State Medicaid offices must have systems in place to begin verifying meaningful use performance and processing lump-sum checks by May 2011, when the Centers for Medicare and Medicaid Services (CMS) will officially open the program to providers who meet certain criteria for deploying electronic health record systems.

In 2011, the criteria include the requirement that at least 30 percent of a medical practice be devoted to caring for Medicaid patients and that providers adopt a new EHR system or upgrade an existing one. In subsequent years, providers will be asked to meet stepped-up objectives, including a record of prescribing at least 40 percent of all their prescriptions electronically.

Medicaid officials say these new responsibilities will require more manhours, development of auditable processes and field visits to provider offices, the modification of existing IT systems and even the creation of new applications to help state officials verify provider eligibility and track payments.

Some states are also building systems that can connect to CMS via the National Level Repository (NLR), an online application that will help manage the reimbursement process by taking provider applications for incentive payments and checking that no duplicate payments are made.

In short, overseeing the Medicaid incentive program won't be easy, say state Medicaid directors. Many of them are grappling with forced furlough days, hiring freezes and budget cuts and are burdened with tight schedules and tasks related to other health IT initiatives, the new health reform legislation and efforts to modernize legacy Medicaid Management Information Systems.

"It is a concern, because monitoring the incentive monies is going to involve additional work and staff resources that they really don't have," said Ann Kohler, executive director of the National Association of State Medicaid Directors. "However, state Medicaid officials are very committed to health IT, and so on balance, they think it's a good investment on their part to find a way to do this."

Loosening the rules

Fortunately, the final meaningful use rule released in late July is less stringent than the draft rule published earlier this year.

Carol Steckel, commissioner of Alabama Medicaid, says that although she and her staff are still parsing the 800-plus-page policy document, she believes that the flexibility afforded providers in the initial year will make her job launching the new management systems a lot more palatable.

"My understanding"for the first phase at least"is that it is more of a certification and audit process and that means it will not be quite as intense as it will be in the later phases," she said. "So our challenge is to make it as easy as possible given our staff load and budget, but still validate that the money we're spending is accomplishing the goals we and CMS are trying to accomplish."

Steckel expects that her office will leave it to providers to warrant that they have met the first-stage criteria, but that her office will also send personnel into the field to do random checks. "What I presume is that we'll automatically audit a certain number, but if we find problems, we'll expand the audit," Steckel said. "If we don't find any problems, then like any other fraud and abuse initiative, we'll assume people are doing it correctly."

Ruth Carr, general counsel for the Georgia Department of Community Health (DCH), agrees that the new rule initially takes some pressure off states. For her organizations, physicians in the first year will need only sign an "attestation" that they have purchased or launched an EHR or upgraded an existing EHR. "It's a very easy threshold," she said.

But Carr cautions that there are still opportunities for mistakes, misunderstandings or outright fraud. "We will be scrutinizing the applicants and the payments because the federal government is sending this money through the states and expecting the states to be responsible for the disbursements, so we can't simply be a pass-through," she said.

The criteria will get more stringent in future years, for which Georgia plans to become "audit-ready," Carr said. To do so, her office received a grant from CMS to hire an audit and actuarial firm with Medicaid expertise to design their business operations process. Carr says the process will include all necessary checks and balances, an audit trail and monitoring and follow-up processes.

She will hire additional staff to help monitor the Medicaid incentive program, including a project director, project manager, data analyst and business analyst. The effort will also borrow the time of an already employed privacy and security officer and the department's legal team.

Carr also expects to conduct random audits, and in addition, her office will use its designated Regional Extension Center to help answer provider questions as they begin the process of picking and installing EHRs. "Through our collaboration and leveraging our talents and staff, we'll be able to have people actually in provider offices, looking at what's going on, how they're handling it and assuring that we do it right," Carr said.

Automating checks and check-ups

Many states also are looking at automating payment processes and program integrity check-ups. Pennsylvania's Office of Medical Assistance Program, for example, is developing what it calls the Medical Assistance Provider Incentive Repository (MAPIR), an online application that will be connected with CMS's National Level Repository (NLR) and provider files maintained in the state's Medicaid Management Information System (MMIS). This will help state officials track payments and verify provider eligibility.

Once the NLR transmits the names and information of providers who have applied under the Medicaid program in Pennsylvania, "we would use
MAPIR to do an initial review to make sure that we have the provider enrolled with Medical Assistance," said Mike Nardone, deputy secretary of the Office of Medical Assistance Programs in the Pennsylvania Department of Public Welfare. "If they are, we can then populate automatically some information that we already have in our provider file and, if necessary, correct our file."

In the future, MAPIR will be able to do more intensive scrutiny, he says, such as checking a provider's e-prescribing claims against the MMIS. "If someone says they're meeting the 40 percent threshold but we don't have any medication claims that are coming in electronically, then that will be a red flag," Nardone said. "Now they may be doing the electronic prescribing for their non- Medicaid patient population and are making a legitimate claim, but the system would still flag it and we would get somebody to check into what's going on with the provider."

Once a physician provides the needed attestation and any required documentation, Pennsylvania will approve a payment and send that information to the NLR, which will confirm and register the payment and give the state the go-ahead to make the payment. Pennsylvania's MMIS financial system will then generate a check for the provider.

MAPIR, which is being built by HP Enterprise Services, will be part of the NLR's testing phase this fall and will go completely live in early 2011. The application, Nardone notes, is also being made available to other states.