2) and 

§ 495.202(b)(3), since the deadline for 

attestations of meaningful use should be 

consistent with deadlines for revenue 

reporting for MA EPs, and final 

identification of MA EPs and MAaffiliated hospitals. We are extending 

the timeframe for reporting meaningful 

use to 60 days after the close of the 

payment year. 

7. Posting Information on the CMS Web 

Site 

In the proposed rule we said that 

sections 1853(l)(7) and 1853(m)(5) of the 

Act require us to post information on an 

Internet Web site related to the receipt 

of incentive payments under the MA 

EHR incentive program. We said posted 

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 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 § 495.108. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

8. Limitation on Review 

In the proposed rule we said that 

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. We said 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 proposed 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 meaningful use and the 

selection of measures. We proposed to 

codify these requirements in 

§ 495.212(c). 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

9. Conforming Changes 

In the proposed rule we said that 

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 proposed 

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 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 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. 

We did not receive any comments on 

these provisions and are finalizing them 

as proposed. 

10. Payment Adjustment and Future 

Rulemaking 

In the proposed rule we said that 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 solicited 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 


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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 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. 

Comment: Two commenters said that 

the EHR Incentive Program (the 

Medicare component) is limited to 

providers who bill for Part B covered 

services under traditional FFS Medicare 

or for MA organizations that provide 

equivalent services to MA beneficiaries. 

In addition to incentive payments, the 

program will impose penalties on 

providers who do not adopt technology 

and meet criteria for meaningful use of 

electronic health records; those 

penalties will be in the form of 

percentage reductions in Medicare 

reimbursements, beginning in 2016. 

Medicare section 1876 (of the Act) cost 

contract programs by statute are not 

eligible for the EHR Incentive Program. 

The proposed rule does not expressly 

state whether physicians paid under a 

cost plan will be required to meet 

meaningful use criteria to avoid the 

payment adjustments that will take 

effect after 2015. CMS should clearly 

state that those providers who are not 

eligible to participate in the EHR 

Incentive Program will not be subject to 

reductions in payment for not achieving 

meaningful use, for instance any 

providers reimbursed under Medicare 

cost contract arrangements. 

Response: While it is true that current 

statute applies payment adjustments 

beginning in 2015 only to FFS and MA 

providers, it is also true that cost plan 

providers might provide either FFS or 

MA services to which adjustments 

would apply. So, while it is true that 

cost plan payments are unaffected, a 

blanket statement that cost plan 

providers are unaffected is not possible. 

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 MAaffiliated 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 331⁄3 percent reduction in 

2015, by a 662⁄3 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 received no additional comments. 

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 reasonable 

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. 

Finally, as required by section 

1903(t)(10) of the Act, CMS 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. 

Comment: A commenter requested 

additional discussion in the final rule of 

the many challenges that exist to 

adopting electronic health record 

technology experienced by the Medicaid 

Transformation Grantees. 

Response: The primary challenges 

faced by the Medicaid Transformation 

Grantees involved assisting providers to 

adopt the EHRs and to successfully 

integrate utilization of the EHRs into 

their practice workflow. Workflow 

redesign is unique to each practice 

based upon practice size, clinical 

specialty area, practice operation (for 

example, medical home teams or 

specialty care) and the providers’ 

hardware and software. In addition, 

Grantees reported that providers value 

the EHRs only in so far as the patient 

data in the EHR is timely and complete. 

Therefore lagging data feeds or gaps in 

data from certain sources, such as labs 

or Part D claims for dual eligibles, were 

observed to discourage providers from 

investing their time and effort into 

learning how to use the EHRs. Many 

Grantees noted that early negative 

experiences with workflow or with 

timely and accurate access to relevant 

data discouraged providers from using 

the system. They reported needing to 

dedicate significant time and resources 

to provider outreach, technical 

assistance and training. Some Grantees 

focused on identifying or developing the 

right EHR product only to conclude 

afterwards that their focus needed to be 

equally, if not more, on supporting their 

providers’ use of the EHR, including 

fostering health information exchange 

through interface development. In 

summary, the Medicaid Transformation 

Grantees affirmed that the barriers faced 

by Medicaid providers to EHR adoption 

and use were not unique to Medicaid. 

There were several challenges to HIT/ 

EHR implementation that were specific 

to Medicaid programs that may be 

useful for States in light of HITECH. 

These include, integration of HIT into 

the State Medicaid Management 

Information System (MMIS); churning 


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of Medicaid patients on/off Medicaid 

eligibility; issues of consent with 

patients with diminished capacity, 

children and their parents and 

caregivers, and foster children/wards of 

the State; costs associated with 

transaction fees for pharmacy hubs on a 

statewide scale; and how to calculate 

return on investment and quality 

outcomes as a result of HIT programs 

that are running concurrent with other 

quality initiatives with the same goals, 

such as the medical home model, 

disease management/care coordination 

and provider pay-for-performance. 

While this information is valuable in 

terms of understanding and addressing 

the challenges to EHR adoption, we 

continue to believe that the benefits of 

meaningful use of EHRs far outweigh 

the implementation challenges. 

2. General Medicaid Provisions 

In § 495.320 and § 495.322 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. 

We did not receive any comments and 

we are finalizing these provisions as 

proposed. 

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 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). 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 will 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 use almost identical 

definitions of the term. We refer readers 

to section II.A. for a definition of 

‘‘hospital-based,’’ and for a thorough 

discussion of our 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)(A)(iii) of the Act 

does not define ‘‘practices 

predominantly,’’ we specify that an EP 

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 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 

§ 495.306. Children’s hospitals do not 

have patient volume requirements for 

Medicaid incentive program 

participation. 

Comment: Commenters expressed 

confusion about the restrictions on 

physician assistants’ (PAs) 

participation. Numerous commenters 

suggested that PAs should be eligible 

without conditions, particularly the 

condition that they are practicing in an 

FQHC or RHC that is ‘‘so led by a 

physician assistant’’ and/or CMS should 

exercise flexibility in defining ‘‘so led,’’ 

in order to capture the highest number 

of PAs. We received specific comments 

on how to define ‘‘so led’’ to provide the 

greatest flexibility to PAs. Suggestions 

included allowing clinics under a larger 

FQHC to be led by a PA, but not 

necessarily the entire FQHC. Also, 

commenters asked that we consider 

‘‘led’’ to mean the dominant clinical 

provider, which is the case for PAs in 

many RHCs. 

Response: As stated in the statute at 

1903(t)(3)(B)(v), regarding the program 

eligibility for PAs, PAs are eligible when 

they are a ‘‘physician assistant insofar as 

the assistant is practicing in a rural 

health clinic that is led by a physician 

assistant or is practicing in a Federally 

qualified health center that is so led.’’ 

These conditions on PAs’ eligibility 

apply whether the PA is qualifying 

because they meet Medicaid patient 

volume requirements or if they are 

qualifying because they practice 

predominantly in an FQHC or RHC. 

Since this language requiring that a PA 

must be leading the FQHC or RHC is 

derived from statute, we have no 

flexibility to change or remove it. 

However, we agree that we have the 

authority to interpret what it means for 

a PA to lead an FQHC or RHC, and we 

believe a PA would be leading an FQHC 

or RHC under any of the following 

circumstances: 

(1) When a PA is the primary provider 

in a clinic (for example, when there is 

a part-time physician and full-time PA, 

we would consider the PA as the 

primary provider); 

(2) When a PA is a clinical or medical 

director at a clinical site of practice; or 

(3) When a PA is an owner of an RHC. 

We agree that FQHCs and RHCs that 

have PAs in these leadership roles can 

be considered ‘‘PA-led.’’ Furthermore, 

since RHCs can be practitioner owned 

(FQHCs cannot), we will allow 

ownership to be considered ‘‘PA-led.’’ 

With the exception of this 

clarification of PA-led, we are adopting 

this language as proposed. We have not 

changed our regulatory language, as we 

consider this clarification to be an 

interpretation of our regulations as to 

what it means to be a PA to be leading 

an FQHC or RHC. 

Comment: We received questions 

about eligibility related to FQHC lookalikes, tribal clinics, and other similar 

facilities. 

Response: As previously mentioned, 

in accordance with section 1903(t)(2)(B), 

the only two facilities eligible for 

incentives are acute care and children’s 

hospitals. However, EPs at facilities 

such as FQHCs, RHCs, and tribal clinics 

may be eligible for participation when 

they practice predominantly at an FQHC 

or RHC or meet the other patient volume 

requirements. The statute defines 

FQHCs at 1905(l)(2)(B) and defines 

RHCs at 1905(l)(1) by essentially 

incorporating the definition in 1861(aa). 

Comment: Numerous commenters 

opposed the proposed definition for 

‘‘hospital-based.’’ 

Response: This is a consideration for 

Medicare and Medicaid and is 

addressed in II.A. 


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After consideration of the public 

comments received, we are making 

changes under II.A. 

(1) Acute Care Hospitals 

For purposes of Medicaid incentive 

payments, we proposed to define an 

‘‘acute care hospital’’ as a health care 

facility where the average length of 

patient stay is 25 days or fewer and with 

a CCN that has the last four digits in the 

series 0001 through 0879 (that is, shortterm general hospitals and the 11 cancer 

hospitals in the United States). 

We excluded from this proposed 

definition a category of long-term care 

hospitals, which are defined for 

Medicare purposes in regulations at 

§ 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). 

Comment: We received numerous 

comments recommending that CAHs be 

included in the definition of acute care 

hospitals for purposes of the Medicaid 

EHR incentive payment program. 

Commenters pointed out that the CAHs 

would qualify on all criteria except for 

the requirement to have a CCN in the 

range 0001–0879. CAHs have CCNs in 

the range 1300–1399. Moreover, many 

commenters pointed out that, because of 

their rural location and distance from 

other hospitals to which they frequently 

transfer patients, the CAHs would 

benefit from having electronic records 

that could be shared with the 

subsequent provider of care to the 

patient. Commenters also asked what 

reimbursement methodology CMS 

would use if it decided to include CAHs 

in the Medicaid incentive payment 

program. 

Response: We agree with the 

commenters that CAHs conform to our 

definitional criteria for acute care 

hospital except for the CCN range. 

Moreover, we recognize the positive 

impact on quality that may ensue from 

the CAH’s being able to electronically 

communicate with the hospitals to 

which it transfers patients. Therefore, in 

the final rule, we are amending the 

definition of acute care hospital for 

purposes of the Medicaid EHR incentive 

payment program as ‘‘those hospitals 

with an average patient length of stay of 

25 days or fewer, and with a CCN that 

falls in the range 0001–0879 or 1300– 

1399.’’ This definition will now 

encompass general short-term hospitals, 

cancer hospitals, and critical access 

hospitals that meet the Medicaid patient 

volume criteria. Since we are including 

CAHs under the category of ‘‘acute care 

hospital,’’ we are not developing a 

separate Medicaid incentive payment 

calculation for CAHs. States will pay the 

incentive payment to qualifying CAHs 

using the acute care methodology 

described at section 495.310(g). In 

summary, CAHs will be eligible for the 

Medicaid hospital incentive insofar as 

they meet the requirements under an 

acute care hospital described here. 

While the statute issued specific 

calculation requirements for CAHs 

under Medicare, there is no special 

Medicaid calculation. Like other acute 

care hospitals, some CAHs may be 

eligible for Medicare and Medicaid 

incentives. 

We will reflect this definitional 

change in the final regulation at section 

495.302. 

Comment: Further guidance was 

requested on the determination of 

average length of stay. Commenters 

questioned whether the average length 

of stay should be calculated relative to 

the fiscal year prior to the payment year 

or relative to the calendar year prior to 

the payment year. Commenters also 

questioned whether outliers in terms of 

extremely long length of stay could be 

left out of the calculation, and if so, 

could CMS provide detail on this and 

any similar exclusions; for example, 

other exclusions with respect to 

observation stays. 

Response: After consideration of these 

comments, we believe the best policy is 

to allow the States to decide whether 

they will use a fiscal year or calendar 

year for calculating length of stay, as the 

State will be in the best position to 

determine what documentation exists in 

order to support any length of stay 

calculation. With respect to outliers, we 

point readers to the State Operations 

Manual, page 303, Revision 57, dated 

January 29, 2010 and we note that these 

long (and short) stay outliers are 

included in average length of stay 

calculations for other purposes, such as 

reporting statistics to States, Medicare, 

and other payers. We do not find a basis 

for excluding outliers from the average 

length of stay for purposes of the 

incentive payment. In fact, since acute 

care hospitals have CCNs in either the 

0001–0879 or the 1300–1399 range, and 

length of stay is one of the definitional 

criteria for CCNs in these ranges, all of 

the acute care hospitals are very likely 

to meet length of stay criteria. 

Observation stays are considered to be 

outpatient services and, therefore, 

cannot be included in average length of 

stay calculations. This is consistent with 

the treatment of observation days under 

Medicare. 

In summary we are making no 

revisions to the regulation as a result of 

this comment. 

(2) Children’s Hospitals 

For purposes of the Medicaid EHR 

incentive program, in the proposed rule, 

we proposed one definition to include 

only separately certified children’s 

hospitals, with CCNs in the 3300–3399 

series in the definition of eligible 

‘‘children’s hospital.’’ By defining 

‘‘children’s hospital’’ in this way, we: (1) 

Prevented general acute care hospitals, 

which could not themselves qualify for 

the incentive because they did 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) excluded 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-withinhospital children’s hospitals; and (3) 

excluded some pediatric specialty 

hospitals which have CCNs as 

psychiatric or rehabilitation hospitals. 

An alternative definition of a 

‘‘children’s hospital’’ was also proposed 

to include those hospitals with 

Medicare provider numbers in the 

following series: 

• 0001 through 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, 

applied only to those freestanding 

hospitals within the above mentioned 

series that exclusively furnish services 

to individuals under age 21. 

This broader definition still: (1) 

Prevented acute care hospitals that 

cannot independently 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 an HIT incentive payment; 

(2) allowed for participation in the 

incentive program by the greatest 

number of children’s hospitals, 

including rehabilitative and psychiatric 

specialty hospitals; and (3) aligned with 

Federal efforts aimed at improving 

healthcare quality for all children, 

including those with physical and 

mental diseases/disabilities. 

Comment: CMS received several 

comments on this issue. Specifically, 

the commenters stated that the proposed 

rule limited the definition of children’s 


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hospitals to those that provide care to 

individuals under the age of 21; the 

commenters stated that children’s 

hospitals actually may provide care to 

older individuals who have conditions 

such as congenital cardiac problems, 

sickle cell disease and cystic fibrosis. 

Response: We agree with the 

commenters that children’s hospitals do 

on occasion treat patients who are over 

the age of 21, especially if the patient is 

on a continued course of treatment for 

a condition that began in childhood, 

such as those conditions mentioned. 

Accordingly, in the proposed rule 

published on January 13, 2010 at section 

495.302, we defined a children’s 

hospital for purposes of the HIT 

incentive payment program as a hospital 

that is separately certified as a 

children’s hospital, with a CCN in the 

3300–3399 series and predominantly 

treats individuals under the age of 21. 

We used the term ‘‘predominantly’’ to 

recognize that not all patients of the 

children’s hospital are in fact under age 

21. 

This definition addresses the 

commenters’ concerns and we are not 

revising it in the final rule. The 

commenter’s may have been responding 

to the alternate definition in which we 

requested comments. While that 

alternate definition mentioned specialty 

hospitals that exclusively treat 

individuals under the age of 21, we are 

not adopting that definition in this final 

rule, as noted in the response to the 

comment below. 

Comment: CMS also received a few 

comments that supported our proposed 

definition of children’s hospital as those 

that are separately certified and 

predominantly treating individuals 

under 21 years of age. The commenters 

urged us to adopt this definition rather 

than the alternate definition discussed 

in the proposed rule and on which we 

requested comments. 

Response: We agree with the 

commenters and are adopting the 

definition that we originally proposed at 

section 495.302. See the response to the 

comment below. 

Comment: CMS received one 

comment that recommended use of the 

alternative definition as providing more 

opportunity for hospital participation. 

Response: We considered the merits 

of both definitions and we have decided 

to maintain the definition originally 

proposed in section 495.302 as 

representing the clearest definition of a 

children’s hospital. As previously 

stated, we only intend to include 

children’s hospitals with CCNs within a 

specific range; this will not include 

pediatric wings of larger hospitals. 

In summary, after considering the 

comments, we are adopting the 

definition of children’s hospital as 

originally proposed. 

c. Medicaid Professionals Program 

Eligibility 

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; 

our proposed methodologies which 

follow, are based on this discretion. To 

establish such patient volume, we 

proposed that the EP have a minimum 

of 30 percent of all patient encounters 

attributable to Medicaid over any 

continuous, representative 90-day 

period within the most recent calendar 

year prior to reporting. There are two 

statutory 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 

medical assistance 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 proposed to 

use was that the pediatrician have a 

minimum 20 percent of all patient 

encounters attributable to Medicaid over 

any continuous, representative 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 would 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. 

Comment: Many commenters 

requested that CMS consider groups 

outside of the statute eligible for 

incentive payments. These facilities and 

practitioners included: Community 

mental health centers and other 

behavioral health providers (including 

psychiatric clinics); nursing homes, 

nursing facilities, and skilled nursing 

facilities; long-term care providers 

(community and institutional), 

including home health care providers; 

pharmacists and pharmacies; social 

workers; blood centers; provider based 

departments; professional societies; 

Medicaid-participating health plans; 

speech-language pathologists and 

audiologists; FQHCs, RHCs, tribal 

providers, and other community clinics; 

health aides; and podiatrists. The 

commenters included numerous 

testimonials, research, and statements to 

note that these providers are critical 

partners in improving the quality and 

coordination of care for the Medicaid 

population. Some of the commenters 

acknowledged that this is a statutory 

issue but assert that exclusion of such 

providers impacts Medicaid’s ability to 

improve the quality and efficiency of 

care. Furthermore, some of these 

commenters based several additional 

comments upon presumed eligibility. 

For example, some commenters said 

that social workers could not afford 

EHRs and should not be required to 

participate. 

Another group of comments came 

from health care professionals that 

sought eligibility for incentives by 

virtue of early adoption of EHRs but 

who do not participate in either 

Medicaid or Medicare. They suggested a 

third incentive option available for 

providers that either do not participate 

with Medicaid/Medicare or would not 

reach the threshold of patient visits to 

receive Medicaid incentive payments. 

Response: We note that the 

commenters are correct to recognize that 

this is a statutory issue. The definition 

of a ‘‘Medicaid EP,’’ at 1903(t)(3)(B) of 

the Act, lists five types of professionals 

that are eligible for Medicaid incentive 

payments: physicians, dentists, certified 

nurse-midwives, nurse practitioners, 

and physician assistants practicing in an 

FQHC that is led by a physician 

assistant or RHC that is so led. 

Additionally, the statute at 1903(t)(2)(B) 

designates acute care hospitals and 

children’s hospitals as the only two 

types of facilities eligible for the 

Medicaid incentives. These providers 

must also meet all other program 

requirements, including Medicaid 

patient volume thresholds. 

Since the commenters recommend 

including providers that are not among 

those explicitly mentioned in the 

statute, these providers cannot be 

eligible for the incentive payments. 

Additionally, professionals who do 

not participate in either Medicaid or 


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Medicare are also not eligible for 

incentives due to the statutory 

requirements associated with each 

program. Specifically, the Medicaid 

incentives program requires providers to 

meet Medicaid patient volume 

thresholds or practice predominantly in 

an FQHC or RHC, where they must 

serve needy individuals (as defined at 

section 495.10). Additionally, the 

hospital calculations for Medicare and 

Medicaid are based, in part, on 

Medicare or Medicaid inpatient beddays. For Medicare EPs, the incentive is 

based on the associated Medicare 

claims. Hence, these professionals 

cannot meet the statutory requirements 

for eligibility. 

After consideration of these 

comments, we are maintaining the list 

of providers eligible for the Medicaid 

incentive payment program as originally 

proposed and as identified by statute. 

It is worth noting that while the 

facilities recommended for inclusion by 

the commenters will not be considered 

eligible to participate in these 

incentives, some of the EPs at these 

facilities may be eligible. One example 

is that a psychiatrist (physician) or NP 

is likely to treat individuals at a 

behavioral health facility. Per our rules 

at section 495.10, the EP must identify 

a TIN to which the incentive payment 

should be made. We believe that, in 

accordance with 1903(t)(6)(A) of the 

Act, an EP could reassign payment to a 

TIN associated with his or her employer 

or the facility in which she or he works. 

This facility could be one of those 

recommended for inclusion by the 

commenters. Any reassignment of 

payment must be voluntary and we 

believe the decision as to whether an EP 

does reassign incentive payments to a 

specific TIN is an issue which EPs and 

these other parties should resolve. Any 

reassignment of payment must be 

consistent with applicable laws, rules, 

and regulations, including, without 

limitation, those related to fraud, waste 

and abuse. 

We have provided clarifying language 

at section 495.10(f) to further clarify the 

reassignment of incentive payments by 

EPs to specific TINs. 

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 define ‘‘patient volume’’ in 

§ 495.302 to be a minimum participation 

threshold for each individual Medicaid 

provider (with the exception of 

children’s hospitals). In the proposed 

rule, we proposed methodologies for 

estimating the patient volume 

thresholds and listed them by entity 

type. 

Further, we proposed that States 

could submit alternative approaches to 

the established timeframe for estimating 

patient volume, through their State 

Medicaid HIT Plans (SMHP) and we 

would make a determination of whether 

it was an acceptable alternative. 

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 require the 

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). 

In order to remain as consistent as 

possible between the Medicare and 

Medicaid EHR incentive programs, 

States will be required to downward 

adjust the uncompensated care figure. 

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 a Medicaid managed care 

plan be included. We interpret this to 

mean that individuals enrolled in 

MCOs, prepaid inpatient health plans 

(PIHPs), or prepaid 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. 

Comment: Commenters recommended 

that CMS provide flexibility in the 

specific volume thresholds required for 

program participation (for example, 30 

percent for most EPs, 20 percent for 

pediatricians) and apply a lower 

percentage or a minimum number of 

encounters. Some commenters 

referenced research stating that 

practices with a 30 percent patient 

volume may not be financially viable. 

Response: The patient volume 

thresholds of 30 percent and 20 percent 

are required by statute and cannot be 

changed in the rulemaking process. 

After consideration of the public 

comments received, we are not making 

any changes to these statutory 

requirements. 

Comment: Commenters suggested that 

CMS define ‘‘encounter’’ and take a 

menu approach to patient volume to 

allow States several options, based on 

their data sources. Some commenters 

provided specific suggestions for patient 

volume ‘‘menu’’ items. Some 

commenters further noted that there 

were inconsistencies in how we applied 

‘‘encounter’’ data. Finally, one 

commenter noted that we should 

consider how ‘‘encounter’’ data is 

applied to EPs that bill services through 

another provider (for example, PAs that 

bill through MDs). Other commenters 

asked for a clarification of how 

‘‘encounters’’ would apply to the duallyeligible Medicare/Medicaid 

beneficiaries. Additionally, several 

commenters provided specific 

suggestions for alternative methods 

making an approximate determination 

of providers’ patient volume by [not 

using patient volume] and extending the 

look-back period to two years. 

Response: We agree with the 

approach of offering at least some 

options to States regarding patient 

volume. This approach allows States to 

audit their programs using the data 

sources available to them, while also 

including the largest number of 

providers that may treat Medicaid 

patients. We believe our new approach 

will correct the inconsistencies in how 

we applied ‘‘encounter.’’ Furthermore, 

our new definition of encounter will 

capture the dually-eligible beneficiaries, 

as well as individuals who are in a Title 

XIX-funded 1115 demonstration project. 

Specifically, the statute at 1903(t)(2) 

states that Medicaid patient volume will 

be ‘‘attributable to individuals who are 


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receiving medical assistance under 

[Title XIX],’’ and also states that the 

patient volume calculation for those 

practicing predominantly in an FQHC or 

RHC will be ‘‘attributable to needy 

individuals.’’ Needy individual is 

defined at 1903(t)(3)(F) as ‘‘an 

individual—(i) who is receiving 

assistance under Title XIX; (ii) who is 

receiving assistance under Title XXI; 

(iii) who is furnished uncompensated 

care by the provider; or (iv) for whom 

charges are reduced by the provider on 

a sliding scale basis based on the 

individual’s ability to pay.’’ We believe 

our final rule definition of ‘‘encounter’’ 

captures care to all of these individuals. 

Additionally, consistent with the 

statute, we expect providers and States 

to make estimation in accordance with 

the methodologies we established here. 

This estimation would need to be made 

with reasonable effort, using verifiable 

data sources by the provider and the 

State. 

Finally, we do not agree with any of 

the suggestions from commenters that 

involve using a benchmark number of 

Medicaid patients or other suggestions 

that involve a deviation from the 

statutory language. The statute is clear 

that Medicaid patient volume must be 

considered and explicitly specified 

percentages of caseload mix 

compositions attributable to either 

Medicaid and/or ‘‘needy’’ individuals 

that must be achieved for participation 

in the incentive program. We also do 

not agree with allowing the provider to 

consider a period longer than a year 

prior to registering because that is not a 

current, accurate portrayal of the 

provider’s participation in Medicaid. 

After consideration of the public 

comments received, we are revising the 

patient volume approach to the 

following two options. The State may 

choose one of the two options listed 

below (or both options), or a Stateproposed alternative, if approved by 

CMS. The State’s strategy must be 

submitted for review and approval 

through the SMHP, in accordance with 

all requirements at section 495.332. 

A Medicaid provider may 

demonstrate patient volume by: 

(1) Having patient encounters within 

the 90-day period by using the same 

methodology we proposed in the 

proposed rule. 

This first option preserves the 

methodology we proposed in the 

proposed rule, however we clarify 

‘‘encounter’’ below. For the Medicaid 

patient volume, the methodology for 

estimating patient volume would 

require calculation of a threshold 

(represented below) 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. 

[Total (Medicaid) patient encounters 

in any representative continuous 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 methodology for estimating 

patient volume would require the same 

calculation, 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 Individual) patient 

encounters in any representative 

continuous 90-day period in the 

preceding calendar year/Total patient 

encounters in that same 90-day period] 

* 100 

Table 15, below, demonstrates the 

above-referenced patient volume 

thresholds. (This same Table appeared 

in the proposed rule, with a few minor 

clarifications included in this Table). 

(2) Having a Medicaid enrollee on the 

panel assigned to the EP (for example, 

managed care or medical homes) within 

that representative 90-day period. 

With more than 70 percent of 

Medicaid and CHIP enrollees receiving 

care in a managed care delivery system, 

and additional enrollees in medical 

homes, we determined that it was 

necessary to look for flexibility in how 

we applied these requirements. Under 

this option, we wanted to capture the 

EP’s panel assignments, as well as any 

additional unduplicated Medicaid 

encounters. In other words, we do not 

intend for the EP to count an assigned 

patient who was also an encounter more 

than once. 

The methodology for estimating the 

Medicaid patient volume threshold 

(represented above) would use as the 

numerator the individual hospital’s or 

EP’s total number of Medicaid patients 

assigned through a Medicaid managed 


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care panel, medical or health home 

program panel, or similar provider 

structure with capitation and/or case 

assignment, plus all other Medicaid 

encounters for that EP. The assignment 

must be current within the 90-day 

period and we will consider as a proxy 

for this an encounter with any patient 

on the panel within the previous 

calendar year prior to the representative 

90-day period when the patient was on 

the panel. Note that, as stated above, 

while the EP may add in encounters 

with other, non-panel Medicaid patients 

to the numerator, these encounters must 

be patients who are not assigned to a 

panel and would be encounters that 

occurred during the representative 90- 

day period. The denominator is all 

patients assigned to the EP or hospital 

for the same 90-day period, also with 

whom the provider had at least one 

encounter in the prior calendar year as 

a proxy, as well as any other 

unduplicated Medicaid encounters 

during the representative 90-day period. 

{[Total (Medicaid) patients assigned to 

the provider in any representative 

continuous 90-day period in the 

preceding calendar year, with at least 

one encounter taking place during the 

calendar year preceding the start of the 

90-day period] + [Unduplicated 

(Medicaid) encounters in the same 90- 

day period]/[Total patients assigned to 

the provider in that same 90-day period, 

with at least one encounter taking place 

during the calendar year preceding the 

start of the 90-day period] + [All 

unduplicated encounters in that same 

90-day period]} * 100 

For the needy individual patient 

volume for EPs enrolled in managed 

care and medical homes, the threshold 

(represented below) would be calculated 

in the same manner, but with the 

numerator equal to the EP’s total 

number of needy individuals assigned 

to the patient panel in any 

representative 90-day period in the 

preceding calendar year with at least 

one encounter within that year. 

{[Total (Needy Individual) patients 

assigned to the provider in any 

representative continuous 90-day period 

in the preceding calendar year, with at 

least one encounter taking place during 

the year preceding the 90-day period] + 

[Unduplicated (Needy Individual) 

encounters in the same 90-day period]/ 

[Total patients assigned to the provider 

in that same 90-day period, with at least 

one encounter taking place during the 

year preceding the 90-day period] + [All 

unduplicated encounters in that same 

90-day period]} * 100 

Table 15 demonstrates the abovereferenced patient volume thresholds 

per provider type. 

In order to resolve any inconsistencies 

with the definitions of ‘‘encounter,’’ for 

purposes of EP patient volume, we have 

allowed the following to be considered 

Medicaid encounters: 

(1) Services rendered on any one day 

to an individual where Medicaid or a 

Medicaid demonstration project under 

section 1115 of the Act paid for part or 

all of the service; or 

(2) Services rendered on any one day 

to an individual for where Medicaid or 

a Medicaid demonstration project under 

section 1115 of the Act paid all or part 

of their premiums, co-payments, and/or 

cost-sharing. 

For purposes of calculating hospital 

patient volume, we have allowed the 

following to be considered Medicaid 

encounters: 

(1) Services rendered to an individual 

per inpatient discharges where 

Medicaid or a Medicaid demonstration 

project under section 1115 paid for part 

or all of the service; 

(2) Services rendered to an individual 

per inpatient discharge where Medicaid 

or a Medicaid demonstration project 

under section 1115 of the Act paid all 

or part of their premiums, co-payments, 

and/or cost-sharing; 

(3) Services rendered to an individual 

in an emergency department on any one 

day where Medicaid or a Medicaid 

demonstration project under section 

1115 of the Act either paid for part or 

all of the service; or 

(4) Services rendered to an individual 

in an emergency department on any one 

day where Medicaid or a Medicaid 

demonstration project under section 

1115 of the Act paid all or part of their 

premiums, co-payments, and/or costsharing. 

We wanted to adequately reflect what 

an encounter looked like for a hospital 

and apply these concepts consistently 

across the numerous areas of this final 

rule. We used inpatient discharges and 

emergency department services for the 

hospitals because this is consistent with 

how we will make hospital-based 

determinations for EPs and how we 

collect meaningful use information for 

hospitals. We decided that services 

rendered on one day would be an 

encounter. An emergency department 

must be part of the hospital under the 

qualifying CCN. 

For purposes of calculating needy 

individuals patient volume, we have 

allowed the following to be considered 

needy patient encounters: 

(1) Services rendered on any one day 

to an individual where Medicaid or 

CHIP or a Medicaid or CHIP 

demonstration project under section 

1115 of the Act paid for part or all of 

the service; 

(2) Services rendered on any one day 

to an individual where Medicaid or 

CHIP or a Medicaid or CHIP 

demonstration project under section 

1115 of the Act paid all or part of their 

premiums, co-payments, and/or costsharing; or 

(3) Services rendered to an individual 

on any one day on a sliding scale or that 

were uncompensated. 

We understand that multiple 

providers may submit an encounter for 

the same individual. For example, it 

may be common for a PA or NP to 

provide care to a patient, then a 

physician to also see that patient. It is 

acceptable in circumstances like this to 

include the same encounter for multiple 

providers when it is within the scope of 

practice. 

We considered whether Medicaid 

providers or States should pick from the 

two options provided above. Since 

States are responsible for auditing the 

program and must have reliable sources 

of data, we agree with commenters that 

it must be States that make a 

determination as to whether either 

option will be permitted (or both). 

In the proposed rule, we also 

proposed that if States had an 

alternative approach for the timeframe 

in accounting for the methodology, they 

would be allowed to submit it in the 

SMHP for review and approval. For the 

final rule, we are modifying this option. 

As stakeholders’ understanding of the 

program matures and new technologies 

become available, there may be new 

solutions that we did not consider here, 

but would be a better option for one or 

several States. To that end, in this final 

rule we are providing flexibility to 

consider States’ alternative 

methodologies for measuring not just 

the timeframe that is used in 

establishing patient volume, but all of 

the elements included in the patient 

volume calculation (except the 

thresholds established by statute). 

Therefore, we have revised our final 

regulations to allow States to offer 

alternatives regarding the methodology 

used to establish patient volume, and 

for the Secretary to adopt these options, 

so that they may be used by other States 

as well. An alternative would need a 

verifiable data source. A State also 

would need to provide us with an 

analysis to demonstrate that the 

methodology being proposed by the 

State did not result, in the aggregate, in 

fewer providers becoming eligible than 

under the two options presented in this 

final rule. Finally, if a State is reviewed 

and approved for an alternative 


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methodology, we will post this 

alternative methodology on the CMS 

internet Web site, and allow other States 

to adopt the methodology as well, 

thereby ensuring that the alternative is 

a methodology that is ‘‘established by 

the Secretary.’’ While we believe that 

States will not submit alternative 

methodologies until after the first year 

of the program, allowing for such 

alternatives will permit the patient 

volume calculation to evolve along with 

State and provider experience of the 

program. 

We believe that these solutions will 

help address issues for providers 

practicing across State lines, who may 

have their Medicaid patient volume 

derived from more than one State. We 

encourage States to build partnerships, 

particularly through data sharing 

agreements. Medicaid providers must 

still annually re-attest to meeting the 

patient volume thresholds. 

After consideration of the comments, 

we are revising § 495.302, § 495.306, 

and § 495.332 regarding patient volume, 

patient encounters and the associated 

revisions to the SMHP requirements. 

Comment: Commenters asked CMS to 

include all individuals receiving 

services through section 1115 

demonstrations as eligible encounters. 

Response: Although the commenter 

did not elaborate, we believe the 

commenter is referring to section 1115 

demonstrations under the authority of 

section 1115(a)(2) of the Act. Our final 

regulations allow two alternate methods 

for States to estimate Medicaid patient 

volume. Under both methods, however, 

the State must review whether a 

Medicaid ‘‘patient encounter’’ occurred. 

Our regulations, at 495.306(e) state that 

a Medicaid encounter will exist where 

Medicaid (or a Medicaid demonstration 

project approved under section 1115) 

paid for part or all of the service; or 

where Medicaid (or a Medicaid 

demonstration project approved under 

section 1115) paid all or part of the 

individual’s premiums, co-payments 

and/or cost-sharing. Because our 

methodology is based upon Medicaid 

payment for an encounter, and because 

we believe it will be difficult or 

impossible for EPs and eligible hospitals 

to distinguish between payment that is 

due to patients receiving medical 

assistance under Title XIX and payment 

that is due to expansion populations 

(who are not receiving Title XIX 

medical assistance), we will allow 

providers to include in the patient 

volume calculation individuals who are 

part of expansion populations under 

section 1115(a)(2) of the Act. The statute 

confers broad authority on the Secretary 

to establish the methodology that is 

used to estimate the patient volume 

percentage. Thus, although individuals 

in section 1115(a)(2) demonstrations are 

not receiving Title XIX medical 

assistance, we use our broad authority 

to allow a methodology that considers 

these individuals in the estimate that is 

used. (Limited to Medicaid patient 

volume determinations, the same 

reasoning would not apply to CHIP 

demonstrations or to State-only 

programs, because no Title XIX funding 

is received for these projects. However, 

in calculating Needy Individual patient 

volume, it is permissible to consider 

Medicaid or CHIP demonstration 

projects approved under section 1115.) 

Our above discussion noting what will 

be considered a patient encounter 

includes encounters which were paid 

for with Title XIX funds under a section 

1115 Medicaid demonstration. 

Comment: Several commenters asked 

that CMS allow CHIP patients to be 

considered in the Medicaid patient 

volume requirements, particularly for 

pediatricians. 

Response: The requirement that the 

methodology for estimating Medicaid 

patient volume is based on Medicaid 

and not CHIP is related to the statutory 

language at section 1903(t)(2)(A)(i)–(ii)). 

Such language requires that the 

Secretary establish a methodology that 

can be used to estimate ‘‘Medicaid’’ 

patient volume for those individuals 

receiving medical assistance under Title 

XIX. However, the statute at 

1903(t)(2)(A)(iii) allows for an EP 

practicing predominantly in an FQHC or 

RHC to consider CHIP patients under 

the needy individual patient volume 

requirements. 

After consideration of these public 

comments, we are making no further 

revisions to this section of the rule. 

Comment: Many commenters urged 

CMS to allow practice- or clinic-level 

patient volume data to apply to 

practitioners as a proxy to establish 

patient volume. This would apply for 

both Medicaid and needy individual 

patient volume calculations. The 

commenters stated that many clinics 

and group practices do not necessarily 

track the pay or data per EP and it 

would be very disruptive to their 

current practice to begin collecting data 

like this. 

Response: We agree with commenters 

and acknowledge that it is not our intent 

to disrupt the practice with new 

additional burdens, but rather to 

leverage efficiencies. We will allow 

clinics and group practices to use the 

practice or clinic Medicaid patient 

volume (or needy individual patient 

volume, insofar as it applies) and apply 

it to all EPs in their practice under three 

conditions: (1) The clinic or group 

practice’s patient volume is appropriate 

as a patient volume methodology 

calculation for the EP (for example, if an 

EP only sees Medicare, commercial, or 

self-pay patients, this is not an 

appropriate calculation); (2) there is an 

auditable data source to support the 

clinic’s patient volume determination; 

and (3) so long as the practice and EPs 

decide to use one methodology in each 

year (in other words, clinics could not 

have some of the EPs using their 

individual patient volume for patients 

seen at the clinic, while others use the 

clinic-level data). The clinic or practice 

must use the entire practice’s patient 

volume and not limit it in any way. EPs 

may attest to patient volume under the 

individual calculation or the group/ 

clinic proxy in any participation year. 

Furthermore, if the EP works in both the 

clinic and outside the clinic (or with 

and outside a group practice), then the 

clinic/practice level determination 

includes only those encounters 

associated with the clinic/practice. 

We have revised our regulations to 

make clear that when patient volume is 

calculated on a group-practice/clinic 

level, the above rules will apply. 

Comment: Similar to the last 

comment, we received comments 

requesting clarification on how the 

patient volume requirements will apply 

in States with seamless eligibility 

determinations and payments for their 

program. For example, some States have 

streamlined their programs so that the 

potential beneficiary is applying for any 

public health care program for which 

they might be eligible (for example, 

Medicaid, CHIP, State-only) in one 

application. Often these States have one 

enrollment card as well. In other words, 

it is likely that both the beneficiary and 

the health care provider might have no 

indication as to whether the beneficiary 

is receiving assistance under Title XIX, 

Title XXI, or State-only funds. This 

becomes a problem when attempting to 

determine if the provider meets the 

patient volume requirements. 

Response: If there is a combined 

program like the one in the example, 

this does not mean that all the 

encounters are being paid for with Title 

XIX funds (or the individual’s premium 

or cost-sharing is funded through Title 

XIX), which is how we explained we 

would determine Medicaid patient 

encounters. We do not believe it would 

be reasonable to allow an encounter that 

is paid for with Title XXI or State-only 

funds to be considered a ‘‘Medicaid 

encounter.’’ Thus, States with combined 

programs (for example, Medicaid/CHIP 

expansion programs), may indeed have 

difficulty determining who is eligible 


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for participation in this incentive 

program. 

Considering these States have made 

enormous strides to reduce the 

confusion and burden associated with 

eligibility and payment for these 

programs, and also to reduce the stigma 

sometimes associated with Medicaid, 

we want to support the work they have 

done. 

After consideration of the public 

comments received, we believe that the 

best course of action is to work with 

these States on a case-by-case basis 

through providing guidance as they 

develop the SMHP. We believe that each 

State will have different data and 

information available to them. The 

States should make sure that the health 

IT coordinators are working closely with 

the Medicaid (and CHIP, as it pertains 

to this program) policy staff on all 

aspects of the program. The goal will be 

to find a solution that leverages the 

State’s existing and/or future data 

sources, as well as looking for flexible 

alternatives, while still honoring 

Congress’ intent for the patient volume 

requirements, as established in the 

statute. 

Comment: Some commenters pointed 

out that not all Medicaid providers use 

an EHR or submit electronic claims, 

making it tedious to capture a 

numerator and denominator for patient 

volume until the providers have 

adopted an EHR. Additionally, some 

commenters expressed concern about 

how providers would determine the 

denominator for patient volume and 

how States would audit the resulting 

percentage. 

Response: While the commenters may 

be correct about the assertion that not 

all providers use an EHR or submit 

electronic claims, we do not believe it 

will prevent EPs and eligible hospitals 

from participating. These providers are 

businesses and there is an expectation 

that they are tracking their receivables 

from all entities (including Medicaid) 

associated with specific patients. In 

other words, we do not see a connection 

between electronic claims and current 

EHR use and calculation of the patient 

volume. Furthermore, when EHRs are 

used with practice management 

systems, we believe that in most cases, 

this data should be derived from the 

electronic systems. 

When States consider their audit 

strategies, they should leverage existing 

data sources to the extent possible, but 

also consider future data sources. Part of 

the Medicaid Information Technology 

Architecture (MITA) principles 

associated with the SMHP development 

includes consideration of the ‘‘as is’’ 

world, as well as the ‘‘to be’’ world. 

While States may not have the systems 

in place today for a complete picture, 

we expect a longer-term strategy 

leveraging better data systems. 

After consideration of the public 

comments received, we are not making 

any change on the basis of this 

comment. We provided additional 

flexibility in the patient volume 

requirements, which may help 

providers more easily calculate their 

patient volume and provide for 

flexibility when States begin to audit 

providers. 

Comment: Commenters requested 

clarification on how to determine 

eligibility for the five types of Medicaid 

EPs. Commenters also noted that there 

was a potential difference between 

Medicare and Medicaid for the 

definition of ‘‘physician.’’ Finally, other 

commenters were confused if, as a 

specialty practitioner, they qualified as 

one of the EP types. 

Response: We agree with the 

commenters that there is a distinction 

between the Medicare and Medicaid 

definitions of physician. The Medicare 

statute at section 1848(o)(5)(C) defines 

an eligible professional as including all 

the professionals listed in section 

1861(r) of the Act (which, generally 

stated, includes podiatrists, 

chiropractors and optometrists), the 

Medicaid statute does not incorporate 

all of 1861(r). Rather, the Medicaid 

statute defines what are physician 

services for purposes of qualifying as 

medical assistance under section 

1905(a)(5)(A) of the Act, and states that 

physician services constitutes services 

furnished by a physician as defined in 

section 1861(r)(1) (which includes only 

doctors of medicine or osteopathy 

legally authorized to practice medicine 

and surgery by their State). In addition, 

section 1905(e) permits States the 

option to consider optometrist services 

as physician services. In this case, the 

State plan must specifically provide that 

the term ‘‘physicians’ services’’ includes 

services of the type which an 

optometrist is legally authorized to 

perform. 

Thus, in keeping with the statute, a 

physician would be limited to doctors of 

medicine or osteopathy legally 

authorized to practice in their State, 

and, in cases where States have 

specifically adopted the option of 

1905(e) in their State plans, 

optometrists. 

In addition, States would need to refer 

to their own scope of practice rules to 

determine whether an individual 

qualifies as providing dental, nurse 

practitioner, physician assistant, or 

certified nurse midwife services. Also, 

States and EPs would need to refer to 

CMS regulations. These regulations, at 

42 CFR 440.60 require that practitioners 

be licensed and that they are within the 

scope of practice defined under State 

law (see also 1905(a)(6)). 42 CFR 

440.100(b), defines a dentist as an 

individual licensed to practice dentistry 

or dental surgery in his or her State. 42 

CFR 440.165 defines a nurse midwife as 

a registered professional nurse who 

meets the following requirements: (1) Is 

currently licensed to practice in the 

State as a registered professional nurse; 

(2) is legally authorized under State law 

or regulations to practice as a nursemidwife, (3) has completed a program of 

study and clinical experience for nursemidwives as specified in the State, 

unless the State does not specify such 

a program. (4) In the case where the 

State has not specified a particular 

program of study and clinical 

experience, the regulation provides 

alternative means for demonstrating this 

training. See also section 1905(a)(17), 

defining certified nurse midwife with 

reference to section 1861(g). 42 CFR 

440.166 contains a definition of what 

qualifies as nurse practitioner services 

and requires a nurse practitioner to be 

a registered professional nurse who 

meets the State’s advanced educational 

and clinical practice requirements, if 

any, beyond the 2 to 4 years of basic 

nursing education required of all 

registered nurse. States will have a 

Medicaid State Plan (and often State 

regulations) that designates how each 

provider is eligible to participate in the 

Medicaid program by practice type. All 

of these practitioners must meet all 

other eligibility requirements (including 

Medicaid patient volume) in order to 

participate. 

Regarding the confusion by some 

specialty providers (for example, 

advanced practice nurses, pediatricians, 

physician sub-specialties, etc.), so long 

as an EP qualifies as a practitioner 

within the State’s scope of practice rules 

for each of the five EP types, they are 

eligible for this program. In other words, 

since pediatricians are physicians, they 

must meet the physician scope of 

practice rules and then they may be 

eligible for an incentive when they meet 

all other requirements. Advanced 

practice nurses who meet their State’s 

criteria for qualifying as a nurse 

practitioner would qualify as nurse 

practitioners. We believe most States 

would recognize APNs as NPs within 

their scope of practice rules. Eligible 

provider types must be specified in a 

State’s SMHP. 

After consideration of the public 

comments received, we are revising the 

definition of these EPs under section 


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495.304 to clarify additional scope of 

practice requirements. 

Comment: Commenters requested 

clarification on how full- or part-time 

status impacts an EP’s eligibility for 

incentives. 

Response: Full or part-time status 

does not affect patient volume 

calculations or whether an EP’s practice 

is predominantly in an FQHC or RHC. 

There is no mention of requisite number 

of hours in the statute or this final rule 

as a pre-condition for eligibility. 

After consideration of the public 

comments received, we are not making 

any revisions to this section of the final 

rule. 

e. Entities Promoting the Adoption of 

Certified EHR Technology 

We 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 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 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. Under 

1903(t)(6)(A)(ii) of the Act and as 

proposed in § 495.332, 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 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 

proposed 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 definition for 

promoting the adoption of certified EHR 

technology is in § 495.302. 

Comment: A commenter 

recommended that CMS require that 

entities designated by States that 

promote the adoption of EHR 

technology must use qualified EHR 

technology and be able to capture, query 

and/or exchange data from beyond a 

practice or closed system in order to 

foster interoperability, and to promote 

competition among EHR vendors with 

vendor-neutral and provider-neutral 

solutions. The commenter 

recommended that entities that promote 

the adoption of certified EHR 

technology be certified to an electronic 

hub that permits the exchange of 

electronic structured data on a providerneutral basis. 

Commenters also requested that the 

Regional Extension Centers funded by 

ONC be permissible as entities 

designated by the State to be eligible to 

receive EPs assigned incentive 

payments. 

Response: States will have the 

discretion to identify entities that 

promote the adoption of certified EHR 

technology in accordance with our 

definition in regulation. We do not agree 

that the definition of ‘‘promotion of the 

adoption of EHR technology’’ requires 

the designated entity itself to utilize 

certified EHR technology. A variety of 

entities might offer services that meet 

the language included in this final rule 

defining promoting EHR adoption. We 

wish to point out that there is also a 

discussion of reassignment of payments 

in Section II.B.1.d. of this rule. 

After consideration of the comments, 

we are adopting the language as written 

with the additional clarification that we 

encourage States to consider how they 

will verify on an ongoing basis that the 

entities that they designate are in fact 

promoting EHR adoption, per the 

requirements. Their responsibility to 

audit this element might be a factor in 

identifying which entities they wish to 

designate, in terms of tangible EHR 

promotion activities. 

We agree that our definition of 

‘‘promoting EHR adoption’’ does not 

preclude the ONC-funded Regional 

Extension Centers from being 

designated by States for this role. 

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 

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 


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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. 

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. 

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 set the average allowable cost at 

$54,000. We established this average 

allowable cost at the high end of the 

range since the data we reviewed is 

based on certification criteria that may 

not be appropriate moving forward. 

Specifically, since the ONC is 

establishing new certification criteria for 

EHR technology, we believe the average 

cost of certified EHR technology 

incorporating the new criteria 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 

requirements in the ONC interim final 

rule for the adoption of an initial set of 

standards, implementation 

specifications, and certification criteria 

for EHRs and the health measures data 

discussed in this final 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 originally 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 set the average allowable 

cost at $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 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, if 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. 

Comment: Several commenters are 

concerned that States are required to 

develop a method to determine the 

payment amount for each provider. 

Commenters believed that incentive 

payments should be based on the 

maximum amount and that individual 

calculations are cumbersome and a 

difficult process for both States and 

eligible professionals. 

Response: We would like to clarify 

the requirements in the statute and the 

process by which incentive payments 

will be established. 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 is also 

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. CMS conducted 

a literature review of recent studies on 

EHR technology to determine the 

average allowable cost of implementing 


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and using such technology. CMS 

reviewed the results from four recent, 

comprehensive studies and determined 

that these costs are $54,000 per 

professional. We recognize that this cost 

is variable and since the ONC is 

establishing certification criteria for 

EHR technology, we believe this cost is 

reasonable since we expect that current 

EHR technology will need to be 

upgraded in order to meet the new 

certification criteria. 

Next, in accordance with the statute, 

in order to determine the net average 

allowable costs for each provider, 

average allowable costs for each 

provider must be adjusted in order to 

subtract any payment that is made to 

Medicaid eligible professionals and is 

directly attributable to payment for 

certified EHR technology or support 

services of such technology. The only 

exception to this requirement, as 

discussed above, is that payments from 

State, or local governments do not 

reduce the average allowable costs. The 

resulting figure is the net average 

allowable costs. The statute further 

indicates that Medicaid eligible 

professionals can receive up to 85 

percent of a maximum of the net average 

allowable cost. In year one the 

maximum net average allowable cost is 

$25,000 and in subsequent years is 

$10,000. Additionally, the statute 

indicates that Medicaid eligible 

professionals are responsible for the 

remaining 15 percent of the net average 

allowable cost (1903(t)(6)(B)). We 

believe the commenters are concerned 

with the 85 percent of net average 

allowable cost maximum incentive 

payment amount and the responsibility 

of the Medicaid professional for the 

remaining 15 percent of the net average 

allowable cost. 

Since the statute is clear that to get to 

the net average allowable cost, 

payments made to the EP that are 

directly attributable to the payment for 

certified EHR technology or support 

services for such technology for each 

provider have to be subtracted from the 

average allowable cost, this must be an 

individual provider calculation. We do 

not believe we have discretion to change 

this netting process directed by the 

Congress. We have provided an example 

calculation so that in using the average 

allowable cost established by the 

Secretary of $54,000 professionals could 

receive as much as $29,000 in payments 

from outside sources and still receive 85 

percent of the maximum capped net 

average allowable cost of $25,000. We 

have also required that States must have 

a process in place and a methodology 

for verifying that payment incentives are 

not paid at amounts higher than 85 

percent of the net average allowable cost 

and a process in place and a 

methodology for verifying that 

professionals pay 15 percent of the net 

average allowable cost of the certified 

EHR technology. 

States may wish to establish a process 

whereby individuals attest to having 

completed their forms correctly and risk 

the circumstance of audit in the event 

the State has reason to believe 

individuals did not complete the forms 

appropriately. States could develop a 

process for providers to attest to having 

received no other sources of funding 

from other than State and local 

governments as payment that is directly 

attributable to the cost of the 

technology. States could select a 

random sample of providers to audit 

after the incentive payment has been 

paid. Additionally, States could 

determine that certain types of 

providers should be selected for a more 

extensive review since it may be true 

that this particular provider group was 

most likely to have received payment 

for certified EHR technology from 

sources other than State, or local 

governments. This process could 

eliminate some of the burden. 

Comment: Commenters also asked 

that we provide some examples of the 

costs that must be subtracted to get to 

the net average allowable cost and 

therefore the incentive payment 

amount. Commenters do not want to be 

penalized because they did not have a 

fair chance at understanding the rule 

before participating in the program. 

Commenters further argued that 

reducing incentive payments due to 

other non-State/local resources could 

immobilize innovation and temper 

research activities. 

Response: When States begin to think 

through the payments that are not 

considered acceptable and that must be 

subtracted from the average allowable 

cost to get to the net average allowable 

costs and consequently, the incentive 

payment, we believe that States should 

consider the situation in which 

professionals may have been provided 

with the certified EHR technology 

through, for example, an employer/ 

employee relationship. We do not 

believe in this case that there could be 

any payments directly attributable to the 

professional for the certified EHR 

technology; therefore, there are no 

payments that must be subtracted. This 

situation would apply in the case of 

clinics like FQHCs/RHCs or IHS 

facilities. Additionally, States should 

consider that any in-kind contributions 

such as EHR technology or free software 

provided by vendors are not cash 

payments and therefore are also not 

costs that must be subtracted. Further, 

in the case of grants like the HRSA 

Capital Improvement Program grants 

that are used to finance many projects 

within an organization; for example, 

research projects, infrastructure, 

construction or repair and renovation of 

health centers, health care services, etc., 

we do not believe these grants are 

directly attributable as payments for the 

certified technology but rather are 

payments for several projects of the 

organization. Again, we do not believe 

that these costs are directly attributable 

to payment costs for the certified 

technology and therefore must be 

subtracted. These are just some 

examples but the clarifying point is that 

any costs that are subtracted from the 

average allowable cost to get to the net 

average allowable cost have to be cash 

payment that is ‘‘directly attributable to 

the professional for the certified EHR 

technology.’’ Aside from specific costs 

related to computer hardware, software, 

staff training, and/or upgrades of the 

technology, we believe there are limited 

situations that exist in which cash 

payment has been made that is directly 

attributable to the professional solely for 

the purpose of certified EHR technology. 

In any case, we are requiring that 

States submit to CMS for review and 

approval a description of their process 

and methodology for verifying payment 

incentives in State Medicaid HIT plans. 

CMS has the flexibility to approve State 

Medicaid HIT plans that require 

provider attestation initially with 

subsequent auditing of either a random 

sample, or a sample of payment 

incentive recipients most likely to have 

received funding from other sources. 

We also would like to provide 

clarifying information concerning the 

responsibility of the professional for 15 

percent of the net average allowable 

cost. Section 1903(t)(6)(B) of the Act 

dictates that EPs are responsible for 

payment of the remaining 15 percent of 

the net average allowable cost and 

States are responsible for ensuring that 

the Secretary pays no more than 85 

percent of the net average allowable cost 

as incentive payments. In ensuring EPs’ 

responsibility for the remaining 15 

percent, we believe States may consider 

funding that the EP receives from other 

sources as essentially meeting the EPs 

responsibility. For example, as stated 

earlier, States should consider the 

previous examples of employer/ 

employee relationship, certain grants, 

and in-kind contributions. Specifically, 

if a professional is an employee at an 

FQHC/RHC or IHS facility, since the 

employer has provided the technology 

to the employee it is assumed that the 

employer has contributed the 15 percent 


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to the net average allowable cost on 

behalf of the employee. Additionally, in 

the case of in-kind contributions, the 

professional’s 15 percent responsibility 

to the net average allowable cost is of no 

consequence since the entity has 

assumed that responsibility for the 

professional. It should be noted that in 

the case of a vendor supplying the 15 

percent on behalf of the EP because the 

technology, training, support services, 

etc. was either in-kind contributions or 

free, conflict of interest safeguards apply 

and the parties should be mindful of the 

requirement to comply with applicable 

fraud, waste, and abuse laws, rules, and 

regulations. 

In those cases in which the 

professional himself must satisfy the 

responsibility for the 15 percent net 

average allowable costs, we believe in 

determining the calculation, States 

should consider costs related to the 

providers’ efforts to address workflow 

redesign and training to facilitate 

meaningful use of EHRs as contributing 

to the providers’ 15 percent share. 

Considering the costs of training, 

preparing for, and installing or 

upgrading EHR technology, we believe 

the vast majority of EPs will spend, or 

receive funding from other sources in 

the amount of 15 percent of the 

maximum net average allowable cost (or 

$3,750 in the first year and $1,500 in 

subsequent years). We also believe that 

for providers’ first payment for having 

adopted, implemented or upgraded 

certified EHR technology, States should 

take into consideration providers’ 

verifiable contributions up through the 

date of attestation. For example, if a 

provider adopted EHR technology for 

$100 in January 2010 and then paid for 

the upgrade to the newly certified 

version for an additional $100 in 

December of 2010, the sum of both 

investments; that is, $200, should be 

applicable to their 15 percent of the net 

average allowable cost. 

In summary, in response to these 

comments, we are clarifying in the final 

rule that State Medicaid HIT plans must 

explain the process and methodology 

States will put in place to ensure that 

Medicaid eligible professionals comply 

with this responsibility (see section 

495.332). Additionally, we have 

clarified the rules at section 495.310 

that providers are responsible for 15 

percent of the net average allowable 

costs of the certified EHR technology. 

The following chart is useful in 

depicting the effect of this calculation. 

Comment: Several commenters have 

raised questions about the cost of the 

certified EHR technology for hospitals. 

Specifically, commenters believed that 

$54,000 is identified as the initial costs 

for providers with 20 percent per year 

thereafter for ongoing costs; and $5 

million for initial costs for hospitals 

with 20 percent per year thereafter for 

ongoing costs. The commenters believed 

that the $54,000 assumption for 

providers may be accurate; however, the 

$5 million assumption for hospitals 

could be off by a factor of 4 or 5. Other 

commenters believed that even the 

$54,000 assumption seriously 

underestimates the total cost of 

ownership for EHR systems and their 

ongoing expenses and argued that this 

assumption does not account for the 

training and labor costs associated with 

implementation of an EHR system, nor 

does it account for the lost revenues 

resulting from the decreases in 

productivity during the initial 

implementation phase. One commenter 

questioned whether the $54,000 average 

allowable cost for certified EHR 

technology takes into account leasing of 

an ASP (applicable service provider web 

based) model as an allowable cost. 

Response: As explained above, we 

conducted a literature review of recent 

studies on EHR technology and 

determined that these costs are $54,000 

per professional. We are not establishing 

an average allowable cost for hospitals. 

The reference to the costs of EHRs for 

hospitals was only to make the point 

that the costs of EHRs vary greatly 

because of the size and type of provider 

practices, differences in available 

features of systems, and the additional 

costs associated with licensing, support, 

training and maintenance. Additionally, 

there is no reason to establish the 

average allowable costs of EHR 

technology for hospitals since the 

hospital incentive payments are based 

on a formula that is defined in the 

statute and that does not rely on the 


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average allowable cost. In terms of the 

$54,000 average allowable cost figure, 

we indicated that we believe this is a 

reasonable figure but recognize that 

there are many variables to determining 

the average allowable cost of certified 

EHR technology because of practice 

size, the differences in available features 

of systems, and the additional costs 

associated with licensing, support, 

training and maintenance. The $54,000 

average allowable cost figure does take 

into account web based models since 

the Secretary is tasked to study the 

average costs associated with the 

purchase, initial implementation, and 

upgrade of certified EHR technology, 

including support services, and integral 

related training. 

We are making no additional 

revisions to this section of the final rule 

as a result of this comment. 

Comment: One commenter requested 

that CMS make clear that any funding 

an FQHC receives because the Medicaid 

eligible professional voluntarily chooses 

to reassign his/her incentive payment or 

any funds the center may have received 

through HRSA Capital Improvement 

Funds cannot be the basis for a State 

reducing its per visit payment to FQHCs 

required under Section 1902(bb). 

Response: We agree with the 

commenter with respect to the incentive 

payments authorized under section 

1903(t); however, we are not addressing 

the HRSA Capital Improvement funds, 

as this funding is outside the scope of 

this rulemaking. Since FQHCs are not 

eligible providers, incentive payments 

will not be made to FQHCs. It is true, 

however, that an eligible professional 

could choose to reassign his/her 

incentive payment to the FQHC. Any 

reassignment of payments must be 

consistent with applicable laws, rules, 

and regulations, including, without 

limitation, those related to fraud, waste, 

and abuse. Incentive payments are 

payments designed to promote the 

adoption and meaningful use of 

certified EHR technology and are not 

payments for medical assistance 

provided in the FQHC. We do not have 

the authority under this program to 

provide that these funds be the basis for 

the State to reduce its per visit payment 

to the FQHC. 

After consideration of this comment, 

we are making no further additions to 

this section of the final rule. 

(4) Payments for Medicaid Eligible 

Professionals 

One important difference we 

proposed 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 final 

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. 

As previously discussed in this final 

rule, based on the 85 percent threshold 

applied to the net average allowable 

costs, we proposed 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. 

Pediatricians who are not hospitalbased, 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. 


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All State Medicaid EHR incentive 

program calculations, payments, and 

limits under this section are subject to 

our review. 

Comment: Commenters suggested that 

CMS apply the health professional 

shortage area (HPSA) bonus offered 

under Medicare to Medicaid providers. 

Response: There is no statutory 

authority for HPSA bonuses in the 

Medicaid incentive program. However, 

it is worth noting that in comparing the 

maximum participation period for EPs 

in Medicare and Medicaid, EPs can earn 

higher total incentive payments under 

Medicaid, even when compared to the 

Medicare payments with the HPSA 

bonus. 

We are not making any changes to this 

rule as a result of this comment. 

Comment: Commenters requested 

clarification on how the Medicare 

payment adjustments apply to Medicaid 

providers. Commenters suggested that if 

these apply to Medicaid providers, it 

could be a reason not to participate. One 

commenter asked about a provider who 

began in the Medicare incentive 

program and then switched to Medicaid, 

but then stopped meaningfully using the 

certified EHR. 

Response: The Medicaid program 

does not have the payment adjustments 

that apply, beginning in 2015, in the 

Medicare program. However, all 

Medicare providers will have a payment 

reduction in 2015 if they are not 

demonstrating meaningful use, 

regardless of whether they participate in 

the Medicare or Medicaid EHR 

incentive program. Whether an EP, 

hospital or CAH is a meaningful user of 

certified EHR technology will continue 

to be determined on a year-by-year 

basis. A provider who stops 

meaningfully using certified EHR 

cannot receive an incentive payment. 

This is discussed in greater detail in 

II.A. 

We are not making any changes to this 

rule as a result of this comment. 

(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 

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 17 demonstrates the payment 

scenarios available to a Medicaid EP 

who begins in their first year by 

adopting, implementing, or upgrading 

certified EHR technology, and receives 

all six years of payments consecutively. 

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. 

(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 

proposed 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 


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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 payments 

available to those demonstrating 

adoption, implementation, or upgrading 

certified EHR technology in the first 

year, as depicted in Table 18. 

We also requested comment on an 

alternative approach that would 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. 

We refer readers to our proposed rule 

(75 FR 1937) for a discussion of this 

approach. 

Medicaid EPs are not required to 

participate on a consecutive annual 

basis, however, the last year an EP may 

begin receiving payments is 2016, and 

the last year the EP can receive 

payments is 2021. See our discussion on 

consecutive versus non-consecutive 

payments in section II.A. of this final 

rule. We wish to point out to readers 

that this is one area where the Medicare 

and Medicaid incentive payment 

programs differ. That is, Medicare EPs 

do not have the same flexibility afforded 

to Medicaid EPs, who are permitted to 

participate in a non-consecutive annual 

basis, or to skip years, in other words, 

without the omitted years necessarily 

reducing the total number of years for 

which they may receive payment. 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. 

Comment: Some commenters rejected 

the alternative scenario (including 5 

years of payment instead of 6), as it 

would effectively result in a penalty for 

early adopters, and reward those who 

delayed adoption. 

Response: We agree that early 

adopters should not be penalized. 

Further, we agree that Medicaid EPs that 

have adopted EHR technology before the 

first year should have an opportunity for 

the same maximum incentive payments 

as EPs that are meaningful users in the 

first year. Accordingly, the alternative 

scenario we presented in Table 30 of the 

proposed rule will not be used for 

incentive payments. 

As we are adopting our proposed 

policy as final, we are not making any 

changes to the regulations as a result of 

this comment. 

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. Section 

1905(t)(5)(D) requires that no payments 

can be made to hospitals after 2016 

unless the provider have been paid a 

payment in the previous year; thus, 

while Medicaid EPs are afforded 

flexibility to receive six years of 

payments on a non-consecutive, annual 

basis, hospitals receiving a Medicaid 


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incentive payment must receive 

payments on a consecutive, annual basis 

after the year 2016. Prior to 2016, 

Medicaid incentive payments to 

hospitals can be made on a nonconsecutive, annual basis. 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. 

States are responsible for using 

auditable data sources to calculate 

Medicaid 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; 

• 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 

hospital 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 year (for 

subsequent 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 require that States use 

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 first payment 

year. 

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 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. 

The overall hospital EHR amount 

requires that a transition factor be 

applied to each year. This transition 

factor equals 1 for year 1, d for year 2, 

c for year 3, and @ 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 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-beddays 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-bed-days, 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 

interpreted 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 a sub-acute wing or skilled 

nursing wing, so long as States and 

contracting entities are in compliance 

with the actuarial soundness rules in 

§ 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 proposed that for purposes of 

the Medicaid formula, we would count 

only those days that would count as 

inpatient-bed-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 

§ 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 


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the State to estimate the percentage of 

inpatient bed days that are not charity 

care (that is, [estimated total charges— 

charity care charges]/estimated total 

charges), the statute directs that such 

figure is deemed to equal 1. 

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 19 demonstrates several 

scenarios for Medicaid hospitals. 

However, there are other scenarios not 

included here. For example, this table 

assumes that a hospital would 

participate on a consecutive annual 

basis until the incentive is exhausted. 

The purpose of Table 19 is to illustrate 

the general timeline for Medicaid 

hospital incentives. 

Comment: Many commenters 

recommended that CMS instruct States 

to provide hospitals the maximum 

incentive payments possible in their 

first two payment years. Commenters 

provided many examples of how CMS 

should instruct States to make 

payments. For instance, commenters 

suggested that CMS require States to pay 

50 percent of hospitals’ aggregate 

incentive payment in the first year and 

another 40 percent in the second year— 

as a limited source of capital for 

adoption, implementation, and 

upgrades. Many commenters stated that 

it is critical that EHR incentive 

payments be made in a timely manner 

and not delayed or affected by State 

budgetary problems or changes. 

Response: After consideration of the 

public comments received, we are 

finalizing these provisions as originally 

proposed, with one clarification to 

ensure the statutory requirement that 

eligible hospitals, after 2016, may not 

receive an incentive payment, unless a 

payment was received in the prior year. 

The statute is imposing maximums on 

what the State is authorized to pay 

eligible hospitals. At section 

1903(t)(5)(A) the statute requires that a 

State can make no more than 50 percent 

of the hospital’s aggregate incentive 

payment in any one year. Likewise, over 

a 2-year period, the State cannot pay 

more than 90 percent of the aggregate 

incentive. Finally, under 1903(t)(5)(D) 

no more than six years of payment may 

be made, and payment may not be paid 


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for any year beginning after 2016, unless 

the hospital was provided an incentive 

payment for the preceding year. 

However, these are limits on State 

payments, not required minimums. We 

believe that States should work with 

their provider communities to 

determine the best timeframes for 

implementing their EHR programs and 

making payments to providers. 

Comment: Some commenters 

indicated that incentive payments 

should not be included in any 

calculation of total Medicaid payments 

for the purpose of determining Medicaid 

shortfalls, disproportionate share 

payments, upper payment limits, or any 

general Medicaid program service. 

Response: According to the statute, 

Medicaid HIT incentive payments are 

made to encourage the adoption and use 

of certified EHR technology defined by 

the statute, as well as support services 

including maintenance and training that 

is for, or is necessary for the adoption 

and operation of, such technology. 

Payments to providers under this rule 

are not being made for the provision of 

services or the cost of the provision of 

services to Medicaid beneficiaries or the 

uninsured. Therefore, we are clarifying 

that EHR incentive payments made to 

providers in accordance with the statute 

and final regulation are not subject to 

the same limits as payments for items 

and services provided to Medicaid 

beneficiaries and the uninsured 

including Medicaid upper payment 

limits and disproportionate share 

hospital limits. This comment is also 

addressed in the Medicare section at 

II.B.4.b. 

Comment: One commenter noted a 

technical error in the proposed rule at 

495.310 (g) (2) Medicaid Share. The 

commenter questioned whether (2)(iii) 

meant to qualify (2)(ii) or (2)(i), noting 

that the latter would result in dual 

eligibles being removed from Medicaid 

days (the numerator) and would not 

conform to the Act which would require 

that they be removed from the 

denominator. 

Response: We agree that the 

regulation includes a technical error, 

and we read the statute as requiring that 

dually eligible individuals be excluded 

from the denominator. Section 

1903(t)(5)(C) states that the Medicaid 

share should be calculated using a 

numerator that does not include 

individuals ‘‘described in section 

1886(n)(2)(D)(i).’’ Individuals described 

in that section are individuals for whom 

payment may be made under Medicare 

Part A as well as individuals enrolled 

with a Medicare Advantage 

Organization under Part C. Thus, dually 

eligible individuals are excluded from 

the numerator in determining the 

Medicaid share. 

We are therefore revising section 

495.310(g)(2)(iii) to ensure that it refers 

to clause (i), rather than clause (ii), of 

§ 495.310(g)(2). 

Comment: One commenter 

highlighted a technical error in the 

proposed rule at § 495.310(g)(1)(i)(B) 

when he requested clarification for that 

section which reads: ‘‘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.’’ He interpreted the language to 

mean that if the payment year begins in 

2011, the Federal fiscal year would be 

2010; and the discharge related amount 

would be for 2009. 

Response: Section 495.310(g)(1)(i)(B) 

is improperly worded in the proposed 

rule and should read, ‘‘The discharge 

related amount for a 12-month period 

selected by the State, but ending in the 

Federal fiscal year before the hospital’s 

fiscal year that serves as the first 

payment year.’’ For 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, the State would employ the 

relevant data from the hospital’s cost 

reporting period ending June 30, 2010 in 

order to determine the EHR incentive 

payment amount for the hospital. 

We are revising this language in the 

final rule at section 495.310(g)(1)(i)(B) to 

be clear. 

Comment: Some commenters 

indicated that CMS should specify an 

alternative source of charity care data 

that States may use so that Medicare 

and Medicaid incentive payments can 

be determined appropriately. Others 

commented that while CMS has 

proposed the Medicare cost report, 

Medicaid cost report data, MMIS data, 

hospital financial statements, and 

accounting records to determine 

Medicaid EHR incentives, there is no 

absence of State-level usable data to 

implement this definition. 

Response: We agree that there are a 

number of data sources available at the 

State and hospital levels that would 

allow States to accurately capture 

charity care data for the purposes of 

calculating hospital EHR amounts. 

However, we have no vehicle for 

identifying which of these tools exist in 

individual States or across the country. 

Medicare cost reports, Medicaid cost 

report data, MMIS data, hospital 

financial statements, and accounting 

records are all items that we feel 

confident are accessible to all States and 

providers. Additionally, we believe that 

States and their provider communities 

are better versed at determining the 

tools that will be most beneficial for 

their individual programs. As such, we 

included the standard items listed as 

auditable data sources, but did not 

prohibit the use of other appropriate 

auditable data sources. States must 

describe their auditable data sources in 

their SMHP and submit to CMS for 

review and approval. 

After consideration of this comment, 

we are making no further additions to 

this section of the final rule. 

Comment: One commenter asked 

whether the criteria for determining 

Medicaid eligible days and Medicaid 

managed care days in the Medicaid 

share portion of the hospital incentive 

payment calculation is the same criteria 

for determining Medicare DSH 

payments. 

Response: The criteria for determining 

Medicaid eligible days and Medicaid 

managed care days for Medicare DSH 

and Medicaid managed care days for 

EHR incentive payments are not the 

same. Medicare DSH includes unpaid 

days, while the EHR incentive payment 

calculation requires the inclusion of 

only paid inpatient-bed days. 

After consideration of this comment, 

we are making no further additions to 

this section of the final rule. 

Comment: One commenter asked for 

clarification of the term ‘‘estimated’’ 

Medicaid inpatient bed days. 

Response: We are unclear about the 

commenter’s question. Specifically, the 

statute permits the use of ‘‘estimated’’ 

days in the Medicaid share portion of 

the EHR hospital incentive payment 

calculation. Therefore, we refer the 

reader to the hospital calculation at 

section 1903(t)(5) and section 495.310 of 

this rule. 

After consideration of this comment, 

we are making no further additions to 

this section of the final rule. 

Comment: One commenter requested 

that for purposes of accurately 

calculating and auditing the Medicaid 

Share, CMS should eliminate data 

provisions at 2080.18 of the State 

Medicaid Manual. 

Response: We disagree. The 

provisions at 2080.18 of the State 

Medicaid Manual do not adversely 

impact the calculation or auditing of the 

Medicaid Share. 

We have not made any changes to the 

regulation related to this comment. 

Comment: On commenter requested 

that we include as an auditable data 

sources, data acquired through 

authorized trading partners, such as 

clearing houses, eligibility systems 

maintained by CMS, state Medicaid 

programs, and/or their agents. 


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Response: We agree that there are a 

number of data sources available that 

would allow States to accurately data 

for the purposes of calculating the 

Medicaid Share. However, we have no 

vehicle for identifying which of these 

tools exist in individual States or across 

the country. Medicare cost reports, 

Medicaid cost report data, MMIS data, 

hospital financial statements, and 

accounting records are all items that we 

feel confident are accessible to all States 

and providers. Additionally, we believe 

that States and their provider 

communities are better versed at 

determining the tools that will be most 

beneficial for their individual programs. 

As such, we included the standard 

items listed as auditable data sources, 

but did not prohibit the use of other 

appropriate auditable data sources. 

After consideration of this comment, 

we are making no further additions to 

this section of the final rule. 

Comment: One commenter asked 

whether the Medicaid payment is based 

on an annually-calculated Medicaid 

Share, or is the Medicaid Share 

established in the base year only and to 

be applied to the duration of payments. 

Response: For purposes of calculating 

the Medicaid hospital incentive, the 

Medicaid Share is established in the 

base year. 

After consideration of this comment, 

we are making no further additions to 

this section of the final rule. 

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. In our 

proposed rule we discussed the fact that 

some States might be prepared to 

implement their programs and make 

EHR incentive payments to Medicaid 

providers in 2010 for adopting, 

implementing, or upgrading certified 

EHR technology. We proposed to allow 

States to initiate implementation of 

these payments to Medicaid EPs and 

hospitals after the effective date of the 

final rule if they could successfully 

demonstrate to CMS that they are ready 

to make timely and accurate payments 

through the SMHP. States would 

include an additional attestation for 

providers assuring that they are not 

accepting payment in any other State. 

We also proposed that to be approved 

for early implementation, a State would 

be required to have an electronic system 

for provider registration capable of 

collecting the relevant information (this 

information is identified in section 

II.A.5.c of this final rule, where we 

describe the data collection 

requirements). 

Participating States would be 

responsible for transmitting the required 

data to CMS so that CMS could ensure 

that no duplicate payments were made 

to providers. We proposed to use the 

single provider election repository 

described in section II.A.5.c. of this final 

rule to assure no duplicative payments 

were made between States. 

We did not propose that States would 

be able to make early payments to 

meaningful users. Rather, our proposal 

was intended to offer Medicaid 

providers an early opportunity for 

capital so that they would be more 

likely to have the certified EHR 

technology required to demonstrate 

meaningful use in successive periods. 

We stated that since hospitals may 

qualify under both programs, we hoped 

that they would use the early capital to 

qualify as meaningful users under the 

Medicare program in the first year. 

Comment: We received comments 

suggesting that our proposal on early 

State implementation creates 

unreasonable pressure on States, 

particularly given the status and 

timeline of the ONC rule on certification 

criteria. 

Response: We agree with commenters. 

We proposed this option in order for 

States with very mature programs to 

proceed with early incentive payments 

for adoption, implementation, and 

upgrading certified EHR technology. 

However, in considering the complexity 

associated with States establishing an 

electronic registration system (which 

would only be temporary), as well as the 

fact that very few providers (if any) will 

have certified EHR technology early 

enough for this option, we believe that 

this may not be an efficient, costeffective option for many States. 

Consequently, as a result of these 

comments, we are removing this option. 

States will not be permitted to make 

payments until January 2011. 

Additionally, we wish to reiterate that 

States must have a SMHP approved by 

CMS before making any payments to 

EPs and eligible hospitals. 

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 eligible hospitals, State Medicaid 

agencies (or their contractors) are fully 

responsible for administering and 

disbursing the incentive payments to 

Medicaid eligible providers. 

We proposed to 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 would be required to choose only 

one State from which to receive 

Medicaid incentive payments in each 

payment year. (We note that readers 

should also refer to section section II.A 

of this final rule for additional 

information regarding the EHR reporting 

period and the single provider election 

repository). 

As we noted in the proposed rule, the 

statute anticipates coordination between 

the Medicare and Medicaid EHR 

incentive programs to ensure no 

duplicate payments are made to EPs (see 

1903(t) and 1848(o)(1)(D)(iii). 

Additionally, section 1848(o)(1)(B) of 

the Act requires that Medicare incentive 

payments for eligible professionals 

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 further direction 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 

January 1, 2011. This also gives CMS, 

ONC, and States an opportunity to 

coordinate between Medicare and 

Medicaid, which will simplify 

administrative complexity in the EHR 

incentive program and facilitate 

provider adoption. 

Under this final rule Medicaid EPs, as 

discussed in section II.D.5 and II.A.5.c, 

will enroll in the program through the 

single provider election repository. 

Once an EP selects the Medicaid EHR 

incentive program, 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 are required 

to submit to CMS data on 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 deidentified data on meaningful use. 

States’ systems and processes must 

receive prior approval, concurrent with 

the requirements described in section 

II.D.8 of this final rule for review and 

approval of the SMHP. 

The specific timeframes for EPs and 

eligible hospitals to report and submit 


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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 discussed in 

section II.A.1.e. of this final rule. As 

discussed in that section, for the first 

payment year based on meaningful use, 

the reporting period for eligible 

hospitals and EPs will be a continuous 

90-day period that both starts and ends 

within the payment year. As long as the 

period spans the 90-day continuous 

period and ends within the payment 

year (fiscal year for hospitals, calendar 

year for EPs), the reporting period can 

begin at any time during such payment 

year. States also are expected to process 

payments on a rolling basis. We will 

issue further guidance regarding the 

timing expectations needed for State 

systems to coordinate with CMS and 

make timely payments 

Comment: Several commenters were 

concerned that Medicaid EPs and 

eligible hospitals that qualify for 

incentive payments in their first year by 

adopting, implementing or upgrading 

certified EHR technology are not 

afforded the same flexibility as 

Medicare EPs and eligible hospitals in 

their second payment year. The 

commenters wrote that they would be 

required to demonstrate meaningful use 

for the full year, rather than 90 days in 

their second payment year, (even 

though it will be their first year 

demonstrating meaningful use). The 

commenters recommended that 

Medicaid EPs and eligible hospitals be 

subject to a 90-day reporting period in 

their second payment year when it is 

the first year they are demonstrating 

meaningful use. 

Response: We agree with the 

commenters and as discussed in section 

II.A., we clarify that there is no EHR 

reporting period for adopting, 

implementing, or upgrading certified 

EHR technology for Medicaid provider’s 

first payment year. In order to offer 

parity with Medicare providers who 

must achieve meaningful use in the first 

year over a 90-day period and over 12 

months in subsequent years, the same 

policy will apply to Medicaid providers. 

In other words, Medicaid providers in 

their second participation year (or in 

their first payment year if they are 

qualifying based on meaningful use) 

shall demonstrate meaningful use over a 

90-day reporting period and over 12- 

months for their third and subsequent 

years. 

e. Avoiding Duplicate Payment 

In our proposed rule, we discussed 

the statutory requirement at section 

1903(t)(7) of the Act that the Medicare 

and Medicaid programs coordinate 

payments to avoid duplication, and that 

CMS and the States coordinate 

payments through a data matching 

process, utilizing NPIs to the extent 

practicable. We also discussed section 

1903(t)(2) of the Act, which states that 

Medicaid EPs must waive rights to 

Medicare incentive payments under 

sections 1848(o) and 1853(l) of the Act; 

hospitals, however, may qualify for 

incentives under both programs. We 

also proposed requirements under the 

review and approval of SMHPs in part 

495 subpart D for States to verify that 

providers meet these requirements. 

In section II.A of this final rule, we 

discuss the final requirements we are 

adopting in order to avoid duplicate 

payments in the Medicare and Medicaid 

incentive programs. We also respond to 

comments in that section (see section 

II.A.5.c. of this final rule). As discussed 

in that section of the final rule, 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. 

To achieve all three of these 

conditions, we will collect this data in 

a single provider election repository. 

Next, in administering each State 

Medicaid EHR incentive program, States 

will 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 requirements that 

a State must have an approved SMHP 

that will include a mechanism for crosschecking this information prior to 

payment. 

f. Flexibility for EPs To Alternate 

Between Medicare and Medicaid EHR 

Incentive Programs One Time 

We refer readers to section II.A.5.b of 

this final rule, which discusses rules 

that would allow Medicare and 

Medicaid EPs to make one EHR 

incentive program election change prior 

to the 2015 payment year, and not to 

permit any switching after the 2014 

payment year. 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 (assuming the professional meets 

all eligibility criteria for the Medicaid 

incentives program). Similarly, an EP 

who initially selected the Medicaid EHR 

incentive program could switch to the 

Medicare program one time prior to 

2015. (In other words, the last payment 

year an EP could switch would be the 

2014 payment year.) 

Comments received on these policies 

are addressed in section II.A.5.b. of this 

final rule. 

g. One State Selection 

In the proposed rule, we proposed 

that EPs and hospitals with multi-State 

Medicaid practice locations 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. 

Medicaid EPs and hospitals could 

annually change the State they select 

when they re-attest to program 

requirements. 

We considered the possible impact of 

this proposed approach with respect to 

patient volume calculations on 

Medicaid EPs and hospitals in border 

State areas, stating that because the 

Medicaid incentive payment for EPs 

will remain the same—regardless of 

whether they receive payment from one 

State or from multiple States—we did 

not think the administrative complexity 

associated with dividing and 

administering payments between or 

among more than one State could be 

justified. We recommended, however, 

that States consider border State 

providers when developing their 

policies on patient volume and the 

attestation methodology. We afforded 

additional flexibility in the patient 

volume at proposed § 495.306 to 

account for unique circumstances and 

data collection. 

Comment: Providers inquired whether 

it is permissible for an EP who practices 

in more than one State to aggregate 

patient encounters in order to achieve 

the 30 percent Medicaid patient volume 

criteria. 

Response: First, it is not clear that 

aggregating patient volume across States 

will be an issue once EPs actually begin 

tallying up patient volume. Patient 

volume is calculated as a percentage, 

and not an absolute number. Thus, it 

does not appear that, but for aggregating 

patient volume across multiple States, 

an EP would not be able to qualify for 

incentive payments in any State. For 

example, if an EP has 10 percent patient 

volume in one State (10 of 100 

encounters are Medicaid) and 20 

percent patient volume in a second 

State (20 of 100 encounters are 

Medicaid), this does not add up to 30 

percent patient volume (but, rather, 

results in a 15 percent patient volume 


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as a result of dividing 30 by 200). To 

restate, we do not believe that an EP 

will need to sum patient encounters 

across multiple States in order to reach 

the 30 percent patient volume—as in 

order to reach this patient volume 

threshold, the EP would likely meet the 

30 percent in at least one State. Indeed, 

it appears that the only benefit of 

aggregating patient volume across States 

would be to permit an EP who has more 

than a 30 percent patient volume in one 

State to receive incentive payments 

from another State in which s/he does 

not meet the 30 percent threshold. 

Nevertheless, we recommend that 

States consider the circumstances of 

border State providers when developing 

their policies and attestation 

methodologies. To afford States 

maximum flexibility to develop such 

policies, we will not be prescriptive 

about whether a State may allow a 

Medicaid EP to aggregate his/her 

patients across practice sites, if the State 

has a way to verify the patient volume 

attestation when necessary. States will 

propose their policies and attestation 

methodologies to CMS for approval in 

their State Medicaid HIT plans. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

5. Single Provider Election Repository 

and State Data Collection 

We refer readers to section II.A.5.c of 

this final rule for a discussion of the 

single provider election repository and 

the comments received on this policy. 

As discussed in that section, the 

repository will 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 

In our proposed rule, we proposed 

that EPs in multiple group practices or 

multiple types of practice locations 

would be required to select one TIN for 

Medicaid EHR payment disbursement. 

In other words, such EPs would not be 

permitted to require a State to divide 

payments among different practices or 

practice locations based upon group 

TINs. We explained that 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 stated that 

requiring reimbursement to be made to 

one TIN would reduce opportunities for 

fraud or abuse, as States would be able 

to cross-check EP and TIN combinations 

more easily to verify EP attestations. 

We also stated that although the State 

would not divide payments among the 

various TINs of an individual EP, 

Medicaid EPs could, themselves, decide 

to divide payment. These EPs could 

independently distribute funds among 

their respective group practices or 

practice locations after the initial 

disbursement from the State to their 

designated TIN. 

Comment: We received comments 

suggesting that EPs should be allowed to 

proportion their payments and give 

multiple TINs. 

Response: For these reasons advanced 

in the proposed rule, we believe that 

permitting an EP to divide the incentive 

payment among multiple TINs would 

introduce an unnecessary level of 

administrative complexity into this 

temporary program. It also could 

increase the opportunities for fraud and 

abuse as it would be more 

administratively cumbersome for States 

to track multiple payments (to ensure 

correct payments) and to track and 

verify multiple eligibility-related EP 

attestations. Once a payment is 

disbursed from the State, nothing 

precludes the EP from further 

disbursing the incentive payment, 

subject to the applicable fraud, waste, 

and abuse laws, regulations, and rules. 

After consideration of the public 

comments received, we are finalizing 

these provisions as proposed. 

7. Activities Required To Receive 

Incentive Payments 

a. General Overview 

As we discussed in our proposed rule, 

to qualify to receive a first year 

Medicaid incentive payment, section 

1903(t)(6)(C)(i) of the Act indicates that 

EPs and eligible hospitals 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 Public 

Health Service Act) that is certified 

pursuant to section 3001(c)(5) of such 

Act as meeting standards adopted under 

section 3004 of such 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 II.A of 

this final 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 use 

certified EHR technology. These 

providers may receive a first year of 

payment if they are engaged in efforts to 

‘‘adopt, implement, or upgrade’’ 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, we 

proposed that 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. We proposed that 

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 


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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). We proposed that 

the State’s SMHP would detail these 

processes. 

The CMS Medicaid Transformation 

Grants 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 proposed to 

include staff training and efforts to 

redesign provider workflow under the 

definition of implementing certified 

EHR technology. We explained that 

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 

proposed that there be evidence that a 

provider demonstrated actual 

installation prior to the incentive, rather 

than ‘‘efforts’’ to install. We stated that 

this evidence would 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. As Medicaid 

incentive payments are intended to 

stimulate meaningful use of EHR 

technology, we stated our belief that the 

payments need to result in tangible 

adoption, implementation, or upgrading 

of certified EHR technology. We stated 

that States would be responsible for 

verifying this evidence of EHR adoption. 

In establishing criteria for the 

‘‘implementation’’ portion of ‘‘adopt, 

implement or upgrade’’ requirement, we 

proposed 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 proposed 

‘‘upgrade’’ to mean the expansion of the 

functionality of the certified EHR 

technology, such as the addition of 

clinical decision support, e-prescribing 

functionality, CPOE or other 

enhancements that facilitate the 

meaningful use of certified EHR 

technology. We proposed that States 

describe in their SMHPs the process that 

would be in place 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. 

Comment: Several commenters 

recommended that CMS clarify if 

‘‘upgrade’’ does or does not apply to an 

already certified EHR. They 

recommended that CMS confirm that an 

upgrade is intended to enable a provider 

to expand existing functionality of an 

EHR so that it meets the new 

certification criteria. 

Response: To clarify this question, an 

example of upgrading that would 

qualify for the EHR incentive payment 

would be upgrading from an existing 

EHR to a newer version that is certified 

per the EHR certification criteria 

promulgated by ONC related to 

meaningful use. Upgrading may also 

mean expanding the functionality of an 

EHR in order to render it certifiable per 

the ONC EHR certification criteria. 

We are making no additional 

revisions to this section of the final rule 

as a result of this comment. 

Comment: Commenters wrote that 

given that adopt/implement/upgrade 

(AIU) involves significant practice 

workflow redesign and that the States’ 

overarching goal is to increase the level 

of provider participation, the 

commenters recommended that CMS 

require only AIU for participation Year 

1 and Year 2. They further 

recommended that CMS allow AIU 

compliance to be further defined as the 

provider developing, submitting, and 

following a customized plan for the 

necessary workflow changes with 

timelines (whose development can be 

assisted by the Regional Extension 

Centers); the provider would have to 

meet their timelines for each year in 

Stage 1 to qualify for the incentive 

payment; and the AIU plan timelines 

would have to be structured so 

submission of HIT and clinical quality 

measures would begin in Stage 2. 

Response: The statute at section 

1903(t)(6)(C) permits Medicaid 

providers to receive the EHR incentives 

for adopting, implementing or 

upgrading to certified EHR technology 

in their first participation year. A 

provider’s first participation year may 

be any year between 2011 through 2016. 

In their State Medicaid HIT Plans, States 

will propose to CMS how they will 

audit and oversee Medicaid providers’ 

adoption, implementation or upgrading 

to certified EHR technology. States 

should propose further details to CMS 

about how they will verify that 

providers have met this requirement. 

After consideration of the comments 

received, we do not believe that just the 

development and submission of an 

implementation plan for EHR adoption 

is a significant enough commitment to 

warrant the AIU incentive payment. 

There is nothing binding, nor is there 

any financial contribution towards such 

a plan. 

We are making no additional 

revisions to this section of the final rule 

as a result of this comment. 

Comment: Many commenters 

suggested that they believe the goal of 

this incentive is to help defray some of 

the costs of adopting, implementing, 

and upgrading to certified EHR 

technology. As such, the commenters 

believe ‘‘proof’’ of AIU should not 

require completion of AIU but 

demonstrated commitment to AIU. For 

example, a proof of purchase, a 

schedule for training and 

implementation, and periodic reporting 

from practices on progress on the 

schedule could suffice. The commenters 

requested that States have flexibility to 

define what is sufficient to trigger 

payment. 

Response: States should provide 

details to CMS on how they will audit 

and oversee Medicaid providers’ 

adoption, implementation or upgrading 

to certified EHR technology in their 

SMHP. States’ SMHP should include 

further details about how they will 

verify that providers have met this 

requirement. However, while States may 

propose how they will determine what 

AIU activities are sufficient for the EHR 

incentive payment; CMS must approve 

their proposals via the SMHP. The 

definitions included in this final 

regulation by CMS for adopt, implement 

or upgrade do imply completion of at 

least one of the three tasks. A proof of 

purchase or signed contract would 

likely be an acceptable indicator of EHR 

adoption per the States. Implementation 

is on-going, therefore working actively 

with Regional Health IT Extension 

Centers on implementation, completion 

of specific benchmarks or other 

activities towards implementation 

would be acceptable. 

We are making no additional 

revisions to this section of the final rule 

as a result of this comment. 

Comment: A commenter 

recommended that State Medicaid 

agencies provide eligible hospitals with 


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the maximum incentive payments for 

their first two payment years as a 

limited source of capital for AIU. 

Response: The Medicaid hospital 

calculation was part of the HITECH 

statute and not defined by CMS. Eligible 

Medicaid hospitals can receive their 

first year’s payment for AIU and not 

meaningful use, but must meet the 

meaningful use requirement in their 

second and subsequent participation 

years. 

We are making no additional 

revisions to this section of the final rule 

as a result of this comment. 

Comment: A commenter 

recommended that a Medicaid provider 

be permitted to qualify for their first 

year Medicaid EHR incentive even if 

they have not actually installed certified 

EHR technology but have spent or are 

committed to spend an amount equal to 

at least the lesser of $50,000 or 5 percent 

of the Medicaid EHR incentive amount. 

Response: In consideration of the 

comments, we are clarifying that the 

final definition of adopt, implement or 

upgrade is inclusive of providers’ 

acquisition, such as a purchase, of a 

certified EHR. Providers will be 

responsible for providing 

documentation which substantiates AIU 

as required by the State Medicaid 

Agency. 

We are revising the definition of 

adopt, implement, and upgrade as a 

result of these comments, see section 

495.302. 

c. Other General Terminology 

In our proposed rule, we proposed 

definitions for ‘‘EHR reporting period’’ 

and ‘‘payment period,’’ stating that these 

definitions 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 

demonstrate meaningful use of certified 

EHR 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 were specified in 

proposed § 495.332). In the proposed 

rule, we specified that States would 

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, States would need to refer 

to providers’ reports on meaningful use, 

including reporting of clinical quality 

measures (see section II.A. of this final 

rule for requirements for clinical quality 

measures), in accordance with the 

appropriate EHR reporting period. 

States could not appropriately make 

incentive payments in the absence of 

such reporting. 

We proposed that 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 other requirements. 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. We 

proposed that permissible means for 

ensuring patient volume and all of the 

requirements described in this section 

would include survey, attestation, or the 

creation of special codes on claims, 

subject to our prior approval. 

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 our proposed rule, we discussed 

our expectation that the bar for 

demonstrating meaningful use of 

certified EHR technology will rise in 

years to come. In this final rule, 

meaningful use and its evolving criteria 

are discussed in section II.A. In order to 

receive Medicaid incentive payments, 

providers will be required to 

demonstrate (and States will be required 

to track and validate) meaningful use, as 

described in section II.A.2. of this final 

rule. In section II.D.8 of this final rule, 

we also discuss our policies regarding 

States’ ability to require additional 

objectives in the demonstration of 

‘‘meaningful use,’’ or otherwise add to 

the Federal definition of meaningful 

use. We also discuss the requirement 

that States receive prior approval of any 

such additions. 

As we discussed in the proposed rule, 

we believe that 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 the extent practicable, 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 will be 

evaluating States’ HIT Planning 

Advanced Planning Documents (PAPDs) 

and SMHPs with this objective in mind, 

as described section II.D.8 of this final 

rule. 

As we discussed in the proposed rule, 

States’ system requirements for 

monitoring meaningful use must 

include the capacity to determine the 

appropriate stage of meaningful use and 

the appropriate incentive payment 

amount, depending upon the providers’ 

payment year. 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 a provider’s year of entry into 

the Medicaid EHR incentive program to 

determine the correct eligibility criteria 

and generate the appropriate Medicaid 

incentive payments. 

Once States are giving providers the 

Medicaid EHR incentive payments for 

being meaningful users of EHRs, and in 

2012 begin receiving clinical quality 

measures data from those providers, we 

proposed that States would 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 the Medicare and Medicaid EHR 

incentive programs, we proposed that 

we would use the meaningful use 

measures hospitals report to us to make 

quality data on Medicaid eligible 

hospitals available to States. 

Comment: Commenters requested 

clarification on the reporting period for 


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adopting, implementing, and upgrading, 

and whether this period is similar to the 

90-day period for demonstrating 

meaningful use in the first year. 

Response: As discussed earlier, we are 

clarifying that there is a no reporting 

period for AIU for the providers’ first 

participation year. However, there is a 

90-day reporting period for the first 

participation year in which Medicaid 

providers qualify by demonstrating 

meaningful use. The rationale is that we 

understand that not all AIU activities 

require 90 days, such as EHR 

acquisition. States will determine how 

they plan to implement this 

requirement. 

As a result of this comment and a 

similar comment above, we are revising 

section 495.4 to indicate that there is no 

EHR reporting period for adopting, 

implementing, or upgrading in 

Medicaid providers’ first participation 

year, if they qualify based on AIU, and 

there is a 90-day reporting period for 

both the first year that a Medicaid 

provider demonstrates MU (regardless 

of whether they demonstrated AIU in 

their first participation year or are 

qualifying based on MU in their first 

participation year). 

Comment: Several commenters 

requested that CMS clarify the process 

that will assure Medicaid access to 

Medicare meaningful use data, at a 

minimum for (1) hospitals who receive 

both Medicaid and Medicare payments 

and (2) eligible providers that may 

switch once between the Medicaid and 

Medicare incentive programs. 

Commenters requested that CMS 

provide States with Medicare quality 

reporting/data in a timely fashion (for 

example, within 30 days of receipt of 

such information). Alternatively, 

commenters suggested that the 

providers could be required to report 

separately to both Medicare and 

Medicaid. 

Response: We are finalizing our 

policy as proposed. We believe that it 

would represent an undue burden on 

hospitals eligible for both EHR incentive 

payments to report their data to both 

CMS and the States. We will issue 

further guidance about how States will 

be able to access the meaningful use 

data submitted to CMS by hospitals 

eligible for both Medicare and Medicaid 

EHR incentive payments in order for the 

State to meet its audit and oversight 

requirements. It is not clear to CMS why 

a State would require access from CMS 

to an eligible professional’s meaningful 

use data if they were a Medicare EHR 

Incentive Program participant in the 

prior year. States can only base a 

Medicaid provider’s EHR incentive 

payment, as it pertains to meaningful 

use, on the current participation year’s 

EHR reporting period. 

We are making no additional 

revisions to our regulations as a result 

of this comment. 

Other than the changes explained 

above, we are finalizing the remainder 

of our proposed policies as they were 

proposed. 

d. Quality Measures 

We refer readers to section II.A.3 of 

this final rule-for a discussion of the 

clinical quality measure reporting 

required for demonstrating meaningful 

use of certified EHR technology. As 

discussed previously, we intend to 

update our definition of meaningful use 

biennially, 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 final rule). 

Comment: Several commenters 

believe that the current clinical 

measures do not reflect key clinical 

services and issues for the Medicaid 

population, including behavioral health, 

dental, long-term care, and care 

coordination (particularly across 

physical and behavioral health care). 

The commenters recommend that 

CMS work with the Medicaid Medical 

Directors and ONC and consider the 

development and inclusion of clinical 

and non-clinical quality measures that 

are more representative of the Medicaid 

population. Alternatively they wrote 

that CMS and ONC should have a 

‘‘placeholder’’ to accommodate data and 

interoperability for these measures. 

Commenters wrote that the areas with 

gaps are behavioral health, dental care, 

long-term care, special needs 

populations and care coordination, 

particularly across physical and 

behavioral health. The commenters 

recommended that new clinical quality 

measures be added as ‘‘placeholders’’ for 

care provided by non-eligible, but 

critical Medicaid providers, such as 

Community Mental Health Centers, 

Home Health, and Renal Dialysis 

Centers. 

Many commenters noted that with 

regard to pediatric clinical quality 

measures, they recommend that firstyear measures focus on immunizations, 

diabetes, asthma, autism, and lead 

screening. They also recommend 

measures to introduce in 2012 and 

beyond to include smoking, obesity, 

disease- or condition-specific measures, 

and measures aimed at reducing 

disparities. They further recommended 

measures to introduce in 2013 and 

beyond include the development of 

clinical quality measures on 

psychology, child abuse, developmental 

delays, and efficiency measures. 

Response: We agree that these 

measures (listed directly above) have 

clinical relevance for providers. 

However we are aligning with the 

Medicare Stage 1 meaningful use 

provisions regarding publication and 

opportunity for public comment on 

quality measures before they are 

finalized. We are not including 

additional meaningful use objectives 

and measures that were not discussed in 

the proposed rule. 

Comment: Several commenters 

believed that the quality measures 

proposed in the interim rule do not 

match the quality measures that HRSA 

currently requires FQHCs to report. The 

commenters would like to work with 

CMS and HRSA to move forward and 

harmonize the quality measures by 2013 

but requested that until quality 

measures are harmonized across the 

federal government system, FQHCs and 

the EPs who qualify and assign their 

Medicaid incentive payments to the 

FQHC should be allowed to report on 

the current HRSA measures. 

Response: Meaningful use applies to 

each individual EP. Therefore the HRSA 

quality measures, which are facilitybased, not necessarily NQF-endorsed, or 

reportable from EHRs are not an 

acceptable alternative for EPs who 

practice at an FQHC. Furthermore, as 

explained in section II.A. of this final 

rule, we are not including in the final 

rule quality measures that were not 

included in the proposed rule. To 

ensure uniformity across both programs, 

we have adopted this same policy for 

Medicaid. We believe it is important to 

offer Medicaid providers and 

stakeholders the same opportunity for 

public comment on quality measures. 

We agree with the goal of 

harmonizing quality measure reporting 

across Federal programs and will engage 

with stakeholders and experts to 

address this priority as part of the 

development of the Stage 2 definition of 

meaningful use. 

We are finalizing these provisions as 

proposed and we will continue to work 

to identify, and develop electronic 

specifications for additional clinical 

quality measures that address current 

gaps, such as long-term care, behavioral 

health, pediatrics and oral health for 

Stage 2 of meaningful use. In particular, 

we recognize the lack of endorsed oral 

health clinical quality measures, with 

identified and tested electronic 

specifications. This poses a challenge 

for dentists, who are eligible 

professionals for the Medicaid EHR 


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incentives, to demonstrate meaningful 

use, other than with the general, 

profession-neutral measures. 

While an eligible professional can 

report ‘‘zero’’ for the denominator of any 

measure for which s/he does not have 

any relevant patients, we will work to 

include in Stage 2 of meaningful use, 

clinical quality measures that would 

provide useful data to CMS and States 

on oral health care as reported by EHRs. 

In addition, in order to minimize 

provider burden, and to maximize 

measure reporting efforts and resources, 

we seek to align the quality measures for 

the Stage 2 definition of meaningful use 

with other quality measures 

development and reporting related to 

health care reform and other CMS 

quality measures programs, as 

appropriate and feasible. Stage 1 of 

meaningful use is limited to objectives 

and measures that are already in 

existence, not those still under 

development. Measures will be 

included that have operational 

relevance to the care provided to 

Medicaid and CHIP beneficiaries by 

eligible professionals and hospitals 

defined in the HITECH Act. 

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. (See 1903(t)(9) of the 

Act.) 

This section of the final rule discusses 

the requirements for States to request 

FFP from CMS for the Medicaid EHR 

incentive program. Additionally, this 

section is 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 defined 

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 proposed to 

separately include definitions in part 

495. 

We proposed to include in our 

regulations the requirements that in 

order to qualify to receive FFP for 

administering the incentive program, 

States must develop a SMHP, an HIT 

Planning APD (PAPD), and an HIT 

Implementation APD (IAPD). These 

documents lay out the process used by 

States to implement and oversee the 

EHR incentive program, and will help 

States to construct an HIT roadmap to 

develop the systems necessary to 

support eligible 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, while reducing 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 (SMD) letter on 

September 1, 2009, on this process and 

the State efforts necessary to receive the 

90 percent FFP for planning-related 

expenditures. As stated in that letter, 

and as further required through this 

rulemaking, our review process ensures 

that States are complying with 

requirements of the HITECH 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 would not ensure the 90 

percent FFP. As explained in the letter, 

and as further reflected in this 

rulemaking, we must review and prior 

approve all elements of the State’s 

SMHP, and APD documents, and work 

with States to determine the appropriate 

level and type of FFP. 

States are required to submit these 

advance planning documents in order 

for us to approve receipt of the 90 

percent Federal match. Specifically, 

prior approval is required for the HIT 

PAPD (see also § 495.336). The 

deliverable resulting from the HIT PAPD 

is the SMHP. The SMHP must be 

reviewed and approved before it is 

included in an IAPD (see also 

§ 495.338). The IAPD also must be prior 

approved. Until approval is granted 

States cannot draw down funds. 

For purposes of the Medicaid EHR 

incentive program, we believe there are 

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 includes initial planning, including an 

assessment of the State EHR 

environmental landscape, and 

development of the SMHP. As 

explained in our September 1, 2009 

letter, the vehicle for informing us of 

Phase I activities is the HIT PAPD, and 

indeed, over 40 States have already 

submitted their PAPDs and have 

received funding to begin Phase I 

activities. Phase II then involves further 

development and full implementation of 

the SMHP. Consequently, the HIT IAPD 

is the vehicle for reporting of Phase II 

activities. As discussed in the SMD 

letter, and as further reflected in this 

final rule, States need to receive prior 

approval of their planning documents. 

In fact, we have already worked closely 

with the majority of States in 

developing their HIT PAPDs, prior to 

them initiating their EHR planning 

activities, and we expect this close 

coordination to continue between the 

States and CMS. 

Also, as proposed, in this final rule 

we will require States 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, we designed the prior 

approval conditions, and the prior 

approval process, to mirror what is 

presently used in support of acquiring 

automated data processing equipment 

and services in conjunction with 

development and operation of State 

MMIS (the State’s automated 

mechanized claims processing and 

information retrieval system approved 

by CMS). 

As proposed, this final rule (at 

495.348) will require State Medicaid 

programs to comply with current 

procurement standards. Specifically, at 

495.348 we have included language that 

accords with the procurement 

requirements in 45 CFR part 95 subpart 

F and incorporates many 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. 


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Under these standards the State must 

ensure that when procuring HIT 

equipment and/or services, there is 

maximum practical open and free 

competition, and that any procured 

materials or services are obtained in a 

cost-effective manner. The regulations 

also make clear that the State, as the 

grantee, is responsible for meeting its 

contractual responsibilities under any of 

its procurements, and will not have 

recourse to the Federal government to 

settle or satisfy its contractual and 

administrative issues. Further, States 

must have written standards of conduct 

regarding the performance of its 

employees that are engaged in the award 

and administration of the HIT 

equipment/services contracts (including 

conflict of interest rules contained in 

495.348(c)). States must have written 

procurement procedures that accord 

with 495.348(e) and a system for 

administering contracts in accordance 

with 495.348(f). Procurement contracts 

must meet the additional requirements 

contained in 495.348(g) as well as 

describe the conditions under which the 

contract may be terminated for default 

or because of circumstances beyond the 

control of the contractor (see 

495.348(h)). Procurement contracts must 

include provisions allowing State and 

Federal access to the materials and staff 

of the contractor, in accordance with 

495.348(i). 

As was proposed, our final 

regulations at 495.346 also will require 

the State agency to allow the 

Department access to all records and 

systems operated by the State in support 

of the program. Final regulations at 

495.352 impose reporting requirements 

on States to submit to the Department, 

on a quarterly basis, a progress report 

documenting specific implementation 

and oversight activities performed 

during the quarter. Regulations at 

495.354 through 495.360 contain rules 

for charging equipment, nondiscrimination requirements, 

requirements for cost allocation plans, 

and requirements for ownership rights 

in software. Our rules would require 

termination of FFP in the case of States 

failing to provide access to information 

relating to any of the requirements we 

have included in this subpart. We 

believe the procurement and other rules 

discussed above are authorized under 

section 1902(a)(4) of the Act, as well as 

under section 1903(t)(9) of the Act 

requiring a State to conduct adequate 

oversight of its program, and use its 

funds to administer the incentive 

payments. In addition, any reporting 

and other requirements will assist us in 

submitting the reports that are required 

under section 1903(t)(10) of the Act, 

which requires us to monitor and report 

on the progress of implementation of the 

EHR provisions. 

As proposed, State Medicaid agencies 

will be required to attest, as required by 

section 1903(t)(6)(A)(i) of the Act, that 

States 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. States must 

also attest that payments to an entity 

promoting the adoption of certified EHR 

technology, as designated by the State, 

will 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 technology. (See 

495.332 of our final rules). States are 

required to attest that the entire 

incentive payment has been forwarded 

to the eligible Medicaid provider, and 

that no Medicaid eligible professional or 

hospital is required to return any 

portion of the incentive payment to the 

State Medicaid agency. States must 

establish a process to ensure that any 

existing fiscal relationships with eligible 

professionals or hospitals 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 requiring 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 have 

allowed for claiming of such reasonable 

costs incurred on or after February 18, 

2009, prior to publication of the final 

rule. Specifically, a State that can show 

that 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 

may potentially receive retroactive FFP 

back to the date in which these efforts 

began, with CMS approval, but not 

before February 18, 2009. 

Comment: Several commenters 

expressed concerns about the timing of 

planning and implementation and 

request flexibility in this area. 

Commenters indicated that there will be 

a need for ongoing planning while rules 

and guidelines are being promulgated. 

Commenters indicated that they 

envision a phased approach to 

implementation, and request that CMS 

permit simultaneous expenditure of 

both planning and implementation 

funds. 

Response: We proposed specific 

requirements for States to request FFP 

from CMS for the Medicaid EHR 

incentive program modeled on the 

process States use to request FFP from 

CMS for Medicaid Management 

Information Systems technology 

projects. CMS proposed to utilize 

information and documentation that 

will result from the process described in 

this section to evaluate approaches 

proposed by States, track and monitor 

progress of implementation, and 

perform the statutory program and 

financial oversight required for this new 

program. 

In establishing the requirements we 

believe States will have flexibility to 

request FFP for planning and 

implementation activities to implement 

the provisions of the EHR incentive 

program in a manner that is similar to 

and consistent with current approaches 

to receive enhanced FFP for MMIS 

systems under the Medicaid program. 

This will enable States to modify or 

adapt as changes occur during the 

planning and implementation phases 

envisioned under this proposed rule. 

Further, we believe that the information 

required is consistent with section 

1903(t)(9) of the Act that States must 

demonstrate to the satisfaction of the 

Secretary that the State is conducting 

adequate oversight. 

We agree with the need for flexibility 

in planning for the Medicaid incentive 

program, and the conduct of 

implementation activities to ensure the 

program is successful in the long-term. 

We have added additional clarifying 

information in the sections regarding 

the HIT PAPD, HIT IAPD, As-needed 

HIT PAPD update and as-needed HIT 

IAPD update, Annual HIT IAPD 

requirements, and SMHP requirements. 

These clarifications are consistent with 

guidance issued in our State Medicaid 

Director’s letter on September 1, 2009, 

which indicated that CMS anticipates a 

phased approach to planning and 

implementation activities. 

Finally, for the final rule we are 

making numerous changes in order to be 

more specific and provide additional 

clarity regarding certain terms and 


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requirements. These revisions are 

reflected here; however, regulations text 

is not updated since the concepts of 

these terms remain the same. 

Clarifications are as follows: 

We have further defined the terms 

‘‘service oriented architecture (SOA)’’, or 

‘‘service component based architecture’’ 

to indicate that they are a means of 

organizing and developing information 

technology capabilities as collaborating 

services that interact with each other 

based on open standards. We are 

defining this term in the context of 

health IT projects authorized under the 

Act to ensure that different systems and 

programming languages provide a basis 

for interoperability among and between 

applications that may reside on different 

platforms through a communication 

protocol to achieve health information 

exchange required under the Act. CMS 

anticipates that States will describe 

proposed HIT projects in the context of 

SOA principles, and intends to evaluate 

plans for health information exchange, 

and interoperable health IT based on 

these commonly used information 

technology principles. 

We have also further defined the term 

‘‘State self-assessment (SS–A),’’ a 

component of MITA, as a process that 

a State will use to review its Medicaid 

information technology strategic goals 

and objectives, measure its current 

baseline business processes and 

capabilities against defined MITA 

business capabilities, and develop 

targeted future capabilities to transform 

the Medicaid enterprise to be consistent 

with the MITA principles of 

interoperability and exchange of health 

information. Although we are including 

a definition of State self assessment in 

this final rule, we are deleting the 

requirement that a State provide the 

MITA SS–A, as we believe the as-is 

assessment supercedes the need for a 

separate MITA SS–A. However, we 

believe it is important to keep a 

definition of SS–A, because there is an 

inter-connection between activities 

accomplished under the Medicaid EHR 

Incentive Program and States’ MMIS 

enhancements. For example, data 

exchanges between various State 

systems that comprise the Medicaid 

enterprise of the State might also 

support the State’s administration of the 

EHR Incentive Program. 

We are further defining MITA, 

because we expect that States will 

describe proposed health IT projects as 

well as their ‘‘as is’’ landscapes using 

MITA concepts and principles. We 

intend to evaluate States’ proposed 

strategies and plans for development of 

Medicaid health information exchange 

and interoperable health IT using these 

MITA principles, as applicable. These 

strategies and plans must be included in 

the State Medicaid Health Information 

Technology Plan (SMHP), a term 

discussed below. We have previously 

published a document entitled ‘‘MITA 

Framework 2.0’’ on the CMS Web site at 

http://www.cms.hhs.gov/

MedicaidInfoTechArch. The MITA 

Framework 2.0 was developed by CMS 

in collaboration with State Medicaid 

agencies and information technology 

vendors to facilitate the adoption of 

information technology principles and 

practices that will lead to increased 

deployment of state-of-the-art 

technologies and improved management 

of the Medicaid program. States 

presently are utilizing MITA and the 

SS–A for Medicaid IT projects approved 

by CMS, and application of these 

principles for activities required under 

this proposed rule will not add 

additional burden to State efforts to 

adopt HIT as envisioned under the 

Section 1903(a)(3)(F) of the Act. 

The MITA principles and tools foster 

integrated business processes and IT 

transformation for all States. It achieves 

this in part by demonstrating that 

planned enhancements to Medicaid 

systems, including MMIS, support State 

and Medicaid strategic goals and how 

intra-state systems other than the MMIS 

have been considered in developing the 

solutions. We believe that as States and 

providers implement EHRs, it will be 

necessary and essential to plan 

technology upgrades that will facilitate 

health information exchange with 

Medicaid providers receiving incentive 

funding. 

We are further clarifying that we are 

defining the Medicaid Management 

Information System (MMIS) as it relates 

to specific requirements for Medicaid 

claims processing and information 

retrieval contained in current 

regulations at 42 CFR part 433, subpart 

C. We proposed a definition of the term 

MMIS because it is the common term 

that CMS, State Medicaid agencies, and 

industry use to refer to the Mechanized 

Claims Processing and Information 

Retrieval Systems specified in section 

1903(a)(3) of the Social Security Act. 

MMIS means the system of software and 

hardware used to process Medicaid 

claims from providers of medical care 

and services for the medical care and 

services furnished to recipients under 

the medical assistance program and to 

retrieve and produce service utilization 

and management information required 

by the Medicaid single State agency and 

Federal Government for program 

administration and audit purposes. The 

objectives of the MMIS 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. The MMIS is 

also compatible with the claims 

processing and information retrieval 

systems used in the administration of 

the Medicare program. 

We believe that States will utilize 

their MMIS extensively in administering 

the provisions of this proposed rule, 

including but not limited to payment 

and tracking of Medicaid incentive 

payments, access to data and 

information necessary to establish the 

vision for Medicaid health IT, and 

achieving interoperability and health 

information exchange envisioned in the 

Act. 

In the proposed regulation at 

§ 495.332 we proposed a definition of 

the term State Medicaid Health 

Information Technology Plan (SMHP) as 

an integral part of planning and 

implementation of the EHR incentive 

program. The SMHP is a comprehensive 

document that describes the State’s 

current and future health IT activities in 

support of the Medicaid EHR incentive 

program. We further clarify that we 

require that the SMHP will be 

developed by the State Medicaid 

agency, after consulting with other 

stakeholders across the State. The 

SMHP will be reviewed and approved 

by CMS prior to any activities described 

in the SMHP being funded and 

implemented. We anticipate State 

agencies will engage a wide range of 

stakeholders within and outside of State 

and Federal government to develop a 

vision of how the Medicaid EHR 

incentive program will operate in 

concert with the larger health system 

and statewide efforts. The SMHP is 

required to participate in the Medicaid 

incentive program because we believe 

that States must develop a strategic 

vision and plan that includes clear 

targets and measurable outcomes to be 

consistent with the intent of section 

1903(a)(3)(F) of the Act to encourage the 

adoption and meaningful use of 

certified EHR technology. 

The SMHP is intended to serve as the 

vision for developing the desired future 

state for the Medicaid IT environment 

that furthers the goals of health 

information exchange and meaningful 

use envisioned under the Act. The 

SMHP should be coordinated and 

integrated with the Statewide plan for 

health IT developed under section 3013 

of the Public Health Service Act, which 

is developed by the designated 

statewide entity. To ensure that the 

SMHP is coordinated and integrated 


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with the Statewide plan, we will 

develop criteria and processes for the 

evaluation of the SMHP consistent with 

ONC’s review of the Statewide plans. 

The SMHP must contain: (a) A current 

health IT landscape assessment; (b) a 

vision of the State’s HIT future 

landscape, and (c) the specific actions 

necessary to implement the incentive 

payments program, including a health 

IT roadmap to achieve those actions. 

This deliverable will be the ‘‘plan’’ to 

determine how the incentive payments 

will be administered; however, it is not 

the implementation of such plan. The 

SMHP must include all of the elements 

listed in 495.332; however, we realize 

that States may not have all of the 

answers initially. States will not be 

permitted to make incentive payments 

to providers unless they have a 

comprehensive EHR incentive payment 

program established. However, if States 

are not completely clear, for example, 

about their ‘‘to be’’ world at the time of 

the submission of their SMHP, States 

can present the components that are 

finalized and revise the SMHP to further 

discuss their ‘‘to be’’ world at a later 

time. Additionally, as stated previously 

in this final rule, we have revised the 

rule to include a requirement that the 

SMHP must describe the process in 

place and the methodology for verifying 

that eligible professionals meet their 

responsibility for 15 percent of the net 

average allowable cost for certified EHR 

technology and that the SMHP include 

information about how States will 

validate the patient volume consistent 

with the menu of options listed in 

§ 495.306. 

For this final rule, we are also 

explaining our understanding that the 

elements of the SMHP, as listed in 

§ 495.332, may be separated into four 

categories, as follows: 

(1) Assessment and Planning. This 

category of SMHP elements addresses 

requirements in the Act relating to 

increasing the use of health IT, 

including EHR, ensuring 

interoperability, and meaningful use of 

certified EHRs. As proposed, States will 

perform comprehensive assessments of 

the current health IT landscape 

environment in the State, including the 

inventory of existing health IT in the 

State, including ‘‘as is’’ and ‘‘to be’’ 

landscape assessments. Also, as 

proposed, States will develop a 5-year 

strategic plan, and a description of how 

the State Medicaid HIT plan will be 

planned, designed, developed and 

implemented, including how it will be 

implemented, and a description of how 

intrastate systems, including the MMIS, 

and other claims systems, have been 

considered in developing a health IT 

solution. The SMHP will include a 

description of data-sharing components 

of proposed health IT solutions, 

including security provisions, and 

description of how the State will 

support integration of clinical and 

administrative data. 

(2) Ensuring improvements in health 

outcomes, clinical quality, and 

efficiency. This category of SMHP 

elements will address requirements in 

the Act relating to improving healthcare 

quality and lowering costs. As 

proposed, States will include 

components that describe a process for 

ensuring improvements in health 

outcomes, clinical quality, or efficiency 

resulting from the adoption of certified 

EHR technology by recipients of 

Medicaid EHR incentive payments and 

a methodology for verifying such 

information. As proposed, we are 

requiring a description of how the State 

will address, in the long-term, the needs 

of underserved and vulnerable 

populations such as children, 

individuals with chronic conditions, 

Title IV–E foster care children, 

individuals in long-term care settings 

and the aged, blind, and disabled. We 

proposed that in order to obtain 

approval for their SMHP and 

implementation funding, a State would 

have to detail how their EHR Incentive 

Program addressed the concepts of selfdirection including budget development 

and expenditure tracking for persons 

with disabilities. After additional 

consideration, CMS decided that these 

concepts are not directly applicable to 

electronic health records or meaningful 

use, per se, and while important, are 

more associated with other e-Health 

tools, such as personal health records. 

Furthermore, the provider types to 

whom this is most directly relevant, 

such as home, institutional and 

community-based providers and 

facilities, are not eligible for EHR 

incentives so including planning for this 

issue was not perceived as rising to the 

level of a requirement. It is anticipated 

that Stage 2 of meaningful use will 

include greater levels of patient 

engagement, including via personal 

health records. However, we think it is 

premature to require that States fully 

address this issue in their SMHPs order 

to initiate their EHR Incentive Programs 

for Stage 1. 

As proposed, we will also require a 

description of the process in place for 

ensuring that any certified EHR 

technology used as the basis for 

incentive payments 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. 

(3) Interoperability and Health 

Information Exchange. This category of 

SMHP elements will address 

requirements in the Act relating to 

ensuring interoperability and increasing 

health information exchange. We 

proposed a series of elements that 

explain how the State will adopt 

national data standards for health and 

data exchange and open standards for 

technical solutions as they become 

available. These elements of the SMHP 

also are included in our final rule. 

(4) Administration and Oversight. 

This category of SMHP elements 

address the requirements in the Act 

relating to implementation and financial 

oversight of the program. For provider 

eligibility, we proposed that States 

provide a description of the process 

they will use for ensuring that each EP 

and eligible hospital meets provider 

enrollment eligibility criteria upon 

enrollment and re-enrollment to the 

Medicaid EHR payment incentive 

program, and the process for ensuring 

patient volume consistent with the 

criteria in § 495.304 and § 495.306, and 

for ensuring that each Medicaid EP is 

not hospital-based and that there is a 

methodology in place used to verify 

such information. We are finalizing 

most of these requirements, as 

proposed. However, in response to 

comments suggesting that CMS define 

the term ‘‘encounter’’ and take a menu 

approach to patient volume to allow 

States several options, based on their 

data sources, CMS has included changes 

to the SMHP requirements for the 

patient volume requirement in 

§ 495.302, § 495.306, and § 495.332. 

These changes are discussed under the 

patient volume section of this final rule. 

We note that States that wish to offer an 

alternative for estimating patient 

volume would be required to involve 

key stakeholders in the determination of 

such alternative. We also proposed, and 

are finalizing, specific elements in the 

SMHP relating to monitoring and 

validation of information, including a 

method of ensuring all information from 

provider attestations is captured, stored, 

and verified, and any information added 

to the CMS Single Provider Repository 

is all true and accurate. We also 

proposed, and are finalizing, that States 

include a list of the specific actions 

planned to implement the EHR 

incentive program, including a 

description and organizational charts for 

workgroups within State government 

and external partners. As proposed, 

States will need to describe the process 

they have in place to ensure that no 


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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 incentive payment 

program, and a methodology for 

verifying such information is available 

and the process to ensure that no 

amounts higher than 90 percent of FFP 

will be claimed for CMS-approved 

administrative expenses in 

administering the certified EHR 

technology incentive payment program, 

including a methodology for verifying 

such information. As proposed, States 

will need to include mechanisms for 

making timely and accurate payments 

and a requirement that providers attest 

that they are not receiving a payment in 

any other State under the Medicaid EHR 

incentive program. This category also 

includes elements relating to financial 

management and auditing necessary to 

ensure the proper and efficient 

management and oversight of the 

program and FFP. 

Finally, we proposed that the States 

may propose in the SMHP alternatives 

to measuring patient volume or 

achieving meaningful use. The rules for 

proposing alternatives are discussed 

elsewhere in this final rule. 

We are further clarifying the 

definition of Health Information 

Technology Planning Advance Planning 

Document (HIT PAPD) (and any 

necessary update documents) to mean a 

plan of action that requests FFP and 

approval to initiate and accomplish 

planning activities necessary for a State 

agency to determine the need for and 

plan the acquisition of HIT equipment 

and services, and to acquire information 

necessary to prepare a HIT 

Implementation Advanced Planning 

Document (HIT IAPD), described below, 

or common procurement instruments, 

such as requests for proposals, or 

requests for qualifications and 

quotations, necessary to implement the 

SMHP. CMS is including a definition of 

the HIT PAPD so that States may submit 

proposed resources and planning 

activities, which are described in further 

detail in our State Medicaid Director’s 

letter on September 1, 2009, to receive 

the 90 percent FFP match for initial 

planning activities related to the 

Medicaid EHR incentive payment 

program. In order to qualify for the 90 

percent FFP administrative match, 

section 1903(t)(9) of the Act requires a 

State to demonstrate, to the satisfaction 

of the Secretary, compliance with three 

specific criteria: 

(A) The State uses the funds for 

purposes of administering the incentive 

payments, including the tracking of 

meaningful use of certified EHR 

technology by Medicaid providers; 

(B) The State conducts adequate 

oversight of the incentive program, 

including routine tracking of 

meaningful use attestations and 

reporting mechanisms; and 

(C) The State pursues initiatives to 

encourage adoption of certified EHR 

technology to promote health care 

quality and the exchange of health care 

information under Medicaid, subject to 

applicable laws and regulations 

governing such exchange, while 

ensuring privacy and security of data 

provided to its data exchange partners. 

We are further clarifying the 

definition of Health Information 

Technology Implementation Advance 

Planning Document (HIT IAPD) (and 

any necessary update documents) to 

mean a plan of action that requests 

approval of FFP to acquire necessary 

resources to implement and administer 

the activities and objectives of the 

State’s proposed SMHP, once the SMHP 

is approved by CMS, including the 

allocation or acquisition of human 

resources, services and equipment. To 

qualify to receive FFP for administering 

the incentive program, States must 

develop an HIT PAPD, SMHP, 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 and maintain a 

health IT roadmap to develop the 

systems necessary to support providers 

in their adoption and meaningful use of 

certified EHR technology. 

With respect to FFP under the 

Medicaid incentive program, we are 

clarifying that the incentive payments to 

providers are matched at 100 percent 

FFP as described above, and therefore 

there is no non-Federal share for these 

payments. However, there is a nonFederal share necessary for the 

administration of the payment 

incentives. That is, CMS is reimbursing 

States at 90 percent FFP for reasonable 

expenses related to the administration 

of the payment incentives. States must 

fund the 10 percent non-Federal share 

of Medicaid health information 

technology (health IT) administrative 

payments consistent with existing rules 

and regulations regarding funding of the 

non-Federal share. We review nonFederal share funding sources to ensure 

compliance with existing statute and 

regulations. Consistent with current 

practice, we will review non-Federal 

share funding sources on an individual 

basis using information provided by the 

State and gathered by CMS staff. 

Existing rules permit States to provide 

the non-Federal share of administrative 

claims through various sources, 

including appropriations, 

intergovernmental transfers, certified 

public expenditures, bona fide 

donations, and permissible health care 

related taxes. CMS’ regional financial 

management staff will review funding 

sources and will review the Medicaid 

Budget and Expenditure System to 

ensure that all claims for reimbursement 

are appropriate. Additionally, States are 

required to submit SMHPs outlining 

their process for making payments and 

ensuring that all claims for 

reimbursement are appropriate to CMS 

for review and approval. 

At § 495.324 we proposed to review 

and prior approve all elements of the 

State’s APD documents and SMHP 

described in this rule to ensure that all 

of the intended objectives of the 

program are addressed. We are 

finalizing this proposal. States are 

required to submit these APD 

documents and the SMHP in order for 

us to approve FFP. Specifically, prior 

approval is required for the HIT PAPD 

(see also § 495.336). The deliverable 

resulting from the HIT PAPD is the 

SMHP. The SMHP will be reviewed and 

approved before it is included in an HIT 

Implementation APD (HIT IAPD) (see 

also § 495.338). The HIT IAPD also must 

be prior approved. After a HIT PAPD is 

approved for planning activities, and 

these planning activities are complete, 

we anticipate that in certain cases, 

States may decide to submit the SMHP 

and HIT IAPD together in one 

submission for CMS review and 

approval. In all cases, until approval is 

granted, States cannot draw down 

Federal funds. We envision that the 

prior approval process described at 

§ 495.324 will permit States to work 

closely with CMS in developing the HIT 

PAPD prior to initiating EHR planning 

activities and prior to submission of the 

initial HIT PAPD. 

We are defining ‘‘as needed’’ and 

‘‘annual’’ updates to the HIT PAPD and 

HIT IAPD at § 495.340 and § 495.342. In 

consultation with States and other key 

stakeholders, CMS has determined that 

planning and implementing the 

Medicaid EHR incentive payment 

program will be a complex process that 

will result in a need for ‘‘as needed’’ and 

‘‘annual’’ updates to the original scope of 

work. Therefore, we proposed that the 

APD process would allow States to 

update their APD documents when they 

anticipate changes in the amount of 

FFP, duration of the project, or scope of 

work or activities under the APD. We 

are finalizing this proposal, as it allows 

States flexibility to add additional tasks 

and milestones as the project evolves, as 

determined since the date the APD was 


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initially approved or since the most 

recently updated and approved APD. 

We initially proposed that we 

envision two phases in the process of 

planning and implementing the 

incentive program, as well as the 

promotion of adoption and meaningful 

use of EHR. We are further clarifying 

that based on submission of HIT PAPDs 

in response to guidance provided in our 

State Medicaid Director’s letter of 

September 1, 2009, initial planning 

timelines are ranging from 6 months to 

18 months to develop the SMHP. CMS 

envisions that States will begin to 

administer the EHR incentive program 

on January 1, 2011, once the SMHP and 

IAPD are approved. As proposed, we 

will issue additional written guidance, 

similar to our earlier SMD letter, 

concerning timelines for 

implementation of the EHR incentive 

program as States develop the SMHP. 

We require the HIT IAPD as the 

vehicle for informing us of Phase II 

activities. We anticipate that States will 

also have ongoing planning needs as 

implementation activities, once 

approved under the IAPD, are under 

way. We further envision that the IAPD 

‘‘annual’’ or ‘‘as needed’’ updates may 

also include requests for approval of 

FFP for other Phase II that are necessary 

to continue planning and development 

for the ongoing implementation phases 

of the program. In section 495.388, we 

proposed to require that States submit 

information in the IAPD regarding an 

estimate of prospective cost allocation 

(OMB Circular A–87, Cost Principles for 

State, Local, and Indian Tribal 

Governments) to the various State and 

Federal funding sources and the 

proposed procedures for distributing 

costs including a detailed payment list 

file to include NPI, name, and type of 

provider for which the State will 

provide incentive payments. For the 

final rule, we are continuing to require 

the estimate of prospective cost 

distribution and the procedures for 

distributing costs; however, we are 

eliminating the requirement that States 

have to submit NPI, name and provider 

type as part of the estimates for cost 

distribution since we realize that in 

continuing to require this information 

States will not be able to submit 

approvable IAPDs to CMS because 

States will not have this information at 

the time of submittal; hence, States will 

not be successful in implementing this 

program. 

We wish to further clarify that in 

proposing termination of funding if the 

State fails to meet the requirements and 

undertakings of the approved HIT 

PAPD, SMHP, and HIT IAPD, or fails to 

provide access to the required 

information, this requirement is 

necessary to ensure the proper and 

efficient use of FFP and is consistent 

with present authority under the Act 

and existing regulations that are 

promulgated by CMS, including at 45 

CFR Part 95, Subpart F. 

Comment: One commenter questioned 

whether the EHR incentive payments 

will be required to be processed through 

the Medicaid Management Information 

System (MMIS). 

Response: Payments under the 

Medicaid EHR incentive program are 

authorized under Title XIX of the Social 

Security Act as part of the Medicaid 

program. We require that States have an 

automated claims processing and 

information and retrieval system, 

known as MMIS to manage health care 

provider payments for health care 

services, and provide information for 

program management, administration, 

and auditing. As such, we believe that 

most States will choose to process, 

monitor, and report Medicaid incentive 

payments to eligible professionals and 

hospitals participating in the Medicaid 

EHR incentive program using the MMIS. 

States may propose alternative methods 

to process, monitor, and report 

Medicaid incentive payments in their 

SMHP. Any proposed method to 

process, monitor, and report Medicaid 

incentive payments, including 

utilization of the State’s MMIS, must be 

approved by CMS. Through guidance 

issued in a State Medicaid Directors 

Letter and via case by case analysis of 

APDs, CMS will collaborate with States 

to approve system development and 

enhancement expenditures under the 

most appropriate funding source, 

HITECH or MMIS. 

Comment: One commenter provided 

comments on § 495.348(d), Procurement 

standards; Competition, and 

§ 495.360(a). The commenter agrees that 

procurement transactions are conducted 

to provide, to the maximum extent 

practicable, open and free competition 

and recommends that procurement 

transactions require that bidders bid 

specifically for the EHR portion of any 

project (to ensure that the discrete costs 

are clearly identified), (2) no certified 

EHR technology may be excluded from 

bidding, and (3) all projects must be 

both EHR-neutral and provider-neutral. 

They further comment that CMS could 

consider having either a cap or 

percentage limits on the amount of 

administrative costs or consulting fees 

to ensure that the bulk of the award is 

used for the hard costs of the project: 

equipment, connectivity, and training. 

Response: The requirement in 

§ 495.348(d) is limited to States and 

other grantees of Federal funds 

authorized under Title XIX of the Social 

Security Act and does not apply to 

procurement standards for vendors 

bidding on EHR technology for eligible 

providers. However, CMS will 

encourage States to include adoption of 

interoperable solutions that align with 

the MITA principles that address IT 

architectural and platform neutrality. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter 

recommended that CMS reconsider the 

general rule set forth in § 495.360 that 

‘‘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.’’ 

The commenter states that it is typical 

for the vendor to own the underlying 

software, and State or local governments 

are provided a license to use the 

software, and this is contrary to the 

proposed general rule. 

Response: We disagree with the 

recommendation to exclude a clause in 

all State procurement instruments that 

provides that the State or local 

government will have all ownership 

rights in software developed or 

modified using Federal funding. This is 

a long-standing principal for use of FFP 

associated with the development of 

information technology solutions that 

may be licensed for use by other State 

or Federal government agencies to 

benefit the Medicaid program, at no 

additional cost for the license. CMS 

clarifies that costs of the license 

agreements for proprietary software may 

be reimbursable under the provisions of 

1903(a)(3)(F)(ii) of the Act that provides 

for 90 percent FFP for costs associated 

with certain administrative activities 

performed by a State. However, costs 

associated with developing or 

modifying software may not be funded 

with Federal funds unless the State has 

ownership rights to that software. This 

provision does not apply to eligible 

providers or hospitals purchasing 

software for which Federal funding has 

been provided by States through the 

Medicaid EHR incentive program. 

Proposed costs may be submitted for 

review and consideration for approval 

by CMS as part of the HIT PAPD and 

HIT IAPD requirements described in 

this proposed rule under § 495.336 and 

§ 495.338. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 


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Comment: One commenter indicated 

that the process for State Medicaid 

plans seems to be lengthy, with no 

timeframes specified for initial 

submission from the State to the 

Department, nor is there a timeline for 

the approval process from CMS back to 

the State. There is also no timeline for 

the implementation of the health IT 

programs after a State receives approval. 

The commenter also notes that with the 

burden for administration on the States, 

there may not be adequate time to get 

all of the activities completed to have 

infrastructure and processes in place to 

accept data or attestations from the 

Eligible Providers and Eligible 

Hospitals. 

Response: We provided specific 

guidance on timelines and process prior 

to the initial planning period regarding 

State planning activities and 

administrative expenses for provider 

incentive payments in our State 

Medicaid Director’s letter on September 

1, 2009. We also indicated in our letter 

that CMS will work with States to 

determine when each State is ready to 

begin making payments. We have 

provided additional rationale about the 

process for submitting documents and 

required content in the final rule. In the 

near future, CMS will issue more 

guidance on specific implementation 

activities and timelines, prior to States 

submission of their SMHP and IAPD. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter requested 

that CMS require that States pass 

through the matching funds to 

providers. 

Response: The regulation at section 

495.366 requires that States 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. 

This language is consistent with the 

statutory language at 1903(t)(6). We will 

require that this process be established 

in the SMHP. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter requested 

that CMS clarify that use of certified 

public expenditures (CPE) or 

intergovernmental transfers in the 

context of the Medicaid EHR incentive 

payments would be inappropriate, since 

these payments do not have a nonfederal share. If CMS does permit use of 

CPEs in the Medicaid EHR incentive 

program context, CMS must require that 

States pass through the matching funds 

to providers. 

Response: We believe the commenter 

is not clear. As explained above 

incentive payments to providers are 

matched at 100 percent; thus, there is no 

non-Federal share for these payments. 

However, there is a non-Federal share 

necessary for the administration of the 

payment incentives. CMS is reimbursing 

States at 90 percent for reasonable 

expenses related to the administration 

of the payment incentives and States 

must fund the 10 percent non-Federal 

share of Medicaid health information 

technology administrative payments 

consistent with existing rules and 

regulations regarding funding of the 

non-Federal share. Please see our above 

discussion of this issue for further 

detail. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter questioned 

why Medicaid is allowed to determine 

its own requirements and the impact 

this may have on other stakeholders. 

Response: We are clarifying that we 

have provided specific guidance for 

State planning activities that must be 

addressed in order to qualify to receive 

FFP for administering the incentive 

program. We provided guidance in a 

State Medicaid Director’s letter 

published on September 1, 2009, on this 

process. CMS intends to require 

submission of documentation that will 

enable the agency to evaluate whether 

the activities for which FFP was, or may 

be approved for, are being completed 

according to Federal requirements, 

including any terms and conditions of 

FFP approval. States must develop a 

HIT PAPD, a SMHP, and a HIT IAPD. 

These documents would describe the 

processes and resources States will use 

to implement and oversee the EHR 

incentive program, and would help 

States to construct an health IT 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) also 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. Our review 

process ensures 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 CMS is responsible for 

overseeing States in their administration 

of the Medicaid program, as well as 

ensuring the overall financial integrity 

of the program, States cannot simply 

propose activities in order to secure the 

90 percent FFP. We propose to review 

and prior approve all elements of the 

State’s SMHP, and APD documents 

described in this rule to ensure that all 

of the intended objectives of the 

program are addressed. One of the key 

components of the SMHP is stakeholder 

collaboration and coordination to 

ensure that an integrated strategy is 

developed addressing stakeholder 

needs. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter 

recommended that all the source 

materials needed to create the quality 

measure registry, is submitted to the 

MITA Information Architecture Review 

Board (IARB) for approval as a MITA 

standard and all the source materials be 

added to the MITA artifact repository. 

Doing this will prevent duplicative 

efforts and associated expense both by 

CMS and the participating States. 

Response: We agree with the 

commenter. We support the concept 

that States should apply MITA 

principles to any IT development work 

performed for the EHR incentive 

program, where applicable. If a State 

chooses to integrate a clinical data 

warehouse into its MMIS system, all 

recommended steps, and required 

approvals, for MMIS development, 

including application of MITA 

guidelines, should apply. The goal of 

MITA is not to focus on creating new 

standards so much as utilizing data 

standards developed by other national 

organizations, such as those responsible 

for implementation of HITECH and also 

defining information requirements for 

new business processes. If a State is 

going to develop its own clinical data 

repository to store Medicaid providers’ 

submitted clinical quality measures data 

(one of the MU objectives), then use of 

the MITA Governance boards would be 

a recommended approach. States whose 

SMHPs successfully apply MITA to 

their EHR incentive program systems 

are encouraged to store approved 

artifacts in the Clemson University 

MITA repository so that other States 

may benefit: http://mita.clemson.edu. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter, as a large 

pediatric provider with five physicians 

and four nurses in a relatively rural 

area, is concerned that States have not 

yet sent, or had approved by CMS, the 

State’s Medicaid requirements. 


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Response: States are in the process of 

developing their SMHPs. States could 

not be approved to start offering 

incentives prior to a final rule becoming 

effective. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: Some commenters asked 

for clarification on how managed care 

entities would be involved in this 

program besides potentially being used 

to disburse incentive payments, as 

mentioned in the proposed rule. 

Examples included things like 

monitoring providers in the health plans 

to ensure compliance. The commenters 

suggested that any work done by the 

managed care entity should be reflected 

in the capitation rate. 

Response: Service agreements 

between States and their managed care 

contractors are not governed by this 

regulation, but must be in compliance 

with 42 CFR part 438. We agree there 

are many opportunities to leverage the 

efficiencies of the managed care entities’ 

activities and role with the larger goals 

and State responsibilities for 

administering the payments. We suggest 

that activities like distributing 

informational materials about the 

incentive program and health IT to 

health plan providers and enrollees 

would fall under most current contracts 

and would be considered part of the 

cost of doing business, which may be 

reflected in the administrative portion 

of the capitation rate. 

If more significant activities are 

expected, such as monitoring and 

reporting information on the providers, 

health plans may exceed the normal 

costs of doing business and what would 

be adequately reflected in the 

administrative portion of the capitation 

rate. An alternative option would be for 

the State and managed care organization 

to have contractual requirements and 

deliverables separate from the capitation 

rate, including the administrative 

component. In the latter scenario, it 

would be acceptable to develop a 

contract amendment specifying the 

terms. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: A commenter asked 

whether or not a State would need to 

file a State Plan Amendment that 

incorporates the SMHP into their State 

Plan, or if the SMHP can stand alone. 

The commenter further asked that if the 

SMHP can stand alone, then would the 

state need to file a State Plan 

Amendment that references the SMHP 

in their plan. 

Response: CMS clarifies that the State 

does not need to file a State Plan 

Amendment or reference the SMHP in 

their State Plan. As part of the Advance 

Planning Document process, the SMHP 

is a deliverable that is submitted to CMS 

for review and approval prior to 

expending funds for the incentive 

program implementation activities. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

9. Financial Oversight, Program 

Integrity and Provider Appeals 

Pursuant 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 proposed requirements for 

States’ financial oversight and 

monitoring of expenditures. 

Additionally, we proposed 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). 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 

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. 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, which may include 

an MMIS—the automated mechanized 

claims 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. 

Additionally, we would monitor 

provider demonstration of meaningful 

use. 

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 also are requiring 

States to establish § 495.370, Provider 

Appeals. This section specifies 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 meaningful use of, or the 

efforts to adopt, implement, or upgrade 


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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 

§ 447.253(e). 

Comment: One individual commented 

on potential fraud and abuse 

opportunities if large amounts of 

medical data can be mined, as a result 

of electronic health records. 

Response: First, it is important to note 

that as part of demonstrating meaningful 

use providers will be submitting only 

aggregated, not individually identifiable 

data, to States. Second, we wish to 

clarify that providers will be required to 

comply with the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA) to the extent that they are 

covered entities. States must provide 

CMS with details about how their 

implementation of the EHR incentive 

program will address Federal and State 

privacy laws and how all data will be 

secured in the SMHP. 

Additionally, the act of preventing 

fraud should be paramount in 

implementing this program. In 

accordance with Section 1903(t)(9) of 

the Social Security Act, States must 

demonstrate to the satisfaction of the 

Secretary that they are conducting 

adequate oversight of this program and 

that they are complying with Federal 

requirements to: (a) Ensure the 

qualifications of providers who request 

Medicaid EHR incentive payments, (b) 

detect improper payments and (c) refer 

suspected cases of fraud and abuse to 

the Medicaid fraud control unit. In 

conducting required oversight 

responsibilities, States can receive 90 

percent matching funds for allowable 

expenditures. States are required to 

assure CMS through the State’s 

Medicaid HIT plan that they have 

processes in place to prevent against 

fraud and abuse. CMS will review and 

approve each State’s Medicaid HIT plan. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter noted that 

use of electronic health records may 

provide claims adjudication auditors 

with documentation to verify that items 

or services provided are reasonable and 

necessary, supporting an upfront clean 

claims process and the opportunity to 

conduct pre- and post-pay audits 

without the need to request 

documentation in retrospect. Another 

commenter wanted an assurance that 

CMS will perform audits of a random 

sample of attestation surveys and that 

any providers that are found to be 

making false claims would be penalized 

and listed in a public report posted on 

CMS’ Web site. 

Response: We thank the commenter 

for the comments, but point out that 

meaningful use currently would not 

include using EHRs to provide 

electronic documentation in support of 

claims adjudication. We do, however, 

want to address the issue of pre- and 

post-audits. While one commenter is 

concerned with the process for 

adjudicating claims, the other 

commenter is concerned that there are 

other areas of this program that will 

necessitate pre- and post-pay audits. For 

Medicaid, States are required to provide 

information to CMS in the State 

Medicaid HIT plan outlining the 

processes and methodologies they will 

use to ensure that payments are being 

made to the right person, at the right 

time, for the right reason. Specifically, 

in year one in order to receive an 

incentive payment, providers will be 

attesting to, among other things, 

whether they are using a certified EHR, 

demonstrating meaningful use, 

demonstrating adopting, implementing 

or upgrading certified EHR technology, 

etc. States will be required to ‘‘look 

behind’’ provider attestations. We 

believe that this will require audits both 

pre- and post-pay. CMS believes a 

combination of approaches is in order 

which should result in accurate 

payments. CMS wishes to point out that 

States must provide assurances to CMS 

that they are conducting adequate 

oversight in order to receive the 90 

percent FFP for administration of the 

incentive payments. Additionally, it 

should be noted that this program is 

consistent with other programs under 

Title XIX. States must properly 

administer the program or risk FFP. All 

costs claimed under the program are 

subject to review or audit. Furthermore, 

CMS’ approval of the State Medicaid 

HIT plan does not relieve the State of its 

responsibility to comply with changes 

in Federal laws and regulations and to 

ensure that claims for Federal funding 

are consistent with all applicable 

requirements. We should point out that 

for Medicaid there is no statutory 

requirement to post individual 

provider’s name and/or incentive 

payment program information to the 

CMS Web site. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter is 

concerned about the circumstances 

under which Medicaid is required to 

recoup incentive payments from 

providers. Specifically, the commenter 

requests clarification on the scenario in 

which a provider receives a payment for 

demonstrating adoption, 

implementation, or upgrading EHR 

technology in year one, demonstrating 

meaningful use in years two and three, 

but receives no payment in year four 

because the provider could not 

demonstrate meaningful use. The 

commenter is concerned that Medicaid 

will be responsible for recouping 

payments made in years one, two, and 

three. 

Response: First, it should be noted 

that it is possible for a provider to be 

able to demonstrate meaningful use in 

one year, but not others. Thus, the 

failure of the provider to demonstrate 

meaningful use in year four would not 

necessarily mean that the provider 

failed to demonstrate meaningful use in 

prior years, although it could possibly 

alert the State to more closely review a 

specific provider’s prior year 

attestations or demonstrations of 

meaningful use. For hospitals 

demonstrating meaningful use in both 

the Medicare and Medicaid incentive 

payment programs, CMS will issue 

further guidance about how States will 

be able to access the meaningful use 

data submitted to CMS in order for the 

State to meet its audit and oversight 

requirements. States will be required to 

outline in the SMHP the process for 

‘‘looking behind’’ provider attestations 

and the demonstration of meaningful 

use including any record retention 

requirements. 

In accordance with section 1903(t)(9) 

of the Social Security Act and 

§ 495.332(c) and (e) of the regulations as 

well as § 495.368, States are required to 

include in their State’s Medicaid HIT 

plan processes for detecting improper 

payments and for combating fraud and 

abuse. This would mean that States will 

be responsible for conducting audits of 

providers and ensuring that any 

requests for reimbursement for FFP 

meet all requirements of this subpart. 

When States conduct audits and 

determine that improper payments have 

been made, States are responsible for 

recovering and returning to CMS FFP 

for any incentive payments that are 

discovered to be improper. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: Another commenter is 

concerned with a similar issue. That is, 

the commenter requested that CMS 

identify and develop ‘‘safe harbor’’ 


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processes and methods for 

administering the incentive program 

that would assure States that if these 

processes/methods are used, States 

would not be at risk if the processes/ 

methods are less successful than 

anticipated. An example would include 

a process for auditing the adoption, 

implementation, and upgrading process. 

If an audit approach was agreed to but 

ended up being less than effective when 

applied, the State should not be 

responsible for re-auditing providers for 

previous years, nor would it be denied 

participation in the incentive program 

and lose the FFP. Another commenter is 

similarly concerned that this is a new 

program and they requested that CMS 

explicitly recognize the States’ ability to 

revise and redirect the program without 

penalty from CMS. 

Response: Our focus is on ensuring 

that EHR incentive payments are made 

to the eligible provider, and are for the 

correct amount in the appropriate 

payment year (or payment cycle). CMS 

will ensure 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. 

States can receive FFP if they are 

conducting adequate oversight and 

States must provide their plans for 

financial oversight and the processes 

and methodologies they will use to 

verify provider information to CMS for 

review and approval as part of its State’s 

Medicaid HIT plan. We believe States 

may want to consider multiple ways in 

which to audit their providers; for 

example, to ensure that a provider is not 

excluded from the program, the State 

should review on a prepay basis the 

Office of the Inspector General’s List of 

Excluded Individuals and Entities to 

determine if providers are excluded. 

Additionally, States may wish to 

consider attestation in year one for 

demonstrating adopting, implementing, 

or upgrading or meaningfully using 

certified EHR technology. States will 

have to ‘‘look behind’’ these attestations 

and we assume this will be done on a 

post-pay basis. One size does not fit all 

and we believe several audit options 

should be used by States to ensure 

‘‘adequate oversight.’’ However, if it is 

determined that the State’s audit 

methodologies are proving to be less 

than effective we will require that the 

State update its State Medicaid HIT plan 

and present more effective audit 

strategies that will work to accomplish 

conducting adequate oversight of the 

program. States must ensure due 

diligence in conducting adequate 

oversight and all requirements of this 

subpart must be met or FFP could be at 

risk. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

Comment: One commenter requested 

information regarding the appeals 

process. 

Response: For Medicaid, CMS has 

specified the appeals process for a 

Medicaid provider receiving electronic 

health record incentive payments in 

§ 495.370. Specifically, the State must 

have a process in place consistent with 

the requirements established at 

§ 447.253(e) to allow for providers 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. CMS is requiring that the 

State Medicaid HIT plan describe the 

process in place for provider appeals. 

We believe the States, not the Federal 

government, are in the best position to 

determine the administrative process 

that would best meet their needs and we 

believe States are in a position to design 

an effective appeal procedure; thus, we 

are providing for a great deal of State 

flexibility. Within the parameters of the 

regulation, States are free to establish 

reasonable criteria for appeals, to limit 

the issues on appeal that may be 

appropriate, or to adopt other 

procedures to prevent frivolous appeals. 

However, State appeal processes should 

be consistent with the requirement in 

§ 447.253(e) for prompt administrative 

review. (States define what would 

constitute a prompt review, and we 

have not specified a time period for 

conducting or concluding a provider 

appeal.) This requirement is in keeping 

with providing States flexibility while 

retaining for providers an opportunity to 

avail themselves of an exception process 

when they believe an exception is 

warranted. Additionally, § 447.253(e) 

provides that the Medicaid agency must 

allow providers an opportunity to 

submit additional evidence. Our 

regulations at § 495.370 also require that 

the appeals processes established by the 

States comply with the State’s own 

administrative procedure laws and that 

the State provide any additional appeal 

rights that would otherwise be available 

under the procedures established by the 

State. 

We are making no additional 

revisions to this section of the rule as a 

result of this comment. 

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 final 

rule. This analysis finalizes our 

projections which were proposed in the 

January 13, 2010 Federal Register (75 

FR 1844 through 2011). The projected 

numbers of EPs and eligible hospitals, 

MA organizations, MA EPs and MAaffiliated hospitals are based on the 

numbers used in the impact analysis 

assumptions as well as in Table 32 in 

section IV of this final rule. 

A. ICRs Regarding Demonstration of 

Meaningful Use Criteria (§ 495.8) 

Section 495.8(a)(1) of the proposed 

rule contained requirements for EPs, in 

CY 2011, to attest, through a secure 

mechanism, to meeting meaningful use 

criteria. As described in the proposed 

rule (75 FR 1949), we divided 

meaningful use objectives/measures into 

Sets A and B. We estimated that the 

total burden for an EP to attest to 

§ 495.8(a)(1)(i) and (ii) for Set A 

meaningful use objectives/measures and 

ambulatory quality measures would be 

one hour. For all 442,600 non-hospitalbased Medicare and Medicaid EPs 

(323,500 Medicare EPs, 80,900 dual 

Medicare/Medicaid EPs, and 38,200 

Medicaid-eligible-only EPs), the burden 

therefore equaled 442,600 hours. We 

estimated that the associated cost 

burden was $79.33 for an EP to attest to 

§ 495.8(a)(1)(i) and (ii) for Set A 

meaningful use objectives/measures and 

ambulatory quality measures, and the 

total associated annual cost burden for 

all EPs to attest was $35,111,458. We 

invited comments on the estimated 

percentages and the numbers of 

(registered) EPs that will attest to the 

above including Set A meaningful use 


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objectives/measures in CY 2011, but did 

not receive any on this issue. 

In the proposed rule, we also 

estimated that it would take 8 hours for 

an EP to attest to meeting the Set B 

meaningful use objectives/measures. We 

estimated that the total annual burden 

for all 442,600 non-hospital-based EPs 

to attest to Set B meaningful use 

objectives and measures was 3,540,800 

hours. We estimated the associated cost 

burden for an EP to attest was $634.64 

and the total cost burden for all nonhospital-based EPs to attest was 

$280,891,664. We solicited comments 

on the estimated percentages and the 

numbers of (registered) EPs that will 

attest to Set B objectives and measures 

in CY 2011, but did not receive any on 

this issue. 

Although, as we proposed, we 

continue to have an attestation 

requirement in § 495.8(a)(1), we are 

revising the burden estimates for two 

reasons. First, as described elsewhere in 

this final rule, the definition of hospitalbased EP has changed, resulting in 

about 73,000 outpatient hospital EPs 

becoming potentially eligible to 

participate in the EHR incentive 

program. Therefore, we are increasing 

the number of EPs in our burden 

estimates. We estimate that in CY 2011, 

there will be 521,600 non-hospitalbased Medicare and Medicaid EPs 

(382,000 Medicare EPs, 95,500 dual 

Medicare/Medicaid EPs, and 44,100 

Medicaid-eligible-only EPs) 

participating in the EHR incentive 

program. Second, in response to public 

comments, we have made significant 

changes in § 495.6 meaningful use 

objectives and measures for EPs, eligible 

hospitals and CAHs, which has changed 

the burden estimates. 

In section II.A.2.d. of this final rule, 

Stage 1 Criteria for Meaningful Use in 

this final rule, we have re-categorized 

meaningful use objectives/measures as 

core criteria and menu criteria. Unless 

an exception applies, § 495.6(a) requires 

that an EP must meet all 15 Stage 1 

meaningful use core criteria under 

§ 495.6(d) and 5 out of 10 meaningful 

use menu criteria under § 495.6(e). The 

burden associated with the 

requirements in § 495.8 and § 495.6 is 

the time and effort required to attest to 

the required elements. 

To comply with § 495.8(a)(1), we 

estimate that it would take an EP 8 

hours 52 minutes to prepare and attest 

that during the EHR reporting period, 

the EP used certified technology, specify 

the technology, and satisfied all 15 

mandatory Stage 1 meaningful use core 

criteria. We estimate that it would take 

an EP an additional 0.5 hours to select 

and attest to the clinical quality 

measures, in the format and manner 

specified by CMS. We estimate the total 

burden associated with this requirement 

for an EP is 9 hours 22 minute (8 hours 

52 minutes + 0.5 hours) and the total 

burden for all the EPs to attest to these 

requirements is 4,855,827 hours 

(521,600 EPs × 9 hours 22 minutes). We 

estimate the associated cost burden for 

an EP to attest to these requirements is 

$743.08 (9 hours 22 minutes × $79.33 

(mean hourly rate for physicians based 

on the May 2008 Bureau of Labor 

Statistics)), and the total cost burden for 

all EPs to attest to these requirements is 

$387,592,672 (4,855,827 hours × 

$79.33). 

We recognize that some Stage 1 

meaningful use menu set measures are 

easier to accomplish than others. We 

cannot predict which of the measures in 

the menu set an EP will select. 

Therefore, our burden estimates are 

based on two scenarios to illustrate how 

different scenarios would impact the 

burden incurred. Our ‘‘least 

burdensome’’ or ‘‘low’’ scenario of 

meaningful use demonstration assumes 

that an EP defers the five most 

burdensome objectives/measures while 

our ‘‘most burdensome’’ or ‘‘high’’ 

scenario of meaningful use 

demonstration assumes that an EP 

defers the five least burdensome 

meaningful use menu set measures. We 

recognize that in reality, nothing is 

absolute, and we have no basis for 

estimating the ‘‘all low’’ or ‘‘all high’’ 

scenario and have therefore created 

estimates for both. To compensate for 

the uncertainties of selection of 

meaningful use criteria by an EP, we use 

the averages of the ‘‘high’’ and ‘‘low’’ 

scenario estimates in Table 33. Section 

495.6(a) requires that an EP must meet 

five out of 10 Stage 1 meaningful use 

menu set measures (unless exceptions 

apply). The burden involved is the time 

and effort to select and attest to the 

meaningful use menu set measures. In 

the ‘‘low’’ scenario, we estimate that an 

EP may defer the five most burdensome 

meaningful use measures. We estimate 

it will take an EP 42 minutes to comply 

with the remaining five Stage 1 

meaningful use menu set measures. We 

estimate the total burden for all 521,600 

EPs to comply with the meaningful use 

menu set criteria is 365,120 hours 

(521,600 EPs × 42 minutes). In the high 

scenario, we estimate that an EP may 

defer the five least burdensome 

meaningful use criteria. We estimate 

that it will take an EP 2 hours 40 

minutes to comply with the remaining 

five Stage 1 meaning use menu 

measures. We estimate that the total 

burden for all 521,600 EPs to comply 

with the meaningful use menu set 

criteria is 1,390,586 hours (521,600 EPs 

× 2 hours 40 minutes). Based on the two 

scenarios, the average burden for an EP 

to comply with meaningful use menu 

set criteria is 1 hour 41 minutes ((42 

minutes + 2 hours 40 minutes)/2). Based 

on the two scenarios, the average 

burden for all EPs to comply with 

meaningful use menu set criteria is 

877,853 hours ((365,120 hours + 

1,390,586 hours)/2). We estimate the 

cost burden for an EP to comply with 

the ‘‘low’’ scenario Stage 1 meaningful 

use menu criteria is $55.53 (42 minutes 

× $79.33 (mean hourly rate for 

physicians based on the May 2008 

Bureau of Labor Statistics)), and the 

total cost burden for all 521,600 EPs to 

comply is $28,964,970 (521,600 EPs × 

$55.53). We estimate that the cost 

burden for an EP to comply with the 

‘‘high’’ scenario Stage 1 meaningful use 

menu criteria is $211.49 (2 hours 40 

minutes × $79.33), and the total cost 

burden for all EPs is $110,315.156 

(521,600 EPs × $211.49). The average 

cost burden estimate for an EP to 

comply with the meaningful use menu 

set criteria is $133.51 (($55.53 + 

$211.49)/2). The average cost burden 

estimate for all 521,600 EPs to comply 

with meaningful use menu set criteria is 

$69,640,063 (($28,964,970 + 

$110,315.156)/2). 

In the proposed rule, we expected that 

there would be steady growth in the 

number of participating EPs. We 

estimated that in 2012, there would be 

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) qualified to receive EHR incentive 

payment. We estimated that the burden 

for meeting § 495.8(a)(2), which 

required attestation for most meaningful 

use measures, and electronic reporting 

of clinical quality measures in CY 2012, 

would be 0.5 hours for an EP to attest 

to the Set A objectives and measures 

and 8 hours to gather information and 

attest to the Meaningful Use Set B 

objectives/measures. For burden 

estimate purposes, we estimated that all 

447,400 non-hospital-based Medicare, 

and Medicaid EPs might attest. We 

estimated that the total annual 

attestation burden for all EPs was 

223,700 hours for the Set A objectives/ 

measures and 3,579,200 hours for Set B 

objectives/measures. We estimated that 

the associated cost burden was $39.67 

for the Set A meaningful use objectives/ 

measures and $634.64 for the Set B 

meaningful use objectives/measures. 

The total cost burden for all EPs was 

$17,746,121 for Set A and $283,937,936 


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for Set B. We invited comments on the 

estimated percentages and the numbers 

of registered EPs that would attest to 

EHR technology used and Meaningful 

Use Set A and Set B objectives/measures 

in CY 2012, but we did not receive any 

comments on this issue. 

We expect steady growth in EPs in CY 

2012. In the final rule, based on 

legislation altering the definition of 

‘‘hospital-based,’’ we are increasing our 

estimates of participating EPs, and 

estimate that in CY 2012, there will be 

about 527,254 non-hospital-based 

Medicare and Medicaid EPs (385,954 

Medicare EPs, 96,500 dual Medicare/ 

Medicaid EPs and 44,800 Medicaideligible-only EPs) who are qualified to 

receive EHR incentive payments. The 

Stage 1 meaningful use criteria (core 

and menu sets) are the same for CY 2011 

and CY 2012. We estimate that it would 

take 8 hours 52 minutes for an EP to 

attest that during the EHR reporting 

period, the EP used certified technology, 

specify the technology, and satisfied all 

15 mandatory Stage 1 meaningful use 

core criteria. We estimate the total 

burden associated with this requirement 

for all EPs is -4,675,161 hours (527,254 

EPs × 8 hours 52 minutes). The 

associated cost burden for an EP to 

comply with this requirement is $703.42 

(8 hours 52 minute × $79.33) and the 

associated cost burden for all EPs is 

$370,880.589 (44,675,161 hours × 

$79.33 (mean hourly rate of physicians 

based on the May 2008 Bureau of Labor 

Statistics)). 

The Stage 1 meaningful use objectives 

and measures are the same for CY 2011 

and CY 2012. Therefore, in CY 2012, the 

burden associated with attesting to 

Stage 1 meaningful use core and menu 

criteria for an EP is the same as CY 

2011. Again, we cannot predict which of 

the measures in the menu set will be 

selected by an EP. Therefore, as 

explained above, we use a ‘‘low’’ and 

‘‘high’’ scenario to estimate burden. For 

the ‘‘low’’ scenario, we estimate it will 

take an EP 42 minutes to attest to five 

Stage 1 meaningful use menu-set 

measures. The total burden for all 

527,254 EPs, therefore, would be 

estimated at 369,078 hours (527,254 EPs 

× 42 minutes). Under the ‘‘high’’ 

scenario, we estimate it will take 2 

hours 40 minutes for an EP to attest to 

five Stage 1 meaningful use menu-set 

criteria. The total burden for all 527,254 

EPs, therefore, is estimated to be 

1,405,659 hours (527,254 EPs × 2 hours 

40 minutes). Based on the two 

scenarios, the average burden hours for 

an EP to attest to meaningful use menu 

set measures is 1 hour 41 minutes ((42 

minutes + 2 hours 40 minutes)/2), and 

the total average burden for all EPs is 

887,369 hours ((369,078 hours + 

1,405,659 hours)/2). Under the ‘‘low 

scenario,’’ we estimate that the cost 

burden for an EP is $55.53 (42 minutes 

× $79.33 (mean hourly rate for 

physicians based on the May 2008 

Bureau of Labor Statistics)), and the 

total cost burden for all 527,254 EPs to 

comply with is $29,278,942 (527,254 

EPs × $55.53). For the ‘‘high scenario,’’ 

we estimate that the cost burden is 

$211.49 (2 hours 40 minutes × $79.33), 

and the total cost burden for all EPs is 

$111,510,942 (527,254 EPs × $211.49). 

The average cost burden is $133.51 

(($55.53 + $211.49)/2). The average cost 

burden for all 527,254 EPs is 

$70,394,942 (($29,278,942 + 

111,510,942)/2). 

Section 495.8(a)(2)(iii) requires that 

for CY 2012, EPs must report 

electronically to CMS, or, in the case of 

Medicaid EPs, the States, clinical 

quality information in the form and 

manner specified by CMS. We have 

limited the required measures only to 

those that can be automatically 

calculated by a certified EHR, and to 

those for which we have electronic 

specifications currently available and 

we are able to post as final by the date 

of display of this final rule. The burden 

associated with this requirement is the 

time and efforts to report the required 

clinical quality measures. We estimate 

the burden for an EP to comply with 

this requirement is 0.5 hours and the 

total burden for all EPs to comply with 

this requirement is 263,627 hours 

(527,254 EPs × 0.5 hours). We believed 

that an EP may assign a medical 

secretary to submit the specific clinical 

quality measures to CMS or the States. 

We estimate the cost burden for an EP 

to comply with this requirement is 

$7.40 (0.5 hours × $14.81 (mean hourly 

rate of medical secretaries based on the 

May 2008 Bureau of Labor Statistics)) 

and the cost burden for all EPs to 

comply with this requirement is 

$3,904,316 (263,627 hours × $14.81). 

To estimate capital costs for EPs, we 

assume a certified EHR system will cost 

roughly $54,000. If 521,600 EPs adopt 

these EHRs, total capital costs prior to 

incentives would be roughly $23.9 

billion. We also estimate that in 2011, 

$0.2 billion of Medicare incentive 

payments and $0.2 billion of Medicaid 

incentive payments would be provided 

to EPs under a low scenario, and $0.6 

billion Medicare incentive payments 

and $0.9 billion of Medicaid incentive 

payments would be provided to EPs 

under a high scenario to help offset 

those costs. Therefore, we estimate that 

total net capital costs for EPs in 2011 

would be $23.5 billion ($23.9 

billion¥$0.2 billion¥$0.2 billion) 

under a low scenario and $22.4 billion 

($23.9 billion¥$0.6 billion¥$0.9 

billion). 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 $22.1 billion ($23.5 

billion¥$1.0 billion of Medicare 

incentives¥$0.4 billion of Medicaid 

incentives) under the low scenario and 

419.0 billion ($22.4 billion¥$2.3 

billion¥$1.1 billion) under the high 

scenario. 

As with EPs, for eligible hospitals and 

CAHs, we proposed, at section 495.8(b) 

of the proposed rule, that hospitals 

demonstrate they are meaningful EHR 

users through an attestation mechanism. 

As with EPs, we divided meaningful use 

criteria into Sets A and B. We estimated 

that it would take an eligible hospital or 

CAH 0.5 hours to attest to the 

requirements in § 495.8(b)(1)(i) and (ii) 

including the Set A meaningful use 

objectives/measures, .0.5 hours to select 

and attest to the hospital quality 

measures, and 7 hours to comply with 

gathering the information, attesting and 

reporting Set B objectives/measures. 

Therefore, the estimated the total 

burden for all 5,011 Medicare and 

Medicaid eligible hospitals and CAHs 

(3,620 acute care hospitals, 1,302 

critical access hospitals, 78 Medicaid 

children’s hospitals, and 11 Medicaid 

cancer hospitals) equaled 5,011 hours. 

For Set B objectives and measures, we 

estimated the total burden at 35,077 

hours. 

We believed that an eligible hospital 

or CAH might assign an attorney to 

attest on their behalf. We estimated the 

cost burden for an eligible hospital or 

CAH to attest to the Set A and hospital 

quality requirements was $59.98 and the 

total estimated annual cost burden for 

all eligible hospitals and CAHs to attest 

was $300,560. For Set B objectives/ 

measures, we estimated a per-hospital 

cost burden of $419.86, and a total cost 

burden of $2,103,918, not including 

capital costs. We solicited public 

comments on the estimated percentages 

and the numbers of (registered) eligible 

hospitals and CAHs that would attest in 

FY 2011, but we did not receive any 

comments on this issue. We also invited 

comments on the type of personnel or 

staff that would mostly likely attest on 

behalf of eligible hospitals and CAHs, 

but we did not receive any comments on 

this issue. 

For the final rule, as proposed, 

§ 495.8(b) will require demonstration of 

meaningful use through an attestation 

mechanism. However, as with EPs, we 

have revised the burden estimates due 

to the changes in meaningful use 


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objectives and measures, in response to 

comments. Unless an exception applies, 

§ 495.6(b) requires that an eligible 

hospital or CAH must meet all 14 Stage 

1 meaningful use core criteria under 

§ 495.6(f) and five out of 10 meaningful 

use menu criteria under § 495.6(g). The 

burden associated with the 

requirements in § 495.8 and § 495.6 is 

the time and effort required to attest to 

the required elements. 

To comply with § 495.8(b)(1), we 

estimate that it would take an eligible 

hospital or CAH 8 hours 42 minutes to 

prepare and attest that during the EHR 

reporting period, the hospital or CAH 

used certified technology, specify the 

technology, and satisfied all 14 

mandatory Stage 1 meaningful use core 

criteria. We estimate that it will take an 

eligible hospital or CAH an extra 0.5 

hours to select and attest to the hospital 

quality measure, in the format and 

manner specified by CMS. We estimate 

the total burden associated with this 

requirement for an eligible hospital or 

CAH is 9 hours 12 minutes (8 hours 42 

minutes + 0.5 hours) and the total 

burden all eligible hospitals and CAHs 

to attest to these requirements is 46,101 

hours (9 hours 12 minutes × 5,011 

hospitals). We believe an eligible 

hospital or CAH may use an attorney to 

attest on their behalf. We estimate the 

associated cost burden for an eligible 

hospital or CAH to attest to these 

requirements is $551.82 (9 hours 12 

minutes × $59.98 (mean hourly rate for 

attorneys based on the May 2008 Bureau 

of Labor Statistics)) and the total cost 

burden for all eligible hospitals and 

CAHs to attest to these requirements is 

$2,765,150 ($551.82 × 5,011 hospitals 

and CAHs)). 

We recognize that some Stage 1 

meaningful use menu criteria are easier 

to accomplish than others. Therefore, as 

with the EPs, our burden estimates are 

based on a ‘‘low’’ and ‘‘high’’ scenario. 

Unless an exception applies, § 495.6(b) 

requires that an eligible hospital or CAH 

must meet five out of 10 Stage 1 

meaningful use menu criteria. The 

burden involved is the time and effort 

to select and attest to the meaningful 

use menu-set measures. Under the ‘‘low’’ 

scenario, we estimate it will take an 

eligible hospital or CAH 42 minutes to 

attest to five Stage 1 meaningful use 

menu-set measures, resulting in a total 

burden for all 5,011 eligible hospitals 

and CAHs of 3,508 hours (5,011 

hospitals × 42 minutes). Under the high 

scenario, we estimate it will take an 

eligible hospital or CAH 3 hours 30 

minutes to attest to five Stage 1 

meaningful use menu-set measures, 

resulting in a total burden for all 5,011 

eligible hospitals and CAHs of 17,539 

hours (5,011 hospitals × 3 hours 30 

minutes). Based on the two scenarios, 

the average burden is 2 hours 6 minutes 

(42 minutes + 3 hours 30 minutes)/2), 

and the average burden for all eligible 

hospitals and CAHs is 10,523 hours 

(3,508 hours + 17,539 hours)/2). 

We believe an eligible hospital or 

CAH may use an attorney to attest on 

their behalf. For menu-set meaningful 

use criteria, low scenario, we estimate 

the associated cost burden for an 

eligible hospital or CAH is $41.99 (42 

minutes × $59.98 (mean hourly rate for 

attorneys based on the May 2008 Bureau 

of Labor Statistics)) and the total cost 

burden for all eligible hospitals and 

CAHs is $210,392 ($41.99 × 5,011 

hospitals and CAHs). For menu-set 

meaningful use criteria, high scenario, 

we estimate the associated cost burden 

for an eligible hospital or CAH is 

$209.93 (3 hours 30 minutes × $59.98) 

and the total cost burden for all eligible 

hospitals and CAHs is $1,051,959 

($209.93 × 5,011 hospitals and CAHs). 

Based on the two scenarios, the average 

cost burden for an eligible hospital or 

CAH to attest to meaningful use menu 

set criteria is $125.96 (($41.99 + 

$209.93)/2). The average burden for all 

eligible hospitals and CAHs to attest to 

meaningful use menu set criteria is 

$631,176 (($210,392 + $1,051,959)/2). 

As with EPs, our proposed regulations 

(at § 495.8(b)(2)) required that for FY 

2012 and subsequent years, eligible 

hospitals and CAHs demonstrate 

meeting most meaningful use criteria 

through attestation, and electronically 

report hospital quality measures. As 

with EPs, we divided meaningful use 

objectives and measures into Sets A and 

B. For Set A, we estimated that it would 

take an eligible hospital or CAH 0.5 

hours to attest to the requirements in 

§ 495.8(b)(2). For Set B, we estimated it 

would take an eligible hospital or CAH 

7 hours to gather information and attest. 

Assuming that 5,011 hospitals might 

attest, we estimated that the total annual 

attestation burden for all eligible 

hospitals and CAHs was 2,506 hours 

(Set A) and 35,077 hours (Set B). We 

estimated the total annual cost burden 

for all eligible hospitals and CAHs to 

attest was $150,310 (Set A) and 

$2,103,918 (Set B). We invited public 

comments on the estimated percentages 

and the numbers of registered EPs that 

would attest to EHR technology used in 

CY 2012, but we did not receive any 

comments on this issue. 

In the final rule, we also require that 

for FY 2012, eligible hospitals and 

CAHs demonstrate meeting meaningful 

use criteria through attestation, except 

for clinical quality measures, which 

must be electronically reported to CMS 

or the States. We do not expect growth 

in the number of eligible hospitals or 

CAHs. The meaningful use criteria (core 

and menu sets) are the same for FY 2011 

and FY 2012. To comply with 

§ 495.8(b)(1), we estimate that it would 

take an eligible hospital or CAH 8 hours 

41 minutes to prepare and attest that 

during the EHR reporting period, the 

eligible hospital or CAH used certified 

technology, specify the technology, and 

satisfied all 14 mandatory Stage 1 

meaningful use core criteria. We 

estimate the total burden associated 

with this requirement for all eligible 

hospitals and CAHs to attest to these 

requirements is 43,596 hours (8 hours 

42 minutes × 5,011 hospitals). We 

believe an eligible hospital or CAH may 

use an attorney to attest on their behalf. 

We estimate the associated cost burden 

for an eligible hospital or CAH to attest 

to these requirements is $521.83 (8 

hours 42 minutes × $59.98 (mean hourly 

rate for attorneys based on the May 2008 

Bureau of Labor Statistics)) and the total 

cost burden for all eligible hospitals and 

CAHs to attest to these requirements is 

$2,614,870 ($521.83 × 5,011 hospitals 

and CAHs). 

We recognize that some Stage 1 

meaningful use menu criteria are easier 

to accomplish than others. We cannot 

predict which of the measures in the 

menu criteria will be selected by an 

eligible hospital or CAH. Therefore, as 

with EPs, our burden estimates are 

based on a ‘‘low’’ and ‘‘high’’ scenario. 

Unless an exception applies, § 495.6(b) 

requires that an eligible hospital or CAH 

must meet five out of 10 Stage 1 

meaningful use menu criteria. The 

burden involved is the time and effort 

to select and attest to the meaningful 

use menu criteria. Under the ‘‘low’’ 

scenario, we estimate it will take an 

eligible hospital or CAH 42 minutes to 

attest to five Stage 1 meaningful use 

menu-set measures, resulting in a total 

burden of 3,508 hours (5,011 hospitals 

× 42 minutes). Under the high scenario, 

we estimate it will take an eligible 

hospital or CAH 3 hours 30 minutes to 

attest to five Stage 1 meaningful use 

menu-set measures, resulting in a total 

burden of 17,539 hours (5,011 hospitals 

× 3 hours 30 minutes). Based on the two 

scenarios, the average burden for an 

eligible hospital or CAH to attest to 

meaningful use menu set criteria is 2 

hours 6 minutes ((42 minutes + 3 hours 

30 minutes)/2), and the average burden 

hours for all eligible hospitals and CAHs 

is 10,523 hours ((3,508 hours + 17,539 

hours)/2). 

We believe an eligible hospital or 

CAH may use an attorney to attest on 

their behalf. For menu-set meaningful 

use criteria, low scenario, we estimate 


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the associated cost burden for an 

eligible hospital or CAH is $41.99 (42 

minutes × $59.98) and the total cost 

burden for all eligible hospitals and 

CAHs is $210,392 ($41.99 × 5,011 

hospitals and CAHs). For menu-set 

meaningful use criteria, high scenario, 

we estimate the associated cost burden 

for an eligible hospital or CAH is 

$209.93 (3 hours 30 minutes × $59.98) 

and the total cost burden for all eligible 

hospitals and CAHs is $1,051,959 

($209.93 × 5,011 hospitals and CAHs). 

Based on the two scenarios, the average 

cost burden for an eligible hospital or 

CAH to attest to meaningful use menu 

set criteria is $125.96 (($41.99 + 

$209.93)/2). The average burden for all 

eligible hospitals and CAHs to attest to 

meaningful use menu set criteria is 

$631,175 (($210,392 + $1,051,959)/2). 

Section 495.8(b)(2)(iii) requires that 

for FY 2012, eligible hospitals or CAHs 

must report electronically to CMS, or, in 

the case of Medicaid hospitals, the 

States, clinical quality information in 

the format and manner specified by 

CMS. Given that we limit the required 

measures only to those that can be 

automatically calculated by a certified 

EHR and to those for which we have 

electronic specifications currently 

available that we are able to post as final 

by date of display of this final rule. The 

burden associated with this requirement 

is the time and effort to report the 

required hospital quality measures. We 

estimate the burden for an eligible 

hospital or CAH to comply with this 

requirement is 0.5 hours and the total 

burden for all eligible hospitals or CAHs 

to comply with this requirement is 

2,506 hours (5,011 hospitals and CAHs 

× 0.5 hours). We believe that an eligible 

hospital or CAH may assign a medical 

secretary to submit the specific hospital 

clinical quality measures to CMS or the 

States. We estimated the cost burden for 

an eligible hospital or CAH to comply 

with this requirement is $7.40 (0.5 

hours × $14.81 (mean hourly rate of 

medical secretary based on May 2008 

Bureau of Labor Statistics)) and the cost 

burden for all eligible hospitals or CAHs 

to comply with this requirement is 

$37,107 (2,506 hours × $14.81). 

To estimate capital costs for eligible 

hospitals and CAHs, consistent with the 

sources cited in section V.G.4 of this 

final rule, 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, $0.2 billion of Medicare incentive 

payments and $0.4 billion of Medicaid 

incentive payments would be provided 

to eligible hospitals and CAHs under the 

low scenario, and $0.5 billion of 

Medicare incentive payments and $0.8 

billion of Medicaid incentive payments 

would be provided to eligible hospitals 

and CAHs under the high scenario to 

help offset those costs. Therefore, we 

estimate that total net capital costs for 

hospitals in 2011 would be $24.5 billion 

($25.1 billion¥$0.2 billion¥$0.4 

billion) under the low scenario and 

$23.8 billion ($25.1 billion¥$0.5 

billion¥$0.8 billion) under the high 

scenario. 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 

hospitals would be $23.5 billion ($24.5 

billion¥$0.9 billion of Medicare 

incentives¥$0.1 billion of Medicaid 

incentives) under the low scenario, and 

$21.4 billion ($23.8 billion¥$2.1 billion 

of Medicare incentives¥$0.3 billion of 

Medicaid incentives) under the high 

scenario. 

Comment: Some commenters believed 

that CMS grossly underestimated the 

cost and hour burden for EPs, eligible 

hospitals and CAHs to comply with 

meaningful use Set A and Set B 

measures. Some commenters stated that 

we should take into consideration all 

the time required to prepare all 

attestation of meaningful use measures, 

including the manual counting of 

numerators and denominators in our 

burden estimates. 

Response: Prior to and after the 

publication of the proposed rule, we 

have worked with ONC to ensure that 

our meaningful use objectives/measures 

are well aligned with certified EHR 

technology. In the final rule, we only 

require meaningful use measures that 

can be achieved by the functionality and 

capability of certified EHR technology. 

Furthermore, based on comments, we 

have explained in section II.A.2.d. of 

this final rule that we are including a 

substantial amount of flexibility in the 

final rule to lower the burden for EPs, 

eligible hospitals and CAHs in meeting 

the attestation and demonstration of 

meaningful use criteria. Some examples 

of such flexibility are the categorization 

of Stage 1 meaningful use core and 

menu (optional) criteria, reducing the 

number of meaningful use objectives/ 

measures for 2011 and 2012, limiting 

the denominators, in certain cases, only 

to patients whose records are 

maintained using certified EHR 

technology, and lowering thresholds for 

many of the meaningful use measures. 

We believe these changes reduce burden 

without compromising the intent of the 

Congress, and the ability of EHR 

technology to begin to improve health 

care quality, efficiency, and outcomes. 

We have considered the comments and 

we have made some revisions on our 

previous burden estimates. While this 

requirement is subject to PRA, we have 

no way of accurately quantifying the 

burden. We will continue to monitor the 

burden associated with the 

implementation of EHR technology as 

our experience continues to grow and as 

EHR technology continues to evolve. 

Comment: CMS received numerous 

comments regarding the burden 

(economic and other) of reporting on the 

large number of measures and the 

overall quality reporting burden this 

will add to EPs and other healthcare 

providers. Others suggested reporting on 

significantly smaller set of measures. 

Response: As we have explained in 

section II.A.3.(d) of this final rule, we 

have reduced the reporting burden by 

decreasing the number of required 

clinical quality measures and limiting 

measures to those that can be 

automatically calculated by a certified 

EHR. We believe that the proposed 

burden estimate, which was estimated 

to be an additional 0.5 hours in 2011 

and 2012, is reasonable and we are 

finalizing it. 

Table 20 below lists the objectives 

and associated measures in which we 

estimate the burden to fulfill ‘‘core set,’’ 

‘‘menu set’’, and clinical quality 

measures requirements. Estimates of 

total capital costs at the bottom of Table 

20 are derived from the estimates used 

in the ‘‘Industry Costs’’ section in 

Section V.G.4. of this final rule. 

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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. 

For the proposed rule, § 495.10(a) 

through (c), we estimated that all 

442,600 non-hospital-based Medicare, 

and Medicaid EPs would register in 

2011 to receive an EHR incentive 

payment, and that it would take no 

more than 0.5 hours to complete the 

registration, resulting in a total 

estimated annual registration burden for 

all EPs of 221,300 hours (442,600 EPs × 

0.5 hours). As we could not predict 

whether an EP or a medical secretary 

(on the EP’s behalf) would register, we 

did one high-end and one low-end 

burden estimate. The cost burden for an 

EP who chose to register in the EHR 

incentive payment program himself or 

herself was $39.67 (0.5 hours × $79.33 

(mean hourly rate for physicians based 

on the May 2008 Bureau of Labor 

Statistics)), with a total estimated 

annual cost burden for all EPs of 

$17,555,729 (221,300 hours × $79.33). 

Similarly, the cost burden for an EP who 

chose to use a medical secretary to 

register on their behalf was $7.41 (0.5 

hours × $14.81), with a total estimated 

annual cost burden for all EPs of 

$3,277,453 (221,300 hours × $14.81). We 

used the average of the two estimates in 

the tally in Table 34 of the proposed 

rule. We invited comments on whether 

we should use the higher cost burden 

estimate ($17,555,729) or the lower cost 

burden estimate ($3,277,453), but we 

did not receive any comments on this 

issue. We invited public comments on 

the estimated percentages or the 

numbers of EPs that will register in CY 

2011 and subsequent years, but we did 

not receive any comments on this issue. 

We are finalizing both the lower cost 

estimate using the medical secretary as 

the personnel registering for the EP and 

the high cost estimate of the EP 

registering him or herself. Due to the 

revised estimates of non-hospital-based 

EPs eligible for the EHR incentive 

program, we are revising our burden 

estimates to reflect this change. In the 

final rule, we estimate that 521,600 nonhospital-based Medicare, and Medicaid 

EPs may register in CY 2011 to receive 

an EHR incentive payment. We believe 

that an EP may use a medical secretary 

to register on his/her behalf (low 

burden) or the EP may register him or 

herself (high burden). We estimate that 

it would take no more than 0.5 hours to 

complete the registration. The low cost 

burden for a medical secretary to 

register an EP is $7.41 (0.5 hours × 

$14.81 (mean hourly rate of medical 

secretaries based on the May 2008 

Bureau of Labor statistics)). The total 

estimated annual registration burden 

hours for the low cost estimate is 

260,800 (521,600 EPs × 0.5 hours) in the 

first payment year. The total estimated 

low cost burden for all EPs to register in 

CY 2011 is $3,862,448 (260,800 hours × 

$14.81). The high cost burden for an EP 

to register him or herself is $39.67 (0.5 

hours × $79.33 (mean hourly rate for 

physicians based on the May 2008 

Bureau of Labor Statistics)). In the first 

payment year, the total estimated 

annual registration burden hours for the 

high cost estimate is 260,800 (521,600 

EPs × 0.5 hours). The total estimated 

high cost burden for all EPs to register 

in CY 2011 is $20,689,264 (260,800 

hours × $79.33). We only use the 

average of the two estimates in the tally 

in Table 34. 

Section 495.10(d) proposed that if 

there were subsequent changes in the 

initial registration information, the EP 

was responsible for providing us with 

updated changes in the manner 

specified by us. Based on our 

experience with provider enrollment, 

we estimated that about 11 percent of 

the Medicare and Medicaid EPs might 

need to update their registration 

information during a 1-year period. We 

estimated that 49,214 EPs (11 percent) 

might only have one occasion that 

required updating of information in a 

given year. For each occasion, we 

estimated that it would take no more 

than 0.5 hours to notify us of the 

changes. With that, we estimated that 

the annual total burden hours for 49,214 

EPs to update changes were 24,607. 

However, we could not predict if the EP 

would update the registration 

information himself or herself or assign 

a medical secretary to do it. Therefore, 

we did two burden estimates for an EP 

and his/her medical secretary. The cost 

burden for an EP who chose to update 

the registration information himself or 

herself was $39.67. The total estimated 

annual cost burden for all 49,214 EPs to 

update registration information 

themselves was $1,952,073. Similarly, 

the cost burden for the EP who chose to 

use a medical secretary to update 

registration information on his/her 

behalf was $7.41. The total estimated 

annual cost burden for 49,214 EPs who 

chose to use medical secretaries to 

update registration information on their 

behalf was $364,429. We used the 

average of the two estimates in the tally 

in Table 34. We invited comments on 

whether we should use the higher cost 

burden estimate ($1,952,073) or the 

lower cost burden estimate ($364,429) 

but we did not receive any comments on 

this issue. We also invited 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 but we did 

not receive any comments on this issue. 

We are finalizing both the lower cost 

estimate using the medical secretary as 

the personnel to update registration 

information for the EP and the high cost 

estimate of the EP updating their 

registration information. Due to the 

revised estimates of non-hospital-based 

EPs eligible for the EHR incentive 

program pursuant to legislative 

inclusion of EPs who practice in 

outpatient hospital setting, we are 

revising our burden estimate for this 

requirement to reflect this change. In the 

final rule, we estimate that about 11 

percent of the Medicare and Medicaid 

EPs may need to update their 

registration information during a 1-year 

period. We estimate that 57,998 EPs 

(527,254 (revised estimated number of 

EPs for CY 2012) × 11 percent) may only 

have one occasion that requires them to 

update their information in a given year. 

For each occasion, we estimate that it 

will take no more than 0.5 hours to 

notify us of the changes. With that, we 

estimate that the annual total burden 

hours for 57,998 EPs to update 

registration changes are 28,999. The 

lower cost burden estimate for a medical 

secretary to update an EP’s registration 

is $7.41 ($14.81 (mean hourly rate for 

medical secretary based on the May 

2008 Bureau of Labor Statistics) × 0.5 

hours). The total lower cost burden for 

all EPs to update registration 

information is $429,475 (28,999 hours × 

$14.81). The high cost burden for an EP 

to update their own registration 

information is $39.67 (0.5 hours × 

$79.33 (mean hourly rate for physicians 

based on May 2008 Bureau of Labor 

Statistics)). The total estimated annual 

high cost burden to update registration 

information is $2,300,491 (28,999 hours 

× $79.33). We only use the average of 

the two estimates in the tally in Table 

34. 


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In § 495.10(a) and (b), 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 than 0.5 hours for an 

eligible hospital or CAH to register. We 

estimate the total annual burden hours 

for registration will be 2,506 (5,011 

hospitals × 0.5 hours). 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 hours × $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 × 

0.5 hours × $14.81) (mean hourly rate 

for medical secretaries based on the May 

2008 Bureau of Labor Statistics)). We 

invited 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 

but we did not receive any comments on 

this issue. We are finalizing the burden 

estimates as proposed. 

In § 495.10(d), we proposed that if 

there were subsequent changes in the 

initial registration information, the 

eligible hospital or CAH was 

responsible for providing us with 

updated information in the manner 

specified by us. Based on our 

experience with provider enrollment, 

we estimated that about 8 percent of the 

Medicare and Medicaid eligible 

hospitals and CAHs (5,011 hospitals and 

CAHs × 8 percent = 401 hospitals) might 

need to update their registration 

information during a 1-year period. We 

estimated that eligible hospitals in this 

8 percent pool might only have 1 

occasion that required updating of 

registration information in a given year. 

For each occasion, we estimated that it 

would take no more than 0.5 hours to 

notify us of the changes. With that, we 

estimated that the total annual burden 

hours for eligible hospitals and CAHs to 

update CMS of registration changes 

were 201 (401 hospitals and CAHs × 0.5 

hours). We believe that eligible 

hospitals or CAHs might assign a 

medical secretary to update the 

registration information. We estimated 

the total annual cost burden for eligible 

hospitals and CAHs to update CMS of 

registration changes is $2,969 (401 

hospitals and CAHs × 0.5 hours × 

$14.81) (mean hourly rate for medical 

secretaries based on the May 2008 

Bureau of Labor Statistics)). We invited 

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 but we did not receive 

any comments on this issue. We are 

finalizing the estimated burden for 

hospitals and CAHs that will be making 

subsequent registration changes for FY 

2012 as proposed. 

In § 495.10(e)(1), we proposed 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 

estimated that in 2011, there would be 

about 80,900 dual Medicare/Medicaid 

EPs who might 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 believed 

that all of the 80,900 dual Medicare/ 

Medicaid EPs might make the Medicaid 

program selection. We estimated that it 

would take no more than 0.5 hours to 

submit the initial Medicare or Medicaid 

selection notification to us. We could 

not predict if the EP would submit the 

notification to CMS himself or herself or 

assign a secretary to do it. Therefore, we 

did 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 were 40,450 in the 

first payment year. The cost burden for 

these EPs who notify CMS of Medicare 

or Medicaid program selection himself 

or herself was $39.67. The total 

estimated annual cost burden for all 

dual Medicare/Medicaid EPs to notify 

CMS of program selection themselves 

was $3,208,899. Similarly, the cost 

burden for an EP who chose to use a 

medical secretary to notify CMS of 

program selection was $7.41. The total 

estimated annual cost burden for all 

dual Medicare/Medicaid EPs who use 

medical secretaries to notify CMS of 

program selection was $599,065. We 

used the average of the two estimates in 

the tally in Table 34. We invited 

comments on whether we should use 

the higher cost burden estimate 

($3,208,899) or the lower cost burden 

estimate ($599,065), but we did not 

receive any comments on this issue. We 

also invited public comments on the 

estimated percentages and the number 

of dual Medicare/Medicaid EPs that 

would submit initial Medicare or 

Medicaid program selection in 2011, 

2012, 2013, or 2014 but we did not 

receive any comments. 

In the final rule, we are finalizing 

both the low burden cost estimate using 

a medical secretary for dual-Medicare/ 

Medicaid EPs to notify CMS of program 

selection and the high burden cost 

estimate of an EP who may do this him 

or herself. We have revised the total 

number of dual-Medicare/Medicaid EPs 

and the associated burden estimates 

pursuant to the legislative inclusion of 

EPs, who practice in outpatient hospital, 

in the incentive program. We estimate 

that in CY 2011, there will be 95,500 

dual Medicare/Medicaid EPs who may 

use a medical secretary to notify CMS of 

the initial Medicare and Medicaid 

program selection. We estimate that it 

would take no more than 0.5 hours to 

submit the initial Medicare or Medicaid 

selection notification to us. The 

estimated burden for all the dualMedicare/Medicaid EPs to comply with 

this requirement is 47,750 hours (95,500 

EPs × 0.5 hours). The associated low 

cost burden for a dual-Medicare/ 

Medicaid EP is $7.41 (0.5 hours × 

$14.81 (mean hourly rate for medical 

secretaries based on May 2008 Bureau of 

Labor Statistics) and the total low cost 

burden for all the dual-Medicare/ 

Medicaid EPs is $707,178 (47,750 hours 

× $14.81). The associated high cost 

burden for a dual-Medicare/Medicaid 

EP is $39.67 (0.5 hours × $79.33 (mean 

hourly rate for physicians based on the 

May 2008 Bureau of Labor Statistics)) 

and the total high cost burden estimate 

for all dual-Medicare/Medicaid EPs is 

$3,788,008 (47,750 hours × $79.33). We 

only use the average of the two 

estimates in the tally in Table 34. 

In § 495.10(e)(2) we proposed that EPs 

might switch from Medicare to 

Medicaid EHR incentive program or 

vice versa one time, and only for 

payment year 2014 or earlier. The 

burden associated with this requirement 

was the time required for the EP to make 

the Medicare/Medicaid program 

selection. Since we had no knowledge 

of how many EPs will make the 

subsequent changes in program 

selection, we assumed that all 81,700 

(estimated number of dual-Medicare/ 

Medicaid EPs for CY 2012) dual 

Medicare/Medicaid EPs might make 

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for burden estimate purposes. We 

estimated that it would take no more 

than 0.5 hours to submit the Medicare/ 

Medicaid selection change to us. We 

could not predict if the EP would 

submit the change to CMS himself or 

herself or assign a secretary to do it. 

Therefore, we did one high end burden 

estimate for an EP and one low end 

estimate for a medical secretary. We 

used the average of the two estimates in 

the tally in Table 34. The total estimated 

burden hours for all dual-Medicare/ 

Medicaid EPs to notify CMS of program 

changes were 40,850 in a given year. 

The higher cost burden for the EP who 

chose to notify CMS of Medicare/ 

Medicaid program change him or herself 

was $39.67. The total estimated annual 

cost burden for all dual Medicare/ 

Medicaid EPs to notify CMS of program 

changes themselves was $3,240,630. 

Similarly, the lower cost burden for an 

EP who chose to use a medical secretary 

to notify CMS of program changes was 

$7.41. The total estimated annual cost 

burden for all dual-Medicare/Medicaid 

EPs who use medical secretaries to 

notify CMS of program changes was 

$604,989. We invited comments on 

whether we should use the higher cost 

burden estimate ($3,240,630) or the 

lower cost burden estimate ($604,989) 

but we did not received any comments 

on this issue. We also invited comments 

on the estimated percentages and the 

number of dual-Medicare/Medicaid EPs 

that would submit initial Medicare or 

Medicaid program changes in 2012, 

2013, or 2014 but we did not receive 

any comments on this issue. 

We are finalizing both the lower cost 

burden for EPs for may assign medical 

secretaries as the personnel to submit 

Medicare/Medicaid program selection 

changes to CMS and the high cost 

burden for EPs who may do this him or 

herself. We revised our burden 

estimates and the number of dualMedicare/Medicaid EPs, pursuant to 

legislative inclusion of EPs who practice 

at outpatient hospital setting in the 

incentive program. For CY 2012, we 

estimate that there will be 96,500 dualMedicare/Medicaid EPs. The 

notification will take 0.5 hours and the 

total burden for all dual-Medicare/ 

Medicaid EPs will be 48,250 hours 

(96,500 EPs × 0.5 hours). The lower cost 

burden for each EP is $7.41 (0.5 hours 

× $14.81 (mean hourly rate for medical 

secretaries based on the May 2008 

Bureau of Labor Statistics) and the total 

lower cost burden for all the dualMedicare/Medicaid EPs will be 

$714,583 (48,250 hours × $14.81). The 

high cost burden for each EP is $39.67 

(0.5 hours × $79.33 (mean hourly rate 

for physicians based on the May 2008 

Bureau of Labor Statistics)) and the total 

high cost burden for all dual-Medicare/ 

Medicaid EPs is $3,827,673 (48,250 

hours × $79.33). We only use the 

average of the two estimates in the tally 

in Table 34. 

C. ICRs Regarding Identification of 

Qualifying MA Organizations, MA–EPs 

and MA-Affiliated Eligible Hospitals 

(§ 495.202) 

Section 495.202(a)(1) states that 

beginning with bids due in June 2011 

(for plan year 2012), 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. There is no 

burden associated with this requirement 

for qualifying MA organizations offering 

MA HMO plans, since they are deemed 

to meet the definition of HMO in 42 

U.S.C. 300gg–91(b)(3) of the PHS Act in 

accordance with § 495.202(a)(2). 

However, per § 495.202(a)(3), for MA 

organizations offering types of MA plans 

other than HMOs, the burden is the 

amount of time it will take them to 

attest to the fact that they meet the 

definition of HMO in 42 U.S.C. 300gg– 

91(b)(3). We believe the burden 

associated with this requirement for MA 

organizations not offering HMO type 

plans would be approximately 1 hour 

per MA organization. We do not believe 

that there are any MA organizations that 

are not offering MA HMO type plans 

that will request reimbursement for 

qualifying MA EPs or MA-affiliated 

eligible hospitals under the MA EHR 

incentive payment program. Although 

the timeframe goes beyond the effective 

date of the proposed information 

collection period (3 years from the 

effective date of the final rule), we do 

not believe there are any MA 

organizations with potentially 

qualifying MA EPs or potentially 

qualifying MA-affiliated eligible 

hospitals that will need to report to us 

beginning in 2014 (for plan year 2015) 

per § 495.202(a)(4). Therefore, we 

believe there will be no burden 

associated with identification of 

qualifying MA organizations per 

§ 495.202(a)(1) through (4). 

Section 495.202(b)(1) and (2) require 

a qualifying MA organization, as part of 

its initial bid starting with its bid for 

plan year 2012, to make preliminary 

identification of potentially qualifying 

MA EPs and potentially qualifying MAaffiliated eligible hospitals for which the 

organization is seeking incentive 

payments for the current plan year 

(2011). The burden associated with this 

requirement would be the time required 

for a MA organization to identify their 

MA-affiliated hospitals to CMS. In the 

proposed rule, we explained that when 

MAOs identify amounts of 

compensation per § 422.204(b)(2) and 

(5) they will also be identifying MA EPs 

per this requirement, and therefore there 

is will be no additional burden related 

to this requirement with respect to MA 

EPs. There are approximately 29 MAaffiliated eligible hospitals and 

approximately 12 MA organizations, or 

an average of 2.42 eligible hospitals for 

each MA organization. In the proposed 

rule, we estimated that the total burden 

hours for all MA organizations to 

identify their affiliated hospitals to CMS 

would be 3 hours. We believe a MA 

organization may use a billing clerk to 

identify the eligible hospital to us. The 

total cost burden for all MA 

organizations to identify their eligible 

hospitals to us would be $46.32. 

Sections 495.202(b)(1) and (2), state 

that a MA organization, as part of its 

initial bid starting with plan year 2012, 

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 for the current plan year. A 

qualifying MA organization must 

provide the following information on 

their MA-affiliated EPs and eligible 

hospitals: (A) name of the EP or eligible 

hospital; (B) address of the EP’s practice 

or eligible hospital’s location; and (C) 

NPI. We believe that it is within the 

customary business practices of an MA 

organization to keep the information in 

(A), (B), and (C) on file. The burden 

associated with this requirement would 

be the time required to provide this 

information to CMS along with an 

attestation that the MA EPs or MAaffiliated eligible hospitals meet the 

eligibility criteria. In the proposed rule, 

we estimated that it would take 0.5 

hours for a MA organization to comply 

with this attestation requirement. We 

estimated that the total burden for all 

MA organizations to attest would be 

6 hours. We believe that MA 

organizations may use an attorney to 

attest on their behalf. In the proposed 

rule, we estimated that the cost burden 

for a MA organization to attest is $29.99 

and the total estimated cost burden for 

all MA organizations to attest would be 

$359.88. 

Section 495.202(b)(4) states that all 

qualifying MA organizations, as part of 

their initial bids in June 2015 for plan 

year 2016, must identify potentially 

qualifying MA EPs and potentially 


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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) 

Section 495.204(b)(2) requires a 

qualifying MA organization to report to 

CMS within 60 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 would be 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. In the proposed rule, 

we estimated that there were 12 MA 

organizations and 28,000 MA EPs. 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 would be 480. We believe 

MA organizations may involve a billing 

clerk to report the required data to CMS. 

We estimated that the cost burden for a 

MA organization to report was $617.6 

(40 hours × $15.44 (mean hourly rate of 

billing clerk based on the May 2008 

Bureau of Labor Statistics)) and we 

estimated the total annual cost burden 

for all MA organizations to comply with 

this requirement would be $7,411. 

Section 495.204(b)(4) states 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; (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; and (iii) 

methodological proposals must be 

submitted to CMS by June of the 

payment year and must be auditable by 

an independent third party. CMS will 

review and approve or disapprove such 

proposals in a timely manner. In the 

proposed rule, we estimated that it 

might take a MA organization one and 

a half hour to develop the methodology. 

We estimated that there are about two 

MA organizations that may have the 

need to develop the methodology. We 

estimated the total burden hours for the 

two MA organizations to develop the 

methodology would be 3 hours. We 

believed that a MA organization may 

use an accountant to develop the 

methodology. We estimated the cost 

burden for a MA organization was 

$47.48 (1.5 hours × $31.65 (mean hourly 

rate for accountants based on the May 

2008 Bureau of Labor Statistics)), and 

the total cost burden for the two MA 

organizations to develop the 

methodology would be $94.95 (47.48 × 

2 MA organizations). 

Section 495.204(b)(5) states that for 

qualifying MA EPs who are not salaried, 

qualifying MA organizations may 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 were 

not salaried and that was an average of 

233 non-salaried EPs in each MA 

organization. Further, we estimate that 

it might take 0.25 hour to electronically 

obtain and compile each attestation into 

a document for transmission to CMS. 

We estimate the total burden hours for 

a MA organization would be 58.3, and 

the total estimated burden hours for all 

MA organizations would be 699.6 (58.3 

hours × 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 would be 

$900.15 (58.3 hours × $15.44 (mean 

salary of a 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 would be 

$10,801.82 ($900.15 × 12 MA 

organizations). 

Section 495.204(b)(6) states that for 

qualifying MA EPs who are not salaried, 

qualified MA organizations may also 

have qualifying MA EPs send MA 

organization compensation information 

directly to CMS. We estimated the 

burden associated with this requirement 

is the time it would take the MA EP to 

send the information directly to CMS. 

However, we believe that the nonsalaried MA EPS are employed by a 

third-party physician group which will 

be responsible for sending the required 

information to CMS. Again, we estimate 

that about 10 percent of the MA EPs are 

not salaried and that there is an average 

of 233 non-salaried EPs in each of the 

third-party physician groups. Further, 

we estimate that it might take 0.25 hour 

to electronically obtain and compile the 

information into a document for 

transmission to CMS. We estimate the 

total burden hours for a third-party 

physician group will be 58.3, and the 

total estimated burden hours for all 

third-party physician groups will be 

699.6 (58.3 hours × 12 third-party 

physician group). We believe a thirdparty physician group may involve a 

billing clerk to compile and submit the 

compensation information. We estimate 

the cost burden for a third-party 

physician group to comply with this 

requirement will be $900.15 (58.3 hours 

× $15.44 (mean salary of a billing clerk 

based on the May 2008 Bureau of Labor 

Statistics)). We estimate the total annual 

cost burden for all third-party physician 

groups to comply with this requirement 

will be $10,801.82 ($900.15 × 12 thirdparty physician groups). Note that this 

is the same burden we estimate with 

respect to § 422.204(b)(5). Further, an 

MAO will either submit non-salary 

information directly to CMS, or it will 

have someone else do it on behalf of the 

MA EPs with respect to that MAO. We 

believe the burden related to 

§ 422.204(b)(6) is counted in the burden 

we already projected with respect to 

§ 422.204(b)(5). We do not believe any 

MAO will submit under both 

§ 422.204(b)(5) and (6). 

E. ICRs Regarding Meaningful User 

Attestation (§ 495.210) 

Section 495.210(b) requires qualifying 

MA organizations to attest within 60 

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. We estimate the 

burden associated with this requirement 

would be the time necessary to attest to 

the required information. We estimated 

that there were approximately 12 MA 

organizations and approximately 28,000 

MA EPs, or an average of approximately 

2,333 MA EPs affiliated with each 

qualifying MA organization. We believe 

that it would take a MA organization 

about 40 hours annually to attest 

whether each qualifying MA EP is a 


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meaningful user, given that all the data 

are captured in the certified EHR 

technology and that meaningful use will 

be demonstrated through the continued 

reporting of HEDIS data. We estimate 

the total estimated annual burden hours 

for all MA organizations to comply with 

this requirement will be 480. We believe 

MA organizations might involve an 

attorney to attest on their behalf. We 

estimate the cost burden for a MA 

organization to attest will be $2,399 (40 

hours × $59.98 (mean hourly rate of 

attorney 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 will be $28,790. 

Section 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 60 days after the close 

of a calendar year whether each 

qualifying MA-affiliated eligible 

hospital is a meaningful EHR user. 

While the EHR incentive payments for 

Medicare FFS and MA-affiliated 

hospitals are treated the same as all 

Medicare-certified MA affiliated 

hospitals they will demonstrate clinical 

quality measures through the continued 

reporting of HEDIS data. This means 

that § 495.210(c) generally applies to a 

MA-affiliated hospital that is not 

Medicare certified, and such a type of 

hospitals does not exist currently. We 

do not expect there to be any MAaffiliated 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 addressed the 

attestation burden on hospitals, 

including MA-affiliated hospitals under 

§ 495.10(b)(2)(i)(ii) and through our 

existing PRA package related to HEDIS 

reporting by MA organizations—OMB 

control number 0938–NEW. 

F. ICRs Regarding Establishing Patient 

Volume (§ 495.306) 

This section of the final rule contains 

patient volume requirements, and 

requires EPs and certain hospitals to 

attest to meeting such requirement using 

representative periods in order to 

qualify for a Medicaid EHR incentive. 

The minimum patient volume 

requirements are as follows: 30 percent 

Medicaid patient volume for most EPs, 

20 percent Medicaid patient volume for 

pediatricians, 30 percent needy 

individual patient volume for EPs 

practicing predominantly in an FQHC or 

RHC, and 10 percent Medicaid patient 

volume for acute-care hospitals. The 

burden associated with the 

requirements in this section is the time 

and effort necessary to submit the 

information to CMS. In the proposed 

rule, in each instance, we estimated it 

would take no longer than 0.5 hours to 

submit the necessary information to 

CMS. We estimated that 119,000 entities 

would submit the required information 

to meet 30 percent (or 20 percent 

pediatrician) requirements for most EPs. 

We estimated the total annual burden to 

be 59,500 hours, with total labor cost 

amounting to $4,720,135 (assuming that 

physicians (rather than staff assistants) 

establish patient volume ($79.33 mean 

hourly rate for physicians based on May 

2008 Bureau of Labor Statistics). 

For hospitals to attest to patient 

volume, we estimated that 3,631 entities 

would submit required information, and 

estimated a total burden of 1,815.50 

hours (3,631 entities × .5 hours). The 

total labor cost associated with this 

requirement is $25,617. This cost 

burden was based on a secretary 

reporting patient volume on behalf of 

the acute care hospital at $14.11 (mean 

hourly rate for secretaries based on May 

2008 Bureau of Labor Statistics). 

We received no comments on this 

section; however, since we have revised 

our definition of hospital-based EP, the 

burden is revised to account for the 

additional number of Medicaid EPs that 

could now be eligible to receive 

Medicaid incentive payments. We 

currently estimate that there are an 

additional Medicare/Medicaid 75,700 

EPs that could be eligible for an 

incentive payment because of the new 

definition of hospital-based EP. We 

believe there are 553,200 Medicare EPs 

of which 86 percent are non-hospital 

based or 477,500. We believe 20 percent 

or 95,500 will meet patient volume 

requirements, and therefore, potentially 

qualify for Medicaid EHR incentive 

payments. Additionally, there are 

44,100 Medicaid-only EPs (nurse 

practitioners, certified nurse-midwives, 

dentists, and physician assistants) that 

we believe will meet patient volume. 

Specifically, we believe that 139,600 

EPs (95,500 + 44,100) could be reporting 

patient volume information. Thus, the 

updated annual burden associated with 

the requirements in § 495.306 at 0.5 

hours for EPs is 69,800. 

The total labor cost associated with 

the requirement is (69,800 × 79.33) 

$5,537,234. The total labor cost 

associated with each requirement is 

$5,537,234. 

For hospitals reporting patient 

volume, we have updated the burden to 

account for the additional CAHs that 

meet the definition of acute care 

hospital. Specifically, there are 3,620 

acute care hospitals, 11 cancer 

hospitals, and 1,302 CAHs that must 

report 10 percent Medicaid patient 

volume, or 4,933 entities. The updated 

annual burden associated with the 

requirement, at 0.5 hours is 2,466.5 

(4,933 × .05). The total labor cost is 

$34,803.30. 

G. ICRs Regarding Process for Payments 

(§ 495.312) 

Section 495.312(b) states that in order 

to receive a Medicaid EHR incentive 

payment, a provider must report all 

necessary data (including data required 

by subpart A of the regulations, such as 

meaningful use data) within the EHR 

reporting period. We believe the 

information collections associated with 

this requirement are discussed in the 

relevant sections discussing each 

particular requirement that would 

necessitate data reporting (for example, 

the burden for demonstrating 

meaningful use is discussed in the 

information collection section on 

meaningful use). Therefore, we have not 

calculated a separate information 

collection burden for this requirement. 

H. ICRs Regarding Activities Required 

To Receive an Incentive Payment 

(§ 495.314) 

Section 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 § 495.4. 

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 believe we already 

accounted for this burden in the earlier 

discussion of the burden associated 

with § 495.8. 

Section 495.314(a)(2) states that a 

provider may notify the State of its 

nonbinding intention to participate in 


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the incentives program prior to having 

fulfilled all of the eligibility criteria. 

This requirement constitutes a thirdparty disclosure. The burden associated 

with this requirement is the time and 

effort necessary for a provider to send 

notification to the State. We estimated 

that this burden will be the same burden 

associated with § 495.10 since the 

information necessary to notify the State 

of the providers non-binding intention 

to participate in the program could be 

the 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. 

Section 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 § 495.4. 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 § 495.6 and 

495.8. 

We did not receive any comments on 

the information collection burdens we 

estimated for the proposed rule. 

I. ICRs Regarding State Monitoring and 

Reporting Regarding Activities Required 

To Receive an Incentive Payment 

(§ 495.316) 

Section 495.316(a) requires 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. 

For the proposed rule, we estimated 

that it would take 5 hours per State to 

accomplish this. The estimated annual 

burden for States associated with the 

aforementioned submission 

requirements is 280 hours (56 StatesTerritories × 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). 

Comment: Some commenters asked 

CMS to clarify if States are responsible 

for collecting the MU measure data or if 

providers will report data directly to 

CMS. If the collection and reporting of 

MU data are States’ responsibility, this 

would create tremendous burden on 

States. The commenters also asked CMS 

to clarify if States are responsible for 

validating attestations by eligible 

providers. 

Response: For EPs and some 

hospitals, States are responsible for 

collecting the MU measure data; for 

hospitals that are eligible for both the 

Medicare and Medicaid incentives, 

hospitals that meet the Medicare MU 

objectives are deemed to have met MU 

for Medicaid; thus, since hospitals are 

required to report MU data to CMS for 

the Medicare EHR incentives program, 

these hospitals do not, in addition, have 

to report MU data to States. States are 

required to submit a State Medicaid HIT 

plan to CMS for review and approval 

outlining their methodology for 

collecting MU measure data and other 

required information outlined in this 

final rule. States are also responsible for 

validating attestations by providers. We 

do not believe collecting data or 

validating attestations is a tremendous 

burden on States as noted by our 

estimates. States can receive 90 percent 

FFP for administering the incentive 

payments to providers and for 

conducting adequate monitoring and 

oversight. In addition, it should be 

noted that States voluntarily participate 

in the Medicaid EHR incentive program. 

J. ICRs Regarding State Responsibilities 

for Receiving FFP (§ 495.318) 

Section 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) 

Section 495.324(a) requires 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, § 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). 

Section 495.324(c) requires 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 

subpart D of Part 495 in the regulations, 

if the total State and Federal acquisition 

cost is more than $100,000. Burden 

must be calculated for State Medicaid 

Agencies to submit the planning and 

implementation documents and the 

SMHP to CMS. 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) 

Section 495.330(a) states that the 

Department can terminate 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. 

Section 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 estimated 

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. 

For States to collect and submit the 

information required, we estimated it 

would take 5 hours per State. The 

estimated annual burden for States 

associated with the aforementioned 

submission requirements is 280 hours 

(56 States-Territories × 5.0 hours/StateTerritory). 

The annual cost burden for a State 

employee to provide the above 

information is $9,904 (280 hours × 

$35.37 (mean hourly rate for a 

management analyst based on the May 

2008 Bureau of Labor Statistics)). We 

believe 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 × $14.11 (mean 

hourly rate for secretaries based on the 

May 2008 Bureau of Labor Statistics)). 


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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 providers to demonstrate that 

they have adopted, implemented, or 

upgraded certified EHR technology or 

that they are meaningful users of such 

technology. We believe much of the 

burden associated with these 

requirements has already been 

accounted for in our discussion of the 

burden for § 495.316. 

N. ICRs Regarding Access to Systems 

and Records (§ 495.346) 

Section 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 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. 

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) 

Section 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. Although 

most States may already have these 

written standards of conduct, we have 

estimated the burden associated with 

this requirement as the time and effort 

necessary for a grantee to develop and 

maintain written standards of conduct. 

We estimate it will take each of the 56 

grantees 0.5 hours to develop and 

maintain standards of conduct. The total 

estimated annual burden is 28 hours (56 

grantees × 0.5 hours). The annual cost 

burden for a grantee to develop and 

maintain standards of conduct is $990 

(28 hours × $35.37 (mean hourly rate for 

a management analyst based on the May 

2008 Bureau of Labor Statistics)). 

Section 495.348(e) requires 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. Although most States 

probably have these procedures already, 

we estimate that it will take each of the 

56 grantees 0.5 hours to develop and 

maintain written procurement 

procedures. The total estimated annual 

burden is 28 hours (56 grantees × 0.5 

hours). The annual cost burden for a 

grantee to develop and maintain written 

procurement procedures is $990 (28 

hours × $35.37 (mean hourly rate for a 

management analyst based on the May 

2008 Bureau of Labor Statistics)). 

Section 495.348(f) imposes 

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 × 5 hours). The 

annual cost burden for a grantee to 

develop and maintain a system for 

contract administration is $9,904 (280 

hours × $35.37 (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) 

Section 495.350 requires 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 hours to verify the 

information and 0.5 hours to submit the 

attestation to the Department, for a total 

of 1 hour. The estimated annual burden 

for States associated with the 

aforementioned submission 

requirements is 56 hours (56 StatesTerritories × 1 hour State-Territory). The 

annual cost burden for a State employee 

to provide the above information is 

$1,981 (56 hours × $35.37 (mean hourly 

rate for a management analyst based on 

the May 2008 Bureau of Labor 

Statistics)). We believe that 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 $790 (56 hours × $14.11 

(mean hourly rate for secretaries based 

on the May 2008 Bureau of Labor 

Statistics)). 

Q. ICRs Regarding Reporting 

Requirements (§ 495.352) 

Section 495.352 requires 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. 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 


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(56 States-Territories × 5 hours/StateTerritory). 

The annual cost burden for a State 

employee to provide the above 

information is $9,904 (280 hours × 

$35.37 (mean hourly rate for a 

management analyst based on the May 

2008 Bureau of Labor Statistics)). We 

believe 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 × $14.11 (mean 

hourly rate for secretaries based on the 

May 2008 Bureau of Labor Statistics)). 

R. ICRs Regarding Retroactive Approval 

of FFP With an Effective Date of 

February 18, 2009 (§ 495.362) 

Section 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 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) 

Section 495.366(a)(2) requires a State 

to have a process in place to report 

actual expenditures for the Medicaid 

EHR 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. The estimated 

annual burden for States associated with 

the aforementioned requirements is 280 

hours (56 States-Territories × 5 hours 

State-Territory). 

The annual cost burden for a State 

employee to provide the above 

information is $9,904 (280 hours × 

$35.37 (mean hourly rate for a 

management analyst based on the May 

2008 Bureau of Labor Statistics)). We 

believe 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 × $14.11 (mean 

hourly rate for secretaries based on the 

May 2008 Bureau of Labor Statistics)). 

Section 495.366(a)(3) requires 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. 

Section 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. 

Section § 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 § 495.8. 

Section 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. 

Section 495.366(d)(2) 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. Section 

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. 

Section 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) 

Section 495.370(a) requires states to 

have a process in place consistent with 

the requirements established in 

§ 447.253(e) 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. 

We continue to believe that these 

numbers are subject to a substantial 

amount of uncertainty and actual 

experience may be significantly 

different. The range of possible 

experience is greater 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. 

U. General Comments Regarding the 

Information Collection Requirements 

Comment: Some commenters 

recommended that EPs and eligible 

hospitals should start tracking time and 

resources estimates on their overall cost 

for complying with all the required data 

collection to achieve meaningful use 

during the reporting period. They 

believed the information is beneficial 

for CMS in developing and assessing 

future meaningful use objectives and 

measures. 

Response: We welcome provider 

input on the required resources to 

comply with the meaningful use 

requirements. We believe the 

information would help us to fine-tune 

burden estimates for future rulemaking 

for subsequent stages of meaningful use 

demonstration. 

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BILLING CODE 4120–01–C 


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We will accept comments on the 

aforementioned information collection 

requirements for 60 days from the date 

of display for this final rule. At the 

conclusion of the 60-day comment 

period, we will publish an additional 

notice announcing the submission of the 

information collection request 

associated with this final rule for OMB 

approval. At that time, the public will 

have an additional 30 days to submit 

public comments to OMB for 

consideration. 

To obtain copies of the supporting 

statement associated with the 

information collection requirements 

contained herein, access CMS’ Web site 

at http://www.cms.hhs.gov/

PaperworkReductionActof1995, or Email your request, including your 

address, phone number, OMB number, 

and CMS document identifier, to 

Paperwork@cms.hhs.gov, or call the 

Reports Clearance Office on (410) 786– 

1326. 

In commenting on the information 

collection requirements, please 

reference the information collection 

request identifier (CMS–10336). To be 

assured consideration, comments and 

recommendations must be submitted in 

one of the following ways by September 

13, 2010: 

1. Electronically. You may submit 

your comments electronically to http:// 

www.regulations.gov. Follow the 

instructions for ‘‘Comment or 

Submission’’ or ‘‘More Search Options’’ 

to find the information collection 

document(s) accepting comments. 

2. By regular mail. You may mail 

written comments to the following 

address: CMS, Office of Strategic 

Operations and Regulatory Affairs, 

Division of Regulations Development, 

Attention: Document Identifier/OMB 

Control Number, Room C4–26–05, 7500 

Security Boulevard, Baltimore, 

Maryland 21244–1850. 

IV. Regulatory Impact Analysis 

A. Overall Impact 

We have examined the final impacts 

of this rule as required by Executive 

Order 12866, the Regulatory Flexibility 

Act, 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 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 final 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 final rule. 

This final 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 HHS’ 

final rule on EHR certification programs. 

Each rule assessed the direct economic 

effects of its provisions. This final rule 

on Medicare and Medicaid EHR 

Incentive Programs addresses the 

impacts related to the actions taken by 

EPs or eligible hospitals, or CAHs to 

demonstrate meaningful use 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 final 

analysis, but also the final provisions of 

the other rules. Readers should 

understand that these forecasts are also 

subject to substantial uncertainty since 

demonstration of meaningful use will 

depend not only on the standards and 

requirements for FYs 2011 and 2012 for 

eligible hospitals and CYs 2011 and 

2012 for EPs, but on future rulemakings 

issued by the HHS. 

The HITECH Act provides Medicare 

and Medicaid incentive payments 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 payment reductions 

under the sustainable growth rate (SGR) 

formula for determining Medicare 

payments. Under the current law, 

physician payments were reduced by 23 

percent beginning December 1, 2010, 

and are scheduled for further reductions 

in CY 2011. Such reductions could 

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 

Medicare physician payment reductions 

are not included in our estimate and 

likewise we do not assume any 

additional behavioral changes from EHR 

incentive payments for Medicare 

physicians. 

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 show two scenarios, 

which illustrate how different scenarios 

would 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.’’ 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, 

eligible hospitals and CAHs may choose 

not to adopt and meaningfully use EHRs 

if the total costs of purchasing certified 

EHRs and the total costs of complying 

with this rule are higher than the value 


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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’’ 

scenario estimate for the demonstration 

of meaningful use each year, which 

assumes less robust adoption and 

meaningful use. Our ‘‘low’’ scenario of 

meaningful use demonstration assumes 

that roughly a decade from now, nearly 

95.6 percent of hospitals and 36 percent 

of EPs will be ‘‘meaningful users.’’ 

Both the high and low scenario 

estimates are based on current law, 

which includes a scheduled physician 

payment cut of 23 percent on December 

1, 2010. Such a reduction could cause 

major changes in physician behavior, 

enrollee care, and other Medicare 

provider payments, but the specific 

nature of these changes is exceptionally 

uncertain. In our estimates, we did not 

assume changes in physician behavior 

as a result of these payment cuts, as this 

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, and the 

Office of the Actuary in HHS. 

Since this RIA was published in the 

proposed rule, legislation has been 

enacted that increases the number of 

EPs that may be eligible to receive an 

incentive payment by changing the 

determination of hospital-based. A 

complete discussion of the issue, 

including comments and responses are 

available in section 2 of this rule stated. 

The determination of whether an EP is 

hospital-based will be based upon 

whether substantially all of the EP’s 

services are furnished in places of 

service classified under place of service 

codes 21 (Inpatient Hospital) or 23 

(Emergency Room, Hospital). Previously 

under the old definition, CMS estimated 

that 27 percent of EPs would meet the 

definition of hospital-based, however, 

now, under this final definition of 

hospital-based EPs, about 14 percent of 

Medicare EPs would be considered 

hospital-based and thus not eligible to 

receive any incentive payments. 

There are many estimates of current 

EHR adoption and usage rates. There is 

one EHR function—e-prescribing—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 ONC’s 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 electronicrecords 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 a basic system.’’ 

Computerized order entry (CPOE) 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 advanced 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 likely 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, despite, as 

those providers have commented, not 

being included in this final rule. 

Overall, we expect spending under 

the EHR incentive program for transfer 

payments to Medicare and Medicaid 

providers over 10 years to be $9.7 

billion under the low scenario, and 

$27.4 billion under the high scenario 

(these estimates include net payment 

adjustments for Medicare providers who 

do not achieve meaningful use in 2015 

and beyond in the amount of $3.9 

billion under the high scenario and $8.1 

billion under the low scenario). We 

have also estimated ‘‘per entity’’ costs for 

EPs, eligible hospitals, and CAHs. 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. We 

remain persuaded after consideration of 

the public comments that 

implementation costs will be significant 

for each participating entity because 

providers who would like to qualify as 

meaningful users of EHRs will need to 

purchase certified EHR technology. We 

further acknowledge that certified EHRs 

may differ in many important respects 

from the types of EHRs noted in these 

comments and the functionalities they 

contain may differ. However, we still 

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. Thus it remains 

that although both cost and benefit 

estimates are highly uncertain, the RIA 

that we have prepared to the best of our 

ability presents the costs and benefits of 

the final rulemaking. 

B. Regulatory Flexibility Analysis 

The Regulatory Flexibility Act 

requires agencies to prepare an Initial 

Regulatory Flexibility Analysis to 

describe and analyze the impact of the 

final 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 

Regulatory Flexibility Act, 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 

Regulatory Flexibility Act’s definitions, 

it is the normal practice of HHS simply 

to assume that all affected providers are 

‘‘small’’ under the Regulatory Flexibility 

Act. In this case, most EPs, eligible 

hospitals, and CAHs are either nonprofit 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 

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significant. Accordingly, this RIA 

section, in conjunction with the 

remainder of the preamble, constitutes 

the required Initial Regulatory 

Flexibility Analysis. We believe that the 

adoption and meaningful use of EHRs 

will have an impact on virtually every 

EP and eligible hospital, as well as 

CAHs and some EPs and hospitals 

affiliated with MA organizations. 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, CAHs 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 may 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 that EPs, 

CAHs and eligible hospitals 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, implement 

this new technology, and train their staff 

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. 

1. Number of Small Entities 

In total, we estimate that there are 

approximately 624,000 healthcare 

organizations (EPs, eligible hospitals, or 

CAHs 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 nonphysicians 

(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 and implement a certified EHR 

and $10,000 annually for ongoing 

maintenance according to the CBO. In 

that paper, Evidence on the Costs and 

Benefits of Health Information 

Technology, May 2008, in attempting to 

estimate the total cost of 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. 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 to achieve meaningful use. We 

estimate $1 million for maintenance, 

upgrades, and training each year. See 

the Costs of EHR adoption in section a 

under Background and Assumptions 

portion of this analysis for a discussion 

regarding the costs of adoption and 

variation by size and details on our 

estimates for the number of entities that 

are eligible for the incentive within each 

eligibility type category. 

Comment: One commenter suggested 

that the Regulatory Flexibility Act 

analysis did not include an assessment 

of the cost to implement the rule at state 

and local health departments. State and 

local health departments do operate 

clinics and provide care to the public. 

Some state and local health departments 

would be considered small businesses 

under the Regulatory Flexibility Act and 

an assessment of the implementation 

costs for these entities would allow us 

to work together to identify possible 

funding sources and cost savings 

strategies. 

Response: Under Medicaid, clinics 

such as rural health clinics or FQHCs 

are not eligible providers that can 

receive incentive payments. However, 

EPs within these clinics can receive 

incentive payments if they meet all 

other eligibility requirements. The 

Federal costs and payments associated 

with EHR implementation for EPs are 

captured on in Tables 32 and 33. 

2. Alternatives Considered 

This final rule implements new 

provisions of the Act for providing 

incentives for EPs, eligible hospitals, 

and CAHs that adopt and demonstrate 

meaningful use of certified EHR 

technology. HHS has no discretion to 

change the incentive payments or 

Medicare 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 

around how best to meet the 

requirements of the HITECH Act 

through the definition of 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 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 HITECH 

Act. We note that with regard to 

reporting of clinical quality measures 

for purposes of demonstrating 

meaningful use, we initially 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 

final rule, is to require reporting of 

quality measures in phases. In 2011, 

there will be a requirement to report 

clinical quality measures through 

attestation with a numerator, 

denominator, and exclusions. Electronic 

clinical quality measure reporting will 

begin in FY 2012 for hospitals and CY 

2012 for EPs. We expect that additional 

clinical quality measure reporting will 

be added in later years. 

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 time period for 

demonstrating adequate patient volume, 

and the requirements and methods for 

demonstrating meaningful use are 


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discussed in section II.D. of this final 

rule. 

3. Conclusion 

As discussed later in this analysis, we 

believe that 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 Regulatory 

Flexibility Act to minimize burden on 

small entities are met by this rule as 

final. 

Comment: Commenters cited the 

variation in the costs of EHR adoption 

across EP settings. For example, smaller 

practices believe their costs of EHR 

adoption to be higher per physician 

than larger counterparts. They believe 

they cannot realize the staff reductions 

and related cost savings from EHR 

adoption due to greater crossfunctionality for their staff. 

Response: We acknowledge the 

different experiences EPs have with 

EHR adoption and implementation. Two 

additional studies relating to the costs of 

adoption among small practices (Miller 

et al. (2005) ‘‘The Value Of Electronic 

Health Records In Solo Or Small Group 

Practices’’ Health Affairs 24(5): 1127– 

1137, and Zaroukian and Sierra (2006) 

‘‘Benefiting from Ambulatory EHR 

Implementation: Solidarity, Six Sigma, 

and Willingness to Strive’’ The Journal 

of Healthcare Information Management 

20(1): 53–60) estimate the cost per 

physician to be $44,000 per year with 

roughly $8,500 to $13,000 in ongoing 

maintenance. However, even among 

these studies there was still variation in 

experience. The per provider design of 

meaningful use incentive payments and 

orientation of other government health 

IT grant programs is to facilitate 

adoption and positive return on 

investment across health care settings. 

Thus we continue to hold that our cost 

estimates are reasonable estimations of 

provider experience while 

acknowledging that variations in 

experiences will be inevitable. 

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 604 of the 

Regulatory Flexibility Act. 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 final 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 

Medicare payments. As stated above, we 

have determined that this final rule 

would create a significant impact on a 

substantial number of small entities, 

and have prepared a Regulatory 

Flexibility Analysis as required by the 

Regulatory Flexibility Act 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. 

Comment: Several commenters have 

disagreed with our assessment, noting 

that the unique circumstances of small 

rural hospitals will not lead to 

efficiency and lower costs as it might 

with urban hospitals, but would lead to 

increased costs related to loss of 

productivity among the staff for 

implementing and learning an EHR 

system, and in later years, Medicare 

payment adjustments because of the 

lack of broadband access in these areas 

among other reasons. 

Response: Although we agree that 

small rural hospitals will have 

challenges inherent in their location, 

size and staffing complexity, we also 

acknowledge that smaller, more rural 

hospitals could experience added 

burden in achieving meaningful use. 

Supplemental funding to Regional 

Extension Centers to assist CAHs will 

work to lessen disparity between urban 

and rural hospitals. We also believe that 

the presence of incentive payments, 

market demands and rewards for data 

exchange, and future cost savings 

resulting from meaningful use will 

increase hospital adoption and 

meaningful use of EHRs. 

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 2010, that threshold is 

approximately $135 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. This program is 

voluntary for States and States offer the 

incentives at their option. 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 State’s related 

administrative costs, 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, 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 $135 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. 

E. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This final 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 for expenses associated 

with administering the program. As 

previously stated, we believe that State 

administrative costs are minimal. We 

note that this final rule does add a new 


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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. States will interface with the 

NLR since registration of providers will 

be stored in the NLR. For tracking and 

making payments, we believe that most 

States will use their current MMIS 

system to make payments. States must 

inform us of their plans for payments, 

systems, etc, via the SMHP, PAPD and 

IAPD; additionally, States will indicate 

the costs associated with these activities 

in their PAPD and IAPD. CMS is 

providing 90 percent FFP to States for 

building the interface and/or for updates 

to the MMIS related to EHR incentive 

payment administration. We believe the 

Federal share of the 90 percent match 

will protect the States from burdensome 

financial outlays and, as noted above, 

States offer the Medicaid EHR incentive 

program at their option. 

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 final rule would implement the 

provisions of the American Recovery 

and Reinvestment Act of 2009 (ARRA) 

(Pub. L. 111–5) that provide incentive 

payments to EPs, eligible hospitals, and 

CAHs participating in Medicare and 

Medicaid programs that adopt and 

meaningfully use certified EHR 

technology. The final rule specifies the 

initial criteria that an EP, eligible 

hospital, or CAH 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. As noted 

earlier in this RIA, changes both in 

legislation and policy based on 

comments from the public have been 

taken into account for the preparation of 

this final impact analysis. 

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 

demonstrate meaningful use of certified 

EHR technology. However, we have 

discretion around how best to meet the 

HITECH Act requirements for 

meaningful use for FY 2011 and beyond, 

which we have exercised in this final 

rule. Additionally, we have used our 

discretion to appropriately time the 

registration, attestation and payment 

requirements to allow EPs and eligible 

organizations as much time as possible 

in coordination with the anticipated 

certification of EHR technology to 

obtain and meaningfully use certified 

EHRs. 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 HITECH 

Act, however, those costs cannot be 

estimated and are not captured in this 

analysis. 

3. Background and Assumptions 

The principal costs of this final rule 

are the additional expenditures that will 

be undertaken by eligible entities in 

order to obtain the Medicare and 

Medicaid incentive payments to adopt, 

implement or upgrade and/or 

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 has been 

finalized for stage one but will change 

over time; (3) the HHS certification 

process although defined, has yet to be 

implemented;, and, (4) the impact of the 

financial incentives and payment 

adjustments on the rate of adoption of 

certified EHR technology by EPs, 

eligible hospitals, and CAHs is difficult 

to predict. The net costs and savings 

shown for this program represent two 

possible scenarios and actual impacts 

could differ substantially. 

As written in the preamble, this final 

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, CAHs 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 

final 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, including CAHs 

under Medicare, Medicaid, and MA and 

used them throughout the analysis. 

• About 553,200 Medicare FFS EPs in 

2011 (some of which will also be 

Medicaid EPs). 

• About 14 percent of the total EPs 

are hospital-based Medicare EPs, and 

are not eligible for the program. This 

leaves approximately 477,500 

nonhospital-based Medicare EPs in 

2011. 

• Twenty percent of the nonhospitalbased Medicare EPs (approximately 

95,500 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. We assume that any EP in this 

situation will choose to receive the 

Medicaid incentive payment, because it 

is larger. 

• About 44,100 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 

++ 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 third 

quarter 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 continue to estimate 

for EPs, the average adopt/implement/ 


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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. 

Although reports vary widely, we 

anticipate that the average would be $5 

million to achieve meaningful use, 

because providers who would like to 

qualify as meaningful users of EHRs will 

need to purchase certified EHRs. We 

further acknowledge that ‘‘certified 

EHRs’’ may differ in many important 

respects from the EHRs currently in use 

and may differ in the functionalities 

they contain. We estimate $1 million for 

maintenance, upgrades, and training 

each year. 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. 

For an eligible Medicaid EP, the first 

year incentive can be based on 

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 studied 

average costs associated with the 

purchase, initial 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 (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. 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 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 95,500 in 2011). Since 

the Medicaid incentive payments are 

higher than those for Medicare and EPs 

can only receive payments from one 

program, we assume the dually eligible 

EPs will receive their payments through 

the Medicaid program. It is also 

important to note that just as there is 

overall variation in state Medicaid 

programs, we anticipate there will be 

variation in the design and timing of 

state Medicaid EHR incentive programs. 

New data on the pace of state planning 

for meaningful use was used to adjust 

Medicaid adoption scenarios. Thus, 

how and when providers apply for 

meaningful use through Medicaid will 

likely differ by state. Medicaid also 

offers incentive payments for 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 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 

The American Hospital Association 

(AHA) conducts annual surveys that 

among other measures, track hospital 

spending. We have updated these data 

to reflect the latest figures from the 2008 

AHA Survey. Costs at these levels of 

adoption were significantly higher in 

2008 than 2007. This may better reflect 

the costs of implementing additional 

functionalities. We have also updated 

the number of discharges using the most 

recent cost report data available. The 

range in yearly information technology 

spending among hospitals is large— 

from $36,000 to over $32 million based 

on 2007 and 2008 AHA data. EHR 

system costs specifically 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 aforementioned AHA study, 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. 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. Applying a similar 

standard to the 2008 AHA data results 

in roughly 3–4 percent of hospitals 

having comprehensive systems and 12 

to 13 percent having basic systems. 

According to hospital CEOs, the main 

barrier to adoption is the cost of the 


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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 of advanced systems is 

low, it is difficult to get a solid average 

estimate for implementation and 

maintenance costs that can be applied 

across the industry. In addition, we 

recognize that there are additional 

industry costs associated with adoption 

and 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. 

5. Medicare Incentive Program Costs 

a. Medicare Eligible Professionals (EPs) 

In the proposed rule, CMS said that 

an EP would be a hospital-based EP and 

therefore ineligible to receive a 

Medicare or Medicaid EHR incentive 

payment if more than 90 percent of their 

services are provided in the following 

place of service (POS) codes for HIPAA 

standard transactions: 21—Inpatient 

Hospital, 22—Outpatient Hospital, 23— 

Emergency Room. 

However, as previously noted here 

and discussed elsewhere in this final 

rule, Congress amended the law to 

include only POS codes 21 (inpatient) 

and 23 (emergency room), excluding 22 

(outpatient hospital), thereby permitting 

some hospital-based EPs to qualify for 

the incentive payment. Accordingly we 

have updated our tables to reflect the 

increased number of EPs that may now 

qualify for the incentive payments, and 

those revisions to the numbers flow 

throughout these updated tables. 

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 14 percent of those EPs are 

hospital-based, based on the definition 

final in § 495.4, and therefore, do not 

qualify for incentive payments. This 

percentage of EPs were 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 hospitalbased will qualify for Medicaid 

incentive payments and will choose that 

program because the payments are 

higher. Of the remaining EPs, 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 is uncertain, so we 

established high and low scenarios 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 a 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 21.3 

percent beginning June 1, 2010, and are 

scheduled to be further reduced 

beginning in CY 2011. 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 Medicare 

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 non-hospital 

based Medicare EPs, (including those 

additional EPs who may now qualify 

under the revised definition), who will 

demonstrate meaningful use of certified 

EHR technology over the period CYs 

2011 through 2019 is as shown in Table 

22. 


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Under the HITECH Act, EPs can 

receive up to 5 years of Medicare 

incentive payments for the 

demonstration of 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 (2011 or 2012) 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, (with some 

limitations on switching programs) 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: of $63,750 versus $44,000 for 

Medicare. 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 eligible to receive 3 years 

of incentive payments. For the Medicare 

program, incentives are not 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 

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 

organizations 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 use 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 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 started with the estimated 

rate of EHR adoption from the study 

with the most rigorous definition, but 

note that the meaningful criteria are not 

equivalent to a fully functional system 

as defined in this study. (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). For the low 

scenario, 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. 

Given the revisions to the meaningful 

use criteria in this final rule and the 

nationwide implementation of the 

Regional Extension Center Program, the 

likelihood of reaching the high scenario 

has increased. However, actual adoption 

trends could be significantly different 

from these assumptions, given the 

elements of uncertainty we describe 

throughout this analysis. 

Net costs for the low scenario of the 

Medicare EP portion of the HITECH Act 

are shown in Table 23. 


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The estimated net costs for the high 

scenario of the Medicare EP portion of 

the HITECH Act are shown in Table 24. 


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b. Medicare Eligible Hospitals and 

CAHs 

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 

assumptions about how rapidly 

hospitals would adopt given the fraction 

of their costs that were covered. In 

addition, our estimates have been 

updated to reflect that the additional 

challenges likely to be experienced in 

the adoption of EHRs among CAHs will 

be partially ameliorated by supplements 

to Regional Extension Center funding to 

assist CAHs with EHR adoption. 

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 

$11,000 to a high of $12.9 million, with 

the median being $3.8 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 2008 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 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 final meaningful use definition 

will be the hardest one for hospitals to 

meet. Table 25 provides these 

proportions. 

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 have updated these data to reflect 

the latest figures from the 2008 AHA 

Survey. Costs at these levels of adoption 

were significantly higher in 2008 than 

2007. This may better reflect the costs 

of implementing additional 

functionalities. We have also updated 

the number of discharges using the most 

recent cost report data available. 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 

first demonstrating meaningful use in 

FY 2016 or later are not eligible for 

incentive payments. Medicare 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 to illustrate the uncertainty, we 

are providing two scenarios for our 

estimates. Our high scenario estimated 

net costs for section 4102 of the HITECH 

Act are shown in Table 26: Estimated 

costs (+) and savings (¥) for eligible 

hospitals adopting certified EHRs. This 

provision is estimated to increase 

Medicare hospital expenditures by a net 

total of $10.1 billion during FYs -2011 

through 2019. 


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We are also providing the estimates 

for a low scenario in Table 27. 


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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 

28, 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 28 shows the high 

scenario estimates: 

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, 

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 two 

scenarios which are examples of what 

we believe are possible low rates and 

high rates of adoption. 

Table 29 shows the low scenario 

estimates. 


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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 29, we estimated that the great 

majority of eligible hospitals would 

qualify for at least a portion 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 30 

shows our high scenario estimated 

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. 

For instance in FY 2012 under the 

high scenario, 53.5 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, 92.6 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 54.2 

percent of all possible incentive 

payments actually paid in that year. 

Table 31 shows the low scenario 

estimates. 

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 


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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. 

Comment: The AHA surveyed 795 

hospitals in January 2010 asking 

whether their EHR systems could meet 

each of the meaningful use objectives 

now and in coming years: 45 percent 

reported they could meet all Stage 1 

objectives by 2015 meaning that the 

remainder might be subject to penalties. 

Response: Their survey was based on 

our proposed definition of meaningful 

use. The definition of meaningful use in 

this final rule offers more flexibility and 

lower thresholds which we believe will 

make it easier for eligible hospitals to 

qualify for incentives. However we do 

acknowledge that the meaningful use 

criteria described in this final rule may 

still challenge hospitals to use their IT 

in ways that improve patient care and 

outcomes. We also acknowledge that 

smaller, more rural hospitals could 

experience added burden in achieving 

meaningful use related to timing and 

costs of implementation. Supplemental 

funding to Regional Extension Centers 

to assist CAHs will work to lessen 

disparity between urban and rural 

hospitals. We also believe that the 

presence of incentive payments, market 

demands and rewards for data 

exchange, and future cost savings 

resulting from meaningful use will 

increase hospital adoption and 

meaningful use of EHRs. 

c. Critical Access Hospitals (CAHs) 

We estimate that there are 1,302 CAHs 

eligible to receive EHR incentive 

payments. Given the financial assistance 

available under HITECH for Regional 

Extension Centers, whose priorities 

include assisting CAHs in EHR 

adoption, we estimate that the 19 

percent of CAHs with relatively 

advanced EHR systems will achieve 

meaningful use before 2016. We also 

estimate that most of the remaining 

CAHs that have already adopted some 

kind of EHR system (48 percent of 

CAHs) will also achieve meaningful use 

by 2016. Our estimates regarding the 

incentives that will be paid to CAHs are 

incorporated into the overall Medicare 

and Medicaid program costs. 

We note that in response to comments 

this final rule amends the definition of 

acute care hospital for purposes of the 

Medicaid EHR incentive payment 

program to generally include critical 

access hospitals that meet the Medicaid 

patient volume criteria. Thus, the 

change in the definition has required 

that we update our tables to reflect the 

increased number of hospitals that now 

may qualify for the Medicaid EHR 

incentive payment program under this 

new definition. The numbers and 

percentages from the revised tables are 

reflected throughout this final impact 

analysis. Additionally, EHR adoption 

rates have been adjusted now that CAHs 

will be eligible for both Medicare and 

Medicaid EHR incentive payments. 

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 qualify for a Medicaid 

incentive payment for adopting, 

implementing, or upgrading in their first 

participation year, or for meaningful 

use, and up to an additional 5 years of 

incentive payments for demonstrating 

meaningful use of certified EHR 

technology. Under Medicaid, EPs 

include physicians (including 

pediatricians), dentists, certified nursemidwives, nurse practitioners, and 

certain physician assistants. Initial 

incentive payments are available 

through 2016, and incentive payments 

cannot be made after 2021. The 

Medicaid hospital incentives are similar 

to those specified in section 4102 of the 

HITECH Act for Medicare, except that 

they must be paid out over at least 3 

years and are spread out over a 

maximum of 6 years, are based on the 

ratio of Medicaid inpatient days to total 

days, and are not phased down as 

quickly as the Medicare payments based 

on the first year of payment. Medicaid 

hospitals can begin incentive payments 

through 2016, and incentive payments 

cannot be made after 2021. 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 non-adoption 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 32 shows our 

high estimates for the net Medicaid 

costs for eligible hospitals and EP. 


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Table 33 shows the low estimates for 

Medicaid costs and savings. 

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 

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. 


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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 use 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 34. 

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 has 

demonstrated a meaningful use or 

because he or she has adopted, 

implemented, or upgraded certified EHR 

technology, these participation rates 

include not only meaningful users but 

eligible providers implementing 

certified EHR technology as well. Table 

35 shows our low scenario estimates. 


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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 36. 

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 spread 

aggregate Medicaid incentive payments 

over no less than 3 years, but no more 

than 6 years of payments, and acute care 

hospitals may qualify to receive both the 

Medicare and Medicaid incentive 

payments. 

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 nonchildren’s hospitals. 

Table 37 shows our low scenario 

estimates. 

7. Benefits for All EPs and All Eligible 

Hospitals 

In this final 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 


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Technology: New Trends from the 

Literature’’ Health Affairs.) 

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 costsaving 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 Center http:// 

www.journalacs.org/article/S1072-

7515%2807%2900390-0/abstractarticle-footnote-1s.) 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, the study states that EHRs can 

reduce the duplication of diagnostic 

tests, prompt providers to prescribe 

cost-effective generic medications, 

remind patients about preventive care 

reduce unnecessary office visits and 

assist in managing complex care. 

Further, the report claims 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 

final 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. 

Since the CBO study, additional 

research has emerged documenting the 

association of EHRs with improved 

outcomes among diabetics (Hunt, JS et 

al. (2009) ‘‘The impact of a physiciandirected health information technology 

system on diabetes outcomes in primary 

care: a pre- and post-implementation 

study’’ Informatics in Primary Care 

17(3):165–74; Pollard, C et al. (2009) 

‘‘Electronic patient registries improve 

diabetes care and clinical outcomes in 

rural community health centers’’ Journal 

of Rural Health 25(1):77–84) and trauma 

patients (Deckelbaum, D. et al. (2009) 

‘‘Electronic medical records and 

mortality in trauma patients ‘‘The 

Journal of Trauma: Injury, Infection, and 

Critical Care 67(3): 634–636), enhanced 

efficiencies in ambulatory care settings 

(Chen, C et al. (2009) ‘‘The Kaiser 

Permanente Electronic Health Record: 

Transforming and Streamlining 

Modalities Of Care.’’Health Affairs 

28(2):323–333), and improved outcomes 

and lower costs in hospitals 

(Amarasingham, R. et al. (2009) 

‘‘Clinical information technologies and 

inpatient outcomes: a multiple hospital 

study’’ Archives of Internal Medicine 

169(2):108–14). 

9. General Considerations 

The estimates for the HITECH Act 

provisions were based on the economic 

assumptions underlying the President’s 

2011 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, CAHs and EPs will 

adopt EHRs and other HIT. Nonetheless, 

we believe that the Medicare incentive 

payments and the prospect of significant 

payment penalties for not demonstrating 

meaningful use 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 expect to 

administer the requirements in such a 

way as to encourage adoption of 

certified EHR technology and facilitate 

qualification for incentive payments, 

and expect to adopt progressively 

demanding standards at each stage 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 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 

Medicare and Medicaid programs, but 

acknowledge the wide range of possible 

outcomes. 

All financial analysis is calculated 

over a 10-year planning horizon, 

because though the incentive payments 

for Medicare EPs, CAHs and eligible 


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hospitals will only be paid for 5 years, 

the Medicaid incentives will cease in 

CY 2021. Starting in CY 2015, Medicare 

payment adjustments will begin. 

10. Summary 

The total cost to the Medicare and 

Medicaid programs is estimated to be 

$9.7 billion in transfers under the low 

scenario, and $27.4 billion under the 

high scenario, over a 10-year timeframe. 

The main reasons for the changes from 

the proposed rule are revised definitions 

of hospital-based eligible professional 

and Medicaid acute care hospitals, and 

updated data on discharges and costs of 

adoption among hospitals. 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 39 shows the total costs from 

2011 through 2019 for the high scenario 

after which the payment adjustments 

will be invoked. 

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, and the like, are still unable 

to be quantified at this time. 

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 


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classification of the expenditures 

associated with the provisions of this 

final 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 define the universe of 

those additional costs, nor specify what 

the high or low range might be to 

implement EHR technology in this final 

rule. 

Expected qualitative benefits include 

improved quality of care, better health 

outcomes, reduced errors and the like. 

Private industry costs would include the 

impact of EHR activities such as 

temporary reduced staff productivity 

related to learning how to use the EHR, 

the need for additional staff to work 

with HIT issues, and administrative 

costs related to reporting. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

was reviewed by the Office of 

Management and Budget. 

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. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicare Services amends 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 as 

follows: 

■ A. Revising paragraph (d)(2)(i)(B). 

■ B. Adding 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. 

* * * * * 

(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-fourths of the applicable 

percentage change specified in 

paragraph (d)(1) of this section is 

reduced— 

(i) For fiscal year 2015, by 331⁄3

percent; 

(ii) For fiscal year 2016, by 662⁄3

percent; and 

(iii) For fiscal year 2017 and 

subsequent fiscal years, by 100 percent. 

* * * * * 


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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 as 

follows: 

■ A. Revising paragraph (a)(1). 

■ B. Adding new paragraphs (a)(5), 

(a)(6) and (a)(7). 

The revision and additions read as 

follows: 

§ 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. 

(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. 

(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. 

(7) There is no administrative or 

judicial review under section s1869 and 

1878 of the Actor otherwise of the 

following: 

(i) The methodology and standards for 

determining the amount of payment 

under paragraph (a)(5) of this section, 

including the calculation of reasonable 

costs under § 495.106(c) of this chapter. 

(ii) The methodology and standards 

for determining the amount of payment 

adjustments made under paragraph 

(a)(6). 

(iii) The methodology and standards 

for determining a CAH to be a qualifying 

CAH under § 495.106 of this chapter. 

(iv) The methodology and standards 

for determining if the hardship 

exemption applies to a CAH under 

paragraph (a)(6)(ii) of this section. 

(v) The specification of the cost 

reporting periods, payment years, or 

fiscal years as applied under this 

paragraph. 

* * * * * 

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 as 

follows: 

■ A. Removing ‘‘and’’ from the end of 

paragraph (b)(2)(ii). 

■ B. Removing the period at the end of 

paragraph (b)(2)(iii) and adding ‘‘; and’’ 

in its place. 

■ C. Adding a new paragraph (b)(2)(iv). 

The addition reads 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 as 

follows: 

■ 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. 

* * * * * 

■ 9. Section 422.322 is amended as 

follows: 

■ A. Adding paragraph (a)(3). 

■ B. Revising paragraph (b). 

The addition and revision read as 

follows: 

§ 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 


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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 

■ 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 

Sec. 

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, 

eligible hospitals, and 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. 

495.110 Preclusion on administrative and 

judicial review. 

Subpart C—Requirements Specific to 

Medicare Advantage (MA) Organizations 

495.200 Definitions. 

495.202 Identification of qualifying MA 

organizations, MA–EPs, and MAaffiliated eligible hospitals. 

495.204 Incentive payments to qualifying 

MA organizations for MA–EPs and MAaffiliated eligible hospitals. 

495.206 Timeframe for payment to 

qualifying MA organizations. 

495.208 Avoiding duplicate payment. 

495.210 Meaningful EHR 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 FFP. 

495.328 Request for reconsideration of 

adverse determination. 

495.330 Termination of FFP for failure to 

provide access to information. 

495.332 State Medicaid health information 

technology (HIT) plan requirements. 

495.334 Reserved. 

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. 

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 eligible 

professionals who adopt and 

meaningfully use certified electronic 

health record (EHR) technology. 

(b) Section 1853(1) of the Act to 

provide incentive payments to Medicare 

Advantage organizations for certain 

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 the Medicare 

FFS program. 

(d) Section 1814(l) of the Act to 

provide an incentive payment to critical 

access hospitals that 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)(B)(ix)(I), 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 

EHR technology, and for covered 

professional services furnished on or 

after January 1, 2015 to Medicare 

beneficiaries by certain professionals 

who are not meaningful users of 

certified EHR technology. 

§ 495.4 Definitions. 

In this part, unless otherwise 

indicated— 

Certified electronic health record 

technology has the same definition as 

this term is defined at 45 CFR 170.102. 

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 


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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 eligible professional (EP)— 

(i) For the first payment year, any 

continuous 90-day period within a 

calendar year; 

(ii)(A) Except as specified in 

paragraph (1)(ii)(B) of this definition, for 

the second, third, fourth, fifth, or sixth 

payment year, the calendar year. 

(B) For Medicaid providers who are 

demonstrating they are meaningful EHR 

users for the first time in their second 

payment year, the EHR reporting period 

during such second payment year is any 

continuous 90-day period within the 

calendar year. 

(2) For an eligible hospital or a CAH— 

(i) For the first payment year, any 

continuous 90-day period within a 

federal fiscal year; and 

(ii)(A) Except as specified in 

paragraph (2)(ii)(B) of this definition, for 

the second, third, fourth, fifth, or sixth 

payment year, the Federal fiscal year. 

(B) For Medicaid providers who are 

demonstrating they are meaningful EHR 

users for the first time in their second 

payment year, the EHR reporting period 

during such second payment year is any 

continuous 90-day period within the 

Federal 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. 

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 a hospital 

setting in the year preceding the 

payment year. For Medicare, this will be 

calculated based on the Federal FY prior 

to the payment year. For Medicaid, it is 

at the State’s discretion if the data is 

gathered on the Federal FY or CY prior 

to the payment year. A setting is 

considered a hospital setting if it is a 

site of service that would be identified 

by the codes used in the HIPAA 

standard transactions as an inpatient 

hospital, or emergency room setting. 

Meaningful EHR user means: 

(1) Subject to paragraph (3) of this 

definition, 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)(i) Except as specified in paragraph 

(2)(ii) of this definition, a Medicaid EP 

or Medicaid eligible hospital, that meets 

the requirements of 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. 

(ii) An eligible hospital or CAH is 

deemed to be a meaningful EHR user for 

purposes of receiving an incentive 

payment under subpart D of this Part, if 

the hospital participates in both the 

Medicare and Medicaid EHR incentive 

programs, and the hospital meets the 

requirements of paragraph (1) of this 

definition. 

(3) To be considered a meaningful 

EHR user, at least 50 percent of an EP’s 

patient encounters during the EHR 

reporting period during the payment 

year must occur at a practice/location or 

practices/locations equipped with 

certified EHR technology. 

Payment year means: 

(1) For an EP, a calendar year 

beginning with CY 2011; and 

(2) For a CAH or an eligible hospital, 

a Federal fiscal year beginning with FY 

2011. 

Qualified EHR has the same definition 

as this term is defined at 45 CFR 

170.102. 

First, second, third, fourth, fifth, or 

sixth payment years mean as follows: 

(1) The first payment year is: with 

respect to an EP, the first calendar year 

for which the EP receives an incentive 

payment under this part; and with 

respect to an eligible hospital or CAH, 

the first FY for which the hospital 

receives an incentive payment under 

this part. 

(2) The second, third, fourth, fifth, or 

sixth payment year is: 

(i) With respect to a Medicare EP, the 

second, third, fourth or fifth successive 

CY immediately following the first 

payment year; and with respect to a 

Medicare eligible hospital or CAH, the 

second, third, or fourth successive 

Federal FY immediately following the 

first payment year. (Note: Medicare EPs 

are not eligible for a sixth payment year 

and Medicare eligible hospitals are not 

eligible for a fifth or sixth payment 

year.) 

(ii)(A) With respect to a Medicaid EP, 

the second, third, fourth, fifth, or sixth 

CY for which the EP receives an 

incentive payment under subpart D, 

regardless of whether the year 

immediately follows the prior payment 

year; and 

(B) With respect to a Medicaid eligible 

hospital, for years prior to FY 2017, the 

second, third, fourth, fifth, or sixth 

Federal FY for which the hospital 

receives an incentive payment under 

subpart D of this part, regardless of 

whether the year immediately follows 

the prior payment year. Beginning with 

FY 2017, payments to Medicaid eligible 

hospitals must be consecutive, and the 

hospital is not eligible for an incentive 

payment under subpart D of this part 

unless it received such incentive 

payment for the prior fiscal year. 

§ 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 paragraphs (a)(2) and (a)(3) 

of this section, EPs must meet all 

objectives and associated measures of 

the Stage 1 criteria specified in 

paragraph (d) of this section and five 

objectives of the EP’s choice from 

paragraph (e) of this section to meet the 

definition of a meaningful EHR user. 

(2) Exclusion for non-applicable 

objectives. (i) An EP may exclude a 

particular objective contained in 

paragraphs (d) or (e) of this section, if 

the EP meets all of the following 

requirements: 

(A) Must ensure that the objective in 

paragraph (d) or (e) of this section 

includes an option for the EP to attest 

that the objective is not applicable. 

(B) Meets the criteria in the applicable 

objective that would permit the 

attestation. 

(C) Attests. 

(ii) An exclusion will reduce (by the 

number of exclusions applicable) the 

number of objectives that would 

otherwise apply. For example, an EP 

that has an exclusion from one of the 

objectives in paragraph (e) of this 

section must meet four (and not five) 

objectives of the EP’s choice from such 

paragraph to meet the definition of a 

meaningful EHR user. 

(3) 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 (d) and (e) 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 paragraphs (b)(2) 

and (b)(3) of this section, eligible 

hospitals and CAHs must meet all 

objectives and associated measures of 


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the Stage 1 criteria specified in 

paragraph (f) of this section and five 

objectives of the eligible hospital’s or 

CAH’s choice from paragraph (g) of this 

section to meet the definition of a 

meaningful EHR user. 

(2) Exclusions for nonapplicable 

objectives. (i) An eligible hospital or 

CAH may exclude a particular objective 

that includes an option for exclusion 

contained in paragraphs (f) or (g) of this 

section, if the hospital meets all of the 

following requirements: 

(A) The hospital meets the criteria in 

the applicable objective that would 

permit an exclusion. 

(B) The hospital so attests. 

(ii) An exclusion will reduce (by the 

number of exclusions received) the 

number of objectives that would 

otherwise apply. For example, an 

eligible hospital that is excluded from 

one of the objectives in paragraph (g) of 

this section must meet four (and not 

five) objectives of the hospital’s choice 

from such paragraph to meet the 

definition of a meaningful EHR user. 

(3) Exception for Medicaid eligible 

hospitals that adopt, implement or 

upgrade in their first payment year. For 

Medicaid eligible hospitals that 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 (f) and 

(g) of this section apply beginning with 

the second payment year, and do not 

apply to the first payment year. 

(c) Many of the objective and 

associated measures in paragraphs (d) 

through (g) of this section rely on 

measures that count unique patients or 

actions. 

(1) If a measure (or associated 

objective) in paragraphs (d) through (g) 

of this section references paragraph (c) 

of this section, then the measure may be 

calculated by reviewing only the actions 

for patients whose records are 

maintained using certified EHR 

technology. A patient’s record is 

maintained using certified EHR 

technology if sufficient data was entered 

in the certified EHR technology to allow 

the record to be saved, and not rejected 

due to incomplete data. 

(2) If the objective and associated 

measure does not reference this 

paragraph (c) of this section, then the 

measure must be calculated by 

reviewing all patient records, not just 

those maintained using certified EHR 

technology. 

(d) Stage 1 core criteria for EPs. An EP 

must satisfy the following objectives 

and associated measures, except those 

objectives and associated measures for 

which an EP qualifies for an exclusion 

under paragraph (a)(2) of this section 

specified in this paragraph: 

(1)(i) Objective. Use computerized 

provider order entry (CPOE) for 

medication orders directly entered by 

any licensed healthcare professional 

who can enter orders into the medical 

record per state, local and professional 

guidelines. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 30 percent of 

all unique patients with at least one 

medication in their medication list seen 

by the EP have at least one medication 

order entered using CPOE. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section Any EP 

who writes fewer than 100 prescriptions 

during the EHR reporting period. 

(2)(i) Objective. Implement drug-drug 

and drug-allergy interaction checks. 

(ii) Measure. The EP has enabled this 

functionality for the entire EHR 

reporting period. 

(3)(i) Objective. Maintain an up-todate problem list of current and active 

diagnoses. 

(ii) Measure. More than 80 percent of 

all unique patients seen by the EP have 

at least one entry or an indication that 

no problems are known for the patient 

recorded as structured data. 

(4)(i) Objective. Generate and transmit 

permissible prescriptions electronically 

(eRx). 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 40 percent of 

all permissible prescriptions written by 

the EP are transmitted electronically 

using certified EHR technology. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section Any EP 

who writes fewer than 100 prescriptions 

during the EHR reporting period. 

(5)(i) Objective. Maintain active 

medication list. 

(ii) Measure. More than 80 percent of 

all unique patients seen by the EP have 

at least one entry (or an indication that 

the patient is not currently prescribed 

any medication) recorded as structured 

data. 

(6)(i) Objective. Maintain active 

medication allergy list. 

(ii) Measure. More than 80 percent of 

all unique patients seen by the EP have 

at least one entry (or an indication that 

the patient has no known medication 

allergies) recorded as structured data. 

(7)(i) Objective. Record all of the 

following demographics: 

(A) Preferred language. 

(B) Gender. 

(C) Race. 

(D) Ethnicity. 

(E) Date of birth. 

(ii) Measure. More than 50 percent of 

all unique patients seen by the EP have 

demographics recorded as structured 

data. 

(8)(i) Objective. Record and chart 

changes in the following vital signs: 

(A) Height. 

(B) Weight. 

(C) Blood pressure. 

(D) Calculate and display body mass 

index (BMI). 

(E) Plot and display growth charts for 

children 2–20 years, including BMI. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all unique patients age 2 and over seen 

by the EP, height, weight and blood 

pressure are recorded as structured data. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. Any EP 

who either see no patients 2 years or 

older, or who believes that all three vital 

signs of height, weight, and blood 

pressure of their patients have no 

relevance to their scope of practice. 

(9)(i) Objective. Record smoking status 

for patients 13 years old or older. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all unique patients 13 years old or older 

seen by the EP have smoking status 

recorded as structured data. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. Any EP 

who sees no patients 13 years or older. 

(10)(i) Objective. Report ambulatory 

clinical quality measures to CMS or, in 

the case of Medicaid EPs, the States. 

(ii) Measure. Subject to paragraph (c) 

of this section, successfully report to 

CMS (or, in the case of Medicaid EPs, 

the States) ambulatory clinical quality 

measures selected by CMS in the 

manner specified by CMS (or in the case 

of Medicaid EPs, the States). 

(11)(i) Objective. Implement one 

clinical decision support rules relevant 

to specialty or high clinical priority 

along with the ability to track 

compliance with that rule. 

(ii) Measure. Implement one clinical 

decision support rule. 

(12)(i) Objective. Provide patients 

with an electronic copy of their health 

information (including diagnostics test 

results, problem list, medication lists, 

medication allergies) upon request. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all patients who request an electronic 

copy of their health information are 

provided it within 3 business days. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. Any EP 

that has no requests from patients or 

their agents for an electronic copy of 

patient health information during the 

EHR reporting period. 

(13)(i) Objective. Provide clinical 

summaries for patients for each office 

visit. 

(ii) Measure. Subject to paragraph (c) 

of this section, clinical summaries 


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provided to patients for more than 50 

percent of all office visits within 3 

business days. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. Any EP 

who has no office visits during the EHR 

reporting period. 

(14)(i) 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. 

(ii) Measure. Performed at least one 

test of certified EHR technology’s 

capacity to electronically exchange key 

clinical information. 

(15)(i) Objective. Protect electronic 

health information created or 

maintained by the certified EHR 

technology through the implementation 

of appropriate technical capabilities. 

(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 and correct 

identified security deficiencies as part 

of its risk management process. 

(e) Stage 1 menu set criteria for EPs. 

An EP must meet five of the following 

objectives and associated measures, one 

of which must be either paragraph (e)(9) 

or (e)(10) of this section, except that the 

required number of objectives and 

associated measures is reduced by an 

EP’s paragraph (a)(2) of this section 

exclusions specified in this paragraph: 

(1)(i) Objective. Implement drugformulary checks. 

(ii) Measure. The EP has enabled this 

functionality and has access to at least 

one internal or external formulary for 

the entire EHR reporting period. 

(2)(i) Objective. Incorporate clinical 

lab-test results into EHR as structured 

data. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 40 percent of 

all clinical lab tests results ordered by 

the EP 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. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. An EP 

who orders no lab tests whose results 

are either in a positive/negative or 

numeric format during the EHR 

reporting period. 

(3)(i) Objective. Generate lists of 

patients by specific conditions to use for 

quality improvement, reduction of 

disparities, research, or outreach. 

(ii) Measure. Subject to paragraph (c) 

of this section, generate at least one 

report listing patients of the EP with a 

specific condition. 

(4)(i) Objective. Send reminders to 

patients per patient preference for 

preventive/follow-up care. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 20 percent of 

all patients 65 years or older or 5 years 

old or younger were sent an appropriate 

reminder during the EHR reporting 

period. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. An EP 

who has no patients 65 years old or 

older or 5 years old or younger with 

records maintained using certified EHR 

technology. 

(5)(i) Objective. Provide patients with 

timely electronic access to their health 

information (including lab results, 

problem list, medication lists, and 

allergies) within 4 business days 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 (available to the patient 

within four business days of being 

updated in the certified EHR 

technology) electronic access to their 

health information subject to the EP’s 

discretion to withhold certain 

information. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. Any EP 

that neither orders nor creates any of the 

information listed at 45 CFR 170.304(g) 

during the EHR reporting period. 

(6)(i) Objective. Use certified EHR 

technology to identify patient-specific 

education resources and provide those 

resources to the patient if appropriate. 

(ii) Measure. More than 10 percent of 

all unique patients seen by the EP are 

provided patient-specific education 

resources. 

(7)(i) Objective. The EP who receives 

a patient from another setting of care or 

provider of care or believes an 

encounter is relevant should perform 

medication reconciliation. 

(ii) Measure. Subject to paragraph (c) 

of this section, the EP performs 

medication reconciliation for more than 

50 percent of transitions of care in 

which the patient is transitioned into 

the care of the EP. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. An EP 

who was not the recipient of any 

transitions of care during the EHR 

reporting period. 

(8)(i) Objective. The EP who 

transitions their patient to another 

setting of care or provider of care or 

refers their patient to another provider 

of care should provide summary care 

record for each transition of care or 

referral. 

(ii) Measure. Subject to paragraph (c) 

of this section, the EP who transitions 

or refers their patient to another setting 

of care or provider of care provides a 

summary of care record for more than 

50 percent of transitions of care and 

referrals. 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. An EP 

who neither transfers a patient to 

another setting nor refers a patient to 

another provider during the EHR 

reporting period. 

(9)(i) Objective. Capability to submit 

electronic data to immunization 

registries or immunization information 

systems and actual submission 

according to applicable law and 

practice. 

(ii) Measure. Performed at least one 

test of certified EHR technology’s 

capacity to submit electronic data to 

immunization registries and follow up 

submission if the test is successful 

(unless none of the immunization 

registries to which the EP submits such 

information has the capacity to receive 

the information electronically). 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. An EP 

who administers no immunizations 

during the EHR reporting period or 

where no immunization registry has the 

capacity to receive the information 

electronically. 

(10)(i) Objective. Capability to submit 

electronic syndromic surveillance data 

to public health agencies and actual 

submission 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 and follow-up 

submission if the test is successful 

(unless none of the public health 

agencies to which an EP submits such 

information has the capacity to receive 

the information electronically). 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. An EP 

who does not collect any reportable 

syndromic information on their patients 

during the EHR reporting period or does 

not submit such information to any 

public health agency that has the 

capacity to receive the information 

electronically. 

(f) Stage 1 core criteria for eligible 

hospitals or CAHs. An eligible hospital 

or CAH must meet the following 

objectives and associated measures 

except those objectives and associated 

measures for which an eligible hospital 

or CAH qualifies for a paragraph (b)(2) 

of this section exclusion specified in 

this paragraph: 

(1)(i) Objective. Use CPOE for 

medication orders directly entered by 

any licensed healthcare professional 

who can enter orders into the medical 


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record per State, local, and professional 

guidelines. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 30 percent of 

all unique patients with at least one 

medication in their medication list 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) have at least 

one medication order entered using 

CPOE. 

(2)(i) Objective. Implement drug-drug 

and drug-allergy interaction checks. 

(ii) Measure. The eligible hospital or 

CAH has enabled this functionality for 

the entire EHR reporting period. 

(3)(i) Objective. Maintain an up-todate problem list of current and active 

diagnoses. 

(ii) Measure. More than 80 percent of 

all unique patients admitted to the 

eligible hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

have at least one entry or an indication 

that no problems are known for the 

patient recorded as structured data. 

(4)(i) Objective. Maintain active 

medication list. 

(ii) Measure. More than 80 percent of 

all unique patients admitted to the 

eligible hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

have at least one entry (or an indication 

that the patient is not currently 

prescribed any medication) recorded as 

structured data. 

(5)(i) Objective. Maintain active 

medication allergy list. 

(ii) Measure. More than 80 percent of 

all unique patients admitted to the 

eligible hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

have at least one entry (or an indication 

that the patient has no known 

medication allergies) recorded as 

structured data. 

(6)(i) Objective. Record all of the 

following demographics; 

(A) Preferred language. 

(B) Gender. 

(C) Race. 

(D) Ethnicity. 

(E) Date of birth. 

(F) Date and preliminary cause of 

death in the event of mortality in the 

eligible hospital or CAH. 

(ii) Measure. More than 50 percent of 

all unique patients admitted to the 

eligible hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

have demographics recorded as 

structured data. 

(7)(i) Objective. Record and chart 

changes in the following vital signs: 

(A) Height. 

(B) Weight. 

(C) Blood pressure. 

(D) Calculate and display body mass 

index (BMI). 

(E) Plot and display growth charts for 

children 2–20 years, including BMI. 

(ii) Measure. Subject to paragraph (c) 

of this section, for more than 50 percent 

of all unique patients age 2 and over 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23), height, 

weight, and blood pressure are recorded 

as structured data. 

(8)(i) Objective. Record smoking for 

patients 13 years old or older. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all unique patients 13 years old or older 

or admitted to the eligible hospital’s 

inpatient or emergency department 

(POS 21 or 23) have smoking status 

recorded as structured data. 

(iii) Exclusion in accordance with 

paragraph (b)(2) of this section. Any 

eligible hospital or CAH that admits no 

patients 13 years or older to their 

inpatient or emergency department 

(POS 21 or 23). 

(9)(i) Objective. Report hospital 

clinical quality measures to CMS or, in 

the case of Medicaid eligible hospitals, 

the States. 

(ii) Measure. Subject to paragraph (c) 

of this section, successfully report to 

CMS (or, in the case of Medicaid eligible 

hospitals or CAHs, the States) hospital 

clinical quality measures selected by 

CMS in the manner specified by CMS 

(or, in the case of Medicaid eligible 

hospitals or CAHs, the States). 

(10)(i) Objective. Implement one 

clinical decision support rule related to 

a high priority hospital condition along 

with the ability to track compliance 

with that rule. 

(ii) Measure. Implement one clinical 

decision support rule. 

(11)(i) Objective. Provide patients 

with an electronic copy of their health 

information (including diagnostic test 

results, problem list, medication lists, 

medication allergies, discharge 

summary, procedures), upon request. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all patients of the inpatient or 

emergency departments of the eligible 

hospital or CAH (POS 21 or 23) who 

request an electronic copy of their 

health information are provided it 

within 3 business days. 

(iii) Exclusion in accordance with 

paragraph (b)(2) of this section. Any 

eligible hospital or CAH that has no 

requests from patients or their agents for 

an electronic copy of patient health 

information during the EHR reporting 

period. 

(12)(i) Objective. Provide patients 

with an electronic copy of their 

discharge instructions at time of 

discharge, upon request. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all patients who are discharged from an 

eligible hospital or CAH’s inpatient or 

emergency department (POS 21 or 23) 

and who request an electronic copy of 

their discharge instructions are 

provided it. 

(iii) Exclusion in accordance with 

paragraph (b)(2) of this section. Any 

eligible hospital or CAH that has no 

requests from patients or their agents for 

an electronic copy of the discharge 

instructions during the EHR reporting 

period. 

(13)(i) Objective. Capability to 

exchange key clinical information (for 

example, problem list, medication list, 

medication 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. 

(14)(i) Objective. Protect electronic 

health information created or 

maintained by the certified EHR 

technology through the implementation 

of appropriate technical capabilities. 

(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 and correct 

identified security deficiencies as part 

of its risk management process. 

(g) Stage 1 menu set criteria for 

eligible hospitals or CAHs. Eligible 

hospitals or CAHs must meet five of the 

following objectives and associated 

measures, one which must be specified 

in paragraph (g)(8), (g)(9), or (g)(10) of 

this section, except that the required 

number of objectives and associated 

measures is reduced by a hospital’s 

paragraph (b)(2) of this section 

exclusions specified in this paragraph: 

(1)(i) Objective. Implement drugformulary checks. 

(ii) Measure. The eligible hospital or 

CAH has enabled this functionality and 

has access to at least one internal or 

external formulary for the entire EHR 

reporting period. 

(2)(i) Objective. Record advance 

directives for patient 65 years old or 

older. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 50 percent of 

all unique patients 65 years old or older 

admitted to the eligible hospital’s or 

CAH’s inpatient (POS 21) have an 

indication of an advance directive status 

recorded as structured data. 

(iii) Exclusion in accordance with 

paragraph (b)(2) of this section. An 

eligible hospital or CAH that admits no 


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patients age 65 years old or older during 

the EHR reporting period. 

(3)(i) Objective. Incorporate clinical 

lab-test results into EHR as structured 

data. 

(ii) Measure. Subject to paragraph (c) 

of this section, more than 40 percent of 

all clinical lab test results ordered by an 

authorized provider of the eligible 

hospital or CAH for patients admitted to 

its inpatient or emergency department 

(POS 21 and 23) 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. 

(4)(i) Objective. Generate lists of 

patients by specific conditions to use for 

quality improvement, reduction of 

disparities, research, or outreach. 

(ii) Measure. Subject to paragraph (c) 

of this section, generate at least one 

report listing patients of the eligible 

hospital or CAH with a specific 

condition. 

(5)(i) Objective. Use certified EHR 

technology to identify patient-specific 

education resources and provide those 

resources to the patient if appropriate. 

(ii) Measure. More than 10 percent of 

all unique patients admitted to the 

eligible hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23) 

are provided patient-specific education 

resources. 

(6)(i) Objective. The eligible hospital 

or CAH who receives a patient from 

another setting of care or provider of 

care or believes an encounter is relevant 

should perform medication 

reconciliation. 

(ii) Measure. Subject to paragraph (c) 

of this section, the eligible hospital or 

CAH performs medication 

reconciliation for more than 50 percent 

of transitions of care in which the 

patient is admitted to the eligible 

hospital’s or CAH’s inpatient or 

emergency department (POS 21 or 23). 

(7)(i) Objective. The eligible hospital 

or CAH that transitions their patient to 

another setting of care or provider of 

care or refers their patient to another 

provider of care should provide 

summary care record for each transition 

of care or referral. 

(ii) Measure. Subject to paragraph (c) 

of this section, the eligible hospital or 

CAH that transitions or refers their 

patient to another setting of care or 

provider of care provides a summary of 

care record for more than 50 percent of 

transitions of care and referrals. 

(8)(i) Objective. Capability to submit 

electronic data to immunization 

registries or immunization information 

systems and actual submission 

according to applicable law and 

practice. 

(ii) Measure. Performed at least one 

test of certified EHR technology’s 

capacity to submit electronic data to 

immunization registries and follow up 

submission if the test is successful 

(unless none of the immunization 

registries to which the eligible hospital 

or CAH submits such information has 

the capacity to receive the information 

electronically). 

(iii) Exclusion in accordance with 

paragraph (b)(2) of this section. An 

eligible hospital or CAH that 

administers no immunizations during 

the EHR reporting period or where no 

immunization registry has the capacity 

to receive the information 

electronically. 

(9)(i) Objective. Capability to submit 

electronic data on reportable (as 

required by State or local law) lab 

results to public health agencies and 

actual submission according to 

applicable law and practice. 

(ii) Measure. Performed at least one 

test of certified EHR technology’s 

capacity to provide electronic 

submission of reportable lab results to 

public health agencies and follow-up 

submission if the test is successful 

(unless none of the public health 

agencies to which an eligible hospital or 

CAH submits such information has the 

capacity to receive the information 

electronically). 

(iii) Exclusion in accordance with 

paragraph (b)(2) of this section. No 

public health agency to which the 

eligible hospital or CAH submits such 

information has the capacity to receive 

the information electronically. 

(10)(i) Objective. Capability to submit 

electronic syndromic surveillance data 

to public health agencies and actual 

submission 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 and follow-up 

submission if the test is successful 

(unless none of the public health 

agencies to which an eligible hospital or 

CAH submits information has the 

capacity to receive the information 

electronically). 

(iii) Exclusion in accordance with 

paragraph (a)(2) of this section. No 

public health agency to which the 

eligible hospital or CAH submits 

information has the capacity to receive 

the information electronically. 

(h) Stage 2 criteria for EPs. Beginning 

when final regulations for Stage 2 are 

effective, an EP must satisfy the 

following objectives and associated 

measures: 

(1)(i) Objective. Use computerized 

provider order entry (CPOE) for 

medication orders directly entered by 

any licensed healthcare professional 

who can enter orders into the medical 

record per state, local and professional 

guidelines. 

(ii) Measure. More than 60 percent of 

all unique patients with at least one 

medication in their medication list seen 

by the EP have at least one medication 

order entered using CPOE. 

(iii) Exclusion. Any EP who writes 

fewer than 100 prescriptions during the 

EHR reporting period. 

(2) [Reserved]. 

(i) Stage 2 criteria for eligible 

hospitals or CAHs. Beginning when 

final regulations for Stage 2 are 

effective, an eligible hospital or CAH 

must satisfy the following objectives 

and associated measures: 

(1)(i) Objective. Use computerized 

provider order entry (CPOE) for 

medication orders directly entered by 

any licensed healthcare professional 

who can enter orders into the medical 

record per state, local and professional 

guidelines. 

(ii) Measure. More than 60 percent of 

all unique patients with at least one 

medication in their medication list 

admitted to the eligible hospital’s or 

CAH’s inpatient or emergency 

department (POS 21 or 23) have at least 

one medication order entered using 

CPOE. 

(2) [Reserved]. 

§ 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) Attestation. 

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— 

(A) Used certified EHR technology, 

and specify the technology used; 

(B) Satisfied the required objectives 

and associated measures under 

§ 495.6(d) and § 495.6(e) of this subpart; 

(C) 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; 

(ii) Additional requirements for 

Medicaid EPs. For Medicaid EPs, if, in 

accordance with § 495.316 and 

§ 495.332, CMS has approved a State’s 

revised definition for meaningful use, in 

addition to meeting paragraphs (a)(1)(i) 

through (ii) of this section, the EP must 


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also demonstrate meeting the State 

revised definition using the method 

approved by CMS; and 

(iii) Exception for Medicaid EPs. If a 

Medicaid EP has adopted, implemented 

or upgraded certified EHR technology in 

the first payment year, the EP need not 

demonstrate meaningful use until the 

second payment year, as described in 

§ 495.6 and § 495.8 of this subpart. 

(2) For CY 2012 and subsequent 

years— 

(i) Attestation. 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— 

(A) Used certified EHR technology 

and specify the technology used. 

(B) Satisfied the required objectives 

and associated measures under 

§ 495.6(d) and § 495.6(e), except 

§ 495.6(d)(10) ‘‘Report ambulatory 

clinical quality measures to CMS or, in 

the case of Medicaid EPs, the States.’’ 

(C) 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. 

(ii) Reporting of clinical quality 

information. For § 495.6(d)(10), ‘‘Report 

ambulatory clinical quality measures to 

CMS or, in the case of Medicaid EPs, the 

States,’’ report the ambulatory clinical 

quality measures selected by CMS 

electronically to CMS (or in the case of 

Medicaid EPs, the States) in the manner 

specified by CMS (or in the case of 

Medicaid EPs, the States). 

(iii) Additional requirements for 

Medicaid EPs. For Medicaid EPs, if, in 

accordance with § 495.316 and 

§ 495.332, CMS has approved a State’s 

additional criteria for meaningful use, in 

addition to meeting paragraphs (a)(2)(i) 

through (iii), the EP must also 

demonstrate meeting such additional 

criteria using the method approved by 

CMS. 

(iv) Exception for Medicaid EPs. If a 

Medicaid EP has adopted, implemented, 

or upgrade certified EHR technology in 

the first payment year, the EP need not 

demonstrate that it is a meaningful EHR 

user until the second payment year, as 

described in § 495.6 and § 495.8 of this 

subpart. 

(3) For all CYs, an EP who practices 

in multiple physical locations, not all of 

which have certified EHR technology 

available, will demonstrate meaningful 

use using only the locations where the 

EP has certified EHR technology 

available. (See also § 495.4 regarding the 

definition of meaningful EHR user). 

(b) Demonstration by eligible 

hospitals and CAHs. To successfully 

demonstrate that it is a meaningful EHR 

user, an eligible hospital or CAH must 

the following requirements: 

(1) For FY 2011— 

(i) Attestation. 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— 

(A) Used certified EHR and specify 

the technology used. 

(B) Satisfied the required objectives 

and associated measures under 

§ 495.6(f) and § 495.6(g). 

(C) Must specify the EHR reporting 

period and provide the result of each 

applicable measure for all patients 

admitted to the inpatient or emergency 

department (POS 21 or 23) of the 

hospital during the EHR reporting 

period for which a selected measure is 

applicable. 

(ii) Additional requirements for 

Medicaid eligible hospitals. For 

Medicaid eligible hospitals, if, in 

accordance with § 495.316 and 

§ 495.332, CMS has approved a State’s 

revised definition for meaningful use, in 

addition to meeting paragraphs (b)(1)(i) 

through (ii) of this section, the eligible 

hospital must also demonstrate meeting 

the State’s revised definition using the 

method approved by CMS. 

(iv) Exception for Medicaid eligible 

hospitals. If a Medicaid eligible hospital 

has adopted, implemented or upgraded 

certified EHR technology in the first 

payment year, the eligible hospital need 

not demonstrate meaningful use until 

the second payment year, as described 

in § 495.6 and § 495.8 of this subpart. 

(2) For FY 2012 and subsequent 

years— 

(i) Attestation. 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— 

(A) Used certified EHR and specify 

the technology used; 

(B) Satisfied the required objectives 

and associated measures under 

§ 495.6(f) and § 495.6(g), except 

§ 495.6(f)(9) ‘‘Report hospital clinical 

quality measures to CMS or, in the case 

of Medicaid eligible hospitals, the 

States;’’ 

(C) Must specify the EHR reporting 

period and provide the result of each 

applicable measure for all patients 

admitted to the inpatient or emergency 

department (POS 21 or 23) of the 

hospital during the EHR reporting 

period for which a selected measure is 

applicable. 

(ii) Reporting clinical quality 

information. For § 495.6(f)(9) ‘‘Report 

hospital clinical quality measures to 

CMS or, in the case of Medicaid eligible 

hospitals, the States,’’ report the hospital 

quality measures selected by CMS 

electronically to CMS (or in the case of 

Medicaid eligible hospitals, the States), 

in the manner specified by CMS (or in 

the case of Medicaid eligible hospitals, 

the States). 

(iv) Additional requirements for 

Medicaid eligible hospitals. For 

Medicaid eligible hospitals if, in 

accordance with § 495.316 and 

§ 495.332, CMS has approved a State’s 

revised definition for meaningful use, in 

addition to meeting paragraphs (b)(2)(i) 

through (iii) of this section, the eligible 

hospital must also demonstrate meeting 

the State’s revised definition using the 

method approved by CMS. 

(v) Exception for Medicaid eligible 

hospitals. If a Medicaid eligible hospital 

has adopted, implemented, or upgraded 

certified EHR technology in the first 

payment year, the eligible hospital need 

not demonstrate that it is a meaningful 

EHR user until the second payment 

year, as described in § 495.6 and § 495.8 

of this subpart. 

(c) Review of meaningful use. (1) CMS 

(and in the case of Medicaid EPs and 

eligible hospitals, States) may review an 

EP, eligible hospital or CAH’s 

demonstration of meaningful use. 

(2) All EPs, eligible hospitals, and 

CAHs must keep documentation 

supporting their demonstration of 

meaningful use for 6 years. 

§ 495.10 Participation requirements for 

EPs, eligible hospitals, and CAHs. 

(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. 

(4) Such other information as 

specified by CMS. 

(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) which may 

be the EP’s Social Security Number 


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(SSN) 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, 

eligible hospital or CAH 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) After receiving at least one EHR 

incentive payment, may switch between 

the two EHR incentive programs only 

one time, and only for a payment year 

before 2015; 

(3) Must, for each payment year, meet 

all of the applicable requirements, 

including applicable patient volume 

requirements, for the program in which 

he or she chooses to participate 

(Medicare or Medicaid); 

(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; and 

(5) Is placed in the payment year the 

EP would have been in had the EP 

begun in and remained in the program 

to which he or she has switched. 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. (1) EPs are permitted to 

reassign their incentive payments to 

their employer or to an entity with 

which they have a contractual 

arrangement allowing the employer or 

entity to bill and receive payment for 

the EP’s covered professional services. 

(2)(i) Assignments in Medicare must 

be consistent with Section 1842(b)(6)(A) 

of the Act and 42 CFR part 424 subpart 

F. 

(ii) Medicaid EPs may also assign 

their incentive payments to a TIN for an 

entity promoting the adoption of EHR 

technology, consistent with subpart D of 

this part. 

(3) Each EP may reassign the entire 

amount of the incentive payment to 

only one employer or entity. 

Subpart B—Requirements Specific to 

the Medicare Program 

§ 495.100 Definitions. 

In this subpart unless otherwise 

indicated— 

Covered professional services means 

(as specified in section 1848(k)(3) of the 

Act) services furnished by an EP for 

which payment is made under, or is 

based on, the Medicare physician fee 

schedule. 

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, and 

excluding those hospital units specified 

in § 412.25 of this chapter. 

Eligible professional (EP) means a 

physician as defined in section 1861(r) 

of the Act, which includes, with certain 

limitations, 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 a 

geographic 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 

(qualifying 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, as 

determined for that payment year. 

Qualifying hospital means an eligible 

hospital that is a meaningful EHR user 

for the EHR reporting period for a 

payment year. 

§ 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 must be 

paid to a qualifying EP (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 to 75 percent of the estimated 

allowed charges for covered 

professional services furnished by the 

EP during the payment year. 

(2) For purposes of this paragraph (a) 

of this section, 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 

paragraphs (b)(2) and (c) of this section, 

the amount of the incentive payment 

under paragraph (a) of this section 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 EP is 2011 or 2012, $18,000). 

(ii) For the second payment year, 

$12,000. 

(iii) For the third payment year, 

$8,000. 

(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 EP is 2014, then the payment 

limit for a payment year for the 

qualifying EP is the same as the amount 

specified in paragraph (b)(1) of this 

section 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 

payment limit specified in this 

paragraph for such EP for such year and 

any subsequent year is $0. 

(c) Increase in incentive payment 

limit for EPs who predominantly furnish 

services in a geographic HPSA. In the 

case of a qualifying EP 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 that is designated as 

of December 31 of such year, the 

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 hospitalbased EP for the year, the payment 

amount for such services is equal the 

product of the applicable percent 

specified in paragraph (d)(2) of this 

section and the Medicare physician fee 

schedule amount for such services. 

(2) Applicable percent. Applicable 

percent is as follows: 

(i) For 2015, 99 percent if the EP is 

not subject to the payment adjustment 

for an EP who is not a successful 

electronic prescriber under section 

1848(a)(5) of the Act, or 98 percent if the 

EP is subject to the payment adjustment 


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for an EP 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. (i) 

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. 

(ii) The Secretary’s determination to 

grant an EP an exemption under 

paragraph (d)(3)(i) of this section may be 

renewed on an annual basis, provided 

that in no case may an EP be granted an 

exemption under paragraph (d)(3)(i) of 

this section for more than 5 years. 

§ 495.104 Incentive payments to eligible 

hospitals. 

(a) General rule. A qualifying hospital 

(as defined in this subpart) must 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 

paragraph (d) of this section and the 

payment formula specified in paragraph 

(c) of this section, qualifying hospitals 

may receive incentive payments during 

transition periods which comprise the 

following fiscal years: 

(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 2016. 

(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. 

(iii) The transition factor determined 

under paragraph (c)(5) of this section. 

(2) Interim and final payments. CMS 

uses data on hospital acute care 

inpatient discharges, Medicare Part A 

acute care inpatient-bed-days, Medicare 

Part C acute care inpatient-bed-days, 

and total acute care inpatient-bed-days, 

from the latest submitted 12-month 

hospital cost report as the basis for 

making preliminary incentive payments. 

Final payments are determined at the 

time of settling the first 12-month 

hospital cost report for the hospital 

fiscal year that begins on or after the 

first day of 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 acute 

care inpatient discharges or fewer, 

$2,000,000. 

(ii) For each hospital with at least 

1,150 but no more than 23,000 acute 

care inpatient discharges, $2,000,000 + 

[$200 × (n ¥ 1,149)], where n is the 

number of discharges for the hospital. 

(iii) For each hospital with more than 

23,000 acute care inpatient discharges, 

$6,370,200. 

(4) Medicare share fraction—(i) 

General. (A) CMS determines the 

Medicare share fraction for an eligible 

hospital by using the number of 

Medicare Part A, Medicare Part C, and 

total acute care 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 

which are attributable to individuals 

with respect to whom payment may be 

made under Part A, including 

individuals enrolled in section 1876 

Medicare cost plans; and 

(2) The number of inpatient-bed-days 

which are attributable to individuals 

who are enrolled with a Medicare 

Advantage organization (as defined in 

§ 422.2 of this chapter). 

(B) A denominator which is the 

product of— 

(1) The total number of acute care 

inpatient-bed-days; and 

(2) The total amount of the eligible 

hospital’s charges, not including any 

charges that are attributable to charity 

care, divided by the estimated total 

amount of the hospitals charges. 

(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) For 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) For 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. 

(iv) For 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) For hospitals whose first payment 

year is FY 2015— 

(A) 1⁄2 for FY 2015; and 

(B) 1⁄4 for FY 2016. 

(d) No incentive payment for 

nonqualifying hospitals. After the first 

payment year, an eligible hospital will 

not receive an incentive payment for 

any payment year during which it is not 

a qualifying hospital. 

§ 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 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. 


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(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)(4) 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 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 

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 qualifying 

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 Web 

site, 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 addressee. 

(3) Business phone number. 

(4) Such other information as 

specified by CMS. 

(b) CMS posts, on its Internet Web 

site, 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. 

§ 495.110 Preclusion on administrative 

and judicial review. 

There is no administrative or judicial 

review under sections 1869 or 1878 of 

the Act, or otherwise, of the following: 

(a) For EPs— 

(1) The methodology and standards 

for determining EP incentive payment 

amounts; 

(2) The methodology and standards 

for determining the payment 

adjustments that apply to EPs beginning 

with 2015; 

(3) The methodology and standards 

for determining whether an EP is a 

meaningful EHR user, including— 

(i) The selection of clinical quality 

measures; and 

(ii) The means of demonstrating 

meaningful EHR use. 

(4) The methodology and standards 

for determining the hardship exception 

to the payment adjustments; 

(5) The methodology and standards 

for determining whether an EP is 

hospital-based; and 

(6) The specification of the EHR 

reporting period, as well as whether 

payment will be made only once, in a 

single consolidated payment, or in 

periodic installments. 

(b) For eligible hospitals— 

(1) The methodology and standards 

for determining the incentive payment 

amounts made to eligible hospitals, 

including— 

(i) The estimates or proxies for 

determining discharges, inpatient-beddays, hospital charges, charity charges, 

and Medicare share; and 

(ii) The period used to determine such 

estimate or proxy; 

(2) The methodology and standards 

for determining the payment 

adjustments that apply to eligible 

hospitals beginning with FY 2015; 

(3) The methodology and standards 

for determining whether an eligible 

hospital is a meaningful EHR user, 

including— 

(i) The selection of clinical quality 

measures; and 

(ii) The means of demonstrating 

meaningful EHR use. 

(4) The methodology and standards 

for determining the hardship exception 

to the payment adjustments; and 

(5) The specification of the EHR 

reporting period, as well as whether 

payment will be made only once, in a 

single consolidated payment, or in 

periodic installments. 


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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 section 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. 

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 to a 

Medicare beneficiary. 

Payment year means— 

(1) For a qualifying MA EP, a calendar 

year (CY) beginning with CY 2011 and 

ending with CY 2016; and 

(2) For an eligible hospital, a Federal 

fiscal year (FY) 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, for 

which at least two thirds of the 

Medicare hospital discharges (or beddays) are of (or for) 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 must 

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. 

(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. 

(5) Is not a ‘‘hospital-based EP’’ as that 

term is defined in § 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. 

(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 MAaffiliated 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 2011 (for plan year 2012), 

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. 

(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. ‘‘Potentially qualifying MA EPs’’ 

and ‘‘potentially qualifying MAaffiliated eligible hospitals’’ are those 

EPs and hospitals that meet the 

respective definitions of ‘‘qualifying MA 

EP’’ and ‘‘qualifying MA-affiliated 

eligible hospital’’ in § 495.200 but who 

(or which) are not meaningful users of 

certified EHR technology. 

(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 2012, must make a preliminary 

identification of potentially qualifying 

MA EPs and potentially qualifying MAaffiliated eligible hospitals for which the 

organization is seeking incentive 

payments for the current plan year. 

(2) A qualifying MA organization 

must provide CMS with the following 

for each MA EP or eligible hospital 

when reporting under either paragraph 

(b)(1) or (b)(3) of this section: 

(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 MAaffiliated eligible hospital meets the 

eligibility criteria. 

(3) Final identification of potentially 

qualifying MA EP or MA-affiliated 

eligible hospital must be made within 

60 days of the close of the payment year 

as defined in § 495.200 for which MA 

EHR incentive payments are being 

sought. 


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(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 MAaffiliated 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 MAaffiliated eligible 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. 

(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 60 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 

section 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 MAenrollee related Part B practice costs of 

the salaried qualifying MA EP. 

(iii) Methodological proposals must 

be submitted to CMS by June of the 

payment year and must be auditable by 

an independent third-party. CMS will 

review and approve or disapprove such 

proposals in a timely manner. 

(5) For qualifying MA EPs who are not 

salaried, qualifying MA organizations 

may obtain attestations from such 

qualifying MA EPs (or from entities that 

the MA EPs are employed by or with 

which they have a partnership interest) 

as to the amount of compensation 

received by such EPs for MA plan 

enrollees of the MA organization. The 

organizations may submit to CMS 

compensation information for each such 

MA EP based on such attestations. 

(6) For qualifying MA EPs who are not 

salaried, qualified MA organizations 

may have qualifying MA EPs (or from 

entities that the MA EPs are employed 

by or with which they have a 

partnership interest) send MA 

organization compensation information 

directly to CMS. CMS will use the 

information provided in this 

subparagraph or paragraph (b)(5) of this 

section for no other purpose than to 

compute the amount of EHR incentive 

payment due the MA organization. 

(c) Amount payable to qualifying MA 

organization for qualifying MAaffiliated eligible hospitals. (1)(i) 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. 

(ii) 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. 

(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 

EHR users 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 6 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 MAaffiliated eligible hospitals under 

common corporate governance are made 

under the Medicare FFS 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 made under the MA 

EHR incentive program to a qualifying 

MA organization. 

(b) Payment to qualifying MA 

organizations for a qualifying MAaffiliated eligible hospital under 

common governance only occurs under 


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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 

§ 495.202(b) is provided to CMS. 

§ 495.210 Meaningful EHR user attestation. 

(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 60 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 60 days after 

close of the FY whether each qualifying 

MA-affiliated eligible hospital is a 

meaningful EHR 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 

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 authorize States, at their option, 

to provide for incentive payments to 

Medicaid providers for adopting, 

implementing, or upgrading certified 

EHR 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 or 1300– 

1399 

Adopt, implement or upgrade 

means— 

(1) Acquire, purchase, or secure 

access to certified EHR technology; 

(2) Install or commence utilization of 

certified EHR technology capable of 

meeting meaningful use requirements; 

or 

(3) Expand the available functionality 

of certified EHR technology capable of 

meeting meaningful use requirements at 

the practice site, including staffing, 

maintenance, and training, or upgrade 

from existing EHR technology to 

certified EHR technology per the ONC 

EHR certification criteria. 

Children’s hospital means a 

separately certified children’s hospital, 

either freestanding or hospital-withinhospital 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 

certified EHR technology 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 eligible 

providers. 

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 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 


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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. 

Needy individuals mean individuals 

that meet one of following: 

(1) Received medical assistance from 

Medicaid or the Children’s Health 

Insurance Program. (or a Medicaid or 

CHIP demonstration project approved 

under section 1115 of the Act). 

(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 (as described at 

§ 495.304(c) through (e)) that is 

estimated through a numerator and 

denominator, consistent with the 

SMHP, and that meets the requirements 

of § 495.306. 

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. 

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 an EHR 

incentive payment is limited to the 

following when consistent with the 

scope of practice regulations, as 

applicable for each professional 

(§ 440.50, § 440.60, § 440.100; § 440.165, 

and § 440.166): 

(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 

(FQHC) led by a physician assistant or 

a rural health clinic (RHC), that 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, 

for each year for which the EP seeks an 

EHR incentive payment, not be hospitalbased as defined at § 495.4 of this 

subpart, and meet one of the following 

criteria: 

(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) of this 

section does not apply to the MedicaidEP 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) General rule. A Medicaid provider 

must annually meet patient volume 

requirements of § 495.304, as these 

requirements are established through 

the State’s SMHP in accordance with 

the remainder of this section. 

(b) State option(s) through SMHP. A 

State must submit through the SMHP 

the option or options it has selected for 

measuring patient volume. A State must 

select the methodology described in 

either paragraph (c) or paragraph (d) of 

section (or both methodologies). In 

addition, or as an alternative, a State 

may select the methodology described 

in paragraph (g) of this section. 

(c) Methodology, patient encounter. 

(1) EPs. To calculate Medicaid patient 

volume, an EP must divide: 

(i) The total Medicaid patient 

encounters in any representative, 

continuous 90-day period in the 

preceding calendar year; by 

(ii) The total patient encounters in the 

same 90-day period. 

(2) Eligible hospitals. To calculate 

Medicaid patient volume, an eligible 

hospital must divide— 

(i) The total Medicaid encounters in 

any representative, continuous 90-day 

period in the preceding fiscal year; by 

(ii) The total encounters in the same 

90-day period. 

(3) Needy individual patient volume. 

To calculate needy individual patient 

volume, an EP must divide— 

(i) The total needy individual patient 

encounters in any representative, 

continuous 90-day period in the 

preceding calendar year; by 

(ii) The total patient encounters in the 

same 90-day period. 

(d) Methodology, patient panel. 

(1) EPs. To calculate Medicaid patient 

volume, an EP must divide: 

(i) (A) The total Medicaid patients 

assigned to the EP’s panel in any 

representative, continuous 90-day 

period in the preceding calendar year 

when at least one Medicaid encounter 

took place with the Medicaid patient in 

the year prior to the 90-day period; plus 

(B) Unduplicated Medicaid 

encounters in the same 90-day period; 

by 

(ii)(A) The total patients assigned to 

the provider in that same 90-day period 

with at least one encounter taking place 

with the patient during the year prior to 

the 90-day period; plus 

(B) All unduplicated patient 

encounters in the same 90-day period. 

(2) Needy individual patient volume. 

To calculate needy individual patient 

volume an EP must divide— 

(i)(A) The total Needy Individual 

patients assigned to the EP’s panel in 

any representative, continuous 90-day 

period in the preceding calendar year 

when at least one Needy Individual 

encounter took place with the Medicaid 

patient in the year prior to the 90-day 

period; plus 

(B) Unduplicated Needy Individual 

encounters in the same 90-day period, 

by 

(ii)(A) The total patients assigned to 

the provider in that same 90-day period 

with at least one encounter taking place 

with the patient during the year prior to 

the 90-day period, plus 

(B) All unduplicated patient 

encounters in the same 90-day period. 

(e) For purposes of this section, the 

following rules apply: 


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(1) For purposes of calculating EP 

patient volume, a Medicaid encounter 

means services rendered to an 

individual on any one day where— 

(i) Medicaid (or a Medicaid 

demonstration project approved under 

section 1115 of the Act) paid for part or 

all of the service; or 

(ii) Medicaid (or a Medicaid 

demonstration project approved under 

section 1115 of the Act) paid all or part 

of the individual’s premiums, copayments, and cost-sharing. 

(2) For purposes of calculating 

hospital patient volume, both of the 

following definitions in paragraphs 

(e)(2)(i) and (e)(2)(ii) of this section may 

apply: 

(i) A Medicaid encounter means 

services rendered to an individual per 

inpatient discharge where— 

(A) Medicaid (or a Medicaid 

demonstration project approved under 

section 1115 of the Act) paid for part or 

all of the service; or 

(B) Medicaid (or a Medicaid 

demonstration project approved under 

section 1115 of the Act) paid all or part 

of the individual’s premiums, copayments, and/or cost-sharing. 

(ii) A Medicaid encounter means 

services rendered in an emergency 

department on any one day where— 

(A) Medicaid (or a Medicaid 

demonstration project approved under 

section 1115 of the Act) paid for part or 

all of the service; or 

(B) Medicaid (or a Medicaid 

demonstration project approved under 

section 1115 of the Act) paid all or part 

of the individual’s premiums, copayments, and cost-sharing. 

(3) For purposes of calculating needy 

individual patient volume, a needy 

patient encounter means services 

rendered to an individual on any one 

day where— 

(i) Medicaid or CHIP (or a Medicaid 

or CHIP demonstration project approved 

under section 1115 of the Act) paid for 

part or all of the service; 

(ii) Medicaid or CHIP (or a Medicaid 

or CHIP demonstration project approved 

under section 1115 of the Act) paid all 

or part of the individual’s premiums, copayments, or cost-sharing; 

(iii) The services were furnished at no 

cost; and calculated consistent with 

§ 495.310(h); or 

(iv) The services were paid for at a 

reduced cost based on a sliding scale 

determined by the individual’s ability to 

pay. 

(f) Exception. A children’s hospital is 

not required to meet Medicaid patient 

volume requirements. 

(g) Establishing an alternative 

methodology. A State may submit to 

CMS for review and approval through 

the SMHP an alternative from the 

options included in paragraphs (c) and 

(d) of this section, so long as it meets the 

following requirements: 

(1) It is submitted consistent with all 

rules governing the SMHP at § 495.332. 

(2) Has an auditable data source. 

(3) Has received input from the 

relevant stakeholder group. 

(4) It does not result, in the aggregate, 

in fewer providers becoming eligible 

than the methodologies in either 

paragraphs (c) and (d) of this section. 

(h) Group practices. Clinics or group 

practices will be permitted to calculate 

patient volume at the group practice/ 

clinic level, but only in accordance with 

all of the following limitations: 

(1) The clinic or group practice’s 

patient volume is appropriate as a 

patient volume methodology calculation 

for the EP. 

(2) There is an auditable data source 

to support the clinic’s or group 

practice’s patient volume determination. 

(3) All EPs in the group practice or 

clinic must use the same methodology 

for the payment year. 

(4) The clinic or group practice uses 

the entire practice or clinic’s patient 

volume and does not limit patient 

volume in any way. 

(5) If an EP works inside and outside 

of the clinic or practice, then the patient 

volume calculation includes only those 

encounters associated with the clinic or 

group practice, and not the EP’s outside 

encounters. 

§ 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, 

implementation or upgrade 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) Rules for Medicaid EPs. The 

Medicaid EP’s incentive payments are 

subject to all of the following 

limitations: 

(1) First payment year. (i) For the first 

payment year, payment under this 

subpart may not exceed 85 percent of 

the maximum threshold of $25,000, 

which equals $21,250. 

(ii) Medicaid EPs are responsible for 

payment for the remaining 15 percent of 

the net average allowable cost of 

certified EHR technology, or $3,750 for 

the first payment year. 

(iii) An EP may not begin receiving 

payments any later than CY 2016. 

(2) Subsequent annual payment years. 

(i) For subsequent payment years, 

payment may not exceed 85 percent of 

the maximum threshold of $10,000, 

which equals $8,500. 

(ii) Medicaid EPs are responsible for 

payment for the remaining 15 percent of 

the net average allowable cost of 

certified EHR technology, or $1,500 per 

payment year. 

(iii) Payments after the first payment 

year may continue for a maximum of 5 

years. 

(iv) Medicaid EPs may receive 

payments on a non-consecutive, annual 

basis. 

(v) No payments may be made after 

CY 2021. 

(3) Maximum incentives. In no case 

may a Medicaid EP participate for more 

than a total of 6 years, and 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 payment is limited as 

follows: 

(i) The maximum payment in the first 

payment year is further reduced by twothirds, which equals $14,167. 

(ii) The maximum payment in 

subsequent payment years is further 

reduced by 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 a 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) Limitation to only one EHR 

incentive program. An EP may only 

receive an incentive payment from 

either Medicare or Medicaid in a 

payment year, but not both. 

(d) Exception for EPs to switch 

programs. An EP may change his or her 

EHR incentive payment program 

election once, consistent with § 495.10 

of this part. 

(e) Limitation to one State only. A 

Medicaid EP or eligible hospital may 

receive an incentive payment from only 

one State in a payment year. 

(f) Incentive payments to hospitals. 

Incentive payments to an eligible 


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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 FY 

2016, and after FY 2016, a hospital may 

not receive an incentive payment unless 

it received an incentive payment in the 

prior fiscal year. 

(6) Prior to FY 2016, payments can be 

made to an eligible hospital on a nonconsecutive, annual basis for the fiscal 

year. 

(7) 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). 

(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 ending in the Federal fiscal year 

before the hospital’s fiscal year that 

serves as the first 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. 

(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 paragraph (g)(2)(i) of this section, 

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 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 provider’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) of this section 

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 in the payment year. 

(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 reassign 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: 

(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 reassigning annual 

payments and includes information 

about the verification mechanism the 

State will use to ensure that the 

reassignment 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. 


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(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: 

(1) Medicaid EPs. States disburse 

payments consistent with the calendar 

year on a rolling basis following 

verification of eligibility for the 

payment year. 

(2) Medicaid eligible hospitals. States 

disburse payments consistent with the 

Federal fiscal year on a rolling basis 

following verification of eligibility 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 

payment year, it has adopted, 

implemented, or upgraded certified EHR 

technology, as defined in § 495.302. 

(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. 

§ 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 § 495.352 

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. 

(ii) Aggregated data tables 

representing the provider adoption, 

implementation, or 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 

demonstrating that they are meaningful 

users 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) Subject to § 495.332, the State may 

propose a revised definition of 

meaningful use of certified EHR 

technology, subject to CMS prior 

approval, but only with respect to the 

following objectives: 

(i) Generate lists of patients by 

specific conditions to use for quality 

improvement, reduction of disparities, 

research or outreach. 

(ii) Capability to submit electronic 

data to immunization registries or 

immunization information systems and 

actual submission in accordance with 

applicable law and practice. 

(iii) Capability to provide electronic 

submission of reportable (as required by 

State or local law) lab results to public 

health agencies and actual submission 

in accordance with applicable law and 

practice; and 

(iv) Capability to provide electronic 

syndromic surveillance data to public 

health agencies and actual transmission 

in accordance with applicable law and 

practice. 

(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 

HHS, 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 

(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 

meaningful 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 advance planning 

document and the implementation 

advance planning document. 

(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 of Health and Human 

Services, prior to release of the request 

for proposal or prior to execution of a 

contract. 


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(3) For contract amendments, unless 

specifically exempted by HHS, before 

execution of the contract amendment, 

involving contract cost increases 

exceeding $100,000 or contract time 

extensions of more than 60 days. 

(4) The State Medicaid HIT plan. 

(c) Failure to submit any of the 

information specified in paragraph (b) of 

this section to the satisfaction of HHS 

may result in disapproval or suspension 

of project funding. 

(d) A State must obtain prior written 

approval from HHS 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 FFP. 

If the HHS 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, suspension would occur in 

the same manner as 45 CFR 205.37(c) 

and 307.40(a). 

§ 495.328 Request for reconsideration of 

adverse determination. 

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 FFP for failure to 

provide access to information. 

(a) HHS 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 health 

information technology (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— 

(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. 

(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) and other 

requirements included in ARRA. 

(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 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; and 

(iv) 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 


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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 or eligible 

hospital is a provider who meets patient 

volume consistent with the criteria in 

§ 495.304 and § 495.306 and a 

methodology in place used to verify 

such information. 

(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 a methodology for 

verifying such information. 

(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 including 

meaningful use, efforts to adopt, 

implement, or upgrade and any 

information added to the CMS Single 

Provider Repository including all 

information related to patient volume, 

NPI, Tax identification number (TIN), 

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 EHR reporting 

period, and that they have adopted, 

implemented, or upgraded certified EHR 

technology and a description of the 

methodology in place used to verify 

such information. 

(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 

their participation year and a 

methodology for verifying such 

information. 

(6) A list of the specific actions 

planned to implement the 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 

by the State 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. 

(8) A description of the process in 

place to ensure that no amounts higher 

than 90 percent of FFP will be claimed 

by the State for administrative expenses 

in administering the certified EHR 

technology incentive payment program 

and a methodology for verifying such 

information. 

(9) A description of the process and 

methodology for ensuring and verifying 

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 employer or facility 

to which such provider has assigned 

payments) without any deduction or 

rebate. 

(ii) All incentive payment 

reassignments 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 EP 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. 

(d) Payments. For payments, States 

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 the methodology for 

verifying such information. 

(4) The process in place and the 

methodology for verifying that 

information is available in order to 

ensure that Medicaid EHR incentive 

payments are made for no more than a 

total of 6 years; that no EP or eligible 

hospital begins receiving payments after 

2016; that incentive payments cease 

after 2021; and that an eligible hospital 

does not receive incentive payments 

after FY 2016 unless the hospital 

received an incentive payment in the 

prior fiscal year. 

(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. 

(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. 

(7) The process in place to provide for 

the timely and accurate payment of 

incentive payments to EPs and eligible 

hospitals, including the timeframe 

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 


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in compliance with this subpart will be 

recouped and FFP will be repaid. 

(9) The process in place and the 

methodology for verifying that EPs meet 

their responsibility for 15 percent of the 

net average allowable cost for certified 

EHR technology. 

(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: 

(1) An alternative methodology for 

measuring patient volume, consistent 

with § 495.306(g). 

(2)(i) A revised definition of 

meaningful use of certified EHR 

technology consistent with § 495.4 and 

§ 495.316(d)(2) of this part. 

(ii) Any revised definition of 

meaningful use may not require 

additional functionality beyond that of 

certified EHR technology and conform 

with CMS guidance on Stage 1. See also 

§ 495.316(d)(2). 

§ 495.334 [Reserved] 

§ 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. 

(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. 

(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 including: 

(1) Planned annual payment amounts; 

(2) Total of planned payment 

amounts; and 

(3) Calendar year of each planned 

annual payment amount. 

(4) 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. 

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. 

(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/ 


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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. 

§ 495.344 Approval of the State Medicaid 

HIT plan, the HIT PAPD and update, the HIT 

IAPD and update, and the annual HIT IAPD. 

HHS will not approve the State 

Medicaid HIT plan, HIT PAPD and 

update, HIT–IAPD and update, or 

annual IAPD if any of these documents 

do not include all of the information 

required under this subpart. 

§ 495.346 Access to systems and records. 

The State agency must allow HHS 

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. 

(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. 

(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 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. 

(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. 


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(iv) Encourage contracting with 

consortia of small businesses, minorityowned 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-ofcost’’ 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 2 CFR 

part 376. 

(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: 

(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 HHS 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. 

§ 495.352 Reporting requirements. 

Each State must submit to HHS 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. 

(b) Specifically, 45 CFR 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. HHS reserves a 

royalty-free, non-exclusive, and 

irrevocable license to reproduce, 

publish or otherwise use and to 

authorize others to use for Federal 

government purposes, the software, 

modifications, and documentation 

designed, developed or installed with 

FFP under this Subpart. 

(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 


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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. 

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. 

(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. 

(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 

§ 495.312, 495.314, and § 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. 

(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 that Medicaid EHR incentive 

payments are made for no more than 6 

years; that no EP or eligible hospital 

begins receiving payments after 2016; 

that incentive payments cease after 

2021; and that an eligible hospital does 

not receive incentive payments after FY 

2016 unless the hospital received an 

incentive payment in the prior fiscal 

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 


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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— 

(i) Ensure the qualifications of the 

providers who request Medicaid EHR 

incentive payments; 

(ii) Detect improper payments; and 

(iii) In accordance with § 455.15 and 

§ 455.21 of this chapter, 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. For any forms 

on which a provider submits 

information necessary to the 

determination of eligibility to receive 

EHR payments, the State must obtain a 

statement that meets the following 

requirements: 

(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. 

(c) Overpayments. States must repay 

to CMS all Federal financial 

participation received by providers 

identified as an overpayment regardless 

of 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: 

(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. 

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: June 16, 2010. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: July 9, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–17207 Filed 7–13–10; 8:45 am] 

BILLING CODE 4120–01–P 


srobinson on DSKHWCL6B1PROD with RULES2