Under the provisions of the American Recovery and Reinvestment Act of 2009 (ARRA, or the “Stimulus Act”), providers are eligible for financial incentives for demonstrating “meaningful use” of an electronic health record (EHR) system. Providers can qualify for incentives either through the Medicare program, or through the Medicaid program (Medi-Cal in California). Eligible Medicare providers will be eligible for up to $44,000 in incentives paid out over 5 years beginning in 2011.

Medicare providers can begin demonstrating meaningful April 18, 2011. Starting in 2015, providers who have not demonstrated meaningful use will receive Medicare payment reductions.

Eligible Providers

Providers eligible to receive incentive payments under the Medicare program are: physicians (MD or DO), dentists, podiatrists, optometrists, and chiropractors.

Maximum Incentive Payments

The maximum provider incentive that providers can receive under the Medicare program is $44,000, paid out over a five year period.

Providers will only receive the maximum incentive if they achieve meaningful use in Calendar Year 2011 or 2012. In 2013 and 2014, providers can still receive incentives, but for lower amounts. The following chart lays out the maximum amount that a provider will receive, based on the first year of meaningful use:


Calculation of Incentive

In any given year, the maximum incentive that a provider can receive is 75% of their Medicare Part B (fee-for-service) charges from the previous year. Therefore, in order for providers to receive the maximum incentive in 2011, they must have at least $24,000 in Medicare Part B charges from the previous year ($24,000*.75 = $18,000).

Exclusion of Medicare Advantage

For the purposes of calculating their incentive, providers cannot include any charges paid by a Medicare Advantage (Medicare Part C) plan. There is a separate incentive program specifically established for Medicare Advantage Organizations (MAOs). In order to qualify as an MAO, however, the providers in that organization must provide 80% of their Medicare Advantage services to patients covered by the organization.
The rules of the MAO incentive program will prohibit all but a very few very large integrated systems from qualifying.

Reductions in Payment

Beginning in 2015, providers who do not demonstrate meaningful use will see reductions in payment. These reductions increase from 1% of total Medicare charges in 2015, to 2% in 2016, and 3% in 2017 and every year thereafter.

Bonus for Providers in Shortage Areas

Providers who practice in a federally-designated Health Professions Shortage Area (HPSA) are eligible for 10% bonus payments, meaning that their maximum incentive is $48,400. In order to qualify for this bonus, providers must provide more than 50% of their patient encounters at a location that is in a HPSA. Providers who want to find out if their practice lies in a HPSA can click here.

Demonstrating Meaningful Use

Meaningful use is the set of criteria, known as “Objectives and Measures,” which providers will have to demonstrate in order to qualify for provider incentives. Providers will demonstrate meaningful use through attestation.

For more information on “meaningful use,” please see CMA’s Summary of the Final Rule on Meaningful Use.