KHI News Service

State’s Medicaid HIT plan behind schedule

Medical providers fear delay could stall incentive payments

By Phil Cauthon | February 22, 2011

The Kansas Medicaid program's health information technology plan is months behind schedule.

If it's not completed by August, as many as 2,800 physicians and 70 hospitals could face delays in receiving millions of dollars of federal incentive payments.

The so-called SMHP — or State Medicaid Health Information Technology Plan — is a federally mandated first step for states before they can begin Medicaid-based incentive payments to health providers that have implemented Electronic Health Records. The incentives complement similar Medicare-based incentives for providers who adopt EHRs.

The Kansas Health Policy Authority is responsible for creating and implementing the state's plan. Officials there say they had intended to have in place by Nov. 3, 2010, a contract with a vendor to design the plan.

But more than three months later, the agency has yet to finalize the contract.

"There's no earth-shattering reason, there were just a variety of things that happened that caused it to get delayed," said Diane Davidson, project director at the health policy authority.

"They were the result of a number of systematic personnel changes both at CMS, KHPA and the state of Kansas — and it's just natural when you're transitioning to a new governor and a new Legislature that these things get delayed. The old administration doesn't want to approve something without the new administration having something to say about it."


CMS' template for a State Medicaid HIT Plan (SMHP)

Download .PDF


CMS State Medicaid Director letters on SMHP creation

Download .PDF

The health policy authority submitted a contract for federal approval earlier this month and is now waiting for a response from the federal Centers for Medicare & Medicaid Services (CMS), said Andy Allison, executive director of the health policy authority.

The final plan was originally scheduled to be completed by Feb. 25.

"We're clearly delayed versus that timeline because we don't yet have that vendor approved and on board," Allison said.

He said he expects the contract to be approved and finalized, "any time."

Revised timeline

Agency officials declined to say which vendor they had selected or how many proposals they received until after the contract is approved by CMS and announced.

After the contract is approved, Davidson said, it should take four months for the plan to be completed and submitted to CMS and then another one or two months for CMS to approve the plan.

Incentive payments could begin between one and three months after that, she said, "depending in part upon policy decisions made during the development of the (plan)."

The new timeline means incentive payments to providers could begin as late as November. If the process dragged into 2012, Davidson said, provider incentives might be delayed but not lost.

"Our reading of the (regulations) is that they won't be hurt financially because they can request reimbursement for eligible monies retroactive to January of this year," Davidson said. "But I don't think (the process) is going to go into 2012."

But providers could have to wait a full year for the retroactive payment. That's the understanding of Jerry Slaughter, executive director of the Kansas Medical Society.

"My understanding is if they don't do it in this year, then by the time they get their first incentive payment it waits for a whole year. So it is kind of dependent on them getting going. We're hopeful they'll be in a position to do it," he said. "We are watching — it's just a little bit early to know how this is all going to shake out."

• In-depth summaries of both Medicaid and Medicare incentive programs for implementing EHRs are on Kansas' Health Information Technology Regional Extension Center site.

• Kansas REC summary of "meaningful use."

• Federal "meaningful use" documents.

• Federal site for both Medicaid- and Medicare-based incentive programs.

The incentive payments

To qualify for the federal incentive payments, hospitals and physicians must demonstrate that their EHR systems meet the federal "meaningful use" criteria (PDF).

To be eligible for the Medicaid-based "meaningful use" incentives, most physicians must have a patient base that is at least 30 percent Medicaid. (The threshold for pediatricians is 20 percent). Hospitals are eligible with 10 percent Medicaid patient volume.

The methodology for determining Medicaid patient volume will be part of the plan designed by or for the health policy authority.

Based on the agency's initial survey of Kansas providers, Davidson wrote in an email, "interest may be as high as 2,800 physicians and 65-70 hospitals. However, these projections reflect only the number of providers who indicated interest in applying for Medicaid incentive payments."

Physicians who apply can receive up to $63,750 in incentives during the six-year program — an initial payment of $21,250 and up to $8,500 per year.

Hospital payments are based on a number of factors, but begin with a $2 million base payment. Hospitals may apply for both the Medicaid and the Medicare incentives. Physicians must choose which program to apply for and then may only switch programs once.

This is the first year states could offer incentives for adopting EHRs. The American Recovery and Reinvestment Act of 2009 allows states to participate for up to six years.

Each state's HIT plan is to lay out how its Medicaid agency will verify whether a provider's EHR software meets "meaningful use" criteria. Davidson said the three states that have already begun incentive payments are initially relying on providers self-reporting that they meet the standards, and then — in subsequent years — plan to perform audits and on-site inspections to confirm the reports.

State-tailored formula

As part of the SMHP, the federal government has also directed states to tailor the formula for determining a physician's or hospital's Medicaid patient volume, and hence eligibility for incentives. Until Kansas' SMHP is in place, health providers may not know whether they qualify.

That's the case with Coffey County Hospital in east central Kansas. Dennis George, the hospital's chief executive officer, said he's already begun preliminary work for applying for Medicare-based EHR incentives, but will have to wait for Kansas' SMHP details before he knows whether his hospital also qualifies for Medicaid-based incentives, which require a 10 percent Medicaid patient base.

Coffey County Hospital CEO Dennis George.

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"I'm sitting right at the 9 percent range, so I'm one of those that will have to see how the final formula goes and do all the calculations," George said.

The federal template (PDF) for the scope of a state's HIT plan is broad and open-ended, said Allison of the health policy authority.

"It could be anywhere from providing infrastructure to ensure data on Medicaid recipients is collected, it could extend into support or the facilitation of the creation of (a health information exchange) — either for Medicaid or to support a larger state-wide effort," Allison said.

He declined to say what elements the health policy authority plan might have before the vendor contract is finalized.