By Brandy Schnautz Mann

The Centers for Medicare & Medicaid Services ("CMS") yesterday released the Notice of Proposed Rulemaking setting forth the "Stage 2" requirements for the Medicare and Medicaid Electronic Health Record ("EHR") Incentive Programs.  These programs were created in 2009 by the Health Information Technology for Economic and Clinical Health ("HITECH") Act and allow eligible professionals such as physicians and eligible hospitals to receive incentive payments if they adopt and make "meaningful use" of certified EHR technology. 

In a 2010 rule, CMS set forth its intention to roll out the requirements for program participation in three stages, each of which would require increasing use of EHR technology and electronic information exchange.  The "Stage 1" criteria for demonstrating meaningful use of EHR—consisting of both core and menu objectives—were issued at that time.  Providers had to meet all of the core objectives and a set number of the menu objectives to demonstrate meaningful use of EHR and qualify for incentive payments.  Providers for whom it is not possible to meet an objective can apply for an exclusion from that objective.

The proposed Stage 2 criteria raise the number of core objectives as compared to menu objectives.  Almost all Stage 1 objectives have been retained, but a number have been consolidated into other objectives.  Physicians and other eligible professionals must meet seventeen core objectives and three out of five menu objectives.  Hospitals will have to meet sixteen core objectives and two out of four menu objectives.  Additionally, where Stage 1 objectives have been retained at the Stage 2 level, the proposed rule raises the achievement threshold.  For example, at the Stage 1 level, physicians had to electronically prescribe more than 40% of prescriptions and electronically record demographic information for more than 50% of patients seen to qualify.  Under the proposed Stage 2 rules, these percentages rise to 65% and 80%, respectively. 

The proposed Stage 2 rule also continues the Stage 1 requirement that providers report on specified "clinical quality measures" ("CQMs") in order to qualify for incentive payments.  There are twelve Stage 2 CQMs for eligible professionals and twenty-four for hospitals.  With the intention of lessening the administrative burden such reporting puts on providers, CMS is now proposing to align these reporting requirements with existing requirements.  Specifically, in the case of hospitals, CMS is proposing to align Stage 2 CQMs with CMS' existing Inpatient Quality Reporting ("IQR") and Joint Commission accreditation measures.

Additionally, the proposed Stage 2 rule would allow eligible professionals and hospitals that demonstrate meaningful use in 2013 to avoid any Medicare payment adjustments (i.e., penalties) in 2015.  The proposed rule also outlines exceptions to payment adjustments for some newly practicing eligible professionals and those with barriers to obtaining internet access and information technology infrastructure.

Finally, as was previously announced, CMS is proposing to extend Stage 1 to allow providers (and EHR vendors) an additional year to prepare for the Stage 2 criteria.  This delays the application of the Stage 2 criteria until 2014 for those providers who first attested to the use of Stage 1 criteria in 2011.

CMS intends to publish the proposed Stage 2 rule in the March 7, 2012, edition of the Federal Register.  Comments to the proposed rule must be received within sixty days of this publication and will be addressed by CMS in its promulgation of the final rule.

For further information on the meaningful use rules, please contact Jeff Drummond at 214.953.5781 or jdrummond@jw.com or Brandy Schnautz Mann at 512.236.2310 or bmann@jw.com.