SUTHERLAND GLOBAL SERVICES
HOW FEDERAL LEGISLATION MOTIVATED PHYSICIANS AND HOSPITALS IN THE UNITED STATES
TO INSTITUTE AN ELECTRONIC MEDICAL RECORD
This paper was presented as follow up to a meeting with Sussan Ley, Australian Minister of Health, in February
2015. The Minister asked “How did the United States improve adoption of E-Health through Obamacare?”
The adoption of electronic medical records (EMR) in the United States is being propelled by two major pieces
of federal law; the American Recovery and Reinvestment Act (ARRA) of 2009, and the Patient Protection and
Affordable Care Act (ACA) of 2010 also known as Obamacare.
What is ARRA?
The American Recovery and Reinvestment Act (ARRA) is an economic stimulus package intended to mitigate
the effects of the 2008 international financial crisis. It was signed into law on February 17, 2009 by President
Barack Obama. ARRA authorizes the Centers for Medicare and Medicaid Services (CMS) to establish financial
incentives and penalties for the adoption of EMRs by hospitals and physicians.
What is Obamacare?
Obamacare is the unofficial name for The Patient Protection and Affordable Care Act which was signed into law
on March 23, 2010 by President Barack Obama. Obamacare created additional incentives for the adoption of
EMRs by making them a central element of the quality of care improvement, and cost containment
requirements of the law.
The broad policy aims of the EMR mandate are to:
1. Improve quality, safety, and efficiency of care and reduce health disparities across populations. This is
accomplished by using EMRs to engage patients and families, improve care coordination, and support
population and public health initiatives while maintaining the privacy and security of patient health
information.
2. Improve health outcomes and reduce medical waste and mistakes by enabling payment reforms that
reimburse physicians and hospitals on the basis of clinical outcomes versus services provided.
How did the law incentivize physicians, and hospitals to implement EMRs to a level known as
Meaningful Use?
Meaningful Use sets specific objectives for eligible professionals and hospitals to qualify for CMS Incentive
Programs. It also requires providers that serve patients covered by the two main government-sponsored
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health programs, Medicare (provides coverage for those 65 and older) and Medicaid (provides coverage for
low income children, andults, and the disabled). Since most providers serve the populations covered by these
programs, Meaningful Use creates a near-universal requirements for EMR adoption.
Meaningful Use is implemented in a three stage phased approach.

Stage 1 – Promotes basic EHR adoption and data gathering

Stage 2 – Emphasizes care coordination and exchange of patient information

Stage 3 – Improves healthcare outcomes* *Under development by ONC
What are the incentives and penalties?
Medicare EHR Incentive Program: Medicare incentive payments are equal to 75% of a provider’s annual
Medicare Part B allowed charges up to a maximum yearly amount.
Beginning in 2015, providers who are eligible for the Medicare Meaningful Use program who don’t successfully
demonstrate Meaningful Use will be penalized—starting at 1% of Medicare Part B reimbursements and
increasing each year to a maximum of 5%. There will be hardship exceptions for eligible providers.
Meaningful Use payment adjustments are based on achieving Meaningful Use two years before the adjustment
year—so providers starting in 2013 avoid a penalty in 2015.
Medicaid EHR Incentive Program: Providers that serve Medicaid patients can earn up to $63,750 in
incentive payments over the six years that they choose to participate in the program (see chart below).
Providers starting in 2014, can earn incentives through 2019. Providers who are eligible for Meaningful Use
under the Medicaid program are not subject to payment penalties, unless the provider is also eligible under the
Medicare program.
Outcome from using an incentive for implementation and penalties for noncompliance
According to the Office of the National Coordinator for Health IT, through to December, 2014, 9 out of 10
eligible hospitals had attested to the meaningful use of certified technology.
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