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Hospitals and physicians should begin planning the rollout of electronic health records systems now to gain maximum financial incentives under the federal economic stimulus package. That’s the advice of H. Stephen Lieber, president and CEO of the Healthcare Information and Management Systems Society, Chicago.

In a Web seminar Feb. 18, Lieber acknowledged that many of the details of the package, signed into law by President Obama Feb. 17, still need to be worked out. That includes the complete definition of a “meaningful electronic health record” that qualifies hospitals and physicians for a total of $17.2 billion worth of incentive payments from Medicare and Medicaid over a five-year period. Nevertheless, he said providers and software vendors can’t afford to wait for all the details to be ironed out before moving forward with automation projects. That’s because to gain the maximum amount of Medicare and Medicaid incentives, providers must have a qualifying records system in place by 2011.

The stimulus bill already spells out that a qualifying records system must include, among other factors: clinical decision support and physician order entry plus the ability to capture health care quality data and support the exchange of clinical data with other organizations. “”So interoperability is an absolute must,” Lieber stressed.

Also, the definition of a qualifying system will change to a tougher standard midway through the incentive payment program, so providers and vendors alike will need to make adjustments, he noted. “A vendor has to commit to a buyer now that it will provide updates to meet these emerging standards,” Lieber said. He called on software vendors to offer “iron-clad, binding agreements” to meet emerging standards, no matter how those standards are ultimately defined.

“Vendors need to recognize that this is a huge opportunity because the provider community is going to want to talk about their strategy right now,” the HIMSS CEO said. Because vendors will face demand for completion of a large number of EHR implementations in the next 18 to 24 months, Lieber urged software companies to offer their own financial incentives to providers who buy software soon “to help spread out the work.”

Under the Medicare incentive portion of the stimulus package, physicians can earn a total of $44,000 to more than $60,000 in extra payments over a five-year period, including $18,000 in year one, if they have a records system in place by 2011. By 2015, doctors will face a series of escalating cuts in Medicare payments if they lack a records system.

For hospitals, incentives start at a base of $2 million annually, according to HIMSS’ interpretation of the law, plus an additional amount based on Medicare patient volume, with incentive payments decreasing over the five-year period. Starting in 2015, hospitals face payment cuts if they lack the required technology.

Although the stimulus package includes some funding for grants and loans, “most providers will have to make their own upfront investments in technology,” and then recoup some of that investment with the extra payments from Medicare or Medicaid, Lieber acknowledged. But if they fail to automate, he stressed, they face the prospect of substantial long-term cuts in funding from Medicare.

--Howard Anderson