Five-Year HHS Project to Encourage Adoption of Electronic Health Records

In a move that is believed will improve health care for millions of Americans, HHS Secretary Mike Leavitt today announced a five-year demonstration project that will encourage small to medium-sized physician practices to adopt electronic health records (EHRs).

"This demonstration is designed to show that streamlining health care management with electronic health records will reduce medical errors and improve quality of care for 3.6 million Americans. By linking higher payment to use of EHRs to meet quality measures, we will encourage adoption of health information technology at the community level, where 60 percent of patients receive care," Leavitt said. "We also anticipate that EHRs will produce significant savings for Medicare over time by improving quality of care. This is another step in our ongoing effort to become a smart purchaser of health care -- paying for better, rather than simply paying for more."

Conducted by the Centers for Medicare & Medicaid Services (CMS), the demonstration would be open to participation by up to 1,200 physician practices beginning in the spring. Over a five-year period, the program will provide financial incentives to physician groups using certified EHRs to meet certain clinical quality measures. A bonus will be provided each year based on a physician group's score on a standardized survey that assesses the specific EHR functions a group employs to support the delivery of care.

The CMS demonstration also will help advance Leavitt's efforts to shift health care in the U.S. toward a system based on value. HHS is working to effect change through its Value-Driven Health Care initiative, which is based on four cornerstones: interoperable electronic health records, public reporting of provider quality information, public reporting of cost information, and incentives for value comparison.

"Broad adoption of electronic health records has the potential not only to improve the quality of care provided, but also to transform the way medicine is practiced and delivered," said Leavitt. "We are looking for 1,200 physician practice pioneers who will help us move health care toward a system that delivers better quality at lower cost for more Americans."

Under the CMS demonstration, all participating practices will be required to use a certified EHR system to perform specific functions that can positively affect patient care processes, such as clinical documentation and ordering prescriptions. The system, which must be in place by the end of the second year, must also be approved by a certification body officially recognized by HHS. The core incentive payment to practices will be based on performance on the quality measures, with an enhanced bonus based on the how well integrated the EHR is in helping manage patient care.

"We want to revolutionize the way vital health data is managed and maintained, so we are taking steps to change from a paper-based medical record to an electronic health record," said CMS Acting Administrator Kerry Weems. "This project will appropriately align incentives to reward doctors in small physician practices who use certified EHRs as tools to deliver higher quality care. This reward structure will bring the benefits of electronic health records to Americans at their most frequent point of contact with health care -- their family doctor."

During the five-year project, it is estimated that 3.6 million consumers will be directly affected as their primary care physicians adopt certified EHRs in their practices. In order to amplify the effect of this demonstration project, CMS is encouraging private insurers to offer similar incentives for EHR adoption.

"We believe that encouraging higher quality care through the use of EHRs benefits every health care stakeholder. That is why we are asking private insurers to help accelerate certified EHR adoption by offering incentives similar to those in this demonstration," Acting Administrator Weems said.