A new law signed by Maryland Gov. Martin O'Malley will coax physicians into making the switch from paper to electronic medical records by requiring private insurance companies to provide financial incentives.

Maryland officials have said this is the first state law of its kind to advance EHR adoption in this way.

The law also requires Maryland to designate a health information exchange for the state on or before October 1.

 "This is where government and private health care providers can come together to really improve not only the quality of care but also, hopefully, create some costs savings as well," O'Malley said, according to the Baltimore Sun. "Health IT is the future of healthcare in our country, and we want Maryland to lead the way."

Health Secretary John Colmers said the bill allows insurers to choose among several forms of inducement – increased reimbursements, lump-sum payments or in-kind services – so long as it has a monetary value, the Sun reported.

"The goal here in Maryland was to assure that all of the payers pull their oars in the same direction," Colmers said. "There is a great promise in electronic health records, but the greatest promise comes when it's done in a coordinated fashion, across all of the payers."

CareFirst, a large insurer in the mid-Atlantic region, already offers increased reimbursements to doctors who use electronic medical records.

Last summer, Maryland began piloting two electronic health exchanges, the Chesapeake Regional Information System for our Patients and the Montgomery County Health Information Exchange Collaborative.