Critical Access Hospitals

Medicare EHR Incentive Payment Calculations

CAHs are currently paid based on reasonable cost principles; therefore, their EHR incentive payments are calculated differently from the incentive payments to subsection (d) hospitals. A CAH must meet the definition of a meaningful EHR user to qualify to be paid the incentive payment for a payment year. A payment year means a Federal fiscal year beginning after FY 2010 and before FY 2016. In no case are incentive payments made with respect to cost reporting periods that begin during a payment year before FY 2011 or after FY 2015, and in no case may a CAH receive an incentive payment with respect to more than 4 consecutive payment years. The incentive payment made to a qualifying CAH equals:

[Allowable cost amount] * [Medicare Share].

The allowable cost amount equals the costs of depreciable assets purchased, such as computers and associated software, necessary to administer certified EHR technology. The incentive payment permits a qualifying CAH to expense the allowable cost amount in a single payment year rather than depreciating the costs over the useful life of the purchased asset. The allowable cost amount for a cost reporting period that begins in a payment year includes the reasonable cost incurred for the purchase of certified EHR technology in that payment year plus the undepreciated costs for assets purchased, prior to the CAH becoming qualified, that are also being used to administer certified EHR technology in that payment year.

The Medicare Share is a fraction based on Medicare fee-for-service and managed care inpatient days, divided by total inpatient days, modified by charges for charity care:

• Numerator = (1) The number of inpatient-bed-days which are attributable to individuals with respect to whom payment may be made under Part A, including individuals enrolled in section 1876 Medicare cost plans; and (2) The number of inpatient-bed-days which are attributable to individuals who are enrolled with a Medicare Advantage organization

• Denominator = Total number of acute care inpatient-bed-days; * ((Total amount of the eligible hospital’s charges – charges attributable to charity care)/Total amount of the eligible hospital’s charges))

For CAHs, 20 percentage points are added to the Medicare Share calculation (not to exceed 100 percent).

In order for the CAH to receive its interim incentive payment, upon attestation, it must submit supporting documentation for its incurred costs of purchasing certified EHR technology to its Medicare contractor (Fiscal Intermediary/Medicare Administrative Contractor). The Medicare contractor will then calculate the allowable amount. The interim incentive payment is then subject to reconciliation to determine the final incentive payment amount. The final payment amount constitutes payment in full for the reasonable costs incurred for the purchase of certified EHR technology in the single payment year.

Cost Report Data Elements Used for Calculation

The current Medicare cost report, Form CMS 2552-96, will be used until the implementation of the new Medicare cost report, Form CMS 2552-10. The CMS 2552-96 data elements are as follows:

Total Discharges – Worksheet S-3 Part 1, Column 15, Line 12
Inpatient Part A Days – Worksheet S-3 Part 1, Column 4, Line 1 + Lines 6 through 10
Inpatient Part C Days – Worksheet S-3 Part 1, Column 4, Line 2
Total Inpatient Days – Worksheet S-3 Part 1, Column 6, Line 1 + Lines 6 through 10
Total Charges – Worksheet C Part 1, Column 8, Line 103
Charity Care Charges – Worksheet S-10, Column 1, Line 30

The CMS 2552-10 data elements are as follows:

Total Discharges – Worksheet S-3 Part 1, Column 15, Line 14
Inpatient Part A Days – Worksheet S-3 Part 1, Column 6, Line 1 + Lines 8 through 12
Inpatient Part C Days – Worksheet S-3 Part 1, Column 6, Line 2
Total Inpatient Days – Worksheet S-3 Part 1, Column 8, Line 1 + Lines 8 through 12
Total Charges – Worksheet C Part 1, Column 8, Line 200
Charity Care Charges – Worksheet S-10, Column 3, Line 20

CMS Guidance on CAH Questions

For more information on issues and questions pertaining to the EHR Incentive Program and Critical Access Hospitals, visit the CMS EHR Incentive Program web site.