February 17, 2010

HHS Issues Proposed Regulations to Implement HITECH Act

Holland & Knight Alert
Robert H. Bradner | Joel E. Roberson

On December 30, 2009, the Department of Health and Human Services (HHS) released two proposed regulations that implement major provisions of the Health Information Technology for Economic and Clinical Health (HITECH) Act enacted in February 2009 as part of the American Recovery and Reinvestment Act, or stimulus bill. The full text of the regulations, which are important for providers and other interested parties to become familiar with, is available at 75 Fed. Reg. 1844 and 75 Fed. Reg. 2014.

Effect of the HITECH Act

The HITECH Act articulates a program by which eligible professionals and eligible hospitals can qualify for significant incentive payments if they can demonstrate that they are “meaningful users” of Certified Electronic Health Records Technology (CEHRT). Ultimately, eligible professionals who are not meaningful users may face a penalty, in the form of Medicare reimbursement reductions, for not achieving this status.

Under the law, a meaningful user of health information technology (HIT) is an eligible professional or hospital that: (1) uses a CEHRT in a meaningful manner (i.e., the technology is used in a way that provides for the electronic entry and, in some cases, the exchange of health information with other healthcare providers to improve the quality of care); and (2) uses such technology to submit to HHS information on clinical quality and other measures as required by HHS.

Incentive payments will be channeled through both the Medicare and Medicaid programs, but most eligible professionals will only be allowed to pursue these payments through one program – not both. Eligible professionals will be allowed to exercise a one-time election to switch from one program to the other, and eligible hospitals will be able to pursue incentive payments through both Medicare and Medicaid (assuming they meet the applicable requirements for each).

The Two Regulations

HHS issued two separate regulations to implement the first phase of the HITECH provisions. The first is a proposed rule that outlines an incentive program for meaningful users of CEHRT. The second is an interim final rule that establishes an initial set of standards, specifications and certification criteria for CEHRT. These regulations were published in the Federal Register on January 13, 2010. Each regulation has a 60-day public comment period that expires at 5:00 p.m. EST on March 15, 2010.

The proposed Incentive Program rule was issued by the Centers for Medicare and Medicaid Services (CMS). This rule sets out what eligible professionals need to do to qualify for incentive payments – i.e., how they can demonstrate they are a “meaningful user.” The proposed rule also addresses a number of related matters, such as the timetable for qualifying for and receiving payments, the definition of numerous criteria, the calculation and timing of payments, qualification requirements and the methods for demonstrating compliance.1 Any comments received by CMS prior to the March 15, 2010 deadline will be reviewed and considered. CMS intends to publish a final regulation in April or May 2010; the regulation will incorporate modifications based on the comments received and will have the force of law.

The Standards, Specifications and Certification interim final rule was issued by the HHS Office of the National Coordinator for HIT (ONC) and the Secretary of HHS. The interim final rule sets out the substantive requirements that an electronic health records technology must possess in order to be considered “qualified” and thus able to be “certified.”2 In other words, this regulation pertains to the capabilities that an electronic health records technology must possess to meet the requirements of the law. Because it is an interim final rule, this regulation obtained force of law on February 12, 2010, 30 days after the date on which it was published in the Federal Register. However, it also has a 60-day comment period until March 15 that will generate feedback for potential future modification. This regulation is considered more time sensitive than the Incentive Program rule because electronic health records (EHR) vendors, eligible professionals and hospitals need to know whether the technology they acquire will pass government muster.

Additional Regulations

HHS will issue a third regulation to define the process by which technology vendors can obtain the required certification to ensure that their EHR systems meet all the relevant standards and specifications. A system must be certified for an eligible professional to qualify for incentive payments. The certification process is expected to involve HHS accrediting third parties (such as CCHIT, the Certification Commission for Health Information Technology) that can administer the certification process on a biennial basis and apply the federal requirements.

It is important to note that HHS is implementing the HITECH Act in such a way that the requirements to qualify as a meaningful user of CEHRT will become more stringent over time. The regulations published in January only deal with meeting the first hurdle in this process – termed “Stage 1” by HHS. Generally, Stage 1 requirements become effective in 2011 and remain in effect in 2012. Higher hurdles for Stage 2 (2013) and Stage 3 (2015) will continue to be developed by ONC with recommendations from federal advisory committees – the HIT Policy Committee and the HIT Standards Committee – and will be set forth in future years through additional regulations. CMS indicates in the preamble to the proposed rule that it intends to have the Stage 2 proposed rules issued by the end of 2011 and Stage 3 proposed rules issued by the end of 2013.

Certification Criteria

The certification criteria sets forth in general terms the capabilities EHRs must possess. The requirements differ slightly for inpatient EHRs and ambulatory EHRs. The inpatient requirements are applicable to eligible hospitals attempting to qualify for payments; the ambulatory requirements apply to an eligible professional (either as an individual or as part of a group practice).

In short, EHRs must have the capability to: (1) perform Computerized Provider Order Entry (CPOE); (2) automatically and electronically generate real-time alerts at the point of care for drug-drug and drug-allergy contraindications based on the medication list, medication allergy list, patient age and computerized physician order entry; (3) implement five “clinical decision support rules” (in addition to drug and allergy interaction checking requirements); (4) exchange clinical information and the patient summary records; (5) enable a user to check if drugs are on a formulary or preferred drug list; (6) maintain up-to-date problem lists; (7) incorporate clinical lab results into the EHR as structured data; (8) generate patient lists by specific condition for use in quality improvement; (9) report measures of quality to CMS (under Medicare) or to the state (under Medicaid); (10) check insurance eligibility electronically from public and private payers; (11) submit claims electronically to public and private payers; (12) complete medication reconciliation of two or more medication lists by comparing and merging into a single list that can be displayed in real time; (13) record, retrieve and transmit certain information to immunization registries and public health agencies; (14) provide a number of technical capabilities, including access control, emergency access and automatic log off (to name a few); and (15) record and display certain required patient information, including demographic information, specified vital signs, BMI, growth charts for children ages 2 to 20, and smoking status.

In addition to the requirements described above:

  • Ambulatory EHRs must have the capability to: (1) transmit medication orders (e-Prescribe); (2) generate a patient reminder list; and (3) among other things, enable a user to provide a patient with a clinical summary for each office visit.
  • Inpatient EHRs must be able to record, retrieve and transmit lab results in the required structured format.

Payment Eligibility

Certain providers are “eligible” for payments, and if they meet the various requirements, would then be considered “qualifying” providers. Not all providers are eligible to participate, however. Eligible providers are as follows:


Under the Medicare program, a “subsection (d)” hospital can qualify for incentive payments based on a formula that measures Medicare in-patient caseloads, total discharges and charity care – subsection (d) referring to the section of the Social Security Act where such hospitals are described. Most hospitals participating in Medicare PPS are subsection (d) hospitals, but some – such as psychiatric, rehabilitation, long-term care, children’s and cancer hospitals – are not. Critical Access Hospitals (CAHs) can also qualify for Medicare incentive payments under a different formula that is tied to measuring the reasonable costs the CAH incurs in acquiring health information technology. Some hospitals will be able to qualify for incentive payments under the Medicaid program. For example, “acute care hospitals” (as defined in the regulations) with Medicaid patient volumes of at least 10 percent of their total patient volume, and “children’s hospitals” (also defined in the regulations) can receive payments through Medicaid. For these Medicaid hospitals, the incentive payment formula measures Medicaid caseload.


Under the Medicare program, a physician (or a physician group practice acting collectively) can obtain incentive payments. Payments are based on a measurement of the physician’s Medicare billings and are subject to a cap. Alternatively, a physician can elect to pursue incentive payments under their state Medicaid program if they have a Medicaid patient volume of at least 30 percent (pediatricians with 20 percent Medicaid volume can also qualify for incentive payments limited to two-thirds of the otherwise applicable amounts). In addition, certain non-physician practitioners can qualify for Medicaid incentive payments but not for Medicare payments. Although hospitals can pursue payment under both Medicare and Medicaid (assuming they qualify), physicians must elect to proceed under one program or the other, with a one-time opportunity to switch. Medicare payments are made over a period of up to five years; Medicaid up to six years.

Medicare Advantage Organizations

A Medicare Advantage organization that meets various requirements (including being considered an HMO under state law) can qualify for incentive payments as an entity.


The proposed regulations reflect the work done over the past year by the ONC and the two federal advisory committees created by the new law. They answer several questions left unaddressed until now and make changes to some of the policy proposals developed by the advisory committees. They also include interpretations of the statute and definitions that had not previously been addressed.

Again, it is advisable for providers and other interested parties to familiarize themselves with the proposed regulations and how they affect their operations – especially given the opportunity to submit comments before the applicable comment periods close, and to possibly encourage changes to the final regulations. Considering the financial incentives involved, providers should also begin conducting internal assessments – with the assistance of financial, legal and IT personnel – to determine if and how they can become “meaningful users” of CEHRT.


1 Medicare and Medicaid Programs: Electronic Health Record Incentive Program (CMS-0033-P).

Health Information Technology: Initial Set of Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology (RIN 0991-ABS).

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