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1. Denver Boulder Colorado Springs London Los Angeles Munich Phoenix Salt Lake City San Francisco HITECH Highlights: Hyping HIT, HIPAA and Hopium By Steve Nash www.hro.com

2. HITECH Highlights HITECH Act reflects five elements of the Obama administration’s basic HIT strategy: • Reconfiguration of the basis of, and the role for, the federal government as the coordinator of federal HIT policy. • Formerly Executive Order 13335. • Now statutory. • Expansion of the role for the federal government in testing and research for HIT. • Federal subsidy of roles for states, certain nonprofits, and educational organizations in promoting and implementing HIT. • Significant revision of current privacy and security rules • Federal incentive payments for adoption of EHRs by “meaningful users”, variously estimated at between $19 and $38 billion. • Congressional Budget Office estimates the federal government will invest, as much as $38.3 billion into healthcare information technology support through 2015 under the American Recovery and Reinvestment Act of 2009.

3. HITECH Highlights Federal incentive payments for adoption of EHRs by “meaningful users”, variously estimated at between $19 and $38 billion. But compare these estimates with the results of a February 2009 online survey of 331 health IT professionals, asking whether the Medicare incentive payments in the stimulus package will be sufficient for organizations to begin investing in HIT

4. HITECH Highlights On February 17, 2009, the President signed P.L.111-05, the American Recovery and Reinvestment Act (or “ARRA”) – which has Divisions, A and B. • Division A includes Title XIII – which comprises the Health Information Technology for Economic and Clinical Health Act (or the “HITECH Act”.) See H.R. 1 at pages 113 – 165. • Subtitle A – Promotion of Health Information Technology • Part 1 – Improving Healthcare Quality, Safety and Efficiency • Part 2 – Application and Use of Adopted HIT Standards; Reports • Subtitle B – Testing of Health Information Technology • Subtitle C – Grants and Loan Funding • Subtitle D – Privacy • Part 1 – Improved Privacy and Security Provisions • Part 2 – Pre-emption, Regulations and Effective Dates

5. HITECH Highlights On February 17, 2009, the President signed P.L.111-05, the American Recovery and Reinvestment Act (or “ARRA”) which has Divisions, A and B (continued.) • Division B includes Title IV – which includes a number of Medicare and Medicaid subsidies for electronic health records (or “EHRs”.) • Subtitle A sets forth the Medicare incentives. See H.R. 1 at pages 353 – 375. • Subtitle B sets forth the Medicaid incentives. See H.R. 1 at pages 375 – 380.

6. HITECH Highlights Division A – Subtitle C – Grants and Loan Funding • Sec. 3011. Immediate funding to strengthen the health information technology infrastructure. • Sec. 3012. Health information technology implementation assistance. • Sec. 3013. State grants to promote health information technology. • Sec. 3014. Competitive grants to States and Indian tribes for the development of loan programs to facilitate the widespread adoption of certified EHR technology. • Sec. 3015. Demonstration program to integrate information technology into clinical education. • Sec. 3016. Information technology professionals in health care. • Sec. 3017. General grant and loan provisions. • Sec. 3018. Authorization for appropriations.

7. HITECH Highlights Sec. 3012. HIT Implementation Assistance ONCHIT is required to establish an HIT extension program to assist providers in adopting and using certified EHR technology. The HHS Secretary is required to support the development of HIT Regional Extension Centers, to be affiliated with US based nonprofit organizations that apply for and are awarded financial assistance under this Part of the Act. • This financial assistance may be awarded for up to four years and may not exceed 50% of the capital and annual operating funds required to create and maintain the Center. (The Secretary is directed to publish a draft description of this program within 90 days.) • CORHIO is submitting an application to be a Regional Extension Center.

8. HITECH Highlights Sec. 3013. State grants to promote health information technology. HHS Secretary is directed to establish a program to provide grants (both planning and implementation) to a State or “qualified State designated entity” for the purpose of advancing the interoperable use of EHRs across a broad list of more specific goals. • On April 3, 2009, Governor Ritter appointed CORHIO as Colorado’s “qualified State-designated entity”. • CORHIO must submit a plan describing the activities to be carried out (consistent with the National Coordinator's strategic plan) to facilitate and expand its electronic health information exchange. • These grants will require matching cash or in-kind contributions from the host State as follows: in 2011, $1 State to $10 Federal; in 2012, $1 State to $7 Federal; and in 2013 and thereafter, $1 State to $3 Federal. The Secretary has discretion to require a State match for grants awarded prior to 2011.

9. HITECH Highlights Sec. 3014. Competitive Grants to States for Development of Loan Programs to Facilitate Widespread Adoption of Certified EHRs. ONCHIT may award competitive grants to States (and Indian Tribes) to seed “certified EHR Technology loan funds” for the purpose of facilitating the purchase and utilization of “certified technology”. • Loan funds to be used health care providers to: • purchase certified EHR technology, • train personnel in the use of such technology, and • improve the secure electronic exchange of health information. • To be eligible, grantees would be required to: • establish a qualified HIT loan fund, • submit a strategic plan, updated annually, describing the intended uses of the funds and providing assurances that loans will only be given to health care providers that submitrequired reports on quality measures and use the certified EHR technology supported by the loan for the electronic exchange of health information to improve the quality of care; and • provide matching funds of at least $1 for every $5 of federal funding. Loans would be repayable over a period of up to 10 years. • Each year, the National Coordinator would be required to provide a report to Congress summarizing the annual reports submitted by grantees. • Awards would not be permitted before January 1, 2010.

10. HITECH Highlights Division A – Subtitle D – Privacy • Part 1 – Improved Privacy and Security Provisions. • Establishes “improved” privacy and security provisions and will be the subject of a separate HRO Alert over the next few weeks. • Extends certain HIPAA privacy rules to “business associates” and invokes civil and criminal penalties for violations, • Extends certain HIPAA security and penalty provisions to “business associates” and invokes civil and criminal penalties for violations , • Established new requirements for “breach notification”, • Prohibits (with limited exceptions) the sale of “electronic health records” or “protected health information”, • Redefines the term “healthcare operations” for purposes of determining what disclosures are statutorily “authorized”, • Establishes “temporary” breach notification rules for vendors of “personal health records.” • Establishes that RHIOs and other HIEs, e-Prescribing Gateways and certain PHR vendors are “business associates” and must enter into BA Agreements with “covered entities”, and • Authorizes State AGs to sue individuals to enforce HIPAA medical privacy and security rules. • Part 2 – Pre-emption, Regulations and Effective Dates. • Reaffirms the application of HIPAA state law preemption provisions to the Act.

11. HITECH Highlights Division A – Subtitle D – Privacy • Sec. 13400. Definitions. • Terms which retain their HIPAA Reg definitions include: Business Associate; Covered Entity; Disclose; Health Care Operations; Healthcare Provider; Health Plan; Payment; Protected Health Information; Security; Treatment; and Use. • But note: BAs now include: RHIOs and other HIEs, e-Prescribing Gateways, and PHR vendors that provide PHRs to CEs. • New Terms include: • Breach – means the unauthorized acquisition, access, use, or disclosure of protected health information which compromises the security or privacy of such information, except where an unauthorized person to whom such information is disclosed would not reasonably have been able to retain such information. There are exceptions for “unintentional” and “inadvertent” disclosures. • Electronic Health Record -- means an electronic record of health-related information on an individual that is created, gathered, man-aged, and consulted by authorized health care clinicians and staff. • Personal Health Record – means an electronic record of PHR “identifiable health information” (as defined in section 13407(f)(2)) on an individual that can be drawn from multiple sources and that is managed, shared, and controlled by or primarily for the individual. • Vendor of Personal Health Records – means an entity, other than a covered entity (as defined in paragraph (3)), that offers or maintains a personal health record. • National Coordinator and Secretary – just who you think they are.

12. HITECH Highlights Division A – Subtitle D – Privacy • Part 1 – Improved Privacy and Security Provisions. • Sec. 13401. Application of security provisions and penalties to business associates of covered entities; annual guidance on security provisions. • Sec. 13402. Notification in the case of breach. • Sec. 13403. Education on health information privacy. • Sec. 13404. Application of privacy provisions and penalties to business associates of covered entities. • Sec. 13405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format. • Sec. 13406. Conditions on certain contacts as part of health care operations. • Sec. 13407. Temporary breach notification requirement for vendors of personal health records and other non-HIPAA covered entities. • Sec. 13408.Business associate contracts required for certain entities. • Sec. 13409. Clarification of application of wrongful disclosures criminal penalties. • Sec. 13410.Improved Enforcement • Sec. 13411. Audits

13. HITECH Highlights Sec. 13401. Application of security provisions and penalties to business associates of covered entities; annual guidance on security provisions. • HIPAA Security Regs set forth at 45 CFR §§ 164.308, 164.310, 164.312, and 164.316 are applicable to BAs by statute. • Civil and criminal penalties at 42 U.S.C. §§ 1320d–5 and 1320d–6 are applicable to BAs by statute. • Annually, Secretary of Health and Human Services shall, after consultation with stakeholders, issue guidance on the most effective and appropriate technical safeguards for use in carrying out the above security standards, as those now required under the HITECH Act (to be found at § 3002(b)(2)(B)(vi) of the Public Health Service Act.)

14. HITECH Highlights Sec. 13402. Notification in the case of breach. • In general, CEs must notify affected individuals, and BAs must notify the affected CE, in the case of breach of “unsecured protected health information.” • Additional defined terms or concepts include: • Unsecured protected health information – means protected health information that is not secured through the use of a technology or methodology specified by the Secretary in the guidance issued not later than 60 days after the enactment of the HITECH Act. • Breached treated as discovered – on first day an employee, officer, or other agent of such CE or BA knew or reasonably should have know. • Timeliness of notification – without unreasonable delay but within 60 days of discovery. • Burden of proof – on CE or BA • Methods of notice – requirements vary but include individual notice, media notice, notice to the Secretary and posting on HHS’s website.

15. HITECH Highlights Sec. 13402. Notification in the case of breach (continued.) • Additional defined terms or concepts include: • Content of notification – must include what/when/how and investigatory and mitigation steps by CE, and contact and recommended mitigation steps for affected individuals. • Authorized delay – if official determines that notice would impede investigation or national security. • Ongoing reports – requires annual incidence and corrective action reports from Secretary to congressional committees • Effective date – variously defined and ranging from 30 days after Secretary issues implementing regulations (within 180 days of the Act) to January 1, 2011 – 2014.

16. HITECH Highlights Sec. 13404. Application of privacy provisions and penalties to business associates of covered entities. • HIPAA Privacy Regs set forth at 45 CFR §§ 164.504(e) (permitted use), 164.504(e)(1)(ii) (knowledge elements), 164.502(e) are applicable to BAs who receive PHI from CE pursuant to a BAA, now by statute. • Civil and criminal penalties at 42 U.S.C. §§ 1320d–5 and 1320d–6 are applicable to BAs, now by statute.

17. HITECH Highlights Sec. 13405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format. • Permits an individual to restrict disclosure of certain PHI by CE to a health plan – for payment or operations – if provider involved has already been paid in full. • Requires CEs using or disclosing PHI, or requesting PHI from another covered entity, to limit “to the extent practicable” disclosure of PHI to the “limited data set” as defined under HIPAA, or, if more information is “needed,” to the minimum necessary “to accomplish the intended purpose of such use, disclosure, or request, respectively”. • Secretary to issue guidance on what constitutes “minimum necessary Secretary is permitted up to 18 months to issue the new guidance. • However, the Act retains all the current exceptions to the existing minimum necessary disclosure standard, including disclosures made for treatment purposes and disclosure required by law. • This section does not apply to the use, disclosure or request of de-identified PHI.

18. HITECH Highlights Sec. 13405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format (continued.) • For CEs using EHRs, disclosures through an EHR to carry out TPO is now subject to accounting – but for only 3 years (not 6 years.) • Secretary is required to issue regulations on scope of accounting within 6 months of the date on which the Secretary adopts standards on accounting for disclosure described in section 13101 of the Act. • CE may opt to account for (a) disclosures of CE and BAs, or (b) own disclosures plus list of all BAs (listed BAs must then provide accounting.) • Effective date varies depending on whether CE was EHR user before or after January 1, 2009. • If before, must account for disclosures on or after January 1, 2014. • If after, must account for disclosures after the later of (a) January 1, 2011, or (b) the date EHRs acquired. • Or in either case, later if the Secretary issues regulations to that effect.

19. HITECH Highlights Sec. 13405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format (continued.) • CEs and BAs prohibited from receiving remuneration in exchange for any PHI of an individual -- and downstream remuneration also prohibited – unless authorization obtained. There are seven exceptions as follows: • Public Health activities (as defined under HIPAA). • Research, if the price paid for PHI reflects the costs of preparation and transmittal of PHI. • Treatment of the individual. • Sale, transfer, merger or consolidation of all or part of the covered entity and due diligence related to such activity. • For an activity that the covered entity’s business associate undertakes covered by an applicable business associate agreement. • Providing an individual with a copy of the individual’s PHI pursuant to HIPAA section164.524. • Other exchanges that the Secretary, in mandated future regulations, will deem similarly “appropriate and necessary” to the exceptions described above.

20. HITECH Highlights Sec. 13405. Restrictions on certain disclosures and sales of health information; accounting of certain protected health information disclosures; access to certain information in electronic format (continued.) • CE which maintains an EHR with respect to PHI is now required: • To produce a copy of such PHI in electronic format upon an individual’s request. • If the individual so chooses, to transmit the copy directly to an entity or person designated by the individual, and provided the request is “clear, conspicuous, and specific.” • Applies when CE must comply with 45 CFR 164.524 (the Access of Individuals to PHI section) • CE may charge a fee equal to but not more than in labor costs incurred in responding.

21. HITECH Highlights Sec. 13406. Conditions on certain contacts as part of health care operations. • Marketing communications (by CEs or BAs) that encourages the recipient to purchase or use a product or service is not considered a health care operation unless it is made: • To describe a product or service (or payment therefore) that is provided by, or included in a plan of benefits of, the covered entity making the communication, including communications about: • “the entities participating in a health care provider network or health plan network; • replacement of, or enhancements to, a health plan; and • health-related products or services available only to a health plan enrollee that add value to, but are not part of, a plan of benefits”; • For treatment of the individual; or • For case management or care coordination for the individual, • or to direct or recommend alternative treatments, therapies, health care providers, • or settings of care to the individual • There are exceptions to the above exceptions. • There are new rules for written fund-raising communications.

22. HITECH Highlights Sec. 13406. Conditions on certain contacts as part of health care operations. • A fundraising communication that comprises a HIPAA healthcare operation is now required to clearly and conspicuously provide: • An opportunity for the recipient to opt out or elect not to receive any further such communications, • If a person elects to opt out, their election is to be treated as a revocation of authorization regarding use of their data for fundraising purposes. • The above described restrictions on marketing and fundraising communications will apply to written communications occurring on or after February 17, 2010

23. HITECH Highlights Sec. 13408. Business associate contracts required for certain entities (continued.) • CMPs to go to the Office of Civil Rights (”OCR”) and harmed individuals • Harmed individuals to receive percentage of CMP • State Attorneys General may bring civil actions for criminal violations • HHS Audits of covered entities and business associates required

24. HITECH Highlights Sec. 13410. Improved Enforcement. • Expands who is liable for criminal violations. 42 U.S.C.§ 1320d-6. • Prior DOJ memorandum opinion, dated June 1, 2005 – only covered entities and corporate directors, officers, employees of covered entities may be prosecuted. • Under the Act – a person who has obtained or disclosed PHI without authorization commits a criminal violation HIPAA if the information is “maintained by a covered entity.” • Expands civil enforcement. 42 U.S.C. § 1320d-5. • Unknown or with diligence would not have known: • Penalties maintained at $100 for each identical violation up to $25,000 for all identical violations in a calendar year, with a cap of $1.5 million for all violations of this type in a calendar year. • Corrective action without CMPs authorized. • Reasonable cause that is not willful neglect: • Penalties increased to $1,000 for each identical violation up to $100,000 for all identical violations in a calendar year, with a cap of $1.5 million for all violations of this type in a calendar year.

25. HITECH Highlights Sec. 13410. Improved Enforcement. • Willful neglect is specified as a basis for enforcement • Effective for acts after February 17, 2011 • Regulations required no later than August 17, 2010 • Requires investigation by Secretary if potential violation demonstrated • Two levels of CMPs • If violation corrected within 30 days from knowledge: $10,000 for each identical violation, up to $250,000 for all identical violations in a calendar year, with a cap of $1.5 million for all violations of this type in a calendar year • If violation not corrected: $50,000 for each violation, up to $1.5 million for all identical or non-identical violations in a calendar year

26. HITECH Highlights Sec. 13410. Improved Enforcement. • Under the Act -- state AGs may commence civil actions parens patriae in federal district court for violations of HIPAA: • Unless a federal action is pending. • Required to give notice to Secretary of HHS of pendency of action – and Secretary retains rights of: • Intervention • Participation • Appeal • Purpose is to permit state AGs to enjoin violations and obtain damages: $100 per separate violation with a cap of $25,000 for each identical violation. • Court may award costs and attorney fees to the State.

27. HITECH Highlights Subtitle D – Privacy • Part 2 – Pre-emption, Regulations and Effective Dates. • Sec. 13421. Relationship to other laws. • Sec. 13422. Regulatory references. • Sec. 13423. Effective date. • Sec. 13424. Studies, reports, guidance.

28. HITECH Highlights Sec. 13421. Relationship to other laws. • HITECH Act supersedes contrary provisions of state laws in the same manner as a standard and implementation specification adopted under HIPAA supersedes contrary provisions of state law, unless, • HHS Secretary determines that the Act’s provision is necessary to: • prevent fraud and abuse, • ensure appropriate state regulations of insurance and health plans, or • for state reporting on health delivery costs; or other purposes as determined by the Secretary; • The state provision addresses a controlled substance; • Subject to Section 264(c)(2) of HIPAA, such provision relates to privacy of individually identifiable health information. • Note that HIPAA does not supersede state law if state law provisions are more stringent that requirements imposed under HIPAA. • HITECH Act also supersedes any inconsistent standards governing the privacy and security of individually identifiable information promulgated under HIPAA • Secretary is required to amend existing regulations to be consistent with the Act.

29. HITECH Highlights Sec. 13423. Effective date. • Except as otherwise specifically provided, these provisions take effect on the date that is 12 months after the date of the enactment of the HITECH Act.

30. HITECH Highlights Division B, Title IV – which includes a number of Medicare and Medicaid subsidies for electronic health records (or “EHRs”.) • Subtitle A sets forth the Medicare incentives. • Section 4101 – Incentives for eligible professionals. • Section 4102 – Incentives for hospitals. • Section 4103 – Treatment of payments and savings; implementation funding. • Section 4104 – Studies and reports on health information technology.

31. HITECH Highlights Section 4101 – [Medicare] Incentives for eligible professionals. • Adopts “carrots and sticks.” • Provides financial incentives for eligible professionals (“EPs”) who adopt and are meaningful users of qualified EHRs. • EPs defined as “physicians” under §1861(r) of SSA. • EPs will not receive incentives if “hospital based” -- excludes most pathologists, anesthesiologists and emergency physicians. • Qualified EHR means an electronic record of health-related information about an individual that (a) includes demographic and clinical health information (such as medical history and problem lists) and (b) has the capacity to: • Provide clinical decision support; • Support physician order entry; • Capture and query information relevant to health care quality; and • Exchange electronic health information with and integrate such information with other sources

32. HITECH Highlights Section 4101 – [Medicare] Incentives for eligible professionals. • “Meaningful EHR use” – requires demonstration to the satisfaction of the Secretary, as defined in her regulations, to include: • Use of e-Prescribing “as determined to be appropriate by the Secretary.” • Connection of the EHR in a manner that provides for interoperable electronic exchange of health information to improve the quality of care, such as promoting care coordination • Reporting on clinical quality and other measures as determined by the Secretary • “Meaningful EHR use” standards are likely to change as Secretary is required to seek to improve use of EHRs and quality over time by “requiring more stringent measures of meaningful use.”

33. HITECH Highlights Section 4101 – [Medicare] Incentives for eligible professionals. • Carrots: • Medicare incentives for EPs are 75% of estimated allowed charges for a payment year but not to exceed: • First payment year - $15,000 (or $18,000 if first payment year is 2011 or 2012) • Second payment year – $12,000 • Third payment year - $8,000 • Fourth payment year – $4,000 • Fifth payment year - $2,000 • Maximum total over five years -- $44,000 • Earliest payment year is 2011 (not a fiscal year) • It appears that amounts “phase down” if the first payment year is after 2013, but language is unclear • No incentive if the first payment year is after 2014 • No incentive payments with respect to years after 2016

34. HITECH Highlights Section 4101 – [Medicare] Incentives for eligible professionals. • Sticks: • If an EP is not a meaningful EHR user in 2015 or thereafter, the fee schedule amount for such EP shall decline as follows: • 1% - 2015 • 2% - 2016 • 3% - 2017 and thereafter • If less than 75% of EPs are meaningful EHR users by 2018, the fee schedule may be decreased by an additional 1% per year (but not to exceed 5%). • Secretary may establish hardship exceptions • There are similar Medicare Advantage Incentives for EPs.

35. HITECH Highlights Section 4102 – Incentives for hospitals. • Adopts “carrots and sticks.” • Provides financial incentives for eligible hospitals (“EHs”) who adopt and are meaningful users of qualified EHRs. • EH defined as a “subsection d hospital.” • Does not include rehab, cancer, children’s or LTC hospitals. • MA hospitals under common corporate governance may qualify for similar payments. • Incentives also available for critical access hospitals (CAHs) -- based on cost . • Qualified EHR means an electronic record of health-related information about an individual that (a) includes demographic and clinical health information (such as medical history and problem lists) and (b) has the capacity to: • Provide clinical decision support; • Support physician order entry; • Capture and query information relevant to health care quality; and • Exchange electronic health information with and integrate such information with other sources

36. HITECH Highlights Section 4102 – Incentives for hospitals. • Meaningful Use requires demonstration to the satisfaction of the Secretary, as to be set forth in regulations, that: • The EH is using the certified EHR “in a meaningful manner” • The certified EHR technology is connected in a manner that: • Provides for electronically interoperable exchange of health information to improve quality of health care (e.g., promoting care coordination.) • In accordance with law and standards regarding health information exchange. • EHs will be required to submit information to HHS on clinical quality and other measures selected by the Secretary. • Note - no e-prescribing requirement (unlike requirements for EPs) • Secretary has discretion regarding how demonstration will be made • As with the EP incentive, the standard for EH meaningful use is likely to change because Secretary must seek to improve use of EHRs and quality over time by “requiring more stringent measures of meaningful use”

37. HITECH Highlights Section 4102 – Incentives for hospitals. • Carrots: • As with so many Medicare “supplemental” payments (*e.g., DSH, Outlier, and GME) the formulas are complex. • The principal variables are the year of initial adoption, the number of overall annual discharges (i.e., $200 per discharge for discharges between 1,150 and 23,000), the EH’s “Medicare fraction”, and the “transition factor.” • The Colorado Hospitals Association estimates that the Medicare incentives for Colorado hospitals will average $1,285,000 with a range between: • A low of $226,000, and • A high of $2,775,000, and a maximum aggregate state incentive of about $66,000,000.

38. HITECH Highlights Section 4102 – Incentives for hospitals. • Sticks: • Section 4102(b) adds new §1886(b)(3)(B)(ix)(I) of SSA • Provides that if an EH is not a meaningful EHR user by 2015, then 3/4ths of the applicable percentage market basket increase that would otherwise be due will be reduced as follows for the FY in question: • 33 1/3% for FY 2015 • 66 2/3% for FY 2016 and • 100% for FY 2017 • States shall also make reductions for payments due under Section 1814(b)(3) the SSA. • Secretary may establish hardship exceptions, but not for more than 5 years.

39. HITECH Highlights Subtitle B sets forth the Medicaid incentives. • Section 4201 – HIT Adoption and Operation Payments • The Act makes provision for the state to elect to provide for Medicaid incentives that are intended to be similar in design to the Medicare incentives, but offered to a broader set of eligible providers, and to hospitals, that met rigorous standards regarding specific percentages of patients receiving medical assistance or meeting definition of “needy”. • Types of professionals who may qualify for these incentives: • Physicians • Dentists • Certified nurse midwives • Nurse practitioners • Physician assistants who lead rural health clinics or federally qualified health centers • Professionals seeking incentives under this provision must waive their right to receive the Medicare incentives

40. HITECH Highlights Subtitle B sets forth the Medicaid incentives. • Section 4201 – HIT Adoption and Operation Payments(continued.) • Professionals must also have the following patient volumes to qualify for Medicaid incentives: • Professionals not hospital-based -- at least 30% of patients receiving medical assistance • Pediatricians not hospital-based -- at least 20% of patients receiving medical assistance • Professionals who practice predominantly in rural health clinics or federally qualified health centers – at least 30% of patients are “needy” -- defined as: • Receiving Medicaid assistance • Receiving SCHIP assistance • Receiving uncompensated care or • Being charged on a sliding scale based on ability to pay

41. HITECH Highlights Subtitle B sets forth the Medicaid incentives. • Section 4201 – HIT Adoption and Operation Payments(continued.) • Hospital Medicaid incentives available to: • Acute care hospitals (other than children’s hospitals) that have at least 10% of patient volume receiving medical assistance • Children’s hospitals regardless of patient volume • Hospital must adopt EHR by 2016. • Incentives limited to 6 years. • State must demonstrate to Secretary that it is using funds properly and encouraging adoption of EHRs.

42. HITECH Highlights Subtitle B sets forth the Medicaid incentives. • Secretary is required to consult with the state regarding the aggregate amounts of HIT incentives. • Nevertheless, it seems clear that Medicaid share calculation is likely to be conceptually the same as the calculation of the Medicare share – except using the number of inpatient-bed-days for individuals who are receiving medical assistance instead of Medicare. • Much remains to be determined by state regulations and it is not yet possible to provide estimates of total incentive payments. It does appear that EPs accepting Medicaid incentives may have to waive their entitlement to Medicare incentives.

43. HITECH Highlights Thanks for you attention. Any questions may be directed to: Stephen P. Nash Holme Roberts & Owen LLP 1700 Lincoln, Suite 4100 Denver, CO 80203-4541 (303) 861-7000 (303) 866-0200 fax E-Mail: steve.nash@hro.com Website: www.hro.com Denver ◊ Boulder ◊ Colorado Springs ◊ London ◊ Munich ◊ Phoenix ◊ Salt Lake City ◊ San Francisco ◊ Los Angeles