IMPORTANT NOTICE:  This article was originally written in June 2009, before HHS released the Proposed Rule on “meaningful use” on December 30, 2009 and before President Obama signed the Continuing Extension Act of 2010. Under the Proposed Rule, the determining factor of whether a physician is “hospital-based” under the Medicare incentive program was to be his or her “site of service” on the claim, specifically, “21” for hospital inpatient, “22” for hospital outpatient, and “23” for emergency department.  If 90% or more of a physician’s claims had these places of service codes, then CMS would have deemed such physician to be “hospital-based” and ineligible for the incentive. However, on April 15, 2010, President Obama signed the Extension Act, which amended the HITECH Act language by replacing the words “outpatient setting” with the words “emergency room setting.”  Accordingly, CMS will not be able to deem a physician practicing in a hospital outpatient setting, such as an urgent care clinic, ineligible for the incentive soley on this basis.  If an employed or contracted physician practicing in an outpatient setting is eligible (EP), the hospital should take steps to ensure the incentive awarded to such EP due to the meaningful use of a certified EHR in that hospital’s outpatient setting is appropriately assigned to the employing or contracting hospital.

Article Summary: This article explores the potential for hospitals to obtain the HITECH Act incentives made available to “eligible professionals.” Hospital-based physicians who meet the “hospital-based” definition are not eligible for the eligible professional incentives. The definition of “hospital-based” contains several terms, including “hospital setting,” that are not clearly defined and, importantly, the HITECH Act leaves some discretion in the Secretary of Health & Human Services (HHS) to further define it. If the objective is to prevent hospitals from being paid twice for the same electronic medical record (EMR), then the exclusion of “hospital-based” physicians makes sense. However, if hospital-owned physician clinics or practices must implement specially designed health information technology (HIT) that will enable such physicians to make a “meaningful use” of the EMR, then the hospital owner might be advised to consider this in formulating its business and financial strategy for a totally integrated HIT system-wide.

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