Bloomberg News

Hospitals Face More Tests to Access U.S. Medical Records Grants

February 24, 2012

Hospitals would have to show they’ve amassed the vital statistics of more than 80 percent of their patients in digital form, among other targets, to continue collecting as much as $14.6 billion in federal grants for installing electronic records technology sold by General Electric Co. (GE) and smaller suppliers.

Awards of as much as $11.5 million are available to hospitals that demonstrate “meaningful use” of the equipment, under preliminary rules issued yesterday by the Obama administration. Doctors can apply for grants of $44,000 or $64,000, depending on whether they treat patients in Medicare, the federal health program for the elderly and disabled, or Medicaid, the program for the poor.

The rules continue carrying out an initiative in the economic stimulus law enacted in February 2009 as a step toward overhauling the U.S. health-care system. Hospitals and doctors should gain “substantial benefits” from adopting digital records, the government said in the regulatory filing, including lower record-keeping costs, fewer unnecessary tests, shorter hospital stays and reduced medical errors.

The proposed rules put the government “in a position to really move the industry and health care forward,” said Lauren Fifield, senior policy adviser at athenahealth Inc. of Watertown, Mass., which sells the systems.

“Keep the momentum and don’t sort of water the measures down,” she said, citing 2010 regulations that weakened some proposed rules for use.

The public has two months to comment on the proposals.

Hospital Adoptions

Many health providers still rely on paper records. Lawmakers have tried to prod hospitals and doctors into adopting electronic systems despite a lack of criteria. Preliminary benchmarks included using electronic systems to enter doctors’ medical orders, check drugs against lists of insurance company reimbursements and to store patients’ personal data.

The percentage of U.S. hospitals that have adopted electronic records more than doubled from 2009 to 2011, to 35 percent, according to a survey by the American Hospital Association that the U.S. government reported Feb. 17. About 85 percent of hospitals told the Chicago-based association, the largest industry trade group, that they intended to take advantage of government incentives by 2015.

The government expects that by 2019, no less than 96 percent of hospitals will adopt electronic records and at least 36 percent of doctors’ practices.

The grants will be paid in three stages, with rising requirements that doctors and hospitals show they are using the technology. Doctors that don’t meet the criteria face a 1 percent reduction in Medicare payments in 2015 rising to 3 percent in 2017. Hospitals would eventually lose annual increases in their Medicare payments.

GE, based in Fairfield, Connecticut, has provided interest- free loans to help furnish hospitals and doctors’ offices. Siemens AG (SIE) also is helping to finance the systems.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net


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