Electronic Health Record Incentive Program Final Rule 2010-17207

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Wednesday,

July 28, 2010

Part II

Department ofHealth and HumanServicesCenters for Medicare & Medicaid Services

42 CFR Parts 412, 413, 422 et al.

Medicare and Medicaid Programs;Electronic Health Record IncentiveProgram; Final Rule

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44314 Federal Register / Vol. 75, No. 144/ Wednesday, July 28, 2010/ Rules and Regulations

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Centers for Medicare & MedicaidServices

42 CFR Parts 412, 413, 422, and 495

[CMS0033F]

RIN 0938AP78

Medicare and Medicaid Programs;Electronic Health Record IncentiveProgram

AGENCY: Centers for Medicare &Medicaid Services (CMS), HHS.

ACTION: Final rule.

SUMMARY: This final rule implementsthe provisions of the AmericanRecovery and Reinvestment Act of 2009(ARRA) (Pub. L. 1115) that provideincentive payments to eligibleprofessionals (EPs), eligible hospitalsand critical access hospitals (CAHs)participating in Medicare and Medicaidprograms that adopt and successfullydemonstrate meaningful use of certifiedelectronic health record (EHR)technology. This final rule specifiesthe initial criteria EPs, eligible hospitals,and CAHs must meet in order to qualifyfor an incentive payment; calculation ofthe incentive payment amounts;payment adjustments under Medicarefor covered professional services andinpatient hospital services provided byEPs, eligible hospitals and CAHs failingto demonstrate meaningful use of

certified EHR technology; and otherprogram participation requirements.Also, the Office of the NationalCoordinator for Health InformationTechnology (ONC) will be issuing aclosely related final rule that specifiesthe Secretarys adoption of an initial setof standards, implementation,specifications, and certification criteriafor electronic health records. ONC hasalso issued a separate final rule on theestablishment of certification programsfor health information technology.

DATES: Effective Date: These regulationsare effective on September 27, 2010.

FOR FURTHER INFORMATION CONTACT:Elizabeth Holland, (410) 7861309, EHR

incentive program issues.Edward Gendron, (410) 7861064,

Medicaid incentive payment issues.Jim Hart, (410) 7869520, Medicare fee

for service payment issues.Bob Kuhl or Susan Burris, (410) 786

5594, Medicare CAH payment andcharity care issues.

Frank Szeflinski, (303) 8447119,Medicare Advantage issues.

SUPPLEMENTARY INFORMATION:

Acronyms

ARRA American Recovery andReinvestment Act of 2009

AAC Average Allowable Cost (of certifiedEHR technology)

AIU Adopt, Implement, Upgrade (certifiedEHR technology)

CAH Critical Access HospitalCAHPS Consumer Assessment of

Healthcare Providers and SystemsCCN CMS Certification NumberCFR Code of Federal RegulationsCHIP Childrens Health Insurance ProgramCHIPRA Childrens Health Insurance

Program Reauthorization Act of 2009CMS Centers for Medicare & Medicaid

ServicesCPOE Computerized Physician Order EntryCY Calendar YearEHR Electronic Health RecordEP Eligible ProfessionalEPO Exclusive Provider OrganizationFACA Federal Advisory Committee ActFFP Federal Financial ParticipationFFY Federal Fiscal YearFFS Fee-For-ServiceFQHC Federally Qualified Health CenterFTE Full-Time EquivalentFY Fiscal YearHEDIS Healthcare Effectiveness Data and

Information SetHHS Department of Health and Human

ServicesHIE Health Information ExchangeHIT Health Information TechnologyHIPAA Health Insurance Portability and

Accountability Act of 1996HITECH Health Information Technology for

Economic and Clinical Health ActHMO Health Maintenance OrganizationHOS Health Outcomes SurveyHPSA Health Professional Shortage AreaHRSA Health Resource and Services

Administration

IAPD Implementation Advance PlanningDocument

ICR Information Collection RequirementIHS Indian Health ServiceIPA Independent Practice AssociationIT Information TechnologyMA Medicare AdvantageMAC Medicare Administrative ContractorMAO Medicare Advantage OrganizationMCO Managed Care OrganizationMITA Medicaid Information Technology

ArchitectureMMIS Medicaid Management Information

SystemsMSA Medical Savings AccountNAAC Net Average Allowable Cost (of

certified EHR technology)

NCQA National Committee for QualityAssurance

NCVHS National Committee on Vital andHealth Statistics

NPI National Provider IdentifierNPRM Notice of Proposed RulemakingONC Office of the National Coordinator for

Health Information TechnologyPAHP Prepaid Ambulatory Health PlanPAPD Planning Advance Planning

DocumentPFFS Private Fee-For-ServicePHO Physician Hospital OrganizationPHS Public Health ServicePHSA Public Health Service Act

PIHP Prepaid Inpatient Health PlanPOS Place of ServicePPO Preferred Provider OrganizationPQRI Physician Quality Reporting InitiativePSO Provider Sponsored OrganizationRHC Rural Health ClinicRHQDAPU Reporting Hospital Quality Data

for Annual Payment UpdateRPPO Regional Preferred Provider

Organization

SMHP State Medicaid Health InformationTechnology Plan

TIN Tax Identification Number

Table of Contents

I. BackgroundA. Overview of the HITECH Programs

Created by the American Recovery andReinvestment Act of 2009

B. Statutory Basis for the Medicare &Medicaid EHR Incentive Programs

II. Provisions of the Proposed Regulationsand Response and Analysis of Comments

A. Definitions Across the Medicare FFS,Medicare Advantage, and MedicaidPrograms

1. Definitions

a. Certified Electronic Health Record (EHR)Technology

b. Qualified Electronic Health Recordc. Payment Yeard. First, Second, Third, Fourth, Fifth and

Sixth Payment Yeare. EHR Reporting Periodf. Meaningful EHR User2. Definition of Meaningful Usea. Considerations in Defining Meaningful

Useb. Common Definition of Meaningful Use

Under Medicare and Medicaidc. Stage 1 Criteria for Meaningful Use3. Sections 4101(a) and 4102(a)(1) of

HITECH Act: Reporting on ClinicalQuality Measures Using EHR by EPs,

Eligible Hospitals and CAHsa. General

b. Requirements for the Submission ofClinical Quality Measures by EPs,Eligible Hospitals and CAHs

c. Statutory Requirements and OtherConsiderations for the Selection ofClinical Quality Measures for ElectronicSubmission by EPs, Eligible Hospitalsand CAHs

(1) Statutory Requirements for theSelection of Clinical Quality Measuresfor Electronic Submission by EPs,Eligible Hospitals and CAHs

(2) Other Considerations for the Selectionof Clinical Quality Measures forElectronic Submission by EPs, Eligible

Hospitals and CAHsd. Clinical Quality Measures for EPse. Clinical Quality Measures Reporting

Criteria for EPsf. Clinical Quality Measures for Electronic

Submission by Eligible Hospitalsg. Potential Measures for EPs, Eligible

Hospitals and CAHs in Stage 2 andSubsequent Years

h. Reporting Method for Clinical QualityMeasures for 2011 and Beginning Withthe 2012 Payment Years

(1) Reporting Method for 2011 PaymentYear

(2) Reporting Method Beginning in 2012



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i. Alternative Reporting Methods forClinical Quality Measures

j. Reporting Period for Reporting ClinicalQuality Measures

4. Demonstration of Meaningful Usea. Common Methods of Demonstration in

Medicare and Medicaidb. Methods for Demonstration of the Stage

1 Criteria of Meaningful Use5. Data Collection for Online Posting,

Program Coordination, and AccuratePayments

a. Online Postingb. Program Election Between Medicare

FFS/MA and Medicaid for EPsc. Data To Be Collected6. Hospital-Based Eligible Professionals7. Interaction With Other ProgramsB. Medicare Fee-for-Service Incentives1. Incentive Payments for Eligible

Professionalsa. Definitions

b. Incentive Payment Limitsc. Increase in Incentive Payment for EPs

Who Predominantly Furnish Services ina Geographic Health ProfessionalShortage Area

d. Form and Timing of Paymente. Payment Adjustment Effective in CY

2015 and Subsequent Years for EPs WhoAre Not Meaningful Users of CertifiedEHR Technology

2. Incentive Payments for Hospitalsa. Definition of Eligible Hospital for

Medicareb. Incentive Payment Calculation for

Eligible Hospitalsc. Medicare Shared. Charity Caree. Transition Factorf. Duration and Timing of Incentive

Paymentsg. Incentive Payment Adjustment Effective

in Federal FY 2015 and Subsequent

Years for Eligible Hospitals Who Are NotMeaningful EHR Users

3. Incentive Payments for Critical AccessHospitals

a. Definition of CAHs for Medicareb. Current Medicare Payment of

Reasonable Cost for CAHsc. Changes Made by the HITECH Actd. Incentive Payment Calculation for CAHse. Reduction of Reasonable Cost Payment

in FY 2015 and Subsequent Years forCAHs That Are Not Meaningful EHRUsers

4. Process for Making Incentive PaymentsUnder the Medicare FFS Program

a. Incentive Payments to EPsb. Incentive Payments to Eligible Hospitals

c. Incentive Payments to CAHsd. Payment Accounting Under MedicareC. Medicare Advantage Organization

Incentive Payments1. Definitionsa. Qualifying MA Organization

b. Qualifying MA Eligible Professionalc. Qualifying MA-Affiliated Eligible

Hospital2. Identification of Qualifying MA

Organizations, MA EPs, and MA-Affiliated Eligible Hospitals

3. Computation of Incentives to QualifyingMA Organizations for MA EPs andHospitals

4. Timeframe for Payment5. Avoiding Duplicate Payment6. Meaningful User Attestation7. Posting Information on the CMS Web

site8. Limitation on Review9. Conforming Changes10. Payment Adjustment and Future

RulemakingD. Medicaid Incentives

1. Overview of Health InformationTechnology in Medicaid2. General Medicaid Provisions3. Identification of Qualifying Medicaid

EPs and Eligible Hospitalsa. Overview

b. Program Participation1. Acute Care Hospitals2. Childrens Hospitalsc. Medicaid Professionals Program

Eligibilityd. Calculating Patient Volume

Requirementse. Entities Promoting the Adoption of

Certified EHR Technology4. Computation of Amount Payable to

Qualifying Medicaid EPs and EligibleHospitals

a. Payment Methodology for EPs(1) General Overview(2) Average Allowable Costs(3) Net Average Allowable Costs(4) Payments for Medicaid Eligible

Professionals(5) Basis for Medicaid EHR Incentive

Program First Payment Year andSubsequent Payment Years

(i) Medicaid EP Who Begins Adopting,Implementing or Upgrading CertifiedEHR Technology in the First Year

(ii) Medicaid EP Who Has AlreadyAdopted, Implemented or UpgradedCertified EHR Technology andMeaningfully Uses EHR Technology

b. Payment Methodology for Eligible

Hospitalsc. Alternative and Optional Early State

Implementation To Make IncentivePayments for Adopting, Implementing orUpgrading Certified EHR Technology

d. Process for Making and ReceivingMedicaid Incentive Payments

e. Avoiding Duplicate Paymentf. Flexibility To Alternate Between

Medicare and Medicaid EHR IncentivePrograms One Time

g. One State Selection5. Single Provider Election Repository and

State Data Collection6. Collection of Information Related to the

Eligible Professionals National ProviderIdentifier (NPI) and the Tax

Identification Number (TIN)7. Activities Required To Receive Incentive

Paymentsa. General Overview

b. Definitions Related to Certified EHRTechnology and Adopting, Implementingor Upgrading Such Technology

(1) Certified EHR Technology(2) Adopting, Implementing or Upgradingc. Other General Terminologyd. Quality Measures8. Overview of Conditions for States To

Receive Federal Financial Participation(FFP) for Incentive Payments andImplementation Funding

9. Financial Oversight, Program Integrityand Provider Appeals

III. Collection of Information RequirementsA. ICRs Regarding Demonstration of

Meaningful Use Criteria ( 495.8)B. ICRs Regarding Participation

Requirements for EPs, Eligible Hospitals,and Qualifying CAHs ( 495.10)

C. ICRs Regarding Identification ofQualifying MA Organizations, MAEPs

and MA-Affiliated Eligible Hospitals(495.202)

D. ICRs Regarding Incentive Payments toQualifying MA Organizations for MAEPs and Hospitals (495.204)

E. ICRs Regarding Meaningful UserAttestation ( 495.210)

F. ICRs Regarding Incentive Payments toQualifying MA Organizations for MA-Eligible Professionals and Hospitals(495.220)

G. ICRs Regarding Process for Payments(495.312)

H. ICRs Regarding Activities Required ToReceive an Incentive Payment( 495.314)

I. ICRs Regarding State Monitoring and

Reporting Regarding Activities RequiredTo Receive an Incentive Payment(495.316)

J. ICRs Regarding State Responsibilities forReceiving FFP (495.318)

K. ICRs Regarding Prior ApprovalConditions ( 495.324)

L. ICRs Regarding Termination of FederalFinancial Participation (FFP) for FailureTo Provide Access to Information(495.330)

M. ICRs Regarding State Medicaid Agencyand Medicaid EP and Hospital Activities( 495.332 Through 495.338)

N. ICRs Regarding Access to Systems andRecords ( 495.342)

O. ICRs Regarding Procurement Standards

(495.344)P. ICRs Regarding State Medicaid AgencyAttestations (495.346)

Q. ICRs Regarding Reporting Requirements(495.348)

R. ICRs Regarding Retroactive Approval ofFFP With an Effective Date of February18, 2009 ( 495.358)

S. ICRs Regarding Financial Oversight andMonitoring Expenditures (495.362)

T. ICRs Regarding Appeals Process for aMedicaid Provider Receiving ElectronicHealth Record Incentive Payments(495.366)

IV. Regulatory Impact AnalysisA. Overall ImpactB. Regulatory Flexibility Analysis

C. Small Rural HospitalsD. Unfunded Mandates Reform ActE. FederalismF. Anticipated EffectsG. HITECH Impact AnalysisH. Accounting Statement

I. Background

A. Overview of the HITECH ProgramsCreated by the American Recovery andReinvestment Act of 2009

The American Recovery andReinvestment Act of 2009 (ARRA) (Pub.L. 1115) was enacted on February 17,



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2009. Title IV of Division B of ARRAamends Titles XVIII and XIX of theSocial Security Act (the Act) byestablishing incentive payments toeligible professionals (EPs), eligiblehospitals, and critical access hospitals(CAHs), and Medicare AdvantageOrganizations to promote the adoptionand meaningful use of interoperable

health information technology (HIT) andqualified electronic health records(EHRs). These provisions, together withTitle XIII of Division A of ARRA, may

be cited as the Health InformationTechnology for Economic and ClinicalHealth Act or the HITECH Act. Theseincentive payments are part of a broadereffort under the HITECH Act toaccelerate the adoption of HIT andutilization of qualified EHRs.

On January 13, 2010 we published aproposed rule (75 FR 1844), entitledMedicare and Medicaid Programs;Electronic Health Record Incentive

Program

to implement the provisions ofARRA that provide incentive paymentsto EPs, eligible hospitals, and CAHsparticipating in Medicare and Medicaidprograms that adopt and successfullydemonstrate meaningful use ofcertifiedEHR technology, and incentivepayments to certain MedicareAdvantage Organizations for theiraffiliated EPs and eligible hospitals thatmeaningfully use certified EHRtechnology. Through this final rule, weare developing the incentive programswhich are outlined in Division B, TitleIV of the HITECH Act. This final rulesets forth the definition ofmeaningful

use of certified EHR technology.Section 13101 of the HITECH Act

adds a new section 3000 to the PublicHealth Service Act (PHSA), whichdefines certified EHR technology as aqualified EHR that has been properlycertified as meeting standards adoptedunder section 3004 of the PHSA. CMSand ONC have been working closely toensure that the definition of meaningfuluse of certified EHR technology and thestandards for certified EHR technologyare coordinated. In the interim final rulepublished on January 13, 2010 (75 FR2014) entitled Health Information

Technology: Initial Set of Standards,Implementation Specifications, andCertification Criteria for ElectronicHealth Record Technology, ONCdefined the term certified EHRtechnology, identified the initial set ofstandards and implementationspecifications that such EHR technologywould need to support the achievementof the proposed meaningful use Stage 1,as well as the certification criteria thatwill be used to certify EHR technology.ONC is also issuing a final rule on thestandards, implementation

specifications, and certification criteriaelsewhere in this issue of the FederalRegister.

In a related proposed rule publishedon March 10, 2010, (75 FR 11328)entitled Proposed Establishment ofCertification Programs for HealthInformation Technology ONC proposedthe establishment of two certification

programs for purpose of testing andcertifying health informationtechnology. In the June 24, 2010 FederalRegister (75 FR 36157), ONC publisheda final rule to establish a temporarycertification program whereby theNational Coordinator would authorizeorganizations to test and certifycomplete EHRs and EHR Modules, andplans to issue a separate final rule toestablish a permanent certificationprogram to replace the temporarycertification program. Specifically, thisfinal rule will ensure that the definitionof meaningful use of certified EHR

technology does not require EPs, eligiblehospitals, and CAHs to performfunctions for which standards have not

been recognized or established.Similarly, the functionality of certifiedEHR technology should enable andadvance the definition of meaningfuluse.

We urge those interested in this finalrule to also review the ONC interimfinal rule on standards andimplementation specifications forcertified EHR technology and the relatedfinal rule as well as the final rule on theestablishment of a temporarycertification program. Readers may also

visit http://healthit.hhs.govand http://www.cms.hhs.gov/Recovery/11_HealthIT.asp#TopOfPagefor moreinformation on the efforts at theDepartment of Health and HumanServices (HHS) to advance HITinitiatives.

B. Statutory Basis for the Medicare &Medicaid EHR Incentive Programs

Section 4101(a) of the HITECH Actadds a new subsection (o) to section1848 of the Act. Section 1848(o) of theAct establishes incentive payments fordemonstration of meaningful use of

certified EHR technology by EPsparticipating in the original Medicareprogram (hereinafter referred to as theMedicare Fee-for-Service (FFS)program) beginning in calendar year(CY) 2011. Section 4101(b) of theHITECH Act also adds a new paragraph(7) to section 1848(a) of the Act. Section1848(a)(7) of the Act provides that

beginning in CY 2015, EPs who do notdemonstrate that they are meaningfulusers of certified EHR technology willreceive an adjustment to their feeschedule for their professional services

of 99 percent for 2015 (or, in the caseof an eligible professional who wassubject to the application of thepayment adjustment under section1848(a)(5) of the Act, 98 percent for2014), 98 percent for 2016, and 97percent for 2017 and each subsequentyear. Section 4101(c) of the HITECH Actadds a new subsection (l) to section

1853 of the Act to provide incentivepayments to certain MedicareAdvantage (MA) organizations for theiraffiliated EPs who meaningfully usecertified EHR technology and meetcertain other requirements, and requiresa downward adjustment to Medicarepayments to certain MA organizationsfor professional services provided byany of their affiliated EPs who are notmeaningful users of certified EHRtechnology, beginning in 2015. Section1853(l) of the Act also requires us toestablish a process that ensures thatthere are no duplicate payments made

to MA organizations under section1853(l) of the Act and to their affiliatedEPs under the FFS EHR incentiveprogram established under section1848(o)(1)(A) of the Act.

Section 4102(a) of the HITECH Actadds a new subsection (n) to section1886 of the Act. Section 1886(n) of theAct establishes incentives payments fordemonstration of meaningful use ofcertified EHR technology by subsection(d) hospitals, as defined under section1886(d)(1)(B) of the Act, participating inthe Medicare FFS program beginning inFederal fiscal year (FFY) 2011. Section

4102(b)(1) of the HITECH Act amendssection 1886(b)(3)(B) of the Act toprovide that, beginning in FY 2015,subsection (d) hospitals that are notmeaningful users of certified EHRtechnology will receive a reducedannual payment update for theirinpatient hospital services. Section4102(a)(2) of the HITECH Act amendssection 1814(l) of the Act to provide anincentive payment to critical accesshospitals (CAHs) who meaningfully usecertified EHR technology based on thehospitals reasonable costs for thepurchase of certified EHR technology

beginning in FY 2011. In addition,section 4102(b)(2) of the HITECH Actamends section 1814(l) of the Act toprovide for a downward paymentadjustment for hospital servicesprovided by CAHs that are notmeaningful users of certified EHRtechnology for cost reporting periods

beginning in FY 2015. Section 4102(c)of the HITECH Act adds a newsubsection (m) to section 1853 of theAct to provide incentive payments toqualifying MA organizations for certainaffiliated hospitals that meaningfully

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use certified EHR technology to make adownward adjustment to payments tocertain MA organizations for inpatienthospital services provided by itsaffiliated hospitals that are notmeaningful users of certified EHRtechnology beginning in FY 2015.Section 1853(m) of the Act also requiresus to establish a process that ensures

that there are no duplicate paymentsmade to MA organizations under section1853(m) of the Act and to their affiliatedhospitals under the FFS EHR incentiveprogram established under section1886(n) of the Act.

Section 4103 of the HITECH Actprovides for implementation funding forthe EHR incentives program underMedicare.

Section 4201 of the HITECH Actamends section 1903 of the Act toprovide 100 percent Federal financialparticipation (FFP) to States forincentive payments to certain eligibleproviders participating in the Medicaidprogram to purchase, implement,operate (including support services andtraining for staff) and meaningfully usecertified EHR technology and 90 percentFFP for State administrative expensesrelated to the program outlined in1903(t) of the Act. Section 4201(a)(2) ofthe HITECH Act adds a new subsection(t) to section 1903 of the Act to establisha program with input from the States toprovide incentives for the adoption andsubsequent meaningful use of certifiedEHR technology for providersparticipating in the Medicaid program.

II. Provisions of the Proposed Rule andAnalysis of and Responses to PublicComments

We proposed to add a new part 495to title 42 of the Code of FederalRegulations to implement the provisionsof Title IV of Division B of ARRAproviding for incentive payments toEPs, eligible hospitals, CAHs andcertain Medicare Advantageorganizations for the adoption anddemonstration of meaningful use ofcertified EHR technology under theMedicare program or the Medicaidprogram.

The HITECH Act creates incentivesunder the Medicare Fee-for-Service(FFS), Medicare Advantage (MA), andMedicaid programs for EPs, eligiblehospitals and CAHs to adopt anddemonstrate meaningful use of certifiedEHR technology, and paymentadjustments under the Medicare FFSand MA programs for EPs, eligiblehospitals, and CAHs who fail to adoptand demonstrate meaningful use ofcertified EHR technology. The threeincentive programs contain manycommon elements and certain

provisions of the HITECH Act encourageavoiding duplication of payments,reporting, and other requirements,particularly in the area of demonstrationof meaningful use of certified EHRtechnology. Eligible hospitals and CAHsmay participate in both the Medicareprogram and the Medicaid program,assuming they meet each programs

eligibility requirements, which varyacross the two programs. In certaincases, the HITECH Act has used nearlyidentical or identical language indefining terms that are used in theMedicare FFS, MA, and Medicaidprograms, including such terms ashospital-based EPs and certified EHRtechnology. For these reasons, we seekto create as much commonality betweenthe three programs as possible and havestructured this final rule, as we did theproposed rule, based on the premise by

beginning with those provisions that cutacross the three programs before moving

on to discuss the provisions specific toMedicare FFS, MA and Medicaid.

A. Definitions Across the Medicare FFS,MA, and Medicaid Programs

Title IV, Division B of ARRAestablishes incentive payments underthe Medicare and Medicaid programsfor certain professionals and hospitalsthat meaningfully use certified EHRtechnology, and for certain MAorganizations whose affiliated EPs andhospitals meaningfully use certifiedEHR technology. We refer to theincentive payments made under the

original Medicare program to EPs,eligible hospitals, and CAHs as theMedicare FFS EHR incentive program,the incentive payments made toqualifying MA organizations as the MAEHR incentive program, and theincentive payments made underMedicaid to eligible professionals andeligible hospitals as the Medicaid EHRincentive program. When referring tothe Medicare EHR incentive program,we are generally referring to both theMedicare FFS EHR and the MA EHRincentive programs.

1. Definitions

Sections 4101, 4102, and 4201 of theHITECH Act use many identical orsimilar terms. In this section of thepreamble, we discuss terms for whichwe are finalizing uniform definitions forthe Medicare FFS, MA, and MedicaidEHR incentive programs. Thesedefinitions are set forth in part 495subpart A of the regulations. Fordefinitions specific to an individualprogram, the definition is set forth anddiscussed in the applicable EHRincentive program section.

The incentive payments are availableto EPs which are non-hospital-basedphysicians, as defined in section 1861(r)of the Act, who either receivereimbursement for services under theMedicare FFS program or have anemployment or contractual relationshipwith a qualifying MA organizationmeeting the criteria under section

1853(l)(2) of the Act; or healthcareprofessionals meeting the definition ofeligible professional under section1903(t)(3)(B) of the Act as well as thepatient-volume and non-hospital-basedcriteria of section 1903(t)(2)(A) of theAct and eligible hospitals which aresubsection (d) hospitals as definedunder subsection 1886(d)(1)(B) of theAct that either receive reimbursementfor services under the Medicare FFSprogram or are affiliated with aqualifying MA organization as describedin section 1853(m)(2) of the Act; criticalaccess hospitals (CAHs); or acute care or

childrens hospitals described undersection 1903(t)(2)(B) of the Act.

a. Certified Electronic Health Record(EHR) Technology

Under all three EHR incentiveprograms, EPs, eligible hospitals, andCAHs must utilize certified EHRtechnology if they are to be consideredeligible for the incentive payments. Inthe Medicare FFS EHR incentiveprogram this requirement for EPs isfound in section 1848(o)(2)(A)(i) of theAct, and for eligible hospitals and CAHsin section 1886(n)(3)(A)(i) of the Act. Inthe MA EHR incentive program this

requirement for EPs is found in section1853(l)(1) of the Act, and for eligiblehospitals and CAHs, in section1853(m)(1) of the Act. In the MedicaidEHR incentive program this requirementfor EPs and Medicaid eligible hospitalsis found throughout section 1903(t) ofthe Act, including in section1903(t)(6)(C) of the Act. Certified EHRtechnology is a critical component ofthe EHR incentive programs, and theSecretary has charged ONC, under theauthority given to her in the HITECHAct, with developing the criteria andmechanisms for certification of EHR

technology. Therefore, we finalize ourproposal to use the definition ofcertified EHR technology adopted byONC. ONC issued an interim final rulewith comment for the standards andcertification criteria for certified EHRtechnology at the same time ourproposed rule was issued. Afterreviewing the comments they receivedand to address changes made in thisfinal rule, ONC will be issuing a finalrule in conjunction with this final rule.When we refer to the ONC final rule, weare referring to this final rule titled



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Health Information Technology: InitialSet of Standards, ImplementationSpecifications, and Certification Criteriafor Electronic Health RecordTechnology. When we refer to the ONCIFR, we are referring to the interim finalrule with comment period published inthe Federal Register on January 13,2010.

Comment: Several commenters askedfor clarification on the definition ofcertified EHR technology. Currently,hospitals utilize multiple systems tooperate electronically. For example,some electronic operating systems feedEHR data and some systems pull EHRdata. Data from the two systems are thenextracted and manipulated to create aquality measure calculation. Thecommenters inquired as to how thesesystems can continue to be utilized eventhough, independently, these systemswill not meet all certification standards.Some commenters expressed concern

the ONC IFR did not include generationof the data needed to demonstratemeaningful use as a certificationrequirement and that certified EHRtechnology requirements should alsoinclude compliance with HIPAAstandards as well as all relevant statestatutes for the state or states where itis installed. Commenters recommendedvarious approaches to defining certifiedtechnology especially in the early stagesof the program. Some suggestionsincluded, grandfathering existingsystems for a period of three years aslong as the provider could meet specificmeaningful use objectives while

requiring all upgrades to existingsystems to be certified, allowing all EHRproducts certified by the CertificationCommission for Health InformationTechnology (CCHIT) at the criteriaestablished for 2008 or later be deemedas meeting Stage 1 certificationrequirements or alternatively CMSprovide a process that can verifycompliance of required features at nocost to providers or vendors as is donenow with Enterprise Data Interchange(EDI) claims processing. Somecommenters also offered other thoughtson potential unintended consequences

of defining the EHR certificationsoftware process to include certifyingagencies that charge for the process. Thecommenters believed this could resultin continued new and revisedrequirements to justify the certifyingentities existence and increase itsrevenue.

Response: We have referred thosecomments to ONC who addresses themin their final rule.

We are adopting the ONC definitionof certified EHR technology at 45 CFR170.102 in this final rule.

b. Qualified Electronic Health Record

In order for an EHR technology to beeligible for certification, it must firstmeet the definition of a QualifiedElectronic Health Record. This term wasdefined by ONC in its in its IFR andfinalized by ONC in their final rule, andwe are finalizing our proposal to use the

definition of qualified electronic healthrecord adopted by ONC in their finalrule to be published concurrently withthis rule.

Comment: We received a fewcomments on the definition of qualifiedEHR technology. Commenters expressedconcerns regarding perceived gaps indefining an EHR as qualified such as alack of the requirement for a narrativetext for physicians (also known asprogress note). Another commentrequested further clarification regardingthe requirement for a qualified EHR tocapture and query information relevantto health care quality and exchange

electronic health information with andintegrate such information from othersources. For example, some might

believe that these requirements applystrictly to information contained withinthe EHR or closed proprietary hospitalsystems and not to information thatwould have to be obtained from outsidethe four walls of the practice or theextended (but closed) system.

Response: We have referred thosecomments to ONC who addresses themin their final rule.

We are adopting the ONC definitionof Qualified Electronic Health Record at

45 CFR 170.102.c. Payment Year

As discussed in the proposed rule,under section 1848(o)(1)(A)(i) of the Actthe Medicare FFS EHR incentivepayment is available to EPs for apayment year. Section 1848(o)(1)(E) ofthe Act defines the term payment yearas a year beginning with 2011. Whilethe Act does not use the term, paymentyear, for the Medicaid EHR incentiveprogram, it does use the term year ofpayment throughout section 1903(t) ofthe Act, for example, at sections

1903(t)(3)(C), 1903(t)(4)(A), and1903(t)(6)(C) of the Act. For all EPs inthe Medicare and Medicaid EHRincentive programs, we are proposing acommon definition for both paymentyear and year of payment, as anycalendar year beginning with 2011 at 495.4. In the proposed rule, weexplained that this definition, which isconsistent with the statutory definitionofpayment year under Medicare FFS,would simplify the EHR incentiveprograms for EPs. As discussed later inthis preamble, EPs will have the

opportunity to participate in either theMedicare or Medicaid incentiveprograms, and once an EP has selecteda program, they are permitted to makea one-time switch from one program tothe other. A common definition willallow EPs to more easily understand

both incentive programs, and informtheir decisions regarding participation

in either program.Under section 1886(n)(1) of the Act,

the Medicare FFS EHR incentivepayment is available to eligiblehospitals and CAHs for a paymentyear. Section 1886(n)(2)(G) of the Actdefines the term payment year as afiscal year beginning in 2011. Ashospitals are paid based on the 12-month Federal fiscal year, we interpretthe reference to a fiscal year means thefiscal year beginning on October 1 of theprior calendar year and extending toSeptember 30 of the relevant year.Again, for the Medicaid EHR incentive

program, the HITECH Act uses the term,year of payment (see section1903(t)(5)(D)(ii) of the Act), rather thanpayment year. For the same reasonsexpressed in the proposed rule andsummarized above for proposing acommon definition ofpayment yearfor EPs, and because hospitals will havethe opportunity to simultaneouslyparticipate in both the Medicare andMedicaid EHR incentive programs, wepropose a common definition ofpayment year and year of paymentfor both programs.

For purposes of the incentive

payments made to eligible hospitals andCAHs under the Medicare FFS, MA andMedicaid EHR incentive programs, weproposed to define payment year andyear of payment at 495.4, consistentwith the statutory definition, as anyfiscal year beginning with 2011.

Comment: A commenter asked CMSto identify the first possible paymentyear for EPs, and hospitals and CAHs.

Response: The first payment year forEPs is any calendar year (CY) beginningwith CY 2011 and for eligible hospitalsand CAHs is any fiscal year (FY)

beginning with 2011.Comment: The majority of

commenters favored our definition ofpayment yearbased on the differentexisting fiscal periods for eligibleprofessionals and hospitals. Additionalsupport was received from somecommenters whom explained that theyparticipated in performance-basedinitiatives, which define a payment yearthe same as the proposed rule.

Response: After consideration of thepublic comments received, we areadopting our proposed definition ofpayment year in the Medicare and



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Medicaid EHR incentive programs asdescribed above.

Comment: The majority of commentsreceived regarding the definition of apayment year asked whether paymentyears must be consecutive for an EP oreligible hospital to receive all years ofincentive payments.

Response: In the proposed rule, we

defined the second, third, fourth, fifth,and sixth payment year, respectively, tomean the second, third, fourth, fifth,and sixth calendar or Federal fiscal year,respectively, for which an EP or eligiblehospital receives an incentive payment.However, section 1848(o)(1)(E) of Actdefines the second through fifthpayment years for an EP as eachsuccessive year immediately followingthe first payment year for suchprofessional for the Medicare FFS andMA EHR incentive programs. Similarly,section 1886(n)(2)(G)(ii) of the Actdefines the second through fourthpayment years for an eligible hospital orCAH as requiring the years to besuccessive and immediatelyfollowing the prior year. Thisrequirement, that each payment yearimmediately follow the prior year,means that every year subsequent to thefirst payment year is a payment yearregardless of whether an incentivepayment is received by the EP, eligiblehospital or CAH. For example, if aMedicare EP receives an incentive in CY2011, but does not successfullydemonstrate meaningful use orotherwise fails to qualify for theincentive in CY 2012, CY 2012 still

counts as one of the EPs five paymentyears and they would only be able toreceive an incentive under the MedicareEHR incentive program for three moreyears as CY 2013 would be there thirdpayment year. In this example, themaximum incentive payment thatwould apply for this Medicare EP notpracticing predominately in a healthprofessional shortage area (HPSA)would be $18,000 in 2011, and $8,000in 2013 as outlined in section1848(o)(1)(B) of the Act. The EP wouldhave qualified for a maximum incentivepayment of $12,000 in 2012, but did not

qualify as a meaningful user for thisyear. No incentives may be made underthe Medicare EHR incentive programafter 2016.

The same rule, however, does notapply to the Medicaid EHR incentiveprogram. For that program, paymentsmay generally be non-consecutive. If anEP or eligible hospital does not receivean incentive payment for a given CY orFY then that year would not constitutea payment year. For example, if aMedicaid EP receives incentives in CY2011 and CY 2012, but fails to qualify

for an incentive in CY 2013, they wouldstill be eligible to receive incentives foran additional four payment years. Forhospitals, however, starting with FY2017 payments must be consecutive.This rule is required by section1903(t)(5)(D) of the Act, which statesthat after 2016, no Medicaid incentivepayment may be made to an eligible

hospital unless the provider has beenprovided payment * * * for theprevious year. As a result, Medicaideligible hospitals must receive anincentive in FY 2016 to receive anincentive in FY 2017 and later years.Starting in FY 2016, incentive paymentsmust be made every year in order tocontinue participation in the program.In no case may any Medicaid EP oreligible hospital receive an incentiveafter 2021. We have revised ourregulations at 495.4 to incorporatethese statutory requirements.

Comment: Some commentersrequested that CMS clarify the impacton EPs when they change practices inthe middle of the incentive paymentprogram; in other words, if an EP leavesa practice in year two of the incentivepayment program and goes to anotherpractice, does that EP forfeit the abilityto continue collecting incentivepayments for years 3 through 5?

Response: A qualifying EP that leavesone practice for another may still beeligible to receive subsequent incentivepayments if the EP is a meaningful EHRuser in the new practice. The incentivepayment is tied to the individual EP,and not to his or her place of practice.

d. First, Second, Third, Fourth, Fifth,and Sixth Payment Year

In accordance with sections1848(o)(1)(A)(ii), 1886(n)(2)(E),1814(l)(3)(A), 1903(t)(4)(B), and1903(t)(5)(A) of the Act, for EPs, eligiblehospitals, and CAHs that qualify forEHR incentive payments in a paymentyear, the amount of the payment willdepend in part on whether the EP orhospital previously received anincentive payment and, if so (for theMedicare EHR incentive program) whenthe EP or hospital received his or herfirst payment. We proposed to definethe first payment year to mean the firstCY or Federal fiscal year (FY) for whichan EP, eligible hospital, or CAH receivesan incentive payment. Likewise, weproposed to define the second, third,fourth, fifth, and sixth payment year,respectively, to mean the second, third,fourth, fifth, and sixth CY or FY,respectively, for which an EP, eligiblehospital, or CAH receives an incentivepayment.

Comment: As stated above, manycommenters requested clarification onnon-consecutive payment.

Response: This comment is addressedabove.

Comment: A commenter requestedCMS to clarify the consequences for ahospital that originally qualified andreceived incentive payments the first

year, but in a subsequent year failed toqualify as a meaningful user of certifiedEHR technology.

Response: Meaningful use will beassessed on a year-by-year basis as weestablish different Stages of meaningfuluse criteria for different years. If an EPor an eligible hospital including a CAHhas failed to demonstrate meaningfuluse of certified EHR technology for acertain payment year, the EP, eligiblehospital, or CAH will not be qualifiedfor incentive payments for that paymentyear. However, upon successfuldemonstration as a meaningful EHRuser in subsequent years, an EP, eligiblehospital or CAH may be eligible toreceive an incentive payment. Asdiscussed above, however, for theMedicare program, the failure of theeligible hospital or CAH to demonstratemeaningful use in the subsequent year,will affect the total payments thathospital is eligible to receive, as,pursuant to the statute, the hospital istreated as skipping a payment year.Payment adjustments apply to Medicareproviders who are unable todemonstrate meaningful use starting in2015.

Comment: One commenter asked if

CMS could apply the same MedicaidEPs first year incentive eligibilityrequirements of adopting, implementingor upgrading to certified EHRtechnology to Medicare physiciansinstead of demonstration of meaningfuluse.

Response: The HITECH Act allowsMedicaid EPs and eligible hospitals toreceive an incentive for the adoption,implementation, or upgrade of certifiedEHR technology in their firstparticipation year. In subsequent years,these EPs and eligible hospitals mustdemonstrate that they are meaningfulusers. There are no parallel provisionsunder the Medicare EHR incentiveprogram that would authorize us tomake payments to Medicare EPs,eligible hospitals, and CAHs for theadoption, implementation or upgrade ofcertified EHR technology. Rather, inaccordance with sections 1848(o)(2),1886(n)(3)(A), and 1814(l)(3)(A) of theAct, Medicare incentive payments areonly made to EPs, eligible hospitals, andCAHs for the demonstration ofmeaningful use of certified EHRtechnology.



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After consideration of the publiccomments received, we are finalizingthe definitions of First payment year asproposed. For the Medicare EHRincentive programs, we are modifyingthe definitions of second, third, fourth,fifth payment year to make clear thatthese years are each successive yearfollowing the first payment year. For

the Medicaid EHR incentive program,we included definitions of first, second,third, fourth, fifth and sixth paymentyear that make clear that these are theyears for which payment is received.The regulations can now be found at 495.4 of our regulations.

e. EHR Reporting Period

In the proposed rule, we proposed adefinition of EHR Reporting Period forpurposes of the Medicare and Medicaidincentive payments under sections1848(o), 1853(l)(3), 1886(n), 1853(m)(3),1814(l) and 1903(t) of the Act. For thesesections, we proposed that the EHRreporting period would be anycontinuous 90-day period within thefirst payment year and the entirepayment year for all subsequentpayment years. In our proposed rule, wedid not make any proposals regardingthe reporting period that will be usedfor purposes of the paymentadjustments that begin in 2015. Weintend to address this issue in futurerulemaking, for purposes of Medicareincentive payment adjustments undersections 1848(a)(7), 1853(l)(4),1886(b)(3)(B)(ix), 1853(m)(4), and1814(l)(4) of the Act.

For the first payment year only, weproposed to define the term EHRreporting period at 495.4 of ourregulations to mean any continuous 90-day period within a payment year inwhich an EP, eligible hospital or CAHsuccessfully demonstrates meaningfuluse of certified EHR technology. TheEHR reporting period therefore could beany continuous period beginning andending within the relevant paymentyear. Starting with the second paymentyear and any subsequent payment yearsfor a given EP, eligible hospital or CAH,we proposed to define the term EHR

reporting period at 495.4 to mean theentire payment year. In our discussionof considerations in definingmeaningful use later in this section wediscuss how this policy may be affected

by subsequent revisions to thedefinition of meaningful use.

For the first payment year, we statedin the proposed rule our belief thatgiving EPs, eligible hospitals and CAHsflexibility as to the start date of the EHRreporting period is important, asunforeseen circumstances, such asdelays in implementation, higher than

expected training needs and otherunexpected hindrances, may cause anEP, eligible hospital, or CAH topotentially miss a target start date.

Comment: Some commenterssupported the 90-day reporting periodproposed for the first payment year. Onecommenter requested that exceptions,per the provider request, be considered

individually in cases of compliance forless than the 90 days (for example, 85days). Commenters preferred the 90-dayreporting period overall and manysuggested it be used for subsequentyears as well. We also receivedcomments questioning why Medicaidproviders would need to conform to the90-day reporting period in order toadopt, implement or upgrade certifiedEHR technology.

Response: We do believe that forprogram integrity it is crucial tomaintain a consistent reporting period.Basing the incentive payments onmeaningful use implies a minimumlevel of use in order to receive theincentive payment. The timeframe ispart of the determination of whether useis meaningful and therefore requires aminimum as well. Given the short timeperiod as compared to the entire year,we do not believe an exception processis needed. However, we agree withcommenters that an EHR reportingperiod for demonstrating adoption,implementation or upgrading certifiedEHR technology by Medicaid EPs andeligible hospitals is unnecessary and areremoving it for the final rule in thisinstance. Similarly, Medicaid EPs and

eligible hospitals who are demonstratingmeaningful use for the first time in theirsecond payment year, will have a 90-day reporting period to maintain paritywith Medicare providers firstmeaningful use payment year. We donot believe that after successfullydemonstrating meaningful use, a 90-dayperiod is appropriate for subsequentyears. The reasons for using the 90-dayperiod instead of the full year are basedon potential delays in implementingcertifying EHR technology. Oncecertified EHR technology isimplemented these are no longer

applicable.After consideration of the publiccomments received and with theclarification described above foradopting, implementing or upgrading,we are finalizing the 90-day reportingperiod for the first payment year basedon meaningful use as proposed forMedicare EPs, eligible hospitals andCAHs and full year EHR reportingperiods for subsequent payment years.For Medicaid EPs and eligible hospitals,the EHR reporting period will be a 90-day period for the first year a Medicaid

EP or eligible hospital demonstratesmeaningful use and full year EHRreporting periods for subsequentpayment years.

f. Meaningful EHR User

Section 1848(o)(1)(A)(i) of the Act,limits incentive payments under theMedicare FFS EHR incentive program to

an EP who is ameaningful EHR user.

Similarly, section 1886(n)(1) and 1814(l)of the Act, limits incentive paymentsunder the Medicare FFS EHR incentiveprogram to an eligible hospital or CAH,respectively, who is a meaningful EHRuser. Section 1903(t)(6)(C)(i)(II) of theAct limits incentive payments forpayment years other than the firstpayment year to a Medicaid EP oreligible hospital who demonstratesmeaningful use of certified EHRtechnology. We proposed to define at 495.4 the term meaningful EHR useras an EP, eligible hospital, or CAH who,

for an EHR reporting period for apayment year, demonstrates meaningfuluse of certified EHR technology in theform and manner consistent with ourstandards (discussed below).

Comment: Several commentersindicated there is a need to alignmeasures and programs, to avoid havingto report similar measure standards todifferent Federal, State and otherentities.

Response: We concur with the goal ofalignment to avoid redundant andduplicative reporting and seek toaccomplish this to the extent possiblenow and in future rulemaking.

Comment: Several commenterssuggested that CMS considers EPs,eligible hospitals, and CAHs who areparticipating in certain existingprograms as meaningful EHR users. Thecommenters contended that thestandards followed by participants inthese programs are equivalent to thosewe proposed to adopt for purposes ofdemonstrating meaningful use. Theprograms recommended by commentersare

Qualified Health InformationExchange Networks; and

Medicare Electronic Health Record

Demonstration Program.Response: We do not agree thatparticipation in these programs would

be the equivalent to demonstratingmeaningful use in accordance with thecriteria under the EHR incentiveprograms. Most of these programs placea heavy focus on one of the fivepriorities of meaningful use discussedin the next section such as reportingclinical quality measures or theexchange of health information, tailoredto the individual programs goals. Forexample, the goal of the Medicare



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Electronic Health Record DemonstrationProgram, for example, which wasstarted in 2009 and pre-dates passage ofthe HITECH Act, is to reward deliveryof high-quality care supported by theadoption and use of electronic healthrecords in physician small to medium-size primary care practices. The purposeof this program is to encourage adoption

and increasingly sophisticated use ofEHRs by small to medium-sized primarycare practices. While this goal is similarto the overall objective of the HITECHAct, the requirements for thedemonstration are not as broad-based asthat of the HITECH Act, and paymentincentives are based on the level of useover the duration of the program, whichwill vary by practice. Therefore, it is notappropriate to deem practicesparticipating in the EHR Demonstrationas meaningful users for purposes of theHITECH Act. The HITECH Act alsorequires use certified EHR technology as

defined by ONC to qualify for incentivepayments. While CCHIT has certifiedEHR technology in the past, the ONCregulation Establishment of theTemporary Certification Program forHealth Information Technology; FinalRule (see 75 FR 36157) whichestablishes a temporary certifying bodyhas yet to be established. Wherepossible, we have aligned the criteriarequired to demonstrate meaningful usewith existing programs like PQRI andRHQDAPU as discussed in sectionII.A.3 of this final rule. Afterconsideration of the public comments

received, we are finalizing ourdefinition of a meaningful EHR user asproposed.

2. Definition of Meaningful Use

a. Considerations in DefiningMeaningful Use

In sections 1848(o)(2)(A) and1886(n)(3)(A) of the Act, the Congressidentified the broad goal of expandingthe use of EHRs through the termmeaningful use. In section 1903(t)(6)(C)of the Act, Congress applies thedefinition of meaningful use toMedicaid eligible professionals andeligible hospitals as well. Certified EHRtechnology used in a meaningful way isone piece of a broader HITinfrastructure needed to reform thehealth care system and improve healthcare quality, efficiency, and patientsafety. HHS believes this ultimate visionof reforming the health care system andimproving health care quality, efficiencyand patient safety should drive thedefinition of meaningful use consistentwith the applicable provisions ofMedicare and Medicaid law.

In the proposed rule we explainedthat in defining meaningful use wesought to balance the sometimescompeting considerations of improvinghealth care quality, encouragingwidespread EHR adoption, promotinginnovation, and avoiding imposingexcessive or unnecessary burdens onhealth care providers, while at the same

time recognizing the short timeframeavailable under the HITECH Act forproviders to begin using certified EHRtechnology.

Based on public and stakeholderinput received prior to publishing theproposed rule, we consider a phasedapproach to be most appropriate. Sucha phased approach encompassesreasonable criteria for meaningful use

based on currently available technologycapabilities and provider practiceexperience, and builds up to a morerobust definition of meaningful use,

based on anticipated technology and

capabilities development. The HITECHAct acknowledges the need for thisbalance by granting the Secretary thediscretion to require more stringentmeasures of meaningful use over time.Ultimately, consistent with otherprovisions of law, meaningful use ofcertified EHR technology should resultin health care that is patient centered,evidence-based, prevention-oriented,efficient, and equitable.

Under this phased approach tomeaningful use, we intend to update thecriteria of meaningful use throughfuture rulemaking. We refer to the initialmeaningful use criteria as Stage 1. We

currently anticipate two additionalupdates, which we refer to as Stage 2and Stage 3, respectively. We expect toupdate the meaningful use criteria on a

biennial basis, with the Stage 2 criteriaby the end of 2011 and the Stage 3criteria by the end of 2013. The stagesrepresent an initial graduated approachto arriving at the ultimate goal.

Stage 1: The Stage 1 meaningful usecriteria, consistent with other provisionsof Medicare and Medicaid law, focuseson electronically capturing healthinformation in a structured format;using that information to track key

clinical conditions and communicatingthat information for care coordinationpurposes (whether that information isstructured or unstructured, but instructured format whenever feasible);implementing clinical decision supporttools to facilitate disease andmedication management; using EHRs toengage patients and families andreporting clinical quality measures andpublic health information. Stage 1focuses heavily on establishing thefunctionalities in certified EHRtechnology that will allow for

continuous quality improvement andease of information exchange. By havingthese functionalities in certified EHRtechnology at the onset of the programand requiring that the EP, eligiblehospital or CAH become familiar withthem through the varying levels ofengagement required by Stage 1, we

believe we will create a strong

foundation to build on in later years.Though some functionalities areoptional in Stage 1, as outlined indiscussions later in this rule, all of thefunctionalities are considered crucial tomaximize the value to the health caresystem provided by certified EHRtechnology. We encourage all EPs,eligible hospitals and CAHs to beproactive in implementing all of thefunctionalities of Stage 1 in order toprepare for later stages of meaningfuluse, particularly functionalities thatimprove patient care, the efficiency ofthe health care system and public and

population health. The specific criteriafor Stage 1 of meaningful use arediscussed at section II.2.c of this finalrule.

Stage 2: Our goals for the Stage 2meaningful use criteria, consistent withother provisions of Medicare andMedicaid law, expand upon the Stage 1criteria to encourage the use of health ITfor continuous quality improvement atthe point of care and the exchange ofinformation in the most structuredformat possible, such as the electronictransmission of orders entered usingcomputerized provider order entry

(CPOE) and the electronic transmissionof diagnostic test results (such as bloodtests, microbiology, urinalysis,pathology tests, radiology, cardiacimaging, nuclear medicine tests,pulmonary function tests, genetic tests,genomic tests and other such dataneeded to diagnose and treat disease).For the final rule, we elaborate on ourplans for Stage 2. We expect that stagetwo meaningful use requirements willinclude rigorous expectations for healthinformation exchange, including moredemanding requirements for e-prescribing and incorporating structuredlaboratory results and the expectationthat providers will electronicallytransmit patient care summaries tosupport transitions in care acrossunaffiliated providers, settings and EHRsystems. Increasingly robustexpectations for health informationexchange in stage two and stage threewill support and make real the goal thatinformation follows the patient. Weexpect that Stage 2 will build uponStage 1 by both altering the expectationsof the functionalities in Stage 1 andlikely adding new functionalities which



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are not yet ready for inclusion in Stage1, but whose provision is necessary tomaximize the potential of EHRtechnology. As discussed later in thisfinal rule, we are making someobjectives of the Stage 1 of meaningfuluse optional and other required. We willconsider every objective that is optionalfor Stage 1 to be required in Stage 2 as

well as revaluate the thresholds andexclusions of all the measures bothpercentage based and those currently ayes/no attestation. Additionally, we mayconsider applying the criteria more

broadly to all outpatient hospitalsettings (not just the emergencydepartment).

Stage 3: Our goals for the Stage 3meaningful use criteria are, consistentwith other provisions of Medicare andMedicaid law, to focus on promotingimprovements in quality, safety andefficiency leading to improved healthoutcomes, focusing on decision support

for national high priority conditions,patient access to self management tools,access to comprehensive patient datathrough robust, patient-centered healthinformation exchange and improvingpopulation health.

We did not include regulatoryprovisions for Stage 2 or Stage 3 in ourproposal and with one exceptiondiscussed under the CPOE objective, weare not finalizing Stage 2 or Stage 3requirements at this time. However, weplan to build upon Stage 1 by increasingthe expectations of the functionalities inStage 1 and adding new objectives forStage 2. In our next rulemaking, we

currently intend to propose that everyobjective in the menu set for Stage 1 (asdescribed later in this section) beincluded in Stage 2 as part of the coreset. While allowing providers flexibilityin setting priorities for EHRimplementation takes into account theirunique circumstances, we maintain thatall the objectives are crucial to buildinga strong foundation for health IT and tomeeting the statutory objectives of theAct. In addition, as indicated in ourproposed rule, we anticipate raising thethreshold for these objectives in bothStage 2 and 3 as the capabilities of HIT

infrastructure increases. For Stage 2, weintend to review the thresholds andmeasures associated with all Stage 1objectives considering advances intechnology, changes in standardpractice, and changes in themarketplace (for example, wideradoption of information technology bypharmacies) and propose, asappropriate, increases in theserequirements.

We recognize that the thresholdsincluded in the final regulation areambitious for the current state of

technology and standards of care.However, we expect the delivery ofhealth care to evolve through theinception of the HITECH incentiveprograms and implementation of theAffordable Care Act prior to finalizingStage 2. Furthermore, data collectedfrom the initial attestations ofmeaningful use will be used to ensure

that the thresholds of the measures thataccompany the objectives in Stage 2 arecontinue to aggressively advance the useof certified EHR technology. Finally, wecontinue to anticipate redefining ourobjectives to include not only thecapturing of data in electronic format

but also the exchange (bothtransmission and receipt) of that data inincreasingly structured formats. Asappropriate, we intend to propose theaddition of new objectives to capturenew functions that are necessary tomaximize the potential of EHRtechnology, but were not ready for Stage

1. For instance, we would consideradding measures related to CPOE ordersfor services beyond medication orders.The intent and policy goal for raisingthese thresholds and expectations is toensure that meaningful use encouragespatient-centric, interoperable healthinformation exchange across providerorganizations.

We will continue to evaluate theprogression of the meaningful usedefinition for consistency with theHITECH ACT and any future statutoryrequirements relating to qualitymeasurement and administrativesimplification. As the purpose of these

incentives is to encourage the adoptionand meaningful use of certified EHRtechnology, we believe it is desirable toaccount for whether an EP, eligiblehospital or CAH is in their first, second,third, fourth, fifth, or sixth paymentyear when deciding which definition ofmeaningful use to apply in the

beginning years of the program. The HITPolicy Committee in its public meetingon July 16, 2009 also voiced its approvalof this approach. However, suchconsiderations are dependent on futurerulemaking, so for this final rule Stage1 criteria for meaningful use are valid

for all payments years until updated byfuture rulemaking.We proposed that Medicare EPs,

eligible hospitals, and CAHs whose firstpayment year is 2011 must satisfy therequirements of the Stage 1 criteria ofmeaningful use in their first and secondpayment years (2011 and 2012) toreceive the incentive payments. Weanticipate updating the criteria ofmeaningful use to Stage 2 in time for the2013 payment year and thereforeanticipate for their third and fourthpayment years (2013 and 2014), an EP,

eligible hospital, or CAH whose firstpayment year is 2011 would have tosatisfy the Stage 2 criteria of meaningfuluse to receive the incentive payments.We proposed that Medicare EPs, eligiblehospitals, and CAHs whose firstpayment year is 2012 must satisfy theStage 1 criteria of meaningful use intheir first and second payment years

(2012 and 2013) to receive the incentivepayments. We anticipate updating thecriteria of meaningful use to Stage 2 intime for the 2013 payment year andanticipate for their third payment year(2014), an EP, eligible hospital, or CAHwhose first payment year is 2012 wouldhave to satisfy the Stage 2 criteria ofmeaningful use to receive the incentivepayments. We discussed in theproposed rule that Medicare EPs,eligible hospitals, and CAHs whose firstpayment year is 2013 must satisfy theStage 1 criteria of meaningful use intheir first payment year (2013) to receive

the incentive payments. We anticipateupdating the criteria of meaningful useto Stage 2 in time for the 2013 paymentyear and therefore anticipate for theirsecond payment year (2014), an EP,eligible hospital, or CAH whose firstpayment year is 2013 would have tosatisfy the Stage 2 criteria of meaningfuluse to receive the incentive payments.We discussed in the proposed rule thatMedicare EPs, eligible hospitals, andCAHs whose first payment year is 2014must satisfy the Stage 1 criteria ofmeaningful use in their first paymentyear (2014) to receive the incentive

payments. In the proposed rule, wediscussed the idea that alignment ofstage of meaningful use and paymentyear should synchronize for allproviders in 2015, and requestedcomment on the need to create suchalignment. After reviewing publiccomment on this issue, our goal remainsto align the stages of meaningful useacross all providers in 2015. However,we acknowledge the concerns regardingthe different Medicare and Medicaidincentive timelines, as well as concernsabout whether Stage 3 would beappropriate for an EPs, eligiblehospitals or CAHs first payment year atany point in the future and believe theissue needs additional review anddiscussion before we lay out a clear pathforward for 2015 and beyond. Therefore,we have decided to remove language inthe final rule discussing our possibledirections for any year beyond 2014. Wewill address the years beyond 2014 inlater rulemaking. Table 1 outlines howwe anticipate applying the respectivecriteria of meaningful use in the firstyears of the program, and how weanticipate applying such criteria for



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subsequent payment years, through2014. Please note that nothing in thisdiscussion restricts us from requiringadditional stages of meaningful use(beyond stage 3) through futurerulemaking. In addition, as we expect to

engage in rulemaking to adopt thecriteria that will accompany Stages 2and 3 of meaningful use, stakeholdersshould wait for those rulemakings todetermine what will be required forthose Stages and should not view the

discussions in this preamble or finalrule as binding the agency to anyspecific definition for those futurestages.

Please note that each of the EHRincentive programs has different rulesregarding the number of payment years

available, the last year for whichincentives may be received, and the lastpayment year that can be the firstpayment year for an EP, eligiblehospital, or CAH. The applicablepayment years and the incentivepayments available for each program arealso discussed in section II.C. of thisfinal rule for the Medicare FFS EHRincentive program, in section II.D. ofthis final rule for the MA EHR incentiveprogram, and in section II.E. of this finalrule for the Medicaid EHR incentiveprogram.

Comment: Numerous commentersnoted that it is inappropriate to align the

Medicaid EHR incentive paymentprogram with the Medicare program dueto the lack of penalties in the Medicaidprogram and due to the option forMedicaid providers to participate intheir first year by adopting,implementing, or upgrading certifiedEHR technology.

Response: This was not the onlyreason for having all EPs, eligiblehospitals, and CAHs align by 2015.However, as we are not addressingstages of meaningful use beyond 2014 inthis final rule, potential alignment is notdiscussed. We will reconsider this

comment in future rulemaking.The stages of criteria of meaningfuluse and how they are demonstrated aredescribed further in this final rule andwill be updated in subsequentrulemaking to reflect advances in HITproducts and infrastructure. We notethat such future rulemaking might alsoinclude updates to the Stage 1 criteria.

We invited comment on ouralignment between payment year andthe criteria of meaningful useparticularly in regards to the need tocreate alignment across all EPs, eligible

hospitals, and CAHs in all EHRincentive programs in 2015.

Comment: Many commenters

requested that if there continued to bea year where all EPs, eligible hospitalsand CAHs must meet the same stage ofmeaningful use that that year be 2017,rather than 2015 as we had discussed inthe proposed rule. These commentersasserted that EPs, eligible hospitals, andCAHs whose first payment year is after2011 might not have sufficient time toreach the Stage 3 of meaningful usecriteria by 2015. Some commenterspointed out that while the HITECH Actstates that 2015 is the first year ofpayment adjustments, it provides forescalation of the payment adjustments

so that they do not reach their full levelsuntil 2017.

Response: As we explained in theproposed rule, equity in the level ofmeaningful use across all EPs, eligiblehospitals, and CAHs subject to thepayment adjustment was not the onlyreason for our plan that all EPs, eligiblehospitals, and CAHs satisfy the Stage 3criteria for either the Medicare orMedicaid EHR incentive programs. Theachievement of many of the ultimategoals of meaningful use of certified EHRtechnology are dependent on a criticalmass of EPs, eligible hospitals, and

CAHs all being meaningful EHR users.Exchange of health information is mostvaluable when it is so robust that it can

be relied upon to provide a complete ornearly complete picture of a patientshealth. For example, robust Stage 3meaningful use by an EP does not assistthat EP in avoiding ordering aduplicative test, if the EP withinformation on the original test is onlya Stage 1 meaningful EHR user and isnot yet exchanging that information.This dependency is key to the need toget to Stage 3 for all providers. Another

reason for alignment at Stage 3 in 2015is that many of the barriers tofunctionalities of EHRs that exist today

as may no longer exist in 2015. Theexistence of these barriers today is oneof the primary reasons for having astaged approach as opposed to requiringmore robust meaningful use at the

beginning of the program. Providers,developers of EHRs, government andnon-governmental organizations are allworking to remove these barriers. We

believe it is likely there will be successin removing many of these barriers,which would make many of thecompromises made in Stage 1 no longernecessary by 2015. However, due to themany comments on alignment startingin 2015 and our plan to engage inadditional more rounds of rulemaking,we are removing discussion of actualalignment between the first paymentyear of an EP, eligible hospital, or CAHand the Stage of meaningful use theywill be expected to meet for all yearsafter 2014. Our policies for 2015 andsubsequent years will be determinedthrough future rulemaking.

Comment: Several commentersrequested that CMS base the paymentadjustments on Stage 1 of meaningfuluse regardless of the EP, eligiblehospital, or CAHs prior participation inthe incentive program.

Response: We thank commenters forthe thoughtful comments received, andwill take their input into considerationwhen in future rulemaking when weconsider whether to require that EPs,eligible hospitals, and CAHs satisfy thestage 3 definition of meaningful use inorder to avoid reduced payments underMedicare for their professional servicesand inpatient hospital services

beginning 2015. We reiterate, however,that in this final rule we are onlyadopting criteria that we expect will



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apply in 2011 and 2012. We have alsooutlined the expected progression ofstages of meaningful use criteria until2014. However, we are not in this rulefinalizing regulations that address themeaningful use standards that apply in2015 and thereafter.

Comment: Numerous commentersrequested that we specifically propose

objectives and measures for Stage 2 and3. We also received recommendationson what those objectives and, in rarecases, measures should be. Wediscussed some of these objectives inthe proposed rule and discuss themagain in this final rule in section II.d.Others are highly related to existingobjectives, while still others were notdiscussed in any way in the proposedrule. The suggested objectives andmeasures for Stages 2 and 3 include thefollowing:

Use of evidence-based order sets. Electronic medication

administration record (eMAR). Bedside medication administrationsupport (barcode/RFID).

Record nursing assessment in EHR. Record nursing plan of care in EHR. Record physician assessment in

EHR. Record physician notes in EHR. Multimedia/Imaging integration. Generate permissible discharge

prescriptions electronically. Contribute data to a PHR. Record patient preferences

(language, etc). Provide electronic access to patient-

specific educational resources.

Asking patients about theirexperience of care.

Response: With one exceptiondiscussed under the CPOE objective, wecontinue to believe that finalizingspecific objectives and measures forlater stages is inappropriate. One of thegreatest benefits of the phased stageapproach is the ability to consider theimpact and lessons of the prior stagewhen formulating a new stage. Manycommenters supported our discussionof later stages for this very reason. Inaddition, we do not believe it isappropriate to finalize objectives for any

stage of meaningful use that were notspecifically discussed in the proposedrule, as doing so would deprive thepublic the opportunity to comment onthe objective in question. Nevertheless,we thank commenters for the thoughtfulcomments received, and expect to taketheir input into consideration when infuture rulemaking we consideradditional or revised criteria andmeasures to adopt for the stage 2 andstage 3 definitions of meaningful use.

Comment: A commenter indicatedthat attestation is an insufficient means

to hold providers accountable for theexpenditure of public funds and toprotect against fraud and abuse.

Response: We likewise are concernedwith the potential fraud and abuse.However, Congress for the HITECH Actspecifically authorized submission ofinformation as to meaningful usethrough attestation. CMS is developing

an audit strategy to ameliorate andaddress the risk of fraud and abuse.

b. Common Definition of MeaningfulUse Under Medicare and Medicaid

Under sections 1848(o)(1)(A)(i),1814(l)(3)(A), and 1886(n)(1) of the Act,an EP, eligible hospital or CAH must bea meaningful EHR user for the relevantEHR reporting period in order to qualifyfor the incentive payment for a paymentyear in the Medicare FFS EHR incentiveprogram. Sections 1848(o)(2)(A) and1886(n)(3)(A) of the Act provide that anEP and an eligible hospital shall beconsidered a meaningful EHR user foran EHR reporting period for a paymentyear if they meet the following threerequirements: (1) Demonstrates use ofcertified EHR technology in ameaningful manner; (2) demonstrates tothe satisfaction of the Secretary thatcertified EHR technology is connectedin a manner that provides for theelectronic exchange of healthinformation to improve the quality ofhealth care such as promoting carecoordination, in accordance with alllaws and standards applicable to theexchange of information; and (3) usingits certified EHR technology, submits to

the Secretary, in a form and mannerspecified by the Secretary, informationon clinical quality measures and othermeasures specified by the Secretary.The HITECH Act requires that to receivea Medicaid incentive payment in theinitial year of payment, an EP or eligiblehospital may demonstrate that they haveengaged in efforts to adopt, implement,or upgrade certified EHR technology.Details, including special timeframes,on how we define and implementadopt, implement, and upgrade are insection II.D.7.b.2 of this final rule. Forsubsequent payment years, or the first

payment year if an EP or eligiblehospital chooses, section1903(t)(6)(C)(i)(II) of the Act, prohibitsreceipt of an incentive payment, unlessthe Medicaid provider demonstratesmeaningful use of certified EHRtechnology through a means that isapproved by the State and acceptable tothe Secretary, and that may be basedupon the methodologies applied undersection 1848(o) or 1886(n). (Sections1848(o) and 1886(n) of the Act refer tothe Medicare EHR incentive programsfor EPs and eligible hospitals/CAHs

respectively.) Under section 1903(t)(8)of the Act to the maximum extentpracticable, we are directed to avoidduplicative requirements from Federaland State governments to demonstratemeaningful use of certified EHRtechnology. Provisions included atsection 1848(o)(1)(D)(iii) of the Act alsocontain a Congressional mandate to

avoid duplicative requirements formeaningful use, to the extentpracticable. Finally, section 1903(t)(8) ofthe Act allows the Secretary to deemsatisfaction of the requirements formeaningful use of certified EHRtechnology for a payment year underMedicare to qualify as meaningful useunder Medicaid.

We stated in the proposed rule thatwe believe that given the strong level ofinteraction on meaningful useencouraged by the HITECH Act, therewould need to be a compelling reasonto create separate definitions for

Medicare and Medicaid. We declared inthe proposed rule that we had found nosuch reasons for disparate definitions inour internal or external discussions. Tothe contrary, stakeholders haveexpressed strong preferences to link theMedicare and Medicaid EHR incentiveprograms wherever possible. Hospitalsare entitled to participate in bothprograms, and we proposed to offer EPsan opportunity to switch between theMedicare and Medicaid EHR incentiveprograms. Therefore, we proposed tocreate a common definition ofmeaningful use that would serve as thedefinition for EPs, eligible hospitals and

CAHs participating in the Medicare FFSand MA EHR incentive program, andthe minimum standard for EPs andeligible hospitals participating in theMedicaid EHR incentive program. Weclarified that under Medicaid thisproposed common definition would bethe minimum standard. We proposed toallow States to add additional objectivesto the definition of meaningful use ormodify how the existing objectives aremeasured; the Secretary would notaccept any State alternative that doesnot further promote the use of EHRs andhealthcare quality or that would require

additional functionality beyond that ofcertified EHR technology. See sectionII.D.8. of this final rule for furtherdetails.

For hospitals, we proposed to exercisethe option granted under section1903(t)(8) of the Act and deem anyMedicare eligible hospital or CAH whois a meaningful EHR user under theMedicare EHR incentive program and isotherwise eligible for the Medicaidincentive payment to be classified as ameaningful EHR user under theMedicaid EHR incentive program. This



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is applicable only to eligible hospitalsand CAHs, as EPs cannotsimultaneously receive an incentivepayment under both Medicare andMedicaid.

We solicited comments as to whetherthere are compelling reasons to give theStates additional flexibility in creatingdisparate definitions beyond what was

proposed. In addition, if commenting infavor of such disparate definitions, wealso asked interested parties to commenton whether the proposal of deemingmeeting the Medicare definition assufficient for meeting the Medicaiddefinition remains appropriate underthe disparate definitions. This isapplicable only to hospitals eligible for

both the Medicare and Medicaidincentive programs. Furthermore, if aState has CMS-approved additionalmeaningful use requirements, hospitalsdeemed as meaningful users byMedicare would not have to meet the

State-specific additional meaningful userequirements in order to qualify for theMedicaid incentive payment.

Comment: Most commenters believethat States should not be allowed theoption to add to or change themeaningful use requirements for theMedicaid EHR incentive program. Thecommenters main reason forstandardizing the meaningful userequirements for both Medicare andMedicaid is to eliminate administrative

burden on both providers and EHRvendors to accommodate programmingand reporting using different technicalspecifications for the same or similar

measures.Response: After consideration of the

comments received, we are finalizingthe provisions regarding possibledifferences in the definition ofmeaningful use between Medicare andMedicaid with the following revisions.We believe that over time the option toadd to or change the floor definition ofmeaningful use might represent animportant policy tool for States andtherefore CMS plans to review andadjudicate these requests over theduration of the program. For Stage 1 ofmeaningful use, we have revised the

definition of meaningful use in responseto the many comments and are requiringan overall lower bar and an approachthat is more flexible. On the other hand,we wish to support the ability for Statesto reinforce their public health prioritiesand goals based upon their existingpublic health infrastructure andmaturity. For that reason, we, for Stage1, will only entertain States requests totailor the Stage 1 meaningful usedefinition as it pertains specifically topublic health objectives and dataregistries. For purposes of the Medicaid

EHR incentive program during Stage 1of meaningful use, these are limited to:

Objective: Generate lists of patients byspecific conditions to use for qualityimprovement, reduction of disparities,research, or outreach.

Measure: Generate at least one reportlisting patients of the EP or eligiblehospital with a specific condition.

Example: Generate lists of patientswith the following conditions:depression, diabetes, obesity, etc. Thiswould not be for reporting to the State

but to draw EPs or eligible hospitalsattention in order to better manage theirpatient population. States would also bepermitted to request CMS approval toinclude this in the core set for all EPsand/or eligible hospitals.

Objective: Capability to submitelectronic data to immunizationregistries of Immunization InformationSystems and actual submission inaccordance with applicable law andpractice.

Measure: Performed at least one testof certified EHR technologys capacity tosubmit electronic data to immunizationregistries and follow up submission ifthe test is successful (unless none of theimmunization registries to which the EPor eligible hospital submits suchinformation have the capacity toreceived the information electronically).

Example: State could point to aspecific immunization registry thatsupports standards-based transmissionof data and dictate how that informationis transmitted. States would also bepermitted to request CMS approval to

include this objective in the core list forall EPs and eligible hospitals. Thejustification for this request in theirState Medicaid HIT Plan, shouldaddress any potential barriers forproviders in achieving this objective.

Objective: Capability to submitelectronic data on reportable (asrequired by state or local law) lab resultsto public health agencies and actualsubmission in accordance withapplicable law and practice.

Measure: Performed at least one testof certified EHR technologys capacity tosubmit electronic data on reportable lab

results to public health agencies andfollow-up submission if the test issuccessful (unless none of the publichealth agencies to which an eligiblehospital submits such information havethe capacity to receive the informationelectronically).

Example: State could specify thestandards-based means of transmissionand/or the destination of this data.States would also be permitted torequest CMS approval to include thisobjective in the core list for all andeligible hospitals. The justification for

this request in their State Medicaid HITPlan, should address any potential

barriers for providers in achieving thisobjective.

Objective: Capability to submitelectronic syndromic surveillance datato public health agencies and actualtransmission according to applicablelaw and practice.

Measure: Performed at least one testof certified EHR technologys capacity tosubmit electronic syndromicsurveillance data to public healthagencies and follow-up submission ifthe test is successful (unless none of thepublic health agencies to which an EPor eligible hospital submits suchinformation have the capacity to receivethe information electronically).

Example: State could specify thestandards-based means of transmissionand/or the destination of this data.States would also be permitted torequest CMS approval to include thisobjective in the core list for all EPs andeligible hospitals. The justification forthis request in their State Medicaid HITPlan, should address any potential

barriers for providers in achieving thisobjective.

We reiterate that we will not approveany requests that would require EHRfunctionality above and beyond thatincluded in the ONC EHR certificationcriteria as finalized for Stage 1 ofmeaningful use.

Comment: Several commentersrequested that CMS affirm the ability ofStates to require additional meaningfuluse criteria for all eligible professionals

and hospitals (pursuant to 495.316(a),495.316(d)(2)), regardless of whetherthose entities were deemed eligiblethrough Medicare.

Response: Section 1903(t)(8) providesauthority for the Secretary to deemsatisfaction of requirements for * * *meaningful use for a payment yearunder title XVIII to be sufficient toqualify as meaningful use under[1903(t)]. We continue to believe thatallowing deeming ensures that hospitalseligible for both programs are able tofocus on only one set of measures,without requiring duplication of effortor confusion regarding meaningful usestandards. Thus, hospitals eligible for

both Medicare and Medicaid incentivepayments will be deemed f

Electronic Health Record Incentive Program Final Rule 2010-17207

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