CMS to reward practices with interoperable EMR systems

July 1, 2006

Dermatologists and other physicians who establish interoperable electronic health records systems in their practices can expect to be rewarded with increased compensation under the pay for performance policies being established at the Centers for Medicare and Medicaid Services (CMS).

The Bush administration, which has included the use of information technology in its healthcare priorities, has taken several major steps to link physician computer systems with hospitals and other key providers, including electronic prescriptions. Top administration officials are now equating participation by physicians with financial rewards in no uncertain terms.

Sharing records

To achieve that, he explained, systems must be harmonized so they can communicate with each other. Once in place, Mr. Leggitt said, "CMS will be looking at this as a performance factor - in outcomes."

CMS Administrator Mark B. McClellan, M.D., speaking at the 2006 National Health Policy Conference in February, said flatly: "When providers use electronic records to avoid duplicative tests or head off an office visit or a complication, resulting in higher quality and lower costs, we will start paying more, not less."

Dr. McClellan points out that CMS is supporting widespread adoption of health information technology to help improve care, and has proposed regulatory reforms to create new opportunities for healthcare providers to work together to adopt interoperable electronic healthcare systems.

Last October, Health and Human Services (HHS) Secretary Mike Leavitt announced proposed regulations to create exceptions to the "physician self-referral" law. The purpose is to allow hospitals and certain healthcare organizations to furnish hardware, software and related training services to physicians for e-prescribing and electronic health records - particularly when the support involves systems that can exchange information effectively and securely among healthcare providers.

Currently, physicians in Medicare are prohibited from referring Medicare patients for certain health services to healthcare entities with which the physician has a financial relationship, unless an exception applies. Healthcare entities are also not allowed to bill Medicare for services furnished as a result of a prohibited referral.

As part of that effort, the HHS Office of Inspector General announced proposed safe harbors for arrangements involving the donation of technology for e-prescribing and electronic health records. Such arrangements that meet the requirements of the safe harbors would be exempt from enforcement action under the federal anti-kickback statute.

"We are bringing our rules in line with what we are working together to achieve: an interoperable electronic healthcare system that benefits patients by improving care, reducing complications and unnecessary tests and procedures," Dr. McClellan says.

CMS said it is considering a cap on the value of technology that can be donated by a single donor to reduce the potential of arrangements designed to pay physicians for referrals.

Last October, a new federal task force of health-related agency representatives, the American Health Information Community, was launched to develop recommendations for health IT standards, deployment of technology and protection of privacy.

In mid-May, the task force delivered 28 recommendations to Mr. Leavitt, covering how to make health records digital and interoperable while protecting patient privacy and the security of those records.

In addition, HHS has awarded contracts to four groups of healthcare and health information technology organizations to develop prototypes for a Nationwide Health Information Network architecture, and in January, Mr. Leavitt announced a pilot project to test initial standards for electronic prescribing.

Under that project, teams will measure the impact of e-prescribing data transmission systems on patient safety and quality of care, such as whether and how they reduce adverse drug events and improve the appropriate use of medications.

"We expect that electronic prescribing will help improve quality, prevent medication errors and reduce costs," Dr. McClellan says.

The pilot project also will assess changes in workflow in pharmacies and physician offices that use e-prescribing to demonstrate a return on investment for use of the technology.