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Danielle Sink, MD, and her two physician partners at Acacia Internal Medicine Specialists in Phoenix used part of their meaningful use incentive bonus to hire a tai chi teacher for patient classes. Although the exercise has nothing to do with technology, Dr. Sink says she and her partners felt it was a good use of the money because of the benefits it will bring to their elderly patients, especially those with arthritis. Photo by Rick Scuteri / AP Images for American Medical News

EHRs: Where will your meaningful use bonus go?

Practices should set expectations early in the process for how the money will be divided and how it will be spent.

By — Posted Feb. 11, 2013

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As they do every time they expect to come into extra money, the partners at Acacia Internal Medicine Specialists talked about what to do with a bonus from the meaningful use incentive program.

The three-physician, four-nurse practitioner practice in Phoenix was building a new facility when the incentive program was announced, so by the time the checks arrived, the investments needed to bring the technology infrastructure to meaningful use readiness had already been made. But there was a community room in the new building that the group had envisioned as space for wellness classes. Together, they decided their meaningful use checks would go toward hiring a teacher to conduct weekly tai chi classes. They also made other small technology purchases to improve the existing IT.

The question of what to do with meaningful use money is one that every practice needs to discuss early on, as the Acacia practice did, before each physician goes through the attestation process. Being on the same page not only will help a practice achieve its goals, which very well could be contingent on everyone receiving the maximum incentive amount, but it also could prevent hurt feelings. In addition, it could avoid a lawsuit if a physician thinks he is entitled to pocketing money that the practice expects to keep.

“There are no guidelines in the statute in terms of how the money is spent,” said Michele Mann, principal at the technology consulting firm CSC. “So that really does, to some degree, become a business decision.”

It’s not unlike the questions associated with the money accountable care organizations receive, said Robert Williams, MD, director at Deloitte Consulting and national medical leader for Deloitte health care consulting. ACOs operate under arrangements through which shared savings from providing efficient, quality care are distributed among participating parties. Some practices may reinvest those funds into the practice. Others may make the checks part of a physician’s compensation package.

Incentive pay decisions

Many practices decide on incentive pay by falling back on existing business arrangements that require all revenue generated by each employee or partner to be reassigned back to the practice. But because this is not normal, fee-for-service revenue, there may be confusion, especially because each physician is responsible for attesting to his or her achievement of meaningful use.

The program, which allows doctors to receive Medicare or Medicaid incentive money for demonstrating meaningful use of electronic health records, is based on paying individual doctors or other qualified practitioners, rather than the practice in total.

Although administrators may think it is clear that all incentive money will go back to the practice, having the conversation ahead of time can prevent sticky situations later.

Some practice partners feel confident enough in their relationship with fellow partners and employees that a verbal agreement is sufficient. But many experts agree that, whatever a practice decides, it should be put in writing.

“You are adding insult to injury, because you are asking them to do all of this — it’s not a lot of work, but it’s still work they have to do — and they are not recognizing the actual incentive money themselves, so it can clearly become a little contentious,” Mann said.

Danielle Sink, MD, one of the partners at Acacia Internal Medicine Specialists, said financial arrangements have always been clear among everyone involved. But the practice found itself in the middle of a lawsuit a few years ago, when a physician tried to challenge a decision about incentive pay. Dr. Sink said the practice prevailed in the lawsuit, but it was very time-consuming and costly to defend. The practice now puts everything in writing, and everyone involved in an arrangement is required to sign off.

Reassigning versus individual bonuses

It’s very rare for full incentive checks to go back to individual physicians in a multidoctor practice, given the large practicewide investment necessary to meet meaningful use. But a practice also should ensure that things are handled fairly and equitably, especially for physicians who may have taken on more than the others.

Dr. Sink handled all the legwork involved with making sure the practice met meaningful use requirements and managing the decisions that were made with the money. Because these extra job responsibilities took time away from patient care, when the meaningful use checks arrived, the practice gave her some off the top as compensation.

A practice may decide to distribute the money to physicians as opposed to reinvesting in the practice. Mann recommends that the money be reassigned to the practice. Then the practice can use productivity as a relative percentage to determine who gets how much. “At the end of the day, the docs are the ones who are really having to use the system in a meaningful way to get the incentive money,” she said.

Michael Schrager, MD, managing partner of Central Coast Family Care, a nine-physician medical practice in Santa Maria, Calif., said all physicians at his practice are allowed to keep their bonus checks, but the “windfall” comes with a caveat.

The practice establishes goals it wants to meet each year, and the costs associated with reaching them are divided evenly among partners. If the doctors decide to spend meaningful use funds on themselves, they must come up with the agreed-upon investment amounts needed to reach the goals. The partners meet monthly to talk about upcoming projects and expenses. Every decision must be approved by each partner.

How to spend the money

Eric Finocchiaro, RPh, director at Deloitte Consulting, said for many practices the decision of what to do with the money was part of the decision to go after meaningful use in the first place. Doctors had to assign the incentive money into the budgets to achieve meaningful use.

For others, the bonus checks are a way to make necessary upgrades to the practice, or simply pay for the ongoing costs associated with converting to electronic records. Some of the more popular uses include:

Buying or replacing IT hardware/tools. Many early adopters of EHRs found themselves in need of new systems when meaningful use requirements were made clear. Others had to adopt EHRs for the first time. For many, those purchases were either financed or came out of capital budgets that needed to be replenished when the checks arrived.

Dr. Schrager and his partners decided not to take any chances on failing to meet the second of five stages of meaningful use, so they invested in software that monitors the practice’s readiness for all the objectives for the next stage. It shows them where improvements are needed and where a physician may be struggling.

“It’s important not to just spend the money,” he said. “If you are going to keep going in this project, the meaningful use criteria get more stringent, and the old ones don’t go away.”

Additional staff. The conversion to the electronic world may mean many hours of manpower to enter patient information, that previously lived in paper charts, into the EHR. Sumana Reddy, MD, owner of Acacia Family Medical Group, a four-physician practice in Salinas, Calif., said she decided not to let that burden fall on the physicians. She hired two temporary workers to input some of the data, including medication and problem lists, and an additional staff member to scan old records into the charts. That meant extra staff costs and a reduced patient volume while the doctors learned the new system. Had it not been for the meaningful use money, Dr. Reddy would have had to forgo pay for herself for a few months, something she has done a few times in the past. “This was not some huge gift,” she said.

Staff development. Dr. Schrager said his practice does not do direct bonuses to employees, but it will use some of the meaningful use money on improving morale through team building and staff development projects. They have developed a curriculum for support staff, for example, where employees can learn skills related to their areas of work.

New services. As many payers move toward outcome-based pay models, practices may want to consider using the money to offer wellness services such as smoking cessation and weight management classes. Dr. Sink said even though tai chi classes had nothing to do with EHRs, she and her partners believed it was a good use of the money because of the benefits to her elderly patients, especially those with arthritis.

Dr. Sink said she and her partners are always discussing ways to improve their practice. So far, they have not come up with an exciting way to spend their next round of meaningful use funds.

“But we’ll do the same kind of thing,” she said. “We don’t owe any debt, so we’ll save the money, and the things that come up that are appropriate, we’ll discuss it and then use it.”

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Handling a meaningful use holdout

Some practices that were early adopters of electronic health records made the use of those systems optional for physicians, some of whom were just not interested in learning a new way of doing things and thought there wasn’t a strong enough incentive to change.

Because of the meaningful use program, those holdout physicians will not only cost the practice $44,000 in incentive pay, but they also will cause a reduction in revenue if they continue using their paper records into 2014 when the penalty phase of the program kicks in.

Eric Finocchiaro, RPh, director at Deloitte Consulting, said practices could hold these physicians accountable for “opportunity loss,” meaning they have the ability to bring in extra revenue, but they have failed to do so.

But a practice should focus on getting the physicians on board, said Michele Mann, principal at the technology consulting firm CSC. EHR use and participation in the meaningful use incentive program should be requirements spelled out in any new employment contracts, she said. Physicians need to understand the consequences of their decision not to participate, she said.

Practices also should make sure each physician is eligible for the program.

Sumana Reddy, MD, owner of Acacia Family Medical Group, a four-physician practice in Salinas, Calif., said there is a young physician at her practice who had not yet built up the Medicare patient load required to qualify for meaningful use. The practice made a concerted effort to help build up the needed patient population by sending new Medicare patients to the doctor over a period of several months.

— By Pamela Lewis Dolan

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Meaningful use payments to doctors

Medicaid meaningful use incentive payments began in January 2011, and Medicare payments began in April 2011. Since then, more than $10 billion has been paid to eligible hospitals and health care professionals, including physicians, who met the criteria for their use of electronic health records. The breakdown of payments made to physicians as of December 2012:


Physicians who received payments: 96,102

Total amount paid: $1,672,937,853


Physicians who received payments: 54,079

Total amount paid: $1,084,656,205

Source: Centers for Medicare & Medicaid Services

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