Medicaid EHR Incentives: A Good Deal for Small Practices

The hubbub over meaningful use and Medicare incentives has been so distracting that the advantages of the Medicaid EHR incentive program seem to have been lost in the noise.  It also doesn’t help that seven states still have not launched their programs.   Here are a few important differences between the programs.


Medicare Medicaid
Doctors of medicine, osteopathy, dental surgery, dental medicine, podiatric medicine, optometry, and chiropractors. Physicians, nurse practitioners, certified nurse-midwives, dentists, physician assistants.

Note that Medicaid offers incentives to mid-level providers, while Medicare does not.  In order to qualify, 30% of a provider’s patients must be Medicaid recipients.  Pediatricians qualify if only 20% of their patients are covered by Medicaid.   Medicare has no patient volume requirement.

Entering the Program

Medicare Medicaid
Final year to enter the program is 2014.  The maximum total incentive is $44,000 per provider over five years.  The last payment year is 2016. Final year to enter program is 2016. In order to qualify for the maximum total incentive, providers must enter the program by 2016.  The maximum total incentive is $63,750 per provider over six years.  The last payment year is 2021.

Medicaid offers a longer timeline (10 years 2011-2021) for program participation.  Since the last year to enter the Medicaid program and still receive the maximum incentive payment of $63,750 is 2016, Medicaid providers have four more years to watch the EHR market mature and the interoperability infrastructure grow before committing to a product.   Given the rapidity with which technology changes, this is a definite advantage.

Payment Basis

Medicare Medicaid
Incentive payments are calculated based on a percentage of the provider’s total allowable charges. For example, the first year incentive payment is based on 75% of allowable charges up to a cap of $24,000.(75% of 24,000 =18,000). Medicaid payments are based on the net allowable charges for adopting, implementing, or upgrading certified EHR technology.   Providers are reimbursed 85% of the EHR-related costs up to a maximum of $25,000.  The maximum first-year payment is 85% of $25,000 =$21, 250.

Notice that the maximum amount of incentive received is not guaranteed – it is based on a calculation.  For example,  a provider who enters the Medicare program, meets meaningful use in his first year, and has $10,000 in allowable charges will receive a payment  equal to 75% of $10,000 or $7500–not the $18,000 maximum payment.

Medicare requires providers to demonstrate meaningful use each year in order to receive an incentive payment. By contrast, the first-year Medicaid incentive payment may be obtained simply by installing or upgrading an EHR. Meeting meaningful use requirements is only necessary in subsequent years.

For small practices that qualify, especially those with mid-level providers, the Medicaid EHR incentive program is a low-threshold source of HIT funding.  Unfortunately, this message seems to be getting lost in the clamor over meaningful use.  The good news, especially for providers in laggard states, is that there is still time—providers may enter the program as late as 2016 and still receive the maximum total incentive.



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