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CMS Incentive Program Stage 3: Will this increase simplicity in electronic health records?

What is the Incentive Program again?

The Centers for Medicare & Medicaid Services (“CMS”) began its meaningful use incentive program with Stage 1 nearly four years ago in 2011.  By 2017, Stage 3 is projected to be fully implemented.  Recently, in March 2015, the Department of Health and Human Services (HHS) released the Notice of Proposed Rulemaking (NPRM) identifying the criteria for Stage 3.  Like its preceding stages, Stage 3 will mandate eligible professionals, eligible hospitals, and critical access hospitals to meet certain criteria in order to receive Medicare and Medicaid incentive payments and avoid penalties.

To qualify for incentive payments, eligible providers must demonstrate meaningful use for each year they participate in the program.  Eligible providers that do not demonstrate meaningful use will incur a penalty—a “payment adjustment.”  The adjustment reduces reimbursement by “1% and increases each year that an eligible professional does not demonstrate meaningful use, to a maximum of 5%.”

What’s going on with Stage 3?

Stage 3 takes the role of improving outcomes that align with the goals of the previous stages. Stage 1 focused on capturing and sharing data, and Stage 2 focused on advancing the clinical processes.  One recommended outcome that has been identified is to increase patient engagement.  Three measures of engagement have been recommended, and providers must report all three measures, but only have to meet the standards of two.

The first measure comes from the Office of the National Coordinator (“ONC”) which recommends increasing the rates at which patients “view, download, and transmit their personal health data” from 5%, laid out in Stage 2, to 25%.  The second recommended measure would require that at least 35% of patients seen by eligible providers, at discharge or check-out, receive a “secure message” from the provider’s electronic health record’s (“EHR”) messaging function.  The third measure would require at least 15% of patients to participate in contributing to their personal EHR by gathering and entering health related data into their EHR.


Although these measures are intended to improve patient outcomes, there are concerns relating to the recommended measures.  First, interacting with patients through electronic messaging provides the patient with little context and uses technical jargon the patient may not understand.  Second, many providers face challenges in meeting the 5% Stage 2 requirement in having their patients view their online EHR.  Lastly, besides facing these challenges moving into Stage 3, HHS is trying to address the ongoing issues since the EHR inception, which include: “the burden of reporting to multiple quality reporting programs, the number of EHR Program requirements, the timing of EHR meaningful use reporting periods, and the numerous stages of participation.”


With the inception of the electronic health record and the increasing demands placed on providers, HHS states that the overall goal for Stage 3 is to support “broader efforts to increase simplicity and flexibility in the program while driving interoperability and a focus on patient outcomes in the meaningful use program.”  Time will tell whether eligible providers will be able to keep up with the evolving EHR and the demands of the ongoing incentive program.

Lauren E. Masching is pursuing her law degree and health law certificate at DePaul University College of Law in Chicago, Class of 2017. Lauren completed her undergraduate degree at the University of Iowa and has a Bachelor of Science in Nursing. She is an active member of the Jaharis Health Law Institute as Co-Vice Chair of Outreach and Recruitment. She is interested in pursuing a career in either Administrative Health Law or working in-house after graduation.​​