June 2009

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (Recovery Act), which, among other things, created financial incentives for physicians and other providers to adopt and utilize electronic health records (EHR) and penalties for those physicians who do not.  The provisions addressing the incentives are known as the Health Information Technology for Economic and Clinical Health Act or the "HITECH Act".  Many physicians remain uncertain about the details of the incentives so CMS has now published a Fact Sheet which is intended to shed some light on the HITECH payment incentives. 

Here are some of the key points from the Fact Sheet:

  • Financial incentives will begin in January 2011 for eligible professionals (EPs) who are meaningful EHR users.
  • Beginning in 2015, payment adjustments will be imposed on EPs who are not meaningful EHR users by that date.
  • Hospital-based physicians who substantially furnish their services in a hospital setting are not eligible for incentive payments.
  • Incentive payments will equal to 75 percent of Medicare allowable charges for covered services furnished by the EP in a year, subject to a maximum payment in the first, second, third, fourth, and fifth years of $15,000; $12,000; $8,000; $4000; and $2,000, respectively.
  • For early adopters whose first payment year is 2011 or 2012, the maximum payment is $18,000 in the first year.
  • There will be no payments for meaningful EHR use after 2016.
  • The Medicare fee schedule amount for professional services provided by an EP who was not a meaningful EHR user for the year would be reduced by 1 percent in 2015, by 2 percent in 2016, by 3 percent for 2017 and by between 3 to 5 percent in subsequent years.
  • For 2018 and thereafter, if the Secretary finds that the proportion of EPs who are meaningful EHR users is less than 75 percent, then the reductions will be increased by 1 percentage point each year, but by not more than 5 percent overall.


According to a statement by Secretary of HHS Catherine Sebelius in a June 24 HHS Press Release, "the Obama Administration is committed to turning up the heat on Medicare fraud…"  As evidence of this commitment, the Press Release announced the indictment of 53 individuals, including physicians and health care executives, accused of various Medicare fraud offenses ranging from conspiracy to defraud the Medicare program, false claims anti-kickback statute violations.  Among other things, the indictments allege that the individuals conspired to submit claims for medically unnecessary services and services not rendered as well as to pay kickbacks to beneficiaries to attest that they received the services.  The Press Release can be viewed here.


According to a June 2, 2009 letter from President Obama to key Democrat Congressman, the President is pushing for major health care reform legislation by October 2009. Given that this is only a few months away, it is remarkable how little detail exists with regard to the President’s plan for reform. Here are some key quotes and a few take away thoughts that might be gleaned from the President’s letter:

I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans”. Based on this quote it would appear that there will indeed be an expanded national health insurance program. If the Medicare program is any indicator, this is going to mean a lot more regulation.

I am committed to working with the Congress to fully offset the cost of health care reform by … strengthening Medicare and Medicaid payment accuracy by cutting waste, fraud and abuse; improving care for Medicare patients after hospitalizations; and encouraging physicians to form "accountable care organizations" to improve the quality of care for Medicare patients.” I’m guessing this means more fraud and abuse enforcement and more physician accountability although the President’s definition of an “accountable care organization” remains elusive.

I am committed to working with the Congress to fully offset the cost of health care reform by reducing Medicare and Medicaid spending by another $200 to $300 billion over the next 10 years, and by enacting appropriate proposals to generate additional revenues.” More taxes?

These savings will come not only by adopting new technologies and addressing the vastly different costs of care, but from going after the key drivers of skyrocketing health care costs, including unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions.” Though it’s pretty vague, this could mean greater rationing of care through mechanisms such as pre-authorization requirements for diagnostic testing.

If President Obama has his way, big changes will be coming very soon.  Stay tuned!


On Nov. 9, 2007, The Federal Trade Commission (FTC) created the Red Flags Rule requiring creditors to develop and implement written identity theft prevention programs within their organizations. The rule defines a “Creditor” any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal or continuation of credit. Because physicians do not generally collect payment in full at the time of service, The FTC has informally indicated that the Red Flag Rule requirements will likely apply to physician practices. Although some physician advocate groups such as the AMA have challenged this assertion, at present the FTC has not exempted physicians from the definition of Creditors. The compliance date in the regulations was originally November 1, 2008 but has been extended to August 1, 2009. Accordingly, physicians need to begin familiarizing themselves with the Red Flag Rule and should plan on becoming compliant by August 1.

Among other things, the Red Flag Rule requires “Creditors” to implement a written identity theft prevention program which includes reasonable policies and procedures to: (i) identify relevant red flags and incorporate those red flags into the program; (ii) detect red flags that have been incorporated into the program; (iii) respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and (iv) ensure the program is updated periodically to reflect changes in the risks of identity theft. Although the regulations are fairly complex, implementing a workable program should not be overly burdensome for most practices. As the Red Flag Rule compliance date approaches, we at Fox Rothschild LLP will be developing cost effective resources to assist practices in developing compliant identity theft prevention programs. In the meantime, if you have questions regarding the Rule, please contact us here