Handy Incentive Calculator Helps You Anticipate Your Arra Dollars

By Author: Angela Martin
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If you are in the healthcare sector, you need to stay tuned to all Healthcare IT software updates.


One thing we all know by now is that hospitals that meet ARRA's criteria get to collect incentives starting at $2 million. Based on your hospital's Medicare discharges and the year that you make the EHR transition, the government will adjust the figure.



How much your facility stands to gain can certainly be a head scratcher. But there's good news for you as you can calculate your anticipated share of funding with this breakdown of the Medicare incentive formula.


The formula for acute care prospective payment system (PPS) hospitals is:


Initial Amount times Medicare Share times Transition Factor = Total Incentive Amount


The ‘Initial Amount' is $2 million in addition to $200 for each discharge between the 1,150th and 23,000th discharge in a 12-month period. There's no credit for the first 1,149 discharges or discharges after 23,000.


The Medicare Share a fraction: The numerator: Inpatient bed days attributable to Part A plus inpatient bed days attributable to Part C. The denominator: The total number of inpatient bed days times (non-charity care charges divided by total amount of charges).


“Transition Factor”: This depends on the adoption year you achieve ‘meaningful' EHR use and progressively decreases over the four reimbursement years. For hospitals that achieve meaningful EHR use in 2011 to 2013, the transition factor is 100 percent for the first year, followed by 75, 50 and 25 percent in the subsequent years.


Hospitals that accomplish meaningful EHR use in 2014 will benefit from three reimbursement years only, beginning with a transition factor of 75 percent. And those who do not achieve meaningful EHR use by 2015 will benefit from only two reimbursement years beginning with a transition factor of 50 percent. Those who fail to adopt EHR by 2015 won't bag any incentive.


So if you want to achieve maximum payout, brace up and adopt EHR before 2013.


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