New Rule Includes Core Objectives for Hospitals

Authors: Lloyd Arakelian & Carol Cassell


CMS has, at long last, released its final rule regarding Stage 2 of the Electronic Health Record (EHR) Incentive Program. These final regs address several key areas you should be aware of.

Core objectives

The final rule requires all hospitals to satisfy some 16 “core objectives” and three of six “menu objectives.” The new regs also replace and add other objectives. In Stage 1, for example, hospitals were required to fulfill 14 core objectives and five of 10 menu objectives. Some Stage 1 objectives were either eliminated or combined, but most of them have been finalized. Many require meaningful use by higher thresholds of the patient population, however.

Core objectives of “capability to exchange key clinical information” and “provide patients with an electronic copy of their health information” have now been replaced. The respective replacements are “transitions of care” (which requires the provision of a summary of care record for each referral or transition) and “electronic/online access” to patients’ health information within 36 hours of being discharged.

The final rule also adds a new core objective that requires that facilities “automatically track medications from order to administration using assistive technologies in conjunction with an electronic medication administration record (eMAR).”

And the rule adds these five new menu objectives:

  1. Record electronic notes in patient records.
  2. Offer access to imaging results available through Certified EHR Technology (CEHRT).
  3. Record patient family health history as structured data.
  4. Generate and transmit permissible discharge prescriptions electronically.
  5. Provide structured electronic lab results to ambulatory providers.

The sixth menu objective — which is to record whether a patient 65 years old or older has an advance directive — is a holdover from Stage 1.

Hospitals and CQMs

While the final rule removes clinical quality measure (CQM) reporting as a core objective, facilities must still report on CQMs to demonstrate meaningful use. And specifically, all facilities must report on 16 out of 29 CQMs, beginning in 2014.

Moreover, hospitals must select CQMs from at least three of six key health care policy domains as identified in the Department of Health and Human Services’ National Quality Strategy. The domains include:

  1. Patient and family engagement,
  2. Patient safety,
  3. Care coordination,
  4. Population and public health,
  5. Efficient use of health care resources, and
  6. Clinical processes/effectiveness.

Beginning in 2014, Medicare providers that are beyond the first year of demonstrating meaningful use must electronically report CQM data to CMS. Hospitals will provide reporting through the EHR Reporting Pilot infrastructure for hospitals or electronic submission of aggregate data through a CMS Portal.

Payment adjustments 

Medicare payment adjustments are supposed to take effect in fiscal year 2015 (Oct. 1, 2014). Medicare hospitals that demonstrate meaningful use this year will avoid a 25% payment reduction that applies to the percentage increase to the inpatient prospective payment system (IPPS) reimbursement amount in 2015. A Medicare hospital that first demonstrates meaningful use in 2014 will avoid that penalty by registering and attesting to meaningful use by July 1, 2014. If the increase in the IPPS amount in 2015 is 2%, for example, a hospital failing to meet meaningful use would only receive a 1.5% increase (1 – 25% reduction = 75%; 75% × 2% IPPS increase = 1.5% increase for nonconforming hospital).

The final rule also lists three categories of hardship exceptions that facilities may apply for to avoid any payment adjustments: infrastructure, new eligible hospitals and unforeseen circumstances. In the first category, hospitals must demonstrate that they’re in an area without sufficient Internet access or face insurmountable barriers to obtaining infrastructure (for example, the lack of broadband).

The second category allows hospitals with new CMS Certification Numbers that would not have had time to become meaningful users to apply for a limited exception for one full-year cost reporting period. And the third category regards unforeseen circumstances, such as natural disasters.

Getting a jump on the deadline

The Stage 2 rule offers providers more time to meet the Stage 2 criteria than was originally laid out in the Stage 1 regs. Now, the earliest that hospitals must meet Stage 2 criteria is in fiscal year 2014. But savvy hospitals will likely take steps to get a jump on the deadline to avoid 2015 Medicare payment adjustments.

If you have any questions about the Stage 2 rule or any other issue pertaining to the rule change, give us a call at 716.847.2651, or you may contact us here.

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