On Friday, March 20, 2015, the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule (available here) which would make significant changes to the federal Medicare and Medicaid Electronic Health Records (“EHR”) Incentive Programs (collectively the “Meaningful Use Program”). 

The Meaningful Use Program operates in 3 stages, with providers required to demonstrate increasing use/metrics at each stage to continue to receive payments.  Under the Meaningful Use Program, eligible professionals, eligible hospitals and critical access hospitals can receive incentive payments for demonstrating Meaningful Use of certified EHR technology.[1]  Furthermore, starting in 2015, health care providers who are eligible to participate in the program, but choose not to participate or are not able to demonstrate Meaningful Use, may see downward payment adjustments to the amounts reimbursed by Medicare.  Thus, the Meaningful Use Program has been a source of additional income to some providers, but for many others it has been a serious concern due to the significant capital outlays required to demonstrate Meaningful Use of certified EHR and potential penalties that may be forthcoming.  The proposed rule from last Friday has some providers even more concerned about the feasibility of meeting Meaningful Use standards and the push to achieve Meaningful Use when so many are struggling.

Under the proposed rule, CMS will make several changes to the Meaningful Use Program.  The following are descriptions of some of CMS’ important proposals:

  • Stage 3 Meaningful Use will have an optional year in 2017 and starting in 2018, all providers will report on the same definition of Meaningful Use at Stage 3, regardless of prior participation. CMS intends this requirement to respond to stakeholder input re the complexity of the program, success to date and to set a long-term sustainable foundation for the Meaningful Use Program.
  • In order to align the Meaningful Use Program with other CMS incentives, such as the Physician Quality Reporting System or PQRS, CMS will require all providers to report on a calendar year EHR reporting period beginning in 2017.
  • CMS desires to promote improved patient outcomes and health information exchange in Stage 3 and thus the rule focuses on patient engagement. For example, providers must meet two of the following three requirements for patient engagement: (i) patients view, download or transmit their health information; (ii) secure messaging between providers and patients; and (iii) patient generated health data from a non-clinical setting is incorporated into a certified EHR.

While CMS sets forth many goals in support of its proposed rulemaking (e.g., the triple aim), one message comes through clearly, CMS is pushing forward with EHR and is not slowing down due to sluggish adoption by health care practitioners.  Accordingly, providers and their industry groups have been lamenting the onerous burdens of the Meaningful Use Program and the fact that less than 35% of hospitals and only a small fraction of physicians have met Stage 2 requirements.[2]  Furthermore, providers who fail to meet the minimum use thresholds could be subject to hundreds of millions of dollars in penalties.

Contrary to providers, those in the health information technology or digital health industry should be quite pleased with the rule as it may provide them with additional customers and markets as providers try to interface with and collect data from patients’ health wearables (e.g., smart watches with heart rate sensors).

In sum, the proposed rule clearly signifies that CMS is planning to take a stringent approach to ensure that providers are meaningfully compliant by 2018.  Providers can take steps to mitigate their exposure to penalties by investing in certified EHR, perhaps in conjunction with applying for hardship exemptions from the Meaningful Use Program’s requirements, to delay the date where they must comply or be subject to penalties.  Health information technology vendors generally and EHR vendors specifically should plan to modify and ensure that their technology is compliant and sufficiently differentiated to provide value to health care providers that must comply with the Meaningful Use Program’s requirements.


[1] CMS. “The Official Web Site for the Medicare and Medicaid Electronic Health Records (EHR) Incentive Programs”

[2] Tahir, Darius. “CMS issues draft Stage 3 rules for EHR incentive program,” Modern HealthCare, March 20, 2015.