CMS gives guidance on Medicaid incentive payments for EHRs

October 1, 2009

In order to encourage providers to adopt EHR technology, the Centers for Medicare and Medicaid Services has informed state Medicaid directors that the federal government will reimburse states for 100 percent of incentive payments made to healthcare providers showing "meaningful use" of electronic health records.

In order to encourage providers to adopt EHR technology, the Centers for Medicare and Medicaid Services has informed state Medicaid directors that the federal government will reimburse states for 100 percent of incentive payments made to healthcare providers showing “meaningful use” of electronic health records.

Federal economic stimulus law allows hospitals and physicians who demonstrate “meaningful use” of EHRs to qualify for Medicaid and Medicare incentive payments. The letter is CMS’s first formal guidance on how Medicaid officials should disburse the payments.

In addition, CMS announced that state Medicaid agencies can immediately apply for federal matching funds to cover 90 percent of the planning stages of the incentive payments program. To receive the matching funds, state agencies must use an official planning document and get pre-approval from CMS. CMS also recommends that states develop a plan to audit their incentive payment programs.

The letter also asked states to develop a State Medicaid Health IT Plan outlining targets for promoting interoperable EHR systems, including a current assessment of the state’s IT capabilities, an implementation plan for the incentive program, a road map for IT initiatives and a vision for the state’s health IT future.

CMS said it will release further guidance about the incentive payments in a proposed rule by the end of the year.